-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, qXNtpBwayb4EJEVBHEHamC4BchcttgXVWJOHQXOdB6rUJEl4UmMDMUZrKG/XH58W 29qPKMgdlD2BOkL3PL5y8A== 0000899243-95-000362.txt : 19950627 0000899243-95-000362.hdr.sgml : 19950627 ACCESSION NUMBER: 0000899243-95-000362 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950501 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19950626 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LYONDELL PETROCHEMICAL CO CENTRAL INDEX KEY: 0000842635 STANDARD INDUSTRIAL CLASSIFICATION: PETROLEUM REFINING [2911] IRS NUMBER: 954160558 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 033-53483 FILM NUMBER: 95549307 BUSINESS ADDRESS: STREET 1: 1221 MCKINNEY ST STREET 2: STE 1600 CITY: HOUSTON STATE: TX ZIP: 77010 BUSINESS PHONE: 7136527200 MAIL ADDRESS: STREET 1: 1221 MCKINNEY ST STREET 2: SUITE 1600 CITY: HOUSTON STATE: TX ZIP: 77010 8-K/A 1 FORM 8-K/A SECURITIES AND EXCHANGE COMMISSION Washington, D.C. FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): May 1, 1995. LYONDELL PETROCHEMICAL COMPANY - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 1-10145 95-4160558 - -------------------------------------------------------------------------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 1221 McKinney Street, Suite 1600, Houston, Texas 77010 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (713) 652-7200 Not Applicable - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS INDEX TO FINANCIAL STATEMENTS (A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED: Unaudited financial statements for the Alathon Division of Occidental Chemical Corporation are provided below as of and for the three months ended March 31, 1995. Unaudited Balance Sheet as of March 31, 1995 3 Unaudited Statement of Operations and Changes in Owner's Investment for the three months ended March 31, 1995 4 Unaudited Statement of Cash Flows for the three months ended March 31, 1995 5 Notes to Unaudited Financial Statements 6 (B) UNAUDITED PRO FORMA FINANCIAL INFORMATION: Unaudited pro forma condensed financial statements are provided below as of and for the three months ended March 31, 1995. Unaudited Pro Forma Condensed Statement of Income for the three months ended March 31, 1995 12 Unaudited Pro Forma Condensed Balance Sheet as of March 31, 1995 13 Notes to Unaudited Pro Forma Condensed Financial Statements 14 (C) EXHIBITS: None 2 OCCIDENTAL CHEMICAL CORPORATION ALATHON DIVISION BALANCE SHEET UNAUDITED March 31, 1995 (in thousands) CURRENT ASSETS: Cash....................................................... $ 3 Trade receivables, net of reserves $995.................... 11,087 Inventories................................................ 62,695 Deferred income taxes...................................... 2,200 Other current assets....................................... 312 -------- Total current assets..................................... 76,297 LONG-TERM RECEIVABLES........................................ 913 PROPERTY, PLANT AND EQUIPMENT, at cost, net of accumulated depreciation of $127,577.................................... 327,204 OTHER ASSETS................................................. 2,624 -------- TOTAL ASSETS............................................. $407,038 ======== CURRENT LIABILITIES Accounts payable........................................... $ 9,981 Accrued liabilities........................................ 10,168 -------- Total current liabilities................................ 20,149 DEFERRED INCOME TAXES........................................ 104,501 OTHER LIABILITIES............................................ 3,133 -------- Total liabilities........................................ 127,783 OWNER'S INVESTMENT........................................... 279,255 -------- TOTAL LIABILITIES AND OWNER'S INVESTMENT................. $407,038 ========
The accompanying notes are an integral part of these statements. 3 OCCIDENTAL CHEMICAL CORPORATION ALATHON DIVISION STATEMENT OF OPERATIONS AND CHANGES IN OWNER'S INVESTMENT UNAUDITED For the three months ended March 31,1995 (in thousands) EXTERNAL SALES, net.......................................... $147,374 SALES TO OWNER AT MARKET VALUE............................... -- -------- TOTAL SALES, net............................................. 147,374 OPERATING COSTS AND EXPENSES: Cost of sales.............................................. 117,369 Selling, general and administrative expenses............... 3,322 Other operating expense.................................... 1,096 -------- INCOME BEFORE CHARGE FROM OCCIDENTAL CHEMICAL CORPORATION IN LIEU OF FEDERAL TAXES AND PROVISION FOR STATE TAXES.................................... 25,587 Charge from Occidental Chemical Corporation in lieu of federal taxes and provision for state taxes................ 8,997 -------- NET INCOME.................................................... 16,590 DECREASE IN OWNER'S INVESTMENT................................ (4,581) OWNER'S INVESTMENT, beginning of period....................... 267,246 -------- OWNER'S INVESTMENT, end of period............................. $279,255 ========
