Ecolab (ECL) 10-Q 6 Nov 09 2009 Q3 Quarterly report Financial data

CONSOLIDATED STATEMENT OF INCOM

CONSOLIDATED STATEMENT OF INCOME (USD $)
In Millions, except Per Share data	3 Months Ended Sep. 30, 2009	3 Months Ended Sep. 30, 2008	9 Months Ended Sep. 30, 2009	9 Months Ended Sep. 30, 2008
Net sales	1546.4	1626.3	4336.1	4654.2
Cost of sales (including special charges of $1.3 and $9.4 for the three and nine month periods ended September 30, 2009, respectively)	763.9	834.3	2196.9	2371.4
Selling, general and administrative expenses	554.1	578.8	1596.8	1715.8
Special gains and charges	5.4	11.8	56.9	-5.6
Operating income	223	201.4	485.5	572.6
Interest expense, net	15.1	16	46.1	46.1
Income before income taxes	207.9	185.4	439.4	526.5
Provision for income taxes	62.7	59.5	137	158.5
Net income including noncontrolling interest	145.2	125.9	302.4	368
Less: Net income (loss) attributable to noncontrolling interest	0.2	-0.3	0.9	-0.1
Net income attributable to Ecolab	$145	126.2	301.5	368.1
Net income attributable to Ecolab per common share
Basic (in dollars per share)	0.61	0.51	1.27	1.49
Diluted (in dollars per share)	0.6	0.5	1.26	1.46
Dividends declared per common share (in dollars per share)	0.14	0.13	0.42	0.39
Weighted-average common shares outstanding
Basic (in shares)	237	247.5	236.5	247.2
Diluted (in shares)	240.6	251.8	239.6	251.7

1_CONSOLIDATED STATEMENT OF INC

CONSOLIDATED STATEMENT OF INCOME (Parenthetical) (USD $)
In Millions	3 Months Ended Sep. 30, 2009	9 Months Ended Sep. 30, 2009
CONSOLIDATED STATEMENT OF INCOME
Cost of sales, special charges	1.3	9.4

CONSOLIDATED BALANCE SHEET

CONSOLIDATED BALANCE SHEET (USD $)
In Millions	Sep. 30, 2009		Dec. 31, 2008
Current assets
Cash and cash equivalents	107.5		66.7
Accounts receivable (net of allowance of $51.6 at September 30, 2009 and $43.8 at December 31, 2008)	1,013		971
Inventories	474.8		467.2
Deferred income taxes	93.8		94.7
Other current assets	126.9		91.5
Total current assets	1,816		1691.1
Property, plant and equipment, net	1149.1		1135.2
Goodwill	1369.8		1267.7
Other intangible assets, net	312.2		326.7
Other assets	341.7		336.2
Total assets	4988.8		4756.9
Current liabilities
Short-term debt	121		338.9
Accounts payable	367.3		359.6
Compensation and benefits	271.8		261.1
Income taxes	31		46.3
Other current liabilities	501.8		436
Total current liabilities	1292.9		1441.9
Long-term debt	850		799.3
Postretirement health care and pension benefits	601.7		680.2
Other liabilities	274.2		256.5
Equity (a)
Common stock	329.5	[1]	328	[1]
Additional paid-in capital	1,154		1090.5
Retained earnings	2819.2		2,617
Accumulated other comprehensive loss	-224.6		-359.1
Treasury stock	-2116.3		-2104.8
Total Ecolab shareholders' equity	1961.8		1571.6
Noncontrolling interest	8.2		7.4
Total equity	1,970		1,579
Total liabilities and equity	4988.8		4756.9
[1](a) Common stock, 400 million shares authorized, $1.00 par value per share, 237.5 million shares outstanding at September 30, 2009, 236.2 million shares outstanding at December 31, 2008.

