SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED]
For the fiscal year ended December 31, 1997.
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _______________ to _______________.
Commission File Number 0-2085
BETZDEARBORN INC. EMPLOYEE STOCK OWNERSHIP AND 401K PLAN
(Title of Plan)
BETZDEARBORN INC.
4636 Somerton Road
Trevose, Pennsylvania 19053
(Name of Issuer of the Securities Held Pursuant to the Plans
and the Address of its Principal Executive Office)
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this annual report to be signed on its behalf by the
undersigned, hereunto duly authorized.
BETZDEARBORN INC.
By: /s/ Linda R. Hansen
--------------------------
Linda R. Hansen
Vice President, Secretary
and General Counsel
<PAGE>
Financial Statements and
Supplemental Schedule
BetzDearborn Inc. Employee Stock
Ownership and 401(k) Plan
Years ended December 31, 1997 and 1996
with Report of Independent Auditors
<PAGE>
BetzDearborn Inc. Employee Stock
Ownership and 401(k) Plan
Financial Statements and Supplemental Schedule
Years ended December 31, 1997 and 1996
Contents
Report of Independent Auditors............................................1
Audited Financial Statements
Statements of Net Assets Available for Benefits...........................2
Statements of Changes in Net Assets Available for Benefits................3
Notes to Financial Statements.............................................4
Supplemental Schedule
Assets Held for Investment Purposes......................................12
<PAGE>
Report of Independent Auditors
Retirement Committee
BetzDearborn Inc. Employee Stock Ownership and 401(k) Plan
We have audited the accompanying statements of net assets available for
benefits of the BetzDearborn Inc. Employee Stock Ownership and 401(k) Plan as of
December 31, 1997 and 1996, and the related statements of changes in net assets
available for benefits for the years then ended. These financial statements are
the responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 1997 and 1996, and the changes in its net assets available for
benefits for the years then ended, in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedule of
assets held for investment purposes as of December 31, 1997 is presented for
purposes of complying with the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974, and is not a required part of the basic financial statements. The
supplemental schedule has been subjected to the auditing procedures applied in
our audit of the 1997 financial statements and, in our opinion, is fairly stated
in all material respects in relation to the basic financial statements taken as
a whole.
ERNST & YOUNG LLP
June 15, 1998
1
<PAGE>
BetzDearborn Inc. Employee Stock Ownership and 401(k) Plan
Statements of Net Assets Available for Benefits
December 31
1997 1996
----------- -----------
Assets
Investments:
Series A ESOP Convertible Preferred Stock
of BetzDearborn Inc. $159,596,410 $162,398,524
Common Stock--BetzDearborn Inc. 31,315,271 31,880,666
Putnam Voyager Fund 47,151,542 38,799,167
Putnam Fund for Growth and Income 41,532,541 30,887,194
Putnam New Opportunities Fund 14,092,470 10,462,397
Putnam Money Market Fund 9,532,006 8,775,990
Putnam U.S. Government Income Trust 6,585,642 5,673,604
Putnam International Growth Fund 3,738,088 --
Putnam Loan Fund 3,718,866 2,880,805
Putnam S&P 500 Index Fund 2,992,187 --
Putnam OTC & Emerging Fund 1,593,400 --
Putnam Asset Allocation Balanced Fund 1,230,428 --
Putnam Asset Allocation Conservative Fund 707,287 --
Putnam Asset Allocation Growth Fund 623,647 --
Putnam Global Growth Fund -- 4,171,205
------------ ------------
324,409,785 295,929,552
Contribution receivable 285,285 277,420
Cash 100,968 75,916
------------ ------------
Total assets 324,796,038 296,282,888
Liabilities
Accrued interest payable 285,285 272,493
Loan payable 94,500,000 95,500,000
------------ ------------
Total liabilities 94,785,285 95,772,493
------------ ------------
Net assets available for benefits $230,010,753 $200,510,395
============ ============
See accompanying notes.
