ITEM 3. LEGAL PROCEEDINGS
ENVIRONMENTAL MATTERS AND RELATED LITIGATION
The company has completed a remedial investigation/feasibility study at the French Ltd. Site (Texas) under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) and the Superfund Amendments and Reauthorization Act of 1986. As a result of that study, the U.S. Environmental Protection Agency (EPA) determined that bioremediation was the appropriate remedy. ARCO and the company reached a settlement with the other potentially responsible parties as to allocation of clean-up costs. A consent decree in this regard was entered with the United States District Court for the Eastern District of Texas. The selected remedy has been substantially implemented. The company believes that the maximum remaining aggregate cost for the potentially responsible parties to implement this remedy will be less than $10 million. The company's allocated share of clean-up costs for this site is approximately 33 percent.
The company has been a named defendant in a number of lawsuits brought by several thousand plaintiffs relating to the French Ltd. Site. These suits generally have alleged personal injury and/or property damage caused by chemical waste allegedly sent to the site by the company and other defendants. The company has resolved the majority of these lawsuits.
In December 1993, the EPA issued a Unilateral Administrative Order (the Order) to the company and other potentially responsible parties requiring implementation of a remedial design/remedial action for the Turtle Bayou, Texas CERCLA Site. The company has raised certain legal defenses against the enforcement of the Order. Without waiving any of its defenses against the Order, the company has reached an agreement in principle with certain other potentially responsible parties to proceed with certain work at the site. In January 1994, the EPA filed a complaint in the United States District Court for the Eastern District of Texas seeking recovery of costs of removal and/or remedial action allegedly incurred or to be incurred by the federal government. On November 28, 1994, the company reached an agreement in principle with the EPA to settle the cost recovery lawsuit. The company and ARCO have agreed (i) to pay $1.1 million in reimbursement of past costs incurred by the federal government and (ii) to perform remedial activities with respect to a portion of the site. Site remediation is expected to take at least five years. The parties are negotiating the terms of a consent decree to embody the settlement.
The company is currently involved in administrative proceedings or lawsuits relating to seven other CERCLA sites and may in the future be involved in additional environmental assessments and clean-ups under these laws. The future costs in connection with such matters are indeterminable due to such factors as the unknown magnitude of clean-up costs, the unknown timing and extent of the remedial actions which may be required and the determination of the company's liability in proportion to the liability and financial resources of the other potentially responsible parties.
The company discovered that certain organic waste material is situated in the soil and ground water at portions of its Monaca, Pennsylvania (Beaver Valley) plant. The company commenced a feasibility study to determine the technology required to remedy the conditions at the plant. In 1994, the company entered into a Consent Order and Agreement (the "Consent Agreement") with the Pennsylvania Department of Environmental Resources ("PADER") pursuant to which the company and PADER agreed upon a work plan for testing and remedial process design with regard to the conditions at the plant. Under the terms of the Consent Agreement, the company paid civil penalties totalling $363,000 in 1994 (which included $300,000 agreed upon by the company and PADER in 1988 and previously disclosed and civil penalties assessed for 1994 in connection with plant conditions). In addition, the company must pay a penalty of $63,000 each year until the commencement of active remediation at the plant, after which the amount of such annual penalty shall be reduced based on the extent of remediation commenced at the plant. The company has signed an agreement with Beazer East, Inc., the successor to Koppers Inc. (the previous owner of the Beaver Valley plant), whereby Beazer East, Inc. agreed to pay for approximately 50 percent of the cost of the remediation.
In addition to the matters reported herein, from time to time the company and its subsidiaries become aware of compliance matters relating to, or receive notices from federal, state or local governmental entities of alleged violations of, environmental, health and/or safety laws and regulations pertaining to, among other things, the disposal or discharge of chemical substances (including hazardous wastes). In some instances, these matters may become the subject of administrative proceedings or lawsuits and may involve monetary sanctions of $100,000 or more (exclusive of interest and costs). See Items 1 and 2, "Business and Properties--Environmental Matters" and Note 12 of Notes to Consolidated Financial Statements.
OTHER LITIGATION
In addition, the company and its subsidiaries are involved in a number of lawsuits, all of which have arisen in the ordinary course of the company's business.
The company is unable to predict the outcome of the foregoing matters, but does not believe that the ultimate resolution of such matters will have a material adverse effect on the consolidated financial statements of the company.
ITEM 4.
ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth quarter of 1994.
EXECUTIVE OFFICERS OF THE COMPANY
Set forth below are the executive officers of the company as of February 1, 1995.
- -------- (a) The By-Laws of the company provide that each officer shall hold office until his successor is elected or appointed and qualified, or until his death or resignation, or his removal by the Board of Directors.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The common stock is listed on the New York Stock Exchange. The reported high and low sales prices of the common stock on the New York Stock Exchange (New York Stock Exchange Composite Tape) from January 1, 1993 through February 17, 1995, inclusive, were:
On February 17, 1995, the closing price of the common stock was $42 1/4.
As of December 31, 1994, the number of holders of record of common stock of the company was 1,634.
The company has paid quarterly cash dividends as follows:
- -------- * On January 26, 1995, a dividend of $0.625 per share was declared on the common stock, payable on March 3, 1995 to stockholders of record on February 17, 1995.
The current quarterly dividend rate for the common stock is $0.625 per share. The declaration and payment of future dividends and the amount thereof will be dependent on the company's results of operations, financial condition, cash requirements, and future prospects as well as on other factors deemed relevant by the Board of Directors. It is the current intention of the company to declare and pay quarterly cash dividends on its common stock.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected financial information for the company:
- -------- (1) Net income in 1992 includes a charge of $2 million, or $.02 per share, for the net cumulative effect of changes in accounting principles, and a $56 million charge, or $.58 per share, related to the divestiture of a joint venture in Korea. (2) The 1990 impact on net income from the cumulative effect of the change in accounting for income taxes was $43 million or $.45 per share.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion should be read in connection with the information contained in the Consolidated Financial Statements and the Notes thereto.
