Form 8-K LyondellBasell Industrie For: Jul 29

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

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): July 29, 2016

 

 

LYONDELLBASELL INDUSTRIES N.V.

(Exact Name of Registrant as Specified in Charter)

 

 

 

The Netherlands		001-34726		98-0646235
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

1221 McKinney St. Suite 300 Houston, Texas USA 77010		4th Floor, One Vine Street London W1J0AH The United Kingdom		Delftseplein 27E 3013 AA Rotterdam The Netherlands
		(Addresses of principal executive offices)

 

(713) 309-7200		+44 (0)207 220 2600		+31 (0)10 275 5500
(Registrant’s telephone numbers, including area codes)

 

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 2.02 Results of Operations and Financial Conditions.

On July 29, 2016, LyondellBasell Industries N.V. announced earnings results for the quarter ended June 30, 2016. A copy of our earnings release is attached as Exhibit 99.1 and incorporated into this Item 2.02 by reference.

The information in this Current Report on Form 8-K, including Exhibit 99.1 furnished herewith, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and will not be incorporated by reference into any filing under the Exchange Act or the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference.

Item 9.01 Financial Statements and Exhibits

 

(d)

Exhibits

 

99.1		Press Release dated July 29, 2016

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 

				LYONDELLBASELL INDUSTRIES N.V.
Date: July 29, 2016				By:		/s/ Jeffrey A. Kaplan
						Jeffrey A. Kaplan
						Executive Vice President

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Item 9.01 Financial Statements and Exhibits

 

99.1		Press Release dated July 29, 2016

Exhibit 99.1

 

NEWS RELEASE

FOR IMMEDIATE RELEASE

HOUSTON and LONDON, July 29, 2016

LyondellBasell Reports Second-Quarter 2016 Earnings

Second Quarter 2016 Highlights

 

•

Income from continuing operations: $1.1 billion ($1.0 billion excluding LCM1)

 

•

Diluted earnings per share: $2.56 per share ($2.45 per share excluding LCM)

 

•

EBITDA: $1.8 billion ($1.7 billion excluding LCM)

 

•

Share repurchases and dividends totaled $1.1 billion; repurchased 8.8 million shares during the second quarter, approximately 2% of the outstanding shares

 

•

Authorized a fourth share repurchase program for up to an additional 10% of shares over the next 18 months

 

•

Increased second quarter 2016 interim dividend by 9% to $0.85 per share

Comparisons with the prior quarter and second quarter 2015 are available in the following table:

Table 1 - Earnings Summary

 

		Three Months Ended												Six Months Ended
		June 30,				March 31,				June 30,				June 30,
Millions of U.S. dollars (except share data)		2016				2016				2015				2016				2015
Sales and other operating revenues		$	7,328			$	6,743			$	9,145			$	14,071			$	17,330
Net income(a)			1,091				1,030				1,329				2,121				2,493
Income from continuing operations(b)			1,092				1,030				1,326				2,122				2,493
Diluted earnings per share (U.S. dollars):
Net income(c)			2.56				2.37				2.82				4.93				5.22
Income from continuing operations(b)			2.56				2.37				2.81				4.93				5.22
Diluted share count (millions)			425				434				472				429				477
EBITDA(d)			1,783				1,807				2,186				3,590				4,138
Excluding LCM Impact:
LCM charges (benefits), pre-tax			(68	)			68				(9	)			—				83
Income from continuing operations(b)			1,045				1,077				1,320				2,122				2,545
Diluted earnings per share (U.S. dollars):
Income from continuing operations(b)			2.45				2.48				2.79				4.93				5.33
EBITDA(d)			1,715				1,875				2,177				3,590				4,221

 

(a)	Includes net loss attributable to non-controlling interests and income (loss) from discontinued operations, net of tax. See Table 10.

(b)	See Table 11 for charges and benefits to income from continuing operations.

(c)	Includes diluted earnings (loss) per share attributable to discontinued operations.

(d)	See the end of this release for an explanation of the Company’s use of EBITDA and Table 8 for reconciliations of EBITDA to net income and income from continuing operations.

 

1	LCM stands for “lower of cost or market.” An explanation of LCM and why we have excluded it from our financial information in this press release can be found at the end of this press release under “Information Related to Financial Measures.”

