RECONCILIATION OF REPORTED TO ONGOING OPERATIONS
FOR
FOURTH QUARTER AND YEAR 2006

HERCULES INCORPORATED
Reconciliation to Ongoing Operations

Three Months
Ended Dec. 31, 2006

(Dollars in millions, except per share)

  Net
Income
(Loss)

Basic &
Diluted
  EPS

    Profit
    From
Operations

EBITDA

As Reported

$242.1

$2.14

$53.7

$46.1

Discontinued operations, net of tax

(48.6)

(0.43)

—

—

Cumulative effect of change in accounting principle, net of tax

—

—

—

—

Vertac litigation

1.0

0.01

—

1.5

Asbestos expense, net of insurance settlements

13.0

0.12

—

20.0

Legal accruals and  settlements⁽²⁾

3.1

0.03

0.1

4.8

Severance and restructuring costs

2.9

0.03

4.5

4.5

Asset impairments/charges and accelerated depreciation

2.8

0.02

4.2

3.2

Gain on debt prepayment and write-off of debt issuance costs

(0.3)

—

—

(0.5)

Gain on asset dispositions

(0.9)

(0.01)

—

(1.4)

Loss on sale of FiberVisions, goodwill impairment⁽⁴⁾

2.6

0.02

—

2.6

Tax on undistributed earnings of FiberVisions

—

—

—

—

Other⁽³⁾

2.3

0.02

0.2

3.6

Subtotal adjustment items⁽⁴⁾

(22.1)

(0.19)

9.0

38.3

Tax adjustment to the ongoing effective tax rate

(185.2)

(1.64)

—

—

Ongoing Operations⁽¹⁾

$34.8

$0.31

$62.7

$84.4

 
Three Months
Ended Dec. 31, 2005

(Dollars in millions, except per share)

Net
Income
(Loss)

Basic &
Diluted
  EPS

    Profit
    From
Operations

EBITDA

As Reported

($79.2)

($0.73)

($13.5)

($26.0)

Discontinued operations, net of tax

5.2

0.05

—

—

Cumulative effect of change in accounting principle, net of tax

2.5

0.02

—

—

Vertac litigation

—

—

—

—

Asbestos expense, net of insurance settlements

24.4

0.22

—

37.5

Legal accruals and  settlements⁽²⁾

0.5

—

0.5

0.8

Severance and restructuring costs

2.8

0.03

4.4

4.4

Asset impairments/charges and accelerated depreciation

2.1

0.02

3.2

1.6

Gain on debt prepayment and write-off of debt issuance costs

(0.4)

—

—

(0.6)

Gain on asset dispositions

—

—

—

—

Loss on sale of FiberVisions, goodwill impairment⁽⁴⁾

34.4

0.32

52.9

52.9

Tax on undistributed earnings of FiberVisions

7.6

0.07

—

—

Other⁽³⁾

(0.5)

(0.01)

0.1

(0.8)

Subtotal adjustment items⁽⁴⁾

78.6

0.72

61.1

95.8

Tax adjustment to the ongoing effective tax rate

19.6

0.18

—

—

Ongoing Operations⁽¹⁾

$19.0

$0.17

$47.6

$69.8

 
Twelve Months
Ended Dec. 31, 2006

(Dollars in millions, except per share)

   Net
Income
(Loss)

Basic &
Diluted
  EPS

    Profit
    From
Operations

EBITDA

As Reported

$238.7

$2.14

$248.6

$168.6

Discontinued operations, net of tax

(47.0)

(0.42)

—

—

Cumulative effect of change in accounting principle, net of tax

(0.9)

(0.01)

—

—

Vertac litigation

70.5

0.63

—

108.5

Asbestos expense, net of insurance settlements

13.0

0.12

—

20.0

Legal accruals and  settlements⁽²⁾

4.3

0.04

(2.0)

6.6

Severance and restructuring costs

13.7

0.12

21.1

21.1

Asset impairments/charges and accelerated depreciation

5.4

0.05

8.3

3.2

Loss on debt prepayment, net, and write-off of debt issuance costs

7.6

0.07

—

11.7

Gain on asset dispositions

(0.9)

(0.01)

—

(1.4)

Loss on sale of FiberVisions, goodwill impairment⁽⁴⁾

13.3

0.12

—

13.3

Tax on undistributed earnings of FiberVisions

—

—

—

—

Accelerated vesting of stock compensation

—

—

—

—

Other⁽³⁾

3.1

0.03

0.4

4.2

Subtotal adjustment items⁽⁴⁾

82.1

0.74

27.8

187.2

Tax adjustment to the ongoing effective tax rate and impact of diluted shares

(183.5)

(1.65)

—

—

Ongoing Operations⁽¹⁾

$137.3

$1.23

$276.4

$355.8

 
Twelve Months
Ended Dec. 31, 2005

(Dollars in millions, except per share)

Net
Income
(Loss)

Basic &
Diluted
  EPS

    Profit
    From
Operations

EBITDA

As Reported

($41.1)

($0.38)

$140.3

$157.3

Discontinued operations, net of tax

6.5

0.06