<PAGE>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ----------- to------------
Commission File Number 1-4654
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)
(203) 552-2000
-------------------------------
(Registrant's telephone number,
including area code)
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 October 31, 1996
Common Stock - $5 par value 56,705,745
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WITCO CORPORATION
FORM 10-Q
For the quarterly period ended September 30, 1996
<TABLE>
<CAPTION>
CONTENTS PAGE
-------- ----
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed consolidated balance sheets at September 30, 1996
(unaudited) and December 31, 1995 2
Condensed consolidated statements of operations (unaudited) for
the three and nine months ended September 30, 1996 and 1995 3
Condensed consolidated statements of cash flows (unaudited) for the
nine months ended September 30, 1996 and 1995 4
Notes to condensed consolidated financial statements (unaudited) 5
Independent accountants' report on review of interim
financial information 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
Index to Exhibits 17
</TABLE>
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WITCO CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands Except Per Share Data)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995(a)
------------- -------------
(Unaudited)
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 132,092 $ 143,994
Accounts and notes receivable-net 409,288 406,486
Inventories
Raw materials and supplies $121,278 $115,231
Finished goods 210,968 332,246 207,667 322,898
------- -------
Prepaid and other current assets 71,429 70,667
---------- ----------
TOTAL CURRENT ASSETS 945,055 944,045
---------- ----------
PROPERTY, PLANT, AND EQUIPMENT -
less accumulated depreciation
of $652,892 and $586,595 815,719 811,667
GOODWILL AND OTHER INTANGIBLE ASSETS -
less accumulated amortization of $85,599
and $62,450 708,900 728,124
OTHER ASSETS 116,697 118,182
NET ASSETS OF DISCONTINUED OPERATIONS 159,134 170,426
---------- ----------
TOTAL ASSETS $2,745,505 $2,772,444
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes and loans payable $ 294,223 $309,171
Accounts payable and other current liabilities 431,620 385,294
---------- ----------
TOTAL CURRENT LIABILITIES 725,843 694,465
---------- ----------
LONG-TERM DEBT 694,154 683,830
DEFERRED INCOME TAXES 67,692 87,532
DEFERRED CREDITS AND OTHER LIABILITIES 311,483 302,500
SHAREHOLDERS' EQUITY
$2.65 Cumulative Convertible Preferred Stock,
par value $1 per share
Authorized - 14 shares
Issued and outstanding - 7 shares 7 7
Common Stock, par value $5 per share
Authorized - 100,000 shares
Issued and outstanding - 56,704 shares and
56,435 shares 283,521 282,173
Capital in excess of par value 137,175 131,076
Equity adjustments:
Foreign currency translation 13,306 17,222
Pensions (6,782) (4,898)
Retained earnings 519,106 578,537
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 946,333 1,004,117
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,745,505 $2,772,444
========== ==========
</TABLE>
(a) The balance sheet at December 31, 1995 has been derived from the audited
financial statements at that date.
See accompanying notes.
2
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WITCO CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------------- ------------------------------
(In thousands except per share data)
1996 1995 1996 1995
--------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Net Sales $562,049 $441,902 $1,722,932 $1,449,085
Cost of Goods Sold 437,952 352,554 1,320,977 1,148,401
--------------- -------------- -------------- -------------
Gross Profit 124,097 89,348 401,955 300,684
Operating Expenses
Selling expense 26,591 18,324 82,298 57,160
General and administrative expenses 37,299 28,292 109,206 86,443
Research and development 17,869 11,429 53,895 36,505
Other expenses (income) - net 3,087 (5,148) 9,875 (89,471)
--------------- -------------- -------------- -------------
Total Operating Expenses 84,846 52,897 255,274 90,637
--------------- -------------- -------------- -------------
Operating Income from Continuing 39,251 36,451 146,681 210,047
Operations
Other Expense (Income) - Net
Interest expense 17,854 9,402 53,247 26,146
Interest income (2,159) (5,074) (7,030) (11,204)
Other expense - net 931 933 2,805 2,810
--------------- -------------- -------------- -------------
Income from Continuing Operations before
Income Taxes 22,625 31,190 97,659 192,295
Income Taxes 10,697 11,746 41,631 73,560
--------------- -------------- -------------- -------------
Income from Continuing Operations 11,928 19,444 56,028 118,735
Discontinued Operations:
Income from Discontinued Operations -
Net of Income Taxes of $--,
$2,851, $283, and $4,149 - 4,466 340 6,304
Estimated Loss on Disposal - Net of
Income Tax Benefit of $43,612 - - (68,253) -
--------------- -------------- -------------- -------------
Income (Loss) from Discontinued
Operations - 4,466 (67,913) 6,304
--------------- -------------- -------------- -------------
Net Income (Loss) $ 11,928 $ 23,910 $ (11,885) $ 125,039
=============== ============== ============== =============
PER COMMON SHARE: PRIMARY
Income from continuing operations $ .21 $ .34 $ .98 $ 2.10
Discontinued operations:
Income from discontinued
operations - net of income taxes - .08 .01 .11
Estimated loss on disposal - net
of income tax benefit - (1.20) -
--------------- -------------- -------------- -------------
Net Income (Loss) $ .21 $ .42 $ (.21) $ 2.21
=============== ============== ============== =============
PER COMMON SHARE: FULLY DILUTED
Income from continuing operations $ .21 $ .34 $ .98 $ 2.08
Discontinued operations:
Income from discontinued
operations - net of income taxes - .08 .01 .11
Estimated loss on disposal - net
of income tax benefit - (1.20)
--------------- -------------- -------------- -------------
Net Income (Loss) $ .21 $ .42 $ (.21) $ 2.19
=============== ============== ============== =============
Weighted average number of common shares
and equivalents - primary 56,867 56,861 56,919 56,542
=============== ============== ============== =============
Dividends declared $ .28 $ .28 $ .84 $ .84
=============== ============== ============== =============
</TABLE>
See accompanying notes.
3
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WITCO CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
------------------------
1996 1995
-------- --------
(In Thousands)
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $140,409 $74,664
-------- -------
INVESTING ACTIVITIES
Expenditures for property, plant, and equipment (118,990) (73,615)
Proceeds from dispositions 13,650 146,026
Other investing activities 165 (5,187)
-------- -------
Net Cash Provided by (Used in) Investing Activities (105,175) 67,224
-------- -------
FINANCING ACTIVITIES
Proceeds from borrowings 319,489 711
Payments on borrowings (322,126) (706)
Dividends paid (47,491) (47,220)
Other financing activities 5,558 6,523
-------- -------
Net Cash Used in Financing Activities (44,570) (40,692)
-------- -------
Effects of Exchange Rate Changes on Cash and Cash Equivalents (2,566) 8,929
-------- -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (11,902) 110,125
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 143,994 197,173
-------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $132,092 $307,298
======== ========
</TABLE>
See accompanying notes.
4
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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 three and nine month
periods ended September 30, 1996 are not necessarily indicative of the results
that may be expected for the year ending December 31, 1996. 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, 1995.
The condensed consolidated financial statements at September 30, 1996, and for
the three and nine month periods ended September 30, 1996 and 1995, 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 - Statement of Operations Reclassifications
Effective January 1, 1996, the company made the following revisions to its
statement of operations format:
Depreciation expense is included in cost of goods sold, general and
administrative expenses, selling expense and research and development.
Amortization expense is included in other expenses (income) - net.
Depreciation and amortization was previously classified separately.
Research and development, previously included in cost of goods sold, is
now classified separately.
State income taxes, previously included in cost of goods sold, and other
expenses (income)-net are now classified as income taxes.
The condensed consolidated statement of operations for the three and nine month
periods ended September 30, 1995 have been reclassified for these changes.
NOTE C - Discontinued Operations
On September 11, 1995, the company announced its intention to divest its
Lubricants Group. These operations are reflected as discontinued operations for
all periods presented in the company's statements of operations and as net
assets of discontinued operations in the company's balance sheets. Total
revenues for the three and nine month periods ended September 30, 1996 and 1995
were $99,193,000 and $278,408,000, and $99,996,000 and $281,939,000,
respectively.
The results of these operations were impacted in the nine months ended September
30, 1996 by an after tax charge of $68,253,000, or $1.20 per common share,
associated with the divestiture of the Lubricants Group. The charge is based
upon events and information which resulted in management's revised estimate of
the net realizable value of the Lubricants Group. This revised estimate is based
upon contract negotiations, lower than anticipated bids for portions of the
group and amendments to the company's plan of disposal, including plant
closures, which resulted in a writedown of certain assets and a provision for
associated costs.
