* Lyondell reports net income of $126 million or 48 cents per share on a fully diluted basis vs. $3 million or 2 cents per share a year ago
* Strong performance in propylene oxide and related products partially offset:
- Price declines in ethylene, co-products and derivatives
- Maintenance impacts at Lyondell-Citgo Refining
* Repaid $328 million of debt during the quarter
- Today called final $200 million of Lyondell 9.875 percent 2007 bonds bringing total debt reduction to more than $1 billion since August 2004
HOUSTON, July 28 /PRNewswire-FirstCall/ -- Lyondell Chemical Company (NYSE: LYO) today announced net income for the second quarter 2005 of $126 million which equates to 48 cents per share on a fully diluted basis (or 51 cents basic earnings per share). This compares to net income of $3 million, or 2 cents per share, for the second quarter 2004, and net income of $254 million, or 98 cents per share, for the first quarter 2005. For the first six months of 2005, net income was $380 million or $1.46 per share on a fully diluted basis, compared to a net loss of $12 million or 7 cents per share during the first six months of 2004.
Table 1 - Lyondell Earnings Summary (A) Millions of dollars except per share amounts 1st Six 1st Six 2Q 2005 2Q 2004 1Q 2005 Months 2005 Months 2004 Sales and other operating revenues $4,382 $1,161 $4,446 $8,828 $2,266 Net income (loss) 126 3 254 380 (12) Basic earnings (loss) per share 0.51 0.02 1.04 1.55 (0.07) Diluted earnings (loss) per share (B) 0.48 0.02 0.98 1.46 (0.07) Basic weighted average shares outstanding (millions) 245.9 177.1 244.5 245.2 176.8 Diluted weighted average shares outstanding (millions) (B) 259.0 177.8 259.8 259.4 176.8 (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 and outstanding stock options and warrants.
The second quarter includes non-cash pre-tax charges of $14 million related to industry mutual insurance consortia. Additionally, the second quarter includes a $9 million charge related to the early retirement of debt while the first quarter included a $12 million charge related to debt reduction.
"Although this was one of Lyondell's best quarters in many years, I would characterize the results as 'mixed' on a segment basis," said Dan F. Smith, president and CEO of Lyondell Chemical Company. "Our propylene oxide segment experienced strong results, and performance of the inorganic chemicals segment continued to be solid. In our ethylene segment, results were comparable to the strong levels experienced in the fourth quarter 2004; however, this quarter was characterized by reductions in industry operating rates and prices as the market adjusted to earlier over-production. Within our refining segment we experienced some planned and unplanned downtime, but these events also are behind us and the refinery is performing well. Overall, we benefited from the breadth of our product portfolio."
OUTLOOK
Thus far in the third quarter, market conditions for propylene oxide are relatively unchanged from the second quarter, while MTBE margins have continued to expand. Refining results are expected to improve from the second quarter as the refinery is now operating at full utilization and industry margins are quite strong. After reaching a low in late June, market conditions for ethylene, co-products and derivatives have strengthened. However, the volatility of the global market makes it difficult to quantify the pace and magnitude of such a turnaround.
"Industry and economic fundamentals remain strong," said Smith. "We see continued growth in the global economy, growing Chinese demand for chemicals and plastics, delays in Middle East chemical plant construction, and strong global demand for gasoline, diesel fuel and their components. When we review the past several quarters in aggregate, we believe that the industry remains on a trajectory that indicates continued strong performance over the coming years. For these reasons, our outlook has been and continues to be very positive."
LYONDELL BUSINESS RESULTS DISCUSSION BY BUSINESS SEGMENT
Lyondell's operations are reported in four segments: 1) Ethylene, co- products and derivatives; 2) Propylene oxide (PO) and related products; 3) Inorganic chemicals; and 4) Refining, which consists of Lyondell's 58.75 percent ownership of Lyondell-Citgo Refining (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, benzene and toluene) 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
1st Six 1st Six
2Q 2005 2Q 2004 1Q 2005 Months 2005 Months 2004
Sales and other
operating revenues $2,849 $2,099 $2,974 $5,823 $4,061
Operating income 201 99 395 596 160
EBITDA (B) 294 175 486 780 311
(A) 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 6 for additional segment
information.
