* Lyondell reports net income of $254 million or 98 cents per share on a fully diluted basis - Increased product margins drive ethylene, co-products and derivatives segment operating income to $395 million - Propylene oxide and related products segment operating income increases by $122 million versus previous quarter * Debt reduction continues with the call of an additional $300 million - Total of $800 million called since August 2004 * Millennium acquisition, including Equistar ownership, adds $71 million to quarterly net income
HOUSTON, April 28, 2005 /PRNewswire-FirstCall via COMTEX/ -- Lyondell Chemical Company (NYSE: LYO) today announced net income for the first quarter 2005 of $254 million which equates to 98 cents per share on a fully diluted basis ($1.04 basic earnings per share). This compares to a net loss of $15 million, or 8 cents per share, for the first quarter 2004, and net income of $16 million, or 8 cents per share, for the fourth quarter 2004.
Table 1 - Lyondell Earnings Summary (A) Millions of dollars except per share amounts 1Q 2005 1Q 2004 4Q 2004 (B) Sales and other operating revenues $4,446 $1,105 $2,395 Net income (loss) 254 (15) 16 Basic earnings (loss) per share 1.04 (0.08) 0.08 Diluted earnings (loss) per share (C) 0.98 (0.08) 0.08 Basic weighted average shares outstanding (millions) 244.5 176.5 200.5 Diluted weighted average shares outstanding (millions) (C) 259.8 176.5 207.7 (A) Results include the operations of Equistar and Millennium prospectively from December 1, 2004. Prior to December 1, 2004, Lyondell's 70.5% interest in Equistar was accounted for as an equity investment. (B) Fourth quarter 2004 results include a $64 million non-cash charge for purchased in-process research and development related to the acquisition of Millennium. (C) Includes the dilutive effect of the convertible debentures and outstanding stock options and warrants.
Adjustments related to accounting for the acquisition of Millennium on November 30, 2004 did not significantly affect first-quarter 2005 net income. Both the first quarter 2005 and the fourth quarter 2004 include $12 million of charges related to the early retirement of Lyondell debt.
"After significant fourth-quarter price increases, the first quarter was characterized by steady pricing in the ethylene and ethylene derivative areas and, consequently, continued strong margins," said Dan F. Smith, president and CEO of Lyondell Chemical Company. "Similarly, refining margins remained strong while propylene oxide and derivatives and inorganic chemicals margins continued to increase. With the exception of some slowing in ethylene derivatives sales, first-quarter sales volumes remained strong at the nearly sold-out levels established during the fourth quarter. The strength of the business is evident in our financial results as Lyondell generated $254 million of first-quarter net income compared to $54 million during the entire year of 2004. Consistent with these results, our commitment to debt reduction remains on track, as demonstrated by our call of an additional $300 million of debt during the quarter."
OUTLOOK
Business conditions continue to be positive for the majority of Lyondell's products and the company continues to benefit from the competitive advantage provided by its crude oil-based ethylene facilities. Thus far in the second quarter, Lyondell has benefited from the expected seasonal improvement in its MTBE and titanium dioxide products and continued improvement in the propylene oxide chain. Scheduled maintenance activity at LYONDELL-CITGO Refining (LCR) is expected to adversely affect LCR's second-quarter operating income by $30 million to $50 million.
"Supply/demand fundamentals remain strong for the industry and, although some product prices have come off of the highs reached in the first quarter, they remain above average fourth-quarter prices. Despite minor bumps in the road, we expect the year to show continued strengthening across the breadth of our product portfolio. Our view of industry fundamentals and our belief in the strength of the cyclical recovery are unaltered. Our strategy and focus on debt reduction remain unchanged," said Smith.
LYONDELL BUSINESS RESULTS DISCUSSION BY REPORTING SEGMENT
Lyondell's operations are reported in four segments: 1) Ethylene, co- products and derivatives; 2) Propylene oxide (PO) and related products; 3) Inorganic chemicals; and 4) Refining, which consists of Lyondell's 58.75 percent ownership of LCR, a joint venture with CITGO Petroleum Corp.
