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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): September 28, 2000
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)
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Introductory Note:
The purpose of this Form 8-K/A is to revise the "Food Gums Net
Adjustments" presentation in the Unaudited Pro Forma Consolidated Balance Sheet
as of June 30, 2000 to reflect the use of a portion of the net proceeds to pay
current maturities of long-term debt.
Item 2. Acquisition or Disposition of Assets.
On September 28, 2000, Hercules Incorporated sold the assets and
capital stock of certain subsidiaries comprising the Registrant's Food Gums
Business to CP Kelco ApS, a new venture owned by Hercules and an affiliate of
Lehman Brothers Merchant Banking Partners II L.P. Hercules owns approximately
29% of the capital stock of CP Kelco ApS, and has the right to appoint two
directors of CP Kelco ApS. Pursuant to the Share Purchase Agreement, dated as of
August 10, 2000, among CP Kelco ApS (formerly known as Hercules Copenhagen ApS),
Hercules Investment ApS, Hercules Incorporated, Lehman FG Newco, Inc., WSP, Inc.
and Hercules Holding BV/BVBA, Hercules received net proceeds of approximately
$395 million in cash and recorded certain expenses of approximately $77 million
for its Food Gums Business.
Item 7. Financial Statements and Exhibits.
(b) Pro Forma Financial Information.
Unaudited Pro Forma Consolidated Statement of Income for the
year ended December 31, 1999.
Unaudited Pro Forma Consolidated Statement of Income for the
six months ended June 30, 2000.
Unaudited Pro Forma Consolidated Balance Sheet as of June 30,
2000.
2
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PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Basis of Presentation
The following unaudited pro forma consolidated financial statements
give effect to the divestiture of Hercules' Food Gums Business after giving
effect to the pro forma adjustments described in the accompanying notes. These
unaudited pro forma consolidated financial statements have been prepared from,
and should be read in conjunction with, the historical financial statements and
notes thereto of Hercules, which are included in Hercules' Annual Report on Form
10-K for the year ended December 31, 1999 and Quarterly Report on Form 10-Q for
the quarter ended June 30, 2000.
The unaudited pro forma information is presented for illustrative
purposes only and is not necessarily indicative of the operating results or
financial position that would have occurred had the divestiture been consummated
at the dates indicated, nor is it necessarily indicative of future operating
results or financial position of Hercules.
The unaudited pro forma consolidated statements of income give effect
to the divestiture as if it had occurred at the beginning of the earliest period
presented. The unaudited pro forma balance sheet gives effect to the divestiture
as if it had occurred on June 30, 2000.
PF-1
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HERCULES INCORPORATED
PRO FORMA CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1999
(In millions except for per share amounts)
<TABLE>
<CAPTION>
(1) FOOD GUMS
EX- PRO FORMA
HERCULES FOOD GUMS ADJUSTMENTS PRO FORMA
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 3,309 $ 208 $ - $ 3,101
Cost of sales 1,831 113 - 1,718
Selling, general and administrative expenses 787 40 17 (2) 764
Research and development 85 8 - 77
Goodwill and intangible asset amortization 79 - (2)(3) 77
Other operating expenses (income), net 47 2 2 (3) 47
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Profit from operations $ 480 $ 45 $ (17) $ 418
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Equity in income (loss) of affiliated companies 1 - - (4) 1
Interest and debt expense 185 4 (17)(5) 164
Preferred security distributions of subsidiary trusts 51 - - 51
Other income (expense), net (2) (2) - -
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Income before income taxes $ 243 $ 39 $ - $ 204
Provision for income taxes 75 14 - (6) 61
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Net income $ 168 $ 25 $ - $ 143
=============================================================
Earnings per share:
Per share - basic $ 1.63 $ 1.39
Weighted average shares outstanding - basic 103.2 103.2
Per share - assuming dilution $ 1.62 $ 1.38
Weighted average shares outstanding -
assuming dilution 103.9 103.9
</TABLE>
The accompanying notes are an integral part of the Pro Forma Financial
Statements.
