Lyondell Reports Fourth Quarter and Full-Year 2002 Results
- Full-year 2002 results comparable to 2001 as trough conditions continue in chemical industry. - Rising energy costs and scheduled maintenance weaken fourth-quarter results at Equistar and Intermediate Chemicals & Derivatives. - Venezuelan oil-industry strike has minimal fourth-quarter earnings impact on LYONDELL-CITGO Refining. - Broad price increases announced for first quarter 2003. HOUSTON, Jan. 30 /PRNewswire-FirstCall/ -- Lyondell Chemical Company (NYSE: LYO) today announced a net loss for the fourth quarter of $93 million, or $0.58 per share. This compares to a net loss of $53 million, or $0.46 per share, for the fourth quarter of 2001, and a net loss of $2 million, or $0.02 per share, for the third quarter 2002. For the full year 2002, Lyondell had a net loss of $148 million, or $1.10 per share, compared to a net loss of $150 million, or $1.28 per share, for 2001. Lyondell Earnings Summary Millions of dollars Full Full except per share Year Year amounts 4Q2002 4Q2001 3Q2002 2002 2001 Sales and Other Operating Revenues $890 $709 $855 $3,262 $3,193 Net Loss (93) (53) (2) (148) (150) Basic and Diluted Net Loss per Share (A) (0.58) (0.46) (0.02) (1.10) (1.28) Weighted Average Shares Outstanding (millions) (A) 159.9 117.5 140.3 133.9 117.6 (A) Lyondell sold 8.28 million shares of common stock on July 1, 2002 in a public offering and issued 34 million shares of Series B common stock to Occidental on August 22, 2002 in connection with the purchase of Occidental's 29.5% interest in Equistar. Lyondell paid a dividend to Occidental on December 31, 2002 by issuing 568,224 shares of Series B common stock to Occidental in lieu of a dividend payment in cash. Common shares outstanding on December 31, 2002 were 160.4 million shares. EBITDA (earnings before net interest, taxes, depreciation and amortization) for Lyondell and the proportionate share of its joint ventures was $145 million in the fourth quarter 2002. Proportionate EBITDA in the fourth quarter 2001 was $136 million, and in the third quarter of 2002 was $241 million. Supplemental Financial Data Full Full Year Year Millions of dollars 4Q2002 4Q2001 3Q2002 2002 2001 Sales and Other Operating Revenues (Lyondell and proportionate share of ventures) (A) $2,461 $1,561 $2,189 $8,166 $7,658 EBITDA (Lyondell and proportionate share of ventures) (B) 145 136 241 742 738 (A) Includes revenues from sales to affiliates. See the financial table SELECTED FINANCIAL AND OPERATING INFORMATION for components of proportionate share of sales and other operating revenues. (B) See reconciliation of Lyondell's net loss to operating income on the SELECTED FINANCIAL AND OPERATING INFORMATION financial table and reconciliation of operating income to EBITDA on the RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA financial table. For the year, individual results for Intermediate Chemicals & Derivatives (IC&D), Equistar Chemicals, LP, and LYONDELL-CITGO Refining LP (LCR) were comparable to 2001 results. Unfavorable economic conditions -- including high energy costs and weak supply/demand balances that characterize the chemical industry trough -- persisted throughout 2002. While Lyondell's performance improved mid year, that improvement was reversed in the fourth quarter by a confluence of factors: -- Energy costs continued their year-long climb into the fourth quarter, particularly impacting Equistar's performance. -- The supply/demand balance in the North American olefins industry weakened in the fourth quarter. -- While the oil-industry strike in Venezuela did not greatly affect LCR's profits, it did result in the reduction of fourth-quarter cash distributions from the joint venture to Lyondell. "Although industry conditions and a continued