 

LyondellBasell Industries www.lyb.com				1

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LyondellBasell Industries (NYSE: LYB) today announced earnings from continuing operations for the second quarter 2016 of $1.1 billion, or $2.56 per share. Second quarter 2016 EBITDA was $1.8 billion. The quarter included a $68 million non-cash, pre-tax benefit for the impact of a lower of cost or market (LCM) inventory adjustment ($47 million after-tax benefit). Excluding the LCM adjustment, earnings from continuing operations during the second quarter totaled $1.0 billion, or $2.45 per share and EBITDA was $1.7 billion.

“Excluding the first quarter gain from the Petroken business sale and the impact of maintenance activities, overall second quarter results were similar to the first quarter. Balance across our business portfolio enabled us to generate earnings in excess of $1 billion and earnings per share of $2.56. Industry trends generally developed as we anticipated resulting in continued strong polyolefin performance and seasonally stronger fuel margins. However, due to an April upset at our refinery, the benefits of higher fuel margins were only seen in our Oxyfuels business,” said Bob Patel, LyondellBasell’s CEO.

OUTLOOK

“During the third quarter, chemical and polyolefin markets thus far have generally been well balanced with trends similar to the second quarter. However, refining and oxyfuel margins have declined. Within our system, refinery repairs have been completed, and the Corpus Christi ethylene plant expansion is expected to be completed by the end of the third quarter. During the second half of the year our plant maintenance schedule continues to be significant with turnarounds at additional O&P and I&D facilities. Although our inventory and scheduling efforts will only partially mitigate the production impact during this heavy planned maintenance period, we look forward to the continuing returns from these investments in long-term reliability,” Patel said.

LYONDELLBASELL BUSINESS RESULTS DISCUSSION BY REPORTING SEGMENT

LyondellBasell manages operations through five operating segments: 1) Olefins & Polyolefins – Americas; 2) Olefins & Polyolefins – Europe, Asia and International (EAI); 3) Intermediates & Derivatives; 4) Refining; and 5) Technology.

The following comments and analysis represent underlying business activity and are exclusive of LCM inventory adjustments.

 

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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 2 - O&P–Americas Financial Overview

 

		Three Months Ended												Six Months Ended
		June 30,				March 31,				June 30,				June 30,
Millions of U.S. dollars		2016				2016				2015				2016				2015
Operating income		$	646			$	707			$	920			$	1,353			$	1,854
EBITDA			754				878				1,014				1,632				2,045
LCM charges (benefits), pre-tax			—				—				(21	)			—				22
EBITDA excluding LCM adjustments			754				878				993				1,632				2,067

Three months ended June 30, 2016 versus three months ended March 31, 2016 – EBITDA decreased $124 million for the second quarter 2016 versus the first quarter 2016. First quarter 2016 results included a $57 million gain on the sale of the Petroken polypropylene business. Results declined by $67 million exclusive of the Petroken gain. Compared to the prior period, underlying olefin results were relatively unchanged as margins increased while customer and internal derivative maintenance resulted in reduced ethylene volumes. Combined polyolefin results continued to be strong despite declining by approximately $60 million. Polyethylene sales volumes declined by 8% due to plant maintenance. Polyethylene spreads increased by approximately 1 cent per pound. Polypropylene spreads declined by approximately 2 cents per pound and volumes were down 5% primarily due to the first quarter sale of Petroken. Joint venture equity income declined by $2 million.

Three months ended June 30, 2016 versus three months ended June 30, 2015 – EBITDA decreased $239 million versus the second quarter 2015, excluding an unfavorable $21 million quarter to quarter variance as a result of the LCM inventory adjustments. Olefin results drove the decline as quarterly EBITDA decreased approximately $280 million versus the prior year primarily due to lower ethylene margin. Combined polyolefin results increased approximately $30 million versus the prior year period. Polyethylene results declined due to maintenance while margins were relatively unchanged. Polypropylene benefitted from a spread improvement of approximately 10 cents per pound and volumes were lower in 2016 due to the first quarter Petroken sale. Joint venture equity income improved by $12 million consistent with strong polypropylene margins.

