* Positive Lyondell earnings driven by strengthening Equistar results and continued record performance at LYONDELL-CITGO Refining (LCR).
* Improving supply/demand balance more than offsets the impact of record high crude oil prices.
HOUSTON, July 22 /PRNewswire-FirstCall/ -- Lyondell Chemical Company (NYSE: LYO) today announced net income for the second quarter of $3 million, or $0.02 per share. This compares to a net loss of $68 million, or $0.43 per share, for the second quarter 2003, and a net loss of $15 million, or $0.08 per share, for the first quarter 2004.
Table 1 - Lyondell Earnings Summary
Millions of dollars 1st Six 1st Six
except per share Months Months
amounts 2Q 2004 2Q 2003 1Q 2004 2004 2003
Sales and other
operating revenues $1,161 $913 $1,105 $2,266 $1,902
Net income (loss) 3 (68) (15) (12) (181)
Basic and diluted
earnings (loss)
per share (A) 0.02 (0.43) (0.08) (0.07) (1.13)
Basic weighted average
shares outstanding
(millions) (A) 177.1 161.0 176.5 176.8 160.7
Diluted weighted average
shares outstanding
(millions) (A) 178.2 161.0 176.5 176.8 160.7
(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 approximately 0.6 million shares of Series B common stock
each quarter beginning in December 2002 in lieu of a dividend
payment in cash.
Table 2 - Lyondell and Proportionate Share of Ventures - Supplemental
Financial Data
1st Six 1st Six
Months Months
Millions of dollars 2Q 2004 2Q 2003 1Q 2004 2004 2003
Proportionate sales
and other operating
revenues (A) $3,427 $2,571 $3,166 $6,594 $5,412
Proportionate EBITDA (B) 287 161 259 546 239
(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 second quarter of 2003, income turned positive as improved performance at each entity led to a $71 million increase.
For the first half of 2004, Lyondell's net loss was $12 million, a $169 million improvement versus the first half of 2003. Each of the Lyondell companies contributed to this improvement with increased Equistar margins and volumes contributing the largest portion. Sales volumes for Equistar's ethylene and ethylene derivatives, as well as Lyondell's propylene oxide (PO) and derivatives, for the first half of 2004 were approximately 14 percent higher than in the first half of 2003.
Compared to the first quarter of 2004, an improving supply/demand balance led to increased average quarterly prices which more than offset the impact of increased raw material and energy costs. Within the Lyondell enterprise, Equistar was the most significant beneficiary of these improvements as Equistar's income increased by $38 million versus the prior quarter.
"Overall our product lines are benefiting from the economic momentum that began in late 2003," said Dan F. Smith, president and CEO of Lyondell Chemical Company. "Although second quarter earnings are modest, after enduring such a prolonged trough, I am pleased to report positive results at this early phase of the cyclical recovery. During the quarter, the majority of our basic petrochemical and gasoline-related products benefited from increased prices and margins as industry conditions improved. However, in certain products such as styrene, prices have lagged or have only offset increasing raw material costs thus far. I am confident that as the recovery progresses these products will benefit from tightening conditions much as the other basic petrochemicals are benefiting today."
OUTLOOK
Industry conditions have continued to reflect a reasonably strong supply/demand balance. However, near-term results will remain vulnerable to the impacts of global tensions and related volatility of crude oil and natural gas prices.
"The industry and our product lines continue to move through the early phase of a cyclical recovery, and we expect that this trend will continue into the foreseeable future," said Smith. "We are now entering the point in the cycle during which we can begin to direct our financial focus to the next phase of our plans, namely debt reduction and optimization of the debt portfolio."
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 Six 1st Six
Months Months
Millions of dollars 2Q 2004 2Q 2003 1Q 2004 2004 2003
Sales and other
operating revenues $1,161 $913 $1,105 $2,266 $1,902
Operating income
(loss) (A) 20 (6) 23 43 (24)
EBITDA (A) 82 48 86 168 101
(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).
