<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
[X] Annual Report
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
(Fee Required)
For the fiscal year ended December 31, 1998
OR
[_] Transition report pursuant to Section 15(d) of the
Securities Exchange Act of 1934
(No Fee Required)
Commission File Number 33-26867
LYONDELL CHEMICAL COMPANY 401(K) AND SAVINGS PLAN
(Title of the Plan)
LYONDELL CHEMICAL COMPANY
1221 McKinney Street
Suite 700
Houston, Texas 77010
(Name and address of principal executive
office of the issuer of the securities)
<PAGE>
LYONDELL CHEMICAL COMPANY 401(K) AND SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Accountants 2
Financial Statements:
Statement of Net Assets Available for Benefits 3
Statement of Changes in Net Assets Available for
Benefits with Fund Information 4
Notes to Financial Statements 6
</TABLE>
Supplemental Schedules are not required at the plan level and have been omitted.
1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Benefits Administrative Committee of the
Lyondell Chemical Company 401(k) and Savings Plan:
In our opinion, the accompanying statement of net assets available for benefits
and the related statement of changes in net assets available for benefits with
fund information present fairly, in all material respects, the net assets
available for benefits of the Lyondell Chemical Company 401(k) and Savings Plan
(the "Plan") at December 31, 1998, and the changes in net assets available for
benefits for the year ended December 31, 1998 in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Plan's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The fund information in the statement of
changes in net assets available for benefits is presented for purposes of
additional analysis rather than to present the changes in net assets available
for benefits of each fund. The fund information has been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
PRICEWATERHOUSECOOPERS LLP
Houston, Texas
June 28, 1999
2
<PAGE>
LYONDELL CHEMICAL COMPANY 401(K) AND SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
As of December 31, 1998
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investments, at fair value:
Investment in Lyondell Chemical Company Master Trust $20,449,051
-----------
Net assets available for benefits $20,449,051
===========
</TABLE>
See Notes to Financial Statements.
3
<PAGE>
LYONDELL CHEMICAL COMPANY 401(K) AND SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
For the year ended December 31, 1998
<TABLE>
<CAPTION>
Participant Directed
----------------------------------------------------------------------
Lyondell SSGA
Common Stock ARCO Money Intermediate
------------
Dividend Dividend Common Market Bond
Payout Reinvestment Stock Fund Fund
------------- ------------- ------------ ------------- -----------
<S> <C> <C> <C> <C> <C>
Contributions:
Employer $ -- $ -- $ -- $ -- $ --
Participant 21,232 79,304 -- 66,286 26,989
Rollover -- -- -- 8,598 8,468
----------------------------------------------------------------------
Total 21,232 79,304 -- 74,884 35,457
----------------------------------------------------------------------
Investment income (loss):
Lyondell Chemical Company Master Trust (227,461) (562,217) (336,571) 143,002 75,247
----------------------------------------------------------------------
Benefits paid to participants (227,071) (201,758) (1,135,956) (4,073,523) (184,658)
----------------------------------------------------------------------
Loan activity:
Participant borrowings (1,316) -- -- (97,359) --
Participant repayments 24,300 32,228 -- 141,978 4,206
----------------------------------------------------------------------
Net loan activity 22,984 32,228 -- 44,619 4,206
----------------------------------------------------------------------
Transfer activity:
Transfers from Equistar Chemicals, LP
Savings and Investment Plan 1,257,339 2,945,782 3,617,761 5,051,173 959,726
Net transfers from LYONDELL-CITGO
Refining Company Ltd. Master Trust -- 134,226 48,823 314,222 70,855
Net transfers between investment options (74,898) (543,404) (916,350) 2,288,790 113,011
----------------------------------------------------------------------
Net transfer activity 1,182,441 2,536,604 2,750,234 7,654,185 1,143,592
----------------------------------------------------------------------
Net increase 772,125 1,884,161 1,277,707 3,843,167 1,073,844
----------------------------------------------------------------------
Net assets available for benefits:
End of year $ 772,125 $ 1,884,161 $ 1,277,707 $ 3,843,167 $ 1,073,844
======================================================================
<CAPTION>
------------------------
IDS Dodge &
New Cox
Dimensions Balanced
Fund Fund
