filings.toolsItem 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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Item 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
LYONDELLBASELL INDUSTRIES N.V.
CONSOLIDATED STATEMENTS OF INCOME
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| Millions of dollars, except earnings per share | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
| Sales and other operating revenues: | |||||||||||||||||||||||
| Trade | $ | 12,401 | $ | 6,587 | $ | 32,586 | $ | 19,261 | |||||||||||||||
| Related parties | 299 | 189 | 757 | 555 | |||||||||||||||||||
| 12,700 | 6,776 | 33,343 | 19,816 | ||||||||||||||||||||
| Operating costs and expenses: | |||||||||||||||||||||||
| Cost of sales | 10,109 | 5,885 | 26,463 | 17,647 | |||||||||||||||||||
| Impairment of long-lived assets | — | 582 | — | 582 | |||||||||||||||||||
| Selling, general and administrative expenses | 313 | 259 | 927 | 842 | |||||||||||||||||||
| Research and development expenses | 30 | 27 | 91 | 79 | |||||||||||||||||||
| 10,452 | 6,753 | 27,481 | 19,150 | ||||||||||||||||||||
| Operating income | 2,248 | 23 | 5,862 | 666 | |||||||||||||||||||
| Interest expense | (126) | (122) | (366) | (336) | |||||||||||||||||||
| Interest income | 1 | 3 | 8 | 10 | |||||||||||||||||||
| Other (expense) income, net | (12) | 23 | 27 | 27 | |||||||||||||||||||
| Income (loss) from continuing operations before equity investments and income taxes | 2,111 | (73) | 5,531 | 367 | |||||||||||||||||||
| Income from equity investments | 104 | 62 | 389 | 123 | |||||||||||||||||||
| Income (loss) from continuing operations before income taxes | 2,215 | (11) | 5,920 | 490 | |||||||||||||||||||
| Provision for (benefit from) income taxes | 452 | (125) | 1,028 | (82) | |||||||||||||||||||
| Income from continuing operations | 1,763 | 114 | 4,892 | 572 | |||||||||||||||||||
| Loss from discontinued operations, net of tax | (1) | — | (1) | — | |||||||||||||||||||
| Net income | 1,762 | 114 | 4,891 | 572 | |||||||||||||||||||
| Dividends on redeemable non-controlling interests | (2) | (2) | (5) | (5) | |||||||||||||||||||
| Net income attributable to the Company shareholders | $ | 1,760 | $ | 112 | $ | 4,886 | $ | 567 | |||||||||||||||
| Earnings per share: | |||||||||||||||||||||||
| Net income attributable to the Company shareholders — | |||||||||||||||||||||||
| Basic | $ | 5.25 | $ | 0.33 | $ | 14.58 | $ | 1.69 | |||||||||||||||
| Diluted | $ | 5.25 | $ | 0.33 | $ | 14.57 | $ | 1.69 | |||||||||||||||
See Notes to the Consolidated Financial Statements.
LYONDELLBASELL INDUSTRIES N.V.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| Millions of dollars | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
| Net income | $ | 1,762 | $ | 114 | $ | 4,891 | $ | 572 | |||||||||||||||
| Other comprehensive income (loss), net of tax – | |||||||||||||||||||||||
| Financial derivatives | 35 | 75 | 132 | (289) | |||||||||||||||||||
| Unrealized (losses) gains on available-for-sale debt securities | — | — | (1) | 1 | |||||||||||||||||||
| Defined benefit pension and other postretirement benefit plans | 28 | 10 | 56 | 31 | |||||||||||||||||||
| Foreign currency translations | (97) | 86 | (127) | (47) | |||||||||||||||||||
| Total other comprehensive (loss) income, net of tax | (34) | 171 | 60 | (304) | |||||||||||||||||||
| Comprehensive income | 1,728 | 285 | 4,951 | 268 | |||||||||||||||||||
| Dividends on redeemable non-controlling interests | (2) | (2) | (5) | (5) | |||||||||||||||||||
| Comprehensive income attributable to the Company shareholders | $ | 1,726 | $ | 283 | $ | 4,946 | $ | 263 |
See Notes to the Consolidated Financial Statements.
LYONDELLBASELL INDUSTRIES N.V.
CONSOLIDATED BALANCE SHEETS
| Millions of dollars | September 30, 2021 | December 31, 2020 | |||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 1,893 | $ | 1,763 | |||||||
| Restricted cash | 5 | 2 | |||||||||
| Short-term investments | 36 | 702 | |||||||||
| Accounts receivable: | |||||||||||
| Trade, net | 5,003 | 3,291 | |||||||||
| Related parties | 248 | 150 | |||||||||
| Inventories | 4,982 | 4,344 | |||||||||
| Prepaid expenses and other current assets | 1,819 | 1,382 | |||||||||
| Total current assets | 13,986 | 11,634 | |||||||||
| Operating lease assets | 1,789 | 1,492 | |||||||||
| Property, plant and equipment | 22,575 | 21,484 | |||||||||
| Less: Accumulated depreciation | (7,739) | (7,098) | |||||||||
| Property, plant and equipment, net | 14,836 | 14,386 | |||||||||
| Equity investments | 4,888 | 4,729 | |||||||||
| Goodwill | 1,894 | 1,953 | |||||||||
| Intangible assets, net | 666 | 751 | |||||||||
| Other assets | 603 | 458 | |||||||||
| Total assets | $ | 38,662 | $ | 35,403 |
See Notes to the Consolidated Financial Statements.
LYONDELLBASELL INDUSTRIES N.V.
CONSOLIDATED BALANCE SHEETS
| Millions of dollars, except shares and par value data | September 30, 2021 | December 31, 2020 | |||||||||
| LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Current maturities of long-term debt | $ | 8 | $ | 8 | |||||||
| Short-term debt | 563 | 663 | |||||||||
| Accounts payable: | |||||||||||
| Trade | 3,494 | 2,398 | |||||||||
| Related parties | 678 | 550 | |||||||||
| Accrued liabilities | 2,665 | 1,883 | |||||||||
| Total current liabilities | 7,408 | 5,502 | |||||||||
| Long-term debt | 12,945 | 15,286 | |||||||||
| Operating lease liabilities | 1,518 | 1,222 | |||||||||
| Other liabilities | 2,383 | 2,957 | |||||||||
| Deferred income taxes | 2,478 | 2,332 | |||||||||
| Commitments and contingencies | |||||||||||
| Redeemable non-controlling interests | 116 | 116 | |||||||||
| Shareholders’ equity: | |||||||||||
| Ordinary shares, €0.04 par value, 1,275 million shares authorized, 333,627,352 and 334,015,220 shares outstanding, respectively | 19 | 19 | |||||||||
| Additional paid-in capital | 6,029 | 5,986 | |||||||||
| Retained earnings | 8,216 | 4,440 | |||||||||
| Accumulated other comprehensive loss | (1,883) | (1,943) | |||||||||
| Treasury stock, at cost, 6,518,226 and 6,030,408 ordinary shares, respectively | (581) | (531) | |||||||||
| Total Company share of shareholders’ equity | 11,800 | 7,971 | |||||||||
| Non-controlling interests | 14 | 17 | |||||||||
| Total equity | 11,814 | 7,988 | |||||||||
| Total liabilities, redeemable non-controlling interests and equity | $ | 38,662 | $ | 35,403 |
See Notes to the Consolidated Financial Statements.
LYONDELLBASELL INDUSTRIES N.V.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Nine Months Ended September 30, | |||||||||||
| Millions of dollars | 2021 | 2020 | |||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | 4,891 | $ | 572 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 1,016 | 1,056 | |||||||||
| Impairment of long-lived assets | — | 582 | |||||||||
| Amortization of debt-related costs | 21 | 12 | |||||||||
| Share-based compensation | 50 | 43 | |||||||||
| Inventory valuation charges | — | 163 | |||||||||
| Equity investments— | |||||||||||
| Equity income | (389) | (123) | |||||||||
| Distributions of earnings, net of tax | 169 | 104 | |||||||||
| Deferred income tax provision (benefit) | 7 | (135) | |||||||||
| Changes in assets and liabilities that provided (used) cash: | |||||||||||
| Accounts receivable | (1,915) | 152 | |||||||||
| Inventories | (741) | 452 | |||||||||
| Accounts payable | 1,139 | (90) | |||||||||
| Other, net | 368 | (127) | |||||||||
| Net cash provided by operating activities | 4,616 | 2,661 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Expenditures for property, plant and equipment | (1,285) | (1,673) | |||||||||
| Purchases of available-for-sale debt securities | — | (270) | |||||||||
| Proceeds from sales and maturities of available-for-sale debt securities | 346 | 90 | |||||||||
| Purchases of equity securities | — | (267) | |||||||||
| Proceeds from equity securities | 309 | 313 | |||||||||
| Acquisition of equity method investment | (104) | (472) | |||||||||
| Proceeds from settlement of net investment hedges | 358 | — | |||||||||
| Payments for settlement of net investment hedges | (355) | — | |||||||||
| Other, net | (66) | (28) | |||||||||
| Net cash used in investing activities | (797) | (2,307) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Repurchases of Company ordinary shares | (78) | (4) | |||||||||
| Dividends paid - common stock | (1,110) | (1,053) | |||||||||
| Purchase of non-controlling interest | — | (30) | |||||||||
| Issuance of long-term debt | — | 2,492 | |||||||||
| Payments of debt issuance costs | — | (18) | |||||||||
| Repayments of long-term debt | (2,275) | (500) | |||||||||
| Debt extinguishment costs | (57) | — | |||||||||
| Issuance of short-term debt | — | 521 | |||||||||
| Repayments of short-term debt | — | (504) | |||||||||
| Net (repayments of) proceeds from commercial paper | (103) | 194 | |||||||||
| Collateral paid for interest rate derivatives | — | (238) | |||||||||
| Proceeds from settlement of cash flow hedges | — | 346 | |||||||||
| Other, net | (4) | (14) | |||||||||
| Net cash (used in) provided by financing activities | (3,627) | 1,192 | |||||||||
| Effect of exchange rate changes on cash | (59) | 50 | |||||||||
| Increase in cash and cash equivalents and restricted cash | 133 | 1,596 | |||||||||
| Cash and cash equivalents and restricted cash at beginning of period | 1,765 | 888 | |||||||||
| Cash and cash equivalents and restricted cash at end of period | $ | 1,898 | $ | 2,484 |
See Notes to the Consolidated Financial Statements.