(B) See Table 9 for reconciliations of segment EBITDA to net income
(loss) of Lyondell and Equistar, respectively.
The following discussion addresses business conditions independent of ownership.
2Q05 v. 1Q05 - Ethylene and ethylene derivative product sales volumes decreased approximately 60 million pounds (or 2 percent) versus the first quarter 2005 primarily as a result of reduced ethylene and ethylene glycol sales. Product prices for ethylene and the major ethylene derivatives (polyethylene and ethylene glycol) averaged approximately 5 cents to 6 cents per pound lower than first-quarter prices.
Raw material costs increased for both crude oil and natural gas-based raw materials. Coupled with a decline in co-product propylene prices, this led to an increase in our cost-of-ethylene-production metric (COE).
Acetyls results remained strong as increased costs were offset by higher prices and volumes.
2Q05 v. 2Q04 - Ethylene and ethylene derivative sales volumes were approximately 130 million pounds (or 4.5 percent) lower than second-quarter 2004 sales volumes. The quarterly average price of these products was higher than during the year-ago quarter. Ethylene prices averaged 4 cents per pound higher, polyethylene prices averaged 10 cents per pound higher, and prices for performance derivatives such as ethylene oxide (EO), ethylene glycol ethers, and vinyl acetate monomer (VAM) averaged 8 cents to 23 cents per pound higher than in the second quarter 2004. Significantly higher raw material costs were only partially offset by increased co-product prices, resulting in an increase of approximately 3 cents per pound in our cost-of-ethylene-production metric (COE). Acetyls results improved due to a combination of increased margins and volumes.
Propylene Oxide and Related Products Segment - The principal products of the propylene oxide and related products segment include propylene oxide (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
1st Six 1st Six
2Q 2005 2Q 2004 1Q 2005 Months 2005 Months 2004
Sales and other
operating revenues $1,562 $1,161 $1,529 $3,091 $2,266
Operating income 134 20 96 230 43
EBITDA (B) 186 82 146 332 168
(A) See Table 6 for additional segment information.
(B) See Table 9 for a reconciliation of segment EBITDA to net income
(loss) of Lyondell.
2Q05 v. 1Q05 - PO and PO derivative product results were relatively unchanged versus the first quarter as margins expanded while volumes declined primarily due to the seasonality of aircraft deicing sales. MTBE margins increased by approximately 33 cents per gallon, resulting in a $65 million profit improvement. Styrene results were unchanged, and TDI results declined by approximately $20 million primarily due to reduced margins and plant maintenance.
2Q05 v. 2Q04 - Versus the year-ago quarter, increased PO and PO derivative product margins led to approximately a $70 million increase in results. MTBE results improved by approximately $50 million as a result of higher raw material margins. Styrene margin increases were offset by TDI margin declines, resulting in a negative impact of approximately $10 million.
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
1st Six 1st Six
2Q 2005 2Q 2004 1Q 2005 Months 2005 Months 2004
Sales and other
operating revenues $342 --- $318 $660 ---
Operating income 16 --- 21 37 ---
EBITDA (B) 49 --- 45 94 ---
(A) Includes the Inorganic Chemicals segment prospectively from
December 1, 2004. See Table 6 for additional segment information.
(B) See Table 9 for a reconciliation of segment EBITDA to net income
(loss) of Lyondell.
The following discussion addresses the inorganics business independent of ownership.
2Q05 v. 1Q05 - Sales volumes increased by approximately 12,000 metric tons to 151,000 metric tons and sales prices increased by approximately $15 per metric ton, but were offset by higher costs.
