-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PxDAtDGm+lD4l4pP7J5+pUfjlXR7Rh5rC5IawXPhnbh6BQfufKdqb2ndltFvgeqn NwYUjw2RlOAAIUuxq/WZFw== 0000950117-99-000985.txt : 19990510 0000950117-99-000985.hdr.sgml : 19990510 ACCESSION NUMBER: 0000950117-99-000985 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990507 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WITCO CORP CENTRAL INDEX KEY: 0000107889 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL ORGANIC CHEMICALS [2860] IRS NUMBER: 131870000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-04654 FILM NUMBER: 99614294 BUSINESS ADDRESS: STREET 1: ONE AMERICAN WAY CITY: GREENWICH STATE: CT ZIP: 06831 BUSINESS PHONE: 2035522000 MAIL ADDRESS: STREET 1: ONE AMERICAN LANE CITY: GREENWICH STATE: CT ZIP: 06831 FORMER COMPANY: FORMER CONFORMED NAME: WITCO CHEMICAL CORP DATE OF NAME CHANGE: 19851117 FORMER COMPANY: FORMER CONFORMED NAME: WITCO CHEMICAL CO INC DATE OF NAME CHANGE: 19681203 10-Q 1 WITCO CORPORATION 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to --------- ----------- Commission File Number 1-4654 WITCO CORPORATION - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 13-1870000 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) ONE AMERICAN LANE, GREENWICH, CONNECTICUT 06831-2559 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code)
(203) 552-2000 -------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO --- --- The number of shares of common stock outstanding is as follows: Class Outstanding at April 30, 1999 ----- ----------------------------- Common Stock - $5 par value 57,644,017
WITCO CORPORATION FORM 10-Q For the quarterly period ended March 31, 1999
CONTENTS PAGE -------- ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed consolidated balance sheets at March 31, 1999 (unaudited) and December 31, 1998 2 Condensed consolidated statements of income (unaudited) for the three months ended March 31, 1999 and 1998 3 Condensed consolidated statements of cash flows (unaudited) for the three months ended March 31, 1999 and 1998 4 Notes to condensed consolidated financial statements (unaudited) 5 Independent accountants' report on review of interim financial information 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Item 3. Quantitative and Qualitative Disclosure of Market Risk 16 PART II. OTHER INFORMATION Item 1. Legal Proceedings 17 Item 4. Submission of Matters to a Vote of Security Holders 18 Item 6. Exhibits and Reports on Form 8-K 19 Signatures 20 Index to Exhibits 21
PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS WITCO CORPORATION AND SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands except per share data)
March 31, December 31, 1999 1998 (a) --------- ------------ (Unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 32,691 $ 36,986 Accounts and notes 354,164 324,738 receivable-net Inventories Raw materials and supplies $ 57,574 $ 53,024 Finished goods 212,432 270,006 202,501 255,525 -------- -------- Deferred income taxes 42,850 42,533 Prepaid 16,601 20,836 ---------- ---------- TOTAL CURRENT ASSETS 716,312 680,618 ---------- ---------- PROPERTY, PLANT, AND EQUIPMENT - less accumulated depreciation of $814,396 and $813,311 985,344 961,703 GOODWILL AND OTHER INTANGIBLE ASSETS - less accumulated amortization of $156,593 and $151,472 599,979 611,943 DEFERRED INCOME TAXES 3,610 7,605 DEFERRED COSTS AND OTHER ASSETS 91,097 77,000 ---------- ---------- TOTAL ASSETS $2,396,342 $2,338,869 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Notes and loans payable $ 298,266 $ 201,437 Accounts payable and other current liabilities 443,875 433,154 ---------- ---------- TOTAL CURRENT LIABILITIES 742,141 634,591 ---------- ---------- LONG-TERM DEBT 681,045 688,192 DEFERRED CREDITS AND OTHER LIABILITIES 344,395 358,263 SHAREHOLDERS' EQUITY $2.65 Cumulative Convertible Preferred Stock, par value $1 per share: authorized - 14 shares, issued and outstanding - 6 shares 6 6 Common Stock, par value $5 per share: authorized - 100,000 shares, issued - 57,662 shares and 57,632 shares 288,308 288,163 Capital in excess of par value 161,582 161,267 Accumulated other comprehensive loss (36,672) (14,884) Restricted stock programs (1,712) (1,613) Retained earnings 217,694 225,310 Treasury stock, at cost - 16 shares and 12 shares (445) (426) ---------- ---------- TOTAL SHAREHOLDERS' EQUITY 628,761 657,823 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,396,342 $2,338,869 ========== ==========
(a) The balance sheet at December 31, 1998 has been derived from the audited financial statements at that date. See accompanying notes. 2 WITCO CORPORATION AND SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (in thousands except per share data)
Three Months Ended March 31, 1999 1998 ------------ ----------- Net Sales $ 480,591 $ 507,374 Cost of Goods Sold 364,547 380,220 --------- --------- Gross Profit 116,044 127,154 Operating Expenses Selling expense 25,128 25,712 General and administrative expenses 39,430 34,032 Research and development 19,112 17,885 Other expenses (income) - net 1,522 1,020 Restructuring charges 2,682 2,262 --------- --------- Total Operating Expenses 87,874 80,911 --------- --------- Operating Income 28,170 46,243 Other Expense (Income) - Net Interest expense 12,862 11,990 Interest income (1,016) (1,320) Other expense - net 573 921 --------- --------- Income before Income Taxes 15,751 34,652 Income Taxes 7,245 14,207 --------- --------- Net Income $ 8,506 $ 20,445 ========= ========= Net Income Per Common Share: Basic $ .15 $ .36 ========= ========= Average Number of Common Shares: Basic 57,561 57,443 ========= ========= Net Income Per Common Share: Diluted $ .15 $ .35 ========= ========= Average Number of Common Shares: Diluted 57,735 58,334 ========= ========= Dividends Declared $ .28 $ .28 ========= =========
See accompanying notes. 3 WITCO CORPORATION AND SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended March 31, ----------------------------- 1999 1998 -------- -------- (in thousands) NET CASH USED IN OPERATING ACTIVITIES $(17,114) $(73,393) -------- -------- INVESTING ACTIVITIES Expenditures for property, plant, and equipment (68,471) (52,271) Proceeds from dispositions 2,707 21,770 Other investing activities -- 6,256 -------- -------- Net Cash Used in Investing Activities (65,764) (24,245) -------- -------- FINANCING ACTIVITIES Proceeds from borrowings 388,561 55,288 Payments on borrowings (291,957) (16,567) Dividends paid (16,122) (16,076) Proceeds from exercise of stock options -- 2,771 -------- -------- Net Cash Provided by Financing Activities 80,482 25,416 -------- -------- Effects of Exchange Rate Changes on Cash and Cash Equivalents (1,899) (729) -------- -------- DECREASE IN CASH AND CASH EQUIVALENTS (4,295) (72,951) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 36,986 96,383 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 32,691 $ 23,432 ======== ========
