FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-4957
NALCO CHEMICAL COMPANY
Incorporated in the State of Delaware
Employer Identification No. 36-1520480
One Nalco Center, Naperville, Illinois 60563-1198
Telephone 630-305-1000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
The number of shares outstanding of each of the issuer's classes of common
stock, as of June 30, 1997 was 66,817,271 shares common stock - par value $.1875
a share.
<PAGE>
NALCO CHEMICAL COMPANY
INDEX
<TABLE>
<CAPTION>
<S> <C> <C>
Page No.
Part I. Financial Information:
Item 1. Financial Statements
Condensed Consolidated Statements of
Financial Condition - June 30, 1997
(Unaudited) and December 31, 1996.........................................2
Condensed Consolidated Statements of
Earnings (Unaudited) - Three Months and
Six Months Ended June 30, 1997 and 1996...................................3
Condensed Consolidated Statements of
Cash Flows (Unaudited) - Three Months and
Six Months Ended June 30, 1997 and 1996...................................4
Notes to Condensed Consolidated Financial
Statements (Unaudited)....................................................5
Report of Independent Accountants on
Review of Interim Financial Information...................................7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations.............................................................8
Part II. Other Information:
Item 6. Exhibits and Reports on Form 8-K...............................................11
Exhibit (11) - Statement Re: Computation
of Earnings Per Share................................................12
Exhibit (15) - Awareness Letter of Independent
Accountants..........................................................14
Exhibit (27) - Financial Data Schedule.......................................................15
Signatures...................................................................................16
</TABLE>
<PAGE>
- 2 -
PART I. FINANCIAL INFORMATION
NALCO CHEMICAL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
<S> <C> <C>
June 30, December 31,
1997 1996
(Dollars in millions) (Unaudited) (Note)
ASSETS
Current assets
Cash and cash equivalents $ 47.1 $ 38.8
Accounts receivable, less allowances
of $5.0 and $4.9, respectively 249.0 233.4
Inventories
Finished products 62.7 61.4
Materials and work in process 27.7 29.4
-------- --------
90.4 90.8
Prepaid expenses, taxes and other
current assets 17.4 22.2
-------- --------
Total current assets 403.9 385.2
Investment in and advances
to partnership 132.4 126.0
Goodwill and other intangibles,
less accumulated amortization
of $27.2 and $24.7, respectively 228.9 202.5
Other assets 160.9 158.8
Property, plant and equipment 1,151.2 1,169.4
Less allowances for depreciation (649.9) (647.4)
-------- --------
501.3 522.0
-------- --------
$1,427.4 $1,394.5
======== ========
LIABILITIES/SHAREHOLDERS' EQUITY
Current liabilities
Short-term debt $ 73.4 $ 31.3
Accounts payable 105.4 114.6
Other current liabilities 125.5 143.8
-------- --------
Total current liabilities 304.3 289.7
Long-term debt 248.5 252.6
Deferred income taxes 43.3 42.9
Accrued postretirement benefits 99.8 98.5
Other liabilities 57.5 56.3
Shareholders' equity 674.0 654.5
-------- --------
$1,427.4 $1,394.5
======== ========
</TABLE>
Note: The Statement of Financial Condition at December 31, 1996 has been
derived from the audited financial statements at that date.
See accompanying Notes to Condensed Consolidated Financial Statements
(Unaudited).
