Exhibit 99.1
| | |
 | | NEWS RELEASE |
For information, contact:
Media – Susan Moore (713) 309-4645
Investors – Doug Pike (713) 309-7141
Lyondell Reports Third-Quarter 2006 Results
Highlights
| | • | | Net income—$57 million or 22 cents per share |
| | • | | Earnings reflect improved business results and pretax charges: |
| | • | | $176 million: refinery acquisition |
| | • | | $106 million: impairment of Lake Charles ethylene plant |
| | • | | $31 million: mutual insurance consortium and debt prepayment |
| | • | | Mid-August acquisition of CITGO’s 41.25 percent of Houston refinery and new market-based crude contract with PDVSA |
HOUSTON (Oct. 26, 2006) – Lyondell Chemical Company (NYSE: LYO) today announced net income for the third quarter 2006 of $57 million, or 22 cents per share on a fully diluted basis. These results include after-tax charges of $114 million related to an August 2006 refinery transaction and $69 million for the impairment of the net book value of the Lake Charles, La., ethylene facility. [See Table 2 below for additional charges.] These results compare with net income of $10 million, or 4 cents per share, for the third quarter 2005, and net income of $160 million, or 62 cents per share, for the second quarter 2006. For the first nine months of 2006, net income was $507 million, or $1.96 per share on a fully diluted basis, including the charges described above, compared with $390 million, or $1.50 per share, during the first nine months of 2005.
Table 1—Lyondell Earnings Summary
| | | | | | | | | | | | | | | |
Millions of dollars, except per share amounts | | 3Q
2006 | | 3Q
2005 | | 2Q
2006 | | 1st Nine
Months
2006 | | 1st Nine
Months
2005 |
Sales and other operating revenues | | $ | 6,154 | | $ | 4,790 | | $ | 5,072 | | $ | 15,983 | | $ | 13,606 |
Net income | | | 57 | | | 10 | | | 160 | | | 507 | | | 390 |
Basic earnings per share | | | 0.23 | | | 0.04 | | | 0.65 | | | 2.05 | | | 1.59 |
Diluted earnings per share(a) | | | 0.22 | | | 0.04 | | | 0.62 | | | 1.96 | | | 1.50 |
Basic weighted average shares outstanding (millions) | | | 247.7 | | | 246.5 | | | 247.4 | | | 247.3 | | | 245.6 |
Diluted weighted average shares outstanding (millions)(a) | | | 260.5 | | | 260.4 | | | 260.1 | | | 260.0 | | | 259.7 |
| (a) | Includes the dilutive effect of the convertible debentures, stock options and warrants. |
Table 2 – Charges (Benefits) Included in Lyondell’s Results
| | | | | | | | | | | | | | | | |
Millions of dollars | | 3Q
2006 | | 3Q
2005 | | 2Q
2006 | | 1st Nine
Months
2006 | | | 1st Nine
Months
2005 |
Pretax charges (benefits): | | | | | | | | | | | | | | | | |
Lake Charles ethylene facility impairment(a) | | $ | 106 | | $ | – | | $ | – | | $ | 106 | | | $ | – |
Lake Charles TDI plant impairment(b) | | | – | | | 195 | | | – | | | – | | | | 195 |
Refining segment contract termination cost(c) | | | 176 | | | – | | | – | | | 176 | | | | – |
Houston Refining LP—related settlement(d) | | | – | | | – | | | – | | | (70 | ) | | | – |
Mutual insurance consortia losses | | | 10 | | | 30 | | | – | | | 15 | | | | 44 |
Debt retirement charges | | | 21 | | | 7 | | | – | | | 21 | | | | 28 |
| | | | | |
Net after-tax effect | | | 203 | | | 151 | | | – | | | 161 | | | | 174 |
Effect on diluted earnings per share | | | 0.78 | | | 0.58 | | | – | | | 0.62 | | | | 0.67 |
| | (a) | Represents impairment of the carrying value of the Lake Charles, La., ethylene facility and related assets, which is part of the Ethylene, Co-Products & Derivatives segment. |
| | (b) | Represents impairment of the carrying value of the Lake Charles, La., toluene diisocyanate (TDI) facility, which is part of the PO & Related Products segment. |
| | (c) | Represents Lyondell’s 58.75 percent share of the cost to terminate Houston Refining LP’s (“Houston Refining”) previous crude supply agreement. |
| | (d) | Represents the impact of the resolution of various matters among Houston Refining, its owners and their affiliates. |
Aside from the previously mentioned charges, third-quarter business results improved versus the second quarter 2006, with strength in both chemicals and refining. The ethylene segment benefited from increased prices, while propylene oxide (PO) and PO derivatives reported higher sales volumes and margins. Refining segment results improved, primarily as a result of increased ownership in the Houston refinery and the related change in the crude supply contract.
“ In a period of continued volatility in the energy and chemical markets, our product mix and operating flexibility performed well, producing strong third-quarter results. In addition, the refinery continued to set new records and operate above stated capacity for the second quarter in a row,” said Dan F. Smith, president and CEO of Lyondell Chemical Company. “Our strong results positioned us to call an additional $430 million of debt on Oct. 24. After completing this prepayment, debt repayment will approach $900 million for the year.”
OUTLOOK
Through October, ethylene chain margins have remained strong despite price declines in response to energy prices. However, there are continued pressures as a result of inventory destocking, seasonal demand patterns and continued energy price volatility. PO and PO derivative product prices, margins and volumes are generally more stable. In fuel products, margins are following typical seasonal trends, as energy-price volatility is coupled with the expected slowdown between the summer driving and winter heating seasons.
“The fundamental economic and market conditions for our industry continue to be quite good, despite the increased turbulence caused by the energy markets. I believe that somewhat lower energy prices ultimately will serve as a positive stimulus to extend the chemical cycle,”
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said Smith. “The new crude supply contract and 100 percent ownership of the refinery are expected to provide strong cash flow, in addition to further expanding the diversification of our portfolio. We appreciate the investment community’s favorable response to the transaction.”
LYONDELL BUSINESS RESULTS DISCUSSION BY REPORTING SEGMENT
Lyondell operates in four segments: 1) Ethylene, co-products and derivatives; 2) PO and related products; 3) Inorganic chemicals; and 4) Refining.
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).
Table 3 – Ethylene, Co-Products & Derivatives Financial Overview(a)
| | | | | | | | | | | | | | | |
Millions of dollars | | 3Q
2006 | | 3Q
2005 | | 2Q
2006 | | 1st Nine
Months
2006 | | 1st Nine
Months
2005 |
Sales and other operating revenues | | $ | 3,603 | | $ | 2,988 | | $ | 3,401 | | $ | 10,156 | | $ | 8,811 |
Operating income(b) | | | 173 | | | 21 | | | 181 | | | 653 | | | 613 |
EBITDA(c) | | | 372 | | | 116 | | | 279 | | | 1,048 | | | 896 |
| | (a) | See Table 7 for additional segment information. |
| | (b) | Operating income for the third quarter and first nine months of 2006 included an impairment charge of $106 million, which is excluded from EBITDA. |
| | (c) | See Table 10 for a reconciliation of segment EBITDA to net income of Lyondell. |
Third-quarter 2006 results include a pretax charge of $106 million related to the impairment of the net book value of the Lake Charles ethylene facility.