2Q05 v. 2Q04 - Sales volumes were approximately 33,000 metric tons lower versus the year-ago quarter during which sales volumes increased to reduce elevated inventory levels. Conversely, second-quarter 2005 prices were $270 per metric ton higher than during the second quarter 2004.
Refining Segment - Lyondell owns a 58.75 percent interest in LCR, a major refiner of heavy crude oil. This investment is accounted for using the equity method.
Table 5 - Refining Financial Overview - 100% Basis (A)
Millions of dollars
1st Six 1st Six
2Q 2005 2Q 2004 1Q 2005 Months 2005 Months 2004
Sales and other
operating revenues $1,563 $1,339 $1,536 $3,099 $2,493
Operating income 37 111 118 155 212
EBITDA (B) 65 139 146 211 270
(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.
2Q05 v. 1Q05 - Total crude processing rates were approximately 69,000 barrels per day below first-quarter rates as the refinery processed 28,000 barrels per day of spot crude and 165,000 barrels per day under the Venezuelan crude supply contract. Reduced processing rates were primarily related to planned maintenance activity, but were additionally impacted by an unplanned equipment failure and a force majeure declaration by a third party. Versus the first quarter 2005, planned maintenance impacted results by approximately $50 million, the equipment outage had an estimated $20 million to $25 million impact on results, and the third-party situation had an estimated impact of $10 million. Other variances such as increased spot crude margins and decreased aromatics margins offset each other.
2Q05 v. 2Q04 - In general, trends and comparisons to the second quarter 2004 are similar to the comparisons made to the first quarter of 2005.
Cash Distributions and Debt Reduction
During the second quarter 2005, Equistar distributed a total of $475 million to Lyondell and Millennium (Lyondell received $335 million and Millennium received $140 million). Net distributions from LCR to Lyondell were $19 million. (Distributions from LCR totaled $36 million and contributions to LCR totaled $17 million.) Lyondell Chemical Company paid $300 million toward early debt reduction while Millennium Chemicals reduced debt by $28 million. Earlier today, Lyondell called the final $200 million of its 9.875 percent 2007 bonds.
CONFERENCE CALL
Lyondell will host a conference call today, July 28, 2005, 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 July 28 to 5 p.m. ET on August 5. The dial-in numbers are 800-216-3053 (U.S.) and 402-220-3760 (international). The passcode for each is 5549. Web replay will be available at 2:30 p.m. ET July 28 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 July 28 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. Forward-looking statements are subject to 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; uncertainties associated with the U.S. and worldwide economies; current and potential governmental regulatory actions; terrorist acts; international political unrest; operating interruptions; legal, tax and environmental proceedings; cyclical nature of the chemical and refining industries; competitive products and pricing; industry production capacities and operating rates; risks of doing business outside of the U.S.; access to capital markets; technological developments; and other risk factors. All of such forward-looking statements are based upon the current beliefs and expectations of management, and are subject to significant risks and uncertainties. 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, and the Lyondell, Equistar and Millennium Quarterly Reports on Form 10-Q for the quarter ended June 30, 2005, which will be filed with the SEC in August 2005.
