Segment Information:

Effective January 1, 2016, our former Performance Chemicals reportable segment was split into two reportable segments: (1) Lithium and Advanced Materials and (2) Bromine Specialties. In addition, on June 17, 2016, the Company signed a definitive agreement to sell its Chemetall Surface Treatment business to BASF SE. This business, a separate reportable segment, is classified as discontinued operations and its results are excluded from segment results for all periods presented. As a result, our three reportable segments include Lithium and Advanced Materials, Bromine Specialties and Refining Solutions. Each segment has a dedicated team of sales, research and development, process engineering, manufacturing and sourcing, and business strategy personnel and has full accountability for improving execution through greater asset and market focus, agility and responsiveness. The new business structure aligns with the markets and customers we serve through each of the segments. The new structure also facilitates the continued standardization of business processes across the organization, and is consistent with the manner in which information is presently used internally by the Company’s chief operating decision maker to evaluate performance and make resource allocation decisions.

Summarized financial information concerning our reportable segments is shown in the following tables. Results for 2015 have been recast to reflect the change in segments noted above.

The “All Other” category comprises three operating segments that do not fit into any of our core businesses subsequent to the acquisition of Rockwood: minerals-based flame retardants and specialty chemicals, fine chemistry services and metal sulfides. During the first quarter of 2016, we completed the sales of the metal sulfides business and the minerals-based flame retardants and specialty chemicals businesses. For additional information about these businesses, see Note 3, “Divestitures.”

The Corporate category is not considered to be a segment and includes corporate-related items not allocated to the reportable segments. Pension and OPEB service cost (which represents the benefits earned by active employees during the period) and amortization of prior service cost or benefit are allocated to the reportable segments, All Other, and Corporate, whereas the remaining components of pension and OPEB benefits cost or credit (“Non-operating pension and OPEB items”) are included in Corporate. Segment data includes intersegment transfers of raw materials at cost and allocations for certain corporate costs.

The Company’s chief operating decision maker uses earnings before interest, taxes, depreciation and amortization, as adjusted on a consistent basis for certain non-recurring or unusual items such as acquisition and integration related costs, utilization of inventory markup, gains or losses on sales of businesses, restructuring charges, facility divestiture charges, non-operating pension and OPEB items and other significant non-recurring items (“adjusted EBITDA”), in a balanced manner and on a segment basis to assess the ongoing performance of the Company’s business segments and to allocate resources. In addition, management uses adjusted EBITDA for business planning purposes and as a significant component in the calculation of performance-based compensation for management and other employees. The Company has reported adjusted EBITDA because management believes it provides transparency to investors and enables period-to-period comparability of financial performance. Adjusted EBITDA is a financial measure that is not required by, or presented in accordance with, U.S. GAAP. Adjusted EBITDA should not be considered as an alternative to Net income (loss) attributable to Albemarle Corporation, the most directly comparable financial measure calculated and reported in accordance with U.S. GAAP, or any other financial measure reported in accordance with U.S. GAAP.



	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
	(In thousands)
Net sales:
Lithium and Advanced Materials	$	240,424		$	208,820		$	689,950		$	620,597
Bromine Specialties	194,496			190,716			597,912			604,267
Refining Solutions	190,453			185,102			539,044			528,841
All Other	28,272			102,224			150,987			337,997
Corporate	365			6,354			2,655			12,117
Total net sales	$	654,010		$	693,216		$	1,980,548		$	2,103,819

Adjusted EBITDA:
Lithium and Advanced Materials	$	91,719		$	77,408		$	260,861		$	234,988
Bromine Specialties	51,807			58,801			179,977			180,431
Refining Solutions	64,960			54,517			181,620			144,910
All Other	5,470			6,262			14,810			29,540
Corporate	(25,627		)	(16,307		)	(66,435		)	(8,350		)
Total adjusted EBITDA	$	188,329		$	180,681		$	570,833		$	581,519

See below for a reconciliation of adjusted EBITDA, the non-GAAP financial measure, to Net income (loss) attributable to Albemarle Corporation, the most directly comparable financial measure calculated and reported in accordance with U.S. GAAP, (in thousands):



