-----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, RFq5uAQo18zVZZ+T6dktR+52yFC0ebASI+ez0fTB72wzzlJfEmtUn/KhOX0NzZjl nOJamIVQYUZiXyGK/B2bvQ== 0000069598-96-000022.txt : 19960816 0000069598-96-000022.hdr.sgml : 19960816 ACCESSION NUMBER: 0000069598-96-000022 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: CSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NALCO CHEMICAL CO CENTRAL INDEX KEY: 0000069598 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS CHEMICAL PRODUCTS [2890] IRS NUMBER: 361520480 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04957 FILM NUMBER: 96612289 BUSINESS ADDRESS: STREET 1: ONE NALCO CTR CITY: NAPERVILLE STATE: IL ZIP: 60563 BUSINESS PHONE: 7083051000 MAIL ADDRESS: STREET 1: ONE NALCO CENTER CITY: NAPERVILLE STATE: IL ZIP: 60563-1198 10-Q 1 NALCO CHEMICAL COMPANY INDEX
Page No. Part I. Financial Information: Item 1. Financial Statements Condensed Consolidated Statements of Financial Condition -June 30, 1996 (Unaudited) and December 31, 1995........................................2 Condensed Consolidated Statements of Earnings (Unaudited) - Three Months and Six Months Ended June 30, 1996 and 1995...................................3 Condensed Consolidated Statements of Cash Flows (Unaudited) - Three Months and Six Months Ended June 30, 1996 and 1995...................................4 Notes to Condensed Consolidated Financial Statements (Unaudited)....................................................5 Report of Independent Accountants on Review of Interim Financial Information...................................8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.............................................................9 Part II. Other Information: Item 6. Exhibits and Reports on Form 8-K...............................................12 Exhibit (3)(ii)- By-Laws.....................................................................13 Exhibit (11) - Statement Re: Computation of Earnings Per Share................................................26 Exhibit (15) - Awareness Letter of Independent Accountants..........................................................28 Exhibit (27) - Financial Data Schedule.......................................................29 Signatures 30
- 17 - PART I. FINANCIAL INFORMATION NALCO CHEMICAL COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION June 30, December 31, 1996 1995 (Dollars in millions) (Unaudited) (Note) ASSETS Current assets Cash and cash equivalents $ 37.7 $ 38.1 Accounts receivable, less allowances of $4.3 and $4.4, respectively 230.6 220.3 Inventories Finished products 62.6 62.4 Materials and work in process 32.1 29.0 ------- -------- 94.7 91.4 Prepaid expenses, taxes and other current assets 25.2 20.2 Discontinued operations - net 45.4 - -------- ------ Total current assets 433.6 370.0 Investment in and advances to partnership 131.1 126.2 Discontinued operations-net - 47.1 Goodwill and other intangibles, less accumulated amortization of $20.9 and $18.6, respectively 201.9 131.0 Other assets 163.1 175.8 Property, plant and equipment 1,143.3 1,101.6 Less allowances for depreciation (613.3) (581.6) -------- -------- 530.0 520.0 -------- -------- $1,459.7 $1,370.1 ======== ======== LIABILITIES/SHAREHOLDERS' EQUITY Current liabilities Short-term debt $ 78.6 $ 95.0 Accounts payable 107.8 126.9 Accrued formation and consolidation expenses 19.2 22.7 Other current liabilities 111.8 111.2 -------- -------- Total current liabilities 317.4 355.8 Long-term debt 306.7 221.5 Deferred income taxes 52.6 53.3 Accrued postretirement benefits 98.3 97.7 Other liabilities 63.9 61.5 Shareholders' equity 620.8 580.3 -------- -------- $1,459.7 $1,370.1 ======== ======== Note: The Statement of Financial Condition at December 31, 1995 has been derived from the audited financial statements at that date. See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited). NALCO CHEMICAL COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
Three Months Ended Six Months Ended (Amounts in millions, June 30 June 30 except per share data) 1996 1995 1996 1995 ------------ ------ ----- ----- Net sales $318.6 $302.3 $620.5 $594.8 Operating costs and expenses Cost of products sold 139.6 132.1 274.6 260.6 Operating expenses 127.8 119.7 250.9 235.0 ------ ------ ------ ------ 267.4 251.8 525.5 495.6 ------ ------ ------ ------ Operating earnings 51.2 50.5 95.0 99.2 Other income (expense) Interest and other income (0.3) 2.0 0.2 3.3 Interest expense(3.3) (4.3) (7.0) (8.4) Equity in earnings of partnership 6.6 2.6 13.0 8.2 ------ ------ ------ ------ Earnings from continuing operations before income taxes 54.2 50.8 101.2 102.3 Income taxes 19.7 18.4 36.7 37.0 ------ ------ ------ ------ Earnings from continuing operations 34.5 32.4 64.5 65.3 Discontinued operations, net of income taxes 2.5 4.7 4.3 9.6 ------ ------ ------ ------ Net earnings $ 37.0 $ 37.1 $ 68.8 $ 74.9 ====== ====== ====== ====== Per common share - Primary Earnings from continuing operations $ 0.47 $ 0.44 $ 0.87 $ 0.88 Discontinued operations, net of income taxes 0.03 0.07 0.06 0.14 ------ ------ ------ ------ Net earnings $ 0.50 $ 0.51 $ 0.93 $ 1.02 ====== ====== ====== ====== Per common share - Fully diluted Earnings from continuing operations $ 0.44 $ 0.41 $ 0.82 $ 0.82 Discontinued operations, net of income taxes 0.03 0.06 0.05 0.13 ------ ------ ------ ------ Net earnings $ 0.47 $ 0.47 $ 0.87 $ 0.95 ====== ====== ====== ====== Per common share - Cash dividends $ 0.25 $ 0.25 $ 0.50 $ 0.49 ====== ====== ====== ====== Average primary shares outstanding (in thousands) 67,633 67,961 67,574 68,159 Average fully diluted shares outstanding (in thousands) 75,586 76,030 75,546 76,242
NALCO CHEMICAL COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended Six Months Ended June 30 June 30 (Dollars in millions) 1996 1995 1996 1995 -------- ------- -------- ------ Cash provided by (used for) operating activities Net earnings $ 37.0 $ 37.1 $ 68.8 $ 74.9 Adjustments not affecting cash Depreciation and amortization 23.7 22.2 47.8 43.8 Other, net 0.8 (0.1) (3.0) (13.2) Changes in current assets and liabilities (16.5) (22.4) (33.4) (16.0) ------ ------ ------ ------ Net cash provided by operations 45.0 36.8 80.2 89.5 ------ ------ ------ ------ Investing activities Additions to property, plant and equipment (21.3) (33.9) (48.6) (61.0) Business purchase (81.8) - (81.8) - Other 4.0 (6.3) 7.3 (14.2) ------ ------ ------ ------- Net cash used for investing activities (99.1) (40.2) (123.1) (75.2) ------- ------ ------ ------ Financing activities Cash dividends (19.7) (19.6) (39.4) (38.8) Changes in short-term debt (25.8) 22.6 (19.3) 34.8 Changes in long-term debt 98.4 1.0 96.5 0.9 Common stock reacquired - (4.5) - (23.3) Other 0.9 2.0 3.7 7.5 ------ ------ ------ ------ Net cash provided by (used for)financing activities 53.8 1.5 41.5 (18.9) ------ ------ ------ ------ Effects of foreign exchange rate changes 0.3 (0.8) 1.0 1.0 ------ ------ ------ ------ Increase (decrease) in cash and cash equivalents $ - $ (2.7) $ (0.4) $ (3.6) ====== ====== ====== ======
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited). NALCO CHEMICAL COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) June 30, 1996 NOTE A -- BASIS OF PRESENTATION The accompanying condensed consolidated financial statements have been prepared, without audit, in accordance with the instructions to Form 10-Q and therefore do not include all information and footnotes necessary for a fair presentation of financial position, results of operations, and cash flows in conformity with generally accepted accounting principles. Financial information as of December 31 has been derived from the audited financial statements of the Company, but does not include all disclosures required by generally accepted accounting principles. It is the opinion of management that the unaudited condensed consolidated financial statements include all adjustments necessary to fairly state the results of operations for the three month and six month periods ended June 30, 1996 and 1995. The results of interim periods are not necessarily indicative of results to be expected for the year. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1995. The unaudited condensed consolidated financial statements and the related notes have been reviewed by Nalco's independent accountants, Price Waterhouse LLP. The Independent Accountants' Review Report is included on page 8. NOTE B -- SHAREHOLDERS' EQUITY Shareholders' equity may be further detailed as follows:
June 30, December 31, (Dollars in millions, 1996 1995 ------------ -------- except per share figures) Preferred stock par value $1.00 per share; authorized 2,000,000 shares; Series B ESOP Convertible Preferred Stock - 396,311 shares at June 30, 1996 and 399,400 shares at December 31, 1995 $ 0.4 $ 0.4 Series A Junior Participating Preferred Stock - none issued - - Capital in excess of par value of shares 190.2 191.7 Unearned ESOP compensation (159.6) (166.6) ------- ------- 31.0 25.5 Common stock - par value $.1875 per share; authorized 200,000,000 shares; issued 80,287,568 shares 15.1 15.1 Capital in excess of par value of shares 28.1 27.8 Retained earnings 945.6 916.2 Minimum pension liability adjustment (6.0) (6.0) Foreign currency translation adjustments (48.1) (48.0) Common stock reacquired - at cost 12,882,103 shares at June 30, 1996 and 13,163,155 shares at December 31, 1995 (344.9) (350.3) ------- ------- Total shareholders' equity $ 620.8 $ 580.3 ======= =======
NOTE C - FORMATION AND CONSOLIDATION EXPENSES The Company adopted a worldwide consolidation plan for manufacturing and support operations during 1994, primarily as a result of the formation of the Nalco/Exxon Energy Chemicals, L.P. joint venture partnership. The production volume reduction caused by redundancies associated with the joint venture formation required the Company to downsize, close, and consolidate operations. The Company's South Chicago plant was closed, and several European and Latin American manufacturing and support operations have been or will be closed or downsized. In addition, certain support functions are being regionalized on a pan European basis in order to more efficiently serve customers. Certain redundant assets that were not contributed to the joint venture have been written down to net realizable value, and assets associated with other programs have been or will be written off. All of these activities are in process, and should be largely completed by the end of 1996. As a result of these plans, the Company recorded a pretax provision of $68 million ($54 million after tax, or 70 cents per share on a fully diluted basis) in 1994. Included in this provision was the cost of termination benefits for the elimination of over 400 positions, primarily in the United States and Europe, including manufacturing and support personnel, totaling approximately $27 million in cash. Costs associated with facility closings and the disposition of assets that are no longer productive total approximately $24 million, including $21 million for non-cash asset write-offs and $3 million in cash payments associated with asset disposals. The balance of the pretax costs represented anticipated cash payments for post-closure plant environmental remediation, legal and consulting fees, and other exit costs. Cash expenditures charged against the provision to date have been funded through operating cash flows, and the Company anticipates that future cash expenditures will be similarly funded. A tax benefit of $14 million, net of tax costs associated with the contribution of assets to various joint venture entities, was included in the Company's 1994 income tax provision related to the formation and consolidation expenses. Charges against the provision for formation and consolidation expenses totaled $25.0 million in 1994, $20.5 million in 1995, and $3.5 million in the first half of 1996. Over 300 employees had been terminated as of June 30, 1996. The following table sets forth the details of activity in the accrual for formation and consolidation expenses for the first half of 1996:
Balance at Balance at December 31, Cash Noncash June 30, (in millions) 1995 Payments Charges 1996 - -------------------------------------------------------------------------------------------------------- Termination benefits $ 8.1 $(1.6) $ - $ 6.5 Asset write-downs 7.1 (0.1) (1.2) 5.8 Legal and consulting 1.5 (0.5) - 1.0 Environmental remediation 6.0 (0.1) - 5.9 - ----------------------------------------------------------------------------------------------------------- Total $22.7 $(2.3) $(1.2) $19.2 ===========================================================================
NOTE D -- IMPAIRMENT OF LONG-LIVED ASSETS Effective January 1, 1996, the Company implemented Statement of Financial Accounting Standards No. 121 (SFAS 121), "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," which requires companies to review long-lived assets, including identifiable intangibles and goodwill, for indicators of impairment. The effect of adopting SFAS 121 was not material. NOTE E -- ACQUISITION On June 28, 1996, the Company completed the acquisition of Diversey Water Technologies, a supplier for the middle market water treatment business. The purchase price was approximately $82 million, and the Company anticipates that this acquisition will strengthen the Company's business in North America and Europe. The pro forma impact as if this acquisition had occurred at the beginning of 1996 is not material. The $70.9 million increase in goodwill and other intangibles is mainly attributable to the acquisition of Diversey Water Technologies. The Company is in the process of evaluating the assets that were purchased and the liabilities that were assumed in this acquisition and accordingly will make any necessary adjustments to the recorded value of the acquired assets and liabilities. REPORT OF INDEPENDENT ACCOUNTANTS ON REVIEW OF INTERIM FINANCIAL INFORMATION To the Board of Directors and Shareholders of Nalco Chemical Company We have reviewed the accompanying interim financial information of Nalco Chemical Company and consolidated subsidiaries as of June 30, 1996, and for the three month and six month periods then ended. This interim financial information is the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying financial information for it to be in conformity with generally accepted accounting principles. We previously audited in accordance with generally accepted auditing standards, the statement of consolidated financial condition as of December 31, 1995, and the related statements of consolidated earnings, of cash flows and of common shareholders' equity for the year then ended (not presented herein), and in our report dated February 2, 1996, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated statement of financial condition as of December 31, 1995, is fairly stated in all material respects in relation to the statement of consolidated financial condition from which it has been derived. Price Waterhouse LLP By: Robert R. Ross Engagement Partner July 25, 1996 Chicago, Illinois Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Second Quarter 1996 Operations Compared to Second Quarter 1995 On June 28, 1996, the Company completed the acquisition of Diversey Water Technologies, a supplier for the middle market water treatment business. The purchase price was approximately $82 million. It is anticipated that this acquisition will strengthen the Company's business in North America and Europe. The pro forma impact as if this acquisition had occurred at the beginning of 1996 is not material. On February 2, 1996, Nalco announced its plan to dispose of its superabsorbent chemicals business. The results of this business are now reported as discontinued operations. The Unaudited Condensed Consolidated Statements of Earnings presented in Part I, Item 1 of this Form 10-Q reflect the superabsorbent chemicals business as discontinued operations. During the second quarter, the Company agreed in principle to sell its discontinued superabsorbent chemical business. The sale is expected to be completed this year and result in a small gain. Sales from continuing operations increased by 5 percent over last year, with four of the five divisions reporting improved results. This increase would have been 7 percent, excluding 1995 sales of $3.7 million related to business now with the Nalco/Exxon joint venture. Most of this amount was included last year in the Company's Pacific Division sales. Sales by the Water and Waste Treatment Division rose 4 percent over last year, with increases reported by all four groups in the Division. The Process Chemicals Division reported an 11 percent increase over last year which reflects double-digit gains by the Mining and Mineral Processing Group and the Pulp and Paper Group. The Latin American Division reported a 17 percent sales increase, led by the Company's subsidiary in Argentina. Double-digit gains were also posted by operations in Chile, Colombia, Mexico, and Venezuela. The