PRODUCT VOLUMES
Sales and processing volumes of the company's key product, propylene oxide (PO), its two co-products, tertiary butyl alcohol (TBA) and styrene monomer (SM), and their derivatives are set forth in the following table for the periods indicated. Methyl tertiary butyl ether (MTBE) is a key derivative of TBA used in oxygenated fuels and as an octane enhancer.
Production levels of co-products are based upon the market economics of the co- products as well as the demand for PO. The company manufactures and markets its products in three major world regions: the Americas, Europe and Asia Pacific.
RESULTS OF OPERATIONS
Net Income
Net income for 1994 was $269 million, or $2.80 per share, compared with $214 million, or $2.23 per share, in 1993 and $195 million, or $2.03 per share, in 1992. Net income for these years included nonrecurring items, on an after-tax basis, as follows: a $19 million corporate restructuring charge and a $12 million benefit from insurance proceeds in 1994; a $10 million loss on early debt retirement and the benefit of a low effective income tax rate in 1993; and a $56 million charge from the divestiture of a Korean joint venture in 1992.
Net income in 1994 increased over 1993 primarily due to higher PO and derivatives volumes and higher SM margins and volumes, partly offset by the effects of a weaker MTBE market. The 1994 period also benefitted from lower interest expense. Net income, excluding nonrecurring items, decreased in 1993 versus 1992 as lower European MTBE margins, lower overall PO and derivative margins and higher fixed costs more than offset the benefit from increased sales and processing volumes.
Revenues and Gross Profit
Sales and other operating revenues were $3,423 million in 1994, $3,192 million in 1993 and $3,100 million in 1992. Revenues increased seven percent in 1994 versus 1993 with the majority of the increase attributable to higher average sales prices. Revenues also benefitted from higher volumes for PO and SM and their derivatives, partly offset by lower MTBE volumes. Revenues increased three percent in 1993 over 1992 as the benefit from higher 1993 sales and processing volumes more than offset lower 1993 sales prices. The decrease in prices was primarily due to the weak European economy, including the weak premium gasoline market and the negative effect of a stronger U.S. dollar on European sales.
Gross profit increased $98 million to $837 million in 1994 from $739 million in 1993. The 1994 gross profit improvement primarily resulted from higher volumes for PO and derivatives and higher margins and volumes for SM. These improvements were partly offset by the impact of lower U.S. MTBE volumes. Plant turnaround expenses in 1994, which included two major planned turnarounds, were comparable to 1993, which included three planned turnarounds.
Gross profit of $739 million in 1993 decreased $18 million from $757 million in 1992. In addition to lower 1993 European MTBE margins, 1993 gross profit was reduced by higher plant fixed costs, primarily due to a full year of operation of the new PO/SM II plant and higher maintenance expense, including a $22 million increase resulting from turnarounds at three plants. Benefits from higher 1993 sales volumes substantially offset these negative impacts.
PO and Derivatives
PO and derivatives volumes in 1994 increased 10 percent versus 1993 due to the strong U.S. economy, increased market penetration by propylene glycol-based deicers and coolants, and the recovering economy in Europe. All three regions showed volume improvement over 1993. Overall, PO and derivatives margins in 1994 increased slightly compared to 1993.
PO and derivatives volumes in 1993 increased 10 percent versus 1992 principally due to improvement in the domestic economy, although all three regions showed volume improvement, particularly in derivatives. PO and derivatives margins decreased in 1993 compared to 1992. The combined effects of lower margins associated with new product introductions and a weaker European economy offset margin increases resulting from the ongoing improvement in the domestic economy.
TBA and Derivatives
TBA and derivatives sales volumes decreased 14 percent in 1994 versus 1993 primarily due to lower U.S. MTBE volumes. The U.S. MTBE volumes reflected lower contractual sales volumes and flat demand for MTBE as an oxygenate coupled with increased worldwide capacity. In addition, demand for MTBE in world octane markets was negatively affected by its higher price. Overall, TBA and derivatives margins increased moderately in 1994 versus 1993. MTBE margin improvements in the U.S., resulting from higher U.S. MTBE prices, were substantially offset by European margin declines attributable to rising methanol costs and a weak octane market.
TBA and derivatives sales volumes increased seven percent in 1993 versus 1992 primarily due to higher contractual MTBE sales volumes. TBA and derivatives margins in 1993 declined versus 1992 as margin improvements in the U.S. were more than offset by the declines in Europe. Margins improved in the U.S. as more volume was sold under long-term contracts. The lower margins in Europe reflected continuing weakness in octane demand and gasoline prices in 1993.
On June 30, 1994, the Environmental Protection Agency (EPA) promulgated regulations under the Clean Air Act requiring that 15 percent in 1995, and 30 percent thereafter, of the oxygenate content in reformulated gasoline be supplied by oxygenates such as ethanol and ethyl tertiary butyl ether (ETBE), which are derived from renewable feedstocks. ETBE uses ethanol as a feedstock. In September, 1994, the U.S. Court of Appeals for the District of Columbia granted a temporary stay of the EPA regulations. The regulations, if implemented, may, in the long term, decrease demand for MTBE and increase demand for other oxygenates derived from renewable feedstocks, including ETBE. The company is capable of producing both MTBE and ETBE.
SM and Derivatives
SM and derivatives margins improved in 1994 versus 1993 due to higher average SM prices attributable to increased worldwide demand and a series of planned and unplanned outages at producers' plants. SM and derivatives sales and processing volumes in 1994 increased 20 percent over 1993 primarily due to higher SM export sales, reflecting the increased worldwide demand, and higher SM contractual offtakes by the limited partners in the PO/SM II plant.
SM and derivatives volumes in 1993 increased 45 percent over 1992 due to higher SM contractual offtakes by the limited partners in the PO/SM II plant, higher SM exports to customers in Asia Pacific markets and increased domestic demand. SM and derivatives margins, up slightly from 1992, remained low in 1993 as a result of excess industry supply.
