Reported diluted EPS $0.62; adjusted EPS
+23% to $0.74
2014 full-year adjusted EPS forecast remains
$4.10 to $4.20, +16% to 19%
Ecolab Inc. (NYSE:ECL):
2014 FIRST QUARTER
HIGHLIGHTS:
- Reported sales +16%; acquisition
adjusted fixed currency sales +5% led by the Specialty, Energy,
Food & Beverage businesses and the Latin America and Asia
Pacific regions
- Reported diluted EPS $0.62,
+17%
- Record adjusted EPS $0.74, +23%,
excluding special gains and charges and discrete tax items, driven
by solid sales gains, cost efficiency programs and
synergies
First Quarter Ended
March 31
(unaudited) Reported Adjusted* First
Quarter % First Quarter % (Millions, except per share)
2014
2013
change
2014
2013
change
Net Sales $ 3,336.6 $ 2,872.1 16 % $ 3,336.6 $ 2,872.1 16 %
Operating Income 350.9 261.7 34 % 386.5 313.4
23
%
Net Income Attributable to Ecolab
191.0
159.6 20 %
228.2
180.5 26 % Diluted Net Income Per Share $ 0.62
$ 0.53 17 % $ 0.74 $ 0.60 23 % * Operating income is
adjusted for special gains and charges. Net income and diluted net
income per share are adjusted for special gains and charges and
discrete tax items.
Ecolab Inc. delivered strong first quarter earnings as continued
solid sales growth and operating margin gains led to a 23% adjusted
earnings per share increase over last year.
CEO comment
Commenting on the quarter, Douglas M. Baker, Jr., Ecolab’s
chairman and chief executive officer said, “First quarter results
were in line with our expectations, as our team delivered solid
organic sales growth and strong earnings gains, more than
offsetting unfavorable currencies.
“We continue to expect a strong year in 2014. Global economies
remain choppy, so we continue to focus on driving sales growth
through our strong value proposition – providing the leading
products and on-site service that deliver the best results and
lowest operating costs for customers – while also generating
improved cost efficiencies and synergies to further accelerate
earnings growth. We are in a terrific position, with major growth
opportunities in all of our markets. We are committed to delivering
superior results for our customers and shareholders in 2014, and
continue to invest in the best opportunities for future
growth.”
Quarter overview
First Quarter Ended
March 31
(unaudited) Reported % Adjusted
Fixed Currency* % (Millions)
2014
2013
Change 2014 2013 Change Net Sales $ 3,336.3 $
2,872.1 16 % $ 3,309.1 $ 2,799.1 18 % Operating Income 350.9 261.7
34 % 383.6 302.7 27 % * Operating income is adjusted for
special gains and charges.
Ecolab's reported sales rose 16% to a record $3.3 billion in the
first quarter of 2014. Fixed currency sales rose 18%. First quarter
2014 acquisition adjusted fixed currency sales rose 5%.
Acquisition adjusted growth rates generally exclude the results
of any acquired business for the first twelve months post
acquisition and exclude the results of any divested businesses for
the twelve months prior to divestiture. Champion is an exception.
Due to the rapid pace at which the business is being fully
integrated within our Global Energy segment, including all customer
selling activity, discrete financial data specific to the legacy
Champion business is not readily available post acquisition. As
such, to allow for the most meaningful period-over-period
comparison, specific to the Champion transaction, Champion’s
results for the comparable period of the prior year have been
included for purposes of providing acquisition adjusted growth
rates.
First quarter 2014 reported operating income increased 34% to
$351 million. Both reported first quarter 2014 and 2013 results
include special gains and charges. Excluding special gains and
charges, first quarter 2014 adjusted operating income of $387
million increased 23% compared with first quarter 2013 adjusted
operating income. Excluding special gains and charges and at fixed
currency rates, first quarter 2014 adjusted fixed currency
operating income of $384 million increased 27% when compared with
first quarter 2013 adjusted fixed currency operating income. First
quarter 2014 adjusted fixed currency operating income, adjusted for
acquisitions, increased 17%.