5
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NOTE C - Discontinued Operations (continued)
A summary of net assets of discontinued operations for the periods ended
September 30, 1996 and December 31, 1995 are as follows:
<TABLE>
<CAPTION>
Sept. 30, December 31,
In Thousands 1996 1995
- ------------ --------------- --------------
<S> <C> <C>
Accounts and notes receivable - net $ 57,586 $ 61,633
Inventories - net of LIFO reserve of $33,019 and $27,823 35,023 38,378
Property, plant, and equipment - net 67,200 112,639
Accounts payable and other current liabilities (3,065) (39,603)
Other assets and liabilities - net 2,390 (2,621)
=============== ==============
Net assets of discontinued operations $159,134 $170,426
=============== ==============
</TABLE>
Additional liabilities of the Lubricants Group as of September 30, l996 are
included in "Accounts payable and other current liabilities" ($67,391,000) and
"Deferred Credits and Other Liabilities" ($48,113,000).
On November 1, 1996, the company sold certain assets of its Kendall/Amalie
business to Sun Company Inc., certain assets of its grease gun manufacturing
business to Epicor Industries, Inc., a wholly owned subsidiary of Stant
Corporation, and certain assets of its grease business to Exxon Company, U.S.A.
for approximately $121.0 million, subject to certain post-closing adjustments.
Discussions are currently under way with prospective purchasers for the
Lubricants Group's remaining operations.
NOTE D - Other Matters
At December 31, 1995, the company had $605 million of bank loans outstanding
under a credit agreement with a consortium of banks. On February 12, 1996, the
company issued $150 million of 6.125% Notes due 2006 and $150 million of 6.875%
Debentures due 2026. The net proceeds of $297 million, plus cash on hand, were
used to repay $300 million of bank loans under the credit agreement. Immediately
thereafter, the availability of funds under the credit agreement was reduced to
$375 million, $290 million of which was utilized at September 30, 1996. On
October 11, 1996, the credit agreement was amended and the term of the facility
was extended until October 10, 1997. On November 4, 1996, the company repaid
$150 million of the bank loan with proceeds from the sale of three of the
Lubricants businesses and cash on hand.
The statement of operations for the nine month period ended September 30, 1995
includes a gain of $27,073,000, or $.48 per common share, from the sale of the
company's Carbon Black business. The pre-tax gain of $44,547,000 is included in
the caption "Operating Expenses - Other expenses (income) - net".
The statements of operations for the three and nine month periods ended
September 30, 1995 include gains of $4,410,000, or $.08 per common share, and
$27,442,000, or $.48 per common share, respectively, as a result of settlements
with certain of the company's insurers, net of related legal and other costs.
The respective pre-tax gains of $7,230,000 and $44,926,000 are included in the
caption "Operating Expenses - Other expenses (income) - net".
The statement of operations for the nine month period ended September 30, 1995
includes a gain of $5,918,000, or $.11 per common share, from the sale of the
company's Battery Parts business. The pre-tax gain of $9,532,000 is included in
the caption "Operating Expenses - Other expenses (income) - net".
NOTE E - Effective Tax Rate
The effective tax rates of 47.3% and 42.6% for the three and nine month periods
ended September 30, 1996, as compared to the federal statutory tax rate of 35%,
are primarily the result of state income taxes, goodwill amortization related to
OSi Specialties, Inc. which is not deductible for income tax purposes and the
effect of a change in the mix between domestic and foreign earnings. The
effective tax rates of 37.7% and 38.3% for the three and nine month periods
ended September 30, l995, as compared to the federal statutory tax rate of 35%,
are primarily the result of state income taxes.
6
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<PAGE>
NOTE F - Litigation and Environmental
The company is a potentially responsible party ("PRP") or a defendant in a
number of governmental (federal, state and local) and private actions associated
with the release, or suspected release, of contaminants into the environment. As
a PRP, the company may be liable for costs associated with the investigation and
remediation of environmental contamination, as well as various penalties and
damages to persons, property and natural resources. As of September 30, 1996,
the company was a PRP, or a defendant, in connection with 75 sites at which it
is likely to incur environmental response costs as a result of actions brought
against the company pursuant to the federal Comprehensive Environmental Response
Compensation and Liability Act ("CERCLA"), the federal Resource Conservation and
Recovery Act ("RCRA") or similar state or local laws. With 25 exceptions, all of
these sites involve one or more other PRPs and in most cases there are numerous
other PRPs in addition to the company. CERCLA, RCRA and the state counterparts
to these federal laws authorize governments to investigate and remediate actual
or suspected damage to the environment caused by the release, or suspected
release, of hazardous substances into the environment, or to order the
responsible parties to investigate and/or remediate such environmental damage.
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, changes in
environmental regulations, widely varying costs of alternative cleanup methods,
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 September 30, 1996, the company's reserves for environmental remediation and
compliance costs (including $64,621,000 of both current and long-term
environmental liabilities from the Lubricants Group) amounted to $142,051,000,
reflecting the company's estimate of the costs to be incurred over an extended
period of time in respect of those matters which are reasonably estimable. The
change in the company's environmental reserves from December 31, l995 was
primarily the result of the company's amended plan of disposal.
The company is a defendant in six similar actions arising out of the company's
involvement in the polybutylene resin manufacturing business in the 1970's. Five
of the following cases are currently pending in California state courts and one
is pending in Texas state court: East Bay Municipal Utility District v. Mobil
Oil Corporation, et al., filed in November 1993, and pending in Superior Court
for the County of San Mateo, California; City of Santa Maria v. Shell Oil
Company, et al., filed in May 1994, and pending in Superior Court for the County
of San Luis Obispo, California; Nipomo Community Services District v. Shell Oil
Company, et al., filed in May 1995, and pending in Superior Court for the County
of Santa Barbara, California; Alameda County Water District v. Mobil Oil
Corporation, et al., filed in April 1996, and Marin Municipal Water District v.
Shell Oil Company, et al., filed in May 1996, both pending in Superior Court for
the County of San Mateo; and City of Austin v. Shell Oil Company, et al., filed
in June 1996, and pending in the District Court of Travis County, Texas. The
actions generally allege that the company and several other defendants
negligently misrepresented the performance of polybutylene pipe and fittings
installed in water distribution systems. Other allegations in the California and
Texas actions include breach of the California Unfair Practices Act and the
Texas Deceptive Practices Act, respectively; breach of warranty, fraud and
strict liability. It is possible that the company may be named as a defendant in
future actions arising out of its past involvement in the polybutylene resin
manufacturing business.
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. However, the company's results could be
materially affected in future periods by the resolution of these contingencies.
7
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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 September 30, 1996, and the related
condensed consolidated statements of operations for the three-month and
nine-month periods ended September 30, 1996 and 1995, and the condensed
consolidated statements of cash flows for the nine-month periods ended September
30, 1996 and 1995. 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, 1995, 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 29, 1996, except for Note 7,
as to which the date is February 12, 1996, 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, 1995, is fairly stated, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.
/s/ ERNST & YOUNG LLP
Stamford, Connecticut
November 11, 1996
8
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
LIQUIDITY AND FINANCIAL RESOURCES
Cash and cash equivalents decreased $11.9 million during the first nine months
of 1996 primarily due to increased capital spending and an increase in net
working capital. The OSi Specialties, Inc. ("OSi Specialties") business acquired
in the fourth quarter of 1995 is the primary reason for the increased capital
spending levels.
At December 31, l995, the company had $605 million of bank loans outstanding
under a credit agreement with a consortium of banks. On February 12, l996, the
company issued $150 million of 6.125% Notes due 2006 and $150 million of 6.875%
Debentures due 2026. The net proceeds of $297 million, plus cash on hand, were
used to repay $300 million of bank loans under the credit agreement. Immediately
thereafter, the availability of funds under the credit agreement was reduced to
$375 million, $290 million of which was utilized at September 30, 1996. On
October 11, 1996, the credit agreement was amended and the term of the facility
was extended until October 10, 1997. On November 4, 1996, the company repaid
$150 million of the bank loan with proceeds from the sale of three of the
Lubricants Group's businesses and cash on hand. Discussions are currently
underway with prospective purchasers for the Lubricants Group's remaining
operations. The company anticipates that the balance of the bank loan will be
repaid with proceeds from the sale of the remaining Lubricants businesses,
excess cash or additional long-term financing.
CAPITAL INVESTMENTS AND COMMITMENTS
Capital expenditures for the first nine months of 1996 amounted to $119 million,
as compared to $73.6 million during the same period of 1995. Capital
expenditures related to continuing operations for the nine months ended
September 30, l996 and 1995 were $109 million and $60.8 million, respectively.
The company expects that capital expenditures for the year ending December 31,
1996 will be in the range of $160 million to $170 million.
CONTINGENCIES
The company is a potentially responsible party ("PRP") or a defendant in a
number of governmental (federal, state and local) and private actions associated
with the release, or suspected release, of contaminants into the environment. As
a PRP, the company may be liable for costs associated with the investigation and
remediation of environmental contamination, as well as various penalties and
damages to persons, property and 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. However, the company's results could be materially affected
in future periods by the resolution of these contingencies. The company,
however, does not expect the results of such proceedings or environmental
matters to materially affect its competitive position. See Note F of Notes to
Financial Statements for additional details.
