1
Exhibit 13.2
------------
OXY VINYLS, LP AND SUBSIDIARIES
Consolidated Financial Statements
As Of December 31, 2000 and 1999
Together with Report of Independent Public Accountants
2
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Oxy Vinyls, LP:
We have audited the accompanying consolidated balance sheets of Oxy Vinyls, LP
and subsidiaries (the "Partnership") as of December 31, 2000 and 1999, and the
related consolidated statements of operations, changes in partners' capital, and
cash flows for the year ended December 31, 2000 and for the period from April
30, 1999 through December 31, 1999. These consolidated financial statements are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall consolidated financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Partnership as
of December 31, 2000 and 1999, and the results of its operations and its cash
flows for the year ended December 31, 2000, and for the period from April 30,
1999 through December 31, 1999, in conformity with accounting principles
generally accepted in the United States.
/s/ Arthur Andersen LLP
Dallas, Texas
January 29, 2001
3
OXY VINYLS, LP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 2000 and 1999
(Amounts in thousands)
2000 1999
---------- ----------
CURRENT ASSETS
Cash and cash equivalents $ 15,942 $ 19,842
Trade receivables, net of allowance for doubtful accounts of $1,000 and $300 21,133 10,522
Other receivables 9,602 3,866
Foreign income taxes receivable 5,000 --
Loans receivable from OxyMar -- 12,500
Receivable from Occidental Receivables, Inc. 149,691 200,041
Receivable from Occidental Chemical Corporation, net 8,952 12,239
Inventories 122,807 105,830
Prepaid expenses 4,951 2,849
---------- ----------
Total current assets 338,078 367,689
Loans receivable from Occidental Petroleum Corporation, net 46,000 28,790
Property, plant and equipment, net 980,084 974,394
Other assets, net 18,994 17,903
---------- ----------
TOTAL ASSETS $1,383,156 $1,388,776
========== ==========
CURRENT LIABILITIES
Current maturities of long-term debt $ 296 $ 296
Accounts payable 171,188 205,753
Accrued liabilities 41,371 40,777
Accrued property taxes 18,410 15,600
Payable to PolyOne Corporation, net 6,894 6,270
Foreign income taxes payable -- 3,278
---------- ----------
Total current liabilities 238,159 271,974
Long-term debt, net of current maturities 37,964 54,260
Equity investment in unconsolidated subsidiary 29,069 25,519
Postretirement benefit obligations 14,883 13,268
Deferred credits and other liabilities 11,973 9,464
COMMITMENTS AND CONTINGENCIES (NOTE 7)
PARTNERS' CAPITAL 1,051,108 1,014,291
---------- ----------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $1,383,156 $1,388,776
========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
1
4
OXY VINYLS, LP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Year Ended December 31, 2000 and For the Period from April 30, 1999
through December 31, 1999
(Amounts in thousands)
Year Ended April 30, 1999 through
December 31, 2000 December 31, 1999
-------------------- --------------------
REVENUES
Net sales $ 1,892,292 $ 1,102,099
Equity in (losses) earnings of unconsolidated subsidiary (3,550) 10,480
-------------------- --------------------
1,888,742 1,112,579
COSTS AND OTHER DEDUCTIONS
Cost of sales 1,683,052 997,505
Selling, general and administrative and other operating expenses 58,423 43,295
(Gain) on sale of assets (912) --
Interest expense, net 1,394 4,420
-------------------- --------------------
INCOME FROM OPERATIONS BEFORE INCOME TAXES 146,785 67,359
Provision for income taxes 593 3,699
-------------------- --------------------
NET INCOME $ 146,192 $ 63,660
==================== ====================
The accompanying notes are an integral part of these consolidated financial
statements.
2
5
OXY VINYLS, LP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the Year Ended December 31, 2000 and For the Period from April 30, 1999
through December 31, 1999
(Amounts in thousands)
Occidental Occidental 1999 PVC Total
PVC LP Inc. PVC LLC Partner Inc. Partners' Capital
--------------- --------------- --------------- ---------------
Initial capitalization on April 30, 1999 $ 723,717 $ 9,650 $ 231,589 $ 964,956
Net income 47,745 637 15,278 63,660
Distributions to partners (10,745) (142) (3,438) (14,325)
--------------- --------------- --------------- ---------------
Balance at December 31, 1999 $ 760,717 $ 10,145 $ 243,429 $ 1,014,291
=============== =============== =============== ===============
Net Income 109,645 1,461 35,086 146,192
Distributions to partners (82,031) (1,095) (26,249) (109,375)
--------------- --------------- --------------- ---------------
Balance at December 31, 2000 $ 788,331 $ 10,511 $ 252,266 $ 1,051,108
=============== =============== =============== ===============
The accompanying notes are an integral part of these consolidated financial
statements.
3
6
OXY VINYLS, LP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Year Ended December 31, 2000 and For the Period from April 30, 1999
through December 31, 1999
(Amounts in thousands)
Year Ended April 30, 1999 through
December 31, 2000 December 31, 1999
------------------ ----------------------
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ 146,192 $ 63,660
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 60,112 48,166
Equity in losses (earnings) of unconsolidated subsidiary 3,550 (10,480)
Gain on disposition of assets, net (912) --
Deferred foreign income taxes 1,322 316
Other noncash charge to income 7,998 1,533
Changes in operating assets and liabilities:
(Increase) decrease in trade and other receivables (17,043) 105,236
Decrease in loans receivable from OxyMar 12,500 12,500
Increase in inventories (16,977) (23,220)
Decrease (increase) in receivables from Occidental Receivables, Inc. 50,350 (200,041)
(Increase) decrease in foreign income taxes receivable/payable (8,278) 3,278
Increase in prepaid expenses (2,102) (549)
(Decrease) increase in accounts payable, accrued liabilities and
accrued property taxes (31,161) 133,023
Decrease (increase) in receivable from Occidental Chemical Corporation, net 3,287 (12,239)
Increase in payable to PolyOne Corporation, net 624 6,270
Other operating, net (6,808) (6,007)
---------------- ----------------
Net cash provided by operating activities 202,654 121,446
CASH FLOW FROM INVESTING ACTIVITIES:
Proceeds from sale of assets 3,328 --
Capital expenditures (67,001) (24,525)
---------------- ----------------
Net cash used by investing activities (63,673) (24,525)
CASH FLOW FROM FINANCING ACTIVITIES:
(Payments) proceeds of/from long-term debt (16,296) 44,000
Distributions to partners (109,375) (14,325)
Increase in loans receivable from Occidental Petroleum Corporation, net (17,210) (106,790)
---------------- ----------------
Net cash used by financing activities (142,881) (77,115)
---------------- ----------------
(Decrease) Increase in cash and cash equivalents (3,900) 19,806
Cash and cash equivalents, beginning of period 19,842 36
---------------- ----------------
Cash and cash equivalents, end of period $ 15,942 $ 19,842
================ ================
The accompanying notes are an integral part of these consolidated financial
statements.