First quarter 2014 reported net income attributable to Ecolab
increased 20% to $191 million and reported diluted earnings per
share increased 17% to $0.62. Excluding special gains and charges
and discrete tax items, first quarter 2014 adjusted net income rose
26% to $228 million, and adjusted diluted earnings per share
increased 23% to $0.74, when compared with first quarter 2013
adjusted diluted earnings per share of $0.60. Currency translation
had a negative impact of $0.02 per share on reported and adjusted
diluted earnings per share in the first quarter of 2014.
Segment review
Effective in the first quarter of 2014, Ecolab made immaterial
changes to its reportable segments, including the movement of
certain customers between reportable segments and updates to the
internal allocations of certain supply chain and SG&A expenses
related to our centralized functions. These changes had no impact
on Ecolab’s consolidated sales or operating income. Results for
2013 have been revised to conform to the current year presentation
and are reflected in the following commentary for both 2013 and
2014 results.
First quarter 2014 sales for the Global Industrial segment, when
measured at fixed currency rates, rose 3% to $1,138 million, led by
Food & Beverage and Water. Fixed currency operating income
increased 7% to $120 million compared with the year ago period.
Regionally, Asia Pacific and Latin America enjoyed good sales
growth, with modest gains in North America and a modest decline in
EMEA. When measured at public currency rates, Global Industrial
segment sales were $1,148 million and operating income was $121
million.
First quarter 2014 sales for the Global Institutional segment,
when measured at fixed currency rates, rose 3% to $993 million, led
by strong Specialty sales growth. Fixed currency operating income
increased to $156 million, up 7% compared with last year. Sales for
the segment showed strong growth in Latin America, with good gains
in North America and Asia Pacific, and a modest increase in EMEA.
When measured at public currency rates, Global Institutional
segment sales were $999 million and operating income was $156
million.
First quarter 2014 sales for the Global Energy segment, when
measured at fixed currency rates, grew 78% to $1,005 million in the
first quarter 2014, due in large part to the Champion acquisition.
Fixed currency operating income increased 83% to $132 million.
Acquisition adjusted fixed currency sales grew 8% reflecting good
growth in the upstream and downstream markets; acquisition adjusted
fixed currency operating income increased 36%. When measured at
public currency rates, Global Energy segment sales were $1,016
million and operating income was $133 million.
Other segment sales, when measured at fixed currency rates,
increased 4% to $173 million in the first quarter. Fixed currency
operating income increased 2% to $22 million. When measured at
public currency rates, Other segment reported sales were $173
million and reported operating income was $22 million.
The Corporate segment includes amortization from the Nalco
merger intangible assets, and certain integration costs for both
the Nalco and Champion transactions in 2013. The Corporate segment
also includes special gains and charges. Special gains and charges
for the first quarter of 2014 were a net charge of $36 million ($27
million after-tax) and primarily consisted of restructuring charges
and Champion integration costs. Special gains and charges for the
first quarter 2013 were a net charge of $53 million ($36 million
after-tax).
The reported tax rate in the first quarter 2014 was 31.9% and
compared with 19.6% in the first quarter 2013. Excluding the tax
rate impact of special gains and charges and discrete tax items,
the adjusted tax rate was 27.9% in the first quarter 2014 and
compared with 28.2% in the same period last year. The improved
adjusted tax rate was the result of favorable geographic income mix
which more than offset the expired U.S. Research & Development
tax credit.
Ecolab reacquired 2 million shares of its common stock during
the first quarter.
Business Outlook
2014
Ecolab continues to expect 2014 full-year adjusted earnings per
share forecast in the $4.10 to $4.20 range, representing a 16% to
19% increase over the prior year. When compared with the 2013
performance, we expect further solid fixed currency sales growth,
improved adjusted gross margin and selling, general and
administrative (SG&A) ratios to sales, lower interest expense
and a lower adjusted tax rate. We look for unfavorable currency
exchange to offset favorable pension expense. We expect these
factors, combined with improved efficiency, cost savings and merger
synergies, to yield a very strong adjusted earnings per share
performance. Please note our tax rate forecast for the full year
assumes passage of the R&D tax credit in the fourth
quarter.
