LyondellBasell Reports Record Third-Quarter 2011 Results
--Strong Operations and Advantaged Asset Positions Drive Record Quarterly Results
--Third-Quarter 2011 Highlights - Net income of $895 million; diluted earnings
per share of $1.51; Sales of $13.3 billion - Quarterly EBITDA of $1,788 million;
15 percent increase from second quarter 2011, 45 percent increase from third
quarter 2010 - Excellent results across the portfolio, particularly in U.S.
olefins and Refining & Oxyfuels businesses - Closed third quarter with no net
debt - Initiated bond tender and covenant amendment effort - Quarterly dividend
doubled to 20 cents per share
ROTTERDAM, Netherlands, Oct. 28, 2011 /PRNewswire via COMTEX/ -- LyondellBasell
Industries (LYB) today announced net income for the third quarter 2011 of $895
million, or $1.51 per share. Third-quarter 2011 EBITDA was $1,788 million, a 15
percent increase from the second quarter 2011. Sales in the third quarter were
$13,297 million.
During the third quarter 2011, results improved over a very strong second quarter
2011. Improvements in the performance of U.S. olefins and the Refining & Oxyfuels
segment were most notable.
Table 1 - Earnings Summary(a)
----------------------------------------------------
Three Months EndedNine Months Ended
----------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------
September 30,June 30,September 30,September 30,
------------------------------------------------------------------------------------
Millions of U.S. dollars (except share data)20112011201020112010
---------------------------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ------------------------------------------------
Sales and other operating revenues$13,297$14,042$10,302$39,591$30,541
---------------------------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ------------------------------------------------
Net income(b) (c)8958044672,3589,318
---------------------------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ------------------------------------------------
Diluted earnings per share (U.S. dollars)1.511.380.844.12N/A
---------------------------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ------------------------------------------------
Diluted share count (millions)575575564570N/A
---------------------------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ------------------------------------------------
EBITDA(d)1,7881,5531,1984,7432,908
---------------------------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ------------------------------------------------
EBITDA excluding LCM inventory valuation adjustments 1,7881,5531,2304,7433,273
---------------------------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ------------------------------------------------
(a)For all periods prior to May 1, 2010, EBITDA is calculated using a current cost inventory basis.For periods on and after May 1, 2010, net income and EBITDA are calculated using the LIFO (Last-In, First-Out) method of inventory accounting.
(b)Includes net income (loss) attributable to non-controlling interests.See Table 11.
(c)The nine months ended September 30, 2010 includes an $8,640 million after-tax gain on the discharge of liabilities subject to compromise related to emergence from Chapter 11 and fresh-start accounting adjustments.
(d)See the end of this release for an explanation of the Company's use of EBITDA and Table 9 for reconciliations of EBITDA to net income.
In addition, results reflect the following:
Table 2 - Charges (Benefits) Included in Net Income
Three Months EndedNine Months Ended
------------------------------------ -----------------
September 30, June 30, September 30, September 30,
-----------------
Millions of U.S. dollars (except share data)20112011201020112010
------------------------------------------------------------------ ------------- -------- ------------- -------- --------
Pretax charges (benefits):
------------------------------------------------------------------
Reorganization items$ -$28$13$30($28)
------------------------------------------------- ------------- -------- ------------- -------- --------
Gain on discharge of liabilities subject
to compromise----(13,617)
------------------------- ------------- -------- ------------- -------- --------
Change in net assets resulting from application
of fresh-start accounting ----6,278
------------------------- ------------- -------- ------------- -------- --------
Lower of cost or market inventory adjustment--32-365
------------------------------------------------- ------------- -------- ------------- -------- --------
Unplanned maintenance at the Houston refinery----14
------------------------------------------------- ------------- -------- ------------- -------- --------
Sale of precious metals-(41)-(41)-
------------------------------------------------- ------------- -------- ------------- -------- --------
Corporate restructurings1461-75-
------------------------------------------------- ------------- -------- ------------- -------- --------
Environmental accruals-16-16-
------------------------------------------------- ------------- -------- ------------- -------- --------
Asset retirement obligation10--10-
------------------------------------------------- ------------- -------- ------------- -------- --------
Warrants - mark to market(22)(6)763159
------------------------------------------------- ------------- -------- ------------- -------- --------
Impairments2613-44-
------------------------------------------------- ------------- -------- ------------- -------- --------
Charge related to dispute over environmental
indemnity--6464
------------------------- ------------- -------- ---------------------
Premiums and charges on early repayment of debt-12-12-
------------------------------------------------- ------------- -------- ------------- -------- --------
Insurance settlement---(34)-
------------------------------------------------- ------------- -------- ------------- -------- --------
Total pretax charges (benefits)2883185143(6,865)
------------------------------------------------------------------ ------------- -------- ------------- -------- --------
Provision for (benefit from) income tax related to
these items(14)(21)(13)(24)(1,062)
------------------------------------------------- ------------- -------- ------------- -------- --------
After-tax effect of net charges (credits)$14$62$172$119($7,927)
------------------------------------------------------------------ ------------- -------- ------------- -------- --------
Effect on diluted earnings per share($0.02)($0.11)$0.30($0.21)N/A
------------------------------------------------------------------ ------------- -------- ------------- -------- --------
"We earned $895 million during the third quarter and eclipsed our previous record
quarterly net income set last quarter. EBITDA during the quarter was nearly $1.8
billion - also a record," said Jim Gallogly, LyondellBasell Chief Executive
Officer.
"In U.S. olefins, we benefited from both very strong ethane- and naphtha-based
ethylene margins. Our Midwest ethylene plants were especially advantaged," added
Gallogly. "We achieved good results in our Olefins & Polyolefins - Europe, Asia,
International segment due to our differentiated positions in polypropylene
compounding, butadiene and our joint ventures. Intermediates & Derivatives
continued its strong, stable performance with EBITDA margins of 18%. Results for
Refining & Oxyfuels were particularly strong as the Houston refinery operated
above nameplate capacity, and we took full advantage of our flexibility
optimizing the crude oil feed slate," he said.
