Highlights - Net income of $133 million, or $1.13 per share. Excluding unusual items, net income of $62 million, or $0.52 per share, compared to a net loss of $2 million, or $0.02 per share, for the third quarter 1999. - Record EBITDA from LCR offsets decline at Equistar. - 2000 year-to-date EBITDA of $912 million, up 13 percent from 1999.
HOUSTON, Oct. 24 /PRNewswire/ -- Lyondell Chemical Company (NYSE: LYO) reported net income for the third quarter of 2000 of $133 million, or $1.13 per share. Excluding unusual items, net income for the quarter was $62 million, or $0.52 per share.
"Lyondell's third quarter financial results reflect the strong competitive position and diversity of our portfolio of businesses, which helped offset the effects of generally difficult business conditions in the global chemical industry, including volatile energy prices. Compared to the second quarter, Lyondell's results in the third quarter mainly benefited from the strong earnings contribution from our refinery venture," said Lyondell President and Chief Executive Officer Dan F. Smith. "This partially offset higher feedstock costs and softer demand at Equistar and lower co-products profitability in our intermediate chemicals business."
The favorable unusual items consist of post-closing adjustments to the gain associated with the previously reported sale of assets to Bayer and the effect on the first six months of 2000 of a revision in the estimated annual effective tax rate. The effect of the post-closing adjustments, including the final settlement of working capital with Bayer, was an additional after-tax gain of $31 million, or $0.26 per share. The full-year estimated tax rate was reduced from 39 percent to 32 percent primarily to reflect the finalization of the allocation of the gain associated with the Bayer transaction among the various state and foreign tax jurisdictions. The tax rate reduction for the first six months of 2000 resulted in net income of $40 million, or $0.35 per share.
Lyondell Earnings Summary (A) Millions of dollars except 3Q2000 2Q2000 3Q1999 1st Nine 1st Nine per share amounts Months Months 2000 1999 Net Income (Loss) Before Unusual Items (B)(C) $62 $65 $(2) $115 $(22) Earnings (Loss) per Share Before Unusual Items (B)(C) $0.52 $0.55 $(0.02) $0.97 $(0.22) Net Income (Loss) As Reported $133 $46 $(17) $485 $(57) Earnings (Loss) per Share As Reported $1.13 $0.39 $(0.14) $4.12 $(0.57) EBITDA (Lyondell and proportionate share of ventures) (B)(C) $315 $325 $280 $912 $804 (A) See page 6 for Consolidated Income Statements. (B) The third quarter 2000 excludes the favorable after-tax adjustment of the gain on asset sale of $31 million, or $0.26 per share, and the favorable effect of the tax rate revision of $40 million, or $0.35 per share. The second quarter 2000 excludes the after-tax extraordinary charge of $19 million, or $0.16 per share, on debt retirement. The third quarter 1999 excludes unfavorable adjustments of income taxes of $11 million, or $0.09 per share, before extraordinary item and $4 million, or $0.03 per share, related to the extraordinary item. (C) The first nine months 2000 excludes the after-tax gain on asset sale of $400 million, or $3.40 per share, and the after-tax extraordinary loss of $30 million, or $0.25 per share. The first nine months 1999 excludes an extraordinary loss on early debt retirement of $35 million, or $0.35 per share.
The net income before unusual items of $62 million, or $0.52 per share, in the third quarter 2000 compares to net income of $65 million, or $0.55 per share, in the second quarter and to a net loss of $2 million, or $0.02 per share, for the third quarter of 1999. Net income before unusual items for the first nine months of 2000 of $115 million, or $0.97 per share, compares to a net loss for the first nine months of 1999 of $22 million, or $0.22 per share.
The significant improvement in year-to-date financial results for 2000 compared with 1999 reflects stronger business performance from Equistar and LCR as well as the benefits from more than $2 billion in debt reduction since year-end 1999.
