SUGAR LAND, Texas, March 11 /PRNewswire-FirstCall/ -- CVR Energy,
Inc. (NYSE:CVI) reported today net income of $163.9 million for the
full year 2008, or $1.90 per fully diluted share, and net income of
$11.1 million for the fourth quarter 2008, or $0.13 per fully
diluted share, on full-year net sales of $5,016.1 million and
fourth quarter net sales of $699.7 million. (Logo:
http://www.newscom.com/cgi-bin/prnh/20071203/CVRLOGO) The 2008
results compare to a net loss for the full year in 2007 of $67.6
million, or a pro forma loss of $0.78 per fully diluted share, and
a fourth quarter loss of $24.5 million, or a pro forma loss of
$0.28 per fully diluted share. Among other things, results in 2007
were affected by a major turnaround and expansion at the company's
refinery and significant downtime and costs associated with a
flood. Operating income for the full year in 2008 was $148.7
million, compared to $186.6 million in 2007. The company reported a
fourth quarter 2008 operating loss of $133.6 million compared to
operating income of $31.2 million in the fourth quarter of 2007.
"For CVR Energy as well as the industries in which we compete, 2008
was a volatile year, marked by widely fluctuating crude oil and
product prices and unprecedented swings in nitrogen fertilizer
prices," said Jack Lipinski, chairman, president and chief
executive officer. Certain items affected fourth quarter and full
year 2008 and 2007 net income and diluted earnings per share. These
items include expenses or reversals thereof for share-based
compensation, the impact of "unrealized gain or loss from cash flow
swap," and a goodwill impairment loss taken in the fourth quarter
of 2008 in the amount of $42.8 million. The goodwill impairment
loss represents a write-off of the entire balance of the petroleum
segment's goodwill from the application of impairment testing
criteria under accounting policies. Adjusted for these items, net
income for the full year 2008 was $21.6 million, or $0.25 per
adjusted fully diluted share, and an adjusted net loss of $60.8
million for the fourth quarter 2008, or an adjusted diluted loss
per share of $0.70. The 2008 results compare to adjusted net income
for the full year in 2007 of $31.2 million, or an adjusted pro
forma net income of $0.36 per fully diluted share, and a fourth
quarter adjusted net income of $7.7 million, or an adjusted pro
forma net income of $0.09 per fully diluted share. Results for the
full year and the fourth quarter of 2008 were unfavorably impacted
by our use of first-in/first-out (FIFO) accounting in the amounts
of $70.6 million and $61.8 million, respectively, both net of
taxes. This compares to a favorable tax affected FIFO impact for
the full year and fourth quarter 2007 of $42.0 million and $19.9
million, respectively. The after-tax FIFO impact for the full year
and fourth quarter 2008 decreased earnings per fully diluted share
by $0.72 and $0.82, respectively. After-tax FIFO increased pro
forma earnings per share for the full year and fourth quarter 2007
by $0.49 and $0.23, respectively. The company's fourth quarter 2008
results were also impacted by a planned turnaround at the nitrogen
fertilizer facility, an unplanned outage affecting the refinery's
fluid catalytic cracking unit, and loss on extinguishment of debt
of approximately $10.0 million associated with amending the
company's credit facility. On Dec. 3, the company announced that it
signed a two-year crude oil supply agreement with Vitol Inc.
effective Dec. 31, 2008, replacing an expiring agreement with J.
Aron & Co., a related party of CVR Energy. In addition, on Dec.
