HOUSTON, Jan. 26 /PRNewswire-FirstCall/ -- Lyondell Chemical Company (NYSE: LYO) today announced net income for the fourth quarter 2005 of $141 million, or 54 cents per share on a fully diluted basis. This compares with net income of $16 million, or 8 cents per share, for the fourth quarter 2004, and net income of $10 million, or 4 cents per share, for the third quarter 2005. For the full year 2005, Lyondell had net income of $531 million, or $2.04 per share, compared with 2004 net income of $54 million, or 29 cents per share.
Table 1 - Lyondell Earnings Summary
Millions of dollars
except per share 4Q 4Q 3Q Full Year Full Year
amounts 2005 2004 (A) 2005 2005 2004 (A)
Sales and other
operating revenues $5,000 $2,389 $4,790 $18,606 $5,946
Net income 141 16 10 531 54
Basic earnings
per share 0.57 0.08 0.04 2.16 0.29
Diluted earnings
per share (B) 0.54 0.08 0.04 2.04 0.29
Basic weighted average
shares outstanding
(millions) 246.7 200.5 246.5 245.9 183.2
Diluted weighted average
shares outstanding
(millions) (B) 260.3 207.7 260.4 260.0 186.0
(A) Results include the operations of Equistar and Millennium
prospectively from December 1, 2004. Prior to December 1, 2004,
Lyondell's 70.5% interest in Equistar was accounted for as an equity
investment.
(B) Includes the dilutive effect of the convertible debentures, stock
options and warrants.
Year-to-year profit improvements were driven by strong performance in the ethylene and propylene oxide segments coupled with the full-year ownership of Millennium Chemicals. This strength was partially offset by a decline in Lyondell-Citgo Refining's (LCR) results, which were impacted by maintenance early in the year and hurricane-related damage and outages in the fourth quarter.
Results reflect the following:
Millions of dollars 4Q 4Q 3Q Full Year Full Year
(pre-tax) 2005 2004 2005 2005 2004
Debt refinancing and
early payment $17 $12 $6 $45 $18
Mutual insurance
consortia losses 12 12 30 56 12
Hurricane (estimated
lost production) 75(A) --- 75-100(A) 150-175(A) ---
Lake Charles TDI plant
shutdown 24 --- 195 219 ---
In-process Research &
Development --- 64 --- --- 64
(A) Represents Lyondell's percentage of LCR's estimated lost production
of $130 million.
"Much as expected, overall business conditions followed the strengthening trend established in late 2004, resulting in strong earnings improvement," said Dan F. Smith, president and CEO of Lyondell Chemical Company. "Tight industry conditions were apparent in ethylene, propylene oxide and fuel components, all of which achieved very strong margins at various points during 2005. Despite the hurricanes and record-high raw material costs, our portfolio produced strong earnings and cash flow, enabling us to reduce debt by $1.36 billion during the year."
OUTLOOK
At this time, industry operations have largely recovered from the disruptions of the 2005 hurricane season, and ethylene industry pricing is adjusting to a more balanced global supply and demand situation. After some pullback in December and January, there are signs of demand improvement, and a return to positive price momentum in a number of product areas is expected as early as February. Propylene oxide (PO) and PO derivatives markets have remained solid, while MTBE margins are at typical seasonal levels. Titanium dioxide volumes also have been strong, and LCR has operated at full capacity.
"We enter 2006 with both a positive global economic outlook and strong business conditions for the majority of our products. Ethylene, PO and PO derivatives, inorganic chemicals and LCR are all positioned for a strong year. However, 2006 represents a question mark for MTBE. On one hand, MTBE may benefit from continued tight refining conditions, while on the other U.S. refiners may choose to no longer use MTBE despite the obvious value that it brings to a structurally short gasoline pool," added Smith. "We have prepared ourselves for either outcome.
"Operationally, our assets are running well; neither our ethylene facilities nor the LCR refinery have scheduled maintenance turnarounds, and our inventories are low. Financially, we are more than halfway to our debt reduction target, and our focus continues to be the application of excess cash toward debt reduction and the improvement of our balance sheet. In summary, our outlook for the year is very positive and we believe 2006 results will exceed 2005."
LYONDELL BUSINESS RESULTS DISCUSSION BY REPORTING SEGMENT
Lyondell operates in four segments: 1) Ethylene, co-products and derivatives; 2) Propylene oxide (PO) and related products; 3) Inorganic Chemicals; and 4) Refining, which includes Lyondell's 58.75 percent ownership of LCR, a joint venture with CITGO Petroleum Corp.
Ethylene, Co-products and Derivatives Segment - The primary products of this segment are ethylene, ethylene co-products (propylene, butadiene and benzene), and derivatives of ethylene (polyethylene, ethylene oxygenates and vinyl acetate monomer or VAM). Lyondell acquired Millennium on November 30, 2004; Millennium's acetyls products are included in this segment.