EBITDA (earnings before net interest, taxes, depreciation and amortization), before unusual and extraordinary items, for Lyondell and the proportionate share of its joint ventures was $315 million in the third quarter 2000. This compares to $325 million in the second quarter 2000 and $280 million in the third quarter 1999. The third quarter 1999 EBITDA includes Lyondell's polyols business, which was sold at the end of the first quarter 2000.
INTERMEDIATE CHEMICALS AND DERIVATIVES (IC&D)
The IC&D segment includes PO and derivatives, TDI, styrene monomer and MTBE. EBITDA for the third quarter 2000 was $170 million. This compares to second quarter EBITDA of $198 million and third quarter 1999 EBITDA of $182 million (which included the divested polyols business).
While the PO business remained strong, with greater sales volumes and generally higher selling prices, EBITDA for IC&D declined compared to the second quarter due to lower MTBE and styrene margins. Both MTBE and styrene were adversely affected by higher feedstock costs and lower selling prices.
Year-to-date 2000 EBITDA for IC&D was $531 million, compared to $563 million for the same period last year, indicating the stability and strength of this business, despite volatile feedstock prices and the sale of Lyondell's polyols business.
EQUISTAR CHEMICALS, LP
Equistar's EBITDA for the third quarter 2000 was $186 million, compared to $271 million in the second quarter and $153 million in the third quarter 1999. Equistar's results in the third quarter 2000 were impacted by higher feedstock costs and lower product sales prices. Sales prices declined due to increased competitive activity and the start-up of additional industry capacity.
Equistar's petrochemicals segment had EBITDA of $255 million in the third quarter of 2000, compared to EBITDA of $316 million in the second quarter. This segment was negatively impacted by a sharp decline in ethylene margins, due to the higher cost of feedstocks, particularly naphtha and natural gas liquids.
Third quarter 2000 EBITDA for polymers was a negative $31 million, compared to a negative $10 million in the second quarter. Results for the polymers segment declined due to lower margins as the decrease in polymer prices was greater than the decrease in the cost of raw materials, primarily ethylene and propylene.
LYONDELL-CITGO REFINING LP (LCR)
LCR had record EBITDA of $110 million in the third quarter of 2000, compared to $24 million in the second quarter and $58 million in the third quarter 1999. LCR benefited from excellent operational reliability and higher processing rates of extra-heavy Venezuelan crude oil, due to increased shipments from Venezuela as well as volumes inventoried during a second quarter turnaround. Including the inventoried volumes, processing of extra- heavy Venezuelan crude oil under the Crude Supply Agreement (CSA) averaged 244,000 barrels per day during the third quarter. Total crude oil processing rates in the quarter averaged 270,000 barrels per day.
In the fourth quarter, LCR expects to receive extra-heavy Venezuelan crude oil at the CSA contract level of 230,000 barrels per day. This allocation represents an increase of 29,000 barrels per day compared with the third quarter allocation level. Total crude oil processing rates in the fourth quarter are expected to be approximately the same as in the third quarter.
OUTLOOK
"Lyondell's results for the fourth quarter will depend on several factors," Smith said. "We expect continuing strong results from LCR, although below third quarter levels. Profitability at Equistar is anticipated to be lower as a result of continuing high feedstock costs as well as downward pressure on prices. The IC&D business, except for additional seasonal margin erosion in MTBE, is expected to remain a stable contributor of earnings. Despite the anticipated weaker business environment in the near-term, we expect to benefit from relatively strong cash flows from our businesses and continuing debt reduction. In that regard, we will reduce long-term debt by at least $200 million in the fourth quarter."
Sales Revenues Millions of dollars 3Q2000 2Q2000 3Q1999 1st Nine 1st Nine Months Months 2000 1999 Reported sales revenues $975 $976 $976 $3,087 $2,685 Total sales revenues - all businesses in which Lyondell participates(A) $4,115 $3,774 $3,255 $11,720 $8,227 Lyondell's proportionate share of the sales revenues of businesses in which it participates(A) $2,488 $2,296 $2,058 $7,186 $5,279 (A) Includes revenues from sales to affiliates.
