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 March 31, | |||||||||||||||||||||||
| Millions of dollars, except earnings per share | 2022 | 2021 | |||||||||||||||||||||
| Sales and other operating revenues: | |||||||||||||||||||||||
| Trade | $ | 12,840 | $ | 8,851 | |||||||||||||||||||
| Related parties | 317 | 231 | |||||||||||||||||||||
| 13,157 | 9,082 | ||||||||||||||||||||||
| Operating costs and expenses: | |||||||||||||||||||||||
| Cost of sales | 11,136 | 7,678 | |||||||||||||||||||||
| Selling, general and administrative expenses | 328 | 287 | |||||||||||||||||||||
| Research and development expenses | 32 | 29 | |||||||||||||||||||||
| 11,496 | 7,994 | ||||||||||||||||||||||
| Operating income | 1,661 | 1,088 | |||||||||||||||||||||
| Interest expense | (74) | (110) | |||||||||||||||||||||
| Interest income | 2 | 2 | |||||||||||||||||||||
| Other income, net | 19 | 25 | |||||||||||||||||||||
| Income from continuing operations before equity investments and income taxes | 1,608 | 1,005 | |||||||||||||||||||||
| Income from equity investments | 29 | 137 | |||||||||||||||||||||
| Income from continuing operations before income taxes | 1,637 | 1,142 | |||||||||||||||||||||
| Provision for income taxes | 316 | 70 | |||||||||||||||||||||
| Income from continuing operations | 1,321 | 1,072 | |||||||||||||||||||||
| Loss from discontinued operations, net of tax | (1) | (2) | |||||||||||||||||||||
| Net income | 1,320 | 1,070 | |||||||||||||||||||||
| Dividends on redeemable non-controlling interests | (2) | (2) | |||||||||||||||||||||
| Net income attributable to the Company shareholders | $ | 1,318 | $ | 1,068 | |||||||||||||||||||
| Earnings per share: | |||||||||||||||||||||||
| Net income (loss) attributable to the Company shareholders — | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Continuing operations | $ | 4.01 | $ | 3.20 | |||||||||||||||||||
| Discontinued operations | — | (0.01) | |||||||||||||||||||||
| $ | 4.01 | $ | 3.19 | ||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
| Continuing operations | $ | 4.00 | $ | 3.19 | |||||||||||||||||||
| Discontinued operations | — | (0.01) | |||||||||||||||||||||
| $ | 4.00 | $ | 3.18 |
See Notes to the Consolidated Financial Statements.
LYONDELLBASELL INDUSTRIES N.V.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
| Three Months Ended March 31, | |||||||||||||||||||||||
| Millions of dollars | 2022 | 2021 | |||||||||||||||||||||
| Net income | $ | 1,320 | $ | 1,070 | |||||||||||||||||||
| Other comprehensive income (loss), net of tax – | |||||||||||||||||||||||
| Financial derivatives | 88 | 175 | |||||||||||||||||||||
| Defined benefit pension and other postretirement benefit plans | 5 | 11 | |||||||||||||||||||||
| Foreign currency translations | (25) | (107) | |||||||||||||||||||||
| Total other comprehensive income, net of tax | 68 | 79 | |||||||||||||||||||||
| Comprehensive income | 1,388 | 1,149 | |||||||||||||||||||||
| Dividends on redeemable non-controlling interests | (2) | (2) | |||||||||||||||||||||
| Comprehensive income attributable to the Company shareholders | $ | 1,386 | $ | 1,147 |
See Notes to the Consolidated Financial Statements.
LYONDELLBASELL INDUSTRIES N.V.
CONSOLIDATED BALANCE SHEETS
| Millions of dollars | March 31, 2022 | December 31, 2021 | |||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 1,785 | $ | 1,472 | |||||||
| Restricted cash | 9 | 5 | |||||||||
| Short-term investments | — | 9 | |||||||||
| Accounts receivable: | |||||||||||
| Trade, net | 5,092 | 4,565 | |||||||||
| Related parties | 299 | 243 | |||||||||
| Inventories | 4,979 | 4,901 | |||||||||
| Prepaid expenses and other current assets | 1,127 | 1,022 | |||||||||
| Total current assets | 13,291 | 12,217 | |||||||||
| Operating lease assets | 1,905 | 1,946 | |||||||||
| Property, plant and equipment | 22,733 | 22,382 | |||||||||
| Less: Accumulated depreciation | (8,004) | (7,826) | |||||||||
| Property, plant and equipment, net | 14,729 | 14,556 | |||||||||
| Equity investments | 4,743 | 4,786 | |||||||||
| Goodwill | 1,866 | 1,875 | |||||||||
| Intangible assets, net | 673 | 695 | |||||||||
| Other assets | 647 | 667 | |||||||||
| Total assets | $ | 37,854 | $ | 36,742 |
See Notes to the Consolidated Financial Statements.
LYONDELLBASELL INDUSTRIES N.V.
