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, 2007
OR
|
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, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. Large accelerated filer x Accelerated filer
¨ Non-accelerated
filer ¨ (Do not check if a
smaller reporting company) Smaller reporting company ¨ .
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 29, 2007, was approximately $2.3
billion.
As
of February 27, 2008, the registrant had 113,490,756 shares of Common
Stock outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE
Portions
of the registrant's definitive Proxy Statement for its 2008 Annual Meeting
of Shareholders (the "Proxy Statement"), when filed, will be incorporated
by reference in Part III of this report.
|
Page
|
|
3
|
|
3
|
|
7
|
|
9
|
|
10
|
|
10
|
|
10
|
|
11
|
|
12
|
|
13
|
|
13
|
|
15
|
|
17
|
|
23
|
|
30
|
|
32
|
|
33
|
|
35
|
|
35
|
|
35
|
|
36
|
|
37
|
|
37
|
|
37
|
|
37
|
|
38
|
|
38
|
|
39
|
|
39
|
|
39
|
|
40
|
|
41
|
|
44
|
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) and derivatives, Carboxymethylcellulose (CMC), Methylcellulose (MC),
Hydroxypropylcellulose (HPC), Guar and derivatives, ethylcellulose (EC),
phosphate ester surfactants 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 and Suzhou, China (40%
joint venture interest);Nanjing, China (land-use rights acquired in 2006
for facility construction beginning in 2007); Parlin, New Jersey, U.S.
Zwijndrecht, The Netherlands; and Brunswick, Georgia,
U.S.
|
2007
|
Dividend
|
High
|
Low
|
|||||||||
First
Quarter
|
— | $ | 21.04 | $ | 18.48 | |||||||
Second
Quarter
|
— | $ | 19.87 | $ | 17.67 | |||||||
Third
Quarter
|
$ | 0.05 | $ | 21.91 | $ | 19.01 | ||||||
Fourth
Quarter
|
$ | 0.05 | $ | 22.06 | $ | 17.49 | ||||||
2006
|
Dividend
|
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 |
Period
|
Total
Number of Shares Purchased
|
Average
Price Paid per Share
|
Total
Number of Shares Purchased as Part of Publicly Announced Plans or Programs
(1)
|
Approximate
Dollar Value of Shares That May Yet Be Purchased Under Plans or Programs
(1)
|
||||||||||||
October
1 – 31, 2007
|
— | — | — | $ | 177,235,535 | |||||||||||
November
1 – 30, 2007
|
331,900 | $ | 18.09 | 331,900 | $ | 171,231,941 | ||||||||||
December
1 – 31, 2007
|
1,316,560 | $ | 19.43 | 1,316,560 | $ | 145,651,609 | ||||||||||
Totals
|
1,648,460 | 1,648,460 |
|
(Dollars
and shares in millions, except per share data)
|
|||||||||||||||||||
Statements
of Operations Information:
|
2007
|
2006
|
2005
|
2004
|
2003
|
|||||||||||||||
Net
sales
|
$ | 2,136.2 | $ | 2,035.3 | $ | 2,055.0 | $ | 1,984.3 | $ | 1,836.0 | ||||||||||
Cost
of sales
|
1,405.7 | 1,343.4 | 1,391.1 | 1,291.6 | 1,155.6 | |||||||||||||||
Gross
profit
|
$ | 730.5 | $ | 691.9 | $ | 663.9 | $ | 692.7 | $ | 680.4 | ||||||||||
Research
and development
|
$ | 43.8 | $ | 38.8 | $ | 40.8 | $ | 42.7 | $ | 38.7 | ||||||||||
Profit
from operations
|
$ | 264.2 | $ | 248.6 | $ | 140.3 | $ | 232.9 | $ | 257.1 | ||||||||||
Net
income (loss) from continuing operations before discontinued
operations
and cumulative effect of changes in accounting principle
|
$ | 170.9 | $ | 190.8 | $ | (32.1 | ) | $ | 30.7 | $ | 75.2 | |||||||||
Net
income (loss) from discontinued operations, net of tax
|
8.0 | 47.0 | (6.5 | ) | (2.6 | ) | 3.5 | |||||||||||||
Cumulative
effect of changes in accounting principle, net of tax
|
— | 0.9 | (2.5 | ) | — | (33.3 | ) | |||||||||||||
Net
income (loss)
|
$ | 178.9 | $ | 238.7 | $ | (41.1 | ) | $ | 28.1 | $ | 45.4 | |||||||||
Per
Share Data and Other Share Information:
|
||||||||||||||||||||
Basic
earnings (loss) per share
|
||||||||||||||||||||
Continuing
operations
|
$ | 1.50 | $ | 1.72 | $ | (0.30 | ) | $ | 0.28 | $ | 0.71 | |||||||||
Discontinued
operations
|
0.07 | 0.42 | (0.06 | ) | (0.02 | ) | 0.03 | |||||||||||||
Cumulative
effect of changes in accounting principle
|
— | 0.01 | (0.02 | ) | — | (0.31 | ) | |||||||||||||
Net
income (loss)
|
$ | 1.57 | $ | 2.15 | $ | (0.38 | ) | $ | 0.26 | $ | 0.43 | |||||||||
Diluted
earnings (loss) per share
|
||||||||||||||||||||
Continuing
operations
|
$ | 1.49 | $ | 1.71 | $ | (0.30 | ) | $ | 0.28 | $ | 0.70 | |||||||||
Discontinued
operations
|
0.07 | 0.42 | (0.06 | ) | (0.02 | ) | 0.03 | |||||||||||||
Cumulative
effect of changes in accounting principle
|
— | 0.01 | (0.02 | ) | — | (0.31 | ) | |||||||||||||
Net
income (loss)
|
$ | 1.56 | $ | 2.14 | $ | (0.38 | ) | $ | 0.26 | $ | 0.42 | |||||||||
Dividends
declared per share
|
$ | 0.10 | — | — | — | — | ||||||||||||||
Weighted-average
number of common shares outstanding
|
||||||||||||||||||||
Basic
|
114.3 | 110.8 | 108.7 | 107.3 | 106.2 | |||||||||||||||
Diluted
|
115.1 | 111.3 | 110.4 | 109.0 | 107.2 | |||||||||||||||
Actual
number of common shares outstanding
|
114.0 | 116.0 | 112.7 | 112.1 | 111.0 | |||||||||||||||
Balance
Sheet Data:
|
||||||||||||||||||||
Accounts
receivable, net
|
$ | 366.8 | $ | 326.6 | $ | 289.7 | $ | 344.9 | $ | 319.7 | ||||||||||
Inventories
|
224.0 | 210.6 | 179.6 | 205.7 | 199.6 | |||||||||||||||
Less: Accounts
payable
|
(222.0 | ) | (205.3 | ) | (172.9 | ) | (186.6 | ) | (161.6 | ) | ||||||||||
Operating
working capital, net
|
$ | 368.8 | $ | 331.9 | $ | 296.4 | $ | 364.0 | $ | 357.7 | ||||||||||
Total
assets
|
$ | 2,678.4 | $ | 2,808.5 | $ | 2,568.8 | $ | 2,720.3 | $ | 2,721.8 | ||||||||||
Total
debt
|
$ | 796.0 | $ | 995.5 | $ | 1,109.0 | $ | 1,240.1 | $ | 1,347.8 | ||||||||||
Other
Financial and Statistical Data:
|
||||||||||||||||||||
Net
cash provided by operating activities
|
$ | 299.9 | $ | 172.9 | $ | 139.2 | $ | 120.5 | $ | 22.8 | ||||||||||
Capital
expenditures
|
$ | 118.3 | $ | 93.6 | $ | 67.5 | $ | 77.4 | $ | 48.0 | ||||||||||
Depreciation
|
$ | 70.3 | $ | 70.7 | $ | 80.5 | $ | 74.9 | $ | 73.2 | ||||||||||
Amortization
|
$ | 39.7 | $ | 24.6 | $ | 25.4 | $ | 26.3 | $ | 27.4 | ||||||||||
Employees
|
4,660 | 4,430 | 4,650 | 4,950 | 5,120 | |||||||||||||||
Manufacturing
facilities
|
32 | 32 | 35 | 35 | 37 |
2007
|
2006
|
2005
|
||||||||||
North
America
|
47 | % | 49 | % | 47 | % | ||||||
Europe
|
35 | % | 34 | % | 37 | % | ||||||
Asia
Pacific
|
12 | % | 11 | % | 11 | % | ||||||
Latin
America
|
6 | % | 6 | % | 5 | % | ||||||
100 | % | 100 | % | 100 | % |
2007
|
2006
|
2005
|
||||||||||
Paper
Technologies and Ventures
|
54 | % | 53 | % | 50 | % | ||||||
Aqualon
Group
|
46 | % | 44 | % | 36 | % | ||||||
FiberVisions
|
— | 3 | % | 14 | % | |||||||
100 | % | 100 | % | 100 | % |
Change
|
Average
Impact
|
||||
Discount
rate
|
+/- 0.5 | % |
+/-
$ 140 million
|
||
Revenue
growth
|
+/- 1.0 | % |
+/-
$ 340 million
|
||
Cost
of sales growth
|
+/- 1.0 | % |
+/-
$ 205 million
|
2007
|
2006
|
2005
|
2007
Change
|
2006
Change
|
||||||||||||||||
Net
sales
|
$ | 2,136.2 | $ | 2,035.3 | $ | 2,055.0 | $ | 100.9 | $ | (19.7 | ) |
%
Change
Excluding
|
||||||||||||||||
Regions
|
2007
|
2006
|
%
Change
|
ROE
|
||||||||||||
North
America
|
$ | 1,002.9 | $ | 1,003.2 | — | — | ||||||||||
Europe
|
756.8 | 696.0 | 9 | % | 1 | % | ||||||||||
Asia
Pacific
|
249.3 | 227.4 | 10 | % | 7 | % | ||||||||||
Latin
America
|
127.2 | 108.7 | 17 | % | 12 | % | ||||||||||
All
regions
|
$ | 2,136.2 | $ | 2,035.3 | 5 | % | 1 | % |
%
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 | )% |
2007
|
2006
|
2005
|
2007
Change
|
2006
Change
|
||||||||||||||||
Cost
of sales
|
$ | 1,405.7 | $ | 1,343.4 | $ | 1,391.1 | $ | 62.3 | $ | (47.7 | ) | |||||||||
As
a % of sales
|
66 | % | 66 | % | 68 | % |
2007
|
2006
|
2005
|
2007
Change
|
2006
Change
|
||||||||||||||||
Selling,
general and administrative expenses
|
$ | 376.9 | $ | 372.2 | $ | 382.5 | $ | 4.7 | $ | (10.3 | ) | |||||||||
As
a % of sales
|
18 | % | 18 | % | 19 | % |
2007
|
2006
|
2005
|
2007
Change
|
2006
Change
|
||||||||||||||||
Research
and development
|
$ | 43.8 | $ | 38.8 | $ | 40.8 | $ | 5.0 | $ | (2.0 | ) | |||||||||
As
a % of sales
|
2 | % | 2 | % | 2 | % |
2007
|
2006
|
2005
|
2007
Change
|
2006
Change
|
||||||||||||||||
Intangible
asset amortization
|
$ | 8.7 | $ | 7.2 | $ | 8.0 | $ | 1.5 | $ | (0.8 | ) |
2007
|
2006
|
2005
|
2007
Change
|
2006
Change
|
||||||||||||||||
Impairment
of FiberVisions goodwill
|
$ | — | $ | — | $ | 52.9 | $ | — | $ | (52.9 | ) |
2007
|
2006
|
2005
|
2007
Change
|
2006
Change
|
||||||||||||||||
Other
operating expense, net
|
$ | 36.9 | $ | 25.1 | $ | 39.4 | $ | 11.8 | $ | (14.3 | ) |
2007
|
2006
|
2005
|
2007
Change
|
2006
Change
|
||||||||||||||||
Interest
and debt expense
|
$ | 68.6 | $ | 71.2 | $ | 89.4 | $ | (2.6 | ) | $ | (18.2 | ) |
2007
|
2006
|
2005
|
2007
Change
|
2006
Change
|
||||||||||||||||
Vertac
response costs and litigation charges
|
$ | 20.3 | $ | 108.5 | $ | 15.0 | $ | (88.2 | ) | $ | 93.5 |
2007
|
2006
|
2005
|
2007
Change
|
2006
Change
|
||||||||||||||||
Other
expense, net
|
$ | 24.0 | $ | 65.7 | $ | 71.3 | $ | (41.7 | ) | $ | (5.6 | ) |
2007
|
2006
|
2005
|
2007
Change
|
2006
Change
|
||||||||||||||||
Benefit
for income taxes
|
$ | (20.3 | ) | $ | (192.2 | ) | $ | (3.8 | ) | $ | 171.9 | $ | (188.4 | ) | ||||||
Effective
tax benefit rate
|
13 | % |
Not
Meaningful
|
11 | % |
2007
|
2006
|
2005
|
2007
Change
|
2006
Change
|
||||||||||||||||
Minority
interests in earnings of consolidated subsidiaries
|
$ | (0.6 | ) | $ | (1.4 | ) | $ | (1.0 | ) | $ | 0.8 | $ | (0.4 | ) |
2007
|
2006
|
2005
|
2007
Change
|
2006
Change
|
||||||||||||||||
Equity
(loss) income of affiliated companies, net of tax
|
$ | (0.1 | ) | $ | (3.2 | ) | $ | 0.5 | $ | 3.1 | $ | (3.7 | ) |
2007
|
2006
|
2005
|
2007
Change
|
2006
Change
|
||||||||||||||||
Net
income (loss) from discontinued operations, net of tax
|
$ | 8.0 | $ | 47.0 | $ | (6.5 | ) | $ | (39.0 | ) | $ | 53.5 |
2007
|
2006
|
2005
|
2007
Change
|
2006
Change
|
||||||||||||||||
Cumulative
effect of changes in accounting principle, net of tax
|
$ | — | $ | 0.9 | $ | (2.5 | ) | $ | (0.9 | ) | $ | 3.4 |
2007
|
2006
|
Change
|
%
Change
|
|||||||||||||
Net
sales:
|
||||||||||||||||
Paper
Technologies and Ventures
|
||||||||||||||||
Paper
Technologies
|
$ | 903.4 | $ | 845.7 | $ | 57.7 | 7 | % | ||||||||
Ventures
|
247.2 | 229.6 | 17.6 | 8 | % | |||||||||||
1,150.6 | 1,075.3 | 75.3 | 7 | % | ||||||||||||
Aqualon
Group
|
||||||||||||||||
Coatings
& Construction
|
476.0 | 420.2 | 55.8 | 13 | % | |||||||||||
Regulated
|
241.6 | 225.3 | 16.3 | 7 | % | |||||||||||
Energy
& Specialties
|
268.0 | 245.3 | 22.7 | 9 | % | |||||||||||
985.6 | 890.8 | 94.8 | 11 | % | ||||||||||||
FiberVisions
|
— | 69.2 | (69.2 | ) |
NM
|
|||||||||||
Consolidated
|
$ | 2,136.2 | $ | 2,035.3 | $ | 100.9 | 5 | % | ||||||||
Profit
from operations:
|
||||||||||||||||
Paper
Technologies and Ventures
|
$ | 113.6 | $ | 80.8 | $ | 32.8 | 41 | % | ||||||||
Aqualon
Group
|
199.0 | 187.4 | 11.6 | 6 | % | |||||||||||
FiberVisions
|
— | 0.5 | (0.5 | ) |
NM
|
|||||||||||
Corporate
Items
|
(48.4 | ) | (20.1 | ) | (28.3 | ) |
NM
|
|||||||||
Consolidated
|
$ | 264.2 | $ | 248.6 | $ | 15.6 | 6 | % |
2006
|
2005
|
Change
|
%
Change
|
|||||||||||||
Net
sales:
|
||||||||||||||||
Paper
Technologies and Ventures
|
||||||||||||||||
Paper
Technologies
|
$ | 845.7 | $ | 810.7 | $ | 35.0 | 4 | % | ||||||||
Ventures
|
229.6 | 206.6 | 23.0 | 11 | % | |||||||||||
1,075.3 | 1,017.3 | 58.0 | 6 | % | ||||||||||||
Aqualon
Group
|
||||||||||||||||
Coatings
& Construction
|
420.2 | 356.4 | 63.8 | 18 | % | |||||||||||