Ethylene, Co-products and Derivatives Segment -- The primary products of this segment are ethylene, ethylene co-products (propylene, butadiene, benzene and toluene) and derivatives of ethylene (polyethylene, ethylene oxygenates and vinyl acetate monomer or VAM). Lyondell acquired Millennium on November 30, 2004; Millennium's acetyls products and its 29.5 percent interest in Equistar are included in this segment.
Table 2 - Ethylene, Co-Products & Derivatives Financial Overview (A) Millions of dollars 1Q 2005 1Q 2004 4Q 2004 Sales and other operating revenues $2,974 $1,962 $2,816 Operating income 395 61 213 EBITDA (B) 486 136 290 (A) The first quarter 2005 includes Millennium's Acetyls business which had sales of $113 million and operating income of $18 million. For periods prior to January 1, 2005, the Ethylene, Co-Products and Derivatives information represents the historical operating results of Equistar on a 100% basis. See Table 6 for additional segment information. (B) See Table 9 for reconciliations of segment EBITDA to net income (loss) of Lyondell and Equistar, respectively.
The following discussion addresses business conditions independent of ownership.
1Q05 v. 4Q04 -- Ethylene and ethylene derivative product sales volumes decreased approximately 170 million pounds (or 5.5 percent) versus the fourth quarter 2004 primarily as a result of reduced polyethylene exports sales. In general, ethylene and ethylene derivative product prices averaged between 1 cent and 6 cents per pound higher than fourth-quarter average prices. Polyethylene and ethylene oxide experienced the largest increases. The exception to these increases was ethylene glycol, the price of which decreased by approximately 3 cents per pound. First-quarter results benefited as increased raw material costs were more than offset by co-product price increases. Acetyls results were relatively unchanged as higher prices largely offset lower sales volumes. Segment operating costs were lower due to various items including lower employee incentive pay accruals.
1Q05 v. 1Q04 -- Ethylene and ethylene derivative sales volumes were comparable to the first quarter 2004. The quarterly average price of these products increased between 7 cents and 17 cents per pound. Polyethylene had the strongest increase while ethylene increases were at the low end of the range. Significantly higher raw material costs were largely offset by increased co-product prices. Acetyls results benefited from increased margins which more than offset lower sales volumes.
Propylene Oxide and Related Products Segment -- The principal products of the propylene oxide and related products segment include propylene oxide (PO), PO derivatives (propylene glycol, propylene glycol ethers, butanediol and butanediol derivatives), styrene, MTBE, and toluene diisocyanate (TDI).
Table 3 - PO & Related Products Financial Overview (A) Millions of dollars 1Q 2005 1Q 2004 4Q 2004 Sales and other operating revenues $1,529 $1,105 $1,433 Operating income (loss) 96 23 (26) EBITDA (B) 146 86 37 (A) See Table 6 for additional segment information. (B) See Table 9 for a reconciliation of segment EBITDA to net income (loss) of Lyondell.
1Q05 v. 4Q04 -- PO and PO derivative products continued to benefit from margin expansion leading to profit improvement of approximately $35 million. MTBE margins followed seasonal patterns, increasing by approximately 16 cents per gallon, resulting in a $35 million profit improvement. Styrene results were unchanged while TDI improved moderately compared to the fourth quarter, which included higher costs related to maintenance activity. Segment operating costs were lower due to various items including lower employee incentive pay accruals.
1Q05 v. 1Q04 -- Versus the year-ago quarter, PO and PO derivative product results improved by approximately $55 million, primarily as a result of increased margins. MTBE results improved by approximately $20 million as a result of higher raw material margins. Styrene and TDI results were relatively unchanged versus the prior-year quarter.
Inorganic Chemicals Segment -- The principal product of the inorganic chemicals segment is titanium dioxide (TiO2). Lyondell acquired Millennium on November 30, 2004.
Table 4 - Inorganic Chemicals Financial Overview (A) Millions of dollars 1Q 2005 1Q 2004 4Q 2004 Sales and other operating revenues $318 --- $97 Operating income 21 --- 6 EBITDA (B) 45 --- 15 (A) Includes Inorganic Chemicals segment prospectively from December 1, 2004. See Table 6 for additional segment information. (B) See Table 9 for a reconciliation of segment EBITDA to net income (loss) of Lyondell.