2
<PAGE>
BetzDearborn Inc. Employee Stock Ownership and 401(k) Plan
Statements of Changes in Net Assets Available for Benefits
Year ended December 31
1997 1996
------------ ------------
Additions:
Contributions from employer $ 1,491,159 $ 1,240,509
Contributions from employees 15,147,309 15,687,411
Interest and dividend income 18,466,288 15,079,970
------------ ------------
35,104,756 32,007,890
Deductions:
Benefit payments 10,874,706 10,234,761
Interest expense 8,136,392 7,987,126
Administrative expenses 21,452 28,569
------------ ------------
19,032,550 18,250,456
------------ ------------
16,072,206 13,757,434
Net realized and unrealized appreciation
in fair value of investments 13,428,152 58,668,339
------------ ------------
Net additions 29,500,358 72,425,773
Net assets available for benefits
at beginning of year 200,510,395 128,084,622
------------ ------------
Net assets available for benefits
at end of year $230,010,753 $200,510,395
============ ============
See accompanying notes.
3
<PAGE>
BetzDearborn Inc. Employee Stock Ownership and 401(k) Plan
Notes to Financial Statements
December 31, 1997
1. Significant Accounting Policies
Valuation of Investments
Series A ESOP Convertible Preferred Stock of BetzDearborn Inc. is stated at
aggregate current value as determined by an independent securities appraisal
company. Marketable securities and investments in various mutual funds are
stated at aggregate fair value as determined from quoted market prices. The
change in the difference between current fair values and the cost of investments
and realized gains and losses on sales of investments is reflected in the
statement of changes in net assets available for benefits as net realized and
unrealized appreciation in fair value of investments.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
2. Description of Plan
The BetzDearborn Inc. Employee Stock Ownership and 401(k) Plan ("Plan") is a
defined contribution plan, which covers substantially all domestic employees of
BetzDearborn Inc. (the "Company") who have attained age 21. On June 28, 1996,
Betz Laboratories, Inc. acquired the Dearborn operations from W.R. Grace and
formally changed its name to BetzDearborn Inc. As of the closing date, all
domestic employees of Dearborn were given full credit in the Plan for service
with W.R. Grace for purposes of eligibility and vesting.
Under the 401(k) provisions of the Plan, employees can contribute on a pretax
basis amounts up to 15% of salary, the first 4% being matched by the Company at
a rate of 25%. The Company's match is made in the form of the BetzDearborn Inc.
Convertible Preferred Stock.
After satisfying the 401(k) matching contributions and dividends, the remaining
allocable preferred shares are allocated to individual participants' accounts as
of December 31st of each plan year based on the participants' eligible
compensation as a percentage of total eligible compensation. The number of
shares released for allocation in a plan year is equal to the number of
previously unreleased shares multiplied by a fraction. The numerator of the
fraction is the amount of principal and interest paid on the loan for the Plan
year, and the denominator of the fraction is the sum of the numerator plus the
principal and interest to be paid on the loan for all future plan years during
the term of the loan.
4
<PAGE>
BetzDearborn Inc. Employee Stock Ownership and 401(k) Plan
Notes to Financial Statements (continued)
2. Description of Plan (continued)
The Board of Directors has the right to discontinue the Company's
contributions to the Plan and to terminate or partially terminate the Plan at
any time. In the event of Plan termination or discontinuance of Company
contributions, the rights of the affected participants shall be 100% vested.
Additional information about the Plan agreement, its vesting, distribution,
loan, and forfeiture provisions is contained in Company publications available
from the Plan Administrator.
3. Investments
During 1997 and 1996, the Plan's investments (including investments bought,
sold, and held during the year) appreciated (depreciated) in fair value as
follows:
Net Appreciation
(Depreciation)
in Fair Value Fair Value at
During Year End of Year
------------- -------------
Year ended December 31, 1997
Series A ESOP Convertible Preferred Stock
of BetzDearborn Inc.* $ (651,723) $ 159,596,410
Common Stock--BetzDearborn Inc.* 1,546,956 31,315,271
Putnam Voyager Fund 6,902,946 47,151,542
Putnam Fund for Growth and Income 2,600,563 41,532,541
Putnam New Opportunities Fund 2,067,671 14,092,470
Putnam Money Market Fund 8 9,532,006
Putnam U.S. Government Income Trust 123,614 6,585,642
Putnam International Growth Fund (129,709) 3,738,088
Putnam Loan Fund -- 3,718,866
Putnam S&P 500 Index Fund 280,577 2,992,187
Putnam OTC & Emerging Fund 115,498 1,593,400
Putnam Asset Allocation Balanced Fund (33,437) 1,230,428
Putnam Asset Allocation Conservative Fund (15,547) 707,287
Putnam Asset Allocation Growth Fund (15,210) 623,647
Putnam Global Growth Fund 635,945 --
------------- -------------
$ 13,428,152 $ 324,409,785
============= =============
* Fair value at December 31, 1997 is based on $336 per share for the Series A
ESOP Convertible Preferred Stock of BetzDearborn Inc. and on $61 1/16 per
share for the Common Stock of BetzDearborn Inc. At June 12, 1998, the most
recent Preferred Stock valuation date, those fair values were $265 per share
and $44 7/8 per share, respectively.
