<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
Annual Report Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [NO FEE REQUIRED]
For the Fiscal Year Ended December 31, 1998
or
[ ] TRANSITION REPORT, PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ______________ to ______________
Commission file number 1-4654
A. Full title of Plan: WITCO CORPORATION EMPLOYEE RETIREMENT SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office
WITCO CORPORATION
ONE AMERICAN LANE
GREENWICH, CONNECTICUT 06831-2559
<PAGE>
SIGNATURE
The Plan Pursuant to the requirements of the Securities Exchange Act of
1934 and the administrators of the Witco Corporation Employee Retirement Savings
Plan have duly caused this annual report to be signed on their behalf by the
undersigned hereunto duly authorized.
WITCO CORPORATION EMPLOYEE RETIREMENT SAVINGS PLAN
Date: June 25, 1999 By /S/ Brian J. Dick
---------------------------------------
Brian J. Dick
Vice President of Finance and Controller
of Witco Corporation
<PAGE>
Witco Corporation Employee Retirement Savings Plan
Financial Statements And Supplemental Schedules
Years Ended December 31, 1998 and 1997
CONTENTS
<TABLE>
<S> <C>
Report of Independent Auditors.........................................................F-1
Financial Statements
Statements of Assets Available for Benefits, with Fund Information (Modified
Cash Basis)as of December 31, 1998 and 1997............................................F-2
Statements of Changes in Assets Available for Benefits, with Fund Information
(Modified Cash Basis) for the Years Ended December 31, 1998 and 1997...................F-3
Notes to Financial Statements (Modified Cash Basis)....................................F-9
Supplemental Schedules
Schedule of Assets Held for Investment Purposes.......................................F-14
Schedule of Reportable Transactions...................................................F-15
Consent of Independent Auditors ................................................Exhibit 23
</TABLE>
<PAGE>
Report of Independent Auditors
Management and Employees of Witco Corporation
We have audited the accompanying statements of assets available for benefits
(modified cash basis) of the Witco Corporation Employee Retirement Savings Plan
as of December 31, 1998 and 1997, and the related statements of changes in
assets available for benefits (modified cash basis) for the years then ended.
These financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As described in Note 1, the financial statements and supplemental schedules were
prepared on a modified cash basis of accounting, which is a comprehensive basis
of accounting other than generally accepted accounting principles.
In our opinion, the financial statements referred to above present fairly, in
all material respects, information regarding the Plan's assets available for
benefits (modified cash basis) as of December 31, 1998 and 1997, and changes
therein (modified cash basis) for the years then ended, on the basis of
accounting described in Note 1.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules (modified
cash basis) of assets held for investment purposes as of December 31, 1998, and
reportable transactions for the year then ended are presented for purpose of
additional analysis and are not a required part of the financial statements but
are supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These supplemental schedules are the responsibility of the
Plan's management. The Fund Information in the statement of assets available for
benefits and the statement of changes in assets available for benefits is
presented for purposes of additional analysis rather than to present the assets
available for benefits and the changes in assets available for benefits of each
fund. The supplemental schedules (modified cash basis) and Fund Information have
been subjected to the auditing procedures applied in our audits of the financial
statements and, in our opinion, are fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ ERNST & YOUNG LLP
Stamford, Connecticut
June 18, 1999
F-1
<PAGE>
Witco Corporation Employee Retirement Savings Plan
Statements of Assets Available for Benefits,
with Fund Information
(Modified Cash Basis)
<TABLE>
<CAPTION>
DECEMBER 31
1998 1997
----------------------------------------
<S> <C> <C>
ASSETS
Investments (Notes 2 and 4):
Witco Common Stock Fund $ 10,211,683 $ 18,245,434
Managed Income Portfolio II 50,905,087 52,516,728
Mutual Funds:
Fidelity Magellan Fund 39,533,984 29,181,410
Fidelity Asset Manager Fund 14,521,967 13,692,926
Fidelity International Growth and Income Fund 5,823,524 5,615,485
Fidelity Equity Income Fund 21,109,390 22,228,018
Fidelity Asset Manager: Growth Fund 7,924,114 6,810,220
Fidelity Growth Company Fund 15,230,895 12,394,428
Fidelity Asset Manager: Income Fund 1,747,579 1,629,018
Fidelity Institutional Short-Intermediate Government Fund 5,809,452 5,636,394
Participant Loans Receivable 3,063,427 3,013,616
----------------------------------------
Assets available for benefits $175,881,102 $170,963,677
========================================
</TABLE>
See notes to financial statements.
