<PAGE>
<PAGE>



________________________________________________________________________________
 
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
 
                            ------------------------
 
                                   FORM 10-K
                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934
 
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997           COMMISSION FILE NO. 1-4654
 
                            ------------------------
 
                               WITCO CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
                            ------------------------
 
<TABLE>
<S>                                                       <C>
                        DELAWARE                                                 13-1870000
            (STATE OR OTHER JURISDICTION OF                         (I.R.S. EMPLOYER IDENTIFICATION NO.)
             INCORPORATION OR ORGANIZATION)
 
                   ONE AMERICAN LANE                                             06831-2559
                 GREENWICH, CONNECTICUT                                          (ZIP CODE)
        (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
</TABLE>
 
       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (203) 552-2000
 
                            ------------------------
 
          SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
 
<TABLE>
<CAPTION>
                                                                           NAME OF EACH EXCHANGE
                          TITLE OF EACH CLASS                               ON WHICH REGISTERED
-----------------------------------------------------------------------   ------------------------
 
<S>                                                                       <C>
Common Stock -- $5 Par Value                                              New York Stock Exchange
Rights to Purchase Series A Participating                                 New York Stock Exchange
  Cumulative Preferred Stock
</TABLE>
 
     Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes_X_ No ____
 
     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [x]
 
     As of February 27, 1998, the aggregate market value of the voting stock
held by non-affiliates of the Registrant, based on the closing price on February
27, 1998, on the New York Stock Exchange for the Registrant's Common Stock, was
$2.25 billion.
 
     There were 57,461,622 shares of the Registrant's Common Stock outstanding
on February 27, 1998.
 
                      DOCUMENTS INCORPORATED BY REFERENCE
 
     Portions of Registrant's definitive Proxy Statement for its April 22, 1998
Annual Meeting of Shareholders are incorporated by reference into Part III.
 
________________________________________________________________________________



<PAGE>
<PAGE>



                                     PART I
 
ITEM 1 -- BUSINESS
 
(A) GENERAL DEVELOPMENT OF BUSINESS
 
     Witco Corporation (the 'Company' or 'Witco'), established in 1920, is a
global manufacturer and marketer of specialty chemical products for use in a
wide variety of industrial and consumer applications. Most of the Company's
products are sold to industrial customers for use as additives, ingredients or
intermediates which impart particular characteristics to such customers' end
products. On December 31, 1997, the Company had approximately 5,970 employees
worldwide.
 
     On October 19, 1995, Witco completed the acquisition of OSi Specialties
Holding Company ('OSi Specialties' or 'OSi'), an entity engaged in the
manufacture of silicone surfactants, amine catalysts, organofunctional silanes
and specialty fluids with manufacturing and blending facilities in West
Virginia, Europe, South America and Asia.
 
     In 1995, the Company completed the disposition of its Battery Parts and
Carbon Black operations. These dispositions completed the Company's previously
announced plan to dispose of all of the businesses of the Company's Diversified
Products segment.
 
     In September 1995, Witco announced its intention to divest its Lubricants
Group. In November 1996, the Company disposed of its grease gun and motor oil
portions of its Lubricants business. The Company completed the divestiture of
its Lubricants Group by disposing of its refinery in Bradford, Pennsylvania in
the first quarter of 1997 and its Golden Bear Division in the third quarter of
1997.
 
     On December 12, 1996, the Company announced a restructuring plan to be
implemented over a three year period (1997-1999). The plan is intended to
improve profitability, increase productivity and maximize shareholder value. The
plan's goals are to reduce fixed costs by 20% and variable costs by 5 to 10%.
Cost savings run rates are anticipated to be 50%, 90% and 100% at the end of
1997, 1998 and 1999, respectively. As a part of the plan, the Company is
undertaking a $600 million three-year capital spending plan for new capacity,
modernization, environmental and safety compliance and information systems. The
Company intends to reduce the number of its manufacturing facilities by either
selling or closing principal manufacturing facilities, while consolidating
related distribution, research and development and administrative centers.
During 1997, in connection with the divestiture of the Lubricants Group and the
1995 and 1996 restructuring plans, the Company closed or sold 11 manufacturing
facilities, 28 warehouses and terminals, 6 sales offices, 4 administrative
offices and 3 research and development facilities and reduced its workforce
by approximately 730 employees. At December 31, 1997, Witco conducted
manufacturing operations at 38 plants worldwide, conducted sales activities
at 49 sites worldwide, was engaged in research and development activities
at 23 locations worldwide and conducted administrative functions at 19
offices worldwide.
 
     In connection with the Company's 1996 restructuring plan, on January 28,
1997, the Company announced the reorganization of its business into four groups:
Oleochemicals & Derivatives, Polymer Chemicals, Performance Chemicals and
OrganoSilicones. The Oleochemicals & Derivatives Group, which contains the
Oleochemical assets of the former Oleo/Surfactants Group, produces basic
oleochemicals (fatty acids and plastic lubricants) and oleochemical derivatives.
The Polymer Chemicals Group includes assets of the former Polymer Additives
Group and certain assets of the former Resins Group. This group focuses on the
production of additives and initiators in addition to metal organics, coatings
and adhesives. The Performance Chemicals Group consists of the former Petroleum
Specialties Group, certain assets of the old Oleo/Surfactants and Resins Groups
and Baxenden, a joint venture headquartered in the United Kingdom. This group
focuses on producing petroleum specialties, sulfonation and ethoxylation
products, and urethane chemicals. The OrganoSilicones Group, which consists of
the former OSi Specialties Group, produces silanes, specialty fluids and
urethane additives.
 
     The Company was incorporated in 1958 under the laws of Delaware as Witco
Chemical Company, Inc., at which time it succeeded by merger to the business of
Witco Chemical Company, an Illinois corporation formed in 1920. Its executive
offices are located at One American Lane, Greenwich, Connecticut 06831-2559,
telephone (203) 552-2000.
 
                                       1
 


<PAGE>
<PAGE>



(B) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
 
     Reference is made to Note 18 of Notes to Financial Statements. See Item
8 -- Financial Statements and Supplementary Data following Part IV of this
report.
 
(C) NARRATIVE DESCRIPTION OF BUSINESS
 
     As of December 31, 1997, the Company's operations were divided among four
business groups: the Oleochemicals & Derivatives Group, the Polymer Chemicals
Group, the Performance Chemicals Group and the OrganoSilicones Group.
 
OLEOCHEMICALS & DERIVATIVES GROUP
 
     The Oleochemicals & Derivatives Group is an integrated producer of
chemicals based on natural fats and oils. Witco is one of North Americas largest
fatty acid producers, and a global leader in quaternary fatty amines, amphoteric
and specialty cationic surfactants and ethoxylated specialties. The group
supplies a myriad of industries, including personal care, home care and fabric
conditioning ingredients, paper, textiles, rubber, coatings and plastic.
 
     Oleochemicals modify surfaces either as direct lubricants, emulsifiers or
as components of ingredients that modify surfaces. Examples of diverse
applications of fatty acids include acting as lubricants in plastics, components
of personal care products such as soaps, creams and lotions; and acting as
curing systems for rubber.
 
     Oleochemical derivatives are value added analogs of fatty acids produced
through creative chemistry, modifying molecules to provide specialized solutions
to customer performance requirements. Witco is one of the world's largest
producers of quaternary fatty amines, which are used as laundry softeners, in
personal care as hair conditioners and in many other applications. Amphoteric
surfactants combine detergency with natural mildness, making them ideal for
shampoos, dishwashing detergents, and many other skin care, personal care and
detergent products. Ethoxylated specialties, based on mono/diglycerides, like
amphoteric surfactants, are based on natural compounds that clean without
irritating the skin. They are used to make shampoos, body gels and similar
products richer and creamier.
 
POLYMER CHEMICALS GROUP
 
     Witco's Polymer Chemicals Group is a worldwide supplier of additives and
catalysts for the polymer industry. It manufactures stabilizers, lubricants,
plasticizers, and peroxide catalysts used in the manufacture of polyvinyl
chloride ('PVC') resin for such applications as pipes, fittings, siding and
packaging materials. The Group is also a supplier of lubricants, antioxidants
and peroxide catalysts to polyolefin/polystyrene manufacturers. These resins are
used extensively in a broad spectrum of applications ranging from packaging film
to small appliance housings. The Group is a global producer of aluminum alkyls,
used as cocatalysts in the production of polyolefins (including polyethylene and
polypropylene, which are among the world's largest volume plastics used in
packaging, cars, furniture and appliances) and produces organotin compounds for
the production of PVC stabilizers and biocides for marine paints. The Polymer
Chemicals Group also manufactures environmentally friendly epoxy resins and
hardening agents, complete resin systems that add durability and adhesion to
coatings and adhesives, and hot melt and epoxy adhesives used in applications
such as shoes, textiles, automotive body components and wire encapsulation.
 
PERFORMANCE CHEMICALS GROUP
 
     The Company's Performance Chemicals Group consists of five business units:
Refined Products, Petroleum Additives, Industrial Surfactants, Urethane
Chemicals and Baxenden, a 53.5% owned subsidiary of the Company.
 
                                       2
 


<PAGE>
<PAGE>



Refined Products
 
     The Refined Products business is engaged in the manufacture and marketing
of a wide range of high purity hydrocarbon products, including white oils,
petrolatums, microcrystalline waxes, cable compounds, and refrigeration oils,
serving numerous global markets predominantly requiring food grade quality. The
business' product lines serve as lubricants, emollients, moisture barriers,
plasticizers and carriers and are characterized by their chemical inertness and
high quality.
 
     The Refined Products business serves five major market segments:
polystyrene, other polymers, personal care, refrigeration oils and
telecommunication cables, as well as additional minor markets.
 
Petroleum Additives
 
     The Petroleum Additives business is a major manufacturer and marketer of
sulfonates, primarily used as performance additives in transport and industrial
lubricant applications, and as heavy fuel additives. The Witco sulfonate product
line includes low based and overbased calcium sulfonates, overbased magnesium
sulfonates, low based barium sulfonates and sodium sulfonates. These sulfonates
are oil soluble surfactants, and their properties include detergency to help
lubricants keep car, truck and ship engines clean with minimal wear;
emulsification and corrosion protection for metalworking fluids; and corrosion
protection for heavy fuels used in power generation.
 
     The Petroleum Additives business is globally managed. Manufacturing plants
are located in North America and Europe, and an established distribution network
services South America and the Asia Pacific region. The bulk of the sulfonate
product line is marketed directly through Witco's own sales force. Many of the
business customers are supplied and serviced on a global basis.
 
Industrial Surfactants
 
     The Industrial Surfactants business manufactures and sells a broad line of
surfactants to a range of industries, primarily agriculture, oil field, emulsion
(water based) polymers, paints and coatings; and also to personal care, soap and
detergent, and textile markets. Surfactants change the surface tension
(spreadability) of liquids. In agricultural applications, surfactants separate
pesticides into small particles, thereby increasing their efficacy via
dispersion and penetration; in the oil field, surfactants are used as
demulsifiers which aid in the clean separation of oil from water. Surfactants
are also used in personal care products, and in soaps and detergents, to improve
penetration and cleaning capability.
 
Urethane Chemicals
 
     The Urethane Chemicals business is comprised of three product groupings
that offer technologically advanced materials to a diverse and global customer
base: Fomrez'r' saturated polyester polyols, Witcobond'r' polyurethane
dispersions, and Witcothane'r' polyurethane systems.
 
     Polyester polyols are employed in industrial applications such as flexible
foam for seating, thermoplastic urethanes for structural parts, adhesives and
coatings. The polyurethane dispersions are sold to a larger and more diverse
customer base primarily for coating applications such as flooring, fiberglass
reinforcement and textiles. Polyurethane systems are used primarily by the shoe
sole industry, and is a highly service intensive business.
 
Baxenden
 
     Baxenden, a 53.5% owned Witco subsidiary (partner Croda Inc. at 46.5%) is
engaged in the manufacture and marketing of isocyanate derivatives, polyesters
and specialty polymer systems used in a wide range of applications. The major
markets served by Baxenden are automotive, construction, surface coatings,
leather and textile finishers. Sub-markets include coatings, adhesives,
sealants, glastomers and insulation for the above markets.
 
     Baxenden is focused on specialty polymer and resin chemistry and novel
curing mechanisms for such polymers. The core technology will be isocyanate and
acrylic chemistry but will include novel polyesters and esterification
processes.
 
                                       3
 


<PAGE>
<PAGE>



ORGANOSILICONES GROUP
 
     The OrganoSilicones Group manufactures and sells over 500 silicone-based
chemical intermediate products to manufacturers of fiberglass, reinforced
plastics, polyurethane foam, textiles, coatings, automotives, adhesives, rubber,
pharmaceuticals, thermoplastics, sealants and agricultural, electrical and
personal care products throughout the world. In 1958, The OrganoSilicones Group
(while part of Union Carbide Corp.) invented the use of silicone surfactants in
the manufacture of urethane foam. This fundamental technological advance
facilitated a lower-cost, continuous manufacturing method, resulting in
accelerated growth in the urethane foam industry. The OrganoSilicones Group was
also a pioneer in the silanes industry, and was instrumental in developing key
technology for the reinforcement of plastics.
 
     Regardless of form, most silicones share a combination of properties,
including electrical resistance, ability to maintain performance across a broad
range of temperatures, resistance to aging, water repellence, lubricating
characteristics and relative chemical and physiological inertness. The
versatility of silicone-based intermediates has led to a wide variety of
applications across a broad spectrum of industries in all major countries.
Examples of the OrganoSilicones Group's products include catalysts, surfactants,
coupling agents, process aids and other silicone-based specialty chemicals.
Catalysts promote the process of urethane foam and polymer formation.
Surfactants promote the mixing of reactants, control cell size and stabilize
urethane foam. Surfactants also serve as wetting agents in a broad spectrum of
applications and are used in personal care products (hair conditioning) and
coatings (for flow control and leveling) and agriculture (netting). Coupling
agents bond inorganic and organic materials and enhance the physical, mechanical
and adhesion properties of a variety of products, including fiberglass,
sealants, rubber and coatings. Process aides include foam control agents, which
inhibit foam formation or reduce foam in such diverse applications as antacid
tablets, fountain soda and pulp and paper processing.
 
Raw Materials
 
     The principal raw materials for the OrganoSilicones Group products are
trichlorosilane, polyether fluids and dimethyl siloxane hydrolyzate. The
OrganoSilicones Group purchases, in the aggregate, more than 40% of its raw
materials from Dow Corning Corporation and Union Carbide Corporation under
various long-term agreements, which terms expire at various times through 2000.
The Group purchases other raw materials from a variety of domestic and
international suppliers, and these products are readily available from other
suppliers.
 
DIVESTITURE OF LUBRICANTS BUSINESS
 
     In September 1995, Witco announced its intention to divest its Lubricants
Group. In 1996, Witco sold its Kendall/Amalie, private label grease and grease
gun manufacturing businesses. In the first quarter of 1997, Witco sold its
Bradford, PA refinery. Witco discontinued its operation as a supplier of
specialty naphthenic oils, which had been marketed to the rubber, plastics, ink
and agricultural industries, and asphalt and specialty road and surface
treatment products, which had been sold primarily for highway construction and
maintenance, when it completed the divestiture of its Lubricants Group by
disposing of its Golden Bear Division in the third quarter of 1997.
 
INTERNATIONAL OPERATIONS
 
     Sales of Witco's continuing non-U.S. operations were $905 million, or 41.4%
of total sales for continuing operations, for the year ended December 31, 1997.
Witco's manufacturing and producing operations outside the United States are in
Belgium, Brazil, Canada, Denmark, England, France, Germany, Hong Kong,
Indonesia, Italy, Korea, Malaysia, Mexico, the Netherlands, Singapore, Spain and
Thailand.
 
                                       4
 


<PAGE>
<PAGE>



PATENTS AND TRADEMARKS
 
     The Company owns and controls patents, trade secrets, trademarks, trade
names, copyrights and confidential information, which in the aggregate, are of
material importance to its business. However, the Company is not materially
dependent upon any single patent or trademark. The Company's trademarks are
registered in the United States and in a number of foreign countries, with
renewable terms of registration expiring generally between 1998 and 2007. The
Company intends to renew in a timely fashion those trademarks that are renewable
and deemed important to its continuing business operations. Additionally, the
Company currently has approximately 2,200 patents and pending patent
applications worldwide related to its continuing business operations. The
Company intends to continue to file patent applications on new and emerging
technologies.
 
BACKLOG
 
     The nature of the business conducted by each of the Company's four business
groups is such that customer orders are usually filled within 30 days.
Accordingly, backlog is not significant to the Company's business.
 
RESEARCH AND DEVELOPMENT
 
     The Company is actively engaged in research and development programs
designed to develop new products, manufacturing processes, systems and
technologies to enhance existing products and processes. The Company believes
its investments in research and development have been an important factor in
establishing and maintaining its competitive position. Witco expended
approximately $71.8 million in 1997, $73.1 million in 1996 and $52.9 million in
1995 on research and development of new products and services for its continuing
operations, and for improvements and new applications of existing products and
services for its continuing operations. During 1997, the Company consolidated
its U.S. research and development facilities into three primary locations.
 
ENVIRONMENTAL MATTERS
 
     The industries in which Witco operates have experienced increased operating
costs and capital investments due to statutes and regulations at the federal,
state and local levels for the protection of the environment and the health and
safety of employees and others. Witco believes that expenditures for compliance
with these statutes and regulations will continue to have a significant impact
upon the conduct of its business. The trend for greater environmental awareness
and more stringent environmental regulations is likely to continue and while
Witco cannot accurately predict how this trend will affect future operations and
earnings, Witco does not believe its costs will vary significantly from those of
its competitors in the chemical industry.
 
     The Company evaluates and reviews environmental reserves for future
remediation and other costs on a quarterly basis to determine appropriate
reserve amounts. Inherent in this process are considerable uncertainties which
affect the Company's ability to estimate the ultimate costs of remediation
efforts. Such uncertainties include the nature and extent of contamination at
each site, evolving governmental standards regarding remediation requirements,
changes in environmental regulations, widely varying costs of alternative
clean-up methods, the number and financial condition of other potentially
responsible parties at multi-party sites, innovations in remediation and
restoration technology, and the identification of additional environmental
sites.
 
     Reserves for environmental remediation and compliance costs at December 31,
1997 amounted to $186.6 million (including $55.3 million associated with
environmental expenses of the Lubricants Group and $64.7 million associated with
plants either to be, or which have already been, shut down or sold as part of
the 1996 and 1995 restructuring plans), which reflects management's assessment
of future remediation and compliance costs in light of currently available
information. Remediation expenditures charged to those reserves were $36.8
million in 1997 and include expenditures currently mandated as well as those not
initiated by any regulatory authority or third party. The Company anticipates
1998 expenditures to be approximately $36.5 million.
 
                                       5
 


<PAGE>
<PAGE>



     Capital expenditures for air, water and solid waste control equipment and
facilities amounted to $37.4 million in 1997. The Company estimates that
approximately $26.0 million will be expended on similar capital projects in
1998.
 
     The Company is continuing its efforts to reduce hazardous waste and
emissions generated by its operations. Through improved operating efficiencies,
installation of additional environmental control equipment and utilization of
the latest innovations in waste treatment technology, management believes that
direct recurring operating costs associated with managing hazardous substances
and pollution can be maintained at or slightly above current levels. Such costs
amounted to approximately $40.7 million in 1997.
 
YEAR 2000 ISSUES
 
     Reference is made to the Capital Investments and Commitments section of the
Management's Discussion and Analysis of Financial Condition and Results of
Operations. See Item 7 -- 'Management's Discussion and Analysis of Financial
Condition and Results of Operations.'
 
(D) FINANCIAL INFORMATION REGARDING FOREIGN AND DOMESTIC OPERATIONS AND EXPORT
SALES
 
     Witco's foreign subsidiaries generally manufacture products similar to the
principal products manufactured domestically. Manufacturing is conducted by
subsidiaries in Belgium, Brazil, Canada, Denmark, England, France, Germany,
Italy, Mexico, the Netherlands, Singapore and Spain. In addition, the Company
operates producing and other facilities in Korea, Hong Kong, Malaysia, Thailand
and Indonesia.
 
     In accord with normal market conditions, sales made outside the United
States are generally made on longer terms of payment than would be normal within
the United States. Foreign operations are subject to certain risks inherent in
carrying on international business, including currency devaluations and
controls, export and import restrictions, inflationary factors, product supply,
economic controls, nationalization and expropriation. The likelihood of such
occurrences varies from country to country and is not predictable. However, the
Company's primary foreign operations are based in Western Europe and other
stable areas, and, therefore, the Company does not believe these risks will have
a significant impact upon the Company.
 
     Reference is made to Note 18 of Notes to Financial Statements. See Item
8 -- Financial Statements and Supplementary Data following Part IV of this
report.
 
ITEM 2 -- PROPERTIES
 
     At December 31, 1997, Witco conducted manufacturing and other operations at
41 principal facilities worldwide, of which 21 are in the United States and 20
are in other countries. Of these principal facilities, 6 are utilized for
Oleochemicals & Derivatives product manufacturing; 8 are utilized for Polymer
Chemicals product manufacturing; 15 are utilized for Performance Chemicals
product manufacturing; 4 are utilized for OrganoSilicones product manufacturing;
and 8 are utilized for administrative and research purposes. All of the
facilities are in good operating condition.
 