Table 2 - Ethylene, Co-Products & Derivatives Financial Overview (A)
Millions of dollars 4Q 4Q 3Q Full Year Full Year
2005 2004(B) 2005 2005 2004(B)
Sales and other
operating revenues $3,380 $2,816 $2,988 $12,191 $9,316
Operating income 337 210 21 950 494
EBITDA © 438 290 116 1,334 809
(A) See Table 6 for additional segment information.
(B) For periods prior to January 1, 2005, the Ethylene, Co-Products and
Derivatives information represents the historical operating results
of Equistar on a 100% basis.
© See Table 9 for reconciliations of segment EBITDA to net income of
Lyondell and Equistar, respectively.
The following discussion addresses business results independent of ownership.
4Q05 v. 3Q05 - Ethylene and ethylene derivative product sales volumes were relatively unchanged versus the third quarter 2005. Average prices for the key products increased by 7 cents to 18 cents per pound, led by ethylene and polyethylene, which increased by 15 cents and 18 cents per pound, respectively. The company's cost-of-ethylene-production metric (COE) increased by approximately 1 cent per pound versus the third quarter. Essentially all of this increase is attributed to the higher price of natural- gas-based raw materials. Acetyls results declined as price increases did not fully offset higher natural gas and ethylene costs.
4Q05 v. 4Q04 - Ethylene and ethylene derivative sales volumes decreased by approximately 285 million pounds. The quarterly average price of ethylene and polyethylene increased by 17 cents to 18 cents per pound, while the average ethylene glycol price decreased approximately 3 cents per pound. The company's COE metric increased by approximately 7 cents per pound primarily due to increased costs for natural-gas-based raw materials. Increased co- product prices largely offset a $9-per-barrel increase in crude oil-based raw material costs.
2005 v. 2004 - Ethylene and ethylene derivative sales volumes decreased by 660 million pounds. The average annual price of ethylene and polyethylene increased by 9 cents and 13 cents per pound, respectively, while ethylene glycol increased by 3 cents per pound. The company's COE metric increased by approximately 4 cents per pound. The cost of natural-gas-based raw materials accounted for the majority of the increase.
PO and Related Products Segment - The principal products of the PO and related products segment include PO, PO derivatives (propylene glycol, propylene glycol ethers, butanediol and butanediol derivatives), styrene, MTBE and toluene diisocyanate (TDI).
Table 3 - PO & Related Products Financial Overview (A)
Millions of dollars 4Q 4Q 3Q Full Year Full Year
2005 2004 2005 2005 2004
Sales and other
operating revenues $1,645 $1,427 $1,843 $6,568 $4,984
Operating income
(loss) (B) 35 (34) 65 316 48
EBITDA (B) © 104 39 321 757 313
(A) See Table 6 for additional segment information.
(B) Operating income for the third quarter and full year 2005 included
charges of $195 million related to shutdown of the Lake Charles,
Louisiana, toluene diisocyanate plant, which are excluded from
EBITDA.
© See Table 9 for a reconciliation of segment EBITDA to net income of
Lyondell.
4Q05 v. 3Q05 - Fourth-quarter 2005 operations were negatively impacted by a reduction of approximately $220 million in MTBE profitability as margins returned to typical seasonal levels during November and December after benefiting from extremely strong third-quarter margins. Average MTBE raw material margins declined by approximately 95 cents per gallon from the third quarter. PO and PO derivative product results were relatively unchanged as stronger volumes and prices were offset by increased raw material and natural gas costs. Styrene margins increased, improving results by approximately $15 million. TDI results were unchanged as improved business results were offset by costs of approximately $24 million related to shutdown of the Lake Charles TDI facility.
4Q05 v. 4Q04 - Versus the year-ago quarter, MTBE results improved by approximately $50 million, primarily due to strong October margins. PO and PO derivative results improved by approximately $20 million based on stronger margins. Combined styrene and TDI results were relatively unchanged as styrene results improved slightly and TDI results declined as a result of Lake Charles TDI shutdown costs.
2005 v. 2004 - Higher margins led to an approximate $325 million increase in MTBE results. PO and PO derivative product results improved by approximately $200 million, based on stronger margins as price increases more than offset a 9-cents-per-pound increase in raw material (propylene) prices. Styrene results were relatively unchanged. TDI performance fell by approximately $65 million due to lower margins and costs associated with the Lake Charles TDI shutdown.
Inorganic Chemicals Segment - The principal product of the inorganic chemicals segment is titanium dioxide (TiO2). Lyondell acquired Millennium, including this business, on November 30, 2004.
