3
|
||||
3
|
||||
3
|
||||
4
|
||||
5
|
||||
7
|
||||
38
|
||||
38
|
||||
40
|
||||
41
|
||||
47
|
||||
51
|
||||
53
|
||||
54
|
||||
55
|
||||
57
|
||||
57
|
||||
58
|
||||
59
|
||||
59
|
||||
59
|
||||
60
|
||||
61
|
(Unaudited)
|
|||||||||||||
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Net
sales
|
$
|
513.1
|
$
|
519.6
|
$
|
1,541.4
|
$
|
1,556.2
|
|||||
Cost
of sales
|
332.2
|
353.7
|
1,017.6
|
1,042.5
|
|||||||||
Selling,
general and administrative expenses
|
92.8
|
92.7
|
274.8
|
292.3
|
|||||||||
Research
and development
|
9.3
|
10.1
|
28.3
|
30.4
|
|||||||||
Intangible
asset amortization (Note 5)
|
1.8
|
2.0
|
5.4
|
6.0
|
|||||||||
Other
operating expense, net (Note 13)
|
4.6
|
11.1
|
20.4
|
31.2
|
|||||||||
Profit
from operations
|
72.4
|
50.0
|
194.9
|
153.8
|
|||||||||
Interest
and debt expense
|
16.7
|
22.5
|
54.1
|
67.5
|
|||||||||
Vertac
litigation charges (Note 9)
|
1.0
|
0.1
|
107.0
|
15.0
|
|||||||||
Other
expense, net (Note 14)
|
4.6
|
0.1
|
36.3
|
32.1
|
|||||||||
(Loss)
income before income taxes and equity loss
|
50.1
|
27.3
|
(2.5
|
)
|
39.2
|
||||||||
(Benefit)
provision for income taxes (Note 15)
|
14.1
|
2.8
|
(2.7
|
)
|
(0.6
|
)
|
|||||||
Income
(loss) before minority interests and equity loss (income)
|
36.0
|
24.5
|
0.2
|
39.8
|
|||||||||
Minority
interests in earnings of consolidated subsidiaries
|
(0.4
|
)
|
(0.3
|
)
|
(0.8
|
)
|
(0.9
|
)
|
|||||
Equity
(loss) income of affiliated companies, net of tax
|
(1.1
|
)
|
0.2
|
(2.1
|
)
|
0.5
|
|||||||
Net
(loss) income from continuing operations before discontinued operations
and cumulative effect of change in accounting principle
|
34.5
|
24.4
|
(2.7
|
)
|
39.4
|
||||||||
Net
loss from discontinued operations, net of tax (Note 17)
|
(0.3
|
)
|
(0.4
|
)
|
(1.6
|
)
|
(1.3
|
)
|
|||||
Net
(loss) income before cumulative effect of change in accounting
principle
|
34.2
|
24.0
|
(4.3
|
)
|
38.1
|
||||||||
Cumulative
effect of change in accounting principle, net of tax (Note
3)
|
—
|
—
|
0.9
|
—
|
|||||||||
Net
(loss) income
|
$
|
34.2
|
$
|
24.0
|
$
|
(3.4
|
)
|
$
|
38.1
|
||||
(Loss)
earnings per share (Note 16):
|
|||||||||||||
Basic
(loss) earnings per share
|
|||||||||||||
Continuing
operations
|
$
|
0.31
|
$
|
0.22
|
$
|
(0.02
|
)
|
$
|
0.36
|
||||
Discontinued
operations
|
—
|
—
|
(0.01
|
)
|
(0.01
|
)
|
|||||||
Cumulative
effect of change in accounting principle
|
—
|
—
|
—
|
—
|
|||||||||
Net
(loss) income
|
$
|
0.31
|
$
|
0.22
|
$
|
(0.03
|
)
|
$
|
0.35
|
||||
Weighted
average number of shares (millions)
|
110.9
|
108.9
|
110.6
|
108.7
|
|||||||||
Diluted
(loss) earnings per share
|
|||||||||||||
Continuing
operations
|
$
|
0.31
|
$
|
0.22
|
$
|
(0.02
|
)
|
$
|
0.35
|
||||
Discontinued
operations
|
—
|
—
|
(0.01
|
)
|
(0.01
|
)
|
|||||||
Cumulative
effect of change in accounting principle
|
—
|
—
|
—
|
—
|
|||||||||
Net
(loss) income
|
$
|
0.31
|
$
|
0.22
|
$
|
(0.03
|
)
|
$
|
0.34
|
||||
Weighted
average number of shares (millions)
|
111.7
|
110.7
|
110.6
|
110.5
|
|||||||||
Net
(loss) income
|
$
|
34.2
|
$
|
24.0
|
$
|
(3.4
|
)
|
$
|
38.1
|
||||
Foreign
currency translation
|
6.5
|
(2.2
|
)
|
44.4
|
(67.1
|
)
|
|||||||
Decrease
(increase) in additional minimum pension liability due to:
|
|||||||||||||
Remeasurement
adjustments (Note 7)
|
6.9
|
(20.2
|
)
|
71.6
|
(20.2
|
)
|
|||||||
Foreign
currency translation
|
(1.1
|
)
|
0.9
|
(2.9
|
)
|
4.6
|
|||||||
Other,
net including hedging activities
|
5.8
|
—
|
(21.8
|
)
|
—
|
||||||||
Comprehensive
income (loss)
|
$
|
52.3
|
$
|
2.5
|
$
|
87.9
|
$
|
(44.6
|
)
|
(Dollars
in millions)
|
(Unaudited)
|
||||||
September
30,
2006
|
December 31,
2005
|
||||||
ASSETS
|
|||||||
Current
assets
|
|||||||
Cash
and cash equivalents
|
$
|
123.9
|
$
|
77.3
|
|||
Accounts
receivable, net (Note 10)
|
335.5
|
289.7
|
|||||
Inventories
(Note 10)
|
208.9
|
179.6
|
|||||
Deferred
income taxes
|
83.3
|
39.3
|
|||||
FiberVisions
assets held for sale (Note 4)
|
—
|
202.7
|
|||||
Current
assets of discontinued operations (Note 17)
|
0.7
|
6.7
|
|||||
Other
current assets
|
43.4
|
48.1
|
|||||
Total
current assets
|
795.7
|
843.4
|
|||||
Property,
plant, and equipment, net (Note 10)
|
564.9
|
535.4
|
|||||
Intangible
assets, net (Note 5)
|
144.8
|
142.8
|
|||||
Goodwill
(Note 5)
|
480.2
|
441.0
|
|||||
Deferred
income taxes
|
172.4
|
240.4
|
|||||
Asbestos-related
assets (Note 9)
|
97.3
|
120.7
|
|||||
Deferred
charges and other assets
|
288.9
|
245.1
|
|||||
Total
assets
|
$
|
2,544.2
|
$
|
2,568.8
|
|||
LIABILITIES
AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
|||||||
Current
liabilities
|
|||||||
Accounts
payable
|
$
|
186.0
|
$
|
172.9
|
|||
FiberVisions
liabilities held for sale (Note 4)
|
—
|
66.6
|
|||||
Asbestos-related
liabilities (Note 9)
|
36.4
|
36.4
|
|||||
Current
debt obligations (Note 6)
|
20.5
|
16.7
|
|||||
Vertac
litigation liability (Note 9)
|
122.0
|
—
|
|||||
Accrued
expenses
|
242.8
|
217.0
|
|||||
Current
liabilities of discontinued operations (Note 17)
|
0.5
|
2.8
|
|||||
Total
current liabilities
|
608.2
|
512.4
|
|||||
Long-term
debt (Note 6)
|
986.1
|
1,092.3
|
|||||
Deferred
income taxes
|
79.7
|
75.8
|
|||||
Pension
obligations
|
215.5
|
323.4
|
|||||
Other
postretirement benefit obligations
|
54.3
|
65.5
|
|||||
Deferred
credits and other liabilities
|
293.5
|
289.4
|
|||||
Asbestos-related
liabilities (Note 9)
|
216.8
|
233.6
|
|||||
Total
liabilities
|
2,454.1
|
2,592.4
|
|||||
Commitments
and contingencies (Note 9)
