-----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, SB3OA9OYI+Vqw31wvSS55CTU+Z9KKiuZXO4FpxbjshwPm/70aVRdMe926dmMbdeT Ur6LyTabCrLN6B5aAXMR2w== 0000950157-99-000425.txt : 19990805 0000950157-99-000425.hdr.sgml : 19990805 ACCESSION NUMBER: 0000950157-99-000425 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990802 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990804 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: 8-K SEC ACT: SEC FILE NUMBER: 001-04654 FILM NUMBER: 99677632 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 8-K 1 WITCO'S CURRENT REPORT ============================================================================ 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 2, 1999 WITCO CORPORATION (Exact name of registrant as specified in its charter) ------------------ Delaware 001-4654 13-187000 (State or other jurisdiction (Commission File Number) (I.R.S. Employer of incorporation) Identification Number) ------------------ One American Lane Greenwich, Connecticut 06831-2559 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (203) 552-2000 N/A (Former name or former address, if changed since last report) ============================================================================ ITEM 5. OTHER EVENTS Witco Corporation, a Delaware corporation, issued a press release on August 2, 1999, announcing results for the six months ended June 30, 1999. A copy of this press release is attached as an exhibit hereto and is incorporated by reference herein. Item 7. Financial Statements and Exhibits. (a) Financial statements of businesses acquired. - Not Applicable (b) Pro forma financial information. - Not Applicable (c) Exhibits. 99.1 Press Release dated August 2, 1999. 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 hereunto duly authorized. WITCO CORPORATION (Registrant) Date: August 4, 1999 By: /s/ Brian J. Dick --------------------------- Name: Brian J. Dick Title: Vice President, Finance & Controller EXHIBIT INDEX Exhibit No. Description of the Exhibit 99.1 Press Release dated August 2, 1999. Exhibit 99.1 Witco Contacts: Robert Bennett 203 552-2282 Director of Investor Relations Patricia McLean 203 552-2273 Director of Communications For Immediate Release WITCO REPORTS SECOND QUARTER RESULTS GREENWICH, CT-- August 2, 1999 -- Witco Corporation (NYSE:WIT) today reported second quarter 1999 net sales of $493.8 million which were $10.5 million, or 2 percent, lower than the same quarter of the prior year. The decline was mainly due to an unfavorable product sales mix and an adverse effect on net sales of approximately $8 million attributable to the comparatively stronger US dollar. The negative impact of these factors was partially offset by an increase in volume. Net income for the second quarter of 1999 was $12.8 million, or $.22 per common share - diluted, compared to $15.2 million, or $.26 per common share - diluted, for the corresponding quarter of 1998. The $2.4 million decline was primarily due to higher net interest expense resulting from increased short-term borrowing, and the above mentioned shortfall in net sales. These unfavorable factors were partially offset by a reduction in performance based compensation costs and lower restructuring charges. E. Gary Cook, Chairman, President and Chief Executive Officer commented, "Both revenue and operating income improved sequentially over the first quarter, but they both lagged behind last year through the first half. The challenge of building on this modest success remains significant. Further top- and bottom-line growth depends on increasing volume both by stronger performance in the market place and by successfully leveraging the capacity from our new facilities and expansions at our Memphis, TN and Taft, LA Polymer Chemicals facilities and our Performance Chemicals facility in Houston, TX as well as continued stability in global economic conditions." He further stated, "In January we announced the next phase of our strategy to become a more focused, market leading specialty chemical company. Events of the past quarter have moved Witco closer to this goal. We reached an agreement with Goldschmidt and SKW to divest the Oleochemicals & Derivatives business, completed the second phase of our SAP implementation, started up a modernized stearates facility in Memphis, and announced an early retirement program as part of our ongoing cost reduction program. On June 1, we entered into and announced a merger agreement with Crompton & Knowles, which will create a $3.4 billion global specialty chemicals leader." Net sales for the six months ended June 30, 1999 of $974.4 million were $37.2 million, or 4 percent, below the corresponding period of 1998. The shortfall in revenue was primarily the result of an unfavorable product sales mix, lower volume and the adverse effect of the comparatively stronger US dollar on net sales of approximately $7 million. For the six months ended June 30, 1999, net income was $21.3 million, or $.37 per common share - diluted, compared to $35.6 million, or $.61 per common share - diluted, for the same period of 1998. The lower earnings were mainly the result of the above mentioned decline in net sales. An increase in general and administrative expenses, including costs attributable to business process improvement initiatives, and higher net interest expense due to an increase in debt, added to the shortfall. Following are segment highlights for the second quarter: Polymer