Highlights
- Income from continuing operations of $6 million or 2 cents per share
- Quarterly results impacted by:
- Scheduled refinery maintenance
- Reduced ethylene segment margins
HOUSTON, April 26 /PRNewswire-FirstCall/ -- Lyondell Chemical Company (NYSE: LYO) today announced income from continuing operations for the first quarter 2007 of $6 million, or 2 cents per share on a fully diluted basis. Comparisons with the prior quarter and first quarter 2006 are available in the following table.
Table 1 - Lyondell Earnings Summary [a]
Millions of dollars, except
per share amounts 1Q 2007 1Q 2006 4Q 2006
Sales and other operating revenues $5,789 $4,418 $5,934
Income from continuing operations 6 286 286
Net income (loss) [b] 19 290 (321)
Income from continuing operations:
Basic earnings per share 0.03 1.16 1.15
Diluted earnings per share 0.02 1.10 1.10
Net income (loss): [b]
Basic earnings per share 0.08 1.18 (1.29)
Diluted earnings per share 0.07 1.12 (1.23)
Basic weighted average shares
outstanding (millions) 251.1 246.9 248.4
Diluted weighted average shares
outstanding (millions) [c] 263.7 259.3 261.6
[a] Results include 100% of the operations of Houston Refining LP
("Houston Refining") prospectively from August 16, 2006. Prior to
August 16, 2006, Lyondell's 58.75% interest in Houston Refining was
accounted for as an equity investment.
[b] Includes fourth quarter 2006 after-tax charges of $549 million, or
$2.10 per share, for impairment of goodwill and certain software
costs related to the inorganic chemicals business, which is being
reported as a discontinued operation.
[c] Includes the dilutive effect of the convertible debentures, stock
options and warrants.
First-quarter 2007 results from continuing operations declined versus the fourth quarter 2006 due to the impact of scheduled maintenance on the Houston refinery's fluid catalytic cracking unit (FCCU), lower average prices and margins in the ethylene segment and a charge related to the 2005 Lake Charles TDI plant closure. Aside from this charge, propylene oxide segment results improved versus the fourth quarter 2006. The inorganic chemicals business results also improved versus the fourth quarter 2006.
Additionally, results reflect the following:
Table 2 - Charges (Benefits) Included in Lyondell's Results from Continuing Operations
Millions of dollars 1Q 2007 1Q 2006 4Q 2006
Pretax charges (benefits):
Charges related to 2005 TDI facility
shutdown [a] $62 $--- $---
Debt retirement charges --- --- 19
Mutual insurance consortia losses, net --- 5 (4)
Houston Refining LP - related
settlement [b] --- (70) ---
After-tax effect of net charges (credits) 40 (42) (16)
Effect on diluted earnings per share 0.15 (0.16) (0.06)
[a] Represents a pretax charge related to commercial arrangements
associated with the 2005 shutdown of the Lake Charles toluene
diisocyanate ("TDI") facility.
[b] Represents the net effect of the resolution of various matters among
Houston Refining, its owners and their affiliates.
"As expected, refining results were negatively impacted by scheduled maintenance, but this work positions the refinery well for the coming years and the developing strong summer season," said Dan F. Smith, president and CEO of Lyondell Chemical Company. "Within our ethylene segment, the early months of the first quarter were quite challenging as product prices were slow to rebound from a fourth-quarter decline. However, sales volumes were quite strong, and positive pricing momentum returned in March and has continued in April. Hence, I don't see the first quarter's results as an indicator of the balance of the year. Rather, it is merely an example of the volatility created by energy prices."
OUTLOOK
The second quarter has shown increased strength, particularly in gasoline- related products, and chemical product prices also are displaying positive momentum. The refining segment is benefiting from seasonally strong margins; however, as previously reported, second-quarter results will be modestly impacted by the 10-day outage of the FCCU. The ethylene segment is benefiting from good demand and positive price momentum, although high and volatile crude oil prices continue to present a challenge. The propylene oxide segment has realized continued steady performance of the chemical products, while fuel products are responding to strong gasoline markets.