Table 4 - Inorganic Chemicals Financial Overview (A)
Millions of dollars 4Q 4Q 3Q Full Year Full Year
2005 2004(B) 2005 2005 2004(B)
Sales and other
operating revenues $355 $97 $345 $1,360 $97
Operating income
(loss) © (3) 6 (16) 18 6
EBITDA © (D) 26 15 3 128 15
(A) See Table 6 for additional segment information.
(B) Includes the Inorganic Chemicals segment prospectively from
December 1, 2004.
© Operating income (loss) included impairment charges of $7 million
and $3 million for the fourth and third quarters of 2005,
respectively, and $15 million for 2005 that are excluded from
EBITDA.
(D) See Table 9 for a reconciliation of segment EBITDA to net income of
Lyondell.
The following discussion addresses the inorganics business independent of ownership.
4Q05 v. 3Q05 - Sales volumes were relatively unchanged at 162,000 metric tons while the average sales price increased by approximately $10 per metric ton. U.S. product prices increased by approximately $65 per metric ton, but were largely offset by dollar-based price declines outside the United States. Versus the third quarter, results were impacted by record high natural gas costs in the United States and the U.K.
4Q05 v. 4Q04 - Sales volumes were approximately 22,000 metric tons higher than the year-ago quarter while dollar-based prices were approximately $30 per metric ton higher. North and South American price increases were partially offset by lower European prices. Production costs increased due to higher raw material and natural gas costs coupled with plant reliability issues in the fourth quarter 2005.
2005 v. 2004 - Versus 2004, sales volumes declined by 47,000 metric tons, or 7 percent, in line with overall industry trends. Prices increased by approximately $180 per metric ton, but this was partially offset by higher raw material and natural gas costs. Finished product inventories were reduced significantly during 2005; however, due to high inventory-carrying values, sales from inventory did not significantly contribute to profits but did generate significant cash flow.
Refining Segment - Lyondell owns a 58.75 percent interest in LCR, a major refiner of heavy crude oil. This position is accounted for on the equity method.
Table 5 - Refining Financial Overview - 100% Basis (A)
Millions of dollars 4Q 4Q 3Q Full Year Full Year
2005 2004 2005 2005 2004
Sales and other
operating revenues $1,440 $1,564 $2,202 $6,741 $5,603
Operating income
(loss) (23) 165 100 232 516
EBITDA (B) 7 193 130 348 645
(A) The Refining segment information presented above represents the
historical operating results of LCR on a 100% basis. See Table 6
for additional segment information.
(B) See Table 9 for a reconciliation of segment EBITDA to net income of
LCR.
4Q05 v. 3Q05 - Results declined significantly due to fluid catalytic cracking unit downtime and subsequent refinery crude rate reductions related to Hurricane Rita. Total crude consumption averaged 169,000 barrels per day, a decline of 76,000 barrels per day versus the third quarter and 99,000 barrels per day less than operating capacity. Venezuelan contract (CSA) crude volumes averaged 146,000 barrels per day while spot crude averaged 23,000 barrels per day. Results were further negatively impacted by increased natural gas costs, the majority of which will be offset over time by adjustments in the CSA contract factors.
4Q05 v. 4Q04 - Business drivers and the analysis of results are similar to the comparison to third-quarter 2005 results presented in the previous paragraph.
2005 v. 2004 - LCR results declined significantly from record 2004 earnings. Reduced crude oil consumption related to second-quarter maintenance and Hurricane Rita were the primary drivers of the shortfall. These events led to a 48,000 barrel-per-day decline in total crude consumption in 2005 versus 2004. Increased natural gas prices and lower aromatic margins also pressured results, but were more than offset by an $8-per-barrel increase in spot crude margins.
Cash Distributions and Debt Reduction
LCR to Lyondell Chemical Company - During the fourth quarter 2005, Lyondell Chemical Company made a net contribution to LCR of $12 million. During 2005, net distributions received were $175 million versus $341 million in 2004.
Equistar to Lyondell Chemical Company and Millennium - During the fourth quarter 2005, Lyondell Chemical Company received $176 million of distributions from Equistar, and for the full year 2005 distributions to Lyondell Chemical Company were $511 million. Millennium received $74 million from Equistar during the fourth quarter and $214 million during 2005. During 2004, Equistar distributions to its owners totaled $315 million.
Millennium to Lyondell Chemical Company - There were no dividends paid by Millennium to Lyondell Chemical Company during 2005.
Debt reduction - During the fourth quarter 2005, Lyondell paid $422 million toward debt reduction, of which $22 million was Millennium debt. For the full year 2005, Lyondell paid $1.36 billion toward debt reduction, including $259 million of Millennium debt.
CONFERENCE CALL
Lyondell will host a conference call today, Jan. 26, 2006, 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 Doug Pike, Vice President of Investor Relations. The dial-in numbers are 888-391-2385 (U.S. - toll free) and 517-645-6239 (international). The passcode for each is Lyondell. The call will be broadcast live on the Investor Relations page of the company's web site, http://www.lyondell.com/earnings .
