-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HfwV3++4x6qGV/LhWyMhbeg/SUUR8mmLnUv8cpJFJt9sqHXgHaFXBwk34hVNlPbF XS4vlNTkoa/djxhVDgmB5Q== /in/edgar/work/20000628/0000899243-00-001609/0000899243-00-001609.txt : 20000920 0000899243-00-001609.hdr.sgml : 20000920 ACCESSION NUMBER: 0000899243-00-001609 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000628 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LYONDELL CHEMICAL CO CENTRAL INDEX KEY: 0000842635 STANDARD INDUSTRIAL CLASSIFICATION: [2911 ] IRS NUMBER: 954160558 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-10145 FILM NUMBER: 662946 BUSINESS ADDRESS: STREET 1: 1221 MCKINNEY ST STREET 2: STE 700 CITY: HOUSTON STATE: TX ZIP: 77010 BUSINESS PHONE: 7136527200 MAIL ADDRESS: STREET 1: 1221 MCKINNEY ST STREET 2: SUITE 700 CITY: HOUSTON STATE: TX ZIP: 77010 FORMER COMPANY: FORMER CONFORMED NAME: LYONDELL PETROCHEMICAL CO DATE OF NAME CHANGE: 19920703 11-K 1 0001.txt FORM 11-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 11-K (Mark One) [X] Annual Report Pursuant to Section 15(d) of the Securities Exchange Act of 1934 (Fee Required) For the fiscal year ended December 31, 1999 OR [_] Transition report pursuant to Section 15(d) of the Securities Exchange Act of 1934 (No Fee Required) Commission File Number 33-26867 LYONDELL CHEMICAL COMPANY 401(K) AND SAVINGS PLAN (Title of the Plan) LYONDELL CHEMICAL COMPANY 1221 McKinney Street Suite 700 Houston, Texas 77010 (Name and address of principal executive office of the issuer of the securities) LYONDELL CHEMICAL COMPANY 401(K) AND SAVINGS PLAN INDEX TO FINANCIAL STATEMENTS
Page ---- Report of Independent Accountants 2 Financial Statements: Statements of Net Assets Available for Benefits 3 Statement of Changes in Net Assets Available for Benefits 4 Notes to Financial Statements 5 Supplemental Schedules are not required at the plan level and have been omitted.
1 REPORT OF INDEPENDENT ACCOUNTANTS To the Benefits Administrative Committee of the Lyondell Chemical Company 401(k) and Savings Plan: In our opinion, the accompanying statements of net assets available for benefits and the related statement of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of the Lyondell Chemical Company 401(k) and Savings Plan (the "Plan") at December 31, 1999 and 1998, and the changes in net assets available for benefits for the year ended December 31, 1999 in conformity with accounting principles generally accepted in the United States. These financial statements are the responsibility of the Plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. PRICEWATERHOUSECOOPERS LLP Houston, Texas June 27, 2000 2 LYONDELL CHEMICAL COMPANY 401(K) AND SAVINGS PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, ------------------------------- 1999 1998 ------------- ------------- ASSETS Investments, at fair value: Investment in Lyondell Chemical, Equistar Chemicals, and Lyondell-Citgo Plans Master Trust $303,253,909 $ -- Investment in Lyondell Chemical Company Master Trust -- 20,449,051 ------------- ------------- Net assets available for benefits $303,253,909 $20,449,051 ============= =============
See Notes to Financial Statements. 3 LYONDELL CHEMICAL COMPANY 401(K) AND SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS For the year ended December 31, 1999
Participant Nonparticipant Plan Directed Directed Total -------- -------- ----- Contributions: Employer $ -- $ 8,300,034 $ 8,300,034 Participant 9,677,210 1,009,470 10,686,680 Rollover 682,854 -- 682,854 --------------------------------- --------------- Total 10,360,064 9,309,504 19,669,568 --------------------------------- --------------- Investment income (loss): Lyondell Chemical Company Master Trust 40,383 (598,980) (558,597) Lyondell Chemical, Equistar Chemicals, and Lyondell-Citgo Plans Master Trust 42,800,640 (1,785,522) 41,015,118 --------------------------------- --------------- Net investment income (loss) 42,841,023 (2,384,502) 40,456,521 --------------------------------- --------------- Benefits paid to participants (18,437,296) (508,744) (18,946,040) --------------------------------- --------------- Loan activity: Participant borrowings 1,344,918 (1,344,918) -- Participant repayments (698,741) 698,741 -- --------------------------------- --------------- Net loan activity 646,177 (646,177) -- --------------------------------- --------------- Transfer activity: Transfers from ARCO Chemical Company plans 220,474,460 20,432,419 240,906,879 Net transfers from (to) Equistar Chemicals, LP Savings and Investment Plan 1,138,606 (105,364) 1,033,242 Net transfers from LYONDELL-CITGO Refining Company Ltd. Master Trust 65,228 -- 65,228 Other transfers, net (8,842) (371,698) (380,540) Net transfers between investment options (2,376,196) 2,376,196 -- --------------------------------- --------------- Net transfer activity 219,293,256 22,331,553 241,624,809 --------------------------------- --------------- Net increase 254,703,224 28,101,634 282,804,858 Net assets: Beginning of period 17,788,364 2,660,687 20,449,051 --------------------------------- --------------- End of period $ 272,491,588 $30,762,321 $303,253,909 ================================= ===============