"Our strong results over the last year and a half have enabled us to close the
quarter with no net debt and begin to restructure our balance sheet," Gallogly
said. Details on LyondellBasell's plans to improve its capital structure can be
found in a news release dated Oct. 20, 2011.
"Additionally, we increased our dividend during the quarter, doubling it to 20
cents per share," added Gallogly.
OUTLOOK
"We are currently operating in a period of global economic uncertainty, which has
introduced significant raw material price and profit margin volatility. The
volatility limits our near-term visibility, but our strategy of focusing on the
basics and running our assets safely and efficiently has proven successful in any
environment," commented Gallogly.
"Certain underlying fundamentals that have supported our business remain intact.
A low ratio of U.S. natural gas to crude oil prices creates a favorable condition
for our U.S. operations although ethane prices have increased in recent weeks.
The spread between heavy and light crude oil continues to benefit the Houston
refinery. We also have several businesses that have less volatile earnings such
as our propylene oxide and polypropylene compounding businesses, and our Saudi
joint ventures," added Gallogly.
"During the coming months, in addition to olefins chain margin volatility, we
expect to see typical seasonal impacts in the Refining & Oxyfuels and polyolefins
areas," said Gallogly.
LYONDELLBASELL BUSINESS RESULTS DISCUSSION BY REPORTING SEGMENT
LyondellBasell operates in five business segments: 1) Olefins & Polyolefins -
Americas; 2) Olefins & Polyolefins - Europe, Asia, International; 3)
Intermediates & Derivatives; 4) Refining & Oxyfuels; and 5) Technology.
Olefins & Polyolefins - Americas (O&P-Americas) - The primary products of this
segment include ethylene and its co-products (propylene, butadiene and benzene),
polyethylene, polypropylene and Catalloy process resins.
Table 3 - O&P-Americas Financial
Overview(a)
-------------------------------------
Three Months EndedNine Months Ended
----------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------
September 30,June 30,September 30,September 30,
------------------------------------------------------------------------
Millions of U.S. dollars20112011201020112010
--------------------------------------------------------------------------- ------------------------------------- ------------------------------------- ------------------------------------- ------------------------------------- ----------------------------------
Operating income$599$509$448$1,529$917
--------------------------------------------------------------------------- ------------------------------------- ------------------------------------- ------------------------------------- ------------------------------------- ----------------------------------
EBITDA6735784921,7351,180
--------------------------------------------------------------------------- ------------------------------------- ------------------------------------- ------------------------------------- ------------------------------------- ----------------------------------
EBITDA excluding LCM charges6735785181,7351,377
--------------------------------------------------------------------------- ------------------------------------- ------------------------------------- ------------------------------------- ------------------------------------- ----------------------------------
(a)For all periods prior to May 1, 2010, operating income and EBITDA are calculated on a current cost inventory basis.For periods on and after May 1, 2010, operating income and EBITDA are calculated using the LIFO method of inventory accounting. See Table 8.
Three months ended September 30, 2011 versus three months ended June 30, 2011 -
O&P-Americas segment EBITDA increased $95 million versus the second quarter 2011.
Olefins profitability improved approximately $155 million from the prior period.
An ethylene sales price decrease of approximately 2 cents per pound was more than
offset by an approximately 6 cents per pound decrease in the company's average
cost-of-ethylene-production metric. Ethylene production volume increased during
the quarter primarily as a result of the return to service of one of the
Channelview olefins plants which had undergone scheduled maintenance activity
during the second quarter. Polyethylene (PE) results declined approximately $35
million chiefly as a result of lower sales prices. Polypropylene (PP) profits for
the third quarter 2011 declined approximately $15 million primarily due to lower
margins. We received $10 million of JV dividends in the third quarter 2011.
Three months ended September 30, 2011 versus three months ended September 30,
2010 - O&P-Americas results increased $155 million versus the third quarter 2010
after excluding a third-quarter 2010 Lower of Cost or Market (LCM) charge of $26
million. Olefins results increased approximately $300 million compared to the
prior year period largely as a result of significantly improved margins. This
increase was partially offset by PE results which declined approximately $120
million compared to the third quarter 2010 as a result of lower margins caused by
higher ethylene prices. PP results declined approximately $30 million compared to
the third quarter 2010 due to lower sales volumes and margins.
Olefins & Polyolefins - Europe, Asia, International (O&P-EAI) - The primary
products of this segment include ethylene and its co-products (propylene and
butadiene), polyethylene, polypropylene, global polypropylene compounds, Catalloy
process resins and Polybutene-1 resins.
Table 4 - O&P-EAI Financial Overview(a)
-------------------------------------------
Three Months EndedNine Months Ended
------------------------------------------------------------------------------------------------ -------------------------------------------------------------------------------------------------------------------------
September 30,June 30, September 30,September 30,
-------------------------------------------------------------------------------------------------------------------------
Millions of U.S. dollars20112011201020112010
------------------------------------------- ------------------------------------------- -------- ------------------------------------------- ------------------------------------------- -----------------------------------------------------------------------------
Operating income$144$207$231$530$460
------------------------------------------- ------------------------------------------- -------- ------------------------------------------- ------------------------------------------- -----------------------------------------------------------------------------
EBITDA261275289869693
------------------------------------------- ------------------------------------------- -------- ------------------------------------------- ------------------------------------------- -----------------------------------------------------------------------------
EBITDA excluding LCM charges261275294869698
------------------------------------------- ------------------------------------------- -------- ------------------------------------------- ------------------------------------------- -----------------------------------------------------------------------------
(a)For all periods prior to May 1, 2010, operating income and EBITDA are calculated on a current cost inventory basis.For periods on and after May 1, 2010, operating income and EBITDA are calculated using the LIFO method of inventory accounting. See Table 8.