"Our outlook for our chemical and fuel businesses continues to be very positive. The prospects for the summer months are shaping up well, and our businesses are well positioned as we enter what appears to be another strong season in the fuels markets. As a result, our portfolio should demonstrate its strong earnings- and cash-generating capabilities," said Smith. "Additionally, the pending sale of the inorganic chemicals business will significantly accelerate our debt reduction and balance sheet improvement."
LYONDELL BUSINESS RESULTS DISCUSSION BY REPORTING SEGMENT
Lyondell operates in three segments: 1) Ethylene, co-products and derivatives; 2) Propylene oxide (PO) and related products; and 3) Refining. Inorganic chemicals is presented as a discontinued operation due to the pending sale of this business.
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 3 - Ethylene, Co-Products & Derivatives Financial Overview [a] Millions of dollars 1Q 2007 1Q 2006 4Q 2006 Sales and other operating revenues $2,991 $3,152 $3,091 Operating income 77 299 214 EBITDA [b] 177 397 313 [a] See Table 7 for additional financial information. [b] See Table 10 for a reconciliation of segment EBITDA to income from continuing operations.
1Q07 v. 4Q06 - Ethylene and ethylene derivative product sales volumes increased by approximately 150 million pounds (approximately 5 percent) versus the fourth quarter 2006. Compared with the fourth quarter, our quarterly average prices for ethylene and polyethylene decreased by approximately 2 cents per pound, and the ethylene glycol price was unchanged. The company's average cost-of-ethylene-production metric (COE) increased by approximately 3.5 cents per pound versus the fourth quarter primarily due to increases from crude-oil based raw materials. Acetyls results were relatively unchanged.
1Q07 v. 1Q06 - Ethylene and ethylene derivative product sales volumes were up approximately 85 million pounds versus the first quarter 2006. The quarterly average prices for ethylene and polyethylene decreased by approximately 8.5 cents and 13 cents per pound, respectively, and the ethylene glycol price was unchanged. The company's average COE metric was relatively unchanged. Acetyls results improved by approximately $25 million primarily as a result of increased margins as raw material costs declined while methanol sales prices increased.
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, fuel products (methyl tertiary butyl ether [MTBE] and ethyl tertiary butyl ether [ETBE]), isobutylene and toluene diisocyanate (TDI).
Table 4 - PO & Related Products Financial Overview [a] Millions of dollars 1Q 2007 1Q 2006 4Q 2006 Sales and other operating revenues $1,758 $1,644 $1,712 Operating income [b] 27 117 45 EBITDA [b] [c] 87 175 105 [a] See Table 7 for additional financial information. [b] Operating income and EBITDA for the first quarter 2007 include a pretax charge of $62 million related to commercial arrangements associated with the 2005 shutdown of the Lake Charles TDI facility. [c] See Table 10 for a reconciliation of segment EBITDA to income from continuing operations.
1Q07 v. 4Q06 - Segment EBITDA decreased by $18 million versus the fourth quarter primarily due to the $62 million TDI charge. PO and PO derivative results increased by approximately $40 million due to increased margins and sales volumes. Fuel-product results increased moderately primarily due to increased sales volumes and the absence of fourth-quarter maintenance. Styrene results decreased moderately as a result of lower margins. TDI results declined by approximately $65 million primarily due to the $62 million charge.
1Q07 v. 1Q06 - Segment EBITDA decreased by $88 million versus the first quarter 2006 primarily due to the $62 million TDI charge. Fuel product results declined by approximately $20 million primarily due to lower margins partially related to export costs. Styrene results declined by approximately $20 million due to lower margins. PO and PO derivative results were comparable. TDI results declined by approximately $55 million primarily as a result of the $62 million charge, which was partially offset by increased prices.
Refining Segment - Lyondell owned a 58.75 percent interest in Houston Refining LP (formerly known as Lyondell-Citgo Refining LP) prior to Aug. 16, 2006, at which time Lyondell purchased the remaining 41.25 percent interest from CITGO Petroleum Corporation. Prior to Aug. 16, Lyondell's interest was accounted for by the equity method. As a result of the acquisition, Houston Refining's operations are consolidated from Aug. 16. The following review is on a 100-percent basis.