See Notes to Financial Statements. 4 LYONDELL CHEMICAL COMPANY 401(K) AND SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS 1. Description of Plan General - The Lyondell Chemical Company 401(k) and Savings Plan ("Plan") is a defined contribution plan for employees and vested former employees of Lyondell Chemical Company ("Lyondell" or "Company"). The Plan was adopted as of January 1, 1998 as the successor to the Lyondell Petrochemical Company 401(k) and Savings Plan ("Prior Plan"), which was originally adopted July 1, 1995. With the formation of Equistar Chemicals, LP ("Equistar") as of December 1, 1997, a substantial number of Lyondell employees became employees of Equistar. As of January 1, 1998, Equistar became the sponsor of the Prior Plan and changed the name to the Equistar Chemicals, LP Savings and Investment Plan, thereby creating the need to adopt the successor plan for Lyondell employees. During 1998, Lyondell participants' account balances previously held in the Prior Plan were transferred to the Plan. Effective March 15, 1999, the ARCO Chemical Company Capital Accumulation Plan was merged into the Plan. Participants should refer to the plan document for a complete description of the Plan. Contributions - Participants are allowed to contribute from 1 percent to 14 percent of their base pay to the Plan through pre-tax payroll deductions ("Elective Deferrals") and from 1 percent to 10 percent of their base pay through after-tax payroll deductions ("Savings Contributions"). Lyondell makes matching contributions to the participant's account at the rate of 160 percent of the Elective Deferrals up to a maximum Company contribution of 8 percent of the participant's eligible base pay. All contributions and earnings thereon are fully vested and nonforfeitable. All earnings are allocated to individual participant accounts on the basis of the units held in the investment fund. Investment Election - All participant assets are held in trust. Participant contributions and earnings thereon ("Participant Directed") are invested by the Trustee (see Plan Administration below) in accordance with the options selected by each participant. The Plan does not own specific securities or other assets in the trust, but has an ownership interest in each selected fund within the trust. Contributions to, withdrawals from and transfers between investment options by the participants are appropriately charged or credited to each fund. When investing in Lyondell common stock, the participant may designate that the common stock be held either in the Lyondell Common Stock - Dividend Payout Fund ("ESOP") portion of the Plan (an employee stock ownership plan under Section 4975(e)(7) of the Internal Revenue Code) or in the Lyondell Common Stock - Dividend Reinvestment Fund ("non-ESOP stock fund"). Dividends on common stock held in the non-ESOP stock fund are reinvested in Lyondell common stock and held in the participant's plan account. Dividends on common stock held in the ESOP are reinvested in a money market fund and are payable to the participant annually as allowed by the Plan. All Company matching contributions ("Nonparticipant Directed") are made in the form of Lyondell common stock or cash to be used to purchase Lyondell common stock and are invested in the ESOP and may not be transferred to other investment options. Employees of Atlantic Richfield Company ("ARCO") who became employees of Lyondell had the assets attributable to their participation in the ARCO Capital Accumulation Plan II (which assets included ARCO common stock) transferred to the Plan. ARCO common stock could be held or sold; however, no new purchases of ARCO common stock could be elected by the participant except upon reinvestment of dividends from the shares of ARCO common stock (see Note 6). Withdrawals and Borrowings - If a participant terminates employment for any reason, the participant's account balance will be distributed upon attainment of age 65 or anytime the participant makes application to receive the funds prior to age 65. If the participant's account balance is $5,000 or less, the participant's account balance will be distributed as soon as practicable. 