-----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, HObVTi/c0YkEb697PLCHTRXDIjfY5fFnSsTPpyKKF5mL/sCLFe1MrRY82xVcCgkD 0c4WfIcZBR/2lXyjBHpX7w== 0001193125-03-001718.txt : 20030424 0001193125-03-001718.hdr.sgml : 20030424 20030424090751 ACCESSION NUMBER: 0001193125-03-001718 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030424 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20030424 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LYONDELL CHEMICAL CO CENTRAL INDEX KEY: 0000842635 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL ORGANIC CHEMICALS [2860] 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: 03661161 BUSINESS ADDRESS: STREET 1: 1221 MCKINNEY ST STREET 2: STE 700 CITY: HOUSTON STATE: TX ZIP: 77010 BUSINESS PHONE: 7136527200 MAIL ADDRESS: STREET 1: 1221 MCKINNEY ST STREET 2: SUITE 700 CITY: HOUSTON STATE: TX ZIP: 77010 FORMER COMPANY: FORMER CONFORMED NAME: LYONDELL PETROCHEMICAL CO DATE OF NAME CHANGE: 19920703 8-K 1 d8k.txt FORM 8-K FOR LYONDELL CHEMICAL COMPANY SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 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): April 24, 2003 LYONDELL CHEMICAL COMPANY (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation) 1-10145 95-4160558 (Commission File Number) (I.R.S. Employer Identification No.) 1221 McKinney Street, Suite 700, Houston, Texas 77010 (Address of principal executive offices) (Zip Code) (713) 652-7200 (Registrant's telephone number, including area code) Not Applicable (Former Name or Former Address, if Changed Since Last Report) Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (c) Exhibits. 99.1 Press release dated April 24, 2003. Item 9. Regulation FD Disclosure. On April 24, 2003, Lyondell Chemical Company (the "Company") issued a press release announcing its results for the first quarter of 2003, which is furnished herewith as Exhibit 99.1. The Company will host a conference call on April 24, 2003 at 11:30 a.m. Eastern Time to discuss its results. The call will be broadcast live on the Company's web site at www.lyondell.com/earnings. A replay of the call will be available on the Company's web site at www.lyondell.com/earnings at 1:30 p.m. Eastern Time on April 24, 2003. Reconciliations of non-GAAP financial measures to GAAP financial measures and any other applicable disclosures, including the earnings release, will be available at 11:30 a.m. Eastern Time on April 24, 2003 at www.lyondell.com/earnings. Lyondell is furnishing this disclosure under Items 9 and 12 of Form 8-K. 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 hereunto duly authorized. LYONDELL CHEMICAL COMPANY By: /s/ Kerry A. Galvin ----------------------------------- Name: Kerry A. Galvin Title: Senior Vice President, General Counsel & Secretary Date: April 24, 2003 INDEX TO EXHIBITS Exhibit Number Description - ------- ----------- 99.1 Press release dated April 24, 2003. EX-99.1 3 dex991.txt PRESS RELEASE DATED APRIL 24, 2003 Exhibit 99.1 For information, contact: Media - Anne Knisely (713) 309-2643 Investors - Doug Pike (713) 309-7141 Lyondell Reports First Quarter 2003 Results o Rapidly escalating energy and raw material costs impact first-quarter results. o LYONDELL-CITGO's operating rates and deliveries from Venezuela return to normal in February. o Lyondell strengthens its Asian propylene oxide position by restructuring its Nihon Oxirane joint venture. o Equistar bolsters its cash position through long-term propylene supply arrangement and polypropylene asset sale. HOUSTON, April 24, 2003 - Rapidly escalating crude oil and natural gas prices reduced profitability at Lyondell Chemical Company (NYSE: LYO) through the first quarter of 2003. The company today announced a net loss for the quarter of $113 million, or $0.70 per share. This compares to a net loss of $55 million, or $0.47 per share, for the first quarter of 2002, and a net loss of $93 million, or $0.58 per share, for the fourth quarter 2002. Lyondell Earnings Summary Millions except per share amounts 1Q2003 1Q2002 4Q2002 - --------------------------------- ------ ------ ------ Sales and other operating revenues $ 989 $ 674 $ 890 Net loss (113) (55) (93) Basic and diluted net loss per share (a) (0.70) (0.47) (0.58) Weighted average shares outstanding (a) 160.4 117.6 159.9 (a) Lyondell sold 8.28 million shares of common stock on July 1, 2002, in a public offering and issued 34 million shares of Series B common stock to Occidental on August 22, 2002, in connection with the purchase of Occidental's 29.5% interest in Equistar. Lyondell paid a dividend to Occidental on March 31, 2003, by issuing 604,621 shares of Series B common stock to Occidental in lieu of a dividend payment in cash. Common shares outstanding on March 31, 2003, were 161.3 million shares. Supplemental Financial Data - Lyondell and Proportionate Share of Ventures Millions of dollars 1Q2003 1Q2002 4Q2002 - ------------------- ------ ------ ------ Proportionate sales and other operating revenues (a) $2,841 $1,575 $2,461 Proportionate EBITDA (b) 78 139 136
