Segment and Related Information

9 Months Ended

Sep. 30, 2015

Segment and Related Information [Abstract]

Segment and Related Information [Text Block]

14. Segment and Related Information

Our operations are managed through five operating segments, as shown below. We disclose the results of each of our operating segments in accordance with ASC 280, Segment Reporting. Each of our operating segments is managed by a senior executive reporting directly to our Chief Executive Officer, the chief operating decision maker. Discrete financial information is available for each of the segments, and our Chief Executive Officer uses the operating results of each of the operating segments for performance evaluation and resource allocation. The activities of each of our segments from which they earn revenues and incur expenses are described below:

• Olefins and Polyolefins–Americas (“O&P–Americas”). Our O&P–Americas segment produces and markets olefins, including ethylene and ethylene co-products, and polyolefins.
• Olefins and Polyolefins–Europe, Asia, International (“O&P–EAI”). Our O&P–EAI segment produces and markets olefins, including ethylene and ethylene co-products, polyolefins and specialty products, including polybutene-1 and polypropylene compounds.
• IntermediatesandDerivatives (“I&D”). Our I&D segment produces and markets propylene oxide and its co-products and derivatives, acetyls, including methanol, ethylene oxide and its derivatives, ethanol and oxygenated fuels, or oxyfuels.
• Refining. Our Refining segment refines heavy, high-sulfur crude oils and other crude oils of varied types and sources available on the U.S. Gulf Coast.
• Technology. OurTechnology segment develops and licenses chemical and polyolefin process technologies and manufactures and sells polyolefin catalysts.

EBITDA is the primary measure used in reviewing our segments’ profitability and therefore, in accordance with ASC 280, Segment Reporting, we have presented EBITDA for all segments. We define EBITDA as earnings before interest, taxes and depreciation and amortization.

Intersegment eliminations and items that are not directly related or allocated to business operations are included in “Other.” Sales between segments are made primarily at prices approximating prevailing market prices.

Summarized financial information concerning reportable segments is shown in the following table for the periods presented:

			Three Months Ended September 30, 2015
			O&P–		O&P–
Millions of dollars			Americas		EAI		I&D		Refining		Technology		Other		Total
Sales and other
	operating revenues:
		Customers	$	1,838	$	2,874	$	1,989	$	1,559	$	74	$	- -	$	8,334
		Intersegment		678		58		50		134		26		(946)		- -
				2,516		2,932		2,039		1,693		100		(946)		8,334
EBITDA				841		549		460		93		45		13		2,001

			Three Months Ended September 30, 2014
			O&P–		O&P–
Millions of dollars			Americas		EAI		I&D		Refining		Technology		Other		Total
Sales and other
	operating revenues:
		Customers	$	2,585	$	3,857	$	2,652	$	2,894	$	78	$	- -	$	12,066
		Intersegment		1,165		138		39		252		29		(1,623)		- -
				3,750		3,995		2,691		3,146		107		(1,623)		12,066
EBITDA				1,157		343		383		110		41		1		2,035

			Nine Months Ended September 30, 2015
			O&P –		O&P –
Millions of dollars			Americas		EAI		I&D		Refining		Technology		Other		Total
Sales and other
	operating revenues:
		Customers	$	5,668	$	8,748	$	5,981	$	4,998	$	269	$	- -	$	25,664
		Intersegment		2,078		156		135		404		74		(2,847)		- -
				7,746		8,904		6,116		5,402		343		(2,847)		25,664
EBITDA				2,886		1,398		1,263		401		178		13		6,139

			Nine Months Ended September 30, 2014
			O&P –		O&P –
Millions of dollars			Americas		EAI		I&D		Refining		Technology		Other		Total
Sales and other
	operating revenues:
		Customers	$	7,233	$	11,579	$	7,732	$	8,475	$	299	$	- -	$	35,318
		Intersegment		3,336		263		94		677		88		(4,458)		- -
				10,569		11,842		7,826		9,152		387		(4,458)		35,318
EBITDA				2,871		1,018		1,188		376		188		3		5,644

Operating results for our O&P–Americas segment include non-cashcharges of $79 million and $101 millionin the third quarter and first nine months of 2015, respectively, related to lower of cost or market (“LCM”) inventory valuation adjustmentsdriven by declines in the prices of ethylene, propylene and other products correlated with crude oil. Our O&P–EAI segment’s results for the third quarter and first nine months of 2015 were each negatively impacted by a $6 million LCM inventory valuation adjustmentdriven mainly by a decline in the price of naphtha. Operating results for our I&D segment reflect non-cash charges of $46 million and $107 million in the third quarter and first nine months of 2015, respectively, related to LCM inventory valuation adjustments driven by declines in the prices of various chemical products within its inventory pools, notably styrene and benzene. In our Refining segment, operating results were negatively impacted by a $50 million LCM inventory valuation adjustment in each of thethird quarter and first nine months of 2015, primarily driven by declines in the prices of crude oil.

In the third quarter and first nine months of 2014, operating results for our O&P-Americas segment included a charge of $45 million related to a LCM inventory valuation adjustment driven by a decline in feedstock prices. The O&P–EAI segment operating results for the first nine months of 2014 include a $52 million benefit from a settlement under a 2005 indemnification agreement for certain existing and future environmental liabilities.

A reconciliation of EBITDA to Income from continuing operations before income taxes is shown in the following table for each of the periods presented:

		Three Months Ended September 30,				Nine Months Ended September 30,
Millions of dollars		2015		2014		2015		2014
EBITDA:
	Total segment EBITDA	$	1,988	$	2,034	$	6,126	$	5,641
	Other EBITDA		13		1		13		3
Less:
	Depreciation and amortization expense		(248)		(262)		(782)		(772)
	Interest expense		(85)		(92)		(233)		(280)
Add:
	Interest income		8		13		26		26
Income from continuing operations
	before income taxes	$	1,676	$	1,694	$	5,150	$	4,618

The depreciation and amortization expense for the nine months endedSeptember 30, 2015 reflected in the table above includes $35 million of amortization expense related to expired emission allowance credits, $33million of which was recognized by our Refining segment.