weak economy severely impacted our financial results in 2002, commitment to our operational excellence process enabled us to reduce costs and working capital, achieve our second consecutive year of record-setting safety performance and improve the reliability of our manufacturing operations," said Dan F. Smith, President and CEO of Lyondell Chemical Company. "Year-over-year operational improvements, coupled with our financing efforts, have enabled us to maintain sufficient liquidity to respond confidently to the uncertainties of the global market." OUTLOOK So far in the first quarter of 2003, energy and raw material costs are higher and more volatile than in the fourth quarter of 2002. Smith said Lyondell and Equistar have responded by announcing price increases, which they expect to realize in the first quarter 2003, for the majority of IC&D and Equistar products. Additionally, industry operating rates have increased from the fourth quarter and supply/demand balances in many product areas are tighter. Smith said Lyondell's first-quarter earnings would be impacted by the protracted situation in Venezuela, but added that LCR has acquired crude oil from alternate sources. While the alternate sources will not completely offset the financial impact of reduced supplies from Venezuela, they are profitable feedstocks. "We are confident that we have established both Venezuelan and spot-market supplies to enable LCR to operate at high rates until the situation is resolved," Smith said. "Despite these feedstock-related issues, we expect our actions and the improving industry environment to lead to better performance in the near future," Smith continued. "For example, industry analysts believe Equistar will enjoy improved supply/demand conditions beginning in March. And, if global energy market issues are resolved, we would expect a significant reduction in raw material costs. If these events occur, our operations should benefit from a rebound similar to what we saw in the second quarter of last year." LYONDELL AND JOINT VENTURES Lyondell's operations comprise: Lyondell's IC&D segment; Equistar, a joint venture with Millennium Chemicals Inc.; and LCR, a joint venture with CITGO Petroleum Corp. Each plays a unique role in supporting the enterprise during all phases of the business cycle. Lyondell's Intermediate Chemicals & Derivatives (IC&D) Segment -- The IC&D segment includes propylene oxide (PO) and derivatives, MTBE and styrene. IC&D Financial Overview Full Year Full Year Millions of dollars 4Q2002 4Q2001 3Q2002 2002 2001 Sales and Other Operating Revenues $890 $709 $855 $3,262 $3,193 Operating Income (A) 12 41 59 174 112 EBITDA (A) 78 90 117 410 425 (A) See reconciliation of Lyondell operating income (loss) to EBITDA on the RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA financial table. 4Q02 v. 3Q02 -- PO and derivatives were negatively impacted in the fourth quarter 2002 by high energy costs and holiday shutdowns at some customer operations, as well as turnaround activity in toluene diisocyanate (TDI). Performance in styrene was relatively unchanged, while MTBE performance was down consistent with typical fourth-quarter conditions. 4Q02 v. 4Q01 -- Competition in PO and its derivatives markets resulted in lower margins in the fourth quarter 2002. Additionally, slow sales late in the fourth quarter from the new BDO manufacturing plant in The Netherlands were not sufficient to fully offset increased costs. The financial impact of the TDI turnaround in the fourth quarter 2002 more than offset improved margins that resulted from price increases throughout the year. MTBE profits were slightly higher in 2002 as a result of temporary supply tightness in October. 