Segment Reporting

12 Months Ended

Dec. 31, 2018

17. Segment Reporting

The Company has three reportable segments: Surfactants, Polymers and Specialty Products. Each segment provides distinct products and requires separate management due to unique markets, technologies and production processes. Surfactants are used in a variety of consumer and industrial cleaning compounds as well as in agricultural products, lubricating ingredients, oil field chemicals and other specialized applications. Polymers are used primarily in plastics, building materials, refrigeration systems and CASE applications. Specialty Products are used in food, flavoring, nutritional supplement and pharmaceutical applications.

The Company evaluates the performance of its segments and allocates resources based on operating income before interest expense, other income/expense items and income tax provision. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies.

The following is segment data for the three years ended December 31, 2018, 2017 and 2016:

(In thousands)	Surfactants		Polymers		Specialty Products		Segment Totals
2018
Net sales	$	1,385,932	$	527,420	$	80,505	$	1,993,857
Operating income		137,506		64,539		11,661		213,706
Assets		850,553		351,690		82,957		1,285,200
Capital expenditures		51,543		26,663		6,192		84,398
Depreciation and amortization expenses		50,514		23,253		5,150		78,917

2017
Net sales	$	1,297,555	$	546,634	$	80,818	$	1,925,007
Operating income ^(a)		120,861		82,951		9,965		213,777
Assets		881,415		355,065		75,452		1,311,932
Capital expenditures		50,400		21,146		4,234		75,780
Depreciation and amortization expenses		49,102		22,998		5,019		77,119

2016
Net sales	$	1,181,563	$	498,826	$	85,777	$	1,766,166
Operating income ^(a)		101,092		97,102		10,725		208,919
Assets		831,324		301,890		75,483		1,208,697
Capital expenditures		64,121		31,890		4,194		100,205
Depreciation and amortization expenses		48,643		20,275		4,204		73,122

(a)

The 2017 and 2016 amounts for the noted line items have been immaterially changed from the amounts originally reported as a result of the Company’s first quarter 2018 adoption of ASU No. 2017-7, Compensation –Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.

Below are reconciliations of segment data to the consolidated financial statements:

(In thousands)	2018			2017			2016
Operating income - segment totals ^(a)	$	213,706		$	213,777		$	208,919
Business restructuring and asset impairments ^(b)		(2,588	)		(3,069	)		(7,064	)
Unallocated corporate expenses ^(c)		(59,699	)		(63,513	)		(74,025	)
Total operating income		151,419			147,195			127,830
Interest expense, net		(10,771	)		(11,444	)		(13,205	)
Other, net ^(a)		(725	)		3,486			(809	)
Consolidated income before income taxes	$	139,923		$	139,237		$	113,816

Assets - segment totals	$	1,285,200		$	1,311,932		$	1,208,697
Unallocated corporate assets ^(d)		199,466			158,929			145,193
Consolidated assets	$	1,484,666		$	1,470,861		$	1,353,890

Capital expenditures - segment totals	$	84,398		$	75,780		$	100,205
Unallocated corporate expenditures		2,249			2,833			2,871
Consolidated capital expenditures	$	86,647		$	78,613		$	103,076

Depreciation and amortization expenses – segment totals	$	78,917		$	77,119		$	73,122
Unallocated corporate depreciation expenses		2,198			1,903			1,845
Consolidated depreciation and amortization expenses	$	81,115		$	79,022		$	74,967

(a)

(b)

See Note 22 regarding business restructuring and asset impairment costs.

(c)

Unallocated corporate expenses primarily comprise corporate administrative expenses (e.g., corporate finance, legal, human resources, information systems, deferred compensation and environmental remediation) that are not included in segment operating income and not used to evaluate segment performance.

(d)

The changes in unallocated corporate assets between 2018, 2017 and 2016 were primarily attributable to changes in the balance of U.S. cash and cash equivalents, which are not allocated to segments.

Below is certain Company-wide geographic data for the years ended December 31, 2018, 2017 and 2016:

(In thousands)	2018		2017		2016
Net sales ^(a)
United States	$	1,193,938	$	1,159,578	$	1,076,259
France		171,010		176,052		151,031
Poland		170,474		188,244		153,986
United Kingdom		105,732		99,069		86,458
Brazil		100,328		109,960		74,961
All other countries		252,375		192,104		223,471
Total	$	1,993,857	$	1,925,007	$	1,766,166

Long-lived assets ^(b)
United States	$	427,274	$	420,342	$	411,023
Germany		29,151		29,116		27,475
Singapore		30,838		33,530		36,270
Brazil		48,427		55,974		58,106
China		29,030		30,849		29,508
United Kingdom		20,225		21,657		20,309
All other countries		61,145		50,631		47,670
Total	$	646,090	$	642,099	$	630,361

(a)

Net sales are attributed to countries based on the location of the Company facility making the sales.

(b)

Includes net property, plant and equipment, goodwill and other intangible assets.