Form 10-K/A

0000950123-11-031583.txt : 20110331 0000950123-11-031583.hdr.sgml : 20110331 20110331170120 ACCESSION NUMBER: 0000950123-11-031583 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20101231 FILED AS OF DATE: 20110331 DATE AS OF CHANGE: 20110331 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHICAGO BRIDGE & IRON CO N V CENTRAL INDEX KEY: 0001027884 STANDARD INDUSTRIAL CLASSIFICATION: CONSTRUCTION SPECIAL TRADE CONTRACTORS [1700] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-12815 FILM NUMBER: 11727198 BUSINESS ADDRESS: STREET 1: P O BOX 74658 CITY: 1075 AD AMSTERDAM STATE: P8 ZIP: 00000 MAIL ADDRESS: STREET 1: POLARISAVENUE 31 STREET 2: 2132 JH HOOFDORP CITY: THE NETHERLANDS 10-K/A 1 c14923e10vkza.htm FORM 10-K/A Form 10-K/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

Amendment No. 1


þ		Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2010


o		Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number 1-12815

CHICAGO BRIDGE & IRON COMPANY N.V.


Incorporated in The Netherlands		IRS Identification Number: not applicable

Oostduinlaan 75
2596 JJ The Hague
The Netherlands
31-70-3732010

(Address and telephone number of principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class:		Name of each exchange on which registered:
Common Stock; Euro .01 par value		New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: none

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES þ NO o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES o NO þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES þ NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.) YES þ NO o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act) YES o NO þ

Aggregate market value of common stock held by non-affiliates, based on a New York Stock Exchange closing price of $18.81 as of June 30, 2010 was $1,860,865,306.

The number of shares outstanding of the registrant’s common stock as of February 1, 2011 was 99,435,863.

DOCUMENTS INCORPORATED BY REFERENCE


Portions of the 2011 Proxy Statement		Part III

TABLE OF CONTENTS


PART IV
	Item 15. Exhibits and Financial Statement Schedules
SIGNATURE
EXHIBIT INDEX
Exhibit 23.1
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2
Exhibit 99.1

Explanatory Note — Amendment

Chicago Bridge & Iron Company N.V. and Subsidiaries (“CB&I” or “the Company”) is filing this Form 10-K/A solely to include in its Annual Report on Form 10-K for the year ended December 31, 2010 (the “Annual Report”), pursuant to Rule 3-09 of Regulation S-X, consolidated financial statements and accompanying notes of Chevron-Lummus Global LLC. CB&I owns a 50% interest in Chevron-Lummus Global LLC.

Rule 3-09 of Regulation S-X provides that if a 50% or less owned person accounted for by the equity method meets the first or third condition of the significant subsidiary tests set forth in Rule 1-02(w) of Regulation S-X, substituting 20% for 10%, separate financial statements for such 50% or less owned person shall be filed. As Chevron-Lummus Global LLC met such test as of and for the year ended December 31, 2008, CB&I has included in this Form 10-K/A the unaudited financial statements as of and for the years ended December 31, 2010 and 2009 and audited financial statements as of and for the year ended December 31, 2008. Item 15 is the only portion of the Annual Report being supplemented or amended by this Form 10-K/A.

This Form 10-K/A does not change any other information set forth in the original Form 10-K filed by CB&I for the year ended December 31, 2010.

In connection with the filing of this Form 10-K/A and pursuant to Securities and Exchange Commission rules, CB&I is including currently dated certifications required by Rules 13a-14(a) and 13a-14(b). This Form 10-K/A does not otherwise update any exhibits as originally filed and does not otherwise reflect events occurring after the original filing date of the Annual Report. Accordingly, this Form 10-K/A should be read in conjunction with any CB&I filings with the SEC subsequent to the filing of the Annual Report.

PART IV


Item 15.		*Exhibits and Financial Statement Schedules*

Item 15 of the Annual Report on Form 10-K for the fiscal year ended December 31, 2010, filed on February 22, 2011, is amended by the addition of the following exhibits:

Exhibits


Exhibit No.			Description of Exhibit

	23.1	⁽¹⁾	Consent and Report of the Independent Registered Public Accounting Firm of Chevron-Lummus Global LLC (included in Exhibit 99.1)

	31.1	⁽¹⁾	Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

	31.2	⁽¹⁾	Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

	32.1	⁽¹⁾	Certification pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

	32.2	⁽¹⁾	Certification pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

	99.1	⁽¹⁾	Consolidated financial statements and accompanying notes of Chevron-Lummus Global LLC


