Segment and Geographic Information

The Company’s business segments are based on the products that the Company offers and the markets that it serves. In the fourth quarter of 2017, the Company added Corporate and Other as a reportable segment.

At December 31, 2017, the Company had three reportable segments: Epoxy, Phenolic and Coating Resins; Forest Products Resins; and Corporate and Other. A summary of the major products and items associated with the Company’s reportable segments are as 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


•	Forest Products Resins: forest products resins and formaldehyde applications


•	Corporate and Other: primarily corporate general and administrative expenses that are not allocated to the other segments, such as shared service and administrative functions, foreign exchange gains and losses and legacy company costs.

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.

Net Sales⁽¹⁾:



	Year Ended December 31,
	2017		2016		2015
Epoxy, Phenolic and Coating Resins	$	2,052	$	2,094	$	2,589
Forest Products Resins	1,539		1,344		1,551
Total	$	3,591	$	3,438	$	4,140

Segment EBITDA:



	Year Ended December 31,
	2017			2016			2015
Epoxy, Phenolic and Coating Resins ⁽²⁾	$	174		$	258		$	307
Forest Products Resins ⁽³⁾	257			240			233
Corporate and Other	(66		)	(65		)	(74		)
Total	$	365		$	433		$	466

Depreciation and Amortization Expense:



	Year Ended December 31,
	2017		2016		2015
Epoxy, Phenolic and Coating Resins	$	71	$	87	$	96
Forest Products Resins	40		40		35
Corporate and Other	4		4		6
Total	$	115	$	131	$	137

Total Assets:



	As of December 31,
	2017		2016
Epoxy, Phenolic and Coating Resins	$	1,100	$	1,002
Forest Products Resins	880		840
Corporate and Other	117		213
Total	$	2,097	$	2,055

Capital Expenditures⁽⁴⁾:



	Year Ended December 31,
	2017		2016		2015
Epoxy, Phenolic and Coating Resins	$	73	$	72	$	71
Forest Products Resins	40		67		106
Corporate and Other	5		2		2
Total	$	118	$	141	$	179


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


(2)	Included in the Epoxy, Phenolic and Coating Resins Segment EBITDA are “Earnings from unconsolidated entities, net of taxes” of $3, $11 and $17 for the years ended December 31, 2017, 2016 and 2015, respectively.


(3)	Included in the Forest Products Resins Segment EBITDA are “Earnings (losses) from unconsolidated entities, net of taxes” of $1, less than $(1) and less than $(1) for the years ended December 31, 2017, 2016 and 2015, respectively.


(4)	Includes capitalized interest costs that are incurred during the construction of property and equipment.

Reconciliation of Net Loss to Segment EBITDA:



	Year Ended December 31,
	2017			2016			2015
Net loss	$	(234	)	$	(38	)	$	(39	)
Income tax expense	18			38			34
Interest expense, net	329			310			326
Depreciation and amortization	115			131			137
Accelerated depreciation	14			129			2
EBITDA	$	242		$	570		$	460
Items not included in Segment EBITDA:
Asset impairments	$	13		$	—		$	6
Business realignment costs	52			55			16
Realized and unrealized foreign currency losses (gains)	3			(11		)	10
Gain on dispositions	—			(240		)	—
Loss (gain) on extinguishment of debt	3			(48		)	(41		)
Unrealized (gains) losses on pension and OPEB plan liabilities	(4		)	34			(13		)
Other	56			73			28
Total adjustments	123			(137		)	6
Segment EBITDA	$	365		$	433		$	466

Segment EBITDA:
Epoxy, Phenolic and Coating Resins	$	174		$	258		$	307
Forest Products Resins	257			240			233
Corporate and Other	(66		)	(65		)	(74		)
Total	$	365		$	433		$	466

Items Not Included in Segment EBITDA

Not included in Segment EBITDA are certain non-cash items and other income and expenses. For 2017 and 2016, these other items primarily included certain professional fees related to strategic projects and expenses from retention programs. For 2015, these other items primarily included expenses from retention programs, certain professional fees related to strategic projects and management fees, partially offset by gains on the disposal of assets and a gain on a step acquisition.

Business realignment costs for 2017 primarily included costs related to in-process cost reduction programs and certain in-process and recently completed facility rationalizations. Business realignment costs for 2016 primarily included costs related to the rationalization at our Norco, LA manufacturing facility and costs related to certain in-process cost reduction programs. Business realignment costs for 2015 primarily included costs related to certain in-process cost reduction programs.

Geographic Information

Net Sales⁽¹⁾:



	Year Ended December 31,
	2017		2016		2015
United States	$	1,513	$	1,389	$	1,663
Netherlands	595		583		698
Canada	344		302		344
China	270		296		331
Germany	198		180		205
Brazil	176		162		224
Other international	495		526		675
Total	$	3,591	$	3,438	$	4,140


(1)	Sales are attributed to the country in which the individual business locations reside.

Long-Lived Assets:



	As of December 31,
	2017		2016
United States	$	495	$	555
Netherlands	119		99
Germany	127		92
Brazil	76		80
Canada	68		58
Other international	195		182
Total	$	1,080	$	1,066