CONSOLIDATED STATEMENT OF INCOM
CONSOLIDATED STATEMENT OF INCOME (USD $) | ||||
In Millions, except Per Share data | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
Net sales | 1441.5 | $1,570 | 2789.7 | 3027.9 |
Cost of sales (including special charges of $0.1 and $8.1 for the three and six month periods ended June 30, 2009, respectively) | 725.1 | 798.8 | 1,433 | 1537.1 |
Selling, general and administrative expenses | 526.4 | 580 | 1042.7 | 1,137 |
Special gains and charges | 25 | -19.3 | 51.5 | -17.4 |
Operating income | 165 | 210.5 | 262.5 | 371.2 |
Interest expense, net | 15.2 | 15.3 | 31 | 30.1 |
Income before income taxes | 149.8 | 195.2 | 231.5 | 341.1 |
Provision for income taxes | 50.3 | 56.2 | 74.3 | 99 |
Net income including noncontrolling interest | 99.5 | 139 | 157.2 | 242.1 |
Less: Net income attributable to noncontrolling interest | 0.4 | 0.7 | 0.2 | |
Net income attributable to Ecolab | 99.1 | $139 | 156.5 | 241.9 |
Net income attributable to Ecolab per common share | ||||
Basic (in dollars per share) | 0.42 | 0.56 | 0.66 | 0.98 |
Diluted (in dollars per share) | 0.41 | 0.55 | 0.65 | 0.96 |
Dividends declared per common share | 0.14 | 0.13 | 0.28 | 0.26 |
Weighted-average common shares outstanding | ||||
Basic (in shares) | 236.5 | 247.1 | 236.3 | 247.1 |
Diluted (in shares) | 239.5 | 251.4 | 239.1 | 251.5 |
1_CONSOLIDATED STATEMENT OF INC
CONSOLIDATED STATEMENT OF INCOME (Parenthetical) (USD $) | ||
In Millions | 3 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2009 |
STATEMENT OF INCOME | ||
Cost of sales, special charges | 0.1 | 8.1 |
CONSOLIDATED BALANCE SHEET
CONSOLIDATED BALANCE SHEET (USD $) | |||||||||||||||||||
In Millions | Jun. 30, 2009
| Dec. 31, 2008
| |||||||||||||||||
Current assets | |||||||||||||||||||
Cash and cash equivalents | 82.7 | 66.7 | |||||||||||||||||
Accounts receivable (net of allowance of $50.9 at June 30, 2009 and $43.8 at December 31, 2008) | 970.6 | 971 | |||||||||||||||||
Inventories | 476.7 | 467.2 | |||||||||||||||||
Deferred income taxes | 97.7 | 94.7 | |||||||||||||||||
Other current assets | 122.2 | 91.5 | |||||||||||||||||
Total current assets | 1749.9 | 1691.1 | |||||||||||||||||
Property, plant and equipment, net | 1142.9 | 1135.2 | |||||||||||||||||
Goodwill | 1356.4 | 1267.7 | |||||||||||||||||
Other intangible assets, net | 319.3 | 326.7 | |||||||||||||||||
Other assets | 359.8 | 336.2 | |||||||||||||||||
Total assets | 4928.3 | 4756.9 | |||||||||||||||||
Current liabilities | |||||||||||||||||||
Short-term debt | 241.8 | 338.9 | |||||||||||||||||
Accounts payable | 343.7 | 359.6 | |||||||||||||||||
Compensation and benefits | 235.3 | 261.1 | |||||||||||||||||
Income taxes | 37.2 | 46.3 | |||||||||||||||||
Other current liabilities | 481.9 | 436 | |||||||||||||||||
Total current liabilities | 1339.9 | 1441.9 | |||||||||||||||||
Long-term debt | 842.8 | 799.3 | |||||||||||||||||
Postretirement health care and pension benefits | 665.2 | 680.2 | |||||||||||||||||
Other liabilities | 268.3 | 256.5 | |||||||||||||||||
Equity | |||||||||||||||||||
Common stock | 328.4 | [1] | 328 | [1] | |||||||||||||||
Additional paid-in capital | 1117.8 | 1090.5 | |||||||||||||||||
Retained earnings | 2707.4 | 2,617 | |||||||||||||||||
Accumulated other comprehensive loss | -244.3 | -359.1 | |||||||||||||||||
Treasury stock | -2105.2 | -2104.8 | |||||||||||||||||
Total Ecolab shareholders' equity | 1804.1 | 1571.6 | |||||||||||||||||
Noncontrolling interest | 8 | 7.4 | |||||||||||||||||
Total equity | 1812.1 | 1,579 | |||||||||||||||||
Total liabilities and equity | 4928.3 | 4756.9 | |||||||||||||||||
[1]Common stock, 400 million shares authorized, $1.00 par value per share, 236.7 million shares outstanding at June 30, 2009, 236.2 million shares outstanding at December 31, 2008. |
CONSOLIDATED BALANCE SHEET (Par
CONSOLIDATED BALANCE SHEET (Parenthetical) (USD $) | ||
In Millions, except Per Share data | Jun. 30, 2009
| Dec. 31, 2008
|
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance (in dollars) | 50.9 | 43.8 |
Common stock, shares authorized (in shares) | 400 | 400 |
Common stock, par value per share (in dollars per share) | $1 | $1 |