⁽¹⁾		Filed herewith

- 2 -

SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	Chicago Bridge & Iron Company N.V.
Date: March 31, 2011	/s/ Philip K. Asherman
	Philip K. Asherman
	(Authorized Signer)

- 3 -

EXHIBIT INDEX


Exhibit No.			Description of Exhibit

23.1 ⁽¹⁾			Consent and Report of the Independent Registered Public Accounting Firm of Chevron-Lummus Global LLC (included in Exhibit 99.1)

31.1 ⁽¹⁾			Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2 ⁽¹⁾			Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1 ⁽¹⁾			Certification pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2 ⁽¹⁾			Certification pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

99.1 ⁽¹⁾			Consolidated financial statements and accompanying notes of Chevron-Lummus Global LLC


⁽¹⁾		Filed herewith

- 4 -

EX-23.1 2 c14923exv23w1.htm EXHIBIT 23.1 Exhibit 23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the following Registration Statements:

(1)

Registration Statement (Form S-8 No. 333-64442) pertaining to the Employee Stock Purchase Plan of Chicago Bridge & Iron Company N.V.,

(2)

Registration Statement (Form S-8 No. 333-156004) pertaining to the 2008 Long-Term Incentive Plan of Chicago Bridge & Iron Company N.V.,

(3)

Registration Statement (Form S-8 No. 333-87081) pertaining to the 1999 Long-Term Incentive Plan of Chicago Bridge & Iron Company N.V.,

(4)

Registration Statement (Form S-8 No. 333-39975) pertaining to the Employees Stock Purchase Plan (1997) of Chicago Bridge & Iron Company N.V.,

(5)

Registration Statement (Form S-8 No. 333-24443) pertaining to the Management Defined Contribution Stock Incentive Plan of Chicago Bridge & Iron Company N.V.,

(6)

Registration Statement (Form S-8 No. 333-24445) pertaining to the Long-Term Incentive Plan of Chicago Bridge & Iron Company N.V.,

(7)

Registration Statement (Form S-8 No. 333-33199) pertaining to the Savings Plan of Chicago Bridge & Iron Company N.V.,

(8)

Registration Statement (Form S-8 No. 333-159182) pertaining to the 2009 Amendment to the 2008 Long-Term Incentive Plan of Chicago Bridge & Iron Company N.V.,

(9)

Registration Statement (Form S-8 No. 333-159183) pertaining to the 2009 Amendment to the Employee Stock Purchase Plan of Chicago Bridge & Iron Company N.V.,

(10)

Registration Statement (Form S-3 No. 333-160852) pertaining to the Common Stock and Warrants of Chicago Bridge & Iron Company N.V.,

of our report dated March 30, 2009, with respect to the statements of income, members’ equity and cash flows of Chevron Lummus Global LLC for the year ended December 31, 2008 included in this Annual Report (Form 10-K/A) of Chicago Bridge & Iron Company N.V. for the year ended December 31, 2010.

/s/ Ernst & Young LLP
New York, New York
March 31, 2011

EX-31.1 3 c14923exv31w1.htm EXHIBIT 31.1 Exhibit 31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO
RULE 13A-14 OF THE SECURITIES EXCHANGE ACT OF 1934
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Philip K. Asherman, certify that:

I have reviewed this annual report on Form 10-K/A of Chicago Bridge & Iron Company N.V.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected or is reasonably likely to materially affect the registrant’s internal control over financial reporting; and

The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


	/s/ Philip K. Asherman
	Philip K. Asherman
	Principal Executive Officer

Date: March 31, 2011

EX-31.2 4 c14923exv31w2.htm EXHIBIT 31.2 Exhibit 31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO
RULE 13A-14 OF THE SECURITIES EXCHANGE ACT OF 1934
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Ronald A. Ballschmiede, certify that:

I have reviewed this annual report on Form 10-K/A of Chicago Bridge & Iron Company N.V.;

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


	/s/ Ronald A. Ballschmiede
	Ronald A. Ballschmiede
	Principal Financial Officer

Date: March 31, 2011

EX-32.1 5 c14923exv32w1.htm EXHIBIT 32.1 Exhibit 32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this Annual Report of Chicago Bridge & Iron Company N.V. (the “Company”) on Form 10-K/A for the period ending December 31, 2010 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Philip K. Asherman, Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


/s/ Philip K. Asherman Philip K. Asherman
Principal Executive Officer
March 31, 2011

