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 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, 2001 and 2000
Statements of Changes in Net Assets Available for Plan Benefits
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 H, Line 4j - Schedule of Reportable Transactions
Schedule G, Part III - Nonexempt Transactions
Signature
Exhibit 23 - Consent of KPMG LLP, Independent Auditors
CROMPTON CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
Financial Statements and Supplemental Schedules
December 31, 2001 and 2000
(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, 2001 and 2000
Statements of Changes in Net Assets Available for Plan Benefits
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 H, Line 4j - Schedule of Reportable Transactions
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 plan benefits of Crompton Corporation Employee
Stock Ownership Plan (the "Plan") as of December 31, 2001
and 2000, 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, 2001 and
2000, 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 schedule of assets (held at end
of year), schedule of reportable transactions, and
schedule of nonexempt 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
Stamford, Connecticut
June 14, 2002
CROMPTON CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
Statements of Net Assets Available for Plan Benefits
For the years ended December 31, 2001 and 2000
2001 2000
Investments, at fair value:
Common stock of Crompton $24,362,058 $26,735,247
Corporation
Fixed Income Fund 12,071,789 12,948,033
Mutual Funds 18,242,752 18,225,058
Cash and short-term investments at
cost, which approximates market -- 47
Contributions receivable from 333,454 439,674
participants
Contribution receivable from 231,246 279,821
Crompton Corporation
Accrued income -- 94,720
Net assets available for plan $55,241,299 $58,722,600
benefits
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, 2001 and 2000
2001 2000
Additions
Additions to net assets attributed to:
Interest and dividends $ 1,426,720 $ 2,926,855
Contributions:
Participant rollovers 37,881 3,646
Participants 5,217,557 5,838,726
Employer 3,378,177 3,733,416
Total additions 10,060,335 12,502,643
Deductions
Deductions from net assets attributed to:
Net depreciation in fair value of (5,354,656) (8,413,328)
investments
Withdrawals and distributions (8,150,844) (11,116,800)
Administrative expenses (36,136) (55,280)
Total deductions (13,541,636) (19,585,408)
Net decrease (3,481,301) (7,082,765)
Net assets available for plan benefits at
the beginning of the year 58,722,600 65,805,365
Net assets available for plan benefits
at the end of the year $55,241,299 $58,722,600
See accompanying notes to financial statements
CROMPTON CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 2001 and 2000
1. Basis of Presentation
The accompanying financial statements have been prepared on
the 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).
The Plan is administered by the Employee Benefits Committee
consisting of persons appointed by the Board of Directors of
the Company.
Beginning in 2001, Fidelity Investments (r) (the "Trustee")
was selected by the Company as custodial trustee for a
majority of the Plan assets. Prior to 2001, Fleet Bank
was the custodial trustee of the Plan. 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 2001 and 2000.
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.
The Plan does not allow for participant loans.
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 various investment funds
maintained by Fidelity Investments and Fleet Investment
Management.
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. Summary of Accounting Policies
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.
Investment Valuation and Income Recognition
The Plan's investments are stated at fair value except for
the benefit-responsive investment contract, which is valued
at contract-value (Note 5). Quoted market prices are used to
value investments. 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.
Net appreciation (depreciation) in fair value of investments
includes investments bought and 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.
Payment of Benefits
Benefits are recorded when paid.
Plan Expenses
Plan expenses may be paid by the Company, however if not paid
by the Company, may be charged to the Plan. The Company
provides administrative and accounting services for the Plan
at no charge.
4. Investments
The Plan's investments that exceeded 5% of net assets
available for plan benefits as of December 31, 2001 and 2000
are as follows:
2001 2000
Crompton Corporation Common $24,362,058 $26,735,247
Stock
Crompton Corporation Blended 12,071,789 --
Income Fund
Fidelity Magellan Fund 4,965,324 --
Fidelity U.S. Equity Index 2,886,325 --
Commingled Fund
Hartford Life Ins. Co.
Group Annuity Contract -- 4,846,885
Fleet Stable Asset Fund -- 8,101,148
Galaxy Growth and Income Fund -- 5,735,784
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:
2001 2000
Mutual Funds ($2,241,222) ($2,046,239)
Common Stock of Crompton
Corporation ( 3,113,434) ( 6,422,369)
($5,354,656) ($8,468,608)
5. Investment Contracts with Insurance Company
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, as determined by Fidelity,
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.
6. Income Taxes
The Internal Revenue Service ("IRS") 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
("IRC"). The Plan 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. The Company applied for a new tax
determination letter in December, 2001 and is awaiting
response from the IRS.
7. Party-in-Interest Transactions
Fidelity Investments (r), Fleet Bank and the Company
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.
8. 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.
9. Nonexempt Transactions
There were unavoidable delays by the Company in submitting
January, February, and March 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 STOCK OWNERSHIP PLAN
Schedule of Assets (held at end-of-year)
December 31, 2001
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 Common Stock $24,362,058
Corporation
* Fidelity Blended Income Fund 12,071,789
* Fidelity Fidelity Magellan Fund 4,965,324
* Fidelity U.S. Equity Index Commingled 2,886,325
Fund
* Fidelity Fidelity Freedom 2010 2,662,243
* Fidelity Fidelity Growth Company Fund 2,412,249
Dreyfus Dreyfus Small Company Fund 1,834,882
Dreyfus Dreyfus Premium Core Bond 1,233,088
Putnam Putnam Int'l Growth Fund A 1,137,351
Investments
* Fidelity MSIFT Equity Fund 655,179
* Fidelity Fidelity Freedom 2020 201,717
* Fidelity Dodge & Cox Stock 65,666
Galaxy Galaxy Growth II Fund 57,591
* Fidelity Fidelity Freedom 2030 56,766
* Fidelity Fidelity Freedom Income 39,103
Dreyfus Dreyfus Founders Discovery A 20,699
* Fidelity Fidelity Freedom 2040 7,829
* Fidelity Fidelity Freedom 2000 6,740
TOTAL INVESTMENTS $54,676,599
* Denotes a party-in-interest to the Plan
* See accompanying independent auditors' report
Schedule H, Line 4j
CROMPTON CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
Schedule of Reportable Transactions
For the year ended December 31, 2001
Identity Description Purchase Selling Cost of
of Party of Price Price Asset
Involved Asset
Current Value of Asset Net Gain/(Loss)
on Transaction Date
*** No reportable transactions ***
Party-in-interest - All parties listed above
Schedule G, Part III
CROMPTON CORPORATION
EMPLOYEE STOCK OWNERSHIP 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 9 to the
financial
statements)
(d) Purchase Price (e) Sell Price (f) Lease rental
$542,899* N/A N/A
(g) Expenses incurred (h) Cost of asset (i) Current value
in connection of asset
with transaction
N/A N/A $542,899
(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 STOCK OWNERSHIP PLAN
Date: June 27, 2002 By:/s/Peter Barna
Peter Barna
Senior Vice President &
Chief Financial Officer