Lyondell Chemical Company (www.lyondell.com), with headquarters in Houston, Texas, is the world's largest producer of propylene oxide (PO); the world's number two supplier of TDI (toluene diisocyanate); a leading producer of propylene glycol; a leading producer of other PO derivatives such as BDO (butanediol) and PGE (propylene glycol ether); and a producer of styrene monomer and MTBE as co-products of PO production. Through its 41% interest in Equistar Chemicals, LP, Lyondell also is one of the largest producers of ethylene, propylene and polyethylene in North America and a leading producer of polypropylene, ethylene oxide, ethylene glycol, high value-added specialty polymers and polymeric powder. Through its 58.75% interest in LYONDELL-CITGO Refining LP, Lyondell is one of the largest refiners in the United States, processing extra heavy Venezuelan crude oil to produce gasoline, low sulfur diesel and jet fuel.
The statements in this release relating to matters that are not historical facts are forward-looking statements that are subject to risks and uncertainties, including, but not limited to, future global economic conditions, industry production capacity and operating rates, the supply/demand balance for the Company's products, competitive products and pricing pressures, further increases in raw material costs, changes in governmental regulations and other risks and uncertainties detailed in the Securities and Exchange Commission filings of Lyondell.
LYONDELL CHEMICAL COMPANY
SELECTED FINANCIAL AND OPERATING INFORMATION (UNAUDITED)
(Millions of dollars)
Lyondell Chemical Lyondell and
Company Joint Ventures Proportionate
(Excluding Equity Equistar LCR LMC Share of Equity
Investments)(A) 100% 100% 100% Investments(B)
Three months ended September 30, 2000:
Sales and other
operating revenues (C) $975 $1,914 $1,177 $49 $2,488
SG&A and R&D 57 58 18 3 94
EBITDA before gain
on sale 170 186 110 6 315
Depreciation
and amortization 61(D) 78 28 3 109
Net interest expense 104(D) 45 16 --- 132
Capital expenditures 47 33 11 --- 67
Dividends 27 27
Three months ended June 30, 2000:
Sales and other
operating revenues (C) $976 $1,859 $901 $38 2,296
SG&A and R&D 40 59 14 3 75
EBITDA before
extraordinary item 198 271 24 3 325
Depreciation
and amortization 58(D) 75 30 3 106
Net interest expense 103(D) 44 16 --- 130
Capital expenditures 12 28 18 --- 34
Dividends 26 26
Three months ended September 30, 1999:
Sales and other
operating revenues (C) $976 $1,471 $780 $28 $2,058
SG&A and R&D 77 65 13 2 113
EBITDA before
extraordinary item 182 153 58 2 280
Depreciation
and amortization 80(D) 76 26 2 125
Net interest expense 144(D) 42 11 --- 168
Capital expenditures 15 36 11 --- 36
Dividends 27 27
(A) Consists of the operations of the Intermediate Chemicals and
Derivatives business segment.
(B) This column reflects a combined total of Lyondell's operations and
its pro rata share of each joint venture's operations
and is not a presentation in accordance with generally accepted
accounting principles. Lyondell currently owns a 41% interest in
Equistar Chemicals, LP ("Equistar"), a 58.75% interest in LYONDELL-
CITGO Refining LP ("LCR") and a 75% interest in Lyondell Methanol
Company, L.P. ("LMC").
(C) Includes revenues from sales to affiliates.
(D) "Depreciation and amortization" and "net interest expense" both
include approximately $3 million, $5 million and $2 million of
non-cash amortization of debt issuance costs in the three-month
periods ended September 30, 2000, June 30, 2000, and
September 30, 1999, respectively.
