Ecolab Reports Third Quarter EPS Off 4%.Business Editors ST. PAUL St. Paul as a missionary he fearlessly confronts the “perils of waters, of robbers, in the city, in the wilderness.” [N.T.: II Cor. 11:26] See : Bravery , Minn.--(BUSINESS WIRE)--Oct. 18, 2001 Ecolab Ecolab, Inc., is a St. Paul, Minnesota based sanitation supply company founded in 1923. It was named "Economics Laboratory" before its name was changed to Ecolab in 1986. , Inc.(NYSE NYSE See: New York Stock Exchange :ECL (Emitter-Coupled Logic) A digital circuit composed of bipolar transistors in which the emitter ends are wired together. ECL gates switch faster than TTL gates, but consume more power. See TTL, I2L and bipolar. 1. ): THIRD QUARTER 2001 HIGHLIGHTS:
-- Diluted earnings per share -4% to $0.44
-- Sales +3% to $616 million
-- Unprecedented declines in hospitality and travel markets affect third
quarter results and full year outlook
-- Multiple initiatives underway to offset market slowdown and enhance Ecolab's
leadership position for the future
2001
---------------------------------------
(Millions, except per share) Third % Nine %
Quarter Increase Months Increase
Net Sales $ 616 3 % $ 1,793 6 %
Operating Income $ 94 (4)% $ 252 1 %
Pretax Income $ 87 (4)% $ 231 - %
Taxes 35 (3) 94 -
Earnings from Henkel-Ecolab 5 1 12 (8)
------ ---- ------- -----
Net Income $ 57 (5)% $ 150 (1)%
====== ==== ======= =====
Diluted Net Income Per Share $ 0.44 (4)% $ 1.15 1 %
Diluted Average Shares
Outstanding 129.8 (1)% 130.1 (2)%
September's sharp and broad-based broad-based Of or relating to an index or average that provides a good representation of the overall market. The S&P 500 and NYSE Composite are generally regarded as broad-based stock indexes, while the popular Dow Jones Industrial Average is biased decline in the travel and hospitality industries accentuated an already weak economy to slow results at the end of Ecolab Inc.'s third quarter ended September September: see month. 30, 2001. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for the period were $0.44, a 4% decline from last year and in line with the company's recently stated expectations. Ecolab's consolidated sales increased 3% to $616 million in the third quarter. Net income fell 5% to $57 million, reflecting the effects of the lower unit volume growth on earnings, a less favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. sales mix sales mix See product mix. , currency effects and cost increases. Commenting on the quarter, Allan L. Schuman Allan L. Schuman, age 71, is the former CEO of Ecolab, Inc. He resigned as chairman of the board in May 2006 and was named chairman emeritus, an honorary position. He worked at Ecolab for 49 years. Mr. , Ecolab's Chairman and Chief Executive Officer said, "The third quarter's weak economy, exacerbated by the unprecedented sharp declines in the travel and hospitality industries following the September 11 terrorist attacks, resulted in a slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. of orders from our affected customers. We partially offset this slowdown through aggressive actions in the marketplace, including new account sales, new products, more programs to solve customer cleaning problems, increased promotional activity and incentives for our sales people, and actions to reduce our costs and offset conditions in the marketplace. We are proud of our people and the strong manner in which they responded to the events, showing the qualities and character for which Ecolab is so well known. "Ecolab is committed to its customers and to improving shareholder value. We are confident our current actions will boost our long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. results in line with our aggressive financial objectives. However, we continue to expect the short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. impact of the present and unusually difficult conditions in the marketplace and the current general economic weakness worldwide will cause earnings for the fourth quarter ending December December: see month. 31, 2001 to fall below last year. We believe the actions underway, along with improvement in our major markets, will enable our businesses to deliver earnings growth in 2002." Third quarter sales for Ecolab's United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Cleaning & Sanitizing operations rose 2% over the third quarter of 2000 to $416 million, benefiting from new products and services, as well as aggressive sales efforts and programs. Excluding business acquisitions, sales rose 1%. Results were led by steady gains in Ecolab's Kay KAY Kick Ass Year KAY Kansas Association of Youth operations and modestly higher Institutional sales. Reported operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for the United States Cleaning & Sanitizing business fell 7% to $71 million reflecting a less favorable sales mix and the slower markets. United States Other Services sales increased 3% to $69 million in the third quarter as Pest Elimination and GCS GCS Glasgow Coma Scale GCS Guilford County Schools (North Carolina) GCS Ground Control Station GCS Grand Central Station GCS Ground Control System GCS Ground Combat Systems GCS Group Communication Systems each recorded good growth. Excluding acquisitions and a divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). , sales rose 5%. Operating income rose 7% to $9 million, reflecting operational improvements at GCS and solid growth in the Pest Elimination business. Sales of Ecolab's International Cleaning & Sanitizing operations rose 14% in the third quarter when measured at fixed currency rates. Excluding acquisitions, International sales increased 9%. Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. and Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of were very strong and led the increase, while Asia Pacific also achieved improved sales and profits. Fixed currency operating income rose 18% to $16 million due to the higher sales volumes and cost controls, more than offsetting the negative effects of currency exchange. Earnings of the Henkel-Ecolab joint venture are included in the financial statements using the equity method of accounting. When measured in euros, Henkel-Ecolab sales increased 7% for the third quarter. When translated into U.S. dollars, Henkel-Ecolab sales were unchanged from last year at $221 million. Ecolab's equity income from Henkel-Ecolab earnings increased 1% to $5.4 million. Ecolab reacquired 268,000 shares of its common stock during the third quarter and 621,700 shares of its common stock during the first nine months of 2001. Business Outlook ---------------- The following statements are based on current expectations. These statements are forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. , and actual results may differ materially. Except for the previously announced acquisition of the remaining 50% of the Henkel-Ecolab joint venture Ecolab does not own, these statements do not include the potential impact of business acquisitions or other material corporate transactions which may be completed after the date of this release. The Business Outlook section should be read in conjunction with the information on "Forward Looking Statements" at the end of this release. Ecolab expects fourth quarter diluted earnings per share to be in a $0.30-$0.35 range compared with $0.36 from ongoing operations last year, with the full year 2001 expected to be in the $1.45-$1.50 range. Ecolab earned $1.50 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share in 2000 from ongoing operations. Ecolab is the leading global developer and marketer of premium cleaning, sanitizing, pest elimination, maintenance and repair products and services for the hospitality, institutional and industrial markets. For the year ended December 31, 2000, Ecolab reported sales of $2.3 billion; including European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. joint venture sales, Ecolab's global sales coverage was $3.1 billion. This news release contains various "Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These include statements concerning our 2001 fourth quarter and full year earnings per share prospects as well as a projection projection, in psychology: see defense mechanism. See rear-projection TV, front-projection TV and LCD panel. (theory) projection - In domain theory, a function, f, which is (a) idempotent, i.e. for 2002 earnings growth in the businesses. These statements, which represent Ecolab's expectations or beliefs concerning various future events, are based on current expectations that involve a number of risks and uncertainties that could cause actual results to differ materially from those of such Forward-Looking Statements. These risks and uncertainties include the vitality vi·tal·i·ty n. 1. The capacity to live, grow, or develop. 2. Physical or intellectual vigor; energy. of the hospitality and travel industries; restraints on pricing flexibility due to competitive factors and customer consolidations; cost changes in oil or raw material prices or unavailability un·a·vail·a·ble adj. Not available, accessible, or at hand. un  a·vail of adequate and reasonably priced raw materials; the
occurrence of capacity constraints CONSTRAINTS - A language for solving constraints using value inference.["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. or the loss of a key supplier, which in either case limit the production of certain products; the effect of future acquisitions or divestitures or other corporate transactions, as well as our ability to achieve plans for past acquisitions, including difficulties in rationalizing acquired businesses and in realizing related cost savings and other benefits; market or regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. factors which could affect the Company's ability to reacquire shares; the costs and effects of complying with: (i) the significant environmental laws and regulations which apply to the Company's operations and facilities, (ii) government regulations relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the manufacture, storage, distribution and labeling of the Company's products and (iii) changes in tax, fiscal, governmental and other regulatory policies; economic factors such as the worldwide economy, interest rates, currency movements, euro conversion and the development of markets; the occurrence of (i) litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. or claims, (ii) the loss or insolvency insolvency Condition in which liabilities exceed assets so that creditors cannot be paid. It is a financial condition that often precedes bankruptcy. In the context of equity, insolvency is the inability to pay debts as they become due; insolvency under the balance-sheet of a major customer or distributor, (iii) natural or manmade disasters, (iv) the occurrence, or lack of, significant political or military reaction to the terrorist attacks on September 11, 2001, or the occurrence of additional terrorist incidents The following is a timeline of acts and failed attempts that can be considered non-state terrorism. Massacres more generally are listed chronologically at List of massacres; assassinations are listed by location at List of assassinated people. , (v) severe weather conditions affecting the food service and the hospitality industry and (vi) unanticipated issues relating to the European conversion from national currencies to the Euro; loss of, or changes in, executive management; the Company's ability to continue product introductions and technological innovations; and in connection with the expectation for 2002 earnings growth in the businesses, the effect of any special charges such as those associated with the purchase of Henkel-Ecolab, or other management actions, as well as other uncertainties or risks reported from time to time in the Company's reports to the Securities and Exchange Commission. Ecolab undertakes no duty to update its Forward-Looking Statements.