Three months ended September 30, 2011 versus three months ended June 30, 2011 -
O&P-EAI segment EBITDA decreased $14 million versus the second quarter 2011.
Olefins results declined approximately $55 million from the second quarter 2011
due to lower cracker margins and lower ethylene and co-product production
volumes. Polyethylene results declined approximately $15 million from the prior
period chiefly due to lower margins. Polypropylene results declined approximately
$65 million due to lower margins. Polypropylene compounds results improved
approximately $15 million from the second quarter 2011. We received $45 million
of dividends from joint ventures during the third quarter 2011. Second quarter
2011 results included approximately $60 million of accruals related to a proposed
European staff reorganization and possible environmental remediation charges.
Three months ended September 30, 2011 versus three months ended September 30,
2010 - Excluding a $5 million third-quarter 2010 LCM adjustment, EBITDA declined
$33 million versus the third quarter 2010. Underlying olefins results were
relatively unchanged while polyethylene results declined approximately $20
million compared to the prior year period primarily as a result of lower margins.
Polypropylene EBITDA fell approximately $90 million compared to the prior year
period due to lower sales volumes and compressed margins. Polypropylene
compounding results improved slightly compared to the prior year. Third quarter
2010 results included a charge of approximately $43 million related to a dispute
over an environmental indemnity.
Intermediates & Derivatives (I&D) - The primary products of this segment include
propylene oxide (PO) and its co-products (styrene monomer, tertiary butyl alcohol
(TBA), isobutylene and tertiary butyl hydroperoxide), and derivatives (propylene
glycol, propylene glycol ethers and butanediol); acetyls, and ethylene oxide and
its derivatives.
Table 5 - I&D Financial Overview(a)
-------------------------------------------
Three Months EndedNine Months Ended
------------------------------------------------------------------------------------------------ -------------------------------------------------------------------------------------------------------------------------
September 30,June 30, September 30,September 30,
-------------------------------------------------------------------------------------------------------------------------
Millions of U.S. dollars20112011201020112010
------------------------------------------- ------------------------------------------- -------- ------------------------------------------- ------------------------------------------- -----------------------------------------------------------------------------
Operating income$259$235$207$728$473
------------------------------------------- ------------------------------------------- -------- ------------------------------------------- ------------------------------------------- -----------------------------------------------------------------------------
EBITDA297314243881623
------------------------------------------- ------------------------------------------- -------- ------------------------------------------- ------------------------------------------- -----------------------------------------------------------------------------
EBITDA excluding LCM charges297314243881648
------------------------------------------- ------------------------------------------- -------- ------------------------------------------- ------------------------------------------- -----------------------------------------------------------------------------
(a)For all periods prior to May 1, 2010, operating income and EBITDA are calculated on a current cost inventory basis.For periods on and after May 1, 2010, operating income and EBITDA are calculated using the LIFO method of inventory accounting. See Table 8.
Three months ended September 30, 2011 versus three months ended June 30, 2011 -
I&D segment EBITDA decreased $17 million versus the second quarter 2011. PO and
PO derivatives results improved versus the prior period due to higher margins
which were partially a result of industry outages. Underlying Intermediates
profitability declined slightly versus the second quarter which included a $41
million gain on the sale of spent silver catalyst.
Three months ended September 30, 2011 versus three months ended September 30,
2010 -I&D EBITDA increased $54 million compared to the third quarter 2010. PO and
PO derivatives EBITDA improved versus the prior year period due to increased PO
derivative margins. Increased acetyls and ethylene oxide / ethylene glycol
volumes and margins also contributed to improved results compared to the third
quarter 2010.
Refining & Oxyfuels (R&O) - The primary products of this segment include
gasoline, diesel fuel, heating oil, jet fuel, petrochemical raw materials, methyl
tertiary butyl ether (MTBE) and ethyl tertiary butyl ether (ETBE).
Table 6 - R&O Financial Overview(a)
-------------------------------------------
Three Months EndedNine Months Ended
------------------------------------------------------------------------------------------------ -------------------------------------------------------------------------------------------------------------------------
September 30,June 30, September 30,September 30,
-------------------------------------------------------------------------------------------------------------------------
Millions of U.S. dollars20112011201020112010
------------------------------------------- ------------------------------------------- -------- ------------------------------------------- ------------------------------------------- -----------------------------------------------------------------------------
Operating income (loss)$454$296$83$914($2)
------------------------------------------- ------------------------------------------- -------- ------------------------------------------- ------------------------------------------- -----------------------------------------------------------------------------
EBITDA5193531401,082240
------------------------------------------- ------------------------------------------- -------- ------------------------------------------- ------------------------------------------- -----------------------------------------------------------------------------
EBITDA excluding LCM charges5193531411,082373
------------------------------------------- ------------------------------------------- -------- ------------------------------------------- ------------------------------------------- -----------------------------------------------------------------------------
(a)For all periods prior to May 1, 2010, operating income and EBITDA are calculated on a current cost inventory basis.For periods on and after May 1, 2010, operating income and EBITDA are calculated using the LIFO method of inventory accounting. See Table 8.
Three months ended September 30, 2011 versus three months ended June 30, 2011 -
Refining & Oxyfuels segment EBITDA increased $166 million versus the second
quarter 2011. The Houston refinery financial performance improved approximately
$135 million. Crude oil throughput at the Houston refinery increased to 269,000
barrels per day, slightly above nameplate capacity. Although the industry average
benchmark margin declined approximately $2 per barrel during the quarter, margins
at the Houston refinery expanded due to optimization of the crude oil mix. The
Berre refinery continued to record a loss. A labor strike at the end of the third
quarter 2011 had minimal impact on results. Oxyfuels results improved
approximately $20 million due to improved margins.
