Full-Year 2005 Highlights HOUSTON, Jan. 26 /PRNewswire-FirstCall/
-- Lyondell Chemical Company (NYSE:LYO) today announced net income
for the fourth quarter 2005 of $141 million, or 54 cents per share
on a fully diluted basis. This compares with net income of $16
million, or 8 cents per share, for the fourth quarter 2004, and net
income of $10 million, or 4 cents per share, for the third quarter
2005. For the full year 2005, Lyondell had net income of $531
million, or $2.04 per share, compared with 2004 net income of $54
million, or 29 cents per share. Table 1 - Lyondell Earnings Summary
Millions of dollars except per share 4Q 4Q 3Q Full Year Full Year
amounts 2005 2004 (A) 2005 2005 2004 (A) Sales and other operating
revenues $5,000 $2,389 $4,790 $18,606 $5,946 Net income 141 16 10
531 54 Basic earnings per share 0.57 0.08 0.04 2.16 0.29 Diluted
earnings per share (B) 0.54 0.08 0.04 2.04 0.29 Basic weighted
average shares outstanding (millions) 246.7 200.5 246.5 245.9 183.2
Diluted weighted average shares outstanding (millions) (B) 260.3
207.7 260.4 260.0 186.0 (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, stock options and warrants.
Year-to-year profit improvements were driven by strong performance
in the ethylene and propylene oxide segments coupled with the
full-year ownership of Millennium Chemicals. This strength was
partially offset by a decline in Lyondell-Citgo Refining's (LCR)
results, which were impacted by maintenance early in the year and
hurricane-related damage and outages in the fourth quarter. Results
reflect the following: Millions of dollars 4Q 4Q 3Q Full Year Full
Year (pre-tax) 2005 2004 2005 2005 2004 Debt refinancing and early
payment $17 $12 $6 $45 $18 Mutual insurance consortia losses 12 12
30 56 12 Hurricane (estimated lost production) 75(A) --- 75-100(A)
150-175(A) --- Lake Charles TDI plant shutdown 24 --- 195 219 ---
In-process Research & Development --- 64 --- --- 64 (A)
Represents Lyondell's percentage of LCR's estimated lost production
of $130 million. "Much as expected, overall business conditions
followed the strengthening trend established in late 2004,
resulting in strong earnings improvement," said Dan F. Smith,
president and CEO of Lyondell Chemical Company. "Tight industry
conditions were apparent in ethylene, propylene oxide and fuel
components, all of which achieved very strong margins at various
points during 2005. Despite the hurricanes and record-high raw
material costs, our portfolio produced strong earnings and cash
flow, enabling us to reduce debt by $1.36 billion during the year."
OUTLOOK At this time, industry operations have largely recovered
from the disruptions of the 2005 hurricane season, and ethylene
industry pricing is adjusting to a more balanced global supply and
demand situation. After some pullback in December and January,
there are signs of demand improvement, and a return to positive
price momentum in a number of product areas is expected as early as
February. Propylene oxide (PO) and PO derivatives markets have
remained solid, while MTBE margins are at typical seasonal levels.
Titanium dioxide volumes also have been strong, and LCR has
operated at full capacity. "We enter 2006 with both a positive
global economic outlook and strong business conditions for the
majority of our products. Ethylene, PO and PO derivatives,
inorganic chemicals and LCR are all positioned for a strong year.
However, 2006 represents a question mark for MTBE. On one hand,
MTBE may benefit from continued tight refining conditions, while on
the other U.S. refiners may choose to no longer use MTBE despite
the obvious value that it brings to a structurally short gasoline
pool," added Smith. "We have prepared ourselves for either outcome.
