NALCO CHEMICAL COMPANY
INDEX
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Page No.
Part I. Financial Information:
Item 1. Financial Statements
Condensed Consolidated Statements of
Financial Condition -June 30, 1996
(Unaudited) and December 31, 1995........................................2
Condensed Consolidated Statements of
Earnings (Unaudited) - Three Months and
Six Months Ended June 30, 1996 and 1995...................................3
Condensed Consolidated Statements of
Cash Flows (Unaudited) - Three Months and
Six Months Ended June 30, 1996 and 1995...................................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...............................................12
Exhibit (3)(ii)- By-Laws.....................................................................13
Exhibit (11) - Statement Re: Computation
of Earnings Per Share................................................26
Exhibit (15) - Awareness Letter of Independent
Accountants..........................................................28
Exhibit (27) - Financial Data Schedule.......................................................29
Signatures 30
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<PAGE>
- 17 -
PART I. FINANCIAL INFORMATION
NALCO CHEMICAL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
June 30, December 31,
1996 1995
(Dollars in millions) (Unaudited) (Note)
ASSETS
Current assets
Cash and cash equivalents $ 37.7 $ 38.1
Accounts receivable, less allowances
of $4.3 and $4.4, respectively 230.6 220.3
Inventories
Finished products 62.6 62.4
Materials and work in process 32.1 29.0
------- --------
94.7 91.4
Prepaid expenses, taxes and other
current assets 25.2 20.2
Discontinued operations - net 45.4 -
-------- ------
Total current assets 433.6 370.0
Investment in and advances
to partnership 131.1 126.2
Discontinued operations-net - 47.1
Goodwill and other intangibles,
less accumulated amortization
of $20.9 and $18.6, respectively 201.9 131.0
Other assets 163.1 175.8
Property, plant and equipment 1,143.3 1,101.6
Less allowances for depreciation (613.3) (581.6)
-------- --------
530.0 520.0
-------- --------
$1,459.7 $1,370.1
======== ========
LIABILITIES/SHAREHOLDERS' EQUITY
Current liabilities
Short-term debt $ 78.6 $ 95.0
Accounts payable 107.8 126.9
Accrued formation and
consolidation expenses 19.2 22.7
Other current liabilities 111.8 111.2
-------- --------
Total current liabilities 317.4 355.8
Long-term debt 306.7 221.5
Deferred income taxes 52.6 53.3
Accrued postretirement benefits 98.3 97.7
Other liabilities 63.9 61.5
Shareholders' equity 620.8 580.3
-------- --------
$1,459.7 $1,370.1
======== ========
Note: The Statement of Financial Condition at December 31, 1995 has been
derived from the audited financial statements at that date.
See accompanying Notes to Condensed Consolidated Financial Statements
(Unaudited).
<PAGE>
NALCO CHEMICAL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
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Three Months Ended Six Months Ended
(Amounts in millions, June 30 June 30
except per share data) 1996 1995 1996 1995
------------ ------ ----- -----
Net sales $318.6 $302.3 $620.5 $594.8
Operating costs and expenses
Cost of products sold 139.6 132.1 274.6 260.6
Operating expenses 127.8 119.7 250.9 235.0
------ ------ ------ ------
267.4 251.8 525.5 495.6
------ ------ ------ ------
Operating earnings 51.2 50.5 95.0 99.2
Other income (expense)
Interest and other income (0.3) 2.0 0.2 3.3
Interest expense(3.3) (4.3) (7.0) (8.4)
Equity in earnings of partnership 6.6 2.6 13.0 8.2
------ ------ ------ ------
Earnings from continuing operations
before income taxes 54.2 50.8 101.2 102.3
Income taxes 19.7 18.4 36.7 37.0
------ ------ ------ ------
Earnings from continuing operations 34.5 32.4 64.5 65.3
Discontinued operations, net of income taxes 2.5 4.7 4.3 9.6
------ ------ ------ ------
Net earnings $ 37.0 $ 37.1 $ 68.8 $ 74.9
====== ====== ====== ======
Per common share - Primary
Earnings from continuing operations $ 0.47 $ 0.44 $ 0.87 $ 0.88
Discontinued operations,
net of income taxes 0.03 0.07 0.06 0.14
------ ------ ------ ------
Net earnings $ 0.50 $ 0.51 $ 0.93 $ 1.02
====== ====== ====== ======
Per common share - Fully diluted
Earnings from continuing operations $ 0.44 $ 0.41 $ 0.82 $ 0.82
Discontinued operations,
net of income taxes 0.03 0.06 0.05 0.13
------ ------ ------ ------
Net earnings $ 0.47 $ 0.47 $ 0.87 $ 0.95
====== ====== ====== ======
Per common share - Cash dividends $ 0.25 $ 0.25 $ 0.50 $ 0.49
====== ====== ====== ======
Average primary shares outstanding
(in thousands) 67,633 67,961 67,574 68,159
Average fully diluted shares
outstanding (in thousands) 75,586 76,030 75,546 76,242
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<PAGE>
NALCO CHEMICAL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
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Three Months Ended Six Months Ended
June 30 June 30
(Dollars in millions) 1996 1995 1996 1995
-------- ------- -------- ------
Cash provided by (used for)
operating activities
Net earnings $ 37.0 $ 37.1 $ 68.8 $ 74.9
Adjustments not affecting cash
Depreciation and amortization 23.7 22.2 47.8 43.8
Other, net 0.8 (0.1) (3.0) (13.2)
Changes in current assets and
liabilities (16.5) (22.4) (33.4) (16.0)
------ ------ ------ ------
Net cash provided by operations 45.0 36.8 80.2 89.5
------ ------ ------ ------
Investing activities
Additions to property,
plant and equipment (21.3) (33.9) (48.6) (61.0)
Business purchase (81.8) - (81.8) -
Other 4.0 (6.3) 7.3 (14.2)
------ ------ ------ -------
Net cash used for
investing activities (99.1) (40.2) (123.1) (75.2)
------- ------ ------ ------
Financing activities
Cash dividends (19.7) (19.6) (39.4) (38.8)
Changes in short-term debt (25.8) 22.6 (19.3) 34.8
Changes in long-term debt 98.4 1.0 96.5 0.9
Common stock reacquired - (4.5) - (23.3)
Other 0.9 2.0 3.7 7.5
------ ------ ------ ------
Net cash provided by
(used for)financing activities 53.8 1.5 41.5 (18.9)
------ ------ ------ ------
Effects of foreign exchange
rate changes 0.3 (0.8) 1.0 1.0
------ ------ ------ ------
Increase (decrease) in cash
and cash equivalents $ - $ (2.7) $ (0.4) $ (3.6)
====== ====== ====== ======
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See accompanying Notes to Condensed Consolidated Financial Statements
(Unaudited).
<PAGE>
NALCO CHEMICAL COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
June 30, 1996
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,
1996 and 1995. 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, 1995.
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.
<PAGE>
NOTE B -- SHAREHOLDERS' EQUITY
Shareholders' equity may be further detailed as follows:
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June 30, December 31,
(Dollars in millions, 1996 1995
------------ --------
except per share figures)
Preferred stock par value $1.00 per share;
authorized 2,000,000 shares; Series B
ESOP Convertible
Preferred Stock - 396,311 shares
at June 30, 1996 and 399,400
shares at December 31, 1995 $ 0.4 $ 0.4
Series A Junior Participating
Preferred Stock - none issued - -
Capital in excess of par value
of shares 190.2 191.7
Unearned ESOP compensation (159.6) (166.6)
------- -------
31.0 25.5
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 28.1 27.8
Retained earnings 945.6 916.2
Minimum pension liability adjustment (6.0) (6.0)
Foreign currency translation
adjustments (48.1) (48.0)
Common stock reacquired - at cost
12,882,103 shares at
June 30, 1996 and 13,163,155
shares at December 31, 1995 (344.9) (350.3)
------- -------
Total shareholders' equity $ 620.8 $ 580.3
======= =======
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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 are being 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
have been or will be written off. All of these activities are in process, and
should be largely completed by the end of 1996.
