SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 or 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1994
Commission File Number 1-4654
------
WITCO CORPORATION
- - -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-1870000
- - -------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One American Lane, Greenwich, Connecticut 06831-2559
- - -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (203) 552-2000
- - -------------------------------------------------------------------------------
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
------- -------
The number of shares of common stock outstanding is as follows:
Class Outstanding at July 31, 1994
----- ----------------------------
Common Stock - $5 par value 56,107,422
<PAGE>
WITCO CORPORATION
FORM 10-Q
June 30, 1994
CONTENTS PAGE
-------- ----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed consolidated balance sheets at June 30, 1994
and December 31, 1993 2
Condensed consolidated statements of income for the three
and six months ended June 30, 1994 and 1993 3
Condensed consolidated statements of cash flows for the
six months ended June 30, 1994 and 1993 4
Notes to condensed consolidated financial statements 5
Independent accountants' report on review of interim
financial information 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 14
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
WITCO CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands Except Per Share Data)
June 30, December 31,
1994 1993 (a)
----------- ------------
(Unaudited)
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 176,218 $ 183,050
Accounts and notes receivable-net 406,620 340,850
Inventories
Raw materials and supplies $97,707 $81,440
Finished goods 151,958 249,665 146,029 227,469
------- -------
Prepaid and other current assets 48,038 41,204
--------- ---------
TOTAL CURRENT ASSETS 880,541 792,573
--------- ---------
PROPERTY, PLANT AND EQUIPMENT -
less accumulated depreciation
of $664,706 and $621,684 713,746 696,462
INTANGIBLE ASSETS - less accumulated
amortization of $46,328 and $38,612 214,587 217,032
OTHER ASSETS 109,672 132,931
--------- ---------
TOTAL ASSETS $ 1,918,546 $ 1,838,998
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes and loans payable $ 4,202 $ 4,194
Accounts payable and other current liabilities 372,864 337,144
--------- ---------
TOTAL CURRENT LIABILITIES 377,066 341,338
--------- ---------
LONG-TERM DEBT 348,051 496,266
DEFERRED FEDERAL AND FOREIGN INCOME TAXES 74,512 74,612
DEFERRED CREDITS AND OTHER LIABILITIES 208,903 213,367
SHAREHOLDERS' EQUITY
$2.65 Cumulative Convertible Preferred Stock,
par value $1 per share
Authorized - 14 shares
Issued and outstanding - 8 and 9 shares 8 9
Common Stock, par value $5 per share
Authorized - 100,000 shares
Issued - 56,312 and 50,818 shares 281,561 254,089
Capital in excess of par value 127,429 6,123
Equity adjustments:
Foreign currency translation (5,242) (23,723)
Pensions (6,548) (6,548)
Retained earnings 516,000 488,241
Less cost of 213 and 318 shares of common
stock in treasury (3,194) (4,776)
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 910,014 713,415
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,918,546 $ 1,838,998
========= =========
<FN>
(a) The balance sheet at December 31, 1993, has been derived from the audited
financial statements at that date.
</FN>
</TABLE>
See accompanying notes.
2
<PAGE>
<TABLE>
<CAPTION>
WITCO CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- ----------------------
1994 1993 1994 1993
------- ------- --------- ---------
(In Thousands Except Per Share Data)
<S> <C> <C> <C> <C>
REVENUES
Net sales $565,597 $549,449 $1,119,014 $1,102,623
Interest 2,425 2,282 4,649 4,096
------- ------- --------- ---------
568,022 551,731 1,123,663 1,106,719
------- ------- --------- ---------
COSTS AND EXPENSES
Cost of goods sold (exclusive of
depreciation and amortization) 429,216 425,497 855,776 857,133
Selling and administrative expenses 60,339 58,921 121,225 118,774
Depreciation and amortization 26,964 26,356 53,505 53,269
Interest 6,526 9,552 14,840 17,269
Other expense (income)-net (4,840) 8,694 (5,410) 8,894
------- ------- --------- ---------
518,205 529,020 1,039,936 1,055,339
------- ------- --------- ---------
INCOME BEFORE FEDERAL AND FOREIGN
INCOME TAXES 49,817 22,711 83,727 51,380
FEDERAL AND FOREIGN INCOME TAXES 17,435 7,813 29,304 17,675
------- ------- --------- ---------
NET INCOME $ 32,382 $ 14,898 $ 54,423 $ 33,705
======= ======= ========= =========
PER COMMON SHARE:
Net Income $.57 $.29 $.98 $.68
Net Income - assuming full dilution $.57 $.29 $.98 $.68
Dividends declared $.25 $.23 $.50 $.46
Weighted average number of common shares
and equivalents - primary 56,347 56,077 56,391 53,398
======= ======= ========= =========
</TABLE>
See accompanying notes.