Table 5 - Refining Financial Overview - 100% Basis [a] Millions of dollars 1Q 2007 1Q 2006 4Q 2006 Sales and other operating revenues $1,884 $2,094 $2,065 Operating income 78 162 302 EBITDA [b] 133 193 357 [a] The Refining segment information presented above represents the historical operating results of Houston Refining on a 100% basis, and reflects purchase accounting adjustments from August 16, 2006. See Table 7 for additional financial information. [b] See Table 10 for a reconciliation of segment EBITDA to income from continuing operations and, as appropriate, to net income of Houston Refining.
1Q07 v. 4Q06 - Results were lower compared to the prior quarter, which included approximately $55 million of favorable effects. Those fourth-quarter effects included a $14 million insurance settlement and a $19 million benefit from a LIFO inventory decrement with the remainder due to other product inventory changes. Operationally, refining results in the first quarter 2007 were negatively impacted by approximately $140 million related to the planned maintenance turnaround and upgrade of the FCCU and related units. Of this amount, approximately $80 million is related to a 54,000-barrel-per-day reduction in average crude processing rates, $45 million is related to the inability to realize full conversion margins during the maintenance, and $15 million is related to increased operating costs. Lower aromatics results also impacted the quarter.
1Q07 v. 1Q06 - Results declined primarily due to the impact of the scheduled maintenance during the first quarter 2007. The maintenance impact was partially offset by a $3-per-barrel increase in the conversion margin. As a reminder, first-quarter 2006 results are based on the previous crude supply agreement rather than the current contract.
Discontinued Operations - Inorganic Chemicals The principal product of inorganic chemicals is titanium dioxide (TiO2). In view of the pending sale of the inorganic chemicals business, substantially all of the inorganic chemicals segment is being reported as a discontinued operation including comparative periods.
Table 6 - Discontinued Operations - Inorganic Chemicals Financial Overview [a]
Millions of dollars 1Q 2007 1Q 2006 4Q 2006 Sales and other operating revenues $333 $339 $311 Income (loss) from discontinued operations, net of tax [b] 13 4 (607) EBITDA [b] [c] 21 44 (10) [a] See Table 7 for additional financial information. [b] Includes fourth quarter 2006 after-tax charges of $549 million for impairment of goodwill and certain software costs. [c] See Table 10 for a reconciliation of EBITDA to income (loss) from discontinued operations, net of tax.
1Q07 v. 4Q06 - Sales volumes increased by approximately 10,000 metric tons versus the fourth quarter primarily due to improved operations. Average sales prices declined by approximately $16 per ton primarily due to lower North American prices. Costs declined by approximately $25 million due to improved operating reliability.
1Q07 v. 1Q06 - TiO2 sales volumes declined by approximately 5,000 metric tons versus the first quarter of 2006; however, this was offset by increased sales of titanium tetrachloride and ultrafine TiO2. TiO2 prices declined by $19 per ton. Costs increased by approximately $15 million, including some lingering effects of production issues from the fourth quarter 2006.
Cash Distributions and Debt Reduction
Equistar Chemicals, LP to Lyondell Chemical Company and Millennium Chemicals Inc. - During the quarter, Equistar distributed $70.5 million to Lyondell and $29.5 million to Millennium.
Millennium to Lyondell Chemical Company - There were no dividends paid by Millennium to Lyondell Chemical Company during the first quarter.
Debt Reduction - During the first quarter, there was no debt repayment except the scheduled amortization of term loans.
Receivable Facilities Utilization - As of March 31, 2007, Lyondell's receivable facility was utilized by $125 million and Equistar's receivable facility was unutilized.
CONFERENCE CALL
Lyondell will host a conference call today, Apr. 26, 2007, 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 pass code 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 Apr. 26 to 6 p.m. ET on May 4. The dial-in numbers are 800-216-6079 (U.S.) and 402-220-3893 (international). The pass code for each is 5549. Web replay will be available at 2:30 p.m. ET Apr. 26 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 Apr. 26 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 leading global manufacturer of chemicals and plastics, a refiner of heavy, high-sulfur crude oil and a significant producer of fuel products. Key products include ethylene, polyethylene, styrene, propylene, propylene oxide, titanium dioxide, gasoline, ultra low-sulfur diesel, MTBE and ETBE. Lyondell operates on five continents and employs nearly 11,000 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; Lyondell's ability to implement its business strategies, including Lyondell's ability to successfully complete the proposed sale of the inorganic chemicals business in the time period anticipated, and for the purchase price and on the other terms set forth in the transaction agreement, and the receipt of regulatory approvals and clearances; risks of doing business outside of the U.S.; access to capital markets; technological developments; 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, 2006 and Quarterly Reports on Form 10-Q for the quarter ended March 31, 2007, which will be filed with the SEC in May 2007.