The following discussion addresses the business conditions independent of ownership.
1Q05 v. 4Q04 -- Sales volumes of approximately 140,000 metric tons were relatively unchanged, while sales prices increased by approximately $60 per metric ton.
1Q05 v. 1Q04 -- Sales volumes were approximately 25,000 metric tons lower versus the year-ago quarter during which sales volumes increased in order to reduce inventory levels. Prices were $230 per metric ton higher than the first quarter 2004.
Refining Segment -- Lyondell owns a 58.75 percent interest in LCR, a major refiner of heavy crude oil. This investment is accounted for using the equity method.
Table 5 - Refining Financial Overview - 100% Basis (A) Millions of dollars 1Q 2005 1Q 2004 4Q 2004 Sales and other operating revenues $1,536 $1,154 $1,564 Operating income 118 101 165 EBITDA (B) 146 131 193 (A) The Refining segment information presented above represents the historical operating results of LCR on a 100% basis. See Table 6 for additional segment information. (B) See Table 9 for a reconciliation of segment EBITDA to net income of LCR.
1Q05 v. 4Q04 -- Total crude processing rates were relatively unchanged as the refinery processed 43,000 barrels per day of spot crude and 219,000 barrels per day under the Venezuelan crude supply contract. The contribution of aromatic products increased by approximately $20 million versus the fourth quarter, which was negatively affected by scheduled maintenance activity. Unfavorable timing factors within the Venezuelan crude supply contract related to petroleum product price volatility reduced profits versus the fourth quarter during which these timing factors favorably impacted results.
1Q05 v. 1Q04 -- Total crude processing rates were relatively unchanged. Spot crude margins increased by more than $7 per barrel versus the first quarter 2004. As a result of strong market conditions, the contribution of aromatics to earnings increased by approximately $15 million versus the first quarter 2004. Unfavorable timing factors within the Venezuelan crude supply contract reduced profits versus the first quarter 2004 during which these factors were favorable.
CASH DISTRIBUTIONS AND DEBT REDUCTION
During the first quarter 2005, net distributions received by Lyondell from LCR were $71 million. (Distributions from LCR totaled $98 million and contributions to LCR totaled $27 million.) Lyondell paid $200 million toward early debt reduction. Additionally, the company called $300 million of debt, which will be paid on May 2, 2005.
CONFERENCE CALL
Lyondell will host a conference call today, April 28, 2005, 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). 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 April 28 to 5 p.m. ET on May 6. The dial-in numbers are 800-945-0145 (U.S.) and 402-220-3525 (international). Pass code for each is 5549. Web replay will be available at 2:30 p.m. ET April 28 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 April 28 at http://www.lyondell.com/earnings .
ABOUT LYONDELL
Lyondell Chemical Company, headquartered in Houston, Texas, is North America's third-largest independent, publicly traded chemical company. Lyondell is a major global manufacturer of basic chemicals and derivatives including ethylene, propylene, titanium dioxide, styrene, polyethylene, propylene oxide and acetyls. It also is a significant producer of gasoline blending components. The company has a 58.75 percent interest in Lyondell- Citgo Refining LP, a refiner of heavy, high-sulfur crude oil. As a result of Lyondell's November 30, 2004 acquisition of Millennium Chemicals Inc., Millennium and Equistar Chemicals, LP are wholly owned subsidiaries of Lyondell. Lyondell is a global company operating on five continents and employs approximately 10,000 people worldwide.
