UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
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FORM
10-K
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ANNUAL
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
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For
the fiscal year ended December 31, 2005
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Commission
file number 1-496
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______________________________________________
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HERCULES
INCORPORATED
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A
DELAWARE CORPORATION
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I.R.S.
EMPLOYER IDENTIFICATION NO. 51-0023450
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HERCULES
PLAZA
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1313
NORTH MARKET STREET
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WILMINGTON,
DELAWARE 19894-0001
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TELEPHONE:
302-594-5000
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www.herc.com
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Securities
registered pursuant to Section 12(b) of the Act
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(Each
class is registered on the New York Stock Exchange,
Inc.)
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Title
of each class
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Common
Stock ($25/48
Stated Value)
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8%
Convertible Subordinated Debentures due August 15, 2010
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Indicate
by check mark if the registrant is a well-known seasoned issuer,
as
defined in Rule 405 of the Securities Act. Yes X
No
____.
Indicate
by check mark if the registrant is not required to file reports
pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act.
Yes ____ No
X
.
Indicate
by check mark whether the Registrant (1) has filed all reports
required to
be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934
during the preceding 12 months (or for such shorter period that
the
Registrant was required to file such reports), and (2) has been
subject to
such filing requirements for the past 90 days. Yes X
No
__.
Indicate
by check mark if disclosure of delinquent filers pursuant to Item
405 of
Regulation S-K is not contained herein, and will not be contained,
to the
best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K
or any
amendment to this Form 10-K X
Indicate
by check mark whether the registrant is a large accelerated filer,
an
accelerated filer, or a non-accelerated filer. See definition of
“accelerated filer and large accelerated filer” in Rule 12b-2 of the
Exchange Act. Large accelerated filer X
Accelerated
filer ____ Non-accelerated filer ______.
Indicate
by check mark whether the registrant is a shell company (as defined
in
Rule 12b-2 of the Exchange Act). Yes
No
X
.
The
aggregate market value of registrant's common stock, $25/48
stated value ("Common Stock") held by non-affiliates based on the
closing
price on the last business day of the Company's most recently completed
second fiscal quarter, or June 30, 2005, was approximately $1.5
billion.
As
of February 24, 2006, registrant had 112,885,816 shares of Common
Stock
outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE
Portions
of the registrant's definitive Proxy Statement for its 2006 Annual
Meeting
of Shareholders (the "Proxy Statement"), when filed, will be incorporated
by reference in Part III of this report.
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Division
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Principal
Products
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Primary
Markets
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Pulp
and Paper
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Functional
performance chemicals:
Sizing
(improving printability), strength, tissue creping and coatings
additives.
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Large,
multinational manufacturers of pulp, tissues, paper towels, packaging,
beverage containers, newsprint, papers for magazines and books,
printing
and writing paper and other stationery items such as labels and
envelopes.
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Process
treatment chemicals:
Deposit,
contaminant, microbiological and foam control, clarification, retention,
drainage, felt conditioning, deinking, fiber recovery and water
closure.
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Water
treatment chemicals:
Utility
systems, cooling water and water clarification.
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Aqualon
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Water-soluble
polymers:
Hydroxyethylcellulose
(HEC), Carboxymethylcellulose (CMC), Methylcellulose (MC) and derivatives,
Hydroxypropylcellulose (HPC) and Guar and its derivatives.
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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.
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Solvent-soluble
polymers:
Pentaerythritol
(PE) and Ethylcellulose (EC).
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Producers
of coating resins, printing inks and aviation fluids.
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Division
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Principal
Products
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Primary
Markets
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FiberVisions
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Staple
fibers:
For
hygiene products, wipes, geotextiles and filtration.
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Makers
of nonwoven and woven fabrics for applications including baby care,
feminine care, adult incontinence, wipes, geotextile, construction
and
upholstery.
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Filament
yarns:
For
upholstery and automotive fabrics.
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Pinova
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Rosin
resins:
For
food and beverage, construction and adhesives.
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Makers
of consumer and industrial products such as masking, packaging,
arts and
duct tape, construction materials, beverages, chewing gum, plastics
and
adhesives.
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Pulp
and Paper
-
Beringen, Belgium; Burlington, Ontario, Canada; Busnago, Italy;
Chicopee,
Massachusetts, U.S.; Franklin, Virginia, U.S.; Hattiesburg, Mississippi,
U.S.; Helsingborg, Sweden; Kim Cheon, Korea; Macon, Georgia, U.S.;
Mexico
City, Mexico; Milwaukee, Wisconsin, U.S.; Nantou, Taiwan; Paulinia,
Brazil; Pendlebury, United Kingdom; Portland, Oregon, U.S.; Savannah,
Georgia, U.S.; Shanghai, China (60% joint venture interest); Sobernheim,
Germany; Tampere, Finland; Tarragona, Spain; Voreppe, France; and
Zwijndrecht, The Netherlands.
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Aqualon
-
Alizay, France; Doel, Belgium; Hopewell, Virginia, U.S.; Jiangmen
City,
China; Kenedy, Texas, U.S.; Louisiana, Missouri, U.S.; Dalton,
Georgia,
U.S.; Parlin, New Jersey, U.S.; and Zwijndrecht, The
Netherlands.
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FiberVisions
-
Athens, Georgia, U.S.; Covington, Georgia, U.S.; Suzhou, China;
and Varde,
Denmark.
Pinova
-
Brunswick, Georgia, U.S.
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2005
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High
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Low
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|||||
First
Quarter
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$
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15.24
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$
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13.86
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|||
Second
Quarter
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$
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14.82
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$
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13.00
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|||
Third
Quarter
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$
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14.69
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$
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12.05
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Fourth
Quarter
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$
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12.25
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$
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10.20
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|||
2004
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|||||||
First
Quarter
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$
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13.18
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$
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10.81
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|||
Second
Quarter
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$
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12.19
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$
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9.99
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|||
Third
Quarter
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$
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14.25
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$
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11.21
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Fourth
Quarter
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$
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15.09
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$
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13.97
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(Dollars
in millions, except per share data)
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Statements
of Operations Information:
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2005
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2004
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2003
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2002
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2001
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|||||||||||
Net
sales
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$
|
2,068.8
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$
|
1,996.7
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$
|
1,846.0
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$
|
1,705.0
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$
|
1,776.0
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||||||
Profit
from operations
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130.4
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228.9
|
255.5
|
217.3
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186.0
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|||||||||||
Net
(loss) income from continuing operations before discontinued
operations
and cumulative effect of changes in accounting principle
|
(38.6
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)
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28.1
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74.2
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(48.8
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)
|
(107.7
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)
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||||||||
Net
income (loss) on discontinued operations, net of tax
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-
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-
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4.5
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(196.0
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)
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56.0
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||||||||||
Net
(loss) income before cumulative effect of changes in
accounting
principle
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(38.6
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)
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28.1
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78.7
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(244.8
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)
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(51.7
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)
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||||||||
Cumulative
effect of changes in accounting principle, net of tax (see
Note
21)
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(2.5
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)
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-
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(33.3
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)
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(368.0
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)
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-
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||||||||
Net
(loss) income
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$
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(41.1
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)
|
$
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28.1
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$
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45.4
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$
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(612.8
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)
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$
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(51.7
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)
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Per
Common Share Data and Other Share Information:
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||||||||||||||||
Per
share of common stock
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||||||||||||||||
Basic
(loss) earnings per share
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||||||||||||||||
Continuing
operations
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$
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(0.36
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)
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$
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0.26
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$
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0.70
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$
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(0.46
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)
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$
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(1.03
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)
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|||
Discontinued
operations
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-
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-
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0.04
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(1.85
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)
|
0.54
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||||||||||
Cumulative
effect of changes in accounting principle
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(0.02
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)
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-
|
(0.31
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)
|
(3.47
|
)
|
-
|
||||||||
Net
(loss) income
|
$
|
(0.38
|
)
|
$
|
0.26
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$
|
0.43
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$
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(5.78
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)
|
$
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(0.49
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)
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|||
Diluted
(loss) earnings per share
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||||||||||||||||
Continuing
operations
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$
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(0.36
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)
