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 fiscal year ended December 31, 2002
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
Benson Road
Middlebury, Connecticut 06749
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, 2002 and 2001
Statements of Changes in Net Assets Available for Plan Benefits
(Modified Cash Basis) for the Years Ended December 31, 2002 and
2001
Notes to Financial Statement
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
Signature
Exhibit 23 - Consent of KPMG LLP, Independent Auditors
Exhibit 99.1 - Certification of Vice President and Treasurer and
Senior Vice President, Organization & Administration Pursuant to
18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
CROMPTON CORPORATION
EMPLOYEE SAVINGS PLAN
Financial Statements
and Supplemental Schedule
December 31, 2002 and 2001
(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, 2002 and 2001
Statements of Changes in Net Assets Available for Plan Benefits
(Modified Cash Basis) for the Years Ended December 31, 2002 and 2001
Notes to Financial Statements
Supplemental Schedule:
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
Independent Auditors' Report
The Board of Directors
Crompton Corporation:
We have audited the accompanying statements of net assets
available for plan benefits (modified cash basis) of the Crompton
Corporation Employee Savings Plan (the Plan) as of December 31,
2002 and 2001, and the related statements of changes in net
assets available for plan 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 schedule 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 plan benefits of the Plan as of December 31, 2002
and 2001, and the changes in net assets available for plan
benefits 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) is
presented for the purpose of additional analysis and is not a
required part of the basic financial statements, but is
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 schedule is the responsibility of the Plan's
management. The supplemental schedule has been subjected to the
auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a
whole.
/s/KPMG LLP
Stamford, Connecticut
June 20, 2003
CROMPTON CORPORATION
EMPLOYEE SAVINGS PLAN
Statements of Net Assets Available for Plan Benefits
(Modified Cash Basis)
December 31, 2002 and 2001
Assets 2002 2001
Investments, at fair value:
Crompton Corporation Common
Stock Fund $ 5,978,389 $ 6,705,936
Blended Income Fund 114,975,211 108,462,234
Mutual Funds 198,249,031 261,207,973
Participant Loans 6,531,599 6,386,850
Net assets available for Plan $325,734,230 $382,762,993
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)
December 31, 2002 and 2001
2002 2000
Additions attributed to:
Investment Income:
Interest and dividends $ 8,127,002 $ 15,588,434
Net (depreciation) in fair value (61,934,588) (43,778,784)
of investments
Net Investment (loss) (53,807,586) (28,190,350)
Contributions:
Employer 8,785,547 11,367,649
Participant 16,868,129 17,359,635
25,653,676 28,727,284
Loan repayments 237,132 204,465
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
Transfer from merged Uniroyal
Chemical Co. Inc. Savings Plan A 9,018,827 0
Total additions (18,897,951) 253,753,752
Deductions attributed to:
Benefits paid to participants (38,031,048) (30,090,932)
Administrative expenses (99,764) (71,196)
Total deductions (38,130,812) (30,162,128)
Net (decrease) increase (57,028,763) 223,591,624
Net assets available for plan
benefits at beginning of year 382,762,993 159,171,369
Net assets available for plan $325,734,230 $382,762,993
benefits at end of year
See accompanying notes to financial statements.
CROMPTON CORPORATION
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
December 31, 2002 and 2001
(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
Benefits 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 (the "Employer")
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 April 1, 2002, the Uniroyal Chemical Company, Inc.
Savings Plan A was merged into the Crompton Corporation Employee
Savings Plan. The provisions of the Uniroyal Chemical Company,
Inc. Savings Plan A as a result of this merger have remained
unchanged. All assets have been transferred to similar funds as
of the date of transfer.
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 or post-tax contribution of up to
50% of earnings for non-highly compensated employees or 20% of
earnings for highly compensated employees, 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 the above percentages 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 pre-tax limitations, which were $11,000 in 2002 and
$10,500 in 2001.
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 17 1/2% of the participant's
compensation.
Employer Contributions
For employees participating under the former Witco Plan, the
Company's matching contribution is 50% of the first 6% of the
participant's after-tax contributions and/or pretax
contributions.
For employees participating under the former OSI Plan, 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%.
For employees participating under the former IARP, 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 Vested
Service 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 five
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.
Participants who were eligible to participate in the IARP on
December 31, 2000, and any eligible employee hired on or after
January 1, 2001, are always fully vested in the basic Company
contributions.