5
<PAGE>
3. Investments (continued)
Net Appreciation
(Depreciation)
in Fair Value Fair Value at
During Year End of Year
------------- -------------
Year ended December 31, 1996
Series A ESOP Convertible Preferred Stock
of BetzDearborn Inc. $ 43,692,268 $ 162,398,524
Common Stock--BetzDearborn Inc. 10,209,780 31,880,666
Putnam Voyager Fund 1,702,565 38,799,167
Putnam Fund for Growth and Income 2,801,333 30,887,194
Putnam New Opportunities Fund 250,952 10,462,397
Putnam Money Market Fund -- 8,775,990
Putnam U.S. Government Income Trust (156,899) 5,673,604
Putnam Loan Fund -- 2,880,805
Putnam Global Growth Fund 168,340 4,171,205
------------- -------------
$ 58,668,339 $ 295,929,552
============= =============
4. ESOP Loan, Company Loan Guarantee, and Employer Contributions
The ESOP loan is secured by the unallocated shares of BetzDearborn Inc. Series A
ESOP Convertible Preferred Stock and is guaranteed by the Company. At December
31, 1997, the Plan held 475,371 unallocated shares of the Preferred Stock with a
fair value of $159,596,410. The Company is required to make contributions to the
Plan which, together with dividends received on stock held by the Plan, are
sufficient to enable the Plan to service its indebtedness. Interest was incurred
on the loan at 8.08% from January 1, 1996 to June 28, 1996; 8.56% from June 29,
1996 to December 2, 1997 and 8.36% from December 3, 1997 to December 31, 1997.
Debt service contributions paid to the ESOP during 1997 and 1996 totaled
$9,123,600 and $8,974,540, respectively, including Preferred Stock dividends of
$7,653,633 and $7,746,617, respectively. An additional contribution of $285,285
has been accrued by the Plan and is included in the contribution receivable
recorded at December 31, 1997.
The ESOP loan matures on June 19, 2009 and requires principal payments of
$1,000,000 in each of the years 1998 and 1999, $1,500,000 in 2000, $2,500,000 in
2001, $4,000,000 in 2002 and $84,500,000 thereafter. The Company is obligated to
maintain certain financial ratios and meet certain net worth and indebtedness
tests.
6
<PAGE>
5. Transactions with Parties-in-Interest
In accordance with the Plan document, the Company will pay substantially all
administrative expenses reasonably incurred in connection with the Plan. It is
impractical to allocate common expenses of the Company and the Plan. However,
certain employees of the Company are involved in the operation of the Plan.
Trustee's and other expenses directly applicable to the Plan and paid by the
Company amounted to approximately $130,000 and $62,500 in 1997 and 1996,
respectively.
6. Income Tax Status
The Internal Revenue Service has ruled (March 23, 1995) that the Plan qualifies
under Section 401(a) of the Internal Revenue Code (IRC) and, therefore, the
related trust is not subject to tax under present income tax law. Once
qualified, the Plan is required to operate in conformity with the IRC to
maintain its qualification. The Retirement Committee is not aware of any course
of action or series of events that have occurred that might adversely affect the
Plan's qualified status.
7. Year 2000 Issue (Unaudited)
The Company has developed a plan to modify its internal information technology
to be ready for the year 2000 and has begun converting critical data processing
systems. The project also includes determining whether third party service
providers have reasonable plans in place to become year 2000 compliant. The
Company currently expects the project to be substantially complete by 1999 and
does not expect this project to have a significant effect on Plan operations.
