LANXESS Solutions US (CEMJQ) 8-K Results of Operations and Financial Condition

NEWS

CONTACTS:

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

CROMPTON REPORTS THIRD QUARTER RESULTS:
PRICE IMPROVEMENT OUTPACED RAW MATERIAL AND ENERGY COST INCREASES

MIDDLEBURY, CT - October 27, 2004 - Crompton Corporation (NYSE: CK) reported a third quarter net loss of $40.7 million, or 35 cents per share, compared to net earnings of $80.2 million, or 72 cents per share, in the third quarter of 2003.

The third quarter 2004 net loss included an after-tax gain on the sale of discontinued operations of $2.1 million, or two cents per share, resulting from a purchase price adjustment settlement and other matters related to the July 31, 2003 sale of the Company's OrganoSilicones business unit. Third quarter 2003 net earnings included an after-tax gain on sale of discontinued operations of $111.7 million, or $1.00 per share, and after-tax earnings from discontinued operations of $3.1 million, or three cents per share, also related to the divested OrganoSilicones business unit.

The loss from continuing operations for the third quarter of 2004 of $42.9 million, or 37 cents per share, included pre-tax charges for facility closures, severance and related costs of $40.4 million, a loss on the early extinguishment of debt of $20.1 million in connection with our refinancing completed on August 16, 2004, antitrust costs of $8.4 million (including a payment of $5.0 million under an antitrust class action settlement), a $3.0 million product liability charge related to a divestment made in the first quarter, and supplemental executive retirement costs of $1.7 million. The loss from continuing operations for the third quarter of 2003 of $34.5 million, or 31 cents per share, included pre-tax charges for a loss on the early extinguishment of debt of $24.7 million, facility closures, severance and related costs of $10.6 million and antitrust costs of $5.4 million.

Third quarter net sales of $639.4 million were 14 percent above the prior year with five percent due to improved selling prices, four percent due to improved unit volume, three percent attributable to the acquisition of the GE Specialty Chemicals business on July 31, 2003, and two percent due to the favorable impact of foreign currency translation.

"Our determined pricing efforts resulted in price increases that more than offset higher raw material and energy costs in the third quarter," said Robert L. Wood, Chairman, President and CEO of Crompton. "While rising raw material and energy costs continue to be a challenge, we will continue to increase our prices to achieve satisfactory margins.

"We are also making excellent progress on the organizational redesign we announced in July. Staffing of the streamlined organization is underway and results will be announced in coming weeks. Going forward, we will have a leaner, more efficient organization and will benefit from cost reductions of $50 million annually beginning in 2005."

For the first nine months of 2004, the Company reported net earnings of $21.3 million, or 19 cents per share, compared to net earnings of $77.0 million, or 68 cents per share, for the first nine months

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of 2003. Net sales for the first nine months of 2004 were $1.9 billion compared to $1.6 billion in the first nine months of 2003. Net earnings for the first nine months of 2004 included an after-tax gain on the sale of discontinued operations of $2.1 million, or two cents per share. Net earnings for the first nine months of 2003 included an after-tax gain on the sale of discontinued operations of $111.7 million, or 99 cents per share and after-tax earnings from discontinued operations of $26.3 million, or 23 cents per share. Net earnings from continuing operations for the first nine months of 2004 of $19.2 million, or 17 cents per share, included pre-tax divestment gains of $94.6 million primarily from the sale of our 50% interest in the Gustafson seed treatment joint venture and pre-tax charges for facility closures, severance and related costs of $46.1 million, a loss on the early extinguishment of debt of $20.1 million, antitrust costs of $16.8 million and supplemental executive retirement costs of $7.6 million. The loss from continuing operations for the first nine months of 2003 of $60.6 million, or 54 cents per share, included pre-tax charges for antitrust costs of $26.3 million, a loss on the early extinguishment of debt of $24.7 million and facility closures, severance and related costs of $14.1 million. The tax rate for the nine-month period ending September 30, 2004 was 38 percent. The nine-month rate reflects additional third quarter income tax expense of $1.5 million related to adjustments resulting from the September 2004 filing of the Company's 2003 U.S. income tax return.

