利安德巴塞爾 (LYB) 2010 Q4 法說會逐字稿

Hello and welcome to the LyondellBasell teleconference. At the request of LyondellBasell, this conference is being recorded for instant replay purposes. Following today's presentation, we will conduct a question-and-answer session. (Operator Instructions).

I'd now like to turn the conference over to Mr. Doug Pike, Vice President Investor Relations. Sir, you may begin.

Thank you, Mary Ann. Well, hello and welcome to LyondellBasell's fourth-quarter 2010 teleconference. I'm joined today by Jim Gallogly, our CEO; Kent Potter, our CFO; and Sergey Vasnetsov, our Senior Vice President of Strategic Planning & Transactions.

Now, before we begin the business discussion, I'd like to point out that a slide presentation accompanies today's call and is available on our website, www.LyondellBasell.com.

I'd also like for you to note that statements made in this call relating to matters that are not historical facts are forward-looking statements. These forward-looking statements are based upon assumptions of management which are believed to be reasonable at the time made, and are subject to significant risks and uncertainties. And actual results could differ materially from those forward-looking statements.

For more detailed information about the factors that could cause our actual results to differ materially, please refer to the disclaimer notice of the presentation slides and our financial reports which are available at www.LyondellBasell.com/investorrelations. And reconciliations of non-GAAP financial measures to GAAP financial measures, together with any other applicable disclosures including the earnings release, are currently available on our website at www.LyondellBasell.com.

Now finally, I'd like to point out that a recording of this call will be available by telephone beginning at 2 p.m. Eastern Time today until 8 a.m. Eastern Time on March 18 by calling 888-568-0028 in the United States and 203-369-3451 outside the United States. And the passcode for both numbers is 6323.

During today's call, we will focus on fourth-quarter and full-year 2010 performance, highlights of our first year as a public company, and some thoughts about 2011. With that being said, I'd now like to turn the call over to Jim.

Thank you for joining our earnings call. As Doug mentioned, a set of presentation slides accompany this call and are available on our website. Let's begin by turning to page 4 to review a few financial highlights. We continued to generate solid EBITDA during the fourth quarter, bringing the 2010 full-year EBITDA to $4 billion. This was significantly more than we anticipated when entering 2010, and $1.8 billion greater than 2009.

Fourth-quarter earnings were $1.54 per share. Fourth-quarter EBITDA exceeded EBITDA for the same period of 2009 by $236 million or 45%. However, as expected and consistent with previous guidance, EBITDA declined versus the third quarter.

Several items unique to the fourth quarter account for the majority of the decline. These items total approximately $300 million and include seasonality, particularly in oxyfuels, disruptions caused by the French port strike, and operating upsets at the Houston refinery, and temporary European olefins margin compression related to the rapid increase in naphtha costs.

Additionally, results were impacted by an additional $50 million employee bonus accrual and a $64 million gain from the sale of the Flavors & Fragrances business. While collectively these items lowered fourth-quarter results, they do not reflect a change in business fundamentals.

In fact, across the quarter we continued to see significant positives. Examples include improved Maya 211 spreads and incremental value in the US ethylene chain, following competitor operating issues. While discussing this page, I'd like to emphasize that we took our first steps toward reshaping our capital structure by repaying approximately $1.2 billion of debt.

We have a very strong balance sheet, finishing the year with net debt below $2 billion and a net debt to last 12 months EBITDA ratio of less than [0.5].

As has been our practice, let's turn to page 5 and take a look at our safety results. We made tremendous progress toward institutionalizing our safety principles. Employee safety improved by more than 40% versus 2009. In fact, December was our safest month in three years.

Annualized contract results, however, did not meet our expectations. We had too many contractor injuries at the beginning of last year. Following midyear meetings with our contractors, their safety performance improved significantly, and we expect this trend to continue.

Overall, our safety performance is among the best in the industry. Safety is a measure of attentiveness and a key part of our developing culture. Good safety performance goes hand-in-hand with operating reliability and financial results.

2010 was a year of many accomplishments for LyondellBasell. We started the year in bankruptcy, emerged in May, and by year-end we had reestablished our position as an industry leader. We have highlighted some of our more leveraging accomplishments on page 6, and think that it's worthwhile to spend a few moments looking back.

First, let's consider the progress in the financial and legal areas. We redesigned and simplified our corporate structure. We established our board and implemented strong governance, corporate governance. We registered with the SEC, and we listed the Company on the New York Stock Exchange. While doing this, we completed an $8.9 billion financing.

By year-end our strong performance enabled us to pay down approximately $1.2 billion of debt. In the manufacturing area, we completed four major plant turnarounds, added to our ethane cracking capabilities, and successfully started up new polyethylene and propylene oxide plants.

We also established a firm foundation for the future by setting numerous plant production records. Most importantly, our new operating philosophy in systems are becoming institutionalized.

Commercial progress was also outstanding as we increased our ethane supply, restructured numerous sales contracts, unlocked critical elements of our operating flexibility, and regained lost trade credit. Additionally, rigorous benchmarking efforts established the basis for future actions.

Most of you are aware of the importance that I place on cost control. This was a key element of our 2010 success, as cash fixed costs of approximately $3.6 billion were relatively unchanged versus 2009, after normalizing for foreign exchange differences and the like, and approximately $1 billion less than 2008. We achieved this by offsetting wage inflation plus previous one-time savings with ongoing structural improvements.

During the year, we reduced headcount by approximately 700 people. We also purposely increased maintenance spending, as we believe this pays off in improved reliability. During 2010, we also positioned ourselves for the future by investing in our internal systems and moving to a single global SAP system.

In summary, we've established a solid foundation based on a new culture and new processes and systems. Combined with our technology and assets, this provides tremendous leverage to an improving economy. I am very proud of the 14,000 employees who have demonstrated that we are a new company with high expectations for ourselves and our future.

Finally, as we think about our future, page 7 provides a good visual summary of some of the key points of leverage that our commodity portfolio holds. I won't dwell on all of the details, but will provide a couple key examples. Remember, a $0.01 per pound change in US ethylene margins contributes approximately $100 million to our EBITDA and a $1.00 per barrel increase in the Houston refinery spread contributes a similar amount. During 2010, improvements in these two areas alone contributed an additional $1.5 billion versus 2009.

The right side of the page shows the volume growth in our Intermediates and Derivatives segment. This segment has strong dependence on durable goods. The volume growth we have seen is an indicator of increased global economic activity and our ability to capture improved marketshare by running well. I think that you can agree that our results, accomplishments and metrics reflect tremendous progress.