DISCONTINUED OPERATIONS
On September 11, l995, the company announced its intention to divest its
Lubricants Group (see Note C of Notes to Financial Statements for additional
details).
9
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<PAGE>
RESULTS FROM CONTINUING OPERATIONS
The company reported income from continuing operations of $11.9 million for the
third quarter of 1996 and $56.0 million for the nine months ended September 30,
1996, compared to $19.4 million and $118.7 million for the corresponding quarter
and nine months ended September 30, 1995, respectively. A comparison of these
periods is affected by non-recurring gains. The following table shows the effect
of these non-recurring items on income.
<TABLE>
<CAPTION>
(Unaudited - millions of dollars Three Months Ended September 30,
except per share data) 1996 1995
- ----------------------------- ------------------------------ --------------------------------
Pre-Tax Income Pre-Tax Income
Income Income Per Share Income Income Per Share
- ----------------------------- -------- -------- ---------- --------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Continuing operations
excluding non-recurring items $22.6 $11.9 $.21 $24.0 $15.0 $.26
Insurance settlements - - - 7.2 4.4 .08
- ----------------------------- -------- -------- ---------- --------- -------- ----------
Continuing operations $22.6 $11.9 $.21 $31.2 $19.4 $.34
- ----------------------------- -------- -------- ---------- --------- -------- ----------
(Unaudited - millions of Nine Months Ended September 30,
dollars except per share data) 1996 1995
- ----------------------------- ------------------------------ --------------------------------
Pre-Tax Income Pre-Tax Income
Income Income Per Share Income Income Per Share
- ----------------------------- -------- -------- ---------- --------- -------- ----------
Continuing operations
excluding non-recurring items $97.7 $56.0 $.98 $93.4 $58.3 $1.03
Insurance settlements - - - 44.9 27.4 .48
Gain on disposition of
operations of subsidiaries - - - 54.0 33.0 .59
- ----------------------------- -------- -------- ---------- --------- -------- ----------
Continuing operations $97.7 $56.0 $.98 $192.3 $118.7 $2.10
- ----------------------------- -------- -------- ---------- --------- -------- ----------
</TABLE>
Third quarter 1996 net sales from continuing operations of $562.0 million were
27 percent greater than those for the same period in 1995. The acquisition of
OSi Specialties accounted for the increase in sales and more than offset the
loss in sales attributable to the first quarter 1996 sale of the company's 60
percent interest in Witco Ltd. Net sales from continuing operations, excluding
OSi Specialties and the aforementioned disposition, rose approximately $19
million. This sales increase was attributable to higher sales prices and a
favorable product sales mix, offset by the effects of a slight volume decrease
and the unfavorable impact of a comparatively stronger U.S. dollar.
Income from continuing operations for the third quarter of 1996 was $11.9
million, compared to $15 million, excluding non-recurring items, for the same
period of 1995. The $3.1 million decline was a result of higher interest expense
attributable to financing the OSi Specialties' acquisition and the assumption of
OSi Specialties' debt, coupled with a 9.6 percent rise in the effective tax rate
due to the non-deductible amortization of goodwill arising from the OSi
Specialties acquisition and the effect of a change in the mix between domestic
and foreign earnings. These decreases were partially offset by operating income
contributed by OSi Specialties and a slight increase in operating margins.
Sales of $1.7 billion for the nine months ended September 30, 1996 were 19
percent higher than sales for the corresponding period in 1995. OSi Specialties'
contribution to 1996 sales surpassed those attributable to the company's
businesses sold in 1996 and 1995. Excluding sales attributable to the businesses
either sold or acquired in 1996 and 1995, current year sales increased
approximately $16 million compared to 1995. Higher sales prices and a favorable
product sales mix were offset by the adverse effect of a stronger U.S. dollar
and a slight sales volume decrease.
10
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<PAGE>
Income from continuing operations was $56 million for the first nine months of
1996, compared to $58.3 million, excluding non-recurring items, for the same
period in 1995. The decrease of 3.9 percent was attributable to higher interest
expense related to financing the OSi Specialties acquisition and the assumption
of OSi Specialties' debt along with an increase in the effective tax rate as a
result of the non-deductible amortization of goodwill arising from the OSi
Specialties acquisition and the effect of a change in the mix between domestic
and foreign earnings. This was partially offset by an increase in operating
income contributed by OSi Specialties.
The company plans to adopt the disclosure provisions of Statement of Financial
Accounting Standards No. 123, "Accounting and Disclosure of Stock-Based
Compensation," in 1996. Operating results will not be affected by the adoption.
SEGMENT INFORMATION
Segment net sales and operating income for the third quarter and nine months of
1996 and 1995 are set forth in the following table. As a result of the company's
decision to sell the Lubricants Group, the operating results of which have been
recorded as discontinued operations, the Petroleum Segment consists solely of
the Petroleum Specialties Group.
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
(Unaudited - millions of dollars) 1996 1995 1996 1995
- ----------------------------------- --------------------------- ---------------------------
- ----------------------------------- ------------ ------------- ------------- ------------
<S> <C> <C> <C> <C>
Net sales
Chemical $ 357.8 $ 349.5 $ 1,098.2 $1,102.7
OSi Specialties 110.7 -- 337.0 --
Petroleum 94.7 94.2 290.0 291.8
Diversified products -- -- -- 61.4
Intersegment elimination (1.2) (1.8) (2.3) (6.8)
- ---------------------------------- ------------ ------------- ------------- -----------
Net sales $ 562.0 $ 441.9 $ 1,722.9 $ 1,449.1
- ---------------------------------- ------------ ------------- ------------- -----------
Operating income from continuing
operations:
Chemical $ 28.3 $ 27.2 $ 96.8 $ 89.1
OSi Specialties 11.5 -- 45.3 --
Petroleum 5.7 7.4 18.4 22.6
Diversified products -- -- -- 66.0
Corporate and unallocated (6.2) 1.8 (13.8) 32.3
- ----------------------------------- ------------ ------------- ------------- -----------
Operating income from continuing
operations $ 39.3 $ 36.4 $ 146.7 $ 210.0
- ----------------------------------- ------------ ------------- ------------- -----------
</TABLE>
11
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<PAGE>
CHEMICAL SEGMENT
The Chemical Segment's third quarter 1996 sales of $357.8 million were 2.4
percent higher than sales in the corresponding quarter of 1995. Higher sales
prices and a favorable product sales mix were offset by a 3 percent decline
in shipment volume and the unfavorable impact of a stronger U.S. dollar.
The Chemical Segment's third quarter operating income increased 4 percent to
$28.3 million as compared to $27.2 million for the third quarter of 1995. This
increase in earnings was primarily attributable to lower operating costs and an
improvement in the European economy. Earnings of the Polymer Additives Group
showed improvement while both the Oleo/Surfactants and Resins groups' earnings
were lower than those reported for the prior year. Continuing improvements in
the construction industry and automotive markets resulted in improved earnings
for the Polymer Additives Group. The Oleo/Surfactants Group was adversely
affected by higher raw material prices and the reduction in market demand for
some products. The Resins Group, although still experiencing a weakness in the
polyester foam industry, benefited from an improvement in the European economy
during the quarter, an increase in sales of specialty chemical products and a
reduction in operating costs.
Sales of $1.1 billion reported by the Chemical Segment for the nine months ended
September 30, 1996 were slightly lower than sales reported in the corresponding
period of 1995. The decline was attributable to the sale of Witco Ltd. in the
first quarter of this year. Excluding the effects of the sale of Witco Ltd.,
sales for the segment increased approximately 1 percent. This increase was
attributable to higher sales prices and a favorable product sales mix offset by
the unfavorable effect of a stronger U.S. dollar and a 3 percent decline in
shipment volume.
The Chemical Segment's operating income of $96.8 million for the first nine
months of 1996 was 8.7 percent greater than the income reported for the same
period in 1995. The segment continues to benefit from higher sales prices and
cost savings initiatives in spite of an increase in raw material costs, most of
which occurred in the first half of 1996. Earnings for the Polymer Additives and
Oleo/Surfactants groups were ahead of the prior year, while earnings of the
Resins Group decreased. The Polymer Additives Group's improved earnings were
achieved through productivity improvement initiatives, improvements in the
construction and automotive markets, the European economic recovery and improved
market share. An increase in the global demand for agricultural surfactants and
laundry products, along with greater shipments from the group's European
operations contributed to the Oleo/Surfactants Group's improved earnings. This
group reported higher product margins that were achieved primarily through sales
price increases in certain business sectors and cost savings measures which
offset the first half of 1996's higher expenses due to the severe winter
weather. The Resins Group's lower operating earnings were attributable to market
induced sales price reductions, reduced European product demand in the first six
months of 1996, increased costs associated with a plant start up in the Far East
and costs associated with the severe winter in the United States and Europe.
