LANXESS Solutions US (CEMJQ) 8-K Crompton Reports Fourth Quarter and Annual Results

NEWS

CONTACTS:

Investors: William Kuser (203) 573-2213
Media: Mary Ann Dunnell (203) 573-3034

CROMPTON REPORTS FOURTH QUARTER AND ANNUAL RESULTS

MIDDLEBURY, CT - February 2, 2004 - Crompton Corporation (NYSE: CK) reported today a fourth quarter net loss of $12.8 million, or $.11 per share, compared to net earnings of $2.4 million, or $.02 per share, in the fourth quarter of 2002. However, the fourth quarter loss of $12.8 million, or $.11 per share, compares favorably to the fourth quarter 2002 loss from continuing operations of $14.8 million, or $.13 per share. Discontinued operations for the fourth quarter of 2002 included OSi earnings of $17.3 million, or $.15 per share. The loss for the fourth quarter of 2003 included pre-tax charges of $5.5 million for facility closures, severance and related costs and $6.3 million for antitrust legal and related costs. The loss from continuing operations for the fourth quarter of 2002 included pre-tax charges of $7.2 million for facility closures, severance and related costs and $6.3 million for antitrust legal and related costs.

Fourth quarter sales of $561.0 million were 17 percent above the prior year with eight percent attributable to the acquisition of the GE Specialty Chemicals business on July 31, 2003, four percent due to the favorable impact of foreign currency translation and five percent due to improved unit volume over slightly lower selling prices.

"Our financial performance in the fourth quarter and full year was clearly impacted by a number of well-recognized factors, principal among them being high raw material and energy costs, and the difficulty in offsetting such costs with higher selling prices," said Vincent A. Calarco, chairman. "We are encouraged by the improving economy, the increased volume and our continued ability to reduce operating costs without adversely affecting customer service and satisfaction. These factors should lead to an improved pricing environment in 2004 that will help mitigate the continuing high costs of raw materials and energy."

In speaking about his plans for Crompton, recently appointed President and CEO Bob Wood said, "I am working diligently to ensure that our resources are well allocated and that our strategies are sound and well executed. My goal is to return Crompton to the level of sustained profitability that I know we are capable of delivering. Chief among our short-term priorities is to offset cost increases with improved pricing discipline."

Sales for 2003 of $2.19 billion were five percent above the prior year while net earnings of $64.1 million, or $.57 per share, compared to a net loss of $283.5 million, or $2.50 per share, for 2002. Discontinued operations for 2003 included a gain on the sale of the OSi business of $111.7 million, or $.99 per share, and OSi earnings of $26.3 million, or $.23 per share. Discontinued operations for 2002 included OSi earnings of $50.9 million, or $.44 per share. Cumulative effect of accounting change included charges of $401 thousand in 2003 and $299 million, or $2.63 per share, in 2002. The loss from continuing operations before cumulative effect of accounting change in 2003 of $73.5 million, or $.65 per share, compared to a loss of $35.4 million, or $.31 per share, for 2002. The loss from continuing operations before cumulative effect of accounting change for 2003 included pre-tax

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charges of $19.6 million for facility closures, severance and related costs, $32.5 million for antitrust legal and related costs and $24.7 million for early extinguishment of debt. The loss from continuing operations before cumulative effect of accounting change for 2002 included pre-tax charges of $18.0 million for facility closures, severance and related costs, $6.3 million for antitrust legal and related costs and $34.7 million for the loss on the sale of the industrial specialties business (included in other expense).

Fourth quarter operating results for the Company's reporting segments are summarized as follows:

Polymer Products
Polymer additives sales of $324.7 million rose 20% from the prior year, of which 13% was attributable to the acquisition of GE's Specialty Chemicals business on July 31, 2003 and the remainder due to a four percent increase in both unit volume and favorable foreign currency translation, offset in part by lower selling prices of one percent. Plastic additives sales were up 38% due primarily to the Specialty Chemicals business acquisition, increased unit volume and favorable foreign currency translation. Rubber additives sales were down three percent mainly as the result of lower selling prices, partially offset by favorable foreign currency translation. Urethane additives sales declined one percent due mainly to a reduction in unit volume, offset in part by favorable foreign currency translation. Petroleum additives sales were up two percent due primarily to higher selling prices and favorable foreign currency translation, offset in part by lower unit volume. The operating loss of $.9 million was unfavorable versus the prior year by $18.4 million mainly as a result of higher costs, an unfavorable sales mix and lower selling prices. The increase in costs was mainly due to higher raw material/energy costs, reduced plant throughput and increased legal expenses, offset in part by the impact of cost saving initiatives.

