Borden Chemicals and Plastics Posts Third Quarter Loss of $8.9 Million; Cites Strong Cash Position.COLUMBUS, Ohio--(BUSINESS WIRE)--Oct. 20, 1998--Borden Chemicals and Plastics Limited Partnership (NYSE NYSE See: New York Stock Exchange :BCU BCU British Canoe Union BCU Basic Command Unit (British Police) BCU Big Close-Up BCU Bus Controller Unit BCU Battery Coolant Unit BCU Bandwidth Control Unit BCU Beer Cans Unlimited (collectors) ) announced a loss of $8.9 million, or 24 cents per unit, for the third quarter period ended September 30. The third quarter results compare to the year-ago period's loss of $1.1 million, or 3 cents per unit, which included a one-time charge of $2.9 million. "Results this quarter reflect the extremely difficult and ongoing industry-wide downturn," said Joseph M. Saggese, chairman, president and chief executive officer for the general partner, BCP BCP Best Current Practice(s) BCP Business Continuity Planning BCP Business Continuity Plan BCP Book of Common Prayer BCP Banco Comercial Português BCP Bureau of Consumer Protection (US Federal Trade Commission) Management, Inc. "Excess industry capacity and resulting depressed selling prices in all three of our businesses -- PVC PVC: see polyvinyl chloride. PVC in full polyvinyl chloride Synthetic resin, an organic polymer made by treating vinyl chloride monomers with a peroxide. resins resins, n.pl complex, insoluble, sticky substances secreted by plants. Used as astringents, antimicrobials, and antiinflammatories, and are burned as incense. Can cause oral ulcers and epidermal irritations. , methanol methanol, methyl alcohol, or wood alcohol, CH3OH, a colorless, flammable liquid that is miscible with water in all proportions. Methanol is a monohydric alcohol. It melts at −97. and nitrogen products - continued to put pressure on margins through the quarter. "We are in discussions with participant banks on amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. covenants to our credit facility agreement, as the partnership was out of compliance with certain covenants at the end of the quarter. We expect to negotiate terms that will provide us continued access to the $100 million facility," Saggese said. Saggese also said the Partnership has sufficient liquidity, with more than $40 million in cash at the end of the quarter for funding of future operations. As previously indicated, the partnership did not declare a cash distribution for the period. Third Quarter Results For the third quarter period ended September 30, partnership revenues totaled $119 million, compared to second quarter revenues of $146.3 million and year-ago period revenues of $180.9 million. The average selling price The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. for PVC resin resin, any of a class of amorphous solids or semisolids. Resins are found in nature and are chiefly of vegetable origin. They are typically light yellow to dark brown in color; tasteless; odorless or faintly aromatic; translucent or transparent; brittle, fracturing , which represents about 65 percent of the partnership's annual sales, was 11 percent lower than in the second quarter, and 23 percent lower than the third quarter of last year. The cost of PVC resin raw materials chlorine chlorine (klōr`ēn, klôr`–) [Gr.,=green], gaseous chemical element; symbol Cl; at. no. 17; at. wt. 35.453; m.p. −100.98°C;; b.p. −34.6°C;; density 3.2 grams per liter at STP; valence −1, +1, +3, +5, +7. , ethylene ethylene (ĕth`əlēn') or ethene (ĕth`ēn), H2C=CH2, a gaseous unsaturated hydrocarbon. It is the simplest alkene. and vinyl chloride vinyl chloride or chloroethylene Colourless, flammable, toxic gas (H2C=CHCl), belonging to the family of organic compounds of halogens. It is produced in very large quantities and used principally to make PVC, as well as in other syntheses and in monomer monomer (mŏn`əmər): see polymer. monomer Molecule of any of a class of mostly organic compounds that can react with other molecules of the same or other compounds to form very large molecules (polymers). continued to decline through the third quarter, but not enough to improve margins in the resin business. Sales volume for PVC resin was off 9 percent from the second quarter and 11 percent from last year's third quarter. The partnership's PVC resin operating rates Operating rate The percentage of total production capacity of a company, industry, or country that is being used. operating rate The portion of capacity at which a business operates. remained in line with the industry. Pricing for natural gas-based methanol and nitrogen products remained depressed. Average methanol pricing was flat with the second quarter but down 41 percent compared to the year ago period. Sales volume for methanol was flat with the second quarter and seven percent lower than last year's third quarter. Average nitrogen pricing declined almost 10 percent from the second quarter. Compared to the year ago period, urea pricing was flat while ammonia ammonia, chemical