Our detailed outlook for the full year 2014 is as follows:
Adjusted Gross Margin, excluding special gains
and charges approx. 47% SG&A % of Sales approx. 32% Interest
expense, net $250 million to $260 million Adjusted tax rate 27% -
28% Adjusted EPS, excluding special gains and charges $4.10 - $4.20
Diluted shares approx. 307 million
Effective in the first quarter of 2014, certain employee-related
costs from our recently acquired businesses that were historically
presented within cost of sales were revised and reclassified to
SG&A. These immaterial revisions were made to conform to how
management views the respective costs within the global
organizational model. Results for 2013 have been revised to conform
to the current year presentation. The reclassification had no
impact on net earnings, financial position or cash flows.
We continue to expect special gains and charges for the
full-year 2014 to be approximately a $0.25 per share net charge,
primarily driven by restructuring charges and integration costs.
Amounts do not reflect the impact of a potential Venezuela currency
devaluation or discrete tax items for 2014 that are not currently
quantifiable.
2014 – Second Quarter
Ecolab expects second quarter adjusted earnings per share in the
$1.00 to $1.04 range, representing a 16% to 21% increase versus a
very strong year-ago period, when adjusted earnings per share rose
19% to $0.86.
Our detailed outlook for the second quarter 2014 is as follows:
Adjusted Gross Margin, excluding
special gains and charges approx. 46% SG&A % of Sales approx.
33% Interest expense, net $60 million to $65 million Adjusted tax
rate approx. 28% Adjusted EPS, excluding special gains and charges
$1.00 - $1.04 Diluted shares approx. 307 million
We expect second quarter 2014 special gains and charges,
including restructuring charges and integration costs, to be less
than $0.05 per share. Amounts do not reflect the impact of a
potential Venezuela currency devaluation or discrete tax items for
2014 that are not currently quantifiable.
Reported second quarter 2013 diluted earnings per share of $0.69
included special gains and charges and discrete tax items.
Excluding these items, second quarter 2013 adjusted diluted
earnings per share were $0.86.
About Ecolab
A trusted partner at more than one million customer locations,
Ecolab (ECL) is the global leader in water, hygiene and energy
technologies and services that protect people and vital resources.
With 2013 sales of $13 billion and 45,000 associates, Ecolab
delivers comprehensive solutions and on-site service to promote
safe food, maintain clean environments, optimize water and energy
use and improve operational efficiencies for customers in the food,
healthcare, energy, hospitality and industrial markets in more than
170 countries around the world. For more Ecolab news and
information, visit www.ecolab.com.
Ecolab will host a live webcast to review the first quarter
earnings announcement and earnings guidance today at 1:00 p.m.
Eastern Time. The webcast, along with related presentation slides,
will be available to the public on Ecolab's website at
www.ecolab.com/investor. A replay of the webcast and related
materials will be available at that site. Listening to the webcast
requires Internet access, the Windows Media Player or other
compatible streaming media player.
Cautionary Statements Regarding Forward-Looking
Information
This communication contains certain statements relating to
future events and our intentions, beliefs, expectations and
predictions for the future which are forward-looking statements as
that term is defined in the Private Securities Litigation Reform
Act of 1995. Words or phrases such as “will likely result,” “are
expected to,” “will continue,” “is anticipated,” “we believe,” “we
expect,” “estimate,” “project,” “may,” “will,” “intend,” “plan,”
“believe,” “target,” “forecast” (including the negative or
variations thereof) or similar terminology used in connection with
any discussion of future plans, actions or events generally
identify forward-looking statements. These forward-looking
statements include, but are not limited to, statements regarding
our financial and business performance and prospects, including
forecasted 2014 second quarter and full-year business results,
including sales growth, adjusted gross margin, SG&A ratios to
sales, interest expense, adjusted effective tax rate, adjusted
earnings per share and diluted shares outstanding; special gains
and charges, including restructuring charges and integration costs;
market conditions; cost savings; merger synergies; currency
exchange; and pension expense. These statements are based on the
current expectations of management of the company. There are a
number of risks and uncertainties that could cause actual results
to differ materially from the forward-looking statements included
in this communication. In particular, the ultimate results of any
restructuring, integration and business improvement actions,
including cost synergies, depend on a number of factors, including
the development of final plans, the impact of local regulatory
requirements regarding employee terminations, the time necessary to
develop and implement the restructuring and other business
improvement initiatives and the level of success achieved through
such actions in improving competitiveness, efficiency and
effectiveness. In addition, as it relates to the Nalco and Champion
transactions, these risks and uncertainties include problems that
may arise in successfully integrating the businesses of the company
and Nalco Champion, which may result in the combined business not
operating as effectively and efficiently as expected.
