SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
(X) ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED, EFFECTIVE
OCTOBER 7, 1996)
For the Fiscal Year Ended December 31, 2003.
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _______ to _______
Commission File Number 333-53139
---------
A. Full title of the Plan and the address of the
Plan, if different from that of the issuer named below:
MILLENNIUM CHEMICALS INC.
SALARY AND BONUS DEFERRAL PLAN
(the "Plan")
B. Name of the issuer of the securities held
pursuant to the Plan and the address of its principal
executive office:
Millennium Chemicals Inc.
20 Wight Avenue, Suite 100
Hunt Valley, Maryland 21030
Millennium Chemicals Inc.
Salary and Bonus Deferral Plan
December 31, 2003 and 2002
Millennium Chemicals Inc.
Salary and Bonus Deferral Plan
Table of Contents to the Financial Statements
Page
Financial Statements:
Statements of Financial Condition ....................... 1
Statements of Income and Changes in Plan Equity.......... 2
Notes to Financial Statements............................ 3
Millennium Chemicals Inc.
Salary and Bonus Deferral Plan
Statements of Financial Condition
December 31,
---------------------------
2003 2002
----------- ------------
Assets
------
Investments
Investment in Company common stock,
at fair value (Note 4) $ 5,328,293 $ 4,194,193
----------- ------------
Total investments 5,328,293 4,194,193
----------- ------------
Receivables
Employee contributions - 27,158
Employer contributions - 1,222
----------- ------------
Total receivables - 28,380
----------- ------------
Cash - 832
----------- ------------
Total Assets 5,328,293 4,223,405
----------- ------------
Liabilities
-----------
Accounts payable - (832)
------------ -------------
Total Liabilities - (832)
------------ -------------
------------ -------------
Plan Equity $ 5,328,293 $ 4,222,573
============ =============
The accompanying notes are an integral part of these financial statements.
1
Millennium Chemicals Inc.
Salary and Bonus Deferral Plan
Statements of Income and Changes in Plan Equity
For the Years Ended December 31, 2003 and 2002
December 31,
----------------------------
2003 2002
------------- -------------
Additions
---------
Dividends and interest $ 115,034 $ 232,995
Participant contributions - 33,845
Unrealized appreciation 1,403,682 -
Employer contributions - 1,523
------------- ------------
Total additions 1,518,716 268,363
------------- ------------
Deductions
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Realized loss $ 87,634 $ 246,099
Unrealized depreciation - 1,113,880
Distributions to participants 325,362 583,674
----------------- ------------
Total deductions - 412,996 1,943,653
----------------- ------------
Net increase (decrease) during year - 1,105,720 (1,675,290)
Plan equity, beginning of year 4,222,573 5,897,863
------------- ------------
Plan equity, end of year $ 5,328,293 $ 4,222,573
============= ============
The accompanying notes are an integral part of these financial statements.
2
Millennium Chemicals Inc.
Salary and Bonus Deferral Plan
Notes to Financial Statements
---------------------------------------------------------------
1. Plan Description
On October 8, 1996, Millennium Chemicals Inc. (the "Company")
adopted the Millennium Chemicals Inc. Salary and Bonus
Deferral Plan (the "Plan") for the benefit of a select group
of management and highly compensated employees. The Plan is
intended to be an unfunded plan of deferred compensation and
is not intended to be covered by ERISA.
The purpose of the Plan was to permit eligible employees to
defer from 5% to 100% of their salary and up to 100% of their
bonus (both in 5% increments). The deferred amount was
invested in common stock of the Company. Participants were
immediately vested in their contributions and earnings
thereon, subject to applicable withholding taxes. The Company
matched 4.5% of employee contributions. A participant was
immediately vested in Company contributions and earnings.
The Plan was administered by a committee of three or more
employees of the Company appointed by the Board of Directors
(the "Committee"). Merrill Lynch Trust Company (the
"Trustee") acted as trustee and recordkeeper for the Plan.
On October 1, 2003, Fidelity Management Trust Company became
trustee and recordkeeper for the Plan.
Participation in the Plan is limited to eligible individuals,
other than nonresident aliens of the United States receiving
no United States source income within the meaning of sections
861(a)(3) or 911(d)(2) of the Internal Revenue Code,
designated by the Committee, who are employees of a unit of
the Company (or of one of its subsidiaries) which has adopted
the Plan.
Effective January 1, 2003, no future salary or bonus deferrals
were permitted under this plan.
