SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): September 1, 1999
CK WITCO CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-30270 52-2183153
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) Number)
One Station Place, Metro Center, Stamford, Connecticut 06902
(Address of principal executive offices) (zip code)
(203) 353-5400
(Registrant's telephone number, including area code)
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This amends the CK Witco Corporation ("CK Witco") Form 8-K filed on September
15, 1999 to provide financial statements and pro forma financial information.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Businesses Acquired
Independent Auditors' Report dated February 1, 1999(i).
Audited Financial Statements of Witco Corporation ("Witco") and its
subsidiaries:
1. Consolidated Balance Sheets--Years Ended December 31, 1998 and
1997 (ii).
2. Consolidated Statements of Operations--Years Ended December 31,
1998, 1997 and 1996 (ii).
3. Consolidated Statements of Shareholders' Equity--Years Ended
December 31, 1998, 1997 and 1996 (ii).
4. Consolidated Statements of Cash Flows--Years Ended December 31,
1998, 1997 and 1996 (ii).
5. Notes to the Consolidated Financial Statements (ii).
Unaudited Financial Statements of Witco and its subsidiaries:
1. Condensed Consolidated Balance Sheets--June 30, 1999 and December
31, 1998 (iii).
2. Condensed Consolidated Statement of Income for the Three and Six
Months Ended June 30, 1999 and 1998 (iii).
3. Condensed Consolidated Statements of Cash Flows for the Six
Months Ended June 30, 1999 and 1998 (iii).
4. Notes to Condensed Consolidated Financial Statements (iii).
-----------------
(i) The Independent Auditors' Report of Ernst & Young LLP is incorporated by
reference herein by reference to page F-1 of Witco's Annual Report on Form
10K for the year ended December 31, 1998 (Commission File Number
001-4654).
(ii) The Audited Financial Statements of Witco, including the Notes thereto,
are incorporated by reference to pages F-2 through F-23 of Witco's Annual
Report on Form 10K for the year ended December 31, 1998 (Commission File
Number 001-4654).
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(iii) The Unaudited Financial Statements of Witco including the Notes thereto
are incorporated by reference to Item 1 of Witco's Quarterly Report on
Form 10Q for the quarter ended June 30, 1999 (Commission file Number
001-4654).
(b) Unaudited Pro Forma Combined Financial Information
The following unaudited pro forma combined financial information
gives effect to the merger using the purchase method of accounting. The
information is based upon the historical financial statements of Crompton &
Knowles Corporation ("Crompton") and Witco and should be read in conjunction
with such historical financial statements, the related notes, and other
information contained elsewhere or incorporated by reference in this joint proxy
statement-prospectus. Certain items derived from Crompton's and Witco's
historical financial statements have been reclassified to conform to the pro
forma combined presentation.
The unaudited pro forma combined financial information is not
necessarily indicative of what the actual combined financial position or results
of operations would have been had the foregoing transaction been consummated on
the dates set forth therein, nor does it give effect to (i) any transaction
other than the merger, (ii) Crompton's results of operations since June 26, 1999
or Witco's results of operations since June 30, 1999, (iii) all of the
synergies, cost savings, and one-time charges expected to result from the merger
or (iv) the results of final valuations of property, plant and equipment,
intangible assets and acquired in-process research and development costs. We are
currently developing plans to integrate the operations of the companies, which
may involve various costs including severance and other charges, which may be
material. We may also revise the allocation of the purchase price when
additional information becomes available, including the charge to earnings for
acquired in-process research and development costs. Accordingly, the pro forma
combined financial information does not purport to be indicative of the
financial position or results of operations as of the date hereof, as of the
effective time, or any period ending at the effective time, or as of or for any
other future date or period.