F-2
<PAGE>
Witco Corporation Employee Retirement Savings Plan
Statement of Changes in Assets Available for Benefits,
with Fund Information
(Modified Cash Basis)
Year Ended December 31, 1998
<TABLE>
<CAPTION>
Fidelity
Witco Managed Fidelity Asset
Common Income Magellan Manager
Stock Fund Portfolio II Fund Fund
----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Additions (deductions) to assets
attributed to:
Investment income
Net appreciation (depreciation) in fair
value of investments $(10,962,128) $ - $ 7,833,560 $ (551,189)
Dividends - 3,014,433 1,804,215 2,624,832
------------ ------------ ------------ ------------
(10,962,128) 3,014,433 9,637,775 2,073,643
------------ ------------ ------------ ------------
Contributions
Participants 1,464,830 1,790,921 2,170,029 722,929
Employer 391,264 565,197 583,293 228,029
------------ ------------ ------------ -----------
1,856,094 2,356,118 2,753,322 950,958
------------ ------------ ------------ -----------
Loan repayments (interest and principal) 187,244 438,112 280,910 133,625
------------ ------------ ------------ ------------
Total additions (deductions) (8,918,790) 5,808,663 12,672,007 3,158,226
------------ ------------ ------------ ------------
Deductions from assets attributed to:
Withdrawals (1,457,207) (7,145,229) (3,699,131) (1,667,607)
Administrative expenses (7,179) (112,446) (3,389) (304)
Loan withdrawals (173,758) (361,324) (296,649) (134,744)
------------ ------------ ------------ ------------
Total deductions (1,638,144) (7,618,999) (3,999,169) (1,802,655)
------------ ------------ ------------ ------------
Net increase (decrease) prior to interfund
transfers (10,556,934) (1,810,336) 8,672,838 1,355,571
Interfund transfers 2,523,183 198,695 1,679,736 (526,530)
------------ ------------ ------------ ------------
Net increase (decrease) (8,033,751) (1,611,641) 10,352,574 829,041
Assets available for benefits at beginning of
year 18,245,434 52,516,728 29,181,410 13,692,926
------------ ------------ ------------ ------------
Assets available for benefits at end
of year $ 10,211,683 $50,905,087 $ 39,533,984 $ 14,521,967
============ ============ ============ ============
</TABLE>
See notes to financial statements.
