Full Year 2003
4Q 2003
HOUSTON, Jan. 29 /PRNewswire-FirstCall/ -- Lyondell Chemical Company (NYSE: LYO) today announced a net loss for the fourth quarter of $77 million, or $0.44 per share. This compares to a net loss of $93 million, or $0.58 per share, for the fourth quarter 2002, and a net loss of $44 million, or $0.27 per share, for the third quarter 2003.
For the full year 2003, Lyondell had a net loss of $302 million, or $1.84 per share, compared to a 2002 net loss of $148 million, or $1.10 per share.
Table 1 - Lyondell Earnings Summary
Full Full
Millions of dollars except Year Year
per share amounts 4Q2003 4Q2002 3Q2003 2003 2002
Sales and other operating revenues $945 $890 $954 $3,801 $3,262
Net loss (77) (93) (44) (302) (148)
Basic and diluted net loss
per share (a) (0.44) (0.58) (0.27) (1.84) (1.10)
Weighted average shares outstanding
(millions) (a) 174.0 159.9 161.6 164.3 133.9
(a) Lyondell sold 8.28 million shares of common stock in July 2002.
Lyondell issued 34 million shares of Series B common stock to
Occidental Petroleum Corporation ("Occidental") in August 2002.
Lyondell sold 13.8 million shares of common stock in October 2003,
including 2.7 million shares to Occidental. In addition, Lyondell
paid a dividend to Occidental each quarter by issuing approximately
0.6 million shares of Series B common stock beginning in
December 2002 in lieu of a dividend payment in cash.
Table 2 - Lyondell and Proportionate Share of Ventures - Supplemental Financial Data
Full Full
Year Year
Millions of dollars 4Q2003 4Q2002 3Q2003 2003 2002
Proportionate sales and other
operating revenues (a) $2,732 $2,461 $2,717 $10,860 $8,166
Proportionate EBITDA (b) 144 136 207 590 721
(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.
Financial results for 2003 were negatively impacted by:
-- Lower MTBE margins due to the expiration of a favorable contract at
the end of 2002 and the phase-out of usage in California, New York
and Connecticut;
-- High, volatile crude oil and natural gas prices; and,
-- Financing costs.
LYONDELL-CITGO Refining LP continues to operate with significant positive cash flow, while Lyondell and Equistar each finished the year with substantial financial liquidity and improving market conditions.
"Weak demand for chemicals and persistently high and volatile raw material and energy prices severely impacted our financial results for the year," said Dan F. Smith, president and CEO of Lyondell Chemical Company. "We began 2003 with many uncertainties including the Venezuelan strike, the Iraq war and California's phase-out of MTBE; however, as a result of our continued focus on financial liquidity and operational excellence, we are well positioned for the upcycle."
"During 2003, we started production at our new propylene oxide/styrene monomer plant in Europe, and Equistar completed major maintenance turnaround activity at its two largest ethylene plants. These plants are now prepared to operate for the next seven years before the next scheduled maintenance turnaround."
OUTLOOK
The early weeks of 2004 have yielded strong volumes, but raw material and energy cost increases are pressuring margins. Lyondell and Equistar have responded by announcing product price increases across the majority of their product lines.
"The improving economy and the impact of our new propylene oxide plant in Europe should lead to improved performance for 2004. Since our products have broad utilization across the economy and a heavy dependence on hydrocarbons, external factors such as economic growth and raw materials prices will continue to be leveraging factors to our financial performance during 2004," said Smith.
LYONDELL AND JOINT VENTURES
Lyondell's operations comprise: Lyondell's 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
Full Full
Year Year
Millions of dollars 4Q2003 4Q2002 3Q2003 2003 2002
Sales and other operating revenues $945 $890 $954 $3,801 $3,262
Operating income (loss) (a) 3 12 20 (1) 174
EBITDA (a) 60 69 84 245 390
(a) See Table 7 for a reconciliation of Lyondell's net loss to EBITDA and
Table 8 for Lyondell's IC&D operating income (loss) and net loss.
Full-year 2003 results at IC&D include an $18 million gain on Lyondell's sale of a 10 percent interest in Nihon Oxirane and financing costs of $6 million. Financing costs of $23 million were included in the full year 2002 results.