"Operationally, our assets are running well; neither our ethylene
facilities nor the LCR refinery have scheduled maintenance
turnarounds, and our inventories are low. Financially, we are more
than halfway to our debt reduction target, and our focus continues
to be the application of excess cash toward debt reduction and the
improvement of our balance sheet. In summary, our outlook for the
year is very positive and we believe 2006 results will exceed
2005." LYONDELL BUSINESS RESULTS DISCUSSION BY REPORTING SEGMENT
Lyondell operates in four segments: 1) Ethylene, co-products and
derivatives; 2) Propylene oxide (PO) and related products; 3)
Inorganic Chemicals; and 4) Refining, which includes 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 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)
Millions of dollars 4Q 4Q 3Q Full Year Full Year 2005 2004(B) 2005
2005 2004(B) Sales and other operating revenues $3,380 $2,816
$2,988 $12,191 $9,316 Operating income 337 210 21 950 494 EBITDA
(C) 438 290 116 1,334 809 (A) See Table 6 for additional segment
information. (B) 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. (C) 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. 4Q05 v. 3Q05 -
Ethylene and ethylene derivative product sales volumes were
relatively unchanged versus the third quarter 2005. Average prices
for the key products increased by 7 cents to 18 cents per pound,
led by ethylene and polyethylene, which increased by 15 cents and
18 cents per pound, respectively. The company's
cost-of-ethylene-production metric (COE) increased by approximately
1 cent per pound versus the third quarter. Essentially all of this
increase is attributed to the higher price of natural- gas-based
raw materials. Acetyls results declined as price increases did not
fully offset higher natural gas and ethylene costs. 4Q05 v. 4Q04 -
Ethylene and ethylene derivative sales volumes decreased by
approximately 285 million pounds. The quarterly average price of
ethylene and polyethylene increased by 17 cents to 18 cents per
pound, while the average ethylene glycol price decreased
approximately 3 cents per pound. The company's COE metric increased
by approximately 7 cents per pound primarily due to increased costs
for natural-gas-based raw materials. Increased co- product prices
largely offset a $9-per-barrel increase in crude oil-based raw
material costs. 2005 v. 2004 - Ethylene and ethylene derivative
sales volumes decreased by 660 million pounds. The average annual
price of ethylene and polyethylene increased by 9 cents and 13
cents per pound, respectively, while ethylene glycol increased by 3
cents per pound. The company's COE metric increased by
approximately 4 cents per pound. The cost of natural-gas-based raw
materials accounted for the majority of the increase. PO and
Related Products Segment - The principal products of the PO and
related products segment include 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 4Q 4Q 3Q Full Year Full Year 2005 2004 2005 2005 2004 Sales
and other operating revenues $1,645 $1,427 $1,843 $6,568 $4,984
Operating income (loss) (B) 35 (34) 65 316 48 EBITDA (B) (C) 104 39
321 757 313 (A) See Table 6 for additional segment information. (B)
Operating income for the third quarter and full year 2005 included
charges of $195 million related to shutdown of the Lake Charles,
Louisiana, toluene diisocyanate plant, which are excluded from
EBITDA. (C) See Table 9 for a reconciliation of segment EBITDA to
net income of Lyondell. 4Q05 v. 3Q05 - Fourth-quarter 2005
operations were negatively impacted by a reduction of approximately
$220 million in MTBE profitability as margins returned to typical
seasonal levels during November and December after benefiting from
extremely strong third-quarter margins. Average MTBE raw material
margins declined by approximately 95 cents per gallon from the
third quarter. PO and PO derivative product results were relatively
unchanged as stronger volumes and prices were offset by increased
raw material and natural gas costs. Styrene margins increased,
improving results by approximately $15 million. TDI results were
unchanged as improved business results were offset by costs of
approximately $24 million related to shutdown of the Lake Charles
TDI facility. 4Q05 v. 4Q04 - Versus the year-ago quarter, MTBE
results improved by approximately $50 million, primarily due to
strong October margins. PO and PO derivative results improved by
approximately $20 million based on stronger margins. Combined
styrene and TDI results were relatively unchanged as styrene
results improved slightly and TDI results declined as a result of
Lake Charles TDI shutdown costs. 2005 v. 2004 - Higher margins led
to an approximate $325 million increase in MTBE results. PO and PO
derivative product results improved by approximately $200 million,
based on stronger margins as price increases more than offset a
9-cents-per-pound increase in raw material (propylene) prices.