F-3
<PAGE>
Witco Corporation Employee Retirement Savings Plan
Statement of Changes in Assets Available for Benefits,
with Fund Information
(Modified Cash Basis) (continued)
Year Ended December 31, 1998
<TABLE>
<CAPTION>
Fidelity
Fidelity Fidelity Asset Fidelity
International Equity Manager: Growth
Growth and Income Growth Company
Income Fund Fund Fund Fund
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Additions (deductions) to assets attributed to:
Investment income
Net appreciation (depreciation) in fair value
of investments $ 332,127 $ 1,251,149 $ 134,458 $ 2,194,942
Dividends 193,530 1,244,761 1,096,794 1,061,958
------------ ------------ ------------ ------------
525,657 2,495,910 1,231,252 3,256,900
------------ ------------ ------------ ------------
Contributions
Participants 467,931 1,479,510 639,243 1,189,327
Employer 138,834 381,615 155,324 295,108
------------ ------------ ------------ ------------
606,765 1,861,125 794,567 1,484,435
------------ ------------ ------------ ------------
Loan repayments (interest and principal) 56,731 168,780 68,978 115,886
------------ ------------ ------------ ------------
Total additions (deductions) 1,189,153 4,525,815 2,094,797 4,857,221
------------ ------------ ------------ ------------
Deductions from assets attributed to:
Withdrawals (492,636) (2,831,583) (887,241) (992,737)
Administrative expenses (70) (664) (47) (172)
Loan withdrawals (40,957) (183,935) (70,881) (89,144)
------------ ------------ ------------ ------------
Total deductions (533,663) (3,016,182) (958,169) (1,082,053)
------------ ------------ ------------ ------------
Net increase (decrease) prior to interfund
transfers 655,490 1,509,633 1,136,628 3,775,168
Interfund transfers (447,451) (2,628,261) (22,734) (938,701)
------------ ------------ ------------ ------------
Net increase (decrease) 208,039 (1,118,628) 1,113,894 2,836,467
Assets available for benefits at beginning of
year 5,615,485 22,228,018 6,810,220 12,394,428
------------ ------------ ------------ ------------
Assets available for benefits at end
of year $ 5,823,524 $ 21,109,390 $ 7,924,114 $ 15,230,895
============ ============ ============ ============
</TABLE>
See notes to financial statements.
F-4
<PAGE>
Witco Corporation Employee Retirement Savings Plan
Statement of Changes in Assets Available for Benefits,
with Fund Information
(Modified Cash Basis) (continued)
Year Ended December 31, 1998
<TABLE>
<CAPTION>
Fidelity
Institutional
Fidelity Asset Short-
Manager: Intermediate Participant
Income Government Loans
Fund Fund Receivable Total
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Additions (deductions) to assets attributed to:
Investment income
Net appreciation (depreciation) in fair value
of investments $ 20,466 $ 16,823 $ -- $ 270,208
Dividends 151,002 364,353 -- 11,555,878
------------ ------------ ------------ -------------
171,468 381,176 -- 11,826,086
------------ ------------ ------------ -------------
Contributions
Participants 100,944 320,869 -- 10,346,533
Employer 26,936 106,385 -- 2,871,985
------------ ------------ ------------ -------------
127,880 427,254 -- 13,218,518
------------ ------------ ------------ -------------
Loan repayments (interest and principal) 13,817 78,242 (1,243,974) 298,351
------------ ------------ ------------ -------------
Total additions (deductions) 313,165 886,672 (1,243,974) 25,342,955
------------ ------------ ------------ -------------
Deductions from assets attributed to:
Withdrawals (247,951) (738,972) (140,815) (20,301,109)
Administrative expenses (20) (130) -- (124,421)
Loan withdrawals (22,626) (60,582) 1,434,600 --
------------ ------------ ------------ -------------
Total deductions (270,597) (799,684) 1,293,785 (20,425,530)
------------ ------------ ------------ -------------
Net increase (decrease) prior to interfund
transfers 42,568 86,988 49,811 4,917,425
Interfund transfers 75,993 86,070 -- --
------------ ------------ ------------ -------------
Net increase (decrease) 118,561 173,058 49,811 4,917,425
Assets available for benefits at beginning of
year 1,629,018 5,636,394 3,013,616 170,963,677
------------ ------------ ------------ -------------
Assets available for benefits at end of
year $ 1,747,579 $ 5,809,452 $ 3,063,427 $175,881,102
============ ============ ============ =============
See notes to financial statements.
