UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
|
|
FORM
10-K/A
|
AMENDMENT
NO. 1
|
Mark
One
|
x ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
For
the fiscal year ended December 31, 2006
|
o TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
|
Commission
file number 1-496
|
______________________________________________
|
|
HERCULES
INCORPORATED
|
|
A
DELAWARE CORPORATION
|
I.R.S.
EMPLOYER IDENTIFICATION NO. 51-0023450
|
HERCULES
PLAZA
|
1313
NORTH MARKET STREET
|
WILMINGTON,
DELAWARE 19894-0001
|
TELEPHONE:
302-594-5000
|
www.herc.com
|
|
Securities
registered pursuant to Section 12(b) of the Act
|
(Each
class is registered on the New York Stock Exchange,
Inc.)
|
|
Title
of each class
|
Common
Stock ($25/48
Stated Value)
|
8%
Convertible Subordinated Debentures due August 15, 2010
|
Indicate
by check mark if the registrant is a well-known seasoned issuer,
as
defined in Rule 405 of the Securities Act. Yes x
No
¨.
Indicate
by check mark if the registrant is not required to file reports
pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act.
Yes
¨
No
x.
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
Indicate
by check mark whether the registrant is a large accelerated filer,
an
accelerated filer, or a non-accelerated filer. See definition
of
“accelerated filer and large accelerated filer” in Rule 12b-2 of the
Exchange Act. Large accelerated filer x
Accelerated filer ¨
Non-accelerated filer ¨.
Indicate
by check mark whether the registrant is a shell company (as defined
in
Rule 12b-2 of the Exchange Act). Yes ¨
No
x .
The
aggregate market value of registrant's common stock, $25/48
stated value ("Common Stock") held by non-affiliates based on
the closing
price on the last business day of the Company's most recently
completed
second fiscal quarter, or June 30, 2006, was approximately $1.7
billion.
As
of February 23, 2007, the registrant had 116,417,693 shares of
Common
Stock outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE
Portions
of the registrant's definitive Proxy Statement for its 2007 Annual
Meeting
of Shareholders (the "Proxy Statement"), when filed, will be
incorporated
by reference in Part III of this report.
|
CONSOLIDATED
FINANCIAL
STATEMENTS
|
Page
|
|||
4
|
||||
5
|
||||
8
|
||||
9
|
||||
10
|
||||
11
|
||||
12
|
||||
Notes
to the Consolidated Financial Statements:
|
||||
16
|
||||
16
|
||||
17
|
||||
18
|
||||
19
|
||||
19
|
||||
19
|
||||
20
|
||||
21
|
||||
23
|
||||
27
|
||||
27
|
||||
29
|
||||
39
|
||||
42
|
||||
42
|
||||
42
|
||||
43
|
||||
44
|
||||
48
|
||||
48
|
||||
48
|
||||
49
|
||||
49
|
||||
51
|
||||
51
|
||||
52
|
||||
54
|
||||
55
|
||||
64
|
Hercules
Incorporated
(Dollars
in millions, except per share data)
|
||||||||||
Year
Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
$
|
2,035.3
|
$
|
2,055.0
|
$
|
1,984.3
|
|||||
Cost
of sales
|
1,343.4
|
1,391.1
|
1,291.6
|
|||||||
Selling,
general and administrative expenses
|
372.2
|
382.5
|
382.1
|
|||||||
Research
and development
|
38.8
|
40.8
|
42.7
|
|||||||
Intangible
asset amortization (Note 7)
|
7.2
|
8.0
|
8.1
|
|||||||
Impairment
of FiberVisions goodwill (Note 3)
|
—
|
52.9
|
—
|
|||||||
Other
operating expense, net (Note 20)
|
25.1
|
39.4
|
26.9
|
|||||||
Profit
from operations
|
248.6
|
140.3
|
232.9
|
|||||||
Interest
and debt expense (Note 21)
|
71.2
|
89.4
|
108.7
|
|||||||
Vertac
litigation charges (Note 13)
|
108.5
|
15.0
|
—
|
|||||||
Gain
on sale of CP Kelco ApS (Note 3)
|
—
|
—
|
(27.0
|
)
|
||||||
65.7
|
71.3
|
116.7
|
||||||||
Income
(loss) before income taxes, minority interests and equity (loss)
income
|
3.2
|
(35.4
|
)
|
34.5
|
||||||
(Benefit)
provision for income taxes (Note 9)
|
(192.2
|
)
|
(3.8
|
)
|
3.8
|
|||||
Income
(loss) before minority interests and equity loss (income)
|
195.4
|
(31.6
|
)
|
30.7
|
||||||
Minority
interests in earnings of consolidated subsidiaries
|
(1.4
|
)
|
(1.0
|
)
|
(0.9
|
)
|
||||
Equity
(loss) income of affiliated companies, net of tax
|
(3.2
|
)
|
0.5
|
0.9
|
||||||
Net
income (loss) from continuing operations before discontinued
|
||||||||||
operations
and cumulative effect of changes in accounting principle
|
190.8
|
(32.1
|
)
|
30.7
|
||||||
Net
income (loss) from discontinued operations, net of tax (Note 23)
|
47.0
|
(6.5
|
)
|
(2.6
|
)
|
|||||
Net
income (loss) before cumulative effect of changes in accounting
principle
|
237.8
|
(38.6
|
)
|
28.1
|
||||||
Cumulative
effect of changes in accounting principle, net of tax (Note
24)
|
0.9
|
(2.5
|
)
|
—
|
||||||
Net
income (loss)
|
$
|
238.7
|
$
|
(41.1
|
)
|
$
|
28.1
|
|||
Earnings
(loss) per share (Note 26):
|
||||||||||
Basic
earnings (loss) per share
|
||||||||||
Continuing
operations
|
$
|
1.72
|
$
|
(0.30
|
)
|
$
|
0.28
|
|||
Discontinued
operations
|
0.42
|
(0.06
|
)
|
(0.02
|
)
|
|||||
Cumulative
effect of change in accounting principle
|
0.01
|
(0.02
|
)
|
—
|
||||||
Net
income (loss)
|
$
|
2.15
|
$
|
(0.38
|
)
|
$
|
0.26
|
|||
Weighted
average number of shares (millions)
|
110.8
|
108.7
|
107.3
|
|||||||
Diluted
earnings (loss) per share
|
||||||||||
Continuing
operations
|
$
|
1.71
|
$
|
(0.30
|
)
|
$
|
0.28
|
|||
Discontinued
operations
|
0.42
|
(0.06
|
)
|
(0.02
|
)
|
|||||
Cumulative
effect of change in accounting principle
|
0.01
|
(0.02
|
)
|
—
|
||||||
Net
income (loss)
|
$
|
2.14
|
$
|
(0.38
|
)
|
$
|
0.26
|
|||
Weighted
average number of shares (millions)
|
111.3
|
108.7
|
109.0
|
|||||||
Net
income (loss)
|
$
|
238.7
|
$
|
(41.1
|
)
|
$
|
28.1
|
|||
Foreign
currency translation
|
58.7
|
(72.1
|
)
|
71.1
|
||||||
Decrease
(increase) in additional minimum pension liability, net of tax,
due
to
|
||||||||||
Remeasurement
adjustments
|
85.0
|
(44.3
|
)
|
(28.2
|
)
|
|||||
Foreign
currency translation
|
(4.1
|
)
|
5.5
|
(1.4
|
)
|
|||||
Revaluation
of hedges, net of tax
|
(34.6
|
)
|
—
|
—
|
||||||
Other,
net of tax
|
(0.5
|
)
|
(0.3
|
)
|
—
|
|||||
Comprehensive
income (loss)
|
$
|
343.2
|
$
|
(152.3
|
)
|
$
|
69.6
|
Hercules
Incorporated
|
|||||||
(Dollars
in millions)
|
December
31,
|
||||||
2006
|
2005
|
||||||
Current
assets
|
|||||||
Cash
and cash equivalents
|
$
|
171.8
|
$
|
77.3
|
|||
Accounts
receivable, net (Note 5)
|
326.6
|
289.7
|
|||||
Inventories
(Note 6)
|
210.6
|
179.6
|
|||||
Deferred
income taxes (Note 9 )
|
70.2
|
39.3
|
|||||
FiberVisions
assets held for sale (Note 3)
|
—
|
202.7
|
|||||
Current
assets of discontinued operations (Note
23)
|
0.4
|
6.7
|
|||||
Income
taxes receivable (Note 9)
|
170.8
|
12.6
|
|||||
Other
current assets
|
34.1
|
35.5
|
|||||
Total
current assets
|
984.5
|
843.4
|
|||||
Property,
plant and equipment, net (Note 18)
|
600.4
|
535.4
|
|||||
Intangible
assets, net (Note 7)
|
143.1
|
142.8
|
|||||
Goodwill
(Note 7)
|
481.5
|
441.0
|
|||||
Deferred
income taxes (Note 9)
|
374.6
|
240.4
|
|||||
Asbestos-related
assets (Note 13)
|
87.5
|
120.7
|
|||||
Deferred
charges and other assets (Note 18)
|
136.9
|
245.1
|
|||||
Total
assets
|
$
|
2,808.5
|
$
|
2,568.8
|
|||
LIABILITIES
AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|||||||
Current
liabilities
|
|||||||
Accounts
payable
|
$
|
205.3
|
$
|
172.9
|
|||
FiberVisions
liabilities held for sale (Note 3)
|
—
|
66.6
|
|||||
Asbestos-related
liabilities (Note 13)
|
36.4
|
36.4
|
|||||
Current
debt obligations (Note 8)
|
35.8
|
16.7
|
|||||
Vertac
litigation liability (Note 13)
|
123.5
|
—
|
|||||
Accrued
expenses (Note 18)
|
228.6
|
217.0
|
|||||
Current
liabilities of discontinued operations (Note
23)
|
—
|
2.8
|
|||||
Total
current liabilities
|
629.6
|
512.4
|
|||||
Long-term
debt (Note 8)
|
959.7
|
1,092.3
|
|||||
Deferred
income taxes (Note 9)
|
69.7
|
75.8
|
|||||
Pension
obligations (Note 10)
|
262.5
|
323.4
|
|||||
Other
postretirement benefit obligations (Note
10)
|
142.2
|
65.5
|
|||||
Deferred
credits and other liabilities (Note 18)
|
255.6
|
289.4
|
|||||
Asbestos-related
liabilities (Note 13)
|
233.6
|
233.6
|
|||||
Total
liabilities
|
2,552.9
|
2,592.4
|
|||||
Commitments
and contingencies (Note 13)
|
|||||||
Minority
interests
|
12.7
|
1.1
|
|||||
Stockholders'
equity (deficit)
|
|||||||
Series
preferred stock (Note 15)
|
—
|
—
|
|||||
Common
stock, $25/48 stated value (Note 16)
|
|||||||
(shares
issued: 2006 - 159,997,929 and 2005 - 159,984,444)
|
83.3
|
83.3
|
|||||
Additional
paid-in capital
|
454.9
|
548.9
|
|||||
Unearned
compensation (Notes 11)
|
(42.1
|
)
|
(65.7
|
)
|
|||
Accumulated
other comprehensive losses (Note 17)
|
(409.6
|
)
|
(387.6
|
)
|
|||
Retained
earnings
|
1,734.1
|
1,495.4
|
|||||
1,820.6
|
1,674.3
|
||||||
Reacquired
stock, at cost (shares: 2006 - 43,969,769 and 2005 -
47,247,344)
|
(1,577.7
|
)
|
(1,699.0
|
)
|
|||
Total
stockholders' equity (deficit)
|
242.9
|
(24.7
|
)
|
||||
Total
liabilities and stockholders' equity (deficit)
|
$
|
2,808.5
|
$
|
2,568.8
|
Hercules
Incorporated
(Dollars
in millions)
|
||||||||||
Year
Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
Net
income (loss)
|
$
|
238.7
|
$
|
(41.1
|
)
|
$
|
28.1
|
|||
Adjustments
to reconcile net income (loss) to net cash provided by
operations:
|
||||||||||
Depreciation
|
70.7
|
80.5
|
74.9
|
|||||||
Amortization
|
24.6
|
25.4
|
26.3
|
|||||||
Deferred
income tax provision
|
(157.8
|
)
|
(54.9
|
)
|
(18.7
|
)
|
||||
Gain
on disposals
|
(9.0
|
)
|
(11.8
|
)
|
(28.0
|
)
|
||||
Impairment
charges
|
3.2
|
58.6
|
9.1
|
|||||||
Write-off
of debt issuance costs
|
1.5
|
1.8
|
18.0
|
|||||||
Loss
on sale of 51% interest in FiberVisions
|
13.3
|
—
|
—
|
|||||||
Minority
interests in earnings of consolidated subsidiaries
|
1.4
|
1.0
|
0.9
|
|||||||
Other
non-cash charges and credits
|
7.7
|
5.3
|
0.8
|
|||||||
Accruals
and deferrals of cash receipts and payments (net of acquisitions
and
dispositions):
|
||||||||||
Accounts
receivable, net
|
(17.5
|
)
|
2.9
|
(7.6
|
)
|
|||||
Inventories
|
(8.7
|
)
|
(3.3
|
)
|
4.0
|
|||||
Asbestos-related
assets and liabilities, net
|
37.1
|
61.3
|
40.2
|
|||||||
Other
current assets
|
5.0
|
(10.7
|
)
|
20.7
|
||||||
Accounts
payable and accrued expenses
|
3.9
|
28.2
|
5.0
|
|||||||
Vertac
litigation liability
|
123.5
|
—
|
—
|
|||||||
Income
taxes payable
|
(125.1
|
)
|
27.1
|
(25.4
|
)
|
|||||
Pension
and postretirement benefits
|
(7.9
|
)
|
(18.3
|
)
|
(23.1
|
)
|
||||
Non-current
assets and liabilities
|
(23.8
|
)
|
(12.8
|
)
|
(4.7
|
)
|
||||
FiberVisions
net assets held for sale
|
(7.9
|
)
|
—
|
—
|
||||||
Net
cash provided by operating activities
|
172.9
|
139.2
|
120.5
|
|||||||
Cash
Flow From Investing Activities:
|
||||||||||
Capital
expenditures
|
(93.6
|
)
|
(67.5
|
)
|
(77.4
|
)
|
||||
Acquisitions