(a) Includes revenues from sales to affiliates. See page 8 for components of proportionate share of sales and other operating revenues. (b) See Lyondell's income statements on page 9 and reconciliation of operating income to proportionate EBITDA on page 10. Proportionate EBITDA for the three months ended December 31, 2002, originally reported as $145 million, was restated to include extraordinary charges related to early debt retirement and a restructuring credit related to the ADI business of Lyondell. During the quarter, according to the New York Mercantile Exchange (NYMEX), daily crude oil prices peaked at $37.83 per barrel, an increase of $6.63 per barrel over the year-end price, and natural gas prices peaked at $9.57 per million BTUs in late February, an increase of $4.78 per million BTUs over the year-end price. Lyondell and Equistar Chemicals, LP, implemented product price increases in an effort to offset the rapid increases in raw material costs, but the pace of their implementation was not sufficient to fully offset the financial impact of the cost increases during the quarter. At LYONDELL-CITGO Refining LP (LCR), operations benefited as the crude oil supply from Venezuela and overall operating rates returned to full levels in February and March. "The volatility and pace of increases in energy and raw material costs, coupled with the general strike in Venezuela, imposed pressures on our enterprise that were as extreme as I have experienced in my years in the industry," said Lyondell President and CEO Dan F. Smith. "Even so, our focus on operational excellence, operating flexibility and financial strategy enabled us to respond and meet the challenges presented in the quarter." During the first quarter of 2003, Lyondell completed several projects and transactions that advanced the company's strategy and improved its short-term liquidity. The gains and losses on these projects and transactions, coupled with interest income from a favorable tax-related settlement, increased Lyondell's earnings by $6 million after taxes. The projects and transactions are: o Lyondell's Intermediate Chemicals & Derivatives segment (IC&D) restructured Nihon Oxirane, its joint venture with Sumitomo Chemical Company, Ltd., in a manner that strengthens Lyondell's position in Asia. 2 o Equistar entered into a long-term propylene supply arrangement with Sunoco and sold its Bayport polypropylene unit to Sunoco, enabling both companies to focus on their respective strengths and strategic priorities. o LCR revised plans for its low-sulfur gasoline project by utilizing integration opportunities with Lyondell and CITGO Petroleum Corp. This will result in longer-term reductions in overall capital expenditures. o Both Lyondell and Equistar successfully renegotiated their bank covenants, enhancing each entity's financial flexibility. "Our ability to complete these significant long-term projects and renegotiate our debt covenants during these volatile times demonstrates not only the depth and capability of our organization, but also the confidence that our business and financial partners have in us," Smith said. OUTLOOK While raw material and energy costs peaked in late February and early March, they have since moderated. This, together with increased prices in Equistar's ethylene chain and co-products, has improved ethylene chain economics, particularly for production from crude oil-based raw materials. In IC&D, margins in propylene oxide (PO) and derivatives are improving as a result of price increases that are beginning to take effect. However, the combination of increased product prices and global economic and political uncertainty is negatively impacting IC&D and Equistar sales volumes early in the second quarter. "The instability created by the war in Iraq and unrest in other oil-producing nations makes it very difficult to provide a near-term outlook," Smith said. "Nevertheless, margins have improved and we believe the industry is positioned to show a significant near-term rebound barring further economic deterioration or increases in raw material and energy costs. Most importantly, the longer-term fundamentals for our businesses appear to be improving and we expect to benefit when the resolution of global events and economic uncertainties is more clear." 