3Q06 v. 2Q06 –Ethylene and ethylene derivative product sales volumes decreased by approximately 95 million pounds (3 percent) versus the second quarter 2006. Quarterly average prices for ethylene, polyethylene and ethylene glycol each increased by approximately 4 cents per pound, compared with the second quarter 2006. The company’s average cost-of-ethylene-production metric (COE) was relatively unchanged versus the second quarter as increases in the natural-gas-based raw material component of the metric were offset by declines in the crude-oil-based raw material component. Acetyls results were unchanged as margin increases were offset by lower sales volumes.
3Q06 v. 3Q05 –Ethylene and ethylene derivative product sales volumes were comparable to the third quarter 2005. The quarterly average prices for ethylene, polyethylene and ethylene glycol increased by approximately 9 cents per pound, 12 cents per pound and 5 cents per pound, respectively. The company’s average COE metric increased by approximately
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1 cent per pound, primarily due to increased natural-gas-based raw material costs. Acetyls results improved by approximately $10 million as increased product prices and margins more than offset the impact of reduced methanol sales volumes.
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, methyl tertiary butyl ether (MTBE) and toluene diisocyanate (TDI).
Table 4 – PO & Related Products Financial Overview(a)
| | | | | | | | | | | | | | | |
Millions of dollars | | 3Q
2006 | | 3Q
2005 | | 2Q
2006 | | 1st Nine
Months
2006 | | 1st Nine
Months
2005 |
Sales and other operating revenues | | $ | 1,900 | | $ | 1,843 | | $ | 1,763 | | $ | 5,307 | | $ | 4,923 |
Operating income(b) | | | 133 | | | 65 | | | 108 | | | 358 | | | 281 |
EBITDA(c) | | | 195 | | | 321 | | | 170 | | | 540 | | | 653 |
| | (a) | See Table 7 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 10 for a reconciliation of segment EBITDA to net income of Lyondell. |
Third-quarter 2005 results included a $195 million charge related to the impairment of the Lake Charles TDI facility.
3Q06 v. 2Q06 – Overall results increased by approximately $25 million versus the second quarter 2006. PO and PO derivative results increased by approximately $25 million due to an approximate 50 million pound (7 percent) increase in sales volumes and increased margins. MTBE, styrene and TDI results were relatively unchanged.
3Q06 v. 3Q05 –MTBE results declined by approximately $170 million due to lower margins as raw material margins declined by approximately 95 cents per gallon from record performance in last year’s hurricane-impacted quarter. TDI results increased by approximately $35 million (excluding the impairment) to roughly break even due to a combination of increased prices coupled with lower ongoing operating costs resulting from last year’s shutdown of the Lake Charles TDI facility. PO and PO derivative results increased by approximately $10 million due to a combination of increased margins and sales volume. Styrene results were unchanged.
Inorganic Chemicals Segment – The principal product of the inorganic chemicals segment is titanium dioxide (TiO2).
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Table 5 – Inorganic Chemicals Financial Overview(a)
| | | | | | | | | | | | | | | | | |
Millions of dollars | | 3Q
2006 | | | 3Q
2005 | | | 2Q
2006 | | 1st Nine
Months
2006 | | 1st Nine
Months
2005 |
Sales and other operating revenues | | $ | 341 | | | $ | 345 | | | $ | 359 | | $ | 1,042 | | $ | 1,005 |
Operating income | | | (5 | ) | | | (16 | ) | | | 5 | | | 20 | | | 21 |
EBITDA(b) | | | 25 | | | | 3 | | | | 33 | | | 102 | | | 102 |
| | (a) | See Table 7 for additional segment information. |
| | (b) | See Table 10 for a reconciliation of segment EBITDA to net income of Lyondell. |
3Q06 v. 2Q06 –Sales volumes declined by approximately 9,000 metric tons due to decreased U.S. industry demand and European production problems. Average sales prices declined by approximately $15 per metric ton.
3Q06 v. 3Q05 –Sales prices increased by approximately $50 per metric ton while operating costs declined, resulting in approximately a $25 million improvement in results. This was partially offset by a 10,000 metric ton reduction in sales volume.
Refining Segment – Lyondell owned a 58.75 percent interest in Houston Refining LP (formerly known as LYONDELL-CITGO Refining LP) prior to Aug. 16, 2006, at which time Lyondell purchased the remaining 41.25 percent interest from CITGO Petroleum Corporation.
Table 6—Refining Financial Overview – 100% Basis(a)
| | | | | | | | | | | | | | | | |
Millions of dollars | | 3Q
2006 | | | 3Q
2005 | | 2Q
2006 | | 1st Nine
Months
2006 | | 1st Nine
Months
2005 |
Sales and other operating revenues | | $ | 2,288 | | | $ | 2,202 | | $ | 2,411 | | $ | 6,793 | | $ | 5,301 |
Operating income(b) | | | (98 | ) | | | 100 | | | 163 | | | 227 | | | 255 |
EBITDA(b) (c) | | | (54 | ) | | | 130 | | | 194 | | | 333 | | | 341 |
| | (a) | The Refining segment information presented above represents the historical operating results of Houston Refining on a 100 percent basis, and does not reflect purchase accounting adjustments. See Table 7 for additional segment information. |
| | (b) | Operating income for the first nine months of 2006 includes third quarter 2006 charges of $300 million for the termination of the previous crude supply contract with PDVSA and a second quarter charge of $8 million representing reimbursement to Lyondell of legal fees and expenses paid by Lyondell on behalf of Houston Refining related to a settlement. |
| | (c) | See Table 10 for a reconciliation of segment EBITDA to net income of Houston Refining. |
Prior to Aug. 16, Lyondell’s interest was accounted for by the equity method. As a result of the acquisition, Houston Refining’s operations are consolidated from Aug. 16.
Third-quarter Houston Refining results included a $300 million charge related to the cancellation of the previous crude supply contract with Petróleos de Venezuela S.A. (PDVSA). The refining results summarized in Table 6 reflect the full charge; however, only 58.75 percent,
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or $176 million, of the charge is included in Lyondell’s results of operations. The remaining $124 million is included in the purchase price.
The following review is on a 100 percent basis.
3Q06 v. 2Q06 –Crude processing rates averaged 270,000 barrels per day, unchanged versus the second quarter 2006. Margins increased by approximately $50 million due to a combination of improved Venezuelan crude contract margins and the absence of negative impacts related to second-quarter catalyst changes and property tax changes. Lower spot crude margins offset a portion of the margin improvement.
3Q06 v. 3Q05 –Crude processing rates increased by 25,000 barrels per day to 270,000 barrels per day versus the hurricane-impacted third quarter of 2005. Spreads on non-Venezuelan crude were relatively unchanged versus last year, while the spread on Venezuelan crude increased by several dollars per barrel.
Cash Distributions and Debt Reduction
Equistar Chemicals, LP to Lyondell Chemical Company and Millennium Chemicals Inc. –During the third quarter 2006, Lyondell Chemical Company received $53 million of distributions from Equistar. Millennium received $22 million from Equistar during the third quarter 2006.