Pacific Division reported a sales increase of 7 percent. However, excluding amounts from 1995 sales for business now with the Nalco/Exxon joint venture, Pacific Division sales were up 17 percent. Double-digit gains were posted by operations in Australia, Hong Kong/China, Indonesia, and Korea. Sales by Nalco's former affiliate company in India, which became a majority-owned subsidiary in the fourth quarter of 1995, contributed to growth in the region. Sales reported by the Company's European Division were down 3 percent, with this year's stronger U.S. dollar accounting for most of the decline. The gross margin of 56.2% was slightly lower than last year's rate of 56.3%. Improved European margins offset slight declines in margins for the Company's North American, Latin American, and Pacific operations. Operating expenses (selling, service, research, etc.) were up $8.1 million or 7 percent over the second quarter of last year primarily because of additions to the sales force during 1995. Interest and other income decreased $2.3 million from a year ago. Exchange losses related to the devaluation of the Venezuelan bolivar, a decrease in interest income because of lower invested balances, and a reduction in equity in earnings of affiliates due to Nalco India becoming a consolidated subsidiary accounted for most of the decline. The change in interest expense reflects slightly lower interest rates in the U.S. from a year ago, and lower interest expense reported by operations in Brazil and Mexico. Nalco's equity in earnings of Nalco/Exxon for the second quarter of 1996 was $6.6 million, an increase of $4.0 million over the second quarter of 1995 which reflected improved operating efficiencies and industry conditions. The effective income tax rate for the second quarter 1996 was 36.3 percent, compared to the 36.2 percent effective tax rate that was reported for the second quarter 1995. Earnings from continuing operations as a percent to sales was 10.8 percent for the second quarter 1996, a slight improvement compared to the 10.7 percent for the second quarter 1995. Second quarter 1996 fully diluted earnings per share from continuing operations was 44 cents compared to 41 cents for the second quarter 1995. Net earnings per share on a fully diluted basis for the second quarter 1996 was 47 cents, equal to the amount reported last year. First Half 1996 Operations Compared to First Half 1995 Sales from continuing operations increased by 4 percent over last year with four of the five divisions reporting improvements. Excluding 1995 sales of $8.2 million related to business now with the Nalco/Exxon joint venture, the increase would have been 6 percent. Over 75 percent of the $8.2 million was included last year in the Company's Pacific Division sales. The Water and Waste Treatment Division reported a 2 percent gain, with modest improvements reported by all four groups in the Division. Sales by the Process Chemicals Division were up 11 percent over last year, with the Mining and Mineral Processing and Pulp and Paper Groups both reporting double-digit increases. The Latin American Division reported a 16 percent sales increase, with all operations except Brazil and Colombia posting double-digit gains. Sales by the Pacific Division were up 2 percent over reported sales for last year, which reflected business that was transferred as of the beginning of 1996 to the Nalco/Exxon joint venture. Excluding those amounts from 1995 sales, Pacific Division sales were up 13 percent, as solid double-digit improvements were posted by operations in Indonesia and Korea. Sales by Nalco's former affiliate company in India, which became a majority-owned subsidiary in the fourth quarter of 1995, also contributed to the improvement in the Pacific Division. Sales by the Europe Division were 2 percent lower than a year ago, reflecting the stronger U.S. dollar compared to last year and business now with the Nalco/Exxon joint venture. The gross margin was 55.7 percent, down 0.5 percentage points from last year's rate of 56.2 percent. Higher manufacturing expenses and one-time start-up costs for a new production facility in North America and lower margins in the Latin American and Pacific Divisions accounted for the decrease from last year. Operating expenses (selling, service, research, etc.) increased $15.9 million or 7 percent over the first half of last year, primarily to support growth in the Pacific, Latin America, and the paper market. Interest and other income decreased $3.1 million from a year ago. Contributing to this decline were translation losses resulting from the devaluation of the Venezuelan bolivar during the second quarter of 1996, lower interest income reflecting a decrease in invested balances, and a reduction in equity in earnings of affiliates due to Nalco India becoming a consolidated subsidiary. Interest expense was down $1.4 million from the first half of last year, which was mainly attributable to the Company's Brazilian and Mexican subsidiaries and lower U.S. interest rates. Nalco's equity in earnings of Nalco/Exxon for the first half of 1996 was $13.0 million, a $4.8 million increase over the $8.2 million reported last year. The effective income tax rate was 36.3 percent for the first half 1996, compared to the effective tax rate of 36.2 percent for the same period last year. Earning from continuing operations as a percent to sales was 10.4 percent for the first half of 1996, compared to 11.0 percent for the first half of 1995. Fully diluted earnings per share from continuing operations was 82 cents for the first half of 1996 and equaled last year's amount. Net earnings per share on a fully diluted basis for the first half of 1996 was 87 cents compared to last year's 95 cents per share. Changes in Financial Condition The June 30, 1996 Unaudited Condensed Consolidated Statement of Financial Condition reflects the acquisition of Diversey Water Technologies on June 28, 1996 for a purchase price of $82 million. The final valuation of assets that were acquired in this acquisition has not been determined and may differ slightly from the valuations that have been included in the June 30, 1996 Unaudited Condensed Consolidated Statement of Financial Condition. Cash and cash equivalents decreased by $0.4 million during the first half of 1996 as detailed in the Unaudited Condensed Consolidated Statement of Cash Flows. Days sales outstanding were 63 days at June 30, 1996 compared to 64 days at December 31, 1995. Working capital at June 30, 1996 totaled $116.2 million, up from the $14.2 million at last year end. The reclassification of the net assets of the discontinued superabsorbent chemical business to current assets and decreases in accounts payable and short-term debt accounted for over two-thirds of this change. The ratio of current assets to current liabilities was 1.4 to 1 at June 30, 1996 compared to a current ratio of 1 to 1 at December 31, 1995. The $70.9 million increase in goodwill and other intangibles is mainly attributable to the acquisition of Diversey Water Technologies. The Company is in the process of evaluating the assets that were purchased and the liabilities that were assumed in this acquisition and accordingly will make any necessary adjustments to the recorded value of the acquired assets and liabilities. The acquisition of Diversey Water Technologies was financed primarily by the issuance of commercial paper (30-day notes). At June 30, 1996, $90.0 million of the commercial paper outstanding has been classified as long-term debt because it currently is management's intent to refinance these obligations on a long-term basis. Capital investments totaled $48.6 million for the first half 1996. Domestic projects accounted for nearly two-thirds of that amount, with major expenditures for PORTA-FEED(R) units and automobiles for the sales force. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) The following exhibits are included herein: (3)(ii) By-Laws (11) Statement Re: Computation of Earnings Per Share (15) Awareness Letter of Independent Accountants (27) Financial Data Schedule (b) The Registrant has filed a report on Form 8-K dated June 24, 1996 relating to the adoption of a Shareholder Rights Plan,effective September 1, 1996, which replaces the ShareholderRights Plan that expires August 31, 1996 and amendments to the Company By-laws, as adopted June 20, 1996. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NALCO CHEMICAL COMPANY (Registrant) Date: August 13, 1996 /s/ W. E. BUCHHOLZ ----------------------- W. E. Buchholz - Vice President, Chief Financial Officer Date: August 13, 1996 /s/ S. J. GIOIMO -------------------- S. J. Gioimo - Secretary EX-11 2 EXHIBIT (11) STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE NALCO CHEMICAL COMPANY AND SUBSIDIARIES