F-5
<PAGE>
Witco Corporation Employee Retirement Savings Plan
Statement of Changes in Assets Available for Benefits,
with Fund Information
(Modified Cash Basis)
Year Ended December 31, 1997
</TABLE>
<TABLE>
<CAPTION>
Witco Managed Fidelity
Common Blended Income Magellan
Stock Fund Income Fund Portfolio II Fund
----------------- ----------------- ------------------ -----------------
<S> <C> <C> <C> <C>
Additions (deductions) to assets attributed to:
Investment income
Net appreciation (depreciation) in fair value
of investments $ 4,657,944 $ - $ - $ 4,231,972
Interest - 3,016,032 517,080 -
Dividends - - 19,193 1,874,822
----------------- ----------------- ------------------ -----------------
4,657,944 3,016,032 536,273 6,106,794
----------------- ----------------- ------------------ -----------------
Contributions
Participants 1,412,818 1,785,196 376,255 1,922,116
Employer 379,482 511,951 109,049 522,645
----------------- ----------------- ------------------ -----------------
1,792,300 2,297,147 485,304 2,444,761
----------------- ----------------- ------------------ -----------------
Loan repayments (interest and
principal) 229,191 434,479 74,541 273,120
----------------- ----------------- ------------------ -----------------
Total additions (deductions) 6,679,435 5,747,658 1,096,118 8,824,675
----------------- ----------------- ------------------ -----------------
Deductions from assets attributed to:
Withdrawals (1,953,030) (10,936,077) (1,275,192) (4,472,061)
Administrative expenses (4,781) 44,340 (31,380) (5,192)
Loan withdrawals (220,554) (304,320) (58,823) (215,661)
----------------- ----------------- ------------------ -----------------
Total deductions (2,178,365) (11,196,057) (1,365,395) (4,692,914)
----------------- ----------------- ------------------ -----------------
Net increase (decrease) prior to interfund
transfers 4,501,070 (5,448,399) (269,277) 4,131,761
Interfund transfers (58,780) (56,003,818) 52,786,005 994,207
----------------- ----------------- ------------------ -----------------
Net increase (decrease) 4,442,290 (61,452,217) 52,516,728 5,125,968
Assets available for benefits at beginning
of year 13,803,144 61,452,217 - 24,055,442
----------------- ----------------- ------------------ -----------------
Assets available for benefits at end
of year $18,245,434 $ - $52,516,728 $29,181,410
================= ================= ================== =================
</TABLE>
See notes to financial statements.
F-6
<PAGE>
Witco Corporation Employee Retirement Savings Plan
Statement of Changes in Assets Available for Benefits,
with Fund Information
(Modified Cash Basis) (continued)
Year Ended December 31, 1997
<TABLE>
<CAPTION>
Fidelity
Fidelity Fidelity Fidelity Asset Fidelity
Asset International Equity Manager Growth
Manager Growth and Income Growth Company
Fund Income Fund Fund Fund Fund
---------------- ---------------- ---------------- ------------------- ---------------
<S> <C> <C> <C> <C> <C>
Additions (deductions) to assets
attributed to:
Investment income
Net appreciation (depreciation) in
fair value of investments $ 1,476,708 $ 89,767 $ 3,628,570 $ 656,907 $ 829,133
Interest - - - - -
Dividends 1,210,271 333,415 1,180,930 707,274 1,177,132
---------------- ---------------- ---------------- ------------------- ----------------
2,686,979 423,182 4,809,500 1,364,181 2,006,265
---------------- ---------------- ---------------- ------------------- ---------------
Contributions
Participants 848,668 522,512 1,331,292 447,618 1,103,613
Employer 265,088 151,126 338,111 121,919 275,275
---------------- ---------------- ---------------- ------------------- ----------------
1,113,756 673,638 1,669,403 569,537 1,378,888
---------------- ---------------- ---------------- ------------------- ---------------
Loan repayments (interest and
principal) 153,123 75,688 216,617 81,507 136,289
---------------- ---------------- ---------------- ------------------- --------------
Total additions (deductions) 3,953,858 1,172,508 6,695,520 2,015,225 3,521,442
---------------- ---------------- ---------------- ------------------- --------------
Deductions from assets attributed to:
Withdrawals (2,958,851) (1,099,848) (2,602,461) (897,408) (1,648,611)
Administrative expenses (5,261) (217) (5,953) (722) (531)
Loan withdrawals (146,815) (71,313) (151,228) (48,715) (93,278)
---------------- ---------------- ---------------- ------------------- ---------------
Total deductions (3,110,927) (1,171,378) (2,759,642) (946,845) (1,742,420)
---------------- ---------------- ---------------- ------------------- ---------------
Net increase (decrease) prior to
interfund transfers 842,931 1,130 3,935,878 1,068,380 1,779,022
Interfund transfers (439,478) (512,439) 3,640,303 609,702 (411,874)
---------------- ---------------- ---------------- ------------------- ---------------
Net increase (decrease) 403,453 (511,309) 7,576,181 1,678,082 1,367,148
Assets available for benefits at
beginning of year 13,289,473 6,126,794 14,651,837 5,132,138 11,027,280
---------------- ---------------- ---------------- ------------------- ----------------
Assets available for benefits at end
of year $13,692,926 $5,615,485 $22,228,018 $6,810,220 $12,394,428
================ ================ ================ =================== ================
</TABLE>
See notes to financial statements.