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$
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0.26
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$
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0.69
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$
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(0.46
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)
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$
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(1.03
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)
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|||
Discontinued
operations
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-
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-
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0.04
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(1.85
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)
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0.54
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||||||||||
Cumulative
effect of changes in accounting principle
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(0.02
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)
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-
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(0.31
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)
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(3.47
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)
|
-
|
||||||||
Net
(loss) income
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$
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(0.38
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)
|
$
|
0.26
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$
|
0.42
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$
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(5.78
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)
|
$
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(0.49
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)
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|||
Balance
Sheet Data:
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||||||||||||||||
Total
assets
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$
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2,568.8
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$
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2,720.3
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$
|
2,721.8
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$
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2,772.0
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$
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4,952.1
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||||||
Total
debt
|
$
|
1,109.0
|
$
|
1,240.1
|
$
|
1,347.7
|
$
|
883.0
|
$
|
2,210.0
|
||||||
Company-obligated
preferred securities of subsidiary trusts
|
-
|
-
|
-
|
624.0
|
624.0
|
|||||||||||
Total
debt and preferred securities
|
$
|
1,109.0
|
$
|
1,240.1
|
$
|
1,347.7
|
$
|
1,507.0
|
$
|
2,834.0
|
|
2005
|
2004
|
|||||
Pulp
and
Paper
|
48
|
%
|
48
|
%
|
|||
Regulated
(including food, pharmaceutical and personal care)
|
21
|
%
|
20
|
%
|
|||
Industrial
Specialties (including oilfield, textiles and general
industrial)
|
12
|
%
|
13
|
%
|
|||
Paints
and Adhesives
|
10
|
%
|
10
|
%
|
|||
Construction
Materials
|
9
|
%
|
9
|
%
|
|||
Consolidated
|
100
|
%
|
100
|
%
|
|
2005
|
2004
|
|||||
North
America
|
48
|
%
|
46
|
%
|
|||
Europe
|
36
|
%
|
38
|
%
|
|||
Asia
Pacific
|
11
|
%
|
11
|
%
|
|||
Latin
America
|
5
|
%
|
5
|
%
|
|||
Consolidated
|
100
|
%
|
100
|
%
|
|
2005
|
2004
|
|||||
Pulp
and
Paper
|
47
|
%
|
47
|
%
|
|||
Aqualon
|
34
|
%
|
34
|
%
|
|||
FiberVisions
|
14
|
%
|
14
|
%
|
|||
Pinova
|
5
|
%
|
5
|
%
|
|||
Consolidated
|
100
|
%
|
100
|
%
|
Severance
and Other Exit Costs
|
Asset
Impairments
|
Accelerated
Depreciation
|
Inventory
Write-Downs
|
Totals
|
||||||||||||
Research
and development consolidation
|
$
|
5.2
|
$
|
-
|
$
|
2.4
|
$
|
-
|
$
|
7.6
|
||||||
Global
marketing and management realignment
|
14.5
|
-
|
-
|
-
|
14.5
|
|||||||||||
Performance
Products manufacturing rationalization
|
2.2
|
-
|
1.1
|
-
|
3.3
|
|||||||||||
Pinova
manufacturing rationalization
|
3.6
|
5.7
|
-
|
0.5
|
9.8
|
|||||||||||
FiberVisions
manufacturing rationalization
|
3.4
|
-
|
-
|
1.5
|
4.9
|
|||||||||||
Corporate
support realignment
|
5.3
|
-
|
-
|
-
|
5.3
|
|||||||||||
Total
charges by action
|
$
|
34.2
|
$
|
5.7
|
$
|
3.5
|
$
|
2.0
|
$
|
45.4
|
2005
|
2004
|
2003
|
2005
Change
|
2004
Change
|
||||||||||||
Net
sales
|
$
|
2,068.8
|
$
|
1,996.7
|
$
|
1,846.0
|
$
|
72.1
|
$
|
150.7
|
%
Change
Excluding
|
|||||||||||||
Regions
|
2005
|
2004
|
%Change
|
ROE
|
|||||||||
North
America
|
$
|
981.0
|
$
|
921.2
|
6
|
%
|
6
|
%
|
|||||
Europe
|
747.9
|
762.2
|
(2
|
)%
|
(4
|
)%
|
|||||||
Asia
Pacific
|
233.9
|
214.5
|
9
|
%
|
7
|
%
|
|||||||
Latin
America
|
106.0
|
98.8
|
7
|
%
|
(1
|
)%
|
|||||||
All
regions
|
$
|
2,068.8
|
$
|
1,996.7
|
4
|
%
|
2
|
%
|
%
Change
Excluding
|
|||||||||||||
Regions
|
2004
|
2003
|
%Change
|
ROE
|
|||||||||
North
America
|
$
|
921.2
|
$
|
884.8
|
4
|
%
|
4
|
%
|
|||||
Europe
|
762.2
|
692.9
|
10
|
%
|
1
|
%
|
|||||||
Asia
Pacific
|
214.5
|
174.5
|
23
|
%
|
23
|
%
|
|||||||
Latin
America
|
98.8
|
93.8
|
5
|
%
|
2
|
%
|
|||||||
All
regions
|
$
|
1,996.7
|
$
|
1,846.0
|
8
|
%
|
2
|
%
|
2005
|
2004
|
2003
|
2005
Change
|
2004
Change
|
||||||||||||
Cost
of sales
|
$
|
1,406.3
|
$
|
1,307.6
|
$
|
1,166.9
|
$
|
98.7
|
$
|
140.7
|
2005
|
2004
|
2003
|
2005
Change
|
2004
Change
|
||||||||||||
Selling,
general and administrative expenses
|
$
|
382.8
|
$
|
382.4
|
$
|
359.9
|
$
|
0.4
|
$
|
22.5
|
2005
|
2004
|
2003
|
2005
Change
|
2004
Change
|
||||||||||||
Research
and development
|
$
|
40.9
|
$
|
42.8
|
$
|
38.7
|
$
|
(1.9
|
)
|
$
|
4.1
|
2005
|
2004
|
2003
|
2005
Change
|
2004
Change
|
||||||||||||
Intangible
asset amortization
|
$
|
8.0
|
$
|
8.1
|
$
|
8.0
|
$
|
(0.1
|
)
|
$
|
0.1
|
2005
|
2004
|
2003
|
2005
Change
|
2004
Change
|
||||||||||||
Impairment
of FiberVisions goodwill
|
$
|
52.9
|
$
|
-
|
$
|
-
|
$
|
52.9
|
$
|
-
|
2005
|
2004
|
2003
|
2005
Change
|
2004
Change
|
||||||||||||
Other
operating expenses, net
|
$
|
47.5
|
$
|
26.9
|
$
|
17.0
|
$
|
20.6
|
$
|
9.9
|
2005
|
2004
|
2003
|
2005
Change
|
2004
Change
|
||||||||||||
Interest
and debt expense
|
$
|
89.4
|
$
|
108.7
|
$
|
130.8
|
$
|
(19.3
|
)
|
$
|
(22.1
|
)
|
2005
|
2004
|
2003
|
2005
Change
|
2004
Change
|
||||||||||||
Gain
on sale of CP Kelco ApS
|
$
|
-
|
$
|
(27.0
|
)
|
$
|
-
|
$
|
27.0
|
$
|
(27.0
|
)
|
2005
|
2004
|
2003
|
2005
Change
|
2004
Change
|
||||||||||||
Other
expenses, net
|
$
|
86.3
|
$
|
116.7
|
$
|
28.9
|
$
|
(30.4
|
)
|
$
|
87.8
|
2005
|
2004
|
2003
|
2005
Change
|
2004
Change
|
||||||||||||
(Benefit)
provision for income taxes
|
$
|
(7.2
|
)
|
$
|
2.4
|
$
|
21.3
|
$
|
(9.6
|
)
|
$
|
(18.9
|
)
|
2005
|
2004
|
2003
|
2005
Change
|
2004
Change
|
||||||||||||
Equity
loss of affiliated companies, net of tax
|
$
|
(0.5
|
)
|
$
|
-
|
$
|
(0.3
|
)
|
$
|
(0.5
|
)
|
$
|
0.3
|
2005
|
2004
|
2003
|
2005
Change
|
2004
Change
|
||||||||||||
Net
income from discontinued operations, net of tax
|
$
|
-
|
$
|
-
|
$
|
4.5
|
$
|
-
|
$
|
(4.5
|
)
|
2005
|
2004
|
2003
|
2005
Change
|
2004
Change
|
||||||||||||
Cumulative
effect of changes in accounting principle, net of
tax
|
$
|
(2.5
|
)
|
$
|
-
|
$
|
(33.3
|
)
|
$
|
(2.5
|
)
|
$
|
33.3
|
2005
|
2004
|
Change
|
%
Change
|
||||||||||
Net
sales:
|
|||||||||||||
Performance
Products
|
|||||||||||||
Pulp
and Paper
|
$
|
973.6
|
$
|
932.1
|
$
|
41.5
|
4
|
%
|
|||||
Aqualon
|
712.4
|
684.4
|
28.0
|
4
|
%
|
||||||||
1,686.0
|
1,616.5
|
69.5
|
4
|
%
|
|||||||||
Engineered
Materials and Additives
|
|||||||||||||
FiberVisions
|
282.7
|
281.2
|
1.5
|
1
|
%
|
||||||||
Pinova
|
100.1
|
99.0
|
1.1
|
1
|
%
|
||||||||
382.8
|
380.2
|
2.6
|
1
|
%
|
|||||||||
Consolidated
|
$
|
2,068.8
|
$
|
1,996.7
|
$
|
72.1
|
4
|
%
|
|||||
Profit
from operations:
|
|||||||||||||
Performance
Products
|
|||||||||||||
Pulp
and Paper
|
$
|
62.8
|
$
|
82.3
|
$
|
(19.5
|
)
|
(24
|
)%
|
||||
Aqualon
|
157.2
|
166.3
|
(9.1
|
)
|
(5
|
)%
|
|||||||
220.0
|
248.6
|
(28.6
|
)
|
(12
|
)%
|
||||||||
Engineered
Materials and Additives
|
|||||||||||||
FiberVisions
|
(64.9
|
)
|
(4.1
|
)
|
(60.8
|
)
|
NM
|
||||||
Pinova
|
(13.0
|
)
|
(10.3
|
)
|
(2.7
|
)
|
(26
|
)%
|
|||||
(77.9
|
)
|
(14.4
|
)
|
(63.5
|
)
|
NM
|
|||||||
Corporate
Items
|
(11.7
|
)
|
(5.3
|
)
|
(6.4
|
)
|
NM
|
||||||
Consolidated
|
$
|
130.4
|
$
|
228.9
|
$
|
(98.5
|
)
|
(43
|
)%
|
2004
|
2003
|
Change
|
%
Change
|
||||||||||
Net
sales:
|
|||||||||||||
Performance
Products
|
|||||||||||||
Pulp
and Paper
|
$
|
932.1
|
$
|
880.2
|
$
|
51.9
|
6
|
%
|
|||||
Aqualon
|
684.4
|
603.3
|
81.1
|
13
|
%
|
||||||||
1,616.5
|
1,483.5
|
133.0
|
9
|
%
|
|||||||||
Engineered
Materials and Additives
|
|||||||||||||
FiberVisions
|
281.2
|
277.6
|
3.6
|
1
|
%
|
||||||||
Pinova
|
99.0
|
84.9
|
14.1
|
17
|
%
|
||||||||
380.2
|
362.5
|
17.7
|
5
|
%
|
|||||||||
Consolidated
|
$
|
1,996.7
|
$
|
1,846.0
|
$
|
150.7
|
8
|
%
|
|||||
Profit
from operations:
|
|||||||||||||
Performance
Products
|
|||||||||||||
Pulp
and Paper
|
$
|
82.3
|
$
|
103.4
|
$
|
(21.1
|
)
|
(20
|
)%
|
||||
Aqualon
|
166.3
|
158.5
|
7.8
|
5
|
%
|
||||||||
248.6
|
261.9
|
(13.3
|
)
|
(5
|
)%
|
||||||||
Engineered
Materials and Additives
|
|||||||||||||
FiberVisions
|
(4.1
|
)
|
12.6
|
(16.7
|
)
|
NM
|
|||||||
Pinova
|
(10.3
|
)
|
(3.5
|
)
|
(6.8
|
)
|
NM
|
||||||
(14.4
|
)
|
9.1
|
(23.5
|
)
|
NM
|
||||||||
Corporate
Items
|
(5.3
|
)
|
(15.5
|
)
|
10.2
|
66
|
%
|
||||||
Consolidated
|
$
|
228.9
|
$
|
255.5
|
$
|
(26.6
|
)
|
(10
|
)%
|
2005
|
Net
Sales Percentage Increase (Decrease) from 2004 Due
To:
|
|||||||||||||||
Volume
|
Product
Mix
|
Price
|
Rates
of Exchange
|
Total
|
||||||||||||
Pulp
and Paper
|
1
|
%
|
(1
|
)%
|
1
|
%
|
3
|
%
|
4
|
%
|
||||||
Aqualon
|
3
|
%
|
-
|
-
|
1
|
%
|
4
|
%
|
||||||||
Performance
Products
|
2
|
%
|
(1
|
)%
|
1
|
%
|
2
|
%
|
4
|
%
|
||||||
FiberVisions
|
(13
|
)%
|
-
|
13
|
%
|
1
|
%
|
1
|
%
|
|||||||
Pinova
|
(12
|
)%
|
6
|
%
|
7
|
%
|
-
|
1
|
%
|
|||||||
Engineered
Materials and Additives
|
(13
|
)%
|
2
|
%
|
11
|
%
|
1
|
%
|
1
|
%
|
||||||
Consolidated
|
(1
|
)%
|
-
|
3
|
%
|
2
|
%
|
4
|
%
|
2004
|
Net
Sales Percentage Increase (Decrease) from 2003 Due
To:
|
|||||||||||||||
Volume
|
Product
Mix
|
Price
|
Rates
of Exchange
|
Total
|
||||||||||||
Pulp
and Paper
|
5
|
%
|
(2
|
)%
|
(1
|
)%
|
4
|
%
|
6
|
%
|
||||||
Aqualon
|
18
|
%
|
(7
|
)%
|
(1
|
)%
|
4
|
%
|
14
|
%
|
||||||
Performance
Products
|
11
|
%
|
(5
|
)%
|
(1
|
)%
|
4
|
%
|
9
|
%
|
||||||
FiberVisions
|
(6
|
)%
|
(2
|
)%
|
5
|
%
|
4
|
%
|
1
|
%
|
||||||
Pinova
|
28
|
%
|
(7
|
)%
|
(5
|
)%
|
-
|
16
|
%
|
|||||||
Engineered
Materials and Additives
|
2
|
%
|
(3
|
)%
|
3
|
%
|
3
|
%
|
5
|
%
|
||||||
Consolidated
|
8
|
%
|
(4
|
)%
|
-
|
4
|
%
|
8
|
%
|
2005
|
2004
|
2003
|
||||||||
Severance
and other exit costs
|
$
|
8.0
|
$
|
-
|
$
|
4.6
|
||||
Legacy
issue professional fees
|
0.8
|
1.0
|
-
|
|||||||
Reductions
in insurance claims reserves
|
-
|
(2.6
|
)
|
-
|
||||||
Nitrocellulose
facility shutdown costs
|
-
|
6.5
|
-
|
|||||||
Proxy
solicitation costs
|
-
|
-
|
3.6
|
|||||||
Special
executive pension adjustments
|
-
|
1.5
|
7.3
|
|||||||
Other
miscellaneous
|
2.9
|
(1.1
|
)
|
-
|
||||||
Total
Corporate items
|
$
|
11.7
|
$
|
5.3
|
$
|
15.5
|
(Dollars
in millions)
|
||||||||||||||||
Payments
Due by Period
(1)
|
||||||||||||||||
Less
than
|
1
-
3
|
4
-
5
|
After
5
|
|||||||||||||
Total
|
1
year
|
years
|
years
|
years
|
||||||||||||
Debt
obligations
|
$
|
1,109.0
|
$
|
16.7
|
$
|
138.8
|
$
|
384.6
|
$
|
568.9
|
||||||
Operating
lease obligations
|
118.6
|
19.6
|
34.3
|
35.6
|
29.1
|
|||||||||||
Purchase
obligations
(2)
|
23.7
|
23.7
|
-
|
-
|
-
|
|||||||||||
Other
long-term liabilities reflected on the
registrant's
balance sheet under GAAP
(3)
|
504.7
|
86.5
|
74.4
|
56.5
|
287.3
|
|||||||||||
Total
contractual cash obligations
|
$
|
1,756.0
|
$
|
146.5
|
$
|
247.5
|
$
|
476.7
|
$
|
885.3
|
(1)
|
Does
not include the anticipated future interest payments to be made
under the
Company's current debt agreements; however, based upon current
indebtedness and interest rates at December 31, 2005, such interest
obligations are estimated to be approximately $84.5 million in
2006, $84.2
million in 2007, $69.4 million in 2008, $69.1 million in 2009,
$68.5
million in 2010 and $778.6 million thereafter. A one percent increase
or
decrease in the LIBOR rate would have an impact of approximately
plus or
minus $3.8 million on the Company’s interest payments in years 2006
through 2010.
|
(2)
|
Obligation
relates primarily to the FiberVisions division and as such will
transfer
to the joint venture upon the closing of the aforementioned transaction
with SPG, which is anticipated to occur prior to the end of the
first
quarter of 2006.
|
(3)
|
Includes
amounts pertaining to asbestos-related matters, asset retirement
obligations, post-employment and post-retirement obligations and
workers
compensation claims. Due to the dynamic nature of asbestos litigation,
it
is impractical to determine the anticipated payments in any given
year.
Therefore, the non-current asbestos-related liability of $233.6
million
has been reflected in the after five years
column.
|
CONSOLIDATED
FINANCIAL
STATEMENTS
|
Page
|
Management's
Report on Internal Control Over Financial Reporting
|
34
|
Reports
of Independent Registered Public Accounting Firms
|
35
|
Consolidated
Statements of Operations and Comprehensive (Loss) Income for the
Years
Ended December 31, 2005, 2004 and
2003
|
38
|
Consolidated
Balance Sheets as of December 31, 2005 and 2004
|
39
|
Consolidated
Statements of Cash Flows for the Years Ended December 31, 2005, 2004
and 2003
|
40
|
Consolidated
Statements of Stockholders' (Deficit) Equity for the Years Ended
December 31, 2005, 2004 and 2003
|
42
|
Summary
of Significant Accounting Policies and Notes to Consolidated Financial
Statements
|
43
|
SUPPLEMENTARY
DATA
|
|
Valuation
and Qualifying Accounts
|
98
|
(Dollars
in millions, except per share)
|
Year
Ended December 31,
|
|||||||||
2005
|
2004
|
2003
|
||||||||
$
|
2,068.8
|
$
|
1,996.7
|
$
|
1,846.0
|
|||||
Cost
of sales
|
1,406.3
|
1,307.6
|
1,166.9
|
|||||||
Selling,
general and administrative expenses
|
382.8
|
382.4
|
359.9
|
|||||||
Research
and development
|
40.9
|
42.8
|
38.7
|
|||||||
Intangible
asset amortization (Note 4)
|
8.0
|
8.1
|
8.0
|
|||||||
Impairment
of FiberVisions goodwill (Note 3)
|
52.9
|
-
|
-
|
|||||||
Other
operating expense, net (Note 18)
|
47.5
|
26.9
|
17.0
|
|||||||
Profit
from operations
|
130.4
|
228.9
|
255.5
|
|||||||
Interest
and debt expense (Note 19)
|
89.4
|
108.7
|
130.8
|
|||||||
Gain
on sale of CP Kelco ApS (Note 25)
|
-
|
(27.0
|
)
|
-
|
||||||
Other
expense, net (Note 20)
|
86.3
|
116.7
|
28.9
|
|||||||
(Loss)
income before income taxes and equity (loss) income
|
(45.3
|
)
|
30.5
|
95.8
|
||||||
(Benefit)
provision for income taxes (Note 7)
|
(7.2
|
)
|
2.4
|
21.3
|
||||||
(Loss)
income before equity loss
|
(38.1
|
)
|
28.1
|
74.5
|
||||||
Equity
loss of affiliated companies, net of tax
|
(0.5
|
)
|
-
|
(0.3
|
)
|
|||||
Net
(loss) income from continuing operations before discontinued
|
||||||||||
operations
and cumulative effect of changes in accounting principle
|
(38.6
|
)
|
28.1
|
74.2
|
||||||
Net
income from discontinued operations, net of tax
|
-
|
-
|
4.5
|
|||||||
Net
(loss) income before cumulative effect of changes in accounting
principle
|
(38.6
|
)
|
28.1
|
78.7
|
||||||
Cumulative
effect of changes in accounting principle, net of tax (Note
21)
|
(2.5
|
)
|
-
|
(33.3
|
)
|
|||||
Net
(loss) income
|
$
|
(41.1
|
)
|
$
|
28.1
|
$
|
45.4
|
|||
(Loss)
earnings per share (Note 22):
|
||||||||||
Basic
(loss) earnings per share
|
||||||||||
Continuing
operations
|
$
|
(0.36
|
)
|
$
|
0.26
|
$
|
0.70
|
|||
Discontinued
operations
|
-
|
-
|
0.04
|
|||||||
Cumulative
effect of changes in accounting principle
|
(0.02
|
)
|
-
|
(0.31
|
)
|
|||||
Net
(loss) income
|
$
|
(0.38
|
)
|
$
|
0.26
|
$
|
0.43
|
|||
Weighted
average number of shares (millions)
|
108.7
|
107.3
|
106.2
|
|||||||
Diluted
(loss) earnings per share
|
||||||||||
Continuing
operations
|
$
|
(0.36
|
)
|
$
|
0.26
|
$
|
0.69
|
|||
Discontinued
operations
|
-
|
-
|
0.04
|
|||||||
Cumulative
effect of changes in accounting principle
|
(0.02
|
)
|
-
|
(0.31
|
)
|
|||||
Net
(loss) income
|
$
|
(0.38
|
)
|
$
|
0.26
|
$
|
0.42
|
|||
Weighted
average number of shares (millions)
|
108.7
|
109.0
|
107.2
|
|||||||
Net
(loss) income
|
$
|
(41.1
|
)
|
$
|
28.1
|
$
|
45.4
|
|||
Foreign
currency translation
|
(72.1
|
)
|
71.1
|
123.4
|
||||||
(Increase)
decrease in additional minimum pension liability, net of tax,
due
to