 

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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 3 - O&P–EAI Financial Overview

 

		Three Months Ended												Six Months Ended
		June 30,				March 31,				June 30,				June 30,
Millions of U.S. dollars		2016				2016				2015				2016				2015
Operating income		$	423			$	358			$	359			$	781			$	595
EBITDA			576				509				492				1,085				849
LCM charges (benefits), pretax			(40	)			40				—				—				—
EBITDA excluding LCM adjustments			536				549				492				1,085				849

Three months ended June 30, 2016 versus three months ended March 31, 2016 – EBITDA decreased by $13 million versus the first quarter 2016, excluding a favorable $80 million quarter to quarter variance as a result of LCM inventory adjustments. First quarter 2016 results included a $21 million gain on the sale of the Petroken polypropylene compounding business. Exclusive of the Petroken sale, results were relatively unchanged. Olefin results decreased approximately $30 million on relatively unchanged volumes. Combined polyolefin results were steady. Polypropylene compounds and polybutene-1 results increased by approximately $10MM. Equity income from joint ventures increased by $27 million consistent with strong polypropylene margins.

Three months ended June 30, 2016 versus three months ended June 30, 2015 – EBITDA increased by $44 million versus the second quarter 2015, excluding a favorable $40 million quarter to quarter variance as a result of LCM inventory adjustments. Olefin results declined by approximately $60 million due to a 2 cent per pound decrease in margin combined with reduced volumes related to planned maintenance at our Berre, France facility. Combined polyolefin results increased approximately $65 million as spreads for polyethylene improved by approximately 1 cent per pound while polypropylene spreads improved by approximately 4 cents per pound. Combined polyolefin volumes increased by approximately 4%. Polypropylene compounds and polybutene-1 results improved by approximately $10 million. Equity income from joint ventures increased by $17 million.

 

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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 (including methanol), ethylene oxide and its derivatives, and oxyfuels.

Table 4 - I&D Financial Overview

 

		Three Months Ended												Six Months Ended
		June 30,				March 31,				June 30,				June 30,
Millions of U.S. dollars		2016				2016				2015				2016				2015
Operating income		$	327			$	255			$	405			$	582			$	676
EBITDA			397				326				466				723				803
LCM charges (benefits), pre-tax			(28	)			28				17				—				61
EBITDA excluding LCM adjustments			369				354				483				723				864

Three months ended June 30, 2016 versus three months ended March 31, 2016 – EBITDA increased $15 million versus the first quarter 2016, excluding a favorable $56 million quarter to quarter variance as a result of LCM adjustments related to inventory. Results for PO and PO derivatives declined by approximately $20 million partially due to product sales mix. Intermediate chemicals results improved by approximately $10 million, primarily due to an approximately 4 cents per pound improvement in styrene margin. This increase was partially offset by lower methanol margins. Oxyfuels improved approximately $30 million consistent with seasonal margin improvements. Equity income from joint ventures was relatively unchanged.

Three months ended June 30, 2016 versus three months ended June 30, 2015 – EBITDA decreased $114 million versus the second quarter 2015, excluding a favorable $45 million quarter to quarter variance as a result of LCM inventory adjustments. Results for PO and PO derivatives were relatively unchanged. Intermediate chemicals results declined by approximately $45 million primarily due to reduced methanol margins and lower EO/EG results partially offset by higher styrene sales volumes. Oxyfuels results decreased approximately $55 million relative to a very strong second quarter 2015. Equity income from joint ventures decreased by $2 million.

 

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Refining – The primary products of this segment include gasoline, diesel fuel, heating oil, jet fuel, and petrochemical raw materials.

Table 5 - Refining Financial Overview

 

		Three Months Ended												Six Months Ended
		June 30,				March 31,				June 30,				June 30,
Millions of U.S. dollars		2016				2016				2015				2016				2015
Operating income (loss)		($	53	)		($	30	)		$	119			($	83	)		$	193
EBITDA			(13	)			14				159				1				308
LCM charges (benefits), pre-tax			—				—				(5	)			—				—
EBITDA excluding LCM adjustments			(13	)			14				154				1				308

Three months ended June 30, 2016 versus three months ended March 31, 2016 – EBITDA decreased $27 million versus the first quarter 2016. The Houston refinery operated at 183,000 barrels per day primarily due to the refinery fire. The Maya 2-1-1 industry benchmark crack spread increased by $3.21 per barrel, averaging $21.07 per barrel. Despite the improved industry crack spreads, spreads at the Houston Refinery did not improve due to operational limitations.

Three months ended June 30, 2016 versus three months ended June 30, 2015 – EBITDA decreased $167 million versus the second quarter 2015, excluding an unfavorable $5 million quarter to quarter variance as a result of LCM inventory adjustments. Second quarter 2016 throughput was down by 72,000 barrels per day from the prior year period due to the refinery fire and subsequent downtime for repairs. The Maya 2-1-1 industry benchmark crack spread decreased by $2.91 per barrel.