The accompanying notes are an integral part of these statements. 4 OCCIDENTAL CHEMICAL CORPORATION ALATHON DIVISION STATEMENT OF CASH FLOWS UNAUDITED For the three months ended March 31, 1995 (in thousands) CASH FLOW FROM OPERATING ACTIVITIES: Net income.................................................. $16,590 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation.............................................. 4,451 Deferred income taxes..................................... 173 Changes in operating assets and liabilities: Increase in trade receivables............................. (2,273) Increase in inventories................................... (9,108) Decrease in other current assets.......................... 85 Decrease in accounts payable and accrued liabilities...... (4,134) Other operating, net........................................ 44 ------- Net cash provided by operating activities..................... 5,828 CASH FLOW FROM INVESTING ACTIVITIES: Capital expenditures........................................ (1,246) ------- Net cash used by investing activities......................... (1,246) CASH FLOW FROM FINANCING ACTIVITIES: Decrease in owner's investment.............................. (4,581) ------- Net cash used by financing activities......................... (4,581) ------- Change in cash................................................ 1 Cash - beginning of period.................................... 2 ------- Cash - end of period.......................................... $ 3 =======
The accompanying notes are an integral part of these statements. 5 OCCIDENTAL CHEMICAL CORPORATION ALATHON DIVISION NOTES TO FINANCIAL STATEMENTS UNAUDITED March 31, 1995 (1) GENERAL-- Organization, business and basis of presentation-- The accompanying unaudited interim financial statements have been prepared by Occidental Chemical Corporation (OCC), a New York corporation, in accordance with certain rules and regulations of the Securities and Exchange Commission. All outstanding common shares of OCC are owned indirectly by Occidental Petroleum Corporation (Occidental). Certain information and disclosures normally included in the notes to financial statements have been condensed or omitted pursuant to such rules and regulations, but resultant disclosures are in accordance with generally accepted accounting principles as they apply to interim reporting. These interim financial statements should be read in conjunction with the Alathon Division's audited financial statements for the year ended December 31, 1994 (1994 Financial Statements). In the opinion of OCC's management, the accompanying interim financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly the Alathon Division's financial position as of March 31, 1995 and the results of operations and cash flows for the three months then ended. The results of operations and cash flows for the period ended March 31, 1995 are not necessarily indicative of the results of operations or cash flows to be expected for the full year. Reference is made to Note 1 to the 1994 Financial Statements for a summary of significant accounting policies. Supplemental cash flow information-- For the three months ended March 31, 1995, all cash payments for income taxes were made by Occidental. For the same period, there were no cash payments for interest. As of March 31, 1995, trade receivables of $80,185,000 were transferred to an affiliate (see Note 2). Environmental costs-- Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to existing conditions caused by past operations and that do not contribute to current or future revenue generation are expensed. No costs relating to existing conditions caused by past operations were incurred by the Alathon Division during the first quarter of 1995. Reserves for estimated costs are recorded when environmental remedial efforts are probable and the costs can be reasonably estimated. In determining the reserves, the Alathon Division uses the most current information available, including similar past experiences, available technology, regulations in effect, the timing of remediation and cost-sharing arrangements. At March 31, 1995, there were no environmental reserves related to the Alathon Division. 