3 LYONDELL AND JOINT VENTURES Lyondell's operations comprise: Lyondell's IC&D segment; Equistar, a joint venture with Millennium Chemicals Inc.; and LCR, a joint venture with CITGO Petroleum Corp. Each plays a unique role in supporting the enterprise during all phases of the business cycle. Lyondell's Intermediate Chemicals & Derivatives (IC&D) Segment - The IC&D segment includes PO and derivatives, MTBE and styrene. Results in the first quarter 2003 benefited from an $18 million gain related to the restructuring of the Nihon Oxirane joint venture and $15 million of interest income from a favorable tax-related settlement. IC&D Financial Overview Millions of dollars 1Q2003 1Q2002 4Q2002 - ------------------- ------ ------ ------ Sales and other operating revenues $ 989 $ 674 $ 890 Operating income (loss) (a) (18) 38 12 EBITDA (a) 53 95 69 (a) See reconciliation of Lyondell operating income (loss) to EBITDA on page 10. EBITDA for the three months ended December 31, 2002 originally reported as $78 million was restated to include $12 million of pretax charges related to early debt retirement and a $3 million restructuring credit related to the ADI business of Lyondell. 1Q03 v. 1Q02 - Compared to the first quarter of 2002, higher volumes in PO and derivatives only partially offset the effect of margin compression that resulted from increased energy and raw material costs, particularly propylene. The majority of the financial shortfall occurred in the co-product area, where the previously announced expiration of a major MTBE sales contract with BP and lower margins compared to year-ago levels had a negative impact on performance. Styrene performance was relatively unchanged. Higher product prices and margins improved TDI performance over the same period last year. 1Q03 v. 4Q02 - Compared to the fourth quarter of 2002, generally higher sales volumes in PO and derivative products essentially offset lower margins that resulted when escalations in raw material costs outpaced increases in product prices. MTBE performance was negatively impacted by a number of factors, including expiration of the BP contract and high raw material costs. Styrene performance was down slightly versus the prior quarter as price increases lagged cost increases. TDI performance in the first quarter 4 2003 exceeded the previous quarter's performance as a result of volume and price increases and the absence of fourth-quarter maintenance costs. Equistar Chemicals, LP - Lyondell owns a 70.5 percent interest in Equistar, which consists of the petrochemicals (including ethylene) and polymers segments. Results in the first quarter 2003 included a $12 million loss on the sale of Equistar's Bayport polypropylene asset. Equistar Financial Overview - 100% Basis Millions of dollars 1Q2003 1Q2002 4Q2002 - ------------------- ------ ------ ------ Sales and other operating revenues (a) $ 1,641 $ 1,136 $ 1,431 Operating loss (b) (96) (75) (62) EBITDA (b) (19) (1) 14 (a) Includes revenues from sales to affiliates. (b) See reconciliation of Equistar operating loss to EBITDA on page 10. 1Q03 v. 1Q02 - While ethylene and polymer sales prices averaged approximately 10 cents per pound higher compared to the first quarter of 2002, the average cost of ethylene production in the first quarter of 2003, as reported by Chemical Marketing Associates Inc. (CMAI), more than offset those price increases. Equistar's combined ethylene and derivatives sales volumes were essentially flat period to period. 1Q03 v. 4Q02 - Rapidly escalating natural gas and crude oil prices in the first quarter of 2003 caused the cost of ethylene to increase dramatically. CMAI estimates that in the first quarter of 2003 the cost of ethylene production increased more than 5 cents per pound from the fourth quarter of 2002. While Equistar's product sales price increases in ethylene, polyethylene and ethylene glycol more than equaled the higher ethylene costs, the timing of the price increases was such that the average product margin in the first quarter of 2003 was lower than the average fourth-quarter 2002 product margin. Equistar's combined ethylene and ethylene derivatives sales volumes were essentially unchanged versus the fourth quarter of 2002. LYONDELL-CITGO Refining LP (LCR) - Lyondell owns a 58.75 percent interest in LCR, a major refiner of heavy crude oil. Results in the first quarter 2003 included a $25 million charge related to the restructuring of LCR's low-sulfur gasoline project. 