F-7
<PAGE>
Witco Corporation Employee Retirement Savings Plan
Statement of Changes in Assets Available for Benefits,
with Fund Information
(Modified Cash Basis) (continued)
Year Ended December 31, 1997
<TABLE>
<CAPTION>
Fidelity
Institutional
Fidelity Asset Short-
Manager: Intermediate Participant
Income Government Loans
Fund Fund Receivable Total
------------------ ------------------ -------------------- -------------------
<S> <C> <C> <C> <C>
Additions (deductions) to assets attributed to:
Investment income
Net appreciation (depreciation) in fair value
of investments $ 76,792 $ (4,278) $ -- $ 15,643,515
Interest -- -- -- 3,533,112
Dividends 112,314 387,777 -- 7,003,128
--------------------------------------------------------------------------
189,106 383,499 -- 26,179,755
--------------------------------------------------------------------------
Contributions
Participants 85,974 415,212 -- 10,251,274
Employer 25,105 136,729 -- 2,836,480
--------------------------------------------------------------------------
111,079 551,941 -- 13,087,754
--------------------------------------------------------------------------
Loan repayments (interest and principal) 13,596 74,962 (1,439,806) 323,307
--------------------------------------------------------------------------
Total additions (deductions) 313,781 1,010,402 (1,439,806) 39,590,816
--------------------------------------------------------------------------
Deductions from assets attributed to:
Withdrawals (433,484) (999,208) (522,200) (29,798,431)
Administrative expenses (662) (95) -- (10,454)
Loan withdrawals (7,417) (63,576) 1,381,700 --
--------------------------------------------------------------------------
Total deductions (441,563) (1,062,879) 859,500 (29,808,885)
--------------------------------------------------------------------------
Net increase (decrease) prior to interfund
transfers (127,782) (52,477) (580,306) 9,781,931
Interfund transfers 116,044 (719,872) -- --
--------------------------------------------------------------------------
Net increase (decrease) (11,738) (772,349) (580,306) 9,781,931
Assets available for benefits at beginning of
year 1,640,756 6,408,743 3,593,922 161,181,746
--------------------------------------------------------------------------
Assets available for benefits at end of
year $ 1,629,018 $ 5,636,394 $ 3,013,616 $ 170,963,677
==========================================================================
</TABLE>
See notes to financial statements.
F-8
<PAGE>
Witco Corporation Employee Retirement Savings Plan
Notes to Financial Statements
(Modified Cash Basis)
Years Ended December 31, 1998 and 1997
1. SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTING BASIS
The accompanying financial statements have been prepared on a modified basis of
cash receipts and disbursements; consequently, contributions, interest income
and the related assets are recognized when received rather than when earned, and
expenses are recognized when paid rather than when the obligation is incurred.
Accordingly, the accompanying financial statements are presented on a
comprehensive basis of accounting other than generally accepted accounting
principles.
INVESTMENT VALUATION
Investments are stated at fair value. Fair value is determined by quoted market
prices, if an active market exists, or redemption values, which approximate
market value.
