Highlights - Net income of $306 million, or $2.60 per share, including a $332 million after-tax gain on the sale of polyols business. - Net proceeds from polyols sale of $2.05 billion being applied to debt reduction. - Proportionate share EBITDA of $272 million, excluding gain.
HOUSTON, April 25 /PRNewswire/ -- Lyondell Chemical Company (NYSE: LYO) reported net income for the first quarter of 2000 of $306 million, or $2.60 per share, including a $332 million, or $2.82 per share, one-time, after-tax gain from the sale of Lyondell's worldwide polyols business, along with an ownership interest in Lyondell's US propylene oxide (PO) operations, to Bayer on March 31, 2000. Lyondell is using net proceeds of $2.05 billion from the sale to repay debt.
Excluding the gain on the sale of assets and an $11 million after-tax extraordinary charge, Lyondell had a net loss of $15 million, or $0.13 per share, in the first quarter. This compares with a loss of $16 million, or $0.14 per share, for the fourth quarter of 1999, excluding unusual items. For the first quarter of 1999, net income was $2 million, or $0.02 per share. The extraordinary charge in the first quarter of 2000 is related to the write-off of debt issuance costs resulting from the early payment of bank debt on March 31, 2000.
EBITDA (earnings before net interest, taxes, depreciation and amortization), adjusted for unusual and extraordinary items, for Lyondell and the proportionate share of its joint ventures was $272 million in the first quarter 2000, compared to $278 million in the fourth quarter 1999 and $269 million in the first quarter 1999.
"The highlight of the first quarter was the closing of the Bayer transaction a full quarter ahead of schedule," said Lyondell President and Chief Executive Officer Dan Smith. "In addition to enabling us to achieve significant debt reduction, the transaction is accretive to Lyondell's earnings and cash flow in the first year. We also expect this unique agreement to open up significant worldwide growth opportunities for Lyondell as well as to strengthen our PO business through more rapid growth for polyols."
Commenting on the first quarter, Smith added, "Our financial results were essentially level with the fourth quarter of last year. This is impressive, given the sharp rise in raw material costs for both Lyondell and Equistar. Strong business performance resulted from continued excellent sales volume growth and generally higher prices for many of our products. In addition, the Lyondell and Equistar enterprise benefited from lower controllable costs as a result of the implementation of the shared services organization and other cost reduction initiatives."
Lyondell Earnings Summary (A) Millions of dollars except per share amounts 1Q2000 4Q1999 1Q1999 Net Income (Loss) Before Unusual Items (B) $(15) $(16) $2 Earnings (Loss) per Share Before Unusual Items (B) $(0.13) $(0.14) $0.02 Net Income (Loss) As Reported $306 $(58) $2 Earnings (Loss) per Share As Reported $2.60 $(0.50) $0.02 EBITDA (Lyondell and proportionate share of ventures) (B) $272 $278 $269 (A) See page 6 for Consolidated Income Statements. (B) The first quarter 2000 excludes the net after-tax benefit from unusual items of $321 million, or $2.73 per share, which consists of the gain on the sale less the extraordinary charge on debt retirement. The fourth quarter 1999 excludes after-tax unusual items of $42 million, or $.36 per share, which consist of Equistar's restructuring charge, Lyondell's unfavorable LIFO adjustment and LCR's charge related to its labor agreement. DEBT AND CAPITAL STRUCTURE
Lyondell's long-term debt was significantly reduced with proceeds from the Bayer transaction. The Company paid $999 million under Term Loan A on March 31, 2000. On April 7, 2000, the Company paid the $96 million balance of Term Loan A and the $149 million outstanding balance of Term Loan F. Lyondell intends to reduce the outstanding balance of Term Loan B by $810 million by May 31, 2000.
At the end of the first quarter 2000, Lyondell's debt, net of cash on hand, totaled $3.6 billion, a $2.3 billion reduction from year-end 1999.
INTERMEDIATE CHEMICALS AND DERIVATIVES (IC&D)
The Intermediate Chemicals and Derivatives segment includes PO and derivatives, TDI, styrene monomer and MTBE. EBITDA for the first quarter 2000 was $163 million, compared to fourth quarter 1999 EBITDA of $165 million.