As a result of these plans, the Company recorded a pretax provision of $68
million ($54 million after tax, or 70 cents per share on a fully diluted basis)
in 1994. Included in this provision was the cost of termination benefits for the
elimination of over 400 positions, primarily in the United States and Europe,
including manufacturing and support personnel, totaling 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 balance of the pretax costs represented
anticipated cash payments for post-closure plant environmental remediation,
legal and consulting fees, and other exit costs. Cash expenditures charged
against the provision to date have been funded through operating cash flows, and
the Company anticipates that future cash expenditures will be similarly funded.
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.
Charges against the provision for formation and consolidation expenses totaled
$25.0 million in 1994, $20.5 million in 1995, and $3.5 million in the first half
of 1996. Over 300 employees had been terminated as of June 30, 1996. The
following table sets forth the details of activity in the accrual for formation
and consolidation expenses for the first half of 1996:
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Balance at Balance at
December 31, Cash Noncash June 30,
(in millions) 1995 Payments Charges 1996
- --------------------------------------------------------------------------------------------------------
Termination
benefits $ 8.1 $(1.6) $ - $ 6.5
Asset
write-downs 7.1 (0.1) (1.2) 5.8
Legal and
consulting 1.5 (0.5) - 1.0
Environmental
remediation 6.0 (0.1) - 5.9
- -----------------------------------------------------------------------------------------------------------
Total $22.7 $(2.3) $(1.2) $19.2
===========================================================================
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NOTE D -- IMPAIRMENT OF LONG-LIVED ASSETS
Effective January 1, 1996, the Company implemented Statement of Financial
Accounting Standards No. 121 (SFAS 121), "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," which requires
companies to review long-lived assets, including identifiable intangibles and
goodwill, for indicators of impairment. The effect of adopting SFAS 121 was not
material.
NOTE E -- ACQUISITION
On June 28, 1996, the Company completed the acquisition of Diversey Water
Technologies, a supplier for the middle market water treatment business. The
purchase price was approximately $82 million, and the Company anticipates that
this acquisition will strengthen the Company's business in North America and
Europe. The pro forma impact as if this acquisition had occurred at the
beginning of 1996 is not material.
The $70.9 million increase in goodwill and other intangibles is mainly
attributable to the acquisition of Diversey Water Technologies. The Company is
in the process of evaluating the assets that were purchased and the liabilities
that were assumed in this acquisition and accordingly will make any necessary
adjustments to the recorded value of the acquired assets and liabilities.
<PAGE>
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, 1996, 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, 1995, 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 2, 1996, 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, 1995, 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 25, 1996
Chicago, Illinois
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Second Quarter 1996 Operations Compared to Second Quarter 1995
On June 28, 1996, the Company completed the acquisition of Diversey Water
Technologies, a supplier for the middle market water treatment business. The
purchase price was approximately $82 million. It is anticipated that this
acquisition will strengthen the Company's business in North America and Europe.
The pro forma impact as if this acquisition had occurred at the beginning of
1996 is not material.
On February 2, 1996, Nalco announced its plan to dispose of its superabsorbent
chemicals business. The results of this business are now reported as
discontinued operations. The Unaudited Condensed Consolidated Statements of
Earnings presented in Part I, Item 1 of this Form 10-Q reflect the
superabsorbent chemicals business as discontinued operations.
During the second quarter, the Company agreed in principle to sell its
discontinued superabsorbent chemical business. The sale is expected to be
completed this year and result in a small gain.
Sales from continuing operations increased by 5 percent over last year, with
four of the five divisions reporting improved results. This increase would have
been 7 percent, excluding 1995 sales of $3.7 million related to business now
with the Nalco/Exxon joint venture. Most of this amount was included last year
in the Company's Pacific Division sales. Sales by the Water and Waste Treatment
Division rose 4 percent over last year, with increases reported by all four
groups in the Division. The Process Chemicals Division reported an 11 percent
increase over last year which reflects double-digit gains by the Mining and
Mineral Processing Group and the Pulp and Paper Group. The Latin American
Division reported a 17 percent sales increase, led by the Company's subsidiary
in Argentina. Double-digit gains were also posted by operations in Chile,
Colombia, Mexico, and Venezuela. The Pacific Division reported a sales increase
of 7 percent. However, excluding amounts from 1995 sales for business now with
the Nalco/Exxon joint venture, Pacific Division sales were up 17 percent.
Double-digit gains were posted by operations in Australia, Hong Kong/China,
Indonesia, and Korea. Sales by Nalco's former affiliate company in India, which
became a majority-owned subsidiary in the fourth quarter of 1995, contributed to
growth in the region. Sales reported by the Company's European Division were
down 3 percent, with this year's stronger U.S.
dollar accounting for most of the decline.
The gross margin of 56.2% was slightly lower than last year's rate of 56.3%.
Improved European margins offset slight declines in margins for the Company's
North American, Latin American, and Pacific operations.
Operating expenses (selling, service, research, etc.) were up $8.1 million or 7
percent over the second quarter of last year primarily because of additions to
the sales force during 1995.
Interest and other income decreased $2.3 million from a year ago. Exchange
losses related to the devaluation of the Venezuelan bolivar, a decrease in
interest income because of lower invested balances, and a reduction in equity in
earnings of affiliates due to Nalco India becoming a consolidated subsidiary
accounted for most of the decline. The change in interest expense reflects
slightly lower interest rates in the U.S. from a year ago, and lower interest
expense reported by operations in Brazil and Mexico.
Nalco's equity in earnings of Nalco/Exxon for the second quarter of 1996 was
$6.6 million, an increase of $4.0 million over the second quarter of 1995 which
reflected improved operating efficiencies and industry conditions.
The effective income tax rate for the second quarter 1996 was 36.3 percent,
compared to the 36.2 percent effective tax rate that was reported for the second
quarter 1995.
Earnings from continuing operations as a percent to sales was 10.8 percent for
the second quarter 1996, a slight improvement compared to the 10.7 percent for
the second quarter 1995. Second quarter 1996 fully diluted earnings per share
from continuing operations was 44 cents compared to 41 cents for the second
quarter 1995. Net earnings per share on a fully diluted basis for the second
quarter 1996 was 47 cents, equal to the amount reported last year.
First Half 1996 Operations Compared to First Half 1995
Sales from continuing operations increased by 4 percent over last year with four
of the five divisions reporting improvements. Excluding 1995 sales of $8.2
million related to business now with the Nalco/Exxon joint venture, the increase
would have been 6 percent. Over 75 percent of the $8.2 million was included last
year in the Company's Pacific Division sales. The Water and Waste Treatment
Division reported a 2 percent gain, with modest improvements reported by all
four groups in the Division. Sales by the Process Chemicals Division were up 11
percent over last year, with the Mining and Mineral Processing and Pulp and
Paper Groups both reporting double-digit increases. The Latin American Division
reported a 16 percent sales increase, with all operations except Brazil and
Colombia posting double-digit gains. Sales by the Pacific Division were up 2
percent over reported sales for last year, which reflected business that was
transferred as of the beginning of 1996 to the Nalco/Exxon joint venture.
Excluding those amounts from 1995 sales, Pacific Division sales were up 13
percent, as solid double-digit improvements were posted by operations in
Indonesia and Korea. Sales by Nalco's former affiliate company in India, which
became a majority-owned subsidiary in the fourth quarter of 1995, also
contributed to the improvement in the Pacific Division. Sales by the Europe
Division were 2 percent lower than a year ago, reflecting the stronger U.S.
dollar compared to last year and business now with the Nalco/Exxon joint
venture.
