SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant X
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only
/ / Definitive Proxy Statement
/x/ Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule
14a-11(c) or Rule 14a-12
CROMPTON & KNOWLES CORPORATION
________________UNIROYAL CHEMICAL CORPORATION________________
(Name of Registrant as Specified in Its Charter)
_________________________________N/A_________________________________
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
PAYMENT OF FILING FEE (Check the appropriate box):
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/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3).
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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1) TITLE OF EACH CLASS OF SECURITIES TO WHICH TRANSACTION APPLIES:
Common Stock, par value $0.01 per share, of Uniroyal Chemical Corporation
(together with the attached Preferred Stock Purchase Rights of Uniroyal, "Uniroyal
Common Stock"); Series A Cumulative Redeemable Preferred Stock, par value $0.01
per share, of Uniroyal Chemical Corporation ("Series A Preferred Stock"); and
Series B Preferred Stock, par value $0.01 per share, of Uniroyal Chemical
Corporation ("Series B Preferred Stock").
2) AGGREGATE NUMBER OF SECURITIES TO WHICH TRANSACTION APPLIES:
26,963,367 shares of Uniroyal Common Stock; 29,721 shares of Series A Preferred
Stock; and 12,000 shares of Series B Preferred Stock.
3) PER UNIT PRICE OR OTHER UNDERLYING VALUE OF TRANSACTION COMPUTED PURSUANT TO
EXCHANGE ACT RULE 0-11:
The filing fee of $85,769.03 was calculated pursuant to Rule 0-11(a)(4) and (c) of
the Securities Exchange Act of 1934, as amended, by multiplying 1/50th of 1% by an
amount equal to the sum of (x) the product of (A) $15.75, the average of the high
and low sale prices of Uniroyal Common Stock as reported on the Nasdaq National
Market on May 20, 1996, and (B) 26,963,367, the number of shares of Uniroyal
Common Stock expected to be exchanged in the transaction, (y) the product of (A)
$100, the book value per share of the Series A Preferred Stock computed as of
March 31, 1996, and (B) 29,721, the number of shares of Series A Preferred Stock
expected to be exchanged in the transaction, and (z) the product of (A) $100, the
book value per share of the Series B Preferred Stock computed as of March 31,
1996, and (B) 12,000, the number of shares of Series B Preferred Stock expected to
be exchanged in the transaction.
4) PROPOSED MAXIMUM AGGREGATE VALUE OF TRANSACTION:
$428,845,130.30
5) TOTAL FEE PAID:
$85,769.03
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/x/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date
of its filing.
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1) AMOUNT PREVIOUSLY PAID:
2) FORM, SCHEDULE OR REGISTRATION STATEMENT
NO.:
3) FILING PARTY:
4) DATE FILED:
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[LOGO]
THIRD QUARTER REPORT 1996
AND
SUPPLEMENT
TO
CROMPTON & KNOWLES CORPORATION
AND
UNIROYAL CHEMICAL CORPORATION
JOINT PROXY STATEMENT
August 7, 1996
UNIROYAL CHEMICAL CORPORATION,
WORLD HEADQUARTERS, MIDDLEBURY, CT 06749, TELEPHONE (203) 573-2000
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TO OUR SHAREHOLDERS
We are pleased to report our results for the third quarter of fiscal 1996.
FINANCIAL REVIEW
Net income before extraordinary charges for the third quarter ended June 30,
1996 was $14.7 million, or $0.59 per common share on record sales of $302.1
million, compared to $12.4 million, or $0.50 per common share on sales of $298.6
million for the third quarter of fiscal 1995.
We are pleased with the third quarter results, which reflect an 18% increase in
earnings. The continued improvement in our profitability is due to increasing
gross margins, cost containment efforts, and lower interest expense resulting
from our debt repayment program. The relatively small sales growth in the
quarter is primarily due to adverse weather conditions experienced in certain of
our Crop Protection markets.
Sales for the Chemicals and Polymers Division rose 2.6% in the third quarter to
$125.3 million compared to $122.2 million in the third quarter of fiscal 1995.
This increase was due primarily to higher selling prices in Rubber Chemicals,
partially offset by lower EPDM sales.