5 LCR Financial Overview - 100% Basis Millions of dollars 1Q2003 1Q2002 4Q2002 - ------------------- ------ ------ ------ Sales revenues (a) $ 1,183 $ 707 $ 956 Operating income (b) 38 49 69 EBITDA (b) 66 78 97 (a) Includes revenues from sales to affiliates. (b) See reconciliation of LCR operating income to EBITDA on page 10. EBITDA for the three months ended December 31, 2002, originally reported as $98 million, was restated to include a $1 million extraordinary charge related to early debt retirement. 1Q03 v. 1Q02 - Compared to the first quarter of 2002, disruptions in deliveries of crude oil from Venezuela and high natural gas prices negatively impacted LCR's performance. However, these factors were offset by strong spot volumes and refining spreads during the quarter. 1Q03 v. 4Q02 - LCR's total crude processing rate in the first quarter 2003 was lower than in the previous quarter, averaging 245,000 barrels per day versus 250,000 barrels per day in the fourth quarter 2002. Due to the Venezuelan strike, crude oil volumes processed under the Crude Supply Agreement (CSA) were limited to 194,000 barrels per day during the first quarter 2003, compared to 209,000 barrels per day in the fourth quarter 2002. However, disruptions in crude oil deliveries from Venezuela were limited to January 2003. During February and March, the combination of strong operations, Venezuelan crude deliveries and improved refining margins were sufficient to offset the impact of the January disruptions, but were not enough to offset the impact of higher first-quarter natural gas costs. CONFERENCE CALL Lyondell will host a conference call today, April 24, 2003, at 11:30 a.m. Eastern Time (ET). Participating on the call will be: Dan F. Smith, President and CEO; Morris Gelb, Executive Vice President and COO; T. Kevin DeNicola, Senior Vice President and CFO; and Douglas J. Pike, Director of Investor Relations. The dial-in numbers are 888-385-9734 (U.S - toll free) and 212-547-0409 (international). The call will be broadcast live on the company's web site at www.lyondell.com/earnings. A replay of the call will be available from 1:30 p.m. ET April 24 to 5 p.m. ET May 2. The dial-in numbers are 800-925-2380 (U.S) and 412-220-4107 (international). Pass code 6 for each is 5549. Web replay will be available at 1:30 p.m. ET April 24 on the company's web site at www.lyondell.com/earnings. Reconciliations of non-GAAP financial measures to GAAP financial measures and any other applicable disclosures, including this earnings release, will be available at 11:30 a.m. ET at www.lyondell.com/earnings. ABOUT LYONDELL Lyondell Chemical Company, (www.lyondell.com), headquartered in Houston, Texas, is a leading producer of: propylene oxide (PO); PO derivatives, including propylene glycol (PG), butanediol (BDO) and propylene glycol ether (PGE); toluene diisocyanate (TDI); and styrene monomer and MTBE as co-products of PO production. Through its 70.5% interest in Equistar Chemicals, LP, Lyondell also is one of the largest producers of ethylene, propylene and polyethylene in North America and a leading producer of ethylene oxide, ethylene glycol, high value-added specialty polymers and polymeric powder. Through its 58.75% interest in LYONDELL-CITGO Refining LP, Lyondell is one of the largest refiners in the United States processing extra heavy Venezuelan crude oil to produce gasoline, low sulfur diesel and jet fuel. FORWARD LOOKING STATEMENTS The statements in this release relating to matters that are not historical facts are forward-looking statements that are subject to risks and uncertainties. Actual results could differ materially, based on factors including, but not limited to: the cyclical nature of the chemical and refining industries; availability, cost and volatility of raw materials and utilities; governmental regulatory actions and political unrest; global economic conditions; industry production capacity and operating rates; the supply/demand balance for Lyondell's and its joint ventures' products; competitive products and pricing pressures; access to capital markets; technological developments and other risk factors. For more detailed information about the factors that could cause actual results to differ materially, please refer to Lyondell's Annual Report on Form 10-K for the year ended December 31, 2002, which was filed in March 2003, and Lyondell's Quarterly Report on Form 10-Q, which will be filed in May 2003. ### 7 LYONDELL CHEMICAL COMPANY SELECTED FINANCIAL AND OPERATING INFORMATION (UNAUDITED) (Millions of dollars)