2002 v. 2001 -- In PO and derivatives, increased volumes were insufficient to offset reduced margins in the derivatives products. However, TDI was an exception and experienced tighter supply throughout 2002, resulting in price increases and improved profitability. Supply/demand balance in the styrene industry improved in 2002. In MTBE, year-to-year performance was relatively unchanged from the strong performance in 2001. Equistar Chemicals, LP -- Lyondell owns a 70.5 percent interest in Equistar, which consists of the petrochemicals (including ethylene) and polymers segments. Equistar Financial Overview - 100% Basis Full Year Full Year Millions of dollars 4Q2002 4Q2001 3Q2002 2002 2001 Sales and Other Operating Revenues (A) $1,431 $1,185 $1,508 $5,537 $5,909 Operating Income (Loss) (B) (62) (43) 71 (44) (99) EBITDA (B) 14 39 147 256 250 (A) Includes revenues from sales to affiliates. (B) See reconciliation of Equistar operating income (loss) to EBITDA on the RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA financial table. 4Q02 v. 3Q02 -- The fourth quarter 2002 was primarily impacted by increasing raw material costs as, according to Chemical Marketing Associates Inc. (CMAI), the cost of ethylene production increased by 3 cents per pound compared to the third quarter. Equistar experienced an additional cost increase of nearly 1 cent per pound, attributable to planned maintenance at its olefins manufacturing plant in Chocolate Bayou, Texas. These cost increases were partially offset by a 1 cent per pound ethylene price increase, according to CMAI. Equistar's ethylene sales were approximately 50 million pounds below third-quarter sales. Most of the shortfall was concentrated in October and November. In the polymers segment, volumes were approximately 56 million pounds below third-quarter sales. Equistar's average selling price was below the third quarter 2002 level as a result of slightly lower domestic market prices and a lower-margin product mix. 4Q02 v. 4Q01 -- Equistar's ethylene and polymers prices increased 3 cents and 4 cents per pound, respectively, but this positive contribution was more than offset by the increasing cost of ethylene, which was driven principally by higher crude oil prices. 2002 v. 2001 -- Although, according to CMAI, volumes recovered over the course of the year, as demonstrated by 5 percent increase in industry polymers sales volumes, trough conditions continued in the industry, leading to reductions in pricing and margins in ethylene and polymers. LYONDELL-CITGO Refining LP (LCR) -- Lyondell owns a 58.75 percent interest in LCR, a major refiner of heavy crude oil. LCR Financial Overview - 100% Basis Full Year Full Year Millions of dollars 4Q2002 4Q2001 3Q2002 2002 2001 Sales and Other Operating Revenues (A) $956 $592 $891 $3,392 $3,284 Operating Income (B) 69 27 58 246 256 EBITDA (B) 98 54 86 362 364 (A) Includes revenues from sales to affiliates. (B) See reconciliation of LCR operating income to EBITDA on the RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA financial table. 4Q02 v. 3Q02 -- Despite a rate reduction in December due to the strike in Venezuela, in the fourth quarter LCR processed approximately 209,000 barrels per day of heavy Venezuelan crude, supplied under the Crude Supply Agreement (CSA) with Petroleos de Venezuela, S.A. (PDVSA). In the previous quarter, LCR processed 212,000 barrels per day of CSA crude. Spot crude volumes were down slightly, but margins were stronger, leading to a higher contribution from spot crude purchases. Increases in the cost of natural gas were offset by inventory reductions and CSA timing impacts. 4Q02 v. 4Q01 -- Total crude processing rates were 43,000 barrels per day higher in the fourth quarter 2002 compared to the same period a year ago when a scheduled major turnaround significantly reduced crude throughput. 