HOUSTON, July 27 /PRNewswire-FirstCall/ -- Lyondell Chemical Company (NYSE: LYO) today announced net income for the second quarter 2006 of $160 million, or 62 cents per share on a fully diluted basis. This compares with net income of $126 million, or 48 cents per share, for the second quarter 2005, and net income of $290 million, or $1.12 per share, for the first quarter 2006. For the first six months of 2006, net income was $450 million, or $1.74 per share on a fully diluted basis, compared with $380 million, or $1.46 per share, during the first six months of 2005.
Table 1 - Lyondell Earnings Summary
Millions of dollars except
per share amounts
1st Six 1st Six
Months Months
2Q 2006 2Q 2005 1Q 2006 2006 2005
Sales and other
operating revenues $5,072 $4,376 $4,757 $9,829 $8,816
Net income 160 126 290 450 380
Basic earnings
per share 0.65 0.51 1.18 1.82 1.55
Diluted earnings
per share (A) 0.62 0.48 1.12 1.74 1.46
Basic weighted average
shares outstanding
(millions) 247.4 245.9 246.9 247.1 245.2
Diluted weighted average
shares outstanding
(millions) (A) 260.1 259.0 259.3 259.7 259.4
(A) Includes the dilutive effect of the convertible debentures, stock
options and warrants.
Second-quarter results improved versus the second quarter 2005 as moderate declines in the chemical businesses were offset by stronger refining results. Versus the first quarter 2006, results declined primarily due to lower margins in the ethylene segment early in the second quarter. Additionally first- quarter results included the benefit of a settlement related to LCR that contributed 17 cents per share to first-quarter earnings.
"Trends in the second quarter were much as expected. Ethylene chain, refining and gasoline component results improved as the quarter progressed, and liquids reestablished their raw material advantage in U.S. ethylene production," said Dan F. Smith, president and CEO of Lyondell Chemical Company. "Our operations have continued to be strong, and we have been able to efficiently react to changes in the raw material environment. The strength of our operating efforts is reflected not only in our financial results but also in our record safety performance during the quarter."
OUTLOOK
The strong ethylene chain performance realized late in the second quarter is expected to continue into the third quarter. Thus far, propylene oxide chain results have been good and refining and gasoline components have continued to be strong.
"Overall, I am pleased with our performance through the first half of 2006 and with our outlook for the balance of the year. The third quarter has started out positively despite the very high cost of crude oil, which has increased by approximately 25 percent this year. This cost pressure has been offset so far by the strength in refining, gasoline components and other co- products," added Smith.
LYONDELL BUSINESS RESULTS DISCUSSION BY REPORTING SEGMENT
Lyondell operates in four segments: 1) Ethylene, co-products and derivatives; 2) PO and related products; 3) Inorganic chemicals; and 4) Refining, which includes Lyondell's 58.75 percent ownership of Lyondell-Citgo Refining LP (LCR), a joint venture with CITGO Petroleum Corp.
Ethylene, Co-products and Derivatives Segment - The primary products of this segment are ethylene, ethylene co-products (propylene, butadiene and benzene), and derivatives of ethylene (polyethylene, ethylene oxygenates and vinyl acetate monomer or VAM).
Table 2 - Ethylene, Co-Products & Derivatives Financial Overview (A)
Millions of dollars 1st Six 1st Six
Months Months
2Q 2006 2Q 2005 1Q 2006 2006 2005
Sales and other
operating revenues $3,401 $2,849 $3,152 $6,553 $5,823
Operating income 181 200 299 480 592
EBITDA (B) 279 294 397 676 780
(A) See Table 6 for additional segment information.
(B) See Table 9 for reconciliations of segment EBITDA to net income of
Lyondell.
2Q06 v. 1Q06 - Ethylene and ethylene derivative product sales volumes increased by approximately 60 million pounds (2 percent) versus the first quarter 2006. Quarterly average prices for ethylene and polyethylene decreased by approximately 1.5 cents and 6 cents per pound, respectively, compared with the first quarter 2006. The company's cost-of-ethylene-production metric (COE) increased by approximately 1 cent per pound versus the first quarter. The majority of the increase is attributed to the higher priced natural-gas-based raw materials as co-product price increases substantially offset crude-oil- based raw material cost increases. Acetyls results improved by approximately $10 million, primarily due to volume and margin improvements associated with lower raw material costs.
