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COMMISSION FILE NO. 1-496
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
Title of the plan:
---------------------------
HERCULES INCORPORATED EMPLOYEE SAVINGS PLAN
Issuer of the securities held pursuant to the plan:
------------------------------------------------------------------
HERCULES INCORPORATED
Hercules Plaza
1313 North Market Street
Wilmington, Delaware 19894
<PAGE> 2
HERCULES INCORPORATED EMPLOYEE SAVINGS PLAN
-------------------------------------------
FINANCIAL STATEMENTS
--------------------
STATEMENT OF ASSETS, LIABILITIES, AND PLAN EQUITY
December 31, 1995 and 1994
STATEMENT OF INCOME AND CHANGES IN PLAN EQUITY
Years ended December 31, 1995, 1994, and 1993
For
ANNUAL REPORT
FORM 11-K
1
<PAGE> 3
HERCULES INCORPORATED EMPLOYEE SAVINGS PLAN
STATEMENT OF ASSETS, LIABILITIES, AND PLAN EQUITY WITH FUND INFORMATION
DECEMBER 31, 1995
<TABLE>
<CAPTION>
HERCULES
INCORPORATED BLENDED FIDELITY
COMMON EQUITY GOVERNMENT INTEREST RATE MAGELLAN
STOCK FUND BOND FUND SAVINGS FUND FUND LOAN FUND TOTAL
----- ---- --------- ------------ ---- --------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments $870,396(a) $532,254(b) $ 0 $ 10,593,316 $1,948,450(c) $320,110(d) $14,264,526
Receivable from Company 0 2,494 0 (7,402) 7,530 0 2,622
Cash 21,522 3,122 0 264,279 13,339 160 302,422
-------- -------- -------- ------------ ---------- -------- -----------
Total Assets $891,918 $537,870 $ 0 $ 10,850,193 $1,969,319 $320,270 $14,569,570
======== ======== ======== ============ ========== ======== ===========
LIABILITIES & EQUITY
Plan Equity $891,918 $537,870 $ 0 $ 10,850,193 $1,969,319 $320,270 $14,569,570
-------- -------- -------- ------------ ---------- -------- -----------
Total Liabilities & Equity $891,918 $537,870 $ 0 $ 10,850,193 $1,969,319 $320,270 $14,569,570
======== ======== ======== ============ ========== ======== ===========
</TABLE>
(a) At fair value. Cost: $214,191. Shares: 15,439.
(b) At fair value. Cost: $531,507.
(c) At fair value. Cost: $1,796,545.
(d) Represents loans to plan participants.
The accompanying notes are an integral part of the financial statements.
2
<PAGE> 4
HERCULES INCORPORATED EMPLOYEE SAVINGS PLAN
STATEMENT OF ASSETS, LIABILITIES, AND PLAN EQUITY WITH FUND INFORMATION
DECEMBER 31, 1994
<TABLE>
<CAPTION>
HERCULES
INCORPORATED BLENDED FIDELITY
COMMON EQUITY GOVERNMENT INTEREST RATE MAGELLAN
STOCK FUND BOND FUND SAVINGS FUND FUND LOAN FUND TOTAL
---------- -------- -------- ----------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments $1,867,454(a) $301,076(b) $ 24,643(c) $12,427,503 $ 1,178,384(d) $276,791(e) $16,075,851
Receivable from Company 1,316 2,865 (273) 22,590 5,293 150 31,941
Cash 42,145 51,559 (26) 604,798 20,035 28,052 746,563
---------- -------- -------- ----------- ----------- -------- -----------
Total Assets $1,910,915 $355,500 $ 24,344 $13,054,891 $ 1,203,712 $304,993 $16,854,355
========== ======== ======== =========== =========== ======== ===========
LIABILITIES & EQUITY
Other Liabilities $ 1,051 $ 1 $ 0 $ 0 $ 0 $ 7,956 $ 9,008
Advances from Company 0 0 0 0 123 0 123
Plan Equity 1,909,864 355,499 24,344 13,054,891 1,203,589 297,037 16,845,224
---------- -------- -------- ----------- ----------- -------- -----------
Total Liabilities & Equity $1,910,915 $355,500 $ 24,344 $13,054,891 $ 1,203,712 $304,993 $16,854,355
========== ======== ======== =========== =========== ======== ===========
</TABLE>
(a) At fair value. Cost: $956,271. Shares: 48,505.
