Highlights vs. 2Q1997:
-- Net income up $0.46 per share from second quarter, excluding
restructuring charge;
-- Higher sales volumes and margins for polyols and TDI;
-- Higher margins for MTBE;
-- Lower plant turnaround costs
NEWTOWN SQUARE, Pa., Oct. 20 /PRNewswire/ -- ARCO Chemical Company
(NYSE: RCM) reported a third quarter 1997 net loss of $37 million, or
$(0.38) per share. Included in third quarter 1997 earnings was the previously
announced after-tax charge of $116 million, or $1.20 per share, for the
company's ongoing restructuring program and other actions. Excluding this one
time charge, net income for the third quarter was $79 million, or $0.82 per
share, which compares to net income of $35 million, or $0.36 per share in the
second quarter 1997 and net income of $97 million, or $1.00 per share, in the
third quarter 1996.
Revenue for the third quarter 1997 was $1,004 million compared with $956
million in the second quarter and $1,035 million a year ago.
Excluding the charge, net income for the first nine months of 1997 was
$162 million, or $1.67 per share. This compares with $284 million, or $2.94
per share, for the first nine months of 1996. Revenue for the first nine
months of 1997 was $2,989 million compared with $2,976 million a year ago.
Commenting on the results, Alan R. Hirsig, President and Chief Executive
Officer, said, "Compared to second quarter 1997, we saw stronger volumes and
higher margins in our urethanes business along with lower plant turnaround
costs. In addition, MTBE margins in Europe and the U.S. rose seasonally due
to higher gasoline prices and strong demand for gasoline during the summer
driving season. We are encouraged by the improved performance of our overall
business. However, we recognize that our co-products, MTBE and styrene, are
cyclical commodities and their profitability outlook remains uncertain."
Plant turnaround costs in the third quarter were $8 million compared to
$23 million in the second quarter. The company anticipates turnaround costs
will be approximately $15 million in the fourth quarter of 1997.
The third quarter one-time after-tax charge of $116 million covers the
costs of the company's previously announced cost-reduction program and other
actions. The cost-reduction program, which is expected to yield annual cost
savings of $150 million, is part of a broader strategy to achieve greater
operational efficiencies and enhance shareholder value. This program will be
substantially in place by the end of 1998. The company does not expect any
additional charges to earnings for the restructuring program.
Third quarter 1997 results also include charges related to revisions in
the company's foreign exchange hedging strategy for its investment in a new
PO/SM plant in Rotterdam, the Netherlands. The company also recorded
unrealized foreign exchange losses resulting from weaker Asian currencies.
Comparing third quarter 1997 with the same period last year, net income
was lower by $134 million. The principal contributing factors were the one-
time charge and the foreign exchange charges.
Mr. Hirsig further commented on the company's continuing efforts to build
shareholder value, "To meet both our performance objectives and shareholders'
expectations, we will pursue opportunities to profitably grow our core PO and
derivatives business, while aggressively reducing our cost structure and
realizing efficiency improvements throughout our global organization. We
believe there is significant potential to build long-term value for our
shareholders in our business."
ARCO Chemical Company is a leading worldwide manufacturer and marketer
of propylene oxide and derivatives and other intermediate chemicals. Its
products are used in a wide range of consumer and industrial goods, including
automotive components, cushioning, paints and coatings, plastics, home
furnishings, engine coolants and reformulated gasoline.
Except for the historical information contained herein, the matters
discussed in this press release are forward-looking statements that are based
on certain assumptions and involve certain risks and uncertainties. Actual
results could differ materially based upon numerous factors, including the
factors identified on pages 14-15 in the Company's Report on Form 10-Q for the
quarterly period ended June 30, 1997.
ARCO CHEMICAL COMPANY
Selected Financial Data
(Millions of Dollars, except per share data)
Three Months Ended Nine Months End
September 30 September 30
(Unaudited)
1997 1996 1997 1996
Sales and other
operating revenues $1,004 $1,035 $2,989 $2,976
Costs and other
operating expenses 772 800 2,411 2,273
Gross profit 232 235 578 703
Selling, general and
administrative expenses 63 67 198 200
Research and development 20 22 61 61
Restructuring and
other charges 175 -- 175 --
Operating (loss) income (26) 146 144 442
Interest expense (19) (22) (61) (65)
Other (expense)income,
net(A) (12) 8 (14) 26
(Loss) income before
income taxes (57) 132 69 403
Income tax (benefit)
provision (20) 35 23 119
NET (LOSS) INCOME $(37) $97 $46 $284
Net (loss) income per
common share $(.38) $1.00 $.47 $2.94
(A) Primarily foreign exchange gains and losses, interest income, and
results from equity investments.
The effective full year tax rate for 1997 is expected to be 34%.
Depreciation/amortization expense for the nine months ended 9/30/97 and
9/30/96 was $172 million and $165 million, respectively.
ARCO CHEMICAL COMPANY
SALES VOLUME STATISTICS
Three Months Ended Nine Months Ended
September 30 September 30
1997 1996 1997 1996
Core Products (B) 1,060 895 3,036 2,624
(mm lbs.)
Co-products:
TBA and Derivatives 269 303 789 835
(mm gals.)
SM and Derivatives 607 730 1,942 2,080
(mm lbs.)
(B) Core products include PO, PO derivatives, TDI and ADI.
SOURCE ARCO Chemical Company
 back to top
CONTACT:
Sallie D. Anderson, Media Relations,
610-359-5773, or Sami Ahmad, Investor Relations, 610-359-3171,
both of ARCO Chemical
|