LYONDELL CHEMICAL COMPANY
SELECTED FINANCIAL AND OPERATING INFORMATION (UNAUDITED)
For the three months For the nine months
INCOME STATEMENTS ended September 30, ended September 30,
(Millions of dollars,
except per share data) 2000 1999 2000 1999
Sales and other
operating revenues $ 975 $ 976 $ 3,087 $ 2,685
Operating costs and
expenses:
Cost of sales 793 771 2,514 2,052
Selling, general
and administrative
expenses 51 63 139 186
Research and
development 6 14 27 43
Amortization of
goodwill and other
intangibles 28 28 81 75
Operating income 97 100 326 329
Income from equity
investment in Equistar 35 24 140 63
Income from equity
investment in LCR 42 14 48 5
Income from other equity
investments 6 2 11 1
Interest expense, net (104) (144) (364) (424)
Other income, net 14 2 8 9
Gain on sale of assets 46 --- 590 ---
Income (loss) before
income taxes and
extraordinary item 136 (2) 759 (17)
Provision for income taxes 3 11 244 5
Income (loss) before
extraordinary item 133 (13) 515 (22)
Extraordinary loss, net
of income taxes --- (4) (30) (35)
Net income (loss) $ 133 $ (17) $ 485 $ (57)
Basic earnings per
share:
Income (loss) before
extraordinary item $ 1.13 $ (0.11) $ 4.38 $ (0.22)
Net income (loss) $ 1.13 $ (0.14) $ 4.13 $ (0.57)
Weighted average
shares outstanding
(in thousands)(A) 117,556 117,554 117,556 98,237
Diluted earnings per
share:
Income (loss) before
extraordinary item $ 1.13 $ (0.11) $ 4.37 $ (0.22)
Net income (loss) $ 1.13 $ (0.14) $ 4.12 $ (0.57)
Weighted average
shares outstanding
(in thousands)(A) 117,721 117,554 117,812 98,237
INTERMEDIATE CHEMICALS AND DERIVATIVES SEGMENT
SELECTED FINANCIAL AND OPERATING INFORMATION
(Millions of dollars)
Sales and other
operating revenues $ 975 $ 976 $ 3,087 $ 2,685
Operating income 97 100 326 329
EBITDA before unusual
charges 170 182 531 563
Sales Volumes (millions)
PO and derivatives
(pounds)(B) 720 1,126 2,600 3,268
Co-products:
Styrene monomer
(pounds) 882 899 2,670 2,356
TBA and derivatives
(gallons) 299 279 891 811
(A) In May 1999, Lyondell issued 40.25 million shares of common stock in
a public offering.
(B) Includes propylene oxide ("PO"), PO derivatives and isocyanates. The
polyols business sold to Bayer on March 31, 2000 is included through
the date of sale.
LYONDELL CHEMICAL COMPANY
SELECTED FINANCIAL INFORMATION (UNAUDITED)
(Millions of dollars)
For the nine months
ended September 30,
STATEMENTS OF CASH FLOWS 2000 1999
Net income (loss) $485 $(57)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Gain on sale of assets (590) ---
Depreciation and amortization 203 244
Extraordinary loss 30 35
Accounts receivable (134) (143)
Inventories (28) 37
Accounts payable 44 13
Changes in other working capital and other, net 27 101
Net cash provided by operating activities 37 230
Proceeds from sale of assets, net of cash sold 2,445 ---
Expenditures for property, plant and equipment (78) (90)
Contributions and advances to affiliates (28) (45)
Distributions from affiliates in excess
of earnings --- 82
Net cash provided by (used in)
investing activities 2,339 (53)
Repayments of long-term debt (2,064) (4,117)
Issuance of long-term debt, net --- 3,293
Issuance of common stock --- 736
Dividends paid (79) (70)
Other (18) 8
Net cash used in financing activities (2,161) (150)
Effect of exchange rate changes on cash (6) (2)
Increase in cash and cash equivalents $209 $25
LYONDELL CHEMICAL COMPANY
SELECTED FINANCIAL INFORMATION (UNAUDITED)
(Millions of dollars)
September 30, December 31,
