-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OaeZpEHs5lNUJbbcz0PlOFQlVW152D+rRlNdkeDCGE1R6Z0VRw3TiAG9ouUDgMg4 SYjn2T9yzG/4swhOyLoDOw== 0000893220-02-000920.txt : 20020719 0000893220-02-000920.hdr.sgml : 20020719 20020719142048 ACCESSION NUMBER: 0000893220-02-000920 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020429 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20020719 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HERCULES INC CENTRAL INDEX KEY: 0000046989 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS CHEMICAL PRODUCTS [2890] IRS NUMBER: 510023450 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-00496 FILM NUMBER: 02706470 BUSINESS ADDRESS: STREET 1: 1313 N MARKET ST STREET 2: HERCULES PLZ CITY: WILMINGTON STATE: DE ZIP: 19894 BUSINESS PHONE: 3025945000 MAIL ADDRESS: STREET 1: HERCULES PLAZA STREET 2: RM 8151 NW CITY: WILMINGTON STATE: DE ZIP: 19894-0001 FORMER COMPANY: FORMER CONFORMED NAME: HERCULES POWDER CO DATE OF NAME CHANGE: 19680321 8-K/A 1 w62393e8vkza.txt HERCULES INC. FORM 8-K/A DATED APRIL 29, 2002 United States Securities and Exchange Commission Washington, D.C. 20549 FORM 8-K/A CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): April 29, 2002 Hercules Incorporated ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 001-00496 51-0023450 - -------------------- ----------------------- ---------------------- (State or other (Commission File Number) (IRS Employer jurisdiction of Identification Number) incorporation) Hercules Plaza 1313 North Market Street Wilmington, Delaware 19894-0001 ---------------------------------------------------- (Address of principal executive offices) (Zip Code) (302) 594-5000 ---------------------------------------------------- (Registrant's telephone number, including area code) Item 2. Acquisition or Disposition of Assets. On April 29, 2002, Hercules Incorporated ("Hercules") announced the completion of the sale of the Water Treatment Business, consisting of the BetzDearborn Division and certain Pulp and Paper Division treatment businesses, to GE Specialty Materials ("GESM"), a unit of General Electric Company. The sale price was $1.8 billion in cash, resulting in net after tax proceeds of approximately $1.665 billion. As previously announced, the Company used the net proceeds to prepay debt under its senior credit facility and ESOP credit facility. Pursuant to the March 6, 2002 amendments to the senior credit facility and the ESOP credit facility, the following provisions became effective upon the consummation of the sale and the prepayment of debt: i. the release of the subsidiary stock pledged to the collateral agent; ii. the elimination of the requirement that stock of any additional subsidiaries be pledged in the future; and iii. increases in the permitted amounts of asset purchases and dispositions. Proceeds from the divestiture will also serve as collateral for outstanding letters of credit. Item 7. Financial Statements and Exhibits. (b) Pro Forma Financial Information. Unaudited Pro Forma Consolidated Statement of Operations for the years ended December 31, 2001, 2000, and 1999. Unaudited Pro Forma Consolidated Statement of Operations for the three months ended March 31, 2002 and 2001. Unaudited Pro Forma Consolidated Balance Sheet as of March 31, 2002. (c) Exhibits. None Basis of Presentation The following unaudited pro forma consolidated financial statements reflect the divestiture of Hercules' Water Treatment Business after giving effect to the pro forma adjustments described in the accompanying notes. These unaudited pro forma consolidated financial statements have been prepared from, and should be read in conjunction with, the historical consolidated financial statements and notes thereto of Hercules, which are included in Hercules' Annual Report on Form 10-K for the year ended December 31, 2001 and Quarterly Report on Form 10-Q as of March 31, 2002 and for the three months ended March 31, 2002 and 2001, respectively. The unaudited pro forma information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred had the divestiture been consummated at the dates indicated, nor is it necessarily indicative of future operating results or financial position of Hercules. The unaudited pro forma consolidated statements of operations give effect to the divestiture as if it had occurred at the beginning of the earliest period presented. The unaudited pro forma balance sheet gives effect to the divestiture as if it had occurred on March 31, 2002. HERCULES INCORPORATED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2001 (UNAUDITED)