CONSOLIDATED BALANCE SHEET (Par

CONSOLIDATED BALANCE SHEET (Parenthetical) (USD $)
In Millions, except Per Share data	Sep. 30, 2009	Dec. 31, 2008
CONSOLIDATED BALANCE SHEET
Accounts receivable, allowance (in dollars)	51.6	43.8
Common stock, shares authorized	400	400
Common stock, par value per share (in dollars per share)	$1	$1
Common stock, shares outstanding	237.5	236.2

CONSOLIDATED STATEMENT OF CASH

CONSOLIDATED STATEMENT OF CASH FLOWS (USD $)
In Millions	9 Months Ended Sep. 30, 2009	9 Months Ended Sep. 30, 2008
OPERATING ACTIVITIES
Net income including noncontrolling interest	302.4	$368
Adjustments to reconcile net income including noncontrolling interest to cash provided by operating activities:
Depreciation and amortization	248.6	255.2
Deferred income taxes	20.2	70.4
Share-based compensation expense	22.9	22.4
Excess tax benefits from share-based payment arrangements	-5.9	-8.1
Pension and postretirement plan contributions	-144.8	-94.1
Pension and postretirement plan expense	61.5	54.7
Special charges-restructuring, net of cash paid	28.9
Gain on sale of plant		-24.5
Other, net	7.4	-2.4
Changes in operating assets and liabilities:
Accounts receivable	23.1	-129.3
Inventories	21.7	-48.5
Other assets	-14.6	-0.1
Accounts payable	-12.7	40.9
Other liabilities	-27.2	-8.4
Cash provided by operating activities	531.5	496.2
INVESTING ACTIVITIES
Capital expenditures	(169)	-248.5
Capitalized software expenditures	-29.7	-51.3
Property sold	3.2	35.7
Businesses acquired and investments in affiliates, net of cash acquired	-7.1	-203.7
Sale of businesses	0.7	2.2
Deposit into indemnification escrow		(21)
Cash used for investing activities	-201.9	-486.6
FINANCING ACTIVITIES
Net issuances (repayments) of commercial paper and notes payable	-219.8	-229.3
Long-term debt borrowings		257.7
Long-term debt repayments	(5)	-3.4
Reacquired shares	-11.5	-20.9
Cash dividends on common stock	-99.5	-96.3
Exercise of employee stock options	37.1	35.6
Excess tax benefits from share-based payment arrangements	5.9	8.1
Other, net		-0.6
Cash used for financing activities	-292.8	-49.1
Effect of exchange rate changes on cash	4	4.2
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	40.8	-35.3
Cash and cash equivalents, beginning of period	66.7	137.4
Cash and cash equivalents, end of period	107.5	102.1

Consolidated Financial Informat

Consolidated Financial Information
	9 Months Ended Sep. 30, 2009 USD / shares
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Information	1. Consolidated Financial Information The unaudited consolidated financial information for the third quarter and nine months ended September30, 2009 and 2008, reflect, in the opinion of management, all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows of Ecolab Inc. (the company) for the interim periods presented. The financial results for any interim period are not necessarily indicative of results for the full year. The consolidated balance sheet data as of December31, 2008 was derived from the audited consolidated financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. The unaudited consolidated financial information should be read in conjunction with the consolidated financial statements and notes thereto incorporated in the companys Annual Report on Form10-K for the year ended December31, 2008. With respect to the unaudited financial information of the company for the three and nine-month periods ended September30, 2009 and 2008 included in this Form10-Q, PricewaterhouseCoopers LLP reported that they have applied limited procedures in accordance with professional standards for a review of such information. Therefore, their separate report dated November6, 2009 appearing herein, states that they did not audit and they do not express an opinion on that unaudited financial information. Accordingly, the degree of reliance on their report on such information should be restricted in light of the limited nature of the review procedures applied. PricewaterhouseCoopers LLP is not subject to the liability provisions of Section11 of the Securities Act of 1933, as amended (the Act) for their report on the unaudited financial information because that report is not a report or a part of a registration statement prepared or certified by PricewaterhouseCoopers LLP within the meaning of Sections 7 and 11 of the Act.