Chemicals' net sales for the second quarter of 1999 of $118.8 million were $5.9 million, or 5 percent, lower than the second quarter of 1998. The reduction in net sales was mainly attributable to the 1998 swap of businesses with Ciba Specialty Chemicals, which involved the receipt of a PVC heat stabilizers business that had comparatively higher sales prices but substantially lower volume than the epoxy systems and adhesives business exchanged. The comparatively stronger US dollar also adversely affected current quarter net sales. Operating income for the second quarter of 1999 of $12.8 million was $1.8 million, or 13 percent, below the same period of 1998. The decrease was primarily the result of the above mentioned reduction in net sales and higher fixed costs attributable to asset consolidation initiatives and the Ciba swap. OrganoSilicones' net sales for the second quarter of 1999 increased $.9 million to $113.4 million from the same period of 1998. The increase was mainly attributable to an increase in volume, partially offset by the adverse effect of the strengthening US dollar versus most currencies, principally the Brazilian Real. Operating income of $14.3 million was $2.3 million, or 19 percent, ahead of the same quarter of 1998. The increase was primarily due to an improvement in margins associated with the increase in sales of specialty versus commodity products within the Specialty Fluids business and the comparatively weaker US dollar compared to the Japanese Yen. Performance Chemicals' second quarter 1999 net sales of $174.8 million were $1.2 million, or 1 percent, greater than 1998. The segment benefited from increased volume in the paraffinic white oils business resulting from the arrangement entered into with Petro-Canada Lubricants in late 1998. A vast majority of the revenue attributable to the higher volume was offset by competitive pricing pressures in certain businesses, the adverse impact of the stronger US dollar and the absence of sales associated with the July 1998 sale of the SACI business. Operating income for the second quarter of 1999 of $15.3 million was $1.7 million, or 10 percent, lower than the second quarter of 1998. The major factors that contributed to the decrease in operating income were the above mentioned competitive pricing pressures, additional expenses attributable to the lingering effects of the fire at Petro-Canada's refinery during the first quarter of 1999 and higher costs associated with business process improvement initiatives. Oleochemicals and Derivatives' second quarter 1999 net sales of $86.8 million were $6.7 million, or 7 percent, lower than the same quarter of 1998. The reduction in net sales was primarily attributable to a volume decline in low margin products. The comparatively stronger US dollar and lower prices related to formula sales contracts that are based on raw material prices, which were lower in the second quarter of 1999 compared to the same quarter of the prior year, also contributed to the decrease in net sales. Despite the decrease in net sales, operating income for the second quarter of 1999 increased $.5 million to $2.5 million. The increase was mainly attributable to a reduction in operating expenses and an improved product sales mix including increased sales of refined glycerin due to the installation of a new glycerin still. # # # Information in this press release 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 appropriate cash flow, the cost and timing of the implementation of capital improvements, the cost and timing of the initiatives associated with the company's cost savings program, the company's ability to effectively divest Oleochemicals & Derivatives (ODG) or enter into other strategic alternatives and transactions regarding other businesses, the amount of proceeds the company receives as a result of the ODG divestiture or other transaction, the company's ability to maintain price levels, changes in product mix, availability and pricing of raw materials, price and product competition, certain global and regional economics conditions and other factors detailed in the company's Securities and Exchange Commission filings. (Comparative Tables Attached)
WITCO CORPORATION AND SUBSIDIARY COMPANIES (in thousands except per share data) Three Months Ended June 30, Six Months Ended June 30, 1999(A)(B) 1998(A)(B)(C) 1999(A)(B)(C) 1998(A)(B)(C)(D) ----------- ------------- ------------- ---------------- Net Sales $493,842 $504,302 $974,433 $1,011,676 Cost of Goods Sold 369,955 377,567 734,502 757,787 ----------- ------------- ------------- --------------- Gross Profit 123,887 126,735 239,931 253,889 Operating Expenses Selling expense 25,840 25,973 50,968 51,685 General and administrative expenses 37,036 35,913 76,466 69,945 Research and development 16,521 18,314 35,633 36,199 Other expenses (income) - net 4,788 5,721 6,310 6,741 Restructuring charges 522 2,781 3,204 5,043 ----------- ------------- ------------- --------------- Total Operating Expenses 84,707 88,702 172,581 169,613 ----------- ------------- ------------- --------------- Operating Income 39,180 38,033 67,350 84,276 Other Expense (Income) - Net Interest expense 15,429 12,002 28,291 23,992 Interest income (785) (1,374) (1,801) (2,694) Other expense - net 800 674 1,373 1,595 ----------- ------------- ------------- --------------- Income before Income Taxes 23,736 26,731 39,487 61,383 Income Taxes 10,919 11,574 18,164 25,781 ----------- ------------- ------------- --------------- Net Income $ 12,817 $ 15,157 $ 21,323 $ 35,602 =========== ============= ============= =============== Net Income Per Common Share: Basic $.22 $.26 $.37 $.62 =========== ============= ============= =============== Average Number of Common Shares: Basic 57,570 57,528 57,565 57,485 =========== ============= ============= =============== Net Income Per Common Share: Diluted $.22 $.26 $.37 $.61 =========== ============= ============= =============== Average Number of Common Shares: Diluted 57,744 58,052 57,739 58,173 =========== ============= ============= ===============
