* Lyondell reports net income of $10 million or 4 cents per share
on a fully diluted basis vs. $50 million or 28 cents per share a
year ago HOUSTON, Oct. 27 /PRNewswire-FirstCall/ -- Lyondell
Chemical Company (NYSE:LYO) today announced net income for the
third quarter 2005 of $10 million, or 4 cents per share on a fully
diluted basis, including third- quarter charges and hurricane
impacts described below. This compares with net income of $50
million, or 28 cents per share, for the third quarter 2004, and net
income of $126 million, or 48 cents per share, for the second
quarter 2005. For the first nine months of 2005, net income was
$390 million, or $1.50 per share on a fully diluted basis, compared
with net income of $38 million, or 21 cents per share, during the
first nine months of 2004. Table 1 - Lyondell Earnings Summary (A)
Millions of 1st Nine 1st Nine dollars except Months Months per
share amounts 3Q 2005 3Q 2004 2Q 2005 2005 2004 Sales and other
operating revenues $ 4,795 $ 1,307 $ 4,382 $ 13,623 $ 3,573 Net
income 10 50 126 390 38 Basic earnings per share 0.04 0.28 0.51
1.59 0.21 Diluted earnings per share (B) 0.04 0.28 0.48 1.50 0.21
Basic weighted average shares outstanding (millions) 246.5 178.1
245.9 245.6 177.5 Diluted weighted average shares outstanding
(millions) (B) 260.4 179.9 259.0 259.7 178.7 (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)
Includes the dilutive effect of the convertible debentures and
outstanding stock options and warrants. The third quarter 2005
includes several pre-tax charges: * $195 million for impairment of
the carrying value of Lyondell's Lake Charles, La., toluene
diisocyanate (TDI) facility, which is part of the Propylene Oxide
and Related Products segment * $30 million related to an industry
mutual insurance consortium, including the effects of both
Hurricanes Katrina and Rita, which impacts all segments * $7
million related to the early retirement of debt Also, net income in
the third quarter 2005 reflects a benefit of $38 million due to a
reduction in the estimated income tax rate for the year. This
reflects primarily the finalization of income tax liabilities
relating to prior years, partially offset by higher foreign
earnings that are effectively taxed at higher rates. The second
quarter 2005 included pre-tax charges of $14 million related to a
mutual insurance consortium and $9 million related to debt
reduction. The third quarter 2004 included pre-tax charges of $6
million related to debt reduction. Other effects of Hurricanes
Katrina and Rita on third-quarter 2005 results include the
following: * Hurricane Katrina did not directly impact any assets,
but did impact several suppliers and logistics providers. While
this did not manifest itself in reduced production of ethylene,
propylene oxide or titanium dioxide at Lyondell, or reduced crude
processing at LYONDELL-CITGO Refining (LCR), it did impact some
derivative production. * Hurricane Rita's impact on both assets and
production was more direct. All of Lyondell's Gulf Coast sites were
shut down for the storm, and minor damage was sustained at several
sites. In addition to shutdown and start-up costs at these
facilities, the company experienced lost production during the down
time. Compared with nameplate capacity, estimated lost production
for certain key products during the third quarter was
approximately: -- Ethylene - 200 million pounds -- Propylene oxide
- 60 million pounds -- LCR crude processing - 2.4 million barrels *
Based on August prices and variable costs as reported by industry
consultants, as well as internal estimates, the pre-tax value of
Lyondell's lost production in late September caused by Hurricane
Rita is estimated to be approximately $75 million to $100 million,
or 19 cents to 25 cents per share (after tax). Approximately half
of this can be attributed to the Ethylene, Co-Products and
Derivatives segment, with the balance split between the Propylene
Oxide and Related Products segment and the Refining segment
(Lyondell's share of LCR). "The third quarter was shaped by
Hurricanes Katrina and Rita, rapid increases in raw material costs
and tight refined product markets," said Dan F. Smith, president
and CEO of Lyondell Chemical Company. "While pricing trends were
established in advance of the hurricanes, these changes accelerated
and became far more pronounced as a result of the hurricane-related
disruptions. Overall, I am happy to say that Lyondell's assets
fared well through the storms. While third-quarter results were
obviously reduced by the storms and impairment of our Lake Charles
TDI plant, the breadth of our product portfolio served us well
during the quarter." OUTLOOK Thus far in the fourth quarter, prices
