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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Nova Chemicals Corp | NYSE:NCX | NYSE | Ordinary Share |
| Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.00 | - |
From May 2019 to May 2024
All financial information is in U.S. dollars, and all earnings per share results are diluted, unless otherwise indicated.
First Quarter 2009 Results
Highlights
“We are pleased that our shareholders voted overwhelmingly in favor of the IPIC transaction and we are looking forward to the transaction closing later in the second quarter, subject to receiving necessary regulatory and court approvals, and meeting other customary conditions,” said Jeff Lipton, CEO, NOVA Chemicals.
“Market conditions and the Alberta Advantage improved month-to-month, leading to a solid March. We are looking forward to working more closely with IPIC after the transaction closes,” added Chris Pappas, President and COO, NOVA Chemicals.
Adjusted EBITDAfrom the Businesses($U.S. millions)
FirstQuarter2009
FourthQuarter2008
Olefins/Polyolefins $ 13 $ (210 ) INEOS NOVA JV 6 (77 ) Performance Styrenics (13 ) (35 )Adjusted EBITDA from the Businesses
$ 6
$ (322
)
*Adjusted EBITDA from the Olefins/Polyolefins, INEOS NOVA JV and Performance Styrenics business units. (See Supplemental Measures on page 15.)
NOVA Chemicals’ pre-recorded first quarter 2009 earnings report will be available on Thursday, April 23, 2009 for investors, analysts and media at 11:30 a.m. EDT (9:30 a.m. MDT; 8:30 a.m. PDT). The replay number is (416) 695-5800 (Reservation No. 3271221). The report also will be available on the Internet at www.novachemicals.com.
NOVA Chemicals Financial Highlights
These highlights should be read in conjunction with NOVA Chemicals’ other interim and annual financial statement disclosures and its 2008 Annual Report.
(millions of U.S. dollars, except per share amounts or unless otherwise noted)
Three Months EndedMar. 312009
Dec. 312008 (1)
Mar. 312008 (1)
Revenue $ 818 $ 1,153 $ 1,912 Adjusted EBITDA (2) Olefins/Polyolefins (3) $ 13 $ (210 ) $ 246 INEOS NOVA Joint Venture 6 (77 ) 8 Performance Styrenics (13 ) (35 ) 2 Adjusted EBITDA from the Businesses (4) 6 (322 ) 256 Corporate (see page 7) (45 ) 96 (49 ) Adjusted EBITDA $ (39 ) $ (226 ) $ 207 Operating (loss) income (4) $ (120 ) $ (315 ) $ 110 Net (loss) income $ (123 ) $ (212 ) $ 52 (Loss) earnings per common share, diluted $ (1.48 ) $ (2.55 ) $ 0.63 Adjusted (loss) earnings per share, diluted (4) $ (1.31 ) $ (2.27 ) $ 0.88 Funds from operations (4) $ (78 ) $ (323 ) $ 127 Cash (used in) from operations $ (271 ) $ 107 $ (12 )(1) Prior periods were restated due to the write-off of certain intangible assets and the related amortization expense, net of tax, due to the adoption of CICA 3064 in the first quarter of 2009. The after-tax impact to the net loss in the fourth quarter of 2008 and net income in the first quarter of 2008 was a $2 million benefit for each period.
(2) Net income before interest expense, income taxes, depreciation and amortization, other gains/losses, mark-to-market feedstock derivatives, IPIC transaction costs and restructuring charges (see Supplemental Measures on page 15). In the first quarter of 2009, NOVA Chemicals changed its definition of adjusted EBITDA to exclude the IPIC transaction costs. (3) Olefins/Polyolefins consists of the Joffre Olefins, Corunna Olefins and Polyethylene segments. (4) See Supplemental Measures on page 15.IPIC Transaction
On Apr. 14, 2009, shareholders voted overwhelmingly in favor of a special resolution to approve an arrangement (the Arrangement) under the Canada Business Corporations Act involving, among other things, the acquisition, directly or indirectly, by International Petroleum Investment Company (IPIC) of all of the issued and outstanding common shares of NOVA Chemicals for US$6.00 in cash for each common share. On April 17, 2009, the Court of Queen’s Bench of Alberta entered an Order approving the Arrangement. Closing of the transaction is expected in the second quarter of 2009 following receipt of regulatory and court approvals, and satisfaction of customary conditions. All regulatory filings have been made. The U.S. Federal Trade Commission granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and the Commissioner of Competition appointed under the Competition Act (Canada) issued a “no-action” letter advising the parties in writing that she does not have grounds on which to initiate proceedings before the Competition Tribunal under the merger provisions of the Competition Act (Canada).
Exceptional Factors Affecting First Quarter Results
During the first quarter of 2009, various exceptional items totaling $16 million before-tax ($14 million after-tax) negatively affected NOVA Chemicals’ results.
Liquidity Update / Balance Sheet Classification
The $250 million 7.4% notes that matured on Apr. 1, 2009, were repaid in full using available liquidity, including $150 million from the $250 million backstop term loan credit facility entered into with IPIC.
Because NOVA Chemicals has not completed negotiations with its core banks to amend its financial covenants over the coming 12 month period, the Company is required as a technical matter in accordance with EIC-59, Long-term Debt with Covenant Violations, to classify all outstanding long-term debt, except its public debentures and notes, as current liabilities at Mar. 31, 2009. See Liquidity on page 9, last paragraph, for further details.
Review of Business Results
OLEFINS/POLYOLEFINS BUSINESS UNIT
Financial Highlights
(millions of U.S. dollars, except as noted) Three Months Ended
Mar. 312009
Dec. 312008
Mar. 312008
Revenue $ 551 $ 801 $ 1,402 Adjusted EBITDA (1) Joffre Olefins $ 45 $ 107 $ 168 Corunna Olefins (38 ) (221 ) 14 Polyethylene 11 (120 ) 44 Eliminations (5 ) 24 20 Total Adjusted EBITDA $ 13 $ (210 ) $ 246 Depreciation (2) 51 52 53 Operating (Loss) Income (1) (2) $ (38 ) $ (262 ) $ 193 Capital Spending $ 17 $ 40 $ 27 PE Sales Volumes (millions of pounds) (3) Advanced SCLAIRTECHTM resins 214 206 237 All other polyethylene resins 557 541 679 Total Sales 771 747 916 (1) See Supplemental Measures on page 15. (2) Prior periods have been restated due to the adoption of CICA 3064 in the first quarter of 2009. (3) Third-party sales. Advanced SCLAIRTECH resins are produced at the Joffre site and include SCLAIR® and SURPASS® resins.Average Benchmark Prices (1)
(U.S. dollars per pound, unless otherwise noted) Three Month Average
Mar. 312009
Dec. 312008
Mar. 312008
Principal Products: Ethylene (2) $ 0.32 $ 0.39 $ 0.61 Polyethylene – linear low density butene liner (3) $ 0.49 $ 0.61 $ 0.78 Polyethylene – weighted-average benchmark (3) $ 0.39 $ 0.51 $ 0.83 Raw Materials: AECO natural gas (dollars per mmBTU) (4) $ 3.96 $ 5.51 $ 7.87 NYMEX natural gas (dollars per mmBTU) (4) $ 4.86 $ 6.82 $ 8.09 WTI crude oil (dollars per barrel) (5) $ 43.08 $ 58.73 $ 97.92 (1) Average benchmark prices do not necessarily reflect actual prices realized by NOVA Chemicals or any other petrochemical company. (2) Source: Chemical Market Associates, Inc. (CMAI) U.S. Gulf Coast (USGC) Net Transaction Price. (3) Source. Townsend Polymer Services and Information (TPSI). Benchmark prices weighted according to NOVA Chemicals’ sales volume mix in North America. (4) Source: Canadian Gas Price Reporter. AECO gas is weighted-average daily spot gas price. NYMEX gas is Henry Hub 3-Day Average Close. (5) Source: Platt’s. NYMEX WTI daily spot-settled price average for calendar month.Review of Operations
In the first quarter of 2009, business conditions were relatively stable as feedstock costs and selling prices were much less volatile than in the fourth quarter of 2008, when they fell dramatically throughout the period. The Olefins/Polyolefins business unit reported adjusted EBITDA profit of $13 million, up significantly from the adjusted EBITDA loss of $210 million in the fourth quarter of 2008. The quarter-over-quarter increase was due to sharply higher margins for the Corunna Olefins and Polyethylene segments, as flow-through feedstock costs fell more than average selling prices, partially offset by lower EBITDA for the Joffre Olefins segment due to lower margins.
