Crompton Reports First Quarter Results; Results for the Polymer Additi

    Business Editors/Chemicals Writers

    MIDDLEBURY, Conn.--(BUSINESS WIRE)--April 26, 2005--Crompton Corporation (NYSE: CK) reported today that net earnings for the first quarter of 2005 were $20.4 million, or $0.17 per diluted share, which includes earnings from discontinued operations of $2.2 million, or $0.02 per share, related to the company's Refined Products business that it expects to sell during the second quarter of 2005. Net earnings from continuing operations for the quarter were $18.2 million, or $0.15 per diluted share, which includes pre-tax charges of $3.2 million for antitrust costs and $0.2 million for facility closures, severance and related costs. Operating profit for Crop Protection for the first quarter of 2004 included $9.6 million of equity income from the Company's Gustafson joint venture, which is not reflected in 2005 first quarter results as the joint venture was divested at the end of last year's first quarter.
    First quarter net sales of $589.7 million were 6 percent above prior year net sales of $555.5 million. The increase was the result of a 13 percent increase in selling prices and a 2 percent increase due to favorable foreign currency, partially offset by a 9 percent decrease in volume.
    The tax rate from continuing operations for the first quarter was 44 percent, owing largely to a $3.8 million increase in the deferred tax valuation allowance. The company expects its effective tax rate for the year to be approximately 35 percent.
    The diluted weighted average shares outstanding for the first quarter of 2005 were 118,944,995 versus 114,835,089 for the first quarter of 2004.
    "As promised, we continued to accelerate pricing and were able to deliver improved earnings despite the selective loss of some volume and slightly lower than expected results in our Crop Protection business," said Robert L. Wood, chairman, president and chief executive officer. "While there is more to be done, we continue to emphasize to customers the value-in-use (low component cost compared to indispensable functional value) of the products we sell, as well as the necessity of better returns to support future investment.
    "The good first quarter results and improved gross margins are a result of:

1. A better understanding of the competitive environment and the value of our products. 2. A tough-minded discipline with respect to pricing, which caused us to selectively give up volume to competitors who are still focused on price protection and share. 3. A disciplined approach to cost reduction and allocation of resources. 4. A strategic and selective raw material pre-buying program. 5. More people on our team believing we can, in fact, win with our strategy.
    "We are far from declaring victory, as we look forward to the balance of the year. Going forward, we expect to reap continued benefits from the restructuring and cost reduction initiatives we undertook in 2004. We also expect continued leverage in price and improved volume. These positive factors will be offset to some degree by higher raw material prices in the second quarter that will challenge margins. We cannot confidently see much beyond the second quarter. While April looks to be in-line with our expectations, we have to be vigilant and disciplined as the year progresses."
    "We are focused on delivering solid results from our existing portfolio while undertaking thorough integration planning to unlock the potential of the new company we are building," Wood concluded.

    2005 Annual Meeting of Stockholders:

    The Company's 2005 Annual Meeting of Stockholders will be held on April 26, 2005 at 11:15 a.m. EDT, in listen-only mode. Interested parties are asked to dial in approximately 10 minutes prior to the start time at (612) 332-0820. Replay of the call will be available for two weeks starting at 2:45 p.m. on April 26. To access the replay, call (320) 365-3844 and enter access code 778079.

    First Quarter Earnings Q&A Teleconference:

    The Company's first quarter earnings conference call will be held on April 26, 2005 at 2:00 p.m. EDT. The Company will post informational slides shortly before the call, which include analysis of segment results, to the Investor Relations section of its Web site (www.cromptoncorp.com). Interested parties are asked to dial in approximately 10 minutes prior to the start time at (612) 332-1213. Replay of the call will be available for two weeks starting at 5:30 p.m. on April 26. To access the replay, call (320) 365-3844 and enter access code 778081.
    Crompton Corporation, with 2004 sales of $2.5 billion, is a producer and marketer of specialty chemicals and polymer products and equipment. Additional information concerning Crompton Corporation is available at www.cromptoncorp.com.