I'm now going to turn the call over to Kent to discuss fourth-quarter results and some of our key financial metrics. Kent will also address some of the details behind our presentation of the results. I will later return for a review of each business segment and we will finish with a question-and-answer session. Kent?

Thanks, Jim. And thanks to all of you for joining us today. Let's begin by digging a little deeper into the results. On page 8, you can see that the olefins and polyolefins America segment continue to be the primary area of strength in our results. However, you also see strength and balance across the other segments.

The outstanding results in O&P Americas tend to overshadow our successes -- other successes such as a $324 million year-on-year improvement in the Intermediates and Derivatives segment driven by the strength in our propylene oxide business and the $477 million improvement in olefins and polyolefins Europe, Asia and International segment. We often speak of the challenges facing this segment, perhaps overlooking the strength of our 2010 results.

I also want to emphasize that despite the one-time and seasonal items, fourth-quarter EBITDA still exceeded $760 million and net income was $874 million. This speaks to the strength and scale of our Company.

We appreciate that this has been a complex year to analyze and the fourth quarter is no exception. I want to spend a few minutes explaining some of the factors that might cause some of this confusion. First, I'll address inventory accounting. As you know, we record our results based on LIFO inventory accounting and our inventory was revalued to current market prices at the time of emergence as part of our fresh start accounting process. This resulted in a significantly higher inventory evaluation, which became our new base cost LIFO layer.

During the second and third quarters, falling costs and prices caused us to reduce the value of the inventory and recognized what is known as lower of cost or market charges. However, in the fourth quarter, we reversed most of this impact as prices and costs rose. In our presentations, we've consistently removed this effect from EBITDA, therefore, it should not impact your analysis. However, remember that this has been a difference between our EBITDA presentation and the income statement.

I also offer another caution. Our base LIFO inventory layer established emergence and any increments built this year reflect relatively high values. This means that, in future years, if prices fall, we could see additional lower of cost or market adjustments.

Accounting for our outstanding warrants may be another source of questions. Clauses within the warrant contracts require that these be marked to market. The resulting $55 million fourth-quarter charge is reflected in other income or expense on our income statement. This treatment does not impact cash or EBITDA, but does impact net income and earnings per share.

I also want to point out that this charge is not tax-effected, therefore, the $0.10 per share impact on EPS may be larger than you had anticipated.

While speaking of taxes, you probably noted that we have booked a fourth-quarter income tax benefit. Many factors impact this, but most importantly, you should be aware that, for US tax purposes, fresh start accounting doesn't take effect until 2011, the beginning of this year. Therefore, throughout the latter months of the year, we continued to see fresh start effects incorporated into our tax calculation.

Additionally, the effects of some of our European restructuring post-emergence and improved profit outlook has caused us to recognize the benefits of certain tax loss carryforwards that had been previously reversed or reserved.

Some of the other factors impacting the quarter included the fact that tax rates in many jurisdictions are lower than the US rate. Also, the majority of our JV earnings aren't taxed and some items, such as the accounting of the warrants, do not attract tax, and finally, there were minimal taxes on the Flavors & Fragrance transaction. I'll discuss our outlook for 2011 taxes in a few minutes.

Let's proceed to page 9 and take a quick look at cash flow since emergence. Over the eight months, we have generated nearly $3 billion in cash with $2.5 billion coming from operations, another $52 million from joint venture dividends and $150 million from the Flavors & Fragrance sale. Working capital generated approximately $425 million.

Turn to page 10 and let's look at working capital and liquidity in a little more detail. Let me remind you that the step-up in working capital in the first half of 2010 was largely driven by the increased inventory value and fresh start accounting as discussed earlier.

In the fourth quarter, working capital was impacted by a few key items. First, we recovered most of our trade credit either through reestablishment of terms, purchase discounts or, frankly, by switching suppliers.

However, during the fourth quarter, increased prices, especially feedstock costs and other costs, increased our working capital, offsetting gains realized from improved trade credit. You might recall that our rule of thumb for estimating working capital increases. We see an increase of $30 million to $40 million for every dollar increase in crude oil price. Crude oil prices increased about $12 a barrel during the fourth quarter.

On the right-hand side of the chart, you will see our liquidity position. Although we repaid $1.2 billion of debt during the quarter, our liquidity remained unchanged at $6.1 billion with a year-end cash balance of about $4.2 billion. Combined with the remaining debt balance of $6.1 billion, our net debt finished below $2 billion.

To help complete the cash story, I will note that our 2000 capital expenditures were $780 million, which included $178 million for turnarounds and $81 million for catalysts. During 2011, we expect to increase our capital spending to approximately $1.2 billion with $250 million devoted to turnarounds and new catalysts. We currently plan to direct approximately 75% of the total capital towards maintenance and environmental health and safety projects with the balance primarily targeted towards smaller, high return opportunities.

This is probably a good time for a brief discussion of pension spending and expense. During 2011, we will be making larger contributions to our US pension plans than in the recent few years. In fact, in January, we contributed approximately $150 million and I expect to make further contributions as the year progresses. We regard this as a good use of cash as the pension plan offers tax-efficient investment flexibility. 2011 pension expense is estimated to be somewhat less than the $120 million expense in 2010.

Finally, I'd like to provide some guidance regarding taxes. Last quarter, we suggested that the 2011 book tax rate would be approximately 30%. This guidance still holds true, but there will be a change with respect to cash taxes. Based on the bonus depreciation provisions in the Jobs Creation Act, we estimate the depreciation applicable to US cash taxes will be approximately $450 million. This will shield earnings and reduce cash taxes by approximately $150 million. Additionally, we continue to anticipate tax refunds this year in excess of $200 million, primarily in the US.

Let me summarize. EBITDA remains strong at $762 million, bringing the full-year EBITDA to $4 billion. During the fourth quarter, we repaid $1.2 billion of debt, working capital is being managed closely and we have reestablished normal trade credit. Capital spending during 2010 was below expectations as we completed planned projects more efficiently than previously forecast, but we do anticipate increased CapEx spending in 2011. Year-end liquidity was $6.1 billion, with a cash balance of $4.2 billion and our asset base or asset-backed revolvers were undrawn. Okay, thank you. I'm going to return the call to Jim.

