NALCO CHEMICAL COMPANY
INDEX
Page No.
Part I. Financial Information:
Item 1. Financial Statements
Condensed Consolidated Statements of
Financial Condition - June 30, 1995
(Unaudited) and December 31, 1994 .............2
Condensed Consolidated Statements of
Earnings (Unaudited) -
Three Months and Six Months
Ended June 30, 1995 and 1994 ..................3
Condensed Consolidated Statements of
Cash Flows (Unaudited) -
Three Months and Six Months
Ended June 30, 1995 and 1994 ..................4
Notes to Condensed Consolidated Financial
Statements (Unaudited) ........................5
Report of Independent Accountants on
Review of Interim Financial Information .......8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations ................................9
Part II. Other Information:
Item 6. Exhibits and Reports on Form 8-K .........14
Exhibit (11) - Statement Re: Computation
of Earnings Per Share .............15
Exhibit (15) - Awareness Letter of Independent
Accountants .......................17
Exhibit (27) - Financial Data Schedule ...........18
Signatures .......................................19
PART I. FINANCIAL INFORMATION
NALCO CHEMICAL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
Dollars in millions (Unaudited) (Note)
<S> <C> <S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 41.5 $ 45.1
Accounts receivable, less allowances
of $6.5 and $5.6, respectively 222.1 205.9
Inventories
Finished products 57.9 51.4
Materials and work in process 29.8 32.4
87.7 83.8
Prepaid expenses, taxes and other
current assets 28.0 27.3
Total current assets 379.3 362.1
Investment in and advances
to partnership 129.3 109.4
Goodwill, less accumulated
amortization of $16.6 and
$15.1, respectively 109.6 114.4
Other assets 164.7 172.4
Property, plant and equipment 1,114.3 1,067.1
Less allowances for depreciation (574.7) (543.2)
539.6 523.9
$1,322.5 $1,282.2
LIABILITIES/SHAREHOLDERS' EQUITY
Current liabilities
Short-term debt $ 56.4 $ 21.6
Accounts payable 108.2 109.1
Accrued formation and
consolidation expenses 28.3 43.2
Other current liabilities 104.0 100.4
Total current liabilities 296.9 274.3
Long-term debt 245.5 245.3
Deferred income taxes 53.8 56.8
Accrued postretirement benefits 97.9 95.2
Other liabilities 65.7 66.4
Shareholders' equity 562.7 544.2
$1,322.5 $1,282.2
</TABLE>
Note: The Statement of Financial Condition at December 31, 1994 has been
derived from the audited financial statements at that date.
See accompanying Notes to Condensed Consolidated Financial Statements
(Unaudited)
<TABLE>
<CAPTION>
NALCO CHEMICAL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
Three Months Ended Six Months Ended
(Amounts in millions, June 30 June 30
except per share data) 1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net sales $326.8 $352.0 $642.2 $688.2
Operating costs and expenses
Cost of products sold 147.7 158.3 289.9 308.7
Operating expenses 120.9 135.3 237.4 262.0
268.6 293.6 527.3 570.7
Operating earnings 58.2 58.4 114.9 117.5
Other income (expense)
Interest and other income 2.0 2.8 3.3 5.5
Interest expense (4.3) (6.6) (8.4) (13.4)
Equity in earnings of
partnership 2.6 - 8.2 -
Earnings before income taxes 58.5 54.6 118.0 109.6
Income taxes 21.4 21.5 43.1 42.7
Net earnings $ 37.1 $ 33.1 $ 74.9 $ 66.9
Per common share
Net earnings - Primary $ .51 $ .44 $ 1.02 $ .89
Net earnings - Fully diluted $ .47 $ .41 $ .95 $ .83
Cash dividends $ .25 $ .24 $ .49 $ .465
Average primary shares
outstanding (in thousands) 67,961 69,127 68,159 69,325
Average fully diluted shares
outstanding (in thousands) 76,030 77,263 76,242 77,469
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
(Unaudited).