    Forward-Looking Statements

    Certain statements made in this release are forward-looking statements that involve risks and uncertainties, including, but not limited to, general economic conditions, the outcome and timing of antitrust investigations and related civil lawsuits to which the Company is subject, the ability to obtain selling price increases, pension and other post-retirement benefit plan assumptions, energy and raw material prices and availability, production capacity, changes in interest rates and foreign currency exchange rates, changes in technology, market demand and customer requirements, the enactment of more stringent environmental laws and regulations, the ability to realize expected cost savings under the Company's cost reduction initiatives, the amount of any additional earn-out payments from GE, the ability to reduce the Company's debt levels, the risk that Great Lakes and the Company's businesses will not be integrated successfully, the risk that the cost savings, cash flow synergies and other synergies from the merger transaction may not be fully realized or take longer to realize than anticipated, disruption from the merger transaction may make it more difficult to maintain relationships with employees, customers or suppliers, competition and its effect on pricing, third party relationships and revenues, the ability to obtain regulatory approval of the merger transaction on the proposed terms and schedule, the failure of the stockholders of either the Company or Great Lakes to approve the merger transaction, and other risks and uncertainties detailed in the Company's filings with the Securities and Exchange Commission. These statements are based on the Company's estimates and assumptions and on currently available information. The forward-looking statements include information concerning the Company's possible or assumed future results of operations, and the Company's actual results may differ significantly from the results discussed. Forward-looking information is intended to reflect opinions as of the date of this release and such information will not necessarily be updated by the Company.

CROMPTON CORPORATION Consolidated Statements of Earnings First quarter ended 2005 and 2004 (In thousands, except per share data)

First Quarter ------------------- 2005 2004 --------- ---------

Net sales $ 589,730 $ 555,509

Cost of products sold* 418,669 430,988 Selling, general and administrative* 61,271 71,321 Depreciation and amortization 30,126 28,880 Research and development 10,511 11,399 Equity income (88) (9,627) Facility closures, severance and related costs 158 2,411 Antitrust costs 3,166 4,053 --------- ---------

Operating profit 65,917 16,084 Interest expense 24,406 17,925 Other (income) expense, net 8,799 (92,754) --------- ---------

Earnings from continuing operations before income taxes 32,712 90,913 Income tax expense 14,483 30,120 --------- ---------

Earnings from continuing operations 18,229 60,793 Earnings from discontinued operations 2,206 160 --------- ---------

Net earnings $ 20,435 $ 60,953 ========= =========

Basic earnings per common share: Earnings from continuing operations $ 0.16 $ 0.53 Earnings from discontinued operations 0.02 - --------- --------- Net earnings $ 0.18 $ 0.53 ========= =========

Diluted earnings per common share: Earnings from continuing operations $ 0.15 $ 0.53 Earnings from discontinued operations 0.02 - --------- --------- Net earnings $ 0.17 $ 0.53 ========= =========

Weighted average shares outstanding - basic 116,760 114,525 ========= =========

Weighted average shares outstanding - diluted 118,945 114,835 ========= =========

* Reflects the reclassification of shipping costs of $15.7 million and $16.7 million for the first quarter of 2005 and 2004, respectively, from selling, general and administrative to cost of products sold.

CROMPTON CORPORATION Consolidated Balance Sheets March 31, 2005 and December 31, 2004 (In thousands of dollars)

March 31, December 31, 2005 2004 ----------- ----------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 118,411 $ 158,700 Accounts receivable 267,106 242,435 Inventories 404,093 383,635 Other current assets 153,254 165,554 Assets held for sale* 95,877 97,252 ----------- ----------- Total current assets 1,038,741 1,047,576 ----------- -----------

NON-CURRENT ASSETS Property, plant and equipment 674,137 694,925 Cost in excess of acquired net assets 401,288 407,975 Other assets 525,823 528,233 ----------- -----------

$ 2,639,989 $ 2,678,709 =========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES Short-term borrowings $ 14,137 $ 4,294 Accounts payable 207,593 231,473 Accrued expenses 307,460 338,709 Income taxes payable 99,916 107,686 Other current liabilities 21,265 23,555 Liabilities held for sale* 3,866 3,452 ----------- ----------- Total current liabilities 654,237 709,169 ----------- -----------

NON-CURRENT LIABILITIES Long-term debt 877,927 862,251 Pension and post-retirement health care liabilities 557,595 566,759 Other liabilities 214,951 211,550

STOCKHOLDERS' EQUITY Common stock 1,192 1,192 Additional paid-in capital 1,033,291 1,032,282 Accumulated deficit (633,051) (647,678) Accumulated other comprehensive loss (49,651) (22,372) Treasury stock at cost (16,502) (34,444) ----------- ----------- Total stockholders' equity 335,279 328,980 ----------- -----------

$2,639,989 $2,678,709 =========== ===========

* Represents the assets to be sold and liabilities to be assigned related to the Refined Products business, which has been classified as a discontinued operation.

