-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UWpVf8UPSGslDrUpcRgpLyua083tz9Ou/gXnVddSFVC4vS5h56R2j27Ah8/2m0o4 bSLXFlE0lVjIip97MsVY0g== 0000912057-97-022222.txt : 19970630 0000912057-97-022222.hdr.sgml : 19970630 ACCESSION NUMBER: 0000912057-97-022222 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970627 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ECOLAB INC CENTRAL INDEX KEY: 0000031462 STANDARD INDUSTRIAL CLASSIFICATION: SOAP, DETERGENT, CLEANING PREPARATIONS, PERFUMES, COSMETICS [2840] IRS NUMBER: 410231510 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09328 FILM NUMBER: 97631623 BUSINESS ADDRESS: STREET 1: ECOLAB CTR STREET 2: 370 N WABASHA ST CITY: ST PAUL STATE: MN ZIP: 55102 BUSINESS PHONE: 6122932233 FORMER COMPANY: FORMER CONFORMED NAME: ECONOMICS LABORATORY INC DATE OF NAME CHANGE: 19861203 11-K 1 FORM 11-K FORM 11-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (Mark One) [ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to -------- --------- Commission file numbers 2-90702, 33-18202, 33-55986 and 33-56101 ---------------------------------------- A. Full title of the plan and the address of the plan, if different from that of the issuer name below: ECOLAB SAVINGS PLAN B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: ECOLAB INC. 370 N. Wabasha St. Saint Paul, Minnesota 55102-1390 ECOLAB SAVINGS PLAN ------------------- REPORT ON AUDITS OF FINANCIAL STATEMENTS As of December 31, 1996 and 1995 and for the years ended December 31, 1996, 1995 and 1994 AND SUPPLEMENTAL SCHEDULES as of December 31, 1996 and for the year then ended INDEX ----- Page(s) ------- Report of Independent Accountants 2 Financial Statements: Statements of Net Assets Available for Plan Benefits as of December 31, 1996 and 1995 3 Statement of Changes in Net Assets Available for Plan Benefits, With Fund Information for the year ended December 31, 1996 4 - 5 Statement of Changes in Net Assets Available for Plan Benefits, With Fund Information for the year ended December 31, 1995 6 - 7 Statement of Changes in Net Assets Available for Plan Benefits, With Fund Information for the year ended December 31, 1994 8 Notes to Financial Statements 9 - 19 Supplemental Schedules: Line 27a - Schedule of Assets Held for Investment Purposes as of December 31, 1996 20 Line 27b - Schedule of Loans or Fixed Income Obligations for the year ended December 31, 1996 21 Line 27d - Schedule of Reportable Transactions for the year ended December 31, 1996 22 - 23 1 REPORT OF INDEPENDENT ACCOUNTANTS To the Plan Administrator Ecolab Savings Plan We have audited the financial statements of the Ecolab Savings Plan as listed in the accompanying index on page 1. These financial statements are the responsibility of the Plan Administrator. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Plan Administrator, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of the Ecolab Savings Plan as of December 31, 1996 and 1995, and the changes in net assets available for plan benefits for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules as listed in the accompanying index on page 1 are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The Fund Information in the statements of changes in net assets available for plan benefits is presented for purposes of additional analysis rather than to present the changes in net assets available for plan benefits of each fund. The supplemental schedules and Fund Information have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. /s/Coopers & Lybrand L.L.P. COOPERS & LYBRAND L.L.P. Saint Paul, Minnesota June 11, 1997 2 ECOLAB SAVINGS PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS as of December 31, 1996 and 1995 (in thousands) 1996 1995 -------- ------- ASSETS Investments: Mutual funds: Fidelity Retirement Money Market Portfolio $ 7,855 $ 6,123 Fidelity Government Securities Fund 13,020 12,420 Fidelity Puritan Fund 27,297 12,129 Spartan U.S. Equity Index Fund 25,598 16,978 Fidelity Magellan Fund 24,167 20,460 Fidelity Small Cap Stock Fund 9,906 7,424 Fidelity Overseas Fund 10,395 7,329 -------- -------- 118,238 82,863 Managed Income Fund 39,803 37,577 Ecolab Stock Fund 148,184 108,855 Participant loans 13,679 12,092 -------- -------- Total investments 319,904 241,387 -------- -------- Receivables: Employer contributions 1,255 Dividends 619 499 -------- -------- Total receivables 1,874 499 -------- -------- NET ASSETS AVAILABLE FOR PLAN BENEFITS $321,778 $241,886 -------- -------- -------- -------- The accompanying notes are an integral part of the financial statements. 3 ECOLAB SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION for the year ended December 31, 1996