(b) At fair value. Cost: $305,588.
(c) At fair value. Cost: $24,643.
(d) At fair value. Cost: $1,233,978.
(e) Represents loans to plan participants.
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 5
HERCULES INCORPORATED EMPLOYEE SAVINGS PLAN
STATEMENT OF INCOME AND CHANGES IN PLAN EQUITY WITH FUND INFORMATION
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
HERCULES
INCORPORATED BLENDED FIDELITY
COMMON EQUITY GOVERNMENT INTEREST RATE MAGELLAN LOAN
STOCK FUND BOND FUND SAVINGS FUND FUND FUND TOTAL
----------- --------- -------- ------------ ----------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
CONTRIBUTIONS:
Participating Employees $ 2,464 $ 64,422 $ 891 $ 1,036,960 $ 191,928 $ 0 $ 1,296,665
Company Contributions 21,136 18,305 0 307,211 39,908 0 386,560
----------- --------- -------- ------------ ----------- --------- ------------
Subtotal Contributions 23,600 82,727 891 1,344,171 231,836 0 1,683,225
Interplan Transfers 0 448,045 (1,430) 1,776,945 1,324,737 0 3,548,297
Investment Income:
Cash Dividends 34,982 0 0 0 108,236 0 143,218
Interest 2,175 1,100 0 776,482 2,299 23,189 805,245
Change in Market Value (140,386) 17,023 796 (27,239) 228,212 0 78,406
----------- --------- -------- ------------ ----------- --------- ------------
Total $ (79,629) $ 548,895 $ 257 $ 3,870,359 $ 1,895,320 $ 23,189 $ 6,258,391
Withdrawals (813,477) (436,353) (24,601) (5,835,160) (1,424,716) 262 (8,534,045)
Interfund Transfers (124,840) 69,829 0 (239,897) 295,126 (218) 0
----------- --------- -------- ------------ ----------- --------- ------------
Change in Plan Equity (1,017,946) 182,371 (24,344) (2,204,698) 765,730 23,233 (2,275,654)
Plan Equity, Dec. 31, 1994 1,909,864 355,499 24,344 13,054,891 1,203,589 297,037 16,845,224
----------- --------- -------- ------------ ----------- --------- ------------
Plan Equity, Dec. 31, 1995 $ 891,918 $ 537,870 $ 0 $ 10,850,193 $ 1,969,319 $ 320,270 $ 14,569,570
=========== ========= ======== ============ =========== ========= ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 6
HERCULES INCORPORATED EMPLOYEE SAVINGS PLAN
STATEMENT OF INCOME AND CHANGES IN PLAN EQUITY WITH FUND INFORMATION
YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
HERCULES
INCORPORATED BLENDED FIDELITY
COMMON EQUITY GOVERNMENT INTEREST RATE MAGELLAN LOAN
STOCK FUND BOND FUND SAVINGS FUND FUND FUND TOTAL
----------- --------- -------- ------------ ----------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
CONTRIBUTIONS:
Participating Employees $ 19,391 $ 82,127 $ 14,095 $ 1,296,547 $ 179,305 $ 150 $ 1,591,615
Company Contributions 140,989 15,884 0 334,351 38,821 0 530,045
----------- --------- -------- ------------ ----------- --------- ------------
Subtotal Contributions $ 160,380 $ 98,011 $ 14,095 $ 1,630,898 $ 218,126 $ 150 $ 2,121,660
Interplan Transfers 0 (303,343) 26,946 17,546 (3,732) 30,505 (232,078)
Investment Income:
Cash Dividends 52,760 0 0 75 0 0 52,835
Interest 2,364 1,190 7 907,976 48,656 28,052 988,245
Change in Market Value (584,157) (3,539) 314 24,144 (73,214) 0 (636,452)
----------- --------- -------- ------------ ----------- --------- ------------
Total $ (368,653) $(207,681) $ 41,362 $ 2,580,639 $ 189,836 $ 58,707 $ 2,294,210
Withdrawals (92,391) (102,451) (80,432) (2,869,931) (79,426) (317) (3,224,948)
Interfund Transfers (481,584) 258,419 0 202,591 (17,310) 37,884 0
----------- --------- -------- ------------ ----------- --------- ------------
Change in Plan Equity (942,628) (51,713) (39,070) (86,701) 93,100 96,274 (930,738)
Plan Equity, Dec. 31, 1993 2,852,492 407,212 63,414 13,141,592 1,110,489 200,763 17,775,962
----------- --------- -------- ------------ ----------- --------- ------------
Plan Equity, Dec. 31, 1994 $ 1,909,864 $ 355,499 $ 24,344 $ 13,054,891 $ 1,203,589 $ 297,037 $ 16,845,224
