-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IrUMiBPrAfgPXLE8B1bmS9jI+flbMXtM4xnc3OiGAA/cux4du6CegMNxUedl5hnb 9SEa+2im4ukyHy1Rg5gNgw== 0000899243-95-000739.txt : 19951118 0000899243-95-000739.hdr.sgml : 19951118 ACCESSION NUMBER: 0000899243-95-000739 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951109 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: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-53483 FILM NUMBER: 95588465 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 10-Q 1 FORM 10-Q - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------- FORM 10-Q [XQUARTERLY]REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995. OR [_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 1-10145 --------- LYONDELL PETROCHEMICAL COMPANY (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) --------- DELAWARE 95-4160558 (STATE OR OTHER (I.R.S. EMPLOYER JURISDICTION OF IDENTIFICATION NO.) INCORPORATION OR ORGANIZATION) 77010 (ZIP CODE) 1221 MCKINNEY STREET, SUITE 1600, HOUSTON, TEXAS (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 652-7200 --------- NOT APPLICABLE (FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST REPORT) 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 X NO NUMBER OF SHARES OF COMMON STOCK, $1.00 PAR VALUE, OUTSTANDING AS OF SEPTEMBER 30, 1995: 80,000,000. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART I. FINANCIAL INFORMATION LYONDELL PETROCHEMICAL COMPANY CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS FOR THE NINE MONTHS ENDED SEPTEMBER 30 ENDED SEPTEMBER 30 ------------------------- ------------------------- MILLIONS OF DOLLARS EXCEPT PER SHARE AMOUNTS 1995 1994 1995 1994 - --------------------------------------------- ----------- ------------ ----------- ---------- SALES AND OTHER OPERATING REVENUES: Unrelated parties $ 1,168 $ 948 $ 3,523 $ 2,521 Related parties 81 89 270 240 ----------- ------------ ----------- ---------- 1,249 1,037 3,793 2,761 OPERATION COSTS AND EXPENSES: Cost of sales: Unrelated parties 955 818 2,828 2,227 Related parties 56 62 175 183 Selling, general and administrative expenses 55 33 148 102 ----------- ------------ ----------- ---------- 1,066 913 3,151 2,512 ----------- ------------ ----------- ---------- Operating income 183 124 642 249 Interest expense (20) (19) (59) (56) Interest income -- 1 5 3 Minority interest in LYONDELL-CITGO Refining Company Ltd. (4) (1) (12) (6) ----------- ------------ ----------- ---------- Income before income taxes 159 105 576 190 Provision for income taxes 59 39 214 70 ----------- ------------ ----------- ---------- NET INCOME $ 100 $ 66 $ 362 $ 120 =========== ============ =========== ========== EARNINGS PER SHARE $ 1.25 $ .83 $ 4.52 $ 1.51 =========== ============ =========== ==========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 1 LYONDELL PETROCHEMICAL COMPANY CONSOLIDATED BALANCE SHEET
SEPTEMBER 30 DECEMBER 31 MILLIONS OF DOLLARS 1995 1994 - ------------------- --------------- -------------- ASSETS Current assets: Cash and cash equivalents $ 44 $ 52 Restricted cash and cash equivalents (Note 2) 27 42 Accounts receivable: Trade 341 331 Related parties 25 29 Inventories 313 229 Prepaid expenses and other current assets 34 14 --------------- -------------- Total current assets 784 697 --------------- -------------- Fixed assets: Property, plant and equipment 3,596 2,810 Less accumulated depreciation and amortization 1,971 1,930 --------------- -------------- 1,625 880 Deferred charges and other assets 92 86 --------------- -------------- Total assets $ 2,501 $ 1,663 =============== ============== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable: Trade $ 309 $ 287 Related parties 1 1 Income taxes payable --- 28 Notes payable 175 20 Current maturities of long-term debt 150 10 Other accrued liabilities 122 87 --------------- -------------- Total current liabilities 757 433 --------------- -------------- Long-term debt 732 707 Other liabilities and deferred credits 98 83 Deferred income taxes 117 109 Commitments and contingencies (Note 6) Minority interest 427 268 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 Retained earnings (deficit) 132 (175) --------------- -------------- Total stockholders' equity 370 63 --------------- -------------- Total liabilities and stockholders' equity $ 2,501 $ 1,663 =============== ==============
See notes to consolidated financial statements. 2 LYONDELL PETROCHEMICAL COMPANY CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30 ----------------------------- Millions of dollars 1995 1994 - ------------------- ----------- ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 362 $ 120 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 61 46 Deferred taxes 2 6 Increase in accounts receivable (5) (101) Increase in inventory (84) (6) Increase in accounts payable 14 41 Net change in other working capital accounts (7) 11 Minority interest 12 6 Other (10) (9) ----------- ------------ Net cash provided by operating activities 345 114 ----------- ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Additions to fixed assets (781) (144) Purchases of short-term investments --- (20) Proceeds from sales of short-term investments --- 23 ----------- ------------ Net cash used in investing activities (781) (141) ----------- ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Minority owner contribution 147 65 Net change in short-term debt 155 --- Proceeds from issuance of long-term debt 175 --- Repayments of long-term debt (10) (8) Dividends paid (54) (54) ----------- ------------ Net cash provided by financing activities 413 3 ----------- ------------ DECREASE IN CASH, RESTRICTED CASH AND CASH EQUIVALENTS (23) (24) Cash, restricted cash and cash equivalents at beginning of period 94 113 ----------- ------------ Cash, restricted cash and cash equivalents at end of period $ 71 $ 89 =========== ============
See notes to consolidated financial statements. 3 LYONDELL PETROCHEMICAL COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED 1. BASIS OF PREPARATION The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting only of normal, recurring adjustments considered necessary for a fair presentation, have been included. For further information, refer to the consolidated financial statements and notes thereto for the year ended December 31, 1994 included in the Lyondell Petrochemical Company ("Company") 1994 Annual Report and the Annual Report on Form 10-K pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. The year-end condensed balance sheet data was derived from audited financial statements but does not include all disclosures required by generally accepted accounting principles. Certain amounts from prior periods have been reclassified to conform to current period presentation. 2. RESTRICTED FUNDS As of September 30, 1995 and December 31, 1994, cash in the amount of $27 million and $42 million, respectively, was restricted for use in connection with LYONDELL-CITGO Refining Company Ltd. ("LCR") capital projects, including the Refinery upgrade project, and other expenditures as determined by the LCR owners. Presented below is a reconciliation of changes in restricted funds for the nine- month period ended September 30, 1995. Restricted - cash and cash equivalents at December 31, 1994 $ 42 Minority owner investments: Contributions 147 Reinvestments 8 Proceeds from bank loan 175 Interest on restricted funds 1 Additions to fixed assets: Refinery upgrade project (321) Refining segment-other (25) ---- Restricted - cash and cash equivalents $ 27 at September 30, 1995 ====