Compared to the fourth quarter 1999, the first quarter 2000 benefited from seasonally better results from the aircraft deicers business and improved profitability for styrene. This was offset by higher costs for propylene, the primary raw material for PO and derivatives.
Demand in the first quarter for PO and derivatives continued to be strong, as demonstrated by a 10% increase in sales volumes from a year ago. This was driven by economic growth, particularly in Asia and the United States.
The first quarter 2000 results of IC&D included the polyols business sold to Bayer. This business generated $160 million of EBITDA for the full year of 1999.
EQUISTAR CHEMICALS, LP
Equistar's EBITDA for the first quarter 2000 was $178 million, an increase from EBITDA of $170 million in the fourth quarter of 1999. Equistar's fourth quarter 1999 EBITDA excludes the $96 million of unusual items primarily associated with the mothballing of certain polymer facilities. Equistar's results in the first quarter 2000 benefited from cost reductions announced in the fourth quarter.
Equistar's petrochemicals segment had EBITDA of $223 million in the first quarter of 2000, unchanged from the fourth quarter of 1999. Compared to the fourth quarter 1999, higher ethylene and co-product prices, along with higher sales volumes, were offset by higher raw material costs.
First quarter 2000 EBITDA for polymers was $(19) million, compared to $20 million in the fourth quarter of 1999. Profitability declined as increases in polymer prices lagged price increases in polymer raw materials, primarily ethylene and propylene.
LYONDELL-CITGO REFINING LP (LCR)
LCR had EBITDA of $60 million in the first quarter of 2000, compared with $70 million in the fourth quarter of 1999. Included in the fourth quarter results was an insurance recovery of $12 million related to an unplanned coker outage that occurred in 1999. Excluding the insurance recovery, first quarter 2000 results were essentially flat compared to the fourth quarter, as improved refining margins were offset by turnaround and other operating costs.
OUTLOOK
"Looking ahead, Lyondell's profitability will be driven by the ability to grow or maintain product margins in an environment of uncertain and volatile feedstock costs," Smith said. "If crude oil prices stabilize at the OPEC-announced price range, Equistar's results will benefit significantly. For Lyondell, margins will remain under pressure despite price increases for PO and derivatives, due to significant increases in propylene costs in the US and Europe. Ongoing progress with debt reduction and a focus on controllable costs will have a continued positive impact on future earnings and cash flow."
Sales Revenues Millions of dollars 1Q2000 4Q1999 1Q1999 Reported Sales Revenues $1,136 $1,008 $ 855 Total sales revenues - all businesses in which Lyondell participates(A) $3,831 $3,570 $2,402 Lyondell's proportionate share of the sales revenues of businesses in which it participates(A) $2,402 $2,224 $1,570 (A) Includes revenues from sales to affiliates.
Lyondell Chemical Company, with headquarters in Houston, Texas, is the world's largest producer of propylene oxide (PO); the world's number two supplier of TDI (toluene diisocyanate); a leading producer of propylene glycol; a leading producer of other PO derivatives such as BDO (butanediol) and PGE (propylene glycol ether); and a producer of styrene monomer and MTBE as co-products of PO production.
Through its 41% 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 polypropylene, 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.
Lyondell is the third largest methanol producer in the U.S., through its 75% interest in Lyondell Methanol Company, L.P.
The statements in this release relating to matters that are not historical facts are forward-looking statements that are subject to risks and uncertainties, including, but not limited to, future global economic conditions, industry production capacity and operating rates, the supply/demand balance for the Company's products, competitive products and pricing pressures, further increases in raw material costs, changes in governmental regulations and other risks and uncertainties detailed in the Securities and Exchange Commission filings of Lyondell.