Millennium to Lyondell Chemical Company –There were no dividends paid by Millennium to Lyondell Chemical Company during the third quarter 2006.
Debt Reduction –During the third quarter, Millennium prepaid $10 million of debt.
Receivable Facilities Utilization –As of Sept. 30, 2006, Lyondell’s receivable facility was unutilized and Equistar’s receivable facility was utilized at $90 million.
Third-Quarter Financing Activity –Lyondell completed several financing activities related to the refinery transaction during the quarter, ultimately leading to:
| | • | | Issuance of $1.775 billion in new 7-year term loans |
| | • | | Issuance of a new $1.06 billion 5-year revolving credit facility |
| | • | | Issuance of $875 million of new 8 percent, 8-year unsecured bonds |
| | • | | Issuance of $900 million of new 8 1/4 percent, 10-year unsecured bonds |
| | • | | Elimination of Lyondell Chemical Company’s previous revolving credit facility |
| | • | | Elimination of Houston Refining’s previous term loans and revolving credit facility |
| | • | | Repayment of $760 million of the 9 5/8 percent bonds due 2007 |
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Subsequent Financing Activity –
| | • | | On Oct. 6, Lyondell called for repayment the remaining $87 million of the 9 5/8 percent bonds due in 2007. |
| | • | | On Oct. 24, Lyondell called for repayment the remaining $430 million of its 9 1/2 percent bonds due in 2008. |
CONFERENCE CALL
Lyondell will host a conference call today, Oct. 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 pass code for each is Lyondell. The call will be broadcast live on the Investor Relations page of the company’s web site, www.lyondell.com/earnings.
A replay of the call will be available from 1:30 p.m. ET Oct. 26 to 6 p.m. ET on Nov. 3. The dial-in numbers are 888-562-0231 (U.S.) and 203-369-3168 (international). The pass code for each is 5549. Web replay will be available at 2:30 p.m. ET Oct. 26 on the Investor Relations page of the company’s web site, 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 Oct. 26 at 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 refiner of heavy, high-sulfur crude oil and a significant producer of gasoline-blending components. Lyondell is a global company operating on five continents and employs approximately 11,000 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; uncertainties associated with the U.S. and worldwide economies; legal, tax and environmental proceedings; cyclical nature of the chemical and refining industries; operating interruptions; current and potential governmental regulatory actions; terrorist acts; international political unrest; competitive products and pricing; Lyondell’s ability to implement its business strategies, including whether the expected benefits of Lyondell’s acquisition of Houston Refining are achieved to the extent
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and in the time period anticipated; 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, 2005 and Quarterly Reports on Form 10-Q for the quarter ended September 30, 2006, which will be filed with the SEC in November 2006, and Lyondell’s Current Report on Form 8-K filed on September 7, 2006.
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SOURCE: Lyondell Chemical Company; Equistar Chemicals, LP; Millennium Chemicals Inc.
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Table 7 - Selected Unaudited Segment Financial Information(a)
| | | | | | | | | | | | | | | | | |
| | | For the three months ended | | For the nine months ended
September 30, |
| | September 30, | | | June 30, 2006 | |
(Millions of dollars) | | 2006 | | | 2005 | | | | 2006 | | 2005 |
Sales and other operating revenues:(b) | | | | | | | | | | | | | | | | | |
Ethylene, Co-Products & Derivatives | | $ | 3,603 | | | $ | 2,988 | | | $ | 3,401 | | $ | 10,156 | | $ | 8,811 |
PO & Related Products | | | 1,900 | | | | 1,843 | | | | 1,763 | | | 5,307 | | | 4,923 |
Inorganic Chemicals | | | 341 | | | | 345 | | | | 359 | | | 1,042 | | | 1,005 |
Refining | | | 2,288 | | | | 2,202 | | | | 2,411 | | | 6,793 | | | 5,301 |
| | | | | |
Operating income: | | | | | | | | | | | | | | | | | |
Ethylene, Co-Products & Derivatives(c) | | $ | 173 | | | $ | 21 | | | $ | 181 | | $ | 653 | | $ | 613 |
PO & Related Products(d) | | | 133 | | | | 65 | | | | 108 | | | 358 | | | 281 |
Inorganic Chemicals | | | (5 | ) | | | (16 | ) | | | 5 | | | 20 | | | 21 |
Refining(e) | | | (98 | ) | | | 100 | | | | 163 | | | 227 | | | 255 |
| | | | | |
Depreciation and amortization: | | | | | | | | | | | | | | | | | |
Ethylene, Co-Products & Derivatives | | $ | 94 | | | $ | 95 | | | $ | 96 | | $ | 288 | | $ | 286 |
PO & Related Products | | | 57 | | | | 59 | | | | 59 | | | 172 | | | 177 |
Inorganic Chemicals | | | 24 | | | | 26 | | | | 25 | | | 73 | | | 76 |
Refining | | | 44 | | | | 30 | | | | 31 | | | 106 | | | 86 |
| | | | | |
EBITDA:(f) | | | | | | | | | | | | | | | | | |
Ethylene, Co-Products & Derivatives | | $ | 372 | | | $ | 116 | | | $ | 279 | | $ | 1,048 | | $ | 896 |
PO & Related Products | | | 195 | | | | 321 | | | | 170 | | | 540 | | | 653 |
Inorganic Chemicals | | | 25 | | | | 3 | | | | 33 | | | 102 | | | 102 |
Refining(e) | | | (54 | ) | | | 130 | | | | 194 | | | 333 | | | 341 |
| | | | | |
Capital expenditures: | | | | | | | | | | | | | | | | | |
Ethylene, Co-Products & Derivatives | | $ | 44 | | | $ | 34 | | | $ | 43 | | $ | 110 | | $ | 103 |
PO & Related Products | | | 21 | | | | 6 | | | | 18 | | | 54 | | | 28 |
Inorganic Chemicals | | | 19 | | | | 13 | | | | 13 | | | 42 | | | 32 |
Refining | | | 61 | | | | 38 | | | | 49 | | | 170 | | | 121 |