6 OCCIDENTAL CHEMICAL CORPORATION ALATHON DIVISION NOTES TO FINANCIAL STATEMENTS UNAUDITED March 31, 1995 (1) GENERAL--(continued) The Alathon Division's estimated operating expenses relating to compliance with environmental laws and regulations governing ongoing operations were approximately $514,000 in the first quarter of 1995. In addition, estimated capital expenditures for environmental compliance in the first quarter of 1995 were approximately $342,000. Management has not identified any material environmental matter, nor has the Alathon Division been identified as a potentially responsible party under the Comprehensive Environmental Response, Compensation and Liability Act (Superfund) and corresponding state acts. Research and development costs-- Research and development costs, which are charged to operations as incurred, were $1,214,000 in the three months ended March 31, 1995. These charges are included in Selling, General and Administrative Expenses in the accompanying financial statements. (2) RECEIVABLES-- As of March 31, 1995, OCC had transferred, without recourse, to an Occidental affiliate trade receivables of the Alathon Division under a revolving sale program amounting to $80,185,000, in connection with the ultimate sale for cash of such receivables by the affiliate. OCC transferred the receivables to the affiliate in a noncash transaction that was reflected as a reduction in the Alathon Division's Owner's Investment. OCC has retained the collection responsibility with respect to the receivables sold. An interest in newly created receivables is transferred monthly, net of collections made from customers. Fees related to the sales of receivables under this program, which are allocated from OCC, were $861,000 for the three months ended March 31, 1995 and are included in Other Operating Expense. (3) ACCOUNTING CHANGE-- Reference is made to Note 3 to the 1994 Financial Statements for a description of an accounting change. 7 OCCIDENTAL CHEMICAL CORPORATION ALATHON DIVISION NOTES TO FINANCIAL STATEMENTS UNAUDITED March 31, 1995 (4) INVENTORIES-- Inventories are valued at the lower of cost or market. The first-in, first-out (FIFO) cost method was used in determining the costs of raw materials and finished goods. Materials and supplies inventories were determined using the weighted average cost method. Inventories consisted of the following as of March 31, 1995 (in thousands): Raw materials...................................... $ 2,254 Materials and supplies............................. 2,711 Work in process.................................... 154 Finished goods..................................... 57,576 --------- Inventory at lower of cost or market............... $ 62,695 =========
(5) PROPERTY, PLANT AND EQUIPMENT-- Land and land improvements......................... $ 18,821 Buildings.......................................... 21,512 Machinery and equipment............................ 408,207 Construction in progress........................... 6,241 --------- 454,781 Accumulated depreciation........................... (127,577) --------- $ 327,204 =========
Reference is made to Note 5 to the 1994 Financial Statements for a description of investments in Property, Plant and Equipment. (6) LEASE COMMITMENTS-- Reference is made to Note 6 to the 1994 Financial Statements for a description of lease commitments. (7) CHARGE FROM OCC IN LIEU OF FEDERAL TAXES AND PROVISION FOR STATE TAXES-- The charge allocated by OCC in lieu of federal taxes and provision for state taxes for the three months ended March 31, 1995 consisted of the following (in thousands): Current U.S. federal charge from OCC................. $8,824 Deferred U.S. federal charge from OCC................ 157 Deferred state....................................... 16 ------ $8,997 ======
8 OCCIDENTAL CHEMICAL CORPORATION ALATHON DIVISION NOTES TO FINANCIAL STATEMENTS UNAUDITED March 31,1995 (7) CHARGE FROM OCC IN LIEU OF FEDERAL TAXES AND PROVISION FOR STATE TAXES--(continued) The following table reconciles the maximum statutory U.S. federal income tax rate multiplied by the Alathon Division's income before taxes to the recorded charge for income taxes (in thousands): U.S. federal income tax at 35%........................... $8,955 State income tax expense, net of U.S. federal benefit.... 10 Nondeductible expenses................................... 32 ------ $8,997 ======
