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 June 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 July 31, 1996
----- ----------------------------
Common Stock - $5 par value 56,649,410
<PAGE>
WITCO CORPORATION
FORM 10-Q
For the quarterly period ended June 30, 1996
CONTENTS PAGE
-------- ----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed consolidated balance sheets at June 30, 1996
(unaudited) and December 31, 1995 2
Condensed consolidated statements of operations
(unaudited) for the three and six months ended June 30,
1996 and 1995 3
Condensed consolidated statements of cash flows
(unaudited) for the six months ended June 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 4. Submission of Matters to a Vote of Security Holders 15
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 17
Index of Exhibits 18
<PAGE>
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>
June 30, December 31,
1996 1995 (a)
------------------------ ------------------------
(Unaudited)
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 119,652 $ 143,994
Accounts and notes receivable-net 425,460 406,486
Inventories
Raw materials and supplies $115,195 $115,231
Finished goods 209,337 324,532 207,667 322,898
-------- --------
Prepaid and other current assets 70,007 70,667
---------- ----------
TOTAL CURRENT ASSETS 939,651 944,045
---------- ----------
PROPERTY, PLANT, AND EQUIPMENT -
less accumulated depreciation
of $634,349 and $586,595 797,898 811,667
GOODWILL AND OTHER INTANGIBLE ASSETS -
less accumulated amortization of $78,313
and $62,450 715,612 728,124
OTHER ASSETS 125,560 118,182
NET ASSETS OF DISCONTINUED OPERATIONS 171,293 170,426
---------- ----------
TOTAL ASSETS $2,750,014 $2,772,444
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes and loans payable $ 308,857 $ 309,171
Accounts payable and other current liabilities 439,644 385,294
---------- ----------
TOTAL CURRENT LIABILITIES 748,501 694,465
---------- ----------
LONG-TERM DEBT 678,907 683,830
DEFERRED INCOME TAXES 61,860 87,532
DEFERRED CREDITS AND OTHER LIABILITIES 311,374 302,500
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 -
56,649 shares and 56,435 shares 283,247 282,173
Capital in excess of par value 135,934 131,076
Equity adjustments:
Foreign currency translation 13,029 17,222
Pensions (5,884) (4,898)
Retained earnings 523,039 578,537
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 949,372 1,004,117
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,750,014 $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
<PAGE>
WITCO CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
(In thousands except per share data)
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Sales $ 571,458 $ 489,231 $ 1,160,883 $ 1,007,183
Cost of Goods Sold 434,680 390,634 883,025 795,847
----------- ----------- ----------- -----------
Gross Profit 136,778 98,597 277,858 211,336
Operating Expenses
Selling expense 28,588 18,898 55,707 38,836
General and administrative expenses 36,480 27,712 71,907 58,151
Research and development 18,037 12,633 36,026 25,076
Other expenses (income) - net 5,507 (79,477) 6,788 (84,323)
----------- ----------- ----------- -----------
Total Operating Expenses 88,612 (20,234) 170,428 37,740
----------- ----------- ----------- -----------
Operating Income from Continuing Operations 48,166 118,831 107,430 173,596
Other Expense (Income) - Net
Interest expense 17,724 8,294 35,393 16,744
Interest income (2,403) (3,208) (4,871) (6,130)
Other expense - net 901 671 1,874 1,877
----------- ----------- ----------- -----------
Income from Continuing Operations before
Income Taxes 31,944 113,074 75,034 161,105
Income Taxes 13,425 44,053 30,934 61,814
----------- ----------- ----------- -----------
Income from Continuing Operations 18,519 69,021 44,100 99,291
Discontinued Operations:
Income from Discontinued Operations -
Net of Income Taxes of $ -,
$1,412, $283, and $1,298 -- 2,333 340 1,838
Estimated Loss on Disposal - Net of Income Tax Benefit
of $43,612 (68,253) -- (68,253) --
----------- ----------- ----------- -----------
Income (Loss) from Discontinued Operations (68,253) 2,333 (67,913) 1,838
----------- ----------- ----------- -----------
Net Income (Loss) $ (49,734) $ 71,354 $ (23,813) $ 101,129
=========== =========== =========== ===========
PER COMMON SHARE: PRIMARY