|
—
|
—
|
|||||
Minority
interests
|
13.1
|
1.1
|
|||||
Stockholders’
equity (deficit)
|
|||||||
Series preferred
stock
|
—
|
—
|
|||||
Common
stock, $25/48 par value (shares issued at both 2006 and 2005 - 160.0
million)
|
83.3
|
83.3
|
|||||
Additional
paid-in capital
|
507.9
|
548.9
|
|||||
Unearned
compensation
|
(43.6
|
)
|
(65.7
|
)
|
|||
Accumulated
other comprehensive losses
|
(296.3
|
)
|
(387.6
|
)
|
|||
Retained
earnings
|
1,491.9
|
1,495.4
|
|||||
1,743.2
|
1,674.3
|
||||||
Reacquired
stock, at cost (2006 - 46.4 million shares; 2005 - 47.2 million
shares)
|
1,666.2
|
1,699.0
|
|||||
Total
stockholders’ equity (deficit)
|
77.0
|
(24.7
|
)
|
||||
Total
liabilities and stockholders’ equity (deficit)
|
$
|
2,544.2
|
$
|
2,568.8
|
(Dollars
in millions)
|
(Unaudited)
|
||||||
Nine
Months Ended
September
30,
|
|||||||
2006
|
2005
|
||||||
Cash
Flows from Operating Activities:
|
|||||||
Net
(loss) income
|
$
|
(3.4
|
)
|
$
|
38.1
|
||
Adjustments
to reconcile net (loss) income to net cash provided by operating
activities:
|
|||||||
Depreciation
|
54.1
|
59.6
|
|||||
Amortization
|
17.6
|
19.0
|
|||||
Deferred
income tax provision
|
(20.7
|
)
|
9.4
|
||||
Gain
on disposals
|
(0.9
|
)
|
(11.3
|
)
|
|||
Impairment
charges
|
—
|
0.5
|
|||||
Write-off
of debt issuance costs
|
1.5
|
1.7
|
|||||
Loss
on sale of 51% interest in FiberVisions
|
10.7
|
—
|
|||||
Minority
interests in earnings of consolidated subsidiaries
|
0.8
|
0.9
|
|||||
Other
non-cash charges and credits, net
|
5.4
|
6.5
|
|||||
Accruals
and deferrals of cash receipts and payments (net of acquisitions
and
dispositions):
|
|||||||
Accounts
receivable, net
|
(30.9
|
)
|
(7.4
|
)
|
|||
Inventories
|
(9.2
|
)
|
(11.4
|
)
|
|||
Asbestos-related
assets and liabilities, net
|
9.5
|
17.8
|
|||||
Other
current assets
|
8.4
|
(1.8
|
)
|
||||
Accounts
payable and accrued expenses
|
119.2
|
9.5
|
|||||
Income
taxes payable
|
(13.2
|
)
|
(30.1
|
)
|
|||
Pension
and postretirement benefit obligations
|
(11.2
|
)
|
(23.4
|
)
|
|||
Non-current
assets and liabilities
|
(22.8
|
)
|
(1.8
|
)
|
|||
FiberVisions
net assets held for sale
|
(7.9
|
)
|
—
|
||||
Net
cash provided by operating activities
|
107.0
|
75.8
|
|||||
Cash
Flows from Investing Activities:
|
|||||||
Capital
expenditures
|
(49.2
|
)
|
(45.7
|
)
|
|||
Proceeds
from sale of 51% interest in FiberVisions, net of transaction
costs
|
25.1
|
—
|
|||||
Acquisition
of the net assets of Benchmark Polymer Products, L.P and
investment
in
Benchmark Performance Group.
|
(22.7
|
)
|
—
|
||||
Investment
in Hercules Tianpu Chemicals Company Limited, net of cash recognized
upon
consolidation
|
(3.4
|
)
|
—
|
||||
Proceeds
of fixed asset disposals
|
1.2
|
15.6
|
|||||
Other,
net
|
(0.5
|
)
|
—
|
||||
Net
cash used in investing activities
|
(49.5
|
)
|
(30.1
|
)
|
|||
Cash
Flows from Financing Activities:
|
|||||||
Long-term
debt issued by FiberVisions, net of issuance costs
|
83.7
|
—
|
|||||
Long-term
debt proceeds
|
13.7
|
—
|
|||||
Long-term
debt payments
|
(123.7
|
)
|
(100.5
|
)
|
|||
Change
in short-term debt
|
6.5
|
2.5
|
|||||
Proceeds
from the exercise of stock options
|
6.6
|
2.4
|
|||||
Other,
net
|
0.6
|
(0.3
|
)
|
||||
Net
cash used in financing activities
|
(12.6
|
)
|
(95.9
|
)
|
|||
Effect
of exchange rate changes on cash
|
1.7
|
(3.1
|
)
|
||||
Net
increase (decrease) in cash and cash equivalents
|
46.6
|
(53.3
|
)
|
||||
Cash
and cash equivalents - beginning of period
|
77.3
|
126.5
|
|||||
Cash
and cash equivalents - end of period
|
$
|
123.9
|
$
|
73.2
|
Supplemental
Disclosures of Cash Flow Information:
|
|||||||
Cash
paid during the period for:
|
|||||||
Interest
|
$
|
47.2
|
$
|
59.1
|
|||
Income
taxes, net of refunds received
|
28.8
|
17.9
|
|||||
Non-cash
investing and financing activities:
|
|||||||
De-consolidation
of debt issued by FiberVisions
|
90.0
|
—
|
|||||
De-consolidation
of FiberVisions capitalized debt issuance costs
|
(6.3
|
)
|
—
|
||||
Incentive
and other employee benefit stock plan issuances
|
12.4
|
12.0
|
Expected
volatility
|
30.10
|
%
|
||
Expected
dividend yield
|
0
|
%
|
||
Expected
life (in years)
|
6.0
|
|||
Risk
free interest rate
|
4.60
|
%
|
Regular
|
Performance
Accelerated
|
||||||||||||
Number
of
Shares
|
Weighted-
Average
Price
|
Number
of
Shares
|
Weighted-Average
Price
|
||||||||||
Outstanding
at January 1, 2006
|
8,382,012
|
$
|
21.31
|
1,342,115
|
$
|
43.49
|
|||||||
Granted
|
478,704
|
12.25
|
—
|
—
|
|||||||||
Exercised
|
(566,817
|
)
|
11.72
|
—
|
—
|
||||||||
Forfeited
|
(743,435
|
)
|
32.72
|
(417,150
|
)
|
49.13
|
|||||||
Outstanding
at September 30, 2006
|
7,550,464
|
$
|
20.33
|
924,965
|
$
|
40.94
|
|||||||
Exercisable
at September 30, 2006
|
6,935,996
|
$
|
21.02
|
—
|
$
|
—
|
Number
of
Shares
|
Weighted-Average
Grant Date Fair
Value
|
||||||
Outstanding
at January 1, 2006
|
2,096,565
|
$
|
11.37
|
||||
Granted
|
569,448
|
12.24
|
|||||
Vested
|
(410,913
|
)
|
9.09
|
||||
Forfeited
|
(117,719
|
)
|
12.37
|
||||
Converted
|
(76,490
|
)
|
12.22
|
||||
Outstanding
at September 30, 2006
|
2,060,891
|
$
|
11.98
|
Three
Months
|
Nine
Months
|
||||||
Net
income as reported
|
$
|
24.0
|
$
|
38.1
|
|||
Add:
Stock-based compensation expense recognized in reported results,
net of
tax
|
0.8
|
5.0
|
|||||
Deduct:
Stock-based compensation expense determined under the fair value
based
method for all awards , net of tax
|
(0.8
|
)
|
(5.6
|
)
|
|||
Pro
forma net income
|
$
|
24.0
|
$
|
37.5
|
|||
Earnings
per share:
|