CONSOLIDATED BALANCE SHEETS
| Millions of dollars, except shares and par value data | March 31, 2022 | December 31, 2021 | |||||||||
| LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Current maturities of long-term debt | $ | 8 | $ | 6 | |||||||
| Short-term debt | 141 | 362 | |||||||||
| Accounts payable: | |||||||||||
| Trade | 4,238 | 3,460 | |||||||||
| Related parties | 776 | 831 | |||||||||
| Accrued liabilities | 2,376 | 2,571 | |||||||||
| Total current liabilities | 7,539 | 7,230 | |||||||||
| Long-term debt | 11,175 | 11,246 | |||||||||
| Operating lease liabilities | 1,610 | 1,649 | |||||||||
| Other liabilities | 2,215 | 2,295 | |||||||||
| Deferred income taxes | 2,487 | 2,334 | |||||||||
| Commitments and contingencies | |||||||||||
| Redeemable non-controlling interests | 116 | 116 | |||||||||
| Shareholders’ equity: | |||||||||||
| Ordinary shares, €0.04 par value, 1,275 million shares authorized, 327,644,034 and 329,536,389 shares outstanding, respectively | 19 | 19 | |||||||||
| Additional paid-in capital | 6,056 | 6,044 | |||||||||
| Retained earnings | 9,514 | 8,563 | |||||||||
| Accumulated other comprehensive loss | (1,735) | (1,803) | |||||||||
| Treasury stock, at cost, 12,625,433 and 10,675,605 ordinary shares, respectively | (1,156) | (965) | |||||||||
| Total Company share of shareholders’ equity | 12,698 | 11,858 | |||||||||
| Non-controlling interests | 14 | 14 | |||||||||
| Total equity | 12,712 | 11,872 | |||||||||
| Total liabilities, redeemable non-controlling interests and equity | $ | 37,854 | $ | 36,742 |
See Notes to the Consolidated Financial Statements.
LYONDELLBASELL INDUSTRIES N.V.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Three Months Ended March 31, | |||||||||||
| Millions of dollars | 2022 | 2021 | |||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | 1,320 | $ | 1,070 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 311 | 335 | |||||||||
| Amortization of debt-related costs | 4 | 5 | |||||||||
| Share-based compensation | 18 | 19 | |||||||||
| Equity investments— | |||||||||||
| Equity income | (29) | (137) | |||||||||
| Distributions of earnings, net of tax | 34 | 20 | |||||||||
| Deferred income tax provision (benefit) | 137 | (83) | |||||||||
| Changes in assets and liabilities that provided (used) cash: | |||||||||||
| Accounts receivable | (629) | (593) | |||||||||
| Inventories | (117) | (360) | |||||||||
| Accounts payable | 724 | 327 | |||||||||
| Other, net | (271) | (32) | |||||||||
| Net cash provided by operating activities | 1,502 | 571 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Expenditures for property, plant and equipment | (446) | (340) | |||||||||
| Proceeds from maturities of available-for-sale debt securities | — | 74 | |||||||||
| Proceeds from equity securities | 8 | 226 | |||||||||
| Other, net | (18) | (19) | |||||||||
| Net cash used in investing activities | (456) | (59) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Repurchases of Company ordinary shares | (217) | — | |||||||||
| Dividends paid - common stock | (371) | (352) | |||||||||
| Repayments of long-term debt | — | (500) | |||||||||
| Net repayments of commercial paper | (169) | — | |||||||||
| Collateral received from interest rate derivatives | 51 | 66 | |||||||||
| Other, net | (7) | 4 | |||||||||
| Net cash used in financing activities | (713) | (782) | |||||||||
| Effect of exchange rate changes on cash | (16) | (32) | |||||||||
| Increase (decrease) in cash and cash equivalents and restricted cash | 317 | (302) | |||||||||
| Cash and cash equivalents and restricted cash at beginning of period | 1,477 | 1,765 | |||||||||
| Cash and cash equivalents and restricted cash at end of period | $ | 1,794 | $ | 1,463 |
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, 2021 | $ | 19 | $ | (965) | $ | 6,044 | $ | 8,563 | $ | (1,803) | $ | 11,858 | $ | 14 | |||||||||||||||||||||||||||
| Net income | — | — | — | 1,320 | — | 1,320 | — | ||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | 68 | 68 | — | ||||||||||||||||||||||||||||||||||
| Share-based compensation | — | 11 | 12 | 4 | — | 27 | — | ||||||||||||||||||||||||||||||||||
| Dividends - common stock ($1.13 per share) | — | — | — | (371) | — | (371) | — | ||||||||||||||||||||||||||||||||||
| Dividends - redeemable non-controlling interests ($15.00 per share) | — | — | — | (2) | — | (2) | — | ||||||||||||||||||||||||||||||||||
| Repurchases of Company ordinary shares | — | (202) | — | — | — | (202) | — | ||||||||||||||||||||||||||||||||||
| Balance, March 31, 2022 | $ | 19 | $ | (1,156) | $ | 6,056 | $ | 9,514 | $ | (1,735) | $ | 12,698 | $ | 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, 2020 | $ | 19 | $ | (531) | $ | 5,986 | $ | 4,440 | $ | (1,943) | $ | 7,971 | $ | 17 | |||||||||||||||||||||||||||
| Net income | — | — | — | 1,070 | — | 1,070 | — | ||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | 79 | 79 | — | ||||||||||||||||||||||||||||||||||
| Share-based compensation | — | 25 | 7 | 2 | — | 34 | — | ||||||||||||||||||||||||||||||||||
| Dividends - common stock ($1.05 per share) | — | — | — | (352) | — | (352) | — | ||||||||||||||||||||||||||||||||||
| Dividends - redeemable non-controlling interests ($15.00 per share) | — | — | — | (2) | — | (2) | — | ||||||||||||||||||||||||||||||||||
| Sales of non-controlling interest | — | — | — | — | — | — | (3) | ||||||||||||||||||||||||||||||||||
| Balance, March 31, 2021 | $ | 19 | $ | (506) | $ | 5,993 | $ | 5,158 | $ | (1,864) | $ | 8,800 | $ | 14 |
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, 2021. 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
There were no new standards or Accounting Standard Updates (“ASU”) adopted in the quarter ended March 31, 2022 that had a material impact on our Consolidated Financial Statements.