Three months ended September 30, 2011 versus three months ended September 30,
2010 - Excluding a $1 million LCM charge in the third quarter 2010, segment
EBITDA increased $378 million versus the third quarter 2010. At the Houston
refinery, EBITDA increased approximately $330 million versus the prior year
period. A higher industry average benchmark margin and optimization of the crude
oil feed slate drove results. Berre refinery results were relatively unchanged
versus the prior year period. Oxyfuels results improved approximately $40 million
between the periods mainly as a result of higher margins.
Technology Segment - The principal products of the Technology segment include
polyolefin catalysts and production process technology licenses and related
services.
Table 7 - Technology Financial
Overview(a)
-------------------------------------
Three Months EndedNine Months Ended
----------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------
September 30,June 30,September 30,September 30,
------------------------------------------------------------------------
Millions of U.S. dollars20112011201020112010
--------------------------------------------------------------------------- ------------------------------------- ------------------------------------- ------------------------------------- ------------------------------------- ----------------------------------
Operating income$7$23$38$96$100
--------------------------------------------------------------------------- ------------------------------------- ------------------------------------- ------------------------------------- ------------------------------------- ----------------------------------
EBITDA454278178168
--------------------------------------------------------------------------- ------------------------------------- ------------------------------------- ------------------------------------- ------------------------------------- ----------------------------------
EBITDA excluding LCM charges454278178168
--------------------------------------------------------------------------- ------------------------------------- ------------------------------------- ------------------------------------- ------------------------------------- ----------------------------------
(a)For all periods prior to May 1, 2010, operating income and EBITDA are calculated on a current cost inventory basis.For periods on and after May 1, 2010, operating income and EBITDA are calculated using the LIFO method of inventory accounting. See Table 8.
Three months ended September 30, 2011 versus three months ended June 30, 2011 -
Catalyst results were relatively unchanged compared to the second quarter 2011.
Three months ended September 30, 2011 versus three months ended September 30,
2010 - Catalyst results improved compared to the prior year period while
licensing and technology services results declined compared to third quarter
2010.
Liquidity
Company liquidity, which we define as cash and cash equivalents plus funds
available through established lines of credit, was approximately $7.9 billion on
Sept. 30, 2011. The cash balance was approximately $5.9 billion including
restricted cash on Sept. 30, 2011.
Capital Spending
Capital expenditures, including maintenance turnaround, catalyst and information
technology related expenditures, were $281 million during the third quarter 2011.
This figure includes approximately $75 million for a pipeline acquisition.
CONFERENCE CALL
LyondellBasell will host a conference call today, Oct. 28, 2011, at 11:00 a.m.
ET. Participating on the call will be: Jim Gallogly, Chief Executive Officer;
Karyn Ovelmen, Executive Vice President and Chief Financial Officer; Kent Potter,
Principal Financial Officer; Sergey Vasnetsov, Senior Vice President - Strategic
Planning and Transactions; and Doug Pike, Vice President of Investor Relations.
The toll-free dial-in number in the U.S. is 888-982-4611. For international
numbers, please go to our website, lyondellbasell.com,
for a complete listing of toll-free numbers by country. The pass code for all
numbers is 7379598.
A replay of the call will be available from 1:00 p.m. ET Oct. 28 to 11:00 p.m. ET
on Nov. 28. The replay dial-in numbers are 800-789-9018 (U.S.) and +1
203-369-3337 (international). The pass code for each is 6798.
A copy of the slides that accompany the call will be available on our website at
lyondellbasell.com.
ABOUT LYONDELLBASELL
LyondellBasell (LYB) is one of the world's largest plastics, chemical and
refining companies. The company manufactures products at 58 sites in 18
countries. LyondellBasell products and technologies are used to make items that
improve the quality of life for people around the world including packaging,
electronics, automotive components, home furnishings, construction materials and
biofuels. More information about LyondellBasell can be found at
lyondellbasell.com.
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 assumptions of management which are
believed to be reasonable at the time made and are subject to significant risks
and uncertainties. Actual results could differ materially based on factors
including, but not limited to, the business cyclicality of the chemical, polymers
and refining industries; the availability, cost and price volatility of raw
materials and utilities, particularly the cost of oil and natural gas;
competitive product and pricing pressures; labor conditions; our ability to
attract and retain key personnel; operating interruptions (including leaks,
explosions, fires, weather-related incidents, mechanical failure, unscheduled
downtime, supplier disruptions, labor shortages, strikes, work stoppages or other
labor difficulties, transportation interruptions, spills and releases and other
environmental risks); the supply/demand balances for our and our joint ventures'
products, and the related effects of industry production capacities and operating
rates; our ability to achieve expected cost savings and other synergies; legal
and environmental proceedings; tax rulings, consequences or proceedings;
technological developments, and our ability to develop new products and process
technologies; potential governmental regulatory actions; political unrest and
terrorist acts; risks and uncertainties posed by international operations,
including foreign currency fluctuations; and our ability to comply with debt
covenants and service our debt. Additional factors that could cause results to
differ materially from those described in the forward-looking statements can be
found in the "Risk Factors" section of our Form 10-K for the year ended December
31, 2010, which can be found at lyondellbasell.com on the Investor
Relations page and on the Securities and Exchange Commission's website at
sec.gov.
NON-GAAP MEASURES
This release makes reference to certain "non-GAAP" financial measures as defined
in Regulation G of the U.S. Securities Exchange Act of 1934, as amended. We
report our financial results in accordance with U.S. generally accepted
accounting principles, but believe that certain non-GAAP financial measures
provide useful supplemental information to investors regarding the underlying
business trends and performance of the company's ongoing operations and are
useful for period-over-period comparisons of such operations. These non-GAAP
financial measures should be considered as a supplement to, and not as a
substitute for, or superior to, the financial measures prepared in accordance
with GAAP.
