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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q/A
(AMENDMENT NO. 3)
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2004
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period________ from________ to
Commission file number: 1-12091
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MILLENNIUM CHEMICALS INC.
(Exact name of registrant as specified in its charter)
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Delaware 22-3436215
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
20 Wight Avenue, Suite 100
Hunt Valley, MD 21030
(Address of principal executive offices)
410-229-4400
(Registrant's telephone number, including area code)
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant is required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ].
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [X] No [ ].
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: 64,970,023 shares of Common
Stock, par value $.01 per share, as of April 30, 2004, excluding 12,926,563
shares held by the registrant, its subsidiaries and certain Company trusts that
are not entitled to vote.
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MILLENNIUM CHEMICALS INC.
Explanatory Note
Millennium Chemicals Inc. (the "Company") filed Amendment No. 2
("Amendment No. 2") to its Quarterly Report on Form 10-Q for the period ended
March 31, 2004 (the "Quarterly Report") to provide additional information
relating to the Company's material weakness in internal control over financial
reporting relating to the computation of deferred income taxes for the Company's
investment in Equistar Chemicals, LP; the analysis and re-computation performed
by the Company to correct such deferred income tax calculation; and the steps
the Company is taking to remediate such material weakness.
This Amendment No. 3 to the Quarterly Report ("Amendment No. 3") contains
the text of Amendment No. 2 in its entirety apart from the explanatory note and
exhibits thereto. This Amendment No. 3 also includes as exhibits certificates of
each of the Chief Executive Officer and Chief Financial Officer that include
paragraphs 4 and 5, which were unintentionally omitted from the certificates
filed as exhibits to Amendment No. 2.
PART I. FINANCIAL INFORMATION
Item 4. Controls and Procedures
(a) The Company maintains disclosure controls and procedures that are designed
to provide reasonable assurance that information required to be disclosed
in the Company's filings under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the periods specified
in the rules and forms of the Securities and Exchange Commission (the
"SEC") and that such information is accumulated and communicated to the
Company's management, including its principal executive officer and
principal financial officer, as appropriate, to allow timely decisions
regarding required disclosure.
As a result of tax integration activities that began in the second quarter
of 2004 with respect to the Company's proposed business combination with
Lyondell, the Company determined at the beginning of July 2004 that it had
made errors in the computation of its tax basis in Equistar, which in turn
had been used to compute the Company's deferred income taxes. In response
to the determination that errors had been made, the Company performed a
thorough analysis and re-computation of the Company's tax basis in
Equistar. In late July 2004, the Company completed the analysis and
re-computation necessary to verify and quantify the errors and prepare a
restatement to correct the errors, which restatement was reflected in
Amendment No. 2 to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2003, filed with the SEC on August 9, 2004 and
Amendment No. 1 to the Company's Quarterly Report on Form 10-Q for the
period ended March 31, 2004 ("10-Q Amendment No. 1"), filed with the SEC on
August 9, 2004.
The restatement of prior periods' financial statements that resulted from
the analysis and recomputation discussed above decreased the Company's
liability for deferred income taxes and shareholders' deficit at March 31,
2004 and December 31, 2003 and 2002 by $15 million. The restatement
similarly decreased liabilities for deferred income taxes and increased
shareholders' equity at December 31, 2001 and 2000 by $15 million. The
restatement did not affect the Company's cash flow or operating income in
any period.
The errors corrected in the restatement were the result of (i) an incorrect
computation by the Company in 1998 of the Company's original tax basis in
the net assets it contributed to Equistar upon the joint venture's
formation in December 1997 and (ii) incorrect computations by the Company
for 1998 and 1999 of changes in the amount of such tax basis. The Company
also discovered a de minimis error made in 2001. The Company believes that
the errors were attributable to a material weakness in internal control
over financial reporting relating to the computation by the Company of
deferred income taxes for the Company's investment in Equistar. The
material weakness consisted of (i) inadequate review and verification by
the Company in 1998 of tax basis data relating to net assets contributed
by the Company to Equistar in December 1997, and (ii) incorrect
interpretation by the Company of Equistar tax return information provided
by the "tax matters partner" of Equistar and used by Millennium to compute
changes in its tax basis in Equistar for 1998 and 1999. Under Equistar's
partnership agreement, Lyondell serves as the tax matters partner and, as
such, prepares and files Equistar's tax returns.