Accounting Guidance Issued But Not Adopted as of March 31, 2022
Government Assistance—In November 2021, the Financial Accounting Standards Board (“FASB”) issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. The guidance requires disclosures about assistance received from the government that have been accounted for by analogizing to a grant or contribution accounting model including the nature and form of assistance, the accounting policies used to account for the assistance and its impact on the entity’s financial statements. The guidance is effective for annual periods beginning after December 15, 2021, with early application permitted. The adoption of this guidance will not have a material impact on our Consolidated Financial Statements.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
3. Revenues
*Contract Balances—*Contract liabilities were $214 million and $169 million at March 31, 2022 and December 31, 2021, 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 March 31, | |||||||||||||||||||||||
| Millions of dollars | 2022 | 2021 | |||||||||||||||||||||
| Sales and other operating revenues: | |||||||||||||||||||||||
| Olefins and co-products | $ | 1,157 | $ | 1,091 | |||||||||||||||||||
| Polyethylene | 2,684 | 2,153 | |||||||||||||||||||||
| Polypropylene | 2,014 | 1,718 | |||||||||||||||||||||
| Propylene oxide and derivatives | 885 | 502 | |||||||||||||||||||||
| Oxyfuels and related products | 1,254 | 607 | |||||||||||||||||||||
| Intermediate chemicals | 1,110 | 578 | |||||||||||||||||||||
| Compounding and solutions | 1,135 | 1,038 | |||||||||||||||||||||
| Advanced polymers | 272 | 231 | |||||||||||||||||||||
| Refined products | 2,458 | 993 | |||||||||||||||||||||
| Other | 188 | 171 | |||||||||||||||||||||
| Total | $ | 13,157 | $ | 9,082 |
The following table presents our revenues disaggregated by geography, based upon the location of the customer:
| Three Months Ended March 31, | |||||||||||||||||||||||
| Millions of dollars | 2022 | 2021 | |||||||||||||||||||||
| Sales and other operating revenues: | |||||||||||||||||||||||
| United States | $ | 6,074 | $ | 4,086 | |||||||||||||||||||
| Germany | 995 | 765 | |||||||||||||||||||||
| China | 656 | 560 | |||||||||||||||||||||
| Italy | 518 | 378 | |||||||||||||||||||||
| Mexico | 442 | 247 | |||||||||||||||||||||
| Japan | 423 | 230 | |||||||||||||||||||||
| Poland | 395 | 270 | |||||||||||||||||||||
| The Netherlands | 390 | 270 | |||||||||||||||||||||
| France | 387 | 290 | |||||||||||||||||||||
| Other | 2,877 | 1,986 | |||||||||||||||||||||
| Total | $ | 13,157 | $ | 9,082 |
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
4. Accounts Receivable
Our accounts receivable are reflected in the Consolidated Balance Sheets, net of allowance for credit losses, of $6 million as of March 31, 2022 and December 31, 2021.