OSi SPECIALTIES SEGMENT
OSi Specialties, acquired during the fourth quarter of 1995, added $110.7
million and $337 million, respectively, to Witco's reported net sales for the
third quarter and nine months ended September 30, 1996. Although not included in
Witco's 1995 results, the segment's net sales for the third quarter of 1996 were
4.2 percent higher, while net sales for the nine months ended September 30, 1996
were flat when compared to 1995. OSi Specialties contributed $11.5 million and
$45.3 million, inclusive of acquisition related amortization, respectively, to
the company's third quarter and nine months reported 1996 operating income.
Current year operating income for the quarter and nine months ended September
30, 1996 were 28 percent and 16 percent greater, respectively, than the prior
year's operating income, on a pro forma basis, due to a favorable business sales
mix, price increases and manufacturing efficiencies.
12
<PAGE>
<PAGE>
PETROLEUM SEGMENT
Third quarter 1996 Petroleum Segment sales of $94.7 million were slightly ahead
of sales in the corresponding period of 1995. An increase in shipment volume of
approximately 2 percent more than offset the unfavorable impact of a
comparatively stronger U.S. dollar.
Third quarter Petroleum Segment operating income of $5.8 million was 22.5
percent behind prior year reported earnings. The $1.7 million decline was
primarily a result of additional costs associated with the continued
under-utilization of manufacturing capacity available from earlier plant
expansions.
The Petroleum Segment's sales of $290 million for the first nine months of 1996
were slightly lower than the sales reported for the same period of 1995.
Although volume rose 3 percent compared to 1995, lower sales prices and the
unfavorable effect of a stronger U.S. dollar resulted in a decline in sales.
Petroleum Segment operating income for the nine months ended September 30, 1995
of $18.4 million declined $4.2 million compared to operating income for the
corresponding period of 1995. The inability to recover costs associated with
completed plant expansions due to lower than anticipated product demand, coupled
with an erosion of product margins attributable to competitive pricing pressures
and an unfavorable product mix, caused operating income to decline.
DIVERSIFIED PRODUCTS SEGMENT
The divestiture of this segment's operations was completed in the second quarter
of 1995. This segment's operating income for the nine months ended September 30,
1995 included a pre-tax gain of $54 million from the sale of the segment's
businesses.
CORPORATE AND UNALLOCATED
Corporate and unallocated for the third quarter and nine months ended September
30, 1995 included $7.2 million and $44.9 million, respectively, of pre-tax
insurance settlements, net of legal and other costs, with certain of the
company's insurance carriers arising out of litigation concerning coverage for
certain environmental expenditures.
OUTLOOK
The company is disappointed with third quarter 1996 earnings and does not
anticipate significant improvement in business conditions or earnings for the
fourth quarter. This disappointing performance underscores the importance and
urgency of previously announced efforts to develop a comprehensive plan to
consolidate assets for the purposes of reducing costs and increasing
productivity to improve earnings, cash flow and shareholder value. The plan's
goals are to optimize manufacturing capabilities, reduce variable and conversion
costs, lower operating expenses, improve cash flow and reduce working capital
and debt. The company has targeted achievement of these goals over a three year
period. By the end of 1996, the company plans to disclose more information about
the plan and the timing of its impact on the company.
13
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
The company is a potentially responsible party ("PRP") or a defendant in a
number of governmental (federal, state and local) and private actions associated
with the release, or suspected release, of contaminants into the environment. As
a PRP, the company may be liable for costs associated with the investigation and
remediation of environmental contamination, as well as various penalties and
damages to persons, property and natural resources. As of September 30, 1996,
the company was a PRP, or a defendant, in connection with 75 sites at which it
is likely to incur environmental response costs as a result of actions brought
against the Company pursuant to the federal Comprehensive Environmental Response
Compensation and Liability Act ("CERCLA"), the federal Resource Conservation and
Recovery Act ("RCRA") or similar state or local laws. With 25 exceptions, all of
these sites involve one or more other PRPs, and in most cases there are numerous
other PRPs in addition to the company. CERCLA, RCRA and the state counterparts
to these federal laws authorize governments to investigate and remediate actual
or suspected damage to the environment caused by the release, or suspected
release, of hazardous substances into the environment, or to order the
responsible parties to investigate and/or remediate such environmental damage.
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, changes in
environmental regulations, widely varying costs of alternative cleanup methods,
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 six similar actions arising out of the company's
involvement in the polybutylene resin manufacturing business in the 1970's. Five
of the following cases are currently pending in California state courts and one
is pending in Texas state court: East Bay Municipal Utility District v. Mobil
Oil Corporation, et al., filed in November 1993, and pending in Superior Court
for the County of San Mateo, California; City of Santa Maria v. Shell Oil
Company, et al., filed in May 1994, and pending in Superior Court for the County
of San Luis Obispo, California; Nipomo Community Services District v. Shell Oil
Company, et al., filed in May 1995, and pending in Superior Court for the County
of Santa Barbara, California; Alameda County Water District v. Mobil Oil
Corporation, et al., filed in April 1996, and Marin Municipal Water District v.
Shell Oil Company, et al., filed in May 1996, both pending in Superior Court for
the County of San Mateo; and City of Austin v. Shell Oil Company, et al., filed
in June 1996, and pending in the District Court of Travis County, Texas. The
actions generally allege that the company and several other defendants
negligently misrepresented the performance of polybutylene pipe and fittings
installed in water distribution systems. Other allegations in the California and
Texas actions include breach of the California Unfair Practices Act and the
Texas Deceptive Practices Act, respectively; breach of warranty, fraud and
strict liability. It is possible that the company may be named as a defendant in
future actions arising out of its past involvement in the polybutylene resin
manufacturing business.
On November 3, 1995, the United States filed suit against the company in United
States District Court for the Central District of Illinois seeking up to $4.5
million in civil penalties for the alleged discharge of pollutants in violation
of the federal Clean Water Act. In this action, the United States alleged that,
at various times from 1990 to 1993, the company discharged pollutants into the
Illinois River from its Mapleton, Illinois facility without first obtaining a
National Pollutant Discharge Elimination System Permit. The company and the
United States Department of Justice have executed an agreement requiring
the company to pay $215,000 to settle the suit. The action will be terminated
after the United States Environmental Protection Agency has executed the
settlement agreement and court approval has been obtained.
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. However, the company's results could be
materially affected in future periods by the resolution of these contingencies.
14
<PAGE>
<PAGE>
ITEM 6. Exhibits and Reports on Form 8-K
(a)Exhibits
10.1 Amended and Restated Credit Agreement, dated as of October
11, 1996, among Witco Corporation and Morgan Guaranty Trust
Company of New York, as agent, and certain banks listed
therein
10.2 Employment Agreement, dated June 12, 1996, by and between
Witco Corporation and E. Gary Cook
11 Statement re computation of per share earnings
15 Letter re unaudited interim financial information
27 Financial Data Schedule
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the three
months ended September 30, 1996.
15
<PAGE>
<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)
/s/ PETER J. BIANCOTTI
Date: November 12, 1996 _______________________________________
Peter J. Biancotti
Controller - Chief Accounting Officer
/s/ DUSTAN E. MCCOY
Date: November 12, 1996 _______________________________________
Dustan E. McCoy
Senior Vice President, General Counsel
and Corporate Secretary
16
<PAGE>
<PAGE>
WITCO CORPORATION
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
----------------- -------------------------------------------------
10.1 Amended and Restated Credit Agreement, dated as
of October 11, 1996, among Witco Corporation and
Morgan Guaranty Trust Company of New York, as
agent, and certain banks listed therein
10.2 Employment Agreement, dated June 12, 1996, by and
between Witco Corporation and E. Gary Cook
11 Statement re computation of per share earnings
15 Letter re unaudited interim financial information
27 Financial Data Schedule
17
<PAGE>
<PAGE>
EXHIBIT 10.1
[CONFORMED COPY]
AMENDED AND RESTATED CREDIT AGREEMENT
AMENDED AND RESTATED CREDIT AGREEMENT dated as of October 11, 1996
among WITCO CORPORATION and the BANKS listed on the signature pages hereof (the
"Amendment and Restatement").
W I T N E S S E T H:
WHEREAS, Morgan Guaranty Trust Company of New York, as Agent, and the
parties hereto have heretofore entered into a Credit Agreement dated as of
October 18, 1995 (the "Agreement"); and
WHEREAS, the parties hereto desire to amend the Agreement to provide for
the extension of the termination date and for changes in the facility fee rate
and in the debt covenant and to restate the Agreement in its entirety to read as
set forth in the Agreement with the amendments specified below;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions; References. Unless otherwise specifically
defined herein, each term used herein which is defined in the Agreement shall
have the meaning assigned to such term in the Agreement. Each reference to
"hereof", "hereunder", "herein" and "hereby" and each other similar reference
and each reference to "this Agreement" and each other similar reference
contained in the Agreement shall from and after the date hereof refer to the
Agreement as amended and restated hereby.
