<PAGE>
FORM 11-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
-------- ---------
Commission file numbers 2-90702, 33-18202, 33-55986 AND 33-56101
----------------------------------------
A. Full title of the plan and the address of the plan, if
different from that of the issuer name below:
ECOLAB SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the
plan and the address of its principal executive office:
ECOLAB INC.
370 N. Wabasha St.
Saint Paul, Minnesota 55102-1390
<PAGE>
ECOLAB SAVINGS PLAN
----------------
REPORT ON AUDITS OF FINANCIAL STATEMENTS
As of December 31, 1997 and 1996
and
for each of the three years in the period ended December 31, 1997
AND SUPPLEMENTAL SCHEDULES
as of December 31, 1997
and
for the year then ended
<PAGE>
INDEX
------------
<TABLE>
<CAPTION>
Page(s)
-------
<S> <C>
Report of Independent Accountants 2
Financial Statements:
Statements of Net Assets Available for Plan
Benefits as of December 31, 1997 and 1996 3
Statement of Changes in Net Assets
Available for Plan Benefits, With
Fund Information, for the year ended
December 31, 1997 4 - 5
Statement of Changes in Net Assets
Available for Plan Benefits, With
Fund Information, for the year ended
December 31, 1996 6 - 7
Statement of Changes in Net Assets
Available for Plan Benefits, With
Fund Information, for the year ended
December 31, 1995 8 - 9
Notes to Financial Statements 10 - 20
Supplemental Schedules:
Line 27a - Schedule of Assets Held for
Investment Purposes as of December 31, 1997 21
Line 27d - Schedule of Reportable Transactions
for the year ended December 31, 1997 22
</TABLE>
1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Plan Administrator
Ecolab Savings Plan
We have audited the financial statements of the Ecolab Savings Plan as
listed in the accompanying index on page 1. These financial statements are the
responsibility of the Plan Administrator. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the Plan Administrator, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the net assets available for plan benefits of the
Ecolab Savings Plan as of December 31, 1997 and 1996, and the changes in net
assets available for plan benefits for each of the three years in the period
ended December 31, 1997, in conformity with generally accepted accounting
principles.
Our audits were performed for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental schedules as
listed in the accompanying index on page 1 are presented for the purpose of
additional analysis and are not a required part of the basic financial
statements but are supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The Fund Information in the Statements
of Changes in Net Assets Available for Plan Benefits is presented for purposes
of additional analysis rather than to present the changes in net assets
available for plan benefits of each fund. The supplemental schedules and Fund
Information have been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, are fairly stated, in all
material respects, in relation to the basic financial statements taken as a
whole.
/s/Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Saint Paul, Minnesota
June 12, 1998
2
<PAGE>
ECOLAB SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
as of December 31, 1997 and 1996
<TABLE>
<CAPTION>
(in thousands) 1997 1996
------- -------
<S> <C> <C>
ASSETS
Investments:
Fidelity mutual funds:
Retirement Money Market Portfolio $ 8,300 $ 7,855
Government Securities Fund 13,835 13,020
Puritan Fund 32,128 27,297
Spartan U.S. Equity Index 38,935 25,598
Magellan Fund 31,100 24,167
Small Cap Selector 13,209 9,906
Overseas Fund 11,594 10,395
-------- --------
149,101 118,238
Common/Collective trust funds:
Managed Income Fund 39,860 39,803
Ecolab Stock Fund 230,208 148,184
-------- --------
270,068 187,987
Participant loans 15,195 13,679
-------- --------
Total investments 434,364 319,904
-------- --------
Receivables:
Employer contributions 1,255
Dividends 778 619
-------- --------
Total receivables 778 1,874
-------- --------
Total Assets 435,142
-------- --------
LIABILITIES
Accrued distributions 77
-------- --------
Total Liabilities 77
-------- --------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $435,065 $321,778
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral
part of the financial statements.
3
<PAGE>
ECOLAB SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
for the year ended December 31, 1997
<TABLE>
<CAPTION>
Spartan
Retirement U.S.