Table 6 - Selected Unaudited Segment Financial Information (A) For the For the three months ended six months ended June 30, March 31, June 30, (Millions of dollars) 2005 2004 2005 2005 2004 Sales and other operating revenues (B) Ethylene, Co-Products & Derivatives $2,849 $2,099 $2,974 $5,823 $4,061 PO & Related Products 1,562 1,161 1,529 3,091 2,266 Inorganic Chemicals 342 --- 318 660 --- Refining 1,563 1,339 1,536 3,099 2,493 Operating income Ethylene, Co-Products & Derivatives $201 $99 $395 $596 $160 PO & Related Products 134 20 96 230 43 Inorganic Chemicals 16 --- 21 37 --- Refining 37 111 118 155 212 Depreciation and amortization Ethylene, Co-Products & Derivatives $96 $77 $95 $191 $153 PO & Related Products 60 64 58 118 127 Inorganic Chemicals 26 --- 24 50 --- Refining 28 28 28 56 58 EBITDA (C) Ethylene, Co-Products & Derivatives $294 $175 $486 $780 $311 PO & Related Products 186 82 146 332 168 Inorganic Chemicals 49 --- 45 94 --- Refining 65 139 146 211 270 Capital expenditures Ethylene, Co-Products & Derivatives $32 $22 $37 $69 $41 PO & Related Products 16 16 14 30 27 Inorganic Chemicals 14 --- 5 19 --- Refining 49 14 34 83 29 (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 13 for additional Equistar financial information. See Table 8 for a reconciliation of segment information for the three months and six months ended June 30, 2005 and for the three months ended March 31, 2005 to consolidated Lyondell financial information. See Table 10 for PO and Related Products data for the three and six months ended June 30, 2004. The Refining information presented above represents the historical operating results of LCR on a 100% basis. See Table 19 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. (C) See Table 9 for reconciliation of segment EBITDA to net income (loss). Table 7 - Selected Segment Sales Volumes (A) (B) For the For the three months ended six months ended June 30, March 31, June 30, 2005 2004 2005 2005 2004 Ethylene, Co-Products and Derivatives (in millions) Ethylene and derivatives (pounds) 2,845 2,759 2,908 5,753 5,479 Polyethylene included above (pounds) 1,341 1,439 1,337 2,678 2,776 Co-products, nonaromatic (pounds) 1,862 1,961 2,034 3,896 3,876 Aromatics (gallons) 107 80 102 209 173 PO and Related Products (in millions) PO and derivatives (pounds) 731 766 884 1,615 1,651 Co-products: Styrene monomer (pounds) 1,045 830 982 2,027 1,761 MTBE and other TBA derivatives (gallons) 297 284 283 580 556 Inorganic Chemicals (thousand metric tons) TiO2 154 --- 142 296 --- Refined products (thousand barrels per day) Gasoline 110 121 117 113 118 Diesel and heating oil 85 99 88 86 95 Jet fuel 8 14 20 14 15 Aromatics 10 9 8 9 9 Other refined products 70 87 87 80 88 Total refined products volumes 283 330 320 302 325 Refinery Runs Crude processing rates (thousand barrels per day) Crude Supply Agreement 165 233 219 192 235 Other crude oil 28 33 43 35 30 Total crude oil 193 266 262 227 265 (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. (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 June 30, 2005: Segment Data Ethylene, Co-Products & Derivatives $2,849 $201 $96 $32 PO & Related Products 1,562 134 60 16 Inorganic Chemicals 342 16 26 14 Other (A) (371) (3) 3 0 Total $4,382 $348 $185 $62 For the six months ended June 30, 2005: Segment Data Ethylene, Co-Products & Derivatives $5,823 $596 $191 $69 PO & Related Products 3,091 230 118 30 Inorganic Chemicals 660 37 50 19 Other (A) (746) (5) 4 2 Total $8,828 $858 $363 $120 For the three months ended March 31, 2005: Segment Data Ethylene, Co-Products & Derivatives $2,974 $395 $95 $37 PO & Related Products 1,529 96 58 14 Inorganic Chemicals 318 21 24 5 Other (A) (375) (2) 1 2 Total $4,446 $510 $178 $58 (A) Includes elimination of intersegment transactions and items not allocated to segments. Table 9 - Reconciliation of Segment EBITDA to Net Income (Loss) For the For the three months ended six months ended June 30, March 