Mark
One
|
ý QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For
the quarterly period ended June 30, 2008
OR
|
oTRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Page
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46
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47
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(Unaudited)
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||||||||||||||||
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||||||
As
Adjusted
|
As
Adjusted
|
|||||||||||||||
(Note 6)
|
(Note 6)
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Net
sales
|
$ | 612.6 | $ | 549.0 | $ | 1,170.9 | $ | 1,051.3 | ||||||||
Cost
of sales
|
420.1 | 358.8 | 794.5 | 682.2 | ||||||||||||
Selling,
general and administrative expenses
|
98.6 | 84.8 | 193.2 | 168.2 | ||||||||||||
Research
and development
|
11.4 | 11.0 | 22.5 | 21.4 | ||||||||||||
Intangible
asset amortization (Note 4)
|
2.7 | 1.9 | 5.3 | 3.7 | ||||||||||||
Other
operating expense, net (Note 12)
|
4.6 | 7.6 | 12.8 | 20.7 | ||||||||||||
Profit
from operations
|
75.2 | 84.9 | 142.6 | 155.1 | ||||||||||||
Interest
and debt expense
|
18.3 | 17.8 | 35.0 | 35.0 | ||||||||||||
Vertac
response costs and litigation charges (Note
8)
|
0.3 | 17.5 | 0.5 | 19.0 | ||||||||||||
Other
expense, net (Note 13)
|
8.4 | 15.7 | 15.3 | 19.0 | ||||||||||||
Income
before income taxes, minority interests and equity loss
|
48.2 | 33.9 | 91.8 | 82.1 | ||||||||||||
Provision
(benefit) for income taxes (Note 14)
|
12.6 | (7.9 | ) | 24.1 | (41.0 | ) | ||||||||||
Income
before minority interests and equity loss
|
35.6 | 41.8 | 67.7 | 123.1 | ||||||||||||
Minority
interests in losses (earnings) of consolidated
subsidiaries
|
(0.3 | ) | (0.5 | ) | 0.9 | (1.0 | ) | |||||||||
Equity
loss of affiliated companies, net of tax
|
(0.2 | ) | — | (1.1 | ) | (0.5 | ) | |||||||||
Net
income from continuing operations before discontinued
operations
|
35.1 | 41.3 | 67.5 | 121.6 | ||||||||||||
Net
income from discontinued operations, net of tax (Note
1)
|
25.9 | — | 25.9 | — | ||||||||||||
Net
income
|
$ | 61.0 | $ | 41.3 | $ | 93.4 | $ | 121.6 | ||||||||
Earnings
per share (Note 15):
|
||||||||||||||||
Basic
earnings per share
|
||||||||||||||||
Continuing
operations
|
$ | 0.32 | $ | 0.36 | $ | 0.61 | $ | 1.06 | ||||||||
Discontinued
operations
|
0.23 | — | 0.23 | — | ||||||||||||
Net income
|
$ | 0.55 | $ | 0.36 | $ | 0.84 | $ | 1.06 | ||||||||
Weighted
average number of shares (millions)
|
111.4 | 114.6 | 111.6 | 114.3 | ||||||||||||
Diluted
earnings per share
|
||||||||||||||||
Continuing
operations
|
$ | 0.31 | $ | 0.36 | $ | 0.60 | $ | 1.06 | ||||||||
Discontinued
operations
|
0.23 | — | 0.23 | — | ||||||||||||
Net income
|
$ | 0.54 | $ | 0.36 | $ | 0.83 | $ | 1.06 | ||||||||
Weighted
average number of shares (millions)
|
112.1 | 115.3 | 112.2 | 115.0 | ||||||||||||
Dividends
declared per share
|
$ | 0.05 | — | $ | 0.10 | — | ||||||||||
Net
income
|
$ | 61.0 | $ | 41.3 | $ | 93.4 | $ | 121.6 | ||||||||
Other
comprehensive income:
|
||||||||||||||||
Foreign
currency translation
|
2.4 | 18.8 | 47.0 | 24.4 | ||||||||||||
Pension
and postretirement benefit adjustments, net of tax
|
0.8 | 1.6 | 1.2 | 1.7 | ||||||||||||
Revaluation
of net investment hedges, net of tax
|
1.5 | (2.9 | ) | (31.8 | ) | (7.5 | ) | |||||||||
4.7 | 17.5 | 16.4 | 18.6 | |||||||||||||
Comprehensive
income
|
$ | 65.7 | $ | 58.8 | $ | 109.8 | $ | 140.2 |
(Dollars
in millions)
|
(Unaudited)
|
|||||||
As
Adjusted
|
||||||||
(Note 6)
|
||||||||
June
30,
2008
|
December 31,
2007
|
|||||||
ASSETS
|
||||||||
Current
assets
|
||||||||
Cash
and cash equivalents
|
$ | 106.6 | $ | 116.5 | ||||
Accounts
receivable, net of allowance (2008 – $7.3; 2007 – $4.5)
|
435.8 | 366.8 | ||||||
Inventories
(Note 10)
|
244.6 | 224.0 | ||||||
Deferred
income taxes
|
34.1 | 41.0 | ||||||
Income
taxes receivable
|
24.6 | 20.2 | ||||||
Asbestos-related
assets (Note 8)
|
— | 4.0 | ||||||
Other
current assets
|
46.3 | 41.8 | ||||||
Total
current assets
|
892.0 | 814.3 | ||||||
Property,
plant, and equipment, net (Note 10)
|
698.9 | 660.0 | ||||||
Intangible
assets, net (Note 4)
|
157.7 | 161.2 | ||||||
Goodwill
(Note 4)
|
551.9 | 527.9 | ||||||
Deferred
income taxes
|
370.5 | 370.8 | ||||||
Asbestos-related
assets (Note 8)
|
9.6 | 24.1 | ||||||
Deferred
charges and other assets
|
110.1 | 120.1 | ||||||
Total
assets
|
$ | 2,790.7 | $ | 2,678.4 | ||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
Current
liabilities
|
||||||||
Accounts
payable
|
$ | 236.3 | $ | 222.0 | ||||
Asbestos-related
liabilities (Note 8)
|
28.0 | 28.0 | ||||||
Current
debt obligations (Note 5)
|
54.9 | 33.7 | ||||||
Vertac
obligations (Note 8)
|
20.5 | 20.0 | ||||||
Accrued
expenses
|
200.5 | 207.7 | ||||||
Income
taxes payable
|
17.0 | 13.3 | ||||||
Deferred
income taxes
|
8.8 | 9.5 | ||||||
Total
current liabilities
|
566.0 | 534.2 | ||||||
Long-term
debt (Note 5)
|
761.8 | 762.3 | ||||||
Deferred
income taxes
|
78.7 | 74.3 | ||||||
Pension
obligations
|
163.0 | 158.7 | ||||||
Other
postretirement benefit obligations
|
118.4 | 123.1 | ||||||
Deferred
credits and other liabilities
|
306.1 | 298.7 | ||||||
Asbestos-related
liabilities (Note 8)
|
216.3 | 227.0 | ||||||
Total
liabilities
|
2,210.3 | 2,178.3 | ||||||
Commitments
and contingencies (Note 8)
|
— | — | ||||||
Minority
interests
|
21.1 | 22.1 | ||||||
Stockholders’
equity (Note 9)
|
||||||||
Series preferred
stock
|
— | — | ||||||
Common
stock, $25/48 par value (shares issued: 2008 and 2007 – 160.0
million)
|
83.3 | 83.3 | ||||||
Additional
paid-in capital
|
422.6 | 438.3 | ||||||
Unearned
compensation
|
(15.2 | ) | (29.8 | ) | ||||
Accumulated
other comprehensive losses
|
(6.4 | ) | (22.8 | ) | ||||
Retained
earnings
|
1,692.2 | 1,610.1 | ||||||
2,176.5 | 2,079.1 | |||||||
Reacquired
stock, at cost (2008 – 47.4 million shares; 2007 – 46.0 million
shares)
|
(1,617.2 | ) | (1,601.1 | ) | ||||
Total
stockholders’ equity
|
559.3 | 478.0 | ||||||
Total
liabilities and stockholders’ equity
|
$ | 2,790.7 | $ | 2,678.4 |
(Dollars
in millions)
|
(Unaudited)
|
|||||||
Six
Months Ended
June
30,
|
||||||||
As
Adjusted
|
||||||||
(Note 6)
|
||||||||
2008
|
2007
|
|||||||
Cash
Flows from Operating Activities:
|
||||||||
Net
income
|
$ | 93.4 | $ | 121.6 | ||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
Depreciation
|
37.2 | 34.9 | ||||||
Amortization
|
15.9 | 19.1 | ||||||
Deferred
income tax provision
|
8.9 | 15.6 | ||||||
Gain
on disposal of assets and investments, net
|
(3.7 | ) | (4.2 | ) | ||||
Dilution
of investment and loss on sale of 51% interest in
FiberVisions
|
— | (0.3 | ) | |||||
Minority
interests in (losses) earnings of consolidated
subsidiaries
|
(0.9 | ) | 1.0 | |||||
Stock-based
compensation
|
4.4 | 6.0 | ||||||
Other
non-cash charges and credits, net
|
4.8 | (0.8 | ) | |||||
Accruals
and deferrals of cash receipts and payments (net of acquisitions and
dispositions):
|
||||||||
Accounts
receivable, net
|
(55.0 | ) | (43.8 | ) | ||||
Inventories
|
(11.4 | ) | (9.9 | ) | ||||
Asbestos-related
assets and liabilities, net
|
7.4 | 43.8 | ||||||
Other
current assets
|
(2.4 | ) | (3.2 | ) | ||||
Accounts
payable
|
3.9 | (4.2 | ) | |||||
Vertac
obligations
|
0.5 | (104.8 | ) | |||||
Accrued
expenses
|
(5.3 | ) | 7.5 | |||||
Income
taxes receivable and payable, net
|
14.3 | 107.1 | ||||||
Pension
and other postretirement benefit obligations
|
(4.5 | ) | (29.4 | ) | ||||
Non-current
assets and liabilities
|
(39.6 | ) | (15.5 | ) | ||||
Net
cash provided by operating activities
|
67.9 | 140.5 | ||||||
Cash
Flows from Investing Activities:
|
||||||||
Capital
expenditures
|
(45.4 | ) | (53.8 | ) | ||||
Acquisitions
and investments, net
|
(9.0 | ) | (0.9 | ) | ||||
Proceeds
from sale of 51% interest in FiberVisions, net
|
— | (1.2 | ) | |||||
Proceeds
of asset disposals, net of transaction costs
|
3.0 | 11.4 | ||||||
Other
|
— | (0.1 | ) | |||||
Net
cash used in investing activities
|
(51.4 | ) | (44.6 | ) | ||||
Cash
Flows from Financing Activities:
|
||||||||
Long-term
debt proceeds
|
— | 3.3 | ||||||
Long-term
debt payments
|
(2.3 | ) | (47.0 | ) | ||||
Change
in short-term debt
|
16.4 | 5.8 | ||||||
Repurchase
of common stock
|
(37.3 | ) | — | |||||
Dividends
paid
|
(10.9 | ) | — | |||||
Proceeds
from the exercise of stock options
|
0.9 | 4.9 | ||||||
Other,
net including income tax benefits attributable to stock-based
compensation
|
0.8 | 2.1 | ||||||
Net
cash used in financing activities
|
(32.4 | ) | (30.9 | ) | ||||
Effect
of exchange rate changes on cash
|
6.0 | 1.1 | ||||||
Net
(decrease) increase in cash and cash equivalents
|
(9.9 | ) | 66.1 | |||||
Cash
and cash equivalents – beginning of period
|
116.5 | 171.8 | ||||||
Cash
and cash equivalents – end of period
|
$ | 106.6 | $ | 237.9 |
1.