----------- ----------
<S> <C> <C>
Contributions:
Employer $ -- $ --
Participant 162,670 72,262
Rollover 20,729 1,384
------------------------
Total 183,399 73,646
------------------------
Investment income (loss):
Lyondell Chemical Company Master Trust 625,778 1,053
------------------------
Benefits paid to participants (1,180,701) (132,648)
------------------------
Loan activity:
Participant borrowings (25,124) --
Participant repayments 93,176 17,435
------------------------
Net loan activity 68,052 17,435
------------------------
Transfer activity:
Transfers from Equistar Chemicals, LP
Savings and Investment Plan 4,905,903 1,000,535
Net transfers from LYONDELL-CITGO
Refining Company Ltd. Master Trust 182,924 --
Net transfers between investment options (610,152) (125,484)
------------------------
Net transfer activity 4,478,675 875,051
------------------------
Net increase 4,175,203 834,537
------------------------
Net assets available for benefits:
End of year $ 4,175,203 $ 834,537
========================
</TABLE>
(Continued on next page)
4
<PAGE>
LYONDELL CHEMICAL COMPANY 401(K) AND SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
--(Continued)
For the year ended December 31, 1998
<TABLE>
<CAPTION>
Non-Part
Participant Directed Directed
----------------------------------------------------- ------------
Seven Lyondell
Seas PBHG Europacific Participant Common
S&P 500 Growth Growth Loan Stock Plan
Fund Fund Fund Fund Div. Payout Total
----------- ----------- ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Contributions:
Employer $ -- $ -- $ -- $ -- $ 301,968 $ 301,968
Participant 132,269 64,343 45,932 -- -- 671,287
Rollover 27,992 13,460 11,914 -- -- 92,545
-------------------------------------------------------------------- ------------
Total 160,261 77,803 57,846 -- 301,968 1,065,800
-------------------------------------------------------------------- ------------
Investment income (loss):
Lyondell Chemical Company Master Trust 309,331 (20,396) 167,403 58,991 (742,297) (508,137)
-------------------------------------------------------------------- ------------
Benefits paid to participants (185,915) (98,861) (201,755) (223,945) (1,216,574) (9,063,365)
-------------------------------------------------------------------- ------------
Loan activity:
Participant borrowings (6,752) (8,697) (8,679) 151,341 (3,414) --
Participant repayments 29,407 20,911 17,947 (382,211) 623 --
-------------------------------------------------------------------- ------------
Net loan activity 22,655 12,214 9,268 (230,870) (2,791) --
-------------------------------------------------------------------- ------------
Transfer activity:
Transfers from Equistar Chemicals, LP
Savings and Investment Plan 1,062,999 1,176,335 1,143,732 916,842 3,759,012 27,797,139
Net transfers from LYONDELL-CITGO
Refining Company Ltd. Master Trust 146,620 170,442 89,502 -- -- 1,157,614
Net transfers between investment options (26,381) (76,307) 181,930 -- (210,755) --
-------------------------------------------------------------------- ------------
Net transfer activity 1,183,238 1,270,470 1,415,164 916,842 3,548,257 28,954,753
-------------------------------------------------------------------- ------------
Net increase 1,489,570 1,241,230 1,447,926 521,018 1,888,563 20,449,051
-------------------------------------------------------------------- ------------
Net assets available for benefits:
End of year $1,489,570 $1,241,230 $1,447,926 $ 521,018 $ 1,888,563 $20,449,051
==================================================================== ============
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
LYONDELL CHEMICAL COMPANY 401(K) AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. Description of Plan
General - The Lyondell Chemical Company 401(k) and Savings Plan ("Plan") is a
defined contribution plan for employees and vested former employees of Lyondell
Chemical Company ("Company" or "Lyondell"), formerly Lyondell Petrochemical
Company. The Plan was adopted as of January 1, 1998 as the successor to the
Lyondell Petrochemical Company 401(k) and Savings Plan ("Prior Plan"), which was
originally adopted July 1, 1995. With the formation of Equistar Chemicals, LP
("Equistar") as of December 1, 1997, a substantial number of Lyondell employees
became employees of Equistar. As of January 1, 1998, Equistar became the sponsor
of the Prior Plan and changed the name to the Equistar Chemicals, LP Savings and
Investment Plan, thereby creating the need to adopt the successor plan for
Lyondell employees. During 1998, Lyondell participants' account balances
previously held in the Prior Plan were transferred to the new Plan. Participants
should refer to the Plan document for a complete description of the Plan.