LYONDELLBASELL INDUSTRIES N.V.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
| Ordinary Shares | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Company Share of Shareholders’ Equity | Non- Controlling Interests | ||||||||||||||||||||||||||||||||||||
| Millions of dollars | Issued | Treasury | |||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2021 | $ | 19 | $ | (494) | $ | 6,011 | $ | 6,837 | $ | (1,849) | $ | 10,524 | $ | 14 | |||||||||||||||||||||||||||
| Net income | — | — | — | 1,762 | — | 1,762 | — | ||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | (34) | (34) | — | ||||||||||||||||||||||||||||||||||
| Share-based compensation | — | 2 | 18 | (1) | — | 19 | — | ||||||||||||||||||||||||||||||||||
| Dividends - common stock ($1.13 per share) | — | — | — | (380) | — | (380) | — | ||||||||||||||||||||||||||||||||||
| Dividends - redeemable non-controlling interests ($15.00 per share) | — | — | — | (2) | — | (2) | — | ||||||||||||||||||||||||||||||||||
| Repurchases of Company ordinary shares | — | (89) | — | — | — | (89) | — | ||||||||||||||||||||||||||||||||||
| Balance, September 30, 2021 | $ | 19 | $ | (581) | $ | 6,029 | $ | 8,216 | $ | (1,883) | $ | 11,800 | $ | 14 |
| Ordinary Shares | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Company Share of Shareholders’ Equity | Non- Controlling Interests | ||||||||||||||||||||||||||||||||||||
| Millions of dollars | Issued | Treasury | |||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2020 | $ | 19 | $ | (548) | $ | 5,958 | $ | 4,188 | $ | (2,259) | $ | 7,358 | $ | 19 | |||||||||||||||||||||||||||
| Net income | — | — | — | 114 | — | 114 | — | ||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | 171 | 171 | — | ||||||||||||||||||||||||||||||||||
| Share-based compensation | — | 8 | 17 | (8) | — | 17 | — | ||||||||||||||||||||||||||||||||||
| Dividends - common stock ($1.05 per share) | — | — | — | (352) | — | (352) | — | ||||||||||||||||||||||||||||||||||
| Dividends - redeemable non-controlling interests ($15.00 per share) | — | — | — | (2) | — | (2) | — | ||||||||||||||||||||||||||||||||||
| Distributions to non-controlling interests | — | — | — | — | — | — | (2) | ||||||||||||||||||||||||||||||||||
| Balance, September 30, 2020 | $ | 19 | $ | (540) | $ | 5,975 | $ | 3,940 | $ | (2,088) | $ | 7,306 | $ | 17 |
See Notes to the Consolidated Financial Statements.
LYONDELLBASELL INDUSTRIES N.V.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
| Ordinary Shares | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Company Share of Shareholders’ Equity | Non- Controlling Interests | ||||||||||||||||||||||||||||||||||||
| Millions of dollars | Issued | Treasury | |||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2020 | $ | 19 | $ | (531) | $ | 5,986 | $ | 4,440 | $ | (1,943) | $ | 7,971 | $ | 17 | |||||||||||||||||||||||||||
| Net income | — | — | — | 4,891 | — | 4,891 | — | ||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | 60 | 60 | — | ||||||||||||||||||||||||||||||||||
| Share-based compensation | — | 39 | 43 | — | — | 82 | — | ||||||||||||||||||||||||||||||||||
| Dividends - common stock ($3.31 per share) | — | — | — | (1,110) | — | (1,110) | — | ||||||||||||||||||||||||||||||||||
| Dividends - redeemable non-controlling interests ($45.00 per share) | — | — | — | (5) | — | (5) | — | ||||||||||||||||||||||||||||||||||
| Repurchases of Company ordinary shares | — | (89) | — | — | — | (89) | — | ||||||||||||||||||||||||||||||||||
| Sales of non-controlling interest | — | — | — | — | — | — | (3) | ||||||||||||||||||||||||||||||||||
| Balance, September 30, 2021 | $ | 19 | $ | (581) | $ | 6,029 | $ | 8,216 | $ | (1,883) | $ | 11,800 | $ | 14 |
| Ordinary Shares | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Company Share of Shareholders’ Equity | Non- Controlling Interests | ||||||||||||||||||||||||||||||||||||
| Millions of dollars | Issued | Treasury | |||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2019 | $ | 19 | $ | (580) | $ | 5,954 | $ | 4,435 | $ | (1,784) | $ | 8,044 | $ | 19 | |||||||||||||||||||||||||||
| Net income | — | — | — | 572 | — | 572 | — | ||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | (304) | (304) | — | ||||||||||||||||||||||||||||||||||
| Share-based compensation | — | 44 | 14 | (9) | — | 49 | — | ||||||||||||||||||||||||||||||||||
| Dividends - common stock ($3.15 per share) | — | — | — | (1,053) | — | (1,053) | — | ||||||||||||||||||||||||||||||||||
| Dividends - redeemable non-controlling interests ($45.00 per share) | — | — | — | (5) | — | (5) | — | ||||||||||||||||||||||||||||||||||
| Repurchases of Company ordinary shares | — | (4) | — | — | — | (4) | — | ||||||||||||||||||||||||||||||||||
| Purchase of non-controlling interest | — | — | 7 | — | — | 7 | — | ||||||||||||||||||||||||||||||||||
| Distributions to non-controlling interests | — | — | — | — | — | — | (2) | ||||||||||||||||||||||||||||||||||
| Balance, September 30, 2020 | $ | 19 | $ | (540) | $ | 5,975 | $ | 3,940 | $ | (2,088) | $ | 7,306 | $ | 17 |
See Notes to the Consolidated Financial Statements.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TABLE OF CONTENTS
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
LyondellBasell Industries N.V. is a limited liability company (Naamloze Vennootschap) incorporated under Dutch law by deed of incorporation dated October 15, 2009. Unless otherwise indicated, the “Company,” “we,” “us,” “our” or similar words are used to refer to LyondellBasell Industries N.V. together with its consolidated subsidiaries (“LyondellBasell N.V.”). LyondellBasell N.V. is a worldwide manufacturer of chemicals and polymers, a refiner of crude oil, a significant producer of gasoline blending components and a developer and licensor of technologies for the production of polymers.
The accompanying unaudited Consolidated Financial Statements have been prepared from the books and records of LyondellBasell N.V. in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X for interim financial information. Certain notes and other information have been condensed or omitted from the interim financial statements included in this report. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States (“U.S. GAAP”) for complete financial statements. These Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. In the opinion of management, all adjustments, including normal recurring adjustments, considered necessary for a fair statement have been included. These statements contain some amounts that are based upon management estimates and judgments. Future actual results could differ from such current estimates. The results for interim periods are not necessarily indicative of results for the entire year.
2. Accounting and Reporting Changes
Recently Adopted Guidance
The following table provides a brief description of recently adopted Accounting Standard Updates (“ASU”) issued by the Financial Accounting Standards Board (“FASB”):
| Standard | Description | |||||||||||||
| ASU 2020-01, Clarifying the Interactions between Topic 321, Topic 323, Equity Method and Joint Ventures, and Topic 815, Derivatives and Hedging | This guidance clarifies that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321. The standard also includes scope considerations for entities that hold certain non-derivative forward contracts and purchased options to acquire equity securities that, upon settlement of the forward contract or exercise of the purchase option, would be accounted for under the equity method of accounting. This guidance is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The prospective adoption of this guidance from January 1, 2021 did not have a material impact on our Consolidated Financial Statements. | |||||||||||||
| ASU 2020-06, Debt - Debt with Conversion and Other Options and Derivatives and Hedging - Contracts in Entity’s Own Equity | This guidance simplifies the accounting for convertible instruments and the application of the derivatives scope exception for contracts in an entity’s own equity. The standard also amends the accounting for convertible instruments in the diluted earnings per share calculation and requires enhanced disclosures of convertible instruments and contracts in an entity’s own equity. The guidance is effective for fiscal years beginning after December 15, 2021 and may be applied on a modified or fully retrospective basis. The early adoption of this guidance on a modified retrospective basis from January 1, 2021 did not have a material impact on our Consolidated Financial Statements. | |||||||||||||
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
| Standard | Description | |||||||||||||
| ASU 2020-09, Debt (Topic 470): Amendments to SEC Paragraphs Pursuant to SEC Release No. 33-10762 | This guidance amends and supersedes SEC paragraphs in the Accounting Standards Codification to reflect the issuance of SEC Release No. 33-10762 related to financial disclosure requirements for subsidiary issuers and guarantors of registered debt securities and affiliates whose securities are pledged as collateral for registered securities. The guidance is effective for annual and interim periods ending after January 4, 2021. The adoption of this guidance from January 1, 2021 did not have a material impact on our Consolidated Financial Statements. |
Accounting Guidance Issued But Not Adopted as of September 30, 2021
There are no ASUs issued and not yet adopted that are expected to have a material impact on our Consolidated Financial Statements.
