Segment Information

3 Months Ended

Mar. 31, 2013

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, 2013, 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, phenolic encapsulated substrates, 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

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 for certain non-cash items and other income and expenses. 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 ⁽¹⁾:

	Three Months Ended March 31,
	2013		2012
Epoxy, Phenolic and Coating Resins	$	765	$	794
Forest Products Resins	427		442
Total	$	1,192	$	1,236

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

Segment EBITDA:

	Three Months Ended March 31,
	2013			2012
Epoxy, Phenolic and Coating Resins	$	68		$	114
Forest Products Resins	55			46
Corporate and Other (2)	(18		)	(14		)

(2) For the three months ended March 31, 2012, the Company has reclassified approximately $3 of costs into Corporate and Other Segment EBITDA which were previously excluded.

Reconciliation of Segment EBITDA to Net Loss:

	Three Months Ended March 31,
	2013			2012
Segment EBITDA:
Epoxy, Phenolic and Coating Resins	$	68		$	114
Forest Products Resins	55			46
Corporate and Other	(18		)	(14		)
Reconciliation:
Items not included in Segment EBITDA:
Asset impairments	—			(23		)
Business realignment costs	(9		)	(15		)
Integration costs	(3		)	(5		)
Other	(11		)	(18		)
Total adjustments	(23		)	(61		)
Interest expense, net	(74		)	(65		)
Loss on extinguishment of debt	(6		)	—
Income tax benefit	32			2
Depreciation and amortization	(38		)	(38		)
Net loss	$	(4	)	$	(16	)

Items Not Included in Segment EBITDA

Business realignment costs for the three months ended March 31, 2013 primarily relate to expenses from minor restructuring programs and costs for environmental remediation at certain formerly owned locations. Business realignment costs for the three months ended March 31, 2012 primarily include expenses from the Company’s restructuring and cost optimization programs. Integration costs for the three months ended March 31, 2013 and 2012 primarily represent integrations costs associated with the Momentive Combination.

Not included in Segment EBITDA are certain non-cash items and other income and expenses. For the three months ended March 31, 2013, these items primarily include expenses from retention programs, partially offset by net realized and unrealized foreign exchange transaction gains. For the three months ended March 31, 2012, these items primarily include accelerated depreciation recorded on closing facilities, net realized and unrealized foreign exchange transaction losses, stock-based compensation expense and losses on the disposal of assets.