Highlights
- Refining posts record EBITDA of $116 million.
- LCR and Equistar refinanced, extending debt maturities and enhancing
liquidity.
- Lyondell exits ADI business, takes a $78 million charge.
HOUSTON, Oct. 25 /PRNewswire/ -- Lyondell Chemical Company (NYSE: LYO) had a net loss excluding unusual charges for the third quarter of 2001 of $16 million, or $0.13 per share.
Lyondell's reported third quarter 2001 loss was $67 million, or $0.57 per share, including unusual charges related to the shutdown of the ADI (aliphatic diisocyanates) business at Lake Charles, LA.
"Business conditions remained very difficult during the third quarter, as we had anticipated," said Dan F. Smith, President and CEO. "While our third quarter results benefited from record performance in refining, as well as continued declines in natural gas and energy costs, these improvements were more than offset by lower margins in many of Lyondell's businesses, primarily petrochemicals and MTBE.
"Nevertheless, we made progress during the quarter on several important fronts. We generated significant cash flow from working capital, helping increase Lyondell's end-of-quarter cash balance by $117 million from the second quarter of 2001, and Equistar's by $56 million. We completed debt refinancings for both LCR and Equistar. Equistar's debt maturities were extended over a period more consistent with our expectations for improved business conditions. Further, the financing provided Equistar with significant liquidity. We also announced our decision to exit the ADI business because we did not see its potential for delivering the returns that would justify our continued participation."
Lyondell Earnings Summary (A)
Millions of dollars 3Q2001 2Q2001 3Q2000 1st Nine 1st Nine
except per share amounts Months Months
2001 2000
Net Income (Loss) Before
Unusual Items (B)(C) $(16) $4 $62 $(40) $115
Earnings (Loss) per Share
Before Unusual
Items (B)(C) $(0.13) $.04 $0.52 $(0.33) $0.97
Net Income (Loss) As
Reported $(67) $4 $133 $(97) $485
Earnings (Loss) per Share
As Reported $(0.57) $.04 $1.13 $(0.82) $4.12
EBITDA (Lyondell and
proportionate share of
ventures) Before Unusual
Items (B)(C) $193 $235 $324 $602 $928
(A) See Consolidated Income Statements.
(B) The third quarter 2001 excludes the unusual charge related to the ADI
shutdown of $51 million after tax, or $0.44 per share. The first
nine months 2001 exclude the ADI shutdown charge as well as an
after-tax charge of $6 million, or $0.05 per share, consisting of
Lyondell's share of Equistar's facility shutdown costs.
(C) The third quarter 2000 excludes a favorable after-tax adjustment of
the gain on asset sale of $31 million, or $0.26 per share, and a
favorable effect from a tax rate revision of $40 million, or
$0.35 per share. The first nine months 2000 exclude the after-tax
gain on asset sale of $400 million, or $3.40 per share, and the
after-tax extraordinary loss of $30 million, or $0.25 per share,
related to early debt reduction.
The third quarter 2001 net loss before unusual charges of $16 million, or $0.13 per share, compares to net income of $4 million, or $0.04 per share, in the second quarter of 2001. Third quarter 2001 EBITDA (earnings before interest, taxes, depreciation and amortization) before unusual charges for Lyondell and its proportionate share of the joint ventures was $193 million, compared to $235 million in the second quarter 2001.
The third quarter 2001 net loss before unusual charges compares to net income before unusual items of $62 million, or $0.52 per share, in the third quarter of 2000. The third quarter of 2000 was characterized by stronger margins in petrochemicals and the extension of the MTBE seasonal margin peak into the third quarter.
INTERMEDIATE CHEMICALS AND DERIVATIVES (IC&D)
The IC&D segment includes propylene oxide (PO) and derivatives, styrene monomer and MTBE. EBITDA for the third quarter of 2001 was $110 million excluding unusual charges, compared to $128 million in the second quarter of 2001 and $179 million in the third quarter of 2000.
