<PAGE> 1
UNITED STATES
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
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 333-58275
A. Full title of the plans and the address of the plans,
if different from that of the issuer below:
THE PIONEER COMPANIES SAVINGS PLAN FOR SALARIED EMPLOYEES
THE PIONEER COMPANIES SAVINGS PLAN FOR HENDERSON BARGAINING UNIT EMPLOYEES,
THE PIONEER COMPANIES SAVINGS PLAN FOR TACOMA BARGAINING UNIT EMPLOYEES,
THE KEMWATER NORTH AMERICA SAVINGS PLAN, AND
THE ALL PURE SAVINGS PLAN
B. Name of the issuer of the securities held pursuant to the plans
and the address of its principal executive office:
PIONEER COMPANIES, INC.
700 LOUISIANA STREET, SUITE 4300
HOUSTON, TEXAS 77002
<PAGE> 2
TABLE OF CONTENTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PIONEER COMPANIES SAVINGS PLAN FOR SALARIED EMPLOYEES
PAGE
<S> <C>
INDEPENDENT AUDITORS' REPORT 5
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits As of December 31, 1999 and 1998 6
Statements of Changes in Net Assets Available for Benefits for the Years Ended
December 31, 1999 and 1998 7
Notes to Financial Statements 8
SUPPLEMENTAL SCHEDULE:
Schedule of Assets Held for Investment Purposes As of December 31, 1999 12
PIONEER COMPANIES SAVINGS PLAN FOR
HENDERSON BARGAINING UNIT EMPLOYEES
INDEPENDENT AUDITORS' REPORT 14
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits As of December 31, 1999 and 1998 15
Statements of Changes in Net Assets Available for Benefits for the Years Ended
December 31, 1999 and 1998 16
Notes to Financial Statements 17
SUPPLEMENTAL SCHEDULE:
Schedule of Assets Held for Investment Purposes As of December 31, 1999 21
PIONEER COMPANIES SAVINGS PLAN FOR
TACOMA BARGAINING UNIT EMPLOYEES
INDEPENDENT AUDITORS' REPORT 23
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits As of December 31, 1999 and 1998 24
Statements of Changes in Net Assets Available for Benefits for the Years Ended
December 31, 1999 and 1998 25
Notes to Financial Statements 26
SUPPLEMENTAL SCHEDULE:
Schedule of Assets Held for Investment Purposes As of December 31, 1998 30
</TABLE>
2
<PAGE> 3
KEMWATER NORTH AMERICA SAVINGS PLAN
<TABLE>
<CAPTION>
PAGE
<S> <C>
INDEPENDENT AUDITORS' REPORT 32
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits As of December 31, 1999 and 1998 33
Statements of Changes in Net Assets Available for Benefits for the Years Ended
December 31, 1999 and 1998 34
Notes to Financial Statements 35
SUPPLEMENTAL SCHEDULE:
Schedule of Assets Held for Investment Purposes As of December 31, 1999 39
ALL PURE SAVINGS PLAN
INDEPENDENT AUDITORS' REPORT 41
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits As of October 12, 1999 and December 31, 1998 42
Statements of Changes in Net Assets Available for Benefits for the Period from January 1, 1999
to October 12, 1999 and for the Year Ended December 31, 1998 43
Notes to Financial Statements 44
LIST OF EXHIBITS 48
</TABLE>
3
<PAGE> 4
PIONEER COMPANIES SAVINGS PLAN
FOR SALARIED EMPLOYEES
TABLE OF CONTENTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
<S> <C>
INDEPENDENT AUDITORS' REPORT 5
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits as of December 31, 1999 and 1998 6
Statements of Changes in Net Assets Available for Benefits for the Years Ended
December 31, 1999 and 1998 7
Notes to Financial Statements 8
SUPPLEMENTAL SCHEDULE -
Schedule of Assets Held for Investment Purposes as of December 31, 1999 12
Schedules, other than the one listed above, have been omitted because of the
absence of the conditions under which they are required.
</TABLE>
4
<PAGE> 5
INDEPENDENT AUDITORS' REPORT
The Plan Administrator of the
Pioneer Companies Savings Plan
for Salaried Employees:
We have audited the accompanying statements of net assets available for benefits
of the Pioneer Companies Savings Plan for Salaried Employees (the "Plan") as of
December 31, 1999 and 1998, and the related statements of changes in net assets
available for benefits for the years then ended. 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 in accordance with auditing standards generally accepted
in the United States of America. Those standards 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. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December 31,
1999 and 1998, and the changes in net assets available for benefits for the
years then ended in conformity with accounting principles generally accepted in
the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedule of
assets held for investment purposes as of December 31, 1999 is presented for the
purpose of additional analysis and is not a required part of the basic financial
statements, but is supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. This schedule is the responsibility of
the Plan's management. Such schedule has been subjected to the auditing
procedures applied in our audit of the basic 1999 financial statements and, in
our opinion, is fairly stated in all material respects when considered in
relation to the basic financial statements taken as a whole.
DELOITTE & TOUCHE LLP
June 28, 2000
Houston, Texas
5
<PAGE> 6
PIONEER COMPANIES SAVINGS PLAN
FOR SALARIED EMPLOYEES
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1999 AND 1998
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
ASSETS:
Investments $ 22,963,686 $ 17,168,824
Contributions receivable 352,586 140,035
------------- -------------
NET ASSETS AVAILABLE FOR BENEFITS $ 23,316,272 $ 17,308,859
============= =============
</TABLE>
See notes to financial statements.
6
<PAGE> 7
PIONEER COMPANIES SAVINGS PLAN
FOR SALARIED EMPLOYEES
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income:
Net appreciation in fair value of investments $ 2,765,558 $ 1,405,183
Interest 379,845 305,666
Contributions:
Employee 1,721,361 1,522,281
Employer 1,011,566 333,642
-------------- --------------
Total additions 5,878,330 3,566,772
TRANSFERS FROM OTHER PLANS 1,314,641 4,930,583
BENEFITS PAID TO PARTICIPANTS (1,185,558) (706,611)
-------------- --------------
NET INCREASE IN NET ASSETS AVAILABLE FOR
BENEFITS 6,007,413 7,790,744
NET ASSETS AVAILABLE FOR BENEFITS AT:
Beginning of year 17,308,859 9,518,115
-------------- --------------
End of year $ 23,316,272 $ 17,308,859
============== ==============
</TABLE>
See notes to financial statements.
7
<PAGE> 8
PIONEER COMPANIES SAVINGS PLAN
FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
--------------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN
The following description of the Pioneer Companies Savings Plan for Salaried
Employees (the "Plan") provides only general information. Participants should
refer to the plan document for a more complete description of the Plan's
provisions.
GENERAL - The Plan is a defined contribution plan covering all Pioneer Americas,
Inc. employees who are not leased employees or members of, or covered by, a
collective bargaining unit which has a bargaining agreement with Pioneer
Companies, Inc. (the "Company"). Effective October 12, 1999, the Company merged
the All Pure Savings Plan (the "All Pure Plan") into the Plan. In connection
with the merger, $1,314,641 of investments was transferred from the All Pure
Plan into the Plan. Effective July 1, 1998, the Company merged the Pioneer
Tacoma Salaried 401(k) Plan (the "Tacoma Plan") into the Plan. In connection
with the merger, $4,930,583 of investments was transferred from the Tacoma Plan
into the Plan. Also effective July 1, 1998, the Plan changed trustees from
Manufacturer's Life Insurance Company ("ManuLife") to Connecticut General Life
Insurance Company ("CIGNA"). During December 1998, the Plan was amended to
provide a Supplemental Retirement Account ("SRA") to employees hired before
October 1, 1998. Employees are eligible for a contribution approved annually by
the Board of Directors of the Company when they reach age 50 and have one year
of service. The SRA contribution will be 25% of the COBRA rate effective for the
year in which the contribution to the SRA is made. Employees hired on or after
October 1, 1998 are not eligible for SRA contributions.
CONTRIBUTIONS - Participants may contribute up to 15% of their annual
compensation. The total annual contribution may not exceed the maximum amount
established by the Internal Revenue Code (the "Code"). The Company makes an
employer matching contribution of 50% of a participant's contribution up to 6%,
for a maximum match of 3% of the participant's annual compensation. SRA
contributions totaled approximately $174,000 and $375,000 for 1999 and 1998,
respectively.
PARTICIPANT ACCOUNTS AND VESTING - Each participant's account is credited with
their contributions and withdrawals and allocations of Company contributions and
investment earnings. Participants are always fully vested in their contributions
and cumulative earnings thereon. Participants hired before July 1, 1998 vest
immediately in Company matching contributions, whereas participants hired after
June 30, 1998 vest in Company matching contributions after three years of
credited service. Participants vest immediately in contributions to the SRA.