Contributions - Participants are allowed to contribute from 1 percent to 14
percent of their base pay to the Plan through pre-tax payroll deductions
("Elective Deferrals") and from 1 percent to 10 percent of their base pay
through after-tax payroll deductions ("Savings Contributions"). The Company
makes matching contributions to the participant's account at the rate of 160
percent of the Elective Deferrals up to a maximum Company contribution of 8
percent of the participant's base salary. All contributions and earnings
thereon are fully vested and nonforfeitable. All earnings are allocated to
individual participant accounts on the basis of the units held in the investment
fund.
Investment Election - Participant contributions and earnings thereon are
invested in the following alternatives, or any combination thereof, in
accordance with the option or options selected by each participant: common stock
of the Company, units of the State Street Short-Term Investment Fund ("Money
Market Fund"), units of the SSGA Intermediate Bond Fund, units of the IDS New
Dimensions Fund, units of the Dodge & Cox Balanced Fund, units of the Seven Seas
S&P 500 Fund, units of the PBHG Growth Fund and units of the Europacific Growth
Fund. All of these funds are held within the Lyondell Chemical Company Master
Trust ("Lyondell Master Trust"), formerly the Lyondell Petrochemical Company
Master Trust. A brief description of each fund follows:
Money Market Fund - Contributions to this fund are primarily invested in
-----------------
commercial paper, certificates of deposit, bankers' acceptances, repurchase
agreements and other high quality money market investments. Each participant
earns interest based upon the blended rate of the various interest rates for
all securities held in the fund.
SSGA Intermediate Bond Fund - Contributions to this fund are primarily
---------------------------
invested in intermediate-term U.S. Treasury or Agency bonds, high quality
investment-grade corporate bonds and "A"-rated or better asset backed
investments. Each participant earns a return based upon interest paid on
the bonds and increases and decreases in the market value of the bonds.
IDS New Dimensions Fund - Contributions to this fund are primarily invested
-----------------------
in stocks of medium to large companies operating in areas where economic and
technological changes are occurring. Each participant earns a return based
upon the increase or decrease in the market value of the stocks held, plus
dividend and interest income.
Dodge & Cox Balanced Fund - Contributions to this fund are primarily
-------------------------
invested in a diversified portfolio of stocks and investment grade bonds.
Each participant earns a return based upon the increase or decrease in the
value of the stocks and bonds held, plus dividend and interest income.
6
<PAGE>
LYONDELL CHEMICAL COMPANY 401(K) AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS--(Continued)
Seven Seas S&P 500 Fund - Contributions to this fund are invested in stocks
-----------------------
of large U.S. companies. Each participant earns a return based upon the
increase or decrease in the market value of the stocks held, plus dividend
and interest income.
PBHG Growth Fund - Contributions to this fund are primarily invested in
----------------
stocks of small companies in the U.S. Each participant earns a return based
upon the increase or decrease in the market value of the stocks held, plus
dividend and interest income.
Europacific Growth Fund - Contributions to this fund are primarily invested
-----------------------
in stocks of companies based outside the U.S. Each participant earns a
return based upon the increase or decrease in the market value of the stocks
held, dividend and interest income and changes in the values of foreign
currencies (as compared to the value of the U.S. dollar).