Styrene results were relatively unchanged. TDI performance fell by
approximately $65 million due to lower margins and costs associated
with the Lake Charles TDI shutdown. 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) Millions of dollars 4Q 4Q 3Q Full Year Full
Year 2005 2004(B) 2005 2005 2004(B) Sales and other operating
revenues $355 $97 $345 $1,360 $97 Operating income (loss) (C) (3) 6
(16) 18 6 EBITDA (C) (D) 26 15 3 128 15 (A) See Table 6 for
additional segment information. (B) Includes the Inorganic
Chemicals segment prospectively from December 1, 2004. (C)
Operating income (loss) included impairment charges of $7 million
and $3 million for the fourth and third quarters of 2005,
respectively, and $15 million for 2005 that are excluded from
EBITDA. (D) See Table 9 for a reconciliation of segment EBITDA to
net income of Lyondell. The following discussion addresses the
inorganics business independent of ownership. 4Q05 v. 3Q05 - Sales
volumes were relatively unchanged at 162,000 metric tons while the
average sales price increased by approximately $10 per metric ton.
U.S. product prices increased by approximately $65 per metric ton,
but were largely offset by dollar-based price declines outside the
United States. Versus the third quarter, results were impacted by
record high natural gas costs in the United States and the U.K.
4Q05 v. 4Q04 - Sales volumes were approximately 22,000 metric tons
higher than the year-ago quarter while dollar-based prices were
approximately $30 per metric ton higher. North and South American
price increases were partially offset by lower European prices.
Production costs increased due to higher raw material and natural
gas costs coupled with plant reliability issues in the fourth
quarter 2005. 2005 v. 2004 - Versus 2004, sales volumes declined by
47,000 metric tons, or 7 percent, in line with overall industry
trends. Prices increased by approximately $180 per metric ton, but
this was partially offset by higher raw material and natural gas
costs. Finished product inventories were reduced significantly
during 2005; however, due to high inventory-carrying values, sales
from inventory did not significantly contribute to profits but did
generate significant cash flow. Refining Segment - Lyondell owns a
58.75 percent interest in LCR, a major refiner of heavy crude oil.
This position is accounted for on the equity method. Table 5 -
Refining Financial Overview - 100% Basis (A) Millions of dollars 4Q
4Q 3Q Full Year Full Year 2005 2004 2005 2005 2004 Sales and other
operating revenues $1,440 $1,564 $2,202 $6,741 $5,603 Operating
income (loss) (23) 165 100 232 516 EBITDA (B) 7 193 130 348 645 (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. 4Q05 v. 3Q05
- Results declined significantly due to fluid catalytic cracking
unit downtime and subsequent refinery crude rate reductions related
to Hurricane Rita. Total crude consumption averaged 169,000 barrels
per day, a decline of 76,000 barrels per day versus the third
quarter and 99,000 barrels per day less than operating capacity.
Venezuelan contract (CSA) crude volumes averaged 146,000 barrels
per day while spot crude averaged 23,000 barrels per day. Results
were further negatively impacted by increased natural gas costs,
the majority of which will be offset over time by adjustments in
the CSA contract factors. 4Q05 v. 4Q04 - Business drivers and the
analysis of results are similar to the comparison to third-quarter
2005 results presented in the previous paragraph. 2005 v. 2004 -
LCR results declined significantly from record 2004 earnings.
Reduced crude oil consumption related to second-quarter maintenance
and Hurricane Rita were the primary drivers of the shortfall. These
events led to a 48,000 barrel-per-day decline in total crude
consumption in 2005 versus 2004. Increased natural gas prices and
lower aromatic margins also pressured results, but were more than
offset by an $8-per-barrel increase in spot crude margins. Cash
Distributions and Debt Reduction LCR to Lyondell Chemical Company -
During the fourth quarter 2005, Lyondell Chemical Company made a
net contribution to LCR of $12 million. During 2005, net
distributions received were $175 million versus $341 million in
2004. Equistar to Lyondell Chemical Company and Millennium - During
the fourth quarter 2005, Lyondell Chemical Company received $176
million of distributions from Equistar, and for the full year 2005
distributions to Lyondell Chemical Company were $511 million.
