-----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, GsULX7RtI09BdPNW2QsIBIUgm1LPu33aqanbvlmYBaXYmWBOSpV1dstaPn/52eSC frnyZFXr7vDGcCH8aMfUXQ== 0000069598-97-000026.txt : 19971113 0000069598-97-000026.hdr.sgml : 19971113 ACCESSION NUMBER: 0000069598-97-000026 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971113 SROS: NYSE 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: SEC FILE NUMBER: 001-04957 FILM NUMBER: 97716337 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 10Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1997 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-4957 NALCO CHEMICAL COMPANY Incorporated in the State of Delaware Employer Identification No. 36-1520480 One Nalco Center, Naperville, Illinois 60563-1198 Telephone 630-305-1000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No The number of shares outstanding of each of the issuer's classes of common stock, as of September 30, 1997 was 66,592,789 shares common stock - par value $.1875 a share. NALCO CHEMICAL COMPANY INDEX
Page No. Part I. Financial Information: Item 1. Financial Statements Condensed Consolidated Statements of Financial Condition - September 30, 1997 (Unaudited) and December 31, 1996.........................................2 Condensed Consolidated Statements of Earnings (Unaudited) - Three Months and Nine Months Ended September 30, 1997 and 1996.............................3 Condensed Consolidated Statements of Cash Flows (Unaudited) - Three Months and Nine Months Ended September 30, 1997 and 1996.............................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 (11) - Statement Re: Computation of Earnings Per Share................................................13 Exhibit (15) - Awareness Letter of Independent Accountants..........................................................15 Exhibit (27) - Financial Data Schedule.......................................................16 Signatures 17
- 2 - PART I. FINANCIAL INFORMATION NALCO CHEMICAL COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
September 30, December 31, 1997 1996 (Dollars in millions) (Unaudited) (Note) ASSETS Current assets Cash and cash equivalents $ 63.9 $ 38.8 Accounts receivable, less allowances of $4.7 and $4.9, respectively 243.1 233.4 Inventories Finished products 63.8 61.4 Materials and work in process 24.9 29.4 -------- -------- 88.7 90.8 Prepaid expenses, taxes and other current assets 22.9 22.2 -------- -------- Total current assets 418.6 385.2 Investment in and advances to partnership 134.7 126.0 Goodwill and other intangibles, less accumulated amortization of $28.4 and $24.7, respectively 223.9 202.5 Other assets 156.8 158.8 Property, plant and equipment 1,146.2 1,169.4 Less allowances for depreciation (653.6) (647.4) -------- -------- 492.6 522.0 -------- -------- $1,426.6 $1,394.5 ======== ======== LIABILITIES/SHAREHOLDERS' EQUITY Current liabilities Short-term debt $ 73.4 $ 31.3 Accounts payable 97.8 114.6 Other current liabilities 138.3 143.8 -------- -------- Total current liabilities 309.5 289.7 Long-term debt 245.7 252.6 Deferred income taxes 38.8 42.9 Accrued postretirement benefits 100.4 98.5 Other liabilities 59.1 56.3 Shareholders' equity 673.1 654.5 -------- -------- $1,426.6 $1,394.5 ======== ========
Note: The Statement of Financial Condition at December 31, 1996 has been derived from the audited financial statements at that date. See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited). - 14 - NALCO CHEMICAL COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
Three Months Ended Nine Months Ended (Amounts in millions, September 30 September 30 except per share data) 1997 1996 1997 1996 ------ ------ ------ ----- Net sales $371.0 $343.3 $1,060.0 $963.8 Operating costs and expenses Cost of products sold 165.0 147.0 462.4 421.6 Operating expenses 139.7 132.6 418.5 383.5 ------ ------ -------- ------ 304.7 279.6 880.9 805.1 ------ ------ -------- ------ Operating earnings 66.3 63.7 179.1 158.7 Other income (expense) Interest and other income (0.4) - 0.8 0.2 Interest expense(3.7) (4.3) (11.1) (11.3) Equity in earnings of partnership 6.6 5.0 19.8 18.0 ------ ------ -------- ------ Earnings from continuing operations before income taxes 68.8 64.4 188.6 165.6 Income taxes 24.6 23.4 68.5 60.1 ------ ------ -------- ------ Earnings from continuing operations 44.2 41.0 120.1 105.5 Discontinued operations, net of income taxes - 1.5 - 5.8 ------ ------ -------- ------ Net earnings $ 44.2 $ 42.5 $ 120.1 $111.3 ====== ====== ======== ====== Per common share - Primary Earnings from continuing operations $ 0.61 $ 0.56 $ 1.65 $ 1.43 Discontinued operations, net of income taxes - 0.03 - 0.09 ------ ------ ------ ------ Net earnings $ 0.61 $ 0.59 $ 1.65 $ 1.52 ====== ====== ====== ====== Per common share - Fully diluted Earnings from continuing operations $ 0.57 $ 0.52 $ 1.54 $ 1.34 Discontinued operations, net of income taxes - 0.02 - 0.08 ------ ------ ------ ------ Net earnings $ 0.57 $ 0.54 $ 1.54 $ 1.42 ====== ====== ====== ====== Per common share - Cash dividends $ 0.25 $ 0.25 $ 0.75 $ 0.75 ====== ====== ====== ====== Average primary shares outstanding (in thousands) 67,650 67,664 67,492 67,601 Average fully diluted shares outstanding (in thousands) 75,396 75,710 75,504 75,693