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

Polymer Products
Polymer additives sales of $366.2 million increased 18% from the prior year, of which five percent was attributable to the acquisition of GE's Specialty Chemicals business on July 31, 2003, with the balance due to improved pricing of six percent, higher unit volume of five percent and favorable foreign currency translation of two percent. Plastic additives sales rose 22% mainly as a result of higher selling prices, the Specialty Chemicals business acquisition and higher unit volume. Rubber additives sales were up 11% due mainly to higher unit volume. Urethane additives sales were up five percent due primarily to favorable foreign currency translation and improved pricing, offset in part by lower unit volume. Petroleum additives sales rose 18% due mainly to higher unit volume and improved pricing. Operating profit of $13.0 million was up $8.1 million from the third quarter of 2003 due mainly to favorable pricing and savings attributable to cost reduction initiatives, offset in part by higher raw material costs.

Polymers sales of $81.9 million were up 10% from the prior year due to an increase in selling prices of seven percent, favorable foreign currency translation of two percent and higher unit volume of one percent. EPDM sales rose six percent due mainly to improved pricing, offset in part by lower unit volume. Urethanes sales increased 14% mainly as a result of higher unit volume and favorable foreign currency translation. Operating profit of $13.5 million was up $7.1 million from the prior year due primarily to improved pricing, lower costs resulting mainly from cost saving initiatives and lower depreciation, and higher Urethanes unit volume, offset in part by higher raw material and energy costs.

Polymer processing equipment sales of $41.0 million increased seven percent from the third quarter of 2003 due to higher unit volume of eight percent and favorable foreign currency translation of two percent, offset in part by unfavorable pricing of three percent. Operating profit of $0.4 million was up $0.7 million from the prior year due mainly to higher unit volume, offset in part by unfavorable pricing. The backlog at the end of September of $87 million was $25 million higher than at the end of 2003.

Specialty Products
Crop protection sales of $88.3 million rose 13% from the prior year due to higher unit volume of eight percent, increased selling prices of three percent and favorable foreign currency translation of two percent. Operating profit of $26.1 million was up 54% from the prior year due mainly to increased

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unit volume, improved pricing and the absence of the Company's share of a prior year Gustafson joint venture loss.

Refined products sales of $65.4 million were up eight percent from the prior year due to improved pricing of six percent and favorable foreign currency translation of two percent. Operating profit of $1.4 million was up $1.6 million from the third quarter of 2003 due primarily to favorable pricing and lower operating costs, offset in part by higher raw material costs.

The Company will post informational slides to the Investor Relations section of its Web site that investors may wish to refer to during Crompton's teleconference and live audio webcast on October 28, at 9:00 a.m. EST. The dial-in number for the call is (612) 288-0329.

