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Business Segments
 9 Months Ended
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