Thanks, Kent. Let's quickly step through a summary of fourth-quarter and full-year results for each of our businesses. Pages 11 and 12 address the key results for the olefins and polyolefins Americas segment. Fourth-quarter results in this segment continued to be strong. EBITDA of $342 million, exclusive of LCM impacts, was approximately $175 million less than the third quarter. Versus the third quarter, olefin results declined by approximately $50 million. This decline was partially related to unplanned downtime at one of our Channelview crackers, seasonal volume declines and scheduled customer downtime.

In total, ethylene sales volumes declined by 130 million pounds or about 6%. Margins were relatively unchanged as ethylene price increased by $0.10 per pound, while the cost of ethylene production metric increased by nearly the same amount. Polyethylene results declined by approximately $70 million. Polyethylene prices increased by approximately $0.05 per pound; however, this did not keep pace with the ethylene price increase. Volumes declined slightly due to seasonality and lost production at our Chocolate Bayou plant, which was impacted by problems at Ineos, the site host. This lost polyethylene production had minimal impact on overall profits as we were able to replace lost polyethylene sales with ethylene sales at good prices.

Polypropylene results declined by approximately $35 million for generally similar reasons. Seasonality was partially responsible for a 60 million pound decline in volumes, or about 10%, while margins declined slightly as polypropylene price increases lagged propylene prices.

Looking at the full year, our EBITDA was $1.7 billion in this segment, a $1 billion increase over 2009 results. Essentially, all of this increase can be attributed to stronger ethylene margins. Ethylene prices increased by $0.14 per pound while the cost of ethylene production metric increased by $0.02 per pound. Polyethylene results were relatively unchanged as margins and volumes were near 2009 levels.

It's worth highlighting that polyethylene exports declined to 20% of sales versus 30% during 2009. By year-end, exports to Asia had been generally replaced with domestic sales.

Polypropylene results improved by approximately $20 million versus 2009. Approximately half of the improvement came from increased volumes and the balance from improved margins. 2010 was a tremendous year for this business. The turn round from 2009 demonstrates the strength and leverage of our position.

But that was last year, and we need to look forward. The Enterprise fire has caused the near-term domestic market to be quite volatile. Both ethane and spot ethylene prices have increased and polyethylene increases are being negotiated. Ethylene co-product prices have been strong and price increases have been implemented in response to industry tightness and increased raw material costs.

The Enterprise fire has also affected operations as have recent cold weather conditions in the Central United States extending down to Houston. The cold weather resulted in minor disruptions, mostly related to third-party supplier issues, which will not be material to our results. The Enterprise fire temporarily disrupted production at our Channelview and La Porte sites. The flexibility of the Channelview facility allowed us to quickly adjust raw material mix and suppliers, thereby minimizing the impact.

La Porte's options were somewhat more limited. We reduced rates to match feedstock availability from other suppliers. La Porte was increasing operating rates when it encountered a nonrelated issue and temporarily shut down. This sometimes happens when we're cycling plants up and down. We expect to restart the facility this weekend. The estimated financial impacts of these disruptions are also not expected to be material.

Before I move ahead, I want to point out that we have a turnaround at one of our [Channelview] crackers scheduled for the second quarter. It has been nine years since the last turnaround on this cracker.

Let's page forward to slides 13 and 14 and turn our attention to O&P Europe, Asia and International. Our fourth-quarter EBITDA was $115 million, a $179 million decline versus the third quarter. Olefins are responsible for the majority of the decline as margins were squeezed by the run-up in naphtha costs.

An industry cracker model that we benchmark indicated a $0.14 per pound increase in the cost of ethylene metric driven by increased naphtha costs, approximately a $130 million impact versus the prior quarter. Price increases lagged the cost increase resulting in poor profitability during the latter portion of the quarter. Seasonal demand declines were also a factor as ethylene volume declined by approximately 80 million pounds or 8%.

Polyethylene results declined by approximately $10 million as our spread shrank by $0.01 per pound while volumes declined by 40 million pounds or about 3%. Seasonally lower volumes and margins were responsible for an approximate $50 million decline in combined polypropylene and polypropylene compound results. Our polypropylene spread declined by $0.01 to $0.02 per pound.

For the full year, segment results were very good. EBITDA was $818 million, an increase of $477 million versus 2009. Improvement was seen in essentially all areas of the segment. Olefin results improved by approximately $160 million, primarily due to increased midtier cracker margins and strong butadiene results. Improved polyethylene margins were primarily responsible for a $130 million improvement.

Polypropylene results improved by approximately $150 million with two-thirds of the increase attributed to margin and the balance to a 14% volume increase. Polypropylene compound volumes are also strong as a 28% increase in volumes drove a $40 million EBITDA improvement.

Thus far in 2011, production has been good and olefin and polyolefin prices have increased. Naphtha costs remained quite high, but price increases were implemented restoring cracker profitability. Raw material cost volatility will remain a key factor in determining near-term profitability. During January, we received an $82 million dividend from our SEPC joint venture in Saudi Arabia, the first from this joint venture.

Please turn to page 15 for a discussion of the Intermediates and Derivatives segment. Fourth-quarter EBITDA was $211 million, $32 million less than third-quarter results. We also realized a $64 million gain from the sale of the Flavors & Fragrance business. The propylene oxide and derivatives area represented the majority of the decline. Sales volumes declined slightly due to a combination of year-end customer buying patterns and scheduled maintenance in our solvents operation.

Pricing generally kept pace with raw material changes, while the business experienced some internal cost increases. The intermediates products EBITDA declined by approximately $10 million, primarily due to increased styrene, TBA chemicals and acetyls raw material costs.

2010 was a great year for Intermediates and Derivatives. EBITDA was $859 million, exclusive of the F&F sale. This represents a $324 million increase versus 2009. The PO product volumes benefited from strong durable goods demand and competitor outages. PO derivative margins also contributed to the improvement as tight supply, demand in butanediol and solvents resulted in margin expansion.

The segment also benefited from increased PO co-product volume coupled with a strong isobutylene market. Cost reductions provided an additional benefit across the segment. The segment also realized a $64 million book gain from the sale of the Flavors & Fragrances business, a transaction which yielded $150 million of after-tax cash. As you know, results from these businesses have generally been relatively steady and are expected to remain so in the near future.

Moving forward to pages 16 and 17, I'd like to discuss the Refining and Oxyfuel segment. Fourth-quarter EBITDA was $79 million, a $62 million decline versus the third quarter. This decline was expected and is attributed to margin seasonality in the oxyfuels business. Houston refinery results bucked typical seasonal trends as spreads increased versus the third quarter. The industry Maya 211, which normally contracts in the fourth quarter, expanded by approximately $2.00 per barrel, averaging $18.38 per barrel during the quarter.