=========== ========= ======== ============ =========== ========= ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 7
HERCULES INCORPORATED EMPLOYEE SAVINGS PLAN
STATEMENT OF INCOME AND CHANGES IN PLAN EQUITY WITH FUND INFORMATION
YEAR ENDED DECEMBER 31, 1993
<TABLE>
<CAPTION>
HERCULES
INCORPORATED BLENDED FIDELITY
COMMON EQUITY GOVERNMENT INTEREST RATE MAGELLAN LOAN
STOCK FUND BOND FUND SAVINGS FUND FUND FUND TOTAL
----- ---- --------- ------------ ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C>
CONTRIBUTIONS:
Participating Employees $ 13,640 $ 25,480 $ 17,263 $ 1,126,631 $ 82,020 $ 0 $ 1,266,034
Company Contributions 158,614 8,210 388 140,344 23,442 0 330,998
----------- --------- -------- ------------ ----------- --------- ------------
Subtotal Contributions $ 172,254 $ 33,690 $ 17,651 $ 1,266,975 $ 106,462 $ 0 $ 1,597,032
Interplan transfers 352,762 572,505 0 7,856,933 931,495 201,207 9,914,902
Investment Income:
Cash Dividends 57,289 0 0 0 0 0 57,289
Interest 1,281 515 833 687,673 62,350 0 752,652
Change in Market Value 1,461,885 6,746 506 1,001 13,901 0 1,484,039
----------- --------- -------- ------------ ----------- --------- ------------
Total $ 2,045,471 $ 613,456 $ 18,990 $ 9,812,582 $ 1,114,208 $ 201,207 $ 13,805,914
Withdrawals (554,117) (47,135) (9,213) (1,388,251) (60,909) (7,638) (2,067,263)
Interfund Transfers (374,890) (188,714) 5,465 493,755 57,190 7,194 0
----------- --------- -------- ------------ ----------- --------- ------------
Change in Plan Equity 1,116,464 377,607 15,242 8,918,086 1,110,489 200,763 11,738,651
Plan Equity, Dec. 31, 1992 1,736,028 29,605 48,172 4,223,506 0 0 6,037,311
----------- --------- -------- ------------ ----------- --------- ------------
Plan Equity, Dec. 31, 1993 $ 2,852,492 $ 407,212 $ 63,414 $ 13,141,592 $ 1,110,489 $ 200,763 $ 17,775,962
=========== ========= ======== ============ =========== ========= ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE> 8
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Hercules Incorporated Employee Savings Plan (the Plan) is a
defined-contribution plan subject to the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA).
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make significant estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
The Plan provides for various investment options in any combination of
stocks, bonds, fixed income securities, mutual funds, and other investment
securities. Investment securities are exposed to various risks, such as interest
rate, market, and credit. Due to the level of risk associated with certain
investment securities and the level of uncertainty related to changes in the
value of investment securities, it is at least reasonably possible that changes
in risks in the near term would materially affect participants' account balances
and the amounts reported in the statement of assets, liabilities, and plan
equity and the statement of income and changes in plan equity.
The financial statements of the Plan are prepared under the accrual
method of accounting. Investments in the Plan are carried at fair value. The
fair value of the common stock of Hercules Incorporated is based upon the price
at which the stock closed on the New York Stock Exchange on the last business
day of the year. The Blended Interest Rate Savings Fund is carried at cost plus
accrued interest, which is equivalent to contract value, which approximates
fair value. The market value of the Equity Fund, the Government Bond Fund and
The Fidelity Magellan Fund is based on the fair value of the underlying
securities held by the fund. Purchases and sales of securities are recorded on
a trade-date basis. Interest income is recorded on the accrual basis and
dividends are recorded on the ex-dividend date. Withdrawals are recorded upon
distribution.