Other
In the fourth quarter 1994, management adopted a corporate restructuring plan which will reorganize the company's work force on a global basis to better match the increasingly global nature of the marketplace. Under the new organization, each key product line will have worldwide, rather than regional, profit responsibility. The restructuring should increase future operational efficiency and will result in approximately 130 people leaving the company. The restructuring will be substantially completed during 1995. The plan resulted in a pretax charge of $30 million, primarily for costs associated with personnel reductions. Approximately one half of the charge will be paid out within one year, primarily for severance benefits. The remainder represents enhanced retirement and postretirement benefits, which will be paid out over a longer period of time.
Interest expense was $85 million in 1994, $105 million in 1993 and $79 million in 1992. Interest expense declined in 1994 from 1993 due to lower debt levels and lower interest rates on certain bank borrowings. In 1992, $37 million of interest related to the construction of the PO/SM II plant was capitalized whereas capitalized interest was negligible in 1994 and 1993.
Other income (expense), net, was $26 million in 1994, $(9) million in 1993 and was negligible in 1992. Other income (expense), net in 1994 included an $18 million pretax benefit from an insurance settlement related to the 1990 Channelview plant incident. The decrease in 1993 reflects a pretax loss of $13 million on early retirement of debt.
The company's effective income tax rate was 35.3 percent in 1994, 31.2 percent in 1993, and 38.8 percent in 1992. The 1994 rate increased versus 1993, which benefitted from the recognition of foreign deferred tax assets. The 1992 rate was higher due to the charge related to the divestiture of a Korean joint venture, which did not generate a tax benefit in 1992.
FINANCIAL CONDITION
Liquidity and Capital Resources
As of December 31, 1994, the company had $144 million in cash and cash equivalents compared with $42 million at December 31, 1993.
The Consolidated Statement of Cash Flows for the year ended December 31, 1994 shows that net cash flows provided by operating activities were $565 million, whereas net cash flows used by investment and financing activities were $176 million and $288 million, respectively.
Investment activities in 1994 included expenditures for plant and equipment of $186 million, which was comparable to the $181 million spent in 1993. A significant portion of the 1994 and 1993 capital programs were devoted to environmental, health and safety projects as well as PO derivative capacity expansions at existing facilities. The company's 1995 spending budget for plant and equipment is $195 million.
In January 1995, the company entered into a long-term arrangement with Rhone- Poulenc (RP) for a supply of toluene di-isocyanate (TDI). Adding TDI to the list of products sold by the company complements the company's existing line of polyols products and strengthens the company's position in the polyurethanes market. Effective January 1, 1995, the company is entitled to the entire TDI output of RP's two plants in France, which have a combined annual capacity of approximately 264 million pounds. The company made an initial payment of $80 million at closing for capacity reservation fees, related inventory and other rights and costs. The company is obligated to pay additional capacity reservation fees and purchase minimum quantities of TDI for periods of up to 15 years. The company's projected TDI sales volumes exceed the minimum purchase quantities, and the company expects to fund the obligations under this arrangement through cash flows from increased sales revenues.
The company paid dividends totalling $240 million in 1994, including a $.625 per share dividend, totalling $60 million, during the quarter ended December 31, 1994. On January 26, 1995, the Board of Directors declared a dividend of $.625 per share on the company's common stock, payable March 3, 1995.
The company maintains a credit agreement under which it can borrow amounts of up to $300 million. At December 31, 1994, the company had no outstanding borrowings against the credit agreement, which is used to back up the company's commercial paper borrowing.
It is expected that future cash requirements for capital expenditures, dividends and debt repayments will be met by cash generated from operating activities and additional borrowing.
Effects of Inflation
Based on the age of the company's fixed assets, it is estimated that the replacement cost of those assets is greater than the historical cost reflected in the company's financial statements. Accordingly,
the company's depreciation and amortization expense for the three years ended December 31, 1994, would be greater if the expense were stated on a current cost basis.
Risk Management
The company uses financial derivative instruments to reduce certain types of financial risk. Use of derivatives is limited to simple, non-leveraged instruments placed with major financial institutions whose creditworthiness is monitored. Company policy provides restrictions on concentrating credit risk in any one institution. Hedging strategies and transactions are reviewed and approved by management before being implemented. Monthly market valuations and quarterly sensitivity analyses are performed to monitor the effectiveness of the company's risk management program.
To minimize the effects of foreign currency rate and interest rate fluctuations, the company enters into the following activities using financial derivative instruments: (1) foreign currency forward contracts, option contracts and swap contracts to reduce the risk of foreign currency fluctuations on future cash flows, and, to a lesser extent, (2) interest rate swaps to minimize the impact of fluctuating interest rates on the company's outstanding floating rate debt.
Feedstock Costs
See "Raw Materials" included in Items 1 and 2.
Environmental
The company is subject to federal, state, local, and foreign environmental laws and regulations that require the company to remove or mitigate the effect on the environment of the disposal or release of certain chemical substances at various sites. The company is currently participating in environmental assessments, remedial investigations/feasibility studies (RI/FS), and remediation at a number of sites under these laws and regulations and may in the future be involved in additional environmental assessments and cleanups. The company continues to estimate the amount of these costs in periodically establishing reserves based on progress made in determining the magnitude, method and timing of remedial actions required by governmental authorities and the amount of the company's liability in proportion to the liability and financial resources of the other responsible parties.
The company's reserve takes into consideration federal CERCLA and comparable state sites as well as other clean-up sites, including operating facilities. Reflected in costs and other operating expenses for 1994 is a $13 million pretax charge for estimated future environmental clean-up costs compared with $12 million in 1993 and $6 million in 1992. These charges do not reflect any potential insurance proceeds. At December 31, 1994, the company's reserve totaled $51 million. A significant portion of the reserve is related to the company's Beaver Valley plant. The remainder is related to other sites for amounts ranging from $1 million to $7 million per site. Substantially all amounts accrued are expected to be paid out over the next five to ten years. See Note 12 of Notes to Consolidated Financial Statements for discussion of uncertainties relating to future clean-up costs associated with CERCLA and comparable state sites.
