Segment Information

The Company’s business segments are based on the products that the Company offers and the markets that it serves. At June 30, 2017, 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 and phenolic specialty resins and molding compounds


•	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 June 30,				Six Months Ended June 30.
	2017		2016		2017		2016
Epoxy, Phenolic and Coating Resins	$	517	$	613	$	1,009	$	1,188
Forest Products Resins	395		339		773		673
Total	$	912	$	952	$	1,782	$	1,861

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

Reconciliation of Net (Loss) Income to Segment EBITDA:



	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Reconciliation:
Net (loss) income	$	(34	)	$	150		$	(76	)	$	106
Income tax (benefit) expense	(1		)	17			7			24
Interest expense, net	82			80			165			159
Depreciation and amortization	28			36			56			71
Accelerated depreciation	—			60			—			106
EBITDA	$	75		$	343		$	152		$	466
Items not included in Segment EBITDA:
Business realignment costs	$	10		$	42		$	17		$	45
Gain on dispositions	—			(240		)	—			(240		)
Realized and unrealized foreign currency gains	(1		)	(11		)	(2		)	(9		)
(Gain) loss on extinguishment of debt	—			(21		)	3			(44		)
Other	16			17			25			34
Total adjustments	25			(213		)	43			(214		)
Segment EBITDA	$	100		$	130		$	195		$	252

Segment EBITDA:
Epoxy, Phenolic and Coating Resins	$	46		$	83		$	98		$	166
Forest Products Resins	68			63			129			119
Corporate and Other	(14		)	(16		)	(32		)	(33		)
Total	$	100		$	130		$	195		$	252

Items Not Included in Segment EBITDA

Not included in Segment EBITDA are certain non-cash items and other income and expenses. For the three and six months ended June 30, 2017 and 2016, these items primarily include expenses from retention programs and certain professional fees related to strategic projects. Business realignment costs for the three and six months ended June 30, 2017 primarily include costs related to certain in-process facility rationalizations and cost reduction programs. Business realignment costs for the three and six months ended June 30, 2016 primarily include costs related to the planned facility rationalization within the Epoxy, Phenolic and Coating Resins segment and costs related to certain in-process cost reduction programs.