4
7
OXY VINYLS, LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2000 and 1999
(1) FORMATION AND OPERATIONS -
Oxy Vinyls, LP ("OxyVinyls" or the "Partnership"), a Delaware limited
partnership, was formed on April 6, 1999, pursuant to a Limited Partnership
Agreement among Occidental PVC LP, Inc. (the "Oxy Limited Partner") and
Occidental PVC, LLC (the "Oxy General Partner"), wholly-owned subsidiaries of
Occidental Chemical Corporation (OCC) and 1999 PVC Partner Inc., (the "PolyOne
Limited Partner"), a subsidiary of The PolyOne Corporation ("PolyOne") (formerly
The Geon Company). The contributions and related transactions hereinafter
described in this Note were effective, and the Partnership commenced operations,
as of April 30, 1999, at which time the Limited Partnership Agreement was
amended pursuant to a First Amended and Restated Limited Partnership Agreement
dated as of April 30, 1999 (collectively with the Limited Partnership Agreement,
the "Partnership Agreement"). Through the Oxy General Partner and the Oxy
Limited Partner, OCC indirectly owns a seventy-six percent interest in the
Partnership. OCC is an indirect, wholly-owned subsidiary of Occidental Petroleum
Corporation (OPC). Through the PolyOne Limited Partner, PolyOne indirectly owns
a twenty-four percent interest in the Partnership.
The Partnership owns and operates polyvinyl chloride (PVC) and vinyl
chloride monomer (VCM) assets in the United States that were contributed on
behalf of the Oxy General Partner and the Oxy Limited Partner by OCC, and on
behalf of the PolyOne Limited Partner, by PolyOne. These assets consist of
several manufacturing facilities on the U.S. Gulf Coast, as well as
manufacturing facilities in Kentucky and New Jersey and two chlor-alkali and
cogeneration facilities near Houston, Texas. A fifty percent equity interest in
OxyMar, a Texas general partnership between Oxy VCM Corporation ("Oxy VCM"), an
indirect wholly-owned subsidiary of OPC, and U.S. VCM Corporation ("U.S. VCM"),
a wholly-owned subsidiary of Marubeni Corporation, a Japanese corporation, was
contributed to the Partnership through the merger of Oxy VCM into the Oxy
General Partner and the subsequent transfer by the Oxy General Partner of its
equity interest in OxyMar to the Partnership. (See Note 2.)
The Partnership also owns and operates two PVC manufacturing facilities
located in Ontario and Alberta, Canada. Ownership of these Canadian assets was
acquired through a transfer by PolyOne Canada Inc., a wholly- owned Canadian
subsidiary of PolyOne, of the capital stock of Oxy Vinyls Canada Inc.
("OxyVinyls Canada") to 3547728 Canada, Inc., an indirect Canadian subsidiary of
the Partnership. For the capital stock of OxyVinyls Canada, 3547728 Canada Inc.
paid $36 million U.S. dollars borrowed by the Partnership from OPC and
contributed by the Partnership as capital to its subsidiary, LaPorte Chemicals
Corp. ("LaPorte") and further contributed by LaPorte to 3547728 Canada Inc.
3547728 Canada Inc. and OxyVinyls Canada were amalgamated with OxyVinyls Canada
as the surviving entity.
The assets and liabilities contributed on behalf of the Oxy General
Partner and the Oxy Limited Partner were recorded at OCC's book basis by the
Partnership. The assets and liabilities contributed on behalf of the PolyOne
Limited Partner were recorded at their fair value by the Partnership.
Under terms of the Partnership Agreement, net income is allocated among
the partners pro rata based on their percentage ownership of the Partnership.
Distributions to the partners and any additional cash contributions required by
the Partnership are also based on the partners' percentage ownership of the
Partnership.
The consolidated financial statements include the accounts of OxyVinyls
and its wholly-owned subsidiary, LaPorte, as well as LaPorte's subsidiary,
OxyVinyls Canada, whose functional currency is the U.S. dollar. All intercompany
accounts and transactions have been eliminated.
5
8
OXY VINYLS, LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2000 and 1999
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
Risks and uncertainties -
-------------------------
The process of preparing consolidated financial statements in
conformity with accounting principles generally accepted in the United States
requires the use of estimates and assumptions regarding certain types of assets,
liabilities, revenues and expenses. Such estimates primarily relate to unsettled
transactions and events as of the date of the consolidated financial statements.
Accordingly, upon settlement, actual results may differ from estimated amounts,
generally by immaterial amounts. Management believes that these estimates and
assumptions provide a reasonable basis for the fair presentation of OxyVinyls'
financial position and results of operations.
Since OxyVinyls' major products are commodities, significant changes in
the prices of chemical products could have a significant impact on OxyVinyls'
results of operations for any particular period. OxyVinyls had one major
customer, PolyOne, during the periods presented, which accounted for 20.5% of
total sales for the year ended December 31, 2000, and 14.5% of total sales
during the period from April 30, 1999 through December 31, 1999. PolyOne's trade
receivable balance with OxyVinyls was $23 million and $32 million at December
31, 2000 and 1999, respectively.