We have included EBITDA in this press release, as we believe that EBITDA is a
measure commonly used by investors. However, EBITDA, as presented herein, may not
be comparable to a similarly titled measure reported by other companies due to
differences in the way the measure is calculated. For purposes of this release,
EBITDA for predecessor periods means earnings before interest, taxes,
depreciation, amortization and restructuring costs, as adjusted for other items
management does not believe are indicative of the Company's underlying results of
operations such as impairment charges, reorganization items, the effect of
mark-to-market accounting on our warrants and current cost inventory adjustments.
EBITDA for successor periods means earnings before interest, taxes, depreciation
and amortization, as adjusted for the same items, to the extent applicable in the
successor periods. EBITDA also includes dividends from joint ventures. EBITDA
should not be considered an alternative to profit or operating profit for any
period as an indicator of our performance, or as alternatives to operating cash
flows as a measure of our liquidity.
Reconciliations of non-GAAP financial measures to their nearest comparable GAAP
financial measures are provided in the financial tables at the end of this
release.
OTHER FINANCIAL MEASURE PRESENTATION NOTES
As a result of the Company's reorganization proceedings and its emergence from
Chapter 11, financial results are prepared and disclosed for a predecessor
company for the time period before May 1, 2010, and the successor company for
time periods after April 30, 2010, the date of emergence. For financial
accounting purposes, the predecessor and successor companies are considered to be
two separate entities. Further, the reorganization under Chapter 11 and the
application of fresh-start accounting make comparisons of the predecessor and
successor periods difficult. The primary impacts affecting the comparisons
include (i) significant changes to our inventory valuations; (ii) lower
depreciation and amortization expense; and (iii) lower interest expense. In
connection with the application of fresh-start accounting, we were required to
write our inventory up to fair market value, which was significant given the high
crude oil prices at April 30, 2010. However, in the fourth quarter 2010, prices
rose to levels close to those at April 30, 2010, and it became necessary to
reverse significant portions of the LCM charges taken in the second and third
quarters. The lower depreciation and amortization expenses in the successor
period are the result of the revaluation of assets in connection with fresh-start
accounting. Lower interest expense is the result of the substantial changes to
the balance sheet as a result of the reorganization.
Prior to emergence from Chapter 11, we utilized a combination of First-In,
First-Out and Last-In, First-Out inventory methods for financial reporting. For
purposes of evaluating segment results, management reviewed operating results
using current cost, which approximates LIFO. As supplementary information, and
for our segment reporting, we provide EBITDA information on a current cost basis
for periods prior to our emergence from Chapter 11. Since emergence from Chapter
11, we have utilized the LIFO inventory methodology and EBITDA information for
periods after our emergence is on a LIFO basis. The combined financial results
and measures that are disclosed in this press release, including EBITDA,
therefore use both current cost and LIFO methodologies.
This release contains time sensitive information that is accurate only as of the
time hereof. Information contained in this release is unaudited and subject to
change. LyondellBasell undertakes no obligation to update the information
presented herein except to the extent required by law.
Table 8 - Reconciliation of Segment Information to Consolidated Financial Information
---------------------------------------------------------------------------------------------------------------------------------
2011
---------------------------------------------------------
(Millions of U.S. dollars)Q1Q2Q3YTD
------------------------------------------
Sales and other operating revenues:
Olefins & Polyolefins - Americas$3,572$4,010$3,875$ 11,457
Olefins & Polyolefins - Europe, Asia, International3,9444,2643,91812,126
Intermediates & Derivatives1,6921,7771,6175,086
Refining & Oxyfuels4,7205,8335,86916,422
Technology139126129394
Other/elims(1,815)(1,968)(2,111)(5,894)
----------------------------
Total$12,252$14,042$13,297$ 39,591
Operating income (loss):
Olefins & Polyolefins - Americas$421$509$599$ 1,529
Olefins & Polyolefins - Europe, Asia, International179207144530
Intermediates & Derivatives234235259728
Refining & Oxyfuels164296454914
Technology6623796
Other1(5)4- -
Current cost adjustment- -- -- -- -
----------------------------
Total$1,065$1,265$1,467$ 3,797
Depreciation and amortization:
Olefins & Polyolefins - Americas$58$59$64$ 181
Olefins & Polyolefins - Europe, Asia, International576669192
Intermediates & Derivatives343735106
Refining & Oxyfuels424648136
Technology24162161
Other- -- -- -- -
----------------------------
Total$215$224$237$ 676
EBITDA: (a)
Olefins & Polyolefins - Americas$484$578$673$ 1,735
Olefins & Polyolefins - Europe, Asia, International333275261869
Intermediates & Derivatives270314297881
Refining & Oxyfuels2103535191,082
Technology914245178
Other14(9)(7)(2)
----------------------------
Total EBITDA$1,402$1,553$1,788$ 4,743
Capital, turnarounds and IT deferred spending:
Olefins & Polyolefins - Americas$66$138$149$ 353
Olefins & Polyolefins - Europe, Asia, International423746125
Intermediates & Derivatives5152545
Refining & Oxyfuels1015853212
Technology73818
Other110- -11
----------------------------
Total222261281764
Deferred charges included above(1)- -(2)(3)
----------------------------
Capital expenditures$221$261$279$ 761
(a) See Table 9 for a reconciliation of total EBITDA, excluding LCM inventory valuation adjustments, to net income.