GAINS/(LOSSES)
The change in the difference between the fair value and the cost of investments
is reflected as unrealized gains/(losses) in the aggregate fair value of
investments. Realized gains and losses on the disposal of investments are
calculated as the difference between the proceeds received and the cost of
investments sold.
USE OF ESTIMATES
The preparation of financial statements requires management to make estimates
and assumptions that affect the amounts reported in the financial statements.
Actual results could differ from those estimates.
2. DESCRIPTION OF THE PLAN
The Witco Corporation Employee Retirement Savings Plan ("Plan") is a defined
contribution plan established for the purpose of encouraging and assisting
eligible employees of Witco Corporation and subsidiary companies ("Witco" or
"Company") in following a systematic savings program. Fidelity Investments is
the trustee and recordkeeper of the Plan.
An employee becomes eligible to participate in the Plan on the first day of the
month following 31 days of service. The Company's matching contribution is 50%
of the basic employee contributions up to 6% of their base salary except for
certain collective bargaining employees whose participation is based upon the
terms of their respective collective bargaining agreements. In addition,
employees may elect to make supplementary after-tax and pre-tax contributions of
1% to 9% of their base salary except for certain collective bargaining employees
who are limited based upon the terms of their respective collective bargaining
agreements.
F-9
<PAGE>
Witco Corporation Employee Retirement Savings Plan
Notes to Financial Statements (continued)
(Modified Cash Basis)
2. DESCRIPTION OF THE PLAN (CONTINUED)
The Plan permits pre-tax and after-tax contributions by participants. Certain
collective bargaining employees are excluded from making after-tax
contributions. Participants may direct the pre-tax contributions and after-tax
contributions, including Company matching contributions, to be invested in one
or more of ten funds. The ten funds include a Witco Common Stock Fund, and
various diversified bond and equity funds as described below.
WITCO COMMON STOCK FUND - invests primarily in Witco company stock, and a
portion in money market instruments for liquidity.
MANAGED INCOME PORTFOLIO II - is a stable value fund. It seeks to provide a
competitive level of income over time while preserving the value of
investments by purchasing investment contracts issued by major insurance
companies and banks and short-term instruments.
FIDELITY MAGELLAN FUND - is a growth fund. It seeks long-term capital
appreciation by investing in the stocks of well-known and lesser known
foreign and domestic companies.
FIDELITY ASSET MANAGER FUND - is an asset allocation fund. It seeks high
total return with reduced risk over the long-term by allocating its assets
among domestic and foreign stocks, bonds and short-term and money market
instruments.
FIDELITY INTERNATIONAL GROWTH AND INCOME FUND - seeks capital growth and
current income, by investing principally in foreign equity securities.
FIDELITY EQUITY INCOME FUND - is a growth and income fund. It seeks
reasonable income by investing in income-producing equity securities. The
Fund tries to achieve a yield that exceeds the composite yield on
securities composing the S&P 500.
FIDELITY ASSET MANAGER: GROWTH FUND - is an asset allocation fund. It seeks
to maximize total return over the long-term by allocating its assets among
and across domestic and foreign stocks, bonds and short-term and money
market instruments.
FIDELITY GROWTH COMPANY FUND - is a growth fund. It seeks long-term capital
appreciation by investing primarily in common stocks and securities
convertible into common stocks.
FIDELITY ASSET MANAGER: INCOME FUND - is an asset allocation fund. It seeks
a high level of current income by allocating its assets among domestic and
foreign stocks, bonds and short-term and money market instruments.
FIDELITY INSTITUTIONAL SHORT-INTERMEDIATE GOVERNMENT FUND - is an income
fund. It seeks a high level of current income consistent with preservation
of principal by investing exclusively in U.S. government securities.