for most chemical products have increased rapidly in response to
both increased costs and tight supply/demand balances. Within the
ethylene segment, elevated natural gas costs and strong co-product
markets favor liquid raw material economics. The propylene oxide
segment has continued to benefit from global MTBE margins that,
although seasonally lower than the third quarter, are much stronger
than typical for this time of year, while the inorganics segment
has benefited from hurricane-related outages at two competitor
facilities. In refining, problems encountered during start-up after
Hurricane Rita have continued and currently are expected to reduce
refining rates to between 30 percent and 50 percent until late
November. "At this time, with the exception of LCR and previously
scheduled maintenance turnaround activity at one propylene oxide
plant, all of our major plants are operating at or near full
capacity, and we believe our chemical businesses are well
positioned to respond to post-hurricane supply/demand tightness.
The pressures and uncertainties caused by extremely high and
volatile raw material costs continue to be a concern, but are
somewhat mitigated by our greater reliance on crude oil-based raw
materials rather than natural gas," said Smith. LYONDELL BUSINESS
RESULTS DISCUSSION BY BUSINESS 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 LYONDELL-CITGO Refining (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 and benzene)
and derivatives of ethylene (polyethylene, ethylene oxygenates and
vinyl acetate monomer or VAM). Lyondell acquired Millennium on
November 30, 2004; Millennium's acetyls products are included in
this segment. Table 2 - Ethylene, Co-Products & Derivatives
Financial Overview (A) 1st Nine 1st Nine Millions Months Months of
dollars 3Q 2005 3Q 2004 2Q 2005 2005 2004 Sales and other operating
revenues $ 2,988 $ 2,439 $ 2,849 $ 8,811 $ 6,500 Operating income
22 129 201 618 289 EBITDA (B) 116 208 294 896 519 (A) 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
of Lyondell and Equistar, respectively. The following discussion
addresses business results independent of ownership. 3Q05 v. 2Q05
-- Ethylene and ethylene derivative product sales volumes were
relatively unchanged versus the second quarter 2005, while product
margins declined. The quarterly average ethylene sales price
increased by approximately 5 cents per pound, while quarterly
average prices for the major ethylene derivatives (polyethylene and
ethylene glycol) were relatively unchanged versus the second
quarter. Raw material costs increased for both crude oil-based and
natural gas-based raw materials. Increases in fuel co-product
prices, coupled with lower average chemical co-product prices, were
insufficient to offset these cost increases, which led to an
increase of approximately 7 cents per pound in our
cost-of-ethylene-production metric (COE). Acetyls results declined
by approximately $20 million primarily due to lower margins related
to significantly higher raw material costs. 3Q05 v. 3Q04 --
Excluding VAM, ethylene and ethylene derivative sales volumes were
approximately 170 million pounds (or 6 percent) lower than strong
third-quarter 2004 sales volumes. The quarterly average price of
ethylene and polyethylene increased by approximately 7 cents per
pound versus the year-ago quarter, while the average ethylene
glycol price was relatively unchanged. Prices for performance
derivatives such as ethylene oxide (EO), ethylene glycol ethers and
vinyl acetate monomer (VAM) averaged 7 cents to 20 cents per pound
higher than in the third quarter 2004. Significantly higher raw
material costs were only partially offset by increased co-product
prices, resulting in an increase of approximately 7 cents per pound
in our cost-of-ethylene-production metric (COE). Acetyls results
declined by approximately $15 million due to lower margins
primarily resulting from increased natural gas costs. 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) 1st Nine 1st Nine Millions Months Months of
dollars 3Q 2005 3Q 2004 2Q 2005 2005 2004 Sales and other operating
revenues $ 1,848 $ 1,307 $ 1,562 $ 4,939 $ 3,573 Operating income
(B) 70 49 134 300 92 EBITDA (C) 321 106 186 653 274 (A) See Table 6
for additional segment information. (B) Operating income for the
third quarter and first nine months of 2005 included an impairment
charge of $195 million, which is excluded from EBITDA. (C) See
Table 9 for a reconciliation of segment EBITDA to net income of
Lyondell. Operating income in the third quarter 2005 includes a
charge of $195 million for impairment of the carrying value of
Lyondell's Lake Charles, La., toluene diisocyanate (TDI) facility.