SECTION 2. Amendment of Section 1.01. The definition of "Termination
Date" in Section 1.01 of the Agreement is amended to replace "October 17, 1996"
with "October 10, 1997".
SECTION 3. Amendment of Section 2.07. Section 2.07(b) of the Agreement
is amended to replace ".305%" with ".32%", and Sections 2.07(c) and (d) of the
Agreement are amended to replace ".18%" with ".195%".
SECTION 4. Amendment of Section 2.08. Section 2.08 of the Agreement is
amended to replace ".07%" with ".055%".
<PAGE>
<PAGE>
SECTION 5. Amendment of Section 5.07. Section 5.07 of the Agreement is
amended to replace "110%" with "120%" and "15%" with "20%".
SECTION 6. Governing Law. This Amendment and Restatement shall be
governed by and construed in accordance with the laws of the State of New York.
SECTION 7. Counterparts; Effectiveness. This Amendment and Restatement
may be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Amendment and Restatement shall become effective as of the date
hereof when the Agent shall have received:
(a) duly executed counterparts hereof signed by the Company and
the Banks (or, in the case of any party as to which an executed
counterpart shall not have been received, the Agent shall have received
telegraphic, telex or other written confirmation from such party of
execution of a counterpart hereof by such party);
(b) an opinion of Dustan E. McCoy, Esq., General Counsel of the
Company, substantially in the form of Exhibit A hereto; and
(c) all documents the Agent may reasonably request relating to
the existence of the Company, the corporate authority for and the
validity of the Agreement as amended by this Amendment and Restatement,
and any other matters relevant hereto, all in form and substance
satisfactory to the Agent.
2
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment and
Restatement to be duly executed as of the date first above written.
WITCO CORPORATION
By /s/ James M. Rutledge
_______________________________________
Name: James M. Rutledge
Title: Vice President & Treasurer
Commitments
- -----------
$52,777,777.78 MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By /s/ Robert Bottamedi
_______________________________________
Name: Robert Bottamedi
Title: Vice President
$42,222,222.22 THE CHASE MANHATTAN BANK
By /s/ Robert T. Sacks
_______________________________________
Name: Robert T. Sacks
Title: Vice President
$35,000,000.00 ABN AMRO BANK N.V., NEW YORK
BRANCH
By /s/ George M Dugan
_______________________________________
Name: George M. Dugan
Title: Vice President
By /s/ Darin E. Cohen
_______________________________________
Name: Darin E.Cohen
Title: C.B.O.
3
<PAGE>
<PAGE>
Commitments
- -----------
$35,000,000.00 BANK OF AMERICA ILLINOIS
By /s/ Wendy L. Loring
_______________________________________
Name: Wendy L. Loring
Title: Vice President
$35,000,000.00 CITIBANK, N.A.
By /s/ Thomas D. Stott
_______________________________________
Name: Thomas D. Stott
Title: Vice President
$35,000,000.00 COMMERZBANK AG, NEW YORK
AND/OR CAYMAN
ISLANDS BRANCH
By /s/ Juergen Boysen
_______________________________________
Name: Juergen Boysen
Title: Senior Vice President
By /s/ Andrew R. Campbell
_______________________________________
Name: Andrew R. Campbell
Title: Assistant Cashier
4
<PAGE>
<PAGE>
Commitments
- -----------
$35,000,000.00 DEUTSCHE BANK AG, NEW YORK
AND/OR CAYMAN ISLANDS
BRANCH
By /s/ Jean M. Hannigan
_______________________________________
Name: Jean M. Hannigan
Title: Vice President
By /s/ Vishwanie S. Sewsankar
_______________________________________
Name: Vishwanie S. Sewsankar
Title: Associate
$35,000,000.00 MELLON BANK, N.A.
By /s/ Jack D. Crossley
_______________________________________
Name: Jack D. Crossley
Title: Vice President
$35,000,000.00 FLEET NATIONAL BANK
By /s/ Robert C. Rubino
_______________________________________
Name: Robert C. Rubino
Title: Vice President
$35,000,000.00 THE SUMITOMO BANK, LIMITED,
NEW YORK BRANCH
By /s/ Yoshinori Kawamura
_______________________________________
Name: Yoshinori Kawamura
Title: Joint General Manager
Total Commitments
- -----------------
$375,000,000.00
5
<PAGE>
<PAGE>
EXHIBIT A
OPINION OF
COUNSEL FOR THE COMPANY
October 11, 1996
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
I am Senior Vice President, General Counsel and Corporate Secretary of
Witco Corporation (the "Company"). This opinion is being rendered to you at the
request of the Company pursuant to Section 7(b) of the Amended and Restated
Credit Agreement dated as of October 11, 1996 (the "Amendment and Restatement")
which amends and restates the Credit Agreement dated as of October 18, 1995
among the Company, the Eligible Subsidiaries referred to therein, the banks
listed on the signature pages thereof and Morgan Guaranty Trust Company of New
York, as Agent. Such credit agreement as in effect prior to the effectiveness of
the Amendment and Restatement is referred to herein as the "Existing Credit
Agreement", and the Existing Credit Agreement as amended by the Amendment and
Restatement is referred to herein as the "Amended Credit Agreement". Terms
defined in the Existing Credit Agreement and not otherwise defined are used
herein as therein defined.
I have examined originals or copies, certified or otherwise identified
to my satisfaction, of such documents, corporate records, certificates of public
officials and officers of the Company and its Subsidiaries and other instruments
and have conducted such other investigations of fact and law as I have deemed
necessary or advisable for purposes of this opinion. I have assumed, with your
permission, that
<PAGE>
<PAGE>
the signatures (other than those of officers of the Company) on all the
documents that I have examined are genuine.
Upon the basis of the foregoing, I am of the opinion that:
1. The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware, and has all corporate
powers required to carry on its business as now conducted. Each of the Company's
Subsidiaries which is a "significant subsidiary" within the meaning of
Regulation S-X of the Securities and Exchange Commission is a corporation
validly existing and in good standing under the laws of its jurisdiction of
incorporation, and has all corporate powers required to carry on its business as
now conducted.
2. The execution, delivery and performance by the Company of the
Amendment and Restatement are within the Company's corporate powers, have been
duly authorized by all necessary corporate action, and require no action by or
in respect of, or filing with, any governmental agency or official.
3. The execution, delivery and performance by the Company of the
Amendment and Restatement will not contravene, or constitute a default under,
any provision of applicable law or regulation or of the articles of
incorporation or bylaws of the Company or any agreement or instrument evidencing
Debt of the Company or, to the best of my knowledge, any other agreement,
judgment, injunction, order, decree or other instrument binding upon the Company
or, to the best of my knowledge, result in the creation or imposition of any
Lien on any asset of the Company or any of its Subsidiaries.
4. Each of the Amendment and Restatement and the Amended Credit
Agreement constitutes a valid and binding agreement of the Company.
5. Except as disclosed in the Company's annual report on Form 10-K for
1995 and the Company's quarterly report on Form 10-Q for the quarter ended June
30, 1996, in each case as filed with the Securities and Exchange Commission,
there is no action, suit or proceeding pending against, or to the best of my
knowledge threatened against or affecting, the Company or any of its
Subsidiaries before any court or arbitrator or any governmental body, agency or
official, in which there is a reasonable possibility of an adverse decision
which could materially adversely affect the business or consolidated financial
position of the Company and its Consolidated Subsidiaries, considered as a
whole, or which in any manner draws into question the validity of the Amendment
and Restatement, the Amended Credit Agreement or the Notes. For the purposes
hereof, I have not regarded an action, suit or proceeding to be "threatened"
against the Company or
2
<PAGE>
<PAGE>
any of its Subsidiaries unless the potential litigant has manifested to the
management of the Company in writing an intention to institute the same.
This opinion is rendered solely to you in connection with the above
matter. This opinion may not be relied upon by you for any other purpose or
relied upon by or furnished to any other person without my prior written
consent.
Very truly yours,
3
<PAGE>
<PAGE>
EXHIBIT 10.2
EMPLOYMENT AGREEMENT dated the 12th day
of June, 1996 by and between WITCO
CORPORATION, a Delaware corporation (the
"Company"), and E. GARY COOK ("Executive");
1. EMPLOYMENT AND DUTIES OF EXECUTIVE
1.1 EMPLOYMENT; TITLE: DUTIES. The Company hereby employs Executive, and
Executive hereby accepts employment as President and Chief Executive Officer of
the Company and appointment as Chairman of the Board of Directors of the Company
(the "Board") to be effective upon a date specified by Executive but no later
than June 13, 1996. In these capacities the principal duties of Executive shall
be to establish the strategic direction, and the development and achievement of
plans and objectives, of the Company and the selection and management of senior
executives of the Company, its subsidiaries and affiliates. Executive shall
render such services as are necessary and desirable to protect and advance the
best interests of the Company, acting, in all instances, under the supervision
of and in accordance with the policies set by the Board. Without further
compensation, Executive agrees to serve (if requested to do so) as an officer
and/or director of any Subsidiary. A "Subsidiary" means a corporation in which
more than 50% of the stock having the ordinary power to elect directors is owned
directly or indirectly by the Company.