3
<PAGE>
WITCO CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended
June 30,
---------------------
1994 1993
------- -------
(In Thousands)
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 42,558 $ 39,091
------- -------
INVESTING ACTIVITIES
Expenditures for property, plant and equipment (54,027) (43,231)
Proceeds from dispositions 24,194 -
Other investing activities 441 (6,205)
------- -------
Net Cash Used in Investing Activities (29,392) (49,436)
------- -------
FINANCING ACTIVITIES
Proceeds from common stock offering - 142,169
Proceeds from borrowings 1,106 368,381
Payments on borrowings (3,246) (486,893)
Dividends paid (25,266) (20,467)
Other financing activities 1,738 679
------- -------
Net Cash Provided by (Used in) Financing Activities (25,668) 3,869
------- -------
Effects of Exchange Rate Changes on Cash
and Cash Equivalents 5,670 (3,161)
------- -------
DECREASE IN CASH AND CASH EQUIVALENTS (6,832) (9,637)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 183,050 134,447
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 176,218 $ 124,810
======== =======
See accompanying notes.
4
<PAGE>
WITCO CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
NOTE A - Basis of Preparation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included. All such adjustments are
of a normal recurring nature. Operating results for the six month period ended
June 30, 1994, are not necessarily indicative of the results that may be
expected for the year ending December 31, 1994. For further information, refer
to the consolidated financial statements and footnotes thereto included in the
company's annual report on Form 10-K for the year ended December 31, 1993.
The condensed consolidated financial statements at June 30, 1994, and for the
six month periods ended June 30, 1994 and 1993, have been reviewed in accordance
with standards established by the American Institute of Certified Public
Accountants, by independent accountants, Ernst & Young LLP, and their report is
included herein.
NOTE B - Common Stock Split
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% 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 the periods
presented reflect the split.
NOTE C - Redemption of 5 1/2% Convertible Debentures
In March 1994, the company called for redemption all of its $150,000,000
outstanding 5 1/2% Convertible Subordinated Debentures due 2012. $149,890,000 of
the principal was converted into approximately 5,495,000 shares of common stock
at a conversion price of $27.28 per share and $110,000 of the principal was
redeemed for cash at a premium of 1.65%. Since the shares underlying the
debentures had been previously included as common stock equivalents, the shares
converted have no effect on the net income per common share calculations.
NOTE D - Other Matters
Statements of income for the three and six month periods ended June 30, 1994
include a gain of $3,133,000, or $.06 per common share, from the sale of the
metal finishing and metal working businesses of the company's Allied-Kelite
subsidiary. The pre-tax gain of $4,820,000 is included in the caption "Other
expense (income) - net."
Statements of income for the three and six month periods ended June 30, 1993
include a charge of $6,061,000, or $.11 per common share, for a loss on sublease
of office facilities. The pre-tax charge of $9,184,000 is included in the
caption "Other expense (income) - net."
5
<PAGE>
NOTE E - Litigation and Environmental
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.
At June 30, 1994, the company's reserves for environmental remediation and
compliance costs amounted to $97,315,000, 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 not a party to any legal proceedings, including environmental
matters, which it believes will have a material adverse effect on its
consolidated financial position.
6
<PAGE>
Independent Accountants' Review Report
The Board of Directors
Witco Corporation
We have reviewed the accompanying condensed consolidated balance sheet of Witco
Corporation and Subsidiary Companies as of June 30, 1994, and the related
condensed consolidated statements of income for the three-month and six-month
periods ended June 30, 1994 and 1993, and the condensed consolidated statements
of cash flows for the six-month periods ended June 30, 1994 and 1993. These
financial statements are the responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data, and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, which will be performed
for the full year with the objective of expressing an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such an
opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying condensed consolidated financial statements referred
to above for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Witco Corporation and Subsidiary
Companies as of December 31, 1993, and the related consolidated statements of
income, shareholders' equity, and cash flows for the year then ended (not
presented herein) and in our report dated January 27, 1994, except for Note 7,
as to which the date is March 11, 1994, we expressed an unqualified opinion on
those consolidated financial statements. In our opinion, the information set
forth in the accompanying condensed consolidated balance sheet as of December
31, 1993, is fairly stated, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.