|
Basis of
Presentation
|
Recent
Accounting Pronouncements
|
Acquisitions
and Investments
|
Intangible
Assets and Goodwill
|
June
30, 2008
|
December
31, 2007
|
|||||||||||||||||||||||
Accumulated
|
Accumulated
|
|||||||||||||||||||||||
Gross
|
Amortization
|
Net
|
Gross
|
Amortization
|
Net
|
|||||||||||||||||||
Customer
relationships
|
$ | 95.6 | $ | 22.5 | $ | 73.1 | $ | 95.6 | $ | 21.1 | $ | 74.5 | ||||||||||||
Trademarks
and tradenames
|
76.2 | 18.6 | 57.6 | 76.2 | 17.6 | 58.6 | ||||||||||||||||||
Other
intangible assets
|
52.7 | 25.7 | 27.0 | 51.0 | 22.9 | 28.1 | ||||||||||||||||||
$ | 224.5 | $ | 66.8 | $ | 157.7 | $ | 222.8 | $ | 61.6 | $ | 161.2 |
Paper
Technologies and Ventures
|
Aqualon
Group
|
Total
|
||||||||||
Balance
at January 1, 2008
|
$ | 471.6 | $ | 56.3 | $ | 527.9 | ||||||
Foreign
currency translation and other changes
|
23.0 | 1.0 | 24.0 | |||||||||
Balance
at June 30, 2008
|
$ | 494.6 | $ | 57.3 | $ | 551.9 |
June
30,
2008
|
December 31,
2007
|
|||||||
Term
B Loan due 2010
|
$ | 259.0 | $ | 261.0 | ||||
6.6%
notes due 2027
|
15.9 | 15.9 | ||||||
6.75%
senior subordinated notes due 2029
|
250.0 | 250.0 | ||||||
8%
convertible subordinated debentures due 2010
|
2.2 | 2.3 | ||||||
6.5%
junior subordinated deferrable interest debentures due
2029
|
215.6 | 215.1 | ||||||
Term
loans of Hercules Tianpu at rates ranging from 4.33% to 8.22% through
2011(1)
|
49.8 | 42.4 | ||||||
Term
loans of Hercules Jiangmen at rates ranging from 6.24% to 8.22% through
2010
|
17.2 | 7.5 | ||||||
Other
|
7.0 | 1.8 | ||||||
816.7 | 796.0 | |||||||
Less:
Current debt obligations
|
54.9 | 33.7 | ||||||
Long-term
debt
|
$ | 761.8 | $ | 762.3 |
Pension
and Other Postretirement Benefits
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||||||||||
June
30, 2007
|
June
30, 2007
|
|||||||||||||||||||||||
As
|
Effect
of
|
As
|
As
|
Effect
of
|
As
|
|||||||||||||||||||
Reported
|
Change
|
Adjusted
|
Reported
|
Change
|
Adjusted
|
|||||||||||||||||||
Selling,
general and administrative expenses
|
$ | 95.2 | $ | (10.4 | ) | $ | 84.8 | $ | 188.9 | $ | (20.7 | ) | $ | 168.2 | ||||||||||
Profit
from operations
|
74.5 | 10.4 | 84.9 | 134.4 | 20.7 | 155.1 | ||||||||||||||||||
(Benefit)
provision for income taxes
|
(11.5 | ) | 3.6 | (7.9 | ) | (48.1 | ) | 7.1 | (41.0 | ) | ||||||||||||||
Net
income from continuing operations
|
34.5 | 6.8 | 41.3 | 108.0 | 13.6 | 121.6 | ||||||||||||||||||
Net
income
|
34.5 | 6.8 | 41.3 | 108.0 | 13.6 | 121.6 | ||||||||||||||||||
Basic
earnings per share
|
$ | 0.30 | $ | 0.06 | $ | 0.36 | $ | 0.95 | $ | 0.11 | $ | 1.06 | ||||||||||||
Diluted
earnings per share
|
$ | 0.30 | $ | 0.06 | $ | 0.36 | $ | 0.94 | $ | 0.12 | $ | 1.06 |
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||||||||||
June
30, 2008
|
June
30, 2008
|
|||||||||||||||||||||||
Previous
|
Effect
of
|
Current
|
Previous
|
Effect
of
|
Current
|
|||||||||||||||||||
Method
|
Change
|
Method
|
Method
|
Change
|
Method
|
|||||||||||||||||||
Selling,
general and administrative expenses
|
$ | 109.5 | $ | (10.9 | ) | $ | 98.6 | $ | 215.1 | $ | (21.9 | ) | $ | 193.2 | ||||||||||
Profit
from operations
|
64.3 | 10.9 | 75.2 | 120.7 | 21.9 | 142.6 | ||||||||||||||||||
Provision
for income taxes
|
8.8 | 3.8 | 12.6 | 16.5 | 7.6 | 24.1 | ||||||||||||||||||
Net
income from continuing operations
|
28.0 | 7.1 | 35.1 | 53.2 | 14.3 | 67.5 | ||||||||||||||||||
Net
income
|
53.9 | 7.1 | 61.0 | 79.1 | 14.3 | 93.4 | ||||||||||||||||||
Basic
earnings per share – continuing operations
|
$ | 0.26 | $ | 0.06 | $ | 0.32 | $ | 0.48 | $ | 0.13 | $ | 0.61 | ||||||||||||
Diluted
earnings per share – continuing operations
|
$ | 0.25 | $ | 0.06 | $ | 0.31 | $ | 0.47 | $ | 0.13 | $ | 0.60 | ||||||||||||
Basic
earnings per share – net income
|
$ | 0.49 | $ | 0.06 | $ | 0.55 | $ | 0.71 | $ | 0.13 | $ | 0.84 | ||||||||||||
Diluted
earnings per share – net income
|
$ | 0.48 | $ | 0.06 | $ | 0.54 | $ | 0.70 | $ | 0.13 | $ | 0.83 |
Pension
Benefits
|
||||||||||||||||
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||||||
As
Adjusted
|
As
Adjusted
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Net
periodic benefit cost:
|
||||||||||||||||
Service
cost
|
$ | 3.9 | $ | 4.3 | $ | 7.9 | $ | 8.8 | ||||||||
Interest
cost
|
27.1 | 25.8 | 54.1 | 51.7 | ||||||||||||
Expected
return on plan assets
|
(27.9 | ) | (31.4 | ) | (55.8 | ) | (62.6 | ) | ||||||||
Amortization
and deferrals
|
(0.6 | ) | (0.6 | ) | (1.3 | ) | (1.3 | ) | ||||||||
Actuarial
losses recognized
|
1.0 | 1.2 | 2.0 | 2.7 | ||||||||||||
$ | 3.5 | $ | (0.7 | ) | $ | 6.9 | $ | (0.7 | ) |
Other
Postretirement Benefits
|
||||||||||||||||
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Net
periodic benefit cost:
|
||||||||||||||||
Service
cost
|
$ | 0.1 | $ | 0.1 | $ | 0.2 | $ | 0.2 | ||||||||
Interest
cost
|
2.0 | 1.9 | 3.9 | 4.1 | ||||||||||||
Amortization
and deferrals
|
(1.8 | ) | (2.0 | ) | (3.5 | ) | (3.9 | ) | ||||||||
Actuarial
losses recognized
|
2.5 | 2.1 | 5.0 | 4.3 | ||||||||||||
$ | 2.8 | $ | 2.1 | $ | 5.6 | $ | 4.7 |
Asset
Retirement Obligations and Environmental
Contingencies
|
Active
Sites
|
Inactive
Sites
|
Total
|
||||||||||
Balance
at January 1, 2008
|
$ | 10.8 | $ | 67.5 | $ | 78.3 | ||||||
Settlement
payments, net of cost recoveries
|
(0.5 | ) | (2.6 | ) | (3.1 | ) | ||||||
Changes
in estimated obligations and accretion
|
0.5 | 4.9 | 5.4 | |||||||||
Foreign
currency translation and other changes
|
(1.3 | ) | 1.8 | 0.5 | ||||||||
Balance
at June 30, 2008
|
$ | 9.5 | $ | 71.6 | $ | 81.1 |
Commitments
and Contingencies
|
Balance
January 1, 2008
|
Interest
Income/
Accrual
adjustments, net
|
Insurance
Recovered/
Liabilities
Settled
|
Accretion/
Reclassifi-
cation
|
Balance
June
30,
2008
|
||||||||||||||||
Asbestos-related
assets:
|
||||||||||||||||||||
Insurance
receivable – current
|
$ | 4.0 | $ | — | $ | (4.0 | ) | $ | — | $ | — | |||||||||
Insurance
receivable – non-current
|
16.8 | (0.4 | ) | (16.4 | ) | — | — | |||||||||||||
Restricted
cash in trust
|
7.3 | — | 2.3 | — | 9.6 | |||||||||||||||
Noncurrent
asbestos-related assets
|
24.1 | (0.4 | ) | (14.1 | ) | — | 9.6 | |||||||||||||
Total
asbestos-related assets
|
$ | 28.1 | $ | (0.4 | ) | $ | (18.1 | ) | $ | — | $ | 9.6 | ||||||||
Asbestos-related