Joint Ventures Lyondell and Lyondell --------------------------------------------- Proportionate Chemical Equistar LCR LMC Share of Equity Company 100% 100% 100% Investments (a) --------- -------------- ------------ ----------- ----------------- Three months ended March 31, 2003: Sales and other operating revenues (b) $ 989 $ 1,641 $ 1,183 $ - $ 2,841 SG&A and R&D 51 49 12 - 93 EBITDA 53 (19) 66 - 78 Depreciation and amortization 57 78 28 - 126 Interest expense, net 83 49 10 - 123 Net loss (c) (113) Capital expenditures 9 (d) 13 15 - 27 Cash dividends 28 Three months ended March 31, 2002: Sales and other operating revenues (b) $ 674 $ 1,136 $ 707 $ 26 $ 1,575 SG&A and R&D 47 49 12 2 76 EBITDA 95 (1) 78 (2) 139 Depreciation and amortization 56 73 29 2 101 Interest expense, net 91 52 8 - 117 Net loss (c) (55) Capital expenditures 11 (d) 15 22 - 30 Cash dividends 26 Three months ended December 31, 2002: Sales and other operating revenues (b) $ 890 $ 1,431 $ 956 $ - $ 2,461 SG&A and R&D 42 43 14 - 81 EBITDA 69 (e) 14 97 (e) - 136 (e) Depreciation and amortization 67 77 29 - 136 Interest expense, net 96 51 9 - 137 Net loss (c) (93) Capital expenditures 2 (d) 75 12 - 62 Cash dividends 28
________ (a) This column reflects Lyondell's 100% owned operations and its pro rata share of each joint venture's operations and is not a presentation in accordance with generally accepted accounting principles. Lyondell had a 41% interest in Equistar Chemicals, LP ("Equistar") through August 22, 2002 and 70.5% thereafter, a 58.75% interest in LYONDELL-CITGO Refining LP ("LCR") and, through April 30, 2002, a 75% interest in LMC. As of May 1, 2002, Lyondell Methanol Company, L.P. ("LMC") is wholly owned by Lyondell and its operations are included in the IC&D business segment. (b) Includes revenues from sales to affiliates. (c) Includes income (loss) in the joint ventures. (d) In addition, Lyondell made contributions to the PO-11 joint venture and the U.S. PO joint venture of $30 million, $24 million and $13 million in the three-month periods ended March 31, 2003, December 31, 2002 and March 31, 2002, respectively. (e) EBITDA for Lyondell and LCR for the three months ended December 31, 2002, was restated to include extraordinary charges related to early debt retirement and a restructuring credit related to the ADI business of Lyondell. EBITDA was originally reported for Lyondell as $78 million, for LCR as $98 million and for Lyondell and proportionate share of equity investments as $145 million and excluded these items. 8 LYONDELL CHEMICAL COMPANY SELECTED FINANCIAL AND OPERATING INFORMATION (UNAUDITED)
For the three months ended ------------------------------------------------------ INCOME STATEMENTS March 31, ------------------------------- December 31, (Millions of dollars, except per share data) 2003 2002 2002 (a) -------------- -------------- ------------ Sales and other operating revenues $ 989 $ 674 $ 890 Operating costs and expenses: Cost of sales 956 589 836 Selling, general and administrative expenses 42 40 34 Research and development 9 7 8 ------- ------- ------- Operating income (loss) (18) 38 12 Loss from equity investment in Equistar (b) (c) (100) (45) (78) Income from equity investment in LCR 19 27 37 Loss from other equity investments (2) (3) - Interest expense, net (83) (91) (96) Other income (expense), net 16 1 (10) ------- ------- ------- Loss before income taxes (168) (73) (135) Benefit from income taxes (55) (18) (42) ------- ------- ------- Net loss (b) $ (113) $ (55) $ (93) ======= ======= ======= Basic and diluted loss per share: Net loss (b) $ (0.70) $ (0.47) $ (0.58) ======= ======= ======= Basic and diluted shares (in thousands) (d) : 160,419 117,565 159,851 ======= ======= ======= INTERMEDIATE CHEMICALS AND DERIVATIVES SEGMENT SELECTED OPERATING INFORMATION Sales Volumes (millions) PO and derivatives (pounds) (e) 899 785 744 Co-products: Styrene monomer (pounds) 869 786 889 MTBE and other TBA derivatives (gallons) 257 267 303
________ (a) Concurrent with the adoption of Statement of Financial Accounting Standards ("SFAS") No. 145, a previously-reported $8 million after-tax extraordinary charge related to early debt retirement for the three months ended December 31, 2002 was reclassified. The $12 million pretax charge was included in other income (expense), net and the $4 million income tax benefit was included in benefit from income taxes. (b) As of January 1, 2002, Lyondell's share of Equistar's $1.1 billion charge for the write-off of goodwill, or $432 million, was offset by Lyondell's write-off of a portion of its underlying equity in Equistar's net assets in excess of its investment in Equistar. (c) Lyondell had a 41% interest in Equistar through August 22, 2002 and 70.5% thereafter. (d) Lyondell sold 8,280,000 shares of common stock on July 1, 2002 and issued 34,000,000 shares of Series B common stock to Occidental on August 22, 2002. Lyondell paid a dividend to Occidental on March 31, 2003 by issuing 604,621 shares of Series B common stock in lieu of dividend payments in cash. (e) Includes propylene oxide ("PO"), PO derivatives and isocyanates. 