NOVA Chemicals has two product lines: our olefins/polyolefins business manufactures ethylene, associated petrochemicals and polyethylene; our styrenics business manufactures styrene monomer and styrenic polymers. Our polymers (plastic resins) are used to manufacture products ranging from toys and kayaks, to packaging materials and foam insulation. Our businesses are highly cyclical and results vary with the supply and demand for our products, not necessarily with the cost of our feedstocks. Low industry operating rates result in poor returns, while high industry operating rates historically result in strong returns.

NOVA Chemicals is positioned to take advantage of an improving economy and the expected corresponding improvement in the supply/demand balance of our products:

• We focused aggressively on cash generation and reduced debt by roughly $500 million since the middle of 2001. As a result, we have a strong balance sheet and financial flexibility with about $200 million of cash.

• Our olefins/polyolefins business has structural, low-cost production advantages.

• We are building a portfolio of higher-margin, differentiated polymers for both of our businesses.

• We have significant operating leverage to both of our product chains, which we believe will peak at about the same time.

Our focus is, and will remain, the effective stewardship of shareholder value. In 2003, that meant reducing risk through disciplined cash management and increasing potential shareholder return through higher-margin product development.

NOVA Chemicals' earnings have historically tracked the U.S. Industrial Production Index (IP Index), as shown below. We recognized in 2001, early in the trough, that we needed to act quickly to manage the effects of a potential extended economic downturn. We focused on strengthening our balance sheet and maintaining solid liquidity. The charts on the following pages show exactly how we did that.