5 LYONDELL CHEMICAL COMPANY 401(K) AND SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS--(Continued) The Plan permits withdrawals of Elective Deferrals under certain hardship conditions as defined by the Plan and granted by the Benefits Administrative Committee. Savings Contributions may be withdrawn in total or partial amounts as defined by the Plan. Withdrawals are made in a lump sum cash payment, although a participant may elect to receive Lyondell or, prior to April 18, 2000, ARCO common stock to the extent assets are held in the form of such stock. Distributions upon retirement or termination have generally been in Lyondell or ARCO common stock to the extent assets were held in the form of such stock, and in cash to the extent invested in any other investment funds maintained under the Plan. The Plan provides for employees to borrow up to 50 percent of their account balance, as defined by the Plan and subject to a minimum and maximum borrowing level. The interest rate currently charged for loans is a fixed rate equal to the average prime rate reported in The Wall Street Journal as of the last ----------------------- business day of the month preceding the date the loan application was received by the Benefits Administrative Committee. Interest rates on loans outstanding at December 31, 1999 and 1998 range from 6 percent to 9.5 percent. Repayment periods range from one to five years for general loans and one to ten years for residential loans. Repaid principal and interest are added to investment funds according to the current investment elections of the participant. The loans are carried at their face amount. Plan Administration - The Plan is administered by the Lyondell Benefits Administrative Committee. During 1999, Plan assets were maintained in the Lyondell Chemical Company Master Trust ("Lyondell Master Trust"; see Note 4) under the custody of State Street Bank and Trust Company until April 1, at which time the assets were transferred to the Lyondell Chemical, Equistar Chemicals, and Lyondell-Citgo Plans Master Trust ("New Master Trust"; see Note 5) under the custody of Fidelity Management Trust Company (collectively, the two custodians, or trustees, are referred to as "Trustee"). The Trustee makes payments as authorized by the Plan. Administrative expenses of the plan are paid by Lyondell. Termination Provision - Although it has not expressed any intent to do so, Lyondell has the right to terminate the Plan at any time subject to the provisions of the Employee Retirement Income Security Act of 1974. In the event of Plan termination, all participants will be fully vested in their accounts and all assets of the Plan will continue to be held for distribution to participants as provided in the Plan. 2. Summary of Significant Accounting Policies Basis of Accounting - The financial statements of the Plan are prepared using the accrual method of accounting. Investment Valuation and Income Recognition - The Plan's investments are stated at fair value. Quoted market prices are used to value investments. Investment funds are valued at net asset value as of the last business day of the periods presented, which is the fair value of all securities held plus accruals for dividend income and interest income. Short-term and certain other investments are valued at cost, which approximates fair value. Purchases and sales of securities are accounted for on the settlement date. Gains or losses on the sale or distribution of securities are computed on an average cost basis. Dividend income is accrued on the ex-dividend date and interest income is accrued as earned. The net appreciation or depreciation in the fair value of investments, which consist of the realized gains or losses and the unrealized appreciation or depreciation on those investments, is included in "Investment income (loss)" in the statement of changes in net assets. Payment of Benefits - Benefits are recorded when paid. 6 LYONDELL CHEMICAL COMPANY 401(K) AND SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS-(Continued) Reclassifications - Certain previously reported amounts have been restated to conform to classifications adopted in 1999. Use of Estimates - The preparation of the Plan's financial statements in conformity with generally accepted accounting principles requires the Plan's management to make significant estimates and assumptions that affect the reported amounts of net assets available for benefits at the date of the financial statements and the changes in net assets available for benefits during the reporting period and, when applicable, disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. Risks and Uncertainties - The Plan provides for investment options in various combinations of stocks and mutual funds. Investment securities are exposed to various risks, such as market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the statement of net assets available for plan benefits. 