<TABLE>
<CAPTION>
NALCO CHEMICAL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended Six Months Ended
June 30 June 30
Dollars in millions 1995 1994 1995 1994
<S> <C> <C> <C> <C>
Cash provided by (used for)
operating activities
Net earnings $ 37.1 $ 33.1 $ 74.9 $ 66.9
Adjustments not affecting
cash Depreciation and
amortization 22.2 23.4 43.8 47.1
Other, net (0.1) 7.9 (13.2) 4.8
Changes in current assets
and liabilities (22.4) (6.3) (16.0) 5.6
Net cash provided by
operations 36.8 58.1 89.5 124.4
Investing activities
Additions to property,
plant and equipment (33.9) (33.8) (61.0) (68.5)
Other (6.3) (3.9) (14.2) (0.7)
Net cash used for
investing activities (40.2) (37.7) (75.2) (69.2)
Financing activities
Cash dividends (19.6) (19.2) (38.8) (37.5)
Changes in short-term debt 22.6 0.9 34.8 9.4
Changes in long-term debt 1.0 0.3 0.9 (1.2)
Common stock reacquired (4.5) (21.5) (23.3) (32.4)
Other 2.0 1.8 7.5 5.4
Net cash provided by
(used for) financing
activities 1.5 (37.7) (18.9) (56.3)
Effects of foreign exchange
rate changes (0.8) 1.8 1.0 3.0
Increase (decrease) in
cash and cash equivalents $ (2.7) $(15.5) $ (3.6) $ 1.9
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
(Unaudited).
NALCO CHEMICAL COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
June 30, 1995
NOTE A -- BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements have been
prepared, without audit, in accordance with the instructions to Form 10-Q
and therefore do not include all information and footnotes necessary for
a fair presentation of financial position, results of operations, and cash
flows in conformity with generally accepted accounting principles.
Financial information as of December 31 has been derived from the audited
financial statements of the Company, but does not include all disclosures
required by generally accepted accounting principles.
It is the opinion of management that the unaudited condensed consolidated
financial statements include all adjustments necessary to fairly state
the results of operations for the three month and six month periods ended
June 30, 1995 and 1994. The results of interim periods are not necessarily
indicative of results to be expected for the year. For further information,
refer to the consolidated financial statements and footnotes thereto
included in the Company's annual report on Form 10-K for the year ended
December 31, 1994.
The unaudited condensed consolidated financial statements and the related
notes have been reviewed by Nalco's independent accountants, Price
Waterhouse LLP. The Independent Accountants' Review Report is included
on page 8.
NOTE B -- SHAREHOLDERS' EQUITY
Shareholders' equity may be further detailed as follows:
<TABLE>
<CAPTION>
June 30, December 31,
Dollars in millions, 1995 1994
except per share figures
<S> <C> <C>
Preferred stock -
par value $1.00 per share;
authorized 2,000,000 shares;
Series B ESOP Convertible
Preferred Stock - 401,834 shares
at June 30, 1995 and 404,224
shares at December 31, 1994 $ 0.4 $ 0.4
Series A Junior Participating
Preferred Stock - none issued - -
Capital in excess of par value
of shares 192.9 194.0
Unearned ESOP compensation (166.5) (168.7)
26.8 25.7
Common stock -
par value $.1875 per share;
authorized 200,000,000 shares;
issued 80,287,568 shares 15.1 15.1
Capital in excess of par value
of shares 25.6 25.5
Retained earnings 876.7 840.6
Minimum pension liability adjustment (5.7) (5.7)
Foreign currency translation
adjustments (41.4) (39.3)
Common stock reacquired - at cost
12,741,964 shares at
June 30, 1995 and 12,387,441
shares at December 31, 1994 (334.4) (317.7)
Total shareholders' equity $ 562.7 $ 544.2
</TABLE>
NOTE C -- FORMATION AND CONSOLIDATION EXPENSES
The Company adopted a worldwide consolidation plan for manufacturing
and support operations during 1994, primarily as a result of the
formation of the Nalco/Exxon Energy Chemicals, L.P. joint venture
partnership. The production volume reduction caused by redundancies
associated with the joint venture formation required the Company to
downsize, close, and consolidate operations. The Company's South
Chicago plant was closed, and several European and Latin American
manufacturing and support operations have been or will be closed
or downsized. In addition, certain support functions will be
regionalized on a pan-European basis in order to more efficiently
serve customers. Certain redundant assets that were not contributed
to the joint venture have been written down to net realizable
value, and assets associated with other programs will be written
off. All of these activities are in process, and should be largely
completed by the end of 1995.
