- Rapidly escalating energy and raw material costs impact first-quarter results.
- LYONDELL-CITGO's operating rates and deliveries from Venezuela return to normal in February.
- Lyondell strengthens its Asian propylene oxide position by restructuring its Nihon Oxirane joint venture.
- Equistar bolsters its cash position through long-term propylene supply arrangement and polypropylene asset sale.
HOUSTON, April 24 /PRNewswire-FirstCall/ -- 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 the financial table
SELECTED FINANCIAL AND OPERATING INFORMATION for components of
proportionate share of sales and other operating revenues.
(B) See Lyondell's income statements on the SELECTED FINANCIAL AND
OPERATING INFORMATION financial table and reconciliation of operating
income to proportionate EBITDA on the RECONCILIATION OF OPERATING
INCOME (LOSS) TO EBITDA financial table. 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:
-- 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.
-- 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.
-- 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.
-- 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."
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
the financial table RECONCILIATION OF OPERATING INCOME (LOSS) TO
EBITDA. 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 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 the
financial table RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA.
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.
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 the financial
table RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA. 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 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.
LYONDELL CHEMICAL COMPANY
SELECTED FINANCIAL AND OPERATING INFORMATION (UNAUDITED)
(Millions of dollars)
Lyondell and
Lyondell Joint Ventures 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.
LYONDELL CHEMICAL COMPANY
SELECTED FINANCIAL AND OPERATING INFORMATION (UNAUDITED)
For the three months ended
INCOME STATEMENTS March 31, Dec. 31,
2003 2002 2002 (A)
(Millions of dollars, except per
share data)
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.
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, Dec. 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.
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.
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
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.
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.
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.
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 responsibility 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.
SOURCE Lyondell Chemical Company