Adjusted EBITDA of $13 million in the first quarter of 2009 was significantly lower than adjusted EBITDA of $246 million reported in the first quarter last year. The decline was due to lower margins, as selling prices fell more than flow-through feedstock costs, and lower sales volumes.
Joffre Olefins
First Quarter 2009 Versus Fourth Quarter 2008
The Joffre Olefins segment reported adjusted EBITDA of $45 million in the first quarter of 2009, down from $107 million in the fourth quarter of 2008. Higher sales volume was more than offset by lower margins as selling prices fell faster than flow-through feedstock costs.
Alberta ethane costs were 27% lower in the first quarter. Natural gas prices declined 28% due to higher production, weaker industrial demand and ample inventories. In contrast, USGC ethane prices fell only 15%, as the balance between strong ethane supply and weak demand improved. As a result, the Alberta Advantage rose from an average of 2¢ per pound in the fourth quarter of 2008 to an average of 4¢ per pound in the first quarter of 2009, and has increased to an average of 7¢ per pound to date in April.
First Quarter 2009 Versus First Quarter 2008
Joffre Olefins reported an adjusted EBITDA of $45 million in the first quarter of 2009, down from $168 million in the first quarter of 2008. Sales volumes were lower and margins declined due to selling prices that fell faster than feedstock costs. Industry average prices for ethylene were 48% lower in the first quarter of 2009 compared to the same period one year ago.
Corunna Olefins
First Quarter 2009 Versus Fourth Quarter 2008
Corunna Olefins reported an adjusted EBITDA loss of $38 million in the first quarter of 2009, compared to an adjusted EBITDA loss of $221 million in the fourth quarter of 2008. Lower sales volumes were more than offset by higher margins as flow-through feedstock costs fell faster than selling prices.
In the first quarter of 2009, the average WTI crude oil price fell 27%, while NOVA Chemicals’ average flow-through crude oil costs declined 59%, due in part to the write-down of inventory to market value as of Dec. 31, 2008. Industry average prices for ethylene fell 18% due to lower average feedstock costs in the USGC region. Average co-product selling prices in the first quarter were 41% lower and total sales volumes were 25% lower than the fourth quarter of 2008.
First Quarter 2009 Versus First Quarter 2008
Corunna Olefins reported an adjusted EBITDA loss of $38 million in the first quarter of 2009, compared to an adjusted EBITDA profit of $14 million in the first quarter one year ago. Sales volumes declined, and margins contracted as selling prices fell more than feedstock costs. In the first quarter of 2009, industry average prices for ethylene fell 48% compared to the first quarter of 2008, due to lower average feedstock costs and relatively weak demand in the USGC region.
Polyethylene
First Quarter 2009 Versus Fourth Quarter 2008
The Polyethylene segment reported an adjusted EBITDA profit of $ 11 million in the first quarter of 2009, compared to an adjusted EBITDA loss of $120 million in the fourth quarter of 2008. The improvement was due to higher margins, as feedstock costs fell faster than average selling prices, and higher sales volume.
NOVA Chemicals’ sales volume was 771 million pounds in the first quarter of 2009, compared to 747 million pounds in the fourth quarter of 2008, as the market began to stabilize following the dramatic price and inventory reductions in late 2008. International sales volume represented 19% of total sales, up from 14% in the prior period and higher than the 15% long-term average. Selling prices in international markets rose as naphtha-based cash costs increased and demand recovered, keeping the export window open throughout the quarter.
Sales of polyethylene manufactured using the Advanced SCLAIRTECH technology (AST polyethylene) totaled 214 million pounds in the first quarter, up from 206 million pounds in the fourth quarter of 2008. First quarter sales represent 91% of the recently increased annualized AST production capacity of 950 million pounds, a significantly higher level than the first quarter industry operating rate of 85%, as published by the American Chemistry Council (ACC).
NOVA Chemicals ended the quarter with 20 days of polyethylene inventory, much lower than the industry average of 44 days as reported by the ACC. Producer inventory levels in the first quarter were much more stable than in the volatile fourth quarter of 2008, as producers effectively matched production to demand. Inventory downstream of producers continued to decline.
The average first quarter North American industry butene liner polyethylene price decreased 12¢ per pound to an average 49¢ per pound, according to Townsend Polymers Services and Information. The industry price reached its recent low in December 2008, while the average first quarter price was 7¢ per pound higher than December. Of the price increases announced for the first quarter, a 7¢ per pound increase was fully implemented, while a second increase of 5¢ per pound has been delayed to the second quarter.
First Quarter 2009 Versus First Quarter 2008
The Polyethylene segment reported adjusted EBITDA of $ 11 million in the first quarter of 2009, compared to adjusted EBITDA of $44 million in the first quarter of 2008. The decline was due to lower margins, as selling prices fell more than flow-through feedstock costs, and lower sales volumes. Lower margins were only partially offset by lower operating costs, that were due to lower transportation and utilities costs. The first quarter 2009 industry average butene liner polyethylene price decreased 37% as compared to the first quarter one year ago.
NOVA Chemicals’ ability to implement price increases depends on many factors that may be beyond its control. See Forward-Looking Information on Page 16.
INEOS NOVA Joint Venture(1)
Financial Highlights
(millions of U.S. dollars, except as noted) Three Months Ended
Mar. 312009
Dec. 312008
Mar. 312008
Revenue $ 237 $ 320 $ 479 Adjusted EBITDA (2) $ 6 $ (77 ) $ 8 Depreciation 6 7 6 Operating Income (Loss) (2) $ - $ (84 ) $ 2 Capital Spending $ 1 $ 4 $ 7 Sales Volumes (millions of pounds) (3) Styrene Monomer 176 180 243 Solid and Expandable Polystyrene 377 320 414 Total Sales 553 500 657(1) Results reflect NOVA Chemicals 50% position in the INEOS NOVA joint venture.
