Lyondell Reports Fourth Quarter & Full-Year 2000 Results
Highlights - Full-year 2000 net income of $437 million, or $3.71 per share. - Strong full-year 2000 EBITDA of $1.1 billion, second consecutive year of EBITDA in excess of $1 billion. - Debt reduction in 2000 of $2.4 billion, including $353 million in the fourth quarter. - Fourth quarter loss of $45 million, or $0.38 per share, excluding extraordinary item. HOUSTON, Jan. 29 /PRNewswire/ -- Lyondell Chemical Company (NYSE: LYO) had a loss before an extraordinary item for the fourth quarter of 2000 of $45 million, or $0.38 per share. Excluding unusual items, this compares with net income of $62 million, or $0.52 per share, for the third quarter and a loss of $16 million, or $0.14 per share, for the fourth quarter of 1999. Including an extraordinary item of $3 million, or $0.03 per share, Lyondell reported a loss of $48 million, or $0.41 per share, for the fourth quarter 2000. This compares with net income after unusual items of $133 million, or $1.13 per share, for the third quarter and a loss of $58 million, or $0.50 per share, for the fourth quarter of 1999. For the full-year 2000, Lyondell's net income increased to $437 million, or $3.71 per share. This compared to a loss of $115 million, or $1.10 per share, for 1999. Excluding a $400 million, or $3.40 per share, after-tax gain from the sale of Lyondell's polyols business and an unfavorable extraordinary item of $33 million, or $0.28 per share, Lyondell's earnings for 2000 were $70 million, or $0.59 per share, compared to a net loss of $38 million, or $0.36 per share, in 1999. Revenues for 2000, including Lyondell's share of revenues from its venture companies, increased to $9.6 billion from $7.6 billion in 1999. "While results for the fourth quarter were impacted by unprecedented increases in feedstock and utility costs, earnings for the full-year 2000 increased significantly compared to 1999," said Lyondell President and Chief Executive Officer Dan F. Smith. "In addition, we achieved a number of strategic milestones during the year that we believe will provide future growth in earnings and shareholder value." Major accomplishments in 2000 included: -- Best safety performance in company history. -- Completion of the sale of Lyondell's global polyols business, along with an equity interest in its propylene oxide (PO) business for $2.45 billion in cash. This transaction was immediately accretive to earnings and cash flow. -- Total long-term debt was reduced by $2.4 billion, including $353 million paid down in the fourth quarter. -- Manufacturing joint venture formed with Bayer to build the world-class PO-11 propylene oxide/styrene monomer facility currently under construction in the Netherlands, scheduled to start-up in 2003. -- Began construction on world-class butanediol (BDO) facility, also located in the Netherlands, that will be the lowest cost BDO plant in the world when it starts up in 2002. "Compared to the third quarter of 2000, fourth quarter results were negatively impacted by higher natural gas prices, which resulted in higher raw material and utility costs at Lyondell and our joint ventures," Smith said. "The fourth quarter also reflects the effects of a major scheduled turnaround at one of our PO facilities. In response to the slowing economy and cost pressures, we took actions to continue to improve our cost position, including reducing production at, and in some cases shutting down, higher cost facilities. We also continued to make progress with debt reduction, paying down approximately $350 million of debt in the fourth quarter. "The first quarter of 2001 is difficult to predict, given the current level of energy prices and a weakening economy," Smith added. "Given the uncertain crude oil price environment and the fact that natural gas prices have further increased in January, it remains to be seen how the quarter will play out." Lyondell Earnings Summary (A) Millions of dollars except per share amounts 4Q2000 3Q2000 4Q1999 2000 1999 Net Income (Loss) Before Unusual Items (B)(C)(D) $(45) $ 