4 3. INVENTORIES The categories of inventory and their book values at September 30, 1995 and December 31, 1994 were:
MILLIONS OF DOLLARS 1995 1994 ------------------- ---- ---- Crude oil $ 42 $ 62 Refined products 34 30 Petrochemicals 196 102 Materials and supplies 41 35 ----- ----- $ 313 $ 229 ===== =====
4. ACQUISITION OF ALATHON/(R)/ HIGH-DENSITY POLYETHYLENE BUSINESS On May 1, 1995, the Company acquired the assets associated with Occidental Chemical Corporation's Alathon/(R)/ high-density polyethylene ("HDPE") business for $355 million including certain direct costs, plus approximately $64 million for inventory. Assets involved in the purchase include resin production facilities at Victoria and Matagorda, Texas, associated research and development activities and the rights to the Alathon/(R)/ trademark. These facilities have a combined annual production capacity of approximately 1.5 billion pounds of HDPE. The Company financed the acquisition from internal cash and by borrowing from its existing credit facilities. The following unaudited pro forma information combines the results of operations of the Company and the Alathon/(R)/ business for the nine months ended September 30, 1995 and 1994 and assumes that the acquisition of the Alathon/(R)/ business occurred on January 1, 1994. This unaudited pro forma information may not be indicative of results that would have actually resulted if this transaction had occurred on January 1, 1994 or which may be obtained in the future.
NINE MONTHS ENDED SEPTEMBER 30 --------------------- MILLIONS OF DOLLARS EXCEPT PER SHARE AMOUNTS 1995 1994 -------------------------------------------- ---- ---- Revenues $3,987 $3,045 Net income $ 382 $ 126 Earnings per share $ 4.78 $ 1.57
5. FINANCING ARRANGEMENTS LCR entered into two credit facilities, dated as of May 5, 1995, totaling $520 million with a group of banks with The Bank of New York as agent. The first facility is a $70 million, 364 day revolving credit facility, which replaces LCR's existing $70 million revolving credit facility, that will be utilized for general business purposes, including letters of credit, unrelated to the Refinery upgrade project. The second facility is a $450 million, five year term credit facility that will be used in connection with the Refinery upgrade project. Interest for the facilities is based on prime or eurodollar rates at LCR's option. Prior to the completion of the Refinery upgrade project, all financing and other costs related to the $450 million credit facility will be funded by CITGO Petroleum Corporation, the minority owner of LCR. The facilities contain covenants which require LCR to maintain a minimum net worth which increases each year until 1998 and maintenance of certain financial ratios defined in the agreements. The facilities also contain other customary covenants which limit LCR's ability to modify certain significant contracts, incur additional debt or liens, dispose of assets, make restricted payments as defined in the agreements or merge or consolidate with other entities. As of September 30, 1995, a total of $190 million was outstanding under these facilities. 5 5. FINANCING ARRANGEMENTS - (CONTINUED) During June 1995, the Company elected to amend its existing $400 million credit facility. The amended credit facility includes a provision allowing banks, in their sole discretion, to make competitive bids for advances to the Company. The term of the amended credit facility was extended from December 6, 1998 to June 30, 2000. All other terms and conditions remained substantially unchanged. As of September 30, 1995, $40 million was outstanding under this credit facility. As of September 30, 1995, the Company also had uncommitted lines of credit totaling $240 million with banks and other financial institutions. These uncommitted lines of credit provide the Company with additional borrowing flexibility and potentially more competitive interest rates. The Company can borrow money on these uncommitted lines of credit on such terms as may be mutually agreed upon at the time amounts are borrowed. The lines of credit can be terminated by the lenders, in their sole discretion, on short notice. As of September 30, 1995, the Company had $120 million outstanding under these uncommitted lines of credit. 6. COMMITMENTS AND CONTINGENCIES The Company has various purchase commitments for materials, supplies and services incident to the ordinary conduct of business. In the aggregate, such commitments are not at prices in excess of current market. In connection with the transfer of assets and liabilities from Atlantic Richfield Company ("ARCO") to the Company, the Company agreed to assume certain liabilities arising out of the operation of the Company's integrated petrochemical and petroleum processing business prior to July 1, 1988. In connection with the transfer of such liabilities, the Company and ARCO entered into an agreement ("Cross-Indemnity Agreement") whereby the Company has agreed to defend and indemnify ARCO against certain uninsured claims and liabilities which ARCO may incur relating to the operation of the business of the Company prior to July 1, 1988, including certain liabilities which may arise out of pending and future lawsuits. ARCO indemnified the Company under the Cross-Indemnity Agreement with respect to other claims or liabilities and other matters of litigation not related to the assets or business included in the consolidated financial statements. ARCO has also indemnified the Company for all federal taxes which might be assessed upon audit of the operations of the Company included in the consolidated financial statements prior to January 12, 1989 and for all state and local taxes for the period prior to July 1, 1988. In addition to lawsuits for which the Company has indemnified ARCO, the Company is also subject to various lawsuits and proceedings. Subject to the uncertainty inherent in all litigation, management believes the resolution of these