4Q03 v. 3Q03 -- Following an unusually strong third quarter, lower MTBE margins negatively impacted fourth-quarter operating income by approximately $40 million. Performance in PO, PO derivatives, and TDI products improved based primarily on higher margins. Styrene results were unchanged.
4Q03 v. 4Q02 -- MTBE results were down approximately $45 million versus the fourth quarter of 2002. PO and PO derivative results improved in the fourth quarter of 2003 based on stronger margins and 10 percent higher volumes. Styrene and TDI results were relatively unchanged.
2003 v. 2002 -- The year-to-year decrease is attributable to MTBE, as results were negatively impacted by both the expiration of a key contract at the end of 2002 and transition of the gasoline markets in several states away from the use of MTBE.
The MTBE impact was partially offset by improvement in PO and PO derivatives. Price and volume increases in these products offset increased raw material and energy costs. TDI results fell somewhat short of 2002 performance, while styrene results were 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
Full Full
Year Year
Millions of dollars 4Q2003 4Q2002 3Q2003 2003 2002
Sales and other operating
revenues $1,665 $1,431 $1,642 $6,545 $5,537
Operating income (loss) (29) (62) 12 (89) (44)
Net loss (a) (b) (104) (114) (40) (339) (1,299)
EBITDA (a) 27 14 87 175 256
(a) See Table 7 for a reconciliation of Equistar's net loss to EBITDA.
(b) The full year 2002 net loss includes a $1.1 billion charge for
goodwill impairment as a cumulative effect of accounting change upon
adoption of SFAS No. 142.
Fourth-quarter 2003 results include $18 million in financing costs and $6 million related to employee severance. Full-year 2003 results include financing costs of $37 million and $33 million of charges for asset dispositions and employee severance.
4Q03 v. 3Q03 -- Fourth-quarter operations were negatively impacted by an increase in the cost of ethylene production which was driven by higher crude oil and natural gas liquid prices. Price actions were implemented to offset these increases, but the timing of implementation was insufficient to fully offset the cost increases. Additionally, a scheduled maintenance turnaround at an ethylene plant had a negative $5 million to $10 million impact on the fourth-quarter results. Third-quarter results included a charge of $12 million primarily related to the write-off of a polymer R&D facility.
4Q03 v. 4Q02 -- Versus the year-ago quarter, sales volumes of ethylene and ethylene derivatives (ethylene oxygenates and polyethylene) increased by 7 percent. Additionally, higher prices for ethylene and its derivatives more than offset the higher cost of ethylene production. Chemical Marketing Associates, Inc. (CMAI) estimates that the industry's average cost of ethylene production increased by 3.0 to 3.5 cents per pound over the same period last year.
2003 v. 2002 -- For the year, total sales volume of ethylene and ethylene derivatives were down approximately 360 million pounds (4 percent). The majority of this shortfall occurred during the second quarter 2003. The average cost of ethylene production, as estimated by CMAI, increased by approximately 5 cents per pound, while their reported benchmark sales prices increased by 6 cents per pound for ethylene. Polyethylene prices increased by several cents per pound more than the ethylene price increased. Equistar's 2003 results were negatively impacted by scheduled maintenance turnarounds and costs related to financings, asset dispositions and employee severance.
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
Full Full
Year Year
Millions of dollars 4Q2003 4Q2002 3Q2003 2003 2002
Sales and other operating revenues $ 1,044 $956 $1,030 $4,162 $3,392
Operating income 82 69 77 264 246
Net income (a) 73 59 69 228 213
EBITDA (a) 110 97 105 377 361
(a) See Table 7 for a reconciliation of LCR's net income to EBITDA.
Full-year 2003 results include a $25 million charge related to the redesign of a low-sulfur gasoline project and a $6 million charge relating to personnel reductions.
4Q03 v. 3Q03 -- Results continued to be strong in the fourth quarter. Venezuelan contract (CSA) crude volumes and total crude volumes were relatively unchanged.
4Q03 v. 4Q02 -- Volumes of heavy crude processed under the CSA contract averaged 227,000 barrels per day in the fourth quarter of 2003, an increase of 18,000 barrels per day versus the same quarter in 2002 when crude deliveries were disrupted by a strike in Venezuela.