<PAGE>
- 16 -
NALCO CHEMICAL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Three Months Ended Six Months Ended
(Amounts in millions, June 30 June 30
except per share data) 1997 1996 1997 1996
------- ----- ------ -----
Net sales $354.4 $318.6 $689.0 $620.5
Operating costs and expenses
Cost of products sold 152.6 139.6 297.4 274.6
Operating expenses 142.4 127.8 278.8 250.9
------ ------ ------ ------
295.0 267.4 576.2 525.5
------ ------ ------ ------
Operating earnings 59.4 51.2 112.8 95.0
Other income (expense)
Interest and other income 0.4 (0.3) 1.2 0.2
Interest expense(3.8) (3.3) (7.4) (7.0)
Equity in earnings of partnership 7.4 6.6 13.2 13.0
------ ------ ------ ------
Earnings from continuing operations
before income taxes 63.4 54.2 119.8 101.2
Income taxes 23.3 19.7 43.9 36.7
------ ------ ------ ------
Earnings from continuing operations 40.1 34.5 75.9 64.5
Discontinued operations, net of income taxes - 2.5 - 4.3
------ ------ ------ ------
Net earnings $ 40.1 $ 37.0 $ 75.9 $ 68.8
====== ====== ====== ======
Per common share - Primary
Earnings from continuing operations $ 0.55 $ 0.47 $ 1.04 $ 0.87
Discontinued operations,
net of income taxes - 0.03 - 0.06
------ ------ ------ ------
Net earnings $ 0.55 $ 0.50 $ 1.04 $ 0.93
====== ====== ====== ======
Per common share - Fully diluted
Earnings from continuing operations $ 0.51 $ 0.44 $ 0.97 $ 0.82
Discontinued operations,
net of income taxes - 0.03 - 0.05
------ ------ ------ ------
Net earnings $ 0.51 $ 0.47 $ 0.97 $ 0.87
====== ====== ====== ======
Per common share - Cash dividends $ 0.25 $ 0.25 $ 0.50 $ 0.50
====== ====== ====== ======
Average primary shares outstanding
(in thousands) 67,280 67,633 67,401 67,574
Average fully diluted shares
outstanding (in thousands) 75,283 75,586 75,396 75,546
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
(Unaudited).
<PAGE>
NALCO CHEMICAL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Three Months Ended Six Months Ended
June 30 June 30
(Dollars in millions) 1997 1996 1997 1996
-------- ------- -------- ------
Cash provided by (used for)
operating activities
Net earnings $ 40.1 $ 37.0 $ 75.9 $ 68.8
Adjustments not affecting cash
Depreciation and amortization 25.7 23.7 49.5 47.8
Other, net (0.8) 0.8 (3.2) (3.0)
Changes in current assets and
liabilities (1.3) (16.5) (24.2) (33.4)
------ ------ ------ ------
Net cash provided by operations 63.7 45.0 98.0 80.2
------ ------ ------ ------
Investing activities
Additions to property,
plant and equipment (22.2) (21.3) (38.6) (48.6)
Business purchases (7.6) (81.8) (39.8) (81.8)
Other (11.0) 4.0 (5.2) 7.3
------ ------ ------ ------
Net cash used for
investing activities (40.8) (99.1) (83.6) (123.1)
------ ------ ------ -------
Financing activities
Cash dividends (19.6) (19.7) (39.2) (39.4)
Changes in short-term debt (4.9) (25.8) 41.9 (19.3)
Changes in long-term debt 7.6 98.4 6.3 96.5
Common stock reacquired (4.0) - (22.0) -
Other 3.8 0.9 7.9 3.7
------ ------ ------ ------
Net cash provided by (used for)
financing activities (17.1) 53.8 (5.1) 41.5
------ ------ ------ ------
Effects of foreign exchange
rate changes 0.3 0.3 (1.0) 1.0
------ ------ -------- ------
Increase (decrease) in cash
and cash equivalents $ 6.1 $ - $ 8.3 $ (0.4)
====== ====== ====== ======
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
(Unaudited).
<PAGE>
NALCO CHEMICAL COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
June 30, 1997
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,
1997 and 1996. 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, 1996.
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 7.
NOTE B -- EFFECT OF CHANGING ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 (SFAS 128), "Earnings per Share." SFAS
128 establishes standards for computing and presenting earnings per share (EPS)
and simplifies the standards for computing earnings per share previously found
in APB Opinion No. 15 (APB 15), "Earnings per Share." It replaces the
presentation of primary EPS with a presentation of basic EPS. It also requires
dual presentation of basic and diluted EPS on the face of the income statement
for all entities with complex capital structures.
Basic EPS excludes dilution and is computed by dividing income available to
common shareholders by the weighted-average number of common shares outstanding
for the period. Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock that then shared
in the earnings of the entity. Diluted EPS is computed similarly to fully
diluted EPS pursuant to APB 15.
SFAS 128 is effective for financial statements issued for periods ending after
December 15, 1997, including interim periods; earlier application is not
permitted. SFAS 128 requires restatement of all prior-period EPS data presented.
Adoption of SFAS 128 is expected to have little or no impact on the Company's
future and previously reported EPS.