Technology Segment – The principal products of the Technology segment include polyolefin catalysts and production process technology licenses and related services.

Table 6 - Technology Financial Overview

 

		Three Months Ended												Six Months Ended
		June 30,				March 31,				June 30,				June 30,
Millions of U.S. dollars		2016				2016				2015				2016				2015
Operating income		$	62			$	73			$	45			$	135			$	109
EBITDA			73				83				57				156				133

Three months ended June 30, 2016 versus three months ended March 31, 2016 – EBITDA decreased by $10 million due to lower licensing revenue.

Three months ended June 30, 2016 versus three months ended June 30, 2015 – EBITDA increased by $16 million due to improved catalyst and licensing results.

 

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Capital Spending and Cash Balances

Capital expenditures, including growth projects, maintenance turnarounds, catalyst and information technology-related expenditures, were $563 million during the second quarter 2016. Our cash and liquid investment balance was $2.5 billion at June 30, 2016. We repurchased 8.8 million ordinary shares during the second quarter 2016. There were 419 million common shares outstanding as of June 30, 2016. The company paid dividends of $362 million during the second quarter of 2016.

CONFERENCE CALL

LyondellBasell will host a conference call July 29 at 11 a.m. EDT. Participants on the call will include Chief Executive Officer Bob Patel, Executive Vice President and Chief Financial Officer Thomas Aebischer and Vice President of Investor Relations Doug Pike.

The toll-free dial-in number in the U.S. is 888-677-1826. A complete listing of toll-free numbers by country is available at www.lyb.com/teleconference for international callers. The pass code for all numbers is 6934553.

The slides and webcast that accompany the call will be available at http://www.lyb.com/earnings.

A replay of the call will be available from 2 p.m. EDT July 29 until August 29 at 12:59 a.m. EDT. The replay dial-in numbers are 866-453-2318 (U.S.) and +1 203-369-1226 (international). The pass code for each is 72916.

ABOUT LYONDELLBASELL

LyondellBasell (NYSE: LYB) is one of the world’s largest plastics, chemical and refining companies and a member of the S&P 500. LyondellBasell (www.lyb.com) manufactures products at 57 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 parts, home furnishings, construction materials and biofuels.

 

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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, natural gas, and associated natural gas liquids; 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; our ability to successfully execute projects and growth strategies; 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, 2015, which can be found at www.lyb.com on the Investor Relations page and on the Securities and Exchange Commission’s website at www.sec.gov.

INFORMATION RELATED TO FINANCIAL 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. The non-GAAP measures we have presented include income from continuing operations excluding LCM, diluted earnings per share excluding LCM, EBITDA and EBITDA excluding LCM. LCM stands for “lower of cost or market,” which is an accounting rule consistent with GAAP related to the valuation of inventory. Our inventories are stated at the lower of cost or market. Cost is determined using the last-in, first-out (“LIFO”) inventory valuation methodology, which means that the most recently incurred costs are charged to cost of sales and inventories are valued at the earliest acquisition costs. Market is determined based on an assessment of the current estimated replacement cost and selling price of the inventory. In periods where the market price of our inventory declines substantially, cost values of inventory may be higher than the market value, which results in us writing down the value of inventory to market value in accordance with the LCM rule, consistent with GAAP. This adjustment is related to our use of LIFO accounting and the recent decline in pricing for many

 

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of our raw material and finished goods inventories. We report our financial results in accordance with U.S. generally accepted accounting principles, but believe that certain non-GAAP financial measures, such as EBITDA and earnings and EBITDA excluding LCM, 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. 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.

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. We calculate EBITDA as income from continuing operations plus interest expense (net), provision for (benefit from) income taxes, and depreciation & amortization. EBITDA should not be considered an alternative to profit or operating profit for any period as an indicator of our performance, or as an alternative to operating cash flows as a measure of our liquidity. We have also presented financial information herein exclusive of adjustments for LCM.

Quantitative reconciliations of EBITDA to net income, the most comparable GAAP measure, are provided in Table 8 at the end of this release.

OTHER FINANCIAL MEASURE PRESENTATION NOTES

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.