ERNST & YOUNG LLP
Stamford, Connecticut
August 10, 1994
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
LIQUIDITY AND FINANCIAL RESOURCES
Although cash and cash equivalents have decreased slightly since year-end,
record sales have resulted in a $78 million increase in other components of
working capital. Additional accounts receivable represents $61.8 million of this
increase. 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.
During the first quarter the company completed the redemption of all of its $150
million outstanding 5 1/2% Convertible Subordinated Debentures due 2012. $149.9
million of this debt was converted into the company's common stock. The
redemption was called to provide greater financial flexibility as the company
continues in its efforts to expand product lines and marketing capabilities of
its core businesses. See Note C to the Financial Statements for further
discussion regarding the redemption.
The metal finishing and metal working businesses of Allied-Kelite, a non-core
operation, were sold during the second quarter for $24.2 million. In addition,
the company is currently seeking a buyer for its Battery Parts business.
CAPITAL INVESTMENTS AND COMMITMENTS
Capital expenditures during the first six months of 1994 amounted to $54 million
compared to $43.2 million during the same period of 1993. Capital expenditures
are expected to exceed $110 million in 1994 which would be a record level of
capital investment by the company.
During the second quarter the company's management presented to the Board of
Directors an overview of its strategy to develop business opportunities in Asia.
The presentation focused on the immediate and longer term actions that are
necessary to expand and leverage new and existing business in this region of the
world. The strategy includes both capital investment as well as new marketing
initiatives. The company presently anticipates that initial capital investments
may be in the form of joint ventures. For non-capital initiatives, cooperative
marketing and technical agreements will be pursued. The screening and
development of specific investments and agreements will take place over the next
six to eighteen months.
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 is not a party to any legal proceedings or environmental matters
which it believes will have a material adverse effect on its consolidated
financial position. It is possible however, that future results of operations
and cash flows, for any particular quarterly or annual period, could be
materially affected by such legal proceedings or environmental matters. However,
the company does not expect the results of such proceedings or environmental
matters to materially affect its competitive position.
8
<PAGE>
RESULTS OF OPERATIONS
The company reported record sales and net income for both the second quarter and
first six months of 1994.
Second quarter 1994 sales reached $565.6 million. Second quarter 1993 sales
included $7.8 million in sales by the company's Chemprene subsidiary, which
subsidiary's assets were sold in the fourth quarter of 1993. Notwithstanding the
loss of these sales in the 1994 second quarter, sales rose $16.1 million, or 3
percent, primarily as a result of an 8 percent increase in the Chemical
Segment's shipment volume.
Reported second quarter net income of $32.4 million for 1994 and $14.9 million
for 1993 included non-recurring items. Current year results included a gain of
$3.1 million attributable to the sale of the company's Allied-Kelite operation,
while 1993 results contained a $6.1 million charge for a loss on the sublease of
office facilities. Before non-recurring items, net income for the second quarter
1994 was $29.3 million, an increase of $8.4 million compared to $20.9 million
for the same period of 1993. The 40 percent increase in net income, before
non-recurring items, was primarily attributable to a 2 percent improvement in
gross profit margins and greater sales. Increased shipment volume, favorable
sales mix and cost saving initiatives at the Bergkamen, Germany facility were
all key components contributing to higher margins in the Chemical Segment. Lower
crude oil and raw material feedstock costs were the most important elements
leading to greater margins in the company's petroleum operations.
Reported sales of $1,119 million for the first six months of 1994 were $16.4
million above sales for the same period of 1993. Sales rose, despite the loss of
revenue attributable to the former Chemprene operation which contributed $15.9
million to the sales recorded during the first six months of 1993. The increase
in sales was concentrated within the Chemical Segment which reported 1994
shipment volume that was 6 percent above the prior year.
