Segment Information

3 Months Ended

Mar. 31, 2012

Segment Information [Abstract]

Segment Reporting Disclosure [Text Block]

Segment Information

The Company's business segments are based on the products that the Company offers and the markets that it serves. At March 31, 2012, the Company had two reportable segments: Epoxy, Phenolic and Coating Resins and Forest Products Resins. A summary of the major products of the Company's reportable segments follows:

• Epoxy, Phenolic and Coating Resins: epoxy specialty resins, oil field products, versatic acids and derivatives, basic epoxy resins and intermediates, phenolic specialty resins and molding compounds, polyester resins, acrylic resins and vinylic resins

• Forest Products Resins: forest products resins and formaldehyde applications

The Company's organizational structure continues to evolve. It is also continuing to refine its operating structure to more closely link similar products, minimize divisional boundaries and improve the Company's ability to serve multi-dimensional common customers. These refinements may result in future changes to the Company's reportable segments.

Reportable Segments

Following are net sales and Segment EBITDA (earnings before interest, income taxes, depreciation and amortization) by reportable segment. Segment EBITDA is defined as EBITDA adjusted to exclude certain non-cash, other income and expenses and discontinued operations. Segment EBITDA is the primary performance measure used by the Company's senior management, the chief operating decision-maker and the board of directors to evaluate operating results and allocate capital resources among segments. Segment EBITDA is also the profitability measure used to set management and executive incentive compensation goals. Corporate and Other is primarily corporate general and administrative expenses that are not allocated to the segments, such as shared service and administrative functions, foreign exchange gains and losses and legacy company costs not allocated to continuing segments.

Net Sales to Unaffiliated Customers⁽¹⁾⁽²⁾:

	Three Months Ended March 31,
	2012		2011
Epoxy, Phenolic and Coating Resins	$	794	$	846
Forest Products Resins	442		448
Total	$	1,236	$	1,294

Segment EBITDA⁽²⁾:

	Three Months Ended March 31,
	2012			2011
Epoxy, Phenolic and Coating Resins	$	114		$	150
Forest Products Resins	46			45
Corporate and Other	(11		)	(17		)

(1) Intersegment sales are not significant and, as such, are eliminated within the selling segment.

(2) Prior period balances have been recast to exclude the results of the CCR Business, which is reported as a discontinued operation

Reconciliation of Segment EBITDA to Net (Loss) Income:

	Three Months Ended March 31,
	2012			2011
Segment EBITDA:
Epoxy, Phenolic and Coating Resins	$	114		$	150
Forest Products Resins	46			45
Corporate and Other	(11		)	(17		)
Reconciliation:
Items not included in Segment EBITDA:
Asset impairments and other non-cash charges	(48		)	1
Business realignment costs	(15		)	(3		)
Integration costs	(8		)	(5		)
Net income from discontinued operations	—			5
Other	7			(5		)
Total adjustments	(64		)	(7		)
Interest expense, net	(65		)	(64		)
Income tax benefit (expense)	2			(3		)
Depreciation and amortization	(38		)	(41		)
Net (loss) income	$	(16	)	$	63

Items not included in Segment EBITDA

Non-cash charges primarily represent asset impairments, stock-based compensation expense, accelerated depreciation on closing facilities and unrealized derivative and foreign exchange gains and losses. Business realignment costs for the three months ended March 31, 2012 primarily include expenses from the Company's restructuring and cost optimization programs. Business realignment costs for the three months ended March 31, 2011 primarily relate to expenses from minor restructuring programs. Integration costs relate primarily to the Momentive Combination. Net income from discontinued operations represents the results of the IAR and CCR businesses.

Not included in Segment EBITDA are certain non-cash and other income or expenses. For the three months ended March 31, 2012, these items primarily include net realized foreign exchange transaction gains, partially offset by losses on the disposal of assets. For the three months ended March 31, 2011, these items include primarily net foreign exchange transaction losses, losses on disposal of assets and business optimization expenses.