3Q05 v. 2Q05 -- PO and PO derivative product results declined
slightly based on moderately lower margins, which were partially
offset by increased sales volumes. MTBE margins increased
significantly, contributing approximately $160 million to profit
improvement. Styrene and TDI results both declined slightly
primarily due to higher costs. 3Q05 v. 3Q04 -- Versus the year-ago
quarter, increased PO and PO derivative product margins contributed
to an approximate $45 million improvement in segment results. MTBE
results improved by approximately $210 million as a result of
higher raw material margins. Lower styrene margins resulted in a
slight decline in profitability, while lower TDI margins led to a
$20 million decline in results. Inorganic Chemicals Segment -- The
principal product of the inorganic chemicals segment is titanium
dioxide (TiO2). Lyondell acquired Millennium, including this
business, on November 30, 2004. Table 4 - Inorganic Chemicals
Financial Overview (A) 1st Nine 1st Nine Millions Months Months of
dollars 3Q 2005 3Q 2004 2Q 2005 2005 2004 Sales and other operating
revenues $ 345 --- $ 342 $ 1,005 --- Operating income (loss) (B)
(16) --- 16 21 --- EBITDA (C) 3 --- 52 102 --- (A) Includes the
Inorganic Chemicals segment prospectively from December 1, 2004.
See Table 6 for additional segment information. (B) Operating
income (loss) included impairment charges of $3 million for each of
the third and second quarters of 2005 and $8 million for the first
nine months of 2005 that are excluded from EBITDA. (C) See Table 9
for a reconciliation of segment EBITDA to net income of Lyondell.
The following discussion addresses the inorganics business
independent of ownership. 3Q05 v. 2Q05 -- Sales volumes increased
by approximately 6,000 metric tons to 160,000 metric tons while the
average sales price decreased by approximately $50 per metric ton.
Approximately half of the U.S. dollar reduction in prices was due
to foreign exchange rates. Together, the price and volume changes
had an approximately $10 million negative impact on results. Lower
production rates related to inventory management early in the third
quarter reduced results by approximately $20 million, and finished
product inventories were reduced by approximately 30,000 metric
tons during the third quarter. 3Q05 v. 3Q04 -- Sales volumes were
approximately 10,000 metric tons less than the year-ago quarter.
Conversely, third-quarter 2005 prices were approximately $165 per
metric ton higher than during the third quarter 2004. Reduced
production rates related to inventory management lowered results by
approximately $20 million. 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) 1st Nine 1st Nine
Millions Months Months of dollars 3Q 2005 3Q 2004 2Q 2005 2005 2004
Sales and other operating revenues $ 2,202 $ 1,546 $ 1,563 $ 5,301
$ 4,039 Operating income 100 139 37 255 351 EBITDA (B) 130 182 65
341 452 (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. 3Q05 v.