However, our refinery experienced two disruptions with limited average throughput for this quarter to 233,000 barrels per day. The most significant of these disruptions was a third-party power outage, which took the refinery down for several days. The impact of these disruptions is estimated to have reduced EBITDA by approximately $30 million. Overall, EBITDA for the refinery was relatively unchanged.

Their results continued to lag as a port strike impacted results by an estimated $15 million. Oxyfuel results declined by approximately $75 million to approximately $5 million. A winter decline is typical. Margins contract due to increased raw material costs and weaker winter gasoline markets.

On page 17, you can see an approximately $0.25 per gallon decline in an industry benchmark raw material margin. For 2010, the Refining and Oxyfuels segment generated $452 million of EBITDA. Houston refinery results improved by $425 million, primarily due to improved industry conditions as the Maya 211 benchmark increased by $5.47 per barrel. Oxyfuel results declined by approximately $200 million following record 2009 results. Exclusive of 2009, the 2010 performance was consistent with recent years.

Thus far, the first-quarter industry conditions have been fairly strong as the Maya 211 benchmark has averaged approximately $22 per barrel and the oxyfuels benchmark margin has expanded to approximately $0.50 per gallon. We are currently conducting the turnaround of the fluid cat cracker at the Houston refinery. This is a major project. Turnaround costs will be amortized over approximately five years.

We currently estimate that first-quarter EBITDA will be impacted by approximately $75 million in lost opportunity profits due to the cat cracker turnaround. This project is very important as we will be upgrading the unit and anticipate improved throughput, conversion and reliability following completion. This investment should have a very good payback.

Let's move to slide 18 and the Technology segment. The segment posted fourth-quarter EBITDA of $44 million. The moderate decline from the third quarter is primarily related to seasonal catalyst sales patterns. For the year, the segment generated $212 million of EBITDA, primarily through catalyst sales as licensing activity was weak throughout the year. While not a positive for 2010, the reduced licensing results indicates that the industry is not adding insignificant capacity that might blend a cyclical recovery in the coming years.

Let me summarize on page 19. 2010 was a tremendous start for our new company. We implemented new internal processed, upgraded our systems and established a foundation for the future. The market provided opportunities, which we seized. Despite these strong results, we are still in the early phases of our own development in the industry recovery. We believe the best is still ahead.

So what can you expect from us during 2011? Some key areas will be improving operations at the Houston refinery and establishing a future path for the [Bear] facility; completion of major turnarounds at the Houston refinery and the Channelview olefins plant; building on our 2010 SAP system consolidation; institutionalizing our culture, processes and systems, particularly in Europe and Asia; advancing the capital structure; and, as always, keeping our focus on safety, reliability and costs.

We entered 2011 well-positioned and demand for our products continues to grow with the global economy. There is very little new industry capacity under construction and I'm optimistic that we will continue to be rewarded in the strengthening market. Regardless of the economic and industry cycles, we will focus on our operations, costs and capital structure. In so doing, we will be positioned to generate differential results. Mary Ann, we'd be happy to take questions.

(Operator Instructions). P.J. Juvekar, Citi.

Yes, good morning, Jim. You know, you mentioned the Chocolate Bayou outage in US polyethylene. And I'm wondering, your polyethylene volumes dropped in North America by roughly about 8%, while competitors saw year-over-year volume increases.

Do you think that's all explained by the Chocolate Bayou outage?

Well, P.J., I think that our fourth-quarter results in polyethylene were pretty consistent with the industry from what I saw. We did have that polyethylene outage as a result of third-party impacts. But we felt pretty good about our operation overall, and I think we were pretty consistent with rest of the market.

Jim, it seems like you guys have too many outages and turnarounds in your refinery in the crackers. Do you think it's due to the underinvestment by the Company in the past? And if it is, then what kind of catch-up do you need to do in the future? Thank you.

I think this year we've had pretty good operations in our olefins crackers. In fact, earlier in the year you remember us commenting that when others were down, we were running and setting new production records.

We did have an outage, an OP1, at Channelview in the fourth quarter that did impact us a bit. But overall, our cracker reliability has been quite good. We are going into a major turnaround here in the second quarter in OP2 at Channelview, and I think that will position us very well for the future.

You remember we did four major turnarounds here in 2010. So on the cracker side, I'm feeling pretty good about things. On the refining side, we are doing some catch-up. In particular, the Houston refinery has not run to the standard that I would otherwise expect.

We were in a very significant turnaround today related to the cat cracker. I think as I mentioned in my earlier comments today, we think that that will improve the reliability. We will be moving more gasoline through that unit, and frankly, I think the payout should be in the neighborhood of one year. It's a very, very good project for us.

I will comment that that cat cracker had major changes made several years ago to it, and frankly, it wasn't done very well. So we're fixing something that should have been fixed better in the past.

Thank you.

Brian McGuire, Goldman Sachs.

Good morning, guys. Just to follow up on the question on volume, I know you said that seasonally the fourth quarter is a little bit lower. I was wondering if you quantify what portion of the year-over-year decline in polyethylene volume was due to the Ineos outages.

And also in Europe, it looked like the polyethylene volumes there were down pretty substantially as well. I was just wondering if you could comment on any impact you might be feeling from the ramp-up in operating rates and some of that new capacity in the Middle East and Asia, and if that's having any impact in your ability to get price in Europe.

Brian, let me help you with the Chocolate Bayou first. The Chocolate Bayou plant is about, if I recall, a 450 million, 500 million pound plant. And it was down for about three weeks or so in that timeframe waiting for the first of the two crackers there to get back online.

So that's the type of impact that you see specifically related to that element. Let me turn it over to Jim, I think, to address the second question.

Yes, the European polyethylene volumes I think are really primarily seasonal. The competitive situation in our view has not changed materially through the year in polyethylene from Middle East capacities.

There are some volumes showing up in Europe, but I think the preferred market remains Asia. So while there's some impact, I don't think it's that significant. I think this is more seasonality in Europe.

And in the first quarter, it looks like you are so far being able to recapture the pricing you weren't able to get in the fourth quarter?

Yes, we had pretty significant margin squeezes in European olefins as a result of the fly-up in oil prices, which causes a fly-up in naphtha prices. It just took a little while to move those prices through the market. And as we showed in the industry numbers in January, we were able to capture a lot of that.

