The following Management’s Discussion and Analysis (MD&A) should be read in conjunction with the information contained in the Consolidated Financial Statements and the notes thereto starting on page 67. This MD&A is based upon financial statements prepared in accordance with Canadian Generally Accepted Accounting Principles (GAAP). These accounting principles are different in some respects from those generally accepted in the United States, and the significant differences are described in Note 21 to the Consolidated Financial Statements. References may be made to several non-GAAP measures throughout this MD&A. These measures are discussed in Supplemental Measures on page 54. This MD&A is the responsibility of management. The Board of Directors carries out its responsibility for review of this disclosure principally through its Audit, Finance and Risk Committee comprised exclusively of independent directors. The Audit, Finance and Risk Committee reviews this disclosure and recommends its approval by the Board of Directors. This MD&A was prepared as of Feb. 7, 2008.
All references in this Annual Report, including the MD&A to “NOVA Chemicals,” the “Company,” “we,” “us,” and similar terms refer to NOVA Chemicals Corporation alone or together with its consolidated subsidiaries and affiliates, depending on the context in which such terms are used. All amounts are presented in U.S. dollars unless otherwise noted.
NOVA Chemicals — A Plastics and Chemical Company
NOVA Chemicals is a plastics and chemical company whose products are used in a wide variety of applications, including food and electronics packaging, industrial materials, appliances and a variety of consumer goods.
The Company operates two business units and holds a 50% interest in a major joint venture with INEOS Group Limited (INEOS), called INEOS NOVA.
BUSINESS UNITS
- Olefins/Polyolefins manufactures and sells ethylene, polyethylene (PE) and chemical and energy co-products.
- Performance Styrenics manufactures and sells expandable polystyrene (EPS) in North America and higher-value styrenic Performance Polymers. This business unit also has interests in EPS-based downstream ventures and businesses for end-use consumer and industrial applications.
INEOS NOVA
- INEOS NOVA is a 50:50 joint venture between NOVA Chemicals
and INEOS that manufactures and sells styrene, solid polystyrene (SPS) and
EPS.
Until Sep. 30, 2007, NOVA Chemicals operated a commodity styrenics business unit known as STYRENIX, which manufactured and sold styrene and SPS in North America. It also manufactured and sold SPS and EPS in Europe through NOVA Innovene, its 50:50 joint venture with INEOS.
On Oct. 1 2007, NOVA Chemicals and INEOS expanded their European joint venture to include the North American styrene and SPS businesses of both companies. NOVA Chemicals no longer reports the results of its STYRENIX business unit but rather its interest in INEOS NOVA. This MD&A includes discussion and analysis of INEOS NOVA’s results of operations and outlook, and the styrenics market due to the Company’s significant investment in INEOS NOVA.
Figure 1. NOVA Chemicals’ business structure.
| NOVA Chemicals | INEOS NOVA | |
|---|---|---|
| Olefins/Polyolefins | Performance Styrenics | |
| Ethylene |
ARCEL® and DYLARK® resins | North American Styrene and SPS |
| Polyethylene | EPS-based Business Ventures | European SPS and EPS |
| Co-Products | North American EPS Styrene Equity Position |
SPS-based Specialty Polymers |
