SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): August 23, 1999
Crompton & Knowles Corporation
(Exact Name of Registrant as Specified in its Charter)
Massachusetts 1-4663 04-1218720
(State or other (Commission (IRS Employer
jurisdiction of File 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)
<PAGE>
Item 5. Other Events
Crompton & Knowles Corporation, a Massachusetts corporation, and Witco
Corporation, a Delaware corporation, commenced a series of joint presentations
for shareholders on August 23, 1999. The presentations relate to the planned
merger of the two companies. A copy of the presentation is attached as an
exhibit hereto and is incorporated by reference herein.
<PAGE>
Item 7. Financial Statements and Exhibits
(a) Financial statements of businesses
- Not Applicable
(b) Pro forma financial information.
- Not Applicable
(c) Exhibits.
99.1 Shareholder Presentation dated August 23, 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 hereunder duly authorized.
CROMPTON & KNOWLES CORPORATION
By: /s/ John T. Ferguson
Name: John T. Ferguson II
Title: Secretary
Date: August 24, 1999
<PAGE>
EXHIBIT INDEX
99.1 Shareholder Presentation dated August 23, 1999.
[CROMPTON & KNOWLES CORPORATION LOGO]
[WITCO CORPORATION LOGO]
[CK WITCO CORPORATION LOGO]
Shareholder Presentation
August 1999
<PAGE>
[CROMPTON & KNOWLES CORPORATION LOGO]
[WITCO CORPORATION LOGO]
Participants
Vincent A. Calarco -- Chairman, President & Chief Executive Officer
Crompton & Knowles Corporation
Dr. E. Gary Cook -- Chairman, President & Chief Executive Officer
Witco Corporation
Peter Barna -- Chief Financial Officer
Crompton & Knowles Corporation
Analyst contacts:
Rob Bennett 203-552-2282
Bob Harwood 203-573-3441
<PAGE>
[CROMPTON & KNOWLES CORPORATION LOGO]
[WITCO CORPORATION LOGO]
Transaction Summary
Shareholder vote set for September 1
Structure
Merger of Equals
Tax-free stock for stock exchange
1 share WIT = 0.9242 share CNW
1 share CNK = 1 share CNW
Purchase accounting
Enterprise value: $3.7 billion
<PAGE>
[CROMPTON & KNOWLES CORPORATION LOGO]
[WITCO CORPORATION LOGO]
Introducing CK Witco
The merger creates a global specialty company with leading market and
technology positions, and profitable businesses with strong cash flows...
$3.3 billion revenue
44% of revenues from overseas
10,000 employees
63 manufacturing facilities in 19 countries
Customer focused culture
Solid, profitable businesses with stable cash flows
Operating management depth
<PAGE>
[CROMPTON & KNOWLES CORPORATION LOGO]
[WITCO CORPORATION LOGO]
CK Witco builds shareholder value
CK Witco will provide the opportunity for greater shareholder value
through increased cash flow and both top and bottom line growth...
Top-line growth
Bottom-line growth
Immediately cash flow accretive
EPS accretive in 2001
Lower cost of debt
Strategic & financial flexibility through scale
Greater stock liquidity
<PAGE>
[CROMPTON & KNOWLES CORPORATION LOGO]
[WITCO CORPORATION LOGO]
Top-Line Growth
Product lines are complementary but not competitive. This creates
significant cross-selling opportunities...
Value-added products in leading market positions
Significant customer overlap
Broad customer offerings
Leverage regional and international presence
Market oriented sales force
World-class technology
[Pie Chart Appears Here]
Significant Market Overlap:
Polyer & Rubber Processing 28%
Elastomers & Urethanes 25%
Other 16%
Agriculture 15%
Textiles 10%
Lubricants 6%
<PAGE>
[CROMPTON & KNOWLES CORPORATION LOGO]
[WITCO CORPORATION LOGO]
Bottom-Line Growth
Bottom line growth will be enhanced by merger synergies and lower
cost of debt.
Merger synergies
$60 million - Total synergies
$30 million by 2000
$60 million by 2001
Lower Cost of Debt
$12 million high yield Uniroyal bonds - year 2000
$ 5 million investment grade company - year 2000
$17 million - lower interest cost
<PAGE>
[CROMPTON & KNOWLES CORPORATION LOGO]
[WITCO CORPORATION LOGO]
Consolidation & Globalization in
the Specialty Chemicals Industry
CK Witco is well positioned to successfully compete in a rapidly
evolving industry.
Competitive global market place
Slower top-line growth
Importance of low-cost position
Strategic alliances/joint ventures
One stop shopping
Improved liquidity in equity market
<PAGE>
[CROMPTON & KNOWLES CORPORATION LOGO]
[WITCO CORPORATION LOGO]
C&K Restructuring
Management has a strong track record in integrating acquired
companies, optimizing the business portfolio, improving the cost structure
and buying back stock.
Management has a very successful record of merging
companies.
