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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): August 2, 1999
WITCO CORPORATION
(Exact name of registrant as specified in its charter)
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Delaware 001-4654 13-187000
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification Number)
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One American Lane
Greenwich, Connecticut
06831-2559
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (203) 552-2000
N/A
(Former name or former address, if changed since last report)
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<PAGE>
ITEM 5. OTHER EVENTS
Witco Corporation, a Delaware corporation, issued a press release on
August 2, 1999, announcing results for the six months ended June 30, 1999. A
copy of this press release is attached as an exhibit hereto and is
incorporated by reference herein.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
- Not Applicable
(b) Pro forma financial information.
- Not Applicable
(c) Exhibits.
99.1 Press Release dated August 2, 1999.
<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 hereunto duly authorized.
WITCO CORPORATION
(Registrant)
Date: August 4, 1999 By: /s/ Brian J. Dick
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Name: Brian J. Dick
Title: Vice President, Finance & Controller
<PAGE>
EXHIBIT INDEX
Exhibit No. Description of the Exhibit
99.1 Press Release dated August 2, 1999.
<PAGE>
Exhibit 99.1
Witco Contacts: Robert Bennett 203 552-2282
Director of Investor Relations
Patricia McLean 203 552-2273
Director of Communications
For Immediate Release
WITCO REPORTS SECOND QUARTER RESULTS
GREENWICH, CT-- August 2, 1999 -- Witco Corporation (NYSE:WIT) today reported
second quarter 1999 net sales of $493.8 million which were $10.5 million, or 2
percent, lower than the same quarter of the prior year. The decline was mainly
due to an unfavorable product sales mix and an adverse effect on net sales of
approximately $8 million attributable to the comparatively stronger US dollar.
The negative impact of these factors was partially offset by an increase in
volume.
Net income for the second quarter of 1999 was $12.8 million, or $.22
per common share - diluted, compared to $15.2 million, or $.26 per common
share - diluted, for the corresponding quarter of 1998. The $2.4 million
decline was primarily due to higher net interest expense resulting from
increased short-term borrowing, and the above mentioned shortfall in net
sales. These unfavorable factors were partially offset by a reduction in
performance based compensation costs and lower restructuring charges.
E. Gary Cook, Chairman, President and Chief Executive Officer
commented, "Both revenue and operating income improved sequentially over the
first quarter, but they both lagged behind last year through the first half.
The challenge of building on this modest success remains significant. Further
top- and bottom-line growth depends on increasing volume both by stronger
performance in the market place and by successfully leveraging the capacity
from our new facilities and expansions at our Memphis, TN and Taft, LA Polymer
Chemicals facilities and our Performance Chemicals facility in Houston, TX as
well as continued stability in global economic conditions."
He further stated, "In January we announced the next phase of our
strategy to become a more focused, market leading specialty chemical company.
Events of the past quarter have moved Witco closer to this goal. We reached an
agreement with Goldschmidt and SKW to divest the Oleochemicals & Derivatives
business, completed the second phase of our SAP implementation, started up a
modernized stearates facility in Memphis, and announced an early retirement
program as part of our ongoing cost reduction program. On June 1, we entered
into and announced a merger agreement with Crompton & Knowles, which will
create a $3.4 billion global specialty chemicals leader."
Net sales for the six months ended June 30, 1999 of $974.4 million
were $37.2 million, or 4 percent, below the corresponding period of 1998. The
shortfall in revenue was primarily the result of an unfavorable product sales
mix, lower volume and the adverse effect of the comparatively stronger US
dollar on net sales of approximately $7 million.
For the six months ended June 30, 1999, net income was $21.3
million, or $.37 per common share - diluted, compared to $35.6 million, or
$.61 per common share - diluted, for the same period of 1998. The lower
earnings were mainly the result of the above mentioned decline in net sales.
An increase in general and administrative expenses, including costs
attributable to business process improvement initiatives, and higher net
interest expense due to an increase in debt, added to the shortfall.
Following are segment highlights for the second quarter:
Polymer Chemicals' net sales for the second quarter of 1999 of
$118.8 million were $5.9 million, or 5 percent, lower than the second quarter
of 1998. The reduction in net sales was mainly attributable to the 1998 swap
of businesses with Ciba Specialty Chemicals, which involved the receipt of a
PVC heat stabilizers business that had comparatively higher sales prices but
substantially lower volume than the epoxy systems and adhesives business
exchanged. The comparatively stronger US dollar also adversely affected
current quarter net sales. Operating income for the second quarter of 1999 of
$12.8 million was $1.8 million, or 13 percent, below the same period of 1998.
The decrease was primarily the result of the above mentioned reduction in net
sales and higher fixed costs attributable to asset consolidation initiatives
and the Ciba swap.