2Q04 v. 1Q04 - Compared to the first quarter, results were relatively unchanged as increased MTBE margins offset the impact of reduced PO and PO derivative volumes. The reduction in PO and PO derivative sales volumes was related to the seasonality of aircraft deicer sales and the timing of maintenance activity within the industry. PO, PO derivative and TDI price increases generally offset higher raw material costs. MTBE operating income improved by approximately $35 million based on seasonally higher margins throughout the quarter and significant margin increases around the Memorial Day holiday. Styrene prices did not keep pace with raw material increases, resulting in an approximate $10 million reduction in profitability.
2Q04 v. 2Q03 - Operating income increased by $26 million versus the year- ago quarter. Increased MTBE margins and PO and PO derivative product volumes contributed to the improvement while lower styrene and TDI margins reduced results by approximately $20 million.
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 Six 1st Six
Months Months
Millions of dollars 2Q 2004 2Q 2003 1Q 2004 2004 2003
Sales and other
operating revenues $2,099 $1,597 $1,962 $4,061 $3,238
Operating income (loss) 99 24 61 160 (72)
Net income (loss) (A) 43 (49) 5 48 (195)
EBITDA (A) 175 80 136 311 61
(A) See Table 7 for a reconciliation of Equistar's net income (loss) to
EBITDA.
2Q04 v. 1Q04 - Results followed the first-quarter trend and continued to improve as higher co-product (propylene, benzene, butadiene, and fuels) and ethylene derivative (ethylene oxygenates and polyethylene) prices more than offset increased raw material costs. Ethylene and ethylene derivative volumes increased by approximately 3.5 percent versus the first quarter. Maintenance turnarounds and unplanned outages negatively impacted the second quarter by approximately $15 million to $20 million.
2Q04 v. 2Q03 - Ethylene and ethylene derivative volumes increased by 520 million pounds (25 percent) versus last year's depressed levels. Raw material costs increased significantly as crude oil prices averaged more than 30 percent higher than during the second quarter 2003. The majority of the raw material cost increases were offset by product price increases. The second quarter 2003 included a $19 million charge related to financing activity.
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 Six 1st Six
Months Months
Millions of dollars 2Q 2004 2Q 2003 1Q 2004 2004 2003
Sales and other
operating revenues $1,339 $905 $1,154 $2,493 $2,088
Operating income 111 67 101 212 105
Net income (A) 103 58 91 194 86
EBITDA (A) 139 96 131 270 162
(A) See Table 7 for a reconciliation of LCR's net income to EBITDA.
2Q04 v. 1Q04 - LCR's income surpassed the record level established in the first quarter 2004. Processing rates for Venezuelan contract crude (CSA) averaged 233,000 barrels per day while total crude volumes averaged 273,000 barrels per day. Previously reported maintenance activity to repair damage sustained during a May storm had a minor impact on the quarter. The repair was completed and operations returned to normal during June. Continued strengthening of spot crude and aromatics margins contributed to the improved quarterly results.
2Q04 v. 2Q03 - Results improved versus the second quarter 2003 primarily as a result of increased spot crude and aromatic product margins as well as the value of certain CSA contract formula variables, such as the natural gas price factor. Second quarter 2003 results were negatively impacted by a $6 million charge related to personnel reductions.
CONFERENCE CALL
Lyondell will host a conference call today, July 22, 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 July 22 to 5 p.m. ET July 30. The dial-in numbers are 800-294-4406 (U.S.) and 402-220-9778 (international). Passcode for each is 5549. Web replay will be available at 1:30 p.m. ET July 22 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 June 30, 2004, which will be filed with the SEC in August 2004.
In addition, on June 18, 2004, Lyondell filed with the SEC an amendment to its registration statement on Form S-4 (as amended, the "Form S-4") containing a preliminary 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, including the definitive joint proxy statement/prospectus that will be part of the definitive registration statement, 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 (when it becomes available) 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 (when it becomes available) 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.