Okay. And I think you mentioned that La Porte will probably restart this weekend. Do you expect that when it restarts, you'll have all the ethane or like feeds that you would want from Mont Bellvieu, or you're expecting any continued disruption from that fire feeding the La Porte cracker?

Well, at this point in time it looks like we have adequate feedstocks. We were able to get ethane in to La Porte fairly rapidly, maybe not at the volumes we wanted, but the bigger issue was getting propane in, surprisingly. And we think we've found a way around that.

As you would guess when you have a major fire like that, it was difficult for Enterprise to get within the site because there were investigations going on to reroute some pipes and all. But I think most of that is in pretty good shape, and we are expecting to have the volumes that we need for startup this weekend.

We were running six of eight furnaces, and then I think at part due to going up and down and up and down with all the feedstocks things, we ended up having another issue that caused us to have to come down for a few days and fix. But we should be back up this weekend.

Okay, and then just one last question on the cash flow. I think on last quarter's call you mentioned that in October, you had generated about $600 million of cash. It looked like for the full quarter, your cash flow from ops was about $728 million.

Was the big decline in, I guess, the rate of cash flow growth in November and October more due to the working capital changes, or was it just that's where you saw a lot of the volume fall off that led to maybe a less robust cash flow generation quarter than you would have otherwise thought? Thanks.

Brian, this is Doug. Let me first make one comment, and then I'll let Kent address the question. At any point in time, this is a pretty big system. It's a $40 billion entity. And we take shipments in and out of $75 million per shipment often on any one ship. So don't read any one point number on cash too strongly.

I mean, there's variability in the system. So that's why I don't want you to take two points always and extrapolate a straight line, so be careful of that. But let me turn it over to Kent to talk a little bit more about just the overall cash side.

Yes, Brian, I'm not sure about all the elements of your question. But I think in the fourth quarter, a number of factors were going on, not the least of which was us paying down $1.2 billion of debt. But Doug did talk about or Jim has talked about the fact that crude oil ran up, and I gave you our estimate rule of thumb.

We absorbed a lot of working capital in there, and also our refining people have been very aggressive identifying some opportunistic crude purchases and have done very well at that. But it has met a more immediate use of cash. Some of the terms are a little shorter than we've got with other suppliers, but it's been a very economic thing to do.

So it's been a combination of working capital needs for operations, but on balance we still remain very optimistic. I think we've solidified the trade working capital or the trade working credit -- trade credit we've been searching for, and I think we've solidified that really across the spectrum.

Okay, thanks for taking my questions.

Frank Mitsch, BB&T Capital Markets.

Good morning, gentlemen. At the December 8 Analyst Day, I don't recall a discussion of the potential benefits or reversal of tax expense being a major benefit. And obviously, that session was more focused on the big picture, but the fact that you guys got into $200 million plus rebate on the tax side, was that a surprise to you, or did you know about that back on December 8?

Frank, we've known about the refund for some time. That's been part of our normal filing, and the team has done a great job on it. We've been expecting that. We, frankly, expect it very quickly. It's in the final stages of the IRS payment approval process, I guess you'd say. So we've expected that.

I think in terms of the book earnings stuff, some things have happened fairly late in the year, largely as a result of us getting some European restructuring work done that's enabled us to, in the future, utilize tax losses that heretofore had been reserved. We had valuation allowance against those.

So we had some late-year stuff as we finalized some of our tax attribute work in fresh start accounting. We've developed some profit effects essentially, tax benefit effects. But the cash refund had been expected all along.

So the base tax rate of 30% that you are guiding to, that was your expectation of what the fourth quarter would come in as well, but it was just a confluence of various events as well as the major refund.

Frank, I think when we say to a 30% rate, we're not going to forecast a quarterly rate. We're trying to give you some guidance on an overall picture of a 30%. And it does not include the refund. You're right, I think in December at the Investor Day we didn't discuss that, but we have in the prior earnings calls and things. So this $200 million has been expected, and it's been part of the plan.

Frank, the $200 million would not have had anything to do with the rate. The rate we're quoting, the 30%, it's really next year's rate and it's centered around our expectations. For the most part, we're going to be full tax payers, either deferred or current, in all of our jurisdictions, and some of our jurisdictions just aren't at 35%.

All right, terrific. Then also, you mentioned that you were able to adapt at the Channelview facility your feedstock mix. Propylene volumes were off a little bit, although ethylene -- O&P Americas propylene volumes were down, but ethylene was kind of flat.

Will you anticipate then now that if you -- I assume you went to a heavier feed slate -- that we should see a material pickup on the propylene side?

No, Frank, I think that was a temporary adjustment. Right now, ethane is still favored. Because we couldn't get all the ethane we wanted, we knew we could run heavier at Channelview and reroute some product to other places. So that was a near-term adjustment based on the Enterprise fire.

And you are back to normal at this point there at Channelview?

Yes, we have switched back to a lighter feed.

Thank you.

Laurence Alexander, Jefferies.

Good morning. I guess two quick questions. First, can you characterize volume trends on particularly what you're seeing since the Chinese New Year? And given the rise in prices, are you seeing customers delay or pull forward the order patterns?

The second question is can you put this cracker maintenance project in perspective, in terms of like how much you think you can get from incremental productivity investments over the next one to two years?

Well, let's take the first one first. Then we may ask for some clarity on the second question, Laurence.

Yes, on the what's going on in China, as you properly point out, things get a little slow around the Chinese New Year, and then things pick up coming out of that holiday. We're seeing everything typically the same as before.

Obviously, oil prices have come up, and so that causes some customers to try to buy more. That's more of a Middle East question for us these days. We do sell from the Middle East into Asia. We try to make sure that our customers have regular buying patterns and don't buy forward.

One of the things I pointed out that I think is extremely important in the prepared remarks was that we really don't participate in the export market to China out of the US today. We've repatriated those volumes to higher margins. That's been one of our key accomplishments this year and something that I think the team has done a very nice job of.

Laurence, could you restate your second question? I think we weren't able to follow that.

Yes. So you had a very good track record the last couple of years in terms of doing cost-cutting productivity programs. And you talked at the Investor Day about a longer-term trajectory of ongoing productivity investments.

Could you characterize over the next, say, 12 to 18 months how much you think you might -- you need to spend on the consequent savings that would be generated from productivity programs, and particularly any color you can give on your thinking about Europe in particular?

Yes. Let me comment on a few of the projects and use that as an example. We're spending tens of millions of dollars I'll just say on the cat cracker turnaround, and we expect that to have a payback in about a year.