2Q05 -- Total crude processing rates were approximately 52,000
barrels per day higher than second-quarter rates as the refinery
processed 212,000 barrels per day under the Venezuelan crude supply
contract and 33,000 barrels per day of spot crude. Second-quarter
rates were lower than normal due to a combination of planned and
unplanned outages while third-quarter rates were impacted by
Hurricane Rita. Higher natural gas prices and lower aromatic
margins negatively impacted results. 3Q05 v. 3Q04 -- Total crude
processing rates were approximately 27,000 barrels per day lower
than third-quarter 2004 rates. The shortfall was primarily related
to Hurricane Rita. Higher natural gas prices and lower aromatic
margins negatively impacted results while spot crude oil margins
increased. Cash Distributions and Debt Reduction During the third
quarter 2005, net distributions from LCR to Lyondell were $97
million. (Distributions from LCR totaled $127 million and
contributions to LCR totaled $30 million.) Lyondell Chemical
Company paid $200 million toward early debt reduction, while
Millennium Chemicals reduced debt by a net $211 million through the
combination of purchasing $311 million of debt and issuing $100
million of debt at its Australian subsidiary. CONFERENCE CALL
Lyondell will host a conference call today, October 27, 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). The passcode 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 October 27 to 5
p.m. ET on November 4. The dial-in numbers are 866-435-1326 (U.S.)
and 203-369-1022 (international). The passcode for each is 5549.
Web replay will be available at 2:30 p.m. ET October 27 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 October 27 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. These forward-looking
statements are based upon the current beliefs and expectations of
management, and are subject to significant risks and uncertainties.
Actual results could differ materially based on factors including,
but not limited to, costs associated with changes in plant status
and related matters; availability, cost and price volatility of raw
materials and utilities; supply/demand balances; industry
production capacities and operating rates; operating interruptions;
uncertainties associated with the U.S. and worldwide economies;
current and potential governmental regulatory actions; terrorist
acts; international political unrest; legal, tax and environmental
proceedings; cyclical nature of the chemical and refining
industries; competitive products and pricing; risks of doing
business outside of the U.S.; access to capital markets;
technological developments; and other risk factors. Additional
factors that could cause results to differ materially from those
described in the forward-looking statements can be found in the
Lyondell, Equistar and Millennium Annual Reports on Form 10-K for
the year ended December 31, 2004, and the Lyondell, Equistar and
Millennium Quarterly Reports on Form 10-Q for the quarter ended
September 30, 2005 which will be filed with the SEC in November
2005. Table 6 - Selected Unaudited Segment Financial Information
(A) For the three For the nine months ended months ended September
30, June 30, September 30, (Millions of dollars) 2005 2004 2005
2005 2004 Sales and other operating revenues (B) Ethylene,
Co-Products & Derivatives $2,988 $2,439 $2,849 $8,811 $6,500 PO
& Related Products 1,848 1,307 1,562 4,939 3,573 Inorganic
Chemicals 345 --- 342 1,005 --- Refining 2,202 1,546 1,563 5,301
4,039 Operating income (loss) Ethylene, Co-Products &
Derivatives $22 $129 $201 $618 $289 PO & Related Products (C)
70 49 134 300 92 Inorganic Chemicals (D) (16) --- 16 21 ---