1.2 PERFORMANCE OF DUTIES. Executive shall devote substantially all his
time and efforts during normal business hours, excluding any periods of vacation
and sick leave, to the performance of his duties as chief executive officer of
the Company. It shall not be a violation of this Agreement during the Term (as
hereinafter defined) for Executive to (i) serve on corporate, civil or
charitable boards or committees, (ii) deliver lectures or fulfill speaking
engagements and (iii) manage his personal investments, so long as such
activities do not interfere with the performance of his duties as chief
executive officer of the Company in accordance with this Agreement. During the
Term and for a two-year period thereafter, Executive shall not (unless his
employment shall have
<PAGE>
<PAGE>
2
terminated for any reason other than Cause) engage in or become employed,
directly or indirectly, in a business which competes with the business of the
Company and its Subsidiaries, nor shall he act as a consultant to or provide any
services to, whether on a remunerative basis or otherwise, the commercial or
professional business of any other person which competes with the business of
the Company and its Subsidiaries, without the written consent of the Board,
which may be given or withheld by the Board in its absolute discretion.
Competition with the business of the Company and its Subsidiaries shall mean
sales of any product or services where the Company's sales of the same or
similar products or services amount to 20% of the Company's total sales.
2. TERM OF EMPLOYMENT
The employment of Executive pursuant to this Agreement shall
commence on the date hereof and end three years thereafter, provided, however
that such employment shall continue for annual periods thereafter unless either
party to this Employment Agreement shall have provided six months written notice
to the other of his or its intention that such employment shall not so continue.
3. COMPENSATION AND BENEFITS
The Company shall pay Executive as compensation for all of the
services to be rendered by him hereunder during the Term, the Basic Salary, the
Bonus and other benefits as provided for and determined pursuant to Sections 4
through 7 of this Agreement.
4. BASIC SALARY/BONUS/STOCK OPTION
4.1 BASIC SALARY. The Company shall pay Executive, as compensation
for all of the services to be rendered by him hereunder an annual salary of
$750,000 (as adjusted by the Board from time to time) (the "Basic Salary"),
payable in substantially equal, semi-monthly payments, less such deductions
or amounts as are required to be deducted or withheld by applicable laws or
regulations, deductions for employee contributions to welfare benefit plans
provided by the Company to Executive and less such other deductions or amounts,
if any, as are authorized by Executive. The Basic
<PAGE>
<PAGE>
3
Salary shall be prorated for the month and year in which employment by the
Company commences or terminates. The Basic Salary shall be reviewed at least
annually by the Organization and Compensation Committee of the Board.
4.2 BONUS. Executive will be awarded and, unless deferred by Executive,
paid an annual cash bonus (the "Bonus") within ninety days after the close of
each fiscal year of the Company during the Term in an amount determined in
accordance with the provision of the Company's Officers' Annual Incentive
Program (the "OAIP") applicable to the Chief Executive Officer; provided,
however, that for the fiscal year ended December 31, 1996, the annual Bonus
shall be prorated to reflect the portion of such fiscal year during which
Executive was employed hereunder.
4.3 LTIP AWARD. Executive will receive pursuant to the terms of the
Company's Long Term Incentive Plan (the "Incentive Plan") a Target Award (as
defined in the Incentive Plan) of 17,800 shares of Common Stock of the Company
for the 1996-1998 performance period. The performance measurement and
corresponding performance target for that period is based on a targeted Return
on Equity (as defined in the Incentive Plan) for that three-year performance
period. The form of such award is set forth as Exhibit A to this Agreement.
4.4 STOCK OPTION GRANT. As of the Grant Date (as hereinafter defined),
Executive shall be awarded a non-qualified option to acquire 800,000 shares of
common stock, par value $5.00 per share, of the Company (the "Option") under the
1995 Stock Option Plan for Executives of Witco Corporation and its Subsidiaries
(the "Stock Option Plan") with an exercise price equal to the fair market value
of such shares of Company Common Stock (as determined pursuant to the Stock
Option Plan) on the trading day immediately prior to the public announcement of
Executive's employment by the Company (the "Grant Date"). The Option will vest
on a basis by which 50% of the shares subject to the Option shall become
exercisable one year from the Grant Date, an additional 25% of the shares shall
become exercisable on the second anniversary of the Grant Date and the remaining
25% shall become exercisable on the third anniversary of the Grant Date. The
Option will be evidenced by the form of Stock Option Agreement set forth as
Exhibit B to this Agreement.
4.5 RESTRICTED STOCK AWARD. As of the Grant Date, Executive shall be
awarded 30,000 shares of Company Common
<PAGE>
<PAGE>
4
Stock subject to the restrictions set forth in Exhibit C hereto (the "Stock
Award").
4.6 MAKE-WHOLE AWARD. As of the Grant Date, Executive shall
receive (i) $500,000 (the "Signing Bonus") and (ii) a possible award of shares
of Company Common Stock subject to the restrictions set forth in Exhibit D
hereto (the "Contingent Stock Award") in an aggregate amount equal to the value
of the stock options, if any, which Executive will forfeit upon leaving his
employment with Albemarle Corporation ("Albemarle"). For purposes of determining
the number of shares of Company Common Stock subject to the Contingent Stock
Award, the shares shall be valued at the exercise price established for the
Option. For purposes of determining the stock option benefits forfeited from
Albemarle, the value shall be based upon the spread between the actual exercise
price of a forfeited Albemarle option and an assumed value of $23.00 per share.
Executive represents that he has endeavored to, and will continue to attempt to,
minimize the stock option benefits so forfeited. Not later than March 31, 1997,
a second installment of the Signing Bonus will be paid to Executive in an amount
equal to $500,000, less the amount received pursuant to the Company's Officers
Annual Incentive Program with respect to 1996 performance.
5. ADDITIONAL BENEFITS AND REIMBURSEMENT FOR EXPENSES
5.1 ADDITIONAL BENEFITS. The Company shall provide the following
additional benefits to Executive during the Term:
(i) participation upon the commencement of employment on an
equitable basis at the level of Chief Executive Officer in any compensation
plans which cover senior executives or employees of the Company, including
without limitation the Incentive Plan, the Stock Option Plan, the 1994 Deferred
Compensation Plan ("Deferred Plan"), the Excess Benefit and Compensation Cap
Plan of Witco Corporation ("Excess Plan") and any other plans which are
hereafter adopted and cover senior executives or employees of the Company.
(ii) full coverage for Executive and his eligible family members
under the Company's medical, dental, hospitalization and medical insurance and
reimbursement plans, participation in the Witco Corporation Retirement Plan (the
"Pension Plan") and the Supplemental Executive
<PAGE>
<PAGE>
5
Retirement Plan of Witco Corporation (the "SERP") and group life insurance
programs covering senior executives of the Company, as they may exist from time
to time.
(iii) six weeks vacation with pay in each calendar year.
(iv) use by Executive of an automobile of his choice in accordance
with Company policy.
(v) immediate participation and coverage in disability plans
provided by the Company for its senior executives.
(vi) the Company will reimburse Executive pursuant to the Company's
relocation plan for his relocation to Connecticut.
(vii) by virtue of this Agreement, the Executive will participate in
the SERP on the terms provided in Section 7 hereof (such plan as so amended
being the "SERP") and the Company shall hereafter maintain the SERP and
Executive shall be a participant therein.
(viii) pay the initiation, any bond and entry or other one time fees
for a country club and a lunch club in New York City, New York of Executive's
choosing.
(ix) pay the reasonable legal fees and expenses of counsel for
Executive for review of this Agreement and representation of Executive in any
dispute arising hereunder.
(x) the continuation of financial planning services by AMG for
Executive.
5.2 BUSINESS LOSS REIMBURSEMENT. In order to assure the ability of the
Executive to devote his undivided attention to his responsibilities hereunder,
Executive agrees that his wife will either (a) contract for the professional
management of Brenda's Interiors & Gifts, Inc. dba, The Golden Swan, or (b)
liquidate and dispose of that business, in either case not later than June 30,
1997. In the event Executive's wife determines to liquidate or dispose of the
business the Company will reimburse Executive and his wife for any loss
attributable thereto; provided, that the Company's reimbursement obligation
hereunder shall not exceed $750,000. Such reimbursement will be made
<PAGE>
<PAGE>
6
promptly following Executive's accounting for any such loss in such reasonable
detail as the Company may require.
