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In an October 26 release, Ecolab reported net sales declined 5 percent to $1.5 billion in the third quarter of 2009; fixed currency sales were level with the prior year. Reported net income attributable to Ecolab increased 15 percent to $145 million. Reported diluted earnings per share increased 20 percent to $0.60.
Third quarter 2009 and 2008 results included special gains and charges and discrete tax items. Excluding those items, pro forma third quarter 2009 diluted earnings per share were $0.61, an 11 percent increase from pro forma third quarter 2008 diluted earnings per share of $0.55. Currency translation had a negative impact on third quarter 2009 pro forma diluted earnings per share of approximately $0.03 per share.
Third quarter 2009 sales for Ecolab's U.S. Cleaning & Sanitizing operations were $693 million, roughly even with last year. Ecolab's U.S. Cleaning & Sanitizing operating income rose 17 percent to $141 million.
Sales of Ecolab's International operations, when measured at fixed currency rates, rose 1 percent to $692 million in the third quarter. Fixed currency operating income increased 6 percent to $71 million. When measured at public currency rates, International sales declined 9 percent and operating income declined 8 percent.
The Corporate segment includes special gains and charges, which are reported as a separate line item in the income statement. Special charges for the third quarter 2009 of $7 million included a restructuring charge of $5 million ($4 million after tax) for actions announced in January 2009 that were primarily taken to optimize our workforce, as well as other non-recurring costs to optimize our business structure. The Corporate segment also includes investments in the development of business systems and other corporate investments we are making as part of our ongoing efforts to improve our efficiency and returns.
The reported income tax rate for the third quarter 2009 was 30.2 percent compared to the reported tax rate of 32.1 percent for the third quarter 2008. Excluding the tax rate impact of special gains and charges and discrete tax items, the adjusted effective income tax rate for the third quarter 2009 was 32.0 percent compared with 30.4 percent for the same period last year. The increase in the adjusted third quarter 2009 effective tax rate compared with last year was primarily due to lower tax benefits from our international operations which increased the third quarter 2009 adjusted tax rate, and tax benefits in the prior year which reduced the third quarter 2008. We expect our full year 2009 effective income tax rate to be similar to the prior year's 31.6 percent.
Ecolab has narrowed the range for its pro forma earnings per share forecast, which excludes special gains and charges and discrete tax items, for the full year ending December 31, to $1.98 to $2.01 from the previous forecast of $1.96 to $2.02.
As previously announced, special gains and charges are expected to include restructuring charges of approximately $70 million. For the full year 2009, special gains and charges, including restructuring charges, are expected to be a charge of approximately $0.21 to $0.23 per share.
((Comments on this story may be sent to health@closeupmedia.com))
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