22, 2008, the company amended its outstanding credit facility to
modify certain restrictive covenants. Petroleum Business The
petroleum segment reported operating income for the full year 2008
of $31.9 million on net sales of $4,774.3 million, and for the
fourth quarter 2008 posted an operating loss of $153.8 million on
net sales of $636.4 million, compared to operating income of $144.9
million on net sales of $2,806.2 million for the full year in 2007
and operating income of $22.6 million on net sales of $1,098.9
million for the fourth quarter in 2007. The 2008 fourth quarter
loss was unfavorably impacted by FIFO accounting in the amount of
$117.1 million and the goodwill impairment of $42.8 million
compared to a favorable FIFO impact of $33.1 million in the fourth
quarter of 2007. Crude throughput for the full year 2008 averaged
105,837 barrels per day (bpd), and for the fourth quarter
throughput averaged 97,657 bpd. These figures compare to an average
throughput of 76,317 bpd for the full year in 2007. Gross profit
per barrel was $2.69 for the full year 2008 and a negative $11.17
for the fourth quarter 2008. Refining margin per barrel was $8.39
for the full year 2008 and a negative $6.08 in the fourth quarter
of 2008, with the calculation of refining margins affected by FIFO
impacts. Direct operating expenses (exclusive of depreciation and
amortization) were $3.91 per barrel for the full year 2008, down
from $7.52 per barrel for the full year in 2007. For the fourth
quarter of 2008, direct operating expenses declined to $3.49 per
barrel from $3.82 per barrel in the fourth quarter of 2007.
Nitrogen Fertilizer Business Nitrogen fertilizer operations
reported 2008 full year operating income of $116.8 million on net
sales of $263.0 million, compared to $46.6 million on net sales of
$165.9 for the full year in 2007. For the fourth quarter 2008,
operating income was $21.2 million on net sales of $67.4 million
compared to operating income of $11.7 million on net sales of $50.8
million in the fourth quarter of 2007. The nitrogen fertilizer
plant produced 112,500 tons of ammonia available for sale during
2008, compared to 91,800 net tons in 2007, and for the fourth
quarter of 2008 produced 29,200 nets tons of ammonia available for
sale compared to 23,000 net tons for the fourth quarter in 2007.
The plant produced 599,200 tons of UAN during the full year 2008
compared to 576,900 tons in 2007, and 137,200 tons of UAN in the
fourth quarter of 2008 compared to 144,300 tons in the fourth
quarter of 2007. For the full year 2008, average realized sales
prices for ammonia and UAN were $557 per ton and $303 per ton
respectively, compared to $376 per ton and $211 per ton for the
full year 2007. For the fourth quarter 2008, average realized sales
prices for ammonia and UAN were $536 per ton and $324 per ton
respectively, compared to $408 per ton and $236 per ton for the
same period in 2007. This news release contains forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. You can generally identify forward-looking
statements by our use of forward-looking terminology such as
"anticipate," "believe," "continue," "could," "estimate," "expect,"
"intend," "may," "might," "plan," "potential," "predict," "seek,"
"should," or "will," or the negative thereof or other variations
thereon or comparable terminology. These forward-looking statements
are only predictions and involve known and unknown risks and
uncertainties, many of which are beyond our control. For a
discussion of risk factors which may affect our results, please see
the risk factors and other disclosures included in our SEC filings.
These risks may cause our actual results, performance or
achievements to differ materially from any future results,
performance or achievements expressed or implied by these
forward-looking statements. Given these risks and uncertainties,
you are cautioned not to place undue reliance on such
forward-looking statements. The forward-looking statements included
in this press release are made only as of the date hereof. The
Company undertakes no duty to update its forward-looking
statements. About CVR Energy, Inc. Headquartered in Sugar Land,
Texas, CVR Energy, Inc.'s subsidiary and affiliated businesses
include an independent refiner that operates a 115,000 barrel per
day refinery in Coffeyville, Kan., and markets high-value
transportation fuels supplied to customers through tanker trucks
and pipeline terminals; a crude oil gathering system serving
central Kansas, northern Oklahoma, eastern Colorado, western
Missouri and southwest Nebraska; an asphalt and refined fuels
storage and terminal business in Phillipsburg, Kan.; and through a
limited partnership, an ammonia and urea ammonium nitrate
fertilizer business located in Coffeyville, Kan. For further
information, please contact: Investor Relations: Media Relations:
Stirling Pack, Jr. Steve Eames CVR Energy, Inc. CVR Energy, Inc.