The gross margin was 55.7 percent, down 0.5 percentage points from last year's
rate of 56.2 percent. Higher manufacturing expenses and one-time start-up costs
for a new production facility in North America and lower margins in the Latin
American and Pacific Divisions accounted for the decrease from last year.
Operating expenses (selling, service, research, etc.) increased $15.9 million or
7 percent over the first half of last year, primarily to support growth in the
Pacific, Latin America, and the paper market.
Interest and other income decreased $3.1 million from a year ago. Contributing
to this decline were translation losses resulting from the devaluation of the
Venezuelan bolivar during the second quarter of 1996, lower interest income
reflecting a decrease in invested balances, and a reduction in equity in
earnings of affiliates due to Nalco India becoming a consolidated subsidiary.
Interest expense was down $1.4 million from the first half of last year, which
was mainly attributable to the Company's Brazilian and Mexican subsidiaries and
lower U.S. interest rates.
Nalco's equity in earnings of Nalco/Exxon for the first half of 1996 was $13.0
million, a $4.8 million increase over the $8.2 million reported last year.
The effective income tax rate was 36.3 percent for the first half 1996, compared
to the effective tax rate of 36.2 percent for the same period last year.
Earning from continuing operations as a percent to sales was 10.4 percent for
the first half of 1996, compared to 11.0 percent for the first half of 1995.
Fully diluted earnings per share from continuing operations was 82 cents for the
first half of 1996 and equaled last year's amount. Net earnings per share on a
fully diluted basis for the first half of 1996 was 87 cents compared to last
year's 95 cents per share.
Changes in Financial Condition
The June 30, 1996 Unaudited Condensed Consolidated Statement of Financial
Condition reflects the acquisition of Diversey Water Technologies on June 28,
1996 for a purchase price of $82 million. The final valuation of assets that
were acquired in this acquisition has not been determined and may differ
slightly from the valuations that have been included in the June 30, 1996
Unaudited Condensed Consolidated Statement of Financial Condition.
Cash and cash equivalents decreased by $0.4 million during the first half of
1996 as detailed in the Unaudited Condensed Consolidated Statement of Cash
Flows.
Days sales outstanding were 63 days at June 30, 1996 compared to 64 days at
December 31, 1995. Working capital at June 30, 1996 totaled $116.2 million, up
from the $14.2 million at last year end. The reclassification of the net assets
of the discontinued superabsorbent chemical business to current assets and
decreases in accounts payable and short-term debt accounted for over two-thirds
of this change. The ratio of current assets to current liabilities was 1.4 to 1
at June 30, 1996 compared to a current ratio of 1 to 1 at December 31, 1995.
The $70.9 million increase in goodwill and other intangibles is mainly
attributable to the acquisition of Diversey Water Technologies. The Company is
in the process of evaluating the assets that were purchased and the liabilities
that were assumed in this acquisition and accordingly will make any necessary
adjustments to the recorded value of the acquired assets and liabilities.
The acquisition of Diversey Water Technologies was financed primarily by the
issuance of commercial paper (30-day notes). At June 30, 1996, $90.0 million of
the commercial paper outstanding has been classified as long-term debt because
it currently is management's intent to refinance these obligations on a
long-term basis.
Capital investments totaled $48.6 million for the first half 1996. Domestic
projects accounted for nearly two-thirds of that amount, with major expenditures
for PORTA-FEED(R) units and automobiles for the sales force.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are included herein:
(3)(ii) By-Laws
(11) Statement Re: Computation of Earnings Per Share
(15) Awareness Letter of Independent Accountants
(27) Financial Data Schedule
(b) The Registrant has filed a report on Form 8-K dated June 24,
1996 relating to the adoption of a Shareholder Rights
Plan,effective September 1, 1996, which replaces the
ShareholderRights Plan that expires August 31, 1996 and
amendments to the Company By-laws, as adopted June 20, 1996.
<PAGE>
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 13, 1996 /s/ W. E. BUCHHOLZ
-----------------------
W. E. Buchholz - Vice President,
Chief Financial Officer
Date: August 13, 1996 /s/ S. J. GIOIMO
--------------------
S. J. Gioimo - Secretary
EXHIBIT (11)
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
NALCO CHEMICAL COMPANY AND SUBSIDIARIES
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Three Months Ended Six Months Ended
(Amounts in thousands, June 30 June 30
except per share data) 1996 1995 1996 1995
------ ------ ------ -----
Primary
Average shares outstanding 67,360 67,518 67,287 67,695
Net effect of dilutive stock options and shares
contingently issuable-based on
the treasury stock method using
average market price 273 443 287 464
------- ------- ------- -------
TOTALS 67,633 67,961 67,574 68,159
======= ======= ======= =======
Earnings from continuing operations $ 34,470 $ 32,464 $ 64,478 $ 65,297
Earnings discontinued operations,
net of income taxes 2,514 4,708 4,279 9,646
-------- -------- -------- --------
Net earnings 36,984 37,172 68,757 74,943
Preferred stock dividends,
net of taxes (2,842) (2,804) (5,697) (5,620)
-------- -------- -------- --------
Net earnings to
common shareholders $ 34,142 $ 34,368 $ 63,060 $ 69,323
======== ======== ======== ========
Per share amounts
Earnings from continuing operations $ 0.47 $ 0.44 $ 0.87 $ 0.88
Earnings from discontinued operations,
net of taxes 0.03 0.07 0.06 0.14
------- ------- ------- -------
Net earnings to common shareholders $ 0.50 $ 0.51 $ 0.93 $ 1.02
======= ======= ======= =======
</TABLE>
<PAGE>
EXHIBIT (11)
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
NALCO CHEMICAL COMPANY AND SUBSIDIARIES
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Three Months Ended Six Months Ended
(Amounts in thousands, June 30 June 30
except per share data) 1996 1995 1996 1995
------ ------ ------ -----
Fully Diluted
Average shares outstanding 67,360 67,518 67,287 67,695
Average dilutive effect of
assumed conversion of ESOP
convertible Preferred shares 7,948 8,049 7,965 8,062
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 278 463 294 485
-------- -------- -------- --------
TOTALS 75,586 76,030 75,546 76,242
======== ======== ======== ========
Earnings from continuing operations $ 34,470 $ 32,464 $ 64,478 $ 65,297
Earnings from discontinued operations,
net of income taxes 2,514 4,708 4,279 9,646
------- -------- -------- --------
Net earnings 36,984 37,172 68,757 74,943
Additional ESOP contribution
resulting from assumed
conversion, net of taxes (1,132) (1,152) (2,273) (2,358)
Tax adjustment on assumed
common dividends (231) (196) (461) (401)
-------- -------- -------- --------
Net earnings to
common shareholders $ 35,621 $ 35,824 $ 66,023 $ 72,184
======== ======== ======== ========
Per share amounts:
Earnings from continuing operations $ 0.44 $ 0.41 $ 0.82 $ 0.82
Earnings from discontinued operations,
net of income taxes 0.03 0.06 0.05 0.13
------- ------- ------- -------
Net earnings to common shareholders $ 0.47 $ 0.47 $ 0.87 $ 0.95
======= ======= ======= =======
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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 25, 1996 (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. 333-06955, 333-06963, 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 13, 1996
Chicago, Illinois
16
NALCO CHEMICAL COMPANY
BY-LAWS
ARTICLE I
OFFICES
1 Section 1. Principal Office. The principal office of the Corporation
shall be in the City of Naperville, DuPage County, State of Illinois.
Section 2. Registered Office. The registered office shall be in the
City of Wilmington, County of New Castle, State of Delaware.
