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, 2001
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 SAVINGS 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 SAVINGS PLAN
Index to Financial Statements
Independent Auditors' Report
Statements of Net Assets Available for Plan Benefits (Modified
Cash Basis) as of December 31, 2001 and 2000
Statements of Changes in Net Assets Available for Plan Benefits
(Modified Cash Basis) for the Years Ended December 31, 2001 and
2000
Notes to Financial Statements
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
Schedule G, Part III - Nonexempt Transactions
Signature
Exhibit 23 - Consent of KPMG LLP, Independent Auditors
CROMPTON CORPORATION
EMPLOYEE SAVINGS PLAN
Financial Statements
and Supplemental Schedule
December 31, 2001 and 2000
(With Independent Auditors' Report Thereon)
CROMPTON CORPORATION
EMPLOYEE SAVINGS PLAN
INDEX
Independent Auditors' Report
Statements of Net Assets Available for Plan Benefits (Modified Cash
Basis) as of December 31, 2001 and 2000
Statements of Changes in Net Assets Available for Plan Benefits
(Modified Cash Basis) for the Years Ended December 31, 2001
and 2000
Notes to Financial Statements
Supplemental Schedules:
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
Schedule G, Part III - Nonexempt Transactions
Independent Auditors' Report
The Board of Directors
Crompton Corporation:
We have audited the accompanying statements of
net assets available for benefits (modified cash
basis) of the Crompton Corporation Employee
Savings Plan (the Plan) as of December 31, 2001 and
2000, and the related statements of changes in
net assets available for benefits (modified cash
basis) 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.
As described in note 1, these financial
statements and supplemental schedules were prepared
on a modified cash basis of accounting, which is a
comprehensive basis of accounting other than accounting
principles generally accepted in the United
States of America.
In our opinion, the financial statements
referred to above present fairly, in all
material respects, the net assets
available for benefits (modified cash basis) of the
Plan as of December 31, 2001 and 2000, and the
changes in net assets available for benefits
(modified cash basis) for the years then ended, on
the basis of accounting described in note 1.
Our audits were performed for the purpose of forming
an opinion on the financial statements taken as a
whole. The accompanying supplemental schedule of
assets (held at end of year) (modified cash basis)
and schedule of nonexempt transactions as of December
31, 2001 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. The supplemental schedules are
the responsibility of the Plan's management. The
supplemental schedules have been subjected to the
auditing procedures applied in the audit 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
Stamford, Connecticut
June 14, 2002
CROMPTON CORPORATION
EMPLOYEE SAVINGS PLAN
Statements of Net Assets Available for Plan Benefits
(Modified Cash Basis)
December 31, 2001 and 2000
Assets 2001 2000
Investments, at fair value:
Crompton Corporation Common
Stock Fund $ 6,705,936 $ 7,888,427
Blended Income Fund 108,462,234 --
Mutual Funds 261,207,973 149,175,382
Participant Loans 6,386,850 2,107,560
Net assets available for $382,762,993 $159,171,369
benefits
See accompanying notes to financial statements
CROMPTON CORPORATION
EMPLOYEE SAVINGS PLAN
Statements of changes in Net Assets Available for Plan Benefits
(Modified Cash Basis)
For the Years Ended December 31, 2001 and 2000
2001 2000
Additions attributed to:
Investment Income:
Interest and dividends $ 15,588,434 $11,371,978
Net (depreciation) in fair value (43,778,784) (17,744,427)
of investments
Net Investment (loss) (28,190,350) (6,372,449)
Contributions:
Employer 11,367,649 2,130,537
Participant 17,359,635 7,596,057
28,727,284 9,726,594
Loan repayments 204,465 88,676
Transfer from merged OSi Specialties,
Inc. 401(k) Savings and Investment
Plan 46,075,324 --
Transfer from merged Crompton
Corporation Individual Account
Retirement Plan 206,937,029 --
Total additions 253,753,752 3,442,821
Deductions attributed to:
Benefits paid to participants (30,090,932) (27,428,786)
Administrative expenses (71,196) (50,717)
Total deductions (30,162,128) (27,479,503)
Net increase (decrease) 223,591,624 (24,036,682)
Net assets available for plan
benefits at beginning of year 159,171,369 183,208,051
Net assets available for plan $382,762,993 $159,171,369
benefits at end of year
See accompanying notes to financial statements
CROMPTON CORPORATION
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(1) Description of the Plan
The following description of the Crompton Corporation Employee
Savings Plan (the "Plan") provides only general information.