CROMPTON CORPORATION Consolidated Statements of Cash Flows First quarter ended 2005 and 2004 (In thousands of dollars)

First Quarter -------------------- Increase (decrease) to cash 2005 2004 --------------------------- --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net earnings $ 20,435 $ 60,953 Adjustments to reconcile net earnings to net cash used in operations: Gain on sale of Gustafson joint venture - (90,938) Depreciation and amortization 32,135 30,854 Equity income (88) (9,627) Changes in assets and liabilities, net: Accounts receivable (40,606) (42,642) Accounts receivable - securitization 1,596 (20,333) Inventories (30,168) (4,475) Accounts payable (20,490) (1,807) Other (32,834) 15,768 --------- --------- Net cash used in operations (70,020) (62,247) --------- ---------

CASH FLOWS FROM INVESTING ACTIVITIES Net proceeds from divestments 11,797 129,516 Capital expenditures (13,978) (16,640) Other investing activities (28) 391 --------- --------- Net cash (used in) provided by investing activities (2,209) 113,267 --------- ---------

CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from (payments on) domestic credit facility 25,000 (49,400) (Payments on) proceeds from short-term borrowings (162) 727 Dividends paid (5,808) (5,727) Other financing activities 14,324 171 --------- --------- Net cash provided by (used in) financing activities 33,354 (54,229) --------- ---------

CASH Effect of exchange rates on cash (1,414) (138) --------- ---------

Change in cash (40,289) (3,347) Cash at beginning of period 158,700 39,213 --------- ---------

Cash at end of period $ 118,411 $ 35,866 ========= =========

Note: The Consolidated Statements of Cash Flows have not been adjusted to reflect the discontinued operations and thus include the cash flows of the Refined Products business.

CROMPTON CORPORATION Segment Sales and Operating Profit First quarter ended 2005 and 2004 (In thousands of dollars)

First Quarter --------------------- 2005 2004 ---------- ---------- NET SALES Polymer Products Polymer Additives $ 381,369 $ 363,343 Polymers 94,536 81,212 Polymer Processing Equipment 40,393 38,428 Eliminations (4,481) (3,948) ---------- ---------- 511,817 479,035 ---------- ----------

Specialty Products Crop Protection 77,913 76,474 ---------- ---------- 77,913 76,474 ---------- ----------

Total net sales $ 589,730 $ 555,509 ========== ==========

OPERATING PROFIT Polymer Products Polymer Additives $ 46,394 $ 8,948 Polymers 20,521 10,195 Polymer Processing Equipment (470) (1,764) ---------- ---------- 66,445 17,379 ---------- ----------

Specialty Products Crop Protection 19,497 28,441 ---------- ---------- 19,497 28,441 ---------- ----------

General corporate expense, including amortization (16,701) (20,698) Unabsorbed overhead expense from discontinued operations - (2,574) Facility closures, severance and related costs (158) (2,411) Antitrust costs (3,166) (4,053)

---------- ---------- Total operating profit $ 65,917 $ 16,084 ========== ==========

CROMPTON CORPORATION SUPPLEMENTARY SCHEDULE Major Factors Affecting Operating Results ---------------------- First quarter ended 2005 versus 2004 (In millions of dollars)

The following table summarizes the major factors contributing to the first quarter changes in operating results versus the prior year:

First Quarter ------------------- Pre-tax Net Earnings Sales (Loss) --------- ---------

2004 $ 555.5 $ 90.9 *

2004 Facility closures, severance and related costs - 2.4 2004 Antitrust costs - 4.1 2004 Supplemental executive retirement costs - 5.9 2004 Divestment gains, primarily Gustafson - (94.6) -------- -------- 555.5 8.7

Higher selling prices 74.0 74.0 Reduced unit volume/mix (49.6) (7.8) Foreign currency impact 9.8 0.1 Cost savings - 18.5 Higher raw materials/energy costs - (40.6) Decrease in Gustafson equity income - (9.6) Lower costs (legal, environmental) - 3.6 Higher incentive expense - (3.3) Higher interest expense - (6.5) Other - (1.0) -------- -------- 589.7 36.1

2005 Facility closures, severance and related costs - (0.2) 2005 Antitrust costs - (3.2)

-------- -------- 2005 $ 589.7 $ 32.7 * ======== ========

* Represents the pre-tax earnings from continuing operations.

--30--SW/ny*

CONTACT: Crompton Corporation Investor Contact: William Kuser, 203-573-2213 or Media Contact: Mary Ann Dunnell, 203-573-3034

KEYWORD: CONNECTICUT INDUSTRY KEYWORD: CHEMICALS/PLASTICS BANKING EARNINGS CONFERENCE CALLS SOURCE: Crompton Corporation

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