3. Revenues
*Contract Balances—*Contract liabilities were $250 million and $194 million at September 30, 2021 and December 31, 2020, respectively. Revenue recognized in each reporting period, included in the contract liability balance at the beginning of the period, was immaterial.
*Disaggregation of Revenues—*The following table presents our revenues disaggregated by key products:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| Millions of dollars | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
| Sales and other operating revenues: | |||||||||||||||||||||||
| Olefins and co-products | $ | 1,453 | $ | 568 | $ | 3,729 | $ | 1,695 | |||||||||||||||
| Polyethylene | 2,705 | 1,423 | 7,469 | 4,159 | |||||||||||||||||||
| Polypropylene | 2,162 | 1,103 | 5,876 | 3,173 | |||||||||||||||||||
| Propylene oxide and derivatives | 832 | 421 | 2,059 | 1,217 | |||||||||||||||||||
| Oxyfuels and related products | 1,088 | 573 | 2,533 | 1,669 | |||||||||||||||||||
| Intermediate chemicals | 910 | 486 | 2,436 | 1,434 | |||||||||||||||||||
| Compounding and solutions | 1,019 | 834 | 3,134 | 2,295 | |||||||||||||||||||
| Advanced polymers | 261 | 169 | 748 | 501 | |||||||||||||||||||
| Refined products | 2,050 | 1,003 | 4,784 | 3,193 | |||||||||||||||||||
| Other | 220 | 196 | 575 | 480 | |||||||||||||||||||
| Total | $ | 12,700 | $ | 6,776 | $ | 33,343 | $ | 19,816 |
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
The following table presents our revenues disaggregated by geography, based upon the location of the customer:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| Millions of dollars | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
| Sales and other operating revenues: | |||||||||||||||||||||||
| United States | $ | 6,387 | $ | 2,983 | $ | 16,089 | $ | 8,587 | |||||||||||||||
| Germany | 886 | 494 | 2,585 | 1,533 | |||||||||||||||||||
| China | 572 | 369 | 1,693 | 914 | |||||||||||||||||||
| Italy | 489 | 290 | 1,339 | 884 | |||||||||||||||||||
| Mexico | 496 | 285 | 1,133 | 868 | |||||||||||||||||||
| France | 384 | 213 | 1,040 | 644 | |||||||||||||||||||
| The Netherlands | 423 | 197 | 1,039 | 562 | |||||||||||||||||||
| Japan | 432 | 161 | 993 | 639 | |||||||||||||||||||
| Poland | 300 | 205 | 841 | 617 | |||||||||||||||||||
| Other | 2,331 | 1,579 | 6,591 | 4,568 | |||||||||||||||||||
| Total | $ | 12,700 | $ | 6,776 | $ | 33,343 | $ | 19,816 |
4. Accounts Receivable
Our accounts receivable are reflected in the Consolidated Balance Sheets, net of allowance for credit losses, of $7 million and $15 million at September 30, 2021 and December 31, 2020, respectively.
5. Inventories
Inventories consisted of the following components:
| Millions of dollars | September 30, 2021 | December 31, 2020 | |||||||||
| Finished goods | $ | 3,329 | $ | 2,816 | |||||||
| Work-in-process | 167 | 144 | |||||||||
| Raw materials and supplies | 1,486 | 1,384 | |||||||||
| Total inventories | $ | 4,982 | $ | 4,344 |
Our inventories are stated at the lower of cost or market (“LCM”). 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, and as a result we adjust the value of inventory to market value. Fluctuations in the prices of crude oil, natural gas and correlated products from period to period may result in the recognition of charges to adjust the value of inventory to the LCM in periods of falling prices and the reversal of those charges in subsequent interim periods, within the fiscal year, as market prices recover.
During the first nine months of 2020, we recognized an LCM inventory valuation charge of $163 million related to the decline in pricing for many of our raw material and finished goods inventories since December 31, 2019. During the third quarter of 2020, we recognized an LCM inventory valuation benefit of $160 million, largely driven by the recovery of market pricing for many of our raw material and finished goods inventories during the quarter.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
6. Debt
Long-term loans, notes and other debt, net of unamortized discount and debt issuance cost, consisted of the following:
| Millions of dollars | September 30, 2021 | December 31, 2020 | |||||||||
| Senior Notes due 2024, $1,000 million, 5.75% ($3 million of debt issuance cost) | $ | 997 | $ | 996 | |||||||
| Senior Notes due 2055, $1,000 million, 4.625% ($15 million of discount; $11 million of debt issuance cost) | 974 | 974 | |||||||||
| Term Loan due 2022, $4,000 million | — | 1,448 | |||||||||
| Guaranteed Notes due 2023, $750 million, 4.0% ($1 million of discount; $1 million of debt issuance cost) | 423 | 745 | |||||||||
| Guaranteed Floating Rate Notes due 2023, $650 million ($3 million of debt issuance cost) | 647 | 646 | |||||||||
| Guaranteed Notes due 2025, $500 million, 2.875% | — | 496 | |||||||||
| Guaranteed Notes due 2025, $500 million, 1.25% ($1 million of discount; $3 million of debt issuance cost) | 495 | 495 | |||||||||
| Guaranteed Notes due 2026, €500 million, 0.875% ($1 million of discount; $3 million of debt issuance cost) | 575 | 608 | |||||||||
| Guaranteed Notes due 2027, $1,000 million, 3.5% ($6 million of discount; $5 million of debt issuance cost) | 1,079 | 1,090 | |||||||||
| Guaranteed Notes due 2027, $300 million, 8.1% | 300 | 300 | |||||||||
| Guaranteed Notes due 2030, $500 million, 3.375% ($1 million of discount; $3 million of debt issuance cost) | 499 | 495 | |||||||||
| Guaranteed Notes due 2030, $500 million, 2.25% ($4 million of discount; $4 million of debt issuance cost) | 491 | 492 | |||||||||
| Guaranteed Notes due 2031, €500 million, 1.625% ($6 million of discount; $3 million of debt issuance cost) | 570 | 602 | |||||||||
| Guaranteed Notes due 2040, $750 million, 3.375% ($2 million of discount; $8 million of debt issuance cost) | 740 | 740 | |||||||||
| Guaranteed Notes due 2043, $750 million, 5.25% ($19 million of discount; $7 million of debt issuance cost) | 724 | 723 | |||||||||
| Guaranteed Notes due 2044, $1,000 million, 4.875% ($10 million of discount; $9 million of debt issuance cost) | 981 | 981 | |||||||||
| Guaranteed Notes due 2049, $1,000 million, 4.2% ($15 million of discount; $10 million of debt issuance cost) | 975 | 975 | |||||||||
| Guaranteed Notes due 2050, $1,000 million, 4.2% ($6 million of discount; $10 million of debt issuance cost) | 983 | 984 | |||||||||
| Guaranteed Notes due 2051, $1,000 million, 3.625% ($3 million of discount; $11 million of debt issuance cost) | 986 | 986 | |||||||||
| Guaranteed Notes due 2060, $500 million, 3.8% ($4 million of discount; $6 million of debt issuance cost) | 490 | 490 | |||||||||
| Other | 24 | 28 | |||||||||
| Total | 12,953 | 15,294 | |||||||||
| Less current maturities | (8) | (8) | |||||||||
| Long-term debt | $ | 12,945 | $ | 15,286 |
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Fair value hedging adjustments associated with the fair value hedge accounting of our fixed-for-floating interest rate swaps for the applicable periods are as follows:
| Gains (Losses) | Cumulative Fair Value Hedging Adjustments Included in Carrying Amount of Debt | |||||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | September 30, | December 31, | |||||||||||||||||||||||||||||||||||
| Millions of dollars | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||||||||||
| Senior Notes due 2021, 6.0% | $ | — | $ | 3 | $ | — | $ | (11) | $ | — | $ | — | ||||||||||||||||||||||||||
| Guaranteed Notes due 2022, 1.875% | — | — | — | 1 | — | — | ||||||||||||||||||||||||||||||||
| Guaranteed Notes due 2025, 1.25% | 1 | — | 1 | — | 1 | — | ||||||||||||||||||||||||||||||||
| Guaranteed Notes due 2026, 0.875% | 1 | (1) | 2 | (2) | — | (2) | ||||||||||||||||||||||||||||||||
| Guaranteed Notes due 2027, 3.5% | 5 | 4 | 12 | (69) | (90) | (102) | ||||||||||||||||||||||||||||||||
| Guaranteed Notes due 2030, 3.375% | 1 | — | (3) | — | (3) | — | ||||||||||||||||||||||||||||||||
| Guaranteed Notes due 2030, 2.25% | 1 | — | 1 | — | 1 | — | ||||||||||||||||||||||||||||||||
| Guaranteed Notes due 2050, 4.2% | 1 | — | 1 | — | 1 | — | ||||||||||||||||||||||||||||||||
| Total | $ | 10 | $ | 6 | $ | 14 | $ | (81) | $ | (90) | $ | (104) |
Fair value adjustments are recognized in Interest expense in the Consolidated Statements of Income.