When investing in common stock of the Company, the participant may designate
that the common stock be held either in the Lyondell Common Stock - Dividend
Payout Fund ("ESOP") portion of the Plan (an employee stock ownership plan under
Section 4975(e)(7) of the Internal Revenue Code) or in the Lyondell Common Stock
- - Dividend Reinvestment Fund ("non-ESOP stock fund"). Dividends on common stock
held in the non-ESOP stock fund are reinvested in the common stock of the
Company and held in the participant's plan account. Dividends on common stock
held in the ESOP are reinvested in the Money Market Fund and are payable to the
participant annually as allowed by the Plan. All Company contributions are made
in the form of common stock of the Company or cash to be used to purchase common
stock of the Company and are invested in the ESOP and may not be transferred to
other investment options.
Employees of Atlantic Richfield Company ("ARCO") who became employees of
Lyondell had the assets attributable to their participation in the ARCO Capital
Accumulation Plan II (which assets included ARCO common stock) transferred to
the Plan. ARCO common stock may be held or sold; however, no new purchases of
ARCO common stock may be elected by the participant except upon reinvestment of
dividends from the shares of ARCO common stock.
Withdrawals and Borrowings - If a participant terminates employment for any
reason, the participant's account balance will be distributed upon attainment of
age 65 or anytime the participant makes application to receive the funds prior
to age 65. If the participant's account balance is less than $3,500, the
participant's account balance will be distributed as soon as practicable.
The Plan permits withdrawals of Elective Deferrals under certain hardship
conditions as defined by the Plan and granted by the Benefits Administrative
Committee. Savings Contributions may be withdrawn in total or partial amounts
as defined by the Plan.
Withdrawals are made in a lump sum cash payment, although a participant may
elect to receive Lyondell or ARCO common stock to the extent assets are held in
the form of such stock. Distributions upon retirement or termination are
generally in Lyondell or ARCO common stock to the extent assets are held in the
form of such stock, and in cash to the extent invested in any other investment
funds maintained under the Plan.
The Plan provides for employees to borrow up to 50 percent of their account
balance, as defined by the Plan and subject to a minimum and maximum borrowing
level. The interest rate currently charged for loans is a fixed rate equal to
the average prime rate reported in The Wall Street Journal as of the last
-----------------------
business day of the month preceding the date the loan application was received
by the Benefits Administrative Committee. Interest rates on loans outstanding
at December 31, 1998 range from 6 percent to 9.5 percent. Loan repayment
periods range from
7
<PAGE>
LYONDELL CHEMICAL COMPANY 401(K) AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS--(Continued)
one to five years. Repaid principal and interest are added to investment funds
according to the current investment elections of the participant. The loans are
carried at their face amount, which approximates fair value.
Plan Administration - The Plan is administered by the Company's Benefits
Administrative Committee. The assets of the Plan are maintained in the Lyondell
Master Trust under the custody of State Street Bank and Trust Company
("Trustee"). See Note 5. The Trustee makes payments as authorized by the Plan.
The Trustee has also been appointed investment manager to the Money Market Fund,
the SSGA Intermediate Bond Fund and the Lyondell and ARCO common stock funds.
Other investment options are managed by their respective fund investment
managers. Administrative expenses are paid by the Company.
Termination Provision - Although it has not expressed any intent to do so, the
Company has the right to terminate the Plan at any time subject to the
provisions of the Employee Retirement Income Security Act of 1974. In the event
of Plan termination, all participants will be fully vested in their accounts and
all assets of the Plan will continue to be held for distribution to participants
as provided in the Plan.
2. Summary of Significant Accounting Policies
Basis of Accounting - The financial statements of the Plan are prepared using
the accrual method of accounting.
Investments - See Note 4.
Investment Income - This includes dividend income, interest income and the net
appreciation or depreciation in the fair value of investments, which consists of
the realized gains and losses and the unrealized appreciation or depreciation of
those investments.
Payment of Benefits - Benefits are recorded when paid.
Use of Estimates - The preparation of the Plan's financial statements in
conformity with generally accepted accounting principles requires the Plan's
management to make significant estimates and assumptions that affect the
reported amounts of net assets available for benefits at the date of the
financial statements and the changes in net assets available for benefits during
the reporting period and, when applicable, disclosures of contingent assets and
liabilities at the date of the financial statements. Actual results could
differ from those estimates.
