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, 2019, the Company had three reportable segments: Epoxy, Phenolic and Coating Resins; Forest Products Resins; and Corporate and Other. 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


•	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. Corporate and Other is 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 not allocated to continuing segments.

Net Sales ⁽¹⁾:

Following is revenue by reportable segment. Product sales within each reportable segment share economically similar risks. These risks include general economic and industrial conditions, competitive pricing pressures and the Company’s ability to pass on fluctuations in raw material prices to its customers. A substantial number of the Company’s raw material inputs are petroleum-based and their prices fluctuate with the price of oil. Due to differing regional industrial and economic conditions, the geographic distribution of revenue may impact the amount, timing and uncertainty of revenue and cash flows from contracts with customers.

Following is net sales by reportable segment disaggregated by geographic region:



	Three Months Ended June 30, 2019						Three Months Ended June 30, 2018
	Epoxy, Phenolic and Coating Resins		Forest Products Resins		Total		Epoxy, Phenolic and Coating Resins		Forest Products Resins		Total
North America	$	216	$	259	$	475	$	237	$	294	$	531
Europe	212		43		255		249		52		301
Asia Pacific	84		30		114		77		35		112
Latin America	—		48		48		1		50		51
Total	$	512	$	380	$	892	$	564	$	431	$	995

	Six Months Ended June 30, 2019						Six Months Ended June 30, 2018
	Epoxy, Phenolic and Coating Resins		Forest Products Resins		Total		Epoxy, Phenolic and Coating Resins		Forest Products Resins		Total
North America	$	425	$	519	$	944	$	470	$	562	$	1,032
Europe	431		90		521		494		106		600
Asia Pacific	147		63		210		138		66		204
Latin America	—		103		103		2		103		105
Total	$	1,003	$	775	$	1,778	$	1,104	$	837	$	1,941

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

Reconciliation of Net Loss to Segment EBITDA:



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Reconciliation:
Net loss attributable to Hexion Inc.	$	(108	)	$	(22	)	$	(160	)	$	(35	)
Net income attributable to noncontrolling interest	(1		)	(1		)	(1		)	(1		)
Net loss	(107		)	(21		)	(159		)	(34		)
Income tax expense	8			3			15			11
Interest expense, net	9			84			89			167
Depreciation and amortization	26			28			52			58
EBITDA	$	(64	)	$	94		$	(3	)	$	202
Items not included in Segment EBITDA:
Asset impairments	$	—		$	—		$	—		$	25
Business realignment costs	11			5			15			14
Gain on disposition	—			—			—			(44		)
Transaction costs	3			3			26			6
Realized and unrealized foreign currency (gains) losses	(7		)	15			(6		)	22
Reorganization costs	156			—			156			—
Other	13			11			27			21
Total adjustments	176			34			218			44
Segment EBITDA	$	112		$	128		$	215		$	246

Segment EBITDA:
Epoxy, Phenolic and Coating Resins	$	59		$	72		$	111		$	142
Forest Products Resins	66			76			134			143
Corporate and Other	(13		)	(20		)	(30		)	(39		)
Total	$	112		$	128		$	215		$	246

Items Not Included in Segment EBITDA

Not included in Segment EBITDA are certain non-cash items and other unusual or non-recurring income and expenses. Reorganization costs for the three and six months ended June 30, 2019 represent incremental costs incurred directly as a result of the Company’s Chapter 11 proceedings after the date of filing. See Note 4 for more information. For the six months ended June 30, 2019, transaction costs primarily included certain professional fees and other expenses related to the Company’s Chapter 11 proceedings incurred prior to the date of filing. For the three months ended June 30, 2019, transaction costs primarily included other expenses related to the Company’s Chapter 11 proceedings that do not meet the criteria for reorganization costs. For the three and six months ended June 30, 2018, transaction costs included certain professional fees related to strategic projects. Business realignment costs for the three and six months ended June 30, 2019 and 2018 primarily included costs related to certain in-process facility rationalizations and cost reduction programs. For the three and six months ended June 30, 2019 and 2018, items classified as “Other” primarily included expenses from retention programs, management fees and expense s related to legacy liabilities