F-10
<PAGE>
Witco Corporation Employee Retirement Savings Plan
Notes to Financial Statements (continued)
(Modified Cash Basis)
2. DESCRIPTION OF THE PLAN (CONTINUED)
Participants are immediately vested in contributions made by them and become
fully vested in the contributions made by Witco after they have completed three
consecutive years of participation in the Plan or five years of service to
Witco. All former Sherex participants are immediately vested in contributions
made by Witco. Participants who have been terminated for reasons beyond their
own control become fully vested in Witco's contributions upon their termination.
Non-vested contributions by Witco which have been forfeited by participants are
applied to reduce future contributions by Witco. Terminated participants whose
account balance is in excess of $5,000 ($3,500 in 1997) may elect to defer
receipt of such amounts until the required distribution date.
Employees participating in the Plan will not be subject to federal income tax on
amounts contributed to the Plan by Witco and earnings allocated to their
accounts until such time that their participating interest in the Plan is
distributed to them. The Plan provides that participants may elect to have their
pre-tax contributions, subject to certain limitations, excluded from taxable
income pursuant to Section 401(k) of the Internal Revenue Code.
Employees are permitted to make hardship withdrawals if certain criteria are
met. Only one hardship withdrawal a year is permitted.
Employees may borrow up to the lesser of $50,000 or 50% of their vested account
balance at an interest rate of 1% above prime. Loan repayments are made
automatically through payroll deductions.
Witco, by action of its Board of Directors, may suspend the operation of the
Plan for any year by omitting all or part of the employer contributions. In
addition, Witco may terminate or amend the Plan for any reason, at any time,
provided that no such termination or amendment shall permit any of the funds
established pursuant to this Plan to be used for any purpose other than the
exclusive benefit of the participating employees. Upon termination of the Plan,
the rights of members to the benefits accrued under the Plan to the date of
termination shall be nonforfeitable.
3. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated December 14, 1995, stating that the Plan is qualified under Section 401(a)
of the Internal Revenue Code (the "Code"), and therefore, the related trust is
exempt from taxation. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. The Employee Benefits
Committee of Witco Corporation believes the Plan is being operated in compliance
with the applicable requirements of the Code and, therefore believes that the
Plan is qualified and the related trust is tax exempt.
F-11
<PAGE>
Witco Corporation Employee Retirement Savings Plan
Notes to Financial Statements (continued)
(Modified Cash Basis)
4. INVESTMENTS
The fair value of individual investments that represent 5% or more of the Plan's
net assets are as follows:
<TABLE>
<CAPTION>
DECEMBER 31
1998 1997
------------------ -----------------
<S> <C> <C>
Witco Common Stock Fund* $10,211,683 $18,245,434
Managed Income Portfolio II 50,905,087 52,516,728
Fidelity Magellan Fund 39,533,984 29,181,410
Fidelity Asset Manager Fund 14,521,967 13,692,926
Fidelity Equity Income Fund 21,109,390 22,228,018
Fidelity Growth Company Fund 15,230,895 12,394,428
*Party-in-interest investment
</TABLE>
5. YEAR 2000 ISSUE (UNAUDITED)
The Plan Sponsor is currently in the process of addressing date sensitive issues
associated with Year 2000. The Plan Sponsor expects to implement the final phase
of its Year 2000 project on October 1, 1999 and does not expect it to have a
significant effect on plan operations.
The Plan Sponsor has ascertained that failure to alleviate the Year 2000 issue
could result in possible system failures or miscalculations causing disruptions
of operations, including, among other things, a temporary inability to process
transactions. The Plan Sponsor is in the process of developing contingency plans
for its critical activities, which involve, among other things, manual and
external processing of transactions. Development of such plans will be
approximately 95% complete by the end of the second quarter of 1999, with the
remaining plans expected to be completed during July 1999.
The third party service provider has informed the Plan Sponsor that all of its
mission critical systems have been made Year 2000 compliant and contingency
plans have been drafted and approved. The third party service provider is
currently in the process of performing external testing which is expected to be
completed before the end of 1999.
