* Lyondell reports $50 million or $0.28/share net income
* Strongest quarterly earnings since third quarter of 2000
* Continued improvement at each operating entity
* Debt reduction initiated at Lyondell Chemical Company
* Lyondell called $200 million of debt during the quarter
* Equistar distributed $100 million to owners
* Millennium acquisition scheduled to close on December 1, 2004
HOUSTON, Oct. 28 /PRNewswire-FirstCall/ -- Lyondell Chemical Company (NYSE: LYO) today announced net income for the third quarter of $50 million, or $0.28 per share. This compares to a net loss of $44 million, or $0.27 per share, for the third quarter 2003, and net income of $3 million, or $0.02 per share, for the second quarter 2004.
Table 1 - Lyondell Earnings Summary
1st Nine 1st Nine
Millions of dollars except Months Months
per share amounts 3Q 2004 3Q 2003 2Q 2004 2004 2003
Sales and other operating
revenues $1,307 $954 $1,161 $3,573 $2,856
Net income (loss) 50 (44) 3 38 (225)
Basic and diluted earnings
(loss) per share 0.28 (0.27) 0.02 0.21 (1.40)
Weighted average shares
outstanding (millions) 178.1 161.6 177.1 177.5 161.0
Table 2 - Lyondell and Proportionate Share of Ventures - Supplemental
Financial Data
1st Nine 1st Nine
Months Months
Millions of dollars 3Q 2004 3Q 2003 2Q 2004 2004 2003
Proportionate sales
and other operating
revenues (A) $3,935 $2,717 $3,427 $10,529 $8,128
Proportionate EBITDA (B) 354 207 287 900 446
(A) See Table 6 for components of proportionate share of sales and other
operating revenues.
(B) See Table 7 for a reconciliation of net income (loss) to
proportionate EBITDA and Table 8 for Lyondell's income statement
information.
Compared to the third quarter of 2003, results turned positive as improved performance at each entity led to a $94 million, or $0.55 per share, improvement in quarterly results.
For the first nine months of 2004, Lyondell's net income was $38 million, a $263 million improvement versus the first nine months of 2003. Each of the Lyondell companies contributed to this improvement with increased Equistar margins and volumes contributing the largest portion. For the first nine months of 2004, sales volumes for Equistar's ethylene and ethylene derivatives, as well as Lyondell's propylene oxide (PO) and PO derivatives, have increased by approximately 11 percent and 16 percent, respectively, versus the same period in 2003.
Compared to the second quarter of 2004, margin improvements coupled with volume increases in most key products led to a $47 million net income improvement. These improvements followed trends established late in 2003, as aggregate quarterly product prices more than offset the impact of increased raw material and energy costs.
"For the past year we have benefited from improving performance in the majority of our key products," said Dan F. Smith, president and CEO of Lyondell Chemical Company. "Volume growth across most products as well as margin improvements in ethylene glycol, propylene, and fuel products were early contributors. Strength in these areas continued during the third quarter and results have been further enhanced by strengthening in benzene, polyethylene, and propylene oxide derivatives. These improvements, coupled with a growing confidence in the industry cycle, positioned Equistar to make its first cash distribution since the summer of 2000 and enabled Lyondell to call $200 million of its outstanding debt during the quarter."
OUTLOOK
Industry conditions have continued to be quite strong through October. Price increase activity is underway in almost all products in response to strong supply/demand fundamentals and the current high level of crude oil and natural gas prices. Products with strong seasonal dependencies such as MTBE and deicers have followed typical seasonal trends (i.e., MTBE margins decrease, deicer volumes increase); in aggregate, this historically has reduced fourth-quarter IC&D results compared to the third quarter.
"Solid global sales volume growth has tightened industry supply/demand conditions, which in turn have led to modest margin improvement despite significant increases in raw material costs," said Smith. "It appears that, barring a significant economic slowdown or global disruption, these industry conditions and resulting improving cyclical trends will continue. While it is difficult to quantify the potential near-term earnings impacts of raw material volatility and seasonality, positive longer-term trends appear to be well established. We fully expect that conditions will allow us to continue our focus on debt reduction.