Table 7 - Selected Unaudited Financial Information For the three months ended March 31, December 31, (Millions of dollars) 2007 2006 2006 Sales and other operating revenues: [a] [b] Ethylene, Co-Products & Derivatives $2,991 $3,152 $3,091 PO & Related Products 1,758 1,644 1,712 Refining 1,884 2,094 2,065 Operating income: [a] Ethylene, Co-Products & Derivatives $77 $299 $214 PO & Related Products [c] 27 117 45 Refining 78 162 302 Depreciation and amortization: [a] Ethylene, Co-Products & Derivatives $98 $98 $98 PO & Related Products 59 56 62 Refining 55 31 55 EBITDA: [a] [d] Ethylene, Co-Products & Derivatives $177 $397 $313 PO & Related Products [c] 87 175 105 Refining 133 193 357 Capital expenditures: [a] Ethylene, Co-Products & Derivatives $41 $23 $65 PO & Related Products 9 15 14 Refining 90 60 69 Discontinued Operations - Inorganic Chemicals: [e] Sales and other operating revenues 333 339 311 Income (loss) from discontinued operations, net of tax 13 4 (607) EBITDA 21 44 (10) Capital expenditures 8 10 12 [a] See Table 9 for a reconciliation of segment information for the three months ended March 31, 2007 and 2006 and December 31, 2006 to consolidated Lyondell financial information. The Refining information presented above represents operating results of Houston Refining on a 100% basis. Lyondell acquired the remaining 41.25% of Houston Refining on August 16, 2006. From August 16, 2006, depreciation and amortization, as well as operating income, reflect the effects of that acquisition. See Table 14 for additional Houston Refining financial information. [b] Sales include sales to affiliates and intersegment sales. [c] Includes a first quarter 2007 pretax charge of $62 million related to commercial arrangements associated with the 2005 shutdown of the Lake Charles TDI facility. [d] See Table 10 for reconciliation of segment EBITDA to income from continuing operations of Lyondell. [e] In the first quarter 2007, Lyondell signed an agreement for a pending sale of its worldwide inorganic chemicals business. As a result, the inorganic chemicals business is being reported as a discontinued operation, including comparative periods presented. See Table 10 for additional financial information for discontinued operations. Table 8 - Selected Operating Information [a] For the three months ended March 31, December 31, 2007 2006 2006 Selected Segment Sales Volumes: Ethylene, Co-Products and Derivatives (in millions) Ethylene and derivatives (pounds) 2,958 2,871 2,810 Polyethylene included above (pounds) 1,479 1,333 1,371 Co-products, nonaromatic (pounds) 2,025 1,966 1,956 Aromatics (gallons) 95 89 92 PO and Related Products (in millions) PO and derivatives (pounds) 868 834 783 Co-products: Styrene monomer (pounds) 987 982 1,027 MTBE and other TBA derivatives (gallons) 300 297 280 Refined products (thousand barrels per day) [b] Gasoline 79 113 110 Diesel and heating oil 71 105 90 Jet fuel 19 10 21 Aromatics 6 8 8 Other refined products 145 114 124 Total refined products volumes 320 350 353 Discontinued Operations - Inorganic Chemicals (thousand metric tons) [c] TiO2 146 151 136 Refining Metrics: [b] Crude processing rates (thousand barrels per day) 221 261 275 Throughput margin ($ per barrel) [d] 15.43 20.16 Market margins ($ per barrel): [e] WTI 2-1-1 9.28 7.52 WTI-Maya 12.72 13.02 Total 22.00 20.54 [a] Sales volumes include sales to affiliates and intersegment sales. [b] The Refining information represents the operating results of Houston Refining on a 100% basis. [c] In the first quarter 2007, Lyondell signed an agreement for a pending sale of its worldwide inorganic chemicals business. As a result, the inorganic chemicals business is being reported as a discontinued operation, including comparative periods presented. [d] As a result of Lyondell's acquisition of 100% of Houston Refining, beginning with the fourth quarter 2006, Lyondell is providing throughput margin per barrel information for the refining segment. Throughput margin per barrel is a statistic that is commonly reported by independent refiners, and management believes that it provides useful information to help investors, financial analysts and the public analyze and evaluate refining segment performance compared to other refiners and to industry benchmarks. Lyondell's presentation of throughput margins for the refining segment should not be considered as an alternative to GAAP measures such as refining segment revenues and operating income. See Table 14 for calculation of throughput margin and reconciliation to Refining segment operating income. The throughput margin is divided by the number of barrels of crude oil processed in the quarter to derive the margin per barrel. [e] Market margins are reported by Platts, a division of The McGraw-Hill Companies.