                                       6
 


<PAGE>
<PAGE>



 PRINCIPAL MANUFACTURING PLANTS AND OTHER IMPORTANT PHYSICAL PROPERTIES RELATED
                                 TO CONTINUING
        OPERATIONS -- LOCATIONS BY INDUSTRY SEGMENT (OWNED IN FEE EXCEPT
              WHERE PARENTHETICAL DATES REFER TO LEASE EXPIRATION)
 
OLEOCHEMICALS & DERIVATIVES GROUP
 
United States
Mapleton, Illinois
Memphis, Tennessee
Janesville, Wisconsin
 
International
Flimby, England
Steinau, Germany
Granollers, Spain
 
POLYMER CHEMICALS GROUP
 
United States
Mapleton MOP, Illinois
Taft, Louisiana
Brooklyn, New York*
Marshall, Texas
 
International
Bergkamen, Germany (2091)
Gambolo, Italy
Cuatitlan, Mexico
Singapore
 
PERFORMANCE CHEMICALS GROUP
 
United States
Chicago, Illinois*
Perth Amboy, New Jersey
Houston, Texas
Fort Worth, Texas*
Gretna, Louisiana
Harahan, Louisiana*
Petrolia, Pennsylvania*
Trainer, Pennsylvania*
 
International
West Hill, Canada
Amsterdam, the Netherlands
Haarlem, the Netherlands
Koog aan de Zaan, the Netherlands
Soro, Denmark (2005)
Accrington, England
Droitwich, England
 
                                       7
 


<PAGE>
<PAGE>



ORGANOSILICONES GROUP
 
United States
Sistersville, West Virginia
 
International
Antwerp, Belgium (2019)
Itatiba, Brazil
Termoli, Italy
 
------------
 
* Manufacturing plants, for which public announcements have been made regarding
  the Company's intention to close or sell as part of its asset consolidation
  plan.
 
OTHER FACILITIES
 
<TABLE>
<S>                                                       <C>
United States
Greenwich, Connecticut (2014)                             World Headquarters -- Principal Executive,
                                                          Administrative and Sales Office
Tarrytown, New York (2007)                                Research
Dublin, Ohio                                              Research
Oakland, New Jersey                                       Research
S. Charleston, West Virginia (1997*)                      Administrative, Research and Sales Office

International
Paris, France (1999)                                      Administrative and Sales Office
Singapore (1999)                                          Administrative, Research and Sales Office
                                                          Principal European Executive and Administrative Office,
                                                          Research and Sales Office
Meyrin, Switzerland (2007)
</TABLE>
 
------------
 
* The Company is presently negotiating a new lease arrangement.
 
     In addition, the Company operates production and other facilities in Korea,
Hong Kong, Malaysia, Thailand and Indonesia.
 
ITEM 3 -- LEGAL PROCEEDINGS
 
     The Company is a potentially responsible party ('PRP') or a defendant in a
number of governmental (federal, state and local) and private actions associated
with the release, or suspected release, of contaminants into the environment. As
a PRP, the Company may be liable for costs associated with the investigation and
remediation of environmental contamination, as well as various penalties and
damages to persons, property and natural resources. As of December 31, 1997, the
Company was a PRP, or a defendant, in connection with 59 sites at which it is
likely to incur environmental response costs as a result of actions brought
against the Company pursuant to the federal Comprehensive Environmental Response
Compensation and Liability Act ('CERCLA'), the federal Resource Conservation and
Recovery Act ('RCRA') or similar state or local laws. With 22 exceptions, all of
these sites involve one or more other PRPs, and in most cases there are numerous
other PRPs in addition to the Company. CERCLA, RCRA and the state counterparts
to these federal laws authorize governments to investigate and remediate actual
or suspected damage to the environment caused by the release, or suspected
release, of hazardous substances into the environment, or to order the
responsible parties to investigate and/or remediate such environmental damage.
 
     The Company evaluates and reviews environmental reserves for future
remediation and other costs on a quarterly basis to determine appropriate
reserve amounts. Inherent in this process are considerable uncertainties which
affect the Company's ability to estimate the ultimate costs of remediation
efforts.
                                       8
 


<PAGE>
<PAGE>


Such uncertainties include the nature and extent of contamination at each site,
evolving governmental standards regarding remediation requirements, changes
in environmental regulations, widely varying costs of alternative cleanup
methods, the number and financial condition of other potentially responsible
parties at multi-party sites, innovations in remediation and restoration
technology and the identification of additional environmental sites.
 
     The Company is a defendant in six similar actions arising out of the
Company's involvement in the polybutylene resin manufacturing business in the
1970's. Five of the following cases are currently pending in California state
courts and one is pending in Texas state court; East Bay Municipal Utility
District v. Mobil Oil Corporation, et al., filed in November 1993, and pending
in Superior Court for the County of San Mateo, California; City of Santa Maria
v. Shell Oil Company, et al., filed in May 1994, and pending in Superior Court
for the County of San Luis Obispo, California; Nipomo Community Services
District v. Shell Oil Company, et al., filed in May 1995, and pending in
Superior Court for the County of Santa Barbara, California; Alameda County Water
District v. Mobil Oil Corporation, et al., filed in April 1996, and Marin
Municipal Water District v. Shell Oil Company, et al., filed in May 1996, both
pending in Superior Court for the County of San Mateo; and City of Austin v.
Shell Oil Company, et al. filed in June 1996, and pending in the District Court
of Travis County, Texas. The actions generally allege that the Company and
several other defendants negligently misrepresented the performance of
polybutylene pipe and fittings installed in water distribution systems. Other
allegations in the California and Texas actions include breach of the California
Unfair Practices Act and the Texas Deceptive Practices Act, respectively; breach
of warranty, fraud and strict liability. It is possible that the Company may be
named as a defendant in future actions arising out of its past involvement in
the polybutylene resin manufacturing business.
 
     On September 30 , 1997, the U.S. Environmental Protection Agency ('EPA')
filed an Administrative Complaint with the Regional Hearing Clerk, U.S. EPA,
Region III alleging violations of the Clean Water Act at the Company's Petrolia,
Pennsylvania facility. In its complaint, EPA proposed that a penalty of $125,000
be assessed against the Company. The Company and EPA have agreed in principle to
settle the matter for $100,000, however, negotiations concerning the terms of a
settlement agreement are ongoing.
 
     The Company is not a party to any legal proceedings, including
environmental matters, which it believes will have a material adverse effect on
its consolidated financial position or liquidity. However, the Company's
operating results or cash flow could be materially affected in future periods by
the resolution of these contingencies.
 
ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
     There were no matters submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter ended December
31, 1997.
 
                                       9



<PAGE>
<PAGE>



                       EXECUTIVE OFFICERS OF THE COMPANY
 
     The following sets forth information regarding executive officers of the
Company as of February 27, 1998, and is included in Part I in accordance with
Instruction 3 of Item 401(b) of Regulation S-K.
 
<TABLE>
<CAPTION>
                                                SERVED IN
                                                 PRESENT
                                                POSITION               PRIOR BUSINESS EXPERIENCE
           NAME AND PRESENT TITLE                 SINCE                 (WITHIN LAST FIVE YEARS)               AGE
---------------------------------------------   ---------   ------------------------------------------------   ---
<S>                                             <C>         <C>                                                <C>
Peter J. Biancotti ..........................      1997     Vice President and Controller 1983 to 1997.        54
  Vice President, Business Assurance
E. Gary Cook ................................      1996     President and COO of Albemarle                     53
  President and CEO                                           Corporation -- March 1994 to June 1996. Senior
                                                              Vice President -- Chemicals of Ethyl
                                                              Corp. -- January 1992 to March 1994.
Bruce G. Davis ..............................      1995     Vice President Purchasing and Logistics,           49
  Vice President, Global Purchasing and                       Standard Products -- 1993 to 1995.
  Logistics
Brian J. Dick ...............................      1997     Assistant Controller 1995 to 1997. Controller,     41
  Vice President and Controller                               Formica Corporation prior to 1995.
Camillo J. DiFrancesco ......................      1996     Vice President of Investor Relations -- March      48
  Senior Vice President and Chief Financial                   1996 to September 1996. Vice President and
  Officer                                                     CFO, OSi Specialties, Inc. -- July 1993 to
                                                              March 1996.
Ronald Edelstein ............................      1995     Vice President, Information Systems -- April       48
  Chief Information Officer, Vice                             1992 to December 1995.
  President -- Information Systems
Nirmal Jain .................................      1997     Group Vice President, Polymer Chemicals -- 1996    60
  Group Vice President, Special Projects                      to 1997. Group Vice President Additives --1993
                                                              to 1996.
Gerald Katz .................................      1996     Senior Vice President of Corporate                 60
  Senior Vice President Performance Chemicals                 Development -- 1995 to 1996. Group Vice
                                                              President and Senior Managing Director, Witco
                                                              Europe -- 1992 to 1994.
Patrick C. Mackey ...........................      1997     Director, Integrated Operations and Human          51
  Group Vice President, Polymer Chemicals                     Resources (Global Nylon) Du Pont Corporation.
Dustan E. McCoy .............................      1996     Vice President, General Counsel and Corporate      48
  Senior Vice President, General Counsel and                  Secretary -- April 1993 to October 1996.
  Corporate Secretary                                         Associate General Counsel, Ashland,
                                                              Inc. -- 1990 to 1993.
Eric R. Myers ...............................      1996     Vice President of Investor Relations --            51
  Group Vice President, Corporate                             September 1996 to November 1996. Vice
  Restructuring/Implementation                                President and General Manager, Lubricants
                                                              Business -- May 1993 to September 1996.
Edward Pollak ...............................      1997     Vice President -- International, OSi               63
  Vice President, Asia/Pacific                                Specialties -- 1994 to 1997. Senior Vice
                                                              President, Olin Corporation prior to December
                                                              1993.
James M. Rutledge ...........................      1990                                                        45
  Vice President and Treasurer
Roger L. Sharp ..............................      1997     Senior Vice President, Global Operations -- 1996   55
  Executive Vice President and Chief of                       to 1997. Vice President of Operations (Global
  Global Operations                                           Nylon) Du Pont Corporation -- prior to
                                                              September 1996.
</TABLE>
 
                                                        (continued on next page)
 
                                       10
 


<PAGE>
<PAGE>



(continued from previous page)
 
<TABLE>
<CAPTION>
                                                SERVED IN
                                                 PRESENT
                                                POSITION               PRIOR BUSINESS EXPERIENCE
           NAME AND PRESENT TITLE                 SINCE                 (WITHIN LAST FIVE YEARS)               AGE
---------------------------------------------   ---------   ------------------------------------------------   ---
<S>                                             <C>         <C>                                                <C>
Frederick A. Shinners .......................      1996     Group Vice President of                            55
  Group Vice President, Managing Director,                    Oleochemicals/Surfactants -- June 1994 to
  Europe                                                      December 1996. Vice President and General
                                                              Manager of GE Silicones -- August 1990 to
                                                              June 1994
Georg Urban. ................................      1996     Managing Director of Witco's European              51
  Group Vice President, Oleochemicals &                       surfactants business -- 1993 to 1996.
  Derivatives
David N. Verner .............................      1996     Vice President, Urethane Additives business        50
  Group Vice President, OrganoSilicones                       unit -- October 1995 to April 1996. Vice
                                                              President, Urethane Additives, OSi
                                                              Specialties, Inc. -- July 1993 to October
                                                              1995.
</TABLE>
 
                                    PART II
 
ITEM 5 -- MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS
 
     Witco's Common Stock is listed on the New York Stock Exchange. The
following table reflects the high and low sales prices, as reported on such
exchange for each quarterly period during the past two years:
 
<TABLE>
<CAPTION>
                                                      1997                1996
                                                ----------------    ----------------
                   QUARTER                       HIGH      LOW       HIGH      LOW
---------------------------------------------   ------    ------    ------    ------
<S>                                             <C>       <C>       <C>       <C>
First........................................   $34.88    $29.44    $36.25    $29.13
Second.......................................   $38.38    $33.25    $37.38    $31.88
Third........................................   $47.63    $38.00    $34.63    $28.13
Fourth.......................................   $45.50    $38.00    $33.50    $29.50
</TABLE>
 
     The approximate number of holders of record of the Company's Common Stock
as of February 27, 1998, was 4,162.
 
     Dividends on the Common Stock have been declared quarterly during the past
two years as follows:
 
<TABLE>
<CAPTION>
                                                                          PER SHARE
                                                                         ------------
                               QUARTER                                   1997    1996
----------------------------------------------------------------------   ----    ----
<S>                                                                      <C>     <C>
First.................................................................   $.28    $.28
Second................................................................   $.28    $.28
Third.................................................................   $.28    $.28
Fourth................................................................   $.28    $.28
</TABLE>
 
ITEM 6 -- SELECTED FINANCIAL DATA
 
     The data for this item are submitted as a separate section following Part
IV of this report.
 
ITEM 7 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 
     The data for this item are submitted as a separate section following Part
IV of this report.
 
ITEM 8 -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
     The consolidated financial statements and supplementary data of the Company
and its subsidiaries are included in a separate section following Part IV of
this report.
 
ITEM 9 -- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
 
     None.
 
                                       11
 


<PAGE>
<PAGE>



                                    PART III
 
ITEM 10 -- DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
 
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
 
(a) Identification of Directors
 
     Reference is made to pages 3 through 7 of the Proxy Statement to be filed
pursuant to Regulation 14A no later than March 31, 1998.
 
(b) Identification of Executive Officers
 
     Reference is made to Part I of this Form 10-K.
 
(c) Business Experience
 
     Reference is made to pages 3 through 7 of the Proxy Statement to be filed
pursuant to Regulation 14A no later than March 31, 1998 and Part I of this Form
10-K.
 
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
 
     Reference is made to page 11 of the Proxy Statement to be filed pursuant to
Regulation 14A no later than March 31, 1998.
 
ITEM 11 -- EXECUTIVE COMPENSATION
 
     Reference is made to the information set forth under the captions
'Compensation of Directors' and 'Executive Compensation' on pages 8 and 13,
respectively, of the Proxy Statement to be filed pursuant to Regulation 14A no
later than March 31, 1998.
 
ITEM 12 -- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
     For information with respect to beneficial ownership of the Company's
voting securities, and rights thereto, reference is made to the information set
forth under the captions 'Ownership of Securities by Directors and Officers' and
'Security Ownership of Certain Beneficial Owners' on pages 10 and 11,
respectively, of the Proxy Statement to be filed pursuant to Regulation 14A no
later than March 31, 1998.
 
ITEM 13 -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
(a) Transactions with Management and Others
 
     Reference is made to the information set forth under the caption
'Compensation of Directors' and 'Transactions with Management' on pages 8 and
21, respectively, of the Proxy Statement to be filed pursuant to Regulation 14A
no later than March 31, 1998.
 
(b) Certain Business Relationships
 
     Reference is made to the information set forth under the captions 'Certain
Business Relationships' on page 9 and 'Compensation Committee Interlocks and
Insider Participation' on page 9 of the Proxy Statement to be filed pursuant to
Regulation 14A no later than March 31, 1998.
 
                                       12
 


<PAGE>
<PAGE>



                                    PART IV
 
ITEM 14 -- EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
 
     (a) 1 and 2 -- The response to this portion of Item 14 is submitted as a
separate section of this report.
 
     (a) 3 -- Exhibits:
 
<TABLE>
<CAPTION>
EXHIBIT
  NO.
-------
<C>       <S>
    3(i)  -- Restated Certificate of Incorporation.(1)
    3(ii) -- By-laws, as amended.(1)
    4     -- Instruments defining the rights of security holders, including indentures.
          (i)  --  Rights Agreement dated as of March 2, 1995, between Witco Corporation and First
                   Chicago Trust Company of New York.(2)
          (iii) -- Pursuant to Regulation S-K, Item 601(b)(4)(iii), no debt or other security instrument
                   represents 10% of the total assets of the Registrant, and accordingly such
                   instruments are not filed herewith. Registrant agrees to furnish a copy of any such
                   agreement to the Commission upon request.
   10     -- Material Contracts.
          (i)      -- 1. Agreement and Plan of Merger dated as of September 10, 1995, among Witco
                         Corporation, Witsel Corporation and OSi Specialties Holding Company.(3)
                   -- 2. Amendment dated as of October 18, 1995, to the Agreement and Plan of Merger dated as of
                         September 10, 1995, among Witco Corporation, Witsel Corporation and OSi Specialties
                         Holding Company.(4)
                   -- 3. Credit Agreement dated as of October 18, 1995.(5)
                   -- 4. Amended and Restated Credit Agreement dated as of October 11, 1996.(6)
                   -- 5. Amendment No. 1 to Amended and Restated Credit Agreement dated as of December 23,
                         1996.(7)
                   -- 6. Credit Agreement dated as of March 31, 1997.(8)
          (iii)(A) -- Executive Compensation Plans and Arrangements Required to be Filed:
                   -- 1. 1986 Stock Option Plan for Employees, as amended.(9)
                   -- 2. 1989 Stock Option Plan for Employees.(10)
                   -- 3. 1992 Stock Option Plan for Employees.(11)
                   -- 4. 1995 Stock Option Plan for Employees.(12)
                   -- 5. Amendment No. 1 to 1995 Stock Option Plan for Employees.(13)
                   -- 6. Consultancy Agreement Between the Company and William Wishnick.(14)
                   -- 7. Employment Agreement, dated June 12, 1996, by and between Witco Corporation and E. Gary
                         Cook.(15)
                   -- 8. Witco Corporation 1994 Deferred Compensation Plan.(16)
                   -- 9. Witco Corporation Deferred Compensation Plan.
                   -- 10. Supplemental Executive Retirement Plan of Witco Corporation as amended and restated
                          effective December 5, 1995.(17)
   11     -- Statement re Computation of Per Share Earnings.(18)
   21     -- Subsidiaries of the Registrant.
   23     -- Consent of Independent Auditors.
   24     -- Power of Attorney.(19)
   27.1   -- Financial Data Schedule (with restated quarterly information
             for the periods ended March 31, June 30 and September 30, 1997).
   27.2   -- Restated Financial Data Schedule (with restated information for 
             all 1996 periods).
   27.3   -- Restated Financial Data Schedule (with restated information for 
             the year ended December 31, 1995).
</TABLE>
 
     (b) Reports on Form 8-K.
 
          (i) No reports on Form 8-K were filed during the quarter ended
     December 31, 1997.
 
     (c) The Exhibits filed with this report are listed in response to Item
14(a)3.
 
     (d) The response to this portion of Item 14 is submitted as a separate
section of this report.
 
                                                        (footnotes on next page)
 
                                       13
 


<PAGE>
<PAGE>



(footnotes from previous page)
 
 (1) This Exhibit was included as an exhibit to the quarterly report on Form
     10-Q for the quarter ended March 31, 1994, and such Exhibit is hereby
     incorporated by reference.
 
 (2) This Exhibit was included as an exhibit to the Registration Statement on
     Form 8-A filed with the Securities and Exchange Commission on March 3,
     1995, and such Exhibit is hereby incorporated by reference.
 
 (3) This Exhibit was included as Exhibit 2(a) to Form 8-K filed with the
     Securities and Exchange Commission on September 25, 1995, and such Exhibit
     is hereby incorporated by reference.
 
 (4) This Exhibit was included as Exhibit 2(c) to Form 8-K filed with the
     Securities and Exchange Commission on October 31, 1995, and such Exhibit is
     hereby incorporated by reference.
 
 (5) This Exhibit was included as an exhibit to the Form 8-K filed with the
     Securities and Exchange Commission on October 31, 1995, and such Exhibit is
     hereby incorporated by reference.
 
 (6) This Exhibit was included as an exhibit to the quarterly report on Form
     10-Q for the quarter ended September 30, 1996, and such Exhibit is hereby
     incorporated by reference.
 
 (7) This Exhibit was included as an exhibit to the annual report on Form 10-K
     for the fiscal year ended December 31, 1996, and such Exhibit is hereby
     incorporated by reference.
 
 (8) This Exhibit was included as an exhibit to the quarterly report on Form
     10-Q for the quarter ended March 31, 1997, and such Exhibit is hereby
     incorporated by reference.
 
 (9) The 1986 Stock Option Plan, as amended, was filed as an Exhibit to the
     Registration Statement on Form S-8, registration number 33-10715,
     Post-Effective Amendment No. 1 to Form S-8 effective October 3, 1988, and
     Post-Effective Amendment No. 2 to Form S-8 effective June 23, 1992. Such
     Exhibit is incorporated herein by reference.
 
(10) The 1989 Stock Option Plan was filed as an Exhibit to the Registration
     Statement on Form S-8, registration number 33-30995 effective October 2,
     1989, and Post-Effective Amendment No. 1 to Form S-8 effective June 23,
     1992, and such Exhibit is hereby incorporated by reference.
 
(11) The 1992 Stock Option Plan was filed as an Exhibit to the Registration
     Statement on Form S-8, registration number 33-48806, effective June 23,
     1992, and such Exhibit is hereby incorporated by reference.
 
(12) The 1995 Stock Option Plan was filed as an Exhibit to the Registration
     Statement on Form S-8, registration number 33-60755, effective June 30,
     1995, and such Exhibit is hereby incorporated by reference.
 
(13) Amendment No. 1 to the 1995 Stock Option Plan for employees was filed as an
     Exhibit to the Registration Statement on Form S-8, registration number
     33-05509, effective June 7, 1996, and such Exhibit is hereby incorporated
     by reference.
 
(14) This Exhibit was included as an exhibit to the annual report on Form 10-K
     for the fiscal year ended December 31, 1992, and such Exhibit is hereby
     incorporated by reference.
 
(15) This Exhibit was included as an exhibit to the quarterly report on Form
     10-Q for the quarter ended September 30, 1996, and such Exhibit is hereby
     incorporated by reference.
 
(16) This Exhibit was included as an exhibit to the annual report on Form 10-K
     for the fiscal year ended December 31, 1994, and such Exhibit is hereby
     incorporated by reference.
 
(17) This Exhibit was included as an exhibit to the annual report on Form 10-K
     for the fiscal year ended December 31, 1995, and such Exhibit is hereby
     incorporated by reference.
 
(18) The required Statement re: Computation of Per Share Earnings appears in
     Note 10 of Notes to Financial Statements.
 
(19) The Power of Attorney appears on the Signature Page.
 
                                       14



<PAGE>
<PAGE>



                                   SIGNATURES
 
     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized on the 20th day of
March, 1998.
 