and investments, net of cash recognized upon consolidation
|
(29.4
|
)
|
(4.4
|
)
|
—
|
|||||
Proceeds
from sale of 51% interest in FiberVisions, net of transaction
costs
|
17.8
|
—
|
—
|
|||||||
Proceeds
of fixed asset disposals
|
11.3
|
16.6
|
1.4
|
|||||||
Proceeds
from sale of minority interest in CP Kelco ApS
|
—
|
—
|
27.0
|
|||||||
Other,
net
|
(0.2
|
)
|
(2.4
|
)
|
(0.1
|
)
|
||||
Net
cash used in investing activities
|
(94.1
|
)
|
(57.7
|
)
|
(49.1
|
)
|
||||
Cash
Flow From Financing Activities:
|
||||||||||
Long-term
debt issued by FiberVisions, net of issuance costs
|
83.7
|
—
|
—
|
|||||||
Long-term
debt proceeds
|
22.0
|
—
|
650.0
|
|||||||
Long-term
debt payments
|
(142.5
|
)
|
(131.2
|
)
|
(729.5
|
)
|
||||
Change
in short-term debt
|
5.8
|
1.9
|
1.6
|
|||||||
Proceeds
from the exercise of stock options
|
37.0
|
2.7
|
5.5
|
|||||||
Payment
of debt issuance costs and underwriting fees
|
—
|
—
|
(7.8
|
)
|
||||||
Other,
net
|
5.6
|
(0.4
|
)
|
6.1
|
||||||
Net
cash provided by (used in) financing activities
|
11.6
|
(127.0
|
)
|
(74.1
|
)
|
|||||
Effect
of exchange rate changes on cash
|
4.1
|
(3.7
|
)
|
2.9
|
||||||
Net
increase (decrease) in cash and cash equivalents
|
94.5
|
(49.2
|
)
|
0.2
|
||||||
Cash
and cash equivalents at beginning of year
|
77.3
|
126.5
|
126.3
|
|||||||
Cash
and cash equivalents at end of year
|
$
|
171.8
|
$
|
77.3
|
$
|
126.5
|
Hercules
Incorporated
(Dollars
in millions)
|
||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||
Unearned
|
Other
|
|||||||||||||||||||||
Common
|
Paid-in
|
Compen-
|
Comprehen-
|
Retained
|
Reacquired
|
|||||||||||||||||
|
Stock
|
Capital
|
sation
|
sive
Losses
|
Earnings
|
Stock
|
Total
|
|||||||||||||||
Balances
at January 1, 2004
|
$
|
83.3
|
$
|
603.4
|
$
|
(86.2
|
)
|
$
|
(317.9
|
)
|
$
|
1,508.4
|
$
|
(1,765.6
|
)
|
$
|
25.4
|
|||||
(Common
shares: issued, 159,984,444; reacquired, 48,992,628)
|
||||||||||||||||||||||
Net
income
|
—
|
—
|
—
|
—
|
28.1
|
—
|
28.1
|
|||||||||||||||
Foreign
currency translation adjustment
|
—
|
—
|
—
|
69.7
|
—
|
—
|
69.7
|
|||||||||||||||
Release
of shares held by ESOP trust
|
—
|
(5.0
|
)
|
13.3
|
—
|
—
|
—
|
8.3
|
||||||||||||||
Increase
in additional minimum pension liability, net of tax
|
—
|
—
|
—
|
(28.2
|
)
|
—
|
—
|
(28.2
|
)
|
|||||||||||||
Issuances
of treasury stock, net of forfeitures
|
—
|
(29.2
|
)
|
(8.0
|
)
|
—
|
—
|
42.8
|
5.6
|
|||||||||||||
Amortization
of unearned compensation
|
—
|
—
|
3.0
|
—
|
—
|
—
|
3.0
|
|||||||||||||||
Balances
at December 31, 2004
|
$
|
83.3
|
$
|
569.2
|
$
|
(77.9
|
)
|
$
|
(276.4
|
)
|
$
|
1,536.5
|
$
|
(1,722.8
|
)
|
$
|
111.9
|
|||||
(Common
shares: issued, 159,984,444; reacquired, 47,842,836)
|
||||||||||||||||||||||
Net
loss
|
—
|
—
|
—
|
—
|
(41.1
|
)
|
—
|
(41.1
|
)
|
|||||||||||||
Foreign
currency translation adjustment
|
—
|
—
|
—
|
(66.6
|
)
|
—
|
—
|
(66.6
|
)
|
|||||||||||||
Release
of shares held by ESOP trust
|
—
|
(5.0
|
)
|
12.8
|
—
|
—
|
—
|
7.8
|
||||||||||||||
Repurchase
of warrants
|
—
|
(2.0
|
)
|
—
|
—
|
—
|
—
|
(2.0
|
)
|
|||||||||||||
Increase
in additional minimum pension liability, net of tax
|
—
|
—
|
—
|
(44.3
|
)
|
—
|
—
|
(44.3
|
)
|
|||||||||||||
Issuances
of treasury stock, net of forfeitures
|
—
|
(13.3
|
)
|
(8.5
|
)
|
—
|
—
|
23.8
|
2.0
|
|||||||||||||
Amortization
of unearned compensation
|
—
|
—
|
7.9
|
—
|
—
|
—
|
7.9
|
|||||||||||||||
Other,
net of tax
|
—
|
—
|
—
|
(0.3
|
)
|
—
|
—
|
(0.3
|
)
|
|||||||||||||
Balances
at December 31, 2005
|
$
|
83.3
|
$
|
548.9
|
$
|
(65.7
|
)
|
$
|
(387.6
|
)
|
$
|
1,495.4
|
$
|
(1,699.0
|
)
|
$
|
(24.7
|
)
|
||||
(Common
shares: issued, 159,984,444; reacquired, 47,247,344)
|
||||||||||||||||||||||
Net
income
|
—
|
—
|
—
|
—
|
238.7
|
—
|
238.7
|
|||||||||||||||
Foreign
currency translation adjustment
|
—
|
—
|
—
|
54.6
|
—
|
—
|
54.6
|
|||||||||||||||
Release
of shares held by ESOP trust
|
—
|
(6.4
|
)
|
11.5
|
—
|
—
|
—
|
5.1
|
||||||||||||||
Repurchase
of warrants
|
—
|
(1.0
|
)
|
—
|
—
|
—
|
—
|
(1.0
|
)
|
|||||||||||||
Decrease
in additional minimum pension liability, net of tax
|
—
|
—
|
—
|
85.0
|
—
|
—
|
85.0
|
|||||||||||||||
Recognition
of funded status of pension and postretirement
benefit
plans, net of tax
|
—
|
—
|
—
|
(126.5
|
)
|
—
|
—
|
(126.5
|
)
|
|||||||||||||
Issuances
of treasury stock, net of forfeitures
|
—
|
(74.7
|
)
|
—
|
—
|
—
|
121.3
|
46.6
|
||||||||||||||
Reclassification
required by SFAS 123R
|
—
|
(12.1
|
)
|
12.1
|
—
|
—
|
—
|
—
|
||||||||||||||
Conversion
of debentures
|
—
|
0.2
|
—
|
—
|
—
|
—
|
0.2
|
|||||||||||||||
Revaluation
of hedges, net of tax
|
—
|
—
|
—
|
(34.6
|
)
|
—
|
—
|
(34.6
|
)
|
|||||||||||||
Other,
net of tax
|
—
|
—
|
—
|
(0.5
|
)
|
—
|
—
|
(0.5
|
)
|
|||||||||||||
Balances
at December 31, 2006
|
$
|
83.3
|
$
|
454.9
|
$
|
(42.1
|
)
|
$
|
(409.6
|
)
|
$
|
1,734.1
|
$
|
(1,577.7
|
)
|
$
|
242.9
|
|||||
(Common
shares: issued, 159,997,929; reacquired,43,969,769)
|
||||||||||||||||||||||
Year
Ended December 31,
|
|||||||
2005
|
2004
|
||||||
Net
(loss) income, as reported
|
$
|
(41.1
|
)
|
$
|
28.1
|
||
Add:
Total stock-based compensation expense recognized in reported results,
net of tax
|
4.5
|
1.4
|
|||||
Deduct:
Total stock-based compensation expense determined under the
fair
value based method for all awards, net of tax*
|
5.1
|
2.8
|
|||||
Pro
forma net (loss) income
|
$
|
(41.7
|
)
|
$
|
26.7
|
||
(Loss)
earnings per share:
|
|||||||
Basic
- as reported
|
$
|
(0.38
|
)
|
$
|
0.26
|
||
Basic
- pro forma
|
$
|
(0.38
|
)
|
$
|
0.25
|
||
Diluted
- as reported
|
$
|
(0.38
|
)
|
$
|
0.26
|
||
Diluted
- pro forma
|
$
|
(0.38
|
)
|
$
|
0.24
|
*
For information regarding the weighted-average assumptions used in
estimating fair value for 2005 and 2004 see Note
14.
|
Assets
|
Liabilities
and Minority Interests
|
|||||||||
Cash
and cash equivalents
|
$
|
2.6
|
Accounts
payable
|
$
|
10.3
|
|||||
Accounts
receivable, net
|
3.9
|
Accrued
expenses
|
5.5
|
|||||||
Inventories
|
10.1
|
Minority
interests
|
9.6
|
|||||||
Other
current assets
|
0.1
|
|||||||||
Property,
plant and equipment, net
|
21.2
|
|||||||||
Intangible
assets, net
|
7.2
|
|||||||||
Goodwill
|
14.0
|
|||||||||
Deferred
charges and other assets
|
2.7
|
|||||||||
Total
assets
|
$
|
61.8
|
Total liabilities and minority interests
|
$
|
25.4
|
Assets
|
Liabilities
|
|||||||||
Cash
and cash equivalents
|
$
|
2.6
|
Accounts
payable
|
$
|
29.9
|
|||||
Accounts
receivable, net
|
34.4
|
Accrued
expenses
|
7.1
|
|||||||
Inventories
|
20.7
|
Deferred
income taxes
|
29.2
|
|||||||
Other
current assets
|
9.2
|
Long-term
debt
|
0.3
|
|||||||
Property,
plant and equipment, net
|
92.1
|
Deferred
credits and other liabilities
|
0.1
|
|||||||
Intangible
assets, net
|
11.1
|
|||||||||
Goodwill
|
32.0
|
|||||||||
Deferred
charges and other assets
|
0.6
|
|||||||||
Total
FiberVisions assets held for sale
|
$
|
202.7
|
Total FiberVisions liabilities held for sale
|
$
|
66.6
|
2006
|
2005
|
2004
|
||||||||
Balance
at beginning of year
|
$
|
4.0
|
$
|
4.7
|
$
|
5.5
|
||||
Charged
to costs and expenses
|
3.2
|
2.3
|
5.4
|
|||||||
Deductions
|
(1.6
|
)
|
(3.0
|
)
|
(6.2
|
)
|
||||
Balance
at end of year
|
$
|
5.6
|
$
|
4.0
|
$
|
4.7
|
2006
|
2005
|
||||||
Finished
products
|
$
|
115.4
|
$
|
98.4
|
|||
Raw
materials and work-in-process
|
73.3
|
60.5
|
|||||
Supplies
|
21.9
|
20.7
|
|||||
$
|
210.6
|
$
|
179.6
|
2006
|
2005
|
||||||||||||||||||
Accumulated
|
Accumulated
|
||||||||||||||||||
Gross
|
Amortization
|
Net
|
Gross
|
Amortization
|
Net
|
||||||||||||||
Customer
relationships
|
$
|
90.0
|
$
|
18.6
|
$
|
71.4
|
$
|
90.0
|
$
|
16.4
|
$
|
73.6
|
|||||||
Trademarks
and tradenames
|
73.9
|
15.6
|
58.3
|
73.9
|
13.5
|
60.4
|
|||||||||||||
Other
intangible assets
|
32.2
|
18.8
|
13.4
|
24.8
|
16.0
|
8.8
|
|||||||||||||
$
|
196.1
|
$
|
53.0
|
$
|
143.1
|
$
|
188.7
|
$
|
45.9
|
$
|
142.8
|
Paper
|
|||||||||||||
Technologies
|
Aqualon
|
||||||||||||
and
Ventures
|
Group
|
FiberVisions
|
Total
|
||||||||||
Balance
at December 31, 2004
|
$
|
425.7
|
$
|
39.7
|
$
|
84.9
|
$
|
550.3
|
|||||
Impairment
|
—
|
—
|
(52.9
|
)
|
(52.9
|
)
|
|||||||
Reclassified
to FiberVisions assets held for sale
|
—
|
—
|
(32.0
|
)
|
(32.0
|
)
|
|||||||
Foreign
currency translation
|
(23.1
|
)
|
(1.3
|
)
|
—
|
(24.4
|
)
|
||||||
Balance
at December 31, 2005
|
$
|
402.6
|
$
|
38.4
|
$
|
—
|
$
|
441.0
|
|||||
Acquisitions
and investments
|
1.5
|
12.5
|
—
|
14.0
|
|||||||||
Foreign
currency translation
|
25.4
|
1.1
|
—
|
26.5
|
|||||||||
Balance
at December 31, 2006
|
$
|
429.5
|
$
|
52.0
|
$
|
—
|
$
|
481.5
|
2006
|
2005
|
||||||
Term
B loan due 2010 (a)
|
$
|
375.0
|
$
|
393.0
|
|||
6.60%
notes due 2027 (b)
|
100.0
|
100.0
|
|||||
Term
notes at various rates from 5.00% to 7.16% due in varying amounts
through
2006 (c)
|
—
|
6.8
|
|||||
11.125%
senior notes due 2007 (d)
|
16.1
|
130.0
|
|||||
6.75%
senior subordinated notes due 2029 (e)
|
250.0
|
250.0
|
|||||
8%
convertible subordinated debentures due 2010 (f)
|
2.4
|
2.6
|
|||||
6.5%
junior subordinated deferrable interest debentures due 2029
(g)
|
214.1
|
217.0
|
|||||
Term
loans at rates ranging from 5.5575% to 5.814% due in varying amounts
through 2011(h)
|
28.1
|
—
|
|||||
Other
|
9.8
|
9.6
|
|||||
995.5
|
1,109.0
|
||||||
Less:
Current debt obligations
|
35.8
|
16.7
|
|||||
Long
term debt
|
$
|
959.7
|
$
|
1,092.3
|
(a)
|
The
term loan, a component of the Company’s Senior Credit Facility, matures on
October 8, 2010 and bears interest at LIBOR + 1.50%, with the Company
holding the option to reset interest rates for one, two, three or
six
month periods. The weighted average rate was 6.87% as of December
31,
2006. The Senior Credit Facility is also comprised of a $150 million
committed revolving credit facility (the “Revolving Facility”) which
matures on April 8, 2009 and provides Hercules the ability, subject
to
lender approval, to borrow until April 8, 2007 an additional $250
million
in the form of an incremental term note. The Senior Credit Facility
is
secured by liens on the Company's assets (including real, personal
and
intellectual properties) and is guaranteed by substantially all of
the
Company's current and future wholly-owned domestic subsidiaries (see
Note 29).
|
(b)
|
30-year
debentures with a 10-year put option, exercisable August 1, 2007
by the
bondholder at a redemption price equal to the principal
amount.
|
(c)
|
Debt
assumed in conjunction with the acquisition of FiberVisions L.L.C
in 1998
and retained by Hercules prior to the FiberVisions
Transaction.
|
(d)
|
The
senior notes accrue interest at 11.125% per annum, payable semi-annually.
