01—Abstract
Summary
Summary of the 10-K filed March 18, 2011. Cited figures are marked; the original filing is the authoritative source.
LyondellBasell Industries N.V.
(LYB) reports results for the successor period from May 1 through December 31, 2010, following emergence from chapter 11 on April 30, 2010. Consolidated sales and other operating revenues were $27.68 billiona for the successor period and $13.47 billion for the predecessor period January 1 through April 30, 2010, compared with $30.83 billion in 2009 and $50.71 billion in 2008. Full-year 2010 revenues were $41.15 billion.
Successor-period net income attributable to the company was $1.59 billionb, or diluted EPS of $2.67 from continuing operations, while the predecessor period included a large $8.56 billion net income driven by reorganization gains. Results are not directly comparable across the two periods because of fresh-start accounting, which included a $7.47 billion write-down of property, plant and equipment. The company describes itself as the world's third largest independent chemical company by revenue, with five reportable segments: Olefins and Polyolefins Americas ($8.41 billion successor-period revenue), Olefins and Polyolefins Europe, Asia and International ($8.73 billion), Intermediates and Derivatives ($3.75 billion), Refining & Oxyfuels ($10.32 billion), and Technology ($365 million).
Successor-period operating income was $2.25 billionc. Cash and cash equivalents were $4.22 billion at December 31, 2010, and total debt was $6.08 billion. Operating cash flow was $2.96 billion for the successor period.
Management reported a material weakness in internal control over income tax accounting related to fresh-start accounting, and the company disclosed ongoing FCPA and sanctions-related investigations, a pending BASF lawsuit with a $170 milliond jury verdict that was reversed on appeal, and an Access Industries indemnity demand. The company has not paid dividends.
Its financing agreements limit dividends and share repurchases to $50 million per year plus 1.75% of net tangible assets through 2011. Three shareholders own about 52% of the ordinary shares, and the company's pension plans were underfunded by $1.17 billion at year-end 2010.
02—Key points
Key Highlights
- Successor-period (May 1 to December 31, 2010) sales and other operating revenues of $27.68 billion and operating income of $2.25 billion; full-year 2010 revenues were $41.15 billion.
- Successor-period net income attributable to the company of $1.59 billion, with diluted EPS from continuing operations of $2.67.
- Fresh-start accounting after emergence from chapter 11 on April 30, 2010 included a $7.47 billion write-down of property, plant and equipment, reducing depreciation and amortization in the successor period.
- Refining & Oxyfuels was the largest segment by revenue at $10.32 billion for the successor period, and O&P Europe, Asia and International was second at $8.73 billion.
- Cash and cash equivalents of $4.22 billion and total debt of $6.08 billion at December 31, 2010; successor-period operating cash flow was $2.96 billion.
- Management disclosed a material weakness in internal control over income tax accounting tied to fresh-start accounting, and the company has not yet paid dividends.
- Pending legal and regulatory matters include the BASF lawsuit (reversed on appeal and remanded), an Access Industries indemnity demand, and FCPA and sanctions investigations.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2010filed March 18, 2011Financial Statements
| Cash & Equivalents | $4.22B |
| Accounts Receivable | $3.48B |
| Inventory | $4.82B |
| Total Current Assets | $13.78B |
| Property, Plant & Equipment | $7.19B |
| Goodwill | $595.00M |
| Total Assets | $25.30B |
| Short-term Debt | $42.00M |
| Total Current Liabilities | $4.83B |
| Long-term Debt | $6.04B |
| Total Liabilities | $13.77B |
| Retained Earnings | $1.59B |
| Stockholders' Equity | $11.54B |
05—Questions
Frequently Asked Questions
Why are the 2010 results split into successor and predecessor periods?
The company emerged from chapter 11 on April 30, 2010 and adopted fresh-start accounting effective May 1, 2010. The filing presents the period before emergence as the predecessor and the period after as the successor, and states that the two are not comparable. The successor results include a $7.47 billion write-down of property, plant and equipment and lower depreciation as a result.
What drove the large predecessor-period net income?
The predecessor period from January 1 through April 30, 2010 reported net income of $8.50 billion. The filing attributes this mainly to reorganization items, including a $13.62 billion gain on discharge of liabilities subject to compromise, partly offset by a $6.09 billion charge for the change in net assets from fresh-start accounting.
Does the company pay dividends, and what limits them?
No dividends have been paid. Financing arrangements limit dividends and share repurchases to $50 million per year through 2011, and thereafter to the greater of $50 million per year and an amount based on net income. Dutch law and the discretion of the shareholders and boards also govern any future dividends.
What are the main legal and compliance risks disclosed?
The filing discloses a voluntary disclosure to the U.S. Department of Justice regarding a Kazakhstan-related payment that raises FCPA concerns, and a voluntary disclosure to the U.S. Treasury Department regarding business with Iran, Syria and Sudan. The BASF lawsuit's $170 million verdict was reversed on appeal and remanded, and Access Industries has demanded indemnification and $50 million in management fees. The company says it does not expect the BASF matter to have a material adverse effect on its financial position.
What is the company's debt and liquidity position?
At December 31, 2010, total debt was $6.08 billion, cash and cash equivalents were $4.22 billion, and unused availability under credit facilities was $1.88 billion. The $1.75 billion U.S. asset-based facility had $1.38 billion available, and the European receivables facility had about $503 million available. The company stated that it believes its resources are sufficient to meet its capital requirements.
06—Continue