A replay of the call will be available from 1:30 p.m. ET Jan. 26 to 6 p.m. ET on Feb. 3. The dial-in numbers are 866-490-2543 (U.S.) and 203-369-1699 (international). The passcode for each is 5549. Web replay will be available at 2:30 p.m. ET Jan. 26 on the Investor Relations page of the company's web site, http://www.lyondell.com/earnings .
Reconciliations of non-GAAP financial measures to GAAP financial measures, together with any other applicable disclosures, including this earnings release, will be available at 11:30 a.m. ET Jan. 26 at http://www.lyondell.com/earnings .
ABOUT LYONDELL
Lyondell Chemical Company, headquartered in Houston, Texas, is North America's third-largest independent, publicly traded chemical company. Lyondell is a major global manufacturer of basic chemicals and derivatives including ethylene, propylene, titanium dioxide, styrene, polyethylene, propylene oxide and acetyls. It also is a significant producer of gasoline blending components. The company has a 58.75 percent interest in Lyondell- Citgo Refining LP, a refiner of heavy, high-sulfur crude oil. As a result of Lyondell's November 30, 2004 acquisition of Millennium Chemicals Inc., Millennium and Equistar Chemicals, LP are wholly owned subsidiaries of Lyondell. Lyondell is a global company operating on five continents and employs approximately 10,000 people worldwide.
FORWARD-LOOKING STATEMENTS
The statements in this release and the related teleconference relating to matters that are not historical facts are forward-looking statements. These forward-looking statements are based upon the current beliefs and expectations of management, and are subject to significant risks and uncertainties. Actual results could differ materially based on factors including, but not limited to, availability, cost and price volatility of raw materials and utilities; supply/demand balances; industry production capacities and operating rates; cyclical nature of the chemical and refining industries; operating interruptions; uncertainties associated with the U.S. and worldwide economies; current and potential governmental regulatory actions; terrorist acts; international political unrest; competitive products and pricing; risks of doing business outside of the U.S.; legal, tax and environmental proceedings; access to capital markets; technological developments; and other risk factors. Additional factors that could cause results to differ materially from those described in the forward-looking statements can be found in the Lyondell, Equistar and Millennium Annual Reports on Form 10-K for the year ended December 31, 2004, the Lyondell, Equistar and Millennium Quarterly Reports on Form 10-Q for the quarter ended September 30, 2005, and the Lyondell, Equistar and Millennium Annual Reports on Form 10-K for the year ended December 31, 2005, which will be filed with the SEC in March 2006.
Table 6 - Selected Unaudited Segment Financial Information (A)
For the For the
three months twelve months
ended ended
December 31, September 30, December 31,
(Millions of dollars) 2005 2004 2005 2005 2004
Sales and other operating
revenues (B)
Ethylene, Co-Products &
Derivatives $3,380 $2,816 $2,988 $12,191 $9,316
PO & Related Products 1,645 1,427 1,843 6,568 4,984
Inorganic Chemicals 355 97 345 1,360 97
Refining 1,440 1,564 2,202 6,741 5,603
Operating income (loss)
Ethylene, Co-Products &
Derivatives $337 $210 $21 $950 $494
PO & Related Products © 35 (34) 65 316 48
Inorganic Chemicals (D) (3) 6 (16) 18 6
Refining (23) 165 100 232 516
Depreciation and amortization
Ethylene, Co-Products &
Derivatives $102 $79 $95 $388 $313
PO & Related Products 58 63 59 235 249
Inorganic Chemicals 22 8 26 98 8
Refining 30 28 30 116 115
EBITDA (E)
Ethylene, Co-Products &
Derivatives $438 $290 $116 $1,334 $809
PO & Related Products © 104 39 321 757 313
Inorganic Chemicals (D) 26 15 3 128 15
Refining 7 193 130 348 645
Capital expenditures
Ethylene, Co-Products &
Derivatives $52 $32 $34 $155 $101
PO & Related Products 8 13 6 36 49
Inorganic Chemicals 21 5 13 53 5
Refining 55 29 38 176 71
(A) The EC&D data for periods prior to January 1, 2005 represents
Equistar results on a 100% basis. Prior to December 1, 2004,
Equistar was accounted for as an equity investment. See Table 14 for
additional Equistar financial information. See Table 8 for a
reconciliation of segment information for the year ended
December 31, 2005 to consolidated Lyondell financial information.
See Table 10 for PO and Related Products data for the year ended
December 31, 2005. The Refining information presented above
represents the historical operating results of LCR on a 100% basis.
See Table 20 for additional LCR financial information. The Inorganic
Chemicals segment is presented prospectively from December 1, 2004.
(B) Sales include sales to affiliates and intersegment sales.