See accompanying notes. 4 WITCO CORPORATION AND SUBSIDIARY COMPANIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE A - Basis of Preparation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature. Operating results for the three month period ended March 31, 1999 are not necessarily indicative of the results that may be expected for the year ending December 31, 1999. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1998. The condensed consolidated financial statements at March 31, 1999 and for the three month periods ended March 31, 1999 and 1998 have been reviewed in accordance with standards established by the American Institute of Certified Public Accountants, by independent accountants Ernst & Young LLP, and their report is included herein. NOTE B - Changes in Accounting Principles In June 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 requires that all derivatives be recorded on the balance sheet as an asset or liability measured at its fair value. Derivatives that are not hedges must be adjusted to fair value through income. If the derivative is a hedge, depending on the nature of the hedge, changes in fair value of the derivative will either be offset against the changes in fair market value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative's change in fair market value will be immediately recognized in earnings. The Company has not yet determined what the effect of SFAS No. 133 will be on its earnings and financial position. Since the standard allows certain foreign currency transactions to be accounted for as hedges for financial reporting purposes that were not previously treated as hedges, the Company may change its policies towards the management of certain foreign currency exposures. Any changes that may occur would be to further reduce the Company's exposure to foreign currency risks. The Company is required to adopt the provisions of SFAS No. 133 by January 1, 2000, however, early application is permitted as of the beginning of any preceding fiscal quarter. NOTE C - Comprehensive Income (Loss) The components of comprehensive income (loss) for the three month period ended March 31, 1999 and 1998 are as follows:
(in thousands of dollars) Three Months Ended March 31, ----------------------- 1999 1998 --------- -------- Net income $ 8,506 $ 20,445 Foreign currency translation adjustments (21,788) (5,176) -------- -------- Comprehensive income (loss) $(13,282) $ 15,269 ======== ========
The components of accumulated other comprehensive loss, net of related tax benefit, at March 31, 1999 and December 31, 1998 are as follows:
(in thousands of dollars) March 30, December 31, 1999 1998 --------- ------------ Foreign currency translation adjustments $(34,629) $(12,841) Pension - minimum liability adjustments (2,043) (2,043) -------- -------- Accumulated other comprehensive loss $(36,672) $(14,884) ======== ========
5 NOTE D - Effective Tax Rate The effective tax rate of 46.0% and 41.0% for the three month periods ended March 31, 1999 and 1998, respectively, as compared to the federal statutory tax rate of 35%, is primarily the result of state income taxes, goodwill amortization which is not deductible for income tax purposes and the effect of the mix between domestic and foreign earnings. The 5% increase in the tax rate as of March 31,1999 as compared to March 31, 1998 is mainly due to the effect of non-deductible amortization costs on reduced earnings. NOTE E - Earnings Per Share The following is an illustration of the reconciliation of the numerator and denominator of basic and diluted EPS computations and other related disclosures.
(in thousands of dollars and shares, Three Months Ended except per share amounts) March 31, ------------------- 1999 1998 -------- -------- Numerator: - --------- Net income $ 8,506 $ 20,445 Cumulative convertible preferred stock dividends (4) (4) -------- -------- Numerator for basic earnings per share - income available to common shareholders 8,502 20,441 Effect of dilutive securities: Cumulative convertible preferred stock dividends 4 4 -------- -------- Numerator for diluted earnings per share - income available to common shareholders after assumed conversions $ 8,506 $ 20,445 ======== ======== Denominator: - ------------ Denominator for basic earnings per share - weighted-average shares 57,561 57,443 Effect of dilutive securities: Employee stock options -- 711 Cumulative convertible preferred stock 99 103 Restricted shares 75 77 -------- -------- Dilutive potential common shares 174 891 -------- -------- Denominator for diluted earnings per share - adjusted weighted - average shares and assumed conversions 57,735 58,334 ======== ======== Basic Earnings Per Share $ .15 $ .36 ======== ======== Diluted Earnings Per Share $ .15 $ .35 ======== ========
NOTE F - Litigation and Environmental The Company is a potentially responsible party (PRP) or a defendant in a number of governmental (federal, state and local) and private actions associated with the release, or suspected release, of contaminants into the environment. As a PRP, the Company may be liable for costs associated with the investigation and remediation of environmental contamination, as well as various penalties and damages to persons, property and natural resources. As of March 31, 1999, the Company was a PRP, or a defendant, in connection with 56 sites at which it is likely to incur environmental response costs as a result of actions brought against the Company pursuant to the federal Comprehensive Environmental Response Compensation and Liability Act (CERCLA), the federal Resource Conservation and Recovery Act (RCRA) or similar state or local laws. With 23 exceptions, all of these sites involve one or more other PRPs, and in most cases there are numerous other PRPs in addition to the Company. CERCLA, RCRA and the state counterparts to these federal laws authorize governments to investigate and remediate actual or suspected damage to the environment caused by the release, or suspected release, of hazardous substances into the environment, or to order the responsible parties to investigate and/or remediate such environmental damage. 