31, June 30, (Millions of dollars) 2005 2004 2005 2005 2004 LYONDELL Segment EBITDA: Ethylene, Co-Products & Derivatives (A) $294 $--- $486 $780 $--- PO & Related Products 186 82 146 332 168 Inorganic Chemicals (B) 49 --- 45 94 --- Other (2) --- 1 (1) --- Add: Income from equity investment in Equistar --- 33 --- --- 39 Income from equity investment in LCR 19 63 67 86 119 Deduct: Depreciation and amortization (185) (64) (178) (363) (127) Interest expense, net (155) (108) (158) (313) (217) Provision for income taxes (71) (3) (143) (214) 6 Debt prepayment premiums and charges (9) --- (12) (21) --- Lyondell net income (loss) $126 $3 $254 $380 $(12) Equistar EBITDA (C) $175 $311 Deduct: Depreciation and amortization (77) (153) Interest expense, net (55) (110) Equistar net income $43 $48 Refining EBITDA (D) $65 $139 $146 $211 $270 Deduct: Depreciation and amortization (28) (28) (28) (56) (58) Interest expense, net (9) (8) (8) (17) (18) LCR net income $28 $103 $110 $138 $194 (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 13 and 16 for additional Equistar and Millennium financial information, respectively. (B) The Inorganic Chemicals segment information reflects the consolidation of Millennium prospectively from December 1, 2004. (C) The Equistar information presented represents the historical operating results of Equistar on a 100% basis. See Table 13 for additional Equistar financial information. (D) The Refining information presented represents the historical operating results of LCR on a 100% basis. See Table 19 for additional LCR financial information. Table 10 - Lyondell Unaudited Income Statement Information (A) For the For the three months ended six months ended June 30, March 31, June 30, (Millions of dollars, except per share data) 2005 2004 2005 2005 2004 Sales and other operating revenues $4,382 $1,161 $4,446 $8,828 $2,266 Cost of sales 3,879 1,084 3,784 7,663 2,113 Selling, general and administrative expenses 133 49 129 262 94 Research and development expenses 22 8 23 45 16 Operating income 348 20 510 858 43 Income from equity investment in Equistar --- 33 --- --- 39 Income from equity investment in LCR 19 63 67 86 119 Income (loss) from other equity investments (1) 1 1 --- 2 Interest expense, net (155) (108) (158) (313) (217) Other expense, net (14) (3) (23) (37) (4) Income (loss) before income taxes 197 6 397 594 (18) Provision for (benefit from) income taxes 71 3 143 214 (6) Net income (loss) $126 $3 $254 $380 $(12) Basic earnings (loss) per share: $0.51 $0.02 $1.04 $1.55 $(0.07) Diluted earnings (loss) per share: $0.48 $0.02 $0.98 $1.46 $(0.07) Weighted average shares (in millions): Basic 245.9 177.1 244.5 245.2 176.8 Diluted 259.0 177.8 259.8 259.4 176.8 (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 six months ended June 30, (Millions of dollars) 2005 2004 Net income (loss) $380 $(12) Adjustments: Depreciation and amortization 363 127 Income from equity investments (86) (160) Distributions of earnings from affiliates 86 120 Deferred income taxes 161 (8) Debt prepayment charges and premiums 21 --- Changes in assets and liabilities: Accounts receivable (150) (56) Inventories (177) 17 Accounts payable 128 50 Accrued interest (8) --- Other, net (67) --- Cash provided by operating activities 651 78 Expenditures for property, plant and equipment (120) (27) Distributions from affiliates in excess of earnings 51 48 Contributions and advances to affiliates (51) (22) Other 3 --- Cash used in investing activities (117) (1) Repayment of long-term debt (547) --- Dividends paid (111) (63) Exercise of stock options 43 5 Other (1) (1) Cash used in financing activities (616) (59) Effect of exchange rate changes on cash (9) (1) Increase (decrease) in cash and cash equivalents $(91) $17 (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 June 30, December 31, (Millions of dollars) 2005 2004 Cash and cash equivalents $713 $804 Accounts receivable, net 1,664 1,569 Inventories 