Refining 100 139 37 255 351 Depreciation and amortization Ethylene,
Co-Products & Derivatives $95 $81 $96 $286 $234 PO &
Related Products 59 59 60 177 186 Inorganic Chemicals 26 --- 26 76
--- Refining 30 29 28 86 87 EBITDA (E) Ethylene, Co-Products &
Derivatives $116 $208 $294 $896 $519 PO & Related Products (C)
321 106 186 653 274 Inorganic Chemicals (D) 3 --- 52 102 ---
Refining 130 182 65 341 452 Capital expenditures Ethylene,
Co-Products & Derivatives $34 $28 $32 $103 $69 PO & Related
Products 11 16 16 41 43 Inorganic Chemicals 13 --- 14 32 ---
Refining 38 13 49 121 42 (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 and nine months ended September
30, 2005 and for the three months ended June 30, 2005 to
consolidated Lyondell financial information. See Table 10 for PO
and Related Products data for the three and nine months ended
September 30, 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. The
Inorganic Chemicals segment is presented prospectively from
December 1, 2004. (B) Sales include sales to affiliates and
intersegment sales. (C) PO&RP operating income for the third
quarter and first nine months of 2005 included an impairment charge
of $195 million, which is excluded from EBITDA. (D) Inorganic
Chemicals operating income (loss) included impairment charges of $3
million in each of the third and second quarters of 2005 and $8
million in the first nine months of 2005 that are excluded from
EBITDA. (E) See Table 9 for reconciliation of segment EBITDA to net
income. Table 7 - Selected Segment Sales Volumes (A) (B) For the
three months For the nine ended months ended September 30, June 30,
September 30, 2005 2004 2005 2005 2004 Ethylene, Co-Products and
Derivatives (in millions) Ethylene and derivatives (pounds) 2,834
2,836 2,848 8,590 8,315 Polyethylene included above (pounds) 1,409
1,467 1,341 4,087 4,243 Co-products, nonaromatic (pounds) 1,899
2,038 1,862 5,795 5,914 Aromatics (gallons) 100 99 107 309 272 PO
and Related Products (in millions) PO and derivatives (pounds) 790
794 731 2,405 2,445 Co-products: Styrene monomer (pounds) 953 962
1,045 2,980 2,723 MTBE and other TBA derivatives (gallons) 298 269
297 878 825 Inorganic Chemicals (thousand metric tons) TiO2 160 ---
154 456 --- Refined products (thousand barrels per day) Gasoline
125 117 110 117 118 Diesel and heating oil 85 99 85 86 96 Jet fuel
16 20 8 15 17 Aromatics 7 9 10 8 9 Other refined products 92 99 70
83 92 Total refined products volumes 325 344 283 309 332 Refinery
Runs Crude processing rates (thousand barrels per day) Crude Supply
Agreement 212 243 165 199 238 Other crude oil 33 29 28 34 29 Total
crude oil 245 272 193 233 267 (A) The EC&D data for periods
prior to January 1, 2005 represent 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 Lyondell Financial Information Sales and other
Operating Depreciation operating income and Capital (Millions of
dollars) revenues (loss) amortization expenditures For the three
months ended September 30, 2005: Segment Data Ethylene, Co-Products
& Derivatives $2,988 $22 $95 $34 PO & Related Products
1,848 70 59 11 Inorganic Chemicals 345 (16) 26 13 Other (A) (386)
(4) 2 --- Total $4,795 $72 $182 $58 For the nine months ended
September 30, 2005: Segment Data Ethylene, Co-Products &
Derivatives $8,811 $618 $286 $103 PO & Related Products 4,939
300 177 41 Inorganic Chemicals 1,005 21 76 32 Other (A) (1,132) (9)
6 2 Total $13,623 $930 $545 $178 For the three months ended June
30, 2005: Segment Data Ethylene, Co-Products & Derivatives
$2,849 $201 $96 $32 PO & Related Products 1,562 134 60 16
Inorganic Chemicals 342 16 26 14 Other (A) (371) (3) 3 --- Total
$4,382 $348 $185 $62 (A) Includes elimination of intersegment
