SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________
FORM 11-K
(Mark One)
[X] Annual Report pursuant to Section 15 (d) of the
Securities Exchange Act of 1934
For the calendar year ended December 31, 1999
OR
[ ] Transition report pursuant to Section 15 (d) of the
Securities Exchange Act of 1934
For the transition period from ________ to _________
Commission file number 0-30270
A. Full title of the Plan and the address of the Plan, if
different from that of the issuer named below:
CROMPTON CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
B. Name of issuer of the securities held pursuant to the
Plan and the address of its principal executive
office:
Crompton Corporation
One American Lane
Greenwich, CT 06831
CROMPTON CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
Index to Financial Statements and Exhibit
Independent Auditors' Report
Statements of Net Assets Available for Plan Benefits as of
December 31, 1999 and 1998
Statements of Changes in Net Assets Available for Plan Benefits
for the Years Ended December 31, 1999 and 1998
Notes to Financial Statements
Schedule of Assets Held for Investment Purposes
at End-of-Year December 31, 1999
Signature
Exhibit 23 - Consent of KPMG LLP, Independent Auditors
CROMPTON CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
Financial Statements and Schedules
December 31, 1999 and 1998
(With Independent Auditors' Report Thereon)
CROMPTON CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
Index
Independent Auditors' Report
Statements of Net Assets Available for Plan Benefits as of
December 31, 1999 and 1998
Statements of Changes in Net Assets Available for Plan Benefits
for the Years Ended December 31, 1999 and 1998
Notes to Financial Statements
Schedule
Schedule of Assets Held for Investment Purposes
at End-of-Year December 31, 1999........................... 1
Independent Auditors' Report
The Board of Directors
Crompton Corporation:
We have audited the accompanying statements of net assets
available for plan benefits of Crompton Corporation Employee
Stock Ownership Plan (the "Plan") as of December 31, 1999 and
1998, and the related statements of changes in net assets
available for plan benefits 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.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the net assets
available for plan benefits as of December 31, 1999 and 1998, and
the changes in net assets available for plan benefits for the
years then ended, in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion
on the basic financial statements taken as a whole. The
supplemental schedule of Assets Held for Investment Purposes at
End of Year is presented for the purpose of additional analysis
and is not a required part of the basic financial statements but
is 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. This
supplemental schedule is the responsibility of the Plan's
management. The supplemental schedule has been subjected to the
auditing procedures applied in the audits of the basic financial
statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a
whole.
/s/KPMG LLP
Stamford, Connecticut
June 16, 2000
Crompton Corporation
Employee Stock Ownership Plan
Statements of Net Assets Available for Plan Benefits
as of December 31, 1999 and 1998
1999 1998
Investments:
Common stock of Crompton Corporation $ 31,123,665 $ 43,291,577
Hartford Life Insurance Co.
group annuity contract 7,072,918 9,176,919
Fleet Stable Asset Fund 7,629,270 5,598,455
Galaxy Asset Allocation Fund 2,116,900 2,172,425
Galaxy Growth & Income Fund 7,122,243 8,004,789
Fidelity Advisor Government
Investment Fund 820,520 902,208
George Putnam Fund of Boston 735,356 379,024
Putnam Voyager Fund 2,911,678 830,665
Putnam International Growth Fund 1,262,894 525,025
Invesco Industrial Fund 664,476 442,359
Galaxy Large Company Index Fund 2,451,303 1,421,496
Galaxy Small Cap Value Fund 839,585 565,416
Cash and short-term investments at cost
which approximates market 30,952 5,669
Contributions receivable from participants 560,162 352,929
Contribution receivable
from Crompton Corporation 355,012 215,684
Accrued income 108,431 143,733
Plan assets available for plan benefits $ 65,805,365 $ 74,028,373
See accompanying notes to financial statements
Crompton Corporation
Employee Stock Ownership Plan
Statements of Changes in Net Assets Available for Plan Benefits
For the Years Ended December 31, 1999 and 1998
1999 1998
Investment income:
Interest and dividends earned $ 2,224,950 $ 2,081,582
Realized gain on sale
of investments and withdrawals 1,472,539 2,661,345
Increase (decrease) in unrealized
gain (loss) of investments (15,524,592) (11,935,791)
Net investment income (11,827,103) (7,192,864)
Contributions:
Employee Rollovers 11,464 28,479
Employee 6,594,511 3,771,315
Employer - Net of forfeitures 4,222,183 2,106,708
ITC divestiture - Plan to Plan transfer (1,928,708) -
Withdrawals and distributions (5,295,355) (7,490,359)
Net (decrease) (8,223,008) (8,776,721)
Net assets available for plan benefits
at the beginning of the year 74,028,373 82,805,094
Net assets available for plan benefits
at the end of the year $ 65,805,365 $ 74,028,373
See accompanying notes to financial statements
CROMPTON CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 and 1998
1. Basis of Presentation
The accompanying financial statements have been prepared on
an accrual basis of accounting and present the net assets
available for plan benefits and changes in those net assets.
