UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
|
|
FORM
10-K
|
|
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.
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102
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Principal
Products
|
Primary
Markets
|
Paper
Technologies:Functional performance chemicals
Sizing
(internal and surface), strength, tissue creping and coatings
additives.
|
Large,
multi-national manufacturers of tissue, paper towels, packaging,
beverage
containers, newsprint, corrugated medium, printing and writing paper
and
other stationery items such as labels and envelopes.
|
Paper
Technologies: Process treatment chemicals
Contaminant,
microbiological and foam control, clarification, retention, drainage,
felt
conditioning, fiber recovery, and water closure.
|
|
Ventures:
Pulping chemicals
Deposit
and scale control, foam control, deinking, and clarification.
|
Large,
multi-national manufacturers of pulp to ultimately produce paper.
Locations are either stand alone or integrated with paper
making.
|
Ventures:
Water treatment chemicals
Utility
systems, cooling water and water clarification.
|
Large,
multi-national manufacturers of pulp and/or paper with water utility
operations including boilers, cooling water and influent/effluent
water
treatment.
|
Ventures:
Lubricants
Ester-based
synthetic lubricants and pentaerythritol (PE).
|
Producers
of aviation and refrigeration compressor fluids, automotive, and
general
industry.
|
Ventures:
Building and Converted Products
Adhesives,
resin modifiers, coatings, hydrophobic and release chemistries,
crosslinkers and binders, and foam control.
|
Producers
of building products, textiles, electronics, paints and inks, and
paper
industry converting operations.
|
Principal
Products
|
Primary
Markets
|
Water-soluble
polymers, ethylcellulose and rosin resins:
Hydroxyethylcellulose
(HEC), Carboxymethylcellulose (CMC), Methylcellulose (MC) and derivatives,
Hydroxypropylcellulose (HPC), Guar and its derivatives, ethylcellulose
(EC) and rosin resins.
|
Manufacturers
of interior and exterior architectural paints, oilfield service companies
for oil and gas drilling and recovery, paper mills, construction
material
manufacturers and makers of oral hygiene products, personal care
products,
food products and pharmaceuticals.
|
|
Beringen,
Belgium; Burlington, Ontario, Canada; Busnago, Italy; Chicopee,
Massachusetts, U.S.; Franklin, Virginia, U.S.; Hattiesburg, Mississippi,
U.S.; Helsingborg, Sweden; Kim Cheon, Korea; Louisiana, Missouri,
U.S.;
Macon, Georgia, U.S.; Mexico City, Mexico; Milwaukee, Wisconsin,
U.S.;
Nantou, Taiwan; Paulinia, Brazil; Portland, Oregon, U.S.; Savannah,
Georgia, U.S.; Shanghai, China; Sobernheim, Germany; Tampere, Finland;
Tarragona, Spain; Voreppe, France; and Zwijndrecht, The
Netherlands.
|
|
Alizay,
France; Doel, Belgium; Dalton, Georgia, U.S.; Hopewell, Virginia,
U.S.;
Jiangmen City, China; Kenedy, Texas, U.S.; Luzhou, China (40% joint
venture interest); Nanjing, China (land acquired in 2006 for facility
construction in 2007); Parlin, New Jersey, U.S.; Suzhou, China (40%
joint
venture interest); Zwijndrecht, The Netherlands; and Brunswick, Georgia,
U.S.
|
2006
|
High
|
Low
|
|||||
First
Quarter
|
$
|
13.93
|
$
|
11.03
|
|||
Second
Quarter
|
$
|
16.02
|
$
|
13.63
|
|||
Third
Quarter
|
$
|
15.99
|
$
|
13.68
|
|||
Fourth
Quarter
|
$
|
19.52
|
$
|
15.73
|
|||
2005
|
High
|
Low
|
|||||
First
Quarter
|
$
|
15.24
|
$
|
13.86
|
|||
Second
Quarter
|
$
|
14.82
|
$
|
13.00
|
|||
Third
Quarter
|
$
|
14.69
|
$
|
12.05
|
|||
Fourth
Quarter
|
$
|
12.25
|
$
|
10.20
|
|
(Dollars
and shares in millions, except per share data)
|
|||||||||||||||
Statements
of Operations Information:
|
2006
|
2005
|
2004
|
2003
|
2002
|
|||||||||||
Net
sales
|
$
|
2,035.3
|
$
|
2,055.0
|
$
|
1,984.3
|
$
|
1,836.0
|
$
|
1,693.7
|
||||||
Cost
of sales
|
1,343.4
|
1,391.1
|
1,291.6
|
1,155.6
|
1,029.1
|
|||||||||||
Gross
profit
|
$
|
691.9
|
$
|
663.9
|
$
|
692.7
|
$
|
680.4
|
$
|
664.6
|
||||||
Research
and development
|
$
|
38.8
|
$
|
40.8
|
$
|
42.7
|
$
|
38.7
|
$
|
42.0
|
||||||
Profit