Substantially all key raw materials are supplied by related parties.
(see Note 11)
OxyVinyls purchases all VCM for its Alberta, Canada facility from one
supplier. These purchases totaled approximately $67 million for the year ended
December 31, 2000, and $45 million during the period from April 30, 1999 through
December 31, 1999. Starting January 1, 2001, all VCM for the Alberta Canada
facility, will be provided under an exchange agreement. (see Exchanges below)
Revenue recognition -
---------------------
Revenue from product sales is recognized upon shipment of product to
the customer.
Income taxes -
--------------
The Partnership is generally not subject to income taxes except for
Canadian income taxes related to OxyVinyls Canada, certain U.S. state income
taxes and U.S. federal income taxes associated with LaPorte.
The Partnership follows SFAS No. 109, "Accounting for Income Taxes",
pursuant to which the liability method is used in accounting for taxes. Under
this method, deferred tax assets and liabilities are determined based on
differences between financial reporting and tax basis of assets and liabilities
and are measured using the enacted tax rates and regulations that will be in
effect when the differences are expected to reverse.
6
9
OXY VINYLS, LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2000 and 1999
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (continued)
Recent accounting pronouncements -
----------------------------------
During 2000, OxyVinyls adopted EITF No. 00-10 - "Accounting for
Shipping and Handling Fees and Costs" ("EITF No. 00-10") which establishes
accounting and reporting standards for the treatment of shipping and handling
costs. Among its provisions, EITF No. 00-10 requires that transportation costs
that had been accounted for as deductions from net sales should now be recorded
in cost of sales. The implementation of EITF 00-10 had no effect on net income.
Prior year balances have been reclassified to reflect this accounting change.
The transportation costs that have been reclassed from net sales and included in
cost of sales on the accompanying consolidated statements of operations totaled
$58.6 million for the year ended December 31, 2000 and $34.2 million for the
period from April 30 through December 31, 1999.
In 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS No. 133"). In 1999, the
FASB issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities - Deferral of the Effective Date of FASB No. 133." In 2000, the FASB
issued SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain
Hedging Activities, an amendment of SFAS No. 133." SFAS No. 133, as amended, is
effective for OxyVinyls as of January 1, 2001. SFAS No. 133, as amended,
establishes accounting and reporting standards for derivative instruments and
hedging activities and requires an entity to recognize all derivatives in the
statement of financial position and measure those instruments at fair value.
Changes in the derivative instruments' fair value must be recognized into
earnings unless specific hedge accounting criteria are met. Special accounting
for qualifying hedges allows a derivative instrument's gains and losses to
offset related results on the hedged item in the income statement, to the extent
effective, and requires that a company formally document, designate and assess
the effectiveness of transactions that receive hedge accounting. Management
believes the adoption of SFAS 133, as amended, will not have a significant
impact on the partnership's financial position or results of operations on
January 1, 2001.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements".
("SAB No. 101") SAB No. 101 summarizes the Staff's views in applying generally
accepted accounting principles to revenue recognition in the financial
statements. The bulletin was effective in the fourth quarter of 2000. OxyVinyls
was in compliance with these standards; accordingly, the adoption of SAB No. 101
did not have an impact on its consolidated financial statements.
In the fourth quarter of 2000, OxyVinyls adopted the disclosure
provisions of SFAS No. 140 - "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities - a Replacement of FASB
Statement No. 125," ("SFAS No. 140") which revises disclosure standards for
asset securitizations and other financial asset transfers. SFAS No. 140 also
contains provisions which revise certain criteria for accounting for
securitization, financial asset transfers and collateral. These accounting
provisions will be adopted by OxyVinyls on April 1, 2001. Management believes
the implementation of all of these provisions of SFAS No. 140 will not have an
impact on OxyVinyls' consolidated financial positions or results of operations.
7
10
OXY VINYLS, LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2000 and 1999
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (continued)
Reclassifications -
-------------------
Certain prior year amounts have been reclassified to conform to the
December 31, 2000 presentation.
Foreign currency -
---------------- -
The functional currency applicable to OxyVinyls Canadian operations is
the U.S. dollar since cash flows are denominated principally in U.S. dollars.
The effect of exchange-rate changes on transactions denominated in nonfunctional
currencies generated a loss of $4.0 million for the year ended December 31,
2000, and a gain of $.2 million for the period from April 30, 1999 through
December 31, 1999. These amounts are included in the expense category of the
item that gave rise to the related transaction gain or loss.
Cash and cash equivalents -
---------------------------
Cash equivalents consist of highly liquid certificates of deposits and
a restricted bank deposit (see Note 7) with initial maturities of three months
or less. Cash equivalents totaled $6.6 million and $7.9 million at December 31,
2000 and 1999, respectively.
Interest income on deposits with unrelated parties was $1.1 million for
the year ended December 31, 2000, and $.4 million for the period from April 30,
1999 through December 31, 1999.
Cash overdrafts are reclassified to accounts payable and amounted to
$9.9 million and $13.9 million as of December 31, 2000 and 1999, respectively.
Equity investment in OxyMar -
OxyMar owns a VCM manufacturing facility at Ingleside, Texas which is
operated on OxyMar's behalf by OCC pursuant to an operating agreement. OxyMar is
not subject to federal or state income taxes as income is reportable directly by
the individual partners. The investment in OxyMar is accounted for under the
equity method.
Effective November 29, 2000, U.S. VCM transferred 28.6 percent of the
ownership of OxyMar to Oxy VCM, LP ("Oxy VCM"), an indirect wholly-owned
subsidiary of OCC. In connection with such transfer, OxyVinyls, Oxy VCM and U.S.
VCM entered into the Second Amended and Restated Partnership Agreement, dated as
of November 29, 2000, pertaining to the ownership and operation of OxyMar.