Three Months Ended Six Months Ended (Amounts in thousands, June 30 June 30 except per share data) 1996 1995 1996 1995 ------ ------ ------ ----- Primary Average shares outstanding 67,360 67,518 67,287 67,695 Net effect of dilutive stock options and shares contingently issuable-based on the treasury stock method using average market price 273 443 287 464 ------- ------- ------- ------- TOTALS 67,633 67,961 67,574 68,159 ======= ======= ======= ======= Earnings from continuing operations $ 34,470 $ 32,464 $ 64,478 $ 65,297 Earnings discontinued operations, net of income taxes 2,514 4,708 4,279 9,646 -------- -------- -------- -------- Net earnings 36,984 37,172 68,757 74,943 Preferred stock dividends, net of taxes (2,842) (2,804) (5,697) (5,620) -------- -------- -------- -------- Net earnings to common shareholders $ 34,142 $ 34,368 $ 63,060 $ 69,323 ======== ======== ======== ======== Per share amounts Earnings from continuing operations $ 0.47 $ 0.44 $ 0.87 $ 0.88 Earnings from discontinued operations, net of taxes 0.03 0.07 0.06 0.14 ------- ------- ------- ------- Net earnings to common shareholders $ 0.50 $ 0.51 $ 0.93 $ 1.02 ======= ======= ======= =======
EXHIBIT (11) STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE NALCO CHEMICAL COMPANY AND SUBSIDIARIES
Three Months Ended Six Months Ended (Amounts in thousands, June 30 June 30 except per share data) 1996 1995 1996 1995 ------ ------ ------ ----- Fully Diluted Average shares outstanding 67,360 67,518 67,287 67,695 Average dilutive effect of assumed conversion of ESOP convertible Preferred shares 7,948 8,049 7,965 8,062 Additional shares assuming exercise of dilutive stock options and shares contingently issuable-based on the treasury stock method using the quarter-end market price, if higher than average market price 278 463 294 485 -------- -------- -------- -------- TOTALS 75,586 76,030 75,546 76,242 ======== ======== ======== ======== Earnings from continuing operations $ 34,470 $ 32,464 $ 64,478 $ 65,297 Earnings from discontinued operations, net of income taxes 2,514 4,708 4,279 9,646 ------- -------- -------- -------- Net earnings 36,984 37,172 68,757 74,943 Additional ESOP contribution resulting from assumed conversion, net of taxes (1,132) (1,152) (2,273) (2,358) Tax adjustment on assumed common dividends (231) (196) (461) (401) -------- -------- -------- -------- Net earnings to common shareholders $ 35,621 $ 35,824 $ 66,023 $ 72,184 ======== ======== ======== ======== Per share amounts: Earnings from continuing operations $ 0.44 $ 0.41 $ 0.82 $ 0.82 Earnings from discontinued operations, net of income taxes 0.03 0.06 0.05 0.13 ------- ------- ------- ------- Net earnings to common shareholders $ 0.47 $ 0.47 $ 0.87 $ 0.95 ======= ======= ======= =======
EX-15 3 EXHIBIT (15) AWARENESS LETTER OF INDEPENDENT ACCOUNTANTS Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Dear Sirs: We are aware that Nalco Chemical Company has included our report dated July 25, 1996 (issued pursuant to the provisions of Statement on Auditing Standards No. 71) in the Prospectuses constituting part of its Registration Statements on Form S-3 (Nos. 33-57363, 33-53111, 33-9934, and 2-97721) and Form S-8 (Nos. 333-06955, 333-06963, 33-54377, 33-38033, 33-38032, 33-29149, 2-97721, 2-97131 and 2-82642). We are also aware of our responsibilities under the Securities Act of 1933. Yours very truly, Price Waterhouse LLP By: Robert R. Ross Engagement Partner August 13, 1996 Chicago, Illinois EX-3 4 16 NALCO CHEMICAL COMPANY BY-LAWS ARTICLE I OFFICES 1 Section 1. Principal Office. The principal office of the Corporation shall be in the City of Naperville, DuPage County, State of Illinois. Section 2. Registered Office. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 3. Other Offices. The Corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation may require. ARTICLE II STOCKHOLDER MEETINGS Section 1. Annual Meeting. The Annual Meeting of Stockholders shall be held on the first Monday of May of each year at 10:00 a.m., or at such other date and time as shall be designated by the Board of Directors and stated in the notice of meeting, for the purpose of electing directors and for transacting such other business as may properly come before the meeting. If the date fixed for the Annual Meeting shall be a legal holiday, such meeting shall be held on the next succeeding business day. If the election of directors shall not be held on the day designated herein for any annual meeting of stockholders, or at any adjournment thereof, the Board of Directors shall cause the election to be held at a Special Meeting of Stockholders as soon thereafter as conveniently may be held. 2 Section 2. Special Meetings. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute, may be called only on the order of the Chairman of the Board, or of the President or of a majority of the Board of Directors. Only those matters set forth in the notice of the special meeting may be considered or acted upon at such special meeting, unless otherwise provided by law. Section 3. Place of Meeting. All meetings of the stockholders shall be held at such place as may be designated by the Board of Directors and as stated in the notice of meeting and in the absence of such designation, at the principal office of the corporation. A waiver of notice signed by stockholders entitled to vote at a meeting may designate any place for holding of such meeting. Section 4. Notice of Meeting. Written or printed notice stating the place, day, and hour of the meeting, and in case of a special meeting, the purpose or purposes for which the meeting is called, shall be mailed to or delivered to each stockholder entitled to vote at such meeting not less than 10 nor more than 60 days before the date of the meeting. 3 Section 5. Record Date. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action (other than action by written consent), the Board of Directors may fix in advance a record date which shall not be more than 60 or less than 10 days before the date of such meeting, nor more than 60 days prior to any other action. 4 Section 6. Quorum. Holders of shares having a majority of the votes of all outstanding shares of capital stock, represented in person or by proxy, shall constitute a quorum at a meeting of stockholders. In the absence of a quorum, a meeting may be adjourned from time to time without notice to the stockholders. Section 7. Proxies. At all meetings of stockholders, a stockholder entitled to vote may vote either in person or by proxy executed in writing by the stockholder or by his duly authorized attorney-in-fact. Such proxy shall be filed with the Secretary before or at the time of the meeting. No proxy shall be valid after 11 months from the date of its execution, unless otherwise provided in the proxy. Section 8. Voting Lists. The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least 10 days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. 5 Section 9. Notice of Stockholder Business at Annual Meeting. At an annual meeting of the stockholders, only such business shall be conducted as shall have been brought before the meeting (a) by or at the direction of the Board of Directors or (b) by any stockholder of the Corporation who complies with the notice procedures set forth in this Section 9. For business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the Corporation, not less than 90 days prior to the anniversary date of the prior year's annual meeting. A stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting (a) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (b) the name and address, as they appear on the Corporation's books, of the stockholder proposing such business, (c) the class and number of shares of the Corporation which are beneficially owned by the stockholder and (d) any material interest of the stockholder in such business. Notwithstanding anything in these By-laws to the contrary, no business shall be conducted at an annual meeting except in accordance with the procedures set forth in this Section 9. The Chairman of an annual meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting and in accordance with the provisions of this Section 9, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. 