from operations
|
$
|
248.6
|
$
|
140.3
|
$
|
232.9
|
$
|
257.1
|
$
|
219.9
|
||||||
Net
income (loss) from continuing operations before discontinued
operations
and cumulative effect of changes in accounting principle
|
$
|
190.8
|
$
|
(32.1
|
)
|
$
|
30.7
|
$
|
75.2
|
$
|
(47.1
|
)
|
||||
Net
income (loss) on discontinued operations, net of tax
|
47.0
|
(6.5
|
)
|
(2.6
|
)
|
3.5
|
(197.7
|
)
|
||||||||
Net
income (loss) before cumulative effect of changes in
accounting
principle
|
237.8
|
(38.6
|
)
|
28.1
|
78.7
|
(244.8
|
)
|
|||||||||
Cumulative
effect of changes in accounting principle, net of tax
|
0.9
|
(2.5
|
)
|
—
|
(33.3
|
)
|
(368.0
|
)
|
||||||||
Net
income (loss)
|
$
|
238.7
|
$
|
(41.1
|
)
|
$
|
28.1
|
$
|
45.4
|
$
|
(612.8
|
)
|
||||
Per
Share Data and Other Share Information:
|
||||||||||||||||
Basic
earnings (loss) per share
|
||||||||||||||||
Continuing
operations
|
$
|
1.72
|
$
|
(0.30
|
)
|
$
|
0.28
|
$
|
0.71
|
$
|
(0.44
|
)
|
||||
Discontinued
operations
|
0.42
|
(0.06
|
)
|
(0.02
|
)
|
0.03
|
(1.87
|
)
|
||||||||
Cumulative
effect of changes in accounting principle
|
0.01
|
(0.02
|
)
|
—
|
(0.31
|
)
|
(3.47
|
)
|
||||||||
Net
income (loss)
|
$
|
2.15
|
$
|
(0.38
|
)
|
$
|
0.26
|
$
|
0.43
|
$
|
(5.78
|
)
|
||||
Diluted
earnings (loss) per share
|
||||||||||||||||
Continuing
operations
|
$
|
1.71
|
$
|
(0.30
|
)
|
$
|
0.28
|
$
|
0.70
|
$
|
(0.44
|
)
|
||||
Discontinued
operations
|
0.42
|
(0.06
|
)
|
(0.02
|
)
|
0.03
|
(1.87
|
)
|
||||||||
Cumulative
effect of changes in accounting principle
|
0.01
|
(0.02
|
)
|
—
|
(0.31
|
)
|
(3.47
|
)
|
||||||||
Net
income (loss)
|
$
|
2.14
|
$
|
(0.38
|
)
|
$
|
0.26
|
$
|
0.42
|
$
|
(5.78
|
)
|
||||
Average
number of common shares outstanding
|
||||||||||||||||
Basic
|
110.8
|
108.7
|
107.3
|
106.2
|
106.0
|
|||||||||||
Diluted
|
111.3
|
110.4
|
109.0
|
107.2
|
106.2
|
|||||||||||
Actual
number of common shares outstanding
|
116.0
|
112.7
|
112.1
|
111.0
|
109.4
|
|||||||||||
Balance
Sheet Data:
|
||||||||||||||||
Accounts
receivable, net
|
$
|
326.6
|
$
|
289.7
|
$
|
344.9
|
$
|
319.7
|
$
|
393.9
|
||||||
Inventories
|
210.6
|
179.6
|
205.7
|
199.6
|
181.7
|
|||||||||||
Less:
Accounts payable
|
(205.3
|
)
|
(172.9
|
)
|
(186.6
|
)
|
(161.6
|
)
|
(167.8
|
)
|
||||||
Operating
working capital, net
|
$
|
331.9
|
$
|
296.4
|
$
|
364.0
|
$
|
357.7
|
$
|
407.8
|
||||||
Total
assets
|
$
|
2,808.5
|
$
|
2,568.8
|
$
|
2,720.3
|
$
|
2,721.8
|
$
|
2,772.0
|
||||||
Total
debt
|
$
|
995.5
|
$
|
1,109.0
|
$
|
1,240.1
|
$
|
1,347.8
|
$
|
883.0
|
||||||
Company-obligated
preferred securities of subsidiary trusts
|
—
|
—
|
—
|
—
|
624.0
|
|||||||||||
Total
debt and preferred securities
|
$
|
995.5
|
$
|
1,109.0
|
$
|
1,240.1
|
$
|
1,347.8
|
$
|
1,507.0
|
||||||
Other
Data:
|
||||||||||||||||
Net
cash provided by (used in) operating activities
|
$
|
172.9
|
$
|
139.2
|
$
|
120.5
|
$
|
22.8
|
$
|
(215.2
|
)
|
|||||
Capital
expenditures
|
$
|
93.6
|
$
|
67.5
|
$
|
77.4
|
$
|
48.0
|
$
|
43.4
|
||||||
Depreciation
|
$
|
70.7
|
$
|
80.5
|
$
|
74.9
|
$
|
73.2
|
$
|
70.7
|
||||||
Amortization
|
$
|
24.6
|
$
|
25.4
|
$
|
26.3
|
$
|
27.4
|
$
|
29.0
|
||||||
Employees
|
4,430
|
4,650
|
4,950
|
5,116
|
5,095
|
2006
|
2005
|
||||||
North
America
|
49
|
%
|
47
|
%
|
|||
Europe
|
34
|
%
|
37
|
%
|
|||
Asia
Pacific
|
11
|
%
|
11
|
%
|
|||
Latin
America
|
6
|
%
|
5
|
%
|
|||
Consolidated
|
100
|
%
|
100
|
%
|
2006
|
2005
|
||||||
Paper
Technologies and Ventures
|
53
|
%
|
50
|
%
|
|||
Aqualon
Group
|
44
|
%
|
36
|
%
|
|||
FiberVisions
|
3
|
%
|
14
|
%
|
|||
Consolidated
|
100
|
%
|
100
|
%
|
· |
Research
and development consolidation -The Company completed the consolidation
of
its research and development activities from its Jacksonville, Florida
facility to its Wilmington, Delaware research center (“WRC”). Costs
incurred during 2006 that were attributable to this program included
$2.6
million in severance and termination benefits, other exit costs of
$1.2
million and accelerated depreciation of $1.2 million. In 2005, the
Company
consolidated its Barneveld research activities into WRC and a European
regional center.
