SEGMENT INFORMATION:

3 Months Ended

Mar. 31, 2013

SEGMENT INFORMATION:

SEGMENT INFORMATION:

2.  SEGMENT INFORMATION:

Rockwood operates in five reportable segments according to the nature and economic characteristics of its products and services as well as the manner in which the information is used internally by the Company’s key decision maker, who is the Company’s Chief Executive Officer. The five segments are: (1) Lithium; (2) Surface Treatment; (3) Performance Additives, which consists of Color Pigments and Services, Timber Treatment Chemicals and Clay-based Additives; (4) Titanium Dioxide Pigments; and (5) Advanced Ceramics.

Items that cannot be readily attributed to individual segments have been classified as “Corporate and other.” Corporate and other operating loss primarily represents payroll, professional fees and other operating expenses of centralized functions such as treasury, tax, legal, internal audit and consolidation accounting as well as the cost of operating the Company’s central offices (including some costs maintained based on legal or tax considerations). The Corporate and other classification also includes the results of operations of the metal sulfides business, rubber/thermoplastics compounding business and the wafer reclaim business.

Summarized financial information for each of the reportable segments is provided in the following tables:

	Three months ended
	March 31,
($ in millions)	2013		2012
Net Sales:
Lithium	$	118.5	$	114.7
Surface Treatment	184.5		188.6
Performance Additives	177.1		196.5
Titanium Dioxide Pigments	273.1		225.1
Advanced Ceramics	142.9		144.6
Corporate and other	38.5		40.0
Total	$	934.6	$	909.5

The Company uses Adjusted EBITDA on a segment basis to assess the ongoing performance of the Company’s business segments and reporting units. Because the Company views Adjusted EBITDA on a segment basis as an operating performance measure, the Company uses income (loss) before taxes as the most comparable U.S. GAAP measure. The summary of segment information below includes “Adjusted EBITDA,” a non-GAAP financial measure used by the Company’s chief decision maker and senior management to evaluate the operating performance of each segment. See Note 3, “Segment Information,” in the Company’s 2012 Annual Report on Form 10-K for a discussion of the use of Adjusted EBITDA as a non-GAAP financial measure.

	Three months ended
	March 31,
($ in millions)	2013			2012
Adjusted EBITDA
Lithium	$	46.9		$	44.4
Surface Treatment	39.5			39.7
Performance Additives	35.8			38.8
Titanium Dioxide Pigments	8.6			75.6
Advanced Ceramics	46.5			46.3
Corporate and other	(9.1		)	(9.9		)
Total	$	168.2		$	234.9

	Identifiable Assets as of
	March 31,			December 31,
($ in millions)	2013			2012
Lithium	$	1,278.8		$	1,282.0
Surface Treatment	995.5			982.4
Performance Additives	694.1			675.8
Titanium Dioxide Pigments	1,074.2			1,130.0
Advanced Ceramics	805.3			813.2
Corporate and other (a)	780.4			1,550.8
Eliminations (b)	(458.2		)	(460.5		)
Total	$	5,170.1		$	5,973.7

(a) Corporate and other identifiable assets primarily represent the operating assets of the businesses included herein described above, assets (primarily real estate) of legacy businesses formerly belonging to the Dynamit Nobel businesses acquired in 2004, deferred income tax assets and cash and cash equivalent balances maintained in accordance with centralized cash management techniques.

(b) Amounts included in “Eliminations” represent individual subsidiaries’ retained interest in their cumulative net cash balance (deposits less withdrawals) included in the corporate cash concentration arrangements. These amounts are eliminated as the cash concentration arrangement balances are included in the Corporate and other segment’s identifiable assets.

Geographic information regarding net sales based on seller’s location and long-lived assets are described in Note 3, “Segment Information,” in the Company’s 2012 Annual Report on Form 10-K.

Major components within the reconciliation of income (loss) before taxes to Adjusted EBITDA are described more fully below:

								Titanium
			Surface			Performance		Dioxide			Advanced			Corporate
($ in millions)	Lithium		Treatment			Additives		Pigments			Ceramics			and other			Consolidated
Three months ended March 31, 2013
Income (loss) before taxes	$	30.4	$	27.2		$	19.1	$	(33.3	)	$	29.4		$	(47.9	)	$	24.9
Interest expense, net	0.7		3.0			1.4		5.9			3.6			14.4			29.0
Depreciation and amortization	11.1		7.9			14.4		18.2			13.1			2.3			67.0
Restructuring and other severance costs (a)	3.9		2.2			0.6		0.3			0.1			—			7.1
Systems/organization establishment expenses (income) (b)	0.1		0.6			—		(0.1		)	—			—			0.6
Acquisition and disposal costs (c)	0.1		—			0.1		—			0.2			5.7			6.1
Loss on early extinguishment/modification of debt (d)	—		—			—		17.6			—			—			17.6
Foreign exchange loss (gain) on financing activities, net (e)	0.6		(1.9		)	0.1		—			0.1			16.4			15.3
Other	—		0.5			0.1		—			—			—			0.6
Total Adjusted EBITDA	$	46.9	$	39.5		$	35.8	$	8.6		$	46.5		$	(9.1	)	$	168.2
Three months ended March 31, 2012
Income (loss) before taxes	$	16.0	$	22.7		$	18.5	$	53.6		$	28.6		$	(19.1	)	$	120.3
Interest expense, net	1.0		5.2			2.2		1.9			4.6			5.6			20.5
Depreciation and amortization	10.7		7.9			15.1		17.3			12.8			2.0			65.8
Restructuring and other severance costs (a)	11.3		0.8			2.0		—			—			0.1			14.2
Systems/organization establishment expenses (b)	—		—			0.1		1.5			—			—			1.6
Loss on early extinguishment/modification of debt (d)	2.2		3.0			0.9		—			0.7			2.9			9.7
Foreign exchange loss (gain) on financing activities, net	3.2		—			—		—			(0.5		)	(1.7		)	1.0
Other (c)	—		0.1			—		1.3			0.1			0.3			1.8
Total Adjusted EBITDA	$	44.4	$	39.7		$	38.8	$	75.6		$	46.3		$	(9.9	)	$	234.9

(a) See Note 13, “Restructuring and Other Severance Costs,” for further details.

(b) Primarily represents costs incurred in conjunction with the integration of businesses acquired.

(c) Primarily represents professional fees incurred in connection with exploring strategic options.

(d) In 2013, this represents the write-off of deferred financing costs of $17.6 million in connection with the prepayment of the Titanium Dioxide Pigments facility agreement. In 2012, this represents redemption premiums of $6.7 million and the write-off of deferred financing costs of $3.0 million in connection with the redemption of the 2014 Notes.

(e) Primarily represents the foreign exchange loss in connection with intercompany Euro-denominated loans put in place to fund the prepayment of the outstanding borrowings under the Titanium Dioxide Pigments facility agreement.