Common stock, shares outstanding (in shares) | 236.7 | 236.2 |
CONSOLIDATED STATEMENT OF CASH
CONSOLIDATED STATEMENT OF CASH FLOWS (USD $) | ||
In Millions | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
OPERATING ACTIVITIES | ||
Net income including noncontrolling interest | 157.2 | 242.1 |
Adjustments to reconcile net income including noncontrolling interest to cash provided by operating activities: | ||
Depreciation and amortization | 165 | 170 |
Deferred income taxes | 3.8 | -4.8 |
Share-based compensation expense | 14.9 | 15.4 |
Excess tax benefits from share-based payment arrangements | -1.2 | -4.9 |
Pension and postretirement plan contributions | -63.2 | (13) |
Pension and postretirement plan expense | 41.1 | 36.4 |
Special charges-restructuring, net of cash paid | 33.9 | |
Gain on sale of plant | -24.5 | |
Other, net | 5.7 | 6.8 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 53.6 | -73.3 |
Inventories | 16.3 | -30.8 |
Other assets | -8.3 | -38.5 |
Accounts payable | -32.5 | 35.2 |
Other liabilities | -86.9 | -5.4 |
Cash provided by operating activities | 299.4 | 310.7 |
INVESTING ACTIVITIES | ||
Capital expenditures | -107.7 | -164.5 |
Capitalized software expenditures | -17.3 | -35.7 |
Property sold | 1 | 34.5 |
Businesses acquired and investments in affiliates, net of cash acquired | -5.2 | -202.5 |
Sale of businesses | 0.3 | 2.2 |
Deposit into indemnification escrow | (21) | |
Cash used for investing activities | -128.9 | (387) |
FINANCING ACTIVITIES | ||
Net issuances (repayments) of commercial paper and notes payable | -99.5 | -32.3 |
Long-term debt borrowings | 248 | |
Long-term debt repayments | -3.5 | -2.8 |
Reacquired shares | -0.4 | -20.2 |
Cash dividends on common stock | -66.4 | -64.2 |
Exercise of employee stock options | 12.1 | 21.8 |
Excess tax benefits from share-based payment arrangements | 1.2 | 4.9 |
Other, net | -0.8 | |
Cash provided by (used for) financing activities | -156.5 | 154.4 |
Effect of exchange rate changes on cash | 2 | 6.5 |
INCREASE IN CASH AND CASH EQUIVALENTS | 16 | 84.6 |
Cash and cash equivalents, beginning of period | 66.7 | 137.4 |
Cash and cash equivalents, end of period | 82.7 | $222 |
Consolidated Financial Informat
Consolidated Financial Information | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Consolidated Financial Information | 1. Consolidated Financial Information The unaudited consolidated financial information for the second quarter and six months ended June30, 2009 and 2008, reflect, in the opinion of management, all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows of Ecolab Inc. (the company) for the interim periods presented. The financial results for any interim period are not necessarily indicative of results for the full year. The consolidated balance sheet data as of December31, 2008 was derived from the audited consolidated financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. The unaudited consolidated financial information should be read in conjunction with the consolidated financial statements and notes thereto incorporated in the companys Annual Report on Form10-K for the year ended December31, 2008. With respect to the unaudited financial information of the company for the three and six-month periods ended June30, 2009 and 2008 included in this Form10-Q, PricewaterhouseCoopers LLP reported that they have applied limited procedures in accordance with professional standards for a review of such information. Therefore, their separate report dated July28, 2009 appearing herein, states that they did not audit and they do not express an opinion on that unaudited financial information. Accordingly, the degree of reliance on their report on such information should be restricted in light of the limited nature of the review procedures applied. PricewaterhouseCoopers LLP is not subject to the liability provisions of Section11 of the Securities Act of 1933, as amended (the Act) for their report on the unaudited financial information because that report is not a report or a part of a registration statement prepared or certified by PricewaterhouseCoopers LLP within the meaning of Sections 7 and 11 of the Act. |
