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Business Segments | 9 Months Ended
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Sep. 30, 2012
Business Segments |
Business Segments |
(19) Business Segments The Company measures segment profit as operating income for Petroleum and Nitrogen Fertilizer, CVR's two reporting segments, based on the definitions provided in ASC Topic 280—Segment Reporting. All operations of the segments are located within the United States. Petroleum Principal products of the Petroleum Segment are refined fuels, liquefied petroleum gas, asphalts, and petroleum refining by-products, including pet coke. The Petroleum Segment's Coffeyville refinery sells pet coke to the Partnership for use in the manufacture of nitrogen fertilizer at the adjacent nitrogen fertilizer plant. For the Petroleum Segment, a per-ton transfer price is used to record intercompany sales on the part of the Petroleum Segment and corresponding intercompany cost of product sold (exclusive of depreciation and amortization) for the Nitrogen Fertilizer Segment. The per ton transfer price paid, pursuant to the pet coke supply agreement that became effective October 24, 2007, is based on the lesser of a pet coke price derived from the price received by the Nitrogen Fertilizer Segment for UAN (subject to a UAN based price ceiling and floor) and a pet coke price index for pet coke. The intercompany transactions are eliminated in the Other Segment. Intercompany sales included in petroleum net sales were approximately $2.4 million and $3.9 million for the three months ended September 30, 2012 and 2011, respectively. Intercompany sales included in petroleum net sales were approximately $7.3 million and $8.8 million for the nine months ended September 30, 2012 and 2011, respectively. The Petroleum Segment recorded intercompany cost of product sold (exclusive of depreciation and amortization) for the hydrogen purchases (sales) described below under "Nitrogen Fertilizer" for the three months ended September 30, 2012 and 2011 of approximately $0.2 million and $5.5 million, respectively. For the nine months ended September 30, 2012 and 2011, the Petroleum Segment recorded intercompany cost of product sold (exclusive of depreciation and amortization) for the hydrogen purchases (sales) of approximately $5.8 million and $10.8 million, respectively. Nitrogen Fertilizer The principal product of the Nitrogen Fertilizer Segment is nitrogen fertilizer. Intercompany cost of product sold (exclusive of depreciation and amortization) for the pet coke transfer described above was approximately $2.5 million and $3.4 million for the three months ended September 30, 2012 and 2011, respectively. Intercompany cost of product sold (exclusive of depreciation and amortization) for the pet coke transfer described above was approximately $7.8 million and $7.0 million for the nine months ended September 30, 2012 and 2011, respectively. Pursuant to the feedstock agreement, the Coffeyville refinery and nitrogen fertilizer plant have the right to transfer excess hydrogen (hydrogen determined not to be needed to meet the current anticipated operational requirements of the facility transferring the hydrogen) to one another. Sales of hydrogen to the Petroleum Segment have been reflected as net sales for the Nitrogen Fertilizer Segment. Receipts of hydrogen from the Petroleum Segment have been reflected in cost of product sold (exclusive of depreciation and amortization) for the Nitrogen Fertilizer Segment. For the three months ended September 30, 2012 and 2011, the net sales generated from intercompany hydrogen sales were $0.3 million and $5.7 million, respectively. For the nine months ended September 30, 2012 and 2011, the net sales generated from intercompany hydrogen sales were $6.0 million and $11.8 million, respectively. For the three months ended September 30, 2012 and 2011, the Nitrogen Fertilizer Segment also recognized approximately $0.1 million and $0.3 million, respectively, of cost of product sold related to the transfer of excess hydrogen. For the nine months ended September 30, 2012 and 2011, the Nitrogen Fertilizer Segment also recognized approximately $0.2 million and $1.0 million, respectively, of cost of product sold related to the transfer of excess hydrogen. As these intercompany sales and cost of product sold are eliminated, there is no financial statement impact on the condensed consolidated financial statements. Other Segment The Other Segment reflects intercompany eliminations, cash and cash equivalents, all debt related activities, income tax activities and other corporate activities that are not allocated to the operating segments. The following table summarizes certain operating results and capital expenditures information by segment:
|  | Three Months Ended September 30, |  | Nine Months Ended September 30, |
--- | --- | --- | --- | --- | ---
|  | 2012 |  | 2011 |  | 2012 |  | 2011 |
|  | (in thousands) |
Net sales |  |  |  |  |  |  |  |  |  |  |  |  |
Petroleum |  | $ | 2,337,354 |  | $ | 1,284,407 |  | $ | 6,465,378 |  | $ | 3,772,348 |
Nitrogen Fertilizer |  |  | 75,013 |  |  | 77,203 |  |  | 234,720 |  |  | 215,253 |
Intersegment elimination |  |  | (2,743 | ) |  | (9,646 | ) |  | (13,525 | ) |  | (20,656 | )
Total |  | $ | 2,409,624 |  | $ | 1,351,964 |  | $ | 6,686,573 |  | $ | 3,966,945 |
Cost of product sold (exclusive of depreciation and amortization) |  |  |  |  |  |  |  |  |  |  |  |  |
Petroleum |  | $ | 1,694,019 |  | $ | 1,024,509 |  | $ | 5,190,839 |  | $ | 3,077,555 |
Nitrogen Fertilizer |  |  | 11,297 |  |  | 10,901 |  |  | 34,620 |  |  | 28,138 |
Intersegment elimination |  |  | (2,864 | ) |  | (9,370 | ) |  | (13,642 | ) |  | (19,456 | )
Total |  | $ | 1,702,452 |  | $ | 1,026,040 |  | $ | 5,211,817 |  | $ | 3,086,237 |
Direct operating expenses (exclusive of depreciation and amortization) |  |  |  |  |  |  |  |  |  |  |  |  |
Petroleum |  | $ | 88,890 |  | $ | 54,510 |  | $ | 253,176 |  | $ | 143,974 |
Nitrogen Fertilizer |  |  | 21,063 |  |  | 20,083 |  |  | 66,424 |  |  | 65,373 |
Other |  |  | (24 | ) |  | 22 |  |  | (58 | ) |  | (91 | )
Total |  | $ | 109,929 |  | $ | 74,615 |  | $ | 319,542 |  | $ | 209,256 |
Insurance recovery—business interruption |  |  |  |  |  |  |  |  |  |  |  |  |
Petroleum |  | $ | — |  | $ | — |  | $ | — |  | $ | — |
Nitrogen Fertilizer |  |  | — |  |  | (490 | ) |  | — |  |  | (3,360 | )
Other |  |  | — |  |  | — |  |  | — |  |  | — |
Total |  | $ | — |  | $ | (490 | ) | $ | — |  | $ | (3,360 | )
Depreciation and amortization |  |  |  |  |  |  |  |  |  |  |  |  |
Petroleum |  | $ | 27,458 |  | $ | 16,990 |  | $ | 80,355 |  | $ | 50,872 |
Nitrogen Fertilizer |  |  | 5,230 |  |  | 4,663 |  |  | 15,826 |  |  | 13,948 |
Other |  |  | 421 |  |  | 372 |  |  | 1,230 |  |  | 1,259 |
Total |  | $ | 33,109 |  | $ | 22,025 |  | $ | 97,411 |  | $ | 66,079 |
Operating income (loss) |  |  |  |  |  |  |  |  |  |  |  |  |
Petroleum |  | $ | 507,470 |  | $ | 179,815 |  | $ | 891,222 |  | $ | 469,042 |
Nitrogen Fertilizer |  |  | 32,347 |  |  | 37,514 |  |  | 99,820 |  |  | 93,626 |
Other |  |  | (6,073 | ) |  | (5,139 | ) |  | (81,018 | ) |  | (22,952 | )
Total |  | $ | 533,744 |  | $ | 212,190 |  | $ | 910,024 |  | $ | 539,716 |
Capital expenditures |  |  |  |  |  |  |  |  |  |  |  |  |
Petroleum |  | $ | 20,211 |  | $ | 20,216 |  | $ | 82,604 |  | $ | 33,430 |
Nitrogen fertilizer |  |  | 18,201 |  |  | 4,492 |  |  | 57,419 |  |  | 10,539 |
Other |  |  | 1,482 |  |  | 944 |  |  | 5,030 |  |  | 2,662 |
Total |  | $ | 39,894 |  | $ | 25,652 |  | $ | 145,053 |  | $ | 46,631 |
|  | As of September 30, 2012 |  | As of December 31, 2011 |
--- | --- | --- | --- | --- | ---
Total assets |  |  |  |  |  |  |
Petroleum |  | $ | 2,188,950 |  | $ | 2,322,148 |
Nitrogen Fertilizer |  |  | 653,242 |  |  | 659,309 |
Other |  |  | 810,185 |  |  | 137,834 |
Total |  | $ | 3,652,377 |  | $ | 3,119,291 |
Goodwill |  |  |  |  |  |  |
Petroleum |  | $ | — |  | $ | — |
Nitrogen Fertilizer |  |  | 40,969 |  |  | 40,969 |
Other |  |  | — |  |  | — |
Total |  | $ | 40,969 |  | $ | 40,969 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 12 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8595-108599 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8538-108599 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 33 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8971-108599 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8981-108599 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 29 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8864-108599 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8380-108599 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8984-108599 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8933-108599 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 131 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8906-108599 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8844-108599 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9031-108599 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9054-108599 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8924-108599 + Details
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