Additional risks and uncertainties that may affect operating
results and business performance are set forth under Item 1A of our
most recent Form 10-K and include the vitality of the markets we
serve; the impact of economic factors such as the worldwide
economy, capital flows, interest rates and foreign currency risk,
including a potential currency devaluation in Venezuela; our
ability to integrate the Nalco and Champion transactions and to
realize the anticipated benefits of these transactions; our ability
to attract and retain high caliber management talent to lead our
business; our ability to execute key business initiatives;
potential information technology infrastructure failures; exposure
to global economic, political and legal risks related to our
international operations, including with respect to our operations
in Russia; the costs and effects of complying with laws and
regulations, including those relating to the environment and to the
manufacture, storage, distribution, sale and use of our products;
the occurrence of litigation or claims, including related to the
Deepwater Horizon oil spill; our ability to compete with respect to
value, innovation and customer support; difficulty in procuring raw
materials or fluctuations in raw material costs; our substantial
indebtedness; our ability to acquire complementary businesses and
to effectively integrate such businesses; restraints on pricing
flexibility due to contractual obligations; pressure on operations
from consolidation of customers, vendors or competitors; public
health epidemics; potential losses arising from the impairment of
goodwill or other assets; potential loss of deferred tax assets;
potential chemical spill or release; potential class action
lawsuits; uncertainty of customer performance, including with
respect to our joint venture operations in Kazakhstan; the loss or
insolvency of a major customer or distributor; acts of war or
terrorism; natural or man-made disasters; water shortages; severe
weather conditions; and other uncertainties or risks reported from
time to time in our reports to the Securities and Exchange
Commission. In light of these risks, uncertainties, assumptions and
factors, the forward-looking events discussed in this communication
may not occur. We caution that undue reliance should not be placed
on forward-looking statements, which speak only as of the date
made. Ecolab does not undertake, and expressly disclaims, any duty
to update any forward-looking statement whether as a result of new
information, future events or changes in expectations, except as
required by law.
Non-GAAP Financial Information
This news release and certain of the accompanying tables include
financial measures that have not been calculated in accordance with
accounting principles generally accepted in the U.S. (GAAP). These
non-GAAP financial measures include fixed currency sales,
acquisition adjusted fixed currency sales, adjusted gross margins,
fixed currency operating income, adjusted operating income,
adjusted fixed currency operating income, adjusted fixed currency
operating income adjusted for acquisitions, adjusted tax rate,
adjusted net income and adjusted diluted earnings per share.
We provide these measures as additional information regarding
our operating results. We use these non-GAAP measures internally to
evaluate our performance and in making financial and operational
decisions, including with respect to incentive compensation. We
believe that our presentation of these measures provides investors
with greater transparency with respect to our results of operations
and that these measures are useful for period-to-period comparison
of results.
We include in special gains and charges items that are unusual
in nature, and significant in amount. In order to better allow
investors to compare underlying business performance
period-to-period, we provide adjusted gross margin, adjusted
operating income, adjusted net income attributable to Ecolab and
adjusted diluted earnings per share, which excludes special gains
and charges and discrete tax items.
The adjusted effective tax rate measure promotes
period-to-period comparability of the underlying effective tax rate
because the amounts excluded do not necessarily reflect costs
associated with historical trends or expected future results.