Special Gains and Charges

Special Gains and Charges
	9 Months Ended Sep. 30, 2009 USD / shares
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Special Gains and Charges	2. Special Gains and Charges Special gains and charges reported on the Consolidated Statement of Income include the following: Third Quarter Ended Nine Months Ended September30 September30 (millions) 2009 2008 2009 2008 Cost of sales Restructuring charges $ 1.3 $ $ 9.4 $ Special gains and charges Restructuring charges 4.0 52.6 Business structure and optimization 0.7 8.6 2.3 14.3 Gain on sale of plant (24.0 ) Gain on sale of business (1.7 ) Other non-recurring items 0.7 3.2 2.0 5.8 Total 5.4 11.8 56.9 (5.6 ) Total special gains and charges $ 6.7 $ 11.8 $ 66.3 $ (5.6 ) In the first quarter of 2009, the company announced plans to undertake restructuring and other cost-saving actions during 2009 in order to streamline operations and improve efficiency and effectiveness. The restructuring plan includes a reduction of the companys global workforce by approximately 1,000 positions or 4% and the reduction of plant and distribution center locations during 2009. As a result of these actions, the company recorded restructuring charges of $5.3 million ($4.4 million after tax) or $0.02 per diluted share and $62.0 million ($44.2 million after tax) or $0.18 per diluted share, during the third quarter and nine months ended September30, 2009, respectively. The restructuring charges and subsequent reductions to the related liability accounts include the following: Employee Termination Asset (millions) Costs Disposals Other Total Recorded expense and accrual $ 31.2 $ 0.6 $ 0.9 $ 32.7 Cash payments (8.0 ) (8.0 ) Non-cash charges (0.6 ) (0.9 ) (1.5 ) Restructuring liability, March31, 2009 23.2 23.2 Recorded expense and accrual 24.0 24.0 Cash payments (14.8 ) (14.8 ) Effect of foreign currency translation 1.2 1.2 Restructuring liability, June30, 2009 33.6 33.6 Recorded expense and accrual 3.4 1.2 0.7 5.3 Cash payments (10.3 ) (10.3 ) Non-cash charges (1.2 ) (0.5 ) (1.7 ) Effect of foreign currency translation 0.3 0.3 Restructuring liability, September30, 2009 $ 27.0 $ $ 0.2 $ 27.2 Restructuring charges on the Consolidated Statement of Income have been included both as a component of cost of sales and as a component of special gains and charges. Amounts included as a component of cost of sales include asset write-downs and manufacturing related severance. Restructuring liabilities have been classified as a component of other current liabilities on the Consolidated Balance Sheet. Employee termination costs include personnel reductions and related costs for severance, benefits and outplacement services. Asset disposals include inventory and intangible asset writ

Selected Balance Sheet Informat

Selected Balance Sheet Information
	9 Months Ended Sep. 30, 2009 USD / shares
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Selected Balance Sheet Information	3. Selected Balance Sheet Information September30 December31 (millions) 2009 2008 Inventories Finished goods $ 280.6 $ 263.8 Raw materials and parts 220.2 232.8 Inventories at FIFO cost 500.8 496.6 Excess of FIFO cost over LIFO cost (26.0 ) (29.4 ) Total $ 474.8 $ 467.2 Property, plant and equipment, net Land $ 28.1 $ 26.5 Buildings and leaseholds 353.6 330.6 Machinery and equipment 724.6 673.5 Merchandising equipment 1,430.0 1,333.3 Capitalized software 204.7 162.9 Construction in progress 113.9 125.5 2,854.9 2,652.3 Accumulated depreciation (1,705.8 ) (1,517.1 ) Total $ 1,149.1 $ 1,135.2 Other intangible assets, gross Customer relationships $ 291.9 $ 266.9 Intellectual property 81.6 78.3 Trademarks 115.0 111.9 Other intangibles 54.2 54.0 542.7 511.1 Accumulated amortization Customer relationships (151.1 ) (120.3 ) Intellectual property (28.1 ) (22.8 ) Trademarks (37.1 ) (31.1 ) Other intangibles (14.2 ) (10.2 ) Other intangible assets, net $ 312.2 $ 326.7 Other assets Deferred income taxes $ 162.2 $ 157.9 Pension 15.0 12.1 Other 164.5 166.2 Total $ 341.7 $ 336.2 September30 December31 (millions) 2009 2008 Other current liabilities Discounts and rebates $ 208.9 $ 211.5 Dividends payable 33.2 33.1 Interest payable 18.0 8.4 Restructuring liability 27.2 Taxes payable, other than income 57.5 44.4 Foreign exchange contracts 10.0 7.6 Other 147.0 131.0 Total $ 501.8 $ 436.0 Other liabilities Deferred income taxes $ 80.2 $ 74.2 Income taxes payable - non-current 76.5 65.4 Other 117.5 116.9 Total $ 274.2 $ 256.5 Accumulated other comprehensive income Unrealized gain (loss) on financial instruments, net of tax $ (2.8 ) $ 8.0 Unrecognized pension and postretirement benefit expense, net of tax (359.3 ) (364.7 ) Cumulative translation 137.5 (2.4 ) Total $ (224.6 ) $ (359.1 )