2. Plan Description
The Employee Stock Purchase and Savings Plan was adopted by
the Board of Directors of Crompton Corporation (the "Company") on
January 27, 1976. Effective July 1, 1989 the Board of Directors
amended the Plan to convert it into an Employee Stock Ownership
Plan (the "Plan"). The following description of the Plan provides
only general information. For complete information see the Plan
document. The Plan is a defined contribution plan and is subject
to the provisions of the Employee Retirement Income Security Act
of 1974 (ERISA). Fleet Bank (the "Trustee") has been selected by
the Company as custodial trustee. The Trustee has custodial
responsibility for a trust fund on behalf of the Plan and
maintains accounting records for all Plan assets. These assets
and changes therein have been reported to the Plan administrator
and certified as complete and accurate by the trustee.
Eligibility
Employees of participating affiliates of the Company are
eligible to participate upon attaining the age of 18 and having
worked for at least six months.
Contributions and Vesting
The Plan permits an eligible employee to elect to participate
by authorizing a withholding of an amount equal to 1%, 2%, 3%,
4%, 5% or 6% of compensation as the basic contribution to the
Plan. Contributions by the Company to the Plan are made at an
amount equal to 66 2/3% of each participating employee's basic
employee contribution to the Plan. If participants are not
eligible for any other defined contribution plan, additional
employee contributions in 1% increments up to 10% of compensation
can be made as supplemental employee contributions. Supplemental
employee contributions are not eligible for matching Company
contributions.
A participant in the Plan is fully vested in his basic and
supplemental contributions. Employer contributions vest 100% over
a five year period at a rate of 40% after two years of service
and an additional 20% per year thereafter. Forfeitures are
accumulated and used to reduce Company contributions. There were
no forfeitures in 1999. In 1998, forfeitures totaled $225,000.
Withdrawals/Benefit Payments
Upon termination, death, or retiring, a participant's account
shall be distributed. However, funds can remain in the Plan after
retirement indefinitely with quarterly withdrawals permitted and
as long as funds begin to be distributed after the participant
reaches the age of 70 1/2%.
A participant may elect to make one withdrawal of his basic or
supplemental contributions in a 12 month period. Withdrawal of
basic contributions will cause a suspension of contributions for
a three month period. A participant who is fully vested and has
withdrawn all of his basic and supplemental contributions may
also elect to withdraw all or part of his employer contributions.
Withdrawal of employer contributions will result in a suspension
of contributions for a six month period.
Investments Options
The Company's contribution to the plan is invested in the
Crompton Corporation Common Stock Fund. The Plan provides for
investment of employee contributions in the Crompton Corporation
Stock Fund and among ten investment funds maintained by Fleet
investment management:
The Crompton Corporation Stock Fund is a fund invested entirely
in common stock of Crompton Corporation. The market value of the
common stock is based on quotations from the New York Stock
Exchange.
Fleet Stable Asset Fund This fund invests primarily in
guaranteed investment contracts ("GIC") issued by highly rated
life insurance companies and also includes a GIC maintained by
the Hartford Life Insurance Company which was part of a prior
investment program that was terminated on November 1, 1997.
Payout of the funds will commence in six equal annual
installments with the initial payment on November 1, 1997 and
with the rate of interest credited on the declining balance of
5.80%
Fidelity Advisor Government Fund This fund invests primarily
in obligations issued or guaranteed by the U.S. Government or any
of its agencies or instrumentalities.
George Putnam Fund of Boston (Class M shares) This fund's
primary objective is to provide a diversified portfolio of stocks
and bonds that will provide both capital growth and income.
Putnam Voyager Fund (Class M shares) This fund's objective is
to provide capital appreciation by investing in stocks of
companies with above average growth potential.
Putnam International Growth Fund Class M shares This fund's
objective is to invest in equity securities of companies located
outside the United States.
Invesco Industrial Income Fund This fund's objective is to
provide income with secondary consideration to capital
appreciation by investing in stocks, bonds and mortgages.
Galaxy Growth and Income Fund This fund's objective is to
provide high total returns through long-term capital appreciation
and income by investing primarily in common stock.
Galaxy Asset Allocation Fund This fund's objective is to
provide a high total return with a combination of income and long
term growth in assets held by investing in equity securities,
fixed income securities and cash equivalents.
Galaxy Large Company Index Fund This fund's objective is to
provide investment results that mirror investment results of U.S.
common stocks with large stock market capitalizations as
represented by the Standard & Poor's 500 Index.
Galaxy Small Cap Value Fund This fund's objective is to provide
long-term capital appreciation by investing in companies that
have market capitalization of up to $1 billion.
Assets in any of the funds may be invested in short term
government or other securities pending permanent investment.
Earnings on each fund will be reinvested in that fund.
Each participant is permitted to elect to have his basic
contribution invested in any of the funds in 1% increments.
Fund transfer can be made on a daily basis in a minimum of 1%
increments.