                                          WITCO CORPORATION
                                          By           /s/ E. GARY COOK
                                             ...................................
                                                        E. GARY COOK
                                                   CHAIRMAN OF THE BOARD,
                                                         PRESIDENT
                                                AND CHIEF EXECUTIVE OFFICER
 
                               POWER OF ATTORNEY
 
     KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints E. GARY COOK, CAMILLO J. DIFRANCESCO, or DUSTAN
E. MCCOY, acting severally, his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any or all amendments to this
Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
 
     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
 
<TABLE>
<CAPTION>
                   NAME                                        TITLE                              DATE
------------------------------------------  --------------------------------------------   -------------------
<C>                                         <S>                                            <C>
PRINCIPAL EXECUTIVE OFFICER:
 
             /s/ E. GARY COOK                Chairman of the Board, President and Chief      March 20, 1998
 .........................................                Executive Officer
               E. GARY COOK
 
PRINCIPAL FINANCIAL OFFICER:
 
        /s/ CAMILLO J. DIFRANCESCO           Senior Vice President and Chief Financial       March 20, 1998
 .........................................                     Officer
          CAMILLO J. DIFRANCESCO
DIRECTORS:
 
             /s/ E. GARY COOK                                 Director                       March 20, 1998
 .........................................
               E. GARY COOK
 
        /s/ DONALD L. BLANKENSHIP                             Director                       March 20, 1998
 .........................................
          DONALD L. BLANKENSHIP
 
            /s/ BRUCE R. BOND                                 Director                       March 20, 1998
 .........................................
              BRUCE R. BOND
 
           /s/ SIMEON BRINBERG                                Director                       March 20, 1998
 .........................................
             SIMEON BRINBERG
</TABLE>
 
                                       15
 


<PAGE>
<PAGE>



 
<TABLE>
<CAPTION>
                   NAME                                        TITLE                              DATE
------------------------------------------  --------------------------------------------   -------------------
<C>                                         <S>                                            <C>
           /s/ WILLIAM G. BURNS                               Director                       March 20, 1998
 .........................................
             WILLIAM G. BURNS
 
            /s/ LOUISE GOESER                                 Director                       March 20, 1998
 .........................................
              LOUISE GOESER
 
           /s/ WILLIAM R. GRANT                               Director                       March 20, 1998
 .........................................
             WILLIAM R. GRANT
 
          /s/ RICHARD M. HAYDEN                               Director                       March 20, 1998
 .........................................
            RICHARD M. HAYDEN
 
            /s/ HARRY G. HOHN                                 Director                       March 20, 1998
 .........................................
              HARRY G. HOHN
 
           /s/ NICHOLAS PAPPAS                                Director                       March 20, 1998
 .........................................
             NICHOLAS PAPPAS
 
            /s/ DAN J. SAMUEL                                 Director                       March 20, 1998
 .........................................
              DAN J. SAMUEL
 
           /s/ BRUCE F. WESSON                                Director                       March 20, 1998
 .........................................
             BRUCE F. WESSON
 
           /s/ WILLIAM WISHNICK                               Director                       March 20, 1998
 .........................................
             WILLIAM WISHNICK
</TABLE>
 
                                       16



<PAGE>
<PAGE>



                                ANNUAL REPORT ON
                                   FORM 10-K
                            ITEM 6, ITEM 7, ITEM 8,
                      ITEM 14(A)(1) AND (2) AND ITEM 14(D)
                         INDEX OF FINANCIAL STATEMENTS
                          YEAR ENDED DECEMBER 31, 1997
                               WITCO CORPORATION
                             GREENWICH, CONNECTICUT
 


<PAGE>
<PAGE>



                                     INDEX
                           ANNUAL REPORT ON FORM 10-K
         ITEM 6, ITEM 7, ITEM 8, ITEM 14(A)(1) AND (2), AND ITEM 14(D)
                               DECEMBER 31, 1997
 
<TABLE>
<CAPTION>
                                                                                                          PAGE NO.
                                                                                                          --------
 
<S>                                                                                                       <C>
ITEM 6 -- SELECTED FINANCIAL DATA......................................................................        1
 
ITEM 7 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS........        2
 
ITEM 8 -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA -- SEE ITEM 14(A)(1) AND (2) BELOW.
</TABLE>
 
ITEM 14(A)(1) AND (2) AND ITEM 14(D)
 
     The following consolidated financial statements of Witco Corporation and
subsidiary companies, for the year ended December 31, 1997, are included in Item
8:
 
<TABLE>
<CAPTION>
                                                                                                          PAGE NO.
                                                                                                          --------
<S>                                                                                                       <C>
     Report of Independent Auditors....................................................................      F-1
     Consolidated Balance Sheets -- December 31, 1997 and 1996.........................................      F-2
     Consolidated Statements of Operations -- Years Ended December 31, 1997, 1996 and 1995.............      F-3
     Consolidated Statements of Cash Flows -- Years Ended December 31, 1997, 1996 and 1995.............      F-4
     Consolidated Statements of Shareholders' Equity -- Years Ended December 31, 1997, 1996 and 1995...      F-5
     Notes to Financial Statements.....................................................................      F-6
     Quarterly Financial Data (unaudited)..............................................................     F-23
</TABLE>
 
     The following consolidated financial statement schedule of Witco
Corporation and subsidiary companies is included in Part IV, Item 14(d):
 
<TABLE>
<CAPTION>
                                                                                                          PAGE NO.
                                                                                                          --------
 
<S>                                                                                                       <C>
     Schedule II -- Valuation and Qualifying Accounts..................................................      S-1
</TABLE>
 
     All other schedules (Nos. I, III, IV and V) for which provision is made in
the applicable accounting regulation of the Securities and Exchange Commission
are not required under the related instructions or are inapplicable, and
therefore have been omitted.
 
     Financial statements (and summarized financial information) of 50% or less
owned persons accounted for by the equity method have been omitted because they
do not, considered individually or in the aggregate, constitute a significant
subsidiary.




<PAGE>
<PAGE>




WITCO CORPORATION AND SUBSIDIARY COMPANIES

FIVE YEAR SUMMARY OF SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
(in millions of dollars except per share data)                   1997(a)(g)    1996(b)     1995(c)(d)    1994(e)     1993(f)
----------------------------------------------------------------------------------------------------------------------------
<S>                                                              <C>           <C>         <C>           <C>         <C>
SELECTED STATEMENT OF OPERATIONS DATA
Net sales                                                         $2,187.4     $2,263.3     $1,985.1     $1,841.4    $1,763.1
Gross profit                                                         558.0        503.0        416.3        407.1       381.3
Operating income (loss) from continuing operations                   205.0       (262.1)       201.3        173.4        76.1
Income (loss) from continuing operations before income taxes
  and cumulative effect of accounting change                         152.7       (325.8)       169.1        149.8        47.2
Income (loss) from continuing operations before cumulative
  effect of accounting change                                         90.1       (247.2)       100.3         94.4        25.1
Income (loss) from discontinued operations -- net of income
  taxes (benefit)                                                     10.0        (67.9)         4.1         12.7        (5.3)
Cumulative effect of accounting change -- net of income tax
  benefit                                                             (5.2)           -            -            -           -
-----------------------------------------------------------------------------------------------------------------------------
Net income (loss)                                                 $   94.9     $ (315.1)    $  104.4     $  107.1    $   19.8
=============================================================================================================================
Per common share -- basic: (h)
Income (loss) from continuing operations                          $   1.58     $  (4.37)    $   1.78     $   1.74    $   0.62
Income (loss) from discontinued operations                            0.17        (1.20)        0.07         0.23       (0.11)
Cumulative effect of accounting change                               (0.09)           -            -            -           -
-----------------------------------------------------------------------------------------------------------------------------
Net income (loss)                                                 $   1.66     $  (5.57)    $   1.85     $   1.97    $   0.51
=============================================================================================================================
Per common share -- diluted: (h)
Income (loss) from continuing operations                          $   1.55     $  (4.37)    $   1.77     $   1.69    $   0.56
Income (loss) from discontinued operations                            0.17        (1.20)        0.07         0.22       (0.10)
Cumulative effect of accounting change                               (0.09)           -            -            -           -
-----------------------------------------------------------------------------------------------------------------------------
Net income (loss)                                                 $   1.63     $  (5.57)    $   1.84     $   1.91    $   0.46
=============================================================================================================================
SELECTED BALANCE SHEET DATA
Working capital                                                   $  221.3     $  243.2     $  249.6     $  551.6    $  451.2
Property, plant and equipment expenditures (including
  acquisitions)                                                   $  201.6     $  161.2     $  343.0     $  107.4    $  103.7
Property, plant and equipment -- net                              $  780.4     $  735.4     $  789.8     $  720.0    $  696.5
Total assets                                                      $2,297.7     $2,391.7     $2,750.6     $1,919.3    $1,839.0
Long-term debt                                                    $  645.1     $  700.8     $  683.8     $  346.5    $  496.3
Total shareholders' equity                                         $  644.3     $  627.9     $1,004.1     $  940.0    $  713.4
Book value per common share                                       $  11.20     $  11.05     $  17.78     $  16.73    $  14.12
-----------------------------------------------------------------------------------------------------------------------------
SELECTED OTHER FINANCIAL DATA
Number of shareholders (record holders) -- at year end               4,194        4,563        4,990        5,194       5,253
Weighted average number of common shares outstanding (in
  thousands) -- basic                                               57,130       56,591       56,312       54,812      49,055
Weighted average number of common shares outstanding (in
  thousands) -- diluted                                             58,042       56,591       56,656       56,507      55,035
Dividends paid per share -- common stock                          $   1.12     $   1.12     $   1.12     $   1.03    $   0.94
Dividends declared per share -- common stock                      $   1.12     $   1.12     $   1.12     $   1.06    $   0.96
Market price to the nearest dollar, per common share on New
  York Stock Exchange (high-low)                                  $  47-30     $  37-28     $  36-24     $  35-24    $  32-24
=============================================================================================================================
</TABLE>
 
 (a) Includes restructuring charges of $13.0 ($8.0 after-tax or $.14 per common
     share) primarily related to expenditures for equipment at sites previously
     identified for closure, which otherwise would have been capitalized. Also
     includes gains of $1.0 ($0.6 after-tax or $.01 per common share) as a
     result of settlements with certain of the Company's insurers, net of
     related legal and other costs and $2.0 ($1.2 after-tax or $.02 per common
     share) from the disposition of businesses.
 
 (b) Includes a restructuring charge of $345.1 ($239.3 after-tax or $4.23 per
     common share) which includes severance and related costs of $104.5, a
     write-down of property, plant and equipment of $96.9, environmental closure
     costs of $53.3, a write-down of goodwill and intangibles of $40.0,
     demolition costs of $26.2 and other costs of $24.2. Also includes other
     non-recurring charges of $91.0 ($71.3 after-tax or $1.26 per common share)
     which include provisions for litigation of $34.7, environmental remediation
     costs of $30.1 and other matters of $26.2. Also includes a gain of $4.3
     ($2.6 after-tax or $.05 per common share) as a result of settlements with
     certain of the Company's insurers, net of related legal and other costs.
 
 (c) Includes gains of $55.1 ($33.7 after-tax or $.59 per common share) as a
     result of settlements with certain of the Company's insurers, net of
     related legal and other costs and $54.0 ($33.0 after-tax or $.58 per common
     share) from the disposition of businesses. Also includes a restructuring
     charge of $33.8 ($20.6 after-tax or $.36 per common share) related to a
     write-down of property, plant and equipment of $21.8 and other costs of
     $12.0. Also includes $18.1 ($11.0 after-tax or $.20 per common share)
     related to provisions for environmental remediation costs and litigation.
 
 (d) Includes the results of operations of OSi Specialties for the three months
     ended December 31, 1995.
 
 (e) Includes a gain of $5.1 ($3.1 after-tax or $.05 per common share) from the
     disposition of businesses.
 
 (f) Includes a charge of $68.9 ($42.0 after-tax or $.76 per common share) for
     environmental remediation costs, disposition of a business, work force
     reduction and other matters.
 
 (g) Pursuant to Emerging Issues Task Force No. 97-13 issued on November 20,
     1997, the Company has changed its accounting policy in the fourth quarter
     of 1997 regarding the accounting for costs associated with projects that
     combine business process reengineering and information technology
     transformation. Previously, substantially all direct costs relating to
     these projects were capitalized, including the portion related to business
     process reengineering. Under the consensus, all future costs for the
     business process reengineering component must be expensed as incurred with
     the unamortized balance of these costs as of September 30, 1997 of $5.2
     (net of income taxes), or $.09 per common share, written-off as a
     cumulative catch-up adjustment in the fourth quarter of 1997.
 
 (h) In 1997, the Financial Accounting Standards Board issued Statement No. 128
     'Earnings Per Share.' Statement No. 128 replaced the calculation of primary
     and fully diluted earnings per share with basic and diluted earnings per
     share. Unlike primary earnings per share, basic earnings per share excludes
     any dilutive effect of options, warrants and convertible securities.
     Diluted earnings per share is very similar to the previously reported fully
     diluted earnings per share. All earnings per share amounts for all periods
     have been presented under the requirements of Statement No. 128.
 
1






<PAGE>
<PAGE>




MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
--------------------------------------------------------------------------------
LIQUIDITY AND FINANCIAL RESOURCES
 
Certain statements made in this 'Management's Discussion and Analysis of
Financial Condition and Results of Operations' section are 'forward looking
statements' that involve certain risks and uncertainties. The factors that could
cause actual results to differ materially from those presented herein include,
without limitation, the Company's ability to generate appropriate cash flows,
the cost and timing of the implementation of certain capital improvements, the
cost and timing associated with the planned reduction in production facilities
and workforce, the Company's ability to effectively divest certain assets, the
cost of environmental remediation and compliance efforts, technological or
competitive changes in any of the Company's businesses, inability to reach
agreement with third parties on planned business arrangements, certain global
and regional economic conditions and other factors listed from time to time in
the Company's Securities and Exchange Commission filings.
 
Cash flow from operations is a major source of liquidity for the Company. Over
the past three years, cash generated through operations was approximately $603
million, which was sufficient to support the Company's internal capital
investment program. Additionally, the Company was able to repay approximately
$83 million of its outstanding debt in 1997, primarily with proceeds received
from dispositions. Additional details regarding operating, investing and
financing activities can be found in the Consolidated Statements of Cash Flows.
 
During 1997, the Company embarked on a three-year restructuring program that is
intended to improve profitability, increase productivity and maximize
shareholder value. The Company recognized cost savings associated with the plan
during 1997 and estimates annual savings to be approximately $200 million by the
end of 1999.
 
During the fourth quarter of 1996, the Company recorded an after-tax charge of
$310.6 million associated with the restructuring plan and other initiatives of
which approximately $130 million will require cash expenditures. As of December
31, 1997, approximately $44.1 million has been spent associated with the
restructuring plan and other initiatives with the balance to be expended
primarily in 1998 and 1999.
 
The principal actions in the restructuring involve the closure or sale of
fifteen production facilities and consolidation of support infrastructure. This
will result in the elimination of approximately 1,800 positions worldwide by
1999 (see Note 2 of Notes to Financial Statements).
 
During the fourth quarter of 1995, a restructuring plan was initiated which
addressed the shut-down of five facilities (two in Performance Chemicals, two in
Oleochemicals & Derivatives and one in Polymer Chemicals). Four of the five
facilities have been shut-down with the remaining facility scheduled to close in
1998.
 
On March 31, 1997, the Company entered into a new five year credit agreement
with various banks in the amount of $500 million ($490 million available at
December 31, 1997). This agreement replaced the existing $375 million credit
facility. The new facility contains various covenants which are customary in
agreements of this nature. Borrowings on this facility are at various rate
options to be determined at the time of the borrowing. The Company plans to
utilize the facility periodically for its various operating requirements and
planned capital investment program.
 
It is the Company's belief that annual cash flows from operations, along with
the flexibility provided by the new credit agreement, will be sufficient to
fund, for the foreseeable future, capital investments, dividend payments,
commitments on environmental remediation projects, and operating requirements.
 
As the Company continues to focus on global expansion, it has, through certain
of its international subsidiaries, arrangements with various banks for lines of
credit. At December 31, 1997, these lines of credit aggregated $37.6 million, of
which $1.4 million was utilized. The Company has also entered into certain
long-term hedging arrangements primarily denominated in German marks and French
francs to protect against possible adverse currency exchange rate fluctuations
as related to its net investment in foreign subsidiaries. The Company utilizes
forward contracts to hedge foreign currency risk on trade accounts receivable
and payables. These forward contracts are generally outstanding for 30 to 90
days and are primarily denominated in German marks, Italian lire, Swiss and
French francs, and British pounds (see Note 16 of Notes to Financial Statements
for additional details).
 
Currently, the Company's primary international operations are based in Western
Europe. Although there are certain risks inherent in carrying on
international business, including currency devaluations and controls, export and
import restrictions, inflationary factors, product supply, economic controls,
and nationalization and appropriation, the Company does not believe these
factors will significantly affect its operations.
 
The Company periodically evaluates, and periodically reviews with the Finance
Committee of the Board of Directors, its liquidity requirements, capital needs
and availability of external funds. As a result of this process, the Company has
in the past and may in the future seek to restructure indebtedness, raise
additional capital or take such other steps to increase or manage its liquidity
and financial resources.
 
CAPITAL INVESTMENTS AND COMMITMENTS
 
Consistent with the 1996 restructuring plan, the Company is committed to
improving operating efficiencies and intends to invest approximately $415
million of internally generated funds primarily over the next two years.
Expenditures will be allocated to increase production capacity to support
growth; modernize plants and replace capacity at closed facilities; improve
environmental, safety and other items; and upgrade the worldwide information
systems.

2






<PAGE>
<PAGE>




--------------------------------------------------------------------------------
Total capital expenditures for 1997 were $201.6 million. Over the past three
years, the Company has invested $478.6 million on its capital investment
program, including $449.5 million for continuing operations. The Company intends
to spend approximately $265 million and $150 million in 1998 and 1999,
respectively.
 
The Company is currently in the process of addressing date sensitive systems
issues associated with the year 2000. In connection with the Company's 1996
restructuring initiative, the Company began a worldwide business system redesign
and implementation project (Project 'EDGE' ) which is expected to be completed
in mid-1999. It is anticipated that these new systems, which are Year 2000
compliant, will replace substantially all of the Company's business computer
programs. The remaining business application programs will be made compliant
through the efforts of internal resources and third party vendors. The cost of
becoming Year 2000 compliant for these additional business application programs
is not expected to be material to the Company's future cash flow or results of
operations. The majority of the business applications addressed through the EDGE
Project are scheduled to be completed by July 1999, with a few software programs
scheduled to be replaced near the end of that year. The Company is also
identifying and prioritizing critical suppliers and customers and will follow up
with them concerning their plans and progress in addressing the Year 2000
problem.
 
The total costs associated with Project EDGE are expected to be approximately
$78 million (including $60 million of capital expenditures), of which $31
million has been incurred ($22 million capitalized and $9 million expensed)
through December 31, 1997.
 
The Company has ascertained that failure to alleviate the Year 2000 problems
within its application systems could result in possible system failure or
miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices, or engage
in similar normal business activities. These problems could be substantially
alleviated with manual processing. However, this would cause delays and possible
lost production days.
 
The Company is currently evaluating the Year 2000 readiness of its equipment
with a comprehensive inventory of monitoring and control devices for plants,
safety systems and other similar operating installations. Work plans detailing
the tasks and resources required to insure equipment Year 2000 readiness by the
end of 1998 are expected to be in place by the end of the first quarter 1998.
Based on a preliminary review, the Company does not expect costs associated with
equipment upgrades and modifications to have a material effect on its future
cash flow or results of operations.
 
ENVIRONMENTAL MATTERS
 
The Company operates in an industry subject to extensive regulations related to
the protection of the environment and the health and safety of employees and
others. Domestic operations are subject to a myriad of environmental statutes
and regulations at the federal, state and local levels. The Company's
international production facilities operate in an environmental regulatory
framework in which governmental authorities typically are granted broad
discretionary powers which require manufacturing facilities to obtain operating
permits to continue operations.
 
The Company believes that expenditures for compliance with these statutes,
regulations and permits will continue to have a significant impact upon the
conduct of its business. The trend toward greater environmental awareness and
more stringent environmental regulations is likely to continue, and while the
Company cannot accurately predict how this will affect future operations and
earnings, the Company does not believe its costs will vary significantly from
those of its competitors. Consistent with the Company's concern for the
protection and improvement of the environment worldwide, the Company continually
monitors the environmental impact of past and present operating practices in
light of changing environmental standards. Where remedial action is indicated,
the Company assesses the probability and scope of potential remediation costs.
To determine the appropriate reserve amounts, management reviews, on a quarterly
basis, currently available information pertaining to each environmental site.
Inherent in this process are considerable uncertainties which affect the
Company's ability to estimate the ultimate costs of remediation. Such
uncertainties include the nature and extent of contamination at each site,
evolving governmental standards regarding remediation requirements, changes in
environmental regulations, widely varying costs of alternative cleanup methods,
the number and financial condition of other potentially responsible parties at
multi-party sites, innovations in remediation and restoration technology, and
the identification of additional environmental sites. As a result, as
remediation efforts proceed at existing sites and new sites are assimilated into
the review process, charges against income for environmental reserves could have
a material effect on results of operations or cash flows in a particular quarter
or year. However, such charges are not expected to have a material adverse
effect on the Company's consolidated financial position or liquidity.
 
Over the past three years, the Company has spent approximately $58.9 million on
capital environmental expenditures. In fiscal years 1997, 1996 and 1995,
approximately $37.4 million, $12.6 million and $8.9 million, respectively were
expended on environmental capital projects. Capital projects for environmental
purposes are estimated to be approximately $26 million for 1998.
 
Reserves for environmental remediation and compliance costs at December 31, 1997
are $186.6 million, including $55.3 million associated with environmental
expenses of the Lubricants Group and $64.7 million associated with plants to
either be, or which have already been, shut-down or sold as part of the 1996 and
1995 restructuring plans.
 