We evaluate the performance of our international operations
based on fixed currency rates of foreign exchange. Fixed currency
sales, acquisition adjusted fixed currency sales, fixed currency
operating income, adjusted fixed currency operating income and
adjusted fixed currency operating income adjusted for acquisitions
measures eliminate the impact of exchange rate fluctuations on our
international sales, acquisition adjusted sales, operating income,
adjusted operating income and acquisition adjusted operating
income, respectively, and promote a better understanding of our
sales and operating income trends from underlying business
performance. Fixed currency amounts included in this release are
based on translation into U.S. dollars at the fixed foreign
currency exchange rates established by management at the beginning
of 2014.
Acquisition adjusted growth rates generally exclude the results
of any acquired business for the first twelve months post
acquisition and exclude the results of any divested businesses for
the previous twelve months prior to divestiture. Champion is an
exception. Due to the rapid pace at which the business is being
fully integrated within our Global Energy segment, including all
customer selling activity, discrete financial data specific to the
legacy Champion business is not readily available post acquisition.
As such, to allow for the most meaningful period-over-period
comparison, specific to the Champion transaction, Champion’s
results for the comparable period of the prior year have been
included for purposes of providing acquisition adjusted growth
rates.
These non-GAAP financial measures are not in accordance with, or
an alternative to, GAAP and may be different from non-GAAP measures
used by other companies. Investors should not rely on any single
financial measure when evaluating our business. We recommend that
investors view these measures in conjunction with the GAAP measures
included in this news release. A reconciliation of reported diluted
earnings per share to adjusted diluted earnings per share is
provided in the table "Supplemental Diluted Earnings per Share
Information" included in this news release.
(ECL-E)
ECOLAB INC. CONSOLIDATED STATEMENT OF INCOME
FIRST QUARTER ENDED MARCH 31 (unaudited)
First Quarter Ended March 31 % (millions, except per share)
2014 2013 Change Net sales
$ 3,336.6 $
2,872.1 16 % Cost of sales (1)
1,819.2 1,539.7 18 %
Selling, general and administrative expenses
1,136.9 1,021.0
11 % Special (gains) and charges (1)
29.6
49.7 Operating income
350.9 261.7 34 %
Interest expense, net (1)
65.1 61.5
6 % Income before income taxes
285.8 200.2 43 %
Provision for income taxes
91.3 39.2
133 % Net income including noncontrolling interest
194.5 161.0 21 % Less: Net income (loss) attributable to
noncontrolling interest (1)
3.5 1.4
Net income attributable to Ecolab
$ 191.0
$ 159.6 20 % Earnings attributable to Ecolab
per common share Basic
$ 0.64 $ 0.54 19 % Diluted
$ 0.62 $ 0.53 17 % Weighted-average
common shares outstanding Basic
300.6 295.4 2 % Diluted
306.5 300.9 2 % (1) Special (gains) and charges in
the Consolidated Statement of Income above include the following:
(millions)
2014
2013 Cost of sales Restructuring
$ 6.0 $ 2.0 Special (gains) and charges
Restructuring charges
22.6 18.5 Champion acquisition and
integration costs
6.5 7.8 Nalco merger and integration costs
1.3 3.8 Venezuela currency devaluation
- 23.4
Litigation related charges and other
(0.8 )
(3.8 ) Subtotal
29.6 49.7 Operating
income subtotal
35.6 51.7
Interest expense, net Acquisition debt costs
- 2.2
Net income attributable to noncontrolling interest Venezuela
currency devaluation
- (0.5 ) Total
$
35.6 $ 53.4
ECOLAB INC.