PF-2
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HERCULES INCORPORATED
PRO FORMA CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(In millions except for per share amounts)
<TABLE>
<CAPTION>
(1)
EX- FOOD GUMS
HERCULES FOOD GUMS PRO FORMA PRO FORMA
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 1,620 $ 105 $ - $ 1,515
Cost of sales 912 58 - 854
Selling, general and administrative expenses 403 21 9 (2) 391
Research and development 41 3 - 38
Goodwill and intangible asset amortization 40 - (1)(3) 39
Other operating expenses (income), net 22 1 1 (3) 22
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Profit from operations $ 202 $ 22 $ (9) $ 171
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Equity in income (loss) of affiliated companies - - (2)(4) (2)
Interest and debt expense 74 3 (9)(7) 62
Preferred security distributions of subsidiary trusts 46 - - 46
Other income (expense), net (1) - - (1)
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Income before income taxes $ 81 $ 19 $ (2) $ 60
Provision for taxes on income 29 6 - (6) 23
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Net income $ 52 $ 13 $ (2) $ 37
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Earnings per share:
Per share - basic $ 0.49 $ 0.35
Weighted average shares outstanding - basic 106.9 106.9
Per share - assuming dilution $ 0.49 $ 0.35
Weighted average shares outstanding -
assuming dilution 107.1 107.1
</TABLE>
The accompanying notes are an integral part of the Pro Forma Financial
Statements.
PF-3
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HERCULES INCORPORATED
PRO FORMA CONSOLIDATED BALANCE SHEET (UNAUDITED)
JUNE 30, 2000
(Dollars in millions)
<TABLE>
<CAPTION>
(8) FOOD GUMS
EX- NET
HERCULES FOOD GUMS ADJUSTMENTS PRO FORMA
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<S> <C> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 65 $ - $ - $ 65
Accounts and notes receivable, net 630 44 - 586
Other current assets 90 - - 90
Inventories 372 58 - 314
Deferred income taxes 144 - - 144
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Total current assets 1,301 102 - 1,199
Net property, plant and equipment 1,303 127 - 1,176
Goodwill and other tangible assets 2,484 41 - 2,443
Other assets 685 14 39 (9) 710
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Total assets $ 5,773 $ 284 $ 39 $ 5,528
==============================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 730 $ 36 $ 26 (10) $ 720
Short-term debt 686 1 (318)(11) 367
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Total current liabilities 1,416 37 (292) 1,087
Long-term debt 1,882 - - 1,882
Deferred income taxes 284 14 - 270
Postretirement benefits and other liabilities 390 10 - 380
Company-obligated preferred securities of
subsidiary trusts 992 - - 992
Stockholders' equity
Common stock 83 - - 83
Additional paid-in capital 739 - - 739
Unearned compensation (119) - - (119)
Other comprehensive losses (109) - 7 (12) (102)
Retained earnings 2,120 223 324 (13) 2,221
Reacquired stock, at cost (1,905) - - (1,905)
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Total stockholders' equity 809 223 331 917
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Total liabilities and stockholders' equity $ 5,773 $ 284 $ 39 $ 5,528
==============================================================
</TABLE>
The accompanying notes are an integral part of the Pro Forma Financial
Statements.
PF-4
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HERCULES INCORPORATED
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) Eliminates the results of operations of our Food Gums Business as if
the divestiture had been completed as of the beginning of the period
presented.
(2) Reflects the adjustment for Corporate allocations that had been
included in the Food Gums Business.
(3) Reclassifies this item to the appropriate category.
(4) Gives effect to equity in the pro forma income (loss) of CP Kelco ApS
at 28.57%.
(5) Reflects a reduction in interest expense of approximately $21 million
from the application of the proceeds from the divestiture of the Foods
Gums Business to the reduction in long-term debt, offset by an
adjustment of approximately $4 million for Corporate allocated interest
expense included in the Food Gums Business.
(6) Reflects income tax effect of pro forma adjustments (excluding equity
in income (loss) of affiliated companies which is not tax deductible)
at a statutory rate of 37%, including state income taxes.
(7) Reflects a reduction in interest expense of approximately $12 million
from the application of the proceeds from the divestiture of the Foods
Gums Business to the reduction in long-term debt, offset an adjustment
of approximately $3 million for Corporate allocated interest expense
included in the Food Gums Business.
(8) Eliminates the net assets of our Food Gums Business as if the
divestiture had been completed as of the balance sheet date.
(9) Reflects Hercules' net investment in CP Kelco ApS at 28.57%.
(10) Reflects recognition of liabilities associated with the sale of the
Food Gums Business for transition costs, pension funding obligations
and other expenses.
(11) Reflects application of the estimated net proceeds from the sale of the
Food Gums Business and the corresponding reduction to current
maturities of long-term debt.
(12) Reflects elimination of currency translation adjustments that were
associated with the Food Gums Business.
(13) Reflects the add back of the retained earnings of the Food Gums
Business and the estimated net gain from the sale of the business, net
of taxes.
PF-5
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this amended report to be signed on its
behalf by the undersigned hereunto duly authorized.
HERCULES INCORPORATED
November 2, 2000 By: /s/ George MacKenzie
---------------------------------------
George MacKenzie, Executive Vice
President and Chief Financial
Officer
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