In the third quarter of fiscal 1996, sales for the Crop Protection Division
decreased 2.9% to $104.3 million from $107.4 million in the same period last
year. The primary factors contributing to this decrease were lower infestation
levels and adverse weather conditions in the U. S. The shortfall was somewhat
offset by the continuing success of the new Gaucho(TM) seed treatment
insecticide.
Sales for the Specialties Division rose 4.8% to $70.5 million from $67.3 million
in the third quarter of fiscal 1995. The increase was primarily due to higher
Vibrathane sales, stronger demand for lubricant additives and market share gains
in certain other specialties.
Operating income increased by 8.3% to $51.5 million as gross margin increased to
35.7% of net sales versus 34.4% in last year's third quarter. The increase in
gross margin is primarily a result of the improved margin percentage in the
Chemicals and Polymers Division as well as increased contribution from the
Crop Protection Division due primarily to lower raw material and production
costs. Selling, general and administrative costs rose less than 2% compared to
last year's quarter, despite increased spending in new product development and
promotion.
On a year-to-date basis, the Company reported net sales for the first nine
months of fiscal 1996 of $829.2 million, $44.6 million more than the $784.6
million reported in the first nine months of fiscal 1995. Operating income for
the nine months ended June 30, 1996 was $111.9 million, an increase of 6.1% over
the first nine months of 1995 after adjusting for one time insurance recoveries
in the prior period. Income before extraordinary charges for the first nine
months of fiscal 1996 was $18.0 million or $0.72 per common share.
Extraordinary charges for the three and nine months ended June 30, 1996 relate
to premiums and unamortized fees associated with the Company's long-term debt
repurchases in the open market.
LEGAL MATTERS
Counsel for the Company, Crompton & Knowles Corporation ("Crompton"), Tiger
Merger Corp. ("Subcorp") and the counsel for plaintiff entered into a memorandum
of understanding (the "Memorandum of Understanding") dated August 5, 1996 in
connection with the settlement of a purported class action lawsuit filed in the
Delaware Court of Chancery, County of New Castle entitled
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Fassbender v. Mazaika, et al., which had sought, among other things, to enjoin
consummation of the merger of Subcorp, a wholly owned subsidiary of Crompton,
with and into the Company (the "Merger"). Among other things, the Memorandum of
Understanding provides that, in full settlement of the claims asserted, (i) the
Agreement and Plan of Merger, dated as of April 30, 1996 (the "Merger
Agreement"), between the Company, Crompton and Subcorp will be amended so as to
reduce the fee payable to Crompton upon termination of the Merger Agreement
under certain circumstances from $50 million to $35 million, (ii) the Company
will promptly disseminate to Uniroyal stockholders this Third Quarter Report,
(iii) the defendants will publicly disclose this proposed settlement by a filing
with the Securities and Exchange Commission and (iv) the plaintiff will withdraw
his request for a preliminary injunction enjoining consummation of the Merger.
The consummation of the proposed settlement is subject to (i) completion by the
plaintiff of discovery, (ii) execution of definitive settlement documents, (iii)
notice to members of the plaintiff class and (iv) approval by the Delaware Court
of Chancery. In connection with the proposed settlement, the defendants have
agreed that they will not oppose plaintiff's counsel's application for an award
of fees and expenses not to exceed $350,000 in the aggregate, to be paid by
Crompton and/or the Company.
The Company and its directors have denied, and continue to deny, that any of
them have committed any violations of law or breaches of duty to plaintiff or
any member of the plaintiff class, the Company or its stockholders, or anyone
else. The defendants entered into the Memorandum of Understanding in order to
eliminate the distraction and expense of further litigation.
Sincerely yours,
/s/ Robert J. Mazaika
Robert J. Mazaika
Chairman, President and Chief Executive Officer
THE ENCLOSED PROXY CARD (THE "DUPLICATE PROXY") IS A DUPLICATE OF THE ORIGINAL
PROXY CARD (THE "ORIGINAL PROXY") MAILED TO YOU ON JULY 23, 1996. IF YOU HAVE
NOT COMPLETED AND RETURNED AN ORIGINAL PROXY OR HAVE COMPLETED AND RETURNED AN
ORIGINAL PROXY AND WOULD LIKE TO CHANGE THE MANNER IN WHICH YOUR SHARES ARE TO
BE VOTED AT THE SPECIAL MEETING, PLEASE COMPLETE AND RETURN THE DUPLICATE PROXY.