281-207-3464 281-207-3550 CVR Energy, Inc. The following tables
summarize the financial data and key operating statistics for CVR
Energy and our two operating segments for the three and twelve
months ended December 31, 2008 and 2007. Select balance sheet data
is as of December 31, 2008, and 2007. The summary financial data
for our two operating segments does not include certain SG&A
expenses and depreciation and amortization related to our corporate
offices. Three Months Twelve Months Ended Ended December 31,
December 31, 2008 2007 2008 2007 (in millions, except share data)
(unaudited) Consolidated Statement of Operations Data: Net sales
$699.7 $1,147.0 $5,016.1 $2,966.9 Cost of product sold* 697.8 982.2
4,461.8 2,308.8 Direct operating expenses* (1) 58.0 57.3 237.5
276.1 Selling, general and Administrative expenses* (1) 14.8 51.0
35.2 93.1 Net costs associated with flood (1.0) 7.2 7.9 41.5
Depreciation and amortization 20.9 18.1 82.2 60.8 Goodwill
impairment (2) 42.8 - 42.8 - Operating income (loss) (133.6) 31.2
148.7 186.6 Interest expense and other financing costs (10.2)
(15.2) (40.3) (61.1) Gain (loss) on derivatives, net 175.8 (30.1)
125.3 (282.0) Loss on extinguishment of debt (10.0) (1.3) (10.0)
(1.3) Other income, net (1) 1.7 0.6 4.1 1.5 Income (loss) before
income taxes and minority interest in loss of subsidiaries 23.7
(14.8) 227.8 (156.3) Income tax (expense) benefit (12.6) (9.7)
(63.9) 88.5 Minority interest in loss of subsidiaries - - - 0.2 Net
income (loss) $11.1 $(24.5) $163.9 $(67.6) * Amounts shown are
exclusive of depreciation and amortization. Net earnings per share
Basic $0.13 $1.90 Diluted $0.13 $1.90 Weighted average shares Basic
86,158,206 86,145,543 Diluted 86,236,872 86,224,209 Pro forma
information Net loss per share: Basic $(0.28) $(0.78) Diluted
$(0.28) $(0.78) Weighted average shares Basic 86,141,291 86,141,291
Diluted 86,141,291 86,141,291 As of December 31, As of December 31,
2008 2007 (in millions) (unaudited) Balance Sheet Data: Cash and
cash equivalents $8.9 $30.5 Working capital 128.5 10.7 Total assets
1,610.5 1,868.4 Total debt, including current portion 495.9 500.8
Minority interest in subsidiary 10.6 10.6 Stockholders' equity
579.5 432.7 Three Months Twelve Months Ended Ended December 31,
December 31, 2008 2007 2008 2007 (in millions) (unaudited) Other
Financial Data: Cash flows provided by (used in) operating
activities $(21.6) $(19.7) $ 83.2 $145.9 Cash flows used in
investing activities (19.0) (28.9) (86.5) (268.6) Cash flows
provided by (used in) financing activities (10.3) 51.8 (18.3) 111.3
Capital expenditures for property, plant and equipment 19.0 28.9
86.5 268.6 Non-GAAP Measures Reconciliation of Net Income (Loss) to
Adjusted Net Income (Loss): Net income (loss) $11.1 $(24.5) $163.9
$(67.6) Unrealized gain (loss) from Cash Flow Swap, net of taxes
110.7 (2.9) 152.7 (62.0) Net income (loss) adjusted for unrealized
gain or loss from Cash Flow Swap (3) (99.6) (21.6) 11.2 (5.6)
Special Items: Goodwill impairment (2) 42.8 - 42.8 - Share-based
compensation (1) (5.6) 32.8 (42.5) 44.1 Income tax expense
(benefit) of share-based compensation 1.6 (3.5) 10.1 (7.3) Adjusted
net income (loss) (4) $(60.8) $ 7.7 $ 21.6 $31.2 Adjusted net
income (loss) per share, fully diluted $(0.70) $0.25 Adjusted pro
forma net income per share, fully diluted $0.09 $0.36 Three Months
Twelve Months Ended Ended December 31, December 31, 2008 2007 2008