|
||||||||||
Remeasurement
adjustments
|
(44.3
|
)
|
(28.2
|
)
|
14.9
|
|||||
Foreign
currency translations
|
5.5
|
(1.4
|
)
|
(2.2
|
)
|
|||||
Other,
net of tax
|
(0.3
|
)
|
-
|
-
|
||||||
Comprehensive
(loss) income
|
$
|
(152.3
|
)
|
$
|
69.6
|
$
|
181.5
|
(Dollars
in millions)
|
December
31,
|
||||||
2005
|
2004
|
||||||
Current
assets
|
|||||||
Cash
and cash equivalents
|
$
|
77.3
|
$
|
126.5
|
|||
Accounts
receivable, net (Note 1)
|
291.0
|
346.7
|
|||||
Inventories
(Note 2)
|
185.0
|
212.4
|
|||||
Deferred
income taxes (Note 7 )
|
39.3
|
36.7
|
|||||
Asbestos-related
assets (Note 12)
|
-
|
6.3
|
|||||
FiberVisions
assets held for sale (Note 3)
|
202.7
|
-
|
|||||
Other
current assets (Note 16)
|
48.1
|
53.8
|
|||||
Total
current assets
|
843.4
|
782.4
|
|||||
Property,
plant and equipment, net (Note 16)
|
535.4
|
695.4
|
|||||
Intangible
assets, net (Note 4)
|
142.8
|
162.3
|
|||||
Goodwill
(Note 4)
|
441.0
|
550.3
|
|||||
Deferred
income taxes (Note 7)
|
240.4
|
121.9
|
|||||
Asbestos-related
assets (Note 12)
|
120.7
|
162.5
|
|||||
Deferred
charges and other assets (Note 16)
|
245.1
|
245.5
|
|||||
Total
assets
|
$
|
2,568.8
|
$
|
2,720.3
|
|||
LIABILITIES
AND STOCKHOLDERS' (DEFICIT) EQUITY
|
|||||||
Current
liabilities
|
|||||||
Accounts
payable
|
$
|
173.4
|
$
|
187.0
|
|||
FiberVisions
liabilities held for sale (Note 3)
|
66.6
|
-
|
|||||
Asbestos-related
liabilities (Note 12)
|
36.4
|
46.8
|
|||||
Current
debt obligations (Note 5)
|
16.7
|
29.8
|
|||||
Accrued
expenses (Note 16)
|
219.3
|
212.1
|
|||||
Total
current liabilities
|
512.4
|
475.7
|
|||||
Long-term
debt (Note 5)
|
1,092.3
|
1,210.3
|
|||||
Deferred
income taxes (Note 7)
|
75.8
|
77.2
|
|||||
Pension
liability (Note 8)
|
323.4
|
241.4
|
|||||
Other
postretirement benefits (Note 8)
|
65.5
|
80.5
|
|||||
Deferred
credits and other liabilities (Note 16)
|
290.5
|
309.9
|
|||||
Asbestos-related
liabilities (Note 12)
|
233.6
|
213.4
|
|||||
Total
liabilities
|
2,593.5
|
2,608.4
|
|||||
Commitments
and contingencies (Note 12)
|
|||||||
Stockholders'
(deficit) equity
|
|||||||
Series
preferred stock (Note 13)
|
-
|
-
|
|||||
Common
stock, $25/48 stated value (Note 14)
|
83.3
|
83.3
|
|||||
(shares
issued: 2005 and 2004 - 159,984,444)
|
|||||||
Additional
paid-in capital
|
548.9
|
569.2
|
|||||
Unearned
compensation (Notes 9 and 10)
|
(65.7
|
)
|
(77.9
|
)
|
|||
Accumulated
other comprehensive loss (Note 15)
|
(387.6
|
)
|
(276.4
|
)
|
|||
Retained
earnings
|
1,495.4
|
1,536.5
|
|||||
1,674.3
|
1,834.7
|
||||||
Treasury
stock, at cost (shares: 2005 - 47,247,344 and 2004 -
47,842,836)
|
(1,699.0
|
)
|
(1,722.8
|
)
|
|||
Total
stockholders' (deficit) equity
|
(24.7
|
)
|
111.9
|
||||
Total
liabilities and stockholders' (deficit) equity
|
$
|
2,568.8
|
$
|
2,720.3
|
(Dollars
in millions)
|
Year
Ended December 31,
|
|||||||||
2005
|
2004
|
2003
|
||||||||
Net
(loss) income
|
$
|
(41.1
|
)
|
$
|
28.1
|
$
|
45.4
|
|||
Net
income from discontinued operations, net of tax
|
-
|
-
|
(4.5
|
)
|
||||||
Adjustments
to reconcile net (loss) income to net cash provided by
operations:
|
||||||||||
Depreciation
|
80.5
|
74.9
|
73.2
|
|||||||
Amortization
|
25.4
|
26.3
|
27.4
|
|||||||
Deferred
income tax provision
|
(54.9
|
)
|
(18.7
|
)
|
8.3
|
|||||
Gain
on disposals
|
(11.8
|
)
|
(28.0
|
)
|
(3.7
|
)
|
||||
Impairment
charges
|
58.6
|
9.1
|
1.9
|
|||||||
Write-off
of debt issuance costs
|
1.8
|
18.0
|
-
|
|||||||
Other
non-cash charges and credits
|
6.3
|
1.7
|
9.4
|
|||||||
Accruals
and deferrals of cash receipts and payments (net of acquisitions
and
dispositions):
|
||||||||||
Accounts
receivable
|
2.9
|
(7.6
|
)
|
6.8
|
||||||
Inventories
|
(3.3
|
)
|
4.0
|
(7.4
|
)
|
|||||
Asbestos-related
assets and liabilities, net
|
61.3
|
40.2
|
(27.6
|
)
|
||||||
Other
current assets
|
(10.7
|
)
|
20.7
|
1.8
|
||||||
Accounts
payable and accrued expenses
|
28.2
|
5.0
|
(36.7
|
)
|
||||||
Income
taxes payable
|
27.1
|
(25.4
|
)
|
(88.1
|
)
|
|||||
Pension
and postretirement benefits
|
(18.3
|
)
|
(23.1
|
)
|
(34.3
|
)
|
||||
Non-current
assets and liabilities
|
(12.8
|
)
|
(4.7
|
)
|
50.9
|
|||||
Net
cash provided by operating activities from continuing
operations
|
139.2
|
120.5
|
22.8
|
|||||||
Cash
Flow From Investing Activities:
|
||||||||||
Capital
expenditures
|
(67.5
|
)
|
(77.4
|
)
|
(48.0
|
)
|
||||
Proceeds
of investment and fixed asset disposals
|
16.6
|
1.4
|
10.4
|
|||||||
Proceeds
from sale of minority interest in CP Kelco ApS
|
-
|
27.0
|
-
|
|||||||
Decrease
in restricted cash
|
-
|
-
|
125.0
|
|||||||
Acquisitions,
net of cash acquired
|
-
|
-
|
(8.9
|
)
|
||||||
Investment
in CRESTS Units preferred securities
|
-
|
-
|
(27.4
|
)
|
||||||
Other,
net
|
(6.8
|
)
|
(0.1
|
)
|
(1.4
|
)
|
||||
Net
cash (used in) provided by investing activities
|
(57.7
|
)
|
(49.1
|
)
|
49.7
|
|||||
Cash
Flow From Financing Activities:
|
||||||||||
Long-term
debt proceeds
|
-
|
650.0
|
-
|
|||||||
Long-term
debt payments
|
(131.2
|
)
|
(729.5
|
)
|
(165.2
|
)
|
||||
Change
in short-term debt
|
1.9
|
1.6
|
(0.7
|
)
|
||||||
Payment
of debt issuance costs and underwriting fees
|
-
|
(7.8
|
)
|
-
|
||||||
Repurchase
of CRESTS Units warrants
|
-
|
-
|
(7.0
|
)
|
||||||
Treasury
stock issued
|
2.7
|
5.5
|
1.9
|
|||||||
Other
|
(0.4
|
)
|
6.1
|
-
|
||||||
Net
cash used in financing activities
|
(127.0
|
)
|
(74.1
|
)
|
(171.0
|
)
|
||||
Effect
of exchange rate changes on cash
|
(3.7
|
)
|
2.9
|
15.8
|
||||||
Net
(decrease) increase in cash and cash equivalents
|
(49.2
|
)
|
0.2
|
(82.7
|
)
|
|||||
Cash
and cash equivalents at beginning of year
|
126.5
|
126.3
|
209.0
|
|||||||
Cash
and cash equivalents at end of year
|
$
|
77.3
|
$
|
126.5
|
$
|
126.3
|
(Dollars
in millions)
|
Year
Ended December 31,
|
|||||||||
2005
|
2004
|
2003
|
||||||||
Supplemental
Disclosures of Cash Flow Information:
|
||||||||||
Cash
paid during the period for:
|
||||||||||
Interest
|
$
|
86.4
|
$
|
97.1
|
$
|
121.8
|
||||
Income
taxes, net of refunds received
|
18.4
|
40.7
|
64.7
|
|||||||
Non-cash
investing and financing activities:
|
||||||||||
Acquisition
of minority interest
|
$
|
-
|
$
|
-
|
$
|
2.0
|
||||
Incentive
and other employee benefit stock plan issuances
|
13.4
|
15.7
|
19.0
|
|||||||
Elimination
of 6.5% junior subordinated deferrable interest debentures due
2029
|
-
|
(34.6
|
)
|
-
|
||||||
Elimination
of investment in Hercules Trust II upon its dissolution
|
-
|
27.4
|
-
|
Accumulated
|
||||||||||||||||||||||
Unearned
|
Other
|
|||||||||||||||||||||
Common
|
Paid-in
|
Compen-
|
Comprehen-
|
Retained
|
Reacquired
|
|||||||||||||||||
|
Stock
|
Capital
|
sation
|
sive
Loss
|
Earnings
|
Stock
|
Total
|
|||||||||||||||
Balances
at January 1, 2003, as previously reported
|
$
|
83.3
|
$
|
665.0
|
$
|
(91.0
|
)
|
$
|
(454.0
|
)
|
$
|
1,449.8
|
$
|
(1,824.3
|
)
|
$
|
(171.2
|
)
|
||||
(Common
shares: issued, 159,984,444; reacquired, 50,615,487)
|
||||||||||||||||||||||
Adjustment
for the cumulative effect on prior years of retrospectively applying
the weighted-average method of accounting for valuing inventories
(Note 21)
|
-
|
-
|
-
|
-
|
13.2
|
-
|
13.2
|
|||||||||||||||
Balances
at January 1, 2003 as adjusted
|
$
|
83.3
|
$
|
665.0
|
$
|
(91.0
|
)
|
$
|
(454.0
|
)
|
$
|
1,463.0
|
$
|
(1,824.3
|
)
|
$
|
(158.0
|
)
|
||||
Net
income
|
-
|
-
|
-
|
-
|
45.4
|
-
|
45.4
|
|||||||||||||||
Foreign
currency translation adjustment
|
-
|
-
|
-
|
121.2
|
-
|
-
|
121.2
|
|||||||||||||||
Release
of shares held by ESOP trust
|
-
|
(4.8
|
)
|
11.0
|
-
|
-
|
-
|
6.2
|
||||||||||||||
Debt
issuance costs on warrants issued with trust preferred
|
||||||||||||||||||||||
securities
|
-
|
(7.0
|
)
|
-
|
-
|
-
|
-
|
(7.0
|
)
|
|||||||||||||
Repurchase
of warrants
|
-
|
(7.0
|
)
|
-
|
-
|
-
|
-
|
(7.0
|
)
|
|||||||||||||
Decrease
in additional minimum pension liability, net of tax
|
-
|
-
|
-
|
14.9
|
-
|
-
|
14.9
|
|||||||||||||||
Issuances
of treasury stock, net of forfeitures
|
-
|
(42.8
|
)
|
(10.2
|
)
|
-
|
-
|
58.7
|
5.7
|
|||||||||||||
Amortization
of unearned compensation
|
-
|
-
|
4.0
|
-
|
-
|
-
|
4.0
|
|||||||||||||||
Balances
at December 31, 2003
|
$
|
83.3
|
$
|
603.4
|
$
|
(86.2
|
)
|
$
|
(317.9
|
)
|
$
|
1,508.4
|
$
|
(1,765.6
|
)
|
$
|
25.4
|
|||||
(Common
shares: issued, 159,984,444; reacquired, 48,992,628)
|
||||||||||||||||||||||
Net
income
|
-
|
-
|
-
|
-
|
28.1
|
-
|
28.1
|
|||||||||||||||
Foreign
currency translation adjustment
|
-
|
-
|
-
|
69.7
|
-
|
-
|
69.7
|
|||||||||||||||
Release
of shares held by ESOP trust
|
-
|
(5.0
|
)
|
13.3
|
-
|
-
|
-
|
8.3
|
||||||||||||||
Increase
in additional minimum pension liability, net of tax
|
-
|
-
|
-
|
(28.2
|
)
|
-
|
-
|
(28.2
|
)
|
|||||||||||||
Issuances
of treasury stock, net of forfeitures
|
-
|
(29.2
|
)
|
(8.0
|
)
|
-
|
-
|
42.8
|
5.6
|
|||||||||||||
Amortization
of unearned compensation
|
-
|
-
|
3.0
|
-
|
-
|
-
|
3.0
|
|||||||||||||||
Balances
at December 31, 2004
|
$
|
83.3
|
$
|
569.2
|
$
|
(77.9
|
)
|
$
|
(276.4
|
)
|
$
|
1,536.5
|
$
|
(1,722.8
|
)
|
$
|
111.9
|
|||||
(Common
shares: issued, 159,984,444; reacquired, 47,842,836)
|
||||||||||||||||||||||
Net
loss
|
-
|
-
|
-
|
-
|
(41.1
|
)
|
-
|
(41.1
|
)
|
|||||||||||||
Foreign
currency translation adjustment
|
-
|
-
|
-
|
(66.6
|
)
|
-
|
-
|
(66.6
|
)
|
|||||||||||||
Release
of shares held by ESOP trust
|
-
|
(5.0
|
)
|
12.8
|
-
|
-
|
-
|
7.8
|
||||||||||||||
Repurchase
of warrants
|
-
|
(2.0
|
)
|
-
|
-
|
-
|
-
|
(2.0
|
)
|
|||||||||||||
Increase
in additional minimum pension liability, net of tax
|
-
|
-
|
-
|
(44.3
|
)
|
-
|
-
|
(44.3
|
)
|
|||||||||||||
Issuances
of treasury stock, net of forfeitures
|
-
|
(13.3
|
)
|
(8.5
|
)
|
-
|
-
|
23.8
|
2.0
|
|||||||||||||
Amortization
of unearned compensation
|
-
|
-
|
7.9
|
-
|
-
|
-
|
7.9
|
|||||||||||||||
Other,
net of tax
|
-
|
-
|
-
|
(0.3
|
)
|
-
|
-
|
(0.3
|
)
|
|||||||||||||
Balances
at December 31, 2005
|
$
|
83.3
|
$
|
548.9
|
$
|
(65.7
|
)
|
$
|
(387.6
|
)
|
$
|
1,495.4
|
$
|
(1,699.0
|
)
|
$
|
(24.7
|
)
|
||||
(Common
shares: issued, 159,984,444; reacquired,47,247,344)
|
||||||||||||||||||||||
(Dollars
in millions, except per share)
|
Year
Ended December 31,
|
|||||||||
2005
|
2004
|
2003
|
||||||||
Net
(loss) income, as reported
|
$
|
(41.1
|
)
|
$
|
28.1
|
$
|
45.4
|
|||
Add:
Total stock-based compensation expense recognized in reported results,
net of tax
|
4.5
|
1.4
|
2.9
|
|||||||
Deduct:
Total stock-based compensation expense determined under the
fair
value based method for all awards, net of tax*
|
5.1
|
2.8
|
9.6
|
|||||||
Pro
forma net (loss) income
|
$
|
(41.7
|
)
|
$
|
26.7
|
$
|
38.7
|
|||
(Loss)
earnings per share:
|
||||||||||
Basic
- as reported
|
$
|
(0.38
|
)
|
$
|
0.26
|
$
|
0.43
|
|||
Basic
- pro forma
|
$
|
(0.38
|
)
|
$
|
0.25
|
$
|
0.36
|
|||
Diluted
- as reported
|
$
|
(0.38
|
)
|
$
|
0.26
|
$
|
0.42
|
|||
Diluted
- pro forma
|
$
|
(0.38
|
)
|
$
|
0.24
|
$
|
0.36
|
*
For information regarding the weighted-average assumptions used
in
estimating fair value for 2005, 2004 and 2003, see Note
10.
|
(Dollars
in millions)
|
||||||||||
2005
|
2004
|
2003
|
||||||||
Balance
at beginning of year
|
$
|
4.7
|
$
|
5.5
|
$
|
11.9
|
||||
Charged
to costs and expenses
|
2.3
|
5.4
|
4.2
|
|||||||
Deductions
|
(3.0
|
)
|
(6.2
|
)
|
(10.6
|
)
|
||||
Balance
at end of year
|
$
|
4.0
|
$
|
4.7
|
$
|
5.5
|
(Dollars
in millions)
|
|||||||
2005
|
2004
|
||||||
Finished
products
|
$
|
99.0
|
$
|
103.5
|
|||
Raw
materials and work-in-process
|
64.8
|
79.6
|
|||||
Supplies
|
21.2
|
29.3
|
|||||
$
|
185.0
|
$
|
212.4
|
(Dollars
in millions)
|
||||||||||
Assets
|
|
Liabilities
|
||||||||
Cash
and cash equivalents
|
$
|
2.6
|
Accounts
payable
|
$
|
29.9
|
|||||
Accounts
receivable, net
|
34.4
|
Accrued
expenses
|
7.1
|
|||||||
Inventories
|
20.7
|
Deferred
income taxes
|
29.2
|
|||||||
Other
current assets
|
9.2
|
Deferred
credits and other liabilities
|
0.1
|
|||||||
Property,
plant and equipment, net
|
92.1
|
Long-term
debt
|
0.3
|
|||||||
Intangible
assets, net
|
11.1
|
|||||||||
Goodwill
|
32.0
|
|
||||||||
Deferred
charges and other assets
|
0.6
|
|||||||||
Total
Fibervisions assets held for sale
|
$
|
202.7
|
Total
FiberVisions liabilities held for sale
|
$
|
66.6
|
(Dollars
in millions)
|
||||||||||
Engineered
|
||||||||||
Performance
|
Materials
&
|
|||||||||
Products
|
Additives
|
Total
|
||||||||
Balance
at December 31, 2003
|
$
|
433.2
|
$
|
84.9
|
$
|
518.1
|
||||
Additions
|
1.6
|
-
|
1.6
|
|||||||
Foreign
currency translation
|
30.6
|
-
|
30.6
|
|||||||
Balance
at December 31, 2004
|
$
|
465.4
|
$
|
84.9
|
$
|
550.3
|
||||
FiberVisions
impairment
|
-
|
(52.9
|
)
|
(52.9
|
)
|
|||||
Reclassified
to FiberVisions assets held for sale
|
-
|
(32.0
|
)
|
(32.0
|
)
|
|||||
Foreign
currency translation
|
(24.4
|
)
|
-
|
(24.4
|
)
|
|||||
Balance
at December 31, 2005
|
$
|
441.0
|
$
|
-
|
$
|
441.0
|
Customer
|
Trademarks
&
|
Other
|
|||||||||||
Relationships
|
Tradenames
|
Intangibles
|
Total
|
||||||||||
Gross
Carrying Amount
|
|||||||||||||
Balance,
December 31, 2004
|
$
|
90.0
|
$
|
73.9
|
$
|
52.5
|
$
|
216.4
|
|||||
Balance,
December 31, 2005
|
90.0
|
73.9
|
24.8
|
188.7
|
|||||||||
Accumulated
Amortization
|
|||||||||||||
Balance,
December 31, 2004
|
$
|
13.9
|
$
|
11.5
|
$
|
28.7
|
$
|
54.1
|
|||||
Balance,
December 31, 2005
|
16.4
|
13.5
|
16.0
|
45.9
|
(Dollars
in millions)
|
|||||||
2005
|
2004
|
||||||
Term
B loan due 2010 (a)
|
$
|
393.0
|
$
|
397.0
|
|||
6.60%
notes due 2027 (b)
|
100.0
|
100.0
|
|||||
Term
notes at various rates from 5.00% to 7.16% due in varying amounts
through
2006 (c)
|
6.8
|
27.8
|
|||||
11.125%
senior notes due 2007 (d)
|
130.0
|
226.0
|
|||||
6.75%
senior subordinated notes due 2029 (e)
|
250.0
|
250.0
|
|||||
8%
convertible subordinated debentures due 2010 (f)
|
2.6
|
2.6
|
|||||
6.5%
junior subordinated deferrable interest debentures due 2029
(g)
|
217.0
|
229.0
|
|||||
Other
|
9.6
|
7.7
|
|||||
1,109.0
|
1,240.1
|
||||||
Less:
Current debt obligations
|
16.7
|
29.8
|
|||||
Long
term debt
|
$
|
1,092.3
|
$
|
1,210.3
|
(a)
|
The
term loan, a component of the Company’s Senior Credit Facility, matures on
October 8, 2010 and bears interest at LIBOR + 1.75%, with the Company
holding the option to reset interest rates for one, two, three
or six
month periods. The weighted average rate was 5.9% as of December
31, 2005.
The Senior Credit Facility is also comprised of a $150 million
committed
revolving credit facility (the “Revolving Facility”) and provides Hercules
the ability, subject to lender approval, to borrow an additional
$250
million in the form of an incremental term note. The Senior Credit
Facility is secured by liens on the
|
(Dollars
in millions)
|
||||||||||
2005
|
2004
|
2003
|
||||||||
Domestic
|
$
|
(56.8
|
)
|
$
|
(158.8
|
)
|
$
|
(68.4
|
)
|
|
Foreign
|
11.5
|
189.3
|
164.2
|
|||||||
(Loss)
income before income taxes and equity loss
|
$
|
(45.3
|
)
|
$
|
30.5
|
$
|
95.8
|
Currently
payable
|
||||||||||
U.S.
federal
|
$
|
(2.1
|
)
|
$
|
(30.4
|
)
|
$
|
(28.1
|
)
|
|
Foreign
|
40.9
|
38.1
|
39.9
|
|||||||
State
|
8.9
|
13.4
|
0.6
|
|||||||
Deferred
|
||||||||||
Domestic
|
(48.3
|
)
|
(21.5
|
)
|
11.5
|
|||||
Foreign
|
(6.6
|
)
|
2.8
|
(2.6
|
)
|
|||||
(Benefit)
provision for income taxes
|
$
|
(7.2
|
)
|
$
|
2.4
|
$
|
21.3
|
2005
|
2004
|
||||||
Depreciation
|
$
|
(81.4
|
)
|
$
|
(105.9
|
)
|
|
Pension
|
(8.2
|
)
|
(1.1
|
)
|
|||
Inventory
|
(4.1
|
)
|
(0.7
|
)
|
|||
Investments
|
(174.3
|
)
|
(161.4
|
)
|
|||
Goodwill
|
(48.4
|
)
|
(52.6
|
)
|
|||
Accrued
expenses
|
(3.1
|
)
|
(4.1
|
)
|
|||
Other
|
(13.1
|
)
|
(29.8
|
)
|
|||
Gross
deferred tax liabilities
|
$
|
(332.6
|
)
|
$
|
(355.6
|
)
|
|
Postretirement
benefits other than pensions
|
$
|
45.5
|
$
|
52.5
|
|||
Pension
|
113.4
|
84.7
|
|||||
Goodwill
|
7.1
|
7.8
|
|||||
Accrued
expenses
|
216.1
|
192.1
|
|||||
Loss
carryforwards
|
349.2
|
366.1
|
|||||
Credit
carryforwards
|
126.9
|
97.1
|
|||||
Assets
held for sale
|
21.5
|
-
|
|||||
Other
|
24.6
|
21.0
|
|||||
Gross
deferred tax assets
|
904.3
|
821.3
|
|||||
Valuation
allowance
|
(380.7
|
)
|
(391.8
|
)
|
|||
Net
deferred tax assets
|
$
|
191.0
|
$
|
73.9
|
(Dollars
in millions)
|
||||||||||
2005
|
2004
|
2003
|
||||||||
Provision
on income from discontinued operations
|
$
|
-
|
$
|
-
|
$
|
2.1
|
||||
Cumulative
effect of changes in accounting principle
|
(1.4
|
)
|
-
|
(18.2
|
)
|
|||||
$
|
(1.4
|
)
|
$
|
-
|
$
|
(16.1
|
)
|
(Dollars
in millions)
|
||||||||||
2005
|
2004
|
2003
|
||||||||
Additional
minimum pension liability
|
$
|
24.8
|
$
|
14.5
|
$
|
(10.5
|
)
|
|||
Other
|
0.2
|
-
|
-
|
|||||||
Total
|
$
|
25.0
|
$
|
14.5
|
$
|
(10.5
|
)
|
2005
|
2004
|
2003
|
||||||||
U.S.
statutory income tax rate
|
35
|
%
|
35
|
%
|
35
|
%
|
||||
Gain
on sale of CP Kelco ApS
|
-
|
(31
|
)
|
-
|
||||||
Valuation
allowances
|
(51
|
)
|
(75
|
)
|
(3
|
)
|
||||
Tax
rate differences on subsidiary earnings
|
(6
|
)
|
(44
|
)
|
(9
|
)
|
||||
U.S.
