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 PERIOD ENDED JANUARY 31, 2001
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
HERCULES INCORPORATED EMPLOYEE SAVINGS PLAN
FINANCIAL STATEMENTS
STATEMENTS OF NET ASSETS AVAILABLE
FOR BENEFITS
at January 31, 2001 and December 31, 2000
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE
FOR BENEFITS
for the period ended January 31, 2001
NOTES TO FINANCIAL STATEMENTS
SUPPLEMENTAL SCHEDULES
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.
REPORT OF INDEPENDENT ACCOUNTANTS
EXHIBIT INDEX
The accompanying notes are an integral part of these financial statements.
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HERCULES INCORPORATED EMPLOYEE SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
ASSETS January 31, 2001 December 31, 2000
---------------- -----------------
Interest in Hercules Incorporated
Master Savings Trust $ -- $ 7,293,283
------------ -----------
Net assets available for benefits: $ -- $ 7,293,283
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The accompanying notes are an integral part of these financial statements.
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HERCULES INCORPORATED EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Period Ended
January 31,
2001
ADDITIONS:
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
INVESTMENT INCOME (LOSS):
Increase in Plan's interest in Hercules
Incorporated Master Savings Trust $ 76,361
Contributions:
Participant 8,781
Employer 2,334
----------
11,115
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Total additions
87,476
DEDUCTIONS:
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefits paid to participants 34,949
Transfer to other plan 7,345,810
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Total deductions 7,380,759
Net decrease (7,293,283)
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of period 7,293,283
-----------
End of period $ --
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The accompanying notes are an integral part of these financial statements.
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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.
On June 16, 2000, Hercules' Nitrocellulose business was acquired by Green
Tree Chemical Technologies. Nitrocellulose was manufactured at Hercules'
Parlin, NJ plant location. The Plan was established specifically for the
employees at the Parlin site. Following the sale, the former employees had
the option of keeping their account balances in the Plan, withdrawing the
funds if retirement eligible, or electing to rollover their entire account
balance(s) into an Individual Retirement Plan (IRA) or other qualified
plan. There were approximately 315 plan participants with account balances
prior to the sale. As of January 31, 2001, approximately 200 of these
participants remained in the plan.
After the close of business on January 31, 2001, the Plan merged with and
into the Hercules Incorporated Savings and Investment Plan. Pursuant to
the merger, 194 participants with assets having a fair market value of
$7,345,810 at the time of the merger, became part of the Hercules
Incorporated Savings and Investment Plan.
The Plan's participants underwent changes to their benefits under the
Hercules Incorporated Savings and Investment Plan. For additional
information regarding these changes, participants should refer to the plan
document for the Hercules Incorporated Savings and Investment Plan.
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) makes
matching contributions 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 options, 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 statements
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 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. 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. 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.
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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 period. 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 end of period, 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.
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.
2. INVESTMENTS IN MASTER TRUST
Bankers Trust Company (Trustee) holds the assets of the Trust. The Plan's
share of the net assets in the Trust was approximately zero and 2% at
January 31, 2001 and December 31, 2000, respectively. 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. Investment income relating to the
Trust is applied to the units or shares that individual plan participants
hold in unitized or net asset value funds, respectively. Net appreciation
(depreciation) is allocated to the individual plans based on the relative
percentage of each plan's holdings in the trust. Also, administrative
expenses associated with the Trust are allocated entirely to the Hercules
Incorporated Savings and Investment Plan.
The following table presents the fair values of investments for the Trust:
January 31, 2001 December 31, 2000
---------------- -----------------
Hercules Incorporated Common Stock $ 42,899,644 $ 58,451,380
Mutual Funds ..................... 147,138,878 145,542,269
Blended Interest Rate Fund ....... 92,655,834 94,599,576
Loan Fund ........................ 6,952,072 7,060,823
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Total .................... $289,646,428 $305,654,048
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Investment income for the Trust for the period ended January 31, 2001 is
as follows:
January 31, 2001
Net appreciation (depreciation) in fair value of investments:
Hercules Incorporated Common Stock ................... $(14,059,690)
Mutual Funds ......................................... 5,008,144
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Total .......................................... 9,051,546
Interest .................................................... 36,732
Dividends ................................................... 52,336
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Total ....................................................... $ (8,962,478)
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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.
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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 January 31,
2001 and December 31, 2000, and the changes in net assets available for benefits
for the month ended January 31, 2001, in conformity with accounting principles
generally accepted in the United States of America. 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 of America, 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 our opinion.
As discussed in Note 1, effective January 31, 2001, the Plan was merged with and
into the Hercules Incorporated Savings and Investment Plan.
/s/ PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania 19103
November 15, 2001
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/ Edward V. Carrington
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Edward V. Carrington
Vice President, Human Resources and
Corporate Resources
Plan Administrator
June 28, 2002
EXHIBIT INDEX
Number Description
23 Consent of Independent Accountants.