(2) See Supplemental Measures on page 15. (3) Third-party sales. Polystyrene sales consist of solid polystyrene sales in North America and solid and expandable polystyrene sales in Europe.Average Benchmark Prices (1)
(U.S. dollars per pound, unless otherwise noted) Three Month Average
Mar. 31
2009
Dec. 312008
Mar. 312008
Principal Products: Styrene Monomer – North America (2) $ 0.40 $ 0.56 $ 0.72 Solid Polystyrene – North America (2) $ 0.77 $ 0.99 $ 1.04 Solid Polystyrene – Europe (2) $ 0.43 $ 0.57 $ 0.88 Raw Materials: Benzene (dollars per gallon) (2) $ 1.22 $ 2.30 $ 3.65 Ethylene (2) $ 0.32 $ 0.39 $ 0.61 (1) Average benchmark prices do not necessarily reflect actual prices realized by INEOS NOVA or any other petrochemical company. (2) Source: CMAI Contract Market.Review of Operations
First Quarter 2009 Versus Fourth Quarter 2008
NOVA Chemicals’ 50% share of INEOS NOVA provided an adjusted EBITDA profit of $6 million in the first quarter of 2009, compared to an adjusted EBITDA loss of $77 million in the fourth quarter of 2008. The significant improvement was due to higher margins, as flow-through feedstock costs fell more than selling prices, and higher sales volume across all product lines and regions.
In North America, styrene monomer margins expanded due to flow-through feedstock costs that fell much more than selling prices. The market price of benzene, which represents approximately 70% of styrene monomer raw material costs, declined 47% while industry styrene monomer selling prices declined 27%. For North American polymers, flow-through feedstock costs declined further than selling prices, leading to margin improvement. Sales volumes rose 18% in the first quarter of 2009 versus the fourth quarter of 2008 as lower polystyrene prices led customers to restock, and INEOS NOVA benefited from its strong market position in food service ware and packaging markets that were less affected by the recession than other market segments.
In Europe, polystyrene (PS) and expandable polystyrene (EPS) margins were higher in the first quarter of 2009 versus the fourth quarter of 2008 mainly due to some recovery in volumes of both PS and EPS that improved slightly from the extremely weak levels caused by significant inventory destocking in the fourth quarter of 2008.
First Quarter 2009 Versus First Quarter 2008
NOVA Chemicals’ 50% share of INEOS NOVA provided adjusted EBITDA of $6 million in the first quarter of 2009, compared to adjusted EBITDA of $8 million in the first quarter of 2008. In North America, first quarter 2009 styrene monomer margin declined modestly due to lower sales volume, as inventory destocking continued into early 2009, though monomer margins and volumes improved later in the quarter. In North America polymers, margins were higher due to flow-through feedstock costs that fell more than selling prices as compared to the first quarter of 2008. In Europe, significantly lower sales volumes, due to the effects of the recession, more than offset higher product margins as flow-through feedstock costs fell more than selling prices.
PERFORMANCE STYRENICS BUSINESS UNIT
Financial Highlights
(millions of U.S. dollars, except as noted) Three Months EndedMar. 31
2009
Dec. 312008
Mar. 312008
Revenue $ 46 $ 70 $ 122 Adjusted EBITDA (1) $ (13 ) $ (35 ) $ 2 Depreciation 7 6 6 Operating Loss (1) $ (20 ) $ (41 ) $ (4 ) Capital Spending $ 1 $ 6 $ 1 Sales Volumes (millions of pounds) (2) 59 65 103(1) See Supplemental Measures on page 15.
(2) Third-party sales.Average Benchmark Prices (1)
(U.S. dollars per pound) Three Month AverageMar. 31
2009
Dec. 312008
Mar. 312008
Styrene Monomer $ 0.40 $ 0.56 $ 0.72 Expandable Polystyrene $ 0.82 $ 1.08 $ 1.02 (1) Source: CMAI. Average benchmark prices do not necessarily reflect actual prices realized by NOVA Chemicals or any other petrochemical company.Review of Operations
First Quarter 2009 Versus Fourth Quarter 2008
The Performance Styrenics segment reported an adjusted EBITDA loss of $13 million in the first quarter of 2009 compared to an adjusted EBITDA loss of $35 million in the fourth quarter of 2008. The improvement was due to higher margins, as flow-through feedstock costs declined faster than selling prices, and fixed cost reductions related to cost control measures and temporary manufacturing plant idling.
In March 2009, NOVA Chemicals resumed a restructuring of its Performance Styrenics unit that is targeted to ultimately reduce fixed costs by 40% and strengthen the business. The Company recorded a restructuring charge of $8 million before-tax (which is reflected in Corporate results) during the first quarter of 2009 related to severance and other employee related costs. Additionally, plant operations were rationalized, resulting in re-rating the Monaca, PA, EPS unit from 285 million pounds per year to 180 million pounds per year, and the Painesville, OH, EPS unit from 85 million pounds per year to 100 million pounds per year.
First quarter DYLARK® resin sales declined 14% primarily due to dramatic declines in European automobile production. ARCEL® resin first quarter sales declined 22% due to continued weakness in the consumer durables market. Asian sales of ARCEL resin dropped 37% compared to the fourth quarter.
NOVIDESA and NOVA Chile generated record profitability as Mexican and Chilean building and construction markets were resilient and lower materials costs stimulated demand. Elemix® Concrete Additive was launched at the 2009 World of Concrete Conference in February 2009, where the product was voted “Most Innovative Product” for concrete applications by industry experts.
First Quarter 2009 Versus First Quarter 2008
The Performance Styrenics segment reported an adjusted EBITDA loss of $13 million in the first quarter of 2009 compared to an adjusted EBITDA profit of $2 million in the first quarter of 2008. The decline was due to lower sales volumes and lower margins, as selling prices declined more than flow-through feedstock costs.
EPS sales declined 40% in the first quarter of 2009 due to the sharp decline in the construction market as compared to the first quarter of 2008. DYLARK resin first quarter sales declined 58% due to weakness in automotive markets. ARCEL resin first quarter sales declined 54% from the first quarter of 2008 due to weakness in consumer durables markets. European ARCEL resin sales were particularly weak as sales dropped 72% because of low consumer demand and inventory corrections.