tax on foreign dividends and undistributed earnings
|
21
|
23
|
8
|
|||||||
State
taxes
|
(11
|
)
|
34
|
1
|
||||||
Reserves
|
16
|
70
|
-
|
|||||||
Exempt
export income
|
4
|
(7
|
)
|
(2
|
)
|
|||||
Intellectual
property
|
-
|
-
|
(9
|
)
|
||||||
Tax
refunds
|
9
|
-
|
-
|
|||||||
Other
|
(1
|
)
|
3
|
1
|
||||||
Effective
tax rate
|
16
|
%
|
8
|
%
|
22
|
%
|
(Dollars
in millions)
|
|||||||||||||||||||
Pension
Benefits
|
|||||||||||||||||||
2005
|
2004
|
Other
Postretirement Benefits
|
|||||||||||||||||
Change
in benefit obligation:
|
U.S.
|
Int’l.
|
U.S.
|
Int’l.
|
2005
|
2004
|
|||||||||||||
Benefit
obligation at January 1
|
$
|
1,413.5
|
$
|
325.7
|
$
|
1,421.3
|
$
|
282.2
|
$
|
181.0
|
$
|
206.1
|
|||||||
Service
cost
|
12.7
|
5.4
|
13.3
|
5.9
|
0.8
|
0.8
|
|||||||||||||
Interest
cost
|
81.3
|
15.2
|
82.3
|
15.4
|
8.8
|
10.3
|
|||||||||||||
Plan
amendments
|
-
|
(4.5
|
)
|
(43.1
|
)
|
(1.7
|
)
|
(32.4
|
)
|
-
|
|||||||||
Participant
contributions
|
-
|
-
|
-
|
0.3
|
-
|
-
|
|||||||||||||
Foreign
currency translation
|
-
|
(37.3
|
)
|
-
|
27.3
|
0.1
|
0.2
|
||||||||||||
Actuarial
loss (gain)
|
136.1
|
49.2
|
42.7
|
10.2
|
19.8
|
(12.9
|
)
|
||||||||||||
Settlements/curtailments
|
-
|
-
|
-
|
(0.6
|
)
|
-
|
-
|
||||||||||||
Special
benefits
|
-
|
-
|
1.1
|
-
|
-
|
-
|
|||||||||||||
Benefits
paid from plan assets
|
(101.9
|
)
|
(13.1
|
)
|
(98.8
|
)
|
(12.1
|
)
|
-
|
-
|
|||||||||
Benefits
paid from Company assets
|
(4.9
|
)
|
-
|
(5.3
|
)
|
(1.2
|
)
|
(23.6
|
)
|
(23.5
|
)
|
||||||||
Benefit
obligation at December 31
|
$
|
1,536.8
|
$
|
340.6
|
$
|
1,413.5
|
$
|
325.7
|
$
|
154.5
|
$
|
181,0
|
|||||||
Change
in plan assets:
|
|||||||||||||||||||
Fair
value of plan assets at January 1
|
$
|
1,176.2
|
$
|
245.7
|
$
|
1,115.1
|
$
|
217.9
|
$
|
-
|
$
|
-
|
|||||||
Actual
return on plan assets
|
105.0
|
20.9
|
119.9
|
15.6
|
-
|
-
|
|||||||||||||
Actuarial
gain
|
-
|
14.7
|
-
|
0.1
|
-
|
-
|
|||||||||||||
Settlements/curtailments
|
-
|
-
|
-
|
(0.5
|
)
|
-
|
-
|
||||||||||||
Company
contributions
|
40.0
|
13.7
|
40.0
|
3.2
|
-
|
-
|
|||||||||||||
Participant
contributions
|
-
|
0.9
|
-
|
1.0
|
-
|
-
|
|||||||||||||
Foreign
currency translation
|
-
|
(27.7
|
)
|
-
|
20.5
|
-
|
-
|
||||||||||||
Benefits
paid from plan assets
|
(101.9
|
)
|
(11.8
|
)
|
(98.8
|
)
|
(12.1
|
)
|
-
|
-
|
|||||||||
Fair
value of plan assets at December 31
|
$
|
1,219.3
|
$
|
256.4
|
$
|
1,176.2
|
$
|
245.7
|
$
|
-
|
$
|
-
|
Funded
status of the plan
|
$
|
(317.5
|
)
|
$
|
(84.2
|
)
|
$
|
(237.3
|
)
|
$
|
(80.0
|
)
|
$
|
(154.5
|
)
|
$
|
(181.0
|
)
|
|
Unrecognized
actuarial loss
|
671.2
|
104.5
|
584.4
|
89.9
|
120.1
|
106.6
|
|||||||||||||
Unrecognized
prior service (benefit) cost
|
(22.0
|
)
|
(2.7
|
)
|
(23.0
|
)
|
2.4
|
(55.4
|
)
|
(30.5
|
)
|
||||||||
Accrued
Expenses
|
-
|
(0.2
|
)
|
-
|
(0.2
|
)
|
-
|
-
|
|||||||||||
Unrecognized
net transition obligation
|
-
|
0.5
|
-
|
0.8
|
0.8
|
0.9
|
|||||||||||||
Net
amount recognized
|
$
|
331.7
|
$
|
17.9
|
$
|
324.1
|
$
|
12.9
|
$
|
(89.0
|
)
|
$
|
(104.0
|
)
|
|||||
Components
of the above amounts:
|
|||||||||||||||||||
Prepaid
benefit cost
|
$
|
369.5
|
$
|
53.3
|
$
|
361.9
|
$
|
51.6
|
$
|
-
|
$
|
-
|
|||||||
Accrued
benefit liability
|
(37.8
|
)
|
(35.4
|
)
|
(37.8
|
)
|
(38.7
|
)
|
(89.0
|
)
|
(104.0
|
)
|
|||||||
Additional
minimum liability
|
(588.6
|
)
|
(48.2
|
)
|
(506.2
|
)
|
(72.3
|
)
|
-
|
-
|
|||||||||
Intangible
asset
|
-
|
0.4
|
-
|
3.6
|
-
|
-
|
|||||||||||||
Accumulated
other comprehensive loss (pre-tax)
|
588.6
|
47.8
|
506.2
|
68.7
|
-
|
-
|
|||||||||||||
Net
amount recognized
|
$
|
331.7
|
$
|
17.9
|
$
|
324.1
|
$
|
12.9
|
$
|
(89.0
|
)
|
$
|
(104.0
|
)
|
|||||
Weighted-average
assumptions used to determine the benefit obligation at December
31, 2005
and 2004 were:
|
|||||||||||||||||||
|
Pension
Benefits
|
Other
Postretirement
|
|||||||||||||||||
2005
|
2004
|
Benefits
|
|||||||||||||||||
|
U.S.
|
Int’l.
|
U.S.
|
Int’l.
|
2005
|
2004
|
|||||||||||||
Weighted-average
discount rate
|
5.70
|
%
|
4.35
|
%
|
5.75
|
%
|
5.04
|
%
|
5.59
|
%
|
5.51
|
%
|
|||||||
Rate
of compensation increase
|
4.30
|
%
|
2.87
|
%
|
4.50
|
%
|
2.79
|
%
|
4.29
|
%
|
4.49
|
%
|
(Dollars
in millions)
|
||||||||||||||||||||||||||||
Pension
Benefits
|
||||||||||||||||||||||||||||
2005
|
2004
|
2003
|
Other
Postretirement Benefits
|
|||||||||||||||||||||||||
Net
periodic benefit cost:
|
U.S.
|
Int’l.
|
U.S.
|
Int’l.
|
U.S.
|
Int’l.
|
2005
|
2004
|
2003
|
|||||||||||||||||||
Service
cost
|
$
|
12.7
|
$
|
5.4
|
$
|
13.3
|
$
|
5.9
|
$
|
12.1
|
$
|
5.9
|
$
|
0.8
|
$
|
0.8
|
$
|
0.6
|
||||||||||
Interest
cost
|
81.3
|
15.2
|
82.3
|
15.4
|
86.3
|
13.1
|
8.8
|
10.3
|
13.4
|
|||||||||||||||||||
Expected
return on plan assets
|
(95.4
|
)
|
(14.9
|
)
|
(96.5
|
)
|
(14.6
|
)
|
(101.6
|
)
|
(12.1
|
)
|
-
|
-
|
-
|
|||||||||||||
Amortization
and deferrals
|
(1.9
|
)
|
0.2
|
1.3
|
0.6
|
3.5
|
0.8
|
(7.3
|
)
|
(8.5
|
)
|
(7.7
|
)
|
|||||||||||||||
Participant
contributions
|
-
|
(0.5
|
)
|
-
|
(0.7
|
)
|
-
|
(0.6
|
)
|
-
|
-
|
-
|
||||||||||||||||
Settlements/Curtailments
|
-
|
-
|
-
|
(0.1
|
)
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Special
benefits/terminations
|
-
|
-
|
1.1
|
-
|
4.7
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
Amortization
of transition (asset) obligation
|
-
|
-
|
-
|
(0.1
|
)
|
-
|
(0.1
|
)
|
6.5
|
0.1
|
0.1
|
|||||||||||||||||
Actuarial
losses recognized
|
40.7
|
3.4
|
33.9
|
3.1
|
19.9
|
1.3
|
-
|
5.2
|
6.7
|
|||||||||||||||||||
Benefit
cost
|
$
|
37.4
|
$
|
8.8
|
$
|
35.4
|
$
|
9.5
|
$
|
24.9
|
$
|
8.3
|
$
|
8.8
|
$
|
7.9
|
$
|
13.1
|
Weighted-average
assumptions used to determine net periodic benefit
cost:
|
||||||||||||||||||||||||||||
2005
|
2004
|
2003
|
||||||||||||||||||||||||||
U.S.
|
Int’l.
|
U.S.
|
Int’l.
|
U.S.
|
Int’l.
|
2005
|
2004
|
2003
|
||||||||||||||||||||
Weighted-average
discount rate
|
5.75
|
%
|
5.04
|
%
|
6.10
|
%
|
5.35
|
%
|
6.75
|
%
|
5.35
|
%
|
5.51
|
%
|
6.08
|
%
|
6.74
|
%
|
||||||||||
Expected
return on plan assets
|
8.50
|
%
|
6.49
|
%
|
8.75
|
%
|
6.64
|
%
|
8.75
|
%
|
6.70
|
%
|
N/A
|
N/A
|
N/A
|
|||||||||||||
Rate
of compensation increase
|
4.50
|
%
|
2.79
|
%
|
4.50
|
%
|
2.86
|
%
|
4.50
|
%
|
2.93
|
%
|
4.49
|
%
|
4.49
|
%
|
4.50
|
%
|
|
Target
Allocation
|
Percentage
of Plan Assets
at
December 31,
|
||||||||
Asset
category:
|
2006
|
2005
|
2004
|
|||||||
Equity
securities
|
62
|
%
|
66
|
%
|
66
|
%
|
||||
Fixed
income
|
28
|
%
|
26
|
%
|
27
|
%
|
||||
Other
|
10
|
%
|
8
|
%
|
7
|
%
|
||||
Totals
|
100
|
%
|
100
|
%
|
100
|
%
|
(Dollars
in millions)
|
|||||||||||||
Pension
Benefits
|
Other
Postretirement Benefits
|
||||||||||||
Qualified
Plan
|
Non-qualified
Plan
|
Total
|
|||||||||||
Expected
employer contributions for 2006
|
$
|
40
|
$
|
-
|
$
|
40
|
$
|
-
|
|||||
Expected
benefit payments
|
|||||||||||||
2006
|
86
|
5
|
91
|
13
|
|||||||||
2007
|
85
|
5
|
90
|
13
|
|||||||||
2008
|
85
|
5
|
90
|
13
|
|||||||||
2009
|
86
|
5
|
91
|
12
|
|||||||||
2010
|
87
|
5
|
92
|
12
|
|||||||||
2011-2015
|
469
|
22
|
491
|
59
|
|
Target
Allocation
|
Percentage
of Plan Assets
at
December 31,
|
||||||||
Asset
category:
|
2006
|
2005
|
2004
|
|||||||
Equity
securities
|
58
|
%
|
61
|
%
|
59
|
%
|
||||
Fixed
income
|
42
|
%
|
38
|
%
|
40
|
%
|
||||
Other
|
-
|
1
|
%
|
1
|
%
|
|||||
Totals
|
100
|
%
|
100
|
%
|
100
|
%
|
(Dollars
in millions)
|
||||
Pension
Plan Benefits
|
||||
Expected
employer contributions for 2006
|
$
|
5
|
||
Expected
benefit payments:
|
||||
2006
|
13
|
|||
2007
|
13
|
|||
2008
|
14
|
|||
2009
|
15
|
|||
2010
|
15
|
|||
2011-2015
|
85
|
2005
|
2004
|
||||||
Allocated
|
1,458,065
|
1,464,530
|
|||||
Unallocated
|
1,695,387
|
2,099,176
|
|||||
Total
shares held by ESOP Trust
|
3,153,452
|
3,563,706
|
Regular
|
Performance
Accelerated
|
||||||||||||
Number
of Shares
|
Weighted-
average
Price
|
Number
of
Shares
|
Weighted-average
Price
|
||||||||||
December
31, 2002
|
13,207,
634
|
$
|
25.21
|
5,188,925
|
$
|
43.91
|
|||||||
Granted
|
21,000
|
10.09
|
-
|
-
|
|||||||||
Exercised
|
-
|
-
|
-
|
-
|
|||||||||
Forfeited
|
(922,075
|
)
|
32.34
|
(409,225
|
)
|
46.77
|
|||||||
December
31, 2003
|
12,306,559
|
$
|
24.47
|
4,779,700
|
$
|
43.66
|
|||||||
Granted
|
21,000
|
14.25
|
-
|
-
|
|||||||||
Exercised
|
(402,855
|
)
|
11.48
|
-
|
-
|
||||||||
Forfeited
|
(886,820
|
)
|
33.19
|
(963,725
|
)
|
38.25
|
|||||||
December
31, 2004
|
11,037,884
|
$
|
24.22
|
3,815,975
|
$
|
45.03
|
|||||||
Granted
|
224,229
|
14.01
|
-
|
-
|
|||||||||
Exercised
|
(200,752
|
)
|
11.53
|
-
|
-
|
||||||||
Forfeited
|
(2,679,349
|
)
|
33.45
|
(2,473,860
|
)
|
45.87
|
|||||||
December
31, 2005
|
8,382,012
|
$
|
21.31
|
1,342,115
|
$
|
43.49
|
Outstanding
Options
|
Exercisable
Options
|
|||||||||||||||
Number
Outstanding
at
12/31/2005
|
Weighted-
average
Remaining
Contractual
Life
|
Weighted-
average
Exercise
Price
|
Number
Exercisable
12/31/2005
|
Weighted-
average
Exercise
Price
|
||||||||||||
Regular
Stock Options
|
||||||||||||||||
$8.50
- $11.75
|
1,015,975
|
5.85
|
$
|
11.18
|
988,975
|
11.19
|
||||||||||
$11.76
- $15.00
|
3,198,047
|
6.14
|
$
|
11.24
|
2,979,818
|
11.97
|
||||||||||
$15.01
- $22.50
|
1,257,025
|
4.16
|
$
|
17.12
|
1,257,025
|
17.12
|
||||||||||
$22.51
- $33.75
|
891,700
|
2.70
|
$
|
26.01
|
891,700
|
26.01
|
||||||||||
$33.76
- $40.00
|
1,465,865
|
2.40
|
$
|
38.50
|
1,486,665
|
38.51
|
||||||||||
$40.01
- $60.00
|
553,400
|
1.77
|
$
|
49.30
|
558,400
|
49.31
|
||||||||||
8,382,012
|
8,162,583
|
|||||||||||||||
Performance-Accelerated
Stock Options
|
||||||||||||||||
$24.00
- $36.00
|
17,925
|
3.46
|
$
|
31.27
|
-
|
-
|
||||||||||
$36.01
- $45.00
|
685,030
|
2.66
|
$
|
38.25
|
-
|
-
|
||||||||||
$45.01
- $50.00
|
480,310
|
1.70
|
$
|
47.48
|
-
|
-
|
||||||||||
$50.01
- $61.00
|
158,850
|
0.12
|
$
|
55.36
|
-
|
-
|
||||||||||
1,342,115
|
-
|
-
|
Dividend
Yield
|
Risk-free
Interest
Rate
|
Expected
Life
|
Expected
Volatility
|
||||||||||
2005:
|
|||||||||||||
Regular
Plan
|
0.00
|
%
|
4.08
|
%
|
6
yrs.
|
28.65
|
%
|
||||||
Employee
Stock Purchase Plan
|
NA
|
NA
|
NA
|
NA
|
|||||||||
2004:
|
|||||||||||||
Regular
Plan
|
0.00
|
%
|
3.73
|
%
|
6
yrs.
|
31.22
|
%
|
||||||
Employee
Stock Purchase Plan
|
0.00
|
%
|
1.00
|
%
|
3
mos.
|
32.90
|
%
|
||||||
2003:
|
|||||||||||||
Regular
Plan
|
0.00
|
%
|
3.54
|
%
|
6
yrs.
|
42.79
|
%
|
||||||
Employee
Stock Purchase Plan
|
0.00
|
%
|
1.00
|
%
|
3
mos.