6 NOTE F - Litigation and Environmental (continued) The Company evaluates and reviews its environmental reserves for future remediation and other costs on a quarterly basis to determine appropriate reserve amounts. Inherent in this process are considerable uncertainties which affect the Company's ability to estimate the ultimate costs of remediation efforts. Such uncertainties include the nature and extent of contamination at each site, evolving governmental standards regarding remediation requirements, changes in environmental regulations, widely varying costs of alternative cleanup methods, the number and financial condition of other potentially responsible parties at multi-party sites, innovations in remediation and restoration technology, and the identification of additional environmental sites. At March 31, 1999, the Company's reserves for environmental remediation and compliance costs amounted to $115,524, reflecting the Company's estimate of the costs to be incurred over an extended period of time in respect of those matters which are reasonably estimable. At March 31, 1999, $95,546 of the reserves are included in Deferred Credits and Other Liabilities on the Condensed Consolidated Balance Sheets. The Company believes it has provided adequate reserves for these commitments. The Company is a defendant in five similar actions arising out of the Company's involvement in the polybutylene resin manufacturing business in the 1970's. Four of the following cases are currently pending in California state courts and one is pending in Texas state court: East Bay Municipal Utility District v. Mobil Oil Corporation, et al., filed in November 1993, and pending in Superior Court for the County of San Mateo, California; City of Santa Maria v. Shell Oil Company, et al., filed in May 1994, and pending in Superior Court for the County of San Luis Obispo, California; Alameda County Water District v. Mobil Oil Corporation, et al., filed in April 1996, and Marin Municipal Water District v. Shell Oil Company, et al., filed in May 1996, both pending in superior Court for the County of San Mateo; and City of Austin v. Shell Oil Company, et al., filed in June 1996, and pending in the District Court of Travis County, Texas. The actions generally allege that the Company and several other defendants negligently misrepresented the performance of polybutylene pipe and fittings installed in water distribution systems. Other allegations in the California and Texas actions include breach of the California Unfair Practices Act and the Texas Deceptive Practices Act, respectively; breach of warranty, fraud and strict liability. It is possible that the Company may be named as a defendant in future actions arising out of its past involvement in the polybutylene resin manufacturing business. The Company is not a party to any legal proceedings, including environmental matters, which it believes will have a material adverse effect on its consolidated financial position or liquidity. However, the Company's operating results or cash flows could be materially affected in future periods by the resolution of contingencies. Note G - Segment Information For the year ended December 31, 1998, the Company adopted SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information." SFAS No. 131 requires comparative disclosure of limited segment information in financial statements for interim periods after adoption. The adoption of SFAS No. 131 does not affect results of operations or financial position.
(in thousands of dollars) Three Months Ended March 31, ----------------------- 1999 1998 ---------- ---------- Net sales Polymer Chemicals $ 113,531 $ 124,003 OrganoSilicones 112,614 111,688 Performance Chemicals 164,990 177,598 Oleochemicals & Derivatives 89,456 94,085 --------- --------- Total net sales $ 480,591 $ 507,374 ========= ========= Operating income Polymer Chemicals $ 8,081 $ 17,878 OrganoSilicones 12,952 11,797 Performance Chemicals 13,224 19,994 Oleochemicals & Derivatives 3,767 6 --------- --------- Total segment operating income 38,024 49,675 Corporate and unallocated (9,854) (3,432) --------- --------- Operating income 28,170 46,243 Other expense - net (573) (921) Interest expense - net (11,846) (10,670) --------- --------- Income before income taxes $ 15,751 $ 34,652 ========= =========
7 Note H- Other Matters The three month period ended March 31, 1999 includes a gain of $2,200 ($1,342 after-tax or $.02 per common share - diluted) for additional proceeds received on the 1998 disposition of the company's SACI Anti-Corrosion Coatings business. The restructuring charges of $2,682 ($1,636 after-tax or $.03 per common share - diluted) for the three month period ended March 31, 1999 include severance and related costs of $1,710 and other costs primarily associated with the Company's global systems implementation. During the three month period ended March 31, 1999, the Company made cash payments against the restructuring accruals of approximately $7,680 related principally to severance and related costs. The restructuring charges of $2,262 ($1,380 after-tax or $.02 per common share - diluted) for the three month period ended March 31, 1998 include expenditures for equipment at sites previously identified for closure which otherwise would have been capitalized and other costs primarily associated with the Company's global systems implementation. During the three month period ended March 31, 1998, the Company made cash payments against the restructuring accruals of approximately $4,760 related principally to severance and related costs. 8 Independent Accountants' Review Report The Board of Directors Witco Corporation We have reviewed the accompanying condensed consolidated balance sheet of Witco Corporation and Subsidiary Companies as of March 31, 1999, and the related condensed consolidated statements of income for the three-month period ended March 31, 1999 and 1998, and the condensed consolidated statements of cash flows for the three-month period ended March 31, 1999 and 1998. These financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, which will be performed for the full year with the objective of expressing an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the accompanying condensed consolidated financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Witco Corporation and Subsidiary Companies as of December 31, 1998, and the related consolidated statements of operations, shareholders' equity, and cash flows for the year then ended (not presented herein) and in our report dated February 1, 1999, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 1998, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. /s/ ERNST & YOUNG LLP Stamford, Connecticut May 6, 1999 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND FINANCIAL RESOURCES Net cash used in operating activities was $17.1 million for the three month period ended March 31, 1999 as compared to $73.4 million for the same period of 1998. The decrease in cash used in operating activities is mainly due to the timing of payments associated with the 1996 restructuring plan and other initiatives. Total debt increased $89.7 million to $979.3 million at March 31, 1999 as compared to December 31, 1998. The