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, 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, 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 inf ormation. 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 discussed. 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
Third quarter and nine months ended 2004 and 2003
(In thousands of dollars, except per share data)
			Third Quarter				Nine months ended
			2004		2003		2004		2003
Net sales		$	639,397	$	559,189	$	1,910,484	$	1,624,062
Cost of products sold			466,677		410,254		1,421,557		1,189,849
Selling, general and admin.			92,785		91,504		281,384		263,604
Depreciation and amortization			31,216		30,318		93,056		84,816
Research and development			12,593		12,767		37,455		37,553
Equity (income) loss			(145)		1,073		(9,838)		(6,769)
Facility closures, severance and related costs			40,376		10,566		46,065		14,071
Antitrust costs			8,426		5,385		16,829		26,260
Operating profit (loss)			(12,531)		(2,678)		23,976		14,678
Interest expense			20,579		20,664		55,666		72,938
Loss on early extinguishment of debt			20,063		24,699		20,063		24,699
Other (income) expense, net			7,199		3,414		(82,613)		7,454
Earnings (loss) from continuing operations
before income taxes and cumulative effect
of accounting change			(60,372)		(51,455)		30,860		(90,413)
Income tax expense (benefit)			(17,520)		(16,953)		11,675		(29,791)
Earnings (loss) from continuing operations
before cumulative effect of accounting change			(42,852)		(34,502)		19,185		(60,622)
Earnings from discontinued operations			-		3,057		-		26,314
Gain on sale of discontinued operations			2,142		111,692		2,142		111,692
Cumulative effect of accounting change			-		-		-		(401)
Net earnings (loss)		$	(40,710)	$	80,247	$	21,327	$	76,983
Basic and diluted earnings (loss) per common share:
	Earnings (loss) from continuing operations
	before cumulative effect of accounting change	$	(0.37)	$	(0.31)	$	0.17	$	(0.54)
	Earnings from discontinued operations		-		0.03		-		0.23
	Gain on sale of discontinued operations		0.02		1.00		0.02		0.99
	Cumulative effect of accounting change		-		-		-		-
	Net earnings (loss)	$	(0.35)	$	0.72	$	0.19	$	0.68
	Weighted average shares outstanding - basic		114,719		111,208		114,607		112,654
	Weighted average shares outstanding - diluted		114,719		111,208		114,791		112,654

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CROMPTON CORPORATION
Consolidated Balance Sheets
September 30, 2004 and December 31, 2003
(In thousands of dollars)
			September 30, 2004		December 31, 2003
ASSETS
	CURRENT ASSETS
	Cash	$	136,933	$	39,213
	Accounts receivable		212,198		210,190
	Inventories		397,135		390,199
	Other current assets		156,905		170,852
	Total current assets		903,171		810,454
	NON-CURRENT ASSETS
	Property, plant and equipment		722,517		774,612
	Cost in excess of acquired net assets		418,688		418,607
	Other assets		497,259		525,509
		$	2,541,635	$	2,529,182
LIABILITIES AND STOCKHOLDERS' EQUITY
	CURRENT LIABILITIES
	Short-term borrowings	$	3,496	$	60,695
	Accounts payable		202,634		232,127
	Accrued expenses		267,040		267,472
	Income taxes payable		132,106		130,284
	Other current liabilities		17,533		10,667
	Total current liabilities		622,809		701,245
	NON-CURRENT LIABILITIES
	Long-term debt		862,024		754,018
	Pension and post-retirement health care liabilities		549,446		566,966
	Other liabilities		195,974		204,244
	STOCKHOLDERS' EQUITY
	Common stock		1,192		1,192
	Additional paid-in capital		1,033,139		1,034,027
	Accumulated deficit		(586,025)		(590,157)
	Accumulated other comprehensive loss		(93,753)		(96,463)
	Treasury stock at cost		(43,171)		(45,890)
	Total stockholders' equity		311,382		302,709
		$	2,541,635	$	2,529,182

