<PAGE>
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
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, 1993 COMMISSION FILE NO. 1-4654
------------------------
WITCO CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
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<S> <C>
DELAWARE 13-1870000
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
520 MADISON AVENUE, 10022-4236
NEW YORK, NEW YORK (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 605-3800
------------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
- ----------------------------------------------------------------------- ------------------------
<S> <C>
Common Stock -- $5 Par Value New York Stock Exchange
5 1/2% Convertible Subordinated Debentures due 2012 New York Stock Exchange
7.45% Debentures due 1997 New York Stock Exchange
</TABLE>
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 was 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 if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [x]
As of February 28, 1994, the aggregate market value of the voting stock
held by non-affiliates of the Registrant, based on the closing price on February
28, 1994 on the New York Stock Exchange for the Registrant's Common Stock, was
$1.7 billion.
There were 50,519,019 shares of the Registrant's Common Stock outstanding
at February 28, 1994.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant's definitive Proxy Statement for its April 27, 1994
Annual Meeting of Shareholders are incorporated by reference into Part III.
________________________________________________________________________________
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PART I
ITEM 1 -- BUSINESS
(a) GENERAL DEVELOPMENT OF BUSINESS
The Company is a global manufacturer and marketer of specialty chemical and
petroleum products for use in a wide variety of industrial and consumer
applications. Most of the Company's products are sold to industrial customers
for use as additives and intermediates which impart particular characteristics
to such customers' end products. The Company provides manufacturing flexibility
and a high degree of technical service to create value-added chemical and
petroleum products that meet customers' specialized needs. Established in 1920,
Witco has ranked among the Fortune 500 largest U.S. industrial firms for many
years, ranking 242 for 1992. At December 31, 1993, the Company had 8,161
employees worldwide.
The Company's operations are divided among three business segments:
Chemical, Petroleum and Diversified Products. Principal products of the Chemical
segment include surface active agents, resins, oleochemicals, and polymer
additives. Surface active agents (also known as surfactants) are used as
emulsifiers in agricultural and food products, and are ingredients in personal
care, laundry, and cleaning products; resins are used as adhesion promoters in
shoes, coatings, flooring, and construction materials; oleochemicals are used in
the production of personal care products, rubber, plastics, paper, and textiles;
and polymer additives are used in the production and processing of vinyl,
polyethylene, and other polymers. Principal products of the Petroleum segment
include white oils, and petrolatums used in cosmetics, pharmaceuticals, and
plastics; petroleum sulfonates used as additives in lubricating oils, greases
and metalwork fluids; Lubrimatic brand and private label lubricating greases and
equipment; asphalt, napthenic oils and road restorative products; and Kendall
and Amalie brand motor oils and lubricants. The Diversified Products segment
manufactures battery containers and other molded plastics products, as well as
carbon black and metal finishing and metalworking products.
In 1992 the Company completed the acquisition of the Industrial Chemicals
and Natural Substances divisions of Schering AG Berlin (the 'Schering
Acquisition') for approximately $440 million. As a result of the acquisition,
the Company's international presence expanded with the addition of a large
chemical manufacturing base in Germany and operations in Spain, the United
Kingdom, France, Italy, and Ecuador. In addition, the Company's specialty
businesses in surfactants, polymer additives, and oleochemicals broadened
significantly.
The Company completed a two-for-one common stock split during the fourth
quarter of 1993. In 1993 the Company also disposed of the operations of its
Chemprene, Inc. subsidiary, a manufacturer of conveyor belting and other
specialized belts. The Company expects to complete the sale of its Allied-Kelite
and Battery Parts divisions' businesses in 1994.
On March 11, 1994 the Company called for redemption on March 28, 1994 all
of its 5 1/2% Convertible Subordinated Debentures due 2012 of which $150 million
are outstanding. The debentures are convertible into common stock of the Company
at a conversion price of $27.28 per share, which price was below the market
price for the Company's common stock on the New York Stock Exchange on March 10,
1994. If all debentures are converted, approximately 5.5 million additional
shares of common stock will become issued and outstanding. However, the issuance
of additional common stock by reason of conversion of any debentures will have
no effect upon the Company's earnings per share calculations as the shares
underlying the debentures have been considered as common stock equivalents in
such calculations. If all debentures were to be redeemed rather than converted,
the total cost to the Company would be $152.8 million. The Company will fund any
redemptions through a combination of available cash and short-term borrowings.
Witco Corporation was incorporated in 1958 under the laws of Delaware as
Witco Chemical Company, Inc., at which time it succeeded by merger to the
business of Witco Chemical Company, an Illinois corporation formed in 1920. Its
executive offices are located at 520 Madison Avenue, New York, New York
10022-4236, telephone (212) 605-3800.
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(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
Reference is made to Note 15 of the Notes to Financial Statements. See Item
8 -- Financial Statements and Supplementary Data following Part IV of this
report.
(c) NARRATIVE DESCRIPTION OF BUSINESS
The Company's operations are divided among three business segments:
Chemical, Petroleum and Diversified Products.
Chemical Products
Oleochemicals/Surfactants
Witco offers one of the broadest lines of surfactants and oleochemicals in
the chemical industry, providing 'one-stop shopping' for its customers. These
products are sold to a range of industries, including cosmetics and
pharmaceuticals; personal care, soap and detergent; agricultural; rubber; food;
paint and protective coatings; and textile. Surfactants change the surface
tension of liquids. They include agricultural emulsifiers, which are used to
break up pesticides into small particles, thereby increasing dispersion and
improving penetration, and food emulsifiers, which impart particular
characteristics (such as consistency) to certain foods. In addition, surfactants
are used in personal care products, fabric softeners, and detergents to improve
penetration and cleaning capability. These products are marketed in coordination
with the Petroleum Specialties Group of the Company's Petroleum Products
segment. Oleochemicals are derived from natural fats and oils, and include fatty
acids, fatty amines, esters, and glycerines. Oleochemicals modify surfaces
either as direct lubricants, or as components of ingredients that modify
surfaces. Examples of their diverse applications include acting as lubricants in
plastics; imparting mold release features for the rubber industry; and acting as
curing systems for rubber.
The Schering Acquisition significantly broadened the Company's surfactants
product base to include offerings in all significant specialty surfactants
product categories and made Witco a leading U.S. and worldwide producer of
cationic surfactants. Cationic surfactants are the major ingredient in fabric
softeners, hair conditioners, and other personal care products. The acquisition
also complements Witco's oleochemical business with additional fatty amines,
which are used as chemical intermediates and to make cationic surfactants.
Polymer Additives
Witco is a worldwide supplier of polymer additives, producing an extensive
array of chemicals used as additives in the plastics industry, including
stabilizers for use in the manufacture of polyvinyl chloride products (PVC) for
such applications as pipes, fittings, siding, and packaging materials. It is an
international supplier of lubricant additives to polyolefin and PVC
manufacturers. The Company also makes peroxides for use in the polyolefin and
PVC industries, epoxy plasticizers, and stearates used as lubricants in the
plastics industry. As a result of the Schering Acquisition, the Company is the
leading European producer of aluminum alkyls, used as co-catalysts in the
production of polyolefins (including polyethylene and polypropylene, which are
among the world's largest volume plastics used in packaging, cars, furniture,
and appliances) and produces organotin compounds for the production of PVC
stabilizers and biocides for the marine paints.
Polyurethanes
Witco has long been a major supplier of polyesters, coatings, and urethane
chemicals to the construction, leather and textile finishing, and paint
industries. The Company is a leading producer of saturated polyester polyols
which are used in the manufacture of flexible foam that is sold to a wide
variety of industries, including textile and automotive. Witco is currently
expanding its polyester polyol business for use in non-cellular urethane
applications such as coatings, adhesives, cast elastomers, and thermoplastic
urethanes.
3
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Resins
With the Schering Acquisition, the Company added a resins product line
augmenting its polyurethane business, broadening the range of products sold to
similar industries and adding complementary research and development
capabilities. As a result, Witco has a major share of the European market for
thermoplastic polyamide and polyester products used by the adhesives, shoe and
textile industries, adhesion promoters used in vinyl plastisol production, and
amine and polyamide epoxy resin curing agents and epoxy resins used to
manufacture industrial floorings and adhesives and as coatings for
infrastructure and building purposes.
Customers
The Company markets its specialty chemical products directly through its
own sales force and through an organized distribution program to a large number
of customers in a broad range of industries. Its chemical business is not
dependent upon any single customer or a few customers. During the year ended
December 31, 1993, no customer accounted for more than 5.2% of Chemical Segment
sales, and sales to the ten largest customers accounted for approximately 15.8%
of Chemical Segment sales.
Competition
Many of the specialty chemical products produced by the Company are
characterized by a need for a high degree of manufacturing competence and
technical service, particularly because customer specifications vary
considerably and special formulations must be devised to meet customers' needs.
Competition is fragmented, with no one competitor offering products across all
of the Company's chemical product lines. Competition is primarily on the basis
of performance of the Company's products compared with similar products produced
by its competitors.
Petroleum Products
Petroleum Specialties
Witco is an important manufacturer and marketer of white mineral oils,
petrolatums, refrigeration oils and telecommunication cable filling compounds,
as well as natural and synthetic petroleum sulfonates. White mineral oils and
petrolatums are extensively refined, high purity petroleum products suitable for
food grade, pharmaceutical and cosmetic applications. They are inert and
non-reactive, and impart emolliency, moisture resistance, lubrication and
insulation properties. These products are marketed in coordination with the
Oleochemicals/Surfactants Group of the Company's Chemical Segment. In addition
to personal care and food applications, white mineral oils and petrolatums are
used in plastics, agriculture, textiles and chemical processing. Petroleum
sulfonates are oil soluble, surface active agents derived from both synthetic
and natural petroleum feedstocks. They provide properties of emulsification,
dispersion, wetting of solids, and rust and corrosion inhibition, and are used
in lubricant additives and metalworking fluids. The Company is also a supplier
of fully refined, FDA-quality microcrystalline waxes, which are primarily used
in paper lamination and packaging applications including cheese coatings.
Lubricants
The Company produces motor oils and lubricants which it sells under the
Kendall and Amalie brand names. Kendall and Amalie brand products are sold
worldwide through a network of over 300 warehouse distributors. Kendall and
Amalie brand products are also sold directly to large national accounts
domestically. In addition, Witco is the largest domestic private label grease
manufacturer and markets Lubrimatic brand products and lubricating equipment
directly to its customers. Witco is also a supplier of specialty naphthenic
oils, which are marketed to the rubber, plastics, ink and agricultural
industries, and asphalt and surface treatment products, which are sold primarily
for highway construction and maintenance.
4
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Customers
The Company's petroleum products are marketed directly through its own
sales force and through distributors and agents. During the year ended December
31, 1993, no customer accounted for more than 3.0% of Petroleum Segment sales,
and sales to the ten largest customers accounted for approximately 17.0% of
Petroleum Segment sales.
Competition
Many of the specialty petroleum products produced by Witco, like its
specialty chemical products, are characterized by a need for a high degree of
manufacturing competence and technical service. The petroleum products market is
highly competitive with the Company's products competing primarily on the basis
of pricing and quality. The Company believes its technical expertise, reputation
for quality products, and, in the case of consumer products, brand name
recognition, give it advantages in the marketplace.
Diversified Products
Diversified Products include battery containers, covers and parts,
metalworking and metal finishing substances, and carbon black. In the U.S.,
Witco is the leading independent producer of battery containers. Metalworking
and metal finishing products are marketed to the aerospace, automotive,
electronics, and hardware industries. The Company expects to complete the sale
of its Allied-Kelite and Battery Parts divisions' businesses in 1994. Carbon
black is sold to the domestic tire and other rubber products industries. The
Company is a leading supplier of specialty carbon black for the tire industry.
Customers
During the year ended December 31, 1993, one customer accounted for
approximately 15.9% of this segment's 1993 sales and the ten largest customers
for approximately 70.0%.
International Operations
Sales of Witco's non-U.S. operations were $588.7 million, or 28% of total
sales, for the year ended December 31, 1993. Through the Schering Acquisition,
Witco added two plants in Germany (surfactants, polymer additives, and resins),
one each in Spain (surfactants), the United Kingdom (surfactants), France
(resins), Italy (resins), and Ecuador (oleochemicals/surfactants), as well as
three in the U.S. which manufacture oleochemicals, surfactants, and polymer
additives. With the ten properties acquired from Schering, Witco now operates 64
manufacturing facilities in 12 countries.
Patents
Witco owns and has been licensed to use a number of patents, some of which
are important in connection with particular products but all of which, as a
group, are not material to the Company.
Backlog
The nature of the Company's business is such that customer orders are
usually filled within 30 days. Accordingly, backlog is not significant to the
Company's business.
Research and Development
Witco expended approximately $49.5 million in 1993, $29.2 million in 1992
and $27.9 million in 1991 on research and development of new products and
services, and for improvements and new applications of existing products and
services.
General
The chemical and petroleum industries in which Witco operates have
experienced increased operating costs and capital investments due to statutes
and regulations at the federal, state and local levels for the protection of the
environment and the health and safety of employees and others. Witco believes
that expenditures for compliance with these statutes and regulations will
continue to have a
5
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significant impact upon the conduct of its business. The trend for greater
environmental awareness and more stringent environmental regulations is likely
to continue and while Witco cannot accurately predict how this trend will affect
future operations and earnings, Witco does not believe its costs will
significantly vary from those of its competitors in the chemical and petroleum
industries.
Witco evaluates and reviews environmental reserves for future remediation
and compliance costs on a quarterly basis. To determine the appropriate reserve
amounts, management reviews all available facts and evaluates the probability
and scope of potential liabilities. Inherent in this process are considerable
uncertainties which affect Witco's ability to estimate the ultimate costs of
remediation efforts. Such uncertainties include the nature and extent of
contamination at each site, evolving governmental standards regarding
remediation requirements, the number and financial condition of other
potentially responsible parties at multi-party sites, innovations in remediation
and restoration technology, and the identification of additional environmental
sites. As a result, as remediation efforts proceed at existing sites and new
sites are assimilated into the review process, charges against income for
environmental reserves could have a material effect on results of operations in
a particular quarter or year. However, such charges are not expected to have a
material adverse effect on Witco's consolidated financial position, cash flow or
liquidity.
At December 31, 1993, environmental reserves amounted to $99.6 million, of
which $52.8 million was provided for in 1993. These reserves reflect
management's assessment of future remediation and compliance costs in light of
all available information. Witco expended $15.1 million in 1993 against these
reserves and anticipates 1994 expenditures to approximate $29 million.
The Company's current construction projects include up-to-date methods and
equipment for protecting the environment. In addition, Witco is continuing its
program for modification of its facilities to meet current standards for the
control of emissions, effluents and solid wastes. Capital expenditures to
improve safety and to conform to environmental regulations amounted to
approximately $17.6 million in 1993 and $15.6 million in 1992.
Witco is continuing its efforts to reduce hazardous waste and emissions
generated by its operations. Through improved operating efficiencies,
installation of additional environmental control equipment, and utilization of
the latest innovations in waste treatment technology, management believes that
operating costs associated with managing hazardous substances and pollution can
be controlled. Such operating costs amounted to $23.6 million in 1993.
(d) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES
Witco's foreign subsidiaries generally manufacture products similar to the
principal products manufactured domestically. Subsidiaries in the Netherlands
and Canada manufacture petroleum products; subsidiaries in Canada, Denmark,
Ecuador, England, France, Germany, Israel, Italy, Mexico and Spain manufacture
chemical products.
In accord with normal market conditions, sales made outside the United
States are generally made on longer terms of payment than would be normal within
the United States. Foreign operations are subject to certain risks inherent in
carrying on international business, including currency devaluations and
controls, export and import restrictions, inflationary factors, product supply,
economic controls, nationalization and expropriation. The likelihood of such
occurrences varies from country to country and is not predictable. However, the
Company's primary foreign operations are based in Western Europe, Canada, and
other stable areas, and, therefore, the Company does not believe these risks
will have a significant impact upon the Company.
Reference is made to Note 15 of the Notes to Financial Statements. See Item
8 -- Financial Statements and Supplementary Data following Part IV of this
report.
ITEM 2 -- PROPERTIES
Witco currently conducts its manufacturing operations in 64 plants, owned
in fee or occupied under lease, of which 42 are in the United States and 22 in
other countries. Of these facilities, 34 are utilized for Chemical product
manufacturing, 19, including 2 refineries, are utilized for Petroleum product
manufacturing and 11 are utilized for the manufacture of Diversified Products.
All of the facilities are in good operating condition.
6
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PRINCIPAL PLANTS AND OTHER IMPORTANT PHYSICAL PROPERTIES -- LOCATIONS BY
INDUSTRY SEGMENT
(OWNED IN FEE EXCEPT WHERE PARENTHETICAL DATES REFER TO LEASE EXPIRATION)
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<S> <C>
CHEMICAL SEGMENT FACILITIES
United States
Santa Fe Springs, California -- 2 Plants Perth Amboy, New Jersey
Blue Island, Illinois Brooklyn, New York
Chicago, Illinois Memphis, Tennessee
Mapleton, Illinois -- 2 Plants Fort Worth, Texas
Harahan, Louisiana Houston, Texas
Taft, Louisiana LaPorte, Texas
Brainards, New Jersey Marshall, Texas
Newark, New Jersey Janesville, Wisconsin
International
Brantford, Canada Elbeuf, France
Montreal, Canada St. Amour, France
Oakville, Canada Bergkamen, Germany (2091)
Soro, Denmark (2005) Steinau, Germany
Quito, Ecuador Haifa, Israel
Accrington, England Gambolo, Italy
Droitwich, England Cuatitlan, Mexico
Flimby, England Barcelona, Spain
PETROLEUM SEGMENT FACILITIES
United States
Los Angeles, California Gretna, Louisiana
Oildale, California -- Refinery Omaha, Nebraska (1999)
Rancho Dominguez, California Bakerstown, Pennsylvania
Richmond, California (1994) Bradford, Pennsylvania -- Refinery
Jacksonville, Florida Petrolia, Pennsylvania
Spencer, Iowa Trainer, Pennsylvania
Olathe, Kansas
International
Scarborough, Canada (1995) Amsterdam, the Netherlands
Toronto, Canada Haarlem, the Netherlands
West Hill, Canada Koog Aan De Zaan, the Netherlands
DIVERSIFIED PRODUCTS SEGMENT FACILITIES
United States
Phoenix City, Alabama Detroit, Michigan
Los Angeles, California Philadelphia, Mississippi
Portland, Connecticut Cleveland, Ohio
Chicago, Illinois -- 2 Plants Ponca City, Oklahoma
Indianapolis, Indiana Sunray, Texas
</TABLE>
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OTHER FACILITIES
United States
Greenwich, Connecticut (2014) World Headquarters -- Principal Executive,
Administrative and Sales Office
Los Angeles, California (2001) Administrative and Sales Office
Melrose Park, Illinois Administrative and Sales Office
New Hudson, Michigan Research
Oakland, New Jersey Research
Oakland, New Jersey (1994) Administrative, Research and Sales Office
Woodcliff Lake, New Jersey (2006) Administrative Office
New York, New York (1997) Principal Executive, Administrative and Sales
Office
Houston, Texas (1995) Administrative, Research and Sales Office
International
Willowdale, Canada (2002) Administrative Office
Paris, France (1995) Administrative and Sales Office
Frankfurt, Germany (1997) Principal European Executive and Administrative
Office
</TABLE>
ITEM 3 -- LEGAL PROCEEDINGS
The Company has been notified, or is named as a potentially responsible
party ('PRP') or a defendant in a number of governmental (federal, state, and
local) and private actions associated with environmental matters, such as those
relating to hazardous wastes. These actions seek remediation costs, penalties
and/or damages for personal injury or damage to property or natural resources.
As of December 31, 1993, the Company had been identified as a PRP in connection
with 40 sites which are subject to the federal Superfund Program under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
('CERCLA'). With 2 exceptions, all the Superfund sites in which the Company is
involved are multi-party sites, and, in most cases, there are numerous other
potentially responsible parties in addition to the Company. CERCLA authorizes
the federal government to remediate a Superfund site itself and to assess the
costs against the responsible parties, or to order the responsible parties to
remediate the site.
The Company evaluates and reviews environmental reserves for future
remediation and other costs on a quarterly basis to determine appropriate
reserve amounts. Inherent in this process are considerable uncertainties which
affect the Company's ability to estimate the ultimate costs of remediation
efforts. Such uncertainties include the nature and extent of contamination at
each site, evolving governmental standards regarding remediation requirements,
the number and financial condition of other potentially responsible parties at
multi-party sites, innovations in remediation and restoration technology, and
the identification of additional environmental sites.
The Company is a defendant in a case filed in October 1992 by the United
States Department of Justice on behalf of the United States Environmental
Protection Agency styled United States v. Witco, et. all. pending in the United
States District Court for the Eastern District of California. The United States
alleged that the Company has violated the Clean Air Act, the Safe Water Drinking
Act, and the Resource Conservation and Recovery Act in connection with certain
activities at its Oildale, California, refinery. The United States seeks
unspecified civil penalties and certain injunctive relief in this action.
The Company has numerous insurance policies which it believes provide
coverage at various levels for environmental liabilities. The Company is
currently in litigation with many of its insurers concerning the applicability
and amount of insurance coverage for environmental costs under certain of these
policies. No provision for recovery under any of these policies is included in
the Company's financial statements.
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The Company is not a party to any legal proceedings, including
environmental matters, which it believes will have a material adverse effect on
its consolidated financial position.
ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter ended December
31, 1993.
EXECUTIVE OFFICERS OF THE COMPANY
The following sets forth information regarding executive officers of the
Company as of February 28, 1994, and is included in Part I in accordance with
Instruction 3 of Item 401(b) of Regulation S-K.
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SERVED IN
PRESENT
POSITION PRIOR BUSINESS EXPERIENCE
NAME AND PRESENT TITLE SINCE (WITHIN LAST FIVE YEARS) AGE
- --------------------------------------------- --------- ------------------------------------------------ ---
<S> <C> <C> <C>
CORPORATE
Denis Andreuzzi ............................. 1992 President and Chief Operating Officer -- March 62
Vice Chairman and Chief Operating 1990 to September 1992. Executive Vice
Officer -- Petroleum President -- Petroleum Group -- July 1989 to
February 1990. Executive Vice
President -- Commercial Services prior to July
1989.