LYONDELL CHEMICAL COMPANY
SELECTED FINANCIAL AND OPERATING INFORMATION (UNAUDITED)
(Millions of dollars)
Lyondell Chemical Lyondell and
Company Joint Ventures Proportionate
(Excluding Equistar LCR LMC Share of
Equity Equity
Investments)(A) 100% 100% 100% Investments(B)
Three months ended March 31, 2000:
Sales and other operating
revenues(C) $1,136 $1,807 $ 859 $29 2,402
SG&A and R&D 69 53 14 2 100
EBITDA before unusual
charges 163 178 60 1 272
Depreciation and
amortization 84(E) 77 26 3 130
Net interest expense 157(E) 45 12 --- 183
Capital expenditures 19 20 17 --- 37
Dividends 26 26
Three months ended
December 31, 1999:
Sales and other operating
revenues(C) $1,008 $1,653 $ 877 $32 2,224
SG&A and R&D 69 99 19 2 122
EBITDA before unusual
charges and extraordinary
item 165(D) 170 70 3 278
Depreciation and
amortization 86(E) 77 25 2 131
Net interest expense 165(E) 48 13 --- 192
Capital expenditures 41 45 13 --- 67
Dividends 27 27
Three months ended
March 31, 1999:
Sales and other
operating revenues(C) $ 855 $1,104 $ 432 $11 $1,570
SG&A and R&D 72 71 19 2 114
EBITDA before unusual
charges 193 119 49 (2) 269
Depreciation and
amortization 85(E) 73 25 2 128
Net interest expense 140(E) 39 10 --- 162
Capital expenditures 32 46 16 11 69
Dividends 17 17
(A) Consists of the operations of the Intermediate Chemicals and
Derivatives business segment.
(B) This column reflects a combined total for 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 currently owns a 41% interest in
Equistar Chemicals, LP ("Equistar"), a 58.75% interest in
LYONDELL-CITGO Refining LP ("LCR") and a 75% interest in Lyondell
Methanol Company, L.P. ("LMC").
(C) Includes revenues from sales to affiliates.
(D) Excludes LIFO inventory liquidation charge of $15 million.
(E) "Depreciation and amortization" and "net interest expense" both
include approximately $6 million, $6 million and $14 million of
non-cash amortization of debt issuance costs in the three-months
periods ended March 31, 2000, December 31, 1999 and March 31, 1999,
respectively.
LYONDELL CHEMICAL COMPANY
SELECTED FINANCIAL AND OPERATING INFORMATION (UNAUDITED)
For the three months
INCOME STATEMENTS ended March 31
2000 1999
(Millions of dollars, except per share data)
Sales and other operating revenues $1,136 $ 855
Operating costs and expenses:
Cost of sales 952 630
Selling, general and administrative expenses 55 57
Research and development 14 15
Amortization of goodwill and other intangibles 28 24
Operating income 87 129
Income from equity investment in Equistar 33 13
Income from equity investment in LCR 16 11
Income (loss) from other equity investments 1 (3)
Interest expense, net (157) (140)
Other expense, net (5) (7)
Gain on sale of assets 544 ---
Income before income taxes and
extraordinary item 519 3
Provision for income taxes 202 1
Income before extraordinary item 317 2
Extraordinary loss, net of income taxes (11) ---
Net income $ 306 $ 2
Basic and diluted earnings per share:
Income before extraordinary item $ 2.69 $ 0.02
Net income $ 2.60 $ 0.02
Weighted average shares outstanding
(thousands):(A)
Basic 117,562 77,072
Diluted 117,562 77,072
INTERMEDIATE CHEMICALS AND DERIVATIVES SEGMENT
SELECTED FINANCIAL AND OPERATING INFORMATION
(Millions of dollars)
Sales and other operating revenues $1,136 $ 855
Operating income 87 129
EBITDA before unusual charges 163 193
Sales Volumes (millions)
PO and derivatives (pounds)(B) 1,187 1,080
Co-products:
Styrene monomer (pounds) 900 782
TBA and derivatives (gallons) 284 265
(A) In May 1999, Lyondell issued 40.25 million shares of common stock in
a public offering.
(B) Includes propylene oxide ("PO"), PO derivatives and isocyanates.