liabilities:
|
||||||||||||||||||||
Current
reserve for claims
|
$ | 28.0 | $ | — | $ | — | $ | — | $ | 28.0 | ||||||||||
Noncurrent
reserve for claims
|
227.0 | — | (10.7 | ) | — | 216.3 | ||||||||||||||
Total
asbestos-related liabilities
|
$ | 255.0 | $ | — | $ | (10.7 | ) | $ | — | $ | 244.3 |
Common
Stock
|
Reacquired
Stock
|
|||||||
Balances
at January 1, 2008
|
160,004,908 | 46,006,780 | ||||||
Conversion
of debentures
|
3,354 | — | ||||||
Exercise
of stock options
|
— | (76,166 | ) | |||||
Issuance
of stock awards, net of forfeitures
|
— | (356,164 | ) | |||||
Shares
redeemed in lieu of taxes on share-based compensation
awards
|
— | 115,255 | ||||||
Contribution
of shares to defined contribution benefit plan
|
— | (10,864 | ) | |||||
Repurchases
of common stock
|
— | 1,674,200 | ||||||
Balances
at June 30, 2008
|
160,008,262 | 47,353,041 |
June
30, 2008
|
December 31,
2007
|
|||||||
Inventories:
|
||||||||
Finished
goods
|
$ | 131.0 | $ | 125.5 | ||||
Raw
materials and work-in-process
|
88.5 | 74.9 | ||||||
Supplies
|
25.1 | 23.6 | ||||||
$ | 244.6 | $ | 224.0 | |||||
Property,
plant and equipment:
|
||||||||
Land
|
$ | 16.6 | $ | 16.0 | ||||
Buildings
and equipment
|
1,813.5 | 1,726.4 | ||||||
Construction
in progress
|
128.4 | 113.7 | ||||||
1,958.5 | 1,856.1 | |||||||
Accumulated
depreciation and amortization
|
(1,259.6 | ) | (1,196.1 | ) | ||||
$ | 698.9 | $ | 660.0 |
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Depreciation:
|
||||||||||||||||
Included
in Cost of sales and Selling, general and administrative (“SG&A”)
expenses
|
$ | 18.9 | $ | 17.6 | $ | 37.1 | $ | 34.4 | ||||||||
Accelerated
depreciation included in Other operating expense, net
|
— | 0.2 | 0.1 | 0.5 | ||||||||||||
$ | 18.9 | $ | 17.8 | $ | 37.2 | $ | 34.9 | |||||||||
Amortization:
|
||||||||||||||||
Intangible
assets
|
$ | 2.7 | $ | 1.9 | $ | 5.3 | $ | 3.7 | ||||||||
Capitalized
software (normal basis) included in SG&A expenses
|
1.9 | 3.9 | 5.7 | 7.7 | ||||||||||||
Accelerated
amortization of capitalized software included in Other operating expense,
net
|
1.2 | 3.4 | 4.6 | 6.9 | ||||||||||||
Deferred
financing costs included in Interest and debt expense
|
0.1 | 0.4 | 0.3 | 0.8 | ||||||||||||
$ | 5.9 | $ | 9.6 | $ | 15.9 | $ | 19.1 | |||||||||
Cash
paid during the period for:
|
||||||||||||||||
Interest
|
$ | 21.3 | $ | 20.2 | $ | 36.4 | $ | 33.6 | ||||||||
Income
taxes, net of refunds received
|
6.8 | (178.7 | ) | 13.7 | (171.6 | ) |
Severance
and Other
Exit
Costs
|
Asset
Charges
|
Total
|
||||||||||
Business
and Corporate infrastructure projects
|
$ | 2.7 | $ | 5.2 | $ | 7.9 | ||||||
All
other restructuring programs
|
5.3 | 0.1 | 5.4 | |||||||||
$ | 8.0 | $ | 5.3 | $ | 13.3 | |||||||
Paper
Technologies and Ventures
|
$ | 2.2 | $ | — | $ | 2.2 | ||||||
Aqualon
Group
|
0.4 | — | 0.4 | |||||||||
Corporate
|
5.4 | 5.3 | 10.7 | |||||||||
$ | 8.0 | $ | 5.3 | $ | 13.3 |
Six
Months Ended June 30,
|
||||||||
2008
|
2007
|
|||||||
Balance
at beginning of period
|
$ | 19.1 | $ | 10.5 | ||||
Accrued
charges for severance and other exit costs
|
7.6 | 14.3 | ||||||
Cash
payments
|
(11.5 | ) | (7.6 | ) | ||||
Other,
including foreign currency translation
|
1.3 | 0.3 | ||||||
Balance
at end of period
|
$ | 16.5 | $ | 17.5 |
Three
Months Ended
June
30
|
Six
Months Ended
June
30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Severance,
restructuring and other exit costs, net
|
$ | 4.9 | $ | 6.2 | $ | 8.0 | $ | 14.8 | ||||||||
Accelerated
depreciation and amortization
|
1.2 | 3.7 | 4.7 | 7.4 | ||||||||||||
Asset
retirement and environmental charges (active sites)
|
0.3 | 0.1 | 0.5 | 0.2 | ||||||||||||
Asset
impairment
|
0.6 | — | 0.6 | — | ||||||||||||
Legal
settlements
|
— | — | — | (0.2 | ) | |||||||||||
Gains
on asset dispositions, net
|
(3.1 | ) | (4.1 | ) | (3.3 | ) | (4.0 | ) | ||||||||
Dismantlement
costs
|
0.4 | 1.0 | 1.2 | 1.7 | ||||||||||||
Other
miscellaneous charges, net
|
0.3 | 0.7 | 1.1 | 0.8 | ||||||||||||
$ | 4.6 | $ | 7.6 | $ | 12.8 | $ | 20.7 |
|
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Asbestos-related
costs, net
|
$ | 2.0 | $ | 2.2 | $ | 5.0 | $ | 4.3 | ||||||||
Investment
dilution and loss on sale of 51% interest in FiberVisions
|
— | (0.1 | ) | — | (0.3 | ) | ||||||||||
Asset
retirement and environmental charges (inactive sites)
(1)
|
6.3 | 1.4 | 8.9 | 2.9 | ||||||||||||
Litigation
settlements and accruals
|
1.0 | 13.8 | 1.8 | 14.5 | ||||||||||||
Gains
on asset dispositions, net
|
— | (0.4 | ) | — | (0.4 | ) | ||||||||||
Other,
net
|
(0.9 | ) | (1.2 | ) | (0.4 | ) | (2.0 | ) | ||||||||
$ | 8.4 | $ | 15.7 | $ | 15.3 | $ | 19.0 |
Income
Taxes
|
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Weighted-average
number of common shares outstanding – Basic
|
111.4 | 114.6 | 111.6 | 114.3 | ||||||||||||
Dilutive
effect of:
|
||||||||||||||||
Convertible
debentures
|
0.2 | 0.2 | 0.2 | 0.2 | ||||||||||||
Share-based compensation
plans
|
0.5 | 0.5 | 0.4 | 0.5 | ||||||||||||
Weighted-average
number of common shares outstanding – Diluted
|
112.1 | 115.3 | 112.2 | 115.0 | ||||||||||||
The
following were antidilutive and therefore excluded from the computation of
diluted earnings per share:
|
||||||||||||||||
Options to purchase common
stock
|
1.3 | 1.9 | 1.3 | 1.9 | ||||||||||||
Warrants to purchase common
stock
|
6.6 | 6.6 | 6.6 | 6.6 | ||||||||||||
7.9 | 8.5 | 7.9 | 8.5 |
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Net
sales:
|
||||||||||||||||
Paper
Technologies and Ventures
|
$ | 310.0 | $ | 288.3 | $ | 612.9 | $ | 571.5 | ||||||||
Aqualon
Group
|
302.6 | 260.7 | 558.0 | 479.8 | ||||||||||||
|
$ | 612.6 | $ | 549.0 | $ | 1,170.9 | $ | 1,051.3 | ||||||||
Profit
from operations(1)(2):
|
||||||||||||||||
Paper
Technologies and Ventures
|
$ | 23.9 | $ | 31.8 | $ | 53.6 | $ | 65.4 | ||||||||
Aqualon
Group
|
56.6 | 62.5 | 104.6 | 114.8 | ||||||||||||
Corporate
items (3)
|
(5.3 | ) | (9.4 | ) | (15.6 | ) | (25.1 | ) | ||||||||
|
$ | 75.2 | $ | 84.9 | $ | 142.6 | $ | 155.1 | ||||||||
Depreciation
and amortization:
|
||||||||||||||||
Paper
Technologies and Ventures
|
$ | 9.6 | $ | 10.2 | $ | 20.3 | $ | 20.3 | ||||||||
Aqualon
Group
|
12.7 | 12.0 | 25.4 | 23.2 | ||||||||||||
Corporate
items (1)(4)
|
2.5 | 5.2 | 7.4 | 10.5 | ||||||||||||