REPORTABLE SEGMENT INFORMATION FIRST QUARTER ENDED MARCH
31 (unaudited) First Quarter Ended March
31 (millions)
2014 2013 % Change Net Sales Global
Industrial
$ 1,138.0 $ 1,104.3 3% Global Institutional
993.3 963.2 3% Global Energy
1,005.1 565.7 78% Other
172.7 165.9 4% Subtotal at fixed currency rates
3,309.1 2,799.1 18% Currency impact
27.5 73.0
Consolidated
$ 3,336.6 $ 2,872.1 16% Operating
Income Global Industrial
$ 119.5 $ 111.7 7% Global
Institutional
155.5 145.8 7% Global Energy
131.7 72.1
83% Other
22.1 21.7 2% Corporate
(80.8) (100.3)
Subtotal at fixed currency rates
348.0 251.0 39% Currency
impact
2.9 10.7 Consolidated
$ 350.9 $ 261.7 34%
Note:
Effective in the first quarter of 2014, Ecolab made immaterial
changes to its reportable segments, including the movement of
certain customers between reportable segments and updates to the
internal allocations of certain supply chain and SG&A expenses
related to our centralized functions. Results for 2013 have been
revised to conform to the current year presentation and are
reflected in the above table for both 2013 and 2014 results.
The Corporate segment includes amortization from the Nalco
merger intangible assets and in 2013 certain integration costs for
both the Nalco and Champion transactions. The Corporate segment
also includes special (gains) and charges reported on the
Consolidated Statement of Income.
ECOLAB INC. CONSOLIDATED BALANCE SHEET
(unaudited)
March 31 December 31
March 31 (millions)
2014 2013 2013
Assets
Current assets Cash and cash equivalents
$ 300.3 $
339.2 $ 824.3 Accounts receivable, net
2,519.6 2,568.0
2,182.1 Inventories
1,367.1 1,321.9 1,145.3 Deferred income
taxes
170.8 163.0 201.3 Other current assets
345.2 306.3 250.4 Total
current assets
4,703.0 4,698.4 4,603.4 Property,
plant and equipment, net
2,889.0 2,882.0 2,415.5 Goodwill
6,856.6 6,862.9 5,908.5 Other intangible assets, net
4,701.3 4,785.3 4,022.5 Other assets
413.5
407.9 346.3 Total assets
$ 19,563.4 $ 19,636.5 $ 17,296.2
Liabilities and Equity Current liabilities Short-term
debt
$ 1,257.6 $ 861.0 $ 497.1 Accounts payable
951.2 1,021.9 845.0 Compensation and benefits
474.7
571.1 405.4 Income taxes
89.3 80.9 108.1 Other current
liabilities
881.8 953.8
828.6 Total current liabilities
3,654.6 3,488.7
2,684.2 Long-term debt
5,946.4 6,043.5 5,737.1
Postretirement health care and pension benefits
795.9 795.6
1,219.2 Other liabilities
1,893.4
1,899.3 1,423.2 Total liabilities
12,290.3 12,227.1 11,063.7 Equity Common stock
346.4 345.1 343.6 Additional paid-in capital
4,757.0
4,692.0 4,309.7 Retained earnings
4,807.2 4,699.0 4,112.3
Accumulated other comprehensive loss
(373.3 ) (305.2
) (509.2 ) Treasury stock
(2,326.8 )
(2,086.6 ) (2,094.7 ) Total Ecolab shareholders' equity
7,210.5 7,344.3 6,161.7 Noncontrolling interest
62.6 65.1 70.8 Total
equity
7,273.1 7,409.4 6,232.5 Total liabilities and
equity
$ 19,563.4 $ 19,636.5 $ 17,296.2
ECOLAB INC. SUPPLEMENTAL DILUTED EARNINGS
PER SHARE INFORMATION (unaudited)
The table below provides a reconciliation
of diluted earnings per share, as reported, to the non-GAAP measure
of adjusted diluted earnings per share.