Polymers sales of $72.5 million were up 14% from the prior year due to higher unit volume of 15% and favorable foreign currency translation of three percent, offset in part by lower selling prices of four percent. EPDM sales were up 20% mainly as a result of increased unit volume, partially offset by reduced selling prices. Urethanes sales were up eight percent due to a combination of favorable foreign currency translation, higher unit volume and increased selling prices. Operating profit of $7.5 million was down 20% from the fourth quarter of 2002 mainly as a result of lower EPDM selling prices and higher raw material/energy costs, offset in part by increased unit volume and reduced costs attributable to greater plant throughput.

Polymer processing equipment sales of $46.6 million were up 11% from the prior year due to an increase in unit volume of seven percent and favorable foreign currency translation of five percent, partially offset by lower selling prices of one percent. Operating profit of $3.4 million was up $8.2 million from the prior year due primarily to reduced costs and the impact of higher unit volume. The backlog at the end of 2003 of $62 million was $14 million lower than at the end of 2002.

Specialty Products
Crop protection sales of $61.0 million were up 21% from the prior year due to an increase in unit volume of 16% and favorable foreign currency translation of five percent. Operating profit of $14.1 million was 41% above the prior year due mainly to the impact of increased unit volume, higher joint venture equity income and a favorable sales mix, offset in part by an unfavorable foreign currency impact.

Refined products sales of $58.9 million were up four percent from the prior year due primarily to increased selling prices, with favorable foreign currency translation of three percent offsetting lower

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unit volume. The operating loss of $2.9 million was unfavorable versus the fourth quarter of 2002 by $3.5 million due primarily to higher raw material costs, an unfavorable sales mix and the impact of lower unit volume, offset in part by reduced environmental-related expenses and increased selling prices.

Crompton Corporation, with annual sales of $2.2 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.

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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, 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, and other risks and uncertainties detailed in the Company's filings with the Securities and Exchange Commission. These statements are based on our estimates and assumptions and on currently available information. The forward-looking statements include information concerning our possible or assumed future results of operations, and the Company's actual results may differ significantly from the results discusse d. Forward-looking information is intended to reflect opinions as of the date this release was issued and such information will not necessarily be updated by the Company.

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CROMPTON CORPORATION
Consolidated Statements of Operations
Fourth quarter and twelve months ended 2003 and 2002
(In thousands, except per share data)
				Fourth Quarter						Twelve Months Ended
				2003				2002		2003		2002
Net sales		$		560,981		$		479,764	$	2,185,043	$	2,090,271
Cost of products sold				426,243				340,657		1,616,092		1,468,268
Selling, general and admin.				89,422				89,155		353,026		354,559
Depreciation and amortization				30,553				25,524		115,369		111,426
Research and development				13,914				13,364		51,467		54,285
Equity income				(6,400)				(4,449)		(13,169)		(7,917)
Facility closures, severance and
related costs				5,489				7,169		19,560		17,969
Antitrust legal and related costs				6,269				6,306		32,529		6,306
Operating profit (loss)				(4,509)				2,038		10,169		85,375
Interest expense				16,715				24,273		89,653		101,704
Loss on early extinguishment of debt				-				-		24,699		-
Other expense (income), net				(2,071)				(2,556)		5,383		38,021
Loss from continuing operations before
income taxes and cumulative effect of accounting change
				(19,153)			(19,679)			(109,566)		(54,350)
Income tax benefit				(6,311)			(4,840)			(36,102)		(18,904)
Loss from continuing operations before cumulative effect of accounting change				(12,842)			(14,839)			(73,464)		(35,446)
Earnings from discontinued operations				-			17,264			26,314		50,920
Gain on sale of discontinued operations				-			-			111,692		-
Cumulative effect of accounting change				-			-			(401)		(298,981)
Net earnings (loss)			$	(12,842)	$		2,425		$	64,141	$	(283,507)
Basic and diluted earnings (loss) per common share:
	Loss from continuing operations
	before cumulative effect of
	accounting change		$	(0.11)	$		(0.13)		$	(0.65)	$	(0.31)
	Earnings from discontinued operations			-			0.15			0.23		0.44
	Gain on sale of discontinued operations			-			-			0.99		-
	Cumulative effect of accounting change			-			-			-		(2.63)
	Net earnings (loss)		$	(0.11)	$		0.02		$	0.57	$	(2.50)
	Weighted average shares outstanding			112,166			113,788			112,531		113,568