Income from continuing operations $ .33 $ 1.22 $ .77 $ 1.76
Discontinued operations:
Income from discontinued
operations - net of income taxes -- .04 .01 .03
Estimated loss on disposal - net of
income tax benefit (1.20) -- (1.20) --
----------- ----------- ----------- -----------
Net Income (Loss) $ (.87) $ 1.26 $ (.42) $ 1.79
=========== =========== =========== ===========
PER COMMON SHARE: FULLY DILUTED
Income from continuing operations $ .32 $ 1.22 $ .77 $ 1.76
Discontinued operations:
Income from discontinued
operations - net of income taxes -- .04 -- .03
Estimated loss on disposal - net of
income tax benefit (1.19) -- (1.19) --
----------- ----------- ----------- -----------
Net Income (Loss) $ (.87) $ 1.26 $ (.42) $ 1.79
=========== =========== =========== ===========
Weighted average number of common shares
and equivalents - primary 56,990 56,460 56,943 56,410
=========== =========== =========== ===========
Dividends declared $ .28 $ .28 $ .56 $ .56
=========== =========== =========== ===========
</TABLE>
See accompanying notes.
3
<PAGE>
WITCO CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------
1996 1995
--------- ---------
(In Thousands)
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 74,485 $ 25,329
--------- ---------
INVESTING ACTIVITIES
Expenditures for property, plant, and equipment (77,910) (49,070)
Proceeds from dispositions 13,650 146,026
Other investing activities (2,521) (1,824)
--------- ---------
Net Cash Provided by (Used in) Investing Activities (66,781) 95,132
--------- ---------
FINANCING ACTIVITIES
Proceeds from borrowings 303,831 3
Payments on borrowings (306,698) (703)
Dividends paid (31,643) (31,459)
Other financing activities 5,014 3,653
--------- ---------
Net Cash Used in Financing Activities (29,496) (28,506)
--------- ---------
Effects of Exchange Rate Changes on Cash and Cash Equivalents (2,550) 10,890
--------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (24,342) 102,845
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 143,994 197,173
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 119,652 $ 300,018
========= =========
</TABLE>
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 three and six month
periods ended June 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 June 30, 1996, and for the
three and six month periods ended June 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:
o 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.
o Research and development, previously included in cost of goods sold, is now
classified separately.
o 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 six month
periods ended June 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 six month periods ended June 30, 1996 and 1995 were
$92,036,000 and $179,215,000, and $97,444,000 and $181,943,000 respectively.
The results of these operations were impacted in the second quarter and the six
months ended June 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 recent events and information which resulted in
management's current estimate of the net realizable value of the Lubricants
Group. This latest 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. The divestiture of the Lubricants
Group is expected to be completed by year-end.
5
<PAGE>
NOTE C - Discontinued Operations (continued)
A summary of net assets of discontinued operations for the periods ended June
30, 1996 and December 31, 1995 are as follows:
<TABLE>
<CAPTION>
June 30, December 31,
In Thousands 1996 1995
- ------------ --------- ---------
<S> <C> <C>
Accounts and notes receivable - net $ 58,339 $ 61,633
Inventories - net of LIFO reserve of $32,188 and $27,823 43,652 38,378
Property, plant, and equipment - net 67,870 112,639
Accounts payable and other current liabilities (3,065) (39,603)
Other assets and liabilities - net 4,497 (2,621)
--------- ---------
Net assets of discontinued operations $ 171,293 $ 170,426
========= =========
</TABLE>
Additional liabilities of the Lubricants Group are included in "Accounts payable
and other current liabilities" ($66,853,000) and "Deferred credits and other
liabilities" ($48,426,000) as of June 30, l996.
On August 1, 1996, the company entered into an agreement to sell certain assets
of the Kendall/Amalie unit of the Lubricants Group. The terms of the agreement
are consistent with the company's amended plan of disposal.