increase in total debt is primarily due to financing capital expenditures and other costs associated with the 1996 restructuring plan and other initiatives and the Company's global systems implementation, as a result of a decrease in net sales and an increase in working capital requirements. The Company has a revolving credit agreement with various banks in the amount of $500 million, $260 million of which was outstanding at March 31, 1999. In addition, the Company has access to short-term uncommitted facilities based on current money market interest rates. As of March 31, 1999, the Company had $35.1 million outstanding on these uncommitted facilities. The Company also has, through certain of its international subsidiaries, arrangements with various banks for lines of credit in the amount of $29.3 million, of which $1 million was utilized as of March 31, 1999. The Company plans to utilize the credit agreement, uncommitted facilities and lines of credit periodically for its operating requirements and planned capital investment program. Based upon the existing covenants under the Company's revolving credit agreement, the Company could have borrowed up to an additional $171 million on its various borrowing arrangements as of March 31, 1999. On March 31, 1999, the Company amended its revolving credit agreement to delay the implementation of a more restrictive financial covenant from April 1, 1999 to January 1, 2000. On January 13, 1999, the Company announced the next phase of its strategic plan, which includes its intention to divest or seek a strategic alliance for its Oleochemical and Derivatives business (ODG). In the event of a transaction which generates proceeds, the proceeds will be used to reduce short-term debt. In addition to the ODG strategic alternatives, the Company will focus its resources on realigning its portfolio mix with an emphasis on its market leadership, high growth, core businesses. The Company also plans to reduce its non-manufacturing operating expenses, including costs related to the corporate infrastructure. On April 28, 1999, the Company's Board of Directors approved the 1999 Enhanced Retirement Opportunity (1999 ERO) as part of its strategic plan. This is a voluntary program, that will provide enhanced retirement benefits to certain U.S. based employees. Certain U.S. based employees as of May 1, 1999 may be eligible for the 1999 ERO if they will be at least 50 years old and will have at least five years of vesting service as of December 31, 1999. The impact the 1999 ERO will have on the Company's earnings and financial position will not be known until participation in the program has been determined. In addition, on May 5, 1999, the Company announced its intention to sell its Petroleum Additives business. The proceeds from this divestiture will be used to reduce short-term debt. It is the Company's belief that annual cash flows from operations, along with the flexibility provided by the credit agreement, uncommitted facilities and lines of credit will be sufficient to fund, for the foreseeable future, operating requirements, the 1996 restructuring plan and other initiatives, capital investments, Year 2000 expenditures, dividend payments, and commitments on environmental remediation projects. RESTRUCTURING CHARGES For information regarding restructuring charges, see Note H of the Notes to Condensed Consolidated Financial Statements. CAPITAL INVESTMENTS AND COMMITMENTS Capital expenditures for the first three months of 1999 amounted to $68.5 million as compared to $52.3 during the same period of 1998. Capital expenditures during the first three months of 1999 were primarily related to the 1996 restructuring plan and other initiatives and the Company's global systems implementation. The Company expects capital expenditures to be between $180 and $200 million for the year. YEAR 2000 State of Readiness The Company is currently in the process of addressing date sensitive system issues associated with the Year 2000. The Company's Year 2000 project is led by the Group Vice President of Corporate Restructuring/Implementation and is managed by an executive steering committee of key management personnel. The Company has assigned business teams, regional and 10 location coordinators and contracted third-party vendors to carry out the Company's Year 2000 compliance plan. The Company's Board of Directors is updated regularly regarding the Year 2000 compliance plan and its progress. The Company's approach to mitigating the Year 2000 issue involves the following five phases: awareness, assessment (including an inventory of hardware, software, process control equipment and monitoring devices for plants, safety systems and other non-information technology systems and equipment), repair/replacement, testing and implementation. In connection with the Company's 1996 restructuring plan and other initiatives, the Company began a worldwide business process redesign and implementation project (Project EDGE). It is anticipated that the new systems implemented as part of Project EDGE, which are Year 2000 compliant, will replace substantially all of the Company's existing information technology (IT) business application systems. All other IT business application systems, which are not part of Project EDGE, and all non-IT systems and equipment (collectively non-EDGE) will be made compliant through the efforts of internal resources and third-party vendors. In order to assess the readiness of its EDGE and non-EDGE systems and equipment with the Year 2000 issue, the Company has completed an inventory of hardware, software, process control equipment and monitoring devices for plants, safety systems and other non-IT systems and equipment. Regarding both the EDGE and non-EDGE projects, the Company has completed the awareness phase, is over 95 percent complete with respect to the assessment phase, is 50 percent complete with respect to the repair/replacement phase and is 30 percent complete with respect to each of the testing and implementation phases. Completion of the assessment phase is expected during the second quarter of 1999, with completion of the repair/replacement, testing and implementation phases to be completed during the third quarter of 1999, with the exception of a small percentage of locations, including the Asia/Pacific region, where we are updating our existing business systems, the repair/replacement, testing and implementation phases will be completed in the fourth quarter 1999. The Company has identified critical raw material suppliers, service providers and major customers and has initiated communications with these third parties in an effort to assess their plans and progress in addressing the Year 2000 issue. The Company is 80 percent complete with respect