IF YOU HAVE ALREADY COMPLETED AND RETURNED AN ORIGINAL PROXY AND DO NOT COMPLETE
AND RETURN A DUPLICATE PROXY, YOUR SHARES WILL BE VOTED AT THE SPECIAL MEETING
IN THE MANNER SPECIFIED ON YOUR ORIGINAL PROXY. THIS SUPPLEMENT AMENDS AND
SUPPLEMENTS THE INFORMATION IN THE JOINT PROXY STATEMENT DATED JULY 23, 1996.
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UNIROYAL CHEMICAL CORPORATION
Consolidated Statements of Operations
(Unaudited, in millions except per share data)
Three Months Ended Nine Months Ended
------------------- --------------------
June 30, July 2, June 30, July 2,
1996 1995 1996 1995
-------- -------- -------- ---------
Net sales: Chemicals and Polymers $125.3 $122.2 $365.9 $355.1
Crop Protection 104.3 107.4 250.7 222.3
Specialties 70.5 67.3 206.9 201.4
Other 2.0 1.7 5.7 5.8
-------- -------- -------- ---------
Total net sales 302.1 298.6 829.2 784.6
Operating costs and expenses:
Cost of products sold 194.3 195.8 558.0 519.2
Selling, general and
administrative expenses 56.3 55.3 159.3 150.2
-------- -------- -------- ---------
Operating income 51.5 47.5 111.9 115.2
Interest expense 26.7 27.7 80.0 88.0
Other (income) expense 0.2 (0.6) 1.8 (1.4)
-------- -------- -------- ---------
Income before income taxes and
extraordinary charges 24.6 20.4 30.1 28.6
Provision (benefit) for income
taxes 9.9 8.0 12.1 (67.1)
-------- -------- -------- ---------
Income before extraordinary
charges 14.7 12.4 18.0 95.7
Extraordinary charges - early
retirement of debt (0.1) (0.5) (8.3)
-------- -------- -------- ---------
Net income 14.6 12.4 17.5 87.4
Preferred stock dividends earned (0.1) (0.1) (0.3) (0.3)
-------- -------- -------- ---------
Net income applicable to common
shares $14.5 $12.3 $17.2 $87.1
======== ======== ======== ==========
Earnings per common share:
Income before extraordinary
charges $0.59 $0.50 $0.72 $5.80
Extraordinary charges (0.01) --- (0.02) (0.50)
-------- -------- -------- ---------
Net income per common share $0.58 $0.50 $0.70 $5.30
======== ======== ======== ==========
Weighted average shares
outstanding 24.8 24.6 24.6 16.4
======== ======== ======== ==========
Depreciation $12.1 $11.8 $34.5 $32.8
Amortization 5.4 5.2 16.3 15.2
-------- -------- -------- ---------
$17.5 $17.0 $50.8 $48.0
======== ======== ======== ==========
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UNIROYAL CHEMICAL CORPORATION
Consolidated Balance Sheets
(In millions)
June 30, October 1,
1996 1995
--------- ----------
ASSETS
------
(Unaudited)
Current assets
Cash and cash equivalents $31.2 $29.5
Accounts receivable 153.4 159.3
Inventories 196.5 177.6
Other current assets 44.1 39.1
--------- ----------
Total current assets 425.2 405.5
Property, plant and equipment - 378.2 394.5
net
Intangible assets 228.7 241.7
Deferred income taxes 65.7 63.9
Other assets 63.2 66.1
--------- ----------
$1,161.0 $1,171.7
========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities
Accounts payable $90.4 $94.8
Short-term debt 42.2 33.3
Current portion of long-term debt 11.1 11.4
Accrued liabilities 109.2 119.1
--------- ---------
Total current liabilities 252.9 258.6
Long-term debt 888.9 910.2
Accrued postretirement liability 180.9 180.4
Other liabilities 126.0 121.7
Stockholders' equity (deficit)
Preferred Stock 4.2 4.2
Common Stock 0.3 0.3
Additional paid-in capital 177.0 176.8
Accumulated deficit Pension (429.9) (447.5)
liability adjustment (3.6) (3.6)
Cumulative translation adjustment (25.0) (18.5)
Treasury stock (10.7) (10.9)
--------- ----------
Total stockholders' deficit (287.7) (299.2)
--------- ----------
$1,161.0 $1,171.7