Millennium received $74 million from Equistar during the fourth
quarter and $214 million during 2005. During 2004, Equistar
distributions to its owners totaled $315 million. Millennium to
Lyondell Chemical Company - There were no dividends paid by
Millennium to Lyondell Chemical Company during 2005. Debt reduction
- During the fourth quarter 2005, Lyondell paid $422 million toward
debt reduction, of which $22 million was Millennium debt. For the
full year 2005, Lyondell paid $1.36 billion toward debt reduction,
including $259 million of Millennium debt. CONFERENCE CALL Lyondell
will host a conference call today, Jan. 26, 2006, 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 Jan. 26 to 6 p.m. ET on Feb. 3. The
dial-in numbers are 866-490-2543 (U.S.) and 203-369-1699
(international). The passcode for each is 5549. Web replay will be
available at 2:30 p.m. ET Jan. 26 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 Jan. 26
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, availability, cost and price volatility of raw
materials and utilities; supply/demand balances; industry
production capacities and operating rates; cyclical nature of the
chemical and refining industries; operating interruptions;
uncertainties associated with the U.S. and worldwide economies;
current and potential governmental regulatory actions; terrorist
acts; international political unrest; competitive products and
pricing; risks of doing business outside of the U.S.; legal, tax
and environmental proceedings; 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, the Lyondell, Equistar and
Millennium Quarterly Reports on Form 10-Q for the quarter ended
September 30, 2005, and the Lyondell, Equistar and Millennium
Annual Reports on Form 10-K for the year ended December 31, 2005,
which will be filed with the SEC in March 2006. Table 6 - Selected
Unaudited Segment Financial Information (A) For the For the three
months twelve months ended ended December 31, September 30,
December 31, (Millions of dollars) 2005 2004 2005 2005 2004 Sales
and other operating revenues (B) Ethylene, Co-Products &
Derivatives $3,380 $2,816 $2,988 $12,191 $9,316 PO & Related
Products 1,645 1,427 1,843 6,568 4,984 Inorganic Chemicals 355 97
345 1,360 97 Refining 1,440 1,564 2,202 6,741 5,603 Operating
income (loss) Ethylene, Co-Products & Derivatives $337 $210 $21
$950 $494 PO & Related Products (C) 35 (34) 65 316 48 Inorganic
Chemicals (D) (3) 6 (16) 18 6 Refining (23) 165 100 232 516
Depreciation and amortization Ethylene, Co-Products &
Derivatives $102 $79 $95 $388 $313 PO & Related Products 58 63
59 235 249 Inorganic Chemicals 22 8 26 98 8 Refining 30 28 30 116
115 EBITDA (E) Ethylene, Co-Products & Derivatives $438 $290
$116 $1,334 $809 PO & Related Products (C) 104 39 321 757 313
Inorganic Chemicals (D) 26 15 3 128 15 Refining 7 193 130 348 645
Capital expenditures Ethylene, Co-Products & Derivatives $52
$32 $34 $155 $101 PO & Related Products 8 13 6 36 49 Inorganic
Chemicals 21 5 13 53 5 Refining 55 29 38 176 71 (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 14 for additional
Equistar financial information. See Table 8 for a reconciliation of
segment information for the year ended December 31, 2005 to
consolidated Lyondell financial information. See Table 10 for PO
and Related Products data for the year ended December 31, 2005. The
Refining information presented above represents the historical
operating results of LCR on a 100% basis. See Table 20 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) Operating
income for the third quarter and full year 2005 included charges of
$195 million related to shutdown of the Lake Charles, Louisiana,
toluene diisocyanate plant, which are excluded from EBITDA. (D)
Inorganic Chemicals operating income (loss) included impairment