$ | 24.8 | $ | 27.4 | $ | 53.1 | $ | 54.0 | |||||||||
Research
and development:
|
||||||||||||||||
Paper
Technologies and Ventures
|
$ | 4.7 | $ | 4.3 | $ | 9.2 | $ | 8.7 | ||||||||
Aqualon
Group
|
6.6 | 6.5 | 13.0 | 12.4 | ||||||||||||
Corporate
items
|
0.1 | 0.2 | 0.3 | 0.3 | ||||||||||||
$ | 11.4 | $ | 11.0 | $ | 22.5 | $ | 21.4 | |||||||||
Capital
expenditures:
|
||||||||||||||||
Paper
Technologies and Ventures
|
$ | 7.5 | $ | 10.0 | $ | 12.6 | $ | 15.0 | ||||||||
Aqualon
Group
|
13.0 | 16.7 | 26.9 | 35.1 | ||||||||||||
Corporate
items
|
2.8 | 2.9 | 5.9 | 3.7 | ||||||||||||
|
$ | 23.3 | $ | 29.6 | $ | 45.4 | $ | 53.8 |
June
30, 2008
|
December
31, 2007
|
|||||||||||||||
Notional
|
Fair
Value
|
Notional
|
Fair
Value
|
|||||||||||||
Foreign
exchange contracts(1)
|
$ | 54.9 | $ | 0.7 | $ | 35.6 | $ | 0.3 | ||||||||
Cross
currency interest rate swaps(2)
|
(500.0 | ) | (160.9 | ) | (500.0 | ) | (112.1 | ) |
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Foreign
exchange contracts, net
|
||||||||||||||||
Gains
(losses) recognized in Other expense, net
|
$ | 0.9 | $ | — | $ | 1.1 | $ | (0.4 | ) | |||||||
Cross
currency interest rate swaps:
|
||||||||||||||||
Gains
(losses) recognized in OCI (1)
|
2.4 | (4.4 | ) | (48.8 | ) | (11.5 | ) | |||||||||
(Losses)
gains recognized in Interest and debt expense
|
(4.7 | ) | 0.8 | (7.3 | ) | 2.0 |
Subsequent
Event
|
Financial
Information of Guarantor
Subsidiaries
|
Condensed
Consolidating Statement of Operations
|
||||||||||||||||||||
Three
Months Ended June 30, 2008
|
||||||||||||||||||||
Unconsolidated
|
||||||||||||||||||||
Parent
|
Guarantor
Subsidiaries
|
Non-
Guarantor
Subsidiaries
|
Eliminations
and
Adjustments
|
Consolidated
|
||||||||||||||||
Net
sales
|
$ | 159.1 | $ | 139.2 | $ | 368.4 | $ | (54.1 | ) | $ | 612.6 | |||||||||
Cost
of sales
|
116.9 | 102.4 | 255.2 | (54.4 | ) | 420.1 | ||||||||||||||
Selling,
general and administrative expenses
|
26.4 | 26.4 | 45.8 | — | 98.6 | |||||||||||||||
Research
and development
|
4.6 | 5.2 | 1.6 | — | 11.4 | |||||||||||||||
Intangible
asset amortization
|
1.6 | 0.2 | 1.1 | (0.2 | ) | 2.7 | ||||||||||||||
Other
operating expense, net
|
2.1 | (1.4 | ) | 3.9 | — | 4.6 | ||||||||||||||
Profit
from operations
|
7.5 | 6.4 | 60.8 | 0.5 | 75.2 | |||||||||||||||
Interest
and debt expense (income), net
|
25.8 | (8.7 | ) | 1.2 | — | 18.3 | ||||||||||||||
Vertac
response costs and litigation charges
|
0.3 | — | — | — | 0.3 | |||||||||||||||
Other
expense (income), net
|
8.7 | 0.6 | (1.1 | ) | 0.2 | 8.4 | ||||||||||||||
Income
(loss) before income taxes, minority interests and equity (loss)
income
|
(27.3 | ) | 14.5 | 60.7 | 0.3 | 48.2 | ||||||||||||||
Provision
(benefit) for income taxes
|
(5.3 | ) | 5.5 | 12.2 | 0.2 | 12.6 | ||||||||||||||
Income
(loss) before minority interests and equity (loss) income
|
(22.0 | ) | 9.0 | 48.5 | 0.1 | 35.6 | ||||||||||||||
Minority
interests in income of consolidated subsidiaries
|
— | — | (0.3 | ) | — | (0.3 | ) | |||||||||||||
Equity
(loss) income of affiliated companies
|
— | (0.2 | ) | 0.3 | (0.3 | ) | (0.2 | ) | ||||||||||||
Equity
income from consolidated subsidiaries
|
57.1 | — | — | (57.1 | ) | — | ||||||||||||||
Net
income from continuing operations before discontinued
operations
|
35.1 | 8.8 | 48.5 | (57.3 | ) | 35.1 | ||||||||||||||
Net
income from discontinued operations, net of tax
|
25.9 | — | — | — | 25.9 | |||||||||||||||
Net
income
|
$ | 61.0 | $ | 8.8 | $ | 48.5 | $ | (57.3 | ) | $ | 61.0 |
Condensed
Consolidating Statement of Operations
|
||||||||||||||||||||
Six
Months Ended June 30, 2008
|
||||||||||||||||||||
Unconsolidated
|
||||||||||||||||||||
Parent
|
Guarantor
Subsidiaries
|
Non-
Guarantor
Subsidiaries
|
Eliminations
and
Adjustments
|
Consolidated
|
||||||||||||||||
Net
sales
|
$ | 318.2 | $ | 268.4 | $ | 686.5 | $ | (102.2 | ) | $ | 1,170.9 | |||||||||
Cost
of sales
|
232.4 | 194.8 | 469.8 | (102.5 | ) | 794.5 | ||||||||||||||
Selling,
general and administrative expenses
|
50.8 | 55.6 | 86.8 | — | 193.2 | |||||||||||||||
Research
and development
|
9.1 | 10.3 | 3.1 | — | 22.5 | |||||||||||||||
Intangible
asset amortization
|
3.2 | 0.4 | 2.1 | (0.4 | ) | 5.3 | ||||||||||||||
Other
operating expense (income), net
|
6.9 | (0.5 | ) | 6.4 | — | 12.8 | ||||||||||||||
Profit
from operations
|
15.8 | 7.8 | 118.3 | 0.7 | 142.6 | |||||||||||||||
Interest
and debt expense (income), net
|
56.2 | (23.3 | ) | 2.1 | — | 35.0 | ||||||||||||||
Vertac
response costs and litigation charges
|
0.5 | — | — | — | 0.5 | |||||||||||||||
Other
expense (income), net
|
15.3 | 1.2 | (1.6 | ) | 0.4 | 15.3 | ||||||||||||||
Income
(loss) before income taxes, minority interests and equity
loss
|
(56.2 | ) | 29.9 | 117.8 | 0.3 | 91.8 | ||||||||||||||
Provision
(benefit) for income taxes
|
(10.0 | ) | 11.0 | 23.0 | 0.1 | 24.1 | ||||||||||||||
Income
(loss) before minority interests and equity loss
|
(46.2 | ) | 18.9 | 94.8 | 0.2 | 67.7 | ||||||||||||||
Minority
interests in losses of consolidated subsidiaries
|
— | — | 0.9 | — | 0.9 | |||||||||||||||
Equity
loss of affiliated companies
|
— | (1.1 | ) | (0.9 | ) | 0.9 | (1.1 | ) | ||||||||||||
Equity
income from consolidated subsidiaries
|
113.7 | — | — | (113.7 | ) | — | ||||||||||||||
Net
income from continuing operations before discontinued
operations
|
67.5 | 17.8 | 94.8 | (112.6 | ) | 67.5 | ||||||||||||||
Net
income from discontinued operations, net of tax
|
25.9 | — | — | — | 25.9 | |||||||||||||||
Net
income
|
$ | 93.4 | $ | 17.8 | $ | 94.8 | $ | (112.6 | ) | $ | 93.4 |
Condensed
Consolidating Statement of Operations
|
||||||||||||||||||||
Three
Months Ended June 30, 2007
|
||||||||||||||||||||
As
Adjusted (Note 6)
|
||||||||||||||||||||
Unconsolidated
|
||||||||||||||||||||
Parent
|
Guarantor
Subsidiaries
|
Non-
Guarantor
Subsidiaries
|
Eliminations
and
Adjustments
|
Consolidated
|
||||||||||||||||
Net
sales
|
$ | 155.4 | $ | 116.5 | $ | 326.1 | $ | (49.0 | ) | $ | 549.0 | |||||||||
Cost
of sales
|
109.6 | 82.0 | 216.7 | (49.5 | ) | 358.8 | ||||||||||||||
Selling,
general and administrative expenses
|
15.7 | 31.0 | 38.1 | — | 84.8 | |||||||||||||||
Research
and development
|
4.5 | 5.2 | 1.3 | — | 11.0 | |||||||||||||||
Intangible
asset amortization