Regulated
|
225.3 | 174.1 | 51.2 | 29 | % | |||||||||||
Energy
& Specialties
|
245.3 | 224.5 | 20.8 | 9 | % | |||||||||||
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 | % |
Net
Sales Percentage Increase (Decrease) from 2006 Due To:
|
||||||||||||||||||||
Volume
|
Product
Mix
|
Price
|
Rates
of Exchange
|
Total
|
||||||||||||||||
Paper
Technologies
|
4 | % | (1 | )% | — | 4 | % | 7 | % | |||||||||||
Ventures
|
2 | % | — | 4 | % | 2 | % | 8 | % | |||||||||||
4 | % | (2 | )% | 1 | % | 4 | % | 7 | % |
Analysis
of Changes in Profitability
|
||||||||
2006
Profit from operations
|
$ | 80.8 | ||||||
Changes
due to:
|
||||||||
Volume
|
14.3 | |||||||
Product
mix
|
(4.2 | ) | ||||||
Price
|
11.2 | |||||||
Raw
material, transportation and energy costs
|
(8.5 | ) | ||||||
All
other manufacturing costs
|
(6.6 | ) | ||||||
Asset
dispositions
|
5.0 | |||||||
ROE
|
6.6 | |||||||
SG&A
and other expenses
|
5.9 | |||||||
Restructuring,
severance and other exit costs, accelerated depreciation and other
charges
|
9.1 | |||||||
Net
change
|
32.8 | |||||||
2007
Profit from operations
|
$ | 113.6 |
Net
Sales Percentage Increase (Decrease) from 2005 Due To:
|
||||||||||||||||||||
Volume
|
Product
Mix
|
Price
|
Rates
of Exchange
|
Total
|
||||||||||||||||
Paper
Technologies
|
1 | % | — | 2 | % | 1 | % | 4 | % | |||||||||||
Ventures
|
(3 | )% | 9 | % | 4 | % | 1 | % | 11 | % | ||||||||||
— | 1 | % | 4 | % | 1 | % | 6 | % |
Analysis
of Changes in Profitability
|
||||||||
2005
Profit from operations
|
$ | 61.4 | ||||||
Changes
due to:
|
||||||||
Volume
|
(1.3 | ) | ||||||
Product
mix
|
3.3 | |||||||
Price
|
37.9 | |||||||
Raw
material, transportation and energy costs
|
(36.8 | ) | ||||||
All
other manufacturing costs
|
(1.1 | ) | ||||||
Asset
dispositions
|
2.6 | |||||||
ROE
|
1.8 | |||||||
SG&A
and other expenses
|
6.4 | |||||||
Restructuring,
severance and other exit costs, accelerated depreciation and other
charges
|
6.6 | |||||||
Net
change
|
19.4 | |||||||
2006
Profit from operations
|
$ | 80.8 |
Net
Sales Percentage Increase (Decrease) from 2006 Due To:
|
||||||||||||||||||||
Volume
|
Product
Mix
|
Price
|
Rates
of Exchange
|
Total
|
||||||||||||||||
Coatings
& Construction
|
11 | % | (4 | )% | 1 | % | 5 | % | 13 | % | ||||||||||
Regulated
|
(1 | )% | 4 | % | 2 | % | 2 | % | 7 | % | ||||||||||
Energy
& Specialties
|
13 | % | (7 | )% | 1 | % | 2 | % | 9 | % | ||||||||||
|
9 | % | (2 | )% | 1 | % | 3 | % | 11 | % |
Analysis
of Changes in Profitability
|
||||||||
2006
Profit from operations
|
$ | 187.4 | ||||||
Changes
due to:
|
||||||||
Volume
|
27.4 | |||||||
Product
mix
|
(10.4 | ) | ||||||
Price
|
10.0 | |||||||
Raw
material, transportation and energy costs
|
(8.5 | ) | ||||||
All
other manufacturing costs
|
(0.9 | ) | ||||||
Asset
dispositions
|
(2.8 | ) | ||||||
ROE
|
3.7 | |||||||
SG&A
and other expenses
|
(7.3 | ) | ||||||
Restructuring,
severance and other exit costs and accelerated depreciation and other
charges
|
0.4 | |||||||
Net
change
|
11.6 | |||||||
2007
Profit from operations
|
$ | 199.0 |
Net
Sales Percentage Increase (Decrease) from 2005 Due To:
|
||||||||||||||||||||
Volume
|
Product
Mix
|
Price
|
Rates
of Exchange
|
Total
|
||||||||||||||||
Coatings
& Construction
|
26 | % | (5 | )% | (3 | )% | — | 18 | % | |||||||||||
Regulated
|
15 | % | 7 | % | 7 | % | — | 29 | % | |||||||||||
Energy
& Specialties
|
13 | % | (6 | )% | 2 | % | — | 9 | % | |||||||||||
|
24 | % | (7 | )% | 1 | % | — | 18 | % |
Analysis
of Changes in Profitability
|
||||||||
2005
Profit from operations
|
$ | 155.5 | ||||||
Changes
due to:
|
||||||||
Volume
|
70.4 | |||||||
Product
mix
|
(35.2 | ) | ||||||
Price
|
9.9 | |||||||
Raw
material, transportation and energy costs
|
(14.2 | ) | ||||||
All
other manufacturing costs
|
7.1 | |||||||
Asset
dispositions
|
3.3 | |||||||
ROE
|
— | |||||||
SG&A
and other expenses
|
(9.0 | ) | ||||||
Restructuring,
severance and other exit costs and accelerated depreciation and other
charges
|
(0.4 | ) | ||||||
Net
change
|
31.9 | |||||||
2006
Profit from operations
|
$ | 187.4 |
2007
|
2006
|
2005
|
||||||||||
Severance,
restructuring and other exit costs
|
$ | 19.6 | $ | 6.5 | $ | 7.5 | ||||||
Asset
charges (impairments and accelerated
depreciation/amortization)
|
14.2 | 5.2 | 0.5 | |||||||||
Legal
settlements
|
— | (3.1 | ) | 0.1 | ||||||||
Gains
on asset dispositions
|
(4.7 | ) | — | (0.3 | ) | |||||||
Dismantlement
costs
|
3.1 | 1.5 | — | |||||||||
Unallocated
corporate costs
|
12.8 | 7.9 | — | |||||||||
Other
miscellaneous charges, net
|
3.4 | 2.1 | 3.9 | |||||||||
Total
Corporate items
|
$ | 48.4 | $ | 20.1 | $ | 11.7 |
Operating Activities
|
2007
|
2006
|
||||||
Net
income, depreciation, amortization and all other non-cash charges and
credits
|
$ | 312.6 | $ | 194.3 | ||||
Changes
in working capital, net
|
(19.1 | ) | (13.4 | ) | ||||
All
other sources and uses of cash
|
6.4 | (8.0 | ) | |||||
Net
cash provided by operating activities
|
$ | 299.9 | $ | 172.9 |
Investing Activities
|
2007
|
2006
|
||||||
Capital
expenditures
|
$ | 118.3 | $ | 93.6 | ||||
Acquisitions
and investments, net
|
16.5 | 29.4 | ||||||
Proceeds
from asset and investment dispositions and all other sources,
net
|
(17.1 | ) | (28.9 | ) | ||||
Net
cash used in investing activities
|
$ | 117.7 | $ | 94.1 |
Financing Activities
|
2007
|
2006
|
||||||
Long-term
debt payments
|
$ | (216.8 | ) | $ | (142.5 | ) | ||
Long-term
debt proceeds and changes in short-term debt
|
13.2 | 27.8 | ||||||
Long-term
debt issued by FiberVisions, net of issuance costs
|
— | 83.7 | ||||||
Repurchases
of common stock and dividends paid
|
(51.8 | ) | — | |||||
Proceeds
from the exercise of stock options and all other sources,
net
|
7.8 | 42.6 | ||||||
Net
cash (used in) provided by financing activities
|
$ | (247.6 | ) | $ | 11.6 |
Payments
Due by Period
(1)
|
||||||||||||||||||||
Less
than
|
1 -
3
|
3 -
5
|
More
than
|
|||||||||||||||||
Total
|
1
year
|
years
|
years
|
5
years
|
||||||||||||||||
Debt
obligations
|
$ | 796.0 | $ | 33.7 | $ | 275.3 | $ | 6.1 | $ | 480.9 | ||||||||||
Operating
lease obligations
|
100.0 | 21.2 | 44.1 | 23.9 | 10.8 | |||||||||||||||
Purchase
obligations
(2)
|
4,242.6 | 739.7 | 1,634.6 | 1,868.3 | — | |||||||||||||||
Other
liabilities reflected on the registrant's
balance sheet under GAAP
(3)
|
630.2 | 106.4 | 129.3 | 121.0 | 273.5 | |||||||||||||||
Total
contractual cash obligations
|
$ | 5,768.8 | $ | 901.0 | $ | 2,083.3 | $ | 2,019.3 | $ | 765.2 |
|
(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, 2007, such interest
obligations are estimated to be approximately $57.7 million in 2008, $56.4
million in 2009, $54.4 million in 2010, $36.5 million in 2011, $36.3
million in 2012 and $599.5 million thereafter. A one percent
increase or decrease in the LIBOR rate would have an impact of
approximately plus or minus $3.0 million on the Company’s interest
payments in years 2008 through
2010.
|
|
(2)
|
Obligations
relate primarily to raw material requirements and service
contracts.
|
(3)
|
Includes
amounts pertaining to asbestos-related matters, asset retirement
obligations, long-term unrecognized tax benefits (“UTBs”), postemployment
and postretirement obligations and workers compensation
claims. Due to the dynamic nature of asbestos litigation, it is
impractical to determine the anticipated payments in any given
year. Therefore, the non-current asbestos-related liability of
$227.0 million has been reflected in the “More than 5 years”
column. Due to the high degree of uncertainty regarding the
timing of potential future cash outflows associated with the Company’s
UTBs, the entire amount as provided in Note 8 to the
Consolidated Financial Statements is included in the “More than 5 years”
column.
|
|
ITEM
10. DIRECTORS,
EXECUTIVE OFFICERS OF THE REGISTRANT AND CORPORATE
GOVERNANCE
|
Name
|
|
Age
|
|
Current
Position
|
Craig
A. Rogerson
|
51
|
President,
Chief Executive Officer and Director
|
||
Fred
G. Aanonsen
|
60
|
Vice
President and Controller
|
||
Edward
V. Carrington
|
65
|
Vice
President, Human Resources
|
||
Richard
G. Dahlen
|
68
|
Chief
Legal Officer
|
||
Israel
J. Floyd
|
61
|
Corporate
Secretary and General Counsel
|
||
Vincenzo
M. Romano
|
54
|
Vice
President, Taxes
|
||
Stuart
C. Shears
|
57
|
Vice
President and Treasurer
|
||
Allen
A. Spizzo
|
50
|
Vice
President and Chief Financial
Officer
|
|
ITEM
12. SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
|
Plan
category
|
Number
of securities to
be
issued upon
exercise
of outstanding
options,
warrants
and
rights
(a)
|
Weighted-average
exercise
price of
outstanding
options,
warrants
and rights
(b)
|
Number
of securities
remaining
available
for
future issuance
under
equity
compensation
plans
(excluding
securities
reflected
in
column
(a))
(c)
|
|||
Equity
compensation plans approved by security holders
|
4,133,074
|
(1)
(2)
|
$ 23.08
|
8,954,274
|
||
Equity
compensation plans not approved by security holders
|
—
|
—
|
—
|
|||
Total
|
4,133,074
|
$ 23.08
|
8,954,274
|
|||
(1) Includes 1,576,950 options with
exercise prices in excess of the weighted average price of
$23.08.
|
||||||
(2) Includes options to purchase
854,797 shares that were not vested at December 31,
2007.
|
|
ITEM
13. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
|
|
Page
|
46
|
|
47
|
|
49
|
|
50
|
|
51
|
|
52
|
|
53
|
Number
|
Description
|
Incorporated
by Reference to
|
|
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
|
|
3.1.1
|
Certificate
of Amendment filed October 24, 1995, to the Restated Certificate of
Incorporation of Hercules
|
Exhibit
4.1a, Registration Statement on Form S-3, filed September 15,
1998
|
|
3.1.2*
|
Certificate
of Amendment, filed June 25, 2007, to the Restated Certificate of
Incorporation of Hercules
|
||
3.2
|
By-Laws
of Hercules, as amended and restated on June 21, 2007
|
Exhibit
3.1, Current Report on Form 8-K, filed June 26, 2007
|
|
4.1
|
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
|
|
4.2
|
Form
of Series A Junior Subordinated Deferrable Interest
Debentures
|
Exhibit
4.5, Current Report on Form 8-K, dated July 27, 1999
|
|
4.3
|
Form
of CRESTSSM
Unit
|
Exhibit
4.7, Current Report on Form 8-K, dated July 27, 1999
|
|
4.4
|
Form
of Warrant
|
Exhibit
4.8, Current Report on Form 8-K, dated July 27, 1999
|
|
4.5
|
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
|
|
4.5.1
|
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
|
|
4.5.2
|
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
|
|
4.6
|
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
|
|
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
|
|
10.2.1
|
Amendment
2002-1 to Non-Employee Director Stock Accumulation Plan
|
Exhibit
II, Proxy Statement, dated May 15, 2002
|
|
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
|
|
10.4.1
|
Amendment
2002-1 to Amended and Restated Long Term Incentive Compensation
Plan
|
Exhibit
I, Proxy Statement, dated May 15, 2002
|
|
10.5
|
Form
of Change-of-Control Employment Agreement between Hercules Incorporated
and Craig A. Rogerson, dated August 24, 2000
|
Exhibit
10-19, Registration Statement S-4, filed August 9, 2001
|
|
10.5.1
|
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
|
|
10.6
|
Form
of Change-of-Control Employment Agreement between Hercules
Incorporated and each of Richard G. Dahlen and Edward V.