62 $(16) $70 $(38) Earnings/(Loss) per Share Before Unusual Items (B)(C)(D) $(0.38) $0.52 $(0.14) $0.59 $(.36) Net Income (Loss) As Reported $(48) $133 $(58) $437 $(115) Earnings (Loss) per Share As Reported $(0.41) $1.13 $(0.50) $3.71 $(1.10) EBITDA (Lyondell and proportionate share of ventures) (B)(C)(D) $156 $325 $278 $1,084 $1,083 (A) See Consolidated Income Statements. (B) The fourth quarter 2000 excludes the after-tax extraordinary charge of $3 million, or $0.03 per share, related to early debt retirement. The 2000 full-year amount excludes the after-tax gain on asset sale of $400 million, or $3.40 per share, and after-tax extraordinary charges of $33 million, or $0.28 per share. (C) The third quarter 2000 excludes the favorable after-tax adjustment of the gain on asset sale of $31 million, or $0.26 per share, and the favorable effect of the tax rate revision of $40 million, or $0.35 per share. (D) The fourth quarter 1999 excludes after-tax unusual items of $42 million, or $0.36 per share, which consist of Equistar's restructuring charge, Lyondell's unfavorable LIFO adjustment and LCR's charge related to its labor agreement. The 1999 full-year amount excludes these items as well as the extraordinary charge, for a total charge of $77 million, or $0.74 per share. INTERMEDIATE CHEMICALS AND DERIVATIVES (IC&D) The IC&D segment includes PO and derivatives, TDI, styrene monomer and MTBE. EBITDA for the fourth quarter 2000 was $89 million, compared to $179 million for the third quarter. For the full-year 2000, EBITDA in the IC&D segment was $636 million, compared to $728 million in 1999. Full-year EBITDA information includes results for Lyondell's polyols business prior to its sale at the end of the first quarter 2000. Compared to the third quarter, the decrease in EBITDA for this segment was primarily due to a precipitous decline in MTBE margins, because of lower selling prices and higher costs for butane, the key raw material. In addition, the IC&D segment was impacted by the effect of high natural gas prices on utility costs and a major turnaround at Lyondell's PO/SM-1 plant in Channelview, Texas. These business conditions more than offset a 10% sales volume increase of core PO and derivatives products. This volume increase was primarily due to higher seasonal aircraft deicer sales. For the year 2000, sales volumes of some key PO derivatives increased significantly, with BDO sales up 17% and propylene glycol ethers sales up 7% compared to 1999. EQUISTAR CHEMICALS, LP Equistar's EBITDA for the fourth quarter 2000 was $9 million, compared to $186 million in the third quarter. Full-year 2000 EBITDA increased to $644 million from $604 million in 1999. Equistar's results in the fourth quarter 2000 were significantly impacted by unprecedented increases in natural gas costs and, to a lesser extent, by the slowing economy. These conditions resulted in higher natural gas liquids feedstock costs, lower product sales prices and higher natural gas-based utility costs. Equistar took a number of actions during the fourth quarter to counter these adverse business conditions. These included production optimization across its facilities to minimize natural gas-based ethylene production, product scheduling to match production to the reduced demand, inventory reductions and the temporary shutdown of an olefins facility. These actions will continue in the first quarter of 2001. In addition, Equistar recently announced plans for the permanent shutdown of a noncompetitive polyethylene facility. Equistar's petrochemicals segment had EBITDA of $100 million in the fourth quarter of 2000, compared to EBITDA of $255 million in the third quarter. Ethylene margins were approximately half of the third quarter levels as a result of high feedstock and utility costs and lower selling prices, especially for ethylene and propylene. For Equistar's polymers segment, fourth quarter EBITDA was a negative $69 million compared to a negative $31 million in the third quarter. Polymers sales volumes declined 6% and selling prices eroded