FORWARD-LOOKING STATEMENTS
The statements in this release and the related teleconference relating to matters that are not historical facts are forward-looking statements. Forward-looking statements are subject to 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; uncertainties associated with the U.S. and worldwide economies; current and potential governmental regulatory actions; terrorist acts; international political unrest; operating interruptions; legal, tax and environmental proceedings; cyclical nature of the chemical and refining industries; competitive products and pricing; industry production capacities and operating rates; supply/demand balances; risks of doing business outside of the U.S.; access to capital markets; technological developments; and other risk factors. All of such forward-looking statements are based upon the current beliefs and expectations of management, and are subject to significant risks and uncertainties. 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, 2004, and the Lyondell, Equistar and Millennium Quarterly Reports on Form 10-Q for the quarter ended March 31, 2005, which will be filed with the SEC in May 2005.
Table 6 - Selected Unaudited Segment Financial Information (A) For the three months ended March 31, December 31, (Millions of dollars) 2005 2004 2004 Sales and other operating revenues (B) Ethylene, Co-Products & Derivatives $2,974 $1,962 $2,816 PO & Related Products 1,529 1,105 1,433 Inorganic Chemicals 318 --- 97 Refining 1,536 1,154 1,564 Operating income (loss) Ethylene, Co-Products & Derivatives $395 $61 $213 PO & Related Products 96 23 (26) Inorganic Chemicals 21 --- 6 Refining 118 101 165 Depreciation and amortization Ethylene, Co-Products & Derivatives $95 $76 $79 PO & Related Products 58 63 63 Inorganic Chemicals 24 --- 8 Refining 28 30 28 EBITDA (C) Ethylene, Co-Products & Derivatives $486 $136 $290 PO & Related Products 146 86 37 Inorganic Chemicals 45 --- 15 Refining 146 131 193 Capital expenditures Ethylene, Co-Products & Derivatives $37 $19 $32 PO & Related Products 14 11 19 Inorganic Chemicals 5 --- 4 Refining 34 15 29 (A) The EC&D data for periods prior to January 1, 2005 represents Equistar results on a 100% basis. Prior to December 1, 2004, Equistar was accounted for as an equity investment. See Table 13 for additional Equistar financial information. See Table 8 for a reconciliation of segment information for the three months ended March 31, 2005 and a reconciliation of PO and Related Products segment data for the three months ended December 31, 2004 to consolidated Lyondell financial information. See Table 10 for PO and Related Products data for the quarter ended March 31, 2004. The Refining information presented above represents the historical operating results of LCR on a 100% basis. See Table 19 for additional LCR financial information. (B) Sales include sales to affiliates and intersegment sales. (C) See Table 9 for reconciliation of segment EBITDA to net income (loss). Table 7 - Selected Segment Sales Volumes (A) (B) For the three months ended March 31, Dec. 31, 2005 2004 2004 Ethylene, Co-Products and Derivatives (in millions) Ethylene and derivatives (pounds) 2,908 2,720 2,881 Polyethylene included above (pounds) 1,337 1,337 1,460 Co-products, nonaromatic (pounds) 2,034 1,915 2,029 Aromatics (gallons) 102 93 105 PO and Related Products (in millions) PO and derivatives (pounds) 884 885 885 Co-products: Styrene monomer (pounds) 982 931 997 MTBE and other TBA derivatives (gallons) 283 272 289 Inorganic Chemicals (thousands of metric tons) TiO2 142 --- 45 Refined products (thousand barrels per day) Gasoline 117 115 119 Diesel and heating oil 88 90 92 Jet fuel 20 16 17 Aromatics 8 8 7 Other refined products 87 92 105 Total refined products volumes 320 321 340 Refinery Runs Crude processing rates (thousand barrels per day) Crude Supply Agreement 219 238 235 Other crude oil 43 25 26 Total crude oil 262 263 261 (A) The EC&D data for periods prior to January 1, 2005 represents Equistar results on a 100% basis. Prior to December 1, 2004, Equistar was accounted for as an equity investment. The Refining information presented above represents the historical operating results of LCR on