|
1.5 | 0.2 | 0.2 | — | 1.9 | |||||||||||||||
Other
operating expense (income), net
|
10.0 | 0.8 | (3.2 | ) | — | 7.6 | ||||||||||||||
Profit
(loss) from operations
|
14.1 | (2.7 | ) | 73.0 | 0.5 | 84.9 | ||||||||||||||
Interest
and debt expense (income), net
|
46.7 | (30.3 | ) | 1.4 | — | 17.8 | ||||||||||||||
Vertac
response costs and litigation charges
|
17.5 | — | — | — | 17.5 | |||||||||||||||
Other
expense (income), net
|
15.2 | 0.8 | (0.5 | ) | 0.2 | 15.7 | ||||||||||||||
Income
(loss) before income taxes, minority interests and equity (loss)
income
|
(65.3 | ) | 26.8 | 72.1 | 0.3 | 33.9 | ||||||||||||||
(Benefit)
provision for income taxes
|
(30.3 | ) | 9.1 | 13.2 | 0.1 | (7.9 | ) | |||||||||||||
Income
(loss) before minority interests and equity (loss) income
|
(35.0 | ) | 17.7 | 58.9 | 0.2 | 41.8 | ||||||||||||||
Minority
interests in earnings of consolidated subsidiaries
|
— | — | (0.5 | ) | — | (0.5 | ) | |||||||||||||
Equity
(loss) income of affiliated companies
|
— | (0.2 | ) | 0.8 | (0.6 | ) | — | |||||||||||||
Equity
income from consolidated subsidiaries
|
76.3 | — | — | (76.3 | ) | — | ||||||||||||||
Net
income
|
$ | 41.3 | $ | 17.5 | $ | 59.2 | $ | (76.7 | ) | $ | 41.3 |
Condensed
Consolidating Statement of Operations
|
||||||||||||||||||||
Six
Months Ended June 30, 2007
|
||||||||||||||||||||
As
Adjusted (Note 6)
|
||||||||||||||||||||
Unconsolidated
|
||||||||||||||||||||
Parent
|
Guarantor
Subsidiaries
|
Non-
Guarantor
Subsidiaries
|
Eliminations
and
Adjustments
|
Consolidated
|
||||||||||||||||
Net
sales
|
$ | 310.0 | $ | 225.4 | $ | 611.3 | $ | (95.4 | ) | $ | 1,051.3 | |||||||||
Cost
of sales
|
217.8 | 157.8 | 402.4 | (95.8 | ) | 682.2 | ||||||||||||||
Selling,
general and administrative expenses
|
31.9 | 63.2 | 73.1 | — | 168.2 | |||||||||||||||
Research
and development
|
9.1 | 9.7 | 2.6 | — | 21.4 | |||||||||||||||
Intangible
asset amortization
|
3.0 | 0.4 | 0.3 | — | 3.7 | |||||||||||||||
Other
operating expense (income), net
|
21.9 | 0.9 | (2.1 | ) | — | 20.7 | ||||||||||||||
Profit
(loss) from operations
|
26.3 | (6.6 | ) | 135.0 | 0.4 | 155.1 | ||||||||||||||
Interest
and debt expense (income), net
|
91.9 | (59.3 | ) | 2.4 | — | 35.0 | ||||||||||||||
Vertac
response costs and litigation charges
|
19.0 | — | — | — | 19.0 | |||||||||||||||
Other
expense, net
|
17.2 | 1.8 | — | — | 19.0 | |||||||||||||||
Income
(loss) before income taxes, minority interests and equity (loss)
income
|
(101.8 | ) | 50.9 | 132.6 | 0.4 | 82.1 | ||||||||||||||
(Benefit)
provision for income taxes
|
(85.8 | ) | 17.9 | 26.7 | 0.2 | (41.0 | ) | |||||||||||||
Income
(loss) before minority interests and equity (loss) income
|
(16.0 | ) | 33.0 | 105.9 | 0.2 | 123.1 | ||||||||||||||
Minority
interests in earnings of consolidated subsidiaries
|
— | — | (1.0 | ) | — | (1.0 | ) | |||||||||||||
Equity
(loss) income of affiliated companies
|
— | (0.5 | ) | 1.0 | (1.0 | ) | (0.5 | ) | ||||||||||||
Equity
income from consolidated subsidiaries
|
137.6 | — | — | (137.6 | ) | — | ||||||||||||||
Net
income
|
$ | 121.6 | $ | 32.5 | $ | 105.9 | $ | (138.4 | ) | $ | 121.6 |
Condensed
Consolidating Balance Sheet
|
||||||||||||||||||||
As
of June 30, 2008
|
||||||||||||||||||||
Unconsolidated
|
||||||||||||||||||||
Guarantor
|
Non-Guarantor
|
Eliminations
and
|
||||||||||||||||||
Assets
|
Parent
|
Subsidiaries
|
Subsidiaries
|
Adjustments
|
Consolidated
|
|||||||||||||||
Current
assets
|
||||||||||||||||||||
Cash
and cash equivalents
|
$ | 11.0 | $ | 1.5 | $ | 94.1 | $ | — | $ | 106.6 | ||||||||||
Accounts
receivable, net
|
71.8 | 65.9 | 298.1 | — | 435.8 | |||||||||||||||
Intercompany
receivables (payables)
|
69.4 | 13.9 | (1.7 | ) | (81.6 | ) | — | |||||||||||||
Inventories
|
58.3 | 70.4 | 115.2 | 0.7 | 244.6 | |||||||||||||||
Deferred
income taxes
|
23.0 | 3.6 | 7.5 | — | 34.1 | |||||||||||||||
Income
taxes receivable
|
89.2 | — | — | (64.6 | ) | 24.6 | ||||||||||||||
Other
current assets
|
19.7 | 4.8 | 21.8 | — | 46.3 | |||||||||||||||
Total
current assets
|
342.4 | 160.1 | 535.0 | (145.5 | ) | 892.0 | ||||||||||||||
Property,
plant and equipment, net
|
131.1 | 158.1 | 409.7 | — | 698.9 | |||||||||||||||
Investments
in subsidiaries and advances, net
|
1,773.6 | 80.2 | — | (1,853.8 | ) | — | ||||||||||||||
Intangible
assets, net
|
131.0 | 1.8 | 24.9 | — | 157.7 | |||||||||||||||
Goodwill
|
59.3 | 39.7 | 452.9 | — | 551.9 | |||||||||||||||
Deferred
income taxes
|
364.3 | — | 12.3 | (6.1 | ) | 370.5 | ||||||||||||||
Asbestos-related
assets
|
9.6 | — | — | — | 9.6 | |||||||||||||||
Deferred
charges and other assets
|
57.4 | 24.8 | 27.9 | — | 110.1 | |||||||||||||||
Total
assets
|
$ | 2,868.7 | $ | 464.7 | $ | 1,462.7 | $ | (2,005.4 | ) | $ | 2,790.7 | |||||||||
Liabilities
and Stockholders' Equity
|
||||||||||||||||||||
Current
liabilities
|
||||||||||||||||||||
Accounts
payable
|
$ | 61.1 | $ | 43.5 | $ | 131.7 | $ | — | $ | 236.3 | ||||||||||
Intercompany
payables
|
2.1 | 48.3 | 31.2 | (81.6 | ) | — | ||||||||||||||
Asbestos-related
liabilities
|
28.0 | — | — | — | 28.0 | |||||||||||||||
Current
debt obligations
|
4.0 | — | 50.9 | — | 54.9 | |||||||||||||||
Vertac
obligations
|
20.5 | — | — | — | 20.5 | |||||||||||||||
Accrued
expenses
|
101.1 | 20.2 | 78.9 | 0.3 | 200.5 | |||||||||||||||
Income
taxes payable
|
— | 72.2 | 9.4 | (64.6 | ) | 17.0 | ||||||||||||||
Deferred income
taxes
|
— | — | 8.8 | — | 8.8 | |||||||||||||||
Total
current liabilities
|
216.8 | 184.2 | 310.9 | (145.9 | ) | 566.0 | ||||||||||||||
Long-term
debt
|
738.7 | — | 23.1 | — | 761.8 | |||||||||||||||
Deferred
income taxes
|
— | 6.3 | 78.5 | (6.1 | ) | 78.7 | ||||||||||||||
Pension
obligations
|
109.6 | — | 53.4 | — | 163.0 | |||||||||||||||
Other
postretirement benefit obligations
|
115.2 | — | 3.2 | — | 118.4 | |||||||||||||||
Deferred
credits and other liabilities
|
271.0 | 15.8 | 19.3 | — | 306.1 | |||||||||||||||
Asbestos-related
liabilities
|
216.3 | — | — | — | 216.3 | |||||||||||||||
Intercompany
notes payable (receivable)
|
641.8 | (771.0 | ) | 129.2 | — | — | ||||||||||||||
Minority
interests
|
— | — | 21.1 | — | 21.1 | |||||||||||||||
Total
stockholders' equity
|
559.3 | 1,029.4 | 824.0 | (1,853.4 | ) | 559.3 | ||||||||||||||
Total