Remediation expenditures charged to environmental reserves were $36.8 million in
1997 and include expenditures currently mandated as well as those not initiated
by any regulatory authority or third party. The Company anticipates 1998
remediation expenditures to approximate $36.5 million.

3






<PAGE>
<PAGE>




--------------------------------------------------------------------------------
The Company is continuing its efforts to reduce hazardous waste and emissions
generated by its operations. Through improved operating efficiencies,
installation of additional environmental control equipment and utilization of
the latest innovations in waste treatment technology, management believes that
direct recurring operating costs associated with managing hazardous substances
and pollution can be maintained at or slightly above current levels. Such costs
amounted to approximately $40.7 million in 1997.
 
CONTINGENCIES
 
The Company is a potentially responsible party ('PRP') or a defendant in a
number of governmental (federal, state and local) and private actions associated
with the release, or suspected release, of contaminants into the environment. As
a PRP, the Company may be liable for costs associated with the investigation and
remediation of environmental contamination, as well as various penalties, and
damages to persons, property and natural resources.
 
The Company is not a party to any legal proceedings or environmental matters
which it believes will have a material adverse effect on its con-solidated
financial position or liquidity. It is possible, however, that future cash flow
or results of operations for any particular quarterly or annual period, could be
materially affected by such legal proceedings or environmental matters. However,
the Company does not expect the results of such proceedings or environmental
matters to materially affect its competitive position (see Note 17 of Notes to
Financial Statements).
 
INCOME TAXES
 
For information regarding income tax matters, see Note 13 of Notes to Financial
Statements.
 
DISCONTINUED OPERATIONS
 
On September 11, 1995, the Company announced its intention to divest its
Lubricants Group. This divestiture was completed in 1997 (see Note 19 of Notes
to Financial Statements).
 
RESULTS OF CONTINUING OPERATIONS
1997 VS. 1996
 
The Company reported income from continuing operations before cumulative effect
of accounting change of $90.1 million in 1997 compared to a loss of $247.2
million in 1996. The inclusion of several non-recurring items in both years
affect comparison. The following table shows the effect of these non-recurring
items on continuing operations before cumulative effect of accounting change.
 
SUMMARY OF NON-RECURRING ITEMS

<TABLE>
<CAPTION>
(millions of dollars except per share data)                 1997                                      1996
---------------------------------------------------------------------------------------------------------------------------
                                             PRE-TAX     AFTER-TAX       INCOME        Pre-Tax     After-Tax       Income
                                             INCOME       INCOME         (LOSS)        Income       Income         (Loss)
                                             (LOSS)       (LOSS)       PER SHARE*     (Loss)       (Loss)       Per Share*
---------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>         <C>           <C>             <C>         <C>           <C>
Continuing operations excluding non-
  recurring items before cumulative effect
  of accounting change                       $162.7         $96.3          $1.66      $ 106.0       $  60.8         $ 1.07
Restructuring charges (a)                     (13.0)         (8.0)          (.14)      (345.1)       (239.3)         (4.23)
Other charges (b)                                 -             -              -        (91.0)        (71.3)         (1.26)
Insurance settlements (c)                       1.0           0.6            .01          4.3           2.6            .05
Gain on disposition of businesses (d)           2.0           1.2            .02            -             -              -
---------------------------------------------------------------------------------------------------------------------------
Continuing operations before cumulative
  effect of accounting change                $152.7         $90.1          $1.55       $(325.8)     $(247.2)        $(4.37)
===========================================================================================================================
</TABLE>
 
  * Diluted basis
(a) The year ended December 31, 1997 includes restructuring charges of $13.0
    ($8.0 after-tax or $.14 per common share) primarily related to expenditures
    for equipment at sites previously identified for closure, which otherwise
    would have been capitalized. In addition, the year ended December 31, 1996
    includes a restructuring charge of $345.1 ($239.3 after-tax or $4.23 per
    common share) which includes severance and related costs of $104.5, a
    writedown of property, plant and equipment of $96.9, environmental closure
    costs of $53.3, a writedown of goodwill and intangibles of $40.0, demolition
    costs of $26.2 and other costs of $24.2.
(b) The year ended December 31, 1996 includes other non-recurring charges
    of $91.0 ($71.3 after-tax or $1.26 per common share) which include
    provisions for litigation of $34.7, environmental remediation costs of
    $30.1 and other matters of $26.2.
(c) The years ended December 31, 1997 and 1996 include a gain of $1.0 ($0.6
    after-tax or $.01 per common share) and $4.3 ($2.6 after-tax or $.05 per
    common share), respectively, as a result of settlements with certain of the
    Company's insurers, net of related legal and other costs.
(d) The year ended December 31, 1997 includes a gain of $2.0 ($1.2 after-tax or
    $.02 per common share) from the disposition of businesses.
 
Consolidated net sales from continuing operations decreased $75.9 million to
$2.2 billion in 1997 compared to 1996. This decrease was primarily due to the
comparatively stronger U.S. dollar which had an $84.9 million adverse effect on
current year net sales. The impact of a more favorable product mix partially
offset the effect of the stronger U.S. dollar and a 4% decline in volume. The
favorable mix was a result of a year long focus on sales initiatives that
fostered greater sales of higher margin products. Volume was down from 1996
primarily as a result of a first quarter fire and its lingering residual effects
at the Company's Petrolia, Pennsylvania plant, and the exiting/divesting of non-
strategic, non-specialty products and product lines.
 
4






<PAGE>
<PAGE>




--------------------------------------------------------------------------------
Income from continuing operations, excluding non-recurring items before
cumulative effect of accounting change, of $96.3 million in 1997 was up $35.5
million, or 58%, compared to 1996. Approximately 75% of the increase in income
was attributable to an improvement in gross margin which rose 2.8 percentage
points to 25.5%. This increase was attributable to lower material costs and 
restructuring related reductions in manufacturing costs, including depreciation
expense. Also contributing to the increase in income was a decrease in net 
interest expense due to a reduction in bank debt and a decline in operating 
expenses which was achieved despite the inclusion of higher costs associated 
with performance based compensation plans.
 
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 130 and No. 131, Reporting
Comprehensive Income and Disclosures about Segments of an Enterprise and Related
Information, respectively, both of which are required to be adopted for fiscal
years beginning after December 15, 1997 (see Note 1 of Notes to Financial
Statements).
 
SEGMENT INFORMATION
 
The Company's operating income from continuing operations for 1997 and 1996
included non-recurring items in both years which affect the comparison.
Excluding these items, operating income was $215.0 million in 1997 and $169.7
million in 1996. The following tables show the effect of these non-recurring
items on operating income from continuing operations by industry segment.
 
<TABLE>
<CAPTION>
                                                                                   
                                              OLEOCHEMICALS    PERFORMANCE     POLYMER      ORGANO-     CORPORATE &
(millions of dollars)                         & DERIVATIVES     CHEMICALS     CHEMICALS    SILICONES    UNALLOCATED    TOTAL
-----------------------------------------------------------------------------------------------------------------------------
                                                                                   1997
-----------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>              <C>            <C>          <C>          <C>            <C>
Operating income (loss) from continuing
  operations excluding non-recurring items        $18.9          $  79.8        $75.0        $72.6        $ (31.3)     $215.0
Restructuring charges                              (0.6)           (10.0)        (0.9)           -           (1.5)      (13.0)
Insurance settlements                                 -                -            -            -            1.0         1.0
Gain on disposition of businesses                   3.3              0.1         (1.4)           -              -         2.0
-----------------------------------------------------------------------------------------------------------------------------
Operating income (loss) from continuing
  operations                                      $21.6          $  69.9        $72.7        $72.6        $ (31.8)     $205.0
=============================================================================================================================

                                              Oleochemicals    Performance     Polymer      Organo-     Corporate &
(millions of dollars)                         & Derivatives     Chemicals     Chemicals    Silicones    Unallocated     Total
-----------------------------------------------------------------------------------------------------------------------------
                                                                                   1996
-----------------------------------------------------------------------------------------------------------------------------
Operating income (loss) from continuing
  operations excluding non-recurring items       $  16.4         $  69.2       $  51.9       $58.4        $ (26.2)     $ 169.7
Restructuring charges                              (10.7)         (237.8)        (43.2)          -          (53.4)      (345.1)
Other charges                                       (0.7)          (33.6)         (7.4)          -          (49.3)       (91.0)
Insurance settlements                                  -               -             -           -            4.3          4.3
-----------------------------------------------------------------------------------------------------------------------------
Operating income (loss) from continuing
  operations                                     $   5.0         $(202.2)      $   1.3       $58.4        $(124.6)     $(262.1)
=============================================================================================================================
</TABLE>
 
OLEOCHEMICALS & DERIVATIVES
 
Segment 1997 net sales of $413.3 million were $11.5 million, or 3%, lower than
the prior year. A 4% increase in volume bolstered current year net sales, while
a $14.0 million adverse impact of a comparatively stronger U.S. dollar and the
lowering of glycerine sales prices due to soft market conditions, accounted for
the decline in net sales.


Operating income for this segment, excluding non-recurring items from both
years, rose from $16.4 million in 1996 to $18.9 million in 1997. The 15%
increase was attributable to comparatively strong fourth quarter results which
were mainly due to higher sales volume and cost savings associated with closing
the segment s Newark, New Jersey facility in 1996. The segment was impacted
throughout the year with a soft glycerine market causing sales prices to drop
below 1996 levels and higher costs associated with performance based
compensation plans. The segment benefited from savings in manufacturing costs
resulting from the consolidation of its Oleochemicals-Basics operations into
one facility and lower operating costs achieved through cost improvement
initiatives.
 
PERFORMANCE CHEMICALS
 
Performance Chemicals' 1997 net sales of $781.8 million declined $62.9 million,
or 7%, from 1996. This decrease was a result of an 8% decline in volume, which
was primarily due to a fire at the segment's Petrolia, Pennsylvania plant and
the exiting/divesting of certain products and product lines, and a comparatively
stronger U.S. dollar which had an $18.5 million adverse effect on net sales.

5






<PAGE>
<PAGE>




--------------------------------------------------------------------------------
Segment 1997 operating income, excluding non-recurring items from both years,
was $79.8 million, representing an increase of $10.6 million, or 15%, compared
to 1996. This increase was a result of lower material costs, restructuring
driven reductions in manufacturing and operating costs, including depreciation,
and a continued focus on selling higher margin products. These positive factors
were partially offset by the aforementioned decline in shipment volume, higher
costs associated with performance based compensation plans and the adverse
effect of the comparatively stronger U.S. dollar.
 
POLYMER CHEMICALS
 
Polymer Chemicals' net sales for 1997 of $519.8 million represented a decrease
of $14.1 million, or 3%, compared to 1996. Although the segment benefited from a
more favorable product mix, attributable to the exiting/divesting of low margin
products and product lines, and replacing much of the lost revenue with business
that generated higher margins, a $33.9 million adverse effect of the
comparatively stronger U.S. dollar and a 2% drop in volume caused net sales to
decline.
 
Operating income for Polymer Chemicals, excluding non-recurring items from both
years, was up 45% to $75.0 million in 1997 compared to 1996. This $23.1 million
increase was attributable to the combination of lower material costs, a
reduction in manufacturing costs and a more favorable product sales mix. The
reduction in manufacturing costs was a result of restructuring related
initiatives which centered around savings attributable to new service
agreements, lower personnel costs and asset consolidation at the segment's
Bergkamen, Germany facility. Partially offsetting the impact that these positive
factors had on operating income were the adverse effect of the comparatively
stronger U.S. dollar and higher costs associated with performance based
compensation plans.
 
ORGANOSILICONES
 
Net sales for OrganoSilicones for 1997 of $472.5 million were $24.6 million, or
5%, greater than 1996. The net sales increase was a result of an 8% increase in
volume and a more favorable product mix, which was partially offset by an $18.4
million negative impact caused by the comparatively stronger U.S. dollar.
 
OrganoSilicones' 1997 operating income of $72.6 million was $14.2 million
greater than 1996. This 24% increase was primarily attributable to the
aforementioned increase in shipment volume and more favorable product sales mix,
combined with restructuring driven reductions in costs. The major restructuring
initiative was the silanes expansion at the Termoli, Italy plant which generated
savings by providing the capability to manufacture materials which had
previously been purchased and improving manufacturing processes. These favorable
factors were partially offset by higher costs associated with performance based
compensation plans.
 
1996 VS. 1995
 
The Company reported a loss from continuing operations in 1996 of $247.2 million
compared to income of $100.3 million in 1995. The inclusion of several
non-recurring items in both periods affect comparison. The following table shows
the effect of these non-recurring items on continuing operations.
 
<TABLE>
<CAPTION>
SUMMARY OF NON-RECURRING ITEMS
(millions of dollars except per share data)                  1996                                     1995
----------------------------------------------------------------------------------------------------------------------------
                                               PRE-TAX     AFTER-TAX        INCOME       Pre-Tax     After-Tax      Income
                                                INCOME        INCOME        (LOSS)        Income        Income       (Loss)
                                                 (LOSS)       (LOSS)     PER SHARE*       (Loss)        (Loss)    Per Share*
----------------------------------------------------------------------------------------------------------------------------
<S>                                            <C>         <C>           <C>            <C>         <C>           <C>
Continuing operations excluding non-
  recurring items                             $ 106.0       $  60.8        $ 1.07       $111.9        $ 65.2        $1.15
Restructuring charges (a)                      (345.1)       (239.3)        (4.23)       (33.8)        (20.6)        (.36)
Other charges (b)                               (91.0)        (71.3)        (1.26)       (18.1)        (11.0)        (.19)
Insurance settlements (c)                         4.3           2.6           .05         55.1          33.7          .59
Gain on disposition of businesses (d)               -             -             -         54.0          33.0          .58
----------------------------------------------------------------------------------------------------------------------------
Continuing operations                         $(325.8)      $(247.2)       $(4.37)      $169.1        $100.3        $1.77
============================================================================================================================
</TABLE>
 
 *  Diluted basis
(a) The year ended December 31, 1996 includes a restructuring charge of $345.1
    ($239.3 after-tax or $4.23 per common share) which includes severance and
    related costs of $104.5, a writedown of property, plant and equipment of
    $96.9, environmental closure costs of $53.3, a writedown of goodwill and
    intangibles of $40.0, demolition costs of $26.2 and other costs of $24.2. In
    addition, the year ended December 31, 1995, includes a restructuring charge
    of $33.8 ($20.6 after-tax or $.36 per common share) related to a writedown
    of property, plant and equipment of $21.8 and other costs of $12.0.
(b) The year ended December 31, 1996 includes other non-recurring charges of
    $91.0 ($71.3 after-tax or $1.26 per common share) which include provisions
    for litigation of $34.7, environmental remediation costs of $30.1 and other
    matters of $26.2. In addition, the year ended December 31, 1995, includes
    other non-recurring charges of $18.1 ($11.0 after-tax or $.19 per common
    share) related to provisions for environmental remediation costs and
    litigation.
(c) The years ended December 31, 1996 and 1995 include a gain of $4.3 ($2.6
    after-tax or $.05 per common share) and $55.1 ($33.7 after-tax or $.59 per
    common share), respectively as a result of settlements with certain of the
    Company's insurers, net of related legal and other costs.
(d) The year ended December 31, 1995 includes a gain of $54.0 ($33.0 after-tax
    or $.58 per common share) from the disposition of businesses.

6







<PAGE>
<PAGE>




--------------------------------------------------------------------------------
Consolidated 1996 net sales from continuing operations of $2.3 billion were 14%
greater than 1995. The increase was attributable to the inclusion of
OrganoSilicones in 1996 for a full year which more than covered the loss in
sales resulting from the disposition of businesses in 1996 and 1995.
Consolidated net sales, adjusted to exclude sales attributable to
OrganoSilicones for the first nine months of 1996 and dispositions for both
years, rose 1% over 1995. This increase was driven by higher sales prices,
partially offset by the unfavorable impact of a comparatively stronger U.S.
dollar, while volume was essentially unchanged.
 
Income from continuing operations, excluding non-recurring items, was $60.8
million in 1996 compared to $65.2 million in 1995. The decline was mainly
attributable to higher interest expense, the loss of earnings attributable to
the sale of businesses and lower interest income which was largely offset by the
inclusion of a full year of OrganoSilicones higher margin operations. Higher
interest expense was attributable to financing the acquisition of
OrganoSilicones and the assumption of OrganoSilicones debt, while the decline in
interest income was due to a reduction in funds available for short-term
investing resulting from the acquisition of OrganoSilicones and payment of bank
loans. Other major income and expense categories appearing on the Consolidated
Statements of Operations, adjusted for the acquisition and dispositions, were
comparable to 1995 on a percentage of net sales basis.
 
SEGMENT INFORMATION
 
A comparison of operating income from continuing operations for 1996 and 1995 is
affected by the inclusion of non-recurring items in both years. Operating income
from continuing operations, excluding non-recurring items, was $169.7 million in
1996 compared to $144.0 million in 1995. The following tables show the effect of
these non-recurring items on operating income from continuing operations by
industry segment.
 
<TABLE>
<CAPTION>
                                              OLEOCHEMICALS    PERFORMANCE       POLYMER      ORGANO-    CORPORATE &
(millions of dollars)                         & DERIVATIVES      CHEMICALS     CHEMICALS    SILICONES    UNALLOCATED     TOTAL
------------------------------------------------------------------------------------------------------------------------------
                                                                                 1996
------------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>              <C>            <C>          <C>          <C>            <C>
Operating income (loss) from continuing
  operations excluding non-recurring items       $  16.4         $  69.2       $  51.9       $58.4        $ (26.2)     $ 169.7
Restructuring charges                              (10.7)         (237.8)        (43.2)          -          (53.4)      (345.1)
Other charges                                       (0.7)          (33.6)         (7.4)          -          (49.3)       (91.0)
Insurance settlements                                  -               -             -           -            4.3          4.3
------------------------------------------------------------------------------------------------------------------------------
Operating income (loss) from continuing
  operations                                     $   5.0         $(202.2)      $   1.3       $58.4        $(124.6)     $(262.1)
==============================================================================================================================
<CAPTION>
                                              Oleochemicals    Performance       Polymer      Organo-    Corporate &
(millions of dollars)                         & Derivatives      Chemicals     Chemicals    Silicones    Unallocated     Total
------------------------------------------------------------------------------------------------------------------------------
                                                                                 1995
------------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>              <C>            <C>          <C>          <C>            <C>
Operating income (loss) from continuing
  operations excluding non-recurring items        $  14.7         $  80.4       $  49.2       $ 7.4          $(7.7)     $144.0
Restructuring charges                               (10.2)          (17.2)         (5.0)          -           (1.4)      (33.8)
Other charges                                           -            (0.4)        (11.9)          -           (5.8)      (18.1)
Insurance settlements                                   -               -             -           -           55.1        55.1
Gain on disposition of businesses                       -               -             -           -           54.0        54.0
------------------------------------------------------------------------------------------------------------------------------
Operating income from continuing operations       $   4.5         $  62.8       $  32.3       $ 7.4          $94.2      $201.2
==============================================================================================================================
</TABLE>
 
OLEOCHEMICALS & DERIVATIVES
 
Segment 1996 net sales of $424.7 million were $4.3 million behind 1995. The 1%
decline was mainly attributable to a 4% decline in volume and the comparatively
stronger U.S. dollar, which was partially offset by the positive effect of a
more favorable product mix.

7






<PAGE>
<PAGE>




--------------------------------------------------------------------------------
Oleochemicals & Derivatives' operating income, excluding non-recurring items,
was $16.4 million in 1996 compared to $14.7 million in 1995. The major factor
contributing to the segment's improvement in operating income was a reduction in
manufacturing costs resulting from the closure of its Newark, New Jersey plant.
The production from this facility was transferred to the Company's Memphis,
Tennessee plant. Efficiencies were achieved which enabled this plant to absorb
the additional production without a substantial increase in costs.
 
PERFORMANCE CHEMICALS
 
The segment's 1996 net sales of $844.7 million were 3% ahead of 1995. Higher
unit sales prices, due to a more favorable product mix and increased prices in
certain business sectors, offset a 3% decline in volume and the impact of a
comparatively stronger U.S. dollar against key global currencies.
 
Operating income, excluding non-recurring items, was $69.2 million in 1996
compared to $80.4 million in 1995. Although sales were up over the prior year,
operating income declined primarily as a result of the segment being burdened
throughout 1996 with increased depreciation and manufacturing costs attributable
to the under-utilization of manufacturing capacity associated with the 1995
expansion at facilities in the U.S. and Holland. Lower than anticipated demand
precluded recovery of these costs. Higher costs associated with the severity of
the 1996 winter weather and increased utility rates in the United States also
adversely affected operating income.
 
POLYMER CHEMICALS
 
Net sales for the Polymer Chemicals segment of $533.9 million were flat compared
to 1995. Higher sales prices, a more favorable product mix and a 1% increase in
volume aided by an upturn in the construction and automotive markets, offset the
adverse effect of a comparatively stronger U.S. dollar.
 
Polymer Chemicals' 1996 operating income, excluding non-recurring items, rose
from $49.2 million in 1995 to $51.9 million in 1996. Although segment sales were
flat with 1995, operating income rose 5% primarily due to increased sales of
higher margin products in the construction and automotive markets. Lower
manufacturing costs, achieved through productivity improvement initiatives,
also contributed to the increase in operating income in 1996.
 
ORGANOSILICONES
 
Segment 1996 operating income included a full year of operations as compared to
three months in 1995. OrganoSilicones added $447.9 million to net sales in 1996
compared to $101.3 million in 1995. The segment's 1996 operating income of $58.4
million was $51.0 million greater than the income reported in 1995.
 
Sales for the fourth quarter, the comparable period of ownership, were up 10%
over 1995 due to greater volume and a more favorable product mix. Operating
income for this comparable period increased from $7.4 million to $13.0 million
as a result of efficiencies and reductions in non-manufacturing costs achieved
primarily through acquisition related synergies.
 