6 Section 10. Required Vote. Unless the question is one upon which by express provision of the Delaware General Corporation Law, the certificate of incorporation or these Bylaws a different vote is required (in which case such express provision shall govern and control the decision of such question), action by the stockholders of the Corporation shall require (a) with respect to the election of directors at a meeting of stockholders, a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors, (b) with respect to any other matter which is to be decided by stockholders at a meeting of stockholders and which matter has received the prior approval or recommendation of the Corporation's Board of Directors, the affirmative vote of holders of shares constituting a majority of the votes cast with respect to such matter, or (c) with respect to any other matter, the affirmative vote of holders of shares constituting a majority of the voting power of all of the Corporation's outstanding shares. 7 Section 11. Stockholder Vote. Each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the common stock having voting power held by such stockholder. Section 12. Consent Without a Meeting. (a) Whenever the vote of stockholders at a meeting thereof is required or permitted to be taken for or in connection with any corporate action by any provision of the statutes, the meeting and vote of stockholders may be dispensed with if the certificate of incorporation authorizes the action to be taken with the written consent of the holders of less than all of the stock who would have been entitled to vote upon the action if a meeting were held, on the written consent of the stockholders having not less than such percentage of the number of votes as may be authorized in the certificate of incorporation; provided that in no case shall the written consent be by the holders of stock having less than the minimum percentage of the vote required by statute for the proposed corporate action, and provided that prompt notice must be given to all stockholders of the taking of corporate action with a meeting. 8 (b) The record date for determining stockholders entitled to express consent to corporate action in writing without a meeting shall be fixed by the Board of Directors. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent without a meeting shall, by written notice to the Secretary, request the Board of Directors to fix a record date. Upon receipt of such a request, the Secretary shall place such request before the Board of Directors at its next regularly scheduled meeting, provided, however, that if the stockholder represents in such request that he intends, and is prepared, to commence a consent solicitation as soon as is permitted by the Securities Exchange Act of 1934, as amended, and the regulations thereunder and other applicable law, the Secretary shall as promptly as practicable call a special meeting of the Board of Directors, which meeting shall be held as promptly as practicable but in all events within ten days after the date on which the stockholder's request was received. At such regular or special meeting, the Board of Directors shall fix a record date as provided in Section 213(b) (or its successor provision) of the Delaware General Corporation Law. Should the Board of Directors fail to fix a record date as provided for in this Section 12, the record date for determining the stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the records in which proceedings of stockholders meetings are recorded, to the attention of the Secretary of the Corporation. Delivery shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by applicable law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the date on which the Board of Directors adopts the resolution taking such prior action. 9 (c) In the event of the delivery to the Corporation of written consents purporting to represent the requisite voting power to authorize or take corporate action and/or related revocations, the Secretary of the Corporation shall provide for the safekeeping of such consents and revocations and shall, as promptly as practicable, engage nationally recognized independent inspectors of elections for the purpose of promptly performing a ministerial review of the validity of the consents and revocations. No action by written consent and without a meeting shall be effective until such inspectors have completed their review, determined that the requisite number of valid and unrevoked consents has been obtained to authorize or take the action specified in the consents, and certified such determination for entry in the records of the Corporation kept for the purpose of recording the proceedings of meeting of stockholders. ARTICLE III DIRECTORS Section 1. Function of Board. The business of the Corporation shall be managed by or under the direction of its Board of Directors which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these By-laws directed or required to be exercised or done by the stockholders. 10 Section 2. Number of Directors. The Board of Directors shall consist of not less than seven (7) nor more than fifteen (15) directors, the precise number of directors to be designated from time to time by resolution adopted by the affirmative vote of a majority of the entire Board of Directors, and in the absence of such designation the number shall be eleven (11). The directors shall be divided into three classes as nearly equal in number as possible, designated Class I, Class II and Class III. At the 1984 Annual Meeting of Stockholders, Class I directors shall be elected for a one-year term, Class II directors for a two-year term and Class III directors for a three-year term. At each succeeding Annual Meeting of Stockholders beginning in 1985, successors to the class of directors whose term expires at that Annual Meeting shall be elected for a three-year term. If the number of directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible, but in no case shall a decrease in the number of directors shorten the term of any incumbent director. A director shall hold office until the annual meeting for the year in which his term expires or until his successor has been elected and qualified. Directors need not be stockholders. No director of the corporation shall be removed from office with or without cause unless such removal is approved either by the holders of three-fourths of the shares of common stock of the corporation outstanding at the time a determination is made or by the affirmative vote of three-fourths of the directors in office at the time a determination is made. This section of the By-laws shall not be amended without either the approval of the holders of three-fourths of the common stock outstanding at the time of the amendment or the affirmative vote of three-fourths of the directors in office at the time of the amendment. 11 Section 3. Notice of Stockholder Nominees. Only persons who are nominated in accordance with the procedures set forth in these By-laws shall be eligible for election as directors. Nominations of persons for election to the Board of Directors of the Corporation may be made at a meeting of stockholders (a) by or at the direction of the Board of Directors or (b) by any stockholder of the Corporation entitled to vote for the election of Directors at the meeting who complies with the notice procedures set forth in this Section 3. Such nominations, other than those made by or at the direction of the Board of Directors, shall be made pursuant to timely notice in writing to the Secretary of the Corporation. To be timely, a stockholder's notice shall be delivered to or mailed and received at the principal executive offices of the Corporation not less than 90 days prior to the anniversary date of the prior year's annual meeting. Such stockholder's notice shall set forth (a) as to each person whom the stockholder proposes to nominate for election or re-election as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected); and (b) as to the stockholder giving the notice (i) the name and address, as they appear on the Corporation's books, of such stockholder and (ii) the class and number of shares of the Corporation which are beneficially owned by such stockholder. At the request of the Board of Directors any person nominated by the Board of Directors for election as a director shall furnish to the Secretary of the Corporation that information required to be set forth in a stockholder's notice of nomination which pertains to the nominee. No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in the By-laws. The Chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the procedures prescribed by these By-laws, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded. 12 Section 4. Vacancies of Directors. The term of a director elected by the stockholders to fill a newly created directorship or other vacancy shall expire at the same time as the terms of the other directors of the class for which the new directorship is created or in which the vacancy occurred. Any vacancy on the Board of Directors that results from an increase in the number of directors and any other vacancy occurring in the Board of Directors may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. Any director so elected by the Board of Directors shall, without regard to the class in which the vacancy occurred, hold office until the next Annual Meeting of Stockholders and until his successor is elected and qualified. Section 5. Meetings of the Board of Directors. The Board of Directors of the Corporation may hold meetings, both regular and special, either within or without the State of Delaware. 