3. Income Taxes
The Internal Revenue Service has determined and has informed
the Company by a letter dated November 16, 1994 that the Plan and
related trust are designed in accordance with applicable sections
of the Internal Revenue Code (the "IRC"). The Plan has been
amended since receiving the determination letter. However, the
Plan administrator and the Plan's tax counsel believe that the
Plan is designed and is currently being operated in compliance
with the applicable requirements of the IRC.
4. Investments
Mutual Funds
The mutual funds sponsored by registered investment companies
are recorded at market valuations which are based on published
market prices. Purchases and sales are recorded on a trade date
basis. Interest income is accrued when earned. Dividend income
is recorded on the ex-dividend date.
Crompton Stock Fund
The Crompton Corporation stock fund is valued at its year-end
closing price.
Stable Asset Fund
The Stable Asset Fund is valued at cost plus accrued interest.
The carrying amount approximates fair value because of the short
maturity of those instruments.
Group Annuity Contract
The Group Annuity Contract with Hartford Life Insurance Company
is valued at cost plus accrued interest.
Investments Exceeding 5% of Net Assets
The Plan's investments which exceeded 5% of net assets
available for plan benefits as of December 31, 1999 and 1998 are
as follows:
1999 1998
Crompton Corporation
Common Stock $31,123,665 $43,291,577
Hartford Life Ins. Co.
Group Annuity Contract 7,072,918 9,176,919
Fleet Stable Asset Fund 7,629,270 5,598,455
Galaxy Growth and Income
Fund 7,122,243 8,004,789
5. Plan Expenses
Significant costs of Plan administration, which are payable
from the Trust or by the Company, are generally paid by the
Company.
6. Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires the Plan to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported changes in net assets available for plan benefits during
the reporting period. Actual results could differ from those
estimates.
7. Party-in-Interest Transactions
The Fleet Bank and Hartford Life Insurance company are
parties-in-interest as defined in Section 3 (14) of the Employee
Retirement Income Security Act of 1974. During the years 1999 and
1998 there were no prohibited party-in-interest transactions.
8. Priorities Upon Termination of the Plan
The Board of Directors of the Company shall have the right
from time to time to add to, modify or amend the Plan, and the
Board of Directors shall have the right to terminate the Plan.
The Board of Directors may also authorize the inclusion in any
contract entered into by the Company with the union or unions
representing employees, or with any group or groups of employees,
of a provision or provisions having the effect of limiting or
foregoing any such rights. Further, no addition to,
modification, amendment or termination of the Plan shall have the
effect of reducing the entitlement of any participant's benefit
accrued under the Plan or of diverting any part of the assets of
the Trust Fund for purposes other than provided in the Plan.
Upon any terminations of the Plan, or complete and permanent
discontinuance of contributions of all participants, the value of
each of the participant's account, if not already vested, shall
vest fully and all amounts in all accounts of each participant
shall be delivered and paid as soon as practicable in accordance
with the Plan Document.
9. Plan to Plan Transfer
Ingredient Technology Corporation, a wholly owned affiliate
of the Company, was sold to Chr. Hansen Holding S.A. in January
1999. Account balances of those employees of Ingredient
Technology Corporation were transferred to a successor plan
maintained by Chr. Hansen in a plan to plan transfer.
Schedule 1 (Form 5500)
CROMPTON CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END-OF-YEAR
DECEMBER 31, 1999
IDENTITY OF ISSUE, DESCRIPTION OF INVESTMENT INCLUDING
BORROWER, LESSOR MATURITY DATE, RATE OF INTEREST, CURRENT
OR SIMILAR PARTY COLLATERAL, PAR OR MATURITY VALUE VALUE
GALAXY MONEY MARKET TRUST $ 30,952
CROMPTON CORPORATION COMMON STOCK 31,123,665
GALAXY GROWTH & INCOME FUND 7,122,243
GALAXY ASSET ALLOCATION FUND 2,116,900
FIDELITY ADVISOR GOVERNMENT INVESTMENT FUND 820,520
FLEET STABLE ASSET FUND 7,629,270
PUTNAM INVESTMENTS PUTNAM VOYAGER FUND 2,911,678
PUTNAM INVESTMENTS GEORGE PUTNAM FUND 735,356
PUTNAM INVESTMENTS PUTNAM INTERNATIONAL GROWTH FUND 1,262,894
INVESCO FUNDS GROUP INC. INVESCO INDUSTRIAL INCOME FUND 664,476
GALAXY GALAXY LARGE COMPANY INDEX FUND 2,451,303
GALAXY GALAXY SMALL CAP VALUE FUND 839,585
HARTFORD LIFE
INSURANCE CO. GROUP ANNUITY CONTRACT 7,072,918
TOTAL INVESTMENTS $ 64,781,760
Party - in- interest - All parties listed above
SIGNATURE
The Plan. Pursuant to the requirements of the Securities and
Exchange Act of 1934, the trustees (or other persons who
administer the employee benefit plan) have duly caused this
annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
CROMPTON CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
Date: June 28, 2000 By:/s/Peter Barna
Peter Barna
Senior Vice President &
Chief Financial Officer