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited). NALCO CHEMICAL COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended Nine Months Ended September 30 September 30 (Dollars in millions) 1997 1996 1997 1996 -------- ------- -------- ------ Cash provided by (used for) operating activities Net earnings $ 44.2 $ 42.5 $120.1 $111.3 Adjustments not affecting cash Depreciation and amortization 27.7 26.5 77.2 74.3 Other, net (5.7) (4.4) (8.9) (7.4) Changes in current assets and liabilities 5.4 17.8 (18.8) (15.6) ------ ------ ------ ------ Net cash provided by operations 71.6 82.4 169.6 162.6 ------ ------ ------ ------ Investing activities Additions to property, plant and equipment (20.4) (17.8) (59.0) (66.4) Business purchases - - (39.8) (81.8) Other 3.6 8.9 (1.6) 16.2 ------ ------ ------ ------ Net cash (used for) investing activities (16.8) (8.9) (100.4) (132.0) ------ ------ ------ ------- Financing activities Cash dividends (19.6) (19.6) (58.8) (59.0) Changes in short-term debt 0.9 10.4 42.8 (8.9) Changes in long-term debt (1.4) (52.2) 4.9 44.3 Common stock reacquired (22.8) (6.4) (44.8) (6.4) Other 8.1 2.7 16.0 6.4 ------ ------ ------ ------ Net cash (used for) financing activities (34.8) (65.1) (39.9) (23.6) ------ ------ ------ ------ Effects of foreign exchange rate changes (3.2) (0.5) (4.2) 0.5 ------ ------ ------ ------ Increase in cash and cash equivalents $ 16.8 $ 7.9 $ 25.1 $ 7.5 ====== ====== ====== ======
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited). NALCO CHEMICAL COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) September 30, 1997 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 nine month periods ended September 30, 1997 and 1996. 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, 1996. 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 -- EFFECT OF CHANGING ACCOUNTING STANDARDS In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128 (SFAS 128), "Earnings per Share." SFAS 128 establishes standards for computing and presenting earnings per share (EPS) and simplifies the standards for computing earnings per share previously found in APB Opinion No. 15 (APB 15), "Earnings per Share." It replaces the presentation of primary EPS with a presentation of basic EPS. It also requires dual presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures. Basic EPS excludes dilution and is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Diluted EPS is computed similarly to fully diluted EPS pursuant to APB 15. SFAS 128 is effective for financial statements issued for periods ending after December 15, 1997, including interim periods; earlier application is not permitted. SFAS 128 requires restatement of all prior-period EPS data presented. Adoption of SFAS 128 is expected to have little or no impact on the Company's future and previously reported EPS. NOTE C -- SHAREHOLDERS' EQUITY Shareholders' equity may be further detailed as follows:
September 30, December 31, (Dollars in millions, 1997 1996 ------------ -------- except per share figures) Preferred stock par value $1.00 per share; par value $1.0 per share; authroized 2,000,000 shares; Preferred Stock - 385,458 shares at September 30, 1997 and 392,851 shares at December 31, 1996 $ 0.4 $ 0.4 Series C Junior Participating Preferred Stock - none issued - - Capital in excess of par value of shares 185.0 188.6 Unearned ESOP compensation (151.1) (162.6) -------- ------- 34.3 26.4 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 35.9 31.2 Retained earnings 1,053.3 992.0 Minimum pension liability adjustment (6.1) (6.1) Foreign currency translation adjustments (65.3) (39.9) Common stock reacquired - at cost 13,694,779 shares at September 30, 1997 and 13,263,648 shares at December 31, 1996 (394.1) (364.2) -------- ------- Total shareholders' equity $ 673.1 $ 654.5 ======== =======
NOTE D - ACQUISITIONS In January 1997, the Company acquired the stock of International Water Consultants Beheer B.V. (IWC) and the assets of Nutmeg Technologies, Inc. (Nutmeg). IWC serves the water treatment needs of customers in the Netherlands, Belgium, Germany and the Commonwealth of Independent States and Nutmeg is a water treatment company which serves markets mainly in the Northeast United States. They had 1996 sales of just under $30 million. In May 1997, the Company acquired the pulp and paper enzyme business of Ciba Specialty Chemicals, Inc. The enzyme technology which was acquired is used in paper mills to enhance fiber quality and water drainage during the paper making process. Also in May 1997, the Company increased its investment in Taiwan Nalco Chemical Co. Ltd. from 55 percent to 79 percent. In August 1997, the Company acquired a majority