2002 v. 2001 -- Overall performance was flat year to year as lower volumes of CSA crude, related to a declaration of force majeure by PDVSA in 2002, were offset by increased spot crude volumes. CONFERENCE CALL Lyondell will host a conference call today, Jan. 30, 2003, at 11:30 a.m. Eastern Time (ET). Participating on the call will be: Dan F. Smith, President and CEO; T. Kevin DeNicola, Senior Vice President and CFO; and Douglas J. Pike, Director of Investor Relations. The dial-in numbers are 888-385-9734 (U.S. - toll free) and 212-287-1615 (international). The call will be broadcast live on the Investor Relations page of the company's web site, www.lyondell.com . A replay of the call will be available from 1:30 p.m. ET Jan. 30 to 5 p.m. ET Feb. 7. The dial-in numbers are 800-294-0358 (U.S.) and 402-220-9749 (international). Pass code for each is 5549. Web replay will be available at 1:30 p.m. ET Jan. 30 on the Investor Relations page of the company's web site, www.lyondell.com . ABOUT LYONDELL Lyondell Chemical Company, (www.lyondell.com ), headquartered in Houston, Texas, is a leading producer of: propylene oxide (PO); PO derivatives, including toluene diisocyanate (TDI), propylene glycol (PG), butanediol (BDO) and propylene glycol ether (PGE); and styrene monomer and MTBE as co-products of PO production. Through its 70.5% interest in Equistar Chemicals, LP, Lyondell also is one of the largest producers of ethylene, propylene and polyethylene in North America and a leading producer of ethylene oxide, ethylene glycol, high value-added specialty polymers and polymeric powder. Through its 58.75% interest in LYONDELL-CITGO Refining LP, Lyondell is one of the largest refiners in the United States, principally processing extra heavy Venezuelan crude oil to produce gasoline, low sulfur diesel and jet fuel. FORWARD-LOOKING STATEMENTS 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: the cyclical nature of the chemical and refining industries; availability, cost and volatility of raw materials and utilities; governmental regulatory actions and political unrest; global economic conditions; industry production capacity and operating rates; the supply/demand balance for Lyondell's and its joint ventures' products; competitive products and pricing pressures; access to capital markets; technological developments 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, 2001, Lyondell's Quarterly Report on Form 10-Q for the quarter ended September 30, 2002, and Lyondell's Annual Report on Form 10-K for the year ended December 31, 2002, which will be filed in March 2003. LYONDELL CHEMICAL COMPANY SELECTED FINANCIAL AND OPERATING INFORMATION (UNAUDITED) (Millions of dollars) Lyondell Lyondell and Chemical Joint Ventures Proportionate Company Equistar LCR LMC Share of Equity (A) (B) 100% 100% 100% (B) Investments (C) Three months ended December 31, 2002: Sales and other operating revenues (D) $890 $1,431 $956 $--- $2,461 SG&A and R&D 42 43 14 --- 81 EBITDA 78 14 98 --- 145 Depreciation and amortization 67 (F) 77 (F) 29 --- 136 Interest expense, net 96 51 9 --- 137 Net loss (E) (93) Capital expenditures 2 (G) 75 12 --- 62 Cash dividends 28 Three months ended September 30, 2002: Sales and other operating revenues (D) $855 $1,508 $891 $--- $2,189 SG&A and R&D 47 51 13 --- 82 EBITDA 117 147 86 --- 241 Depreciation and amortization 62 (F) 74 (F) 28 --- 115 Interest expense, net 95 51 8 --- 127 Net loss (E) (2) Capital expenditures 8 (G) 14 11 --- 22 Cash dividends 28 Three months ended December 31, 2001: Sales and other operating revenues (D) $709 $1,185 $592 $24 $1,561 SG&A and R&D 48 60 17 2 84 EBITDA 90 39 54 (3) 136 Depreciation and amortization 66 (F) 81 (F) 27 3 114 Interest expense, net 92 52 10 --- 119 Net loss (E) (53) Capital