to its evaluation of critical raw material suppliers, service providers, and major customers. The Company has identified approximately 100 high-impact suppliers whose failure to deliver raw materials could cause disruption to operations and a loss of business. The Company has obtained information from key service providers with respect to their Year 2000 readiness and is in the process of reviewing their Year 2000 compliance status. The Company has also surveyed its major customers regarding their Year 2000 compliance status and is in the process of reviewing the results of these surveys. The Company will closely monitor the Year 2000 readiness of its high-impact suppliers, key service providers and major customers throughout 1999. Costs The total costs associated with Project EDGE and non-EDGE systems and equipment are expected to range from $110-$115 million (including $95-$100 million of capital expenditures), of which $85.3 million has been incurred ($70.0 million capitalized and $15.3 million expensed) to date. Expenditures of $7.6 million were made during the first quarter of 1999 ($6.9 million capitalized and $.7 million expensed). Substantially all of these costs are associated with Project EDGE. The costs associated with the third-party evaluation initiative are not expected to be significant. Risks and Contingency Plans The Company has ascertained that failure to alleviate the Year 2000 issues within its EDGE and non-EDGE projects could result in possible system failure or miscalculations causing disruptions of operations, including, among other things, a temporary inability to process transactions, send invoices, produce products and engage in similar normal business activities, with a corresponding impact on the Company's results of operations. The Company is in the process of developing contingency plans for its critical EDGE and non-EDGE activities, which involve, among other actions, manual and/or external processing and building inventories. The Company is 75 percent complete with respect to the development of such contingency plans and expects to be complete during the second quarter of 1999. To the extent that the operations of critical raw material suppliers, service providers, and major customers are impacted by their failure to address their Year 2000 issues, such disruption may have a direct impact on the Company's results of operations. Contingency plans are being developed and will include, but will not be limited to, building inventories, switching suppliers, managing production levels and finding alternate methods of transportation. The Company is 75 percent complete with respect to the development of its third-party contingency plans, with preliminary plans for raw material suppliers and service providers already completed. Reviews and revisions of such plans will be made throughout 1999 as circumstances warrant. The Company is confident that the Year 2000 issues will be resolved by the implementation of the EDGE and non-EDGE projects and the completion of the third-party initiative. If the measures associated with the EDGE and non-EDGE projects, as well as the efforts associated with critical raw material suppliers, service providers, and major customers, were to fail, the contingency plans currently being formulated will be implemented. The amount of potential liability and lost revenue 11 associated with the failure to alleviate the Year 2000 issues or implement appropriate contingency plans cannot be reasonably estimated at this time. EURO CONVERSION On January 1, 1999, certain member countries of the European Union adopted the Euro as their common legal currency. Between January 1, 1999 and January 1, 2002, transactions may be conducted in either the Euro or the participating countries national currency. However, by July 1, 2002, the participating countries will withdraw their national currency as legal tender and complete the conversion to the Euro. The Company conducts business in Europe and does not expect the conversion to the Euro to have an adverse effect on its competitive position or consolidated financial position. The Company believes that the implementation of Project EDGE will allow the Company to conduct business transactions in both the Euro as well as the participating countries national currency. The Company has determined that failure to implement systems that are able to process both the Euro and participating countries national currency may cause disruptions to operations including, among other things, a temporary inability to process transactions, send invoices or engage in normal business activities. These problems could be substantially alleviated with manual processing. However, this would cause delays in certain normal business activities. CONTINGENCIES The Company is a potentially responsible party (PRP) or a defendant in a number of governmental (federal, state and local) and private actions associated with the release, or suspected release, of contaminants into the environment. As a PRP, the Company may be liable for costs associated with the investigation and remediation of environmental contamination, as well as various penalties and damages to persons, property and natural resources. The Company is not a party to any legal proceedings, including environmental matters, which it believes will have a material adverse effect on its consolidated financial position or liquidity. However, the Company's results of operations or cash flows could be materially affected in future periods by the resolution of contingencies. See Note F of Notes to Condensed Consolidated Financial Statements. RESULTS OF OPERATIONS First quarter 1999 net sales of $480.6 million were $26.8 million, or approximately 5 percent, lower than the same quarter of 1998. The shortfall was attributable to a decline in volume of approximately 3 percent, partially offset by a more favorable product sales mix. Net income for the first quarter of 1999 was $8.5 million compared to $20.4 million for the same quarter of 1998. The decline was mainly due to reduced sales volume. An increase in operating expenses primarily attributable to higher general and administrative expenses, including costs associated with business process improvement initiatives, and higher research and development costs added to the decline. Higher depreciation and net interest expenses, along with a 5 percent increase in the effective tax rate also contributed to the decrease in net income. The higher tax rate was mainly related to the effect of non-deductible amortization costs on reduced earnings and non-recurring tax benefits recorded in 1998. 12 SEGMENT INFORMATION Segment net sales and operating income for the first quarter of 1999 and 1998 are set forth on the following table.