Special Gains and Charges
Special Gains and Charges | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Special Gains and Charges | 2. Special Gains and Charges Special gains and charges reported on the Consolidated Statement of Income include the following: Second Quarter Ended Six Months Ended June30 June30 (millions) 2009 2008 2009 2008 (unaudited) (unaudited) Cost of sales Restructuring charges $ 0.1 $ $ 8.1 $ Special gains and charges Restructuring charges 23.9 48.6 Business structure and optimization 0.6 3.9 1.6 5.7 Gain on sale of plant (24.0 ) (24.0 ) Gain on sale of business (1.7 ) Other non-recurring items 0.5 0.8 1.3 2.6 Total 25.0 (19.3 ) 51.5 (17.4 ) Total special gains and charges $ 25.1 $ (19.3 ) $ 59.6 $ (17.4 ) In the first quarter of 2009, the company announced plans to undertake restructuring and other cost-saving actions during 2009 in order to streamline operations and improve efficiency and effectiveness. The restructuring plan includes a reduction of the companys global workforce by approximately 1,000 positions or 4% and the reduction of plant and distribution center locations during 2009. As a result of these actions, the company recorded restructuring charges of $24.0 million ($18.9 million after tax) or $0.08 per diluted share and $56.7 million ($39.8 million after tax) or $0.17 per diluted share, during the second quarter and six months ended June30, 2009, respectively. The restructuring charges and subsequent reductions to the related liability accounts include the following: Employee Termination Asset (millions) Costs Disposals Other Total Recorded expense and accrual $ 31.2 $ 0.6 $ 0.9 $ 32.7 Cash payments (8.0 ) (8.0 ) Non-cash charges (0.6 ) (0.9 ) (1.5 ) Restructuring liability, March31, 2009 23.2 23.2 Recorded expense and accrual 24.0 24.0 Cash payments (14.8 ) (14.8 ) Effect of foreign currency translation 1.2 1.2 Restructuring liability, June30, 2009 $ 33.6 $ $ $ 33.6 Restructuring charges on the Consolidated Statement of Income have been included both as a component of cost of sales and as a component of special gains and charges. Amounts included as a component of cost of sales include asset write-downs and manufacturing related severance. Restructuring liabilities have been classified as a component of other current liabilities on the Consolidated Balance Sheet. Employee termination costs include personnel reductions and related costs for severance, benefits and outplacement services. Asset disposals include inventory and intangible asset write-downs related to the discontinuance of product lines which are not consistent with the companys long-term strategies. Other charges include a one-time curtailment charge related to the companys U.S. postretirement health care benefits plan. The restructuring plan is expected to be finalized and actions completed during the current year. The company anticipates additional restructuring |
Selected Balance Sheet Informat
Selected Balance Sheet Information | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Selected Balance Sheet Information | 3. Selected Balance Sheet Information June30 December31 (millions) 2009 2008 (unaudited) Inventories Finished goods $ 281.2 $ 263.8 Raw materials and parts 224.4 232.8 Inventories at FIFO cost 505.6 496.6 Excess of FIFO cost over LIFO cost (28.9 ) (29.4 ) Total $ 476.7 $ 467.2 Property, plant and equipment, net Land $ 28.7 $ 26.5 Buildings and leaseholds 345.0 330.6 Machinery and equipment 719.1 673.5 Merchandising equipment 1,400.9 1,333.3 Capitalized software 204.3 162.9 Construction in progress 97.2 125.5 2,795.2 2,652.3 Accumulated depreciation (1,652.3 ) (1,517.1 ) Total $ 1,142.9 $ 1,135.2 Other intangible assets, gross Customer relationships $ 288.4 $ 266.9 Intellectual property 80.7 78.3 Trademarks 114.4 111.9 Other intangibles 54.3 54.0 537.8 511.1 Accumulated amortization Customer relationships (143.8 ) (120.3 ) Intellectual property (26.4 ) (22.8 ) Trademarks (35.4 ) (31.1 ) Other intangibles (12.9 ) (10.2 ) Other intangible assets, net $ 319.3 $ 326.7 Other assets Deferred income taxes $ 178.0 $ 157.9 Pension 13.0 12.1 Other 168.8 166.2 Total $ 359.8 $ 336.2 June30 December31 (millions) 2009 2008 (unaudited) Other current liabilities Discounts and rebates $ 193.0 $ 211.5 Dividends payable 33.1 33.1 Interest payable 18.6 8.4 Restructuring liability 33.6 Taxes payable, other than income 36.1 44.4 Foreign exchange contracts 14.4 7.6 Other 153.1 131.0 Total $ 481.9 $ 436.0 Other liabilities Deferred income taxes $ 80.1 $ 74.2 Income taxes payable - non-current 74.9 65.4 Other 113.3 116.9 Total $ 268.3 $ 256.5 Accumulated other comprehensive income Unrealized gain on financial instruments $ 0.9 $ 8.0 Unrecognized pension and postretirement benefit expense (361.8 ) (364.7 ) Cumulative translation 116.6 (2.4 ) Total $ (244.3 ) $ (359.1 ) |
Interest
Interest | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Interest | 4. Interest Second Quarter Ended Six Months Ended June30 June30 (millions) 2009 2008 2009 2008 (unaudited) (unaudited) Interest expense $ 16.9 $ 17.8 $ 34.7 $ 35.1 Interest income (1.7 ) (2.5 ) (3.7 ) (5.0 ) Interest expense, net $ 15.2 $ 15.3 $ 31.0 $ 30.1 |
Financial Instruments and Hedgi
Financial Instruments and Hedging Transactions | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Financial Instruments and Hedging Transactions | 5. Financial Instruments and Hedging Transactions The carrying amount and the estimated fair value of financial instruments held by the company were: June 30, 2009 December 31, 2008 Carrying Fair Carrying Fair (millions) Amount Value Amount Value Assets Cash and cash equivalents $ 82.7 $ 82.7 $ 66.7 $ 66.7 Accounts receivable, net 970.6 970.6 971.0 971.0 Foreign exchange contracts 9.0 9.0 22.0 22.0 Liabilities Foreign exchange contracts 14.4 14.4 7.6 7.6 Notes payable 40.6 40.6 17.8 17.8 Commercial paper 194.9 194.9 316.0 316.0 Long-term debt (including current maturities) 849.1 839.7 804.4 713.8 The carrying amounts of cash equivalents, accounts receivable, notes payable and commercial paper approximate fair value because of their short maturities. The carrying amount of foreign exchange contracts is at fair value, which is determined based on foreign currency exchange rates as of the balance sheet date (level 2 - significant other observable inputs). The fair value of long-term debt is based on quoted market prices for the same or similar debt instruments. The company has concluded that it does not have any amounts of financial assets and liabilities measured using the companys own assumptions of fair market value (level 3 - unobservable inputs). Derivative Instruments and Hedging The company uses foreign currency forward contracts, interest rate swaps and foreign currency debt to manage risks associated with foreign currency exchange rates, interest rates and net investments in foreign operations. The company records all derivatives as assets and liabilities on the balance sheet at fair value. Changes in fair value are recognized immediately in earnings unless the derivative qualifies and is designated as a hedge. The effective portion of changes in fair value of hedges are initially recognized in accumulated other comprehensive income (AOCI) on the Consolidated Balance Sheet. Amounts recorded in AOCI are reclassified into earnings in the same period or periods during which the hedged transactions affect earnings. The company evaluates hedge effectiveness at inception and on an ongoing basis. If a derivative is no longer expected to be effective, hedge accounting is discontinued. Hedge ineffectiveness, if any, is recorded in earnings. The company does not hold derivative financial instruments of a speculative nature. The company is exposed to credit loss in the event of nonperformance of counterparties for foreign currency forward exchange contracts and interest rate swap agreements. The company monitors its exposure to credit risk by using credit approvals and credit limits and by selecting major international banks and financial institutions as counterparties. The company does not anticipate nonperformance by any of these counterparties. Derivatives Designated as Cash Flow Hedges The company utilizes foreign currency forward contracts to hedge the effect of foreign currency exchange rate fluctuatio |
