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SECURITIES AND EXCHANGE COMMISSION
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WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
MARCH 30, 1995 COMMISSION FILE NUMBER 1-496
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HERCULES INCORPORATED
A DELAWARE CORPORATION
I.R.S. EMPLOYER IDENTIFICATION NO.51-0023450
HERCULES PLAZA
1313 NORTH MARKET STREET
WILMINGTON, DELAWARE 19894-0001
(302) 594-5000
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ITEM 2. ACQUISITION/DISPOSITION OF ASSETS
On March 15, 1995, Hercules Incorporated (Hercules) completed the sale
of its aerospace business to Alliant Techsystems Inc. (Alliant) for $440
million in cash and Alliant stock. The assets included in the sale include
Hercules' space and strategic propulsion systems; composite structures;
tactical propulsion systems; ordnance; Hercules Defense Electronics Systems
Inc.; and Global Environmental Solutions, Inc. These units reported combined
revenues of $657 million and operating profit of $110 million in 1994.
Hercules now holds a 30% ownership interest in Alliant and two of eight
nonemployee seats on the Alliant Board of Directors. Hercules' 30% interest in
Alliant will be accounted for on the equity method.
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ITEM 7. PRO FORMA FINANCIAL STATEMENTS
The following pro forma financial statements have been prepared to
reflect the sale of the Hercules Incorporated (Hercules) aerospace business to
Alliant Techsystems Inc. (Alliant) on March 15, 1995. The results of the
transaction, structured with both cash and newly issued shares of Alliant
common stock, result in Hercules obtaining a 30% ownership interest in Alliant,
which will be accounted for on the equity method.
The pro forma balance sheet has given effect to the transaction as if
it had occurred on December 31, 1994, and the pro forma income statement has
given effect to the transaction as if it had occurred on January 1, 1994.
Material nonrecurring charges and credits and related tax effects resulting
directly from this transaction and which will be included in income within the
next 12 months have not been considered in the pro forma income statement. See
note 7 of notes to pro forma Financial Statements.
The pro forma financial statements have been prepared based on the
foregoing and on certain assumptions described in the accompanying notes. Such
statements should be read in conjunction with the historical financial
statements of Hercules including the notes thereto and "Management's Discussion
and Analysis of Results of Operations and Financial Condition" included in
Hercules' Annual Report filing on Form 10-K.
The following pro forma statements do not purport to be indicative of
the financial position or results of operations of Hercules that would have
been reported had the transaction been effected on the dates indicated or which
may be reported in the future.
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Hercules Incorporated
Pro Forma Consolidated Statement of Income (Dollars in thousands,
except per share)
Year Ended
Dec. 31, 1994 Pro Forma
Actual Adjustments Pro Forma
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NET SALES $2,821,015 $(657,393)(1) $2,163,622
Cost of sales 1,924,342 (469,562)(2) 1,454,780
Selling, general and administrative expenses 373,941 (59,955)(3) 313,986
Research and development 64,780 (8,685)(4) 56,095
Other operating expenses, net 39,104 (8,764)(4) 30,339
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PROFIT FROM OPERATIONS 418,848 (110,427) 308,421
Equity in income of affiliated companies 25,605 14,199 (5) 39,804
Interest and debt expense 28,137 0 28,137
Other income (expense), net (8,028) 0 (8,028)
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INCOME BEFORE INCOME TAXES 408,288 (96,228) 312,060
Provision for income taxes 134,132 (38,297)(6) 95,835
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NET INCOME (LOSS) $ 274,156 ($57,931)(7) $ 216,225
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Earnings per share $ 2.29 $ -- $ 1.93
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Primary weighted average number of shares (millions) 120.0 7.7 (8) 112.3
See notes to pro forma Financial Statements
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Hercules Incorporated
Pro Forma Consolidated Balance Sheet (Dollars in thousands)
Dec. 31, 1994 Pro Forma
Actual Adjustments Pro Forma
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Assets
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Current Assets
Cash and cash equivalents $111,637 $311,289 (9) $ 422,926
Accounts receivable, net 588,851 (191,360)(10) 397,491
Inventories 362,254 (34,084)(10) 328,170
Deferred income taxes 89,573 (19,000)(15) 70,573
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Total Current Assets 1,152,315 66,845 1,219,160