Spartan Retirement U.S. Money Government Equity Small Cap (in thousands) Market Securities Puritan Index Magellan Stock Overseas Fidelity Portfolio Fund Fund Fund Fund Fund Fund Subtotal --------- ---------- ------- -------- -------- --------- --------- -------- Additions: Interest $ 15 $ 15 Dividends $ 350 $ 863 3,136 $ 606 $ 3,733 $ 368 $ 627 9,683 Net appreciation (depreciation) in the fair value of investments (581) 526 3,759 (1,215) 691 468 3,648 ------- ------- ------- ------- ------- ------ ------- -------- Total investment income 350 282 3,677 4,365 2,518 1,059 1,095 13,346 Plan expenses (8) (6) (10) (7) (5) (8) (1) (45) ------- ------- ------- ------- ------- ------ ------- -------- 342 276 3,667 4,358 2,513 1,051 1,094 13,301 Employee contributions 503 1,295 1,628 1,856 2,945 1,325 1,272 10,824 Employer contributions Transfers from other plans 263 271 15,335 623 1,333 122 17,947 ------- ------- ------- ------- ------- ------ ------- -------- Total additions 1,108 1,842 20,630 6,837 6,791 2,376 2,488 42,072 Deductions: Distributions and withdrawals (454) (315) (1,871) (631) (449) (179) (178) (4,077) ------- ------- ------- ------- ------- ------ ------- -------- Net increase before loan activity and interfund transfers 654 1,527 18,759 6,206 6,342 2,197 2,310 37,995 Loans granted (198) (316) (1,023) (630) (832) (286) (303) (3,588) Loan principal and interest repayments 163 380 449 523 838 332 326 3,011 Interfund transfers 1,113 (991) (3,017) 2,521 (2,641) 239 733 (2,043) ------- ------- ------- ------- ------- ------ ------- -------- Net increase 1,732 600 15,168 8,620 3,707 2,482 3,066 35,375 Net assets available for plan benefits: Beginning of year 6,123 12,420 12,129 16,978 20,460 7,424 7,329 82,863 ------- ------- ------- ------- ------- ------ ------- -------- End of year $7,855 $13,020 $27,297 $25,598 $24,167 $9,906 $10,395 $118,238 ------- ------- ------- ------- ------- ------ ------- -------- ------- ------- ------- ------- ------- ------ ------- --------
The accompanying notes are an integral part of the financial statements. (Continued) 4 ECOLAB SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION for the year ended December 31, 1996(Continued) Managed Ecolab (in thousands) Fidelity Income Stock Participant Subtotal Fund Fund Loans Other Total ---------- ------- -------- -------------- ------- ------ Additions: Interest $ 15 $ 2,102 $ 1 $ 958 $ 120 $ 3,076 Dividends 9,683 2,078 11,881 Net appreciation (depreciation) in the fair value of investments 3,648 29,304 32,952 --------- -------- -------- -------------- -------- -------- Total investment income 13,346 2,102 31,383 958 120 47,909 Plan expenses (45) (27) (41) (113) --------- -------- --------- -------------- --------- --------- 13,301 2,075 31,342 958 120 47,796 Employee contributions 10,824 2,054 4,504 17,382 Employer contributions 6,276 1,255 7,531 Transfers from other plans 17,947 391 18,338 --------- ------- --------- -------------- --------- ---------- Total additions 42,072 4,520 42,122 958 1,375 91,047 Deductions: Distributions and withdrawals (4,077) (2,161) (4,434) (483) (11,155) --------- -------- --------- -------------- -------- ---------- Net increase before loan activity and interfund transfers 37,995 2,359 37,688 475 1,375 79,892 Loans granted (3,588) (1,084) (2,201) 6,873 Loan principal and interest repayments 3,011 961 1,789 (5,761) Interfund transfers (2,043) (10) 2,053 ---------- -------- -------- -------------- -------- --------- Net increase (decrease) 35,375 2,226 39,329 1,587 1,375 79,892 Net assets available for plan benefits: Beginning of year 82,863 37,577 108,855 12,092 499 241,886 ---------- --------- --------- -------------- -------- ----------- End of year $118,238 $39,803 $148,184 $13,679 $1,874 $321,778 ---------- --------- --------- -------------- -------- ----------- ---------- --------- --------- -------------- -------- ----------- The accompanying notes are an integral part of the financial statements. 5
ECOLAB SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION for the year ended December 31, 1995 Spartan Retirement U.S. Money Government Equity Small Cap Market Securities Puritan Index Magellan Stock Overseas Fidelity (in thousands) Portfolio Fund Fund Fund Fund Fund Fund Subtotal ------------ ----------- -------- ---------- --------- ------------ ---------- --------- Additions: Interest $ 33 $ 33 Dividends $ 285 $ 615 $ 600 407 $ 1,159 $ 465 $ 167 3,698 Net appreciation in the fair value of investments 899 1,149 4,826 2,951 717 674 11,216 ------------ ---------- -------- --------- --------- ------------ --------- ------- Total investment income 285 1,514 1,749 5,266 4,110 1,182 841 14,947 Plan expenses (8) (10) (9) 7 (12) (4) (5) (41) ------------ ---------- -------- --------- --------- ----------- -------- ------- 277 1,504 1,740 5,273 4,098 1,178 836 14,906 Employee contributions 391 1,334 1,211 1,448 2,229 920 1,184 8,717 ------------ ---------- --------- --------- ---------- ----------- -------- ------ Employer contributions Total additions 668 2,838 2,951 6,721 6,327 2,098 2,020 23,623 Deductions: Distributions and withdrawals (470) (353) (356) (380) (399) (199) (273) (2,430) ------------- ---------- -------- --------- ---------- ----------- ------- ------- Net increase before loan activity and interfund transfers 198 2,458 2,595 6,341 5,928 1,899 1,747 21,193 Loans granted (159) (464) (276) (569) (765) (241) (277) (2,751) Loan principal and interest repayments 195 376 325 375 564 217 313 2,365 Interfund transfers 5,889 10,023 9,485 10,831 14,733 5,549 5,546 62,056 ------------ --------- -------- -------- --------- --------- ------- ------ Net increase (decrease) 6,123 12,420 12,129 16,978 20,460 7,424 7,329 82,863 Net assets available for plan benefits: Beginning of year - - - - - - - - -------------- --------- --------- -------- --------- ---------- ------- ------ End of year $ 6,123 $12,420 $12,129 $16,978 $20,460 $7,424 $7,329 $82,863 -------------- --------- -------- -------- ---------- ----------- ------- ------ -------------- --------- -------- -------- ---------- ----------- ------- ------ The accompanying notes are an integral part of the financial statements. (Continued) 6