Pursuant to this Agreement, U.S. VCM and OxyVinyls retained 50/50 management
control of OxyMar. The percentage ownership interest held by each partner of
OxyMar is:
OxyVinyls 50%
Oxy VCM 28.6%
U.S. VCM 21.4%
8
11
OXY VINYLS, LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2000 and 1999
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (continued)
Equity investment in OxyMar -
---------------------------
Under the terms of the OxyMar Partnership Agreement, net income is
allocated among the partners pro rata based on their percentage interest in the
earnings of OxyMar. Distributions to the partners are also based on the
partners' percentage interest in OxyMar. Subject to certain qualifications
described below, the OxyMar Partnership Agreement requires cash calls from each
partner when the quarterly cash flow forecast approved by the OxyMar managing
committee shows a deficit in any month. Each partner is required to contribute a
pro rata portion, based on their respective percentage interests, of the deficit
in the form of an equity contribution or subordinated loan. The foregoing
obligations are qualified to the extent that during the period from November 29,
2000 until April 30, 2004 (the "Restricted Period") OxyMar may not require any
partner to make any contribution or loan for any purpose and the funding
requirements of OxyMar shall be met by loans arranged or provided by OPC. To
implement such loans during the Restricted Period, effective as of December 27,
2000, OxyMar entered into a $100 million Cash Management and Revolving Credit
Facility Agreement with OPC (the "OPC Revolver"). Effective February 28, 2001,
the credit facility limit under the OPC Revolver was increased to $200 million.
Pursuant to the terms of the OxyMar Partnership Agreement, upon the
expiration of the Restricted Period, U.S. VCM may elect to require OCC (or any
affiliate designated by OCC) to purchase U.S. VCM's remaining 21.4% equity
interest in OxyMar and in connection with such transfer require OPC to assume
Marubeni's guarantee of OxyMar's outstanding indebtedness. For purposes of such
transfer, the value of U.S. VCM's remaining interest in OxyMar is calculated
based upon an agreed deemed value of the OxyMar partnership less partnership
indebtedness, subject to certain adjustments for accrued taxes, interest and
available cash.
At December 31, 2000 and 1999, the historical underlying equity in net
assets of OxyMar exceeded the Partnership's investment in OxyMar by $7.5 million
and $8 million, respectively. The deficiency is being amortized on a
straight-line basis into income over 25 years. Amortization amounted to $.5
million for the year ended December 31, 2000, and $.4 million for the period
from April 30, 1999 through December 31, 1999 and is included in equity in
(losses)/earnings of unconsolidated subsidiary. The following table presents
summarized financial information of OxyMar (in thousands):
For the Year April 30, 1999 Through
Ended December 31, 2000 December 31, 1999
----------------------- -----------------
Net sales $ 431,555 $ 303,273
Costs and expenses 439,836 281,601
------------- -------------
Net (loss) income $ (8,281) $ 21,672
============== ==============
Current assets $ 68,423 $ 92,408
Noncurrent assets $ 346,642 $ 363,308
Current liabilities $ 36,255 $ 325,861
Noncurrent liabilities $ 421,651 $ 164,415
Partners' capital $ (42,841) $ (34,560)
At December 31, 2000, OPC unconditionally provides guarantees of $302.5
million of OxyMar's obligations, which include private placement bonds and a
revolving credit line.
See Note 11 regarding OxyVinyls' purchase commitment from OxyMar.
Unrealized profits on inventory purchased from OxyMar are deferred by OxyVinyls
based on ownership percentage and are recognized upon the ultimate sale to an
unaffiliated customer.
9
12
OXY VINYLS, LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2000 and 1999
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (continued)
Other assets, net -
-----------------
Other assets, net includes certain tangible assets and deferred charges
that are amortized over the estimated periods to be benefited (3 - 10 years).
Other assets, net also includes trade receivable balances of $9.0
million due from two customers which filed bankruptcy in the current year.
Management believes the amounts are collectible over a period greater than one
year and the receivables have been reduced to their net realizable value. The
allowance for doubtful long-term receivables was $4.5 million on December 31,
2000.
Major maintenance expenditures -
------------------------------
OxyVinyls uses the accrue-in-advance method to account for major
maintenance turnaround expenditures. Under this method, an estimate is made of
the costs expected to be incurred in connection with the next planned periodic
maintenance shutdown. That estimate is then accrued on a straight-line basis
over the period of time until the next planned major maintenance shutdown
occurs. The liability for major maintenance turnaround included in accrued
liabilities was $10.1 million and $13.2 million as of December 31, 2000 and
1999, respectively.
Exchanges -
---------
Finished product exchange transactions, which involve homogeneous
commodities held for sale in the ordinary course in the same line of business
and do not involve the payment or receipt of cash, are not accounted for as
purchases and sales. Any resulting volumetric exchange balances are accounted
for as inventory in accordance with the normal inventory valuation policy.
Environmental costs -
-------------------
Environmental expenditures that relate to current operations are
expensed or capitalized as appropriate. Reserves for estimated costs that relate
to existing conditions caused by past operations and that do not contribute to
current or future revenue generation are recorded when environmental remedial
efforts are probable and the costs can be reasonably estimated. In determining
the reserves, OxyVinyls uses the most current information available, including
similar past experiences, available technology, regulations in effect, the
timing of remediation and cost-sharing arrangements. The environmental reserves
are based on management's estimate of the most likely cost to be incurred and
are reviewed periodically and adjusted as additional or new information becomes
available. Probable recoveries or reimbursements are recorded as an asset.
Pursuant to the asset contribution agreements of the Partnership, the
contributors (OCC and PolyOne) have an obligation to indemnify OxyVinyls for
health, safety and environmental claims that relate to pre-May 1, 1999
activities and that existed as of April 30, 1999, or arise within ten years of
that date, except to the extent that OxyVinyls exacerbated or accelerated the
claim.
