<PAGE> 1
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 YEAR ENDED DECEMBER 31, 1998
Title of the Plan:
HERCULES INCORPORATED SAVINGS AND INVESTMENT 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 SAVINGS AND INVESTMENT PLAN
FINANCIAL STATEMENTS
STATEMENT OF NET ASSETS AVAILABLE
FOR BENEFITS WITH FUND INFORMATION
at December 31, 1998 and 1997
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE
FOR BENEFITS WITH FUND INFORMATION
for the year ended December 31, 1998
Supplemental schedules required by Section 2520, 103-10 of the Department of
Labor Rules and Regulations for Reporting and Disclosure under ERISA have been
omitted because they are not applicable. Plans with all of their assets in a
Master Trust are exempt from the requirement to include investment supplemental
schedules as part of their Financial Statements.
1
<PAGE> 3
HERCULES INCORPORATED SAVINGS AND INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED
-----------------------------------------------------
HERCULES
INCORPORATED BLENDED
COMMON INTEREST RATE
STOCK FUND SAVINGS FUND EQUITY FUND
---------- ------------ -----------
<S> <C> <C> <C>
ASSETS
Allocated Share of Master
Savings Trust Investments $ 14,094,550(a) $100,770,139 $ 75,182,000(b)
Allocated Share of Master
Savings Trust Cash 353,150 6,460,322 3
------------ ------------ ------------
Total Assets 14,447,700 107,230,461 75,182,003
------------ ------------ ------------
LIABILITIES
Accounts Payable 87,525 20,736 6,949
------------ ------------ ------------
Net Assets Available for Benefits $ 14,360,175 $107,209,725 $ 75,175,054
============ ============ ============
<CAPTION>
PARTICIPANT DIRECTED
-------------------------------------------------------
FRANK RUSSELL
FIDELITY MAGELLAN LOAN EQUITY
FUND FUND INDEX FUND
---- ---- ----------
<S> <C> <C> <C>
ASSETS
Allocated Share of Master
Savings Trust Investments $ 39,596,181(c) $ 8,743,273 $ 12,346,695(d)
Allocated Share of Master
Savings Trust Cash 13,008 51,225 3,221
------------ ------------ ------------
Total Assets 39,609,189 8,794,498 12,349,916
------------ ------------ ------------
LIABILITIES
Accounts Payable 124,598 4,058 3,422
------------ ------------ ------------
Net Assets Available for Benefits $ 39,484,591 $ 8,790,440 $ 12,346,494
============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED
--------------------------------------------------------------------------------
SEI DIVERSIFIED
SEI INTERNATIONAL CONSERVATIVE SEI CORE FIXED SEI SMALL CAP.
EQUITY FUND FUND INCOME FUND GROWTH FUND
----------- ---- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Allocated Share of Master
Savings Trust Investments $ 2,548,550(e) $ 5,275,885(f) $ 7,956,803(g) $ 5,475,885(h)
Allocated Share of Master
Savings Trust Cash 90 6,323 57,891 23,786
------------ ------------ ------------ ------------
Total Assets 2,548,640 5,282,208 8,014,694 5,499,671
------------ ------------ ------------ ------------
LIABILITIES
Accounts Payable -- 910 54,561 1,153
------------ ------------ ------------ ------------
Net Assets Available for Benefits $ 2,548,640 $ 5,281,298 $ 7,960,133 $ 5,498,518
============ ============ ============ ============
<CAPTION>
PARTICIPANT NONPARTICIPANT
DIRECTED DIRECTED
--------- --------
HERCULES
SEI DIVERSIFIED INCORPORATED
MODERATE COMMON
GROWTH FUND STOCK FUND TOTAL
----------- ---------- -----
<S> <C> <C> <C>
ASSETS
Allocated Share of Master
Savings Trust Investments $ 5,424,389(i) $ 31,357,081(a) $308,771,431
Allocated Share of Master
Savings Trust Cash -- 785,675 7,754,694
------------ ------------ ------------
Total Assets 5,424,389 32,142,756 316,526,125
------------ ------------ ------------
LIABILITIES
Accounts Payable 3,630 194,725 502,267
------------ ------------ ------------
Net Assets Available for Benefits $ 5,420,759 $ 31,948,031 $316,023,858
============ ============ ============
</TABLE>
- ----------
(a) At fair value. Cost $43,321,650. Shares: 1,667,950
(b) At fair value. Cost $39,853,001.