At Channelview, we're doing some convection section upgrades. That will have significant energy savings. That's less than a two-year payback. We've got -- we're identifying several hundred million dollars of additional capital projects that will have significant energy benefits and/or debottleneck benefits.

Those typically have less than a year payback. So there's a lot of that going on. A fair amount of that is focused in the United States. A little bit of that is focused in Europe. But I think I just named a couple of the largest of those projects. I hope that answers your question.

Perfect, thank you.

I'm going to, in the interest of time here and the number of questions to accommodate everybody, I'm going to ask everyone to please limit their questions if we could.

Don Carson, Susquehanna.

Thank you. A question on the fourth quarter. I know you had the outage in polyethylene at Chocolate Bayou, but I would have expected you would have gotten quite a benefit from opportunistic sales of ethylene in the spot markets on that Ineos outage.

I'm just wondering how much of that did you do, and is that something that you plan on doing continuing doing as you did back in March/April when those opportunities arise?

Don, this is Doug. Yes, I think you've got the right picture. What we did was, although Chocolate Bayou had to go down, we immediately put that ethylene into the spot market. So we placed that ethylene, and really what we did was the spot market moved up. So anything that we saw, essentially, in lost polymer profits we picked up on the ethylene side, we think.

So that's why I say there's really no net financial impact of any significance, although you see it in the statistics, the volume statistics.

And what were the total volumes that you sold in the spot markets?

Well, as I said, it was down. It was about a 500 million pound plant that was down for about three weeks. So we basically just reversed that volume into spot markets.

Okay. Thank you.

Kevin McCarthy, Bank of America-Merrill Lynch.

Good morning. This is Alex (inaudible) for Kevin. I wanted to ask a question on the refining. What is the status of your current negotiations with PDVSA on crude oil supplies? And I have a follow-up to that. You get about 25% of crude outside of Venezuela. Where is that crude coming from? Thanks.

Kevin, we have negotiations going on with PDVSA on an ongoing basis. The contract expires in the third quarter, but we really don't expect much change. We've been a very good customer to them; they've been a very good supplier to us. They're doing shorter-term contracts these days instead of long-term contracts, but we expect that supply to continue.

I will say that we've been very opportunistic in the way that we've been buying crude. That's something that has occurred more over the last year than in prior years in this company. We've been able to find some distressed crudes in different places around the world and bring that in and crack it to our advantage.

We're buying crude in multiple South American countries, a little here, a little there. But I try not to be too specific in that because we think sometimes where we're buying that crude is a competitive advantage for us, and so I would prefer not to be too specific.

Okay, thank you.

Andy Cash, UBS.

I would just like to talk about maybe strategically the ethylene/ethane situation. I guess it's sort of an understatement to say that ethylene margins in the US are above reinvestment levels now. But we're starting to hear a bit of talk about grassroots crackers.

I'm just wondering from your perspective, not the next couple of years, but you're thinking out maybe three or four years, would you guys entertain the idea of going for the first mover advantage by building a new grassroots cracker in the US?

And in order to secure your fair share of ethane and your fair price of ethane, is there something you might do in terms of a joint venture on a fractionator or even going upstream a little bit more?

Yes. There had been some speculation that somebody would ultimately build a cracker in the Gulf Coast. At this point, there is nothing very firm that's announced. I think the economics might make some sense, but people are watching to see that this is all a long-term trend.

We think it is. We think it will hold and we will just see who the first movers are. We don't want to speculate on that at this point in time.

Why don't you guys step out and do it? It looks like you've got the firepower to do it.

Well, we do have the -- obviously, the cash to do something like that. But I'd prefer not to make any statement about that at this point in time.

You also asked a question about NGL fractionation. That's a business that we could enter very easily. It's a fairly simple plant to run compared to the things that we run in the rest of our company.

But what we're doing at this point is negotiating with some of the more traditional parties in that segment, and we're very clear with them that we expect fair and competitive rates and that if their returns start to look too rich, then we'll go build it ourselves. And we do have the firepower to do that now.

Okay, very good. Thanks a lot, Jim.

Hamad Khorsand, BWS Financial.

Good morning. I just have one question here. If I look out beyond Q1 and the delay in the process you've had in getting pricing passed through to customers, what kind of potential will that have going into the peak of the year, Q2/Q3, as far as having profitable quarters?

Well, Hamad, I think last year we saw that there were some operating issues here and there, and we had quite a bit of pricing power and were able to push prices through. That was particularly true in the olefins chain in the United States.

We did have some margin compression here and there in polyethylene and polypropylene. At this moment in time, things seem to be fairly tight, and it's a little bit hard to predict out there. A fair amount depends on whether the economy continues to improve as it has. But generally speaking, we think the trend is favorable in terms of supply/demand.

(multiple speakers) You might note fuels are -- we've seen Maya 211 spreads have opened up. I think they're about $24 now. Oxyfuels have returned, and it's fairly early to see good spreads in those areas. So that's another indication, as Jim was saying, in supporting what Jim was saying there.

Okay, because -- I ask that because it seems like there's this timeshift delay in passing them through.

Well, there always is. Remember, we buy raw materials in a fuel market that price daily, and we price our products into a chemical and plastics market that price monthly, typically. So you see that in polyolefins, you'll see that in olefins. You don't see it in the fuels business where everything prices really on a similar time frame.

And sometimes it makes a difference on how fast feedstock price rises. And as you observed late in the year, oil prices rose very, very rapidly. So it means that we have to push a lot of price increase through into the market.

Okay, thank you.

Jeff Zekauskas, JPMorgan.

Hi, good morning. Obviously the reference in cracking ethane are much higher than cracking naphtha. So are you doing something structurally to improve the ratio of the amount of ethane feedstock you use relative to the amount of naphtha or unfavorable feedstocks you use? And do you have targets? In other words, are you at, in the United States, 65% this year and your goal is to get to 70%, or do you not have targets?

Jeff, we are doing things to further improve the ability to crack ethane versus heavier feedstocks. You remember earlier in the year we reported that we, as a result of the turnaround that we had at corporate, made significant improvement. Today we're at about 75% ability to crack those liquids.

We also are looking at each one of our facilities and saying what else could we do? Can we reconfigure a furnace and tubing configuration this or that? Can we lighten up in other ways? And there's been a full-court press across our units to do that. Some of these things will require turnaround, some we can do on the fly, but we're doing all that we can to accomplish that. A fair amount has already been done because we could see this trend coming. But we're seeing what else we can do with a little bit more capital spending.

So how far can you go?