Short-term loans, notes and other debt consisted of the following:
| Millions of dollars | September 30, 2021 | December 31, 2020 | |||||||||
| U.S. Receivables Facility | $ | — | $ | — | |||||||
| Commercial paper | 397 | 500 | |||||||||
| Precious metal financings | 159 | 140 | |||||||||
| Other | 7 | 23 | |||||||||
| Total Short-term debt | $ | 563 | $ | 663 |
Long-Term Debt
Senior Revolving Credit Facility—Our $2,500 million Senior Revolving Credit Facility, of which $2,440 million expires in June 2023 and the remainder expires in June 2022, may be used for dollar and euro denominated borrowings. The facility has a $500 million sub-limit for dollar and euro denominated letters of credit, a $1,000 million uncommitted accordion feature, and supports our commercial paper program. Borrowings under the facility bear interest at either a base rate or LIBOR rate, plus an applicable margin. Additional fees are incurred for the average daily unused commitments. At September 30, 2021, we had no borrowings or letters of credit outstanding and $2,104 million of unused availability under this facility.
Term Loan due 2022—In March 2019, LYB Americas Finance Company LLC, a wholly owned subsidiary of LyondellBasell Industries N.V., entered into a $4,000 million senior unsecured delayed draw term loan credit facility that matures in March 2022. Borrowings under the credit agreement were available through December 31, 2019, subsequent to which no further borrowings may be made under the agreement. Outstanding borrowings bear interest at either a base rate or LIBOR rate, as defined, plus in each case, an applicable margin determined by reference to LyondellBasell N.V.’s current credit ratings. During the nine months ended September 30, 2021, we repaid $1,450 million outstanding under our Term Loan due 2022.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Guaranteed Notes due 2023—In July 2013, LYB International Finance B.V. issued $750 million of 4% guaranteed notes due 2023 at a discounted price of 98.678%. In June 2021, we redeemed $325 million of the outstanding notes. In conjunction with the partial redemption, we recognized $25 million of debt extinguishment costs which are reflected in Interest expense in the Consolidated Statements of Income. The debt extinguishment costs include $23 million paid for make-whole premiums, fees and expenses related to the redemption of the notes and non-cash charges of $2 million for the write-off of unamortized debt discount and issuance costs.
Guaranteed Notes due 2025—In April 2020, LYB International Finance III, LLC (“LYB Finance III”) issued $500 million of 2.875% guaranteed notes due 2025 at a discounted price of 99.911%. In September 2021, we redeemed the $500 million outstanding notes. In conjunction with the redemption, we recognized $37 million of debt extinguishment costs which are reflected in Interest expense in the Consolidated Statements of Income. The debt extinguishment costs include $34 million paid for make-whole premiums, fees and expenses related to the redemption of the notes and non-cash charges of $3 million for the write-off of unamortized debt issuance costs.
Guaranteed Floating Rate Notes due 2023—In October 2020, LYB Finance III issued $650 million of guaranteed floating rate notes due 2023. In October 2021, we redeemed the $650 million outstanding notes. In conjunction with the redemption, we recognized $3 million of debt extinguishment costs related to the non-cash write-off of unamortized debt issuance costs.
Short-Term Debt
U.S. Receivables Facility—Our U.S. Receivables Facility has a purchase limit of $900 million in addition to a $300 million uncommitted accordion feature. In June 2021, we extended the term of the facility to June 2024 in accordance with the terms of the agreement. This facility provides liquidity through the sale or contribution of trade receivables by certain of our U.S. subsidiaries to a wholly owned, bankruptcy-remote subsidiary on an ongoing basis and without recourse. We pay variable interest rates on our secured borrowings. Additional fees are incurred for the average daily unused commitments. This facility also provides for the issuance of letters of credit up to $200 million. At September 30, 2021, we had no borrowings or letters of credit outstanding and $900 million unused availability under this facility.
Commercial Paper Program—We have a commercial paper program under which we may issue up to $2,500 million of privately placed, unsecured, short-term promissory notes (“commercial paper”). Interest rates on the commercial paper outstanding at September 30, 2021 are based on the terms of the notes and range from 0.13% to 0.17%. At September 30, 2021, we had $397 million of outstanding commercial paper.
Weighted Average Interest Rate—At September 30, 2021 and December 31, 2020, our weighted average interest rates on outstanding Short-term debt were 0.7% and 0.9%, respectively.
Additional Information
Debt Discount and Issuance Costs—Amortization of debt discounts and debt issuance costs resulted in amortization expense of $21 million and $12 million for the nine months ended September 30, 2021 and 2020, respectively, which is included in Interest expense in the Consolidated Statements of Income.
As of September 30, 2021, we are in compliance with our debt covenants.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
7. Financial Instruments and Fair Value Measurements
We are exposed to market risks, such as changes in commodity pricing, interest rates and currency exchange rates. To manage the volatility related to these exposures, we selectively enter into derivative contracts pursuant to our risk management policies.
A summary of our financial instruments, risk management policies, derivative instruments, hedging activities and fair value measurement can be found in Notes 2 and 13 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2020. If applicable, updates have been included in the respective sections below.
Cash and Cash Equivalents—At September 30, 2021 and December 31, 2020, we had marketable securities classified as Cash and cash equivalents of $707 million and $682 million, respectively.
Foreign Currency Gain (Loss)—Other income (expense), net, in the Consolidated Statements of Income includes foreign currency gains of $4 million and $2 million for the three and nine months ended September 30, 2021, respectively, and gains of $3 million and losses of $4 million for the three and nine months ended September 30, 2020, respectively.
Financial Instruments Measured at Fair Value on a Recurring Basis—The following table summarizes financial instruments outstanding for the periods presented that are measured at fair value on a recurring basis:
| September 30, 2021 | December 31, 2020 | ||||||||||||||||||||||||||||
| Millions of dollars | Notional Amount | Fair Value | Notional Amount | Fair Value | Balance Sheet Classification | ||||||||||||||||||||||||
| Assets– | |||||||||||||||||||||||||||||
| Derivatives designated as hedges: | |||||||||||||||||||||||||||||
| Commodities | $ | 35 | $ | 47 | $ | 19 | $ | 3 | Prepaid expenses and other current assets | ||||||||||||||||||||
| Commodities | 10 | 7 | 41 | 4 | Other Assets | ||||||||||||||||||||||||
| Foreign currency | 614 | 82 | — | 26 | Prepaid expenses and other current assets | ||||||||||||||||||||||||
| Foreign currency | 1,024 | 25 | — | — | Other assets | ||||||||||||||||||||||||
| Interest rates | — | 5 | — | — | Prepaid expenses and other current assets | ||||||||||||||||||||||||
| Interest rates | 416 | 3 | 122 | 2 | Other assets | ||||||||||||||||||||||||
| Derivatives not designated as hedges: | |||||||||||||||||||||||||||||
| Commodities | 288 | 38 | 71 | 2 | Prepaid expenses and other current assets | ||||||||||||||||||||||||
| Commodities | 1 | 1 | — | — | Other assets | ||||||||||||||||||||||||
| Foreign currency | 150 | 2 | 149 | — | Prepaid expenses and other current assets | ||||||||||||||||||||||||
| Non-derivatives: | |||||||||||||||||||||||||||||
| Available-for-sale debt securities | — | — | 348 | 349 | Short-term investments | ||||||||||||||||||||||||
| Equity securities | 36 | 35 | 353 | 353 | Short-term investments | ||||||||||||||||||||||||
| Total | $ | 2,574 | $ | 245 | $ | 1,103 | $ | 739 | |||||||||||||||||||||
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
| September 30, 2021 | December 31, 2020 | ||||||||||||||||||||||||||||
| Millions of dollars | Notional Amount | Fair Value | Notional Amount | Fair Value | Balance Sheet Classification | ||||||||||||||||||||||||
| Liabilities– | |||||||||||||||||||||||||||||
| Derivatives designated as hedges: | |||||||||||||||||||||||||||||
| Commodities | $ | — | $ | — | $ | — | $ | 2 | Accrued liabilities | ||||||||||||||||||||
| Foreign currency | 855 | 101 | 1,213 | 146 | Accrued liabilities | ||||||||||||||||||||||||
| Foreign currency | 2,270 | 144 | 2,682 | 302 | Other liabilities | ||||||||||||||||||||||||
| Interest rates | — | 1 | — | — | Accrued liabilities | ||||||||||||||||||||||||
| Interest rates | 1,600 | 228 | 1,000 | 343 | Other liabilities | ||||||||||||||||||||||||
| Derivatives not designated as hedges: | |||||||||||||||||||||||||||||
| Commodities | 3 | — | 113 | 14 | Accrued liabilities | ||||||||||||||||||||||||
| Foreign currency | 842 | 16 | 76 | 1 | Accrued liabilities | ||||||||||||||||||||||||
| Total | $ | 5,570 | $ | 490 | $ | 5,084 | $ | 808 |
As of September 30, 2021, our limited partnership investments included in our equity securities discussed below are measured at fair value using the net asset value per share, or its equivalent, practical expedient and have not been classified in the fair value hierarchy. All other financial instruments in the table above, including equity securities as of December 31, 2020, are classified as Level 2. We present the gross assets and liabilities of our derivative financial instruments on the Consolidated Balance Sheets.