OPERATIONS BY INDUSTRY SEGMENT Three Months Ended June 30, Six Months Ended June 30, (in thousands of dollars) 1999 1998 1999 1998 - ------------------------------ ------------- ----------- ------------ ----------- Net sales Polymer Chemicals $118,772 $124,691 $232,303 $ 248,694 OrganoSilicones 113,442 112,511 226,056 224,199 Performance Chemicals 174,813 173,572 339,803 351,170 Oleochemicals & Derivatives 86,815 93,528 176,271 187,613 ------------- ----------- ------------ ----------- Net sales $493,842 $504,302 $974,433 $1,011,676 ============= =========== ============ =========== Operating income Polymer Chemicals $ 12,750 $ 14,572 $ 20,831 $ 32,450 OrganoSilicones 14,333 12,033 27,285 23,830 Performance Chemicals 15,334 17,002 28,558 36,996 Oleochemicals & Derivatives 2,451 1,978 6,218 1,984 Corporate and unallocated (5,688) (7,552) (15,542) (10,984) ------------- ----------- ------------ ----------- Operating income $ 39,180 $ 38,033 $ 67,350 $ 84,276 ============= =========== ============ =========== SUMMARY OF NON-RECURRING ITEMS (millions of dollars except Three Months Ended June 30, per share data) 1999 1998 - --------------------------- -------------------------------------- ---------------------------------------------- Pre-Tax After-Tax Net Income Pre-Tax After-Tax Net Net Income Income Income (Loss) Income Income (Loss) (Loss) (Loss) Per Share* (Loss) (Loss) Per Share* ---------- ----------- ----------- ---------- -------------- ------------- Income excluding non- recurring items $24.2 $13.1 $ .23 $29.1 $16.7 $ .29 Restructuring charges (B) (0.5) (0.3) (.01) (2.8) (1.7) (.03) Gain on disposition of businesses (C) - - - 0.4 0.2 - - --------------------------- ---------- ----------- ----------- ---------- -------------- ------------- Income as reported $23.7 $12.8 $.22 $26.7 $15.2 $ .26 - --------------------------- ---------- ----------- ----------- ---------- -------------- ------------- (millions of dollars except Six Months Ended June 30, per share data) 1999 1998 - --------------------------- -------------------------------------- ---------------------------------------------- Pre-Tax After-Tax Net Income Pre-Tax After-Tax Net Net Income Income Income (Loss) Income Income (Loss) (Loss) (Loss) Per Share* (Loss) (Loss) Per Share* - --------------------------- ---------- ----------- ----------- ---------- -------------- ------------- Income excluding non- recurring items $40.5 $22.0 $.38 $61.5 $36.0 $ .62 Restructuring charges (B) (3.2) (2.0) (.03) (5.0) (3.1) (.05) Gain on disposition of an investment (D) - - - 4.5 2.5 .04 Gain on disposition of businesses (C) - --------------------------- 2.2 1.3 .02 0.4 0.2 - ---------- ----------- ----------- ---------- -------------- ------------- Income as reported $39.5 $21.3 $.37 $61.4 $35.6 $ .61 - --------------------------- ---------- ----------- ----------- ---------- -------------- ------------- * Diluted basis
NOTES: All references to per share data throughout the document, including the footnotes, will be on a diluted basis unless otherwise specified. (A) Depreciation expense for the three months ended June 30, 1999 and 1998 and for the six months ended June 30, 1999 and 1998, respectively, was $25,472, $23,737, $50,526, and $46,433. Amortization expense for the respective periods was $5,196, $5,310, $10,317, and $10,615. (B) The restructuring charge of $522 ($318 after-tax or $.01 per common share) for the three month period ended June 30, 1999 primarily relates to costs associated with the company's global systems implementation. The restructuring charge of $3,204 ($1,954 after-tax or $.03 per common share) for the six month period ended June 30, 1999 includes severance and related costs of $1,710 and other costs primarily associated with the company's global systems implementation. The restructuring charges of $2,781 ($1,696 after-tax or $.03 per common share) and $5,043 ($3,076 after-tax or $.05 per common share) for the three and six month periods ended June 30, 1998, respectively, primarily relates to expenditures for equipment at sites previously identified for closure, which otherwise would have been capitalized, and costs associated with the company's global systems implementation. (C) The six month period ended June 30, 1999 includes a gain of $2,200 ($1,342 after-tax or $.02 per common share) for additional proceeds received on the 1998 disposition of the company's SACI Anti- Corrosion Coatings business. The three and six month periods ended June 30, 1998 include a gain of $362 ($221 after-tax; with no per common share effect) on the disposition of the company's epoxy systems and adhesives business. (D) The six month period ended June 30, 1998 includes a gain of $4,484 ($2,466 after-tax or $.04 per common share) as a result of the disposition of an investment. -----END PRIVACY-ENHANCED MESSAGE-----