The company is currently performing RI/FS at certain of its production facilities in the U.S. and Europe, which are expected to be completed within the next several years. As the scope of the company's environmental contingencies becomes more clearly defined, it is possible that amounts in excess of those already reserved may be necessary. Management believes, based upon its past experience and best assessment of future events, that these environmental liabilities and costs will be determined and incurred over an extended period of time, allowing the company to fund such liabilities and costs through its operating cash flow, and, therefore, that their impact would not be material in relation to the company's consolidated financial position as of December 31, 1994. Depending on the amounts of future operating results, the environmental liabilities to be recorded in a given annual or quarterly period may, potentially, result in charges that are material to the results of operations for that period.
ITEM 8.
ITEM 8.FINANCIAL STATEMENTS
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors of ARCO Chemical Company
We have audited the consolidated financial statements of ARCO Chemical Company and Subsidiaries listed in the index on page 18 of this Form 10-K. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. 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, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of ARCO Chemical Company and Subsidiaries as of December 31, 1994 and 1993, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1994 in conformity with generally accepted accounting principles.
As discussed in Notes 2, 10 and 14 to the consolidated financial statements, the Company changed its method of accounting for income taxes and postretirement benefits other than pensions in 1992.
Coopers & Lybrand L.L.P.
2400 Eleven Penn Center Philadelphia, Pennsylvania February 10, 1995
ARCO CHEMICAL COMPANY
CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
(MILLIONS OF DOLLARS, EXCEPT PER SHARE DATA)
See accompanying notes.
ARCO CHEMICAL COMPANY
CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1994 AND 1993
(MILLIONS OF DOLLARS)
ASSETS
See accompanying notes.
ARCO CHEMICAL COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
(MILLIONS OF DOLLARS)
See accompanying notes.
ARCO CHEMICAL COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
(MILLIONS OF DOLLARS, EXCEPT PER SHARE DATA)
See accompanying notes.
ARCO CHEMICAL COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. FORMATION OF THE COMPANY
On June 9, 1987, Atlantic Richfield Company (ARCO) transferred substantially all the assets and liabilities of the oxygenates and polystyrenics businesses of the then ARCO Chemical Division to ARCO Chemical Company (the company) in exchange for 80,000,001 shares of common stock. On October 5, 1987, the company completed an initial public offering of 19,550,000 shares of common stock. ARCO's 80,000,001 shares represented approximately 83.3 percent of the outstanding shares of common stock at December 31, 1994.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation--The consolidated financial statements include the accounts of the company and its majority-owned subsidiaries. Investments in affiliates (20 percent to 50 percent owned) are accounted for under the equity method. All significant intercompany transactions have been eliminated in consolidation. Certain amounts in 1993 and 1992 have been reclassified for comparative purposes.
Cash Equivalents--Cash equivalents consist of highly liquid investments, such as time deposits, certificates of deposit and marketable securities other than equity securities, maturing within three months of purchase. Cash equivalents are carried at cost, which approximates market, and are classified as held-to- maturity.
Property, Plant and Equipment--Property, plant and equipment are depreciated on a straight-line method over their estimated useful lives. Upon disposition, residual cost less salvage is included in current income. Maintenance and repairs are expensed and betterments are capitalized.
Deferred Charges--Deferred charges are carried at cost and consist primarily of the value assigned to acquired technology. These assets are being amortized on a straight-line method over their estimated useful lives.
Environmental Expenditures--Environmental expenditures that relate to current operations are expensed or capitalized, depending upon their future economic benefit. Expenditures that result from the remediation of an existing condition caused by past operations are expensed. Liabilities are recognized for remedial activities when remediation is probable and the costs can be reasonably estimated.
Postretirement Benefits Other Than Pensions--Effective January 1, 1992, the company adopted Statement of Financial Accounting Standards (SFAS) No. 106, "Employers Accounting for Postretirement Benefits Other Than Pensions," on the immediate recognition basis. Under this standard, the company accrues the actuarially determined costs of postretirement benefits during the years that the employee renders the necessary service. Previously, the company expensed these costs when incurred. See Note 14.
Income Taxes--The company's results of operations are included in the consolidated U.S. federal income tax return and unitary state returns of ARCO. Income tax expense in the consolidated financial statements is computed on a stand-alone return basis pursuant to a Tax Sharing Agreement. Any resulting current tax liability or refund is settled with ARCO, consistent with the Tax Sharing Agreement. State income tax expense is computed on a stand-alone return basis using the applicable tax rates for both unitary and non-unitary states' filings.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Effective January 1, 1992, the company adopted SFAS No. 109, "Accounting for Income Taxes," whereby deferred taxes are computed under the liability method rather than the deferred method. Additionally, SFAS No. 109 increases the ability to recognize deferred tax assets by permitting the anticipation of future income. See Note 10.
3. RELATED PARTY TRANSACTIONS AND COST ALLOCATIONS
Effective July 1, 1987, the company and ARCO (including ARCO subsidiaries) entered into a series of agreements that included, among other things, purchase, exchange and processing agreements, product sales agreements, operational services agreements, and an administrative services agreement.
Certain of these agreements were between the company and the Lyondell Petrochemical Company, then a division of ARCO (the Lyondell Division). Effective July 1, 1988, ARCO transferred substantially all the assets and liabilities of the Lyondell Division to Lyondell Petrochemical Company (Lyondell), a wholly owned subsidiary of ARCO. On January 25, 1989, ARCO completed the sale to the public of a majority interest in Lyondell. Currently ARCO's interest in Lyondell is 49.9 percent. In 1994, ARCO issued Exchangeable Notes due 1997, which, at ARCO's option, can be exchanged at maturity into Lyondell common stock or cash of equal value. If ARCO elects to deliver shares of Lyondell common stock at maturity, ARCO's equity interest in Lyondell will be substantially reduced or eliminated. Lyondell continues to be treated by the company as a related party.
The purchase, exchange, and processing agreements are principally for methanol, benzene, ethylene, propylene, and MTBE. Other purchases from ARCO and Lyondell principally include normal butane, isobutane, isobutylene, nonenes and tetramers, natural gas and certain butanediol feedstocks. Product sales include sales by the company to ARCO and Lyondell of MTBE and propane. In 1991, the company entered into long-term sales agreements with ARCO providing for delivery of fixed quantities of MTBE. The operational services agreements are for various plant services performed by ARCO and Lyondell. The administrative services agreement provides that beginning October 1, 1987, ARCO provides the company with certain leased office space, insurance and other financial, internal audit, legal, aviation and administrative services, and the company provides ARCO with various technical and legal services. These agreements have various durations, ranging from monthly renewals to a term extending to 2017.
