-----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, UU7eQ6QfXOvnPtvkO2fQOgtbHzlvjxHW5wh79q4Sj5Q5thbyZNZ1EHXKwRMZZcyX o1hFDoO47PP+7aoIAuri2g== 0000898822-01-500155.txt : 20010509 0000898822-01-500155.hdr.sgml : 20010509 ACCESSION NUMBER: 0000898822-01-500155 CONFORMED SUBMISSION TYPE: DEFA14A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20010508 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: DEFA14A SEC ACT: SEC FILE NUMBER: 001-00496 FILM NUMBER: 1624835 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 DEFA14A 1 may7defa14a.txt DEFINITIVE ADDITIONAL MATERIALS UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 SCHEDULE 14A (RULE 14A-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934 Filed by the Registrant [x] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14A-6(E)(2)) [ ] Definitive Proxy Statement [x] Definitive Additional Materials [ ] Soliciting Material Pursuant to Rule 14a-12 Hercules Incorporated - ------------------------------------------------------------------------------ (Name of Registrant as Specified In Its Charter) N/A - ------------------------------------------------------------------------------ (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [x] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. 1) Title of each class of securities to which transaction applies: - ------------------------------------------------------------------------------ 2) Aggregate number of securities to which transaction applies: - ------------------------------------------------------------------------------ 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): - ------------------------------------------------------------------------------ 4) Proposed maximum aggregate value of transaction: - ------------------------------------------------------------------------------ 5) Total fee paid: - ------------------------------------------------------------------------------ [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. 1) Amount Previously Paid: - ------------------------------------------------------------------------------ 2) Form, Schedule or Registration Statement No.: - ------------------------------------------------------------------------------ 3) Filing Party: - ------------------------------------------------------------------------------ 4) Date Filed: - ------------------------------------------------------------------------------ HERCULES REPORTS FIRST QUARTER 2001 RESULTS; CONTINUES PROCESS TO SELL OR MERGE COMPANY WILMINGTON, DE, MAY 7, 2001 ... Hercules Incorporated (NYSE: HPC) today reported sales for the first-quarter ending March 31, 2001 of $702 million, down 4% on a comparable basis from the prior year. The company recorded a loss of $.09 per diluted share in the quarter on a reported and recurring basis. This compares to diluted earnings per share in the first quarter 2000 of $.34 on a reported basis and $.35 on a recurring basis. Earnings during the quarter included a non-cash loss of $.03 per diluted share from the company's equity interest in C.P. Kelco. The company reported recurring profit from operations of $63 million, 34% lower than the same period last year on the same business basis. This reflects the impact of challenging conditions in the chemical industry as well as soft demand in key markets. A number of factors including higher energy, freight and raw material costs, as well as unfavorable foreign currency exchange translation further reduced results. The slowing worldwide economy particularly impacted Pulp and Paper and Aqualon. However, BetzDearborn delivered results in line with last year's performance and the company's FiberVisions unit reported improved performance. Thomas L. Gossage, chairman and chief executive officer, said, "Difficult economic forces in the chemical industry and in our businesses continued in the first quarter. Although we are cautious looking forward, we expect business conditions to improve as the year progresses. To offset higher costs, we are raising prices across our divisions. In addition, we are attacking costs in every operation and maximizing cash flow as we simultaneously move ahead in our efforts to sell or merge the company. "We closed the sale of the majority of our resins business to Eastman Chemical Company last week. During the first quarter, we also signed a definitive agreement to sell the peroxides business to GEO Specialty Chemicals, Inc. Steps are also well underway to divest our wood rosin and terpenes business," Gossage said. (continued) 2 "The process to merge or sell the company and its businesses is ongoing," he said. "We are evaluating and pursuing a number of alternatives. Although the timetable has not met our original plans, the process continues to move forward." Gossage pointed out that cash flow from operating activities, which excludes capital expenditures, was positive for the quarter versus a deficit last year. He described that as "strong performance given the difficult operating environment for the industry and Hercules." Effective steps to improve cash included trimming of capital expenditures, active management of working capital, a company-wide restriction on hiring, and a firm hold on all discretionary expenses. Interest expense and preferred security distributions rose $15 million in the quarter as a result of higher interest rates as compared to the first quarter 2000. SEGMENT AND REGIONAL RESULTS - ---------------------------- In the Process Chemicals Segment, sales in the first quarter were down 2% and profit from operations declined 18% versus the same quarter 2000. The