The senior notes are guaranteed by each of Hercules' current and
future
wholly-owned domestic restricted subsidiaries and matures on November
15,
2007.
|
(e)
|
The
Company completed a private placement of $250 million aggregate principal
amount of 6.75% senior subordinated notes due 2029 during April 2004.
The
senior subordinated notes are guaranteed by each of Hercules’ current and
future wholly-owned domestic restricted subsidiaries.
|
(f)
|
The
convertible subordinated debentures are convertible into common stock
at
$14.90 per share and are redeemable at the option of the Company
at
varying rates. The annual sinking fund requirement of $5 million,
beginning in 1996, has been satisfied through conversions of
debentures.
|
(g)
|
The
6.5% junior subordinated deferrable interest debentures due 2029
(the
"6.5% debentures") had an initial issue price of $741.46 and have
a
redemption price of $1,000. The 6.5% debentures were initially issued
to
Hercules Trust II ("Trust II"), a subsidiary trust established in
1999.
Trust II had issued, in an underwritten public offering, 350,000
CRESTS
Units, each consisting of a 6.5% preferred security of Trust II and
a
warrant (exercisable through 2029) to purchase 23.4192 shares of
the
Company's common stock. The preferred securities and the warrants
were
separable and were initially valued at $741.46 and $258.54, respectively.
The Company and Trust II accreted the difference between the initial
valuation of the 6.5% debentures and the preferred securities and
the
redemption value of $1,000 over the term of the 6.5% debentures and
the
preferred securities. In connection with the Company’s dissolution and
liquidation of Trust II in December 2004, Trust II distributed the
6.5%
debentures to the holders of the preferred securities and the preferred
securities were cancelled. The CRESTS Units now consist of the 6.5%
debentures and the warrants.
|
(h)
|
Includes
loans issued by Hercules Tianpu secured by liens on Hercules Tinapu’s
fixed assets for which Hercules has provided a guarantee for 55%
of the
outstanding balances. The loans are denominated in renminbi and include
a
short-term loan payable due in 2007 for approximately $5.9 million
and a
long-term loan payable due in 2011 for approximately $22.2
million.
|
2006
|
2005
|
2004
|
||||||||
Domestic
|
$
|
(164.3
|
)
|
$
|
(46.9
|
)
|
$
|
(154.8
|
)
|
|
Foreign
|
167.5
|
11.5
|
189.3
|
|||||||
Income
(loss) before income taxes, minority interests and equity (loss)
income
|
$
|
3.2
|
$
|
(35.4
|
)
|
$
|
34.5
|
Currently
payable
|
2006
|
2005
|
2004
|
|||||||
U.S.
federal
|
$
|
(64.0
|
)
|
$
|
1.4
|
$
|
(29.0
|
)
|
||
Foreign
|
29.6
|
40.9
|
38.1
|
|||||||
State
|
—
|
8.8
|
13.4
|
|||||||
Deferred
|
||||||||||
Domestic
|
(154.6
|
)
|
(48.3
|
)
|
(21.5
|
)
|
||||
Foreign
|
(3.2
|
)
|
(6.6
|
)
|
2.8
|
|||||
(Benefit)
provision for income taxes
|
$
|
(192.2
|
)
|
$
|
(3.8
|
)
|
$
|
3.8
|
2006
|
2005
|
2004
|
||||||||
Benefit
on loss from discontinued operations
|
$
|
(49.6
|
)
|
$
|
(3.4
|
)
|
$
|
(1.4
|
)
|
|
Cumulative
effect of changes in accounting principle
|
0.5
|
(1.4
|
)
|
—
|
||||||
$
|
(49.1
|
)
|
$
|
(4.8
|
)
|
$
|
(1.4
|
)
|
2006
|
2005
|
2004
|
||||||||
Additional
minimum pension liability
|
$
|
(44.7
|
)
|
$
|
24.8
|
$
|
14.5
|
|||
Impact
of the adoption of SFAS 158
|
62.2
|
—
|
—
|
|||||||
Hedging
activities
|
18.6
|
—
|
—
|
|||||||
Other
|
0.3
|
0.2
|
—
|
|||||||
$
|
36.4
|
$
|
25.0
|
$
|
14.5
|
2006
|
2005
|
||||||
Depreciation
|
$
|
(82.8
|
)
|
$
|
(81.4
|
)
|
|
Pension
|
(1.3
|
)
|
(8.2
|
)
|
|||
Inventory
|
(3.1
|
)
|
(4.1
|
)
|
|||
Investments
|
(19.3
|
)
|
(174.3
|
)
|
|||
Goodwill
|
(45.0
|
)
|
(48.4
|
)
|
|||
Accrued
expenses
|
(2.9
|
)
|
(3.1
|
)
|
|||
Other
|
(7.5
|
)
|
(13.1
|
)
|
|||
Gross
deferred tax liabilities
|
$
|
(161.9
|
)
|
$
|
(332.6
|
)
|
|
Postretirement
benefits other than pensions
|
$
|
70.0
|
$
|
45.5
|
|||
Pension
|
87.3
|
113.4
|
|||||
Goodwill
|
8.4
|
7.1
|
|||||
Accrued
expenses
|
242.1
|
216.1
|
|||||
Loss
carryforwards
|
230.1
|
349.2
|
|||||
Credit
carryforwards
|
131.4
|
126.9
|
|||||
Investments
|
77.5
|
21.5
|
|||||
Other
|
14.2
|
24.6
|
|||||
Gross
deferred tax assets
|
861.0
|
904.3
|
|||||
Valuation
allowance
|
(335.8
|
)
|
(380.7
|
)
|
|||
Net
deferred tax assets
|
$
|
363.3
|
$
|
191.0
|
2006
|
2005
|
2004
|
||||||||
U.S.
statutory income tax rate
|
35
|
%
|
35
|
%
|
35
|
%
|
||||
Gain
on sale of CP Kelco ApS
|
—
|
—
|
(27
|
)
|
||||||
Valuation
allowances
|
(3,137
|
)
|
(66
|
)
|
(66
|
)
|
||||
Tax
rate differences on subsidiary earnings
|
(325
|
)
|
(8
|
)
|
(39
|
)
|
||||
U.S.
tax on foreign dividends and undistributed earnings
|
232
|
27
|
21
|
|||||||
State
taxes
|
(1
|
)
|
(15
|
)
|
30
|
|||||
Reserves
|
(1,378
|
)
|
21
|
61
|
||||||
Exempt
export income
|
(36
|
)
|
5
|
(6
|
)
|
|||||
Tax
refunds
|
(1,396
|
)
|
12
|
—
|
||||||
Other
|
—
|
—
|
2
|
|||||||
Effective
tax rate
|
(6,006
|
)%
|
11
|
%
|
11
|
%
|
Pension
Benefits
|
|||||||||||||||||||
2006
|
2005
|
Other
Postretirement Benefits
|
|||||||||||||||||
Change
in benefit obligation:
|
U.S.
|
Int’l.
|
U.S.
|
Int’l.
|
2006
|
2005
|
|||||||||||||
Benefit
obligation at January 1
|
$
|
1,536.8
|
$
|
340.6
|
$
|
1,413.5
|
$
|
325.7
|
$
|
154.5
|
$
|
181.0
|
|||||||
Service
cost
|
11.4
|
6.0
|
12.7
|
5.4
|
0.5
|
0.8
|
|||||||||||||
Interest
cost
|
86.5
|
15.5
|
81.3
|
15.2
|
8.8
|
8.8
|
|||||||||||||
Plan
amendments
|
—
|
0.3
|
—
|
(4.5
|
)
|
—
|
(32.4
|
)
|
|||||||||||
Foreign
currency translation
|
—
|
35.3
|
—
|
(37.3
|
)
|
—
|
0.1
|
||||||||||||
Actuarial
(gain) loss
|
(17.8
|
)
|
(17.8
|
)
|
136.1
|
49.2
|
14.7
|
19.8
|
|||||||||||
Settlements/curtailments
|
(2.3
|
)
|
(0.6
|
)
|
—
|
—
|
—
|
—
|
|||||||||||
Special
termination benefits
|
1.6
|
—
|
—
|
—
|
1.3
|
—
|
|||||||||||||
Benefits
paid from plan assets
|
(109.0
|
)
|
(15.2
|
)
|
(101.9
|
)
|
(13.1
|
)
|
—
|
—
|
|||||||||
Benefits
paid from Company assets
|
(5.1
|
)
|
—
|
(4.9
|
)
|
—
|
(21.4
|
)
|
(23.6
|
)
|
|||||||||
Benefit
obligation at December 31
|
$
|
1,502.1
|
$
|
364.1
|
$
|
1,536.8
|
$
|
340.6
|
$
|
158.4
|
$
|
154.5
|
|||||||
Change
in plan assets:
|
|||||||||||||||||||
Fair
value of plan assets at January 1
|
$
|
1,219.3
|
$
|
256.4
|
$
|
1,176.2
|
$
|
245.7
|
$
|
—
|
$
|
—
|
|||||||
Actual
return on plan assets
|
165.7
|
17.1
|
105.0
|
20.9
|
—
|
—
|
|||||||||||||
Actuarial
(loss) gain
|
—
|
(0.5
|
)
|
—
|
14.7
|
—
|
—
|
||||||||||||
Company
contributions
|
30.0
|
7.5
|
40.0
|
13.7
|
—
|
—
|
|||||||||||||
Participant
contributions
|
—
|
0.8
|
—
|
0.9
|
—
|
—
|
|||||||||||||
Foreign
currency translation
|
—
|
27.5
|
—
|
(27.7
|
)
|
—
|
—
|
||||||||||||
Benefits
paid from plan assets
|
(109.0
|
)
|
(13.8
|
)
|
(101.9
|
)
|
(11.8
|
)
|
—
|
—
|
|||||||||
Fair
value of plan assets at December 31
|
$
|
1,306.0
|
$
|
295.0
|
$
|
1,219.3
|
$
|
256.4
|
$
|
—
|
$
|
—
|
Funded
status of the plan
|
$
|
(196.1
|
)
|
$
|
(69.1
|
)
|
$
|
(317.5
|
)
|
$
|
(84.2
|
)
|
$
|
(158.4
|
)
|
$
|
(154.5
|
)
|
|
Unrecognized
actuarial loss
|
—
|
—
|
671.2
|
104.5
|
—
|
120.1
|
|||||||||||||
Unrecognized
prior service benefit
|
—
|
—
|
(22.0
|
)
|
(2.7
|
)
|
—
|
(55.4
|
)
|
||||||||||
Accrued
expenses
|
—
|
—
|
—
|
(0.2
|
)
|
—
|
—
|
||||||||||||
Unrecognized
net transition obligation
|
—
|
—
|
—
|
0.5
|
—
|
0.8
|
|||||||||||||
Net
amount recognized
|
$
|
(196.1
|
)
|
$
|
(69.1
|
)
|
$
|
331.7
|
$
|
17.9
|
$
|
(158.4
|
)
|
$
|
(89.0
|
)
|
|||
Components
of the above amounts:
|
|||||||||||||||||||
Prepaid
benefit cost
|
$
|
—
|
$
|
2.2
|
$
|
369.5
|
$
|
53.3
|
$
|
—
|
$
|
—
|
|||||||
Accrued
expenses
|
(4.9
|
)
|
—
|
—
|
—
|
(16.2
|
)
|
(23.5
|
)
|
||||||||||
Accrued
benefit liability (noncurrent)
|
(191.2
|
)
|
(71.3
|
)
|
(37.8
|
)
|
(35.4
|
)
|
(142.2
|
)
|
(65.5
|
)
|
|||||||
Additional
minimum liability
|
—
|
—
|
(588.6
|
)
|
(48.2
|
)
|
—
|
—
|
|||||||||||
Intangible
asset
|
—
|
—
|
—
|
0.4
|
—
|
—
|
|||||||||||||
Accumulated
other comprehensive losses
|
—
|
—
|
588.6
|
47.8
|
—
|
—
|
|||||||||||||
Net
amount recognized
|
$
|
(196.1
|
)
|
$
|
(69.1
|
)
|
$
|
331.7
|
$
|
17.9
|
$
|
(158.4
|
)
|
$
|
(89.0
|
)
|
|||
Amounts
included in Accumulated other comprehensive
losses:
|
|||||||||||||||||||
Actuarial
(losses) gains
|
$
|
(545.8
|
)
|
$
|
(106.6
|
)
|
N/A
|
N/A
|
$
|
(126.4
|
)
|
N/A
|
|||||||
Prior
service credits
|
18.2
|
17.2
|
N/A
|
N/A
|
43.0
|
N/A
|
|||||||||||||
Transition
obligations
|
—
|
(0.4
|
)
|
N/A
|
N/A
|
(0.7
|
)
|
N/A
|
|||||||||||
Total
|
$
|
(527.6
|
)
|
$
|
(89.8
|
)
|
N/A
|
N/A
|
$
|
(84.1
|
)
|
N/A
|
|||||||
Amortization
expected to be recognized during next fiscal
year:
|
|||||||||||||||||||
Actuarial
losses
|
$
|
39.1
|
$
|
4.5
|
N/A
|
N/A
|
$
|
8.9
|
N/A
|
||||||||||
Prior
service credits
|
(1.7
|
)
|
(0.9
|
)
|
N/A
|
N/A
|
(7.8
|
)
|
N/A
|
||||||||||
Transition
obligations
|
—
|
0.1
|
N/A
|
N/A
|
0.1
|
N/A
|
|||||||||||||
Total
|
$
|
37.4
|
$
|
3.7
|
N/A
|
N/A
|
$
|
1.2
|
N/A
|
Weighted-average
assumptions used to determine the benefit obligation at December
31, 2006
and 2005 were:
|
|||||||||||||||||||
Pension
Benefits
|
|
||||||||||||||||||
2006
|
2005
|
Other
Postretirement Benefits
|
|||||||||||||||||
U.S.
|
Int’l.
|
U.S.
|
Int’l.
|
2006
|
2005
|
||||||||||||||
Weighted-average
discount rate
|
5.90
|
%
|
4.71
|
%
|
5.70
|
%
|
4.35
|
%
|
5.79
|
%
|
5.59
|
%
|
|||||||
Rate
of compensation increase
|
4.30
|
%
|
3.10
|
%
|
4.30
|
%
|
2.87
|
%
|
4.29
|
%
|
4.29
|
%
|
Pension
Benefits
|
||||||||||||||||||||||||||||
2006
|
2005
|
2004
|
Other
Postretirement Benefits
|
|||||||||||||||||||||||||
Net
periodic benefit cost:
|
U.S.
|
Int’l.
|
U.S.
|
Int’l.
|
U.S.
|
Int’l.