(c) At fair value. Cost $27,744,643.
(d) At fair value. Cost $10,367,371.
(e) At fair value. Cost $ 2,519,491.
(f) At fair value. Cost $ 4,964,005.
(g) At fair value. Cost $ 7,963,914.
(h) At fair value. Cost $ 5,367,182.
(i) At fair value. Cost $ 5,120,550.
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 4
HERCULES INCORPORATED SAVINGS AND INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED
-------------------------------------------------------
HERCULES BLENDED
INCORPORATED COMMON INTEREST RATE
STOCK FUND SAVINGS FUND EQUITY FUND
---------- ------------ -----------
<S> <C> <C> <C>
ASSETS
Allocated Share of Master
Savings Trust Investments $ 23,760,445(a) $115,611,690 $ 63,161,169(b)
Contributions Receivable 71,796 -- --
Allocated Share of Master
Savings Trust Cash 350,032 977,287 --
------------ ------------ ------------
Total Assets 24,182,273 116,588,977 63,161,169
------------ ------------ ------------
LIABILITIES
Accounts Payable 6 9,981 48,761
------------ ------------ ------------
Net Assets Available for Benefits $ 24,182,267 $116,578,996 $ 63,112,408
============ ============ ============
<CAPTION>
PARTICIPANT DIRECTED
-------------------------------------------------------
FRANK RUSSELL
FIDELITY LOAN EQUITY INDEX
MAGELLAN FUND FUND FUND
------------- ---- ----
<S> <C> <C> <C>
ASSETS
Allocated Share of Master
Savings Trust Investments $ 30,707,808(c) $ 9,007,645 $ 7,139,167(d)
Contributions Receivable -- -- --
Allocated Share of Master
Savings Trust Cash -- 100 --
------------ ------------ ------------
Total Assets 30,707,808 9,007,745 7,139,167
------------ ------------ ------------
LIABILITIES
Accounts Payable 91,424 12,001 23,276
------------ ------------ ------------
Net Assets Available for Benefits $ 30,616,384 $ 8,995,744 $ 7,115,891
============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED
-------------------------------------------------------------------------------
SEI DIVERSIFIED
SEI INTERNATIONAL CONSERVATIVE SEI CORE FIXED SEI SMALL CAP.
EQUITY FUND FUND INCOME FUND GROWTH FUND
----------- ---- ------------ -----------
<S> <C> <C> <C> <C>
ASSETS
Allocated Share of Master
Savings Trust Investments $ 1,841,918(e) $ 3,925,623(f) $ 4,687,313(g) $ 4,565,057(h)
Contributions Receivable -- 6,188 1,278 45,885
Allocated Share of Master
Savings Trust Cash -- -- -- --
------------ ------------ ------------ ------------
Total Assets 1,841,918 3,931,811 4,688,591 4,610,942
------------ ------------ ------------ ------------
LIABILITIES
Accounts Payable 10,542 156 24,475 3,996
------------ ------------ ------------ ------------
Net Assets Available for Benefits $ 1,831,376 $ 3,931,655 $ 4,664,116 $ 4,606,946
============ ============ ============ ============
<CAPTION>
PARTICIPANT NONPARTICIPANT
DIRECTED DIRECTED
--------- --------
HERCULES
SEI DIVERSIFIED INCORPORATED
MODERATE COMMON
GROWTH FUND STOCK FUND TOTAL
------ ---------- -----
<S> <C> <C> <C>
ASSETS
Allocated Share of Master
Savings Trust Investments $ 5,344,653(i) $ 50,190,521(a) $319,943,009
Contributions Receivable 64,902 151,660 341,709
Allocated Share of Master
Savings Trust Cash -- 739,391 2,066,810
------------ ------------ ------------
Total Assets 5,409,555 51,081,572 322,351,528
------------ ------------ ------------
LIABILITIES
Accounts Payable 64,577 12 289,207
------------ ------------ ------------
Net Assets Available for Benefits $ 5,344,978 $ 51,081,560 $322,062,321
============ ============ ============
</TABLE>
- ----------
(a) At fair value. Cost $35,305,350. Shares: 1,477,173.