7
<PAGE>
BetzDearborn Inc. Employee Stock Ownership and 401(k) Plan
Notes to Financial Statements (continued)
8. Investment Programs
The amount of net assets at December 31, 1997 and 1996, and the changes in
net assets for the years then ended, were allocated to the separate investment
programs as follows:
<TABLE>
<CAPTION>
Putnam Putnam Putnam
Putnam Fund New Putnam U.S.
Voyager for Growth Opportunities Money Government
1997 ESOP Fund Stock Fund Fund and Income Fund Market Fund Income Trust
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets
Investments:
Series A ESOP Convertible Preferred
Stock of BetzDearborn Inc. $ 159,596,410 $ -- $ -- $ -- $ -- $ -- $ --
Common Stock--BetzDearborn Inc. 31,315,271
Putnam Voyager Fund 47,151,542
Putnam Fund for Growth and Income 41,532,541
Putnam New Opportunities Fund 14,092,470
Putnam Money Market Fund 9,532,006
Putnam U.S. Government Income Trust 6,585,642
Putnam International Growth Fund
Putnam Loan Fund
Putnam S&P 500 Index Fund
Putnam OTC & Emerging Fund
Putnam Asset Allocation Balanced Fund
Putnam Asset Allocation Conservative Fund
Putnam Asset Allocation Growth Fund
Putnam Global Growth Fund
Contribution receivable 285,285
Cash 63,148 37,820
----------------------------------------------------------------------------------------
Total assets 159,944,843 31,353,091 47,151,542 41,532,541 14,092,470 9,532,006 6,585,642
Liabilities
Accrued interest payable 285,285
Loan payable 94,500,000
----------------------------------------------------------------------------------------
Net assets $ 65,159,558 $31,353,091 $47,151,542 $41,532,541 $14,092,470 $ 9,532,006 $ 6,585,642
========================================================================================
<CAPTION>
Putnam Putnam
Putnam Putnam Asset Asset Putnam
International Putnam Putnam OTC & Allocation Allocation Asset
Growth Loan S&P 500 Emerging Balanced Conservative Allocation
1997 Fund Fund Index Fund Fund Fund Fund Growth Fund
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets
Investments:
Series A ESOP Convertible Preferred
Stock of BetzDearborn Inc. $ -- $ -- $ -- $ -- $ -- $ -- $ --
Common Stock--BetzDearborn Inc.
Putnam Voyager Fund
Putnam Fund for Growth and Income
Putnam New Opportunities Fund
Putnam Money Market Fund
Putnam U.S. Government Income Trust
Putnam International Growth Fund 3,738,088
Putnam Loan Fund 3,718,866
Putnam S&P 500 Index Fund 2,992,187
Putnam OTC & Emerging Fund 1,593,400
Putnam Asset Allocation Balanced Fund 1,230,428
Putnam Asset Allocation Conservative Fund 707,287
Putnam Asset Allocation Growth Fund 623,647
Putnam Global Growth Fund
Contribution receivable
Cash
---------------------------------------------------------------------------------------
Total assets 3,738,088 3,718,866 2,992,187 1,593,400 1,230,428 707,287 623,647
Liabilities
Accrued interest payable
Loan payable
---------------------------------------------------------------------------------------
Net assets $ 3,738,088 $ 3,718,866 $ 2,992,187 $ 1,593,400 $ 1,230,428 $ 707,287 $ 623,647
=======================================================================================
<CAPTION>
Putnam
Global
Growth
1997 Fund Total
- ------------------------------------------------------------------------
<S> <C> <C>
Assets
Investments:
Series A ESOP Convertible Preferred
Stock of BetzDearborn Inc. $ -- $ 159,596,410
Common Stock--BetzDearborn Inc. 31,315,271