CORPORATE
(millions of U.S. dollars) Three Months EndedMar. 31
2009
Dec. 312008
Mar. 312008
Before-Tax Corporate Items: Corporate operating costs (1) (2) $ (24 ) $ (7 ) $ (34 ) Stock-based compensation and profit sharing (3) (22 ) (14 ) (17 ) Mark-to-market feedstock derivatives (4) 15 8 (30 ) Foreign exchange gain (impact of functional currency change) - 117 - IPIC transaction costs (23 ) - - Restructuring (8 ) (32 ) - Operating (Loss) Income (2) $ (62 ) $ 72 $ (81 ) Add back: Mark-to-market feedstock derivatives (4) (15 ) (8 ) 30 Corporate depreciation (2) 1 - 2 IPIC transaction costs 23 - - Restructuring 8 32 - Adjusted EBITDA (5) $ (45 ) $ 96 $ (49 ) (1) Includes corporate depreciation. (2) Prior period have been restated due to the adoption of CICA 3064 in the first quarter of 2009. (3) NOVA Chemicals has three cash-settled, stock-based compensation plans that are marked to market with changes in the value of the common stock price. NOVA Chemicals entered into forward transactions with the intent to neutralize the mark-to-market impact of two of the stock-based compensation plans. All forward transactions were cash settled in the first quarter of 2009 (see page 10). In the fourth quarter of 2008, NOVA Chemicals changed its accounting policy for one of its stock-based compensation plans. Stock-based compensation also includes the amount expensed related to the fair value of stock options earned by employees during the period. In addition, NOVA Chemicals maintains a profit sharing program available to most employees based on the achievement of shareholder return on equity targets. (4) NOVA Chemicals is required to record on its balance sheet the market value of its open derivative positions which do not qualify for hedge accounting treatment. The gain or loss resulting from changes in the market value of these derivatives is recorded as earnings or loss each period. These mark-to-market adjustments are recorded in the Feedstock and operating costs line on the Consolidated Statements of Net (Loss) Income and as part of Corporate results until the positions are realized. Once realized, any income effects are recorded in business results. (5) See Supplemental Measures on page 15. In the first quarter of 2009, NOVA Chemicals changed its definition of adjusted EBITDA to exclude the IPIC transaction costs.Corporate Operating Costs
Corporate operating costs were higher during the first quarter of 2009 as compared to the fourth quarter of 2008 primarily due to a settlement charge of $8 million related to a partial payment from the Company’s supplemental employee retirement plan and increased incentive compensation accruals during the first quarter of 2009. Corporate operating costs in the first quarter of 2008 were higher than the first quarter of 2009 primarily due to project write-offs in the first quarter of 2008.
Stock-based Compensation and Profit Sharing
Expenses increased by $8 million in the first quarter of 2009 versus the fourth quarter of 2008. Recognition of stock-based compensation costs for restricted share units granted in February 2009 to retirement eligible employees in accordance with EIC-162 increased first quarter expenses by $12 million, while the fourth quarter expense benefited from a reversal of profit sharing accruals amounting to $8 million. The mark-to-market cost of stock-based compensation programs declined by $12 million in the first quarter of 2009 as compared to the fourth quarter of 2008. The hedging program designed to offset the mark-to-market costs of stock-based compensation programs was ineffective in both the fourth quarter of 2008 and the first quarter of 2009 because the stock price had fallen below the level at which the hedging program was effective. This hedging program was still effective in the first quarter of 2008, which mainly accounts for the lower expense in that quarter despite record profitability in 2007. The hedging program was cash settled in the first quarter of 2009 (see page 10).
Mark-to-Market Feedstock Derivatives
The mark-to-market value of NOVA Chemicals’ open feedstock positions improved in the first quarter of 2009, resulting in a non-cash gain of $15 million ($11 million after-tax). The Company locks in a portion of its propane and butane feedstock requirements as a percentage of crude oil using forward contracts that extend to 2012. Strengthening forward propane and butane prices as a percentage of forward crude oil prices drove the non-cash mark-to-market improvement. NOVA Chemicals recorded an unrealized gain of $8 million ($6 million after-tax) in the fourth quarter of 2008 and an unrealized loss of $30 million ($21 million after-tax) in the first quarter of 2008 on the feedstock derivative positions.
On Jan. 1, 2009, NOVA Chemical adopted EIC-173, Credit Risk and the Fair Value of Financial Assets and Liabilities, which requires the mark-to-market value of NOVA Chemicals’ open feedstock positions to include consideration of the Company’s own credit risk and the credit risk of its counterparties. The adoption of EIC-173 resulted in a one-time credit on Jan. 1, 2009 to opening retained earnings and a corresponding decrease in the mark-to-market liability of $18 million ($12 million after-tax). During the first quarter of 2009, the initial EIC-173 impact was reduced by $15 million ($10 million after-tax), decreasing the first quarter 2009 non-cash mark-to-market gain and increasing the mark-to-market liability.
Functional Currency Change
Effective Oct. 1, 2008, the functional currency of NOVA Chemicals’ Canadian operations changed to U.S. dollars. The change resulted in a $117 million foreign exchange non-cash gain during the fourth quarter of 2008 that was recorded in Corporate results. NOVA Chemicals will continue to see foreign exchange gains and losses flow through earnings in the future and has separately highlighted these amounts on the Consolidated Statements of Net (Loss) Income. See page 12.
IPIC Transaction Costs
Costs incurred by NOVA Chemicals related to the IPIC transaction include financial advisor fees and legal fees incurred during the first quarter of 2009. As of Mar. 31, 2009, $8 million of these costs have been paid.
Restructuring
In March 2009, NOVA Chemicals resumed restructuring its Performance Styrenics segment to strengthen the business. The target for restructuring is to reduce fixed costs within the unit by 40%. The Company recorded a restructuring charge of $8 million during the first quarter of 2009 related to severance and other employee related costs as a result of the restructuring.
IFRS Changeover Plan
NOVA Chemicals has provided a qualitative assessment of its IFRS convergence plan at Dec. 31, 2008, in the 2008 Annual Report MD&A on page 63. There were no further changes to this plan during the first quarter of 2009. The Company will continue to investigate the impact of IFRS convergence throughout the remainder of 2009.
Capitalization, Liquidity and Cash Flow
Capitalization
(millions of U.S. dollars) Mar. 312009
Dec. 312008
Mar. 312008
Net current debt (1) $ 840 $ 333 $ 254 Long-term debt 1,107 1,270 1,525 Less: cash and cash equivalents (141 ) (74 ) (59 )Total debt, net of cash, cash equivalents, and restricted cash
1,806 1,5291,720
Total shareholders’ equity 779 895 1,113 (Increase) decrease in debt, net of cash (277 ) 140 (45 ) (1) See Supplemental Measures on page 15.Liquidity
Liquidity is defined as total available revolving credit facilities, less utilization (including letters of credit), plus cash and cash equivalents. NOVA Chemicals’ total liquidity at the end of the first quarter of 2009 was $323 million, down from $573 million at the end of the fourth quarter of 2008. The Company’s future liquidity is dependent on the actions described below and many other factors such as cash generated from ongoing operations, internal actions taken to reduce costs and conserve cash, and other potential sources of financing.
NOVA Chemicals has five revolving credit facilities totaling $765 million of which $740 million was available as of Mar. 31, 2009 ($683 million as of Dec. 31, 2008). As of Mar. 31, 2009 and Dec. 31, 2008, NOVA Chemicals had utilized $558 million and $184 million of its revolving credit facilities, respectively (of which $45 million and $40 million, respectively, was in the form of letters of credit).
On Jan. 28, 2009, the $68 million facility was reduced to $33 million and on Mar. 15, 2009, this facility expired. On Feb. 22, 2009, the Company secured a $150 million facility with Export Development Canada (EDC) and a syndicate of three Canadian banks that expires on June 30, 2010. This new facility is governed by the quarterly financial covenants discussed below. This $150 million facility exceeded the $100 million of new financing required to be raised by Feb. 28, 2009, as a condition subsequent to the covenant relief discussed below. The $50 million of excess financing may be used toward meeting the additional $100 million of financing required by June 1, 2009 as a condition subsequent to the same covenant relief.