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UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF JUNE 26, 1999 (CROMPTON) AND JUNE 30, 1999 (WITCO)
(IN THOUSANDS)
PRO FORMA PRO FORMA
CROMPTON WITCO ADJUSTMENTS COMBINED
ASSETS
CURRENT ASSETS
Cash $ 14,243 $ 22,395 $ -- $ 36,638
Accounts receivable 199,368 288,951 -- 488,319
Inventories 318,711 246,120 27,692 (2) 592,523
Other current assets 82,788 52,243 (10,800)(10) 124,231
-------- -------- -------- --------
Total current assets 615,110 609,709 16,892 1,241,711
NON-CURRENT ASSETS
Property, plant and
equipment 449,804 1,002,079 -- 1,451,883
Cost in excess of acquired
net assets 145,563 379,277 (2)(4)(5) 1,185,277
(8)(10)
529,182 (1)
131,255 (3)
Goodwill and other intangible
assets -- 595,608 (595,608)(1) --
Other assets 170,715 99,770 66,426 (1) 336,086
7,000 (3)
(28,087)(4)
(5,443)(5)
25,705 (10)
---------- ---------- --------- ----------
TOTAL ASSETS $1,381,192 $2,307,166 $ 526,599 $4,214,957
========== ========== ======== ==========
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES
Notes and loans payable $ 15,327 $ 286,243 $ -- $ 301,570
Account payable 106,396 394,955 (231,167)(1) 270,184
Accrued expenses 133,451 -- 200,258 (1) 333,709
Income taxes payable 79,657 -- 30,909 (1) 110,566
Other current liabilities 14,711 -- -- 14,711
-------- -------- -------- --------
Total current 349,542 681,198 -- 1,030,740
liabilities
NON-CURRENT LIABILITIES
Long-term debt 668,975 677,334 134,100 (3) 1,436,622
(43,787)(4)
Postretirement health care 142,995 -- 61,096 (1) 218,980
liability 14,889 (5)
Other liabilities 142,686 336,252 (61,096)(1) 458,272
49 (4)
18,000 (3)
22,381 (5)
STOCKHOLDERS' EQUITY
Preferred stock -- 6 (5)(6) 1
Common stock 7,733 288,311 (294,856)(6) 1,188
Additional paid-in capital 240,884 161,579 543,946 (8) 1,042,833
294,856 (6)
(198,432)(7)
Retained earnings 76,830 214,388 (214,388)(8) 76,830
Accumulated other (49,737) (49,905) 46,557 (8) (49,737)
comprehensive loss 3,348 (5)
Treasury stock at cost (197,944) (488) 198,432 (7) --
Deferred compensation (772) (1,509) 1,509 (8) (772)
-------- -------- -------- ----------
Total stockholders' 76,994 612,382 380,967 1,070,343
equity -------- -------- -------- ----------
Total Liabilities & $1,381,192 $2,307,166 $ 526,599 $4,214,957
Stockholders' Equity ========== ========== ======== ==========
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UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 26, 1998 (CROMPTON) AND DECEMBER 31,
1998 (WITCO)
(IN THOUSANDS EXCEPT PER SHARE DATA)
PRO FORMA PRO FORMA
CROMPTON WITCO ADJUSTMENTS COMBINED
Net sales $1,796,119 $1,941,529 $ 60,094 (1) $3,797,742
Cost of products sold 1,146,200 1,469,864 (59,837)(1) 2,555,411 (12)
(816)(5)
Selling, general and 264,710 246,816 (272)(5) 539,963
administrative 28,709 (1)
Depreciation and amortization 80,536 -- 115,619 (1) 206,897
10,742 (9)
Research and development 52,775 74,177 (3,879)(1) 123,073
Other expenses (income)-- net -- 37,420 (37,420)(1) --
Special items:
Facility closure costs 33,600 -- -- 33,600 (12)
Restructuring charges -- (34,764) -- (34,764)(12)
(credits)
Special environmental -- -- 22,025 (1) 22,025 (12)
charge -------- ------- ------- --------
Operating Profit 218,298 148,016 (14,777) 351,537
Interest expense 78,520 48,361 9,781 (3) 133,663
(2,999)(4)
Other (income) expense (158,938) (1,957) (5,123)(1) (166,018)(12)
Earnings before income taxes -------- -------- ------- --------
and extraordinary loss 298,716 101,612 (16,436) 383,892
Income taxes 115,493 42,677 (1,875)(10) 156,295 (12)
Earnings before extraordinary -------- --------- ------- --------
loss $ 183,223 $ 58,935 $(14,561) $ 227,597 (12)
======== ========== ======== ==========
EARNINGS PER SHARE -- BASIC:
Weighted average shares
outstanding 73,696 57,518 126,854
Earnings before
extraordinary loss $ 2.48 $ 1.02 $ 1.79
EARNINGS PER SHARE -- DILUTED:
Weighted average shares
outstanding 75,700 57,958 128,961 (11)
