Wilmington, DE, Aug. 5, 2003 - - Hercules Incorporated (NYSE: HPC) today reported net income for the quarter ended June 30, 2003 of $32 million, or $0.29 per diluted share.  This compares to a loss of $11 million, or a loss of $0.10 per diluted share for the same period in 2002.  The second quarter 2003 and 2002 results included after-tax earnings of $2 million and $10 million, or $0.02 and $0.09 per diluted share, respectively, related to discontinued operations.

Earnings from ongoing operations for the second quarter of 2003 were $0.23 per diluted share.  This compares to earnings on the same basis of $0.20 per diluted share in the second quarter of 2002 and $0.13 per diluted share in the first quarter of 2003.

Net sales in the second quarter of 2003 were $472 million, an increase of 8% from the same period last year and a 7% increase compared to the first quarter of 2003.  Compared with the second quarter of 2002, sales growth was driven primarily by the Euro's appreciation against the U.S. dollar and higher volume in Aqualon and FiberVisions.

Second quarter of 2003 net sales, as compared to the same period in 2002: increased 23% in Europe; increased 6% in Asia Pacific; were flat in Latin America; and declined 1% in North America.

Profit from operations in the second quarter of 2003 was $73 million compared to $53 million for the same period in 2002.  Profit from ongoing operations in the second quarter of 2003 was $74 million, a 10% improvement compared to $67 million in the second quarter of 2002.

"In this difficult operating environment the people of Hercules continue to deliver solid performance," said Dr. William H. Joyce, Chairman and Chief Executive Officer.  "Our improved results were achieved in the face of higher pension expenses, higher energy and raw material costs, and a difficult pulp and paper marketplace offset to some extent by the favorable strengthening of the Euro.  We remained focused on bringing value to our customers, increasing our competitive advantage, improving productivity, and delivering significant financial improvement by upgrading operations, primarily through Work Process Redesign."

Interest and debt expense and preferred securities distributions were $33 million in the second quarter of 2003, a decrease of $6 million compared to the second quarter of 2002, due to lower outstanding debt balances resulting from the application of proceeds from asset sales.

Capital spending in the second quarter of 2003 was $11 million.  Cash outflows for restructuring in the second quarter of 2003 were $5 million.  The Company also contributed $40 million to its U.S. pension plan in the second quarter of 2003.

Segment Results

In the Performance Products segment (Pulp and Paper, Aqualon), net sales in the second quarter grew 8% while profit from operations improved 16% as compared to the same quarter last year.  Net sales were up 8% and profit from operations increased 29% compared to the first quarter of 2003.

In the Pulp and Paper Division, net sales grew 4% compared to both the second quarter of 2002 and the first quarter of 2003.  Profit from operations increased 13% compared to the second quarter of 2002 and increased 29% compared to the first quarter of 2003.  North American and European paper customers reduced their demand for product with a number of mills taking shutdowns to adjust for market conditions.  Profit from operations benefited from favorable rate of currency exchange, growth in Asia and South America, and Work Process improvements, partially offset by unfavorable volume/mix, lower prices, and higher pension, raw material and energy costs.  Profit from operations in the second quarter of 2003 also benefited from the absence of an asset impairment charge versus the same period last year.

Aqualon's net sales increased 13% compared to the second quarter of 2002 and the first quarter of 2003.  Profit from operations improved 18% and 29% compared to the second quarter of 2002 and the first quarter of 2003, respectively.  The weaker U.S. dollar, improved volume/mix, higher prices, and lower costs resulted in favorable comparisons to the second quarter of 2002.

In the Engineered Materials and Additives segment (FiberVisions, Pinova), net sales in the second quarter increased 9% and 4% compared to the second quarter of 2002 and the first quarter of 2003, respectively.  Profit from operations decreased $1 million compared to the second quarter of 2002 and was flat compared with the first quarter of 2003.

Second quarter of 2003 net sales in FiberVisions increased 20% compared to the second quarter of 2002 and increased 3% compared to the first quarter of 2003.  Profit from operations increased $2 million compared to the second quarter of 2002 and increased $1 million compared to the first quarter of 2003.  Profits in the second quarter of 2003 compared to the same quarter last year were higher due to higher selling prices and favorable rate of currency exchange partially offset by higher polymer costs.

Pinova's second quarter net sales declined 15% compared to the second quarter of 2002 and increased 5% compared to the first quarter of 2003.  Profit from operations was down $3 million compared to the second quarter of 2002 and was down $1 million compared to the first quarter of 2003.  Lower profits in the second quarter were driven by lower volumes and higher costs.

Second Quarter Conference Call

The Company will hold a teleconference for shareholders and analysts on August 5th beginning at 9 AM EST.  To participate in the conference call, dial 973-582-2710, 10 to 15 minutes prior to the call.

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