BENEFITS - A participant may make a partial withdrawal of after-tax
contributions (but not earnings thereon) made by the participant prior to 1987
as of any quarter end. If a participant has withdrawn all of their pre-1987
contributions, the participant may withdraw any remaining amount of their
after-tax contribution account, including earnings.
If a participant has made the maximum partial withdrawals allowed, the
participant may also withdraw the full amount of the Company matching account
provided the participant has made contributions to the Plan for any 60 months
prior to the date of the total withdrawal.
8
<PAGE> 9
Loans may be granted in a uniform manner to participants from the balance in
their accounts. Loans shall be limited to the lesser of $50,000 or one-half of
the value of the vested portion of the participant's account and bear interest
at prevailing market rates. As of December 31, 1999, interest rates on
outstanding loans ranged from 6% to 10%. Loans are to be repaid through monthly
payroll deductions over a period not to exceed five years unless used to
purchase a principal residence.
Investments - Effective July 1, 1998, each participant may direct that
contributions to their account be invested in the following options:
Large Company Stock Index Fund - invests in securities that reflect the
composition of the Standard and Poor's 500 Stock Index.
Fidelity Advisor Growth Opportunities Account - invests mainly in
securities of companies believed to have long-term growth potential.
Janus Worldwide Account - invests primarily in common stocks of foreign
and domestic issuers.
Pioneer Companies, Inc. Common Stock - invests exclusively in the common
stock of Pioneer Companies, Inc.
Guaranteed Income Fund - invests in six month, fixed interest rate
securities.
American Century - Twentieth Century Ultra Account - invests in the
equity securities of large companies that offer the potential for
better-than-average prospects for capital appreciation.
CIGNA Lifetime Funds - invest in a combination of high-yield bonds,
high-grade bonds, and equity securities of small companies, large
companies, growth companies, and international companies.
Neuberger & Berman Guardian Account - invests in equity securities that
have good potential capital appreciation.
PBHG Growth Account - invests mainly in common stocks and convertible
securities of small- and medium-sized growth companies.
Invesco Total Return Account - invests in a combination of equity and
fixed income securities.
Founders Balanced Account - invests primarily in equity securities,
corporate obligations, and preferred stock.
Founders Growth Account - invests mainly in the common stock of
companies with strong performance records and solid market positions.
Warburg Pincus Advisor Growth & Income Account - invests mainly in
dividend-paying equity securities.
Warburg Pincus Advisor Emerging Growth Account - invests in securities
of high-growth companies.
Invesco Dynamics Account - invests primarily in common stock of
companies traded on U.S. securities exchanges, as well as
over-the-counter.
9
<PAGE> 10
AIM Constellation Account - invests primarily in securities growth
companies and companies that have a history of strong performance.
Templeton Growth Account - invests in common stock.
Warburg Pincus Advisor International Equity Account - invests in
securities of corporations located in a number of foreign countries.
Templeton Foreign Account - invests primarily in common stock.
Participants may change their investment elections and/or transfer funds at any
time.
Prior to July 1, 1998, the Plan included the following investment options
offered by ManuLife: Guaranteed Interest Account, Short-Term Securities Pooled
Account, Equity A Pooled Account, Balanced Account and High Quality Bond
Account. The Guaranteed Interest Account invested in ManuLife general funds.
Transfers and withdrawals from the Guaranteed Interest Account were subject to a
market value adjustment. The Short-Term Securities Pooled Account invested
primarily in U.S. Treasury Bills, certificates of deposit of major banks, or
commercial paper, all with maturity dates of one year or less. The Balanced
Account invested primarily in debt and equity securities for long-term,
consistent growth of capital. The High Quality Bond Account invested primarily
in corporate and U.S. government bonds. The Equity A Pooled Account invested in
common stocks and securities convertible into common stocks with an emphasis on
high quality growth stocks.
DISTRIBUTION OF ACCOUNTS - Distribution of a participant's account balance may
occur due to termination of employment, retirement, disability or death. Upon
termination of service, distributions shall be made in a lump-sum amount unless
a participant makes the proper election to receive another form of payment as
provided by the plan document. If the participant is married on the benefit date
and elects not to receive a lump-sum payment, distributions shall be in the form
of a joint and survivor annuity. If the participant is not married on the
benefit date, distributions shall be in the form of a single life annuity. As of
December 31, 1999 and 1998, there were no amounts payable to participants who
have terminated or withdrawn from the Plan.
FORFEITURES - Forfeited nonvested accounts are used to reduce future employer
contributions. Such forfeited amounts were not significant during the years
ended December 31, 1999 and 1998.
PLAN TERMINATION - Although the Company has not expressed any intention to do
so, it may terminate the Plan subject to the provisions of ERISA. In the event
of termination of the Plan, each participant shall be fully vested in his or her
account balance. Distribution of participant account balances will be made in
accordance with the modes of distribution provided for under the Plan.
2. SUMMARY OF ACCOUNTING POLICIES
BASIS OF ACCOUNTING - The accompanying financial statements are presented on the
accrual basis of accounting.
INVESTMENTS - The Guaranteed Income Fund and the Guaranteed Interest Account are
valued at contract value. Contract value represents the contributed amounts plus
accumulated interest less funds used to pay benefits. Contract value
approximates fair market value. Other investments are reported in the financial
statements at fair values based on the quoted market prices. Loans are valued at
cost, which approximates fair value.
10
<PAGE> 11
PLAN EXPENSES - Administrative expenses, to the extent not paid by the Company,
are paid from plan assets.
TAX STATUS - The Plan obtained its latest determination letter dated March 1,
1995 in which the Internal Revenue Service stated that the plan, as then
designed, was in compliance with the applicable requirements of the Code. The
Company believes that the Plan is currently designed and being operated in
compliance with the Code. Therefore, no provision for income taxes has been
included in the Plan's financial statements.
USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires plan management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, and changes therein, and disclosure of contingent assets and
liabilities. Actual results could differ from these estimates.
RECENT ACCOUNTING PRONOUNCEMENTS - The Plan has adopted the provisions of
Statement of Position 99-3, "Accounting for and Reporting of Certain Defined
Contribution Benefit Plan Investments and Other Matters" ("SOP 99-3"), which was
issued September 15, 1999. In accordance with SOP 99-3, the by-fund disclosures
previously required have been omitted, and certain prior year balances have been
reclassified to conform with the current year presentation.
3. INVESTMENTS
The following is a summary of investments that represent 5% or more of the
Plan's net assets as of December 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Guaranteed Income Fund $ 6,147,545 $ 5,610,709
Fidelity Advisor Growth Opportunities Account 4,759,260 5,626,756
Janus Worldwide Account 2,663,795 1,155,687
Large Company Stock Index Fund 1,294,556 892,811
Invesco Dynamics Account 1,165,115 80,279
</TABLE>
During 1999 and 1998, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) appreciated in
value as follows:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Mutual funds $ 2,638,931 $ 1,399,179
Pioneer Companies, Inc. Common Stock 126,627 6,004
------------ ------------
$ 2,765,558 $ 1,405,183
============ ============
</TABLE>
4. GUARANTEED INTEREST ACCOUNTS
The stated interest rate for the Guaranteed Income Fund held by CIGNA was 5.9%
and 6% as of December 31, 1999 and 1998, respectively. The stated interest rate
for the Guaranteed Interest Account held by ManuLife was 6% as of December 31,
1998. The average yield for the Guaranteed Income Fund held by CIGNA was 5.59%
and 6.15% for the years ended December 31, 1999 and 1998, respectively. The
average yield for the Guaranteed Interest Account held by ManuLife was 5.38% for
the year ended 1998.
