NEWTOWN SQUARE, Pa., Oct. 17 /PRNewswire/ -- ARCO Chemical Company
(NYSE: RCM) today reported results for the quarter ending September 30, 1996.
Third quarter net income was $97 million, or $1.00 per share, compared with
net income of $117 million, or $1.21 per share, in the third quarter 1995.
Net income for the second quarter 1996 was $81 million, or $0.84 per share.
Revenue for the third quarter 1996 was $1,035 million compared with $999
million a year ago and $959 million in the second quarter.
    Commenting on the quarter, Alan R. Hirsig, president and chief executive
officer, said, "The fundamentals of our businesses were relatively unchanged
from the second quarter.  However, global demand for polyurethanes in
automobiles and household furnishings is beginning to improve.  We saw some
modest improvement in European demand which helped to boost our volumes in the
quarter.  We also continued to experience rising raw material costs which
squeezed our margins for certain products including, in particular, styrene
monomer."
    The primary factors contributing to the increase in net income from the
second quarter 1996 were:
    -- Higher volumes of propylene oxide (PO) and derivatives, largely due to
an improving European economy and customer inventory building in anticipation
of derivative price increases.
    -- Higher volumes of methyl tertiary butyl ether (MTBE) reflecting
stronger demand as many U.S. customers replenished low MTBE inventories.
    -- A lower tax rate for the quarter, primarily due to the utilization of
prior year capital losses.  The company has revised its 1996 full-year
estimated effective tax rate from 31.0% to 29.6%.
     Comparing results with the third quarter 1995, net income fell by $20
million primarily due to lower styrene monomer margins and, to a lesser
extent, lower PO derivative margins.  The lower margins were partly offset by
higher volumes for most products.
    During the third quarter, the company completed the sale of its plastics
unit to Nova Chemicals Inc., as anticipated.
    Subsequent to the third quarter 1996, consistent with the company's
strategy, they announced two important projects.
    ARCO Chemical reported that it reached agreement to purchase Olin
Corporation's isocyanates businesses.  This acquisition, together with the
company's European toluene diisocyanate (TDI) business, would make ARCO
Chemical the second largest TDI marketer worldwide.  The purchase has received
approval from the Boards of Directors of both companies and, upon completion
of regulatory approval, is expected to close in late 1996 or early 1997.
    The company also announced the start of engineering on a 250MM lbs./year
grass roots butanediol plant to be built in Rotterdam by the year 2001, and
plans to expand existing butanediol capacity in Channelview, Texas from 75MM
lbs./year to 120MM lbs./year in late 1997.  Butanediol (BDO) is a versatile PO
derivative used in engineering resins, elastomers and solvents.
    Mr. Hirsig commented on the company's recent announcements saying that,
"ARCO Chemical Company's strategy is to grow our PO and derivatives business
where we have technological, cost or market advantages.  The sale of the
plastics business to Nova Chemicals, the purchase of Olin Corporation's
isocyanates businesses, and our proposed expansion of butanediol capacity
demonstrate our commitment to this focus."
    ARCO Chemical Company is a leading worldwide manufacturer and marketer
of propylene oxide and derivatives and other intermediate chemicals and
specialty products.  Its products are used in a wide range of consumer and
industrial goods, including automotive components, cushioning, paints and
coatings, plastics, home furnishings, antifreeze and reformulated gasoline.

                         ARCO CHEMICAL COMPANY
                        Selected Financial Data
               (Millions of Dollars except per share data)

                                         Three Months Ended  Nine Months Ended
                                            September 30    September 30
                                                     (Unaudited)

                                          1996   1995    1996   1995
   Total revenues                       $1,035   $999  $2,976 $3,289
    Costs and other operating expenses     800    729   2,273  2,395
           Gross profit                    235    270     703    894
    Selling, general and
        administrative expenses             67     70     200    203
    Research and development                22     20      61     58
           Operating income                146    180     442    633
    Interest expense                      (22)   (23)    (65)   (67)
    Other income, net(A)                     8      4      26     20
        Income before income taxes         132    161     403    586
    Provision for income taxes              35     44     119    193
              NET INCOME                   $97   $117    $284   $393
    Net income per common share          $1.00  $1.21   $2.94  $4.08

    (A) Primarily interest income, results from equity investments, and
foreign exchange gains and losses.
    The effective full year tax rate for 1996 is expected to be 29.6%.
    Depreciation/amortization expense for the nine months ended 9/30/96 and
9/30/95 was $165 million and $176 million, respectively.

                               SALES VOLUME STATISTICS

                                         Three Months Ended  Nine Months Ended
                                            September 30    September 30
                                                     (Unaudited)

                                          1996   1995    1996   1995

    PO and Derivatives                     846   811   2,493   2,601
        (mm lbs.)

    TBA and Derivatives                    303   272     835     862
        (mm gals.)

    SM and Derivatives                     730   616   2,080   1,965
        (mm lbs.)

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