Interest

Interest
	9 Months Ended Sep. 30, 2009 USD / shares
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Interest	4. Interest Third Quarter Ended Nine Months Ended September30 September30 (millions) 2009 2008 2009 2008 Interest expense $ 16.4 $ 17.9 $ 51.1 $ 53.0 Interest income (1.3 ) (1.9 ) (5.0 ) (6.9 ) Interest expense, net $ 15.1 $ 16.0 $ 46.1 $ 46.1

Financial Instruments and Hedgi

Financial Instruments and Hedging Transactions
	9 Months Ended Sep. 30, 2009 USD / shares
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Financial Instruments and Hedging Transactions	5. Financial Instruments and Hedging Transactions The carrying amount and the estimated fair value of financial instruments held by the company were: September 30, 2009 December 31, 2008 Carrying Fair Carrying Fair (millions) Amount Value Amount Value Assets Cash and cash equivalents $ 107.5 $ 107.5 $ 66.7 $ 66.7 Accounts receivable, net 1,013.0 1,013.0 971.0 971.0 Foreign exchange contracts 6.1 6.1 22.0 22.0 Liabilities Foreign exchange contracts 10.0 10.0 7.6 7.6 Notes payable 15.8 15.8 17.8 17.8 Commercial paper 98.5 98.5 316.0 316.0 Long-term debt (including current maturities) 856.7 877.1 804.4 713.8 The carrying amounts of cash equivalents, accounts receivable, notes payable and commercial paper approximate fair value because of their short maturities. The carrying amount of foreign exchange contracts is at fair value, which is determined based on foreign currency exchange rates as of the balance sheet date (level 2 - significant other observable inputs). The fair value of long-term debt is based on quoted market prices for the same or similar debt instruments. The company has concluded that it does not have any amounts of financial assets and liabilities measured using the companys own assumptions of fair market value (level 3 - unobservable inputs). Derivative Instruments and Hedging The company uses foreign currency forward contracts, interest rate swaps and foreign currency debt to manage risks associated with foreign currency exchange rates, interest rates and net investments in foreign operations. The company records all derivatives as assets and liabilities on the balance sheet at fair value. Changes in fair value are recognized immediately in earnings unless the derivative qualifies and is designated as a hedge. The effective portion of changes in fair value of hedges are initially recognized in accumulated other comprehensive income (AOCI) on the Consolidated Balance Sheet. Amounts recorded in AOCI are reclassified into earnings in the same period or periods during which the hedged transactions affect earnings. The company evaluates hedge effectiveness at inception and on an ongoing basis. If a derivative is no longer expected to be effective, hedge accounting is discontinued. Hedge ineffectiveness, if any, is recorded in earnings. The company does not hold derivative financial instruments of a speculative nature. The company is exposed to credit loss in the event of nonperformance of counterparties for foreign currency forward exchange contracts and interest rate swap agreements. The company monitors its exposure to credit risk by using credit approvals and credit limits and by selecting major international banks and financial institutions as counterparties. The company does not anticipate nonperformance by any of these counterparties. Derivatives Designated as Cash Flow Hedges The company utilizes foreign currency forward co