2Q06 v. 2Q05 - Ethylene and ethylene derivative product sales volumes increased by 85 million pounds (3 percent) versus the second quarter 2005. The quarterly average prices for ethylene and polyethylene increased by approximately 10 cents and 8 cents per pound, respectively, while the average ethylene glycol price decreased by approximately 2 cents per pound compared with the second quarter 2005. The company's COE metric increased by approximately 8 cents per pound as the cost of production from both crude-oil- and natural-gas-based raw materials increased. Lower volumes and margins in the second quarter 2006 resulted in a $10 million decline in acetyls results.
PO and Related Products Segment - The principal products of the PO and related products segment include PO, PO derivatives (propylene glycol, propylene glycol ethers, butanediol and butanediol derivatives), styrene, MTBE and toluene diisocyanate (TDI).
Table 3 - PO & Related Products Financial Overview (A)
Millions of dollars 1st Six 1st Six
Months Months
2Q 2006 2Q 2005 1Q 2006 2006 2005
Sales and other
operating revenues $1,763 $1,557 $1,644 $3,407 $3,080
Operating income 108 127 117 225 216
EBITDA (B) 170 186 175 345 332
(A) See Table 6 for additional segment information.
(B) See Table 9 for a reconciliation of segment EBITDA to net income of
Lyondell.
2Q06 v. 1Q06 - Overall results were relatively unchanged. MTBE results improved by approximately $45 million, despite the need to export U.S. production volumes, as raw material margins increased by 30 cents per gallon and more than offset export costs. PO and PO derivative results declined by approximately $45 million primarily due to higher raw material costs (approximately $15 million), lower aircraft deicer sales volumes (approximately 50 million pounds) and increased costs related to scheduled maintenance activity at two European plants. Styrene results declined by approximately $15 million due to increased raw material costs, while TDI results were relatively unchanged.
2Q06 v. 2Q05 - Versus the year-ago quarter, results declined by approximately $20 million. PO and PO derivatives, styrene and MTBE results declined primarily due to lower margins. TDI losses decreased due to margin improvements.
Inorganic Chemicals Segment - The principal product of the inorganic chemicals segment is titanium dioxide (TiO2).
Table 4 - Inorganic Chemicals Financial Overview (A)
Millions of dollars 1st Six 1st Six
Months Months
2Q 2006 2Q 2005 1Q 2006 2006 2005
Sales and other
operating revenues $359 $342 $342 $701 $660
Operating income 5 16 20 25 37
EBITDA (B) 33 52 44 77 99
(A) See Table 6 for additional segment information.
(B) See Table 9 for a reconciliation of segment EBITDA to net income of
Lyondell.
2Q06 v. 1Q06 - Sales volumes increased by approximately 7,000 metric tons. These improvements were offset by increased costs and lost sales opportunities primarily related to operating problems at the UK plant.
2Q06 v. 2Q05 - Sales volumes were approximately 4,000 metric tons higher than the year-ago quarter, while average sales prices were relatively unchanged. Production costs increased compared with the second quarter 2005 primarily due to increased utility and ore costs in addition to the previously mentioned production problems at the UK plant. These costs more than offset the volume and price improvements.
Refining Segment - Lyondell owns a 58.75 percent interest in LCR, a major refiner of heavy crude oil. This interest is accounted for by the equity method.
Table 5 - Refining Financial Overview - 100% Basis (A)
Millions of dollars 1st Six 1st Six
Months Months
2Q 2006 2Q 2005 1Q 2006 2006 2005
Sales and other
operating revenues $2,411 $1,563 $2,094 $4,505 $3,099
Operating income (B) 163 37 162 325 155
EBITDA (B) (C) 194 65 193 387 211
(A) The Refining segment information presented above represents the
historical operating results of LCR on a 100% basis. See Table 6
for additional segment information.