|
35.88
|
%
|
||||||
Active
Sites
|
Inactive
Sites
|
Total
|
||||||||
Balance
at January 1, 2004
|
$
|
7.5
|
$
|
95.3
|
$
|
102.8
|
||||
Liabilities
incurred
|
0.3
|
-
|
0.3
|
|||||||
Accretion
|
0.3
|
1.6
|
1.9
|
|||||||
Settlement
payments
|
(1.0
|
)
|
(12.5
|
)
|
(13.5
|
)
|
||||
Changes
in estimated obligations
|
(0.2
|
)
|
4.2
|
4.0
|
||||||
Foreign
currency translation
|
0.2
|
0.6
|
0.8
|
|||||||
Balance
at December 31, 2004
|
$
|
7.1
|
$
|
89.2
|
$
|
96.3
|
||||
Impact
of FIN 47 adoption
|
4.0
|
-
|
4.0
|
|||||||
Accretion
|
0.2
|
1.8
|
2.0
|
|||||||
Settlement
payments
|
(1.2
|
)
|
(9.0
|
)
|
(10.2
|
)
|
||||
Changes
in estimated obligations
|
0.3
|
3.2
|
3.5
|
|||||||
Transfers
of obligations
|
-
|
(4.4
|
)
|
(4.4
|
)
|
|||||
Foreign
currency translation
|
(0.2
|
)
|
(0.7
|
)
|
(0.9
|
)
|
||||
Balance
at December 31, 2005
|
$
|
10.2
|
$
|
80.1
|
$
|
90.3
|
Balance
January 1, 2005
|
Interest
Income/
Additional
Accruals
|
Insurance
Recovered/
Liabilities
Settled
|
Accretion/
Reclassifi-
cation
|
Balance
December 31, 2005
|
||||||||||||
Asbestos-related
assets:
|
||||||||||||||||
Insurance
receivable
|
$
|
6.3
|
$
|
(0.3
|
)
|
$
|
(6.0
|
)
|
$
|
-
|
$
|
-
|
||||
Asbestos-related
assets, current
|
6.3
|
(0.3
|
)
|
(6.0
|
)
|
-
|
-
|
|||||||||
Insurance
receivable
|
98.9
|
-
|
(35.3
|
)
|
1.6
|
65.2
|
||||||||||
Restricted
cash in trust (1)
|
63.6
|
1.8
|
(9.9
|
)
|
-
|
55.5
|
||||||||||
Asbestos-related
assets, non-current
|
162.5
|
1.8
|
(45.2
|
)
|
1.6
|
120.7
|
||||||||||
Total
asbestos-related assets
|
$
|
168.8
|
$
|
1.5
|
$
|
(51.2
|
)
|
$
|
1.6
|
$
|
120.7
|
|||||
Asbestos-related
liabilities:
|
||||||||||||||||
Asbestos-related
liabilities, current
|
$
|
46.8
|
$
|
-
|
$
|
(27.7
|
)
|
$
|
17.3
|
$
|
36.4
|
|||||
Asbestos-related
liabilities, non-current
|
213.4
|
37.5
|
-
|
(17.3
|
)
|
233.6
|
||||||||||
Total
asbestos-related liabilities
|
$
|
260.2
|
$
|
37.5
|
$
|
(27.7
|
)
|
$
|
-
|
$
|
270.0
|
(1) |
Amount
is reflected as a non-current asset as its availability for reimbursement
to the Company is restricted to asbestos claims and related defense
costs
reimbursable to the Company as discussed above in connection with
the
First Settlement Agreement.
|
(Dollars
in millions)
|
||||||||||
December
31,
|
||||||||||
2005
|
2004
|
2003
|
||||||||
Additional
minimum pension liability, net of tax
|
$
|
(417.6
|
)
|
$
|
(373.3
|
)
|
$
|
(345.1
|
)
|
|
Foreign
currency translation adjustment
|
30.3
|
96.9
|
27.2
|
|||||||
Other,
net of tax
|
(0.3
|
)
|
-
|
-
|
||||||
$
|
(387.6
|
)
|
$
|
(276.4
|
)
|
$
|
(317.9
|
)
|
(Dollars
in millions)
|
|||||||
2005
|
2004
|
||||||
Property,
plant and equipment:
|
|||||||
Land
|
$
|
10.6
|
$
|
19.6
|
|||
Buildings
and equipment
|
1,613.6
|
1,998.9
|
|||||
Construction
in progress
|
38.0
|
70.8
|
|||||
Total
|
1,662.2
|
2,089.3
|
|||||
Accumulated
depreciation
|
(1,126.8
|
)
|
(1,393.9
|
)
|
|||
Property,
plant and equipment, net
|
$
|
535.4
|
$
|
695.4
|
(Dollars
in millions)
|
|||||||
2005
|
2004
|
||||||
Other
current assets:
|
|||||||
Value-added
tax receivable
|
$
|
13.1
|
$
|
4.4
|
|||
Federal
tax receivable
|
12.6
|
12.6
|
|||||
Supplier
rebates receivable
|
0.3
|
14.6
|
|||||
Assets
held for sale
|
0.2
|
5.8
|
|||||
Other
|
21.9
|
16.4
|
|||||
$
|
48.1
|
$
|
53.8
|
(Dollars
in millions)
|
|||||||
2005
|
2004
|
||||||
Deferred
charges and other assets:
|
|||||||
Tax
deposits
|
$
|
66.1
|
$
|
89.1
|
|||
Capitalized
software, net
|
62.6
|
73.2
|
|||||
Prepaid
pension assets
|
42.4
|
7.0
|
|||||
Cash
surrender value of life insurance policies
|
21.4
|
19.4
|
|||||
Unamortized
debt issuance costs
|
10.3
|
14.2
|
|||||
Investments
|
9.8
|
6.0
|
|||||
Unrecognized
prior period service costs
|
0.4
|
3.6
|
|||||
Other
|
32.1
|
33.0
|
|||||
$
|
245.1
|
$
|
245.5
|
(Dollars
in millions)
|
|||||||
2005
|
2004
|
||||||
Accrued
expenses:
|
|||||||
Compensation
and benefits
|
$
|
37.0
|
$
|
45.0
|
|||
Current
portion of postretirement benefits
|
23.5
|
23.5
|
|||||
Current
portion of asset retirement obligations
|
21.6
|
19.3
|
|||||
Severance
and other exit costs
|
16.6
|
5.8
|
|||||
Income
taxes payable
|
14.5
|
4.7
|
|||||
Interest
payable
|
12.9
|
12.8
|
|||||
Current
deferred income taxes
|
12.9
|
7.5
|
|||||
Sales
rebate accrual
|
9.3
|
11.1
|
|||||
Current
pension liability
|
6.2
|
7.1
|
|||||
Litigation
accrual
|
3.5
|
18.0
|
|||||
Current
portion of deferred rent
|
3.0
|
3.2
|
|||||
Other
taxes payable
|
2.3
|
1.7
|
|||||
Other
|
56.0
|
52.4
|
|||||
$
|
219.3
|
$
|
212.1
|
Deferred
credits and other liabilities:
|
|||||||
Non-current
income tax liabilities
|
$
|
95.7
|
$
|
108.0
|
|||
Asset
retirement obligations - non-current
|
68.7
|
77.0
|
|||||
Indemnifications
|
40.0
|
40.0
|
|||||
Deferred
rent
|
30.6
|
35.7
|
|||||
Environmental
accrual
|
17.6
|
2.8
|
|||||
Workers
compensation
|
14.6
|
21.9
|
|||||
Other
|
23.3
|
24.5
|
|||||
$
|
290.5
|
$
|
309.9
|
Charges
by Type
|
||||||||||
SFAS
112
|
SFAS
146
|
Total
|
||||||||
Employee
severance, relocation and related benefits accrued:
|
|
|
||||||||
Research
and development consolidation
|
$
|
0.5
|
$
|
3.3
|
$
|
3.8
|
||||
Global
marketing and management realignment
|
14.5
|
-
|
14.5
|
|||||||
Performance
products manufacturing rationalization
|
1.7
|
0.5
|
2.2
|
|||||||
Pinova
manufacturing rationalization
|
3.4
|
-
|
3.4
|
|||||||
FiberVisions
manufacturing rationalization
|
3.4
|
-
|
3.4
|
|||||||
Corporate
support realignment
|
4.8
|
0.5
|
5.3
|
|||||||
28.3
|
4.3
|
32.6
|
||||||||
Other
exit costs charged as incurred:
|
||||||||||
Barneveld,
The Netherlands exit and site closure costs
|
-
|
1.4
|
1.4
|
|||||||
Pinova
product distribution agreement termination
|
-
|
0.2
|
0.2
|
|||||||
|
- |
1.6
|
1.6
|
|||||||
Total
severance and other exit costs
|
$
|
28.3
|
$
|
5.9
|
$
|
34.2
|
Accelerated
Depreciation
|
Asset
Impairment
|
Inventory
Write-Down
|
Total
|
||||||||||
Research
& development consolidation
|
|||||||||||||
Barneveld,
The Netherlands
|
$
|
1.8
|
$
|
-
|
$
|
-
|
$
|
1.8
|
|||||
Jacksonville,
FL
|
0.1
|
-
|
-
|
0.1
|
|||||||||
Wilmington,
DE
|
0.5
|
-
|
-
|
0.5
|
|||||||||
2.4
|
-
|
-
|
2.4
|
||||||||||
Performance
Products manufacturing rationalization
|
|||||||||||||
Pandaan,
Indonesia
|
0.3
|
-
|
-
|
0.3
|
|||||||||
Pendlebury,
UK
|
0.8
|
-
|
-
|
0.8
|
|||||||||
1.1
|
-
|
-
|
1.1
|
||||||||||
Engineered
Materials and Additives manufacturing
rationalization
|
|||||||||||||
Brunswick,
GA
|
-
|
5.2
|
0.5
|
5.7
|
|||||||||
Hattiesburg,
MS
|
-
|
0.5
|
-
|
0.5
|
|||||||||
Covington,
VA
|
-
|
-
|
1.5
|
1.5
|
|||||||||
|
- |
5.7
|
2.0
|
7.7
|
|||||||||
Total
asset charges
|
$
|
3.5
|
$
|
5.7
|
$
|
2.0
|
$
|
11.2
|
(Dollars
in millions)
|
|||||||
2005
|
2004
|
||||||
Balance
at beginning of the year
|
$
|
5.8
|
$
|
6.0
|
|||
Additional
severance and related costs recognized (SFAS 112)
|
28.3
|
9.3
|
|||||
Charges
for SFAS 146 terminations and relocations
|
4.3
|
0.3
|
|||||
Cash
payments
|
(21.4
|
)
|
(9.9
|
)
|
|||
Other,
including foreign currency translation
|
(0.4
|
)
|
0.1
|
||||
Balance
at end of the year
|
$
|
16.6
|
$
|
5.8
|
|
(Dollars
in millions)
|
|||||||||
Year
Ended December 31,
|
||||||||||
2005
|
2004
|
2003
|
||||||||
Severance,
restructuring and other exit costs, net
|
$
|
34.2
|
$
|
9.5
|
$
|
4.9
|
||||
Nitrocellulose
facility shutdown costs
|
-
|
6.5
|
-
|
|||||||
Asset
impairment charges
|
5.7
|
7.3
|
0.6
|
|||||||
Accelerated
depreciation
|
3.5
|
-
|
-
|
|||||||
Special
executive pension adjustment
|
-
|
1.6
|
7.3
|
|||||||
Proxy
costs
|
-
|
-
|
3.6
|
|||||||
Net
environmental expense
|
-
|
-
|
0.8
|
|||||||
Other
miscellaneous charges
|
4.1
|
2.0
|
(0.2
|
)
|
||||||
$
|
47.5
|
$
|
26.9
|
$
|
17.0
|
|
(Dollars
in millions)
|
|||||||||
Year
Ended December 31,
|
||||||||||
2005
|
2004
|
2003
|
||||||||
Incurred
|
$
|
89.8
|
$
|
109.8
|
$
|
131.2
|
||||
Capitalized
|
(0.4
|
)
|
(1.1
|
)
|
(0.4
|
)
|
||||
Net
expensed
|
$
|
89.4
|
$
|
108.7
|
$
|
130.8
|
Other
expense, net, consists of the following:
|
(Dollars
in millions)
|
|||||||||
Year
Ended December 31,
|
||||||||||
2005
|
2004
|
2003
|
||||||||
Asbestos-related
costs, net
|
$
|
44.6
|
$
|
48.8
|
$
|
12.0
|
||||
Loss
(gain) on repurchase of debt
|
14.2
|
41.0
|
(2.3
|
)
|
||||||
Environmental
charges
|
22.4
|
7.6
|
5.0
|
|||||||
Asset
impairment charges
|
-
|
1.9
|
2.0
|
|||||||
Net
gains on dispositions
|
(10.9
|
)
|
-
|
-
|
||||||
Other
litigation settlements and accruals
|
18.9
|
19.2
|
7.8
|
|||||||
Other,
net
|
(2.9
|
)
|
(1.8
|
)
|
4.4
|
|||||
$
|
86.3
|
$
|
116.7
|
$
|
28.9
|
|||||
(Dollars
in millions)
|
||||||||||
Year
Ended December 31,
|
||||||||||
2005
|
2004
|
2003
|
||||||||
Net
(loss) income before cumulative effect of changes in accounting
principle:
|
||||||||||
As
reported
|
$
|
(38.6
|
)
|
$
|
28.1
|
$
|
78.7
|
|||
Accretion
and depreciation
|
-
|
(0.1
|
)
|
(0.1
|
)
|
|||||
Adjusted
net (loss) income before cumulative effect of changes in accounting
principle
|
$
|
(38.6
|
)
|
$
|
28.0
|
$
|
78.6
|
|||
Basic
(loss) earnings per share before cumulative effect of changes in
accounting principle:
|
||||||||||
As
reported
|
$
|
(0.36
|
)
|
$
|
0.26
|
$
|
0.74
|
|||
Adjusted
|
$
|
(0.36
|
)
|
$
|
0.26
|
$
|
0.74
|
|||
Diluted
(loss) earnings per share before cumulative effect of changes in
accounting principle:
|
||||||||||
As
reported
|
$
|
(0.36
|
)
|
$
|
0.26
|
$
|
0.73
|
|||
Adjusted
|
$
|
(0.36
|
)
|
$
|
0.26
|
$
|
0.73
|
|||
Net
(loss) income:
|
||||||||||
As
reported
|
$
|
(41.1
|
)
|
$
|
28.1
|
$
|
45.4
|
|||
Accretion
and depreciation
|
-
|
(0.1
|
)
|
(0.1
|
)
|
|||||
Adjusted
net income (loss)
|
$
|
(41.1
|
)
|
$
|
28.0
|
$
|
45.3
|
|||
Basic
(loss) earnings per share:
|
||||||||||
As
reported
|
$
|
(0.38
|
)
|
$
|
0.26
|
$
|
0.43
|
|||
Adjusted
|
$
|
(0.38
|
)
|
$
|
0.26
|
$
|
0.43
|
|||
Diluted
(loss) earnings per share:
|
||||||||||
As
reported
|
$
|
(0.38
|
)
|
$
|
0.26
|
$
|
0.42
|
|||
Adjusted
|
$
|
(0.38
|
)
|
$
|
0.26
|
$
|
0.42
|
(Dollars
in millions)
|
|||||||||||||||||||
For
the Years Ended December 31,
|
|||||||||||||||||||
2004
|
2003
|
||||||||||||||||||
As
Originally
Reported
|
Effect
of
Change
|
As
Adjusted
|
As
Originally
Reported
|
Effect
of
Change
|
As
Adjusted
|
||||||||||||||
Statement
of Operations Line Items:
|
|||||||||||||||||||
Cost
of sales
|
$
|
1,309.6
|
$
|
(2.0
|
)
|
$
|
1,307.6
|
$
|
1,167.6
|
$
|
(0.7
|
)
|
$
|
1,166.9
|
|||||
Profit
from operations
|
226.9
|
2.0
|
228.9
|
254.8
|
0.7
|
255.5
|
|||||||||||||
Provision
for income taxes
|
1.7
|
0.7
|
2.4
|
21.1
|
0.2
|
21.3
|
|||||||||||||
Net
income from continuing operations
|
26.8
|
1.3
|
28.1
|
74.0
|
0.5
|
74.5
|
|||||||||||||
Net
income
|
$
|
26.8
|
$
|
1.3
|
$
|
28.1
|
$
|
44.9
|
$
|
0.5
|
$
|
45.4
|
|||||||
Basic
earnings per share from:
|
|||||||||||||||||||
Continuing
operations
|
$
|
0.25
|
$
|
0.01
|
$
|
0.26
|
$
|
0.69
|
$
|
0.01
|
$
|
0.70
|
|||||||
Net
income
|
$
|
0.25
|
$
|
0.01
|
$
|
0.26
|
$
|
0.42
|
$
|
0.01
|
$
|
0.43
|
|||||||
Diluted
earnings per share from:
|
|||||||||||||||||||
Continuing
operations
|
$
|
0.25
|
$
|
0.01
|
$
|
0.26
|
$
|
0.69
|
$
|
-
|
$
|
0.69
|
|||||||
Net
income
|
$
|
0.25
|
$
|
0.01
|
$
|
0.26
|
$
|
0.42
|
$
|
-
|
$
|
0.42
|
|||||||
Statement
of Cash Flows Line Items:
|
|||||||||||||||||||
Net
income
|
$
|
26.8
|
$
|
1.3
|
$
|
28.1
|
$
|
44.9
|
$
|
0.5
|
$
|
45.4
|
|||||||
Deferred
income tax provision
|
(19.4
|
)
|
0.7
|
(18.7
|
)
|
7.5
|
0.2
|
7.7
|
|||||||||||
Inventories
|
6.0
|
(2.0
|
)
|
4.0
|
(6.7
|
)
|
(0.7
|
)
|
(7.4
|
)
|
|||||||||
Net
cash provided by operating activities
|
$
|
120.5
|
$
|
-
|
$
|
120.5
|
$
|
22.8
|
$
|
-
|
$
|
22.8
|
|||||||
As
of December 31, 2004
|
||||||||||
As
Originally
Reported
|
Effect
of
Change
|
As
Adjusted
|
||||||||
Balance
Sheet Line Items:
|
||||||||||
Inventories
|
$
|
189.4
|
$
|
23.0
|
$
|
212.4
|
||||
Deferred
income taxes - current
|
44.8
|
(8.1
|
)
|
36.7
|
||||||
Total
assets (1)
|
$
|
2,710.2
|
$
|
10.1
|
$
|
2,720.3
|
||||
Retained
earnings
|
1,521.5
|
15.0
|
1,536.5
|
|||||||
Total
liabilities and stockholders’ equity (1)
|
$
|
2,710.2
|
$
|
10.1
|
$
|
2,720.3
|
||||
|
(Dollars
in millions, except per share)
|
||||||||||||||||||
For
the years ended December 31,
|
|||||||||||||||||||
2005
|
2004
|
2003
|
|||||||||||||||||
Earnings
|
|||||||||||||||||||
Loss
|
Earnings
|
Income
|
(loss)
|
||||||||||||||||
Loss
|
per
share
|
Income
|
per
share
|
(loss)
|
per
share
|
||||||||||||||
Basic:
|
|||||||||||||||||||
Continuing
operations
|
$
|
(38.6
|
)
|
$
|
(0.36
|
)
|
$
|
28.1
|
$
|
0.26
|
$
|
74.2
|
$
|
0.70
|
|||||
Discontinued
operations
|
-
|
-
|
-
|
-
|
4.5
|
0.04
|
|||||||||||||
Cumulative
effect of changes
|
|||||||||||||||||||
in
accounting principle
|
(2.5
|
)
|
(0.02
|
)
|
-
|
-
|
(33.3
|
)
|
(0.31
|
)
|
|||||||||
Net
(loss) income
|
$
|
(41.1
|
)
|
$
|
(0.38
|
)
|
$
|
28.1
|
$
|
0.26
|
$
|
45.4
|
$
|
0.43
|
|||||
Weighted
average number
|
|||||||||||||||||||
of
basic shares (millions)
|
108.7
|
107.3
|
106.2
|
||||||||||||||||
Diluted:
|
|||||||||||||||||||
Continuing
operations
|
$
|
(38.6
|
)
|
$
|
(0.36
|
)
|
$
|
28.1
|
$
|
0.26
|
$
|
74.2
|
$
|
0.69
|
|||||
Discontinued
operations
|
-
|
-
|
-
|
-
|
4.5
|
0.04
|
|||||||||||||
Cumulative
effect of changes
|
|||||||||||||||||||
in
accounting principle
|
(2.5
|
)
|
(0.02
|
)
|
-
|
-
|
(33.3
|
)
|
(0.31
|
)
|
|||||||||
Net
(loss) income
|
$
|
(41.1
|
)
|
$
|
(0.38
|
)
|
$
|
28.1
|
$
|
0.26
|
$
|
45.4
|
$
|
0.42
|
Weighted
average number
|
|||||||||||||||||||
of
diluted shares (millions)
|
108.7
|
109.0
|
107.2
|
Year
ended December 31,
|
||||||||||
2005
|
2004
|
2003
|
||||||||
Options
to purchase common stock (millions)
|
5.8
|
10.6
|
12.4
|
|||||||
Warrants
to purchase common stock (millions)
|
6.7
|
7.1
|
7.1
|
Geographic
Areas
|
United
States
|
Europe
|
Americas
(a)
|
Asia
Pacific
|
Total
|
|||||||||||
2005
|
||||||||||||||||
Net
Sales
|
$
|
981.0
|
$
|
747.9
|
$
|
106.0
|
$
|
233.9
|
$
|
2,068.8
|
||||||
Property,
plant and equipment, net
|
262.1
|
233.8
|
15.7
|
23.8
|
535.4
|
|||||||||||
2004
|
||||||||||||||||
Net
Sales
|
$
|
921.2
|
$
|
762.2
|
$
|
98.8
|
$
|
214.5
|
$
|
1,996.7
|
||||||
Property,
plant and equipment, net
|
325.2
|
331.4
|
16.2
|
22.6
|
695.4
|
|||||||||||
2003
|
||||||||||||||||
Net
Sales
|
$
|
884.8
|
$
|
692.9
|
$
|
93.8
|
$
|
174.5
|
$
|
1,846.0
|
||||||
Property,
plant and equipment, net
|
345.3
|
302.6
|
12.2
|
17.3
|
677.4
|
|||||||||||
(Dollars
in millions)
|
||||||||||||||||
Industry
Segments
|
Performance
Products
|
Engineered
Materials
and
Additives
|
Corporate
|
Consolidated
|
||||||||||||
2005
|
||||||||||||||||
Net
sales
|
$
|
1,686.0
|
$
|
382.8
|
$
|
-
|
$
|
2,068.8
|
||||||||
Profit
(loss) from operations
|
220.0
|
(77.9
|
)
|
(11.7
|
)
|
(b)
|
|
130.4
|
||||||||
Interest
and debt expense
|
89.4
|
|||||||||||||||
Other
expense, net
|
86.3
|
|||||||||||||||
(Loss)
before income taxes and equity loss
|
(45.3
|
)
|
||||||||||||||
Total
assets
|
1,474.9
|
234.0
|
859.9
|
(c)
|
|
2,568.8
|
||||||||||
Capital
expenditures
|
53.5
|
6.5
|
7.5
|
67.5
|
||||||||||||
Depreciation
and amortization
|
80.2
|
17.0
|
8.7
|
105.9
|
||||||||||||
2004
|
||||||||||||||||
Net
sales
|
$
|
1,616.5
|
$
|
380.2
|
$
|
-
|
$
|
1,996.7
|
||||||||
Profit
(loss) from operations
|
248.6
|
(14.4
|
)
|
(5.3
|
)
|
(b)
|
|
228.9
|
||||||||
Interest
and debt expense
|
108.7
|
|||||||||||||||
Gain
on sale of CP Kelco ApS
|
(27.0
|
)
|
||||||||||||||
Other
expense, net
|
116.7
|
|||||||||||||||
Income
before income taxes and equity loss
|
30.5
|
|||||||||||||||
Total
assets
|
1,622.0
|
369.4
|
728.9
|
(c)
|
|
2,720.3
|
||||||||||
Capital
expenditures
|
63.7
|
8.2
|
5.5
|
77.4
|
||||||||||||
Depreciation
and amortization
|
73.5
|
17.7
|
9.9
|
101.1
|
||||||||||||
2003
|
||||||||||||||||
Net
sales
|
$
|
1,483.5
|
$
|
362.5
|
$
|
-
|
$
|
1,846.0
|
||||||||
Profit
(loss) from operations
|
261.9
|
9.1
|
(15.5
|
)
|
(b)
|
|
255.5
|
|||||||||
Interest
and debt expense
|
130.8
|
|||||||||||||||
Other
expense, net
|
28.9
|
|||||||||||||||
Income
before income taxes and equity loss
|
95.8
|
|||||||||||||||
Total
assets
|
1,525.6
|
372.1
|
824.1
|
(c)
|
|
2,721.8
|
||||||||||
Capital
expenditures
|
39.3
|
4.9
|
3.8
|
48.0
|
||||||||||||
Depreciation
and amortization
|
74.1
|
20.8
|
5.7
|
100.6
|
||||||||||||
(a)
|
Excluding
operations in the United States of America.
