-----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, DHB9zT6T9nMqlIdCV23yxe76P6CaQtoDhS8H6ocxiGRbT+6xh8rq8qz+R0Xa7lEo 3vlB9n5jVlPZggwIv+AiBg== 0000898822-99-000522.txt : 19991227 0000898822-99-000522.hdr.sgml : 19991227 ACCESSION NUMBER: 0000898822-99-000522 CONFORMED SUBMISSION TYPE: 8-K12G3/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990901 ITEM INFORMATION: FILED AS OF DATE: 19990928 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CROMPTON & KNOWLES CORP CENTRAL INDEX KEY: 0000025757 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL ORGANIC CHEMICALS [2860] IRS NUMBER: 041218720 STATE OF INCORPORATION: MA FISCAL YEAR END: 1225 FILING VALUES: FORM TYPE: 8-K12G3/A SEC ACT: SEC FILE NUMBER: 001-04663 FILM NUMBER: 99719059 BUSINESS ADDRESS: STREET 1: ONE STATION PL STREET 2: METRO CTR CITY: STAMFORD STATE: CT ZIP: 06902 BUSINESS PHONE: 2033535400 MAIL ADDRESS: STREET 1: ONE STATION PLACE STREET 2: METRO CENTER CITY: STAMFORD STATE: CT ZIP: 06902 8-K12G3/A 1 AMENDMENT TO FORM 8-K12G3 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------- FORM 8-K/A CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of Earliest Event Reported): September 1, 1999 CK WITCO CORPORATION (Exact Name of Registrant as Specified in its Charter) Delaware 0-30270 52-2183153 (State or other (Commission File (IRS Employer jurisdiction of Number) Identification incorporation) Number) One Station Place, Metro Center, Stamford, Connecticut 06902 (Address of principal executive offices) (zip code) (203) 353-5400 (Registrant's telephone number, including area code) This amends the CK Witco Corporation ("CK Witco") Form 8-K filed on September 15, 1999 to provide financial statements and pro forma financial information. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (a) Financial Statements of Businesses Acquired Independent Auditors' Report dated February 1, 1999(i). Audited Financial Statements of Witco Corporation ("Witco") and its subsidiaries: 1. Consolidated Balance Sheets--Years Ended December 31, 1998 and 1997 (ii). 2. Consolidated Statements of Operations--Years Ended December 31, 1998, 1997 and 1996 (ii). 3. Consolidated Statements of Shareholders' Equity--Years Ended December 31, 1998, 1997 and 1996 (ii). 4. Consolidated Statements of Cash Flows--Years Ended December 31, 1998, 1997 and 1996 (ii). 5. Notes to the Consolidated Financial Statements (ii). Unaudited Financial Statements of Witco and its subsidiaries: 1. Condensed Consolidated Balance Sheets--June 30, 1999 and December 31, 1998 (iii). 2. Condensed Consolidated Statement of Income for the Three and Six Months Ended June 30, 1999 and 1998 (iii). 3. Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1999 and 1998 (iii). 4. Notes to Condensed Consolidated Financial Statements (iii). ----------------- (i) The Independent Auditors' Report of Ernst & Young LLP is incorporated by reference herein by reference to page F-1 of Witco's Annual Report on Form 10K for the year ended December 31, 1998 (Commission File Number 001-4654). (ii) The Audited Financial Statements of Witco, including the Notes thereto, are incorporated by reference to pages F-2 through F-23 of Witco's Annual Report on Form 10K for the year ended December 31, 1998 (Commission File Number 001-4654). -1- (iii) The Unaudited Financial Statements of Witco including the Notes thereto are incorporated by reference to Item 1 of Witco's Quarterly Report on Form 10Q for the quarter ended June 30, 1999 (Commission file Number 001-4654). (b) Unaudited Pro Forma Combined Financial Information The following unaudited pro forma combined financial information gives effect to the merger using the purchase method of accounting. The information is based upon the historical financial statements of Crompton & Knowles Corporation ("Crompton") and Witco and should be read in conjunction with such historical financial statements, the related notes, and other information contained elsewhere or incorporated by reference in this joint proxy statement-prospectus. Certain items derived from Crompton's and Witco's historical financial statements have been reclassified to conform to the pro forma combined presentation. The unaudited pro forma combined financial information is not necessarily indicative of what the actual combined financial position or results of operations would have been had the foregoing transaction been consummated on the dates set forth therein, nor does it give effect to (i) any transaction other than the merger, (ii) Crompton's