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 under the credit agreement, as amended, was reduced
to $375 million of which $305 million was utilized at June 30, 1996.
The statements of operations for the three and six month periods ended June 30,
1995 include 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 six month periods ended June 30,
1995 include a gain of $23,032,000, or $.40 per common share, as a result of
settlements with certain of the company's insurers, net of related legal and
other costs. The pre-tax gain of $37,696,000 is included in the caption
"Operating Expenses - Other expenses (income) - net".
The statement of operations for the six month period ended June 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 42% and 41.2% for the three and six month periods
ended June 30, 1996, as compared to the statutory tax rate of 35%, are primarily
the result of state income taxes and goodwill amortization related to OSi
Specialties, Inc., which is not deductible for income tax purposes. The
effective tax rates of 39% and 38.4% for the three and six month periods ended
June 30, l995, as compared to the statutory tax rate of 35%, are primarily the
result of state income taxes.
NOTE F - Litigation and Environmental
The company has been notified that it 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 June 30, 1996, the company was a PRP, or a
defendant, in connection with 67 sites at which it is likely to incur costs
associated with environmental investigation or remedial
6
<PAGE>
NOTE F - Litigation and Environmental (continued)
actions which have been or will be executed 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 21 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 June 30, 1996, the company's reserves for environmental remediation and
compliance costs (including $66,635,000 of both current and long-term
environmental liabilities from the Lubricants Group) amounted to $145,286,000,
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 a defendant in an action filed on May 15, 1992 in New Jersey
state court styled Gordon et al. v. Witco Corporation, Superior Court of New
Jersey Law Division - Morris County Docket No. MRS-L-2165-92 in which nine
former employees of the company sought compensatory and punitive damages on the
basis their termination of employment by the company violated the New Jersey age
discrimination statute and caused loss of income and emotional harm. Prior to
the trial of the action the company settled the claims of five of the
plaintiffs. Following trial and while the jury deliberated, the company settled
the claims of two of the remaining plaintiffs, but the jury was not informed of
the settlements. On March 6, 1996, the jury in the action awarded a verdict of
compensatory and punitive damages in favor of three plaintiffs (two of whom had
settled and were limited to the settlement amounts) and a verdict in favor of
the company and against the fourth plaintiff. On May 29, 1996, judgment was
entered in favor of the non-settling plaintiff in the amount of $2,252,265.50,
together with post-judgment interest. The company has filed an appeal which is
presently pending in the Superior Court of New Jersey, Appellate Division,
challenging the verdicts and various decisions by the trial court and asking for
judgment notwithstanding the verdict or a new trial. The one successful
plaintiff has filed an appeal for further damages and attorney's fees. The
unsuccessful plaintiff has also filed an appeal seeking a new trial on all
issues. The parties have consented to a stay of the judgment pending the outcome
of the appeal process and the company has posted a bond for the judgment.
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
<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, 1996, and the related
condensed consolidated statements of operations for the three-month and
six-month periods ended June 30, 1996 and 1995, and the condensed consolidated
statements of cash flows for the six-month periods ended June 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.
ERNST & YOUNG LLP
Stamford, Connecticut
August 13, 1996
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND FINANCIAL RESOURCES
Cash and cash equivalents decreased $24.3 million during the first six months of
1996 primarily from an increase in accounts receivable and increased capital
spending. The OSi Specialties, Inc. ("OSi Specialties") business acquired in the
fourth quarter of 1995 is the primary reason for the company's 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 under the credit agreement, as amended, was reduced
to $375 million. The company plans to repay the remaining $305 million with
available proceeds from the divestiture of the Lubricants Group, cash flow from
operations or additional long-term financing. The company anticipates net
proceeds from the divestiture of the Lubricants Group, after taxes, will
approximate $140 million during 1996. The company anticipates that net cash
after taxes of approximately $50 million will be spent in future years to
satisfy obligations, including environmental liabilities, that will remain with
the company related to the divestiture of the Lubricants Group. The result of
the Lubricants Group divestiture, which is expected to be completed by year-end,
is an anticipated favorable net cash impact after taxes of approximately $90
million.