Money Government Equity
(in thousands) Market Securities Puritan Index
Portfolio Fund Fund Fund
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Additions:
Interest
Dividends $ 427 $ 828 $ 2,568 $ 865
Net appreciation
in the fair value
of investments 298 3,236 8,457
Increase (decrease) in
Plan's interest in common/
collective trust funds
---------- ---------- ---------- ----------
Total investment
income 427 1,126 5,804 9,322
Plan expenses (10) (5) (11) (8)
---------- ---------- ---------- ----------
417 1,121 5,793 9,314
Employee contributions 643 1,386 1,807 2,489
Employer contributions
Transfers from other
Plans (Note 6) 136 379 662 2,240
---------- ---------- ---------- ----------
Total additions 1,196 2,886 8,262 14,043
Deductions:
Distributions and
withdrawals (814) (778) (3,999) (1,880)
---------- ---------- ---------- ----------
Net increase (decrease)
before loan activity
and interfund transfers 382 2,108 4,263 12,163
Loans granted (241) (326) (549) (834)
Loan principal and
interest repayments 231 355 526 684
Interfund transfers 73 (1,322) 591 1,324
---------- ---------- ---------- ----------
Net increase (decrease) 445 815 4,831 13,337
Net assets available
for plan benefits:
Beginning of year 7,855 13,020 27,297 25,598
---------- ---------- ---------- ----------
End of year $ 8,300 $ 13,835 $ 32,128 $ 38,935
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
Magellan Small Cap Overseas Fidelity
Fund Selector Fund Subtotal
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Additions:
Interest
Dividends $ 1,989 $ 972 $ 575 $ 8,224
Net appreciation
in the fair value
of investments 4,418 1,680 608 18,697
Increase (decrease) in
Plan's interest in common/
collective trust funds
---------- ---------- ---------- ----------
Total investment
income 6,407 2,652 1,183 26,921
Plan expenses (5) (5) (1) (45)
---------- ---------- ---------- ----------
6,402 2,647 1,182 26,876
Employee contributions 3,014 1,409 1,445 12,193
Employer contributions
Transfers from other
Plans (Note 6) 3,417
---------- ---------- ---------- ----------
Total additions 9,416 4,056 2,627 42,486
Deductions:
Distributions and
withdrawals (1,450) (582) (605) (10,108)
---------- ---------- ---------- ----------
Net increase (decrease)
before loan activity
and interfund transfers 7,966 3,474 2,022 32,378
Loans granted (897) (296) (306) (3,449)
Loan principal and
interest repayments 842 318 369 3,325
Interfund transfers (978) (193) (886) (1,391)
---------- ---------- ---------- ----------
Net increase (decrease) 6,933 3,303 1,199 30,863
Net assets available
for plan benefits:
Beginning of year 24,167 9,906 10,395 118,238
---------- ---------- ---------- ----------
End of year $ 31,100 $ 13,209 $ 11,594 $ 149,101
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
(Continued)
4
<PAGE>
ECOLAB SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
for the year ended December 31, 1997 (Continued)
<TABLE>
<CAPTION>
Managed Ecolab
(in thousands) Fidelity Income Stock Participant
Subtotal Fund Fund Loans Other Total
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Additions:
Interest $ 2,933 $ 1,069 $ 4,002
Dividends $ 8,224 $ 2,563 $ 159 10,946
Net appreciation
in the fair value
of investments 18,697 18,697
Increase (decrease) in
Plan's interest in common/
collective trust funds (508) 72,785 72,277
----------- ----------- ----------- ----------- ----------- -----------
Total investment
income 26,921 2,425 75,348 1,069 159 105,922
Plan expenses (45) (32) (51) (128)
----------- ----------- ----------- ----------- ----------- -----------
26,876 2,393 75,297 1,069 159 105,794
Employee contributions 12,193 2,110 6,078 20,381
Employer contributions 8,468 (1,255) 7,213
Transfers from other
Plans (Note 6) 3,417 1,522 110 5,049
----------- ----------- ----------- ----------- ----------- -----------
Total additions 42,486 6,025 89,843 1,179 (1,096) 138,437
Deductions:
Distributions and
withdrawals (10,108) (3,289) (10,919) (757) (77) (25,150)
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease)
before loan activity
and interfund transfers 32,378 2,736 78,924 422 (1,173) 113,287
Loans granted (3,449) (1,013) (3,305) 7,767
Loan principal and
interest repayments 3,325 1,016 2,332 (6,673)
Interfund transfers (1,391) (2,682) 4,073
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) 30,863 57 82,024 1,516 (1,173) 113,287
Net assets available
for plan benefits:
Beginning of year 118,238 39,803 148,184 13,679 1,874 321,778
----------- ----------- ----------- ----------- ----------- -----------
End of year $ 149,101 $ 39,860 $ 230,208 $ 15,195 $ 701 $ 435,065
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
ECOLAB SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
for the year ended December 31, 1996
<TABLE>
<CAPTION>
Spartan
Retirement U.S.
