<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JANUARY 31, 1996.
LYONDELL PETROCHEMICAL COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 1-10145 95-4160558
(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
1221 MCKINNEY STREET, SUITE 1600, HOUSTON, TEXAS 77010
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (713) 652-7200
NOT APPLICABLE
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
PAGE 1 OF 3
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ITEM 5. OTHER EVENTS
Press Release dated January 22, 1996, reporting earnings from 4th Quarter and
full year 1995 and Press Release dated January 30, 1996 reporting 1996 Capital
budget.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Exhibits:
Exhibit Document
------- --------
99.1 Press Release dated January 22, 1996.
99.2 Press Release, dated January 30, 1996.
PAGE 2 OF 3
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: January 31, 1996 LYONDELL PETROCHEMICAL COMPANY
By: /s/ Russell S. Young
------------------------------------
Russell S. Young
Senior Vice President
Chief Financial Officer and Treasurer
PAGE 3 OF 3
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EXHIBIT INDEX
SEQUENTIALLY
EXHIBIT NUMBERED PAGE
NO. EXHIBITS WHERE LOCATED
------- -------- -------------
99.1 Press Release dated January 22, 1996
99.2 Press Release dated January 30, 1996
<PAGE>
EXHIBIT 99.1
[LOGO OF LYONDELL APPEARS HERE]
News
================================================================================
One Houston Center, 1221 McKinney Ave., P.O. Box 3646, Houston, Texas 77253-3646
(713) 652-7200
FOR IMMEDIATE RELEASE
LYONDELL PETROCHEMICAL COMPANY REPORTS
1995 EARNINGS OF $389 MILLION, VERSUS $223 MILLION IN 1994
HOUSTON, January 22, 1996--Lyondell Petrochemical Company (NYSE:LYO) today
reported net income for the full year 1995 of $389 million, or $4.86 per share,
compared to $223 million, or $2.78 per share, in 1994. This represents the best
annual earnings since Lyondell became a public company in 1989 and was primarily
due to strong petrochemical and polymers performance in the first nine months of
1995. These markets declined sharply in the latter part of the year and this
resulted in fourth quarter 1995 earnings of $27 million, or $.34 per share,
versus $103 million, or $1.28 per share, in the fourth quarter of 1994.
Bob G. Gower, chairman and chief executive officer of Lyondell Petrochemical
Company, said, "In spite of the market downturn in the fourth quarter, 1995 was
marked by good overall performance for Lyondell as well as significant progress
toward our strategic goals."
Major factors in the company's 1995 performance included:
. Strong market conditions for petrochemicals and polymers in the first half of
the year followed by substantially weaker markets in the fourth quarter.
. The acquisition of the Alathon(R) high-density polyethylene business, which
contributed significantly to 1995 results and is also providing Lyondell
with integration benefits and important niches in this growing market.
. Outstanding aromatics profitability at LYONDELL-CITGO Refining Company Ltd.
(LCR).
. The LCR venture agreement that enabled the refining business to be profitable
in a dismal year for the Gulf Coast refining industry. Refinery rates were
limited by some operating problems, but this was LCR's best year thus far for
processing heavy Venezuelan crude oil, which is key to maximizing the
economic benefits of the venture.
--MORE--
<PAGE>
Olefins margins declined significantly in the fourth quarter of 1995 as
supply/demand conditions worsened and this was the overriding factor in the
decline in the company's fourth quarter earnings. In addition, fourth quarter
results were affected by downtime for a scheduled maintenance turnaround and
capacity expansion of one of the company's olefins units. Other factors
affecting 1995 fourth quarter results versus the same period in 1994 were lower
methanol profitability, offset by increased contributions from polymers and
aromatics and better refining performance at LCR, where major turnarounds
limited 1994 results.
Compared to the 1995 third quarter, when Lyondell earned $100 million, or
$1.25 per share, 1995 fourth quarter results reflected the decline in
petrochemical markets as well as coker downtime at the LCR refinery.
"Although we are starting 1996 in a difficult business environment, we have
broadened our asset base and we believe that our continued focus on low cost
together with emphasis on reducing cyclicality in our key businesses will enable
us to weather any storm," said Dan F. Smith, Lyondell's president and chief
operating officer.