At September 30, 2021, our outstanding foreign currency contracts, not designated as hedges, mature from October 2021 to March 2022. Our commodity contracts, not designated as hedges, mature from October 2021 to December 2021.
Financial Instruments Not Measured at Fair Value on a Recurring Basis—The following table presents the carrying value and estimated fair value of our financial instruments that are not measured at fair value on a recurring basis for the periods presented. Due to the short maturity, the fair value of all non-derivative financial instruments included in Current assets and Current liabilities for which the carrying value approximates fair value are excluded from the table below. Short-term and long-term debt are recorded at amortized cost in the Consolidated Balance Sheets. The carrying and fair values of short-term and of long-term debt exclude commercial paper and other miscellaneous debt. All financial instruments in the table below are classified as Level 2.
| September 30, 2021 | December 31, 2020 | ||||||||||||||||||||||
| Millions of dollars | Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||||||||
| Non-derivatives: | |||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Short-term debt | $ | 159 | $ | 129 | $ | 140 | $ | 154 | |||||||||||||||
| Long-term debt | 12,929 | 14,493 | 15,266 | 17,290 | |||||||||||||||||||
| Total | $ | 13,088 | $ | 14,622 | $ | 15,406 | $ | 17,444 |
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
*Net Investment Hedges—*The following table summarizes our net investment hedges outstanding for the periods presented:
| September 30, 2021 | December 31, 2020 | ||||||||||||||||||||||||||||
| Millions of euro/dollars | Notional Value | Notional Value | Expiration Date | ||||||||||||||||||||||||||
| Equivalent US$ | Equivalent US$ | ||||||||||||||||||||||||||||
| Foreign currency | € | 2,367 | $ | 2,758 | € | 1,667 | $ | 1,890 | 2022 to 2030 | ||||||||||||||||||||
In the first nine months of 2021, we entered into four foreign currency contracts with an aggregate notional value of €1,000 million that were designated as net investment hedges.
In July 2021, foreign currency contracts with an aggregate notional value of €300 million expired. Upon settlement of these foreign currency contracts, we paid €300 million ($355 million at the expiry spot rate) to our counterparties and received $358 million from our counterparties.
*Cash Flow Hedges—*The following table summarizes our cash flow hedges outstanding for the periods presented:
| September 30, 2021 | December 31, 2020 | ||||||||||||||||
| Millions of dollars | Notional Value | Notional Value | Expiration Date | ||||||||||||||
| Foreign currency | $ | 2,005 | $ | 2,005 | 2021 to 2027 | ||||||||||||
| Interest rates | 1,000 | 1,000 | 2023 to 2024 | ||||||||||||||
| Commodities | 45 | 60 | 2021 to 2022 |
As of September 30, 2021 and December 31, 2020, Other assets include $238 million of collateral held with our counterparties related to our forward-starting interest rate swaps; this amount represents the maximum amount of collateral required in accordance with the swap agreements. Related cash flows are included in financing activities in the Consolidated Statements of Cash Flows.
As of September 30, 2021, on a pre-tax basis, $6 million is scheduled to be reclassified from Accumulated other comprehensive loss as an increase to Interest expense over the next twelve months.
*Fair Value Hedges—*The following table summarizes our fair value hedges outstanding for the periods presented:
| September 30, 2021 | December 31, 2020 | ||||||||||||||||
| Millions of dollars | Notional Value | Notional Value | Expiration Date | ||||||||||||||
| Interest rates | $ | 1,016 | $ | 122 | 2025 to 2030 |
In the first nine months of 2021, we entered into fixed-for-floating interest rate swaps to mitigate the change in the fair value associated with the risk of variability in the 3-month LIBOR rate component of $150 million of our $500 million, 3.375% guaranteed notes due 2030, $300 million of our $1,000 million, 3.5% guaranteed notes due 2027, $150 million of our $500 million, 2.875% guaranteed notes due 2025, $150 million of our $500 million, 1.25% guaranteed notes due 2025 and $150 million of our $500 million, 2.25% guaranteed notes due 2030. The fixed-rate and variable-rate components for these trades are settled semi-annually and quarterly, respectively.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
In September 2021, upon the redemption of our $500 million, 2.875% guaranteed notes due 2025, the $150 million fixed-for-floating interest rate swap entered in April 2021 was dedesignated and concurrently redesignated as a partial-term hedge to mitigate the change in the fair value associated with the risk of variability in the 3-month LIBOR rate component of $150 million of our $1,000 million, 4.2% guaranteed notes due 2050.
Impact on Earnings and Other Comprehensive Income—The following tables summarize the pre-tax effect of derivative and non-derivative instruments recorded in Accumulated other comprehensive loss (“AOCI”), the gains (losses) reclassified from AOCI to earnings and additional gains (losses) recognized directly in earnings:
| Effects of Financial Instruments | |||||||||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||
| Gain (Loss) Recognized in AOCI | Gain (Loss) Reclassified from AOCI to Income | Gain (Loss) Recognized in Income | Income Statement | ||||||||||||||||||||||||||||||||||||||
| Millions of dollars | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | Classification | ||||||||||||||||||||||||||||||||||
| Derivatives designated as hedges: | |||||||||||||||||||||||||||||||||||||||||
| Commodities | $ | 38 | $ | 8 | $ | (14) | $ | — | $ | — | $ | — | Cost of sales | ||||||||||||||||||||||||||||
| Foreign currency | 135 | (125) | (60) | 89 | 9 | 8 | Interest expense | ||||||||||||||||||||||||||||||||||
| Interest rates | 17 | 102 | 1 | 1 | (5) | 1 | Interest expense | ||||||||||||||||||||||||||||||||||
| Derivatives not designated as hedges: | |||||||||||||||||||||||||||||||||||||||||
| Commodities | — | — | — | — | 6 | (1) | Sales and other operating revenues | ||||||||||||||||||||||||||||||||||
| Commodities | — | — | — | — | 49 | 42 | Cost of sales | ||||||||||||||||||||||||||||||||||
| Foreign currency | — | — | — | — | (32) | (1) | Other income (expense), net | ||||||||||||||||||||||||||||||||||
| Non-derivatives designated as hedges: | |||||||||||||||||||||||||||||||||||||||||
| Long-term debt | — | (38) | — | — | — | — | Other income (expense), net | ||||||||||||||||||||||||||||||||||
| Total | $ | 190 | $ | (53) | $ | (73) | $ | 90 | $ | 27 | $ | 49 |
| Effects of Financial Instruments | |||||||||||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||
| Gain (Loss) Recognized in AOCI | Gain (Loss) Reclassified from AOCI to Income | Gain (Loss) Recognized in Income | Income Statement | ||||||||||||||||||||||||||||||||||||||
| Millions of dollars | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | Classification | ||||||||||||||||||||||||||||||||||
| Derivatives designated as hedges: | |||||||||||||||||||||||||||||||||||||||||
| Commodities | $ | 67 | $ | 6 | $ | (18) | $ | — | $ | — | $ | — | Cost of sales | ||||||||||||||||||||||||||||
| Foreign currency | 274 | (47) | (128) | 81 | 34 | 38 | Interest expense | ||||||||||||||||||||||||||||||||||
| Interest rates | 117 | (430) | 4 | 3 | — | 91 | Interest expense | ||||||||||||||||||||||||||||||||||
| Derivatives not designated as hedges: | |||||||||||||||||||||||||||||||||||||||||
| Commodities | — | — | — | — | 18 | 4 | Sales and other operating revenues | ||||||||||||||||||||||||||||||||||
| Commodities | — | — | — | — | 72 | 116 | Cost of sales | ||||||||||||||||||||||||||||||||||
| Foreign currency | — | — | — | — | (61) | (11) | Other income (expense), net | ||||||||||||||||||||||||||||||||||
| Non-derivatives designated as hedges: | |||||||||||||||||||||||||||||||||||||||||
| Long-term debt | — | (36) | — | — | — | — | Other income (expense), net | ||||||||||||||||||||||||||||||||||
| Total | $ | 458 | $ | (507) | $ | (142) | $ | 84 | $ | 63 | $ | 238 |
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
The derivative amounts excluded from the assessment of effectiveness for foreign currency contracts designated as net investment hedges recognized in other comprehensive income for the three and nine months ended September 30, 2021 were gains of $1 million and $5 million, respectively, and for the three and nine months ended September 30, 2020 were gains of $1 million and losses of less than $1 million, respectively.