As of December 31, 2000, management believes no environmental reserve
is required.
Research and development costs -
------------------------------
Research and development costs, which are charged to selling, general
and administrative and other operating expenses as incurred, were $6.9 million
for the year ended December 31, 2000, and $4.4 million for the period from April
30, 1999 through December 31, 1999.
10
13
OXY VINYLS, LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2000 and 1999
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (continued)
Supplemental cash flow information -
----------------------------------
Cash payments for income taxes during the year ended December 31, 2000,
and the period from April 30, 1999 through December 31, 1999, totaled $7.4
million and $.1 million, respectively. Net interest paid totaled $4.1 million
during the year ended December 31, 2000, and $4.2 million during the period from
April 30, 1999 through December 31, 1999.
During the year ended December 31, 2000, and the period from April 30,
1999 through December 31, 1999, OxyVinyls transferred trade receivables to an
affiliate, Occidental Receivables, Inc. (ORI), in noncash transactions. (See
Note 3)
Fair value of financial instruments -
-----------------------------------
OxyVinyls values financial instruments as required by SFAS No. 107,
"Disclosures about Fair Value of Financial Instruments." The carrying amounts of
cash and cash equivalents approximate fair value because of the short maturity
of those instruments. OxyVinyls estimates the fair value of its long-term debt
based on the quoted market prices for the same or similar issues or on the
yields offered to OxyVinyls for debt of similar rating and similar remaining
maturities. The estimated fair value of OxyVinyls' long-term debt at December
31, 2000 and 1999 was approximately $37.7 million and $54.5 million,
respectively, compared with a carrying value of $38.3 million and $54.6 million,
respectively. (See Note 6.) The carrying value of all other financial
instruments approximates fair value.
(3) RECEIVABLES -
During the year ended December 31, 2000, and during the period from
April 30, 1999 through December 31, 1999, OxyVinyls sold, with limited recourse,
to Occidental Receivables, Inc. (ORI) certain trade receivables under a
revolving sale program in connection with the ultimate sale for cash of an
undivided ownership interest in such receivables by ORI. OxyVinyls has retained
the collection responsibility with respect to the receivables sold. An interest
in new receivables is sold monthly in noncash transactions representing the net
difference between newly created receivables and collections made from
customers. In January 2001, OxyVinyls entered into a new similar type of
program. The net receivables balance sold as of December 31, 2000 and 1999, was
$150 million and $200 million, respectively.
11
14
OXY VINYLS, LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2000 and 1999
(4) INVENTORIES -
Inventories are valued at the lower of cost or market. The last-in,
first-out (LIFO) method was used to determine the cost of $81 million and $65
million of inventories at December 31, 2000 and 1999, respectively. The
remaining inventories are accounted for using the first-in, first-out (FIFO) and
weighted-average-cost methods. Inventories consisted of the following (in
thousands):
2000 1999
----------- ----------
Raw materials $ 24,209 $ 15,262
Materials and supplies 22,574 24,834
Finished goods 96,300 78,150
----------- -----------
143,083 118,246
LIFO and lower of cost or market reserve (20,276) (12,416)
----------- -----------
Total inventories $ 122,807 $ 105,830
=========== ===========
(5) PROPERTY, PLANT AND EQUIPMENT -
Property additions and major renewals and improvements are capitalized
at cost. Interest costs incurred in connection with major capital expenditures
are capitalized and amortized over the lives of the related assets. Capitalized
interest amounted to $1.5 million at December 31, 2000. There was no capitalized
interest at December 31, 1999. Depreciation of plant and equipment is primarily
provided using the units-of-production method based on estimated total
productive life. The partnership has reviewed its long-lived assets to be held
and used for impairment during the year ended December 31, 2000, and during the
period from April 30, 1999 to December 31, 1999. Management believes no
circumstances exist that would indicate the carrying value of a long-lived asset
may not be recoverable. Property, plant and equipment consisted of the following
(in thousands):
2000 1999
------------- -------------
Land and land improvements $ 30,998 $ 28,715
Buildings 54,215 53,659
Machinery and equipment 1,195,727 1,113,538
Construction in progress 68,498 93,561
------------- -------------
1,349,438 1,289,473
Accumulated depreciation (369,354) (315,079)
------------- -------------
Property, plant and equipment, net $ 980,084 $ 974,394
============= =============
12
15
OXY VINYLS, LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2000 and 1999
(6) LONG-TERM DEBT -
Long-term debt consisted of the following (in thousands):
2000 1999
------------- -------------
Pollution control revenue bonds, 6%, due through 2007 $ 9,760 $ 10,056
Pollution control revenue bonds, 6.75%, due through 2009 500 500
Loan payable to Canadian bank under credit agreement,
variable rate, 7.8% and 7.2% at December 31, 2000,
and 1999, respectively due in 2004 28,000 44,000
------------- -------------
38,260 54,556
Current maturities (296) (296)
------------- -------------
$ 37,964 $ 54,260
============= =============
Minimum principal payments on long-term debt subsequent to 2000 are as
follows (in thousands):
2001 $ 296
2002 296
2003 322
2004 28,322
2005 422
Thereafter 8,602
-------------
$ 38,260
=============
The pollution control revenue bonds are secured by the equipment
purchased with the proceeds of the financing.
The Canadian bank loan is payable in U.S. dollars under the terms of
the Credit Agreement ("Credit Agreement") entered into by OxyVinyls Canada in
December 1999. OxyVinyls Canada may borrow up to $48 million U.S. dollars under
the terms of the Credit Agreement, which is guaranteed by OPC. Interest is
payable quarterly.
Interest expense related to long-term external debt was $4.1 million
for the year ended December 31, 2000, and $.5 million for the period April 30,
1999 through December 31, 1999.