charges of $7 million and $3 million for the fourth and third
quarters of 2005, respectively, and $15 million for 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 For the three months ended twelve months ended December
31, September 30, December 31, 2005 2004 2005 2005 2004 Ethylene,
Co-Products and Derivatives (in millions) Ethylene and derivatives
(pounds) 2,799 2,881 2,834 11,389 11,194 Polyethylene included
above (pounds) 1,258 1,460 1,409 5,345 5,703 Co-products,
nonaromatic (pounds) 1,953 2,029 1,899 7,749 7,942 Aromatics
(gallons) 103 105 100 412 377 PO and Related Products (in millions)
PO and derivatives (pounds) 831 885 790 3,236 3,330 Co-products:
Styrene monomer (pounds) 905 997 953 3,885 3,720 MTBE and other TBA
derivatives (gallons) 300 289 298 1,178 1,114 Inorganic Chemicals
(thousand metric tons) TiO2 162 45 160 618 45 Refined products
(thousand barrels per day) Gasoline 66 119 125 104 118 Diesel and
heating oil 63 92 85 80 95 Jet fuel 8 17 16 13 17 Aromatics 8 7 7 8
8 Other refined products 90 105 92 86 96 Total refined products
volumes 235 340 325 291 334 Refinery Runs Crude processing rates
(thousand barrels per day) Crude Supply Agreement 146 235 212 185
237 Other crude oil 23 26 33 32 28 Total crude oil 169 261 245 217
265 (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. The Inorganic Chemicals
segment is presented prospectively from December 1, 2004. (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 December 31,
2005: Segment Data Ethylene, Co-Products & Derivatives $3,380
$337 $102 $52 PO & Related Products 1,645 35 58 8 Inorganic
Chemicals 355 (3) 22 21 Other (A) (380) (6) 2 3 Total $5,000 $363
$184 $84 For the twelve months ended December 31, 2005: Segment
Data Ethylene, Co-Products & Derivatives $12,191 $950 $388 $155
PO & Related Products 6,568 316 235 36 Inorganic Chemicals
1,360 18 98 53 Other (A) (1,513) (16) 8 5 Total $18,606 $1,268 $729
$249 For the three months ended September 30, 2005: Segment Data
Ethylene, Co-Products & Derivatives $2,988 $21 $95 $34 PO &
Related Products 1,843 65 59 6 Inorganic Chemicals 345 (16) 26 13
Other (A) (386) (5) 2 --- Total $4,790 $65 $182 $53 (A) Includes
elimination of intersegment transactions and items not allocated to
segments. Table 9 - Reconciliation of Segment EBITDA to Net Income
For the For the three months twelve months ended ended December 31,
September 30, December 31, (Millions of dollars) 2005 2004 2005
2005 2004 LYONDELL Segment EBITDA: Ethylene, Co-Products &
Derivatives (A) $438 $145 $116 $1,334 $145 PO & Related
Products 104 39 321 757 313 Inorganic Chemicals (B) 26 15 3 128 15
Other (3) (3) (1) (5) (3) Add: Income from equity investment in
Equistar --- 48 --- --- 141 Income (loss) from equity investment in
LCR (16) 95 53 123 303 Deduct: Depreciation and amortization (184)
(103) (182) (729) (289) Interest expense, net (141) (124) (149)
(603) (449) (Provision for) benefit from income taxes (59) (3) 54
(219) (23) Intercompany profit elimination --- (15) --- --- (15)
Purchased in process R&D --- (64) --- --- (64) Charges related
to toluene diisocyanate plant and other assets (7) (2) (198) (210)
(2) Debt prepayment premiums and charges (17) (12) (7) (45) (18)
Lyondell net income $141 $16 $10 $531 $54 Equistar EBITDA (C) $290
$809 Deduct: Depreciation and amortization (79) (313) Interest
expense, net (55) (220) Equistar net income $156 $276 Refining
EBITDA (D) $7 $193 $130 $348 $645 Deduct: Depreciation and
amortization (30) (28) (30) (116) (115) Interest expense, net (12)
(6) (9) (38) (30) LCR net income (loss) $(35) $159 $91 $194 $500
(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 14 and 17 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. (D) The Refining information presented
represents the historical operating results of LCR on a 100% basis.