|
(b) |
Includes
$7.1 million of severance and other exit costs in 2005, $6.5 million
in
facility shutdown costs in 2004, and $4.6 million, $7.3 million and
$3.6
million of severance, special pension adjustment and proxy costs,
respectively, in 2003.
|
(c) |
Includes
assets not specifically allocated to business segments, primarily
intangible assets and other long-term
assets.
|
(Dollars
in millions)
|
|||||||||||||
2005
|
2004
|
||||||||||||
Carrying
|
Fair
|
Carrying
|
Fair
|
||||||||||
Amount
|
Value
|
Amount
|
Value
|
||||||||||
Investment
securities (available for sale)
|
$
|
1.0
|
$
|
1.0
|
$
|
1.5
|
$
|
1.5
|
|||||
Total
debt
|
(1,109.0
|
)
|
(1,092.1
|
)
|
(1,240.1
|
)
|
(1,265.2
|
)
|
|||||
Foreign
exchange contracts, net
|
(0.2
|
)
|
(0.2
|
)
|
0.6
|
0.6
|
· |
Investment
securities: Present value of expected future cash
flows.
|
· |
Long-term
debt: Present value of expected cash flows related to existing borrowings
discounted at rates currently available to the Company for long-term
borrowings with similar terms and remaining
maturities.
|
· |
Foreign
exchange contracts: Year-end exchange
rates.
|
Aqualon
Company
|
FiberVisions
Products, Inc.
|
Athens
Holding Inc.
|
Hercules
Euro Holdings, LLC
|
Covington
Holdings, Inc.
|
Hercules
Finance Company
|
East
Bay Realty Services, Inc.
|
Hercules
Flavor, Inc.
|
FiberVisions
Incorporated
|
Hercules
Hydrocarbon Holdings, Inc.
|
FiberVisions,
L.L.C.
|
Hercules
Paper Holdings, Inc.
|
FiberVisions
L.P.
|
WSP,
Inc.
|
Condensed
Consolidating Statement of Operations
|
||||||||||||||||
Year
Ended December 31, 2005
|
||||||||||||||||
(Dollars
in millions)
|
Unconsolidated
|
|||||||||||||||
Guarantor
|
Non-Guarantor
|
Eliminations
and
|
||||||||||||||
Parent
|
Subsidiaries
|
Subsidiaries
|
Adjustments
|
Consolidated
|
||||||||||||
Net
sales
|
$
|
562.7
|
$
|
491.2
|
$
|
1,175.2
|
$
|
(160.3
|
)
|
$
|
2,068.8
|
|||||
Cost
of sales
|
401.4
|
382.7
|
794.7
|
(172.5
|
)
|
1,406.3
|
||||||||||
Selling,
general, and administrative expenses
|
104.0
|
130.0
|
148.8
|
-
|
382.8
|
|||||||||||
Research
and development
|
19.3
|
18.4
|
3.2
|
-
|
40.9
|
|||||||||||
Intangible
asset amortization
|
6.0
|
1.5
|
0.5
|
-
|
8.0
|
|||||||||||
Impairment
of Fibervisions goodwill
|
-
|
52.9
|
-
|
-
|
52.9
|
|||||||||||
Other
operating expenses, net
|
16.1
|
9.0
|
22.4
|
-
|
47.5
|
|||||||||||
Profit
(loss) from operations
|
15.9
|
(103.3
|
)
|
205.6
|
12.2
|
130.4
|
||||||||||
Interest
and debt expense (income), net
|
173.1
|
(71.6
|
)
|
(12.1
|
)
|
-
|
89.4
|
|||||||||
Other
expense (income), net
|
87.3
|
2.4
|
(3.4
|
)
|
-
|
86.3
|
||||||||||
(Loss)
income before income taxes and
equity
(loss) income
|
(244.5
|
)
|
(34.1
|
)
|
221.1
|
12.2
|
(45.3
|
)
|
||||||||
(Benefit)
provision for income taxes
|
(103.7
|
)
|
20.0
|
72.2
|
4.3
|
(7.2
|
)
|
|||||||||
Equity
(loss) income of affiliated companies
|
-
|
(1.1
|
)
|
0.5
|
0.1
|
(0.5
|
)
|
|||||||||
Equity
income (loss) from consolidated subsidiaries
|
102.2
|
10.0
|
(3.2
|
)
|
(109.0
|
)
|
-
|
|||||||||
Net
(loss) income from continuing operations
|
(38.6
|
)
|
(45.2
|
)
|
146.2
|
(101.0
|
)
|
(38.6
|
)
|
|||||||
Cumulative
effect of changes in accounting principles
|
(2.5
|
)
|
-
|
-
|
-
|
(2.5
|
)
|
|||||||||
Net
(loss) income
|
$
|
(41.1
|
)
|
$
|
(45.2
|
)
|
$
|
146.2
|
$
|
(101.0
|
)
|
$
|
(41.1
|
)
|
||
Condensed
Consolidating Statement of Operations
|
||||||||||||||||
Year
Ended December 31, 2004
|
||||||||||||||||
(Dollars
in millions)
|
Unconsolidated
|
|||||||||||||||
Guarantor
|
Non-Guarantor
|
Eliminations
and
|
||||||||||||||
Parent
|
Subsidiaries
|
Subsidiaries
|
Adjustments
|
Consolidated
|
||||||||||||
Net
sales
|
$
|
540.8
|
$
|
474.8
|
$
|
1,131.9
|
$
|
(150.8
|
)
|
$
|
1,996.7
|
|||||
Cost
of sales
|
374.8
|
352.5
|
731.1
|
(150.8
|
)
|
1,307.6
|
||||||||||
Selling,
general, and administrative expenses
|
101.1
|
126.0
|
155.3
|
-
|
382.4
|
|||||||||||
Research
and development
|
19.8
|
17.4
|
5.6
|
-
|
42.8
|
|||||||||||
Goodwill
and intangible asset amortization
|
6.1
|
1.5
|
0.5
|
-
|
8.1
|
|||||||||||
Other
operating expenses, net
|
4.8
|
12.9
|
9.2
|
-
|
26.9
|
|||||||||||
Profit
(loss) from operations
|
34.2
|
(35.5
|
)
|
230.2
|
-
|
228.9
|
||||||||||
Interest
and debt expense (income), net
|
177.6
|
(59.7
|
)
|
(9.2
|
)
|
-
|
108.7
|
|||||||||
Gain
on sale of CP Kelco ApS
|
-
|
-
|
(27.0
|
)
|
-
|
(27.0
|
)
|
|||||||||
Other
expense (income), net
|
256.6
|
3.9
|
(143.8
|
)
|
-
|
116.7
|
||||||||||
Income
(loss) before income taxes and
|
||||||||||||||||
equity
income (loss)
|
(400.0
|
)
|
20.3
|
410.2
|
-
|
30.5
|
||||||||||
Provision
(benefit) for income taxes
|
(88.2
|
)
|
38.1
|
52.5
|
-
|
2.4
|
||||||||||
Equity
income (loss) of affiliated companies
|
-
|
(0.7
|
)
|
0.9
|
(0.2
|
)
|
-
|
|||||||||
Equity
income (loss) from consolidated subsidiaries
|
339.9
|
6.0
|
(1.6
|
)
|
(344.3
|
)
|
-
|
|||||||||
Net
income (loss) from continuing operations
|
28.1
|
(12.5
|
)
|
357.0
|
(344.5
|
)
|
28.1
|
|||||||||
Cumulative
effect of changes in accounting
|
||||||||||||||||
principle,
net of tax
|
-
|
-
|
-
|
-
|
-
|
|||||||||||
Net
income (loss)
|
$
|
28.1
|
$
|
(12.5
|
)
|
$
|
357.0
|
$
|
(344.5
|
)
|
$
|
28.1
|
Condensed
Consolidating Statement of
Operations
|
||||||||||||||||
Year
Ended December 31, 2003
|
||||||||||||||||
(Dollars
in millions)
|
Unconsolidated
|
|||||||||||||||
Guarantor
|
Non-Guarantor
|
Eliminations
and
|
||||||||||||||
Parent
|
Subsidiaries
|
Subsidiaries
|
Adjustments
|
Consolidated
|
||||||||||||
Net
sales
|
$
|
509.2
|
$
|
445.1
|
$
|
1,023.5
|
$
|
(131.8
|
)
|
$
|
1,846.0
|
|||||
Cost
of sales
|
331.7
|
320.0
|
643.2
|
(128.0
|
)
|
1,166.9
|
||||||||||
Selling,
general, and administrative expenses
|
83.7
|
84.6
|
191.6
|
-
|
359.9
|
|||||||||||
Research
and development
|
17.0
|
16.8
|
4.9
|
-
|
38.7
|
|||||||||||
Goodwill
and intangible asset amortization
|
6.3
|
1.7
|
-
|
-
|
8.0
|
|||||||||||
Other
operating expenses, net
|
9.2
|
3.9
|
3.9
|
-
|
17.0
|
|||||||||||
Profit
from operations
|
61.3
|
18.1
|
179.9
|
(3.8
|
)
|
255.5
|
||||||||||
Interest
and debt expense (income), net
|
174.2
|
(58.8
|
)
|
15.4
|
-
|
130.8
|
||||||||||
Other
expense, net
|
23.1
|
4.8
|
1.0
|
-
|
28.9
|
|||||||||||
Income
(loss) before income taxes and
|
||||||||||||||||
equity
(loss) income
|
(136.0
|
)
|
72.1
|
163.5
|
(3.8
|
)
|
95.8
|
|||||||||
Provision
(benefit) for income taxes
|
(52.3
|
)
|
29.2
|
45.7
|
(1.3
|
)
|
21.3
|
|||||||||
Equity
(loss) income of affiliated companies
|
-
|
(0.7
|
)
|
0.7
|
(0.3
|
)
|
(0.3
|
)
|
||||||||
Equity
income from consolidated subsidiaries
|
157.9
|
15.0
|
1.6
|
(174.5
|
)
|
-
|
||||||||||
Net
income from continuing operations
|
74.2
|
57.2
|
120.1
|
(177.3
|
)
|
74.2
|
||||||||||
Net
income on discontinued operations,
|
||||||||||||||||
net
of tax
|
4.5
|
-
|
-
|
-
|
4.5
|
|||||||||||
Net
income before cumulative effect
|
||||||||||||||||
of
changes in accounting principle
|
78.7
|
57.2
|
120.1
|
(177.3
|
)
|
78.7
|
||||||||||
Cumulative
effect of changes in accounting
|
||||||||||||||||
principle,
net of tax
|
(33.3
|
)
|
-
|
-
|
-
|
(33.3
|
)
|
|||||||||
Net
income
|
$
|
45.4
|
$
|
57.2
|
$
|
120.1
|
$
|
(177.3
|
)
|
$
|
45.4
|
Condensed
Consolidating Balance Sheet
|
||||||||||||||||
December
31, 2005
|
||||||||||||||||
(Dollars
in millions)
|
Unconsolidated
|
|
||||||||||||||
|
Guarantor
|
Non-Guarantor
|
Eliminations
and
|
|||||||||||||
Assets
|
Parent
|
Subsidiaries
|
Subsidiaries
|
Adjustments
|
Consolidated
|
|||||||||||
Current
assets
|
||||||||||||||||
Cash
and cash equivalents
|
$
|
9.1
|
$
|
1.0
|
$
|
67.2
|
$
|
-
|
$
|
77.3
|
||||||
Accounts
receivable, net
|
63.4
|
35.8
|
191.6
|
0.2
|
291.0
|
|||||||||||
Intercompany
receivable
|
68.7
|
17.5
|
21.4
|
(107.6
|
)
|
-
|
||||||||||
Inventories
|
58.1
|
52.4
|
76.6
|
(2.1
|
)
|
185.0
|
||||||||||
Deferred
income taxes
|
24.0
|
2.9
|
12.4
|
-
|
39.3
|
|||||||||||
FiberVisions
assets held for sale
|
-
|
138.8
|
63.9
|
-
|
202.7
|
|||||||||||
Other
current assets
|
25.4
|
1.8
|
20.7
|
0.2
|
48.1
|
|||||||||||
Total
current assets
|
248.7
|
250.2
|
453.8
|
(109.3
|
)
|
843.4
|
||||||||||
Property,
plant and equipment, net
|
145.6
|
107.2
|
282.6
|
-
|
535.4
|
|||||||||||
Investments
in subsidiaries and advances, net
|
2,461.4
|
88.3
|
44.9
|
(2,594.6
|
)
|
-
|
||||||||||
Goodwill
and other intangible assets, net
|
196.4
|
27.8
|
359.6
|
-
|
583.8
|
|||||||||||
Deferred
income taxes
|
361.7
|
-
|
18.3
|
(139.6
|
)
|
240.4
|
||||||||||
Asbestos-related
assets
|
120.7
|
-
|
-
|
-
|
120.7
|
|||||||||||
Deferred
charges and other assets
|
171.6
|
13.8
|
59.7
|
-
|
245.1
|
|||||||||||
Total
assets
|
$
|
3,706.1
|
$
|
487.3
|
$
|
1,218.9
|
$
|
(2,843.5
|
)
|
$
|
2,568.8
|
|||||
Liabilities
and Stockholders' (Deficit) Equity
|
||||||||||||||||
Current
liabilities
|
||||||||||||||||
Accounts
payable
|
$
|
52.0
|
$
|
16.7
|
$
|
104.5
|
$
|
0.2
|
$
|
173.4
|
||||||
FiberVisions
liabilities held for sale
|
-
|
51.2
|
15.4
|
-
|
66.6
|
|||||||||||
Asbestos-related
liabilities
|
36.4
|
-
|
-
|
-
|
36.4
|
|||||||||||
Intercompany
payable
|
1.5
|
60.7
|
42.0
|
(104.2
|
)
|
-
|
||||||||||
Current
debt obligations
|
4.0
|
-
|
12.7
|
-
|
16.7
|
|||||||||||
Accrued
expenses
|
78.5
|
60.5
|
80.3
|
-
|
219.3
|
|||||||||||
Total
current liabilities
|
172.4
|
189.1
|
254.9
|
(104.0
|
)
|
512.4
|
||||||||||
Long-term
debt
|
1,088.6
|
-
|
3.7
|
-
|
1,092.3
|
|||||||||||
Deferred
income taxes
|
-
|
142.6
|
72.2
|
(139.0
|
)
|
75.8
|
||||||||||
Pension
liability
|
251.7
|
-
|
71.7
|
-
|
323.4
|
|||||||||||
Other
postretirement benefits
|
63.1
|
2.1
|
0.3
|
-
|
65.5
|
|||||||||||
Deferred
credits and other liabilities
|
254.2
|
18.8
|
17.5
|
-
|
290.5
|
|||||||||||
Asbestos-related
liabilities
|
233.6
|
-
|
-
|
-
|
233.6
|
|||||||||||
Intercompany
notes payable (receivable)
|
1,667.2
|
(1,208.7
|
)
|
(458.5
|
)
|
-
|
-
|
|||||||||
Total
stockholders' (deficit) equity
|
(24.7
|
)
|
1,343.4
|
1,257.1
|
(2,600.5
|
)
|
(24.7
|
)
|
||||||||
Total
liabilities and stockholders' (deficit) equity
|
$
|
3,706.1
|
$
|
487.3
|
$
|
1,218.9
|
$
|
(2,843.5
|
)
|
$
|
2,568.8
|
Condensed
Consolidating Balance Sheet
|
||||||||||||||||
December
31, 2004
|
||||||||||||||||
(Dollars
in millions)
|
Unconsolidated
|
|
||||||||||||||
|
Guarantor
|
Non-Guarantor
|
Eliminations
and
|
|||||||||||||
Assets
|
Parent
|
Subsidiaries
|
Subsidiaries
|
Adjustments
|
Consolidated
|
|||||||||||
Current
assets
|
||||||||||||||||
Cash
and cash equivalents
|
$
|
42.8
|
$
|
0.9
|
$
|
82.8
|
$
|
-
|
$
|
126.5
|
||||||
Accounts
receivable, net
|
64.8
|
55.6
|
225.6
|
0.7
|
346.7
|
|||||||||||
Intercompany
receivable
|
74.4
|
25.2
|
29.9
|
(129.5
|
)
|
-
|
||||||||||
Inventories
|
59.0
|
63.2
|
105.0
|
(14.8
|
)
|
212.4
|
||||||||||
Deferred
income taxes
|
18.3
|
16.3
|
2.1
|
-
|
36.7
|
|||||||||||
Asbestos-related
assets
|
6.3
|
-
|
-
|
-
|
6.3
|
|||||||||||
Other
current assets
|
23.4
|
10.1
|
20.3
|
-
|
53.8
|
|||||||||||
Total
current assets
|
289.0
|
171.3
|
465.7
|
(143.6
|
)
|
782.4
|
||||||||||
Property,
plant and equipment, net
|
162.7
|
152.7
|
380.0
|
-
|
695.4
|
|||||||||||
Investments
in subsidiaries and advances, net
|
2,279.4
|
88.0
|
48.8
|
(2,416.2
|
)
|
-
|
||||||||||
Goodwill
and other intangible assets, net
|
195.9
|
88.2
|
428.5
|
-
|
712.6
|
|||||||||||
Deferred
income taxes
|
266.3
|
(159.1
|
)
|
14.7
|
-
|
121.9
|
||||||||||
Asbestos-related
assets
|
162.5
|
-
|
-
|
-
|
162.5
|
|||||||||||
Deferred
charges and other assets
|
206.2
|
5.6
|
33.7
|
-
|
245.5
|
|||||||||||
Total
assets
|
$
|
3,562.0
|
$
|
346.7
|
$
|
1,371.4
|
$
|
(2,559.8
|
)
|
$
|
2,720.3
|
|||||
Liabilities
and Stockholders' Equity
|
||||||||||||||||
Current
liabilities
|
||||||||||||||||
Accounts
payable
|
$
|
43.1
|
$
|
24.4
|
$
|
120.2
|
$
|
(0.7
|
)
|
$
|
187.0
|
|||||
Asbestos-related
liabilities
|
46.8
|
-
|
-
|
-
|
46.8
|