Table 8 - Reconciliation of Segment Information to Consolidated Financial Information
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
PredecessorSuccessorCombinedSuccessorPredecessorSuccessorCombined
------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------
2010
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
April 1 -May 1 -January 1 -May 1 -
(Millions of U.S. dollars)Q1April 30June 30Q2Q3April 30September 30YTD
-----------------------------------------------------------------------------------------------------------------------------------------------------------------
Sales and other operating revenues: (a)
Olefins & Polyolefins - Americas$3,020$1,163$2,004$3,167$3,247$4,183$5,251$9,434
Olefins & Polyolefins - Europe, Asia, International3,1191,0662,1403,2063,2474,1055,3879,492
Intermediates & Derivatives1,3165049401,4441,4531,8202,3934,213
Refining & Oxyfuels3,4151,3332,4033,7363,8674,7486,27011,018
Technology1103575110157145232377
Other/elims(1,225)(389)(790)(1,179)(1,669)(1,534)(2,459)(3,993)
-----------------------------------------------------------------------------------------
Total$9,755$3,712$6,772$10,484$10,302$13,467$17,074$30,541
Operating income (loss): (a)
Olefins & Polyolefins - Americas$145$175$149$324$448$320$597$917
Olefins & Polyolefins - Europe, Asia, International7144114158231115345460
Intermediates & Derivatives12334109143207157316473
Refining & Oxyfuels(128)29144383(99)97(2)
Technology3182331383961100
Other(59)181331(19)(41)(6)(47)
Current cost adjustment18415- -15- -199- -199
-----------------------------------------------------------------------------------------
Total$367$323$422$745$988$690$1,410$2,100
Depreciation and amortization:
Olefins & Polyolefins - Americas$119$41$51$92$42$160$93$253
Olefins & Polyolefins - Europe, Asia, International812633596010793200
Intermediates & Derivatives69222345309153144
Refining & Oxyfuels135459545518064244
Technology17661240234669
Other3178(5)426
-----------------------------------------------------------------------------------------
Total$424$141$129$270$222$565$351$916
EBITDA: (a)(b)
Olefins & Polyolefins - Americas$274$216$198$414$492$490$690$1,180
Olefins & Polyolefins - Europe, Asia, International15278174252289230463693
Intermediates & Derivatives19656128184243252371623
Refining & Oxyfuels376219714079161240
Technology471429437861107168
Other(32)87280(44)(24)284
-----------------------------------------------------------------------------------------
Total EBITDA6404486221,0701,1981,0881,8202,908
LCM inventory valuation adjustments- -- -33333332- -365365
-----------------------------------------------------------------------------------------
Total excluding LCM inventory valuation adjustments$640$448$955$1,403$1,230$1,088$2,185$3,273
Capital, turnarounds and IT deferred spending:
Olefins & Polyolefins - Americas$69$20$50$70$40$89$90$179
Olefins & Polyolefins - Europe, Asia, International594331743210263165
Intermediates & Derivatives7551039124456
Refining & Oxyfuels64152237347956135
Technology102357121022
Other4358971421
-----------------------------------------------------------------------------------------
Total21388116204161301277578
Deferred charges included above(74)(1)(3)(4)(8)(75)(11)(86)
-----------------------------------------------------------------------------------------
Capital expenditures (c)$139$87$113$200$153$226$266$492
(a) For periods prior to May 1, 2010, Predecessor segment operating income and EBITDA were determined on a current cost basis.For periods following May 1, 2010, Successor operating income and EBITDA were determined using the LIFO method of inventory accounting.
(b) See Table 9 for a reconciliation of total EBITDA, excluding LCM inventory valuation adjustments, to net income.
(c) Deferred IT spending is excluded from capital expenditures for all periods presented.Turnarounds, which are classified as property, plant and equipment from May 1, 2010, were excluded from capital expenditures for periods prior to May 1, 2010.
Table 9 - Reconciliation of EBITDA to Net Income
---------------------------------------------------------------------------------------------------------------
Successor
----------------------------------------
2011
----------------------------------------
(Millions of U.S. dollars)Q1Q2Q3YTD
----------------------------------
Segment EBITDA:
Olefins & Polyolefins - Americas$484$578$673$1,735
Olefins & Polyolefins - Europe, Asia, International333275261869
Intermediates & Derivatives270314297881
Refining & Oxyfuels2103535191,082
Technology914245178
Other14(9)(7)(2)
----------------------
Total EBITDA1,4021,5531,7884,743
LCM inventory valuation adjustments- -- -- -- -
----------------------
Total EBITDA excluding LCM inventory valuation adjustments1,4021,5531,7884,743
Add:
Income from equity investment587352183
Unrealized foreign exchange (loss) gain(3)4(17)(16)
Deduct:
Depreciation and amortization(215)(224)(237)(676)
Impairment charge(5)(13)(26)(44)
Reorganization items(2)(28)- -(30)
Interest expense, net(155)(164)(145)(464)
Joint venture dividends received(96)(11)(55)(162)
Provision for income taxes(263)(388)(489)(1,140)
Fair value change in warrants(59)622(31)
Other(2)(5)2(5)
----------------------
LyondellBasell Industries net income6608038952,358
Less: Net loss attributable to non-controlling interests31- -4
----------------------
Net Income$663$804$895$2,362
Table 9 - Reconciliation of EBITDA to Net Income
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
PredecessorSuccessorCombinedSuccessorPredecessorSuccessorCombined
---------------------------------------------------------------------------------------------------------------------------------------------------------------