Pulp and Paper Division was hurt by weak demand in the North American and European markets. In North America, industry production of paper and paperboard declined 10% in the quarter. Volumes for Hercules Pulp and Paper Division were off 4% from last year's first quarter. BetzDearborn, also part of Process Chemicals, reported sales and profit from operations essentially even with last year's results. Higher costs borne by this division for freight and utility charges were offset by improved pricing, a 4% rise in volumes and positive changes in product mix. In the Functional Products Segment, first quarter sales and profit from operations, excluding the divested food gums and nitrocellulose businesses, were down 4% and profit from operations fell 38% compared to the same quarter 2000. Slower sales in emerging international regions and to the U.S. paint market were only partially offset by strong sales to the oilfield sector and to a rebounding construction market in Europe. Higher raw material and energy costs impacted results during the quarter. In addition, we had additional costs during the quarter as we commissioned our new methylcellulose facility in Belgium. Overall, on the same business basis, Aqualon's volumes rose 1% in the quarter versus a year ago. In the Chemical Specialties Segment, sales dropped 7% in the first quarter versus the same period a year ago, although profits from operations increased 6% compared to the first quarter 2000. Higher pricing and lower overhead expenses led to this improvement, despite being partially offset by higher costs for raw materials and energy. FiberVisions volumes were lower as this unit exited a number of lower margin textile sectors. (continued) 3 Within this segment, on May 1st, the company closed the sale of its hydrocarbon resins and portions of its rosin resins business to Eastman. Also, the peroxides sales to GEO and the auction of wood rosins and terpenes businesses are progressing. In the company's largest market, North America, sales declined 3%. In Europe, sales fell 4%; in the emerging markets of Latin America and Asia Pacific, sales in the quarter fell 4% and 6%, respectively. # # # Hercules manufactures and markets chemical specialties globally for making a variety of products for home, office and industrial markets. For more information, visit the Hercules website at www.herc.com. THIS NEWS RELEASE INCLUDES FORWARD-LOOKING STATEMENTS, AS DEFINED IN THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995, REFLECTING MANAGEMENT'S CURRENT ANALYSIS AND EXPECTATIONS, BASED ON REASONABLE ASSUMPTIONS. RESULTS COULD DIFFER MATERIALLY DEPENDING ON SUCH FACTORS AS BUSINESS CLIMATE, ECONOMIC AND COMPETITIVE UNCERTAINTIES, FAILURE TO COMPLETE TRANSACTIONS, ADVERSE LEGAL AND REGULATORY DEVELOPMENTS, AND ADVERSE CHANGES IN ECONOMIC AND POLITICAL CLIMATES AROUND THE WORLD. AS APPROPRIATE, ADDITIONAL FACTORS ARE CONTAINED IN REPORTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE OF THIS PRESS RELEASE. THIS PARAGRAPH IS INCLUDED TO PROVIDE SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS, WHICH ARE NOT REQUIRED TO BE PUBLICLY REVISED AS CIRCUMSTANCES CHANGE. Media Contact: John S. Riley (302) 594-6025 Investor Contact: Allen A. Spizzo (302) 594-6491 HERCULES INCORPORATED CONSOLIDATED STATEMENT OF INCOME (Dollars in Millions, except per share) (Unaudited) Three Months Ended March 31 --------------- 2001 2000(A) ------ ------- Net sales $702 $798 Cost of sales 409 450 Selling, general and administrative expenses 190 197 Research and development 19 21 Goodwill and intangible asset amortization 19 20 Other operating expenses, net 3 4 ------ ------- Profit from operations 62 106 Equity in income of affiliated companies (3) - Interest and debt expense 55 32 Preferred security distribution of subsidiary trusts 15 23 Other income (expense), net (3) 5 ------ ------- Income before income taxes (14) 56 Provision for income taxes (4) 20 ------ ------- Net income $(10) $36 ====== ======= Earnings per share: Basic: $(0.09) $0.34 ====== ======= Weighted average No. shares (millions) 107.9 106.7 Diluted: $(0.09) $0.34 ====== ======= Weighted average No. shares (millions) 108.0 106.9 Note: Depreciation and amortization $ 54 $ 60 ________________________________________________________________________________ (Unaudited) SEGMENT DATA Excluding (Dollars In Millions) Nonrecurring Items Three Months Three Months Ended Ended March 31 March 31 -------------------------------- 2001 2000 2001 2000 ------- ------ ------ ------ Net Sales By Industry Segment Process Chemicals and Services $407 $416 $407 $416 Functional Products 131 206 131 206 Chemical Specialties 164 177 164 177 Reconciling Items - (1) - (1) ------- ------ ------ ------ Total $702 $798 $702 $798 ======= ====== ====== ====== Profit (Loss) From Operations By Industry Segment Process Chemicals and Services $63 $77 $63 $77 Functional Products 24 52 24 52 Chemical Specialties 17 16 17 16 Reconciling Items (42) (39) (41) (37) ------- ------ ------ ------ Total $62 $106 $63 $108 ======= ====== ====== ====== EBITDA(B) $112 $162 $113 $164 (A) Effective with the second quarter 2000, we changed our policy regarding the classification of shipping and handling expenses. Accordingly, net sales and cost of sales for the first quarter 2000 have been restated to reflect this change for purposes of comparability. There is no impact on profit from operations as a result of this change. (B) Calculated as profit from operations plus depreciation and amortization, net of amortization of debt issuance costs. -----END PRIVACY-ENHANCED MESSAGE-----