OUTLOOK
 
In December of 1996, the Company announced a three-year restructuring plan, and
certain cost reduction goals which included lower manufacturing costs and
reduced general and administration expenses. The Company has met its initial
goal of achieving 50% of its three-year savings objectives, on a run rate basis,
by the end of 1997. The capital spending portion of the plan, however, is
somewhat behind schedule, primarily as a result of an increased emphasis on
proper scope definition and enhanced upfront planning. Management, however,
remains optimistic that the Company will meet the overall goals of the
three-year restructuring plan. The Company will continue to aggressively pursue
implementation of the restructuring plan and, following its completion, the
Company believes it will achieve its long-term financial goals; revenues between
$2.8 to $3.0 billion within five years; gross margins to reach the mid 30%
range; operating margins in the mid-teens; earnings per share growth sufficient
to maintain return on equity greater than 20%; debt to total capitalization of
30-45%; and, a return on capital employed greater than the Company's cost of
capital so that shareholder value will increase.
 
Statements made in this 'Outlook' section are 'forward looking statements' that
involve certain risks and uncertainties. The factors that could cause actual
results to differ materially from those presented herein include, without
limitation, the Company's ability to generate appropriate cash flows, the
cost and timing of the implementation of certain capital improvements, the
cost and timing associated with the planned reduction in production facilities
and workforce, the impact of cost savings initiatives, the Company's ability to
effectively divest certain assets, the cost of environmental remediation and
compliance efforts, technological or competitive changes in any of the Company's
businesses, inability to reach agreement with third parties on planned business
arrangements, certain global and regional economic conditions and other factors
listed from time to time in the Company's other Securities and Exchange
Commission filings.
 
8








<PAGE>
<PAGE>




--------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

Board of Directors and Shareholders
Witco Corporation
 
We have audited the accompanying consolidated balance sheets of Witco
Corporation and Subsidiary Companies as of December 31, 1997 and 1996, and the
related consolidated statements of operations, shareholders' equity and cash
flows for each of the three years in the period ended December 31, 1997.
Our audits also included the financial statement schedule listed in the Index
at Item 14(a). These financial statements and schedules are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements and schedules based on our audits.
 
We conducted our audits in accordance with generally accepted auditing
standards. 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 consolidated financial position of Witco Corporation
and Subsidiary Companies at December 31, 1997 and 1996, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1997, in conformity with generally accepted
accounting principles. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements
taken as a whole, presents fairly in all material respects the information
set forth therein.
 
As discussed in Note 1 to the financial statements, in 1997 the Company adopted
the provisions of Emerging Issues Task Force Issue No. 97-13, 'Accounting for
Costs Incurred in Connection with a Consulting Contract or an Internal Project
that Combines Business Process Reengineering and Information Technology
Transformation.'
 
/s/ ERNST & YOUNG LLP

Stamford, Connecticut
February 2, 1998
 
F-1









<PAGE>
<PAGE>




WITCO CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
(in thousands except per share data)  December 31                                                   1997            1996
---------------------------------------------------------------------------------------------------------------------------
<S>                                                                                              <C>             <C>
ASSETS
Current assets
     Cash and cash equivalents                                                                   $   96,383      $   59,201
     Accounts and notes receivable, less allowance of $12,649 and $14,201                           383,758         390,288
     Inventories                                                                                    235,334         284,500
     Deferred income taxes                                                                           47,036          92,490
     Prepaid                                                                                         27,128          26,947
---------------------------------------------------------------------------------------------------------------------------
          Total current assets                                                                      789,639         853,426
---------------------------------------------------------------------------------------------------------------------------

Property, plant and equipment, less accumulated depreciation of $766,241 and $761,926               780,390         735,392
Goodwill and other intangible assets, less accumulated amortization of $157,703 and $133,625        621,619         653,733
Deferred income taxes                                                                                 6,981          16,438
Deferred costs and other assets                                                                      99,023          72,976
Net assets of discontinued operations                                                                     -          59,740
---------------------------------------------------------------------------------------------------------------------------
          TOTAL ASSETS                                                                           $2,297,652      $2,391,705
===========================================================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
     Notes and loans payable                                                                     $   52,834      $   94,929
     Accounts payable and other current liabilities                                                 515,531         515,344
---------------------------------------------------------------------------------------------------------------------------
          Total current liabilities                                                                 568,365         610,273
---------------------------------------------------------------------------------------------------------------------------
Long-term debt                                                                                      645,101         700,820
Deferred credits and other liabilities                                                              439,906         452,747
Shareholders' equity
     $2.65 cumulative convertible preferred stock, par value $1 per share:
       authorized -- 14 shares, issued and outstanding -- 6 shares                                        6               6
     Common stock, par value $5 per share: authorized -- 100,000 shares, issued 57,503 and
      56,763 shares                                                                                 287,516         283,818
     Capital in excess of par value                                                                 157,980         138,453
     Equity adjustments:
          Foreign currency translation                                                              (27,381)         11,989
          Pensions and other                                                                         (3,971)         (6,423)
     Retained earnings                                                                              230,832         200,022
     Treasury stock, at cost -- 15 shares                                                              (702)              -
---------------------------------------------------------------------------------------------------------------------------
          Total shareholders' equity                                                                644,280         627,865
---------------------------------------------------------------------------------------------------------------------------
          TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                             $2,297,652      $2,391,705
===========================================================================================================================
</TABLE>

See accompanying notes.

F-2








<PAGE>
<PAGE>




WITCO CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
(in thousands except per share data)  For the years ended December 31                  1997            1996            1995
---------------------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>             <C>             <C>
Net sales                                                                        $2,187,402      $2,263,327      $1,985,077
Cost of goods sold                                                                1,629,405       1,760,320       1,568,822
---------------------------------------------------------------------------------------------------------------------------
Gross profit                                                                        557,997         503,007         416,255

Operating expenses
     Selling expense                                                                105,684         106,261          83,829
     General and administrative expenses                                            144,684         152,186         121,425
     Research and development                                                        71,756          73,088          52,907
     Other expenses (income) -- net                                                  17,830          88,400         (76,998)
     Restructuring charges                                                           13,044         345,130          33,842
---------------------------------------------------------------------------------------------------------------------------
          Total operating expenses                                                  352,998         765,065         215,005
---------------------------------------------------------------------------------------------------------------------------

Operating income (loss) from continuing operations                                  204,999        (262,058)        201,250

Other expense (income) -- net
     Interest expense                                                                53,004          69,334          43,689
     Interest income                                                                 (4,733)         (9,114)        (15,104)
     Other expense -- net                                                             4,029           3,531           3,525
---------------------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations before income taxes and cumulative
  effect of accounting change                                                       152,699        (325,809)        169,140

Income taxes (benefit)                                                               62,621         (78,635)         68,794
---------------------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations before cumulative effect of
  accounting change                                                                  90,078        (247,174)        100,346
Income from discontinued operations net of income taxes of $ - , $283 and
  $3,034                                                                                  -             340           4,099
Estimated income (loss) on disposal -- net of income taxes (benefit) of $5,824
  and $(43,612)                                                                       9,990         (68,253)              -
---------------------------------------------------------------------------------------------------------------------------
Income (loss) from discontinued operations                                            9,990         (67,913)          4,099
---------------------------------------------------------------------------------------------------------------------------
Income (loss) before cumulative effect of accounting change                         100,068        (315,087)        104,445
---------------------------------------------------------------------------------------------------------------------------
Cumulative effect of accounting change -- net of income tax benefit of $3,319        (5,191)              -               -
---------------------------------------------------------------------------------------------------------------------------
Net income (loss)                                                                $   94,877      $ (315,087)     $  104,445
===========================================================================================================================

Net income (loss) per common share -- basic
     Income (loss) from continuing operations before cumulative effect of
       accounting change                                                         $     1.58      $    (4.37)     $     1.78
     Income (loss) from discontinued operations                                         .17           (1.20)            .07
     Cumulative effect of accounting change                                            (.09)              -               -
---------------------------------------------------------------------------------------------------------------------------
          NET INCOME (LOSS) PER COMMON SHARE -- BASIC                            $     1.66      $    (5.57)     $     1.85
===========================================================================================================================

Net income (loss) per common share -- diluted
     Income (loss) from continuing operations before cumulative effect of
       accounting change                                                         $     1.55      $    (4.37)     $     1.77
     Income (loss) from discontinued operations                                         .17           (1.20)            .07
     Cumulative effect of accounting change                                            (.09)              -               -
---------------------------------------------------------------------------------------------------------------------------
          NET INCOME (LOSS) PER COMMON SHARE -- DILUTED                          $     1.63      $    (5.57)     $     1.84
===========================================================================================================================
</TABLE>

See accompanying notes.
 
F-3








<PAGE>
<PAGE>



WITCO CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
(in thousands of dollars)    For the years ended December 31                            1997           1996           1995
--------------------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>             <C>             <C>
OPERATING ACTIVITIES
     Net income (loss)                                                             $  94,877      $(315,087)     $ 104,445
     Adjustments to reconcile net income (loss) to net cash provided by
       operating activities:
          Depreciation and amortization                                              110,872        128,793        119,571
          Provision (benefit) for deferred income taxes                               46,612       (159,311)        (6,884)
          Pension cost                                                                14,640         15,154         10,130
          Gain on disposition of businesses                                           (2,007)             -        (54,079)
          Estimated (gain) loss on disposal of Lubricants Group                      (15,814)       111,865              -
          Provision for environmental remediation and compliance                           -         30,077         15,348
          Provision for litigation                                                         -         34,733          9,500
          Restructuring charges                                                            -        345,130         33,842
          Cumulative effect of a change in accounting                                  8,510              -              -
          Changes in operating assets and liabilities:
               Accounts and notes receivable                                             996         13,089        (26,609)
               Inventories                                                            27,207         36,672        (12,849)
               Prepaid and other current assets                                       (5,773)         4,956          9,866
               Accounts payable and other current liabilities                         13,758        (76,286)       (41,709)
          Other                                                                      (12,746)        17,515        (25,652)
--------------------------------------------------------------------------------------------------------------------------
       Net cash provided by operating activities                                     281,132        187,300        134,920
==========================================================================================================================

INVESTING ACTIVITIES
     Expenditures for property, plant and equipment                                 (201,609)      (161,163)      (115,845)
     Proceeds from dispositions                                                       84,011        136,941        146,026
     Acquisitions of businesses, net of cash acquired                                      -              -       (481,431)
     Other                                                                             9,368          1,769         (2,443)
--------------------------------------------------------------------------------------------------------------------------
       Net cash used in investing activities                                        (108,230)       (22,453)      (453,693)
==========================================================================================================================

FINANCING ACTIVITIES
     Dividends paid                                                                  (63,872)       (63,351)       (63,026)
     Payments on borrowings                                                         (196,326)      (526,378)      (367,541)
     Proceeds from borrowings                                                        112,898        335,565        681,551
     Proceeds from exercise of stock options                                          19,227          7,084          6,523
     Other                                                                              (695)             -              -
--------------------------------------------------------------------------------------------------------------------------
       Net cash (used in) provided by financing activities                          (128,768)      (247,080)       257,507
==========================================================================================================================

EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS                         (6,952)        (2,560)         8,087
--------------------------------------------------------------------------------------------------------------------------
     INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                 37,182        (84,793)       (53,179)
--------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at beginning of year                                        59,201        143,994        197,173
--------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year                                           $  96,383      $  59,201      $ 143,994
==========================================================================================================================
</TABLE>
See accompanying notes.
 
F-4

 





<PAGE>
<PAGE>




WITCO CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY


<TABLE>
<CAPTION>
(in thousands of dollars)
-----------------------------------------------------------------------------------------------------------------------------------
                                                    Capital in       Foreign                                   Treasury
                             Preferred    Common     Excess of      Currency                        Retained   Stock at
                                 Stock     Stock     Par Value   Translation   Pensions    Other    Earnings       Cost       Total
-----------------------------------------------------------------------------------------------------------------------------------
<S>                          <C>         <C>        <C>           <C>           <C>        <C>       <C>         <C>
BALANCE AT DECEMBER 31, 1994       $ 7  $281,561      $127,643      $ (1,481)   $(2,446)  $    -   $ 537,199    $(2,477)   $940,006
Net income                                                                                           104,445                104,445
Cash dividends declared:                                                                                                          
    Preferred stock                                                                                      (18)                   (18)
    Common stock                                                                                     (63,089)               (63,089)
Common stock issued:                                                                                                              
    Employee plans                           607         3,535                                                    2,380       6,522 
    Conversions                                5          (102)                                                      97           - 
Equity adjustments                                                    18,703     (2,452)                                     16,251 
------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1995         7   282,173       131,076        17,222     (4,898)       -     578,537          -   1,004,117 
Net loss                                                                                            (315,087)              (315,087)
Cash dividends declared:                                                                                                           
    Preferred stock                                                                                      (18)                   (18)
    Common stock                                                                                     (63,410)               (63,410)
Common stock issued:                                                                                                              
    Employee plans                         1,319         5,814                                                                7,133 
    Conversions                     (1)       30           (25)                                                                   4 
    Restricted stock                         296         1,588                             1,884)                                 - 
Equity adjustments                                                    (5,233)       359                                      (4,874)
-----------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1996         6   283,818       138,453        11,989     (4,539)  (1,884)    200,022          -     627,865
Net income                                                                                            94,877                 94,877 
Cash dividends declared:
    Preferred stock                                                                                      (16)                   (16)
    Common stock                                                                                     (64,051)               (64,051)
Common stock issued:
    Employee plans                         3,527        18,520                                                               22,047 
    Conversions                               28           (28)                                                                   - 
    Restricted stock                         143         1,035                               (97)                   871       1,952 
Equity adjustments                                                   (39,370)     2,549                                    $(36,821)
Purchases of treasury stock                                                                                      (1,573)     (1,573)
------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1997       $ 6  $287,516      $157,980      $(27,381)   $(1,990) $(1,981)  $ 230,832    $  (702)   $644,280
====================================================================================================================================
</TABLE>
See accompanying notes.
 
F-5









<PAGE>
<PAGE>




WITCO CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS (in thousands except per share data)
--------------------------------------------------------------------------------
NOTE 1   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
ORGANIZATION: Witco Corporation is a worldwide manufacturer of high quality
specialty chemical products. The Company's products are used primarily as
intermediates by other manufacturers in industries such as personal care and
household products, agricultural, automotive, housing and construction,
packaging, food and textiles.
 
ACCOUNTING CHANGES: Pursuant to Emerging Issues Task Force Issue No. 97-13, the
Company changed its accounting policy in the fourth quarter of 1997 regarding
the accounting for costs associated with projects that combine business process
reengineering activities and information technology transformation. Under the
consensus, all future costs for business process reengineering must be expensed
as incurred and the unamortized balance of these costs as of September 30, 1997
of $5,191 (net of income taxes), or $.09 per common share, were written-off as a
cumulative catch-up adjustment in the fourth quarter. The change in accounting
method would not have had a material effect on the Statement of Operations for
the years ended December 31, 1996 or 1995, if adopted in those periods.
 
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 130 and No. 131, 'Reporting
Comprehensive Income' and 'Disclosures about Segments of an Enterprise and
Related Information,' respectively, both of which are required to be adopted for
fiscal years beginning after December 15, 1997. SFAS No. 130 will require the
Company to report in its financial statements all non-owner related changes in
equity for the periods being reported. SFAS No. 131 will require the Company to
disclose revenues, earnings and other financial information pertaining to the
business segments by which the Company is managed, as well as what factors
management used to determine these segments. The Company is currently evaluating
the effects SFAS No. 130 and No. 131 will have on its financial statement and
related disclosures.
 
PRINCIPLES OF CONSOLIDATION AND USE OF ESTIMATES: The consolidated financial
statements include the accounts of all majority owned subsidiaries after the
elimination of inter-company transactions. The preparation of financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Actual results could differ
from those estimates.
 
RECLASSIFICATIONS: Certain prior year amounts have been reclassified to conform
with the current year presentation.
 
CASH EQUIVALENTS: Cash equivalents consist of highly liquid investments with a
maturity of three months or less when purchased.
 
INVENTORIES: Inventories are stated at the lower of cost or market. Cost is
determined on either the Last-In, First-Out (LIFO) or First-In, First-Out (FIFO)
basis.
 
PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment is stated at cost
and depreciation is provided principally using the straight-line method based on
estimated useful lives. Buildings and improvements and machinery, fixtures and
equipment are depreciated over periods not exceeding 25 years and 16 years,
respectively.
 
LONG-LIVED ASSETS AND INTANGIBLE ASSETS: SFAS No. 121 'Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of'
requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount. SFAS No. 121 also addresses the accounting for long-lived
assets that are expected to be disposed of. As indicated in Note 2 of Notes to
Financial Statements, the Company recognized impairment losses associated with
the 1996 and 1995 restructuring plans.
 
Intangible assets primarily include goodwill, the excess of purchase price over
the estimated fair value of net assets acquired, and are being amortized over
periods not in excess of forty years. The Company periodically evaluates the
carrying value of intangible assets in relation to the estimated cash flows of
the underlying businesses. An impairment loss may be recognized if the expected
cash flow is less than book value. The Company recognized an impairment loss on
certain intangible assets, as disclosed in Note 2 of Notes to Financial
Statements, as part of the 1996 and 1995 restructuring plans.
 
RESEARCH AND DEVELOPMENT COSTS: The Company's research and development costs are
charged to expense as incurred and were $71,756 (1997), $73,088 (1996), and
$52,907 (1995).
 
ENVIRONMENTAL REMEDIATION COSTS: Environmental remediation costs are charged to
expense if the remediation is the result of past practices or events and the
expenditures are not expected to benefit future operations. Projected costs are
accrued when it is probable that a liability has been incurred and the amount
can be reasonably estimated. Accruals are recorded at undiscounted amounts
without regard to any third party recoveries, and are regularly adjusted as
environmental assessments and remediation efforts proceed.
 
STOCK BASED COMPENSATION: The Company accounts for stock option grants in
accordance with Accounting Principles Board Opinion No. 25, 'Accounting for
Stock Issued to Employees,' and, accordingly, recognizes no compensation expense
for the stock options granted since the exercise price of the option was the
same as the market value of the Company's common stock. As prescribed under SFAS
No. 123, 'Accounting for Stock Based Compensation,' the Company has disclosed in
Note 11 of Notes to Financial Statements, the pro forma effects on net income
(loss) and earnings (loss) per share of recording compensation expense for the
fair value of the options granted.

F-6








<PAGE>
<PAGE>



 
WITCO CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS (in thousands except per share data)
--------------------------------------------------------------------------------
INCOME TAXES: Income taxes have been provided using the liability method in
accordance with SFAS No. 109 'Accounting for Income Taxes.'
 
COMMON SHARE DATA: In 1997, the Financial Accounting Standards Board issued SFAS
No. 128, 'Earnings Per Share.' SFAS No. 128 replaced the calculation of primary
and fully diluted earnings per share with basic and diluted earnings per share.
Unlike primary earnings per share, basic earnings per share excludes any
dilutive effects of options, warrants and convertible securities. Diluted
earnings per share is very similar to the previously reported fully diluted
earnings per share. All earnings per share amounts for all periods have been
presented in accordance with the SFAS No. 128 requirements.
 
NOTE 2   RESTRUCTURING
 
In December 1996, in connection with management's plan to reduce costs and
improve operating efficiencies, the Company recorded a restructuring charge of
approximately $345,130. The principal actions in the 1996 restructuring plan
involve the closure or sale of fifteen production facilities (nine in
Performance Chemicals, five in Polymer Chemicals and one in OrganoSilicones) and
consolidation of supporting infrastructure. This restructuring, which will
result in the elimination of approximately eighteen hundred corporate staff and
manufacturing positions, will be completed by 1999.
 
In 1997, the Company recorded additional restructuring charges of $13,044,
primarily related to expenditures for equipment, principally at Performance
Chemicals sites previously identified for closure, which otherwise would have
been capitalized.
 
Also during 1997, the Company sold five plants (four in Performance Chemicals
and one in Polymer Chemicals) and shut-down two others (one in OrganoSilicones
and one in Polymer Chemicals). Included within this activity were the sale of
the Company's Canadian Detergents and Aluminum Chloride businesses and portions
of its Anionic Surfactants business for a total of approximately $29,000. The
operating results individually and in the aggregate of these dispositions and
shut-downs were not significant to the consolidated results of operations.
Through 1997, the Company has expended approximately $11,000 for severance costs
as a result of the termination of seven hundred thirty-three employees, $10,500
for environmental remediation and compliance, $1,459 for demolition and $3,121
for other. There have not been any significant changes in the overall or
component accruals of the 1997 charge as a result of changes in estimates.
 
The year ended December 31, 1995, included a restructuring charge of $33,842
related to the shut-down of five facilities (two in Performance Chemicals, two
in Oleochemicals & Derivatives and one in Polymer Chemicals). Four of the five
facilities have been shut-down with the remaining facility scheduled to close in
1998.
 
The major components of the restructuring charges are as follows:
 
<TABLE>
<CAPTION>
==============================================================================================
DESCRIPTION                                                1997           1996          1995
----------------------------------------------------------------------------------------------
<S>                                                       <C>           <C>            <C>
Equipment expenditures                                    $10,321       $      -       $     -
Severance and related costs                                     -        104,456         1,900
Write-down of property, plant and equipment                    --         96,879        21,840
Environmental remediation and compliance                        -         53,298         2,090
Write-down of goodwill and intangibles                          -         40,000         1,856
Demolition costs                                                -         26,200         4,605
Other                                                       2,723         24,297         1,551
----------------------------------------------------------------------------------------------
                                                          $13,044       $345,130       $33,842
==============================================================================================
</TABLE>

Included within severance and related costs are $35,047 and $13,443 of
curtailment charges for pension and other postemployment benefits, respectively.
 
NOTE 3   DISPOSITIONS
 
1997 and 1996 dispositions relate to the Company's two restructuring initiatives
and to discontinued operations. Further detail on these dispositions can be
found in Note 2 and Note 19 of Notes to Financial Statements, respectively.
 