interest in Green Label Products Inc. (Green Label). Green Label is located in Gainesville, Georgia and supplies odor control products, technology and application systems for chemically neutralizing objectionable odors of various processes. The purchase price of these businesses was approximately $40 million. The Company is in the process of evaluating the assets that were purchased and the liabilities that were assumed in these acquisitions and accordingly will make any necessary adjustments to the recorded value of the acquired assets and liabilities. During October 1997, the Company acquired the assets of Chemical Technologies, Incorporated (CTI). CTI is located in Jackson, Michigan and is a manufacturer and marketer of synthetic fluids and lubricants that are used in cooling and lubricating tooling employed in the machining of metal products. CTI's estimated annual sales for 1997 are $18 million. Also during October 1997, the Company acquired Gamus Quimica, Ltda., a manufacturer of waste treatment chemical products in Brazil. Annual sales for 1997 are estimated to be approximately $2 million. 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 September 30, 1997, and for the three month and nine 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, 1996, 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 3, 1997, 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, 1996, 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 October 28, 1997 Chicago, Illinois Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Third Quarter 1997 Operations Compared to Third Quarter 1996 Sales increased by 8% over last year with all five divisions reporting improved results. Effective with the beginning of the third quarter of 1997, the Company adopted the policy of reporting freight revenues as a component of sales rather than offsetting freight costs that are included as a component of cost of products sold. This resulted in recognizing additional sales revenues of approximately $14 million for the third quarter of 1997. Sales and costs of products sold amounts for prior periods have not been reclassified to conform with this change. Third Quarter (Dollars in millions) 1997 1996 Increase ------ -------- -------- Water and Waste Treatment $126.2 $115.0 10% Process Chemicals 97.8 87.7 12% Europe 79.2 75.0 6% Latin America 27.7 27.2 2% Pacific 40.1 38.4 4% ------- ------- Total $371.0 $343.3 8% ======= ======= About two-thirds of the improvement reported by the Water and Waste Treatment Division was attributable to the change in reporting of freight revenues. Excluding the impact of freight revenues, a near double-digit increase was posted by WATERGY(R) and more modest gains were reported by UNISOLV(R) and Waste Treatment Chemicals. Freight revenues represented slightly more than one-third of the increase posted by the Process Chemicals Division. Excluding freight, solid double-digit improvements were reported by the General Industry and Pulp Technologies Groups, and the Paper Group posted a good increase. In Europe, sales by IWC, which was acquired in January 1997, and the impact of freight revenues were more than offset by the negative translation effect of the stronger U.S. dollar compared to most European currencies. However, most business units in the Division reported strong gains in local currencies. Freight revenues had insignificant effects on sales reported by the Latin America and Pacific Divisions. In Latin America, strong gains were posted by operations in Brazil, Mexico, and Venezuela. Solid improvements in local currencies reported by most operations in the Pacific Division more than offset the effect of translation impacts of the stronger U.S. dollar compared to most Pacific Rim currencies. The gross margin of 55.5 percent for the third quarter of 1997 reflects the effect of classifying $14 million of freight revenue as a component of sales rather than as an offset to cost of products sold. Had this revenue been classified in cost of products sold, the gross margin would have been 57.7 percent compared to last year's rate of 57.2 percent. Improved margins in North America and the Pacific offset slight declines in Europe and Latin America margins. Operating expenses (selling, service, research, etc.) were up $7.1 million over the third quarter of last year. Higher spending supported the growth in sales, and was moderated by the effect of the stronger U.S. dollar compared to most European and Pacific Rim currencies. Interest and other income decreased by $0.4 million from a year ago. Interest expense decreased by $0.6 million from the third quarter of last year, reflecting lower average borrowings compared to a year ago. Nalco's equity in Nalco/Exxon for the third quarter of 1997 was $6.6 million, an increase of $1.6 million over the third quarter of 1996. The effective income tax rate for the third quarter of 1997 was 35.8 percent compared to the 36.3 percent that was reported for the third quarter of 1996. Fully