|
· |
PTV
manufacturing rationalization and alliance - The Company closed its
Pendlebury manufacturing facility in the United Kingdom. As a result,
charges incurred during 2006 with respect to this program included
$2.1
million of accelerated depreciation, $0.4 million in severance and
termination benefits and $0.8 million in other exit costs. PTV entered
into an alliance agreement whereby the manufacture of the underlying
products is being phased to MeadWestvaco. As a result certain production
lines at the Company’s manufacturing facilities in Savannah, Georgia,
Hattiesburg, Mississippi and Portland, Oregon will be closed. During
2006,
the Company incurred $0.5 million in severance and termination benefits,
$0.2 million of other exit costs and $0.6 million of accelerated
depreciation in connection with this program. Additional charges
are
expected to continue into 2007 during the manufacturing phase-out
period.
|
· |
Business
segment realignment - In connection with the realignment of its business
segments, the Company incurred $9.8 million of severance and termination
benefits and $0.4 million of other exit costs, primarily to further
de-layer management and streamline organizational
structures.
|
· |
Business
Infrastructure Projects - These projects were developed primarily
as a
result of efforts to reduce stranded corporate costs resulting from
the
FiberVisions transaction discussed above. The goal of the projects
is to
realign the Company’s support organization through both reorganization and
selected outsourcing and offshoring service arrangements such that
a
substantial proportion of the underlying costs become more variable
in
nature, providing the Company with greater flexibility to scale the
level
of support services required in response to changing business demands,
as
well as to access larger service organizations that can provide a
greater
depth and breadth of services. The Company realized approximately
$10
million in annual savings due to the reorganization in 2006 and
anticipates approximately $7 million in annual cost reductions to
be
achieved by the end of 2007 as a result of the outsourcing and offshoring
projects.
|
2006
|
2005
|
2004
|
2006
Change
|
2005
Change
|
||||||||||||
Net
sales
|
$
|
2,035.3
|
$
|
2,055.0
|
$
|
1,984.3
|
$
|
(19.7
|
)
|
$
|
70.7
|
%
Change
Excluding
|
|||||||||||||
Regions
|
2006
|
2005
|
%
Change
|
ROE
|
|||||||||
North
America
|
$
|
1,003.2
|
$
|
967.9
|
4
|
%
|
3
|
%
|
|||||
Europe
|
696.0
|
747.7
|
(7
|
)%
|
(6
|
)%
|
|||||||
Asia
Pacific
|
227.4
|
233.7
|
(3
|
)%
|
(3
|
)%
|
|||||||
Latin
America
|
108.7
|
105.7
|
3
|
%
|
(1
|
)%
|
|||||||
All
regions
|
$
|
2,035.3
|
$
|
2,055.0
|
(1
|
)%
|
(1
|
)%
|
%
Change
Excluding
|
|||||||||||||
Regions
|
2005
|
2004
|
%
Change
|
ROE
|
|||||||||
North
America
|
$
|
967.9
|
$
|
909.6
|
6
|
%
|
6
|
%
|
|||||
Europe
|
747.7
|
761.8
|
(2
|
)%
|
(4
|
)%
|
|||||||
Asia
Pacific
|
233.7
|
214.4
|
9
|
%
|
7
|
%
|
|||||||
Latin
America
|
105.7
|
98.5
|
7
|
%
|
(1
|
)%
|
|||||||
All
regions
|
$
|
2,055.0
|
$
|
1,984.3
|
4
|
%
|
2
|
%
|
2006
|
2005
|
2004
|
2006
Change
|
2005
Change
|
||||||||||||
Cost
of sales
|
$
|
1,343.4
|
$
|
1,391.1
|
$
|
1,291.6
|
$
|
(47.7
|
)
|
$
|
99.5
|
2006
|
2005
|
2004
|
2006
Change
|
2005
Change
|
||||||||||||
Selling,
general and administrative expenses
|
$
|
372.2
|
$
|
382.5
|
$
|
382.1
|
$
|
(10.3
|
)
|
$
|
0.4
|
2006
|
2005
|
2004
|
2006
Change
|
2005
Change
|
||||||||||||
Research
and development
|
$
|
38.8
|
$
|
40.8
|
$
|
42.7
|
$
|
(2.0
|
)
|
$
|
(1.9
|
)
|
2006
|
2005
|
2004
|
2006
Change
|
2005
Change
|
||||||||||||
Intangible
asset amortization
|
$
|
7.2
|
$
|
8.0
|
$
|
8.1
|
$
|
(0.8
|
)
|
$
|
(0.1
|
)
|
2006
|
2005
|
2004
|
2006
Change
|
2005
Change
|
||||||||||||
Impairment
of FiberVisions goodwill