2007 (in millions, except per crude oil throughput barrel data)
(unaudited) Petroleum Business Financial Results: Net Sales $636.4
$1,098.9 $4,774.3 $2,806.2 Cost of product sold* 691.0 981.0
4,449.4 2,300.2 Direct operating expenses* (1) 31.3 38.8 151.4
209.5 Net costs associated with flood (1.5) 6.0 6.4 36.7
Depreciation and amortization 15.9 13.3 62.7 43.0 Gross profit
(loss) $(100.3) $59.8 $104.4 $216.8 Plus direct operating expenses*
(1) 31.3 38.8 151.4 209.5 Plus net costs associated with flood
(1.5) 6.0 6.4 36.7 Plus depreciation and amortization 15.9 13.3
62.7 43.0 Refining margin (5) $(54.6) $117.9 $324.9 $506.0
Operating income (loss) $(153.8) $22.6 $31.9 $144.9 Goodwill
impairment (2) 42.8 - 42.8 - Share-based compensation (1) (1.3) 6.0
(10.8) 7.2 Adjusted operating income (loss) (6) $(112.3) $28.6
$63.9 $152.1 Petroleum Key Operating Statistics: Per crude oil
throughput barrel: Refining margin (5) $(6.08) $11.62 $8.39 $18.17
Direct operating expenses* (1) 3.49 3.82 3.91 7.52 Gross profit
(loss) (11.17) 5.89 2.69 7.79 FIFO impact (favorable) unfavorable
(7) $117.1 $(33.1) $102.5 $(69.9) FIFO impact (favorable)
unfavorable per crude oil throughput barrel (7) $13.03 $(3.27)
$2.64 $(2.51) * Amounts shown are exclusive of depreciation and
amortization Three Months Twelve Months Ended Ended December 31,
December 31, 2008 2007 2008 2007 Refining Throughput and Production
Data (unaudited) (barrels per day) Throughput: Sweet 70,034 77,885
77,315 54,509 Light/medium sour 17,448 13,483 16,795 14,580 Heavy
sour 10,175 18,906 11,727 7,228 Total crude oil throughput 97,657
110,274 105,837 76,317 All other feed and blendstocks 13,074 12,129
11,882 5,748 Total throughput 110,731 122,403 117,719 82,065
Production: Gasoline 55,833 57,990 56,852 37,017 Distillate 44,526
50,551 48,257 34,814 Other (excluding internally produced fuel)
10,843 15,941 13,422 10,551 Total refining production (excluding
internally produced fuel) 111,202 124,482 118,531 82,382 Product
price (dollars per gallon): Gasoline $1.36 $2.30 $2.50 $2.20
Distillate $1.87 $2.60 $3.00 $2.28 Market Indicators (dollars per
barrel) West Texas Intermediate (WTI) NYMEX $59.08 $90.50 $99.75
$72.36 Crude Oil Differentials: WTI less WTS (light/medium sour)
3.53 6.35 3.44 5.16 WTI less WCS (heavy sour) 14.56 32.60 18.72
22.94 NYMEX Crack Spreads: Gasoline (2.71) 5.26 4.76 14.61 Heating
Oil 18.35 13.88 20.25 13.29 NYMEX 2-1-1 Crack Spread 7.82 9.57
12.50 13.95 PADD II Group 3 Basis: Gasoline 1.41 0.41 0.12 3.56
Ultra Los Sulfur Diesel 3.00 2.97 4.22 7.95 PADD II Group 3 Product
Crack: Gasoline (1.30) 5.67 4.88 18.18 Ultra Low Sulfur Diesel
21.36 16.84 24.47 21.24 PADD II Group 3 2:1:1 10.03 11.26 14.68
19.71 Three Months Twelve Months Ended Ended December 31, December
31, 2008 2007 2008 2007 (in millions, except as noted) (unaudited)
Nitrogen Fertilizer Business Financial Results: Net sales $67.4
$50.8 $263.0 $165.9 Cost of product sold* 10.7 3.1 32.6 13.0 Direct
operating expenses* (1) 26.7 18.5 86.1 66.7 Net cost associated
with flood - 0.4 - 2.4 Depreciation and amortization 4.5 4.4 18.0
16.8 Operating income $21.2 $11.7 $116.8 $46.6 Share-based
compensation (1) (1.6) 8.2 (10.6) 9.0 Adjusted operating income (6)
$19.6 $19.9 $106.2 $55.6 Nitrogen Fertilizer Key Operating
Statistics Production (thousand tons): Ammonia (gross produced) (8)
85.6 81.8 359.1 326.7 Ammonia (net available for sale) (8) 29.2