13 Section 6. Annual Board Meeting. The Annual Board Meeting of the Corporation shall be held on the day of the Annual Meeting of Stockholders for the purpose of the organization of the Board, the election and appointment of officers for the ensuing year, and for the transaction of such other business as may be properly brought before such meeting. In the event such meeting is not held at the time and place so fixed by these By-laws, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors, or as shall be specified in a written waiver signed by all of the directors. Section 7. Regular Board Meetings. Regular meetings of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by the Board. 14 Section 8. Special Board Meetings. Special meetings of the Board may be called by order of the Chairman of the Board, the President, or by any two directors on one (1) days' notice to each director, either personally, by mail, by telephone, or by telegram. Section 9. Quorum at Board Meetings. At all meetings of the Board a majority of the designated number of members of the Board then in effect shall constitute a quorum for the transaction of business, and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the Board of Directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 10. Consent Without a Meeting. Unless otherwise restricted by the certificate of incorporation or these By-laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee. 15 Section 11. (a) Executive Committee. The Board of Directors by resolution adopted by a majority of the whole Board, may designate at least five (5), but not more than seven (7) directors, including the Chairman of the Board and the President, to constitute an Executive Committee and shall designate a Chairman of the Committee and a Secretary. The members of the Executive Committee shall hold office until the next annual meeting of the Board of Directors following their designation as members thereof, unless sooner removed by action of a majority of the whole Board. The Board of Directors shall fill vacancies in the Executive Committee by election from the directors. The Executive Committee shall keep regular minutes of its proceedings and report the same to the Board when required by the Board. Meetings of the Executive Committee may be called by order of the Chairman of the Executive Committee, the President, or by any two members of the Executive Committee on one (1) days' notice to each member, either personally, by mail, by telephone, or by telegram. 16 (b) The Executive Committee shall have and exercise all the authority of the Board of Directors in the management of the business and affairs of the Corporation between meetings of the Board, and shall represent the Board for the purpose of consulting with the officers and giving special consideration to matters of importance affecting the policies, financing, management and operation of the business and taking action thereon, or making recommendations to the Board; however, the Executive Committee shall have no power or authority in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution, or amending the By-laws. The Executive Committee shall have power and authority to declare a dividend and to authorize the issuance of stock. Section 12. (a) Audit Committee. The Board of Directors, by resolution adopted by a majority of the whole Board, may designate at least three (3) non-employee directors to constitute an Audit Committee. The members of the Audit Committee shall hold office until the next annual meeting of the Board of Directors following their designation as members thereof, unless sooner removed by action of a majority of a whole Board. The Board of Directors shall fill vacancies in the Audit Committee by election from the non-employee directors. The Audit Committee shall keep regular minutes of its proceedings and report the same to the Board when required by the Board. (b) The Audit Committee shall in general, but not by way of limitation, represent the Board of Directors in dealing with the public accountants and management of the Corporation on matters involving accounting and financial reporting policies, accounting and financial controls and the independence of the public accountants. The Committee shall also review the scope and nature of the non-audit related services performed by the public accountants for the Corporation and shall have authority to authorize such services. The Committee shall also recommend to the Board the firm of public accountants which should be engaged by the Corporation. Section 13. Other Committees of Directors. The Board of Directors may, by resolution or resolutions passed by a majority of the whole Board, designate one or more committees other than the Executive Committee and Audit Committee, each committee to consist of two (2) or more of the directors of the Corporation, which, to the extent provided in said resolution or resolutions, shall have and may exercise the powers of the Board of Directors, to the extent permitted by statute, in carrying out their prescribed duties, and may have power to authorize the seal of the Corporation to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. Such committees shall keep regular minutes of their proceedings and report the same to the Board when required by the Board. 17 Section 14. Compensation of Directors. Directors who are not officers of the Corporation ("outside directors") shall be entitled to receive such compensation as may be fixed from time to time by resolution of a majority of the Directors who are officers of the Corporation. Directors will be entitled to reimbursement for expenses necessarily incurred in attending any meeting of the Board or committees of the Board. ARTICLE IV OFFICERS 18 Section 1. Officers. The officers of the Corporation shall be the Chairman of the Board of Directors, Chairman of the Executive Committee, a President, one or more Executive Vice Presidents, one or more Vice Presidents (one or more of whom may be designated Senior Vice President or Group Vice President), a Secretary, a Treasurer, a Controller and such Assistant Secretaries, Assistant Treasurers and other officers or agents as may be elected or appointed by the Board of Directors. In its discretion the Board of Directors may leave unfilled for any period any office except the office of President, at least one Vice President, Secretary, and Treasurer. Section 2. Election of Officers. The officers of the Corporation shall be elected or appointed by the Board of Directors and each officer shall hold office until his successor shall have been duly elected and qualified, but any officer may be removed at any time by the affirmative vote of a majority of the whole Board of Directors. 19 Section 3(a). Chairman of Board. The Chairman of the Board of Directors shall be the Chief Executive Officer of the Corporation, shall exercise general supervision over the affairs of and operation of the business of the Corporation and shall preside at all meetings of the stockholders and the Board of Directors and shall perform such other duties as are incident to his office or are assigned to him by the Board of Directors from time to time. Section 3(b). Chairman of Executive Committee. The Chairman of the Executive Committee shall preside at all meetings of the Executive Committee and shall perform such other duties as are incident to his office or are assigned to him by the Board of Directors from time to time. In the absence of the Chairman of the Board, he shall preside at all meetings of the stockholders and the Board of Directors and shall perform such duties for the Chairman of the Board as may be required. 