<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 27, 1997.
LYONDELL PETROCHEMICAL COMPANY
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 1-10145 95-4160558
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(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
IDENTIFICATION NO.) OF INCORPORATION) FILE NUMBER)
1221 MCKINNEY STREET, SUITE 1600, HOUSTON, TEXAS 77010
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (713) 652-7200
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NOT APPLICABLE
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(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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ITEM 5. OTHER EVENTS
Press Release dated January 27, 1997, reporting earnings from 4th Quarter and
full year 1996. Press release dated January 27, 1997, reporting 1997 capital
budget. Press release dated January 27, 1997, reporting quarterly dividend
payment. Press release dated January 27, 1997, reporting management realignment
and segmented reporting.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Exhibits
Exhibit Document
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99.1 Press Release dated January 27, 1997.
99.2 Press Release dated January 27, 1997.
99.3 Press Release dated January 27, 1997.
99.4 Press Release dated January 27, 1997.
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EXHIBIT INDEX
Exhibit Number Document
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99.1 Press Release Dated as of January 27, 1997.
99.2 Press Release Dated as of January 27, 1997.
99.3 Press Release Dated as of January 27, 1997.
99.4 Press Release Dated as of January 27, 1997.
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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 27, 1997 LYONDELL PETROCHEMICAL COMPANY
By: /s/ Joseph M.Putz
------------------
Joseph M. Putz
Vice President and Controller
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EXHIBIT 99.1
[Logo of Lyondell Petrochemical appears here]
NEWS
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One Houston Center, 1221 McKinney Ave., P.O. Box 3646,
Houston, Texas 77253-3646 (713) 652-7200
FOR IMMEDIATE RELEASE
LYONDELL PETROCHEMICAL COMPANY ANNOUNCES EARNINGS
FOR 1996 FULL YEAR AND FOURTH QUARTER
HOUSTON, January 27, 1997 -- Lyondell Petrochemical Company (NYSE:LYO)
today reported net income for the full year 1996 of $126 million, or $1.58 per
share, versus $389 million, or $4.86 per share, in 1995. Net income for the
fourth quarter of 1996 was $52 million, or $.66 per share, compared with $27
million, or $.34 per share in the fourth quarter of 1995. Fourth quarter 1996
net income includes an approximate $20 million gain from asset sales and
approximately $19 million from the settlement of a claim.
"While this has been a difficult year for Lyondell with higher
feedstock costs for petrochemicals and planned and unplanned downtime at the LCR
refinery, there were positive developments on several fronts that are adding
value now and for the future," said Dan F. Smith, President and Chief Executive
Officer. "These included strong contributions from the polymers business, the
creation of a strong partnership for our methanol business and the substantial
completion of the LCR upgrade project, which is expected to stabilize earnings
and cash flow from our refining business."
Smith said that petrochemical markets were strong in 1996 and Lyondell
benefited from good performance from its olefins and polymers operations.
However, price increases were outpaced by rapidly escalating feedstock costs and
this eroded margins for the olefins business. Results from LYONDELL-CITGO
Refining Company, Ltd., (LCR) were affected by a decline in aromatics margins as
well as scheduled and
<PAGE>
unscheduled turnarounds associated with completion and tie-in of new units for
the upgrade project.
Among the highlights of 1996:
. Polymers production volumes and operating profits reached record levels, led
by the high-density polyethylene (HDPE) business that Lyondell acquired in
May 1995. To build on its leadership in fast growing segments of this
market, Lyondell has recently announced plans to expand HDPE capacity. A 33
percent capacity expansion for polypropylene was completed in 1996.
. Lyondell completed a 7 percent increase in ethylene capacity through a low-
cost debottleneck of the second olefins plant during a scheduled turnaround
in the second quarter.
. In the fourth quarter, the Company finalized an agreement through which MCN
Investment Corporation acquired a 25 percent interest in Lyondell's methanol
unit, enhancing the value of that asset.