As a result of these plans, the Company recorded a pretax provision
of $68 million in 1994 ($54 million after tax, or 70 cents per share
on a fully diluted basis). Included in this provision is the cost of
termination benefits for the elimination of over 400 positions,
primarily in the United States and Europe, including manufacturing
and support personnel, which will require approximately $27 million
in cash. Costs associated with facility closings and the disposition
of assets that are no longer productive total approximately $24 million,
including $21 million for non-cash asset write-offs and $3 million
in cash payments associated with asset disposals. The remaining $17
million of the pretax costs represents anticipated cash payments for
post-closure plant environmental remediation, legal and consulting
fees, and other exit costs. The Company anticipates that cash
expenditures will be funded through operating cash flows. A tax
benefit of $14 million, net of tax costs associated with the
contribution of assets to various joint venture entities, was included
in the Company's 1994 income tax provision related to the formation
and consolidation expenses.
As of June 30, 1995, $40 million had been charged against the provision
for formation and consolidation expenses and over 300 employees had
been terminated. The following table sets forth the details of activity
for 1994 and the first six months of 1995:
<TABLE>
<CAPTION>
Nalco Environ-
Termi- Asset Exxon Legal & mental
nation Write- Forma- Consult- Remedi-
(in millions) Benefits downs tion ing ation Total
<S> <C> <C> <C> <C> <C> <C>
1994 accrual $27.0 $ 23.7 $ 2.0 $ 6.3 $ 9.2 $ 68.2
Cash payments (9.4) - (2.0) (3.0) - (14.4)
Noncash charges - (10.6) - - - (10.6)
Balance at
December 31, 1994 17.6 13.1 - 3.3 9.2 43.2
Cash payments (7.3) (1.3) - (2.7) (0.3) (11.6)
Noncash charges - (3.3) - - - (3.3)
Balance at
June 30, 1995 $10.3 $ 8.5 $ - $ 0.6 $ 8.9 $ 28.3
</TABLE>
REPORT OF INDEPENDENT ACCOUNTANTS ON REVIEW
OF INTERIM FINANCIAL INFORMATION
To the Board of Directors and
Shareholders of Nalco Chemical Company
We have reviewed the accompanying interim financial information of
Nalco Chemical Company and consolidated subsidiaries as of June 30,
1995, and for the three month and six month periods then ended. This
interim financial information is the responsibility of the Company's
management.
We conducted our review in accordance with standards established by
the American Institute of Certified Public Accountants. A review of
interim financial information consists principally of applying
analytical procedures to financial data and making inquiries of
persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the accompanying financial information for
it to be in conformity with generally accepted accounting principles.
We previously audited in accordance with generally accepted auditing
standards, the statement of consolidated financial condition as of
December 31, 1994, and the related statements of consolidated earnings,
of cash flows and of common shareholders equity for the year then ended
(not presented herein), and in our report dated February 1, 1995 we
expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the
accompanying condensed consolidated statement of financial condition
as of December 31, 1994, is fairly stated in all material respects in
relation to the statement of consolidated financial condition from
which it has been derived.
Price Waterhouse LLP
By: Robert R. Ross
Engagement Partner
July 31, 1995
Chicago, Illinois
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Second Quarter 1995 Operations Compared to Second Quarter 1994
Effective September 1, 1994, Nalco and Exxon Chemical Company (Exxon),
a division of Exxon Corporation, formed Nalco/Exxon Energy Chemicals,
L.P. (Nalco/Exxon), a joint venture partnership to provide specialty
chemical products and services to the petroleum and chemicals industries
worldwide. Nalco's investment in the joint venture is accounted for by
the equity method.
At the time of formation of Nalco/Exxon, Nalco transferred the business
and sales volume of its U.S. Petroleum Chemicals Division and certain
petroleum chemical product lines of its international operations to the
joint venture. While this formation did not change Nalco's net assets
or results of operations, several historical captions in the consolidated
financial statements were affected. Because results for the second quarter
1994 have not been reclassified to exclude petroleum chemical operations,
the following unaudited statement of consolidated earnings for the
quarter ended June 30, 1994 is presented. It reflects results of
operations on a comparable basis with 1995; that is, Nalco petroleum
chemical operations are excluded and recognized as if they were accounted
for by the equity method.
<TABLE>
<CAPTION>
Three Months Ended
(Amounts in millions) June 30
1995 1994*
<S> <C> <C>
Net sales $326.8 $302.3
Operating costs and expenses
Cost of products sold 147.7 135.1
Operating expenses 120.9 114.6
268.6 249.7
Operating earnings 58.2 52.6
Other income (expense)
Interest and other income 2.0 2.7
Interest expense (4.3) (6.6)
Equity in earnings of partnership 2.6 3.9
Earnings before income taxes 58.5 52.6
Income taxes 21.4 19.5
Net earnings $ 37.1 $ 33.1
</TABLE>
* Reclassified
The following discussion of results of operations compares the second
quarter 1995 to the reclassified second quarter 1994 results presented
above.
