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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1995 Commission file number 1-496
-------------- -----
HERCULES INCORPORATED
A Delaware Corporation
I.R.S. Employer Identification No. 51-0023450
Hercules Plaza
Wilmington, Delaware 19894
Telephone: 302-594-5000
Registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.
As of April 30, 1995, 112,112,476 shares of registrant's common
stock were outstanding.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
CONSOLIDATED STATEMENT OF INCOME
(Dollars in thousands, except per share)
(UNAUDITED)
THREE MONTHS ENDED MARCH 31
1995 1994
---- ----
NET SALES . . . . . . . . . . . . . . . . . . . . . . . . $693,044 $680,028
Cost of sales . . . . . . . . . . . . . . . . . . . . . . 461,978 476,454
Selling, general and administrative expenses . . . . . . 94,034 93,594
Research and development . . . . . . . . . . . . . . . . 15,242 15,978
Other operating expenses, net . . . . . . . . . . . . . . 8,246 15,511
--------- ---------
PROFIT FROM OPERATIONS . . . . . . . . . . . . . . . . . 113,544 78,491
Equity in income of affiliated companies . . . . . . . . 6,912 6,367
Interest and debt expense . . . . . . . . . . . . . . . . 7,091 7,249
Other income, net . . . . . . . . . . . . . . . . . . . . 27,920 775
--------- ---------
INCOME BEFORE INCOME TAXES . . . . . . . . . . . . . . . 141,285 78,384
Provision for income taxes . . . . . . . . . . . . . . . 51,891 26,042
--------- ---------
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . $ 89,394 $ 52,342
========= =========
EARNINGS PER SHARE . . . . . . . . . . . . . . . . . . . $ 0.76 $ 0.43
========= =========
DIVIDENDS PER SHARE . . . . . . . . . . . . . . . . . . . $ 0.21 $ 0.19
========= =========
See accompanying notes to financial statements.
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CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
(UNAUDITED)
MARCH 31 December 31
1995 1994
---- ----
ASSETS
CURRENT ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . . $164,198 $ 111,637
Accounts and notes receivable, net . . . . . . . . . . . 435,959 588,851
Inventories
Finished products . . . . . . . . . . . . . . . . 197,827 171,891
Materials, supplies, and work in process . . . . . 169,562 190,363
Deferred income taxes . . . . . . . . . . . . . . . . . . 70,073 89,573
--------- ----------
TOTAL CURRENT ASSETS . . . . . . . . . . . . . 1,037,619 1,152,315
Property, plant and equipment . . . . . . . . . . . . . . 2,461,204 3,100,749
Accumulated depreciation and amortization . . . . . . . . 1,480,783 1,884,694
--------- ---------
Net property, plant and equipment . . . . . . . . 980,421 1,216,055
Investments . . . . . . . . . . . . . . . . . . . . . . . 359,430 224,760
Other assets . . . . . . . . . . . . . . . . . . . . . . 293,613 348,123
--------- ---------
$2,671,083 $2,941,253
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable . . . . . . . . . . . . . . . . . . . . $145,544 $ 162,858
Accrued expenses . . . . . . . . . . . . . . . . . . . . 483,754 384,947
Short-term debt . . . . . . . . . . . . . . . . . . . . . 96,076 188,347
Income taxes payable . . . . . . . . . . . . . . . . . . 32,318 31,318
-------- ---------
TOTAL CURRENT LIABILITIES . . . . . . . . . . . . 757,692 767,470
Long-term debt . . . . . . . . . . . . . . . . . . . . . 213,057 307,217
Deferred income taxes . . . . . . . . . . . . . . . . . . 145,294 129,183
Postretirement benefits and other liabilities . . . . . . 349,643 442,702
STOCKHOLDERS' EQUITY
Common stock (issued 1995, 150,725,102;
1994, 149,115,459 shares) . . . . . . . . . . . . 78,503 77,665
Additional paid-in capital . . . . . . . . . . . . . . . 424,267 394,749
Foreign currency translation adjustment . . . . . . . . . 87,149 49,422
Retained earnings . . . . . . . . . . . . . . . . . . . . 1,539,718 1,474,329
--------- ---------
2,129,637 1,996,165
Reacquired stock, at cost (1995, 37,295,084;
1994, 32,480,067 shares) . . . . . . . . . . . . . . . . 924,240 701,484
--------- ----------
TOTAL STOCKHOLDERS' EQUITY . . . . . . . . . . . . 1,205,397 1,294,681
--------- ---------
$2,671,083 $2,941,253
========== ==========
See accompanying notes to financial statements.