Section 3. Other Offices. The Corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
ARTICLE II
STOCKHOLDER MEETINGS
Section 1. Annual Meeting. The Annual Meeting of Stockholders shall be
held on the first Monday of May of each year at 10:00 a.m., or at such other
date and time as shall be designated by the Board of Directors and stated in the
notice of meeting, for the purpose of electing directors and for transacting
such other business as may properly come before the meeting. If the date fixed
for the Annual Meeting shall be a legal holiday, such meeting shall be held on
the next succeeding business day. If the election of directors shall not be held
on the day designated herein for any annual meeting of stockholders, or at any
adjournment thereof, the Board of Directors shall cause the election to be held
at a Special Meeting of Stockholders as soon thereafter as conveniently may be
held.
2 Section 2. Special Meetings. Special meetings of the stockholders, for any
purpose or purposes, unless otherwise prescribed by statute, may be called only
on the order of the Chairman of the Board, or of the President or of a majority
of the Board of Directors. Only those matters set forth in the notice of the
special meeting may be considered or acted upon at such special meeting, unless
otherwise provided by law.
Section 3. Place of Meeting. All meetings of the stockholders shall be
held at such place as may be designated by the Board of Directors and as stated
in the notice of meeting and in the absence of such designation, at the
principal office of the corporation. A waiver of notice signed by stockholders
entitled to vote at a meeting may designate any place for holding of such
meeting.
Section 4. Notice of Meeting. Written or printed notice stating the
place, day, and hour of the meeting, and in case of a special meeting, the
purpose or purposes for which the meeting is called, shall be mailed to or
delivered to each stockholder entitled to vote at such meeting not less than 10
nor more than 60 days before the date of the meeting.
3 Section 5. Record Date. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action (other than action by written consent), the Board of
Directors may fix in advance a record date which shall not be more than 60 or
less than 10 days before the date of such meeting, nor more than 60 days prior
to any other action.
4 Section 6. Quorum. Holders of shares having a majority of the votes
of all outstanding shares of capital stock, represented in person or by proxy,
shall constitute a quorum at a meeting of stockholders. In the absence of a
quorum, a meeting may be adjourned from time to time without notice to the
stockholders.
Section 7. Proxies. At all meetings of stockholders, a stockholder
entitled to vote may vote either in person or by proxy executed in writing by
the stockholder or by his duly authorized attorney-in-fact. Such proxy shall be
filed with the Secretary before or at the time of the meeting. No proxy shall be
valid after 11 months from the date of its execution, unless otherwise provided
in the proxy.
Section 8. Voting Lists. The officer who has charge of the stock ledger
of the Corporation shall prepare and make, at least 10 days before every meeting
of stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
10 days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
5 Section 9. Notice of Stockholder Business at Annual Meeting. At an annual
meeting of the stockholders, only such business shall be conducted as shall have
been brought before the meeting (a) by or at the direction of the Board of
Directors or (b) by any stockholder of the Corporation who complies with the
notice procedures set forth in this Section 9. For business to be properly
brought before an annual meeting by a stockholder, the stockholder must have
given timely notice thereof in writing to the Secretary of the Corporation. To
be timely, a stockholder's notice must be delivered to or mailed and received at
the principal executive offices of the Corporation, not less than 90 days prior
to the anniversary date of the prior year's annual meeting. A stockholder's
notice to the Secretary shall set forth as to each matter the stockholder
proposes to bring before the annual meeting (a) a brief description of the
business desired to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (b) the name and address, as
they appear on the Corporation's books, of the stockholder proposing such
business, (c) the class and number of shares of the Corporation which are
beneficially owned by the stockholder and (d) any material interest of the
stockholder in such business. Notwithstanding anything in these By-laws to the
contrary, no business shall be conducted at an annual meeting except in
accordance with the procedures set forth in this Section 9. The Chairman of an
annual meeting shall, if the facts warrant, determine and declare to the meeting
that business was not properly brought before the meeting and in accordance with
the provisions of this Section 9, and if he should so determine, he shall so
declare to the meeting and any such business not properly brought before the
meeting shall not be transacted.
6 Section 10. Required Vote. Unless the question is one upon which by express
provision of the Delaware General Corporation Law, the certificate of
incorporation or these Bylaws a different vote is required (in which case such
express provision shall govern and control the decision of such question),
action by the stockholders of the Corporation shall require (a) with respect to
the election of directors at a meeting of stockholders, a plurality of the votes
of the shares present in person or represented by proxy at the meeting and
entitled to vote on the election of directors, (b) with respect to any other
matter which is to be decided by stockholders at a meeting of stockholders and
which matter has received the prior approval or recommendation of the
Corporation's Board of Directors, the affirmative vote of holders of shares
constituting a majority of the votes cast with respect to such matter, or (c)
with respect to any other matter, the affirmative vote of holders of shares
constituting a majority of the voting power of all of the Corporation's
outstanding shares.
7 Section 11. Stockholder Vote. Each stockholder shall at every meeting
of the stockholders be entitled to one vote in person or by proxy for each
share of the common stock having voting power held by such stockholder.
Section 12. Consent Without a Meeting. (a) Whenever the vote of
stockholders at a meeting thereof is required or permitted to be taken for or in
connection with any corporate action by any provision of the statutes, the
meeting and vote of stockholders may be dispensed with if the certificate of
incorporation authorizes the action to be taken with the written consent of the
holders of less than all of the stock who would have been entitled to vote upon
the action if a meeting were held, on the written consent of the stockholders
having not less than such percentage of the number of votes as may be authorized
in the certificate of incorporation; provided that in no case shall the written
consent be by the holders of stock having less than the minimum percentage of
the vote required by statute for the proposed corporate action, and provided
that prompt notice must be given to all stockholders of the taking of corporate
action with a meeting.
8 (b) The record date for determining stockholders entitled to express consent
to corporate action in writing without a meeting shall be fixed by the Board of
Directors. Any stockholder of record seeking to have the stockholders authorize
or take corporate action by written consent without a meeting shall, by written
notice to the Secretary, request the Board of Directors to fix a record date.
Upon receipt of such a request, the Secretary shall place such request before
the Board of Directors at its next regularly scheduled meeting, provided,
however, that if the stockholder represents in such request that he intends, and
is prepared, to commence a consent solicitation as soon as is permitted by the
Securities Exchange Act of 1934, as amended, and the regulations thereunder and
other applicable law, the Secretary shall as promptly as practicable call a
special meeting of the Board of Directors, which meeting shall be held as
promptly as practicable but in all events within ten days after the date on
which the stockholder's request was received. At such regular or special
meeting, the Board of Directors shall fix a record date as provided in Section
213(b) (or its successor provision) of the Delaware General Corporation Law.
Should the Board of Directors fail to fix a record date as provided for in this
Section 12, the record date for determining the stockholders entitled to consent
to corporate action in writing without a meeting, when no prior action by the
Board of Directors is required by applicable law, shall be the first date on
which a signed written consent setting forth the action taken or proposed to be
taken is delivered to the Corporation by delivery to its registered office in
the State of Delaware, its principal place of business, or an officer or agent
of the Corporation having custody of the records in which proceedings of
stockholders meetings are recorded, to the attention of the Secretary of the
Corporation. Delivery shall be by hand or by certified or registered mail,
return receipt requested. If no record date has been fixed by the Board of
Directors and prior action by the Board of Directors is required by applicable
law, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting shall be at the close of business
on the date on which the Board of Directors adopts the resolution taking such
prior action.