ECOLAB SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION for the year ended December 31, 1995 (Continued) Common Managed Ecolab Fidelity Income Stock Income Stock Participant (in thousands) Subtotal Fund Fund Fund Fund Loans Other Total ----------- -------- --------- -------- -------- ------------ ------- -------- Additions: Interest $ 33 $ 2,407 $ 703 $ 3,143 Dividends 3,698 $ 1,269 $499 5,466 Net appreciation in the fair value of investments 11,216 32,977 44,193 ---------- --------- ----------- ----------- Total investment income 14,947 2,407 34,246 703 52,802 Plan expenses (41) 4 (41) (78) ---------- --------- ----------- ---------- ----------- 14,906 2,411 34,205 703 52,724 Employee contributions 8,717 2,325 4,059 15,101 Employer contributions 5,837 5,837 Other 527 527 ---------- --------- ----------- ---------- ------- ----------- Total additions 23,623 4,736 44,101 1,230 499 74,189 Deductions: Distributions and withdrawals (2,430) (2,578) (3,920) (178) (9,106) ---------- --------- ----------- ---------- ----------- Net increase before loan activity and interfund transfers 21,193 2,158 40,181 1,052 499 65,083 Loans granted (2,751) (1,270) (2,170) 6,191 Loan principal and interest repayments 2,365 821 1,332 (4,518) Interfund transfers 62,056 $(63,258) $(24,496) 35,868 (10,170) ---------- ---------- ----------- --------- ----------- ---------- ------- ----------- Net increase (decrease) 82,863 (63,258) (24,496) 37,577 29,173 2,725 499 65,083 Net assets available for plan benefits: Beginning of year - 63,258 24,496 - 79,682 9,367 - 176,803 ---------- ---------- ----------- --------- ----------- ---------- ------- ----------- End of year $82,863 $ - $ - $37,577 $108,855 $12,092 $499 $241,886 ---------- ---------- ----------- --------- ----------- ---------- ------- ----------- ---------- ---------- ----------- --------- ----------- ---------- ------- -----------
The accompanying notes are an integral part of the financial statements. 7 ECOLAB SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION for the year ended December 31, 1994 Common Ecolab Income Stock Stock Participant (in thousands) Fund Fund Fund Loans Total ------- ------- -------- ------------ ------ Additions: Interest $ 4,358 $ 12 $ 31 $ 516 $ 4,917 Dividends 1,644 1,644 Net appreciation (depreciation)in the fair value of investments 294 (5,889) (5,595) ------- ------- ------- ------ -------- Total investment income 4,358 306 (4,214) 516 966 Plan expenses (199) (72) (95) (366) ------- ------- ------- ------ -------- 4,159 234 (4,309) 51 600 Employee contributions 4,579 3,002 5,746 13,327 Employer contributions 5,131 5,131 ------- ------- ------- ------ -------- Total additions 8,738 3,236 6,568 516 19,058 Deductions: Distributions and withdrawals (4,760) (1,343) (3,858) (184) (10,145) ------- ------- ------- ------ -------- Net increase before loan activity and interfund transfers 3,978 1,893 2,710 332 8,913 Loans granted (2,259) (878) (1,904) 5,041 Loan principal and interest repayments 1,588 872 1,551 (4,011) Interfund transfers (2,464) (1,016) 3,480 ------- ------- ------- ------ -------- Net increase 843 871 5,837 1,362 8,913 Net assets available for plan benefits: Beginning of year 62,415 23,625 73,845 8,005 167,890 ------- ------- ------- ------ -------- End of year $63,258 $24,496 $79,682 $9,367 $176,803 ------- ------- ------- ------ -------- ------- ------- ------- ------ --------
The accompanying notes are an integral part of the financial statements. 8 ECOLAB SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS 1. DESCRIPTION OF PLAN: The following brief description of the Ecolab Savings Plan (the "Plan") is provided for general information purposes only. Participants should refer to the Plan document for complete information regarding the Plan's definitions, benefits, eligibility and other matters. GENERAL AND ELIGIBILITY: The Plan is a qualified defined contribution plan available to employees of Ecolab Inc. (the "Company") and certain of its subsidiaries. Employees regularly scheduled to work at least 20 hours per week may participate immediately in the Plan provided they are not subject to a collective bargaining agreement which does not provide for their inclusion. Part-time employees working less than 20 hours a week must have been employed for a twelve consecutive month period during which they have worked at least 1,000 hours to be eligible to participate. Effective January 1, 1996, employees who were participating in the Profit Sharing Retirement Plan of Kay Chemical Company and the Kay Chemical Company Section 401(k) Savings Plan became participants of the Plan. Also effective January 1, 1996, employees who were participating in the Profit Sharing Plan and Trust for Employees of Western Water Management, Inc. became participants of the Plan. Employees participating in the Huntington Laboratories, Inc. Savings and Retirement Plan became participants of the Plan effective January 1, 1997 (see Note 6). Assets transferred into the Plan as these employees became participants are shown separately in the Statement of Changes in Net Assets Available for Plan Benefits and Fund Information. Employee participation in the Plan is voluntary. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") and the Internal Revenue Code of 1986, as amended (the "Code"). CONTRIBUTIONS: Contributions are made to the Plan as "before-tax savings contributions," "after-tax savings contributions," "employer matching contributions" or "employer profit sharing contributions." (Continued) 9 ECOLAB SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS, (Continued) 1. DESCRIPTION OF PLAN, (Continued): Before-tax savings contributions are contributions made by the Company on behalf of participants who have agreed to have their taxable compensation reduced. Participants may reduce their compensation up to 10% (subject to a statutory annual maximum of $9,500 in 1996 and $9,240 in 1995 and 1994)for the purpose of making before-tax savings contributions to the Plan. After-tax savings contributions are contributions made by the Company on behalf of participants through after-tax payroll deductions. The total of before-tax savings contributions made on behalf of a participant and a participant's after-tax savings contributions cannot exceed 16% of a participant's compensation. Employer matching contributions are made by the Company in an amount equal to 50% of the total before-tax savings contributions and after-tax savings contributions for a payroll period which do not exceed 6% of a participant's eligible compensation for that period, as defined. Employer matching contributions are invested entirely in the Ecolab Stock Fund. Employer profit sharing contributions are discretionary and may be determined each year by the Company's Board of Directors. Profit sharing contributions are divided among employees who are not eligible for a management incentive or equivalent bonus and are invested entirely in the Ecolab Stock Fund. The levels of contributions made by or on behalf of participants who are "highly compensated," as defined in the Code, are subject to limitations under the Code based on the level of contributions made by employees who are not considered highly compensated. VESTING: Before-tax savings contributions, after-tax savings contributions, employer profit sharing contributions and investment income thereon are always 100% vested. Participants become vested in the employer matching contributions and investment income thereon at a rate of 25% each year, after two years of continuous service, until fully vested after five years of continuous service. Participants also become fully vested in those contributions in the event of death or total disability while employed by the Company or retirement at or after age 65. (Continued) 10 ECOLAB SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS, (Continued) 1. DESCRIPTION OF PLAN, (Continued): PLAN BENEFITS: Benefits to participants are limited to the amount vested in each participant's account. Upon retirement, death, disability or separation from service, a distribution may be made to the participant or beneficiary equal to the vested portion of the participant's account. An employee distribution or withdrawal from the Plan may be subject to federal income tax. Forfeitures of nonvested employer matching contributions and related investment income are used to reduce future employer contributions. PARTICIPANT LOANS: Participants and beneficiaries are permitted to borrow from their accounts. The total amount of a participant's loan may not exceed the lesser of (a) $50,000 minus the participant's highest outstanding loan balance for the previous twelve month period, or (b) 50% of the participant's vested interest in his or her account. When a loan is granted, the appropriate account balances are reduced and a separate loan account is created. Loan payments, together with interest, are repaid at the rate designated by the Plan Administrator, generally over 5 or 10 years. PARTICIPANT ACCOUNTS AND ALLOCATION: Fidelity Institutional Retirement Services Company ("Fidelity"), a division of Fidelity Investments Institutional Services Company, Inc., has provided directly or through one or more of its subsidiaries investment management, recordkeeping and trustee services for the Plan since January 1, 1995. Each participant's account is credited with the participant's contributions, the employer matching contributions, any employer profit sharing contributions and investment income thereon. (Continued) 11 ECOLAB SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS, (Continued) -------------- 1. DESCRIPTION OF PLAN, (Continued): Except for employer matching and profit sharing contributions which are invested in the Ecolab Stock Fund, participants are allowed to allocate their entire account balance and/or future before-tax and after-tax savings contributions in any combination of nine investment options. Participants can transfer their invested