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CONSOLIDATED STATEMENT
OF CASH FLOW
(Dollars in thousands)
(Unaudited)
Three Months Ended March 31
1995 1994
---- ----
NET CASH PROVIDED BY OPERATIONS . . . . . . . . . . . . . . . . . . . . . $105,153 $ 16,264
-------- --------
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . (24,992) (38,383)
Proceeds of investment and fixed asset disposals . . . . . . . . . . . . 252,939 607
Cash invested in unconsolidated affiliates . . . . . . . . . . . . . . . -- 4,108
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,724 (3,430)
------- ---------
Net Cash Provided by/(Used in) Investing Activities . . . . . . . . . . . 242,671 (37,098)
------- ---------
CASH FLOW FROM FINANCING ACTIVITIES:
Long-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . 135 11,400
Long-term debt repayments . . . . . . . . . . . . . . . . . . . . . . . . (76,319) (82,072)
Change in short-term debt . . . . . . . . . . . . . . . . . . . . . . . . (90,721) 154,866
Common stock issued . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,428 2,576
Common stock reacquired . . . . . . . . . . . . . . . . . . . . . . . . . (140,502) (133,581)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000 ---
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (24,014) (22,597)
-------- --------
Net Cash Used in Financing Activities . . . . . . . . . . . . . . . . . . (294,993) (69,408)
-------- --------
Effect of exchange rate changes on cash . . . . . . . . . . . . . . . . . (270) 583
-------- --------
Net Increase (Decrease) in Cash and Cash Equivalents . . . . . . . . . . 52,561 (89,659)
Cash and cash equivalents - beginning of period . . . . . . . . . . . . . 111,637 154,628
------- --------
Cash and cash equivalents - end of period . . . . . . . . . . . . . . . . $164,198 $ 64,969
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized) . . . . . . . . . . . . . . . . $6,406 $7,252
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,941 51,529
Noncash investing and financing activities:
Conversion of notes and debentures . . . . . . . . . . . . . . . . . 19,526 22,648
Accounts payable for common stock acquisitions . . . . . . . . . . . 97,091 14,566
Incentive plan stock issuances . . . . . . . . . . . . . . . . . . . 5,362 4,026
Investment in Alliant Techsystems, Inc. . . . . . . . . . . . . . . 143,862 --
See accompanying notes to financial statements.
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NOTES TO FINANCIAL STATEMENTS
(Dollars in thousands) (Unaudited)
1. These condensed financial statements are unaudited, but in the opinion of
management include all adjustments (consisting of only normal accruals)
necessary to present fairly the company's financial position and results of
operations for interim periods. It is suggested that these condensed financial
statements be read in conjunction with the accounting policies and the
financial statements and notes thereto included in the company's annual report
for 1994.
Pursuant to the divestiture of the Aerospace segment in March 1995,
Composite Materials data is included in segment Other. Previously it was
reported in the Aerospace segment. 1994 information has been restated to
conform with the 1995 presentation.
2. Primary earnings per share are calculated on the basis of average number
of common and common equivalent shares of 117,378,844 at March 31, 1995 and
122,548,725 at March 31, 1994. Earnings have been adjusted to reflect the
elimination of interest expense, net of taxes, on the 6.5% convertible
debentures, of $39 for the quarter ended March 31, 1995, and $56 for the
quarter ended March 31, 1994.