2010
------------------------------------------------------------------------------------------------------------------------------------------------------------------
April 1 -May 1 -January 1 -May 1 -
(Millions of U.S. dollars)Q1April 30June 30Q2Q3Q4April 30September 30YTD
-----------------------------------------------------------------------------------------------------------------------------------------------------------
Segment EBITDA: (a)
Olefins & Polyolefins - Americas$274$216$198$414$492$505$490$690$1,180
Olefins & Polyolefins - Europe, Asia, International15278174252289125230463693
Intermediates & Derivatives19656128184243228252371623
Refining & Oxyfuels376219714021279161240
Technology47142943784461107168
Other(32)87280(44)(29)(24)284
--------------------------------------------------------------------------
Total EBITDA6404486221,0701,1981,0851,0881,8202,908
--------------------------------------------------------------------------
LCM inventory valuation adjustments- -- -33333332(323)- -365365
Total EBITDA excluding LCM inventory valuation adjustments6404489551,4031,2307621,0882,1853,273
Add:
Income from equity investment5529275629308456140
Unrealized foreign exchange loss(202)(62)(14)(76)(7)(1)(264)(21)(285)
Gain on sale of Flavors and Fragrances business- -- -- -- -- -64- -- -- -
Deduct:
LCM inventory valuation adjustments- -- -(333)(333)(32)323- -(365)(365)
Depreciation and amortization(424)(141)(129)(270)(222)(207)(565)(351)(916)
Impairment charge(3)(6)- -(6)- -(28)(9)- -(9)
Reorganization items2077,181(8)7,173(13)(2)7,388(21)7,367
Interest expense, net(409)(299)(120)(419)(186)(222)(708)(306)(1,014)
Joint venture dividends received(13)(5)(28)(33)-(6)(18)(28)(46)
(Provision for) benefit from income taxes(12)1,327(28)1,299(254)1121,315(282)1,033
Fair value change in warrants- -- -1717(76)(55)- -(59)(59)
Current cost adjustment to inventory18415- -15- -- -199- -199
Other(15)9817(2)(4)(6)6- -
--------------------------------------------------------------------------
LyondellBasell Industries net income88,4963478,8434677668,5048149,318
Less: Net (income) loss attributable to non-controlling interests258(5)537560262
--------------------------------------------------------------------------
$10$8,554$342$8,896$474$771$8,564$816$9,380
(a) For periods prior to May 1, 2010, Predecessor segment operating income and EBITDA were determined on a current cost basis.For periods following May 1, 2010, Successor operating income and EBITDA were determined using the LIFO method of inventory accounting.
Table 10 - Selected Segment Operating Information
-------------------------------------------------------------------------------------------------------------------------------------------------------
20102011
----------------------------------------------------
Q1Q2Q3YTDQ1Q2Q3YTD
----------------------------------------
Olefins and Polyolefins - Americas
Volumes (million pounds)
Ethylene produced2,0191,9982,1846,2012,0891,9292,1346,152
Propylene produced7557777902,3227695568382,163
Polyethylene sold1,3301,3201,4724,1221,4051,3771,3684,150
Polypropylene sold6156706751,9605856116351,831
Benchmark Market Prices
West Texas Intermediate crude oil (USD per barrel)78.978.176.177.794.6102.389.595.5
Light Louisiana Sweet ("LLS") crude oil (USD per barrel)80.082.279.681.1107.8118.3112.5113.2
Natural gas (USD per million BTUs)5.44.04.44.64.24.44.34.3
U.S. weighted average cost of ethylene production (cents/pound)34.326.725.228.732.633.834.333.6
U.S. ethylene (cents/pound)52.345.638.345.449.357.555.854.2
U.S. polyethylene [high density] (cents/pound)83.384.077.781.787.795.389.090.7
U.S. propylene (cents/pound)61.563.356.260.371.787.376.578.5
U.S. polypropylene [homopolymer] (cents/pound)87.889.882.786.8100.8113.8103.0105.9
Olefins and Polyolefins - Europe, Asia, International
Volumes (million pounds)
Ethylene produced8618429942,6979979999262,922
Propylene produced5095406361,6856086315601,799
Polyethylene sold1,2391,2301,3163,7851,3051,2791,3493,933
Polypropylene sold1,5381,7621,8915,1911,7041,6311,6384,973
Benchmark Market Prices
Western Europe weighted average cost of ethylene production (euro 0.01 per pound)28.727.326.527.434.735.437.335.8
Western Europe ethylene (euro 0.01 per pound)41.643.743.142.852.054.750.352.3
Western Europe polyethylene [high density] (euro 0.01 per pound)51.453.852.452.562.165.959.962.6
Western Europe propylene (euro 0.01 per pound)38.945.143.142.450.855.350.252.1
Western Europe polypropylene [homopolymer] (euro 0.01 per pound)51.360.360.357.366.669.462.066.0
Intermediates and Derivatives
Volumes (million pounds)
Propylene oxide and derivatives8697818722,5228387917582,387
Ethylene oxide and derivatives265250206721288277281846
Styrene monomer5897808272,1968528177142,383
Acetyls3794394051,2234394174111,267
TBA Intermediates4724704541,3964854594331,377
Refining and Oxyfuels
Volumes
Houston Refining crude processing rate (thousands of barrels per day)263189261237258263269263
Berre Refinery crude processing rate (thousands of barrels per day)73999990101857988
MTBE/ETBE sales volumes (million gallons)189236248673196206264661
Benchmark Market Margins
Light crude oil - 2-1-1(a)6.8510.457.608.3119.0610.289.548.64
Light crude oil - Maya differential(a)8.949.548.549.004.6315.5013.9915.85
Urals 4-1-2-1 (USD per barrel)5.917.335.896.327.817.718.768.10
MTBE - Northwest Europe (cents per gallon)49.346.244.346.658.992.794.181.8
Source: CMAI, Bloomberg, LyondellBasell Industries
(a) Prices prior to 2011 use WTI as the light crude benchmark.Beginning in 2011, LLS is used as the light crude benchmark.