The indentures governing NOVA Chemicals’ public debt allow for debt up to 10% of consolidated net tangible assets to be secured without having to secure the public debt. If consolidated net tangible assets (defined in accordance with the indentures and calculated on a quarterly basis) fall below $3.5 billion, access to the $350 million secured revolving credit facility will be reduced proportionately. Effective Feb. 25, 2009, the availability on the $350 million revolving credit facility was reduced by $25 million to $325 million. The revolving credit facility size remains at $350 million and NOVA Chemicals anticipates that close to full availability will be restored in April 2009 based on the consolidated net tangible assets calculation performed at Mar. 31, 2009.
In connection with an arrangement agreement (the Arrangement Agreement) entered into by IPIC and NOVA Chemicals, IPIC provided a $250 million unsecured backstop credit facility (the Backstop Facility) to NOVA Chemicals. The Backstop Facility could only be used as a single draw to assist the Company in repaying the $250 million, 7.4% notes due on Apr. 1, 2009. The amount drawn and all related interest and fees are payable upon maturity of the Backstop Facility on June 30, 2010 or other termination of the Backstop Facility. In addition, unless the Backstop Facility has been repaid in full, an event of default will occur if the Arrangement Agreement is terminated under certain circumstances, in which case IPIC would have the right to accelerate any amounts owed and/or outstanding under the Backstop Facility. On Mar. 31, 2009, $150 million was drawn on the Backstop Facility which was deposited by IPIC directly with the trustee in respect of the 7.4% notes to repay the 7.4% notes. As a result, this $150 million is included in Restricted cash on the Consolidated Balance Sheets.
The $350 million secured revolving credit facility, the new $150 million facility, the Backstop Facility, the total return swap and NOVA Chemicals’ Accounts Receivable Securitization programs are governed by financial covenants which require quarterly compliance. The covenants require a maximum net debt-to-cash flow ratio of 5:1 and a minimum interest coverage ratio of 2:1 computed on a rolling 12-month basis. Effective Jan. 28, 2009, NOVA Chemicals amended these financial covenants in the $350 million secured revolving credit facility and the total return swap for the quarter ending Mar. 31, 2009, to exclude the quarter ending Dec. 31, 2008, results and include the quarter ending Mar. 31, 2008 results (the new $150 million facility and the Backstop Facility include these amended financial covenants). At Mar. 31, 2009, the Company was in compliance with these amended financial covenants. These amendments provide relief to give the Company access to its major credit lines during the first half of 2009, subject to complying with certain conditions subsequent which include the following:
The Company anticipates that further amendments to its financial covenants will be required with an effective date no later than June 30, 2009. These amendments are expected to be required due to the continuing effect of the large loss incurred in the fourth quarter of 2008 on compliance with the rolling 12-month debt-to-cash flow and interest coverage ratio limits. NOVA Chemicals is currently in negotiations with its core group of banks to amend these covenants such that compliance will be achieved. NOVA Chemicals also anticipates that once the IPIC acquisition closes, the remaining $50 million additional financing condition subsequent by June 1, 2009 will be met given the IPIC Backstop Facility funding and or other financing facilities. NOVA Chemicals’ ability to maintain compliance with these financial covenants is dependent on various factors, certain of which are outside the Company’s control. Such factors include successful closing of the IPIC transaction, future industry and capital market conditions, impacts of planned restructuring activities and results of ongoing negotiations with the Company’s core group of banks and other sources of financing.
If NOVA Chemicals were to fail to negotiate amendments to these covenants and be in breach of these covenants or other covenants, it could result in a default which would permit the lenders to declare all amounts outstanding to be due and payable and to terminate all commitments to extend further credit. Because NOVA Chemicals has not completed these negotiations with its core group of banks, the Company is required as a technical matter in accordance with EIC-59, Long-term Debt with Covenant Violations, to classify all outstanding long-term debt subject to these financial covenants and revolving credit facilities which contain cross defaults as current liabilities at Mar. 31, 2009. NOVA Chemicals believes covenant amendments are likely to be negotiated and the Company will be in compliance over the coming 12 month period, with the result that the classification of certain indebtedness as long-term will be restored.
On Feb. 22, 2009, NOVA Chemicals agreed to jointly develop a financing plan with certain of its existing lenders. The plan would only be implemented if the IPIC transaction was not completed. The financing plan would provide for the refinancing of all or part of the Company’s existing debt and the raising of incremental liquidity. Pursuant to the financing plan, NOVA Chemicals would issue both debt securities and equity securities or other hybrids in one or more financings or public or private offerings. The Company has agreed with certain of its existing lenders that such issuance of equity or equity-like securities would be intended to raise net proceeds of not less than $300 million.
The total return swap was amended on Feb. 22, 2009, to extend the termination date from Oct. 31, 2009, to June 30, 2010, and reduce the equity notional amount. Of the $52 million cash collateral posted as of Feb. 22, 2009 ($45 million as of Dec. 31, 2008 plus $7 million provided from Jan. 1, 2009, through Feb. 22, 2009), $51 million was applied to the $126 million equity notional amount to reduce the equity notional amount to $75 million. The remaining $1 million cash collateral was returned to NOVA Chemicals.
The Company had share forward transactions to manage its exposure to fluctuations in its stock-based compensation costs related to stock-based compensation plans. Prior to Dec. 31, 2008, NOVA Chemicals agreed to terminate one of the forward transactions for 1,300,000 notional common shares. This forward transaction was cash settled for $42 million in January 2009. The counterparty had the election to settle the remaining forward transaction for 2,312,100 notional common shares if the closing price of NOVA Chemicals’ common shares on any three consecutive trading days commencing Feb. 1, 2009, was $8 or less. The stock price trigger was met and the counterparty elected to terminate the agreement on Feb. 4, 2009. NOVA Chemicals paid the counterparty $88 million on Feb. 12, 2009.
On Feb. 13, 2009, NOVA Chemicals amended the financial covenants of its accounts receivable securitization programs to mirror the amended financial covenants for the $350 million secured revolving credit facility. In addition, the maximum amount of the programs was reduced from $300 million to $190 million and the expiration dates were changed from June 2010 to February 2010. The balances as of Mar. 31, 2009 and Dec. 31, 2008, were $99 million and $175 million, respectively. NOVA Chemicals does not include any undrawn amounts under the accounts receivable securitization programs as part of liquidity.
The INEOS NOVA joint venture has two accounts receivable securitization programs, a $150 million North American program and a €120 million European program. NOVA Chemicals’ 50% share of the balances as of Mar. 31, 2009 and Dec. 31, 2008, were $14 million and $27 million, respectively, under the North American program and €24 million and €25 million, respectively, under the European program.
Cash Flow and Working Capital
Working capital increased $186 million in the first quarter of 2009 primarily due to the cash settlement of the share forward transactions in January and February 2009 (see above) as well as a $76 million reduction in the balance outstanding on the accounts receivable securitization programs.
