-----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, T7AQfRYkDTfvj/6IWE/cdVgnPlJzObcNGVJcToJRyP1ZTMTWsTSg/rqj6aw6G6Xw Yf+hCgBWeeFAvu8FN9PUpA== 0000927356-97-000070.txt : 19970128 0000927356-97-000070.hdr.sgml : 19970128 ACCESSION NUMBER: 0000927356-97-000070 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19970127 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970127 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 SEC ACT: 1934 Act SEC FILE NUMBER: 001-10145 FILM NUMBER: 97511511 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 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JANUARY 27, 1997. LYONDELL PETROCHEMICAL COMPANY - ---------------------------------------------------------------------------- (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 1-10145 95-4160558 - ---------------------------------------------------------------------------- (STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER IDENTIFICATION NO.) OF INCORPORATION) FILE NUMBER) 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 5. OTHER EVENTS Press Release dated January 27, 1997, reporting earnings from 4th Quarter and full year 1996. Press release dated January 27, 1997, reporting 1997 capital budget. Press release dated January 27, 1997, reporting quarterly dividend payment. Press release dated January 27, 1997, reporting management realignment and segmented reporting. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) Exhibits Exhibit Document ------- -------- 99.1 Press Release dated January 27, 1997. 99.2 Press Release dated January 27, 1997. 99.3 Press Release dated January 27, 1997. 99.4 Press Release dated January 27, 1997. 2 EXHIBIT INDEX Exhibit Number Document - -------------- -------- 99.1 Press Release Dated as of January 27, 1997. 99.2 Press Release Dated as of January 27, 1997. 99.3 Press Release Dated as of January 27, 1997. 99.4 Press Release Dated as of January 27, 1997. 3 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: January 27, 1997 LYONDELL PETROCHEMICAL COMPANY By: /s/ Joseph M.Putz ------------------ Joseph M. Putz Vice President and Controller 4 EX-99.1 2 PRESS RELEASE DATED JANUARY 27, 1997 EXHIBIT 99.1 [Logo of Lyondell Petrochemical appears here] NEWS - -------------------------------------------------------------------------------- One Houston Center, 1221 McKinney Ave., P.O. Box 3646, Houston, Texas 77253-3646 (713) 652-7200 FOR IMMEDIATE RELEASE LYONDELL PETROCHEMICAL COMPANY ANNOUNCES EARNINGS FOR 1996 FULL YEAR AND FOURTH QUARTER HOUSTON, January 27, 1997 -- Lyondell Petrochemical Company (NYSE:LYO) today reported net income for the full year 1996 of $126 million, or $1.58 per share, versus $389 million, or $4.86 per share, in 1995. Net income for the fourth quarter of 1996 was $52 million, or $.66 per share, compared with $27 million, or $.34 per share in the fourth quarter of 1995. Fourth quarter 1996 net income includes an approximate $20 million gain from asset sales and approximately $19 million from the settlement of a claim. "While this has been a difficult year for Lyondell with higher feedstock costs for petrochemicals and planned and unplanned downtime at the LCR refinery, there were positive developments on several fronts that are adding value now and for the future," said Dan F. Smith, President and Chief Executive Officer. "These included strong contributions from the polymers business, the creation of a strong partnership for our methanol business and the substantial completion of the LCR upgrade project, which is expected to stabilize earnings and cash flow from our refining business." Smith said that petrochemical markets were strong in 1996 and Lyondell benefited from good performance from its olefins and polymers operations. However, price increases were outpaced by rapidly escalating feedstock costs and this eroded margins for the olefins business. Results from LYONDELL-CITGO Refining Company, Ltd., (LCR) were affected by a decline in aromatics margins as well as scheduled and unscheduled turnarounds associated with completion and tie-in of new units for the upgrade project. Among the highlights of 1996: . Polymers production volumes and operating profits reached record levels, led by the high-density polyethylene (HDPE) business that Lyondell acquired in May 1995. To build on its leadership