See Table 20 for additional LCR financial information. Table 10 -
Lyondell Unaudited Income Statement Information (A) For the For the
three months twelve months ended ended (Millions of dollars, except
December 31, September 30, December 31, per share data) 2005 2004
2005 2005 2004 Sales and other operating revenues $5,000 $2,389
$4,790 $18,606 $5,946 Cost of sales 4,469 2,166 4,353 16,485 5,468
Charges related to toluene diisocyanate plant 24 --- 195 219 ---
Selling, general and administrative expenses 121 138 154 543 287
Research and development expenses 23 17 23 91 41 Purchased
in-process research and development --- 64 --- --- 64 Operating
income 363 4 65 1,268 86 Income from equity investment in Equistar
--- 48 --- --- 141 Income (loss) from equity investment in LCR (16)
95 53 123 303 Income from other equity investments (1) 4 2 1 7
Interest expense, net (141) (124) (149) (603) (449) Other expense,
net (5) (8) (15) (39) (11) Income (loss) before income taxes 200 19
(44) 750 77 Provision for (benefit from) income taxes 59 3 (54) 219
23 Net income $141 $16 $10 $531 $54 Basic earnings per share: $0.57
$0.08 $0.04 $2.16 $0.29 Diluted earnings per share: $0.54 $0.08
$0.04 $2.04 $0.29 Weighted average shares (in millions): Basic
246.7 200.5 246.5 245.9 183.2 Diluted 260.3 207.7 260.4 260.0 186.0
(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 twelve
months ended December 31, (Millions of dollars) 2005 2004 Net
income $531 $54 Adjustments: Depreciation and amortization 729 289
Charges related to toluene diisocyanate plant 195 --- Income from
equity investments (124) (451) Distributions of earnings from
affiliates 123 424 Deferred income taxes 143 19 Purchased
in-process research and development --- 64 Debt prepayment charges
and premiums 45 18 Changes in assets and liabilities: Accounts
receivable (156) 24 Inventories (94) (137) Accounts payable 292
(11) Other, net (92) 61 Cash provided by operating activities 1,592
354 Expenditures for property, plant and equipment (249) (70)
Distributions from affiliates in excess of earnings 183 95
Contributions and advances to affiliates (148) (53) Cash received
in acquisition of Millennium --- 367 Cash received in acquisition
of Equistar --- 85 Other 3 --- Cash provided by (used in) investing
activities (211) 424 Repayment of long-term debt (1,510) (319)
Issuance of long-term debt 100 4 Dividends paid (222) (127)
Proceeds from stock option exercises 48 25 Other 6 1 Cash used in
financing activities (1,578) (416) Effect of exchange rate changes
on cash (14) 4 Increase (decrease) in cash and cash equivalents
$(211) $366 (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
December 31, December 31, (Millions of dollars) 2005 2004 Cash and
cash equivalents $593 $804 Accounts receivable, net 1,677 1,587
Inventories 1,657 1,619 Prepaid expenses and other current assets
176 171 Deferred tax assets 131 276 Total current assets 4,234
4,457 Property, plant and equipment, net 6,530 7,215 Investments
and long-term receivables: Investment in PO joint ventures 776 838
Investment in and receivable from LCR 186 229 Other investments and
long-term receivables 114 123 Goodwill, net 2,245 2,175 Other
assets, net 856 924 Total assets $14,941 $15,961 Current maturities
of long-term debt $319 $308 Accounts payable 1,453 1,205 Accrued
liabilities 797 782 Total current liabilities 2,569 2,295 Long-term
debt 6,117 7,555 Other liabilities 1,722 1,780 Deferred income
taxes 1,488 1,477 Minority interest 180 181 Stockholders' equity
(247,050,234 and 243,684,998 shares outstanding at December 31,
2005 and 2004, respectively) 2,865 2,673 Total liabilities and
stockholders' equity $14,941 $15,961 Table 13 - Lyondell Selected
Equity Investment Activity For the three For the twelve months
ended months ended December 31, December 31, (Millions of dollars)
2005 2005 Investment in LCR, beginning of period $(86) $(37)