Three Months Ended March 31, (Unaudited - In Millions) 1999 1998 ----------- ----------- Net sales Polymer Chemicals $113.5 $124.0 OrganoSilicones 112.6 111.7 Performance Chemicals 165.0 177.6 Oleochemicals & Derivatives 89.5 94.1 ----------- ----------- Net sales $480.6 $507.4 =========== =========== Operating income Polymer Chemicals $ 8.1 $17.8 OrganoSilicones 13.0 11.8 Performance Chemicals 13.2 20.0 Oleochemicals & Derivatives 3.8 - Corporate and unallocated (9.9) (3.4) ----------- ----------- Operating income $28.2 $46.2 =========== ===========
POLYMER CHEMICALS Polymer Chemicals' net sales for the first quarter of 1999 declined $10.5 million, or approximately 8 percent, to $113.5 million compared to the same period of 1998. This shortfall was primarily the result of a decline in volume of approximately 13 percent caused by the impact of the 1998 swap of Witco's epoxy systems and adhesives business for Ciba Specialty Chemicals' PVC heat stabilizers business, product rationalization, weaker demand for marine antifouling coatings in Asia and competitive pressures in North America in selected markets. The adverse impact of these items was partially offset by a more favorable product sales mix. Operating income for the first quarter of 1999 declined $9.8 million to $8.1 million compared to the same quarter of 1998. This was directly attributable to lower sales volume as well as additional costs associated with a February 1999 fire at the Company's Bergkamen, Germany facility. ORGANOSILICONES First quarter 1999 net sales of $112.6 million for OrganoSilicones were $.9 million, or approximately 1 percent, greater than the same period in 1998. Shipments were up approximately 1 percent with increases reported in North America and Asia Pacific. The adverse effect of the devaluation of the Brazilian Real was offset by a weakening of the US dollar against most other world currencies and a more favorable product sales mix. First quarter 1999 operating income of $13.0 million was $1.2 million, or approximately 10 percent, higher than the same quarter of the prior year. Although volume improved, the increase in operating income was mainly due to improved margins attributable to increased operating efficiencies and a more favorable product sales mix. PERFORMANCE CHEMICALS Performance Chemicals' net sales of $165.0 million for the first quarter of 1999 were $12.6 million, or approximately 7 percent, less than 1998. Although volume was flat compared to the prior year, the arrangement entered into with Petro-Canada Lubricants in late 1998 resulted in an expansion of the paraffinic white oil business. With continued weakness in the oil field surfactants and polyester markets, this less favorable product mix was responsible for the decline in net sales. Current quarter operating income of $13.2 million, which included a $2.2 million non-recurring gain for additional proceeds received on the 1998 disposition of the SACI Anti-Corrosion Coatings business, represented a decrease of $6.8 million, or approximately 34 percent, compared to the prior year. The decrease was driven by the revenue shortfall and additional costs attributable to fires at the segment's Petrolia, Pennsylvania facility and at Petro-Canada's refinery during the first quarter of 1999. 13 OLEOCHEMICALS AND DERIVATIVES Oleochemicals and Derivatives' first quarter 1999 net sales of $89.5 million were $4.6 million, or approximately 5 percent, lower than the same quarter of 1998. The decline was attributable principally to a volume decline of approximately 5 percent of low margin products. Also contributing to the decrease in net sales were lower prices related to formula sales contracts that are based on raw material prices, which were lower in the first quarter of 1999 as compared to the same period last year. Operating income for the first quarter of 1999 increased significantly from the prior year's break-even quarter to $3.8 million. The increase was attributable to a reduction in operating expenses, lower raw material costs and an improved product mix, including increased sales of refined glycerin due to the installation of a new glycerin still. OUTLOOK During 1999, the Company will take steps to implement the next phase of its strategic plan focusing its resources on its market leadership, high growth businesses: Polymer Chemicals, OrganoSilicones and Industrial Specialties. Refined Products, a lower growth but market leadership business, will continue as an important part of the Company's portfolio providing cash generation. The Company intends to complete a transaction regarding the divestiture or other strategic alliance of its Oleochemicals and Derivatives Group (ODG) during 1999. The Company has received proposals for this business and is nearing the completion of the second phase of the process. In addition , the Company plans to divest its Petroleum Additives business during 1999. In the event that these transactions generate proceeds, they will be used to reduce short-term debt. The Company also intends to find strategic solutions for its remaining non-core portfolio businesses during 1999. As a result of these actions, the Company will become a smaller but more efficient and focused company with higher quality earnings. As volume and revenue increase during the year and combine with the leverage present in the cost structure, the benefits of the restructuring efforts will begin to become visible in the Company's earnings. In connection with these portfolio changes, the Company also plans to reduce non-manufacturing operating expenses, including costs related to corporate infrastructure, consistent with the restructuring of the portfolio and change in business emphasis. As plans to achieve these reductions are better defined, additional restructuring charges will be taken at various times during 1999 to provide for the costs of transitioning to the new business support structure. Although during the first quarter of 1999 the Company experienced sequential improvement in its businesses, and conditions in certain world regions seem to have stabilized, the Company believes 1999 will continue to be a difficult year and remains cautious about market and economic conditions for the remainder of the year. During 1999, the Company will complete the remaining elements of its three year restructuring program, while continuing its efforts to grow its business in the current environment. Capital spending in 1998 was $281.6 million, the highest level of the three year restructuring plan, and is now expected to be approximately $180 and $200 million during 1999. Total capital spending for the three year period ending in 1999 will exceed original estimates by approximately $63 -$83 million. This will result in significantly higher depreciation in 1999 and future years as compared to 1998. Total debt increased by approximately $90 million during the first quarter of 1999 to $979.3 million. The Company expects debt to continue at approximately this level, or be slightly higher, excluding any proceeds that may be received as a result of the ODG and Petroleum Additives transactions mentioned above. CAUTIONARY STATEMENTS Certain statements made in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" section are "forward looking statements" that involve certain