|
$
|
—
|
$
|
52.9
|
$
|
—
|
$
|
(52.9
|
)
|
$
|
52.9
|
2006
|
2005
|
2004
|
2006
Change
|
2005
Change
|
||||||||||||
Other
operating expense, net
|
$
|
25.1
|
$
|
39.4
|
$
|
26.9
|
$
|
(14.3
|
)
|
$
|
12.5
|
2006
|
2005
|
2004
|
2006
Change
|
2005
Change
|
||||||||||||
Interest
and debt expense
|
$
|
71.2
|
$
|
89.4
|
$
|
108.7
|
$
|
(18.2
|
)
|
$
|
(19.3
|
)
|
2006
|
2005
|
2004
|
2006
Change
|
2005
Change
|
||||||||||||
Vertac
litigation charges
|
$
|
108.5
|
$
|
15.0
|
$
|
—
|
$
|
93.5
|
$
|
15.0
|
2006
|
2005
|
2004
|
2006
Change
|
2005
Change
|
||||||||||||
Gain
on sale of CP Kelco ApS
|
$
|
—
|
$
|
—
|
$
|
(27.0
|
)
|
$
|
—
|
$
|
27.0
|
2006
|
2005
|
2004
|
2006
Change
|
2005
Change
|
||||||||||||
Other
expense, net
|
$
|
65.7
|
$
|
71.3
|
$
|
116.7
|
$
|
(5.6
|
)
|
$
|
(45.4
|
)
|
2006
|
2005
|
2004
|
2006
Change
|
2005
Change
|
||||||||||||
(Benefit)
provision for income taxes
|
$
|
(192.2
|
)
|
$
|
(3.8
|
)
|
$
|
3.8
|
$
|
(188.4
|
)
|
$
|
(7.6
|
)
|
|
2006
|
2005
|
2004
|
2006
Change
|
2005
Change
|
|||||||||||
Minority
interests in earnings of consolidated
subsidiaries
|
$
|
(1.4
|
)
|
$
|
(1.0
|
)
|
$
|
(0.9
|
)
|
$
|
(0.4
|
)
|
$
|
(0.1
|
)
|
2006
|
2005
|
2004
|
2006
Change
|
2005
Change
|
||||||||||||
Equity
loss of affiliated companies, net of tax
|
$
|
(3.2
|
)
|
$
|
0.5
|
$
|
0.9
|
$
|
(3.7
|
)
|
$
|
(0.4
|
)
|
2006
|
2005
|
2004
|
2006
Change
|
2005
Change
|
||||||||||||
Net
income (loss) from discontinued operations, net of
tax
|
$
|
47.0
|
$
|
(6.5
|
)
|
$
|
(2.6
|
)
|
$
|
53.5
|
$
|
(3.9
|
)
|
2006
|
2005
|
2004
|
2006
Change
|
2005
Change
|
||||||||||||
Cumulative
effect of changes in accounting principle, net of
tax
|
$
|
0.9
|
$
|
(2.5
|
)
|
$
|
—
|
$
|
3.4
|
$
|
(2.5
|
)
|
2006
|
2005
|
Change
|
%
Change
|
||||||||||
Net
sales:
|
|||||||||||||
Paper
Technologies and Ventures
|
$
|
1,075.3
|
$
|
1,017.3
|
$
|
58.0
|
6
|
%
|
|||||
Aqualon
Group
|
890.8
|
755.0
|
135.8
|
18
|
%
|
||||||||
FiberVisions
|
69.2
|
282.7
|
(213.5
|
)
|
(76
|
)%
|
|||||||
Consolidated
|
$
|
2,035.3
|
$
|
2,055.0
|
$
|
(19.7
|
)
|
(1
|
)%
|
||||
Profit
from operations:
|
|||||||||||||
Paper
Technologies and Ventures
|
$
|
80.8
|
$
|
61.4
|
$
|
19.4
|
32
|
%
|
|||||
Aqualon
Group
|
187.4
|
155.5
|
31.9
|
21
|
%
|
||||||||
FiberVisions
|
0.5
|
(64.9
|
)
|
65.4
|
NM
|
||||||||
Corporate
Items
|
(20.1
|
)
|
(11.7
|
)
|
(8.4
|
)
|
(72
|
)%
|
|||||
Consolidated
|
$
|
248.6
|
$
|
140.3
|
$
|
108.3
|
77
|
%
|
2005
|
2004
|
Change
|
%
Change
|
||||||||||
Net
sales:
|
|||||||||||||
Paper
Technologies and Ventures
|
$
|
1,017.3
|
$
|
978.5
|
$
|
38.8
|
4
|
%
|
|||||
Aqualon
Group
|
755.0
|
724.6
|
30.4
|
4
|
%
|
||||||||
FiberVisions
|
282.7
|
281.2
|
1.5
|
1
|
%
|
||||||||
Consolidated
|
$
|
2,055.0
|
$
|
1,984.3
|
$
|
70.7
|
4
|
%
|
|||||
Profit
from operations:
|
|||||||||||||
Paper
Technologies and Ventures
|
$
|
61.4
|
$
|
84.5
|
$
|
(23.1
|
)
|
(27
|
)%
|
||||
Aqualon
Group
|
155.5
|
157.9
|
(2.4
|
)
|
(2
|
)%
|
|||||||
FiberVisions
|
(64.9
|
)
|
(4.1
|
)
|
(60.8
|
)
|
NM
|
||||||
Corporate
Items
|
(11.7
|
)
|
(5.4
|
)
|
(6.3
|
)
|
NM
|
||||||
Consolidated
|
$
|
140.3
|
$
|
232.9
|
$
|
(92.6
|
)
|
(40
|
)%
|
2006
|
Net
Sales Percentage Increase (Decrease) from 2005 Due
To:
|
|||||||||||||||
Volume
|
Product
Mix
|
Price
|
Rates
of Exchange
|
Total
|
||||||||||||
Paper
Technologies and Ventures
|
—
|
1
|
%
|
4
|
%
|
1
|
%
|
6
|
%
|
|||||||
Aqualon
Group
|
24
|
%
|
(7
|
)%
|
1
|
%
|
—
|
18
|
%
|
|||||||
FiberVisions
|
(76
|
)%
|
—
|
—
|
—
|
(76
|
)%
|
|||||||||
Consolidated
|
(2
|
)%
|
(2
|
)%
|
3
|
%
|
—
|
(1
|
)%
|
2005
|
Net
Sales Percentage Increase (Decrease) from 2004 Due
To:
|
|||||||||||||||
Volume
|
Product
Mix
|
Price
|
Rates
of Exchange
|
Total
|
||||||||||||
Paper
Technologies and Ventures
|
1
|
%
|
(1