15 acquisitions in 15 years
Crompton & Knowles acquired Uniroyal Chemical in 1996
Debt reduced from $1.1 billion in 1996 to $668 million
(June 1999)
Improved operating margin from 12.1% in 1996 to 14.5% in
1998
<PAGE>
[CROMPTON & KNOWLES CORPORATION LOGO]
[WITCO CORPORATION LOGO]
C&K Restructuring
Flexible portfolio of businesses
Sale of 50% interest in Gustafson seed treatment business
$180 million cash
Sale of Specialty Ingredients business
$103 million cash
Joint-Venture of nitrile rubber business
New 40,000 metric ton facility in Mexico
High-cost Ohio plant closed
Stock buyback
9.5 million shares repurchased from September 1998 through
April 1999
Average price of $17.85
<PAGE>
[CROMPTON & KNOWLES CORPORATION LOGO]
[WITCO CORPORATION LOGO]
Witco Restructuring
The Witco assets restructuring will enable the new company to
capitalize on growth opportunties with a low-cost structure.
Completing third and final year of restructuring
$678 million in capital improvements
12 plants closed
Consolidation of warehouses, sales and administrative
offices, and R&D facilities
Employment reduced by 1,535
Working capital reduced by 25%
CK Witco to benefit from:
Plant modernization and expansion
Growth platforms
Reduced fixed and variable costs
<PAGE>
[CROMPTON & KNOWLES CORPORATION LOGO]
[WITCO CORPORATION LOGO]
Witco Restructuring
Business portfolio enhanced
Joint ventures
Asset swaps
Divestitures
Oleochemicals and Derivative Group Sale
Sold for $249 million, closing August 31
Proceeds will be applied to debt reduction
Retained Memphis facility to supply polymer
intermediates
Retained portion of Mapleton facility to produce
aluminum alkyls
CK Witco to retain Petroleum Additives business
Fit with C&K's lube additives group
Broadens product offering
<PAGE>
[CROMPTON & KNOWLES CORPORATION LOGO]
[WITCO CORPORATION LOGO]
Business Overview
A global specialty chemicals company with a highly diversified
portfolio of products that have leading market positions.
[Pie Chart Appears Here]
1998 Revenue by Business Group
Specialty Chemicals: 43%
Additives: 32%
Polymers & Processing Equipment: 25%
Leading Market Positions
EPDM #1 in N. America
Urethanes #1 Worldwide
Rubber Chemicals #3 Worldwide
Seed Fungicides #1 Worldwide
Seed Treatment #1 in N. America
Miticides #1 Worldwide
Lubricant Additives #1 in Key Products
Plastic Additives #1 in Key Products
Polymerization Inhibitors #1 in Key Products
Poly Extrusion Systems #1 Worldwide
Polymer Stabilizers #1 in N. America
Aluminum Alkyl Catalysts #2 Worldwide
Silanes #1 Worldwide
Silicone Surf. & Catalysts #1 Worldwide
Refined Products #2 Worldwide
Agricultural Surfactants #1 in N. America
Oilfield Emulsions #1 in N. America
Metal Working Sulfonates #1 Worldwide
<PAGE>
[CROMPTON & KNOWLES CORPORATION LOGO]
[WITCO CORPORATION LOGO]
Expected Business Groupings
[Pie Chart Appears Here]
Specialty Chemicals 43%
Organo-Silicones Industrial Surfactants
Crop Protection Gustafson*
Refined Products Colors
Additives 32%
Polymer Additives
Rubber Chemicals
Lube & Petroleum
Polymer & Processing Equipment 25%
EPDM
Castable Urethanes
Urethane Chemicals
Baxenden*
Nitrile*
Davis-Standard
* Joint Ventures
<PAGE>
[CROMPTON & KNOWLES CORPORATION LOGO]
[WITCO CORPORATION LOGO]
Product Lines
Performance Chemicals
A leading worldwide producer of rubber and chemicals and additives, for
plastics and lubricants.
key products
antioxidants, antiozonants, accelerators, foaming agents, polymer
modifier, petroleum additives, synthetic fluids, polymerization
inhibitors, curatives and dispersants
markets served
Automotive, wire and cables, aerospace, constructions, flooring,
electronics, tires, belts, lubricants, hoses, rubber sponge,
synthetic rubber products, plastics, petrochemicals, additives
Crop Protection
Producer of products for use on high value crops to improve crop quality and
increase yields. A leading international treatment company providing products
to assure germination and healthy seedings.
key products
Fungicides, miticides, insecticides, herbicides, growth regulants
and seed treatment equipment.
markets served
Food and non-food crops with an emphasis on high value crops such as
nuts, citrus, tree and vine fruits, tobacco, cotton and ornamental
plants
Colors
The largest producer of dyes in U.S.
key products
Textile and industrial dyes and auxilary chemicals for the dyeing
process
markets served
About one-half of sales are to the apparel market.
Other textile markets include carpeting and other home and
automotive furnishing. Industrial dyes markets are primarily paper,
leather and ink.