"Additionally, we look forward to closing the Millennium acquisition on December 1 and benefiting from the subsequent ownership of 100 percent of Equistar as well as the Millennium product lines as the long-awaited upturn progresses."
LYONDELL AND JOINT VENTURES
Lyondell's operations comprise: Lyondell's Intermediate Chemicals and Derivatives (IC&D) segment; Equistar, a joint venture with Millennium Chemicals Inc.; and LYONDELL-CITGO Refining LP (LCR), a joint venture with CITGO Petroleum Corp.
Lyondell's Intermediate Chemicals & Derivatives (IC&D) Segment -- The IC&D segment includes propylene oxide (PO) and derivatives, MTBE, styrene and TDI.
Table 3 - IC&D Financial Overview
1st Nine 1st Nine
Months Months
Millions of dollars 3Q 2004 3Q 2003 2Q 2004 2004 2003
Sales and other operating
revenues $1,307 $954 $1,161 $3,573 $2,856
Operating income (loss) (A) 49 20 20 92 (4)
EBITDA (A) 100 84 82 268 185
(A) See Table 7 for a reconciliation of Lyondell's net income (loss) to
EBITDA and Table 8 for Lyondell's IC&D operating income (loss) and
net income (loss).
Third-quarter 2004 results include a $6 million charge related to the early retirement of $100 million of debt.
3Q04 v. 2Q04 -- Compared to the second quarter, PO and PO derivative margins improved by approximately $15 million as price increases offset earlier increases in propylene raw material costs. Sales volumes in these products continued to be strong and increased slightly. Styrene results improved by approximately $10 million based on European margin improvements and increased U.S. sales volumes. MTBE performance continued to be strong at second-quarter levels. TDI results were relatively unchanged versus the second quarter of 2004.
3Q04 v. 3Q03 -- Operating income increased by $29 million versus the year- ago quarter. Increased MTBE margins and PO and PO derivative product volumes and margins contributed to the improvement. Styrene results were slightly lower as lower margins were only partially offset by increased sales volume. TDI results were relatively unchanged.
Equistar Chemicals, LP -- Lyondell owns a 70.5 percent interest in Equistar, which consists of the petrochemicals and polymers segments.
Table 4 - Equistar Financial Overview - 100% Basis
1st Nine 1st Nine
Months Months
Millions of dollars 3Q 2004 3Q 2003 2Q 2004 2004 2003
Sales and other operating
revenues $2,439 $1,642 $2,099 $6,500 $4,880
Operating income (loss) 129 12 99 289 (60)
Net income (loss) (A) 72 (40) 43 120 (235)
EBITDA (A) 208 87 175 519 148
(A) See Table 7 for a reconciliation of Equistar's net income (loss) to
EBITDA
3Q04 v. 2Q04 -- Reflecting the continuation of second quarter industry trends, net income improved by $29 million. Margin improvements in ethylene derivatives (polyethylene and ethylene oxygenates) were the key contributors as price increases outpaced ethylene raw material costs. Ethylene sales margins were relatively unchanged as ethylene and co-product price increases largely offset raw material costs. Total raw material costs increased by more than $160 million versus the prior quarter. Ethylene and ethylene derivative volumes continued to increase, growing by approximately 65 million pounds or approximately 2.5 percent versus the second quarter.
3Q04 v. 3Q03 -- Net income improved by $112 million as a result of increased product margins supplemented by increased sales volumes. Average quarterly prices for ethylene and its major derivatives (polyethylene and ethylene glycol) ranged from 6 1/2 cents per pound to 8 1/2 cents per pound higher than during the third quarter of 2003. Equistar's average cost-of- ethylene-production metric increased by approximately 4 1/2 cents per pound versus the same period last year, driven by the increased cost of crude oil and natural gas-based raw materials. Compared to the third quarter of 2003, ethylene and ethylene derivative sales volumes increased by approximately 140 million pounds or 5.5 percent. Third-quarter 2003 results included an $11 million charge for the write-off of an R&D facility.
