ECOLAB TO DIVEST CHEMLAWN; ANNOUNCES 1991 RESULTS
ECOLAB TO DIVEST CHEMLAWN; ANNOUNCES 1991 RESULTS ST. PAUL, Minn., March 2 /PRNewswire/ -- Ecolab Inc. (NYSE: ECL)
announced today its intention to divest its ChemLawn landscape care subsidiary through a sale, spin-off or other form of corporate disposition by mid-year, in order to focus on its significant opportunities in its global cleaning and sanitizing business. In line with this decision, Ecolab has classified ChemLawn as a discontinued operation and recorded a $275 million loss in 1991 to recognize both the estimated loss on divestiture and ChemLawn's 1991 operating results.
Ecolab also reported 1991 earnings from continuing operations of $56 million, down 4 percent from last year's $58 million. Earnings per share from continuing operations were $1.91 compared to $2.14 in 1990; the decline was due to an increase in common shares outstanding resulting from the July, 1991 Henkel transaction and to an incremental after-tax expense of $3 million, or $0.11 per share, stemming from Ecolab's adoption of FAS 106, "Employers' Accounting For Postretirement Benefits Other Than Pensions," effective Jan. 1, 1991. Net earnings for 1991 also included a one-time $25 million after-tax charge to reflect the cumulative prior-year effect of FAS 106 which, together with the ChemLawn charge and the earnings from continuing operations, resulted in a net loss of $9.16 per share for 1991 compared with earnings of $1.95 per share in 1990. Ecolab's 1991 results include after-tax earnings of $5 million from the Henkel-Ecolab joint venture. The joint venture's audit has not been completed due to complexities attributable to its recent formation. Final audited results are expected by the end of March and Ecolab does not anticipate its 1991 results will be materially affected. Pierson M. Grieve, Ecolab's chairman, president and chief executive officer, commented, "The decision to divest ChemLawn focuses all our strategies on our strong worldwide cleaning and sanitizing business opportunities. While ChemLawn's position as the leading residential and commercial landscape care provider offers unique opportunities in residential services, we believe Ecolab's shareholder value is best realized through management's complete concentration on our institutional and industrial cleaning and sanitizing markets. "ChemLawn has developed an excellent organization," Grieve continued. "The current enhancements to ChemLawn's marketing and field operations will enable ChemLawn to provide improved landscape care service and product offerings, as well as develop new opportunities in the residential services market." Grieve added, "The Henkel transaction has resulted in an increased focus on Ecolab's worldwide institutional businesses. Because of the management resources required by the Henkel-Ecolab joint venture, particularly during the near-term integration period, and the excellent opportunities in our core service businesses, we believe ChemLawn would not receive sufficient resources to properly address its residential opportunities. It is time for us to concentrate our full attention on our largest opportunities and move forward. "Given the non-cash nature of the ChemLawn write down and FAS 106 adoption, Ecolab's strong cash flow will be unaffected. Looking ahead, Ecolab's attractive earnings and cash flow streams should show better growth and predictability as Ecolab focuses solely on serving its global customers' cleaning and sanitizing needs." Sales from continuing operations for the year were $918 million compared
with $1 billion last year; on a comparable basis, sales rose 7 percent, adjusted to exclude 1990 European sales. European sales were not consolidated in 1991 due to the July, 1991 transaction with Henkel KGaA in which Ecolab and Henkel each contributed their European institutional cleaning and sanitizing businesses to a joint venture and Ecolab purchased certain Henkel business operations outside of Europe.
