<PAGE> 1
COMMISSION FILE NO. 1-496
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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, 1999
Title of the Plan:
------------------
HERCULES INCORPORATED EMPLOYEE SAVINGS PLAN
Issuer of the securities held pursuant to the Plan:
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HERCULES INCORPORATED
Hercules Plaza
1313 North Market Street
Wilmington, Delaware 19894
<PAGE> 2
HERCULES INCORPORATED EMPLOYEE SAVINGS PLAN
FINANCIAL STATEMENTS
STATEMENT OF NET ASSETS AVAILABLE
FOR BENEFITS
at December 31, 1999 and 1998
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE
FOR BENEFITS
for the year ended December 31, 1999
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.
<PAGE> 3
HERCULES INCORPORATED EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
December 31,
1999 1998
<S> <C> <C>
INTEREST IN HERCULES INCORPORATED
MASTER SAVINGS TRUST $10,652,871 $9,291,134
----------- ----------
NET ASSETS AVAILABLE FOR BENEFITS: $10,652,871 $9,291,134
=========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 4
HERCULES INCORPORATED EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
Year Ended
December 31, 1999
<S> <C>
ADDITIONS:
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
INVESTMENT INCOME:
Increase in net interest in Hercules
Incorporated Master Savings Trust $ 1,246,232
Contributions:
Participant 665,479
Employer 166,598
-----------
832,077
-----------
Total additions 2,078,309
DEDUCTIONS:
Deductions from net assets attributed to:
Benefits paid to participants 716,572
-----------
Total deductions 716,572
Net increase 1,361,737
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 9,291,134
-----------
End of year $10,652,871
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 5
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF PLAN AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following description of the Hercules Incorporated Employee Savings
Plan (the Plan) provides only general information. The Plan is a defined
contribution plan subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA). Participants should refer to the Plan agreement
for a more complete description of the Plan's provisions.
Upon hire, certain represented employees are immediately eligible to
participate in the Plan and obtain immediate, non-forfeitable (vested) rights to
the full market value of their account. At time of enrollment in the Plan,
participants may elect to contribute up to 10% of their annual wages on a
post-tax basis. Hercules Incorporated (the Company) contributes up to 25% of the
first 10% of the annual wages that an employee contributes to the Plan. The
participant shall direct the investment of his or her monthly savings in 5%
increments and the employer match in any of the Plan's investment media, with
the exception of the Hercules Incorporated stock fund, or a combination thereof.
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 participant's 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 preparation of financial statements in conformity with generally
accepted accounting principles requires management to make 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
investment earnings less withdrawals, which is equivalent to contract 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 valued at the net asset value
of the shares held by the Plan at year end, which 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.
The Plan presents in the statement of changes in net assets available
for benefits its allocated share of the Trust's investment income that includes
the net appreciation (depreciation) in fair value of its investments, which
consists of the realized gains or losses and the change in unrealized
appreciation (depreciation) on those investments.
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, in which the distribution is
requested.
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.
<PAGE> 6
2. INVESTMENTS IN MASTER TRUST
The assets of the Plan are held in the Hercules Incorporated Master
Savings Trust (the Trust) along with the assets of the Hercules Incorporated
Savings and Investment Plan. Bankers Trust Company (Trustee) holds the assets of
the Trust. The fair value of the Plan's interest in the Trust is based on the
beginning of year value of the Plan's interest in the Trust plus contributions
and allocated investment income less actual distributions. The Plan's share of
the net assets in the Trust was approximately 3% both at December 31, 1999 and
1998. However, 100% of the Trust's Loan Fund balance is allocated to the
Hercules Incorporated Savings & Investment Plan. Recordkeeping for the Plan is
performed by MetLife's Defined Contribution Group.
The following table presents the fair values of investments for the
Trust:
<TABLE>
<CAPTION>
December 31,
1999 1998
------------ ------------
<S> <C> <C>
Hercules Incorporated Common Stock ............. $ 55,786,379 $ 50,333,052
Mutual Funds ................................... 178,488,853 157,476,226
Blended Interest Rate Fund ..................... 109,620,622 112,915,032
Loan Fund ...................................... 8,092,771 8,654,993
------------ ------------
Total: .................................... $351,988,625 $329,379,303
============ ============
</TABLE>
Investment income for the trust for the year ended December 31, 1999 is
as follows:
<TABLE>
<S> <C>
Net appreciation in fair value of investments:
Hercules Incorporated Common Stock ........ $ 1,607,455
Mutual Funds .............................. 27,879,518
------------
29,486,973
Interest .................................. 7,641,318
Dividends ................................. 8,091,845
------------
Total ..................... $ 45,220,136
============
</TABLE>
3. 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.
4. 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,
1999 1998
------------ -----------
<S> <C> <C>
Net Assets Available for Benefits
per the financial statements ........... $ 10,652,871 $ 9,291,134
Amounts Allocated to Withdrawing
Participants............................ (10,175) (7,969)
------------ -----------
Net Assets Available for Benefits
per the Form 5500 ...................... $ 10,642,696 $ 9,283,165
============ ===========
</TABLE>
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The following is a reconciliation of withdrawals per the financial
statements to the Form 5500:
<TABLE>
<CAPTION>
Year Ended
December 31, 1999
<S> <C>
Benefits paid to participants per the financial statements... $ 716,572
Add: Amounts Allocated to Withdrawing Participants at
December 31, 1999..................................... 10,175
Less: Amounts Allocated to Withdrawing Participants at
December 31, 1998..................................... (7,969)
-----------
Benefits paid to participants per the Form 5500.............. $ 718,778
===========
</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.
<PAGE> 8
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 the Hercules Incorporated Employee Savings Plan (the "Plan") at December 31,
1999 and December 31, 1998, and the changes in net assets available for benefits
for the year ended December 31, 1999 in conformity with accounting principles
generally accepted in the United States. 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 auditing standards generally
accepted in the United States, 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.
/s/ PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania 19103
June 26, 2000
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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
/s/ Ralph L. MacDonald, Jr.
Ralph L. MacDonald, Jr., Chairman
Finance Committee, Hercules Incorporated
Plan Administrator
Date: June 28, 2000
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EXHIBIT INDEX
Number Description
23 Consent of Independent Accountants.