13
16
OXY VINYLS, LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2000 and 1999
(7) COMMITMENTS AND CONTINGENCIES -
Leases -
------
At December 31, 2000, future net minimum rental commitments under
noncancelable operating leases with terms in excess of one year are as follows
(in thousands):
2001 $ 29,987
2002 19,949
2003 17,097
2004 9,488
2005 6,985
Thereafter 52,453
-----------
$ 135,959
===========
OxyVinyls leases certain manufacturing facilities in LaPorte, Texas,
and railcars under the terms of various related agreements dated April 30, 1999
(collectively, the "LaPorte Lease"). The initial lease term extends through
April 20, 2004, and has a provision for annual renewals for an additional five
years. Upon termination of the LaPorte Lease, OxyVinyls may purchase the assets
based upon their estimated fair values. In the event OxyVinyls does not purchase
the assets, the LaPorte Lease provides a residual value guarantee by OxyVinyls
of approximately $152 million. Currently, OxyVinyls does not expect to make
payments under this provision. Total estimated future rental commitments of
$32.5 million under the LaPorte Lease are included in the operating lease
commitments above. Actual rent payments under the LaPorte Lease are calculated
using variable interest rates. OxyVinyls has restricted bank deposits, recorded
in cash and cash equivalents on the consolidated balance sheets, associated with
the LaPorte Lease of $3.6 million and 3.5 million as of December 31, 2000 and
1999, respectively. OxyVinyls earns interest on these deposits which will be
returned to OxyVinyls upon termination of the LaPorte Lease. All obligations
under the LaPorte Lease are guaranteed by OPC.
Rent expense was approximately $29.9 million for the year ended
December 31, 2000, and $21.5 million for the period from April 30, 1999 through
December 31, 1999. Rent expense is included in cost of sales on the consolidated
statement of operations.
14
17
OXY VINYLS, LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2000 and 1999
(7) COMMITMENTS AND CONTINGENCIES - (continued)
Other -
-----
OxyVinyls has entered into an agreement providing for the following
future payments (in thousands) to purchase brine, a raw material utilized in
chlor-alkali production. At December 31, 2000, the net present value of the
fixed and determinable portion of the obligation under this agreement was used
to collateralize financing of the brine supplier.
2001 $ 790
2002 760
2003 730
2004 700
2005 670
Thereafter 4,356
-----------
$ 8,006
===========
OxyVinyls has certain other commitments under contracts to purchase
electrical power and raw materials and other obligations, all in the ordinary
course of business and at market prices.
The Partnership also becomes involved in certain legal proceedings in
the normal course of business. Management believes that the outcome of such
matters will not significantly affect the Partnership's consolidated financial
position or results of operations.
Also, see Note 2 and Note 9 related to income taxes and Note 10 and 11
related to related parties.
(8) RETIREMENT PLANS AND POSTRETIREMENT BENEFITS -
Retirement plans -
----------------
OxyVinyls participates in various defined contribution retirement plans
sponsored by OPC for its salaried, domestic union and nonunion hourly, and
certain foreign national employees that provide for periodic contributions by
OxyVinyls based on plan-specific criteria, such as base pay, age level, and/or
employee contributions. OxyVinyls contributed and expensed approximately $8.2
million for the year ended December 31, 2000, and $4.7 million during the period
from April 30, 1999 through December 31, 1999, under the provisions of these
plans.
15
18
OXY VINYLS, LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2000 and 1999
(8) RETIREMENT PLANS AND POSTRETIREMENT BENEFITS - (continued)
Medical and postretirement benefits -
-----------------------------------
OxyVinyls provides medical and dental benefits and life insurance
coverage for certain active, retired and disabled employees and their eligible
dependents. The benefits generally are funded by OxyVinyls as they are paid
during the year. The cost of providing these benefits is based on claims filed
and insurance premiums paid for the period. The total benefits costs, including
postretirement costs, were approximately $7.2 million for the year ended
December 31, 2000, and $5 million during the period from April 30, 1999 through
December 31, 1999.
The following table sets forth the components of the net periodic
benefit costs for OxyVinyls' postretirement benefit plans (in thousands):
For the Year April 30, 1999 Through
Ended December 31, 2000 December 31, 1999
----------------------- -----------------
Service cost - benefits earned during the period $ 573 $ 625
Interest cost on benefit obligations 1,057 827
----------- -----------
Net periodic postretirement benefit cost $ 1,630 $ 1,452
=========== ===========
OxyVinyls' postretirement benefit plans are accrued based on various
assumptions and discount rates, as described below. The actuarial assumptions
used could change in the near term as a result of changes in expected future
trends and other factors which, depending on the nature of the changes, could
cause increases or decreases in the liabilities accrued.
The following table sets forth the reconciliation of the beginning and
ending balances of the benefit obligation for OxyVinyls' postretirement benefit
plans (in thousands):
For the Year April 30, 1999 Through
Ended December 31, 2000 December 31, 1999
----------------------- -----------------
Changes in benefit obligation:
Benefit obligation - beginning of period $ 11,942 $ 11,816
Service cost - benefits earned during the period 573 625
Interest cost on projected benefit obligations 1,057 827
Actuarial (gain) loss 1,697 (1,326)
Benefits paid (15) -
---------- ---------
Benefit obligation - end of period $ 15,254 $ 11,942
========== =========
The postretirement benefit obligations were determined by application
of the terms of medical and dental benefits and life insurance coverage,
including the effect of established maximums on covered costs, together with
relevant actuarial assumptions and health care cost trend rates projected at a
Consumer Price Index (CPI) increase of 3 percent as of December 31, 2000 and
1999. Participants pay for all medical cost increases in excess of increases in
the CPI. Consequently, increases in the assumed healthcare cost trend rates
beyond the CPI increase would have no impact on the postretirement benefit
obligation at December 31, 2000 and 1999. The discount rate used in determining
the benefit obligation was 7.75 percent as of December 31, 2000 and 1999.