Participants should refer to the Plan document for a more
complete description of the Plan's provisions.
The Plan is intended to be a profit sharing plan meeting the
requirements of Section 401(a) of the Internal Revenue Code
("IRC") and contains provisions meeting the requirements of
Sections 401(k) and 401(m) of the IRC.
The Plan administrator is the Crompton Corporation Employee
Benefit Committee. Fidelity Investments is the trustee and
record keeper of the Plan.
The Plan is a defined contribution plan established for the
purpose of encouraging and assisting eligible employees of
Crompton Corporation and subsidiary companies in following a
systematic savings program. The Plan is subject to the
provisions of the Employee Retirement Income Security Act of
1974 as amended (ERISA).
Effective January 1, 2001, Crompton Corporation merged the OSi
Specialties, Inc. 401(k) Savings and Investment Plan ("OSi
Plan"), and the Crompton Corporation Individual Account
Retirement Plan ("IARP") into the Witco Corporation Employee
Retirement Savings Plan ("Witco Plan"), with the successor plan
being named the Crompton Corporation Employee Savings Plan.
The Plan utilizes the modified cash basis of accounting (see
Note 2), whereas the OSi Plan and the IARP utilized the accrual
basis of accounting. Transfers into the Plan in January 2001
from the IARP in the amount of $206,937,029 and from the OSi
Plans in the amount of $46,075,324 were recognized representing
the cash basis of the IARP and OSi Plan. The December 31, 2000
financial statements for the IARP recognized $673,536 of
employer contributions receivable and $587,834 of participant
contributions receivable and the OSi Plan recognized $67,736 of
employer contributions receivable and $178,466 of participant
contributions. These contribution receivables to the IARP and
OSi Plan at December 31, 2000 have been included as
contributions in the 2001 financial statements of the Plan,
consistent with the modified cash basis of accounting.
Employees are eligible to participate in the Plan if they are
eligible to participate in the Witco Plan, OSi Plan, or IARP as
of December 31, 2000 (whether or not participating). All
employees hired on or after January 1, 2001 are eligible to
participate in the Plan beginning on the first day of any
calendar month following 30 days of service.
Participant Contributions
Each year, participants may contribute to the Plan, by means of
payroll deductions, a pre-tax contribution of up to 15% of their
earnings, effective with the first payroll period which ends on
or after the date in which the employee becomes a participant,
provided that the total of pre-tax contributions (and after-tax
contributions, if any) do not exceed 15% of the participant's
earnings. Participants may change the rate of pre-tax
contributions (and/or after-tax contributions, if any) at any
time. Participant contributions are subject to Internal Revenue
Service limitations, which was $10,500 in both 2001 and 2000.
Participants who completed an hour of service under the Witco
Plan on or before January 1, 2001, may contribute to the Plan,
by means of payroll deductions, after-tax contributions of
between 0% and 10% of earnings, effective with the first payroll
period which ends on or after the date in which the employee
becomes a participant.
Participants who completed an hour of service under the OSi Plan
on or before January 1, 2001, may elect to contribute to the
Plan after-tax contributions at a rate of from 2 1/2% to 7 1/2%
of compensation for the Plan year. The aggregate of
a participant's after-tax contributions and pre-tax contributions
at any time may not exceed 15% of the participant's
compensation.
Employer Contributions
If a participant was eligible to participate in the Witco Plan
on December 31, 2000, the Company's matching contribution is 50%
of the first 6% of the participant's after-tax contributions
and/or pretax contributions.
If a participant was eligible to participate in the OSi Plan on
December 31, 2000, the Company's matching contribution is 50% of
the first 7 1/2% of a participant's pre-tax contribution. If a
participant's pre-tax contribution does not equal or exceed 7 1/2%
of the participant's earnings, the Company matches 50% of after-
tax contributions, up to a maximum matching contribution of
after-tax contributions of 3 3/4%.
If a participant was eligible to participate in the IARP on
December 31, 2000, or first completes any hour of service after
January 1, 2001, the Company's basic contribution is equal to 2%
of each participant's earnings (5% for Gustafson employees).