5.3 REIMBURSEMENT FOR EXPENSES. The Company shall pay or reimburse
Executive for all reasonable travel, entertainment and other business expenses
actually incurred or paid by him during the Term in the performance of his
services under this Agreement. Such expenses shall be accounted for in such
reasonable detail as the Company may require.
6. TERMINATION OF EMPLOYMENT
6.1 DEATH. If Executive dies during the Term, on the date of his
death this Agreement shall terminate.
6.2 DISABILITY. If, during the Term, Executive is subject to a
Disability (as hereinafter defined), the Company may, at any time thereafter
during the continuation of the Disability, terminate Executive's employment by
Notice of Termination. For purposes hereof the term "Disability" shall mean the
inability of Executive to perform Executive's duties of employment for the
Company pursuant to the terms of this Agreement, because of physical or mental
disability, where such disability shall have existed for a period of more than
120 consecutive days or an aggregate of 180 days in any 365-day period, and if a
long-term disability plan is maintained by the Company, Executive is entitled to
receive long-term disability payments under such plan. The existence of a
Disability means that Executive's mental and/or physical condition substantially
interferes with Executive's performance of his duties for the Company as
specified in this Agreement.
6.3 TERMINATION FOR CAUSE. During the Term the Company may terminate
Executive's employment hereunder for Cause at any time by Notice of Termination.
For purposes hereof the term "Cause" shall mean:
(a) The conviction of Executive for a felony, or the willful
commission by Executive of a criminal act that in the reasonable judgment of the
Board causes or will likely cause substantial economic damage to the Company or
substantial injury to the business reputation of the Company;
(b) The willful commission by Executive of an act of fraud in
the performance of his duties on behalf of the Company or a Subsidiary; or
<PAGE>
<PAGE>
7
(c) The continuing willful failure of Executive to perform his
duties (other than any such failure resulting from Executive's incapacity due to
physical or mental illness) after written notice thereof (specifying the
particulars thereof in reasonable detail) and a reasonable opportunity to be
heard and cure such failure are given to Executive by the Board.
6.4 GOOD REASON TERMINATION OF EMPLOYMENT BY EXECUTIVE. During the
Term, Executive may terminate his employment hereunder at any time for Good
Reason by providing Notice of Termination to the Company. Good Reason
shall mean:
(a) (i) The assignment by the Board to Executive of duties
without Executive's express written consent, which (x) are materially different
than Executive's duties contemplated by Section 1.1 hereof, or (y) result, in
either a significant reduction in Executive's authority and responsibility as
President and Chief Executive Officer of the Company, or (ii) without
Executive's express written consent, the removal of Executive from, or any
failure to reappoint or reelect Executive to the foregoing positions, except in
connection with the termination of Executive's employment by the Company for
Cause, or by reason of Executive's death, Disability or voluntary termination,
or (iii) except for Executive's termination of employment by the Company for
Cause, or by reason of Executive's death, Disability or voluntary termination,
the failure of Executive to be elected or appointed Chairman of the Board of the
Company;
(b) The Company's requiring Executive to be based anywhere other
than the Company's current principal executive offices (unless such headquarters
is relocated with Executive's consent);
(c) Breach by the Company of its obligations under this Agreement
if such breach is not corrected to the reasonable satisfaction of Executive
within thirty days after the Board is notified by Executive of such breach;
(d) A Change of Control shall occur;
(e) Any termination by the Company of Executive's employment
otherwise than as permitted by this Agreement; or
<PAGE>
<PAGE>
8
(f) Any reduction by the Company of the annual basic salary
payable to Executive.
For purposes of this Agreement the term "Change of Control" shall mean:
(A) any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Act"), other than
a trustee or other fiduciary holding securities under an employee benefit plan
of the Company or a Subsidiary, becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Act), directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Company's then
outstanding securities;
(B) 33-1/3% of the Board of Directors consists of individuals
other than the members of the Board of Directors on the Commencement Date (the
"Incumbent Directors"); provided, however, that any person becoming a director
subsequent to the Commencement Date whose election or nomination for election
was approved by at least two-thirds of the directors who at the time of such
election or nomination comprised the Incumbent Directors shall for purposes of
this definition be considered an Incumbent Director;
(C) the shareholders of the Company approve, or if no shareholder
approval is required or obtained, the Company completes a merger, consolidation
or similar transaction of the Company with or into any other corporation, or a
binding share exchange involving the Company's securities occurs, other than any
such transaction which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least a majority of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such transaction; or
(D) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all the Company's assets.
6.5 NOTICE OF TERMINATION. Any purported termination of
employment by the Company by reason of Executive's Disability or for Cause,
or by Executive for
<PAGE>
<PAGE>
9
Good Reason or voluntary termination shall be communicated by a Notice of
Termination to the other party hereto. For purposes of this Agreement, a "Notice
of Termination" shall mean a written notice given by Executive or a person
authorized by the Board on behalf of the Company, as the case may be, which
shall indicate the specific basis for termination and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of any payments under this Agreement. Executive shall not be
entitled to give a Notice of Termination that Executive is terminating his
employment with the Company for Good Reason based upon a Change of Control more
than two years following the occurrence of the event alleged to constitute a
Change of Control.
6.6 PAYMENTS ON TERMINATION.
(a) Termination Benefits. If Executive is
terminated by the Company other than by reason of Executive's death, Disability
or for Cause, or if the Executive terminates his employment for Good Reason,
then the Company shall pay Executive the aggregate of the following amounts
within thirty (30) days after the termination of Executive's employment:
(i) A. the sum of (1) Basic Salary through
the Date of Termination to the extent not theretofore paid, (2) the product of
(x) the Bonus targeted for Executive for the then current fiscal year of the
Company and (y) a fraction, the numerator of which is the number of days in the
then current fiscal year through the Date of Termination, and the denominator of
which is 365 and (3) any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon) and any accrued
vacation pay, in each case to the extent not theretofore paid (the sum of the
amounts described in clauses (1), (2) and (3) being hereinafter referred to as
the "Accrued Obligations"); and
B. the amount equal to the product of
three times the Executive's annual compensation (including amounts paid under
the OAIP and amounts earned under the Incentive Plan (whether or not paid))
based on his five year average total compensation amounts (or such lesser period
as Executive may have been employed hereunder).
(ii) for the remainder of the Term, unless Executive becomes
reemployed with another employer and is eligible to receive medical, disability
and other welfare
<PAGE>
<PAGE>
10
benefits under plans of such employer, the Company shall continue benefits to
Executive and/or Executive's eligible family members at least equal to those
which would have been provided to them in accordance with the plans, programs,
practices and policies described in Section 5.1(ii) and (v) as if the
Executive's employment had not been terminated; for purposes of determining
eligibility of Executive for retiree benefits pursuant to such plans, practices,
programs and policies, Executive shall be considered to have remained employed
until the end of the Term and to have retired on the last day of such period;
(such continuation of such benefits for the applicable period herein set forth
being hereinafter referred to as "Welfare Benefit Continuation");
(b) Death Benefits. If Executive's
employment is terminated by reason of Executive's death during the Term, this
Agreement shall terminate without further obligation to Executive's legal
representatives under this Agreement, other than for payment of Accrued
Obligations (which shall be paid to Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of such death) and the timely
payment or provision of the Welfare Benefit Continuation to Executive's eligible
family members for the remainder of the Term;
(c) Disability Benefits. If Executive's
employment is terminated by reason of the Executive's Disability during the
Term, this Agreement shall terminate without further obligation to Executive,
other than for (i) payment of Accrued Obligations (which shall be paid to
Executive in a lump sum in cash within 30 days of the Date of Termination) and
the timely payment or provision of the Welfare Benefit Continuation to
Executive's eligible family members for the remainder of the Term;
(d) Cause; Other than for Good Reason
Termination. If the Executive's employment shall be terminated for Cause during
the Term, this Agreement shall terminate without further obligation to Executive
other than the obligation to pay to Executive Basic Salary through the Date of
Termination plus the amount of any compensation award by the Company to
Executive previously deferred by Executive, in each case to the extent
theretofore unpaid. If Executive voluntarily terminates his employment during
the Term, excluding a termination for Good Reason, this Agreement shall
terminate on the Date of Termination without further obligations to Executive,
other than for Accrued Obligations, which shall be paid to Executive in a lump
sum in cash within 30 days of the Date of Termination.
<PAGE>
<PAGE>
11
7. SERP PROVISION
The Company has delivered to Executive a full and correct copy of
the SERP and related trust agreement as in effect on the date hereof. The
Executive is hereby designated as a participant under the SERP and,
notwithstanding the provisions of Section 3.1 of the SERP, Executive will be
entitled to 40% of the normal supplemental retirement benefit upon retirement as
an active officer of the Company within three years of his commencement of
employment, 60% of the normal supplemental retirement benefit if such retirement
occurs on or after three years of employment but before completion of five years
and 100% of the normal supplemental retirement benefit if such retirement occurs
on or after five years of employment.