Polymers
The #1 supplier of EPDM in North America. The #1 worldwide supplier of
castable urethanes. Building the world's largest dedicated nitrile rubber
mfg. facility.
key products
EPDM heat, sunlight and ozone resistant rubber, abrasion-resistant
castable urethane prepolymers and oil resistant nitrile rubber.
markets served
EPDM - used in automotive as well as in roofing, hose and wire and
cable insulation. Urethane - industrial and printing rollers, mining,
mechanical goods, industrial tires and sporting goods. Nitrile
rubber - automotive and industrial applications
Polymer Processing Equipment
The #1 worldwide producer of plastics extrusion systems.
key products
Integrated single screw and twin screw extrusion systems with advanced
electronic controls, industrial blow molding equipment and controls.
markets served
Makers of extruded products for the packaging, automotive, appliance,
construction, medical, and power and communications cable markets
<PAGE>
[CROMPTON & KNOWLES CORPORATION LOGO]
[WITCO CORPORATION LOGO]
Product Lines (Cont.)
Performance Chemicals
A leading worldwide producer of petroleum additives, urethanes chemicals and
refined products
key products
Refined products, urethane chemicals, industrial specialties,
petroleum additives, baxenden (J/V)
markets served
Personal care, fabric care, pharmaceuticals, agriculture, oilfield,
urethane products, communication cable, refrigeration, packaging
food, textiles, adhesives, printing ink, marine lubricants
Polymer Chemicals
The #1 worldwide producer of metal working sulfonates and additives & Initiators
key products
Catalysts and additives, organotin and mixed metal stabilizers,
organic peroxides, amide and stearate lubricants, tin stabilizer
intermediates, metal organic products, aluminum alkyls, methyl
aluminum oxane
markets served
Polyvinyl Chloride (PVC), Oleofins, Stearates, Marine Paint Additives
Organo Silicones
The #1 worldwide producer of Silanes, urethanes additives and specialty fluids
key products
Silanes, Urethane Additives, Specialty Fluids
markets served
Plastics, Furniture, Textile, Personal Care, Health Care, Adhesives,
Sealants, Construction, Automotive, Carpeting, Rubber products,
Fiberglass, electronics, antifreeze, coatings, agriculture, insulated
appliances, nonwovens and paper processing
<PAGE>
[CROMPTON & KNOWLES CORPORATION LOGO]
[WITCO CORPORATION LOGO]
Operating Strategies
CK Witco is focused on leveraging core competencies, improving
competitive positions and maintaining a low cost structure
Build and maintain strong market leadership positions
Maintain tight focus on operations
Low-cost structure
Efficiency gains to increase throughput
Focus capital spending on higher-return projects
Prudent acquisition strategy
<PAGE>
[CROMPTON & KNOWLES CORPORATION LOGO]
[WITCO CORPORATION LOGO]
Financial Objectives
EPS growth
Target - 10% per year
Generate a high and stable free cash flow
Target - $150 - $200 Million per year
Maintain a strong debt reduction program
Target - $125 Million per year minimum
Maintain low financial leverage
Target - 35% - 45%
Maintain maximum financial flexibility
Target solid Baa debt rating
<PAGE>
[CROMPTON & KNOWLES CORPORATION LOGO]
[WITCO CORPORATION LOGO]
Pro Forma Financial Data (1)
Diluted EPS
-----------------------------
C&K (5)
EARNINGS $ millions CK Witco Standalone
1998 before special items $ 149.9 (2) $ 1.16 (2) $ 1.55
===============================================================================
1999 $ 1.50 (3) $ 1.60
2000 $ 1.53 (4) $ 1.75
2001 $ 1.91 (4) $ 1.90
EBITDA
1998 Before Special Items $ 592.6 $ 4.60 $ 4.46
TOTAL DEBT
Year End 1998 $ 1,762.0
TOTAL EQUITY
Year end 1998 $ 1,042.6
INTEREST EXPENSE
1998 $ 134.1
RATIOS
Debt to total capital 63%
Debt to EBITDA 2.9X
EBITDA to interest 4.4X
(1) 1998 Data from Joint Proxy Statement
(2) Includes Witco for all of 1998
(3) Average CK Witco earnings estimates from Merrill Lynch, Salomon Smith
Barney; assumes Witco results included from 9/1/99
(4) Average CK Witco earnings estimates from First Call, shown under CNK
(5) Company earnings estimates of June 1, 1999
<PAGE>
[CROMPTON & KNOWLES CORPORATION LOGO]
[WITCO CORPORATION LOGO]
[CK WITCO CORPORATION LOGO]
A Winning Combination
A leading global specialty chemical company
with
strong market positions in key segments
led by
a seasoned management team
creating value
for shareholders & customers
<PAGE>
[CROMPTON & KNOWLES CORPORATION LOGO]
[WITCO CORPORATION LOGO]
Information in this presentation 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 targeted cash flow, revenue
and earnings growth, the timing and quantity of merger cost savings, certain
global and regional economic conditions and other factors detailed in the
Company's Securities and Exchange Commission filings.