Putnam Voyager Fund 47,151,542
Putnam Fund for Growth and Income 41,532,541
Putnam New Opportunities Fund 14,092,470
Putnam Money Market Fund 9,532,006
Putnam U.S. Government Income Trust 6,585,642
Putnam International Growth Fund 3,738,088
Putnam Loan Fund 3,718,866
Putnam S&P 500 Index Fund 2,992,187
Putnam OTC & Emerging Fund 1,593,400
Putnam Asset Allocation Balanced Fund 1,230,428
Putnam Asset Allocation Conservative Fund 707,287
Putnam Asset Allocation Growth Fund 623,647
Putnam Global Growth Fund -- --
Contribution receivable 285,285
Cash 100,968
----------------------------
Total assets -- 324,796,038
Liabilities
Accrued interest payable 285,285
Loan payable 94,500,000
----------------------------
Net assets $ -- $ 230,010,753
============================
</TABLE>
8
<PAGE>
BetzDearborn Inc. Employee Stock Ownership and 401(k) Plan
Notes to Financial Statements (continued)
8. Investment Programs (continued)
<TABLE>
<CAPTION>
Putnam
Putnam Putnam Fund New
Voyager for Growth Opportunities
1996 ESOP Fund Stock Fund Fund and Income Fund
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets
Investments:
Series A ESOP Convertible Preferred Stock of
BetzDearborn Inc. $162,398,524 $ -- $ -- $ -- $ --
Common Stock--BetzDearborn Inc. 31,880,666
Putnam Voyager Fund 38,799,167
Putnam Fund for Growth and Income 30,887,194
Putnam New Opportunities Fund 10,462,397
Putnam Money Market Fund
Putnam U.S. Government Income Trust
Putnam Loan Fund
Putnam Global Growth Fund
Contribution receivable 272,493 4,927
Cash 43,386 32,530
-------------------------------------------------------------------------------
Total assets 162,714,403 31,913,196 38,799,167 30,892,121 10,462,397
Liabilities
Accrued interest payable 272,493
Loan payable 95,500,000
-------------------------------------------------------------------------------
Net assets $ 66,941,910 $31,913,196 $38,799,167 $30,892,121 $10,462,397
===============================================================================
<CAPTION>
Putnam Putnam
Putnam U.S. Putnam Global
Money Government Loan Growth
1996 Market Fund Income Trust Fund Fund Total
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets
Investments:
Series A ESOP Convertible Preferred
Stock of BetzDearborn Inc. $ -- $ -- $ -- $ -- $162,398,524
Common Stock--BetzDearborn Inc. 31,880,666
Putnam Voyager Fund 38,799,167
Putnam Fund for Growth and Income 30,887,194
Putnam New Opportunities Fund 10,462,397
Putnam Money Market Fund 8,775,990 8,775,990
Putnam U.S. Government Income Trust 5,673,604 5,673,604
Putnam Loan Fund 2,880,805 2,880,805
Putnam Global Growth Fund 4,171,205 4,171,205
Contribution receivable 277,420
Cash 75,916
------------------------------------------------------------------------------------
Total assets 8,775,990 5,673,604 2,880,805 4,171,205 296,282,888
Liabilities
Accrued interest payable 272,493
Loan payable 95,500,000
------------------------------------------------------------------------------------
Net assets $ 8,775,990 $ 5,673,604 $ 2,880,805 $ 4,171,205 $200,510,395
====================================================================================
</TABLE>
9
<PAGE>
BetzDearborn Inc. Employee Stock Ownership and 401(k) Plan
Notes to Financial Statements (continued)
8. Investment Programs (continued)
<TABLE>
<CAPTION>
Putnam Putnam
Putnam Fund New Putnam
Voyager for Growth Opportunities Money
ESOP Fund Stock Fund Fund and Income Fund Market Fund