Sales for the quarter increased 8 percent over last year, with all five
divisions reporting improved results. Sales by the Water and Waste
Treatment Division rose 4 percent, with gains reported by the UNISOLV,
Basic Industry, WATERGY and Waste Treatment Chemicals Groups. The
Process Chemicals Division reported a 5 percent sales improvement,
with double-digit growth posted by the Pulp and Paper Chemicals Group
and the Mining and Mineral Processing Group. A more modest increase
was reported by the General Industry Group. Sales by the European
Division rose 12 percent, partially as a result of the weaker dollar
compared to a year ago. However, double-digit gains in local
currencies were turned in by subsidiaries in Italy, Austria, and
Spain. The Latin American Division posted a 15 percent sales
improvement as a result of double-digit gains reported by subsidiary
companies in Chile and Brazil, and sales by Nalcomex (Mexico), a
former affiliate, which became a wholly owned subsidiary in the
fourth quarter 1994. Sales by the Pacific Division were up 15 percent,
as double-digit gains were reported by all but two of the
subsidiary companies in the Division.
The gross margin was 54.8 percent, down 0.5 percentage point from last
year's rate of 55.3 percent. Gross margins in the United States decreased
from a year ago primarily as a result of a lower gross margin for the
Absorbent Chemicals Group. Gross margins of International Divisions were
slightly higher on a combined basis.
Operating expenses (selling, service, research, etc.) were up $6.3 million
or 5 percent over the second quarter of last year, primarily to support
growth overseas and in the paper market. Part of the increase was
attributable to the weaker dollar used to translate expenses of most
international subsidiaries, principally those in Europe.
Interest and other income decreased $0.7 million from a year ago.
Improved equity in earnings of affiliates, most notably Nalco Fuel
Tech, was more than offset by lower realized exchange and unrealized
translation gains reported by the Company's subsidiary in Brazil.
Interest expense was $2.3 million lower than a year ago, which was
also mainly attributable to the Company's Brazilian subsidiary.
These changes were due to a monetary control program instituted
by the Brazilian government in mid-1994.
Nalco's equity in earnings of Nalco/Exxon for the second quarter
1995 was $2.6 million, down $1.3 million from the $3.9 million
for Nalco petroleum chemical operations a year earlier, reflecting
start-up and consolidation expenses for the joint venture.
The effective tax rate was 36.5 percent for the second quarter 1995,
compared to an effective tax rate of 37.0 percent for the same period
last year, based on the reclassified results presented above.
Net earnings as a percent to sales was 11.4 percent for the second
quarter 1995, compared to 11.0 percent for the second quarter 1994,
based on the reclassified results presented above. Fully diluted
earnings per share for the quarter rose 15 percent to 47 cents from
the 41 cents per share a year earlier.
First Half 1995 Operations Compared to First Half 1994
As previously discussed, the formation of the Nalco/Exxon joint
venture in September 1994 did not change Nalco's net assets or
results of operations, but several historical captions in the
consolidated financial statements were affected. The following
unaudited statement of consolidated earnings for the six months
ended June 30, 1994 is presented to reflect results of operations
on a comparable basis with 1995; that is, Nalco petroleum
chemical operations are excluded and recognized as if they were
accounted for by the equity method.
<TABLE>
<CAPTION>
Six Months Ended
(Amounts in millions) June 30
1995 1994*
<S> <C> <C>
Net sales $642.2 $587.3
Operating costs and expenses
Cost of products sold 289.9 262.3
Operating expenses 237.4 220.9
527.3 483.2
Operating earnings 114.9 104.1
Other income (expense)
Interest and other income 3.3 5.4
Interest expense (8.4) (12.7)
Equity in earnings of partnership 8.2 9.1
Earnings before income taxes 118.0 105.9
Income taxes 43.1 39.0
Net earnings $ 74.9 $ 66.9
</TABLE>
* Reclassified
The following discussion of results of operations compares the first
half 1995 to the reclassified first half 1994 results presented above.
