SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[X] Annual Report pursuant to Section 15 (d) of the Securities Exchange
Act of 1934
For the calendar year ended December 31, 2000
OR
[ ] Transition report pursuant to Section 15 (d) of the Securities
Exchange Act of 1934
For the transition period from ________ to _________
Commission file number 0-30270
A. Full title of the Plan and the address of the Plan, if different from
that of the issuer named below:
CROMPTON CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
B. Name of issuer of the securities held pursuant to the Plan and the
address of its principal executive office:
Crompton Corporation
One American Lane
Greenwich, Connecticut 06831
CROMPTON CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
Index to Financial Statements
Independent Auditors' Report
Statements of Net Assets Available for Plan Benefits as of December 31, 2000
and 1999
Statements of Changes in Net Assets Available for Plan Benefits for the
Years Ended December 31, 2000 and 1999
Notes to Financial Statements
Schedule of Assets Held for Investment Purposes at End-of-Year December 31,
2000
Schedule of Reportable Transactions for The Year Ended December 31, 2000
Signature
Exhibit 23 - Consent of KPMG LLP, Independent Auditors
CROMPTON CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
Financial Statements and Schedules
December 31, 2000 and 1999
(With Independent Auditors' Report Thereon)
CROMPTON CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
INDEX
Independent Auditors' Report
Statements of Net Assets Available for Plan Benefits as of December 31, 2000
and 1999
Statements of Changes in Net Assets Available for Plan Benefits for the
Years Ended December 31, 2000 and 1999
Notes to Financial Statements
Schedule
Schedule of Assets Held for Investment Purposes
at End-of-Year December 31, 2000 I
Schedule of Reportable Transactions
For the Year Ended December 31, 2000 II
Independent Auditors' Report
The Board of Directors
Crompton Corporation:
We have audited the accompanying statements of net assets available for plan
benefits of Crompton Corporation Employee Stock Ownership Plan (the "Plan")
as of December 31, 2000 and 1999, and the related statements of changes in
net assets available for plan benefits for the years then ended. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the net assets available for plan benefits as of
December 31, 2000 and 1999, and the changes in net assets available for plan
benefits for the years then ended, in conformity with accounting principles
generally accepted in the United States of America.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of Assets
Held for Investment Purposes at End of Year and Reportable Transactions are
presented for the purpose of additional analysis and are not a required part
of the basic financial statements but are supplementary information required
by the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974. These
supplemental schedules are the responsibility of the Plan's management. The
supplemental schedules have been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion,
are fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/ KPMG LLP
June 15, 2001
CROMPTON CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AS OF DECEMBER 31, 2000 and 1999
2000 1999
Investments, at fair value:
Common stock of Crompton Corporation $ 26,735,247 $ 31,123,665
Fixed Income Fund 12,948,033 14,702,188
Mutual Funds 18,225,058 18,924,955
Cash and short-term investments at cost,
which approximates market 47 30,952
Contributions receivable from participants 439,674 560,162
Contribution receivable from Crompton
Corporation 279,821 355,012
Accrued income 94,720 108,431
Net assets available for plan benefits $ 58,722,600 $ 65,805,365
See accompanying notes to financial statements
CROMPTON CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 2000 and 1999
2000 1999
Investment income:
Interest and dividends $ 2,926,855 $ 2,224,950
Net depreciation in
fair value of investments (8,468,608) (14,052,053)
Net investment loss (5,541,753) (11,827,103)
Contributions:
Employee Rollovers 3,646 11,464
Employee 5,838,726 6,594,511
Employer 3,733,416 4,222,183
ITC divestiture - Plan to Plan transfer - (1,928,708)
Withdrawals and distributions (11,116,800) (5,295,355)
Net decrease (7,082,765) (8,223,008)
Net assets available for plan benefits at the
beginning of the year 65,805,365 74,028,373
Net assets available for plan benefits
at the end of the year $ 58,722,600 $ 65,805,365
See accompanying notes to financial statements
CROMPTON CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 and 1999
1. Basis of Presentation
The accompanying financial statements have been prepared on an accrual basis
of accounting and present the net assets available for plan benefits and
changes in those net assets.
2. Plan Description
The Employee Stock Purchase and Savings Plan was adopted by the Board of
Directors of Crompton Corporation (the "Company") on January 27, 1976.
Effective July 1, 1989, the Board of Directors amended the Plan to convert
it into an Employee Stock Ownership Plan (the "Plan"). The following
description of the Plan provides only general information. For complete
information see the Plan document. The Plan is a defined contribution plan
and is subject to the provisions of the Employee Retirement Income Security
Act of 1974, as amended (ERISA).
Fleet Bank (the "Trustee") has been selected by the Company as custodial
trustee. The Trustee has custodial responsibility for a trust fund on behalf
of the Plan and maintains accounting records for all Plan assets.
Eligibility
Employees of participating affiliates of the Company are eligible to
participate upon attaining the age of 18 and having worked for at least a
thirty (30) consecutive day period of employment.