Peter J. Biancotti .......................... 1983 50
Vice President and Controller
Ronald Edelstein ............................ 1992 General Manager -- Information Systems, 44
Vice President -- Information Systems Witco -- October 1991 to April 1992. Vice
President -- Systems Development, Revlon
Inc. -- February 1991 to September 1991. Group
Director -- Systems and Programming, Revlon,
Inc. prior to February 1991.
Michael D. Fullwood ......................... 1992 Group Vice President -- Finance and 47
Executive Vice President and Chief Administration -- October 1990 to September
Financial Officer 1992. Vice President and Treasurer prior to
September 1990.
William E. Mahoney .......................... 1992 Executive Vice President -- Chemical 62
Vice Chairman and Chief Operating Group -- July 1989 to September 1992. Group
Officer -- Chemicals Vice President -- Chemical Group prior to July
1989.
Dustan E. McCoy ............................. 1993 Associate General Counsel, Ashland Oil prior to 44
Vice President, General Counsel and April 1993.
Corporate Secretary
Lawrence B. Nelson .......................... 1990 Group Vice President -- Petroleum Group 63
Group Vice President -- Corporate
Technology
James M. Rutledge ........................... 1990 Assistant Controller 41
Vice President and Treasurer
Carl R. Soderlind ........................... 1993 Group Vice President -- Commercial 60
Senior Vice President -- External Affairs Services -- March 1990 to December 1992. Vice
President -- Corporate Development and
Investor Relations prior to March 1990.
William R. Toller ........................... 1990 Vice Chairman and Chief Financial 63
Chairman of the Board and Chief Executive Officer -- March 1990 to September 1990.
Officer Executive Vice President -- Finance and
Administration prior to March 1990.
</TABLE>
(table continued on next page)
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(table continued from previous page)
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<CAPTION>
SERVED IN
PRESENT
POSITION PRIOR BUSINESS EXPERIENCE
NAME AND PRESENT TITLE SINCE (WITHIN LAST FIVE YEARS) AGE
- --------------------------------------------- --------- ------------------------------------------------ ---
<S> <C> <C> <C>
Clark E. Tucker ............................. 1993 General Manager -- Human Resources from August 44
Vice President -- Human Resources 1992 to April 1993. Consultant, Towers,
Perrin, Foster and Crosby -- April 1990 to
July 1992. Director of Personnel, American
Cyanamid Co. -- August 1989 to March 1990.
Corporate Director -- Employee Benefits,
American Cyanamid Co. -- prior to July 1989.
Tom M. Uhoda ................................ 1981 62
Vice President -- Purchasing, Distribution
and Traffic
CHEMICAL SEGMENT
Group Vice Presidents:
Seymour Cohen ............................... 1975 62
Oleochemicals/Surfactants
Nirmal Jain ................................. 1993 Vice President & General Manager -- Argus 56
Polymer Additives Division prior to January 1993.
Gerald Katz ................................. 1986 56
International/Europe
PETROLEUM SEGMENT
Group Vice Presidents:
Harvey L. Golubock .......................... 1990 Vice President Supply and Distribution prior to 51
Lubricants September 1990.
Newton E. Brightwell III .................... 1993 Vice President & General Manager -- Sonneborn 45
Petroleum Specialties Division from June 1989 to December 1992.
Plant Manager -- Sonneborn Gretna, LA plant
prior to June 1989.
Vice Presidents:
John R. Jury................................. 1978 63
Eric R. Myers ............................... 1993 Vice President & General Manager -- 47
Kendall/Amalie Division from January 1993 to
April 1993. Vice President & General
Manager -- Richardson Battery Parts Division
from May 1991 to December 1992. President &
General Manager, Bridgeport -- Piedmont
Manufacturing Co. -- Division of Bridge
Products, Inc. prior to May 1991.
Donald E. Weinberg........................... 1986 58
DIVERSIFIED PRODUCTS SEGMENT
Group Vice President:
Robert J. Seward............................. 1993 Group Vice President -- Petroleum Group from 61
June 1989 to December 1992. Vice President and
General Manager -- Concarb prior to June 1989.
Vice President and
Division General Manager:
Richard W. Gotsch ........................... 1983 62
Allied-Kelite
</TABLE>
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PART II
ITEM 5 -- MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS
Witco's Common Stock is listed on the New York Stock Exchange. The
following table reflects the high and low sales prices, adjusted to give
retroactive effect to the 2-for-1 stock split effective October 5, 1993, as
reported on such exchange for each quarterly period during the past two years:
<TABLE>
<CAPTION>
1993 1992
---------------- ----------------
QUARTER HIGH LOW HIGH LOW
- --------------------------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
First........................................ $26.69 $24.00 $24.69 $20.00
Second....................................... $28.06 $25.88 $24.63 $21.38
Third........................................ $31.38 $26.25 $23.13 $20.56
Fourth....................................... $32.25 $28.63 $25.31 $20.94
</TABLE>
The approximate number of holders of record of the Company's Common Stock
as of February 28, 1994, was 5,114.
Dividends on the Common Stock have been declared quarterly during the past
two years as follows:
<TABLE>
<CAPTION>
PER SHARE
------------
QUARTER 1993 1992
- ---------------------------------------------------------------------- ---- ----
<S> <C> <C>
First................................................................. $.23 $.23
Second................................................................ $.23 $.23
Third................................................................. $.25 $.23
Fourth................................................................ $.25 $.23
Note: Amounts have been adjusted to give retroactive effect to the 2-for-1 stock
split effective October 5, 1993.
</TABLE>
ITEM 6 -- SELECTED FINANCIAL DATA
The data for this item is submitted as a separate section following Part IV
of this report.
ITEM 7 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The data for this item is submitted as a separate section following Part IV
of this report.
ITEM 8 -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and supplementary data of the Company
and its subsidiaries are included in a separate section following Part IV of
this report.
ITEM 9 -- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
11
<PAGE>
PART III
ITEM 10 -- DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
(a) Identification of Directors
Reference is made to pages 2 through 7 of the Proxy Statement to be filed
pursuant to Regulation 14A no later than March 31, 1994.
(b) Identification of Executive Officers
Reference is made to Part I of this Form 10-K.
(c) Business Experience
Reference is made to pages 2 through 7 of the Proxy Statement to be filed
pursuant to Regulation 14A no later than March 31, 1994 and Part I of this Form
10-K.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Reference is made to page 8 of the Proxy Statement to be filed pursuant to
Regulation 14A no later than March 31, 1994.
ITEM 11 -- EXECUTIVE COMPENSATION
Reference is made to the information set forth under the captions
'Compensation of Directors' and 'Executive Compensation' on pages 10 through 14
of the Proxy Statement to be filed pursuant to Regulation 14A no later than
March 31, 1994.
ITEM 12 -- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
For information with respect to beneficial ownership of the Company's
voting securities, and rights thereto, reference is made to the information set
forth under the captions 'Ownership of Securities by Directors and Officers' and
'Security Ownership of Certain Beneficial Owners' on pages 7 and 8 of the Proxy
Statement to be filed pursuant to Regulation 14A no later than March 31, 1994.
ITEM 13 -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) Transactions with Management and Others
Reference is made to the information set forth under the caption
'Compensation of Directors' on page 10 of the Proxy Statement to be filed
pursuant to Regulation 14A no later than March 31, 1994.
(b) Certain Business Relationships
Reference is made to the information set forth under the captions 'Other
Transactions' on page 9 and 'Compensation Committee Interlocks and Insider
Participation' on page 14 of the Proxy Statement to be filed pursuant to
Regulation 14A no later than March 31, 1994.
12
<PAGE>
PART IV
ITEM 14 -- EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1 and 2 -- The response to this portion of Item 14 is submitted as a
separate section of this report.
(a) 3 -- Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NO.
- -------
<S> <C>
3(i) -- Restated Certificate of Incorporation.(1)
3(i) -- Certificates of Amendment of the Restated Certificate of Incorporation.(2)
3(ii) -- By-laws, as amended.
4 -- Instruments defining the rights of security holders, including indentures. Pursuant to
Regulation S-K, Item 601(b)(4)(iii), no debt or other security instrument represents 10% of
the total assets of the Registrant, and accordingly such instruments are not filed herewith.
Registrant agrees to furnish a copy of any such agreement to the Commission upon request.
10 -- Material Contracts.
(iii)(A) -- Executive Compensation Plans and Arrangements Required to be Filed:
-- 1. 1986 Stock Option Plan for Employees, as amended.(3)
-- 2. 1989 Stock Option Plan for Employees.(4)
-- 3. 1992 Stock Option Plan for Employees.(5)
-- 4. Consultancy Agreement Between the Company and William Wishnick.(6)
-- 5. Supplemental Executive Retirement Plan of Witco Corporation.
11 -- Statement re Computation of Per Share Earnings.
21 -- Subsidiaries of the Registrant.
23 -- Consent of Independent Auditors.
24 -- Power of Attorney.(7)
</TABLE>
(b) Reports on Form 8-K.
The Company filed a Current Report on Form 8-K, dated January 19, 1994,
pertaining to the Company's announcement that it would take a $92.6 million
charge ($60.1 million after tax, or $1.10 per common share) against earnings in
the fourth quarter which ended December 31, 1993.
(c) The Exhibits filed with this report are listed in response to Item
14(a)3.
(d) The response to this portion of Item 14 is submitted as a separate
section of this report.
- ------------
(1) This Exhibit was included as an exhibit to the annual report on Form 10-K
for the fiscal year ended December 31, 1980, and such Exhibit is hereby
incorporated by reference.
(2) These Exhibits were included as exhibits to the quarterly report on Form
10-Q for the quarter ended June 30, 1983, the annual report on Form 10-K for
the fiscal year ended December 31, 1985, the quarterly report on Form 10-Q
for the quarter ended June 30, 1987, and the quarterly report on Form 10-Q
for the quarter ended June 30, 1988, and such Exhibits are hereby
incorporated by reference. From time to time, the Company has filed, as a
result of the conversion of the Company's outstanding $2.65 Cumulative
Convertible Preferred Stock, certificates reducing such authorized Preferred
Stock. Such certificates of reduction are not filed as Exhibits.
(3) The 1986 Stock Option Plan, as amended, was filed as an Exhibit to
Registration Statement on Form S-8, registration number 33-10715,
Post-Effective Amendment No. 1 to Form S-8 effective October 3, 1988, and
Post-Effective Amendment No. 2 to Form S-8 effective June 23, 1992. Such
Exhibit is incorporated herein by reference.
(4) The 1989 Stock Option Plan was filed as an Exhibit to Registration Statement
on Form S-8, registration number 33-30995 effective October 2, 1989, and
Post-Effective Amendment No. 1 to Form S-8 effective June 23, 1992, and such
Exhibit is hereby incorporated by reference.
(5) The 1992 Stock Option Plan was filed as an Exhibit to Registration Statement
on Form S-8, registration number 33-48806, effective June 23, 1992, and such
Exhibit is hereby incorporated by reference.
(6) This Exhibit was included as an exhibit to the annual report on Form 10-K
for the fiscal year ended December 31, 1992, and such Exhibit is hereby
incorporated by reference.
(7) The Power of Attorney appears on the Signatures Page.
13
<PAGE>
SIGNATURES
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 on the 21st day of
March, 1994.
WITCO CORPORATION
By /s/ WILLIAM R. TOLLER
...................................
WILLIAM R. TOLLER
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints WILLIAM R. TOLLER, DENIS ANDREUZZI, WILLIAM E.
MAHONEY, MICHAEL D. FULLWOOD, OR DUSTAN E. MCCOY, acting severally, his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments to this Annual Report on Form 10-K,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
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 dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ------------------------------------------ -------------------------------------------- -------------------
<S> <C> <C>
PRINCIPAL EXECUTIVE OFFICERS:
/s/ WILLIAM R. TOLLER Chairman of the Board and Chief Executive March 21, 1994
......................................... Officer
WILLIAM R. TOLLER
/s/ DENIS ANDREUZZI Vice Chairman and Chief Operating March 21, 1994
......................................... Officer-Petroleum
DENIS ANDREUZZI
/s/ WILLIAM E. MAHONEY Vice Chairman and Chief Operating March 21, 1994
......................................... Officer-Chemicals
WILLIAM E. MAHONEY
PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER:
/s/ MICHAEL D. FULLWOOD Executive Vice President and Chief Financial March 21, 1994
......................................... Officer
MICHAEL D. FULLWOOD
DIRECTORS:
/s/ DENIS ANDREUZZI Director March 21, 1994
.........................................
DENIS ANDREUZZI
/s/ WILLIAM J. ASHE Director March 21, 1994
.........................................
WILLIAM J. ASHE
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
NAME TITLE DATE
- ------------------------------------------ -------------------------------------------- -------------------
<S> <C> <C>
/s/ SIMEON BRINBERG Director March 21, 1994
.........................................
SIMEON BRINBERG
/s/ WILLIAM G. BURNS Director March 21, 1994
.........................................
WILLIAM G. BURNS
/s/ WILLIAM R. GRANT Director March 21, 1994
.........................................
WILLIAM R. GRANT
/s/ RICHARD M. HAYDEN Director March 21, 1994
.........................................
RICHARD M. HAYDEN
/s/ HARRY G. HOHN Director March 21, 1994
.........................................
HARRY G. HOHN
/s/ WILLIAM E. MAHONEY Director March 21, 1994
.........................................
WILLIAM E. MAHONEY
/s/ L. JOHN POLITE, JR. Director March 21, 1994
.........................................
L. JOHN POLITE, JR.
/s/ DAN J. SAMUEL Director March 21, 1994
.........................................
DAN J. SAMUEL
/s/ HENRY SONNEBORN III Director March 21, 1994
.........................................
HENRY SONNEBORN III
/s/ WILLIAM R. TOLLER Director March 21, 1994
.........................................
WILLIAM R. TOLLER
/s/ BRUCE F. WESSON Director March 21, 1994
.........................................
BRUCE F. WESSON
/s/ WILLIAM WISHNICK Director March 21, 1994
.........................................
WILLIAM WISHNICK
</TABLE>
15
<PAGE>
ANNUAL REPORT ON
------------------------
FORM 10-K
ITEM 6, ITEM 7, ITEM 8,
ITEM 14 (a)(1) AND (2) AND ITEM 14(d)
INDEX OF FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1993
------------------------
WITCO CORPORATION
NEW YORK, NEW YORK
<PAGE>
INDEX
ANNUAL REPORT ON FORM 10-K
ITEM 6, ITEM 7, ITEM 8, ITEM 14(a)(1) AND (2), AND ITEM 14(d)
DECEMBER 31, 1993
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
ITEM 6 -- SELECTED FINANCIAL DATA................................................................ 1
ITEM 7 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS........................................................ 3
ITEM 8 -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA -- SEE ITEM 14(a)(1)
AND (2) BELOW.
ITEM 14(a)(1) AND (2) AND ITEM 14(d)
</TABLE>
The following consolidated financial statements of Witco Corporation
and subsidiary companies, for the year ended December 31, 1993, are included in
Item 8:
<TABLE>
<S> <C>
Report of Independent Auditors......................................................... F-1
Consolidated Balance Sheets -- December 31, 1993 and 1992.............................. F-2
Consolidated Statements of Income -- Years Ended December 31, 1993, 1992 and 1991...... F-3
Consolidated Statements of Cash Flows -- Years Ended December 31, 1993, 1992 and
1991.............................................................................. F-4
Consolidated Statements of Shareholders' Equity -- Years Ended December 31, 1993, 1992
and 1991.......................................................................... F-5
Notes to Financial Statements.......................................................... F-6
Quarterly Financial Data (unaudited)................................................... F-20
</TABLE>
The following consolidated financial statement schedules of Witco
Corporation and subsidiary companies are included in Part IV, Item 14(d):
<TABLE>
<CAPTION>
Schedule V -- Property, Plant and Equipment....................................... S-1
<S> <C> <C>
Schedule VI -- Accumulated Depreciation, Depletion and Amortization of Property,
Plant and Equipment............................................. S-2
Schedule VIII -- Valuation and Qualifying Accounts................................... S-3
Schedule IX -- Short-Term Borrowings............................................... S-4
Schedule X -- Supplementary Income Statement Information.......................... S-5
</TABLE>
All other schedules (Nos. I, II, III, IV, VII, XI, XII, XIII and XIV) for which
provision is made in the applicable accounting regulation of the Securities and
Exchange Commission are not required under the related instructions or are
inapplicable, and therefore have been omitted.
Financial statements (and summarized financial information) of 50% or less owned
persons accounted for by the equity method have been omitted because they do
not, considered individually or in the aggregate, constitute a significant
subsidiary.
<PAGE>
WITCO CORPORATION AND SUBSIDIARY COMPANIES
ELEVEN-YEAR FINANCIAL AND STATISTICAL SUMMARY
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ----------
(THOUSANDS OF DOLLARS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Selected Statement of Income Data
Net sales...................................... $2,142,555 $1,728,896 $1,630,521 $1,631,481 $1,587,788
Interest....................................... 8,679 9,303 10,529 19,380 21,248
---------- ---------- ---------- ---------- ----------
Total revenues........................ 2,151,234 1,738,199 1,641,050 1,650,861 1,609,036
---------- ---------- ---------- ---------- ----------
Cost of goods sold (exclusive of depreciation,
depletion, and amortization)................. 1,649,143 1,355,450 1,270,954 1,309,907 1,261,918
Selling and administrative expenses............ 230,722 190,339 178,573 167,686 167,229
Depreciation, depletion, and amortization...... 102,502 76,162 67,622 60,098 56,813
Interest....................................... 34,984 16,448 16,027 16,400 16,289
Other expense (income) -- net.................. 100,552(b) 17,688(c) (1,930) (9,074) 53,368(d)
---------- ---------- ---------- ---------- ----------
Total costs and expenses.............. 2,117,903 1,656,087 1,531,246 1,545,017 1,555,617
---------- ---------- ---------- ---------- ----------
Income before federal and foreign income taxes
and cumulative effect of accounting change... 33,331 82,112 109,804 105,844 53,419
Federal and foreign income taxes............... 13,568 28,247 36,329 37,890 18,410
---------- ---------- ---------- ---------- ----------
Income before cumulative effect of accounting
change....................................... 19,763 53,865 73,475 67,954 35,009
Cumulative effect of accounting change......... -- (14,690) -- -- --
---------- ---------- ---------- ---------- ----------
Net Income..................................... $ 19,763 $ 39,175 $ 73,475 $ 67,954 $ 35,009
As a percent of net sales.................. .9% 2.3% 4.5% 4.2% 2.2%
As a percent of average shareholders'
equity................................... 3.0% 6.3% 12.1% 11.7% 6.1%
---------- ---------- ---------- ---------- ----------
Selected Balance Sheet Data
Working capital................................ $ 451,235 $ (21,611) $ 320,934 $ 359,091 $ 456,183
Current ratio.................................. 2.32 0.97 2.25 2.76 3.54
Property, plant, and equipment expenditures
(including acquisitions)..................... $ 103,689 $ 322,786 $ 74,307 $ 106,650 $ 70,387
Property, plant, and equipment -- net.......... $ 696,462 $ 721,171 $ 474,755 $ 471,026 $ 417,175
Total assets................................... $1,838,998 $1,811,794 $1,198,276 $1,178,885 $1,139,256
Long-term debt................................. $ 496,266 $ 173,086 $ 179,132 $ 230,183 $ 235,510
Total shareholders' equity..................... $ 713,415 $ 614,296 $ 625,700 $ 587,472 $ 571,582
Book value per common share(a)................. $ 14.12 $ 13.80 $ 14.35 $ 13.55 $ 12.67
---------- ---------- ---------- ---------- ----------
Selected Other Financial Data(a)
Number of shareholders -- at year end.......... 5,253 5,262 5,602 5,949 5,635
Weighted average number of common shares
outstanding (in thousands)................... 54,866 49,801 49,212 49,703 50,674
Per common share:
Net income................................. $ .46 $ .90 $ 1.60 $ 1.48 $ .80
Net income -- assuming full dilution....... $ .46 $ .89 $ 1.59 $ 1.47 $ .79
Dividends declared......................... $ .96 $ .92 $ .91 $ .86 $ .84
Dividends paid per share:
Common stock............................... $ .94 $ .92 $ .89 $ .86 $ .81
Preferred stock............................ $ 2.65 $ 2.65 $ 2.65 $ 2.65 $ 2.65
Market price to the nearest dollar, per common
share on New York Stock Exchange
(high - low)................................. $ 32-24 $ 25-20 $ 22-14 $ 20-11 $ 23-17
</TABLE>
- ------------
(a) Common share data have been adjusted to reflect the two-for-one stock split
effective October 5, 1993.
(b) Includes provisions for environmental remediation and compliance,
disposition of a business, work force reduction, and other matters of $92.6
million.
(c) Includes a provision for consolidation of offices of $20.1 million.
(d) Includes a provision of $59.8 million primarily related to environmental
projects and plant shutdowns.
1
<PAGE>
<TABLE>
<CAPTION>
1988 1987 1986 1985 1984 1983
---------- ---------- ---------- ---------- ---------- ----------
(THOUSANDS OF DOLLARS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
$1,585,856 $1,427,650 $1,355,018 $1,448,929 $1,495,831 $1,385,744
15,792 12,405 6,595 3,369 6,190 4,555
---------- ---------- ---------- ---------- ---------- ----------
1,601,648 1,440,055 1,361,613 1,452,298 1,502,021 1,390,299
---------- ---------- ---------- ---------- ---------- ----------
1,240,730 1,121,118 1,039,727 1,166,415 1,208,966 1,114,043
165,364 149,968 149,823 138,130 139,183 134,141
52,867 53,659 54,159 51,536 45,504 43,577
16,394 15,732 12,045 11,343 14,482 14,070
10,776 (578) (2,451) (8,741) 1,541 (5,654)
---------- ---------- ---------- ---------- ---------- ----------
1,486,131 1,339,899 1,253,303 1,358,683 1,409,676 1,300,177
---------- ---------- ---------- ---------- ---------- ----------
115,517 100,156 108,310 93,615 92,345 90,122
43,896 36,863 43,095 36,841 29,743 38,100
---------- ---------- ---------- ---------- ---------- ----------
71,621 63,293 65,215 56,774 62,602 52,022
20,289 -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
$ 91,910 $ 63,293 $ 65,215 $ 56,774 $ 62,602 $ 52,022
5.8% 4.4% 4.8% 3.9% 4.2% 3.8%
16.8% 12.9% 14.8% 14.4% 17.6% 16.4%
---------- ---------- ---------- ---------- ---------- ----------
$ 439,250 $ 417,332 $ 246,661 $ 233,554 $ 202,890 $ 202,579
3.24 3.06 2.49 2.34 2.24 2.14
$ 79,509 $ 82,090 $ 60,102 $ 75,606 $ 85,192 $ 54,872
$ 400,996 $ 374,628 $ 367,789 $ 360,950 $ 348,740 $ 313,794
$1,114,575 $1,056,298 $ 819,768 $ 810,292 $ 755,777 $ 732,851
$ 240,709 $ 242,641 $ 95,590 $ 136,020 $ 143,409 $ 146,964
$ 578,341 $ 513,615 $ 465,465 $ 415,410 $ 374,786 $ 336,713
$ 12.89 $ 11.47 $ 10.43 $ 9.39 $ 8.51 $ 7.69
---------- ---------- ---------- ---------- ---------- ----------
5,784 5,823 5,965 6,228 6,618 6,782
50,499 49,477 44,538 44,267 43,956 43,426
$ 1.93 $ 1.36 $ 1.47 $ 1.28 $ 1.43 $ 1.20
$ 1.91 $ 1.35 $ 1.44 $ 1.26 $ 1.39 $ 1.16
$ .73 $ .60 $ .55 $ .50 $ .48 $ .43
$ .70 $ .58 $ .53 $ .50 $ .47 $ .42
$ 2.65 $ 2.65 $ 2.65 $ 2.65 $ 2.65 $ 2.65
$ 19-15 $ 24-13 $ 20-13 $ 14-11 $ 13-9 $ 12-6
</TABLE>
2
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND FINANCIAL RESOURCES
Cash flow from operations continues to be a prime source of funds for
Witco. Over the past three years, cash provided by operations exceeded $436
million, an amount sufficient to fund working capital requirements, support the
Company's internal capital investment program, and sustain an increasing rate of
dividends paid. The Company anticipates that cash flow from operations will be
sufficient to fund, for the foreseeable future, capital investments, dividend
payments, commitments on environmental remediation projects, and operating
requirements.