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Source: LyondellBasell Industries

Media Contact:        Faye Eson +1 713-309-7575

Investor Contact:     Douglas J. Pike +1 713-309-7141

 

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Table 7 - Reconciliation of Segment Information to Consolidated Financial Information ^(a)

 

		2015																				2016
(Millions of U.S. dollars)		Q1				Q2				Q3				Q4				Total				Q1				Q2				YTD
Sales and other operating revenues:
Olefins & Polyolefins - Americas		$	2,551			$	2,679			$	2,516			$	2,218			$	9,964			$	2,115			$	2,211			$	4,326
Olefins & Polyolefins - EAI			2,911				3,061				2,932				2,672				11,576				2,578				2,721				5,299
Intermediates & Derivatives			1,918				2,159				2,039				1,656				7,772				1,702				1,769				3,471
Refining			1,607				2,102				1,693				1,155				6,557				955				1,289				2,244
Technology			136				107				100				122				465				132				129				261
Other/elims			(938	)			(963	)			(946	)			(752	)			(3,599	)			(739	)			(791	)			(1,530	)
Continuing Operations		$	8,185			$	9,145			$	8,334			$	7,071			$	32,735			$	6,743			$	7,328			$	14,071
Operating income (loss):
Olefins & Polyolefins - Americas		$	934			$	920			$	740			$	662			$	3,256			$	707			$	646			$	1,353
Olefins & Polyolefins - EAI			236				359				412				302				1,309				358				423				781
Intermediates & Derivatives			271				405				403				145				1,224				255				327				582
Refining			74				119				52				(101	)			144				(30	)			(53	)			(83	)
Technology			64				45				34				54				197				73				62				135
Other			(4	)			(3	)			9				(10	)			(8	)			(3	)			(2	)			(5	)
Continuing Operations		$	1,575			$	1,845			$	1,650			$	1,052			$	6,122			$	1,360			$	1,403			$	2,763
Depreciation and amortization:
Olefins & Polyolefins - Americas		$	86			$	85			$	87			$	95			$	353			$	90			$	88			$	178
Olefins & Polyolefins - EAI			55				54				54				56				219				55				58				113
Intermediates & Derivatives			60				56				55				62				233				70				69				139
Refining			74				40				41				41				196				43				40				83
Technology			12				12				11				11				46				10				11				21
Continuing Operations		$	287			$	247			$	248			$	265			$	1,047			$	268			$	266			$	534
EBITDA: (b)
Olefins & Polyolefins - Americas		$	1,031			$	1,014			$	841			$	775			$	3,661			$	878			$	754			$	1,632
Olefins & Polyolefins - EAI			357				492				549				427				1,825				509				576				1,085
Intermediates & Derivatives			337				466				460				212				1,475				326				397				723
Refining			149				159				93				(59	)			342				14				(13	)			1
Technology			76				57				45				65				243				83				73				156
Other			2				(2	)			13				(26	)			(13	)			(3	)			(4	)			(7	)
Continuing Operations		$	1,952			$	2,186			$	2,001			$	1,394			$	7,533			$	1,807			$	1,783			$	3,590
Capital, turnarounds and IT deferred spending:
Olefins & Polyolefins - Americas		$	149			$	140			$	159			$	220			$	668			$	303			$	339			$	642
Olefins & Polyolefins - EAI			38				27				49				72				186				81				60				141
Intermediates & Derivatives			76				76				135				154				441				76				80				156
Refining			33				28				23				24				108				57				71				128
Technology			6				3				7				8				24				6				9				15
Other			4				4				—				5				13				4				4				8
Continuing Operations		$	306			$	278			$	373			$	483			$	1,440			$	527			$	563			$	1,090

 

(a)

EBITDA as presented herein includes the impacts of pre-tax LCM charges of $92 million, $181 million and $284 million for the first, third and fourth quarters of 2015, respectively. EBITDA for the second quarter of 2015 includes a pre-tax LCM benefit of $9 million for the partial reversal of the first quarter 2015 LCM adjustment. EBITDA for the first quarter of 2016 includes a pre-tax LCM adjustment of $68 million and a $78 million pre-tax gain on the sale of our wholly owned Argentine subsidiary. Second quarter 2016 EBITDA includes a pre-tax LCM benefit of $68 million for the reversal of the first quarter 2016 LCM adjustment due to price recoveries during the period. See Tables 2 through 6 for LCM adjustments recorded for each segment.

(b)	See Table 8 for EBITDA calculation.