9 (c) In the event of the delivery to the Corporation of written consents
purporting to represent the requisite voting power to authorize or take
corporate action and/or related revocations, the Secretary of the Corporation
shall provide for the safekeeping of such consents and revocations and shall, as
promptly as practicable, engage nationally recognized independent inspectors of
elections for the purpose of promptly performing a ministerial review of the
validity of the consents and revocations. No action by written consent and
without a meeting shall be effective until such inspectors have completed their
review, determined that the requisite number of valid and unrevoked consents has
been obtained to authorize or take the action specified in the consents, and
certified such determination for entry in the records of the Corporation kept
for the purpose of recording the proceedings of meeting of stockholders.
ARTICLE III
DIRECTORS
Section 1. Function of Board. The business of the Corporation shall be
managed by or under the direction of its Board of Directors which may exercise
all such powers of the Corporation and do all such lawful acts and things as are
not by statute or by the certificate of incorporation or by these By-laws
directed or required to be exercised or done by the stockholders.
10 Section 2. Number of Directors. The Board of Directors shall consist of not
less than seven (7) nor more than fifteen (15) directors, the precise number of
directors to be designated from time to time by resolution adopted by the
affirmative vote of a majority of the entire Board of Directors, and in the
absence of such designation the number shall be eleven (11). The directors shall
be divided into three classes as nearly equal in number as possible, designated
Class I, Class II and Class III. At the 1984 Annual Meeting of Stockholders,
Class I directors shall be elected for a one-year term, Class II directors for a
two-year term and Class III directors for a three-year term. At each succeeding
Annual Meeting of Stockholders beginning in 1985, successors to the class of
directors whose term expires at that Annual Meeting shall be elected for a
three-year term. If the number of directors is changed, any increase or decrease
shall be apportioned among the classes so as to maintain the number of directors
in each class as nearly equal as possible, but in no case shall a decrease in
the number of directors shorten the term of any incumbent director. A director
shall hold office until the annual meeting for the year in which his term
expires or until his successor has been elected and qualified. Directors need
not be stockholders. No director of the corporation shall be removed from office
with or without cause unless such removal is approved either by the holders of
three-fourths of the shares of common stock of the corporation outstanding at
the time a determination is made or by the affirmative vote of three-fourths of
the directors in office at the time a determination is made. This section of the
By-laws shall not be amended without either the approval of the holders of
three-fourths of the common stock outstanding at the time of the amendment or
the affirmative vote of three-fourths of the directors in office at the time of
the amendment.
11 Section 3. Notice of Stockholder Nominees. Only persons who are nominated in
accordance with the procedures set forth in these By-laws shall be eligible for
election as directors. Nominations of persons for election to the Board of
Directors of the Corporation may be made at a meeting of stockholders (a) by or
at the direction of the Board of Directors or (b) by any stockholder of the
Corporation entitled to vote for the election of Directors at the meeting who
complies with the notice procedures set forth in this Section 3. Such
nominations, other than those made by or at the direction of the Board of
Directors, shall be made pursuant to timely notice in writing to the Secretary
of the Corporation. To be timely, a stockholder's notice shall be delivered to
or mailed and received at the principal executive offices of the Corporation not
less than 90 days prior to the anniversary date of the prior year's annual
meeting. Such stockholder's notice shall set forth (a) as to each person whom
the stockholder proposes to nominate for election or re-election as a director,
all information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required, in
each case pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended (including such person's written consent to being named in the proxy
statement as a nominee and to serving as a director if elected); and (b) as to
the stockholder giving the notice (i) the name and address, as they appear on
the Corporation's books, of such stockholder and (ii) the class and number of
shares of the Corporation which are beneficially owned by such stockholder. At
the request of the Board of Directors any person nominated by the Board of
Directors for election as a director shall furnish to the Secretary of the
Corporation that information required to be set forth in a stockholder's notice
of nomination which pertains to the nominee. No person shall be eligible for
election as a director of the Corporation unless nominated in accordance with
the procedures set forth in the By-laws. The Chairman of the meeting shall, if
the facts warrant, determine and declare to the meeting that a nomination was
not made in accordance with the procedures prescribed by these By-laws, and if
he should so determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.
12 Section 4. Vacancies of Directors. The term of a director elected by the
stockholders to fill a newly created directorship or other vacancy shall expire
at the same time as the terms of the other directors of the class for which the
new directorship is created or in which the vacancy occurred. Any vacancy on the
Board of Directors that results from an increase in the number of directors and
any other vacancy occurring in the Board of Directors may be filled by a
majority of the directors then in office, although less than a quorum, or by a
sole remaining director. Any director so elected by the Board of Directors
shall, without regard to the class in which the vacancy occurred, hold office
until the next Annual Meeting of Stockholders and until his successor is elected
and qualified.
Section 5. Meetings of the Board of Directors. The Board of Directors
of the Corporation may hold meetings, both regular and special, either within or
without the State of Delaware.
13 Section 6. Annual Board Meeting. The Annual Board Meeting of the Corporation
shall be held on the day of the Annual Meeting of Stockholders for the purpose
of the organization of the Board, the election and appointment of officers for
the ensuing year, and for the transaction of such other business as may be
properly brought before such meeting. In the event such meeting is not held at
the time and place so fixed by these By-laws, the meeting may be held at such
time and place as shall be specified in a notice given as hereinafter provided
for special meetings of the Board of Directors, or as shall be specified in a
written waiver signed by all of the directors.
Section 7. Regular Board Meetings. Regular meetings of the Board of
Directors may be held without notice at such time and at such place as shall
from time to time be determined by the Board.
14 Section 8. Special Board Meetings. Special meetings of the Board may
be called by order of the Chairman of the Board, the President, or by any two
directors on one (1) days' notice to each director, either personally, by mail,
by telephone, or by telegram.
Section 9. Quorum at Board Meetings. At all meetings of the Board a
majority of the designated number of members of the Board then in effect shall
constitute a quorum for the transaction of business, and the act of a majority
of the directors present at any meeting at which there is a quorum shall be the
act of the Board of Directors, except as may be otherwise specifically provided
by statute or by the certificate of incorporation. If a quorum shall not be
present at any meeting of the Board of Directors the directors present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 10. Consent Without a Meeting. Unless otherwise restricted by
the certificate of incorporation or these By-laws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if all members of the Board or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board or committee.
15 Section 11. (a) Executive Committee. The Board of Directors by resolution
adopted by a majority of the whole Board, may designate at least five (5), but
not more than seven (7) directors, including the Chairman of the Board and the
President, to constitute an Executive Committee and shall designate a Chairman
of the Committee and a Secretary. The members of the Executive Committee shall
hold office until the next annual meeting of the Board of Directors following
their designation as members thereof, unless sooner removed by action of a
majority of the whole Board. The Board of Directors shall fill vacancies in the
Executive Committee by election from the directors. The Executive Committee
shall keep regular minutes of its proceedings and report the same to the Board
when required by the Board. Meetings of the Executive Committee may be called by
order of the Chairman of the Executive Committee, the President, or by any two
members of the Executive Committee on one (1) days' notice to each member,
either personally, by mail, by telephone, or by telegram.
16 (b) The Executive Committee shall have and exercise all the authority of the
Board of Directors in the management of the business and affairs of the
Corporation between meetings of the Board, and shall represent the Board for the
purpose of consulting with the officers and giving special consideration to
matters of importance affecting the policies, financing, management and
operation of the business and taking action thereon, or making recommendations
to the Board; however, the Executive Committee shall have no power or authority
in reference to amending the Certificate of Incorporation, adopting an agreement
of merger or consolidation, recommending to the stockholders the sale, lease or
exchange of all or substantially all of the Corporation's property and assets,
recommending to the stockholders a dissolution of the Corporation or a
revocation of a dissolution, or amending the By-laws. The Executive Committee
shall have power and authority to declare a dividend and to authorize the
issuance of stock.