results of operations since June 26, 1999 or Witco's results of operations since June 30, 1999, (iii) all of the synergies, cost savings, and one-time charges expected to result from the merger or (iv) the results of final valuations of property, plant and equipment, intangible assets and acquired in-process research and development costs. We are currently developing plans to integrate the operations of the companies, which may involve various costs including severance and other charges, which may be material. We may also revise the allocation of the purchase price when additional information becomes available, including the charge to earnings for acquired in-process research and development costs. Accordingly, the pro forma combined financial information does not purport to be indicative of the financial position or results of operations as of the date hereof, as of the effective time, or any period ending at the effective time, or as of or for any other future date or period. -2- UNAUDITED PRO FORMA COMBINED BALANCE SHEET AS OF JUNE 26, 1999 (CROMPTON) AND JUNE 30, 1999 (WITCO) (IN THOUSANDS) PRO FORMA PRO FORMA CROMPTON WITCO ADJUSTMENTS COMBINED ASSETS CURRENT ASSETS Cash $ 14,243 $ 22,395 $ -- $ 36,638 Accounts receivable 199,368 288,951 -- 488,319 Inventories 318,711 246,120 27,692 (2) 592,523 Other current assets 82,788 52,243 (10,800)(10) 124,231 -------- -------- -------- -------- Total current assets 615,110 609,709 16,892 1,241,711 NON-CURRENT ASSETS Property, plant and equipment 449,804 1,002,079 -- 1,451,883 Cost in excess of acquired net assets 145,563 379,277 (2)(4)(5) 1,185,277 (8)(10) 529,182 (1) 131,255 (3) Goodwill and other intangible assets -- 595,608 (595,608)(1) -- Other assets 170,715 99,770 66,426 (1) 336,086 7,000 (3) (28,087)(4) (5,443)(5) 25,705 (10) ---------- ---------- --------- ---------- TOTAL ASSETS $1,381,192 $2,307,166 $ 526,599 $4,214,957 ========== ========== ======== ========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Notes and loans payable $ 15,327 $ 286,243 $ -- $ 301,570 Account payable 106,396 394,955 (231,167)(1) 270,184 Accrued expenses 133,451 -- 200,258 (1) 333,709 Income taxes payable 79,657 -- 30,909 (1) 110,566 Other current liabilities 14,711 -- -- 14,711 -------- -------- -------- -------- Total current 349,542 681,198 -- 1,030,740 liabilities NON-CURRENT LIABILITIES Long-term debt 668,975 677,334 134,100 (3) 1,436,622 (43,787)(4) Postretirement health care 142,995 -- 61,096 (1) 218,980 liability 14,889 (5) Other liabilities 142,686 336,252 (61,096)(1) 458,272 49 (4) 18,000 (3) 22,381 (5) STOCKHOLDERS' EQUITY Preferred stock -- 6 (5)(6) 1 Common stock 7,733 288,311 (294,856)(6) 1,188 Additional paid-in capital 240,884 161,579 543,946 (8) 1,042,833 294,856 (6) (198,432)(7) Retained earnings 76,830 214,388 (214,388)(8) 76,830 Accumulated other (49,737) (49,905) 46,557 (8) (49,737) comprehensive loss 3,348 (5) Treasury stock at cost (197,944) (488) 198,432 (7) -- Deferred compensation (772) (1,509) 1,509 (8) (772) -------- -------- -------- ---------- Total stockholders' 76,994 612,382 380,967 1,070,343 equity -------- -------- -------- ---------- Total Liabilities & $1,381,192 $2,307,166 $ 526,599 $4,214,957 Stockholders' Equity ========== ========== ======== ========== -3- UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 26, 1998 (CROMPTON) AND DECEMBER 31, 1998 (WITCO) (IN THOUSANDS EXCEPT PER SHARE DATA) PRO FORMA PRO FORMA CROMPTON WITCO ADJUSTMENTS COMBINED Net sales $1,796,119 $1,941,529 $ 60,094 (1) $3,797,742 Cost of products sold 1,146,200 1,469,864 (59,837)(1) 2,555,411 (12) (816)(5) Selling, general and 264,710 246,816 (272)(5) 539,963 administrative 28,709 (1) Depreciation and amortization 80,536 -- 115,619 (1) 206,897 10,742 (9) Research and development 52,775 74,177 (3,879)(1) 123,073 Other expenses (income)-- net -- 37,420 (37,420)(1) -- Special items: Facility closure costs 33,600 -- -- 33,600 (12) Restructuring charges -- (34,764) -- (34,764)(12) (credits) Special environmental -- -- 22,025 (1) 22,025 (12) charge -------- ------- ------- -------- Operating Profit 218,298 148,016 (14,777) 351,537 Interest expense 78,520 48,361 9,781 (3) 133,663 (2,999)(4) Other (income) expense (158,938) (1,957) (5,123)(1) (166,018)(12) Earnings before income taxes -------- -------- ------- -------- and extraordinary loss 298,716 101,612 (16,436) 383,892 Income taxes 115,493 42,677 (1,875)(10) 156,295 (12) Earnings before extraordinary -------- --------- ------- -------- loss $ 183,223 $ 58,935 $(14,561) $ 227,597 (12) ======== ========== ======== ========== EARNINGS PER SHARE -- BASIC: Weighted average shares outstanding 73,696 57,518 126,854 Earnings before extraordinary loss $ 2.48 $ 1.02 $ 1.79 EARNINGS PER SHARE -- DILUTED: Weighted average shares outstanding 75,700 57,958 128,961 (11) Earnings before extraordinary loss $ 2.42 $ 1.02 $ 1.76 -4- UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 26, 1999 (CROMPTON) AND JUNE 30, 1999 (WITCO) (IN THOUSANDS EXCEPT PER SHARE DATA) PRO FORMA PRO FORMA CROMPTON WITCO ADJUSTMENTS COMBINED Net sales $805,466 $974,433 $ 28,515 (1) $1,808,414 Cost of products sold 495,877 734,502 (34,570)(1) 1,195,673 (136)(5) Selling, general and 120,656 127,434 14,218 (1) 262,262 administrative (46)(5) Depreciation and amortization 37,503 -- 60,843 (1) 103,724 5,378 (9) Research and development 22,586 35,633 (1,659)(1) 56,560 Equity income (9,434) -- -- (9,434) Other expenses (income)-- net -- 6,310 (6,310)(1) -- Special items: Restructuring charges -- 3,204 -- 3,204 (12) -------- ------- ---------- --------- Operating profit 138,278 67,350 (9,203) 196,425 Interest expense 26,107 28,291 4,891 (3) 57,789 (1,500)(4) Other (income) expense (40,255) (428) (4,007)(1) (44,690)(12) Earnings before income taxes and -------- ------- -------- ---------- extraordinary loss 152,426 39,487 (8,587) 183,326 Income taxes 55,254 18,164 (1,251)(10) 72,167 (12) -------- -------- -------- ---------- Earnings before extraordinary $ 97,172 $ 21,323 $ (7,336) $ 111,159 (12) loss ======== ======== ======== ========== EARNINGS PER SHARE -- BASIC: Weighted average shares 66,603 57,565 119,805 outstanding Earnings before $ 1.46 $ 0.37 $ 0.93 extraordinary loss EARNINGS PER SHARE -- DILUTED: Weighted average shares 67,925 57,739 121,274(11) outstanding Earnings before $ 1.43 $ 0.37 $ 0.92 extraordinary loss -5- NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION (1) Reflects certain balance sheet and statement of operations reclassifications made to conform to Crompton's and CK Witco's intended presentation. (2) Reflects an adjustment to record inventories at fair value. (3) Estimated costs expected to be incurred as a result of the merger of approximately $131.3 million, net of a related tax benefit of $13.8 million, and debt issue costs of approximately $7.0 million, are principally funded from additional borrowings under available revolving credit facilities. Interest expense on additional borrowings was calculated using the weighted average interest rate on Crompton's revolving credit facility during the periods presented. (4) Reflects the adjustment to record the fair value of Witco's financial instruments, including notes receivable, long-term debt, notes payable and certain off-balance sheet financial instruments, and accordingly the related adjustments to the statements of operations. (5) Reflects an adjustment to record pension and postretirement liabilities at fair value by eliminating any unrecognized gains and losses and any related amortization recorded in the results of operations. (6) Reflects the conversion of all outstanding Crompton common stock ($.10 par value) into shares of CK Witco common stock at a conversion ratio of one share of Crompton common stock for each share of CK Witco common stock ($.01 par value). Also reflects the conversion of Witco common stock ($5.00 par value) into shares of CK Witco common stock at a conversion ratio of one share of Witco common stock into .9242 shares of CK Witco common stock ($.01 par value) and the conversion of one share of Witco preferred stock ($1.00 par value) for one share of CK Witco preferred stock ($.20 par value). (7) Reflects the cancellation of Crompton's and Witco's treasury stock, as provided for in the merger agreement. (8) Reflects the adjustment to stockholders' equity for the purchase price which was calculated by multiplying Witco's outstanding common shares of 57,644,086 at June 30, 1999, by a conversion ratio of .9242 and then multiplied by Crompton's average common share price of $18.646 for a period immediately before and after the announcement of the merger. (9) Reflects the recording of incremental amortization of cost in excess of acquired net assets over 40 years after assigning the fair value of assets and liabilities acquired less any historical amounts recorded by Witco. The results of final valuations of property, plant and equipment, intangible assets and acquired in-process research and development costs have not yet been completed