5. Inventories
Inventories consisted of the following components:
| Millions of dollars | March 31, 2022 | December 31, 2021 | |||||||||
| Finished goods | $ | 3,382 | $ | 3,329 | |||||||
| Work-in-process | 206 | 178 | |||||||||
| Raw materials and supplies | 1,391 | 1,394 | |||||||||
| Total inventories | $ | 4,979 | $ | 4,901 |
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 | March 31, 2022 | December 31, 2021 | |||||||||
| Senior Notes due 2024, $1,000 million, 5.75% ($2 million of debt issuance cost) | $ | 773 | $ | 773 | |||||||
| Senior Notes due 2055, $1,000 million, 4.625% ($15 million of discount; $11 million of debt issuance cost) | 974 | 974 | |||||||||
| Guaranteed Notes due 2027, $300 million, 8.1% | 300 | 300 | |||||||||
| Issued by LYB International Finance B.V.: | |||||||||||
| Guaranteed Notes due 2023, $750 million, 4.0% ($1 million of discount) | 424 | 423 | |||||||||
| Guaranteed Notes due 2043, $750 million, 5.25% ($19 million of discount; $7 million of debt issuance cost) | 724 | 724 | |||||||||
| Guaranteed Notes due 2044, $1,000 million, 4.875% ($10 million of discount; $9 million of debt issuance cost) | 981 | 981 | |||||||||
| Issued by LYB International Finance II B.V.: | |||||||||||
| Guaranteed Notes due 2026, €500 million, 0.875% ($1 million of discount; $2 million of debt issuance cost) | 547 | 562 | |||||||||
| Guaranteed Notes due 2027, $1,000 million, 3.5% ($3 million of discount; $3 million of debt issuance cost) | 612 | 631 | |||||||||
| Guaranteed Notes due 2031, €500 million, 1.625% ($5 million of discount; $3 million of debt issuance cost) | 547 | 558 | |||||||||
| Issued by LYB International Finance III LLC: | |||||||||||
| Guaranteed Notes due 2025, $500 million, 1.25% ($1 million of discount; $3 million of debt issuance cost) | 479 | 486 | |||||||||
| Guaranteed Notes due 2030, $500 million, 3.375% ($1 million of debt issuance cost) | 133 | 143 | |||||||||
| Guaranteed Notes due 2030, $500 million, 2.25% ($3 million of discount; $4 million of debt issuance cost) | 481 | 490 | |||||||||
| Guaranteed Notes due 2040, $750 million, 3.375% ($2 million of discount; $7 million of debt issuance cost) | 741 | 741 | |||||||||
| 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) | 976 | 981 | |||||||||
| Guaranteed Notes due 2051, $1,000 million, 3.625% ($3 million of discount; $11 million of debt issuance cost) | 957 | 986 | |||||||||
| Guaranteed Notes due 2060, $500 million, 3.8% ($4 million of discount; $6 million of debt issuance cost) | 490 | 490 | |||||||||
| Other | 69 | 34 | |||||||||
| Total | 11,183 | 11,252 | |||||||||
| Less current maturities | (8) | (6) | |||||||||
| Long-term debt | $ | 11,175 | $ | 11,246 |
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 March 31, | March 31, | December 31, | ||||||||||||||||||||||||||||||||||||
| Millions of dollars | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||||||||||||||
| Guaranteed Notes due 2025, 1.25% | $ | 7 | $ | — | $ | 9 | $ | 2 | ||||||||||||||||||||||||||||||
| Guaranteed Notes due 2026, 0.875% | 4 | 1 | 5 | 1 | ||||||||||||||||||||||||||||||||||
| Guaranteed Notes due 2027, 3.5% | 19 | 4 | (27) | (46) | ||||||||||||||||||||||||||||||||||
| Guaranteed Notes due 2030, 3.375% | 10 | — | 8 | (2) | ||||||||||||||||||||||||||||||||||
| Guaranteed Notes due 2030, 2.25% | 10 | — | 12 | 2 | ||||||||||||||||||||||||||||||||||
| Guaranteed Notes due 2050, 4.2% | 5 | — | 8 | 3 | ||||||||||||||||||||||||||||||||||
| Guaranteed Notes due 2051, 3.625% | 29 | — | 29 | — | ||||||||||||||||||||||||||||||||||
| Total | $ | 84 | $ | 5 | $ | 44 | $ | (40) |
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 | March 31, 2022 | December 31, 2021 | |||||||||
| U.S. Receivables Facility | $ | — | $ | — | |||||||
| Commercial paper | 35 | 204 | |||||||||
| Precious metal financings | 106 | 155 | |||||||||
| Other | — | 3 | |||||||||
| Total Short-term debt | $ | 141 | $ | 362 |
Long-Term Debt
Senior Revolving Credit Facility—Our $3,250 million Senior Revolving Credit Facility, which expires in November 2026, may be used for dollar and euro denominated borrowings. The facility has a $200 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, LIBOR rate or EURIBOR rate, plus an applicable margin. Additional fees are incurred for the average daily unused commitments. At March 31, 2022, we had no borrowings or letters of credit outstanding and $3,215 million of unused availability under this facility.
Short-Term Debt
U.S. Receivables Facility—Our U.S. Receivables Facility, which expires in June 2024, has a purchase limit of $900 million in addition to a $300 million uncommitted accordion feature. 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 March 31, 2022, we had no borrowings or letters of credit outstanding and $900 million unused availability under this facility.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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 March 31, 2022 are based on the terms of the notes and range from 0.45% to 0.55%. At March 31, 2022, we had $35 million of outstanding commercial paper.
Weighted Average Interest Rate—At March 31, 2022 and December 31, 2021, our weighted average interest rates on outstanding Short-term debt were 1.2% and 0.9%, respectively.
Additional Information
Debt Discount and Issuance Costs—Amortization of debt discounts and debt issuance costs resulted in amortization expense of $4 million and $5 million for the three months ended March 31, 2022 and 2021, respectively, which is included in Interest expense in the Consolidated Statements of Income.
As of March 31, 2022, we are in compliance with our debt covenants.
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.