(In millions, except per share) Pro Forma Adjustments ----------------------- Water Treatment Other Hercules Business(1) Adjustments Pro Forma -------- ----------- ----------- --------- Net Sales $ 2,620 $ 843 $ -- $ 1,777 Cost of Sales 1,464 336 (15)(2) 1,143 Selling, general and administrative expenses 743 341 -- 402 Research and development 67 14 -- 53 Goodwill and intangible asset amortization 76 52 -- 24 Other operating income, net (17) -- -- (17) ------- ------- ------- ------- Profit from operations 287 100 15 172 Interest and debt expense 196 -- 128(3) 68 Preferred security distributions of subsidiary trusts 58 -- -- 58 Other expense, net (10) (2) -- (8) ------- ------- ------- ------- Income before income taxes and equity loss 23 98 (113) 38 Provision (benefit) for income taxes 72 55 (40)(4) 57 ------- ------- ------- ------- (Loss) income before equity loss (49) 43 (73) (19) Equity loss of affiliated companies, net of tax (9) -- -- (9) ------- ------- ------- ------- Net (loss) income $ (58) $ 43 $ (73) $ (28) ======= ======= ======= ======= Basic and diluted loss per share: Per share - basic $ (0.54) $ (0.26) Weighted average shares outstanding - basic 108.2 108.2 Per share - assuming dilution $ (0.54) $ (0.26) Weighted average shares outstanding - diluted 108.2 108.2
See accompanying notes to pro forma consolidated financial statements. HERCULES INCORPORATED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2000 (UNAUDITED)
(In millions, except per share) Pro Forma Adjustments --------------------- Water Treatment Other Hercules Business(1) Adjustments Pro Forma -------- ----------- ----------- --------- Net Sales $ 3,152 $ 849 $ -- $ 2,303 Cost of Sales 1,784 332 (16)(2) 1,468 Selling, general and administrative expenses 810 367 -- 443 Research and development 80 16 -- 64 Goodwill and intangible asset amortization 80 56 -- 24 Other operating income, net (46) -- -- (46) ------- ------- ------- ------- Profit from operations 444 78 16 350 Interest and debt expense 164 -- 121(3) 43 Preferred security distributions of subsidiary trusts 96 -- -- 96 Other expense, net (18) -- -- (18) ------- ------- ------- ------- Income (loss) before income taxes and equity loss 166 78 (105) 193 Provision (benefit) for income taxes 66 46 (37)(4) 57 ------- ------- ------- ------- Income (loss) before equity loss 100 32 (68) 136 Equity loss of affiliated companies, net of tax (2) -- -- (2) ------- ------- ------- ------- Net income (loss) $ 98 $ 32 $ (68) $ 134 ======= ======= ======= ======= Basic and diluted earnings per share: Per share - basic $ 0.91 $ 1.25 Weighted average shares outstanding - basic 107.2 107.2 Per share - assuming dilution $ 0.91 $ 1.25 Weighted average shares outstanding - diluted 107.4 107.4
See accompanying notes to pro forma consolidated financial statements. HERCULES INCORPORATED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1999 (UNAUDITED)
(In millions, except per share) Pro Forma Adjustments ------------------------ Water Treatment Other Hercules Business(1) Adjustments Pro Forma -------- ----------- ----------- --------- Net Sales $ 3,309 $ 846 $ -- $ 2,463 Cost of Sales 1,831 325 (18)(2) 1,524 Selling, general and administrative expenses 787 340 -- 447 Research and development 85 18 -- 67 Goodwill and intangible asset amortization 79 62 -- 17 Other operating expenses, net 47 -- -- 47 ------- ------- ------- ------- Profit from operations 480 101 18 361 Interest and debt expense 185 -- 106(3) 79 Preferred security distributions of subsidiary trusts 51 -- -- 51 Other expense, net (2) (1) -- (1) ------- ------- ------- ------- Income (loss) before income taxes and equity income 242 100 (88) 230 Provision (benefit) for income taxes 75 58 (31)(4) 48 ------- ------- ------- ------- Income (loss) before equity income 167 42 (57) 182 Equity income of affiliated companies, net of tax 1 -- -- 1 ------- ------- ------- ------- Net income (loss) $ 168 $ 42 $ (57) $ 183 ======= ======= ======= ======= Basic and diluted earnings per share: Per share - basic $ 1.63 $ 1.77 Weighted average shares outstanding - basic 103.2 103.2 Per share - assuming dilution $ 1.62 $ 1.76 Weighted average shares outstanding - diluted 103.9 103.9