Deferred income taxes reflect the future tax consequences of temporary differences between the tax bases of assets and liabilities and their financial reporting amounts. Temporary differences are associated with the financial statement assets and liabilities shown in the table below. Deferred income tax assets and liabilities have been recorded in the following amounts as of March 31, 1995 (in thousands):
DEFFERED TAX ASSETS LIABILITIES ------ ----------- Inventories........................... $1,201 $ -- Property, plant and equipment......... -- (108,258) Other assets.......................... -- (692) Accrued liabilities................... 1,067 -- Other liabilities..................... 1,200 -- Deferred state income tax............. 3,181 -- ------ --------- $6,649 $(108,950) ====== =========
(8) RETIREMENT PLANS AND POSTRETIREMENT BENEFITS-- Reference is made to Note 8 to the 1994 Financial Statements for a description of retirement plans and postretirement benefits. (9) RELATED PARTY TRANSACTIONS-- Transactions with other plants and affiliates of OCC included purchases of feedstocks of $98,680,000 for the three months ended March 31, 1995. These purchases are recorded at market value. The Alathon Division has been charged for certain financial and operational support services provided by OCC. Charges for such support services, included in Selling, General and Administrative Expenses in the accompanying statement of operations, totaled $544,000 for the three months ended March 31, 1995. These charges were allocated based on ratios including such factors as revenues, operating income, fixed assets, and working capital in a reasonable and consistent manner. 9 OCCIDENTAL CHEMICAL CORPORATION ALATHON DIVISION NOTES TO FINANCIAL STATEMENTS UNAUDITED March 31, 1995 (10) SALE OF ALATHON DIVISION-- On May 1, 1995, OCC sold the Alathon Division to Lyondell Petrochemical Company (Lyondell). Under the terms of the agreement, Lyondell purchased the assets, and assumed certain of the liabilities, that constitute the Alathon Division. Certain of the Alathon Division's assets and liabilities included in these financial statements were not included in the sale to Lyondell. 10 LYONDELL PETROCHEMICAL COMPANY UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS The accompanying unaudited pro forma condensed financial statements give effect to the acquisition by Lyondell Petrochemical Company ("Lyondell") of Occidental Chemical Corporation's (an affiliate of Occidental Petroleum Corporation) Alathon(R) high-density polyethylene ("HDPE") business (the "Alathon Division") in a transaction accounted for as a purchase. The unaudited pro forma condensed balance sheet is based on the balance sheet of Lyondell adjusted to reflect the purchase of the assets of the Alathon Division (acquired by Lyondell as of May 1, 1995) as of March 31, 1995. The unaudited pro forma condensed statement of income is based on the individual statements of income of Lyondell and the Alathon Division and combines the results of operations of Lyondell and the Alathon Division for the three months ended March 31, 1995 as if the acquisition occurred on January 1, 1995. These unaudited pro forma condensed financial statements should be read in conjunction with both the historical financial statements and notes thereto of Lyondell which are included in its quarterly report on Form 10-Q for the three months ended March 31, 1995, which is incorporated herein by reference and the historical financial statements and notes thereto of the Alathon Division included elsewhere in this Form 8-K. 11 LYONDELL PETROCHEMICAL COMPANY UNAUDITED PRO FORMA CONDENSED STATEMENT OF INCOME THREE MONTHS ENDED MARCH 31, 1995
PRO FORMA ALATHON ADJUSTMENTS MILLIONS OF DOLLARS EXCEPT PER SHARE AMOUNTS LYONDELL DIVISION (NOTE 2) COMBINED - -------------------------------------------- -------- -------- ----------- -------- Sales and other operating revenues................ $1,174 $147 $1,321 Cost of sales..................................... 907 117 1,024 Selling, general and administrative expenses...... 45 4 (1)(a) 48 ------ ---- --- ------ 952 121 (1) 1,072 ------ ---- --- ------ Operating income.............................. 222 26 1 249 Interest expense.................................. (18) (4)(b) (22) Interest income................................... 3 3 Minority interest in LYONDELL-CITGO Refining Company Ltd. .......................... (5) (5) ------ ---- --- ------ Income before income taxes.................... 202 26 (3) 225 Provision for income taxes........................ 75 9 (1)(c) 83 ------ ---- --- ------ NET INCOME........................................ $ 127 $ 17 $(2) $ 142 ====== ==== === ====== EARNINGS PER SHARE................................ $ 1.59 $ 1.78 ====== ======