 

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Table 8 - EBITDA Calculation

 

		2015																				2016
(Millions of U.S. dollars)		Q1				Q2				Q3				Q4				Total				Q1				Q2				YTD
Net income(a)		$	1,164			$	1,329			$	1,186			$	795			$	4,474			$	1,030			$	1,091			$	2,121
(Income) loss from discontinued operations, net of tax			3				(3	)			3				2				5				—				1				1
Income from continuing operations(a)			1,167				1,326				1,189				797				4,479				1,030				1,092				2,122
Provision for income taxes			440				541				487				262				1,730				432				346				778
Depreciation and amortization			287				247				248				265				1,047				268				266				534
Interest expense, net			58				72				77				70				277				77				79				156
EBITDA(b)		$	1,952			$	2,186			$	2,001			$	1,394			$	7,533			$	1,807			$	1,783			$	3,590

 

(a)

Amounts presented herein include after-tax LCM charges of $58 million, $114 million and $185 million in the first, third and fourth quarters of 2015, respectively. The second quarter of 2015 includes an after-tax benefit of $6 million for the partial reversal of the first quarter 2015 LCM adjustment resulting from price recoveries during the period. The first quarter of 2016 includes an after-tax LCM charge of $47 million and a $78 million after-tax gain related to the sale of our wholly owned Argentine subsidiary. The second quarter of 2016 includes an after-tax benefit of $47 million for the reversal of the first quarter 2016 LCM adjustment due to price recoveries during the period.

(b)

EBITDA as presented herein includes the impact of pre-tax LCM charges of $92 million, $181 million and $284 million for the first, third and fourth quarters of 2015, respectively. EBITDA for the second quarter of 2015 includes a pre-tax LCM benefit of $9 million for the partial reversal of the first quarter 2015 LCM adjustment. The first quarter of 2016 includes a pre-tax LCM charge of $68 million and a pre-tax gain of $78 million on the sale of our wholly owned Argentine subsidiary. Second quarter 2016 EBITDA includes a pre-tax LCM benefit of $68 million for the reversal of the first quarter 2016 LCM adjustment.

 

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Table 9 - Selected Segment Operating Information

 

		2015																				2016
		Q1				Q2				Q3				Q4				Total				Q1				Q2				YTD
Olefins and Polyolefins - Americas
Volumes (million pounds)
Ethylene produced			2,364				2,415				2,514				2,391				9,684				2,392				1,899				4,291
Propylene produced			805				740				697				798				3,040				832				748				1,580
Polyethylene sold			1,473				1,575				1,577				1,578				6,203				1,554				1,426				2,980
Polypropylene sold			627				698				662				606				2,593				612				582				1,194
Benchmark Market Prices
West Texas Intermediate crude oil (USD per barrel)			48.57				57.95				45.36				42.16				48.71				33.63				46.01				39.97
Light Louisiana Sweet (“LLS”) crude oil (USD per barrel)			52.84				62.93				50.20				43.53				52.36				35.34				47.39				41.51
Natural gas (USD per million BTUs)			2.76				2.76				2.72				2.11				2.57				1.93				2.06				1.99
U.S. weighted average cost of ethylene production (cents/pound)			10.2				9.7				9.6				10.9				10.1				9.8				12.0				10.9
U.S. ethylene (cents/pound)			34.8				34.2				30.3				27.5				31.7				26.7				30.3				28.5
U.S. polyethylene [high density] (cents/pound)			65.7				67.3				64.3				57.0				63.6				52.3				59.0				55.7
U.S. propylene (cents/pound)			49.7				41.7				33.2				31.3				39.0				31.0				32.7				31.8
U.S. polypropylene [homopolymer] (cents/pound)			67.7				61.7				59.3				62.7				62.8				67.8				61.7				64.8
Olefins and Polyolefins - Europe, Asia, International
Volumes (million pounds)
Ethylene produced			1,007				1,047				944				978				3,976				950				941				1,891
Propylene produced			600				632				575				575				2,382				555				577				1,132
Polyethylene sold			1,533				1,360				1,304				1,379				5,576				1,434				1,386				2,820
Polypropylene sold			1,817				1,529				1,673				1,757				6,776				1,773				1,617				3,390
Benchmark Market Prices (€0.01 per pound)
Western Europe weighted average cost of ethylene production			22.9				23.2				14.4				22.5				20.8				16.3				21.2				18.8
Western Europe ethylene			39.3				47.1				46.6				41.4				43.6				38.4				41.1				39.7
Western Europe polyethylene [high density]			45.2				60.6				61.2				56.9				56.0				55.4				57.6				56.5
Western Europe propylene			37.1				44.4				41.7				31.0				38.5				26.3				28.8				27.6
Western Europe polypropylene [homopolymer]			49.8				62.5				59.3				47.4				54.7				46.5				49.5				48.0
Intermediates and Derivatives
Volumes (million pounds)
Propylene oxide and derivatives			870				751				697				682				3,000				793				743				1,536
Ethylene oxide and derivatives			268				312				282				237				1,099				301				233				534
Styrene monomer			903				735				904				889				3,431				917				933				1,850
Acetyls			547				810				733				623				2,713				702				821				1,523
TBA Intermediates			433				321				421				371				1,546				415				391				806
Volumes (million gallons)
MTBE/ETBE			229				299				268				258				1,054				270				278				548
Benchmark Market Margins (cents per gallon)
MTBE - Northwest Europe			64.0				106.0				119.0				49.8				85.1				44.4				78.7				61.7
Refining
Volumes (thousands of barrels per day)
Heavy crude oil processing rate			241				255				249				206				238				186				183				184
Benchmark Market Margins
Light crude oil - 2-1-1			15.02				16.42				15.29				9.44				14.04				8.67				11.52				10.13
Light crude oil - Maya differential			8.72				7.56				7.48				9.11				8.26				9.19				9.55				9.37