Net income for the first six months of 1994 increased 61 percent to $54.4
million compared with the same period of 1993. Excluding non-recurring items, as
previously noted, net income for the first six months of 1994 was $51.3 million.
This represented a 29 percent increase over the $39.8 million of net income for
the corresponding period of 1993. A 1 percent increase in gross profit margins
and greater sales accounted for the increase in net income before non-recurring
items. As noted above in the quarterly comparison, higher shipment volume,
favorable sales mix, cost saving initiatives and lower feedstock costs were all
key factors in achieving the improved margins. Partially offsetting the higher
income was an increase in domestic pension costs, attributable to plan
amendments and assumption changes, that had a $2.7 million adverse effect on net
income.
Segment net sales and operating income for the second quarter and first six
months of 1994 and 1993 are set forth in the following table. Income and
expenses of a general nature are not allocated to industry segments in computing
operating income. These include general corporate expenses, interest income and
expense, and certain other income and expenses.
Three Months Ended Six Months Ended
June 30, June 30,
-------------- --------------
1994 1993 1994 1993
---- ---- ---- ----
Net Sales
Chemical $337.3 $314.3 $ 672.0 $ 645.2
Petroleum 196.3 192.6 375.9 372.6
Diversified products 36.1 46.6 79.3 93.3
Intersegment elimination (4.1) (4.1) (8.2) (8.5)
------ ------ -------- --------
Total Net Sales $565.6 $549.4 $1,119.0 $1,102.6
====== ====== ======== ========
Operating Income
Chemical $34.9 $29.0 $ 66.4 $58.0
Petroleum 18.8 14.3 31.2 22.9
Diversified products 7.1 1.9 10.6 4.8
------ ------ -------- --------
Total Operating Income $60.8 $45.2 $108.2 $85.7
====== ====== ======== ========
Domestic operations accounted for 71 percent of the company's net sales and 67
percent of its operating income for the six months ended June 30, 1994. These
amounts were comparable to those of the same period of 1993.
9
<PAGE>
The composition of second quarter sales for both years was similar to the six
month results. However, the domestic operations' contribution to total operating
income increased from 68 percent for the second quarter 1993 to 71 percent for
the same quarter of 1994.
CHEMICAL SEGMENT
The Chemical Segment's 1994 second quarter sales rose $23 million above the same
quarter of 1993. Each of the segment's three operating groups shared in the
higher sales through increased shipment volume. Operating income rose $5.9
million, or 20 percent, during the second quarter 1994 compared to the same
period of the prior year. The Oleochemicals/Surfactants and Polymer Additives
groups shared equally in the increase while the International/Europe Group's
earnings were unchanged. A 10 percent increase in shipment volume combined with
a favorable sales mix led to the improved operating results of the
Oleochemicals/Surfactants Group, while the higher earnings of the Polymer
Additives Group was a result of increased shipment volume of vinyl products and
favorable product sales mix.
Net sales for the first six months of 1994 were 4 percent, or $26.8 million,
greater than the same period of 1993. Volume increases within all groups
combined with favorable product mix accounted for the improved sales
performance. Segment operating income for the first six months of 1994 was $8.4
million greater than the income reported for the same period of 1993. Operating
income for the Oleochemicals/Surfactants Group, which accounted for
approximately 40 percent of the segment's higher earnings, rose 11 percent
during this period. This group's earnings were reflective of a 6 percent
increase in shipment volume and a favorable product mix. Polymer Additives'
contribution to the segment's increased operating results was also approximately
40 percent. The increase in earnings reported by the Polymer Additives Group was
attributable to a favorable sales mix of Olefins/Styrenics products combined
with a reduction of other operating costs associated with the group's Bergkamen
facility. The International/Europe Group was responsible for the remaining 20
percent of the segment's increased earnings. A 6 percent reduction in other
operating costs, attributable to cost saving initiatives and the consolidation
of sales and administrative functions, coupled with increased surfactant sales,
resulted in higher group earnings.
PETROLEUM SEGMENT
The Petroleum Segment's sales for the second quarter 1994 were 2 percent above
sales for the same quarter of 1993. Increased selling prices and product mix
offset the effect of a 3 percent decline in shipment volume. Operating income
for the second quarter 1994 was up $4.5 million compared to the same period of
the prior year. The improved performance was entirely attributable to the
segment's Petroleum Specialties Group. The group's domestic and international
operations reported current quarter earnings that were approximately 40 percent
above second quarter 1993 results. The ability to retain a portion of the
benefits derived from lower raw material feedstock costs resulted in the higher
reported earnings.