******
11
<PAGE> 12
PIONEER COMPANIES SAVINGS PLAN
FOR SALARIED EMPLOYEES
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(C)
(b) DESCRIPTION OF INVESTMENT, (e)
IDENTITY OF ISSUE, INCLUDING MATURITY DATE, CURRENT
(a) BORROWER, LESSOR, OR SIMILAR PARTY RATE OF INTERESTS, PAR OR MARKET VALUE VALUE
<S> <C> <C>
* Connecticut General Life Insurance Co. Guaranteed Income Fund $ 6,147,545
* Connecticut General Life Insurance Co. Lifetime 60 Fund 30,206
* Connecticut General Life Insurance Co. Lifetime 50 Fund 123,969
* Connecticut General Life Insurance Co. Lifetime 40 Fund 134,166
* Connecticut General Life Insurance Co. Lifetime 30 Fund 124,030
* Connecticut General Life Insurance Co. Lifetime 20 Fund 383,345
* Connecticut General Life Insurance Co. Invesco Balanced Fund 932,371
* Connecticut General Life Insurance Co. Founders Total Return Account 397,994
* Connecticut General Life Insurance Co. Large Company Stock Index Fund 1,294,556
* Connecticut General Life Insurance Co. Neuberger & Berman Guardian Account 144,982
* Connecticut General Life Insurance Co. Warburg Pincus Advisor Growth & Income Account 108,447
* Connecticut General Life Insurance Co. Fidelity Advisor Growth Opportunities Account 4,759,260
* Connecticut General Life Insurance Co. Founders Growth Account 546,162
* Connecticut General Life Insurance Co. Warburg Pincus Advisor Emerging Growth Account 321,654
* Connecticut General Life Insurance Co. PBHG Growth Account 795,024
* Connecticut General Life Insurance Co. American Century - 20th Century Ultra Account 1,088,546
* Connecticut General Life Insurance Co. Invesco Dynamics Account 1,165,115
* Connecticut General Life Insurance Co. AIM Constellation Account 244,722
* Connecticut General Life Insurance Co. Templeton Growth Account 213,886
* Connecticut General Life Insurance Co. Janus Worldwide Account 2,663,795
* Connecticut General Life Insurance Co. Warburg Pincus Advisor International Equity Account 39,117
* Connecticut General Life Insurance Co. Templeton Foreign Account 192,671
* Pioneer Companies, Inc. Pioneer Companies, Inc. Common Stock 372,054
* Loans to participants Maturities up to five years with interest
rates from 6% to 10% 740,069
------------
$ 22,963,686
============
</TABLE>
* Party-in-interest
12
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PIONEER COMPANIES SAVINGS PLAN FOR
HENDERSON BARGAINING UNIT EMPLOYEES
TABLE OF CONTENTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
<S> <C>
INDEPENDENT AUDITORS' REPORT 14
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits as of December 31, 1999 and 1998 15
Statements of Changes in Net Assets Available for Benefits for the Years Ended
December 31, 1999 and 1998 16
Notes to Financial Statements 17
SUPPLEMENTAL SCHEDULE -
Schedule of Assets Held for Investment Purposes as of December 31, 1999 21
</TABLE>
Schedules, other than the one listed above, have been omitted because of the
absence of the conditions under which they are required.
13
<PAGE> 14
INDEPENDENT AUDITORS' REPORT
The Plan Administrator of the
Pioneer Companies Savings Plan for
Henderson Bargaining Unit Employees:
We have audited the accompanying statements of net assets available for benefits
of the Pioneer Companies Savings Plan for Henderson Bargaining Unit Employees
(the "Plan") as of December 31, 1999 and 1998, and the related statements of
changes in net assets available for benefits for the years then ended. 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 in accordance with auditing standards generally accepted
in the United States of America. Those standards 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. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December 31,
1999 and 1998, and the changes in net assets available for benefits for the
years then ended in conformity with accounting principles generally accepted in
the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedule of
assets held for investment purposes as of December 31, 1999 is presented for the
purpose of additional analysis and is not a required part of the basic financial
statements, but is supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. This schedule is the responsibility of
the Plan's management. Such schedule has been subjected to the auditing
procedures applied in our audit of the basic 1999 financial statements and, in
our opinion, is fairly stated in all material respects when considered in
relation to the basic financial statements taken as a whole.
DELOITTE & TOUCHE LLP
June 28, 2000
Houston, Texas
14
<PAGE> 15
PIONEER COMPANIES SAVINGS PLAN FOR
HENDERSON BARGAINING UNIT EMPLOYEES
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1999 AND 1998
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
ASSETS:
Investments $2,946,783 $2,362,040
Contributions receivable 129,037 46,819
---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $3,075,820 $2,408,859
========== ==========
</TABLE>
See notes to financial statements.
15
<PAGE> 16
PIONEER COMPANIES SAVINGS PLAN FOR
HENDERSON BARGAINING UNIT EMPLOYEES
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income:
Net appreciation in fair value of investments $ 113,018 $ 114,292
Interest 103,290 88,392
Contributions:
Employer 363,442 90,001
Employee 316,970 328,508
----------- -----------
Total additions 896,720 621,193
BENEFITS PAID TO PARTICIPANTS (229,759) (297,343)
----------- -----------
NET INCREASE IN NET ASSETS AVAILABLE
FOR BENEFITS 666,961 323,850
NET ASSETS AVAILABLE FOR BENEFITS AT:
Beginning of year 2,408,859 2,085,009
----------- -----------
End of year $ 3,075,820 $ 2,408,859
=========== ===========
</TABLE>
See notes to financial statements.
16
<PAGE> 17
PIONEER COMPANIES SAVINGS PLAN FOR
HENDERSON BARGAINING UNIT EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
--------------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN
The following description of the Pioneer Companies Savings Plan for Henderson
Bargaining Unit Employees (the "Plan") provides only general information.
Participants should refer to the plan document for a more complete description
of the Plan's provisions.
GENERAL - The Plan is a defined contribution plan covering all Henderson
employees who are covered by a collective bargaining unit which has a bargaining
agreement with Pioneer Americas, Inc. (the "Company"). Effective July 1, 1998,
the Plan changed trustees from Manufacturer's Life Insurance Company
("ManuLife") to Connecticut General Life Insurance Company ("CIGNA"). During
December 1998, the Plan was amended to provide a Supplemental Retirement Account
("SRA") to employees hired before October 1, 1998. Employees are eligible for a
contribution approved annually by the Board of Directors of the Company when
they reach age 50 and have one year of service. The SRA contribution will be 25%
of the COBRA rate effective for the year in which the contribution to the SRA is
made. Employees hired on or after October 1, 1998 are not eligible for SRA
contributions.
CONTRIBUTIONS - Participants may contribute up to 15% of their annual
compensation. The total annual contribution may not exceed the maximum amount
established by the Internal Revenue Code (the "Code"). The Company makes an
employer matching contribution of 50% of a participant's contribution up to 6%,
for a maximum match of 3% of the participant's annual compensation. SRA
contributions totaled approximately $84,000 and $182,000 for 1999 and 1998,
respectively.
PARTICIPANT ACCOUNTS AND VESTING - Each participant's account is credited with
their contributions and withdrawals and allocations of Company contributions and
investment earnings. Participants are always fully vested in their contributions
and cumulative earnings thereon. Participants hired before July 1, 1998 vest
immediately in Company matching contributions, whereas participants hired after
June 30, 1998 vest in Company matching contributions after three years of
credited service. Participants vest immediately in contributions to the SRA.
BENEFITS - A participant may make a partial withdrawal of after-tax
contributions (but not earnings thereon) made by the participant prior to 1987
as of any quarter-end. If the participant has withdrawn all of their pre-1987
contributions, the participant may withdraw any remaining amount of their
after-tax contribution account, including earnings.
If a participant has made the maximum partial withdrawals allowed, the
participant may also withdraw the full amount of the Company matching account
provided the participant has made contributions to the Plan for any 60 months
prior to the date of the total withdrawal.
Loans may be granted in a uniform manner to participants from the balance in
their accounts. Loans shall be limited to the lesser of $50,000 or one-half of
the value of the vested portion of the participant's account and bear interest
at prevailing market rates. As of December 31, 1999, interest rates on
outstanding loans ranged from 7.75% to 9%. Loans are to be repaid through
monthly payroll deductions over a period not to exceed five years unless used to
purchase a principal residence.
17
<PAGE> 18
INVESTMENTS - Effective July 1, 1998, each participant may direct that
contributions to their account be invested in the following options:
Invesco Total Return Account - invests in a combination of equity and
fixed income securities.
Fidelity Advisor Growth Opportunities Account - invests mainly in
securities of companies believed to have long-term growth potential.
Founders Balanced Account - invests primarily in equity securities,
corporate obligations, and preferred stock.
Invesco Dynamics Account - invests primarily in common stock of
companies traded on U.S. securities exchanges, as well as
over-the-counter.
Pioneer Companies, Inc. Common Stock - invests exclusively in the common
stock of Pioneer Companies, Inc.
Guaranteed Income Fund - invests in six month, fixed interest rate
securities.
Large Company Stock Index Fund - invests in securities that reflect the
composition of the Standard and Poor's 500 Stock Index.
Janus Worldwide Account - invests primarily in common stocks of foreign
and domestic issuers.
American Century - Twentieth Century Ultra Account - invests in the
equity securities of large companies that offer the potential for
better-than-average prospects for capital appreciation.
CIGNA Lifetime Funds - invest in a combination of high yield bonds,
high-grade bonds, and equity securities of small companies, large
companies, growth companies, and international companies.
Neuberger & Berman Guardian Account - invests in equity securities that
have good potential capital appreciation.
PBHG Growth Account - invests mainly in common stocks and convertible
securities of small- and medium-sized growth companies.
Founders Growth Account - invests mainly in the common stock of
companies with strong performance records and solid market positions.
Warburg Pincus Advisor Growth & Income Account - invests mainly in
dividend-paying equity securities.
Warburg Pincus Advisor Emerging Growth Account - invests in securities
of high-growth companies.
AIM Constellation Account - invests primarily in securities growth
companies and companies that have a history of strong performance.