The derivative amounts excluded from the assessment of effectiveness for foreign currency contracts designated as net investment hedges recognized in Interest expense for the three and nine months ended September 30, 2021 were gains of $1 million and $6 million, respectively, and for the three and nine months ended September 30, 2020 were gains of $1 million and $8 million, respectively.
The pre-tax effect of the periodic receipt of fixed interest and payment of variable interest associated with our fixed-for-floating interest rate swaps resulted in $2 million and $3 million decrease in Interest expense during each of the three and nine months ended September 30, 2021, respectively, and less than $1 million and $3 million decrease in interest expense during the three and nine months ended September 30, 2020, respectively.
Investments in Available-for-Sale Debt Securities—The following table summarizes the amortized cost, gross unrealized gains and losses, and fair value of our outstanding available-for-sale debt securities:
| Millions of dollars | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||||
| Debt securities at September 30, 2021 | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||
| Debt securities at December 31, 2020 | 348 | 1 | — | 349 |
No allowance for credit losses related to our available-for-sale debt securities were recorded for the three and nine months ended September 30, 2021 and for the year ended December 31, 2020.
The proceeds from maturities and sales of our available-for-sale debt securities during the three and nine months ended September 30, 2021 and 2020 are summarized in the following table:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| Millions of dollars | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
| Proceeds from maturities of available-for-sale debt securities | $ | 55 | $ | — | $ | 346 | $ | — | |||||||||||||||
| Proceeds from sales of available-for-sale debt securities | — | 90 | — | 90 |
We had no available-for-sale debt securities which were in a continuous unrealized loss position for less than or greater than twelve months as of September 30, 2021 and December 31, 2020.
Investments in Equity Securities—Our investment in equity securities consists of an investment in a limited partnership with a notional amount of $36 million and $353 million as of September 30, 2021 and December 31, 2020, respectively. The carrying amount approximates fair value. The investment is carried at its net asset value as a practical expedient at September 30, 2021 and fair value at December 31, 2020. The investment is under an orderly voluntary liquidation by the fund administrator and we expect the investment to be fully liquidated by early 2022, during which time redemption or sale of the investment is restricted.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
We received proceeds of $45 million and $309 million related to our investments in equity securities during the three and nine months ended September 30, 2021, respectively, and $312 million and $313 million during the three and nine months ended September 30, 2020, respectively.
We recognized unrealized losses of less than $1 million on our equity securities that were outstanding during the three and nine months ended September 30, 2021, and no unrealized gains or losses were recognized during the three and nine months ended September 30, 2020.
8. Income Taxes
For interim tax reporting, we estimate an annual effective tax rate which is applied to the year-to-date ordinary income (loss). Tax effects of significant unusual or infrequently occurring items are excluded from the estimated annual effective tax rate calculation and recognized in the interim period in which they occur. Our effective income tax rate fluctuates based on, among other factors, changes in pretax income in countries with varying statutory tax rates, changes in valuation allowances, changes in foreign exchange gains or losses, the amount of exempt income, changes in unrecognized tax benefits associated with uncertain tax positions and changes in tax laws.
Our exempt income primarily includes interest income, export incentives, and equity earnings of joint ventures. Interest income earned by certain of our European subsidiaries through intercompany financings is taxed at rates substantially lower than the U.S. statutory rate. Export incentives relate to tax benefits derived from elections and structures available for U.S. exports. Equity earnings attributable to the earnings of our joint ventures, when paid through dividends to certain European subsidiaries, are exempt from all or portions of normal statutory income tax rates. We currently anticipate the favorable treatment for interest income, dividends, and export incentives to continue in the near term; however, this treatment is based on current law and tax rulings, which could change.
Our effective income tax rates for the third quarter and the first nine months of 2021 were 20.4% and 17.4%, respectively, compared to 1,136.4% and -16.7% for the third quarter and first nine months of 2020.
Our effective income tax rate decreased in the third quarter of 2021 compared to the third quarter of 2020. The lower effective tax rate for the third quarter of 2021 is primarily attributable to the recognition of a tax benefit of $125 million, primarily from a non-cash impairment in 2020. This tax benefit on our $11 million of pre-tax loss for the third quarter of 2020 resulted in an abnormally high effective tax rate.
Our effective income tax rate increased in the first nine months of 2021 compared to the first nine months of 2020. The higher effective tax rate for the first nine months of 2021 is primarily attributable to increased pre-tax earnings relative to our tax rate drivers, primarily exempt income (12.4%), coupled with the tax benefit recognized on a non-cash impairment in 2020 (21.7%).
As of September 30, 2021 and December 31, 2020, we had $497 million and $67 million, respectively, of income taxes payable which was included in Accrued liabilities in our Consolidated Balance Sheets.
9. Commitments and Contingencies
Commitments—We have various purchase commitments for materials, supplies and services incidental to the ordinary conduct of business, generally for quantities required for our businesses and at prevailing market prices. These commitments are designed to assure sources of supply and are not expected to be in excess of normal requirements. As of September 30, 2021, we had capital expenditure commitments, which we incurred in our normal course of business, including commitments of approximately $472 million related to building our new PO/TBA plant in Houston, Texas.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Financial Assurance Instruments—We have obtained letters of credit, performance and surety bonds and have issued financial and performance guarantees to support trade payables, potential liabilities and other obligations. Considering the frequency of claims made against the financial instruments we use to support our obligations, and the magnitude of those financial instruments in light of our current financial position, management does not expect that any claims against or draws on these instruments would have a material adverse effect on our Consolidated Financial Statements. We have not experienced any unmanageable difficulty in obtaining the required financial assurance instruments for our current operations.
Environmental Remediation—Our accrued liability for future environmental remediation costs at current and former plant sites and other remediation sites totaled $144 million and $133 million as of September 30, 2021 and December 31, 2020, respectively. At September 30, 2021, the accrued liabilities for individual sites range from less than $1 million to $27 million. The remediation expenditures are expected to occur over a number of years, and not concentrated in any single year. In our opinion, it is reasonably possible that losses in excess of the liabilities recorded may have been incurred. However, we cannot estimate any amount or range of such possible additional losses. New information about sites, new technology or future developments such as involvement in investigations by regulatory agencies, could require us to reassess our potential exposure related to environmental matters.
Indemnification—We are parties to various indemnification arrangements, including arrangements entered into in connection with acquisitions, divestitures and the formation and dissolution of joint ventures. Pursuant to these arrangements, we provide indemnification to and/or receive indemnification from other parties in connection with liabilities that may arise in connection with the transactions and in connection with activities prior to completion of the transactions. These indemnification arrangements typically include provisions pertaining to third-party claims relating to environmental and tax matters and various types of litigation. As of September 30, 2021, we had not accrued any significant amounts for our indemnification obligations, and we are not aware of other circumstances that would likely lead to significant future indemnification obligations. We cannot determine with certainty the potential amount of future payments under the indemnification arrangements until events arise that would trigger a liability under the arrangements.
As part of our technology licensing contracts, we give indemnifications to our licensees for liabilities arising from possible patent infringement claims with respect to certain proprietary licensed technologies. Such indemnifications have a stated maximum amount and generally cover a period of 5 to 10 years.
*Legal Proceedings—*We are subject to various lawsuits and claims, including but not limited to, matters involving contract disputes, environmental damages, personal injury and property damage. We vigorously defend ourselves and prosecute these matters as appropriate.
Our legal organization applies its knowledge, experience and professional judgment to the specific characteristics of our cases, employing a litigation management process to manage and monitor legal proceedings in which we are a party. Our process facilitates the early evaluation and quantification of potential exposures in individual cases. This process also enables us to track those cases that have been scheduled for trial, mediation or other resolution. We regularly assess the adequacy of legal accruals based on our professional judgment, experience and the information available regarding our cases.
Based on a consideration of all relevant facts and circumstances, we do not believe the ultimate outcome of any currently pending lawsuit against us will have a material adverse effect upon our operations, financial condition or Consolidated Financial Statements.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
10. Shareholders’ Equity and Redeemable Non-controlling Interests
Shareholders’ Equity
Dividend Distributions—The following table summarized the dividends paid in the periods presented:
| Millions of dollars, except per share amounts | Dividend Per Ordinary Share | Aggregate Dividends Paid | Date of Record | ||||||||||||||
| March 2021 | $ | 1.05 | $ | 352 | March 8, 2021 | ||||||||||||
| June 2021 | 1.13 | 378 | June 7, 2021 | ||||||||||||||
| September 2021 | 1.13 | 380 | August 30, 2021 | ||||||||||||||
| $ | 3.31 | $ | 1,110 | ||||||||||||||
Share Repurchase Authorization—In May 2021, our shareholders approved a proposal to authorize us to repurchase up to 34.0 million ordinary shares, through November 28, 2022 (“May 2021 Share Repurchase Authorization”), which superseded any prior repurchase authorizations. The timing and amount of these repurchases, which are determined based on our evaluation of market conditions and other factors, may be executed from time to time through open market or privately negotiated transactions. The repurchased shares, which are recorded at cost, are classified as Treasury stock and may be retired or used for general corporate purposes, including for various employee benefit and compensation plans.