(B) Includes an $8 million charge for the first quarter and first six
months of 2006 representing reimbursement to Lyondell of legal fees
and expenses paid by Lyondell on behalf of LCR related to the
settlement.
(C) See Table 9 for a reconciliation of segment EBITDA to net income of
LCR.
2Q06 v. 1Q06 - Margin and volume improvements were offset by a $35 million negative impact of scheduled catalyst changes and a $20 million charge related to property taxes and a mid-year change in Texas tax laws. The total crude processing rate averaged 271,000 barrels per day, a 10,000 barrel-per-day increase versus first quarter 2006. Results improved by approximately $15 million due to the increased rates. Venezuelan contract crude volumes averaged 227,000 barrels per day.
2Q06 v. 2Q05 - Results in 2006 were higher due to a combination of volume and margin improvements. Total crude processing rates increased by 79,000 barrels per day versus the second quarter of 2005, when rates were reduced due to a combination of planned maintenance and unplanned downtime. The second quarter 2005 events impacted results by an estimated $80 million while, as previously mentioned, the impact of the 2006 catalyst changes was approximately $35 million. Operating and administrative costs increased by approximately $25 million, including the previously mentioned tax increases.
Cash Distributions and Debt Reduction
LCR to Lyondell Chemical Company - During the second quarter 2006, LCR made a net distribution of $33 million to Lyondell Chemical Company.
Equistar to Lyondell Chemical Company and Millennium - During the second quarter 2006, Lyondell Chemical Company received $71 million of distributions from Equistar. Millennium received $29 million from Equistar during the second quarter 2006.
Millennium to Lyondell Chemical Company - There were no dividends paid by Millennium to Lyondell Chemical Company during the second quarter 2006.
Debt Reduction - No additional voluntary debt reductions were made during the second quarter.
Receivable Facility Program Utilization - As of June 30, 2006, Lyondell's receivable facility was utilized at $75 million and Equistar's receivable facility was utilized at $200 million.
CONFERENCE CALL
Lyondell will host a conference call today, July 27, 2006, at 11:30 a.m. Eastern Time (ET). Participating on the call will be: Dan F. Smith, President and CEO; Morris Gelb, Executive Vice President and COO; T. Kevin DeNicola, Senior Vice President and CFO; and Doug Pike, Vice President of Investor Relations. The dial-in numbers are 888-391-2385 (U.S. - toll free) and 517- 645-6239 (international). The passcode for each is Lyondell. The call will be broadcast live on the Investor Relations page of the company's web site, http://www.lyondell.com/earnings .
A replay of the call will be available from 1:30 p.m. ET July 27 to 6 p.m. ET on August 3. The dial-in numbers are 866-402-3767 (U.S.) and 203-369-0554 (international). The passcode for each is 5549. Web replay will be available at 2:30 p.m. ET July 27, 2006, on the Investor Relations page of the company's web site, http://www.lyondell.com/earnings .
Reconciliations of non-GAAP financial measures to GAAP financial measures, together with any other applicable disclosures, including this earnings release, will be available at 11:30 a.m. ET July 27 at http://www.lyondell.com/earnings .
ABOUT LYONDELL
Lyondell Chemical Company, headquartered in Houston, Texas, is North America's third-largest independent, publicly traded chemical company. Lyondell is a major global manufacturer of basic chemicals and derivatives including ethylene, propylene, titanium dioxide, styrene, polyethylene, propylene oxide and acetyls. It also is a significant producer of gasoline- blending components. The company has a 58.75 percent interest in Lyondell- Citgo Refining LP, a refiner of heavy, high-sulfur crude oil. Millennium Chemicals Inc. and Equistar Chemicals, LP are wholly owned subsidiaries of Lyondell. Lyondell is a global company operating on five continents and employs approximately 10,000 people worldwide.