Lyondell's share of LCR net income (loss) (16) 123 Cash
distributions from LCR (42) (303) Cash contributions to LCR 54 128
Other --- (1) Investment in LCR, end of period $(90) $(90) December
31, Investment in and receivable from LCR 2005 Investment in LCR
$(90) LCR note receivable 229 LCR interest receivable 47 Total $186
Tables 13 through 22 represent additional financial information on
a 100% basis for Equistar, Millennium and LCR. Table 14 - Equistar
Unaudited Income Statement Information (A) For the For the three
months twelve months ended ended December 31, September 30,
December 31, (Millions of dollars) 2005 2004 2005 2005 2004 Sales
and other operating revenues (B) $3,258 $2,816 $2,867 $11,686
$9,316 Cost of sales 2,847 2,524 2,776 10,487 8,587 Selling,
general and administrative expenses 47 71 53 198 205 Research and
development expenses 8 11 8 33 34 Gain on asset dispositions ---
--- --- --- (4) Operating income 356 210 30 968 494 Interest
expense, net (54) (55) (56) (218) (220) Other income (expense), net
--- 1 (2) (2) 2 Net (loss) income (C) $302 $156 $(28) $748 $276 (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
15 - Equistar Unaudited Balance Sheet Information (A) December 31,
December 31, (Millions of dollars) 2005 2004 Cash and cash
equivalents $215 $39 Accounts receivable, net 924 826 Inventories
657 582 Prepaid expenses and other current assets 53 43 Total
current assets 1,849 1,490 Property, plant and equipment, net 3,063
3,167 Investments 58 60 Other assets, net 350 357 Total assets
$5,320 $5,074 Current maturities of long-term debt $150 $1 Accounts
payable 735 532 Accrued liabilities 275 273 Total current
liabilities 1,160 806 Long-term debt 2,161 2,312 Other liabilities
and deferred revenues 416 395 Partners' capital 1,583 1,561 Total
liabilities and partners' capital $5,320 $5,074 (A) Represents
information for Equistar on a stand-alone basis and does not
reflect purchase accounting adjustments. Table 16 - Equistar
Unaudited Cash Flow Information (A) For the twelve months ended
December 31, (Millions of dollars) 2005 2004 Net income $748 $276
Adjustments: Depreciation and amortization 322 313 Deferred
maintenance turnaround expenditures (51) (55) Gain on asset
dispositions --- (4) Changes in assets and liabilities: Accounts
receivable (B) (96) (216) Inventories (69) (174) Accounts payable
197 30 Other, net (4) 45 Cash provided by operating activities
1,047 215 Expenditures for property, plant and equipment (153)
(101) Proceeds from sales of assets 3 41 Cash used in investing
activities (150) (60) Repayment of long-term debt (1) ---
Distributions to owners (725) (315) Other 5 --- Cash used in
financing activities (721) (315) Increase (decrease) in cash and
cash equivalents $176 $(160) (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 December 2005 and 2004 that otherwise
would have been expected to be collected in January 2006 and 2005
of the respective years. This included $84 million and $66 million
from Occidental Chemical Corporation in December 2005 and 2004,
respectively. Table 17 - Millennium Unaudited Income Statement
Information (A) (C) For the For the three months twelve months
ended ended December 31, September 30, December 31, (Millions of
dollars) 2005 2005 2005 Sales and other operating revenues (B) $502
$489 $1,959 Cost of sales 478 448 1,715 Selling, general and
administrative expenses 29 77 194 Research and development expenses
6 5 23 Asset impairments 7 3 15 Combination costs --- 2 2 Operating
income (loss) (18) (46) 10 Interest expense, net (39) (24) (112)
Other income (expense), net 3 (18) (19) Loss before equity
investment, minority interest and income taxes (54) (88) (121)
Income (loss) from equity investment in Equistar 89 (8) 221 Income
(loss) before income taxes and minority interest 35 (96) 100
Provision for (benefit from) income taxes 36 (26) 67 Income (loss)