16
19
OXY VINYLS, LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2000 and 1999
(8) RETIREMENT PLANS AND POSTRETIREMENT BENEFITS - (continued)
Medical and postretirement benefits - (continued)
-----------------------------------
Pursuant to the asset contribution agreements of the Partnership, the
contributors (OCC and PolyOne) retained liability for, and have an obligation to
indemnify the Partnership with respect to, such contributors' employee benefit
and welfare plans and programs (including existing retirees and disabled) and
any claims by or on behalf of employees of OxyVinyls that are attributable to
their employment with the contributor prior to May 1, 1999. Obligations related
to postretirement benefits attributable to active employees at April 30, 1999,
were assumed by OxyVinyls.
The following sets forth the funded status and amount recognized in
OxyVinyls' consolidated balance sheet for the postretirement benefit obligations
(in thousands):
2000 1999
----------- ----------
Funded status $ (15,254) $ (11,942)
Unrecognized net loss (gain) 371 (1,326)
----------- -----------
Postretirement benefit obligations $ (14,883) $ (13,268)
=========== ===========
(9) INCOME TAXES -
Deferred foreign income taxes reflect the future tax consequences of
temporary differences between the tax basis of assets and liabilities and their
financial reporting amounts. At December 31, 2000 and 1999, OxyVinyls had
deferred tax liabilities of $1.6 million and $.3 million, respectively, which
are included in deferred credits and other liabilities on the consolidated
balance sheets. The temporary differences resulting in deferred tax liabilities
are primarily related to property, plant and equipment.
The current and deferred (benefit)/provision for Canadian income tax
was $(1.4) million and $1.3 million, respectively, for the year ended December
31, 2000, and $3.4 million and $.3 million, respectively, for the period from
April 30, 1999 through December 31, 1999. Additionally, the Partnership paid
certain minimum state and federal taxes of approximately $.7 million for the
year ended December 31, 2000.
OxyVinyls is subject to audit by taxing authorities in various tax
jurisdictions. Management believes that any required adjustments to OxyVinyls'
tax liabilities will not have a material adverse impact on its financial
position or results of operations.
17
20
OXY VINYLS, LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2000 and 1999
(10) CASH MANAGEMENT AND CREDIT AND DEPOSIT FACILITIES AGREEMENT WITH OPC -
OxyVinyls participates in OPC's centralized cash management system for
its domestic operations. OxyVinyls maintains a concentration account to collect
cash receipts and to fund disbursements. OPC funds any negative cash balances
and collects any excess cash balances on a daily basis in the concentration
account under the terms of a Cash Management and Credit and Deposit Facilities
Agreement between OPC and OxyVinyls (the "Agreement").
Under terms of the Agreement, OPC has committed to loan OxyVinyls, on a
revolving basis, up to $66 million as of December 31, 2000.
PolyOne has guaranteed $42.3 million of the OxyVinyls' loans payable to
OPC. This guarantee terminates on the later of April 30, 2002, or when OxyVinyls
attains a defined amount of earnings before income taxes, depreciation and
amortization.
OPC loans to OxyVinyls cannot decrease below a minimum required balance
of $42.3 million before the termination of the PolyOne guarantee. As of December
31, 2000 and 1999, loans payable to OPC under the Agreement were $42.3 million.
In order to maintain the loan at the minimum required balance, any excess cash
collected by OPC is held in the form of interest bearing deposits under terms of
the Agreement. These deposits are considered loans receivable from OPC. As of
December 31, 2000 and 1999, the balance of loans receivable from OPC was $88.3
million and $71.1 million, respectively. The OxyVinyls' loans payable and
receivable to/from OPC, including interest, has been combined and recorded as
loans receivable from OPC, net in the accompanying consolidated balance sheet.
Loans payable to OPC accrue interest at the reported one-month London
Interbank Offered Rate (LIBOR) plus a calculated variable margin. Loans
receivable from OPC accrue interest at the reported one-month LIBOR. Interest
income under the Agreement was $.1 million for the year ended December 31, 2000,
and $.4 million for the period from April 30, 1999 through December 31, 1999.
Net interest expense under the Agreement totaled $.3 million for the year ended
December 31, 2000, and $4.4 million for the period from April 30, 1999 through
December 31, 1999. Fees payable to OPC under the Agreement totaled $.3 million
for the year ended December 31, 2000, and $.4 million for the period from April
30, 1999 through December 31, 1999, and are included in other operating
expenses.
The Agreement may be terminated by either OxyVinyls or OPC after the
termination of the PolyOne guarantee, at which date any outstanding loans as
well as any accrued interest and fees payable become due.
18
21
OXY VINYLS, LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2000 and 1999
(11) RELATED PARTY TRANSACTIONS -
OxyVinyls sells PVC to PolyOne under the terms of a sales agreement
that expires on December 31, 2013. The agreement requires PolyOne and its
majority affiliates' to purchase their annual PVC requirements in North America
from OxyVinyls in excess of 290 million pounds. On the first 880 million pounds
of PVC supplied in any calendar year, PolyOne will pay a price which is based
upon cost and market considerations. PolyOne will purchase all volumes over 880
million pounds in any calendar year at a competitive market price.
OxyVinyls sells VCM to OCC and PolyOne under the terms of separate
sales agreements that expire on December 31, 2013. The agreements require that
OCC and PolyOne purchase at market price all of their VCM requirements for
production of PVC in North America from OxyVinyls. Under the terms of the
agreements, PolyOne and OCC receive an integration credit on the first 210
million and 215 million pounds purchased in any year, respectively, to
compensate for surrendered purchasing power on major feedstocks.
OxyVinyls' sales of VCM to OCC under the terms of these agreements was
approximately $45.2 million and $25.9 million for the year ended December 31,
2000 and during the period from April 30, 1999 through December 31, 1999,
respectively. OxyVinyls' sales of PVC and VCM to PolyOne under the terms of
these agreements was approximately $297 million and $220 million for the year
ended December 31, 2000, and during the period from April 30, 1999 through
December 31, 1999, respectively.