LYONDELL CHEMICAL COMPANY
SELECTED FINANCIAL INFORMATION (UNAUDITED)
(Millions of dollars)
For the three months
ended March 31
STATEMENTS OF CASH FLOWS 2000 1999
Net income $ 306 $ 2
Adjustments to reconcile net income to
net cash provided by operating activities:
Gain on sale of assets (544) ---
Depreciation and amortization 84 85
Extraordinary loss 11
Changes in working capital and other, net 145 47
Net cash provided by operating activities 2 134
Proceeds from sale of assets, net of cash sold 2,424 -
Expenditures for property, plant and equipment (19) (32)
Contributions and advances to affiliates (4) (4)
Distributions from affiliates in excess of
earnings --- 25
Other (38) (6)
Net cash provided by (used in) investing
activities 2,363 (17)
Repayments of long-term debt (1,004) (76)
Dividends paid (26) (17)
Other (10) ---
Net cash used in financing activities (1,040) (93)
Effect of exchange rate changes on cash (2) 3
Increase in cash and cash equivalents $1,323 $ 27
LYONDELL CHEMICAL COMPANY
SELECTED FINANCIAL INFORMATION (UNAUDITED)
(Millions of dollars)
March 31 December 31
BALANCE SHEET 2000 1999
Cash and cash equivalents $1,630 $307
Accounts receivable, net 426 566
Inventories 374 519
Prepaid expenses and other current assets 117 114
Deferred tax assets 110 380
Total current assets 2,657 1,886
Property, plant and equipment, net 2,499 4,291
Investments and long-term receivables:
Investment in Equistar 645 607
Investment in LCR 35 52
Investment in LMC 62 63
Investment in PO joint ventures(A) 667 ---
Receivable from LCR 223 219
Other investments and long-term receivables 60 74
Goodwill, net 1,179 1,545
Deferred charges and other assets 629 761
Total assets $8,656 $9,498
Accounts payable $ 379 $ 350
Current maturities of long-term debt 220 225
Other accrued liabilities 762 446
Total current liabilities 1,361 1,021
Long-term debt, less current maturities 5,047 6,046
Other liabilities and deferred credits 383 331
Deferred income taxes 537 891
Minority interest 169 202
Stockholders' equity (117,555,971 shares
outstanding) 1,159 1,007
Total liabilities and stockholders' equity $8,656 $9,498
Investment in Equistar, December 31, 1999 $ 607
Lyondell's share of Equistar net income 33
Transfer of shared service organization
liability from Equistar 5
Investment in Equistar, March 31, 2000 $ 645
Investment in LCR, December 31, 1999 $ 52
Lyondell's share of LCR net income 16
Cash distributions from LCR (33)
Investment in LCR, March 31, 2000 $ 35
Investment in LMC, December 31, 1999 $ 63
Lyondell's share of LMC net loss (1)
Investment in LMC, March 31, 2000 $ 62
(A) Lyondell has entered into two joint ventures with Bayer, one to
manufacture PO and a second to license PO technology to the
manufacturing joint venture.
LYONDELL CHEMICAL COMPANY
EQUISTAR CHEMICALS, LP
SELECTED FINANCIAL AND OPERATING INFORMATION (UNAUDITED)
For the three months
INCOME STATEMENTS ended March 31
(Millions of dollars) 2000 1999
Sales and other operating revenues (A) $ 1,807 $ 1,104
Operating costs and expenses:
Cost of sales 1,647 979
Selling, general and administrative expenses 44 61
Research and development expense 9 10
Amortization of goodwill and other intangibles 8 8
Restructuring and other unusual charges --- ---
Operating income 99 46
Interest expense, net (45) (39)
Other income, net 2 ---
Net income (B) $ 56 $ 7
SELECTED FINANCIAL AND OPERATING INFORMATION
(Millions of dollars)
Sales and Other Operating Revenues (A)
Petrochemicals segment $ 1,705 $ 907
Polymers segment 576 455
Intersegment eliminations (474) (258)
Total $ 1,807 $ 1,104
Other Operating Expenses (C)
Petrochemicals segment $ 2 $ 3
Polymers segment 17 20
Unallocated 42 56
Total $ 61 $ 79
Operating Income (Loss)
Petrochemicals segment $ 172 $ 91
Polymers segment (31) 11
Unallocated (42) (56)
Total $ 99 $ 46
EBITDA
Petrochemicals segment $ 223 $ 139
Polymers segment (19) 24
Unallocated (26) (44)
Total $ 178 $ 119
EBITDA before unusual charges $ 178 $ 119
Sales Volumes (millions) (A)
Selected petrochemical products:
Ethylene, propylene and other olefins (pounds) 4,902 4,527
Aromatics (gallons) 102 85
Polymers products (pounds) 1,667 1,652
Lyondell has a 41% ownership interest in Equistar and Millennium
Chemicals, Inc. and Occidental Chemical Corporation each have a 29.5%
ownership interest.