Carrington
|
Exhibit
10-25, Registration Statement S-4, filed August 9, 2001
|
|
10.7
|
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
|
|
10.8
|
Hercules
Incorporated Compensation Benefits Grantor Trust Agreement for Management
Employees
|
Exhibit
10-Ee, Annual Report on Form 10-K/A, filed May 1,
2003
|
10.9
|
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
|
|
10.10
|
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
|
|
10.11
|
Hercules
Deferred Compensation Plan, restated December 1995
|
Exhibit
10-B, Quarterly Report on Form 10-Q, filed May 15, 2003
|
|
10.12
|
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
|
|
10.13
|
Omnibus
Equity Compensation Plan for Non-Employee Directors
|
Appendix
II, Proxy Statement dated June 20, 2003
|
|
10.14
|
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
|
|
10.14.1
|
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
|
|
10.15
|
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
|
|
10.15.1
|
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
|
|
10.16
|
Employment
Offer Letter – Paul C. Raymond III, dated December 28,
2004
|
Exhibit
10.34, Annual Report on Form 10-K, filed March 16, 2005
|
|
10.17
|
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
|
|
10.18
|
General
Terms of Employment between Hercules Incorporated and Certain Executive
Officers
|
Exhibit
10.36, Annual Report on Form 10-K, filed March 16, 2005
|
|
10.19
|
Employment
Offer Letter – John E. Panichella, dated December 15, 2005
|
Exhibit
10.1, Current Report on Form 8-K/A, dated December 15,
2005
|
|
10.20
|
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
|
|
10.20.1
|
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
|
|
10.20.2
|
Second
Amendment Amended and Restated Credit Agreement dated as of June 29, 2005,
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 August 1,
2007
|
|
10.20.3
|
Third
Amendment Amended and Restated Credit Agreement dated as of March 2, 2006,
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, Current Report on Form 8-K, dated March 2, 2006
|
|
10.20.4
|
Fourth
Amendment Amended and Restated Credit Agreement dated as of July 11, 2007,
among Hercules Incorporated and the Guarantors listed on Schedule A
thereto and Credit Suisse First Boston LLC and Wachovia Bank, National
Association
|
Exhibit
10.2, Quarterly Report on Form 10-Q, filed August 1,
2007
|
10.21
|
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
|
|
10.22
|
Agreement
between Hercules Incorporated and Genpact International dated January 16,
2007
|
Exhibit
10.32, Annual Report on Form 10-K, filed February 28,
2007
|
|
10.23
|
Agreement
between Hercules Incorporated and HCL America Inc. and HCL Technologies
Limited dated January 16, 2007
|
Exhibit
10.33, Annual Report on Form 10-K, filed February 28,
2007
|
|
14.1*
|
Code
of Ethics for Senior Financial Executives
|
||
14.2
|
Directors
Code of Business Conduct and Ethics
|
Appendix
VII, Proxy Statement dated June 20, 2003
|
|
21.1*
|
Principal
Consolidated Subsidiaries as of December 31, 2006
|
||
23.1*
|
Consent
of BDO Seidman, 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
|
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/
Jeffrey M. Lipton
|
||||
Allan
H. Cohen
|
Jeffrey
M. Lipton
|
|||
/s/
Thomas P. Gerrity
|
/s/
Joe B. Wyatt
|
|||
Thomas
P. Gerrity
|
Joe
B. Wyatt
|
|||
/s/
John C. Hunter, III
|
||||
John
C. Hunter, III
|
CONSOLIDATED
FINANCIAL
STATEMENTS
|
Page
|
46
|
|
47
|
|
49
|
|
50
|
|
51
|
|
52
|
|
53
|
|
57
|
|
58
|
|
58
|
|
59
|
|
59
|
|
59
|
|
60
|
|
61
|
|
64
|
|
67
|
|
68
|
|
68
|
|
76
|
|
79
|
|
80
|
|
81
|
|
83
|
|
84
|
|
84
|
|
84
|
|
85
|
|
86
|
|
86
|
|
88
|
|
88
|
|
97
|
Year
Ended December 31,
|
||||||||||||
2007
|
2006
|
2005
|
||||||||||
$ | 2,136.2 | $ | 2,035.3 | $ | 2,055.0 | |||||||
Cost
of sales
|
1,405.7 | 1,343.4 | 1,391.1 | |||||||||
Selling,
general and administrative expenses
|
376.9 | 372.2 | 382.5 | |||||||||
Research
and development
|
43.8 | 38.8 | 40.8 | |||||||||
Intangible
asset amortization (Note 6)
|
8.7 | 7.2 | 8.0 | |||||||||
Impairment
of FiberVisions goodwill (Note 2)
|
— | — | 52.9 | |||||||||
Other
operating expense, net (Note 17)
|
36.9 | 25.1 | 39.4 | |||||||||
Profit
from operations
|
264.2 | 248.6 | 140.3 | |||||||||
Interest
and debt expense (Note 7)
|
68.6 | 71.2 | 89.4 | |||||||||
Vertac
response costs and litigation charges (Note
12)
|
20.3 | 108.5 | 15.0 | |||||||||
24.0 | 65.7 | 71.3 | ||||||||||
Income
(loss) before income taxes, minority interests and equity (loss)
income
|
151.3 | 3.2 | (35.4 | ) | ||||||||
Benefit
for income taxes (Note 8)
|
(20.3 | ) | (192.2 | ) | (3.8 | ) | ||||||
Income
(loss) before minority interests and equity (loss) income
|
171.6 | 195.4 | (31.6 | ) | ||||||||
Minority
interests in earnings of consolidated subsidiaries
|
(0.6 | ) | (1.4 | ) | (1.0 | ) | ||||||
Equity
(loss) income of affiliated companies, net of tax
|
(0.1 | ) | (3.2 | ) | 0.5 | |||||||
Net
income (loss) from continuing operations before discontinued operations and
cumulative effect of changes in accounting principle
|
170.9 | 190.8 | (32.1 | ) | ||||||||
Net
income (loss) from discontinued operations, net of tax (Note 19)
|
8.0 | 47.0 | (6.5 | ) | ||||||||
Net
income (loss) before cumulative effect of changes in accounting
principle
|
178.9 | 237.8 | (38.6 | ) | ||||||||
Cumulative
effect of changes in accounting principle, net of tax (Note 20)
|
— | 0.9 | (2.5 | ) | ||||||||
Net
income (loss)
|
$ | 178.9 | $ | 238.7 | $ | (41.1 | ) | |||||
Earnings
(loss) per share (Note 22):
|
||||||||||||
Basic
earnings (loss) per share
|
||||||||||||
Continuing
operations
|
$ | 1.50 | $ | 1.72 | $ | (0.30 | ) | |||||
Discontinued
operations
|
0.07 | 0.42 | (0.06 | ) | ||||||||
Cumulative effect of changes in
accounting principle
|
— | 0.01 | (0.02 | ) | ||||||||
Net income (loss)
|
$ | 1.57 | $ | 2.15 | $ | (0.38 | ) | |||||
Weighted average number of shares
(millions)
|
114.3 | 110.8 | 108.7 | |||||||||
Diluted
earnings (loss) per share
|
||||||||||||
Continuing
operations
|
$ | 1.49 | $ | 1.71 | $ | (0.30 | ) | |||||
Discontinued
operations
|
0.07 | 0.42 | (0.06 | ) | ||||||||
Cumulative effect of changes in
accounting principle
|
— | 0.01 | (0.02 | ) | ||||||||
Net income (loss)
|
$ | 1.56 | $ | 2.14 | $ | (0.38 | ) | |||||
Weighted average number of shares
(millions)
|
115.1 | 111.3 | 108.7 | |||||||||
Dividends
declared per share
|
$ | 0.10 | — | — | ||||||||
Net
income (loss)
|
$ | 178.9 | $ | 238.7 | $ | (41.1 | ) | |||||
Foreign
currency translation
|
80.8 | 54.6 | (66.6 | ) | ||||||||
Pension
and postretirement benefit adjustments, net of tax
|
51.1 | 85.0 | (44.3 | ) | ||||||||
Revaluation
of hedges, net of tax
|
(38.3 | ) | (34.6 | ) | — | |||||||
Other,
net of tax
|
— | (0.5 | ) | (0.3 | ) | |||||||
Comprehensive
income (loss)
|
$ | 272.5 | $ | 343.2 | $ | (152.3 | ) |
(Dollars
in millions)
|
December
31,
|
|||||||
2007
|
2006
|
|||||||
Current
assets
|
||||||||
Cash
and cash equivalents
|
$ | 116.5 | $ | 171.8 | ||||
Accounts
receivable, net (Note 4)
|
366.8 | 326.6 | ||||||
Inventories
(Note 5)
|
224.0 | 210.6 | ||||||
Deferred
income taxes (Note 8)
|
41.0 | 70.2 | ||||||
Current
assets of discontinued operations (Note
19)
|
— | 0.4 | ||||||
Income
taxes receivable (Note 8)
|
20.2 | 170.8 | ||||||
Asbestos-related
assets (Note 12)
|
4.0 | — | ||||||
Other
current assets
|
41.8 | 34.1 | ||||||
Total
current assets
|
814.3 | 984.5 | ||||||
Property,
plant and equipment, net (Note 15)
|
660.0 | 600.4 | ||||||
Intangible
assets, net (Note 6)
|
161.2 | 143.1 | ||||||
Goodwill
(Note 6)
|
527.9 | 481.5 | ||||||
Deferred
income taxes (Note 8)
|
370.8 | 374.6 | ||||||
Asbestos-related
assets (Note 12)
|
24.1 | 87.5 | ||||||
Deferred
charges and other assets (Note 15)
|
120.1 | 136.9 | ||||||
Total
assets
|
$ | 2,678.4 | $ | 2,808.5 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Current
liabilities
|
||||||||
Accounts
payable
|
$ | 222.0 | $ | 205.3 | ||||
Asbestos-related
liabilities (Note 12)
|
28.0 | 36.4 | ||||||
Current
debt obligations (Note 7)
|
33.7 | 35.8 | ||||||
Vertac
obligations (Note 12)
|
20.0 | 123.5 | ||||||
Accrued
expenses (Note 15)
|
207.7 | 192.3 | ||||||
Income
taxes payable (Note 8)
|
13.3 | 24.5 | ||||||
Deferred
income taxes (Note 8)
|
9.5 | 11.8 | ||||||
Total
current liabilities
|
534.2 | 629.6 | ||||||
Long-term
debt (Note 7)
|
762.3 | 959.7 | ||||||
Deferred
income taxes (Note 8)
|
74.3 | 69.7 | ||||||
Pension
obligations (Note 9)
|
158.7 | 262.5 | ||||||
Other
postretirement benefit obligations (Note
9)
|
123.1 | 142.2 | ||||||
Deferred
credits and other liabilities (Note
15)
|
298.7 | 255.6 | ||||||
Asbestos-related
liabilities (Note 12)
|
227.0 | 233.6 | ||||||
Total
liabilities
|
2,178.3 | 2,552.9 | ||||||
Commitments
and contingencies (Note 12)
|
— | — | ||||||
Minority
interests
|
22.1 | 12.7 | ||||||
Stockholders'
equity (Note 14)
|
||||||||
Series
preferred stock
|
— | — | ||||||
Common
stock, $25/48 stated value (shares: 2007 – 160,004,908 and 2006 –
159,997,929)
|
83.3 | 83.3 | ||||||
Additional
paid-in capital
|
438.3 | 454.9 | ||||||
Unearned
compensation (Note 10)
|
(29.8 | ) | (42.1 | ) | ||||
Accumulated
other comprehensive losses
|
(316.0 | ) | (409.6 | ) | ||||
Retained
earnings
|
1,903.3 | 1,734.1 | ||||||
2,079.1 | 1,820.6 | |||||||
Reacquired
stock, at cost (shares: 2007 – 46,006,780 and 2006 –
43,969,769)
|
(1,601.1 | ) | (1,577.7 | ) | ||||
Total
stockholders' equity
|
478.0 | 242.9 | ||||||
Total
liabilities and stockholders' equity
|
$ | 2,678.4 | $ | 2,808.5 |
Year
Ended December 31,
|
||||||||||||
2007
|
2006
|
2005
|
||||||||||
Net
income (loss)
|
$ | 178.9 | $ | 238.7 | $ | (41.1 | ) | |||||
Adjustments
to reconcile net income (loss) to net cash provided by
operations:
|
||||||||||||
Depreciation
|
70.3 | 70.7 | 80.5 | |||||||||
Amortization
|
39.7 | 24.6 | 25.4 | |||||||||
Deferred
income tax provision
|
19.1 | (157.8 | ) | (54.9 | ) | |||||||
Gain
on disposal of assets and investments, net
|
(8.5 | ) | (9.0 | ) | (11.8 | ) | ||||||
Impairment
charges
|
— | 3.2 | 58.6 | |||||||||
Dilution
of investment and loss on sale of 51% interest in
FiberVisions
|
2.5 | 13.3 | — | |||||||||
Minority
interests in earnings of consolidated subsidiaries
|
0.6 | 1.4 | 1.0 | |||||||||
Stock-based
compensation
|
9.4 | 7.0 | 8.1 | |||||||||
Other
non-cash charges and credits, net
|
0.6 | 2.2 | (1.0 | ) | ||||||||
Accruals
and deferrals of cash receipts and payments (net of acquisitions and
dispositions):
|
||||||||||||
Accounts
receivable, net
|
(21.6 | ) | (17.5 | ) | 2.9 | |||||||
Inventories
|
(2.1 | ) | (8.7 | ) | (3.3 | ) | ||||||
Asbestos-related
assets and liabilities, net
|
46.4 | 37.1 | 61.3 | |||||||||
Other
current assets
|
3.1 | 5.0 | (10.7 | ) | ||||||||
Accounts
payable
|
4.6 | 12.8 | 27.6 | |||||||||
Vertac
obligations
|
(103.5 | ) | 123.5 | — | ||||||||
Accrued
expenses
|
(0.3 | ) | (8.9 | ) | 0.6 | |||||||
Income
taxes receivable and payable
|
134.1 | (125.1 | ) | 27.1 | ||||||||
Pension
and postretirement benefit obligations
|
(55.7 | ) | (7.9 | ) | (18.3 | ) | ||||||
Non-current
assets and liabilities
|
(17.7 | ) | (23.8 | ) | (12.8 | ) | ||||||
