Reportable Segments

6 Months Ended

Jun. 30, 2012

Segment Reporting [Abstract]

Reportable Segments

Reportable Segments

From January 1, 2010 until December 31, 2011, MEMC was organized by end market, with three business segments: Semiconductor Materials, Solar Materials, and Solar Energy. During the fourth quarter of 2011, we initiated a large scale global restructuring plan across all of our reportable segments (see Note 2). As part of our restructuring plan, effective January 1, 2012, we consolidated our two solar business units' operations into one business unit, and since that date we have been engaged in two reportable segments, Semiconductor Materials and Solar Energy.

Our Semiconductor Materials segment includes the development, production and marketing of semiconductor wafers with a wide variety of features satisfying numerous product specifications to meet our customers’ exacting requirements, which wafers are utilized in the manufacture of semiconductor devices.

Our Solar Energy segment provides solar energy services that integrate the design, installation, financing, monitoring, operations and maintenance portions of the downstream solar market to provide a comprehensive solar energy service to our customers. Our Solar Energy segment also manufactures polysilicon, silicon wafers and solar modules principally to support our downstream solar business. While there continued to be external solar wafer sales during the six month period ended June 30, 2012, these sales were significantly diminished from prior year sales levels and, going forward, solar wafer sales to external parties are expected to continue to decline to or remain at minimal levels given our strategic shift to primarily supplying wafers for internal consumption by our SunEdison subsidiary.

The Chief Operating Decision Maker ("CODM") is our Chief Executive Officer. The CODM evaluates segment performance based on segment operating profit plus interest expense. In order to determine segment operating profit, standard costs are used as the basis for raw material costs allocated between segments and any related variances are allocated based on usage of those raw materials. General corporate marketing and administration costs, substantially all of our stock-based compensation expense, legal professional services and related costs, and other items are not evaluated by segment and are included in Corporate and Other below. Because certain sites include operations, facilities and/or back office functions that are utilized to support our Semiconductor Materials and Solar Energy businesses, we do not have discrete financial information for total assets. Accordingly, the CODM does not consider total assets when analyzing segment performance. The CODM also evaluates the business on several other key operating metrics, including free cash flow.

	Three Months Ended June 30,						Six Months Ended June 30,
In millions	2012			2011			2012			2011
Net sales:
Semiconductor Materials	$	232.7		$	275.3		$	448.7		$	526.8
Solar Energy	575.7			470.3			878.9			954.7
Consolidated net sales	$	808.4		$	745.6		$	1,327.6		$	1,481.5
Operating income (loss):
Semiconductor Materials	$	(4.3	)	$	3.4		$	(16.8	)	$	11.8
Solar Energy	27.7			80.8			17.2			113.6
Corporate and Other	(22.7		)	(32.5		)	(47.3		)	(73.9		)
Consolidated operating income (loss)	$	0.7		$	51.7		$	(46.9	)	$	51.5
Interest expense (income):
Semiconductor Materials	$	(0.3	)	$	(0.5	)	$	(0.5	)	$	(0.7	)
Solar Energy	31.3			8.9			46.0			13.3
Corporate and Other	13.6			12.8			26.8			17.6
Consolidated interest expense	$	44.6		$	21.2		$	72.3		$	30.2
Depreciation and amortization:
Semiconductor Materials	$	31.6		$	31.0		$	63.6		$	61.6
Solar Energy	22.4			24.6			43.3			43.0
Consolidated depreciation and amortization	$	54.0		$	55.6		$	106.9		$	104.6
Capital expenditures:
Semiconductor Materials	$	17.7		$	34.0		$	41.0		$	84.7
Solar Energy (1)	71.9			240.5			186.4			447.8
Corporate and Other	5.4			2.3			6.6			2.3
Consolidated capital expenditures	$	95.0		$	276.8		$	234.0		$	534.8

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(1) Includes construction of solar energy systems of $58.7 million and $174.1 million in the three month periods ended June 30, 2012 and June 30, 2011, respectively, and construction of solar energy systems of $157.7 million and $226.7 million in the six month periods ended June 30, 2012 and June 30, 2011, respectively.

Semiconductor Materials

During the six month period ended June 30, 2012, we recorded income of $4.0 million for an insurance claim to recover a portion of our losses related to the disruption in production at our semiconductor wafer production facility in Utsunomiya, Japan as a result of the Japan earthquake in March 2011. The full amount was recorded during the three month period ended March 31, 2012.

Due to the earthquake in Japan on March 11, 2011, our semiconductor wafer production in Japan was suspended from that time through April 12, 2011. Due to the unplanned downtime and damages to the plant, we recorded $15.8 million as period charges to cost of goods sold in the six months ended June 30, 2011, for the under absorption of costs, inventory adjustments and asset impairment charges. We had no similar adjustments during the six month period ended June 30, 2012.

Solar Energy

During the three month period ended June 30, 2011, there was $149.4 million of revenue recognized in the Solar Energy segment in connection with the resolution of a long-term solar wafer supply contract with a customer. Additionally, the Solar Energy segment charged $52.4 million during the three month period ended June 30, 2011 to cost of goods sold related to the estimated probable shortfall to our purchase obligations associated with take-or-pay agreements we have with suppliers for raw materials. No similar amounts were recorded in this period in 2012.

Corporate and Other

Approximately $13.1 million of net expenses were recorded in Corporate and Other related to legal cases during the six month period ended June 30, 2011. Because the business decision that resulted in this litigation affected multiple segments, these expenses were recorded to Corporate and Other. There were no similar expenses in 2012.