LYONDELL-CITGO Refining LP (LCR) - Lyondell owns a 58.75 percent interest in LCR, a major refiner of heavy crude oil.
Table 5 - LCR Financial Overview - 100% Basis
1st Nine 1st Nine
Months Months
Millions of dollars 3Q 2004 3Q 2003 2Q 2004 2004 2003
Sales and other operating
revenues $1,546 $1,030 $1,339 $4,039 $3,118
Operating income 139 77 111 351 182
Net income (A) 147 69 103 341 155
EBITDA (A) 182 105 139 452 267
(A) See Table 7 for a reconciliation of LCR's net income to EBITDA.
Third-quarter 2004 results benefited from the receipt of $14 million related to a third-party contract settlement. However, the results also include a non-cash charge of $9 million for the write-off of obsolete equipment.
3Q04 v. 2Q04 -- LCR's income continued to set new profitability records. Processing rates for Venezuelan contract crude (CSA) averaged 243,000 barrels per day while total crude volumes averaged 278,000 barrels per day. Continued strong spot crude margins, aromatics margins and operating efficiencies also contributed to the record quarterly results.
3Q04 v. 3Q03 -- Results improved $78 million versus the third quarter of 2003 primarily as a result of increased crude oil and aromatic product margins. Strong operations and resulting increased crude oil processing volumes also contributed to the substantial earnings increase.
CONFERENCE CALL
Lyondell will host a conference call today, October 28, 2004, 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, Director of Investor Relations. The dial-in numbers are 888-391-2385 (U.S. - toll free) and 484-644-0641 (international). The passcode for each number 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 October 28 to 5 p.m. ET November 5. The dial-in numbers are 800-839-8797 (U.S.) and 402-998-1603 (international). Passcode for each is 5549. Web replay will be available at 2:30 p.m. ET October 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 at http://www.lyondell.com/earnings .
ABOUT LYONDELL
Lyondell Chemical Company, (http://www.lyondell.com ), headquartered in Houston, Texas, is a leading producer of: propylene oxide (PO); PO derivatives, propylene glycol (PG), butanediol (BDO) and propylene glycol ether (PGE); 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 AND ADDITIONAL INFORMATION
The statements in this release and the related teleconference 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: availability, cost and price volatility of raw materials; uncertainties associated with the US and worldwide economies; current and potential governmental regulatory actions; terrorist acts; operating interruptions; cyclical nature of the chemical and refining industries; competitive products and pricing; industry production capabilities; supply/demand balances; access to capital markets; technological developments; business strategies and other risk factors. In the case of any forward-looking statements relating to the proposed transaction between Lyondell Chemical Company ("Lyondell") and Millennium Chemicals Inc. ("Millennium"), the following factors, among others, could affect the proposed transaction and the anticipated results: approval by Lyondell's and Millennium's respective shareholders, and the parties' ability to achieve expected synergies in the transaction within the expected timeframes or at all. All of such forward-looking statements are based upon the current beliefs and expectations of Lyondell's management and are subject to significant risks and uncertainties. Additional factors that could cause Lyondell's results to differ materially from those described in the forward- looking statements can be found in Lyondell's Annual Report on Form 10-K for the year ended December 31, 2003, which was filed with the Securities and Exchange Commission (the "SEC") on March 12, 2004, and Lyondell's Quarterly Report on Form 10-Q for the quarter ended September 30, 2004, which will be filed with the SEC in November 2004.