liabilities and stockholders' equity
|
$ | 2,868.7 | $ | 464.7 | $ | 1,462.7 | $ | (2,005.4 | ) | $ | 2,790.7 |
Condensed
Consolidating Statement of Cash Flows
|
||||||||||||||||||||
Six
Months Ended June 30, 2008
|
||||||||||||||||||||
Unconsolidated
|
||||||||||||||||||||
Parent
|
Guarantor
Subsidiaries
|
Non-
Guarantor
Subsidiaries
|
Eliminations
and
Adjustments
|
Consolidated
|
||||||||||||||||
Net
Cash Provided by Operating Activities
|
$ | 43.5 | $ | 63.8 | $ | 74.3 | $ | (113.7 | ) | $ | 67.9 | |||||||||
Cash
Flows From Investing Activities:
|
||||||||||||||||||||
Capital
expenditures
|
(10.8 | ) | (10.1 | ) | (24.5 | ) | — | (45.4 | ) | |||||||||||
Acquisitions and investments,
net
|
— | (1.5 | ) | (7.5 | ) | — | (9.0 | ) | ||||||||||||
Proceeds
of asset disposals, net of transaction
|
2.9 | 0.1 | 3.0 | |||||||||||||||||
Net cash used in investing
activities
|
(7.9 | ) | (11.6 | ) | (31.9 | ) | — | (51.4 | ) | |||||||||||
Cash
Flows From Financing Activities:
|
||||||||||||||||||||
Long-term debt
payments
|
(2.0 | ) | — | (0.3 | ) | — | (2.3 | ) | ||||||||||||
Change in short-term
debt
|
— | — | 16.4 | — | 16.4 | |||||||||||||||
Change
in intercompany advances
|
(3.0 | ) | (52.2 | ) | (40.5 | ) | 95.7 | — | ||||||||||||
Repurchase
of common stock
|
(37.3 | ) | — | — | — | (37.3 | ) | |||||||||||||
Dividends
paid
|
(10.9 | ) | — | — | — | (10.9 | ) | |||||||||||||
Intercompany dividends
paid
|
— | — | (18.0 | ) | 18.0 | — | ||||||||||||||
Proceeds from the exercise of
stock options
|
0.9 | — | — | — | 0.9 | |||||||||||||||
Other, net
|
0.8 | — | — | — | 0.8 | |||||||||||||||
Net
cash used in financing activities
|
(51.5 | ) | (52.2 | ) | (42.4 | ) | 113.7 | (32.4 | ) | |||||||||||
Effect of exchange rate
changes on cash
|
— | — | 6.0 | — | 6.0 | |||||||||||||||
Net (decrease) increase in
cash and cash equivalents
|
(15.9 | ) | — | 6.0 | — | (9.9 | ) | |||||||||||||
Cash and cash equivalents -
beginning of period
|
26.9 | 1.5 | 88.1 | — | 116.5 | |||||||||||||||
Cash and cash equivalents -
end of period
|
$ | 11.0 | $ | 1.5 | $ | 94.1 | $ | — | $ | 106.6 |
Condensed
Consolidating Statement of Cash Flows
|
||||||||||||||||||||
Six
Months Ended June 30, 2007
|
||||||||||||||||||||
As
Adjusted (Note 6)
|
||||||||||||||||||||
Unconsolidated
|
||||||||||||||||||||
Parent
|
Guarantor
Subsidiaries
|
Non-
Guarantor
Subsidiaries
|
Eliminations
and
Adjustments
|
Consolidated
|
||||||||||||||||
Net
Cash Provided by Operating Activities
|
$ | 164.0 | $ | 74.6 | $ | 65.9 | $ | (164.0 | ) | $ | 140.5 | |||||||||
Cash
Flows From Investing Activities:
|
||||||||||||||||||||
Capital
expenditures
|
(9.1 | ) | (18.8 | ) | (25.9 | ) | — | (53.8 | ) | |||||||||||
Acquisitions and investments,
net
|
— | (0.9 | ) | — | — | (0.9 | ) | |||||||||||||
Proceeds from sale of 51%
interest in FiberVisions, net of transaction
costs
|
(1.2 | ) | — | — | — | (1.2 | ) | |||||||||||||
Proceeds
of asset disposals, net of transaction costs
|
— | — | 11.4 | — | 11.4 | |||||||||||||||
Other, net
|
(0.1 | ) | — | — | — | (0.1 | ) | |||||||||||||
Net cash used in investing
activities
|
(10.4 | ) | (19.7 | ) | (14.5 | ) | — | (44.6 | ) | |||||||||||
Cash
Flows From Financing Activities:
|
||||||||||||||||||||
Long-term
debt proceeds
|
— | — | 3.3 | — | 3.3 | |||||||||||||||
Long-term debt
payments
|
(47.0 | ) | — | — | — | (47.0 | ) | |||||||||||||
Change in short-term
debt
|
— | — | 5.8 | — | 5.8 | |||||||||||||||
Change in intercompany
advances
|
(79.0 | ) | (54.2 | ) | (26.4 | ) | 159.6 | — | ||||||||||||
Proceeds from the exercise of
stock options
|
4.9 | — | — | — | 4.9 | |||||||||||||||
Intercompany dividends
paid
|
— | — | (4.4 | ) | 4.4 | — | ||||||||||||||
Other, net
|
2.1 | — | — | — | 2.1 | |||||||||||||||
Net cash used in financing
activities
|
(119.0 | ) | (54.2 | ) | (21.7 | ) | 164.0 | (30.9 | ) | |||||||||||
Effect of exchange rate changes
on cash
|
— | — | 1.1 | — | 1.1 | |||||||||||||||
Net increase in cash and cash
equivalents
|
34.6 | 0.7 | 30.8 | — | 66.1 | |||||||||||||||
Cash and cash equivalents -
beginning of period
|
89.7 | 0.5 | 81.6 | — | 171.8 | |||||||||||||||
Cash and cash equivalents - end
of period
|
$ | 124.3 | $ | 1.2 | $ | 112.4 | $ | — | $ | 237.9 |
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
North
America
|
44 | % | 46 | % | 46 | % | 48 | % | ||||||||
Europe
|
38 | % | 37 | % | 37 | % | 36 | % | ||||||||
Asia
Pacific
|
12 | % | 12 | % | 11 | % | 11 | % | ||||||||
Latin
America
|
6 | % | 5 | % | 6 | % | 5 | % | ||||||||
Consolidated
|
100 | % | 100 | % | 100 | % | 100 | % |
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Paper
Technologies and Ventures
|
51 | % | 53 | % | 52 | % | 54 | % | ||||||||
Aqualon
Group
|
49 | % | 47 | % | 48 | % | 46 | % | ||||||||
Consolidated
|
100 | % | 100 | % | 100 | % | 100 | % |
Three
Months
|
Six
Months
|
|||||||||||||||||||||||
2008
|
2007
|
Change
|
2008
|
2007
|
Change
|
|||||||||||||||||||
Net
sales
|
$ | 612.6 | $ | 549.0 | $ | 63.6 | $ | 1,170.9 | $ | 1,051.3 | $ | 119.6 |
Three
Months Ended June 30,
|
%
Change
Excluding
|
|||||||||||||||
Regions
|
2008
|
2007
|
%
Change
|
ROE
|
||||||||||||
North
America
|
$ | 270.8 | $ | 252.3 | 7 | % | 6 | % | ||||||||
Europe
|
232.1 | 203.3 | 14 | % | (1 | )% | ||||||||||
Asia
Pacific
|
74.2 | 63.8 | 16 | % | 13 | % | ||||||||||
Latin
America
|
35.5 | 29.6 | 20 | % | 11 | % | ||||||||||
All
regions
|
$ | 612.6 | $ | 549.0 | 12 | % | 5 | % |
Six
Months Ended June 30,
|
%
Change
Excluding
|
|||||||||||||||
Regions
|
2008
|
2007
|
%
Change
|
ROE
|
||||||||||||
North
America
|
$ | 534.5 | $ | 500.0 | 7 | % | 6 | % | ||||||||
Europe
|
432.6 | 378.2 | 14 | % | 1 | % | ||||||||||
Asia
Pacific
|
135.0 | 116.7 | 16 | % | 14 | % | ||||||||||
Latin
America
|
68.8 | 56.4 | 22 | % | 13 | % | ||||||||||
All
regions
|
$ | 1,170.9 | $ | 1,051.3 | 11 | % | 5 | % |
Three
Months
|
Six
Months
|
|||||||||||||||||||||||
2008
|
2007
|
Change
|
2008
|
2007
|
Change
|
|||||||||||||||||||
Cost
of sales
|
$ | 420.1 | $ | 358.8 | $ | 61.3 | $ | 794.5 | $ | 682.2 | $ | 112.3 | ||||||||||||
As
a % of sales
|
69 | % | 65 | % | 68 | % | 65 | % |
Three
Months
|
Six
Months
|
|||||||||||||||||||||||
2008
|
2007
|
Change
|
2008
|
2007
|
Change
|
|||||||||||||||||||
Selling,