In the fourth quarter Witco sold the operations of a subsidiary, Chemprene,
Inc., for $24.2 million in cash. This divestiture is consistent with
management's intent to divest assets that do not meet the Company's long-term
strategic objectives. Management expects to complete the sale of other non-core
businesses in 1994, with the resulting cash flow from these divestitures being
used to further strengthen the Company's core businesses of specialty chemical
and petroleum products.
During 1993 Witco repaid the $440 million short-term indebtedness incurred
in connection with the November 1992 acquisition of the Industrial Chemicals and
Natural Substances divisions of Schering AG (Schering Acquisition). The funds
used to repay this debt were provided by the completion of all phases of the
Company's long-term financing strategy, which included a public offering of
common stock, issuance of 10 and 30 year notes and debentures, and 5 year German
bank loans. Net proceeds from these long-term financings totalled $457.8
million. Additional details regarding the impact of operating, investing, and
financing activities on the Company's cash position can be found in the
Consolidated Statements of Cash Flows.
On March 11, 1994 the Company called for redemption on March 28, 1994 all
of its 5 1/2% Convertible Subordinated Debentures due 2012 of which $150 million
is outstanding. The debentures are convertible into common stock of the Company
at a conversion price of $27.28 per share, which price was below the market
price for the Company's common stock on the New York Stock Exchange on March 10,
1994. Therefore, the Company believes most of the debentures will be converted
into common stock. If all debentures are converted, approximately 5.5 million
additional shares of common stock will become issued and outstanding. However,
the issuance of additional common stock by reason of conversion of any of these
debentures will have no effect upon the Company's earnings per share
calculations as the shares underlying the debentures have been considered as
common stock equivalents in such calculations. If all debentures were to be
redeemed rather than converted, the total cost to the Company would be $152.8
million. The Company will fund any redemptions through a combination of
available cash and short-term borrowings.
The Company, through certain of its international subsidiaries, has
arrangements with various banks for lines of credit. At December 31, 1993, these
lines of credit aggregated $40.2 million, of which $37.4 million was unused at
year-end. Witco has also entered into certain long-term hedging arrangements to
protect against possible adverse currency exchange and interest rate
fluctuations (see Note 8 of the Notes to Financial Statements for additional
details).
CAPITAL INVESTMENTS AND COMMITMENTS
In 1993 the Company continued its program of upgrading existing facilities
for efficiencies to best meet changing market demands. Internal capital
expenditures in 1993 were $103.7 million, bringing the total for the past three
years to $250.6 million. Capital expenditures are expected to approximate $110
million in 1994.
The Company's European manufacturing base, which was greatly expanded by
the Schering Acquisition, remains a focal point of Witco's capital investment
program. In 1993 management authorized capital projects at the Company's
European facilities of $44.4 million, reflecting management's commitment to
enhancing manufacturing capabilities to better position itself to take advantage
of growth opportunities as the European economy stabilizes.
3
<PAGE>
In the fourth quarter of 1993 the Board of Directors authorized certain
amendments to the domestic salaried pension plans. These improvements, in
conjunction with changes to actuarial assumptions relating to the discount rate
on pension obligations and the expected long-term rate of return on plan assets,
will increase 1994 pension costs by approximately $9.2 million. The Company
anticipates that cash flow will not be materially affected by these changes.
Also in the fourth quarter, the Company announced its intention to sell its
Battery Parts Division, and to effect a reduction of approximately four percent
in its worldwide employee population of 8,200. Reserves of $31.4 million have
been recorded, principally for severance costs and the anticipated loss on the
sale of Battery Parts' net assets. The Company anticipates that cash outlays of
$16.9 million relative to these reserves will be made over the next two years
and will be funded through cash flow from operations.
ENVIRONMENTAL MATTERS
The chemical and petroleum industries in which Witco operates have
experienced increased operating costs and capital investments due to statutes
and regulations at the federal, state, and local levels for the protection of
the environment and the health and safety of employees and others. Witco
believes that expenditures for compliance with these statutes and regulations
will continue to have a significant impact upon the conduct of its business. The
trend for greater environmental awareness and more stringent environmental
regulations is likely to continue and while Witco cannot accurately predict how
this trend will affect future operations and earnings, Witco does not believe
its costs will significantly vary from those of its competitors in the chemical
and petroleum industries.
Witco evaluates and reviews environmental reserves for future remediation
and compliance costs on a quarterly basis. To determine the appropriate reserve
amounts, management reviews all available facts and evaluates the probability
and scope of potential liabilities. Inherent in this process are considerable
uncertainties which affect Witco's ability to estimate the ultimate costs of
remediation efforts. Such uncertainties include the nature and extent of
contamination at each site, evolving governmental standards regarding
remediation requirements, the number and financial condition of other
potentially responsible parties at multi-party sites, innovations in remediation
and restoration technology, and the identification of additional environmental
sites. As a result, as remediation efforts proceed at existing sites and new
sites are assimilated into the review process, charges against income for
environmental reserves could have a material effect on results of operations in
a particular quarter or year. However, such charges are not expected to have a
material adverse effect on Witco's consolidated financial position, cash flow,
or liquidity.
At December 31, 1993, environmental reserves amounted to $99.6 million, of
which $52.8 million was provided for in 1993. These reserves reflect
management's assessment of future remediation and compliance costs in light of
all currently available information. Witco expended $15.1 million in 1993
against these reserves and anticipates 1994 expenditures to approximate $29
million.
Capital expenditures for environmental control equipment and facilities
amounted to $12.3 million in 1993, and $34.1 million for the past three years.
The Company estimates that from 1994 through 1996, approximately $45 million
will be expended on environmental capital projects.
Witco is continuing its efforts to reduce hazardous waste and emissions
generated by its operations. Through improved operating efficiencies,
installation of additional environmental control equipment, and utilization of
the latest innovations in waste treatment technology, management believes that
direct recurring operating costs associated with managing hazardous substances
and pollution can be controlled. Such costs amounted to $23.6 million in 1993.
RESULTS OF OPERATIONS
The Company's reported net income of $19.8 million for 1993 and $39.2
million for 1992 included several non-recurring items. Comparisons of net income
for the three year period ended December 31, 1993 are affected by these items.
The following table shows the effect of these non-recurring items on net income.
The pre-tax values of these items, except the accounting change which was shown
4
<PAGE>
separately, were included in the 'Other expense (income) -- net' caption of the
Consolidated Statements of Income.
<TABLE>
<CAPTION>
1993 1992 1991
--------------------------- --------------------------- -----------------------------
PRE-TAX NET NET INCOME PRE-TAX NET NET INCOME PRE-TAX NET NET INCOME
INCOME INCOME PER SHARE INCOME INCOME PER SHARE INCOME INCOME PER SHARE
------- ------ ---------- ------- ------ ---------- ------- ------ ---------
(MILLIONS OF DOLLARS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income excluding non-recurring
items......................... $137.9 $87.8 $1.70 $102.2 $67.2 $1.46 $109.8 $73.5 $1.60
Provision for environmental
remediation and compliance.... (52.8) (34.3) (.63) -- -- -- -- -- --
Provision for disposition of a
business...................... (19.2) (12.4) (.23) -- -- -- -- -- --
Provision for work force
reduction..................... (12.2) (7.9) (.14) -- -- -- -- -- --
Gain on sale of the operations
of a subsidiary............... 8.8 5.7 .11 -- -- -- -- -- --
Charge for a legal judgment..... (11.6) (7.6) (.14) -- -- -- -- -- --
Provision for loss on sublease
of office facilities.......... (9.2) (6.1) (.11) -- -- -- -- -- --
Other -- net.................... (8.4) (5.4) (.10) -- -- -- -- -- --
Provision for consolidation of
offices....................... -- -- -- (20.1) (13.3) (.27) -- -- --
------- ------ ----- ------- ------ ----- ------- ------ -----
Income before cumulative effect
of accounting change.......... 33.3 19.8 .46 82.1 53.9 1.19 109.8 73.5 1.60
Accounting change (adoption of
SFAS No. 106)................. -- -- -- -- (14.7) (.29) -- -- --
------- ------ ----- ------- ------ ----- ------- ------ -----
Income as reported.............. $ 33.3 $19.8 $ .46 $ 82.1 $39.2 $ .90 $109.8 $73.5 $1.60
------- ------ ----- ------- ------ ----- ------- ------ -----
------- ------ ----- ------- ------ ----- ------- ------ -----
</TABLE>
The current year's $34.3 million environmental provision reflected the
Company's assessment of the remediation and compliance costs it will incur to
comply with regulatory requirements and standards. Additionally, the Company has
established provisions of $12.4 million for the planned divestiture of the
Battery Parts Division and $7.9 million for the reduction of approximately 4
percent of the Company's worldwide work force, as part of its strategy to
realign and reorganize operations to emphasize core businesses. Consistent with
this strategy, during 1993 the Company sold the operations of its Chemprene
subsidiary for a net gain of $5.7 million. The $7.6 million legal settlement
recorded in 1993 resulted from a judgment against the Company in the Lightning
Lube litigation. Current year results also included a loss of $6.1 million
attributable to an agreement to sublease two office facilities resulting from
the Company's commitment to relocate to a new world headquarters.
1992 results included a charge of $13.3 million relating to the Company's
decision to bring certain operating management together with executive
management and administrative functions through the consolidation of offices
into a new world headquarters. An accounting change resulting from the adoption
of Statement of Financial Accounting Standards No. 106 for postretirement
benefits other than pensions further reduced net income by $14.7 million in
1992.
1993 VS. 1992
Net income, adjusted to exclude non-recurring items, was $87.8 million in
1993, compared to $67.2 million in 1992. The 31 percent increase in net income,
before non-recurring items, was primarily attributable to record sales, which
rose 24 percent to $2.1 billion, and a 1 percent improvement in gross margins.
The acquisition of the Schering businesses accounted for the higher sales and
approximately 50 percent of the improved margins. The remaining improvement in
margins was attributable to a reduction in key raw material feedstock costs and
operating efficiencies in both the Petroleum and Diversified Products Segments.
Increases in selling and administrative expenses, depreciation and amortization,
and interest, primarily attributable to the Schering Acquisition, partially
offset the higher sales and improved margins.
The Company does not allocate income and expenses that are of a general
corporate nature to industry segments in computing operating income. These
include general corporate expenses, interest income and expense, and certain
other income and expenses (see Note 15 of the Notes to Financial Statements).
5
<PAGE>
Current year's operating income was $114.5 million, compared to $129.7
million in 1992. A comparison of the results of these periods was affected by a
net non-recurring charge of $74.8 million recorded in 1993. Excluding
non-recurring items, operating income increased $59.6 million to $189.3 million.
All segments reported operating earnings, exclusive of non-recurring items, that
were appreciably higher than the preceding year (see segment information below).
CHEMICAL SEGMENT
Chemical net sales of $1.2 billion in 1993 exceeded the previous year by
approximately $396 million. The segment was able to sustain sales, excluding
those relating to the acquisition, at 1992 levels despite a soft demand due to
sluggish domestic and European economies. Sales attributable to the Schering
Acquisition accounted for the 47 percent increase.
Excluding the segment's $5.6 million of environmental charges recorded in
1993, current year's operating income of $113.8 million increased $39.5 million,
or 53 percent, from 1992. Each of the segment's business groups reported 1993
earnings that were substantially higher than the preceding year. The inclusion
of the acquired Schering businesses' full year operating results in 1993,
compared to two months for 1992, accounted for the higher earnings. The Schering
Acquisition contributed $41 million to the segment's 1993 operating earnings,
compared to the reported loss of $2.2 million in 1992. International,
principally Western Europe, and domestic operations contributed equally to the
Schering Acquisition's current year earnings. The favorable earnings were also,
in part, attributable to cost saving programs and the consolidation of sales and
administrative functions in Europe, which minimized the effect the persistent
European recession had on operations. Partially offsetting the positive impact
that the Schering Acquisition and cost saving programs had on operations, the
Oleochemicals/Surfactants Group was adversely affected by $3 million as a result
of an increase in the cost of major commodity raw material feedstocks.
Many of the benefits derived from the actions initiated in 1993,
particularly cost reduction programs in the acquired Schering businesses, will
not be fully realized until 1994 and beyond.
PETROLEUM SEGMENT
Net sales in 1993 were $746 million, an increase of $11.7 million over the
$734.3 million recorded in 1992. Despite a soft global economy and the
strengthening of the dollar overseas, both 1993 sales volume and prices were
generally comparable to the prior year. The acquisition of the business of IGI
Petroleum Specialties, Inc. (PSI) late in 1992 bolstered 1993 sales. This
business, which enhanced the segment's white oils and petroleum jellies
marketing capabilities, contributed approximately $30 million to sales in 1993,
compared to $2 million in 1992.
Operating income for 1993 included non-recurring charges of $50.6 million
attributable to an environmental provision and legal judgment. 1993 operating
income, excluding these charges, was $65.6 million, an increase of $14.1
million, or 27 percent, over 1992. The Petroleum Specialties Group accounted for
approximately two-thirds of the segment's higher earnings, excluding
non-recurring charges, while the Lubricants Group's results accounted for the
remaining improvement. Earnings from the Petroleum Specialties Group's domestic
operations rose despite a sluggish economy and a shortage of critical sulfonate
feedstocks. The PSI business added approximately $3 million to current year
earnings. In addition, the ability to hold down manufacturing expenses and the
inclusion of $3.1 million of demolition costs in 1992 contributed to the
improved domestic results. The group's Holland operation reported lower earnings
attributable to the depressed European economy and a stronger dollar.
Lubricants Group's earnings improved approximately 20 percent during 1993.
Higher earnings were primarily due to a stronger asphalt market and a 10 percent
decline in crude oil feedstock costs at its California refinery. Additionally,
the group's lube oil and grease operations reported 1993 earnings that were
marginally higher than the previous year's. Lower crude oil and feedstock costs
boosted these operations' material margins by 1 percent.
6
<PAGE>
DIVERSIFIED PRODUCTS SEGMENT
Segment operating earnings for 1993 included a net non-recurring charge of
$18.7 million. The charge covered an expected loss on the disposition of the
Battery Parts Division and environmental provisions, partially offset by a gain
on the sale of the operations of the segment's Chemprene, Inc. subsidiary.
Net sales, excluding those attributable to Chemprene, Inc., were $154
million in 1993, an increase of 7 percent above sales for the corresponding
operations in 1992. Operating income, excluding the results of Chemprene, Inc.
and non-recurring items, increased $7.4 million, from $.4 million in 1992, to
$7.8 million in 1993. Higher carbon black sales and earnings more than offset
declines from each of the segment's other businesses. The carbon black business
benefited from a 12 percent increase in volume, higher sales prices, and
manufacturing efficiencies.
The divestiture of assets that do not meet the Company's long-term business
objectives is an important part of Witco's strategic focus to reorganize and
grow core businesses. Hence, two of the segment's three remaining divisions,
Battery Parts and Allied-Kelite, are slated for disposition in 1994. The
disposition of the Battery Parts Division is expected to result in a loss, which
was recognized in 1993.
1992 VS. 1991
Excluding non-recurring charges, net income amounted to $67.2 million in
1992, a decrease of 9 percent compared to net income of $73.5 million in 1991.
Included in the $67.2 million was a net loss of $2.8 million related to the
Schering Acquisition.
1992 sales, which included $72.3 million from the operations of the
acquired Schering businesses, rose 6 percent above 1991 to a record level of
$1.7 billion. Despite record sales attributed to a 5 percent increase in volume,
earnings declined as a result of increased selling and administrative expenses,
higher depreciation and amortization, and an erosion of sales prices. The
Schering Acquisition and increased litigation costs accounted for the higher
expenses, while competitive pressures, reflective of a soft global economy,
resulted in depressed selling prices.
Operating income generated by the Company's business segments in 1992 was
$129.7 million, a decrease of $6.8 million, or 5 percent, from 1991.
CHEMICAL SEGMENT
1992 net sales, which included $72.3 million from the acquired Schering
businesses, reached $836.8 million, an increase of 12 percent from 1991. Sales,
excluding those credited to the Schering Acquisition, increased $14.7 million,
or 2 percent, primarily due to a 4 percent increase in sales volume attributable
to the segment's domestic operations. Operating income was $74.3 million in
1992, an increase of $3.7 million, or 5 percent, from 1991. Operating earnings
for 1992 contained a $2.2 million operating loss reported by the acquired
Schering businesses. These operations were adversely affected by the sharp
downturn in the German economy and normal cyclical weaknesses.
Income from the segment's domestic operations improved $7.1 million, while
international earnings for 1992 were $3.4 million below those reported in 1991.
The segment's Oleochemicals/Surfactants Group's domestic operations reported
increased operating income as a result of greater shipment volume and higher
sales prices, while the Polymer Additives Group's domestic operation's earnings
declined due to the recession sensitive nature of its business. The segment's
international operating results reflected a loss from the Schering Acquisition
and lower sales volume reported by Witco Israel.
PETROLEUM SEGMENT
Segment net sales increased less than 1 percent from $732.1 million in 1991
to $734.3 million in 1992. The effect of a 5 percent increase in sales volume
during this period was offset by a decline in prices. Operating income was $51.5
million for 1992, a decrease of $14 million, or 21 percent, from 1991.
7
<PAGE>
The decline in profitability was confined to the segment's domestic
operations, which reported a $14.5 million, or 30 percent, decrease in operating
income. These results were indicative of a soft economy, as evidenced by a 5
percent decline in sales prices. Material margins were adversely affected by the
reduction in sales prices that outpaced a reduction in average material costs.
Also contributing to the decline in operating income were significant 1992
charges for litigation and demolition costs. Operating income for the segment's
international subsidiaries increased $.5 million, a result of lower material
costs and higher sales volume.
DIVERSIFIED PRODUCTS SEGMENT
Net sales in 1992 were $175.1 million, a $10.1 million, or 6 percent,
increase over 1991. Improved sales were attributed to greater volume and higher
sales prices. Operating income reported in 1992 of $4 million represented an
increase of $3.5 million over 1991. Despite significant losses experienced in
carbon black products before industry price increases took hold and volumes
increased late in the year, the segment's improved operating performance was
reflective of increased sales and a gain from the sale of a former manufacturing
facility.
OUTLOOK
Witco will divest its Allied-Kelite and Battery Parts divisions' businesses
in 1994 as a part of its effort to concentrate on its core businesses in the
Petroleum and Chemical Segments. Evaluation of possible divestiture of other
business units within Witco will continue on the basis of return-on-equity
performance, strategic significance, and other factors.
Global expansion of core businesses in the Chemical and Petroleum Segments
will remain a Company focus in 1994. With the continuation of the European
recession, Witco's businesses in Europe may not exceed their 1993 performance
levels in 1994. Witco's European operations should benefit from additional
operational efficiencies and any future economic recovery in Europe. As the
North American recovery slowly grows in 1994, Witco's results from operations
for its businesses operating there should continue to improve.
The Pacific Rim has been targeted as a growth market for certain of Witco's
product lines and implementation of the market entry strategy for that region
will continue in 1994. Acquisitions and joint ventures which will enhance
existing market positions in core product lines will be evaluated on a case-
by-case basis in 1994.
8
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Shareholders
WITCO CORPORATION
We have audited the accompanying consolidated balance sheets of Witco
Corporation and Subsidiary Companies as of December 31, 1993 and 1992, and the
related consolidated statements of income, shareholders' equity, and cash flows
for each of the three years in the period ended December 31, 1993. Our audits
also included the financial statement schedules listed in the Index at Item
14(a). These financial statements and schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and schedules 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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Witco
Corporation and Subsidiary Companies at December 31, 1993 and 1992, and the
consolidated results of its operations and its cash flows for each of the three
years in the period ended December 31, 1993, in conformity with generally
accepted accounting principles. Also, in our opinion, the related financial
statement schedules, when considered in relation to the basic statements taken
as a whole, present fairly in all material respects the information set forth
therein.
As discussed in Note 12 to the financial statements, in 1992, the Company
changed its method of accounting for postretirement benefits other than
pensions.
ERNST & YOUNG
Stamford, Connecticut
January 27, 1994,
except for Note 7, as to which
the date is March 11, 1994
F-1
<PAGE>
WITCO CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1993 1992
---------- ----------
(IN THOUSANDS EXCEPT PER
SHARE DATA)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents........................................................ $ 183,050 $ 134,447
Accounts and notes receivable, less allowances of $6,821 and $5,623.............. 340,850 329,160
Inventories...................................................................... 227,469 249,664
Prepaid and other current assets................................................. 41,204 34,074
---------- ----------
Total Current Assets........................................................ 792,573 747,345
---------- ----------
Property, Plant and Equipment, less accumulated depreciation of $621,684 and
$566,682............................................................................ 696,462 721,171
Intangible Assets, less accumulated amortization of $38,612 and $25,282............... 217,032 249,867
Deferred Costs and Other Assets....................................................... 132,931 93,411
---------- ----------
Total Assets................................................................ $1,838,998 $1,811,794
---------- ----------
---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Notes and loans payable.......................................................... $ 4,194 $ 461,269
Accounts payable and other current liabilities................................... 337,144 307,687
---------- ----------
Total Current Liabilities................................................... 341,338 768,956
---------- ----------
Long-term Debt........................................................................ 496,266 173,086
Deferred Federal and Foreign Income Taxes............................................. 74,612 108,248
Deferred Credits and Other Liabilities................................................ 213,367 147,208
Shareholders' Equity
$2.65 Cumulative Convertible Preferred Stock, par value $1 per share
Authorized -- 14 shares.....................................................
