<PAGE> 1
Securities and Exchange Commission
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 15, 1998
Hercules Incorporated
(Exact name of registrant as specified in its charter)
Delaware 001-00496 51-0023450
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
Hercules Plaza
1313 North Market Street
Wilmington, Delaware 19894-0001
(Address of principal executive offices) (Zip Code)
(302) 594-5000
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
<PAGE> 2
EXPLANATORY NOTE
The purpose of this Form 8-K/A is to correct financial information in
the Registrant's Unaudited Pro Forma Condensed Combined Statement of Income for
the Six Months Ended June 30, 1998 on Page PF-4.
2
<PAGE> 3
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(b) Pro Forma Financial Information
Hercules, Incorporated
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Condensed Combined Financial Statements
reflect the acquisition by merger of all of the outstanding equity securities of
BetzDearborn Inc. ("BetzDearborn") by Hercules Incorporated ("Hercules").
The following Unaudited Pro Forma Financial Statements are attached to this
report:
Unaudited Pro Forma Condensed Combined Balance Sheet
at June 30, 1998.......................................................... PF-2
Unaudited Pro Forma Condensed Combined Statement of
Income for the year ended December 31, 1997............................... PF-3
Unaudited Pro Forma Condensed Combined Statement of
Income for the six months ended June 30, 1998............................. PF-4
Notes to Unaudited Pro Forma Condensed Combined
Financial ................................................................ PF-5
The Unaudited Pro Forma Condensed Combined Balance Sheet reflects the
acquisition as if it had occurred on June 30, 1998. The Unaudited Pro Forma
Condensed Combined Statements of Income for the year ended December 31, 1997 and
for the six months ended June 30, 1998 reflect the acquisition as if it had
occurred at the beginning of the year ended December 31, 1997. The pro forma
information is based on the historical financial statements of Hercules and
BetzDearborn after giving effect to the acquisition using the purchase method of
accounting. Under this method of accounting, the aggregate purchase price is
allocated to assets acquired and liabilities assumed based on their estimated
fair values. For purposes of the Unaudited Pro Forma Condensed Combined
Financial Statements, the excess of the purchase price over the book value of
the net assets of BetzDearborn has been recorded as goodwill. The actual
allocation of the purchase price will be determined within a reasonable time
after consummation of such transaction and will be based on a complete
evaluation of the assets acquired and liabilities assumed. Accordingly, the
information presented herein may differ from the final purchase price
allocation. The Unaudited Pro Forma Condensed Combined Financial Statements also
reflect assumptions and adjustments deemed appropriate by Hercules, which are
described in the accompanying notes to the Unaudited Pro Forma Condensed
Combined Financial Statements. Cost savings benefits from synergies to be
derived from the planned acquisition, which may be significant, are not
reflected in the Unaudited Pro Forma Condensed Combined Financial Statements.
The Unaudited Pro Form Condensed Combined Financial Statements do not purport to
be indicative of Hercules' financial position or results of operations had the
acquisition actually occurred on the dates presented nor is it necessarily
indicative of Hercules' future financial position or future operating results.
The Unaudited Pro Forma Condensed Combined Financial Statements should be read
in conjunction with the separate audited historical consolidated financial
statements of Hercules and the notes thereto set forth in Hercules' 1997 Annual
Report on Form 10-K and the unaudited financial statements of Hercules for the
periods ended March 31, 1998 and June 30, 1998, as set forth in its Quarterly
Reports on Form 10-Q for these periods, and the historical consolidated
financial statements of BetzDearborn and the notes thereto which are included in
this Current Report on Form 8-K.
In the opinion of Hercules' management, subject to finalization of the purchase
price allocation, all adjustments have been made that are necessary to present
fairly the pro forma data.
PF-1
<PAGE> 4
HERCULES INCORPORATED
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
JUNE 30, 1998
(IN MILLIONS)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
HERCULES BETZDEARBORN ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and Cash Equivalents $ 32 $ 23 $ 55
Accounts and notes receivable, net 420 273 693
Inventories 267 96 363
Income Taxes 49 20 69
Other Current Assets/Prepaid Expenses 0 29 29
------------------------------------------------------------
Total Current Assets 768 441 1,209
Property, Plant, and Equipment, net 725 409 1,134
Investments and other 602 21 623
Other Assets 555 522 $ 1,826 (A) 2,963
60 (B)
------------------------------------------------------------
Total Assets $ 2,650 $ 1,393 $ 1,886 $ 5,929
======== ========= ========= ========
LIABILITIES
Current Liabilities:
Short-term Debt $ 474 $ 6 $ (480)(C) $ 0
Accounts Payable 128 65 193
Accrued expenses 352 96 25 (A) 473
Income taxes payable 80 7 87
------------------------------------------------------------
Total Current Liabilities 1,034 174 (455) 753
Long-Term Debt 461 680 2,269 (D) 3,890
480 (C)
Accrued Postretirement Benefits 338 57 395
Deferred Income Taxes 169 17 186
Other Liabilities/Deferred Credits 0 4 4
SHAREHOLDERS' EQUITY 648 461 (461)(A) 701
53 (E)
------------------------------------------------------------
TOTAL LIABILITIES AND $ 2,650 $ 1,393 $ 1,886 $ 5,929
SHAREHOLDERS' EQUITY ======== ========= ========= ========
</TABLE>
The accompanying notes are an integral part of the Unaudited Pro Forma Condensed
Combined Financial Statements.