9 LYONDELL CHEMICAL COMPANY SELECTED FINANCIAL AND OPERATING INFORMATION (UNAUDITED) (Millions of dollars) RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA
For the three months ended ----------------------------------- March 31, ------------------- December 31, 2003 2002 2002(a) ------ ------ ------------ Lyondell (IC&D) Operating income (loss) $ (18) $ 38 $ 12 Add: Depreciation and amortization 57 56 67 Other income (expense), net 16 1 (10) Loss from other equity investments (2) - - ------ ----- ----- Lyondell EBITDA $ 53 $ 95 $ 69 ====== ===== ===== Equistar Operating loss $ (96) $(75) $(62) Add: Depreciation and amortization 78 73 77 Other income (expense), net (1) 1 (1) ------ ----- ----- Equistar EBITDA $ (19) $ (1) $ 14 ====== ===== ===== Proportionate Share (b) $ (13) $ - $ 10 ====== ===== ===== LCR Operating income $ 38 $ 49 $ 69 Add: Depreciation and amortization 28 29 29 Other expense, net - - (1) ------ ----- ----- LCR EBITDA $ 66 $ 78 $ 97 ====== ===== ===== Proportionate Share - 58.75% $ 39 $ 46 $ 57 ====== ===== ===== EBITDA - Lyondell and Proportionate Share of Equity Investments Lyondell EBITDA $ 53 $ 95 $ 69 Lyondell share of Equistar EBITDA (b) (13) - 10 58.75% of LCR EBITDA 39 46 57 75% of LMC EBITDA through April 30, 2002 - (2) - ------ ----- ----- Lyondell and Proportionate Share of Equity Investments $ 78 $139 $136 ====== ===== =====
________ (a) EBITDA for Lyondell and LCR for the three months ended December 31, 2002, was restated to include extraordinary charges related to early debt retirement and a credit related to a restructuring. EBITDA was originally reported for Lyondell as $78 million, for LCR as $98 million and for Lyondell and proportionate share of equity investments as $145 million and excluded these items. (b) Lyondell had a 41% interest in Equistar through August 22, 2002 and 70.5% thereafter. 10 LYONDELL CHEMICAL COMPANY SELECTED FINANCIAL INFORMATION (UNAUDITED) (Millions of dollars)
For the three months ended March 31, -------------------------- STATEMENTS OF CASH FLOWS 2003 2002 ------ ------ Net loss $(113) $(55) Adjustments: Depreciation and amortization 57 56 Loss from equity investments 102 48 Gain on sale of investment (18) - Accounts receivable (48) 28 Inventories (5) 13 Accounts payable (a) 36 (42) Prepaid expenses and other current assets 39 71 Other assets and liabilities, net (4) 51 ------ ----- Net cash provided by operating activities (a) 46 170 ------ ----- Contributions and advances to affiliates (b) (51) (38) Proceeds from sale of investment 28 - Expenditures for property, plant and equipment (9) (11) Distributions from affiliates in excess of earnings 71 - Purchase of other short-term investments (9) - ------ ----- Net cash provided by (used in) investing activities 30 (49) ------ ----- Repayment of long-term debt - (13) Dividends paid (28) (26) Other (3) - ------ ----- Net cash used in financing activities (31) (39) ------ ----- Increase in cash and cash equivalents $ 45 $ 82 ====== =====
________ (a) In March 2003, in consideration of discounts offered by Equistar for early payment, Lyondell paid certain Equistar product invoices totaling $23 million for product delivered in March 2003. Such amounts otherwise would have been expected to be paid in April 2003. (b) Includes contributions to PO-11 joint venture and U.S. PO joint venture of $30 million and $13 million in the three-month periods ended March 31, 2003 and 2002, respectively. 11 LYONDELL CHEMICAL COMPANY SELECTED FINANCIAL INFORMATION (UNAUDITED) (Millions of dollars)
March 31, December 31, BALANCE SHEET 2003 2002 --------- ------------ Cash and cash equivalents $ 331 $ 286 Other short-term investments 53 44 Accounts receivable, net 412 396 Inventories 352 344 Prepaid expenses and other current assets 69 66 Deferred tax assets 35 35 --------- -------- Total current assets 1,252 1,171 Property, plant and equipment, net 2,364 2,369 Investments and long-term receivables: Investment in Equistar 1,084 1,184 Investment in PO joint ventures 796 770 Receivable from LCR 229 229 Investment in LCR 20 68 Other investments and long-term receivables 87 98 Goodwill, net 1,124 1,130 Other assets, net 412 429 --------- -------- Total assets $ 7,368 $ 7,448 ========= ======== Accounts payable $ 384 $ 344 Current maturities of long-term