2003 v. 2002 -- LCR had record earnings in 2003 driven primarily by higher CSA crude volumes, strong operating performance, and improved aromatics/lube product performance. These improvements were partially offset by higher natural gas costs and the charges mentioned above. For 2003, total crude volumes averaged 264,000 barrels per day while CSA volumes averaged 224,000 barrels per day.
CONFERENCE CALL
Lyondell will host a conference call today, Jan. 29, 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 888-385-9734 (U.S. - toll free) and 212- 547-0409 (international). Pass code for each is Lyondell. The call will be broadcast live on the Investor Relations page of the company's web site, www.lyondell.com/earnings .
A replay of the call will be available from 1:30 p.m. ET Jan. 29 to 5 p.m. ET Feb. 6. The dial-in numbers are 888-277-9381 (U.S.) and 402-998-0506 (international). Pass code for each is 5549. Web replay will be available at 1:30 p.m. ET Jan. 29 on the Investor Relations page of the company's web site, 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 on Jan. 29 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 toluene diisocyanate (TDI), 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
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, Lyondell's Quarterly Report on Form 10-Q for the quarter ended September 30, 2003, and Lyondell's Annual Report on Form 10-K for the year ended December 31, 2003, which will be filed in March 2004.
Table 6 - Unaudited Financial and Operating Information
Lyondell
and
Proportionate
Lyondell Joint Ventures Share of
Chemical Equistar LCR LMC Equity
(Millions of dollars) Company 100% 100% 100% Investments
(a) (b)
Three months ended
December 31, 2003:
Sales and other operating
revenues (c) $945 $1,665 $1,044 $--- $2,732
SG&A and R&D 56 60 14 --- 107
EBITDA 60 27 110 --- 144
Depreciation and amortization 66 77 28 --- 135
Interest expense, net 104 54 9 --- 147
Net loss (77)(d)
Capital expenditures 21 (e) 44 10 --- 58
Cash dividends 31
Three months ended
December 31, 2002:
Sales and other operating
revenues (c) $890 $1,431 $956 $--- $2,461
SG&A and R&D 42 43 14 --- 81
EBITDA 69 14 97 --- 136
Depreciation and amortization 67 77 29 --- 136
Interest expense, net 96 51 9 --- 137
Net loss (93)(d)
Capital expenditures 2 (e) 75 12 --- 62
Cash dividends 28
Three months ended
September 30, 2003:
Sales and other operating
revenues (c) $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) (d)
Capital expenditures 9 (e) 28 8 --- 33
Cash dividends 28
Year ended December 31, 2003:
Sales and other operating
revenues (c) $3,801 $6,545 $4,162 $--- $10,860
EBITDA 245 175 377 --- 590
Interest expense, net 392 207 36 --- 559
Capital expenditures 268(e)(f) 106 46 --- 370
Cash dividends 116
Year ended December 31, 2002:
Sales and other operating
revenues (c) $3,262 $5,537 $3,392 $36 $8,166
EBITDA 390 256 361 (4) 721
Interest expense, net 373 204 32 --- 497
Capital expenditures 22 (e) 118 65 --- 133
Cash dividends 109
(a) As of May 1, 2002, Lyondell Methanol Company ("LMC") is wholly owned
by Lyondell Chemical Company ("Lyondell") and its operations are
included in the Intermediate Chemicals and Derivatives ("IC&D")
business segment.
(b) 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 58.75% interest in LYONDELL-CITGO Refining LP ("LCR") and
a 70.5% interest in Equistar Chemicals, LP ("Equistar"). Prior to
August 22, 2002, Lyondell had a 41% interest in Equistar.
(c) Includes revenues from sales to affiliates.
(d) Includes income (loss) from equity investments in Equistar and LCR.
(e) In addition, Lyondell made cash contributions to the PO-11 joint
venture and the U.S. PO joint venture. See footnote (a) of Table 10
for detail of cash contributions.
(f) Capital expenditures of $268 million for the twelve months ended
December 31, 2003 include Lyondell's purchase of the BDO-2 facility
from the lessor for $218 million.