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net assets at December 31, 1996 $66,941,910 $31,913,196 $38,799,167 $30,892,121 $10,462,397 $8,775,990
Add:
Contributions from employer 1,491,159
Contributions from employees 2,156,742 4,124,564 3,298,257 2,432,482 785,031
Loan repayments from employees 295,157 519,749 366,279 269,244 135,966
Investment income 7,664,996 801,842 2,815,139 5,291,160 311,138 478,026
Loans issued (626,441) (723,142) (518,221) (203,781) (181,697)
Deduct:
Benefit payments (2,150,392) (1,583,746) (2,201,597) (2,084,107) (507,977) (1,228,465)
Interest expense (8,136,392)
Administrative expenses (3,711) (6,569) (5,128) (2,311) (1,748)
Net realized and unrealized appreciation
(depreciation) in fair value of (651,723) 1,546,956 6,902,946 2,600,563 2,067,671 8
investments
Interfund transfers (3,146,904) (3,078,715) 1,691,617 (736,393) 768,895
------------------------------------------------------------------------------
Net assets at December 31, 1997 $65,159,558 $31,353,091 $47,151,542 $41,532,541 $14,092,470 $9,532,006
===============================================================================
<CAPTION>
Putnam Putnam Putnam Asset
U.S. Putnam Putnam Putnam OTC & Allocation
Government International Loan S&P 500 Emerging Balanced
Income Trust Growth Fund Fund Index Fund Fund Fund
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net assets at December 31, 1996 $5,673,604 $ -- $2,880,805 $ -- $ -- $ --
Add:
Contributions from employer
Contributions from employees 660,589 279,792 - 390,774 271,557 69,177
Loan repayments from employees 65,583 26,724 (1,814,470) 27,723 44,025 9,876
Investment income 383,362 230,250 316,733 -- -- 99,000
Loans issued (87,156) (23,929) 2,483,603 (16,953) (13,770) (11,567)
Deduct:
Benefit payments (453,293) (18,769) (147,805) (247,296) (4,345) (6,841)
Interest expense
Administrative expenses (910) (229) (181) (135) (80)
Net realized and unrealized appreciation
(depreciation) in fair value of 123,614 (129,709) 280,577 115,498 (33,437)
investments
Interfund transfers 220,249 3,373,958 2,557,543 1,180,570 1,104,300
-----------------------------------------------------------------------------
Net assets at December 31, 1997 $6,585,642 $3,738,088 $3,718,866 $2,992,187 $1,593,400 $1,230,428
=============================================================================
<CAPTION>
Putnam Asset Putnam Asset Putnam
Allocation Allocation Global
Conservative Growth Growth
Fund Fund Fund Total
----------------------------------------------------
<S> <C> <C> <C> <C>
Net assets at December 31, 1996 $ -- $ -- $ 4,171,205 $200,510,395
Add:
Contributions from employer 1,491,159
Contributions from employees 17,707 167,916 492,721 15,147,309
Loan repayments from employees 3,004 13,331 37,809 --
Investment income 28,704 45,938 18,466,288
Loans issued (24,293) (4,820) (47,833) --
Deduct:
Benefit payments (6,325) (24,969) (208,779) (10,874,706)
Interest expense (8,136,392)
Administrative expenses (32) (96) (322) (21,452)
Net realized and unrealized appreciation
(depreciation) in fair value of (15,547) (15,210) 635,945 13,428,152
investments
Interfund transfers 704,069 441,557 (5,080,746) --
----------------------------------------------------
Net assets at December 31, 1997 $707,287 $623,647 $ -- $230,010,753
====================================================
</TABLE>
There were 4,873 active participants in the Plan at December 31, 1997.