The decrease in EBITDA from the second quarter of 2001 is due in large part to the seasonal downturn in MTBE margins, consistent with the end of the summer driving season. The decrease was somewhat offset by higher margins in our PO and derivatives business due to lower propylene, natural gas and energy costs. Volumes were relatively unchanged in PO and derivatives versus the second quarter of 2001.
EQUISTAR CHEMICALS, LP
Equistar's EBITDA for the third quarter of 2001 was $46 million, excluding a $3 million extraordinary charge associated with the write-off of financing costs related to the credit facility refinanced in August 2001. This compares to $96 million in the second quarter of 2001 and $186 million in the third quarter of 2000.
The Petrochemicals segment reported EBITDA of $79 million in the third quarter of 2001, compared to $131 million in the second quarter. The decrease was due primarily to falling ethylene and co-product prices, which were only partially offset by falling feedstock, natural gas and energy costs. Ethylene volumes were largely unchanged versus the second quarter of 2001.
The Polymers segment reported negative EBITDA of $10 million in the third quarter of 2001, compared to negative $9 million in the second quarter of 2001. Polymers prices fell more than feedstock costs. The resulting margin erosion during the quarter was largely offset by a 12 percent increase in polymers sales volumes.
LYONDELL-CITGO REFINING LP (LCR)
LCR had record EBITDA of $116 million in the third quarter of 2001, compared to $108 million in the second quarter 2001, and $110 million in the third quarter of 2000, the previous quarterly record.
Compared to its performance in the second quarter of 2001, LCR's third quarter 2001 performance is the result of record operational performance in July and August, lower natural gas and energy costs, and higher contract margins. These benefits were partially offset by an unplanned outage in September of the fluid catalytic cracking unit (FCCU) that negatively impacted third quarter results by approximately $10 million, as well as lower spot crude margins compared to the second quarter 2001.
Refinery processing rates were 270,000 barrels of crude oil per day during the third quarter of 2001, compared to 256,000 barrels per day in the second quarter of 2001. CSA (crude supply agreement) crude comprised 253,000 barrels per day of the third quarter 2001 total.
In the fourth quarter of 2001, LCR will complete major turnarounds in a coker unit, the FCCU and a crude unit. These planned outages are expected to reduce crude processing rates in the fourth quarter to approximately 215,000 barrels per day, essentially all of which is expected to be CSA volume.
OUTLOOK
"For the fourth quarter we expect continued trough conditions in the global chemical markets, which Equistar serves," Smith said. "While we see no change in most of our IC&D businesses, we do expect further seasonal declines in MTBE. LCR will experience a significant decline in production as a result of the major planned maintenance work. We expect LCR's EBITDA in the fourth quarter could be reduced by approximately 50 percent from the third quarter 2001.
"As trough conditions continue, we will continue to take the appropriate and necessary steps not only to manage through the current difficult business environment, but also to position Lyondell to take full advantage of improvements in the market when they come.
"We aggressively controlled costs in the third quarter of this year. The cash management and fixed-cost reduction initiatives that we implemented already have generated results. We believe we will continue to make progress on cost reduction through next year."
Sales Revenues
Millions of dollars 3Q2001 2Q2001 3Q2000 1st Nine 1st Nine
Months Months
2001 2000
Reported sales revenues $750 $902 $975 $2,509 $3,087
Total sales revenues
- all businesses in
which Lyondell
participates (A) $2,980 $3,487 $4,156 $10,052 $11,852
Lyondell's proportionate
share of the sales
revenues of businesses
in which it
participates (A) $1,825 $2,145 $2,505 $6,122 $7,241
(A) Includes revenues from sales to affiliates.