In addition to the transactions with ARCO and its affiliates, related party sales and purchases include transactions with other related parties including those which are accounted for on the equity method.
An analysis of the aggregate transactions for the years ended December 31, 1994, 1993, and 1992 is as follows:
Outstanding balances under these agreements at December 31, 1994 and 1993, are included in "Accounts receivable--related parties" and "Accounts payable-- related parties."
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
4. BUSINESS SEGMENT INFORMATION
The company and its subsidiaries currently manufacture and market intermediate chemicals and specialty products, operate in one reportable segment, and conduct business in three principal geographic regions.
Interregional sales are made at prices approximating current market values. The amounts of inter-regional sales that are included in total revenues are as follows:
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
4. BUSINESS SEGMENT INFORMATION--(CONTINUED)
Included in pretax earnings are royalty charges made from corporate to the regions for the use of company technology. Corporate assets are cash and cash equivalents, headquarters research facilities, and other assets. Eliminations principally include interregional sales, profit, and receivables.
5. INVENTORIES
Inventories are stated at the lower of cost or market. In 1994, approximately 94 percent of inventories, excluding materials and supplies, were determined by the last-in, first-out (LIFO) method. Materials and supplies and other non-LIFO inventories are valued using either the first-in, first-out (FIFO) or the average cost methods.
Inventories at December 31, 1994 and 1993, comprised the following categories:
If the FIFO inventory valuation method had been used exclusively, inventories would have been lower than the book value of such inventories by approximately $6 million and $17 million at December 31, 1994 and 1993, respectively.
6. INVESTMENTS, AT EQUITY
The company uses the equity method to account for its 50 percent interest in a joint venture, the Nihon Oxirane Co., Ltd., which operates a PO/SM plant in Chiba, Japan.
In 1992, the company divested its 50 percent ownership interest in YUKONG ARCO Chemical Ltd. (YAC) to its joint-venture partner Yukong Limited (Yukong). Operating results for the year ended December 31, 1992 included a $56 million charge, comprised of a 21 billion Won payment and write-off of the investment and other related balances. The charge has been recorded in the Consolidated Statement of Income as "Loss on asset disposition." As of June 30, 1992, the company ceased accounting for its holdings in YAC under the equity method. The company's share of net losses from the joint venture through June 30, 1992 were recorded in "Other income (expense), net." YAC continues to operate under license from the company. Certain business relationships between the company and YAC, including an export sales agreement, also continue.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
7. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment, at cost, and related accumulated depreciation at December 31, 1994 and 1993, were as follows:
Depreciation expense for the years ended December 31, 1994, 1993 and 1992 was $193 million, $188 million, and $164 million, respectively. Expenses for maintenance and repairs, including costs associated with plant maintenance turnarounds, for the years ended December 31, 1994, 1993, and 1992 were $105 million, $109 million, and $81 million, respectively. Interest cost capitalized as property, plant and equipment amounted to $37 million in 1992. Interest cost capitalized in 1994 and 1993 was not material.
8. BANK CREDIT FACILITIES
In October 1994, the company executed an amendment to an existing credit facility under which it can borrow a total amount of up to $300 million. This agreement effectively replaced the two previous revolving credit agreements entered into in December 1993. The credit agreement, as amended, has a restrictive financial covenant which requires that the company maintain a minimum net worth of $1 billion and has a term of five years. At December 31, 1994, the company had no outstanding borrowings against the credit agreement.
Notes payable at December 31, 1994 and December 31, 1993 consisted primarily of short-term bank borrowings and commercial paper issued to a variety of financial investors and institutions at various interest rates and maturities of up to 270 days. The weighted average effective interest rate for these borrowings at December 31, 1994 and December 31, 1993 was 5.8 percent and 3.4 percent, respectively. As a condition of the sale of commercial paper, the company is required to maintain a back-up credit facility at least equal to the amount of the outstanding commercial paper. The company uses the credit agreement for this purpose.
9. OTHER ACCRUED LIABILITIES
Other accrued liabilities at December 31, 1994 and 1993, were as follows:
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 10. TAXES
The components of the provision for income taxes for the years ended December 31, 1994, 1993, and 1992 were as follows:
Deferred tax liabilities and assets are comprised of the following at December 31, 1994 and 1993:
The valuation allowance was $100 million at December 31, 1992.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
10. TAXES--(CONTINUED)
A reconciliation of the federal statutory rate to the effective tax rate for the years ended December 31, 1994, 1993, and 1992 is as follows:
During 1993, the company took certain actions to convert five-year foreign tax loss carryforwards into additional depreciable tax basis. Future losses attributable to the additional basis will have an unlimited carryforward period. At December 31, 1994, the company had federal capital loss carryforwards of $75 million, foreign tax loss carryforwards of $230 million, state tax loss carryforwards of $222 million and foreign and federal tax credit carryforwards of $18 million. These carryforwards begin expiring in 1995. Existing foreign tax credits are sufficient to offset any tax on undistributed earnings of foreign subsidiaries.
In the fourth quarter 1992, the company elected early adoption of Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes." This standard increased the company's ability to record deferred tax assets by allowing consideration of anticipated future income. The change was effected as of January 1, 1992; years prior to 1992 were not restated. The cumulative effect upon adoption was a benefit of $18 million. The effect of the change on 1992 results, excluding the cumulative effect, was not material.
11. LONG-TERM DEBT
Long-term debt at December 31, 1994 and 1993, comprised the following:
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
11.LONG-TERM DEBT--(CONTINUED)
On December 1, 1993, the company redeemed all of its outstanding 9.35 percent Debentures due 2019, in accordance with the provisions of the Debentures at a redemption price of 107.48 percent of principal plus interest accrued to the redemption date. The principal amount redeemed represented the original $125 million issue less amounts repurchased in the open market. The company reported a fourth quarter charge for loss on early extinguishment of debt of approximately $13 million before tax, primarily due to repurchase and redemption premiums and write-off of original issue discount.