Table 9 - 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 March 31, 2007: Segment Data Ethylene, Co-Products & Derivatives $2,991 $77 $98 $41 PO & Related Products [a] 1,758 27 59 9 Refining [b] 1,884 78 55 90 Other [c] (844) (3) 1 1 Continuing Operations $5,789 $179 $213 $141 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 Other [c] (378) (4) 2 --- Continuing Operations $4,418 $412 $156 $38 For the three months ended December 31, 2006: Segment Data Ethylene, Co-Products & Derivatives $3,091 $214 $98 $65 PO & Related Products 1,712 45 62 14 Refining [b] 2,065 302 55 69 Other [c] (934) (12) 2 1 Continuing Operations $5,934 $549 $217 $149 [a] Includes a first quarter 2007 pretax charge of $62 million related to commercial arrangements associated with the 2005 shutdown of the Lake Charles TDI facility. [b] The Refining segment information reflects the consolidation of Houston Refining prospectively from August 16, 2006. For periods prior to August 16, 2006, Houston Refining was accounted for as an equity investment. [c] Includes items not allocated to segments or discontinued operations and elimination of intersegment transactions between segments and discontinued operations. Table 10 - Reconciliations Segment EBITDA to Income from Continuing Operations For the three months ended March 31, December 31, (Millions of dollars) 2007 2006 2006 LYONDELL Segment EBITDA: Ethylene, Co-Products & Derivatives $177 $397 $313 PO & Related Products 87 175 105 Refining [a] 133 --- 357 Other (1) 72 (12) Add: Income from equity investment in Houston Refining [a] --- 91 --- Deduct: Depreciation and amortization (213) (156) (217) Interest expense, net (174) (125) (177) Provision for income taxes (3) (168) (64) Debt prepayment premiums and charges --- --- (19) Lyondell income from continuing operations $6 $286 $286 Refining EBITDA [b] $193 Deduct: Depreciation and amortization (31) Interest expense, net (11) Houston Refining net income $151 Discontinued Operations - Inorganic Chemicals [c] Unaudited Income Statement Information For the three months ended March 31, December 31, 2007 2006 2006 Sales and other operating revenue $333 $339 $311 Cost of sales 282 288 306 Asset impairments 1 2 555 Selling, general and administrative expenses 24 24 31 Research and development expenses 6 5 6 Interest expense, net (1) (3) (2) Other income (expense), net --- (3) 1 Provision for income taxes 6 10 19 Income (loss) from discontinued operations, net of tax $13 $4 $(607) Inorganic Chemicals EBITDA [c] $21 $44 $(10) Deduct: Depreciation and amortization --- (25) (21) Interest expense, net (1) (3) (2) Income taxes (6) (10) (19) Charges related to impairment of assets (1) (2) (555) Income (loss) from discontinued operations, net of tax $13 $4 $(607) [a] The Refining segment information reflects the consolidation of Houston Refining prospectively from August 16, 2006. For periods prior to August 16, 2006, Houston Refining was accounted for as an equity investment. [b] The Refining information represents operating results of Houston Refining on a 100% basis. [c] Lyondell signed an agreement in the first quarter 2007 for a pending sale of its worldwide inorganic chemicals business. As a result, the inorganic chemicals business is being reported as a discontinued operation, including comparative periods presented. Table 11 - Lyondell Unaudited Income Statement Information [a] For the three months ended (Millions of dollars, March 31, December 31, except per share data) 2007 2006 2006 Sales and other operating revenues $5,789 $4,418 $5,934 Cost of sales [b] 5,442 3,881 5,234 Selling, general and administrative expenses 150 107 133 Research and development expenses 18 18 18 Operating income 179 412 549 Income from equity investment in Houston Refining --- 91 --- Income (loss) from other equity investments 2 (1) 1 Interest expense, net (174) (125) (177) Other income (expense), net 2 77 (23) Income before income taxes 9 454 350 Provision for income taxes 3 168 64 Income from continuing operations 6 286 286 Income (loss) from discontinued operations, net of tax 13 4 (607) Net income (loss) $19 $290 $(321) Income from continuing operations: Basic $0.03 $1.16 $1.15 Diluted $0.02 $1.10 $1.10 Net income (loss): Basic $0.08 $1.18 $(1.29) Diluted $0.07 $1.12 $(1.23) Weighted average shares (in millions): Basic 251.1 246.9 248.4 Diluted 263.7 259.3 261.6 [a] Lyondell signed an agreement in the first quarter 2007 for a pending sale of its worldwide inorganic chemicals business. As a result, the inorganic chemicals business is being reported as a discontinued operation, including comparative periods presented. Results of operations reflect the consolidation of Houston Refining prospectively from August 16, 2006. For periods prior to August 16, 2006, Houston Refining was accounted for as an equity investment. [b] Includes a first quarter 2007 pretax charge of $62 million related to commercial arrangements associated with the 2005 shutdown of the Lake Charles TDI facility. Table 12 - Lyondell Unaudited Cash Flow Information [a] For the three months ended March 31, (Millions of dollars) 2007 2006 Net income $19 $290 Income from discontinued operations, net of tax (13) (4) Adjustments: Depreciation and amortization 213 156 Equity investments - Amounts included in net income (2) (90) Distributions of earnings --- 70 Deferred income taxes (75) 76 Changes in assets and liabilities: Accounts receivable (54) 59 Inventories (137) (179) Accounts payable 223 (24) Other, net (240) 143 Cash provided by (used in) operating activities - continuing operations (66) 497 Cash used in operating activities - discontinued operations (45) (221) Cash provided by (used in) operating activities (111) 276 Expenditures for property, plant and equipment (141) (38) Acquisition of Houston Refining (94) --- Contributions and advances to affiliates (12) (37) Cash used in investing activities - continuing operations (247) (75) Cash used in investing activities - discontinued operations (8) (10) Cash used in investing activities (255) (85) Repayment of long-term debt [b] (8) (443) Net borrowings on revolving credit facility 145 --- Dividends paid (57) (56) Proceeds from stock option exercises 48 2 Other 23 1 Cash provided by (used in) financing activities - continuing operations 151 (496) Cash provided by (used in) financing activities - discontinued operations 24 (2) Cash provided by (used in) financing activities 175 (498) Effect of exchange rate changes on cash 1 1 Decrease in cash and cash equivalents $(190) $(306) [a] Lyondell signed an agreement in the first quarter 2007 for a proposed sale of its worldwide inorganic chemicals business. As a result, the inorganic chemicals business is being reported as a discontinued operation, including comparative periods presented. Houston Refining became a wholly-owned subsidiary as of August 16, 2006. Prior to August 16, 2006, Lyondell's investment in Houston Refining was accounted for on an equity basis. [b] Includes prepayment premiums in the three months ended March 31, 2006 of $9 million. Table 13 - Lyondell Unaudited Balance Sheet Information [a] March 31, December 31, (Millions of dollars) 2007 2006 Cash and cash equivalents $211 $401 Accounts receivable, net 1,996 1,932 Inventories 2,019 1,877 Prepaid expenses and other current assets 165 147 Deferred tax assets 103 102 Current assets held for sale 694 687 Total current assets 5,188 5,146 Property, plant and equipment, net 8,531 8,542 Investments and long-term receivables: Investment in PO joint ventures 781 778 Other investments and long-term receivables 119 115 Goodwill, net 1,373 1,332 Other assets, net 885 864 Long-term assets held for sale 1,097 1,069 Total assets $17,974 $17,846 Current maturities of long-term debt $163 $18 Accounts payable 2,110 1,868 Accrued liabilities 755 980 Current liabilities associated with assets held for sale 316 341 Total current liabilities 3,344 3,207 Long-term debt 7,920 7,936 Other liabilities 1,495 1,453 Deferred income taxes 1,450 1,537 Long-term liabilities associated with assets held for sale 406 391 Minority interests 113 134 Stockholders' equity (252,889,856 and 248,970,570 shares outstanding at March 31, 2007 and December 31, 2006, respectively) 3,246 3,188 Total liabilities and stockholders' equity $17,974 $17,846 [a] Lyondell signed an agreement in the first quarter 2007 for a pending sale of its worldwide inorganic chemicals business. As a result, the inorganic chemicals business is being reported as held for sale, including comparative periods presented.