Money Government Equity
(in thousands) Market Securities Puritan Index
Portfolio Fund Fund Fund
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Additions:
Interest $ 15
Dividends $ 350 $ 863 3,136 $ 606
Net appreciation
(depreciation) in
the fair value
of investments (581) 526 3,759
Increase in Plan's
interest in common/
collective trust funds
---------- ---------- ---------- ----------
Total investment
income 350 282 3,677 4,365
Plan expenses (8) (6) (10) (7)
---------- ---------- ---------- ----------
342 276 3,667 4,358
Employee contributions 503 1,295 1,628 1,856
Employer contributions
Transfers from other
Plans (Note 6) 263 271 15,335 623
---------- ---------- ---------- ----------
Total additions 1,108 1,842 20,630 6,837
Deductions:
Distributions and
withdrawals (454) (315) (1,871) (631)
---------- ---------- ---------- ----------
Net increase before loan
activity and interfund
transfers 654 1,527 18,759 6,206
Loans granted (198) (316) (1,023) (630)
Loan principal and
interest repayments 163 380 449 523
Interfund transfers 1,113 (991) (3,017) 2,521
---------- ---------- ---------- ----------
Net increase 1,732 600 15,168 8,620
Net assets available
for plan benefits:
Beginning of year 6,123 12,420 12,129 16,978
---------- ---------- ---------- ----------
End of year $ 7,855 $ 13,020 $ 27,297 $ 25,598
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
Magellan Small Cap Overseas Fidelity
Fund Selector Fund Subtotal
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Additions:
Interest $ 15
Dividends $ 3,733 $ 368 $ 627 9,683
Net appreciation
(depreciation) in
the fair value
of investments (1,215) 691 468 3,648
Increase in Plan's
interest in common/
collective trust funds
---------- ---------- ---------- ----------
Total investment
income 2,518 1,059 1,095 13,346
Plan expenses (5) (8) (1) (45)
---------- ---------- ---------- ----------
2,513 1,051 1,094 13,301
Employee contributions 2,945 1,325 1,272 10,824
Employer contributions
Transfers from other
Plans (Note 6) 1,333 122 17,947
---------- ---------- ---------- ----------
Total additions 6,791 2,376 2,488 42,072
Deductions:
Distributions and
withdrawals (449) (179) (178) (4,077)
---------- ---------- ---------- ----------
Net increase before loan
activity and interfund
transfers 6,342 2,197 2,310 37,995
Loans granted (832) (286) (303) (3,588)
Loan principal and
interest repayments 838 332 326 3,011
Interfund transfers (2,641) 239 733 (2,043)
---------- ---------- ---------- ----------
Net increase 3,707 2,482 3,066 35,375
Net assets available
for plan benefits:
Beginning of year 20,460 7,424 7,329 82,863
---------- ---------- ---------- ----------
End of year $ 24,167 $ 9,906 $ 10,395 $ 118,238
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
(Continued)
6
<PAGE>
ECOLAB SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
for the year ended December 31, 1996 (Continued)
<TABLE>
<CAPTION>
Managed Ecolab
(in thousands) Fidelity Income Stock Participant
Subtotal Fund Fund Loans Other Total
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Additions:
Interest $ 15 $ 2,102 $ 1 $ 958 $ 120 $ 3,196
Dividends 9,683 2,078 11,761
Net appreciation
(depreciation) in
the fair value
of investments 3,648 3,648
Increase in Plan's
interest in common/
collective trust funds 29,304 29,304
----------- ----------- ----------- ----------- ----------- -----------
Total investment
income 13,346 2,102 31,383 958 120 47,909
Plan expenses (45) (27) (41) (113)
----------- ----------- ----------- ----------- ----------- -----------
13,301 2,075 31,342 958 120 47,796
Employee contributions 10,824 2,054 4,504 17,382
Employer contributions 6,276 1,255 7,531
Transfers from other
Plans (Note 6) 17,947 391 18,338
----------- ----------- ----------- ----------- ----------- -----------
Total additions 42,072 4,520 42,122 958 1,375 91,047
Deductions:
Distributions and
withdrawals (4,077) (2,161) (4,434) (483) (11,155)
----------- ----------- ----------- ----------- ----------- -----------
Net increase before loan
activity and interfund
transfers 37,995 2,359 37,688 475 1,375 79,892
Loans granted (3,588) (1,084) (2,201) 6,873
Loan principal and
interest repayments 3,011 961 1,789 (5,761)
Interfund transfers (2,043) (10) 2,053
----------- ----------- ----------- ----------- ----------- -----------
Net increase 35,375 2,226 39,329 1,587 1,375 79,892
Net assets available
for plan benefits:
Beginning of year 82,863 37,577 108,855 12,092 499 241,886
----------- ----------- ----------- ----------- ----------- -----------
End of year $ 118,238 $ 39,803 $ 148,184 $ 13,679 $ 1,874 $ 321,778
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
ECOLAB SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
for the year ended December 31, 1995
<TABLE>
<CAPTION>
Spartan
Retirement U.S.
Money Government Equity
(in thousands) Market Securities Puritan Index
Portfolio Fund Fund Fund
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Additions:
Interest $ 33
Dividends $ 285 $ 615 $ 600 407
Net appreciation in
the fair value
of investments 899 1,149 4,826
Increase in Plan's
interest in common/
collective trust funds
---------- ---------- ---------- ----------
Total investment
income 285 1,514 1,749 5,266
Plan expenses (8) (10) (9) 7
---------- ---------- ---------- ----------
277 1,504 1,740 5,273
Employee contributions 391 1,334 1,211 1,448
Employer contributions
Other
---------- ---------- ---------- ----------
Total additions 668 2,838 2,951 6,721
Deductions:
Distributions and
withdrawals (470) (353) (356) (380)
---------- ---------- ---------- ----------
Net increase before loan
activity and interfund
transfers 198 2,485 2,595 6,341
Loans granted (159) (464) (276) (569)
Loan principal and
interest repayments 195 376 325 375
Interfund transfers 5,889 10,023 9,485 10,831
---------- ---------- ---------- ----------
Net increase (decrease) 6,123 12,420 12,129 16,978
Net assets available
for plan benefits:
Beginning of year - - - -
---------- ---------- ---------- ----------
End of year $ 6,123 $ 12,420 $ 12,129 $ 16,978
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
Magellan Small Cap Overseas Fidelity
Fund Selector Fund Subtotal
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Additions:
Interest $ 33
Dividends $ 1,159 $ 465 $ 167 3,698
Net appreciation in
the fair value
of investments 2,951 717 674 11,216
Increase in Plan's
interest in common/
collective trust funds
---------- ---------- ---------- ----------
Total investment
income 4,110 1,182 841 14,947
Plan expenses (12) (4) (5) (41)
---------- ---------- ---------- ----------
4,098 1,178 836 14,906
Employee contributions 2,229 920 1,184 8,717
Employer contributions
Other
---------- ---------- ---------- ----------
Total additions 6,327 2,098 2,020 23,623
Deductions:
Distributions and
withdrawals (399) (199) (273) (2,430)
---------- ---------- ---------- ----------
Net increase before loan
activity and interfund
transfers 5,928 1,899 1,747 21,193
Loans granted (765) (241) (277) (2,751)
Loan principal and
interest repayments 564 217 313 2,365
Interfund transfers 14,733 5,549 5,546 62,056
---------- ---------- ---------- ----------
Net increase (decrease) 20,460 7,424 7,329 82,863
Net assets available
for plan benefits:
Beginning of year - - - -
---------- ---------- ---------- ----------
End of year $ 20,460 $ 7,424 $ 7,329 $ 82,863
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
(Continued)
8
<PAGE>
ECOLAB SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
for the year ended December 31, 1995 (Continued)
<TABLE>
<CAPTION>
Common Managed
Fidelity Income Stock Income
(in thousands) Subtotal Fund Fund Fund
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Additions:
Interest $ 33 $ 2,407
Dividends 3,698
Net appreciation in
the fair value
of investments 11.216
Increase in Plan's
interest in common/
collective trust funds
---------- ----------
Total investment
income 14,947 2,407
Plan expenses (41) 4
---------- ----------
14,906 2,411
Employee contributions 8,717 2,325
Employer contributions
Other
---------- ----------
Total additions 23,623 4,736
Deductions:
Distributions and
withdrawals (2,430) (2,578)
---------- ----------
Net increase before loan
activity and interfund
transfers 21,193 2,158
Loans granted (2,751) (1,270)
Loan principal and
interest repayments 2,365 821
Interfund transfers 62,056 $(63,258) $(24,496) 35,868
---------- ---------- ---------- ----------
Net increase (decrease) 82,863 (63,258) (24,496) 37,577
Net assets available
for plan benefits:
Beginning of year - 63,258 24,496 -
---------- ---------- ---------- ----------
End of year $ 82,863 $ - $ - $ 37,577
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
Ecolab
Stock Participant
(in thousands) Fund Loans Other Total
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Additions:
Interest $ 703 $ 3,143
Dividends $ 1,269 $ 499 5,466
Net appreciation in
the fair value
of investments 11,216
Increase in Plan's
interest in common/
collective trust funds 32,977 32,977
----------- ----------- ----------- -----------
Total investment
income 34,246 703 499 52,802
Plan expenses (41) (78)
----------- ----------- ----------- -----------
34,205 703 499 52,724
Employee contributions 4,059 15,101
Employer contributions 5,837 5,837
Other 527 527
----------- ----------- ----------- -----------
Total additions 44,101 1,230 499 74,189
Deductions:
Distributions and
withdrawals (3,920) (178) (9,106)
----------- ----------- ----------- -----------
Net increase before loan
activity and interfund
transfers 40,181 1,052 499 65,083
Loans granted (2,170) 6,191
Loan principal and
interest repayments 1,332 (4,518)
Interfund transfers (10,170)
----------- ----------- ----------- -----------
Net increase (decrease) 29,173 2,725 499 65,083
Net assets available
for plan benefits:
Beginning of year 79,682 9,367 - 176,803
----------- ----------- ----------- -----------
End of year $ 108,855 $ 12,092 $ 499 $ 241,886
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
ECOLAB SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
----------
1. DESCRIPTION OF PLAN:
The following brief description of the Ecolab Savings Plan (the "Plan") is
provided for general information purposes only. Participants should refer
to the Plan document for complete information regarding the Plan's
definitions, benefits, eligibility and other matters.
GENERAL AND ELIGIBILITY:
The Plan is a qualified defined contribution plan available to employees of
Ecolab Inc. (the "Company") and certain of its subsidiaries. Employees
regularly scheduled to work at least 20 hours per week may participate
immediately in the Plan provided they are not subject to a collective
bargaining agreement which does not provide for their inclusion. Part-time
employees working less than 20 hours a week must have been employed for a
twelve consecutive month period during which they have worked at least
1,000 hours to be eligible to participate. Employee participation in the
Plan is voluntary.
The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") and the Internal Revenue Code of
1986, as amended (the "Code").
Effective January 1, 1997, employees who were previously participating in
the Huntington Laboratories, Inc. Savings and Retirement Plan became
participants of the Plan. Effective January 1, 1996, employees who were
previously participating in the Profit Sharing Retirement Plan of Kay
Chemical Company and the Kay Chemical Company Section 401(k) Savings Plan
became participants of the Plan. Also effective January 1, 1996, employees
who were previously participating in the Profit Sharing Plan and Trust for
Employees of Western Water Management, Inc. became participants of the Plan
(see Note 6). Assets transferred into the Plan as these employees became
participants are shown separately in the Statement of Changes in Net Assets
Available for Plan Benefits, With Fund Information.