Table 7 - Reconciliation of Net Income (Loss) to EBITDA
For the three For the twelve
months ended months ended
December 31, Sept. 30, December 31,
(Millions of dollars) 2003 2002 2003 2003 2002
LYONDELL
Net loss $(77) $(93) $(44) $(302) $(148)
Add:
Benefit from income taxes (58) (42) (27) (179) (66)
Interest expense, net 104 96 106 392 373
Depreciation and amortization 66 67 66 250 244
Loss from equity investment in
Equistar 70 78 26 228 117
Income from equity investment
in LCR (45) (37) (43) (144) (135)
Loss from equity investment
in LMC (a) --- --- --- --- 5
IC&D EBITDA $60 $69 $84 $245 $390
EQUISTAR
Net loss $(104) $(114) $(40) $(339) $(1,299)
Add:
Depreciation and amortization 77 77 76 307 298
Interest expense, net 54 51 51 207 204
Cumulative effect of accounting
change --- --- --- --- 1,053
EBITDA $27 $14 $87 $175 $256
Lyondell Proportionate Share (b) $19 $10 $61 $123 $122
LCR
Net income $73 $59 $69 $228 $213
Add:
Depreciation and amortization 28 29 28 113 116
Interest expense, net 9 9 8 36 32
EBITDA $110 $97 $105 $377 $361
Lyondell Proportionate
Share - 58.75% $65 $57 $62 $222 $212
EBITDA - Lyondell and Proportionate
Share of Equity Investments
Lyondell EBITDA $60 $69 $84 $245 $390
Lyondell share of Equistar EBITDA(b) 19 10 61 123 122
58.75% of LCR EBITDA 65 57 62 222 212
75% of LMC EBITDA through
April 30, 2002 (a) --- --- --- --- (3)
Lyondell and Proportionate Share of
Equity Investments $144 $136 $207 $590 $721
(a) LMC is wholly owned by Lyondell and its operations are included in the
IC&D business segment prospectively from May 1, 2002.
Lyondell had a 75% interest in LMC and applied the equity method of
accounting through April 30, 2002.
(b) Lyondell has a 70.5% interest in Equistar. Prior to August 22, 2002,
it had a 41% interest.
Table 8 - Lyondell Unaudited Income Statement Information
For the twelve
For the three months ended months ended
December 31, Sept. 30, December 31,
(Millions of dollars,
except per share data) 2003 2002 2003 2003 2002
Sales and other operating
revenues $945 $890 $954 $3,801 $3,262
Operating costs and expenses:
Cost of sales 886 836 891 3,599 2,898
Selling, general and
administrative
expenses 45 34 34 166 160
Research and
development expenses 11 8 9 37 30
Operating income (loss) 3 12 20 (1) 174
Loss from equity investment
in Equistar (a) (b) (70) (78) (26) (228) (117)
Income from equity
investment in LCR 45 37 43 144 135
Loss from other equity
investments (9) --- (4) (19) (4)
Interest expense, net (104) (96) (106) (392) (373)
Other income (expense), net --- (10) 2 15 (29)
Loss before income taxes (135) (135) (71) (481) (214)
Benefit from income taxes (58) (42) (27) (179) (66)
Net loss $(77) $(93) $(44) $(302) $(148)
Basic and diluted loss per
share $(0.44) $(0.58) $(0.27) $(1.84) $(1.10)
Basic and diluted shares
(in thousands) (c) 174,016 159,851 161,574 164,288 133,943
(a) 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 the excess of its underlying
equity in Equistar's net assets over its investment in Equistar.
(b) Lyondell has a 70.5% interest in Equistar. Prior to August 22, 2002,
it had a 41% interest.
(c) Lyondell sold 8.28 million shares of common stock in July 2002.
Lyondell issued 34 million shares of Series B common stock to
Occidental in August 2002. Lyondell sold 13.8 million shares of
common stock in October 2003, including 2.7 million shares to
Occidental. In addition, Lyondell paid a dividend to Occidental each
quarter by issuing approximately 0.6 million shares of Series B common
stock beginning in December 2002 in lieu of a dividend payment in
cash.
Table 9 - Lyondell Intermediate Chemicals and Derivatives Segment -
Operating Information
For the three months For the twelve
ended months ended
December 31, Sept. 30, December 31,
(In millions) 2003 2002 2003 2003 2002
PO and derivatives (pounds)(a) 829 744 816 3,288 3,028
Co-products:
Styrene monomer (pounds) 953 889 865 3,467 3,337
MTBE and other TBA
derivatives (gallons) 271 303 292 1,142 1,208
(a) Includes propylene oxide ("PO"), PO derivatives and isocyanates.