FiberVisions
net assets held for sale
|
— | (7.9 | ) | — | ||||||||
Net cash provided by operating
activities
|
299.9 | 172.9 | 139.2 | |||||||||
Cash
Flows From Investing Activities:
|
||||||||||||
Capital
expenditures
|
(118.3 | ) | (93.6 | ) | (67.5 | ) | ||||||
Acquisitions
and investments, net of cash recognized upon consolidation
|
(16.5 | ) | (29.4 | ) | (4.4 | ) | ||||||
Proceeds
from sale of 51% interest in FiberVisions, net of transaction
costs
|
(1.2 | ) | 17.8 | — | ||||||||
Proceeds
of asset and investment disposals, net of transaction
costs
|
18.3 | 11.3 | 16.6 | |||||||||
Other,
net
|
— | (0.2 | ) | (2.4 | ) | |||||||
Net cash used in investing
activities
|
(117.7 | ) | (94.1 | ) | (57.7 | ) | ||||||
Cash
Flows From Financing Activities:
|
||||||||||||
Long-term
debt issued by FiberVisions, net of issuance costs
|
— | 83.7 | — | |||||||||
Long-term
debt proceeds
|
3.8 | 22.0 | — | |||||||||
Long-term
debt payments
|
(216.8 | ) | (142.5 | ) | (131.2 | ) | ||||||
Change
in short-term debt
|
9.4 | 5.8 | 1.9 | |||||||||
Repurchase
of common stock
|
(46.1 | ) | — | — | ||||||||
Dividends
paid
|
(5.7 | ) | — | — | ||||||||
Proceeds
from the exercise of stock options
|
6.5 | 37.0 | 2.7 | |||||||||
Other,
net including income tax benefits attributable to stock-based
compensation
|
1.3 | 5.6 | (0.4 | ) | ||||||||
Net cash (used in) provided by
financing activities
|
(247.6 | ) | 11.6 | (127.0 | ) | |||||||
Effect
of exchange rate changes on cash
|
10.1 | 4.1 | (3.7 | ) | ||||||||
Net
(decrease) increase in cash and cash equivalents
|
(55.3 | ) | 94.5 | (49.2 | ) | |||||||
Cash
and cash equivalents at beginning of year
|
171.8 | 77.3 | 126.5 | |||||||||
Cash
and cash equivalents at end of year
|
$ | 116.5 | $ | 171.8 | $ | 77.3 |
Accumulated
|
||||||||||||||||||||||||||||
Other
|
||||||||||||||||||||||||||||
Common
|
Paid-in
|
Unearned
|
Comprehensive
|
Retained
|
Reacquired
|
|||||||||||||||||||||||
Stock
|
Capital
|
Compensation
|
Losses
|
Earnings
|
Stock
|
Total
|
||||||||||||||||||||||
Balances
at January 1, 2005
|
$ | 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 and sales for taxes
|
— | (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 required by SFAS 158
|
— | — | — | (126.5 | ) | — | — | (126.5 | ) | |||||||||||||||||||
Issuances
of treasury stock, net of forfeitures and sales for taxes
|
— | (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)
|
||||||||||||||||||||||||||||
Net
income
|
— | — | — | — | 178.9 | — | 178.9 | |||||||||||||||||||||
Foreign
currency translation adjustment
|
— | — | — | 80.8 | — | — | 80.8 | |||||||||||||||||||||
Dividends
declared
|
— | — | — | — | (11.6 | ) | — | (11.6 | ) | |||||||||||||||||||
Repurchase
of common stock
|
— | — | — | — | — | (54.3 | ) | (54.3 | ) | |||||||||||||||||||
Release
of shares held by ESOP trust
|
— | (4.5 | ) | 12.3 | — | — | — | 7.8 | ||||||||||||||||||||
Pension
and postretirement benefit adjustments, net of tax
|
— | — | — | 51.1 | — | — | 51.1 | |||||||||||||||||||||
Issuances
of treasury stock, net of forfeitures and sales for taxes
|
— | (12.2 | ) | — | — | — | 30.9 | 18.7 | ||||||||||||||||||||
Conversion
of debentures
|
— | 0.1 | — | — | — | — | 0.1 | |||||||||||||||||||||
Revaluation
of hedges, net of tax
|
— | — | — | (38.3 | ) | — | — | (38.3 | ) | |||||||||||||||||||
Cumulative
transition adjustment required by FIN 48
|
— | — | — | — | 1.9 | — | 1.9 | |||||||||||||||||||||
Balances
at December 31, 2007
|
$ | 83.3 | $ | 438.3 | $ | (29.8 | ) | $ | (316.0 | ) | $ | 1,903.3 | $ | (1,601.1 | ) | $ | 478.0 | |||||||||||
(Common
shares: issued, 160,004,908; reacquired, 46,006,780)
|
||||||||||||||||||||||||||||
2005
|
||||
Net
loss, as reported
|
$ | (41.1 | ) | |
Add: Total
stock-based compensation expense recognized in reported results,
net of tax
|
4.5 | |||
Deduct:
Total stock-based compensation expense determined under the fair
value based method for all awards, net of tax
|
5.1 | |||
Pro
forma net loss
|
$ | (41.7 | ) | |
Basic
and Diluted loss per share - as reported and pro forma
|
$ | (0.38 | ) |
1.
|
Acquisitions and
Investments
|
Assets
|
Liabilities
and Minority Interests
|
||||||||
Inventories
|
$ | 1.7 |
Accrued
expenses
|
$ | 2.2 | ||||
Intangible
assets, net
|
21.7 |
Minority
interests
|
8.7 | ||||||
Goodwill
|
3.1 | ||||||||
Total
assets
|
$ | 26.5 |
Total
liabilities and minority interests
|
$ | 10.9 |
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 |
2.
|
Divestitures
|
3.
|
Variable Interest
Entities
|
2007
|
2006
|
2005
|
||||||||||
Balance
at beginning of year
|
$ | 5.6 | $ | 4.0 | $ | 4.7 | ||||||
Charged
to costs and expenses
|
1.0 | 3.2 | 2.3 | |||||||||
Deductions
and other changes
|
(2.1 | ) | (1.6 | ) | (3.0 | ) | ||||||
Balance
at end of year
|
$ | 4.5 | $ | 5.6 | $ | 4.0 |
5.
|
Inventories
|
2007
|
2006
|
|||||||
Finished
products
|
$ | 125.5 | $ | 115.4 | ||||
Raw
materials and work-in-process
|
74.9 | 73.3 | ||||||
Supplies
|
23.6 | 21.9 | ||||||
$ | 224.0 | $ | 210.6 |
6.
|
Intangible Assets and
Goodwill
|
2007
|
2006
|
|||||||||||||||||||||||
Accumulated
|
Accumulated
|
|||||||||||||||||||||||
Gross
|
Amortization
|
Net
|
Gross
|
Amortization
|
Net
|
|||||||||||||||||||
Customer
relationships
|
$ | 95.6 | $ | 21.1 | $ | 74.5 | $ | 90.0 | $ | 18.6 | $ | 71.4 | ||||||||||||
Trademarks
and tradenames
|
76.2 | 17.6 | 58.6 | 73.9 | 15.6 | 58.3 | ||||||||||||||||||
Other
intangible assets
|
51.0 | 22.9 | 28.1 | 32.2 | 18.8 | 13.4 | ||||||||||||||||||
$ | 222.8 | $ | 61.6 | $ | 161.2 | $ | 196.1 | $ | 53.0 | $ | 143.1 |
Paper
|
||||||||||||
Technologies
|
Aqualon
|
|||||||||||
and
Ventures
|
Group
|
Total
|
||||||||||
Balance
at January 1, 2006
|
$ | 402.6 | $ | 38.4 | $ | 441.0 | ||||||
Acquisitions
and investments
|
1.5 | 12.5 | 14.0 | |||||||||
Foreign
currency translation and other
|
25.4 | 1.1 | 26.5 | |||||||||
Balance
at December 31, 2006
|
$ | 429.5 | $ | 52.0 | $ | 481.5 | ||||||
Acquisitions
and investments
|
— | 3.1 | 3.1 | |||||||||
Foreign
currency translation and other
|
42.1 | 1.2 | 43.3 | |||||||||
Balance
at December 31, 2007
|
$ | 471.6 | $ | 56.3 | $ | 527.9 |
7.
|
Debt
|
2007
|
2006
|
|||||||
Term
B loan due 2010 (a)
|
$ | 261.0 | $ | 375.0 | ||||
6.60%
notes due 2027
|
15.9 | 100.0 | ||||||
11.125%
senior notes due 2007
|
— | 16.1 | ||||||
6.75%
senior notes due 2029 (b)
|
250.0 | 250.0 | ||||||
8%
convertible subordinated debentures due 2010 (c)
|
2.3 | 2.4 | ||||||
6.5%
junior subordinated deferrable interest debentures due 2029
(d)
|
215.1 | 214.1 | ||||||
Term
loans at rates ranging from 5.814% to 7.2978% due in varying amounts
through 2011(e)
|
49.9 | 28.1 | ||||||
Other
|
1.8 | 9.8 | ||||||
796.0 | 995.5 | |||||||
Less: Current
debt obligations
|
33.7 | 35.8 | ||||||
Long
term debt
|
$ | 762.3 | $ | 959.7 |
|
(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 6.71% as of
December 31, 2007. The Senior Credit Facility is also comprised
of a $150 million committed revolving credit facility (the “Revolving
Facility”) which matures on April 8, 2009. 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 25).
|
|
(b)
|
The
senior notes are guaranteed by each of Hercules’ current and future
wholly-owned domestic restricted
subsidiaries.
|
|
(c)
|
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.
|
|
(d)
|
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 CRESTSSM
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 for the equivalent of $42.70 per
share. 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
CRESTSSM
Units now consist of the 6.5% debentures and the
warrants.
|
|
(e)
|
Includes
loans issued by Hercules Tianpu for which Hercules has provided a
guarantee for 55% of the outstanding balances. The loans are
denominated in renminbi and U.S. Dollar-equivalents and include a
short-term loan payable due in 2008 for approximately $17.2 million and a
long-term loan payable due in 2011 for approximately $25.2
million.
|
8.
|
Income
Taxes
|
2007
|
2006
|
2005
|
||||||||||
Domestic
|
$ | (42.0 | ) | $ | (164.3 | ) | $ | (46.9 | ) | |||
Foreign
|
193.3 | 167.5 | 11.5 | |||||||||
$ | 151.3 | $ | 3.2 | $ | (35.4 | ) |
Current
|
2007
|
2006
|
2005
|
|||||||||
U.S.
federal
|
$ | (61.5 | ) | $ | (64.0 | ) | $ | 1.4 | ||||
Foreign
|
28.0 | 29.6 | 40.9 | |||||||||
State
|
(5.9 | ) | — | 8.8 | ||||||||
Deferred
|
||||||||||||
U.S.
federal and state
|
21.8 | (154.6 | ) | (48.3 | ) | |||||||
Foreign
|
(2.7 | ) | (3.2 | ) | (6.6 | ) | ||||||
$ | (20.3 | ) | $ | (192.2 | ) | $ | (3.8 | ) |
2007
|
2006
|
2005
|
||||||||||
U.S.
statutory income tax rate
|
35 | % | 35 | % | 35 | % | ||||||
Valuation
allowances
|
(2 | ) | (3,137 | ) | (66 | ) | ||||||
Tax
rate differences on subsidiary earnings
|
(28 | ) | (325 | ) | (8 | ) | ||||||
U.S.
tax on foreign dividends and undistributed earnings
|
19 | 232 | 27 | |||||||||
State
taxes
|
1 | (1 | ) | (15 | ) | |||||||
Reserves
|
— | (1,378 | ) | 21 | ||||||||
Exempt
export income
|
— | (36 | ) | 5 | ||||||||
Tax
refunds
|
(39 | ) | (1,396 | ) | 12 | |||||||
Other
|
1 | — | — | |||||||||
(13 | )% | (6,006 | )% | 11 | % |
2007
|
2006
|
2005
|
||||||||||
Benefit
on loss from discontinued operations
|
$ | (8.0 | ) | $ | (49.6 | ) | $ | (3.4 | ) | |||
Cumulative
effect of changes in accounting principle
|
— | 0.5 | (1.4 | ) | ||||||||
$ | (8.0 | ) | $ | (49.1 | ) | $ | (4.8 | ) |
2007
|
2006
|
2005
|
||||||||||
Pension
and other postretirement benefits adjustments reflected in
AOCL
|
$ | (28.0 | ) | $ | — | $ | — | |||||
Impact
of the adoption of SFAS 158
|
— | 62.2 | — | |||||||||
Hedging
activities
|
20.6 | 18.6 | — | |||||||||
Additional
minimum pension liability
|
— | (44.7 | ) | 24.8 | ||||||||
Other
|
— | 0.3 | 0.2 | |||||||||
$ | (7.4 | ) | $ | 36.4 | $ | 25.0 |
2007
|
2006
|
|||||||
Depreciation
|
$ | (79.8 | ) | $ | (82.8 | ) | ||
Pension
|
(15.1 | ) | (1.3 | ) | ||||
Inventory
|
(1.4 | ) | (3.1 | ) | ||||
Investments
|
(16.3 | ) | (19.3 | ) | ||||
Goodwill
|
(39.3 | ) | (45.0 | ) | ||||
Accrued
expenses
|
(2.7 | ) | (2.9 | ) | ||||
Other
|
(37.4 | ) | (7.5 | ) | ||||
Gross
deferred tax liabilities
|
$ | (192.0 | ) | $ | (161.9 | ) | ||
Postretirement
benefits other than pensions
|
$ | 80.5 | $ | 70.0 | ||||
Pension
|
48.2 | 87.3 | ||||||
Goodwill
|
5.7 | 8.4 | ||||||
Accrued
expenses
|
244.0 | 242.1 | ||||||
Loss
carryforwards
|
106.7 | 230.1 | ||||||
Credit
carryforwards
|
154.2 | 131.4 | ||||||
Investments(1)
|
78.1 | 77.5 | ||||||
Other
|
7.3 | 14.2 | ||||||
Gross
deferred tax assets
|
724.7 | 861.0 | ||||||
Valuation
allowance
|
(204.7 | ) | (335.8 | ) | ||||
Net
deferred tax assets
|
$ | 328.0 | $ | 363.3 |
2007
|
2006
|
2005
|
||||||||||
Balance
at beginning of the year
|
$ | 335.8 | $ | 380.7 | $ | 391.8 | ||||||
Charged
to the (benefit) provision for income taxes
|
(3.8 | ) | (100.4 | ) | 23.1 | |||||||
Charged
to deferred tax assets
|
(127.3 | ) | 55.5 | (34.2 | ) | |||||||
Balance
at end of the year
|
$ | 204.7 | $ | 335.8 | $ | 380.7 |
Expiration
|
Gross
Amount
|
Allowance
|
||||||||||
Loss
carryforwards
|
||||||||||||
Federal
|
2023
|
$ | 3.4 | $ | — | |||||||
State
|
2008
– 2029
|
89.2 | 89.2 | |||||||||
Foreign
|
2008 – Indef.