(b) At fair value. Cost $35,976,488.
(c) At fair value. Cost $ 6,921,298.
(d) At fair value. Cost $ 6,913,894.
(e) At fair value. Cost $ 2,078,237.
(f) At fair value. Cost $ 3,916,452.
(g) At fair value. Cost $ 4,624,943.
(h) At fair value. Cost $ 5,007,964.
(i) At fair value. Cost $ 5,372,084.
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 5
HERCULES INCORPORATED SAVINGS AND INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED
-------------------------------------------------------
HERCULES BLENDED INTEREST
INCORPORATED RATE SAVINGS
COMMON STOCK FUND FUND EQUITY FUND
----------------- ---- -----------
<S> <C> <C> <C>
CONTRIBUTIONS:
Participating Employees $ 1,269,171 $ 3,808,738 $ 3,224,900
Company Contributions -- -- --
------------- ------------- -------------
Subtotal Contributions 1,269,171 3,808,738 3,224,900
Interplan Transfers 559,131 27,226 214,183
ALLOCATED SHARE OF MASTER
SAVINGS TRUST INVESTMENT
ACTIVITIES:
Cash Dividends 531,471 -- --
Interest 48 7,152,231 75
Change in Market Value (10,221,161) -- 16,874,645
------------- ------------- -------------
Total (7,861,340) 10,988,195 20,313,803
Withdrawals (2,175,045) (15,790,058) (5,473,875)
Interfund Transfers 214,293 (4,567,408) (2,777,282)
------------- ------------- -------------
For Benefits (9,822,092) (9,369,271) 12,062,646
Net Assets Available for Benefits
December 31, 1997 24,182,267 116,578,996 63,112,408
------------- ------------- -------------
December 31, 1998 $ 14,360,175 $ 107,209,725 $ 75,175,054
============= ============= =============
<CAPTION>
PARTICIPANT DIRECTED
--------------------------------------------------------
FRANK RUSSELL
FIDELITY MAGELLAN EQUITY
FUND LOAN FUND INDEX FUND
---- --------- ----------
<S> <C> <C> <C>
CONTRIBUTIONS:
Participating Employees $ 1,596,314 $ -- $ 794,918
Company Contributions -- -- --
------------- ------------- -------------
Subtotal Contributions 1,596,314 -- 794,918
Interplan Transfers 163,427 87,265 153,704
ALLOCATED SHARE OF MASTER
SAVINGS TRUST INVESTMENT
ACTIVITIES:
Cash Dividends 1,861,162 -- 278
Interest -- 588,899 91
Change in Market Value 7,939,429 -- 1,978,911
------------- ------------- -------------
Total 11,560,332 676,164 2,927,902
Withdrawals (1,699,257) (305,028) (586,919)
Interfund Transfers (992,868) (576,440) 2,889,620
------------- ------------- -------------
For Benefits 8,868,207 (205,304) 5,230,603
Net Assets Available for Benefits
December 31, 1997 30,616,384 8,995,744 7,115,891
------------- ------------- -------------
December 31, 1998 $ 39,484,591 $ 8,790,440 $ 12,346,494
============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED
-----------------------------------------------------------------------------
SEI DIVERSIFIED
SEI INTERNATIONAL CONSERVATIVE SEI CORE FIXED SEI SMALL CAP.