CAPITAL INVESTMENTS AND COMMITMENTS
Capital expenditures for the first six months of 1996 amounted to $77.9 million,
as compared to $49.1 million during the same period of 1995. Capital
expenditures related to continuing operations as of June 30, l996 and 1995 were
$70.8 million and $40.1 million, respectively. The company expects that capital
expenditures for the year ending December 31, 1996 related to continuing
operations will be in the range of $150 million to $170 million.
CONTINGENCIES
The company has been notified that it 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.
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
<PAGE>
RESULTS FROM CONTINUING OPERATIONS
The company reported income from continuing operations of $18.5 million for the
second quarter of 1996 and $44.1 million for the six months ended June 30, 1996,
compared to $69.0 million and $99.3 million for the corresponding quarter and
six months ended June 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 June 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 $ 31.9 $ 18.5 $ .33 $ 30.9 $ 18.9 $ .34
Insurance settlements -- -- -- 37.7 23.0 .40
Gain on disposition of
operations of a subsidiary -- -- -- 44.5 27.1 .48
- ------------------------------------------------ ------ ------ ------ ------ ------ ------
Continuing operations $ 31.9 $ 18.5 $ .33 $113.1 $ 69.0 $ 1.22
- ------------------------------------------------ ------ ------ ------ ------ ------ ------
<CAPTION>
(Unaudited - millions of dollars Six Months Ended June 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 $ 75.0 $ 44.1 $ .77 $ 69.4 $ 43.3 $ .77
Insurance settlements -- -- -- 37.7 23.0 .40
Gain on disposition of
operations of subsidiaries -- -- -- 54.0 33.0 .59
- ------------------------------------------------ ------ ------ ------ ------ ------ ------
Continuing operations $ 75.0 $ 44.1 $ .77 $161.1 $ 99.3 $ 1.76
- ------------------------------------------------ ------ ------ ------ ------ ------ ------
</TABLE>
Second quarter 1996 net sales from continuing operations of $571.5 million were
17 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 1995 divestiture of the Diversified Products
Segment and 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 dispositions, rose approximately $4 million. While volume
remained flat, higher sales prices and a favorable product sales mix offset the
effect of unfavorable foreign currency translations, causing sales to rise.
Income from continuing operations for the second quarter of 1996 was $18.5
million, compared to $18.9 million, excluding non-recurring items, for the same
period of 1995. The $0.4 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 3 percent rise in the effective tax rate
primarily due to the non-deductible amortization of goodwill arising from the
OSi Specialties acquisition. This offsets a 0.9 percent increase in the
operating income margin, mainly attributable to the improved operating results
reported by the company's Chemical Segment. The effect of adding OSi
Specialties' higher margin business to the 1996 results was offset by the
absence of the Carbon Black business included in the Diversified Products
Segment which reported high margins in 1995.
10
<PAGE>
Sales of $1.2 billion for the six months ended June 30, 1996 were 15 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 1995 and 1996. Excluding sales attributable to the businesses
either sold or acquired in 1995 and 1996, current year sales declined
approximately $3 million compared to 1995. The adverse effect of foreign
currency translations of $14.1 million was partially offset by higher sales
prices and a favorable product sales mix.
Income from continuing operations was $44.1 million for the first six months of
1996, compared to $43.3 million, excluding non-recurring items, for the same
period in 1995. This increase was attributable to a 1.2 percent improvement in
the operating income margin which was partially offset by increases in interest
expense and the effective tax rate, for reasons noted in the quarter comparison.
The acquisition of OSi Specialties added 1.4 percent to the current year
operating income margin, while the disposition of the Diversified Products
businesses had a 0.8 percent adverse effect. The balance of the margin
improvement was a result of a reduction in other operating costs which was
mainly attributable to miscellaneous income items in the first quarter.
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. Accordingly, operating results will not be affected by
the adoption.