EX-32.2 6 c14923exv32w2.htm EXHIBIT 32.2 Exhibit 32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this Annual Report of Chicago Bridge & Iron Company N.V. (the “Company”) on Form 10-K/A for the period ending December 31, 2010 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ronald A. Ballschmiede, Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


/s/ Ronald A. Ballschmiede Ronald A. Ballschmiede
Principal Financial Officer
March 31, 2011

EX-99.1 7 c14923exv99w1.htm EXHIBIT 99.1 Exhibit 99.1

Exhibit 99.1

Chevron Lummus Global, LLC
(A Delaware Limited Liability Company)

Financial Statements
Year ended December 31, 2010 Unaudited,
December 31, 2009 Unaudited
December 31, 2008 Audited

Chevron Lummus Global, LLC

Year ended December 31, 2010 (Unaudited), 2009 (Unaudited) and 2008 (Audited)

Contents


Report of Independent Auditors			1

Financial Statements

Statements of Income			2
Balance Sheets			3
Statements of Cash Flows			4
Statements of Members’ Equity			5
Notes to Financial Statements			6

Report of Independent Auditors

The Members
Chevron Lummus Global LLC

We have audited the accompanying statements of income, members’ equity, and cash flows of Chevron Lummus Global LLC (the “Company”) for the year ended December 31, 2008. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the statements of income, members’ equity, and cash flows based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the statements of income, members’ equity, and cash flows referred to above present fairly, in all material respects, the results of operations of Chevron Lummus Global LLC for the year ended December 31, 2008, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

New York, New York
March 30, 2009

Chevron Lummus Global, LLC
Statements of Income


	Years Ended December 31,
	2010			2009			2008
	(Unaudited)			(Unaudited)			(Audited)
	(In thousands)

Net revenue:
Catalyst	$	74,072		$	118,777		$	98,205
Engineering and licensing		46,635			66,161			92,333

Total net revenue		120,707			184,938			190,538
Cost of revenue		(70,190	)		(109,790	)		(102,815	)


Gross profit		50,517			75,148			87,723

Selling and administrative expenses		(28,811	)		(29,598	)		(28,509	)


Income from operations		21,706			45,550			59,214

Interest and other (expense) income		(69	)		181			438


Net income	$	21,637		$	45,731		$	59,652

See Accompanying Notes to Financial Statements.

Chevron Lummus Global, LLC
Balance Sheets


	December 31,
	2010		2009
	(Unaudited)		(Unaudited)
	(In thousands)

ASSETS
Cash and cash equivalents	$	7,185	$	9,716
Accounts receivable		42,809		11,965

Cost and estimated earnings in excess of billings		37,290		56,754
Inventories, net		46,628		31,959
Other current assets		290		139


Total assets	$	134,202	$	110,533


LIABILITIES AND MEMBERS’ EQUITY
Accounts payable
Trade	$	7,938	$	5,389
Members		10,786		5,361

Billings in excess of costs and estimated earnings		4,435		6,195
Accrued costs		7,381		6,370
Warranty provisions — current		581		619

Total current liabilities		31,121		23,934

Warranty provisions — long term		2,323		2,478

Total liabilities		33,444		26,412

Members’ equity		100,758		84,121


Total liabilities and members’ equity	$	134,202	$	110,533

See Accompanying Notes to Financial Statements.

Chevron Lummus Global, LLC
Statements of Cash Flows


	Years Ended December 31,
	2010			2009			2008
	(Unaudited)			(Unaudited)			(Audited)
	(In thousands)

Cash flows from operating activities:
Net income	$	21,637		$	45,731		$	59,652
Adjustments to reconcile net income to net cash provided by operating activities
Changes in operating assets and liabilities
(Increase) decrease in accounts receivable		(30,844	)		21,743			20,482
Decrease (increase) in costs and estimated earnings in excess of billings		19,464			(13,174	)		(3,758	)
(Increase) decrease in other current assets		(151	)		4,907			(3,665	)
(Increase) decrease in inventories		(14,669	)		19,660			(21,510	)
Increase (decrease) in accounts payable		7,974			(9,472	)		(11,916	)
Decrease in billings in excess of costs and estimated earnings		(1,760	)		(8,782	)		(8,148	)

(Decrease) increase in warranty provisions		(193	)		(2,619	)		595
Increase (decrease) in accrued costs		1,011			(14,433	)		7,133


Net cash provided by operating activities	$	2,469		$	43,561		$	38,865


Cash flows from financing activities:

Distributions to members		(5,000	)		(48,000	)		(48,000	)

Net cash used in financing activities		(5,000	)		(48,000	)		(48,000	)


Decrease in cash and cash equivalents		(2,531	)		(4,439	)		(9,135	)
Cash and cash equivalents, beginning of year		9,716			14,155			23,290

Cash and cash equivalents, end of year	$	7,185		$	9,716		$	14,155

See Accompanying Notes to Financial Statements.