by 5%-10% in the fourth quarter. LYONDELL-CITGO REFINING LP (LCR) LCR had EBITDA of $107 million in the fourth quarter 2000, compared to $110 million in the third quarter. Full-year 2000 EBITDA was $301 million, compared to $176 million in 1999. LCR's fourth quarter results benefited from continued excellent operating performance and increased delivery of contract levels of extra-heavy Venezuelan crude. LCR also benefited from higher spot crude margins in the fourth quarter, but this was more than offset by higher natural gas costs. The third quarter benefited additionally from the processing of inventoried supplies of Venezuelan crude oil. Total crude processing rates in the quarter averaged 270,000 barrels per day, unchanged from the third quarter. In the first quarter of 2001, LCR expects to process approximately 260,000 barrels of crude oil per day. Sales Revenues Millions of dollars 4Q2000 3Q2000 4Q1999 Full Year Full Year 2000 1999 Reported Sales Revenues $ 949 $ 975 $1,008 $ 4,036 $ 3,693 Total sales revenues - all businesses in which Lyondell participates (A) $3,920 $4,156 $3,613 $15,771 $11,953 Lyondell's proportionate share of the sales revenues of businesses in which it participates (A) $2,385 $2,505 $2,243 $ 9,626 $ 7,568 (A) Includes revenues from sales to affiliates. Lyondell Chemical Company (www.lyondell.com), with headquarters in Houston, Texas, is the world's largest producer of propylene oxide (PO); the world's number two supplier of TDI (toluene diisocyanate); a leading producer of propylene glycol; a leading producer of other PO derivatives such as BDO (butanediol) and PGE (propylene glycol ether); and a producer of styrene monomer and MTBE as co-products of PO production. Through its 41% interest in Equistar Chemicals, LP, Lyondell also is one of the largest producers of ethylene, propylene and polyethylene in North America and a leading producer of polypropylene, ethylene oxide, ethylene glycol, high value-added specialty polymers and polymeric powder. Through its 58.75% interest in LYONDELL-CITGO Refining LP, Lyondell is one of the largest refiners in the United States, processing extra heavy Venezuelan crude oil to produce gasoline, low sulfur diesel and jet fuel. The statements in this release relating to matters that are not historical facts are forward-looking statements that are subject to risks and uncertainties, including, but not limited to, future global economic conditions, industry production capacity and operating rates, the supply/demand balance for the Company's products, competitive products and pricing pressures, further increases in raw material costs, changes in governmental regulations and other risks and uncertainties detailed in the Securities and Exchange Commission filings of Lyondell. Lyondell will conduct a fourth quarter and full-year 2000 teleconference at 10:00 a.m. Eastern Time, January 29, 2001. Teleconference access is available in listen-only mode via telephone (dial-in number: 952-556-2808, no pass code required) and Internet broadcast on Lyondell's web site at www.lyondell.com. Replay details can be found on Lyondell's web site. LYONDELL CHEMICAL COMPANY SELECTED FINANCIAL AND OPERATING INFORMATION (UNAUDITED) (Millions of dollars) Lyondell Chemical Lyondell and Company Joint Ventures Proportionate (Excluding Equity Equistar LRC LMC Share of Equity Investments) (A) 100% 100% 100% Investments (B) Three months ended December 31, 2000: Sales and other operating revenues (C) $949 $1,783 $1,138 $50 2,385 SG&A and R&D 59 50 14 4 91 EBITDA before extraordinary item 89 9 107 1 156 Depreciation and amortization 60 (E) 80 28 2 108 Net interest expense 98 (E) 47 17 --- 127 Capital expenditures 26 50 14 --- 55 Dividends 27 27 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 before unusual items 179 (D) 186 110 6 324 Depreciation and amortization 69 (E) 78 28 3 117 Net interest expense 104 (E) 45 16 --- 132 Capital expenditures 47 33 11 --- 67 Dividends 27 27 Three months ended December 31, 1999: Sales and other operating revenues (C) $1,008 $1,696 $877 $32 $2,243 SG&A and R&D 69 100 19 2 123 EBITDA before unusual items 165 170 70 3 278 Depreciation and amortization 86 (E) 77 25 2 131 Net interest expense 165 (E) 48 13 --- 192 Capital expenditures 41 45 13 --- 67 Dividends 27 27 Year ended December 31, 2000: EBITDA before unusual and extraordinary item $636 (E) $644 $301 $10 $1,084 Net interest expense 462 (F) 181 61 --- 572 Capital expenditures 104 131 60 --- 193 Dividends 106 106 Year ended December 31, 1999: EBITDA before unusual and extraordinary items $728 $604 $176 $5 $1,083 Net interest expense 589 (F) 176 44 --- 687 Capital expenditures 131 157 56 16 240 Dividends 97 97 (A) Consists of the operations of the Intermediate Chemicals and Derivatives business segment. (B) This column reflects a combined total of Lyondell's operations and its pro rata share of each joint venture's operations and is not a presentation in accordance with generally accepted accounting principles. Lyondell currently owns a 41% interest in Equistar Chemicals, LP ("Equistar"), a 58.75% interest in LYONDELL-CITGO Refining LP ("LCR") and a 75% interest in Lyondell Methanol Company, L.P. ("LMC"). (C) Includes revenues from sales to affiliates. (D) Restated to include Lyondell's share of PO joint venture's depreciation. (E) "Depreciation and amortization" and "net interest expense" both include approximately $4 million, $3 million and $6 million of non-cash amortization of debt issuance costs in the three-month periods ended December 31, 2000, September 30, 2000, and December 31, 1999, respectively. (F) Includes approximately $18 million and $30 million of non-cash amortization of debt issuance costs for the years ended December 31,2000 and 1999, respectively. LYONDELL CHEMICAL COMPANY SELECTED FINANCIAL AND OPERATING INFORMATION (UNAUDITED) For the three For the twelve months months INCOME STATEMENTS ended December 31, ended December 31, (Millions of dollars, except per share data) 2000 1999 2000 1999 Sales and other operating revenues $949 $1,008 $4,036 $3,693 Operating costs and expenses: Cost of sales 857 839 3,371 2,891 Selling, general and administrative expenses 51 54 190 240 Research and development 8 15 35 58 Amortization of goodwill and other intangibles 20 25 101 100 Operating income 13 75 339 404 Income (loss) from equity investment in Equistar (39) (11) 101 52 Income from equity investment in LCR 38 18 86 23 Income from other equity investments 1 --- 12 1 Interest expense, net (98) (165) (462) (589) Other income (expense), net 19 (4) 27 5 Gain on sale of assets --- --- 590 --- Income (loss) before income taxes and extraordinary item (66) (87) 693 (104) Provision for (benefit from) income taxes (21) (29) 223 (24) Income (loss) before extraordinary item (45) (58) 470 (80) Extraordinary loss, net of income taxes (3) --- (33) (35) Net income (loss) $(48) $(58) $437 $(115) Basic earnings per share: Income (loss) before extraordinary item $(0.38) $(0.50) $4.00 $(0.77) Net income (loss) $(0.41) $(0.50) $3.72 $(1.10) Weighted average shares outstanding (thousands) (A) 117,560 117,589 117,557 104,249 Diluted earnings per share: Income (loss) before extraordinary item $(0.38) $(0.50) $3.99 $(0.77) Net income (loss) $(0.41) $(0.50) $3.71 $(1.10) Weighted average shares outstanding (thousands) (A) 117,560 117,589 117,778 104,249 INTERMEDIATE CHEMICALS AND DERIVATIVES SEGMENT SELECTED FINANCIAL AND OPERATING INFORMATION (Millions of dollars) Sales and other operating revenues $949 $1,008 $4,036 $3,693 Operating income 13 75 339 404 EBITDA before unusual charges 89 165 636 728 Sales Volumes (millions) PO and derivatives (pounds) (B) 793 1,196 3,393 4,464 Co-products: Styrene monomer (pounds) 805 773 3,475 3,129 TBA and derivatives (gallons) 320 260 1,211 1,071 (A) In May 1999, Lyondell issued 40.25 million shares of common stock in a public offering. (B) Includes propylene oxide ("PO"), PO derivatives and isocyanates. The polyols business sold to Bayer on March 31, 2000 is included through the date of sale. LYONDELL CHEMICAL COMPANY SELECTED FINANCIAL INFORMATION (UNAUDITED) (Millions