On June 30, 1995, the Company sold the operations of its Continental Carbon
subsidiary to China Synthetic Rubber Corporation for $121,900, resulting in a
gain of $27,073, or $.48 per common share. Continental Carbon manufactures
carbon black which is used primarily in the tire and rubber industry.
 
On March 24, 1995, the Company sold the operations of its Battery Parts business
to Acro Products, Inc. for $24,100, resulting in a gain of $5,918, or $.10 per
common share. Battery Parts manufactures rubber and plastic battery containers,
covers and parts and custom injection molded parts.
 
The operating results individually and in the aggregate of the 1995 dispositions
were not significant to the consolidated results of operations.

F-7








<PAGE>
<PAGE>




WITCO CORPORATION AND SUBSIDIARY COMPANIES

(in thousands except per share data)
--------------------------------------------------------------------------------
NOTE 4   INVENTORIES
 
Inventories are classified as follows:
================================================================================
                                                            1997           1996
--------------------------------------------------------------------------------
Raw materials and supplies                              $ 72,528       $ 99,112
Finished goods                                           162,806        185,388
--------------------------------------------------------------------------------
                                                        $235,334       $284,500
================================================================================
Work in progress included above is not significant.
 
Inventories valued on a LIFO basis, at December 31, 1997 and 1996, amounted to
$76,615 and $107,524, respectively. Inventories would have been $32,334 and
$40,964 higher than reported at December 31, 1997 and 1996, respectively, if the
FIFO method (which approximates current cost) had been used by the Company for
all inventories.
 
NOTE 5   PROPERTY, PLANT AND EQUIPMENT
 
A summary of property, plant and equipment follows:

================================================================================
                                                          1997             1996
--------------------------------------------------------------------------------
Land                                                $   32,089       $   34,597
Buildings and improvements                             170,115          172,695
Machinery, fixtures and equipment                    1,198,692        1,202,449
Assets under construction                              145,735           87,577
--------------------------------------------------------------------------------
                                                     1,546,631        1,497,318
Less accumulated depreciation                          766,241          761,926
--------------------------------------------------------------------------------
                                                    $  780,390       $  735,392
================================================================================
 
Depreciation expense, including amortization of assets under capital lease
obligations, from continuing operations amounted to $86,789 (1997), $99,676
(1996), and $81,766 (1995).
 
At December 31, 1997 and 1996, buildings and improvements included approximately
$12,500 and $14,500, respectively, related to an office/laboratory facility
under a capital lease.
 
NOTE 6   GOODWILL AND OTHER INTANGIBLE ASSETS
 
Goodwill and other intangible assets consist of the following:
================================================================================
                                                            1997           1996
--------------------------------------------------------------------------------
Goodwill                                                $649,241       $660,853
Patents and licenses                                      62,515         59,912
Other                                                     67,566         66,593
--------------------------------------------------------------------------------
                                                         779,322        787,358
Less accumulated amortization                            157,703        133,625
--------------------------------------------------------------------------------
                                                        $621,619       $653,733
================================================================================
 
Amortization expense from continuing operations amounted to $24,083 (1997),
$29,117 (1996), and $20,805 (1995).
 
NOTE 7   ACCOUNTS PAYABLE AND OTHER CURRENT LIABILITIES
 
Components of accounts payable and other current liabilities consist of the
following:

================================================================================
                                                            1997           1996
--------------------------------------------------------------------------------
Trade accounts payable                                  $238,212       $155,130
Other accruals                                           123,305        154,696
Payroll related liabilities                               70,870         39,713
Reserves for environmental remediation and compliance     37,372         68,776
Income taxes                                              21,944         19,347
Reserve for restructuring                                 19,528         46,244
Reserve for disposition of Lubricants Group                4,300         31,438
--------------------------------------------------------------------------------
                                                        $515,531       $515,344
================================================================================

F-8








<PAGE>
<PAGE>




WITCO CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS (in thousands except per share data)
--------------------------------------------------------------------------------
NOTE 8   INDEBTEDNESS
 
On March 31, 1997, the Company entered into a new five year revolving credit
agreement totaling $500,000 with various banks, $10,000 of which was utilized at
December 31, 1997. Borrowings on this facility are at various rate options to be
determined at the time of borrowing. The facility contains covenants which are
customary in agreements of this nature. The Company is required to pay a
facility fee of .075% per year on the total commitment. On April 2, 1997, the
Company's previously existing credit facility of $375,000 was terminated. The
interest rates on domestic credit facility borrowings outstanding at December
31, 1997 and 1996, were 6.12% and 5.77%, respectively.
 
The Company has arrangements with various banks for lines of credit for its
international subsidiaries aggregating $37,592, of which $1,374 was utilized at
December 31, 1997. The weighted average interest rates on international credit
facility borrowings outstanding at December 31, 1997 and 1996 were 16.7% and
4.33%, respectively.

Principal maturities of long-term debt including capital lease obligations
through the year 2002 at December 31, 1997 are $41,460 (1998), $2,241 (1999),
$20,181 (2000), $14,863 (2001), and $2,403 (2002).
 
Following is a summary of long-term debt:
================================================================================
                                                             1997           1996
--------------------------------------------------------------------------------
6.125% notes due 2006                                    $150,000       $150,000
6.875% debentures due 2026                                150,000        150,000
6.60% notes due 2003                                      165,000        165,000
7.75% debentures due 2023                                 110,000        110,000
7.325% notes due 1998                                      40,136         46,242
6.47% bank loan due 2000                                   17,811         20,976
Capital lease obligation                                   12,509         14,449
6.30% bank loan due 2001                                   12,352         14,420
5.85% pollution control revenue bonds due 2023             10,000         10,000
8.20% bank loan due 2006                                    8,489          9,879
Industrial development revenue bond due 2014                8,500          8,500
Other                                                       1,764          2,723
--------------------------------------------------------------------------------
                                                          686,561        702,189
Less amounts included in notes and loans payable           41,460          1,369
--------------------------------------------------------------------------------
                                                         $645,101       $700,820
================================================================================
 
Following is a summary of interest from continuing operations:
================================================================================
                                                1997          1996          1995
--------------------------------------------------------------------------------
Interest expense                             $53,004       $69,334       $43,689
Capitalized interest                           2,413         1,503         1,429
--------------------------------------------------------------------------------
    Total interest incurred                  $55,417       $70,837       $45,118
--------------------------------------------------------------------------------
    Total interest payments                  $54,754       $62,593       $47,016
================================================================================
 
NOTE 9   SHAREHOLDERS' EQUITY
 
On March 2, 1995, the Board of Directors unanimously approved a Shareholder
Rights Plan (the 'Plan'). The Plan was implemented by the issuance of one
preferred stock purchase right for each share of common stock outstanding at the
close of business on March 2, 1995, or issued thereafter until the rights become
exercisable. Each right entitles the holder in certain events to purchase
one-one thousandth of a share of participating preferred stock at a purchase
price of $110 per share. Each one-one thousandth of a share of participating
preferred stock is intended to represent the economic equivalent of one share of
common stock. Under the Plan, 300 shares of participating cumulative preferred
stock without par value have been authorized.
 
The rights currently are not exercisable. If a person or group acquires more
than 15% of the outstanding common stock, or at the Board of Directors election
if a tender offer for more than 15% of the outstanding common stock is
commenced, or if such person or group acquires the Company in a merger or other
business combination, each right (other than those held by the acquiring person)
will entitle the holder to purchase stock of the Company or stock or other
property of the acquiring person having a value of twice the purchase price. The
rights will expire on March 2, 2005, unless redeemed earlier by the Company in
whole, but not in part, at a price of $.01 per right.
 
Each share of $2.65 Cumulative Convertible Preferred Stock is entitled to one
vote and has a minimum liquidating preference of $66 per share. Each share is
subject to redemption at the Company's option at $66 per share and is
convertible into 16.8075 shares of the Company's common stock. At December 31,
1997, 103 shares of unissued common stock of the Company were reserved for
issuance in accordance with the $2.65 Cumulative Convertible Preferred Stock.

F-9








<PAGE>
<PAGE>




WITCO CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS (in thousands except per share data)
--------------------------------------------------------------------------------
The Company has authorized 8,300 shares of series preferred stock, which, when
issued, will have such rights, power, and preferences as shall be fixed by the
Company's Board of Directors.

Quarterly dividends declared of $.28 per share on the Company's common stock
amounted to $1.12 for 1997, 1996 and 1995.
 
Common and preferred stock transactions were as follows:

================================================================================
                                                 1997         1996         1995
--------------------------------------------------------------------------------
Convertible preferred stock
    Outstanding at beginning of year                6            7            7
    Conversions                                     -           (1)           -
--------------------------------------------------------------------------------
         Outstanding at end of year                 6            6            7
Common stock
    Issued at beginning of year                56,763       56,435       56,312
    Net shares issued under employee plans        705          263          122
    Conversions                                     6            6            1
    Restricted stock                               29           59            -
--------------------------------------------------------------------------------
         Issued at end of year                 57,503       56,763       56,435
Treasury stock
    In treasury at beginning of year                -            -          165
    Purchases of treasury stock                    35            -            -
    Net shares issued under employee plans         (1)           -         (159)
    Conversions                                     -            -           (6)
    Net shares issued as restricted stock         (19)           -            -
--------------------------------------------------------------------------------
         In treasury at end of year                15            -            -
================================================================================

NOTE 10   EARNINGS PER SHARE
 
The following is an illustration of the reconciliation of the numerators and
denominators of basic and diluted EPS computations and other related disclosures
required by SFAS No. 128.
 
<TABLE>
<CAPTION>
===============================================================================================================================
                                                                                          1997           1996            1995
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                      <C>           <C>             <C>
NUMERATOR:
Income (loss) from continuing operations                                                 $90,078       $(247,174)      $100,346
Preferred stock dividends                                                                    (17)            (18)           (19)
-------------------------------------------------------------------------------------------------------------------------------
    Numerator for basic earnings per share -- income (loss) from continuing operations
    available to common shareholders                                                      90,061        (247,192)       100,327
Effect of dilutive securities:
    Preferred stock dividends                                                                 17              18             19
-------------------------------------------------------------------------------------------------------------------------------
    Numerator for diluted earnings per share -- income (loss) from continuing
    operations available to common shareholders after assumed conversions                $90,078       $(247,174)      $100,346
===============================================================================================================================
DENOMINATOR:
Denominator for basic earnings per share -- weighted-average shares                       57,130          56,591         56,312
Effect of dilutive securities:
    Employee stock options                                                                   735               -            227
    Cumulative convertible preferred stock                                                   106               -            117
    Restricted shares                                                                         71               -              -
-------------------------------------------------------------------------------------------------------------------------------
Dilutive potential common shares                                                             912               -            344
-------------------------------------------------------------------------------------------------------------------------------
Denominator for diluted earnings per share -- adjusted weighted-average shares and
  assumed conversions                                                                     58,042          56,591         56,656
===============================================================================================================================
Basic earnings per share                                                                 $  1.58       $   (4.37)      $   1.78
===============================================================================================================================
Diluted earnings per share                                                               $  1.55       $   (4.37)      $   1.77
===============================================================================================================================
</TABLE>

F-10








<PAGE>
<PAGE>




WITCO CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS (in thousands except per share data)
--------------------------------------------------------------------------------
Options to purchase 89 shares at prices ranging from $39.94 to $46.81 per share,
and 756 shares at $31.75 per share were outstanding as of December 31, 1997 and
1995, respectively, but were not included in the computation of diluted earnings
per share since the options exercise price was greater than the average market
price of the common shares creating an antidilutive effect. Due to the
antidilutive impact of the Company's 1996 loss from continuing operations, the
impact of both options to purchase approximately 2,529 shares of common stock
and the conversion of 18 shares of convertible preferred stock have not been
included in the computation of diluted earnings per share.
 
NOTE 11   STOCK BASED COMPENSATION PLANS
 
The Company has fixed option plans for certain employees. Under the 1992
Incentive Stock Option Plan, the Company may grant options to its employees for
up to 184 and 161 shares of common stock at December 31, 1997 and 1996,
respectively. Under the 1995 Incentive Stock Option Plan, the Company may grant
options to its employees for up to 477 and 1,183 shares of common stock at
December 31, 1997 and 1996, respectively. Under the 1997 Incentive Stock Option
Plan, the Company may grant options to its employees for up to 1,828 shares of
common stock at December 31, 1997. These plans provide that shares granted come
from the Company's authorized but unissued or reacquired common stock. The price
of the options granted pursuant to these plans will not be less than 100% of the
fair market value of the shares on the date of grant.
 
These options are exercisable in installments within a period not to exceed ten
years from the date of grant. The options outstanding at December 31, 1997 and
1996, expire on various dates through December 2007. At December 31, 1997 and
1996, unissued common stock of the Company reserved for issuance in accordance
with the stock option plans are 7,921 and 5,627 shares, respectively.
 
In 1997, shareholders approved a Shareholder Value Incentive Plan (the 'SVIP')
under which 200 shares of convertible preferred stock may be issued to selected
officers and employees. Each share of preferred stock is convertible into common
stock at a ten to one ratio if certain performance criteria are achieved by
March 4, 2002. In 1997, the Company granted rights to certain officers and
employees for 171 shares of convertible preferred stock having no par value
under the SVIP.
 
The Company has elected to follow Accounting Principals Board Opinion (APB) No.
25 'Accounting for Stock Issued to Employees' and related interpretations in
accounting for its employee stock options. Under APB No. 25, the Company does
not recognize compensation expense when the exercise price of the options
granted is equal to the market value of the Company's common stock at the date
of grant. Statement of Financial Accounting Standard No. 123 'Accounting for
Stock Based Compensation' (SFAS No. 123) requires the Company to disclose the
pro forma impact on net income (loss) and earnings (loss) per share as if
compensation expense associated with employee stock options had been calculated
under the fair value method of SFAS No. 123 for employee stock options granted
subsequent to December 31, 1994.
 
The fair value of each option grant is estimated on the date of grant using a
Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants in 1997, 1996 and 1995, respectively; dividend yield
of 3%, 4% and 4%; expected volatility of .245, .214 and .215; risk-free interest
rates of 5.9%, 6.1% and 6.05%; and weighted-average expected lives of 2.1, 5.5
and 6.5 years.
 
The Company's net income (loss) and net income (loss) per common share have been
adjusted to the pro forma amounts indicated below. These pro forma effects may
not be representative of the effects on future years because of the subjective
assumptions used in the fair value estimate calculated under the Black-Scholes
model and that new grants are generally made each year.
 
<TABLE>
<CAPTION>
==========================================================================================
                                                     1997           1996            1995
<S>                            <C>                  <C>           <C>             <C>
------------------------------------------------------------------------------------------
Net income (loss)              As reported          $94,877       $(315,087)      $104,445
                               Pro forma            $87,754       $(317,658)      $104,105
Net income (loss) per common   As reported          $  1.66       $   (5.57)      $   1.85
    share -- basic             Pro forma            $  1.54       $   (5.61)      $   1.85
Net income (loss) per common   As reported          $  1.63       $   (5.57)      $   1.84
    share -- diluted           Pro forma            $  1.51       $   (5.61)      $   1.84
==========================================================================================
</TABLE>
 
Because SFAS No. 123 is applicable only to options granted subsequent to
December 31, 1994, its pro forma effect will not be fully reflected until 1999
since certain options granted prior to January 1, 1995, vest over five years.

F-11







<PAGE>
<PAGE>



WITCO CORPORATION AND SUBSIDIARY COMPANIES

(in thousands except per share data)
--------------------------------------------------------------------------------
A summary of the Company's stock option activity and related information for the
years ended December 31 follows:

<TABLE>
<CAPTION>
                                                           1997                       1996                       1995
=============================================================================================================================
                                                              WEIGHTED-               Weighted-                  Weighted-
                                                               AVERAGE                  Average                    Average
                                                              EXERCISE                 Exercise                   Exercise
                                                   SHARES        PRICE       Shares       Price         Shares       Price
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                <C>        <C>             <C>        <C>             <C>        <C>
Options outstanding, beginning of year             4,283         $30          2,619         $28          2,054         $27
Granted                                            1,995          37          2,182          33            879          28
Exercised                                           (705)         28           (267)         25           (300)         20
Forfeited                                           (141)         33           (251)         30            (14)         29
-----------------------------------------------------------------------------------------------------------------------------
Options outstanding, end of year                   5,432         $33          4,283         $30          2,619         $28
Options exercisable at end of year                 2,094         $30          1,827         $29            808         $27
Weighted-average fair value of options granted
  during the year                                  $6.12                      $6.35                      $5.66
=============================================================================================================================
</TABLE>

<TABLE>
<CAPTION>
=============================================================================================================================
                                         Options Outstanding                                   Options Exercisable
-----------------------------------------------------------------------------------------------------------------------------
 
<CAPTION>
                           Number             Weighted-                                     Number
                   Outstanding at               Average             Weighted-       Exercisable at               Weighted-
        Range of     December 31,             Remaining      Average Exercise         December 31,        Average Exercise
 Exercise Prices             1997      Contractual Life                 Price                 1997                   Price
----------------   ------------------------------------------------------------    ------------------------------------------
<S>                  <C>                  <C>                    <C>                  <C>                  <C>
$21.38 to $33.25          3,516               7.9 years                   $31                2,086                    $30
$35.13 to $46.81          1,916               9.9 years                   $37                    8                    $37
----------------   -----------------                                                     ------------
                          5,432                                                              2,094
=============================================================================================================================
</TABLE>
 
In 1997 and 1996, restricted stock awards were granted to two key employees
pursuant to certain employment agreements between the Company and such
employees. In 1997, two restricted common stock awards totaling 29 shares were
granted and will vest over time through 1999. In 1996, an award of 19 shares of
restricted common stock was granted and will vest over time through 1998. As of
December 31, 1997, 17 shares have vested for these awards.
 
In 1996, two additional restricted common stock awards totaling 40 shares were
granted and will vest if certain performance-based criteria are met. Unless
these performance criteria are met, these restricted stock awards shall
terminate on either September 9, 2001, or June 13, 2002, according to the terms
of the awards. As of December 31, 1997, 13 shares have vested for these awards.

The weighted-average fair value of the restricted stock on the date of grant is
$36 and $32 with a weighted-average remaining contractual life of 1.4 and 4.6
years for 1997 and 1996, respectively.
 
NOTE 12   OTHER EXPENSE (INCOME) -- NET

The components of other expense (income) -- net from continuing operations are
as follows:

<TABLE>
<CAPTION>
===============================================================================================
                                                              1997          1996           1995
-----------------------------------------------------------------------------------------------
<S>                                                        <C>           <C>           <C>
Amortization of intangibles                                $24,083       $29,117       $ 20,805
Provision for litigation                                         -        34,733              -
Provision for environmental remediation and compliance           -        30,077         13,800
Settlements with certain of the company's insurers            (950)       (4,316)       (55,149)
Gain on disposition of businesses                           (2,007)            -        (54,079)
Other -- net                                                (3,296)       (1,211)        (2,375)
-----------------------------------------------------------------------------------------------
                                                           $17,830       $88,400       $(76,998)
===============================================================================================
</TABLE>

F-12







<PAGE>
<PAGE>




WITCO CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS (in thousands except per share data)
--------------------------------------------------------------------------------
NOTE 13   INCOME TAXES
 
The components of income (loss) from continuing operations before income taxes
and cumulative effect of accounting change are:
===============================================================================
                                            1997           1996            1995
-------------------------------------------------------------------------------
Domestic                                $ 63,461       $(335,609)      $113,308
Foreign                                   89,238           9,800         55,832
-------------------------------------------------------------------------------
                                        $152,699       $(325,809)      $169,140
===============================================================================
 
The provision for income taxes (benefit) from continuing operations consists of
the following:
 
===============================================================================
                                              1997           1996          1995
-------------------------------------------------------------------------------
Current
    Federal                               $(13,486)      $(14,514)      $49,675
    State                                   (2,633)           735         8,336
    Foreign                                 32,779         38,564        16,004
Deferred
    Federal                                 35,737        (85,750)       (6,361)
    State                                    5,636        (11,771)         (800)
    Foreign                                  4,588         (5,699)        2,588
Investment tax credit amortization               -           (200)         (648)
-------------------------------------------------------------------------------
                                          $ 62,621       $(78,635)      $68,794
===============================================================================
 
The effective income tax rate from continuing operations varied from the
statutory federal income tax rate as follows:

<TABLE>
<CAPTION>
=============================================================================================
                                                            1997           1996          1995
---------------------------------------------------------------------------------------------
<S>                                                        <C>            <C>            <C>
Statutory federal income tax rate                           35.0%         (35.0)%        35.0%
Foreign rate differences                                     4.0            8.1             -
Non-deductible goodwill amortization                         3.1            1.8           1.1
State income taxes -- net                                    2.0           (3.4)          4.5
Research and development tax credits                        (2.0)             -             -
Foreign sales corporation                                   (1.8)             -             -
Non-deductible goodwill and intangibles write-down             -            3.9             -
Other                                                        0.7            0.5           0.1
---------------------------------------------------------------------------------------------
                                                            41.0%         (24.1)%        40.7%
=============================================================================================
</TABLE>
 
The components of deferred income taxes are as follows:
 
<TABLE>
<CAPTION>
====================================================================================
                                                                1997           1996
------------------------------------------------------------------------------------
<S>                                                         <C>            <C>      
Current deferred tax (assets) liabilities:
    Reserve for environmental remediation and compliance    $(13,264)      $(27,339)
    Accrual items                                            (18,362)       (19,698)
    Inventories                                                8,472          3,905
    Reserve for disposition of Lubricants Group               (1,683)       (12,260)
    Other -- net                                             (22,199)       (37,098)
------------------------------------------------------------------------------------
                                                            $(47,036)      $(92,490)
====================================================================================
Non-current deferred tax (assets) liabilities:
    Depreciation                                            $108,505       $110,396
    Reserve for environmental remediation and compliance     (56,572)       (56,734)
    Postretirement benefits other than pensions              (22,865)       (20,469)
    Net operating loss carry forward                         (21,684)       (21,239)
    Excess foreign tax credits                                (9,500)             -
Other -- net                                                  (4,865)       (28,392)
------------------------------------------------------------------------------------
                                                            $ (6,981)      $(16,438)
====================================================================================
</TABLE>
 
No federal or state income taxes have been provided on approximately $182,000 of
unremitted earnings of the Company's international subsidiaries at December 31,
1997. Based on the expected ability to utilize resulting foreign tax credits, no
significant tax charges would result if these earnings were repatriated to the
United States.