On April 1, 2002, the plan assets of Uniroyal Chemical Company,
Inc. Savings Plan A in the amount of $7,422,143 were transferred
to the Plan. On June 3, 2002 the plan assets of Uniroyal
Chemical Company, Inc. Salary Savings Plan in the amount of
$1,596,684 were transferred to the Plan.
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, 2002 and
2001, forfeited non-vested accounts totaled $153,081 and
$217,372, respectively. 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. 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, ranging from 5.25% to 10.0% 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 stated 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 to the Plan at
no charge.
(3) Investments
The funds available to participants for investing their
contributions and the Company contributions include the Crompton
Corporation Common Stock fund, various mutual funds which invest
in various diversified stocks and bonds, and a fund which
invests in benefit-responsive insurance contracts.
The Fidelity 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 5.18% and 5.93% during 2002 and 2001,
respectively. The crediting interest rate on these GICs was
4.69% and 2.43% during 2002 and 2001, respectively.
The fair values of the individual investments that represent 5%
or more of the Plan's net assets at December 31, 2002 and 2001
are as follows:
December 31
2002 2001
Fidelity Blended Income Fund $114,975,211 $108,462,234
Fidelity Magellan Fund 43,695,199 59,998,453
Fidelity Growth Company 30,715,608 53,386,397
Fund
Fidelity Freedom 2010 Fund 28,634,348 33,884,276
U.S. Equity Index 18,470,885 23,353,053
Commingled Pool
During 2002 and 2001, 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
2002 2001
Crompton Corporation
Common Stock Fund $ (1,923,234) $ (815,921)
Mutual Funds (60,011,354) (42,962,864)
$(61,934,588) $(43,778,785)
(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 2002 and 2001, there
were no prohibited party-in-interest transactions.
(5) Income Tax Status
The Internal Revenue Service ("IRS") has determined and informed
the Company by a letter dated December 14, 1995, that the Plan
and related trust are designed in accordance with the applicable
sections of the IRC. Although the Plan has been amended since
applying for 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 received a favorable tax
determination letter effective April 16, 2003, which stated that
the Plan and related trust are designed in accordance with
applicable sections of the IRC.
(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
In May 2003, Crompton announced its proposed disposition of its
Organosilicones division.
Schedule H, Line 4i
CROMPTON CORPORATION
EMPLOYEE SAVINGS PLAN
Schedule of Assets (Held at End of Year)
December 31, 2002
Description of Investment
Identity of Including Maturity Date,
Issue, Rate of Interest, Current
Borrower, Collateral, Par or Maturity Value
Lessor or Value
Similar
Party
*Crompton Crompton Common Stock Fund $ 5,978,389
Corporation
*Fidelity Blended Income Fund 114,975,211
Investments
Dreyfus Dreyfus Premium Core Bond A 14,562,587
*Fidelity Fidelity Freedom 2010 Fund 28,634,348
Investments
*Fidelity Fidelity Growth Company Fund 30,715,608
Investments
Dodge & Cox Dodge & Cox Stock Fund 5,964,857
Putnam Putnam Int'l Growth Fund A 13,330,678
Investments
*Fidelity Fidelity MSIFT Equity I 8,486,311
Investments
*Fidelity Fidelity Magellan Fund 43,695,199
Investments
*Fidelity Fidelity U.S. Equity Index 18,470,885
Investments Commingled Pool
Dreyfus Dreyfus Small Company Value 10,952,948
*Fidelity Fidelity Freedom Income Fund 4,672,801
Investments
*Fidelity Fidelity Freedom 2040 177,121
Investments
*Fidelity Fidelity Freedom 2030 620,584
Investments
*Fidelity Fidelity Freedom 2020 11,162,781
Investments
*Fidelity Fidelity Freedom 2000 791,713
Investments
*Fidelity Fidelity Founders Discovery Fund 6,010,610
Investments
*Participant Participant Loans Receivable with
Loans maturity dates ranging from
January 1, 2003 to October, 2027
and interest rates ranging from
5.25% to 10.00% 6,531,599
Total $325,734,230
*Represents a party in interest to the Plan
See accompanying independent auditors' 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, 20 2003 By:/s/Peter Barna
Peter Barna
Senior Vice President &
Chief Financial Officer