Lyondell Chemical Company (www.lyondell.com ), with headquarters in Houston, Texas, is the world's largest producer of propylene oxide (PO); the world's number three supplier of TDI (toluene diisocyanate); a leading producer of propylene glycol; a leading producer of other PO derivatives such as BDO (butanediol) and PGE (propylene glycol ether); and a producer of styrene monomer and MTBE as co-products of PO production. Through its 41% interest in Equistar Chemicals, LP, Lyondell also is one of the largest producers of ethylene, propylene and polyethylene in North America and a leading producer of polypropylene, ethylene oxide, ethylene glycol, high value-added specialty polymers and polymeric powder. Through its 58.75% interest in LYONDELL-CITGO Refining LP, Lyondell is one of the largest refiners in the United States, processing extra heavy Venezuelan crude oil to produce gasoline, low sulfur diesel and jet fuel. Lyondell is the third largest methanol producer in the U.S., through its 75% interest in Lyondell Methanol Company, L.P.
The statements in this release relating to matters that are not historical
facts are forward-looking statements that are subject to risks and
uncertainties. Actual results could differ materially, based on factors
including, but not limited to, future global economic conditions,
technological developments, availability of capital markets, industry
production capacity and operating rates, the supply/demand balance for
Lyondell's and its joint ventures' products, competitive products and pricing
pressures, further increases in raw material and/or energy costs, changes in
governmental regulations and other risk factors. For more detailed
information about the factors that could cause actual results to differ
materially, please refer to Lyondell's Annual Report on Form 10-K for the year
ended December 31, 2000, filed with the Securities and Exchange Commission in
March 2001, and Lyondell's Quarterly Report on Form 10-Q for the quarter ended
September 30, 2001, which will be filed in November 2001.
LYONDELL CHEMICAL COMPANY
SELECTED FINANCIAL AND OPERATING INFORMATION (UNAUDITED)
(Millions of dollars)
Lyondell Chemical Lyondell and
Company Proportionate
(Excluding Joint Ventures Share of
Equity Equistar LCR LMC Equity
Investments)(A) 100% 100% 100% Investments(B)
Three months ended
September 30, 2001:
Sales and other
operating revenues (C) $750 $1,351 $850 $29 $1,825
SG&A and R&D 40 49 16 2 71
EBITDA before unusual and
extraordinary charges 110 46 116 (6) 193
Depreciation and amortization 67(D) 80(F) 26 2 114
Net interest expense 91(D) 46(F) 10 --- 116
Capital expenditures 12(E) 32 30 --- 43
Dividends 26 26
Three months ended June 30,
2001:
Sales and other
operating revenues (C) $902 $1,600 $932 $53 2,145
SG&A and R&D 49 55 14 2 81
EBITDA 128 96 108 6 235
Depreciation and amortization 67(D) 81 27 2 115
Net interest expense 94(D) 45 15 --- 121
Capital expenditures 29(E) 29 18 --- 51
Dividends 26 26
Three months ended
September 30, 2000:
Sales and other
operating revenues (C) $975 $1,955 $1,177 $49 $2,505
SG&A and R&D 57 58 18 3 94
EBITDA 179 186 110 6 324
Depreciation and amortization 69(D) 78 28 3 117
Net interest expense 104(D) 45 16 --- 132
Capital expenditures 47 33 11 --- 67
Dividends 27 27
(A) Consists of the operations of the Intermediate Chemicals and
Derivatives business segment.
(B) This column reflects a combined total of Lyondell's 100% owned
operations and its pro rata share of each joint venture's operations
and is not a presentation in accordance with generally accepted
accounting principles. Lyondell currently owns a 41% interest in
Equistar Chemicals, LP ("Equistar"), a 58.75% interest in
LYONDELL-CITGO Refining LP ("LCR") and a 75% interest in Lyondell
Methanol Company, L.P. ("LMC").
(C) Includes revenues from sales to affiliates.
(D) "Depreciation and amortization" and "net interest expense" both
include approximately $4 million, $4 million and $3 million of
non-cash amortization of debt issuance costs in the three-month
periods ended September 30, 2001, June 30, 2001, and September 30,
2000, respectively.
(E) Excludes contributions to PO-11 joint venture of $44 million in the
three-month period ended September 30, 2001 and $15 million in the
three-month period ended June 30, 2001.
(F) "Depreciation and amortization" and "net interest expense" both
include approximately $1 million of non-cash amortization of debt
issuance costs in the three-month period ended September 30, 2001.