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:
| March 31, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||
| Millions of dollars | Notional Amount | Fair Value | Notional Amount | Fair Value | Balance Sheet Classification | ||||||||||||||||||||||||
| Assets– | |||||||||||||||||||||||||||||
| Derivatives designated as hedges: | |||||||||||||||||||||||||||||
| Commodities | $ | 30 | $ | 40 | $ | 41 | $ | 24 | Prepaid expenses and other current assets | ||||||||||||||||||||
| Foreign currency | 614 | 90 | 614 | 63 | Prepaid expenses and other current assets | ||||||||||||||||||||||||
| Foreign currency | 2,085 | 61 | 1,785 | 43 | Other assets | ||||||||||||||||||||||||
| Interest rates | — | 13 | — | 7 | Prepaid expenses and other current assets | ||||||||||||||||||||||||
| Interest rates | — | — | 300 | 1 | Other assets | ||||||||||||||||||||||||
| Derivatives not designated as hedges: | |||||||||||||||||||||||||||||
| Commodities | 55 | 12 | 221 | 30 | Prepaid expenses and other current assets | ||||||||||||||||||||||||
| Commodities | 12 | 1 | — | — | Other assets | ||||||||||||||||||||||||
| Foreign currency | 83 | — | 34 | 1 | Prepaid expenses and other current assets | ||||||||||||||||||||||||
| Non-derivatives: | |||||||||||||||||||||||||||||
| Equity securities | — | — | 9 | 8 | Short-term investments | ||||||||||||||||||||||||
| Total | $ | 2,879 | $ | 217 | $ | 3,004 | $ | 177 | |||||||||||||||||||||
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
| March 31, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||
| Millions of dollars | Notional Amount | Fair Value | Notional Amount | Fair Value | Balance Sheet Classification | ||||||||||||||||||||||||
| Liabilities– | |||||||||||||||||||||||||||||
| Derivatives designated as hedges: | |||||||||||||||||||||||||||||
| Foreign currency | $ | — | $ | 26 | $ | — | $ | 14 | Accrued liabilities | ||||||||||||||||||||
| Foreign currency | 1,499 | 80 | 1,800 | 99 | Other liabilities | ||||||||||||||||||||||||
| Interest rates | — | 5 | — | 3 | Accrued liabilities | ||||||||||||||||||||||||
| Interest rates | 2,763 | 247 | 1,863 | 280 | Other liabilities | ||||||||||||||||||||||||
| Derivatives not designated as hedges: | |||||||||||||||||||||||||||||
| Commodities | 176 | 14 | 24 | 1 | Accrued liabilities | ||||||||||||||||||||||||
| Commodities | 31 | 6 | — | — | Other Liabilities | ||||||||||||||||||||||||
| Foreign currency | 544 | 14 | 188 | 2 | Accrued liabilities | ||||||||||||||||||||||||
| Total | $ | 5,013 | $ | 392 | $ | 3,875 | $ | 399 |
The financial instruments in the table above are classified as Level 2, except for our investment in equity securities which are measured at fair value using the net asset value per share, or its equivalent, practical expedient and are not classified in the fair value hierarchy. We present the gross assets and liabilities of our derivative financial instruments on the Consolidated Balance Sheets.
Financial Instruments Not Measured at Fair Value on a Recurring Basis—The following table presents the carrying value and estimated fair value of our Short-term precious metal financings and Long-term debt:
| March 31, 2022 | December 31, 2021 | ||||||||||||||||||||||
| Millions of dollars | Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||||||||
| Precious metal financings | $ | 106 | $ | 105 | $ | 155 | $ | 130 | |||||||||||||||
| Long-term debt | 11,150 | 11,379 | 11,218 | 12,756 | |||||||||||||||||||
| Total | $ | 11,256 | $ | 11,484 | $ | 11,373 | $ | 12,886 |
The financial instruments in the table above are classified as Level 2. Our other financial instruments classified within Current assets and Current liabilities have a short maturity and their carrying value generally approximates fair value.
Derivative Instruments:
Commodity Prices—The following table presents the notional amounts of our outstanding commodity derivative instruments:
| March 31, 2022 | December 31, 2021 | ||||||||||||||||
| Millions of dollars | Notional Amount | Notional Amount | Maturity Date | ||||||||||||||
| Derivatives designated as hedges: | |||||||||||||||||
| Cash flow hedges | $ | 30 | $ | 41 | 2022 | ||||||||||||
| Derivatives not designated as hedges: | |||||||||||||||||
| Commodity contracts | 274 | 245 | 2022 |
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Interest Rates—The following table presents the notional amounts of our outstanding interest rate derivative instruments:
| March 31, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||
| Millions of dollars | Notional Amount | Notional Amount | Maturity Date | ||||||||||||||||||||||||||
| Cash flow hedges | $ | 1,000 | $ | 1,000 | 2023 to 2024 | ||||||||||||||||||||||||
| Fair value hedges | 1,763 | 1,163 | 2025 to 2030 |
As of March 31, 2022 and December 31, 2021, Other assets included $187 million and $238 million of collateral related to these forward-starting interest swaps, representing the maximum amount of collateral that may be required under these contracts.