Contributions and Vesting
The Plan permits an eligible employee to elect to participate by authorizing
a withholding of an amount equal to 1%, 2%, 3%, 4%, 5% or 6% of compensation
as the basic contribution to the Plan. Contributions by the Company to the
Plan are made at an amount equal to 66 2/3% of each participating employee's
basic employee contribution to the Plan. If participants are not eligible
for any other defined contribution plan, additional employee contributions
in 1% increments up to 10% of compensation can be made as supplemental
employee contributions. Supplemental employee contributions are not
eligible for matching Company contributions.
A participant in the Plan is fully vested in his basic and supplemental
contributions. Employer contributions vest 100% over a five-year period at a
rate of 40% after two years of service and an additional 20% per year
thereafter. Forfeitures are accumulated and used to reduce Company
contributions. There were no forfeitures in 2000 and 1999.
Withdrawals/Benefit Payments
Upon termination, death, or retiring, a participant's account shall be
distributed. However, funds can remain in the Plan after retirement
indefinitely with quarterly withdrawals permitted and as long as funds begin
to be distributed after the participant reaches the age of 70 1/2.
A participant may elect to make one withdrawal of his basic or supplemental
contributions in a 12-month period. Withdrawal of basic contributions will
cause a suspension of contributions for a three-month period. A participant
who is fully vested and has withdrawn all of his basic and supplemental
contributions may also elect to withdraw all or part of his employer
contributions. Withdrawal of employer contributions will result in a
suspension of contributions for a six-month period.
Investments Options
The Company's contribution to the Plan is invested in the Crompton
Corporation Common Stock Fund. The Plan provides for investment of employee
contributions in the Crompton Corporation Stock Fund and among ten
investment funds maintained by Fleet Investment Management:
The Crompton Corporation Stock Fund is a fund invested entirely in common
stock of Crompton Corporation. The market value of the common stock is based
on quotations from the New York Stock Exchange.
Fleet Stable Asset Fund - This fund invests primarily in Guaranteed
Investment Contracts ("GIC") issued by highly rated life insurance companies
and also includes a GIC maintained by the Hartford Life Insurance Company
which was part of a prior investment program that was terminated on November
1, 1997. Payout of the funds will commence in six equal annual installments
with the initial payment on November 1, 1997 and with the rate of interest
credited on the declining balance of 5.80%.
Fidelity Advisor Government Fund - This fund invests primarily in
obligations issued or guaranteed by the U.S. Government or any of its
agencies or instrumentalities.
George Putnam Fund of Boston (Class M shares) - The primary objective of
this fund is to provide a diversified portfolio of stocks and bonds that
will provide both capital growth and income.
Putnam Voyager Fund (Class M shares) - The objective of this fund is to
provide capital appreciation by investing in stocks of companies with above
average growth potential.
Putnam International Growth Fund (Class M shares) - The objective of this
fund is to invest in equity securities of companies located outside the
United States.
Invesco Industrial Income Fund The objective of this fund is to provide
income with secondary consideration to capital appreciation by investing in
stocks, bonds and mortgages.
Galaxy Growth and Income Fund - The objective of this fund is to provide
high total returns through long-term capital appreciation and income by
investing primarily in common stock.
Galaxy Asset Allocation Fund - The objective of this fund is to provide a
high total return with a combination of income and long term growth in
assets held by investing in equity securities, fixed income securities and
cash equivalents.
Galaxy Large Company Index Fund - The objective of this fund is to provide
investment results that mirror investment results of U.S. common stocks with
large stock market capitalization as represented by the Standard & Poor's
500 Index.
Galaxy Small Cap Value Fund - The objective of this fund is to provide long-
term capital appreciation by investing in companies that have market
capitalization of up to $1 billion.
Assets in any of the funds may be invested in short-term government or other
securities pending permanent investment. Earnings on each fund will be
reinvested in that fund.
Each participant is permitted to elect to have his basic contribution
invested in any of the funds in 1% increments.
Fund transfers can be made on a daily basis in a minimum of 1% increments.
3. Income Taxes
The Internal Revenue Service has determined and has informed the Company by
a letter dated November 16, 1994 that the Plan and related trust are
designed in accordance with applicable sections of the Internal Revenue Code
(the "IRC"). The Plan's has been amended since receiving the determination
letter. However, the Plan administrator and the Plan's tax counsel believe
that the Plan is designed and is currently being operated in compliance with
the applicable requirements of the IRC.
4. Investments
Mutual Funds
The mutual funds sponsored by registered investment companies are recorded
at market valuations that are based on published market prices. Purchases
and sales are recorded on a trade date basis. Interest income is accrued
when earned. Dividend income is recorded on the ex-dividend date.
Crompton Stock Fund
The Crompton Corporation stock fund is valued at its year-end closing price.
Stable Asset Fund The Stable Asset Fund is valued at cost plus accrued
interest. The carrying amount approximates fair value because of the short
maturity of those instruments.
Group Annuity Contract
The Group Annuity Contract with Hartford Life Insurance Company is valued at
cost plus accrued interest.