LYONDELL CHEMICAL COMPANY
SELECTED FINANCIAL AND OPERATING INFORMATION (UNAUDITED)
INCOME STATEMENTS For the three months For the nine months
(Millions of dollars, except ended September 30, ended September 30,
per share data) 2001 2000 2001 2000
Sales and other operating revenues $750 $975 $2,509 $3,087
Operating costs and expenses:
Cost of sales 633 793 2,149 2,514
Selling, general and
administrative expenses 32 51 112 139
Research and development 8 6 24 27
Amortization of goodwill and
other intangibles 25 28 75 81
Unusual charges 78 --- 78 ---
Operating income (loss) (26) 97 71 326
Income (loss) from equity investment
in Equistar (24) 35 (48) 140
Income from equity investment in LCR 48 42 116 48
Income (loss) from other equity
investments (7) 6 (7) 11
Interest expense, net (91) (104) (277) (364)
Other income (expense), net (4) 14 (2) 8
Gain on sale of assets --- 46 --- 590
Income (loss) before income taxes
and extraordinary item (104) 136 (147) 759
Provision for (benefit from) income
taxes (37) 3 (50) 244
Income (loss) before
extraordinary item (67) 133 (97) 515
Extraordinary loss, net of
income taxes --- --- --- (30)
Net income (loss) $(67) $133 $(97) $485
Basic earnings per share:
Income (loss) before
extraordinary item $(0.57) $1.13 $(0.82) $4.38
Net income (loss) $(0.57) $1.13 $(0.82) $4.13
Weighted average shares
outstanding (in thousands) 117,563 117,556 117,563 117,556
Diluted earnings per share:
Income (loss) before
extraordinary item $(0.57) $1.13 $(0.82) $4.37
Net income (loss) $(0.57) $1.13 $(0.82) $4.12
Weighted average shares
outstanding (in thousands) 117,563 117,721 117,563 117,808
INTERMEDIATE CHEMICALS AND
DERIVATIVES SEGMENT
SELECTED FINANCIAL AND OPERATING
INFORMATION
(Millions of dollars)
Sales and other operating revenues $750 $975 $2,509 $3,087
Operating income (loss) (26) 97 71 326
EBITDA before unusual and
extraordinary charges 110 179 335 547
Sales Volumes (millions)
PO and derivatives (pounds) (A) 694 720 2,064 2,600
Co-products:
Styrene monomer (pounds) 767 882 2,345 2,670
TBA and derivatives (gallons) 307 299 873 891
(A) Includes propylene oxide ("PO"), PO derivatives and isocyanates. The
polyols business sold to Bayer on March 31, 2000 is included through
the date of sale.
LYONDELL CHEMICAL COMPANY
SELECTED FINANCIAL INFORMATION (UNAUDITED)
(Millions of dollars)
For the nine months
ended September 30,
STATEMENTS OF CASH FLOWS 2001 2000
Net income (loss) $(97) $485
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Gain on sale of assets --- (590)
Depreciation and amortization 199 219
Extraordinary loss --- 30
Unusual charges 78 ---
Accounts receivable 127 (134)
Inventories 22 (28)
Accounts payable (101) 44
Changes in other working capital and
other, net (42) 11
Net cash provided by operating activities 186 37
Proceeds from sale of assets, net of cash sold --- 2,445
Expenditures for property, plant and equipment (52) (78)
Contributions and advances to affiliates (A) (108) (28)
Distributions from affiliates in excess of
earnings 30 ---
Net cash (used in) provided by investing
activities (130) 2,339
Repayments of long-term debt (8) (2,064)
Dividends paid (79) (79)
Other (7) (18)
Net cash used in financing activities (94) (2,161)
Effect of exchange rate changes on cash --- (6)
(Decrease) increase in cash and cash equivalents $(38) $209
(A) Includes contributions to PO-11 joint venture of $74 million and
$2 million in the nine-months ended September 30, 2001 and
September 30, 2000, respectively.