|
)%
|
1
|
%
|
3
|
%
|
4
|
%
|
||||||
Aqualon
Group
|
3
|
%
|
—
|
—
|
1
|
%
|
4
|
%
|
||||||||
FiberVisions
|
(13
|
)%
|
—
|
13
|
%
|
1
|
%
|
1
|
%
|
|||||||
Consolidated
|
(1
|
)%
|
—
|
3
|
%
|
2
|
%
|
4
|
%
|
2006
|
2005
|
2004
|
||||||||
Paper
Technologies
|
$
|
851.0
|
$
|
810.7
|
$
|
779.0
|
||||
Ventures
|
224.3
|
206.6
|
199.5
|
|||||||
$
|
1,075.3
|
$
|
1,017.3
|
$
|
978.5
|
2006
|
2005
|
2004
|
||||||||
Coatings
and Construction
|
$
|
398.3
|
$
|
356.4
|
$
|
346.8
|
||||
Regulated
|
188.2
|
174.1
|
157.7
|
|||||||
Energy
and Specialties
|
304.3
|
224.5
|
220.1
|
|||||||
$
|
890.8
|
$
|
755.0
|
$
|
724.6
|
2006
|
2005
|
2004
|
||||||||
Severance,
restructuring and other exit costs
|
$
|
6.5
|
$
|
7.5
|
$
|
—
|
||||
Asset
charges (impairments and accelerated depreciation)
|
5.2
|
0.5
|
—
|
|||||||
Legal
settlements
|
(3.1
|
)
|
0.1
|
—
|
||||||
Special
executive pension adjustment
|
—
|
—
|
1.6
|
|||||||
Gains
on asset dispositions
|
—
|
(0.3
|
)
|
—
|
||||||
Nitrocellulose
facility shutdown costs
|
—
|
—
|
6.5
|
|||||||
Dismantlement
costs
|
1.5
|
—
|
—
|
|||||||
Stranded
corporate costs
|
7.9
|
—
|
—
|
|||||||
Other
miscellaneous charges, net
|
2.1
|
3.9
|
(2.7
|
)
|
||||||
Total
Corporate items
|
$
|
20.1
|
$
|
11.7
|
$
|
5.4
|
Operating
Activities
|
2006
|
2005
|
|||||
Net
income (loss), depreciation, amortization and all other non-cash
charges
and credits
|
$
|
194.3
|
$
|
64.8
|
|||
Changes
in working capital, net
|
(13.4
|
)
|
27.2
|
||||
All
other sources and uses of cash
|
(8.0
|
)
|
47.2
|
||||
Net
cash provided by operating activities
|
$
|
172.9
|
$
|
139.2
|
Investing
Activities
|
2006
|
2005
|
|||||
Capital
expenditures
|
$
|
93.6
|
$
|
67.5
|
|||
Acquisitions
and investments, net
|
29.4
|
4.4
|
|||||
Proceeds
from asset and investment dispositions and all other sources,
net
|
(28.9
|
)
|
(14.2
|
)
|
|||
Net
cash used in investing activities
|
$
|
94.1
|
$
|
57.7
|
Financing
Activities
|
2006
|
2005
|
|||||
Long-term
debt payments
|
$
|
(142.5
|
)
|
$
|
(131.2
|
)
|
|
Long-term
debt proceeds and changes in short-term debt
|
27.8
|
1.9
|
|||||
Long-term
debt issued by FiberVisions, net of issuance costs
|
83.7
|
—
|
|||||
Proceeds
from the exercise of stock options and all other sources,
net
|
42.6
|
2.3
|
|||||
Net
cash provided by (used in) financing activities
|
$
|
11.6
|
$
|
(127.0
|
)
|
Payments
Due by Period
(1)
|
||||||||||||||||
Less
than
|
1
-
3
|
3
-
5
|
After
5
|
|||||||||||||
Total
|
1
year
|
years
|
years
|
years
|
||||||||||||
Debt
obligations
|
$
|
995.5
|
$
|
35.8
|
$
|
21.5
|
$
|
374.1
|
$
|
564.1
|
||||||
Operating
lease obligations
|
101.0
|
18.9
|
44.6
|
22.8
|
14.7
|
|||||||||||
Purchase
obligations
(2)
|
3,794.2
|
683.6
|
1,475.6
|
1,624.0
|
11.0
|
|||||||||||
Other
liabilities reflected on the
registrant's
balance sheet under GAAP
(3)
|
667.4
|
224.2
|
72.9
|
53.8
|
316.5
|
|||||||||||
Total
contractual cash obligations
|
$
|
5,558.1
|
$
|
962.5
|
$
|
1,614.6
|
$
|
2,074.7
|
$
|
906.3
|
(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 December 31, 2006, such interest
obligations are estimated to be approximately $72.2 million in 2007,
$70.2
million in 2008, $69.9 million in 2009, $69.7 million in 2010, $41.8
million in 2011 and $730.1 million thereafter. A one percent increase
or
decrease in the LIBOR rate would have an impact of approximately
plus or
minus $3.7 million on the Company’s interest payments in years 2007
through 2011.
|
(2)
|
Obligations
relates primarily to raw material requirements and service
contracts.
|
(3)
|
Includes
amounts pertaining to asbestos-related matters, asset retirement
obligations, post-employment and post-retirement 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 $233.6 million
has been reflected in the after five years
column.