risks and uncertainties. The factors that could cause the actual results to differ materially from those presented herein include, without limitation, the cost and timing of the implementation of the Company's EDGE and non-EDGE projects, the ability of the Company to implement its EDGE and non-EDGE projects before the calendar year 2000, the timely response to and correction by third parties, suppliers and customers to address Year 2000 problems, the ability of the Company to assess and implement contingency plans to its EDGE and non-EDGE projects, the Company's ability to generate sufficient cash flows, the cost and timing of the implementation of certain capital improvements, the cost and timing associated with the cost savings initiatives, the Company's ability to effectively divest certain businesses and enter into other strategic alternatives and transactions regarding other businesses, the amount of proceeds the Company receives as a result of any divestiture or other transaction, the ability of the Company to commercialize new products and bring them to the market place, the ability of the Company to improve its customer service and error free delivery rates, the ability of the Company to implement its sales initiatives, including, realizing cross-business group selling opportunities, account development and a process to track new opportunities, the cost of environmental remediation and compliance efforts, technological or competitive changes in any of the Company's businesses, the ability to 14 reach agreement with third parties on planned business arrangements, the Company's ability to maintain price increases, changes in product mix, availability and pricing of raw material, shifts in market demand, price and product competition, certain global and regional economic conditions and other factors listed from time to time in the Company's other Securities Exchange Commission filings. 15 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK Refer to the Market Risk and Risk Management Polices section of Management's Discussion and Analysis of Financial Condition and Results of Operations included in the Company's annual report on Form 10-K for the year ended December 31, 1998. 16 PART II. OTHER INFORMATION ITEM 1.Legal Proceedings The Company is a potentially responsible party (PRP) or a defendant in a number of governmental (federal, state and local) and private actions associated with the release, or suspected release, of contaminants into the environment. As a PRP, the Company may be liable for costs associated with the investigation and remediation of environmental contamination, as well as various penalties and damages to persons, property and natural resources. As of March 31, 1999, the Company was a PRP, or a defendant, in connection with 56 sites at which it is likely to incur environmental response costs as a result of actions brought against the Company pursuant to the federal Comprehensive Environmental Response Compensation and Liability Act (CERCLA), the federal Resource Conservation and Recovery Act (RCRA) or similar state or local laws. With 23 exceptions, all of these sites involve one or more other PRPs, and in most cases there are numerous other PRPs in addition to the Company. CERCLA, RCRA and the state counterparts to these federal laws authorize governments to investigate and remediate actual or suspected damage to the environment caused by the release, or suspected release, of hazardous substances into the environment, or to order the responsible parties to investigate and/or remediate such environmental damage. The Company evaluates and reviews its environmental reserves for future remediation and other costs on a quarterly basis to determine appropriate reserve amounts. Inherent in this process are considerable uncertainties which affect the Company's ability to estimate the ultimate costs of remediation efforts. Such uncertainties include the nature and extent of contamination at each site, evolving governmental standards regarding remediation requirements, changes in environmental regulations, widely varying costs of alternative cleanup methods, the number and financial condition of other potentially responsible parties at multi-party sites, innovations in remediation and restoration technology, and the identification of additional environmental sites. The Company is a defendant in five similar actions arising out of the Company's involvement in the polybutylene resin manufacturing business in the 1970's. Four of the following cases are currently pending in California state courts and one is pending in Texas state court: East Bay Municipal Utility District v. Mobil Oil Corporation, et al., filed in November 1993, and pending in Superior Court for the County of San Mateo, California; City of Santa Maria v. Shell Oil Company, et al., filed in May 1994, and pending in Superior Court for the County of San Luis Obispo, California; Alameda County Water District v. Mobil Oil Corporation, et al., filed in April 1996, and Marin Municipal Water District v. Shell Oil Company, et al., filed in May 1996, both pending in superior Court for the County of San Mateo; and City of Austin v. Shell Oil Company, et al., filed in June 1996, and pending in the District Court of Travis County, Texas. The actions generally allege that the Company and several other defendants negligently misrepresented the performance of polybutylene pipe and fittings installed in water distribution systems. Other allegations in the California and Texas actions include breach of the California Unfair Practices Act and the Texas Deceptive Practices Act, respectively; breach of warranty, fraud and strict liability. It is possible that the Company may be named as a defendant in future actions arising out of its past involvement in the polybutylene resin manufacturing business. The Company is not a party to any legal proceedings, including environmental matters, which it believes will have a material adverse effect on its consolidated financial position or liquidity. However, the Company's operating results or cash flows could be materially affected in future periods by the resolution of contingencies. 17 ITEM 4. Submission of Matters to a Vote of Security Holders (a) The Company's Annual Meeting of Shareholders was held on April 28, 1999, at the offices of the Company, One American Lane, Greenwich, Connecticut beginning at 10:30 a.m. (b) At the Annual Meeting, the Company's shareholders elected three directors to serve a term expiring in 2002 as follows:
Votes ------------------------------- For Withheld -------------- -------------- Don L. Blankenship 53,482,093 683,980 Harry G. Hohn 53,407,846 758,227 Dan J. Samuel 53,395,272 770,801 Bruce F. Wesson 53,492,052 674,021
Directors who did not stand for election and continue in office until the 2000 Annual Meeting are: Simeon Brinberg, William R. Grant, Richard M. Hayden and Nicholas Pappas. Directors who did not stand for election and continue in office until the 2001 Annual Meeting are: Bruce R. Bond, William G. Burns, E. Gary Cook, Lousie Goeser and William Wishnick. (c) In addition to the election of directors, at the Annual Meeting the Company's shareholders: (i) Ratified the appointment of Ernst & Young LLP as the Company's independent auditors for 1999.
