Segment Information:

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. This structure aligns with the markets and customers we serve through each of the segments. The 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.

The “All Other” category comprises operating segments that did not fit into any of our core businesses. 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.” Following the sales of these businesses, the “All Other” category includes only the fine chemistry services business.

The Corporate category is not considered to be a segment and includes corporate-related items not allocated to the operating 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 June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
	(In thousands)
Net sales:
Lithium and Advanced Materials	$	317,859		$	233,353		$	602,234		$	449,526
Bromine Specialties	203,945			206,863			423,136			403,416
Refining Solutions	184,217			178,012			369,629			348,591
All Other	30,704			50,626			63,123			122,715
Corporate	533			473			1,199			2,290
Total net sales	$	737,258		$	669,327		$	1,459,321		$	1,326,538

Adjusted EBITDA:
Lithium and Advanced Materials	$	132,549		$	82,668		$	252,571		$	169,142
Bromine Specialties	62,075			66,562			130,563			128,170
Refining Solutions	50,078			61,586			99,657			116,660
All Other	2,444			876			7,600			9,340
Corporate	(28,205		)	(21,221		)	(60,074		)	(40,808		)
Total adjusted EBITDA	$	218,941		$	190,471		$	430,317		$	382,504

See below for a reconciliation of adjusted EBITDA, the non-GAAP financial measure, from 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 June 30, 2017
Net income (loss) attributable to Albemarle Corporation	$	95,350		$	51,739	$	40,463	$	187,552		$	152		$	(84,371	)	$	103,333
Depreciation and amortization	25,278			10,336		9,615		45,229			2,292			1,601			49,122
Utilization of inventory markup^(a)	11,921			—		—		11,921			—			—			11,921
Restructuring and other, net^(b)	—			—		—		—			—			4,235			4,235
Acquisition and integration related costs^(c)	—			—		—		—			—			6,479			6,479
Interest and financing expenses	—			—		—		—			—			14,590			14,590
Income tax expense	—			—		—		—			—			23,130			23,130
Non-operating pension and OPEB items	—			—		—		—			—			(1,053		)	(1,053		)
Multiemployer plan shortfall contributions^(d)	—			—		—		—			—			4,940			4,940
Other^(e)	—			—		—		—			—			2,244			2,244
Adjusted EBITDA	$	132,549		$	62,075	$	50,078	$	244,702		$	2,444		$	(28,205	)	$	218,941
Three months ended June 30, 2016
Net income (loss) attributable to Albemarle Corporation	$	56,880		$	56,747	$	52,472	$	166,099		$	(1,503	)	$	(479,417	)	$	(314,821	)
Depreciation and amortization	25,788			9,815		9,114		44,717			3,353			1,635			49,705
Gain on sales of businesses^(f)	—			—		—		—			(974		)	—			(974		)
Acquisition and integration related costs^(c)	—			—		—		—			—			19,030			19,030
Interest and financing expenses	—			—		—		—			—			15,800			15,800
Income tax expense	—			—		—		—			—			23,656			23,656
Loss from discontinued operations (net of tax)	—			—		—		—			—			398,340			398,340
Non-operating pension and OPEB items	—			—		—		—			—			(265		)	(265		)
Adjusted EBITDA	$	82,668		$	66,562	$	61,586	$	210,816		$	876		$	(21,221	)	$	190,471
Six months ended June 30, 2017
Net income (loss) attributable to Albemarle Corporation	$	189,456		$	110,433	$	80,937	$	380,826		$	3,398		$	(229,678	)	$	154,546
Depreciation and amortization	48,021			20,130		18,720		86,871			4,202			3,119			94,192
Utilization of inventory markup^(a)	22,527			—		—		22,527			—			—			22,527
Restructuring and other^(b)	—			—		—		—			—			17,141			17,141
Gain on acquisition^(g)	(7,433		)	—		—		(7,433		)	—			—			(7,433		)
Acquisition and integration related costs^(c)	—			—		—		—			—			20,760			20,760
Interest and financing expenses^(h)	—			—		—		—			—			83,103			83,103
Income tax expense	—			—		—		—			—			35,101			35,101
Non-operating pension and OPEB items	—			—		—		—			—			(2,116		)	(2,116		)
Multiemployer plan shortfall contributions^(d)	—			—		—		—			—			4,940			4,940
Other^(e)	—			—		—		—			—			7,556			7,556
Adjusted EBITDA	$	252,571		$	130,563	$	99,657	$	482,791		$	7,600		$	(60,074	)	$	430,317
Six months ended June 30, 2016
Net income (loss) attributable to Albemarle Corporation	$	120,207		$	108,600	$	98,786	$	327,593		$	129,206		$	(543,434	)	$	(86,635	)
Depreciation and amortization	48,935			19,570		17,874		86,379			3,965			2,970			93,314
(Gain) loss on sales of businesses, net^(f)	—			—		—		—			(123,831		)	1,533			(122,298		)
Acquisition and integration related costs^(c)	—			—		—		—			—			37,588			37,588
Interest and financing expenses	—			—		—		—			—			30,914			30,914
Income tax expense	—			—		—		—			—			49,141			49,141



Loss from discontinued operations (net of tax)	—		—		—		—		—		381,028			381,028
Non-operating pension and OPEB items	—		—		—		—		—		(548		)	(548		)
Adjusted EBITDA	$	169,142	$	128,170	$	116,660	$	413,972	$	9,340	$	(40,808	)	$	382,504

(a)

In connection with the acquisition of Jiangli New Materials, the Company valued inventory purchased from Jiangli New Materials at fair value, which resulted in a markup of the underlying net book value of the inventory totaling approximately $23.0 million. The inventory markup is being expensed over the estimated remaining selling period. For the three-month and six-month periods ended June 30, 2017, $11.9 million and $22.5 million, respectively, was included in Cost of goods sold related to the utilization of the inventory markup.

(b)

During 2017, we initiated action to reduce costs in each of our reportable segments at several locations, primarily at our Lithium sites in Germany. Based on the restructuring plans, we have recorded expenses of $4.2 million in Selling, general and administrative expenses for the three-month period ended June 30, 2017 and $2.9 million in Cost of goods sold, $8.4 million in Selling, general and administrative expenses and $5.8 million in Research and development expenses for the six-month period ended June 30, 2017, primarily related to expected severance payments. The unpaid balance is recorded in Accrued expenses at June 30, 2017, with the expectation that the majority of these plans will be completed by the end of 2017.


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


(d)	Included shortfall contributions for our multiemployer plan financial improvement plan. See Note 13, “Pension Plans and Other Postretirement Benefits,” for additional information.

(e)

Included amounts for the three-month and six-month periods ended June 30, 2017 recorded in (1) Selling, general and administrative expenses related to a reversal of an accrual recorded as part of purchase accounting from a previous acquisition of $1.0 million; and (2) Other expenses, net related to final settlement claims associated with the previous disposal of a business of $2.0 million and the revision of tax indemnification expenses of $1.2 million primarily related to a competent authority agreement for a previously disposed business. Also included in Other expenses, net for the six-month period ended June 30, 2017 are $3.2 million of asset retirement obligation charges related to the revision of an estimate at a site formerly owned by Albemarle and a loss of $2.1 million associated with the previous disposal of a business.


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


(g)	Gain recorded in Other expenses, net related to the acquisition of the remaining 50% interest in Salmag. See Note 2, “Acquisitions,” for additional information.


(h)	Included in Interest and financing expenses is a loss on early extinguishment of debt of $52.8 million. See Note 10, “Long-term Debt,” for additional information.