|||||||
Basic
- as reported
|
$
|
0.22
|
$
|
0.35
|
|||
Basic
- pro forma
|
$
|
0.22
|
$
|
0.35
|
|||
Diluted
- as reported
|
$
|
0.22
|
$
|
0.34
|
|||
Diluted
- pro forma
|
$
|
0.22
|
$
|
0.34
|
4. |
Sale
of Interest in FiberVisions
Division
|
5. |
Goodwill
and Other Intangible
Assets
|
Paper
Technology and Ventures
|
Aqualon
Group
|
Total
|
||||||||
Balance,
December 31, 2005
|
$
|
402.6
|
$
|
38.4
|
$
|
441.0
|
||||
Acquisition
|
—
|
16.9
|
16.9
|
|||||||
Foreign
currency translation
|
21.6
|
0.7
|
22.3
|
|
||||||
Balance,
September 30, 2006
|
$
|
424.2
|
$
|
56.0
|
$
|
480.2
|
Customer
Relationships
|
Trademarks
and
Tradenames
|
Other
Intangibles
|
Total
|
||||||||||
Gross
carrying amount
|
|||||||||||||
Balance,
December 31, 2005
|
$
|
90.0
|
$
|
73.9
|
$
|
24.8
|
$
|
188.7
|
|||||
Balance,
September 30, 2006
|
90.0
|
73.9
|
32.1
|
196.0
|
|||||||||
Accumulated
amortization
|
|||||||||||||
Balance,
December 31, 2005
|
$
|
16.4
|
$
|
13.5
|
$
|
16.0
|
$
|
45.9
|
|||||
Balance,
September 30, 2006
|
18.0
|
15.0
|
18.2
|
51.2
|
September
30,
2006
|
December 31,
2005
|
||||||
Term
B Loan due 2010
|
$
|
390.0
|
$
|
393.0
|
|||
6.6%
notes due 2027
|
100.0
|
100.0
|
|||||
Term
notes at various rates from 5.00% to 7.16%
|
—
|
6.8
|
|||||
11.125%
senior notes due 2007
|
16.1
|
130.0
|
|||||
6.75%
senior subordinated notes due 2029
|
250.0
|
250.0
|
|||||
8%
convertible subordinated debentures due 2010
|
2.6
|
2.6
|
|||||
6.5%
junior subordinated deferrable interest debentures due
2029
|
217.7
|
217.0
|
|||||
Other
|
30.2
|
9.6
|
|||||
1,006.6
|
1,109.0
|
||||||
Less:
Current debt obligations
|
20.5
|
16.7
|
|||||
Long-term
debt
|
$
|
986.1
|
$
|
1,092.3
|
Pension
Benefits
|
|||||||||||||
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Net
periodic benefit cost:
|
|||||||||||||
Service
cost
|
$
|
2.8
|
$
|
4.5
|
$
|
11.6
|
$
|
14.4
|
|||||
Interest
cost
|
23.7
|
25.0
|
73.6
|
75.8
|
|||||||||
Expected
return on plan assets
|
(27.2
|
)
|
(28.5
|
)
|
(83.6
|
)
|
(87.1
|
)
|
|||||
Amortization
and deferrals
|
(0.4
|
)
|
0.5
|
(1.4
|
)
|
1.6
|
|||||||
Actuarial
losses recognized
|
10.4
|
10.0
|
32.9
|
29.6
|
|||||||||
$
|
9.3
|
$
|
11.5
|
$
|
33.1
|
$
|
34.3
|
Other
Postretirement Benefits
|
|||||||||||||
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Net
periodic benefit cost:
|
|||||||||||||
Service
cost
|
$
|
0.1
|
$
|
0.2
|
$
|
0.4
|
$
|
0.6
|
|||||
Interest
cost
|
2.3
|
3.1
|
6.6
|
8.3
|
|||||||||
Amortization
and deferrals
|
(1.9
|
)
|
(2.5
|
)
|
(5.9
|
)
|
(6.7
|
)
|
|||||
Actuarial
losses recognized
|
2.2
|
1.5
|
5.8
|
4.1
|
|||||||||
$
|
2.7
|
$
|
2.3
|
$
|
6.9
|
$
|
6.3
|
Active
Sites
|
Inactive
Sites
|
Total
|
||||||||
Balance,
January 1, 2006
|
$
|
10.2
|
$
|
80.1
|
$
|
90.3
|
||||
Accretion
|
0.5
|
1.2
|
1.7
|
|||||||
Settlement
payments
|
(3.1
|
)
|
(8.9
|
)
|
(12.0
|
)
|
||||
Changes
in estimated obligations
|
(0.1
|
)
|
0.3
|
0.2
|
||||||
Foreign
currency translation
|
0.1
|
0.3
|
0.4
|
|||||||
Balance,
September 30, 2006
|
$
|
7.6
|
$
|
73.0
|
$
|
80.6
|
Balance
January 1, 2006
|
Interest
Income/
Additional
Accruals
|
Insurance
Recovered/
Liabilities
Settled
|
Accretion/
Reclassifi-
cation
|
Balance
September 30, 2006
|
||||||||||||
Asbestos-related
assets:
|
||||||||||||||||
Insurance
receivable
|
$
|
65.2
|
$
|
—
|
$
|
(33.3
|
)
|
$
|
0.6
|
$
|
32.5
|
|||||
Restricted
cash in trust (1)
|
55.5
|
2.3
|
7.0
|
—
|
64.8
|
|||||||||||
Asbestos-related
assets, non-current
|
$
|
120.7
|
$
|
2.3
|
$
|
(26.3
|
)
|
$
|
0.6
|
$
|
97.3
|
|||||
Asbestos-related
liabilities:
|
||||||||||||||||
Asbestos-related
liabilities, current
|
$
|
36.4
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
36.4
|
||||||
Asbestos-related
liabilities, non-
current
|
233.6
|
—
|
(16.8
|
)
|
—
|
216.8
|
||||||||||
Total
asbestos-related liabilities
|
$
|
270.0
|
$
|
—
|
$
|
(16.8
|
)
|
$
|
—
|
$
|
253.2
|
September
30,
2006
|
December 31,
2005
|
||||||
Accounts
receivable, gross
|
$
|
340.2
|
$
|
293.7
|
|||
Allowance
for doubtful accounts
|
(4.7
|
)
|
(4.0
|
)
|
|||
Accounts
receivable, net
|
$
|
335.5
|
$
|
289.7
|
|||
Inventories:
|
|||||||
Finished
goods
|
$
|
114.1
|
$
|
98.4
|
|||
Raw
materials and work-in-process
|
72.5
|
60.5
|
|||||
Supplies
|
22.3
|
20.7
|
|||||
$
|
208.9
|
$
|
179.6
|
||||
Property,
plant and equipment:
|
|||||||
Land
|
$
|
16.4
|
$
|
15.7
|
|||
Buildings
and equipment
|
1,668.9
|
1,608.5
|
|||||
Construction
in progress
|
56.6
|
38.0
|
|||||
1,741.9
|
1,662.2
|
||||||
Accumulated
depreciation and amortization
|
(1,177.0
|
)
|
(1,126.8
|
)
|
|||
Property,
plant and equipment, net
|
$
|
564.9
|
$
|
535.4
|
Severance
|
Other
Exit Costs
|
Accelerated
Depreciation
|
Total
|
||||||||||
Research
and development consolidation
|
|||||||||||||
Jacksonville,
FL
|
$
|
1.6
|
$
|
1.4
|
$
|
0.4
|
$
|
3.4
|
|||||
Wilmington,
DE
|
0.9
|
—
|
0.7
|
1.6
|
|||||||||
2.5
|
1.4
|
1.1
|
5.0
|
||||||||||
Manufacturing
rationalization
|
|||||||||||||
Pendlebury,
UK
|
0.4
|
0.9
|
2.5
|
3.8
|
|||||||||
Business
segment realignment
|
|||||||||||||
Paper
Technologies and Ventures
|
3.5
|
0.2
|
—
|
3.7
|
|||||||||
Aqualon Group
|
3.5
|
0.4
|
—
|
3.9
|
|||||||||
7.0
|
0.6
|
—
|
7.6
|
||||||||||
Alliance-related
rationalization (1)
|
0.4
|
—
|
0.5
|
0.9
|
|||||||||
Corporate
stranded cost reduction
|
2.6
|
0.8
|
—
|
3.4
|
|||||||||
Total
restructuring and accelerated depreciation charges
|
$
|
12.9
|
$
|
3.7
|
$
|
4.1
|
$
|
20.7
|
(1)
|
Savannah,
GA, Hattiesburg, MS and Portland,
OR.