SEGMENT INFORMATION
Segment net sales and operating income for the second quarter and first six
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 June 30, Six Months Ended June 30,
(Unaudited - millions of dollars) 1996 1995 1996 1995
- ---------------------------------------------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales
Chemical $ 362.7 $ 371.1 $ 740.4 $ 753.2
OSi Specialties 113.4 -- 226.3 --
Petroleum 96.1 93.9 195.3 197.6
Diversified products -- 25.7 -- 61.4
Intersegment elimination (.7) (1.5) (1.1) (5.0)
- ---------------------------------------------------------- -------- -------- -------- --------
Net sales $ 571.5 $ 489.2 $1,160.9 $1,007.2
- ---------------------------------------------------------- -------- -------- -------- --------
Operating income from continuing operations:
Chemical $ 32.0 $ 28.0 $ 68.5 $ 61.9
OSi Specialties 16.1 -- 33.8 --
Petroleum 6.1 7.1 12.7 15.2
Diversified products -- 50.4 -- 66.0
Corporate and unallocated (6.0) 33.3 (7.6) 30.5
- ---------------------------------------------------------- -------- -------- -------- --------
Operating income from continuing
operations $ 48.2 $ 118.8 $ 107.4 $ 173.6
- ---------------------------------------------------------- -------- -------- -------- --------
</TABLE>
11
<PAGE>
CHEMICAL SEGMENT
The Chemical Segment's second quarter 1996 sales of $362.7 million were 2
percent lower than the corresponding quarter of 1995. The sale of the company's
60 percent interest in Witco Ltd., located in Haifa, Israel, accounted for the
segment's lower sales. Excluding Witco Ltd., the effect of higher sales prices
and a favorable product sales mix was offset by unfavorable foreign currency
translations and a 2 percent decline in shipment volume.
The Chemical Segment's second quarter operating income increased 14 percent to
$32 million compared to the second quarter of 1995. This increase in earnings
was primarily attributable to an improved gross profit margin resulting from
higher sales prices and lower manufacturing costs, achieved primarily through
productivity improvement initiatives. The segment's Oleo/Surfactants and Polymer
Additives Groups both reported higher operating earnings. The Oleo/Surfactants
Group benefited from a favorable product sales mix, higher sales prices and
increased agricultural surfactants shipments resulting from an extended planting
season and greater market penetration. An upturn in the construction industry
and the ability to recover a portion of past feedstock price increases through
higher sales prices resulted in improved earnings for the segment's Polymer
Additives Group. Second quarter Resins Group earnings were lower than those
reported for the prior year. The group was adversely affected by a weakness in
the polyester foam industry, the lowering of sales prices to meet competitive
pressures and start up costs attributable to the group's Singapore facility.
Sales of $740.4 million reported by the Chemical Segment for the six months
ended June 30, 1996 were 2 percent lower than the corresponding period of 1995.
Approximately 50 percent of the decline in sales was attributable to the sale of
Witco Ltd. The balance of the decrease was due to a 2 percent decline in volume
and unfavorable foreign currency translations, partially offset by higher sales
prices and favorable product mix.
The Chemical Segment's operating income of $68.5 million for the first six
months of 1996 was 11 percent greater than the income reported for the same
period in 1995. The segment continues to benefit from stable feedstock prices
and cost savings initiatives, while sales prices remain ahead of 1995.
Consistent with the second quarter comparison, current year operating earnings
for the Oleo/Surfactants and Polymer Additives Groups were ahead of the prior
year. An increase in the global demand for agricultural surfactants and laundry
products, along with greater shipments from the group's European operations,
added 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 successful cost savings measures which
offset higher expenses attributable to the current year's severe winter weather.
The Polymer Additives Group's domestic operations reported higher earnings,
while its international earnings were flat compared to 1995. Cost reductions
achieved through productivity improvement initiatives was the predominant factor
leading to the group's improved performance. Lower operating earnings reported
by the segment's Resins Group were attributable to market induced sales price
reductions, reduced European product demand, and increased costs associated with
the current year's severe winter in the United States and Europe.