. By year-end 1996, LCR had completed construction of all major units for the
refinery upgrade project, which is expected to start up in the first quarter
of 1997. Completion of this project will enable LCR to realize the full
benefits of the Venezuelan crude oil supply agreement which was entered into
in 1993. Once the project is complete, CITGO's ownership will increase to
approximately 40 percent. As a result, effective January 1, 1997, Lyondell
will no longer consolidate financial results from LCR with its petrochemical
results, but will report LCR under the equity method of accounting. The
financial tables accompanying this news release show what Lyondell's 1996
results would have been on a pro forma basis, had the deconsolidation been
effective January 1, 1996.
Fourth quarter 1996 earnings included gains from asset sales and
settlement of a claim associated with an ARCO Pipe Line Company fire which shut
down Lyondell's Channelview, Texas olefins plants for about two weeks in the
early part of the third quarter. This settlement offset most of the impact of
that event and, in effect, transferred earnings that would have been made in the
third quarter to fourth quarter results. Versus the third quarter of 1996, when
the company earned $35 million, or 42 cents per share,
2
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operating results in the fourth quarter were affected by the following factors
(in addition to the items described above):
. higher feedstock costs;
. lower polymers demand and pricing (versus the very strong markets in the
prior quarters) resulting from seasonal factors and inventory reductions
throughout the industry;
. LCR transitional issues as the project was nearing completion.
Smith said, "The supply and demand factors for our petrochemicals business
look strong as we enter 1997. However, we are concerned about the extent that
high feedstock costs may continue to affect margins. We expect to begin to see
the benefits of the advantageous provisions of our refining venture during 1997
as the upgrade project comes on stream, although we recognize that it may be
during the second half of the year before it will be fully operational."
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 - Kevin DeNicola (713) 652-4590
3
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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
-------------------- -------------------------------------
PROFORMA*
(MILLIONS OF DOLLARS EXCEPT PER SHARE AMOUNTS) 1996 1995 1996 1995 1996
------ ------ ------ ------ ---------
<S> <C> <C> <C> <C> <C>
Sales and other operating revenues $1,401 $1,143 $5,052 $4,936 $2,644
Gain on sale of assets 30 -- 30 -- 30
Operating costs and expenses:
Cost of sales 1,270 1,023 4,570 4,026 2,237
Selling, general and administrative expenses 60 56 234 204 172
------ ------ ------ ------ ------
Operating income 101 64 278 706 265
Interest expense (20) (21) (81) (80) (79)
Interest income -- 1 3 6 1
Minority interest (1) (2) (4) (14) (2)
Income from equity investment 11
------ ------ ------ ------ ------
Income before income taxes 80 42 196 618 196
Provision for income taxes 28 15 70 229 70
------ ------ ------ ------ ------
Net income $ 52 $ 27 $ 126 $ 389 $ 126
====== ====== ====== ====== ======
Earnings per share $ .66 $ .34 $ 1.58 $ 4.86 $ 1.58
====== ====== ====== ====== ======
Avg. no. common shares outstanding (thousands) 80,000 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
-------------------- -------------------------------------
PROFORMA*
(MILLIONS OF DOLLARS) 1996 1995 1996 1995 1996
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<S> <C> <C> <C> <C> <C>
SALES AND OPERATING REVENUES
Petrochemical segment $ 770 $ 555 $2,643 $2,657 $2,644
Refinery segment
Products 639 552 2,376 2,278
Crude 127 109 436 370
Intersegment eliminations (135) (73) (403) (369)
------ ------ ------ ------ ------
Total $1,401 $1,143 $5,052 $4,936 $2,644
====== ====== ====== ====== ======
OPERATING INCOME
Petrochemical segment $ 142 $ 51 $ 337 $ 635 $ 265
Refinery segment (24) 25 1 130
Unallocated (17) (12) (60) (59)
------ ------ ------ ------ ------
Total $ 101 $ 64 $ 278 $ 706 $ 265
====== ====== ====== ====== ======
SALES VOLUMES (EXCLUDES INTERSEGMENT SALES)