1,761 1,619 Prepaid expenses and other current assets 142 189 Deferred tax assets 237 276 Total current assets 4,517 4,457 Property, plant and equipment, net 6,875 7,215 Investments and long-term receivables: Investment in PO joint ventures 791 838 Investment in and receivable from LCR 188 192 Other investments and long-term receivables 163 160 Goodwill, net 2,181 2,175 Other assets, net 878 924 Total assets $15,593 $15,961 Accounts payable $1,276 $1,202 Current maturities of long-term debt 256 308 Accrued liabilities 673 785 Total current liabilities 2,205 2,295 Long-term debt 7,052 7,555 Other liabilities 1,779 1,780 Deferred income taxes 1,553 1,477 Minority interest 179 181 Stockholders' equity (246,700,788 and 243,684,998 shares outstanding at June 30, 2005 and December 31, 2004, respectively) 2,825 2,673 Total liabilities and stockholders' equity $15,593 $15,961 Tables 13 through 21 represent additional financial information on a 100% basis for Equistar, Millennium and LCR. Table 13 - Equistar Unaudited Income Statement Information (A) For the For the three months ended six months ended June 30, March 31, June 30, (Millions of dollars) 2005 2004 2005 2005 2004 Sales and other operating revenues (B) $2,700 $2,099 $2,861 $5,561 $4,061 Cost of sales 2,447 1,951 2,417 4,864 3,808 Selling, general and administrative expenses 47 41 47 94 82 Research and development expenses 9 8 8 17 15 Gain on asset dispositions --- --- --- --- (4) Operating income 197 99 389 586 160 Interest expense, net (54) (55) (54) (108) (110) Other expense, net (1) (1) (3) (4) (2) Net income (C) $142 $43 $332 $474 $48 (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. (C) As a partnership, Equistar is not subject to federal income taxes. Table 14 - Equistar Unaudited Balance Sheet Information (A) June 30, December 31, (Millions of dollars) 2005 2004 Cash and cash equivalents $68 $39 Accounts receivable, net 899 826 Inventories 655 582 Prepaid expenses and other current assets 38 43 Total current assets 1,660 1,490 Property, plant and equipment, net 3,107 3,167 Investments 64 60 Other assets, net 342 357 Total assets $5,173 $5,074 Accounts payable $645 $532 Current maturities of long-term debt 150 1 Accrued liabilities 252 273 Total current liabilities 1,047 806 Long-term debt 2,161 2,312 Other liabilities and deferred revenues 408 395 Partners' capital 1,557 1,561 Total liabilities and partners' capital $5,173 $5,074 (A) Represents information for Equistar on a stand-alone basis and does not reflect purchase accounting adjustments. Table 15 - Equistar Unaudited Cash Flow Information (A) For the six months ended June 30, (Millions of dollars) 2005 2004 Net income $474 $48 Adjustments: Depreciation and amortization 159 153 Deferred maintenance turnaround expenditures (14) (51) Gain on asset dispositions --- (4) Changes in assets and liabilities: Accounts receivable (B) (68) (124) Inventories (67) (104) Accounts payable 112 62 Accrued interest --- 1 Other, net (25) (37) Cash provided by (used in) operating activities 571 (56) Expenditures for property, plant and equipment (69) (41) Proceeds from sales of assets 3 41 Cash used in investing activities (66) --- Repayment of long-term debt (1) --- Distributions to owners (475) --- Cash used in financing activities (476) --- Increase (decrease) in cash and cash equivalents $29 $(56) (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 June 2005 and 2004 that otherwise would have been expected to be collected in July of the respective years. This included $46 million and $42 million from Occidental Chemical Holding Corporation in June 2005 and 2004, respectively. Table 16 - Millennium Unaudited Income Statement Information (A) For the For the three months ended six months ended June 30, March 31, June 30, (Millions of dollars) 2005 2005 2005 Sales and other operating revenues (B) $515 $453 $968 Cost of sales 424 365 789 Selling, general and administrative expenses 