(A) Includes revenues/volumes from sales to affiliates.
(B) As a partnership, Equistar is not subject to federal income taxes.
(C) Other Operating Expenses include SG&A, R&D and amortization of
goodwill and other intangibles.
LYONDELL CHEMICAL COMPANY
EQUISTAR CHEMICALS, LP
SELECTED FINANCIAL INFORMATION (UNAUDITED)
(Millions of dollars)
March 31 December 31
BALANCE SHEETS 2000 1999
Cash and cash equivalents $ 40 $ 108
Accounts receivable, net 796 700
Inventories 522 520
Prepaid expenses and other current assets 31 32
Total current assets 1,389 1,360
Property, plant and equipment, net 3,889 3,926
Goodwill, net 1,111 1,119
Deferred charges and other assets 315 331
Total assets $ 6,704 $ 6,736
Accounts payable $ 512 $ 459
Current maturities of long-term debt 57 92
Other accrued liabilities 108 233
Total current liabilities 677 784
Long-term debt, less current maturities 2,169 2,169
Other liabilities and deferred credits 136 121
Partners' capital 3,722 3,662
Total liabilities and partners' capital $ 6,704 $ 6,736
For the three months
ended March 31
SELECTED CASH FLOW INFORMATION 2000 1999
Depreciation and amortization $ 77 $ 73
Cash flow (used in) provided by operations (8) 21
Capital expenditures 20 46
LYONDELL CHEMICAL COMPANY
LYONDELL-CITGO REFINING LP
SELECTED FINANCIAL AND OPERATING INFORMATION (UNAUDITED)
CONDENSED BALANCE SHEETS March 31 December 31
(Millions of dollars) 2000 1999
Total current assets $ 220 $ 219
Property, plant and equipment, net 1,341 1,350
Deferred charges and other assets 65 60
Total assets $ 1,626 $ 1,629
Current maturities of long-term debt $ 450 $ 450
Other current liabilities 297 307
Long-term debt, less current maturities 254 247
Other liabilities and deferred credits 73 69
Partners' capital 552 556
Total liabilities and partners' capital $ 1,626 $ 1,629
For the three months
INCOME STATEMENTS ended March 31
(Millions of dollars) 2000 1999
Sales and other operating revenues (A) $ 859 $ 432
Operating costs and expenses:
Cost of sales 811 389
Selling, general and administrative expenses 14 19
Unusual charges --- ---
Operating income 34 24
Interest expense, net (12) (10)
Benefit from state income taxes --- 1
Net income (B) $ 22 $ 15
SELECTED CASH FLOW INFORMATION
(Millions of dollars)
Depreciation and amortization $ 26 $ 25
Cash flow from operations 25 48
Capital expenditures 17 16
EBITDA $ 60 $ 49
EBITDA before unusual charges $ 60 $ 49
SELECTED OPERATING INFORMATION
Sales Volumes (including intersegment sales) (A)
Refined products (thousand barrels per day):
Gasoline 106 117
Diesel and heating oil 66 65
Jet fuel 15 17
Aromatics 10 9
Other refinery products 118 119
Total refined products volumes 315 327
Refinery Runs
Crude processing rates (thousand barrels per day):
Crude Supply Agreement - coked 180 206
Other heavy crude oil - coked 41 8
Other crude oil 21 41
Total crude oil 242 255
(A) Includes revenues/volumes from sales to affiliates.
(B) LCR is not subject to federal income taxes.
SOURCE Lyondell Chemical Company
Web site: http: //www.lyondell.com
CONTACT: media, Jackie Wilson, 713-652-4596, or Marvin Brown, 713-309-2643, or investors, Sami Ahmad, 713-309-7141, all of Lyondell Chemical Company