Chevron Lummus Global, LLC
Statements of Members’ Equity
(In thousands)

Years Ended December 31, 2010 (Unaudited), 2009 (Unaudited) and 2008 (Audited)


	Chevron			Lummus
	Share			Share			Total
Members’ equity at December 31, 2007	$	37,369		$	37,369		$	74,738
Net income		29,826			29,826			59,652
Distributions to members		(24,000	)		(24,000	)		(48,000	)

Members’ equity at December 31, 2008	$	43,195		$	43,195		$	86,390
Net income		22,866			22,865			45,731
Distribution to members		(24,000	)		(24,000	)		(48,000	)

Members’ equity at December 31, 2009	$	42,061		$	42,060		$	84,121
Net income		10,818			10,819			21,637
Distribution to members		(2,500	)		(2,500	)		(5,000	)

Members’ equity at December 31, 2010	$	50,379		$	50,379		$	100,758

See Accompanying Notes to Financial Statements.

Chevron Lummus Global, LLC
Notes to Financial Statements
(In Thousands)

All 2010 and 2009 Amounts Included in Notes to Financial Statements are Unaudited.

1. DESCRIPTION OF THE BUSINESS

The accompanying financial statements present the results of operations, financial position, and cash flows of Chevron Lummus Global, LLC, (the “Company”), a limited liability Delaware company. The Company was formed on January 1, 2000 and is owned by Lummus Catalyst Company Ltd (“Lummus”), an indirect wholly-owned subsidiary of Chicago Bridge & Iron Company (“CB&I”) and Chevron USA Inc. (“Chevron”), an indirect wholly-owned subsidiary of Chevron Corporation, with each having a 50% ownership interest in the Company. Lummus and Chevron are hereby referred to collectively as “members” of the Company.

The Company provides engineering and technical services, licenses proprietary technology and supplies catalyst to industrial and commercial customers, primarily in the oil, gas and petrochemical industries. The Company’s services primarily relate to solutions for converting/upgrading heavy and residual components in heavy/sour crude oil (“bottom of the barrel”), that are produced during the refining process, into more useable products. Proprietary technology consists principally of hydroprocessing technologies, including hydrocracking and hydrotreating processes that are used by refineries to process petroleum-based products. Technologies include, among others, ISOCRACKING ^®, ISOTREATING ^®, ISODEWAXING ^®, RDS ^® and LC-FINING ^TM.

The Company is subject to risks and uncertainties common to companies providing similar products and services to the oil, gas and petrochemical industries, including, but not limited to, development by its competitors of new technological innovations, protection of proprietary technology, dependence on key personnel, loss of customers or changes in capital spending by customers, and compliance with domestic and foreign regulatory authorities and agencies. The Company’s services, licensing, and supply of catalyst, are performed under fixed-price and cost-plus-fee contracts. The Company generates revenue from customers located throughout the world.

The operations of the Company are dependent upon the operational support provided by the members, as the Company has no employees. Lummus and Chevron assign employees to perform the work of the Company and the fully burdened cost of the employees is charged to the Company. As a result, these financial statements may not be indicative of those of a stand-alone entity. See Note 6 for further discussion of support activities provided by the members.

2. SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates - The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses in the financial statements and related notes. Significant estimates for which changes in the near term are considered reasonably possible and that may have a material impact on the financial statements are addressed in these notes to the financial statements. If the underlying estimates and assumptions upon which the financial statements are based change in the future, actual amounts may differ from those included in the accompanying financial statements.

