01—Abstract
Summary
Summary of the 8-K filed February 14, 2006. Cited figures are marked; the original filing is the authoritative source.
Ecolab Inc. (ECL) filed an 8-K on February 14, 2006, to disclose its adoption of the new accounting standard SFAS 123(R), which requires the expensing of stock options.
This adoption is effective from the fourth quarter of 2005, and the company is utilizing the modified retrospective application method, meaning prior period financial statements have been restated to reflect share-based compensation expenses that were previously only detailed in the notes to the financial statements. As part of this transition, Ecolab has made comparative operating segment information for various quarterly and year-to-date periods in 2005 and 2004 available on its investor relations website and as exhibits to this filing.
This information has been restated to align with the new SFAS 123(R) accounting treatment. Investors should note that these exhibits, specifically the news release and segment information, are furnished and not deemed "filed" under the Securities Exchange Act of 1934.
02—Key points
Key Highlights
- Ecolab Inc. adopted SFAS 123(R), the accounting standard for expensing stock options, effective Q4 2005.
- The company used the modified retrospective application method for SFAS 123(R) adoption.
- Prior period financial statements have been restated to include share-based compensation expense.
- Comparative operating segment information for Q1, Q2, and Q3 of 2005 and 2004 has been restated and provided.
- This restated segment information is available on Ecolab's investor relations website.
- The furnished exhibits, including the news release and segment data, are not considered "filed" under the Securities Exchange Act of 1934.
03—Questions
Frequently Asked Questions
What is SFAS 123(R) and why is Ecolab adopting it?
SFAS 123(R) is a new accounting standard requiring companies to expense stock options, meaning the cost of stock options granted to employees will be recognized as an expense on the income statement. Ecolab is adopting this standard to comply with updated accounting regulations.
How will the adoption of SFAS 123(R) affect Ecolab's financial reporting?
The adoption will result in the recognition of share-based compensation expense, which was previously only disclosed in the financial statement notes. Prior period financial statements have been restated to reflect this change, providing a more comparable historical view under the new accounting rules.
Where can investors find the restated financial information?
Restated comparative operating segment information for various periods in 2005 and 2004 is available on Ecolab's investor relations website (www.ecolab.com/investor) and is also furnished as exhibits (Exhibits B, C, and D) to this 8-K filing.
Are the provided exhibits considered officially 'filed' with the SEC?
No, the exhibits attached to this report (including the news release and restated segment information) are furnished, not filed. This means they are provided for informational purposes but do not carry the same legal implications as formally filed documents under the Securities Exchange Act of 1934.
04—Continue