F-13







<PAGE>
<PAGE>



WITCO CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS (in thousands except per share data)
--------------------------------------------------------------------------------
At December 31, 1997, non-current deferred tax assets include $21,684 (recorded
in connection with purchase accounting associated with the acquisition of
OrganoSilicones, formerly OSi Specialties) for a net operating loss carry
forward and $9,500 for excess foreign tax credits. The Company has concluded
that it is more likely than not that the net operating loss carry forward will
be used based upon continued profitability combined with the income generated
from existing taxable temporary differences; and that excess foreign tax credits
will be utilized based upon the generation of domestic and foreign source
income.
 
The Company's federal net operating losses of approximately $55,500 are subject
to certain limitations and expire as follows: $8,300 (2008), $32,200 (2009), and
$15,000 (2010). The Company's excess foreign tax credits of approximately $9,500
expire in 2002.
 
Cash payments for income taxes amounted to $11,852 (1997), $24,716 (1996), and
$59,509 (1995).
 
NOTE 14   PENSION PLANS
 
The Company has various non-contributory defined benefit pension plans covering
substantially all of its domestic employees and certain international employees.
Benefits are primarily based upon levels of compensation and/or years of
service. The Company's funding policy is based upon funding at the minimum
annual amounts required by applicable federal laws and regulations plus such
additional amounts as the Company may determine to be appropriate from time to
time. Plan assets consist of publicly traded securities and investments in
commingled funds administered by independent investment advisors.
 
Certain union employees of the Company participate in multi-employer plans and
the Company makes contributions primarily based upon hours worked. These plans
provide defined benefits to these employees.
 
Employees of international subsidiaries are covered by various pension benefit
arrangements, some of which are considered to be defined benefit plans for
financial reporting purposes. Assets of the plans are comprised primarily of
insurance contracts and equity securities. Benefits under these plans are
primarily based upon levels of compensation. Funding policies are based on legal
requirements, tax considerations and local practices.
 
Net pension cost includes the following components:
 
<TABLE>
<CAPTION>
================================================================================================================================
                                                     1997                         1996                         1995
--------------------------------------------------------------------------------------------------------------------------------
                                             DOMESTIC    INTERNATIONAL    Domestic    International    Domestic    International
--------------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>         <C>              <C>         <C>              <C>         <C>
Service cost for benefits earned during
  the period                                 $  9,015       $ 5,090       $ 10,456       $ 4,600       $  6,561       $ 3,823
Interest cost on the projected benefit
  obligation                                   29,037         7,615         25,997         7,154         24,337         6,478
Actual gain on plan assets                    (57,292)       (7,689)       (39,145)       (1,046)       (63,453)       (7,486)
Net amortization and deferral                  24,718         4,146          9,883        (2,745)        35,206         4,180
Curtailment loss                                    -             -         44,547             -              -             -
--------------------------------------------------------------------------------------------------------------------------------
Total pension cost                              5,478         9,162         51,738         7,963          2,651         6,995
 
Multi-employer plans                              559             -            473             -            411             -
Other international plans                           -           221              -            68              -            73
--------------------------------------------------------------------------------------------------------------------------------
Net pension cost                                6,037         9,383         52,211         8,031          3,062         7,068
 
Less pension cost of discontinued
  operations                                       70             -         10,292             -             15             -
--------------------------------------------------------------------------------------------------------------------------------
Net pension cost from continuing
  operations                                 $  5,967       $ 9,383       $ 41,919       $ 8,031       $  3,047       $ 7,068
================================================================================================================================
</TABLE>

The domestic curtailment loss of $44,547 in 1996 is reflected in the
Consolidated Statement of Operations as follows: $35,047 is included in the
restructuring charge and $9,500 is included in Loss from Discontinued
Operations.
 
The weighted-average assumptions used to calculate costs were as follows:

<TABLE>
<CAPTION>
================================================================================================================================
                                                       1997                         1996                         1995
--------------------------------------------------------------------------------------------------------------------------------
                                             DOMESTIC    INTERNATIONAL    Domestic    International    Domestic    International
--------------------------------------------------------------------------------------------------------------------------------
<S>                                               <C>          <C>             <C>          <C>             <C>          <C> 
Discount rate                                     7.5%         6.7%            7.0%         7.0%            8.5%         7.1%
Rate of increase in compensation level            4.5%         4.0%            4.5%         4.3%            4.5%         4.3%
Expected long-term rate of return on
  assets                                         10.0%         7.5%           10.0%         7.9%           10.0%         8.0%
================================================================================================================================
</TABLE>
 
In 1997, the discount rate used to calculate domestic pension cost was changed
from 7.0% in 1996 to 7.5% in 1997 which decreased pension cost by approximately
$2,500.

F-14







<PAGE>
<PAGE>




WITCO CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS (in thousands except per share data)
--------------------------------------------------------------------------------
The funded status and amounts recognized in the Company's Consolidated Balance
Sheets at December 31, 1997 and 1996, for the domestic plans were as follows:

<TABLE>
<CAPTION>
============================================================================================================================
                                                                      1997                                1996
----------------------------------------------------------------------------------------------------------------------------
                                                                PLANS IN WHICH:                     Plans in which:
----------------------------------------------------------------------------------------------------------------------------
                                                      ASSETS EXCEED       ACCUMULATED     Assets Exceed       Accumulated
                                                        ACCUMULATED   BENEFITS EXCEED       Accumulated   Benefits Exceed
                                                           BENEFITS            ASSETS          Benefits            Assets
----------------------------------------------------------------------------------------------------------------------------
<S>                                                     <C>              <C>                <C>              <C>
Actuarial present value of:
    Vested benefits                                       $(306,647)        $ (63,964)        $(267,946)        $ (82,112)
    Nonvested benefits                                       (5,581)          (10,728)           (4,995)          (10,341)
----------------------------------------------------------------------------------------------------------------------------
         Accumulated benefit obligation                    (312,228)          (74,692)         (272,941)          (92,453)
Effect of anticipated future compensation levels            (14,216)          (24,634)           (9,713)          (18,224)
----------------------------------------------------------------------------------------------------------------------------
        Projected benefit obligation                       (326,444)          (99,326)         (282,654)         (110,677)
Plan assets at fair value                                   347,369            37,906           294,264            49,756
----------------------------------------------------------------------------------------------------------------------------
        Plan assets in excess of (less than) projected
          benefit obligation                                 20,925           (61,420)           11,610           (60,921)
Unrecognized prior service cost                               9,744             5,402            10,764             6,205
Unrecognized net transition (asset) obligation               (5,894)              403            (8,522)              286
Unrecognized net loss                                         8,603            12,214            13,530            12,396
Adjustment required to recognize minimum liability                -            (8,466)                -           (13,395)
----------------------------------------------------------------------------------------------------------------------------
        Noncurrent pension asset (liability)              $  33,378         $ (51,867)        $  27,382         $ (55,429)
============================================================================================================================
</TABLE>
 
The assumptions used to calculate December 31, 1997 and 1996, obligations for
domestic plans were as follows:
================================================================================
                                                               1997         1996
--------------------------------------------------------------------------------
Discount rate                                                 7.25%         7.5%
Rate of increase in compensation level                        4.50%         4.5%
================================================================================
 
The revised domestic discount rate of 7.25% resulted in an increase of
approximately $15,629 and $11,354 in the 1997 projected and accumulated benefit
obligation, respectively.
 
The funded status and amounts recognized in the Company's Consolidated Balance
Sheets at December 31, 1997 and 1996, for the international plans were as
follows:
 
<TABLE>
<CAPTION>
============================================================================================================================
                                                                      1997                                1996
----------------------------------------------------------------------------------------------------------------------------
                                                                PLANS IN WHICH:                     Plans in which:
----------------------------------------------------------------------------------------------------------------------------
                                                      ASSETS EXCEED       ACCUMULATED     Assets Exceed       Accumulated
                                                        ACCUMULATED   BENEFITS EXCEED       Accumulated    enefits Exceed
                                                           BENEFITS            ASSETS          Benefits            Assets
----------------------------------------------------------------------------------------------------------------------------
<S>                                                     <C>              <C>                <C>              <C>
Actuarial present value of:
    Vested benefits                                       $ (29,926)        $ (48,540)        $ (34,802)        $ (46,579)
    Nonvested benefits                                       (1,500)          (10,139)           (1,717)           (8,366)
----------------------------------------------------------------------------------------------------------------------------
         Accumulated benefit obligation                     (31,426)          (58,679)          (36,519)          (54,945)
Effect of anticipated future compensation levels             (6,671)          (22,596)           (7,065)          (23,822)
----------------------------------------------------------------------------------------------------------------------------
         Projected benefit obligation                       (38,097)          (81,275)          (43,584)          (78,767)
Plan assets at fair value                                    43,690             5,935            48,819               196
----------------------------------------------------------------------------------------------------------------------------
         Plan assets in excess of (less than) projected
           benefit obligation                                 5,593           (75,340)            5,235           (78,571)
Unrecognized prior service cost                               2,739             2,605             1,309                14
Unrecognized net transition (asset) obligation               (4,501)            2,074            (5,473)            2,711
Unrecognized net loss (gain)                                 (1,822)            4,005             1,963             5,915
----------------------------------------------------------------------------------------------------------------------------
    Noncurrent pension asset (liability)                  $   2,009         $ (66,656)        $   3,034         $ (69,931)
============================================================================================================================
</TABLE>
 
The assumptions used to calculate December 31, 1997 and 1996, obligations for
international plans were as follows:
================================================================================
                                                               1997         1996
--------------------------------------------------------------------------------
Discount rate                                                  6.6%         6.6%
Rate of increase in compensation level                         3.8%         3.9%
================================================================================

F-15






<PAGE>
<PAGE>





WITCO CORPORATION AND SUBSIDIARY COMPANIES
(in thousands except per share data)
--------------------------------------------------------------------------------
The Company sponsors a defined contribution savings plan, the Witco Corporation
Employee Retirement Savings Plan, which is organized under sections 401(k) and
401(a) of the Internal Revenue Code. The Plan allows salary and hourly
non-bargaining employees to contribute up to a maximum of 15% of their base pay
with the Company providing a matching contribution of fifty cents for each
dollar up to 6%. In addition, the Company sponsors the OSi Specialties, Inc.
401(k) Savings and Investment Plan which covers all full time employees of OSi.
The Plan allows employees to contribute a maximum of 17.5% of eligible
compensation and the Company provides a matching contribution of 50% up to 7.5%.
The Plans permit employees to make contributions on both a pre-tax and after-tax
basis. Participants are immediately vested in their contributions and become
fully vested in the matching contribution upon meeting certain service
requirements. Union employees' participation, provisions, contributions and
employer match are based upon terms of their respective collective bargaining
agreement.
 
The Company's matching contributions were $3,400 (1997), $4,200 (1996) and
$3,900 (1995).
 
NOTE 15 POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
 
The Company provides health and life insurance to certain domestic retired
employees, most of whom contribute to its cost. Substantially all employees
presently become eligible for retiree benefits after reaching retirement age
while working for the Company. The cost of the retiree medical plan is provided
by retiree contributions that are adjusted annually to reflect current health
costs. For domestic employees subject to collective bargaining arrangements, the
cost is shared by the Company in accordance with the bargained agreements. Life
insurance benefits for certain retired employees are provided with the Company
assuming the cost. The Company's policy is to fund the plans at the discretion
of management.
 
Postretirement benefit obligations at December 31, 1997 and 1996, are as
follows:
 
<TABLE>
<CAPTION>
============================================================================================
                                                                          1997          1996
--------------------------------------------------------------------------------------------
<S>                                                                   <C>            <C>
Accumulated postretirement benefit obligation:
    Retirees                                                          $ 43,394       $31,308
    Active plan participants fully eligible for benefits                18,947        20,076
    Other active plan participants                                       7,886         7,362
--------------------------------------------------------------------------------------------
         Total accumulated postretirement benefit obligation            70,227        58,746
Unrecognized net (loss)                                                (10,889)         (262)
--------------------------------------------------------------------------------------------
    Noncurrent postretirement benefit liability                       $ 59,338       $58,484
============================================================================================
</TABLE>
 
Net periodic postretirement benefit costs include the following components:
 
<TABLE>
<CAPTION>
=============================================================================================
                                                              1997          1996         1995
---------------------------------------------------------------------------------------------
<S>                                                         <C>          <C>           <C>
Service cost of benefits earned                             $  553       $   637       $  486
Interest cost on accumulated postretirement benefits         3,948         3,082        2,938
Curtailment loss                                                 -        13,443            -
Net amortization                                                53            21         (747)
---------------------------------------------------------------------------------------------
    Net periodic postretirement benefit costs               $4,554       $17,183       $2,677
=============================================================================================
</TABLE>
 
For measuring the expected postretirement benefit obligation, a 5.75% and 7%
annual rate of increase in the per capita claims cost was assumed for 1997 and
1996, respectively. The rate was assumed to decrease by 1% per year to 4.75% in
1999 and remain at that level thereafter. The discount rate used in determining
the accumulated postretirement benefit obligation was 7.25% for 1997 and 7.5%
for 1996. The discount rates used in determining the net periodic postretirement
benefit costs were 7.5% (1997), 7% (1996) and 8.3% (1995). In 1996, a
curtailment charge of $13,443 was recognized in connection with the 1996
restructuring plan.
 
The effect of a 1% increase in the health care cost trend rate would increase
the present value of the accumulated postretirement benefit obligation at
December 31, 1997, by approximately $7,100 and the net periodic postretirement
benefit cost for 1997 by approximately $600.
 
Certain union employees of the Company participate in multi-employer plans that
provide defined postretirement health and life insurance benefits. The net
periodic postretirement benefit cost for these employees is not distinguishable.
The Company's costs associated with these plans on a cash basis is not
significant.
 
F-16






<PAGE>
<PAGE>




WITCO CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS (in thousands except per share data)
--------------------------------------------------------------------------------
NOTE 16 FINANCIAL INSTRUMENTS
 
The Company enters into foreign currency forward and swap contracts to hedge the
effect of foreign currency fluctuations on the financial statements.
 
The Company purchases foreign currency forward contracts that are designated and
effective as hedges of recorded transactions (principally foreign currency trade
receivables and payables) which otherwise would expose the Company to foreign
currency risk. Realized and unrealized gains and losses on foreign currency
forward contracts (including open, matured and terminated contracts) that are
designated and effective as hedges of recorded transactions are recognized in
earnings and offset the impact of valuing recorded foreign currency trade
payables and receivables. Unrealized gains or losses are cumulatively measured
as the differential between the spot exchange rate at the contract's inception
and the spot exchange rate as of the balance sheet date. Discounts or premiums
(the difference between the current spot exchange rate and the contract exchange
rate at the inception of the contract) on foreign currency forward contracts
designated and effective as hedges of recorded transactions are amortized over
the respective contract's lives. Realized and unrealized gains and losses on
foreign currency forward contracts that are not designated and effective as
hedges are included in income as other expenses (income) -- net. The net asset
or liability representing the fair value of open positions are included in
accounts and notes receivables on the Consolidated Balance Sheet.
 
The Company uses foreign currency swap contracts that are designed to reduce its
exposure to foreign currency risk from its net investment (including long-term
intercompany loans) in its international subsidiaries. For foreign currency swap
contracts that are designated and effective as hedges, realized and unrealized
gains and losses (including those from open, matured and terminated contracts),
net of related taxes, are included in the cumulative translation adjustment
account in shareholders equity (the deferral accounting method). Discounts or
premiums are amortized over the respective contract lives. The related amounts
due to or from counterparties are included in deferred costs and other assets on
the Consolidated Balance Sheet.
 
At December 31, 1997 and 1996, the Company had outstanding foreign currency swap
contracts with aggregate notional amounts of approximately $247,000 and $253,000
respectively, to hedge its foreign net investments. The swap contracts are
primarily in German marks and French francs, which expire in March 2003 and May
1998, respectively.
 
At December 31, 1997 and 1996, the Company had outstanding foreign currency
forward contracts with aggregate notional amounts of approximately $287,000 and
$137,000 respectively, to hedge foreign currency risk on accounts receivable and
payable. These forward contracts are generally outstanding for 30 to 90 days and
are primarily denominated in German marks, Italian lire, Swiss and French
francs, and British pounds.
 
All contracts have been entered into with major financial institutions. The risk
associated with these transactions is the cost of replacing, at current market
rates, agreements in the event of default by the counterparties. Management
believes the risk of incurring such losses is remote.
 
The following summarizes the major methods and assumptions used in estimating
the fair values of financial instruments.
 
CASH AND CASH EQUIVALENTS: The carrying amount approximates fair value due to
the short maturity of these instruments.
 
NOTES RECEIVABLE: The fair value is estimated by discounting the future cash
flows using the interest rates at which similar loans would be made under
current conditions.
 
LONG-TERM DEBT: The fair value for the 6.60% and the 6.125% Notes in addition to
the 7.75% and the 6.875% Debentures were based on quoted market values. For all
other long-term debt which have no quoted market price, the fair value is
estimated by discounting projected future cash flows using the Company's
incremental borrowing rate.
 
FOREIGN CURRENCY FORWARD AND SWAP CONTRACTS: The fair value is the amount at
which the contracts could be settled based on quotes provided by investment
banking firms.
 
FAIR VALUES OF FINANCIAL INSTRUMENTS: The following table presents the carrying
amounts and estimated fair values of material financial instruments used by the
Company in the normal course of its business.

F-17






<PAGE>
<PAGE>




 
WITCO CORPORATION AND SUBSIDIARY COMPANIES
(in thousands except per share data)
<TABLE>
<CAPTION>
                                                                                             1997         1996
-------------------------------------------------------------------------------------------------------------------------------
                                                                        CARRYING                      Carrying
                                                                          AMOUNT       FAIR VALUE       Amount      Fair Value
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                                      <C>            <C>           <C>            <C>
Cash and cash equivalents                                               $ 96,383         $ 96,383     $ 59,201        $ 59,201
Notes receivable                                                        $ 21,008         $ 20,987     $ 24,422        $ 24,449
Long-term debt                                                          $645,101         $650,389     $700,820        $666,847
Off-balance sheet financial instruments:
    Unrealized loss on foreign currency forward and swap contracts       $    --         $   (843)    $    --         $(35,775)
================================================================================================================================
</TABLE>
 
NOTE 17 COMMITMENTS AND CONTINGENCIES
 
OPERATING LEASES: At December 31, 1997, minimum rental commitments related to
continuing operations under noncancelable operating leases amounted to $18,848
(1998), $16,501 (1999), $13,182 (2000), $11,634 (2001), $11,193 (2002), and
$92,159 (2003 and thereafter).
 
Rental expenses under operating leases from continuing operations were $19,549
(1997), $22,725 (1996) and $16,597 (1995).
 
CAPITAL LEASE: The Company has a capital lease for an office/laboratory facility
located in Meyrin, Switzerland. The lease contains purchase options and expires
in 2007.
 
Future minimum lease payments at December 31, 1997, were as follows:

================================================================================
1998                                                                    $ 1,809
1999                                                                      1,809
2000                                                                      1,809
2001                                                                      1,809
2002                                                                      1,809
2003 and thereafter                                                       9,047
-------------------------------------------------------------------------------
    Total minimum lease payments                                         18,092
Amounts representing interest                                            (5,583)
-------------------------------------------------------------------------------
    Present value of net minimum lease payments                          12,509
Current portion                                                            (864)
-------------------------------------------------------------------------------
    Long-term obligation                                                $11,645
================================================================================

The lease contains a sublease agreement for one-third of the facility over the
length of the lease with the lessee providing a pro rata share of the minimum
lease payments.
 
CAPITAL COMMITMENTS: At December 31, 1997, the estimated costs to complete
authorized projects under construction related to continuing operations amounts
to $225,965.
 
LITIGATION, CLAIMS AND CONTINGENCIES: The Company is a potentially responsible
party ('PRP') or a defendant in a number of governmental (federal, state and
local) and private actions associated with the release, or suspected release, of
contaminants into the environment. As a PRP, the Company may be liable for costs
associated with the investigation and remediation of environmental
contamination, as well as various penalties and damages to persons, property and
natural resources. As of December 31, 1997, the Company was a PRP, or a
defendant, in connection with 59 sites at which it is likely to incur
environmental response costs as a result of actions brought against the Company
pursuant to the federal Comprehensive Environmental Response Compensation and
Liability Act ('CERCLA'), the federal Resource Conservation and Recovery Act
('RCRA') or similar state or local laws. With 22 exceptions, all of these sites
involve one or more other PRPs, and in most cases there are numerous other PRPs
in addition to the Company. CERCLA, RCRA and the state counterparts to these
federal laws authorize governments to investigate and remediate actual or
suspected damage to the environment caused by the release, or suspected release,
of hazardous substances into the environment, or to order the responsible
parties to investigate and/or remediate such environmental damage.
 
The Company evaluates and reviews environmental reserves for future remediation
and other costs on a quarterly basis to determine appropriate reserve amounts.
Inherent in this process are considerable uncertainties which affect the
Company's ability to estimate the ultimate costs of remediation efforts. Such
uncertainties include the nature and extent of contamination at each site,
evolving governmental standards regarding remediation requirements, changes in
environmental regulations, widely varying costs of alternative cleanup methods,
the number and financial condition of other potentially responsible parties at
multi-party sites, innovations in remediation and restoration technology, and
the identification of additional environmental sites.
 
