Home | Business News | Browse by Publication | B | Business Wire

Hercules Reports Second Quarter 2004 Results.

Article Excerpt
WILMINGTON, Del. -- Hercules Incorporated (NYSE:HPC) today reported net income for the quarter ended June 30, 2004 of $4 million, or $0.04 per diluted share, compared to net income of $34 million, or $0.32 per diluted share, for the same period of 2003.(1)

As previously announced, the second quarter 2004 net income includes a non-cash after-tax charge of approximately $9 million for the write-off of unamortized debt issuance costs associated with refinancing of the company's bank credit facility and the 9.42% trust preferred junior subordinated interest debentures. Other after-tax charges in the quarter included $5 million for debt repurchases, $3 million for severance, $4 million associated with divested businesses and $2 million for expenses related to the litigation against the Company's insurance carriers.(4)

Earnings from ongoing operations(2) for the second quarter of 2004, utilizing a 36% income tax rate for ongoing operations, were $28 million or $0.26 per diluted share. This compares to earnings on the same basis of $26 million, or $0.24 per diluted share in the second quarter of 2003 (please refer to Table 2 for a reconciliation of earnings from ongoing operations to reported net income).

Net sales in the second quarter were $510 million, an increase of 7% from the same period last year. Compared with the second quarter of 2003, the sales increase was driven by 10% higher volumes and 3% improved rates of exchange, offset in part by 5% unfavorable mix and 1% lower prices.

Second quarter 2004 net sales, as compared to the same period in 2003, increased 11% in Europe (4% excluding the stronger Euro) and 28% in Asia Pacific and decreased 9% in Latin America. North America was flat.

Reported profit from operations in the second quarter of 2004 was $65 million, compared with $76 million for the same period in 2003. Profit from ongoing operations(2) in the second quarter of 2004 was $76 million, compared with $77 million in the second quarter of 2003.

"Overall, the second quarter reflected a continuation of many of the conditions we saw in late 2003 and the first quarter of 2004, but with a solid increase in volumes," said Craig Rogerson, President and Chief Executive Officer. "Aqualon continues to deliver strong results across most of its product families and markets. Pulp and Paper results are showing signs of volume recovery in container board, packaging, and printing and writing papers in North America; while growth in emerging markets remains strong. FiberVisions' earnings were down primarily due to high polypropylene costs, but also reflected volume losses resulting from substitution in diaper coverstock applications. Pinova delivered significantly improved volumes, but margins were negatively impacted by higher raw material and energy costs, and lower tolling income. All of our businesses are challenged by higher non-cash pension expenses, which are projected to increase by approximately $16 million for the year 2004 versus 2003, and persistently high raw material, energy and freight costs. In spite of these challenges, we expect to deliver improved results for the year from productivity initiatives, pricing actions and improved volumes."

Year to Date Results

Net sales for the six months ended June 30, 2004 were $985 million, an increase of 6% from the same period last year. Compared with the six months ended June 30, 2003, the sales increase was driven by 7% higher volumes and 5% improved rates of exchange, offset in part by 5% unfavorable mix and 1% lower prices.

Reported profit from operations for...