|
CONSOLIDATED
FINANCIAL
STATEMENTS
|
Page
|
|||
36
|
||||
37
|
||||
40
|
||||
41
|
||||
42
|
||||
43
|
||||
44
|
||||
Notes
to the Consolidated Financial Statements:
|
||||
48
|
||||
48
|
||||
49
|
||||
50
|
||||
51
|
||||
51
|
||||
51
|
||||
52
|
||||
53
|
||||
55
|
||||
59
|
||||
59
|
||||
61
|
||||
71
|
||||
74
|
||||
74
|
||||
74
|
||||
75
|
||||
76
|
||||
80
|
||||
80
|
||||
80
|
||||
81
|
||||
81
|
||||
83
|
||||
83
|
||||
84
|
||||
86
|
||||
87
|
||||
96
|
||||
SUPPLEMENTARY
DATA
|
|
|||
100
|
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
|
)
|
Name
|
|
Age
|
|
Current
Position
|
Craig
A. Rogerson
|
50
|
President,
Chief Executive Officer and Director
|
||
Fred
G. Aanonsen
|
59
|
Vice
President and Controller
|
||
Edward
V. Carrington
|
64
|
Vice
President, Human Resources
|
||
Richard
G. Dahlen
|
67
|
Chief
Legal Officer
|
||
Israel
J. Floyd
|
60
|
Corporate
Secretary and General Counsel
|
||
Vincenzo
M. Romano
|
53
|
Vice
President, Taxes
|
||
Stuart
C. Shears
|
56
|
Vice
President and Treasurer
|
||
Allen
A. Spizzo
|
49
|
Vice
President and Chief Financial
Officer
|
Plan
category
|
Number
of securities to
be
issued upon
exercise
of outstanding
options,
warrants
and
rights
|
Weighted-average
exercise
price of
outstanding
options,
warrants
and rights
|
Number
of securities
remaining
available
for
future issuance
under
equity
compensation
plans
(excluding
securities
reflected
in
column
(a))
|
||||||||||
(a)
|
(b)
|
(c)
|
|||||||||||
Equity
compensation plans approved by security holders
|
5,398,285
|
(1)
(2
|
)
|
$
|
25.56
|
8,546,964
|
|||||||
Equity
compensation plans not approved by security holders
|
—
|
—
|
—
|
||||||||||
Total
|
5,398,285
|
$
|
25.56
|
8,546,964
|
|||||||||
(1) Includes
2,234,710 options with exercise prices in excess of the weighted
average
price of $25.56.
|
|||||||||||||
(2) Includes
options to purchase 1,181,759 shares that were not vested at December
31,
2006.
|
|
Page
|
Management's
Report on Internal Control over Financial Reporting
|
36
|
Reports
of Independent Registered Public Accounting Firm
|
37
|
Consolidated
Statements of Operations and Comprehensive Income (Loss) for the
Years
Ended December 31, 2006, 2005 and 2004
|
40
|
Consolidated
Balance Sheets as of December 31, 2006 and 2005
|
41
|
Consolidated
Statements of Cash Flows for the Years Ended December 31, 2006, 2005
and 2004
|
42
|
Consolidated
Statements of Stockholders' Equity (Deficit) for the Years Ended
December 31, 2006, 2005 and 2004
|
43
|
Summary
of Significant Accounting Policies and Notes to Consolidated Financial
Statements
|
44
|
(Dollars
in millions)
|
Balance
at
|
Charged
to
|
Charged
to
|
Balance
at
|
||||||||||||
beginning
|
costs
and
|
other
|
end
|
|||||||||||||
Description
|
of
period
|
expenses
|
accounts
|
Deductions
|
of
period
|
|||||||||||
Year
2006
|
||||||||||||||||
Tax
valuation allowance
|
$
|
380.7
|
$
|
(100.4
|
)
|
$
|
55.5
|
$
|
—
|
$
|
335.8
|
|||||
Year
2005
|
||||||||||||||||
Tax
valuation allowance
|
$
|
391.8
|
$
|
23.1
|
$
|
(34.2
|
)
|
$
|
—
|
$
|
380.7
|
|||||
Year
2004
|
|
|||||||||||||||
Tax
valuation allowance
|
$
|
399.8
|
$
|
(22.9
|
)
|
$
|
14.9
|
$
|
—
|
$
|
391.8
|
|||||
|
HERCULES
INCORPORATED
|
By:
|
/s/
Craig A. Rogerson
|
President
and Chief Executive Officer
|
Principal
Executive Officer and Director:
|
|||
|
President
and Chief Executive Officer
|
/s/
Craig A. Rogerson
|
|
Craig
A. Rogerson
|
|||
Principal
Financial Officer:
|
|||
Vice
President and Chief Financial Officer
|
/s/
Allen A. Spizzo
|
||
Allen
A. Spizzo
|
|||
Principal
Accounting Officer:
|
|||
Vice
President and Controller
|
/s/
Fred G. Aanonsen
|
||
Fred
G. Aanonsen
|
|||
Directors:
|
|||
/s/
John K. Wulff
|
/s/
Burton M. Joyce
|
||
John
K. Wulff, Chairman of the Board
|
Burton
M. Joyce
|
||
/s/
Anna Cheng Catalano
|
/s/
Robert D. Kennedy
|
||
Anna
Cheng Catalano
|
Robert
D. Kennedy
|
||
/s/
Thomas P. Gerrity
|
/s/
Jeffrey M. Lipton
|
||
Thomas
P. Gerrity
|
Jeffrey
M. Lipton
|
||
/s/
John C. Hunter, III
|
/s/
Joe B. Wyatt
|
||
John
C. Hunter, III
|
Joe
B. Wyatt
|
||
Number
|
Description
|
Incorporated
by Reference to
|
|
2.1
|
Agreement
and Plan of Merger among Hercules, Water Acquisition Company and
BetzDearborn Inc., dated July 30, 1998
|
Exhibit
2.1, BetzDearborn Inc. Current Report on Form 8-K, filed July 30,
1998
|
|
3.1
|
Restated
Certificate of Incorporation of Hercules, as revised and amended
July 6,
1988
|
Exhibit
3-A, Annual Report on Form 10-K filed March 26, 1993
|
|
3.2
|
Certificate
of Amendment dated October 24, 1995, to Hercules' Restated Certificate
of
Incorporation as revised and amended July 5, 1998
|
Exhibit
4.1a, Registration Statement on Form S-3, filed September 15, 1998
|
|
3.3
|
By-Laws
of Hercules, as revised and amended as of July 15,
2003
|
Exhibit
3.1, Quarterly Report on Form 10-Q filed August 7, 2003
|
|
4.1
|
Officers'
Certificate, dated as of July 27, 1999,
pursuant to the Junior Subordinated Debentures Indenture between
Hercules
and Chase, dated as of November 12, 1998
|
Exhibit
4.1, Current Report on Form 8-K, dated July 27, 1999
|
|
4.2
|
Unit
Agreement, dated July 27, 1999,
among Hercules, Hercules Trust II and The Chase Manhattan Bank, as
unit
agent
|
Exhibit
4.3, Current Report on Form 8-K, dated July 27, 1999
|
|
4.3
|
Warrant
Agreement, dated July 27, 1999,
between Hercules and The Chase Manhattan Bank, as warrant
agent
|
Exhibit
4.4, Current Report on Form 8-K, dated July 27, 1999
|
|
4.4
|
Form
of Series A Junior Subordinated Deferrable Interest
Debentures
|
Exhibit
4.5, Current Report on Form 8-K, dated July 27, 1999
|
|
4.5
|
Form
of CRESTS Unit
|
Exhibit
4.7, Current Report on Form 8-K, dated July 27, 1999
|
|
4.6
|
Form
of Warrant
|
Exhibit
4.8, Current Report on Form 8-K, dated July 27, 1999
|
|
4.7
|
Rights
Agreement, dated as of August 24, 2000, between Hercules Incorporated
and
Chase Mellon Shareholder Services, L.L.C.