|||||||||||
Intercompany
payable
|
7.7
|
76.4
|
45.4
|
(129.5
|
)
|
-
|
||||||||||
Current
debt obligations
|
4.0
|
-
|
25.8
|
-
|
29.8
|
|||||||||||
Accrued
expenses
|
81.9
|
73.4
|
56.8
|
-
|
212.1
|
|||||||||||
Total
current liabilities
|
183.5
|
174.2
|
248.2
|
(130.2
|
)
|
475.7
|
||||||||||
Long-term
debt
|
1,200.6
|
0.2
|
9.5
|
-
|
1,210.3
|
|||||||||||
Deferred
income taxes
|
-
|
-
|
77.2
|
-
|
77.2
|
|||||||||||
Pension
liability
|
176.8
|
0.6
|
64.0
|
-
|
241.4
|
|||||||||||
Other
postretirement benefits
|
78.3
|
2.2
|
-
|
-
|
80.5
|
|||||||||||
Deferred
credits and other liabilities
|
247.2
|
40.4
|
22.3
|
-
|
309.9
|
|||||||||||
Asbestos-related
liabilities
|
213.4
|
-
|
-
|
-
|
213.4
|
|||||||||||
Intercompany
notes payable (receivable)
|
1,350.3
|
(1,181.9
|
)
|
(168.4
|
)
|
-
|
-
|
|||||||||
Total
stockholders' equity
|
111.9
|
1,311.0
|
1,118.6
|
(2,429.6
|
)
|
111.9
|
||||||||||
Total
liabilities and stockholders' equity
|
$
|
3,562.0
|
$
|
346.7
|
$
|
1,371.4
|
$
|
(2,559.8
|
)
|
$
|
2,720.3
|
Condensed
Consolidating Statement of Cash Flows
|
||||||||||||||||
Year
Ended December 31, 2005
|
||||||||||||||||
(Dollars
in millions)
|
Unconsolidated
|
|||||||||||||||
Parent
|
Guarantor
Subsidiaries
|
Non-
Guarantor
Subsidiaries
|
Eliminations
and
Adjustments
|
Consolidated
|
||||||||||||
Net
Cash Provided By (Used In) Operating Activities
|
$
|
(4.6
|
)
|
$
|
29.1
|
$
|
(81.2
|
)
|
$
|
195.9
|
$
|
139.2
|
||||
Cash
Flow From Investing Activities:
|
||||||||||||||||
Capital
expenditures
|
(16.7
|
)
|
(26.7
|
)
|
(24.1
|
)
|
-
|
(67.5
|
)
|
|||||||
Proceeds
of investment and fixed asset
disposals
|
13.3
|
-
|
3.3
|
-
|
16.6
|
|||||||||||
Other,
net
|
-
|
-
|
(6.8
|
)
|
-
|
(6.8
|
)
|
|||||||||
Net
cash used in investing activities
|
(3.4
|
)
|
(26.7
|
)
|
(27.6
|
)
|
-
|
(57.7
|
)
|
|||||||
Cash
Flow From Financing Activities:
|
||||||||||||||||
Long-term
debt payments
|
(112.8
|
)
|
-
|
(18.4
|
)
|
-
|
(131.2
|
)
|
||||||||
Change
in short-term debt
|
-
|
-
|
1.9
|
-
|
1.9
|
|||||||||||
Change
in intercompany advances
|
84.8
|
(2.3
|
)
|
156.6
|
(239.1
|
)
|
-
|
|||||||||
Treasury
stock issued
|
2.7
|
-
|
-
|
-
|
2.7
|
|||||||||||
Dividends
paid
|
-
|
-
|
(43.2
|
)
|
43.2
|
-
|
||||||||||
Other
|
(0.4
|
)
|
-
|
-
|
-
|
(0.4
|
)
|
|||||||||
Net
cash used in financing activities
|
(25.7
|
)
|
(2.3
|
)
|
96.9
|
(195.9
|
)
|
(127.0
|
)
|
|||||||
Effect
of exchange rate changes on cash
|
-
|
-
|
(3.7
|
)
|
-
|
(3.7
|
)
|
|||||||||
Net
(decrease) increase in cash and cash
equivalents
|
(33.7
|
)
|
0.1
|
(15.6
|
)
|
-
|
(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
|
$
|
9.1
|
$
|
1.0
|
$
|
67.2
|
$
|
-
|
$
|
77.3
|
Condensed
Consolidating Statement of Cash Flows
|
||||||||||||||||
Year
Ended December 31, 2004
|
||||||||||||||||
(Dollars
in millions)
|
Unconsolidated
|
|||||||||||||||
Parent
|
Guarantor
Subsidiaries
|
Non-
Guarantor
Subsidiaries
|
Eliminations
and
Adjustments
|
Consolidated
|
||||||||||||
Net
Cash Provided By Operating Activities
|
$
|
155.4
|
$
|
40.9
|
$
|
490.0
|
$
|
(565.8
|
)
|
$
|
120.5
|
|||||
Cash
Flow From Investing Activities:
|
||||||||||||||||
Capital
expenditures
|
(22.5
|
)
|
(15.4
|
)
|
(39.4
|
)
|
(0.1
|
)
|
(77.4
|
)
|
||||||
Proceeds
of investment and fixed asset
|
||||||||||||||||
disposals
|
0.8
|
-
|
0.6
|
-
|
1.4
|
|||||||||||
Proceeds
from sale of minority interests in
|
||||||||||||||||
CP
Kelco ApS
|
27.0
|
-
|
-
|
-
|
27.0
|
|||||||||||
Other,
net
|
0.8
|
(1.5
|
)
|
0.7
|
(0.1
|
)
|
(0.1
|
)
|
||||||||
Net
cash (used in) provided by investing
|
||||||||||||||||
activities
|
6.1
|
(16.9
|
)
|
(38.1
|
)
|
(0.2
|
)
|
(49.1
|
)
|
|||||||
Cash
Flow From Financing Activities:
|
||||||||||||||||
Long-term
debt proceeds
|
650.0
|
-
|
-
|
-
|
650.0
|
|||||||||||
Long-term
debt payments
|
(713.2
|
)
|
-
|
(16.3
|
)
|
-
|
(729.5
|
)
|
||||||||
Change
in short-term debt
|
-
|
-
|
1.6
|
-
|
1.6
|
|||||||||||
Payment
of debt issuance costs and
|
||||||||||||||||
underwriting
fees
|
(7.8
|
)
|
-
|
-
|
-
|
(7.8
|
)
|
|||||||||
Change
in intercompany advances
|
(68.4
|
)
|
(25.2
|
)
|
(262.2
|
)
|
355.8
|
-
|
||||||||
Treasury
stock issued
|
5.5
|
-
|
-
|
-
|
5.5
|
|||||||||||
Dividends
paid
|
-
|
-
|
(210.2
|
)
|
210.2
|
-
|
||||||||||
Other
|
6.1
|
-
|
-
|
-
|
6.1
|
|||||||||||
Net
cash used in financing activities
|
(127.8
|
)
|
(25.2
|
)
|
(487.1
|
)
|
566.0
|
(74.1
|
)
|
|||||||
Effect
of exchange rate changes on cash
|
-
|
-
|
2.9
|
-
|
2.9
|
|||||||||||
Net
increase (decrease) in cash and cash
|
||||||||||||||||
equivalents
|
33.7
|
(1.2
|
)
|
(32.3
|
)
|
-
|
0.2
|
|||||||||
Cash
and cash equivalents at beginning of year
|
9.1
|
2.1
|
115.1
|
-
|
126.3
|
|||||||||||
Cash
and cash equivalents at end of year
|
$
|
42.8
|
$
|
0.9
|
$
|
82.8
|
$
|
-
|
$
|
126.5
|
Condensed
Consolidating Statement of Cash Flows
|
||||||||||||||||
Year
Ended December 31, 2003
|
||||||||||||||||
(Dollars
in millions)
|
Unconsolidated
|
|||||||||||||||
Parent
|
Guarantor
Subsidiaries
|
Non-
Guarantor
Subsidiaries
|
Eliminations
and
Adjustments
|
Consolidated
|
||||||||||||
Net
Cash Provided By Operating Activities
|
$
|
11.8
|
$
|
53.3
|
$
|
130.3
|
$
|
(172.6
|
)
|
$
|
22.8
|
|||||
Cash
Flow From Investing Activities:
|
||||||||||||||||
Capital
expenditures
|
(13.5
|
)
|
(12.9
|
)
|
(21.6
|
)
|
-
|
(48.0
|
)
|
|||||||
Proceeds
of investment and fixed asset
disposals
|
4.3
|
0.7
|
5.4
|
-
|
10.4
|
|||||||||||
Decrease
in restricted cash
|
125.0
|
-
|
-
|
-
|
125.0
|
|||||||||||
Acquisitions,
net of cash acquired
|
-
|
-
|
(8.9
|
)
|
-
|
(8.9
|
)
|
|||||||||
Investment
in CRESTS Units preferred securities
|
(27.4
|
)
|
-
|
-
|
-
|
(27.4
|
)
|
|||||||||
Other,
net
|
(0.7
|
)
|
0.9
|
(1.6
|
)
|
-
|
(1.4
|
)
|
||||||||
Net
cash provided by (used in) investing
|
||||||||||||||||
activities
|
87.7
|
(11.3
|
)
|
(26.7
|
)
|
-
|
49.7
|
|||||||||
Cash
Flow From Financing Activities:
|
||||||||||||||||
Long-term
debt repayments
|
(151.2
|
)
|
-
|
(14.0
|
)
|
-
|
(165.2
|
)
|
||||||||
Change
in short-term debt
|
-
|
-
|
(0.7
|
)
|
-
|
(0.7
|
)
|
|||||||||
Change
in intercompany, non-current
|
(65.1
|
)
|
(46.9
|
)
|
(105.4
|
)
|
217.4
|
-
|
||||||||
Repurchase
of CRESTS Units warrants
|
(7.0
|
)
|
-
|
-
|
-
|
(7.0
|
)
|
|||||||||
Treasury
stock issued
|
1.9
|
-
|
-
|
-
|
1.9
|
|||||||||||
Dividends
paid
|
-
|
-
|
44.8
|
(44.8
|
)
|
-
|
||||||||||
Net
cash used in financing activities
|
(221.4
|
)
|
(46.9
|
)
|
(75.3
|
)
|
172.6
|
(171.0
|
)
|
|||||||
Effect
of exchange rate changes on cash
|
-
|
-
|
15.8
|
-
|
15.8
|
|||||||||||
Net
(decrease) increase in cash and cash equivalents
|
(121.9
|
)
|
(4.9
|
)
|
44.1
|
-
|
(82.7
|
)
|
||||||||
Cash
and cash equivalents at beginning of year
|
131.0
|
7.0
|
71.0
|
-
|
209.0
|
|||||||||||
Cash
and cash equivalents at end of year
|
$
|
9.1
|
$
|
2.1
|
$
|
115.1
|
$
|
-
|
$
|
126.3
|
||||||
(Dollars
in millions except per share amounts)
|
|||||||||||||||||||||||||||||||
1st
Quarter
|
2nd
Quarter
|
3rd
Quarter
|
4th
Quarter
|
Year
|
|||||||||||||||||||||||||||
2005
|
2004
|
2005
|
2004
|
2005
|
2004
|
2005
|
2004
|
2005
|
2004
|
||||||||||||||||||||||
$
|
505.1
|
$
|
474.9
|
$
|
538.6
|
$
|
510.5
|
$
|
522.9
|
$
|
500.5
|
$
|
502.2
|
$
|
510.8
|
$
|
2,068.8
|
$
|
1,996.7
|
||||||||||||
Cost
of sales
|
341.5
|
305.1
|
355.3
|
325.5
|
357.5
|
327.0
|
352.0
|
350.0
|
1,406.3
|
1,307.6
|
|||||||||||||||||||||
Selling,
general and administrative expenses
|
99.8
|
97.9
|
99.9
|
97.9
|
92.8
|
94.7
|
90.3
|
91.9
|
382.8
|
382.4
|
|||||||||||||||||||||
Research
and development
|
10.4
|
10.5
|
10.0
|
11.7
|
10.1
|
10.4
|
10.4
|
10.2
|
40.9
|
42.8
|
|||||||||||||||||||||
Goodwill
and intangible asset amortization
|
2.0
|
1.9
|
2.0
|
2.1
|
2.0
|
2.0
|
2.0
|
2.1
|
8.0
|
8.1
|
|||||||||||||||||||||
Impairment
if FiberVisions goodwill
|
-
|
-
|
-
|
-
|
-
|
-
|
52.9
|
-
|
52.9
|
-
|
|||||||||||||||||||||
Other
operating expense, net
|
10.0
|
12.9
|
10.4
|
8.7
|
11.1
|
1.4
|
16.0
|
3.9
|
47.5
|
26.9
|
|||||||||||||||||||||
Profit
(loss) from operations
|
41.4
|
46.6
|
61.0
|
64.6
|
49.4
|
65.0
|
(21.4
|
)
|
52.7
|
130.4
|
228.9
|
||||||||||||||||||||
Interest
and debt expense
|
22.2
|
30.4
|
22.8
|
29.4
|
22.5
|
25.1
|
21.9
|
23.8
|
89.4
|
108.7
|
|||||||||||||||||||||
Gain
on sale of CP Kelco ApS
|
-
|
(26.0
|
)
|
-
|
-
|
-
|
-
|
-
|
(1.0
|
)
|
-
|
(27.0
|
)
|
||||||||||||||||||
Other
expense, net
|
21.1
|
17.4
|
25.8
|
26.4
|
0.2
|
49.8
|
39.2
|
23.1
|
86.3
|
116.7
|
|||||||||||||||||||||
(Loss)
income before income taxes
|
(1.9
|
)
|
24.8
|
12.4
|
8.8
|
26.7
|
(9.9
|
)
|
(82.5
|
)
|
6.8
|
(45.3
|
)
|
30.5
|
|||||||||||||||||
(Benefit)
provision for income taxes
|
(6.9
|
)
|
(1.7
|
)
|
3.0
|
4.8
|
2.6
|
41.2
|
(5.9
|
)
|
(41.9
|
)
|
(7.2
|
)
|
2.4
|
||||||||||||||||
(Loss)
income before equity income (loss)
|
5.0
|
26.5
|
9.4
|
4.0
|
24.1
|
(51.1
|
)
|
(76.6
|
)
|
48.7
|
(38.1
|
)
|
28.1
|
||||||||||||||||||
Equity
(loss) of affiliated companies, net of tax
|
(0.1
|
)
|
(0.2
|
)
|
(0.2
|
)
|
0.1
|
(0.1
|
)
|
(0.2
|
)
|
(0.1
|
)
|
0.3
|
(0.5
|
)
|
-
|
||||||||||||||
Net
(loss) income before cumulative effect of changes in accounting
principle
|
4.9
|
26.3
|
9.2
|
4.1
|
24.0
|
(51.3
|
)
|
(76.7
|
)
|
49.0
|
(38.6
|
)
|
28.1
|
||||||||||||||||||
Cumulative
effect of changes in accounting
principle
|
-
|
-
|
-
|
-
|
-
|
-
|
(2.5
|
)
|
-
|
(2.5
|
)
|
-
|
|||||||||||||||||||
Net
(loss) income
|
$
|
4.9
|
$
|
26.3
|
$
|
9.2
|
$
|
4.1
|
$
|
24.0
|
$
|
(51.3
|
)
|
$
|
(79.2
|
)
|
$
|
49.0
|
$
|
(41.1
|
)
|
$
|
28.1
|
||||||||
(Loss)
earnings per share
|
|||||||||||||||||||||||||||||||
Basic
(loss) earnings per share:
|
|||||||||||||||||||||||||||||||
Continuing
operations
|
$
|
0.05
|
$
|
0.25
|
$
|
0.08
|
$
|
0.04
|
$
|
0.22
|
$
|
(0.47
|
)
|
$
|
(0.71
|
)
|
$
|
0.45
|
$
|
(0.36
|
)
|
$
|
0.26
|
||||||||
Cumulative
effect of changes in accounting
principle
|
-
|
-
|
-
|
-
|
-
|
-
|
(0.02
|
)
|
-
|
(0.02
|
)
|
-
|
|||||||||||||||||||
Net
(loss) income
|
$
|
0.05
|
$
|
0.25
|
$
|
0.08
|
$
|
0.04
|
$
|
0.22
|
$
|
(0.47
|
)
|
$
|
(0.73
|
)
|
$
|
0.45
|
$
|
(0.38
|
)
|
$
|
0.26
|
||||||||
Diluted
(loss) earnings per share:
|
|||||||||||||||||||||||||||||||
Continuing
operations
|
$
|
0.04
|
$
|
0.24
|
$
|
0.08
|
$
|
0.04
|
$
|
0.22
|
$
|
(0.47
|
)
|
$
|
(0.71
|
)
|
$
|
0.45
|
$
|
(0.36
|
)
|
$
|
0.26
|
||||||||
Cumulative
effect of changes in accounting
principle
|
-
|
-
|
-
|
-
|
-
|
-
|
(0.02
|
)
|
-
|
(0.02
|
)
|
-
|
|||||||||||||||||||
Net
(loss) income
|
$
|
0.04
|
$
|
0.24
|
$
|
0.08
|
$
|
0.04
|
$
|
0.22
|
$
|
(0.47
|
)
|
$
|
(0.73
|
)
|
$
|
0.45
|
$
|
(0.38
|
)
|
$
|
0.26
|
Name
|
|
Age
|
|
Current
Position
|
Craig
A. Rogerson
|
49
|
President,
Chief Executive Officer and Director
|
||
Fred
G. Aanonsen
|
58
|
Vice
President and Controller
|
||
Edward
V. Carrington
|
63
|
Vice
President, Human Resources
|
||
Richard
G. Dahlen
|
66
|
Chief
Legal Officer
|
||
Israel
J. Floyd
|
59
|
Corporate
Secretary and General Counsel
|
||
Vincenzo
M. Romano
|
52
|
Vice
President, Taxes
|
||
Stuart
C. Shears
|
55
|
Vice
President and Treasurer
|
||
Allen
A. Spizzo
|
48
|
Vice
President and Chief Financial
Officer
|
Plan
category
|
Number
of securities to
be
issued upon
exercise
of outstanding
options,
warrants
and
rights
|
Weighted-average
exercise
price of
outstanding
options,
warrants
and rights
|
Number
of securities
remaining
available
for
future issuance
under
equity
compensation
plans
(excluding
securities
reflected
in
column
(a))
|
||||||||||
(a)
|
(b)
|
(c)
|
|||||||||||
Equity
compensation plans approved by security holders
|
9,724,127
|
(1)
(2)
|
|
$
|
24.08
|
7,726,070
|
|||||||
Equity
compensation plans not approved by security holders (3)
|
-
|
-
|
-
|
||||||||||
Total
|
9,724,127
|
$
|
24.08
|
7,726,070
|
|||||||||
(1)
Includes 4,253,080 options with exercise prices in excess of the
weighted
average price of $24.08.