Issued and outstanding -- 9 shares.......................................... 9 9
Common stock, par value $5 per share
Authorized -- 100,000 shares................................................
Issued -- 50,818 shares and 22,534 shares................................... 254,089 112,670
Capital in excess of par value................................................... 6,123 5,077
Equity adjustments:
Foreign currency translation................................................ (23,723) (6,489)
Pensions.................................................................... (6,548) (3,344)
Retained earnings................................................................ 488,241 515,566
Treasury stock, at cost -- 318 and 306 shares.................................... (4,776) (9,193)
---------- ----------
Total Shareholders' Equity.................................................. 713,415 614,296
---------- ----------
Total Liabilities and Shareholders' Equity.................................. $1,838,998 $1,811,794
---------- ----------
---------- ----------
</TABLE>
See accompanying notes.
F-2
<PAGE>
WITCO CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------
1993 1992 1991
---------- ---------- ----------
(IN THOUSANDS OF DOLLARS
EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Revenues
Net sales........................................................ $2,142,555 $1,728,896 $1,630,521
Interest......................................................... 8,679 9,303 10,529
---------- ---------- ----------
Total Revenues.............................................. 2,151,234 1,738,199 1,641,050
---------- ---------- ----------
Costs and Expenses
Cost of goods sold (exclusive of depreciation and
amortization).................................................. 1,649,143 1,355,450 1,270,954
Selling and administrative expenses.............................. 230,722 190,339 178,573
Depreciation and amortization.................................... 102,502 76,162 67,622
Interest......................................................... 34,984 16,448 16,027
Other expense (income) -- net.................................... 100,552 17,688 (1,930)
---------- ---------- ----------
Total Costs and Expenses.................................... 2,117,903 1,656,087 1,531,246
---------- ---------- ----------
Income before Federal and Foreign Income Taxes and Cumulative
Effect of Accounting Change.................................... 33,331 82,112 109,804
Federal and Foreign Income Taxes...................................... 13,568 28,247 36,329
---------- ---------- ----------
Income before Cumulative Effect of Accounting Change............. 19,763 53,865 73,475
Cumulative Effect of Accounting Change................................ -- (14,690) --
---------- ---------- ----------
Net Income.................................................. $ 19,763 $ 39,175 $ 73,475
---------- ---------- ----------
---------- ---------- ----------
Net Income Per Common Share: Primary
Income before cumulative effect of accounting change............. $.46 $1.19 $1.60
Cumulative effect of accounting change........................... -- (.29) --
---- ----- -----
Net Income Per Common Share: Primary........................ $.46 $.90 $1.60
---- ----- -----
---- ----- -----
Net Income Per Common Share: Fully Diluted
Income before cumulative effect of accounting change............. $.46 $1.18 $1.59
Cumulative effect of accounting change........................... -- (.29) --
---- ----- -----
Net Income Per Common Share: Fully Diluted.................. $.46 $.89 $1.59
---- ----- -----
---- ----- -----
</TABLE>
See accompanying notes.
F-3
<PAGE>
WITCO CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1993 1992 1991
-------- -------- --------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Operating Activities
Net income.............................................................. $ 19,763 $ 39,175 $ 73,475
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization...................................... 102,502 76,162 67,622
Provision for environmental remediation and compliance............. 52,810 -- --
Provision for work force reduction and other matters............... 29,784 -- --
Provision (benefit) for deferred income taxes...................... (24,639) (641) 5,017
Provision for disposition of a business............................ 19,200 -- --
Gains on dispositions.............................................. (8,810) (542) (2,988)
Pension charge (credit)............................................ 1,221 (6,218) (6,424)
Provision for consolidation of offices............................. -- 20,135 --
Cumulative effect of accounting change............................. -- 14,690 --
Changes in operating assets and liabilities:
Accounts receivable........................................... (26,101) (3,140) 4,707
Inventories................................................... 13,490 (11,783) 2,162
Prepaid and other current assets.............................. 513 (4,488) 209
Accounts payable and other current liabilities................ (6,908) 24,950 (24,813)
Other.............................................................. (1,427) (1,098) (1,547)
-------- -------- --------
Net Cash Provided by Operating Activities.......................... 171,398 147,202 117,420
-------- -------- --------
Investing Activities
Expenditures for property, plant and equipment.......................... (103,689) (72,594) (74,307)
Proceeds from dispositions.............................................. 24,160 4,449 11,326
Acquisitions of businesses, net of cash acquired........................ (3,691) (441,633) (1,060)
Other................................................................... (4,568) 2,392 1,542
-------- -------- --------
Net Cash Used in Investing Activities.............................. (87,788) (507,386) (62,499)
-------- -------- --------
Financing Activities
Payments on borrowings.................................................. (501,972) (58,249) (5,680)
Proceeds from borrowings................................................ 374,422 444,880 11,422
Proceeds from issuance of common stock.................................. 141,655 -- --
Dividends paid.......................................................... (44,679) (40,422) (38,680)
Proceeds from exercise of stock options................................. 5,236 16,500 1,366
Other................................................................... (3,499) (1,069) --
-------- -------- --------
Net Cash Provided by (Used in) Financing Activities................ (28,837) 361,640 (31,572)
-------- -------- --------
Effects of Exchange Rate Changes on Cash and Cash Equivalents................ (6,170) (6,260) (491)
-------- -------- --------
Increase (Decrease) in Cash and Cash Equivalents................... 48,603 (4,804) 22,858
-------- -------- --------
Cash and Cash Equivalents at Beginning of Year............................... 134,447 139,251 116,393
-------- -------- --------
Cash and Cash Equivalents at End of Year..................................... $183,050 $134,447 $139,251
-------- -------- --------
-------- -------- --------
</TABLE>
See accompanying notes.
F-4
<PAGE>
WITCO CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
EQUITY ADJUSTMENTS
-----------------------
CAPITAL IN FOREIGN TREASURY
PREFERRED COMMON EXCESS OF CURRENCY RETAINED STOCK AT
STOCK STOCK PAR VALUE TRANSLATION PENSIONS EARNINGS COST
--------- -------- ---------- ----------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1990........ $10 $112,670 $ 1,986 $ 20,423 $ (5,570) $ 484,412 $(26,459)
Net Income.......................... 73,475
Cash Dividends Declared:
Preferred stock................ (26)
Common stock................... (39,361)
Common Stock Issued:
Employee plans................. (433) 1,799
Conversions.................... (5) (1,058) 1,949
Equity Adjustments.................. (1,735) 3,623
--- -------- ---------- ----------- -------- --------- --------
Balance at December 31, 1991........ 10 112,670 1,981 18,688 (1,947) 517,009 (22,711)
Net Income.......................... 39,175
Cash Dividends Declared:
Preferred stock................ (24)
Common stock................... (40,594)
Common Stock Issued:
Employee plans................. 3,383 13,117
Conversions.................... (1) (287) 401
Equity Adjustments.................. (25,177) (1,397)
--- -------- ---------- ----------- -------- --------- --------
Balance at December 31, 1992........ 9 112,670 5,077 (6,489) (3,344) 515,566 (9,193)
Net Income.......................... 19,763
Cash Dividends Declared:
Preferred stock................ (24)
Common stock................... (47,064)
Common Stock Issued:
Two-for-one stock split........ 127,045 (127,176)
Public offering................ 14,374 127,281
Employee plans................. 1,207 4,029
Conversions.................... (266) 388
Equity Adjustments.................. (17,234) (3,204)
--- -------- ---------- ----------- -------- --------- --------
Balance at December 31, 1993........ $ 9 $254,089 $ 6,123 $ (23,723) $ (6,548) $ 488,241 $ (4,776)
--- -------- ---------- ----------- -------- --------- --------
--- -------- ---------- ----------- -------- --------- --------
<CAPTION>
TOTAL
--------
<S> <C>
Balance at December 31, 1990........ $587,472
Net Income.......................... 73,475
Cash Dividends Declared:
Preferred stock................ (26)
Common stock................... (39,361)
Common Stock Issued:
Employee plans................. 1,366
Conversions.................... 886
Equity Adjustments.................. 1,888
--------
Balance at December 31, 1991........ 625,700
Net Income.......................... 39,175
Cash Dividends Declared:
Preferred stock................ (24)
Common stock................... (40,594)
Common Stock Issued:
Employee plans................. 16,500
Conversions.................... 113
Equity Adjustments.................. (26,574)
--------
Balance at December 31, 1992........ 614,296
Net Income.......................... 19,763
Cash Dividends Declared:
Preferred stock................ (24)
Common stock................... (47,064)
Common Stock Issued:
Two-for-one stock split........ (131)
Public offering................ 141,655
Employee plans................. 5,236
Conversions.................... 122
Equity Adjustments.................. (20,438)
--------
Balance at December 31, 1993........ $713,415
--------
--------
</TABLE>
See accompanying notes.
F-5
<PAGE>
WITCO CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation: The consolidated financial statements include
the accounts of all majority owned subsidiaries after the elimination of
inter-company transactions.
Cash Equivalents: Cash equivalents consist of highly liquid investments
with a maturity of three months or less when purchased.
Inventories: Inventories are stated at cost, principally on the Last-In,
First-Out (LIFO) basis which is not in excess of market. The balance of
inventories is stated at the lower of cost on the First-In, First-Out (FIFO)
basis or market.
Property, Plant and Equipment: Property, plant and equipment is stated at
cost and depreciation is provided principally using the straight-line method
based on estimated useful lives.
Intangible Assets: Intangible assets primarily include the excess of
purchase price paid over the estimated fair value of net assets acquired
(goodwill) and other intangibles which are principally being amortized over
periods not in excess of forty years.
Postemployment Benefits: The Company adopted Statement of Financial
Accounting Standards (SFAS) No. 112 'Employers' Accounting for Postemployment
Benefits' effective January 1, 1993. SFAS 112 requires employers to accrue the
cost of postemployment benefits, such as medical and disability benefits, as
employees render services instead of when benefits are paid. The adoption of
SFAS 112 did not have a material impact on the Company's financial position,
results of operations, or cash flow.
Research and Development Costs: The Company's research and development
costs are charged to expense as incurred. These charges amounted to $49,494,000
(1993), $29,207,000 (1992), and $27,908,000 (1991).
Environmental Remediation Costs: Environmental remediation costs are
charged to expense if the remediation is the result of past practices or events
and the expenditures are not expected to contribute to future operations.
Projected costs are accrued when it is probable that a liability has been
incurred and the amount can be reasonably estimated.
Income Taxes: The Company elected to adopt SFAS No. 109 'Accounting for
Income Taxes' effective January 1, 1992. The Company previously accounted for
income taxes under SFAS 96. There was no significant effect on the financial
results of the Company as the result of this change in accounting.
Common Share Data: On September 2, 1993, the Board of Directors of the
Company authorized a two-for-one common stock split in the form of a 100 percent
stock distribution issuable to shareholders of record as of September 16, 1993.
The distribution was made on October 5, 1993. All common stock share and per
share data for 1993 and prior years, except for prior years' shareholders'
equity, have been adjusted to reflect the split.
Net income per common share is based upon net income adjusted for interest
(net of tax) on the 5 1/2% convertible debentures and the dividend requirements
of preferred stock. The weighted average number of common shares outstanding
during each year includes common stock equivalents, principally shares issuable
in connection with the 5 1/2% convertible debentures and the Company's stock
option plans. Fully diluted net income per common share additionally reflects
the assumed conversion of the outstanding convertible preferred stock.
NOTE 2 -- ACQUISITIONS AND DISPOSITIONS
On November 1, 1993, the Company sold the operations of its Chemprene, Inc.
subsidiary to CMP Acquisition Corporation for $24,160,000 resulting in a gain of
$5,726,000, or $.11 per common share. Chemprene manufactures lightweight
belting, coated fabrics, and industrial diaphragms. The operating results of
this subsidiary were not significant to the consolidated results of operations.
F-6
<PAGE>
WITCO CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
In October 1992 the Company acquired the businesses of IGI Petroleum
Specialties, Inc. (PSI), a wholly owned subsidiary of The International Group,
Inc. (U.S.) and certain associated Canadian assets for $14,500,000. PSI was
involved in the manufacturing and selling of white oils, petrolatums, and
refrigeration oils. The acquisition was recorded as a purchase and the results
since the acquisition have not been significant to the consolidated results of
operations.
On November 2, 1992, the Company acquired for cash the Industrial Chemicals
and Natural Substances divisions of Schering AG. The acquired divisions
manufacture and market surfactants, oleochemicals, and polymer additives with
operations at ten manufacturing facilities in seven countries. The acquisition
was accounted for as a purchase and results of operations have been included in
the consolidated financial statements from the acquisition date. The purchase
price of approximately $440,000,000 is subject to adjustment based on changes in
net worth of the businesses acquired for a defined period to the acquisition
date. The amount of any net worth based adjustment is not expected to be
material in relation to the purchase price. An allocation of the purchase price
resulted in an excess over the estimated fair value of net assets acquired
(goodwill) of approximately $119,000,000. This is being amortized on a
straight-line basis over forty years. Results for 1993 included net sales of
$474,700,000 and net income of $16,200,000, or $.30 per common share, compared
to net sales of $72,300,000 and a net loss of $2,800,000, or $.06 per common
share, in 1992 as the result of the acquisition, including associated financing
costs.
The following unaudited pro forma results present the estimated
consolidated financial results as if the Schering Acquisition had occurred at
the beginning of the years indicated and are not indicative of the results that
would have occurred had this acquisition been made on these dates, and are not
indicative of future results.
<TABLE>
<CAPTION>
1992 1991
------------------------------------ ------------------------------------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C>
Net sales.......................... $2,194,420 $2,141,486
------------- -------------
Income before cumulative effect of
accounting change................ $ 63,519 $ 65,990
Cumulative effect of accounting
change........................... (14,690) --
------------- -------------
Net income.................... $ 48,829 $ 65,990
------------- -------------
Net income per common
share -- primary
Income before cumulative
effect of accounting
change...................... $ 1.38 $ 1.45
Cumulative effect of
accounting change........... (.29) --
------------- -------------
Net income per common
share -- primary............ $ 1.09 $ 1.45
------------- -------------
------------- -------------
</TABLE>
NOTE 3 -- OTHER EXPENSE (INCOME) -- NET
The components of other expense (income) -- net are as follows:
<TABLE>
<CAPTION>
1993 1992 1991
-------- ------- -------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Provision for environmental remediation and compliance................ $ 52,810 $ -- $ --
Provision for disposition of a business............................... 19,200 -- --
Provision for work force reduction.................................... 12,200 -- --
Charge for a legal judgment........................................... 11,636 -- --
Provision for loss on sublease of office facilities................... 9,184 -- --
Gain on sale of the operations of a subsidiary........................ (8,810) -- --
Provision for the consolidation of offices............................ -- 20,135
Other -- net.......................................................... 4,332 (2,447) (1,930)
-------- ------- -------
$100,552 $17,688 $(1,930)
-------- ------- -------
-------- ------- -------
</TABLE>
F-7
<PAGE>
WITCO CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 4 -- INVENTORIES
Inventories are classified as follows:
<TABLE>
<CAPTION>
1993 1992
-------- --------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Raw materials and supplies.................................................... $ 81,440 $ 89,305
Finished goods................................................................ 146,029 160,359
-------- --------
$227,469 $249,664
-------- --------
-------- --------
</TABLE>
Work in progress included above is not significant.
Inventories valued on a LIFO basis, at December 31, 1993 and 1992, amounted
to $143,317,000 and $147,670,000, respectively. Inventories would have been
$57,849,000 and $71,023,000 higher than reported at December 31, 1993 and 1992
if the FIFO method (which approximates current cost) had been used by the
Company for all inventories.
NOTE 5 -- PROPERTY, PLANT AND EQUIPMENT
A summary of property, plant and equipment follows:
<TABLE>
<CAPTION>
1993 1992
---------- ----------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Land...................................................................... $ 32,150 $ 29,607
Buildings and improvements................................................ 175,501 186,533
Machinery, fixtures and equipment......................................... 1,055,134 1,028,445
Assets under construction................................................. 55,361 43,268
---------- ----------
1,318,146 1,287,853
Less accumulated depreciation............................................. 621,684 566,682
---------- ----------
$ 696,462 $ 721,171
---------- ----------
---------- ----------
</TABLE>
NOTE 6 -- INTANGIBLE ASSETS
Intangible assets consist of the following:
<TABLE>
<CAPTION>
1993 1992
-------- --------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Goodwill...................................................................... $160,091 $178,566
Patents and licenses.......................................................... 37,341 47,778
Other......................................................................... 58,212 48,805
-------- --------
255,644 275,149
Less accumulated amortization................................................. 38,612 25,282
-------- --------
$217,032 $249,867
-------- --------
-------- --------
</TABLE>
NOTE 7 -- INDEBTEDNESS
In 1993 the Company repaid the $440,000,000 short-term debt incurred to
finance the Schering Acquisition. The funds were provided by net proceeds from a
public offering of shares of common stock and the issuance of long-term debt,
which included $165,000,000 of 6.60% notes due 2003, $110,000,000 of 7.75%
debentures due 2023, and 70,000,000 Deutsche Marks of 7.325% notes from German
banks due 1998 ($40,313,000 at December 31, 1993).
F-8
<PAGE>
WITCO CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Following is a summary of long-term debt:
<TABLE>
<CAPTION>
1993 1992
-------- --------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
6.60% Notes due 2003.......................................................... $165,000 $ --
7.75% Debentures due 2023..................................................... 110,000 --
7.325% Notes due 1998......................................................... 40,313 --
5.85% Pollution Control Revenue Bonds due 2023................................ 10,000 --
8.94% Pollution Control Revenue Bond due 1993................................. -- 10,000
Industrial Development Revenue Bond due 2014.................................. 8,500 8,500
5 1/2% Convertible Subordinated Debentures due 2012 with annual sinking fund
payments of $7,500 beginning 1997........................................... 150,000 150,000
Other......................................................................... 14,663 18,304
-------- --------
498,476 186,804
Less amounts included in notes and loans payable.............................. 2,210 13,718
-------- --------
$496,266 $173,086
-------- --------
-------- --------
</TABLE>
The 8.94% Pollution Control Revenue Bond due 1993 in the amount of
$10,000,000 was refinanced with the proceeds from the issuance of the 5.85%
Pollution Control Revenue Bonds due 2023 for the same amount.
The Company's 5 1/2% convertible debentures are convertible into common
stock at $27.28 per share and are redeemable at a premium for cash at the option
of the Company. On March 11, 1994, the Company announced its intention to redeem
these debentures.
The Company has arrangements with various banks for lines of credit for its
international subsidiaries aggregating $40,190,000 of which $2,823,000 was
utilized at December 31, 1993.
Principal maturities of long-term debt at December 31, 1993 are $2,210,000
(1994), $2,985,000 (1995), $2,009,000 (1996), $9,539,000 (1997), and $48,627,000
(1998).
Following is a summary of interest:
<TABLE>
<CAPTION>
1993 1992 1991
------- ------- -------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Interest expense.................................................... $34,984 $16,448 $16,027
Capitalized interest................................................ 1,923 851 1,164
------- ------- -------
Total interest incurred................................... $36,907 $17,299 $17,191
------- ------- -------
------- ------- -------
Total interest payments................................... $30,098 $18,219 $16,792
------- ------- -------
------- ------- -------
</TABLE>
NOTE 8 -- FINANCIAL INSTRUMENTS
In 1993 and 1992, the Company entered into several foreign currency forward
contracts, currency swaps, and other financial market instruments to hedge the
effect of foreign currency fluctuations on the financial statements. The foreign
exchange contracts are accounted for as hedges of net investments, commitment
hedges, and transaction hedges. Gains and losses on hedges of net investments
are recognized as a component of shareholders' equity. Generally, gains and
losses on the commitment hedges are deferred and included in the basis of the
transaction underlying the commitment. Gains and losses on transaction hedges
are recognized in income and offset the foreign exchange gains and losses on the
related transaction.
At December 31, 1993 and 1992, the Company had outstanding contracts to
hedge its foreign net investments and other foreign exposures. The aggregate
face value of these contracts, with notional amounts of $210,626,000 (1993) and
$414,894,000 (1992), also fix the interest rates on approximately $209,326,000
of indebtedness at a weighted average interest rate of approximately 8 percent.
The net
F-9
<PAGE>
WITCO CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
interest rate differentials that are paid or received are reflected currently as
adjustments to interest expense. The foreign currency contracts are primarily in
German marks and expire at various dates through March 2003.
These contracts have been entered into with major international financial
institutions. The risk associated with these transactions is the cost of
replacing, at current market rates, agreements in the event of default by the
counterparties. Management believes the risk of incurring such losses is remote.
The following methods and assumptions were used to estimate the fair value
of financial instruments as required by Statement of Financial Accounting
Standards No. 107, 'Disclosures about Fair Value of Financial Instruments.'
Cash and cash equivalents: The carrying amount approximates fair value due
to the short maturity of these instruments.
Notes receivable: The fair value is estimated by discounting the future
cash flows using the interest rates at which similar loans would be made under
current conditions.
Long-term debt (including short-term portion): The fair value of the 5 1/2%
Convertible Subordinated Debentures and the 7.45% Debentures are based on their
quoted market price on the New York Stock Exchange. The fair value for the 6.60%
Notes and the 7.75% Debentures were based on market values as furnished by
investment banking firms. For all other long-term debt which has no quoted
market price, the fair value is estimated by discounting projected future cash
flows using the Company's incremental borrowing rate.
Foreign currency/interest rate swap contracts: The fair value is the amount
at which the contracts could be settled based on quotes provided by investment
banking firms.
Fair Values of Financial Instruments: The following table shows the
carrying amounts and estimated fair values of material financial instruments
used by the Company in the normal course of its business.
