United
States
Securities
and Exchange Commission
Washington,
D.C. 20549
FORM 8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date
of
Report (Date of earliest event reported): January
16, 2007
Hercules
Incorporated
(Exact
name of registrant as specified in its charter)
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Delaware
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001-00496
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51-0023450
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(State
or other jurisdiction of
incorporation)
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(Commission
File Number)
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(IRS
Employer Identification
Number)
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Hercules
Plaza
1313
North Market Street
Wilmington,
Delaware 19894-0001
(Address
of principal executive offices) (Zip Code)
(302)
594-5000
(Registrant’s
telephone number, including area code)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the Registrant under any of the following
provisions:
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))
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Item
1.01 Entry
into a Material Definitive Agreement.
On
January 16, 2007, Hercules Incorporated (“Hercules” or the “Company”) entered
into long-term service agreements with (1) Genpact International (“Genpact”) and
(2) HCL America Inc. and HCL Technologies Limited (collectively “HCL”). The
Company has engaged these vendors to provide certain business support services
on a global basis in the functional areas of information technology, order
and
cash processing, including accounts receivable, accounts payable and certain
parts of customer service and procurement, and selected activities in the
business analysis and general accounting areas of finance. The procurement
of
these services and the related reduction in force with respect to Hercules
employees is a part of Hercules’ previously disclosed plans for the Business
Infrastructure Project described in the Company’s 2005 Annual Report on Form
10-K and Quarterly Reports on Form 10-Q filed during 2006. The goal of the
Business Infrastructure Project is primarily to realign the Company’s support
organization such that a substantial proportion of the underlying costs become
more variable in nature. These agreements should allow the Company greater
flexibility to scale the level of support resources required in response to
changing business demands as well as provide access to larger service
organizations that can provide a greater depth and breadth of services.
The
agreement with Genpact encompasses those services in the order and cash
processing and finance functions noted above. In addition, Genpact will provide
application development and maintenance and other information technology
products and services. Included in the information technology services component
of the Genpact agreement are activities associated with the Company’s planned
technical and functional upgrades of its primary information technology
platform. The agreement with HCL encompasses the provision of information
technology infrastructure and other information technology products and
services.
Both
the
Genpact and HCL agreements are effective through 2012 with rights for the
Company to extend for up to an additional two years. The terms of the agreements
include a fixed annual fee based on a service price listing for individual
services within the functional areas described above. The agreements provide
for
annual cost adjustments, as well as other adjustments based on productivity,
service quality and performance benchmarks. The agreements may be cancelled
prior to the end of the term for a termination fee. The combined commitment
for
the agreements is $8.5 million for 2007, $11.6 million for 2008 and
approximately $11.0 million per year thereafter.
Item
2.05 Costs
Associated with Exit or Disposal Activities.
In
connection with the actions described in Item 1.01 above and consistent with
the
Company’s previously described Business Infrastructure Project, the Company
plans to eliminate approximately 200 positions worldwide resulting in a
commitment to provide approximately $13.6 million in severance and termination
benefits as well as completion bonuses contingent upon the successful transition
of job functions and responsibilities to the service providers. The plans impact
a number of business and corporate functional areas and contemplate individual
targets, milestones and scheduling over the next two years. The majority of
the
actions are expected to occur during the first nine months of 2007. Accordingly,
the aforementioned charges will be accrued as incurred over the various
functional project timelines through the individual dates of completion at
which
time cash payments for termination benefits and other compensation will begin
to
be paid to the affected employees. As a result of these actions, the Company
expects to realize approximately $6 million in annual savings net of the
anticipated cost of the services to be provided as described in Item 1.01
above.
This
current report on Form 8-K includes forward-looking statements, as defined
in
the Private Securities Litigation Reform Act of 1995, reflecting management's
current analysis and expectations, based on what management believes to be
reasonable assumptions. Forward-looking statements may involve known and unknown
risks, uncertainties and other factors, which may cause the actual results
to
differ materially from those projected, stated or implied, depending on such
factors as: ability to execute productivity improvements and reduce costs;
economic and competitive uncertainties; changes in strategies; risks in
transitioning business support activities, job functions and responsibilities
to
service providers; business climate; business performance; changes in generally
accepted accounting principles; adverse legal and regulatory developments,
including increases in the number or financial exposures of claims, lawsuits,
settlements or judgments, the impact of increased accruals and reserves for
such
exposures, and the outcome of litigation and appeals, including the inability
to
obtain judicial review of adverse litigation results; and adverse changes in
economic and political climates around the world. Accordingly, there can be
no
assurance that the Company will meet future results, performance or achievements
expressed or implied by such forward-looking statements. As appropriate,
additional factors are contained in other reports filed by the Company with
the
Securities and Exchange Commission. This paragraph is included to provide safe
harbor for forward-looking statements, which are not generally required to
be
publicly revised as circumstances change, and which the Company does not intend
to update.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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January
18,
2007
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By:
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HERCULES
INCORPORATED
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/s/
Allen A. Spizzo
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Allen
A. Spizzo
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Vice
President and Chief Financial
Officer
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