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CROMPTON CORPORATION
Consolidated Balance Sheets
December 31, 2003 and 2002
(In thousands of dollars)
			December 31, 2003		December 31, 2002
ASSETS
	CURRENT ASSETS
	Cash	$	39,213	$	16,941
	Accounts receivable		210,190		183,329
	Inventories		390,199		353,556
	Other current assets		170,852		112,950
	Assets held for sale		-		392,887
	Total current assets		810,454		1,059,663
	NON-CURRENT ASSETS
	Property, plant and equipment		774,612		695,962
	Cost in excess of acquired net assets		418,607		584,633
	Other assets		525,509		500,557
		$	2,529,182	$	2,840,815
LIABILITIES AND STOCKHOLDERS' EQUITY
	CURRENT LIABILITIES
	Short-term borrowings	$	60,695	$	3,694
	Accounts payable		232,127		268,593
	Accrued expenses		265,162		260,718
	Income taxes payable		130,284		116,111
	Other current liabilities		10,667		15,670
	Liabilities held for sale		-		29,273
	Total current liabilities		698,935		694,059
	NON-CURRENT LIABILITIES
	Long-term debt		754,018		1,253,149
	Postretirement health care liability		192,935		193,996
	Other liabilities		535,398		499,728
	STOCKHOLDERS' EQUITY
	Common stock		1,192		1,192
	Additional paid-in capital		1,034,027		1,048,304
	Accumulated deficit		(544,970)		(586,555)
	Accumulated other comprehensive loss		(96,463)		(200,426)
	Treasury stock at cost		(45,890)		(62,632)
	Total stockholders' equity		347,896		199,883
		$	2,529,182	$	2,840,815

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CROMPTON CORPORATION
Consolidated Statements of Cash Flows
Twelve months ended 2003 and 2002
(In thousands of dollars)
			Twelve Months Ended
Increase (decrease) to cash			2003		2002
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss)		$	64,141	$	(283,507)
Adjustments to reconcile net earnings (loss) to net
cash (used in) provided by operations:
	Cumulative effect of accounting change, net of tax		401		298,981
	Gain on sale of discontinued operations		(111,692)		-
	Loss on sale of business unit		-		34,705
	Loss on early extinguishment of debt		24,699		-
	Depreciation and amortization		136,087		146,550
	Equity income		(13,169)		(7,917)
	Changes in assets and liabilities, net:
	Accounts receivable		75,407		7,858
	Accounts receivable - securitization		(38,051)		(157)
	Inventories		39,421		22,683
	Accounts payable		(82,220)		28,945
	Other		(109,854)		(46,387)
Net cash (used in) provided by operations			(14,830)		201,754
CASH FLOWS FROM INVESTING ACTIVITIES
Net proceeds from sale of businesses			633,427		80,000
Capital expenditures			(87,591)		(100,309)
Other investing activities			1,707		(1,526)
Net cash provided by (used in) investing activities			547,543		(21,835)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on long-term notes			(478,380)		(11,742)
Proceeds (payments) on domestic credit facility			32,000		(130,000)
Payments on other short-term borrowings			(1,824)		(27,186)
Premium paid on early extinguishment of debt			(23,804)		-
Dividends paid			(22,556)		(22,698)
Treasury stock acquired			(22,080)		-
Other financing activities			2,323		6,415
Net cash used in financing activities			(514,321)		(185,211)
CASH
Effect of exchange rates on cash			3,880		727
Change in cash			22,272		(4,565)
Cash at beginning of period			16,941		21,506
Cash at end of period		$	39,213	$	16,941