Templeton Growth Account - invests in common stock.
Warburg Pincus Advisor International Equity Account - invests in
securities of corporations located in a number of foreign countries.
18
<PAGE> 19
Templeton Foreign Account - invests primarily in common stock.
Participants may change their investment elections and/or transfer funds at any
time.
Prior to July 1, 1998, the Plan included the following investment options
offered by ManuLife: Guaranteed Interest Account, Short-Term Securities Pooled
Account, Equity A Pooled Account, Balanced Account and High Quality Bond
Account. The Guaranteed Interest Account invested in ManuLife general funds.
Transfers and withdrawals from the Guaranteed Interest Account were subject to a
market value adjustment. The Short-Term Securities Pooled Account invested
primarily in U.S. Treasury Bills, certificates of deposit of major banks or
commercial paper, all with maturity dates of one year or less. The Balanced
Account invested primarily in debt and equity securities for long-term,
consistent growth of capital. The High Quality Bond Account invested primarily
in corporate and U.S. government bonds. The Equity A Pooled Account invested in
common stocks and securities convertible into common stocks with an emphasis on
high quality growth stocks.
DISTRIBUTION OF ACCOUNTS - Distribution of a participant's account balance may
occur due to termination of employment, retirement, disability or death. Upon
termination of service, distributions shall be made in a lump-sum amount unless
a participant makes the proper election to receive another form of payment as
provided by the plan document. If the participant is married on the benefit date
and elects not to receive a lump-sum payment, distributions shall be in the form
of a joint and survivor annuity. If the participant is not married on the
benefit date, distributions shall be in the form of a single life annuity. As of
December 31, 1999 and 1998, there were no amounts payable to participants who
have terminated or withdrawn from the Plan.
FORFEITURES - Forfeited nonvested accounts are used to reduce future employer
contributions. Such forfeited amounts were not significant during the years
ended December 31, 1999 and 1998.
PLAN TERMINATION - Although the Company has not expressed any intention to do
so, it may terminate the Plan subject to the provisions of ERISA. In the event
of termination of the Plan, each participant shall be fully vested in his or her
account balance. Distribution of participant account balances will be made in
accordance with the modes of distribution provided for under the Plan.
2. SUMMARY OF ACCOUNTING POLICIES
BASIS OF ACCOUNTING - The accompanying financial statements are presented on the
accrual basis of accounting.
INVESTMENTS - The Guaranteed Income Fund is valued at contract value. Contract
value represents the contributed amounts plus accumulated interest less funds
used to pay benefits. Contract value approximates fair market value. Other
investments are reported in the financial statements at fair values based on the
quoted market prices. Loans are valued at cost, which approximates fair value.
PLAN EXPENSES - Administrative expenses, to the extent not paid by the Company,
are paid from plan assets.
TAX STATUS - The Plan obtained its latest determination letter dated March 1,
1995 in which the Internal Revenue Service stated that the Plan, as then
designed, was in compliance with the applicable requirements of the Code. The
Company believes that the Plan is currently designed and being operated in
compliance with the Code. Therefore, no provision for income taxes has been
included in the Plan's financial statements.
USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires Plan management to make
estimates and assumptions that affect the reported amounts of
19
<PAGE> 20
assets, liabilities, and changes therein, and disclosure of contingent assets
and liabilities. Actual results could differ from these estimates.
RECENT ACCOUNTING PRONOUNCEMENTS - The Plan has adopted the provisions of
Statement of Position 99-3, "Accounting for and Reporting of Certain Defined
Contribution Benefit Plan Investments and Other Matters" ("SOP 99-3"), which was
issued September 15, 1999. In accordance with SOP 99-3, the by-fund disclosures
previously required have been omitted, and certain prior year balances have been
reclassified to conform with the current year presentation.
3. INVESTMENTS
The following is a summary of investments that represent 5% or more of the
Plan's net assets as of December 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Guaranteed Income Fund $1,586,112 $1,499,953
Fidelity Advisor Growth Opportunities Account 424,377 475,169
Invesco Total Return Account 185,271 191,357
Participant loans 336,855 180,684
</TABLE>
During 1999 and 1998, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) appreciated
(depreciated) in value as follows:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Mutual funds $ 84,291 $ 114,812
Pioneer Companies, Inc. Common Stock 28,727 (520)
--------- ---------
$ 113,018 $ 114,292
========= =========
</TABLE>
4. GUARANTEED INTEREST ACCOUNTS
The stated interest rate for the Guaranteed Income Fund held by CIGNA was 5.9%
and 6% as of December 31, 1999 and 1998, respectively. The stated interest rate
for the Guaranteed Interest Account held by ManuLife was 6% as of December 31,
1998. The average yield for the Guaranteed Income Fund held by CIGNA was 5.59%
and 6.15% for the years ended December 31, 1999 and 1998, respectively. The
average yield for the Guaranteed Interest Account held by ManuLife was 5.38% for
the year ended December 31, 1998.
******
20
<PAGE> 21
PIONEER COMPANIES SAVINGS PLAN FOR
HENDERSON BARGAINING UNIT EMPLOYEES
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(C)
(b) Description of Investment,
Identity of Issue, Including Maturity Date, (e)
Borrower, Lessor, Rate of Interests, Par Current
(a) or Similar Party or Market Value Value
<S> <C>
* Connecticut General Life Insurance Co. Guaranteed Income Fund $ 1,586,112
* Connecticut General Life Insurance Co. Lifetime 60 Fund 14,370
* Connecticut General Life Insurance Co. Lifetime 50 Fund 5,054
* Connecticut General Life Insurance Co. Lifetime 20 Fund 50,365
* Connecticut General Life Insurance Co. Invesco Total Return Account 182,154
* Connecticut General Life Insurance Co. Founders Balanced Fund 1,401
* Connecticut General Life Insurance Co. Large Company Stock Index Fund 22,606
* Connecticut General Life Insurance Co. Fidelity Advisor Growth Opportunities Account 424,377
* Connecticut General Life Insurance Co. Founders Growth Account 1,850
* Connecticut General Life Insurance Co. PBHG Growth Account 16,168
* Connecticut General Life Insurance Co. American Century - 20th Century Ultra Account 21,511
* Connecticut General Life Insurance Co. Invesco Dynamics Account 119,165
* Connecticut General Life Insurance Co. Janus Worldwide Account 72,915
* Pioneer Companies, Inc. Pioneer Companies, Inc. Common Stock 91,880
* Loans to participants Maturities up to five years with interest rates
from 7.75% to 9% 336,855
-------
$ 2,946,783
===========
</TABLE>
*Party-in-interest
21
<PAGE> 22
PIONEER COMPANIES SAVINGS PLAN FOR
TACOMA BARGAINING UNIT EMPLOYEES
TABLE OF CONTENTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
<S> <C>
INDEPENDENT AUDITORS' REPORT 23
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits as of December 31, 1999 and 1998 24
Statements of Changes in Net Assets Available for Benefits for the Years Ended
December 31, 1999 and 1998 25
Notes to Financial Statements 26
SUPPLEMENTAL SCHEDULE -
Schedule of Assets Held for Investment Purposes as of December 31, 1999 30
</TABLE>
Schedules, other than the one listed above, have been omitted because of the
absence of the conditions under which they are required.
22
<PAGE> 23
INDEPENDENT AUDITORS' REPORT
The Plan Administrator of the
Pioneer Companies Savings Plan for
Tacoma Bargaining Unit Employees:
We have audited the accompanying statements of net assets available for benefits
for the Pioneer Companies Savings Plan for Tacoma Bargaining Unit Employees (the
"Plan") as of December 31, 1999 and 1998, and the related statements of changes
in net assets available for benefits for the years then ended. 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 in accordance with auditing standards generally accepted
in the United States of America. Those standards 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. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December 31,
1999 and 1998, and the changes in net assets available for benefits for the
years ended December 31, 1999 and 1998 in conformity with accounting principles
generally accepted in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedule of
assets held for investment purposes as of December 31, 1999 is presented for the
purpose of additional analysis and is not a required part of the basic financial
statements, but is supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. This schedule is the responsibility of
the Plan's management. Such schedule has been subjected to the auditing
procedures applied in our audit of the basic 1999 financial statements and, in
our opinion, is fairly stated in all material respects when considered in
relation to the basic financial statements taken as a whole.
DELOITTE & TOUCHE LLP
June 28, 2000
Houston, Texas
23
<PAGE> 24
PIONEER COMPANIES SAVINGS PLAN FOR
TACOMA BARGAINING UNIT EMPLOYEES
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1999 AND 1998
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
ASSETS:
Investments $6,609,004 $4,554,998
Contributions receivable 105,760 43,497
---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $6,714,764 $4,598,495
========== ==========
</TABLE>
See notes to financial statements.