CONTRIBUTIONS:
Contributions are made to the Plan as "before-tax savings contributions,"
"after-tax savings contributions," "employer matching contributions" or
"employer profit sharing contributions."
(Continued)
10
<PAGE>
ECOLAB SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, (Continued)
----------
1. DESCRIPTION OF PLAN, (Continued):
Before-tax savings contributions are contributions made by the Company on
behalf of participants who have agreed to have their taxable compensation
reduced. Participants may reduce their compensation up to 10% (subject to
a statutory annual maximum of $9,500 in 1997 and 1996 and $9,240 in 1995)
for the purpose of making before-tax savings contributions to the Plan.
After-tax savings contributions are contributions made by the Company on
behalf of participants through after-tax payroll deductions. The total of
before-tax savings contributions made on behalf of a participant and a
participant's after-tax savings contributions cannot exceed 16% of a
participant's compensation.
Employer matching contributions are made by the Company in an amount equal
to 50% of the total before-tax savings contributions and after-tax savings
contributions for a payroll period which do not exceed 6% of a
participant's eligible compensation for that period, as defined. Employer
matching contributions are invested entirely in the Ecolab Stock Fund.
Employer profit sharing contributions are discretionary and are determined
annually by the Company's Board of Directors. Profit sharing contributions
are divided among employees who are not eligible for a management incentive
or equivalent bonus and are invested entirely in the Ecolab Stock Fund.
The levels of contributions made by or on behalf of participants who are
"highly compensated," as defined in the Code, are subject to limitations
under the Code based on the level of contributions made by employees who
are not considered highly compensated.
VESTING:
Before-tax savings contributions, after-tax savings contributions, employer
profit sharing contributions and investment income thereon are always 100%
vested. Participants become vested in the employer matching contributions
and investment income thereon at a rate of 25% each year, after two years
of continuous service, until fully vested after five years of continuous
service. Participants also become fully vested in those contributions in
the event of death or total disability while employed by the Company or
retirement at or after age 65.
(Continued)
11
<PAGE>
ECOLAB SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, (Continued)
----------
1. DESCRIPTION OF PLAN, (Continued):
PLAN BENEFITS:
Benefits to participants are limited to the amount vested in each
participant's account. Upon retirement, death, disability or separation
from service, a distribution may be made to the participant or beneficiary
equal to the vested portion of the participant's account. An employee
distribution or withdrawal from the Plan may be subject to federal income
tax. Forfeitures of nonvested employer matching contributions and related
investment income are used to reduce future employer contributions.
PARTICIPANT LOANS:
Participants and beneficiaries are permitted to borrow from their accounts.
The total amount of a participant's loan may not exceed the lesser of (a)
$50,000 minus the participant's highest outstanding loan balance for the
previous twelve-month period, or (b) 50% of the participant's vested
interest in his or her account. When a loan is granted, the appropriate
account balances are reduced and a separate loan account is created. Loan
payments, together with interest at a market rate determined by the Plan
Administrator, are repaid generally over 5 or 10 years.
PARTICIPANT ACCOUNTS AND ALLOCATION:
Fidelity Institutional Retirement Services Company ("Fidelity"), a division
of Fidelity Investments Institutional Services Company, Inc., provides
investment management, recordkeeping and trustee services for the Plan
directly or through one or more of its subsidiaries.
Each participant's account is credited with the participant's
contributions, the employer matching contributions, any employer profit
sharing contributions and investment income thereon.
(Continued)
12
<PAGE>
ECOLAB SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, (Continued)
----------
1. DESCRIPTION OF PLAN, (Continued):
Except for employer matching and profit sharing contributions which are
invested entirely in the Ecolab Stock Fund, participants are allowed to
allocate their entire account balance and/or future before-tax and
after-tax savings contributions in any combination of nine investment
options. Participants can transfer their account balances among the
investment options and/or change the investment of their future
contributions and earnings thereon daily, as desired. These transfers and
changes must be made in whole dollar amounts of at least $250 and/or in
whole percent increments.
All contributions made under the Plan are paid to and invested by Fidelity
in one or more of the available investment options as directed by the
participants. Seven of the nine investment options are mutual funds of
Fidelity, managed by Fidelity Management and Research Company. The
remaining investment options include a fund invested primarily in
investment contracts and a fund invested primarily in Ecolab Inc. common
stock, both managed by Fidelity Management Trust Company. The nine
investment funds available to participants are:
Fidelity Retirement This portfolio invests in short-term
Money Market money market securities of U.S. and
Portfolio foreign issuers.
Fidelity Government This fund invests primarily in securities
Securities Fund issued by the U.S. government agencies or
instrumentalities.
Fidelity Puritan Fund This fund invests in a broadly diversified
portfolio of domestic and foreign common
stocks, preferred stocks and bonds, including
high-yield debt securities.
(Continued)
13
<PAGE>
ECOLAB SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, (Continued)
----------
1. DESCRIPTION OF PLAN, (Continued):
Fidelity Spartan U.S. This fund (formerly called the Fidelity
Equity Index Fund U.S. Equity Index Portfolio) invests
primarily in the common stocks of the 500
companies that make up the Standard & Poor's
Daily Stock Price Index.