|
Balance,
January 1, 2006
|
$
|
16.6
|
||
Additional
severance and related costs recognized (SFAS 112)
|
9.0
|
|||
Charges
for SFAS 146 terminations and relocations
|
4.7
|
|||
Cash payments
|
(17.9
|
)
|
||
Other,
including foreign currency translation
|
0.3
|
|||
Balance,
September 30, 2006
|
$
|
12.7
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Severance,
restructuring and other exit costs, net
|
$
|
4.1
|
$
|
9.4
|
$
|
16.6
|
$
|
27.4
|
|||||
Legal
settlements
|
—
|
—
|
(2.1
|
)
|
—
|
||||||||
Accelerated
depreciation (see Note 12)
|
0.2
|
1.0
|
4.1
|
1.9
|
|||||||||
Asset
impairment charges
|
—
|
0.5
|
—
|
0.5
|
|||||||||
Consulting
charges related to legacy issues
|
—
|
—
|
—
|
0.8
|
|||||||||
Other
miscellaneous charges, net
|
0.3
|
0.2
|
1.8
|
0.6
|
|||||||||
$
|
4.6
|
$
|
11.1
|
$
|
20.4
|
$
|
31.2
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Litigation
settlements and accruals
|
$
|
2.3
|
$
|
1.7
|
$
|
4.4
|
$
|
18.2
|
|||||
Loss
on repurchase of debt
|
—
|
5.2
|
12.1
|
14.9
|
|||||||||
Loss
on sale of 51% interest in FiberVisions
|
0.1
|
—
|
10.7
|
—
|
|||||||||
Asbestos-related
costs, net
|
2.2
|
1.2
|
6.7
|
5.0
|
|||||||||
Gain
on dispositions
|
—
|
(10.9
|
)
|
—
|
(10.9
|
)
|
|||||||
Environmental
charges
|
1.3
|
3.7
|
3.4
|
5.8
|
|||||||||
Other,
net
|
(1.3
|
)
|
(0.8
|
)
|
(1.0
|
)
|
(0.9
|
)
|
|||||
$
|
4.6
|
$
|
0.1
|
$
|
36.3
|
$
|
32.1
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Weighted-average
number of common shares outstanding - Basic
|
110.9
|
108.9
|
110.6
|
108.7
|
|||||||||
Dilutive
effect of:
|
|||||||||||||
Convertible
debentures
|
0.2
|
0.2
|
0.2
|
0.2
|
|||||||||
Share-based
compensation plans
|
0.6
|
1.6
|
0.5
|
1.6
|
|||||||||
Weighted-average
number of common shares outstanding - Diluted
|
111.7
|
110.7
|
111.3
|
110.5
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Net
sales
|
$
|
0.2
|
$
|
3.2
|
$
|
2.5
|
$
|
10.3
|
|||||
Loss
from operations before income taxes
|
$
|
(0.5
|
)
|
$
|
(0.6
|
)
|
$
|
(2.5
|
)
|
$
|
(2.0
|
)
|
|
Income
tax benefit on operations
|
0.2
|
0.2
|
0.9
|
0.7
|
|||||||||
Net
loss from discontinued operations, net of
tax
|
$
|
(0.3
|
)
|
$
|
(0.4
|
)
|
$
|
(1.6
|
)
|
$
|
(1.3
|
)
|
September
30,
|
December
31,
|
||||||
2006
|
2005
|
||||||
Accounts
receivable, net
|
$
|
0.3
|
$
|
1.3
|
|||
Inventories
|
0.4
|
5.4
|
|||||
Current
assets of discontinued operation
|
$
|
0.7
|
$
|
6.7
|
|||
Accounts
payable
|
$
|
0.1
|
$
|
0.5
|
|||
Accrued
liabilities
|
0.4
|
2.3
|
|||||
Current
liabilities of discontinued operation
|
$
|
0.5
|
$
|
2.8
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Net
sales:
|
|||||||||||||
Paper
Technology and Ventures
|
$
|
274.6
|
$
|
257.7
|
$
|
795.2
|
$
|
768.9
|
|||||
Aqualon
Group
|
238.5
|
191.0
|
677.0
|
571.9
|
|||||||||
FiberVisions
|
—
|
70.9
|
69.2
|
215.4
|
|||||||||
Consolidated
|
$
|
513.1
|
$
|
519.6
|
$
|
1,541.4
|
$
|
1,556.2
|
|||||
Profit
from operations:
|
|||||||||||||
Paper
Technology and Ventures
|
$
|
25.8
|
$
|
21.5
|
$
|
57.0
|
$
|
50.7
|
|||||
Aqualon
Group
|
52.3
|
36.3
|
146.5
|
120.3
|
|||||||||
FiberVisions
|
—
|
(3.8
|
)
|
0.5
|
(6.1
|
)
|
|||||||
Corporate
items (a)
|
(5.7
|
)
|
(4.0
|
)
|
(9.1
|
)
|
(11.1
|
)
|
|||||
Consolidated
|
$
|
72.4
|
$
|
50.0
|
$
|
194.9
|
$
|
153.8
|
Unconsolidated
|
||||||||||||||||
Parent
|
Guarantor
Subsidiaries
|
Non-
Guarantor
Subsidiaries
|
Eliminations
and
Adjustments
|
Consolidated
|
||||||||||||
Net
sales
|
$
|
155.9
|
$
|
115.5
|
$
|
281.6
|
$
|
(39.9
|
)
|
$
|
513.1
|
|||||
Cost
of sales
|
108.6
|
81.8
|
181.6
|
(39.8
|
)
|
332.2
|
||||||||||
Selling,
general and administrative expenses
|
25.4
|
29.6
|
37.8
|
—
|
92.8
|
|||||||||||
Research
and development
|
4.8
|
3.9
|
0.6
|
—
|
9.3
|
|||||||||||
Intangible
asset amortization
|
1.4
|
0.2
|
0.2
|
—
|
1.8
|
|||||||||||
Other
operating expense, net
|
1.7
|
0.5
|
2.4
|
—
|
4.6
|
|||||||||||
Profit
(loss) from operations
|
14.0
|
(0.5
|
)
|
59.0
|
(0.1
|
)
|
72.4
|
|||||||||
Interest
and debt expense (income), net
|
44.0
|
(27.5
|
)
|
0.2
|
—
|
16.7
|
||||||||||
Vertac
litigation charge
|
1.0
|
—
|
—
|
—
|
1.0
|
|||||||||||
Other
expense, net
|
1.1
|
3.2
|
0.3
|
—
|
4.6
|
|||||||||||
Income
(loss) before income taxes and equity (loss) income
|
(32.1
|
)
|
23.8
|
58.5
|
(0.1
|
)
|
50.1
|
|||||||||
Provision
(benefit) for income taxes
|
(28.4
|
)
|
8.0
|
34.7
|
(0.2
|
)
|
14.1
|
|||||||||
Income
(loss) before minority interests and equity (loss) income
|
(3.7
|
)
|
15.8
|
23.8
|
0.1
|
36.0
|
||||||||||
Minority
interests in earnings of consolidated subsidiaries
|
—
|
—
|
(0.4
|
)
|
—
|
(0.4
|
)
|
|||||||||
Equity
(loss) income of affiliated companies
|
—
|
(1.2
|
)
|
(0.2
|
)
|
0.3
|
(1.1
|
)
|
||||||||
Equity
income (loss) from consolidated subsidiaries
|
38.2
|
—
|
—
|
(38.2
|
)
|
—
|
||||||||||
Net
income (loss) from continuing operations before discontinued operations
and cumulative effect of change in accounting principle
|
34.5
|
14.6
|
23.2
|
(37.8
|
)
|
34.5
|
||||||||||
Net
loss from discontinued operations, net of tax
|
(0.3
|
)
|
—
|
—
|
—
|
(0.3
|
)
|
|||||||||
Net
income (loss) before cumulative effect of change in accounting principle
|
34.2
|
14.6
|
23.2
|
(37.8
|
)
|
34.2
|
||||||||||
Cumulative
effect of change in accounting principle, net of tax
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
Net
income (loss)
|
$
|
34.2
|
$
|
14.6
|
$
|
23.2
|
$
|
(37.8
|
)
|
$
|
34.2
|
Unconsolidated
|
||||||||||||||||
Parent
|
Guarantor
Subsidiaries
|
Non-
Guarantor
Subsidiaries
|
Eliminations
and
Adjustments
|
Consolidated
|
||||||||||||
Net
sales
|
$
|
444.4
|
$
|