The Plan provides that participants who retire from the Company may
elect an Optional Valuation Date (OVD) for determining their final withdrawal.
The OVD is the last business day in January of the year following retirement.
The Plan presents in the statement of income and changes in plan equity
the net appreciation (depreciation) in fair value of its investments (under the
caption Change in Market Value), which consists of the realized gains or losses
and the change in unrealized appreciation (depreciation) on those investments.
The unrealized appreciation (depreciation) for all investments at
December 31, 1995, December 31, 1994, and December 31, 1993 and January 1, 1993
was $808,857, $851,077, $1,932,981, and $889,575, respectively.
2. INVESTMENT PROGRAM
Upon hire, employees are immediately eligible to participate in the
Plan and obtain immediate, nonforfeitable (vested) rights to the full market
value of their account. At time of enrollment in the Plan, a participant, by
giving written notice to the Trustee, shall direct the investment of his
monthly savings in any of the following medium, or a combination thereof,
providing his monthly savings in any one medium selected is not less than 20%
of the total amount saved and is stated in 5% increments.
During May 1993, the Money Market Fund was eliminated and a U.S.
Government Bond Fund and a Long-Term Capital Appreciation Fund (Fidelity
Magellan) were added as investment media under the Plan. Participants with
balances in the Money Market Fund were provided the option to transfer their
balances to other investment funds or have their balances automatically
transferred to the new U.S. Government Bond Fund.
The following investment medium are available under the Employee
Savings Plan.
1. Hercules Incorporated Common Stock.
2. A Blended Interest Rate Savings Fund, wherein savings so directed are
deposited with various major insurance companies, who guarantee the
payment of principal. For 1995, the blended yield of these contracts
was approximately 6.6%.
3. Equity Fund. This Fund is made up of substantially all the stocks that
make up the Standard and Poor's 500 Index in such a mix as to track as
closely as possible the movement of the Index.
4. U.S. Government Bond Fund, which invests in U.S. Treasury and Agency
issues and fully insured savings bank deposits.
7
<PAGE> 9
5. Fidelity Magellan Fund is a Long-Term Capital Appreciation Fund, which
invests in common stocks, and securities convertible to common stock,
issued by companies operating in the U.S. and abroad as well as foreign
companies.
The Company contribution, as defined in the Plan, is equal to 25% of
the participants' contribution.
There were 445 participants at December 31, 1995 who participated in
one or more of the five investment media. At December 31, 1995 the number of
participants selecting each of the investment media for their contributions was
as follows:
<TABLE>
<S> <C>
Hercules Incorporated Common Stock .................. 86
Equity Fund.......................................... 67
Government Bond Fund................................. 0
Blended Interest Rate Savings Fund .................. 410
Fidelity Magellan Fund............................... 133
</TABLE>
3. INTERPLAN TRANSFERS
Interplan transfers represent transfers from acquired company plans and
rollovers of new employees' distributions from defined contribution plans.
Effective July 1, 1993, the net assets of the Employee Savings Plan
(approximately $10 MM) of the Aqualon Company (a wholly-owned subsidiary of
Hercules Incorporated) were transferred to the Hercules Incorporated Employee
Savings Plan. Participant's benefits under the Plan were substantially
unaffected by the transfer of net assets.
4. TAX STATUS
The United States Treasury Department advised on June 21, 1995 that the
Plan as amended through January 1, 1995 is a qualified trust under Section
401(a) of the Internal Revenue Code and is therefore exempt from Federal income
taxes under provisions of Section 501(a) of the code. The Plan administrator
believes that the Plan is currently being operated in compliance with the
applicable provisions of the Internal Revenue Code.
The Federal Income Tax status of the employee is covered under the
caption "Federal Tax Aspects" of the Registration Statement "Hercules
Incorporated Employee Savings Plan" (No. 33-21667) on Form S-8 and supplemented
by periodic benefit updates.