24
<PAGE> 25
PIONEER COMPANIES SAVINGS PLAN FOR
TACOMA BARGAINING UNIT EMPLOYEES
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income:
Net appreciation in fair value of investments $ 1,458,161 $ 578,119
Interest 41,447 28,542
Contributions:
Employer 337,533 126,618
Employee 443,949 472,829
----------- -----------
Total additions 2,281,090 1,206,108
BENEFITS PAID TO PARTICIPANTS (164,821) (27,087)
----------- -----------
NET INCREASE IN NET ASSETS AVAILABLE FOR BENEFITS 2,116,269 1,179,021
NET ASSETS AVAILABLE FOR BENEFITS AT:
Beginning of period 4,598,495 3,419,474
----------- -----------
End of period $ 6,714,764 $ 4,598,495
=========== ===========
</TABLE>
See notes to financial statements.
25
<PAGE> 26
PIONEER COMPANIES SAVINGS PLAN FOR
TACOMA BARGAINING UNIT EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
--------------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN
The following description of the Pioneer Companies Savings Plan for Tacoma
Bargaining Unit Employees (the "Plan") provides only general information.
Participants should refer to the Plan document for a more complete description
of the Plan's provisions.
GENERAL - The Plan is a defined contribution plan covering all Tacoma employees
who are covered by a collective bargaining unit which has a bargaining agreement
with Pioneer Americas, Inc. (the "Company"). Connecticut General Life Insurance
Company ("CIGNA") is the trustee of the Plan's assets. During December 1998, the
Plan was amended to provide a Supplemental Retirement Account ("SRA") to
employees hired before October 1, 1998. Employees are eligible for a
contribution approved annually by the Board of Directors of the Company when
they reach age 50 and have one year of service. The SRA contribution will be 25%
of the COBRA rate effective for the year in which the contribution to the SRA is
made. Employees hired on or after October 1, 1998 are not eligible for SRA
contributions.
CONTRIBUTIONS - Participants may contribute up to 15% of their annual
compensation. The total annual contribution may not exceed the maximum amount
established by the Internal Revenue Code (the "Code"). The Company makes an
employer matching contribution of 50% of a participant's contribution up to 6%,
for a maximum match of 3% of the participant's annual compensation. SRA
contributions totaled approximately $62,000 and $153,000 for 1999 and 1998,
respectively.
PARTICIPANT ACCOUNTS AND VESTING - Each participant's account is credited with
their contributions and withdrawals and allocations of Company contributions and
investment earnings. Participants are always fully vested in their contributions
and cumulative earnings thereon. Participants hired before July 1, 1998 vest
immediately in Company matching contributions, whereas participants hired after
June 30, 1998 vest in Company matching contributions after three years of
credited service. Participants vest immediately in contributions to the SRA.
BENEFITS - The Plan provides for participant withdrawals in the event of a
participant attaining the age of 59-1/2 or a serious financial hardship (as
defined by the Plan). Participants may elect to receive distributions in the
form of a lump sum, life annuity or installment payments.
PARTICIPANT LOANS - Loans may be granted in a uniform manner to participants
from the balance in their accounts. Loans shall be limited to the lesser of
$50,000 or one-half of the value of the vested portion of the participant's
account and bear interest at prevailing market rates. As of December 31, 1999,
interest rates on outstanding loans ranged from 5% to 8.5%. Loans are to be
repaid through monthly payroll deductions over a period not to exceed five years
unless used to purchase a principal residence.
INVESTMENTS - Each participant may direct that contributions to their account be
invested in the following investment options:
CIGNA Lifetime Funds - invest in a combination of high yield bonds,
high-grade bonds, and equity securities of small companies, large
companies, growth companies, and international companies.
26
<PAGE> 27
Large Company Stock Index Fund - invests in securities that reflect the
composition of the Standard and Poor's 500 Stock Index.
American Century - Twentieth Century Ultra Account - invests in the
equity securities of large companies that offer the potential for
better-than-average prospects for capital appreciation.
Janus Worldwide Account - invests primarily in common stocks of foreign
and domestic issuers.
Fidelity Advisor Growth Opportunities Account - invests mainly in
securities of companies believed to have long-term growth potential.
Neuberger & Berman Guardian Account - invests in equity securities that
have good potential capital appreciation.
PBHG Growth Account - invests mainly in common stocks and convertible
securities of small- and medium-sized growth companies.
Pioneer Companies, Inc. Common Stock - invests exclusively in the common
stock of Pioneer Companies, Inc.
Guaranteed Income Fund - invests in six month, fixed interest rate
securities.
Invesco Total Return Account - invests in a combination of equity and
fixed income securities.
Founders Balanced Account - invests primarily in equity securities,
corporate obligations, and preferred stock.
Founders Growth Account - invests mainly in the common stock of
companies with strong performance records and solid market positions.
Warburg Pincus Advisor Growth & Income Account - invests mainly in
dividend-paying equity securities.
Warburg Pincus Advisor Emerging Growth Account - invests in securities
of high growth companies.
Invesco Dynamics Account - invests primarily in common stock of
companies traded on U.S. securities exchanges, as well as
over-the-counter.
AIM Constellation Account - invests primarily in securities growth
companies and companies that have a history of strong performance.
Templeton Growth Account - invests in common stock.
Warburg Pincus Advisor International Equity Account - invests in
securities of corporations located in a number of foreign countries.
Templeton Foreign Account - invests primarily in common stock.
Participants may change their investment elections and/or transfer funds at any
time.
DISTRIBUTION OF ACCOUNTS - Distribution of a participant's account balance may
occur due to termination of employment, retirement, disability or death. Upon
termination of service, distributions shall be made in a
27
<PAGE> 28
lump-sum amount unless a participant makes the proper election to receive
another form of payment as provided by the plan document. If the participant is
married on the benefit date and elects not to receive a lump-sum payment,
distribution shall be in the form of a joint and survivor annuity. If the
participant is not married on the benefit date, distribution shall be in the
form of a single life annuity. As of December 31, 1999 and 1998, there were no
amounts payable to participants who have terminated or withdrawn from the Plan.
FORFEITURES - Forfeited nonvested accounts are used to reduce future employer
contributions. Such forfeited amounts were not significant during the years
ended December 31, 1999 and 1998.
PLAN TERMINATION - Although the Company has not expressed any intention to do
so, it may terminate the Plan subject to the provisions of ERISA. In the event
of termination of the Plan, each participant shall be fully vested in his or her
account balance. Distribution of participant account balances will be made in
accordance with the modes of distribution provided for under the Plan.
2. SUMMARY OF ACCOUNTING POLICIES
BASIS OF ACCOUNTING - The accompanying financial statements are presented on the
accrual basis of accounting.
INVESTMENTS - The Guaranteed Income Fund is valued at contract value. Contract
value represents the contributed amounts plus accumulated interest less funds
used to pay benefits. Contract value approximates fair value. Other investments
are reported in the financial statements at fair values based on the quoted
market prices. Loans are valued at cost, which approximates fair value.
PLAN EXPENSES - Administrative expenses, to the extent not paid by the Company,
are paid from Plan assets.
TAX STATUS - The Plan obtained its latest determination letter dated May 18,
1999 in which the Internal Revenue Service stated that the Plan was in
compliance with the applicable requirements of the Code. The Company believes
that the Plan is currently designed and being operated in compliance with the
Code. Therefore, no provision for income taxes has been included in the Plan's
financial statements.
USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires plan management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, and changes therein, and disclosure of contingent assets and
liabilities. Actual results could differ from these estimates.
RECENT ACCOUNTING PRONOUNCEMENTS - The Plan has adopted the provisions of
Statement of Position 99-3, "Accounting for and Reporting of Certain Defined
Contribution Benefit Plan Investments and Other Matters" ("SOP 99-3"), which was
issued September 15, 1999. In accordance with SOP 99-3, the by-fund disclosures
previously required have been omitted, and certain prior year balances have been
reclassified to conform with the current year presentation.
28
<PAGE> 29
3. INVESTMENTS
The following is a summary of the investments that represent 5% or more of the
Plan's net assets as of December 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Janus Worldwide Account $1,735,088 $ 835,435
Large Company Stock Index Fund 1,404,437 1,121,047
Guaranteed Income Fund 524,857 341,668
American Century - Twentieth Century Ultra Account 517,736 283,439
PBHG Growth Account 384,882 171,409
CIGNA Lifetime 40 Fund 300,809 245,786
Fidelity Advisor Growth Opportunities Account 292,852 346,550
</TABLE>
During 1999 and 1998, the Plan's investments (including investments bought and
sold, as well as held during the year) appreciated (depreciated) in value as
follows:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Mutual funds $1,440,740 $ 578,734
Pioneer Companies, Inc. Common Stock 17,421 (615)
---------- ----------
$1,458,181 $ 578,119
========== ==========
</TABLE>
4. GUARANTEED INCOME FUND
The stated interest rate for the Guaranteed Income Fund held by CIGNA was 5.9%
and 6% as of December 31, 1999 and 1998, respectively. The average yield for the
Guaranteed Income Fund held by CIGNA was 5.59% and 6.15% for the years ended
December 31, 1999 and 1998, respectively.