a 100% basis. (B) Sales volumes include sales to affiliates and intersegment sales. Table 8 - Reconciliation of Segment Information to Consolidated 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, 2005: Segment Data Ethylene, Co-Products & Derivatives $2,974 $395 $95 $37 PO & Related Products 1,529 96 58 14 Inorganic Chemicals 318 21 24 5 Other (A) (375) (2) 1 2 Lyondell (consolidated) $4,446 $510 $178 $58 For the three months ended December 31, 2004: Segment Data PO & Related Products $1,433 $(26) $63 $19 Add: December 2004 Equistar operations 945 88 26 16 December 2004 Millennium operations 148 (49) 9 5 Other (A) (131) --- 5 --- Lyondell (consolidated) $2,395 $13 $103 $40 (A) Includes elimination of intersegment transactions, non-reportable segments and items not allocated to segments. Table 9 - Reconciliation of Segment EBITDA to Net Income (Loss) For the three months ended March 31, Dec. 31, (Millions of dollars) 2005 2004 2004 LYONDELL Segment EBITDA: Ethylene, Co-Products & Derivatives (A) $486 --- $145 PO & Related Products 146 86 37 Inorganic Chemicals (B) 45 --- 15 Other 1 --- (3) Add: Income from equity investment in Equistar --- 6 48 Income from equity investment in LCR 67 56 95 Deduct: Depreciation and amortization (178) (63) (103) Interest expense, net (158) (109) (124) Provision for income taxes (143) 9 (3) In-process research and development --- --- (64) Debt prepayment premiums and charges (12) --- (12) Intercompany profit elimination --- --- (15) Lyondell net income (loss) $254 $(15) $16 Equistar EBITDA (C) $136 $290 Deduct: Depreciation and amortization (76) (79) Interest expense, net (55) (55) Equistar net income $5 $156 Refining EBITDA (D) $146 $131 $193 Deduct: Depreciation and amortization (28) (30) (28) Interest expense, net (8) (10) (6) LCR net income $110 $91 $159 (A) The EC&D segment information reflects the consolidation of Millennium and Equistar prospectively from December 1, 2004. For periods prior to December 1, 2004, Equistar was accounted for as an equity investment. See Tables 13 and 16 for additional Equistar and Millennium financial information, respectively. (B) The Inorganic Chemicals segment information reflects the consolidation of Millennium prospectively from December 1, 2004. (C) The Equistar information presented above represents the historical operating results of Equistar on a 100% basis. See Table 13 for additional Equistar financial information. (D) The Refining information presented above represents the historical operating results of LCR on a 100% basis. See Table 19 for additional LCR financial information. Table 10 - Lyondell Unaudited Income Statement Information (A) For the three months ended (Millions of dollars, except per March 31, Dec. 31, share data) 2005 2004 2004 Sales and other operating revenues $4,446 $1,105 $2,395 Cost of sales 3,784 1,029 2,167 Selling, general and administrative expenses 129 45 134 Research and development expenses 23 8 17 Purchased in-process research and development --- --- 64 Operating income 510 23 13 Income from equity investment in Equistar --- 6 48 Income from equity investment in LCR 67 56 95 Income from other equity investments 1 1 4 Interest expense, net (158) (109) (124) Other expense, net (23) (1) (17) Income (loss) before income taxes 397 (24) 19 Provision for (benefit from) income taxes 143 (9) 3 Net income (loss) $254 $(15) $16 Basic earnings (loss) per share: $1.04 $(0.08) $0.08 Diluted earnings (loss) per share: $0.98 $(0.08) $0.08 Weighted average shares (in millions): Basic 244.5 176.5 200.5 Diluted 259.8 176.5 207.7 (A) Results of operations include the operations of Equistar and Millennium prospectively from December 1, 2004. Prior to December 1, 2004, Equistar was accounted for as an equity investment. Table 11 - Lyondell Unaudited Cash Flow Information (A) For the three months ended March 31, (Millions of dollars) 2005 2004 Net income (loss) $254 $(15) Adjustments: Depreciation and amortization 178 63 Income from equity investments (68) (6) Distributions of earnings from affiliates 67 --- Deferred income taxes 115 (10) Debt prepayment charges and premiums 12 --- Changes in assets and liabilities: Accounts receivable (342) (26) Inventories (136) 11 Accounts payable 133 (6) Other assets and liabilities, net (49) 57 Cash provided by operating activities 164 68 Expenditures for property, plant and equipment (58) (11) Distributions from affiliates in excess of earnings 35 18 Contributions and advances to affiliates (30) (13) Other 3 --- Cash used in investing activities (50) (6) Repayment of long-term debt (211) --- Dividends paid (55) (31) Exercise of stock options 34 4 Other (2) (1) Cash used in financing activities (234) (28) Effect of exchange rate changes on cash 5 (1) Increase (decrease) in cash and cash equivalents $(115) $33 (A) Equistar and Millennium became wholly owned subsidiaries as of December 1, 2004. Prior to December 1, 2004, Lyondell's investment in Equistar was accounted for on an equity basis. Table 12 - Lyondell Unaudited Balance Sheet Information March 31, Dec. 31, (Millions of dollars) 2005 2004 Cash and cash equivalents $689 $804 Accounts receivable, net 1,898 1,569 Inventories 1,746 1,619 Prepaid expenses and other current assets 146 189 Deferred tax assets 238 276 Total current assets 4,717 4,457 Property, plant and equipment, net 7,055 7,215 Investments and long-term receivables: Investment in PO joint ventures 814 838 Investment in and receivable from LCR 188 192 Other investments and long-term receivables 161 160 Goodwill, net 2,175 2,175 Other assets, net 909 891 Total assets $16,019 $15,928 Accounts payable $1,314 $1,197 Current maturities of long-term debt 556 308 Accrued liabilities 760 790 Total current liabilities 2,630 2,295 Long-term debt 7,087 7,555 Other liabilities 1,749 1,747 Deferred income taxes 1,587 1,477 Minority interest 172 181 Stockholders' equity (246,877,485 and 244,541,913 shares outstanding at March 31, 2005 and December 31, 2004, respectively) 2,794 2,673 Total liabilities and stockholders' equity $16,019 $15,928 Tables 13 through 21 represent additional financial information on a 100% basis for Equistar, Millennium and LCR. Table 13 - Equistar Unaudited Income Statement Information (A) For the three months ended March 31, Dec. 31, (Millions of dollars) 2005 2004 2004 Sales and other operating revenues (B) $2,861 $1,962 $2,816 Cost of sales 2,417 1,857 2,524 Selling, general and administrative expenses 47 41 68 Research and development expenses 8 7 11 Gain on asset dispositions --- (4) --- Operating income 389 61 213 Interest expense, net (54) (55) (55) Other expense, net (3) (1) (2) Net income (C) $332 $5 $156 (A) Represents information for Equistar on a stand-alone basis and does not reflect purchase accounting adjustments. (B) Sales and other operating revenues include sales to affiliates. (C) As a partnership, Equistar is not subject to federal income taxes. Table 14 - Equistar Unaudited Balance Sheet Information (A) March 31, Dec. 31, (Millions of dollars) 2005 2004 Cash and cash equivalents $140 $39 Accounts receivable, net (B) 1,107 826 Inventories 653 582 Prepaid expenses and other current assets 38 43 Total current assets 1,938 1,490 Property, plant and equipment, net 3,137 3,167 Investments 59 60 Other assets, net 351 357 Total assets $5,485 $5,074 Accounts payable $689 $532 Current maturities of long-term debt 150 1 Accrued liabilities 204 273 Total current liabilities 1,043 806 Long-term debt 2,162 2,312 Other liabilities and deferred revenues 390 395 Partners' capital 1,890 1,561 Total liabilities and partners' capital $5,485 $5,074 (A) Represents information for Equistar on a stand-alone basis and does not reflect purchase accounting adjustments. (B) See Table 23 for accounts receivable sold. Table 15 - Equistar Unaudited Cash Flow Information (A) For the three months ended March 31, (Millions of dollars) 2005 2004 Net income $332 $5 Adjustments: Depreciation and amortization 79 76 Deferred maintenance turnaround expenditures (2) (17) Gain on asset dispositions --- (4) Changes in assets and liabilities: Accounts receivable (B) (C) (268) --- Inventories (71) (65) Accounts payable 149 (12) Accrued interest (17) (17) Other assets and liabilities, net (68) (39) Cash provided by (used in) operating activities 134 (73) Expenditures for property, plant and equipment (35) (19) Proceeds from sales of assets 3 4 Cash used in