Segment Information

6 Months Ended

Jun. 30, 2011

Segment Information

Segment Information

15. Segment Information

The Company operates in two principal business segments: Olefins and Vinyls. These segments are strategic business units that offer a variety of different products. The Company manages each segment separately as each business requires different technology and marketing strategies.

	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
Net sales to external customers
Olefins
Polyethylene	$	467,851	$	408,059	$	914,554	$	822,431
Ethylene, styrene and other		177,464		169,268		335,841		319,920
Total Olefins		645,315		577,327		1,250,395		1,142,351
Vinyls
PVC, caustic soda and other		193,311		138,189		385,168		266,919
Building products		86,423		102,873		156,738		187,453
Total Vinyls		279,734		241,062		541,906		454,372
	$	925,049	$	818,389	$	1,792,301	$	1,596,723
Intersegment sales
Olefins	$	112,174	$	84,409	$	218,444	$	120,176
Vinyls		404		288		724		522
	$	112,578	$	84,697	$	219,168	$	120,698
Income (loss) from operations
Olefins	$	132,767	$	111,158	$	278,023	$	169,403
Vinyls		10,290		(10,890)		7,442		(25,816)
Corporate and other		(4,688)		(731)		(6,459)		(9,621)
	$	138,369	$	99,537	$	279,006	$	133,966
Depreciation and amortization
Olefins	$	21,608	$	21,465	$	43,252	$	42,701
Vinyls		11,041		10,482		21,815		21,127
Corporate and other		156		146		316		293
	$	32,805	$	32,093	$	65,383	$	64,121
Other income (expense), net
Olefins	$	904	$	36	$	1,084	$	74
Vinyls		(30)		(408)		481		(25)
Corporate and other		758		192		1,274		865
	$	1,632	$	(180)	$	2,839	$	914
Provision for (benefit from) income taxes
Olefins	$	45,247	$	34,840	$	93,538	$	51,689
Vinyls		2,723		(2,189)		570		(8,021)
Corporate and other		(1,820)		980		(2,578)		(949)
	$	46,150	$	33,631	$	91,530	$	42,719
Capital expenditures
Olefins	$	15,450	$	9,657	$	33,399	$	14,954
Vinyls		22,376		6,343		35,007		15,507
Corporate and other		697		368		772		625
	$	38,523	$	16,368	$	69,178	$	31,086

In the first quarter of 2011, in order to better reflect large buyer market related pricing, the Company changed its intersegment market pricing methodology used to account for intersegment sales of ethylene sold from the Olefins segment to the Vinyls segment. Had this pricing methodology been in effect on January 1, 2010, the impact on Olefins segment income from operations for the three and six months ended June 30, 2010 would be a reduction of $9,502 and $17,694, respectively, while the Corporate segment's operating results for the three months ended June 30, 2010 would be negatively impacted by $3,323. These reductions would be offset by an improvement in the Vinyls segment's operating results for the three and six months ended June 30, 2010 of $12,825 and $15,137, respectively, and an improvement in the Corporate segment's operating results for the six months ended June 30, 2010 of $2,557. The improvement in the Corporate segment's loss from operations is attributable to a reduction in intercompany profit in inventory reserve related to sales from the Olefins segment to the Vinyls segment. There would be no impact on the Company's reported consolidated income from operations for the three and six months ended June 30, 2010.

A reconciliation of total segment income from operations to consolidated income before income taxes is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
Income from operations	$	138,369	$	99,537	$	279,006	$	133,966
Interest expense		(12,802)		(8,784)		(25,722)		(17,572)
Other income (expense), net		1,632		(180)		2,839		914
Income before income taxes	$	127,199	$	90,573	$	256,123	$	117,308
					June 30, 2011		December 31, 2010
Total assets
Olefins					$	1,442,400	$	1,372,785
Vinyls						807,759		767,875
Corporate and other						897,641		813,484
					$	3,147,800	$	2,954,144