Foreign Currency Rates—The following table presents the notional amounts of our outstanding foreign currency derivative instruments:
| March 31, 2022 | December 31, 2021 | |||||||||||||||||||
| Millions of dollars | Notional Amount | Notional Amount | Maturity Date | |||||||||||||||||
| Net investment hedges | $ | 3,048 | $ | 3,048 | 2022 to 2030 | |||||||||||||||
| Cash flow hedges | 1,150 | 1,150 | 2024 to 2027 | |||||||||||||||||
| Not designated | 627 | 222 | 2022 to 2023 | |||||||||||||||||
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 March 31, | |||||||||||||||||||||||||||||||||||||||||
| Balance Sheet | Income Statement | ||||||||||||||||||||||||||||||||||||||||
| Gain (Loss) Recognized in AOCI | Gain (Loss) Reclassified to Income from AOCI | Additional Gain (Loss) Recognized in Income | Income Statement | ||||||||||||||||||||||||||||||||||||||
| Millions of dollars | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | Classification | ||||||||||||||||||||||||||||||||||
| Derivatives designated as hedges: | |||||||||||||||||||||||||||||||||||||||||
| Commodities | $ | 26 | $ | 6 | $ | (11) | $ | (1) | $ | — | $ | — | Cost of sales | ||||||||||||||||||||||||||||
| Foreign currency | 44 | 148 | (25) | (92) | (4) | 12 | Interest expense | ||||||||||||||||||||||||||||||||||
| Interest rates | 112 | 223 | 1 | 1 | 4 | 2 | Interest expense | ||||||||||||||||||||||||||||||||||
| Derivatives not designated as hedges: | |||||||||||||||||||||||||||||||||||||||||
| Commodities | — | — | — | — | 36 | 3 | Sales and other operating revenues | ||||||||||||||||||||||||||||||||||
| Commodities | — | — | — | — | 3 | 11 | Cost of sales | ||||||||||||||||||||||||||||||||||
| Foreign currency | — | — | — | — | (19) | (14) | Other income, net | ||||||||||||||||||||||||||||||||||
| Total | $ | 182 | $ | 377 | $ | (35) | $ | (92) | $ | 20 | $ | 14 |
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
As of March 31, 2022, 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.
Other Financial Instruments:
Cash and Cash Equivalents—At March 31, 2022 and December 31, 2021, we had marketable securities classified as Cash and cash equivalents of $1,089 million and $438 million, respectively.
8. Income Taxes
For interim tax reporting, we estimate an annual effective tax rate which is applied to the year-to-date ordinary income. 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 if the tax reform proposals in the U.S. and the Pillar Two proposals by the Organization for Economic Cooperation and Development (“OECD”) are enacted.
Our effective income tax rates for the first quarter of 2022 was 19.3% compared to 6.1% for the first quarter of 2021. In the first quarter of 2021, we benefited from return to accrual adjustments primarily associated with a step-up of certain Italian assets to fair market value and benefits resulting from the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) of 10.5% and 2.6% respectively; such benefits did not impact our effective tax rate in the first quarter of 2022.
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 March 31, 2022, we had capital expenditure commitments, which we incurred in our normal course of business, including commitments of approximately $366 million related to building our new PO/TBA plant in Houston, Texas.
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 difficulties in obtaining the required financial assurance instruments for our current operations.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Environmental Remediation—Our accrued liability for future environmental remediation costs at current and former plant sites and other remediation sites totaled $135 million and $138 million as of March 31, 2022 and December 31, 2021, respectively. At March 31, 2022, 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 are 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 March 31, 2022, 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.
10. Shareholders’ Equity and Redeemable Non-controlling Interests
Shareholders’ Equity
Dividend Distributions—The following table summarized the dividends paid in the period presented:
| Millions of dollars, except per share amounts | Dividend Per Ordinary Share | Aggregate Dividends Paid | Date of Record | ||||||||||||||
| March 2022 | $ | 1.13 | $ | 371 | March 7, 2022 | ||||||||||||
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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 (“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 period presented:
| Millions of dollars, except shares and per share amounts | Shares Repurchased | Average Purchase Price | Total Purchase Price, Including Commissions and Fees | |||||||||||||||||
| For three months ended March 31, 2022: | ||||||||||||||||||||
| 2021 Share Repurchase Authorization | 2,073,378 | $ | 97.70 | $ | 202 | |||||||||||||||
Total cash paid for share repurchases for the three months ended March 31, 2022 was $217 million. Cash payments made during the reporting period may differ from the total purchase price, including commissions and fees, due to the timing of payments. There were no share repurchases during the three months ended March 31, 2021.