20 Section 4. President. The President shall have such powers and shall perform such duties as are incident to his office or are assigned to him by the Board of Directors from time to time. In the absence of the Chairman of the Board of Directors and Chairman of the Executive Committee, he shall preside at all meetings of the stockholders and the Board of Directors and exercise the functions of the Chairman of the Board. 21 Section 5. Executive Vice President. In the event of a disability or actual unavailability of the President, the Executive Vice President designated to do so shall exercise the functions of the President. The Executive Vice Presidents shall have such powers and shall perform such other duties as may be assigned to them by the Board of Directors or the President. Section 6. Vice Presidents. Each Vice President, including each Vice President designated as Senior Vice President or Group Vice President, shall have such powers and perform such duties as may be assigned to him by the Board of Directors or the President. Section 7. Secretary. The Secretary shall attend all sessions of the Board of Directors and all meetings of the stockholders and record all votes and the minutes of all proceedings in a book to be kept for that purpose, and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and of the Board of Directors. He may sign on behalf of the Corporation such forms, reports or other documents as may be required to be filed by the Corporation with the jurisdictions in which the Corporation is qualified to do business, and with various governmental agencies. The Secretary shall also perform such other duties as may be prescribed by the Board of Directors or the President. He shall be sworn to the faithful discharge of his duty, and shall in general perform all duties incident to the office of Secretary, subject to the control of the Board of Directors. Section 8. Treasurer. The Treasurer shall have the custody of the corporate funds and securities and shall deposit all moneys, and other valuable effects in the name and to the credit of the Corporation, in such depositories as may be designated by the Board of Directors. He shall disburse the funds of the Corporation as may be authorized by the Board of Directors and shall sign such notes, checks, receipts and documents as may be from time to time directed or authorized by the Board of Directors. The Treasurer shall submit statements of his accounts whenever required by the Board of Directors and shall give the Corporation a bond, if required by the Board of Directors, in such sum as the Board of Directors may require. He shall perform such other duties incident to his office or as are assigned to him by the Board of Directors or the President from time to time. Section 9. Controller. The Controller shall be the Chief Accounting Officer of the Corporation. He shall keep or cause to be kept all books of accounts and accounting records of the Corporation, and shall prepare or have prepared appropriate financial statements for submission to the Board of Directors and stockholders. He shall perform other duties incident to his office or which are assigned to him by the Board of Directors or the President from time to time. 22 Section 10. Assistant Officers and Agents. The Board of Directors or Chief Executive Officer may appoint one or more Assistant Secretaries, Assistant Treasurers and Assistant Controllers or appoint divisional officers and agents, each of whom shall have such powers and perform such duties as may be assigned or delegated to them by the Board of Directors or Chief Executive Officer from time to time. Section 11. Salaries of Officers. The salaries of all officers of the Corporation shall be fixed by the Board of Directors. Section 12. Delegation of Powers. In case of the absence of any officer of the Corporation, or for any other reason that the Board of Directors may deem sufficient, the Board of Directors may delegate for the time being the powers or duties, or any of them, of such officer to any other officer, director or agent, provided a majority of the Board concur therein. 23 Section 13. Signature Authority. Unless the Board of Directors shall otherwise direct, the Chairman of the Board, the Chairman of the Executive Committee, the President and any Vice President of the Corporation may sign and execute bonds, mortgages, and other contracts and obligations of the Corporation in the name of the Corporation, except that contracts may be signed with like effect by any other officer or employee of the Corporation so designated by the Board of Directors. Section 14. Exercise of Rights as Stockholders. Unless otherwise ordered by the Board of Directors, the President, the Secretary or a Vice President thereunto duly authorized by the President shall have full power and authority on behalf of the Corporation to attend and to vote at any meeting of stockholders of any corporation in which this Corporation may hold stock, and may exercise on behalf of this Corporation any and all of the rights and powers incident to the ownership of such stock at any such meeting, and shall have power and authority to execute and deliver proxies and consents on behalf of this Corporation in connection with the exercise by this Corporation of the rights and powers incident to the ownership of such stock. The Board of Directors, from time to time, may confer like powers upon any other person or persons. ARTICLE V STOCK CERTIFICATES Section 1. Certificate of Stock. Every holder of stock in the Corporation shall be entitled to have a certificate, signed by, or in the name of the Corporation by, the Chairman of the Board of Directors, or the President, or a Vice President and the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation, certifying the number of shares owned by him in the Corporation. If the Corporation shall be authorized to issue more than one class of stock or more than one series of any class, the designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate which the Corporation shall issue to represent such class or series of stock, provided that, except as otherwise provided in Section 202 of the General Corporation Law of Delaware, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate which the Corporation shall issue to represent such class or series of stock, a statement that the Corporation will furnish without charge to each stockholder who so requests the designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.24 Section 2. Facsimile Signatures. Any signature on a certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. Section 3. Lost Certificates. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed. Section 4. Transfer of Stock. Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Section 5. Registered Stockholders. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VI NOTICES Section 1. Notices. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these By-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder at his address as it appears on the records of the Corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram or telephone. Section 2. Waiver of Notice. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these By-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. 