Source: LYB and third party consultants

Note: Benchmark market prices for U.S. and Western Europe polyethylene and polypropylene reflect discounted prices. Volumes presented represent third party sales of selected key products.

 

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Table 10 - Unaudited Income Statement Information

 

		2015																				2016
(Millions of U.S. dollars)		Q1				Q2				Q3				Q4				Total				Q1				Q2				YTD
Sales and other operating revenues		$	8,185			$	9,145			$	8,334			$	7,071			$	32,735			$	6,743			$	7,328			$	14,071
Cost of sales(a)			6,379				7,047				6,465				5,792				25,683				5,166				5,702				10,868
Selling, general and administrative expenses			205				228				194				201				828				193				199				392
Research and development expenses			26				25				25				26				102				24				24				48
Operating income(a)			1,575				1,845				1,650				1,052				6,122				1,360				1,403				2,763
Income from equity investments			69				90				93				87				339				91				117				208
Interest expense, net			(58	)			(72	)			(77	)			(70	)			(277	)			(77	)			(79	)			(156	)
Other income (expense), net(b)			21				4				10				(10	)			25				88				(3	)			85
Income from continuing operations before income taxes(a) (b)			1,607				1,867				1,676				1,059				6,209				1,462				1,438				2,900
Provision for income taxes			440				541				487				262				1,730				432				346				778
Income from continuing operations(c)			1,167				1,326				1,189				797				4,479				1,030				1,092				2,122
Income (loss) from discontinued operations, net of tax			(3	)			3				(3	)			(2	)			(5	)			—				(1	)			(1	)
Net income(c)			1,164				1,329				1,186				795				4,474				1,030				1,091				2,121
Net (income) loss attributable to non-controlling interests			2				1				(1	)			—				2				—				—				—
Net income attributable to the Company shareholders(c)		$	1,166			$	1,330			$	1,185			$	795			$	4,476			$	1,030			$	1,091			$	2,121

 

(a)

Amounts presented herein include pre-tax LCM charges of $92 million, $181 million and $284 million for the first, third and fourth quarters of 2015, respectively. The second quarter of 2015 includes a pre-tax LCM benefit of $9 million for the partial reversal of the first quarter 2015 LCM adjustment. The first quarter of 2016 includes a pre-tax LCM charge of $68 million. Second quarter 2016 EBITDA includes a pre-tax LCM benefit of $68 million for the partial reversal of the first quarter 2016 LCM adjustment due to price recoveries during the period.

(b)	Includes a pre-tax gain of $78 million on the sale of our wholly owned Argentine subsidiary in the second quarter of 2016.

(c)

Amounts presented herein include after-tax LCM charges of $58 million, $114 million and $185 million in the first, third and fourth quarters of 2015, respectively. The second quarter of 2015 includes an after-tax benefit of $6 million for the partial reversal of the first quarter 2015 LCM adjustment resulting from price recoveries during the period. The first quarter of 2016 includes an after-tax LCM charge of $47 million and an after-tax gain of $78 million on the sale of our wholly owned Argentine subsidiary. Second quarter 2016 EBITDA includes an after tax LCM benefit of $47 million for the reversal of the first quarter 2016 LCM adjustment.