In addition, on October 15, 2004, Lyondell filed with the SEC the definitive joint proxy statement/prospectus regarding the proposed transaction between Lyondell and Millennium. Investors and security holders are urged to read that document and any other relevant documents filed or that will be filed with the SEC, as they become available, because they contain, or will contain, important information. Investors and security holders may obtain a free copy of the definitive joint proxy statement/prospectus and other documents filed by Lyondell and Millennium with the SEC at the SEC's web site at http://www.sec.gov . The definitive joint proxy statement/prospectus and the other documents filed by Lyondell may also be obtained free from Lyondell by calling Lyondell's Investor Relations department at (713) 309-4590.
Table 6 - Unaudited Financial and Operating Information
Lyondell and
Lyondell Joint Ventures Proportionate
Chemical Equistar LCR Share of Equity
(Millions of dollars) Company 100% 100% Investments (A)
Three months ended
September 30, 2004:
Sales and other operating
revenues (B) $1,307 $2,439 $1,546 $3,935
SG&A and R&D 63 55 14 110
EBITDA 100 208 182 354
Depreciation and
amortization 59 81 29 131
Interest expense, net 108 55 6 150
Net income 50 (C)
Capital expenditures 16 28 13 43
Cash dividends 32
Three months ended
September 30, 2003:
Sales and other operating
revenues (B) $ 954 $1,642 $1,030 $2,717
SG&A and R&D 43 57 14 91
EBITDA 84 87 105 207
Depreciation and amortization 66 76 28 134
Interest expense, net 106 51 8 147
Net loss (44) (C)
Capital expenditures 9 28 8 33
Cash dividends 28
Three months ended
June 30, 2004:
Sales and other operating
revenues (B) $1,161 $2,099 $1,339 $3,427
SG&A and R&D 57 49 15 100
EBITDA 82 175 139 287
Depreciation and amortization 64 77 28 132
Interest expense, net 108 55 8 151
Net income 3 (C)
Capital expenditures 16 22 14 40
Cash dividends 32
(A) This column reflects Lyondell's 100% owned operations and its pro
rata share of each joint venture's operations, which is not a
presentation in accordance with generally accepted accounting
principles. Lyondell has a 70.5% interest in Equistar Chemicals, LP
("Equistar") and a 58.75% interest in LYONDELL-CITGO Refining LP
("LCR").
(B) Sales and other operating revenues include sales to affiliates.
(C) Includes income (loss) from equity investments in Equistar and LCR.
Table 7 - Reconciliation of Net Income (Loss) to EBITDA
For the For the
three months ended nine months ended
September 30, June 30, September 30,
(Millions of dollars) 2004 2003 2004 2004 2003
LYONDELL
Net income (loss) $ 50 $(44) $ 3 $ 38 $(225)
Add:
Provision for (benefit from)
income taxes 26 (27) 3 20 (121)
Interest expense, net 108 106 108 325 288
Depreciation and amortization 59 66 64 186 184
(Income) loss from equity
investment in Equistar (54) 26 (33) (93) 158
Income from equity investment
in LCR (89) (43) (63) (208) (99)
IC&D EBITDA $100 $ 84 $ 82 $268 $ 185
EQUISTAR
Net income (loss) $ 72 $(40) $ 43 $120 $(235)
Add:
Depreciation and amortization 81 76 77 234 230
Interest expense, net 55 51 55 165 153
EBITDA $208 $ 87 $175 $519 $ 148
Lyondell Proportionate Share
- 70.5% $147 $ 61 $123 $366 $ 104
LCR
Net income $147 $ 69 $103 $341 $ 155
Add:
Depreciation and amortization 29 28 28 87 85
Interest expense, net 6 8 8 24 27
EBITDA $182 $105 $139 $452 $ 267
Lyondell Proportionate Share
- 58.75% $107 $ 62 $ 82 $266 $ 157
EBITDA - Lyondell and
Proportionate Share of Equity
Investments
Lyondell EBITDA $100 $ 84 $ 82 $268 $ 185
70.5% of Equistar EBITDA 147 61 123 366 104
58.75% of LCR EBITDA 107 62 82 266 157
Lyondell and Proportionate