Fully diluted earnings per share, which additionally assume conversion of
the 8% convertible subordinated debentures, are not materially different from
primary earnings per share. In the fully diluted computation, the number of
shares is increased by 3,943,567 in 1995 and 5,150,505 in 1994. Earnings are
further adjusted in both 1995 and 1994 to reflect the elimination of interest
expense on the 8% debentures (net of taxes) in the amount of $563 and $1,116,
respectively.
3. Cost and expenses include depreciation and amortization of $37,132 and
$39,183 for the quarters ended March 31, 1995 and 1994, respectively.
4. Other operating expenses, net for the quarters ended March 31, 1995 and
1994 include environmental cleanup costs, principally for nonoperating sites,
of $4,523 and $5,234, respectively, and net employee separation costs and
writeoffs of $3,723 and $9,809, respectively.
5. Interest and debt costs are summarized as follows:
March 31
1995 1994
---- ----
Three Months Ended:
Costs incurred . . . . . . . . . . . $8,044 $8,765
Amount capitalized . . . . . . . . . 953 1,516
----- ------
Interest expense . . . . . . . . . . $7,091 $7,249
====== ======
6. Other income, net for the quarter ended March 31, 1995 primarily
reflects the net gain on the divestiture of the Aerospace segment to Alliant
Techsystems, Inc. (Alliant) of $31,700, subject to post-closing adjustments.
Included in the net gain are pension curtailment and settlement losses
aggregating $60,723 and a postretirement benefit curtailment gain of $24,540,
resulting from the transfer of the defined-benefit pension and postretirement
benefit obligations and related defined-benefit plan assets to Alliant.
The divestiture was completed on March 15, 1995. Net sales and operating
profits for the units divested were $123,414 and $13,306, respectively, for the
quarters ended March 31, 1995 and $138,621 and $12,804, respectively, for the
quarter ended March 31, 1994. Hercules now holds approximately a 27%
ownership interest in Alliant which will be accounted for on the equity method.
In 1994, other income net included the gain on the sale of an investment of
$4,461.
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7. Dividends received from affiliated companies accounted for on the
equity method were $2,061 and $6,677 during the quarters ended March 31, 1995
and 1994, respectively.
8. A summary of short-term and long-term debt follows:
March 31, December 31,
1995 1994
---- ----
SHORT-TERM:
Commercial paper . . . . . . . . . . . . . . . . . . . . . . . $ 0 $100,000
Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,873 35,600
Current maturities . . . . . . . . . . . . . . . . . . . . . . 51,203 52,747
------ --------
$96,076 $188,347
======= ========
At March 31, 1995, Hercules had $66,326 of unused lines of credit that may be
drawn as needed. Lines of credit in use at March 31, 1995, were $34,245.
LONG-TERM:
Term loans due 1993-1995 . . . . . . . . . . . . . . . . . . . $ 52,379 $ 52,393
6.5% convertible subordinated debentures due 1999 . . . . . . . 2,891 4,242
7.85% notes due 2000 . . . . . . . . . . . . . . . . . . . . . 25,000 25,000
6.625% notes due 2003 . . . . . . . . . . . . . . . . . . . . . 124,848 124,842
8% convertible subordinated debentures due 2010 . . . . . . . . 48,608 66,905
Variable rate loans (a) . . . . . . . . . . . . . . . . . . . . -- 75,400
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,534 11,182
------- --------
264,260 359,964
Current maturities of long-term debt (51,203) (52,747)
------- --------
Net long-term debt $213,057 $307,217
======== ========
(a) Uncollateralized bank borrowings with average maturities of 400 days, with
interest at a negotiated spread over lenders' cost of funds.