Sales for the first half increased 9 percent over last year, as all
five divisions posted higher results. Sales by the Water and Waste
Treatment Division were up 4 percent, with solid improvements reported
by the UNISOLV and WATERGY Groups. More modest increases were reported
by the Basic Industry and Waste Treatment Chemicals Groups. The Process
Chemicals Division posted a 5 percent sales improvement. Double-digit
gains were reported by the Pulp and Paper Chemicals Group and the
Mining and Mineral Processing Group, and a solid improvement was posted
by the General Industry Group. These gains were partly offset by a
near double-digit decline reported by the Absorbent Chemicals Group.
Sales by the European Division were up 14 percent. The weaker dollar
compared to a year ago accounted for part of this increase, but
double-digit gains in local currencies were reported by subsidiaries
in Italy and Spain, as well as the Division's Pan European Paper
business. The Latin American Division turned in a 20 percent sales
improvement, as double-digit gains were reported by subsidiary
companies in Brazil and Chile. About three-fourths of the increase
for the Division was attributable to Nalcomex (Mexico), a former
affiliate, which became a wholly owned subsidiary in the fourth
quarter, 1994. Sales by the Pacific Division increased 20 percent,
as double-digit gains were reported by all but one of the subsidiary
companies in the Division.
The gross margin was 54.9 percent, down 0.4 percentage point from last
year's rate of 55.3 percent. Gross margins in the United States
decreased from a year ago primarily as a result of a lower gross
margin for the Absorbent Chemicals Group. Gross margins of the
International Divisions were unchanged from last year on a combined
basis.
Operating expenses (selling, service, research, etc.) increased
$16.5 million or 7 percent over the first half of last year, primarily
to support growth in Latin America, the Pacific, and the paper market.
The increase was also partly attributable to the weaker dollar used
to translate expenses of most international subsidiaries, mainly those
in Europe.
Interest and other income was down $2.1 million from a year ago. Higher
equity in earnings of affiliates, most notably Nalco Fuel Tech,
was more than offset by lower realized exchange and unrealized
translation gains reported by the Company's subsidiary in Brazil.
Interest expense was $4.3 million lower than a year ago, which
was also mainly attributable to the Company's Brazilian subsidiary.
These changes were the result of a monetary control program instituted
by the Brazilian government in mid-1994.
Nalco's equity in earnings of Nalco/Exxon for the first half 1995
was $8.2 million, a 10 percent decline from the $9.1 million for
Nalco petroleum chemical operations a year earlier, reflecting
start-up and consolidation expenses for the joint venture.
The effective tax rate was 36.5 percent for the first half 1995,
compared to an effective tax rate of 36.8 percent for the same
period last year.
Net earnings as a percent to sales was 11.7 percent for the first
half 1995, compared to 11.4 percent for the first half 1994,
based on the reclassified results presented above. Fully diluted
earnings per share for the first half 1995 rose 14 percent to 95
cents from the 83 cents per share a year earlier.
Changes in Financial Condition
Cash and cash equivalents decreased $3.6 million during the first
half of 1995 as detailed in the Unaudited Condensed Consolidated
Statement of Cash Flows.
Days sales outstanding were 60 days at both June 30, 1995 and
December 31, 1994. Working capital at June 30, 1995 totaled $82.4
million, down slightly from the $87.8 million at last year end.
The ratio of current assets to current liabilities was 1.3 to 1
at June 30, 1995 and December 31, 1994.
Domestic projects accounted for more than two-thirds of the $61.0
million in capital investments during the first half. Major
expenditures were for additional PORTA-FEED units and automobiles
for the sales force.
Primarily as a result of the formation of the Nalco/Exxon joint
venture, the Company adopted a worldwide consolidation plan for
manufacturing and support operations during 1994. The joint
venture was formed to take advantage of synergies in business
management, technology, product offerings, and manufacturing
operations. The production volume reduction caused by
redundancies associated with the joint venture formation required
the Company to downsize, close, and consolidate operations. The
Company's South Chicago plant was closed, and several European
and Latin American manufacturing and support operations have been
or will be closed or downsized. In addition, certain support
functions will be regionalized on a pan-European basis in order
to more efficiently serve customers. Certain redundant assets
that were not contributed to the joint venture have been written
down to net realizable value, and assets associated with other
programs will be written off. All of these activities are in
process and should be largely completed by the end of 1995. As a
result of these plans, the Company recorded a pretax provision
for formation and consolidation expenses of $68 million in 1994
($54 million after tax, or 70 cents per share on a fully diluted
basis). Charges against the provision totaled $14.9 million in
the first half of 1995 and $25 million in the year ended
December 31, 1994.