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In order to remediate the material weakness in internal control over
financial reporting, the Company is documenting the procedures used to
analyze and re-compute the Company's tax basis in Equistar in July 2004
for implementation with respect to the third quarter of 2004 and
subsequent reporting periods. These procedures include (i) the detailed
review by the Company's Director-Tax and its Vice President-Tax of
estimates of tax return data provided quarterly by Equistar's tax matters
partner, (ii) followed by discussions of the results of such review with
the tax matters partner to confirm the correctness of the Company's
interpretation of the estimated tax return data provided by the tax matters
partner and (iii) thereafter, review of the results of these procedures by
the Company's Corporate Controller and Chief Financial Officer. Although
these procedures will be implemented for the third quarter of 2004, the
material weakness will not be considered remediated until these procedures
operate for a period of time, are tested and it is concluded that such
procedures are operating effectively.
In May 2004, prior to the initial filing of the Company's Quarterly
Report on Form 10-Q for the quarterly period ended March 31, 2003, the
Company completed an evaluation under the supervision and with the
participation of the Company's management, including the Company's
principal executive officer and principal financial officer, of the
effectiveness of the design and operation of the Company's disclosure
controls and procedures as of March 31, 2004. Based on this evaluation, the
Company's principal executive officer and principal financial officer
concluded that the Company's disclosure controls and procedures were
effective at the reasonable assurance level as of March 31, 2004. However,
as a result of the Company's decision to restate its financial statements,
the Company completed in early August 2004, prior to filing 10-Q Amendment
No. 1, a second evaluation under the supervision and with the participation
of the Company's management, including the Company's principal executive
officer and principal financial officer, of the effectiveness of the design
and operation of the Company's disclosure controls and procedures as of
March 31, 2004. Based on this second evaluation, the Company's principal
executive officer and principal financial officer concluded that, solely as
a result of the material weakness referred to above, the Company's
disclosure controls and procedures were not effective at the reasonable
assurance level as of March 31, 2004. However, as a result of the analysis
and re-computation discussed above, management believes that the financial
statements included in 10-Q Amendment No. 1 fairly present in all material
respects the Company's financial condition, results of operations and cash
flows for the fiscal periods presented.
(b) There were no changes in the Company's internal control over financial
reporting that occurred during the most recent fiscal quarter covered by
this Quarterly Report that have materially affected, or are reasonably
likely to materially affect, the Company's internal control over financial
reporting.
As a result of Section 404 of the Sarbanes-Oxley Act of 2002 and the rules
issued thereunder (the "Section 404 Requirements"), the Company will be
required to include in its Annual Report on Form 10-K for the year ending
December 31, 2004 a report on management's assessment of the effectiveness
of the Company's internal control over financial reporting. As part of the
process of preparing for compliance with the Section 404 Requirements, in
2003, the Company initiated a review of its internal control over
financial reporting. This review is being conducted under the direction of
senior management. As a result, management has made improvements to the
Company's internal control through the date of the filing of this
Amendment No. 2 as part of its normal review process. The Company's
management does not believe these changes have materially affected, or are
reasonably likely to materially affect, the Company's internal control
over financial reporting. The Company anticipates that improvements will
continue to be made as part of the ongoing review.
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits -
31.1 Certificate of Principal Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.**
31.2 Certificate of Principal Financial Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.**
32.1 Certificate of Principal Executive Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002 (Furnished, not filed, in
accordance with Item 601(b)(32)(ii) of Regulation S-K, 17 CFR
229.601(b)(32)(ii)).*
32.2 Certificate of Principal Financial Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002 (Furnished, not filed, in
accordance with Item 601(b)(32)(ii) of Regulation S-K, 17 CFR
229.601(b)(32)(ii)).*
* Filed or furnished with Amendment No. 1 to the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 2004.
** Filed or furnished herewith.
(b) Reports on Form 8-K.
Current Reports on Form 8-K dated March 29, 2004 and May 5, 2004 were filed
or furnished during the quarter ended March 31, 2004 and through May 14,
2004, the date the original Quarterly Report on Form 10-Q was filed with
the Securities and Exchange Commission. Such Current Reports either filed
or furnished information to the Securities and Exchange Commission.
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SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) 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.
MILLENNIUM CHEMICALS INC.
Date: September 24, 2004 By: /S/ JOHN E. LUSHEFSKI
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John E. Lushefski
Executive Vice President and
Chief Financial Officer
(as duly authorized officer and
principal financial officer)
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Exhibit Index
Exhibit
Number Description of Document
31.1 Certificate of Principal Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
31.2 Certificate of Principal Financial Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
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