before minority interest (1) (70) 33 Minority interest (1) (2) (5)
Net income (loss) $(2) $(72) $28 (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 fourth and third quarters and
full year 2005 included $13 million, $39 million and $58 million,
respectively, of charges representing revisions to Lyondell's
previous estimates of expected future environmental remediation
spending. Table 18 - Millennium Unaudited Balance Sheet Information
(A) December 31, December 31, (Millions of dollars) 2005 2004 Cash
and cash equivalents $279 $344 Accounts receivable, net 361 336
Inventories 429 414 Prepaid expenses and other current assets 79 61
Total current assets 1,148 1,155 Property, plant and equipment, net
647 707 Investments 464 457 Goodwill 104 104 Other assets, net 110
107 Total assets $2,473 $2,530 Current maturities of long-term debt
$169 $7 Accounts payable 367 294 Accrued liabilities 156 153 Total
current liabilities 692 454 Long-term debt 966 1,398 Other
liabilities 644 536 Deferred income taxes 167 164 Minority interest
42 33 Stockholder's deficit (100,000,000 shares authorized;
66,135,816 shares outstanding) (38) (55) Total liabilities and
stockholders' equity $2,473 $2,530 (A) Represents information for
Millennium on a stand-alone basis and does not reflect purchase
accounting adjustments. Table 19 - Millennium Unaudited Cash Flow
Information (A) For the twelve months ended December 31, (Millions
of dollars) 2005 Net income $28 Adjustments: Asset impairments 15
Depreciation and amortization 107 Debt prepayment charges and
premiums 11 Deferred income taxes (3) Income from equity investment
in Equistar (221) Distributions of earnings from Equistar 214
Changes in assets and liabilities: Accounts receivable (28)
Inventories (20) Accounts payable 77 Other, net 93 Cash provided by
operating activities 273 Expenditures for property, plant and
equipment (60) Cash used in investing activities (60) Repayment of
long-term debt (372) Issuance of long-term debt 100 Contribution
from Lyondell 6 Distributions to minority interests (6) Other 2
Cash used in financing activities (270) Effect of exchange rate
changes on cash (8) Decrease in cash and cash equivalents $(65) (A)
Represents information for Millennium on a stand-alone basis and
does not reflect purchase accounting adjustments. Table 20 - LCR
Unaudited Income Statement Information For the For the three months
twelve months ended ended December 31, September 30, December 31,
(Millions of dollars) 2005 2004 2005 2005 2004 Sales and other
operating revenues (A) $1,440 $1,564 $2,202 $6,741 $5,603 Cost of
sales 1,446 1,385 2,091 6,458 5,028 Selling, general and
administrative expenses 17 14 11 51 59 Operating income (loss) (23)
165 100 232 516 Interest expense, net (12) (6) (9) (38) (30) Other
income --- --- --- --- 14 Net income (loss) (B) $(35) $159 $91 $194
$500 EBITDA (C) $7 $193 $130 $348 $645 (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 21
- LCR Unaudited Balance Sheet Information December 31, December 31,
(Millions of dollars) 2005 2004 Total current assets $418 $359
Property, plant and equipment, net 1,328 1,227 Other assets, net 86
61 Total assets $1,832 $1,647 Current maturities of long-term debt
$5 $5 Other current liabilities 800 583 Long-term debt 439 443
Loans payable to partners 264 264 Other liabilities 113 112
Partners' capital 211 240 Total liabilities and partners' capital
$1,832 $1,647 Table 22 - LCR Unaudited Cash Flow Information For
the twelve months ended December 31, (Millions of dollars) 2005
2004 Cash flow from operations $439 $667 Capital expenditures 176
71 Depreciation and amortization 116 115 Chemicals Inc. DATASOURCE:
Lyondell Chemical Company; Equistar Chemicals, LP; Millennium
CONTACT: media, Susan Moore, +1-713-309-4645, or investors, Doug
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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