Sales for the first six months of 1994 were up less than 1 percent compared to
the same period of 1993. Despite level sales, operating income for this period
rose $8.3 million, or 36 percent. The Petroleum Specialties Group accounted for
approximately 80 percent of the segment's increased earnings, with the remainder
being attributable to the improved operating results reported by the Lubricants
Group. All business units within the Petroleum Specialties Group contributed to
a 3 percent increase in gross profit margins for the group. Margins rose as a
result of a decline in key raw material feedstock costs and improved yields.
Crude oil pricing was the dominant factor affecting the Lubricants Group's
earnings during this period. Although partially offset by higher additive costs,
favorable crude oil pricing combined with a 2 percent increase in lube oil and
grease sales accounted for the higher reported earnings.
10
<PAGE>
DIVERSIFIED PRODUCTS
The company sold the operations of its Chemprene subsidiary during the fourth
quarter of 1993, while the disposition of the Allied-Kelite operation was
completed during the second quarter of the current year. The Allied-Kelite
disposition resulted in a pre-tax gain of $4.8 million which was included in the
second quarter 1994 segment earnings. Comparisons of net sales and operating
income are affected by these items.
Second quarter 1994 sales, excluding those attributable to the aforementioned
dispositions, rose $1.3 million, or 5 percent, over the same period of 1993.
Sales were up as a result of an increased demand for carbon black products.
Operating income attributable to the segment's remaining operations increased
approximately $1.5 million during the second quarter 1994 compared to the
corresponding period of 1993. Greater sales combined with reduced feedstock
costs for carbon black products resulted in higher segment earnings.
Segment sales for the first six months of 1994, attributable to the segment's
remaining operations, increased $6.1 million, or 11 percent, when compared to
the same six months of 1993. An increase in vehicle production and the severe
winter heightened the demand for carbon black products and battery components.
Earnings for the first six months of 1994 attributable to the segment's
remaining operations increased approximately $3 million over the same period of
the prior year. This increase was a result of the higher sales reported by both
of the segment's remaining operations, combined with lower carbon black
feedstock costs and operating efficiencies at the segment's Battery Parts
facilities.
OUTLOOK
The company will continue to focus on its core areas of specialty chemical and
petroleum products for global expansion. The transition to the world
headquarters was completed in the second quarter, the company's divestiture
program is proceeding as scheduled and the development of plans to expand into
the Pacific Rim are underway. Management sees its worldwide business gaining in
vitality and believes the effect of cost improvement programs will continue to
provide positive returns. The company is looking forward to continued growth in
the second half of 1994.
11
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. 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 forty sites
which are subject to the federal Superfund Program under the
Comprehensive Environmental Response, Compensation and Liability Act of
1980 ("CERCLA"). With two 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 al.
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.
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
(a) The company's annual Meeting of Shareholders was held on April
27, 1994, at the Chase Manhattan Bank, N.A., 410 Park Avenue, New
York, New York at 2:00 p.m.
(b) The company's shareholders elected four directors at said Annual
Meeting to serve a term of three years, as follows:
VOTES
--------------------------
FOR WITHHELD
---------- --------
Simeon Brinberg 44,641,098 116,627
William R. Grant 44,391,751 365,974
Richard M. Hayden 44,482,407 275,318
William R. Toller 44,468,945 288,780
12
<PAGE>
Directors who did not stand for election and continue in office until
the 1995 Annual Meeting are: William J. Ashe, William G. Burns,
William E. Mahoney, L. John Polite, Jr., and William Wishnick.
Directors who did not stand for election and continue in office until
the 1996 Annual Meeting are: Denis Andreuzzi, Harry G. Hohn, Dan J.
Samuel, and Bruce F. Wesson. For information pertaining to Mr.
Andreuzzi see Item 5 below.
(c) In addition to the election of four directors, the company's
shareholders:
(i) Approved an amendment to the company's Restated Certificate
of Incorporation regarding the indemnification of directors
and officers.