proceedings will not have a material adverse effect upon the Company's financial statements. The Company's policy is to be in compliance with all applicable environmental laws. The Company is subject to extensive environmental laws and regulations concerning emissions to the air, discharges to surface and subsurface waters and the generation, handling, storage, transportation, treatment and disposal of waste materials. Some of these laws and regulations are subject to varying and conflicting interpretations. In addition, the Company cannot accurately predict future developments, such as increasingly strict requirements of environmental laws, inspection and enforcement policies and compliance costs therefrom which might affect the handling, manufacture, use, emission or disposal of products, other materials or hazardous and non-hazardous waste. Subject to the terms of the Cross-Indemnity Agreement, the Company is currently contributing funds to the cleanup of two waste sites (French Ltd. and Brio, both of which are located near Houston, Texas) under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") as amended by the Superfund Amendments and Reauthorization Act of 1986. The Company is also subject to certain assessment and remedial actions at the Refinery under the Resource Conservation and Recovery Act ("RCRA"). In addition, the 6 6. COMMITMENTS AND CONTINGENCIES - (CONTINUED) Company has negotiated an order with the Texas Natural Resource Conservation Commission ("TNRCC"), formerly the Texas Water Commission, for assessment and remediation of groundwater and soil contamination at the Refinery. During July 1994, the Company reported results of an independent investigation conducted by the Audit Committee of the Board of Directors regarding the compliance status of two process waste-water streams under the applicable Benzene National Emissions Standard for Hazardous Air Pollutants ("NESHAPS") regulations and certain related issues raised by an employee. Noncompliance with the Benzene NESHAPS regulations and the related reporting requirements can result in civil penalties and, under certain circumstances, substantial civil and, potentially, criminal penalties. The Company received a notice of violation regarding the two streams and paid a fine of $10,200 to the TNRCC. The Company incurred approximately $2 million in capital costs in connection with these waste water streams to achieve on-going compliance with the Benzene NESHAPS regulations. The Criminal Enforcement Division of the EPA is conducting a formal investigation. However, the Company continues to believe that none of the aspects of the matters described above will subject the Company to criminal liability or have a material adverse effect on the Company's business or financial statements. The Company has accrued $17 million related to future CERCLA, RCRA and TNRCC assessment and remediation costs, of which $3 million is included in current liabilities while the remaining amounts are expected to be incurred over the next two to seven years. In the opinion of management, there is currently no material range of loss in excess of the amount accrued. However, it is possible that new information about the sites for which the reserve has been established, new technology or future developments such as involvement in other CERCLA, RCRA, TNRCC or other comparable state law investigations, could require the Company to reassess its potential exposure related to environmental matters. In the opinion of management, any liability arising from the matters discussed above will not have a material adverse effect on the consolidated financial statements or liquidity of the Company, although the adverse resolution in any reporting period of one or more of these matters discussed in this note could have a material impact on the Company's results of operations for that period. 7. DIVIDENDS On September 15, 1995, the Company paid a regular quarterly dividend of $.225 per share of common stock to stockholders of record on August 25, 1995. Additionally, on October 20, 1995 the Board of Directors declared a regular quarterly dividend of $.225 per share of common stock, payable December 15, 1995 to stockholders of record on November 24, 1995. 8. EARNINGS PER SHARE Earnings per share for all periods presented are computed based on the weighted average number of shares outstanding for the periods, which was 80,000,000 shares. 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL Lyondell Petrochemical Company (the "Company" or "Lyondell") operates in two business segments: petrochemicals and refining. The petrochemical segment consists of olefins including ethylene, propylene, butadiene, butylenes and specialty products; polyolefins including polypropylene, low density polyethylene and high-density polyethylene ("HDPE"); aromatics produced at the Channelview petrochemical complex ("Channelview Complex") including benzene and toluene; methanol; methyl tertiary butyl ether ("MTBE") and refinery blending stocks. On May 1, 1995, the Company acquired from Occidental Chemical Corporation resin production facilities at Victoria and Matagorda, Texas, with a combined annual production capacity of approximately 1.5 billion pounds of HDPE, associated research and development activities and the rights to the Alathon(R) trademark. See Note 4 of "NOTES TO CONSOLIDATED FINANCIAL STATEMENTS." On July 1, 1993, the Company and CITGO Petroleum Corporation ("CITGO") announced the commencement of operations of LYONDELL-CITGO Refining Company Ltd. ("LCR"), a new entity owned by subsidiaries of the Company and CITGO. LCR owns and operates the refining business formerly owned by the Company, including the full-conversion refinery ("Refinery"). LCR is undertaking a major upgrade project at the Refinery to enable the facility to process substantial additional volumes of very heavy crude oil. CITGO is providing a major portion of the funds for the upgrade project and has provided in excess of $100 million for funding other capital projects. At the present time, LCR management anticipates the cost for the upgrade project will be approximately $980 million, which includes an allowance for contingency costs. On July 1, 1993, LCR entered into a long-term crude oil supply contract ("Crude Supply Contract") with LAGOVEN, S.A., an affiliate of CITGO. In addition, under terms of a long-term product sales agreement ("Products Agreement"), CITGO purchased approximately 80 to 85 percent of the light refined products produced at the Refinery. Effective July 1995, CITGO began purchasing approximately 100 percent of the light refined products produced at the Refinery. Both LAGOVEN and CITGO are subsidiaries of Petroleos de Venezuela, S.A., the national oil company of Venezuela. Prior