Well, I don't know that that's all defined as the guys are working through it all, Jeff. But we've talked before about creep and that we'll see creep in the 5% to 10% range perhaps is what me might be able to start to do. So we'll keep working that. I mean, this is something that people continue to work and engineers will continue to find some opportunities over time we hope.

Yes, I think it's fair to say though, Jeff, that what we're chasing is 5% to 10% additional because if you start to go too much further then you start to lose flexibility, you start shutting down significant parts of the backside of your crackers. And one of the things we see is as people crack lighter and lighter those coke products get more and more valuable.

I think at some moments in time we'll go ahead and crack some condensates and a little bit of naphtha here and there to take advantage of butadiene prices and propylene prices are obviously very high. So we pay a lot of attention to the total market and we don't want to give away too much of our flexibility at the expense of trying to take it to the last 2% or 3%.

Thank you very much.

Bill Young, Chemspeak.

Good morning, gentlemen. I still have this issue -- I don't quite understand between your D&A and your CapEx. Are you just building cash or ability to build new plants in the future, M&A --? Just what are your priorities -- dividends? It seems like an awfully big gap. And trying to read between the lines, it sounds like you are giving some significant thought to some kind of an ethane cracker. And related to that, what do you think a cracker like that would cost these days?

This is Kent. Let me first talk about the cash. I'm going to defer the questions as to our future strategy and our capital programs to my supervisor, Mr. Gallogly.

But understand that as we look at options for the capital structure and the optimal ways to return value to shareholders, we have to do this through our Board and ultimately get shareholder approval. And until that's done it's very premature and quite inappropriate for us to comment on that at this meeting. So with that I'm going to turn it back to Jim and you can talk about building crackers.

Bill, I think it's fair to say that we indicated that we had no plans at present to do that. So we'll look at the opportunities going forward like all the rest of the competitors, but we're certainly not making any announcement today.

No, no, I understand that. But how about what would the cost of such a cracker be in your estimation for world scale sized the way you defined it, 2 billion pounds to 2.5 billion pounds?

Well, I think if you're looking at a 2 billion pound ethane cracker you're probably in the $500 million range. But you also have to consider you have to build downstream and depending on where things go (multiple speakers) infrastructure needs. So I mean you're up in the $1 billion to $2 billion range by the time you're really done with this.

You know, there are costs and then there's also time and other elements. Jim has spoken to that before of issues around you have to permit these things and work forward in those ways.

Bill I would say part of the cost depends in part about where you build it and what infrastructure that exists -- you have inside battery limit costs like Doug had just described and then of course all the outside battery limit costs in terms of utilities and everything else at the peripherals for a major cracker like that.

So it really depends on where and even what the conditions are in the construction markets. Remember that some of these facilities got extremely expensive in the Middle East when they were built several years ago. We think that market has calmed down quite a bit since then. But we really haven't tried to price anything like that at this point.

Okay, thanks a lot.

[Brit Jever], Columbus Hill.

Thanks for taking the question. Jim, you mentioned early on in the call that in this quarter kind of sequentially there was $300 million of unusual items that affected the quarter. Can you just give us some more detail into those numbers?

Yes, Brit. What I talked about was that we had some seasonality in oxyfuels.

Right, but that's not unusual, right? That's a (multiple speakers).

No, that's not unusual. But last year was a particularly strong year. 2009 was a great year in oxyfuels. What we saw this year was more typical of what we've seen in past years. So that's part of it. But if you were just looking at last year and saying that would have happened again this year, it didn't. That was fairly significant.

We did have kind of that national strike at the French port and that did have some impact on us. We mentioned that that was about $15 million. So that was a portion of it. The Houston refinery, we also had some operating issues. A third-party power provider lost steam and caused us to crash the unit. That was in excess of $15 million there.

We had some issues with our coker, that was about $10 million. So to put that in perspective -- and we already reported on the margin compressions in Europe for a period of time because of the fly up in naphtha prices. We were very much squeezed there and couldn't make it all up in the butadiene side. And I think we reported that. But about $300 million overall.

Okay. And can you just give us -- I don't think you had it on the balance sheet -- what the pension liability is today? The underfunding on the pension side?

Yes, in the US it's about $500 million and outside the US about $500 million, but outside the US you have to remember that most of that is essentially a pay as you go. We don't maintain a lot of trust assets outside the US.

Okay. Okay, great. Thank you.

Gregg Goodnight, UBS.

I'm wondering if you could provide me some more color on oxyfuels. I hear what you're saying about seasonality, but the $75 million year-over-year, I was surprised to the extent. Would you comment if this was purely market? Are there one-time things in there? Or are there structural things like, for instance, losing some sort of supports perhaps in Europe (multiple speakers)?

I'll take that, Gregg. Gregg, this is Doug, let me answer that for you. That really is a market move. And what drives oxyfuels business is you're selling a gasoline component, so gasoline tends to have strength in the summer, weakness in the winter. Raw materials for oxyfuels are primarily butane natural gas. Here you're seeing strength the other way because in the winter months butane can be used for blending of gasoline directly, it's used for heating around the world.

So a typical seasonal pattern will see second quarter really being the strongest quarter, second and third; fourth and first are weaker quarters. So what you have is really the industry just followed the normal pattern and that's really what we saw in the first -- in the fourth quarter.

In the first quarter now we've started to see it recover and, as I mentioned, we've seen some $0.50 raw material margins in oxyfuels. Frankly it's a little bit earlier than you typically would see it. Typically recoveries would come in March and April. So everything really is along what we would expect in patterns that we would see. It's an industry-related item.

Okay. Would you give us a brief update on the ETBE supply to the Japanese refiners?

It continues as is. We've got an agreement, a contract and everything is going very smoothly there.

Okay, thank you.

James (inaudible), [Sittergroup].

Hi, it's James at Citi actually. A quick question just to clarify on the cash flow items for 2011. You had CapEx going to $1.2 billion. What were the other pieces of it? The pension and cash taxes?

I think -- well, the pension, we indicated we'd probably be funding in the range of $200 million or so this year, which is about twice the expense item. What was the other item you mentioned? Cash taxes?

Yes.

I think the cash taxes will be down from that that we had indicated before. We told you before, broadly speaking; we're a cash taxpayer in the US at full rates thinking that we had lost a lot of our attributes. But as I mentioned during the latter part of this year is we refined a lot of that attribute, as well as the new law that provides for immediate deductibility of CapEx, we anticipate not to be paying cash taxes, at least $150 million where we planned before.

So the actual figure will be --?