OSi SPECIALTIES SEGMENT
OSi Specialties, acquired during the fourth quarter of 1995, added $113.4
million and $226.3 million, respectively, to Witco's reported net sales for the
second quarter and six months ended June 30, 1996. Although not included in
Witco's 1995 results, the segment's net sales for both the second quarter and
six months ended June 30, 1996 were 2 percent lower than in 1995. OSi
Specialties contributed $16.1 million and $33.8 million, inclusive of
acquisition related amortization, respectively, to the company's second quarter
and six months reported 1996 operating income. Current year earnings for the
quarter and six months ended June 30, l996 were 2 percent and 12 percent
greater, respectively, than the prior year's earnings, on a pro forma basis, due
to a favorable product sales mix, higher sales prices, manufacturing
efficiencies and a reduced dependence on purchased intermediate feedstocks.
12
<PAGE>
PETROLEUM SEGMENT
Second quarter 1996 Petroleum Segment sales of $96.1 million were 2 percent
ahead of the corresponding period of 1995. An increase in shipment volume of
approximately 7 percent more than offset the impact of an unfavorable product
mix and foreign currency translations.
Second quarter Petroleum Segment operating income of $6.1 million continued to
lag behind prior year reported earnings. The $1.0 million decline was primarily
a result of additional costs attributable to the under-utilization of
manufacturing capacity that recently became available through plant expansions.
The resulting excess capacity was due to lower than expected product demand.
The Petroleum Segment's sales of $195.3 million for the first six months of 1996
were 1 percent lower than the sales reported for the same period of 1995.
Although volume rose 3 percent compared to 1995, lower sales prices and
unfavorable foreign currency translations resulted in a decline in sales.
Petroleum Segment operating income for the six months ended June 30, 1996 of
$12.7 million declined $2.5 million compared to the corresponding period of
1995. The inability to recover costs associated with recently 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 sales product mix, caused operating income to decline.
DIVERSIFIED PRODUCTS SEGMENT
The final phase of the Diversified Products Segment's divestiture program was
completed during the second quarter of 1995. This segment's operating income for
the second quarter and six months ended June 30, 1995 included pre-tax gains of
$44.5 million and $54.0 million, respectively, from the sale of the segment's
businesses.
CORPORATE AND UNALLOCATED
Corporate and unallocated for both the second quarter and six months ended June
30, 1995 included $37.7 million of 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 second quarter 1996 earnings and does not
anticipate business conditions or earnings realized in the first six months of
1996 improving in the second half of the year. In an effort to place a greater
emphasis on the Specialty Chemicals segment of its business, the company will
continue with the divestiture of its non-core Lubricants Group during the latter
half of 1996. Consistent with this plan, on August 5, 1996, the company
announced that it had entered into a purchase agreement with Sun Company, Inc.,
pursuant to which Sun Company, Inc. will purchase certain assets of the
Kendall/Amalie unit of the company's Lubricants Group. The sale is expected to
close in late 1996. The acquisition will include customer lists, trademarks,
blending and packaging facilities and distribution centers; however, three
locations will not be included in the sale. Discussions are currently underway
with prospective purchasers for the remaining units of the Lubricants Group.
While continuing its asset consolidation initiatives, the company plans to focus
efforts on lowering manufacturing costs and building market strength in an
effort to increase sales and earnings in 1997 and beyond.
13
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
The company has been notified that it 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 June 30, 1996, the company was a PRP, or a defendant,
in connection with 67 sites at which it is likely to incur costs associated with
environmental investigation or remedial actions which have been or will be
executed 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 21 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.