Risks and Uncertainties - The Plan provides for investment options in various
combinations of stocks and mutual funds. Investment securities are exposed to
various risks, such as market and credit risks. Due to the level of risk
associated with certain investment securities, it is at least reasonably
possible that changes in the values of investment securities will occur in the
near term and that such changes could materially affect the amounts reported in
the statement of net assets available for plan benefits.
3. Tax Status
The Plan is a qualified plan under Sections 401(a) and (k) of the Internal
Revenue Code of 1986, as amended ("Code") and is a qualified employee stock
ownership plan under Section 4975(e)(7) of the Code. The Benefits
Administrative Committee believes that the Plan is currently designed and being
operated in compliance with the applicable requirements of the Code.
Accordingly, no provision is made for federal income taxes.
8
<PAGE>
LYONDELL CHEMICAL COMPANY 401(K) AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS--(Continued)
4. Lyondell Chemical Company Master Trust
The Lyondell Master Trust, formerly the Lyondell Petrochemical Company Master
Trust, was established in July 1995 for certain participating benefit plans of
the Company and LYONDELL-CITGO Refining LP ("LCR"), an entity related to the
Company, and was administered by the Benefits Administrative Committees of the
two entities.
Effective January 1, 1997, the assets of the two LCR benefit plans were
transferred from the Lyondell Master Trust into a newly created LYONDELL-CITGO
Refining Company Ltd. Master Trust. Subsequent to this transfer, only the assets
of the Prior Plan remained in the Lyondell Master Trust, transforming the
Lyondell Master Trust into the Lyondell Chemical Company Trust ("Trust"). All
accounting procedures, investment valuation procedures and unit determination
procedures for the Trust were consistent with the procedures of the Lyondell
Master Trust.
Effective January 1, 1998, the Lyondell Master Trust was reestablished to hold
the assets of certain participating benefit plans of Lyondell and Equistar and
was administered by the Benefits Administrative Committees of the two entities.
Investments of the Lyondell Master Trust consist of ownership interests in
various investment funds and equity securities of Lyondell, ARCO and Millennium
Chemicals Inc. ("Millennium"). Assets of the Lyondell Master Trust are valued
by the Trustee based upon the value established by the Trustee or the outside
investment managers for the various investment funds. Investments in Lyondell,
ARCO and Millennium common stock are valued at fair value based upon quoted
market prices in an active market as of the last business day of the periods
presented. All other investment funds are valued at net asset value as of the
last business day of the periods presented, which is the fair value of all
securities held plus accruals for dividend income and interest income. The fund
value per unit is determined by dividing the net asset value of the fund by the
number of units outstanding. Short-term and certain other investments are
valued at cost, which approximates fair value. Purchases and sales of
securities are accounted for on a trade date basis (the date the order to buy or
sell is executed). Gains or losses on the sale or distribution of securities
are computed on a first-in, first-out basis. Dividend income is accrued on the
ex-dividend date and interest income is accrued as earned. The Lyondell Master
Trust presents the net appreciation or depreciation in the fair value of its
investments, which consists of the realized gains or losses and the unrealized
appreciation or depreciation on those investments.
The Plan does not own specific securities or other assets in the Lyondell Master
Trust, but has an ownership interest in each selected fund within the Lyondell
Master Trust, which is valued daily. Contributions to, withdrawals from and
transfers between investment options in the Lyondell Master Trust by the
participants are recorded in each investment fund.
9
<PAGE>
LYONDELL CHEMICAL COMPANY 401(K) AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS--(Continued)
Net assets of the Lyondell Master Trust at December 31, 1998 were as follows:
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investments, at fair value:
Lyondell common stock $ 26,464,343
ARCO common stock 8,602,169
Millennium common stock 24,425,549
Money Market Fund 60,488,654
SSGA Intermediate Bond Fund 11,374,559
IDS New Dimensions Fund 55,304,303
Dodge & Cox Balanced Fund 30,231,923
Seven Seas S&P 500 Fund 52,118,869
PBHG Growth Fund 17,727,418
Europacific Growth Fund 10,293,098
Participant loans receivable, at cost 19,545,619
------------
Total investments 316,576,504
Interest and dividends receivable 5,473
------------
Total assets 316,581,977
LIABILITIES
Other liabilities 15,200
------------
NET ASSETS $316,566,777
============
Plan percentage 6.46%
============
</TABLE>
10
<PAGE>
LYONDELL CHEMICAL COMPANY 401(K) AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS--(Continued)
Changes in net assets of the Lyondell Master Trust with fund information for the
year ended December 31, 1998 are presented below. The fund information is
presented for purposes of additional analysis rather than to present the changes
in net assets of each fund.