Additionally, the Company makes a supplemental contribution
equal to 2 1/2% of each participant's earnings (Gustafson employees
are not eligible to receive this supplemental contribution.)
The Company may, by appropriate corporate action, increase the
supplemental contributions made by it for any Plan year (or part
of a Plan year) to a higher percentage than 2 1/2%.
Investments of Contributions
Participants' pre-tax contributions, after-tax contributions,
employer contributions and rollover contributions may be
invested in whole percentages among the investment alternatives
made available by the Plan administrator, at the direction of
the participants. Participants may change their investment
elections with respect to existing funds, as well as future
contributions, at any time.
Vesting
Each participant's pre-tax contribution account, after-tax
contribution account and rollover account is 100% fully vested
at all times. Participants' Company contributions vest based on
years of service according to the following vesting schedule:
Years of Service Vested Percentage
Less than 1 0%
1 25%
2 50%
3 75%
4 100%
Each participant is fully (100%) vested in his Company
contribution account in the event of any of the following: his
attainment of normal retirement age while employed by the
Company; his death while an employee of the Company; upon a
change in control of the Company while an employee of the
Company; termination of the Plan or partial termination of the
Plan which affects the participant; or complete discontinuance
of employer contributions to the Plan.
If a participant was eligible to participate in the Witco Plan
on December 31, 2000, he is at all times fully vested in the
portion of his Company contribution account attributable to
qualified non-elective contributions; a participant who had
three years of service or three years of participation service
on December 31, 2000 is fully vested in his Company contribution
account upon completion of three years of participation service;
a participant is fully vested upon attainment of age 55 while
still employed by the Company; and a non-bargaining participant
is fully vested in his Company contribution account in the event
of his termination due to economic conditions.
For those participants who were eligible to participate in the
IARP on December 31, 2000, and any eligible employee hired on or
after January 1, 2001, they are always fully vested in the basic
Company contributions.
Forfeitures
In the event a participant who is not fully vested in his
Company contribution account incurs a break in service, that
portion which is not vested is forfeited. In the event that a
participant who is less than 50% vested in his Company
contribution account makes a voluntary withdrawal of his after-
tax contribution account, any portion of his Company
contribution account attributable to his matched after-tax
contributions in which he is not vested is forfeited. Company
contributions and the earnings thereon forfeited under the
provisions of the Plan are applied to pay administrative
expenses and/or reduce subsequent Company contributions required
under the Plan. In the event that contributions under the Plan
are discontinued or the Plan is terminated, the distributions of
such forfeitures not yet applied are to be credited ratably to
the accounts of active participants. At December 31, 2001
forfeited nonvested accounts totaled $217,372. These accounts
will be applied to reduce future employer contributions.
Withdrawals and Distributions
At age 59 1/2 and thereafter, an active participant can withdraw
funds from the vested balance of his account at any time.
Before age 59 1/2, participants are permitted to make hardship
withdrawals provided that he has an immediate and heavy
financial need, and only if the participant cannot meet that
need from any other source. A participant is not entitled to
receive a hardship withdrawal until he has received all other
distributions and loans available under all qualified plans
maintained by the Company. Hardship withdrawals require
approval by the Employee Benefits Committee. The minimum amount
that can be withdrawn under a hardship withdrawal is the lesser
of $200 or the total amount available for withdrawal, and may
not exceed the amount of the financial need including amounts
necessary to pay any Federal, state and local income taxes or
penalties reasonably expected to result from the distribution,
and are to be paid in one lump sum. If a participant makes a
hardship withdrawal, he is not permitted to resume making
contributions for a period of twelve months subsequent to the
withdrawal.
Upon termination of employment, death, or attainment of age 70 1/2,
a participant is entitled to receive the value of his after-tax
contribution account, pre-tax contribution account, rollover
account, and the vested portion of his Company contribution
account in the form of a single lump sum cash payment.
Distributions are to be made as soon as practicable following
the participant's termination of employment, provided however,
that if the value of a participant's vested balance is greater
than $5,000, the distribution will not be made prior to the
participant's normal retirement age without his consent.
Any participant eligible to participate in the Witco Plan as of
December 31, 2000, may withdraw from the Plan his entire
supplementary after-tax contributions and interest earned
thereon, however, the participant is not permitted to resume
making supplementary after-tax contributions for a period of six
months subsequent to the withdrawal.