<PAGE>
NOTE C -- SHAREHOLDERS' EQUITY
Shareholders' equity may be further detailed as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
June 30, December 31,
(Dollars in millions, 1997 1996
----------- --------
except per share figures)
Preferred stock par value $1.00 per share;
authorized 2,000,000 shares; Series B
ESOP Convertible
Preferred Stock - 388,210 shares
at June 30, 1997 and 392,851
shares at December 31, 1996 $ 0.4 $ 0.4
Series C Junior Participating
Preferred Stock - none issued - -
Capital in excess of par value
of shares 186.4 188.6
Unearned ESOP compensation (151.1) (162.6)
------- -------
35.7 26.4
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 33.5 31.2
Retained earnings 1,028.7 992.0
Minimum pension liability adjustment (6.1) (6.1)
Foreign currency translation
adjustments (54.5) (39.9)
Common stock reacquired - at cost
13,470,297 shares at
June 30, 1997 and 13,263,648
shares at December 31, 1996 (378.4) (364.2)
------- -------
Total shareholders' equity $ 674.0 $ 654.5
======= =======
</TABLE>
NOTE D - ACQUISITIONS
In January 1997, the Company acquired the stock of International Water
Consultants Beheer B.V. (IWC) and the assets of Nutmeg Technologies, Inc.
(Nutmeg). IWC serves the water treatment needs of customers in the Netherlands,
Belgium, Germany and the Commonwealth of Independent States and Nutmeg is a
water treatment company which serves markets mainly in the Northeast United
States. They had 1996 sales of just under $30 million.
In May 1997, the Company acquired the pulp and paper enzyme business of Ciba
Specialty Chemicals, Inc. The enzyme technology which was acquired is used in
paper mills to enhance fiber quality and water drainage during the paper making
process. Also in May 1997, the Company increased its investment in Taiwan Nalco
Chemical Co. Ltd. from 55 percent to 79 percent.
The purchase price of these businesses was approximately $40 million. The
Company is in the process of evaluating the assets that were purchased and the
liabilities that were assumed in these acquisitions and accordingly will make
any necessary adjustments to the recorded value of the acquired assets and
liabilities.
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, 1997, 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, 1996, 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 3, 1997, 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, 1996, 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, 1997
Chicago, Illinois
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Second Quarter 1997 Operations Compared to Second Quarter 1996
Sales increased by 11% over last year with four of the five divisions reporting
improved results and the Pacific Division reporting comparable sales to last
year.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Second Quarter
(Dollars in millions) 1997 1996 Increase
-------- -------- --------
Water and Waste Treatment $115.0 $ 98.7 17%
Process Chemicals 91.2 85.9 6%
Europe 82.1 70.8 16%
Latin America 29.2 26.3 11%
Pacific 36.9 36.9 -%
------- -------
Total $354.4 $318.6 11%
======= =======
</TABLE>
The Water and Waste Treatment Division reported a gain of 17 percent over last
year, which included sales by Diversey Water Technologies (DWT) a middle market
water treatment business acquired by the Company in mid-1996. Solid improvement
were also posted by the Waste Treatment Chemicals and WATERGY(R) Groups. Within
the Process Chemicals Division, the Paper Chemicals Group led with a near
double-digit increase. Sales by IWC, which was acquired in January 1997, and the
European operations of DWT along with strong growth by Basic Industries - North
Europe, UNISOLV(R) and Pulp and Paper contributed to the 16 percent increase in
Europe Division sales. These gains were moderated by the strengthening of the
U.S. dollar compared to most European currencies. Colombia, Mexico, Chile and
Venezuela posted double-digit sales increases that contributed to the sales
improvement in Latin America. In the Pacific Division, local currency sales
increases were offset by the impact of the stronger U.S. dollar compared to most
Pacific Rim currencies.
The gross margin of 56.9 percent for the second quarter of 1997 was up over last
year's rate of 56.2 percent. This increase was mainly attributable to higher
margins of the newly acquired DWT. Improved margins in North America, Latin
America and the Pacific offset a slight decline in Europe margins.
Operating expenses (selling, service, research, etc.) were up $14.6 million over
the second quarter of last year. Expenses of DWT and IWC account for over half
of this increase.
Interest and other income increased by $0.7 million over a year ago, primarily
due to a gain on sale of assets and an increase in interest income. Interest
expense increased by $0.5 million over the second quarter of last year and
reflects the cost of financing acquisitions less the effect of a lower average
borrowing rate mix compared to last year.
Nalco's equity in Nalco/Exxon for the second quarter of 1997 was $7.4 million,
an increase of $0.8 million over the second quarter of 1996.