Section 12. (a) Audit Committee. The Board of Directors, by resolution
adopted by a majority of the whole Board, may designate at least three (3)
non-employee directors to constitute an Audit Committee. The members of the
Audit Committee shall hold office until the next annual meeting of the Board of
Directors following their designation as members thereof, unless sooner removed
by action of a majority of a whole Board. The Board of Directors shall fill
vacancies in the Audit Committee by election from the non-employee directors.
The Audit Committee shall keep regular minutes of its proceedings and report the
same to the Board when required by the Board.
(b) The Audit Committee shall in general, but not by
way of limitation, represent the Board of Directors in dealing with the public
accountants and management of the Corporation on matters involving accounting
and financial reporting policies, accounting and financial controls and
the independence of the public accountants. The Committee shall also
review the scope and nature of the non-audit related services performed
by the public accountants for the Corporation and shall have authority to
authorize such services. The Committee shall also recommend to the Board the
firm of public accountants which should be engaged by the Corporation.
Section 13. Other Committees of Directors. The Board of Directors may,
by resolution or resolutions passed by a majority of the whole Board, designate
one or more committees other than the Executive Committee and Audit Committee,
each committee to consist of two (2) or more of the directors of the
Corporation, which, to the extent provided in said resolution or resolutions,
shall have and may exercise the powers of the Board of Directors, to the extent
permitted by statute, in carrying out their prescribed duties, and may have
power to authorize the seal of the Corporation to be affixed to all papers which
may require it. Such committee or committees shall have such name or names as
may be determined from time to time by resolution adopted by the Board of
Directors. Such committees shall keep regular minutes of their proceedings and
report the same to the Board when required by the Board.
17 Section 14. Compensation of Directors. Directors who are not officers of the
Corporation ("outside directors") shall be entitled to receive such compensation
as may be fixed from time to time by resolution of a majority of the Directors
who are officers of the Corporation. Directors will be entitled to reimbursement
for expenses necessarily incurred in attending any meeting of the Board or
committees of the Board.
ARTICLE IV
OFFICERS
18 Section 1. Officers. The officers of the Corporation shall be the Chairman of
the Board of Directors, Chairman of the Executive Committee, a President, one or
more Executive Vice Presidents, one or more Vice Presidents (one or more of whom
may be designated Senior Vice President or Group Vice President), a Secretary, a
Treasurer, a Controller and such Assistant Secretaries, Assistant Treasurers and
other officers or agents as may be elected or appointed by the Board of
Directors. In its discretion the Board of Directors may leave unfilled for any
period any office except the office of President, at least one Vice President,
Secretary, and Treasurer.
Section 2. Election of Officers. The officers of the Corporation shall
be elected or appointed by the Board of Directors and each officer shall hold
office until his successor shall have been duly elected and qualified, but any
officer may be removed at any time by the affirmative vote of a majority of the
whole Board of Directors.
19 Section 3(a). Chairman of Board. The Chairman of the Board of Directors shall
be the Chief Executive Officer of the Corporation, shall exercise general
supervision over the affairs of and operation of the business of the Corporation
and shall preside at all meetings of the stockholders and the Board of Directors
and shall perform such other duties as are incident to his office or are
assigned to him by the Board of Directors from time to time.
Section 3(b). Chairman of Executive Committee. The Chairman of the
Executive Committee shall preside at all meetings of the Executive Committee and
shall perform such other duties as are incident to his office or are assigned to
him by the Board of Directors from time to time. In the absence of the Chairman
of the Board, he shall preside at all meetings of the stockholders and the Board
of Directors and shall perform such duties for the Chairman of the Board as may
be required.
20 Section 4. President. The President shall have such powers and shall perform
such duties as are incident to his office or are assigned to him by the Board of
Directors from time to time. In the absence of the Chairman of the Board of
Directors and Chairman of the Executive Committee, he shall preside at all
meetings of the stockholders and the Board of Directors and exercise the
functions of the Chairman of the Board.
21 Section 5. Executive Vice President. In the event of a disability or actual
unavailability of the President, the Executive Vice President designated to do
so shall exercise the functions of the President. The Executive Vice Presidents
shall have such powers and shall perform such other duties as may be assigned to
them by the Board of Directors or the President.
Section 6. Vice Presidents. Each Vice President, including each Vice
President designated as Senior Vice President or Group Vice President, shall
have such powers and perform such duties as may be assigned to him by the Board
of Directors or the President.
Section 7. Secretary. The Secretary shall attend all sessions of the
Board of Directors and all meetings of the stockholders and record all votes and
the minutes of all proceedings in a book to be kept for that purpose, and shall
perform like duties for the standing committees when required. He shall give, or
cause to be given, notice of all meetings of the stockholders and of the Board
of Directors. He may sign on behalf of the Corporation such forms, reports or
other documents as may be required to be filed by the Corporation with the
jurisdictions in which the Corporation is qualified to do business, and with
various governmental agencies.
The Secretary shall also perform such other duties as may be prescribed
by the Board of Directors or the President. He shall be sworn to the faithful
discharge of his duty, and shall in general perform all duties incident to the
office of Secretary, subject to the control of the Board of Directors.
Section 8. Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall deposit all moneys, and other valuable
effects in the name and to the credit of the Corporation, in such depositories
as may be designated by the Board of Directors. He shall disburse the funds of
the Corporation as may be authorized by the Board of Directors and shall sign
such notes, checks, receipts and documents as may be from time to time directed
or authorized by the Board of Directors. The Treasurer shall submit statements
of his accounts whenever required by the Board of Directors and shall give the
Corporation a bond, if required by the Board of Directors, in such sum as the
Board of Directors may require. He shall perform such other duties incident to
his office or as are assigned to him by the Board of Directors or the President
from time to time.
Section 9. Controller. The Controller shall be the Chief Accounting
Officer of the Corporation. He shall keep or cause to be kept all books of
accounts and accounting records of the Corporation, and shall prepare or have
prepared appropriate financial statements for submission to the Board of
Directors and stockholders. He shall perform other duties incident to his office
or which are assigned to him by the Board of Directors or the President from
time to time.
22 Section 10. Assistant Officers and Agents. The Board of Directors or Chief
Executive Officer may appoint one or more Assistant Secretaries, Assistant
Treasurers and Assistant Controllers or appoint divisional officers and agents,
each of whom shall have such powers and perform such duties as may be assigned
or delegated to them by the Board of Directors or Chief Executive Officer from
time to time.
Section 11. Salaries of Officers. The salaries of all officers of
the Corporation shall be fixed by the Board of Directors.
Section 12. Delegation of Powers. In case of the absence of any officer
of the Corporation, or for any other reason that the Board of Directors may deem
sufficient, the Board of Directors may delegate for the time being the powers or
duties, or any of them, of such officer to any other officer, director or agent,
provided a majority of the Board concur therein.
23 Section 13. Signature Authority. Unless the Board of Directors shall
otherwise direct, the Chairman of the Board, the Chairman of the Executive
Committee, the President and any Vice President of the Corporation may sign and
execute bonds, mortgages, and other contracts and obligations of the Corporation
in the name of the Corporation, except that contracts may be signed with like
effect by any other officer or employee of the Corporation so designated by the
Board of Directors.
Section 14. Exercise of Rights as Stockholders. Unless otherwise
ordered by the Board of Directors, the President, the Secretary or a Vice
President thereunto duly authorized by the President shall have full power and
authority on behalf of the Corporation to attend and to vote at any meeting of
stockholders of any corporation in which this Corporation may hold stock, and
may exercise on behalf of this Corporation any and all of the rights and powers
incident to the ownership of such stock at any such meeting, and shall have
power and authority to execute and deliver proxies and consents on behalf of
this Corporation in connection with the exercise by this Corporation of the
rights and powers incident to the ownership of such stock. The Board of
Directors, from time to time, may confer like powers upon any other person or
persons.