© Operating income for the third quarter and full year 2005 included
charges of $195 million related to shutdown of the Lake Charles,
Louisiana, toluene diisocyanate plant, which are excluded from
EBITDA.
(D) Inorganic Chemicals operating income (loss) included impairment
charges of $7 million and $3 million for the fourth and third
quarters of 2005, respectively, and $15 million for 2005 that are
excluded from EBITDA.
(E) See Table 9 for reconciliation of segment EBITDA to net income.
Table 7 - Selected Segment Sales Volumes (A) (B)
For the For the
three months ended twelve months ended
December 31, September 30, December 31,
2005 2004 2005 2005 2004
Ethylene, Co-Products and
Derivatives (in millions)
Ethylene and derivatives
(pounds) 2,799 2,881 2,834 11,389 11,194
Polyethylene included
above (pounds) 1,258 1,460 1,409 5,345 5,703
Co-products, nonaromatic
(pounds) 1,953 2,029 1,899 7,749 7,942
Aromatics (gallons) 103 105 100 412 377
PO and Related Products
(in millions)
PO and derivatives (pounds) 831 885 790 3,236 3,330
Co-products:
Styrene monomer (pounds) 905 997 953 3,885 3,720
MTBE and other TBA
derivatives (gallons) 300 289 298 1,178 1,114
Inorganic Chemicals
(thousand metric tons)
TiO2 162 45 160 618 45
Refined products
(thousand barrels per day)
Gasoline 66 119 125 104 118
Diesel and heating oil 63 92 85 80 95
Jet fuel 8 17 16 13 17
Aromatics 8 7 7 8 8
Other refined products 90 105 92 86 96
Total refined products
volumes 235 340 325 291 334
Refinery Runs
Crude processing rates
(thousand barrels per day)
Crude Supply Agreement 146 235 212 185 237
Other crude oil 23 26 33 32 28
Total crude oil 169 261 245 217 265
(A) The EC&D data for periods prior to January 1, 2005 represent
Equistar results on a 100% basis. Prior to December 1, 2004,
Equistar was accounted for as an equity investment. The Refining
information presented above represents the historical operating
results of LCR on a 100% basis. The Inorganic Chemicals segment is
presented prospectively from December 1, 2004.
(B) Sales volumes include sales to affiliates and intersegment sales.
Table 8 - Reconciliation of Segment Information to Consolidated Lyondell
Financial Information
Sales and
other Operating Depreciation
operating income and Capital
(Millions of dollars) revenues (loss) amortization expenditures
For the three months ended
December 31, 2005:
Segment Data
Ethylene, Co-Products &
Derivatives $3,380 $337 $102 $52
PO & Related Products 1,645 35 58 8
Inorganic Chemicals 355 (3) 22 21
Other (A) (380) (6) 2 3
Total $5,000 $363 $184 $84
For the twelve months ended
December 31, 2005:
Segment Data
Ethylene, Co-Products &
Derivatives $12,191 $950 $388 $155
PO & Related Products 6,568 316 235 36
Inorganic Chemicals 1,360 18 98 53
Other (A) (1,513) (16) 8 5
Total $18,606 $1,268 $729 $249
For the three months ended
September 30, 2005:
Segment Data
Ethylene, Co-Products &
Derivatives $2,988 $21 $95 $34
PO & Related Products 1,843 65 59 6
Inorganic Chemicals 345 (16) 26 13
Other (A) (386) (5) 2 ---
Total $4,790 $65 $182 $53
(A) Includes elimination of intersegment transactions and items not
allocated to segments.
Table 9 - Reconciliation of Segment EBITDA to Net Income
For the For the
three months twelve months
ended ended
December 31, September 30, December 31,
(Millions of dollars) 2005 2004 2005 2005 2004
LYONDELL
Segment EBITDA:
Ethylene, Co-Products &
Derivatives (A) $438 $145 $116 $1,334 $145
PO & Related Products 104 39 321 757 313
Inorganic Chemicals (B) 26 15 3 128 15
Other (3) (3) (1) (5) (3)
Add:
Income from equity investment
in Equistar --- 48 --- --- 141
Income (loss) from equity
investment in LCR (16) 95 53 123 303
Deduct:
Depreciation and
amortization (184) (103) (182) (729) (289)
Interest expense, net (141) (124) (149) (603) (449)
(Provision for) benefit from
income taxes (59) (3) 54 (219) (23)
Intercompany profit
elimination --- (15) --- --- (15)
Purchased in process R&D --- (64) --- --- (64)
Charges related to toluene
diisocyanate plant and other
assets (7) (2) (198) (210) (2)
Debt prepayment premiums and
charges (17) (12) (7) (45) (18)
Lyondell net income $141 $16 $10 $531 $54
Equistar EBITDA © $290 $809
Deduct:
Depreciation and amortization (79) (313)
Interest expense, net (55) (220)
Equistar net income $156 $276
Refining EBITDA (D) $7 $193 $130 $348 $645
Deduct:
Depreciation and amortization (30) (28) (30) (116) (115)
Interest expense, net (12) (6) (9) (38) (30)
LCR net income (loss) $(35) $159 $91 $194 $500
(A) The EC&D segment information reflects the consolidation of Millennium
and Equistar prospectively from December 1, 2004. For periods prior
to December 1, 2004, Equistar was accounted for as an equity
investment. See Tables 14 and 17 for additional Equistar and
Millennium financial information, respectively.