Ordinary Shares—The changes in the outstanding amounts of ordinary shares are as follows:
| Three Months Ended March 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Ordinary shares outstanding: | |||||||||||
| Beginning balance | 329,536,389 | 334,015,220 | |||||||||
| Share-based compensation | 123,550 | 247,964 | |||||||||
| Employee stock purchase plan | 57,473 | 49,956 | |||||||||
| Purchase of ordinary shares | (2,073,378) | — | |||||||||
| Ending balance | 327,644,034 | 334,313,140 |
*Treasury Shares—*The changes in the amounts of treasury shares held by the Company are as follows:
| Three Months Ended March 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Ordinary shares held as treasury shares: | |||||||||||
| Beginning balance | 10,675,605 | 6,030,408 | |||||||||
| Share-based compensation | (123,550) | (247,964) | |||||||||
| Employee stock purchase plan | — | (49,956) | |||||||||
| Purchase of ordinary shares | 2,073,378 | — | |||||||||
| Ending balance | 12,625,433 | 5,732,488 |
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Accumulated Other Comprehensive Loss—The components of, and after-tax changes in, Accumulated other comprehensive loss as of and for the three months ended March 31, 2022 and 2021 are presented in the following tables:
| Millions of dollars | Financial Derivatives | Defined Benefit Pension and Other Postretirement Benefit Plans | Foreign Currency Translation Adjustments | Total | |||||||||||||||||||||||||||||||
| Balance – December 31, 2021 | $ | (354) | $ | (528) | $ | (921) | $ | (1,803) | |||||||||||||||||||||||||||
| Other comprehensive income (loss) before reclassifications | 147 | — | (14) | 133 | |||||||||||||||||||||||||||||||
| Tax expense before reclassifications | (32) | — | (11) | (43) | |||||||||||||||||||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | (35) | 8 | — | (27) | |||||||||||||||||||||||||||||||
| Tax (expense) benefit | 8 | (3) | — | 5 | |||||||||||||||||||||||||||||||
| Net other comprehensive income (loss) | 88 | 5 | (25) | 68 | |||||||||||||||||||||||||||||||
| Balance – March 31, 2022 | $ | (266) | $ | (523) | $ | (946) | $ | (1,735) |
| 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 | 315 | — | — | (93) | 222 | ||||||||||||||||||||||||||||||
| Tax expense before reclassifications | (68) | — | — | (14) | (82) | ||||||||||||||||||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | (92) | — | 15 | — | (77) | ||||||||||||||||||||||||||||||
| Tax (expense) benefit | 20 | — | (4) | — | 16 | ||||||||||||||||||||||||||||||
| Net other comprehensive income (loss) | 175 | — | 11 | (107) | 79 | ||||||||||||||||||||||||||||||
| Balance – March 31, 2021 | $ | (251) | $ | 1 | $ | (741) | $ | (873) | $ | (1,864) |
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
The amounts reclassified out of each component of Accumulated other comprehensive loss are as follows:
| Three Months Ended March 31, | Affected Line Item on the Consolidated Statements of Income | ||||||||||||||||||||||||||||
| Millions of dollars | 2022 | 2021 | |||||||||||||||||||||||||||
| Reclassification adjustments for: | |||||||||||||||||||||||||||||
| Financial derivatives: | |||||||||||||||||||||||||||||
| Commodities | $ | (11) | $ | (1) | Cost of sales | ||||||||||||||||||||||||
| Foreign currency | (25) | (92) | Interest expense | ||||||||||||||||||||||||||
| Interest rates | 1 | 1 | Interest expense | ||||||||||||||||||||||||||
| Income tax benefit | 8 | 20 | Provision for income taxes | ||||||||||||||||||||||||||
| Financial derivatives, net of tax | (27) | (72) | |||||||||||||||||||||||||||
| Amortization of defined pension items: | |||||||||||||||||||||||||||||
| Prior service cost | 1 | 1 | Other income, net | ||||||||||||||||||||||||||
| Actuarial loss | 7 | 14 | Other income, net | ||||||||||||||||||||||||||
| Income tax expense | (3) | (4) | Provision for income taxes | ||||||||||||||||||||||||||
| Defined pension items, net of tax | 5 | 11 | |||||||||||||||||||||||||||
| Total reclassifications, before tax | (27) | (77) | |||||||||||||||||||||||||||
| Income tax benefit | 5 | 16 | Provision for income taxes | ||||||||||||||||||||||||||
| Total reclassifications, after tax | $ | (22) | $ | (61) | 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 March 31, 2022 and December 31, 2021, we had 115,374 shares of redeemable non-controlling interest stock outstanding. In February 2022, we paid cash dividends of $15.00 per share to our redeemable non-controlling interest shareholders of record as of January 15, 2022. These dividends totaled $2 million for each of the three months ended March 31, 2022 and 2021.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
11. Per Share Data
Basic earnings per share is 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 and other equity-based compensation awards. Our unvested restricted stock units contain non-forfeitable rights to dividend equivalents and are considered participating securities. We calculate basic and diluted earnings per share under the two-class method.
Earnings per share data is as follows:
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2022 | 2021 | ||||||||||||||||||||||
| Millions of dollars | Continuing Operations | Discontinued Operations | Continuing Operations | Discontinued Operations | |||||||||||||||||||
| Net income (loss) | $ | 1,321 | $ | (1) | $ | 1,072 | $ | (2) | |||||||||||||||
| Dividends on redeemable non-controlling interests | (2) | — | (2) | — | |||||||||||||||||||
| Net income attributable to participating securities | (2) | — | (2) | — | |||||||||||||||||||
| Net income (loss) attributable to ordinary shareholders – basic and diluted | $ | 1,317 | $ | (1) | $ | 1,068 | $ | (2) | |||||||||||||||
| Millions of shares, except per share amounts | |||||||||||||||||||||||
| Basic weighted average common stock outstanding | 328 | 328 | 334 | 334 | |||||||||||||||||||
| Effect of dilutive securities | 1 | 1 | — | — | |||||||||||||||||||
| Potential dilutive shares | 329 | 329 | 334 | 334 | |||||||||||||||||||
| Earnings per share: | |||||||||||||||||||||||
| Basic | $ | 4.01 | $ | — | $ | 3.20 | $ | (0.01) | |||||||||||||||
| Diluted | $ | 4.00 | $ | — | $ | 3.19 | $ | (0.01) | |||||||||||||||
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.
