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Segment Reporting and Geographical Area Data
 12 Months Ended
Dec. 31, 2015
Segment Reporting [Abstract]  
Segment Reporting and Geographical Area Data

Note 3.     Segment Reporting and Geographical Area Data

 

Innospec divides its business into three segments for management and reporting purposes: Fuel Specialties, Performance Chemicals and Octane Additives. The Fuel Specialties and Performance Chemicals segments operate in markets where we actively seek growth opportunities although their ultimate customers are different. The Octane Additives segment is generally characterized by unpredictable and declining demand.

 

In 2015, the Company had as a significant customer in the Fuel Specialties segment, Royal Dutch Shell plc and its affiliates (“Shell”), which accounted for $65.8 million (6.5%) of our net group sales. In 2014 and 2013, Shell accounted for $81.9 million (8.5%) and $83.1 million (10.1%) of our net group sales, respectively.

 

The Company evaluates the performance of its segments based on operating income. The following table analyzes sales and other financial information by the Company’s reportable segments:

 

(in millions)

    2015     2014     2013  

Net sales:

       

Fuel Specialties

    $ 758.3      $ 682.2      $ 567.4   

Performance Chemicals

      194.5        223.5        192.4   

Octane Additives

      59.5        55.2        59.0   
  

 

 

    

 

 

    

 

 

  
   $ 1,012.3      $ 960.9      $ 818.8   
  

 

 

    

 

 

    

 

 

  

Gross profit:

       

Fuel Specialties

    $ 265.1      $ 219.0      $ 181.1   

Performance Chemicals

      52.4        54.4        46.3   

Octane Additives

      28.5        28.6        27.8   
  

 

 

    

 

 

    

 

 

  
   $ 346.0      $ 302.0      $ 255.2   
  

 

 

    

 

 

    

 

 

  
Operating income:       

Fuel Specialties

    $ 103.9      $ 104.4      $ 92.7   

Performance Chemicals

      23.5        25.6        23.6   

Octane Additives

      24.7        22.6        21.5   

Pension credit/(charge)

      0.2        (3.3 )      (2.3 ) 

Corporate costs

      (38.3 )      (38.7 )      (43.6 ) 

Adjustment to fair value of contingent consideration

      40.7        1.9        0.0   

Profit on disposal of subsidiary

      1.6        0.0        0.0   

Impairment of Octane Additives segment goodwill

      0.0        0.0        (1.3 ) 
  

 

 

    

 

 

    

 

 

  

Total operating income

    $ 156.3      $ 112.5      $ 90.6   
  

 

 

    

 

 

    

 

 

  

Identifiable assets at year end:

       

Fuel Specialties

    $ 633.0      $ 676.9      $ 446.4   

Performance Chemicals

      137.0        181.0        176.8   

Octane Additives

      28.7        29.2        42.0   

Corporate

      231.3        112.8        129.5   
  

 

 

    

 

 

    

 

 

  
   $ 1,030.0      $ 999.9      $ 794.7   
  

 

 

    

 

 

    

 

 

  

 

The pension credit/(charge) relates to the United Kingdom defined benefit pension plan which is closed to future service accrual. The charges related to our other much smaller pension arrangements in the U.S. and overseas are included in the segment and income statement captions consistent with the related employees’ costs.

 

The Company includes within the corporate costs line item the costs of:

 

  •  

managing the Group as a company with securities listed on the NASDAQ and registered with the SEC;

 

  •  

the President/CEO’s office, group finance, group human resources, group legal and compliance counsel, and investor relations;

 

  •  

running the corporate offices in the U.S. and Europe;

 

  •  

the corporate development function since they do not relate to the current trading activities of our other reporting segments; and

 

  •  

the corporate share of the information technology, accounting and human resources departments.

 

Sales by geographical area are reported by source, being where the transactions originated. Intercompany sales are priced using an appropriate pricing methodology and are eliminated in the consolidated financial statements.

 

Identifiable assets are those directly associated with the operations of the geographical area.

 

Goodwill has not been allocated by geographical location on the grounds that it would be impracticable to do so.

 

(in millions)

    2015     2014     2013  

Net sales by source:

       

United States

    $ 571.9      $ 468.6      $ 276.1   

United Kingdom

      445.2        486.1        502.4   

Rest of Europe

      133.3        146.9        129.1   

Rest of World

      22.1        21.4        0.2   

Sales between areas

      (160.2 )      (162.1 )      (89.0 ) 
  

 

 

    

 

 

    

 

 

  
   $ 1,012.3      $ 960.9      $ 818.8   
  

 

 

    

 

 

    

 

 

  

Income before income taxes:

       

United States

    $ 52.7      $ 15.2      $ 10.0   

United Kingdom

      60.6        57.8        43.7   

Rest of Europe

      42.0        39.3        40.4   

Rest of World

      (3.0 )      (1.4 )      0.0   

Impairment of Octane Additives segment goodwill

      0.0        0.0        (1.3 ) 
  

 

 

    

 

 

    

 

 

  
   $ 152.3      $ 110.9      $ 92.8   
  

 

 

    

 

 

    

 

 

  

Long-lived assets at year end:

       

United States

    $ 185.8      $ 197.9      $ 148.2   

United Kingdom

      49.3        54.1        29.4   

Rest of Europe

      10.6        10.4        11.5   

Rest of World

      0.4        0.6        0.0   
  

 

 

    

 

 

    

 

 

  
   $ 246.1      $ 263.0      $ 189.1   
  

 

 

    

 

 

    

 

 

  

Identifiable assets at year end:

       

United States

    $ 412.3      $ 449.3      $ 291.7   

United Kingdom

      303.4        216.4        261.5   

Rest of Europe

      30.9        39.0        53.2   

Rest of World

      16.0        19.1        0.4   

Goodwill

      267.4        276.1        187.9   
  

 

 

    

 

 

    

 

 

  
   $ 1,030.0      $ 999.9      $ 794.7