Table 14 - Refining Segment Throughput Margin and Reconciliation to Unaudited Refining Segment Operating Income
For the three months ended March 31, December 31, (Millions of dollars) 2007 2006 Refining Throughput Margin: Sales and other operating revenues [a] $1,884 $2,065 Crude oil and feedstock costs 1,577 1,555 Throughput margin 307 510 Operating expenses 225 201 Selling, general and administrative expense 4 7 Refining operating income [a] $78 $302 [a] See Table 9 for reconciliation of Refining segment sales and other operating revenues and operating income to Lyondell sales and other operating revenues and operating income. Tables 15 through 20 represent additional financial information for Equistar and Millennium Table 15 - Equistar Unaudited Income Statement Information [a] For the three months ended March 31, December 31, (Millions of dollars) 2007 2006 2006 Sales and other operating revenues [b] $2,869 $3,036 $2,971 Cost of sales 2,738 2,670 2,713 Selling, general and administrative expenses 59 48 47 Research and development expenses 9 8 9 Operating income 63 310 202 Interest expense, net (53) (53) (50) Other income (expense), net 1 (1) --- Net income [c] $11 $256 $152 [a] Represents information for Equistar on the basis reflected in Equistar's financial statements as filed in its Annual Report on Form 10-K. [b] Sales and other operating revenues include sales to affiliates. [c] As a partnership, Equistar is not subject to federal income taxes. Table 16 - Equistar Unaudited Balance Sheet Information [a] March 31, December 31, (Millions of dollars) 2007 2006 Cash and cash equivalents $27 $133 Accounts receivable, net 1,209 1,167 Inventories 755 809 Prepaid expenses and other current assets 58 49 Total current assets 2,049 2,158 Property, plant and equipment, net 2,821 2,846 Investments 63 59 Other assets, net 281 296 Total assets $5,214 $5,359 Accounts payable $951 $905 Accrued liabilities 208 312 Total current liabilities 1,159 1,217 Long-term debt 2,159 2,160 Other liabilities and deferred revenues 381 378 Partners' capital 1,515 1,604 Total liabilities and partners' capital $5,214 $5,359 [a] Represents information for Equistar on the basis reflected in Equistar's financial statements as filed in its Annual Report on Form 10-K. Table 17 - Equistar Unaudited Cash Flow Information [a] For the three months ended March 31, (Millions of dollars) 2007 2006 Net income $11 $256 Adjustments: Depreciation and amortization 81 82 Changes in assets and liabilities: Accounts receivable (42) 35 Inventories 54 (144) Accounts payable 37 46 Other, net (118) (86) Cash provided by operating activities 23 189 Expenditures for property, plant and equipment (38) (22) Cash used in investing activities (38) (22) Distributions to owners (100) (200) Repayment of long-term debt --- (150) Other 9 1 Cash used in financing activities (91) (349) Decrease in cash and cash equivalents $(106) $(182) [a] Represents information for Equistar on the basis reflected in Equistar's financial statements as filed in its Annual Report on Form 10-K. Table 18 - Millennium Unaudited Income Statement Information [a] [b] For the three months ended March 31, December 31, (Millions of dollars) 2007 2006 2006 Sales and other operating revenues [c] $152 $144 $148 Cost of sales 122 146 119 Selling, general and administrative expenses 12 11 18 Research and development expenses 1 1 2 Operating income (loss) 17 (14) 9 Interest expense, net (18) (11) (18) Other income (expense), net [d] --- (25) 1 Loss before equity investment and income taxes (1) (50) (8) Income from equity investment in Equistar 3 75 45 Income from continuing operations before income taxes 2 25 37 Provision for (benefit from) income taxes 1 (7) 16 Income from continuing operations 1 32 21 Income (loss) from discontinued operations, net of tax 14 1 (26) Net income (loss) $15 $33 $(5) [a] Represents information for Millennium on the basis reflected in Millennium's financial statements