Cash flow from operating activities remained strong in 1991 at $122 million due to the gratifying earnings performance by continuing operations and sustained emphasis on effective management of working capital. Fourth quarter earnings from continuing operations were $0.44 per share compared with $0.61 last year, primarily reflecting the increased shares outstanding for the quarter. Sales for the quarter were $245 million versus $265 million in 1990; on a comparable basis, sales rose 10 percent from last year, partially due to the acquisition of Henkel businesses outside of Europe. Addressing the 1991 results, Grieve commented, "Despite a very difficult environment due to the recession and the first quarter's Persian Gulf War, each of Ecolab's domestic divisions achieved record sales, and, for the first time, all five divisions contributed operating income, reflecting the excellent progress made in our cleaning and sanitizing businesses. Our international business also showed good progress, and the Henkel-Ecolab joint venture is off to a strong start. In summary, it was a year of excellent achievement that positions us for a strong future." Discussing prospects for 1992, Grieve added, "We look forward to 1992 as the beginning of a new era for Ecolab. The cleaning and sanitizing market offers us very attractive long-term growth potential as we continue to develop existing markets and exploit new opportunities. This will be the first full year with our Henkel-Ecolab joint venture in Europe and with our improved and expanded opportunities in Asia-Pacific and Latin America. We anticipate these operations, combined with our strong North American cleaning and sanitizing businesses, will register a solid increase in revenues, earnings and cash flow during 1992, though our outlook for the year must be tempered somewhat by the world economic situation and the ongoing weakness in our travel and hospitality customers' markets. We will continue to respond to our customers' needs with our standard of service excellence, utilizing our proven and effective products, services and systems; adding innovative new products and services; and, effectively managing our cost structure. I look forward to this new era with tremendous excitement and anticipation." Ecolab is a leading worldwide developer and marketer of premium cleaning, sanitizing and maintenance products and services for the hospitality, institutional and industrial markets. Ecolab's shares are traded on the New York Stock Exchange and Pacific Stock Exchange under the symbol ECL. ECOLAB INC. CONSOLIDATED STATEMENT OF INCOME (Unaudited) (In thousands, except per share data) Year Ended Quarter Ended 12/31/91 12/31/90 12/31/91 12/31/90 Net Sales United States $716,217 $672,093 $184,320 $173,582 International 201,738 184,220 61,086 48,929 Europe ------- 150,809 --------- 42,284 Total 917,955 1,007,122 245,406 264,795 Cost of Sales 422,466 470,650 112,463 123,695 Selling, General and Administrative Expenses 385,176 417,863 107,527 109,448 Operating Income United States 106,103 105,559 26,534 26,598 International 2,002 4,666 1,110 1,477 Europe 7,958 13,679 ------ 4,925 Corporate (5,750) (5,295) (2,228) (1,348) Total 110,313 118,609 25,416 31,652 Interest Expense, Net 30,216 28,074 8,852 6,390 Income from Continuing Operations Before Income Taxes and Equity in Earnings of Joint Venture 80,097 90,535 16,564 25,262 Provision for Income Taxes 28,994 32,411 5,995 9,044 Equity in Earnings of Henkel-o?lab Joint Venture 4,573 ------ 3,187 ------- Income from Continuing Operations 55,676 58,124 13,756 16,218 Income (Loss) from Discontinued ChemLawn Operations (274,693) (4,408) (264,357) 989 Cumulative Effect of the Change in Accounting for Postretirement Healthcare Benefits (24,560) -------- ---------- ------ Net Income (Loss) (243,577) 53,716 (250,601) 17,207 Preferred Stock Dividends 4,064 7,700 ---------- 1,925 Net Income (Loss) to Common Shareholders $247,641 $6?,016 $(250,601) $15,282 Income (Loss) Per Common Share Continuing Operations $1.91 $2.14 $0.44 $0.61 Discontinued Operations $(10.16) $(0.19) $(8.46) $0.04 Change in Accounting Principle $( 0.91) ---- ------ ---- Net Income (Loss) $( 9.16) $1.95 $(8.02) $.65 Average Common Share Outstanding 27,032 23,594 31,254 23,602 -0- 3/2/92 /CONTACT: Reid J.D. Dabney of Ecolab, 612-293-2482/ (ECL) CO: Ecolab, Inc. ST: Minnesota IN: SU: ERN
KH -- MN004 -- 3787 03/02/92 09:28 EST
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|Date:||Mar 2, 1992|
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