Comprehensive Income

Comprehensive Income
	9 Months Ended Sep. 30, 2009 USD / shares
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comprehensive Income	6. Comprehensive Income Third Quarter Ended Nine Months Ended September30 September30 (millions) 2009 2008 2009 2008 Net income including noncontrolling interest $ 145.2 $ 125.9 $ 302.4 $ 368.0 Other comprehensive income (loss), net of tax Foreign currency translation 20.9 (86.4 ) 139.9 (26.5 ) Derivative instruments (3.7 ) 3.6 (10.8 ) 4.0 Pension and postretirement benefits 2.5 1.5 5.4 5.0 Total 19.7 (81.3 ) 134.5 (17.5 ) Total comprehensive income, including noncontrolling interest 164.9 44.6 436.9 350.5 Less: Comprehensive income attributable to noncontrolling interest 0.4 (0.9 ) 1.2 0.3 Comprehensive income attributable to Ecolab $ 164.5 $ 45.5 $ 435.7 $ 350.2

Business Acquisitions and Inves

Business Acquisitions and Investments
	9 Months Ended Sep. 30, 2009 USD / shares
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Business Acquisitions and Investments	7. Business Acquisitions and Investments In February2009, the company acquired assets of the Stackhouse business of CORPAK Medsystems,Inc. Stackhouse is a leading developer, manufacturer and marketer of surgical helmets and smoke evacuators, primarily for use during orthopedic surgeries. The business, which has annual sales of approximately $4 million, became part of the companys U.S. Cleaning Sanitizing operations during the first quarter of 2009. Acquisitions during the first nine months of 2008 included our Ecovation acquisition and other immaterial acquisition activity. Acquisitions in 2009 and 2008 are not material to the companys consolidated financial statements; therefore pro forma financial information is not presented. The aggregate purchase price of acquisitions and investments in affiliates has been reduced for any cash or cash equivalents acquired with the acquisitions. Based upon purchase price allocations and subsequent adjustments thereto, the components of the aggregate purchase prices of the acquisitions and investments in affiliates made were as follows: Third Quarter Ended Nine Months Ended September30 September30 (millions) 2009 2008 2009 2008 Net tangible assets acquired (liabilities assumed) $ 0.2 $ (10.5 ) $ 2.5 $ 38.9 Identifiable intangible assets Customer relationships 0.9 0.4 1.9 10.7 Intellectual property 1.0 26.8 Trademarks 0.2 0.2 16.0 Other intangibles 0.3 9.9 Total 1.1 0.7 3.1 63.4 Goodwill 0.7 11.0 1.5 122.4 Total aggregate purchase price $ 2.0 $ 1.2 $ 7.1 $ 224.7 Liability for indemnification (21.0 ) Net cash paid for acquisitions $ 2.0 $ 1.2 $ 7.1 $ 203.7 The changes in the carrying amount of goodwill for each of the companys reportable segments for the quarter and nine months ended September30, 2009 were as follows: United States (unaudited) Cleaning Other (millions) Sanitizing Services Total International Consolidated Balance as of December31, 2008 $ 443.6 $ 50.5 $ 494.1 $ 773.6 $ 1,267.7 Goodwill acquired during quarter 0.3 0.3 0.3 Foreign currency translation (7.2 ) (7.2 ) Balance as of March31, 2009 443.9 50.5 494.4 766.4 1,260.8 Goodwill acquired during quarter 0.5 0.5 Foreign currency translation 95.1 95.1 Balance as of June30, 2009 443.9 50.5 494.4 862.0 1,356.4 Goodwill acquired during quarter 0.7 0.7 Goodwill allocated to disposals (0.2 ) (0.2 ) Foreign currency translation 12.9 12.9 Balance as of September30, 2009 $ 443.9 $ 50.5 $ 494.4 $ 875.4 $ 1,369.8