369.6
|
$
|
849.2
|
$
|
(121.8
|
)
|
$
|
1,541.4
|
|||||
Cost
of sales
|
310.2
|
267.5
|
562.2
|
(122.3
|
)
|
1,017.6
|
||||||||||
Selling,
general and administrative expenses
|
76.0
|
87.9
|
110.9
|
—
|
274.8
|
|||||||||||
Research
and development
|
14.1
|
12.5
|
1.7
|
—
|
28.3
|
|||||||||||
Intangible
asset amortization
|
4.4
|
0.6
|
0.4
|
—
|
5.4
|
|||||||||||
Other
operating expense
|
6.3
|
2.2
|
11.9
|
—
|
20.4
|
|||||||||||
Profit
(loss) from operations
|
33.4
|
(1.1
|
)
|
162.1
|
0.5
|
194.9
|
||||||||||
Interest
and debt expense (income), net
|
128.7
|
(75.3
|
)
|
0.7
|
—
|
54.1
|
||||||||||
Vertac
litigation charge
|
107.0
|
—
|
—
|
—
|
107.0
|
|||||||||||
Other
expense, net
|
28.8
|
6.8
|
0.7
|
—
|
36.3
|
|||||||||||
(Loss)
income before income taxes and equity (loss) income
|
(231.1
|
)
|
67.4
|
160.7
|
0.5
|
(2.5
|
)
|
|||||||||
(Benefit)
provision for income taxes
|
(82.2
|
)
|
23.6
|
55.8
|
0.1
|
(2.7
|
)
|
|||||||||
Income
(loss) before minority interests and equity (loss) income
|
(148.9
|
)
|
43.8
|
104.9
|
0.4
|
0.2
|
||||||||||
Minority
interests in earnings of consolidated subsidiaries
|
—
|
—
|
(0.8
|
)
|
—
|
(0.8
|
)
|
|||||||||
Equity
(loss) income of affiliated companies
|
—
|
(2.3
|
)
|
0.2
|
—
|
(2.1
|
)
|
|||||||||
Equity
income (loss) from consolidated subsidiaries
|
146.2
|
0.5
|
(0.8
|
)
|
(145.9
|
)
|
—
|
|||||||||
Net
(loss) income from continuing operations before discontinued operations
and cumulative effect of change in accounting principle
|
(2.7
|
)
|
42.0
|
103.5
|
(145.5
|
)
|
(2.7
|
)
|
||||||||
Net
loss from discontinued operations, net of tax
|
(1.6
|
)
|
—
|
—
|
—
|
(1.6
|
)
|
|||||||||
Net
(loss) income before cumulative effect of change in accounting principle
|
(4.3
|
)
|
42.0
|
103.5
|
(145.5
|
)
|
(4.3
|
)
|
||||||||
Cumulative
effect of change in accounting principle, net of tax
|
0.9
|
—
|
—
|
—
|
0.9
|
|||||||||||
Net
(loss) income
|
$
|
(3.4
|
)
|
$
|
42.0
|
$
|
103.5
|
$
|
(145.5
|
)
|
$
|
(3.4
|
)
|
Unconsolidated
|
||||||||||||||||
Parent
|
Guarantor
Subsidiaries
|
Non-
Guarantor
Subsidiaries
|
Eliminations
and
Adjustments
|
Consolidated
|
||||||||||||
Net
sales
|
$
|
137.5
|
$
|
120.8
|
$
|
299.1
|
$
|
(37.8
|
)
|
$
|
519.6
|
|||||
Cost
of sales
|
97.3
|
99.5
|
210.5
|
(53.6
|
)
|
353.7
|
||||||||||
Selling,
general and administrative expenses
|
24.0
|
31.6
|
37.1
|
—
|
92.7
|
|||||||||||
Research
and development
|
4.9
|
4.8
|
0.4
|
—
|
10.1
|
|||||||||||
Intangible
asset amortization
|
1.5
|
0.4
|
0.1
|
—
|
2.0
|
|||||||||||
Other
operating expense (income), net
|
3.4
|
2.5
|
5.2
|
—
|
11.1
|
|||||||||||
Profit
(loss) from operations
|
6.4
|
(18.0
|
)
|
45.8
|
15.8
|
50.0
|
||||||||||
Interest
and debt expense (income), net
|
48.4
|
(22.4
|
)
|
(3.5
|
)
|
—
|
22.5
|
|||||||||
Vertac
litigation charge
|
0.1
|
—
|
—
|
—
|
0.1
|
|||||||||||
Other
expense, net
|
0.1
|
0.9
|
(0.9
|
)
|
—
|
0.1
|
||||||||||
Income
(loss) before income taxes and equity (loss) income
|
(42.2
|
)
|
3.5
|
50.2
|
15.8
|
27.3
|
||||||||||
Provision
(benefit) for income taxes
|
(21.7
|
)
|
2.5
|
16.4
|
5.6
|
2.8
|
||||||||||
Income
(loss) before minority interests and equity (loss) income
|
(20.5
|
)
|
1.0
|
33.8
|
10.2
|
24.5
|
||||||||||
Minority
interests in earnings of consolidated subsidiaries
|
—
|
—
|
(0.3
|
)
|
—
|
(0.3
|
)
|
|||||||||
Equity
(loss) income of affiliated companies
|
—
|
(0.5
|
)
|
0.5
|
0.2
|
0.2
|
||||||||||
Equity
income (loss) from consolidated subsidiaries
|
44.9
|
1.7
|
(0.1
|
)
|
(46.5
|
)
|
—
|
|||||||||
Net
income from continuing operations before discontinued
operations
|
24.4
|
2.2
|
33.9
|
(36.1
|
)
|
24.4
|
||||||||||
Net
loss from discontinued operations, net of tax
|
(0.4
|
)
|
—
|
—
|
—
|
(0.4
|
)
|
|||||||||
Net
income
|
$
|
24.0
|
$
|
2.2
|
$
|
33.9
|
$
|
(36.1
|
)
|
$
|
24.0
|
Unconsolidated
|
||||||||||||||||
Parent
|
Guarantor
Subsidiaries
|
Non-
Guarantor
Subsidiaries
|
Eliminations
and
Adjustments
|
Consolidated
|
||||||||||||
Net
sales
|
$
|
412.4
|
$
|
370.9
|
$
|
896.8
|
$
|
(123.9
|
)
|
$
|
1,556.2
|
|||||
Cost
of sales
|
286.9
|
288.9
|
602.5
|
(135.8
|
)
|
1,042.5
|
||||||||||
Selling,
general and administrative expenses
|
76.7
|
98.9
|
116.7
|
—
|
292.3
|
|||||||||||
Research
and development
|
14.0
|
13.9
|
2.5
|
—
|
30.4
|
|||||||||||
Intangible
asset amortization
|
4.5
|
1.2
|
0.3
|
—
|
6.0
|
|||||||||||
Other
operating expense, net
|
8.2
|
5.7
|
17.3
|
—
|
31.2
|
|||||||||||
Profit
(loss) from operations
|
22.1
|
(37.7
|
)
|
157.5
|
11.9
|
153.8
|
||||||||||
Interest
and debt expense (income), net
|
137.7
|
(60.0
|
)
|
(10.2
|
)
|
—
|
67.5
|
|||||||||
Vertac
litigation charge
|
15.0
|
—
|
—
|
—
|
15.0
|
|||||||||||
Other
expense (income), net
|
31.3
|
2.5
|
(1.7
|
)
|
—
|
32.1
|
||||||||||
Income
(loss) before income taxes and equity income (loss)
|
(161.9
|
)
|
19.8
|
169.4
|
11.9
|
39.2
|
||||||||||
(Benefit)
provision for income taxes
|
(70.4
|
)
|
8.2
|
57.4
|
4.2
|
(0.6
|
)
|
|||||||||
Income
(loss) before minority interests and equity income (loss)
|
(91.5
|
)
|
11.6
|
112.0
|
7.7
|
39.8
|
||||||||||
Minority
interests in earnings of consolidated subsidiaries
|
—
|
—
|
(0.9
|
)
|
—
|
(0.9
|
)
|
|||||||||
Equity
income (loss) of affiliated companies
|
—
|
(1.3
|
)
|
1.4
|
0.4
|
0.5
|
||||||||||
Equity
income (loss) from consolidated subsidiaries
|
130.9
|
5.5
|
(1.2
|
)
|
(135.2
|
)
|
—
|
|||||||||
Net
income from continuing operations before discontinued
operations
|
39.4
|
15.8
|
111.3
|
(127.1
|
)
|
39.4
|
||||||||||
Net
loss from discontinued operations, net of tax
|
(1.3
|
)
|
—
|
—
|
—
|
(1.3
|
)
|
|||||||||
Net