LYONDELL CHEMICAL COMPANY
SELECTED FINANCIAL INFORMATION (UNAUDITED)
(Millions of dollars)
September 30, December 31,
BALANCE SHEET 2001 2000
Cash and cash equivalents $222 $260
Accounts receivable, net 386 508
Inventories 368 392
Prepaid expenses and other current assets 96 49
Deferred tax assets 232 136
Total current assets 1,304 1,345
Property, plant and equipment, net 2,374 2,429
Investments and long-term receivables:
Investment in PO joint ventures 690 621
Investment in Equistar 550 599
Receivable from LCR 229 229
Investment in LCR 33 20
Investment in LMC 38 49
Other investments and long-term receivables 85 88
Goodwill, net 1,115 1,152
Other assets 529 515
Total assets $6,947 $7,047
Accounts payable $296 $401
Current maturities of long-term debt 10 10
Other accrued liabilities 398 323
Total current liabilities 704 734
Long-term debt, less current maturities 3,836 3,844
Other liabilities 498 441
Deferred income taxes 784 702
Minority interest 170 181
Stockholders' equity (117,562,920 and
117,560,333 shares outstanding respectively
at September 30, 2001 and December 31, 2000) 955 1,145
Total liabilities and stockholders' equity $6,947 $7,047
Investment in Equistar, December 31, 2000 $599
Lyondell's share of Equistar net loss (48)
Other (1)
Investment in Equistar, September 30, 2001 $550
Investment in LCR, December 31, 2000 $20
Lyondell's share of LCR net income 116
Cash distributions from LCR (131)
Cash contributions to LCR 28
Investment in LCR, September 30, 2001 $33
Investment in LMC, December 31, 2000 $49
Lyondell's share of LMC net loss (7)
Cash distributions from LMC (10)
Cash contributions to LMC 6
Investment in LMC, September 30, 2001 $38
LYONDELL CHEMICAL COMPANY
EQUISTAR CHEMICALS, LP
SELECTED FINANCIAL AND OPERATING INFORMATION (UNAUDITED)
For the three months For the nine months
INCOME STATEMENTS ended September 30, ended September 30,
(Millions of dollars) 2001 2000 2001 2000
Sales and other operating
revenues (A) $1,351 $1,955 $4,724 $5,712
Operating costs and expenses:
Cost of sales 1,328 1,779 4,573 5,111
Selling, general and
administrative expenses 40 49 131 142
Research and development 9 9 29 28
Amortization of goodwill 8 9 25 25
Restructuring and unusual charges --- --- 22 ---
Operating income (loss) (34) 109 (56) 406
Interest expense, net (46) (45) (137) (134)
Other income (expense), net 1 (1) 7 (1)
Income (loss) before extraordinary
loss (79) 63 (186) 271
Extraordinary loss (3) --- (3) ---
Net income (loss) (B) $(82) $63 $(189) $271
SELECTED FINANCIAL AND OPERATING
INFORMATION
(Millions of dollars)
Sales and Other Operating
Revenues (A)
Petrochemicals segment $1,181 $1,848 $4,345 $5,334
Polymers segment 494 602 1,552 1,813
Intersegment eliminations (324) (495) (1,173) (1,435)
Total $1,351 $1,955 $4,724 $5,712
Other Operating Expenses (C)
Petrochemicals segment $--- $2 $7 $6
Polymers segment 20 16 57 52
Unallocated 37 49 121 137
Total $57 $67 $185 $195
Operating Income (Loss)
Petrochemicals segment $29 $204 $225 $643
Polymers segment (26) (46) (138) (100)
Unallocated (37) (49) (143) (137)
Total $(34) $109 $(56) $406
EBITDA
Petrochemicals segment $79 $255 $376 $794
Polymers segment (10) (31) (94) (60)
Unallocated (26) (38) (96) (99)
Total $43 $186 $186 $635
EBITDA before unusual
and extraordinary charges $46 $186 $211 $635
Sales Volumes (A)
Selected petrochemical products
(millions):
Ethylene, propylene and other
olefins (pounds) 4,039 4,512 12,352 14,020
Aromatics (gallons) 86 101 274 312
Polymers products (millions of
pounds) 1,565 1,622 4,402 4,763
(A) Includes revenues/volumes from sales to affiliates.