Net Income Attributable to Ecol

Net Income Attributable to Ecolab Per Common Share
	9 Months Ended Sep. 30, 2009 USD / shares
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Net Income Attributable to Ecolab Per Common Share	8. Net Income Attributable to Ecolab Per Common Share The computations of the basic and diluted net income attributable to Ecolab per share amounts were as follows: Third Quarter Ended Nine Months Ended September30 September30 (millions, except per share) 2009 2008 2009 2008 Net income attributable to Ecolab $ 145.0 $ 126.2 $ 301.5 $ 368.1 Weighted-average common shares outstanding Basic 237.0 247.5 236.5 247.2 Effect of dilutive stock options and awards 3.6 4.3 3.1 4.5 Diluted 240.6 251.8 239.6 251.7 Net income attributable to Ecolab per common share Basic $ 0.61 $ 0.51 $ 1.27 $ 1.49 Diluted $ 0.60 $ 0.50 $ 1.26 $ 1.46 Anti-dilutive stock options excluded from the computation of diluted shares 5.9 3.1 9.5 5.4 Unvested restricted stock excluded from the computation of basic shares 0.1 0.1 0.1 0.1

Pension and Postretirement Plan

Pension and Postretirement Plans
	9 Months Ended Sep. 30, 2009 USD / shares
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Pension and Postretirement Plans	9. Pension and Postretirement Plans The components of net periodic pension and postretirement health care benefit costs for the third quarter ended September30 are as follows: U.S. Pension Benefits U.S. (qualified and non- International Postretirement (unaudited) qualified plans) Pension Benefits Health Care Benefits (millions) 2009 2008 2009 2008 2009 2008 Service cost $ 11.8 $ 11.2 $ 3.5 $ 5.1 $ 0.5 $ 0.6 Interest cost on benefit obligation 14.8 13.0 6.0 6.7 2.4 2.4 Expected return on plan assets (18.9 ) (17.6 ) (4.0 ) (4.9 ) (0.4 ) (0.6 ) Recognition of net actuarial loss 4.0 2.2 0.4 0.3 1.1 1.1 Amortization of prior service cost (benefit) 0.1 0.3 0.1 0.1 (1.5 ) (1.6 ) Curtailment and settlement loss 0.5 Total expense $ 11.8 $ 9.1 $ 6.5 $ 7.3 $ 2.1 $ 1.9 The components of net periodic pension and postretirement health care benefit costs for the nine months ended September30 are as follows: U.S. Pension Benefits U.S. (qualified and non- International Postretirement (unaudited) qualified plans) Pension Benefits Health Care Benefits (millions) 2009 2008 2009 2008 2009 2008 Service cost $ 35.4 $ 33.6 $ 10.8 $ 15.2 $ 1.5 $ 1.8 Interest cost on benefit obligation 44.4 39.0 18.4 20.1 7.2 7.2 Expected return on plan assets (56.7 ) (52.8 ) (12.2 ) (14.6 ) (1.2 ) (1.8 ) Recognition of net actuarial loss 12.0 6.6 1.2 0.8 3.3 3.3 Amortization of prior service cost (benefit) 0.3 0.9 0.3 0.2 (4.5 ) (4.8 ) Curtailment and settlement loss 0.4 0.9 Total expense $ 35.4 $ 27.3 $ 18.9 $ 21.7 $ 7.2 $ 5.7 During the current year the company took actions under its restructuring program that reduced the number of active participants in both the U.S. and International pension and U.S. postretirement health care benefit plans. As a result of these actions, the company recognized curtailment and settlement charges related to the U.S. postretirement health care benefits plan and select International pension plans that are included as a component of restructuring charges as discussed in Note 2. The actions were not significant to the U.S. pension plan; therefore, no curtailment was recognized. The company is not required to make any contributions to its U.S. pension plan and postretirement health care benefits plan for 2009. However, the company made $50 million and $75 million voluntary contributions to the U.S. pension plan in the first and third quarter of 2009, respectively. Certain international pension benefit plans