5. INVESTMENTS
Investments that represent five percent or more of Plan Equity at
December 31, 1995 or 1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Hercules Incorporated Common Stock $ 870,396 $1,867,454
Fidelity Magellan Fund $1,948,450 $1,178,384
Group Annuity Contract with Peoples
Life Insurance Company (#BDA 00002TR) $1,430,318 $1,530,997
Group Annuity Contract with Provident Life and
Accident Insurance Company (#630-05537) $1,148,051 $1,234,558
Group Annuity Contract with Metropolitan Life
Insurance Company (#12833) $1,205,855 $ 935,268
GIC Prudential (#GA 8083) $1,592,213 --
Hartford Life Contract (#GA 10226) $ 752,044 --
</TABLE>
6. DIVESTITURE
On March 15, 1995 Hercules completed the sale of its Aerospace
business to Alliant Techsystems Inc. (Alliant). The sale agreement provided for
a transfer of plan assets (approximately $4 million) and assumption of plan
obligations to Alliant as of April 1, 1995.
8
<PAGE> 10
7. RECLASSIFICATION
Amounts allocated to persons who have elected to withdraw from the Plan
but have not been paid as of year end are reported as part of plan equity.
Previously these amounts were reported in liability for withdrawals. The 1994
information has been restated to conform with the 1995 presentation.
8. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of plan equity per the financial
statements to the Form 5500:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1995 1994
---- ----
<S> <C> <C>
Plan equity per the financial statements $ 14,569,570 $ 16,845,223
Amounts allocated to withdrawing participants (19,764) (121,881)
------------ ------------
Plan equity per the Form 5500 $ 14,549,806 $ 16,723,342
============ ============
</TABLE>
The following is a reconciliation of withdrawals per the financial statements
to the Form 5500:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
-----------------
<S> <C>
Withdrawals per the financial statements $ 8,534,045
Add: Amounts allocated to withdrawing participants at
December 31, 1995 19,764
Less: Amounts allocated to withdrawing participants at
December 31, 1994 (121,881)
-----------
Withdrawals per the Form 5500 $ 8,431,928
===========
</TABLE>
Amounts allocated to withdrawing participants are recorded on the Form
5500 for benefit claims that have been processed and approved for payment prior
to December 31 but not yet paid as of that date.
9
<PAGE> 11
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors,
Hercules Incorporated,
Wilmington, Delaware
We have audited the accompanying statements of assets, liabilities, and plan
equity with fund information of Hercules Incorporated Employee Savings Plan as
of December 31, 1995 and 1994, and the related statements of income and changes
in plan equity with fund information for each of the three years in the period
ended December 31, 1995. These financial statements are the responsibility of
the Plan's administrators. 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 financial position of Hercules Incorporated Employee
Savings Plan as of December 31, 1995 and 1994, and its income and changes in
plan equity for each of the three years in the period ended December 31, 1995 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 fund information in the accompanying
statements of assets, liabilities, and plan equity of the Hercules Incorporated
Employee Savings Plan and the related statements of income and changes in plan
equity is presented for purposes of additional analysis rather than to present
the financial position and income and changes in plan equity of each fund. The
fund information has been subjected to the auditing procedures applied in the
audits of the basic financial statements and, in our opinion, are fairly stated
in all material respects in relation to the basic financial statements taken as
a whole.
Coopers & Lybrand L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania 19103
June 28, 1996
10
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the Plan) have duly caused this annual
report to be signed by the undersigned hereunto duly authorized.
HERCULES INCORPORATED EMPLOYEE SAVINGS PLAN
H. Eugene McBrayer
--------------------------------------------
H. Eugene McBrayer, Chairman
Finance Committee, Hercules Incorporated,
Plan Administrator
Date: June 28, 1996
11
<PAGE> 13
EXHIBIT INDEX
Number Description
23 Consent of Independent Accountants.
12
<PAGE> 1
EXHIBIT 23. CONSENT OF INDEPENDENT ACCOUNTANTS.
We consent to the incorporation by reference in the registration statement of
Hercules Incorporated on Form S-8 (Registration No. 33-21667) of our report
dated June 28, 1996 on our audits of the financial statements of Hercules
Incorporated Employee Savings Plan as of December 31, 1995 and 1994 and for each
of the three years in the period ended December 31, 1995, which report is
included in this Annual Report on Form 11-K.
Coopers & Lybrand L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania 19103
June 28, 1996
13