PF-2
<PAGE> 5
HERCULES INCORPORATED
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
HERCULES BETZDEARBORN ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
Net sales $ 1,866 $ 1,295 $ 3,161
Cost of sales 1,169 519 1,688
Selling, general and administrative expenses 251 531 $ 57 (F) 828
(11) (G)
Research and development 53 39 92
Other operating expenses (income), net 165 16 181
-------- --------- ------- --------
Profit from operations 228 190 (46) 372
Equity in income of affiliated companies 30 - 30
Interest and debt expense 39 46 187 (H) 272
Other income (expense), net 374 (1) 373
-------- --------- ------- --------
Income before income taxes and effect of
change in accounting principles 593 143 (233) 503
Income tax expense (benefit) 269 51 (66) (I) 254
-------- --------- ------- --------
Income before effect of change in
accounting principle $ 324 $ 92 $ (167) $ 249
======== ========= ======== ========
Basic earnings per common share before
effect of change in accounting principle $ 3.27 $ 2.34
Diluted earnings per common share
before effect or change in accounting
principle $ 3.18 $ 2.30
Average common shares outstanding -
basic 99.2 106.2
Average common shares outstanding -
diluted 102.4 109.4
</TABLE>
The accompanying notes are an integral part of the Unaudited Pro Forma Condensed
Combined Financial Statements.
PF-3
<PAGE> 6
HERCULES INCORPORATED
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
HERCULES BETZDEARBORN ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
Net sales $ 875 $ 619 $ 1,494
Cost of sales 529 254 783
Selling, general and administrative expenses 129 271 $ 28 (F) 422
(6)(G)
Research and development 25 21 46
Other operating expenses (income), net (3) 0 (3)
-------- --------- ------- --------
Profit from operations 195 73 (22) 246
Equity in income of affiliated companies 10 0 10
Interest and debt expense 24 20 92 (H) 136
Other income (expense), net (28) 0 (28)
-------- --------- ------- --------
Income before income taxes 153 53 (114) 92
Income before tax expense (benefit) 51 19 (32)(I) 38
-------- --------- ------- --------
Net Income $ 102 $ 34 $ (82) $ 54
======== ========= ======== ========
Basic earnings per common share $ 1.07 $ 0.53
Diluted earnings per common share $ 1.06 $ 0.52
Average common shares outstanding -
basic 95.3 102.3
Average common shares outstanding -
diluted 96.7 103.7
</TABLE>
The accompanying notes are an integral part of the Unaudited Pro Forma Condensed
Combined Financial Statements.
PF-4
<PAGE> 7
HERCULES INCORPORATED
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(IN MILLIONS, EXCEPT PER SHARE DATA)
(A) The aggregate purchase price as determined by the offer price of $72
per share is approximately $2,400, plus estimated direct acquisition
costs of $25 and assumed debt of $680. The excess of the purchase price
over the book value of the BetzDearborn net assets of $461, plus the
fair value of the unearned ESOP compensation of $138 (see footnote J)
is $1,826. This amount has been allocated to goodwill ($2,400 + $25 -
($461 + $138)).
(B) To record estimated debt issuance costs of $60 which will be
capitalized.
(C) To record refinancing of short term debt of $480 as long term debt.
(D) To record debt to finance the purchase price of $2,400, plus estimated
debt issuance costs of $60, less estimated proceeds from the ESOP
purchase of Hercules common stock of $191 (see footnote J).
(E) To record additional equity resulting from the purchase of Hercules
common stock by the ESOP. This amount is equal to the total estimated
proceeds of $191 from the sale of Hercules shares to the ESOP less
unearned compensation of $138, representing unallocated shares (see
footnote J).
(F) To record amortization of goodwill of $2,268 ($1,826 of incremental
goodwill, plus $442 of pre-existing goodwill) over its estimated useful
life of 40 years.
(G) To eliminate historical goodwill amortization of BetzDearborn.
(H) To record interest expense on incremental debt of $3,445 (including
refinanced debt of $1,176) at an assumed interest rate of 7.00%, the
approximate borrowing rate for Hercules, plus amortization of debt
issuance costs of $3 and $1.5 for the periods ended December 31, 1997
and June 30, 1998, respectively.
(I) To record the tax effect of the pro forma adjustments at the statutory
rate of 35% for the periods presented. The amortization of goodwill is
substantially non-deductible and accordingly has not been tax affected.
(J) Under the terms of the merger between Hercules and BetzDearborn, the
shares in the BetzDearborn ESOP were automatically converted into
common shares of BetzDearborn immediately prior to the merger. Upon
consummation of the merger, the ESOP utilized the proceeds from the
sale of BetzDearborn stock at $72 per share to purchase Hercules common
shares. This treatment was applied to allocated and unallocated shares.
The value of the allocated shares was approximately $53 and the value
of the unallocated shares was approximately $138. For the EPS
calculations, the total approximate amount of 7 million ESOP shares
(allocated and unallocated) are considered outstanding.
PF-5
<PAGE> 8
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
HERCULES INCORPORATED
By: /s/ Israel J. Floyd
------------------------------
March 5, 1999 Israel J. Floyd
Corporate Secretary
3