23.0 112.5 91.8 UAN 137.2 144.3 599.2 576.9 Petroleum coke consumed
(thousand tons) 102.1 124.2 451.9 449.8 Petroleum coke (cost per
ton) $33 $25 $31 $30 Sales (thousand tons): Ammonia 34.2 33.3 99.4
92.1 UAN 132.2 141.3 594.2 555.4 Total sales 166.4 174.6 693.6
647.5 Product pricing (plant gate) (dollars per ton) (9): Ammonia
$536 $408 $557 $376 UAN $324 $236 $303 $211 On-stream factors (10):
Gasification 78.0% 97.7% 87.8% 90.0% Ammonia 76.4% 96.7% 86.2%
87.7% UAN 74.7% 79.4% 83.4% 78.7% Reconciliation to net sales
(dollars in thousands): Freight in revenue $5,223 $3,815 $18,856
$13,826 Hydrogen revenue 1,035 - 8,967 - Sales net plant gate
61,136 46,950 235,127 152,030 Total net sales $67,394 $50,765
$262,950 $165,856 Market Indicators Natural gas NYMEX (dollars per
MMBtu) $6.40 $7.39 $8.91 $7.12 Ammonia - Southern Plains (dollars
per ton) $619 $469 $707 $409 UAN - Mid Cornbelt (dollars per ton)
$397 $328 $422 $288 (1) The Company has two classifications for
share based compensation awards. Phantom Unit Plan awards are
accounted for as liability based awards. In accordance with FAS
123(R), the expense associated with these awards is based on the
current fair value of the awards. These awards are remeasured at
each reporting date until the awards are settled. Override unit
awards are accounted for as equity- classified awards using the
guidance for non-employee awards prescribed by EITF 00-12 and EITF
96-18. In accordance with that guidance, the expense associated
with these awards is based on the current fair value of the awards.
These awards are remeasured at each reporting date until the awards
are vested (when the performance commitment is reached). The value
of all of these awards can fluctuate significantly between periods.
The compensation expense associated with our Phantom Unit Plan and
override units is recorded in direct operating expenses, selling,
general and administrative expenses, and other income. Below is a
breakdown of the expense by statement of operations caption and by
business segment. Three Months Twelve Months Ended Ended December
31, December 31, 2008 2007 2008 2007 (in millions) Share-based
compensation recorded (unaudited) in direct operating expenses
Petroleum $(0.3) $3.8 $(4.6) $4.0 Nitrogen (0.2) 0.6 (1.6) 1.3
Corporate - - - - (0.5) 4.4 (6.2) 5.3 Share-based compensation
recorded in selling, general and administrative expenses Petroleum
(1.0) 2.2 (6.2) 3.2 Nitrogen (1.4) 7.6 (9.0) 7.7 Corporate (3.0)
18.6 (21.1) 27.9 (5.4) 28.4 (36.3) 38.8 Share-based compensation
recorded in other income 0.3 - - - Total share based compensation
$(5.6) $32.8 $(42.5) $44.1 (2) Upon applying the goodwill
impairment testing criteria under existing accounting rules during
the fourth quarter of 2008, we determined that the goodwill of the
petroleum segment was impaired, which resulted in a goodwill
impairment loss of $42.8 million in the fourth quarter. This
goodwill impairment is included in the petroleum segment operating
income (loss) adjusted for special items but is excluded in the
refining margin and the refining margin per crude oil throughput
barrel data. (3) The unrealized gain (loss) from Cash Flow Swap
relates to the derivative transaction that was executed in
conjunction with the acquisition of Coffeyville Group Holdings, LLC
by Coffeyville Acquisition LLC on June 24, 2005. On June 16, 2005,
Coffeyville Acquisition LLC entered into the Cash Flow Swap with J.