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CROMPTON CORPORATION
Consolidated Statements of Cash Flows
Nine months ended 2004 and 2003
(In thousands of dollars)
				Nine Months Ended
Increase (decrease) in cash				2004		2003
CASH FLOWS FROM OPERATING ACTIVITIES
	Net earnings		$	21,327	$	76,983
	Adjustments to reconcile net earnings
	to net cash used in operations:
		Gain on sale of Gustafson joint venture		(90,938)		-
		Cumulative effect of accounting change		-		401
		Gain on sale of discontinued operations		(2,142)		(111,692)
		Loss on early extinguishment of debt		20,063		24,699
		Depreciation and amortization		93,056		105,534
		Equity income		(9,838)		(6,769)
		Changes in assets and liabilities, net:
		Accounts receivable		(7,162)		50,410
		Accounts receivable - securitization		1,859		(18,767)
		Inventories		(9,911)		10,047
		Accounts payable		(28,724)		(70,747)
		Other		(3,339)		(78,127)
	Net cash used in operations			(15,749)		(18,028)
CASH FLOWS FROM INVESTING ACTIVITIES
	Net proceeds from divestments			142,270		643,115
	Capital expenditures			(43,983)		(55,104)
	Other investing activities			281		(250)
	Net cash provided by investing activities			98,568		587,761
CASH FLOWS FROM FINANCING ACTIVITIES
	Payments on domestic credit facility			(57,000)		-
	(Payments to) proceeds from short-term borrowings			(350,441)		961
	Payments on long term borrowings			(140,006)		(477,627)
	Proceeds from long-term borrowings			597,499		-
	Premium paid on early extinguishment of debt			(19,044)		(23,804)
	Dividends paid			(17,192)		(16,993)
	Treasury stock acquired			-		(22,080)
	Other financing activities			1,276		1,137
	Net cash (used in) provided by financing activities			15,092		(538,406)
CASH
	Effect of exchange rates on cash			(191)		1,516
	Change in cash			97,720		32,843
	Cash at beginning of period			39,213		16,941
	Cash at end of period		$	136,933	$	49,784

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CROMPTON CORPORATION
Segment Sales and Operating Profit (Loss) Third quarter and nine months ended 2004 and 2003 (In thousands of dollars)
			Third Quarter				Nine Months Ended
			2004		2003		2004		2003
NET SALES
Polymer Products
	Polymer Additives	$	366,220	$	311,204	$	1,099,322	$	907,340
	Polymers		81,886		74,685		246,281		213,150
	Polymer Processing Equipment		40,961		38,180		125,315		119,928
	Eliminations		(3,335)		(3,316)		(10,964)		(10,492)
			485,732		420,753		1,459,954		1,229,926
Specialty Products
	Crop Protection		88,293		77,861		250,991		209,822
	Refined Products		65,372		60,575		199,539		184,314
			153,665		138,436		450,530		394,136
	Total net sales	$	639,397	$	559,189	$	1,910,484	$	1,624,062
OPERATING PROFIT
Polymer Products
	Polymer Additives	$	13,011	$	4,872	$	29,856	$	25,299
	Polymers		13,499		6,354		35,335		20,503
	Polymer Processing Equipment		357		(323)		101		1,737
			26,867		10,903		65,292		47,539
Specialty Products
	Crop Protection		26,140		16,979		75,910		50,833
	Refined Products		1,369		(211)		163		(368)
			27,509		16,768		76,073		50,465
General corporate expense			(18,105)		(13,169)		(54,495)		(34,550)
Unabsorbed overhead expense from
discontinued operations			-		(1,229)		-		(8,445)
Facility closures, severance and
related costs			(40,376)		(10,566)		(46,065)		(14,071)
Antitrust costs			(8,426)		(5,385)		(16,829)		(26,260)
	Total operating profit (loss)	$	(12,531)	$	(2,678)	$	23,976	$	14,678