general and administrative expenses
|
$ | 98.6 | $ | 84.8 | $ | 13.8 | $ | 193.2 | $ | 168.2 | $ | 25.0 | ||||||||||||
As
a % of sales
|
16 | % | 15 | % | 17 | % | 16 | % |
Three
Months
|
Six
Months
|
|||||||||||||||||||||||
2008
|
2007
|
Change
|
2008
|
2007
|
Change
|
|||||||||||||||||||
Research
and development
|
$ | 11.4 | $ | 11.0 | $ | 0.4 | $ | 22.5 | $ | 21.4 | $ | 1.1 | ||||||||||||
As
a % of sales
|
2 | % | 2 | % | 2 | % | 2 | % |
Three
Months
|
Six
Months
|
|||||||||||||||||||||||
2008
|
2007
|
Change
|
2008
|
2007
|
Change
|
|||||||||||||||||||
Intangible
asset amortization
|
$ | 2.7 | $ | 1.9 | $ | 0.8 | $ | 5.3 | $ | 3.7 | $ | 1.6 |
Three
Months
|
Six
Months
|
|||||||||||||||||||||||
2008
|
2007
|
Change
|
2008
|
2007
|
Change
|
|||||||||||||||||||
Other
operating expense, net
|
$ | 4.6 | $ | 7.6 | $ | (3.0 | ) | $ | 12.8 | $ | 20.7 | $ | (7.9 | ) |
Three
Months
|
Six
Months
|
|||||||||||||||||||||||
2008
|
2007
|
Change
|
2008
|
2007
|
Change
|
|||||||||||||||||||
Interest
and debt expense
|
$ | 18.3 | $ | 17.8 | $ | 0.5 | $ | 35.0 | $ | 35.0 | $ | — |
Three
Months
|
Six
Months
|
|||||||||||||||||||||||
2008
|
2007
|
Change
|
2008
|
2007
|
Change
|
|||||||||||||||||||
Vertac
response costs and litigation charges
|
$ | 0.3 | $ | 17.5 | $ | (17.2 | ) | $ | 0.5 | $ | 19.0 | $ | (18.5 | ) |
Three
Months
|
Six
Months
|
|||||||||||||||||||||||
2008
|
2007
|
Change
|
2008
|
2007
|
Change
|
|||||||||||||||||||
Other
expense, net
|
$ | 8.4 | $ | 15.7 | $ | (7.3 | ) | $ | 15.3 | $ | 19.0 | $ | (3.7 | ) |
Three
Months
|
Six
Months
|
|||||||||||||||||||||||
2008
|
2007
|
Change
|
2008
|
2007
|
Change
|
|||||||||||||||||||
Provision
(benefit) for income taxes
|
$ | 12.6 | $ | (7.9 | ) | $ | 20.5 | $ | 24.1 | $ | (41.0 | ) | $ | 65.1 | ||||||||||
Effective
tax rate
|
26 | % | (23 | %) | 26 | % | (50 | %) |
Three
Months
|
Six
Months
|
|||||||||||||||||||||||
2008
|
2007
|
Change
|
2008
|
2007
|
Change
|
|||||||||||||||||||
Minority
interests in earnings of consolidated subsidiaries
|
$ | (0.3 | ) | $ | (0.5 | ) | $ | 0.2 | $ | 0.9 | $ | (1.0 | ) | $ | 1.9 |
Three
Months
|
Six
Months
|
|||||||||||||||||||||||
2008
|
2007
|
Change
|
2008
|
2007
|
Change
|
|||||||||||||||||||
Equity
loss of affiliated companies, net of tax
|
$ | (0.2 | ) | $ | — | $ | (0.2 | ) | $ | (1.1 | ) | $ | (0.5 | ) | $ | (0.6 | ) |
Three
Months
|
Six
Months
|
|||||||||||||||||||||||
2008
|
2007
|
Change
|
2008
|
2007
|
Change
|
|||||||||||||||||||
Income
from discontinued operations, net of tax
|
$ | 25.9 | $ | — | $ | 25.9 | $ | 25.9 | $ | — | $ | 25.9 |
Three
Months Ended June 30,
|
||||||||||||||||
2008
|
2007
|
Change
|
%
Change
|
|||||||||||||
Net
sales:
|
||||||||||||||||
Paper
Technologies and Ventures
|
||||||||||||||||
Paper
Technologies
|
$ | 233.8 | $ | 227.6 | $ | 6.2 | 3 | % | ||||||||
Ventures
|
76.2 | 60.7 | 15.5 | 26 | % | |||||||||||
310.0 | 288.3 | 21.7 | 8 | % | ||||||||||||
Aqualon
Group
|
||||||||||||||||
Coatings
& Construction
|
153.8 | 129.9 | 23.9 | 18 | % | |||||||||||
Regulated
|
74.2 | 63.8 | 10.4 | 16 | % | |||||||||||
Energy
& Specialties
|
74.6 | 67.0 | 7.6 | 11 | % | |||||||||||
302.6 | 260.7 | 41.9 | 16 | % | ||||||||||||
$ | 612.6 | $ | 549.0 | $ | 63.6 | 12 | % | |||||||||
Profit
from operations:
|
||||||||||||||||
Paper
Technologies and Ventures
|
$ | 23.9 | $ | 31.8 | $ | (7.9 | ) | (25 | ) % | |||||||
Aqualon
Group
|
56.6 | 62.5 | (5.9 | ) | (9 | ) % | ||||||||||
Corporate
Items
|
(5.3 | ) | (9.4 | ) | 4.1 | 44 | % | |||||||||
Consolidated
|
$ | 75.2 | $ | 84.9 | $ | (9.7 | ) | (11 | ) % |
Six
Months Ended June 30,
|
||||||||||||||||
2008
|
2007
|
Change
|
%
Change
|
|||||||||||||
Net
sales:
|
||||||||||||||||
Paper
Technologies and Ventures
|
||||||||||||||||
Paper
Technologies
|
$ | 460.5 | $ | 448.9 | $ | 11.6 | 3 | % | ||||||||
Ventures
|
152.4 | 122.6 | 29.8 | 24 | % | |||||||||||
612.9 | 571.5 | 41.4 | 7 | % | ||||||||||||
Aqualon
Group
|
||||||||||||||||
Coatings
& Construction
|
273.0 | 230.2 | 42.8 | 19 | % | |||||||||||
Regulated
|
143.0 | 124.0 | 19.0 | 15 | % | |||||||||||
Energy
& Specialties
|
142.0 | 125.6 | 16.4 | 13 | % | |||||||||||
558.0 | 479.8 | 78.2 | 16 | % | ||||||||||||
$ | 1,170.9 | $ | 1,051.3 | $ | 119.6 | 11 | % | |||||||||
Profit
from operations:
|
||||||||||||||||
Paper
Technologies and Ventures
|
$ | 53.6 | $ | 65.4 | $ | (11.8 | ) | (18 | ) % | |||||||
Aqualon
Group
|
104.6 | 114.8 | (10.2 | ) | (9 | ) % | ||||||||||
Corporate
Items
|
(15.6 | ) | (25.1 | ) | 9.5 | 38 | % | |||||||||
Consolidated
|
$ | 142.6 | $ | 155.1 | $ | (12.5 | ) | (8 | ) % |
Net
Sales Percentage Increase (Decrease) from 2007 Due To:
|
||||||||||||||||||||
Volume
|
Mix
|
Price
|
Rates
of Exchange
|
Total
|
||||||||||||||||
Paper
Technologies
|
(6 | )% | — | 2 | % | 7 | % | 3 | % | |||||||||||
Ventures
|
8 | % | 6 | % | 7 | % | 5 | % | 26 | % | ||||||||||
(3 | )% | 1 | % | 3 | % | 7 | % | 8 | % |
Net
Sales Percentage Increase (Decrease) from 2007 Due To:
|
||||||||||||||||||||
Volume
|
Mix
|
Price
|
Rates
of Exchange
|
Total
|
||||||||||||||||
Paper
Technologies
|
(3 | )% | (1 | )% | — | 7 | % | 3 | % | |||||||||||
Ventures
|
7 | % | 5 | % | 7 | % | 5 | % | 24 | % | ||||||||||
(1 | )% | — | 2 | % | 6 | % | 7 | % |
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
2007
Profit from operations
|
$ | 31.8 | $ | 65.4 | ||||||||||||
Changes
due to:
|
||||||||||||||||
Volume
|
(2.1 | ) | (0.5 | ) | ||||||||||||
Regional
and product mix
|
(1.7 | ) | (2.6 | ) | ||||||||||||
Price
|
7.7 | 10.0 | ||||||||||||||
Raw
material, transportation and utility costs
|
(11.1 | ) | (16.1 | ) | ||||||||||||
All
other manufacturing costs
|
3.0 | 1.8 | ||||||||||||||
ROE
|
2.6 | 5.4 | ||||||||||||||
SG&A
and other expenses
|
1.1 | 3.5 | ||||||||||||||
Restructuring,
severance and other exit costs,
accelerated
depreciation and other charges
|
(1.8 | ) | (2.1 | ) | ||||||||||||
Impact
of change in accounting method for pensions
|
(5.6 | ) | (11.2 | ) | ||||||||||||
Net
change
|
(7.9 | ) | (11.8 | ) | ||||||||||||
2008
Profit from operations
|
$ | 23.9 | $ | 53.6 |
Net
Sales Percentage Increase (Decrease) from 2007 Due To:
|
||||||||||||||||||||
Volume
|
Mix
|
Price
|
Rates
of Exchange
|
Total
|
||||||||||||||||
Coatings
& Construction