	Lithium and Advanced Materials		Bromine Specialties		Refining Solutions		Reportable Segments Total		All Other			Corporate			Consolidated Total
Three months ended September 30, 2016
Net income (loss) attributable to Albemarle Corporation	$	66,166	$	41,621	$	55,981	$	163,768	$	3,806		$	(39,354	)	$	128,220
Depreciation and amortization	25,553		10,186		8,979		44,718		1,664			1,592			47,974
Acquisition and integration related costs^(a)	—		—		—		—		—			6,749			6,749
Interest and financing expenses	—		—		—		—		—			15,946			15,946
Income tax expense	—		—		—		—		—			12,394			12,394
Income from discontinued operations (net of tax)	—		—		—		—		—			(23,185		)	(23,185		)
Non-operating pension and OPEB items	—		—		—		—		—			(231		)	(231		)
Other^(b)	—		—		—		—		—			462			462
Adjusted EBITDA	$	91,719	$	51,807	$	64,960	$	208,486	$	5,470		$	(25,627	)	$	188,329
Three months ended September 30, 2015
Net income (loss) attributable to Albemarle Corporation	$	38,498	$	49,395	$	45,713	$	133,606	$	617		$	(68,831	)	$	65,392
Depreciation and amortization	22,076		9,406		8,804		40,286		5,645			2,712			48,643
Utilization of inventory markup^(c)	16,834		—		—		16,834		—			—			16,834
Restructuring and other, net^(d)	—		—		—		—		—			(6,804		)	(6,804		)
Acquisition and integration related costs^(a)	—		—		—		—		—			36,514			36,514
Interest and financing expenses	—		—		—		—		—			19,294			19,294
Income tax expense	—		—		—		—		—			13,144			13,144
Income from discontinued operations (net of tax)	—		—		—		—		—			(11,030		)	(11,030		)
Non-operating pension and OPEB items	—		—		—		—		—			(1,306		)	(1,306		)
Adjusted EBITDA	$	77,408	$	58,801	$	54,517	$	190,726	$	6,262		$	(16,307	)	$	180,681
Nine months ended September 30, 2016
Net income (loss) attributable to Albemarle Corporation	$	186,373	$	150,221	$	154,767	$	491,361	$	133,012		$	(582,788	)	$	41,585
Depreciation and amortization	74,488		29,756		26,853		131,097		5,629			4,562			141,288
(Gain) loss on sales of businesses, net^(e)	—		—		—		—		(123,831		)	1,533			(122,298		)
Acquisition and integration related costs^(a)	—		—		—		—		—			44,337			44,337
Interest and financing expenses	—		—		—		—		—			46,860			46,860
Income tax expense	—		—		—		—		—			61,535			61,535
Loss from discontinued operations (net of tax)	—		—		—		—		—			357,843			357,843
Non-operating pension and OPEB items	—		—		—		—		—			(779		)	(779		)
Other^(b)	—		—		—		—		—			462			462
Adjusted EBITDA	$	260,861	$	179,977	$	181,620	$	622,458	$	14,810		$	(66,435	)	$	570,833
Nine months ended September 30, 2015
Net income (loss) attributable to Albemarle Corporation	$	88,219	$	154,353	$	119,513	$	362,085	$	9,644		$	(211,075	)	$	160,654
Depreciation and amortization	67,530		26,078		25,397		119,005		16,867			6,933			142,805
Utilization of inventory markup^(c)	79,239		—		—		79,239		3,029			—			82,268
Restructuring and other, net^(d)	—		—		—		—		—			(6,804		)	(6,804		)
Acquisition and integration related costs^(a)	—		—		—		—		—			117,171			117,171
Interest and financing expenses	—		—		—		—		—			62,193			62,193
Income tax expense	—		—		—		—		—			41,780			41,780
Income from discontinued operations (net of tax)	—		—		—		—		—			(19,074		)	(19,074		)
Non-operating pension and OPEB items	—		—		—		—		—			(3,915		)	(3,915		)
Other^(f)	—		—		—		—		—			4,441			4,441
Adjusted EBITDA	$	234,988	$	180,431	$	144,910	$	560,329	$	29,540		$	(8,350	)	$	581,519


(a)	See Note 2, “Acquisitions,” for additional information.


(b)	Includes the write-off of fixed assets of $1.4 million included in Research and development expenses, partially offset by a net gain of $0.9 million on the sales of properties included in Other income, net.

(c)

In connection with the acquisition of Rockwood, the Company valued Rockwood’s existing inventory at fair value as of the Acquisition Closing Date, which resulted in a markup of the underlying net book value of the inventory totaling approximately $103.4 million. The inventory markup was expensed over the estimated remaining selling period. For the three-month and nine-month periods ended September 30, 2015, $7.7 million and $55.4 million, respectively, was included in Cost of goods sold, and Equity in net income of unconsolidated investments was reduced by $9.1 million and $26.9 million, respectively, related to the utilization of the inventory markup.


(d)	Gain recognized upon the sale of land in Avonmouth, UK, which was utilized by the phosphorus flame retardants business we exited in 2012.


(e)	See Note 3, “Divestitures,” for additional information.


(f)	Financing-related fees expensed in connection with the acquisition of Rockwood.