See accompanying notes to pro forma consolidated financial statements. HERCULES INCORPORATED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2002 (UNAUDITED)
(In millions, except per share) Pro Forma Adjustments ---------------------- Water Treatment Other Hercules(5) Business Adjustments Pro Forma ----------- -------- ----------- --------- Net Sales $ 402 $ -- $ 402 Cost of Sales 243 -- (4)(2) 247 Selling, general and administrative expenses 88 -- -- 88 Research and development 10 -- -- 10 Goodwill and intangible asset amortization 2 -- -- 2 Other operating expenses, net 5 -- -- 5 ------ ------- ----- ----- Profit from operations 54 -- 4 50 Interest and debt expense 36 -- 20(3) 16 Preferred security distributions of subsidiary trusts 15 -- -- 15 Other expense, net (4) -- -- (4) ------ ------- ----- ----- (Loss) income before income taxes and equity income (1) -- (16) 15 Provision (benefit) for income taxes 2 -- (6)(4) 8 ------ ------- ----- ----- (Loss) income before equity income (3) -- (10) 7 Equity income of affiliated companies, net of tax -- -- -- -- ------ ------- ----- ----- Net (loss) income from continuing operations $ (3) $ -- $ (10) $ 7 ====== ======= ===== ===== Basic and diluted (loss) earnings per share: Per share - basic $(0.03) $0.06 Weighted average shares outstanding - basic 109.0 109.0 Per share - assuming dilution $(0.03) $0.06 Weighted average shares outstanding - diluted 109.0 109.2
See accompanying notes to pro forma consolidated financial statements. HERCULES INCORPORATED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2001 (UNAUDITED)
(In millions, except per share) Pro Forma Adjustments ---------------------- Water Treatment Other Hercules(5) Business Adjustments Pro Forma ----------- --------- ----------- --------- Net Sales $ 498 $ -- $ 498 Cost of Sales 326 -- (4)(2) 330 Selling, general and administrative expenses 101 -- -- 101 Research and development 15 -- -- 15 Goodwill and intangible asset amortization 7 -- -- 7 Other operating expenses, net 3 -- -- 3 ------ ------- ----- ----- Profit from operations 46 4 42 Interest and debt expense 55 -- 36(3) 19 Preferred security distributions of subsidiary trusts 15 -- 15 Other expense, net (2) -- (2) ------ ------- ----- ----- (Loss) income before income taxes and equity loss (26) -- (32) 6 (Benefit) provision for income taxes (10) -- (11)(4) 1 ------ ------- ----- ----- (Loss) income before equity loss (16) -- (21) 5 Equity loss of affiliated companies, net of tax (3) -- (3) ------ ------- ----- ----- Net (loss) income from continuing operations $ (19) $ -- $ (21) $ 2 ====== ======= ===== ===== Basic and diluted (loss) earnings per share: Per share - basic $(0.17) $0.02 Weighted average shares outstanding - basic 107.9 107.9 Per share - assuming dilution $(0.17) $0.02 Weighted average shares outstanding - diluted 107.9 108.1
See accompanying notes to pro forma consolidated financial statements. HERCULES INCORPORATED PRO FORMA CONSOLIDATED BALANCE SHEET MARCH 31, 2002 (UNAUDITED)
ASSETS Hercules Business(6) Adjustments Pro Forma -------- ----------- ----------- --------- Current assets Cash and cash equivalents $ 52 $ -- $ 271(7) $ 323 Accounts and notes receivable, net 318 -- -- 318 Inventories 161 -- -- 161 Assets of business held for sale 1,914 (1,914) -- -- ------- ------- ------- ------- Total current assets 2,445 (1,914) 271 802 Property, plant, and equipment 1,866 -- -- 1,866 Accumulated depreciation and amortization (1,208) -- -- (1,208) ------- ------- ------- ------- Net property, plant, and equipment 658 -- -- 658 Goodwill and other intangible assets, net 610 -- -- 610 Other assets 775 -- (72)(9) 703 ------- ------- ------- ------- Total assets $ 4,488 $(1,914) $ 199 $ 2,773 ======= ======= ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 131 $ -- $ -- $ 131 Accrued expenses 