FORWARD-LOOKING STATEMENTS
The statements in this release and the related teleconference relating to matters that are not historical facts are forward-looking statements. These forward-looking statements are based upon the current beliefs and expectations of management, and are subject to significant risks and uncertainties. Actual results could differ materially based on factors including, but not limited to, availability, cost and price volatility of raw materials and utilities; supply/demand balances; industry production capacities and operating rates; uncertainties associated with the U.S. and worldwide economies; legal, tax and environmental proceedings; cyclical nature of the chemical and refining industries; operating interruptions; current and potential governmental regulatory actions; terrorist acts; international political unrest; competitive products and pricing; risks of doing business outside of the U.S.; access to capital markets; technological developments; Lyondell's ability to implement its business strategies; and other risk factors. Additional factors that could cause results to differ materially from those described in the forward-looking statements can be found in the Lyondell, Equistar and Millennium Annual Reports on Form 10-K for the year ended December 31, 2005, Quarterly Reports on Form 10-Q for the quarter ended March 31, 2006, and Quarterly Reports on Form 10-Q for the quarter ended June 30, 2006, which will be filed with the SEC in August 2006.
Table 6 - Selected Unaudited Segment Financial Information (A)
For the three For the six
months ended months ended
June 30, March 31 June 30,
(Millions of dollars) 2006 2005 2006 2006 2005
Sales and other operating
revenues: (B)
Ethylene, Co-Products &
Derivatives $3,401 $2,849 $3,152 $6,553 $5,823
PO & Related Products 1,763 1,557 1,644 3,407 3,080
Inorganic Chemicals 359 342 342 701 660
Refining 2,411 1,563 2,094 4,505 3,099
Operating income:
Ethylene, Co-Products &
Derivatives $181 $200 $299 $480 $592
PO & Related Products 108 127 117 225 216
Inorganic Chemicals 5 16 20 25 37
Refining (C) 163 37 162 325 155
Depreciation and amortization:
Ethylene, Co-Products &
Derivatives $96 $96 $98 $194 $191
PO & Related Products 59 60 56 115 118
Inorganic Chemicals 25 26 24 49 50
Refining 31 28 31 62 56
EBITDA: (D)
Ethylene, Co-Products &
Derivatives $279 $294 $397 $676 $780
PO & Related Products 170 186 175 345 332
Inorganic Chemicals 33 52 44 77 99
Refining (C) 194 65 193 387 211
Capital expenditures:
Ethylene, Co-Products &
Derivatives $43 $32 $23 $66 $69
PO & Related Products 18 11 15 33 22
Inorganic Chemicals 13 14 10 23 19
Refining 49 49 60 109 83
(A) See Table 8 for a reconciliation of segment information for the
three months and six months ended June 30, 2006 and 2005 and for the
three months ended March 31, 2006 to consolidated Lyondell financial
information. The Refining information presented above represents
operating results of LCR on a 100% basis. See Tables 20 through 22
for additional LCR financial information.
(B) Sales include sales to affiliates and intersegment sales.
(C) Includes an $8 million charge for the three months ended March 31,
2006 and six months ended June 30, 2006 representing reimbursement
to Lyondell of legal fees and expenses paid by Lyondell on behalf of
LCR related to the settlement.
(D) See Table 9 for reconciliation of segment EBITDA to net income.
Table 7 - Selected Segment Sales Volumes (A) (B)
For the three For the six
months ended months ended
June 30, March 31, June 30,
2006 2005 2006 2006 2005
Ethylene, Co-Products and
Derivatives (in millions)
Ethylene and derivatives(pounds) 2,930 2,845 2,871 5,801 5,753
Polyethylene included above
(pounds) 1,489 1,341 1,333 2,822 2,678
Co-products, nonaromatic (pounds) 2,154 1,862 1,966 4,120 3,896
Aromatics (gallons) 88 107 89 177 209
PO and Related Products (in millions)
PO and derivatives (pounds) 763 731 834 1,597 1,615
Co-products:
Styrene monomer (pounds) 1,031 1,045 982 2,013 2,027
MTBE and other TBA
derivatives (gallons) 290 297 297 587 580
Inorganic Chemicals (thousand
metric tons)
TiO2 158 154 151 309 296
Refined products (thousand
barrels per day)
Gasoline 116 110 113 114 113
Diesel and heating oil 82 85 105 94 86
Jet fuel 11 8 10 10 14
Aromatics 7 10 8 7 9
Other refined products 118 70 114 117 80
Total refined products
volumes 334 283 350 342 302
Refinery Runs
Crude processing rates (thousand
barrels per day)
Crude Supply Agreement 227 165 221 224 192
Other crude oil 44 28 40 42 35
Total crude oil 271 193 261 266 227
(A) The Refining information presented above represents the historical
operating results of LCR on a 100% basis.