Fidelity Magellan Fund This fund invests in common stocks of both
well-known and lesser known companies with
potentially above-average growth potential
and a correspondingly higher level of risk.
Fidelity Small Cap This fund (formerly called the Fidelity
Selector Small Cap Stock Fund) invests primarily in
stocks of small market capitalization
companies.
Fidelity Overseas Fund This fund invests primarily in common stocks
and securities convertible into common stock
of issuers whose principal business
activities are outside of the U.S.
Managed Income Fund This fund is a common/collective trust fund
comprised of investment contracts
which were purchased before 1995 by the
former investment manager, U.S. Treasury and
other synthetics and units in a commingled
trust fund, the Managed Income Portfolio II
("MIPII") of the Fidelity Group Trust for
Employee Benefit Plans. MIPII invests
primarily in contracts issued by major
insurance companies and other approved
financial institutions.
Ecolab Stock Fund This fund is a common/collective trust fund
that invests primarily in Ecolab common stock
with a small portion in money market
securities.
(Continued)
14
<PAGE>
ECOLAB SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, (Continued)
----------
1. DESCRIPTION OF PLAN, (Continued):
As of December 31, 1997, approximately 7,800 employees were participating
in the Plan. At December 31, 1997, 1996 and 1995, the approximate number
of participants in each investment fund was as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Fidelity Retirement Money
Market Portfolio 900 900 700
Fidelity Government Securities Fund 1,800 1,800 1,700
Fidelity Puritan Fund 2,500 2,300 1,700
Fidelity Spartan U.S. Equity Index Fund 3,200 2,900 2,500
Fidelity Magellan Fund 3,500 3,200 2,800
Fidelity Small Cap Selector 2,200 2,100 1,800
Fidelity Overseas Fund 2,400 2,200 1,900
Managed Income Fund 4,200 3,500 2,900
Ecolab Stock Fund 7,800 6,400 5,800
</TABLE>
PLAN TERMINATION:
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of
Plan termination, participants would become 100% vested in their accounts.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The financial statements are prepared in conformity with generally accepted
accounting principles and use the following significant accounting
policies.
VALUATION OF INVESTMENTS:
Investments in the Managed Income Fund, a common/collective trust fund, are
recorded at the underlying net asset value per unit as determined by the
Plan's trustee, which approximates fair value. Investments in the Ecolab
Stock Fund, a common/collective trust fund, are recorded at the underlying
net asset value per unit as determined by the Plan's trustee, which
approximates fair value based on the quoted market price of the Company's
common stock. Fidelity mutual funds are recorded at the underlying net
asset value per unit, which approximates fair value based on the publicly
quoted market price of these funds.
(Continued)
15
<PAGE>
ECOLAB SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, (Continued)
----------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (Continued):
The Loan Accounts of participants are recorded at the principal value of
outstanding loans, plus accrued interest, which approximates fair value.
As of December 31, 1996 and 1995, approximately $3.6 million of assets
invested in the Managed Income Fund were with an insurance company which
was taken over in 1994 by regulators. As a result, the assets were
segregated as of August 12, 1994 and were unavailable for investment
transfers, loans, distributions or withdrawals by participants. During
1997, a settlement was reached for all of the insurance company's
contract-holders and participants to receive 100% of the principal balance
plus approximately 15%, or $561,000, as an additional interest credit. The
principal and interest credit related to these assets were automatically
invested into the Managed Income Fund, at which time participants could
transfer their respective balances to any of the Plan's other investment
options in accordance with regular Plan terms.
INTEREST AND DIVIDENDS:
Interest income is recorded as earned on an accrual basis and dividend
income is recorded on the ex-dividend date.
NET APPRECIATION (DEPRECIATION) IN THE FAIR VALUE OF INVESTMENTS:
The Plan presents in the Statements of Changes in Net Assets Available for
Plan Benefits, With Fund Information, the net appreciation (depreciation)
in the fair value of its investments, which consists of the realized gains
or losses and the unrealized appreciation (depreciation) on those
investments.
(Continued)
16
<PAGE>
ECOLAB SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, (Continued)
----------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (Continued):
CONTRIBUTIONS:
Participant before-tax and after-tax savings contributions are recorded in
the period the employer makes the payroll deductions. Employer matching
contributions are accrued based on participant contributions. For the
1996 Plan year, the Company's Board of Directors declared a profit sharing
contribution amounting to $1,255,000 to be divided among eligible
participants. No employer profit sharing contributions were made for the
1997 or 1995 Plan years.
USE OF ESTIMATES:
The preparation of the Plan's financial statements in conformity with
generally accepted accounting principles requires the Plan Administrator to
make significant estimates and assumptions that affect the reported amounts
of net assets available for benefits at the date of the financial
statements and the changes in net assets available for benefits during the
reporting period and, when applicable, disclosures of contingent assets and
liabilities at the date of the financial statements. Actual results could
differ from those estimates.
RISKS AND UNCERTAINTIES:
The Plan provides for various investment options in various combinations of
investment funds. Investment funds are exposed to various risks, such as
interest rate, market and credit risks. Due to the level of risk
associated with certain investment securities, it is at least reasonably
possible that changes in the values of investment securities will occur in
the near term and that such changes could materially affect participants'
account balances and the amounts reported in the Statement of Net Assets
Available for Plan Benefits in future periods.