(B) The Inorganic Chemicals segment information reflects the
consolidation of Millennium prospectively from December 1, 2004.
© The Equistar information presented represents the historical
operating results of Equistar on a 100% basis.
(D) The Refining information presented represents the historical
operating results of LCR on a 100% basis. See Table 20 for
additional LCR financial information.
Table 10 - Lyondell Unaudited Income Statement Information (A)
For the For the
three months twelve months
ended ended
(Millions of dollars, except December 31, September 30, December 31,
per share data) 2005 2004 2005 2005 2004
Sales and other operating
revenues $5,000 $2,389 $4,790 $18,606 $5,946
Cost of sales 4,469 2,166 4,353 16,485 5,468
Charges related to toluene
diisocyanate plant 24 --- 195 219 ---
Selling, general and
administrative expenses 121 138 154 543 287
Research and development
expenses 23 17 23 91 41
Purchased in-process research
and development --- 64 --- --- 64
Operating income 363 4 65 1,268 86
Income from equity investment
in Equistar --- 48 --- --- 141
Income (loss) from equity
investment in LCR (16) 95 53 123 303
Income from other equity
investments (1) 4 2 1 7
Interest expense, net (141) (124) (149) (603) (449)
Other expense, net (5) (8) (15) (39) (11)
Income (loss) before income
taxes 200 19 (44) 750 77
Provision for (benefit from)
income taxes 59 3 (54) 219 23
Net income $141 $16 $10 $531 $54
Basic earnings per share: $0.57 $0.08 $0.04 $2.16 $0.29
Diluted earnings per share: $0.54 $0.08 $0.04 $2.04 $0.29
Weighted average shares
(in millions):
Basic 246.7 200.5 246.5 245.9 183.2
Diluted 260.3 207.7 260.4 260.0 186.0
(A) Results of operations include the operations of Equistar and
Millennium prospectively from December 1, 2004. Prior to
December 1, 2004, Equistar was accounted for as an equity investment.
Table 11 - Lyondell Unaudited Cash Flow Information (A)
For the twelve months ended
December 31,
(Millions of dollars) 2005 2004
Net income $531 $54
Adjustments:
Depreciation and amortization 729 289
Charges related to toluene
diisocyanate plant 195 ---
Income from equity investments (124) (451)
Distributions of earnings from
affiliates 123 424
Deferred income taxes 143 19
Purchased in-process research
and development --- 64
Debt prepayment charges and
premiums 45 18
Changes in assets and liabilities:
Accounts receivable (156) 24
Inventories (94) (137)
Accounts payable 292 (11)
Other, net (92) 61
Cash provided by operating
activities 1,592 354
Expenditures for property, plant and
equipment (249) (70)
Distributions from affiliates in
excess of earnings 183 95
Contributions and advances to
affiliates (148) (53)
Cash received in acquisition of
Millennium --- 367
Cash received in acquisition of
Equistar --- 85
Other 3 ---
Cash provided by (used in)
investing activities (211) 424
Repayment of long-term debt (1,510) (319)
Issuance of long-term debt 100 4
Dividends paid (222) (127)
Proceeds from stock option exercises 48 25
Other 6 1
Cash used in financing activities (1,578) (416)
Effect of exchange rate changes on cash (14) 4
Increase (decrease) in cash and cash
equivalents $(211) $366
(A) Equistar and Millennium became wholly owned subsidiaries as of
December 1, 2004. Prior to December 1, 2004, Lyondell's investment
in Equistar was accounted for on an equity basis.