The company is a defendant in an action filed on May 15, 1992 in New Jersey
state court styled Gordon et al. v. Witco Corporation, Superior Court of New
Jersey Law Division - Morris County Docket No. MRS-L-2165-92 in which nine
former employees of the company sought compensatory and punitive damages on the
basis their termination of employment by the company violated the New Jersey age
discrimination statute and caused loss of income and emotional harm. Prior to
the trial of the action the company settled the claims of five of the
plaintiffs. Following trial and while the jury deliberated, the company settled
the claims of two of the remaining plaintiffs, but the jury was not informed of
the settlements. On March 6, 1996, the jury in the action awarded a verdict of
compensatory and punitive damages in favor of three plaintiffs (two of whom had
settled and were limited to the settlement amounts) and a verdict in favor of
the company and against the fourth plaintiff. On May 29, 1996, judgment was
entered in favor of the non-settling plaintiff in the amount of $2,252,265.50
together with post-judgment interest. The company has filed an appeal which is
presently pending in the Superior Court of New Jersey, Appellate Division,
challenging the verdicts and various decisions by the trial court and asking for
judgment notwithstanding the verdict or a new trial. The one successful
plaintiff has filed an appeal for further damages and attorney's fees. The
unsuccessful plaintiff has also filed an appeal seeking a new trial on all
issues. The parties have consented to a stay of the judgment pending the outcome
of the appeal process and the company has posted a bond for the judgment.
14
<PAGE>
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 Clean Water Act. In this action, the United States alleges 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 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.
ITEM 4. Submission of Matters to a Vote of Security Holders
(a) The company's Annual Meeting of Shareholders was held on April 24, 1996, at
the offices of the company, One American Lane, Greenwich, Connecticut.
(b) At the Annual Meeting, the company's shareholders elected three directors,
each to serve a term expiring in 1999, as follows:
Votes
---------------------------------
For Withheld
---------- --------
Harry G. Hohn 50,423,618 872,667
Dan J. Samuel 50,359,653 936,632
Bruce F. Wesson 50,450,115 846,170
Directors who did not stand for election and whose terms expire in 1997
are: Simeon Brinberg, William R. Grant, Richard M. Hayden, and William R.
Toller. Directors who did not stand for election and whose terms expire in
1998 are: William G. Burns, William E. Mahoney, L. John Polite, Jr., and
William Wishnick. (Director William E. Mahoney retired as an officer and
director of the company in June 1996.)
(c) In addition to the election of directors, at the Annual Meeting the
company's shareholders:
(i) Approved the adoption of the Witco Corporation Long Term Incentive
Plan.
Votes
------------------------------------------------------------
For Against Abstain
---------- --------- -------
44,775,728 6,352,715 167,842
(ii) Approved the amendment of the 1995 Stock Option Plan for Employees of
Witco Corporation and its Subsidiaries.
Votes
------------------------------------------------------------
For Against Abstain
---------- --------- -------
43,198,164 7,916,533 181,288
(iii)Ratified the appointment of Ernst & Young LLP as the company's
independent auditors for 1996.
Votes
------------------------------------------------------------
For Against Abstain
---------- --------- -------
50,774,062 463,388 58,835
(iv) Defeated a shareholder proposal requesting diversity on the Board of
Directors.
Votes
------------------------------------------------------------
Against For Abstain
---------- --------- -------
40,346,495 7,719,426 882,062
15
<PAGE>
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
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
The company filed two Current Reports on Form 8-K, the first,
dated June 12, 1996 and filed with the Securities and Exchange
Commission on June 17, 1996, pertained to a change in management,
with the company's Board of Directors naming Dr. E. Gary Cook
Chairman, Chief Executive Officer and President of the company
succeeding William R. Toller, the company's Chairman and Chief
Executive Officer, who retired. Mr. Toller was named Honorary
Chairman and will remain as a director. William E. Mahoney, the
company's Vice Chairman and Chief Operating Officer, also
retired. The second Current Report on Form 8-K, dated June 21,
1996 and filed with the Securities and Exchange Commission on
that date, pertained to the company revising the format of its
statements of income, thereby reclassifying the consolidated
statements of income and continuing operations by industry
segment for the quarters ended March 31, 1995, June 30, 1995,
September 30, 1995 and December 31, 1995, respectively, and for
the year ended December 31, 1995.