Comprehensive Income
Comprehensive Income | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Comprehensive Income | 6. Comprehensive Income SecondQuarterEnded SixMonthsEnded June30 June30 (millions) 2009 2008 2009 2008 (unaudited) (unaudited) Net income including noncontrolling interest $ 99.5 $ 139.0 $ 157.2 $ 242.1 Other comprehensive income (loss), net of tax Foreign currency translation 143.3 17.5 119.0 60.4 Derivative instruments (7.8 ) 0.1 (7.1 ) 0.4 Pension and postretirement benefits 0.1 1.5 2.9 3.0 Total 135.6 19.1 114.8 63.8 Total comprehensive income, including noncontrolling interest 235.1 158.1 272.0 305.9 Less: Comprehensive income attributable to noncontrolling interest 0.7 0.7 0.8 1.2 Comprehensive income attributable to Ecolab $ 234.4 $ 157.4 $ 271.2 $ 304.7 |
Business Acquisitions and Inves
Business Acquisitions and Investments | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Business Acquisitions and Investments | 7. Business Acquisitions and Investments In February2009, the company acquired assets of the Stackhouse business of CORPAK Medsystems,Inc. Stackhouse is a leading developer, manufacturer and marketer of surgical helmets and smoke evacuators, primarily for use during orthopedic surgeries. The business, which has annual sales of approximately $4 million, became part of the companys U.S. Cleaning Sanitizing operations during the first quarter of 2009. Acquisitions during the first six months of 2008 included our Ecovation acquisition and other immaterial acquisition activity. Acquisitions in 2009 and 2008 are not material to the companys consolidated financial statements; therefore pro forma financial information is not presented. The aggregate purchase price of acquisitions and investments in affiliates has been reduced for any cash or cash equivalents acquired with the acquisitions. Based upon purchase price allocations and subsequent adjustments thereto, the components of the aggregate purchase prices of the acquisitions and investments in affiliates made were as follows: SecondQuarterEnded SixMonthsEnded June30 June30 (millions) 2009 2008 2009 2008 (unaudited) (unaudited) Net tangible assets acquired $ $ 5.9 $ 2.3 $ 49.4 Identifiable intangible assets Customer relationships 0.1 (1.7 ) 1.0 10.3 Intellectual property (1.5 ) 1.0 26.8 Trademarks 0.1 16.0 Other intangibles 9.6 Total 0.1 (3.1 ) 2.0 62.7 Goodwill 0.5 0.4 0.8 111.4 Total aggregate purchase price $ 0.6 $ 3.2 $ 5.1 $ 223.5 Liability for indemnification (21.0 ) Net cash paid for acquisitions $ 0.6 $ 3.2 $ 5.1 $ 202.5 The changes in the carrying amount of goodwill for each of the companys reportable segments for the quarter and six months ended June30, 2009 were as follows: UnitedStates (unaudited) Cleaning Other (millions) Sanitizing Services Total International Consolidated Balance as of December31, 2008 $ 443.6 $ 50.5 $ 494.1 $ 773.6 $ 1,267.7 Goodwill acquired during quarter 0.3 0.3 0.3 Foreign currency translation (7.2 ) (7.2 ) Balance as of March31, 2009 443.9 50.5 494.4 766.4 1,260.8 Goodwill acquired during quarter 0.5 0.5 Foreign currency translation 95.1 95.1 Balance as of June30, 2009 $ 443.9 $ 50.5 $ 494.4 $ 862.0 $ 1,356.4 |
Net Income Attributable to Ecol
Net Income Attributable to Ecolab Per Common Share | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Net Income Attributable to Ecolab Per Common Share | 8. Net Income Attributable to Ecolab Per Common Share The computations of the basic and diluted net income attributable to Ecolab per share amounts were as follows: Second Quarter Ended Six Months Ended June30 June30 (millions, except per share) 2009 2008 2009 2008 (unaudited) (unaudited) Net income attributable to Ecolab $ 99.1 $ 139.0 $ 156.5 $ 241.9 Weighted-average common shares outstanding Basic 236.5 247.1 236.3 247.1 Effect of dilutive stock options and awards 3.0 4.3 2.8 4.4 Diluted 239.5 251.4 239.1 251.5 Net income attributable to Ecolab per common share Basic $ 0.42 $ 0.56 $ 0.66 $ 0.98 Diluted $ 0.41 $ 0.55 $ 0.65 $ 0.96 Anti-dilutive stock options excluded from the computation of diluted shares 9.3 5.4 9.3 5.4 Unvested restricted stock excluded from the computation of basic shares 0.1 0.1 0.1 0.1 |