compound, NH3, colorless gas that is about one half as dense as air at ordinary temperatures and pressures. It has a characteristic pungent, penetrating odor. pricing was off 27 percent. Urea and ammonia sales were down slightly compared to the year ago period and off 7 percent and 12 percent, respectively, compared to the year ago period. The industry average price for natural gas at the Henry Hub Henry Hub is the pricing point for natural gas futures contracts traded on the New York Mercantile Exchange (NYMEX). It is a point on the natural gas pipeline system in Erath, Louisiana. It is owned by Sabine Pipe Line LLC. settlement point was $1.98 per mmbtu for the quarter. This compares to the previous quarter's average hub price of $2.10 per mmbtu and the year-ago period's average of $2.26 per mmbtu. Partnership costs may differ from the industry Henry Hub average price for various reasons including purchasing practices, contract arrangements, transportation costs and other factors. Results Through Nine Months For the nine-month period ended September 30, the partnership recorded a loss of $25.1 million, or 67 cents per unit, on revenues of $418.8 million, compared to net income of $15.8 million, or 42 cents per unit, on revenues of $565.3 million for the same period last year. Outlook Commenting on the partnership's future business prospects, Saggese said: "Although market conditions currently are extremely difficult, I am confident in our position as a long-term supplier to the industry. The partnership has adequate liquidity, excellent physical assets and a competitive operating cost structure. And in our business, producers with a competitive cost position such as the partnership should benefit over the longer-term once industry margins recover." Borden Chemicals and Plastics Limited Partnership manufactures PVC resins, methanol and derivatives and nitrogen products at facilities in Geismar and Addis, La., and Illiopolis, Ill. BCP Management, Inc., a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of Borden, Inc., has a 2 percent interest and serves as general partner. Publicly traded units account for the remaining 98 percent ownership. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This news release contains forward-looking statements subject to the "safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These include statements regarding the Partnership's financial status, liquidity and continued access to credit to meet future business needs. They also include statements regarding the Partnership's future business prospects. These forward-looking statements are based on a number of assumptions and forecasts, and actual results may be materially different from those expressed or implied by such statements. Factors affecting future results include, but are not limited to, changes in the demand for and pricing of products, changes in industry production capacities, and changes in the supply of and costs of significant raw materials. Discussion of these and other factors and risks are discussed in detail in the Partnership's Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. annual report and other documents filed with the Securities and Exchange Commission. See Attached Financial Statements -0-
BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP
(In millions, except per Unit data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
____ ____ ____ ____
Revenues $119.0 $180.9 $418.8 $565.3
Cost of goods sold 116.7 168.5 409.9 512.1
______ ______ ______ ______
Gross profit 2.3 12.4 8.9 53.2
MG&A expense 6.4 6.1 18.8 17.8
Interest expense 6.0 5.2 16.4 15.7
Incentive distribution
to General Partner 0.0 0.0 0.0 0.8
Other, net (1.2) 2.2 (1.2) 3.1
______ ______ ______ ______
Net (loss) income $ (8.9) $ (1.1) $(25.1) $ 15.8
______ ______ ______ ______
______ ______ ______ ______
Per Unit Data:
Net income ($0.24) $(0.03) $(0.67) $0.42
______ ______ ______ ______
______ ______ ______ ______
Cash distribution
declared $0.00 $0.18 $0.00 $0.73
______ ______ ______ ______
______ ______ ______ ______
Average units 36.8 36.8 36.8 36.8
______ ______ ______ ______
______ ______ ______ ______
BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP
(In millions, except per Unit data)
(Unaudited)
Other Selected Financial Data:
Three Month Period Ended September 30,
1998 1997
____ ____
Cash and equivalents at end of period $40.3 $14.9
Net cash provided by operating activities $12.2 $15.7
Depreciation $ 8.1 $12.5
Capital expenditures $11.3 $ 4.7
Nine Month Period Ended September 30,
1998 1997
____ ____
Cash and equivalents at end of period $40.3 $14.9
Net cash provided by operating activities $9.0 $37.1
Depreciation $24.3 $37.5
Capital expenditures $ 26.2 $ 8.9
At September 30, At December 31,
1998 1997
____ ____
Current assets $150.1 $149.4
Current liabilities $ 64.5 $ 85.0
Property, plant, equipment, net $292.1 $290.2
Total partners' capital $158.0 $183.1
Long-term debt $278.7 $225.0
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