First Second Six Third
Nine Fourth Quarter Quarter
Months Quarter Months Quarter
Year Ended Ended Ended Ended
Ended Ended Ended Mar. 31 June
30 June 30 Sept. 30 Sept. 30 Dec.
31 Dec. 31 2013 2013 2013
2013 2013 2013 2013
Diluted earnings per share, as reported
(U.S. GAAP)
$ 0.53 $ 0.69 $ 1.23 $ 1.00 $ 2.23 $ 0.93 $ 3.16
Adjustments: Special (gains) and charges (1) 0.12 0.21 0.33 0.07
0.40 0.11 0.51 Tax expense (benefits) (2) (0.05 ) (0.04 ) (0.09 )
(0.04 ) (0.13 ) (0.01 ) (0.14 )
Adjusted diluted earnings per share
(Non-GAAP)
$ 0.60 $ 0.86 $ 1.47 $ 1.04 $ 2.50
$ 1.04 $ 3.54
First
Second Six Third Nine Fourth
Quarter Quarter Months Quarter
Months Quarter Year Ended Ended
Ended Ended Ended Ended Ended
Mar. 31 June 30 June 30 Sept. 30
Sept. 30 Dec. 31 Dec. 31 2014
2014 2014 2014 2014 2014
2014
Diluted earnings per share, as reported
(U.S. GAAP)
$ 0.62 Adjustments: Special (gains) and charges (3) 0.09 Tax
expense (benefits) (4) 0.03
Adjusted diluted earnings per share
(Non-GAAP)
$ 0.74
Per share amounts do not necessarily sum due to changes in
shares outstanding and rounding.
(1) Special (gains) and charges for 2013
include restructuring charges of $14.1 million, $33.7 million, $8.9
million and $10.2 million net of tax in the first, second, third
and fourth quarters, respectively. Special (gains) and charges for
2013 also include $7.1 million, $17.1 million, $6.7 million and
$4.6 million of costs in the first, second, third and fourth
quarters of 2013, respectively, related to Champion acquisition and
integration costs. Special (gains) and charges for 2013 also
include $10.5 million, $3.5 million and $11.9 million, net of tax
in the second, third and fourth quarters, respectively, for the
recognition of Champion inventory fair value step-up. Special
(gains) and charges for 2013 also include $2.7 million, $3.0
million, $3.5 million and $5.0 million of costs in the first,
second, third and fourth quarters of 2013, respectively, related to
Nalco integration costs. Special (gains) and charges for the first
and fourth quarters of 2013 also include $15.0 million and $1.2
million, net of tax for the devaluation of Venezuelan currency.
Special (gains) and charges for the first quarter of 2013 also
includes a net gain of $2.5 million, net of tax related to other
items.
(2) The first quarter 2013 discrete tax
net benefit of $15.5 million is driven primarily by net benefits
related to the remeasurement of certain deferred tax assets and
liabilities and the retroactive extension during first quarter 2013
of the U.S. R&D 2012 credit. The second quarter 2013 discrete
tax net benefit of $12.1 million are driven primarily by the
release of a valuation allowance related to the realizability of
foreign deferred tax assets, law changes within a foreign
jurisdiction and recognition of settlements related to our 2009
through 2010 U.S. income tax returns, offset partially by foreign
audit adjustments. The third quarter 2013 discrete tax net benefit
of $12.5 million primarily includes net benefits from filing our
2012 U.S. federal tax return and the recognition of settlements
related to prior year income tax audits, partially offset by the
remeasurement of certain deferred tax assets. The fourth quarter
2013 discrete tax net benefits of $1.6 million relate primarily to
U.S. and foreign audit settlements and adjustments and net benefits
from filing our 2012 U.S. state tax returns, partially offset by
net adjustments to deferred tax assets and liabilities.
(3) Special (gains) and charges for the
first quarter of 2014 include restructuring charges of $22.8
million, net of tax. Special (gains) and charges for the first
quarter of 2014 also include $4.1 million, net of tax, related to
Champion integration costs and $0.9 million, net of tax, related to
Nalco integration costs. Special (gains) and charges for the first
quarter of 2014 also include a gain of $0.5 million, net of tax,
related to other items.
(4) The first quarter 2014 discrete tax
net expense of $9.9 million is driven primarily by the rate
differential on certain prior year shared costs, the remeasurement
of certain deferred tax assets and liabilities resulting from a
change in the state tax rate for certain entities following the
merger of Champion operations and the change of a valuation
allowance related to the realizability of foreign deferred tax
assets, which collectively more than offset benefits from a foreign
country audit settlement.
Ecolab Inc.Michael J. Monahan, 651-293-2809Lisa L. Curran,
651-293-2185
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