The ACNL bank loans, entered into by the company's wholly owned subsidiary, ARCO Chemie Nederland, Ltd. (ACNL), consist of two borrowings, both due in 1997. At December 31, 1994, ACNL had outstanding interest rate swaps on both of its bank loans, totalling 300 million Dutch guilders, or approximately $172 million. Both swaps mature in 1997 when the related debt becomes due. The swaps effectively changed both loans' floating rates, which are based on the Amsterdam Interbank Offer Rate ("AIBOR"), to fixed rates of 5.7 percent and 6.7 percent. The company intends to hold the swaps until maturity.
The French bank loans, entered into by the company's wholly owned affiliate, ARCO Chimie France, SNC, mature at various dates through 2006. The weighted average effective interest rate for these borrowings was approximately 7.9 percent in 1994 and 1993.
Aggregate maturities of all long-term debt during the next five years are $15 million in 1995, $23 million in 1996, $197 million in 1997, $26 million in 1998, and $25 million in 1999.
12.OTHER COMMITMENTS AND CONTINGENCIES
COMMITMENTS
Subsequent to December 31, 1994, the company entered into a long-term arrangement for a supply of toluene di-isocyanate (TDI). Initial payments of $80 million were made at closing for capacity reservation fees, related inventory and other rights and costs. Effective January 1, 1995, the company is entitled to all of the TDI output of the supplier's two plants in France, which have a combined rated capacity of approximately 264 million pounds per year. Under the arrangement, the company is required to purchase a minimum of 216 million pounds of TDI per year for up to 15 years. The aggregate purchase price is a combination of plant cost and market price. The company is further obligated to pay additional capacity reservation fees based upon plant output factors.
To assure itself of reliable, long-term supplies of utilities at favorable rates for its Rotterdam plant, the company entered into a 15-year utility cogeneration joint venture as a limited partner. The joint venture constructed and operates a cogeneration plant, primarily funded through nonrecourse debt. Starting in 1995, the company is obligated to take or pay for minimum quantities of steam and electricity in support of the joint venture's financing arrangement. The company will pay for actual quantities of steam and electricity taken based on the joint venture's actual cost plus a specified return on the partners' investment.
The company also has a long-term purchase agreement for ethylene which requires the company to take or pay for 143 million pounds annually at prevailing market prices for a remaining term of five years. Purchases under this agreement during 1994, 1993 and 1992 were $30 million, $27 million and $21 million, respectively.
The company has commitments, including those related to capital expenditures, all made in the normal course of business. At December 31, 1994, there were commitments associated with various capital projects which were not significant either individually or in the aggregate.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 12.OTHER COMMITMENTS AND CONTINGENCIES--(CONTINUED)
CONTINGENCIES
The company and its subsidiaries are involved in a number of lawsuits, all of which have arisen in the ordinary course of the company's business. The company is unable to predict the outcome of these matters, but does not believe, based upon currently available facts, that the ultimate resolution of such matters will have a material adverse effect on the consolidated financial statements of the company.
The company is subject to other loss contingencies pursuant to federal, state, local, and foreign environmental laws and regulations. These contingencies include possible obligations to remove or mitigate the effect on the environment of the disposal or release of certain chemical substances at various sites. The company continues to estimate the amount of these costs and periodically establishes reserves based on the progress made in determining the magnitude, method and timing of the remedial actions that may be required by government authorities, and an evaluation of the company's potential liability in relation to the liability and financial resources of the other potentially responsible parties.
At December 31, 1994, the company's reserve totaled $51 million which reflects the company's latest assessment of potential future costs associated with existing sites. A significant portion of the reserve is related to the company's Beaver Valley (Pennsylvania) facility. The company and the Pennsylvania Department of Environmental Resources have agreed upon a work plan for testing and remedial process design with regard to conditions at the Beaver Valley plant. The reserve reflects an agreement between the company and another responsible party whereby that party has agreed to pay for approximately 50 percent of the cost of the remediation at the Beaver Valley plant. The remainder of the reserve is related to six other sites for amounts ranging from $1 million to $7 million per site. Substantially all amounts accrued are expected to be paid out over the next five to ten years.
The company is currently performing environmental site assessments, remedial investigations/feasibility studies, and remediation activities at a number of sites under these laws. The company may in the future be involved in additional environmental assessments and cleanups. As the scope of the company's environmental contingencies becomes more clearly defined, it is possible that amounts in excess of those already reserved may be necessary.
Management believes, based upon its past experience and best assessment of future events, that these environmental liabilities and costs will be determined and incurred over an extended period of time, allowing the company to fund such liabilities and costs through its operating cash flow, and therefore that the impact of such liabilities and costs would not be material in relation to the company's consolidated financial position as of December 31, 1994. Depending on the amounts of future operating results, the environmental liabilities to be recorded in a given annual or quarterly period may potentially result in charges that are material to the results of operations for that period.
The company and ARCO are parties to an agreement whereby the company has indemnified ARCO against certain claims or liabilities that ARCO may incur relating to ARCO's former ownership and operation of the oxygenates and polystyrenics businesses of the company, including liabilities under laws relating to the protection of the environment and the workplace and liabilities arising out of certain litigation. ARCO has indemnified the company with respect to other claims or liabilities and other matters of litigation not related to the assets or businesses reflected in the consolidated financial statements. ARCO has also indemnified the company for certain federal, foreign, state, and local taxes that might be assessed upon audit of the operations of the company included in its consolidated financial statements for periods prior to July 1, 1987.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
13. RETIREMENT PLANS
Substantially all employees are covered by various pension plans. The ARCO Chemical Retirement Plan (ACRP), a defined benefit plan, provides pension benefits to all of the company's employees in the United States and certain employees in foreign countries. In addition to the ACRP, the company also maintains defined benefit pension plans for hourly employees at the Beaver Valley plant in Monaca, Pennsylvania, as well as several plans covering certain employees throughout its European and Asia Pacific operations.