Earnings before
extraordinary loss $ 2.42 $ 1.02 $ 1.76
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UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 26, 1999 (CROMPTON) AND JUNE 30,
1999 (WITCO)
(IN THOUSANDS EXCEPT PER SHARE DATA)
PRO FORMA PRO FORMA
CROMPTON WITCO ADJUSTMENTS COMBINED
Net sales $805,466 $974,433 $ 28,515 (1) $1,808,414
Cost of products sold 495,877 734,502 (34,570)(1) 1,195,673
(136)(5)
Selling, general and 120,656 127,434 14,218 (1) 262,262
administrative
(46)(5)
Depreciation and amortization 37,503 -- 60,843 (1) 103,724
5,378 (9)
Research and development 22,586 35,633 (1,659)(1) 56,560
Equity income (9,434) -- -- (9,434)
Other expenses (income)-- net -- 6,310 (6,310)(1) --
Special items:
Restructuring charges -- 3,204 -- 3,204 (12)
-------- ------- ---------- ---------
Operating profit 138,278 67,350 (9,203) 196,425
Interest expense 26,107 28,291 4,891 (3) 57,789
(1,500)(4)
Other (income) expense (40,255) (428) (4,007)(1) (44,690)(12)
Earnings before income taxes
and -------- ------- -------- ----------
extraordinary loss 152,426 39,487 (8,587) 183,326
Income taxes 55,254 18,164 (1,251)(10) 72,167 (12)
-------- -------- -------- ----------
Earnings before extraordinary $ 97,172 $ 21,323 $ (7,336) $ 111,159 (12)
loss ======== ======== ======== ==========
EARNINGS PER SHARE -- BASIC:
Weighted average shares 66,603 57,565 119,805
outstanding
Earnings before $ 1.46 $ 0.37 $ 0.93
extraordinary loss
EARNINGS PER SHARE -- DILUTED:
Weighted average shares 67,925 57,739 121,274(11)
outstanding
Earnings before $ 1.43 $ 0.37 $ 0.92
extraordinary loss
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NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
(1) Reflects certain balance sheet and statement of operations
reclassifications made to conform to Crompton's and CK Witco's intended
presentation.
(2) Reflects an adjustment to record inventories at fair value.
(3) Estimated costs expected to be incurred as a result of the merger of
approximately $131.3 million, net of a related tax benefit of $13.8
million, and debt issue costs of approximately $7.0 million, are
principally funded from additional borrowings under available revolving
credit facilities. Interest expense on additional borrowings was calculated
using the weighted average interest rate on Crompton's revolving credit
facility during the periods presented.
(4) Reflects the adjustment to record the fair value of Witco's financial
instruments, including notes receivable, long-term debt, notes payable and
certain off-balance sheet financial instruments, and accordingly the
related adjustments to the statements of operations.
(5) Reflects an adjustment to record pension and postretirement liabilities at
fair value by eliminating any unrecognized gains and losses and any related
amortization recorded in the results of operations.
(6) Reflects the conversion of all outstanding Crompton common stock ($.10 par
value) into shares of CK Witco common stock at a conversion ratio of one
share of Crompton common stock for each share of CK Witco common stock
($.01 par value). Also reflects the conversion of Witco common stock ($5.00
par value) into shares of CK Witco common stock at a conversion ratio of
one share of Witco common stock into .9242 shares of CK Witco common stock
($.01 par value) and the conversion of one share of Witco preferred stock
($1.00 par value) for one share of CK Witco preferred stock ($.20 par
value).
(7) Reflects the cancellation of Crompton's and Witco's treasury stock, as
provided for in the merger agreement.
(8) Reflects the adjustment to stockholders' equity for the purchase price
which was calculated by multiplying Witco's outstanding common shares of
57,644,086 at June 30, 1999, by a conversion ratio of .9242 and then
multiplied by Crompton's average common share price of $18.646 for a period
immediately before and after the announcement of the merger.