Table 10 - Lyondell Unaudited Cash Flow Information
For the twelve months ended
December 31,
(Millions of dollars) 2003 2002
Net loss $(302) $(148)
Adjustments:
Depreciation and amortization 250 244
Losses from equity investments 249 121
Deferred income taxes (172) (24)
Gain on sale of equity interest (18) ---
Debt prepayment charges and premiums 5 23
Changes in assets and liabilities:
Accounts receivable (54) (7)
Inventories 14 (14)
Accounts payable 61 13
Accrued interest 1 13
Refundable income taxes, net 27 62
Other assets and liabilities, net 42 6
Net cash provided by
operating activities 103 289
Purchase of equity investment in Equistar --- (440)
Expenditures for property, plant and equipment (268) (22)
Contributions and advances to affiliates (a) (137) (114)
Distributions from affiliates in
excess of earnings 111 ---
Maturity (purchase) of other short-
term investments 44 (44)
Proceeds from sale of equity interest 28 ---
Other --- (3)
Net cash used in investing activities (222) (623)
Issuance of Series B common stock,
warrants and right --- 440
Issuance of common stock 171 110
Issuance of long-term debt 318 591
Repayment of long-term debt (103) (543)
Dividends paid (116) (109)
Other (4) (18)
Net cash provided by
financing activities 266 471
Effect of exchange rate changes on cash 5 3
Increase in cash and cash equivalents $152 $140
(a) Includes cash contributions to the PO-11 joint venture and the U.S.
PO joint venture of $25 million, $21 million and $15 million in the
three-month periods ended December 31, 2003 and 2002 and
September 30, 2003, respectively, and $88 million and $54 million in
the twelve-month periods ended December 31, 2003 and
December 31, 2002, respectively. These amounts included $9 million,
$21 million and $11 million, respectively, and $60 million and
$54 million, respectively, related to funding for capital
expenditures. Also includes capitalized interest related to the
PO-11 construction project of $4 million, $3 million and $6 million,
during the three-month periods, respectively, and $19 million and
$10 million, during the twelve-month periods, respectively.
Table 11 - Lyondell Unaudited Balance Sheet Information
December 31, December 31,
(Millions of dollars) 2003 2002
Cash and cash equivalents $438 $286
Other short-term investments --- 44
Accounts receivable, net 449 396
Inventories 347 344
Prepaid expenses and other current assets 82 66
Deferred tax assets 43 35
Total current assets 1,359 1,171
Property, plant and equipment, net 2,640 2,369
Investments and long-term receivables:
Investment in Equistar 965 1,184
Investment in PO joint ventures 866 770
Investment in and receivable from LCR 232 297
Other investments and
long-term receivables 85 98
Goodwill, net 1,080 1,130
Other assets, net 406 429
Total assets $7,633 $7,448
Accounts payable $431 $344
Current maturities of long-term debt --- 1
Accrued liabilities 249 279
Total current liabilities 680 624
Long-term debt 4,151 3,926
Other liabilities 699 673
Deferred income taxes 792 881
Minority interest 155 165
Stockholders' equity (176,792,587
and 160,413,144 shares outstanding
at December 31, 2003 and
December 31, 2002, respectively) 1,156 1,179
Total liabilities and
stockholders' equity $7,633 $7,448
Table 12 - Lyondell Selected Equity Investment Activity
For the three For the twelve
months ended months ended
December 31, December 31,
(Millions of dollars) 2003 2003
Investment in Equistar, beginning
of period $1,022 $1,184
Lyondell's share of Equistar net loss (70) (228)
Lyondell's share of Equistar other
comprehensive income 13 13
Other --- (4)
Investment in Equistar, end of period $965 $965
Investment in LCR, beginning of period $(14) $68
Lyondell's share of LCR net income 45 144
Cash distributions from LCR (38) (253)
Cash contributions to LCR 6 30
Conversion of interest receivable
from LCR to equity investment --- 10
Lyondell's share of LCR other
comprehensive income 4 4
Investment in LCR, end of period 3 3
LCR receivable, beginning and end of period 229 229
Investment in and receivable from
LCR, end of period $232 $232
Table 13 - Equistar Unaudited Income Statement Information
For the three months For the twelve
ended months ended
December 31, Sept. 30, December 31,
(Millions of dollars) 2003 2002 2003 2003 2002
Sales and other operating
revenues (a) $1,665 $1,431 $1,642 $6,545 $5,537
Operating costs and expenses:
Cost of sales 1,633 1,450 1,561 6,387 5,388
Selling, general and
administrative expenses 51 33 47 182 155
Research and development
expenses 9 10 10 38 38
Losses on asset
dispositions 1 --- 12 27 ---
Operating income (loss) (29) (62) 12 (89) (44)
Interest expense, net (54) (51) (51) (207) (204)
Other income (expense), net (21) (1) (1) (43) 2
Loss before cumulative
effect of accounting
change (104) (114) (40) (339) (246)
Cumulative effect of accounting
change (b) --- --- --- --- (1,053)
Net loss (c) $(104) $(114) $(40) $(339) $(1,299)
(a) Sales and other operating revenues include 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.