Retirement benefits under the ACRP are based on years of participation service and the employee's compensation primarily during the last three years of service. Retirement benefits for the Beaver Valley Hourly Retirement Plan are primarily based on years of service and on the employee's career average earnings after January 1, 1989, plus a prior benefit accrued through December 31, 1988. European and Asia Pacific plans vary by country, but are primarily based on years of service and compensation during the last year of service. The funding policy for these plans consists of annual contributions as required by applicable regulations. In 1994, 1993, and 1992, the company charged pension costs as accrued, based on an actuarial valuation, and funded the plans through contributions to separate trust funds that are kept apart from company funds.
The following tables set forth the plans' funded status and amounts recognized in the company's balance sheets at December 31, 1994 and 1993:
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
13. RETIREMENT PLANS--(CONTINUED)
The above tables for plans with assets exceeding accumulated benefits include foreign pension plans. These foreign plans constitute approximately 25 percent and 23 percent of the projected benefit obligation and 26 percent and 21 percent of the plan assets in the table at December 31, 1994 and 1993, respectively. The plans for which accumulated benefits exceed assets represent supplemental retirement benefits for executives and expatriated employees.
Components of net pension cost related to company-sponsored plans for the years ended December 31, 1994, 1993, and 1992 were as follows:
In addition to the pension cost above, in 1994 the company recorded $13 million pretax of additional pension expense in connection with work force reductions resulting from the corporate restructuring program.
Foreign pension plans comprised $5 million, $3 million and $4 million of net periodic pension cost for the years 1994, 1993 and 1992, respectively.
The assumptions used as of December 31, 1994, 1993, and 1992 in determining the domestic net pension cost and net pension liability were as follows:
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
13. RETIREMENT PLANS--(CONTINUED)
The assumptions used in determining the net pension cost and pension liability for foreign pension plans were based on the economic environment of each applicable country. The range of assumptions used as of December 31, 1994 was as follows: discount rates, 7.0 to 8.5 percent; rate of salary progression, 5.0 percent; long-term rate of return on assets, 7.0 to 9.0 percent.
14. OTHER POSTRETIREMENT BENEFITS
The company provides medical and life insurance benefits for retired employees and covered dependents. Substantially all U.S. employees of the company may become eligible for these benefits if they remain employed until normal retirement age or fulfill other eligibility requirements. Retiree contribution levels to the medical benefit plan are determined annually by the company; the life insurance plan is noncontributory. The underlying plans are not funded.
In the fourth quarter 1992, the company adopted Statement of Financial Accounting Standards No. 106, "Employers Accounting for Postretirement Benefits Other Than Pensions." The company elected to immediately recognize the transition obligation as of January 1, 1992 of $33 million in the first quarter 1992 as a change in accounting principle. On an after-tax basis, this charge was $20 million, or $.21 per share. The effect of the change on 1992 net income, excluding the cumulative effect upon adoption, was not material.
The following reconciles the unfunded accumulated obligation to the company's balance sheet as of December 31, 1994 and 1993:
Net periodic postretirement benefit cost for the years ended December 31, 1994 and 1993 included the following components:
The medical cost trend rate was assumed to increase 10 percent annually from 1992 to 1996, 8 percent annually from 1997 to 2001 and 6 percent annually thereafter. Increasing the health care cost trend rate by one percentage point in each year would increase the accumulated postretirement benefit obligation as of December 31, 1994 by $9 million and increase net periodic postretirement benefit cost for 1994 by $2 million. The discount rate used was 8.25 percent.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
15. STOCK OPTIONS
In November 1989, the Board of Directors adopted the 1990 Long-Term Incentive Plan (the 1990 Plan). The 1990 Plan, which became effective January 1, 1990, provides, among other things, for the granting to officers and other key management employees of nonqualified stock options for the purchase of up to two million shares of the company's common stock. The option price per share is fixed by the Long-Term Incentive Plan Administration Subcommittee (the subcommittee) of the Board of Directors, which administers the 1990 Plan, but may not be less than the fair market value of the company's common stock on the date the option is granted. The maximum option period is ten years. Options granted may be exercised after one year of continuous service with ARCO, the company, or any of their subsidiaries immediately following the date of the grant unless the subcommittee establishes a longer waiting period.
In July 1987, ARCO, the company's sole stockholder at the time, approved the 1987 Executive Long-Term Incentive Plan (the 1987 Plan). The 1987 Plan, which became effective September 1, 1987, provided, among other things, for the granting to officers and other key management employees of non-qualified stock options for the purchase of up to 290,000 shares of the company's common stock at $32 per share. The options are currently exercisable through October 1997. No additional options will be granted under the 1987 Plan.
The following table summarizes the activity relating to the company's stock option plans:
16. EARNINGS PER COMMON SHARE
Earnings per common share are computed based on the weighted average number of shares outstanding during the year. For 1994, 1993 and 1992, the weighted average number of shares was 96,059,348; 95,956,777 and 95,898,909 shares, respectively. The effect of stock options issued under the 1987 Executive Long- Term Incentive Plan and the 1990 Long-Term Incentive Plan (see Note 15) on the computation of primary and fully diluted earnings per common share was not material and had no effect on the reported earnings per common share.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
17. SUPPLEMENTAL CASH FLOW INFORMATION
Following is supplemental cash flow information provided for the years ended December 31, 1994, 1993, and 1992:
18. LEASE COMMITMENTS
The company leases various facilities and equipment under noncancelable lease arrangements for varying periods. At December 31, 1994, future minimum lease payments for all noncancelable operating leases with lease terms in excess of one year were as follows:
Net rental expense for the years ended December 31, 1994, 1993, and 1992 was as follows:
19. FOREIGN CURRENCY TRANSACTIONS
For the years ended December 31, 1994, 1993, and 1992, losses on foreign exchange transactions, including foreign currency derivative instruments, were $2 million, $1 million, and $15 million, respectively. See Note 20.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
20.FINANCIAL INSTRUMENTS
The company does not hold or issue financial instruments for speculative trading purposes.