Aron & Company, a subsidiary of The Goldman Sachs Group, Inc.,
and a related party of ours. The Cash Flow Swap was subsequently
assigned from Coffeyville Acquisition LLC to Coffeyville Resources,
LLC on June 24, 2005. The derivative took the form of three NYMEX
swap agreements whereby if crack spreads fall below the fixed
level, J. Aron agreed to pay the difference to us, and if crack
spreads rise above the fixed level, we agreed to pay the difference
to J. Aron. Assuming crude oil capacity of 115,000 bpd, the Cash
Flow Swap represents approximately 57% and 14% of crude oil
capacity for the periods January 1, 2009, through June 30, 2009,
and July 1, 2009 through June 30, 2010, respectively. Under the
terms of our Credit Facility and upon meeting specific requirements
related to our leverage ratio and our credit ratings, we are
permitted to terminate the Cash Flow Swap in 2009 or 2010. We have
determined that the Cash Flow Swap does not qualify as a hedge for
hedge accounting purposes under current GAAP. As a result, our
periodic statements of operations reflect in each period material
amounts of unrealized gains and losses based on the increases or
decreases in market value of the unsettled position under the swap
agreements which is accounted for as a liability on our balance
sheet. As the crack spreads increase we are required to record an
increase in this liability account with a corresponding expense
entry to be made to our statement of operations. Conversely, as
crack spreads decline we are required to record a decrease in the
swap related liability and post a corresponding income entry to our
statement of operations. Because of this inverse relationship
between the economic outlook for our underlying business (as
represented by crack spread levels) and the income impact of the
unrecognized gains and losses, and given the significant periodic
fluctuations in the amounts of unrealized gains and losses,
management utilizes Net income (loss) adjusted for unrealized gain
or loss from Cash Flow Swap as a key indicator of our business
performance. In managing our business and assessing its growth and
profitability from a strategic and financial planning perspective,
management and our board of directors consider our U.S. GAAP net
income results as well as Net income (loss) adjusted for unrealized
gain or loss from Cash Flow Swap, net of tax. We believe that Net
income (loss) adjusted for unrealized gain or loss from Cash Flow
Swap, net of tax, enhances the understanding of our results of
operations by highlighting income attributable to our ongoing
operating performance exclusive of charges and income resulting
from mark to market adjustments that are not necessarily indicative
of the performance of our underlying business and our industry. The
adjustment has been made for the unrealized gain or loss from Cash
Flow Swap net of its related tax effect. Net income (loss) adjusted
for unrealized gain or loss from Cash Flow Swap is not a recognized
term under GAAP and should not be substituted for net income as a
measure of our performance but instead should be utilized as a
supplemental measure of financial performance or liquidity in
evaluating our business. Because Net income (loss) adjusted for
unrealized gain or loss from Cash Flow Swap excludes mark to market
adjustments, the measure does not reflect the fair market value of
our Cash Flow Swap in our net income. As a result, the measure does
not include potential cash payments that may be required to be made
on the Cash Flow Swap in the future. Also, our presentation of this
non-GAAP measure may not be comparable to similarly titled measures
of other companies. The Company believes that net income (loss)
adjusted for unrealized gain or loss from Cash Flow Swap is
important to enable investors to better understand and evaluate its
ongoing operating results and allow for greater transparency in the
review of its overall financial, operational and economic
performance. (4) Net income (loss) adjusted for unrealized gain or
loss from Cash Flow Swap and other special items results from
adjusting net income for items that the Company believes are
non-operating in nature. For the twelve months and three months
ended December 31, 2008 and 2007, these items included the
unrealized gain (loss) from Cash Flow swap, the goodwill impairment
of the petroleum segment, and share-based compensation. Net income
(loss) adjusted is not a recognized term under GAAP and should not
be substituted for net income as a measure of our performance but
instead should be utilized as a supplemental measure of financial
performance or liquidity in evaluating our business. The Company
believes that net income (loss) adjusted is important to enable
investors to better understand and evaluate its ongoing operating
results and allow for greater transparency in the review of its
overall financial, operational and economic performance. (5)
Refining margin is a measurement calculated as the difference
between net sales and cost of product sold (exclusive of
depreciation and amortization). Refining margin is a non-GAAP
measure that we believe is important to investors in evaluating our
refinery's performance as a general indication of the amount above
our cost of product sold that we are able to sell refined products.
