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Business Segments
 3 Months Ended
Mar. 31, 2013
Business Segments  
Business Segments

(15) 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 $2.7 million and $2.4 million for the three months ended March 31, 2013 and 2012, respectively.

        The Petroleum Segment recorded intercompany cost of product sold (exclusive of depreciation and amortization) for the hydrogen purchases described below under "Nitrogen Fertilizer" of approximately $29,000 and $5.7 million for the three months ended March 31, 2013 and 2012, respectively. For the three months ended March 31, 2013 and 2012, the net sales recorded as intercompany sales from the sale of hydrogen to the Nitrogen Fertilizer Partnership were approximately $0.2 million and $0, 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 $2.6 million and $3.0 million for the three months ended March 31, 2013 and 2012 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 three months ended March 31, 2013 and 2012, the net sales generated from intercompany hydrogen sales were $29,000 and $5.7 million, respectively. For the three months ended March 31, 2013 and 2012, the nitrogen fertilizer segment also recognized approximately $0.2 million and $0, 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, corporate cash and cash equivalents, 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
March 31,		  
 
   2013   2012  
 
   (in thousands)
  

Net sales

              

Petroleum

   $ 2,274,018   $ 1,898,485  

Nitrogen Fertilizer

     81,411     78,276  

Intersegment elimination

     (3,010 )   (8,130 )
           

Total

   $ 2,352,419   $ 1,968,631  
           

Cost of product sold (exclusive of depreciation and amortization)

              

Petroleum

   $ 1,805,774   $ 1,630,665  

Nitrogen Fertilizer

     10,655     12,598  

Intersegment elimination

     (2,847 )   (8,108 )
           

Total

   $ 1,813,582   $ 1,635,155  
           

Direct operating expenses (exclusive of depreciation and amortization)

              

Petroleum

   $ 86,046   $ 92,703  

Nitrogen Fertilizer

     22,557     22,837  

Other

     (55 )   (26 )
           

Total

   $ 108,548   $ 115,514  
           

Depreciation and amortization

              

Petroleum

   $ 27,951   $ 26,259  

Nitrogen Fertilizer

     5,767     5,438  

Other

     480     415  
           

Total

   $ 34,198   $ 32,112  
           

Operating income (loss)

              

Petroleum

   $ 335,600   $ 134,896  

Nitrogen Fertilizer

     36,803     31,426  

Other

     (4,741 )   (25,814 )
           

Total

   $ 367,662   $ 140,508  
           

Capital expenditures

              

Petroleum

   $ 44,582   $ 35,403  

Nitrogen fertilizer

     18,063     22,274  

Other

     1,074     1,848  
           

Total

   $ 63,719   $ 59,525  
           

 

 
   As of March 31,
2013		   As of December 31,
2012		  
 
   (in thousands)
  

Total assets

              

Petroleum

   $ 2,693,276   $ 2,258,515  

Nitrogen Fertilizer

     660,113     622,954  

Other

     418,670     729,426  
           

Total

   $ 3,772,059   $ 3,610,895  
           

Goodwill

              

Petroleum

   $ —   $ —  

Nitrogen Fertilizer

     40,969     40,969  

Other

     —     —  
           

Total

   $ 40,969   $ 40,969