The following table summarizes our share repurchase activity for the periods presented:
| Millions of dollars, except shares and per share amounts | Shares Repurchased | Average Purchase Price | Total Purchase Price, Including Commissions and Fees | |||||||||||||||||
| For nine months ended September 30, 2021: | ||||||||||||||||||||
| May 2021 Share Repurchase Authorization | 953,681 | $ | 93.34 | $ | 89 | |||||||||||||||
| For nine months ended September 30, 2020: | ||||||||||||||||||||
| September 2019 Share Repurchase Authorization | 50,685 | $ | 78.93 | $ | 4 |
Total cash paid for share repurchases for the nine months ended September 30, 2021 and 2020 were $78 million and $4 million, respectively. Cash payments made during the reporting period may differ from the total purchase price, including commissions and fees, due to the timing of payments.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Ordinary Shares—The changes in the outstanding amounts of ordinary shares are as follows:
| Nine Months Ended September 30, | |||||||||||
| 2021 | 2020 | ||||||||||
| Ordinary shares outstanding: | |||||||||||
| Beginning balance | 334,015,220 | 333,476,883 | |||||||||
| Share-based compensation | 415,857 | 246,640 | |||||||||
| Employee stock purchase plan | 149,956 | 245,521 | |||||||||
| Purchase of ordinary shares | (953,681) | (50,685) | |||||||||
| Ending balance | 333,627,352 | 333,918,359 |
*Treasury Shares—*The changes in the amounts of treasury shares held by the Company are as follows:
| Nine Months Ended September 30, | |||||||||||
| 2021 | 2020 | ||||||||||
| Ordinary shares held as treasury shares: | |||||||||||
| Beginning balance | 6,030,408 | 6,568,745 | |||||||||
| Share-based compensation | (415,857) | (246,640) | |||||||||
| Employee stock purchase plan | (50,006) | (245,521) | |||||||||
| Purchase of ordinary shares | 953,681 | 50,685 | |||||||||
| Ending balance | 6,518,226 | 6,127,269 |
Accumulated Other Comprehensive Loss—The components of, and after-tax changes in, Accumulated other comprehensive loss as of and for the nine months ended September 30, 2021 and 2020 are presented in the following tables:
| Millions of dollars | Financial Derivatives | Unrealized Gains on Available -for-Sale Debt Securities | Defined Benefit Pension and Other Postretirement Benefit Plans | Foreign Currency Translation Adjustments | Total | ||||||||||||||||||||||||||||||
| Balance – December 31, 2020 | $ | (426) | $ | 1 | $ | (752) | $ | (766) | $ | (1,943) | |||||||||||||||||||||||||
| Other comprehensive income (loss) before reclassifications | 311 | (1) | — | (92) | 218 | ||||||||||||||||||||||||||||||
| Tax expense before reclassifications | (69) | — | — | (35) | (104) | ||||||||||||||||||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | (142) | — | 66 | — | (76) | ||||||||||||||||||||||||||||||
| Tax (expense) benefit | 32 | — | (10) | — | 22 | ||||||||||||||||||||||||||||||
| Net other comprehensive income (loss) | 132 | (1) | 56 | (127) | 60 | ||||||||||||||||||||||||||||||
| Balance – September 30, 2021 | $ | (294) | $ | — | $ | (696) | $ | (893) | $ | (1,883) |
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
| Millions of dollars | Financial Derivatives | Unrealized Gains on Available -for-Sale Debt Securities | Defined Benefit Pension and Other Postretirement Benefit Plans | Foreign Currency Translation Adjustments | Total | ||||||||||||||||||||||||||||||
| Balance – December 31, 2019 | $ | (200) | $ | — | $ | (711) | $ | (873) | $ | (1,784) | |||||||||||||||||||||||||
| Other comprehensive income (loss) before reclassifications | (447) | 1 | — | (53) | (499) | ||||||||||||||||||||||||||||||
| Tax benefit before reclassifications | 93 | — | — | 6 | 99 | ||||||||||||||||||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | 84 | — | 42 | — | 126 | ||||||||||||||||||||||||||||||
| Tax expense | (19) | — | (11) | — | (30) | ||||||||||||||||||||||||||||||
| Net other comprehensive income (loss) | (289) | 1 | 31 | (47) | (304) | ||||||||||||||||||||||||||||||
| Balance – September 30, 2020 | $ | (489) | $ | 1 | $ | (680) | $ | (920) | $ | (2,088) |
The amounts reclassified out of each component of Accumulated other comprehensive loss are as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | Affected Line Item on the Consolidated Statements of Income | |||||||||||||||||||||||||||
| Millions of dollars | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||
| Reclassification adjustments for: | |||||||||||||||||||||||||||||
| Financial derivatives: | |||||||||||||||||||||||||||||
| Foreign currency | $ | (60) | $ | 89 | $ | (128) | $ | 81 | Interest expense | ||||||||||||||||||||
| Commodities | (14) | — | (18) | — | Cost of sales | ||||||||||||||||||||||||
| Interest rates | 1 | 1 | 4 | 3 | Interest expense | ||||||||||||||||||||||||
| Income tax (expense) benefit | 17 | (22) | 32 | (19) | Provision for income taxes | ||||||||||||||||||||||||
| Financial derivatives, net of tax | (56) | 68 | (110) | 65 | |||||||||||||||||||||||||
| Amortization of defined pension items: | |||||||||||||||||||||||||||||
| Prior service cost | — | 1 | 2 | 3 | Other income (expense), net | ||||||||||||||||||||||||
| Actuarial loss | 14 | 13 | 40 | 39 | Other income (expense), net | ||||||||||||||||||||||||
| Settlement loss | 20 | — | 24 | — | Other income (expense), net | ||||||||||||||||||||||||
| Income tax expense | (6) | (4) | (10) | (11) | Provision for income taxes | ||||||||||||||||||||||||
| Defined pension items, net of tax | 28 | 10 | 56 | 31 | |||||||||||||||||||||||||
| Total reclassifications, before tax | (39) | 104 | (76) | 126 | |||||||||||||||||||||||||
| Income tax (expense) benefit | 11 | (26) | 22 | (30) | Provision for income taxes | ||||||||||||||||||||||||
| Total reclassifications, after tax | $ | (28) | $ | 78 | $ | (54) | $ | 96 | Amount included in net income |
Redeemable Non-controlling Interests
Our redeemable non-controlling interests relate to shares of cumulative perpetual special stock (“redeemable non-controlling interest stock”) issued by a consolidated subsidiary. As of September 30, 2021 and December 31, 2020, we had 115,374 shares of redeemable non-controlling interest stock outstanding. In February, May and August 2021, we paid cash dividends of $15.00 per share to our redeemable non-controlling interest shareholders of record as of January 15, 2021, April 15, 2021 and July 15, 2021. These dividends totaled $5 million for each of the nine months ended September 30, 2021 and 2020.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
11. Per Share Data
Basic earnings per share are based upon the weighted average number of shares of common stock outstanding during the periods. Diluted earnings per share includes the effect of certain stock option awards and other equity-based compensation awards. We have unvested restricted stock units that are considered participating securities for earnings per share. There was no impact to basic or diluted earnings per share from discontinued operations.
Earnings per share data and dividends declared per share of common stock are as follows:
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2021 | 2020 | ||||||||||||||||||||||
| Millions of dollars | Continuing Operations | Discontinued Operations | Continuing Operations | Discontinued Operations | |||||||||||||||||||
| Net income (loss) | $ | 1,763 | $ | (1) | $ | 114 | $ | — | |||||||||||||||
| Dividends on redeemable non-controlling interests | (2) | — | (2) | — | |||||||||||||||||||
| Net income attributable to participating securities | (4) | — | (1) | — | |||||||||||||||||||
| Net income (loss) attributable to ordinary shareholders – basic and diluted | $ | 1,757 | $ | (1) | $ | 111 | $ | — | |||||||||||||||
| Millions of shares, except per share amounts | |||||||||||||||||||||||
| Basic weighted average common stock outstanding | 334 | 334 | 334 | 334 | |||||||||||||||||||
| Effect of dilutive securities | — | — | — | — | |||||||||||||||||||
| Potential dilutive shares | 334 | 334 | 334 | 334 | |||||||||||||||||||
| Earnings per share: | |||||||||||||||||||||||
| Basic | $ | 5.25 | $ | — | $ | 0.33 | $ | — | |||||||||||||||
| Diluted | $ | 5.25 | $ | — | $ | 0.33 | $ | — | |||||||||||||||
| Nine Months Ended September 30, | |||||||||||||||||||||||
| 2021 | 2020 | ||||||||||||||||||||||
| Millions of dollars | Continuing Operations | Discontinued Operations | Continuing Operations | Discontinued Operations | |||||||||||||||||||
| Net income (loss) | $ | 4,892 | $ | (1) | $ | 572 | $ | — | |||||||||||||||
| Dividends on redeemable non-controlling interests | (5) | — | (5) | — | |||||||||||||||||||
| Net income attributable to participating securities | (12) | — | (2) | — | |||||||||||||||||||
| Net income (loss) attributable to ordinary shareholders – basic and diluted | $ | 4,875 | $ | (1) | $ | 565 | $ | — | |||||||||||||||
| Millions of shares, except per share amounts | |||||||||||||||||||||||
| Basic weighted average common stock outstanding | 334 | 334 | 334 | 334 | |||||||||||||||||||
| Effect of dilutive securities | — | — | — | — | |||||||||||||||||||
| Potential dilutive shares | 334 | 334 | 334 | 334 | |||||||||||||||||||
| Earnings per share: | |||||||||||||||||||||||
| Basic | $ | 14.58 | $ | — | $ | 1.69 | $ | — | |||||||||||||||
| Diluted | $ | 14.57 | $ | — | $ | 1.69 | $ | — | |||||||||||||||
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
12. Segment and Related Information
Our operations are managed by senior executives who report to our Chief Executive Officer, the chief operating decision maker. Discrete financial information is available for each of the segments, and our Chief Executive Officer uses the operating results of each of the operating segments for performance evaluation and resource allocation. The activities of each of our segments from which they earn revenues and incur expenses are described below:
-
Olefins and Polyolefins—Americas (“O&P—Americas”). Our O&P—Americas segment produces and markets olefins and co-products, polyethylene and polypropylene.
