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16. SEGMENT INFORMATION
We have three reportable segments through which we manage our operating activities: (i) chlorovinyls; (ii) building products; and (iii) aromatics. These three segments reflect the organization used by our management for internal reporting. The chlorovinyls segment consists of a highly integrated chain of electrovinyl products, which includes chlorine, caustic soda, VCM and vinyl resins, and our compound products consisting of compound additives and vinyl compounds. Our vinyl-based building and home improvement products, including window and door profiles and mouldings products and outdoor building products consisting of siding, pipe and pipe fittings and deck, fence and rail products are marketed under the Royal Group brand names, and are managed within the building products segment. The aromatics segment is also integrated and includes the product cumene and the co-products phenol and acetone.
Earnings of our segments exclude interest income and expense, unallocated corporate expenses and general plant services, and provision for income taxes. Transactions between operating segments are valued at market based prices. The revenues generated by these transfers are provided in the following table.
The accounting policies of the reportable segments are the same as those described in Note 1 of the Notes to Consolidated Financial Statements in our 2010 Annual Report on Form 10-K.
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(In thousands) |
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Chlorovinyls |
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Aromatics |
|
Building
Products |
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Eliminations,
Unallocated
and Other |
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Total |
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Three months ended June 30, 2011: |
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| |
Net sales |
|
$ |
323,663 |
|
$ |
233,892 |
|
$ |
274,156 |
|
$ |
— |
|
$ |
831,711 |
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| |
Intersegment revenues |
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|
70,439 |
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|
— |
|
|
— |
|
|
(70,439 |
) |
|
— |
|
| |
Restructuring (income) expense |
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|
(1,150 |
) |
|
— |
|
|
443 |
|
|
— |
|
|
(707 |
) |
| |
Operating income (loss) |
|
|
37,826 |
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|
(7,448 |
) |
|
16,891 |
|
|
(11,759 |
) |
|
35,510 |
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| |
Depreciation and amortization |
|
|
14,582 |
|
|
353 |
|
|
10,390 |
|
|
1,067 |
|
|
26,392 |
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|
Three months ended June 30, 2010: |
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Net sales |
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$ |
300,811 |
|
$ |
191,646 |
|
$ |
243,249 |
|
$ |
— |
|
$ |
735,706 |
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| |
Intersegment revenues |
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|
78,817 |
|
|
— |
|
|
— |
|
|
(78,817 |
) |
|
— |
|
| |
Restructuring (income) expense |
|
|
489 |
|
|
— |
|
|
(50 |
) |
|
— |
|
|
439 |
|
| |
Operating income (loss) |
|
|
36,196 |
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|
(7,782 |
) |
|
18,738 |
|
|
(9,258 |
) |
|
37,894 |
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| |
Depreciation and amortization |
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|
14,905 |
|
|
350 |
|
|
8,715 |
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|
1,251 |
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|
25,221 |
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|
(In thousands) |
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Chlorovinyls |
|
Aromatics |
|
Building
Products |
|
Eliminations,
Unallocated
and Other |
|
Total |
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|
Six months ended June 30, 2011: |
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Net sales |
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$ |
649,983 |
|
$ |
538,005 |
|
$ |
431,660 |
|
$ |
— |
|
$ |
1,619,648 |
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| |
Intersegment revenues |
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|
134,700 |
|
|
— |
|
|
3 |
|
|
(134,703 |
) |
|
— |
|
| |
Restructuring (income) expense |
|
|
(516 |
) |
|
— |
|
|
391 |
|
|
— |
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(125 |
) |
| |
Operating income (loss) |
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|
75,565 |
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|
12,334 |
|
|
4,825 |
|
|
(20,573 |
) |
|
72,151 |
|
| |
Depreciation and amortization |
|
|
29,181 |
|
|
713 |
|
|
19,749 |
|
|
2,199 |
|
|
51,842 |
|
|
Six months ended June 30, 2010: |
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Net sales |
|
$ |
588,522 |
|
$ |
382,334 |
|
$ |
396,299 |
|
$ |
— |
|
$ |
1,367,155 |
|
| |
Intersegment revenues |
|
|
136,257 |
|
|
— |
|
|
— |
|
|
(136,257 |
) |
|
— |
|
| |
Restructuring (income) expense |
|
|
(463 |
) |
|
— |
|
|
597 |
|
|
— |
|
|
134 |
|
| |
Operating income (loss) |
|
|
27,544 |
|
|
1,863 |
|
|
15,065 |
|
|
(17,053 |
) |
|
27,419 |
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| |
Depreciation and amortization |
|
|
29,703 |
|
|
730 |
|
|
17,179 |
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|
2,498 |
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|
50,110 |
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Sales by Product
The table below summarizes net sales by product. Our Electrovinyls products are primarily comprised of chlorine/ caustic soda, VCM and vinyl resins. Our compound products are comprised of vinyl compounds, compound additives and plasticizers. Our outdoor building products are comprised of siding, pipe and pipe fittings, and deck, fence, and rail products.
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Three Months Ended
June 30, |
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Six Months Ended
June 30, |
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(In thousands) |
|
2011 |
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2010 |
|
2011 |
|
2010 |
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Chlorovinyls |
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|
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|
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Electrovinyl products |
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$ |
209,794 |
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$ |
195,566 |
|
$ |
428,563 |
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$ |
390,824 |
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Compound products |
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|
113,869 |
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|
105,245 |
|
|
221,420 |
|
|
197,698 |
|
| |
|
|
|
|
|
|
|
|
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| |
Total |
|
|
323,663 |
|
|
300,811 |
|
|
649,983 |
|
|
588,522 |
|
| |
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|
|
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Aromatics |
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|
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Cumene products |
|
|
138,064 |
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|
124,998 |
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|
318,810 |
|
|
258,906 |
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Phenol/acetone products |
|
|
95,828 |
|
|
66,648 |
|
|
219,195 |
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|
123,428 |
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| |
|
|
|
|
|
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|
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| |
Total |
|
|
233,892 |
|
|
191,646 |
|
|
538,005 |
|
|
382,334 |
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| |
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Building Products |
|
|
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|
|
|
|
|
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|
|
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|
Window & Door Profiles and Moulding products |
|
|
95,635 |
|
|
103,633 |
|
|
160,808 |
|
|
172,888 |
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Outdoor Building products |
|
|
178,521 |
|
|
139,616 |
|
|
270,852 |
|
|
223,411 |
|
| |
|
|
|
|
|
|
|
|
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| |
Total |
|
|
274,156 |
|
|
243,249 |
|
|
431,660 |
|
|
396,299 |
|
| |
|
|
|
|
|
|
|
|
|
|
Total net sales |
|
$ |
831,711 |
|
$ |
735,706 |
|
$ |
1,619,648 |
|
$ |
1,367,155 |
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| |
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