(B) Sales volumes include sales to affiliates and intersegment sales.
Table 8 - Reconciliation of Segment Information to Consolidated
Lyondell Financial Information
Sales and
other Operating Depreciation
operating income and Capital
(Millions of dollars) revenues (loss) amortization expenditures
For the three months
ended June 30, 2006:
Segment Data
Ethylene, Co-Products &
Derivatives $3,401 $181 $96 $43
PO & Related Products 1,763 108 59 18
Inorganic Chemicals 359 5 25 13
Other (A) (451) (1) 1 2
Total $5,072 $293 $181 $76
For the three months
ended June 30, 2005:
Segment Data
Ethylene, Co-Products &
Derivatives $2,849 $200 $96 $32
PO & Related Products 1,557 127 60 11
Inorganic Chemicals 342 16 26 14
Other (A) (372) (4) 3 ---
Total $4,376 $339 $185 $57
For the three months
ended March 31, 2006:
Segment Data
Ethylene, Co-Products &
Derivatives $3,152 $299 $98 $23
PO & Related Products 1,644 117 56 15
Inorganic Chemicals 342 20 24 10
Other (A) (381) (4) 3 ---
Total $4,757 $432 $181 $48
For the six months
ended June 30, 2006:
Segment Data
Ethylene, Co-Products &
Derivatives $6,553 $480 $194 $66
PO & Related Products 3,407 225 115 33
Inorganic Chemicals 701 25 49 23
Other (A) (832) (5) 4 2
Total $9,829 $725 $362 $124
For the six months ended
June 30, 2005:
Segment Data
Ethylene, Co-Products &
Derivatives $5,823 $592 $191 $69
PO & Related Products 3,080 216 118 22
Inorganic Chemicals 660 37 50 19
Other (A) (747) (5) 4 2
Total $8,816 $840 $363 $112
(A) Includes elimination of intersegment transactions and items not
allocated to segments.
Table 9 - Reconciliation of Segment EBITDA to Net Income
For the three For the six
months ended months ended
June 30, March 31, June 30,
(Millions of dollars) 2006 2005 2006 2006 2005
LYONDELL
Segment EBITDA:
Ethylene, Co-Products & Derivatives $279 $294 $397 $676 $780
PO & Related Products 170 186 175 345 332
Inorganic Chemicals 33 52 44 77 99
Other --- (2) 72 72 (1)
Add:
Income from equity investment
in LCR 86 19 91 177 86
Deduct:
Depreciation and amortization (181) (185) (181) (362) (363)
Interest expense, net (125) (155) (128) (253) (313)
Provision for income taxes (98) (71) (178) (276) (214)
Charges related to impairment
of assets (4) (3) (2) (6) (5)
Debt prepayment premiums and
charges --- (9) --- --- (21)
Lyondell net income $160 $126 $290 $450 $380
Refining EBITDA (A) $194 $65 $193 $387 $211
Deduct:
Depreciation and amortization (31) (28) (31) (62) (56)
Interest expense, net (12) (9) (11) (23) (17)
Income taxes (8) --- --- (8) ---
LCR net income $143 $28 $151 $294 $138
(A) The Refining information presented represents the historical
operating results of LCR on a 100% basis. See Table 20 for
additional LCR financial information.