as filed in its Annual Report on Form 10-K. [b] Millennium signed an agreement in the first quarter 2007 for a pending sale of its worldwide inorganic chemicals business. As a result, the inorganic chemicals business is being reported as a discontinued operation, including comparative periods presented. [c] Sales and other operating revenues include sales to affiliates. [d] Other income (expense), net, for the three months ended March 31, 2006 included an $18 million charge related to prior years' income tax issues. Table 19 - Millennium Unaudited Balance Sheet Information [a] [b] March 31, December 31, (Millions of dollars) 2007 2006 Cash and cash equivalents $61 $76 Accounts receivable, net 98 111 Inventories 94 87 Prepaid expenses and other current assets 12 13 Deferred tax assets 63 62 Current assets held for sale 671 661 Total current assets 999 1,010 Property, plant and equipment, net 129 129 Investment in Equistar 444 470 Goodwill, net 48 48 Other assets, net 60 63 Long-term assets held for sale 719 694 Total assets $2,399 $2,414 Accounts payable $87 $102 Accrued liabilities 75 72 Current liabilities associated with assets held for sale 310 335 Total current liabilities 472 509 Long-term debt 763 767 Other liabilities 424 381 Deferred income taxes 232 248 Long-term liabilities associated with assets held for sale 379 361 Minority interest 5 5 Stockholder's equity (1,000 shares authorized; 661 shares issued at March 31, 2007 and December 31, 2006) 124 143 Total liabilities and stockholder's equity $2,399 $2,414 [a] Represents information for Millennium on the basis reflected in Millennium's financial statements as filed in its Annual Report on Form 10-K. [b] Millennium signed an agreement in the first quarter 2007 for a pending sale of its worldwide inorganic chemicals business. As a result, the inorganic chemicals business is being reported as held for sale, including comparative periods presented. Table 20 - Millennium Unaudited Cash Flow Information [a] [b] For the three months ended March 31, (Millions of dollars) 2007 2006 Net income $15 $33 Income from discontinued operations (14) (1) Adjustments: Depreciation and amortization 6 7 Equity investment in Equistar - Amounts included in net income (3) (75) Distributions of earnings 3 59 Debt prepayment charges and premiums --- 7 Deferred income taxes (6) 1 Changes in assets and liabilities: Accounts receivable 13 15 Inventories (7) 15 Accounts payable (16) (7) Other, net --- 32 Cash provided by (used in) operating activities - continuing operations (9) 86 Cash used in operating activities - discontinued operations (42) (1) Cash provided by (used in) operating activities (51) 85 Expenditures for property, plant and equipment (4) (1) Distributions from Equistar in excess of earnings 27 --- Cash provided by (used in) investing activities - continuing operations 23 (1) Cash used in investing activities - discontinued operations (8) (10) Cash provided by (used in) investing activities 15 (11) Repayment of long-term debt (4) (241) Other 1 1 Cash used in financing activities - continuing operations (3) (240) Cash provided by (used in) financing activities - discontinued operations 24 (2) Cash provided by (used in) financing activities 21 (242) Decrease in cash and cash equivalents $(15) $(168) [a] Represents information for Millennium on the basis reflected in Millennium's financial statements as filed in its Annual Report on Form 10-K. [b] Millennium signed an agreement in first quarter 2007 for a pending sale of its worldwide inorganic chemicals business. As a result, the inorganic chemicals business is being reported as a discontinued operation, including comparative periods presented.
SOURCE: Lyondell Chemical Company; Equistar Chemicals, LP; Millennium
CONTACT: media, Susan Moore, +1-713-309-4645, or investors, Doug Pike,
+1-713-309-4590, both of Lyondell Chemical Company
Web site: http://www.lyondell.com/
http://www.lyondell.com/earnings