Loans
Participants may borrow a minimum of $1,000 up to a maximum of
$50,000 or 50% of their vested account balance. Loan
transactions are treated as a transfer between the investment
funds and the loan fund. There are two types of loans available
that consist of a general loan and a loan to buy a principal
residence. No participant may have more than two loans
outstanding at any given time. The loans are secured by the
balance in the participant's account and bear interest at a rate
of 1% over prime as of the origination date of the loan. Loan
repayments are made automatically through payroll deductions,
with a minimum loan term of six months, and not to exceed five
years, except for a loan for the purpose of purchasing a primary
residence, in which case the loan may not exceed fifteen years.
Participants who were members in the OSi Plan on December 31,
2000, were previously able to obtain a loan for the purpose of
purchasing a primary residence, with terms not exceeding thirty
years.
(2) Significant Accounting Policies
Accounting Basis
The accompanying financial statements have been prepared on a
modified basis of cash receipts and disbursements; consequently,
contributions, interest and the related assets are recognized
when received rather than when earned, and expenses are
recognized when paid rather than when the obligation is
incurred. Accordingly, the accompanying financial statements
are presented on a comprehensive basis of accounting other than
generally accepted accounting principles.
Investment Valuation and Income Recognition
The Plan's investments are stated at fair value except for its
benefit-responsive investment contracts, which are valued at
contract value (Note 3). Fair Value is determined by quoted
market prices, if an active market exists, or redemption values,
which approximate market value. Shares of mutual funds are
valued at the net asset value of shares held by the Plan at year-
end. The Crompton Corporation Stock fund is valued at its year-
end closing price. Participant loans are stated at cost, which
approximates fair value.
Net appreciation (depreciation) in fair value of investments
includes investments bought, sold, and held during the year.
Purchases and sales of securities are recorded on a trade-date
basis. Interest income is recorded on an accrual basis and
dividends are recorded on the ex-dividend date.
Use of Estimates
The preparation of financial statements requires management 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.
Plan Expenses
All Plan expenses may be paid by the Company, however, if not
paid by the Company, may be charged to the Plan and paid from
available forfeitures, or will be charged to each participant
based on his allocable interest in the Plan. The Company
provides administrative and accounting services for the Plan at
no charge.
(3) Investments
The funds available to participants for investing their
contributions and the Company contributions include the Crompton
Corporation Stock fund, various mutual funds which invest in
various diversified stocks and bonds, and a fund which invests
in benefit-responsive insurance contracts.
The Blended Income fund invests in benefit-responsive guaranteed
investment contracts ("GICs") offered by major insurance
companies and other approved financial institutions and in
certain types of fixed income securities. These GICs are stated
at contract value by the Plan's trustee (Fidelity Investments),
which approximates fair value. The average yield on the
Company's GICs was 5.93% during 2001. The crediting interest
rate on these GICs was 2.43% at December 31, 2001. The Blended
Income Fund was not an investment option in 2000.
The fair value of the individual investments that represent 5%
or more of the Plan's net assets are as follows:
December 31
2001 2000
Blended Income Fund $108,462,234 $ 36,061,254
Fidelity Magellan Fund 59,998,453 38,212,541
Fidelity Growth Company 53,386,397 30,342,721
Fidelity Freedom 2010 Fund 33,884,276 12,650,655
U.S. Equity Index 23,353,053 --
Commingled Pool
During 2001 and 2000, 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:
December 31
2001 2000
Crompton Corporation
Common Stock Fund $ (815,921) $ (1,181,176)
Mutual Funds (42,962,864) (16,563,251)
$(43,778,785) $(17,744,427)
(4) Party-in-Interest Transactions
Fidelity Investments, Inc., the company, and participants
receiving plan loans are parties-in-interest as defined in
Section 3(14) of ERISA. During the years 2001 and 2000, there
were no prohibited party-in-interest transactions.
(5) Income Tax Status
The Internal Revenue Service ("IRS") has determined and informed
that Company by a letter dated December 14, 1995, that the Plan
and related trust are designed in accordance with applicable
sections of the IRC. Although the Plan has been amended since
receiving the determination letter, 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. The Company applied for a new tax
determination in December, 2001, and is awaiting response from
the IRS.