OxyVinyls sells chlor-alkali and other specialty products to OCC under
the terms of a sales agreement that expires on December 31, 2013. This agreement
requires OCC to purchase at market price all chlor-alkali products produced by
OxyVinyls that are not required for its internal uses. This agreement also
requires OCC to purchase all specialty products produced by OxyVinyls at full
manufacturing cost. This agreement also requires OxyVinyls to pay OCC a fee for
marketing excess chlor-alkali products to third parties. OxyVinyls sold $181.7
million and $102.7 million of chlor-alkali and specialty products to OCC during
the year ended December 31, 2000, and during the period from April 30, 1999
through December 31, 1999, respectively. OxyVinyls paid $22.0 million and $14.7
million to OCC for the marketing fee during the year ended December 31, 2000,
and during the period from April 30, 1999 through December 31, 1999,
respectively.
OxyVinyls purchases ethylene from Equistar Chemicals LP ("Equistar"),
an equity investee of OCC, under the terms of two agreements. The first
agreement requires that OxyVinyls purchase ethylene at market price, 250 million
pounds during the year 2000 and 200 million pounds in each of the years 2001
through 2003 for the LaPorte VCM facility. This agreement expires December 31,
2003. Under the terms of the second agreement, OxyVinyls purchases ethylene
requirements for the Deer Park VCM and OxyMar facilities at Equistar's weighted
average selling price, as defined in the agreement. This agreement expires on
December 31, 2013. OxyVinyls purchased $67.1 million and $91.3 million of
ethylene from Equistar under the terms of these agreements during the year ended
December 31, 2000, and the period from April 30, 1999 through December 31, 1999,
respectively.
OxyVinyls purchases chlorine from Sunbelt Chlor Alkali Partnership, an
equity investee of PolyOne ("Sunbelt"), under the terms of an agreement that
expires on December 31, 2094. This agreement requires OxyVinyls to purchase at
market price, less a discount, all chlorine produced by Sunbelt at its chlorine
manufacturing process facility in McIntosh, Alabama, up to a maximum of 250
thousand tons per year. OxyVinyls purchased $38.7 million and $16.4 million of
chlorine from Sunbelt under the terms of this agreement during the year ended
December 31, 2000, and the period from April 30, 1999 through December 31, 1999,
respectively.
19
22
OXY VINYLS, LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2000 and 1999
(11) RELATED PARTY TRANSACTIONS - (continued)
OxyVinyls purchases VCM from OxyMar under the terms of a VCM purchase
agreement that runs until such time as OPC, either directly or through its
affiliates, ceases to own an equity interest in OxyMar. The agreement requires
OxyVinyls to purchase each year at market prices a minimum of 700 million of the
first 1.1 billion pounds of VCM produced and 530 million pounds of the next 1
billion pounds produced by OxyMar. Total purchases under this agreement were
$308.9 million and $204.6 million for the year ended December 31, 2000, and the
period from April 30, 1999 through December 31, 1999, respectively.
OxyVinyls incurs costs charged by OCC and PolyOne under the terms of
various service and shared facilities agreements. These agreements are in effect
generally so long as services continue to be provided between parties and/or
facilities continue to be shared. Under the provisions of these agreements,
OxyVinyls receives from and makes payments to PolyOne and OCC for shared
facilities at Louisville, Kentucky, Pedricktown, New Jersey and Pasadena, Texas.
In some cases the agreements contain renewal options at negotiated prices. The
net total of these costs was approximately $0.5 million and $0.1 million for the
year ended December 31, 2000, and for the period from April 30, 1999 through
December 31, 1999, respectively. Additionally, OxyVinyls incurs costs for
administrative and other support services paid to OCC and PolyOne which totaled
approximately $12.2 million and $7.8 million and $6.9 million and $6.2 million,
respectively, for the year ended December 31, 2000, and for the period from
April 30, 1999 through December 31, 1999, respectively. OxyVinyls incurred net
railcar rent expense/(income) payable/(receivable) to/from OCC and PolyOne of
approximately $4.8 million and $(0.2) million and $4.3 million and $.5 million,
respectively, for the year ended December 31, 2000, and for the period from
April 30, 1999 through December 31, 1999, respectively.
As of December 31, 2000 and 1999, OxyVinyls had a net receivable from
OCC of $9.0 million and $12.2 million and a net payable to PolyOne of $6.9
million and $6.3 million, respectively. The amounts due to PolyOne are net of
trade receivables sold to ORI. (see Note 2 and Note 3)
20
23
OXY VINYLS, LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2000 and 1999
(12) VALUATION AND QUALIFYING ACCOUNTS -
Approximately 30 employees at various manufacturing facilities were
identified in a workforce reduction plan. Certain severance costs of $.9 million
and relocation costs of $.9 million were accrued in connection with the
formation of the Partnership. Also severance and relocation costs of $2.1
million and $.2 million, respectively, were accrued and charged to expense
during the period from April 30, 1999 through December 31, 1999. Total accrued
severance and relocation costs are recorded in accrued liabilities and the
amount charged to expense during the period from April 30, 1999 to December 31,
1999, is recorded in selling, general and administrative and other operating
expenses.
The following table presents the activity of accrued severance and
relocation liabilities and allowance for doubtful accounts for the year ended
December 31, 2000, and for the period from April 30, 1999 through December 31,
1999 (in millions).
Balance at Balance at
Beginning Charged to End of
of Period Expense Deductions Adjustment Period
--------- ------- ---------- ---------- ------
For the Year Ended December 31, 2000
Allowance for doubtful accounts $ .3 $ 5.2 $ - - $ 5.5
Accrued severance and relocation $ 3.2 $ - $ (2.6)(a) $ (.6)(b) $ -
======== ======== =========== ========== =======
For the period from April 30 through
December 31, 1999
Allowance for doubtful accounts $ - $ .3 $ - - $ .3
Accrued severance and relocation $ 1.8 $ 2.3 $ (.9)(a) - $ 3.2
(a) Payments under the Partnership's plan for termination and relocation of
certain employees.
(b) Adjustment to cost of acquisition.
21