Selected petrochemical products (millions)
Ethylene, propylene and polymers (lbs) 1,749 1,719 6,985 6,832 6,985
Other olefins (lbs) 242 207 980 1,030 980
Methanol (gallons) 53 54 209 199 209
Aromatics (gallons) 43 34 167 152 167
Refinery products (thousand barrels per day)
Gasoline 83 113 101 109 101
Heating oil (no. 2 distillate) 47 55 47 52 47
Jet fuel 20 27 23 29 23
Aromatics 7 8 7 8 7
Other refinery products 72 55 59 56 59
------ ------ ------ ------ ------
Total refinery products volumes 229 258 237 254 237
====== ====== ====== ====== ======
REFINERY RUNS (thousand barrels per day)
Blended crude oil 190 236 218 238 218
Unfinished stock 55 50 45 48 45
------ ------ ------ ------ ------
Total 245 286 263 286 263
====== ====== ====== ====== ======
</TABLE>
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* NOTE: The results of LYONDELL-CITCO Refining Company Ltd.'s (LCR) 1996 and
earlier operations have been consolidated into the Company's financial
statements. Effective January 1, 1997, the Company will account for its
investment in LCR under the equity method of accounting. Proforma financial
information as of and for the year ended December 31, 1996 above presents the
Company's results of operations had the change from consolidation of LCR to
accounting for the Company's investment in LCR under the equity method of
accounting been effective January 1, 1996.
<PAGE>
LYONDELL PETROCHEMICAL COMPANY
SELECTED FINANCIAL INFORMATION (UNAUDITED)
MILLIONS OF DOLLARS
<TABLE>
<CAPTION>
Proforma*
December 31 December 31
1996 1996
----------- -----------
<S> <C> <C>
CONDENSED BALANCE SHEET
- -----------------------
Cash and cash equivalents $ 68 $ 56
Accounts receivable, inventories and other current assets 763 563
Fixed assets, net 2,270 893
Investment in affiliate 83
Receivable from affiliate 177
Other non-current assets 175 118
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Total assets $3,276 $1,890
====== ======
Current maturities of long-term debt and notes payable $ 172 $ 162
Other current liabilities 599 321
Long-term debt 1,194 744
Other liabilities and deferred credits 271 229
Minority interest 609 3
Stockholders' equity 431 431
------ ------
Total liabilities and stockholders' equity $3,276 $1,890
====== ======
</TABLE>
<TABLE>
<CAPTION>
Cash and cash equivalents Proforma*
for the twelve months ended December 31, 1996 December 31
Unrestricted Restricted Total 1996
-------------- ------------ ------- ------
<S> <C> <C> <C> <C>
CASH FLOW
- ---------
Net income $ 126 $ 126 $ 126
Non-cash transactions:
Depreciation and amortization 110 110 74
Deferred taxes 50 50 53
Minority interest 4 4 2
Income from equity investment (11)
Gain on sale of assets (30) (30) (30)
Change in working capital/other (28) (28) (92)
----- ----- -----
CASH FLOW FROM OPERATIONS 232 232 122
Additions to fixed assets:
Refinery upgrade project (2) $(471) (473)
Refinery segment - other (56) (56)
Petrochemical segment - other (80) (80) (80)
Proceeds from sales of assets 55 55 55
(Contributions and advances to) and distributions
from affiliate (72)
Minority owner investments:
Contributions 2 144 146
Reinvestments (13) 13 --
Lyondell contributions (12) 12 --
Lyondell loan to LCR (152) 152 --
Net repayments of short-term debt (43) (43) (53)
Borrowings of long-term debt 300 199 499 300
Repayments of long-term debt (150) (150) (150)
Dividends paid (72) (72) (72)
----- ----- -----
INCREASE (DECREASE) IN CASH, RESTRICTED CASH AND
CASH EQUIVALENTS: 65 (7) 58 50
Cash, restricted cash and cash equivalents at beginning of period 3 7 10 6
----- ----- ----- -----
Cash and cash equivalents at end of period $ 68 -- $ 68 $ 56
===== ===== ===== =====
</TABLE>
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*NOTE: The results of LYONDELL-CITGO Refining Company Ltd.'s (LCR) 1996 and
earlier operations have been consolidated into the Company's financial
statements. Effective January 1, 1997, the Company will account for its
investment in LCR under the equity method of accounting. Pro forma financial
information as of and for the year ended December 31, 1996 above presents the
Company's results of operations had the change from consolidation of LCR to
accounting for the Company's investment in LCR under the equity method of
accounting been effective January 1, 1996.