(B) As a partnership, Equistar is not subject to federal income taxes.
(C) Other Operating Expenses include SG&A, R&D and amortization of
goodwill.
LYONDELL CHEMICAL COMPANY
EQUISTAR CHEMICALS, LP
SELECTED FINANCIAL INFORMATION (UNAUDITED)
(Millions of dollars)
September 30, December 31,
BALANCE SHEETS 2001 2000
Cash and cash equivalents $113 $18
Accounts receivable, net 662 758
Inventories 504 506
Prepaid expenses and other current assets 33 50
Total current assets 1,312 1,332
Property, plant and equipment, net 3,731 3,819
Goodwill, net 1,061 1,086
Other assets 338 345
Total assets $6,442 $6,582
Accounts payable $451 $487
Current maturities of long-term debt 104 90
Other accrued liabilities 146 166
Total current liabilities 701 743
Long-term debt, less current maturities 2,234 2,158
Other liabilities 150 141
Partners' capital 3,357 3,540
Total liabilities and partners' capital $6,442 $6,582
For the three months For the nine months
ended September 30, ended September 30,
SELECTED CASH FLOW INFORMATION 2001 2000 2001 2000
Depreciation and amortization $80 $78 $239 $230
Cash flow from operations 24 54 119 313
Capital expenditures 32 33 85 81
LYONDELL CHEMICAL COMPANY
LYONDELL-CITGO REFINING LP
SELECTED FINANCIAL AND OPERATING INFORMATION (UNAUDITED)
CONDENSED BALANCE SHEETS September 30, December 31,
(Millions of dollars) 2001 2000
Total current assets $292 $310
Property, plant and equipment, net 1,321 1,319
Deferred charges and other assets 64 67
Total assets $1,677 $1,696
Notes payable $--- $450
Other current liabilities 434 417
Long-term debt 450 ---
Loans payable to partners 264 264
Other liabilities and deferred credits 62 57
Partners' capital 467 508
Total liabilities and partners' capital $1,677 $1,696
For the three months For the nine months
INCOME STATEMENTS ended September 30, ended September 30,
(Millions of dollars) 2001 2000 2001 2000
Sales and other operating
revenues (A) $850 $1,177 $2,692 $2,937
Operating costs and expenses:
Cost of sales 744 1,077 2,419 2,781
Selling, general and
administrative expenses 16 18 44 46
Operating income 90 82 229 110
Interest expense, net (10) (16) (41) (44)
Income before extraordinary item 80 66 188 66
Extraordinary loss, net of income
taxes (2) --- (2) ---
Net income (B) $78 $66 $186 $66
SELECTED CASH FLOW INFORMATION
(Millions of dollars)
Depreciation and amortization $26 $28 $81 $84
Cash flow from operations 183 103 273 130
Capital expenditures 30 11 59 46
EBITDA before extraordinary item $116 $110 $310 $194
SELECTED OPERATING INFORMATION
Sales Volumes (including
intersegment sales) (A)
Refined products (thousand barrels
per day):
Gasoline 103 122 107 117
Diesel and heating oil 80 81 74 69
Jet fuel 24 24 22 17
Aromatics 7 13 8 11
Other refinery products 109 109 106 103
Total refined products volumes 323 349 317 317
Refinery Runs
Crude processing rates (thousand
barrels per day):
Crude Supply Agreement - coked 253 244 240 188
Other heavy crude oil - coked --- --- 11 14
Other crude oil 16 26 10 34
Total crude oil 269 270 261 236
(A) Includes revenues/volumes from sales to affiliates.
(B) As a partnership, LCR is not subject to federal income taxes.
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SOURCE Lyondell Chemical Company
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CONTACT: media, Anne M. Knisely, +1-713-309-2643, or investors, Patrick Quarles, +1-713-309-7141, both of Lyondell Chemical Company
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