ECOLAB INC.
CONSOLIDATED STATEMENT OF INCOME
THIRD QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 2001
(unaudited)
Third Quarter Nine Months
------------------ ----------------------
(thousands, except per share) 2001 2000 2001 2000
-------- -------- ---------- ----------
Net Sales $616,231 $600,666 $1,792,946 $1,697,637
Cost of Sales 280,748 266,951 820,794 762,817
Selling, General and
Administrative Expenses 241,420 235,987 720,656 685,771
Restructuring Expenses -
Other (53) -- (245) --
-------- -------- ---------- ----------
Operating Income 94,116 97,728 251,741 249,049
Interest Expense, Net 7,010 6,528 20,494 17,130
-------- -------- ---------- ----------
Income Before Income Taxes
and Equity in Earnings
of Henkel-Ecolab 87,106 91,200 231,247 231,919
Provision for Income Taxes 35,279 36,232 93,655 93,927
Equity in Earnings of
Henkel-Ecolab 5,434 5,370 12,276 13,367
-------- -------- ---------- ----------
Net Income $ 57,261 $ 60,338 $ 149,868 $ 151,359
======== ======== ========== ==========
Net Income Per
Common Share
Basic $ 0.45 $ 0.47 $ 1.18 $ 1.18
Diluted $ 0.44 $ 0.46 $ 1.15 $ 1.14
Weighted-Average Common
Shares Outstanding
Basic 127,675 127,112 127,323 128,134
Diluted 129,809 131,167 130,096 132,534
ECOLAB INC.
OPERATING SEGMENT INFORMATION
THIRD QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 2001
(unaudited)
Third Quarter Nine Months
------------------ ----------------------
(thousands) 2001 2000 2001 2000
-------- -------- ---------- ----------
Net Sales
United States
Cleaning & Sanitizing $416,142 $407,521 $1,217,124 $1,156,351
Other Services 69,296 67,596 200,857 183,918
-------- -------- ---------- ----------
Total 485,438 475,117 1,417,981 1,340,269
International Cleaning &
Sanitizing 137,710 121,096 389,229 339,140
Effect of Foreign
Currency Translation (6,917) 4,453 (14,264) 18,228
-------- -------- ---------- ----------
Consolidated $616,231 $600,666 $1,792,946 $1,697,637
======== ======== ========== ==========
Operating Income
United States
Cleaning & Sanitizing $ 71,129 $ 76,091 $ 193,710 $ 190,651
Other Services 8,875 8,317 22,682 20,898
-------- -------- ---------- ----------
Total 80,004 84,408 216,392 211,549
International Cleaning &
Sanitizing 15,802 13,444 40,261 34,211
Corporate (685) (786) (2,819) 625
Effect of Foreign
Currency Translation (1,005) 662 (2,093) 2,664
-------- -------- ---------- ----------
Consolidated $ 94,116 $ 97,728 $ 251,741 $ 249,049
======== ======== ========== ==========
ECOLAB INC.
CONSOLIDATED BALANCE SHEET
Sept. 30 Dec. 31 Sept. 30
(thousands) 2001 2000 2000
---------- ---------- ----------
(unaudited) (unaudited)
Assets
Current assets
Cash and cash equivalents $ 89,845 $ 43,965 $ 45,075
Accounts receivable, net 382,720 326,937 358,100
Inventories 171,700 168,220 183,487
Deferred income taxes 49,591 50,709 43,717
Other current assets 12,153 10,737 14,229
---------- ---------- ----------
Total current assets 706,009 600,568 644,608
Property, plant and equipment, net 523,465 501,640 482,916
Investment in Henkel-Ecolab 204,073 199,642 198,359
Other assets 426,370 412,161 398,496
---------- ---------- ----------
Total assets $1,859,917 $1,714,011 $1,724,379
========== ========== ==========
Liabilities and Shareholders' Equity
Current liabilities
Short-term debt $ 133,143 $ 136,592 $ 234,310
Accounts payable 136,136 146,428 139,434
Compensation and benefits 88,586 88,330 86,829
Other current liabilities 191,982 160,684 174,164
---------- ---------- ----------
Total current liabilities 549,847 532,034 634,737
Long-term debt 246,706 234,377 161,717
Postretirement health care
and pension benefits 127,418 117,790 108,866
Other Liabilities 73,379 72,803 73,847
Shareholders' equity 862,567 757,007 745,212
---------- ---------- ----------
Total liabilities and
shareholders' equity $1,859,917 $1,714,011 $1,724,379
========== ========== ==========
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