as well as final estimates for severance and other charges, which may be material, related to the integration of operations of the companies. We may revise the allocation of the purchase price and the charge to earnings for acquired in-process research and development when additional information becomes available. -6- (10) Reflects the income tax effect on the adjustments in (2), (3), (4), (5) and (9) above, applying the statutory rate, as appropriate. (11) Assumes Witco's stock options are converted using the same conversion ratio as for the outstanding common shares. (12) The pro forma combined statement of operations includes the following special items: YEAR SIX MONTHS ENDED ENDED DECEMBER 26, JUNE 26, 1998 1999 (CROMPTON) (CROMPTON) AND DECEMBER AND 31, 1998 JUNE 30, (WITCO) 1999 (WITCO) Cost of products sold--Conversion of certain inventories from LIFO to FIFO..................................... $ 7,960 $ -- Facility closure costs............................. 33,600 -- Restructuring charges (credits)--net............... (34,764) 3,204 Environmental charge............................... 22,025 -- Other income--Gain on sale of business and investment (159,028) (44,260) Income taxes--impact of above items................. 53,354 14,855 ------ ------ Income from special items.......................... $ 76,853 $26,201 ======== ======= (13) On August 31, 1999, Witco sold a significant portion of the assets and liabilities of its Oleochemicals and Derivatives business. Total assets and liabilities being sold from this business of $236.6 million and $36.4 million, respectively, have been included in the Witco historical balance sheet, while net sales and net earnings from this business of $260.5 million and $6.4 million, respectively, for the year ended December 31, 1998, and net sales and net earnings of $131.2 million and $5.4 million, respectively, for the six months ended June 30, 1999, have been included in the Witco historical statements of operations. Assuming the divestiture of a significant portion of the assets and liabilities of the Oleochemical and Derivatives business, the pro forma combined total assets and liabilities would have been $4,165.4 million and $3,095.1 million, respectively, and the net sales and net earnings would have been $3,523.6 million and $222.7 million, respectively, for the year ended December 31, 1998 and $1,672.8 million and $104.9 million, respectively, for the six month period ended June 30, 1999. -7- (c) Exhibits. 15.1 Letter re: Unaudited financial information 23.1 Consent of independent auditors Ernst & Young LLP -8- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunder duly authorized. CK WITCO CORPORATION By: /s/ John T. Ferguson II ---------------------------------------- Name: John T. Ferguson II Title: Senior Vice President, General Counsel and Secretary Date: September 28, 1999 -9- EXHIBIT INDEX 15.1 Letter re: Unaudited financial information 23.1 Consent of independent auditors Ernst & Young LLP -10- EX-99 2 EXHIBIT 15.1 -- UNAUDITED FINANCIAL INFORMATION Exhibit 15.1 LETTER RE: UNAUDITED FINANCIAL INFORMATION ACKNOWLEDGMENT LETTER September 23, 1999 The Board of Directors CK Witco Corporation We are aware of the incorporation by reference in the Form 8-KA pertaining to the acquisition of Witco Corporation by CK Witco Corporation, formerly known as Crompton and Knowles Corporation, of our report dated August 11, 1999 relating to the unaudited condensed consolidated interim financial statements of Witco Corporation and Subsidiary Companies which are included in its Form 10-Q for the quarter ended June 30, 1999. Pursuant to Rule 436(c) of the Securities Act of 1933 our reports are not a part of the registration statement prepared or certified by accountants within the meaning of Section 7 or 11 of the Securities Act of 1933. /s/ Ernst & Young LLP Stamford, Connecticut EX-99 3 EXHIBIT 23.1 -- CONSENT OF INDEPENDENT AUDITORS Exhibit 23.1 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Form 8-KA pertaining to the acquisition of Witco Corporation by CK Witco Corporation, formerly known as Crompton & Knowles Corporation, of our report dated February 1, 1999, with respect to the consolidated financial statements and schedule of Witco Corporation and Subsidiary Companies included in its Annual Report (Form 10-K) for the year ended December 31, 1998, filed with the Securities and Exchange Commission. /s/ Ernst & Young LLP Stamford, Connecticut September 23, 1999 -----END PRIVACY-ENHANCED MESSAGE-----