Share of Equity Investments $354 $207 $287 $900 $ 446
Table 8 - Lyondell Unaudited Income Statement Information
For the For the
three months ended nine months ended
September 30, June 30, September 30,
(Millions of dollars,
except per share data) 2004 2003 2004 2004 2003
Sales and other operating
revenues $1,307 $954 $1,161 $3,573 $2,856
Cost of sales 1,195 891 1,084 3,308 2,713
Selling, general and
administrative expenses 55 34 49 149 121
Research and development
expenses 8 9 8 24 26
Operating income (loss) 49 20 20 92 (4)
Income (loss) from equity
investment in Equistar 54 (26) 33 93 (158)
Income from equity investment
in LCR 89 43 63 208 99
Income (loss) from other
equity investments 1 (4) 1 3 (10)
Interest expense, net (108) (106) (108) (325) (288)
Other income (expense), net (9) 2 (3) (13) 15
Income (loss) before
income taxes 76 (71) 6 58 (346)
Provision for (benefit from)
income taxes 26 (27) 3 20 (121)
Net income (loss) $ 50 $(44) $ 3 $ 38 $ (225)
Basic and diluted earnings
(loss) per share: $ 0.28 $(0.27) $ 0.02 $0.21 $(1.40)
Weighted average shares
(in millions) (A):
Basic 178.1 161.6 177.1 177.5 161.0
Diluted 179.9 161.6 177.8 178.7 161.0
(A) Lyondell sold 13.8 million shares of common stock in October 2003,
including 2.7 million shares to Occidental Chemical Holding
Corporation ("OCHC"). In addition, Lyondell paid a dividend to OCHC
by issuing shares of Series B common stock each quarter beginning in
December 2002 in lieu of a dividend payment in cash.
Table 9 - Lyondell Intermediate Chemicals and Derivatives Segment - Sales
Volumes
For the For the
three months ended nine months ended
September 30, June 30, September 30,
(In millions) 2004 2003 2004 2004 2003
PO and derivatives
(pounds) (A) 909 816 875 2,786 2,459
Co-products:
Styrene monomer (pounds) 962 865 830 2,723 2,514
MTBE and other TBA
derivatives (gallons) 269 292 284 825 871
(A) Includes propylene oxide ("PO"), PO derivatives and isocyanates.
Table 10 - Lyondell Unaudited Cash Flow Information
For the nine months ended
September 30,
(Millions of dollars) 2004 2003
Net income (loss) $ 38 $ (225)
Adjustments:
Depreciation and amortization 186 184
(Income) loss from equity
investments (304) 69
Distributions of earnings from
affiliates 281 101
Deferred income taxes 16 (122)
Gain on sale of equity interest --- (18)
Changes in assets and liabilities:
Accounts receivable (98) 3
Inventories (24) 12
Accounts payable 47 (5)
Accrued interest 74 79
Income taxes refundable, net of
payable 2 36
Other assets and liabilities,
net 38 22
Cash provided by operating
activities 256 136
Expenditures for property, plant and
equipment (A) (43) (247)
Distributions from affiliates in
excess of earnings 105 118
Contributions and advances to
affiliates (B) (32) (102)
Maturity of other short-term
investments --- 44
Proceeds from sale of equity interest --- 28
Cash provided by (used in)
investing activities 30 (159)
Issuance of long-term debt --- 318
Repayment of long-term debt (105) (103)
Dividends paid (95) (85)
Other 8 (3)
Cash provided by (used in)
financing activities (192) 127
Effect of exchange rate changes on cash (1) 3
Increase in cash and cash equivalents $ 93 $ 107
(A) Includes the May 2003 purchase of the BDO-2 facility for
$218 million, which Lyondell previously leased.
(B) Includes cash contributions to European PO Joint Venture and the U.S.
PO Joint Venture of $4 million and $63 million during the nine-month
periods ended September 30, 2004 and September 30, 2003,
respectively. Also includes capitalized interest related to the
Maasvlakte PO/SM plant of $15 million during the nine-month period
ended September 30, 2003.