45 43 88 Research and development expenses 6 6 12 Asset impairments 3 2 5 Operating income 37 37 74 Interest expense, net (25) (24) (49) Other expense, net 5 (9) (4) Income before equity investment, minority interest and income taxes 17 4 21 Income from equity investment in Equistar 42 98 140 Income before income taxes and minority interest 59 102 161 Provision for income taxes 20 37 57 Income before minority interest 39 65 104 Minority interest (1) (1) (2) Net income $38 $64 $102 (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. Table 17 - Millennium Unaudited Balance Sheet Information (A) June 30, December 31, (Millions of dollars) 2005 2004 Cash and cash equivalents $375 $344 Accounts receivable, net 357 318 Inventories 479 414 Prepaid expenses and other current assets 85 79 Total current assets 1,296 1,155 Property, plant and equipment, net 667 707 Investments 456 457 Goodwill 104 104 Other assets, net 88 107 Total assets $2,611 $2,530 Accounts payable $308 $291 Current maturities of long-term debt 6 7 Accrued liabilities 125 156 Total current liabilities 439 454 Long-term debt 1,371 1,398 Other liabilities 541 536 Deferred income taxes 196 164 Minority interest 47 33 Stockholders' equity (100,000,000 shares authorized; 66,135,816 shares issued) 17 (55) Total liabilities and stockholders' equity $2,611 $2,530 (A) Represents information for Millennium on a stand-alone basis and does not reflect purchase accounting adjustments. Table 18 - Millennium Unaudited Cash Flow Information (A) For the six months ended June 30, (Millions of dollars) 2005 Net income $102 Adjustments: Asset impairment charges 5 Depreciation and amortization 53 Deferred income taxes 7 Income from equity investment in Equistar (140) Distributions of earnings from Equistar 140 Changes in assets and liabilities: Accounts receivable (41) Inventories (75) Accounts payable 25 Other, net 1 Cash provided by operating activities 77 Expenditures for property, plant and equipment (21) Cash used in investing activities (21) Contribution from Lyondell 6 Repayment of long-term debt (29) Other 3 Cash used in financing activities (20) Effect of exchange rate changes on cash (5) Increase in cash and cash equivalents $31 (A) Represents information for Millennium on a stand-alone basis and does not reflect purchase accounting adjustments. Table 19 - LCR Unaudited Income Statement Information For the For the three months ended six months ended June 30, March 31, June 30, (Millions of dollars) 2005 2004 2005 2005 2004 Sales and other operating revenues (A) $1,563 $1,339 $1,536 $3,099 $2,493 Cost of sales 1,515 1,213 1,406 2,921 2,250 Selling, general and administrative expenses 11 15 12 23 31 Operating income 37 111 118 155 212 Interest expense, net (9) (8) (8) (17) (18) Net income (B) $28 $103 $110 $138 $194 EBITDA (C) $65 $139 $146 $211 $270 (A) Sales and other operating revenues include sales to affiliates. (B) As a partnership, LCR is not subject to federal income taxes. (C) See Table 9 for reconciliation of LCR's net income to EBITDA. Table 20 - LCR Unaudited Balance Sheet Information June 30, December 31, (Millions of dollars) 2005 2004 Total current assets $396 $359 Property, plant and equipment, net 1,269 1,227 Other assets, net 88 61 Total assets $1,753 $1,647 Current maturities of long-term debt $5 $5 Other current liabilities 635 583 Long-term debt 441 443 Loans payable to partners 264 264 Other liabilities 114 112 Partners' capital 294 240 Total liabilities and partners' capital $1,753 $1,647 Table 21 - LCR Unaudited Cash Flow Information For the six months ended June 30, (Millions of dollars) 2005 2004 Cash flow from operations $163 $299 Capital expenditures 83 29 Depreciation and amortization 56 58
SOURCE: Lyondell Chemical Company; Equistar Chemicals, LP; Millennium Chemicals Inc.
CONTACT: media, Susan Moore, +1-713-309-4645, or investors, Douglas J. Pike, +1-713-309-7141, both of Lyondell Chemical Company