| (a) | See Table 9 for a reconciliation of segment information for the three months and nine months ended September 30, 2006 and 2005 and for the three months ended June 30, 2006 to consolidated Lyondell financial information. The Refining information presented above represents operating results of Houston Refining LP (“Houston Refining”) on a 100 percent basis. Lyondell acquired the remaining 41.25 percent of Houston Refining on August 16, 2006 (the “August 2006 Acquisition”). From August 16, 2006, depreciation and amortization, as well as operating income, reflect the effects of that acquisition. See Tables 21 through 23 for additional Houston Refining financial information. |
| (b) | Sales include sales to affiliates and intersegment sales. |
| (c) | Includes a $106 million charge for the three and nine months ended September 30, 2006 for the impairment of the carrying value of the Lake Charles, La., ethylene facility. |
| (d) | Includes a $195 million charge for the three and nine months ended September 30, 2005 for the impairment of the carrying value of the Lake Charles, La., TDI facility. |
| (e) | Includes a charge for the three and nine months ended September 30, 2006 of $300 million for the termination of Houston Refining’s previous crude supply agreement with PDVSA and a charge for the three months ended June 30, 2006 and the nine months ended September 30, 2006 of $8 million representing reimbursement to Lyondell of legal fees and expenses paid by Lyondell on behalf of Houston Refining related to the settlement. |
| (f) | See Table 10 for reconciliation of segment EBITDA to net income. |
Table 8 - Selected Segment Sales Volumes(a) (b)
| | | | | | | | | | |
| | | For the three months ended | | For the nine months ended |
| | September 30, | | June 30, 2006 | | September 30, |
| | 2006 | | 2005 | | | 2006 | | 2005 |
Ethylene, Co-Products and Derivatives (in millions) | | | | | | | | | | |
Ethylene and derivatives (pounds) | | 2,836 | | 2,834 | | 2,930 | | 8,637 | | 8,590 |
Polyethylene included above (pounds) | | 1,353 | | 1,409 | | 1,489 | | 4,175 | | 4,087 |
Co-products, nonaromatic (pounds) | | 2,171 | | 1,899 | | 2,154 | | 6,291 | | 5,795 |
Aromatics (gallons) | | 89 | | 100 | | 88 | | 266 | | 309 |
| | | | | |
PO and Related Products (in millions) | | | | | | | | | | |
PO and derivatives (pounds) | | 813 | | 790 | | 763 | | 2,410 | | 2,405 |
Co-products: | | | | | | | | | | |
Styrene monomer (pounds) | | 1,208 | | 953 | | 1,031 | | 3,221 | | 2,980 |
MTBE and other TBA derivatives (gallons) | | 321 | | 298 | | 290 | | 908 | | 878 |
| | | | | |
Inorganic Chemicals (thousand metric tons) | | | | | | | | | | |
TiO2 | | 149 | | 160 | | 158 | | 458 | | 456 |
| | | | | |
Refined products (thousand barrels per day) | | | | | | | | | | |
Gasoline | | 112 | | 125 | | 116 | | 114 | | 117 |
Diesel and heating oil | | 84 | | 85 | | 82 | | 90 | | 86 |
Jet fuel | | 22 | | 16 | | 11 | | 14 | | 15 |
Aromatics | | 7 | | 7 | | 7 | | 7 | | 8 |
Other refined products | | 112 | | 92 | | 118 | | 115 | | 83 |
| | | | | | | | | | |
Total refined products volumes | | 337 | | 325 | | 334 | | 340 | | 309 |
| | | | | | | | | | |
| | | | | |
Refinery Runs | | | | | | | | | | |
Crude processing rates (thousand barrels per day) | | | | | | | | | | |
Crude oil contract | | 214 | | 212 | | 227 | | 221 | | 199 |
Other crude oil | | 56 | | 33 | | 44 | | 47 | | 34 |
| | | | | | | | | | |
Total crude oil | | 270 | | 245 | | 271 | | 268 | | 233 |
| | | | | | | | | | |
| (a) | The Refining information presented above represents the historical operating results of Houston Refining on a 100 percent basis. |
| (b) | Sales volumes include sales to affiliates and intersegment sales. |
Table 9 - Reconciliation of Segment Information to Consolidated Lyondell Financial Information
| | | | | | | | | | | | | | |
(Millions of dollars) | | Sales and
other
operating
revenues | | | Operating income (loss) | | | Depreciation
and
amortization | | Capital
expenditures |
For the three months ended September 30, 2006: | | | | | | | | | | | | | | |
| | | | |
Segment Data | | | | | | | | | | | | | | |
Ethylene, Co-Products & Derivatives | | $ | 3,603 | | | $ | 173 | | | $ | 94 | | $ | 44 |
PO & Related Products | | | 1,900 | | | | 133 | | | | 57 | | | 21 |
Inorganic Chemicals | | | 341 | | | | (5 | ) | | | 24 | | | 19 |
Refining(a) | | | 1,083 | | | | 81 | | | | 28 | | | 29 |
Other (b) | | | (773 | ) | | | — | | | | 2 | | | 2 |
| | | | | | | | | | | | | | |
Total | | $ | 6,154 | | | $ | 382 | | | $ | 205 | | $ | 115 |
| | | | | | | | | | | | | | |
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 (b) | | | (386 | ) | | | (5 | ) | | | 2 | | | — |
| | | | | | | | | | | | | | |
Total | | $ | 4,790 | | | $ | 65 | | | $ | 182 | | $ | 53 |
| | | | | | | | | | | | | | |
For the three months ended June 30, 2006: | | | | | | | | | | | | | | |
| | | | |
Segment Data | | | | | | | | | | | | | | |
Ethylene, Co-Products & Derivatives | | $ | 3,401 | | | $ | 181 | | | $ | 96 | | $ | 43 |
PO & Related Products | | | 1,763 | | | | 108 | | | | 59 | | | 18 |
Inorganic Chemicals | | | 359 | | | | 5 | | | | 25 | | | 13 |
Other (b) | | | (451 | ) | | | (1 | ) | | | 1 | | | 2 |
| | | | | | | | | | | | | | |
Total | | $ | 5,072 | | | $ | 293 | | | $ | 181 | | $ | 76 |
| | | | | | | | | | | | | | |
For the nine months ended September 30, 2006: | | | | | | | | | | | | | | |
| | | | |
Segment Data | | | | | | | | | | | | | | |
Ethylene, Co-Products & Derivatives | | $ | 10,156 | | | $ | 653 | | | $ | 288 | | $ | 110 |
PO & Related Products | | | 5,307 | | | | 358 | | | | 172 | | | 54 |
Inorganic Chemicals | | | 1,042 | | | | 20 | | | | 73 | | | 42 |
Refining(a) | | | 1,083 | | | | 81 | | | | 28 | | | 29 |
Other (b) | | | (1,605 | ) | | | (5 | ) | | | 6 | | | 4 |
| | | | | | | | | | | | | | |
Total | | $ | 15,983 | | | $ | 1,107 | | | $ | 567 | | $ | 239 |
| | | | | | | | | | | | | | |
For the nine months ended September 30, 2005: | | | | | | | | | | | | | | |
| | | | |
Segment Data | | | | | | | | | | | | | | |
Ethylene, Co-Products & Derivatives | | $ | 8,811 | | | $ | 613 | | | $ | 286 | | $ | 103 |