-
Olefins and Polyolefins—Europe, Asia, International (“O&P—EAI”). Our O&P—EAI segment produces and markets olefins and co-products, polyethylene and polypropylene.
-
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.
-
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.
-
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.
-
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 from continuing operations 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 March 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
| Millions of dollars | O&P– Americas | O&P– EAI | I&D | APS | Refining | Technology | Other | Total | |||||||||||||||||||||||||||||||||||||||
| Sales and other operating revenues: | |||||||||||||||||||||||||||||||||||||||||||||||
| Customers | $ | 2,325 | $ | 3,543 | $ | 3,276 | $ | 1,407 | $ | 2,458 | $ | 148 | $ | — | $ | 13,157 | |||||||||||||||||||||||||||||||
| Intersegment | 1,270 | 219 | 63 | 1 | 262 | 33 | (1,848) | — | |||||||||||||||||||||||||||||||||||||||
| 3,595 | 3,762 | 3,339 | 1,408 | 2,720 | 181 | (1,848) | 13,157 | ||||||||||||||||||||||||||||||||||||||||
| Income (loss) from equity investments | 33 | 1 | (5) | — | — | — | — | 29 | |||||||||||||||||||||||||||||||||||||||
| EBITDA | 911 | 188 | 546 | 125 | 148 | 103 | (1) | 2,020 | |||||||||||||||||||||||||||||||||||||||
| Capital expenditures | 132 | 89 | 163 | 18 | 14 | 29 | 1 | 446 | |||||||||||||||||||||||||||||||||||||||
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
| Three Months Ended March 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
| Millions of dollars | O&P– Americas | O&P– EAI | I&D | APS | Refining | Technology | Other | Total | |||||||||||||||||||||||||||||||||||||||
| Sales and other operating revenues: | |||||||||||||||||||||||||||||||||||||||||||||||
| Customers | $ | 2,135 | $ | 2,840 | $ | 1,704 | $ | 1,269 | $ | 993 | $ | 141 | $ | — | $ | 9,082 | |||||||||||||||||||||||||||||||
| Intersegment | 724 | 207 | 63 | 1 | 133 | 24 | (1,152) | — | |||||||||||||||||||||||||||||||||||||||
| 2,859 | 3,047 | 1,767 | 1,270 | 1,126 | 165 | (1,152) | 9,082 | ||||||||||||||||||||||||||||||||||||||||
| Income from equity investments | 30 | 95 | 12 | — | — | — | — | 137 | |||||||||||||||||||||||||||||||||||||||
| EBITDA | 867 | 412 | 182 | 135 | (110) | 94 | 5 | 1,585 | |||||||||||||||||||||||||||||||||||||||
| Capital expenditures | 65 | 40 | 145 | 20 | 25 | 22 | 23 | 340 |
In April 2022 we announced our decision to cease operation of our Houston Refinery no later than December 31, 2023. We determined that exiting the refining business by the end of next year is the best strategic and financial path forward for the company. Our exit of the refining business progresses our decarbonization goals, and the site’s prime location gives us more options for advancing our future strategic objectives, including circularity. In the interim, we will continue serving the fuels market, which is expected to remain strong in the near-term, and consider potential transactions and alternatives for the site.
In connection with the exit plan, we expect to incur certain costs primarily consisting of accelerated amortization of operating lease assets of approximately $300 million to $400 million, asset decommissioning costs of approximately $150 million to $250 million, personnel related costs of approximately $80 million to $120 million, and other charges of approximately $50 million to $100 million. As we intend to proceed with an orderly shut-down, we do not expect to recognize these charges all at once, but over time through 2024. The actual size and timing of costs associated with the closure may differ from our current expectations, and such differences may be material.
A reconciliation of EBITDA to Income from continuing operations before income taxes is shown in the following table for each of the periods presented:
| Three Months Ended March 31, | |||||||||||||||||||||||
| Millions of dollars | 2022 | 2021 | |||||||||||||||||||||
| EBITDA: | |||||||||||||||||||||||
| Total segment EBITDA | $ | 2,021 | $ | 1,580 | |||||||||||||||||||
| Other EBITDA | (1) | 5 | |||||||||||||||||||||
| Less: | |||||||||||||||||||||||
| Depreciation and amortization expense | (311) | (335) | |||||||||||||||||||||
| Interest expense | (74) | (110) | |||||||||||||||||||||
| Add: | |||||||||||||||||||||||
| Interest income | 2 | 2 | |||||||||||||||||||||
| Income from continuing operations before income taxes | $ | 1,637 | $ | 1,142 |
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