16
<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: August 14, 1996 -------------------------------------
Peter J. Biancotti
Controller - Chief Accounting Officer
/s/ Dustan E. McCoy
Date: August 14, 1996 -------------------------------------
Dustan E. McCoy
Vice President, General Counsel and
Corporate Secretary
17
<PAGE>
WITCO CORPORATION
INDEX TO EXHIBITS
Exhibit No. Description Page No.
----------- ----------- --------
11 Statement re computation of per share earnings 19
15 Letter re unaudited interim financial information 20
27 Financial Data Schedule 21
18
EXHIBIT 11
WITCO CORPORATION AND SUBSIDIARY COMPANIES
COMPUTATION OF PER SHARE EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
1996 1995 1996 1995
--------- --------- --------- ---------
(In Thousands Except Per Share Data)
<S> <C> <C> <C> <C>
PRIMARY
Income from Continuing Operations $ 18,519 $ 69,021 $ 44,100 $ 99,291
Dividend requirements of preferred stock (4) (4) (9) (9)
--------- --------- --------- ---------
Total 18,515 69,017 44,091 99,282
Income (Loss) from Discontinued Operations (68,253) 2,333 (67,913) 1,838
--------- --------- --------- ---------
Net Income (Loss) $ (49,738) $ 71,350 $ (23,822) $ 101,120
========= ========= ========= =========
Weighted average shares outstanding 56,585 56,248 56,534 56,205
Assumed conversions:
Stock options 405 212 409 205
--------- --------- --------- ---------
Total 56,990 56,460 56,943 56,410
========= ========= ========= =========
Per share amounts:
Income from Continuing Operations $ .33 $ 1.22 $ .77 $ 1.76
Income (Loss) from Discontinued Operations (1.20) .04 (1.19) .03
--------- --------- --------- ---------
Net Income (Loss) $ (.87) $ 1.26 $ (.42) $ 1.79
========= ========= ========= =========
FULLY DILUTED
Income from Continuing Operations $ 18,519 $ 69,021 $ 44,100 $ 99,291
Income (Loss) from Discontinued Operations (68,253) 2,333 (67,913) 1,838
--------- --------- --------- ---------
Net Income (Loss) $ (49,734) $ 71,354 $ (23,813) $ 101,129
========= ========= ========= =========
Weighted average shares outstanding 56,585 56,248 56,534 56,205
Assumed conversions:
Stock options 462 295 475 315
Preferred stock 114 116 115 119
--------- --------- --------- ---------
Total 57,161 56,659 57,124 56,639
========= ========= ========= =========
Per share amounts:
Income from Continuing Operations $ .32 $ 1.22 $ .77 $ 1.76
Income (Loss) from Discontinued Operations (1.19) .04 (1.19) .03
--------- --------- --------- ---------
Net Income (Loss) $ (.87) $ 1.26 $ (.42) $ 1.79
========= ========= ========= =========
</TABLE>
19
EXHIBIT 15
LETTER RE: UNAUDITED FINANCIAL INFORMATION
ACKNOWLEDGMENT LETTER
August 13, 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 August 13, 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 June 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.
ERNST & YOUNG LLP
Stamford, Connecticut
20
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 119,652
<SECURITIES> 0
<RECEIVABLES> 435,269
<ALLOWANCES> 9,809
<INVENTORY> 324,532
<CURRENT-ASSETS> 939,651
<PP&E> 1,432,247
<DEPRECIATION> 634,349
<TOTAL-ASSETS> 2,750,014
<CURRENT-LIABILITIES> 748,501
<BONDS> 678,907
0
7
<COMMON> 283,247
<OTHER-SE> 666,118
<TOTAL-LIABILITY-AND-EQUITY> 2,750,014
<SALES> 1,160,883
<TOTAL-REVENUES> 1,160,883
<CGS> 883,025
<TOTAL-COSTS> 883,025
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 3,351
<INTEREST-EXPENSE> 35,393
<INCOME-PRETAX> 75,034
<INCOME-TAX> 30,934
<INCOME-CONTINUING> 44,100
<DISCONTINUED> (67,913)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (23,813)
<EPS-PRIMARY> (.42)
<EPS-DILUTED> (.42)
</TABLE>