DISTRIBUTIONS TO PARTICIPANTS:
Distributions to participants are recorded when the distribution is made.
PLAN EXPENSES:
A portion of the administrative expenses of the Plan are paid by the
Company. Certain asset management and administrative fees of the Plan are
charged against the Plan's investment income.
(Continued)
17
<PAGE>
ECOLAB SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, (Continued)
----------
3. INVESTMENTS:
Investments that represent 5 percent or more of the Plan's net assets
available for Plan benefits at December 31, 1997 and 1996 are summarized as
follows:
<TABLE>
<CAPTION>
Fair Value Cost
----------------------- -----------------------
(in thousands) 1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Fidelity Puritan Fund $ 32,128 $ 27,297 $ 28,139 $ 26,016
Fidelity Spartan U.S.
Equity Index Fund 38,935 25,598 25,209 18,921
Fidelity Magellan Fund 31,100 24,167 25,947 22,782
Managed Income Fund 39,860 39,803 40,368 39,803
Ecolab Stock Fund 230,208 148,184 95,889 77,324
</TABLE>
At December 31, 1997, the fair value of non-participant-directed
investments in the Ecolab Stock Fund approximated $143,604,000.
4. TAX STATUS:
The Plan constitutes a qualified trust under Section 401(a) of the Code and
therefore is exempt from federal income taxes under provisions of Section
501(a). The Plan also complies with the provisions of Section 401(k) of
the Code. A tax qualification letter, dated October 26, 1994, was received
from the Internal Revenue Service. The letter stated that the Plan, as
then designed, was in compliance with the applicable requirements of the
Code. The Plan has been amended since receiving the determination letter
in connection with the change in its trustee and investment managers along
with other modifications (see Note 6). However, the Plan Administrator
believes the Plan is currently designed and being operated in compliance
with the applicable requirements of the Code and therefore believes the
Plan is qualified and tax-exempt, as described above. Therefore, no
provision for income taxes has been included in the Plan's financial
statements.
(Continued)
18
<PAGE>
ECOLAB SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, (Continued)
----------
5. RELATED PARTY AND PARTY-IN-INTEREST TRANSACTIONS:
The trustee is authorized under contract provisions, or by ERISA
regulations providing an administrative or statutory exemption, to invest
in funds under its control and in securities of the Company. As of December
31, 1997, 1996 and 1995, investments in funds managed by Fidelity totaled
43%, 49% and 50% of Plan assets, respectively.
Participant contributions are invested in the Managed Income Fund and
mutual funds under the trustee's control. In addition, participant and
employer matching contributions are invested in the Ecolab Stock Fund
consisting of primarily Ecolab Inc. common stock and also short-term
investment funds under the trustee's control. In 1997, 1996 and 1995, the
number and dollar value of such purchases and sales of funds managed by the
trustee and funds consisting of Company stock were as follows (dollars in
thousands):
<TABLE>
<CAPTION>
1997
------------------------------------------------------
# of # of
Purchases Sales Purchases Sales
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Fidelity funds 2,658 2,031 $ 85,593 $ 72,863
Ecolab Stock Fund 334 273 $ 42,393 $ 33,154
1996
------------------------------------------------------
# of # of
Purchases Sales Purchases Sales
--------- --------- --------- ---------
Fidelity funds 2,691 1,968 $ 81,625 $ 47,738
Ecolab Stock Fund 342 270 $ 29,760 $ 19,735
1995
------------------------------------------------------
# of # of
Purchases Sales Purchases Sales
--------- --------- --------- ---------
Fidelity funds 2,469 1,624 $ 115,034 $ 68,422
Ecolab Stock Fund 318 229 $ 22,029 $ 25,729
</TABLE>
(Continued)
19
<PAGE>
ECOLAB SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, (Continued)
----------
6. PLAN AMENDMENTS:
The Plan was amended, effective in 1998, to incorporate various legislative
changes relating to discrimation testing and benefits distribution, and to
incorporate changes in Securities and Exchange Commission requirements
relating to the Ecolab Stock Fund. The amendment also included other minor
modications necessary to allow for efficient and equitable Plan
administration. To the extent required to maintain qualification of the
Plan under Code section 401(a), this amendment was effective retroactively
as of January 1, 1997.
A Declaration of Transfer was adopted, effective 12/1/97, to transfer the
assets and liabilities of the Plan attributable to the accounts of all
participants who become employed by Century Products, Inc. to the trustee
of the trust established under the Century Products, Inc. 401(k) Plan. The
amounts transferred for these participants in 1997 are included with
distributions and withdrawals on the Statement of Changes in Net Assets
Available for Plan Benefits, With Fund Information.
A Declaration of Merger was adopted by the Company, effective January 1,
1997, to merge the assets of the Huntington Laboratories, Inc. Savings and
Retirement Plan into the Plan.
A Declaration of Merger was adopted by the Company, effective January 1,
1996, to merge the assets of the Profit Sharing Retirement Plan and Trust
Agreement of Kay Chemical Company and the Kay Chemical Company Section
401(k) Savings Plan into the Plan. A Declaration of Merger was also
adopted by the Company, effective June 1, 1996, to merge the assets of the
Profit Sharing Plan and Trust for Employees of Western Water Management,
Inc. into the Plan.
