(19) Business Segments

Operating segments are defined in FASB ASC Topic 280 - Segment Reporting, as components of an enterprise about which separate financial information is available and evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company measures segment profit as operating income for petroleum and nitrogen fertilizer, CVR's two reporting segments. All intercompany transactions are eliminated in the other segment as described below. All operations of the segments are located within the United States.

Petroleum

Principal products of the petroleum segment include gasoline, diesel fuel, jet fuel, natural gas liquids, asphalt and petroleum refining by-products, including petroleum coke, which are sold to retailers, petroleum jobbers, railroads and other refiners/marketers. The petroleum segment also sells hydrogen and petroleum coke to the nitrogen fertilizer segment pursuant to separate intercompany agreements. Intercompany sales included in petroleum net sales are eliminated in consolidation.

The petroleum segment may also purchase hydrogen from the nitrogen fertilizer segment under an intercompany feedstock and shared services agreement. Receipts of hydrogen from the nitrogen fertilizer segment are reported in petroleum cost of materials and other and are eliminated in consolidation.

Nitrogen Fertilizer

The principal product of the nitrogen fertilizer segment is nitrogen fertilizer. Nitrogen fertilizer is used by farmers to improve the yield and quality of their crops, primarily corn and wheat. The nitrogen fertilizer segment principally produces UAN. The nitrogen fertilizer segment’s product sales are sold on a wholesale basis in North America. Intercompany sales to the petroleum segment are primarily hydrogen sales pursuant to the feedstock and shared services agreement. The nitrogen fertilizer segment also receives income from subleasing railcars to the petroleum segment’s refineries. All intercompany sales included in nitrogen fertilizer net sales are eliminated in consolidation.

As described above, the nitrogen fertilizer segment purchases hydrogen and petroleum coke from the petroleum segment. Receipts of hydrogen and petroleum coke from the petroleum segment are reported in nitrogen fertilizer cost of materials and other and are eliminated in consolidation.

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:



	Year Ended December 31,
	2017			2016			2015
	(in millions)
Net sales
Petroleum	$	5,664.2		$	4,431.3		$	5,161.9
Nitrogen Fertilizer	330.8			356.3			289.2
Intersegment elimination	(6.6		)	(5.2		)	(18.6		)
Total	$	5,988.4		$	4,782.4		$	5,432.5
Cost of materials and other
Petroleum	$	4,804.7		$	3,759.2		$	4,143.6
Nitrogen Fertilizer	84.9			93.7			65.2
Intersegment elimination	(6.7		)	(5.4		)	(18.4		)
Total	$	4,882.9		$	3,847.5		$	4,190.4
Direct operating expenses (exclusive of depreciation and amortization)
Petroleum	$	443.8		$	393.4		$	478.5
Nitrogen Fertilizer	155.5			148.3			106.1
Other	0.2			0.1			0.1
Total	$	599.5		$	541.8		$	584.7
Depreciation and amortization
Petroleum	$	133.1		$	129.0		$	130.2
Nitrogen Fertilizer	74.0			58.2			28.4
Other	6.9			5.9			5.5
Total	$	214.0		$	193.1		$	164.1
Operating income (loss)
Petroleum	$	203.8		$	77.8		$	361.7
Nitrogen Fertilizer	(9.2		)	26.8			68.7
Other	(16.8		)	(13.7		)	(8.8		)
Total	$	177.8		$	90.9		$	421.6
Capital expenditures
Petroleum	$	99.7		$	102.3		$	194.7
Nitrogen fertilizer	14.5			23.2			17.0
Other	4.4			7.2			7.0
Total	$	118.6		$	132.7		$	218.7



	Year Ended December 31,
	2017		2016		2015
	(in millions)
Total assets
Petroleum	$	2,269.9	$	2,331.9	$	2,189.0
Nitrogen Fertilizer	1,234.3		1,312.2		536.3
Other	302.5		406.1		574.1
Total	$	3,806.7	$	4,050.2	$	3,299.4
Goodwill
Petroleum	$	—	$	—	$	—
Nitrogen Fertilizer	41.0		41.0		41.0
Other	—		—		—
Total	$	41.0	$	41.0	$	41.0