See notes to unaudited pro forma condensed financial statements. 12 LYONDELL PETROCHEMICAL COMPANY UNAUDITED PRO FORMA CONDENSED BALANCE SHEET MARCH 31, 1995
PRO FORMA MILLIONS OF DOLLARS LYONDELL ADJUSTMENTS PRO FORMA - ------------------- -------- ----------- --------- ASSETS Current assets: Cash, restricted cash and cash equivalents.................. $ 243 (207)(d) $ 36 Accounts receivable......................................... 326 326 Inventories................................................. 251 64 (e) 315 Prepaid expenses and other current assets................... 10 10 ------ ------ Total current assets...................................... 830 687 ------ ------ Fixed assets: Property, plant and equipment............................... 2,909 360 (f) 3,269 Less accumulated depreciation and amortization.............. 1,943 1,943 ------ ------ 966 1,326 Deferred charges and other assets............................. 85 85 ------ ------ Total assets.................................................. $1,881 $2,098 ====== ====== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable............................................ $ 295 $ 295 Notes payable............................................... 0 212 (g) 212 Other current liabilities................................... 171 171 ------ ------ Total current liabilities................................. 466 678 ------ ------ Long-term debt................................................ 707 707 Other liabilities and deferred credits........................ 88 5 (h) 93 Deferred income taxes......................................... 103 103 Commitments and contingencies................................. Minority interest............................................. 345 345 Stockholders' equity: Preferred stock, $.01 par value, 80,000,000 shares authorized, none outstanding.............................. Common stock, $1 par value, 250,000,000 shares authorized, 80,000,000 issued and outstanding............. 80 80 Additional paid-in capital.................................. 158 158 Accumulated deficit......................................... (66) (66) ------ ------ Total stockholders' equity................................ 172 172 ------ ------ Total liabilities and stockholders' equity..................... $1,881 $2,098 ====== ======
See notes to unaudited pro forma condensed financial statements. 13 LYONDELL PETROCHEMICAL COMPANY NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS (1) BASIS OF PREPARATION The accompanying unaudited pro forma condensed financial statements have been prepared to reflect the acquisition of the Alathon Division by Lyondell for a purchase price of $350 million plus $64 million representing the value of the Alathon Division's inventory. (2) PRO FORMA ADJUSTMENTS a. Elimination of certain fees incurred by the Alathon Division under a revolving sale program related to the sales of receivables to its affiliate, Occidental Chemical Corporation. b. Pro forma interest charges for the three months ended March 31, 1995 related to borrowings from Lyondell's revolving credit facility, calculated in accordance with the terms of the revolving credit facility. c. Income taxes at statutory rates relating to foregoing adjustments. d. Cash utilized to fund the acquisition price. e. Cost of inventories acquired. f. Acquisition price of fixed assets acquired plus certain transaction costs and investment banking fees incurred and liabilities assumed for unfunded postretirement benefit plans other than pensions related to Alathon employees. g. Borrowings from Lyondell's revolving credit facility necessary to complete the acquisition. h. Liability for unfunded postretirement benefit plans other than pensions related to Alathon employees which were assumed by Lyondell. 14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: June 26, 1995 LYONDELL PETROCHEMICAL COMPANY By: /s/ Joseph M. Putz --------------------------- Joseph M. Putz Vice President and Controller 15 -----END PRIVACY-ENHANCED MESSAGE-----