income
|
$
|
38.1
|
$
|
15.8
|
$
|
111.3
|
$
|
(127.1
|
)
|
$
|
38.1
|
Unconsolidated
|
||||||||||||||||
Parent
|
Guarantor
Subsidiaries
|
Non-
Guarantor
Subsidiaries
|
Eliminations
and
Adjustments
|
Consolidated
|
||||||||||||
Assets
|
||||||||||||||||
Current
assets
|
||||||||||||||||
Cash
and cash equivalents
|
$
|
14.5
|
$
|
0.6
|
$
|
108.8
|
$
|
—
|
$
|
123.9
|
||||||
Accounts
receivable, net
|
69.9
|
46.2
|
219.4
|
—
|
335.5
|
|||||||||||
Intercompany
receivables
|
60.6
|
16.4
|
(5.3
|
)
|
(71.7
|
)
|
—
|
|||||||||
Inventories
|
56.0
|
70.2
|
84.0
|
(1.3
|
)
|
208.9
|
||||||||||
Deferred
income taxes
|
69.2
|
3.4
|
10.7
|
—
|
83.3
|
|||||||||||
Current
assets of discontinued operations
|
0.7
|
—
|
—
|
—
|
0.7
|
|||||||||||
Other
current assets
|
24.5
|
2.9
|
16.0
|
—
|
43.4
|
|||||||||||
Total
current assets
|
295.4
|
139.7
|
433.6
|
(73.0
|
)
|
795.7
|
||||||||||
Property,
plant and equipment, net
|
139.7
|
124.4
|
300.8
|
—
|
564.9
|
|||||||||||
Investments
in subsidiaries and advances, net
|
2,546.8
|
86.4
|
44.9
|
(2,678.1
|
)
|
—
|
||||||||||
Goodwill
and other intangible assets, net
|
192.0
|
47.9
|
385.1
|
—
|
625.0
|
|||||||||||
Deferred
income taxes
|
295.1
|
—
|
22.5
|
(145.2
|
)
|
172.4
|
||||||||||
Asbestos-related
assets
|
97.3
|
—
|
—
|
—
|
97.3
|
|||||||||||
Deferred
charges and other assets
|
189.7
|
40.4
|
58.8
|
—
|
288.9
|
|||||||||||
Total
assets
|
$
|
3,756.0
|
$
|
438.8
|
$
|
1,245.7
|
$
|
(2,896.3
|
)
|
$
|
2,544.2
|
|||||
Liabilities
and Stockholders’ Equity
|
||||||||||||||||
Current
liabilities
|
||||||||||||||||
Accounts
payable
|
$
|
58.4
|
$
|
30.7
|
$
|
96.9
|
$
|
—
|
$
|
186.0
|
||||||
Intercompany
payables
|
2.0
|
44.4
|
25.3
|
(71.7
|
)
|
—
|
||||||||||
Asbestos-related
liabilities
|
36.4
|
—
|
—
|
—
|
36.4
|
|||||||||||
Current
debt obligations
|
4.0
|
—
|
16.5
|
—
|
20.5
|
|||||||||||
Current
liabilities of discontinued operations
|
0.5
|
—
|
—
|
—
|
0.5
|
|||||||||||
Vertac
litigation
|
122.0
|
—
|
—
|
—
|
122.0
|
|||||||||||
Accrued
expenses
|
127.8
|
45.7
|
87.7
|
(18.4
|
)
|
242.8
|
||||||||||
Total
current liabilities
|
351.1
|
120.8
|
226.4
|
(90.1
|
)
|
608.2
|
||||||||||
Long-term
debt
|
972.3
|
—
|
13.8
|
—
|
986.1
|
|||||||||||
Deferred
income taxes
|
—
|
145.2
|
79.7
|
(145.2
|
)
|
79.7
|
||||||||||
Pension
liability
|
134.8
|
—
|
80.7
|
—
|
215.5
|
|||||||||||
Other
postretirement benefits
|
51.8
|
2.3
|
0.2
|
—
|
54.3
|
|||||||||||
Deferred
credits and other liabilities
|
251.6
|
21.6
|
20.3
|
—
|
293.5
|
|||||||||||
Asbestos-related
liabilities
|
216.8
|
—
|
—
|
—
|
216.8
|
|||||||||||
Intercompany
notes payable (receivable)
|
1,700.6
|
(1,410.7
|
)
|
(308.3
|
)
|
18.4
|
—
|
|||||||||
Minority
interests
|
—
|
—
|
13.1
|
—
|
13.1
|
|||||||||||
Total
stockholders’ equity
|
77.0
|
1,559.6
|
1,119.8
|
(2,679.4
|
)
|
77.0
|
||||||||||
Total
liabilities and stockholders’ equity
|
$
|
3,756.0
|
$
|
438.8
|
$
|
1,245.7
|
$
|
(2,896.3
|
)
|
$
|
2,544.2
|
Unconsolidated
|
||||||||||||||||
Parent
|
Guarantor
Subsidiaries
|
Non-
Guarantor
Subsidiaries
|
Eliminations
and
Adjustments
|
Consolidated
|
||||||||||||
Net
Cash Provided By (Used in) Operating Activities
|
$
|
5.5
|
$
|
50.1
|
$
|
417.0
|
$
|
(365.6
|
)
|
$
|
107.0
|
|||||
Cash
Flows From Investing Activities:
|
||||||||||||||||
Capital
expenditures
|
(11.8
|
)
|
(13.0
|
)
|
(24.2
|
)
|
(0.2
|
)
|
(49.2
|
)
|
||||||
Proceeds
from sale of 51% interest in FiberVisions, net
|
25.1
|
—
|
—
|
—
|
25.1
|
|||||||||||
Investment
in Benchmark , net
|
—
|
(22.7
|
)
|
—
|
—
|
(22.7
|
)
|
|||||||||
Investment
in Hercules Tianpu, net
|
—
|
—
|
(3.4
|
)
|
—
|
(3.4
|
)
|
|||||||||
Proceeds
of fixed asset disposals
|
1.0
|
—
|
0.2
|
—
|
1.2
|
|||||||||||
Other,
net
|
(0.2
|
)
|
—
|
(0.3
|
)
|
—
|
(0.5
|
)
|
||||||||
Net
cash (used in) provided by investing activities
|
14.1
|
(35.7
|
)
|
(27.7
|
)
|
(0.2
|
)
|
(49.5
|
)
|
|||||||
Cash
Flows From Financing Activities:
|
||||||||||||||||
Long-term
debt issued by FiberVisions, net of issuance costs
|
83.7
|
—
|
—
|
—
|
83.7
|
|||||||||||
Long-term
debt proceeds
|
—
|
—
|
13.7
|
—
|
13.7
|
|||||||||||
Long-term
debt payments
|
(116.9
|
)
|
—
|
(6.8
|
)
|
—
|
(123.7
|
)
|
||||||||
Change
in short-term debt
|
—
|
—
|
6.5
|
—
|
6.5
|
|||||||||||
Change
in intercompany, advances
|
14.4
|
(14.8
|
)
|
(256.6
|
)
|
257.0
|
—
|
|||||||||
Dividends
paid
|
—
|
—
|
(108.8
|
)
|
108.8
|
—
|
||||||||||
Treasury
stock issued
|
6.6
|
—
|
—
|
—
|
6.6
|
|||||||||||
Other,
net
|
0.6
|
—
|
—
|
—
|
0.6
|
|||||||||||
Net
cash (used in) provided by financing activities
|
(11.6
|
)
|
(14.8
|
)
|
(352.0
|
)
|
365.8
|
(12.6
|
)
|
|||||||
Effect
of exchange rate changes on cash
|
—
|
—
|
1.7
|
—
|
1.7
|
|||||||||||
Net
increase (decrease) in cash and cash equivalents
|
8.0
|
(0.4
|
)
|
39.0
|
—
|
46.6
|
||||||||||
Cash
and cash equivalents - beginning of period
|
6.5
|
1.0
|
69.8
|
—
|
77.3
|
|||||||||||
Cash
and cash equivalents - end of period
|
$
|
14.5
|
$
|
0.6
|
$
|
108.8
|
$
|
—
|
$
|
123.9
|
Unconsolidated
|
||||||||||||||||
Parent
|
Guarantor
Subsidiaries
|
Non-
Guarantor
Subsidiaries
|
Eliminations
and
Adjustments
|
Consolidated
|
||||||||||||
Net
Cash Provided By (Used In) Operating Activities
|
$
|
33.4
|
$
|
24.6
|
$
|
(117.5
|
)
|
$
|
135.3
|
$
|
75.8
|
|||||
Cash
Flows From Investing Activities:
|
||||||||||||||||
Capital
expenditures
|
(12.3
|
)
|
(17.9
|
)
|
(15.5
|
)
|
—
|
(45.7
|
)
|
|||||||
Proceeds
of fixed asset disposals
|
12.6
|
—
|
3.0
|
—
|
15.6
|
|||||||||||
Net
cash used in investing activities
|
0.3
|
(17.9
|
)
|
(12.5
|
)
|
—
|
(30.1
|
)
|
||||||||
Cash
Flows From Financing Activities:
|
||||||||||||||||
Long-term
debt repayments
|
(89.0
|
)
|
—
|
(11.5
|
)
|
—
|
(100.5
|
)
|
||||||||
Change
in short-term debt
|
—
|
—
|
2.5
|
—
|
2.5
|
|||||||||||
Change
in intercompany advances
|
12.5
|
(6.4
|
)
|
171.9
|
(178.0
|
)
|
—
|
|||||||||
Dividends
paid
|
—
|
—
|
(42.7
|
)
|
42.7
|
—
|
||||||||||
Treasury
stock issued
|
2.4
|
—
|
—
|
—
|
2.4
|
|||||||||||
Other,
net
|
(0.3
|
)
|
—
|
—
|
—
|
(0.3
|
)
|
|||||||||
Net
cash (used in) provided by financing activities
|
(74.4
|
)
|
(6.4
|
)
|
120.2
|
(135.3
|
)
|
(95.9
|
)
|
|||||||
Effects
of exchange rate changes on cash
|
—
|
—
|
(3.1
|
)
|
—
|
(3.1
|
)
|
|||||||||
Net
(decrease) increase in cash and cash equivalents
|
(40.7
|
)
|
0.3
|
(12.9
|
)
|
—
|
(53.3
|
)
|
||||||||
Cash
and cash equivalents - beginning of period
|
42.8
|
0.9
|
82.8
|
—
|
126.5
|
|||||||||||
Cash
and cash equivalents - end of period
|
$
|
2.1
|
$
|
1.2
|
$
|
69.9
|
$
|
—
|
$
|
73.2
|
2006
|
2005
|
||||||
Pulp
and Paper
|
55
|
%
|
48
|
%
|
|||
Regulated
Industries (including food, pharmaceutical and personal
care)
|
9
|
%
|
19
|
%
|
|||
Paint
and Adhesives
|
10
|
%
|
8
|
%
|
|||
Construction
Materials
|
11
|
%
|
9
|
%
|
|||
Industrial
Specialties
|
15
|
%
|
16
|
%
|
|||
Consolidated
|
100
|
%
|
100
|
%
|
2006
|
2005
|
||||||
North
America
|
49
|
%
|
47
|
%
|
|||
Europe
|
35
|
%
|
37
|
%
|
|||
Asia
Pacific
|
11
|
%
|
11
|
%
|
|||
Latin
America
|
5
|
%
|
5
|
%
|
|||
Consolidated
|
100
|
%
|
100
|
%
|
2006
|
2005
|
||||||
Paper
Technologies and Ventures
|
52
|
%
|
49
|
%
|
|||
Aqualon
Group
|
44
|
%
|
37
|
%
|
|||
FiberVisions
|
4
|
%
|
14
|
%
|
|||
Consolidated
|
100
|
%
|
100
|
%
|
Three
Months
|
Nine
Months
|
||||||||||||||||||
(Dollars
in millions)
|
2006
|
2005
|
Change
|
2006
|
2005
|
Change
|
|||||||||||||
Net
sales
|
$
|
513.1
|
$
|
519.6
|
$
|
(6.5
|
)
|
$
|
1,541.4
|
$
|
1,556.2
|
$
|
(14.8
|
)
|
(Dollars
in millions)
|
Three
Months
|
%
Change
Excluding
|
|||||||||||
Regions
|
2006
|
2005
|
%Change
|
ROE
|
|||||||||
North
America
|
$
|
254.7
|
$
|
244.0
|
4
|
%
|
4
|
%
|
|||||
Europe
|
178.2
|
185.8
|
(4
|
)%
|
(8
|
)%
|
|||||||
Asia
Pacific
|
53.8
|
61.5
|
(13
|
)%
|
(13
|
)%
|
|||||||
Latin
America
|
26.4
|
28.3
|
(7
|
)%
|
(9
|
)%
|
|||||||
All
regions
|
$
|
513.1
|
$
|
519.6
|
(1
|
)%
|
(3
|
)%
|
(Dollars
in millions)
|
Nine
Months
|
%
Change
Excluding
|
|||||||||||
Regions
|
2006
|
2005
|
%Change
|
ROE
|
|||||||||
North
America
|
$
|
760.0
|
$
|
722.7
|
5
|
%
|
4
|
%
|
|||||
Europe
|
531.3
|
581.2
|
(9
|
)%
|
(6
|
)%
|
|||||||
Asia
Pacific
|
168.6
|
174.2
|
(3
|
)%
|
(4
|
)%
|
|||||||
Latin
America
|
81.5
|
78.1
|
4
|
%
|
—
|
||||||||
All
regions
|
$
|
1,541.4
|
$
|
1,556.2
|
(1
|
)%
|
(1
|
)%
|
Three
Months
|
Nine
Months
|
||||||||||||||||||
(Dollars
in millions)
|
2006
|
2005
|
Change
|
2006
|
2005
|
Change
|
|||||||||||||
Cost
of sales
|
$
|
332.2
|
$
|
353.7
|
$
|
(21.5
|
)
|
$
|
1,017.6
|
$
|
1,042.5
|
$
|
(24.9
|
)
|
Three
Months
|
Nine
Months
|
||||||||||||||||||
(Dollars
in millions)
|
2006
|
2005
|
Change
|
2006
|
2005
|
Change
|
|||||||||||||
Selling,
general and administrative
expenses
|
$
|
92.8
|
$
|
92.7
|
$
|
0.1
|
$
|
274.8
|
$
|
292.3
|
$
|
(17.5
|
)
|
Three
Months
|
Nine
Months
|
||||||||||||||||||
(Dollars
in millions)
|
2006
|
2005
|
Change
|
2006
|
2005
|
Change
|
|||||||||||||
Research
and development
|
$
|
9.3
|
$
|
10.1
|
$
|
(0.8
|
)
|
$
|
28.3
|
$
|
30.4
|
$
|
(2.1
|
)
|
Three
Months
|
Nine
Months
|
||||||||||||||||||
(Dollars
in millions)
|
2006
|
2005
|
Change
|
2006
|
2005
|
Change
|
|||||||||||||
Intangible
asset amortization
|
$
|
1.8
|
$
|
2.0
|
$
|
(0.2
|
)
|
$
|
5.4
|
$
|
6.0
|
$
|
(0.6
|
)
|
Three
Months
|
Nine
Months
|
||||||||||||||||||
(Dollars
in millions)
|
2006
|
2005
|
Change
|
2006
|
2005
|
Change
|
|||||||||||||
Other
operating expense, net
|
$
|
4.6
|
$
|
11.1
|
$
|
(6.5
|
)
|
$
|
20.4
|
$
|
31.2
|
$
|
(10.8
|
)
|
Three
Months
|
Nine
Months
|
||||||||||||||||||
(Dollars
in millions)
|
2006
|
2005
|
Change
|
2006
|
2005
|
Change
|
|||||||||||||
Interest
and debt expense
|
$
|
16.7
|
$
|
22.5
|
$
|
(5.8
|
)
|
$
|
54.1
|
$
|
67.5
|
$
|
(13.4
|
)
|
Three
Months
|
Nine
Months
|
||||||||||||||||||
(Dollars
in millions)
|
2006
|
2005
|
Change
|
2006
|
2005
|
Change
|
|||||||||||||
Vertac
litigation charge
|
$
|
1.0
|
$
|
0.1
|
$
|
0.9
|
$
|
107.0
|
$
|
15.0
|
$
|
92.0
|
Three
Months
|
Nine
Months
|
||||||||||||||||||
(Dollars
in millions)
|
2006
|
2005
|
Change
|
2006
|
2005
|
Change
|
|||||||||||||
Other
expense, net
|
$
|
4.6
|
$
|
0.1
|
$
|
4.5
|
$
|
36.3
|
$
|
32.1
|
$
|
4.2
|
Three
Months
|
Nine
Months
|
||||||||||||||||||
(Dollars
in millions)
|
2006
|
2005
|
Change
|
2006
|
2005
|
Change
|
|||||||||||||
(Benefit)
provision for income taxes
|
$
|
14.1
|
$
|
2.8
|
$
|
11.3
|
$
|
(2.7
|
)
|
$
|
(0.6
|
)
|
$
|
(2.1
|
)
|
Three
Months
|
Nine
Months
|
||||||||||||||||||
(Dollars
in millions)
|
2006
|
2005
|
Change
|
2006
|
2005
|
Change
|
|||||||||||||
Minority
interests in earnings of consolidated
subsidiaries
|
$
|
(0.4
|
)
|
$
|
(0.3
|
)
|
$
|
(0.1
|
)
|
$
|
(0.8
|
)
|
$
|
(0.9
|
)
|
$
|
0.1
|
Three
Months
|
Nine
Months
|
||||||||||||||||||
(Dollars
in millions)
|
2006
|
2005
|
Change
|
2006
|
2005
|
Change
|
|||||||||||||
Equity
(loss) income of affiliated companies, net of tax
|
$
|
(1.1
|
)
|
$
|
0.2
|
$
|
(1.3
|
)
|
$
|
(2.1
|
)
|
$
|
0.5
|
$
|
(2.6
|
)
|
Three
Months
|
Nine
Months
|
||||||||||||||||||
(Dollars
in millions)
|
2006
|
2005
|
Change
|
2006
|
2005
|
Change
|
|||||||||||||
Net
loss from discontinued operations, net of tax
|
$
|
(0.3
|
)
|
$
|
(0.4
|
)
|
$
|
0.1
|
$
|
(1.6
|
)
|
$
|
(1.3