|
14.1 | 7.1 | |||||||||
$ | 106.7 | $ | 96.3 | |||||||||
Credit
carryforwards
|
||||||||||||
Foreign
tax
|
2011
– 2017
|
$ | 141.3 | $ | — | |||||||
Alternative
minimum tax
|
Indefinite
|
10.6 | — | |||||||||
Research
and development
|
2022
– 2027
|
2.3 | — | |||||||||
$ | 154.2 | $ | — |
Balance
at January 1, 2007
|
$ | 40.4 | ||||||
Increases
related to prior year tax positions
|
0.3 | |||||||
Decreases
related to prior year tax positions
|
(3.6 | ) | ||||||
Increases
related to current year tax positions
|
0.4 | |||||||
Settlements
|
(0.9 | ) | ||||||
Lapse
of statute
|
(0.3 | ) | ||||||
Other,
net
|
(0.8 | ) | ||||||
Net
change
|
(4.9 | ) | ||||||
Balance
at December 31, 2007
|
$ | 35.5 |
|
9. Pension and
Other Postretirement
Benefits
|
Defined
Benefit Pension Plans
|
||||||||||||||||||||||||
2007
|
2006
|
OPEB
|
||||||||||||||||||||||
Change
in benefit obligation:
|
U.S.
|
Int’l.
|
U.S.
|
Int’l.
|
2007
|
2006
|
||||||||||||||||||
Benefit
obligation at January 1
|
$ | 1,502.1 | $ | 364.1 | $ | 1,536.8 | $ | 340.6 | $ | 158.4 | $ | 154.5 | ||||||||||||
Service
cost
|
11.2 | 6.0 | 11.4 | 6.0 | 0.6 | 0.5 | ||||||||||||||||||
Interest
cost
|
86.4 | 17.4 | 86.5 | 15.5 | 8.1 | 8.8 | ||||||||||||||||||
Plan
amendments
|
0.6 | 0.8 | — | 0.3 | — | — | ||||||||||||||||||
Foreign
currency translation
|
— | 30.8 | — | 35.3 | 0.5 | — | ||||||||||||||||||
Actuarial
(gain) loss
|
(21.4 | ) | (24.1 | ) | (17.8 | ) | (17.8 | ) | (11.9 | ) | 14.7 | |||||||||||||
Settlements/curtailments
|
— | — | (2.3 | ) | (0.6 | ) | — | — | ||||||||||||||||
Special
termination benefits
|
— | — | 1.6 | — | — | 1.3 | ||||||||||||||||||
Benefits
paid from plan assets
|
(113.4 | ) | (16.5 | ) | (109.0 | ) | (15.2 | ) | — | — | ||||||||||||||
Benefits
paid from Company assets
|
(6.4 | ) | — | (5.1 | ) | — | (17.6 | ) | (21.4 | ) | ||||||||||||||
Benefit
obligation at December 31
|
1,459.1 | 378.5 | 1,502.1 | 364.1 | 138.1 | 158.4 | ||||||||||||||||||
Change
in plan assets:
|
||||||||||||||||||||||||
Fair
value of plan assets at January 1
|
$ | 1,306.1 | $ | 295.0 | $ | 1,219.3 | $ | 256.4 | $ | — | $ | — | ||||||||||||
Actual
return on plan assets
|
92.2 | 8.8 | 165.7 | 16.6 | — | — | ||||||||||||||||||
Company
contributions
|
60.0 | 25.7 | 30.0 | 8.9 | — | — | ||||||||||||||||||
Participant
contributions
|
— | 0.8 | — | 0.8 | — | — | ||||||||||||||||||
Foreign
currency translation
|
— | 25.9 | — | 27.5 | — | — | ||||||||||||||||||
Benefits
paid from plan assets
|
(113.4 | ) | (16.5 | ) | (109.0 | ) | (15.2 | ) | — | — | ||||||||||||||
Fair
value of plan assets at December 31
|
1,344.9 | 339.7 | 1,306.0 | 295.0 | — | — | ||||||||||||||||||
Funded
status of the plan
|
$ | (114.2 | ) | $ | (38.8 | ) | $ | (196.1 | ) | $ | (69.1 | ) | $ | (138.1 | ) | $ | (158.4 | ) |
Components
of the above amounts:
|
||||||||||||||||||||||||
Prepaid
benefit cost
|
$ | — | $ | 10.7 | $ | — | $ | 2.2 | $ | — | $ | — | ||||||||||||
Accrued
expenses
|
(4.9 | ) | (0.1 | ) | (4.9 | ) | — | (15.0 | ) | (16.2 | ) | |||||||||||||
Accrued
benefit liability (noncurrent)
|
(109.3 | ) | (49.4 | ) | (191.2 | ) | (71.3 | ) | (123.1 | ) | (142.2 | ) | ||||||||||||
Net
amount recognized
|
$ | (114.2 | ) | $ | (38.8 | ) | $ | (196.1 | ) | $ | (69.1 | ) | $ | (138.1 | ) | $ | (158.4 | ) | ||||||
Amounts
included in AOCL:
|
||||||||||||||||||||||||
Actuarial
losses
|
$ | (494.9 | ) | $ | (96.2 | ) | $ | (545.8 | ) | $ | (106.6 | ) | $ | (106.4 | ) | $ | (126.4 | ) | ||||||
Prior
service credits
|
15.9 | 16.5 | 18.2 | 17.2 | 35.2 | 43.0 | ||||||||||||||||||
Transition
obligations
|
— | (0.3 | ) | — | (0.4 | ) | (0.6 | ) | (0.7 | ) | ||||||||||||||
Total
|
$ | (479.0 | ) | $ | (80.0 | ) | $ | (527.6 | ) | $ | (89.8 | ) | $ | (71.8 | ) | $ | (84.1 | ) | ||||||
Amortization
expected to be recognized
during
next fiscal year:
|
||||||||||||||||||||||||
Actuarial
losses
|
$ | 43.9 | $ | 4.0 | $ | 39.1 | $ | 4.5 | $ | 9.8 | $ | 8.9 | ||||||||||||
Prior
service credits
|
(1.7 | ) | (1.9 | ) | (1.7 | ) | (0.9 | ) | (7.0 | ) | (7.8 | ) | ||||||||||||
Transition
obligations
|
— | 0.1 | — | 0.1 | 0.2 | 0.1 | ||||||||||||||||||
Total
|
$ | 42.2 | $ | 2.2 | $ | 37.4 | $ | 3.7 | $ | 3.0 | $ | 1.2 |
Weighted-average
assumptions used to
determine the benefit
obligation:
|
||||||||||||||||||||||||
Weighted-average
discount rate
|
6.16 | % | 5.31 | % | 5.90 | % | 4.71 | % | 5.88 | % | 5.79 | % | ||||||||||||
Rate
of compensation increase
|
4.00 | % | 3.19 | % | 4.30 | % | 3.10 | % | 4.00 | % | 4.29 | % |
Defined
Benefit Pension Plans
|
||||||||||||||||||||||||||||||||||||
2007
|
2006
|
2005
|
OPEB
|
|||||||||||||||||||||||||||||||||
Net periodic benefit
cost:
|
U.S.
|
Int’l.
|
U.S.
|
Int’l.
|
U.S.
|
Int’l.
|
2007
|
2006
|
2005
|
|||||||||||||||||||||||||||
Service
cost
|
$ | 11.2 | $ | 6.1 | $ | 11.4 | $ | 6.0 | $ | 12.7 | $ | 5.4 | $ | 0.6 | $ | 0.5 | $ | 0.8 | ||||||||||||||||||
Interest
cost
|
86.4 | 17.4 | 86.5 | 15.5 | 81.3 | 15.2 | 8.1 | 8.8 | 8.8 | |||||||||||||||||||||||||||
Expected
return on plan assets
|
(101.0 | ) | (20.2 | ) | (100.4 | ) | (17.3 | ) | (95.4 | ) | (14.9 | ) | — | — | — | |||||||||||||||||||||
Amortization
and deferrals
|
(1.7 | ) | (1.0 | ) | (1.8 | ) | (0.5 | ) | (1.9 | ) | 0.2 | (7.8 | ) | (8.0 | ) | (7.3 | ) | |||||||||||||||||||
Participant
contributions
|
— | — | — | (0.5 | ) | — | (0.5 | ) | — | — | — | |||||||||||||||||||||||||
Settlements/curtailments
(1)
|
— | — | (2.0 | ) | — | — | — | — | (4.4 | ) | — | |||||||||||||||||||||||||
Special
benefits/terminations (1)
|
— | — | 1.6 | — | — | — | — | 1.2 | — | |||||||||||||||||||||||||||
Amortization
of transition (asset) obligation
|
— | 0.1 | — | 0.1 | — | 0.1 | 0.2 | 0.1 | 0.1 | |||||||||||||||||||||||||||
Actuarial
losses recognized
|
38.2 | 4.7 | 39.9 | 4.5 | 40.7 | 3.3 | 8.1 | 8.3 | 6.4 | |||||||||||||||||||||||||||
33.1 | 7.1 | $ | 35.2 | $ | 7.8 | $ | 37.4 | $ | 8.8 | 9.2 | $ | 6.5 | $ | 8.8 | ||||||||||||||||||||||
Other
changes recognized in Comprehensive income:
|
||||||||||||||||||||||||||||||||||||
Current
year actuarial gains
|
(12.7 | ) | (12.7 | ) | (11.7 | ) | ||||||||||||||||||||||||||||||
Current
year prior service costs
|
0.6 | — | — | |||||||||||||||||||||||||||||||||
Amortization:
|
||||||||||||||||||||||||||||||||||||
Prior
service credits
|
1.7 | 1.0 | 7.8 | |||||||||||||||||||||||||||||||||
Transition
obligations
|
— | (0.1 | ) | (0.2 | ) | |||||||||||||||||||||||||||||||
Actuarial
losses
|
(38.2 | ) | (4.7 | ) | (8.1 | ) | ||||||||||||||||||||||||||||||
(48.6 | ) | (16.5 | ) | (12.2 | ) | |||||||||||||||||||||||||||||||
Recognized
in periodic benefit cost and Comprehensive income
|
$ | 15.5 | $ | (9.4 | ) | $ | (3.0 | ) |
Weighted-average
assumptions used to determine net periodic benefit cost:
|
||||||||||||||||||||||||||||||||||||
2007
|
2006
|
2005
|
||||||||||||||||||||||||||||||||||
U.S.
|
Int’l.
|
U.S.
|
Int’l.
|
U.S.
|
Int’l.
|
2007
|
2006
|
2005
|
||||||||||||||||||||||||||||
Weighted-average
discount rate
|
5.90 | % | 4.71 | % | 6.00 | % | 4.53 | % | 5.75 | % | 5.04 | % | 5.79 | % | 5.81 | % | 5.51 | % | ||||||||||||||||||
Expected
return on plan assets
|
8.25 | % | 6.47 | % | 8.50 | % | 6.36 | % | 8.50 | % | 6.49 | % | N/A | N/A | N/A | |||||||||||||||||||||
Rate
of compensation increase
|
4.30 | % | 3.10 | % | 4.30 | % | 2.99 | % | 4.50 | % | 2.79 | % | 4.29 | % | 4.29 | % | 4.49 | % |
Target
Allocation
|
Percentage
of Plan Assets
at
December 31,
|
|||||||||||
Asset
category:
|
2008
|
2007
|
2006
|
|||||||||
Equity
securities
|
— | — | 66 | % | ||||||||
Fixed
income
|
80 | % | 78 | % | 26 | % | ||||||
Other
|
20 | % | 22 | % | 8 | % | ||||||
Totals
|
100 | % | 100 | % | 100 | % |
Target
Allocation
|
Percentage
of Plan Assets
at
December 31,
|
|||||||||||
Asset
category:
|
2008
|
2007
|
2006
|
|||||||||
Equity
securities
|
33 | % | 33 | % | 58 | % | ||||||
Fixed
income
|
51 | % | 51 | % | 41 | % | ||||||
Other
|
16 | % | 16 | % | 1 | % | ||||||
Totals
|
100 | % | 100 | % | 100 | % |
Pension
Benefits
|
||||||||||||||||||||
U.S.
Qualified
|
U.S.