Table 10 - Lyondell Unaudited Income Statement Information
For the three For the six
months ended months ended
June 30, March 31 June 30,
(Millions of dollars, except per
share data) 2006 2005 2006 2006 2005
Sales and other operating
revenues $5,072 $4,376 $4,757 $9,829 $8,816
Cost of sales 4,586 3,879 4,171 8,757 7,663
Selling, general and
administrative expenses 169 136 131 300 268
Research and development
expenses 24 22 23 47 45
Operating income 293 339 432 725 840
Income from equity investment in
LCR 86 19 91 177 86
Income (loss) from other equity
investments 3 (1) (1) 2 ---
Interest expense, net (125) (155) (128) (253) (313)
Other income (expense), net 1 (5) 74 75 (19)
Income before income taxes 258 197 468 726 594
Provision for income taxes 98 71 178 276 214
Net income $160 $126 $290 $450 $380
Basic earnings per share: $0.65 $0.51 $1.18 $1.82 $1.55
Diluted earnings per share: $0.62 $0.48 $1.12 $1.74 $1.46
Weighted average shares (in
millions):
Basic 247.4 245.9 246.9 247.1 245.2
Diluted 260.1 259.0 259.3 259.7 259.4
Table 11 - Lyondell Unaudited Cash Flow Information (A)
For the six months ended
June 30,
(Millions of dollars) 2006 2005
Net income $450 $380
Adjustments:
Depreciation and amortization 362 363
Equity investments -
Amounts included in net
income (179) (86)
Distributions of earnings 122 86
Deferred income taxes 102 161
Debt prepayment charges and
premiums --- 21
Changes in assets and liabilities:
Accounts receivable (234) (139)
Inventories (46) (177)
Accounts payable 109 128
Other, net (248) (91)
Cash provided by operating
activities 438 646
Expenditures for property, plant and
equipment (124) (112)
Distributions from affiliates in
excess of earnings --- 51
Contributions and advances to
affiliates (57) (51)
Other 6 3
Cash used in investing
activities (175) (109)
Repayment of long-term debt (A) (449) (547)
Issuance of long-term debt 13 ---
Dividends paid (111) (111)
Proceeds from stock option exercises 9 43
Other (2) (4)
Cash used in financing
activities (540) (619)
Effect of exchange rate changes on
cash 4 (9)
Decrease in cash and cash equivalents $(273) $(91)
(A) Includes prepayment premiums in the six months ended June 30, 2006
and 2005 of $9 million and $17 million, respectively.
Table 12 - Lyondell Unaudited Balance Sheet Information
June 30, December 31,
(Millions of dollars) 2006 2005
Cash and cash equivalents $320 $593
Accounts receivable, net 1,971 1,677
Inventories 1,739 1,657
Prepaid expenses and other current
assets 138 176
Deferred tax assets 257 198
Total current assets 4,425 4,301
Property, plant and equipment, net 6,487 6,530
Investments and long-term
receivables:
Investment in PO joint ventures 785 776
Investment in and receivable
from LCR 289 186
Other investments and long-term
receivables 117 114
Goodwill, net 2,135 2,245
Other assets, net 790 828
Total assets $15,028 $14,980
Current maturities of long-term debt $870 $319
Accounts payable 1,607 1,453
Accrued liabilities 700 797
Total current liabilities 3,177 2,569
Long-term debt 4,966 5,974
Other liabilities 1,666 1,786
Deferred income taxes 1,584 1,463
Minority interest 167 180
Stockholders' equity (247,856,254
and 247,050,234 shares outstanding
at June 30, 2006 and December 31,
2005, respectively) 3,468 3,008
Total liabilities and
stockholders' equity $15,028 $14,980
Table 13 - Lyondell Selected Equity Investment Activity
For the six For the twelve
months ended months ended
June 30, December 31,
(Millions of dollars) 2006 2005
Investment in LCR, beginning of
period $(90) $(37)
Lyondell's share of LCR net income 177 123
Cash distributions from LCR (122) (303)
Cash contributions to LCR 42 128
Other --- (1)
Investment in LCR, end of
period $7 $(90)
June 30, Dec. 31,
Investment in and receivable from LCR 2006 2005
Investment in LCR $7 $(90)
LCR note receivable 229 229
LCR interest receivable 53 47
Total $289 $186
Tables 14 through 22 represent additional financial information
on a 100% basis for Equistar, Millennium and LCR.