Table 11 - Lyondell Unaudited Balance Sheet Information
September 30, December 31,
(Millions of dollars) 2004 2003
Cash and cash equivalents $ 531 $ 438
Accounts receivable, net (A) 542 449
Inventories 369 347
Prepaid expenses and other
current assets 70 82
Deferred tax assets 243 43
Total current assets 1,755 1,359
Property, plant and equipment, net 2,521 2,640
Investments and long-term
receivables:
Investment in Equistar 985 965
Investment in PO joint ventures 826 866
Investment in and receivable
from LCR 161 232
Other investments and long-
term receivables 89 85
Goodwill, net 1,080 1,080
Other assets, net 380 406
Total assets $7,797 $7,633
Accounts payable $ 473 $ 431
Current maturities of long-term debt 100 ---
Accrued liabilities 332 268
Total current liabilities 905 699
Long-term debt 3,952 4,151
Other liabilities 705 680
Deferred income taxes 1,003 792
Minority interest 142 155
Stockholders' equity
(179,206,023 and 176,792,587 shares
outstanding at September 30, 2004 and
December 31, 2003, respectively) 1,090 1,156
Total liabilities and
stockholders' equity $7,797 $7,633
(A) See Table 21 for accounts receivable sold.
Table 12 - Lyondell Selected Equity Investment Activity
For the three For the nine
months ended months ended
September 30, September 30,
(Millions of dollars) 2004 2004
Investment in Equistar, beginning
of period $1,002 $ 965
Lyondell's share of Equistar net
income 54 93
Cash distributions from Equistar (71) (71)
Lyondell's share of Equistar other
comprehensive loss --- (2)
Investment in Equistar, end of
period $ 985 $ 985
Investment in LCR, beginning of
period $ (20) $ 3
Lyondell's share of LCR net income 89 208
Cash distributions from LCR (148) (308)
Cash contributions to LCR 10 28
Other 1 1
Investment in LCR, end of
period (68) (68)
LCR receivable, beginning and end
of period 229 229
Investment in and receivable from
LCR, end of period $ 161 $ 161
Table 13 - Equistar Unaudited Income Statement Information
For the For the
three months ended nine months ended
September 30, June 30, September 30,
(Millions of dollars) 2004 2003 2004 2004 2003
Sales and other operating
revenues (A) $2,439 $1,642 $2,099 $6,500 $4,880
Cost of sales 2,255 1,561 1,951 6,063 4,754
Selling, general and
administrative expenses 47 47 41 129 131
Research and development
expenses 8 10 8 23 29
(Gain) loss on asset
dispositions --- 12 --- (4) 26
Operating income (loss) 129 12 99 289 (60)
Interest expense, net (55) (51) (55) (165) (153)
Other expense, net (2) (1) (1) (4) (22)
Net income (loss) (B) $ 72 $ (40) $ 43 $ 120 $ (235)
(A) Sales and other operating revenues include sales to affiliates.
(B) As a partnership, Equistar is not subject to federal income taxes.
Table 14 - Equistar Unaudited Segment Financial and Operating Information
For the For the
three months ended nine months ended
September 30, June 30, September 30,
(Millions of dollars) 2004 2003 2004 2004 2003
Sales and other operating
revenues (A)
Petrochemicals segment $2,277 $1,491 $1,967 $6,110 $4,508
Polymers segment 667 517 603 1,827 1,476
Intersegment eliminations (505) (366) (471) (1,437) (1,104)
Total $2,439 $1,642 $2,099 $6,500 $4,880
Operating income (loss)
Petrochemicals segment $ 132 $ 66 $ 136 $ 372 $ 119
Polymers segment 32 (19) (6) 12 (81)
Unallocated (35) (35) (31) (95) (98)
Total $ 129 $ 12 $ 99 $ 289 $ (60)
Depreciation and amortization
Petrochemicals segment $ 62 $ 58 $ 59 $ 178 $ 171
Polymers segment 13 13 13 40 43
Unallocated 6 5 5 16 16
Total $ 81 $ 76 $ 77 $ 234 $ 230
EBITDA (B) $ 208 $ 87 $ 175 $ 519 $ 148
Sales Volumes (millions) (A)
Selected petrochemical products:
Ethylene, propylene and
other olefins (pounds) 4,568 3,976 4,383 13,228 11,620
Aromatics (gallons) 99 96 80 272 288
Polymers products (pounds) 1,536 1,405 1,514 4,451 3,945
(A) Sales and other operating revenues and sales volumes include sales to
affiliates.