funds among the investment options and/or change the investment of their future contributions daily, as desired. These transfers and changes must be made in whole dollar amounts of at least $250 and/or in whole percent increments. All contributions made under the Plan are paid to and invested by Fidelity in one or more of the available investment options as directed by the participants. Seven of the nine investment options are mutual funds of Fidelity, managed by Fidelity Management and Research Company. The remaining investment options include a fund invested primarily in investment contracts and a fund invested primarily in Ecolab Inc. common stock, both managed by Fidelity Management Trust Company. The nine investment funds available to participants in 1996 and 1995 were: Fidelity Retirement This portfolio invests in money market Money Market instruments offered by U.S. and foreign Portfolio issuers. Fidelity Government This fund is invested principally in Securities Fund securities issued or guaranteed by the U.S. government or its agencies. Fidelity Puritan Fund This fund invests in a broadly diversified portfolio of securities, including common and preferred stocks and bonds of U.S. and foreign issuers. (Continued) 12 ECOLAB SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS, (Continued) -------------- 1. DESCRIPTION OF PLAN, (Continued): Spartan U.S. Equity This fund (formerly called the Index Fund Fidelity U.S. Equity Index Portfolio) makes investments in equity securities and attempts to duplicate the composition and total returns of the Standard & Poor's Daily Stock Price Index of 500 common stocks. Fidelity Magellan Fund This fund is invested primarily in common stocks and securities convertible into common stock. Fidelity Small Cap This fund invests primarily in stocks issued by Stock Fund smaller companies, which may include start-up companies, companies whose stocks have recently become publicly traded, or companies that operate in small industries or regional markets. Fidelity Overseas Fund This fund invests primarily in common stocks, securities convertible into common stock, securities denominated in foreign currencies and debt instruments in markets outside North America. Managed Income Fund This fund is comprised of investment contracts which were purchased before 1995 by the former investment manager and units in commingled trust funds in the Managed Income Portfolio II ("MIPII") of the Fidelity Group Trust for Employee Benefit Plans. MIPII invests primarily in contracts issued by major insurance companies and other approved financial institutions. Ecolab Stock Fund This fund is comprised primarily of Ecolab Inc. common stock. (Continued) 13 ECOLAB SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS, (Continued) -------------- 1. DESCRIPTION OF PLAN, (Continued): Prior to January 1, 1995, the Plan invested in certain investment funds which were no longer investment options at December 31, 1996 and 1995 (the Income Fund and Common Stock Fund). During 1994 the allocation of the participants' before-tax and after-tax savings contributions to the investment funds was selected by the participants and could be changed monthly. As of December 31, 1996, approximately 6,400 employees were participating in the Plan. At December 31, 1996, 1995 and 1994, the approximate number of participants in each investment fund was as follows: 1996 1995 1994 ---- ---- ---- Income Fund 3,500 Common Stock Fund 2,600 Fidelity Retirement Money Market Portfolio 900 700 Fidelity Government Securities Fund 1,800 1,700 Fidelity Puritan Fund 2,300 1,700 Spartan U.S. Equity Index Fund 2,900 2,500 Fidelity Magellan Fund 3,200 2,800 Fidelity Small Cap Stock Fund 2,100 1,800 Fidelity Overseas Fund 2,200 1,900 Managed Income Fund 3,500 2,900 Ecolab Stock Fund 6,400 5,800 5,600 PLAN TERMINATION: Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to provisions of ERISA. In the event of Plan termination, participants would become 100% vested in their accounts. (Continued) 14 ECOLAB SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS, (Continued) ------------ 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: The financial statements are prepared in conformity with generally accepted accounting principles and the following significant accounting policies. VALUATION OF INVESTMENTS: Investments in the Managed Income Fund are recorded at the underlying net asset value per unit, which approximates fair value. Investments in the Ecolab Stock Fund are recorded at the underlying net asset value per unit, which approximates fair value based on the quoted market price of the Company's common stock. Fidelity mutual funds are recorded at the underlying net asset value per unit, which approximates fair value based on the quoted market price of these funds. The Loan Accounts of participants are recorded at the principal value of outstanding loans, plus accrued interest. Approximately $3.6 million of assets invested in the Managed Income Fund are with an insurance company which was taken over in 1994 by regulators. As a result, the assets were segregated as of August 12, 1994 and were unavailable for investment transfers, loans, distributions or withdrawals