Table 14 - Equistar Unaudited Income Statement Information (A)
For the three For the six
months ended months ended
June 30, March 31 June 30,
(Millions of dollars) 2006 2005 2006 2006 2005
Sales and other operating
revenues (B) $3,278 $2,700 $3,036 $6,314 $5,561
Cost of sales 3,028 2,447 2,670 5,698 4,864
Selling, general and
administrative expenses 61 48 48 109 98
Research and development
expenses 9 9 8 17 17
Operating income 180 196 310 490 582
Interest expense, net (52) (54) (53) (105) (108)
Other expense --- --- (1) (1) ---
Net income (C) $128 $142 $256 $384 $474
(A) Represents information for Equistar on a stand-alone basis and does
not reflect purchase accounting adjustments.
(B) Sales and other operating revenues include sales to affiliates.
(C) As a partnership, Equistar is not subject to federal income taxes.
Table 15 - Equistar Unaudited Balance Sheet Information (A)
June 30, Dec. 31,
(Millions of dollars) 2006 2005
Cash and cash equivalents $132 $215
Accounts receivable, net 1,158 924
Inventories 713 657
Prepaid expenses and other
current assets 45 53
Total current assets 2,048 1,849
Property, plant and equipment, net 2,999 3,063
Investments 61 58
Other assets, net 316 350
Total assets $5,424 $5,320
Current maturities of long-term debt $--- $150
Accounts payable 940 735
Accrued liabilities 245 275
Total current liabilities 1,185 1,160
Long-term debt 2,160 2,161
Other liabilities and deferred
revenues 412 416
Partners' capital 1,667 1,583
Total liabilities and
partners' capital $5,424 $5,320
(A) Represents information for Equistar on a stand-alone basis and does
not reflect purchase accounting adjustments.
Table 16 - Equistar Unaudited Cash Flow Information (A)
For the six months ended
June 30,
(Millions of dollars) 2006 2005
Net income $384 $474
Adjustments:
Depreciation and amortization 164 159
Changes in assets and liabilities:
Accounts receivable (232) (68)
Inventories (56) (67)
Accounts payable 204 112
Other, net (37) (39)
Cash provided by
operating activities 427 571
Expenditures for property, plant
and equipment (63) (69)
Proceeds from sale of asset 2 3
Cash used in investing
activities (61) (66)
Repayment of long-term debt (150) (1)
Distributions to owners (300) (475)
Other 1 ---
Cash used in financing
activities (449) (476)
Increase (decrease) in cash and
cash equivalents $(83) $29
(A) Represents information for Equistar on a stand-alone basis and does
not reflect purchase accounting adjustments.
Table 17 - Millennium Unaudited Income Statement Information (A)
For the three For the six
months ended months ended
June 30, March 31, June 30,
(Millions of dollars) 2006 2005 2006 2006 2005
Sales and other operating
revenues (B) $509 $515 $484 $993 $968
Cost of sales 445 424 438 883 789
Selling, general and
administrative expenses 44 45 36 80 88
Research and development
expenses 7 6 6 13 12
Asset impairments 4 3 2 6 5
Operating income 9 37 2 11 74
Interest income (expense),
net (C) 28 (25) (32) (4) (49)
Other income (expense), net 1 5 (9) (8) (4)
Income (loss) before equity
investment, minority interest
and income taxes 38 17 (39) (1) 21
Income from equity investment in
Equistar 38 42 75 113 140
Income before income taxes and
minority interest 76 59 36 112 161
Provision for (benefit from)
income taxes (39) 20 2 (37) 57
Income before minority
interest 115 39 34 149 104
Minority interest (1) (1) (1) (2) (2)
Net income $114 $38 $33 $147 $102
(A) Represents information for Millennium on a stand-alone basis and does
not reflect purchase accounting adjustments.
(B) Sales and other operating revenues include sales to affiliates.
(C) Interest income (expense), net, for the three and six months ended
June 30, 2006 included net credits of $49 million and $31 million,
respectively, and a charge of $18 million in the three months ended
March 31, 2006 related to prior years' income tax issues.