9. Since 1991, the Board of Directors has authorized the repurchase of
up to 47,850,000 shares of company common stock, 4,350,000 shares of which is
intended to satisfy requirements of various employee benefit programs.
Through March 31, 1995, a total of 40,156,289 shares of common stock
(including 4,350,000 shares for employee benefit programs) had been purchased
in the open market at an average price of $28.57 per share.
10. (a) Environmental
Hercules has been identified as a potentially responsible party (PRP)
by U.S. Federal and State authorities for environmental cleanup at numerous
sites. The estimated range of the reasonably possible costs of remediation is
between $60,000 and $244,000. The actual costs will depend upon numerous
factors, including the number of parties found liable at each environmental
site and their ability to pay, the actual method of remediation, outcome of
negotiations with regulatory authorities, outcome of litigation, changes in
environmental laws and regulations, technological developments, and the years
of remedial activity required, which could range up to 30 years. Hercules
becomes aware of sites in which it may be but has not yet been named a PRP
principally through its knowledge of investigation of sites by the U.S.
Environmental Protection Agency (EPA) or other Government agency or through
correspondence with previously named PRPs requesting information of Hercules'
activities at sites under investigation. Hercules brought
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suit in late 1992 against its insurance carriers for past and future costs for
remediation of certain environmental sites. Hercules has not included any
insurance recovery in the estimates set forth above.
Hercules has established procedures for identification of
environmental issues at Hercules plant sites. Hercules designates an
environmental coordinator at all operating facilities. Environmental
coordinators are familiar with environmental laws and regulations and are a
resource for identification of environmental issues. Hercules also has an
environmental audit program which is designed to identify environmental issues
at operating plant sites. Through these programs, Hercules identifies
potential environmental, regulatory, and remedial issues.
Litigation over liability at Jacksonville, Arkansas, the most
significant site, has been pending since 1980. As a result of a pretrial court
ruling in October 1993, Hercules has been held jointly and severally liable for
costs incurred and for future remediation costs at the Jacksonville site by the
District Court, Eastern District of Arkansas (the Court). Appeal of the
Court's ruling with respect to the finding of Hercules being jointly and
severally liable will be filed promptly after issuance of a final court order.
In mid-November 1993, an advisory jury found Uniroyal Chemical, Ltd., liable
for the Jacksonville site, but also found that Uniroyal had proven a reasonable
basis for allocation of responsibility. That same advisory jury found that
Standard Chlorine of Delaware is not a liable party for the Jacksonville site.
The Court may take the jury's findings into consideration when reaching its
decision regarding these parties. The Court has not entered its ruling on the
liability of Uniroyal and Standard Chlorine. Appeals of the Court's expected
rulings with respect to Uniroyal and Standard Chlorine are probable.
Other defendants in this litigation have either settled with the
Government or, in the case of the Department of Defense, have not been held
liable. Hercules appealed the Court's order finding the Department of Defense
not liable. On January 31, 1995 the 8th Circuit Court of Appeals upheld the
Court's order holding the Department of Defense not liable. Hercules has filed
a petition to the U.S. Supreme Court requesting review and reversal of the 8th
Circuit Court ruling.
Hercules' potential costs for remediation of the Jacksonville site are
presently estimated between $23,000 and $149,000. Hercules' potential costs
are based on its assessment of potential liability, the level of participation
by other PRPs and upon current estimates of the costs to remediate the
Jacksonville site. The costs to remediate will vary as Records of Decision are
issued on each operable unit of the site and as remediation methods are
approved by the EPA.
At March 31, 1995, the accrued liability for environmental
remediation represents management's best estimate of the probable and
reasonably estimable costs related to environmental remediation. The extent of
liability is evaluated quarterly. The measurement of the liability is
evaluated based on currently available information, including the progress of
remedial investigation at each site and the current status of negotiations with
regulatory authorities regarding the method and extent of apportionment of
costs among other PRPs. The company does not anticipate that its financial
condition will be materially affected by environmental remediation costs in
excess of amounts accrued, although quarterly or annual operating results could
be materially affected.