<PAGE>
EXHIBIT 99.2
[Logo of Lyondell Petrochemical appears here]
NEWS
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One Houston Center, 1221 McKinney Ave., P.O. Box 3646,
Houston, Texas 77253-3646 (713) 652-7200
FOR IMMEDIATE RELEASE
LYONDELL'S 1997 CAPITAL PROGRAM INCLUDES PLANS
TO ADD HIGH DENSITY POLYETHYLENE CAPACITY
HOUSTON, January 27, 1997 -- Lyondell Petrochemical Company (NYSE:LYO)
has announced plans to add 440 million pounds of Nissan technology high density
polyethylene (HDPE) resin capacity with a targeted start up no later than mid-
1999, to build on its position as a leading supplier of High-Molecular Weight
(HMW) HDPE film resins. This will bring the company's total HDPE capacity to
more than 2 billion pounds, making Lyondell one of the world's largest producers
of HDPE going into the 21st century. The company is currently evaluating
potential locations for the new unit.
Initial capital spending for this project is included in Lyondell's
1997 capital budget, which has been set at $132 million.
"The investment in HDPE expansion will provide us with capacity to
supply the rapidly growing film market where we are a strong participant, and
also benefits our olefins business through additional vertical integration. It
fits well with our existing strengths and logistics system as well as our long-
term strategic plans," said Dan F. Smith, Lyondell President and Chief Executive
Officer.
The increasing rate of demand for HMW film resin is expected to
outpace the growth rate of other resins. Lyondell is a leading producer of
these HMW film resins and is committed to building resin capacity to support our
customers' growth. These resins are used primarily in grocery and merchandise
carry-out bags as well as industrial and consumer trash bags.
The Nissan technology, already in use at the company's Matagorda
County (Texas) plant, provides Lyondell with a competitive economic advantage.
1
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Its multiple reactor, bi-modal product capability is key to Lyondell's ability
to provide a broad, yet unique product line offering. Lyondell also promotes
licensing of the Nissan technology under a joint agreement with Nissan Chemical
and Maruzen Polymer.
The 440 million pound expansion will provide the company with 40
percent more capacity to meet the projected growth of its film customers, as
well as incremental capacity for blow molding, injection molding and pipe
markets.
Currently, Lyondell's annual HDPE capacity includes 1.1 billion pounds
at the Matagorda plant and 475 million pounds at a plant in Victoria, Texas. A
recently announced debottlenecking project at Victoria will increase capacity at
that site to 575 million pounds by 1998. At a plant in LaPorte, Texas, Lyondell
recently completed a 100 million pound expansion of polypropylene (PP) capacity,
bringing total annual PP capacity to 400 million pounds. At that facility,
Lyondell also operates a low-density polyethylene unit with annual capacity of
150 million pounds.
Other major projects in the 1997 capital budget include the
debottlenecking of the Victoria HDPE capacity, and control and electrical
upgrades at the Channelview Petrochemical Complex and LYONDELL-CITGO Refining
Company, Ltd.