ARTICLE
V STOCK CERTIFICATES Section 1. Certificate of Stock. Every holder of stock in
the Corporation shall be entitled to have a certificate, signed by, or in the
name of the Corporation by, the Chairman of the Board of Directors, or the
President, or a Vice President and the Treasurer or an Assistant Treasurer, or
the Secretary or an Assistant Secretary of the Corporation, certifying the
number of shares owned by him in the Corporation. If the Corporation shall be
authorized to issue more than one class of stock or more than one series of any
class, the designations, preferences and relative, participating, optional or
other special rights of each class of stock or series thereof and the
qualifications, limitations or restrictions of such preferences and/or rights
shall be set forth in full or summarized on the face or back of the certificate
which the Corporation shall issue to represent such class or series of stock,
provided that, except as otherwise provided in Section 202 of the General
Corporation Law of Delaware, in lieu of the foregoing requirements, there may be
set forth on the face or back of the certificate which the Corporation shall
issue to represent such class or series of stock, a statement that the
Corporation will furnish without charge to each stockholder who so requests the
designations, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.24 Section 2.
Facsimile Signatures. Any signature on a certificate may be a facsimile. In case
any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
be issued by the Corporation with the same effect as if he were such officer,
transfer agent or registrar at the date of issue. Section 3. Lost Certificates.
The Board of Directors may direct a new certificate or certificates to be issued
in place of any certificate or certificates theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed. When authorizing such issue of a new certificate or
certificates, the Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate or certificates, or his legal representative, to advertise
the same in such manner as it shall require and/or to give the Corporation a
bond in such sum as it may direct as indemnity against any claim that may be
made against the Corporation with respect to the certificate alleged to have
been lost, stolen or destroyed. Section 4. Transfer of Stock. Upon surrender to
the Corporation or the transfer agent of the Corporation of a certificate for
shares duly endorsed or accompanied by proper evidence of succession, assignment
or authority to transfer, it shall be the duty of the Corporation to issue a new
certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books. Section 5. Registered Stockholders. The
Corporation shall be entitled to recognize the exclusive right of a person
registered on its books as the owner of shares to receive dividends, and to vote
as such owner, and to hold liable for calls and assessments a person registered
on its books as the owner of shares, and shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof,
except as otherwise provided by the laws of Delaware.
ARTICLE VI NOTICES Section 1. Notices. Whenever, under the provisions of the
statutes or of the certificate of incorporation or of these By-laws, notice
is required to be given to any director or stockholder, it shall not be
construed to mean personal notice, but such notice may be given in writing, by
mail, addressed to such director or stockholder at his address as it appears
on the records of the Corporation, with postage thereon prepaid, and such notice
shall be deemed to be given at the time when the same shall be deposited in
the
United States mail. Notice to directors may also be given by telegram or
telephone.
Section 2. Waiver of Notice. Whenever any notice is required to be given
under the provisions of the statutes or of the certificate of incorporation
or of these By-laws, a waiver thereof in writing, signed by the person or
persons entitled to said notice, whether before or after the time stated
therein, shall be deemed
equivalent thereto. 25ARTICLE VII INDEMNIFICATION Section 1. Procedure of
Indemnification. Any indemnification of a director or officer under paragraphs
1, 2 and 3, or advance of expenses to a director or officer under paragraph 5,
of Article SIXTH of the Corporation's Restated Certificate of Incorporation,
shall be made promptly, and in any event within 60 days, after the written
request of the director or officer, and the determination as to whether
indemnification is proper, required by paragraph 4 of Article SIXTH, shall be
made promptly, so as to enable indemnification to be made within such 60-day
period. The right to indemnification or advances as provided for by such Article
SIXTH shall be enforceable by the director or officer, in any court of competent
jurisdiction, if the Corporation denies such request, in whole or in part, or if
no disposition thereof is made within such 60 day period. Such person's expenses
incurred in connection with successfully establishing his right to
indemnification, in whole or in part, in any such action shall also be
indemnified by the Corporation. It shall be a defense to any such action (other
than an action brought to enforce a claim by an officer or director for the
advance of expenses under paragraph 5 of such Article SIXTH where the required
undertaking, if any, has been received by the Corporation) that the claimant has
not met the standard of conduct set forth in paragraphs 1 or 2 of such Article
SIXTH, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its Board of Directors, its
independent legal counsel, and its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant is
proper in the circumstances because he has met the applicable standard of
conduct set forth in paragraphs 1 or 2 of such Article SIXTH, nor the fact that
there has been an actual determination by the Corporation (including its Board
of Directors, its independent legal counsel, and its stockholders) that the
claimant has not met such applicable standard of conduct, shall be a defense to
the action or create a presumption that the claimant has not met the applicable
standard of conduct. All rights to indemnification under Article SIXTH of the
Corporations's Restated Certificate of Incorporation shall be deemed to be a
contract between the Corporation and each director or officer of the Corporation
who serves or served in such capacity at any time while such Article SIXTH is in
effect. Section 2. Insurance. The Corporation shall purchase and maintain
insurance on behalf of any person who is or was a director or officer of the
Corporation, or is or was serving at the request of the Corporation as a
director or officer of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability under
the provisions of Article SIXTH of the Corporation's Restated Certificate of
Incorporation or of relevant provisions of the Delaware General Corporation Law,
provided that such insurance is available on acceptable terms, which
determination shall be made by a vote of a majority of the entire Board of
Directors. ARTICLE VIII GENERAL PROVISIONSSection 1. Dividends. Dividends upon
the capital stock of the Corporation, subject to the provisions of the
certificate of incorporation, if any, may be declared by the Board of Directors
at any regular or special meeting, pursuant to law. Dividends may be paid in
cash, in property, or in shares of the capital stock, subject to the provisions
of the certificate of incorporation. Section 2. Dividend Reserve. Before payment
of any dividend, there may be set aside out of any funds of the Corporation
available for dividends such sum or sums as the directors from time to time, in
their absolute discretion, think proper as a reserve or reserves to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the Corporation, or for such other purpose as the directors shall
think conducive to the interest of the Corporation, and the directors may modify
or abolish any such reserve in the manner in which it was created. Section 3.
Checks. All checks or demands for money and notes of the Corporation shall be
signed by the Treasurer or his designatees and such officer or officers or such
other person or persons as the Board of Directors may from time to time
designate. Section 4. Fiscal Year. The fiscal year of the Corporation shall
begin the first day of January and end on the thirty-first day of December in
each year. Section 5. Seal. The corporate seal shall have inscribed thereon the
name of the Corporation, the year of its organization and the words "Corporate
Seal, Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any other manner reproduced. ARTICLE IX AMENDMENTS
Section . Amendments. These By-laws may be altered, amended or repealed or new
By-laws may be adopted by the stockholders or by the Board of Directors, when
such power is conferred upon the Board of Directors by the certificate of
incorporation, at any regular meeting of the stockholders or of the Board of
Directors if notice of such alteration, amendment, repeal, or adoption of new
By-laws be contained in the notice of such special meeting.
shared\plans\bylaws\doc
- --------
1 Amended September 25, 1986.
2 Amended July 24, 1986 and June 20, 1996.
3 Amended June 20, 1996.
4 Amended June 20, 1996.
5 Amended July 24, 1986 and June 20, 1996.
6 Amended June 20, 1996.
7 Amended July 24, 1986.
8 Amended July 24, 1986 and June 20, 1996.
9 Amended July 24, 1986.
10 Amended September 27, 1984, September 26, 1985, October 24, 1985,
September 25, 1986, April 30, 1987, April 30, 1987, April 27, 1989,
June 22, 1989, February 15, 1990 and April 23, 1992.