<TABLE>
<CAPTION>
1993 1992
-------------------- --------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- -------- -------- --------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
Cash and cash equivalents........................................ $183,050 $183,050 $134,447 $134,447
Notes receivable................................................. $ 2,864 $ 2,864 $ 2,850 $ 2,849
Long-term debt................................................... $498,476 $527,704 $186,804 $188,542
Off-balance sheet financial instruments:
Unrealized loss on foreign currency/interest rate swap
contracts................................................. -- $ (6,268) -- --
</TABLE>
NOTE 9 -- SHAREHOLDERS' EQUITY
On September 2, 1993, the Board of Directors of the Company declared a
two-for-one stock split on the Company's common stock. This was paid in the form
of a 100 percent stock distribution of 25,409,000 shares on October 5, 1993, to
shareholders of record as of September 16, 1993. Accordingly, all share and per
share data, as appropriate, reflect the effects of this split. The par value for
the additional shares issued was transferred from capital in excess of par value
to common stock.
At December 31, 1993, unissued common stock of the Company was reserved for
issuance in accordance with the terms of the convertible subordinated debentures
(5,500,000 shares), the stock option plans (2,743,000 shares), and the $2.65
Cumulative Convertible Preferred Stock (143,000 shares).
The Company has several stock option plans for certain employees. All
options are granted at market value as of the date of grant and are exercisable
in installments within a period not to exceed ten years from the date of grant.
The options outstanding at December 31, 1993 expire on various dates
F-10
<PAGE>
WITCO CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
through June 2003. At December 31, 1993 and 1992, options for 1,271,000 and
1,964,000 shares of common stock, respectively, were available for grant.
Stock option transactions were as follows:
<TABLE>
<CAPTION>
1993 1992
--------------------------- ---------------------------
(thousands of shares) SHARES PRICE SHARES PRICE
------ ----------------- ------ -----------------
<S> <C> <C> <C> <C>
Outstanding at beginning of year................... 1,112 $ 13.00 - $21.38 1,462 $ 13.00 - $18.19
Granted............................................ 692 $26.56 636 $21.38
Options exercised.................................. (328) $ 13.00 - $21.38 (986) $ 13.00 - $18.19
Cancelled.......................................... (4) $17.31 -- --
------ ----------------- ------ -----------------
Outstanding at End of Year.................... 1,472 $ 13.00 - $26.56 1,112 $ 13.00 - $21.38
------ ----------------- ------ -----------------
------ ----------------- ------ -----------------
Exercisable at End of Year.................... 201 $ 17.31 - $26.56 144 $ 16.88 - $21.38
------ ----------------- ------ -----------------
------ ----------------- ------ -----------------
</TABLE>
Each share of $2.65 Cumulative Convertible Preferred Stock is entitled to
one vote and has a minimum liquidating preference of $66 per share. Each share
is subject to redemption at the Company's option at $66 per share and is
convertible into 16.8075 shares of the Company's common stock.
The Company has authorized 8,300,000 shares of series preferred stock,
which, when issued, will have such rights, powers, and preferences as shall be
fixed by the Company's Board of Directors.
Dividends declared per share on the Company's common stock amounted to $.96
(1993), $.92 (1992), and $.91 (1991).
Common and preferred stock transactions were as follows:
<TABLE>
<CAPTION>
1993 1992 1991
------ ------ ------
(THOUSANDS OF SHARES)
<S> <C> <C> <C>
Convertible Preferred Stock
Outstanding at beginning of year...................................... 9 10 10
Conversions........................................................... -- (1) --
------ ------ ------
Outstanding at End of Year....................................... 9 9 10
------ ------ ------
------ ------ ------
Common Stock
Outstanding at beginning of year...................................... 22,534 22,534 22,534
Shares issued through a public offering............................... 2,875 -- --
Two-for-one stock split............................................... 25,409 -- --
------ ------ ------
Issued at End of Year............................................ 50,818 22,534 22,534
------ ------ ------
------ ------ ------
Treasury Stock
In treasury at beginning of year...................................... 306 757 882
Two-for-one stock split............................................... 183 -- --
Net shares issued under employee plans................................ (149) (437) (60)
Conversions........................................................... (22) (14) (65)
------ ------ ------
In Treasury at End of Year....................................... 318 306 757
------ ------ ------
------ ------ ------
</TABLE>
F-11
<PAGE>
WITCO CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 10 -- FEDERAL AND FOREIGN INCOME TAXES
The components of income (loss) before federal and foreign income taxes and
the cumulative effect of accounting change are:
<TABLE>
<CAPTION>
1993 1992 1991
-------- ------- --------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Domestic............................................................. $(13,779) $51,551 $ 72,719
International........................................................ 47,110 30,561 37,085
-------- ------- --------
$ 33,331 $82,112 $109,804
-------- ------- --------
-------- ------- --------
</TABLE>
The provision for federal and foreign income taxes (exclusive of the tax
benefit related to the cumulative effect of an accounting change of $7,567,000
in 1992) consists of the following:
<TABLE>
<CAPTION>
1993 1992 1991
-------- ------- -------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Current
Domestic......................................................... $ 21,745 $18,330 $17,936
International.................................................... 16,462 10,558 13,376
Deferred
Domestic......................................................... (22,291) 1,322 7,170
International.................................................... (1,028) (307) (162)
Investment tax credit amortization.................................... (1,320) (1,656) (1,991)
-------- ------- -------
$ 13,568 $28,247 $36,329
-------- ------- -------
-------- ------- -------
</TABLE>
The effective income tax rate from continuing operations varied from the
statutory federal income tax rate as follows:
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Statutory federal income tax rate............................................ 35.0% 34.0% 34.0%
Provision for non-deductible civil penalties................................. 4.0 -- --
Amortization of investment tax credits....................................... (4.0) (2.0) (1.8)
Effect of U.S. tax rate increase on deferred tax balances.................... 3.8 -- --
Other........................................................................ 1.9 2.4 .9
---- ---- ----
40.7% 34.4% 33.1%
---- ---- ----
---- ---- ----
</TABLE>
The components of deferred federal and foreign income taxes are as follows:
<TABLE>
<CAPTION>
1993 1992
-------- --------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Current Deferred Tax (Assets) Liabilities:
Reserve for environmental remediation and compliance....................... $(10,112) $ (7,843)
Inventories................................................................ 7,960 7,070
Accrual items.............................................................. (7,774) (7,357)
Reserve for disposition of a business...................................... (6,720) --
Reserve for consolidation of offices....................................... (6,028) (6,846)
Other -- net............................................................... (2,953) (2,322)
-------- --------
$(25,627) $(17,298)
-------- --------
-------- --------
</TABLE>
F-12
<PAGE>
WITCO CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
1993 1992
-------- --------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Noncurrent Deferred Tax (Assets) Liabilities:
Depreciation............................................................... $ 97,291 $117,545
Reserve for environmental remediation and compliance....................... (24,752) (12,433)
Hedging instruments........................................................ 16,225 --
Foreign net operating loss carryforward.................................... (14,484) --
Pensions................................................................... 13,854 13,473
Postretirement benefits other than pensions................................ (9,907) (10,139)
Reserve for work force reduction........................................... (4,270) --
Other -- net............................................................... 655 (198)
-------- --------
$ 74,612 $108,248
-------- --------
-------- --------
</TABLE>
U.S. federal income taxes have not been provided on approximately
$160,000,000 of unremitted earnings of the Company's international subsidiaries
at December 31, 1993. As a result of the availability of foreign tax credits,
based on current rates, no significant U.S. federal income taxes would be
payable if these earnings were distributed.
Provision has been made for foreign withholding taxes due upon remittance
of 1993 and 1992 foreign earnings. If unremitted earnings accumulated prior to
1992 were distributed it is estimated the related taxes due on these earnings
would not be significant.
Cash payments for federal and foreign income taxes amounted to $29,817,000
(1993), $21,811,000 (1992), and $39,879,000 (1991).
Unamortized investment tax credits aggregated $2,068,000 at December 31,
1993 and are being amortized over the estimated useful lives of the related
assets.
NOTE 11 -- PENSION PLANS
The Company has various non-contributory defined benefit pension plans
covering substantially all of its domestic employees and certain international
employees. Benefits are primarily based upon levels of compensation and/or years
of service. The Company's funding policy is based upon funding at the minimum
annual amounts required by applicable federal laws and regulations plus such
additional amounts as the Company may determine to be appropriate from time to
time. Plan assets consist of publicly traded securities and investments in
commingled funds administered by independent investment advisors.
Certain union employees of the Company participate in multi-employer plans
and the Company makes contributions primarily based upon hours worked. These
plans provide defined benefits to these employees.
In November 1992 the Company acquired certain domestic and international
operations of Schering AG. The related international plans accounted for
approximately $4,800,000 of the 1993 net periodic pension cost. In the years
prior to 1993, net periodic pension cost of the international plans was not
significant.
Employees of international subsidiaries are covered by various pension
benefit arrangements, some of which are considered to be defined benefit plans
for financial reporting purposes. Assets of the plans are comprised of insurance
contracts and equity securities. Benefits under these plans are primarily based
upon levels of compensation. Funding policies are based on legal requirements,
tax considerations, and local practices.
F-13
<PAGE>
WITCO CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Net pension charge (credit) includes the following components:
<TABLE>
<CAPTION>
1993 1992 1991
------------------------- -------- --------
U.S. INTERNATIONAL
-------- -------------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
Service cost for benefits earned during the period.... $ 6,630 $ 2,985 $ 4,834 $ 4,430
Interest cost on the projected benefit obligation..... 20,707 4,763 16,597 14,894
Actual return on plan assets (gain)................... (34,119) (2,861) (17,384) (48,040)
Net amortization and deferral......................... 3,177 (61) (10,265) 22,292
-------- ------------- -------- --------
Total Pension Charge (Credit).................... (3,605) 4,826 (6,218) (6,424)
-------- ------------- -------- --------
Multi-employer plans.................................. 441 -- 418 815
Other international plans............................. -- 90 738 962
-------- ------------- -------- --------
Net Pension Charge (Credit)...................... $ (3,164) $ 4,916 $ (5,062) $ (4,647)
-------- ------------- -------- --------
-------- ------------- -------- --------
</TABLE>
Assumptions used to calculate costs were as follows:
<TABLE>
<CAPTION>
1993 1992 1991
------------------------ -------------- -----
U.S. INTERNATIONAL
---- --------------
<S> <C> <C> <C> <C>
Discount rate................................. 7.9% 7.5% - 9.0% 8.2% - 9.0% 8.7%
Rate of increase in compensation level........ 5.0% 3.5% - 6.0% 5.0% 5.0%
Expected long-term rate of return on assets... 12.0% 8.0% - 12.0% 12.0% 12.0%
</TABLE>
The funded status and amounts recognized in the Company's Consolidated
Balance Sheets at December 31, 1993 and 1992 for the U.S. plans were as follows:
<TABLE>
<CAPTION>
1993 1992
------------------------- -------------------------
PLANS IN WHICH: PLANS IN WHICH:
------------------------- -------------------------
ASSETS ACCUMULATED ASSETS ACCUMULATED
EXCEED BENEFITS EXCEED BENEFITS
ACCUMULATED EXCEED ACCUMULATED EXCEED
BENEFITS ASSETS BENEFITS ASSETS
----------- ----------- ----------- -----------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
Actuarial present value of:
Vested benefits......................................... $(241,453) $ (52,555) $(206,091) $ (41,903)
Nonvested benefits...................................... (13,996) (2,947) (10,412) (1,915)
----------- ----------- ----------- -----------
Accumulated Benefit Obligation..................... (255,449) (55,502) (216,503) (43,818)
Effect of anticipated future compensation levels............. (16,845) (2,456) (12,526) (1,841)
----------- ----------- ----------- -----------
Projected Benefit Obligation....................... (272,294) (57,958) (229,029) (45,659)
Plan assets at fair value.................................... 272,360 30,730 246,910 27,014
----------- ----------- ----------- -----------
Plan Assets in Excess of (Less than) Projected
Benefit Obligation............................... 66 (27,228) 17,881 (18,645)
Unrecognized prior service cost.............................. 39,294 4,631 26,387 1,423
Unrecognized net transition (asset) obligation............... (17,426) 1,339 (20,477) 1,673
Unrecognized net loss........................................ 46,866 12,468 23,279 15,552
Adjustment required to recognize minimum pension liability... -- (10,074) -- (4,773)
----------- ----------- ----------- -----------
Noncurrent Pension Asset (Liability)............... $ 68,800 $ (18,864) $ 47,070 $ (4,770)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
F-14
<PAGE>
WITCO CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Assumptions used to calculate December 31, 1993 and 1992 obligations for
U.S. plans were as follows:
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Discount rate........................................................................... 7.0 % 7.9 %
Rate of increase in compensation level.................................................. 4.5 % 5.0 %
</TABLE>
Effective January 1, 1994, the pension benefit formula of the Retirement
Plan of Witco was amended to a 'final average pay offset' formula and several
plan provisions were revised. Modifications were also made to the benefit
formula and plan provisions of the Supplemental Executive Retirement Plan. These
amendments resulted in increases of approximately $11,800,000 and $19,600,000 in
the 1993 accumulated benefit obligation and projected benefit obligation,
respectively.
Also effective January 1, 1994, Witco revised the discount rate, long-term
rate of return on plan assets and rate of future compensation levels to 7%, 10%,
and 4.5%, respectively. These changes resulted in increases of approximately
$28,000,000 and $24,000,000 in the 1993 accumulated benefit obligation and
projected benefit obligation, respectively. The plan amendments and assumption
changes together are anticipated to increase domestic net periodic pension cost
for 1994 by approximately $9,200,000.
The funded status and amounts recognized in the Company's Consolidated
Balance Sheets at December 31, 1993 and 1992 for the international plans were as
follows:
<TABLE>
<CAPTION>
1993 1992
------------------------- -------------------------
PLANS IN WHICH: PLANS IN WHICH:
------------------------- -------------------------
ASSETS ACCUMULATED ASSETS ACCUMULATED
EXCEED BENEFITS EXCEED BENEFITS
ACCUMULATED EXCEED ACCUMULATED EXCEED
BENEFITS ASSETS BENEFITS ASSETS
----------- ----------- ----------- -----------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
Actuarial present value of:
Vested benefits......................................... $(19,829) $(28,895) $(1,623) $(29,909)
Nonvested benefits...................................... (1,094) (2,845) (50) (2,962)
----------- ----------- ----------- -----------
Accumulated Benefit Obligation..................... (20,923) (31,740) (1,673) (32,871)
Effect of anticipated future compensation levels............. (5,678) (16,751) (48) (10,914)
----------- ----------- ----------- -----------
Projected Benefit Obligation....................... (26,601) (48,491) (1,721) (43,785)
Plan assets at fair value.................................... 31,349 741 1,860 2,764
----------- ----------- ----------- -----------
Plan Assets in Excess of (Less than) Projected
Benefit Obligation............................... 4,748 (47,750) 139 (41,021)
Unrecognized prior service cost.............................. 437 -- 208 284
Unrecognized net transition (asset) obligation............... (6,040) (8) 114 (127)
Unrecognized net loss (gain)................................. 2,658 6,489 (13) 418
Adjustment required to recognize minimum pension liability... -- -- -- (293)
----------- ----------- ----------- -----------
Noncurrent Pension Asset (Liability)............... $ 1,803 $(41,269) $ 448 $(40,739)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
Assumptions used to calculate December 31, 1993 and 1992 obligations for
international plans were as follows:
<TABLE>
<CAPTION>
1993 1992
-------------- --------------
<S> <C> <C>
Discount rate............................................................ 7.5% - 9.0% 7.5% - 9.0%
Rate of increase in compensation level................................... 3.5% - 6.0% 4.5% - 5.5%
</TABLE>
F-15
<PAGE>
WITCO CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The 1993 funded status includes the Netherlands' pension plan. The
inclusion of this plan resulted in an increase of approximately $14,000,000,
$17,500,000, and $19,800,000, in the accumulated benefit obligation, projected
benefit obligation, and plan assets, respectively.
NOTE 12 -- POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company provides health and life insurance benefits to certain eligible
retired employees, most of whom contribute to its cost. Substantially all
employees presently become eligible for retiree health benefits after reaching
retirement age while working for the Company. The cost of the medical plan is
provided by retiree contributions that are adjusted annually to reflect current
estimates of health costs. For employees subject to collective bargaining
arrangements the cost is shared by the Company in accordance with the bargained
agreements. Life insurance benefits for certain retired employees are provided
with the Company assuming the cost. The Company's policy is to fund the plans at
the discretion of management.
In 1992 the Company adopted Financial Accounting Standard No. 106,
'Employers' Accounting for Postretirement Benefits Other Pensions'. This
statement requires the accrual of the cost of providing postretirement benefits,
including medical and life insurance coverage, during the active service period
of the employee. The Company elected to record the effect of this adoption as a
cumulative effect of a change in accounting principle and immediately recognize
the accumulated liability, measured as of January 1, 1992. This resulted in a
one-time after-tax charge of $14,690,000. In accordance with the standard, prior
year's costs have not been restated. In November 1992 the Company acquired
certain U.S. operations of Schering AG. These operations provided certain
retiree medical and life insurance benefits. In 1993 the Company negotiated or
revised many of the provisions and assumptions related to these benefits to be
in compliance with the Company's other comparable plans.
Postretirement benefit obligations at December 31, 1993 and 1992 were as
follows:
<TABLE>
<CAPTION>
1993 1992
------- -------
(THOUSANDS OF
DOLLARS)
<S> <C> <C>
Accumulated Postretirement Benefit Obligation:
Retirees..................................................................... $27,445 $25,895
Active plan participants fully eligible for benefits......................... 3,398 2,717
Other active plan participants............................................... 7,373 5,314
------- -------
Total Accumulated Postretirement Benefit Obligation..................... 38,216 33,926
Unrecognized net loss............................................................. (6,412) (942)
------- -------
Accrued Postretirement Benefit Liability................................ $31,804 $32,984
------- -------
------- -------
</TABLE>
Net periodic postretirement benefit costs include the following components:
<TABLE>
<CAPTION>
1993 1992
------ ------
(THOUSANDS OF
DOLLARS)
<S> <C> <C>
Service cost of benefits earned...................................................... $ 389 $ 196
Interest cost on accumulated postretirement benefits................................. 2,621 1,814
Net amortization..................................................................... 141 --
------ ------
Net Periodic Postretirement Benefit Costs....................................... $3,151 $2,010
------ ------
------ ------
</TABLE>
Postretirement benefit cost for the year ended December 31, 1991 was
approximately $2,300,000.
For measuring the expected postretirement benefit obligation, an 11 and 12
percent annual rate of increase in the per capita claims cost was assumed for
1993 and 1992, respectively. The rate was assumed to decrease by 1 percent per
year to 6 percent in 1998 and remain at that level thereafter. The
F-16
<PAGE>
WITCO CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 7 percent for 1993 and 7.9 percent for
1992. The weighted average discount rates used in determining the net periodic
postretirement benefit costs for 1993 and 1992 were 7.9 and 8.2 percent,
respectively.
The effect of a one percent increase in the health care cost trend rate
would increase the present value of the accumulated postretirement benefit
obligation at December 31, 1993 by approximately $4,300,000 and the net periodic
postretirement benefit cost for 1993 by approximately $400,000.
Certain union employees of the Company participate in multi-employer plans
that provide defined postretirement health and life insurance benefits. The net
periodic postretirement benefit cost for these employees is not distinguishable.
The Company's cost associated with these plans on a cash basis is not
significant.
Employees in operations in countries outside the U.S. are covered by
various postretirement benefit arrangements, none of which are presently
considered to be defined benefit plans.
NOTE 13 -- ACCOUNTS PAYABLE AND OTHER CURRENT LIABILITIES
Components of accounts payable and other current liabilities consist of the
following:
<TABLE>
<CAPTION>
1993 1992
-------- --------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Accounts payable and other accruals............................................. $209,395 $209,415
Payroll and related liabilities................................................. 43,588 34,868
Reserves for environmental remediation and compliance........................... 28,892 25,777
Reserve for disposition of a business........................................... 19,200 --
Income taxes.................................................................... 18,845 17,492
Reserve for consolidation of offices............................................ 17,224 20,135
-------- --------
$337,144 $307,687
-------- --------
-------- --------
</TABLE>
NOTE 14 -- COMMITMENTS AND CONTINGENCIES
Leases: At December 31, 1993, minimum rental commitments under
noncancelable operating leases amounted to $14,834,000 (1994), $15,241,000
(1995), $12,693,000 (1996), $9,829,000 (1997), $7,858,000 (1998), and
$103,345,000 (1999 and thereafter). Aggregate future minimum rentals to be
received under noncancelable subleases, the majority of which are subject to
barter provisions, amount to $26,921,000.
Rental expenses under operating leases were $19,849,000 (1993), $16,518,000
(1992), and $17,114,000 (1991).
Capital Commitments: At December 31, 1993, the estimated costs to complete
authorized projects under construction amounted to $100,906,000.
Litigation, Claims and Contingencies: The Company has been notified, or is
a named or a potentially responsible party in a number of governmental (federal,
state, and local) and private actions associated with environmental matters,
such as those relating to hazardous wastes, including certain sites which are on
the United States EPA National Priorities List. These actions seek cleanup
costs, penalties, and/or damages for personal injury or damage to property or
natural resources.
The Company evaluates and reviews environmental reserves for future
remediation and compliance costs on a quarterly basis to determine appropriate
reserve amounts. Inherent in this process are considerable uncertainties which
affect the Company's ability to estimate the ultimate costs of remediation
efforts. Such uncertainties include the nature and extent of contamination at
each site, evolving governmental standards regarding remediation requirements,
the number and financial condition of other potentially responsible parties at
multi-party sites, innovations in remediation and restoration technology, and
the identification of additional environmental sites.
F-17
<PAGE>
WITCO CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
At December 31, 1993, the Company's reserves for environmental remediation
and compliance costs amounted to $99,613,000 reflecting Witco's estimate of the
costs which will be incurred over an extended period of time in respect of these
matters which are reasonably estimable.
The Company has numerous insurance policies which it believes provide
coverage at various levels for environmental liabilities. The Company is
currently in litigation with many of its insurers concerning the applicability
and amount of insurance coverage for environmental costs under certain of these
policies. No provision for recovery under any of these policies is included in
the Company's financial statements.