The actual figure will obviously be a function of results. But I think the key things we want you to take away are we continue to expect a $200 million refund. In past guidance we had mentioned the loss of this tax attribute in the US. Now with the Jobs Creation Act we expect to see $450 million of depreciation which would have a tax value of about $150 million. So we see the balance change some for us.

Okay, great. So it looks like you'll definitely be generating some nice cash flow in this year. Great, thank you very much.

Mike Shrekgast, Longacre.

Yes, I was just wondering one of your competitors over in Europe had said they saw a more difficult fourth quarter. But as of February they were seeing top of cycle margins in their olefins business. Can you confirm that? Do you think that's industry wide or might that be just something specific to one company?

Mike, I'll try it first. I think Jim mentioned -- we mentioned in the call that we've seen -- that we saw a squeeze in the fourth quarter on margins; we've seen a recovery in pricing in January in ethylene and propylene and in the polymers. So we'll see. I'm not going to comment whether that's top of the cycle or not, but what we have seen is a recovery in the margins from the impacts of the fourth quarter.

Naphtha prices are still high. Remember, we have crude over $100 around the globe. I know it's distorted a bit in some peoples view because of WTI, but you've got average crude over $100 so you still have some pretty expensive raw materials. But we've moved pricing forward and it's the typical time delay that you always see when you get these sudden moves are. And Jim might want to add.

Okay. And then on CapEx you just said it's $1.2 billion for 2011, is that correct?

Yes.

And does it -- I think just based on the debt levels you have right now are you thinking -- is cash interest looking to be a little less than $600 million?

Well, under our current outstanding debt it's a little less -- it's about $600 million a year right now.

Yes, so it's about $1.8 billion altogether, right? Yes. Thanks.

Kristin McDuffy, Goldman Sachs.

Yes, I think you mentioned at your Investor Day that you may be looking at growing your PO business. And I was just wanting to understand whether this could take the form of buying out a JV partner interest or perhaps building an actual plant somewhere else and how long -- and how much a new world scale PO plant would take in cost.

Kristin, we are evaluating whether a new plant should be built. That's been a very good market for us in particular. We think we have some technology that's extremely competitive. So we're evaluating where and when that we might build a new facility.

A world scale plant typically costs between $750 million and $1 billion depending upon where you construct it. And again, that question about inside battery limits, outside battery limits type of thing. It's been a very good stable business for us and we're an excellent competitor.

Great. And then could you give us some guidance on cash distributions from your joint ventures in 2011? Do you think the SEPC will continue to distribute similar amounts each quarter or will it be very bumpy?

It won't be that size amount each quarter by no means. It will be bumpy, but I think we'll, as we've advertised before, we see total cash distributions growing over the next few years, substantially coming out of our three Saudi Arabian joint ventures.

I'll tell you, we're giving all of our joint ventures a lot more focus these days. I think there are things we could do to improve the dividend stream for most of those and it's getting plenty of managerial time.

Okay, thank you.

(Inaudible).

Good morning, gentlemen, and congratulations on your results. I just have a very quick question regarding your bonds. I mean, given the very high coupon that you are paying on the first note and the other notes you have, are you [calculating] a refinancing of your capital structure? And the second question if I may, could you give us a flavor of your working capital requirement for the forthcoming year? Thank you.

Okay, with regard to refinancing, I think I alluded to that and I'll say it again. It's premature and probably inappropriate for us to be talking about that now. Clearly we're looking at options, but all of these options have costs associated with them and then frankly in some cases they're not economic. But we'll be discussing this with our Board and ultimately the shareholders.

With regard to working capital requirements, as you see on our balance sheet today and as I mentioned, they're inflated by the fact that the costs of our raw materials and our end products are up so our receivables are up. But our payables are up too, thanks both to the size of -- or the unit prices that we're paying, but also because we recovered trade credit.

Inventories will stay up about where they're at frankly because we are on LIFO. So this means that generally any increased prices go to the bottom line. We generally keep our inventory values about the same unless we go incremental or decremental in volume. So I'd say the best estimate for working capital right now is where you see it today absent any price changes in our raw material costs.

Okay, thank you very much.

Charles Neivert, Dahlman Rose.

A quick question on the Channelview cracker turnaround, you said it had been nine years since the last major turn. One, the other cracker that isn't getting a turn, when would that be due? And the second is on the cracker that is getting the turn, do you guys expect any gain in output efficiency in there for maybe a small increase in capacity -- maybe not listed capacity, but ability to throughput capacity. Has it been challenged in any way over the last year or so since the turnaround so far between?

Charles, I think a couple comments on all of that. First, this will be a very major turnaround. There will be some furnace work, significant convection section work. That will improve the energy efficiency significantly on that cracker. We expect it to jump a quartile in its efficiency rating. There will be a bit more productivity, but I don't want to forecast that at this point in time.

On the positive side, that cracker has run reasonably well. We did have some down time on OP1, the other cracker this last quarter. OP1 is going to be turned around next year in 2012. So then we'll have both of the two largest crackers at Channelview in excellent shape hopefully as the supply/demand situation continues to improve.

Great, thanks very much.

Brian McGuire, Goldman Sachs.

Just one quick follow-up. A housekeeping item. I was wondering if you might tell us what the $29 million other expense was on the EBITDA presentation.

I think a lot of that -- we had a very modest amount of foreign exchange, but I think a lot of that had to do with some -- Doug, remind me.

In that there was some foreign exchange and there was also --.

I think there was some redundancy in that.

It was a change to some of the redundancy estimates.

As well as --. I think that's it, Brian. That's got the core of it.

Okay, so it wasn't really anything one time like last quarter I think there was an environmental liability in there?

No, we had nothing of that magnitude.

Okay, thanks again.

All right, well I'd like to thank everybody for their continued interest in our Company. We learned a lot about ourselves in 2010. I think we did much better than anybody expected us to and obviously our safety performance improved significantly. Our reliability was strong. We were able to capture a number of market opportunities.

In this cold snap that we just went through, we saw the dedication that our power 14,000 employees have to this Company. We had many employees sleeping in the plants overnight making sure their units continued to run. We had supplier issues of this type and that and they fought their way through that.

This is a brand-new company with a lot of very, very dedicated people who're trying to drive shareholder value. 2010 was a year that was unprecedented in our view in terms of how we responded to the market, $4 billion of EBITDA. 2011 is a new year. As I told everybody on day one, we have something to prove. And so we'll be about that as we go through quarter by quarter this year. Thank you very much.

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