PO & Related Products | | | 4,923 | | | | 281 | | | | 177 | | | 28 |
Inorganic Chemicals | | | 1,005 | | | | 21 | | | | 76 | | | 32 |
Other (b) | | | (1,133 | ) | | | (10 | ) | | | 6 | | | 2 |
| | | | | | | | | | | | | | |
Total | | $ | 13,606 | | | $ | 905 | | | $ | 545 | | $ | 165 |
| | | | | | | | | | | | | | |
| (a) | The Refining segment information reflects the consolidation of Houston Refining prospectively from August 16, 2006. For periods prior to August 16, 2006, Houston Refining was accounted for as an equity investment. |
| (b) | Includes elimination of intersegment transactions and items not allocated to segments. |
Table 10 - Reconciliation of Segment EBITDA to Net Income
| | | | | | | | | | | | | | | | | | | | |
(Millions of dollars) | | For the three months ended | | | For the nine months ended | |
| | September 30, | | | June 30, 2006 | | | September 30, | |
| | 2006 | | | 2005 | | | | 2006 | | | 2005 | |
LYONDELL | | | | | | | | | | | | | | | | | | | | |
Segment EBITDA: | | | | | | | | | | | | | | | | | | | | |
Ethylene, Co-Products & Derivatives | | $ | 372 | | | $ | 116 | | | $ | 279 | | | $ | 1,048 | | | $ | 896 | |
PO & Related Products | | | 195 | | | | 321 | | | | 170 | | | | 540 | | | | 653 | |
Inorganic Chemicals | | | 25 | | | | 3 | | | | 33 | | | | 102 | | | | 102 | |
Refining(a) | | | 109 | | | | — | | | | — | | | | 109 | | | | — | |
Other | | | 4 | | | | (1 | ) | | | — | | | | 76 | | | | (2 | ) |
Add: | | | | | | | | | | | | | | | | | | | | |
Income (loss) from equity investment in Houston Refining(a) | | | (104 | ) | | | 53 | | | | 86 | | | | 73 | | | | 139 | |
Deduct: | | | | | | | | | | | | | | | | | | | | |
Depreciation and amortization | | | (205 | ) | | | (182 | ) | | | (181 | ) | | | (567 | ) | | | (545 | ) |
Interest expense, net | | | (158 | ) | | | (149 | ) | | | (125 | ) | | | (411 | ) | | | (462 | ) |
Benefit from (provision for) income taxes | | | (48 | ) | | | 54 | | | | (98 | ) | | | (324 | ) | | | (160 | ) |
Charges related to impairment of assets | | | (112 | ) | | | (198 | ) | | | (4 | ) | | | (118 | ) | | | (203 | ) |
Debt prepayment premiums and charges | | | (21 | ) | | | (7 | ) | | | — | | | | (21 | ) | | | (28 | ) |
| | | | | | | | | | | | | | | | | | | | |
Lyondell net income | | $ | 57 | | | $ | 10 | | | $ | 160 | | | $ | 507 | | | $ | 390 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Refining EBITDA (b) | | $ | (54 | ) | | $ | 130 | | | $ | 194 | | | $ | 333 | | | $ | 341 | |
Deduct: | | | | | | | | | | | | | | | | | | | | |
Depreciation and amortization | | | (44 | ) | | | (30 | ) | | | (31 | ) | | | (106 | ) | | | (86 | ) |
Interest expense, net | | | (17 | ) | | | (9 | ) | | | (12 | ) | | | (40 | ) | | | (26 | ) |
Income taxes | | | 8 | | | �� | — | | | | (8 | ) | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Houston Refining net income | | $ | (107 | ) | | $ | 91 | | | $ | 143 | | | $ | 187 | | | $ | 229 | |
| | | | | | | | | | | | | | | | | | | | |
| (a) | The Refining segment information reflects the consolidation of Houston Refining prospectively from August 16, 2006. For periods prior to August 16, 2006, Houston Refining was accounted for as an equity investment. |
| (b) | The Refining information presented represents operating results of Houston Refining on a 100 percent basis. |
Table 11 - Lyondell Unaudited Income Statement Information(a)
| | | | | | | | | | | | | | | | | | | | |
| | | For the three months ended | | | For the nine months ended | |
| | September 30, | | | June 30, 2006 | | | September 30, | |
(Millions of dollars, except per share data) | | 2006 | | | 2005 | | | | 2006 | | | 2005 | |
Sales and other operating revenues | | $ | 6,154 | | | $ | 4,790 | | | $ | 5,072 | | | $ | 15,983 | | | $ | 13,606 | |
Cost of sales | | | 5,593 | | | | 4,548 | | | | 4,586 | | | | 14,350 | | | | 12,211 | |
Selling, general and administrative expenses | | | 156 | | | | 154 | | | | 169 | | | | 456 | | | | 422 | |
Research and development expenses | | | 23 | | | | 23 | | | | 24 | | | | 70 | | | | 68 | |
| | | | | | | | | | | | | | | | | | | | |
Operating income | | | 382 | | | | 65 | | | | 293 | | | | 1,107 | | | | 905 | |
Income (loss) from equity investment in Houston Refining(b) | | | (104 | ) | | | 53 | | | | 86 | | | | 73 | | | | 139 | |
Income from other equity investments | | | 2 | | | | 2 | | | | 3 | | | | 4 | | | | 2 | |
Interest expense, net | | | (158 | ) | | | (149 | ) | | | (125 | ) | | | (411 | ) | | | (462 | ) |
Other income (expense), net | | | (17 | ) | | | (15 | ) | | | 1 | | | | 58 | | | | (34 | ) |
| | | | | | | | | | | | | | | | | | | | |
Income (loss) before income taxes | | | 105 | | | | (44 | ) | | | 258 | | | | 831 | | | | 550 | |
Provision for (benefit from) income taxes | | | 48 | | | | (54 | ) | | | 98 | | | | 324 | | | | 160 | |
| | | | | | | | | | | | | | | | | | | | |
Net income | | $ | 57 | | | $ | 10 | | | $ | 160 | | | $ | 507 | | | $ | 390 | |
| | | | | | | | | | | | | | | | | | | | |
Basic earnings per share | | $ | 0.23 | | | $ | 0.04 | | | $ | 0.65 | | | $ | 2.05 | | | $ | 1.59 | |
| | | | | | | | | | | | | | | | | | | | |
Diluted earnings per share | | $ | 0.22 | | | $ | 0.04 | | | $ | 0.62 | | | $ | 1.96 | | | $ | 1.50 | |
| | | | | | | | | | | | | | | | | | | | |
Weighted average shares (in millions): | | | | | | | | | | | | | | | | | | | | |
Basic | | | 247.7 | | | | 246.5 | | | | 247.4 | | | | 247.3 | | | | 245.6 | |
| | | | | | | | | | | | | | | | | | | | |
Diluted | | | 260.5 | | | | 260.4 | | | | 260.1 | | | | 260.0 | | | | 259.7 | |
| | | | | | | | | | | | | | | | | | | | |
| (a) | Results of operations reflect the consolidation of Houston Refining prospectively from August 16, 2006. For periods prior to August 16, 2006, Houston Refining was accounted for as an equity investment. |