to completion of the upgrade project, the Crude Supply Contract requires LCR to purchase and LAGOVEN to supply a minimum of 125,000 barrels per day of heavy Venezuelan crude oil. The contract incorporates a formula price based on the market value of a slate of refined products deemed to be produced from each particular crude oil or feedstock, less: (i) certain deemed refining costs, adjustable for inflation; (ii) certain actual costs, including crude oil transportation costs, import duties and taxes; and (iii) a deemed margin, which varies according to the grade of crude oil or other feedstock delivered. Deemed costs are adjusted periodically based on inflation rates for specific deemed cost components. Adjustments to margins track, but are less than, inflation rates. Because deemed operating costs and the slate of refined products deemed to be produced from a given barrel of crude oil or other feedstock do not necessarily reflect the actual costs and yields in any period and also because the market value of the refined products used in the pricing formula does not necessarily reflect the actual price received for the refined products, the actual refining margin earned by LCR under the Crude Supply Contract will vary depending on, among other things, the efficiency with which LCR conducts its operations during such period. Notwithstanding the limitations discussed above, however, the Crude Supply Contract is designed to reduce the inherent volatility of earnings and cash flow of LCR's refining operations irrespective of market fluctuations of either crude oil or refined products. Specifically, should the market value of refined products "deemed" to be produced from the Venezuelan crude oil increase, the cost of crude oil to LCR will also increase. Alternatively, if the market value of refined products "deemed" to be produced from the Venezuelan crude oil decreases, the cost of crude oil to LCR will also decrease. This results in relatively stable "deemed" margins regardless of the market 8 volatility of either refined products or crude oil. If the actual yields, costs or volumes differ substantially from those contemplated by the Crude Supply Contract, the benefits of this agreement to LCR could be substantially different than anticipated. The refining segment consists of refined petroleum products, including gasoline, heating oil and jet fuel; aromatics produced at the Refinery, including benzene, toluene, paraxylene and orthoxylene; lubricants, including industrial and motor oils; olefins feedstocks and crude oil resales. Crude oil resales consist of revenues from the resale of previously purchased crude oil and from locational exchanges of crude oil that are settled on a cash basis. Crude oil exchanges and resales facilitate the operation of the refining segment by allowing the Company to optimize the crude oil feedstock mix in response to market conditions and refinery maintenance turnarounds and also to reduce transportation costs. Crude oil resales amounted to $97 million and $84 million for the three-month periods ended September 30, 1995 and 1994, respectively and $261 million and $203 million for the nine-month periods ended September 30, 1995 and 1994, respectively. The following table sets forth the Company's major product volumes sold for the periods indicated. Sales volumes include production, purchases of products for resale, propylene production from the product flexibility unit and draws from inventory.
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 -------------------- ------------------- 1995 1994 1995 1994 ---- ---- ---- ---- SELECTED PETROCHEMICAL PRODUCTS (MILLIONS) (EXCLUDING INTERSEGMENT SALES): Ethylene, propylene and polyolefins (lbs.) 1,749 1,545 5,113 4,506 Other olefins (lbs.) 251 271 823 756 Methanol (gallons) 49 36 145 128 Aromatics (gallons) 39 45 118 122 REFINED PRODUCTS (THOUSAND BARRELS PER DAY) (EXCLUDING INTERSEGMENT SALES): Gasoline 112 112 108 109 Heating oil (no. 2 distillate) 47 39 50 47 Jet fuel 29 25 30 26 Aromatics 7 7 8 8 Other refined products 57 48 56 46 ---- ---- ---- ---- Total refined products volumes 252 231 252 236 ==== ==== ==== ====
Summarized below is the segment data for the Company. Intersegment sales between the petrochemical and refining segments include olefins feedstocks and benzene produced at the Refinery and gasoline blending stocks produced at the Channelview Complex and were made at prices that were based on current market values.
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 -------------------- ------------------- (MILLIONS OF DOLLARS) 1995 1994 1995 1994 - --------------------- ---- ---- ---- ---- SALES AND OTHER OPERATING REVENUES: Petrochemical segment $ 687 $ 537 $ 2,102 $ 1,360 Refining segment 644 601 1,982 1,706 Unallocated (82) (101) (291) (305) ----- ------- ------- ------- $ 1,249 $ 1,037 $ 3,793 $ 2,761 ======= ======= ======= =======
9
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 -------------------- ------------------- (MILLIONS OF DOLLARS) 1995 1994 1995 1994 - --------------------- ---- ---- ---- ---- COST OF SALES: Petrochemical segment $ 498 $ 408 $ 1,455 $ 1,105 Refining segment 595 573 1,839 1,610 Unallocated (82) (101) (291) (305) ------ ------ ------- ------- $ 1,011 $ 880 $ 3,003 $ 2,410 ======= ====== ======= ======= SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: Petrochemical segment $ 26 $ 9 $ 58 $ 28 Refining segment 14 14 43 41 Unallocated 15 10 47 33 ------ ------ ------- ------- $ 55 $ 33 $ 148 $ 102 ======= ====== ======= ======= OPERATING INCOME: Petrochemical segment $ 163 $ 120 $ 589 $ 227 Refining segment 35 14 100 55 Unallocated (15) (10) (47) (33) ------ ------ ------- ------- $ 183 $ 124 $ 642 $ 249 ======= ====== ======= ======= Summarized below are intersegment sales for the two segments. Petrochemical segment $ 49 $ 50 $ 150 $ 147 Refining segment 33 51 141 158 ------ ------ ------- ------- $ 82 $ 101 $ 291 $ 305 ======= ====== ======= =======