of dollars) For the twelve months ended December 31, STATEMENTS OF CASH FLOWS 2000 1999 Net income (loss) $437 $(115) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Gain on sale of assets (590) --- Depreciation and amortization 279 330 Extraordinary items 33 35 Accounts receivable (160) (124) Inventories 3 15 Accounts payable 67 52 Changes in working capital and other, net (8) 107 Net cash provided by operating activities 61 300 Proceeds from sales of assets, net of cash sold 2,497 --- Expenditures for property, plant and equipment (104) (131) Contributions and advances to affiliates (40) (52) Distributions from affiliates in excess of earnings 85 134 Other --- 4 Net cash provided by (used in) investing activities 2,438 (45) Issuance of long-term debt, net --- 3,293 Repayment of long-term debt (2,417) (4,122) Issuance of common stock --- 736 Dividends paid (106) (97) Other (20) 8 Net cash used in financing activities (2,543) (182) Effect of exchange rate changes on cash (3) 1 (Decrease) increase in cash and cash equivalents $(47) $74 LYONDELL CHEMICAL COMPANY SELECTED FINANCIAL INFORMATION (UNAUDITED) (Millions of dollars) December 31, BALANCE SHEET 2000 Cash and cash equivalents $ 260 Accounts receivable, net 508 Inventories 392 Prepaid expenses and other current assets 49 Deferred tax assets 136 Total current assets 1,345 Property, plant and equipment, net 2,429 Investments and long-term receivables: Investment in PO joint ventures (A) 621 Investment in Equistar 599 Investment in LCR 20 Investment in LMC 49 Receivable from LCR 229 Other investments and long-term receivables 88 Goodwill, net 1,152 Deferred charges and other assets 531 Total assets $ 7,063 Accounts payable $ 399 Current maturities of long-term debt 10 Other accrued liabilities 325 Total current liabilities 734 Long-term debt, less current maturities 3,844 Other liabilities and deferred credits 441 Deferred income taxes 707 Minority interest 181 Stockholders' equity (117,560,333 shares outstanding at December 31, 2000) 1,156 Total liabilities and stockholders' equity $ 7,063 Investment in Equistar, December 31, 1999 $ 607 Lyondell's share of Equistar net income 101 Cash distributions from Equistar (114) Transfer of shared service organization liability from Equistar 5 Investment in Equistar, December 31, 2000 $ 599 Investment in LCR, December 31, 1999 $ 52 Lyondell's share of LCR net income 87 Cash distributions from LCR (144) Cash contributions to LCR 25 Investment in LCR, December 31, 2000 $ 20 Investment in LMC, December 31, 1999 $ 63 Lyondell's share of LMC net income 3 Cash distributions from LMC (17) Investment in LMC, December 31, 2000 $ 49 (A) Lyondell has entered into joint ventures with Bayer in conjunction with the March 31, 2000 asset sale and the December 21, 2000 agreement for joint construction of PO-11. LYONDELL CHEMICAL COMPANY EQUISTAR CHEMICALS, LP SELECTED FINANCIAL AND OPERATING INFORMATION (UNAUDITED) For the three For the twelve months months INCOME STATEMENTS ended December 31, ended December 31, (Millions of dollars) 2000 1999 2000 1999 Sales and other operating revenues (A) $1,783 $1,696 $7,495 $5,594 Operating costs and expenses: Cost of sales 1,797 1,493 6,908 5,002 Selling, general and administrative expenses 40 89 182 259 Research and development expense 10 11 38 42 Amortization of goodwill and other intangibles 8 8 33 33 Restructuring and other unusual charges --- 96 --- 96 Operating income (loss) (72) (1) 334 162 Interest expense, net (47) (48) (181) (176) Other income (expense), net 1 (2) --- 46 Net income (loss) (B) $(118) $(51) $153 $32 SELECTED FINANCIAL AND OPERATING INFORMATION (Millions of dollars) Sales and Other Operating Revenues (A) Petrochemicals segment $1,697 $1,492 $7,031 $4,759 Polymers segment 538 596 2,351 2,159 Intersegment eliminations (452) (392) (1,887) (1,324) Total $1,783 $1,696 $7,495 $5,594 Other Operating Expenses (C) Petrochemicals segment $1 $5 $7 $14 Polymers segment 19 20 71 80 Unallocated 38 83 175 240 Total $58 $108 $253 $334 Operating Income (Loss) Petrochemicals