by participants. In May 1997, a settlement was reached for all of the insurance company's contract-holders and participants to receive 100% of the principal balance plus approximately 16% as an additional interest credit. Once these amounts become available, participants can transfer their respective balance related to these assets to any of the Plan's other investment options in accordance with regular Plan terms. INTEREST AND DIVIDENDS: Interest income is recorded as earned on an accrual basis and dividend income is recorded on the ex-dividend date. NET APPRECIATION (DEPRECIATION) IN THE FAIR VALUE OF INVESTMENTS: The Plan presents in the Statements of Changes in Net Assets Available for Plan Benefits, With Fund Information the net appreciation (depreciation) in the fair value of its investments, which consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments. (Continued) 15 ECOLAB SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS, (Continued) ------------ 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (Continued): CONTRIBUTIONS: Participant before-tax and after-tax savings contributions are recorded in the period the employer makes the payroll deductions. Employer matching contributions are accrued based on participant contributions. For the 1996 Plan year, the Company's Board of Directors declared a profit sharing contribution amounting to $1,255,000 to be divided among eligible participants. No employer profit sharing contributions were made for the 1995 or 1994 Plan years. USE OF ESTIMATES: The preparation of the Plan's financial statements in conformity with generally accepted accounting principles requires the Plan Administrator to make significant estimates and assumptions that affect the reported amounts of net assets available for benefits at the date of the financial statements and the changes in net assets available for benefits during the reporting period and, when applicable, disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. RISKS AND UNCERTAINTIES: The Plan provides for various investment options in various combinations of investment funds. Investment funds are exposed to various risks, such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants' account balances and the amounts reported in the Statement of Net assets Available for Plan Benefits in future periods. DISTRIBUTIONS TO PARTICIPANTS: Distributions to participants are recorded when the distribution is made. PLAN EXPENSES: A portion of the administrative expenses of the Plan were paid by the Company. Certain asset management and administrative fees of the Plan have been charged against the Plan's investment income. (Continued) 16 ECOLAB SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS, (Continued) ------------ 3. INVESTMENTS: Investments that represent 5 percent or more of the Plan's net assets available for Plan benefits at December 31, 1996 and 1995 are summarized as follows: Fair Value Cost ----------------- ---------------- (in thousands) 1996 1995 1996 1995 ------- -------- ------- ------- Fidelity Government Securities Fund (1) $ 12,420 (1) $11,583 Fidelity Puritan Fund $27,297 12,129 $26,016 11,090 Spartan U.S. Equity Index Fund 25,598 16,978 18,921 13,436 Fidelity Magellan Fund 24,167 20,460 22,782 17,927 Managed Income Fund 39,803 37,577 39,803 37,577 Ecolab Stock Fund 148,184 108,855 77,324 63,379 (1) Investment did not comprise 5 percent or more of the Plan's net assets available for Plan benefits for this year. At December 31, 1996, the fair value of non-participant-directed investments in the Ecolab Stock Fund approximated $93,491,000. 4. TAX STATUS: The Plan constitutes a qualified trust under Section 401(a) of the Code and therefore is exempt from federal income taxes under provisions of Section 501(a). The Plan also complies with the provisions of Section 401(k) of the Code. A tax qualification letter, dated October 26, 1994, was received from the Internal Revenue Service. The letter stated that the Plan, as then designed, was in compliance with the applicable requirements of the Code. The Plan has been amended since receiving the determination letter in connection with the change in its trustee and investment managers (see Note 6). However, the Plan Administrator believes the Plan is currently designed and being operated in compliance with the applicable requirements of the Code and therefore believes the Plan is qualified and tax-exempt, as described above. Therefore, no provision for income taxes has been included in the Plan's financial statements. (Continued) 17 ECOLAB SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS, (Continued) ___________ 5. RELATED PARTY AND PARTY-IN-INTEREST TRANSACTIONS: The trustees, Fidelity in 1996 and 1995 and Mellon Bank N.A. in 1994, were authorized under contract provisions, or by ERISA regulations providing an administrative or statutory exemption, to invest in funds under their control and in securities of the Company. As of December 31, 1996 and 1995, investments in Fidelity funds totaled 49% and 50% of Plan assets, respectively. In 1996 and 1995, participant contributions were invested in the Managed Income Fund and mutual funds under the trustee's control. In 1996, there