The Company is also a defendant in certain suits relating to the sale of
lubricants to a quick lube oil franchisor. In one of such suits, Lightning Lube,
Inc. v. Witco, in the United States District Court of New Jersey, after a trial
the plaintiff was awarded $9,500,000 in compensatory damages for breach of
contract and tortious interference, and approximately $2,000,000 pre-judgment
interest. Both the plaintiff and the Company appealed this result to the Third
Circuit Court of Appeals. In an opinion filed on September 10, 1993, the Third
Circuit Court of Appeals affirmed the trial court's result. On October 8, 1993,
the Company deposited $11,600,000 with the trial court in payment of the total
amount of the judgment, together with interest, to discharge its liability in
this action.
The Company is not a party to any other legal proceedings, including
environmental matters and the other suits relating to the sale of lubricants,
which it believes will have a material adverse effect on its consolidated
financial position.
NOTE 15 -- OPERATIONS BY INDUSTRY SEGMENT AND GEOGRAPHIC AREA
The Company is an international producer of a wide range of specialty
chemical and petroleum products and diversified products for industrial and
consumer uses. The following is a summary of the Company's operations by
industry segment and geographic area:
<TABLE>
<CAPTION>
(thousands of dollars) 1993 1992 1991
---------- ---------- ----------
<S> <C> <C> <C>
Net Sales
Chemical................................................. $1,232,732 $ 836,794 $ 749,810
Petroleum................................................ 746,026 734,330 732,128
Diversified products..................................... 179,466 175,061 164,933
Intersegment elimination................................. (15,669) (17,289) (16,350)
---------- ---------- ----------
Net Sales........................................... $2,142,555 $1,728,896 $1,630,521
---------- ---------- ----------
---------- ---------- ----------
Operating Income
Chemical................................................. $ 108,215 $ 74,286 $ 70,571
Petroleum................................................ 15,069 51,475 65,467
Diversified products..................................... (8,802) 3,960 437
---------- ---------- ----------
Operating Income.................................... 114,482 129,721 136,475
---------- ---------- ----------
General corporate expenses -- net............................. (54,846) (40,464) (21,173)
Interest income (expense) -- net.............................. (26,305) (7,145) (5,498)
---------- ---------- ----------
Income before Federal and Foreign Income Taxes and
Cumulative Effect of Accounting Change............ $ 33,331 $ 82,112 $ 109,804
---------- ---------- ----------
---------- ---------- ----------
Assets
Chemical................................................. $1,036,875 $1,079,769 $ 456,394
Petroleum................................................ 461,073 433,807 428,315
Diversified products..................................... 122,930 138,565 142,823
Corporate (principally cash, cash equivalents and
deferred pension costs)................................ 218,120 159,653 170,744
---------- ---------- ----------
Assets.............................................. $1,838,998 $1,811,794 $1,198,276
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
(table continued on next page)
F-18
<PAGE>
WITCO CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(table continued from previous page)
<TABLE>
<CAPTION>
(thousands of dollars) 1993 1992 1991
---------- ---------- ----------
<S> <C> <C> <C>
Depreciation and Amortization
Chemical................................................. $ 58,204 $ 34,456 $ 26,866
Petroleum................................................ 31,726 28,784 28,154
Diversified products..................................... 11,054 11,304 10,842
Corporate................................................ 1,518 1,618 1,760
---------- ---------- ----------
Depreciation and Amortization....................... $ 102,502 $ 76,162 $ 67,622
---------- ---------- ----------
---------- ---------- ----------
Capital Expenditures (exclusive of acquisitions)
Chemical................................................. $ 53,831 $ 34,355 $ 31,657
Petroleum................................................ 40,482 31,218 29,470
Diversified products..................................... 5,829 5,027 10,748
Corporate................................................ 3,547 1,994 2,432
---------- ---------- ----------
Capital Expenditures................................ $ 103,689 $ 72,594 $ 74,307
---------- ---------- ----------
---------- ---------- ----------
Net Sales
United States............................................ $1,578,847 $1,393,667 $1,333,822
Western Europe........................................... 487,508 249,618 195,029
Other.................................................... 135,092 133,899 148,831
Inter-area elimination................................... (58,892) (48,288) (47,161)
---------- ---------- ----------
Net Sales........................................... $2,142,555 $1,728,896 $1,630,521
---------- ---------- ----------
---------- ---------- ----------
Operating Income
United States............................................ $ 61,617 $ 98,899 $ 102,752
Western Europe........................................... 38,444 18,740 19,821
Other.................................................... 14,421 12,082 13,902
---------- ---------- ----------
Operating Income.................................... $ 114,482 $ 129,721 $ 136,475
---------- ---------- ----------
---------- ---------- ----------
Assets
United States............................................ $1,177,891 $1,128,016 $ 948,134
Western Europe........................................... 565,172 592,395 160,005
Other.................................................... 95,935 91,383 90,137
---------- ---------- ----------
Assets.............................................. $1,838,998 $1,811,794 $1,198,276
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
Intersegment and inter-area sales are accounted for on the same basis used
to price sales to similar non-affiliated customers and such sales are eliminated
in arriving at consolidated amounts.
Income and expenses not allocated to industry segments or geographic areas
in computing operating income include general corporate expenses, interest
income and expense, and other income and expenses of a general corporate nature.
In 1993 general corporate expenses -- net include provisions for a work
force reduction, loss on sublease of office facilities, and other matters
totalling $29,784,000. General corporate expenses in 1992 include $20,135,000
for the provision for the consolidation of offices.
International subsidiaries had liabilities of $211,182,000 in 1993 and
$163,058,000 in 1992. Foreign currency translation and transaction gains and
losses included in net income are not significant.
F-19
<PAGE>
QUARTERLY FINANCIAL DATA
(UNAUDITED)
<TABLE>
<CAPTION>
1993 1992
------------------------------------------------ -----------------------------------------------
COST OF NET NET INCOME/ COST OF NET NET INCOME/
GOODS INCOME (LOSS) PER GOODS INCOME (LOSS) PER
QUARTER NET SALES SOLD(a) (LOSS) SHARE(b) NET SALES SOLD(a) (LOSS) SHARE(b)
- ------------ ---------- ---------- -------- ----------- ---------- ---------- ------- -----------
(IN THOUSANDS OF DOLLARS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
First....... $ 553,174 $ 458,549 $ 18,807 $ .40 $ 420,319 $ 343,070 $ 4,238(f) $ .11(f)
Second...... 549,449 451,853 14,898(c) .29(c) 426,938 350,177 17,976 .39
Third....... 540,603 441,786 13,625(d) .27(d) 425,157 352,126 18,887 .41
Fourth...... 499,329 399,457 (27,567)(e) (.47)(e) 456,482 386,239 (1,926)(g) (.01)(g)
---------- ---------- -------- ----------- ---------- ---------- ------- -----------
$2,142,555 $1,751,645 $ 19,763 $ .46 $1,728,896 $1,431,612 $39,175 $ .90
---------- ---------- -------- ----------- ---------- ---------- ------- -----------
---------- ---------- -------- ----------- ---------- ---------- ------- -----------
</TABLE>
- ------------
(a) Includes depreciation and amortization.
(b) Per share data for all periods have been adjusted to reflect the
two-for-one stock split effective October 5, 1993. 1993 quarterly per share
amounts do not add to total for the year as each quarter and the total year
are computed independently.
(c) Includes a charge of $6,061, or $.11 per common share, for a provision for
loss on sublease of office facilities.
(d) Includes a charge of $7,563, or $.14 per common share, as a result of a
legal judgment against the Company and $1,718, or $.03 per common share, as
a result of the increase in the U.S. federal income tax rate.
(e) Includes a charge of $60,126, or $1.10 per common share, for provisions for
environmental remediation and compliance, disposition of a business, work
force reduction, and other matters and a gain of $5,726, or $.11 per common
share, on the sale of the operations of a subsidiary.
(f) Includes a charge of $14,690, or $.29 per common share, as a result of
adopting a change in accounting for postretirement benefits.
(g) Includes a charge of $13,289, or $.27 per common share, for a provision for
the consolidation of offices.
F-20
<PAGE>
SCHEDULE V
WITCO CORPORATION AND SUBSIDIARY COMPANIES
PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
COLUMN B COLUMN E COLUMN F
---------- COLUMN C ----------- ----------
COLUMN A BALANCE AT --------- COLUMN D OTHER BALANCE
- ------------------------------------------- BEGINNING ADDITIONS ----------- CHANGES-ADD AT END
CLASSIFICATION OF PERIOD AT COST RETIREMENTS (DEDUCT)(c) OF PERIOD
- ------------------------------------------- ---------- --------- ----------- ----------- ----------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1993:
Land.................................. $ 29,607 $ 175 $ 225 $ 2,593 $ 32,150
Buildings and building improvements... 186,533 5,520 4,576 (11,976) 175,501
Machinery, fixtures and equipment..... 1,028,445 82,472(a) 31,211 (24,572) 1,055,134
Assets under construction............. 43,268 15,522(b) 18 (3,411) 55,361
---------- --------- ----------- ----------- ----------
$1,287,853 $ 103,689 $36,030 $ (37,366) $1,318,146
---------- --------- ----------- ----------- ----------
---------- --------- ----------- ----------- ----------
Year ended December 31, 1992:
Land.................................. $ 21,065 $ 1,871 $ 361 $ 7,032 $ 29,607
Buildings and building improvements... 119,820 6,431 2,646 62,928 186,533
Machinery, fixtures and equipment..... 833,983 55,831(a) 14,477 153,108 1,028,445
Assets under construction............. 17,058 8,461(b) -- 17,749 43,268
---------- --------- ----------- ----------- ----------
$ 991,926 $ 72,594 $17,484 $ 240,817 $1,287,853
---------- --------- ----------- ----------- ----------
---------- --------- ----------- ----------- ----------
Year ended December 31, 1991:
Land.................................. $ 21,537 $ 233 $ 204 $ (501) $ 21,065
Buildings and building improvements... 116,912 6,612 1,757 (1,947) 119,820
Machinery, fixtures and equipment..... 790,291 86,457(a) 41,750 (1,015) 833,983
Assets under construction............. 36,131 (18,995)(b) -- (78) 17,058
---------- --------- ----------- ----------- ----------
$ 964,871 $ 74,307 $43,711 $ (3,541) $ 991,926
---------- --------- ----------- ----------- ----------
---------- --------- ----------- ----------- ----------
</TABLE>
- ------------
Notes:
(a) Principally represents new equipment and replacement of retired equipment
for existing plants.
(b) Net of assets completed and transferred to appropriate property, plant and
equipment accounts of $81,688 (1993), $58,121 (1992), and $87,743 (1991).
(c) Principally represents assets acquired in connection with the acquisition
of the Industrial Chemicals and Natural Substances divisions of Schering AG
(1992) and adjustments relating to the finalization of the allocation of
the purchase price (1993). Also includes the results of translating the
financial statements of foreign subsidiaries in accordance with FASB
Statement No. 52.
(d) Depreciation is computed principally in accordance with the following
estimated useful lives:
<TABLE>
<CAPTION>
YEARS
-----
<S> <C>
Buildings and building improvements.................................................... 5-45
Machinery, fixtures and equipment...................................................... 3-20
</TABLE>
S-1
<PAGE>
SCHEDULE VI
WITCO CORPORATION AND SUBSIDIARY COMPANIES
ACCUMULATED DEPRECIATION, DEPLETION AND
AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
COLUMN C
COLUMN B ---------- COLUMN E COLUMN F
---------- ADDITIONS ------------ ---------
COLUMN A BALANCE AT CHARGED TO COLUMN D OTHER BALANCE
- -------------------------------------------- BEGINNING COSTS AND ----------- CHARGES- AT END
CLASSIFICATION OF PERIOD EXPENSES RETIREMENTS ADD (DEDUCT) OF PERIOD
- -------------------------------------------- ---------- ---------- ----------- ------------ ---------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1993:
Buildings and building improvements.... $ 55,914 $ 5,898 $ 2,361 $ 2,917 $ 62,368
Machinery, fixtures and equipment...... 510,768 77,918 25,309 (4,061) 559,316
---------- ---------- ----------- ------------ ---------
$566,682 $ 83,816 $27,670 $ (1,144)(a) $ 621,684
---------- ---------- ----------- ------------ ---------
---------- ---------- ----------- ------------ ---------
Year ended December 31, 1992:
Buildings and building improvements.... $ 52,781 $ 4,867 $ 1,184 $ (550) $ 55,914
Machinery, fixtures and equipment...... 464,390 62,184 12,498 (3,308) 510,768
---------- ---------- ----------- ------------ ---------
$517,171 $ 67,051 $13,682 $ (3,858)(a) $ 566,682
---------- ---------- ----------- ------------ ---------
---------- ---------- ----------- ------------ ---------
Year ended December 31, 1991:
Buildings and building improvements.... $ 50,456 $ 4,468 $ 1,056 $ (1,087) $ 52,781
Machinery, fixtures and equipment...... 443,389 55,157 33,888 (268) 464,390
---------- ---------- ----------- ------------ ---------
$493,845 $ 59,625 $34,944 $ (1,355)(a) $ 517,171
---------- ---------- ----------- ------------ ---------
---------- ---------- ----------- ------------ ---------
</TABLE>
- ------------
Note:
(a) Principally represents the result of the translation of the financial
statements of foreign subsidiaries in accordance with FASB Statement No. 52.
S-2
<PAGE>
SCHEDULE VIII
WITCO CORPORATION AND SUBSIDIARY COMPANIES
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
COLUMN C
------------------------
COLUMN B ADDITIONS COLUMN E
---------- ------------------------ ----------
COLUMN A BALANCE AT CHARGED TO CHARGED TO COLUMN D BALANCE AT
- ------------------------------------------------- BEGINNING COSTS AND OTHER ---------- END
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS OF PERIOD
- ------------------------------------------------- ---------- ---------- ---------- ---------- ----------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1993:
Valuation and qualifying accounts deducted
from assets to which they apply:
Allowances for doubtful
receivables -- trade................. $5,623 $2,652 $427 $1,881(a) $6,821
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Year ended December 31, 1992:
Valuation and qualifying accounts deducted
from assets to which they apply:
Allowances for doubtful
receivables -- trade................. $4,768 $1,773 $334 $1,252(a) $5,623
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Year ended December 31, 1991:
Valuation and qualifying accounts deducted
from assets to which they apply:
Allowances for doubtful
receivables -- trade................. $4,902 $1,784 $ 73 $1,991(a) $4,768
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
</TABLE>
- ------------
Note:
(a) Uncollectible receivables charged against the allowance provided therefor.
S-3
<PAGE>
SCHEDULE IX
WITCO CORPORATION AND SUBSIDIARY COMPANIES
SHORT-TERM BORROWINGS
<TABLE>
<CAPTION>
COLUMN E
COLUMN D ----------- COLUMN F
COLUMN C ----------- AVERAGE -------------
COLUMN B -------- MAXIMUM AMOUNT WEIGHTED
COLUMN A --------- WEIGHTED AMOUNT OUTSTANDING AVERAGE
- -------------------------------------- BALANCE AVERAGE OUTSTANDING DURING INTEREST RATE
CATEGORY OF AGGREGATE AT END INTEREST DURING THE DURING
SHORT-TERM BORROWINGS OF PERIOD RATE THE PERIOD PERIOD(b) THE PERIOD
- -------------------------------------- --------- -------- ----------- ----------- -------------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1993
Notes payable to banks........... $ 2,823 7.22%(a) $ 7,859 $ 6,468 8.27%(a)(c)
Financing arrangement(d)......... -- -- 440,000 282,376 3.99
Year ended December 31, 1992
Notes payable to banks........... 5,304 13.17(a) 8,948 6,494 9.68(a)(c)
Financing arrangement(d)......... 440,000 3.79 440,000 440,000 3.79
Year ended December 31, 1991
Notes payable to banks........... 12,055 12.15(a) 12,055 2,849 13.07(a)(c)
</TABLE>
- ------------
Notes:
(a) The weighted average interest rate was affected by interest rates associated
with the utilization of bank lines of credit by the Company's international
subsidiaries.
(b) The average amount outstanding during the period was computed by dividing
the total of daily outstanding principal balances by the total days
outstanding.
(c) The weighted average interest rate during the period was computed by
dividing the actual interest expense by average short-term debt
outstanding.
(d) To finance the acquisition of the Industrial Chemicals and Natural
Substances divisions of Schering AG, the Company entered into a $440 million
short-term financing arrangement on October 1, 1992, with a syndicate of
banks. This borrowing was repaid during the period from March through May
1993 with a combination of proceeds from public offerings for shares of the
Company's common stock, long-term debt securities, and proceeds from
international borrowings.
S-4
<PAGE>
SCHEDULE X
WITCO CORPORATION AND SUBSIDIARY COMPANIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
<TABLE>
<CAPTION>
COLUMN B
-------------------------------
CHARGED TO COSTS AND EXPENSES
-------------------------------
COLUMN A YEAR ENDED DECEMBER 31
- ------------------------------------------------------------------------------ -------------------------------
ITEM 1993 1992 1991
- ------------------------------------------------------------------------------ ------- ------- -------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Maintenance and repairs....................................................... $64,443(a) $46,702 $41,659
------- ------- -------
------- ------- -------
Depreciation and amortization of intangible assets, pre-operating costs and
similar deferrals(b)........................................................ -- -- --
Taxes, other than payroll and income taxes(b)................................. -- -- --
Royalties(b).................................................................. -- -- --
Advertising costs............................................................. $19,045 $19,243 $18,368
------- ------- -------
------- ------- -------
</TABLE>
- ------------
Notes:
(a) The 1993 increase is primarily due to businesses acquired in November 1992.
(b) Amount for this caption is not presented as it is less than 1% of total
revenues.
S-5
<PAGE>
EXHIBIT 3(ii)
WITCO CORPORATION
* * * * *
B Y - L A W S
* * * * *
Effective Date: January 1, 1994
<PAGE>
ARTICLE I
OFFICES
SECTION 1. The registered office of the corporation shall be in the City of
Wilmington, County of New Castle, State of Delaware.
SECTION 2. The corporation may also have offices at such other places both
within and without the State of Delaware as the Board of Directors may from time
to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. All meetings of the stockholders for the election of directors
or for any other lawful purpose shall be held at such time and at such place as
may be fixed from time to time by the Board of Directors, either within or
without the State of Delaware. Such time and place shall be stated in the notice
of the meeting.
SECTION 2. Annual meetings of stockholders shall be held on the fourth
Wednesday in April, if not a legal holiday, and if a legal holiday, then on the
next business day following, at 2:00 P.M., or at such other date and time as
shall be designated from time to time by the Board of Directors and stated in
the notice of the meeting. At such annual meetings, the stockholders shall elect
a Board of Directors, and shall transact such other business as may properly be
brought before the meeting. To be properly brought before an annual meeting,
business must be (i) specified in the notice of the meeting (or any supplement
thereto) given by or at the direction of the Board of Directors, (ii) brought
before the meeting by or at the direction of the Board of Directors pursuant to
a vote of not less than a majority of the entire Board of Directors, or (iii)
otherwise properly brought before the meeting by a stockholder. For business to
be properly brought before an annual meeting by a stockholder, the stockholder
must have given written notice of the proposed business, either by personal
delivery or by United States mail, either certified or registered, return
receipt requested, to the Secretary of the corporation, such that the Secretary
receives such notice at least ninety days prior to the anniversary date of the
immediately preceding annual meeting or not later than ten days after notice or
public disclosure of the date of the annual meeting is given or made to
stockholders, whichever date is earlier. Any such notice shall set forth as to
each item of business the stockholder proposes to bring before the annual
meeting (i) a brief description of such item of business and the reasons for
conducting it at the meeting and, in the event that such item of business
includes a proposal to amend either the certificate of incorporation of the
corporation or these by-laws, the language of the proposed amendment, (ii) the
name and address of the stockholder proposing such item of business, (iii) a
representation that the stockholder is a holder of record of stock of the
corporation entitled to vote at such meeting having a market value of at least
one thousand dollars and intends to appear in person or by proxy at the meeting
to propose such item of business, and (iv) any material interest of the
stockholder in such item of business. Only business which has been properly
brought before an annual meeting of stockholders in accordance with these
by-laws shall be conducted at such meeting, and the Chairman of such meeting may
refuse to permit any business to be brought before such meeting which has not
been properly brought before it in accordance with these by-laws.
SECTION 3. Written notice of the annual meeting stating the place, date and
hour of the meeting shall be given to each stockholder entitled to vote at such
meeting not less than 10 nor more than 60 days before the date of the meeting.
SECTION 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified,
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at the place where the meeting is to be held or the office of the Secretary of
the corporation. The list shall also be produced and kept at the time and place
of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
SECTION 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, shall be called only by the Board of Directors pursuant to a
resolution approved by a majority of the entire Board of Directors.
SECTION 6. Written notice of a special meeting stating the place, date and
hour of the meeting and the purpose or purposes for which the meeting is called,
shall be given not less than 10 nor more than 60 days before the date of the
meeting to each stockholder entitled to vote at such meeting.
SECTION 7. Business transacted at any special meeting of stockholders shall
be limited to the purposes stated in the notice.
SECTION 8. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
SECTION 9. When a quorum is present at any meeting, the vote of the holders
of a majority of the stock having voting power present in person or represented
by proxy shall decide any question brought before such meeting, unless the
question is one upon which by express provision of applicable statute or of the
certificate of incorporation, a different vote is required, in which case such
express provision shall govern and control the decision of such question.
SECTION 10. Unless otherwise provided in the certificate of incorporation,
each stockholder shall at every meeting of the stockholders be entitled to one
vote in person or by proxy for each share of the capital stock having voting
power held by such stockholder, but no proxy shall be voted or acted upon after
three years from its date, unless the proxy provides for a longer period.
SECTION 11. Any action required or permitted to be taken by the
stockholders of the corporation must be effected at a duly called annual or
special meeting of stockholders, and may not be effected by any consent in
writing by such stockholders.
ARTICLE III
DIRECTORS
SECTION 1. The number of directors which shall constitute the whole Board
shall not be less than twelve (12), nor more than eighteen (18). Within the
limits so specified, the number of directors shall be fixed from time to time by
the Board of Directors pursuant to a resolution adopted by a majority of the
entire Board of Directors. At the 1983 Annual Meeting of Stockholders, the
directors shall be divided into three classes, as nearly equal in number as
possible, with the term of office of the first class to expire at the 1984
Annual Meeting of Stockholders, the term of office of the second class to expire
at the 1985 Annual Meeting of Stockholders, and the term of office of the third
class to expire at the 1986 Annual Meeting of Stockholders. At each annual
meeting of stockholders following such initial classification and election,
directors elected to succeed those directors whose term expired shall be elected
for a term of office to expire at the third succeeding annual meeting of
stockholders after their election.