Table 11 - Unaudited Income Statement Information
---------------------------------------------------------------------------------------------
Successor
------------------------------------------
2011
------------------------------------------
(Millions of U.S. dollars)Q1Q2Q3YTD
------------------------------------
Sales and other operating revenues$12,252$14,042$13,297$39,591
Cost of sales10,94312,47411,53834,955
Selling, general and administrative
expenses211247239697
Research and development expenses335653142
------------------------
Operating income1,0651,2651,4673,797
Income from equity investments587352183
Interest expense, net(155)(164)(145)(464)
Other income (expense), net(43)451012
------------------------
Income before income taxes and
reorganization items9251,2191,3843,528
Reorganization items(2)(28)- -(30)
------------------------
Income before taxes9231,1911,3843,498
Provision for income taxes2633884891,140
------------------------
Net income6608038952,358
Less: Net loss attributable to non-controlling
interests31- -4
------------------------
Net income attributable to the Company$663$804$895$2,362
Table 11 - Unaudited Income Statement Information
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
PredecessorSuccessorCombinedSuccessorPredecessorSuccessorCombined
---------------------------------------------------------------------------------------------
2010
---------------------------------------------------------------------------------------------------------
April 1 -May 1 -January 1 -May 1 -
(Millions of U.S. dollars)Q1April 30June 30Q2Q3April 30September 30YTD
-------------------------------------------------------------------------------------------
Sales and other operating revenues$9,755$3,712$6,772$10,484$10,302$13,467$17,074$30,541
Cost of sales9,1303,2846,1989,4829,07512,41415,27327,687
Selling, general and administrative expenses21791129220204308333641
Research and development expenses41142337355558113
--------------------------------------------------
Operating income3673234227459886901,4102,100
Income from equity investments55292756298456140
Interest expense, net(409)(299)(120)(419)(186)(708)(306)(1,014)
Other income (expense), net(200)(65)54(11)(97)(265)(43)(308)
--------------------------------------------------
Income (loss) before income taxes and reorganization items(187)(12)383371734(199)1,117918
Reorganization items2077,181(8)7,173(13)7,388(21)7,367
--------------------------------------------------
Income before taxes207,1693757,5447217,1891,0968,285
Provision for (benefit from) income taxes12(1,327)28(1,299)254(1,315)282(1,033)
--------------------------------------------------
Net income88,4963478,8434678,5048149,318
Less: Net (income) loss attributable to non-controlling interests258(5)53760262
--------------------------------------------------
Net income attributable to the Company$10$8,554$342$8,896$474$8,564$816$9,380
Table 12 - Unaudited Cash Flow Information
------------------------------------------------------------------------------------
Successor
--------------------------------------
2011
--------------------------------------
(Millions of U.S. dollars)Q1Q2Q3YTD
-----------------------
Net cash provided by operating activities$221$1,026$1,531$2,778
Net cash used in investing activities(216)(435)(320)(971)
Net cash provided by (used in)
financing activities28(327)(118)(417)
Table 12 - Unaudited Cash Flow Information
-------------------------------------------------------------------------------------------------------------------------------------------------------
PredecessorSuccessorCombinedSuccessorPredecessorSuccessorCombined
------------------------------------------------------------------------------------
2010
------------------------------------------------------------------------------------------------
April 1 -May 1 -January 1 -May 1 -
(Millions of U.S. dollars)Q1April 30June 30Q2Q3April 30September 30YTD
-----------------------------------------------------------------------------
Net cash provided by (used in) operating activities$(373)$(552)$1,105$553$1,124$(925)$2,229$1,304
Net cash used in investing activities(127)(97)(110)(207)(156)(224)(266)(490)
Net cash provided by (used in) financing activities4902,8251332,958(88)3,315453,360
Table 13 - Unaudited Balance Sheet Information
----------------------------------------------------------------------------------------------------------------------------------------------------------------
PredecessorSuccessor
-----------------------------------------------------------------------------------------------
March 31,June 30,September 30,December 31,March 31,June 30,September 30,
(Millions of U.S. dollars)2010201020102010201120112011
-------------------------------------------------------------------------------------
Cash and cash equivalents$537$3,753$4,832$4,222$4,383$4,687$5,609
Restricted cash- -- -- -- -- -250292
Short-term investments2- -- -- -- -- -- -
Accounts receivable, net3,6423,5333,8003,7474,7644,9014,038
Inventories3,5904,3724,4124,8245,7265,5775,682
Prepaid expenses and other current assets9321,0168859861,1001,0981,097
-------------------------------------------
Total current assets8,70312,67413,92913,77915,97316,51316,718
Property, plant and equipment, net14,6876,8397,2167,1907,4407,5697,363
Investments and long-term receivables:
Investment in PO joint ventures880434447437444436422
Equity investments1,1251,5071,5821,5871,5861,6541,594
Related party receivable1413141414194
Other investments and long-term receivables90775467666367
Goodwill- -1,0611,105595807621598
Intangible assets, net1,7481,4271,4111,3601,3441,3101,237
Other assets, net338257272273274290264
-------------------------------------------
Total assets$27,585$24,289$26,030$25,302$27,948$28,475$28,267
Current maturities of long-term debt$487$8$8$4$253$2$2
Short-term debt6,67555751842515049
Accounts payable2,2132,5262,5622,7614,0993,9993,307
Accrued liabilities1,2201,1991,5131,7051,7111,6131,505
Deferred income taxes163444446319246315315
-------------------------------------------
Total current liabilities10,7584,7345,0474,8316,3605,9795,178
Long-term debt3046,7456,7996,0365,8055,8135,782
Other liabilities1,3172,0132,0862,1832,0432,1102,021
Deferred income taxes2,0128671,1556561,0279471,204
Liabilities subject to compromise22,058- -- -- -- -- -- -
Stockholders' equity (deficit)(8,975)9,86810,88211,53512,67113,57914,025
Non-controlling interests111626161424757
-------------------------------------------
Total liabilities and stockholders' equity (deficit) $27,585$24,289$26,030$25,302$27,948$28,475$28,267 |