transactions and items not allocated to segments. Table 9 -
Reconciliation of Segment EBITDA to Net Income For the three months
For the nine ended months ended September 30, June 30, September
30, (Millions of dollars) 2005 2004 2005 2005 2004 LYONDELL Segment
EBITDA: Ethylene, Co-Products & Derivatives (A) $116 $--- $294
$896 $--- PO & Related Products 321 106 186 653 274 Inorganic
Chemicals (B) 3 --- 52 102 --- Other (1) --- (2) (2) --- Add:
Income from equity investment in Equistar --- 54 --- --- 93 Income
from equity investment in LCR 53 89 19 139 208 Deduct: Depreciation
and amortization (182) (59) (185) (545) (186) Interest expense, net
(149) (108) (155) (462) (325) Benefit from (provision for) income
taxes 54 (26) (71) (160) (20) Asset impairment charges (198) ---
(3) (203) --- Debt prepayment premiums and charges (7) (6) (9) (28)
(6) Lyondell net income $10 $50 $126 $390 $38 Equistar EBITDA (C)
$208 $519 Deduct: Depreciation and amortization (81) (234) Interest
expense, net (55) (165) Equistar net income $72 $120 Refining
EBITDA (D) $130 $182 $65 $341 $452 Deduct: Depreciation and
amortization (30) (29) (28) (86) (87) Interest expense, net (9) (6)
(9) (26) (24) LCR net income $91 $147 $28 $229 $341 (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 represents the historical operating results
of Equistar on a 100% basis. See Table 13 for additional Equistar
financial information. (D) The Refining information presented
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
For the nine months ended months ended September 30, June 30,
September 30, (Millions of dollars, except per share data) 2005
2004 2005 2005 2004 Sales and other operating revenues $4,795
$1,307 $4,382 $13,623 $3,573 Cost of sales 4,350 1,195 3,876 12,008
3,308 Asset impairments 198 --- 3 203 --- Selling, general and
administrative expenses 152 55 133 414 149 Research and development
expenses 23 8 22 68 24 Operating income 72 49 348 930 92 Income
from equity investment in Equistar --- 54 --- --- 93 Income from
equity investment in LCR 53 89 19 139 208 Income (loss) from other
equity investments 2 1 (1) 2 3 Interest expense, net (149) (108)
(155) (462) (325) Other expense, net (22) (9) (14) (59) (13) Income
(loss) before income taxes (44) 76 197 550 58 Provision for
(benefit from) income taxes (54) 26 71 160 20 Net income $10 $50
$126 $390 $38 Basic earnings per share: $0.04 $0.28 $0.51 $1.59
$0.21 Diluted earnings per share: $0.04 $0.28 $0.48 $1.50 $0.21
Weighted average shares (in millions): Basic 246.5 178.1 245.9
245.6 177.5 Diluted 260.4 179.9 259.0 259.7 178.7 (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 nine months
ended September 30, (Millions of dollars) 2005 2004 Net income $390
$38 Adjustments: Depreciation and amortization 545 186 Asset
impairments 203 --- Income from equity investments (141) (304)
Distributions of earnings from affiliates 140 281 Deferred income
taxes 112 16 Debt prepayment charges and premiums 28 6 Changes in
assets and liabilities: Accounts receivable (358) (98) Inventories
(142) (24) Accounts payable 323 47 Accrued interest 42 74 Other,
net (51) 34 Cash provided by operating activities 1,091 256
Expenditures for property, plant and equipment (178) (43)
Distributions from affiliates in excess of earnings 123 105
Contributions and advances to affiliates (90) (32) Other 3 --- Cash
provided by (used in) investing activities (142) 30 Repayment of
long-term debt (1,072) (105) Issuance of long-term debt 99 ---
Dividends paid (166) (95) Exercise of stock options 46 9 Other 3
(1) Cash used in financing activities (1,090) (192) Effect of
exchange rate changes on cash (11) (1) Increase (decrease) in cash