 

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Table 11 - Charges (Benefits) Included in Income from Continuing Operations

 

		2015																				2016
Millions of U.S. dollars (except share data)		Q1				Q2				Q3				Q4				Total				Q1				Q2				YTD
Pretax charges (benefits):
Gain on sale of wholly owned subsidiary		$	—			$	—			$	—			$	—			$	—			$	(78	)			—				(78	)
Lower of cost or market inventory adjustment			92				(9	)			181				284				548				68			$	(68	)		$	—
Emission allowance credits, amortization			35				—				—				—				35				—				—				—
Total pretax charges (benefits)			127				(9	)			181				284				583				(10	)			(68	)			(78	)
Provision for (benefit from) income tax related to these items			(47	)			3				(67	)			(99	)			(210	)			(21	)			21				—
After-tax effect of net charges (benefits)		$	80			$	(6	)		$	114			$	185			$	373			$	(31	)		$	(47	)		$	(78	)
Effect on diluted earnings per share		$	(0.17	)		$	0.02			$	(0.25	)		$	(0.42	)		$	(0.80	)		$	0.07			$	0.11			$	0.18

 

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Table 12 - Unaudited Cash Flow Information

 

		2015																				2016
(Millions of U.S. dollars)		Q1				Q2				Q3				Q4				Total				Q1				Q2				YTD
Net cash provided by operating activities		$	1,468			$	1,446			$	1,768			$	1,160			$	5,842			$	1,300			$	1,261			$	2,561
Net cash provided by (used in) investing activities			(443	)			(727	)			67				52				(1,051	)			(597	)			(471	)			(1,068	)
Net cash used in financing activities			(401	)			(1,021	)			(1,684	)			(1,744	)			(4,850	)			(333	)			(1,039	)			(1,372	)

 

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Table 13 - Unaudited Balance Sheet Information

 

(Millions of U.S. dollars)		March 31, 2015				June 30, 2015				September 30, 2015				December 31, 2015				March 31, 2016				June 30, 2016
Cash and cash equivalents		$	1,616			$	1,325			$	1,474			$	924			$	1,318			$	1,060
Restricted cash			2				3				1				7				4				4
Short-term investments			1,478				1,989				1,602				1,064				1,332				1,023
Accounts receivable, net			3,089				3,373				2,924				2,517				2,683				2,806
Inventories			4,267				4,179				4,138				4,051				3,978				4,009
Prepaid expenses and other current assets(a)			1,195				1,121				1,059				1,226				1,009				1,081
Total current assets			11,647				11,990				11,198				9,789				10,324				9,983
Property, plant and equipment, net			8,430				8,636				8,793				8,991				9,373				9,681
Investments and long-term receivables:
Investment in PO joint ventures			373				357				357				397				398				390
Equity investments			1,581				1,612				1,602				1,608				1,734				1,610
Other investments and long-term receivables			38				126				125				122				18				18
Goodwill			533				543				543				536				548				542
Intangible assets, net			695				671				644				640				618				588
Other assets(a)			637				600				605				674				559				623
Total assets		$	23,934			$	24,535			$	23,867			$	22,757			$	23,572			$	23,435
Current maturities of long-term debt		$	4			$	3			$	3			$	4			$	4			$	4
Short-term debt			514				582				573				353				594				616
Accounts payable			2,631				2,755				2,450				2,182				2,243				2,357
Accrued liabilities			1,482				1,455				1,784				1,810				1,600				1,374
Deferred income taxes(a)			429				434				383				—				—				—
Total current liabilities			5,060				5,229				5,193				4,349				4,441				4,351
Long-term debt			7,677				7,658				7,674				7,671				8,504				8,485
Other liabilities			2,038				2,063				2,044				2,036				2,125				2,143
Deferred income taxes(a)			1,653				1,635				1,604				2,127				2,134				2,149
Stockholders’ equity			7,478				7,927				7,328				6,550				6,344				6,283
Non-controlling interests			28				23				24				24				24				24
Total liabilities and stockholders’ equity		$	23,934			$	24,535			$	23,867			$	22,757			$	23,572			$	23,435

 

(a)	Our prospective adoption of ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, in December 2015 resulted in the classification of our deferred taxes as of December 2015 as noncurrent.

 

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