Pension and Postretirement Plan
Pension and Postretirement Plans | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Pension and Postretirement Plans | 9. Pension and Postretirement Plans The components of net periodic pension and postretirement health care benefit costs for the second quarter ended June30 are as follows: U.S. Pension Benefits U.S. (qualified and non- International Postretirement (unaudited) qualified plans) Pension Benefits Health Care Benefits (millions) 2009 2008 2009 2008 2009 2008 Service cost $ 11.8 $ 11.2 $ 3.5 $ 5.2 $ 0.5 $ 0.6 Interest cost on benefit obligation 14.8 13.0 6.5 6.8 2.4 2.4 Expected return on plan assets (18.9 ) (17.6 ) (4.3 ) (4.9 ) (0.4 ) (0.6 ) Recognition of net actuarial loss 4.0 2.2 0.4 0.2 1.1 1.1 Amortization of prior service cost (benefit) 0.1 0.3 0.1 0.1 (1.5 ) (1.6 ) Curtailment gain (0.1 ) Total expense $ 11.8 $ 9.1 $ 6.1 $ 7.4 $ 2.1 $ 1.9 The components of net periodic pension and postretirement health care benefit costs for the six months ended June30 are as follows: U.S. Pension Benefits U.S. (qualified and non- International Postretirement (unaudited) qualified plans) Pension Benefits Health Care Benefits (millions) 2009 2008 2009 2008 2009 2008 Service cost $ 23.6 $ 22.4 $ 7.3 $ 10.1 $ 1.0 $ 1.2 Interest cost on benefit obligation 29.6 26.0 12.4 13.4 4.8 4.8 Expected return on plan assets (37.8 ) (35.2 ) (8.2 ) (9.7 ) (0.8 ) (1.2 ) Recognition of net actuarial loss 8.0 4.4 0.8 0.5 2.2 2.2 Amortization of prior service cost (benefit) 0.2 0.6 0.2 0.1 (3.0 ) (3.2 ) Curtailment (gain) loss (0.1 ) 0.9 Total expense $ 23.6 $ 18.2 $ 12.4 $ 14.4 $ 5.1 $ 3.8 During the first quarter the company took actions under the restructuring program that reduced the number of active participants in both the U.S. pension and postretirement health care benefit plans. As a result of these actions, the company recognized a curtailment charge of $0.9 million related to the postretirement health care benefits plan that is included as a component of restructuring charges as discussed in Note 2. The actions were not significant to the U.S. pension plans; therefore, no curtailment was recognized. The company is not required to make any contributions to its U.S. pension plan and postretirement health care benefits plans for 2009. However, in the first quarter of 2009, the company made a $50 million voluntary contribution to the U.S. pension plan. The company is currently evaluating making an additional voluntary contribution to the U.S. pension plan in 2009. Certain international pension benefit plans are required to be funded in accordance with local government requirements. The company contributed $13 million to its international pension benefit plans during the first six mon |
Operating Segments
Operating Segments | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Operating Segments | 10. Operating Segments Financial information for each of the companys reportable segments is as follows: Second Quarter Ended Six Months Ended June30 June30 (millions) 2009 2008 2009 2008 (unaudited) (unaudited) Net Sales United States Cleaning Sanitizing $ 671.1 $ 663.7 $ 1,294.0 $ 1,317.1 Other Services 115.3 120.9 222.4 231.3 Total 786.4 784.6 1,516.4 1,548.4 International 656.4 660.2 1,281.4 1,269.2 Effect of foreign currency translation (1.3 ) 125.2 (8.1 ) 210.3 Consolidated $ 1,441.5 $ 1,570.0 $ 2,789.7 $ 3,027.9 Operating Income United States Cleaning Sanitizing $ 126.3 $ 107.2 $ 228.9 $ 212.4 Other Services 18.3 13.0 31.5 20.0 Total 144.6 120.2 260.4 232.4 International 51.9 62.8 73.5 108.0 Effect of foreign currency translation 0.2 17.6 (0.6 ) 27.7 Corporate (31.7 ) 9.9 (70.8 ) 3.1 Consolidated $ 165.0 $ 210.5 $ 262.5 $ 371.2 The International amounts included above are based on translation into U.S. dollars at the fixed currency exchange rates used by management for 2009. Consistent with the companys internal management reporting, the Corporate segment includes special gains and charges reported on the