The respective executive officers and directors of Lyondell and Millennium and other persons may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information regarding Lyondell's executive officers and directors is available in the proxy statement filed with the SEC by Lyondell on March 16, 2004 and in the Form S-4, and information regarding Millennium's directors and its executive officers is available in Millennium's Annual Report on Form 10-K/A for the year ended December 31, 2003, which was filed with the SEC on April 27, 2004, and in the Form S-4. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the definitive joint proxy statement/prospectus and other relevant materials filed with the SEC, as they become available.
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 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
Three months ended June 30, 2003:
Sales and other operating
revenues (B) $913 $1,597 $905 $2,571
SG&A and R&D 53 54 16 100
EBITDA 48 80 96 161
Depreciation and amortization 61 76 29 129
Interest expense, net 99 53 9 142
Net loss (68) (C)
Capital expenditures 229 (D) 21 13 251
Cash dividends 29
Three months ended March 31, 2004:
Sales and other operating
revenues (B) $1,105 $1,962 $1,154 $3,166
SG&A and R&D 53 48 16 96
EBITDA 86 136 131 259
Depreciation and amortization 63 76 30 132
Interest expense, net 109 55 10 154
Net loss (15) (C)
Capital expenditures 11 19 15 33
Cash dividends 31
(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.
(D) Capital expenditures of $229 million for the three months ended
June 30, 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 For the
three months ended six months ended
June 30, March 31, June 30,
(Millions of dollars) 2004 2003 2004 2004 2003
LYONDELL
Net income (loss) $3 $(68) $(15) $(12) $(181)
Add:
Provision for (benefit from)
income taxes 3 (39) (9) (6) (94)
Interest expense, net 108 99 109 217 182
Depreciation and amortization 64 61 63 127 118
(Income) loss from equity
investment in Equistar (33) 32 (6) (39) 132
Income from equity investment
in LCR (63) (37) (56) (119) (56)
IC&D EBITDA $82 $48 $86 $168 $101
EQUISTAR
Net income (loss) $43 $(49) $5 $48 $(195)
Add:
Depreciation and amortization 77 76 76 153 154
Interest expense, net 55 53 55 110 102
EBITDA $175 $80 $136 $311 $61
Lyondell Proportionate
Share - 70.5% $123 $57 $96 $219 $43
LCR
Net income $103 $58 $91 $194 $86
Add:
Depreciation and amortization 28 29 30 58 57
Interest expense, net 8 9 10 18 19
EBITDA $139 $96 $131 $270 $162
Lyondell Proportionate
Share - 58.75% $82 $56 $77 $159 $95
EBITDA - Lyondell and Proportionate
Share of Equity Investments
Lyondell EBITDA $82 $48 $86 $168 $101
70.5% of Equistar EBITDA 123 57 96 219 43
58.75% of LCR EBITDA 82 56 77 159 95
Lyondell and Proportionate
Share of Equity Investments $287 $161 $259 $546 $239
Table 8 - Lyondell Unaudited Income Statement Information
For the For the
three months ended six months ended
(Millions of dollars, June 30, March 31, June 30,
except per share data) 2004 2003 2004 2004 2003
Sales and other operating
revenues $1,161 $913 $1,105 $2,266 $1,902
Cost of sales 1,084 866 1,029 2,113 1,822
Selling, general and
administrative expenses 49 45 45 94 87
Research and development
expenses 8 8 8 16 17
Operating income (loss) 20 (6) 23 43 (24)
Income (loss) from equity
investment in Equistar 33 (32) 6 39 (132)
Income from equity
investment in LCR 63 37 56 119 56
Income (loss) from other
equity investments 1 (4) 1 2 (6)
Interest expense, net (108) (99) (109) (217) (182)
Other income (expense),
net (3) (3) (1) (4) 13
Income (loss) before
income taxes 6 (107) (24) (18) (275)
Provision for (benefit
from) income taxes 3 (39) (9) (6) (94)
Net income (loss) $3 $(68) $(15) $(12) $(181)
Basic and diluted earnings
(loss) per share: $0.02 $(0.43) $(0.08) $(0.07) $(1.13)
Weighted average shares
(in thousands) (A):
Basic 177,101 161,023 176,543 176,822 160,722
Diluted 178,188 161,023 176,543 176,822 160,722
(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 approximately 0.6 million 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 three For the six
months ended months ended
June 30, March 31, June 30,
(In millions) 2004 2003 2004 2004 2003
PO and derivatives (pounds) (A) 875 744 1,002 1,877 1,643
Co-products:
Styrene monomer (pounds) 830 780 931 1,761 1,649
MTBE and other TBA derivatives
(gallons) 284 322 272 556 579
(A) Includes propylene oxide ("PO"), PO derivatives and isocyanates.