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CROMPTON CORPORATION
Segment Sales and Operating Profit (Loss)
Fourth quarter and twelve months ended 2003 and 2002
(In thousands of dollars)
			Fourth Quarter				Twelve Months Ended
			2003		2002		2003		2002
NET SALES
Polymer Products
	Polymer Additives	$	324,682	$	270,863	$	1,232,022	$	1,110,804
	Polymers		72,519		63,802		285,669		270,954
	Polymer Processing Equipment		46,611		41,970		166,539		172,702
	Eliminations		(2,810)		(3,856)		(13,302)		(15,064)
			441,002		372,779		1,670,928		1,539,396
Specialty Products
	Crop Protection		61,048		50,476		270,870		240,142
	Other		58,931		56,509		243,245		310,733
			119,979		106,985		514,115		550,875
	Total net sales	$	560,981	$	479,764	$	2,185,043	$	2,090,271
OPERATING PROFIT
Polymer Products
	Polymer Additives	$	(907)	$	17,449	$	24,392	$	79,403
	Polymers		7,515		9,405		28,018		41,028
	Polymer Processing Equipment		3,427		(4,762)		5,164		(13,766)
			10,035		22,092		57,574		106,665
Specialty Products
	Crop Protection		14,130		10,002		64,963		60,241
	Other		(2,915)		551		(3,283)		7,960
			11,215		10,553		61,680		68,201
General corporate expense			(14,001)		(14,774)		(48,551)		(53,701)
Unabsorbed overhead expense from      discontinued operations			-		(2,358)		(8,445)		(11,515)
Facility closures, severance and
related costs			(5,489)		(7,169)		(19,560)		(17,969)
Antitrust legal and related costs			(6,269)		(6,306)		(32,529)		(6,306)
	Total operating profit (loss)	$	(4,509)	$	2,038	$	10,169	$	85,375

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CROMPTON CORPORATION			SUPPLEMENTARY SCHEDULE
Major Factors Affecting Operating Results
Fourth quarter and twelve months ended 2003 versus 2002
(In millions of dollars)
The following table summarizes the major factors contributing to the fourth quarter and twelve month changes in operating results versus the prior year:
	Fourth Quarter			Twelve Months Ended
	Net	Pre-tax		Net	Pre-tax
	Sales	Loss *		Sales	Loss *
2002	$ 479.8	$ (19.7)		$ 2,090.3	$ (54.4)
2002 Facility closures, severance
and related costs	-	7.2		-	18.0
2002 Antitrust legal and related costs	-	6.3		-	6.3
2002 Loss on sale of Industrial Specialties	-	-		-	34.7
	479.8	(6.2)		2,090.3	4.6
Divested - Industrial Specialties	-	-		(81.8)	(3.4)
Acquired - GE Specialty Chemicals	35.9	2.8		61.6	6.0
Unit volume/mix	29.2	4.3		44.0	4.0
Lower selling prices	(3.8)	(3.8)		(14.1)	(14.1)
Foreign currency translation	19.9	(3.2)		85.0	(1.6)
Costs savings	-	6.6		-	26.9
Raw materials/energy	-	(16.4)		-	(62.6)
Interest expense	-	7.6		-	12.1
Other	-	0.9		-	(4.7)
	561.0	(7.4)		2,185.0	(32.8)
2003 Facility closures, severance
and related costs	-	(5.5)		-	(19.6)
2003 Antitrust legal and related costs	-	(6.3)		-	(32.5)
2003 Loss on early extinguishment
of debt	-	-		-	(24.7)
2003	$ 561.0	$ (19.2)		$ 2,185.0	$ (109.6)
* Balances for 2002 and 2003 represent the losses from continuing operations before cumulative
effect of accounting change.