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Olefins and Polyolefins—Europe, Asia, International (“O&P—EAI”). Our O&P—EAI segment produces and markets olefins and co-products, polyethylene and polypropylene.
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Intermediates and Derivatives (“I&D”). Our I&D segment produces and markets propylene oxide and its derivatives, oxyfuels and related products, and intermediate chemicals such as styrene monomer, acetyls, ethylene oxide and ethylene glycol.
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Advanced Polymer Solutions (“APS”). Our APS segment produces and markets compounding and solutions, such as polypropylene compounds, engineered plastics, masterbatches, engineered composites, colors and powders, and advanced polymers, which includes Catalloy and polybutene-1.
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Refining. Our Refining segment refines heavy, high-sulfur crude oil and other crude oils of varied types and sources available on the U.S. Gulf Coast into refined products, including gasoline and distillates.
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Technology. Our Technology segment develops and licenses chemical and polyolefin process technologies and manufactures and sells polyolefin catalysts.
Our chief operating decision maker uses EBITDA as the primary measure for reviewing profitability of our segments, and therefore, we have presented EBITDA for all segments. We define EBITDA as earnings before interest, income taxes, and depreciation and amortization.
“Other” includes intersegment eliminations and items that are not directly related or allocated to business operations, such as foreign exchange gains or losses and components of pension and other postretirement benefit costs other than service costs. Sales between segments are made primarily at prices approximating prevailing market prices.
Summarized financial information concerning reportable segments is shown in the following tables for the periods presented:
| Three Months Ended September 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
| Millions of dollars | O&P– Americas | O&P– EAI | I&D | APS | Refining | Technology | Other | Total | |||||||||||||||||||||||||||||||||||||||
| Sales and other operating revenues: | |||||||||||||||||||||||||||||||||||||||||||||||
| Customers | $ | 3,071 | $ | 3,262 | $ | 2,851 | $ | 1,280 | $ | 2,050 | $ | 186 | $ | — | $ | 12,700 | |||||||||||||||||||||||||||||||
| Intersegment | 1,337 | 196 | 43 | 6 | 238 | 52 | (1,872) | — | |||||||||||||||||||||||||||||||||||||||
| 4,408 | 3,458 | 2,894 | 1,286 | 2,288 | 238 | (1,872) | 12,700 | ||||||||||||||||||||||||||||||||||||||||
| Income from equity investments | 29 | 66 | 9 | — | — | — | — | 104 | |||||||||||||||||||||||||||||||||||||||
| EBITDA | 1,568 | 474 | 348 | 121 | 41 | 155 | (16) | 2,691 | |||||||||||||||||||||||||||||||||||||||
| Capital expenditures | 72 | 54 | 327 | 20 | 17 | 22 | 2 | 514 |
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
| Three Months Ended September 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||
| Millions of dollars | O&P– Americas | O&P– EAI | I&D | APS | Refining | Technology | Other | Total | |||||||||||||||||||||||||||||||||||||||
| Sales and other operating revenues: | |||||||||||||||||||||||||||||||||||||||||||||||
| Customers | $ | 1,268 | $ | 1,837 | $ | 1,498 | $ | 1,003 | $ | 1,003 | $ | 167 | $ | — | $ | 6,776 | |||||||||||||||||||||||||||||||
| Intersegment | 572 | 145 | 40 | 1 | 98 | 26 | (882) | — | |||||||||||||||||||||||||||||||||||||||
| 1,840 | 1,982 | 1,538 | 1,004 | 1,101 | 193 | (882) | 6,776 | ||||||||||||||||||||||||||||||||||||||||
| Income from equity investments | 15 | 40 | 7 | — | — | — | — | 62 | |||||||||||||||||||||||||||||||||||||||
| LCM inventory valuation benefit | (70) | (17) | (22) | (40) | (11) | — | — | (160) | |||||||||||||||||||||||||||||||||||||||
| EBITDA | 474 | 148 | 267 | 157 | (692) | 111 | 1 | 466 | |||||||||||||||||||||||||||||||||||||||
| Capital expenditures | 130 | 38 | 103 | 18 | 15 | 24 | 97 | 425 |
| Nine Months Ended September 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
| Millions of dollars | O&P– Americas | O&P– EAI | I&D | APS | Refining | Technology | Other | Total | |||||||||||||||||||||||||||||||||||||||
| Sales and other operating revenues: | |||||||||||||||||||||||||||||||||||||||||||||||
| Customers | $ | 7,770 | $ | 9,342 | $ | 7,086 | $ | 3,882 | $ | 4,784 | $ | 479 | $ | — | $ | 33,343 | |||||||||||||||||||||||||||||||
| Intersegment | 3,220 | 618 | 160 | 10 | 575 | 107 | (4,690) | — | |||||||||||||||||||||||||||||||||||||||
| 10,990 | 9,960 | 7,246 | 3,892 | 5,359 | 586 | (4,690) | 33,343 | ||||||||||||||||||||||||||||||||||||||||
| Income from equity investments | 94 | 263 | 32 | — | — | — | — | 389 | |||||||||||||||||||||||||||||||||||||||
| EBITDA | 4,011 | 1,594 | 1,126 | 385 | (150) | 341 | (13) | 7,294 | |||||||||||||||||||||||||||||||||||||||
| Capital expenditures | 219 | 141 | 717 | 55 | 62 | 64 | 27 | 1,285 | |||||||||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||
| Millions of dollars | O&P– Americas | O&P– EAI | I&D | APS | Refining | Technology | Other | Total | |||||||||||||||||||||||||||||||||||||||
| Sales and other operating revenues: | |||||||||||||||||||||||||||||||||||||||||||||||
| Customers | $ | 3,514 | $ | 5,543 | $ | 4,370 | $ | 2,796 | $ | 3,193 | $ | 400 | $ | — | $ | 19,816 | |||||||||||||||||||||||||||||||
| Intersegment | 1,551 | 365 | 95 | 9 | 275 | 92 | (2,387) | — | |||||||||||||||||||||||||||||||||||||||
| 5,065 | 5,908 | 4,465 | 2,805 | 3,468 | 492 | (2,387) | 19,816 | ||||||||||||||||||||||||||||||||||||||||
| Income (loss) from equity investments | 24 | 88 | 12 | (1) | — | — | — | 123 | |||||||||||||||||||||||||||||||||||||||
| LCM inventory valuation charge | 3 | 53 | 76 | 29 | 2 | — | — | 163 | |||||||||||||||||||||||||||||||||||||||
| EBITDA | 1,088 | 522 | 571 | 226 | (799) | 279 | (15) | 1,872 | |||||||||||||||||||||||||||||||||||||||
| Capital expenditures | 524 | 114 | 761 | 41 | 52 | 80 | 101 | 1,673 |
During the third quarter of 2020, we assessed the Houston refinery for impairment and determined that the asset group carrying value exceeded its undiscounted estimated pre-tax cash flows and fair value. As a result, we recognized a non-cash impairment charge in the third quarter of 2020 of $582 million, which includes a $570 million impairment of property, plant and equipment and a $12 million impairment of intangible assets. The fair value measurement for the asset group is a Level 3 within the fair value hierarchy.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
We are currently weighing strategic options for our Refining segment, including a potential sale of our Houston refinery. While the refinery is a valuable asset, we believe that it may be even more valuable as part of a larger refining system. Any strategic option pursued for the Houston refinery remains subject to the approval of our Board of Directors and, assuming such approval is obtained, may require certain regulatory approvals or other closing conditions.
A reconciliation of EBITDA to Income (loss) from continuing operations before income taxes is shown in the following table for each of the periods presented:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| Millions of dollars | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
| EBITDA: | |||||||||||||||||||||||
| Total segment EBITDA | $ | 2,707 | $ | 465 | $ | 7,307 | $ | 1,887 | |||||||||||||||
| Other EBITDA | (16) | 1 | (13) | (15) | |||||||||||||||||||
| Less: | |||||||||||||||||||||||
| Depreciation and amortization expense | (351) | (358) | (1,016) | (1,056) | |||||||||||||||||||
| Interest expense | (126) | (122) | (366) | (336) | |||||||||||||||||||
| Add: | |||||||||||||||||||||||
| Interest income | 1 | 3 | 8 | 10 | |||||||||||||||||||
| Income (loss) from continuing operations before income taxes | $ | 2,215 | $ | (11) | $ | 5,920 | $ | 490 |
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