SECTION 2. Newly created directorships resulting from an increase in the
authorized number of directors or any vacancies in the Board of Directors shall
be filled by a majority of the directors then in office although less than a
quorum, or by a sole remaining director, and directors so chosen shall hold
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office for a term expiring at the annual meeting of stockholders at which the
term of the class to which they have been elected expires. If the number of
directors is changed, any increase or decrease shall be apportioned among the
classes so as to maintain the number of directors in each class as nearly equal
as possible. No decrease in the number of directors constituting the Board shall
shorten the term of any incumbent director. If there are no directors in office,
then an election of directors may be held in the manner provided by statute.
SECTION 3. Nominations for the election of Directors may be made by the
Board of Directors or by any stockholder entitled to vote for the election of
Directors. Any such stockholder may nominate a person or persons for election as
a director only if written notice of such stockholder's intention to make such
nomination or nominations is given in accordance with the procedures set forth
in Article II, Section 2 of these by-laws. Each such notice shall set forth, in
addition to any information required to be set forth by Article II, Section 2,
(a) the name and address of the stockholder who intends to make the nomination
and of the person or persons to be nominated; (b) a representation that the
stockholder is a holder of record of stock of the corporation entitled to vote
at such meeting and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice; (c) a description of all
arrangements or understandings between the stockholder and each person to be
nominated and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by the
stockholder; (d) such other information regarding each person to be nominated as
would have been required to be included in a proxy statement filed pursuant to
the proxy rules of the Securities and Exchange Commission had such person been
nominated, or intended to be nominated, by the Board of Directors; and (e) the
consent of each person to be nominated to serve as a director of the corporation
if elected at such meeting. The Chairman of any meeting of stockholders, and the
Board of Directors, may refuse to recognize the nomination of any person not
made in accordance with the foregoing procedures.
SECTION 4. The business of the corporation shall be managed by or under the
direction of its Board of Directors which may exercise all such powers of the
corporation and do all such lawful acts and things as are not by statute or by
the certificate of incorporation or by these by-laws directed or required to be
exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
SECTION 5. The Board of Directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
SECTION 6. An annual meeting of the Board of Directors shall be held
immediately following the annual meeting of stockholders, or at such other time
and place as shall be specified in a written notice signed by all of the
directors, or as shall be specified in a notice given pursuant to Article III,
Section 8 hereof.
SECTION 7. Regular meetings of the Board of Directors may be held without
notice at such time and at such place as shall from time to time be determined
by the board.
SECTION 8. Special meetings of the board may be called by the Chairman of
the Board on not less than two days' notice to each director, either personally
or by mail or by facsimile; special meetings shall be called by the Chairman of
the Board or Secretary in like manner and on like notice on the written request
of a majority of the entire Board of Directors. The notice of meeting need not
specify the purpose of the meeting.
SECTION 9. At all meetings of the board, a majority of the directors shall
constitute a quorum for the transaction of business and the act of a majority of
the directors present (and not abstaining) at any meeting at which there is a
quorum shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
SECTION 10. Unless otherwise restricted by the certificate of incorporation
or these by-laws, any action required or permitted to be taken at any meeting of
the Board of Directors or of any committee
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thereof may be taken without a meeting, if all members of the board or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the board or committee.
SECTION 11. Unless otherwise restricted by the certificate of incorporation
or these by-laws, members of the Board of Directors, or any committee designated
by the Board of Directors, may participate in a meeting of the Board of
Directors, or any committee, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
COMMITTEES OF DIRECTORS
SECTION 12. The Board of Directors may, by resolution passed by a majority
of the whole board, designate one or more committees, each committee to consist
of one or more of the directors of the corporation. The Board of Directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee.
In the absence or disqualification of a member of a committee, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any such
absent or disqualified member.
Any such committee, to the extent provided in the resolution of the Board
of Directors, shall have and may exercise all the powers and authority of the
Board of Directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority except to the extent that the enabling resolution grants same, in
reference to amending the certificate of incorporation, adopting an agreement of
merger or consolidation, recommending to the stockholders the sale, lease or
exchange of all or substantially all of the corporation's property and assets,
recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, amending the by-laws of the corporation, declaring
a dividend, authorizing the issuance of stock, or adopting a certificate of
ownership and merger. Such committee or committees shall have such name or names
as may be determined from time to time by resolution adopted by the Board of
Directors.
SECTION 13. Each committee shall keep regular minutes of its meetings,
shall promptly file a transcript thereof with the Secretary, and shall report
the same to the Board of Directors when required.
COMPENSATION OF DIRECTORS
SECTION 14. Unless otherwise restricted by the certificate of incorporation
or these by-laws, the Board of Directors shall have the authority to fix the
compensation of directors. The directors may be paid their expenses, if any, of
attendance at each meeting of the Board of Directors and may be paid a fixed sum
for attendance at each meeting of the Board of Directors and/or a stated annual
sum as a director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
ARTICLE IV
NOTICES
SECTION 1. Whenever, under the provisions of statute or of the certificate
of incorporation or of these by-laws, notice is required to be given to any
director or stockholder, it shall not be construed to require personal notice,
but such notice may be given in writing, by mail, addressed to such director or
stockholder, at his address as it appears on the records of the corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when deposited in the United States mail. Notice to directors may also be
given by facsimile.
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SECTION 2. Whenever any notice is required to be given under the provisions
of statute or of the certificate of incorporation or of these by-laws, a waiver
thereof in writing, signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be deemed equivalent
thereto. The attendance of a director at any meeting shall constitute a waiver
of notice of such meeting, except where a director attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened.
ARTICLE V
OFFICERS
SECTION 1. The officers of the corporation shall be chosen by the Board of
Directors and shall be a Chairman of the Board and a Secretary. The Board of
Directors may also choose a President, one or more Vice Chairmen, one or more
Vice Presidents, a Controller, a Treasurer, and one or more Assistant
Secretaries, Assistant Controllers and Assistant Treasurers. Any number of
offices may be held by the same person, unless the certificate of incorporation
or these by-laws otherwise provide.
SECTION 2. The Board of Directors at its first meeting after each annual
meeting of stockholders shall choose a Chairman of the Board and a Secretary.
SECTION 3. The Board of Directors may appoint such other officers and
agents as it shall deem necessary, who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
SECTION 4. The compensation of all officers of the corporation shall be
fixed by the Board of Directors.
SECTION 5. The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the Board
of Directors may be removed at any time by the affirmative vote of a majority of
the Board of Directors. Any vacancy occurring in any office of the corporation
may be filled by the Board of Directors at such times as it sees fit.
THE CHAIRMAN OF THE BOARD
SECTION 6. The Chairman of the Board shall preside at all meetings of the
stockholders and of the Board of Directors. The Chairman shall be the chief
executive officer of the corporation and as such shall have general supervision
of the affairs of the corporation and shall perform such other duties as are
prescribed by the corporation's by-laws or the Board of Directors. He may sign,
with the Secretary or any other proper officer of the corporation thereunto
authorized by the Board of Directors, certificates for shares of stock of the
corporation, any deeds, mortgages, bonds, contracts, or other instruments which
the Board of Directors has authorized to be executed, except in cases where the
signing and execution thereof shall be expressly otherwise designated by the
Board of Directors or by these by-laws, or shall be required by law to be
otherwise signed or executed.
THE SECRETARY
SECTION 7. The Secretary shall attend all meetings of the Board of
Directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the Board of Directors in a book to be
kept by him for that purpose and shall perform like duties for the standing
committees when required. He shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the Board of Directors, and
shall perform such other duties as may be prescribed by the Board of Directors
or the Chairman of the Board. He shall have custody of the corporate seal of the
corporation and he shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his signature. The Board
of Directors may give general authority to any other officer to affix the seal
of the corporation and to attest the affixing by his signature.
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ARTICLE VI
CERTIFICATE OF STOCK
SECTION 1. Every holder of stock in the corporation shall be entitled to
have a certificate, signed by, or in the name of the corporation by, the
Chairman of the Board and the Secretary of the corporation, certifying the
number of shares of stock owned by him in the corporation.
If the corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificates which the corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in the Delaware Corporation Law, in lieu of the foregoing
requirements, there may be set forth on the face or back of the certificate
which the corporation shall issue to represent such class or series of stock, a
statement that the corporation will furnish without charge to each stockholder
who so requests the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights.
SECTION 2. Any of or all the signatures on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
SECTION 3. The Board of Directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or to give the corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
TRANSFER OF STOCK
SECTION 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
FIXING RECORD DATE
SECTION 5. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for any other lawful
action, the Board of Directors may fix, in advance, a record date, which shall
not be more than sixty nor less than ten days before the date of such meeting,
or the date of the action to be taken, and shall comply with the rules of any
national securities exchange on which any securities of the corporation are
listed at the time. A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting, provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
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REGISTERED STOCKHOLDERS
SECTION 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares of stock to
receive dividends, and to vote as such owner, and shall not be bound to
recognize any equitable or other claim to or interest in such share or shares on
the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
SECTION 1. Dividends upon the capital stock of the corporation, subject to
the provisions of the certificate of incorporation, if any, may be declared by
the Board of Directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.
SECTION 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
Board of Directors from time to time, in their absolute discretion, think proper
as a reserve or reserves to meet contingencies, or for equalizing dividends, or
for repairing or maintaining any property of the corporation, or for such other
purpose as the Board of Directors shall think conducive to the interest of the
corporation, and the Board of Directors may modify or abolish any such reserve
in the manner in which it was created.
CHECKS
SECTION 3. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the Board of Directors may from time to time designate or authorize.
FISCAL YEAR
SECTION 4. The fiscal year of the corporation shall be the calendar year
ending December 31 and may be changed by resolution of the Board of Directors at
any meeting.
SEAL
SECTION 5. The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the words 'Corporate Seal,
Delaware'. The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
INDEMNIFICATION
SECTION 6. (a) The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
or investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee, or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit, or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. In
this connection, the termination of any action, suit, or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
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opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
(b) The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee, or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue, or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication or liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) To the extent that a director, officer, employee, or agent of the
corporation has been successful on the merits or otherwise in defense of any
action, suit, or proceeding referred to in subsections (a) and (b), or in
defense of any claim, issue, or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(d) Any indemnification under subsections (a) and (b) (unless ordered by a
court) shall be made by the corporation only as authorized in the specific case
upon a determination that indemnification of the director, officer, employee, or
agent is proper in the circumstances because he has met the applicable standard
of conduct set forth in subsections (a) and (b). Such determination shall be
made (1) by the Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit, or proceeding, or (2) if
such a quorum is not obtainable, by independent legal counsel in a written
opinion, or (3) by independent legal counsel in a written opinion if a majority
of a quorum consisting of directors who were not parties to such action, suit,
or proceeding so directs, or (4) by the stockholders.
(e) Expenses (including attorney's fees) incurred by an officer or director
in defending any civil, criminal, administrative, or investigative action, suit
or proceeding shall be paid by the corporation in advance of the final
disposition of such action, suit, or proceeding upon receipt of an undertaking
by or on behalf of the director, officer, employee or agent to repay such amount
if it shall ultimately be determined that he is not entitled to be indemnified
by the corporation as authorized in this section. Such expenses (including
attorney's fees) incurred by other employees and agents may be so paid upon such
terms and conditions, if any, as the Board of Directors deems appropriate.
(f) The indemnification and advancement of expenses provided by or granted
pursuant to the provisions of this section shall not be deemed exclusive of any
other rights to which one seeking indemnification or advancement of expenses may
be entitled under any by-law, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office.
(g) The corporation shall have the power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee, or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under the provisions of this section.
(h) The indemnification and advancement of expenses provided by, or granted
pursuant to, this Article VII shall, unless otherwise provided when authorized
or ratified, continue as to a person who has ceased to be a director, officer,
employee, or agent and shall inure to the benefit of the heirs, executors, and
administrators of such person.
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(i) A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) for a stock repurchase which is illegal under Section
174 of the General Corporation Law of the State of Delaware, or (iv) for any
transaction from which the director derived an improper personal benefit. If the
Delaware General Corporation Law hereafter is amended to authorize the further
elimination or limitation of the liability of directors, then the liability of a
director of the corporation, in addition to the limitation on personal liability
provided herein, shall be limited to the fullest extent permitted by the amended
Delaware General Corporation Law. Any repeal or modification of this paragraph
by the stockholders of the corporation shall be prospective only, and shall not
adversely affect any limitation on the personal liability of a director of the
corporation existing at the time of such repeal or modification.
ARTICLE VIII
SECTION 1. These by-laws may be altered, amended, or repealed, or new
by-laws may be adopted by the Board of Directors at any regular or special
meeting of the Board of Directors if notice of such alteration, amendment,
repeal, or adoption of new by-laws is contained in the notice of such meeting.
The by-laws of the corporation may be altered, amended, or repealed, or new
by-laws may be adopted by the stockholders at any regular or special meeting of
the stockholders if notice of such alteration, amendment, repeal, or adoption of
new by-laws be contained in the notice of such meeting, and if such alteration,
amendment, repeal, or adoption is approved by the affirmative vote of the
holders of not less than 80% of the voting power of all shares of stock of the
corporation entitled to vote in the election of directors.
9
<PAGE>
EXHIBIT 10(iii)(A)-5
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SUPPLEMENTAL EXECUTIVE
RETIREMENT PLAN
OF
WITCO CORPORATION
AS EFFECTIVE JANUARY 1, 1994
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PREAMBLE.................................................................................................. 1
ARTICLE I
DEFINITIONS............................................................................................... 1
1.1. Actuarial Equivalent.......................................................................... 1
1.2. Affiliate..................................................................................... 1
1.3. Beneficiary................................................................................... 1
1.4. Benefit Commencement Date..................................................................... 1
1.5. Board of Directors............................................................................ 1
1.6. Cause......................................................................................... 1
1.7. Change in Control............................................................................. 1
1.8. Code.......................................................................................... 2
1.9. Committee..................................................................................... 2
1.10. Disability.................................................................................... 2
1.11. Employer...................................................................................... 2
1.12. Final Average Compensation.................................................................... 2
1.13. Good Reason................................................................................... 2
1.14. Normal Retirement Date........................................................................ 2
1.15. Normal Supplemental Retirement Benefit........................................................ 2
1.16. Officer....................................................................................... 2
1.17. Participant................................................................................... 2
1.18. Plan.......................................................................................... 2
1.19. Retirement Plan............................................................................... 3
1.20. Social Security Primary Benefit............................................................... 3
1.21. Witco......................................................................................... 3
ARTICLE II
PARTICIPATION............................................................................................. 3
2.1. Initial Participation......................................................................... 3
2.2. Termination of Participation.................................................................. 3
ARTICLE III
BENEFITS.................................................................................................. 3
3.1. Normal Supplemental Retirement Benefit........................................................ 3
3.2. Early Retirement Benefit...................................................................... 3
3.3. Disability Retirement Benefit................................................................. 4
3.4. Termination Benefit........................................................................... 4
3.5. Form of Pension Payments...................................................................... 4
3.6. Death Benefits................................................................................ 5
ARTICLE IV
BENEFITS ON A CHANGE IN CONTROL........................................................................... 5
4.1. Change in Control Benefit..................................................................... 5
4.2. Limitation.................................................................................... 5
ARTICLE V
ADMINISTRATION............................................................................................ 6
5.1. Administration................................................................................ 6
5.2. Powers and Duties............................................................................. 6
5.3. Benefit Claim Procedures...................................................................... 6
5.4. Member's Own Participation.................................................................... 6
ARTICLE VI
AMENDMENT AND TERMINATION................................................................................. 6
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
ARTICLE VII
GENERAL PROVISIONS........................................................................................ 6
7.1. Funding....................................................................................... 6
7.2. No Guarantee of Employment.................................................................... 7
7.3. Payments to Minors and Incompetents........................................................... 7
7.4. Nonalienation of Benefits..................................................................... 7
7.5. Applicable Laws; Severability................................................................. 7
</TABLE>
ii
<PAGE>
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
OF
WITCO CORPORATION
AS EFFECTIVE JANUARY 1, 1994
PREAMBLE
Witco Corporation hereby establishes this Supplemental Executive Retirement
Plan of Witco Corporation (the 'Plan') effective January 1, 1994, in order to
provide benefits to selected executives as provided herein. The Plan is intended
to replace the individual agreements established between selected key employees
and Witco Corporation which were designed to provide 'Additional Benefits' as
such term is defined in such agreements.
The Plan is intended to be an unfunded plan maintained primarily for the
purpose of providing deferred compensation for a select group of management or
highly compensated employees as described in Section 201(2) of the Employee
Retirement Income Security Act of 1974, as amended.
ARTICLE I
DEFINITIONS
1.1 'Actuarial Equivalent' means an amount or benefit of equivalent value
when calculated using the GAM 1988 Mortality Table and an interest rate equal to
the average of the market rate for 10-year Treasury notes on the last business
day of the fourth, fifth, and sixth months preceding the date on which benefit
payments under the Plan commence.
1.2 'Affiliate' means (a) any corporation that is a member of the
'controlled group of corporations' that includes Witco, determined in accordance
with Code Section 1563(a) without regard to Code Sections 1563(a)(4) and
(e)(3)(C), and (b) any organization that is part of a group of trades or
businesses under common control pursuant to Code Section 414(b) that includes
Witco.
1.3 'Beneficiary' means the beneficiary or beneficiaries last designated by
the Participant in writing. In the absence of an effective designation or if the
final surviving designated beneficiary has predeceased the Participant, the
Beneficiary shall be the Participant's estate. In the event the Participant is
survived by a Beneficiary who dies after payments to him have commenced but
before receiving all amounts due him under the Plan, any remaining amounts shall
be paid to an alternate beneficiary designated by the Participant or, in the
absence of an alternate surviving Beneficiary, to the estate of the last
surviving Beneficiary.
1.4 'Benefit Commencement Date' means the first day of the month as of
which benefits under the Plan first become payable to a Participant.
1.5 'Board of Directors' means the board of directors of Witco and any
committee authorized by such board to act on its behalf with respect to the
Plan.
1.6 'Cause' means (a) intentional and continued failure by the Participant
to perform his duties for his Employer (other than such failure resulting from
mental or physical incapacity) or (b) intentional misconduct including, among
other things, theft, embezzlement, dishonesty, criminal conduct or disloyalty.
1.7 'Change in Control' shall be deemed to have occurred if:
(a) any 'person', as such term is used in Sections 3(a)(9) and
13(d)(3) of the Securities Exchange Act of 1934 (the 'Exchange Act'), other
than an Affiliate or any employee benefit plan sponsored by Witco or an
Affiliate becomes a 'beneficial owner', as such term is used in Rule 13d-3
promulgated under the Exchange Act, of 20% or more of the 'Voting Stock'
(which means the capital stock of any class or classes of Witco having
general voting power under ordinary circumstances, in the absence of
contingencies, to elect the directors of such corporation) of Witco;
(b) 33 1/3% of the Board of Directors consists of individuals other
than the members of the Board of Directors on January 1, 1994 (the
'Incumbent Directors'); provided, however, that any
1
<PAGE>
person becoming a director subsequent to such date whose election or
nomination for election was approved by two-thirds (but in no event less
than two) of the directors who at the time of such election or nomination
comprise the Incumbent Directors shall, for purposes of this Plan, be
considered an Incumbent Director;
(c) Witco adopts any plan of liquidation providing for the
distribution of all or substantially all of its assets;
(d) Witco combines with another company (whether or not Witco is the
surviving corporation) and immediately after the combination, the
shareholders of Witco immediately prior to the combination (other than
shareholders who, immediately prior to the combination, were 'affiliates'
of such other company, as such term is defined in the rules of the
Securities and Exchange Commission) do not beneficially own, directly or
indirectly, more than 20% of the Voting Stock of the combined company; or
(e) any sale, lease, exchange or other transfer (in one transaction or
a series of related transactions) of all, or substantially all, the assets
of Witco occurs.
1.8 'Code' means the Internal Revenue Code of 1986, as amended.
1.9 'Committee' means the Organization and Compensation Committee appointed
by the Board of Directors (excluding any members of such committee who are
current or former employees of Witco or an Affiliate).
1.10 'Disability' means total and permanent disability such that the
Participant is eligible to receive payments under the Witco Long-Term Disability
Plan.
1.11 'Employer' means Witco and any other Affiliate.
1.12 'Final Average Compensation' means the average annual earnings
received by a Participant during the period specified below. Earnings shall
include (a) the Participant's base salary (prior to reduction for any
contributions that are determined on a salary reduction basis under any plan
maintained by Witco or an Affiliate) received during the 36 complete months of
employment with an Employer preceding the Participant's termination of
employment and (b) annual cash bonuses paid or awarded under the Officers'
Annual Incentive Plan or under any other bonus plan of an Employer during the 47
complete months of employment with an Employer preceding the Participant's
termination of employment.
1.13 'Good Reason' means (a) following a Change in Control, the assignment
to the Officer of any duties inconsistent in any material respect with the
Officer's position or any other action by his Employer which results in a
material diminution or material adverse change in his position, status,
authority, duties or responsibilities as in effect immediately prior to the
Change in Control, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied promptly after
receipt of notice thereof given by the Officer; (b) a material reduction in the
Officer's compensation as in effect immediately prior to the Change in Control
without his express written consent; or (c) the relocation of the Officer's
office (other than a relocation to Greenwich, Connecticut) in excess of 25 miles
from the location where the Officer was based prior to the Change in Control or
a requirement that the Officer travel on business of his Employer to an extent
materially greater than his business travel obligations prior to the Change in
Control.
1.14 'Normal Retirement Date' means the first day of the month coinciding
with or next following the Participant's 65th birthday.
1.15 'Normal Supplemental Retirement Benefit' means the benefit computed in
accordance with Section 3.1.
1.16 'Officer' means an employee of an Employer who is elected as an
officer by the Board of Directors.
1.17 'Participant' means an Officer of an Employer who is designated by the
Board of Directors as a Participant under the Plan.
1.18 'Plan' means the Supplemental Executive Retirement Plan of Witco
Corporation as set forth in this document, as it may be amended from time to
time.
2
<PAGE>
1.19 'Retirement Plan' means the Witco Corporation Retirement Plan as it
may be amended from time to time.
1.20 'Social Security Primary Benefit' means the annual primary old-age
insurance benefit which the Participant would be entitled to receive under the
Social Security Act as defined in the Retirement Plan. For purposes of
determining a Normal Supplemental Retirement Benefit under Section 3.3, Social
Security Primary Benefit shall mean the Participant's disability benefit which
he is entitled to receive under the Social Security Act.