Table 18 - Millennium Unaudited Balance Sheet Information (A)
June 30, Dec. 31,
(Millions of dollars) 2006 2005
Cash and cash equivalents $100 $279
Accounts receivable, net 389 361
Inventories 412 429
Prepaid expenses and other current
assets 56 64
Deferred tax assets 92 15
Total current assets 1,049 1,148
Property, plant and equipment, net 651 647
Investments in Equistar 488 464
Goodwill 104 104
Other assets, net 106 110
Total assets $2,398 $2,473
Current maturities of long-term debt $21 $169
Accounts payable 350 367
Accrued liabilities 149 156
Total current liabilities 520 692
Long-term debt 883 966
Other liabilities 620 644
Deferred income taxes 196 167
Minority interest 46 42
Stockholder's equity (deficit)
(100,000,000 shares
authorized; 66,135,186 shares
outstanding at June 30, 2006 and
December 31, 2005) 133 (38)
Total liabilities and
stockholder's equity $2,398 $2,473
(A) Represents information for Millennium on a stand-alone basis and does
not reflect purchase accounting adjustments.
Table 19 - Millennium Unaudited Cash Flow Information (A)
For the six months ended
June 30,
(Millions of dollars) 2006 2005
Net income $147 $102
Adjustments:
Asset impairments 6 5
Depreciation and amortization 53 53
Debt prepayment charges and
premiums 7 1
Deferred income taxes (43) 7
Equity investment in Equistar -
Amounts included in net
income (113) (140)
Distributions of
earnings 89 140
Changes in assets and liabilities:
Accounts receivable (21) (30)
Inventories 27 (75)
Accounts payable (20) 25
Other, net (49) (8)
Cash provided by
operating activities 83 80
Expenditures for property, plant
and equipment (28) (21)
Proceeds from sales of assets 1 ---
Cash used in investing
activities (27) (21)
Repayment of long-term debt (247) (29)
Issuance of long-term debt 13 3
Contribution from Lyondell --- 6
Other (3) (3)
Cash used in financing
activities (237) (23)
Effect of exchange rate changes on
cash 2 (5)
Increase (decrease) in cash and
cash equivalents $(179) $31
(A) Represents information for Millennium on a stand-alone basis and does
not reflect purchase accounting adjustments.
Table 20 - LCR Unaudited Income Statement Information
For the three For the six
months ended months ended
June 30, March 31 June 30,
(Millions of dollars) 2006 2005 2006 2006 2005
Sales and other operating
revenues (A) $2,411 $1,563 $2,094 $4,505 $3,099
Cost of sales 2,232 1,515 1,915 4,147 2,921
Selling, general and
administrative expenses 16 11 17 33 23
Operating income 163 37 162 325 155
Interest expense, net (12) (9) (11) (23) (17)
Income before income taxes 151 28 151 302 138
Provision for income taxes (B) 8 --- --- 8 ---
Net income $143 $28 $151 $294 $138
EBITDA (C) $194 $65 $193 $387 $211
(A) Sales and other operating revenues include sales to affiliates.
(B) Amounts reflected represent Texas state income tax. As a
partnership, LCR is not subject to federal income taxes.
(C) See Table 9 for reconciliation of LCR's net income to EBITDA.
Table 21 - LCR Unaudited Balance Sheet Information
June 30, Dec. 31,
(Millions of dollars) 2006 2005
Total current assets $576 $418
Property, plant and equipment, net 1,386 1,328
Other assets, net 95 86
Total assets $2,057 $1,832
Current maturities of long-term debt $441 $5
Other current liabilities 981 800
Long-term debt --- 439
Loans payable to partners 264 264
Other liabilities 125 113
Partners' capital 246 211
Total liabilities and partners'
capital $2,057 $1,832
Table 22 - LCR Unaudited Cash Flow Information
For the six months ended
June 30,
(Millions of dollars) 2006 2005
Cash flow from operations $337 $163
Capital expenditures 109 83
Depreciation and amortization 62 56
SOURCE: Lyondell Chemical Company; Equistar Chemicals, LP; Millennium
CONTACT: media, Susan Moore, +1-713-309-4645, or investors, Doug Pike,
+1-713-309-7141, both of Lyondell Chemical Company
Web site: http://www.lyondell.com/
http://www.lyondell.com/earnings