Table 14 - Equistar Unaudited Segment Financial and Operating Information
For the three months For the twelve
ended months ended
December 31, Sept. 30, December 31,
(Millions of dollars) 2003 2002 2003 2003 2002
Sales and other operating
revenues (a)
Petrochemicals segment $1,528 $1,284 $1,491 $6,036 $4,957
Polymers segment 547 476 517 2,023 1,868
Intersegment eliminations (410) (329) (366) (1,514) (1,288)
Total $1,665 $1,431 $1,642 $6,545 $5,537
Operating income (loss)
Petrochemicals segment $6 $(5) $66 $124 $146
Polymers segment 2 (33) (19) (78) (74)
Unallocated (37) (24) (35) (135) (116)
Total $(29) $(62) $12 $(89) $(44)
Depreciation and amortization:
Petrochemicals segment $57 $55 $58 $228 $217
Polymers segment 14 16 13 57 58
Unallocated 6 6 5 22 23
Total $77 $77 $76 $307 $298
EBITDA (b) $27 $14 $87 $175 $256
Sales Volumes (including
intersegment sales)
(millions) (a)
Selected petrochemical products:
Ethylene, propylene and
other olefins (pounds) 4,433 4,026 3,976 16,053 16,815
Aromatics (gallons) 96 87 96 384 369
Polymers products (pounds) 1,444 1,471 1,405 5,389 6,098
(a) Sales and other operating revenues include sales to affiliates. Sales
volumes include sales to affiliates as well as
intersegment sales volumes.
(b) See Table 7 for reconciliation of Equistar's net loss to EBITDA.
Table 15 - Equistar Unaudited Balance Sheet Information
December 31, December 31,
(Millions of dollars) 2003 2002
Cash and cash equivalents $199 $27
Accounts receivable, net 608 625
Inventories 408 424
Prepaid expenses and other current assets 46 50
Total current assets 1,261 1,126
Property, plant and equipment, net 3,334 3,565
Investments 60 65
Other assets, net 373 296
Total assets $5,028 $5,052
Accounts payable $513 $459
Current maturities of long-term debt --- 32
Accrued liabilities 227 223
Total current liabilities 740 714
Long-term debt 2,314 2,196
Other liabilities and deferred revenues 373 221
Partners' capital 1,601 1,921
Total liabilities and partners' capital $5,028 $5,052
Table 16 - Equistar Unaudited Cash Flow Information
For the twelve months ended
December 31,
(Millions of dollars) 2003 2002
Net loss $(339) $(1,299)
Adjustments:
Cumulative effect of accounting change --- 1,053
Depreciation and amortization 307 298
Debt prepayment charges and premiums 30 ---
Losses on asset dispositions 27 ---
Changes in assets and liabilities:
Accounts receivable (a) 26 (54)
Inventories 4 24
Accounts payable 40 99
Accrued interest (2) (2)
Deferred revenues 147 23
Other assets and liabilities, net (76) (87)
Net cash provided by
operating activities 164 55
Expenditures for property, plant
and equipment (106) (118)
Proceeds from sales of assets 69 ---
Contributions to affiliates --- (6)
Net cash used
in investing activities (37) (124)
Issuance of long-term debt 695 ---
Repayment of long-term debt (642) (104)
Other (8) (2)
Net cash provided by (used in)
financing activities 45 (106)
Increase (decrease) in cash and
cash equivalents $172 $(175)
(a) In consideration of discounts offered to certain customers for early
payment for product delivered in December 2003, some receivable
amounts were collected in December 2003 that otherwise would have been
expected to be collected in January 2004, including $41 million from
Occidental.