debt 1 1 Other accrued liabilities 331 279 --------- -------- Total current liabilities 716 624 Long-term debt 3,926 3,926 Other liabilities 663 673 Deferred income taxes 824 881 Minority interest 145 165 Stockholders' equity (161,308,190 and 160,413,144 shares outstanding respectively at March 31, 2003 and December 31, 2002) 1,094 1,179 --------- -------- Total liabilities and stockholders' equity $ 7,368 $ 7,448 ========= ======== For the three months ended March 31, 2003 --------------- Investment in Equistar, beginning of period $ 1,184 Lyondell's share of Equistar net loss (100) --------- Investment in Equistar, end of period $ 1,084 ========= Investment in LCR, beginning of period $ 68 Lyondell's share of LCR net income 19 Cash distributions from LCR (88) Cash contributions to LCR 21 --------- Investment in LCR, end of period $ 20 =========
12 LYONDELL CHEMICAL COMPANY EQUISTAR CHEMICALS, LP SELECTED FINANCIAL AND OPERATING INFORMATION (UNAUDITED)
For the three months ended ---------------------------------------- INCOME STATEMENTS March 31, ---------------------- December 31, (Millions of dollars) 2003 2002 2002 ------ ------ ------------ Sales and other operating revenues (a) $1,641 $ 1,136 $1,431 Operating costs and expenses: Cost of sales 1,688 1,162 1,450 Selling, general and administrative expenses 40 40 33 Research and development 9 9 10 ------- --------- -------- Operating loss (96) (75) (62) Interest expense, net (49) (52) (51) Other income (expense), net (1) 1 (1) ------- --------- -------- Loss before cumulative effect of accounting change (146) (126) (114) Cumulative effect of accounting change (b) - (1,053) - ------- --------- -------- Net loss (c) $ (146) $(1,179) $ (114) ======= ========= ======== SELECTED FINANCIAL AND OPERATING INFORMATION (Millions of dollars) Sales and other operating revenues (a) Petrochemicals segment $1,536 $ 993 $1,284 Polymers segment 513 410 476 Intersegment eliminations (408) (267) (329) ------- --------- -------- Total $1,641 $ 1,136 $1,431 ======= ========= ======== Operating loss Petrochemicals segment $ (32) $ (24) $ (5) Polymers segment (35) (21) (33) Unallocated (29) (30) (24) ------- --------- -------- Total $ (96) $ (75) $ (62) ======= ========= ======== EBITDA before cumulative effect of accounting change $ (19) $ (1) $ 14 Sales Volumes (millions) (a) Selected petrochemical products: Ethylene, propylene and other olefins (pounds) 3,921 4,137 4,026 Aromatics (gallons) 94 86 87 Polymers products (pounds) 1,397 1,508 1,471
________ (a) Includes revenues and volumes from sales to affiliates. (b) Concurrent with the adoption of SFAS No. 142, Equistar reviewed goodwill for impairment and concluded that the entire balance was impaired, resulting in the $1.1 billion charge. (c) As a partnership, Equistar is not subject to federal income taxes. 13 LYONDELL CHEMICAL COMPANY EQUISTAR CHEMICALS, LP SELECTED FINANCIAL INFORMATION (UNAUDITED) (Millions of dollars)
March 31, December 31, BALANCE SHEETS 2003 2002 --------- ------------ Cash and cash equivalents $ 112 $ 27 Accounts receivable, net (a) 563 625 Inventories 461 424 Prepaid expenses and other current assets 44 50 ------ ------ Total current assets 1,180 1,126 Property, plant and equipment, net 3,469 3,565 Other assets, net 394 361 ------ ------ Total assets $5,043 $5,052 ====== ====== Accounts payable $ 519 $ 459 Current maturities of long-term debt 332 32 Other accrued liabilities 133 223 ------ ------ Total current liabilities 984 714 Long-term debt 1,896 2,196 Other liabilities 388 221 Partners' capital 1,775 1,921 ------ ------ Total liabilities and partners' capital $5,043 $5,052 ====== ======
For the three months ended --------------------------------------- March 31, December 31, ------------------ --------------- OTHER INFORMATION 2003 2002 2002 ----- ------ ----- Cash flow from operations (a) $ 67 $(119) $ 173 Capital expenditures 13 15 75 Depreciation and amortization: Petrochemicals segment $ 57 $ 53 $ 55 Polymers segment 16 14 16 Other 5 6 6 ----- ----- ----- Total depreciation and amortization $ 78 $ 73 $ 77 ===== ===== =====
(a) In consideration of discounts offered to certain customers for early payments for product delivered in March 2003, some receivable amounts were collected in March 2003 that otherwise would have been expected to be collected in April 2003, including $23 million from Lyondell and $46 million from Occidental. 14 LYONDELL CHEMICAL COMPANY LYONDELL-CITGO REFINING LP SELECTED FINANCIAL AND OPERATING INFORMATION (UNAUDITED)