diluted earnings per share from continuing operations for the third quarter 1997 was 57 cents compared to the 52 cents for the third quarter 1996. Net earnings per share on a fully diluted basis for the third quarter 1997 was 57 cents compared to 54 cents for the third quarter 1996, which included the results of the discontinued superabsorbent chemical business. First Nine Months 1997 Operations Compared to First Nine Months 1996 Sales increased 10 percent with all five divisions reporting improvements. As discussed above, effective with the beginning of the third quarter of 1997, the Company adopted the policy of reporting freight revenues as a component of sales rather than as an offset to cost of products sold. Had these freight revenues been reported as a component of cost of products sold, the sales improvement for the first nine months of 1997 over 1996 would have been 9 percent. Nine Months (Dollars in millions) 1997 1996 Increase -------- -------- -------- Water and Waste Treatment $ 349.7 $ 302.9 15% Process Chemicals 276.3 256.7 8% Europe 237.4 216.9 9% Latin America 83.3 79.3 5% Pacific 113.3 108.0 5% -------- ------- Total $1,060.0 $ 963.8 10% ======== ======= The Water and Waste Treatment Division sales gain of 15 percent for the first nine months of 1997 included sales by Diversey Water Technologies (DWT), a middle market water treatment business acquired in mid-1996. In addition, excluding the impact of the freight revenue reclassification previously described, a near double-digit increase was reported by WATERGY, while more modest improvements were posted by the other groups in the Division. Slightly less than 20 percent of the sales increase reported by the Process Chemicals Division was attributable to the freight revenue reclassification. Excluding the freight revenue reclassification, strong gains were posted by the General Industry and Paper Groups, and a double-digit increase was reported by the Pulp Technologies Group. Approximately three-fourths of the increase in Europe Division sales that resulted from acquired businesses and the freight revenue reclassification was offset by the translation impact of the stronger U.S. dollar compared to most European currencies. Solid gains in local currencies were reported by most operations in the Division. In Latin America, double-digit or near double-digit improvements were posted by operations in Chile, Colombia, Mexico, and Venezuela. Double-digit increases reported by China, Japan, Korea, Singapore/Malaysia, and Thailand contributed to the improvement in Pacific Division sales, which would have been over $5 million higher if translation rates were unchanged from a year ago. The gross margin for the first nine months of 1997 was 56.4 percent compared to last year's rate of 56.3 percent, which reflects the classification of $14 million of freight revenue in the third quarter 1997 as sales rather than as an offset to cost of products sold. Had this $14 million in freight revenue been treated as a reduction of cost of products sold, the gross margin for the first nine months of 1997 would have been 57.1 percent. Improved margins in North America and higher margins of DWT, which was acquired in mid-1996, contributed to the increase. Operating expenses (selling, service, research, etc.) for the first nine months of 1997 were up $35.0 million over last year, with DWT and IWC operations accounting for over two-thirds of the increase. Higher spending by operations in North America supported the increase in sales volumes, while increased spending by the three international divisions was largely offset by the effect of the stronger U.S. dollar compared to most European and Pacific Rim currencies. Interest and other income for the first nine months of 1997 increased by $0.6 million compared to last year. Higher interest income and a gain on sale of assets contributed to the improvement. Interest expense decreased by $0.2 million from last year. Nalco's equity in Nalco/Exxon for the first nine months of 1997 rose 10 percent to $19.8 million compared to last year's reported amount of $18.0 million. The effective tax rate was 36.3 percent for the first nine months of 1997, which was equivalent to last year's rate. Fully diluted earnings per share from continuing operations was $1.54 per share compared to $1.34 per share for the first nine months of 1996. Net earnings per share on a fully diluted basis for the first nine months of 1997 was $1.54 per share compared to $1.42 per share a year ago, which included the results of the discontinued superabsorbent chemical business. Changes in Financial Condition Cash and cash equivalents increased by $25.1 million during the first nine months as detailed in the Unaudited Condensed Consolidated Statement of Cash Flows. Days sales outstanding were 63 days at September 30, 1997, down slightly from the 64 days outstanding at December 31, 1996. Working capital at September 30, 1997 totaled $109.1 million, a $13.6 million increase over the $95.5 million at December 31, 1996. The ratio of current assets to current liabilities was 1.4 to 1 at September 30, 1997. The $21.4 million increase in goodwill is mainly attributable to the acquisitions of IWC and Nutmeg during the first quarter of 1997, the second quarter 1997 purchase of the pulp and paper enzyme business of Ciba Specialty Chemicals, Inc., and the additional investment in Taiwan Nalco Chemical Co. Ltd. These acquisitions were financed primarily by the issuance of commercial paper, which accounted for most of the increase in short-term debt. Capital investments totaled $59.0 million for the first nine months of 1997. Major expenditures were for additional PORTA-FEED(R) units and vehicles for the sales force. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) The following exhibits are included herein: (11) Statement Re: Computation of Earnings Per Share (15) Awareness Letter of Independent Accountants (27) Financial Data Schedule (b) The Registrant did not file any reports on Form 8-K during the three months ended September 30, 1997. 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: November 13, 1997 W. E. BUCHHOLZ --------------------------- W. E.Buchholz - Senior Vice President, Chief Financial Officer Date: November 13, 1997 S. J. GIOIMO ------------------------ S. J. Gioimo - Secretary EX-11 2 EXHIBIT 11 EXHIBIT (11) STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE NALCO CHEMICAL COMPANY AND SUBSIDIARIES
Three Months Ended Nine Months Ended (Amounts in thousands, September 30 September 30 except per share data) 1997 1996 1997 1996 ------ ------ ------ ----- Primary Average shares outstanding 66,792 67,393 66,811 67,318 Net effect of dilutive stock options and shares contingently issuable-based on the treasury stock method using average market price 858 271 681 283 ------- ------- ------- ------- TOTALS 67,650 67,664 67,492 67,601 ======= ======= ======= ======= Earnings from continuing operations $ 44,197 $ 40,990 $120,092 $105,468 Earnings from discontinued operations, net of income taxes - 1,550 - 5,829 -------- -------- -------- -------- Net earnings 44,197 42,540 120,092 111,297 Preferred stock dividends, net of income taxes (2,857) (2,840) (8,610) (8,537) -------- -------- -------- -------- Net earnings to common shareholders $ 41,340 $ 39,700 $111,482 $102,760 ======== ======== ======== ======== Per share amounts: Earnings from continuing operations $ 0.61 $ 0.56 $ 1.65 $ 1.43 Earnings from discontinued operations, net of income taxes - 0.03 - 0.09 ------- ------- ------- ------- Net earnings to common shareholders $ 0.61 $ 0.59 $ 1.65 $ 1.52 ======= ======= ======= =======
EXHIBIT (11) STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE NALCO CHEMICAL COMPANY AND SUBSIDIARIES
Three Months Ended Nine Months Ended (Amounts in thousands, September 30 September 30 except per share data) 1997 1996 1997 1996 ------ ------ ------ ----- Fully Diluted Average shares outstanding 66,792 67,393 66,811 67,318 Average dilutive effect of assumed conversion of ESOP convertible Preferred shares 7,734 7,913 7,783 7,948 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 870 404 910 427 -------- -------- -------- -------- TOTALS 75,396 75,710 75,504 75,693 ======== ======== ======== ======== Earnings from continuing operations $ 44,197 $ 40,990 $120,092 $105,468 Earnings from discontinued operations, net of income taxes - 1,550 - 5,829 -------- -------- -------- -------- Net earnings 44,197 42,540 120,092 111,297 Additional ESOP contribution resulting from assumed conversion, net of income taxes (1,109) (1,126) (3,354) (3,399) Tax adjustment on assumed common dividends (262) (227) (784) (688) -------- -------- -------- -------- Net earnings to common shareholders $ 42,826 $ 41,187 $115,954 $107,210 ======== ======== ======== ======== Per share amounts: Earnings from continuing operations $ 0.57 $ 0.52 $ 1.54 $ 1.34 Earnings from discontinued operations, net of income taxes - 0.02 - 0.08 ------- ------- ------- ------- Net earnings to common shareholders $ 0.57 $ 0.54 $ 1.54 $ 1.42 ======= ======= ======= =======
EX-15 3 EXHIBIT 15 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 October 28, 1997 (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 November 13, 1997 Chicago, Illinois EX-27 4 FDS --
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL CONDITION AT sEPTEMBER 30, 1997 AND THE CONDENSED CONSOLIDATED STATEMENT OF EARNINGS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 OF NALCO CHEMICAL COMPANY AND SUBSIDIARIES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS DEC-31-1997 SEP-30-1997 63,900,000 0 247,800,000 (4,700,000) 88,700,000 418,600,000 1,146,200,000 (653,600,000) 1,426,600,000 309,500,000 245,700,000 400,000 0 15,100,000 657,600,000 1,426,600,000 1,060,000,000 1,060,000,000 462,400,000 462,400,000 418,500,000 0 11,100,000 188,600,000 68,500,000 120,100,000 0 0 0 120,100,000 1.65 1.54
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