3. Tax Status The Plan is a qualified plan under Sections 401(a) and (k) of the Internal Revenue Code of 1986, as amended ("Code") and is a qualified employee stock ownership plan under Section 4975(e)(7) of the Code. The Benefits Administrative Committee believes that the Plan as currently designed and operated, is in compliance with the applicable requirements of the Code. Accordingly, no provision is made for federal income taxes. 4. Lyondell Chemical Company Master Trust The Lyondell Master Trust was established in July 1995 and was a pooled investment trust composed of the beneficial interests of certain participating defined contribution plans of Lyondell and Equistar. Investments of the Lyondell Master Trust consisted of ownership interests in various investment funds and equity securities of Lyondell, ARCO and Millennium Chemicals Inc., an entity related to Equistar. Net assets of the Lyondell Master Trust at December 31, 1998 were as follows: ASSETS Investments, at fair value: Participant directed: Common stock $ 56,831,374 Mutual funds 237,538,824 Participant loans receivable, at cost 19,545,619 Nonparticipant directed: Common stock 2,660,687 -------------- Total investments 316,576,504 Interest and dividends receivable 5,473 -------------- Total assets 316,581,977 LIABILITIES Other liabilities 15,200 -------------- NET ASSETS $316,566,777 ============== Plan percentage 6.46% ============== 7 LYONDELL CHEMICAL COMPANY 401(K) AND SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS-(Continued) The following investments represented 5 percent or more of the Lyondell Master Trust's net assets at December 31, 1998: State Street Short-Term Investment Fund $60,488,653 IDS New Dimensions Fund (1,913,339 shares) 55,304,304 Seven Seas S&P 500 Fund (2,362,936 shares) 52,118,870 Dodge & Cox Balanced Fund (462,194 shares) 30,231,924 Lyondell Chemical Company common stock (1,468,633 shares) 26,464,343 * Millennium Chemicals Inc. common stock (1,230,026 shares) 24,425,549 PBHG Growth Fund (692,873 shares) 17,727,418 Participant loans receivable, at cost 19,545,619 * Includes $2,660,687 (149,358 shares) that is nonparticipant directed.
Beneficial interest activity in the Lyondell Master Trust for the period from January 1, 1999 to April 1, 1999 is presented below: Net appreciation in fair value of investments $1,439,229 Interest 1,198,970 Dividends 346,372 ------------ Total $2,984,571 ============ On April 1, 1999, the assets of the Lyondell Master Trust were transferred to the Lyondell Chemical, Equistar Chemicals, and Lyondell-Citgo Plans Master Trust. 5. Lyondell Chemical, Equistar Chemicals, and Lyondell-Citgo Plans Master Trust The New Master Trust was established on March 15, 1999 and is a pooled investment trust composed of the beneficial interests of certain participating defined contribution plans of Lyondell, Equistar and LYONDELL-CITGO Refining LP, all of which are related entities. It was formed by combining the assets of ARCO Chemical Company Capital Accumulation Plan, which were transferred to the New Master Trust on March 15, 1999, and the assets formerly held in the Lyondell Master Trust, the LYONDELL-CITGO Refining Company Ltd. Master Trust and the Equistar Chemicals, LP Savings Plan for Former Occidental Petroleum Corporation Employees, which were transferred to the New Master Trust on April 1, 1999. 8 LYONDELL CHEMICAL COMPANY 401(K) AND SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS-(Continued) Net assets of the New Master Trust at December 31, 1999 were as follows: ASSETS Investments, at fair value: Participant directed: Common stock $ 119,954,255 Mutual funds 781,886,517 Participant loans receivable, at cost 50,558,066 Nonparticipant directed: Common stock 31,176,966 ---------------- Total investments 983,575,804 Other receivables 519,984 ---------------- Total assets 984,095,788 LIABILITIES Other liabilities 414,645 ---------------- NET ASSETS $ 983,681,143 ================ Plan percentage 30.83% ================ The following investments represented 5 percent or more of the New Master Trust's net assets at December 31, 1999: Fidelity Retirement Money Market Fund $ 177,395,339 Fidelity Fund (3,781,968 shares) 161,149,647 Spartan US Equity Index Fund (2,131,237 shares) 111,016,115 Fidelity BrokerageLink 77,224,722 Atlantic Richfield Company common stock (649,639 shares) 56,193,771 Participant loans receivable, at cost 50,558,066 9 LYONDELL CHEMICAL COMPANY 401(K) AND SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS-(Continued) Changes in net assets of the New Master Trust for the period from March 15, 1999 (inception) to December 31, 1999 are presented below.