Feedstock Derivative Positions
NOVA Chemicals maintains a derivatives program to manage risk associated with its crude oil feedstock purchases. In the first quarter of 2009, the Company recorded no net after-tax gain or loss on realized positions compared to a net after-tax gain of $2 million in the fourth quarter of 2008 and a net after-tax loss of $5 million in the first quarter of 2008.
Mark-to-market adjustments related to the change in the value of open feedstock positions are recorded as part of Corporate results until the positions are realized. Once realized, any income effects are recorded in business results. See page 7 for more details.
Summary Quarterly Financial Information
(millions of U.S. dollars, Three Months Ended except per share amounts) 20092008 (1)
2007 (1)
Mar. 31 Dec. 31 Sep. 30 June 30 Mar. 31 Dec. 31 Sep. 30 June 30 Revenue $ 818 $ 1,153 $ 2,088 $ 2,213 $ 1,912 $ 1,795 $ 1,755 $ 1,676 Operating (loss) income $ (120 ) $ (315 ) $ 191 $ 70 $ 110 $ 114 $ 188 $ 151 Net (loss) income $ (123 ) $ (212 ) $ 100 $ 20 $ 52 $ 126 $ 97 $ 80 (Loss) earnings per share - basic $ (1.48 ) $ (2.55 ) $ 1.20 $ 0.24 $ 0.63 $ 1.52 $ 1.17 $ 0.97 - diluted $ (1.48 ) $ (2.55 ) $ 1.20 $ 0.24 $ 0.63 $ 1.51 $ 1.16 $ 0.96 Adj. (loss) earnings per share (2) $ (1.31 ) $ (2.27 ) $ 1.02 $ 1.02 $ 0.88 $ 1.53 $ 1.01 $ 1.00 Weighted-average common shares outstanding (millions) - basic 83.2 83.2 83.2 83.1 83.1 83.0 83.0 82.9 - diluted 83.2 83.2 83.2 83.2 83.2 83.4 83.8 83.7(1) Prior periods have been restated due to the adoption of CICA 3064 in the first quarter of 2009.
(2) See Supplemental Measures on page 15.Changes in Net Income
(millions of U.S. dollars)
Q1 2009Compared to
Q4 2008 Q1 2008Higher (lower) operating margin (1)
$ 306 $ (217 ) Lower research and development 3 3 Higher selling, general and administrative (33 ) (22 ) Lower (higher) restructuring charges 24 (8 )Lower foreign exchange gain due to change in functional currency
(117
)
-
Higher foreign exchange gains 12 12 Lower depreciation and amortization - 2 Higher interest expense (12 ) (3 ) Lower net gains and losses - 1 (Higher) lower income tax expense (94 ) 57 Increase (decrease) in net income $ 89 $ (175 ) (1) Operating margin equals revenue less feedstock and operating costs (includes impact of realized and unrealized gains and losses on mark-to-market feedstock derivatives), see page 7.Net income for the first quarter of 2009 was higher than the fourth quarter of 2008 due to lower fourth quarter margins resulting from the dramatic drop in energy and petrochemical prices which led to large inventory flow-through impacts and an inventory write-down. During the fourth quarter of 2008, sharp price reductions and lower sales volumes also contributed to the margin decline. Net income for the first quarter of 2009 was lower than the first quarter of 2008 due to significant margin and volume declines.
Selling, general and administrative costs were $33 million higher in the first quarter of 2009 as compared to the fourth quarter of 2008 primarily due to $23 million of financial advisor fees and legal fees (transaction costs) incurred with respect to the IPIC transaction, as well as an $8 million settlement charge related to a partial payment from the Company’s supplemental employee retirement plan. Selling, general and administrative costs were $22 million higher in the first quarter of 2009 as compared to the first quarter of 2008 primarily due to the $23 million IPIC transaction costs. The $8 million settlement charge related to a partial payment from the Company’s supplemental employee retirement plan incurred in the first quarter of 2009 was offset by various project write-offs that occurred in the first quarter of 2008.
Restructuring charges in the first quarter of 2009 were $24 million lower than the fourth quarter of 2008 and $8 million higher than the first quarter of 2008. In the first quarter of 2009, NOVA Chemicals recorded $8 million of restructuring charges for severance and other employee related costs associated with restructuring of the Performance Styrenics business unit. In the fourth quarter of 2008, NOVA Chemicals recorded $32 million related to the following activities: $17 million impairment charge related to certain joint venture and equity investments; $9 million related to costs incurred on capital projects which will not be pursued at this time; $2 million of severance costs incurred by the INEOS NOVA joint venture; and $4 million of other restructuring charges related to actions taken to reduce costs. There were no restructuring charges in the first quarter of 2008.
In the fourth quarter of 2008, NOVA Chemicals changed the functional currency of its Canadian operations to U.S. dollars. This change resulted in a foreign exchange gain of $117 million during the fourth quarter of 2008.
Interest expense in the first quarter of 2009 was $12 million higher than the fourth quarter of 2008 due to $3 million of additional amortization expense of debt issue costs as a result of the amendments and additional financings completed in the first quarter; $4 million debt advisory fee related to future debt refinancing plans; and interest income being $4 million lower in the first quarter of 2009 compared to the fourth quarter of 2008.
The income tax recovery in the first quarter of 2009 was $94 million lower than the recovery recorded in the fourth quarter of 2008 primarily due to the lower losses incurred. In addition to this, the tax reserve was reduced by $20 million in the fourth quarter of 2008. The decrease in tax expense of $57 million in the first quarter of 2009 compared with the first quarter of 2008 is due to the reduction in earnings from a profit in the first quarter of 2008 to a loss in the first quarter of 2009.
CONSOLIDATED FINANCIAL INFORMATION (1)
Consolidated Statements of Net (Loss) Income
(unaudited, millions of U.S. dollars, except per share amounts)Three Months Ended
Mar. 312009
Dec. 31
2008 (2)
Mar. 31
2008 (2)
Revenue $ 818 $ 1,153 $ 1,912 Feedstock and operating costs (excluding depreciation) 778 1,419 1,655 Research and development 10 13 13 Selling, general and administrative 89 56 67 Restructuring 8 32 - Foreign exchange gain - impact of change in functional currency - (117) - Foreign exchange gain (12) - - Depreciation and amortization 65 65 67 938 1,468 1,802 Operating (loss) income (120) (315) 110 Interest expense, net (46) (34) (43) Other (losses) gains, net - - (1) (46) (34) (44) (Loss) income before income taxes (166) (349) 66 Income tax (recovery) expense (43) (137) 14 Net (loss) income $ (123) $ (212) $ 52 (Loss) earnings per share - basic $ (1.48) $ (2.55) $ 0.63 - diluted $ (1.48) $ (2.55) $ 0.63Consolidated Balance Sheets
(unaudited, millions of U.S. dollars)Mar. 312009
Dec. 312008 (2)
Mar. 31
2008 (2)
Assets Current assets Cash and cash equivalents $ 141 $ 74 $ 59 Accounts receivable 312 290 620 Inventories 406 529 1,075 Prepaid expenses and other assets 31 34 16 Future income taxes - 68 - Restricted cash 154 49 4 1,044 1,044 1,774 Investments and other assets 160 155 127 Property, plant and equipment, net 2,762 2,808 2,933 $ 3,966 $ 4,007 $ 4,834 Liabilities and Shareholders’ Equity Current liabilities Bank loans $ 2 $ 2 $ 3 Accounts payable and accrued liabilities 487 781 1,229 Future income taxes 9 - - Long-term debt due within one year (Pages 9 and 10) 992 380 255 1,490 1,163 1,487 Long-term debt (Pages 9 and 10) 1,107 1,270 1,525 Future income taxes 292 377 449 Deferred credits and long-term liabilities 298 302 260 3,187 3,112 3,721 Shareholders’ equity Common shares 508 508 507 Contributed surplus 26 25 27 Reinvested (deficit) earnings (211 ) (100 ) 15 Accumulated other comprehensive income 456 462 564 779 895 1,113 $ 3,966 $ 4,007 $ 4,834
(1) The consolidated financial information does not include note disclosures that would be included in full interim financial statements prepared in accordance with Canadian GAAP.