Table 12 - Lyondell Unaudited Balance Sheet Information
December 31, December 31,
(Millions of dollars) 2005 2004
Cash and cash equivalents $593 $804
Accounts receivable, net 1,677 1,587
Inventories 1,657 1,619
Prepaid expenses and other
current assets 176 171
Deferred tax assets 131 276
Total current assets 4,234 4,457
Property, plant and equipment, net 6,530 7,215
Investments and long-term receivables:
Investment in PO joint ventures 776 838
Investment in and receivable from LCR 186 229
Other investments and long-term
receivables 114 123
Goodwill, net 2,245 2,175
Other assets, net 856 924
Total assets $14,941 $15,961
Current maturities of long-term debt $319 $308
Accounts payable 1,453 1,205
Accrued liabilities 797 782
Total current liabilities 2,569 2,295
Long-term debt 6,117 7,555
Other liabilities 1,722 1,780
Deferred income taxes 1,488 1,477
Minority interest 180 181
Stockholders' equity (247,050,234 and
243,684,998 shares outstanding at
December 31, 2005 and 2004,
respectively) 2,865 2,673
Total liabilities and
stockholders' equity $14,941 $15,961
Table 13 - Lyondell Selected Equity Investment Activity
For the three For the twelve
months ended months ended
December 31, December 31,
(Millions of dollars) 2005 2005
Investment in LCR, beginning
of period $(86) $(37)
Lyondell's share of LCR net
income (loss) (16) 123
Cash distributions from LCR (42) (303)
Cash contributions to LCR 54 128
Other --- (1)
Investment in LCR,
end of period $(90) $(90)
December 31,
Investment in and receivable from LCR 2005
Investment in LCR $(90)
LCR note receivable 229
LCR interest receivable 47
Total $186
Tables 13 through 22 represent additional financial information
on a 100% basis for Equistar, Millennium and LCR.
Table 14 - Equistar Unaudited Income Statement Information (A)
For the For the
three months twelve months
ended ended
December 31, September 30, December 31,
(Millions of dollars) 2005 2004 2005 2005 2004
Sales and other operating
revenues (B) $3,258 $2,816 $2,867 $11,686 $9,316
Cost of sales 2,847 2,524 2,776 10,487 8,587
Selling, general and
administrative expenses 47 71 53 198 205
Research and development
expenses 8 11 8 33 34
Gain on asset dispositions --- --- --- --- (4)
Operating income 356 210 30 968 494
Interest expense, net (54) (55) (56) (218) (220)
Other income (expense), net --- 1 (2) (2) 2
Net (loss) income © $302 $156 $(28) $748 $276
(A) Represents information for Equistar on a stand-alone basis and does
not reflect purchase accounting adjustments.
(B) Sales and other operating revenues include sales to affiliates.
© As a partnership, Equistar is not subject to federal income taxes.
Table 15 - Equistar Unaudited Balance Sheet Information (A)
December 31, December 31,
(Millions of dollars) 2005 2004
Cash and cash equivalents $215 $39
Accounts receivable, net 924 826
Inventories 657 582
Prepaid expenses and other
current assets 53 43
Total current assets 1,849 1,490
Property, plant and equipment, net 3,063 3,167
Investments 58 60
Other assets, net 350 357
Total assets $5,320 $5,074
Current maturities of
long-term debt $150 $1
Accounts payable 735 532
Accrued liabilities 275 273
Total current liabilities 1,160 806
Long-term debt 2,161 2,312
Other liabilities and deferred
revenues 416 395
Partners' capital 1,583 1,561
Total liabilities and
partners' capital $5,320 $5,074
(A) Represents information for Equistar on a stand-alone basis and does
not reflect purchase accounting adjustments.
Table 16 - Equistar Unaudited Cash Flow Information (A)
For the twelve months ended
December 31,
(Millions of dollars) 2005 2004
Net income $748 $276
Adjustments:
Depreciation and amortization 322 313
Deferred maintenance
turnaround expenditures (51) (55)
Gain on asset dispositions --- (4)
Changes in assets and
liabilities:
Accounts receivable (B) (96) (216)
Inventories (69) (174)
Accounts payable 197 30
Other, net (4) 45
Cash provided by operating
activities 1,047 215
Expenditures for property, plant
and equipment (153) (101)
Proceeds from sales of assets 3 41
Cash used in investing
activities (150) (60)
Repayment of long-term debt (1) ---
Distributions to owners (725) (315)
Other 5 ---
Cash used in financing activities (721) (315)
Increase (decrease) in cash and
cash equivalents $176 $(160)
(A) Represents information for Equistar on a stand-alone basis and does
not reflect purchase accounting adjustments.
(B) In consideration of discounts offered to certain customers for early
payment for product, some receivable amounts were collected in
December 2005 and 2004 that otherwise would have been expected to be
collected in January 2006 and 2005 of the respective years. This
included $84 million and $66 million from Occidental Chemical
Corporation in December 2005 and 2004, respectively.