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(b) Litigation:
Hercules is a defendant in numerous lawsuits that arise out of, and
are incidental to, the conduct of its business. In these legal proceedings, no
director, officer, or affiliate is a party or a named defendant. These suits
concern issues such as product liability, contract disputes, labor-related
matters, patent infringement, environmental proceedings, and personal injury
matters. Hercules also is a defendant in one Federal Administrative Law
Proceeding and two Qui Tam ("Whistle Blower") lawsuits brought by former
employees.
While it is not feasible to predict the outcome of all pending suits
and claims, management does not anticipate that the ultimate resolution of
these matters will have a material effect upon the consolidated financial
position of Hercules, although the resolution of any of the matters during a
specific period could have a material effect on the quarterly or annual
operating results for that period.
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OTHER FINANCIAL INFORMATION
Operational Highlights
(Dollars in millions)
Three Months Ended March 31
1995 1994
---- ----
NET SALES BY INDUSTRY SEGMENT
- -----------------------------
Chemical Specialties . . . . . . . . . . . . . . . $289 $255
Food & Functional Products . . . . . . . . . . . . 257 222
Aerospace . . . . . . . . . . . . . . . . . . . . 123** 139*
Corporate and Other . . . . . . . . . . . . . . . 24 64*
---- ----
TOTAL . . . . . . . . . . . . . . . . . . . $693 $680
==== ====
PROFIT (LOSS) FROM OPERATIONS BY INDUSTRY SEGMENT
- -------------------------------------------------
Chemical Specialties . . . . . . . . . . . . . . . $59 $43
Food & Functional Products . . . . . . . . . . . . 47 33
Aerospace . . . . . . . . . . . . . . . . . . . . 13** 13*
Corporate and Other . . . . . . . . . . . . . . . (5) (11)*
---- ---
TOTAL . . . . . . . . . . . . . . . . . . . $114 $78
==== ===
* Pursuant to the divestiture of the Aerospace segment in March 1995,
Composite Materials data is included in segment Other. Previously it was
reported in the Aerospace segment. 1994 information has been restated to
conform with the 1995 presentation.
** Reflects results of operations through March 14, 1995.
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
In the first quarter of 1995, Hercules completed the sale of its Aerospace
segment to Alliant Techsystems Inc., (Alliant). In conjunction with the
sale, Hercules received approximately $252 million in cash during the quarter
subject to post-closing adjustments and 3.86 million shares of newly issued
Alliant common stock. Hercules now holds approximately a 27% ownership
interest in Alliant, accounted for on the equity method. The sale of the
Aerospace segment had significant effects on cash flow and results of
operations as discussed below.
RESULTS OF OPERATIONS
All comparisons within the following discussion are with the corresponding
periods in the previous year, unless otherwise stated.
Chemical businesses (Chemical Specialties and Food & Functional Products
segments) sales increased 14% for the quarter on increased volume, pricing and
favorable rates of exchange. However, the divestiture of the Packaging Films
unit in April 1994 and reduced revenues from the Aerospace unit, which was
divested in March 1995, resulted in consolidated net sales increasing 2%.
Profit from operations for the Chemical businesses increased $30 million or
39% primarily on the aforementioned sales increase coupled with gross margin
improvements.
Consolidated profit from operations increased $35 million or 45%. Gross profit
was up approximately $27 million or 13% for the quarter. Gross profit margins
increased to 33% from 30%, resulting from the aforementioned volume, price and
rates of exchange benefits, partially offset by lower margins in Aerospace.
Selling, general and administrative expenses and research and development
expenses remained relatively flat. Other operating expenses, net improved $7
million principally due to 1994 charges related to employee separation and
termination costs resulting from a company-wide reduction in personnel.