10
<PAGE>
8. Investment Programs (continued)
<TABLE>
<CAPTION>
Putnam Putnam Fund
Voyager for Growth
ESOP Fund Stock Fund Fund and Income
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net assets at January 1, 1996 $24,138,869 $26,042,112 $32,588,993 $24,660,883
Add:
Contributions from employer 1,240,509
Contributions from employees 2,067,193 4,580,354 3,310,813
Loan repayments from employees 291,098 489,647 308,256
Investment income 7,755,852 891,360 2,463,929 2,622,029
Loans issued (368,434) (536,554) (366,682)
Deduct:
Benefit payments (1,898,462) (1,848,448) (2,286,177) (2,031,731)
Interest expense (7,987,126)
Administrative expenses (5,655) (9,006) (6,982)
Net realized and unrealized appreciation
(depreciation) in fair value of investments 43,692,268 10,209,780 1,702,565 2,801,333
Interfund transfers (5,365,810) (194,584) (405,798)
----------------------------------------------------------------------
Net assets at December 31, 1996 $66,941,910 $31,913,196 $38,799,167 $30,892,121
======================================================================
<CAPTION>
Putnam Putnam
New Putnam U.S. Putnam
Opportunities Money Government Global
Fund Market Fund Income Trust Growth Fund
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net assets at January 1, 1996 $ 3,724,517 $6,841,459 $5,568,759 $1,913,269
Add:
Contributions from employer
Contributions from employees 2,724,938 983,043 925,827 1,095,243
Loan repayments from employees 180,306 91,957 57,434 51,894
Investment income 80,640 371,269 355,678 291,208
Loans issued (132,707) (130,214) (116,428) (68,272)
Deduct:
Benefit payments (400,926) (1,068,066) (319,398) (159,893)
Interest expense
Administrative expenses (2,009) (2,503) (1,536) (878)
Net realized and unrealized appreciation
(depreciation) in fair value of investments 250,952 (156,899) 168,340
Interfund transfers 4,036,686 1,689,045 (639,833) 880,294
-------------------------------------------------------------------------
Net assets at December 31, 1996 $10,462,397 $8,775,990 $5,673,604 $4,171,205
=========================================================================
<CAPTION>
Putnam
Loan
Fund Total
-------------------------------------
<S> <C> <C>
Net assets at January 1, 1996 $2,605,761 $128,084,622
Add:
Contributions from employer 1,240,509
Contributions from employees 15,687,411
Loan repayments from employees (1,470,592) -
Investment income 248,005 15,079,970
Loans issued 1,719,291 -
Deduct:
Benefit payments (221,660) (10,234,761)
Interest expense (7,987,126)
Administrative expenses (28,569)
Net realized and unrealized appreciation
(depreciation) in fair value of investments 58,668,339
Interfund transfers -
-------------------------------------
Net assets at December 31, 1996 $2,880,805 $200,510,395
=====================================
</TABLE>
There were 3,820 active participants in the Plan at December 31, 1996.
11
<PAGE>
Supplemental Schedule
<PAGE>
BetzDearborn Inc. Employee Stock Ownership and 401(k) Plan
Assets Held for Investment Purposes
December 31, 1997
<TABLE>
<CAPTION>
Description of Investment
Identity of Issue, Including Maturity Date,
Borrower, Rate of Interest, Par, or
or Similar Party Maturity Value Cost Market
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Preferred Stock
BetzDearborn Inc. Series A ESOP Convertible
Preferred Stock* 475,371 shares $ 95,074,200 $159,596,410
Common Stock
BetzDearborn Inc.* 512,839 shares 19,903,684 31,315,271
Mutual Funds
Putnam* Voyager Fund 2,475,146 units 34,207,245 47,151,542
Putnam* Fund for Growth & Income 2,125,513 units 34,715,586 41,532,541
Putnam* New Opportunities Fund 289,670 units 12,026,455 14,092,470
Putnam* Money Market Fund 9,532,005 units 9,532,006 9,532,006
Putnam* U.S. Government Income Trust 503,104 units 6,569,705 6,585,642
Putnam* International Growth Fund 224,240 units 3,876,894 3,738,088
Putnam* S&P 500 Index Fund 132,573 units 2,755,627 2,992,187
Putnam* OTC & Emerging Fund 98,907 units 1,492,033 1,593,400
Putnam* Asset Allocation Balanced Fund 110,550 units 1,266,185 1,230,428
Putnam* Asset Allocation Conservative Fund 70,941 units 720,502 707,287
Putnam* Asset Allocation Growth Fund 50,579 units 640,017 623,647
Putnam* Loan Fund Participant loans; between
8% to 10.5% interest 3,718,886 3,718,866
------------------------------
Total mutual funds 111,521,141 133,498,104
------------------------------
Total assets held for investment purposes $226,499,025 $324,409,785
==============================
</TABLE>
*Indicates party-in-interest to the Plan.
12
<PAGE>
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 33-44061) pertaining to the BetzDearborn Inc. Employee Stock Ownership
and 401(k) Plan and in the related Prospectus of our report dated June 15, 1998,
with respect to the financial statements and schedule of the BetzDearborn Inc.
Employee Stock Ownership and 401(k) Plan included in this Annual Report (Form
11-K) for the year ended December 31, 1997.
ERNST & YOUNG LLP
Philadelphia, Pennsylvania
June 24, 1998