The Nalco/Exxon joint venture and the Company's consolidation
plan are expected to result in annualized pretax earnings
improvements by 1996. This is expected to be realized through
lower payroll expenses, depreciation, and other operating
expenses resulting from the joint venture and the consolidation
plan.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are included herein:
(11) Statement Re: Computation of Earnings Per Share
(15) Awareness Letter of Independent Accountants
(27) Financial Data Schedule
(b) The Registrant did not file any reports on Form 8-K
during the three months ended June 30, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
NALCO CHEMICAL COMPANY
(Registrant)
Date: August 10, 1995 /s/
W. E. Buchholz - Vice President,
Chief Financial Officer
Date: August 10, 1995 /s/
S. J. Gioimo - Secretary
EXHIBIT (11)
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
NALCO CHEMICAL COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
(Amounts in thousands, June 30 June 30
except per share data) 1995 1994 1995 1994
<S> <C> <C> <C> <C>
Primary
Average shares outstanding 67,518 68,595 67,695 68,744
Net effect of dilutive
stock options and shares
contingently issuable
- based on the treasury
stock method using
average market price 443 532 464 581
TOTALS 67,961 69,127 68,159 69,325
Net earnings $37,172 $33,128 $74,943 $66,933
Preferred stock dividends,
net of taxes (2,804) (2,756) (5,620) (5,520)
Net earnings to common
shareholders $34,368 $30,372 $69,323 $61,413
Per share amounts $ .51 $ .44 $ 1.02 $ .89
</TABLE>
EXHIBIT (11)
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
NALCO CHEMICAL COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
(Amounts in thousands, June 30 June 30
except per share data) 1995 1994 1995 1994
<S> <C> <C> <C> <C>
Fully diluted
Average shares outstanding 67,518 68,59 67,69 68,744
Average dilutive effect of
assumed conversion of ESOP
Convertible Preferred shares 8,049 8,136 8,062 8,144
Additional shares assuming
exercise of dilutive stock
options and shares contingently
issuable-based on the treasury
stock method using the
quarter-end market price,
if higher than average
market price 463 532 485 581
TOTALS 76,030 77,263 76,242 77,469
Net earnings $37,172 $33,128 $74,943 $66,933
Additional ESOP contribution
resulting from assumed
conversion, net of taxes (1,152) (1,212) (2,358) (2,503)
Tax adjustment on assumed
common dividends (196) (169) (401) (348)
Net earnings to
common shareholders $35,824 $31,747 $72,184 $64,082
Per share amounts $ .47 $ .41 $ .95 $ .83
</TABLE>
EXHIBIT (15)
AWARENESS LETTER OF INDEPENDENT ACCOUNTANTS
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sirs:
We are aware that Nalco Chemical Company has included our report dated
July 31, 1995 (issued pursuant to the provisions of Statement on
Auditing Standards No. 71) in the Prospectuses constituting part of
its Registration Statements on Form S-3 (Nos. 33-57363, 33-53111,
33-9934, and 2-97721) and Form S-8 (Nos. 33-54377, 33-38033, 33-38032,
33-29149, 2-97721, 2-97131 and 2-82642). We are also aware of our
responsibilities under the Securities Act of 1933.
Yours very truly,
Price Waterhouse LLP
By: Robert R. Ross
Engagement Partner
August 10, 1995
Chicago, Illinois
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 41,500,000
<SECURITIES> 0
<RECEIVABLES> 222,100,000
<ALLOWANCES> (6,500,000)
<INVENTORY> 87,700,000
<CURRENT-ASSETS> 379,300,000
<PP&E> 1,114,300,000
<DEPRECIATION> (574,700,000)
<TOTAL-ASSETS> 1,322,500,000
<CURRENT-LIABILITIES> 296,900,000
<BONDS> 245,500,000
<COMMON> 15,100,000
0
400,000
<OTHER-SE> 547,200,000
<TOTAL-LIABILITY-AND-EQUITY> 1,322,500,000
<SALES> 642,200,000
<TOTAL-REVENUES> 642,200,000
<CGS> 289,900,000
<TOTAL-COSTS> 289,900,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,400,000
<INCOME-PRETAX> 118,000,000
<INCOME-TAX> 43,100,000
<INCOME-CONTINUING> 74,900,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 74,900,000
<EPS-PRIMARY> 1.02
<EPS-DILUTED> 0.95
</TABLE>