RESULTS OF OPERATIONS OVERVIEW Net income for the third quarter of 1995 was $100 million or $1.25 per share compared to a net income of $66 million or $.83 per share for the third quarter of 1994. The $34 million improvement was primarily due to higher sales margins for olefins and aromatics and the addition of the Alathon(R) business, which more than offset lower olefins sales volumes. Net income was $35 million lower for the third quarter of 1995 compared to the second quarter of 1995. This decrease was primarily caused by lower olefins sales margins and volumes, partially offset by higher refined products sales margins. Net income for the first nine months of 1995 was $362 million or $4.52 per share compared to a net income of $120 million or $1.51 per share for the first nine months of 1994. The $242 million improvement in net income was primarily caused by higher sales margins for all petrochemical products and the addition of the Alathon(R) business. Contributing to the improvement were higher sales margins for aromatics and refined products which more than offset higher refining period costs. 10 PETROCHEMICAL SEGMENT REVENUES Sales and other operating revenues for the third quarter of 1995 were $687 million compared to $537 million for the third quarter of 1994. The $150 million increase was primarily due to sales of HDPE resulting from the acquisition of the Alathon(R) business effective May 1, 1995. Contributing to the increase were higher olefins sales prices resulting from improved market conditions, partially offset by lower olefins sales volumes. Sales and other operating revenues for the first nine months of 1995 were $2.1 billion, an increase of $742 million compared to the first nine months of 1994. The increase was due to higher olefins and polyolefins sales prices and the HDPE sales from the Alathon(R) business. The higher olefins sales prices reflected continued strong market conditions for petrochemicals that resulted from the high U.S. economic growth rate, an improved worldwide economy and industry supply disruptions during the latter part of 1994 COST OF SALES Cost of sales was $498 million in the third quarter of 1995 compared to $408 million in the third quarter of 1994, an increase of $90 million. The increase was primarily due to the addition of the Alathon(R) business. Cost of sales for the first nine months of 1995 was $1.5 billion, an increase of $350 million compared to the first nine months of 1994. This increase was primarily due to the addition of the Alathon(R) business and to higher olefins feedstock costs resulting mostly from higher raw material prices. Olefins raw material prices were higher due to higher worldwide crude oil and petroleum product prices. SELLING EXPENSES Selling expenses for the third quarter of 1995 were $26 million, an increase of $17 million compared to the third quarter of 1994. Selling expenses for the first nine months of 1995 compared to the first nine months of 1994 were $30 million higher. These increases were primarily caused by selling expenses associated with the Alathon(R) business. OPERATING INCOME Operating income for the third quarter of 1995 was $163 million compared to $120 million in the third quarter of 1994. The $43 million improvement was primarily due to higher olefins sales margins and the contribution from the Alathon(R) business, partially offset by lower olefins sales volumes and lower methanol sales margins. The higher olefins sales margins resulted from higher sales prices which were due to higher industry-wide demand resulting from the improved worldwide economy and industry supply disruptions during the latter part of 1994. However, the olefins market environment began to weaken during the third quarter of 1995 for most products as a result of lower demand. Methanol sales margins were lower due to a significant decline in prices which began late in the first quarter of 1995 due to a decline in MTBE related demand for reformulated gasoline and an increase in methanol supply. Operating income for the third quarter of 1995 compared to the second quarter of 1995 decreased $67 million due to lower olefins sales margins and volumes. Olefins sales margins declined due to lower ethylene and propylene sales prices which more than offset lower feedstock costs. An increase in industry ethylene production during the first nine months of 1995 coupled with lower economic activity contributed to the decline in olefins sales prices during the third quarter. The reduction in olefins sales volumes during the third quarter was due to the lower economic activity and the Company's efforts to build inventories in preparation for the turnaround of one of the olefins units during the fourth quarter. Operating income for the first nine months of 1995 was $589 million compared to an operating income of $227 million during the first nine months of 1994. This $362 million improvement in operating income was primarily caused by higher sales margins for all petrochemical products and the addition of the Alathon(R) business. Olefins sales margins were higher due to significantly higher ethylene and olefins co-products sales prices that more than offset increased raw material prices. Olefins sales prices were higher due to the improved economy and supply and demand factors. The improved methanol sales margins resulted from higher sales prices caused by higher demand growth resulting from the improved worldwide economy, increased use of MTBE and industry supply disruptions 11 in the latter part of 1994. The improved polyolefins performance resulted from the contribution of the Alathon(R) business and higher sales prices for other polyolefins products caused by the improved economic conditions. REFINING SEGMENT REVENUES Sales and other operating revenues for the third quarter of 1995 were $644 million compared to $601 million for the third quarter of 1994. This $43 million increase was primarily due to higher sales prices for aromatics and higher sales volumes for crude oil resales. Aromatics sales prices, specifically for paraxylene and orthoxylene, increased because of improved market conditions over the latter part of 1994 and first half of 1995. Paraxylene prices were positively impacted by high worldwide growth of polyester, particularly in the polyethylene terephthalate bottle sector. Sales and other operating revenues for the first nine months of 1995 were $2.0 billion, an increase of $276 million compared to the first nine months of 1994. This increase was primarily due to higher sales prices for both refined products and aromatics, particularly for paraxylene and orthoxylene, and higher sales volumes and prices for crude oil resales. Refined products sales prices were higher generally due to the higher worldwide crude oil prices. COST OF SALES Cost of sales was $595 million during the third quarter of 1995 compared to $573 million during the third quarter of 1994. Contributing to this $22 million increase were higher crude oil resale volumes and higher period costs. Cost of sales was $1.8 billion during the first nine months of 1995 compared to $1.6 billion during the first nine months of 1994. This $229 million increase was primarily due to higher crude oil and other feedstock prices and to higher volumes and costs related to crude oil resales. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses were $14 million in the third quarter of 1995, unchanged from the third quarter of 1994. Selling, general and administrative expenses were $43 million during the first nine months of 1995 compared to $41 million during the first nine months of 1994. OPERATING INCOME Operating income for the third quarter of 1995 was $35 million compared to $14 million for the third quarter of 1994. The $21 million increase was primarily due to higher aromatics sales margins which increased because of higher sales prices, particularly for paraxylene and orthoxylene. Operating income for the third quarter of 1995 compared with the second quarter of 1995 increased $13 million primarily due to higher refined products sales margins and lower period costs. Refined products sales margins were higher due to improved operating performance, and period costs were lower due to reduced maintenance and repairs costs. Operating income for the first nine months of 1995 was $100 million compared to $55 million for the first nine months of 1994. The $45 million increase was primarily due to higher sales margins for aromatics and refined products, partially offset by higher refining period costs. Aromatics sales margins were higher due to higher sales prices, particularly for paraxylene and orthoxylene. Refined products sales margins were higher due to processing higher volumes of Venezuelan crude oil purchased under the Crude Supply Contract in both the coking and cracking modes. Refined products period costs were higher due to increased maintenance expenses for scheduled and unscheduled downtime of various manufacturing units. 12 UNALLOCATED GENERAL AND ADMINISTRATIVE EXPENSES General and administrative expenses were $15 million in the third quarter of 1995 compared to $10 million in the third quarter of 1994. The $5 million increase was primarily due to the absence of life insurance proceeds during the current quarter that were received in the third quarter of 1994 and to higher outside legal fees. General and administrative expenses were $47 million in the first nine months of 1995 compared to $33 million in the first nine months of 1994. The $14 million increase was primarily due to higher management incentive compensation related expenses, a significant portion of which was for a management incentive compensation plan adopted in 1995, and the absence during the current period of the life insurance proceeds. INTEREST EXPENSE Interest expense was $20 million during the third quarter of 1995 compared to $19 million during the third quarter of 1994. Interest expense was $59 million during the first nine months of 1995 compared to $56 million during the first nine months of 1994. These interest expense increases resulted from amounts borrowed to partially finance the Alathon(R) acquisition. INTEREST INCOME Interest income was $5 million during the first nine months of 1995 compared to $3 million during the first nine months of 1994. This $2 million increase in interest income resulted from higher levels of excess cash invested at higher interest rates prior to the Alathon(R) acquisition. MINORITY INTEREST IN LYONDELL-CITGO REFINING COMPANY LTD. Minority interest was $4 million in the third quarter of 1995 and $12 million for the first nine months of 1995, representing the allocated share of LCR's net income to CITGO, the minority owner of LCR. INCOME TAX The effective income tax rate during the first nine months of 1995 was 37.2 percent. State income tax was the primary difference between the effective tax rate and the 35 percent federal statutory rate. FINANCIAL CONDITION Lyondell's cash provided by operating activities was $345 million and $114 million during the first nine months of 1995 and 1994, respectively. This $231 million increase is attributable to the $242 million increase in net income. Cash provided by operating activities during the first nine months of 1995 was reduced by working capital increases of $82 million which includes $96 million for the initial working capital requirements of the Alathon(R) business. Cash used in investing activities during the first nine months of 1995 consisted of capital expenditures of $781 million, of which $355 million was for the Alathon(R) acquisition, $321 million was for the upgrade project at the Refinery and $21 million was for environmentally related projects. As of September 30, 1995, $27 million of cash was restricted for use in LCR capital projects, including the Refinery upgrade project, and other expenditures as determined by the LCR owners. The total expenditure for the Alathon(R) acquisition was $419 million, including approximately $64 million for inventories. The Company financed the acquisition with internal cash and $230 million of short-term borrowings from its existing financing arrangements. At September 30, 1995, $160 million was outstanding under these financing arrangements. Expenditures during the nine months ended September 30, 1995 for the Refinery upgrade project were funded by contributions from CITGO in the amount of $147 million and $175 million borrowed by LCR under a $450 million credit facility. During June 1995, the Company's $400 million revolving credit facility was amended by extending the term of the facility to the year 2000 and adding a competitive auction feature wherein the interest rate on borrowings can be 13 based on competitive bids submitted by the sponsoring banks or at either the eurodollar, certificate of deposit or prime rates, all at the Company's option. All other terms and conditions remained substantially unchanged. See Note 5 of "NOTES TO CONSOLIDATED FINANCIAL STATEMENTS." In May 1995, LCR entered into two credit facilities totaling $520 million with a group of banks with The Bank of New York as agent. The first facility was a $70 million, 364 day revolving credit facility, which replaced LCR's former $70 million revolving credit facility, that will be utilized for general business purposes, including letters of credit, unrelated to the Refinery upgrade project. The second facility is a $450 million, five year term credit facility that will be used in connection with the Refinery upgrade project. Interest for both facilities is based on prime or eurodollar rates at LCR's option. Prior to the completion of the Refinery upgrade project, all financing and other costs related to the $450 million credit facility will be funded by CITGO. See Note 5 of "NOTES TO CONSOLIDATED FINANCIAL STATEMENTS." On October 20, 1995, the Board of Directors declared a regular quarterly dividend of $.225 per share of common stock, payable December 15, 1995 to stockholders of record on November 24, 1995. CURRENT BUSINESS OUTLOOK Lyondell's results for the third quarter and for the nine month period ended September 30, 1995 reflect strong markets for its petrochemical and polyolefins products and continued strong aromatics performance at LCR. The positive contribution from the Alathon(R) business since its purchase on May 1, 1995 met management's