Non-Qualified
|
Int’l.
|
Total
|
OPEB
|
||||||||||||||||
2008
|
$ | 89 | $ | 5 | $ | 17 | $ | 111 | $ | 15 | ||||||||||
2009
|
90 | 5 | 18 | 113 | 14 | |||||||||||||||
2010
|
90 | 5 | 18 | 113 | 14 | |||||||||||||||
2011
|
91 | 5 | 20 | 116 | 13 | |||||||||||||||
2012
|
92 | 5 | 20 | 117 | 13 | |||||||||||||||
2013
through 2017
|
487 | 21 | 109 | 617 | 54 |
|
10. Defined Contribution
Plans
|
2007
|
2006
|
|||||||
Allocated
|
1,155,021 | 1,200,346 | ||||||
Unallocated
|
942,239 | 1,332,965 | ||||||
2,097,260 | 2,533,311 |
11.
|
Asset Retirement Obligations and Environmental
Contingencies
|
Active
Sites
|
Inactive
Sites
|
Total
|
||||||||||
Balance
at January 1, 2006
|
$ | 10.2 | $ | 85.4 | $ | 95.6 | ||||||
Settlement
payments
|
(4.3 | ) | (15.9 | ) | (20.2 | ) | ||||||
Changes
in estimated obligations and accretion
|
4.0 | 1.6 | 5.6 | |||||||||
Foreign
currency translation
|
0.2 | 0.4 | 0.6 | |||||||||
Balance
at December 31, 2006
|
$ | 10.1 | $ | 71.5 | $ | 81.6 | ||||||
Settlement
payments
|
(1.7 | ) | (10.8 | ) | (12.5 | ) | ||||||
Changes
in estimated obligations and accretion
|
2.2 | 6.3 | 8.5 | |||||||||
Foreign
currency translation
|
0.2 | 0.5 | 0.7 | |||||||||
Balance
at December 31, 2007
|
$ | 10.8 | $ | 67.5 | $ | 78.3 |
|
12. Commitments and
Contingencies
|
Balance
January 1, 2007
|
Interest
Income/
Accrual
adjustments, net
|
Insurance
Recovered/
Liabilities
Settled
|
Accretion/
Reclassifi-
cation
|
Balance
December 31, 2007
|
||||||||||||||||
Asbestos-related
assets:
|
||||||||||||||||||||
Insurance
receivable - current
|
$ | — | $ | 4.0 | $ | — | $ | — | $ | 4.0 | ||||||||||
Insurance
receivable – non-current
|
32.8 | — | (16.5 | ) | 0.5 | 16.8 | ||||||||||||||
Restricted
cash in trust
|
54.7 | 1.5 | (48.9 | ) | — | 7.3 | ||||||||||||||
Noncurrent
asbestos-related assets
|
87.5 | 1.5 | (65.4 | ) | 0.5 | 24.1 | ||||||||||||||
Total
asbestos-related assets
|
$ | 87.5 | $ | 5.5 | $ | (65.4 | ) | $ | 0.5 | $ | 28.1 | |||||||||
Asbestos-related
liabilities:
|
||||||||||||||||||||
Current
reserve for claims
|
$ | 36.4 | $ | — | $ | — | $ | (8.4 | ) | $ | 28.0 | |||||||||
Noncurrent
reserve for claims
|
233.6 | 0.8 | (15.8 | ) | 8.4 | 227.0 | ||||||||||||||
Total
asbestos-related liabilities
|
$ | 270.0 | $ | 0.8 | $ | (15.8 | ) | $ | — | $ | 255.0 |
2007
|
2006
|
2005
|
||||||||||
Expected
volatility
|
29.91 | % | 30.10 | % | 28.65 | % | ||||||
Expected
dividend yield
|
0.10 | % | 0.00 | % | 0.00 | % | ||||||
Expected
life (in years)
|
6.0 | 6.0 | 6.0 | |||||||||
Risk-free
interest rate
|
4.63 | % | 4.60 | % | 4.08 | % |
Regular
|
Performance
Accelerated
|
|||||||||||||||
Number
of
Shares
|
Weighted-
average
Price
|
Number
of
Shares
|
Weighted-
average
Price
|
|||||||||||||
Outstanding
at January 1, 2005
|
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 | ||||||||||
Granted
|
254,133 | 20.89 | — | — | ||||||||||||
Exercised
|
(463,034 | ) | 14.13 | — | — | |||||||||||
Forfeited
|
(820,520 | ) | 38.94 | (235,790 | ) | 40.03 | ||||||||||
Outstanding
at December 31, 2007
|
3,647,874 | $ | 20.68 | 485,200 | $ | 41.09 | ||||||||||
Exerciseable
at December 31, 2007
|
3,072,382 | $ | 21.52 | 201,795 | $ | 46.02 |
Outstanding
Options
|
Exercisable
Options
|
||||||||
Outstanding
|
Weighted-
average
Remaining
Contractual
Life
|
Weighted-
average
Exercise
Price
|
Exercisable
|
Weighted-
average
Exercise
Price
|
|||||
Regular
Stock Options
|
|||||||||
$8.50
- $11.75
|
496,650
|
4.07
|
$11.10
|
496,650
|
$11.10
|
||||
$11.76
- $15.00
|
1,210,790
|
6.27
|
$12.51
|
890,316
|
$12.51
|
||||
$15.01
- $25.00
|
618,551
|
2.74
|
$17.28
|
593,666
|
$17.20
|
||||
$25.00
- $33.75
|
597,158
|
3.94
|
$23.87
|
367,025
|
$25.65
|
||||
$33.76
- $40.00
|
473,525
|
1.47
|
$37.66
|
473,525
|
$37.66
|
||||
$40.01
- $48.00
|
251,200
|
0.35
|
$47.75
|
251,200
|
$47.75
|
||||
3,647,874
|
3,072,382
|
||||||||
Aggregate
intrinsic value
|
$ 77.3
|
$ 66.0
|
|||||||
Performance-Accelerated
Stock Options
|
|||||||||
$25.00
- $35.30
|
3,375
|
0.95
|
$27.53
|
925
|
$32.75
|
||||
$35.31
- $43.65
|
314,005
|
1.34
|
$37.65
|
33,050
|
$37.56
|
||||
$43.66
- $48.75
|
167,820
|
0.35
|
$47.81
|
167,820
|
$47.81
|
||||
485,200
|
201,795
|
||||||||
Aggregate
intrinsic value
|
—
|
—
|
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 | |||||
Granted
|
387,183 | 20.84 | ||||||
Vested(1)
|
(609,591 | ) | 11.89 | |||||
Forfeited
|
(6,784 | ) | 18.63 | |||||
Outstanding
at December 31, 2007
|
1,828,216 | $ | 13.94 |
2007
|
2006
|
|||||||
Unrecognized
compensation cost:
|
||||||||
Stock options
|
$ | 1.7 | $ | 1.6 | ||||
Restricted
stock
|
$ | 13.0 | $ | 12.9 | ||||
Weighted-average
remaining periods for recognition (years):
|
||||||||
Stock options
|
1.5 | 1.9 | ||||||
Restricted
stock
|
3.4 | 3.5 |
Compensation
cost recognized:
|
||||||||
Stock options
|
$ | 1.9 | $ | 1.6 | ||||
Restricted stock (1)
|
$ | 7.5 | $ | 5.4 | ||||
Fair
value of options granted (per share)
|
$ | 8.16 | $ | 4.86 | ||||
Intrinsic
value of options exercised
|
$ | 2.7 | $ | 17.1 | ||||
Tax
benefits recognized in Additional paid-in capital:
|
||||||||
Stock options
|
$ | 2.4 | $ | 5.8 | ||||
Restricted stock
|
$ | 2.9 | $ | 0.4 |
14.
|
Stockholders’ Equity
|
Common
Stock
|
Reacquired
Stock
|
|||||||
Balances
at January 1, 2005
|
159,984,444 | 47,842,836 | ||||||
Exercise
of stock options
|
— | (200,752 | ) | |||||
Issuance
of stock awards, net of forfeitures
|
— | (461,658 | ) | |||||
Sales
for taxes
|
— | 66,918 | ||||||
Balances
at December 31, 2005
|
159,984,444 | 47,247,344 | ||||||
Conversion
of debentures
|
13,485 | — | ||||||
Exercise
of stock options
|
— | (2,966,552 | ) | |||||
Issuance
of stock awards, net of forfeitures
|
— | (441,178 | ) | |||||
Sales
for taxes
|
— | 130,155 | ||||||
Balances
at December 31, 2006
|
159,997,929 | 43,969,769 | ||||||
Conversion
of debentures
|
6,979 | — | ||||||
Exercise
of stock options
|
— | (463,034 | ) | |||||
Issuance
of stock awards, net of forfeitures
|
— | (386,239 | ) | |||||
Sales
for taxes
|
— | 224,282 | ||||||
Contribution
of shares to defined contribution benefit plan
|
— | (138,858 | ) | |||||
Repurchases
of common stock(1)
|
— | 2,800,860 | ||||||
Balances
at December 31, 2007
|
160,004,908 | 46,006,780 |
December
31,
|
||||||||||||
2007
|
2006
|
2005
|
||||||||||
Pension
and postretirement benefit plan adjustments, net of tax (1)
|
$ | (415.4 | ) | $ | (461.3 | ) | $ | (415.7 | ) | |||
Foreign
currency translation adjustments, net of hedging activities and
taxes
|
100.2 | 52.5 | 28.4 | |||||||||
Other,
net of tax
|
(0.8 | ) | (0.8 | ) | (0.3 | ) | ||||||
$ | (316.0 | ) | $ | (409.6 | ) | $ | (387.6 | ) |
2007
|
2006
|
|||||||
Property,
plant and equipment:
|
||||||||
Land
|
$ | 16.0 | $ | 16.4 | ||||
Buildings and
equipment
|
1,726.4 | 1,643.0 | ||||||
Construction in
progress
|
113.7 | 85.0 | ||||||
Total
|
1,856.1 | 1,744.4 | ||||||
Accumulated
depreciation
|
(1,196.1 | ) | (1,144.0 | ) | ||||
$ | 660.0 | $ | 600.4 |
2007
|
2006
|
|||||||
Deferred
charges and other assets:
|
||||||||
Tax
deposits
|
$ | 3.0 | $ | 3.0 | ||||
Capitalized
software, net
|
20.1 | 44.8 | ||||||
Prepaid
pension assets
|
10.7 | 2.2 | ||||||
Cash
surrender value of life insurance policies
|
20.8 | 22.3 | ||||||
Unamortized
debt issuance costs
|
6.1 | 7.7 | ||||||
Investment
securities available for sale
|
6.6 | 2.6 | ||||||
Equity
method investments
|
20.6 | 27.4 | ||||||
Other
|
32.2 | 26.9 | ||||||
$ | 120.1 | $ | 136.9 |
2007
|
2006
|
|||||||
Accrued
expenses:
|
||||||||
Compensation
and benefits
|
$ | 49.6 | $ | 53.0 | ||||
Current
portion of postretirement benefits
|
15.0 | 16.2 | ||||||
Current
portion of asset retirement obligations
|
18.3 | 21.0 | ||||||
Severance
and other exit costs
|
19.1 | 10.5 | ||||||
Interest
payable
|
10.8 | 14.6 | ||||||
Stock
repurchase
|
8.2 | — | ||||||
Sales
rebate accrual
|
11.7 | 10.9 | ||||||
Dividend
payable
|
5.8 | — | ||||||
Current
pension obligation
|
5.0 | 4.9 | ||||||
Litigation
accrual
|
2.7 | 8.6 | ||||||
Current
portion of deferred rent
|
3.3 | 3.3 | ||||||
Other
taxes payable
|
3.3 | 2.8 | ||||||
Other
|
54.9 | 46.5 | ||||||
$ | 207.7 | $ | 192.3 |
2007
|
2006
|
|||||||
Deferred
credits and other liabilities:
|
||||||||
Non-current
income tax liabilities
|
$ | 34.6 | $ | 41.7 | ||||
Asset
retirement obligations – noncurrent
|
54.7 | 55.3 | ||||||
Indemnifications
|
41.2 | 41.2 | ||||||
Deferred
rent
|
21.8 | 26.3 | ||||||
Environmental
contingencies
|
5.3 | 5.3 | ||||||
Fair
value of cross-currency interest rate swaps
|
112.1 | 53.2 | ||||||
Workers
compensation
|
13.9 | 13.9 | ||||||
Other
|
15.1 | 18.7 | ||||||
$ | 298.7 | $ | 255.6 |
16.
|
Restructuring
Programs
|
Severance
|
Other
Exit Costs
|
Asset
Charges
|
Total
|
|||||||||||||
2007
|
||||||||||||||||
Business
and Corporate infrastructure projects
|
$ | 13.2 | $ | 6.4 | $ | 13.7 | $ | 33.3 | ||||||||
Business
and segment realignment projects
|
4.6 | — | — | 4.6 | ||||||||||||
Manufacturing
rationalization projects
|
3.6 | 0.3 | 0.2 | 4.1 | ||||||||||||
Research
and development consolidation
|
(0.2 | ) | 0.5 | 0.5 | 0.8 | |||||||||||
$ | 21.2 | $ | 7.2 | $ | 14.4 | $ | 42.8 | |||||||||
2006
|
||||||||||||||||
Business
and Corporate infrastructure projects
|
$ | 2.9 | $ | 2.3 | $ | 4.4 | $ | 9.6 | ||||||||
Business
and segment realignment projects
|
9.8 | 0.4 | — | 10.2 | ||||||||||||
Manufacturing
rationalization projects
|
0.9 | 1.0 | 2.7 | 4.6 | ||||||||||||
Research
and development consolidation
|
2.6 | 1.2 | 1.2 | 5.0 | ||||||||||||
$ | 16.2 | $ | 4.9 | $ | 8.3 | $ | 29.4 | |||||||||
2005
|
||||||||||||||||
Business
and Corporate infrastructure projects
|
$ | 4.8 | $ | 0.5 | $ | — | $ | 5.3 | ||||||||
Business
and segment realignment projects
|
14.5 | — | — | 14.5 | ||||||||||||
Manufacturing
rationalization projects
|
6.6 | 0.2 | 3.1 | 9.9 | ||||||||||||
Research
and development consolidation
|
3.8 | 1.4 | 2.4 | 7.6 | ||||||||||||
Terpenes
specialties exit activities
|
2.4 | — | 5.7 | 8.1 | ||||||||||||
$ | 32.1 | $ | 2.1 | $ | 11.2 | $ | 45.4 | |||||||||
2007
|
||||||||||||||||
Paper
Technologies and Ventures
|
$ | 4.4 | $ | 0.7 | $ | 0.2 | $ | 5.3 | ||||||||
Aqualon
Group
|
3.7 | — | — | 3.7 | ||||||||||||
Corporate
|
13.1 | 6.5 | 14.2 | 33.8 | ||||||||||||
$ | 21.2 | $ | 7.2 | $ | 14.4 | $ | 42.8 | |||||||||
2006
|
||||||||||||||||
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 | ||||||||||||
$ | 16.2 | $ | 4.9 | $ | 8.3 | $ | 29.4 | |||||||||
2005
|
||||||||||||||||
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 | ||||||||||||
$ | 32.1 | $ | 2.1 | $ | 11.2 | $ | 45.4 |
2007
|
2006
|
2005
|
||||||||||
Balance
at beginning of the year
|
$ | 10.5 | $ | 16.6 | $ | 5.8 | ||||||
Accrued
charges for severance and related benefits
|
21.2 | 16.2 | 32.1 | |||||||||
Accrued
charges for other exit and restructuring costs
|
5.6 | 3.8 | 0.5 | |||||||||
Cash
payments
|
(19.2 | ) | (26.9 | ) | (21.4 | ) | ||||||
Other,
including foreign currency translation
|
1.0 | 0.8 | (0.4 | ) | ||||||||
Balance
at end of the year
|
$ | 19.1 | $ | 10.5 | $ | 16.6 |
|
17. Other
Operating Expense, Net
|
2007
|
2006
|
2005
|
||||||||||
Severance,
restructuring and other exit costs, net
|
$ | 28.4 | $ | 21.1 | $ | 31.8 | ||||||
Accelerated
depreciation and amortization
|
14.4 | 5.1 | 3.5 | |||||||||
Asset
impairments
|
— | 3.2 | 2.0 | |||||||||
Legal
settlements
|
(1.6 | ) | (2.0 | ) | 0.7 | |||||||
Asset
retirement and environmental charges
|
0.4 | 0.8 | 0.2 | |||||||||
(Gains)
losses on asset dispositions, net
|
(12.4 | ) | (6.2 | ) | 0.1 | |||||||
Dismantlement
costs
|
3.2 | 1.6 | — | |||||||||
Other
miscellaneous charges
|
4.5 | 1.5 | 1.1 | |||||||||
$ | 36.9 | $ | 25.1 | $ | 39.4 |
2007
|
2006
|
2005
|
||||||||||
Asbestos-related
costs, net
|
$ | 5.7 | $ | 29.0 | $ | 44.6 | ||||||
Investment
dilution and loss on sale of 51% interest in FiberVisions
|
2.5 | 13.3 | — | |||||||||
Loss
on repurchases of debt
|
— | 11.4 | 14.2 | |||||||||
Asset
retirement and environmental charges
|
7.2 | 6.5 | 7.3 | |||||||||
Litigation
settlements and accruals
|
16.1 | 9.2 | 19.0 | |||||||||
Gains
on dispositions of assets, net
|
(3.0 | ) | (1.4 | ) | (10.9 | ) | ||||||
Other,
net
|
(4.5 | ) | (2.3 | ) | (2.9 | ) | ||||||
$ | 24.0 | $ | 65.7 | $ | 71.3 |
19.