Table 17 - LCR Unaudited Income Statement Information
For the three months For the twelve
ended months ended
December 31, Sept. 30, December 31,
(Millions of dollars) 2003 2002 2003 2003 2002
Sales and other operating
revenues (a) $1,044 $956 $1,030 $4,162 $3,392
Operating costs and expenses:
Cost of sales 948 873 939 3,842 3,093
Selling, general and
administrative expenses 14 14 14 56 53
Operating income 82 69 77 264 246
Interest expense, net (9) (9) (8) (36) (32)
Other expense, net --- (1) --- --- (1)
Net income (b) $73 $59 $69 $228 $213
EBITDA (c) $110 $97 $105 $377 $361
(a) Includes revenues from 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 three months For the twelve
ended months ended
December 31, Sept. 30, December 31,
2003 2002 2003 2003 2002
Sales Volumes (including
intersegment sales) (a)
Refined products (thousand
barrels per day):
Gasoline 121 116 127 119 115
Diesel and heating oil 93 90 84 85 84
Jet fuel 20 15 18 19 18
Aromatics 8 9 7 8 9
Other refined products 94 81 91 91 96
Total refined products
volumes 336 311 327 322 322
Refinery Runs
Crude processing rates (thousand
barrels per day):
Crude Supply Agreement 227 209 229 224 213
Other crude oil 44 41 36 40 46
Total crude oil 271 250 265 264 259
(a) Includes volumes from sales to affiliates.
Table 19 - LCR Unaudited Balance Sheet Information
December 31, December 31,
(Millions of dollars) 2003 2002
Total current assets $316 $357
Property, plant and equipment, net 1,240 1,312
Deferred charges and other assets,
net 81 88
Total assets $1,637 $1,757
Current maturities of long-term debt $714 $---
Other current liabilities 419 514
Long-term debt --- 450
Loans payable to partners --- 264
Other liabilities and deferred credits 81 126
Partners' capital 423 403
Total liabilities and partners' capital $1,637 $1,757
Table 20 - LCR Unaudited Cash Flow Information
For the twelve months ended
December 31,
(Millions of dollars) 2003 2002
Cash flow from operations $374 $361
Capital expenditures 46 65
Depreciation and amortization 113 116
Table 21 - Reconciliation of Lyondell's Days of Working Capital
December 31, Sept. 30, December 31,
(Millions of dollars) 2003 2003 2002
Working Capital: (a)
Accounts receivable $449 $380 $396
Inventories 347 342 344
Accounts payable (431) (354) (344)
Total 365 368 396
Add: Accounts receivable
sold (b) 75 67 65
Adjusted working capital $440 $435 $461
Days of Working Capital:
Sales and other operating
revenues for the three months
ended $945 $954 $890
Number of days in quarter 92 92 92
Sales per day $10.3 $10.4 $9.7
Days of working capital (c) 43 42 48
(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
December 31, Sept. 30, December 31,
(Millions of dollars) 2003 2003 2002
Working Capital: (a)
Accounts receivable (b) $608 $569 $625
Inventories 408 448 424
Accounts payable (513) (451) (459)
Total 503 566 590
Add: Accounts receivable sold (c) 102 77 81
Adjusted working capital $605 $643 $671
Days of Working Capital:
Sales and other operating
revenues for the three months
ended $1,665 $1,642 $1,431
Number of days in quarter 92 92 92
Sales per day $18.1 $17.8 $15.6
Days of working capital (b)(d) 33 36 43
(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 December 2003, some receivable
amounts were collected in December 2003 that otherwise would have been
expected to be collected in January 2004, including $41 million from
Occidental. Similarly, in September 2003, $33 million was received
from Occidental that otherwise would have been expected to be
collected in October 2003. Had such amounts been collected in
January 2004 and October 2003, respectively, days of working capital
would have been 36 days and 38 days at December 31 and
September 30, 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