segment $51 $173 $694 $447 Polymers segment (85) 5 (185) 51 Unallocated (38) (179) (175) (336) Total $(72) $(1) $334 $162 EBITDA Petrochemicals segment $100 $223 $894 $641 Polymers segment (69) 20 (129) 104 Unallocated (22) (169) (121) (237) Total (D) $9 $74 $644 $508 EBITDA before unusual charges (D) $9 $170 $644 $604 Sales Volumes (millions) (A) Selected petrochemical products: Ethylene, propylene and other olefins (pounds) 4,470 4,779 18,490 18,574 Aromatics (gallons) 85 97 397 367 Polymers products (pounds) 1,518 1,584 6,281 6,388 Lyondell has a 41% ownership interest in Equistar while Millennium Chemicals, Inc. and Occidental Chemical Corporation each have a 29.5% ownership interest. (A) Includes revenues/volumes from sales to affiliates. (B) As a partnership, Equistar is not subject to federal income taxes. (C) Other Operating Expenses includes SG&A, R&D and Amortization of goodwill and other intangibles. (D) 1999 EBITDA includes gains from asset sales. LYONDELL CHEMICAL COMPANY EQUISTAR CHEMICALS, LP SELECTED FINANCIAL INFORMATION (UNAUDITED) (Millions of dollars) December 31, December 31, BALANCE SHEETS 2000 1999 Cash and cash equivalents $26 $108 Accounts receivable, net 758 700 Inventories 506 520 Prepaid expenses and other current assets 50 32 Total current assets 1,340 1,360 Property, plant and equipment, net 3,819 3,926 Goodwill, net 1,086 1,119 Deferred charges and other assets 345 331 Total assets $6,590 $6,736 Accounts payable $495 $459 Current maturities of long-term debt 90 92 Other accrued liabilities 166 233 Total current liabilities 751 784 Long-term debt, less current maturities 2,158 2,169 Other liabilities and deferred credits 141 121 Partners' capital 3,540 3,662 Total liabilities and partners' capital $6,590 $6,736 For the three For the twelve months months ended December 31, ended December 31, SELECTED CASH FLOW INFORMATION 2000 1999 2000 1999 Depreciation and amortization $80 $77 $310 $300 Cash flow from operations 34 171 347 344 Capital expenditures 50 45 131 157 LYONDELL CHEMICAL COMPANY LYONDELL-CITGO REFINING LP SELECTED FINANCIAL AND OPERATING INFORMATION (UNAUDITED) CONDENSED BALANCE SHEETS December 31, December 31, (Millions of dollars) 2000 1999 Total current assets $310 $219 Property, plant and equipment, net 1,319 1,350 Deferred charges and other assets 67 60 Total assets $1,696 $1,629 Current maturities of long-term debt $--- $450 Notes payable 450 --- Other current liabilities 417 307 Long-term debt, less current maturities 264 247 Other liabilities and deferred credits 57 69 Partners' capital 508 556 Total liabilities and partners' capital $1,696 $1,629 For the three For the twelve months months INCOME STATEMENTS ended December 31, ended December 31, (Millions of dollars) 2000 1999 2000 1999 Sales and other operating revenues (A) $1,138 $877 $4,075 $2,571 Operating costs and expenses: Cost of sales 1,045 813 3,826 2,432 Selling, general and administrative expenses 14 19 60 66 Unusual charges --- 6 --- 6 Operating income 79 39 189 67 Interest expense, net (17) (13) (61) (44) Benefit from state income taxes --- --- --- 1 Net income (B) $62 $26 $128 $24 SELECTED CASH FLOW INFORMATION (Millions of dollars) Depreciation and amortization $28 $25 $112 $103 Cash flow from operations 92 89 222 181 Capital expenditures 14 13 60 56 EBITDA $107 $64 $301 $170 EBITDA before unusual charges $107 $70 $301 $176 SELECTED OPERATING INFORMATION Sales Volumes (including intersegment sales) (A) Refined products (thousand barrels per day): Gasoline 120 137 118 118 Diesel and heating oil 80 78 72 68 Jet fuel 26 20 19 18 Aromatics 11 11 11 10 Other refinery products 110 105 105 104 Total refined products volumes 347 351 325 318 Refinery Runs Crude processing rates (thousand barrels per day): Crude Supply Agreement - coked 219 182 196 182 Other heavy crude oil - coked 34 23 19 14 Other crude oil 17 54 30 43 Total crude oil 270 259 245 239 (A) Includes revenues/volumes from sales to affiliates. (B) As a partnership, LCR is not subject to federal income taxes. SOURCE Lyondell Chemical Company |