expenditures 16 (G) 25 50 --- 56 Cash dividends 27 Year ended December 31, 2002: Sales and other operating revenues (D) $3,262 $5,537 $3,392 $36 $8,166 EBITDA 410 256 362 (4) 742 Interest expense, net 373 204 32 --- 497 Capital expenditures 22 (G) 118 65 --- 133 Cash dividends 109 Year ended December 31, 2001: Sales and other operating revenues (D) $3,193 $5,909 $3,284 $151 $7,658 EBITDA 425 250 364 (5) 738 Interest expense, net 369 189 51 --- 476 Capital expenditures 68 (G) 110 109 --- 177 Cash dividends 106 (A) Amounts shown, except for net interest expense, net loss and cash dividends, consist of the operating results of the Intermediate Chemicals and Derivatives ("IC&D") business segment of Lyondell. (B) As of May 1, 2002, Lyondell Methanol Company ("LMC") is wholly owned by Lyondell and its operations are included in the IC&D business segment. (C) This column reflects 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 had a 41% interest in Equistar Chemicals, LP ("Equistar") through August 22, 2002 and 70.5% thereafter, a 58.75% interest in LYONDELL-CITGO Refining LP ("LCR") and, through April 30, 2002, a 75% interest in LMC. (D) Includes revenues from sales to affiliates. (E) Includes income (loss) from equity investments. (F) Goodwill amortization ceased effective January 1, 2002. (G) In addition, Lyondell made contributions to PO-11 joint venture and U.S. PO joint venture of $24 million, $17 million and $45 million in the three-month periods ended December 31, 2002, September 30, 2002 and December 31, 2001, respectively, and $64 million and $119 million in the twelve-month periods ended December 31, 2002 and December 31, 2001, respectively. LYONDELL CHEMICAL COMPANY SELECTED FINANCIAL AND OPERATING INFORMATION (UNAUDITED) For the twelve For the three months ended months ended INCOME STATEMENTS December 31, September 30, December 31, (Millions of dollars, except per share data) 2002 2001 2002 2002 2001 Sales and other operating revenues $890 $709 $855 $3,262 $3,193 Operating costs and expenses: Cost of sales 836 613 749 2,898 2,862 Selling, general and administrative expenses 34 40 40 160 157 Research and development 8 8 7 30 32 Amortization of goodwill --- 7 --- --- 30 Operating income 12 41 59 174 112 Income (loss) from equity investment in Equistar (A) (B) (78) (29) 11 (117) (77) Income from equity investment in LCR 37 13 32 135 129 Income (loss) from other equity investments --- (5) 1 (4) (12) Interest expense, net (96) (92) (95) (373) (369) Other income (expense), net 2 (2) (5) (6) (4) Income (loss) before income taxes and extraordinary item (123) (74) 3 (191) (221) Benefit from income taxes (38) (26) (2) (58) (76) Income (loss) before extraordinary item (85) (48) 5 (133) (145) Extraordinary loss, net of income taxes (8) (5) (7) (15) (5) Net loss (A) $(93) $(53) $(2) $(148) $(150) Basic and diluted loss per share: Income (loss) before extraordinary item $(0.53) $(0.42) $0.04 $(0.99) $(1.24) Net loss (A) $(0.58) $(0.46) $(0.02) $(1.10) $(1.28) Shares (in thousands) (C): Basic 159,851 117,563 140,258 133,943 117,563 Diluted 159,851 117,563 140,258 133,943 117,563 INTERMEDIATE CHEMICALS AND DERIVATIVES SEGMENT SELECTED OPERATING INFORMATION Sales Volumes (millions) PO and derivatives (pounds) (D) 744 739 767 3,028 2,803 Co-products: Styrene monomer (pounds) 889 787 798 3,337 3,132 MTBE and other TBA derivatives (gallons) 303 284 311 1,209 1,157 (A) Lyondell's share of Equistar's $1.1 billion charge for the write-off of goodwill, or $432 million, was offset by Lyondell's write-off of a portion of the difference between its investment in Equistar and its share of Equistar's partners' capital. (B) Lyondell had a 41% interest in Equistar through August 22, 2002 and 70.5% thereafter. (C) Lyondell sold 8,280,000 shares of common