BALANCE SHEET 2000 1999
Cash and cash equivalents $516 $307
Accounts receivable, net 498 566
Inventories 420 519
Prepaid expenses and other current assets 114 114
Deferred tax assets 60 380
Total current assets 1,608 1,886
Property, plant and equipment, net 2,417 4,291
Investments and long-term receivables:
Investment in PO joint ventures (A) 664 ---
Investment in Equistar 638 607
Receivable from LCR 229 219
Investment in LCR 58 52
Investment in LMC 53 63
Other investments and long-term receivables 64 74
Goodwill, net 1,147 1,545
Other assets 536 761
Total assets $7,414 $9,498
Accounts payable $371 $350
Current maturities of long-term debt 212 225
Other accrued liabilities 450 446
Total current liabilities 1,033 1,021
Long-term debt, less current maturities 3,995 6,046
Other liabilities 383 331
Deferred income taxes 647 891
Minority interest 179 202
Stockholders' equity (117,560,333 shares
outstanding at September 30, 2000) 1,177 1,007
Total liabilities and stockholders' equity $7,414 $9,498
Investment in Equistar, December 31, 1999 $607
Lyondell's share of Equistar net income 140
Cash distributions from Equistar (114)
Transfer of shared service organization
liability from Equistar 5
Investment in Equistar, September 30, 2000 $638
Investment in LCR, December 31, 1999 $52
Lyondell's share of LCR net income 48
Cash distributions from LCR (57)
Cash contributions to LCR 15
Investment in LCR, September 30, 2000 $58
Investment in LMC, December 31, 1999 $63
Lyondell's share of LMC net income 4
Cash distributions from LMC (14)
Investment in LMC, September 30, 2000 $53
(A)Lyondell has entered into joint ventures with Bayer in conjunction
with the March 31, 2000 asset sale.
LYONDELL CHEMICAL COMPANY
EQUISTAR CHEMICALS, LP
SELECTED FINANCIAL AND OPERATING INFORMATION (UNAUDITED)
For the three months For the nine months
INCOME STATEMENTS ended September 30, ended September 30,
(Millions of dollars) 2000 1999 2000 1999
Sales and other
operating revenues (A) $1,914 $1,471 $5,580 $3,783
Operating costs and expenses:
Cost of sales 1,738 1,322 4,979 3,394
Selling, general
and administrative expenses 49 54 142 170
Research and development 9 11 28 31
Amortization of goodwill
and other intangibles 9 8 25 25
Operating income 109 76 406 163
Interest expense, net (45) (42) (134) (127)
Other income (expense), net (1) 1 (1) 47
Net income (B) $63 $35 $271 $83
SELECTED FINANCIAL
AND OPERATING INFORMATION
(Millions of dollars)
Sales and Other Operating Revenues (A)
Petrochemicals segment $1,836 $1,300 $5,302 $3,250
Polymers segment 573 533 1,713 1,465
Intersegment eliminations (495) (362) (1,435) (932)
Total $1,914 $1,471 $5,580 $3,783
Other Operating Expenses (C)
Petrochemicals segment $2 $3 $6 $9
Polymers segment 16 21 52 60
Unallocated 49 49 137 157
Total $67 $73 $195 $226
Operating Income
Petrochemicals segment $204 $99 $643 $274
Polymers segment (46) 26 (100) 46
Unallocated (49) (49) (137) (157)
Total $109 $76 $406 $163
EBITDA
Petrochemicals segment $255 $148 $794 $417
Polymers segment (31) 40 (60) 86
Unallocated (38) (35) (99) (72)
Total $186 $153 $635 $431
Sales Volumes (A)
Selected petrochemical products (millions):
Ethylene, propylene
and other olefins (pounds) 4,512 4,760 14,020 13,795
Aromatics (gallons) 101 94 312 270
Polymers products
(millions of pounds) 1,622 1,541 4,763 4,804
Lyondell has a 41% ownership interest in Equistar while Millennium Chemicals, Inc. and Occidental Chemical Corporation each have a 29.5% ownership interest.
