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Business Segments
 12 Months Ended
Dec. 31, 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, propane, and petroleum refining by-products, including pet coke. The Petroleum Segment's Coffeyville refinery sells pet coke to the Nitrogen Fertilizer 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 $9.9 million, $11.4 million and $4.3 million for the years ended December 31, 2012, 2011 and 2010, respectively.

        The Petroleum Segment recorded intercompany cost of product sold (exclusive of depreciation and amortization) for the hydrogen sales (purchases) described below under "Nitrogen Fertilizer" of approximately $(6.1) million, $13.2 million and $(1.6) million for the years ended December 31, 2012, 2011 and 2010, 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 $10.2 million, $10.7 million and $4.0 million for the years ended December 31, 2012, 2011 and 2010, respectively.

        Pursuant to the feedstock agreement, the Company's segments have the right to transfer excess hydrogen between the Coffeyville refinery and nitrogen fertilizer plant. 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 years ended December 31, 2012, 2011 and 2010, the net sales generated from intercompany hydrogen sales were $6.3 million, $14.2 million and $0.1 million, respectively. For the year ended December 31, 2012, 2011 and 2010, the nitrogen fertilizer segment also recognized approximately $0.2 million, $1.0 million and $1.8 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 consolidated financial statements.

  • Other Segment

        The Other Segment reflects intercompany eliminations, cash and cash equivalents, certain debt related activities, income tax activities and other corporate activities that are not allocated to the operating segments.

 
   Year Ended December 31,  
 
   2012   2011   2010  
 
   (in thousands)
  

Net sales

                    

Petroleum

   $ 8,281,539   $ 4,751,826   $ 3,903,826  

Nitrogen Fertilizer

     302,309     302,867     180,468  

Other

     —     —     —  

Intersegment elimination

     (16,521 )   (25,580 )   (4,526 )
               

Total

   $ 8,567,327   $ 5,029,113   $ 4,079,768  
               

Cost of product sold (exclusive of depreciation and amortization)

                    

Petroleum

   $ 6,667,311   $ 3,926,632   $ 3,538,017  

Nitrogen Fertilizer

     46,072     42,511     34,328  

Other

     —     —     —  

Intersegment elimination

     (16,471 )   (25,629 )   (4,227 )
               

Total

   $ 6,696,912   $ 3,943,514   $ 3,568,118  
               

Direct operating expenses (exclusive of depreciation and amortization)

                    

Petroleum

   $ 426,527   $ 247,665   $ 153,112  

Nitrogen Fertilizer

     95,614     86,491     86,679  

Other

     (66 )   (104 )   —  
               

Total

   $ 522,075   $ 334,052   $ 239,791  
               

Depreciation and amortization

                    

Petroleum

   $ 107,643   $ 69,852   $ 66,391  

Nitrogen Fertilizer

     20,723     18,869     18,463  

Other

     1,639     1,600     1,907  
               

Total

   $ 130,005   $ 90,321   $ 86,761  
               

Operating income

                    

Petroleum

   $ 1,012,521   $ 465,710   $ 104,564  

Nitrogen Fertilizer

     115,758     136,198     20,356  

Other

     (93,364 )   (35,312 )   (31,856 )
               

Total

   $ 1,034,915   $ 566,596   $ 93,064  
               

Capital expenditures

                    

Petroleum

   $ 119,974   $ 68,612   $ 19,761  

Nitrogen fertilizer

     82,151     19,144     10,117  

Other

     10,069     3,468     2,531  
               

Total

   $ 212,194   $ 91,224   $ 32,409  
               

 

                    

Total assets

                    

Petroleum

   $ 2,258,515   $ 2,322,148   $ 1,049,361  

Nitrogen Fertilizer

     622,954     659,309     452,165  

Other

     729,426     137,834     238,658  
               

Total

   $ 3,610,895   $ 3,119,291   $ 1,740,184  
               

Goodwill

                    

Petroleum

   $ —   $ —   $ —  

Nitrogen Fertilizer

     40,969     40,969     40,969  

Other

     —     —     —  
               

Total

   $ 40,969   $ 40,969   $ 40,969