expectation. However, petrochemical prices continued to decline, as expected, during the third quarter from peak levels experienced in early 1995. An increase in industry ethylene capacity over the past nine months, coupled with slower economic growth, may cause further and broader declines in the prices of olefins and polyolefins. New methanol industry capacity which has been added this year and uncertainty with regard to MTBE demand may put additional pressure on methanol prices. During the third quarter, LCR refined products margins remained above refining industry margins due to the benefits of the Crude Supply Contract. Early in the fourth quarter, refining industry coking and cracking margins have declined compared to the average third quarter levels, affecting LCR's profitability on the approximately 40 percent of crude oil runs not covered by the Crude Supply Contract. The aromatics business remains strong, particularly for paraxylene, although orthoxylene prices have declined. Management expects LCR to continue to benefit from the stabilization of cash flows and reduction in market volatility provided by the Crude Supply Contract. The keys to profitability for LCR continue to be maximizing the amount of heavy Venezuelan crude oil processed in the coking mode, optimizing the efficient utilization of the remaining cracking capacity and low cost operations. On November 3, 1995, the coker was taken down for unscheduled maintenance. LCR management believes the unit will be back in operation in approximately two to three weeks. Profitability and cash flows for the petrochemical and refining businesses are affected by industry supply and demand, feedstock cost volatility, capital expenditures required to meet more stringent environmental standards, repair and maintenance costs and downtime of production units due to maintenance turnarounds. Turnarounds on major units can have significant financial impacts due to the repair and maintenance costs incurred as well as the associated loss of production, resulting in lower profitability during the period of the turnaround. The Company began a turnaround on one of its two olefins units beginning in late September, 1995. During this turnaround, which is expected to last six to eight weeks, work will be completed to debottleneck the unit which will increase its capacity by approximately 120 million pounds per year. The Company plans to perform a turnaround and debottleneck of its other olefins unit during the first half of 1996. LCR plans to perform a turnaround of its fluid catalytic cracking unit in the second half of 1996. 14 The Company announced August 23, 1995 the commencement of an engineering study of the planned construction of a worldscale olefins plant. The proposed 1.5 billion pound per year plant would be jointly owned by the Company and two other olefins producers and would be located at the Company's Channelview, Texas, Petrochemical Complex with the Company as plant operator. The Company believes that business conditions will be such that cash balances, cash generated from operating activities and existing lines of credit will be adequate to meet future cash requirements for scheduled debt repayments, necessary capital expenditures and to sustain for the reasonably foreseeable future the regular quarterly dividend. However, the Company continually evaluates its cash requirements and allocates cash in order to maximize stockholder returns. __________________________ Management cautions against projecting any future results based on present or prior earnings levels because of the cyclical nature of the refining and petrochemical industries and uncertainties associated with the United States and worldwide economies and current and potential United States governmental regulatory actions. 15 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS 1. Reference is made to the disclosure on page 20 of the Company's Annual Report on Form 10-K for the year ended December 31, 1994 (hereinafter the " 1994 Form 10-K Report") regarding Atlantic Richfield Company's (ARCO) litigation with certain of its insurance carriers over insurance coverage and the impact of such coverage disputes on the Company's Cross-Indemnity Agreement with ARCO. ARCO has reported that it has settled with several of the insurance carrier defendants and that ARCO expects that trial with the remainder of the defendants will be scheduled for the first half of 1996. At this time, the Company is unable to assess the impact on it, if any, of the resolution of the coverage disputes. 2. There have been no material developments with respect to the Company's legal proceedings as previously reported in the 1994 Form 10-K Report or subsequent Quarterly Reports on Form 10-Q. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 10.1 Amendment No. 1 to the Lyondell Petrochemical Company Supplementary Executive Retirement Plan. 10.2 Amendment No. 2 to the Lyondell Petrochemical Company Executive Deferral Plan. 10.3 Amendment No. 1 to the Lyondell Petrochemical Company Restricted Stock Plan. 10.4 Amendment No. 2 to the Lyondell Petrochemical Company Value Share Plan. 27 Financial Data Schedule. (b) Reports on Form 8-K None. 16 SIGNATURE 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 thereunto duly authorized. Lyondell Petrochemical Company (Registrant) Dated: November 8, 1995 JOSEPH M. PUTZ ------------------------------ (Signature) Joseph M. Putz Vice President and Controller (Duly Authorized Officer and Principal Accounting Officer) 17 EX-10.1 2 AMT 1 SUPP EXEC RETIREMENT PLAN EXHIBIT 10.1 INSTRUMENT AMENDING LYONDELL PETROCHEMICAL COMPANY SUPPLEMENTARY EXECUTIVE RETIREMENT PLAN LYONDELL PETROCHEMICAL COMPANY hereby amends, effective January 1, 1995, the Lyondell Petrochemical Company Supplementary Executive Retirement Plan, as follows: SECTION 1.1, PURPOSE AND INTENT OF PLAN, paragraph three, subpart (a), is amended to read as follows: This Plan is intended to provide supplemental retirement allowances in accordance with the provisions of the Plan contained herein, to those Employees who: (a) have received Awards under the Lyondell Petrochemical Company Value Share Plan, the Lyondell Petrochemical Management Value Share Plan, the Lyondell Petrochemical Company Annual Incentive Plan, the Atlantic Richfield Company Annual Incentive Plan, the ARCO Chemical Company Annual Incentive Plan and/or the LYONDELL-CITGO Refining Company Ltd Annual Incentive Plan or its equivalent, SECTION 1.4, DEFINITIONS, AWARD, is amended to read as follows: AWARD means a cash award made under the Lyondell Petrochemical Company Value Share Plan, the Lyondell Petrochemical Management Value Share Plan, the Lyondell Petrochemical Company Annual Incentive Plan, the Atlantic Richfield Company