EX-99.2 4 dex992.txt UNAUDITED PRO FORMA FINANCIAL INFORMATION Exhibit 99.2 Pro Forma Financial Information On April 19, 2001, GEO sold to ONDEO Nalco Company (Nalco) certain assets of its Paper Chemicals business for $8,500 in cash plus the assumption by Nalco of certain liabilities associated with the Paper Chemicals business. On May 31, 2001 GEO Specialty Chemicals purchased specific assets of Hercules for approximately $92,200, plus the assumption of specified liabilities. The accompanying Pro Forma financial information presents the Pro Forma effects of the above terminations as of March 31, 2001 and for the three months ended March 31, 2001 and the year ended December 13, 2000, as if the transactions had occurred as of the beginning of the periods. Unaudited Pro Forma Condensed Balance Sheet March 31, 2001 (In thousands)

Notes to Pro Forma Condensed March 31, 2001 Balance Sheet ---------------------------- (In thousands) (A) Reflects the effects of GEO acquiring certain United States and European Peroxides Business Unit assets, net of certain liabilities, of Hercules as if the acquisition had occurred on March 31, 2001. GEO acquired the assets with 100% leveraged financing via a $105,000 long-term loan. Goodwill in the amount of $60,400 was recorded, which represents the difference between the total consideration of $93,000 and the estimated fair market value of Hercules' net assets acquired of $32,600. (B) Reflects the step-up of Peroxy property and equipment to fair market value. (C) Reflects liabilities retained by Hercules. (D) Reflects financing related fees incurred in financing the purchase of Peroxy. (E) Reflects excess cash from long-term loan after payment of consideration for net assets and financing costs. (F) Reflects the effects of GEO selling the paper chemicals customer list and non-production assets to Nalco for $8,500 as if the divestiture had occurred on March 31, 2001. Unaudited Pro Forma Condensed Statement of Income For the three months ended March 31, 2001 (In thousands)

Notes to Pro Forma Condensed Income Statement for the three month period ended March 31, 2001 ---------------------------------------------------------------- (In thousands) (AA) Reflects the elimination of the following from the historical operating results of Peroxy: . Allocated corporate indirect selling, general, and administrative expenses of $558 of corporate allocated indirect costs and $221 of divisional operations indirect costs. (BB) Reflects adjustments to the operating results of Peroxy for estimated incremental costs that would have been incurred by GEO had Peroxy been managed by GEO during the year: . Elimination of soil and groundwater contamination costs for Peroxy's Virginia plant of $11. Hercules has retained the obligation for these costs. . Elimination of a pension plan benefit of $101 created by the over funded status of Hercules pension plans. (CC) Reflects adjustments to the operating results of Peroxy for estimated incremental costs that would have been incurred by GEO had Peroxy been managed by GEO during the year: . Increase of $40 in insurance costs to increase coverage levels to GEO existing levels. . Incremental costs of $233 estimated by GEO for research and development and selling, and general, and administration costs. (DD) Reflects depreciation and amortization for the fair value of assets purchased (excluding current assets) in conjunction with the Peroxy acquisition. Additional depreciation and amortization for the period is calculated as follows:

------------------------------------------------------------------------------------------------------ Excess cost over fair value 15 59,163 986 ------------------------------------------------------------------------------------------------------ Intangible assets 7 4,400 157 ------ ------------------------------------------------------------------------------------------------------ 1,549 ------------------------------------------------------------------------------------------------------ Less: depreciation and amortization included in historical Peroxy financial statements (296) ------ ------------------------------------------------------------------------------------------------------ Pro forma adjustment for depreciation and amortization $1,253 ====== ------------------------------------------------------------------------------------------------------

(EE) Reflects gross margin on sales of paper chemicals and reduction in selling, general, and administrative expenses for GEO operations divested to Nalco subsequent to March 31, 2001. (FF) Reflects interest expense on a pro forma basis for interest costs associated with proceeds from new long-term debt sourced primarily to acquire Peroxy. Interest was computed assuming an average annual interest rate of 8.85%. Unaudited Pro Forma Condensed Statement of Income For the year ended December 31, 2000 (In thousands)

Notes to Proforma Condensed Income Statement for the year ended December 31, 2000 ---------------------------------------------------- (in thousands) (AA) Reflects the elimination of the following from the historical operating results of Peroxy: . Allocated corporate indirect selling, general, and administrative expenses of $2,648 of corporate allocated indirect costs and $2,047 of divisional operations indirect costs. . Amortization of management information software costs of $214 as GEO did not acquire rights to such software. (BB) Reflects adjustments to the operating results of Peroxy for estimated incremental costs that would have been incurred by GEO had Peroxy been managed by GEO during the year: . Elimination of soil and groundwater contamination costs for Peroxy's Virginia plant of $44. Hercules has retained the obligation for these costs. . Elimination of a pension plan benefit of $407 created by the over funded status of Hercules pension plans. (CC) Reflects adjustments to the operating results of Peroxy for estimated incremental costs that would have been incurred by GEO had Peroxy been managed by GEO during the year: . Increase of $161 in insurance costs to increase coverage levels to GEO existing levels. . Incremental costs of $933 estimated by GEO for research and development and selling, and general, and administration costs. (DD) Reflects depreciation and amortization for the fair value of assets purchased (excluding current assets) in conjunction with the Peroxy acquisition. Additional depreciation and amortization for the period is calculated as follows:

---------------------------------------------------------------------------------------------- Office, computer, and laboratory equipment 6-10 209 28 ---------------------------------------------------------------------------------------------- Excess cost over fair value 15 59,163 3,944 ---------------------------------------------------------------------------------------------- Intangible assets 7 4,400 629 ------- ---------------------------------------------------------------------------------------------- 6,198 ---------------------------------------------------------------------------------------------- Less: depreciation and amortization included in historical Peroxy financial statements (1,030) ------- ---------------------------------------------------------------------------------------------- Pro forma adjustment for depreciation and amortization $ 5,168 ======= ----------------------------------------------------------------------------------------------

(EE) Reflects gross margin on sales of paper chemicals and reduction in selling, general, and administrative expenses for GEO operations divested to Nalco subsequent to December 31, 2000. (FF) Reflects interest expense on a pro forma basis for interest costs associated with proceeds from new long-term debt sourced primarily to acquire Peroxy. Interest was computed assuming an average annual interest rate of 9.5%.

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