Votes ---------------------------------------------- For Against Abstain --------------- -------------- -------------- 54,080,357 61,388 24,328
18 ITEM 6. Exhibits and Reports on Form 8-K (a) Exhibits 10(i) Amendment No. 1 to Credit Agreement dated March 31, 1999 15 Letter re unaudited interim financial information 27 Financial Data Schedule (b) Reports on Form 8-K There were no reports on Form 8-K filed during the three months ended March 31, 1999. 19 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 thereunto duly authorized. WITCO CORPORATION (Registrant) /s/ BRIAN J. DICK Date: May 7, 1999 --------------------------------- Brian J. Dick Controller - Chief Accounting Officer /s/ EDGAR J. SMITH, JR. Date: May 7, 1999 --------------------------------- Edgar J. Smith, Jr. Vice President, General Counsel and Corporate Secretary 20 WITCO CORPORATION INDEX TO EXHIBITS EXHIBIT DESCRIPTION NO. ----------- ------------------------------------------------------- 10(i) Amendment No. 1 to Credit Agreement dated March 31, 1999 15 Letter re unaudited interim financial information 27 Financial Data Schedule 21 EX-10 2 EXHIBIT 10(I) EXHIBIT 10(i) AMENDMENT NO. 1 TO FIVE-YEAR CREDIT AGREEMENT AMENDMENT dated as of March 31, 1999 to the Credit Agreement dated as of March 31, 1997 (the "Agreement") among WITCO CORPORATION (the "Company"), the ELIGIBLE SUBSIDIARIES referred to therein, the BANKS party hereto (the "Banks") THE CHASE MANHATTAN BANK, as Administrative Agent, and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Documentation Agent (the "Documentation Agent"). W I T N E S S E T H : WHEREAS, the parties hereto desire to amend the Agreement as set forth herein; NOW, THEREFORE, the parties hereto agree as follows: SECTION 1. Defined Terms; References. Unless otherwise specifically defined herein, each term used herein which is defined in the Agreement has the meaning assigned to such term in the Agreement. Each reference to "hereof", "hereunder", "herein" and "hereby" and each other similar reference and each reference to "this Agreement" and each other similar reference contained in the Agreement shall, after this Amendment becomes effective, refer to the Agreement as amended hereby. SECTION 2. Debt. Section 5.07(a) of the Agreement is amended as Follows: (a) the date "March 31, 1999" is changed to "December 31, 1999"; and (b) the date "April 1, 1999" is changed to "January 1, 2000". SECTION 3. Representations of Company. The Company represents and Warrants that as of the date hereof and after giving effect hereto: (a) no Default under the Agreement has occurred and is continuing; and (b) each representation and warranty of the Company set forth in the Agreement is true and correct. SECTION 4. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of New York. SECTION 5. Counterparts; Effectiveness. This Amendment may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Amendment shall become effective as of the date hereof when the Documentation Agent shall have received duly executed counterparts hereof signed by the Company and the Required Banks (or, in the case of any party as to which an executed counterpart shall not have been received, the Documentation Agent shall have received telegraphic, telex or other written confirmation from such party of execution of a counterpart hereof by such party). IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written. WITCO CORPORATION By /s/ James Rutledge ------------------------------------- Title: Vice President and Treasurer MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as a Bank and as Documentation Agent By /s/ Robert Bottamedi ------------------------------------- Title: Vice President THE CHASE MANHATTAN BANK as a Bank and as Administrative Agent By /s/ Mary Elisabeth Swerz ------------------------------------- Title: Vice President ABN AMRO BANK N.V., NEW YORK BRANCH By /s/ John W. Deegan ------------------------------------- Title: Group Vice President By /s/ Pauline McHugh ------------------------------------- Title: Vice President BANCA COMMERCIALE ITALIANA, NEW YORK BRANCH By /s/ Charles Dougherty ------------------------------------- Title: Vice President By /s/ Tiziano Gallonetto ------------------------------------- Title: Assistant Vice President BANK OF AMERICA NT&SA By /s/ Wendy J. Gorman ------------------------------------- Title: Assistant Vice President CITIBANK, N.A. By /s/ Frank Gerbasi ------------------------------------- Title: Vice President COMMERZBANK AG, NEW YORK AND/OR CAYMAN ISLANDS BRANCH By /s/ Robert Donohue ------------------------------------- Title: Senior Vice President By /s/ Peter Doyle ------------------------------------- Title: Assistant Vice President DEUTSCHE BANK AG, NEW YORK BRANCH AND/OR CAYMAN ISLANDS BRANCH By /s/ Jean Hannigan ------------------------------------- Title: Vice President By /s/ Andreas Neumeier ------------------------------------- Title: Vice President FLEET NATIONAL BANK By /s/ Barbara Agostini Keega ------------------------------------- Title: Vice President MELLON BANK, N.A. By /s/ Mark T. Ricci ------------------------------------- Title: Banking Officer THE SUMITOMO BANK, LIMITED, NEW YORK BRANCH By /s/ J. Bruce Meredith ------------------------------------- Title: Senior Vice President EX-15 3 EXHIBIT 15 EXHIBIT 15 LETTER RE: UNAUDITED FINANCIAL INFORMATION ACKNOWLEDGMENT LETTER May 6, 1999 The Board of Directors Witco Corporation We are aware of the incorporation by reference in the Registration Statement (Form S-3, No. 33-45865) and the Post-effective Amendment No. 2 to the Registration Statement (Form S-3, No. 33-58066), each pertaining to the issuance of debentures, the Amendment No. 1 to the Registration Statement (Form S-3, No. 33-58120), pertaining to the issuance of common stock, the Registration Statement (Form S-3, No. 33-65203), pertaining to the issuance of debt securities, preferred stock, and common stock, the Post-effective Amendment No. 2 to the Registration Statement (Form S-8, No. 33-10715), the Post-effective Amendment No. 1 to the Registration Statement (Form S-8, No. 33-30995), and Registration Statement (Form S-8, No. 33-48806), each pertaining to stock option plans of Witco Corporation, the Registration Statement (Form S-8, No. 33-45194), pertaining to an employee benefit plan of Witco Corporation, the Registration Statement (Form S-8, No. 33-60755) and Registration Statement (Form S-8, No. 333-05509), each pertaining to stock option plans, the Registration Statement (Form S-8, No. 333-33221), pertaining to the Witco Corporation 1997 Stock Incentive Plan and the Registration Statement (Form S-8, No. 333-66033), pertaining to an employee benefit plan, of our report dated May 6, 1999 relating to the unaudited condensed consolidated interim financial statements of Witco Corporation and Subsidiary Companies which is included in its Form 10-Q for the quarter ended March 31, 1999. Pursuant to Rule 436(c) of the Securities Act of 1933, our report is not part of the registration statements prepared or certified by accountants within the meaning of Sections 7 or 11 of the Securities Act of 1933. /s/ ERNST & YOUNG LLP Stamford, Connecticut EX-27 4 EXHIBIT 27
5 1,000 3-MOS DEC-31-1999 MAR-31-1999 32,691 0 365,305 11,141 270,006 716,312 1,799,740 814,396 2,396,342 742,141 681,045 288,308 0 6 340,447 2,396,342 480,591 480,591 364,547 364,547 0 341 12,862 15,751 7,245 8,506 0 0 0 8,506 .15 .15
-----END PRIVACY-ENHANCED MESSAGE-----