Operating Segments

Operating Segments
	9 Months Ended Sep. 30, 2009 USD / shares
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Operating Segments	10. Operating Segments Financial information for each of the companys reportable segments is as follows: Third Quarter Ended Nine Months Ended September30 September30 (millions) 2009 2008 2009 2008 Net Sales United States Cleaning Sanitizing $ 693.2 $ 695.5 $ 1,987.2 $ 2,012.6 Other Services 117.6 124.7 340.0 356.0 Total 810.8 820.2 2,327.2 2,368.6 International 692.0 684.1 1,973.4 1,953.3 Effect of foreign currency translation 43.6 122.0 35.5 332.3 Consolidated $ 1,546.4 $ 1,626.3 $ 4,336.1 $ 4,654.2 Operating Income United States Cleaning Sanitizing $ 141.1 $ 120.4 $ 370.0 $ 332.8 Other Services 18.4 17.9 49.9 37.9 Total 159.5 138.3 419.9 370.7 International 71.0 66.7 144.5 174.7 Effect of foreign currency translation 5.7 15.8 5.1 43.5 Corporate (13.2 ) (19.4 ) (84.0 ) (16.3 ) Consolidated $ 223.0 $ 201.4 $ 485.5 $ 572.6 The International amounts included above are based on translation into U.S. dollars at the fixed currency exchange rates used by management for 2009. Consistent with the companys internal management reporting, the Corporate segment includes special gains and charges reported on the Consolidated Statement of Income. The Corporate segment also includes investments in the development of business systems and other corporate investments the company is making as part of ongoing efforts to improve efficiency and returns. Total service revenue for the U.S. Other Services and International segments, at public exchange rates are as follows: Third Quarter Ended Nine Months Ended September30 September30 (millions) 2009 2008 2009 2008 U.S. Other Services $ 99.9 $ 105.7 $ 287.5 $ 296.8 International 43.4 48.8 122.8 141.7

Goodwill and Other Intangible A

Goodwill and Other Intangible Assets
	9 Months Ended Sep. 30, 2009 USD / shares
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Goodwill and Other Intangible Assets	11. Goodwill and Other Intangible Assets The company tests goodwill for impairment on an annual basis during the second quarter. If circumstances change significantly, the company would also test a reporting unit for impairment during interim periods between its annual tests. During the second quarter ended June30, 2009, the company completed its annual test for goodwill impairment. Based on this testing, no adjustment to the carrying value of goodwill was necessary. Goodwill and other intangible assets arise principally from business acquisitions. Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired. Other intangible assets include primarily customer relationships, intellectual property, trademarks and other technology. Other intangible assets are amortized on a straight-line basis over their estimated economic lives. The weighted-average useful life of other intangible assets was 13 years as of both September30, 2009 and 2008. The straight-line method of amortization reflects an appropriate allocation of the cost of the intangible assets to earnings in proportion to the amount of economic benefits obtained by the company in each reporting period. Total amortization expense related to other intangible assets during the third quarters ended September30, 2009 and 2008 was $10.3 million and $11.5 million, respectively. Total amortization expense related to other intangible assets during the nine months ended September30, 2009 and 2008 was $31.9 million and $37.4 million, respectively. As of September30, 2009, future estimated amortization expense related to amortizable other identifiable intangible assets will be: (unaudited) (millions) 2009 (Remainder: three-month period) $ 11 2010 41 2011 40 2012 39 2013 37