1.21 'Witco' means Witco Corporation or any successor thereto.
The masculine pronoun, wherever used herein, shall include the feminine
pronoun, unless the context clearly indicates a different meaning.
ARTICLE II
PARTICIPATION
2.1. Initial Participation. The Board of Directors shall designate
specified Officers to be Participants in the Plan. In determining whether an
Officer shall be designated as a Participant, the Board of Directors may
consider the nature of the services rendered by the Officer, his contributions
to the success of the Employer, his seniority, remuneration and position and
such other factors as the Board of Directors deems relevant.
With respect to the participation of Officers as of the Effective Date, an
Officer shall become a Participant if he is designated as eligible to become a
Participant pursuant to resolutions adopted by the Board of Directors on October
17, 1993, and if he had a prior individual agreement with Witco designed to
provide the Officer with 'additional benefits' as defined therein, the Officer
agrees in writing to waive all rights under such agreement in a manner
prescribed by the Committee.
2.2. Termination of Participation. In the event a Participant is demoted so
that he ceases to be an Officer but he continues in the employ of an Employer,
his benefit under the Plan shall be frozen at the level in effect as of the date
of his change in status and he shall only be entitled to such benefit if he
meets the requirements of Sections 3.1, 3.2, 3.3, 3.4 or 3.6 (other than the
requirement that he be an active Officer at his date of retirement, Disability,
termination of employment, or death).
ARTICLE III
BENEFITS
3.1. Normal Supplemental Retirement Benefit. Each Participant who retires
from the employ of an Employer as an active Officer on or after attaining age 65
shall be entitled to receive a monthly Normal Supplemental Retirement Benefit
commencing at his Normal Retirement Date equal to one-twelfth of the annual
benefit which is equal to:
(a) 50% of the Participant's Final Average Compensation; reduced by
(b) the sum of (1), (2) and (3) where (1), (2) and (3) are defined to
mean:
(1) any amount payable pursuant to the Retirement Plan;
(2) any amount payable pursuant to the Excess Benefit and
Compensation Cap Plan of Witco Corporation; and
(3) an amount equal to 50% of his Social Security Primary Benefit.
The Social Security Primary Benefit shall be converted to an annual
benefit and shall be adjusted to the amount that would be payable at age
65 if his Social Security retirement age is greater than age 65.
The amounts determined under (b)(1) and (b)(2) shall, in the case of a married
Participant, be determined as if they were to be paid on a 50% joint and
survivor basis; or, in the case of a single Participant or a married Participant
whose beneficiary is other than spouse, be determined as if they were to be paid
on a 10 year certain and life basis regardless of the actual form of payment.
3.2. Early Retirement Benefit. Each Participant who retires from the employ
of an Employer as an active Officer prior to attaining age 65 but on or after
attaining age 62 shall be entitled to receive a
3
<PAGE>
monthly pension commencing on the first day of the month coinciding with or next
following his date of retirement equal to one-twelfth of the annual benefit
which is equal to:
(a) 50% of the Participant's Final Average Compensation reduced by
5/9ths of 1% for each month that the Participant's Benefit Commencement
Date precedes his Normal Retirement Date; provided, however, that at the
discretion of the Board of Directors, this reduction may be waived; reduced
by
(b) the sum of (1), (2) and (3) where (1), (2) and (3) and defined to
mean:
(1) any amount payable pursuant to the Retirement Plan as of his
Benefit Commencement Date;
(2) any amount payable pursuant to the Excess Benefit and
Compensation Cap Plan of Witco Corporation as of his Benefit
Commencement Date; and
(3) an amount equal to 50% of his Social Security Primary Benefit.
The Social Security Primary Benefit shall be converted to an annual
benefit and shall be adjusted to the amount that would be payable at his
Benefit Commencement Date.
The amounts determined under (b)(1) and (b)(2) shall, in the case of a married
Participant, be determined as if they were to be paid on a 50% joint and
survivor basis; or, in the case of a single Participant or a married Participant
whose beneficiary is other than spouse, be determined as if they were to be paid
on a 10 year certain and life basis regardless of the actual form of payment.
3.3. Disability Retirement Benefit. Each Participant whose employment with
an Employer is terminated prior to his Normal Retirement Date as a result of
Disability shall be entitled to receive his Normal Supplemental Retirement
Benefit determined in accordance with the formula in Section 3.1 payable
commencing on the first day of the month coinciding with or next following the
determination that he has incurred a Disability; provided, however, that in
determining the reduction applicable under Section 3.1(b), the reduction shall
be determined as of the later of the date of the Participant's Disability or the
earliest commencement date of such benefit under the applicable plan or the
Social Security Act. In the event that a Participant's Disability retirement
benefit commences prior to the date a benefit can be paid under one of such
plans or the Social Security Act, the reduction shall only be applied to reduce
his benefit under this Plan when reducing benefit is actually available to the
Participant. In addition, a Participant's Disability retirement benefit under
this Plan shall be reduced by any amounts paid under the Witco Long-Term
Disability Plan. In the event the Participant recovers from his Disability
before his Normal Retirement Date and does not resume participation in this
Plan, he shall only be entitled to a termination benefit as described in Section
3.4 or, if eligible at the time of his Disability, an early retirement benefit
as described in Section 3.2.
3.4. Termination Benefit. Except as provided in this Section 3.4, each
Participant whose employment with the Employer is terminated prior to his
attainment of age 62 other than as a result of Disability or death, shall not be
entitled to any benefits under this Article III; provided, however, that in the
event his employment is terminated at the option of his Employer for reasons
other than Cause, the Board of Directors, in its absolute discretion, may decide
to provide him with his Normal Supplemental Retirement Benefit payable
commencing on his Normal Retirement Date. In the event of the death prior to his
Benefit Commencement Date of such a Participant with respect to whom the Board
of Directors has decided to provide a Normal Supplemental Retirement Benefit,
his Beneficiary shall be entitled to the death benefit described in Section 3.6.
3.5. Form of Pension Payments.
(a) The normal form of payment of benefits payable under this Article III,
shall be a monthly pension equal to the amount determined under Sections 3.1,
3.2, 3.3 or 3.4, as the case may be, payable to the Participant for life with no
further payments due after the Participant's death.
(b) Alternatively, at any time prior to his Benefit Commencement Date, a
Participant may elect to receive his pension in one of the following forms:
(1) Joint and Survivor Option -- a monthly pension equal to the amount
determined under Sections 3.1, 3.2, 3.3 or 3.4, as the case may be, payable
to the Participant for life with the provision that after his death, a
monthly pension shall continue to his surviving spouse (to whom he is
4
<PAGE>
married at his Benefit Commencement Date) for the remainder of the spouse's
life in an amount equal to 50% of the Participant's pension. The
Participant may elect to receive the Actuarial Equivalent of the joint and
50% survivor option payable as a joint and 75% or 100% survivor option, in
which case 75% or 100%, respectively, of the Participant's pension will be
continued to his surviving spouse for life.
(2) 15-Year Certain and Life Option -- a monthly pension equal to the
amount determined under Sections 3.1, 3.2, 3.3 or 3.4, as the case may be,
payable to the Participant for life or for 15 years, whichever is longer.
If a Participant dies before the expiration of the 15-year period certain,
payments shall be continued to the Participant's Beneficiary for the
remainder of such period or, in the absence of a surviving Beneficiary, the
Actuarial Equivalent of such payments shall be paid in a lump sum to the
Participant's estate.
(3) Full Cash Refund Option -- a monthly pension equal to the amount
determined under Sections 3.1, 3.2, 3.3. or 3.4, as the case may be,
payable to the Participant for life and, at his death, any excess of the
Actuarial Equivalent value of the pension determined at his Benefit
Commencement Date (on a 15-year certain and life basis) over the amount of
payments actually received by him shall be paid to the Participant's
Beneficiary in a single sum.
Each Participant shall elect a form of payment upon becoming a Participant.
Such election may be changed at any time prior to his Benefit Commencement Date.
3.6. Death Benefits. In the event of the death prior to his Benefit
Commencement Date of a Participant (a) who is an active Officer at the time of
his death, (b) who has ceased to be a Participant as a result of a demotion in
accordance with Section 2.2 but who is still employed by Witco or an Affiliate
at his date of death or (c) whose employment was terminated at the option of his
Employer and the Board of Directors elected to provide him with a Normal
Supplemental Retirement Benefit in accordance with Section 3.4, his Beneficiary
shall receive a death benefit. Such death benefit shall be equal to his Normal
Supplemental Retirement Benefit payable commencing on the first day of the month
coinciding with or next following the Participant's date of death; provided,
however, that in determining the reduction applicable under Section 3.1(b), the
reduction shall be determined as of the later of the date of the Participant's
death or the earliest commencement date of such benefit under the applicable
plan or the Social Security Act. In the event that a death benefit commences
hereunder prior to the date a benefit can be paid under one of such plans or the
Social Security Act, the reduction shall only be applied to reduce his benefit
under this Plan when the reducing benefit is actually available to the
Participant. Such benefit shall be paid in the form last selected by the
Participant prior to his death, i.e., (i) as an annuity for the life of his
spouse equal to 50% of the Participant's Normal Supplemental Retirement Benefit
if he elected the joint and survivor option, (ii) over 15 years if he elected
the 15-year certain and life option, or (iii) in a lump sum that is the
Actuarial Equivalent of the benefit payable on a full cash refund basis if he
elected the full cash refund option.
ARTICLE IV
BENEFITS ON A CHANGE IN CONTROL
4.1. Change in Control Benefit. In addition to any other benefits payable
hereunder, in the event of the termination of a Participant's employment within
three years after a Change in Control, by an Employer (other than for Cause), or
by the Participant for Good Reason, the Participant shall be entitled to receive
an amount equal to three times his average annual total compensation received
from Witco or any Affiliate for the five calendar years ending before the year
in which the Change in Control occurs (determined in accordance with Code
Section 280G(b)) less one dollar. Such benefit shall be paid in a lump sum as
soon as practicable following the Participant's termination of employment.
4.2. Limitation. Notwithstanding Section 4.1, in the event that any payment
received or to be received by the Participant in connection with a Change in
Control (whether pursuant to the terms of this Plan or any other plan,
arrangement or agreement with Witco or an Affiliate) would be subject to the
excise tax imposed by Code Section 4999, then the payments under this Article IV
shall be reduced to the extent necessary so that no portion of the total
payments payable under this Plan or any other arrangement or agreement with
Witco or an Affiliate is subject to such excise tax.
5
<PAGE>
ARTICLE V
ADMINISTRATION
5.1. Administration. The Plan shall be administered by the Committee which
may employ agents and may delegate any of its rights, powers, duties and
responsibilities with respect to the operation and administration of the Plan to
any other person (whether or not an employee of an Employer) or organization.
5.2. Powers and Duties. In addition to any implied powers and duties that
may be needed to carry out the provisions of the Plan, the Committee shall have
the following specific powers and duties:
(a) to make and enforce such rules and regulations as it shall deem
necessary or proper for the efficient administration of the Plan;
(b) to interpret the Plan and to decide any and all matters arising
under the Plan, including the right to remedy possible ambiguities,
inconsistencies or omissions; provided, however, that all such
interpretations and decisions shall be applied in a uniform and
nondiscriminatory manner to all Officers similarly situated;
(c) to compute the amount of benefits that shall be payable to any
Participant or Beneficiary in accordance with the provisions of the Plan;
(d) to authorize disbursements with respect to the Plan on behalf of
Witco; and
(e) to allocate, from time to time, to one or more of its members any
of its rights, powers, duties and responsibilities with respect to the
operation and administration of the Plan.
5.3. Benefit Claim Procedures. Applications for benefits shall be processed
in the same manner as applications for benefits under the Retirement Plan.
5.4. Member's Own Participation. No member of the Committee may act, vote
or otherwise influence a decision of the Committee specifically relating to his
participation under the Plan.
ARTICLE VI
AMENDMENT AND TERMINATION
The Board of Directors may, in its absolute discretion, without notice, at
any time and from time to time, modify or amend, in whole or in part, any or all
of the provisions of the Plan, or suspend or terminate it entirely, provided,
that no such modification, amendment, suspension or termination may apply,
without his consent, to or affect the payment or distribution to any Participant
or adversely affect the right of any Participant to any benefits provided under
the Plan as in effect as of the date on which he first became a Participant.
ARTICLE VII
GENERAL PROVISIONS
7.1. Funding. Distributions under the Plan shall be made solely from the
general assets of Witco. A Participant or Beneficiary shall have only the rights
of a general unsecured creditor of Witco with respect to any rights under the
Plan. Except as provided in the next sentence, no Participant, Beneficiary or
any other person shall have any interest in any fund or in any specific asset or
assets of Witco by reason of the right to receive a benefit under the Plan. The
Board of Directors shall establish a trust to accumulate funds to provide
benefits under the Plan. Such trust shall at all times be subject to the claims
of general creditors of Witco and shall comply with such other requirements as
the Internal Revenue Service may require for so-called 'rabbi trusts'.
Prior to a Change in Control, Witco may, but is not required to, contribute
cash or other property to the trust from time to time. Upon a Change in Control,
Witco or any successor corporation shall, as soon as possible, but in no event
later than 30 days following the Change in Control make an irrevocable
contribution to the trust in an amount sufficient to pay each Participant or, in
the event of the death of a Participant, his Beneficiary, the benefits to which
he would be entitled as of the date on
6
<PAGE>
which the Change in Control occurred assuming termination of employment on the
date of the Change in Control under circumstances that would entitle the
Participant to benefits pursuant to Article IV.
7.2. No Guarantee of Employment. The Plan shall not be deemed to constitute
a contract between an Employer and any Participant or to be a consideration for,
or an inducement for, the employment of any Participant by an Employer. Nothing
contained in the Plan shall be deemed to give any Participant the right to be
retained in the service of an Employer or to interfere with the right of the
Employer to discharge or to terminate the service of any Participant at any time
without regard to the effect such discharge or termination may have on any
rights under the Plan.
7.3. Payments to Minors and Incompetents. If a person entitled to receive
any payments under the Plan is a minor or is deemed by the Committee or is
adjudged to be legally incapable of giving valid receipt and discharge for such
payments, the Committee may direct payments to the legal representative of such
person, or if none, to a person designated by the Committee for the benefit of
such person, or the Committee may direct application of the payment for the
benefit of such person in such manner as the Committee considers advisable. Such
payment shall, to the extent made, be deemed a complete discharge of any
liability for such payment under the Plan.
7.4. Nonalienation of Benefits. To the extent permitted by law, no benefits
payable under the Plan will be subject in any manner to anticipation,
assignment, garnishment or pledge; and any attempt to anticipate, assign,
garnish or pledge the same will be void; no such benefits will be in any manner
liable for or subject to the debts, liabilities, engagements or torts of any
person entitled to receive such benefits.
7.5. Applicable Laws; Severability. This document shall be construed,
administered and governed in all respects under and by the laws of the United
States and, to the extent applicable, under and by the laws of the State of New
York. If any provision of this document shall be held by a court or governmental
agency of competent jurisdiction to be invalid or unenforceable, the remaining
provisions of this document shall continue to be fully effective.
7
<PAGE>
EXHIBIT 11
WITCO CORPORATION AND SUBSIDIARY COMPANIES
COMPUTATION OF PER SHARE EARNINGS*
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
------------------------------
1993 1992 1991
------- -------- -------
(IN THOUSANDS,
EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Primary
Income before cumulative effect of accounting change....................... $19,763 $ 53,865 $73,475
Interest on convertible subordinated debentures (net of tax)............... 5,363 5,445 5,445
Adjustment for dividend requirements of preferred stock.................... (24) (24) (26)
------- -------- -------
25,102 59,286 78,894
Cumulative effect of accounting change..................................... -- (14,690) --
------- -------- -------
Total............................................................ $25,102 $ 44,596 $78,894
------- -------- -------
------- -------- -------
Weighted average shares outstanding........................................ 49,055 44,026 43,478
Assumed conversions:
Convertible subordinated debentures................................... 5,500 5,500 5,500
Stock options......................................................... 311 275 234
------- -------- -------
Total............................................................ 54,866 49,801 49,212
------- -------- -------
------- -------- -------
Per share amount:
Income before cumulative effect of accounting change.................. $ 0.46 $ 1.19 $ 1.60
Cumulative effect of accounting change................................ -- (0.29) --
------- -------- -------
Net income............................................................ $ 0.46 $ 0.90 $ 1.60
------- -------- -------
------- -------- -------
Fully diluted
Income before cumulative effect of accounting change....................... $19,763 $ 53,865 $73,475
Interest on dilutive debentures (net of tax)............................... 5,366 5,450 5,458
------- -------- -------
25,129 59,315 78,933
Cumulative effect of accounting change..................................... -- (14,690) --
------- -------- -------
Total............................................................ $25,129 $ 44,625 $78,933
------- -------- -------
------- -------- -------
Weighted average shares outstanding........................................ 49,055 44,026 43,478
Assumed conversions:
Convertible subordinated debentures................................... 5,519 5,526 5,562
Stock options......................................................... 465 392 368
Preferred stock....................................................... 149 156 167
------- -------- -------
Total............................................................ 55,188 50,100 49,575
------- -------- -------
------- -------- -------
Per share amount:
Income before cumulative effect of accounting change.................. $ 0.46 $ 1.18 $ 1.59
Cumulative effect of accounting change................................ -- (0.29) --
------- -------- -------
Net income............................................................ $ 0.46 $ 0.89 $ 1.59
------- -------- -------
------- -------- -------
</TABLE>
- ------------
* All per share data have been adjusted to reflect the two-for-one stock split
effective October 5, 1993.
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF WITCO CORPORATION -- NOTES (1)(2)(3)
AS OF DECEMBER 31, 1993
<TABLE>
<CAPTION>
PERCENTAGE OF
VOTING SECURITIES
OWNED DIRECTLY
OR INDIRECTLY STATE OR
BY WITCO COUNTRY OF
CORPORATION ORGANIZATION
----------------- --------------------------
<S> <C> <C>
Aero Oil Company, Inc...................................................
100.0% Indiana
Assured Insurance Company...............................................
100.0% Vermont
Beam Oil Company, Inc...................................................
100.0% Georgia
Continental Carbon Company..............................................
100.0% Delaware
Continental Carbon Australia Pty. Ltd.(4).............................
49.0% Australia
Enenco, Incorporated(4).................................................
50.0% New York
The Richardson Company..................................................
100.0% Ohio
Beltend, Inc..........................................................
100.0% Delaware
Allied-Kelite Company.................................................
100.0% Delaware
Sherex Chemical Company, Inc............................................
100.0% Ohio
Southwest Petro-Chem, Inc...............................................
100.0% Delaware
Witco Foreign Sales Corporation.........................................
100.0% U.S. Virgin Islands
Witco International Corporation.........................................
100.0% New Jersey
Surpass Chemicals Limited.............................................
100.0% Canada
Witco Dominion Financial Services Company, Ltd.(5).................
35.0% Province of
Ontario, Canada
Witco Financial Services Co.(5)...............................
35.0% Ireland
Witco Australia Pty. Limited..........................................
100.0% Australia
Witco B.V.............................................................
100.0% the Netherlands
Witco Polymers and Resins B.V......................................
100.0% the Netherlands
Witco Warmtekracht B.V.............................................
100.0% the Netherlands
Nerap Expeditie B.V................................................
100.0% the Netherlands
Jonk B.V...........................................................
100.0% the Netherlands
Witco Canada Inc......................................................
100.0% Canada
Witco Dominion Financial Services Company, Ltd.(5).................
65.0% Province of
Ontario, Canada
Witco Financial Services Co.(5)...............................
65.0% Ireland
Witco Colombia Ltda...................................................
100.0% Colombia
Witco Corporation U.K. Limited........................................
100.0% England
Baxenden Chemicals Limited.........................................
53.5% England
Baxenden Scandinavia AS..........................................
53.5% Denmark
Rewo Chemicals Limited.............................................
100.0% England
Witco Deutschland GmbH................................................
100.0% Germany
Witco GmbH.........................................................
100.0% Germany
Rewo Chemische Werke GmbH..........................................
100.0% Germany
Witco Solvay Duromer GmbH(4).......................................
50.0% Germany
Witco do Brasil Ltda..................................................
100.0% Brazil
Witco Ecuador S.A.....................................................
100.0% Ecuador
Witco Espana, S.L.....................................................
100.0% Spain
Witco Grand Banks Inc.................................................
100.0% Province of
Newfoundland, Canada
Witco Handels-GmbH....................................................
100.0% Austria
Witco Italiana S.r.l. ................................................
100.0% Italy
Witco S.A.............................................................
100.0% France
Witco Singapore Pte Ltd...............................................
100.0% Republic of Singapore
Witco Ltd...............................................................
60.0% Israel
Witco Mexico, S.A. de C.V...............................................
100.0% Mexico
</TABLE>
See next page.
<PAGE>
Notes:
(1) The Company lists the business entities in which it has investments, for
information purposes only. Such listing is not to be deemed an admission
that these business entities are under the control of the Company within the
meaning of the General Rules and Regulations under the Securities Exchange
Act of 1934.
(2) With respect to certain subsidiaries, shares in names of nominees and
qualifying shares in names of directors are included in the above
percentages.
(3) With the exception of the companies covered by footnote (4), the companies
named are included in the consolidated financial statements.
(4) The Company records in the consolidated financial statements its equity in
undistributed earnings (losses) of this unconsolidated entity.
(5) The Company indirectly owns 100% of these companies through the Company's
indirect ownership of Surpass Chemicals Limited and Witco Canada Inc.
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-3, No. 33-45865) and the Post-effective Amendment No. 2 to the
Registration Statement (Form S-3, No. 33-58066), each pertaining to the issuance
of debentures, the Post-effective Amendment No. 1 to the Registration Statement
(Form S-3, No. 33-58120), pertaining to the issuance of common stock, the Post-
effective Amendment No. 2 to the Registration Statement (Form S-8, No.
33-10715), Post-effective Amendment No. 1 to the Registration Statements (Form
S-8, Nos. 33-30995 and 33-45194), each pertaining to stock option plans of Witco
Corporation, and the Registration Statement (Form S-8, No. 33-48806), pertaining
to an employee benefit plan of Witco Corporation, of our report dated January
27, 1994, except for Note 7, as to which the date is March 11, 1994, with
respect to the consolidated financial statements and schedules of Witco
Corporation and Subsidiary Companies included in this Annual Report (Form 10-K)
for the year ended December 31, 1993.
ERNST & YOUNG
Stamford, Connecticut
March 18, 1994