|
12 | % | (6 | )% | 4 | % | 8 | % | 18 | % | ||||||||||
Regulated
|
4 | % | 3 | % | 3 | % | 6 | % | 16 | % | ||||||||||
Energy
& Specialties
|
11 | % | (8 | )% | 4 | % | 4 | % | 11 | % | ||||||||||
|
10 | % | (4 | )% | 3 | % | 7 | % | 16 | % |
Net
Sales Percentage Increase (Decrease) from 2007 Due To:
|
||||||||||||||||||||
Volume
|
Mix
|
Price
|
Rates
of Exchange
|
Total
|
||||||||||||||||
Coatings
& Construction
|
14 | % | (6 | )% | 3 | % | 8 | % | 19 | % | ||||||||||
Regulated
|
4 | % | 4 | % | 2 | % | 5 | % | 15 | % | ||||||||||
Energy
& Specialties
|
15 | % | (8 | )% | 3 | % | 3 | % | 13 | % | ||||||||||
|
11 | % | (4 | )% | 3 | % | 6 | % | 16 | % |
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
2007
Profit from operations
|
$ | 62.5 | $ | 114.8 | ||||||||||||
Changes
due to:
|
||||||||||||||||
Volume
|
9.5 | 21.6 | ||||||||||||||
Regional
and product mix
|
(11.3 | ) | (19.9 | ) | ||||||||||||
Price
|
9.2 | 12.4 | ||||||||||||||
Raw
material, transportation and utility costs
|
(14.8 | ) | (23.9 | ) | ||||||||||||
All
other manufacturing costs
|
5.6 | 8.5 | ||||||||||||||
ROE
|
0.8 | 1.3 | ||||||||||||||
SG&A
and other expenses
|
0.3 | (0.7 | ) | |||||||||||||
Restructuring,
severance and other exit costs,
accelerated
depreciation and other charges
|
(0.4 | ) | — | |||||||||||||
Impact
of change in accounting method for pensions
|
(4.8 | ) | (9.5 | ) | ||||||||||||
Net
change
|
(5.9 | ) | (10.2 | ) | ||||||||||||
2008
Profit from operations
|
$ | 56.6 | $ | 104.6 |
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Severance,
restructuring and other exit costs
|
$ | 2.8 | $ | 6.0 | $ | 5.4 | $ | 13.7 | ||||||||
Accelerated
depreciation and amortization
|
1.9 | 3.5 | 5.4 | 7.1 | ||||||||||||
Asset
retirement and environmental charges
|
0.3 | 0.1 | 0.5 | 0.2 | ||||||||||||
Gains
on asset dispositions, net
|
(3.3 | ) | (4.1 | ) | (3.6 | ) | (4.1 | ) | ||||||||
Dismantlement
costs
|
0.3 | 0.9 | 1.0 | 1.5 | ||||||||||||
Other
unallocated corporate costs
|
2.9 | 3.2 | 6.3 | 6.7 | ||||||||||||
Other
miscellaneous expense (income), net
|
0.4 | (0.2 | ) | 0.6 | — | |||||||||||
$ | 5.3 | $ | 9.4 | $ | 15.6 | $ | 25.1 |
Six
Months Ended June 30,
|
||||||||
Operating
Activities
|
2008
|
2007
|
||||||
Net
income, depreciation, amortization and all other non-cash charges and
credits, net
|
$ | 160.0 | $ | 192.9 | ||||
Changes
in working capital, net
|
(62.5 | ) | (57.9 | ) | ||||
Income
tax payments net of refunds
|
(13.7 | ) | 171.6 | |||||
Interest
paid
|
(36.4 | ) | (32.6 | ) | ||||
Voluntary
pension plan contributions
|
— | (27.1 | ) | |||||
Other
postretirement benefits payments, net
|
(11.2 | ) | (11.2 | ) | ||||
Restructuring,
severance and other exit cost payments
|
(11.9 | ) | (8.1 | ) | ||||
ARO
and environmental contingency payments, net of recoveries
|
(3.1 | ) | (5.4 | ) | ||||
Asbestos
trust receipts, net of settlement payments
|
(0.4 | ) | 43.8 | |||||
Settlement
of Vertac litigation judgment
|
— | (124.5 | ) | |||||
All
other accruals, deferrals and other cash receipts and (payments),
net
|
47.1 | (1.0 | ) | |||||
Net
cash provided by operating activities
|
$ | 67.9 | $ | 140.5 |
Six
Months Ended June 30,
|
||||||||
Investing
Activities
|
2008
|
2007
|
||||||
Capital
expenditures
|
$ | 45.4 | $ | 53.8 | ||||
Acquisitions
and investments, net
|
9.0 | 0.9 | ||||||
Proceeds
from asset and investment dispositions and all other sources,
net
|
(3.0 | ) | (10.1 | ) | ||||
Net
cash used in investing activities
|
$ | 51.4 | $ | 44.6 |
Six
Months Ended June 30,
|
||||||||
Financing
Activities
|
2008
|
2007
|
||||||
Long-term
debt payments
|
$ | 2.3 | $ | 47.0 | ||||
Long-term
debt proceeds and changes in short-term debt, net
|
(16.4 | ) | (9.1 | ) | ||||
Repurchase
of common stock
|
37.3 | — | ||||||
Dividends
paid
|
10.9 | — | ||||||
Proceeds
from the exercise of stock options and all other sources,
net
|
(1.7 | ) | (7.0 | ) | ||||
Net
cash used in financing activities
|
$ | 32.4 | $ | 30.9 |
Period
|
Total
Number of Shares Purchased (1)
|
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)
|
||||||||||||
Cumulative
through 2007
|
2,800,860 | 2,800,860 | $ | 145,651,609 | ||||||||||||
Cumulative
through First Quarter, 2008
|
1,323,100 | $ | 17.63 | 1,323,100 | $ | 122,319,595 | ||||||||||
April
1 – 30, 2008
|
— | — | — | $ | 122,319,595 | |||||||||||
May
1 – 31, 2008
|
142,700 | $ | 19.22 | 142,700 | $ | 119,576,385 | ||||||||||
June
1 – 30, 2008
|
208,400 | $ | 18.15 | 208,400 | $ | 115,794,239 | ||||||||||
Totals
for 2008
|
1,674,200 | 1,674,200 | ||||||||||||||
Cumulative
through 2008
|
4,475,060 | 4,475,060 | $ | 115,794,239 |
1.
|
Election
of Directors
|
Director
Name
|
For
|
Withheld
Authority
|
Broker
Non-Votes
|
|||||||||
Allan
H. Cohen
|
98,357,009 | 2,507,788 | — | |||||||||
Burton
M. Joyce
|
98,340,981 | 2,523,816 | — | |||||||||
Jeffrey
M. Lipton
|
76,613,022 | 24,251,775 | ||||||||||
John
K. Wulff
|
76,017,214 | 24,847,583 | — |
2.
|
Approval
of the provisions of the Amended and Restated Hercules Incorporated Annual
Management Incentive Compensation Plan, which received more than a
majority of the votes necessary for
approval.
|
For
|
Against
|
Abstain
|
Broker
Non-Votes
|
|||||||||||
85,341,193 | 6,682,247 | 893,029 | — |
3.
|
Ratification
of BDO Seidman, LLP as Hercules’ Independent Registered Public Accountants
for 2008, which received more than a majority of the votes necessary for
ratification.
|
For
|
Against
|
Abstain
|
Broker
Non-Votes
|
|||||||||||
99,710,704 | 334,810 | 819,283 | — |
|
(a)
|
Exhibits
|
HERCULES
INCORPORATED
|
|||
By:
|
/s/
Allen A. Spizzo
|
||
Allen
A. Spizzo
|
|||
Vice
President and Chief Financial Officer
|
|||
(Principal
Financial Officer and Duly
|
|||
Authorized
Signatory)
|
|||
July
28, 2008
|
Number
|
Description
|
|
2.1
|
Agreement
and Plan of Merger dated July 10, 2008 among Ashland Inc. Ashland Sub One,
Inc. and Hercules Incorporated (incorporated by reference to Exhibit 2.1
to the Company's Current Report on Form 8-K filed on July 14,
2008).
|
|
18.1
|
Letter
Regarding Change in Accounting Principle (incorporated by reference to
Exhibit 18.1 to the Quarterly Report on Form 10-Q filed on April 28,
2008).
|
|
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.
|