11 Amended July 24, 1986 and June 20, 1996.
12 Amended April 26, 1984.
13 Amended June 23, 1988.
14 Amended February 2, 1984.
15 Amended February 2, 1984.
16 Amended May 5, 1980.
17 Amended January 29, 1987.
18 Amended October 28, 1982.
19 Amended August 22, 1991.
20 Amended August 22, 1991.
21 Amended December 18, 1986.
22 Amended April 28, 1983.
23 Amended October 28, 1982.
24 Amended December 21, 1989.
25 Amended July 24, 1986 and April 30, 1987.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the condensed
consolidated statement of financial condition at June 30, 1996 and the condensed
consolidated statement of earnings for the six months ended June 30, 1996 of
Nalco Chemical Company and subsidiaries and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 37,700,000
<SECURITIES> 0
<RECEIVABLES> 234,900,000
<ALLOWANCES> (4,300,000)
<INVENTORY> 94,700,000
<CURRENT-ASSETS> 433,600,000
<PP&E> 1,143,300,000
<DEPRECIATION> (613,300,000)
<TOTAL-ASSETS> 1,459,700,000
<CURRENT-LIABILITIES> 317,400,000
<BONDS> 306,700,000
0
400,000
<COMMON> 15,100,000
<OTHER-SE> 605,300,000
<TOTAL-LIABILITY-AND-EQUITY> 1,459,700,000
<SALES> 620,500,000
<TOTAL-REVENUES> 620,500,000
<CGS> 274,600,000
<TOTAL-COSTS> 274,600,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,000,000
<INCOME-PRETAX> 101,200,000
<INCOME-TAX> 36,700,000
<INCOME-CONTINUING> 64,500,000
<DISCONTINUED> 4,300,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 68,800,000
<EPS-PRIMARY> 0.93
<EPS-DILUTED> 0.87
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the condensed
consolidated statement of financial condition at September 30, 1994 and the
restated condensed consolidated statement of earnings for the nine months ended
September 30, 1994 of Nalco Chemical Company and subsidiaries and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 72,500,000
<SECURITIES> 0
<RECEIVABLES> 216,800,000
<ALLOWANCES> (5,900,000)
<INVENTORY> 75,000,000
<CURRENT-ASSETS> 371,900,000
<PP&E> 1,054,900,000
<DEPRECIATION> (533,100,000)
<TOTAL-ASSETS> 1,274,700,000
<CURRENT-LIABILITIES> 247,500,000
<BONDS> 248,500,000
0
400,000
<COMMON> 15,100,000
<OTHER-SE> 537,200,000
<TOTAL-LIABILITY-AND-EQUITY> 1,274,700,000
<SALES> 955,500,000
<TOTAL-REVENUES> 955,500,000
<CGS> 419,200,000
<TOTAL-COSTS> 419,200,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,700,000
<INCOME-PRETAX> 98,600,000
<INCOME-TAX> 42,700,000
<INCOME-CONTINUING> 55,900,000
<DISCONTINUED> 18,500,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 74,400,000
<EPS-PRIMARY> 0.96
<EPS-DILUTED> 0.91
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
consolidated statement of financial condition at December 31, 1994 and the
restated consolidated statement of earnings for the year ended December 31, 1994
of Nalco Chemical Company and subsidiaries and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 45,100,000
<SECURITIES> 0
<RECEIVABLES> 211,500,000
<ALLOWANCES> (5,600,000)
<INVENTORY> 83,800,000
<CURRENT-ASSETS> 362,100,000
<PP&E> 1,067,100,000
<DEPRECIATION> (543,200,000)
<TOTAL-ASSETS> 1,282,200,000
<CURRENT-LIABILITIES> 274,300,000
<BONDS> 245,300,000
0
400,000
<COMMON> 15,100,000
<OTHER-SE> 528,700,000
<TOTAL-LIABILITY-AND-EQUITY> 1,282,200,000
<SALES> 1,246,800,000
<TOTAL-REVENUES> 1,246,800,000
<CGS> 543,700,000
<TOTAL-COSTS> 543,700,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,800,000
<INCOME-PRETAX> 137,800,000
<INCOME-TAX> 64,600,000
<INCOME-CONTINUING> 73,200,000
<DISCONTINUED> 23,900,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 97,100,000
<EPS-PRIMARY> 1.25
<EPS-DILUTED> 1.19
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the condensed
consolidated statement of financial condition at March 31, 1995 and the restated
condensed consolidated statement of earnings for the three months ended March
31, 1995 of Nalco Chemical Company and subsidiaries and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 44,200,000
<SECURITIES> 0
<RECEIVABLES> 215,400,000
<ALLOWANCES> (6,200,000)
<INVENTORY> 84,300,000
<CURRENT-ASSETS> 367,000,000
<PP&E> 1,095,800,000
<DEPRECIATION> (565,200,000)
<TOTAL-ASSETS> 1,299,900,000
<CURRENT-LIABILITIES> 285,900,000
<BONDS> 244,500,000
0
400,000
<COMMON> 15,100,000
<OTHER-SE> 537,000,000
<TOTAL-LIABILITY-AND-EQUITY> 1,299,900,000
<SALES> 292,500,000
<TOTAL-REVENUES> 292,500,000
<CGS> 128,500,000
<TOTAL-COSTS> 128,500,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,100,000
<INCOME-PRETAX> 51,500,000
<INCOME-TAX> 18,600,000
<INCOME-CONTINUING> 32,900,000
<DISCONTINUED> 4,900,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 37,800,000
<EPS-PRIMARY> 0.51
<EPS-DILUTED> 0.48
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the condensed
consolidated statement of financial condition at June 30, 1995 and the restated
condensed consolidated statement of earnings for the six months ended June 30,
1995 of Nalco Chemical Company and subsidiaries and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<RESTATED>
<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
0
400,000
<COMMON> 15,100,000
<OTHER-SE> 547,200,000
<TOTAL-LIABILITY-AND-EQUITY> 1,322,500,000
<SALES> 594,800,000
<TOTAL-REVENUES> 594,800,000
<CGS> 260,600,000
<TOTAL-COSTS> 260,600,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,400,000
<INCOME-PRETAX> 102,300,000
<INCOME-TAX> 37,000,000
<INCOME-CONTINUING> 65,300,000
<DISCONTINUED> 9,600,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 74,900,000
<EPS-PRIMARY> 1.02
<EPS-DILUTED> 0.95
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule containe summary financial information extracted from the condensed
consolidated statement of financial condition at September 30, 1995 and the
restated condensed consolidated statement of earnings for the nine months ended
September 30, 1995 of Nalco Chemical Company and subsidiaries and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 39,800,000
<SECURITIES> 0
<RECEIVABLES> 230,300,000
<ALLOWANCES> (6,400,000)
<INVENTORY> 87,200,000
<CURRENT-ASSETS> 380,400,000
<PP&E> 1,141,200,000
<DEPRECIATION> (591,600,000)
<TOTAL-ASSETS> 1,327,400,000
<CURRENT-LIABILITIES> 289,900,000
<BONDS> 248,800,000
0
400,000
<COMMON> 15,100,000
<OTHER-SE> 555,300,000
<TOTAL-LIABILITY-AND-EQUITY> 1,327,400,000
<SALES> 904,800,000
<TOTAL-REVENUES> 904,800,000
<CGS> 396,500,000
<TOTAL-COSTS> 396,500,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,500,000
<INCOME-PRETAX> 158,300,000
<INCOME-TAX> 57,500,000
<INCOME-CONTINUING> 100,800,000
<DISCONTINUED> 14,600,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 115,400,000
<EPS-PRIMARY> 1.57
<EPS-DILUTED> 1.46
</TABLE>