|
Discontinued
Operations
|
2006
|
2005
|
|||||||
Net
sales
|
$ | 2.5 | $ | 13.7 | ||||
Loss
from operations before income taxes
|
$ | (2.6 | ) | $ | (9.9 | ) | ||
Income
tax benefit on operations
|
0.9 | 3.4 | ||||||
Net
loss from discontinued operations, net of tax
|
$ | (1.7 | ) | $ | (6.5 | ) |
20.
|
Changes in Accounting
Principle
|
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 |
21.
|
Supplemental Disclosure of Statements of Operations and Cash
Flows Data
|
2007
|
2006
|
2005
|
||||||||||
Depreciation:
|
||||||||||||
Included
in Cost of sales and Selling, general and administrative
expenses
|
$ | 69.6 | $ | 66.8 | $ | 76.6 | ||||||
Accelerated
depreciation included in Other operating expense, net
|
0.7 | 3.9 | 3.5 | |||||||||
Included
in Net loss from discontinued operations
|
— | — | 0.4 | |||||||||
$ | 70.3 | $ | 70.7 | $ | 80.5 | |||||||
Amortization:
|
||||||||||||
Intangible
assets
|
$ | 8.7 | $ | 7.2 | $ | 8.0 | ||||||
Capitalized
software (normal basis)
|
15.4 | 15.2 | 15.3 | |||||||||
Accelerated
amortization of capitalized software
|
13.7 | 1.1 | — | |||||||||
Deferred
financing costs
|
1.9 | 1.1 | 2.1 | |||||||||
$ | 39.7 | $ | 24.6 | $ | 25.4 | |||||||
Cash
paid during the period for:
|
||||||||||||
Interest
|
$ | 69.9 | $ | 70.9 | $ | 86.4 | ||||||
Income
taxes, net of refunds received
|
(183.9 | ) | 37.6 | 18.4 | ||||||||
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 | — | |||||||||
Formation
of H2H
|
13.7 | — | — | |||||||||
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
|
11.8 | 13.9 | 13.4 |
22.
|
Earnings (Loss) Per
Share
|
2007
|
2006
|
2005
|
||||||||||
Weighted-average
number of common shares outstanding - Basic
|
114.3 | 110.8 | 108.7 | |||||||||
Dilutive
effect of:
|
||||||||||||
Convertible
debentures
|
0.2 | 0.2 | 0.2 | |||||||||
Share-based
compensation plans
|
0.6 | 0.3 | 1.5 | |||||||||
Weighted-average
number of common shares outstanding - Diluted
|
115.1 | 111.3 | 110.4 |
2007
|
2006
|
2005
|
||||||||||
Options
to purchase common stock
|
1.8 | 3.4 | 5.8 | |||||||||
Warrants
to purchase common stock
|
6.6 | 6.6 | 6.7 |
23.
|
Reporting Segment and Geographic
Data
|
Paper
Technologies and Ventures
|
Aqualon
Group
|
FiberVisions
|
Corporate
|
Consolidated
|
||||||||||||||||
2007
|
||||||||||||||||||||
Net
sales
|
$ | 1,150.6 | $ | 985.6 | $ | — | $ | — | $ | 2,136.2 | ||||||||||
Profit
(loss) from operations
|
113.6 | 199.0 | — | (48.4 | ) | 264.2 | ||||||||||||||
Depreciation
|
26.0 | 38.9 | — | 5.4 | 70.3 | (1) | ||||||||||||||
Amortization
|
15.4 | 8.7 | — | 15.6 | 39.7 | (2) | ||||||||||||||
Research
and development
|
18.2 | 24.9 | — | 0.7 | 43.8 | |||||||||||||||
Total
assets
|
1,049.1 | 862.3 | — | 767.0 | 2,678.4 | (3) | ||||||||||||||
Capital
expenditures
|
34.1 | 69.9 | — | 14.3 | 118.3 | |||||||||||||||
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 |
|
(1)
|
Depreciation
for Corporate is allocated to the business segments in the determination
of Profit from operations.
|
|
(2)
|
Corporate
amortization 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.
|
Geographic
Areas
|
United
States
|
Europe
|
Americas
|
Asia
Pacific
|
Total
|
|||||||||||||||
2007
|
||||||||||||||||||||
Net
Sales
|
$ | 894.2 | $ | 756.8 | $ | 235.9 | $ | 249.3 | $ | 2,136.2 | ||||||||||
Property,
plant and equipment, net
|
287.1 | 255.5 | 20.2 | 97.2 | 660.0 | |||||||||||||||
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 |
2007
|
2006
|
|||||||||||||||
Carrying
|
Fair
|
Carrying
|
Fair
|
|||||||||||||
Value
|
Value
|
Value
|
Value
|
|||||||||||||
Deferred
charges and other assets
|
||||||||||||||||
Investment
securities available for sale
|
$ | 6.6 | $ | 6.6 | $ | 2.6 | $ | 2.6 | ||||||||
Foreign
exchange contracts, net
|
0.3 | 0.3 | (0.1 | ) | (0.1 | ) | ||||||||||
Current
and long-term debt obligations
|
796.0 | 713.8 | 995.5 | 964.2 | ||||||||||||
Deferred
credits and other liabilities
|
||||||||||||||||
Cross
currency interest rate swaps
|
112.1 | 112.1 | 53.2 | 53.2 |
|
25. Condensed Consolidating Financial Information of Guarantor
Subsidiaries
|
Aqualon
Company
|
Hercules
Hydrocarbon Holdings, Inc.
|
East
Bay Realty Services, Inc.
|
Hercules
Paper Holdings, Inc.
|
Hercules
Euro Holdings, LLC
|
WSP,
Inc.
|
Condensed
Consolidating Statement of Operations
|
||||||||||||||||||||
Year
Ended December 31, 2007
|
||||||||||||||||||||
Unconsolidated
|
||||||||||||||||||||
Parent
|
Guarantor
Subsidiaries
|
Non-
Guarantor
Subsidiaries
|
Eliminations
and
Adjustments
|
Consolidated
|
||||||||||||||||
Net
sales
|
$ | 623.7 | $ | 450.0 | $ | 1,253.0 | $ | (190.5 | ) | $ | 2,136.2 | |||||||||
Cost
of sales
|
443.5 | 321.2 | 832.5 | (191.5 | ) | 1,405.7 | ||||||||||||||
Selling,
general and administrative expenses
|
111.1 | 112.8 | 153.0 | — | 376.9 | |||||||||||||||
Research
and development
|
18.5 | 19.6 | 5.7 | — | 43.8 | |||||||||||||||
Intangible
asset amortization
|
6.1 | 0.7 | 2.2 | (0.3 | ) | 8.7 | ||||||||||||||
Other
operating expense, net
|
24.6 | 5.1 | 7.2 | — | 36.9 | |||||||||||||||
Profit
(loss) from operations
|
19.9 | (9.4 | ) | 252.4 | 1.3 | 264.2 | ||||||||||||||
Interest
and debt expense (income), net
|
182.1 | (117.8 | ) | 4.3 | — | 68.6 | ||||||||||||||
Vertac
response costs and litigation charges
|
20.3 | — | — | — | 20.3 | |||||||||||||||
Other
expense, net
|
20.7 | 4.8 | (1.9 | ) | 0.4 | 24.0 | ||||||||||||||
Income
(loss) before income taxes, minority interests and equity (loss)
income
|
(203.2 | ) | 103.6 | 250.0 | 0.9 | 151.3 | ||||||||||||||
(Benefit)
provision for income taxes
|
(106.8 | ) | 41.0 | 45.1 | 0.4 | (20.3 | ) | |||||||||||||
Income
(loss) before minority interests and equity (loss) income
|
(96.4 | ) | 62.6 | 204.9 | 0.5 | 171.6 | ||||||||||||||
Minority
interests in earnings of consolidated subsidiaries
|
— | — | (0.6 | ) | — | (0.6 | ) | |||||||||||||
Equity
(loss) income of affiliated companies
|
— | (0.1 | ) | 0.6 | (0.6 | ) | (0.1 | ) | ||||||||||||
Equity
income from consolidated subsidiaries
|
267.3 | — | — | (267.3 | ) | — | ||||||||||||||
Net
income from continuing operations before discontinued
operations
|
170.9 | 62.5 | 204.9 | (267.4 | ) | 170.9 | ||||||||||||||
Net
income from discontinued operations, net of tax
|
8.0 | — | (0.5 | ) | 0.5 | 8.0 | ||||||||||||||
Net
income
|
$ | 178.9 | $ | 62.5 | $ | 204.4 | $ | (266.9 | ) | $ | 178.9 |
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
response costs and 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 changes 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 changes in accounting
principle
|
237.8 | 94.2 | 170.0 | (264.2 | ) | 237.8 | ||||||||||||||
Cumulative
effect of changes in accounting principle, net of tax
|
0.9 | — | — | — | 0.9 | |||||||||||||||
Net
income
|
$ | 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 expense, 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
response costs and 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 | ) | |||||||||||||
(Loss)
income 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 Balance Sheet
|
||||||||||||||||||||
As
of December 31, 2007
|
||||||||||||||||||||
Unconsolidated
|
||||||||||||||||||||
Guarantor
|
Non-Guarantor
|
Eliminations
and
|
||||||||||||||||||
Assets
|
Parent
|
Subsidiaries
|
Subsidiaries
|
Adjustments
|
Consolidated
|
|||||||||||||||
Current
assets
|
||||||||||||||||||||
Cash
and cash equivalents
|
$ | 26.9 | $ | 1.5 | $ | 88.1 | $ | — | $ | 116.5 | ||||||||||
Accounts
receivable, net
|
65.8 | 48.7 | 252.3 | — | 366.8 | |||||||||||||||
Intercompany
receivables
|
70.8 | 11.0 | (3.6 | ) | (78.2 | ) | — | |||||||||||||
Inventories
|
55.3 | 67.6 | 101.7 | (0.6 | ) | 224.0 | ||||||||||||||
Deferred
income taxes
|
29.4 | 4.0 | 7.6 | — | 41.0 | |||||||||||||||
Income
taxes receivable
|
54.7 | — | — | (34.5 | ) | 20.2 | ||||||||||||||
Asbestos-related
assets
|
4.0 | — | — | — | 4.0 | |||||||||||||||
Other
current assets
|
20.1 | 2.0 | 19.7 | — | 41.8 | |||||||||||||||
Total
current assets
|
327.0 | 134.8 | 465.8 | (113.3 | ) | 814.3 | ||||||||||||||
Property,
plant and equipment, net
|
132.0 | 155.1 | 372.9 | — | 660.0 | |||||||||||||||
Investments
in subsidiaries and advances, net
|
1,853.6 | 81.4 | — | (1,935.0 | ) | — | ||||||||||||||
Intangible
assets, net
|
134.2 | 2.2 | 24.8 | — | 161.2 | |||||||||||||||
Goodwill
|
59.3 | 39.7 | 428.9 | — | 527.9 | |||||||||||||||
Deferred
income taxes
|
363.0 | — | 14.1 | (6.3 | ) | 370.8 | ||||||||||||||
Asbestos-related
assets
|
24.1 | — | — | — | 24.1 | |||||||||||||||
Deferred
charges and other assets
|
69.4 | 25.7 | 25.0 | — | 120.1 | |||||||||||||||
Total
assets
|
$ | 2,962.6 | $ | 438.9 | $ | 1,331.5 | $ | (2,054.6 | ) | $ | 2,678.4 | |||||||||
Liabilities
and Stockholders' Equity
|
||||||||||||||||||||
Current
liabilities
|
||||||||||||||||||||
Accounts
payable
|
$ | 65.0 | $ | 31.8 | $ | 125.2 | $ | — | $ | 222.0 | ||||||||||
Intercompany
payables
|
1.8 | 47.0 | 29.1 | (77.9 | ) | — | ||||||||||||||
Asbestos-related
liabilities
|
28.0 | — | — | — | 28.0 | |||||||||||||||
Current
debt obligations
|
4.0 | — | 29.7 | — | 33.7 | |||||||||||||||
Vertac
obligations
|
20.0 | — | — | — | 20.0 | |||||||||||||||
Accrued
expenses
|
117.0 | 24.1 | 66.9 | (0.3 | ) | 207.7 | ||||||||||||||
Income
taxes payable
|
— | 36.7 | 11.1 | (34.5 | ) | 13.3 | ||||||||||||||
Deferred
income taxes
|
— | — | 9.5 | — | 9.5 | |||||||||||||||
Total
current liabilities
|
235.8 | 139.6 | 271.5 | (112.7 | ) | 534.2 | ||||||||||||||
Long-term
debt
|
740.2 | — | 22.1 | — | 762.3 | |||||||||||||||
Deferred
income taxes
|
— | 6.3 | 74.3 | (6.3 | ) | 74.3 | ||||||||||||||
Pension
obligations
|
109.3 | — | 49.4 | — | 158.7 | |||||||||||||||
Other
postretirement benefit obligations
|