25ARTICLE VII INDEMNIFICATION Section 1. Procedure of Indemnification. Any indemnification of a director or officer under paragraphs 1, 2 and 3, or advance of expenses to a director or officer under paragraph 5, of Article SIXTH of the Corporation's Restated Certificate of Incorporation, shall be made promptly, and in any event within 60 days, after the written request of the director or officer, and the determination as to whether indemnification is proper, required by paragraph 4 of Article SIXTH, shall be made promptly, so as to enable indemnification to be made within such 60-day period. The right to indemnification or advances as provided for by such Article SIXTH shall be enforceable by the director or officer, in any court of competent jurisdiction, if the Corporation denies such request, in whole or in part, or if no disposition thereof is made within such 60 day period. Such person's expenses incurred in connection with successfully establishing his right to indemnification, in whole or in part, in any such action shall also be indemnified by the Corporation. It shall be a defense to any such action (other than an action brought to enforce a claim by an officer or director for the advance of expenses under paragraph 5 of such Article SIXTH where the required undertaking, if any, has been received by the Corporation) that the claimant has not met the standard of conduct set forth in paragraphs 1 or 2 of such Article SIXTH, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, its independent legal counsel, and its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he has met the applicable standard of conduct set forth in paragraphs 1 or 2 of such Article SIXTH, nor the fact that there has been an actual determination by the Corporation (including its Board of Directors, its independent legal counsel, and its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. All rights to indemnification under Article SIXTH of the Corporations's Restated Certificate of Incorporation shall be deemed to be a contract between the Corporation and each director or officer of the Corporation who serves or served in such capacity at any time while such Article SIXTH is in effect. Section 2. Insurance. The Corporation shall purchase and maintain insurance on behalf of any person who is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of Article SIXTH of the Corporation's Restated Certificate of Incorporation or of relevant provisions of the Delaware General Corporation Law, provided that such insurance is available on acceptable terms, which determination shall be made by a vote of a majority of the entire Board of Directors. ARTICLE VIII GENERAL PROVISIONSSection 1. Dividends. Dividends upon the capital stock of the Corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Dividend Reserve. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for such other purpose as the directors shall think conducive to the interest of the Corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. Section 3. Checks. All checks or demands for money and notes of the Corporation shall be signed by the Treasurer or his designatees and such officer or officers or such other person or persons as the Board of Directors may from time to time designate. Section 4. Fiscal Year. The fiscal year of the Corporation shall begin the first day of January and end on the thirty-first day of December in each year. Section 5. Seal. The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization and the words "Corporate Seal, Delaware." The seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced. ARTICLE IX AMENDMENTS Section . Amendments. These By-laws may be altered, amended or repealed or new By-laws may be adopted by the stockholders or by the Board of Directors, when such power is conferred upon the Board of Directors by the certificate of incorporation, at any regular meeting of the stockholders or of the Board of Directors if notice of such alteration, amendment, repeal, or adoption of new By-laws be contained in the notice of such special meeting. shared\plans\bylaws\doc - -------- 1 Amended September 25, 1986. 2 Amended July 24, 1986 and June 20, 1996. 3 Amended June 20, 1996. 4 Amended June 20, 1996. 5 Amended July 24, 1986 and June 20, 1996. 6 Amended June 20, 1996. 7 Amended July 24, 1986. 8 Amended July 24, 1986 and June 20, 1996. 9 Amended July 24, 1986. 10 Amended September 27, 1984, September 26, 1985, October 24, 1985, September 25, 1986, April 30, 1987, April 30, 1987, April 27, 1989, June 22, 1989, February 15, 1990 and April 23, 1992. 11 Amended July 24, 1986 and June 20, 1996. 12 Amended April 26, 1984. 13 Amended June 23, 1988. 14 Amended February 2, 1984. 15 Amended February 2, 1984. 16 Amended May 5, 1980. 17 Amended January 29, 1987. 18 Amended October 28, 1982. 19 Amended August 22, 1991. 20 Amended August 22, 1991. 21 Amended December 18, 1986. 22 Amended April 28, 1983. 23 Amended October 28, 1982. 24 Amended December 21, 1989. 25 Amended July 24, 1986 and April 30, 1987. EX-27 5
5 The schedule contains summary financial information extracted from the condensed consolidated statement of financial condition at June 30, 1996 and the condensed consolidated statement of earnings for the six months ended June 30, 1996 of Nalco Chemical Company and subsidiaries and is qualified in its entirety by reference to such financial statements. 6-MOS DEC-31-1996 JUN-30-1996 37,700,000 0 234,900,000 (4,300,000) 94,700,000 433,600,000 1,143,300,000 (613,300,000) 1,459,700,000 317,400,000 306,700,000 0 400,000 15,100,000 605,300,000 1,459,700,000 620,500,000 620,500,000 274,600,000 274,600,000 0 0 7,000,000 101,200,000 36,700,000 64,500,000 4,300,000 0 0 68,800,000 0.93 0.87
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5 The schedule contains summary financial information extracted from the condensed consolidated statement of financial condition at September 30, 1994 and the restated condensed consolidated statement of earnings for the nine months ended September 30, 1994 of Nalco Chemical Company and subsidiaries and is qualified in its entirety by reference to such financial statements. 9-MOS DEC-31-1994 SEP-30-1994 72,500,000 0 216,800,000 (5,900,000) 75,000,000 371,900,000 1,054,900,000 (533,100,000) 1,274,700,000 247,500,000 248,500,000 0 400,000 15,100,000 537,200,000 1,274,700,000 955,500,000 955,500,000 419,200,000 419,200,000 0 0 17,700,000 98,600,000 42,700,000 55,900,000 18,500,000 0 0 74,400,000 0.96 0.91
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5 The schedule contains summary financial information extracted from the consolidated statement of financial condition at December 31, 1994 and the restated consolidated statement of earnings for the year ended December 31, 1994 of Nalco Chemical Company and subsidiaries and is qualified in its entirety by reference to such financial statements. 12-MOS DEC-31-1994 DEC-31-1994 45,100,000 0 211,500,000 (5,600,000) 83,800,000 362,100,000 1,067,100,000 (543,200,000) 1,282,200,000 274,300,000 245,300,000 0 400,000 15,100,000 528,700,000 1,282,200,000 1,246,800,000 1,246,800,000 543,700,000 543,700,000 0 0 21,800,000 137,800,000 64,600,000 73,200,000 23,900,000 0 0 97,100,000 1.25 1.19
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5 The schedule contains summary financial information extracted from the condensed consolidated statement of financial condition at March 31, 1995 and the restated condensed consolidated statement of earnings for the three months ended March 31, 1995 of Nalco Chemical Company and subsidiaries and is qualified in its entirety by reference to such financial statements. 3-MOS DEC-31-1995 MAR-31-1995 44,200,000 0 215,400,000 (6,200,000) 84,300,000 367,000,000 1,095,800,000 (565,200,000) 1,299,900,000 285,900,000 244,500,000 0 400,000 15,100,000 537,000,000 1,299,900,000 292,500,000 292,500,000 128,500,000 128,500,000 0 0 4,100,000 51,500,000 18,600,000 32,900,000 4,900,000 0 0 37,800,000 0.51 0.48
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5 The schedule contains summary financial information extracted from the condensed consolidated statement of financial condition at June 30, 1995 and the restated condensed consolidated statement of earnings for the six months ended June 30, 1995 of Nalco Chemical Company and subsidiaries and is qualified in its entirety by reference to such financial statements. 6-MOS DEC-31-1995 JUN-30-1995 41,500,000 0 222,100,000 (6,500,000) 87,700,000 379,300,000 1,114,300,000 (574,700,000) 1,322,500,000 296,900,000 245,500,000 0 400,000 15,100,000 547,200,000 1,322,500,000 594,800,000 594,800,000 260,600,000 260,600,000 0 0 8,400,000 102,300,000 37,000,000 65,300,000 9,600,000 0 0 74,900,000 1.02 0.95
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5 The schedule containe summary financial information extracted from the condensed consolidated statement of financial condition at September 30, 1995 and the restated condensed consolidated statement of earnings for the nine months ended September 30, 1995 of Nalco Chemical Company and subsidiaries and is qualified in its entirety by reference to such financial statements. 9-MOS DEC-31-1995 SEP-30-1995 39,800,000 0 230,300,000 (6,400,000) 87,200,000 380,400,000 1,141,200,000 (591,600,000) 1,327,400,000 289,900,000 248,800,000 0 400,000 15,100,000 555,300,000 1,327,400,000 904,800,000 904,800,000 396,500,000 396,500,000 0 0 12,500,000 158,300,000 57,500,000 100,800,000 14,600,000 0 0 115,400,000 1.57 1.46
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