Table 17 - Millennium Unaudited Income Statement Information (A) ©
For the For the
three months twelve months
ended ended
December 31, September 30, December 31,
(Millions of dollars) 2005 2005 2005
Sales and other operating
revenues (B) $502 $489 $1,959
Cost of sales 478 448 1,715
Selling, general and
administrative expenses 29 77 194
Research and development expenses 6 5 23
Asset impairments 7 3 15
Combination costs --- 2 2
Operating income (loss) (18) (46) 10
Interest expense, net (39) (24) (112)
Other income (expense), net 3 (18) (19)
Loss before equity investment,
minority interest and income
taxes (54) (88) (121)
Income (loss) from equity
investment in Equistar 89 (8) 221
Income (loss) before income
taxes and minority interest 35 (96) 100
Provision for (benefit from) income
taxes 36 (26) 67
Income (loss) before minority
interest (1) (70) 33
Minority interest (1) (2) (5)
Net income (loss) $(2) $(72) $28
(A) Represents information for Millennium on a stand-alone basis and does
not reflect purchase accounting adjustments.
(B) Sales and other operating revenues include sales to affiliates.
© The fourth and third quarters and full year 2005 included
$13 million, $39 million and $58 million, respectively, of charges
representing revisions to Lyondell's previous estimates of expected
future environmental remediation spending.
Table 18 - Millennium Unaudited Balance Sheet Information (A)
December 31, December 31,
(Millions of dollars) 2005 2004
Cash and cash equivalents $279 $344
Accounts receivable, net 361 336
Inventories 429 414
Prepaid expenses and other current
assets 79 61
Total current assets 1,148 1,155
Property, plant and equipment, net 647 707
Investments 464 457
Goodwill 104 104
Other assets, net 110 107
Total assets $2,473 $2,530
Current maturities of long-term debt $169 $7
Accounts payable 367 294
Accrued liabilities 156 153
Total current liabilities 692 454
Long-term debt 966 1,398
Other liabilities 644 536
Deferred income taxes 167 164
Minority interest 42 33
Stockholder's deficit
(100,000,000 shares authorized;
66,135,816 shares outstanding) (38) (55)
Total liabilities and
stockholders' equity $2,473 $2,530
(A) Represents information for Millennium on a stand-alone basis and does
not reflect purchase accounting adjustments.
Table 19 - Millennium Unaudited Cash Flow Information (A)
For the twelve
months ended
December 31,
(Millions of dollars) 2005
Net income $28
Adjustments:
Asset impairments 15
Depreciation and amortization 107
Debt prepayment charges and premiums 11
Deferred income taxes (3)
Income from equity investment in Equistar (221)
Distributions of earnings from Equistar 214
Changes in assets and liabilities:
Accounts receivable (28)
Inventories (20)
Accounts payable 77
Other, net 93
Cash provided by operating activities 273
Expenditures for property, plant and equipment (60)
Cash used in investing activities (60)
Repayment of long-term debt (372)
Issuance of long-term debt 100
Contribution from Lyondell 6
Distributions to minority interests (6)
Other 2
Cash used in financing activities (270)
Effect of exchange rate changes on cash (8)
Decrease in cash and cash equivalents $(65)
(A) Represents information for Millennium on a stand-alone basis and does
not reflect purchase accounting adjustments.
Table 20 - LCR Unaudited Income Statement Information
For the For the
three months twelve months
ended ended
December 31, September 30, December 31,
(Millions of dollars) 2005 2004 2005 2005 2004
Sales and other operating
revenues (A) $1,440 $1,564 $2,202 $6,741 $5,603
Cost of sales 1,446 1,385 2,091 6,458 5,028
Selling, general and
administrative expenses 17 14 11 51 59
Operating income (loss) (23) 165 100 232 516
Interest expense, net (12) (6) (9) (38) (30)
Other income --- --- --- --- 14
Net income (loss) (B) $(35) $159 $91 $194 $500
EBITDA © $7 $193 $130 $348 $645
(A) Sales and other operating revenues include sales to affiliates.
(B) As a partnership, LCR is not subject to federal income taxes.
© See Table 9 for reconciliation of LCR's net income to EBITDA.
Table 21 - LCR Unaudited Balance Sheet Information
December 31, December 31,
(Millions of dollars) 2005 2004
Total current assets $418 $359
Property, plant and equipment, net 1,328 1,227
Other assets, net 86 61
Total assets $1,832 $1,647
Current maturities of long-term debt $5 $5
Other current liabilities 800 583
Long-term debt 439 443
Loans payable to partners 264 264
Other liabilities 113 112
Partners' capital 211 240
Total liabilities and partners'
capital $1,832 $1,647
Table 22 - LCR Unaudited Cash Flow Information
For the twelve months ended
December 31,
(Millions of dollars) 2005 2004
Cash flow from operations $439 $667
Capital expenditures 176 71
Depreciation and amortization 116 115
Chemicals Inc.
SOURCE: Lyondell Chemical Company; Equistar Chemicals, LP; Millennium
CONTACT: media, Susan Moore, +1-713-309-4645, or investors, Doug Pike,
+1-713-309-7141, both of Lyondell Chemical Company
Web site: http://www.lyondell.com/
http://www.lyondell.com/earnings