Table 10 - Lyondell Unaudited Cash Flow Information
For the six months ended
June 30,
(Millions of dollars) 2004 2003
Net loss $(12) $(181)
Adjustments:
Depreciation and amortization 127 118
(Income) loss from equity investments (40) 138
Deferred income taxes (8) (92)
Gain on sale of equity interest --- (18)
Debt prepayment premiums and charges --- 5
Changes in assets and liabilities:
Accounts receivable (56) (4)
Inventories 17 (14)
Accounts payable 50 34
Accrued interest --- 2
Income taxes refundable, net of payable 1 33
Other assets and liabilities, net (1) 7
Cash provided by operating activities 78 28
Expenditures for property, plant and equipment (27) (238)
Distributions from affiliates in excess
of earnings 48 102
Contributions and advances to affiliates (A) (22) (78)
Maturity of other short-term investments --- 25
Proceeds from sale of equity interest --- 28
Cash used in investing activities (1) (161)
Issuance of long-term debt --- 318
Repayment of long-term debt --- (103)
Dividends paid (63) (57)
Other 4 (4)
Cash provided by (used in) financing
activities (59) 154
Effect of exchange rate changes on cash (1) 1
Increase in cash and cash equivalents $17 $22
(A) Includes cash contributions to European PO Joint Venture and the
U.S. PO Joint Venture of $4 million and $48 million during the six-
month periods ended June 30, 2004 and June 30, 2003, respectively.
Also includes capitalized interest related to the Maasvlakte PO/SM
plant of $9 million during the six-month period ended June 30, 2003.
Table 11 - Lyondell Unaudited Balance Sheet Information
June 30, December 31,
(Millions of dollars) 2004 2003
Cash and cash equivalents $455 $438
Accounts receivable, net (A) 497 449
Inventories 327 347
Prepaid expenses and other current assets 59 82
Deferred tax assets 43 43
Total current assets 1,381 1,359
Property, plant and equipment, net 2,533 2,640
Investments and long-term receivables:
Investment in Equistar 1,002 965
Investment in PO joint ventures 831 866
Investment in and receivable from LCR 209 232
Other investments and long-term receivables 88 85
Goodwill, net 1,080 1,080
Other assets, net 382 406
Total assets $7,506 $7,633
Accounts payable $470 $431
Accrued liabilities 244 268
Total current liabilities 714 699
Long-term debt 4,152 4,151
Other liabilities 686 680
Deferred income taxes 768 792
Minority interest 138 155
Stockholders' equity (178,491,306 and
176,792,587 shares outstanding at
June 30, 2004 and December 31, 2003,
respectively) 1,048 1,156
Total liabilities and stockholders' equity $7,506 $7,633
(A) See Table 21 for accounts receivable sold.