|
2006
|
2005
|
2004
|
|||||||||||||||||||
Service
cost
|
$
|
11.4
|
$
|
6.0
|
$
|
12.7
|
$
|
5.4
|
$
|
13.3
|
$
|
5.9
|
$
|
0.5
|
$
|
0.8
|
$
|
0.8
|
||||||||||
Interest
cost
|
86.5
|
15.5
|
81.3
|
15.2
|
82.3
|
15.4
|
8.8
|
8.8
|
10.3
|
|||||||||||||||||||
Expected
return on plan assets
|
(100.4
|
)
|
(17.3
|
)
|
(95.4
|
)
|
(14.9
|
)
|
(96.5
|
)
|
(14.6
|
)
|
—
|
—
|
—
|
|||||||||||||
Amortization
and deferrals
|
(1.8
|
)
|
(0.4
|
)
|
(1.9
|
)
|
0.2
|
1.3
|
0.6
|
(8.0
|
)
|
(7.3
|
)
|
(8.5
|
)
|
|||||||||||||
Participant
contributions
|
—
|
(0.5
|
)
|
—
|
(0.5
|
)
|
—
|
(0.7
|
)
|
—
|
—
|
—
|
||||||||||||||||
Settlements/curtailments
(1)
|
(2.0
|
)
|
—
|
—
|
—
|
—
|
(0.1
|
)
|
(4.4
|
)
|
—
|
—
|
||||||||||||||||
Special
benefits/terminations (1)
|
1.6
|
—
|
—
|
—
|
1.1
|
—
|
1.2
|
—
|
—
|
|||||||||||||||||||
Amortization
of transition (asset) obligation
|
—
|
—
|
—
|
—
|
—
|
(0.1
|
)
|
—
|
—
|
0.1
|
||||||||||||||||||
Actuarial
losses recognized
|
39.9
|
4.5
|
40.7
|
3.4
|
33.9
|
3.1
|
8.4
|
6.5
|
5.2
|
|||||||||||||||||||
Benefit
cost
|
$
|
35.2
|
$
|
7.8
|
$
|
37.4
|
$
|
8.8
|
$
|
35.4
|
$
|
9.5
|
$
|
6.5
|
$
|
8.8
|
$
|
7.9
|
Weighted-average
assumptions used to determine net periodic benefit
cost:
|
||||||||||||||||||||||||||||
2006
|
2005
|
2004
|
||||||||||||||||||||||||||
U.S.
|
Int’l.
|
U.S.
|
Int’l.
|
U.S.
|
Int’l.
|
2006
|
2005
|
2004
|
||||||||||||||||||||
Weighted-average
discount rate
|
6.00
|
%
|
4.53
|
%
|
5.75
|
%
|
5.04
|
%
|
6.10
|
%
|
5.35
|
%
|
5.81
|
%
|
5.51
|
%
|
6.08
|
%
|
||||||||||
Expected
return on plan assets
|
8.50
|
%
|
6.36
|
%
|
8.50
|
%
|
6.49
|
%
|
8.75
|
%
|
6.64
|
%
|
N/A
|
N/A
|
N/A
|
|||||||||||||
Rate
of compensation increase
|
4.30
|
%
|
2.99
|
%
|
4.50
|
%
|
2.79
|
%
|
4.50
|
%
|
2.86
|
%
|
4.29
|
%
|
4.49
|
%
|
4.49
|
%
|
Target
Allocation
|
Percentage
of Plan Assets
at
December 31,
|
|||||||||
Asset
category:
|
2007
|
2006
|
2005
|
|||||||
Equity
securities
|
61
|
%
|
71
|
%
|
66
|
%
|
||||
Fixed
income
|
32
|
%
|
22
|
%
|
26
|
%
|
||||
Other
|
7
|
%
|
7
|
%
|
8
|
%
|
||||
Totals
|
100
|
%
|
100
|
%
|
100
|
%
|
Pension
Benefits
|
|
||||||||||||
Qualified
Plan
|
Non-qualified
Plan
|
Total
|
Other
Postretirement Benefits
|
||||||||||
Expected
employer contributions for 2007
|
$
|
40
|
$
|
—
|
$
|
40
|
$
|
—
|
|||||
Expected
benefit payments
|
|||||||||||||
2007
|
88
|
5
|
93
|
16
|
|||||||||
2008
|
87
|
5
|
92
|
16
|
|||||||||
2009
|
88
|
5
|
93
|
15
|
|||||||||
2010
|
88
|
5
|
93
|
14
|
|||||||||
2011
|
89
|
5
|
94
|
13
|
|||||||||
2012-2016
|
476
|
25
|
501
|
55
|
Target
Allocation
|
Percentage
of Plan Assets
at
December 31,
|
|||||||||
Asset
category:
|
2007
|
2006
|
2005
|
|||||||
Equity
securities
|
58
|
%
|
58
|
%
|
61
|
%
|
||||
Fixed
income
|
41
|
%
|
41
|
%
|
38
|
%
|
||||
Other
|
1
|
%
|
1
|
%
|
1
|
%
|
||||
Totals
|
100
|
%
|
100
|
%
|
100
|
%
|
Pension
Plan Benefits
|
||||
Expected
employer contributions for 2007
|
$
|
21
|
||
Expected
benefit payments:
|
||||
2007
|
15
|
|||
2008
|
15
|
|||
2009
|
16
|
|||
2010
|
16
|
|||
2011
|
18
|
|||
2012-2016
|
97
|
2006
|
2005
|
||||||
Allocated
|
1,200,346
|
1,458,065
|
|||||
Unallocated
|
1,332,965
|
1,695,387
|
|||||
Total
shares held by ESOP Trust
|
2,533,311
|
3,153,452
|
Active
Sites
|
Inactive
Sites
|
Total
|
||||||||
Balance
at January 1, 2005
|
$
|
7.1
|
$
|
89.2
|
$
|
96.3
|
||||
Impact
of the adoption of FIN 47
|
4.0
|
—
|
4.0
|
|||||||
Accretion
|
0.2
|
1.8
|
2.0
|
|||||||
Settlement
payments
|
(1.2
|
)
|
(9.0
|
)
|
(10.2
|
)
|
||||
Changes
in estimated obligations
|
0.3
|
3.2
|
3.5
|
|||||||
Transfers
of obligations
|
—
|
(4.4
|
)
|
(4.4
|
)
|
|||||
Foreign
currency translation
|
(0.2
|
)
|
(0.7
|
)
|
(0.9
|
)
|
||||
Balance
at December 31, 2005
|
$
|
10.2
|
$
|
80.1
|
$
|
90.3
|
||||
Accretion
|
0.8
|
1.4
|
2.2
|
|||||||
Settlement
payments
|
(4.3
|
)
|
(14.1
|
)
|
(18.4
|
)
|
||||
Changes
in estimated obligations
|
3.2
|
(1.6
|
)
|
1.6
|
||||||
Foreign
currency translation
|
0.2
|
0.4
|
0.6
|
|||||||
Balance
at December 31, 2006
|
$
|
10.1
|
$
|
66.2
|
$
|
76.3
|
Balance
January
1, 2006
|
Interest
Income/
Additional
Accruals
|
Insurance
Recovered/
Liabilities
Settled
|
Accretion/
Reclassifi-
cation
|
Balance
December
31, 2006
|
||||||||||||
Asbestos-related
assets:
|
||||||||||||||||
Insurance
receivable
|
$
|
65.2
|
$
|
—
|
$
|
(33.3
|
)
|
$
|
0.9
|
$
|
32.8
|
|||||
Restricted
cash in trust
|
55.5
|
3.0
|
(3.8
|
)
|
—
|
54.7
|
||||||||||
Asbestos-related
assets
|
$
|
120.7
|
$
|
3.0
|
$
|
(37.1
|
)
|
$
|
0.9
|
$
|
87.5
|
|||||
Asbestos-related
liabilities:
|
||||||||||||||||
Asbestos-related
liabilities, current
|
$
|
36.4
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
36.4
|
||||||
Asbestos-related
liabilities, non-current
|
233.6
|
23.1
|
(23.1
|
)
|
—
|
233.6
|
||||||||||
Total
asbestos-related liabilities
|
$
|
270.0
|
$
|
23.1
|
$
|
(23.1
|
)
|
$
|
—
|
$
|
270.0
|
2006
|
2005
|
2004
|
||||||||
Expected
volatility
|
30.10
|
%
|
28.65
|
%
|
31.22
|
%
|
||||
Expected
dividend yield
|
0.00
|
%
|
0.00
|
%
|
0.00
|
%
|
||||
Expected
life (in years)
|
6.0
|
6.0
|
6.0
|
|||||||
Risk-free
interest rate
|
4.60
|
%
|
4.08
|
%
|
3.73
|
%
|
Regular
|
Performance
Accelerated
|
||||||||||||
Number
of
Shares
|
Weighted-
average
Price
|
Number
of
Shares
|
Weighted-average
Price
|
||||||||||
Outstanding
at January 1, 2004
|
12,306,559
|
$
|
24.47
|
4,779,700
|
$
|
43.66
|
|||||||
Granted
|
21,000
|
14.25
|
—
|
—
|
|||||||||
Exercised
|
(402,855
|
)
|
11.48
|
—
|
—
|
||||||||
Forfeited
|
(886,820
|
)
|
33.19
|
(963,725
|
)
|
38.25
|
|||||||
Outstanding
at December 31, 2004
|
11,037,884
|
$
|
24.22
|
3,815,975
|
$
|
45.03
|
|||||||
Granted
|
224,229
|
14.01
|
—
|
—
|
|||||||||
Exercised
|
(200,752
|
)
|
11.53
|
—
|
—
|
||||||||
Forfeited
|
(2,679,349
|
)
|
33.45
|
(2,473,860
|
)
|
45.87
|
|||||||
Outstanding
at December 31, 2005
|
8,382,012
|
$
|
21.31
|
1,342,115
|
$
|
43.49
|
|||||||
Granted
|
503,430
|
12.52
|
—
|
—
|
|||||||||
Exercised
|
(2,966,552
|
)
|
12.29
|
—
|
—
|
||||||||
Forfeited
|
(1,241,595
|
)
|
32.12
|
(621,125
|
)
|
46.67
|
|||||||
Outstanding
at December 31, 2006
|
4,677,295
|
$
|
23.22
|
720,990
|
$
|
40.75
|
Outstanding
Options
|
Exercisable
Options
|
|||||||||||||||
Number
Outstanding
|
Weighted-
average
Remaining
Contractual
Life
|
Weighted-
average
Exercise
Price
|
Number
Exercisable
|
Weighted-
average
Exercise
Price
|
||||||||||||
Regular
Stock Options
|
||||||||||||||||
$8.50
- $11.75
|
608,150
|
5.00
|
$
|
11.13
|
608,150
|
$
|
11.13
|
|||||||||
$11.76
- $15.00
|
1,359,464
|
7.12
|
$
|
12.46
|
772,746
|
$
|
12.28
|
|||||||||
$15.01
- $25.00
|
801,686
|
3.37
|
$
|
17.21
|
776,210
|
$
|
17.20
|
|||||||||
$25.00
- $33.75
|
404,200
|
1.69
|
$
|
25.70
|
404,200
|
$
|
25.70
|
|||||||||
$33.76
- $40.00
|
1,203,945
|
1.46
|
$
|
38.54
|
1,203,945
|
$
|
38.54
|
|||||||||
$40.01
- $55.00
|
299,850
|
1.32
|
$
|
47.79
|
299,850
|
$
|
47.79
|
|||||||||
4,677,295
|
4,065,101
|
|||||||||||||||
Performance-Accelerated
Stock Options
|
||||||||||||||||
$25.00
- $37.00
|
11,075
|
2.45
|
$
|
31.16
|
—
|
—
|
||||||||||
$37.01
- $45.00
|
511,405
|
1.75
|
$
|
38.19
|
150,850
|
$
|
39.50
|
|||||||||
$45.01
- $50.00
|
197,185
|
1.33
|
$
|
47.83
|
575
|
$
|
47.25
|
|||||||||
$50.01
- $61.00
|
1,325
|
0.65
|
$
|
52.21
|
—
|
—
|
||||||||||
720,990
|
151,425
|
Number
of
Shares
|
Weighted-Average
Grant Date Fair
Value
|
||||||
Outstanding
at January 1, 2006
|
2,093,631
|
$
|
11.38
|
||||
Granted
|
516,252
|
12.47
|
|||||
Vested
|
(430,482
|
)
|
9.17
|
||||
Forfeited
|
(121,993
|
)
|
12.36
|
||||
Outstanding
at December 31, 2006
|
2,057,408
|
$
|
12.05
|
December
31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
Pension
and postretirement benefit plan adjustments, net of tax (1)
|
$
|
(461.3
|
)
|
$
|
(415.7
|
)
|
$
|
(376.9
|
)
|
|
Foreign
currency translation adjustments, net of hedging activities and
taxes
|
52.5
|
28.4
|
100.5
|
|||||||
Other,
net of tax
|
(0.8
|
)
|
(0.3
|
)
|
—
|
|||||
$
|
(409.6
|
)
|
$
|
(387.6
|
)
|
$
|
(276.4
|
)
|
2006
|
2005
|
||||||
Property,
plant and equipment:
|
|||||||
Land
|
$
|
16.4
|
$
|
10.6
|
|||
Buildings
and equipment
|
1,643.0
|
1,613.6
|
|||||
Construction
in progress
|
85.0
|
38.0
|
|||||
Total
|
1,744.4
|
1,662.2
|
|||||
Accumulated
depreciation
|
(1,144.0
|
)
|
(1,126.8
|
)
|
|||
Property,
plant and equipment, net
|
$
|
600.4
|
$
|
535.4
|
2006
|
2005
|
||||||
Deferred
charges and other assets:
|
|||||||
Tax
deposits
|
$
|
3.0
|
$
|
66.1
|
|||
Capitalized
software, net
|
44.8
|
62.6
|
|||||
Prepaid
pension assets
|
2.2
|
42.8
|
|||||
Cash
surrender value of life insurance policies
|
22.3
|
21.4
|
|||||
Unamortized
debt issuance costs
|
7.7
|
10.3
|
|||||
Investment
securities available for sale
|
2.6
|
1.0
|
|||||
Equity
method investments
|
25.6
|
2.6
|
|||||
Other
|
28.7
|
38.3
|
|||||
$
|
136.9
|
$
|
245.1
|
2006
|
2005
|
||||||
Accrued
expenses:
|
|||||||
Compensation
and benefits
|
$
|
53.0
|
$
|
37.0
|
|||
Current
portion of postretirement benefits
|
16.2
|
23.5
|
|||||
Current
portion of asset retirement obligations
|
21.0
|
21.6
|
|||||
Severance
and other exit costs
|
10.5
|
16.6
|
|||||
Income
taxes payable
|
24.5
|
14.5
|
|||||
Interest
payable
|
14.6
|
12.9
|
|||||
Current
deferred income taxes
|
11.8
|
12.9
|
|||||
Sales
rebate accrual
|
10.9
|
9.3
|
|||||
Current
pension liability
|
4.9
|
6.2
|
|||||
Litigation
accrual
|
8.6
|
3.5
|
|||||
Current
portion of deferred rent
|
3.3
|
3.0
|
|||||
Other
taxes payable
|
2.8
|
2.3
|
|||||
Other
|
46.5
|
53.7
|
|||||
$
|
228.6
|
$
|
217.0
|
2006
|
2005
|
||||||
Deferred
credits and other liabilities:
|
|||||||
Non-current
income tax liabilities
|
$
|
41.7
|
$
|
95.7
|
|||
Asset
retirement obligations - noncurrent
|
55.3
|
68.7
|
|||||
Indemnifications
|
40.0
|
40.0
|
|||||
Deferred
rent
|
26.3
|
30.6
|
|||||
Environmental
contingencies
|
5.3
|
17.6
|
|||||
Fair
value of cross-currency interest rate swaps
|
53.2
|
—
|
|||||
Workers
compensation
|
13.9
|
14.6
|
|||||
Other
|
19.9
|
22.2
|
|||||
$
|
255.6
|
$
|
289.4
|
Severance
|
Other
Exit Costs
|
Asset
Charges(1)
|
Total
|
||||||||||
Research
and development consolidation
|
|||||||||||||
Jacksonville,
FL
|
$
|
1.7
|
$
|
0.3
|
$
|
0.4
|
$
|
2.4
|
|||||
Wilmington,
DE
|
0.9
|
0.9
|
0.8
|
2.6
|