Revenue Recognition - Our contracts are awarded on a competitive bid and negotiated basis. For catalyst, the Company generally recognizes revenue when delivery has occurred, the fee is determined and collection is probable. For engineering and licensing, the Company follows the guidance in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Revenue Recognition Topic 605-35 for accounting policies relating to use of the percentage-of-completion (“POC”) method, estimating costs and revenue recognition, including the recognition of profit incentives, unapproved change orders and claims, and combining and segmenting contracts. Our engineering and licensing contract revenue is primarily recognized using the POC method, based on the percentage that actual costs-to-date bear to total estimated costs to complete each contract. Contract costs include all direct material and labor costs and those indirect costs related to contract performance, including estimates for performance risks and warranties. We utilize the cost-to-cost approach, the most widely recognized method used for POC accounting, as we believe this method is less subjective than relying on assessments of physical progress. Under the cost-to-cost approach, the use of estimated cost to complete each contract is a significant variable in the process of determining recognized revenue and is a significant factor in the accounting for contracts. The cumulative impact of revisions in total cost estimates during the progress of work is reflected in the period in which these changes become known, including, to the extent required, the reversal of profit recognized in prior periods. Due to the various estimates inherent in our contract accounting, actual results could differ from those estimates.

Chevron Lummus Global, LLC
Notes to Financial Statements
(In Thousands)

All 2010 and 2009 Amounts Included in Notes to Financial Statements are Unaudited.

Contract revenue reflects the original contract price adjusted for approved change orders and estimated minimum recoveries of unapproved change orders and claims. We recognize revenue associated with unapproved change orders and claims to the extent that related costs have been incurred, recovery is probable and the value can be reliably estimated. For 2010, 2009 and 2008, we had no material unapproved change orders or claims recognized in revenue.

Cumulative costs and estimated earnings recognized to date in excess of cumulative billings is reported on the balance sheets as costs and estimated earnings in excess of billings. Cumulative billings in excess of cumulative costs and estimated earnings recognized to date is reported as billings in excess of costs and estimated earnings. Any billed revenue that has not been collected is reported as accounts receivable. The timing of when we bill our customers is generally dependent upon advance billing terms or completion of certain phases of the work. At December 31, 2010 and 2009, $22,954 and $31,590 of costs and estimated earnings in excess of billings is estimated to be long term in nature.

Selling & Administrative Costs - Selling (including bid costs) and administrative costs (“S&A”), which include research and development (“R&D”) costs, are charged to expense when incurred.

Shipping and Handling Fees and Costs - Shipping and handling fees charged to customers by the Company are recognized in revenue. Shipping and handling costs, which consist principally of out-bound freight, are included in cost of revenue and amounted to $883 for 2010, $1,729 for 2009 and $574 for 2008.

Warranties - The Company typically provides customers with a performance warranty from the date of contract completion to a specified certain date. Provisions for warranty costs are recorded based on historical experience and are managed on a total company basis.

Cash Equivalents - Cash equivalents include highly liquid securities with original maturities of three months or less and are held on deposit and managed by Chevron. There are no restrictions with respect to the usage or withdrawal of cash.

Concentration of Credit Risk - The Company sells a broad range of services to oil, gas and petrochemical customers throughout the world. The risk of uncollectible trade receivables is considered low, as the Company’s customer base primarily consists of major global oil, gas and petrochemical companies. Ongoing credit evaluations of customers’ financial positions are performed and, generally, no collateral is required. The Company maintains adequate reserves for potential losses and such losses have been minimal and approximate management’s estimates. During 2010, the Company had four customers for which revenue with each customer approximated between 10% and 14% of the Company’s total revenue. For 2009 and 2008 one customer accounted for 15% and 16%, respectively, of total revenue. No other customer exceeded 10% of total revenue for 2010, 2009 or 2008.

Chevron Lummus Global, LLC
Notes to Financial Statements
(In Thousands)

All 2010 and 2009 Amounts Included in Notes to Financial Statements are Unaudited.

Subsequent Events - We evaluated all events and transactions that occurred between December 31, 2010 and March 31, 2011, the date these financial statements were issued.

3. ACCOUNTS RECEIVABLE

Trade receivables are non-interest bearing and are generally with major global oil, gas and petrochemical companies. The Company routinely evaluates its portfolio of third party trade receivables for risk of non-collection and records the carrying value of its trade receivables at estimated net realizable value. At December 31, 2010 and 2009, receivables with affiliated companies were valued at $5,722 and $1,885, respectively. The Company did not record an allowance for doubtful accounts at December 31, 2010 or 2009, based on historical experience and the Company’s belief that there was minimal collection risk related to the Company’s accounts receivable balances.