Lyondell Petrochemical Company produces a wide variety of petrochemicals,
including olefins (primarily ethylene, propylene, butadiene, butylenes and
specialty products), methanol, MTBE, and polymers (Alathon(R) high-density
polyethylene, polypropylene and low-density polyethylene). Lyondell currently
has an approximately 90% participation interest in LYONDELL-CITGO Refining
Company Ltd. (LCR), which produces refined petroleum products, including
gasoline, heating oil, jet fuel, aromatics and lubricants.
# # #
For information, contact:
Media - Jackie Wilson (713) 652-4596
Investors - Dave Balderston (713) 652-4590
<PAGE>
LYONDELL PETROCHEMICAL COMPANY
FINANCIAL AND OPERATING INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE TWELVE MONTHS
INCOME STATEMENT ENDED DECEMBER 31 ENDED DECEMBER 31
(MILLIONS OF DOLLARS EXCEPT PER SHARE AMOUNTS) 1995 1994 1995 1994
- ---------------------------------------------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
Sales and other operating revenues $ 1,143 $ 1,096 $ 4,936 $ 3,857
Operating costs and expenses:
Cost of sales 1,023 886 4,026 3,296
Selling, general and administrative expenses 56 35 204 137
------- ------- ------- -------
Operating income 64 175 706 424
Interest expense (21) (18) (80) (74)
Interest income 1 2 6 5
Minority interest in LYONDELL-CITGO Refining
Co. Ltd. (2) -- (14) (6)
------- ------- ------- -------
Income before income taxes 42 159 618 349
Provision for income taxes 15 56 229 126
------- ------- ------- -------
Net income $ 27 $ 103 $ 389 $ 223
======= ======= ======= =======
Earnings per share $ .34 $ 1.28 $ 4.86 $ 2.78
======= ======= ======= =======
Avg. no. common shares outstanding (thousands) 80,000 80,000 80,000 80,000
======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE TWELVE MONTHS
SELECTED FINANCIAL & OPERATING DATA ENDED DECEMBER 31 ENDED DECEMBER 31
(MILLIONS OF DOLLARS) 1995 1994 1995 1994
- ---------------------------------------------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
SALES AND OTHER OPERATING REVENUES
Petrochemical segment $ 555 $ 613 $ 2,657 $ 1,973
Refinery segment:
Products 551 473 2,272 1,976
Crude 109 93 370 296
Intersegment eliminations (72) (83) (363) (388)
------- ------- ------- -------
Total $ 1,143 $ 1,096 $ 4,936 $ 3,857
======= ======= ======= =======
OPERATING INCOME
Petrochemical segment $ 52 $ 186 $ 641 $ 413
Refinery segment 24 (1) 124 54
Unallocated (12) (10) (59) (43)
------- ------- ------- -------
Total $ 64 $ 175 $ 706 $ 424
======= ======= ======= =======
SALES VOLUMES (EXCLUDES INTERSEGMENT SALES)
Selected petrochemical products (millions)
Ethylene, propylene and polymers (lbs) 1,719 1,584 6,832 6,090
Other olefins (lbs) 207 291 1,030 1,048
Methanol (gallons) 54 41 199 169
Aromatics (gallons) 34 38 152 160
Refinery products (thousand barrels per day)
Gasoline 113 109 109 109
Heating oil (no. 2 distillate) 55 37 52 44
Jet fuel 27 18 29 24
Aromatics 8 8 8 8
Other refinery products 55 44 56 46
------- ------- ------- -------
Total refinery products volumes 258 216 254 231
======= ======= ======= =======
REFINERY RUNS (thousand barrels per day)
Blended crude oil 236 160 238 209
Unfinished stock 50 78 48 64
------- ------- ------- -------
Total 286 238 286 273
======= ======= ======= =======
</TABLE>
<PAGE>
LYONDELL PETROCHEMICAL COMPANY
SELECTED FINANCIAL INFORMATION (UNAUDITED)
MILLION OF DOLLARS
<TABLE>
<CAPTION>
DECEMBER 31
CONDENSED BALANCE SHEET 1995
- ----------------------- -----------
<S> <C>
Cash, restricted cash and cash equivalents $ 10
Accounts receivable, inventories and other
current assets 668
Fixed assets (net), and other non-current assets 1,928
-----------
Total assets $ 2,606
===========
Current liabilities $ 750
Long-term debt 807
Other liabilities and deferred credits 210
Minority interest 459
Stockholders' equity 380
-----------
Total liabilities and stockholders' equity $ 2,606
===========
</TABLE>
<TABLE>
<CAPTION>
CASH AND CASH EQUIVALENTS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1995
CASH FLOW UNRESTRICTED RESTRICTED TOTAL
- --------- ------------ ---------- -----
<S> <C> <C> <C>
Net income $ 389 $ 389
Non-cash transactions:
Depreciation and amortization 86 86
Deferred taxes 3 3
Change in working capital/other (7) (7)
------------ ---------- -----
Cash flow from operations 471 471
Minority owner investments:
Contributions $ 176 176
Reinvestments (17) 17 --
Company loan to LCR (25) 25 --
Additions to fixed assets:
Refinery upgrade project (458) (458)
Refinery segment-other (2) (45) (47)
Petrochemical segment-ALATHON acquisition (356) (356)
Petrochemical segment-other (121) (121)
Net proceeds from short-term debt 83 83
Net proceeds from long-term debt (10) 250 240
Dividends paid (72) (72)
------------ ---------- -----
Incr./(Decr.) in cash and cash equivalents (49) (35) (84)
Cash and cash equivalents at beginning of period 52 42 94
------------ ---------- -----
Cash and cash equivalents at end of period $ 3 $ 7 $ 10
============ ========== =====
</TABLE>
<PAGE>
EXHIBIT 99.2
FOR IMMEDIATE RELEASE
LYONDELL ANNOUNCES 1996 CAPITAL BUDGET OF $125 MILLION
HOUSTON, January 30, 1996--The Board of Directors of Lyondell Petrochemical
Company (NYSE:LYO) has approved a 1996 capital budget of $125 million.
Petrochemical projects account for $79 million of the total, and $46 million is
budgeted for projects at the company's affiliate LYONDELL-CITGO Refining
Company, Ltd (LCR). In addition to the $125 million capital budget, Lyondell
will provide funding in the range of $100 million for LCR's major refinery
upgrade project.
Actual capital spending in 1995 totaled $168 million, excluding the
acquisition of the Alathon high-density polyethylene business. Lyondell's
portion of the expenditures for the LCR upgrade project in 1995 was an
additional $25 million.
About 25% of the 1996 petrochemical budget is for the completion of three
previously announced capacity expansions: an approximately 7% increase in
olefins capacity in Channelview, a 33% increase in polypropylene capacity at
LaPorte, and a near-doubling of alkylation capacity at Channelview. Other major
petrochemical projects include process control upgrades at several operating
units.
"This year, we are completing important expansions of our capacity and
enhancing our operating capabilities and efficiency," said Bob G. Gower,
chairman and chief executive officer of Lyondell. "Several of these projects
complement Lyondell's recent acquisitions and new product developments in the
polymers area."
As in previous years, most of the spending at LCR other than the upgrade
project is for environmental, health and safety projects. It is expected that
Lyondell will provide about half of the $46 million budgeted for LCR from its
own cash flow, with the remainder funded from a restricted cash reserve and from
CITGO's reinvested earnings during 1996.
The refinery upgrade project, which will increase LCR's ability to process
very heavy crude oil from Venezuela, is expected to be operational in early
1997.
The cost estimate for the upgrade project, previously estimated at $980
million, is currently undergoing further study and could be increased. The
revised cost estimate will depend on a number of factors, including the impact
of scheduling decisions. Any increase is expected to be less than 10%.
Spending from project inception in 1993 to the end of 1995 has been $602
million, including $458 million last year. CITGO contributions and external
borrowing have provided the majority of the project funding to date. Present
funding is 50% borrowing and 25% each from CITGO and Lyondell. This current
funding plan will apply for a total upgrade project cost of up to $1 billion,
and results in Lyondell's 1996 share of approximately $100 million. If total
spending on the upgrade project exceeds $1 billion, Lyondell expects to fund
one-half of these additional costs. Lyondell has already gained significant
benefits from the venture agreement and expects that earnings and cash flow from
the refinery will be further enhanced upon completion of the upgrade project.
Lyondell Petrochemical Company produces a wide variety of petrochemicals,
including olefins (primarily ethylene, propylene, butadiene, butylenes and
specialty products), methanol, MTBE, and polymers (Alathon(R) high-density
polyethylene, polypropylene and low-density polyethylene). Lyondell currently
has an approximately 90% participation interest in LYONDELL-CITGO Refining
Company Ltd. (LCR), which produces refined petroleum products including
gasoline, heating oil, jet fuel, aromatics and lubricants.
# # #
For information, contact:
Media-Jackie Wilson (713) 652-4596
Investors-Dave Balderston (713) 652-4590