******
29
<PAGE> 30
PIONEER COMPANIES SAVINGS PLAN FOR
TACOMA BARGAINING UNIT EMPLOYEES
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(c)
(b) DESCRIPTION OF INVESTMENT,
IDENTITY OF ISSUE, INCLUDING MATURITY DATE, (e)
BORROWER, LESSOR, RATE OF INTERESTS, PAR CURRENT
(a) OR SIMILAR PARTY OR MARKET VALUE VALUE
<S> <C> <C> <C>
* Connecticut General Life Insurance Co. Guaranteed Income Fund $ 524,857
* Connecticut General Life Insurance Co. Lifetime 60 Fund 31,604
* Connecticut General Life Insurance Co. Lifetime 50 Fund 104,418
* Connecticut General Life Insurance Co. Lifetime 40 Fund 300,809
* Connecticut General Life Insurance Co. Lifetime 30 Fund 47,216
* Connecticut General Life Insurance Co. Lifetime 20 Fund 24,051
* Connecticut General Life Insurance Co. Invesco Total Return Account 48,342
* Connecticut General Life Insurance Co. Founders Balanced Account 114,397
* Connecticut General Life Insurance Co. Large Company Stock Index Fund 1,404,437
* Connecticut General Life Insurance Co. Neuberger & Berman Guardian Account 98,552
* Connecticut General Life Insurance Co. Warburg Pincus Advisor Growth & Income Account 15,118
* Connecticut General Life Insurance Co. Fidelity Advisor Growth Opportunities Account 292,852
* Connecticut General Life Insurance Co. Founders Growth Account 119,854
* Connecticut General Life Insurance Co. PBHG Growth Account 384,882
* Connecticut General Life Insurance Co. American Century - 20th Century Ultra Account 517,736
* Connecticut General Life Insurance Co. Invesco Dynamics Account 142,588
* Connecticut General Life Insurance Co. AIM Constellation Account 110,391
* Connecticut General Life Insurance Co. Templeton Growth Account 111,598
* Connecticut General Life Insurance Co. Janus Worldwide Account 1,735,088
* Connecticut General Life Insurance Co. Warburg Pincus Advisor International Equity Account 7,671
* Connecticut General Life Insurance Co. Templeton Foreign Account 119,548
* Pioneer Companies, Inc. Pioneer Companies, Inc. Common Stock 53,273
* Loans to participants Maturities up to five years with interest rates from 5% 299,722
----------
$6,609,004
==========
</TABLE>
* Party-in-interest
30
<PAGE> 31
KEMWATER NORTH AMERICA SAVINGS PLAN
TABLE OF CONTENTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
<S> <C>
INDEPENDENT AUDITORS' REPORT 32
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits as of December 31, 1999 and 1998 33
Statements of Changes in Net Assets Available for Benefits for the Years Ended
December 31, 1999 and 1998 34
Notes to Financial Statements 35
SUPPLEMENTAL SCHEDULE -
Schedule of Assets Held for Investment Purposes as of December 31, 1999 39
Schedules, other than the one listed above, have been omitted because of the
absence of the conditions under which they are required.
</TABLE>
31
<PAGE> 32
INDEPENDENT AUDITORS' REPORT
The Plan Administrator of the
Kemwater North America Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of the Kemwater North America Savings Plan (the "Plan") as of December 31, 1999
and 1998, and the related statements of changes in net assets available for
benefits for the years then ended. 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 in accordance with auditing standards generally accepted
in the United States of America. Those standards 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. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December 31,
1999 and 1998, and the changes in net assets available for benefits for the
years then ended in conformity with accounting principles generally accepted in
the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedule of
assets held for investment purposes as of December 31, 1999 is presented for the
purpose of additional analysis and is not a required part of the basic financial
statements, but is supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. This schedule is the responsibility of
the Plan's management. Such schedule has been subjected to the auditing
procedures applied in our audit of the basic 1999 financial statements and, in
our opinion, is fairly stated in all material respects when considered in
relation to the basic financial statements taken as a whole.
DELOITTE & TOUCHE LLP
June 28, 2000
Houston, Texas
32
<PAGE> 33
KEMWATER NORTH AMERICA SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1999 AND 1998
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
ASSETS:
Investments $1,599,955 $1,858,871
Contributions receivable 15,284 25,770
---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $1,615,239 $1,884,641
========== ==========
</TABLE>
See notes to financial statements.
33
<PAGE> 34
KEMWATER NORTH AMERICA SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income:
Net appreciation in fair value of investments $ 278,123 $ 200,399
Interest income 9,256 13,584
Contributions:
Employee 163,788 286,643
Employer 43,340 72,088
----------- -----------
Total additions 494,507 572,714
----------- -----------
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefits paid directly to participants (756,393) (174,887)
Administrative expenses (7,516) (706)
----------- -----------
Total deductions (763,909) (175,593)
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS AVAILABLE
FOR BENEFITS (269,402) 397,121
NET ASSETS AVAILABLE FOR BENEFITS AT:
Beginning of year 1,884,641 1,487,520
----------- -----------
End of year $ 1,615,239 $ 1,884,641
=========== ===========
</TABLE>
See notes to financial statements.
34
<PAGE> 35
KEMWATER NORTH AMERICA SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
--------------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN
The following description of the Kemwater North America Savings Plan (the
"Plan") provides only general information. Participants should refer to the Plan
document for a more complete description of the Plan's provisions.
GENERAL - The Plan is a defined contribution plan covering all employees who
have completed six months of service and are 18 years or older, and who are not
a leased employee or a member of, or covered by, a collective bargaining unit
which has a bargaining agreement with Kemwater North America (the "Company").
Connecticut General Life Insurance Company ("CIGNA") is the trustee of the
Plan's assets.
CONTRIBUTIONS - Participants may contribute up to 15% of their annual
compensation. The total annual contribution may not exceed the maximum amount
established by the Internal Revenue Code (the "Code"). The Company contributes
50% of a participant's elected contribution up to 4%, for a maximum match of 2%.
In addition, the Company may make discretionary contributions to the Plan from
all eligible participants. There were no such discretionary contributions in
1999 and 1998.
PARTICIPANT ACCOUNTS AND VESTING - Each participant's account is credited with
their contributions and withdrawals and allocations of Company contributions and
investment earnings. Participants are immediately vested in their voluntary
contributions plus actual earnings thereon. Vesting in the remainder of their
account is based on years of continuous service. A participant is 100% vested
after three years of credited service. Forfeitures of discretionary employer
contributions are allocated to remaining participants. Forfeitures of employer
matching contributions are used to reduce future matching contributions.
Forfeitures in 1999 and 1998 were insignificant.
BENEFITS - A participant may elect to withdraw any dollar amount of the vested
portion of their account balance before termination of employment, retirement,
disability, or death, in times of severe immediate financial hardship, and for
participant loans. Loans may be granted in a uniform manner to participants from
the balance in their accounts. Loans shall be limited to the lesser of $50,000
or one-half of the value of the vested portion of the participant's account and
bear interest at prevailing market rates. As of December 31, 1999, interest
rates on outstanding loans ranged from 7.75% to 8.5%. Loans are to be repaid
through monthly payroll deductions over a period not to exceed five years,
unless used to purchase a principal residence.
INVESTMENTS - Each participant may direct that contributions to their account be
invested in the following options:
Large Company Stock Index Fund - consists of securities that reflect the
composition of the Standard and Poor's 500 Stock Index.
Fidelity Advisor Growth Opportunities Account - invests mainly in
securities of companies believed to have long-term growth potential.
Warburg Pincus Advisor Emerging Growth Account - invests in securities
of high growth companies.
Invesco Total Return Account - invests in a combination of equity and
fixed income securities.
35
<PAGE> 36
Pioneer Companies, Inc. Common Stock - invests and reinvests exclusively
in the common stock of Pioneer Companies, Inc.
CIGNA Guaranteed Income Fund - invests in six month, fixed interest rate
securities.
CIGNA Lifetime Funds - invest in a combination of high yield bonds,
high-grade bonds, and equity securities of small companies, large
companies, growth companies, and international companies.
Neuberger & Berman Guardian Account - invests in equity securities that
have good potential capital appreciation.
Founders Growth Account - invests mainly in the common stock of
companies with strong performance records and solid market positions.
Warburg Pincus Advisor Growth & Income Account - invests mainly in
dividend-paying equity securities.
PBGH Growth Account - invests mainly in common stocks and convertible
securities of small- and medium-sized growth companies.
American Century - Twentieth Century Ultra Account - invests in the
equity securities of large companies that offer the potential for
better-than-average prospects for capital appreciation.