The effective income tax rate for the second quarter of 1997 was 36.8 percent
compared to the 36.3 percent that was reported for the second quarter of 1996.
Fully diluted earnings per share from continuing operations for the second
quarter 1997 was 51 cents compared to the 44 cents for the second quarter 1996.
Net earnings per share on a fully diluted basis for the second quarter 1997 was
51 cents compared to 47 cents for the second quarter 1996 which included the
results of the discontinued superabsorbent chemical business.
<PAGE>
First Six Months 1997 Operations Compared to First Six Months 1996
Sales increased 11 percent with all five divisions reporting improvements.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Six Months
(Dollars in millions) 1997 1996 Increase
-------- -------- --------
Water and Waste Treatment $223.5 $187.9 19%
Process Chemicals 178.5 169.0 6%
Europe 158.2 141.9 11%
Latin America 55.6 52.1 7%
Pacific 73.2 69.6 5%
------- -------
Total $689.0 $620.5 11%
======= =======
</TABLE>
The Water and Waste Treatment Division sales gain of 19 percent for the first
six months of 1997 included sales by DWT, along with a near double-digit
improvement by the Watergy Group and more modest increases by the other three
groups in the Division. The 6 percent sales increase reported by the Process
Chemicals Division included solid growth by the Paper Chemicals Group. The 11
percent sales improvement by the Europe Division included sales by IWC and the
European operations of DWT. Strong increases in local currencies by most other
operations in the Division were partly offset by the translation effects of the
stronger U.S. dollar compared to a year ago. Double-digit improvements reported
by Chile, Colombia, Mexico and Venezuela contributed to the 7 percent increase
in Latin America sales for the first half of 1997. The Pacific Division sales
increase of 5 percent benefited from double-digit sales improvements posted by
China, Japan, Korea, Singapore/Malaysia, and Thailand. These gains were
moderated by the impact of the stronger U.S. dollar compared to most Pacific Rim
currencies.
The gross margin for the first six months of 1997 improved to 56.8 percent
compared to last year's rate of 55.7 percent, which was primarily attributable
to higher margins of the newly acquired DWT. In addition, improved margins in
North America offset slight declines in margins reported in the Europe and Latin
America Divisions.
Operating expenses (selling, service, research, etc.) were up $27.9 million,
with DWT and IWC operations accounting for well over half of the increase.
Interest and other income increased by $1.0 million for the first six months of
1997 compared to last year. Higher interest income and a gain on sale of assets
contributed to the improvement. Interest expense increased by $0.4 million for
the first half of 1997 compared to last year which reflects costs related to
financing acquisitions partly offset by a favorable blend of average financing
rates compared to last year.
Nalco's equity in Nalco/Exxon for the first six months of 1997 rose slightly to
$13.2 million compared to last year's reported amount of $13.0 million.
The effective tax rate was 36.6 percent for the first six months of 1997
compared to 36.3 percent for the first six months of 1996.
Fully diluted earnings per share from continuing operations was 97 cents per
share compared to 82 cents per share for the first six months of 1996. Net
earnings per share on a fully diluted basis for the first six months of 1997 was
97 cents per share compared to 87 cents per share a year ago, which included the
results of the discontinued superabsorbent chemical business.
<PAGE>
Changes in Financial Condition
Cash and cash equivalents increased by $8.3 million during the first six months
as detailed in the Unaudited Condensed Consolidated Statement of Cash Flows.
Days sales outstanding were 64 days at June 30, 1997, comparable to the 64 days
outstanding at December 31, 1996. Working capital at June 30, 1997 totaled $99.6
million, a $4.1 million increase over the $95.5 million at December 31, 1996.
The ratio of current assets to current liabilities was 1.3 to 1 at June 30,
1997.
The $26.4 million increase in goodwill is mainly attributable to the
acquisitions of IWC and Nutmeg during the first quarter of 1997, the May 1997
purchase of the pulp and paper enzyme business of Ciba Specialty Chemicals,
Inc., and the additional investment in Taiwan Nalco Chemical Co. Ltd. These
acquisitions were financed primarily by the issuance of commercial paper, which
accounted for most of the increase in short-term debt.
Capital investments totaled $38.6 million for the first six months of 1997.
Major expenditures were for additional 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:
(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, 1997.
