NOTE 19—SEGMENTS

The Company operates four segments under two principal business units. The Emulsion Polymers business unit includes a Latex segment and a Synthetic Rubber segment. The Plastics business unit includes a Styrenics segment and an Engineered Polymers segment.

The Latex segment produces SB latex primarily for coated paper and packaging board, carpet and artificial turf backings, as well as a number of performance latex applications. The Synthetic Rubber segment produces synthetic rubber products used predominantly in tires, with additional applications in polymer modification and technical rubber goods, including conveyer and fan belts, hoses, seals and gaskets. The Styrenics and Engineered Polymers segments offer complementary plastics products with formulations developed for durable applications, such as consumer electronics, automotive and construction. Through these two segments, the Company provides a broad set of plastics product solutions to its customers.

 

		Emulsion Polymers								Plastics
For the year ended		Latex				Synthetic Rubber				Styrenics				Engineered Polymers				Corporate Unallocated				Total
December 31, 2014
Sales to external customers		$	1,261,137			$	633,983			$	2,197,067			$	1,035,774			$	—			$	5,127,961
Equity in earnings (losses) of unconsolidated affiliates			—				—				50,269				(2,520	)			—				47,749
EBITDA(1)			93,962				136,985				87,496				5,754
Investment in unconsolidated affiliates			—				—				133,533				34,125				—				167,658
Depreciation and amortization			26,954				32,900				29,456				10,351				4,045				103,706
December 31, 2013
Sales to external customers		$	1,341,424			$	622,059			$	2,305,434			$	1,038,497			$	—			$	5,307,414
Equity in earnings (losses) of unconsolidated affiliates			—				—				39,447				(309	)			—				39,138
EBITDA(1)			95,398				113,459				160,724				(9,058	)
Investment in unconsolidated affiliates			—				—				118,263				37,624				—				155,887
Depreciation and amortization			26,092				28,937				28,956				7,375				3,836				95,196
December 31, 2012
Sales to external customers		$	1,545,064			$	701,962			$	2,149,202			$	1,055,681			$	—			$	5,451,909
Equity in earnings of unconsolidated affiliates			—				—				27,026				114				—				27,140
EBITDA(1)			125,473				111,051				82,947				31,503
Investment in unconsolidated affiliates			—				—				101,316				38,988				—				140,304
Depreciation and amortization			27,037				18,080				30,618				6,936				2,933				85,604

 

(1)	Reconciliation of EBITDA to net income (loss) is as follows:

 

		Year Ended December 31,
		2014				2013				2012
Total segment EBITDA		$	324,197			$	360,523			$	350,974
Corporate unallocated			(143,181	)			(133,658	)			(107,557	)
Less: Interest expense, net			124,923				132,038				109,971
Less: Provision for income taxes			19,719				21,849				17,560
Less: Depreciation and amortization			103,706				95,196				85,604
Net income (loss)		$	(67,332	)		$	(22,218	)		$	30,282

 

Corporate unallocated includes corporate overhead costs, loss on extinguishment of long-term debt, and certain other income and expenses.

The primary measure of segment operating performance is EBITDA, which is defined as net income (loss) before interest, income taxes, depreciation and amortization. EBITDA is a key metric that is used by management to evaluate business performance in comparison to budgets, forecasts, and prior year financial results, providing a measure that management believes reflects the Company’s core operating performance. EBITDA is useful for analytical purposes; however, it should not be considered an alternative to the Company’s reported GAAP results, as there are limitations in using such financial measures. Other companies in the industry may define EBITDA differently than the Company, and as a result, it may be difficult to use EBITDA, or similarly-named financial measures, that other companies may use to compare the performance of those companies to the Company’s performance.

Asset and capital expenditure information is not accounted for at the segment level and consequently is not reviewed or included with the Company’s internal management reporting. Therefore, the Company has not disclosed asset and capital expenditure information for each reportable segment.

The Company operates 34 manufacturing plants (which include a total of 81 production units) at 26 sites in 14 countries, inclusive of joint ventures and contract manufacturers. Sales are attributed to geographic areas based on the location where sales originated; long-lived assets are attributed to geographic areas based on asset location.

 

		Year Ended December 31,
		2014				2013				2012
United States
Sales to external customers		$	663,425			$	665,801			$	683,570
Long-lived assets			65,329				73,932				84,992
Europe
Sales to external customers		$	3,066,581			$	3,186,659			$	3,324,064
Long-lived assets			383,311				431,494				449,834
Asia-Pacific
Sales to external customers		$	1,196,163			$	1,214,093			$	1,200,747
Long-lived assets			99,654				92,691				91,885
Rest of World
Sales to external customers		$	201,792			$	240,861			$	243,528
Long-lived assets			8,403				8,310				6,561
Total
Sales to external customers(1)		$	5,127,961			$	5,307,414			$	5,451,909
Long-lived assets(2)(3)			556,697				606,427				633,272

 

(1)

Sales to external customers in China represented approximately 8%, 8% and 8% of the total for the years ended December 31, 2014, 2013, and 2012, respectively. Sales to external customers in Germany represented approximately 12%, 11% and 10% of the total for the years ended December 31, 2014, 2013, and 2012, respectively. Sales to external customers in Hong Kong represented approximately 11%, 10% and 9% of the total for the years ended December 31, 2014, 2013, and 2012, respectively.

(2)

Long-lived assets in China represented approximately 6%, 4%, and 4% of the total for the years ended December 31, 2014, 2013, and 2012, respectively. Long-lived assets in Germany represented approximately 43%, 44%, and 45% of the total for the years ended December 31, 2014, 2013, and 2012, respectively. Long-lived assets in The Netherlands represented approximately 13%, 13%, and 13% of the total for the years ended December 31, 2014, 2013, and 2012, respectively.

(3)	Long-lived assets consist of property, plant and equipment, net.

 

In October 2014, the Company announced that effective January 1, 2015, it will realign its business divisions, creating two new business groups called Performance Materials and Basic Plastics and Feedstocks. This new alignment will better reflect the nature of our businesses, grouping together businesses with similar strategies and aspirations, with the intention of accelerating growth in Performance Materials and optimizing profitability and cash generation in Basic Plastics and Feedstocks. The Performance Materials division will include the following reporting segments: Rubber, Latex and Performance Plastics (consisting of the Automotive and Consumer Essential Markets businesses). The Basic Plastics and Feedstocks division will also represent a separate segment for reporting purposes and will include the following businesses: Styrenic Polymers (Polystyrene, ABS, SAN), Polycarbonate, and Styrene Monomer.