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CROMPTON CORPORATION		SUPPLEMENTARY SCHEDULE I
Major Factors Affecting Operating Results
Third quarter and nine months ended 2004 versus 2003
(In millions of dollars)
The following table summarizes the major factors contributing to the changes in third quarter and nine months operating results versus the prior year:
	Third Quarter			Nine Months Ended
		Pre-tax			Pre-tax
	Net	Earnings		Net	Earnings
	Sales	(Loss)		Sales	(Loss)
2003	$ 559.2	$ (51.5)	*	$1,624.1	$ (90.4)	*
2003 Facility closures, severance and related costs	-	10.6		-	14.1
2003 Antitrust costs	-	5.4		-	26.3
2003 Loss on early extinguishment of debt	-	24.7		-	24.7
	559.2	(10.8)		1,624.1	(25.3)
GE Specialty Chemicals business acquired 7/31/03	14.7	3.0		103.6	6.3
Improved unit volume/mix	24.6	9.0		94.5	30.0
Higher selling prices	28.9	28.9		41.8	41.8
Foreign currency impact	12.0	0.4		46.5	(0.9)
Cost savings	-	14.4		-	40.8
Higher raw materials/energy costs	-	(26.5)		-	(60.1)
Lower interest expense	-	0.1		-	17.3
Equity derivative contract gain - 2003	-	-		-	(1.5)
Gustafson product liability claim	-	(3.0)		-	(3.0)
Legal and environmental costs	-	(1.8)		-	1.1
Unfavorable manufacturing absorption variances	-	(1.5)		-	(6.5)
Other	-	(2.0)		-	(13.1)
	639.4	10.2		1,910.5	26.9
2004 Facility closures, severance and related costs	-	(40.4)		-	(46.1)
2004 Antitrust costs	-	(8.4)		-	(16.8)
2004 Loss on early extinguishment of debt	-	(20.1)		-	(20.1)
2004 Supplemental executive retirement costs	-	(1.7)		-	(7.6)
2004 Divestment gains, primarily Gustafson	-	-		-	94.6
2004	$ 639.4	$ (60.4)	*	$1,910.5	$ 30.9	*
*  Represents the earnings (loss) from continuing operations before income taxes and cumulative      effect of accounting change.

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CROMPTON CORPORATION						SUPPLEMENTARY SCHEDULE II
Consolidated Statements of Cash Flows
Third quarter and second quarter ended 2004 and 2003
(In thousands of dollars)
				Third Quarter Ended					Second Quarter Ended
Increase (decrease) in cash				2004			2003		2004		2003
CASH FLOWS FROM OPERATING ACTIVITIES
	Net earnings (loss)		$	(40,710)	$		80,247	$	1,084	$	(9,110)
	Adjustments to reconcile net earnings (loss)
	to net cash (used in) provided by operations:
		Gain on sale of discontinued operations		(2,142)			(111,692)		-		-
		Loss on early extinguishment of debt		20,063			24,699		-		-
		Depreciation and amortization		31,216			33,127		30,986		35,999
		Equity income		(145)			1,073		(66)		(2,228)
		Changes in assets and liabilities, net:
		Accounts receivable		51,928			46,722		(16,448)		26,947
		Accounts receivable - securitization		(9,246)			(33,408)		31,438		6,515
		Inventories		(7,660)			14,879		2,224		1,032
		Accounts payable		(12,800)			(44,652)		(14,117)		(68,064)
		Other		(22,436)			(60,168)		3,357		(12,438)
	Net cash (used in) provided by operations			8,068			(49,173)		38,458		(21,347)
CASH FLOWS FROM INVESTING ACTIVITIES
	Net proceeds from divestments			4,574			643,115		8,180		-
	Capital expenditures			(14,488)			(22,383)		(12,855)		(18,082)
	Other investing activities			(28)			(96)		(110)		(56)
	Net cash (used in) provided by investing activities			(9,942)			620,636		(4,785)		(18,138)
CASH FLOWS FROM FINANCING ACTIVITIES
	(Payments to) proceed from domestic credit facility			-			(192,800)		(7,600)		217,800
	(Payments to) proceeds from short-term borrowings			(351,015)			(4,894)		(153)		5,424
	Payments on long term borrowings			(140,006)			(312,940)		-		(164,427)
	Proceeds from long-term borrowings			597,499			-		-		-
	Premium paid on early extinguishment of debt			(19,044)			(23,804)		-		-
	Dividends paid			(5,737)			(5,560)		(5,728)		(5,718)
	Treasury stock acquired			-			-		-		(22,080)
	Other financing activities			1,356			101		(251)		156
	Net cash (used in) provided by financing activities			83,053			(539,897)		(13,732)		31,155
CASH
	Effect of exchange rates on cash			576			(148)		(629)		1,255
	Change in cash			81,755			31,418		19,312		(7,075)
	Cash at beginning of period			55,178			18,366		35,866		25,441
	Cash at end of period		$	136,933	$		49,784	$	55,178	$	18,366