(B) See Table 7 for reconciliation of Equistar's net income (loss) to
EBITDA.
Table 15 - Equistar Unaudited Balance Sheet Information
September 30, December 31,
(Millions of dollars) 2004 2003
Cash and cash equivalents $ 147 $ 199
Accounts receivable, net (A) 813 608
Inventories 497 408
Prepaid expenses and other current
assets 34 46
Total current assets 1,491 1,261
Property, plant and equipment, net 3,198 3,334
Investments 60 60
Other assets, net 376 373
Total assets $5,125 $5,028
Accounts payable $ 581 $ 513
Current maturities of long-term
debt 1 ---
Accrued liabilities 233 241
Total current liabilities 815 754
Long-term debt 2,312 2,314
Other liabilities and deferred
revenues 380 359
Partners' capital 1,618 1,601
Total liabilities and
partners' capital $5,125 $5,028
(A) See Table 22 for accounts receivable sold.
Table 16 - Equistar Unaudited Cash Flow Information
For the nine months ended
September 30,
(Millions of dollars) 2004 2003
Net income (loss) $120 $(235)
Adjustments:
Depreciation and amortization 234 230
Deferred maintenance turnaround
expenditures (55) (65)
Deferred revenues --- 159
Debt prepayment charges and
premiums --- 19
(Gain) loss on asset
dispositions (4) 26
Changes in assets and liabilities:
Accounts receivable (A) (B) (205) 56
Inventories (89) (36)
Accounts payable 80 (8)
Accrued interest (16) (29)
Other assets and liabilities, net 11 (19)
Cash provided by
operating activities 76 98
Expenditures for property, plant
and equipment (69) (62)
Proceeds from sales of assets 41 69
Cash provided by (used
in) investing
activities (28) 7
Net repayment under lines of
credit --- 29
Issuance of long-term debt --- 439
Repayment of long-term debt --- (469)
Distributions to owners (100) ---
Other --- (3)
Cash used in financing
activities (100) (4)
Increase (decrease) in cash and
cash equivalents $(52) $101
(A) See Table 22 for accounts receivable sold.
(B) In consideration of discounts offered to certain customers for early
payment for product, some receivable amounts were collected in
September 2004 and 2003 that otherwise would have been expected to be
collected in October of the respective years. This included
$51 million and $33 million from OCHC in September 2004 and 2003,
respectively.
Table 17 - LCR Unaudited Income Statement Information
For the For the
three months ended nine months ended
September 30, June 30, September 30,
(Millions of dollars) 2004 2003 2004 2004 2003
Sales and other operating
revenues (A) $1,546 $1,030 $1,339 $4,039 $3,118
Cost of sales 1,393 939 1,213 3,643 2,894
Selling, general and
administrative expenses 14 14 15 45 42
Operating income 139 77 111 351 182
Interest expense, net (6) (8) (8) (24) (27)
Other income 14 --- --- 14 ---
Net income (B) $ 147 $ 69 $ 103 $ 341 $ 155
EBITDA (C) $ 182 $ 105 $ 139 $ 452 $ 267
(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 7 for reconciliation of LCR's net income to EBITDA.