(2) Prior periods have been restated due to the adoption of CICA 3064 in the first quarter of 2009.Consolidated Statements of Cash Flows
(unaudited, millions of U.S. dollars) Three Months EndedMar. 31
2009
Dec. 312008 (1)
Mar. 312008 (1)
Operating activities Net (loss) income $ (123 ) $ (212 ) $ 52 Depreciation and amortization 65 65 67 Future income tax recovery (7 ) (74 ) (24 ) Unrealized (gain) loss on derivatives (15 ) (8 ) 30 Unrealized foreign exchange loss (gain) 2 (119 ) - Other losses - - 1 Stock option expense - - 1 Non-cash restructuring charges - 25 - (78 ) (323 ) 127 Changes in non-cash working capital: Accounts receivable (25 ) 203 (26 ) Inventories 120 420 (148 ) Other current assets (5 ) (39 ) 4 Accounts payable and accrued liabilities (276 ) (140 ) 47 (186 ) 444 (123 )Changes in other current assets and non-current assets and liabilities
(7
)
(14
)
(16
)
Cash flow (used in) from operating activities(271
)
107
(12
)
Investing activities Property, plant and equipment additions (19 ) (50 ) (35 ) Turnaround costs, long-term investments and other assets(1
)
(4
)
(2
)
Cash flow used in investing activities (20 ) (54 ) (37 ) Financing activities Decrease in current bank loans (1 ) (1 ) - Long-term debt additions 1 - 1 Long-term debt repayments (1 ) - (1 ) Increase (decrease) in revolving debt facilities370
(60
)
(4
)
Common shares issued - - 2 Common share dividends (7 ) (7 ) (8 ) Cash flow from (used in) financing activities362
(68
)
(10
)
(Decrease) increase in cash due to exchange rates(4
)
13
-
Increase (decrease) in cash and cash equivalents67
(2
)
(59
)
Cash and cash equivalents, beginning of period74
76
118
Cash and cash equivalents, end of period$ 141
$ 74
$ 59
Cash tax payments, net of refunds $ (17 ) $ (8 ) $ 12 Cash interest payments $ 45 $ 63 $ 46(1) Prior periods have been restated due to the adoption of CICA 3064 in the first quarter of 2009.
Consolidated Statements of Changes in Shareholders’ Equity
(unaudited, millions of U.S. dollars, except share amounts)
Three Months Ended
Mar. 312009
Dec. 31
2008 (1)
Mar. 31
2008 (1)
Common shares Balance at beginning of period $ 508 $ 508 $ 505 Common shares issued - - 2 Balance at end of period $ 508 $ 508 $ 507 Contributed surplus Balance at beginning of period $ 25 $ 24 $ 27 Stock option compensation cost - 1 - Other 1 - - Balance at end of period $ 26 $ 25 $ 27 Reinvested (deficit) earnings Balance at beginning of period $ (100 ) $ 119 $ (68 ) Net (loss) income (123 ) (212 ) 52 Changes in accounting standards: Adoption of inventory full costing (2) - - 39 Adoption of EIC-173 12 - - Common share dividends - (7 ) (8 ) Balance at end of period $ (211 ) $ (100 ) $ 15 Accumulated other comprehensive income Balance at beginning of period $ 462 $ 488 $ 608 Other comprehensive (loss) income: Unrealized loss on translation of self-sustaining foreign operations
(6
)
(27
)
(44
)
Unrealized gain on available for sale securities - 1 - Balance at end of period $ 456 $ 462 $ 564 Total shareholders’ equity $ 779 $ 895 $ 1,113 Common shares Balance at beginning of period 83,160,889 83,160,889 83,054,528 Common shares issued - - 81,511 Balance at end of period 83,160,889 83,160,889 83,136,039 (1) Prior periods have been restated due to the adoption of CICA 3064 in the first quarter of 2009.(2) One-time credit on Jan. 1, 2008 to opening retained earnings and a corresponding increase in opening inventory of $47 million ($39 million after-tax).
Consolidated Statements of Comprehensive (Loss) Income
(unaudited, millions of U.S. dollars) Three Months EndedMar. 31
2009
Dec. 312008 (1)
Mar. 312008 (1)
Net (loss) income $ (123 ) $ (212 ) $ 52 Other comprehensive (loss) income:Unrealized loss on translation of self-sustaining foreign operations
(6
)
(27
)
(44 ) Unrealized gain on available for sale securities - 1 - Comprehensive (loss) income $ (129 ) $ (238 ) $ 8(1) Prior periods have been restated due to the adoption of CICA 3064 in the first quarter of 2009.
Supplemental Measures
NOVA Chemicals presents certain supplemental measures below, which do not have any standardized meaning prescribed by Canadian GAAP and are therefore unlikely to be comparable to similar measures presented by other companies. The Company believes that certain non-GAAP financial measures, when presented in conjunction with comparable GAAP financial measures, are useful to investors and other readers because the information is an appropriate measure for evaluating NOVA Chemicals operating performance. Internally, the Company uses this non-GAAP financial information as an indicator of business performance, with specific reference to these indicators. These measures should be considered in addition to, and not as a substitute for or superior to, measures of financial performance prepared in accordance with GAAP.
Reconciliation of Consolidated Net (Loss)Income to Adjusted EBITDA
Three Months Ended(millions of U.S. dollars)
Mar. 312009
Dec. 31
2008 (1)
Mar. 312008 (1)
Adjusted EBITDA $ (39 ) $ (226 ) $ 207 Depreciation and amortization (65 ) (65 ) (67 ) Interest expense (net) (46 ) (34 ) (43 ) Other losses - - (1 ) Income tax recovery (expense) 43 137 (14 )Mark-to-market feedstock derivative unrealized gains (losses)
15
8
(30
)
IPIC transaction costs (23 ) - - Restructuring charges (8 ) (32 ) - Net (loss) income $ (123 ) $ (212 ) $ 52(1) Prior periods have been restated due to the adoption of CICA 3064 in the first quarter of 2009.