were 2,691 purchases and 1,968 sales in these various funds totaling $81,625,000 and $47,738,000, respectively. In 1995, there were 2,469 purchases and 1,624 sales in these funds totaling $115,034,000 and $68,422,000, respectively. In addition, participant and employer matching contributions were invested in the Ecolab Stock Fund consisting of Ecolab Inc. common stock and short-term investment funds under the trustee's control. In 1996, there were 342 purchases and 270 sales in this fund, totaling $29,760,000 and $19,735,000, respectively. In 1995, there were 318 purchases and 229 sales in this fund totaling $22,029,000 and $25,729,000, respectively. In 1994, temporary cash balances were invested on a daily basis in short-term investment funds under the trustee's control. In 1994, there were 457 purchases and 228 sales in the various short-term investment funds, totaling $68,276,000 and $41,907,000, respectively. In 1994 purchases, at cost, of Ecolab Inc. common stock were $13,348,000. In 1994 sales, at fair value, of Ecolab Inc. common stock were $1,945,000. 6. PLAN AMENDMENTS: A Declaration of Merger was adopted by the Company, effective January 1, 1996, to merge the assets of the Profit Sharing Retirement Plan and Trust Agreement of Kay Chemical Company and the Kay Chemical Company Section 401(k) Savings Plan into the Plan. A Declaration of Merger was also adopted by the Company, effective June 1, 1996, to merge the assets of the Profit Sharing Plan and Trust for Employees of Western Water Management, Inc. into the Plan. The assets transferred into the Plan as a result of these mergers were invested in similar investment options as under the prior plans until participants were able to direct their accounts into one or more of the Plan's available investment options. (Continued) 18 ECOLAB SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS, (Continued) ___________ 6. PLAN AMENDMENTS, (Continued): The Plan was amended, effective in 1995, to provide for the change in its trustee and investment managers to Fidelity. As a result of these changes, the Plan increased its investment options available to Plan participants from three to nine, provided for daily processing and valuation of accounts and the ability to handle the majority of participant transactions by telephone. The Plan was also amended, effective in 1994, to provide for the immediate eligibility of employees to participate in the Plan along with other minor modifications necessary to conform with law changes or to allow for efficient and equitable Plan administration. As of January 1, 1997, the Huntington Laboratories, Inc. Savings and Retirement Plan was merged into and became a part of the Plan under a Declaration of Merger adopted in December 1996. Assets of $4,907,000 were transferred to the Plan subsequent to December 31, 1996. 19 SUPPLEMENTAL SCHEDULES ECOLAB SAVINGS PLAN LINE 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES as of December 31, 1996 ----------------- EIN 41-0231510 Plan Number: 003 (Dollars in thousands)
(c) Description of Investment, (b) Including Maturity Date, (e) Identity of Issue, Borrower, Rate of Interest, Collateral, (d) Current (a) Lessor or Similar Party Par or Maturity Value Cost Value - --- --------------------------- ---------------------------- -------- -------- * Fidelity Management and Fidelity Retirement Money Research Co. Market Portfolio, 7,855,252 units $ 7,855 $ 7,855 * Fidelity Management and Fidelity Government Research Co. Securities Fund, 1,343,642 units 12,811 13,020 * Fidelity Management and Fidelity Puritan Fund, Research Co. 1,583,351 units 26,016 27,297 * Fidelity Management and Spartan U.S. Equity Research Co. Index Fund, 949,848 units 18,921 25,598 * Fidelity Management and Fidelity Magellan Fund, Research Co. 299,649 units 22,782 24,167 * Fidelity Management and Fidelity Small Cap Stock Research Co. Fund, 730,560 units 8,667 9,906 * Fidelity Management and Fidelity Overseas Fund, Research Co. 337,062 units 9,516 10,395 * Fidelity Management Managed Income Fund, Trust Co. 39,803,244 units 39,803 39,803 * Ecolab Inc. Ecolab Stock Fund, 8,259,962 units 77,324 148,184 * Participant loans Participant loans due 1/97-12/2006 (stated interest rates ranging from 6.0% to 11.5%) 13,679 -------- -------- $223,695 $319,904 -------- -------- -------- --------
* Party-in-interest 20 ECOLAB SAVINGS PLAN LINE 27b - SCHEDULE OF LOANS OR FIXED INCOME OBLIGATIONS for the year ended December 31, 1996 ------------------- EIN 41-0231510 Plan Number: 003 (Dollars)
Amount Received (c) During Year (f) Overdue Amount (b) Original ---------------------- Unpaid (g) --------------------- Indemtity of Loan (d) (e) Balance at Description (h) (i) (a) Obligor Amount Principal Interest Year End of Loan Principal Interest - --- ------------ -------- --------- -------- ---------- ----------- --------- -------- Plan Participant - Participant Loan: * WIL 14 $10,500 $299 $301 $9,063 General purpose note $9,063 $ - dated 2/28/94, 6.0% annual interest rate and scheduled maturity of 2/16/99. Plan Participant - Participant Loan: * SAU 06 16,000 - - 14,761 General purpose note 14,761 - dated 1/31/94, 6.0% annual interest rate and scheduled maturity of 1/16/99.