in fast growing segments of this market, Lyondell has recently announced plans to expand HDPE capacity. A 33 percent capacity expansion for polypropylene was completed in 1996. . Lyondell completed a 7 percent increase in ethylene capacity through a low- cost debottleneck of the second olefins plant during a scheduled turnaround in the second quarter. . In the fourth quarter, the Company finalized an agreement through which MCN Investment Corporation acquired a 25 percent interest in Lyondell's methanol unit, enhancing the value of that asset. . By year-end 1996, LCR had completed construction of all major units for the refinery upgrade project, which is expected to start up in the first quarter of 1997. Completion of this project will enable LCR to realize the full benefits of the Venezuelan crude oil supply agreement which was entered into in 1993. Once the project is complete, CITGO's ownership will increase to approximately 40 percent. As a result, effective January 1, 1997, Lyondell will no longer consolidate financial results from LCR with its petrochemical results, but will report LCR under the equity method of accounting. The financial tables accompanying this news release show what Lyondell's 1996 results would have been on a pro forma basis, had the deconsolidation been effective January 1, 1996. Fourth quarter 1996 earnings included gains from asset sales and settlement of a claim associated with an ARCO Pipe Line Company fire which shut down Lyondell's Channelview, Texas olefins plants for about two weeks in the early part of the third quarter. This settlement offset most of the impact of that event and, in effect, transferred earnings that would have been made in the third quarter to fourth quarter results. Versus the third quarter of 1996, when the company earned $35 million, or 42 cents per share, 2 operating results in the fourth quarter were affected by the following factors (in addition to the items described above): . higher feedstock costs; . lower polymers demand and pricing (versus the very strong markets in the prior quarters) resulting from seasonal factors and inventory reductions throughout the industry; . LCR transitional issues as the project was nearing completion. Smith said, "The supply and demand factors for our petrochemicals business look strong as we enter 1997. However, we are concerned about the extent that high feedstock costs may continue to affect margins. We expect to begin to see the benefits of the advantageous provisions of our refining venture during 1997 as the upgrade project comes on stream, although we recognize that it may be during the second half of the year before it will be fully operational." Lyondell Petrochemical Company produces a wide variety of petrochemicals, including olefins (primarily ethylene, propylene, butadiene, butylenes and specialty products), methanol, MTBE, and polymers (Alathon/R/ high-density polyethylene, polypropylene and low-density polyethylene). Lyondell currently has an approximately 90% participation interest in LYONDELL-CITGO Refining Company Ltd. (LCR), which produces refined petroleum products, including gasoline, heating oil, jet fuel, aromatics and lubricants. # # # For information, contact: Media - Jackie Wilson (713) 652-4596 Investors - Kevin DeNicola (713) 652-4590 3 LYONDELL PETROCHEMICAL COMPANY FINANCIAL AND OPERATING INFORMATION (UNAUDITED)
FOR THE THREE MONTHS FOR THE TWELVE MONTHS INCOME STATEMENT ENDED DECEMBER 31 ENDED DECEMBER 31 -------------------- ------------------------------------- PROFORMA* (MILLIONS OF DOLLARS EXCEPT PER SHARE AMOUNTS) 1996 1995 1996 1995 1996 ------ ------ ------ ------ --------- Sales and other operating revenues $1,401 $1,143 $5,052 $4,936 $2,644 Gain on sale of assets 30 -- 30 -- 30 Operating costs and expenses: Cost of sales 1,270 1,023 4,570 4,026 2,237 Selling, general and administrative expenses 60 56 234 204 172 ------ ------ ------ ------ ------ Operating income 101 64 278 706 265 Interest expense (20) (21) (81) (80) (79) Interest income -- 1 3 6 1 Minority interest (1) (2) (4) (14) (2) Income from equity investment 11 ------ ------ ------ ------ ------ Income before income taxes 80 42 196 618 196 Provision for income taxes 28 15 70 229 70 ------ ------ ------ ------ ------ Net income $ 52 $ 27 $ 126 $ 389 $ 126 ====== ====== ====== ====== ====== Earnings per share $ .66 $ .34 $ 1.58 $ 4.86 $ 1.58 ====== ====== ====== ====== ====== Avg. no. common shares outstanding (thousands) 80,000 80,000 80,000 80,000 80,000 ====== ====== ====== ====== ======