Annual Incentive Plan, the ARCO Chemical Company Annual Incentive Plan and/or the Lyondell-CITGO Refining Company Ltd. Annual Incentive Plan or its equivalent. Award does not include Deferred Cash as such term is used in the Lyondell Petrochemical Company Value Share Plan or Management Value Share Plan. SECTION 5.1, ADMINISTRATIVE COMMITTEE, is amended to read as follows: The Benefits Administrative Committee of Lyondell Petrochemical Company shall act as the Administrative Committee for this Plan. LYONDELL PETROCHEMICAL COMPANY hereby amends effective July 1, 1995, the Lyondell Petrochemical Company Supplementary Executive Retirement Plan, as follows: SECTION 5.2, RULES OF CONDUCT; ADMINISTRATIVE PROCEDURES, is amended to delete the words "CAP Plan" and to substitute the words "Lyondell Petrochemical Company 401(K) and Savings Plan." IN WITNESS WHEREOF, LYONDELL PETROCHEMICAL COMPANY, acting by and through its duly authorized officer, has caused this Instrument to be executed on this 18th day of September, 1995. ATTEST: LYONDELL PETROCHEMICAL COMPANY BY: /s/ Gerald O'Brien BY: /s/ Richard W. Park ----------------------- --------------------------------- Assistant Secretary Richard W. Park Vice President, Human Resources EX-10.2 3 AMT 2 EXEC DEFERRAL PLAN EXHIBIT 10.2 INSTRUMENT AMENDING LYONDELL PETROCHEMICAL COMPANY EXECUTIVE DEFERRAL PLAN LYONDELL PETROCHEMICAL COMPANY hereby amends the Lyondell Petrochemical Company Executive Deferral Plan, effective January 1, 1995, as follows: SECTION 1.1, PURPOSE AND INTENT OF PLAN, is amended to delete "Annual Incentive Plan awards" and to substitute "a portion of Value Share Plan awards or a portion of Management Value Share Plan awards". SECTION 1.3, DEFINITIONS, AWARDS, is amended to read as follows: AWARDS means cash awards under the Lyondell Petrochemical Company Value Share Plan, Management Value Share Plan or awards under any other plan that the Board of Directors of Lyondell Petrochemical Company, or the Compensation Committee thereof, has authorized the Company to adopt and has further authorized awards thereunder to be treated as Awards under this Plan. SECTION 1.3, DEFINITIONS, CONSTRUCTIVE TERMINATION FOR GOOD REASON, subpart (2), is amended to read as follows: (2) the reduction of the Participant's annual salary (including any deferred portions thereof), the reduction of the Participant's Value Share Plan as a result of an adverse change in Plan terms (and not as a result of a reduction solely to satisfy federal tax law requirements), or a material reduction in the level of benefits or supplemental compensation provided to the Participant; or LYONDELL PETROCHEMICAL COMPANY hereby amends the Lyondell Petrochemical Company Executive Deferral Plan, effective July 1, 1995, as follows: SECTION 1.3, DEFINITIONS, CAP PLAN, and SECTION 1.3, DEFINITIONS, SAVINGS PLAN, are deleted. SECTION 1.3, DEFINITIONS, is amended to add new definition, 401(K) AND SAVINGS PLAN, to read as follows: 401(K) AND SAVINGS PLAN means the Lyondell Petrochemical Company 401(K) and Savings Plan maintained by Lyondell Petrochemical Company. The Executive Deferral Plan is amended to delete references to "CAP Plan" or "Savings Plan" or both and to substitute "401(k) and Savings Plan" for any former reference to "CAP Plan" or "Savings Plan" or both. IN WITNESS WHEREOF, LYONDELL PETROCHEMICAL COMPANY, acting by and through its duly authorized officer, has caused this Instrument to be executed on the 18th day of September, 1995. ATTEST: LYONDELL PETROCHEMICAL COMPANY BY: /s/ Gerald A. O'Brien BY: /s/ Richard W. Park ----------------------- ----------------------------------- Assistant Secretary Richard W. Park Vice President, Human Resources EX-10.3 4 AMT 1 RESTRICTED STOCK PLAN EXHIBIT 10.3 INSTRUMENT AMENDING RESTRICTED STOCK PLAN OF LYONDELL PETROCHEMICAL COMPANY LYONDELL PETROCHEMICAL COMPANY hereby amends the Restricted Stock Plan of Lyondell Petrochemical Company, effective September 1, 1995, as follows: Section 5, Terms and Conditions of Restricted Shares, subsection (b), Restricted Period, is amended to read as follows: Section 5 Terms and Conditions of Restricted Shares (b) Restricted Period. The Restricted Period shall begin on the date of the grant and shall continue for a period of time determined on the date of the grant, subject to the following conditions: (i) The Restricted Period for a grant to a Value Share Plan Participant shall lapse on December 15 of each year following the grant as to one third of the grant of Restricted Shares, until, on December 15 of the third year following the grant, the Restricted Period has totally lapsed as to all Restricted Shares for that particular grant; and (ii) The Restricted Period for a grant to Participants who are not Value Share Plan Participants shall not be less than the Restricted Period for a grant to Value Share Plan Participants. IN WITNESS WHEREOF, LYONDELL PETROCHEMICAL COMPANY, acting by and through its duly authorized officer, has caused this Instrument to be executed on August 28, 1995. ATTEST: LYONDELL PETROCHEMICAL COMPANY By: /s/ Gerald A. O'Brien By: /s/ Richard W. Park --------------------- ------------------------------- Assistant Secretary Richard W. Park Vice President, Human Resources EX-10.4 5 AMT 2 VALUE SHARE PLAN EXHIBIT 10.4 AMENDMENT NO. 2 LYONDELL PETROCHEMICAL COMPANY VALUE SHARE PLAN LYONDELL PETROCHEMICAL COMPANY hereby amends the Value Share Plan of Lyondell Petrochemical Company, effective September 1, 1995, as follows: Section II.9, PAYOUT OF AWARDS, paragraph four, is amended to read as follows: The number of shares of Restricted Stock to be granted to each Participant will be calculated by dividing the Participant's award in (b) above by the Company's average daily closing stock price during the last month of the Performance Cycle. The Restricted Stock will vest in three equal installments on December 15 in each of the three years following the end of the Performance Cycle. Restricted Stock will vest immediately upon a Change in Control or upon the Participant's death, Retirement or permanent Disability. Shares of Restricted Stock will earn dividends, as paid, and have voting rights over the restricted period. IN WITNESS WHEREOF, LYONDELL PETROCHEMICAL COMPANY, acting by and through its duly authorized officer, has caused this Instrument to be executed on August 28, 1995. ATTEST: LYONDELL PETROCHEMICAL COMPANY By: GERALD A. O'BRIEN By: RICHARD W. PARK Assistant Secretary Richard W. Park Vice President, Human Resources EX-27 6 FIN DATA SCHED
5 1,000,000 9-MOS DEC-31-1995 JAN-01-1995 SEP-30-1995 71 0 369 3 313 784 3,596 1,971 2,501 757 732 80 0 0 290 2,501 3,793 3,793 3,003 3,003 148 0 59 576 214 362 0 0 0 362 4.52 4.52
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