Consolidated Statement of Income. The Corporate segment also includes investments in the development of business systems and other corporate investments the company is making as part of ongoing efforts to improve efficiency and returns. Total service revenue for the U.S. Other Services and International segments, at public exchange rates are as follows: Second Quarter Ended Six Months Ended June30 June30 (millions) 2009 2008 2009 2008 (unaudited) (unaudited) U.S. Other Services $ 98.0 $ 100.7 $ 187.6 $ 191.1 International 41.0 48.2 79.4 92.9 |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Goodwill and Other Intangible Assets | 11. Goodwill and Other Intangible Assets The company tests goodwill for impairment on an annual basis during the second quarter. If circumstances change significantly, the company would also test a reporting unit for impairment during interim periods between its annual tests. During the second quarter ended June30, 2009, the company completed its annual test for goodwill impairment. Based on this testing, no adjustment to the carrying value of goodwill was necessary. Goodwill and other intangible assets arise principally from business acquisitions. Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired. Other intangible assets include primarily customer relationships, intellectual property, trademarks and other technology. Other intangible assets are amortized on a straight-line basis over their estimated economic lives. The weighted-average useful life of other intangible assets was 13 years as of both June30, 2009 and 2008. The straight-line method of amortization reflects an appropriate allocation of the cost of the intangible assets to earnings in proportion to the amount of economic benefits obtained by the company in each reporting period. Total amortization expense related to other intangible assets during the second quarters ended June30, 2009 and 2008 was $11.5 million and $11.1 million, respectively. Total amortization expense related to other intangible assets during the six months ended June30, 2009 and 2008 was $21.5 million and $25.9 million, respectively. As of June30, 2009, future estimated amortization expense related to amortizable other identifiable intangible assets will be: (unaudited) (millions) 2009 (Remainder: six-month period) $ 22 2010 41 2011 40 2012 39 2013 37 |
New Accounting Pronouncements
New Accounting Pronouncements | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
New Accounting Pronouncements | 12. New Accounting Pronouncements In September2006, the FASB issued SFAS 157, Fair Value Measurements (SFAS 157), which defines fair value, establishes a framework for measuring fair value and expanded disclosures about fair value measurement. In February2008, the FASB deferred the effective date of SFAS 157 for one year for nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis and amended SFAS 157 to add a scope exception for leasing transactions subject to SFAS 13 Accounting for Leases from its application. The company adopted SFAS 157 effective January1, 2008 for financial assets and liabilities measured on a recurring basis and effective January1, 2009 for non-financial assets and liabilities. The adoption did not have an impact on the companys consolidated results of operations and financial position. In December2007, the FASB issued SFAS 141 (revised 2007), Business Combinations (SFAS 141R). SFAS 141R establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired. SFAS 141R also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. The company adopted SFAS 141R effective January1, 2009. The adoption did not have a material impact on the companys consolidated results of operations and financial position. In December2007, the FASB issued SFAS 160, Noncontrolling Interests in Consolidated Financial Statementsan amendment of Accounting Research Bulletin No.51 (SFAS 160). SFAS 160 establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable to the parent and to the noncontrolling interest, changes in a parents ownership interest, and the valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated. SFAS 