New Accounting Pronouncements

New Accounting Pronouncements
	9 Months Ended Sep. 30, 2009 USD / shares
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
New Accounting Pronouncements	12. New Accounting Pronouncements In September2006, the FASB issued Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value and expanded disclosures about fair value measurement. In February2008, the FASB deferred the effective date of this pronouncement for one year for nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis and amended to add a scope exception for leasing transactions subject to the guidance Accounting for Leases from its application. The company adopted this pronouncement effective January1, 2008 for financial assets and liabilities measured on a recurring basis and effective January1, 2009 for non-financial assets and liabilities. The adoption did not have an impact on the companys consolidated results of operations and financial position. In December2007, the FASB issued a revised standard on Business Combinations. The revised standard establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired. The revised standard also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. The company adopted this revised standard effective January1, 2009. The adoption did not have a material impact on the companys consolidated results of operations and financial position. In December2007, the FASB issued Noncontrolling Interests in Consolidated Financial Statementsan amendment of Accounting Research Bulletin No.51. This standard establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable to the parent and to the noncontrolling interest, changes in a parents ownership interest, and the valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated. This standard also establishes disclosure requirements that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. The company adopted this standard effective January1, 2009, and revised its 2008 financial statements in accordance with the guidance. The revision includes a reclassification of $0.3 million and $0.1 million from selling, general and administrative expenses to net income attributable to noncontrolling interest on the Consolidated Statement of Income for the third quarter and nine months ended September30, 2008, respectively, and a reclassification of $7.4 million from other liabilities to noncontrolling interest on the Consolidated Balance Sheet as of December31, 2008. The adoption did not have a material impact on the companys consolidated results of operations and financial position. In March2008, the FASB issued Disclosures about Derivative Instruments and Hedging Activities. This guidance requires companies to provide greater transparency through disclosures about how and why the c

Commitments and Contingencies

Commitments and Contingencies
	9 Months Ended Sep. 30, 2009 USD / shares
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Commitments and Contingencies	13. Commitments and Contingencies The company and certain subsidiaries are party to various lawsuits, claims and environmental actions that have arisen in the ordinary course of business. These include antitrust, patent infringement, product liability and wage hour lawsuits and possible obligations to investigate and mitigate the effects on the environment of the disposal or release of certain chemical substances at various sites, such as Superfund sites and other operating or closed facilities. Because litigation is inherently uncertain, and unfavorable rulings or developments could occur, there can be no certainty that the company may not ultimately incur charges in excess of presently recorded liabilities. A future adverse ruling, settlement or unfavorable development could result in future charges that could have a material adverse effect on the companys results of operations or cash flows in the period in which they are recorded. The company currently believes that such future charge, if any, would not have a material adverse effect on the companys consolidated financial position. The company records liabilities where a contingent loss is probable and can be reasonably estimated. If the reasonable estimate of a probable loss is a range, the company records the most probable estimate of the loss or the minimum amount when no amount within the range is a better estimate than any other amount. The company discloses a contingent liability even if the liability is not probable or the amount is not estimable, or both, if there is a reasonable possibility that a material loss may have been incurred. As previously disclosed, an arbitration decision in conjunction with a settlement was rendered on September24, 2007, concerning two California class-action lawsuits involving wage hour claims affecting former and current employees of the companys Pest Elimination Division. On August19, 2009, a panel of the Court of Appeals of the State of California, Second Appellate District, denied the companys appeal of the lower courts confirmation of the arbitration decision relating to the settlement. The company determined not to seek further appeal. Accordingly, on October13, 2009, the company paid the full judgment and settlement amount of $34.6 million, which included post-award interest and employers taxes, to the settlement administrator in final satisfaction of the two suits. The company had previously accrued for this payment. The company is a defendant in other wage hour lawsuits in the Southern District of New York, one of which has been certified for class-action status. The company has entered into a settlement agreement covering these suits which is subject to court approval. The company has fully accrued for the settlement amount, which is not material to the companys consolidated results of operations or financial position.

Document and Entity Information

Document and Entity Information (USD $)
	9 Months Ended Sep. 30, 2009	Oct. 30, 2009	Jun. 30, 2008
Document and Entity Information
Entity Registrant Name	ECOLAB INC
Entity Central Index Key	0000031462
Document Type	10-Q
Document Period End Date	2009-09-30
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$10,606,696,000
Entity Common Stock, Shares Outstanding		237,554,525