| (b) | Includes a $176 million charge for the three and nine months ended September 30, 2006 representing Lyondell’s 58.75 percent share of the $300 million cost to terminate Houston Refining’s previous crude supply agreement. |
Table 12 - Lyondell Unaudited Cash Flow Information(a)
| | | | | | | | |
| | | For the nine months ended
September 30, | |
(Millions of dollars) | | 2006 | | | 2005 | |
Net income | | $ | 507 | | | $ | 390 | |
Adjustments: | | | | | | | | |
Depreciation and amortization | | | 567 | | | | 545 | |
Asset impairments | | | 118 | | | | 203 | |
Equity investments - | | | | | | | | |
Amounts included in net income | | | (77 | ) | | | (141 | ) |
Distributions of earnings | | | 73 | | | | 140 | |
Deferred income taxes | | | 108 | | | | 112 | |
Debt prepayment premiums and charges | | | 21 | | | | 28 | |
Changes in assets and liabilities: | | | | | | | | |
Accounts receivable | | | (185 | ) | | | (345 | ) |
Inventories | | | (163 | ) | | | (142 | ) |
Accounts payable | | | (144 | ) | | | 322 | |
Other, net | | | (206 | ) | | | (34 | ) |
| | | | | | | | |
Cash provided by operating activities | | | 619 | | | | 1,078 | |
| | | | | | | | |
Acquisition of Houston Refining and related payments, net of cash acquired | | | (2,413 | ) | | | — | |
Contributions and advances to affiliates | | | (82 | ) | | | (90 | ) |
Expenditures for property, plant and equipment | | | (239 | ) | | | (165 | ) |
Distributions from affiliates in excess of earnings | | | 117 | | | | 123 | |
Other | | | 6 | | | | 3 | |
| | | | | | | | |
Cash used in investing activities | | | (2,611 | ) | | | (129 | ) |
| | | | | | | | |
Issuance of long-term debt | | | 4,357 | | | | 99 | |
Repayment of long-term debt(b) | | | (2,114 | ) | | | (1,072 | ) |
Net borrowings on revolving credit facility | | | 6 | | | | — | |
Dividends paid | | | (167 | ) | | | (167 | ) |
Proceeds from stock option exercises | | | 14 | | | | 46 | |
Other | | | — | | | | 4 | |
| | | | | | | | |
Cash provided by (used in) financing activities | | | 2,096 | | | | (1,090 | ) |
| | | | | | | | |
Effect of exchange rate changes on cash | | | 4 | | | | (11 | ) |
| | | | | | | | |
Increase (decrease) in cash and cash equivalents | | $ | 108 | | | $ | (152 | ) |
| | | | | | | | |
| (a) | Houston Refining became a wholly-owned subsidiary as of August 16, 2006. Prior to August 16, 2006, Lyondell’s investment in Houston Refining was accounted for on an equity basis. |
| (b) | Includes prepayment premiums in the nine months ended September 30, 2006 and 2005 of $27 million and $31 million, respectively. |
Table 13 - Lyondell Unaudited Balance Sheet Information(a) (b)
| | | | | | |
(Millions of dollars) | | September 30,
2006 | | December 31,
2005 |
Cash and cash equivalents | | $ | 701 | | $ | 593 |
Accounts receivable, net | | | 2,370 | | | 1,677 |
Inventories | | | 2,183 | | | 1,657 |
Prepaid expenses and other current assets | | | 109 | | | 176 |
Deferred tax assets | | | 233 | | | 198 |
| | | | | | |
Total current assets | | | 5,596 | | | 4,301 |
Property, plant and equipment, net | | | 9,104 | | | 6,530 |
Investments and long-term receivables: | | | | | | |
Investment in PO joint ventures | | | 777 | | | 776 |
Investment in and receivable from Houston Refining | | | — | | | 186 |
Other investments and long-term receivables | | | 124 | | | 114 |
Goodwill, net | | | 2,134 | | | 2,245 |
Other assets, net | | | 948 | | | 828 |
| | | | | | |
Total assets | | $ | 18,683 | | $ | 14,980 |
| | | | | | |
Current maturities of long-term debt | | $ | 109 | | $ | 319 |
Accounts payable | | | 2,119 | | | 1,453 |
Accrued liabilities | | | 1,028 | | | 797 |
| | | | | | |
Total current liabilities | | | 3,256 | | | 2,569 |
Long-term debt | | | 8,494 | | | 5,974 |
Other liabilities | | | 1,726 | | | 1,786 |
Deferred income taxes | | | 1,562 | | | 1,463 |
Minority interest | | | 171 | | | 180 |
Stockholders’ equity (248,479,864 and 247,050,234 shares outstanding at September 30, 2006 and December 31, 2005, respectively) | | | 3,474 | | | 3,008 |
| | | | | | |
Total liabilities and stockholders’ equity | | $ | 18,683 | | $ | 14,980 |
| | | | | | |
| (a) | Reflects Lyondell and its consolidated subsidiaries including Houston Refining at September 30, 2006. Prior to August 16, 2006, Lyondell’s investment in Houston Refining was accounted for on an equity basis. |
| (b) | The purchase price allocation and other information related to Houston Refining used in the preparation of this financial data are preliminary. Lyondell is seeking additional information related to the fair value of certain assets acquired and liabilities assumed. The finalization of these matters is not expected to have a material effect on the purchase price allocation. |
Table 14 - Lyondell Selected Equity Investment Activity
| | | | | | | | |
(Millions of dollars) | | For the nine
months ended
September 30,
2006 | | | For the twelve
months ended
December 31,
2005 | |
Investment in Houston Refining, beginning of period | | $ | (90 | ) | | $ | (37 | ) |
Lyondell’s share of Houston Refining net income | | | 73 | | | | 123 | |
Cash distributions from Houston Refining | | | (190 | ) | | | (303 | ) |
Cash contributions to Houston Refining | | | 64 | | | | 128 | |
Consolidation of Houston Refining | | | 143 | | | | — | |
Other | | | — | | | | (1 | ) |
| | | | | | | | |
Investment in Houston Refining, end of period | | $ | — | | | $ | (90 | ) |
| | | | | | | | |
| | |
Investment in and receivable from Houston Refining | | September 30, 2006 | | | December 31, 2005 | |
| | |
Investment in Houston Refining | | $ | — | | | $ | (90 | ) |
Houston Refining note receivable | | | — | | | | 229 | |
Houston Refining interest receivable | | | — | | | | 47 | |
| | | | | | | | |
Total | | $ | — | | | $ | 186 | |
| | | | | | | | |
Tables 15 through 23 represent additional financial information
on a 100% basis for Equistar, Millennium and Houston Refining LP.