# # #
For information, contact:
Media - Jackie Wilson (713) 652-4596
Investors - Kevin DeNicola (713) 652-4590
2
<PAGE>
EXHIBIT 99.3
[Logo of Lyondell Petrochemical appears here]
NEWS
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One Houston Center, 1221 McKinney Ave., P.O. Box 3646,
Houston, Texas 77253-3646 (713) 652-7200
FOR IMMEDIATE RELEASE
LYONDELL PETROCHEMICAL COMPANY
DECLARES QUARTERLY DIVIDEND
HOUSTON, January 27, 1997 -- The Board of Directors of Lyondell
Petrochemical Company (NYSE:LYO) has declared a regular quarterly dividend of
$.225 per share of common stock, payable March 15 to stockholders of record
February 25.
<PAGE>
Exhibit 99.4
[LYONDELL LOGO APPEARS HERE]
NEWS
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One Houston Center, 1221 McKinney Ave., P.O. Box 3646,
Houston, Texas 77253-3646 (713) 652-72000
FOR IMMEDIATE RELEASE
LYONDELL REALIGNS INTO STRATEGIC BUSINESS UNITS TO FOCUS
ON GROWTH; PLANS TO REPORT FUTURE RESULTS BY SEGMENT
HOUSTON, January 27, 1997 -- Lyondell Petrochemical Company (NYSE:LYO) has
announced executive changes that are designed to strengthen the company's focus
on maximizing current opportunities while supporting strategic goals. The
changes realign the company into strategic business units focused on
petrochemicals and polymers, and enhance the focus on technology as a key value
driver.
"These changes will put the organizational structure in place to support
our strategic goals, enabling us to grow our petrochemicals and polymers
businesses and leverage our technology position. We have a broad and
experienced management team and this will enable us to maximize performance of
our major business lines while strengthening our focus on strategic growth
opportunities," said Dan F. Smith, Lyondell's President and Chief Executive
Officer. "As part of the realignment, we plan to report operating results by
petrochemical and polymers segments beginning with the first quarter of 1997."
Debra L. Starnes will head the petrochemicals business unit as Senior Vice
President, Petrochemicals. Her responsibilities will include manufacturing,
sales, marketing, commercial development and raw materials supply for
petrochemical products, including olefins, methanol, aromatics and specialty
chemicals. An executive with experience in broad aspects of Lyondell's business,
for the past two years Starnes has spearheaded the integration of the
high-density polyethylene business acquired in 1995
1
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into Lyondell's operations, and had oversight of the successful performance of
the Polymers Division.
W. Norman Phillips, Jr. will head the polymers business unit as Vice
President, Polymers. He will oversee manufacturing, sales, marketing and
commercial development for the company's growing polymers division, which
includes expanding operations in high-density polyethylene, polypropylene and
low-density polyethylene. Phillips has successfully guided Sales and Marketing
of Petrochemicals as Vice President since May 1995. He also brings extensive
experience in planning and manufacturing, having previously served as Vice
President of Channelview Operations.
Clifton B. Currin, Jr. has been named Vice President, Strategic
Development, to enhance focus on the company's strategic plan, including
internal and external growth opportunities and its investment in LYONDELL-CITGO
Refining Company Ltd. Currin has extensive experience in operations, sales and
marketing for Lyondell in both petrochemicals and refining. He has served as
Vice President, Petrochemical Business Management since 1995, which has included
primary responsibility for negotiating the proposed joint olefins venture.
J.R. Fontenot has been named Vice President, Technology to focus added
emphasis on innovative technologies that are critical to the success of the
business. He will oversee research and development for polymers and
petrochemicals as well as health, safety and environmental issues and the
company's technology licensing activities. Fontenot established the technology
function at Lyondell when the company was formed in 1985. He subsequently held
management positions in evaluations, olefins operations and process engineering.
He has served as Director of Technology since 1995, and has successfully
orchestrated the integration of technology operations from the Alathon
acquisition into Lyondell's licensing and technology activities.
2