AIM Constellation Account - invests primarily in securities growth
companies and companies that have a history of strong performance.
Templeton Growth Account - invests in common stocks.
Janus Worldwide Account - invests primarily in common stocks of foreign
and domestic issuers.
Templeton Foreign Account - invests primarily in common stocks.
Founders Balanced Account - invests primarily in equity securities,
corporate obligations and preferred stock.
Invesco Dynamics Account - invests primarily in common stock of
companies traded on U.S. securities exchanges, as well as
over-the-counter.
Warburg Pincus Advisor International Equity Account - invests in
securities of corporations located in a number of foreign countries.
Participants may change their investment elections and/or transfer funds at any
time.
DISTRIBUTION OF ACCOUNTS - Distribution of a participant's account balance may
occur due to termination of employment, retirement, disability, or death. Upon
termination of employment, distributions shall be made in a lump-sum amount
unless a participant makes the proper election to receive another form of
payment as provided by the plan document.
PLAN TERMINATION - Although the Company has not expressed any intention to do
so, it may terminate the Plan subject to the provisions of ERISA. Due to the
termination of a large number of plan participants by the Company during the
fourth quarter of 1998 and the first quarter of 1999, in accordance with Section
411 of the Internal Revenue Code, the Company believes that a partial
termination of the Plan has occurred. As a
36
<PAGE> 37
result, all affected participants became 100% vested in their accrued employer
contributions and interest earned thereon at the time of their termination.
Distribution of participant account balances will be made in accordance with the
modes of distribution provided for under the Plan.
2. SUMMARY OF ACCOUNTING POLICIES
BASIS OF ACCOUNTING - The accompanying financial statements are presented on the
accrual basis of accounting.
INVESTMENTS - The Guaranteed Income Fund is valued at contract value. Contract
value represents the contributed amounts plus accumulated interest less funds
used to pay benefits. Contract value approximates fair market value. Other
investments are reported in the financial statements at fair values based on the
quoted market prices. Loans are valued at cost, which approximates fair value.
PLAN EXPENSES - Administrative expenses, to the extent not paid by the Company,
are paid from plan assets.
USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires plan management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, and changes therein, and disclosure of contingent assets and
liabilities. Actual results could differ from these estimates.
RECENT ACCOUNTING PRONOUNCEMENTS - The Plan has adopted the provisions of
Statement of Position 99-3, "Accounting for and Reporting of Certain Defined
Contribution Benefit Plan Investments and Other Matters" ("SOP 99-3"), which was
issued September 15, 1999. In accordance with SOP 99-3, the by-fund disclosures
previously required have been omitted, and certain prior year balances have been
reclassified to conform with the current year presentation.
37
<PAGE> 38
3. INVESTMENTS
The following is a summary of the investments that represent 5% or more of the
Plan's net assets as of December 31, 1999 and 1998:
<TABLE>
<S> <C> <C>
Warburg Pincus Advisor Emerging Growth Account $471,477 $524,755
Large Company Stock Index Fund 334,610 419,208
Fidelity Advisor Growth Opportunities Account 320,996 395,302
Invesco Total Return Account 103,817 145,908
Janus Worldwide Account 94,569 42,073
Guaranteed Income Fund 66,934 169,850
Participant loans 47,938 133,968
</TABLE>
During 1998 and 1998, the Plan's investments (including investments bought and
sold, as well as held during the year) appreciated in value as follows:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Mutual funds $ 277,677 $ 200,399
Pioneer Companies, Inc. Common Stock 446 --
---------- ----------
$ 278,123 $ 200,399
========== ==========
</TABLE>
4. TAX STATUS
The Plan obtained its latest determination letter, dated August 2, 1995, in
which the Internal Revenue Service stated that the Plan, as then designed, was
in compliance with the applicable requirements of the Code. The Company believes
that the Plan is currently designed and being operated in compliance with the
Code. Therefore, no provision for income taxes has been included in the Plan's
financial statements.
5. GUARANTEED INCOME FUND
The stated interest rate for the Guaranteed Income Fund held by CIGNA was 5.9%
and 6% as of December 31, 1999 and 1998, respectively. The average yield for the
Guaranteed Income Fund held by CIGNA was 5.59% and 6.15% for the years ended
December 31, 1999 and 1998, respectively.
******
38
<PAGE> 39
KEMWATER NORTH AMERICA SAVINGS PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(c)
(b) DESCRIPTION OF INVESTMENT,
IDENTITY OF ISSUE, INCLUDING MATURITY DATE, (e)
BORROWER, LESSOR, RATE OF INTERESTS, PAR CURRENT
(a) OR SIMILAR PARTY OR MARKET VALUE VALUE
<S> <C> <C> <C>
* Connecticut General Life Insurance Co. Guaranteed Income Fund $ 66,934
* Connecticut General Life Insurance Co. Lifetime 60 Fund 31
* Connecticut General Life Insurance Co. Lifetime 50 Fund 404
* Connecticut General Life Insurance Co. Lifetime 40 Fund 67,335
* Connecticut General Life Insurance Co. Lifetime 30 Fund 195
* Connecticut General Life Insurance Co. Lifetime 20 Fund 1,819
* Connecticut General Life Insurance Co. Founders Balanced Account 275
* Connecticut General Life Insurance Co. Invesco Total Return Account 103,817
* Connecticut General Life Insurance Co. Large Company Stock Index Fund 334,610
* Connecticut General Life Insurance Co. Neuberger & Berman Guardian Account 2,382
* Connecticut General Life Insurance Co. Warburg Pincus Advisor Growth & Income Account 16,260
* Connecticut General Life Insurance Co. Fidelity Advisor Growth Opportunities Account 320,996
* Connecticut General Life Insurance Co. Founders Growth Account 13,422
* Connecticut General Life Insurance Co. PBHG Growth Account 368
* Connecticut General Life Insurance Co. Warburg Pincus Advisor Emerging Growth Account 471,477
* Connecticut General Life Insurance Co. AIM Constellation Account 6,142
* Connecticut General Life Insurance Co. Invesco Dynamics Account 11,974
* Connecticut General Life Insurance Co. American Century - 20th Century Ultra Account 20,065
* Connecticut General Life Insurance Co. Janus Worldwide Account 94,569
* Connecticut General Life Insurance Co. Templeton Growth Account 98
* Connecticut General Life Insurance Co. Templeton Foreign Account 17,504
* Connecticut General Life Insurance Co. Warburg Pincus Advisor International Equity Account 37
* Pioneer Companies, Inc. Pioneer Companies, Inc. Common Stock 1,303
* Loans to participants Maturities up to five years with interest rates
from 7.75% to 8.5% 47,938
----------
$1,599,955
==========
</TABLE>
* Party-in-interest
39
<PAGE> 40
ALL PURE SAVINGS PLAN
TABLE OF CONTENTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
<S> <C>
INDEPENDENT AUDITORS' REPORT 41
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits as of October 12, 1999 and
December 31, 1998 42
Statements of Changes in Net Assets Available for Benefits for the Period from
January 1, 1999 to October 12, 1999 and for the Year Ended December 31, 1998 43
Notes to Financial Statements 44
Supplemental schedules have been omitted because of the absence of the
conditions under which they are required.
</TABLE>
40
<PAGE> 41
INDEPENDENT AUDITORS' REPORT
The Plan Administrator of the
All Pure Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of the All Pure Savings Plan (the "Plan") as of October 12, 1999 and December
31, 1998, and the related statements of changes in net assets available for
benefits for the period from January 1, 1999 to October 12, 1999 and for the
year ended December 31, 1998. 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 in accordance with auditing standards generally accepted
in the United States of America. Those standards 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. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
As discussed in Note 1 to the financial statements, on October 12, 1999 the
assets of the Plan were transferred, and the Plan was merged, into the Pioneer
Companies Savings Plan for Salaried Employees.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of October 12,
1999 and December 31, 1998, and the changes in net assets available for benefits
for the period from January 1, 1999 to October 12, 1999 and for the year ended
December 31, 1998 in conformity with accounting principles generally accepted in
the United States of America.
DELOITTE & TOUCHE LLP
June 28, 2000
Houston, Texas
41
<PAGE> 42
ALL PURE SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF OCTOBER 12, 1999 AND DECEMBER 31, 1998
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
ASSETS:
Investments $ -- $1,524,055
Contributions receivable -- 22,973
---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $ -- $1,547,028
========== ==========
</TABLE>
See notes to financial statements.