* Denotes party-in-interest 21 ECOLAB SAVINGS PLAN LINE 27d - SCHEDULE OF REPORTABLE TRANSACTIONS for the year ended December 31, 1996 ___________ EIN 41-0231510 Plan Number: 003
(Dollars in thousands) (h) Current Value of (b) (c) (d) (g) Asset on (i) (a) Description Purchase Selling Cost of Transaction Net Gain Identity of Party Involved of Asset Price Price Asset Date or (Loss) - -------------------------- -------------------------- -------- ------- ------- ----------- --------- Series of Transactions: - ----------------------- Fidelity Management Trust Company Fidelity Retirement Money Market Portfolio $10,019 $10,019 $10,019 Fidelity Retirement Money Market Portfolio $ 8,287 8,287 8,287 $ - Fidelity Puritan Fund 25,740 25,740 25,740 Fidelity Puritan Fund 11,097 10,813 11,097 284 Spartan U.S. Equity Index Fund 10,095 10,095 10,095 Spartan U.S. Equity Index Fund 5,233 4,610 5,233 623 Fidelity Magellan Fund 12,343 12,343 12,343 Fidelity Magellan Fund 7,488 7,554 7,488 (66) Managed Income Fund 10,542 10,542 10,542 Managed Income Fund 8,316 8,316 8,316 -
(Continued) 22 ECOLAB SAVINGS PLAN LINE 27d - SCHEDULE OF REPORTABLE TRANSACTIONS for the year ended December 31, 1996, (Continued) ___________ EIN 41-0231510 Plan Number: 003
(Dollars in thousands) (h) Current Value of (b) (c) (d) (g) Asset on (i) (a) Description Purchase Selling Cost of Transaction Net Gain Identity of Party Involved of Asset Price Price Asset Date or (Loss) - -------------------------- -------------------------- -------- ------- ------- ----------- --------- Ecolab Inc./Fidelity Management Trust Co. Ecolab Stock Fund $29,760 $29,760 $29,760 Ecolab Stock Fund $19,735 15,815 19,735 $3,920 Single Transactions: - -------------------- Fidelity Management Trust Company Fidelity Puritan Fund 14,720 14,720 14,720
NOTE (1): The following columns of Schedule 27d were excluded as they are not applicable: (e) - Lease Rental and (f) - Expenses Incurred with Transaction. NOTE (2): Series of transactions are inclusive of single transactions for each respective fund. 23 ECOLAB SAVINGS PLAN EXHIBITS The following documents are filed as exhibits to this Report: Exhibit No. Document - ----------- -------- (23) Consent of Independent Accountants. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. ECOLAB SAVINGS PLAN DATE June 27, 1997 By:/s/Diana D. Lewis ------------- ---------------------------------------------------- Diana D. Lewis Vice President - Human Resources of Ecolab Inc. (Plan Administrator) 24 EXHIBIT INDEX Exhibit No. Document Method of Filing - ----------- -------- ---------------- (23) Consent of Independent Accountants. Filed herewith electronically EX-23 2 CONSENT OF INDEPENDENT ACCOUNTANTS Exhibit 23 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the Registration Statements of Ecolab Inc. on Form S-8 (Registration Nos. 2-90702, 33-18202, 33-55986 and 33-56101) of our report dated June 11, 1997 on our audits of the financial statements of the Ecolab Savings Plan as of December 31, 1996 and 1995 and for the years ended December 31, 1996, 1995 and 1994, and related supplemental schedules as of and for the year ended December 31, 1996, which report is included in this Annual Report on Form 11-K. We also consent to the reference to our firm under the caption "Interests of Named Experts and Counsel" in Registration No. 33-56101, as it relates to the financial statements and related supplemental schedules referred to above and included in this Annual Report on Form 11-K. /s/Coopers & Lybrand L.L.P. COOPERS & LYBRAND L.L.P. Saint Paul, Minnesota June 27, 1997 -----END PRIVACY-ENHANCED MESSAGE-----