6. SUBSEQUENT EVENTS
On June 1, 1999, Witco and Crompton & Knowles Corporation ("C&K") announced
their intention to merge. Under the agreement, each share of C&K common stock
will be converted into one share of C&K Witco Corporation ("Newco") and each
share of Witco common stock will be exchanged for 0.9242 shares of common stock
of Newco.
On June 23, 1999, Witco announced an agreement to sell its Oleochemical and
Derivaties business. Completion of this sale may have an impact on the assets
of the Plan.
F-12
<PAGE>
SUPPLEMENTAL SCHEDULES
F-13
<PAGE>
Witco Corporation Employee Retirement Savings Plan
EIN-13-1870000 Plan 034
Line 27a - Schedule of Assets Held for Investment Purposes
December 31, 1998
<TABLE>
<CAPTION>
SHARES,
UNITS OR
PRINCIPAL CURRENT
DESCRIPTION AMOUNT COST VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Witco Common Stock Fund* 1,699,115 $16,290,589 $10,211,683
Managed Income Portfolio II 50,905,087 50,905,087 50,905,087
Fidelity Magellan Fund 327,214 28,283,635 39,533,984
Fidelity Asset Manager Fund 835,076 13,660,753 14,521,967
Fidelity International Growth and Income Fund 278,504 5,230,988 5,823,524
Fidelity Equity Income Fund 380,007 16,389,908 21,109,390
Fidelity Asset Manager: Growth Fund 424,203 7,071,953 7,924,114
Fidelity Growth Company Fund 298,528 11,940,760 15,230,895
Fidelity Asset Manager: Income Fund 141,849 1,645,564 1,747,579
Fidelity Institutional Short-Intermediate Government Fund 614,757 5,836,826 5,809,452
Participant Loans Receivable 3,063,427
</TABLE>
*Party-in-interest investment
F-14
<PAGE>
Witco Corporation Employee Retirement Savings Plan
EIN-13-1870000 Plan 034
Line 27d - Schedule of Reportable Transactions
Year Ended December 31, 1998
Series of transactions during the year ended December 31, 1998, exceeding 5% of
the current value of Plan assets reportable per Department of Labor regulations
2520.103-6 are listed below. There were no category (i), (ii), or (iv)
reportable transactions during 1998.
<TABLE>
<CAPTION>
Number Aggregate Number
of Value of of
Description Purchase Purchases/ Sales
Identity of Party Involved of Asset Transactions Deposits* Transactions
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CATEGORY (III)--SERIES OF TRANSACTIONS IN EXCESS OF 5% OF PLAN ASSETS:
Witco Corporation Witco Common Stock Fund 243 $ 9,289,408 210
Fidelity Investments Managed Income Portfolio II 242 15,799,960 237
Fidelity Investments Magellan Fund 243 10,923,818 222
Fidelity Investments Equity Income Fund 236 5,807,186 200
<CAPTION>
Aggregate
Value of Cost of
Description Sales/ Sales/
Identity of Party Involved of Asset Withdrawals* Withdrawals Gain/(Loss)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CATEGORY (III)--SERIES OF TRANSACTIONS IN EXCESS OF 5% OF PLAN ASSETS:
Witco Corporation Witco Common Stock Fund $ 6,361,030 $ 6,357,402 $ 3,628
Fidelity Investments Managed Income Portfolio II 17,411,601 17,411,601 --
Fidelity Investments Magellan Fund 8,404,804 7,159,538 1,245,266
Fidelity Investments Equity Income Fund 8,176,963 6,855,067 1,321,896
</TABLE>
* Current value at date of transaction.
F-15
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements
(Form S-8, No. 33-48806 and No. 333-66033) pertaining to the Witco Corporation
Employee Retirement Savings Plan of our report dated June 18, 1999, with
respect to the financial statements and schedules of the Witco Corporation
Employee Retirement Savings Plan included in this Annual Report (Form 11-K)
for the year ended December 31, 1998.
/s/ ERNST & YOUNG LLP
Stamford, Connecticut
June 24, 1999