stock on July 1, 2002 and issued 34,000,000 shares of Series B common stock to Occidental on August 22, 2002. Lyondell paid a dividend to Occidental on December 31, 2002 by issuing 568,224 shares of Series B common stock to Occidental in lieu of a dividend payment in cash. (D) Includes propylene oxide ("PO"), PO derivatives and isocyanates. LYONDELL CHEMICAL COMPANY SELECTED FINANCIAL AND OPERATING INFORMATION (UNAUDITED) (Millions of dollars) RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA For the twelve For the three months ended months ended December 31, September 30, December 31, 2002 2001 2002 2002 2001 Lyondell Operating income $12 $41 $59 $174 $112 Add: Restructuring charges (credits) (A) (3) (15) --- (3) 63 Depreciation and amortization 67 66 62 244 254 Other income (expense), net 2 (2) (5) (6) (4) Income from other equity investments --- --- 1 1 --- Lyondell EBITDA excluding restructuring charges (credits) $78 $90 $117 $410 $425 Equistar Operating income (loss) $(62) $(43) $71 $(44) $(99) Add: Facility closing costs (B) --- --- --- --- 22 Depreciation and amortization 77 81 74 298 319 Other income (expense), net (1) 1 2 2 8 Equistar EBITDA excluding facility closing costs $14 $39 $147 $256 $250 Proportionate Share - % varies (C) $10 $16 $74 $122 $103 LCR Operating income $69 $27 $58 $246 $256 Add: Depreciation and amortization 29 27 28 116 108 LCR EBITDA $98 $54 $86 $362 $364 Proportionate Share - 58.75% $58 $32 $51 $213 $214 EBITDA - Lyondell and Proportionate Share of Equity Investments Lyondell EBITDA excluding restructuring charges (credits) $78 $90 $117 $410 $425 Lyondell share of Equistar EBITDA excluding facility closing costs (C) 10 16 74 122 103 58.75% of LCR EBITDA 58 32 51 213 214 75% of LMC EBITDA through April 30, 2002 --- (2) --- (3) (4) Lyondell and Proportionate Share of Equity Investments $145 $136 $241 $742 $738 (A) Restructuring charges (credits) related to shutdown of Lyondell's ADI business. (B) Closing costs related to Equistar's Port Arthur, Texas facility. (C) Lyondell had a 41% interest in Equistar through August 22, 2002 and 70.5% thereafter. LYONDELL CHEMICAL COMPANY SELECTED FINANCIAL INFORMATION (UNAUDITED) (Millions of dollars) For the twelve months ended December 31, STATEMENTS OF CASH FLOWS 2002 2001 Net loss $(148) $(150) Adjustments: Depreciation and amortization 244 254 Loss from equity investments 121 89 Extraordinary loss 15 5 Accounts receivable (7) 154 Inventories (14) 48 Accounts payable 13 (74) Prepaid expenses and other current assets 62 (85) Other accrued liabilities 7 (21) Other assets and liabilities, net (4) (21) Net cash provided by operating activities 289 199 Purchase of equity investment in Equistar (440) --- Contributions and advances to affiliates (A) (114) (173) Expenditures for property, plant and equipment (22) (68) Distributions from affiliates in excess of earnings --- 50 Purchase of other short-term investments (44) --- Other (3) --- Net cash used in investing activities (623) (191) Issuance of Series B common stock, warrants and right 440 --- Issuance of common stock 110 --- Issuance of long-term debt 606 393 Repayment of long-term debt (532) (394) Dividends paid (109) (106) Other (44) (15) Net cash provided by (used in) financing activities 471 (122) Effect of exchange rate changes on cash 3 --- Increase (decrease) in cash and cash equivalents $140 $(114) (A) Includes contributions to PO-11 joint venture and U.S. PO joint venture of $64 million and $119 million in the twelve-month periods ended December 31, 2002 and 2001, respectively. LYONDELL CHEMICAL COMPANY SELECTED FINANCIAL INFORMATION (UNAUDITED) (Millions of dollars) December 31, December 31, BALANCE SHEET 2002 2001 Cash and cash equivalents $286 $146 Other short-term investments 44 --- Accounts