We also do not plan to update any forward-looking statements during the quarter. Please note that information recorded on this call speaks only as of today March 9, 2012, therefore, you are advised that time sensitive information may no longer be accurate at the time of replay.In addition, some of our comments may reference non-GAAP financial measures and reconciliations to the most directly comparable GAAP financial measures, and other associated disclosures are contained in our earnings release and on our website. And with that, I’ll turn the call over to Mike. Mike McDonnell Thanks, Rishi. Good morning, everyone, and thank you for joining the call this morning. I’ll provide a clear, transparent explanation of the drivers behind our fourth quarter results, including the impact from our inherently stable fee-based business model and cost plus fee contracts, which generated solid underlying results when you remove the impact of the butadiene price changes. I’ll also provide an update on current market conditions. I’m very pleased with our results for the full year 2011. Despite a very challenging fourth quarter, we generated a $130 million of EBITDA in 2011, a 21% increases versus 2010. This performance reflects the continued track record of successful execution as we implement our strategies and service fee expansion targeted volume growth and operational excellence. As we anticipated and communicated to you on last quarters call, we were challenge in the fourth quarter by an abrupt and significant decline in end-use demand, inventory destocking on the part of our customers, and the negative impact of the supply/demand imbalance for butadiene, which drove a 42% decline in a contract price of butadiene between September and December. While the reported EBITDA was $11 million lost in the fourth quarter, we experience a $36 million negative impact from the sharp decline in butadiene pricing due to the timing differences between purchases of butadiene in crude C4 at market price and sales of finished butadiene at market price.
Recall that we purchase butadiene in the crude C4 from ethylene crackers at market price and sale the finished butadiene to customers also at market price. Our stable underlying margin in BD consist of fixed per pound fees charged to suppliers and customers for the aggregation, processing, storage and logistic services that we provide. These fees are an addition to the market price.Removing this $36 million impact, which doesn’t really reflect the quality of our underlying business performance, we generated $25 million of underlying EBITDA, up 11% from the underlying results of the prior year quarter, which included a $4 million negative butadiene price impact last year. Despite the difficult conditions, we’ve generated $25 million of free cash flow in the quarter. This cash flow performance validates the stability of our business model. We outperformed our expectations for the quarter, the guidance we provided for the quarter was reported EBITDA in the range of negative $23 million to $17 million, which included $30 million of negative impact due to the expected substantial declines in butadiene pricing. We anticipated our underlying EBITDA in the fourth quarter to be in the range of $7 million to $13 million. Our actual results were significantly better than expectation for several reasons. We saw better than expected demand for Performance Products as destocking seem to be completed earlier than expected. Additionally, our Performance Products margins were favorably impacted by the contract lag between falling feedstock costs and product selling prices. Our C4 Processing segment results benefited significantly from the excellent work by our employees to mitigate the imbalance between the stable supply and reduced demand of crude C4 components. For example, we developed additional demand opportunities in the quarter to help balance the market, in order to minimize the need to dispose of these valuable C4 by converting them into lower value product and uses. Read the rest of this transcript for free on seekingalpha.com