investing activities (32) (15) Repayment of long-term debt (1) --- Cash used in financing activities (1) --- Increase (decrease) in cash and cash equivalents $101 $(88) (A) Represents information for Equistar on a stand-alone basis and does not reflect purchase accounting adjustments. (B) See Table 23 for accounts receivable sold. (C) In consideration of discounts offered to certain customers for early payment for product, some receivable amounts were collected in March 2005 and 2004 that otherwise would have been expected to be collected in April of the respective years. This included $71 million and $39 million from Occidental Chemical Holding Corporation in March 2005 and 2004, respectively. Table 16 - Millennium Unaudited Income Statement Information (A) For the three months ended March 31, (Millions of dollars) 2005 Sales and other operating revenues (B) $453 Cost of sales 365 Selling, general and administrative expenses 43 Research and development expenses 6 Asset impairments 2 Operating income 37 Interest expense, net (24) Other expense, net (2) Income before equity investment, minority interest and income taxes 11 Income from equity investment in Equistar 98 Income before income taxes and minority interest 109 Provision for income taxes 37 Income before minority interest 72 Minority interest (8) Net income $64 (A) Represents information for Millennium on a stand-alone basis and does not reflect purchase accounting adjustments. (B) Sales and other operating revenues include sales to affiliates. Table 17 - Millennium Unaudited Balance Sheet Information (A) March 31, Dec. 31, (Millions of dollars) 2005 2004 Cash and cash equivalents $309 $344 Accounts receivable, net 341 318 Inventories 473 414 Prepaid expenses and other current assets 115 79 Total current assets 1,238 1,155 Property, plant and equipment, net 685 707 Investments 554 457 Goodwill 104 104 Other assets, net 96 74 Total assets $2,677 $2,497 Accounts payable $309 $287 Current maturities of long-term debt 6 7 Accrued liabilities 180 160 Total current liabilities 495 454 Long-term debt 1,392 1,398 Other liabilities 529 503 Deferred income taxes 217 164 Minority interest 41 33 Stockholders' equity (100,000,000 shares authorized; 66,135,816 shares issued) 3 (55) Total liabilities and stockholders' equity $2,677 $2,497 (A) Represents information for Millennium on a stand-alone basis and does not reflect purchase accounting adjustments. Table 18 - Millennium Unaudited Cash Flow Information (A) For the three months ended March 31, (Millions of dollars) 2005 Net income $64 Adjustments: Asset impairment charges 2 Depreciation and amortization 26 Deferred income taxes 9 Earnings on Equistar investment (98) Changes in assets and liabilities: Accounts receivable (24) Inventories (64) Accounts payable 27 Accrued liabilities and income taxes, net 36 Other assets and liabilities, net (8) Cash used in operating activities (30) Expenditures for property, plant and equipment (9) Cash used in investing activities (9) Contribution from Lyondell 6 Cash provided by financing activities 6 Effect of exchange rate changes on cash (2) Decrease in cash and cash equivalents $(35) (A) Represents information for Millennium on a stand-alone basis and does not reflect purchase accounting adjustments. Table 19 - LCR Unaudited Income Statement Information For the three months ended March 31, Dec. 31, (Millions of dollars) 2005 2004 2004 Sales and other operating revenues (A) $1,536 $1,154 $1,564 Cost of sales 1,406 1,037 1,385 Selling, general and administrative expenses 12 16 14 Operating income 118 101 165 Interest expense, net (8) (10) (6) Net income (B) $110 $91 $159 EBITDA (C) $146 $131 $193 (A) Sales and other operating revenues include sales to affiliates. (B) As a partnership, LCR is not subject to federal income taxes. (C) See Table 9 for reconciliation of LCR's net income to EBITDA. Table 20 - LCR Unaudited Balance Sheet Information March 31, Dec. 31, (Millions of dollars) 2005 2004 Total current assets $515 $359 Property, plant and equipment, net 1,243 1,227 Other assets, net 62 61 Total assets $1,820 $1,647 Current maturities of long-term debt $5 $5 Other current liabilities 840 583 Long-term debt 442 