FOR THE THREE MONTHS FOR THE TWELVE MONTHS SELECTED FINANCIAL & OPERATING DATA ENDED DECEMBER 31 ENDED DECEMBER 31 -------------------- ------------------------------------- PROFORMA* (MILLIONS OF DOLLARS) 1996 1995 1996 1995 1996 ------ ------ ------ ------ --------- SALES AND OPERATING REVENUES Petrochemical segment $ 770 $ 555 $2,643 $2,657 $2,644 Refinery segment Products 639 552 2,376 2,278 Crude 127 109 436 370 Intersegment eliminations (135) (73) (403) (369) ------ ------ ------ ------ ------ Total $1,401 $1,143 $5,052 $4,936 $2,644 ====== ====== ====== ====== ====== OPERATING INCOME Petrochemical segment $ 142 $ 51 $ 337 $ 635 $ 265 Refinery segment (24) 25 1 130 Unallocated (17) (12) (60) (59) ------ ------ ------ ------ ------ Total $ 101 $ 64 $ 278 $ 706 $ 265 ====== ====== ====== ====== ====== SALES VOLUMES (EXCLUDES INTERSEGMENT SALES) Selected petrochemical products (millions) Ethylene, propylene and polymers (lbs) 1,749 1,719 6,985 6,832 6,985 Other olefins (lbs) 242 207 980 1,030 980 Methanol (gallons) 53 54 209 199 209 Aromatics (gallons) 43 34 167 152 167 Refinery products (thousand barrels per day) Gasoline 83 113 101 109 101 Heating oil (no. 2 distillate) 47 55 47 52 47 Jet fuel 20 27 23 29 23 Aromatics 7 8 7 8 7 Other refinery products 72 55 59 56 59 ------ ------ ------ ------ ------ Total refinery products volumes 229 258 237 254 237 ====== ====== ====== ====== ====== REFINERY RUNS (thousand barrels per day) Blended crude oil 190 236 218 238 218 Unfinished stock 55 50 45 48 45 ------ ------ ------ ------ ------ Total 245 286 263 286 263 ====== ====== ====== ====== ======
- ------------------- * NOTE: The results of LYONDELL-CITCO Refining Company Ltd.'s (LCR) 1996 and earlier operations have been consolidated into the Company's financial statements. Effective January 1, 1997, the Company will account for its investment in LCR under the equity method of accounting. Proforma financial information as of and for the year ended December 31, 1996 above presents the Company's results of operations had the change from consolidation of LCR to accounting for the Company's investment in LCR under the equity method of accounting been effective January 1, 1996. LYONDELL PETROCHEMICAL COMPANY SELECTED FINANCIAL INFORMATION (UNAUDITED) MILLIONS OF DOLLARS
Proforma* December 31 December 31 1996 1996 ----------- ----------- CONDENSED BALANCE SHEET - ----------------------- Cash and cash equivalents $ 68 $ 56 Accounts receivable, inventories and other current assets 763 563 Fixed assets, net 2,270 893 Investment in affiliate 83 Receivable from affiliate 177 Other non-current assets 175 118 ------ ------ Total assets $3,276 $1,890 ====== ====== Current maturities of long-term debt and notes payable $ 172 $ 162 Other current liabilities 599 321 Long-term debt 1,194 744 Other liabilities and deferred credits 271 229 Minority interest 609 3 Stockholders' equity 431 431 ------ ------ Total liabilities and stockholders' equity $3,276 $1,890 ====== ======
Cash and cash equivalents Proforma* for the twelve months ended December 31, 1996 December 31 Unrestricted Restricted Total 1996 -------------- ------------ ------- ------ CASH FLOW - --------- Net income $ 126 $ 126 $ 126 Non-cash transactions: Depreciation and amortization 110 110 74 Deferred taxes 50 50 53 Minority interest 4 4 2 Income from equity investment (11) Gain on sale of assets (30) (30) (30) Change in working capital/other (28) (28) (92) ----- ----- ----- CASH FLOW FROM OPERATIONS 232 232 122 Additions to fixed assets: Refinery upgrade project (2) $(471) (473) Refinery segment - other (56) (56) Petrochemical segment - other (80) (80) (80) Proceeds from sales of assets 55 55 55 (Contributions and advances to) and distributions from affiliate (72) Minority owner investments: Contributions 2 144 146 Reinvestments (13) 13 -- Lyondell contributions (12) 12 -- Lyondell loan to LCR (152) 152 -- Net repayments of short-term debt (43) (43) (53) Borrowings of long-term debt 300 199 499 300 Repayments of long-term debt (150) (150) (150) Dividends paid (72) (72) (72) ----- ----- ----- INCREASE (DECREASE) IN CASH, RESTRICTED CASH AND CASH EQUIVALENTS: 65 (7) 58 50 Cash, restricted cash and cash equivalents at beginning of period 3 7 10 6 ----- ----- ----- ----- Cash and cash equivalents at end of period $ 68 -- $ 68 $ 56 ===== ===== ===== =====