Year-over-year percentage growth in operating profit in the Chemical businesses
is not expected to continue at this quarter's pace. Increases in cost of
inputs may erode some of the operating profit gains, however, year-over-year
growth is expected to continue in subsequent quarters of 1995.
Chemical Specialties: Net sales increased 13% or $34 million. Improved volume,
particularly in Europe, favorable rates of exchange, coupled with improved
pricing for resins and paper technology products principally account for the
sales improvement. Favorable pricing in fibers also contributed to the sales
improvement. Profit from operations increased 37% or $16 million and primarily
relates to the aforementioned sales increase coupled with gross margin
improvements.
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Food and Functional Products: Net sales increased 16% or $35 million.
Favorable pricing for water soluble polymers utilized in the paint,
construction and regulated markets coupled with favorable exchange rates
primarily account for the sales increase. Additionally, favorable exchange
rates and improved pricing in the specialty markets for food gums also
contributed to the sales increase. Profit from operations increased 42% or
$14 million primarily on the strength of the improved sales coupled with cost
improvements.
Aerospace: Net sales decreased 12% or $16 million. Lower termination
settlements and incentive award fees coupled with reduced ordnance sales
primarily account for the sales decline. Sales (and operating profit) were
favorably affected by $7 million related to a re-evaluation of the Titan IV
SRMU contract deferral established in 1993. This resulted from diminished
program risk coincident with progress in 1995 toward program completion and a
1995 favorable contract modification. In addition, improved Titan operating
performance and realization of past cost reduction actions resulted in operating
profit remaining flat despite lower revenues.
Corporate and Other: Net sales declined $40 million, primarily reflecting the
divestiture of the Packaging Films business in April 1994. Operating losses
declined $6 million due to lower employee separation costs and improvement in
Composite Materials operating performance.
Improvement in equity income of affiliated companies principally reflects
higher earnings in Tastemaker, the 50% owned flavors joint venture.
Interest and debt costs incurred declined 2% on lower average debt outstanding.
Other income net, (see note 6) increased $27 million and primarily reflects the
net gain on the sale of the Aerospace segment.
The provision for income taxes for the first quarter of 1995 reflects an
estimated annual effective tax rate of 35.8%, combined with a relatively high
rate on the sale of the Aerospace business. The 1994 full year rate of 33% was
favorably affected by a research and experimentation tax credit of $4 million.
FINANCIAL CONDITION
Cash flow from operations was $105 million for the first quarter of 1995,
compared to $16 million for the corresponding quarter in 1994. Improved
operating earnings and working capital, coupled with lower tax payments
primarily account for the improvement. Income tax payments in the first
quarter of 1994 included payments of approximately $45 million associated with
the restructuring of the Titan IV solid rocket motor upgrade contract in late
1993.
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Short-term liquidity has remained stable since year-end 1994. Both the current
ratio and the quick ratio are relatively flat at 1.4 and 0.8, respectively. At
March 31, 1995, $66 million is available under short-term lines of credit.
During the first quarter of 1995, an additional 5,080,889 shares of common
stock were reacquired in the open market. As a percentage of total
capitalization, total debt decreased from 28% to 20%, during the first quarter
of 1995, principally as a result of debt repayments of $167 million.
Management expects this measure to return to more normal levels which would be
in the low 30% range. Funds available under revolving credit agreements at
March 31, 1995 are $380 million; in addition, $50 million is accessible,
depending upon market conditions, under a shelf registration.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
In September 1993, Hercules and the U.S. Environmental Protection
Agency (EPA) Region 1 reached an agreement in principle in settlement of EPA's
claims that Hercules violated its wastewater permit with the City of Chicopee
and the federal pretreatment standard for industrial users of publicly owned
treatment works at its Chicopee, MA facility. Hercules signed a Consent Decree
(the "Decree"), which was entered by the court on December 15, 1994, based on
this agreement requiring supplemental environmental projects (at a cost of
approximately $375,000), compliance with permit limits in the future, and
$250,000 in fines. Hercules has paid the $250,000 fine and is currently in the
process of performing the supplemental environmental projects.