443 Loans payable to partners 264 264 Other liabilities 113 112 Partners' capital 156 240 Total liabilities and partners' capital $1,820 $1,647 Table 21 - LCR Unaudited Cash Flow Information For the three months ended March 31, (Millions of dollars) 2005 2004 Cash flow from operations $240 $100 Capital expenditures 34 15 Depreciation and amortization 28 30 Table 22 - Reconciliation of Lyondell's Days of Working Capital March 31, December 31, (Millions of dollars) 2005 2004 Working Capital: (A), (B) Accounts receivable $1,898 $1,569 Inventories 1,746 1,619 Accounts payable (1,314) (1,197) Total 2,330 1,991 Add: Accounts receivable sold (C) 75 275 Adjusted working capital $2,405 $2,266 Days of Working Capital: Sales and other operating revenues for the relevant period (D) $4,446 $1,431 Number of days in relevant period (D) 90 31 Sales per day $49.4 $46.2 Days of working capital (E) 49 49 (A) Defined as the major controllable components of working capital -- receivables, inventories and payables. (B) Reflects Lyondell and its consolidated subsidiaries including Equistar and Millennium at March 31, 2005 and December 31, 2004. Prior to December 1, 2004, Lyondell's 70.5% investment in Equistar was accounted for on an equity basis. (C) Receivables sold are added back for consistency as such amounts are included in sales and in the sales per day calculation. Management believes that this provides useful information to investors because it reflects Lyondell's and Equistar's responsibility for administration and collection of said amounts. (D) At December 31, 2004 the relevant period is the month of December 2004. (E) Days of working capital are calculated as adjusted working capital divided by sales per day. Table 23 - Reconciliation of Equistar's Days of Working Capital March 31, Dec. 31, (Millions of dollars) 2005 2004 Working Capital: (A) Accounts receivable (B) $1,107 $826 Inventories 653 582 Accounts payable (689) (532) Total 1,071 876 Add: Accounts receivable sold (C) --- 200 Adjusted working capital $1,071 $1,076 Days of Working Capital: Sales and other operating revenues for the three months ended $2,861 $2,816 Number of days in quarter 90 92 Sales per day $31.8 $30.6 Days of working capital (B) (D) 34 35 (A) Defined as the major controllable components of working capital -- receivables, inventories and payables. (B) In consideration of discounts offered to certain customers for early payment for product delivered in March 2005, some receivable amounts were collected in March 2005 that otherwise would have been expected to be collected in April 2005, including $71 million from OCHC. Similarly, in December 2004, $66 million was received from OCHC. Had such amounts been collected in April and January 2005, respectively, days of working capital would have been 36 days and 37 days at the end of March 31, 2005 and December 31, 2004 respectively. (C) Receivables sold are added back for consistency as such amounts are included in sales and in the sales per day calculation. Management believes that this provides useful information to investors because it reflects Lyondell's and Equistar's responsibility for administration and collection of said amounts. (D) Days of working capital are calculated as adjusted working capital divided by sales per day. Table 24 - Reconciliation of Millennium's Days of Working Capital March 31, Dec. 31, (Millions of dollars) 2005 2004 Working Capital: (A) Accounts receivable $341 $318 Inventories 473 414 Accounts payable (309) (287) Total working capital $505 $445 Days of Working Capital: Sales and other operating revenues for the relevant period (B) $453 $148 Number of days in relevant period (B) 90 31 Sales per day $5.0 $4.8 Days of working capital (C) 100 93 (A) Defined as the major controllable components of working capital - receivables, inventories and payables. (B) At December 31, 2004 the relevant period is the month of December 2004. (C) Days of working capital are calculated as total working capital divided by sales per day.
SOURCE: Lyondell Chemical Company; Equistar Chemicals, LP; MillenniumChemicals Inc.
media, Susan Moore, +1-713-309-4645, or investors, Doug Pike, +1-713-309-7141, both of Lyondell Chemical Company