Table 12 - Lyondell Selected Equity Investment Activity
For the three For the six
months ended months ended
June 30, June 30,
(Millions of dollars) 2004 2004
Investment in Equistar, beginning of period $969 $965
Lyondell's share of Equistar net income 33 39
Lyondell's share of Equistar other
comprehensive loss --- (2)
Investment in Equistar, end of period $1,002 $1,002
Investment in LCR, beginning of period $5 $3
Lyondell's share of LCR net income 63 119
Cash distributions from LCR (97) (160)
Cash contributions to LCR 9 18
Investment in LCR, end of period (20) (20)
LCR receivable, beginning and end of period 229 229
Investment in and receivable from
LCR, end of period $209 $209
Table 13 - Equistar Unaudited Income Statement Information
For the For the
three months ended six months ended
June 30, March 31, June 30,
(Millions of dollars) 2004 2003 2004 2004 2003
Sales and other operating
revenues (A) $2,099 $1,597 $1,962 $4,061 $3,238
Cost of sales 1,951 1,517 1,857 3,808 3,193
Selling, general and
administrative expenses 41 44 41 82 84
Research and development
expenses 8 10 7 15 19
(Gain) loss on asset
dispositions --- 2 (4) (4) 14
Operating income (loss) 99 24 61 160 (72)
Interest expense, net (55) (53) (55) (110) (102)
Other expense, net (1) (20) (1) (2) (21)
Net income (loss) (B) $43 $(49) $5 $48 $(195)
(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 six
three months ended months ended
June 30, March 31, June 30,
(Millions of dollars) 2004 2003 2004 2004 2003
Sales and other operating
revenues (A)
Petrochemicals segment $1,967 $1,481 $1,866 $3,833 $3,017
Polymers segment 603 445 557 1,160 958
Intersegment eliminations (471) (329) (461) (932) (737)
Total $2,099 $1,597 $1,962 $4,061 $3,238
Operating income (loss)
Petrochemicals segment $136 $85 $104 $240 $53
Polymers segment (6) (27) (14) (20) (62)
Unallocated (31) (34) (29) (60) (63)
Total $99 $24 $61 $160 $(72)
Depreciation and amortization
Petrochemicals segment $59 $56 $57 $116 $113
Polymers segment 13 14 14 27 30
Unallocated 5 6 5 10 11
Total $77 $76 $76 $153 $154
EBITDA (B) $175 $80 $136 $311 $61
Sales Volumes (millions) (A)
Selected petrochemical products:
Ethylene, propylene and
other olefins (pounds) 4,383 3,723 4,277 8,660 7,644
Aromatics (gallons) 80 98 93 173 192
Polymers products (pounds) 1,514 1,143 1,401 2,915 2,540
(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
June 30, December 31,
(Millions of dollars) 2004 2003
Cash and cash equivalents $143 $199
Accounts receivable, net (A) 732 608
Inventories 512 408
Prepaid expenses and other current assets 43 46
Total current assets 1,430 1,261
Property, plant and equipment, net 3,224 3,334
Investments 61 60
Other assets, net 399 373
Total assets $5,114 $5,028
Accounts payable $571 $513
Current maturities of long-term debt 1 ---
Accrued liabilities 210 241
Total current liabilities 782 754
Long-term debt 2,312 2,314
Other liabilities and deferred revenues 374 359
Partners' capital 1,646 1,601
Total liabilities and partners' capital $5,114 $5,028
(A) See Table 22 for accounts receivable sold.
Table 16 - Equistar Unaudited Cash Flow Information
For the six months ended
June 30,
(Millions of dollars) 2004 2003
Net income (loss) $48 $(195)
Adjustments:
Depreciation and amortization 153 154
Deferred maintenance turnaround
expenditures (51) (51)
Deferred revenues --- 159
Debt prepayment charges and premiums --- 19
(Gain) loss on asset dispositions (4) 14
Changes in assets and liabilities:
Accounts receivable (A) (B) (124) 66
Inventories (104) (66)
Accounts payable 62 23
Accrued interest 1 (4)
Other assets and liabilities, net (37) (20)
Cash provided by (used in)
operating activities (56) 99
Expenditures for property, plant
and equipment (41) (34)
Proceeds from sales of assets 41 54
Cash provided by investing activities --- 20
Issuance of long-term debt --- 440
Repayment of long-term debt --- (440)
Other --- (3)
Cash used in financing activities --- (3)
Increase (decrease) in cash and
cash equivalents $(56) $116
(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
June 2004 and 2003 that otherwise would have been expected to be
collected in July of the respective years. This included
$42 million and $32 million from OCHC in June 2004 and 2003,
respectively.