EQUITY FUND FUND INCOME FUND GROWTH FUND
----------- ---- ----------- -----------
<S> <C> <C> <C> <C>
CONTRIBUTIONS:
Participating Employees $ 195,985 $ 256,071 $ 256,825 $ 345,523
Company Contributions -- -- -- --
------------- ------------- ------------- -------------
Subtotal Contributions 195,985 256,071 256,825 345,523
Interplan transfers 44,927 13,856 15,395 86,695
ALLOCATED SHARE OF MASTER
SAVINGS TRUST INVESTMENT
ACTIVITIES:
Cash Dividends 118,971 322,936 525,365 23,501
Interest -- -- -- --
Change in Market Value 252,547 369,915 (6,174) 369,851
------------- ------------- ------------- -------------
Total 612,430 962,778 791,411 825,570
Withdrawals (401,614) (221,411) (574,261) (536,245)
Interfund Transfers 506,448 608,276 3,078,867 602,247
------------- ------------- ------------- -------------
Change in Net Assets Available
For Benefits 717,264 1,349,643 3,296,017 891,572
Net Assets Available for Benefits
December 31, 1997 1,831,376 3,931,655 4,664,116 4,606,946
------------- ------------- ------------- -------------
Net Assets Available for Benefits
December 31, 1998 $ 2,548,640 $ 5,281,298 $ 7,960,133 $ 5,498,518
============= ============= ============= =============
<CAPTION>
PARTICIPANT NONPARTICIPANT
DIRECTED DIRECTED
-------- --------
SEI DIVERSIFIED HERCULES
MODERATE INCORPORATED COMMON
GROWTH FUND STOCK FUND TOTAL
----------- ---------- -----
<S> <C> <C> <C>
CONTRIBUTIONS:
Participating Employees $ 242,621 $ -- $ 11,991,066
Company Contributions -- 4,203,427 4,203,427
------------- ------------- -------------
Subtotal Contributions 242,621 4,203,427 16,194,493
Interplan transfers 40,694 1,176,224 2,582,727
ALLOCATED SHARE OF MASTER
SAVINGS TRUST INVESTMENT
ACTIVITIES:
Cash Dividends 391,244 1,118,036 4,892,964
Interest -- 100 7,741,444
Change in Market Value 479,475 (21,506,556) (3,469,118)
------------- ------------- -------------
Total 1,154,034 (15,008,769) 27,942,510
Withdrawals (1,641,701) (4,575,559) (33,980,973)
Interfund Transfers 563,448 450,799 --
------------- ------------- -------------
Change in Net Assets Available
For Benefits 75,781 (19,133,529) (6,038,463)
Net Assets Available for Benefits
December 31, 1997 5,344,978 51,081,560 322,062,321
------------- ------------- -------------
Net Assets Available for Benefits
December 31, 1998 $ 5,420,759 $ 31,948,031 $ 316,023,858
============= ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 6
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF PLAN AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Hercules Incorporated Savings and Investment Plan (the Plan) is a
defined-contribution plan subject to the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA).
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 Plan's investment media, 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.
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 net assets available for benefits
and the statement of changes in net assets available for benefits.
The assets of the Plan are commingled for investment purposes in the
Hercules Incorporated Master Savings Trust (the Trust) with the assets of the
Hercules Incorporated Employee Savings Plan. The assets of the Trust are held by
Bankers Trust Company (Trustee). The Plan's investment in the Trust is based
upon the fair value of net assets in the Trust and the Plan's relative interest
in the Trust. The Plan's allocated share of Master Trust investments in the
accompanying statements of net assets available for benefits represent the
Plan's share of the investments in the Trust, which was 97.18% and 97.47% at
December 31, 1998 and 1997, respectively. Recordkeeping for the Plan is
performed by MetLife's Defined Contribution Group.
The Plan includes an employee loan provision authorizing participants
to borrow an amount from their vested balances in the Plan. The loans are
executed by promissory notes and have a minimum term of 12 months and a maximum
term of 60 months, except for qualified residential loans, which have a maximum
term of 120 months. The loans bear an interest rate equal to the average rate
charged by selected major banks to prime customers for secured loans. The loans
are repaid over the term in monthly installments of principal and interest by
payroll deduction. A participant also has the right to repay the loan in full at
any time without penalty.