VOTES
--------------------------------
FOR AGAINST ABSTAIN
---------- ------- -------
43,776,384 811,798 169,543
(ii) Approved a form of indemnification agreement between the
company and its directors and officers.
VOTES
--------------------------------
FOR AGAINST ABSTAIN
---------- ------- -------
43,622,162 949,294 186,269
(iii) Approved the amendment and restatement in full of the
company's present Restated Certificate of Incorporation.
VOTES
--------------------------------
FOR AGAINST ABSTAIN
---------- ------- -------
44,207,944 263,285 286,496
(iv) Ratified the appointment of Ernst & Young as the company's
independent auditors for 1994.
VOTES
--------------------------------
FOR AGAINST ABSTAIN
---------- ------- -------
44,582,313 29,025 146,387
ITEM 5. Other Information
Effective August 1, 1994, Mr. Andreuzzi retired as an officer of the
company, and in connection therewith he resigned as a director of the
company.
13
<PAGE>
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
2 Not applicable
4 Not applicable
10 Not applicable
11 Statement re computation of per share earnings
15 Letter re unaudited interim financial information
18 Not applicable
19 Not applicable
20 Not applicable
22 Not applicable
23 Not applicable
24 Not applicable
(b) Reports on Form 8-K
There were no reports on Form 8-K for the three months ended June
30, 1994.
14
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
WITCO CORPORATION
-----------------
(Registrant)
Date: August 12, 1994 /s/ Michael D. Fullwood
----------------------------
Michael D. Fullwood
Executive Vice President and
Chief Financial Officer
Date: August 12, 1994 /s/ Dustan E. McCoy
----------------------------
Dustan E. McCoy
Vice President - General Counsel and
Corporate Secretary
EXHIBIT 11
<TABLE>
<CAPTION>
WITCO CORPORATION AND SUBSIDIARY COMPANIES
COMPUTATION OF PER SHARE EARNINGS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- -----------------------
1994 1993 1994 1993
--------- --------- --------- ---------
(In Thousands Except Per Share Data)
<S> <C> <C> <C> <C>
PRIMARY
Net Income - as reported $ 32,382 $ 14,898 $ 54,423 $ 33,705
Interest on convertible subordinated
debentures (net of tax) - 1,361 1,109 2,723
Dividend requirements of preferred stock (5) (6) (10) (12)
--------- --------- --------- ---------
Total $ 32,377 $ 16,253 $ 55,522 $ 36,416
========= ========= ========= =========
Weighted average shares outstanding 56,040 50,308 53,475 47,640
Assumed conversions:
Convertible subordinated debentures - 5,500 2,552 5,500
Stock options 307 269 364 258
--------- --------- --------- ---------
Total 56,347 56,077 56,391 53,398
========= ========= ========= =========
Per share amount $ .57 $ .29 $ .98 $ .68
========= ========= ========= =========
FULLY DILUTED
Net Income - as reported $ 32,382 $ 14,898 $ 54,423 $ 33,705
Interest on dilutive debentures
(net of tax) - 1,362 1,109 2,725
--------- --------- --------- ---------
Total $ 32,382 $ 16,260 $ 55,532 $ 36,430
========= ========= ========= =========
Weighted average shares outstanding 56,040 50,308 53,475 47,640
Assumed conversions:
Convertible subordinated debentures 5,522 2,552 5,522
Stock options 307 282 364 294
Preferred stock 131 150 135 152
--------- --------- --------- ---------
Total 56,478 56,262 56,526 53,608
========= ========= ========= =========
Per share amount $ .57 $ .29 $ .98 $ .68
========= ========= ========= =========
</TABLE>
EXHIBIT 15
LETTER RE: UNAUDITED FINANCIAL INFORMATION
ACKNOWLEDGMENT LETTER
August 10, 1994
The Board of Directors
Witco Corporation
We are aware of 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 August 10,
1994 relating to the unaudited condensed consolidated interim financial
statements of Witco Corporation and Subsidiary Companies which are included in
its Form 10-Q for the quarter ended June 30, 1994.
Pursuant to Rule 436(c) of the Securities Act of 1993, our report is not part of
the registration statements prepared or certified by accountants within the
meaning of Sections 7 or 11 of the Securities Act of 1933.
ERNST & YOUNG LLP
Stamford, Connecticut