4. INVENTORIES

Inventories relate to catalyst and consist of raw material, labor, and manufacturing costs and are generally stated at the lower of cost or market. Raw materials are stated at average cost, and finished goods, which include the value of intermediate production, are accounted for utilizing the last-in-first-out (“LIFO”) method. The Company believes the LIFO method represents a better matching of revenues with cost. Inventory consists of the following:


	December 31,
	2010		2009
Raw materials	$	19,691	$	18,128
Intermediate and finished goods		26,937		13,831

Total inventory	$	46,628	$	31,959

5. ACCOUNTS PAYABLE AND ACCRUED COSTS

Accounts Payable to Members - In addition to third party payables, the Company has amounts due to its members. These amounts do not bear interest. Accounts payable to members consist of the following:


	December 31,
	2010		2009
Lummus	$	3,412	$	2,079
Chevron		7,374		3,282

Total accounts payable to members	$	10,786	$	5,361

Accrued Costs- Accrued costs primarily represent accruals for project costs incurred but not yet invoiced that are anticipated to be paid within one year of the balance sheet date.

Chevron Lummus Global, LLC
Notes to Financial Statements
(In Thousands)

All 2010 and 2009 Amounts Included in Notes to Financial Statements are Unaudited.

6. RELATED PARTY TRANSACTIONS

Operational Support Services - Chevron and Lummus are parties to an operational support services agreement with the Company whereby Chevron (or its affiliates) and Lummus (or its affiliates) provide the Company certain support services. Chevron services generally include administrative and technical support services including, but not limited to, general accounting and reporting, treasury, legal, information technology, project management reporting and analysis, and basic engineering and associated services. Lummus services generally include sales and marketing and administrative and technical support services including, but not limited to, legal, information technology, project management reporting and analysis and basic engineering and associated services.

Research and Development Services - Chevron and Lummus are also parties to an R&D agreement with the Company, whereby Chevron (or its affiliates) and Lummus (or its affiliates) provide the Company with R&D services. The Company’s non-project specific R&D costs are primarily from activities conducted in Chevron facilities in Richmond, California.

Summary of Related Party Services - The aforementioned member services are provided to the Company at prices which the members believe approximate the full cost of providing such services. The Company’s total Chevron and Lummus related expenses included in the statements of income are as follows:


	Years Ending December 31,
	2010		2009		2008
Chevron
Operational support services
Cost of revenue	$	6,774	$	5,580	$	11,097
SG&A		14,454		14,732		12,711
R&D services
SG&A		8,572		8,915		9,735

Total Chevron-related expenses	$	29,800	$	29,227	$	33,543


Lummus
Operational support services
Cost of revenue	$	8,631	$	8,355	$	8,481
SG&A		3,783		3,971		3,805
R&D services
SG&A		221		266		544

Total Lummus-related expenses	$	12,635	$	12,592	$	12,830

Catalyst Sales - In 2010, 2009 and 2008, Chevron and its affiliates purchased $9,415, $27,054 and $8,943, respectively, of catalyst from the Company for Chevron’s own use.

7. OPERATING AGREEMENT

Under the terms of the Company’s operating agreement dated January 1, 2000, as amended (the “Agreement”), the net income and net loss of the Company and any distributions of the Company’s assets are to be allocated among the members in proportion their ownership interests. In the event of termination of the Company by the members, the Agreement provides for an apportionment, between the members of proprietary technology rights previously contributed to the Company by the members, in accordance with a prescribed formula. Each member’s liability for the activities of the Company is generally limited to its respective capital contributions.

Chevron Lummus Global, LLC
Notes to Financial Statements
(In Thousands)

All 2010 and 2009 Amounts Included in Notes to Financial Statements are Unaudited.

8. LETTERS OF CREDIT/GUARANTEES

In the ordinary course of business, the Company may provide letters of credit to customers to secure advance payment or performance. These letters of credit are provided through Chevron, with Lummus providing a counter guarantee to Chevron for 50% of the total. In the event of the Company’s non-performance under a contract and an advance being made by a bank pursuant to a draw on a letter of credit, the advance would become an obligation of the Company. Such letters of credit amounted to $19,104, $20,093, and $15,391 for 2010, 2009 and 2008, respectively, and the guarantee periods ranged from 2011 through 2014.

9. INCOME TAXES

The Company is treated as a partnership for income tax purposes, and accordingly, it is not subject to federal, state or local income taxes. Instead, the Company’s results of operations are allocated to the members for inclusion in their respective income tax returns.

10. LITIGATION

The Company is currently not aware of any material, pending or threatened litigation, claims, or assessments directly against or associated with the Company.

11. FUTURE PURCHASE COMMITMENTS

The Company has certain long-term purchase contracts with its suppliers with a minimum commitment of approximately $10,600 per year over the next two years.

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