Table 15 - Equistar Unaudited Income Statement Information (a)
| | | | | | | | | | | | | | | | | | | | |
(Millions of dollars) | | For the three months ended | | | For the nine months ended | |
| | September 30, | | | June 30, 2006 | | | September 30, | |
| | 2006 | | | 2005 | | | | 2006 | | | 2005 | |
Sales and other operating revenues(b) | | $ | 3,480 | | | $ | 2,867 | | | $ | 3,278 | | | $ | 9,794 | | | $ | 8,428 | |
Cost of sales | | | 3,151 | | | | 2,776 | | | | 3,028 | | | | 8,849 | | | | 7,640 | |
Impairment charge | | | 135 | | | | — | | | | — | | | | 135 | | | | — | |
Selling, general and administrative expenses | | | 54 | | | | 53 | | | | 61 | | | | 163 | | | | 151 | |
Research and development expenses | | | 8 | | | | 8 | | | | 9 | | | | 25 | | | | 25 | |
| | | | | | | | | | | | | | | | | | | | |
Operating income | | | 132 | | | | 30 | | | | 180 | | | | 622 | | | | 612 | |
Interest expense, net | | | (55 | ) | | | (56 | ) | | | (52 | ) | | | (160 | ) | | | (164 | ) |
Other income (expense) | | | 1 | | | | (2 | ) | | | — | | | | — | | | | (2 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net income(c) | | $ | 78 | | | $ | (28 | ) | | $ | 128 | | | $ | 462 | | | $ | 446 | |
| | | | | | | | | | | | | | | | | | | | |
| (a) | Represents information for Equistar on the basis reflected in Equistar’s financial statements as filed in its Annual Report on Form 10-K. |
| (b) | Sales and other operating revenues include sales to affiliates. |
| (c) | As a partnership, Equistar is not subject to federal income taxes. |
Table 16 - Equistar Unaudited Balance Sheet Information(a)
| | | | | | |
(Millions of dollars) | | September 30,
2006 | | December 31,
2005 |
Cash and cash equivalents | | $ | 38 | | $ | 215 |
Accounts receivable, net | | | 1,265 | | | 924 |
Inventories | | | 791 | | | 657 |
Prepaid expenses and other current assets | | | 37 | | | 53 |
| | | | | | |
Total current assets | | | 2,131 | | | 1,849 |
Property, plant and equipment, net | | | 2,847 | | | 3,063 |
Investments | | | 65 | | | 58 |
Other assets, net | | | 310 | | | 350 |
| | | | | | |
Total assets | | $ | 5,353 | | $ | 5,320 |
| | | | | | |
Current maturities of long-term debt | | $ | — | | $ | 150 |
Accounts payable | | | 878 | | | 735 |
Accrued liabilities | | | 247 | | | 275 |
| | | | | | |
Total current liabilities | | | 1,125 | | | 1,160 |
Long-term debt | | | 2,160 | | | 2,161 |
Other liabilities and deferred revenues | | | 398 | | | 416 |
Partners’ capital | | | 1,670 | | | 1,583 |
| | | | | | |
Total liabilities and partners’ capital | | $ | 5,353 | | $ | 5,320 |
| | | | | | |
| (a) | Represents information for Equistar on the basis reflected in Equistar’s financial statements as filed in its Annual Report on Form 10-K. |
Table 17 - Equistar Unaudited Cash Flow Information (a)
| | | | | | | | |
(Millions of dollars) | | For the nine months ended September 30, | |
| | 2006 | | | 2005 | |
Net income | | $ | 462 | | | $ | 446 | |
Adjustments: | | | | | | | | |
Depreciation and amortization | | | 243 | | | | 238 | |
Asset impairment | | | 135 | | | | — | |
Deferred maintenance turnaround expenditures | | | (11 | ) | | | (51 | ) |
Changes in assets and liabilities: | | | | | | | | |
Accounts receivable | | | (341 | ) | | | (191 | ) |
Inventories | | | (138 | ) | | | (94 | ) |
Accounts payable | | | 142 | | | | 340 | |
Other, net | | | (42 | ) | | | (26 | ) |
| | | | | | | | |
Cash provided by operating activities | | | 450 | | | | 662 | |
| | | | | | | | |
Expenditures for property, plant and equipment | | | (105 | ) | | | (103 | ) |
Other | | | 2 | | | | 3 | |
| | | | | | | | |
Cash used in investing activities | | | (103 | ) | | | (100 | ) |
| | | | | | | | |
Distributions to owners | | | (375 | ) | | | (475 | ) |
Repayment of long-term debt | | | (150 | ) | | | (1 | ) |
Other | | | 1 | | | | 7 | |
| | | | | | | | |
Cash used in financing activities | | | (524 | ) | | | (469 | ) |
| | | | | | | | |
Increase (decrease) in cash and cash equivalents | | $ | (177 | ) | | $ | 93 | |
| | | | | | | | |
| (a) | Represents information for Equistar on the basis reflected in Equistar’s financial statements as filed in its Annual Report on Form 10-K. |
Table 18 - Millennium Unaudited Income Statement Information (a)
| | | | | | | | | | | | | | | | | | | | |
(Millions of dollars) | | For the three months ended | | | For the nine months ended | |
| | September 30, | | | June 30, 2006 | | | September 30, | |
| | 2006 | | | 2005 | | | | 2006 | | | 2005 | |
Sales and other operating revenues(b) | | $ | 496 | | | $ | 489 | | | $ | 509 | | | $ | 1,489 | | | $ | 1,457 | |
Cost of sales | | | 434 | | | | 448 | | | | 445 | | | | 1,317 | | | | 1,237 | |
Selling, general and administrative expenses | | | 33 | | | | 77 | | | | 44 | | | | 112 | | | | 165 | |
Research and development expenses | | | 6 | | | | 5 | | | | 7 | | | | 19 | | | | 17 | |
Asset impairments | | | 6 | | | | 3 | | | | 4 | | | | 12 | | | | 8 | |
Other | | | — | | | | 2 | | | | — | | | | 1 | | | | 2 | |
| | | | | | | | | | | | | | | | | | | | |
Operating income (loss) | | | 17 | | | | (46 | ) | | | 9 | | | | 28 | | | | 28 | |
Interest expense, net | | | (19 | ) | | | (24 | ) | | | (20 | ) | | | (52 | ) | | | (73 | ) |
Other income (expense), net(c) | | | 2 | | | | (18 | ) | | | 49 | | | | 23 | | | | (22 | ) |
| | | | | | | | | | | | | | | | | | | | |
Income (loss) before equity investment, minority interest and income taxes | | | — | | | | (88 | ) | | | 38 | | | | (1 | ) | | | (67 | ) |
Income (loss) from equity investment in Equistar | | | 23 | | | | (8 | ) | | | 38 | | | | 136 | | | | 132 | |
| | | | | | | | | | | | | | | | | | | | |
Income (loss) before income taxes and minority interest | | | 23 | | | | (96 | ) | | | 76 | | | | 135 | | | | 65 | |
Provision for (benefit from) income taxes | | | 6 | | | | (26 | ) | | | (39 | ) | | | (31 | ) | | | 31 | |
| | | | | | | | | | | | | | | | | | | | |
Income (loss) before minority interest | | | 17 | | | | (70 | ) | | | 115 | | | | 166 | | | | 34 | |
Minority interest | | | — | | | | (2 | ) | | | (1 | ) | | | (2 | ) | | | (4 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net income (loss) | | $ | 17 | | | $ | (72 | ) | | $ | 114 | | | $ | 164 | | | $ | 30 | |
| | | | | | | | | | | | | | | | | | | | |
| (a) | Represents information for Millennium on the basis reflected in Millennium’s financial statements as filed in its Annual Report on Form 10-K. |
| (b) | Sales and other operating revenues include sales to affiliates. |
| (c) | Other income (expense), net, for the three months ended June 30, 2006 and nine months ended September 30, 2006 included net credits of $49 million and $31 million, respectively, related to prior years’ income tax issues. |
Table 19 - Millennium Unaudited Balance Sheet Information(a)
| | | | | | | |