|
|||||||||||||
(2)
Includes options to purchase 1,561,544 shares that were not vested
at
December 31, 2005.
|
|||||||||||||
(3)
There are no equity compensation plans that have not been approved
by the
Company's shareholders.
|
|
Page
|
Management's
Report on Internal Control over Financial Reporting
|
34
|
Report
of Independent Registered Public Accounting Firm
|
35
|
Consolidated
Statements of Operations and Comprehensive (Loss) Income for the
Years
Ended December 31, 2005, 2004 and
2003
|
38
|
Consolidated
Balance Sheets as of December 31, 2005 and 2004
|
39
|
Consolidated
Statements of Cash Flows for the Years Ended December 31, 2005, 2004
and 2003
|
40
|
Consolidated
Statements of Stockholders' Equity (Deficit) for the Years Ended
December 31, 2005, 2004 and 2003
|
42
|
Summary
of Significant Accounting Policies and Notes to Consolidated Financial
Statements
|
43
|
(Dollars
in millions)
|
||||||||||||||||
Balance
at
|
Charged
to
|
Charged
to
|
Balance
at
|
|||||||||||||
beginning
|
costs
and
|
other
|
end
|
|||||||||||||
Description
|
of
period
|
expenses
|
accounts
|
Deductions
|
of
period
|
|||||||||||
Year
2005
|
||||||||||||||||
Tax
valuation allowance
|
$
|
391.8
|
$
|
23.1
|
$
|
(34.2
|
)
|
$
|
-
|
$
|
380.7
|
|||||
Year
2004
|
||||||||||||||||
Tax
valuation allowance
|
$
|
399.8
|
$
|
(22.9
|
)
|
$
|
14.9
|
$
|
-
|
$
|
391.8
|
|||||
Year
2003
|
||||||||||||||||
Tax
valuation allowance
|
$
|
373.0
|
$
|
(2.9
|
)
|
$
|
29.7
|
$
|
-
|
$
|
399.8
|
|||||
HERCULES
INCORPORATED
|
|
By:
|
/s/
Craig A. Rogerson
|
President
and Chief Executive Officer
|
Principal
Executive Officer and Director:
|
||||
|
President
and Chief Executive Officer
|
/s/
Craig A. Rogerson
|
||
Craig
A. Rogerson
|
||||
Principal
Financial Officer:
|
||||
Vice
President and Chief Financial Officer
|
/s/
Allen A. Spizzo
|
|||
Allen
A. Spizzo
|
||||
Principal
Accounting Officer:
|
||||
Vice
President and Controller
|
/s/
Fred G. Aanonsen
|
|||
Fred
G. Aanonsen
|
||||
Directors:
|
||||
/s/
John K. Wulff
|
/s/
Burton M. Joyce
|
|||
John
K. Wulff, Chairman of the Board
|
Burton
M. Joyce
|
|||
/s/
Anna Cheng Catalano
|
/s/
Robert D. Kennedy
|
|||
Anna
Cheng Catalano
|
Robert
D. Kennedy
|
|||
/s/
Patrick Duff
|
/s/
Jeffrey M. Lipton
|
|||
Patrick
Duff
|
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
|
Number
|
Description
|
Incorporated
by Reference to
|
|
2.1
|
Agreement
and Plan of Merger among Hercules, Water Acquisition Company and
BetzDearborn Inc., dated July 30, 1998
|
Exhibit
2.1, BetzDearborn Inc. Current Report on Form 8-K, filed July 30,
1998
|
|
3.1
|
Restated
Certificate of Incorporation of Hercules, as revised and amended
July 6,
1988
|
Exhibit
3-A, Annual Report on Form 10-K filed March 26, 1993
|
|
3.2
|
Certificate
of Amendment dated October 24, 1995, to Hercules' Restated Certificate
of
Incorporation as revised and amended July 5, 1998
|
Exhibit
4.1a, Registration Statement on Form S-3, filed September 15, 1998
|
|
3.3
|
By-Laws
of Hercules, as revised and amended as of July 15,
2003
|
Exhibit
3.1, Quarterly Report on Form 10-Q filed August 7, 2003
|
|
4.1
|
Officers'
Certificate, dated as of July 27, 1999,
pursuant to the Junior Subordinated Debentures Indenture between
Hercules
and Chase, dated as of November 12, 1998
|
Exhibit
4.1, Current Report on Form 8-K, dated July 27, 1999
|
|
4.2
|
Unit
Agreement, dated July 27, 1999,
among Hercules, Hercules Trust II and The Chase Manhattan Bank,
as unit
agent
|
Exhibit
4.3, Current Report on Form 8-K, dated July 27, 1999
|
|
4.3
|
Warrant
Agreement, dated July 27, 1999,
between Hercules and The Chase Manhattan Bank, as warrant
agent
|
Exhibit
4.4, Current Report on Form 8-K, dated July 27, 1999
|
|
4.4
|
Form
of Series A Junior Subordinated Deferrable Interest
Debentures
|
Exhibit
4.5, Current Report on Form 8-K, dated July 27, 1999
|
|
4.5
|
Form
of CRESTS Unit
|
Exhibit
4.7, Current Report on Form 8-K, dated July 27, 1999
|
|
4.6
|
Form
of Warrant
|
Exhibit
4.8, Current Report on Form 8-K, dated July 27, 1999
|
|
4.7
|
Rights
Agreement, dated as of August 24, 2000, between Hercules Incorporated
and
Chase Mellon Shareholder Services, L.L.C.
|
Exhibit
4.1 to Hercules Registration of Certain Classes of Securities on
Form 8-A
filed August 10, 2000
|
|
4.8
|
Indenture,
dated as of November 14, 2000, between Hercules Incorporated, as
issuer
and Wells Fargo Bank Minnesota, N.A., as trustee (including the
form of
11.125% senior notes due 2007 included as Exhibit A
thereto).
|
Exhibit
4-A, Quarterly Report on Form 10-Q, filed November 14,
2000
|
|
4.9
|
Registration
Rights Agreement, dated as of November 14, 2000, among Hercules
Incorporated and all of its domestic subsidiaries and Donaldson,
Lufkin
& Jenrette Securities Corporation and Credit Suisse First Boston
Corporation, as the initial purchasers.
|
Exhibit
4-B Quarterly Report on Form 10-Q, filed November 14,
2000
|
|
4.10
|
Amendment
No. 1 to the Hercules Incorporated Rights Agreement, dated as of
June 5,
2003
|
Exhibit
4.2, Registration Statement on Form 8-A, filed June 5,
2003
|
|
4.11
|
Amendment
No. 2 to the Hercules Incorporated Rights Agreement, dated as of
August
21, 2003
|
Exhibit
4.1, Current Report on Form 8-K, filed September 22,
2003
|
|
4.12
|
Indenture,
dated as of April 8, 2004, between Hercules Incorporated and each
of the
Guarantors party thereto and Wells Fargo Bank, National
Association
|
Exhibit
4.1, Quarterly Report on Form 10-Q filed May 10,
2004
|
4.13
|
Registration
Rights Agreement, dated April 8, 2004, between Hercules Incorporated
and
the Guarantors listed on Schedule A thereto and Credit Suisse First
Boston
LLC, Wachovia Capital Markets, LLC, Scotia Capital (USA) Inc. and
Deutsche
Bank Securities Inc.
|
Exhibit
4.2, Quarterly Report on Form 10-Q, filed May 10, 2004
|
|
10.1
|
Hercules
Executive Survivor Benefit Plan
|
Exhibit
10-D, Annual Report on Form 10-K, filed March 27, 1981
|
|
10.2
|
Hercules
1993 Non-Employee Director Stock Accumulation and Deferred Compensation
Plan
|
Exhibit
4.1, Registration Statement on Form S-8, filed July 16,
1993
|
|
10.3
|
Hercules
Employee Pension Restoration Plan
|
Exhibit
10-L, Annual Report on Form 10-K, filed March 26, 1993
|
|
10.4
|
Hercules
Amended and Restated Long Term Incentive Compensation Plan
|
Exhibit
10-K, Annual Report on Form 10-K, filed March 29, 2000
|
|
10.5
|
CRESTS
Units Underwriting Agreement, dated July 21, 1999,
among Hercules, Hercules Trust II and the Underwriters named
therein
|
Exhibit
1.1, Current Report on Form 8-K, dated July 27, 1999
|
|
10.6
|
Common
Stock Underwriting Agreement, dated July 21, 1999,
among Hercules and the Underwriters named therein
|
Exhibit
1.2, Current Report on Form 8-K, dated July 27, 1999
|
|
10.7
|
Form
of Change-of-Control Employment Agreements entered into as of August
24,
2000 by Hercules Incorporated and each of Robert C. Flexon and
Craig A.
Rogerson
|
Exhibit
10-19, Registration Statement S-4, filed August 9, 2001
|
|
10.8
|
Form
of Change-of-Control Employment Agreements entered into as of June
15,
2001 by Hercules Incorporated and Richard G. Dahlen
|
Exhibit
10-25, Registration Statement S-4, filed August 9, 2001
|
|
10.9
|
Change-of-Control
Employment Agreement, dated as of July 2, 2001, by and between
Hercules
Incorporated and Fred G. Aanonsen
|
Exhibit
10-28, Registration Statement on Form S-4, filed August 9,
2001
|
|
10.10
|
Stock
and Asset Purchase Agreement, dated as of February 12, 2002, by
and among
Hercules Incorporated, General Electric Company and Falcon Acquisition
Corp.
|
Exhibit
10.1, Current Report on Form 8-K,
dated
February 12, 2002
|
|
10.11
|
Amendment
2002-1 to Amended and Restated Long Term Incentive Compensation
Plan
|
Exhibit
I, Proxy Statement, dated May 15, 2002
|
|
10.12
|
Amendment
2002-1 to Non-Employee Director Stock Accumulation Plan
|
Exhibit
II, Proxy Statement, dated May 15, 2002
|
|
10.13
|
Hercules
Incorporated Compensation Benefits Grantor Trust Agreement for
Management
Employees
|
Exhibit
10-Ee, Annual Report on Form 10-K/A, filed May 1, 2003
|
|
10.14
|
Hercules
Incorporated Compensation Benefits Grantor Trust Agreement for
Non-Employee Directors
|
Exhibit
10-Ff, Annual Report on Form 10-K/A, filed May 1, 2003
|
|
10.15
|
Amended
and Restated Hercules Incorporated Management Incentive Compensation
Plan,
dated February 21, 2003
|
Exhibit
10-Gg Annual Report on Form 10-K/A, filed May 1, 2003
|
|
10.16
|
Hercules
Deferred Compensation Plan, restated December 1995
|
Exhibit
10-B, Quarterly Report on Form 10-Q, filed May 15,
2003
|
10.17
|
Employment
Offer Letter - Fred G. Aanonsen, dated June 27, 2001
|
Exhibit
10-C, Quarterly Report on Form 10-Q, filed May 15, 2003
|
|
10.18
|
Hercules
Executive Survivor Benefit Plan II dated January 1, 1987 - benefit
structure is only applicable to one executive officer
|
Exhibit
10-E, Quarterly Report on Form 10-Q, filed May 15, 2003
|
|
10.19
|
First
Amendment to Credit Agreement, dated December 17, 2003, among
Hercules Incorporated, certain subsidiaries of Hercules several
banks and
other financial institutions identified in the agreement and Credit
Suisse
First Boston, as administrative agent
|
Exhibit
10-Mm, Annual Report on Form 10-K, filed March 15, 2004
|
|
10.20
|
Omnibus
Equity Compensation Plan for Non-Employee Directors
|
Appendix
II, Proxy Statement dated June 20, 2003
|
|
10.21
|
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
|
|
10.22
|
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
|
|
10.23
|
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
|
|
10.24
|
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
|
|
10.25
|
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
|
|
10.26
|
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
|
|
10.27
|
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
|
|
10.28
|
Pension
Service Credit Agreement between Hercules Incorporated Compensation
Committee of the Hercules Board of Directors and John Televantos,
dated
September 1, 2004
|
Exhibit
10.33, Annual Report on From 10-K, filed March 16, 2005
|
|
10.29
|
Employment
Offer Letter - Paul C. Raymond III, dated December 28,
2004
|
Exhibit
10.34, Annual Report on Form 10-K, filed March 16, 2005
|
|
10.30
|
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
|
|
10.31
|
General
Terms of Employment between Hercules Incorporated and Certain Executive
Officers
|
Exhibit
10.36, Annual Report on Form 10-K, filed March 16,
2005
|
10.32
|
Employment
Offer Letter - John E. Panichella, dated December 15, 2005
|
Exhibit
10.1, Current Report on Form 8-K/A, dated December 15,
2005
|
|
10.33
*
|
Contribution
Agreement between Hercules Incorporated, WSP, Inc., SPG/FV Investor
LLC
and Fibervisions Delaware Corporation dated January 31,
2006
|
||
14
|
Directors
Code of Business Conduct and Ethics
|
Appendix
VII, Proxy Statement dated June 20, 2003
|
|
18
|
Letter
Regarding Change in Accounting Principle
|
Exhibit
18, Annual Report on Form 10-K, filed March 15, 2004
|
|
18.1*
|
Letter
Regarding Change in Accounting Principle
|
||
21.1*
|
Subsidiaries
of Registrant
|
||
23.1*
|
Consent
of BDO Seidman, LLP
|
||
23.2*
|
Consent
of PricewaterhouseCooper, LLP
|
||
31.1*
|
Certification
of President and Chief Executive Officer Pursuant to Exchange Act
Rule
13a-14(a)/15d-14(a)
|
||
31.2*
|
Certification
of Vice President and Chief Financial Officer Pursuant to Exchange
Act
Rule 13a-14(a)/15d-14(a)
|
||
32.1*
|
Section
1350 Certification of President and Chief Executive
Officer
|
||
32.2*
|
Section
1350 Certification of Vice President and Chief Financial
Officer
|
||
*Filed
herewith
|