|
Exhibit
4.1 to Hercules Registration of Certain Classes of Securities on
Form 8-A
filed August 10, 2000
|
|
4.8
|
Indenture,
dated as of November 14, 2000, between Hercules Incorporated, as
issuer
and Wells Fargo Bank Minnesota, N.A., as trustee (including the form
of
11.125% senior notes due 2007 included as Exhibit A
thereto).
|
Exhibit
4-A, Quarterly Report on Form 10-Q, filed November 14,
2000
|
|
4.9
|
Registration
Rights Agreement, dated as of November 14, 2000, among Hercules
Incorporated and all of its domestic subsidiaries and Donaldson,
Lufkin
& Jenrette Securities Corporation and Credit Suisse First Boston
Corporation, as the initial purchasers.
|
Exhibit
4-B Quarterly Report on Form 10-Q, filed November 14,
2000
|
|
4.10
|
Amendment
No. 1 to the Hercules Incorporated Rights Agreement, dated as of
June 5,
2003
|
Exhibit
4.2, Registration Statement on Form 8-A, filed June 5,
2003
|
|
4.11
|
Amendment
No. 2 to the Hercules Incorporated Rights Agreement, dated as of
August
21, 2003
|
Exhibit
4.1, Current Report on Form 8-K, filed September 22,
2003
|
|
4.12
|
Indenture,
dated as of April 8, 2004, between Hercules Incorporated and each
of the
Guarantors party thereto and Wells Fargo Bank, National
Association
|
Exhibit
4.1, Quarterly Report on Form 10-Q filed May 10,
2004
|
4.13
|
Registration
Rights Agreement, dated April 8, 2004, between Hercules Incorporated
and
the Guarantors listed on Schedule A thereto and Credit Suisse First
Boston
LLC, Wachovia Capital Markets, LLC, Scotia Capital (USA) Inc. and
Deutsche
Bank Securities Inc.
|
Exhibit
4.2, Quarterly Report on Form 10-Q, filed May 10, 2004
|
|
10.1
|
Hercules
Executive Survivor Benefit Plan
|
Exhibit
10-D, Annual Report on Form 10-K, filed March 27, 1981
|
|
10.2
|
Hercules
1993 Non-Employee Director Stock Accumulation and Deferred Compensation
Plan
|
Exhibit
4.1, Registration Statement on Form S-8, filed July 16,
1993
|
|
10.3
|
Hercules
Employee Pension Restoration Plan
|
Exhibit
10-L, Annual Report on Form 10-K, filed March 26, 1993
|
|
10.4
|
Hercules
Amended and Restated Long Term Incentive Compensation Plan
|
Exhibit
10-K, Annual Report on Form 10-K, filed March 29, 2000
|
|
10.5
|
CRESTS
Units Underwriting Agreement, dated July 21, 1999,
among Hercules, Hercules Trust II and the Underwriters named
therein
|
Exhibit
1.1, Current Report on Form 8-K, dated July 27, 1999
|
|
10.6
|
Common
Stock Underwriting Agreement, dated July 21, 1999,
among Hercules and the Underwriters named therein
|
Exhibit
1.2, Current Report on Form 8-K, dated July 27, 1999
|
|
10.7
|
Form
of Change-of-Control Employment Agreements entered into as of August
24,
2000 by Hercules Incorporated and each of Robert C. Flexon and Craig
A.