(Millions of dollars) | | September 30,
2006 | | December 31,
2005 | |
Cash and cash equivalents | | $ | 150 | | $ | 279 | |
Accounts receivable, net | | | 348 | | | 361 | |
Inventories | | | 403 | | | 429 | |
Prepaid expenses and other current assets | | | 32 | | | 64 | |
Deferred tax assets | | | 65 | | | 15 | |
| | | | | | | |
Total current assets | | | 998 | | | 1,148 | |
Property, plant and equipment, net | | | 646 | | | 647 | |
Investments in Equistar | | | 489 | | | 464 | |
Goodwill | | | 104 | | | 104 | |
Other assets, net | | | 104 | | | 110 | |
| | | | | | | |
Total assets | | $ | 2,341 | | $ | 2,473 | |
| | | | | | | |
Current maturities of long-term debt | | $ | 20 | | $ | 169 | |
Accounts payable | | | 311 | | | 367 | |
Accrued liabilities | | | 162 | | | 156 | |
| | | | | | | |
Total current liabilities | | | 493 | | | 692 | |
Long-term debt | | | 868 | | | 966 | |
Other liabilities | | | 612 | | | 644 | |
Deferred income taxes | | | 173 | | | 167 | |
Minority interest | | | 46 | | | 42 | |
Stockholder’s equity (deficit) (1,000 shares authorized; 661 shares issued at September 30, 2006 and December 31, 2005) | | | 149 | | | (38 | ) |
| | | | | | | |
Total liabilities and stockholder’s equity | | $ | 2,341 | | $ | 2,473 | |
| | | | | | | |
| (a) | Represents information for Millennium on the basis reflected in Millennium’s financial statements as filed in its Annual Report on Form 10-K. |
Table 20 - Millennium Unaudited Cash Flow Information (a)
| | | | | | | | |
(Millions of dollars) | | For the nine months ended
September 30, | |
| | 2006 | | | 2005 | |
Net income | | $ | 164 | | | $ | 30 | |
Adjustments: | | | | | | | | |
Asset impairments | | | 12 | | | | 8 | |
Depreciation and amortization | | | 77 | | | | 82 | |
Debt prepayment charges and premiums | | | 7 | | | | 10 | |
Deferred income taxes | | | (37 | ) | | | (18 | ) |
Equity investment in Equistar - | | | | | | | | |
Amounts included in net income | | | (136 | ) | | | (132 | ) |
Distributions of earnings | | | 111 | | | | 132 | |
Changes in assets and liabilities: | | | | | | | | |
Accounts receivable | | | 22 | | | | (10 | ) |
Inventories | | | 36 | | | | (19 | ) |
Accounts payable | | | (60 | ) | | | (26 | ) |
Other, net | | | (21 | ) | | | 59 | |
| | | | | | | | |
Cash provided by operating activities | | | 175 | | | | 116 | |
| | | | | | | | |
Expenditures for property, plant and equipment | | | (51 | ) | | | (34 | ) |
Distributions from Equistar in excess of earnings | | | — | | | | 8 | |
Other | | | 1 | | | | — | |
| | | | | | | | |
Cash used in investing activities | | | (50 | ) | | | (26 | ) |
| | | | | | | | |
Repayment of long-term debt | | | (259 | ) | | | (349 | ) |
Issuance of long-term debt | | | 1 | | | | 99 | |
Net borrowings on revolving credit facility | | | 6 | | | | — | |
Contribution from Lyondell | | | — | | | | 6 | |
Distributions to minority interests | | | — | | | | (5 | ) |
Other | | | (4 | ) | | | (1 | ) |
| | | | | | | | |
Cash used in financing activities | | | (256 | ) | | | (250 | ) |
| | | | | | | | |
Effect of exchange rate changes on cash | | | 2 | | | | (6 | ) |
| | | | | | | | |
Decrease in cash and cash equivalents | | $ | (129 | ) | | $ | (166 | ) |
| | | | | | | | |
| (a) | Represents information for Millennium on the basis reflected in Millennium’s financial statements as filed in its Annual Report on Form 10-K. |
Table 21 - Houston Refining Unaudited Income Statement Information(a)
| | | | | | | | | | | | | | | | | | | | |
(Millions of dollars) | | For the three months ended | | | For the nine months ended | |
| | September 30, | | | June 30, 2006 | | | September 30, | |
| | 2006 | | | 2005 | | | | 2006 | | | 2005 | |
Sales and other operating revenues(b) | | $ | 2,288 | | | $ | 2,202 | | | $ | 2,411 | | | $ | 6,793 | | | $ | 5,301 | |
Cost of sales | | | 2,072 | | | | 2,091 | | | | 2,232 | | | | 6,219 | | | | 5,012 | |
Termination of Crude Supply Agreement | | | 300 | | | | — | | | | — | | | | 300 | | | | — | |
Selling, general and administrative expenses | | | 14 | | | | 11 | | | | 16 | | | | 47 | | | | 34 | |
| | | | | | | | | | | | | | | | | | | | |
Operating income (loss) | | | (98 | ) | | | 100 | | | | 163 | | | | 227 | | | | 255 | |
Interest expense, net | | | (17 | ) | | | (9 | ) | | | (12 | ) | | | (40 | ) | | | (26 | ) |
| | | | | | | | | | | | | | | | | | | | |
Income (loss) before income taxes | | | (115 | ) | | | 91 | | | | 151 | | | | 187 | | | | 229 | |
Provision for (benefit from) income taxes(c) | | | (8 | ) | | | — | | | | 8 | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Net income (loss) | | $ | (107 | ) | | $ | 91 | | | $ | 143 | | | $ | 187 | | | $ | 229 | |
| | | | | | | | | | | | | | | | | | | | |
EBITDA(d) | | $ | (54 | ) | | $ | 130 | | | $ | 194 | | | $ | 333 | | | $ | 341 | |
| (a) | The Refining information presented represents operating results of Houston Refining on a 100 percent basis. The effects of the August 2006 Acquisition are included prospectively from the date of acquisition. |
| (b) | Sales and other operating revenues include sales to affiliates. |
| (c) | Amounts reflected represent Texas state income tax. As a partnership, Houston Refining is not subject to federal income taxes. |
| (d) | See Table 10 for reconciliation of Houston Refining’s net income to EBITDA. |
Table 22 - Houston Refining Unaudited Balance Sheet Information(a)
| | | | | | |
(Millions of dollars) | | September 30,
2006 | | December 31,
2005 |
Total current assets | | $ | 792 | | $ | 418 |
Property, plant and equipment, net | | | 2,775 | | | 1,328 |
Other assets, net | | | 101 | | | 86 |
| | | | | | |
Total assets | | $ | 3,668 | | $ | 1,832 |
| | | | | | |
Current maturities of long-term debt | | $ | — | | $ | 5 |
Other current liabilities | | | 756 | | | 800 |
Long-term debt | | | — | | | 439 |
Note payable to Lyondell Chemical Company | | | 785 | | | — |
Loans payable to partners | | | 229 | | | 264 |
Other liabilities | | | 102 | | | 113 |
Partners’ capital | | | 1,796 | | | 211 |
| | | | | | |
Total liabilities and partners’ capital | | $ | 3,668 | | $ | 1,832 |
| | | | | | |
| (a) | Represents information for Houston Refining on a 100 percent basis The September 30, 2006 balances reflect the effects of the August 2006 Acquisition. |
Table 23 - Houston Refining Unaudited Cash Flow Information(a)
| | | | | | |
(Millions of dollars) | | For the nine months ended
September 30, |
| | 2006 | | 2005 |
Cash flow from operations | | $ | 185 | | $ | 440 |
Capital expenditures | | | 170 | | | 121 |
Depreciation and amortization | | | 106 | | | 86 |
| (a) | The Refining information presented represents operating results of Houston Refining on a 100 percent basis. The effects of the August 2006 Acquisition are included prospectively from the date of acquisition. |