Various types of foreign currency forward, option and swap contracts are used to hedge foreign exchange exposures. Foreign exchange exposures result from cash flows between U.S. and international operations and transactions denominated in currencies other than the local currency of an operating entity. Forward and option contracts are used predominantly to hedge exposures of less than one year in duration. Swap contracts are used to hedge intercompany debt exposures with maturities exceeding one year. At December 31, 1994, the company had foreign currency swap contracts outstanding which mature at various dates through March, 1999. At December 31, 1994 and 1993, the notional amounts of foreign currency contracts outstanding, principally European currencies, were $120 million and $85 million, respectively.
Gains and losses, realized and unrealized, on foreign currency forward and option contracts covering anticipatory cash flows are recognized currently as other income or expense in the results of operations. Gains and losses on foreign currency swaps are recognized currently in income and offset foreign exchange gains and losses on the underlying intercompany loans. Net gains or losses associated with derivative contracts for 1994 and 1993 were not material.
The carrying value and estimated fair value of the company's financial instruments as of December 31, 1994 and 1993 were as follows:
The carrying amounts of nonderivative financial instruments are reported on the balance sheet under the indicated captions. All derivative instruments are off-balance-sheet instruments, however net receivable or payable positions related to derivative instruments are carried on the balance sheet.
Other investments and long-term receivables, which consist primarily of equity investments in affiliated companies, were valued using current financial and other available information. The fair value of notes payable approximates carrying value due to the relatively short-term maturities of such instruments. Long-term debt was valued based on quoted market prices for the same or similar issues or on the current rates offered to the company for debt of the same remaining maturities. The fair value of foreign currency swaps represents the amount to be exchanged if the existing contracts were settled at year end and are based on market quotes.
The company is exposed to credit risk related to its financial instruments in the event of nonperformance by the counterparties. The company does not generally require collateral or other security to support these financial instruments. However, the counterparties to these transactions are major institutions deemed creditworthy by the company; the company does not anticipate nonperformance by the counterparties.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
21. CORPORATE RESTRUCTURING PROGRAM
In November, 1994, the company announced a worldwide corporate restructuring program to reorganize its work force on a global basis. In connection with the restructuring, approximately 130 people will be leaving the company. The company accrued $30 million before tax in the fourth quarter of 1994, consisting primarily of personnel costs (pension enhancements, severance and other ancillary costs) associated with the terminations.
Of the total accrued, approximately one half related to severance and other ancillary costs that will be paid from company funds within the next year. The remainder, primarily related to enhanced pension benefits, will be paid from the assets of qualified pension plans. The company funds these qualified pension plans on a long-term basis, giving consideration to statutory and actuarial requirements and tax regulations.
Through December 31, 1994, no employees had been terminated nor were any payments made.
22. SUMMARY OF QUARTERLY RESULTS (UNAUDITED)
- -------- (1) The fourth quarter 1994 includes a charge of $19 million ($.20 per share) for corporate restructuring costs and a benefit of $12 million ($.12 per share) from insurance proceeds. (2) The fourth quarter 1993 includes a charge of $10 million ($.10 per share) related to early extinguishment of debt. See Note 11. (3) Earnings per common share calculations for each of the quarters are based on the weighted average number of shares outstanding for each period. The sum of the quarters may not necessarily be equal to the full year earnings per share amount.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding executive officers of the company is included in Part I. For the other information called for by Items 10, 11, 12, and 13, reference is made to the company's definitive proxy statement for its Annual Meeting of Stockholders, to be held on May 11, 1995, which will be filed with the Securities and Exchange Commission within 120 days after December 31, 1994, and which is incorporated herein by reference.
PART IV
ITEM 14.
ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K
(A) THE FOLLOWING DOCUMENTS ARE FILED AS A PART OF THIS REPORT:
Copies of exhibits will be furnished upon prepayment of 25 cents per page. Requests should be addressed to the Corporate Secretary.
(B) REPORTS ON FORM 8-K:
ARCO Chemical Company filed a Current Report on Form 8-K, dated December 6, 1994, which contained a press release, dated December 6, 1994, announcing the transaction with Rhone-Poulenc regarding toluene di-isocyanate arrangements.
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in Newtown Square, Commonwealth of Pennsylvania, on February 28, 1995.
ARCO Chemical Company
By: ALAN R. HIRSIG --------------------------------- Alan R. Hirsig President and Chief Executive Officer
----------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
SIGNATURE TITLE DATE --------- ----- ----
LODWRICK M. COOK* Chairman of the - ------------------------------------- Board and Director Lodwrick M. Cook
ALAN R. HIRSIG President, Chief - ------------------------------------- Executive Officer Alan R. Hirsig and Director
MARVIN O. SCHLANGER* Executive Vice - ------------------------------------- President, Chief Marvin O. Schlanger Operating Officer and Director
JACK E. OPPASSER* Senior Vice - ------------------------------------- President and Jack E. Oppasser Director
WALTER J. TUSINSKI* Senior Vice - ------------------------------------- President, Chief Walter J. Tusinski Financial Officer February 28, and Director 1995
PETER C. HARRIS* Vice President and - ------------------------------------- Director Peter C. Harris
RONALD J. ARNAULT* Director - ------------------------------------- Ronald J. Arnault
WALTER F. BERAN* Director - ------------------------------------- Walter F. Beran
E. KENT DAMON, JR.* Director - ------------------------------------- E. Kent Damon, Jr.
MARIE L. KNOWLES* Director - ------------------------------------- Marie L. Knowles
SIGNATURE TITLE DATE --------- ----- ----
JAMES A. MIDDLETON* Director - ------------------------------------- James A. Middleton
FRANK SAVAGE* Director - ------------------------------------- Frank Savage
ROBERT H. STEWART, III* Director - ------------------------------------- Robert H. Stewart, III February 28, JOHN A. SHAW Vice President and 1995 - ------------------------------------- Controller John A. Shaw (principal accounting officer)
*By: JOHN A. SHAW --------------------------------- John A. Shaw
(Attorney in fact)
EXHIBITS TO FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994 COMMISSION FILE NUMBER 1-9678 ARCO CHEMICAL COMPANY
EXHIBIT INDEX