(9) Reflects the recording of incremental amortization of cost in excess of
acquired net assets over 40 years after assigning the fair value of assets
and liabilities acquired less any historical amounts recorded by Witco. The
results of final valuations of property, plant and equipment, intangible
assets and acquired in-process research and development costs have not yet
been completed as well as final estimates for severance and other charges,
which may be material, related to the integration of operations of the
companies. We may revise the allocation of the purchase price and the
charge to earnings for acquired in-process research and development when
additional information becomes available.
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(10) Reflects the income tax effect on the adjustments in (2), (3), (4), (5) and
(9) above, applying the statutory rate, as appropriate.
(11) Assumes Witco's stock options are converted using the same conversion ratio
as for the outstanding common shares.
(12) The pro forma combined statement of operations includes the following
special items:
YEAR SIX MONTHS
ENDED ENDED
DECEMBER 26, JUNE 26,
1998 1999
(CROMPTON) (CROMPTON)
AND DECEMBER AND
31, 1998 JUNE 30,
(WITCO) 1999 (WITCO)
Cost of products sold--Conversion of certain
inventories from
LIFO to FIFO..................................... $ 7,960 $ --
Facility closure costs............................. 33,600 --
Restructuring charges (credits)--net............... (34,764) 3,204
Environmental charge............................... 22,025 --
Other income--Gain on sale of business and investment (159,028) (44,260)
Income taxes--impact of above items................. 53,354 14,855
------ ------
Income from special items.......................... $ 76,853 $26,201
======== =======
(13) On August 31, 1999, Witco sold a significant portion of the assets and
liabilities of its Oleochemicals and Derivatives business. Total assets and
liabilities being sold from this business of $236.6 million and $36.4
million, respectively, have been included in the Witco historical balance
sheet, while net sales and net earnings from this business of $260.5
million and $6.4 million, respectively, for the year ended December 31,
1998, and net sales and net earnings of $131.2 million and $5.4 million,
respectively, for the six months ended June 30, 1999, have been included in
the Witco historical statements of operations.
Assuming the divestiture of a significant portion of the assets and
liabilities of the Oleochemical and Derivatives business, the pro forma
combined total assets and liabilities would have been $4,165.4 million and
$3,095.1 million, respectively, and the net sales and net earnings would
have been $3,523.6 million and $222.7 million, respectively, for the year
ended December 31, 1998 and $1,672.8 million and $104.9 million,
respectively, for the six month period ended June 30, 1999.
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(c) Exhibits.
15.1 Letter re: Unaudited financial information
23.1 Consent of independent auditors Ernst & Young LLP
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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 hereunder duly authorized.
CK WITCO CORPORATION
By: /s/ John T. Ferguson II
----------------------------------------
Name: John T. Ferguson II
Title: Senior Vice
President, General Counsel
and Secretary
Date: September 28, 1999
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EXHIBIT INDEX
15.1 Letter re: Unaudited financial information
23.1 Consent of independent auditors Ernst & Young LLP
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Exhibit 15.1
LETTER RE: UNAUDITED FINANCIAL INFORMATION
ACKNOWLEDGMENT LETTER
September 23, 1999
The Board of Directors
CK Witco Corporation
We are aware of the incorporation by reference in the Form 8-KA pertaining to
the acquisition of Witco Corporation by CK Witco Corporation, formerly known as
Crompton and Knowles Corporation, of our report dated August 11, 1999 relating
to the unaudited condensed consolidated interim financial statements of Witco
Corporation and Subsidiary Companies which are included in its Form 10-Q for the
quarter ended June 30, 1999.
Pursuant to Rule 436(c) of the Securities Act of 1933 our reports are not a part
of the registration statement prepared or certified by accountants within the
meaning of Section 7 or 11 of the Securities Act of 1933.
/s/ Ernst & Young LLP
Stamford, Connecticut
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Form 8-KA pertaining to the
acquisition of Witco Corporation by CK Witco Corporation, formerly known as
Crompton & Knowles Corporation, of our report dated February 1, 1999, with
respect to the consolidated financial statements and schedule of Witco
Corporation and Subsidiary Companies included in its Annual Report (Form 10-K)
for the year ended December 31, 1998, filed with the Securities and Exchange
Commission.
/s/ Ernst & Young LLP
Stamford, Connecticut
September 23, 1999