OrganoSilicones' net sales for the second quarter of 1999 increased
$.9 million to $113.4 million from the same period of 1998. The increase was
mainly attributable to an increase in volume, partially offset by the adverse
effect of the strengthening US dollar versus most currencies, principally the
Brazilian Real. Operating income of $14.3 million was $2.3 million, or 19
percent, ahead of the same quarter of 1998. The increase was primarily due to
an improvement in margins associated with the increase in sales of specialty
versus commodity products within the Specialty Fluids business and the
comparatively weaker US dollar compared to the Japanese Yen.
<PAGE>
Performance Chemicals' second quarter 1999 net sales of $174.8
million were $1.2 million, or 1 percent, greater than 1998. The segment
benefited from increased volume in the paraffinic white oils business
resulting from the arrangement entered into with Petro-Canada Lubricants in
late 1998. A vast majority of the revenue attributable to the higher volume
was offset by competitive pricing pressures in certain businesses, the adverse
impact of the stronger US dollar and the absence of sales associated with the
July 1998 sale of the SACI business. Operating income for the second quarter
of 1999 of $15.3 million was $1.7 million, or 10 percent, lower than the
second quarter of 1998. The major factors that contributed to the decrease in
operating income were the above mentioned competitive pricing pressures,
additional expenses attributable to the lingering effects of the fire at
Petro-Canada's refinery during the first quarter of 1999 and higher costs
associated with business process improvement initiatives.
Oleochemicals and Derivatives' second quarter 1999 net sales of
$86.8 million were $6.7 million, or 7 percent, lower than the same quarter of
1998. The reduction in net sales was primarily attributable to a volume
decline in low margin products. The comparatively stronger US dollar and lower
prices related to formula sales contracts that are based on raw material
prices, which were lower in the second quarter of 1999 compared to the same
quarter of the prior year, also contributed to the decrease in net sales.
Despite the decrease in net sales, operating income for the second quarter of
1999 increased $.5 million to $2.5 million. The increase was mainly
attributable to a reduction in operating expenses and an improved product
sales mix including increased sales of refined glycerin due to the
installation of a new glycerin still.
# # #
Information in this press release contains "forward-looking statements" which
are not historical facts. These statements involve risks and uncertainties
that could cause actual results to differ materially, including, without
limitation, the company's ability to generate appropriate cash flow, the cost
and timing of the implementation of capital improvements, the cost and timing
of the initiatives associated with the company's cost savings program, the
company's ability to effectively divest Oleochemicals & Derivatives (ODG) or
enter into other strategic alternatives and transactions regarding other
businesses, the amount of proceeds the company receives as a result of the ODG
divestiture or other transaction, the company's ability to maintain price
levels, changes in product mix, availability and pricing of raw materials,
price and product competition, certain global and regional economics
conditions and other factors detailed in the company's Securities and Exchange
Commission filings.
(Comparative Tables Attached)
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<TABLE>
<CAPTION>
WITCO CORPORATION AND SUBSIDIARY COMPANIES
(in thousands except per share data)
Three Months Ended June 30, Six Months Ended June 30,
1999(A)(B) 1998(A)(B)(C) 1999(A)(B)(C) 1998(A)(B)(C)(D)
----------- ------------- ------------- ----------------
<S> <C> <C> <C> <C>
Net Sales $493,842 $504,302 $974,433 $1,011,676
Cost of Goods Sold 369,955 377,567 734,502 757,787
----------- ------------- ------------- ---------------
Gross Profit 123,887 126,735 239,931 253,889
Operating Expenses
Selling expense 25,840 25,973 50,968 51,685
General and administrative expenses 37,036 35,913 76,466 69,945
Research and development 16,521 18,314 35,633 36,199
Other expenses (income) - net 4,788 5,721 6,310 6,741
Restructuring charges 522 2,781 3,204 5,043
----------- ------------- ------------- ---------------
Total Operating Expenses 84,707 88,702 172,581 169,613
----------- ------------- ------------- ---------------
Operating Income 39,180 38,033 67,350 84,276
Other Expense (Income) - Net
Interest expense 15,429 12,002 28,291 23,992
Interest income (785) (1,374) (1,801) (2,694)
Other expense - net 800 674 1,373 1,595
----------- ------------- ------------- ---------------
Income before Income Taxes 23,736 26,731 39,487 61,383
Income Taxes 10,919 11,574 18,164 25,781
----------- ------------- ------------- ---------------
Net Income $ 12,817 $ 15,157 $ 21,323 $ 35,602
=========== ============= ============= ===============
Net Income Per Common Share: Basic $.22 $.26 $.37 $.62
=========== ============= ============= ===============
Average Number of Common Shares: Basic 57,570 57,528 57,565 57,485