Table 18 - LCR Operating Information
For the For the
three months ended nine months ended
September 30, June 30, September 30,
2004 2003 2004 2004 2003
Sales Volumes (A)
Refined products
(thousand barrels per day):
Gasoline 117 127 121 118 118
Diesel and heating oil 99 84 99 96 83
Jet fuel 20 18 14 17 18
Aromatics 9 7 9 9 8
Other refined products 99 91 87 92 90
Total refined products
volumes 344 327 330 332 317
Refinery Runs
Crude processing rates
(thousand barrels per day):
Crude Supply Agreement 243 229 233 238 223
Other crude oil 35 36 40 35 39
Total crude oil 278 265 273 273 262
(A) Sales volumes include sales to affiliates.
Table 19 - LCR Unaudited Balance Sheet Information
September 30, December 31,
(Millions of dollars) 2004 2003
Total current assets $ 409 $ 316
Property, plant and equipment, net 1,209 1,240
Other assets, net 66 81
Total assets $1,684 $1,637
Current maturities of long-term debt $ 5 $ ---
Other current liabilities 662 386
Long-term debt 444 450
Loans payable to partners 264 264
Other liabilities 105 114
Partners' capital 204 423
Total liabilities and partners'
capital $1,684 $1,637
Table 20 - LCR Unaudited Cash Flow Information
For the nine months ended
September 30,
(Millions of dollars) 2004 2003
Cash flow from operations $522 $279
Capital expenditures 42 36
Depreciation and amortization 87 85
Table 21 - Reconciliation of Lyondell's Days of Working Capital
September 30, June 30, December 31,
(Millions of dollars) 2004 2004 2003
Working Capital: (A)
Accounts receivable $ 542 $ 497 $ 449
Inventories 369 327 347
Accounts payable (473) (470) (431)
Total 438 354 365
Add: Accounts receivable
sold (B) 75 75 75
Adjusted working
capital $ 513 $ 429 $ 440
Days of Working Capital:
Sales and other operating
revenues for the three
months ended $1,307 $1,161 $ 945
Number of days in quarter 92 91 92
Sales per day $ 14.2 $ 12.8 $10.3
Days of working
capital (C) 36 34 43
(A) Defined as the major controllable components of working capital --
receivables, inventories and payables.
(B) 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.
(C) Days of working capital are calculated as adjusted working capital
divided by sales per day.
Table 22 - Reconciliation of Equistar's Days of Working Capital
September 30, June 30, December 31,
(Millions of dollars) 2004 2004 2003
Working Capital: (A)
Accounts receivable (B) $ 813 $ 732 $ 608
Inventories 497 512 408
Accounts payable (581) (571) (513)
Total 729 673 503
Add: Accounts receivable
sold (C) 120 122 102
Adjusted working
capital $ 849 $ 795 $ 605
Days of Working Capital:
Sales and other operating
revenues for the three
months ended $2,439 $2,099 $1,665
Number of days in quarter 92 91 92
Sales per day $ 26.5 $ 23.1 $ 18.1
Days of working
capital (B) (D) 32 34 33
(A) Defined as the major controllable components of working capital -
receivables, inventories and payables.
(B) In consideration of discounts offered to certain customers for early
payment for product delivered in September 2004, some receivable
amounts were collected in September 2004 that otherwise would have
been expected to be collected in October 2004, including $51 million
from OCHC. Similarly, in June 2004 and December 2003, $42 million
and $41 million, respectively, was received from OCHC. Had these
early payments not been received, days of working capital would have
been 34 days, 36 days and 36 days at September 30 and June 30, 2004
and December 31, 2003, respectively.
(C) 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.
(D) Days of working capital are calculated as adjusted working capital
divided by sales per day.
SOURCE Lyondell Chemical Company
CONTACT: media, Susan P. Moore, +1-713-309-4645, or investors, Douglas J. Pike, +1-713-309-7141, both of Lyondell Chemical Company
Web site: http://www.lyondell.com
http://www.lyondell.com/earnings