Net Property, Plant and Equipment 1,216,055 (264,914)(10) 951,141
Investments 224,760 143,860 (11) 368,620
Prepaid pension 222,412 (78,000)(12) 144,412
Deferred charges and other assets 125,711 (25,181)(10) 100,530
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Total Assets $2,941,253 $(157,390) $2,783,863
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Liabilities and Stockholders' Equity
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Current Liabilities
Accounts payable and accrued expenses $579,123 $ (51,399)(13) $527,724
Short-term debt 188,347 0 188,347
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Total Current Liabilities 767,470 (51,399) 716,071
Long-term debt 307,217 0 307,217
Deferred income taxes 129,183 (30,420)(16) 98,763
Postretirement benefits and other liabilities 442,702 (99,444)(14) 343,258
Stockholders' Equity
Common stock
(Shares issued: 1994, 149,115,459;
1993, 59,899,295) 77,665 0 77,665
Additional paid-in capital 394,749 0 394,749
Foreign currency translation adjustment 49,422 0 49,422
Retained earnings 1,474,329 23,873 (17) 1,498,202
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1,996,165 23,873 2,020,038
Reacquired stock, at cost
(1994,32,480,067; 1993,19,062,295 shares) 701,484 0 701,484
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Total Stockholders' Equity 1,294,681 23,873 1,318,554
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Total Liabilities and Stockholders' Equity $2,941,253 $(157,390) $2,783,863
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See notes to pro forma financial statements.
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Notes to Pro Forma Financial Statements
References to the aerospace business are to the portion of the business sold to
Alliant.
1) Reflects the elimination of sales of the aerospace business.
2) Reflects elimination of costs related to the sales of the aerospace business.
3) Reflects selling, general and administrative costs that will be eliminated in connection with the sale of the aerospace
business.
4) Reflects elimination of research and development and other operating expenses incurred by the aerospace business.
5) Reflects before tax equity income derived from 30% ownership of Alliant net of goodwill amortization of $1.8 mm.
6) Reflects income tax effect of pro forma adjustments (excluding goodwill amortization which is not tax deductible) at a
marginal statutory tax rate of 39%, including state income taxes.
7) Excluding nonrecurring charges of $20.0 million, net of related taxes of $12.0 million; and nonrecurring credits related
to the gain on the sale of the aerospace business of $43.8 million, net of related taxes of $26.7 million, which will be
included in income within the 12 months following the sale of the aerospace business.
8) Assumed repurchase of 7.7 million shares of Hercules common stock with net after tax proceeds of $285.0 million at 1994
average repurchase price $37 per share.
9) Reflects pro forma cash portion of purchase price which would have been received had the closing taken place on December
31, 1994. Pro forma cash proceeds assume cash received based on the net book value of the aerospace business at December
31, 1994, as defined in the purchase and sale agreement.
10) Reflects elimination of aerospace business assets and liabilities.
11) Reflects Hercules investment in Alliant.
12) Loss resulting from the curtailment of defined benefit pension plan resulting from the sale of the aerospace business.
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13) Reflects the following:
a) Elimination of aerospace business accounts payable, accrued expenses, and (111.5)
contract deferrals and provisions.
b) Current taxes payable on the gain on the sale of the aerospace business. 26.1
c) Recognition of liabilities associated with the sale of the aerospace business, 32.0
including severance and termination benefits.
d) Recognition of net transaction costs. 2.0
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Net decrease in accounts payable and accrued expenses $(51.4)
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14) Reflects the gain related to the curtailment of postretirement benefit plan resulting from the sale of the aerospace
business of $85,690; and the elimination of other liabilities of the aerospace business sold to Alliant.
15) Reflects adjustments to deferred tax asset related to the elimination of contract deferrals and provisions.
16) Reflects adjustment to deferred tax liability related to the curtailment loss on defined benefit pension plan (see Note
12).
17) Reflects net after-tax gain on sale.
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Signatures
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereto fully authorized.
Hercules Incorporated
By /s/ Vikram Jog
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Vikram Jog
Controller
March 30, 1995
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