(6) Plan Termination
The Company by action of its Board of Directors may suspend the
operation of the Plan for any year by omitting all or part of
the employer contributions. While the Company has not expressed
any intent to discontinue, terminate or curtail the Plan, the
Company at its discretion, may terminate or amend the Plan for
any reason at any time provided that no such termination or
amendment shall permit any of the funds established pursuant to
this Plan to be used for any purpose other than the exclusive
benefit of the participating employees. Upon termination of the
Plan, the rights of members to the benefits accrued under the
Plan to the date of termination shall be non-forfeitable.
(7) Subsequent Event - Plan Merger
Effective April 1, 2002, the Uniroyal Chemical Company, Inc.,
Savings Plan A, was merged into the Crompton Employee Savings
Plan. The Provisions and investment options of the Plan as a
result of this merger have remained unchanged.
Effective June 1, 2002, the Uniroyal Chemical Company, Inc.,
Savings Plan for Salaried Employees, was merged into the
Crompton Employee Savings Plan. The provisions and investment
options of the Plan as a result of this merger have remained
unchanged.
8. Nonexempt Transactions
There were unavoidable delays by the Company in submitting
January 2001 employee contributions due to problems encountered
as a result in the change of the Plan's record-keeping. There
were also unintentional delays by the Company in submitting
February 2001 and March 2001 employee contributions for the
Company's subsidiary Davis Standard Corporation due to data
processing systems complications. The Company will be
reimbursing the Plan for lost earnings determined by an interest
calculation based on the number of days the contributions were
delayed.
Schedule H, Line 4i
CROMPTON CORPORATION
EMPLOYEE SAVINGS PLAN
Schedule of Assets (Held at End of Year)
December 31, 2001
Identity of Description of investment
issue, including maturity date, rate of Current
borrower, lessor interest, collateral, par, or Value
or similar party maturity value
*Crompton Corporation Crompton Common Stock Fund $ 6,705,936
*Fidelity Investments Blended Income Fund 108,462,234
Dreyfus Dreyfus Premium Core Bond A 14,489,486
*Fidelity Investments Fidelity Freedom 2010 Fund 33,884,276
*Fidelity Investments Fidelity Growth Company Fund 53,386,397
Dodge & Cox Dodge & Cox Stock Fund 1,813,980
Putnam Investments Putnam Int'l Growth Fund A 16,565,575
*Fidelity Investments Fidelity MSIFT Equity I 12,356,881
*Fidelity Investments Fidelity Magellan Fund 59,998,453
*Fidelity Investments Fidelity U.S. Equity Index Pool 23,353,053
Dreyfus Dreyfus Small Company Value 17,873,485
*Fidelity Investments Fidelity Freedom Income Fund 4,981,452
*Fidelity Investments Fidelity Freedom 2040 135,801
*Fidelity Investments Fidelity Freedom 2030 541,639
*Fidelity Investments Fidelity Freedom 2020 12,541,248
*Fidelity Investments Fidelity Freedom 2000 690,633
Galaxy Galaxy Growth Fund 558,690
*Fidelity Investments Fidelity Founders Discovery Fund 8,036,924
*Participant Loans Participant Loans Receivable with
maturity dates ranging from
January 1, 2002 to October, 2027
and interest rates ranging from
7.00% to 10.00% 6,386,850
Assets available for benefits $382,762,993
*Represents a party in interest to the Plan
See accompanying independent auditor's report
Schedule G, Part III
CROMPTON CORPORATION
EMPLOYEE SAVINGS PLAN
Nonexempt Transactions
Year ended December 31, 2001
(a) Identity of (b) Relationship to (c) Description of
party involved plan, employer transactions
or other party- including
in-interest maturity date,
rate of interest,
collateral, par
or maturity value
Crompton Corporation Plan Sponsor Overdue employee
contributions not
time remitted to
the Plan (see also
note 8 to the
financial statements)
(d) Purchase Price (e) Sell Price (f) Lease rental
$1,968,144* N/A N/A
(g) Expenses incurred (h) Cost of asset (i) Current value
in connection of asset
with transaction
N/A N/A $1,968,144
(j) Net gain or (loss)
on each transaction
N/A
*This represents total amount of contributions that have
been withheld from employees, but not remitted timely into
trust by the Plan Sponsor.
See accompanying independent auditor's report.
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 SAVINGS PLAN
Date: June 27, 2002 By:/s/Peter Barna
Peter Barna
Senior Vice President &
Chief Financial Officer