Rogerson
|
Exhibit
10-19, Registration Statement S-4, filed August 9, 2001
|
|
10.8
|
Form
of Change-of-Control Employment Agreements entered into as of June
15,
2001 by Hercules Incorporated and Richard G. Dahlen
|
Exhibit
10-25, Registration Statement S-4, filed August 9, 2001
|
|
10.9
|
Change-of-Control
Employment Agreement, dated as of July 2, 2001, by and between Hercules
Incorporated and Fred G. Aanonsen
|
Exhibit
10-28, Registration Statement on Form S-4, filed August 9,
2001
|
|
10.10
|
Stock
and Asset Purchase Agreement, dated as of February 12, 2002, by and
among
Hercules Incorporated, General Electric Company and Falcon Acquisition
Corp.
|
Exhibit
10.1, Current Report on Form 8-K,
dated
February 12, 2002
|
|
10.11
|
Amendment
2002-1 to Amended and Restated Long Term Incentive Compensation
Plan
|
Exhibit
I, Proxy Statement, dated May 15, 2002
|
|
10.12
|
Amendment
2002-1 to Non-Employee Director Stock Accumulation Plan
|
Exhibit
II, Proxy Statement, dated May 15, 2002
|
|
10.13
|
Hercules
Incorporated Compensation Benefits Grantor Trust Agreement for Management
Employees
|
Exhibit
10-Ee, Annual Report on Form 10-K/A, filed May 1, 2003
|
|
10.14
|
Hercules
Incorporated Compensation Benefits Grantor Trust Agreement for
Non-Employee Directors
|
Exhibit
10-Ff, Annual Report on Form 10-K/A, filed May 1, 2003
|
|
10.15
|
Amended
and Restated Hercules Incorporated Management Incentive Compensation
Plan,
dated February 21, 2003
|
Exhibit
10-Gg Annual Report on Form 10-K/A, filed May 1, 2003
|
|
10.16
|
Hercules
Deferred Compensation Plan, restated December 1995
|
Exhibit
10-B, Quarterly Report on Form 10-Q, filed May 15,
2003
|
10.17
|
Employment
Offer Letter - Fred G. Aanonsen, dated June 27, 2001
|
Exhibit
10-C, Quarterly Report on Form 10-Q, filed May 15, 2003
|
|
10.18
|
Hercules
Executive Survivor Benefit Plan II dated January 1, 1987 - benefit
structure is only applicable to one executive officer
|
Exhibit
10-E, Quarterly Report on Form 10-Q, filed May 15, 2003
|
|
10.19
|
Omnibus
Equity Compensation Plan for Non-Employee Directors
|
Appendix
II, Proxy Statement dated June 20, 2003
|
|
10.20
|
Amended
and Restated Credit Agreement, dated as of April 8, 2004, between
Hercules
Incorporated and the Guarantors listed on Schedule A thereto and
Credit
Suisse First Boston LLC, Wachovia Capital Markets, LLC, Scotia Capital
(USA) Inc. and Deutsche Bank Securities Inc.
|
Exhibit
10.1, Quarterly Report on Form 10-Q, filed May 10, 2004
|
|
10.21
|
First
Amendment to Amended and Restated Credit Agreement dated as of August
12,
2004, among Hercules Incorporated and the Guarantors listed on Schedule
A
thereto and Credit Suisse First Boston LLC and Wachovia Bank, National
Association
|
Exhibit
10.1, Quarterly Report on Form 10-Q, filed November 15,
2004
|
|
10.22
|
Employment
Agreement between Hercules Incorporated and Israel J. Floyd, dated
August
24, 2000
|
Exhibit
10.27, Annual Report on Form 10-K, filed March 16, 2005
|
|
10.23
|
First
Amendment to the Employment Agreement between Hercules Incorporated
and
Israel J. Floyd, dated August 24, 2000
|
Exhibit
10.28, Annual Report on Form 10-K, filed March 16, 2005
|
|
10.24
|
Employment
Agreement between Hercules Incorporated and Allen A. Spizzo, dated
August
24, 2000
|
Exhibit
10.29, Annual Report on Form 10-K, filed March 16, 2005
|
|
10.25
|
First
Amendment to the Employment Agreement between Hercules Incorporated
and
Allen A. Spizzo, dated August 24, 2000
|
Exhibit
10.30, Annual Report on Form 10-K, filed March 16, 2005
|
|
10.26
|
First
Amendment to the Employment Agreement between Hercules Incorporated
and
Craig A. Rogerson, dated August 24, 2000
|
Exhibit
10.31, Annual Report on Form 10-K, filed March 16, 2005
|
|
10.27
|
Employment
Offer Letter - Paul C. Raymond III, dated December 28,
2004
|
Exhibit
10.34, Annual Report on Form 10-K, filed March 16, 2005
|
|
10.28
|
Special
Pension Agreement between Hercules Incorporated and William H. Joyce,
approved August 21, 2003
|
Exhibit
10.35, Annual Report on Form 10-K, filed March 16, 2005
|
|
10.29
|
General
Terms of Employment between Hercules Incorporated and Certain Executive
Officers
|
Exhibit
10.36, Annual Report on Form 10-K, filed March 16, 2005
|
|
10.30
|
Employment
Offer Letter - John E. Panichella, dated December 15, 2005
|
Exhibit
10.1, Current Report on Form 8-K/A, dated December 15,
2005
|
|
10.31
|
Contribution
Agreement between Hercules Incorporated, WSP, Inc., SPG/FV Investor
LLC
and Fibervisions Delaware Corporation dated January 31,
2006
|
Exhibit
10.33, Annual Report on Form 10-K, filed March 3, 2006
|
|
10.32*
|
Agreement
between Hercules Incorporated and Genpact International dated January
16,
2007
|
10.33*
|
Agreement
between Hercules Incorporated and HCL America Inc. and HCL Technologies
Limited dated January 16, 2007
|
||
14
|
Directors
Code of Business Conduct and Ethics
|
Appendix
VII, Proxy Statement dated June 20, 2003
|
|
18.1
|
Letter
Regarding Change in Accounting Principle
|
Exhibit
18.1, Annual report on Form 10-K, filed March 3, 2006
|
|
21.1*
|
Principal
Consolidated Subsidiaries as of December 31, 2006
|
||
23.1*
|
Consent
of BDO Seidman, LLP
|
||
23.2*
|
Consent
of PricewaterhouseCooper, LLP
|
||
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
|