CONDENSED BALANCE SHEETS March 31, December 31, (Millions of dollars) 2003 2002 --------- ------------ Total current assets $ 271 $ 357 Property, plant and equipment, net 1,275 1,312 Deferred charges and other assets, net 90 88 ------ ------ Total assets $1,636 $1,757 ====== ====== Other current liabilities $ 372 $ 514 Long-term debt 450 450 Loans payable to partners 264 264 Other liabilities and deferred credits 127 126 Partners' capital 423 403 ------ ------ Total liabilities and partners' capital $1,636 $1,757 ====== ======
For the three months ended ---------------------------------- INCOME STATEMENTS March 31, ----------------- December 31, (Millions of dollars) 2003 2002 2002 (a) -------- ------- ------------ Sales and other operating revenues (b) $ 1,183 $ 707 $ 956 Operating costs and expenses: Cost of sales 1,133 646 873 Selling, general and administrative expenses 12 12 14 ------- ------- ------- Operating income 38 49 69 Interest expense, net (10) (8) (9) Other expense -- -- (1) ------- ------- ------- Net income (c) $ 28 $ 41 $ 59 ======= ======= ======= OTHER INFORMATION (Millions of dollars) Cash flow from operations $ 58 $ 61 $ 144 Capital expenditures 15 22 12 Depreciation and amortization 28 29 29 EBITDA (d) $ 66 $ 78 $ 97 SELECTED OPERATING INFORMATION Sales Volumes (including intersegment sales) (b) Refined products (thousand barrels per day): Gasoline 113 105 116 Diesel and heating oil 78 80 90 Jet fuel 21 22 15 Aromatics 9 8 9 Other refinery products 83 115 81 ------- ------- ------- Total refined products volumes 304 330 311 ======= ======= ======= Refinery Runs Crude processing rates (thousand barrels per day): Crude Supply Agreement 194 229 209 Other crude oil 51 32 41 ------- ------- ------- Total crude oil 245 261 250 ======= ======= =======
________ (a) Concurrent with the adoption of SFAS No. 145, a previously-reported $1 million extraordinary charge related to early debt retirement for the three months ended December 31, 2002, was reclassified and included in other expense. (b) Includes revenues and volumes from sales to affiliates. (c) As a partnership, LCR is not subject to federal income taxes. (d) EBITDA for the three months ended December, 31, 2002, originally reported as $98 million, was restated to include an extraordinary charge related to early debt retirement. 15 LYONDELL CHEMICAL COMPANY SELECTED FINANCIAL AND OPERATING INFORMATION (UNAUDITED) (Millions of dollars) DAYS OF WORKING CAPITAL
Lyondell March 31, December 31, 2003 2002 ---------- ------------ Working Capital: (a) Accounts receivable $ 412 $ 396 Inventories 352 344 Accounts payable (b) (384) (344) ------- ------- Total 380 396 Add: Accounts receivable sold 81 65 ------- ------- Adjusted working capital $ 461 $ 461 ======= ======= Days of Working Capital: Sales and other operating revenues for the three months ended $ 989 $ 890 Number of days in quarter 90 92 Sales per day $ 11.0 $ 9.7 Days of working capital (b) (c) 42 48 Equistar Working Capital: (a) Accounts receivable (d) $ 563 $ 625 Inventories 461 424 Accounts payable (519) (459) ------- ------- Total 505 590 Add: Accounts receivable sold 96 81 ------- ------- Adjusted working capital $ 601 $ 671 ======= ======= Days of Working Capital: Quarterly sales revenue for the three months ended $ 1,641 $ 1,431 Number of days in quarter 90 92 Sales per day $ 18.2 $ 15.6 Days of working capital (c) (d) 33 43
________ (a) Defined as the major controllable components of working capital - receivables, inventories and payables. Receivables sold are added back for consistency as such amounts are included in sales and in the sales per day calculation. Management believes that this provides useful information to investors because it reflects Lyondell's and Equistar's reponsibility for administration and collection of said amounts. (b) In March 2003, in consideration of discounts offered by Equistar for early payment, Lyondell paid certain Equistar product invoices totaling $23 million for product delivered in March 2003. Such amounts otherwise would have been expected to be paid in April 2003 and would have reduced days of working capital as of March 31, 2003 to 40 days. (c) Days of working capital are calculated as adjusted working capital divided by sales per day. (d) In consideration of discounts offered to certain customers for early payment for product delivered in March 2003, some receivable amounts were collected in March 2003 that otherwise would have been expected to be collected in April 2003, including $23 million from Lyondell and $46 million from Occidental. Had such amounts been collected in April 2003, days of working capital as of March 31, 2003 would have been 37 days. 16 -----END PRIVACY-ENHANCED MESSAGE-----