515 -- (24)(10) 491 Short-term debt 205 -- (181)(7) 24 Liabilities of business held for sale 280 (280) -- -- ------- ------- ------- ------- Total current liabilities 1,131 (280) (205) 646 Long-term debt 1,984 -- (1,313)(8) 671 Deferred income taxes 191 -- -- 191 Postretirement benefits and other liabilities 478 -- -- 478 Commitments and contingencies -- -- -- -- Company-obligated preferred securities of subsidiary trusts 624 -- -- 624 Stockholders' equity Series preferred stock -- -- -- -- Common stock (shares issued: 2002 - 159,984,444) 83 -- -- 83 Additional paid-in capital 691 -- -- 691 Unearned compensation (104) -- -- (104) Other comprehensive losses (273) 113 -- (160) Retained earnings 1,520 (1,747) 1,717(11) 1,490 ------- ------- ------- ------- 1,917 (1,634) 1,717 2,000 Reacquired stock, at cost (shares: 2002 - 50,964,488) (1,837) -- -- (1,837) ------- ------- ------- ------- Total stockholders' equity 80 (1,634) 1,717 163 ------- ------- ------- ------- Total liabilities and stockholders' equity $ 4,488 $(1,914) $ 199 $ 2,773 ======= ======= ======= =======
See accompanying notes to pro forma consolidated financial statements. HERCULES INCORPORATED NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. Eliminates the results of operations of our Water Treatment Business for the period as if the divestiture had been completed as of the beginning of the period presented. 2. Pursuant to a distribution agreement with GESM, the Company will continue to purchase some products from the Water Treatment Business. This adjustment is the estimated incremental cost of purchasing product from an outside manufacturer (GESM) and reducing gross profit to a distribution profit only. 3. Reflects the reduction in interest expense attributable to the application of the proceeds from the Water Treatment Business sale to the reduction in long-term debt. 4. Reflects income tax effect of pro forma adjustments at a U.S. federal statutory rate of 35%. 5. Reflects the results from continuing operations of the Company, which already exclude the Water Treatment Business as this business has been reported as a discontinued operation, for the respective period. 6. Eliminates the assets and liabilities attributed to the Water Treatment Business as if the divestiture had been completed as of the balance sheet date. 7. Reflects the application of the estimated proceeds of the sale of the Water Treatment Business to prepay debt outstanding under Tranche A, Tranche D, the revolving credit facility and the ESOP Note, as follows: (in millions) Gross Proceeds $ 1,800 Principal Repayments Tranche A $ 436 Tranche D 370 Revolver 605 ESOP 75 1,486 --------------- 314 Prepayment penalties (34) Tax withholdings (9) ------- Cash $ 271 =======
The cash balance of $271 million includes $65 million of sale proceeds that was used on April 29, 2002 to repay borrowings against the revolver made during April to make a pension fund contribution. 8. Reflects principal repayments of $1,486 million plus the write-off of the remaining unamortized fair market value step-up on the ESOP credit facility of $8 million. HERCULES INCORPORATED NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 9. Reflects the elimination of transaction costs of $55 million which are deferred at March 31, 2002 and the write-off of $17 million in debt issuance costs. 10. Reflects elimination of accrued taxes related to reorganization related activities undertaken to facilitate the transaction which were withheld from the gross proceeds by GESM and the tax impact of prepayment penalties, debt issuance costs and ESOP fair market value adjustments. 11. Reflects the following: (in millions) Gross proceeds $ 1,800 Transaction costs (55) Prepayment penalties, net of taxes at 35% (22) Write-off of unamortized debt issuance costs, net of taxes at 35% (11) Write-off of ESOP debt fair market value step-up, net of taxes at 35% 5 ------- Adjustment to retained earnings $ 1,717 =======
SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. HERCULES INCORPORATED July 19, 2002 By: /s/ Israel J. Floyd ------------------------------------- Israel J. Floyd Corporate Secretary and General Counsel -----END PRIVACY-ENHANCED MESSAGE-----