|||||||||
2.6
|
1.2
|
1.2
|
5.0
|
||||||||||
Manufacturing
rationalization
|
|||||||||||||
Pendlebury,
UK
|
0.4
|
0.8
|
2.1
|
3.3
|
|||||||||
Alliance-related
rationalization (2)
|
0.5
|
0.2
|
0.6
|
1.3
|
|||||||||
0.9
|
1.0
|
2.7
|
4.6
|
||||||||||
Business
segment realignment
|
|||||||||||||
Paper
Technologies and Ventures
|
6.1
|
—
|
—
|
6.1
|
|||||||||
Aqualon
Group
|
3.7
|
0.4
|
—
|
4.1
|
|||||||||
9.8
|
0.4
|
—
|
10.2
|
||||||||||
Business
Infrastructure Projects
|
2.9
|
2.3
|
4.4
|
9.6
|
|||||||||
Total
restructuring and asset charges
|
$
|
16.2
|
$
|
4.9
|
$
|
8.3
|
$
|
29.4
|
Paper
Technologies and Ventures
|
$
|
8.7
|
$
|
1.8
|
$
|
3.1
|
$
|
13.6
|
|||||
Aqualon
Group
|
3.7
|
0.4
|
—
|
4.1
|
|||||||||
Corporate
|
3.8
|
2.7
|
5.2
|
11.7
|
|||||||||
Total
by reporting segment
|
$
|
16.2
|
$
|
4.9
|
$
|
8.3
|
$
|
29.4
|
Severance
|
Other
Exit Costs
|
Asset
Charges(1)
|
Total
|
||||||||||
Research
and development consolidation
|
|||||||||||||
Barneveld,
The Netherlands
|
$
|
2.9
|
$
|
1.4
|
$
|
1.8
|
$
|
6.1
|
|||||
Jacksonville,
FL
|
0.4
|
—
|
0.1
|
0.5
|
|||||||||
Wilmington,
DE
|
0.5
|
—
|
0.5
|
1.0
|
|||||||||
3.8
|
1.4
|
2.4
|
7.6
|
||||||||||
Manufacturing
rationalization
|
|||||||||||||
Paper
Technologies and Ventures
|
1.9
|
—
|
1.1
|
3.0
|
|||||||||
Aqualon
Group
|
1.3
|
0.2
|
0.5
|
2.0
|
|||||||||
FiberVisions
|
3.4
|
—
|
1.5
|
4.9
|
|||||||||
6.6
|
0.2
|
3.1
|
9.9
|
||||||||||
Global
marketing and management realignment
|
|||||||||||||
Paper
Technologies and Ventures
|
12.7
|
—
|
—
|
12.7
|
|||||||||
Aqualon
Group
|
1.8
|
—
|
—
|
1.8
|
|||||||||
14.5
|
—
|
—
|
14.5
|
||||||||||
Corporate
support realignment
|
4.8
|
0.5
|
—
|
5.3
|
|||||||||
Sub-total
for continuing operations
|
29.7
|
2.1
|
5.5
|
37.3
|
|||||||||
Terpenes
specialties exit
|
2.4
|
—
|
5.7
|
8.1
|
|||||||||
Total
restructuring and asset charges
|
$
|
32.1
|
$
|
2.1
|
$
|
11.2
|
$
|
45.4
|
Paper
Technologies and Ventures
|
$
|
17.5
|
$
|
0.1
|
$
|
3.0
|
$
|
20.6
|
|||||
Aqualon
Group
|
3.1
|
0.2
|
0.5
|
3.8
|
|||||||||
FiberVisions
|
3.4
|
—
|
1.5
|
4.9
|
|||||||||
Corporate
|
5.7
|
1.8
|
0.5
|
8.0
|
|||||||||
Discontinued
operations
|
2.4
|
—
|
5.7
|
8.1
|
|||||||||
Total
by reporting segment
|
$
|
32.1
|
$
|
2.1
|
$
|
11.2
|
$
|
45.4
|
2006
|
2005
|
2004
|
||||||||
Balance
at beginning of the year
|
$
|
16.6
|
$
|
5.8
|
$
|
6.0
|
||||
Accrued
charges for severance and related benefits
|
16.2
|
32.1
|
9.6
|
|||||||
Accrued
charges for other exit and restructuring costs
|
3.8
|
0.5
|
—
|
|||||||
Cash
payments
|
(26.9
|
)
|
(21.4
|
)
|
(9.9
|
)
|
||||
Other,
including foreign currency translation
|
0.8
|
(0.4
|
)
|
0.1
|
||||||
Balance
at end of the year
|
$
|
10.5
|
$
|
16.6
|
$
|
5.8
|
2006
|
2005
|
2004
|
||||||||
Severance,
restructuring and other exit costs, net
|
$
|
21.1
|
$
|
31.8
|
$
|
9.6
|
||||
Accelerated
depreciation and amortization
|
5.1
|
3.5
|
—
|
|||||||
Asset
charges
|
3.2
|
2.0
|
7.3
|
|||||||
Legal
settlements
|
(2.0
|
)
|
0.7
|
—
|
||||||
Environmental
charges
|
0.8
|
0.2
|
0.4
|
|||||||
Special
executive pension adjustment
|
—
|
—
|
1.6
|
|||||||
(Gains)
losses on asset dispositions, net
|
(6.2
|
)
|
0.1
|
1.0
|
||||||
Nitrocellulose
facility shutdown costs
|
—
|
—
|
6.5
|
|||||||
Dismantlement
costs
|
1.6
|
—
|
—
|
|||||||
Other
miscellaneous charges
|
1.5
|
1.1
|
0.5
|
|||||||
$
|
25.1
|
$
|
39.4
|
$
|
26.9
|
2006
|
2005
|
2004
|
||||||||
Incurred
|
$
|
71.5
|
$
|
89.8
|
$
|
109.8
|
||||
Capitalized
|
(0.3
|
)
|
(0.4
|
)
|
(1.1
|
)
|
||||
Net
expensed
|
$
|
71.2
|
$
|
89.4
|
$
|
108.7
|
2006
|
2005
|
2004
|
||||||||
Asbestos-related
costs, net
|
$
|
29.0
|
$
|
44.6
|
$
|
48.8
|
||||
Loss
on sale of 51% interest in FiberVisions (see Note
3)
|
13.3
|
—
|
—
|
|||||||
Loss
on repurchases of debt
|
11.4
|
14.2
|
41.0
|
|||||||
Environmental
charges
|
6.5
|
7.3
|
6.7
|
|||||||
Litigation
settlements and accruals
|
9.2
|
19.0
|
19.2
|
|||||||
Gains
on dispositions of assets, net
|
(1.4
|
)
|
(10.9
|
)
|
—
|
|||||
Asset
impairment charges
|
—
|
—
|
1.9
|
|||||||
Other,
net
|
(2.3
|
)
|
(2.9
|
)
|
(0.9
|
)
|
||||
$
|
65.7
|
$
|
71.3
|
$
|
116.7
|
|||||
2006
|
2005
|
2004
|
||||||||
Net
sales
|
$
|
2.5
|
$
|
13.7
|
$
|
12.4
|
||||
Loss
from operations before income taxes
|
$
|
(2.6
|
)
|
$
|
(9.9
|
)
|
$
|
(4.0
|
)
|
|
Income
tax benefit on operations
|
0.9
|
3.4
|
1.4
|
|||||||
Net
loss from discontinued operations, net of tax
|
$
|
(1.7
|
)
|
$
|
(6.5
|
)
|
$
|
(2.6
|
)
|
|
2006
|
2005
|
||||||
Accounts
receivable, net
|
$
|
0.2
|
$
|
1.3
|
|||
Inventories
|
0.2
|
5.4
|
|||||
Current
assets of discontinued operations
|
$
|
0.4
|
$
|
6.7
|
|||
Accounts
payable
|
$
|
—
|
$
|
0.5
|
|||
Accrued
expenses
|
—
|
2.3
|
|||||
Current
liabilities of discontinued operation
|
$
|
—
|
$
|
2.8
|
Before
|
After
|
|||||||||
Application
of
|
Application
of
|
|||||||||
SFAS
158
|
Adjustments
|
SFAS
158
|
||||||||
Deferred
income taxes
|
$
|
312.4
|
$
|
62.2
|
$
|
374.6
|
||||
Deferred
charges and other assets
|
185.8
|
(48.9
|
)
|
136.9
|
||||||
Total
assets
|
2,795.2
|
13.3
|
2,808.5
|
|||||||
Pension
obligations
|
206.8
|
55.7
|
262.5
|
|||||||
Other
postretirement benefit obligations
|
58.1
|
84.1
|
142.2
|
|||||||
Total
liabilities
|
2,413.1
|
139.8
|
2,552.9
|
|||||||
Accumulated
other comprehensive losses
|
(283.1
|
)
|
(126.5
|
)
|
(409.6
|
)
|
||||
Total
stockholders’ equity
|
369.4
|
(126.5
|
)
|
242.9
|
2005
|
2004
|
||||||
Net
(loss) income before cumulative effect of changes in accounting
principle:
|
|||||||
As
reported
|
$
|
(38.6
|
)
|
$
|
28.1
|
||
Accretion
and depreciation
|
—
|
(0.1
|
)
|
||||
Adjusted
net (loss) income before cumulative effect of changes in accounting
principle
|
$
|
(38.6
|
)
|
$
|
28.0
|
||
Basic
and diluted (loss) earnings per share before cumulative effect of
changes
in accounting principle:
|
|||||||
As
reported
|
$
|
(0.36
|
)
|
$
|
0.26
|
||
Adjusted
|
$
|
(0.36
|
)
|
$
|
0.26
|
||
Net
(loss) income:
|
|||||||
As
reported
|
$
|
(41.1
|
)
|
$
|
28.1
|
||
Accretion
and depreciation
|
—
|
(0.1
|
)
|
||||
Adjusted
net income (loss)
|
$
|
(41.1
|
)
|
$
|
28.0
|
||
Basic
and diluted (loss) earnings per share:
|
|||||||
As
reported
|
$
|
(0.38
|
)
|
$
|
0.26
|
||
Adjusted
|
$
|
(0.38
|
)
|
$
|
0.26
|
||
2006
|
2005
|
2004
|
||||||||
Depreciation:
|
||||||||||
Included
in Cost of sales and Selling, general and administrative
expenses
|
$
|
66.8
|
$
|
76.6
|
$
|
74.5
|
||||
Accelerated
depreciation included in Other operating expense, net
|
3.9
|
3.5
|
—
|
|||||||
Included
in Net loss from discontinued operations
|
—
|
0.4
|
0.4
|
|||||||
$
|
70.7
|
$
|
80.5
|
$
|
74.9
|
|||||
Amortization:
|
||||||||||
Intangible
assets
|
$
|
7.2
|
$
|
8.0
|
$
|
8.1
|
||||
Capitalized
software (normal basis)
|
15.2
|
15.3
|
15.0
|
|||||||
Accelerated
amortization of capitalized software
|
1.1
|
—
|
—
|
|||||||
Deferred
financing costs
|
1.1
|
2.1
|
3.2
|
|||||||
$
|
24.6
|
$
|
25.4
|
$
|
26.3
|
|||||
Cash
paid during the period for:
|
||||||||||
Interest
|
$
|
70.9
|
$
|
86.4
|
$
|
97.1
|
||||
Income
taxes, net of refunds received
|
37.6
|
18.4
|
40.7
|
|||||||
Non-cash
investing and financing activities:
|
||||||||||
Increase
in Property, plant and equipment, net related to the consolidation
|
||||||||||
of
Hercules Tianpu
|
$
|
19.0
|
$
|
—
|
$
|
—
|
||||
Increase
in Intangible assets, net related to the consolidation of Hercules
Tianpu
|
3.5
|
—
|
—
|
|||||||
De-consolidation
of debt issued by FiberVisions
|
90.0
|
—
|
—
|
|||||||
De-consolidation
of FiberVisions capitalized debt issuance costs
|
(6.3
|
)
|
—
|
—
|
||||||
Incentive
and other share-based compensation plan issuances
|
13.9
|
13.4
|
15.7
|
|||||||
Elimination
of 6.5% junior subordinated deferrable interest debentures due
2029
|
—
|
—
|
(34.6
|
)
|
||||||
Elimination
of investment in Hercules Trust II upon its dissolution
|
—
|
—
|
27.4
|
2006
|
2005
|
2004
|
||||||||
Weighted-average
number of common shares outstanding - Basic
|
110.8
|
108.7
|
107.3
|
|||||||
Dilutive
effect of:
|
||||||||||
Convertible
debentures
|
0.2
|
0.2
|
0.2
|
|||||||
Share-based
compensation plans
|
0.3
|
1.5
|
1.5
|
|||||||
Weighted-average
number of common shares outstanding - Diluted
|
111.3
|
110.4
|
109.0
|
2006
|
2005
|
2004
|
||||||||
Options
to purchase common stock
|
3.4
|
5.8
|
10.6
|
|||||||
Warrants
to purchase common stock
|
6.6
|
6.7
|
7.1
|
Paper
Technologies and Ventures
|
Aqualon
Group
|
FiberVisions
|
Corporate
|
Consolidated
|
|||||||||||||||
2006
|
|||||||||||||||||||
Net
sales
|
$
|
1,075.3
|
$
|
890.8
|
$
|
69.2
|
$
|
—
|
$
|
2,035.3
|
|||||||||
Profit
(loss) from operations
|
80.8
|
187.4
|
0.5
|
(20.1
|
)
|
248.6
|
|||||||||||||
Depreciation
|
29.3
|
35.1
|
—
|
6.3
|
70.7
|
(1
|
)
|
||||||||||||
Amortization
|
14.2
|
8.2
|
—
|
2.2
|
24.6
|
(2
|
)
|
||||||||||||
Research
and development
|
19.1
|
18.6
|
0.4
|
0.7
|
38.8
|
||||||||||||||
Total
assets
|
976.1
|
756.5
|
—
|
1,075.9
|
2,808.5
|
(3
|
)
|
||||||||||||
Capital
expenditures
|
25.1
|
59.1
|
—
|
9.4
|
93.6
|
||||||||||||||
2005
|
|||||||||||||||||||
Net
sales
|
$
|
1,017.3
|
$
|
755.0
|
$
|
282.7
|
$
|
—
|
$
|
2,055.0
|
|||||||||
Profit
(loss) from operations
|
61.4
|
155.5
|
(64.9
|
)
|
(11.7
|
)
|
140.3
|
||||||||||||
Depreciation
|
29.6
|
33.0
|
10.9
|
7.0
|
80.5
|
(1
|
)
|
||||||||||||
Amortization
|
14.3
|
7.5
|
1.5
|
2.1
|
25.4
|
(2
|
)
|
||||||||||||
Research
and development
|
18.6
|
18.4
|
2.8
|
1.0
|
40.8
|
||||||||||||||
Total
assets
|
903.6
|
638.1
|
202.7
|
824.4
|
2,568.8
|
(3
|
)
|
||||||||||||
Capital
expenditures
|
18.7
|
37.1
|
4.2
|
7.5
|
67.5
|
||||||||||||||
2004
|
|||||||||||||||||||
Net
sales
|
$
|
978.5
|
$
|
724.6
|
$
|
281.2
|
$
|
—
|
$
|
1,984.3
|
|||||||||
Profit
(loss) from operations
|
84.5
|
157.9
|
(4.1
|
)
|
(5.4
|
)
|
232.9
|
||||||||||||
Depreciation
|
25.4
|
30.8
|
11.6
|
7.1
|
74.9
|
(1
|
)
|
||||||||||||
Amortization
|
13.8
|
7.7
|
1.6
|
3.2
|
26.3
|
(2
|
)
|
||||||||||||
Research
and development
|
19.4
|
18.0
|
2.9
|
2.4
|
42.7
|
||||||||||||||
Total
assets
|
1,029.2
|
676.2
|
286.0
|
728.9
|
2,720.3
|
(3
|
)
|
||||||||||||
Capital
expenditures
|
26.6
|
41.3
|
4.0
|
5.5
|
77.4
|
(1)
|
Depreciation
for Corporate is allocated to the business segments in the determination
of Profit from operations.