and cash equivalents $(152) $93 (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 September 30, December 31, (Millions of dollars) 2005
2004 Cash and cash equivalents $652 $804 Accounts receivable, net
1,869 1,569 Inventories 1,713 1,619 Prepaid expenses and other
current assets 150 189 Deferred tax assets 416 276 Total current
assets 4,800 4,457 Property, plant and equipment, net 6,619 7,215
Investments and long-term receivables: Investment in PO joint
ventures 788 838 Investment in and receivable from LCR 143 192
Other investments and long-term receivables 160 160 Goodwill, net
2,219 2,175 Other assets, net 844 924 Total assets $15,573 $15,961
Accounts payable $1,472 $1,202 Current maturities of long-term debt
256 308 Accrued liabilities 801 785 Total current liabilities 2,529
2,295 Long-term debt 6,617 7,555 Other liabilities 1,791 1,780
Deferred income taxes 1,671 1,477 Minority interest 182 181
Stockholders' equity (246,918,784 and 243,684,998 shares
outstanding at September 30, 2005 and December 31, 2004,
respectively) 2,783 2,673 Total liabilities and stockholders'
equity $15,573 $15,961 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 For the nine months ended months ended September 30,
June 30, September 30, (Millions of dollars) 2005 2004 2005 2005
2004 Sales and other operating revenues (B) $2,867 $2,439 $2,700
$8,428 $6,500 Cost of sales 2,776 2,255 2,447 7,640 6,063 Selling,
general and administrative expenses 52 47 47 146 129 Research and
development expenses 8 8 9 25 23 Gain on asset dispositions --- ---
--- --- (4) Operating income 31 129 197 617 289 Interest expense,
net (56) (55) (54) (164) (165) Other expense, net (3) (2) (1) (7)
(4) Net (loss) income (C) $(28) $72 $142 $446 $120 (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) September 30,
December 31, (Millions of dollars) 2005 2004 Cash and cash
equivalents $132 $39 Accounts receivable, net 1,017 826 Inventories
682 582 Prepaid expenses and other current assets 49 43 Total
current assets 1,880 1,490 Property, plant and equipment, net 3,079
3,167 Investments 59 60 Other assets, net 364 357 Total assets
$5,382 $5,074 Accounts payable $879 $532 Current maturities of
long-term debt 150 1 Accrued liabilities 254 273 Total current
liabilities 1,283 806 Long-term debt 2,161 2,312 Other liabilities
and deferred revenues 408 395 Partners' capital 1,530 1,561 Total
liabilities and partners' capital $5,382 $5,074 (A) Represents
information for Equistar on a stand-alone basis and does not
reflect purchase accounting adjustments. Table 15 - Equistar
Unaudited Cash Flow Information (A) For the nine months ended
September 30, (Millions of dollars) 2005 2004 Net income $446 $120
Adjustments: Depreciation and amortization 238 234 Deferred
maintenance turnaround expenditures (51) (55) Gain on asset
dispositions --- (4) Changes in assets and liabilities: Accounts
receivable (B) (191) (205) Inventories (94) (89) Accounts payable
340 80 Accrued interest (17) (16) Other, net (9) 11 Cash provided
by operating activities 662 76 Expenditures for property, plant and
equipment (103) (69) Proceeds from sales of assets 3 41 Cash used
in investing activities (100) (28) Distributions to owners (475)
(100) Repayment of long-term debt (1) --- Other 7 --- Cash used in
financing activities (469) (100) Increase (decrease) in cash and
cash equivalents $93 $(52) (A) Represents information for Equistar
on a stand-alone basis and does not reflect purchase accounting
adjustments. (B) In consideration of discounts offered to certain
customers for early payment for product, some receivable amounts
were collected in September 2005 and 2004 that otherwise would have
been expected to be collected in October of the respective years.