On February 17, 1994, Hercules received an Administrative Order and
Notice of Civil Administrative Penalty Assessment for alleged violations of
Hercules' water discharge (NPDES) permit at its Kenvil, New Jersey facility.
Negotiations with the State of New Jersey Department of Environmental
Protection have concluded and a Stipulation of Settlement was approved by the
Administrative Law Judge on March 10, 1995. Hercules has paid $115,125 in
settlement of the matter.
Hercules received a letter from the New Jersey Department of
Environmental Protection (the "Department") dated March 9, 1995, which stated
that the Department was considering an enforcement action against Hercules for
alleged non-compliance with the terms of a 1993 Administrative Consent Order
("ACO"). The ACO covered alleged violations of the Air Pollution Control Act.
The letter also identified potential violations under the Spill Compensation
and Control Act, the New Jersey Water Pollution Control Act and the New Jersey
Safe Drinking Water Act. Hercules has met with the Department and has
submitted a schedule addressing all matters identified in the Department's
letter. Although no formal legal proceeding has been commenced, a civil
enforcement action, including a penalty assessment in excess of $100,000, is
expected.
Item 4. Submission of Matters to a Vote of Security Holders.
A SUMMARY OF THE FINAL RESULTS OF VOTING ON THE RESOLUTIONS PROPOSED TO
SHAREHOLDERS AT THE ANNUAL MEETING HELD APRIL 27, 1995, IS AS FOLLOWS:
1. Election of Directors
Of the 116,210,936 shares entitled to vote, a total of 100,957,774
shares voted FOR Robert G. Jahn, as a director; 100,994,565 shares,
voted FOR Ralph L. MacDonald, Jr.; and 100,967,496 shares, voted FOR
Paula A. Sneed. A total of 714,723 shares, WITHHELD votes for Robert
G. Jahn; 677,932 shares, WITHHELD votes for Ralph L. MacDonald, Jr.;
705,001 shares, WITHHELD votes for Paula A. Sneed.
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Directors continuing in office after the meeting are: Manfred
Caspari, R. Keith Elliott, Thomas L. Gossage, Richard M. Fairbanks,
III, Edith E. Holiday, Gaynor E. Kelley, H. Eugene McBrayer, and Lee
M. Thomas.
2. Ratification of Coopers & Lybrand L. L. P. as Auditors
The proposal received the required favorable majority vote necessary
FOR approval. Of the shares voting on this proposal, 101,231,079,
were FOR; 255,393, were AGAINST; and 187,025, ABSTAINED.
3. Amendment to Restated Certificate of Incorporation
The proposal received the required favorable majority vote necessary
FOR approval. Of the shares voting on this proposal, 93,890,563,
were FOR; 6,864,000, were AGAINST; and 313,865, ABSTAINED.
4. Amended and Restated Long-Term Compensation Incentive Plan
The proposal received the required favorable majority vote necessary
FOR approval. Of the shares voting on this proposal, 88,364,812,
were FOR; 12,058,427, were AGAINST; and 645,189, ABSTAINED.
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Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits - None
(b) Reports on Form 8-K.
Hercules filed an 8-K on March 30, 1995 related to the
sale of its Aerospace business to Alliant Techsystems, Inc.
(Alliant) and acquisition of approximately a 27% ownership
position in Alliant. Included therein were applicable pro
forma consolidated financial statements at December 31,
1994 and accompanying notes.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Hercules Incorporated
by R. Keith Elliott
----------------------------------
R. Keith Elliott
Executive Vice President
and Chief Financial Officer
(Principal Financial Officer
and duly authorized signatory)
May 12, 1995
by V. Jog
----------------------------------
Vikram Jog
Controller
(Principal Accounting Officer)
May 12, 1995
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