8. MISCELLANEOUS
8.1 SURVIVAL. The provisions of Sections 6, 7 and this Section 8 shall
survive termination of this Agreement and remain enforceable according to their
terms.
8.2 SEVERABILITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions hereof.
8.3 NOTICES. All notices, demands and requests required or permitted to
be given under the provisions of this Agreement shall be deemed duly given if
made in writing and delivered personally or mailed by postage prepaid
<PAGE>
<PAGE>
12
certified or registered mail, return receipt requested, which notices shall be
addressed as follows:
If to the Company:
Witco Corporation
One American Lane
Greenwich, Connecticut 06831-2559
Attention: Chairman of the Organization and
Compensation Committee
with copies to:
Witco Corporation
One American Lane
Greenwich, Connecticut 06831-2559
Attention: General Counsel and Corporate
Secretary
If to Executive:
E. Gary Cook
with copies to:
Charles Landry, Esq.
Jones, Walker, Waechter, Poitevent, Carrere
& Denegre
Four United Plaza
8555 United Plaza Blvd
Baton Rouge, LA 70809
<PAGE>
<PAGE>
13
By notifying the other parties in writing, given as aforesaid, any party
may from time-to-time change its address or the name of any person to whose
attention notice is to be given, or may add another person, to whose attention
notice is to be given, in connection with notice to any party.
8.4 ASSIGNMENT AND SUCCESSORS. Neither this Agreement nor any of his
rights or duties hereunder may be assigned or delegated by Executive. This
Agreement is not assignable by the Company except to any successor in interest
which takes over all or substantially all of the business of the Company, as it
is conducted at the time of such assignment. Any corporation into or with which
the Company is merged or consolidated or which takes over all or substantially
all of the business of the Company shall be deemed to be a successor of the
Company for purposes hereof. This Agreement shall be binding upon and, except as
aforesaid, shall inure to the benefit of the parties and their respective
successors and permitted assigns. The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company, by
written agreement in form and substance satisfactory to Executive, to expressly
assume and agree to perform this Agreement and the SERP in the same manner and
to the same extent that the Company would be required perform it if no such
succession had taken place.
8.5 ENTIRE AGREEMENT, WAIVER AND OTHER.
(A) INTEGRATION. This Agreement, Exhibits thereto and benefits
referred to herein contain the entire agreement of the parties hereto on its
subject matter and supersede all previous agreements between the parties hereto,
written or oral, express or implied, covering the subject matter hereof. No
representations, inducements, promises or agreements, oral or otherwise, not
embodied herein, shall be of any force or effect.
(B) NO WAIVER. No waiver or modification of any of the provisions
of this Agreement shall be valid unless in writing and signed by or on behalf of
the party granting such waiver or modification. No waiver by any party of any
breach or default hereunder shall be deemed a waiver of any repetition of such
breach or default or shall be deemed a waiver of any other breach or default,
nor shall it in any way affect any of the other terms or conditions of this
Agreement or the enforceability thereof. No failure of a
<PAGE>
<PAGE>
14
party hereto to exercise any power given such party hereunder or to insist upon
strict compliance with any obligation hereunder, and no custom or practice at
variance with the terms hereof, shall constitute a waiver of the right of a
party hereto to demand strict compliance with the terms hereof.
Executive shall not have the right to sign any waiver or
modification of any provisions of this Agreement on behalf of the Company, nor
shall any action taken by Executive reduce his obligations under this Agreement.
This Agreement may not be supplemented or rescinded except by
instrument in writing signed by all of the parties. Neither this Agreement nor
any of the rights of any of the parties hereunder may be terminated except as
provided herein.
8.6 GOVERNING LAW. This Agreement shall be governed by and construed,
and the rights and obligations of the parties hereto enforced, in accordance
with the laws of the State of Delaware.
8.7 HEADINGS. The Section and Subsection headings contained herein are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
8.8 TERMINATION PRIOR TO START DATE. The Company may not terminate
this Agreement prior to the commencement of
<PAGE>
<PAGE>
15
employment hereunder except in the event of Executive's death prior thereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
WITCO CORPORATION
By: /s/ William R. Grant
-------------------------------
William R. Grant
Member of Board of
Directors and Chairman,
Organization and
Compensation Committee
/s/ E. GARY GOOK
-------------------------------
E. GARY COOK
<PAGE>
<PAGE>
EXHIBIT 11
WITCO CORPORATION AND SUBSIDIARY COMPANIES
COMPUTATION OF PER SHARE EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- -----------------
1996 1995 1996 1995
---- ---- ---- ----
(In Thousands Except Per Share Data)
<S> <C> <C> <C> <C>
PRIMARY
Income from Continuing Operations $ 11,928 $ 19,444 $ 56,028 $ 118,735
Dividend requirements of preferred stock (4) (5) (13) (14)
--------- --------- --------- ---------
Total 11,924 19,439 56,015 118,721
Income (Loss) from Discontinued Operations -- 4,466 (67,913) 6,304
--------- --------- --------- ---------
Net Income (Loss) $ 11,924 $ 23,905 $ (11,898) $ 125,025
--------- --------- --------- ---------
--------- --------- --------- ---------
Weighted average shares outstanding 56,661 56,401 56,576 56,271
Assumed conversions:
Stock options 206 460 343 271
--------- --------- --------- ---------
Total 56,867 56,861 56,919 56,542
--------- --------- --------- ---------
--------- --------- --------- ---------
Per share amounts:
Income from Continuing Operations $ .21 $ .34 $ .98 $ 2.10
Income (Loss) from Discontinued Operations -- .08 (1.19) .11
--------- --------- --------- ---------
Net Income (Loss) $ .21 $ .42 $ (.21) $ 2.21
--------- --------- --------- ---------
--------- --------- --------- ---------
FULLY DILUTED
Income from Continuing Operations $ 11,928 $ 19,444 $ 56,028 $ 118,735
Income (Loss) from Discontinued Operations -- 4,466 (67,913) 6,304
--------- --------- --------- ---------
Net Income (Loss) $ 11,928 $ 23,910 $ (11,885) $ 125,039
--------- --------- --------- ---------
--------- --------- --------- ---------
Weighted average shares outstanding 56,661 56,401 56,576 56,271
Assumed conversions:
Stock options 354 554 370 611
Preferred stock 112 116 114 118
--------- --------- --------- ---------
Total 57,127 57,071 57,060 57,000
--------- --------- --------- ---------
--------- --------- --------- ---------
Per share amounts:
Income from Continuing Operations $ .21 $ .34 $ .98 $ 2.08
Income (Loss) from Discontinued Operations -- .08 (1.19) .11
--------- --------- --------- ---------
Net Income (Loss) $ .21 $ .42 $ (.21) $ 2.19
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
<PAGE>
<PAGE>
EXHIBIT 15
LETTER RE: UNAUDITED FINANCIAL INFORMATION
ACKNOWLEDGMENT LETTER
November 11, 1996
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
Registration Statement (Form S-3, No. 33-65203), pertaining to the issuance of
notes and debentures, 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, the Registration Statement (Form
S-8, No. 33-48806), pertaining to an employee benefit plan of Witco Corporation,
the Registration Statement (Form S-8, No. 33-60755), pertaining to the 1995
Stock Option Plan for Employees of Witco Corporation and its Subsidiaries, and
the Post-effective Amendment No. 1 to the Registration Statement (Form S-8, No.
333-05509), pertaining to the 1995 Stock Option Plan for Employees of Witco
Corporation and its Subsidiaries, of our report dated November 11, 1996 relating
to the unaudited condensed consolidated interim financial statements of Witco
Corporation and Subsidiary Companies which is included in its Form 10-Q for the
quarter ended September 30, 1996.
Pursuant to Rule 436(c) of the Securities Act of 1933, 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.
/s/ ERNST & YOUNG LLP
Stamford, Connecticut
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 132,092
<SECURITIES> 0
<RECEIVABLES> 419,462
<ALLOWANCES> 10,174
<INVENTORY> 332,246
<CURRENT-ASSETS> 945,055
<PP&E> 1,468,611
<DEPRECIATION> 652,892
<TOTAL-ASSETS> 2,745,505
<CURRENT-LIABILITIES> 725,843
<BONDS> 694,154
<COMMON> 283,521
0
7
<OTHER-SE> 662,805
<TOTAL-LIABILITY-AND-EQUITY> 2,745,505
<SALES> 1,722,932
<TOTAL-REVENUES> 1,722,932
<CGS> 1,320,977
<TOTAL-COSTS> 1,320,977
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,312
<INTEREST-EXPENSE> 53,247
<INCOME-PRETAX> 97,659
<INCOME-TAX> 41,631
<INCOME-CONTINUING> 56,028
<DISCONTINUED> (67,913)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (11,885)
<EPS-PRIMARY> (.21)
<EPS-DILUTED> (.21)
<PAGE>