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, liabilities and
changes therein, and disclosures of contingent assets and liabilities at the
date of the financial statements. Actual results could differ from those
estimates.
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 Fidelity Magellan Fund, the
Frank Russell Equity Index Fund, and the SEI group of funds 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, upon retirement, an Optional Valuation Date (OVD) for determining their
final withdrawal. The OVD is the last business day of any month following
retirement up to age 70 in which the distribution is requested.
The Plan presents in the statement of changes in net assets available
for benefits its allocated share of the Trust's investment activities, which
includes 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.
5
<PAGE> 7
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of Plan
termination, participants will become 100 percent vested in their accounts.
2. INVESTMENT PROGRAM
The following investment media are available under the Savings and
Investment 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 1998 and 1997, the
blended yield of these contracts was approximately 6.8% and
6.4%, respectively.
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. 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.
5. Frank Russell Equity Index Fund sells high long-term returns
by investing in common stocks of the largest companies in the
U.S. stock market.
6. SEI International Equity Fund seeks to provide aggressive
long-term growth from investments in foreign stocks and
diversification in domestic stock portfolios.
7. SEI Small Cap. Growth Fund invests in stocks of smaller
companies that are in an early stage or transition point in
their development.
8. SEI Diversified Moderate Growth Fund invests in U.S. and
international stocks and provides a limited level of current
income by investing in bonds.
9. SEI Diversified Conservative Fund seeks to provide current
income with opportunity for capital growth by investing in
domestic and international stocks and bonds.
10. SEI Core Fixed Income Fund invests in a diversified portfolio
of high-quality fixed-income bonds.
The Company contribution, as defined in the Plan, is equal to 50% of
that portion of the participants' contribution which does not exceed 6% of
earnings or base pay and must be invested in common stock of Hercules
Incorporated.
During 1998, the Plan had purchases and sales of Hercules common stock
of $16,995,414 and $11,475,620, respectively, which are considered related
party transactions.
There were 4,281 participants at December 31, 1998 who participated in
one or more of the ten available investment media. At December 31, 1998 the
number of participants selecting each of the investment media for their
contributions was as follows:
<TABLE>
<CAPTION>
<S> <C>
Hercules Incorporated Common Stock ......................... 4,039
Blended Interest Rate Savings Fund ......................... 2,716
Equity Fund................................................. 1,897
Fidelity Magellan Fund...................................... 1,348
Frank Russell Equity Index Fund............................. 738
SEI Core Fixed Income Fund.................................. 411
SEI Diversified Conservative Fund........................... 357
SEI Diversified Moderate Growth Fund........................ 300
SEI International Equity Fund............................... 292
SEI Small Cap. Growth Fund.................................. 445
</TABLE>
6
<PAGE> 8
3. INTEREST IN HERCULES INCORPORATED MASTER SAVINGS TRUST
The Plan's allocated share of the Trust's net assets is based upon the
total of each individual Plan"s interest in investments of the Trust. The
allocated interest of the net assets of each fund in the Trust at December 31
was as follows:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Hercules Incorporated Common Stock............................. 99.3% 99.1%
Blended Interest Rate Savings Fund............................. 95.2% 95.6%
Equity Fund.................................................... 98.2% 98.6%
Fidelity Magellan Fund......................................... 95.4% 95.8%
Loan Fund...................................................... 100% 100%
Frank Russell Equity Index Fund................................ 98.5% 98.9%
SEI Diversified Conservative Fund.............................. 100% 100%
SEI International Equity Fund.................................. 99.4% 100%
SEI Small Cap. Growth Fund..................................... 98.8% 99.2%
SEI Diversified Moderate Growth Fund........................... 99.9% 100%
SEI Core Fixed Income Fund..................................... 100% 100%
</TABLE>
4. INTERPLAN TRANSFERS
Interplan transfers represent transfers from acquired company plans and
the Hercules Incorporated Employee Savings Plan, rollovers of new employees'
distributions from defined contribution plans, and the vesting of a 1996
supplemental stock award.