|
(2)
|
Corporate
includes accelerated amortization of capitalized software and deferred
financing costs.
|
(3)
|
Corporate
assets include cash and cash equivalents, income taxes receivable,
deferred tax assets, asbestos-related assets, investments, assets
of
discontinued operations and certain other assets not directly attributable
to the business segments.
|
2006
|
2005
|
2004
|
||||||||
Profit
from operations from the reporting segments
|
$
|
248.6
|
$
|
140.3
|
$
|
232.9
|
||||
Interest
and debt expense
|
71.2
|
89.4
|
108.7
|
|||||||
Vertac
litigation charges
|
108.5
|
15.0
|
—
|
|||||||
Gain
on sale of CP Kelco ApS
|
—
|
—
|
(27.0
|
)
|
||||||
Other
expense, net
|
65.7
|
71.3
|
116.7
|
|||||||
Income
(loss) before income taxes, minority interests and equity (loss)
income
|
$
|
3.2
|
$
|
(35.4
|
)
|
$
|
34.5
|
Geographic
Areas
|
United
States
|
Europe
|
Americas
|
Asia
Pacific
|
Total
|
|||||||||||
2006
|
||||||||||||||||
Net
Sales
|
$
|
897.2
|
$
|
696.0
|
$
|
214.7
|
$
|
227.4
|
$
|
2,035.3
|
||||||
Property,
plant and equipment, net
|
272.1
|
242.6
|
17.0
|
68.7
|
600.4
|
|||||||||||
2005
|
||||||||||||||||
Net
Sales
|
$
|
871.9
|
$
|
747.7
|
$
|
201.7
|
$
|
233.7
|
$
|
2,055.0
|
||||||
Property,
plant and equipment, net
|
262.1
|
233.8
|
15.7
|
23.8
|
535.4
|
|||||||||||
2004
|
||||||||||||||||
Net
Sales
|
$
|
824.1
|
$
|
761.8
|
$
|
184.0
|
$
|
214.4
|
$
|
1,984.3
|
||||||
Property,
plant and equipment, net
|
325.2
|
331.4
|
16.2
|
22.6
|
695.4
|
|||||||||||
2006
|
2005
|
||||||||||||
Carrying
|
Fair
|
Carrying
|
Fair
|
||||||||||
Value
|
Value
|
Value
|
Value
|
||||||||||
Deferred
charges and other assets
|
|||||||||||||
Investment
securities available for sale
|
$
|
2.6
|
$
|
2.6
|
$
|
1.0
|
$
|
1.0
|
|||||
Foreign
exchange contracts, net
|
(0.1
|
)
|
(0.1
|
)
|
(0.2
|
)
|
(0.2
|
)
|
|||||
Current
and long-term debt obligations
|
995.5
|
964.2
|
1,109.0
|
1,092.1
|
|||||||||
Deferred
credits and other liabilities
|
|||||||||||||
Cross
currency interest rate swaps
|
53.2
|
53.2
|
—
|
—
|
Aqualon
Company
|
Hercules
Flavor, Inc.
|
East
Bay Realty Services, Inc.
|
Hercules
Hydrocarbon Holdings, Inc.
|
Hercules
Euro Holdings, LLC
|
Hercules
Paper Holdings, Inc.
|
Hercules
Finance Company
|
WSP,
Inc.
|
Condensed
Consolidating Statement of Operations
|
||||||||||||||||
Year
Ended December 31, 2006
|
||||||||||||||||
Unconsolidated
|
||||||||||||||||
Parent
|
Guarantor
Subsidiaries
|
Non-
Guarantor
Subsidiaries
|
Eliminations
and
Adjustments
|
Consolidated
|
||||||||||||
Net
sales
|
$
|
596.7
|
$
|
478.2
|
$
|
1,124.6
|
$
|
(164.2
|
)
|
$
|
2,035.3
|
|||||
Cost
of sales
|
417.5
|
345.7
|
744.6
|
(164.4
|
)
|
1,343.4
|
||||||||||
Selling,
general and administrative expenses
|
101.0
|
121.3
|
150.7
|
(0.8
|
)
|
372.2
|
||||||||||
Research
and development
|
19.7
|
16.9
|
2.2
|
—
|
38.8
|
|||||||||||
Intangible
asset amortization
|
5.9
|
0.7
|
0.6
|
—
|
7.2
|
|||||||||||
Other
operating expense, net
|
15.5
|
(1.8
|
)
|
11.4
|
—
|
25.1
|
||||||||||
Profit
(loss) from operations
|
37.1
|
(4.6
|
)
|
215.1
|
1.0
|
248.6
|
||||||||||
Interest
and debt expense (income), net
|
173.2
|
(103.7
|
)
|
1.7
|
—
|
71.2
|
||||||||||
Vertac
litigation charges
|
108.5
|
—
|
—
|
—
|
108.5
|
|||||||||||
Other
expense, net
|
58.7
|
6.5
|
0.5
|
—
|
65.7
|
|||||||||||
Income
(loss) before income taxes, minority interests and equity (loss)
income
|
(303.3
|
)
|
92.6
|
212.9
|
1.0
|
3.2
|
||||||||||
(Benefit)
provision for income taxes
|
(230.3
|
)
|
(4.6
|
)
|
42.3
|
0.4
|
(192.2
|
)
|
||||||||
Income
(loss) before minority interests and equity (loss) income
|
(73.0
|
)
|
97.2
|
170.6
|
0.6
|
195.4
|
||||||||||
Minority
interests in earnings of consolidated subsidiaries
|
—
|
—
|
(1.4
|
)
|
—
|
(1.4
|
)
|
|||||||||
Equity
(loss) income of affiliated companies
|
—
|
(3.5
|
)
|
1.6
|
(1.3
|
)
|
(3.2
|
)
|
||||||||
Equity
income (loss) from consolidated subsidiaries
|
263.8
|
0.5
|
(0.8
|
)
|
(263.5
|
)
|
—
|
|||||||||
Net
income from continuing operations before discontinued operations
and
cumulative effect of change in accounting principle
|
190.8
|
94.2
|
170.0
|
(264.2
|
)
|
190.8
|
||||||||||
Net
income from discontinued operations, net of tax
|
47.0
|
—
|
—
|
—
|
47.0
|
|||||||||||
Net
income before cumulative effect of change in accounting principle
|
237.8
|
94.2
|
170.0
|
(264.2
|
)
|
237.8
|
||||||||||
Cumulative
effect of change in accounting principle, net of tax
|
0.9
|
—
|
—
|
—
|
0.9
|
|||||||||||
Net
income (loss)
|
$
|
238.7
|
$
|
94.2
|
$
|
170.0
|
$
|
(264.2
|
)
|
$
|
238.7
|
Condensed
Consolidating Statement of Operations
|
||||||||||||||||
Year
Ended December 31, 2005
|
||||||||||||||||
Unconsolidated
|
||||||||||||||||
Guarantor
|
Non-Guarantor
|
Eliminations
and
|
||||||||||||||
Parent
|
Subsidiaries
|
Subsidiaries
|
Adjustments
|
Consolidated
|
||||||||||||
Net
sales
|
$
|
548.9
|
$
|
491.2
|
$
|
1,175.2
|
$
|
(160.3
|
)
|
$
|
2,055.0
|
|||||
Cost
of sales
|
386.2
|
382.7
|
794.7
|
(172.5
|
)
|
1,391.1
|
||||||||||
Selling,
general, and administrative expenses
|
103.7
|
130.0
|
148.8
|
—
|
382.5
|
|||||||||||
Research
and development
|
19.2
|
18.4
|
3.2
|
—
|
40.8
|
|||||||||||
Intangible
asset amortization
|
6.0
|
1.5
|
0.5
|
—
|
8.0
|
|||||||||||
Impairment
of FiberVisions’ goodwill
|
-
|
52.9
|
—
|
—
|
52.9
|
|||||||||||
Other
operating expenses, net
|
8.0
|
9.0
|
22.4
|
—
|
39.4
|
|||||||||||
Profit
(loss) from operations
|
25.8
|
(103.3
|
)
|
205.6
|
12.2
|
140.3
|
||||||||||
Interest
and debt expense (income), net
|
173.1
|
(71.6
|
)
|
(12.1
|
)
|
—
|
89.4
|
|||||||||
Vertac
litigation charges
|
15.0
|
—
|
—
|
—
|
15.0
|
|||||||||||
Other
expense (income), net
|
72.3
|
2.4
|
(3.4
|
)
|
—
|
71.3
|
||||||||||
(Loss)
income before income taxes, minority interests and equity income
(loss)
|
(234.6
|
)
|
(34.1
|
)
|
221.1
|
12.2
|
(35.4
|
)
|
||||||||
(Benefit)
provision for income taxes
|
(100.3
|
)
|
20.0
|
72.2
|
4.3
|
(3.8
|
)
|
|||||||||
Income
(loss) before minority interests and equity
|
||||||||||||||||
income
(loss)
|
(134.3
|
)
|
(54.1
|
)
|
148.9
|
7.9
|
(31.6
|
)
|
||||||||
Minority
interests in earnings of consolidated
|
||||||||||||||||
subsidiaries
|
—
|
—
|
(1.0
|
)
|
—
|
(1.0
|
)
|
|||||||||
Equity
income (loss) of affiliated companies
|
—
|
(1.1
|
)
|
1.5
|
0.1
|
0.5
|
||||||||||
Equity
income (loss) from consolidated subsidiaries
|
102.2
|
10.0
|
(3.2
|
)
|
(109.0
|
)
|
—
|
|||||||||
Net
(loss) income from continuing operations
before
discontinued operations and cumulative
effect
of change in accounting principle
|
(32.1
|
)
|
(45.2
|
)
|
146.2
|
(101.0
|
)
|
(32.1
|
)
|
|||||||
Net
loss from discontinued operations, net of tax
|
(6.5
|
)
|
—
|
—
|
—
|
(6.5
|
)
|
|||||||||
Net
(loss) income before cumulative effect of
changes
in accounting principle, net of tax
|
(38.6
|
)
|
(45.2
|
)
|
146.2
|
(101.0
|
)
|
(38.6
|
)
|
|||||||
Cumulative
effect of change in accounting principle,
net of tax
|
(2.5
|
)
|
—
|
—
|
—
|
(2.5
|
)
|
|||||||||
Net
(loss) income
|
$
|
(41.1
|
)
|
$
|
(45.2
|
)
|
$
|
146.2
|
$
|
(101.0
|
)
|
$
|
(41.1
|
)
|
Condensed
Consolidating Statement of Operations
|
||||||||||||||||
Year
Ended December 31, 2004
|
||||||||||||||||
Unconsolidated
|
||||||||||||||||
Guarantor
|
Non-Guarantor
|
Eliminations
and
|
||||||||||||||
Parent
|
Subsidiaries
|
Subsidiaries
|
Adjustments
|
Consolidated
|
||||||||||||
Net
sales
|
$
|
528.4
|
$
|
474.8
|
$
|
1,131.9
|
$
|
(150.8
|
)
|
$
|
1,984.3
|
|||||
Cost
of sales
|
358.8
|
352.5
|
731.1
|
(150.8
|
)
|
1,291.6
|
||||||||||
Selling,
general, and administrative expenses
|
100.8
|
126.0
|
155.3
|
—
|
382.1
|
|||||||||||
Research
and development
|
19.7
|
17.4
|
5.6
|
—
|
42.7
|
|||||||||||
Goodwill
and intangible asset amortization
|
6.1
|
1.5
|
0.5
|
—
|
8.1
|
|||||||||||
Other
operating expenses, net
|
4.8
|
12.9
|
9.2
|
—
|
26.9
|
|||||||||||
Profit
(loss) from operations
|
38.2
|
(35.5
|
)
|
230.2
|
—
|
232.9
|
||||||||||
Interest
and debt expense (income), net
|
177.6
|
(59.7
|
)
|
(9.2
|
)
|
—
|
108.7
|
|||||||||
Gain
on sale of CP Kelco ApS
|
—
|
—
|
(27.0
|
)
|
—
|
(27.0
|
)
|
|||||||||
Other
expense (income), net
|
256.6
|
3.9
|
(143.8
|
)
|
—
|
116.7
|
||||||||||
Income
(loss) before income taxes, minority interest and equity income
(loss)
|
(396.0
|
)
|
20.3
|
410.2
|
—
|
34.5
|
||||||||||
Provision
(benefit) for income taxes
|
(86.8
|
)
|
38.1
|
52.5
|
—
|
3.8
|
||||||||||
Income
(loss) before minority interests and
|
||||||||||||||||
equity
income ( loss)
|
(309.2
|
)
|
(17.8
|
)
|
357.7
|
—
|
30.7
|
|||||||||
Minority
interests in earnings of consolidated
|
||||||||||||||||
subsidiaries
|
—
|
—
|
(0.9
|
)
|
—
|
(0.9
|
)
|
|||||||||
Equity
income (loss) of affiliated companies
|
—
|
(0.7
|
)
|
1.8
|
(0.2
|
)
|
0.9
|
|||||||||
Equity
income (loss) from consolidated
|
||||||||||||||||
subsidiaries
|
339.9
|
6.0
|