=========== ============= ============= ===============
Net Income Per Common Share: Diluted $.22 $.26 $.37 $.61
=========== ============= ============= ===============
Average Number of Common Shares: Diluted 57,744 58,052 57,739 58,173
=========== ============= ============= ===============
</TABLE>
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<TABLE>
<CAPTION>
OPERATIONS BY INDUSTRY SEGMENT Three Months Ended June 30, Six Months Ended June 30,
(in thousands of dollars) 1999 1998 1999 1998
- ------------------------------ ------------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Net sales
Polymer Chemicals $118,772 $124,691 $232,303 $ 248,694
OrganoSilicones 113,442 112,511 226,056 224,199
Performance Chemicals 174,813 173,572 339,803 351,170
Oleochemicals & Derivatives 86,815 93,528 176,271 187,613
------------- ----------- ------------ -----------
Net sales $493,842 $504,302 $974,433 $1,011,676
============= =========== ============ ===========
Operating income
Polymer Chemicals $ 12,750 $ 14,572 $ 20,831 $ 32,450
OrganoSilicones 14,333 12,033 27,285 23,830
Performance Chemicals 15,334 17,002 28,558 36,996
Oleochemicals & Derivatives 2,451 1,978 6,218 1,984
Corporate and unallocated (5,688) (7,552) (15,542) (10,984)
------------- ----------- ------------ -----------
Operating income $ 39,180 $ 38,033 $ 67,350 $ 84,276
============= =========== ============ ===========
SUMMARY OF NON-RECURRING ITEMS
(millions of dollars except Three Months Ended June 30,
per share data) 1999 1998
- --------------------------- -------------------------------------- ----------------------------------------------
Pre-Tax After-Tax Net Income Pre-Tax After-Tax Net Net Income
Income Income (Loss) Income Income (Loss)
(Loss) (Loss) Per Share* (Loss) (Loss) Per Share*
---------- ----------- ----------- ---------- -------------- -------------
Income excluding non-
recurring items $24.2 $13.1 $ .23 $29.1 $16.7 $ .29
Restructuring charges (B) (0.5) (0.3) (.01) (2.8) (1.7) (.03)
Gain on disposition of
businesses (C) - - - 0.4 0.2 -
- --------------------------- ---------- ----------- ----------- ---------- -------------- -------------
Income as reported $23.7 $12.8 $.22 $26.7 $15.2 $ .26
- --------------------------- ---------- ----------- ----------- ---------- -------------- -------------
(millions of dollars except Six Months Ended June 30,
per share data) 1999 1998
- --------------------------- -------------------------------------- ----------------------------------------------
Pre-Tax After-Tax Net Income Pre-Tax After-Tax Net Net Income
Income Income (Loss) Income Income (Loss)
(Loss) (Loss) Per Share* (Loss) (Loss) Per Share*
- --------------------------- ---------- ----------- ----------- ---------- -------------- -------------
Income excluding non-
recurring items $40.5 $22.0 $.38 $61.5 $36.0 $ .62
Restructuring charges (B) (3.2) (2.0) (.03) (5.0) (3.1) (.05)
Gain on disposition of an
investment (D) - - - 4.5 2.5 .04
Gain on disposition of
businesses (C)
- ---------------------------
2.2 1.3 .02 0.4 0.2 -
---------- ----------- ----------- ---------- -------------- -------------
Income as reported $39.5 $21.3 $.37 $61.4 $35.6 $ .61
- --------------------------- ---------- ----------- ----------- ---------- -------------- -------------
* Diluted basis
</TABLE>
<PAGE>
NOTES:
All references to per share data throughout the document, including the
footnotes, will be on a diluted basis unless otherwise specified.
(A) Depreciation expense for the three months ended June 30, 1999 and 1998
and for the six months ended June 30, 1999 and 1998, respectively, was
$25,472, $23,737, $50,526, and $46,433. Amortization expense for the
respective periods was $5,196, $5,310, $10,317, and $10,615.
(B) The restructuring charge of $522 ($318 after-tax or $.01 per common
share) for the three month period ended June 30, 1999 primarily relates
to costs associated with the company's global systems implementation. The
restructuring charge of $3,204 ($1,954 after-tax or $.03 per common
share) for the six month period ended June 30, 1999 includes severance
and related costs of $1,710 and other costs primarily associated with the
company's global systems implementation.
The restructuring charges of $2,781 ($1,696 after-tax or $.03 per common
share) and $5,043 ($3,076 after-tax or $.05 per common share) for the
three and six month periods ended June 30, 1998, respectively, primarily
relates to expenditures for equipment at sites previously identified for
closure, which otherwise would have been capitalized, and costs
associated with the company's global systems implementation.
(C) The six month period ended June 30, 1999 includes a gain of $2,200
($1,342 after-tax or $.02 per common share) for additional proceeds
received on the 1998 disposition of the company's SACI Anti- Corrosion
Coatings business.
The three and six month periods ended June 30, 1998 include a gain of
$362 ($221 after-tax; with no per common share effect) on the disposition
of the company's epoxy systems and adhesives business.
(D) The six month period ended June 30, 1998 includes a gain of $4,484
($2,466 after-tax or $.04 per common share) as a result of the
disposition of an investment.