F-18






<PAGE>
<PAGE>





WITCO CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS (in thousands except per share data)
--------------------------------------------------------------------------------
At December 31, 1997 and 1996, the Company's reserves for environmental
remediation and compliance costs (including $55,309 at December 31, 1997 and
$64,224 at December 31, 1996, of both current and long-term environmental
liabilities for the Lubricants Group and $64,716 at December 31, 1997 and
$77,649 at December 31, 1996, of both current and long-term environmental
liabilities for plants to be either sold or closed) amounted to $186,587 and
$219,697, respectively, reflecting the Company's estimate of the costs to be
incurred over an extended period of time in respect of those matters which are
reasonably estimable. At December 31, 1997 and 1996, $149,215 and $150,921,
respectively, of the reserves are included in Deferred Credits and Other
Liabilities on the Consolidated Balance Sheets. At December 31, 1997, the
Company had letters of credit outstanding of approximately $31,500 primarily
related to environmental remediation commitments. The Company believes it has
provided adequate reserves for these commitments.
 
The Company is a defendant in six similar actions arising out of the Company's
involvement in the polybutylene resin manufacturing business in the 1970's. Five
of the following cases are currently pending in California state courts and one
is pending in Texas state court: East Bay Municipal Utility District v. Mobil
Oil Corporation, et al., filed in November 1993, and pending in Superior Court
for the County of San Mateo, California; City of Santa Maria v. Shell Oil
Company, et al., filed in May 1994, and pending in Superior Court for the County
of San Luis Obispo, California; Nipomo Community Services District v. Shell Oil
Company, et al., filed in May 1995, and pending in Superior Court for the County
of Santa Barbara, California; Alameda County Water District v. Mobil Oil
Corporation, et al., filed in April 1996, and Marin Municipal Water District v.
Shell Oil Company, et al., filed in May 1996, both pending in superior Court for
the County of San Mateo; and City of Austin v. Shell Oil Company, et al., filed
in June 1996, and pending in the District Court of Travis County, Texas. The
actions generally allege that the Company and several other defendants
negligently misrepresented the performance of polybutylene pipe and fittings
installed in water distribution systems. Other allegations in the California and
Texas actions include breach of the California Unfair Practices Act and the
Texas Deceptive Practices Act, respectively; breach of warranty, fraud and
strict liability. It is possible that the Company may be named as a defendant in
future actions arising out of its past involvement in the polybutylene resin
manufacturing business.
 
The Company is not a party to any legal proceedings, including environmental
matters, which it believes will have a material adverse effect on its
consolidated financial position or liquidity. However, the Company's operating
results or cash flow could be materially affected in future periods by the
resolution of these contingencies.
 
NOTE 18 OPERATIONS BY INDUSTRY SEGMENT AND GEOGRAPHIC AREA
 
Effective January 1, 1997, the Company realigned its business segments into four
groups. Prior year amounts have been reclassified to conform with the current
year presentation. The following is a summary of the Company's operations by
industry segment and geographic area:
 
<TABLE>
<CAPTION>
================================================================================================================================
                                                                                       1997             1996             1995
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                 <C>              <C>              <C>
Net Sales
    Oleochemicals & derivatives                                                     $  413,268       $  424,718       $  429,025
    Performance chemicals                                                              781,782          844,651          817,923
    Polymer chemicals                                                                  519,835          533,948          536,491
    OrganoSilicones                                                                    472,517          447,929          101,312
    Other                                                                                   --           12,081          100,326
--------------------------------------------------------------------------------------------------------------------------------
         Net sales                                                                  $2,187,402       $2,263,327       $1,985,077
--------------------------------------------------------------------------------------------------------------------------------
Operating income
    Oleochemicals & derivatives                                                     $   21,597       $    5,041       $    4,495
    Performance chemicals                                                               69,923         (202,175)          62,863
    Polymer chemicals                                                                   72,721            1,285           32,271
    OrganoSilicones                                                                     72,634           58,351            7,385
    Corporate and unallocated                                                          (31,876)        (124,560)          94,236
--------------------------------------------------------------------------------------------------------------------------------
         Operating income (loss) from continuing operations                            204,999         (262,058)         201,250
--------------------------------------------------------------------------------------------------------------------------------
Other expense -- net                                                                    (4,029)          (3,531)          (3,525)
Interest expense -- net                                                                (48,271)         (60,220)         (28,585)
--------------------------------------------------------------------------------------------------------------------------------
         Income (loss) from continuing operations before income taxes and
           cumulative effect of accounting change                                   $  152,699       $ (325,809)      $  169,140
--------------------------------------------------------------------------------------------------------------------------------
Assets
    Oleochemicals & derivatives                                                     $  373,011       $  352,184       $  377,586
    Performance chemicals                                                              397,299          400,702          481,739
    Polymer chemicals                                                                  347,025          372,052          458,698
    OrganoSilicones                                                                    942,454          962,319          966,501
    Net assets of discontinued operations                                                   --           59,740          170,426
    Corporate                                                                          237,863          244,708          295,654
--------------------------------------------------------------------------------------------------------------------------------
         Assets                                                                     $2,297,652       $2,391,705       $2,750,604
================================================================================================================================
</TABLE>
 
F-19







<PAGE>
<PAGE>





WITCO CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS (in thousands except per share data)
--------------------------------------------------------------------------------
The following tables present a reconciliation of operating income (loss) from
continuing operations on a segment basis detailing unusual or infrequently
occurring items which affect comparability between years:
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
==============================================================================================================================
                                                                           1997
------------------------------------------------------------------------------------------------------------------------------
                             OLEOCHEMICALS       PERFORMANCE        POLYMER         ORGANO-        CORPORATE &
                             & DERIVATIVES        CHEMICALS        CHEMICALS       SILICONES       UNALLOCATED        TOTAL
------------------------------------------------------------------------------------------------------------------------------
<S>                          <C>                 <C>               <C>             <C>             <C>               <C>
Operating income (loss)
  from continuing
  operations excluding
  non-recurring items           $18,909           $  79,841         $75,026         $72,652         $ (31,342)       $215,086
Restructuring charges              (612)            (10,007)           (923)            (18)           (1,484)        (13,044)
Insurance settlements                 -                   -               -               -               950             950
Gain (loss) on disposition
  of businesses                   3,300                  89          (1,382)              -                 -           2,007
------------------------------------------------------------------------------------------------------------------------------
Operating income (loss)
  from continuing
  operations                    $21,597           $  69,923         $72,721         $72,634         $ (31,876)       $204,999
==============================================================================================================================
==============================================================================================================================
                                                                          1996
------------------------------------------------------------------------------------------------------------------------------
                            Oleochemicals       Performance        Polymer         Organo-        Corporate &
                            & Derivatives        Chemicals        Chemicals       Silicones       Unallocated         Total
------------------------------------------------------------------------------------------------------------------------------
Operating income (loss)
  from continuing
  operations excluding
  non-recurring items         $  16,457          $  69,217        $ 51,890         $58,351         $ (26,173)       $ 169,742
Restructuring charges           (10,724)          (237,853)        (43,178 )             -           (53,375)        (345,130)
Other charges                      (692)           (33,539)         (7,427 )             -           (49,328)         (90,986)
Insurance settlements                 -                  -               -               -             4,316            4,316
------------------------------------------------------------------------------------------------------------------------------
Operating income (loss)
  from continuing
  operations                  $   5,041          $(202,175)       $  1,285         $58,351         $(124,560)       $(262,058)
==============================================================================================================================
==============================================================================================================================
                                                                           1995
------------------------------------------------------------------------------------------------------------------------------
                             Oleochemicals       Performance        Polymer         Organo-        Corporate &
                             & Derivatives        Chemicals        Chemicals       Silicones       Unallocated        Total
------------------------------------------------------------------------------------------------------------------------------
Operating income (loss)
  from continuing
  operations excluding
  non-recurring items          $  14,729          $  80,467        $ 49,199         $ 7,385         $  (7,816)       $143,964
Restructuring charges            (10,234)           (17,204)         (5,028 )             -            (1,376)        (33,842)
Other charges                          -               (400)        (11,900 )             -            (5,800)        (18,100)
Insurance settlements                  -                  -               -               -            55,149          55,149
Gain on disposition of
  businesses                           -                  -               -               -            54,079          54,079
------------------------------------------------------------------------------------------------------------------------------
Operating income from
  continuing operations        $   4,495          $  62,863        $ 32,271         $ 7,385         $  94,236        $201,250
==============================================================================================================================
</TABLE>
 
F-20

 





<PAGE>
<PAGE>





WITCO CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS (in thousands except per share data)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                          1997             1996             1995
<S>                                                                  <C>              <C>              <C>
------------------------------------------------------------------------------------------------------------------
Depreciation and amortization
    Oleochemicals & derivatives                                      $   23,819       $   24,092       $   24,693
    Performance chemicals                                                19,971           34,469           34,461
    Polymer chemicals                                                    22,685           27,425           26,958
    OrganoSilicones                                                      36,980           37,865            9,439
    Corporate                                                             7,417            4,942            7,020
------------------------------------------------------------------------------------------------------------------
         Depreciation and amortization from continuing operations    $  110,872       $  128,793       $  102,571
------------------------------------------------------------------------------------------------------------------
Capital expenditures (exclusive of acquisitions)
    Oleochemicals & derivatives                                      $   37,244       $   27,928       $   18,165
    Performance chemicals                                                57,304           36,549           34,601
    Polymer chemicals                                                    52,527           25,077           15,885
    OrganoSilicones                                                      23,482           40,477           12,400
    Discontinued operations                                                   -           11,844           17,209
    Corporate                                                            31,052           19,288           17,585
------------------------------------------------------------------------------------------------------------------
         Capital expenditures                                        $  201,609       $  161,163       $  115,845
------------------------------------------------------------------------------------------------------------------
Net sales
    United States                                                    $1,415,953       $1,450,996       $1,247,287
    Western Europe                                                      748,413          775,078          662,099
    Other international                                                 214,485          217,447          163,636
    Inter-area elimination                                             (191,449)        (180,194)         (87,945)
------------------------------------------------------------------------------------------------------------------
         Net sales                                                   $2,187,402       $2,263,327       $1,985,077
------------------------------------------------------------------------------------------------------------------
Operating income
    United States                                                    $  101,471       $ (280,774)      $  131,604
    Western Europe                                                       94,093           22,153           55,324
    Other international                                                   9,435           (3,437)          14,322
------------------------------------------------------------------------------------------------------------------
         Operating income (loss) from continuing operations          $  204,999       $ (262,058)      $  201,250
------------------------------------------------------------------------------------------------------------------
Assets
    United States                                                    $1,554,720       $1,580,470       $1,491,188
    Western Europe                                                      615,953          640,265          884,139
    Other international                                                 126,979          111,230          204,851
    Net assets of discontinued operations (United States)                     -           59,740          170,426
------------------------------------------------------------------------------------------------------------------
         Assets                                                      $2,297,652       $2,391,705       $2,750,604
==================================================================================================================
</TABLE>
 
Inter-area sales are accounted for on the same basis used to price sales to
similar non-affiliated customers and such sales are eliminated in arriving at
consolidated amounts.
 
The Company does not allocate income and expenses that are of a general
corporate nature to industry segments in computing operating income. These
include general corporate expenses, interest income and expense, and certain
other income and expenses not directly attributable to a specific segment.
 
In 1997, corporate and unallocated included charges of $1,485 related to
restructuring charges and gains of $950 as a result of settlements with certain
of the Company's insurers, net of related legal and other costs.
 
In 1996, corporate and unallocated included charges of $53,375 related to a
restructuring of the Company's operations and $49,328 of non-recurring items
related to provisions for litigation and other matters.
 
In 1995, corporate and unallocated included income of $55,149 as a result of
settlements with certain of the Company's insurers, net of related legal and
other costs, in addition to a $54,079 gain on disposition of businesses.
 
Foreign currency translation and transaction gains and losses included in net
income are not significant.
 
OrganoSilicones purchases, in the aggregate, approximately 40% of its raw
materials from Dow Corning Corporation and Union Carbide Corporation under
various long-term agreements, which expire at various times through 2000.
 
F-21







<PAGE>
<PAGE>



 

WITCO CORPORATION AND SUBSIDIARY COMPANIES

(in thousands except per share data)
--------------------------------------------------------------------------------
 
 
NOTE 19   DISCONTINUED OPERATIONS
 
On September 11, 1995, the Company announced its intention to divest its
Lubricants Group. These operations are reflected as discontinued operations for
all periods presented in the Company's statements of operations. Net sales for
discontinued operations amounted to $53,225 (1997), $332,930 (1996) and $373,363
(1995). During 1997, the Company recorded an adjustment of $9,990, or $.17 per
common share, reducing the estimated net loss on disposal of $68,253, or $1.21
per common share, recorded in 1996 associated with the divestiture of the
Lubricants Group. The adjustment is primarily the result of revised estimates
from the sale of the various Lubricants businesses.
 
On July 18, 1997, the Company completed the Lubricant's Group divestiture with
the sale of the Golden Bear Division to Golden Bear Acquisition Corporation for
approximately $50,000.
 
On February 28, 1997, the Company sold its refinery in Bradford, Pennsylvania to
American Refining Group, Inc. for approximately $17,000.
 
On November 1, 1996, the Company sold certain assets of its Kendall/Amalie
business and certain assets of its grease and grease gun manufacturing
businesses for approximately $120,689.
 
The components of net assets of discontinued operations included in the
Company's Consolidated Balance Sheets at December 31, 1996, are as follows:
 
--------------------------------------------------------------------------------
 
<TABLE>
<CAPTION>
==================================================================
                                                            1996
------------------------------------------------------------------
<S>                                                      <C>
Accounts and notes receivable -- net                     $19,331
Inventories                                               10,781
Property, plant and equipment -- net                      30,756
Accounts payable and other current liabilities            (2,000)
Other assets and liabilities -- net                          872
------------------------------------------------------------------
                                                         $59,740
==================================================================
</TABLE>
 
Additional liabilities of the Lubricants Group which were retained by the
Company as of December 31, 1997, amounted to $17,792 and are included in the
Accounts Payable and Other Current Liabilities caption of the Company's Balance
Sheet including $4,300 related to the reserve for disposition of the business
and $13,492 for environmental remediation and compliance costs. Additionally,
$41,817 is included in the Deferred Credits and Other Liabilities caption for
environmental remediation and compliance costs.
 
F-22







<PAGE>
<PAGE>





WITCO CORPORATION AND SUBSIDIARY COMPANIES

QUARTERLY FINANCIAL DATA (UNAUDITED)
(in thousands except per share data)
<TABLE>
<CAPTION>
=========================================================================================================================
                                      First Quarter        Second Quarter         Third Quarter         Fourth Quarter
                                   -------------------   --------------------  ------------------    --------------------
                                   1997(A)    1996(E)    1997(B)      1996     1997(C)    1996(F)    1997(D)     1996(G)
-------------------------------------------------------------------------------------------------------------------------
<S>                                <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
Net sales                          $568,490   $589,425   $571,437   $571,458   $528,105   $562,049   $519,370   $ 540,395
Gross profit                       $136,325   $141,080   $147,735   $136,778   $134,946   $124,097   $138,991   $ 101,052
Income (loss) from continuing
  operations before cumulative
  effect of accounting change      $ 19,939   $ 25,581   $ 23,571   $ 18,519   $ 25,742   $ 11,928   $ 20,826   $(303,202)
Income (loss) from continuing
  operations before cumulative
  effect of accounting change per
  share(H)*                        $   0.35   $   0.45   $   0.41   $   0.33   $   0.44   $   0.21   $   0.36   $   (5.35)
Net income (loss)                  $ 19,939   $ 25,921   $ 33,561   $(49,734)  $ 25,742   $ 11,928   $ 15,635   $(303,202)
==========================================================================================================================
</TABLE>

<TABLE>
<CAPTION>
------------------------------------------------------------
                                          Full Year
                                    --------------------
                                      1997         1996
------------------------------------------------------------
<S>                                <C>          <C>
Net sales                          $2,187,402   $2,263,327
Gross profit                       $  557,997   $  503,007
Income (loss) from continuing
  operations before cumulative
  effect of accounting change      $   90,078   $ (247,174)
Income (loss) from continuing
  operations before cumulative
  effect of accounting change per
  share(H)*                        $     1.55   $    (4.37)
Net income (loss)                  $   94,877   $ (315,087)
------------------------------------------------------------
</TABLE>
 
  *  Diluted basis
 
 (A) Includes restructuring charges of $2,158, or $.04 per common share,
     primarily related to expenditures for equipment at sites previously
     identified for closure, which otherwise would have been capitalized. Also
     includes a gain of $580, or $.01 per common share, as a result of
     settlements with certain of the Company's insurers, net of related legal
     and other costs.
 
 (B) Includes restructuring charges of $1,964, or $.03 per common share,
     primarily related to expenditures for equipment at sites previously
     identified for closure, which otherwise would have been capitalized.
 
 (C) Includes restructuring charges of $1,254, or $.02 per common share,
     primarily related to expenditures for equipment at sites previously
     identified for closure, which otherwise would have been capitalized. Also
     includes a gain of $2,334 or $.04 per common share related to the
     disposition of businesses.
 
 (D) Includes restructuring charges of $2,581, or $.04 per common share,
     primarily related to expenditures for equipment at sites previously
     identified for closure, which otherwise would have been capitalized. Also
     includes a loss of $1,110 or $.02 per common share related to the
     disposition of businesses.
 
 (E) Includes a gain of $1,791, or $.03 per common share, as a result of
     settlements with certain of the Company's insurers, net of related legal
     and other costs.
 
 (F) Includes a gain of $842, or $.02 per common share, as a result of
     settlements with certain of the Company's insurers, net of related legal
     and other costs.
 
 (G) Includes a restructuring charge of $239,270, or $4.23 per common share,
     which includes severance and related costs, a write-down of property, plant
     and equipment, environmental closure costs, a write-down of goodwill and
     intangibles, demolition costs and other costs. Also includes other
     non-recurring charges of $71,336, or $1.26 per common share, which include
     provisions for litigation, environmental remediation costs and other
     matters.

 (H) Per share amounts for the quarter are computed independently; and, due to
     the computation formula, the sum of the quarters may not equal the
     year-to-date period.
 
F-23






<PAGE>
<PAGE>





WITCO CORPORATION AND SUBSIDIARY COMPANIES

RESPONSIBILITY FOR FINANCIAL STATEMENTS
 
Witco is responsible for the integrity of the financial data reported by it and
its subsidiary companies. This requires preparing financial statements and other
financial data which fairly reflect Witco's consolidated financial position and
results of operations in accordance with generally accepted accounting
principles, including certain data that is based on management's best estimates
and judgment.
 
In the preparation of its financial data and to safeguard its assets against
unauthorized acquisition, use, or disposition, Witco establishes and maintains
accounting and reporting systems supported by internal accounting controls.
Witco believes that a high level of internal accounting control is maintained by
the selection and training of qualified personnel, by appropriate delegation of
authority and division of responsibilities, by the establishment and
communication of accounting and business policies, and by conducting internal
audits including follow-up procedures that require responsive action by
management. In establishing systems of internal accounting control, Witco weighs
the cost of such systems against the benefits that it believes can be derived.
 
Ernst & Young LLP, independent auditors, are engaged to audit and render an
opinion as to whether Witco's financial statements present fairly Witco's
consolidated financial position and operating results. Their audits are
conducted in accordance with generally accepted auditing standards, and their
report is included herein.
 
The Audit Committee of the Board of Directors, consisting of four non-employee
directors, reviews Witco's accounting and auditing policies, practices and the
services to be performed by the independent auditors. The Audit Committee meets
with management, with the internal auditors and with the independent auditors in
the exercise of its responsibilities.
 


F-24





<PAGE>
<PAGE>



                                                                     SCHEDULE II
 
                   WITCO CORPORATION AND SUBSIDIARY COMPANIES
                       VALUATION AND QUALIFYING ACCOUNTS
                             (THOUSANDS OF DOLLARS)
 
<TABLE>
<CAPTION>
                                                                           COLUMN C            COLUMN D      COLUMN E
                                                                   ------------------------    ----------    --------
                     COLUMN A                         COLUMN B            ADDITIONS
-------------------------------------------------    ----------    ------------------------ 
                                                     BALANCE AT    CHARGED TO    CHARGED TO     COLUMN D     BALANCE
                                                     BEGINNING     COSTS AND       OTHER       ----------     AT END
                   DESCRIPTION                       OF PERIOD      EXPENSES      ACCOUNTS     DEDUCTIONS    OF PERIOD
--------------------------------------------------   ----------    ----------    ----------    ----------    --------
<S>                                                  <C>           <C>           <C>           <C>           <C>
Year ended December 31, 1997:
     Valuation and qualifying accounts deducted
       from assets to which they apply:
          Allowances for doubtful
            receivables-trade.....................    $ 14,201       $4,518       $ --           $6,070(b)   $12,649
                                                     ----------    ----------    ----------    ----------    --------
                                                     ----------    ----------    ----------    ----------    --------
 
Year ended December 31, 1996:
     Valuation and qualifying accounts deducted
       from assets to which they apply:
          Allowances for doubtful
            receivables-trade.....................    $  7,104       $8,235       $  3,036(a)    $4,174(b)   $14,201
                                                     ----------    ----------    ----------    ----------    --------
                                                     ----------    ----------    ----------    ----------    --------
 
Year ended December 31, 1995:
     Valuation and qualifying accounts deducted
       from assets to which they apply:
          Allowances for doubtful
            receivables-trade.....................    $  8,863       $2,615       $ (3,197)(c)   $1,177(b)   $ 7,104
                                                     ----------    ----------    ----------    ----------    --------
                                                     ----------    ----------    ----------    ----------    --------
</TABLE>
 
------------
Notes:
 
(a) Amount principally consists of a purchase accounting adjustment of $3.0
    million associated with the acquisition of OSi Specialties, Inc.
 
(b) Uncollectible receivables charged against the allowance provided.
 
(c) Amount principally consists of the allowance for doubtful accounts of $2.2
    million from the Lubricants Group, which is reflected on the Balance Sheet
    as net assets of discontinued operations.
 
                                      S-1


<PAGE>