<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, 1997 W. E. BUCHHOLZ
----------------------
W. E. Buchholz - Vice President,
Chief Financial Officer
Date: August 13, 1997 S. J. GIOIMO
--------------------
S. J. Gioimo - Secretary
<PAGE>
EXHIBIT (11)
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
NALCO CHEMICAL COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Three Months Ended Six Months Ended
(Amounts in thousands, June 30 June 30
except per share data) 1997 1996 1997 1996
------ ------ ------ -----
Primary
Average shares outstanding 66,749 67,360 66,823 67,287
Net effect of dilutive stock options and shares
contingently issuable-based on
the treasury stock method using
average market price 531 273 578 287
------- ------- ------- -------
TOTALS 67,280 67,633 67,401 67,574
======= ======= ======= =======
Earnings from continuing operations $ 40,064 $ 34,470 $ 75,895 $ 64,478
Earnings discontinued operations,
net of income taxes - 2,514 - 4,279
-------- -------- -------- --------
Net earnings 40,064 36,984 75,895 68,757
Preferred stock dividends,
net of income taxes (2,875) (2,842) (5,753) (5,697)
-------- -------- -------- --------
Net earnings to
common shareholders $ 37,189 $ 34,142 $ 70,142 $ 63,060
======== ======== ======== ========
Per share amounts
Earnings from continuing operations $ 0.55 $ 0.47 $ 1.04 $ 0.87
Earnings from discontinued operations,
net of income taxes - 0.03 - 0.06
------- ------- ------- -------
Net earnings to common shareholders $ 0.55 $ 0.50 $ 1.04 $ 0.93
======= ======= ======= =======
</TABLE>
<PAGE>
EXHIBIT (11)
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
NALCO CHEMICAL COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Three Months Ended Six Months Ended
(Amounts in thousands, June 30 June 30
except per share data) 1997 1996 1997 1996
------ ------ ------ -----
Fully Diluted
Average shares outstanding 66,749 67,360 66,823 67,287
Average dilutive effect of
assumed conversion of ESOP
convertible Preferred shares 7,784 7,948 7,808 7,965
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 750 278 765 294
-------- -------- -------- --------
TOTALS 75,283 75,586 75,396 75,546
======== ======== ======== ========
Earnings from continuing operations $ 40,064 $ 34,470 $ 75,895 $ 64,478
Earnings from discontinued operations,
net of income taxes - 2,514 - 4,279
-------- -------- -------- --------
Net earnings 40,064 36,984 75,895 68,757
Additional ESOP contribution
resulting from assumed
conversion, net of income taxes (1,122) (1,132) (2,245) (2,273)
Tax adjustment on assumed
common dividends (261) (231) (522) (461)
-------- -------- -------- --------
Net earnings to
common shareholders $ 38,681 $ 35,621 $ 73,128 $ 66,023
======== ======== ======== ========
Per share amounts:
Earnings from continuing operations $ 0.51 $ 0.44 $ 0.97 $ 0.82
Earnings from discontinued operations,
net of income taxes - 0.03 - 0.05
------- ------- ------- -------
Net earnings to common shareholders $ 0.51 $ 0.47 $ 0.97 $ 0.87
======= ======= ======= =======
</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, 1997 (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, 1997
Chicago, Illinois
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL CONDITION AT JUNE 30, 1997
AND THE CONDENSED CONSOLIDATED STATEMENT OF EARNINGS FOR THE SIX MONTHS
ENDED JUNE 30, 1997 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-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 47,100,000
<SECURITIES> 0
<RECEIVABLES> 254,000,000
<ALLOWANCES> (5,000,000)
<INVENTORY> 90,400,000
<CURRENT-ASSETS> 403,900,000
<PP&E> 1,151,200,000
<DEPRECIATION> (649,900,000)
<TOTAL-ASSETS> 1,427,400,000
<CURRENT-LIABILITIES> 304,300,000
<BONDS> 248,500,000
0
400,000
<COMMON> 15,100,000
<OTHER-SE> 658,500,000
<TOTAL-LIABILITY-AND-EQUITY> 1,427,400,000
<SALES> 689,000,000
<TOTAL-REVENUES> 689,000,000
<CGS> 297,400,000
<TOTAL-COSTS> 297,400,000
<OTHER-EXPENSES> 278,800,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,400,000
<INCOME-PRETAX> 119,800,000
<INCOME-TAX> 43,900,000
<INCOME-CONTINUING> 75,900,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 75,900,000
<EPS-PRIMARY> 1.04
<EPS-DILUTED> 0.97
</TABLE>
