Segment Information

3 Months Ended

Mar. 31, 2015

Segment Reporting [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, 2015, 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.

Beginning in the first quarter of 2015, the Company has modified the components of Corporate and Other to include certain shared service and administrative functional costs that were previously allocated to the reportable segments. Accordingly, for comparative purposes, the Company has recasted its Segment EBITDA results to include these costs within Corporate and Other for all prior periods presented.

Net Sales ⁽¹⁾:

	Three Months Ended March 31,
	2015		2014
Epoxy, Phenolic and Coating Resins	$	674	$	817
Forest Products Resins	405		476
Total	$	1,079	$	1,293

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

Segment EBITDA:

	Three Months Ended March 31,
	2015			2014
Epoxy, Phenolic and Coating Resins	$	85		$	80
Forest Products Resins	61			62
Corporate and Other	(19		)	(22		)
Total	$	127		$	120

Reconciliation of Segment EBITDA to Net Loss:

	Three Months Ended March 31,
	2015			2014
Segment EBITDA:
Epoxy, Phenolic and Coating Resins	$	85		$	80
Forest Products Resins	61			62
Corporate and Other	(19		)	(22		)
Total	$	127		$	120
Reconciliation:
Items not included in Segment EBITDA:
Business realignment costs	$	(3	)	$	(6	)
Integration costs	—			(2		)
Realized and unrealized foreign currency losses	(3		)	(3		)
Other	(18		)	(9		)
Total adjustments	(24		)	(20		)
Interest expense, net	(77		)	(77		)
Income tax expense	(26		)	(6		)
Depreciation and amortization	(34		)	(35		)
Net loss	$	(34	)	$	(18	)

Items Not Included in Segment EBITDA

Not included in Segment EBITDA are certain non-cash items and other income and expenses. For the three months ended March 31, 2015, these items primarily included expenses from retention programs, losses on the disposal of assets and certain professional fees. For the three months ended March 31, 2014, these items primarily included expenses from retention programs and losses on the disposal of assets. Business realignment costs for the three months ended March 31, 2015 and March 31, 2014 primarily related to costs for environmental remediation at certain formerly owned locations and expenses from minor restructuring programs. Business realignment costs for the three months ended March 31, 2015 also include costs related to certain in-process cost reduction programs. Integration costs for the three months ended March 31, 2014 primarily represented integration costs associated with the previous integration of Hexion and MPM.