160 also establishes disclosure requirements that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. The company adopted SFAS 160 effective January1, 2009, and revised its 2008 financial statements in accordance with SFAS 160. The revision includes a reclassification of $0.2 million from selling, general and administrative expenses to net income attributable to noncontrolling interest on the Consolidated Statement of Income for the six months ended June30, 2008 and a reclassification of $7.4 million from other liabilities to noncontrolling interest on the Consolidated Balance Sheet as of December31, 2008. The adoption did not have a material impact on the companys consolidated results of operations and financial position. In March2008, the FASB issued SFAS 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment to FASB Statement 133 (SFAS 161). SFAS 161 requires companies to provide greater transparency through disclosures about how and why the company uses derivati |
Commitments and Contingencies
Commitments and Contingencies | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Commitments and Contingencies | 13. Commitments and Contingencies The company and certain subsidiaries are party to various lawsuits, claims and environmental actions that have arisen in the ordinary course of business. These include antitrust, patent infringement, product liability and wage hour lawsuits and possible obligations to investigate and mitigate the effects on the environment of the disposal or release of certain chemical substances at various sites, such as Superfund sites and other operating or closed facilities. Because litigation is inherently uncertain, and unfavorable rulings or developments could occur, there can be no certainty that the company may not ultimately incur charges in excess of presently recorded liabilities. A future adverse ruling, settlement or unfavorable development could result in future charges that could have a material adverse effect on the companys results of operations or cash flows in the period in which they are recorded. The company currently believes that such future charge, if any, would not have a material adverse effect on the companys consolidated financial position. In accordance with SFAS 5, Accounting for Contingencies (SFAS 5) and related guidance, the company records liabilities where a contingent loss is probable and can be reasonably estimated. If the reasonable estimate of a probable loss is a range, the company records the most probable estimate of the loss or the minimum amount when no amount within the range is a better estimate than any other amount. The company discloses a contingent liability even if the liability is not probable or the amount is not estimable, or both, if there is a reasonable possibility that a material loss may have been incurred. As previously disclosed, an arbitration decision in conjunction with a settlement was rendered on September24, 2007, concerning two California class-action lawsuits involving wage hour claims affecting former and current employees of the companys Pest Elimination Division. If upheld, the company will pay approximately $27.4 million, plus post-award interest in settlement of the cases. The company has appealed the decision and thereby the settlement. The company fully accrued for this award in the third quarter of 2007 and has fully accrued for the related interest as of June30, 2009. The company is a defendant in other wage hour lawsuits, one of which has been certified for class-action status. The company has completed an analysis and established an accrual for these claims in accordance with SFAS 5. |
Document and Entity Information
Document and Entity Information (USD $) | |||
In Thousands, except Share data | 6 Months Ended
Jun. 30, 2009 | Jul. 31, 2009
| Jun. 30, 2008
|
Document and Entity Information | |||
Entity Registrant Name | ECOLAB INC. | ||
Entity Central Index Key | 0000031462 | ||
Document Type | 10-Q | ||
Document Period End Date | 2009-06-30 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $10,606,696 | ||
Entity Common Stock, Shares Outstanding | 236,824,780 |