<TABLE>
<CAPTION>
SSGA
Lyondell ARCO Millennium Money Intermediate
Common Common Common Market Bond
Stock Stock Stock Fund Fund
------------- ------------ ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Contributions:
Employer $ 301,968 $ -- $ -- $ 3,407,148 $ 614,896
Participant 100,536 -- -- 4,201,219 739,610
Rollover -- -- -- 34,873 647,332
-----------------------------------------------------------------------
Total 402,504 -- -- 7,643,240 2,001,838
-----------------------------------------------------------------------
Investment income:
Dividend income 1,373,424 394,607 1,368,105 -- --
Interest income 50,513 10,291 -- 2,531,643 --
Net appreciation (depreciation)
in the fair value of investments (9,462,628) (2,059,775) (14,994,934) -- 548,629
-----------------------------------------------------------------------
Net investment income (loss) (8,038,691) (1,654,877) (13,626,829) 2,531,643 548,629
-----------------------------------------------------------------------
Benefits paid to participants (3,087,226) (1,592,917) (522,848) (8,015,151) (612,743)
-----------------------------------------------------------------------
Loan activity:
Participant borrowings (318,096) (25,930) (209,062) (2,771,052) (316,635)
Participant repayments 115,304 842 -- 2,787,402 247,961
-----------------------------------------------------------------------
Net loan activity (202,792) (25,088) (209,062) 16,350 (68,674)
-----------------------------------------------------------------------
Transfer activity:
Transfers from Millennium
Chemicals Inc. plans -- -- 42,146,257 13,931,421 4,518,912
Net transfers from LYONDELL-
CITGO Refining Company Ltd.
Master Trust 134,226 48,823 -- 314,222 70,855
Net transfers between investment
options (20,369,231) (1,027,808) (2,908,949) 17,440,402 1,386,673
-----------------------------------------------------------------------
Net transfer activity (20,235,005) (978,985) 39,237,308 31,686,045 5,976,440
-----------------------------------------------------------------------
Net increase (decrease) (31,161,210) (4,251,867) 24,878,569 33,862,127 7,845,490
Net assets available for benefits:
Beginning of year 58,110,714 13,032,575 -- 25,683,537 3,345,611
-----------------------------------------------------------------------
End of year $ 26,949,504 $ 8,780,708 $ 24,878,569 $59,545,664 $11,191,101
=======================================================================
</TABLE>
(Continued on next page)
11
<PAGE>
LYONDELL CHEMICAL COMPANY 401(K) AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS--(Continued)
<TABLE>
<CAPTION>
IDS Dodge Seven
New & Cox Seas PBHG Europacific
Dimensions Balanced S&P 500 Growth Growth
Fund Fund Fund Fund Fund
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Contributions:
Employer $ 3,622,649 $ 2,251,327 $ 3,630,148 $ 1,228,526 $ 763,723
Participant 4,699,376 2,812,067 4,694,270 1,652,688 1,022,722
Rollover 454,753 340,374 563,187 106,677 100,311
-------------------------------------------------------------------------
Total 8,776,778 5,403,768 8,887,605 2,987,891 1,886,756
------------------------------------------------------------------------
Investment income:
Dividend income 1,539,046 1,748,058 5,429,818 -- 423,115
Interest income -- -- -- -- --
Net appreciation (depreciation)
in the fair value of investments 6,042,280 (978,815) 1,503,023 852,762 198,505
------------------------------------------------------------------------
Net investment income 7,581,326 769,243 6,932,841 852,762 621,620
------------------------------------------------------------------------
Benefits paid to participants (1,946,295) (732,127) (903,095) (551,276) (325,463)
------------------------------------------------------------------------
Loan activity:
Participant borrowings (1,786,245) (703,607) (1,318,436) (597,164) (304,269)
Participant repayments 1,398,655 564,991 1,048,229 501,831 224,136
------------------------------------------------------------------------
Net loan activity (387,590) (138,616) (270,207) (95,333) (80,133)
------------------------------------------------------------------------
Transfer activity:
Transfers from Millennium
Chemicals Inc. plans 17,422,117 19,173,148 24,503,678 6,388,229 4,860,207
Net transfers from LYONDELL-
CITGO Refining Company Ltd.