The assets transferred into the Plan as a result of these mergers in the
Plan years 1997 and 1996 were invested in similar investment options as
under the prior plans until participants were able to direct their accounts
into one or more of the Plan's available investment options.
The Plan was amended, effective in 1995, to provide for the change in its
trustee and investment managers to Fidelity. As a result of these changes,
the Plan increased its investment options available to Plan participants
from three to nine, provided for daily processing and valuation of accounts
and the ability to handle the majority of participant transactions by
telephone.
20
<PAGE>
SUPPLEMENTAL SCHEDULES
<PAGE>
ECOLAB SAVINGS PLAN
LINE 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
as of December 31, 1997
--------------
EIN 41-0231510
Plan Number: 003
<TABLE>
<CAPTION>
(Dollars in thousands)
(c)
Description of Investment,
(b) Including Maturity Date, (e)
Identity of Issue, Borrower, Rate of Interest, Collateral, (d) Current
(a) Lessor or Similar Party Par or Maturity Value Cost Value
- --- ---------------------------------- ------------------------------------ ---------- ----------
<S> <C> <C> <C> <C>
* Fidelity Management and Fidelity Retirement Money
Research Co. Market Portfolio,
8,300,004 units $ 8,300 $ 8,300
* Fidelity Management and Fidelity Government
Research Co. Securities Fund,
1,396,038 units 13,350 13,835
* Fidelity Management and Fidelity Puritan Fund,
Research Co. 1,657,803 units 28,139 32,128
* Fidelity Management and Fidelity Spartan U.S.
Research Co. Equity Index Fund,
1,113,069 units 25,209 38,935
* Fidelity Management and Fidelity Magellan Fund,
Research Co. 326,435 units 25,947 31,100
* Fidelity Management and Fidelity Small Cap Selector,
Research Co. 829,230 units 10,681 13,209
* Fidelity Management and Fidelity Overseas Fund,
Research Co. 356,293 units 10,514 11,594
* Fidelity Management Managed Income Fund,
Trust Co. 40,367,789 units 40,368 39,860
* Ecolab Inc. Ecolab Stock Fund,
8,753,154 units 95,889 230,208
* Participant loans Participant loans due
1/1998-12/2007 (stated
interest rates ranging
from 6.0% to 11.5%) 15,195
---------- ----------
$ 258,397 $ 434,364
---------- ----------
---------- ----------
</TABLE>
* Party-in-interest
21
<PAGE>
ECOLAB SAVINGS PLAN
LINE 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
for the year ended December 31, 1997
--------------
EIN 41-0231510
Plan Number: 003
<TABLE>
<CAPTION>
(Dollars in thousands) (h)
Value of
(b) (c) (d) (g) Asset on (i)
(a) Description Purchase Selling Cost of Transaction Net Gain
Identity of Party Involved of Asset Price Price Asset Date (Loss)
- -------------------------- -------------------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
SERIES OF TRANSACTIONS:
Fidelity Management
Trust Company Fidelity Retirement Money
Market Portfolio $ 16,732 $ 16,732 $ 16,732
$ 16,287 16,287 16,287 $ -
Fidelity Puritan Fund 9,785 9,785 9,785
8,190 7,662 8,190 528
Fidelity Spartan U.S.
Equity Index Fund 16,149 16,149 16,149
11,269 9,861 11,269 1,408
Managed Income Fund 19,636 19,636 19,636
19,071 19,071 19,071 -
Ecolab Inc./Fidelity
Management Trust Co. Ecolab Stock Fund 42,393 42,393 42,393
33,154 23,828 33,154 9,326
</TABLE>
NOTE (1): The following columns of Schedule 27d were excluded as they are not
applicable:
(e) - Lease Rental and (f) - Expenses Incurred with Transaction.
22
<PAGE>
ECOLAB SAVINGS PLAN
EXHIBITS
The following documents are filed as exhibits to this Report:
Exhibit No. Document
- ----------- --------
(23) Consent of Independent Accountants.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
ECOLAB SAVINGS PLAN
DATE June 29, 1998 By: /s/ Diane A. Wigglesworth
-------------------- ---------------------------------------------
Diane A. Wigglesworth
Compensation Vice President,
Ecolab Inc.
(Plan Administrator)
23
<PAGE>
EXHIBIT INDEX
Exhibit No. Document Method of Filing
- ----------- -------- ----------------
(23) Consent of Independent Accountants. Filed herewith
electronically
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statements
of Ecolab Inc. on Form S-8 (Registration Nos. 2-90702, 33-18202, 33-55986 and
33-56101) of our report dated June 12, 1998 on our audits of the financial
statements of the Ecolab Savings Plan as of December 31, 1997 and 1996 and for
each of the three years in the period ended December 31, 1997, and related
supplemental schedules as of and for the year ended December 31, 1997, which
report is included in this Annual Report on Form 11-K. We also consent to the
reference to our firm under the caption "Interests of Named Experts and Counsel"
in Registration No. 33-56101, as it relates to the financial statements and
related supplemental schedules referred to above and included in this Annual
Report on Form 11-K.
/s/Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Saint Paul, Minnesota
June 29, 1998