|
)
|
$
|
(0.3
|
)
|
Three
Months
|
Nine
Months
|
||||||||||||||||||
(Dollars
in millions)
|
2006
|
2005
|
Change
|
2006
|
2005
|
Change
|
|||||||||||||
Cumulative
effect of change in accounting principle, net of
tax
|
—
|
—
|
—
|
$
|
0.9
|
$
|
—
|
$
|
0.9
|
(Dollars
in millions)
|
Three
Months Ended September 30,
|
||||||||||||
2006
|
2005
|
Change
|
%
Change
|
||||||||||
Net
sales:
|
|||||||||||||
Paper
Technologies and Ventures
|
$
|
274.6
|
$
|
257.7
|
$
|
16.9
|
7
|
%
|
|||||
Aqualon
Group
|
238.5
|
191.0
|
47.5
|
25
|
%
|
||||||||
FiberVisions
|
—
|
70.9
|
(70.9
|
)
|
(100
|
)%
|
|||||||
Consolidated
|
$
|
513.1
|
$
|
519.6
|
$
|
(6.5
|
)
|
(1
|
)%
|
||||
Profit
from operations:
|
|||||||||||||
Paper
Technologies and Ventures
|
$
|
25.8
|
$
|
21.5
|
$
|
4.3
|
20
|
%
|
|||||
Aqualon
Group
|
52.3
|
36.3
|
16.0
|
44
|
%
|
||||||||
FiberVisions
|
—
|
(3.8
|
)
|
3.8
|
100
|
%
|
|||||||
Corporate
Items
|
(5.7
|
)
|
(4.0
|
)
|
(1.7
|
)
|
(30
|
)%
|
|||||
Consolidated
|
$
|
72.4
|
$
|
50.0
|
$
|
22.4
|
45
|
%
|
Nine
Months Ended September 30,
|
|||||||||||||
2006
|
2005
|
Change
|
%
Change
|
||||||||||
Net
sales:
|
|||||||||||||
Paper
Technologies and Ventures
|
$
|
795.2
|
$
|
768.9
|
$
|
26.3
|
3
|
%
|
|||||
Aqualon
Group
|
677.0
|
571.9
|
105.1
|
18
|
%
|
||||||||
FiberVisions
|
69.2
|
215.4
|
(146.2
|
)
|
(68
|
)%
|
|||||||
Consolidated
|
$
|
1,541.4
|
$
|
1,556.2
|
$
|
(14.8
|
)
|
(1
|
)%
|
||||
Profit
from operations:
|
|||||||||||||
Paper
Technologies and Ventures
|
$
|
57.0
|
$
|
50.7
|
$
|
6.3
|
12
|
%
|
|||||
Aqualon
Group
|
146.5
|
120.3
|
26.2
|
22
|
%
|
||||||||
FiberVisions
|
0.5
|
(6.1
|
)
|
6.6
|
NM
|
||||||||
Corporate
Items
|
(9.1
|
)
|
(11.1
|
)
|
2.0
|
NM
|
|||||||
Consolidated
|
$
|
194.9
|
$
|
153.8
|
$
|
41.1
|
27
|
%
|
Three
Months Ended September 30, 2006
|
Net
Sales Percentage Increase (Decrease) from Prior Year Due
To:
|
|||||||||||||||
Volume
|
Product
Mix
|
Price
|
Rates
of
Exchange
|
Total
|
||||||||||||
Paper
Technologies and Ventures
|
2
|
%
|
(1)
|
%
|
4
|
%
|
2
|
%
|
7
|
%
|
||||||
Aqualon
Group
|
34
|
%
|
(12
|
)%
|
1
|
%
|
2
|
%
|
25
|
%
|
||||||
FiberVisions
|
(100
|
)%
|
—
|
—
|
—
|
(100
|
)%
|
|||||||||
Consolidated
|
—
|
(5
|
)%
|
2
|
%
|
2
|
%
|
(1
|
)%
|
Nine
Months Ended September 30, 2006
|
Net
Sales Percentage Increase (Decrease) from Prior Year Due
To:
|
|||||||||||||||
Volume
|
Product
Mix
|
Price
|
Rates
of
Exchange
|
Total
|
||||||||||||
Paper
Technologies and Ventures
|
(2
|
)%
|
2
|
%
|
3
|
%
|
—
|
3
|
%
|
|||||||
Aqualon
Group
|
27
|
%
|
(9
|
)%
|
1
|
%
|
(1
|
)%
|
18
|
%
|
||||||
FiberVisions
|
(68
|
)%
|
—
|
1
|
%
|
(1
|
)%
|
(68
|
)%
|
|||||||
Consolidated
|
(1
|
)%
|
(2
|
)%
|
2
|
%
|
—
|
(1
|
)%
|
(Dollars
in millions)
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Accelerated
vesting of stock-based compensation for retirement eligible
employees
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
2.8
|
|||||
Severance,
restructuring and other exit costs
|
1.8
|
3.3
|
4.4
|
6.9
|
|||||||||
FiberVisions
stranded corporate costs
|
2.6
|
—
|
4.8
|
—
|
|||||||||
Consulting
charges related to legacy issues
|
—
|
—
|
—
|
0.8
|
|||||||||
Accelerated
depreciation
|
0.1
|
—
|
0.7
|
—
|
|||||||||
Legal
settlement on price fixing litigation, net
|
—
|
—
|
(3.3
|
)
|
—
|
||||||||
Other
miscellaneous expense, net
|
1.2
|
0.7
|
2.5
|
0.6
|
|||||||||
Corporate
items - net expense
|
$
|
5.7
|
$
|
4.0
|
$
|
9.1
|
$
|
11.1
|
(Dollars
in millions)
|
||||||||||||||||
Payments
Due by Period
(1)
|
||||||||||||||||
Less
than
|
1
-
3
|
4
-
5
|
After
5
|
|||||||||||||
Total
|
1
year
|
Years
|
years
|
years
|
||||||||||||
Debt
obligations
(2)
|
$
|
1,006.6
|
$
|
20.5
|
$
|
31.6
|
$
|
386.8
|
$
|
567.7
|
||||||
Operating
lease obligations
|
117.0
|
18.0
|
38.9
|
39.7
|
20.4
|
|||||||||||
Other
long-term liabilities reflected on the
registrant's
balance sheet under GAAP
(3)
|
574.4
|
215.8
|
69.6
|
59.8
|
229.2
|
|||||||||||
Total
contractual cash obligations
|
$
|
1,698.0
|
$
|
254.3
|
$
|
140.1
|
$
|
486.3
|
$
|
817.3
|
(1)
|
Does
not include the anticipated future interest payments to be made under
the
Company's current debt agreements; however, based upon current
indebtedness and interest rates at September 30, 2006, such interest
obligations are estimated to be approximately $73.6 million in 2007,
$72.4
million in 2008, $71.2 million in 2009, $71.0 million in 2010, $51.0
million in 2011 and $748.9 million thereafter. A one percent increase
or
decrease in the LIBOR rate would have an impact of approximately
plus or
minus $3.9 million on the Company’s interest payments in each of the next
four years and $1.0 million in the fifth
year.
|
(2)
|
The
6.60% Debentures due 2027, which are included in “After 5 years” amount,
are redeemable, in whole or in part, at the option of each of the
holders
on August 1, 2007 at a redemption price equal to 100% of the principal
amount thereof.
|
(3)
|
Includes
amounts pertaining to asbestos-related matters, asset retirement
obligations, postemployment and other postretirement obligations
and
workers compensation claims. Due to the dynamic nature of asbestos
litigation, it is impractical to determine the anticipated payments
in any
given year. Therefore, the non-current asbestos-related liability
of
$216.8 million has been reflected in the after five years
column.
|
HERCULES
INCORPORATED
|
|||
By:
|
/s/
Allen A. Spizzo
|
||
Allen
A. Spizzo
|
|||
Vice
President and Chief Financial Officer
|
|||
(Principal
Financial Officer and Duly
|
|||
Authorized
Signatory)
|
|||
November
3, 2006
|
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
|