Master Trust 182,924 -- 146,620 170,442 89,502
Net transfers between investment
options (26,122) 754,361 4,837,710 (323,559) 236,523
--------------------------------------------------------------------------
Net transfer activity 17,578,919 19,927,509 29,488,008 6,235,112 5,186,232
--------------------------------------------------------------------------
Net increase 31,603,138 25,229,777 44,135,152 9,429,156 7,289,012
Net assets available for benefits:
Beginning of year 23,701,166 5,002,147 7,983,718 8,298,262 3,004,084
--------------------------------------------------------------------------
End of year $55,304,304 $30,231,924 $52,118,870 $17,727,418 $10,293,096
==========================================================================
</TABLE>
(Continued on next page)
12
<PAGE>
LYONDELL CHEMICAL COMPANY 401(K) AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS--(Continued)
<TABLE>
<CAPTION>
Participant Trust
Loans Total
------------------ ------------------
<S> <C> <C>
Contributions:
Employer $ -- $ 15,820,385
Participant -- 19,922,488
Rollover -- 2,247,507
----------------- -----------------
Total -- 37,990,380
----------------- -----------------
Investment income:
Dividend income -- 12,276,173
Interest income 1,164,304 3,756,751
Net appreciation (depreciation)
in the fair value of investments -- (18,350,953)
----------------- -----------------
Net investment income (loss) 1,164,304 (2,318,029)
----------------- -----------------
Benefits paid to participants (653,553) (18,942,694)
----------------- -----------------
Loan activity:
Participant borrowings 8,350,496 --
Participant repayments (6,889,351) --
----------------- -----------------
Net loan activity 1,461,145 --
----------------- -----------------
Transfer activity:
Transfers from Millennium
Chemicals Inc. plans 6,982,730 139,926,699
Net transfers from LYONDELL-
CITGO Refining Company Ltd.
Master Trust -- 1,157,614
Net transfers between investment
options -- --
----------------- -----------------
Net transfer activity 6,982,730 141,084,313
----------------- -----------------
Net increase 8,954,626 157,813,970
Net assets available for benefits:
Beginning of year 10,590,993 158,752,807
----------------- -----------------
End of year $ 19,545,619 $ 316,566,777
================= =================
</TABLE>
5. Subsequent Event
Effective April 1, 1999, Fidelity Investments ("Fidelity") replaced State Street
Bank and Trust Company as asset custodian for the Lyondell Master Trust. At the
same time, Fidelity also became the record-keeper for the Plan.
13
<PAGE>
LYONDELL CHEMICAL COMPANY 401(K) AND SAVINGS PLAN
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the Plan) have duly caused this annual
report to be signed on its behalf by the undersigned hereunto duly authorized.
LYONDELL CHEMICAL COMPANY
401(K) AND SAVINGS PLAN
By: /s/ ALLEN C. HOLMES
------------------------------------------
ALLEN C. HOLMES
Chairman, Benefits Administrative Committee
Date: June 29, 1999
14
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered Page
No. Exhibit Where Located
- ------- ------- -------------
<S> <C> <C>
23 Consent of PricewaterhouseCoopers LLP 16
</TABLE>
15
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-26867) of Lyondell Chemical Company of our report
dated June 28, 1999 relating to the financial statements of the Lyondell
Chemical Company 401(k) and Savings Plan, which appears in this Form 11-K.
PricewaterhouseCoopers LLP
Houston, Texas
June 29, 1999
16