(1.6
|
)
|
(344.3
|
)
|
—
|
|||||||||
Net
income (loss) from continuing operations
|
||||||||||||||||
before
discontinued operations
|
30.7
|
(12.5
|
)
|
357.0
|
(344.5
|
)
|
30.7
|
|||||||||
Net
loss from discontinued operations, net of tax
|
(2.6
|
)
|
—
|
—
|
—
|
(2.6
|
)
|
|||||||||
Net
income (loss)
|
$
|
28.1
|
$
|
(12.5
|
)
|
$
|
357.0
|
$
|
(344.5
|
)
|
$
|
28.1
|
Condensed
Consolidating Balance Sheet
|
||||||||||||||||
Year
ended December 31, 2006
|
||||||||||||||||
Unconsolidated
|
|
|||||||||||||||
|
Guarantor
|
Non-Guarantor
|
Eliminations
and
|
|||||||||||||
Assets
|
Parent
|
Subsidiaries
|
Subsidiaries
|
Adjustments
|
Consolidated
|
|||||||||||
Current
assets
|
||||||||||||||||
Cash
and cash equivalents
|
$
|
89.7
|
$
|
0.5
|
$
|
81.6
|
$
|
—
|
$
|
171.8
|
||||||
Accounts
receivable, net
|
69.9
|
45.6
|
211.1
|
—
|
326.6
|
|||||||||||
Intercompany
receivables
|
68.0
|
9.8
|
(6.4
|
)
|
(71.4
|
)
|
—
|
|||||||||
Inventories
|
56.2
|
68.9
|
87.0
|
(1.5
|
)
|
210.6
|
||||||||||
Deferred
income taxes
|
57.6
|
3.2
|
9.4
|
—
|
70.2
|
|||||||||||
Current
assets of discontinued operations
|
0.4
|
—
|
—
|
—
|
0.4
|
|||||||||||
Income
taxes receivable
|
170.8
|
—
|
—
|
—
|
170.8
|
|||||||||||
Other
current assets
|
12.3
|
2.4
|
19.4
|
—
|
34.1
|
|||||||||||
Total
current assets
|
524.9
|
130.4
|
402.1
|
(72.9
|
)
|
984.5
|
||||||||||
Property,
plant and equipment, net
|
139.9
|
132.2
|
328.3
|
—
|
600.4
|
|||||||||||
Investments
in subsidiaries and advances, net
|
2,569.7
|
85.2
|
44.9
|
(2,699.8
|
)
|
—
|
||||||||||
Intangible
assets, net
|
131.8
|
2.9
|
8.4
|
—
|
143.1
|
|||||||||||
Goodwill
|
58.7
|
37.6
|
385.2
|
—
|
481.5
|
|||||||||||
Deferred
income taxes
|
357.1
|
—
|
19.5
|
(2.0
|
)
|
374.6
|
||||||||||
Asbestos-related
assets
|
87.5
|
—
|
—
|
—
|
87.5
|
|||||||||||
Deferred
charges and other assets
|
87.7
|
27.7
|
21.5
|
—
|
136.9
|
|||||||||||
Total
assets
|
$
|
3,957.3
|
$
|
416.0
|
$
|
1,209.9
|
$
|
(2,774.7
|
)
|
$
|
2,808.5
|
|||||
Liabilities
and Stockholders' Equity
|
||||||||||||||||
Current
liabilities
|
||||||||||||||||
Accounts
payable
|
$
|
63.2
|
$
|
35.0
|
$
|
107.1
|
$
|
—
|
$
|
205.3
|
||||||
Intercompany
payables
|
2.0
|
43.4
|
26.1
|
(71.5
|
)
|
—
|
||||||||||
Asbestos-related
liabilities
|
36.4
|
—
|
—
|
—
|
36.4
|
|||||||||||
Current
debt obligations
|
20.0
|
—
|
15.8
|
—
|
35.8
|
|||||||||||
Vertac
litigation liability
|
123.5
|
—
|
—
|
—
|
123.5
|
|||||||||||
Accrued
expenses
|
119.8
|
68.3
|
82.4
|
(41.9
|
)
|
228.6
|
||||||||||
Total
current liabilities
|
364.9
|
146.7
|
231.4
|
(113.4
|
)
|
629.6
|
||||||||||
Long-term
debt
|
937.5
|
—
|
22.2
|
—
|
959.7
|
|||||||||||
Deferred
income taxes
|
—
|
2.0
|
69.7
|
(2.0
|
)
|
69.7
|
||||||||||
Pension
obligations
|
191.2
|
—
|
71.3
|
—
|
262.5
|
|||||||||||
Other
postretirement benefit obligations
|
139.9
|
2.1
|
0.2
|
—
|
142.2
|
|||||||||||
Deferred
credits and other liabilities
|
220.8
|
14.1
|
20.7
|
—
|
255.6
|
|||||||||||
Asbestos-related
liabilities
|
233.6
|
—
|
—
|
—
|
233.6
|
|||||||||||
Intercompany
notes payable (receivable)
|
1,626.5
|
(1,413.5
|
)
|
(255.0
|
)
|
42.0
|
—
|
|||||||||
Minority
interests
|
—
|
—
|
12.7
|
—
|
12.7
|
|||||||||||
Total
stockholders' equity
|
242.9
|
1,664.6
|
1,036.7
|
(2,701.3
|
)
|
242.9
|
||||||||||
Total
liabilities and stockholders' equity
|
$
|
3,957.3
|
$
|
416.0
|
$
|
1,209.9
|
$
|
(2,774.7
|
)
|
$
|
2,808.5
|
Condensed
Consolidating Balance Sheet
|
||||||||||||||||
December
31, 2005
|
||||||||||||||||
Unconsolidated
|
|
|||||||||||||||
|
Guarantor
|
Non-Guarantor
|
Eliminations
and
|
|||||||||||||
Assets
|
Parent
|
Subsidiaries
|
Subsidiaries
|
Adjustments
|
Consolidated
|
|||||||||||
Current
assets
|
||||||||||||||||
Cash
and cash equivalents
|
$
|
9.1
|
$
|
1.0
|
$
|
67.2
|
$
|
—
|
$
|
77.3
|
||||||
Accounts
receivable, net
|
62.1
|
35.8
|
191.6
|
0.2
|
289.7
|
|||||||||||
Intercompany
receivable
|
68.7
|
17.5
|
21.4
|
(107.6
|
)
|
—
|
||||||||||
Inventories
|
52.7
|
52.4
|
76.6
|
(2.1
|
)
|
179.6
|
||||||||||
Deferred
income taxes
|
24.0
|
2.9
|
12.4
|
—
|
39.3
|
|||||||||||
FiberVisions
assets held for sale
|
—
|
138.8
|
63.9
|
—
|
202.7
|
|||||||||||
Current
assets of discontinued operations
|
6.7
|
—
|
—
|
—
|
6.7
|
|||||||||||
Income
taxes receivable
|
12.6
|
—
|
—
|
—
|
12.6
|
|||||||||||
Other
current assets
|
12.8
|
1.8
|
20.7
|
0.2
|
35.5
|
|||||||||||
Total
current assets
|
248.7
|
250.2
|
453.8
|
(109.3
|
)
|
843.4
|
||||||||||
Property,
plant and equipment, net
|
145.6
|
107.2
|
282.6
|
—
|
535.4
|
|||||||||||
Investments
in subsidiaries and advances, net
|
2,461.4
|
88.3
|
44.9
|
(2,594.6
|
)
|
—
|
||||||||||
Intangible
assets, net
|
137.7
|
—
|
5.1
|
—
|
142.8
|
|||||||||||
Goodwill
|
58.7
|
27.9
|
354.4
|
—
|
441.0
|
|||||||||||
Deferred
income taxes
|
361.7
|
—
|
18.3
|
(139.6
|
)
|
240.4
|
||||||||||
Asbestos-related
assets
|
120.7
|
—
|
—
|
—
|
120.7
|
|||||||||||
Deferred
charges and other assets
|
171.6
|
13.7
|
59.8
|
—
|
245.1
|
|||||||||||
Total
assets
|
$
|
3,706.1
|
$
|
487.3
|
$
|
1,218.9
|
$
|
(2,843.5
|
)
|
$
|
2,568.8
|
|||||
Liabilities
and Stockholders' (Deficit) Equity
|
||||||||||||||||
Current
liabilities
|
||||||||||||||||
Accounts
payable
|
$
|
51.5
|
$
|
16.7
|
$
|
104.5
|
$
|
0.2
|
$
|
172.9
|
||||||
FiberVisions
liabilities held for sale
|
—
|
51.2
|
15.4
|
—
|
66.6
|
|||||||||||
Asbestos-related
liabilities
|
36.4
|
—
|
—
|
—
|
36.4
|
|||||||||||
Intercompany
payable
|
1.5
|
60.7
|
42.0
|
(104.2
|
)
|
—
|
||||||||||
Current
debt obligations
|
4.0
|
—
|
12.7
|
—
|
16.7
|
|||||||||||
Accrued
expenses
|
76.2
|
60.5
|
80.3
|
—
|
217.0
|
|||||||||||
Current
liabilities of discontinued operations
|
2.8
|
—
|
—
|
—
|
2.8
|
|||||||||||
Total
current liabilities
|
172.4
|
189.1
|
254.9
|
(104.0
|
)
|
512.4
|
||||||||||
Long-term
debt
|
1,088.6
|
—
|
3.7
|
—
|
1,092.3
|
|||||||||||
Deferred
income taxes
|
—
|
142.6
|
72.2
|
(139.0
|
)
|
75.8
|
||||||||||
Pension
obligations
|
251.7
|
—
|
71.7
|
—
|
323.4
|
|||||||||||
Other
postretirement benefit obligation
|
63.1
|
2.1
|
0.3
|
—
|
65.5
|
|||||||||||
Deferred
credits and other liabilities
|
254.2
|
18.8
|
16.4
|
—
|
289.4
|
|||||||||||
Asbestos-related
liabilities
|
233.6
|
—
|
—
|
—
|
233.6
|
|||||||||||
Intercompany
notes payable (receivable)
|
1,667.2
|
(1,208.7
|
)
|
(458.5
|
)
|
—
|
—
|
|||||||||
Minority
interests
|
—
|
—
|
1.1
|
—
|
1.1
|
|||||||||||
Total
stockholders' (deficit) equity
|
(24.7
|
)
|
1,343.4
|
1,257.1
|
(2,600.5
|
)
|
(24.7
|
)
|
||||||||
Total
liabilities and stockholders' (deficit) equity
|
$
|
3,706.1
|
$
|
487.3
|
$
|
1,218.9
|
$
|
(2,843.5
|
)
|
$
|
2,568.8
|
Condensed
Consolidating Statement of Cash Flows
|
||||||||||||||||
Year
Ended December 31, 2006
|
||||||||||||||||
Unconsolidated
|
||||||||||||||||
Parent
|
Guarantor
Subsidiaries
|
Non-
Guarantor
Subsidiaries
|
Eliminations
and
Adjustments
|
Consolidated
|
||||||||||||
Net
Cash Provided By (Used In) Operating Activities
|
$
|
166.7
|
$
|
(1.2
|
)
|
$
|
482.1
|
$
|
(474.7
|
)
|
$
|
172.9
|
||||
Cash
Flow From Investing Activities:
|
||||||||||||||||
Capital
expenditures
|
(21.3
|
)
|
(21.0
|
)
|
(51.3
|
)
|
—
|
(93.6
|
)
|
|||||||
Acquisitions
and investments, net of
cash, recognized upon consolidation
|
—
|
(22.7
|
)
|
(6.7
|
)
|
—
|
(29.4
|
)
|
||||||||
Proceeds
from sale of 51% interest
in FiberVisions, net
|
17.8
|
—
|
—
|
—
|
17.8
|
|||||||||||
Proceeds
of fixed asset disposals
|
1.1
|
5.9
|
4.3
|
—
|
11.3
|
|||||||||||
Other,
net
|
(0.2
|
)
|
—
|
—
|
—
|
(0.2
|
)
|
|||||||||
Net
cash used in investing activities
|
(2.6
|
)
|
(37.8
|
)
|
(53.7
|
)
|
—
|
(94.1
|
)
|
|||||||
Cash
Flow From Financing Activities:
|
||||||||||||||||
Long-term
debt issued by FiberVisions, net
of issuance costs
|
83.7
|
—
|
—
|
—
|
83.7
|
|||||||||||
Long-term
debt proceeds
|
—
|
—
|
22.0
|
—
|
22.0
|
|||||||||||
Long-term
debt payments
|
(135.7
|
)
|
—
|
(6.8
|
)
|
—
|
(142.5
|
)
|
||||||||
Change
in short-term debt
|
—
|
—
|
5.8
|
—
|
5.8
|
|||||||||||
Change
in intercompany advances
|
(71.5
|
)
|
38.5
|
(388.7
|
)
|
421.7
|
—
|
|||||||||
Proceeds
from the exercise of stock options
|
37.0
|
—
|
—
|
—
|
37.0
|
|||||||||||
Dividends
paid
|
—
|
—
|
(53.0
|
)
|
53.0
|
—
|
||||||||||
Other,
net
|
5.6
|
—
|
—
|
—
|
5.6
|
|||||||||||
Net
cash provided by (used in) financing activities
|
(80.9
|
)
|
38.5
|
(420.7
|
)
|
474.7
|
11.6
|
|||||||||
Effect
of exchange rate changes on cash
|
—
|
—
|
4.1
|
—
|
4.1
|
|||||||||||
Net
increase (decrease) in cash and cash equivalents
|
83.2
|
(0.5
|
)
|
11.8
|
—
|
94.5
|
||||||||||
Cash
and cash equivalents at beginning of year
|
6.5
|
1.0
|
69.8
|
—
|
77.3
|
|||||||||||
Cash
and cash equivalents at end of year
|
$
|
89.7
|
$
|
0.5
|
$
|
81.6
|
$
|
—
|
$
|
171.8
|
Condensed
Consolidating Statement of Cash Flows
|
||||||||||||||||
Year
Ended December 31, 2005
|
||||||||||||||||