receivable, net 396 352 Inventories 344 316 Prepaid expenses and other current assets 66 116 Deferred tax assets 35 277 Total current assets 1,171 1,207 Property, plant and equipment, net 2,369 2,293 Investments and long-term receivables: Investment in Equistar (A) 1,184 522 Investment in PO joint ventures 770 717 Receivable from LCR 229 229 Investment in LCR 68 29 Investment in LMC (B) --- 36 Other investments and long-term receivables 98 86 Goodwill, net 1,130 1,102 Other assets, net 429 482 Total assets $7,448 $6,703 Accounts payable $344 $319 Current maturities of long-term debt 1 7 Other accrued liabilities 279 233 Total current liabilities 624 559 Long-term debt 3,926 3,846 Other liabilities 673 583 Deferred income taxes (A) 881 790 Minority interest 165 176 Stockholders' equity (160,413,144 and 117,562,920 shares outstanding respectively at December 31, 2002 and December 31, 2001) (C) 1,179 749 Total liabilities and stockholders' equity $7,448 $6,703 For the three For the twelve months ended months ended December 31, December 31, 2002 2002 Investment in Equistar, beginning of period $1,275 $522 Purchase of Occidental's interest 12 804 Lyondell's share of Equistar net loss (78) (117) Lyondell's share of Equistar minimum pension liability (25) (25) Investment in Equistar, end of period $1,184 $1,184 Investment in LCR, beginning of period $54 $29 Lyondell's share of LCR net income 37 135 Lyondell's share of LCR minimum pension liability (16) (16) Cash distributions from LCR (12) (126) Cash contributions to LCR 5 46 Investment in LCR, end of period $68 $68 (A) On August 22, 2002, Lyondell acquired Occidental's 29.5% interest in Equistar. Lyondell issued Series B common stock, warrants and a right valued at $452 million and recorded deferred taxes of $352 million. (B) Through April 30, 2002, Lyondell's share of LMC's net loss was $5 million and contributions to LMC were $4 million. Effective May 1, 2002, LMC became a wholly owned subsidiary of Lyondell. LMC is consolidated with Lyondell prospectively from that date. (C) Lyondell sold 8,280,000 shares of common stock on July 1, 2002 and issued 34,000,000 shares of Series B common stock to Occidental on August 22, 2002. Lyondell paid a dividend to Occidental on December 31, 2002 by issuing 568,224 shares of Series B common stock to Occidental in lieu of a dividend payment in cash. LYONDELL CHEMICAL COMPANY EQUISTAR CHEMICALS, LP SELECTED FINANCIAL AND OPERATING INFORMATION (UNAUDITED) For the twelve For the three months ended months ended INCOME STATEMENTS December 31, September 30, December 31, (Millions of dollars) 2002 2001 2002 2002 2001 Sales and other operating revenues (A) $1,431 $1,185 $1,508 $5,537 $5,909 Operating costs and expenses: Cost of sales 1,450 1,160 1,386 5,388 5,733 Selling, general and administrative expenses 33 50 41 155 181 Research and development 10 10 10 38 39 Amortization of goodwill --- 8 --- --- 33 Facility closing costs --- --- --- --- 22 Operating income (loss) (62) (43) 71 (44) (99) Interest expense, net (51) (52) (51) (204) (189) Other income (expense), net (1) 1 2 2 8 Income (loss) before extraordinary loss and cumulative effect of accounting change (114) (94) 22 (246) (280) Extraordinary loss --- --- --- --- (3) Cumulative effect of accounting change (B) --- --- --- (1,053) --- Net income (loss) (C) $(114) $(94) $22 $(1,299) $(283) SELECTED FINANCIAL AND OPERATING INFORMATION (Millions of dollars) Sales and other operating revenues (A) Petrochemicals segment $1,284 $1,042 $1,362 $4,957 $5,384 Polymers segment 476 428 503 1,868 1,980 Intersegment eliminations (329) (285) (357) (1,288) (1,455) Total $1,431 $1,185 $1,508 $5,537 $5,909 Operating income (loss) Petrochemicals segment $(5) $50 $96 $146 $275 Polymers segment (33) (48) 6 (74) (186) Unallocated (24) (45) (31) (116) (188) Total $(62) $(43) $71 $(44) $(99) EBITDA before facility closing costs, extraordinary loss and cumulative effect of accounting change $14 $39 $147 $256 $250 Sales Volumes (millions) (A) Selected petrochemical products: Ethylene, propylene and other olefins (pounds) 4,026 3,884 4,259 16,815 16,236 Aromatics (gallons) 87 92 92 369 366 Polymers products (pounds) 1,471 1,460 1,527 6,098 5,862 (A) Includes revenues and volumes from sales to affiliates. (B) Concurrent with the adoption of FASB Statement No. 142, Goodwill and Other Intangible Assets, Equistar reviewed goodwill for impairment and concluded that the entire balance was impaired, resulting in the $1.1 billion charge. (C) As a partnership, Equistar is not subject to federal income taxes. LYONDELL CHEMICAL COMPANY EQUISTAR CHEMICALS, LP SELECTED FINANCIAL INFORMATION (UNAUDITED) (Millions of dollars) December 31, December 31, BALANCE SHEETS 2002 2001 Cash and cash equivalents $27 $202 Accounts receivable, net 625 540 Inventories 424 448 Prepaid expenses and other current assets 50 36 Total current assets 1,126 1,226 Property, plant and equipment, net 3,565 3,705 Goodwill, net --- 1,053 Other assets, net 361 324 Total assets $5,052 $6,308 Accounts payable $459 $360 Current maturities of long-term debt 32 104 Other accrued liabilities 223 197 Total current liabilities 714 661 Long-term debt 2,196 2,233 Other liabilities 221 177 Partners' capital 1,921 3,237 Total liabilities and partners' capital $5,052 $6,308 For the three months For the twelve months ended December 31, ended December 31, OTHER INFORMATION 2002 2001 2002 2001 Depreciation and amortization $77 $81 $298 $319 Cash flow from operations 173 111 55 230 Capital expenditures 75 25 118 110 LYONDELL CHEMICAL COMPANY LYONDELL-CITGO REFINING LP SELECTED FINANCIAL AND OPERATING INFORMATION (UNAUDITED) Dec. 31, Dec. 31, CONDENSED BALANCE SHEETS (Millions of dollars) 2002 2001 Total current assets $356 $230 Property, plant and equipment, net 1,312 1,343 Deferred charges and other assets, net 87 97 Total assets $1,755 $1,670 Notes payable $--- $50 Other current liabilities 514 335 Long-term debt 450 450 Loans payable to partners 264 264 Other liabilities and deferred credits 122 79 Partners' capital 405 492 Total liabilities and partners' capital $1,755 $1,670 For the twelve For the three months ended months ended INCOME STATEMENTS December 31, September 30, December 31, (Millions of dollars) 2002 2001 2002 2002 2001 Sales and other operating revenues (A) $956 $592 $891 $3,392 $3,284 Operating costs and expenses: Cost of sales 873 548 820 3,093 2,967 Selling, general and administrative expenses 14 17 13 53 61 Operating income 69 27 58 246 256 Interest expense, net (9) (10) (8) (32) (51) Income before extraordinary loss 60 17 50 214 205 Extraordinary loss (1) --- --- (1) (2) Net income (B) $59 $17 $50 $213 $203 OTHER INFORMATION (Millions of dollars) Depreciation and amortization $29 $27 $28 $116 $108 Cash flow from operations 144 7 89 361 280 Capital expenditures 12 50 11 65 109 EBITDA before extraordinary loss $98 $54 $86 $362 $364 SELECTED OPERATING INFORMATION Sales Volumes (including intersegment sales) (A) Refined products (thousand barrels per day): Gasoline 116 81 118 115 101 Diesel and heating oil 90 63 83 84 71 Jet fuel 15 13 20 18 20 Aromatics 9 8 9 9 8 Other refinery products 81 113 91 96 107 Total refined products volumes 311 278 321 322 307 Refinery Runs Crude processing rates (thousand barrels per day): Crude Supply Agreement 209 196 212 213 229 Other crude oil 41 11 51 46 19 Total crude oil 250 207 263 259 248 (A) Includes revenues and volumes from sales to affiliates. (B) As a partnership, LCR is not subject to federal income taxes. SOURCE Lyondell Chemical Company |