119.6 | — | 3.5 | — | 123.1 | |||||||||||||||
Deferred
credits and other liabilities
|
268.5 | 12.5 | 17.7 | — | 298.7 | |||||||||||||||
Asbestos-related
liabilities
|
227.0 | — | — | — | 227.0 | |||||||||||||||
Intercompany
notes payable (receivable)
|
784.2 | (721.8 | ) | (62.4 | ) | — | — | |||||||||||||
Minority
interests
|
— | — | 22.1 | — | 22.1 | |||||||||||||||
Total
stockholders' equity
|
478.0 | 1,002.3 | 933.3 | (1,935.6 | ) | 478.0 | ||||||||||||||
Total
liabilities and stockholders' equity
|
$ | 2,962.6 | $ | 438.9 | $ | 1,331.5 | $ | (2,054.6 | ) | $ | 2,678.4 |
Condensed
Consolidating Balance Sheet
|
||||||||||||||||||||
As
of 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
|
212.8 | — | — | (42.0 | ) | 170.8 | ||||||||||||||
Other
current assets
|
12.3 | 2.4 | 19.4 | — | 34.1 | |||||||||||||||
Total
current assets
|
566.9 | 130.4 | 402.1 | (114.9 | ) | 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
|
$ | 3,999.3 | $ | 416.0 | $ | 1,209.9 | $ | (2,816.7 | ) | $ | 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
obligations
|
123.5 | — | — | — | 123.5 | |||||||||||||||
Accrued
expenses
|
119.8 | 16.6 | 55.8 | 0.1 | 192.3 | |||||||||||||||
Income
taxes payable
|
— | 51.7 | 14.8 | (42.0 | ) | 24.5 | ||||||||||||||
Deferred
income taxes
|
— | — | 11.8 | — | 11.8 | |||||||||||||||
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)
|
1,668.5 | (1,413.5 | ) | (255.0 | ) | — | — | |||||||||||||
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
|
$ | 3,999.3 | $ | 416.0 | $ | 1,209.9 | $ | (2,816.7 | ) | $ | 2,808.5 |
Condensed
Consolidating Statement of Cash Flows
|
||||||||||||||||||||
Year
Ended December 31, 2007
|
||||||||||||||||||||
Unconsolidated
|
||||||||||||||||||||
Parent
|
Guarantor
Subsidiaries
|
Non-
Guarantor
Subsidiaries
|
Eliminations
and
Adjustments
|
Consolidated
|
||||||||||||||||
Net
Cash Provided By Operating Activities
|
$ | 290.1 | $ | 90.0 | $ | 212.7 | $ | (292.9 | ) | $ | 299.9 | |||||||||
Cash
Flows From Investing Activities:
|
||||||||||||||||||||
Capital
expenditures
|
(23.7 | ) | (34.9 | ) | (59.7 | ) | — | (118.3 | ) | |||||||||||
Acquisitions
and investments, net
|
— | (16.5 | ) | — | — | (16.5 | ) | |||||||||||||
Proceeds
from sale of 51% interest in FiberVisions,
net
of transaction costs
|
(1.2 | ) | — | — | — | (1.2 | ) | |||||||||||||
Proceeds
of asset disposals, net of transaction costs
|
2.8 | — | 15.5 | — | 18.3 | |||||||||||||||
Net
cash used in investing activities
|
(22.1 | ) | (51.4 | ) | (44.2 | ) | — | (117.7 | ) | |||||||||||
Cash
Flows From Financing Activities:
|
||||||||||||||||||||
Long-term
debt proceeds
|
— | — | 3.8 | — | 3.8 | |||||||||||||||
Long-term
debt payments
|
(214.2 | ) | — | (2.6 | ) | — | (216.8 | ) | ||||||||||||
Change
in short-term debt
|
— | — | 9.4 | — | 9.4 | |||||||||||||||
Change
in intercompany advances
|
(72.6 | ) | (37.6 | ) | (132.5 | ) | 242.7 | — | ||||||||||||
Repurchase
of common stock
|
(46.1 | ) | — | — | — | (46.1 | ) | |||||||||||||
Dividends
paid
|
(5.7 | ) | — | — | — | (5.7 | ) | |||||||||||||
Intercompany
dividends paid
|
— | — | (50.2 | ) | 50.2 | — | ||||||||||||||
Proceeds
from the exercise of stock options
|
6.5 | — | — | — | 6.5 | |||||||||||||||
Other,
net
|
1.3 | — | — | — | 1.3 | |||||||||||||||
Net
cash used in financing activities
|
(330.8 | ) | (37.6 | ) | (172.1 | ) | 292.9 | (247.6 | ) | |||||||||||
Effect
of exchange rate changes on cash
|
— | — | 10.1 | — | 10.1 | |||||||||||||||
Net
(decrease) increase in cash and cash equivalents
|
(62.8 | ) | 1.0 | 6.5 | — | (55.3 | ) | |||||||||||||
Cash
and cash equivalents at beginning of year
|
89.7 | 0.5 | 81.6 | — | 171.8 | |||||||||||||||
Cash
and cash equivalents at end of year
|
$ | 26.9 | $ | 1.5 | $ | 88.1 | $ | — | $ | 116.5 |
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
Flows 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 asset disposals, net of transaction costs
|
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
Flows 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 | — | |||||||||||||
Intercompany
dividends paid
|
— | — | (53.0 | ) | 53.0 | — | ||||||||||||||
Proceeds
from the exercise of stock options
|
37.0 | — | — | — | 37.0 | |||||||||||||||
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
Flows From Investing Activities:
|
||||||||||||||||||||
Capital
expenditures
|
(16.7 | ) | (26.7 | ) | (24.1 | ) | — | (67.5 | ) | |||||||||||
Acquisitions
and investments, net
|
— | — | (4.4 | ) | — | (4.4 | ) | |||||||||||||
Proceeds
of asset disposals net of transaction costs
|
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
Flows 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 | ) | — | |||||||||||||
Intercompany
dividends paid
|
— | — | (43.2 | ) | 43.2 | — | ||||||||||||||
Proceeds
from the exercise of stock options
|
2.7 | — | — | — | 2.7 | |||||||||||||||
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 |
26. Summary of Quarterly Results (Unaudited)
|
||||||||||||||||||||||||||||||||||||||||
1st
Quarter
|
2nd
Quarter
|
3rd
Quarter
|
4th
Quarter
|
Year
|
||||||||||||||||||||||||||||||||||||
2007
|
2006
|
2007
|
2006
|
2007
|
2006
|
2007
|
2006
|
2007
|
2006
|
|||||||||||||||||||||||||||||||
$ | 502.3 | $ | 527.3 | $ | 549.0 | $ | 501.0 | $ | 544.2 | $ | 513.1 | $ | 540.7 | $ | 493.9 | $ | 2,136.2 | $ | 2,035.3 | |||||||||||||||||||||
Cost
of sales
|
323.4 | 360.7 | 358.8 | 324.7 | 358.0 | 332.2 | 365.5 | 325.8 | 1,405.7 | 1,343.4 | ||||||||||||||||||||||||||||||
Selling,
general and administrative expenses
|
93.7 | 91.3 | 95.2 | 90.7 | 94.5 | 92.8 | 93.5 | 97.4 | 376.9 | 372.2 | ||||||||||||||||||||||||||||||
Research
and development
|
10.4 | 9.6 | 11.0 | 9.4 | 11.0 | 9.3 | 11.4 | 10.5 | 43.8 | 38.8 | ||||||||||||||||||||||||||||||
Intangible
asset amortization
|
1.8 | 1.6 | 1.9 | 2.0 | 2.4 | 1.8 | 2.6 | 1.8 | 8.7 | 7.2 | ||||||||||||||||||||||||||||||
Other
operating expense, net
|
13.1 | 7.2 | 7.6 | 8.6 | 5.4 | 4.6 | 10.8 | 4.7 | 36.9 | 25.1 | ||||||||||||||||||||||||||||||
Profit
from operations
|
59.9 | 56.9 | 74.5 | 65.6 | 72.9 | 72.4 | 56.9 | 53.7 | 264.2 | 248.6 | ||||||||||||||||||||||||||||||
Interest
and debt expense
|
17.2 | 20.7 | 17.8 | 16.7 | 17.0 | 16.7 | 16.6 | 17.1 | 68.6 | 71.2 | ||||||||||||||||||||||||||||||
Vertac
response costs and litigation charges
|
1.5 | — | 17.5 | 106.0 | 1.0 | 1.0 | 0.3 | 1.5 | 20.3 | 108.5 | ||||||||||||||||||||||||||||||
Other
expense, net
|
3.3 | 10.6 | 15.7 | 21.1 | 3.9 | 4.6 | 1.1 | 29.4 | 24.0 | 65.7 | ||||||||||||||||||||||||||||||
Income
(loss) before income taxes, minority interests and equity (loss)
income
|
37.9 | 25.6 | 23.5 | (78.2 | ) | 51.0 | 50.1 | 38.9 | 5.7 | 151.3 | 3.2 | |||||||||||||||||||||||||||||
(Benefit)
provision for income taxes
|
(36.6 | ) | 10.7 | (11.5 | ) | (27.5 | ) | 10.9 | 14.1 | 16.9 | (189.5 | ) | (20.3 | ) | (192.2 | ) | ||||||||||||||||||||||||
Income
(loss) before minority interests and equity (loss) income
|
74.5 | 14.9 | 35.0 | (50.7 | ) | 40.1 | 36.0 | 22.0 | 195.2 | 171.6 | 195.4 | |||||||||||||||||||||||||||||
Minority
interests in (earnings) loss of consolidated subsidiaries
|
(0.5 | ) | (0.1 | ) | (0.5 | ) | (0.3 | ) | 0.3 | (0.4 | ) | 0.1 | (0.6 | ) | (0.6 | ) | (1.4 | ) | ||||||||||||||||||||||
Equity
(loss) income of affiliated companies, net of tax
|
(0.5 | ) | (0.4 | ) | — | (0.6 | ) | 1.0 | (1.1 | ) | (0.6 | ) | (1.1 | ) | (0.1 | ) | (3.2 | ) | ||||||||||||||||||||||
Net
income (loss) from continuing operations before discontinued operations
and cumulative effect of changes in accounting principle
|
73.5 | 14.4 | 34.5 | (51.6 | ) | 41.4 | 34.5 | 21.5 | 193.5 | 170.9 | 190.8 | |||||||||||||||||||||||||||||
Net
income (loss) from discontinued operations, net of tax
|
— | (0.6 | ) | — | (0.7 | ) | 1.0 | (0.3 | ) | 7.0 | 48.6 | 8.0 | 47.0 | |||||||||||||||||||||||||||
Net
income (loss) before cumulative effect of changes in
|
||||||||||||||||||||||||||||||||||||||||
accounting
principle
|
73.5 | 13.8 | 34.5 | (52.3 | ) | 42.4 | 34.2 | 28.5 | 242.1 | 178.9 | 237.8 | |||||||||||||||||||||||||||||
Cumulative
effect of changes in accounting principle
|
— | 0.9 | — | — | — | — | — | — | — | 0.9 | ||||||||||||||||||||||||||||||
Net
income (loss)
|
$ | 73.5 | $ | 14.7 | $ | 34.5 | $ | (52.3 | ) | $ | 42.4 | $ | 34.2 | $ | 28.5 | $ | 242.1 | $ | 178.9 | $ | 238.7 | |||||||||||||||||||
Basic
earnings (loss) per share:
|
||||||||||||||||||||||||||||||||||||||||
Continuing
operations
|
$ | 0.64 | $ | 0.13 | $ | 0.30 | $ | (0.46 | ) | $ | 0.36 | $ | 0.31 | $ | 0.19 | $ | 1.72 | $ | 1.50 | $ | 1.72 | |||||||||||||||||||
Discontinued
operations
|
— | (0.01 | ) | — | (0.01 | ) | 0.01 | — | 0.06 | 0.43 | 0.07 | 0.42 | ||||||||||||||||||||||||||||
Cumulative
effect of changes in accounting principle
|
— | 0.01 | — | — | — | — | — | — | — | 0.01 | ||||||||||||||||||||||||||||||
Net
income (loss)
|
$ | 0.64 | $ | 0.13 | $ | 0.30 | $ | (0.47 | ) | $ | 0.37 | $ | 0.31 | $ | 0.25 | $ | 2.15 | $ | 1.57 | $ | 2.15 | |||||||||||||||||||
Diluted
earnings (loss) per share:
|
||||||||||||||||||||||||||||||||||||||||
Continuing
operations
|
$ | 0.64 | $ | 0.13 | $ | 0.30 | $ | (0.46 | ) | $ | 0.36 | $ | 0.31 | $ | 0.19 | $ | 1.71 | $ | 1.49 | $ | 1.71 | |||||||||||||||||||
Discontinued
operations
|
— | (0.01 | ) | — | (0.01 | ) | 0.01 | — | 0.06 | 0.43 | 0.07 | 0.42 | ||||||||||||||||||||||||||||
Cumulative
effect of changes in accounting principle
|
— | 0.01 | — | — | — | — | — | — | — | 0.01 | ||||||||||||||||||||||||||||||
Net
income (loss)
|
$ | 0.64 | $ | 0.13 | $ | 0.30 | $ | (0.47 | ) | $ | 0.37 | $ | 0.31 | $ | 0.25 | $ | 2.14 | $ | 1.56 | $ | 2.14 | |||||||||||||||||||
Dividends
declared per share
|
— | — | — | — | $ | 0.05 | — | $ | 0.05 | — | $ | 0.10 | — |