Distributions
Deferred accounts will be paid in shares of common stock to
the participant or his or her beneficiary, except that awards
deferred pursuant to special elections will continue to be
subject to the forfeiture provisions of the incentive plan
under which the award was granted. Deferred amounts generally
will be paid in the form of (i) a lump sum payment, (ii) in
five approximately equal annual installments or (iii) in ten
approximately equal annual installments, as elected by the
participant at the time of the deferred salary election,
deferred bonus election or special election; provided,
however, that payments shall only be in a single lump sum in
the case that payment commences (i) while the participant is
still an employee of the Company or of a subsidiary of the
Company or (ii) due to termination for cause.
If the participant suffers permanent or total disability,
dies, or terminates employment prior to the deferral date,
then, except in the case of termination for cause, payment
shall be made (or begin to be made) following the occurrence
of the event making payment necessary or, if so elected in
the deferred salary election and/or deferred bonus election,
on January 31st of the calendar year immediately following
such event.
The Company reserves the right to amend, modify, or terminate
the Plan at any time. No amendment to or termination of the
Plan will impair any rights to benefits that have accrued.
Upon a Change of Control (as defined by Plan documents), the
amount of a participant's Deferred Accounts shall be
distributed to such participant as soon as practicable
thereafter and any Deferred Salary Election and/or Deferred
Bonus Election shall terminate and be null and void following
such Change of Control.
3
Participants should refer to the Plan document for a more
complete description of the Plan's provisions.
2. Summary of Significant Accounting Policies
Method of Accounting
The Plan's financial statements are prepared on the accrual
basis of accounting, except for benefit payments, which are
recorded when paid. The preparation of the Plan financial
statements in conformity with generally accepted accounting
principles requires the Company to make estimates and
assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could
differ from these estimates.
Investment Valuation and Income Recognition
The common stock of the Company is valued at fair value which
is determined based on quoted market prices.
Dividend income is accrued on the ex-dividend date.
Purchases and sales of common stock and realized gains and
losses are recorded on a trade-date basis.
Payment of Benefits
Distributions to participants are recorded upon actual
payment of benefits. There were no distributions of the
Company's common stock approved and payable at December 31,
2003 and December 31, 2002.
3. Administration of Plan Assets
The Plan's assets, which consist of the Company's
common stock, are held by the Trustee of the Plan.
Contributions are held and managed by the Trustee, which
invests cash received and dividend income and makes
distributions to the participants.
Certain administrative functions are performed by officers or
employees of the Company or its subsidiaries. No such
officer or employee receives compensation from the Plan.
Administrative expenses for the Trustee's fees are paid by
the Company.
4
4. Investments
The Plan's investments were:
December 31,
2003 2002
------------ -----------
Number of Shares of Company Stock 420,212 440,567
------------ -----------
Historical Cost $ 8,637,853 $ 8,979,133
------------ -----------
Market $ 5,328,293 $ 4,194,193
------------ -----------
5
5. Subsequent Events
On March 29, 2004, Lyondell Chemical Company ("Lyondell") and the Company
announced that their Boards of Directors had approved, and the companies
had executed, a definitive agreement for a stock-for-stock business
combination of the companies, expected to be tax-free to the Company,
Lyondell and their respective shareholders.
The Company's shareholders will receive between 0.95 and 1.05 shares of
Lyondell common stock for each share of the Company's common stock,
depending on the volume-weighted average price for the Lyondell shares
for the 20 trading days ending on the third trading day before closing.
The Company's shareholders will receive 0.95 shares of Lyondell stock
if the average Lyondell stock price is $20.50 per share or greater and
1.05 shares if it is $16.50 per share or less. Between the two prices,
the exchange ratio varies proportionately. The new shares will be
entitled to receive the same cash dividend as existing outstanding
Lyondell shares.
The transaction is subject to customary conditions, including approval
by both companies' shareholders and receipt of required regulatory
approvals and amendments to each of Lyondell's and the Company's credit
agreements and Lyondell's receivables sales facility. The transaction
is expected to close in the third quarter of 2004. The transaction
involves the merger of Millennium Subsidiary LLC, a newly created
subsidiary of the Company, into the Company, in which the Company's
common stock now held by its public shareholders will be converted into
common stock of Lyondell, and the Company's preferred stock to be issued
to Lyondell immediately before the merger will be converted into common
stock of the surviving entity. As a result, the Company will become a
wholly-owned subsidiary of Lyondell.
As with all of the Company's outstanding common stock prior to the business
combination, upon the closing of the transaction, any of the Company's
common stock held by the Plan will be converted into shares of Lyondell
common stock pursuant to the predetermined exchange ratio as described above.
5
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 by the
undersigned thereunto duly authorized.
MILLENNIUM CHEMICALS INC. SALARY AND
BONUS DEFERRAL PLAN
Dated: June 28, 2004 By: /s/ C. William Carmean
-----------------------------------
C. William Carmean
Member, Benefits Administration
Committee