Investments Exceeding 5% of Net Assets
The Plan's investments that exceeded 5% of net assets available for plan
benefits as of December 31, 2000 and 1999 are as follows:
2000 1999
Crompton Corporation Common Stock $26,735,247 $31,123,665
Hartford Life Ins. Co.
Group Annuity Contract 4,846,885 7,072,918
Fleet Stable Asset Fund 8,101,148 7,629,270
Galaxy Growth and Income Fund 5,735,784 7,122,243
Appreciation/(Depreciation) in Investments
During 2000 and 1999, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year)
appreciated/(depreciated) in value as follows:
2000 1999
Mutual Funds ($2,046,239) $ 1,270,545
Common Stock of Crompton Corporation ( 6,422,369) (15,322,598)
($8,468,608) ($14,052,053)
5. Plan Expenses
Significant costs of Plan administration, which are payable from the Trust
or by the Company, are generally paid by the Company.
6. Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires the
Plan to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported changes in net
assets available for plan benefits during the reporting period. Actual
results could differ from those estimates.
7. Party-in-Interest Transactions
The Fleet Bank and Hartford Life Insurance Company are parties-in-interest
as defined in Section 3 (14) of the Employee Retirement Income Security Act
of 1974. During the years 2000 and 1999, there were no prohibited party-in-
interest transactions.
8. Plan to Plan Transfer
Ingredient Technology Corporation, a wholly owned affiliate of the Company,
was sold to Chr. Hansen Holding S.A. in January 1999. Account balances of
those employees of Ingredient Technology Corporation were transferred to a
successor plan maintained by Chr. Hansen in a plan to plan transfer.
9. Priorities Upon Termination of the Plan
The Board of Directors of the Company shall have the right from time to time
to add to, modify or amend the Plan, and the Board of Directors shall have
the right to terminate the Plan. The Board of Directors may also authorize
the inclusion in any contract entered into by the Company with the union or
unions representing employees, or with any group or groups of employees, of
a provision or provisions having the effect of limiting or foregoing any
such rights. Further, no addition to, modification, amendment or
termination of the Plan shall have the effect of reducing the entitlement of
any participant benefit accrued under the Plan or of diverting any part of
the assets of the Trust Fund for purposes other than provided in the Plan.
Upon termination of the Plan, or a complete and permanent discontinuance of
contributions of all participants, the value of each participant account, if
not already vested, shall vest fully and all amounts remaining in all
participant accounts shall be delivered and paid as soon as practicable in
accordance with the Plan Document.
10. Subsequent Event-Change of Investment Funds and Trustee
Beginning in 2001, the Company has selected Fidelity Investments to be the
trustee and record keeper, replacing Fleet Bank as trustee and record
keeper. All assets were transferred to similar funds maintained by Fidelity
Investments in January, 2001.
Schedule I
CROMPTON CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END-OF-YEAR
DECEMBER 31, 2000
Identity of Issue, Description of Investment
Borrower, Lessor Including Maturity Date,
or Similar Party Rate of Interest, Collateral,
Par or Maturity Value Current Value
Galaxy Money Market Trust $ 47
Crompton Corporation Common Stock 26,735,247
Galaxy Growth & Income Fund 5,735,784
Galaxy Asset Allocation Fund 2,207,192
Fidelity Advisor Government Investment Fund 742,464
Fleet Stable Asset Fund 8,101,148
Putnam Investments Putnam Voyager Fund 2,635,407
Putnam Investments George Putnam Fund 771,882
Putnam Investments Putnam International Growth Funds 1,386,498
Invesco Funds Group
Inc. Invesco Industrial Income Fund 803,038
Galaxy Galaxy Large Company Index Fund 2,749,479
Galaxy Galaxy Small Cap Value Fund 1,193,314
Hartford Life Insurance
Co. Group Annuity Contract 4,846,885
TOTAL INVESTMENTS $57,908,385
Party-in-interest - All parties listed above
Schedule II
CROMPTON CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
SCHEDULE OF REPORTABLE TRANSACTONS
FOR THE YEAR ENDED DECEMBER 31, 2000
Identity Description Purchase Selling Cost of Current
of Party of Asset Price Price Asset Value of
Involved Asset on Net
Transaction Gain/
Date (Loss)
Crompton 586,763 $6,107,173 $- $6,107,173 $6,107,173 $-
Corporation shares
of
Crompton
Corporation
common
stock
263,951 $- $2,846,395 $3,493,578 $2,846,395 ($647,183)
shares
of
Crompton
Corporation
common
stock
Party-in-interest - All parties listed above
SIGNATURE
The Plan. Pursuant to the requirements of the Securities and Exchange
Act of 1934, the trustees (or other persons who administer the employee
benefit plan) have duly caused this annual report to be signed on its behalf
by the undersigned hereunto duly authorized.
CROMPTON CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
Date: June 26, 2001 By:/s/Peter Barna
Peter Barna
Senior Vice President &
Chief Financial Officer