Unconsolidated
|
||||||||||||||||
Parent
|
Guarantor
Subsidiaries
|
Non-
Guarantor
Subsidiaries
|
Eliminations
and
Adjustments
|
Consolidated
|
||||||||||||
Net
Cash Provided By (Used In)
Operating Activities
|
$
|
(4.6
|
)
|
$
|
29.1
|
$
|
(81.2
|
)
|
$
|
195.9
|
$
|
139.2
|
||||
Cash
Flow From Investing Activities:
|
||||||||||||||||
Capital
expenditures
|
(16.7
|
)
|
(26.7
|
)
|
(24.1
|
)
|
—
|
(67.5
|
)
|
|||||||
Investments
|
—
|
—
|
(4.4
|
)
|
—
|
(4.4
|
)
|
|||||||||
Proceeds
of fixed asset disposals
|
13.3
|
—
|
3.3
|
—
|
16.6
|
|||||||||||
Other,
net
|
—
|
—
|
(2.4
|
)
|
—
|
(2.4
|
)
|
|||||||||
Net
cash used in investing activities
|
(3.4
|
)
|
(26.7
|
)
|
(27.6
|
)
|
—
|
(57.7
|
)
|
|||||||
Cash
Flow From Financing Activities:
|
||||||||||||||||
Long-term
debt payments
|
(112.8
|
)
|
—
|
(18.4
|
)
|
—
|
(131.2
|
)
|
||||||||
Change
in short-term debt
|
—
|
—
|
1.9
|
—
|
1.9
|
|||||||||||
Change
in intercompany advances
|
82.2
|
(2.3
|
)
|
159.2
|
(239.1
|
)
|
—
|
|||||||||
Proceeds
from the exercise of stock options
|
2.7
|
—
|
—
|
—
|
2.7
|
|||||||||||
Dividends
paid
|
—
|
—
|
(43.2
|
)
|
43.2
|
—
|
||||||||||
Other,
net
|
(0.4
|
)
|
—
|
—
|
—
|
(0.4
|
)
|
|||||||||
Net
cash (used in) provided by financing activities
|
(28.3
|
)
|
(2.3
|
)
|
99.5
|
(195.9
|
)
|
(127.0
|
)
|
|||||||
Effect
of exchange rate changes on cash
|
—
|
—
|
(3.7
|
)
|
—
|
(3.7
|
)
|
|||||||||
Net
(decrease) increase in cash and cash equivalents
|
(36.3
|
)
|
0.1
|
(13.0
|
)
|
—
|
(49.2
|
)
|
||||||||
Cash
and cash equivalents at beginning of year
|
42.8
|
0.9
|
82.8
|
—
|
126.5
|
|||||||||||
Cash
and cash equivalents at end of year
|
$
|
6.5
|
$
|
1.0
|
$
|
69.8
|
$
|
—
|
$
|
77.3
|
Condensed
Consolidating Statement of Cash Flows
|
||||||||||||||||
Year
Ended December 31, 2004
|
||||||||||||||||
Unconsolidated
|
||||||||||||||||
Parent
|
Guarantor
Subsidiaries
|
Non-
Guarantor
Subsidiaries
|
Eliminations
and
Adjustments
|
Consolidated
|
||||||||||||
Net
Cash Provided By Operating Activities
|
$
|
155.4
|
$
|
40.9
|
$
|
490.0
|
$
|
(565.8
|
)
|
$
|
120.5
|
|||||
Cash
Flow From Investing Activities:
|
||||||||||||||||
Capital
expenditures
|
(22.5
|
)
|
(15.4
|
)
|
(39.4
|
)
|
(0.1
|
)
|
(77.4
|
)
|
||||||
Proceeds
of fixed asset disposals
|
0.8
|
—
|
0.6
|
—
|
1.4
|
|||||||||||
Proceeds
from sale of minority interest in
|
||||||||||||||||
CP
Kelco ApS
|
27.0
|
—
|
—
|
—
|
27.0
|
|||||||||||
Other,
net
|
0.8
|
(1.5
|
)
|
0.7
|
(0.1
|
)
|
(0.1
|
)
|
||||||||
Net
cash (used in) provided by investing
|
||||||||||||||||
activities
|
6.1
|
(16.9
|
)
|
(38.1
|
)
|
(0.2
|
)
|
(49.1
|
)
|
|||||||
Cash
Flow From Financing Activities:
|
||||||||||||||||
Long-term
debt proceeds
|
650.0
|
—
|
—
|
—
|
650.0
|
|||||||||||
Long-term
debt payments
|
(713.2
|
)
|
—
|
(16.3
|
)
|
—
|
(729.5
|
)
|
||||||||
Change
in short-term debt
|
—
|
—
|
1.6
|
—
|
1.6
|
|||||||||||
Change
in intercompany advances
|
(68.4
|
)
|
(25.2
|
)
|
(262.2
|
)
|
355.8
|
—
|
||||||||
Proceeds
from the exercise of stock options
|
5.5
|
—
|
—
|
—
|
5.5
|
|||||||||||
Payment
of debt issuance costs and underwriting
fees
|
(7.8
|
)
|
—
|
—
|
—
|
(7.8
|
)
|
|||||||||
Dividends
paid
|
—
|
—
|
(210.2
|
)
|
210.2
|
—
|
||||||||||
Other,
net
|
6.1
|
—
|
—
|
—
|
6.1
|
|||||||||||
Net
cash used in financing activities
|
(127.8
|
)
|
(25.2
|
)
|
(487.1
|
)
|
566.0
|
(74.1
|
)
|
|||||||
Effect
of exchange rate changes on cash
|
—
|
—
|
2.9
|
—
|
2.9
|
|||||||||||
Net
increase (decrease) in cash and cash equivalents
|
33.7
|
(1.2
|
)
|
(32.3
|
)
|
—
|
0.2
|
|||||||||
Cash
and cash equivalents at beginning of year
|
9.1
|
2.1
|
115.1
|
—
|
126.3
|
|||||||||||
Cash
and cash equivalents at end of year
|
$
|
42.8
|
$
|
0.9
|
$
|
82.8
|
$
|
—
|
$
|
126.5
|
1st
Quarter
|
2nd
Quarter
|
3rd
Quarter
|
4th
Quarter
|
Year
|
|||||||||||||||||||||||||||
2006
|
2005
|
2006
|
2005
|
2006
|
2005
|
2006
|
2005
|
2006
|
2005
|
||||||||||||||||||||||
$
|
527.3
|
$
|
501.9
|
$
|
501.0
|
$
|
534.7
|
$
|
513.1
|
$
|
519.6
|
$
|
493.9
|
$
|
498.8
|
$
|
2,035.3
|
$
|
2,055.0
|
||||||||||||
Cost
of sales
|
360.7
|
337.6
|
324.7
|
351.2
|
332.2
|
353.7
|
325.8
|
348.6
|
1,343.4
|
1,391.1
|
|||||||||||||||||||||
Selling,
general and administrative expenses
|
91.3
|
99.7
|
90.7
|
99.9
|
92.8
|
92.7
|
97.4
|
90.2
|
372.2
|
382.5
|
|||||||||||||||||||||
Research
and development
|
9.6
|
10.3
|
9.4
|
10.0
|
9.3
|
10.1
|
10.5
|
10.4
|
38.8
|
40.8
|
|||||||||||||||||||||
Intangible
asset amortization
|
1.6
|
2.0
|
2.0
|
2.0
|
1.8
|
2.0
|
1.8
|
2.0
|
7.2
|
8.0
|
|||||||||||||||||||||
Impairment
of FiberVisions goodwill
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
52.9
|
—
|
52.9
|
|||||||||||||||||||||
Other
operating expense, net
|
7.2
|
9.7
|
8.6
|
10.4
|
4.6
|
11.1
|
4.7
|
8.2
|
25.1
|
39.4
|
|||||||||||||||||||||
Profit
(loss) from operations
|
56.9
|
42.6
|
65.6
|
61.2
|
72.4
|
50.0
|
53.7
|
(13.5
|
)
|
248.6
|
140.3
|
||||||||||||||||||||
Interest
and debt expense
|
20.7
|
22.2
|
16.7
|
22.8
|
16.7
|
22.5
|
17.1
|
21.9
|
71.2
|
89.4
|
|||||||||||||||||||||
Vertac
litigation charges
|
—
|
14.8
|
106.0
|
0.1
|
1.0
|
0.1
|
1.5
|
—
|
108.5
|
15.0
|
|||||||||||||||||||||
Other
expense, net
|
10.6
|
6.4
|
21.1
|
25.6
|
4.6
|
0.1
|
29.4
|
39.2
|
65.7
|
71.3
|
|||||||||||||||||||||
Income
(loss) before income taxes, minority interests and equity
loss
|
25.6
|
(0.8
|
)
|
(78.2
|
)
|
12.7
|
50.1
|
27.3
|
5.7
|
(74.6
|
)
|
3.2
|
(35.4
|
)
|
|||||||||||||||||
(Benefit)
provision for income taxes
|
10.7
|
(6.5
|
)
|
(27.5
|
)
|
3.1
|
14.1
|
2.8
|
(189.5
|
)
|
(3.2
|
)
|
(192.2
|
)
|
(3.8
|
)
|
|||||||||||||||
Income
(loss) before minority interests and equity loss
|
14.9
|
5.7
|
(50.7
|
)
|
9.6
|
36.0
|
24.5
|
195.2
|
(71.4
|
)
|
195.4
|
(31.6
|
)
|
||||||||||||||||||
Minority
interests in earnings of consolidated subsidiaries
|
(0.1
|
)
|
(0.4
|
)
|
(0.3
|
)
|
(0.2
|
)
|
(0.4
|
)
|
(0.3
|
)
|
(0.6
|
)
|
(0.1
|
)
|
(1.4
|
)
|
(1.0
|
)
|
|||||||||||
Equity
loss of affiliated companies, net of tax
|
(0.4
|
)
|
0.3
|
(0.6
|
)
|
—
|
(1.1
|
)
|
0.2
|
(1.1
|
)
|
—
|
(3.2
|
)
|
0.5
|
||||||||||||||||
Net
income (loss) from continuing operations before discontinued operations
and cumulative effect of changes in accounting principle
|
14.4
|
5.6
|
(51.6
|
)
|
9.4
|
34.5
|
24.4
|
193.5
|
(71.5
|
)
|
190.8
|
(32.1
|
)
|
||||||||||||||||||
Net
income (loss) from discontinued operations, net of tax
|
(0.6
|
)
|
(0.7
|
)
|
(0.7
|
)
|
(0.2
|
)
|
(0.3
|
)
|
(0.4
|
)
|
48.6
|
(5.2
|
)
|
47.0
|
(6.5
|
)
|
|||||||||||||
Net
income (loss) before cumulative effect of
|
|||||||||||||||||||||||||||||||
changes
in accounting principle
|
13.8
|
4.9
|
(52.3
|
)
|
9.2
|
34.2
|
24.0
|
242.1
|
(76.7
|
)
|
237.8
|
(38.6
|
)
|
||||||||||||||||||
Cumulative
effect of changes in accounting principle
|
0.9
|
—
|
—
|
—
|
—
|
—
|
—
|
(2.5
|
)
|
0.9
|
(2.5
|
)
|
|||||||||||||||||||
Net
income (loss)
|
$
|
14.7
|
$
|
4.9
|
$
|
(52.3
|
)
|
$
|
9.2
|
$
|
34.2
|
$
|
24.0
|
$
|
242.1
|
$
|
(79.2
|
)
|
$
|
238.7
|
$
|
(41.1
|
)
|
||||||||
Basic
earnings (loss) per share:
|
|||||||||||||||||||||||||||||||
Continuing
operations
|
$
|
0.13
|
$
|
0.06
|
$
|
(0.46
|
)
|
$
|
0.09
|
$
|
0.31
|
$
|
0.22
|
$
|
1.72
|
$
|
(0.66
|
)
|
$
|
1.72
|
$
|
(0.30
|
)
|
||||||||
Discontinued
operations
|
(0.01
|
)
|
(0.01
|
)
|
(0.01
|
)
|
(0.01
|
)
|
—
|
—
|
0.43
|
(0.05
|
)
|
0.42
|
(0.06
|
)
|
|||||||||||||||
Cumulative
effect of changes in accounting
principle
|
0.01
|
—
|
—
|
—
|
—
|
—
|
—
|
(0.02
|
)
|
0.01
|
(0.02
|
)
|
|||||||||||||||||||
Net
income (loss)
|
$
|
0.13
|
$
|
0.05
|
$
|
(0.47
|
)
|
$
|
0.08
|
$
|
0.31
|
$
|
0.22
|
$
|
2.15
|
$
|
(0.73
|
)
|
$
|
2.15
|
$
|
(0.38
|
)
|
||||||||
Diluted
earnings (loss) per share:
|
|||||||||||||||||||||||||||||||
Continuing
operations
|
$
|
0.13
|
$
|
0.05
|
$
|
(0.46
|
)
|
$
|
0.08
|
$
|
0.31
|
$
|
0.22
|
$
|
1.71
|
$
|
(0.66
|
)
|
$
|
1.71
|
$
|
(0.30
|
)
|
||||||||
Discontinued
operations
|
(0.01
|
)
|
(0.01
|
)
|
(0.01
|
)
|
—
|
—
|
—
|
0.43
|
(0.05
|
)
|
0.42
|
(0.06
|
)
|
||||||||||||||||
Cumulative
effect of changes in accounting
principle
|
0.01
|
—
|
—
|
—
|
—
|
—
|
—
|
(0.02
|
)
|
0.01
|
(0.02
|
)
|
|||||||||||||||||||
Net
income (loss)
|
$
|
0.13
|
$
|
0.04
|
$
|
(0.47
|
)
|
$
|
0.08
|
$
|
0.31
|
$
|
0.22
|
$
|
2.14
|
$
|
(0.73
|
)
|
$
|
2.14
|
$
|
(0.38
|
)
|
|
HERCULES
INCORPORATED
|
By:
|
/s/
Craig A. Rogerson
|
President
and Chief Executive Officer
|
Number
|
Description
|
||
31.1*
|
Certification
of President and Chief Executive Officer Pursuant to Exchange Act
Rule
13a-14(a)/15d-14(a)
|
||
31.2*
|
Certification
of Vice President and Chief Financial Officer Pursuant to Exchange
Act
Rule 13a-14(a)/15d-14(a)
|
||
32.1*
|
Section
1350 Certification of President and Chief Executive
Officer
|
||
32.2*
|
Section
1350 Certification of Vice President and Chief Financial
Officer
|
||
*Filed
herewith
|