5. TAX STATUS
The United States Treasury Department advised on October 29, 1997, that
the Plan as amended through February 1, 1996 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 has been amended
since receiving the determination letter. However, the Plan administrator
believes that the Plan is designed and currently being operated in compliance
with the applicable provisions of the Internal Revenue Code.
6. INVESTMENTS
The Plan's allocated interest in investments in the Trust that
represent five percent or more of net assets available for benefits at December
31, 1998 or 1997 are as follows:
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Hercules Incorporated Common Stock
(Participant/Non-participant) ................... $45,451,631 $73,950,966
Bankers Trust Equity Index Fund ...................... $75,182,000 $63,161,169
Fidelity Magellan Fund ............................... $39,596,181 $30,707,808
Group Annuity Contract with Peoples
Life Insurance Company (#BDA 00002TR) ........... $36,320,655 $23,088,209
Group Annuity Contract with Transamerica Life
Insurance & Annuity Company (#76768) ............ $15,801,561 $ --
GIC Prudential (#GA 8083)............................ $ -- $25,914,612
Group Annuity Contract with Transamerica Life
Insurance & Annuity Company (#76589) ............ $19,494,634 $18,448,411
</TABLE>
7
<PAGE> 9
7. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits
per the financial statements to the Form 5500:
<TABLE>
<CAPTION>
DECEMBER 31,
------------
1998 1997
------------- -------------
<S> <C> <C>
Net Assets Available for Benefits
per the financial statements ............. $ 316,023,858 $ 322,062,321
Amounts Allocated to Withdrawing Participants (127,263) (338,603)
------------- -------------
Net Assets Available for Benefits
per the Form 5500 ........................ $ 315,896,595 $ 321,723,718
============= =============
</TABLE>
The following is a reconciliation of withdrawals per the financial
statements to the Form 5500:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1998
-----------------
<S> <C>
Benefits paid to participants per the financial statements . $ 33,980,973
Add: Amounts Allocated to Withdrawing Participants at
December 31, 1998 .................................... 127,263
Less: Amounts Allocated to Withdrawing Participants at
December 31, 1997 .................................... (338,603)
------------
Benefits paid to participants per the Form 5500 ............ $ 33,769,633
============
</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.
8
<PAGE> 10
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors,
Hercules Incorporated,
Wilmington, Delaware
In our opinion, the accompanying statements of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of Hercules Incorporated Savings and Investment Plan (the "Plan") at December
31, 1998 and December 31, 1997, and the changes in net assets available for
benefits for the year ended December 31, 1998 in conformity with generally
accepted accounting principles. 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 of these statements in accordance with generally accepted auditing
standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The fund information in the statements of
net assets available for benefits and the statement of changes in net assets
available for benefits is presented for purposes of additional analysis rather
than to present the net assets available for plan benefits and changes in net
assets available for benefits of each fund. The fund information is the
responsibility of the Plan's management. 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.
/s/ PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania 19103
June 22, 1999
<PAGE> 11
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 SAVINGS AND INVESTMENT PLAN
/s/ H. Eugene McBrayer
----------------------
H. Eugene McBrayer, Chairman
Finance Committee, Hercules Incorporated,
Plan Administrator
Date: June 29, 1999
<PAGE> 12
<TABLE>
<CAPTION>
EXHIBIT INDEX
Number Description
- ------ -----------
<S> <C>
23 Consent of Independent Accountants.
</TABLE>
<PAGE> 1
EXHIBIT 23. CONSENT OF INDEPENDENT ACCOUNTANTS.
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-37279) of Hercules Incorporated of our report
dated June 22, 1999 relating to the financial statements, which appears in this
Form 11-K.
/s/ PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
June 29, 1999