- --------------- *NOTE: The results of LYONDELL-CITGO Refining Company Ltd.'s (LCR) 1996 and earlier operations have been consolidated into the Company's financial statements. Effective January 1, 1997, the Company will account for its investment in LCR under the equity method of accounting. Pro forma financial information as of and for the year ended December 31, 1996 above presents the Company's results of operations had the change from consolidation of LCR to accounting for the Company's investment in LCR under the equity method of accounting been effective January 1, 1996. EX-99.2 3 PRESS RELEASE DATED JANUARY 27, 1997 EXHIBIT 99.2 [Logo of Lyondell Petrochemical appears here] NEWS - -------------------------------------------------------------------------------- One Houston Center, 1221 McKinney Ave., P.O. Box 3646, Houston, Texas 77253-3646 (713) 652-7200 FOR IMMEDIATE RELEASE LYONDELL'S 1997 CAPITAL PROGRAM INCLUDES PLANS TO ADD HIGH DENSITY POLYETHYLENE CAPACITY HOUSTON, January 27, 1997 -- Lyondell Petrochemical Company (NYSE:LYO) has announced plans to add 440 million pounds of Nissan technology high density polyethylene (HDPE) resin capacity with a targeted start up no later than mid- 1999, to build on its position as a leading supplier of High-Molecular Weight (HMW) HDPE film resins. This will bring the company's total HDPE capacity to more than 2 billion pounds, making Lyondell one of the world's largest producers of HDPE going into the 21st century. The company is currently evaluating potential locations for the new unit. Initial capital spending for this project is included in Lyondell's 1997 capital budget, which has been set at $132 million. "The investment in HDPE expansion will provide us with capacity to supply the rapidly growing film market where we are a strong participant, and also benefits our olefins business through additional vertical integration. It fits well with our existing strengths and logistics system as well as our long- term strategic plans," said Dan F. Smith, Lyondell President and Chief Executive Officer. The increasing rate of demand for HMW film resin is expected to outpace the growth rate of other resins. Lyondell is a leading producer of these HMW film resins and is committed to building resin capacity to support our customers' growth. These resins are used primarily in grocery and merchandise carry-out bags as well as industrial and consumer trash bags. The Nissan technology, already in use at the company's Matagorda County (Texas) plant, provides Lyondell with a competitive economic advantage. 1 Its multiple reactor, bi-modal product capability is key to Lyondell's ability to provide a broad, yet unique product line offering. Lyondell also promotes licensing of the Nissan technology under a joint agreement with Nissan Chemical and Maruzen Polymer. The 440 million pound expansion will provide the company with 40 percent more capacity to meet the projected growth of its film customers, as well as incremental capacity for blow molding, injection molding and pipe markets. Currently, Lyondell's annual HDPE capacity includes 1.1 billion pounds at the Matagorda plant and 475 million pounds at a plant in Victoria, Texas. A recently announced debottlenecking project at Victoria will increase capacity at that site to 575 million pounds by 1998. At a plant in LaPorte, Texas, Lyondell recently completed a 100 million pound expansion of polypropylene (PP) capacity, bringing total annual PP capacity to 400 million pounds. At that facility, Lyondell also operates a low-density polyethylene unit with annual capacity of 150 million pounds. Other major projects in the 1997 capital budget include the debottlenecking of the Victoria HDPE capacity, and control and electrical upgrades at the Channelview Petrochemical Complex and LYONDELL-CITGO Refining Company, Ltd. # # # For information, contact: Media - Jackie Wilson (713) 652-4596 Investors - Kevin DeNicola (713) 652-4590 2 EX-99.3 4 PRESS RELEASE DATED JANUARY 27, 1997 EXHIBIT 99.3 [Logo of Lyondell Petrochemical appears here] NEWS - -------------------------------------------------------------------------------- One Houston Center, 1221 McKinney Ave., P.O. Box 3646, Houston, Texas 77253-3646 (713) 652-7200 FOR IMMEDIATE RELEASE LYONDELL PETROCHEMICAL COMPANY DECLARES QUARTERLY DIVIDEND HOUSTON, January 27, 1997 -- The Board of Directors of Lyondell Petrochemical Company (NYSE:LYO) has declared a regular quarterly dividend of $.225 per share of common stock, payable March 15 to stockholders of record February 25. EX-99.4 5 PRESS RELEASE DATED JANUARY 27, 1997 Exhibit 99.4 [LYONDELL LOGO APPEARS HERE] NEWS - -------------------------------------------------------------------------------- One Houston Center, 1221 McKinney Ave., P.O. Box 3646, Houston, Texas 77253-3646 (713) 652-72000 FOR IMMEDIATE RELEASE LYONDELL REALIGNS INTO STRATEGIC BUSINESS UNITS TO FOCUS ON GROWTH; PLANS TO REPORT FUTURE RESULTS BY SEGMENT HOUSTON, January 27, 1997 -- Lyondell Petrochemical Company (NYSE:LYO) has announced executive changes that are designed to strengthen the company's focus on maximizing current opportunities while supporting strategic goals. The changes realign the company into strategic business units focused on petrochemicals and polymers, and enhance the focus on technology as a key value driver. "These changes will put the organizational structure in place to support our strategic goals, enabling us to grow our petrochemicals and polymers businesses and leverage our technology position. We have a broad and experienced management team and this will enable us to maximize performance of our major business lines while strengthening our focus on strategic growth opportunities," said Dan F. Smith, Lyondell's President and Chief Executive Officer. "As part of the realignment, we plan to report operating results by petrochemical and polymers segments beginning with the first quarter of 1997." Debra L. Starnes will head the petrochemicals business unit as Senior Vice President, Petrochemicals. Her responsibilities will include manufacturing, sales, marketing, commercial development and raw materials supply for petrochemical products, including olefins, methanol, aromatics and specialty chemicals. An executive with experience in broad aspects of Lyondell's business, for the past two years Starnes has spearheaded the integration of the high-density polyethylene business acquired in 1995 1 into Lyondell's operations, and had oversight of the successful performance of the Polymers Division. W. Norman Phillips, Jr. will head the polymers business unit as Vice President, Polymers. He will oversee manufacturing, sales, marketing and commercial development for the company's growing polymers division, which includes expanding operations in high-density polyethylene, polypropylene and low-density polyethylene. Phillips has successfully guided Sales and Marketing of Petrochemicals as Vice President since May 1995. He also brings extensive experience in planning and manufacturing, having previously served as Vice President of Channelview Operations. Clifton B. Currin, Jr. has been named Vice President, Strategic Development, to enhance focus on the company's strategic plan, including internal and external growth opportunities and its investment in LYONDELL-CITGO Refining Company Ltd. Currin has extensive experience in operations, sales and marketing for Lyondell in both petrochemicals and refining. He has served as Vice President, Petrochemical Business Management since 1995, which has included primary responsibility for negotiating the proposed joint olefins venture. J.R. Fontenot has been named Vice President, Technology to focus added emphasis on innovative technologies that are critical to the success of the business. He will oversee research and development for polymers and petrochemicals as well as health, safety and environmental issues and the company's technology licensing activities. Fontenot established the technology function at Lyondell when the company was formed in 1985. He subsequently held management positions in evaluations, olefins operations and process engineering. He has served as Director of Technology since 1995, and has successfully orchestrated the integration of technology operations from the Alathon acquisition into Lyondell's licensing and technology activities. 2 -----END PRIVACY-ENHANCED MESSAGE-----