42
<PAGE> 43
ALL PURE SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE PERIOD FROM JANUARY 1, 1999 TO OCTOBER 12, 1999 AND
FOR THE YEAR ENDED DECEMBER 31, 1998
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income:
Net appreciation in fair value of investments $ 43,030 $ 165,374
Interest 6,352 20,831
Contributions:
Employee 109,053 268,432
Employer 33,359 75,195
------------ ------------
Total additions 191,794 529,832
------------ ------------
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefits paid to participants (485,193) (220,064)
Net transfers to other plans (1,248,211) --
Administrative expenses (5,118) (3,505)
------------ ------------
Total deductions (1,738,822) (223,569)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS AVAILABLE
FOR BENEFITS (1,547,028) 306,263
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of period 1,547,028 1,240,765
------------ ------------
End of period $ -- $ 1,547,028
============ ============
</TABLE>
See notes to financial statements.
43
<PAGE> 44
ALL PURE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM JANUARY 1, 1999 TO OCTOBER 12, 1999 AND
FOR THE YEAR ENDED DECEMBER 31, 1998
--------------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN
The following description of the All Pure Savings Plan (the "Plan") provides
only general information. Participants should refer to the plan document for a
more complete description of the Plan's provisions.
GENERAL - The Plan is a defined contribution plan covering all employees who
have completed six months of service and are 18 years or older, and who are not
a leased employee or a member of, or covered by, a collective bargaining unit
which has a bargaining agreement with All Pure Chemical Company (the "Company").
Connecticut General Life Insurance Company ("CIGNA") is the trustee of the
Plan's assets. During the first quarter of 1999, the Company elected to merge
the Plan into the Pioneer Companies Savings Plan for Salaried Employees (the
"Pioneer Plan"). The plan merger occurred on October 12, 1999. The Plan and the
Pioneer Plan contain similar provisions, and the plan merger did not have a
material effect on individual accounts of participants.
CONTRIBUTIONS - Participants may contribute up to 15% of their annual
compensation. The total annual contribution may not exceed the maximum amount
established by the Internal Revenue Code (the "Code"). As of April 1, 1996, the
Company contributes 50% of a participant's elected contribution up to 4%, for a
maximum match of 2%. In addition, the Company may make discretionary
contributions to the Plan for all eligible participants. There were no such
discretionary contributions in 1999 and 1998.
PARTICIPANT ACCOUNTS AND VESTING - Each participant's account is credited with
their contributions and withdrawals and allocations of Company contributions and
investment earnings. Participants are immediately vested in their voluntary
contributions plus actual earnings thereon. Vesting in the remainder of his/her
account is based on years of continuous service. A participant is 100% vested
after three years of credited service. Forfeitures of discretionary employer
contributions are allocated to remaining participants. Forfeitures of employer
matching contributions are used to reduce future matching contributions. There
were no forfeitures in 1999 or 1998.
BENEFITS - A participant may elect to withdraw any dollar amount of the vested
portion of their account balance before termination of employment, retirement,
disability, or death, in times of severe immediate financial hardship, and for
participant loans. Loans may be granted in a uniform manner to participants from
the balance in their accounts. Loans shall be limited to the lesser of $50,000
or one-half of the value of the vested portion of the participant's account and
bear interest at prevailing market rates.
INVESTMENTS - Each participant may direct that contributions to his/her account
be invested in the following options:
44
<PAGE> 45
Large Company Stock Index Fund - consists of securities that reflect the
composition of the Standard and Poor's 500 Stock Index.
Fidelity Advisor Growth Opportunities Account - invests mainly in
securities of companies believed to have long-term growth potential.
Warburg Pincus Advisor Emerging Growth Account - invests in securities of
high growth companies.
Invesco Total Return Account - invests in a combination of equity and fixed
income securities.
Pioneer Companies, Inc. Common Stock - invests exclusively in the common
stock of Pioneer Companies, Inc.
CIGNA Guaranteed Income Fund - invests in six month, fixed interest rate
securities.
CIGNA Lifetime Funds - invest in a combination of high yield bonds,
high-grade bonds, and equity securities of small companies, large
companies, growth companies, and international companies.
Founders Balanced Account - invests primarily in equity securities,
corporate obligations, and preferred stock.
Neuberger & Berman Guardian Account - invests in equity securities that
have good potential capital appreciation.
Founders Growth Account - invests mainly in the common stock of companies
with strong performance records and solid market positions.
American Century - Twentieth Century Ultra Account - invests in the equity
securities of large companies that offer the potential for
better-than-average prospects for capital appreciation.
AIM Constellation Account - invests primarily in securities growth
companies and companies that have a history of strong performance.
Templeton Growth Account - invests in common stocks.
Janus Worldwide Account - invests primarily in common stocks of foreign and
domestic issuers.
Warburg Pincus Advisor International Equity Account - invests in securities
of corporations located in a number of foreign countries.
Templeton Foreign Account - invests primarily in common stocks.
Invesco Dynamics Account - invests primarily in common stock of companies
traded on U.S. securities exchanges, as well as over-the-counter.
Participants may change their investment elections and/or transfer funds at any
time.
45
<PAGE> 46
DISTRIBUTION OF ACCOUNTS - Distribution of a participant's account balance may
occur due to termination of employment, retirement, disability, or death. Upon
termination of service, distributions shall be made in a lump-sum amount unless
a participant makes the proper election to receive another form of payment as
provided by the Plan document.
FORFEITURES - Forfeited nonvested accounts are used to reduce future employer
contributions. Such forfeited amounts were not significant during the period
from January 1, 1999 to October 12, 1999 and for the year ended December 31,
1998.
2. SUMMARY OF ACCOUNTING POLICIES
BASIS OF ACCOUNTING - The accompanying financial statements are presented on the
accrual basis of accounting.
INVESTMENTS - The Guaranteed Income Fund is valued at contract value. Contract
value represents the contributed amounts plus accumulated interest less funds
used to pay benefits. Contract value approximates fair market value. Other
investments are reported in the financial statements at fair values based on the
quoted market prices. Loans are valued at cost, which approximates fair value.
PLAN EXPENSES - Administrative expenses, to the extent not paid by the Company,
are paid from plan assets.
USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires plan management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, and changes therein, and disclosure of contingent assets and
liabilities. Actual results could differ from these estimates.
RECENT ACCOUNTING PRONOUNCEMENTS - The Plan has adopted the provisions of
Statement of Position 99-3, "Accounting for and Reporting of Certain Defined
Contribution Benefit Plan Investments and Other Matters" ("SOP 99-3"), which was
issued September 15, 1999. In accordance with SOP 99-3, the by-fund disclosures
previously required have been omitted, and certain prior year balances have been
reclassified to conform with the current year presentation.
3. INVESTMENTS
The following is a summary of the investments that represent 5% or more of the
Plan's net assets as of December 31, 1998:
<TABLE>
<S> <C>
Large Company Stock Index Fund $ 341,058
Fidelity Advisor Growth Opportunity Account 292,851
Warburg Pincus Advisor Emerging Growth Account 213,249
Invesco Total Return Account 222,096
Guaranteed Income Fund 188,527
Participant Loans 152,700
</TABLE>
46
<PAGE> 47
During the period from January 1, 1999 to October 12, 1999 and the year ended
December 31, 1998, the Plan's investments (including investments bought and
sold, as well as held during the year) appreciated in value as follows:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Mutual funds $ 42,110 $ 165,139
Pioneer Companies, Inc. Common Stock 920 235
---------- ----------
$ 43,030 $ 165,374
========== ==========
</TABLE>
4. TAX STATUS
The Plan obtained its latest determination letter dated August 2, 1995 in which
the Internal Revenue Service stated that the Plan, as then designed, was in
compliance with the applicable requirements of the Code. The Company believes
that the Plan is currently designed and being operated in compliance with the
Code. Therefore, no provision for income taxes has been included in the Plan's
financial statements.
5. GUARANTEED INCOME FUND
The stated interest rate for the Guaranteed Income Fund held by CIGNA was 5.9%
and 6% as of December 31, 1999 and 1998, respectively. The average yield for the
Guaranteed Income Fund held by CIGNA was 5.59% and 6.15% for 1999 and 1998,
respectively.
******
47
<PAGE> 48
LIST OF EXHIBITS
23.1 Independent Auditors' Consent
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Administrators of the Plans have duly caused this annual report to be signed by
the undersigned thereunto duly authorized.
THE PIONEER COMPANIES SAVINGS
PLAN FOR SALARIED EMPLOYEES
THE PIONEER COMPANIES SAVINGS PLAN
FOR HENDERSON BARGAINING
UNIT EMPLOYEES
THE PIONEER COMPANIES SAVINGS PLAN
FOR TACOMA BARGAINING
UNIT EMPLOYEES
THE KEMWATER NORTH AMERICA
SAVINGS PLAN
THE ALL-PURE SAVINGS PLAN
Date: June 28, 2000 By: PIONEER AMERICAS, INC.
EMPLOYEE BENEFITS COMMITTEE
By: /s/ JERRY B. BRADLEY
-------------------------------
Jerry B. Bradley
Chairman
48
<PAGE> 49
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
23.1 Independent Auditor's Consent
</TABLE>