Each of the components used in this calculation (net sales and cost
of product sold exclusive of depreciation and amortization) can be
taken directly from our statement of operations. Our calculation of
refining margin may differ from similar calculations of other
companies in our industry, thereby limiting its usefulness as a
comparative measure. In order to derive the refining margin per
crude oil throughput barrel, we utilize the total dollar figures
for refining margin as derived above and divide by the applicable
number of crude oil throughput barrels for the period. The Company
believes that refining margin is important to enable investors to
better understand and evaluate its ongoing operating results and
allow for greater transparency in the review of its overall
financial, operational and economic performance. (6) Operating
income (loss) adjusted for special items is a non-GAAP measure that
we believe is important in evaluating the on-going operations of
our segments. This calculation is made in order to adjust for what
the Company believes are significant non-operating items such as
the petroleum segments goodwill impairment and the impact of our
share based compensation. Included within both the Petroleum and
Nitrogen Fertilizer segment's operating income are unusual or
infrequent events that also impact our results. Below is a table
summarizing these items. Three Months Twelve Months Ended Ended
December 31, December 31, 2008 2007 2008 2007 (in millions)
(unaudited) Petroleum: FIFO impact (favorable) unfavorable $117.1
$(33.1) $102.5 $(69.9) Net costs associated with flood (1.5) 6.0
6.4 36.7 Major scheduled turnaround expenses - - - 76.4 Nitrogen
Fertilizer: Net costs associated with flood $- $0.4 $- $2.4 Major
scheduled turnaround expenses 3.3 - 3.3 - Operating income (loss)
adjusted is not a recognized term under GAAP and should not be
substituted for operating income as a measure of our performance
but instead should be utilized as a supplemental measure of
financial performance or liquidity in evaluating our business. The
Company believes that operating income (loss) adjusted is important
to enable investors to better understand and evaluate its ongoing
operating results and allow for greater transparency in the review
of its overall financial, operational and economic performance. (7)
First-in, first-out (FIFO) is the Company's basis for determining
inventory value on a GAAP basis. Changes in crude oil prices can
cause fluctuations in the inventory valuation of our crude oil,
work in process and finished goods thereby resulting in favorable
FIFO impacts when crude oil prices increase and unfavorable FIFO
impacts when crude oil prices decrease. The FIFO impact is
calculated based upon inventory values at the beginning of the
accounting period and at the end of the accounting period. (8) The
gross tons produced for ammonia represent the total ammonia
produced, including ammonia produced that was upgraded into UAN.
The net tons available for sale represent the ammonia available for
sale that was not upgraded into UAN. (9) Plant gate sales per ton
represent net sales less freight divided by product sales volume in
tons in the reporting period. Plant gate pricing per ton is shown
in order to provide industry comparability. (10) On-stream factor
is the total number of hours operated divided by the total number
of hours in the reporting period. Excluding the impact of
turnarounds and the flood at the fertilizer facility, (i) the on-
stream factors for the three months ended December 31, 2008
adjusted for turnaround would have been 93.8% for the gasifier,
92.1% for ammonia, and 90.4% for UAN, (ii) the on-stream factors
for the three months ended December 31, 2007 would have not
changed, (iii) the on- stream factors for the twelve months ended
December 31, 2008 adjusted for turnaround would have been 91.7% for
the gasifier, 90.2% for ammonia and 87.4% for UAN and (iv) the
on-stream factors for the twelve months ended December 31, 2007
adjusted for flood would have been 94.6% for gasifier, 92.4% for
ammonia and 83.9% for UAN. Use of Non-GAAP Financial Measures To
supplement the actual results in accordance with U.S. generally
accepted accounting principles (GAAP) for the applicable periods,
the Company also uses non-GAAP measures as discussed above, which
are adjusted for GAAP-based results. The use of Non-GAAP
adjustments are not in accordance with or an alternative for GAAP.
The adjustments are provided to enhance an overall understanding of
the Company's financial performance for the applicable periods and
are indicators management uses for planning and forecasting future
periods. http://www.newscom.com/cgi-bin/prnh/20071203/CVRLOGO
http://photoarchive.ap.org/ DATASOURCE: CVR Energy, Inc. CONTACT:
investor relations, Stirling Pack, Jr., +1-281-207-3464, , or
media, Steve Eames, +1-281-207-3550, , both of CVR Energy, Inc Web
Site: http://www.cvrenergy.com/
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