Table 17 - LCR Unaudited Income Statement Information
For the For the
three months ended six months ended
June 30, March 31, June 30,
(Millions of dollars) 2004 2003 2004 2004 2003
Sales and other operating
revenues (A) $1,339 $905 $1,154 $2,493 $2,088
Cost of sales 1,213 822 1,037 2,250 1,955
Selling, general and
administrative expenses 15 16 16 31 28
Operating income 111 67 101 212 105
Interest expense, net (8) (9) (10) (18) (19)
Net income (B) $103 $58 $91 $194 $86
EBITDA (C) $139 $96 $131 $270 $162
(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 six months ended
June 30, March 31, June 30,
2004 2003 2004 2004 2003
Sales Volumes (A)
Refined products (thousand
barrels per day):
Gasoline 121 113 115 118 113
Diesel and heating oil 99 86 90 95 82
Jet fuel 14 16 16 15 19
Aromatics 9 7 8 9 8
Other refined products 87 99 92 88 90
Total refined products
volumes 330 321 321 325 312
Refinery Runs
Crude processing rates
(thousand barrels per day):
Crude Supply Agreement 233 246 238 235 220
Other crude oil 40 28 30 36 40
Total crude oil 273 274 268 271 260
(A) Sales volumes include sales to affiliates.
Table 19 - LCR Unaudited Balance Sheet Information
June 30, December 31,
(Millions of dollars) 2004 2003
Total current assets $418 $316
Property, plant and equipment, net 1,222 1,240
Other assets, net 69 81
Total assets $1,709 $1,637
Current maturities of long-term debt $5 $---
Other current liabilities 612 386
Long-term debt 445 450
Loans payable to partners 264 264
Other liabilities 122 114
Partners' capital 261 423
Total liabilities and partners' capital $1,709 $1,637
Table 20 - LCR Unaudited Cash Flow Information
For the six months ended
June 30,
(Millions of dollars) 2004 2003
Cash flow from operations $299 $169
Capital expenditures 29 28
Depreciation and amortization 58 57
Table 21 - Reconciliation of Lyondell's Days of Working Capital
June 30, March 31, December 31,
(Millions of dollars) 2004 2004 2003
Working Capital: (A)
Accounts receivable $497 $467 $449
Inventories 327 334 347
Accounts payable (470) (416) (431)
Total 354 385 365
Add: Accounts receivable sold (B) 75 75 75
Adjusted working capital $429 $460 $440
Days of Working Capital:
Sales and other operating
revenues for the three
months ended $1,161 $1,105 $945
Number of days in quarter 91 91 92
Sales per day $12.8 $12.1 $10.3
Days of working capital (C) 34 38 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
June 30, March 31, December 31,
(Millions of dollars) 2004 2004 2003
Working Capital: (A)
Accounts receivable (B) $732 $608 $608
Inventories 512 473 408
Accounts payable (571) (504) (513)
Total 673 577 503
Add: Accounts receivable sold (C) 122 217 102
Adjusted working capital $795 $794 $605
Days of Working Capital:
Sales and other operating
revenues for the three months
ended $2,099 $1,962 $1,665
Number of days in quarter 91 91 92
Sales per day $23.1 $21.6 $18.1
Days of working capital (B) (D) 34 37 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 June 2004, some receivable amounts
were collected in June 2004 that otherwise would have been expected
to be collected in July 2004, including $42 million from OCHC.
Similarly, in March 2004 and December 2003, $39 million and
$41 million, respectively, was received from OCHC. Had these early
payments not been received, days of working capital would have been
36 days, 39 days and 36 days at June 30 and March 31, 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