(A) Includes revenues/volumes from sales to affiliates. (B) As a partnership, Equistar is not subject to federal income taxes. (C) Other Operating Expenses include SG&A, R&D and amortization of goodwill and other intangibles. LYONDELL CHEMICAL COMPANY EQUISTAR CHEMICALS, LP SELECTED FINANCIAL INFORMATION (UNAUDITED) (Millions of dollars) Sept. 30, Dec. 31, BALANCE SHEETS 2000 1999 Cash and cash equivalents $42 $108 Accounts receivable, net 786 700 Inventories 556 520 Prepaid expenses and other current assets 25 32 Total current assets 1,409 1,360 Property, plant and equipment, net 3,829 3,926 Goodwill, net 1,094 1,119 Other assets 335 331 Total assets $6,667 $6,736 Accounts payable $491 $459 Current maturities of long-term debt 90 92 Other accrued liabilities 140 233 Total current liabilities 721 784 Long-term debt, less current maturities 2,157 2,169 Other liabilities 132 121 Partners' capital 3,657 3,662 Total liabilities and partners' capital $6,667 $6,736 For the three For the nine months ended months ended September 30, September 30, SELECTED CASH FLOW INFORMATION 2000 1999 2000 1999 Depreciation and amortization $78 $76 $230 $222 Cash flow from operations 54 18 313 173 Capital expenditures 33 36 81 112 LYONDELL CHEMICAL COMPANY LYONDELL-CITGO REFINING LP SELECTED FINANCIAL AND OPERATING INFORMATION (UNAUDITED) CONDENSED BALANCE SHEETS Sept. 30, Dec. 31, (Millions of dollars) 2000 1999 Total current assets $359 $219 Property, plant and equipment, net 1,324 1,350 Other assets 74 60 Total assets $1,757 $1,629 Notes payable $450 $--- Current maturities of long-term debt --- 450 Other current liabilities 465 307 Long-term debt, less current maturities 264 247 Other liabilities 58 69 Partners' capital 520 556 Total liabilities and partners' capital $1,757 $1,629 For the three For the nine months ended months ended INCOME STATEMENTS September 30, September, 30 (Millions of dollars) 2000 1999 2000 1999 Sales and other operating revenues (A) $1,177 $780 $2,937 $1,694 Operating costs and expenses: Cost of sales 1,077 735 2,781 1,619 Selling, general and administrative expenses 18 13 46 47 Operating income 82 32 110 28 Interest expense, net (16) (11) (44) (31) State income tax benefit --- --- --- 1 Net income (loss) (B) $66 $21 $66 $(2) SELECTED CASH FLOW INFORMATION (Millions of dollars) Depreciation and amortization $28 $26 $84 $78 Cash flow from operations 103 81 130 92 Capital expenditures 11 11 46 43 EBITDA $110 $58 $194 $106 SELECTED OPERATING INFORMATION Sales Volumes (including intersegment sales) (A) Refined products (thousand barrels per day): Gasoline 122 114 117 112 Diesel and heating oil 81 71 69 64 Jet fuel 24 20 17 17 Aromatics 13 10 11 10 Other refinery products 109 107 103 104 Total refined products volumes 349 322 317 307 Refinery Runs Crude processing rates (thousand barrels per day): Crude Supply Agreement - coked 244 192 188 182 Other heavy crude oil - coked --- 12 14 12 Other crude oil 26 37 34 39 Total crude oil 270 241 236 233 (A) Includes revenues/volumes from sales to affiliates. (B) As a partnership, LCR is not subject to federal income taxes.
SOURCE Lyondell Chemical Company
Web site: http: //www.lyondell.com
Photo: NewsCom: http: //www.newscom.com/cqi-bin/prnh/20000921/LYOLOGO PRN Photo Desk, 888-776-6555 or 201-369-3467
CONTACT: media, Marvin Brown, 713-309-2643, or investors, Sami Ahmad, 713-309-7141, both of Lyondell Chemical Company