This included $55 million and $51 million from Occidental Chemical
Corporation in September 2005 and 2004, respectively. Table 16 -
Millennium Unaudited Income Statement Information (A) (C) For the
three For the nine months ended months ended September 30, June 30,
September 30, (Millions of dollars) 2005 2005 2005 Sales and other
operating revenues (B) $489 $515 $1,457 Cost of sales 448 424 1,237
Selling, general and administrative expenses 77 45 165 Research and
development expenses 5 6 17 Asset impairments 3 3 8 Combination
costs 2 --- 2 Operating income (loss) (46) 37 28 Interest expense,
net (24) (25) (73) Other expense, net (18) 5 (22) Income (loss)
before equity investment, minority interest and income taxes (88)
17 (67) Income (loss) from equity investment in Equistar (8) 42 132
Income (loss) before income taxes and minority interest (96) 59 65
Provision for (benefit from) income taxes (26) 20 31 Income before
minority interest (70) 39 34 Minority interest (2) (1) (4) Net
income (loss) $(72) $38 $30 (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. (C) The third quarter and first nine
months of 2005 included $39 million and $45 million, respectively,
of charges representing revisions to Lyondell's previous estimates
of expected future environmental remediation spending. Table 17 -
Millennium Unaudited Balance Sheet Information (A) September 30,
December 31, (Millions of dollars) 2005 2004 Cash and cash
equivalents $178 $344 Accounts receivable, net 339 318 Inventories
425 414 Prepaid expenses and other current assets 88 79 Total
current assets 1,030 1,155 Property, plant and equipment, net 659
707 Investments 448 457 Goodwill 104 104 Other assets, net 94 107
Total assets $2,335 $2,530 Accounts payable $256 $291 Current
maturities of long-term debt 6 7 Accrued liabilities 125 156 Total
current liabilities 387 454 Long-term debt 1,156 1,398 Other
liabilities 621 536 Deferred income taxes 171 164 Minority interest
46 33 Stockholders' deficit (100,000,000 shares authorized;
66,135,816 shares issued) (46) (55) Total liabilities and
stockholders' equity $2,335 $2,530 (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 nine months ended September 30, 2005
(Millions of dollars) Net income $30 Adjustments: Asset impairments
8 Depreciation and amortization 82 Debt prepayment charges and
premiums 10 Deferred income taxes (18) Income from equity
investment in Equistar (132) Distributions of earnings from
Equistar 132 Changes in assets and liabilities: Accounts receivable
(23) Inventories (19) Accounts payable (25) Other, net 71 Cash
provided by operating activities 116 Expenditures for property,
plant and equipment (34) Distributions from Equistar in excess of
earnings 8 Cash used in investing activities (26) Repayment of
long-term debt (349) Issuance of long-term debt 99 Contribution
from Lyondell 6 Distributions to minority interests (5) Other (1)
Cash used in financing activities (250) Effect of exchange rate
changes on cash (6) Decrease in cash and cash equivalents $(166)
(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 For the
nine months ended months ended September 30, June 30, September 30,
(Millions of dollars) 2005 2004 2005 2005 2004 Sales and other
operating revenues (A) $2,202 $1,546 $1,563 $5,301 $4,039 Cost of
sales 2,091 1,393 1,515 5,012 3,643 Selling, general and
administrative expenses 11 14 11 34 45 Operating income 100 139 37
255 351 Interest expense, net (9) (6) (9) (26) (24) Other income
--- 14 --- --- 14 Net income (B) $91 $147 $28 $229 $341 EBITDA (C)
$130 $182 $65 $341 $452 (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 September 30, December 31, (Millions of dollars)
2005 2004 Total current assets $487 $359 Property, plant and
equipment, net 1,289 1,227 Other assets, net 83 61 Total assets
$1,859 $1,647 Current maturities of long-term debt $5 $5 Other
current liabilities 883 583 Long-term debt 440 443 Loans payable to
partners 264 264 Other liabilities 107 112 Partners' capital 160
240 Total liabilities and partners' capital $1,859 $1,647 Table 21
- LCR Unaudited Cash Flow Information For the nine months ended
September 30, (Millions of dollars) 2005 2004 Cash flow from
operations $440 $522 Capital expenditures 121 42 Depreciation and
amortization 86 87 Chemicals Inc. DATASOURCE: Lyondell Chemical
Company; Equistar Chemicals, LP; Millennium CONTACT: media, Susan
P. Moore, +1-713-309-4645, or investors, Douglas J. Pike,
+1-713-309-7141, both of Lyondell Chemical Company Web site:
http://www.lyondell.com/ http://www.lyondell.com/earnings
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