Participant Nonparticipant Trust Directed Directed Total -------- -------- ----- Contributions: Employer $ 18,959,168 $ 8,239,113 $ 27,198,281 Participant 33,823,932 1,005,761 34,829,693 Rollover 3,881,225 -- 3,881,225 ------------------------------------- --------------- Total 56,664,325 9,244,874 65,909,199 ------------------------------------- --------------- Investment income (loss): Dividend income 2,657,612 363,669 3,021,281 Interest income 10,807,422 181,820 10,989,242 Net appreciation (depreciation) in the fair value of investments 133,736,325 (2,331,011) 131,405,314 ------------------------------------- --------------- Net investment income (loss) 147,201,359 (1,785,522) 145,415,837 ------------------------------------- --------------- Benefits paid to participants (51,303,619) (409,051) (51,712,670) ------------------------------------- --------------- Loan activity: Participant borrowings 1,344,918 (1,344,918) -- Participant repayments (696,332) 696,332 -- ------------------------------------- --------------- Net loan activity 648,586 (648,586) -- ------------------------------------- --------------- Transfer activity: Transfers from Lyondell Master Trust 320,021,167 2,048,459 322,069,626 Transfers from ARCO Chemical Company plans 220,474,461 20,432,418 240,906,879 Transfers from LYONDELL-CITGO Refining Company Ltd. Master Trust 165,727,835 -- 165,727,835 Transfers from the Equistar Chemicals, LP Savings Plan for Former Occidental Petroleum Corporation Employees 88,418,022 -- 88,418,022 Transfers from Millennium Chemicals Inc. plans 11,207,400 -- 11,207,400 Transfers related to sale of business (3,973,476) -- (3,973,476) Other transfers, net (2,167,238) 1,879,729 (287,509) ------------------------------------- --------------- Net transfer activity 799,708,171 24,360,606 824,068,777 ------------------------------------- --------------- Net increase 952,918,822 30,762,321 983,681,143 Net assets: Beginning of period -- -- -- ------------------------------------- --------------- End of period $952,918,822 $30,762,321 $983,681,143 ===================================== ===============
6. Subsequent Event On April 18, 2000, pursuant to the terms of a merger agreement between BP Amoco p.l.c. (BP Amoco) and ARCO, each share of outstanding common stock of ARCO was converted into the right to receive 1.64 BP Amoco American Depositary Receipts (ADRs) or, subject to the timely receipt of elections therefor, 9.84 BP Amoco Ordinary Shares. In addition, ARCO common stock was delisted from the exchanges on which it had been listed. 10 LYONDELL CHEMICAL COMPANY 401(K) AND SAVINGS PLAN SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the Plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. LYONDELL CHEMICAL COMPANY 401(K) AND SAVINGS PLAN By: /s/ ALLEN C. HOLMES ----------------------------------------- ALLEN C. HOLMES Chairman, Benefits Administrative Committee Date: June 28, 2000 11 EXHIBIT INDEX Sequentially Exhibit Numbered Page No. Exhibit Where Located --- ------- ------------- 23 Consent of PricewaterhouseCoopers LLP 13 12 EX-23 2 0002.txt CONSENT Exhibit 23 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 33-26867) of Lyondell Chemical Company of our report dated June 27, 2000 relating to the financial statements of the Lyondell Chemical Company 401(k) and Savings Plan, which appears in this Form 11-K. PRICEWATERHOUSECOOPERS LLP Houston, Texas June 27, 2000 13 -----END PRIVACY-ENHANCED MESSAGE-----