Reconciliation of Adjusted Net (Loss) Incomeand Adjusted EPS
Three Months Ended(millions of U.S. dollars, except per share amounts)
Mar. 312009
Dec. 31
2008 (1)
Mar. 31
2008 (1)
Net (loss) income
$ (123 ) $ (212 ) $ 52 Non-GAAP Adjustments:After-tax mark-to-market feedstock derivative unrealized (gains) losses
(11
)
(6
)
21
After-tax IPIC transaction costs 17 - - After-tax restructuring charges 8 29 - Adjusted net (loss) income $ (109 ) $ (189 ) $ 73Diluted weighted-average common shares outstanding
83.2
83.2
83.2
Adjusted EPS $ (1.31 ) $ (2.27 ) $ 0.88(1) Prior periods have been restated due to the adoption of CICA 3064 in the first quarter of 2009.
Forward-Looking Information
This news release contains forward-looking information with respect to NOVA Chemicals, its subsidiaries and affiliated companies. By its nature, forward-looking information requires NOVA Chemicals to make assumptions and is subject to inherent risks and uncertainties. There is significant risk that predictions, forecasts, conclusions and projections that constitute forward-looking information will not prove to be accurate, that NOVA Chemicals’ assumptions may not be correct and that actual results may differ materially from such forward-looking information. Forward-looking information for the time periods beyond 2009 involve longer-term assumptions and estimates than forward-looking information for 2009 and are consequently subject to greater uncertainty. NOVA Chemicals cautions readers of this news release not to place undue reliance on its forward-looking information as a number of factors could cause actual results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed in the forward-looking information.
The words “believe”, “expect”, “plan”, “intend”, “estimate”, or “anticipate” and similar expressions, as well as future or conditional verbs such as “will”, “should”, “would”, and “could” often identify forward-looking information. Specific forward-looking information contained in this news release includes, among others, statements regarding: NOVA Chemicals’ expectations concerning the IPIC transaction, including the timing of closing; NOVA Chemicals’ beliefs and expectations concerning the restructuring of its Performance Styrenics business, including the target of reducing fixed costs within the business by 40%; NOVA Chemicals use of its major credit lines during the first half of 2009; NOVA Chemicals’ expectation that its $350 million revolving credit facility will be restored to close to full availability in April 2009 based on the consolidated net tangible assets calculation performed at Mar. 31, 2009; NOVA Chemicals’ expectation that further amendments to the financial covenants that govern certain of its financings will be required with an effective date no later than June 30, 2009, and NOVA Chemicals’ belief that it is likely such covenant amendments will be negotiated and the Company will be in compliance in the coming 12 month period; and NOVA Chemicals’ belief that once the IPIC transaction closes, the remaining $50 million additional financing by June 1, 2009 condition subsequent required by the Jan. 28, 2009 amendment to the $350 million revolving credit facility will be met given the IPIC Backstop Facility funding or other financing facilities. With respect to forward-looking information contained in this news release, NOVA Chemicals has made assumptions regarding, among other things: future oil, natural gas and benzene prices; its ability to obtain raw materials; its ability to market products successfully to its anticipated customers; the impact of increasing competition; and its ability to obtain financing on acceptable terms. Some of the risks that could affect NOVA Chemicals’ future results and could cause results to differ materially from those expressed in the forward-looking information include: failure to consummate the Arrangement with IPIC; a deterioration in NOVA Chemicals’ cash balances or liquidity; NOVA Chemicals’ lenders willingness to provide any consents or waivers; NOVA Chemicals’ ability to access capital markets and the terms and availability of financing; commodity chemicals price levels (which depend, among other things, on supply and demand for these products, capacity utilization and substitution rates between these products and competing products); feedstock availability and prices; operating costs; technology developments; currency exchange rate fluctuations; starting up and operating facilities using new technology; realizing synergy and cost savings targets; NOVA Chemicals’ ability to implement its business strategies; meeting time and budget targets for significant capital investments; avoiding unplanned facility shutdowns; safety, health, and environmental risks associated with the operation of chemical plants and marketing of chemical products, including transportation of these products; public perception of chemicals and chemical end-use products; the impact of competition; changes in customer demand, including customer acceptance of NOVA Chemicals’ Performance Polymers; changes in, or the introduction of new laws and regulations relating to NOVA Chemicals’ business, including environmental, competition and employment laws; loss of the services of any of NOVA Chemicals’ executive officers; uncertainties associated with the North American, South American, European, and Asian economies, terrorist attacks, severe weather events, and other risks detailed from time to time in the publicly filed disclosure documents and securities commission reports of NOVA Chemicals.
Implementation of announced price increases depends on many factors, including market conditions, the supply/demand balance for each particular product and feedstock costs. Price increases have varying degrees of success. They are typically phased in and can differ by product or market. There can be no assurances that any announced price increases will be successful or will be realized within the anticipated time frame. In addition, benchmark price indices sometimes lag price increase announcements due to the timing of publication.
NOVA Chemicals’ forward-looking information is expressly qualified in its entirety by this cautionary statement. In addition, the forward-looking information is made only as of the date of this news release, and except as required by applicable law, NOVA Chemicals undertakes no obligation to publicly update this forward-looking information to reflect new information, subsequent events or otherwise.
Trademark Information
Advanced SCLAIRTECHTM is a trademark of NOVA Chemicals; ARCEL®, DYLARK® and Elemix® are registered trademarks of NOVA Chemicals Inc.; SCLAIR® is a registered trademark of NOVA Chemicals Corporation in Canada and of NOVA Chemicals (International) S.A. elsewhere, authorized use/utilisation autorissée; and SURPASS® is a registered trademark of NOVA Chemicals Corporation in Canada and of NOVA Chemicals (International) S.A. elsewhere.
INVESTOR INFORMATION
For inquiries on stock-related matters including dividend payments, stock transfers and address changes, contact NOVA Chemicals toll-free at 1-800-661-8686 or e-mail to shareholders@novachem.com
Transfer Agent and Registrar
Contact InformationCIBC Mellon Trust Company
600 The Dome Tower, 333 Seventh Avenue S.W.
Calgary, Alberta, Canada T2P 2Z1
Phone: (403) 750-3600 (Canada) or (412) 490-4000 (United States)Internet: www.novachemicals.com
E-Mail: invest@novachem.com
Phone: (403) 232-2400 / 1-800-387-0825 Fax: (403) 264-2100NOVA Chemicals Corporation
1000 Seventh Avenue S.W., P.O. Box 2518
Calgary, Alberta, Canada T2P 5C6
Internet:www.cibcmellon.com
Share InformationIf you would like to receive a shareholder information package, please contact us at (403) 750-3600 or (412) 490-4000 or via e-mail at publications@novachem.com
NOVA Chemicals’ trading symbol on the New York and Toronto Stock Exchanges is NCX.
NOVA Chemicals files additional information, including its Annual Information Form, with Canadian securities administrators. This information can be accessed through the System for Electronic Document Analysis and Retrieval (SEDAR), at www.sedar.com. This same information is filed with the U.S. Securities and Exchange Commission and can be accessed via their Electronic Data Gathering Analysis and Retrieval System (EDGAR) at www.sec.gov/edgar.shtml
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