Ecolab2005AR

Annual Report 2005

Clearly
Ecolab

DESCRIPTION OF BUSINESS
Ecolab is the leading global developer and marketer of premium cleaning, sanitizing, pest elimination, maintenance and repair
products and services for the world’s hospitality, foodservice, healthcare and industrial markets. Founded in 1923 and
headquartered in St. Paul, Minn., Ecolab reaches customers in more than 160 countries across North America, Europe, Asia
Pacific, Latin America, the Middle East and Africa, and employs more than 22,000 associates worldwide. Customers include hotels
and restaurants; healthcare and educational facilities; quickservice (fast-food and convenience stores) units; grocery stores;
commercial and institutional laundries; light industry; dairy plants and farms; food and beverage processors; pharmaceutical and
cosmetic facilities; and the vehicle wash industry. Products and services are marketed by the industry’s largest and best-trained
direct sales-and-service force, numbering nearly 13,000 associates, who advise and assist customers in meeting a full range of
cleaning, sanitation and service needs.
Ecolab common stock is traded on the New York Stock Exchange under the symbol ECL. Ecolab news releases and other
selected investor information are available on the Internet at www.ecolab.com.

FORWARD-LOOKING STATEMENTS AND RISK FACTORS
We refer readers to the company’s disclosure, entitled “Forward-Looking Statements and Risk Factors,” which is located on page
30 of this Annual Report.

FINANCIAL HIGHLIGHTS
Percent Change
(thousands, except per share) 2005 2004 2003 2005 2004

Net Sales $4,534,832 $4,1 84,933 $3,76 1,81 9 8% 1 1%
Net Income 3 19,48 1 282,693 260,590 13 8
Percent of Sales 7.0% 6.8% 6.9%
Diluted Net Income Per Common Share 1.23 1.09 0.99 13 10
Diluted Weighted-Average Common Shares Outstanding 260,098 260,407 262,737 - (1 )
Cash Dividends Declared Per Common Share 0.3625 0.3275 0.2975 11 10
Cash Provided by Operating Activities 590,1 3 6 570,908 523,932 3 9
Capital Expenditures 268,783 275,87 1 2 12,035 (3) 30
Shareholders’ Equity 1,649,2 1 0 1,598, 1 4 1 1,32 1,08 1 3 21
Return on Beginning Equity 20.0% 2 1.4% 23.3%
Total Debt 746,30 1 701,577 674,644 6 4
Total Debt to Capitalization 3 1.2% 30.5% 33.8%
Total Assets $3,796,628 $ 3,716, 1 74 $3,228,91 8 2% 15%

DILUTED NET INCOME DIVIDENDS DECLARED
NET SALES NET INCOME PER SHARE PER SHARE
(dollars in millions) (dollars in millions) (dollars) (dollars)
$0.363
$4,535 $319 $1.23
$4,185 $0.328
$1.09
$283
$3,762
$0.99 $0.298
$261
$3,404
$0.263$0.275
$0.75
$196 $0.68
$2,321 $178

2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005

All financial information for all periods reflects the company’s adoption of Statement of Financial Accounting Standards No. 123 (Revised 2004), “Share-Based
Payment” in the fourth quarter of 2005. All prior periods have been restated.

Clearly
Ecolab
Who is the trusted source for “clean” among restaurants, hotels,
hospitals, food and beverage plants, laundries, retail facilities,
educational institutions and more? Clearly Ecolab.
Our strong customer relationships have allowed Ecolab to
grow from a single product offering in 1923 to the leading
global provider of cleaning, sanitizing and service solutions.
We serve customers in more than 160 countries through our
direct sales-and-service force, distributors and export activities. In the United States, we have 10 complementary
business units: Institutional, Kay, Pest Elimination, Food & Beverage, Professional Products, Healthcare, GCS Service,
Textile Care, Vehicle Care and Water Care Services. By focusing on our Circle the Customer - Circle the Globe strategy,
we continue to expand many of these services to markets throughout the world.
Ecolab’s mission is clear. We spend every hour of every day working to provide outstanding results for Ecolab
customers and shareholders everywhere.

SERVICES/PRODUCTS PROVIDED
INSTITUTIONAL FOOD & BEVERAGE TEXTILE CARE
Products, programs and services for the Cleaning and sanitizing products, Cleaning and sanitizing products,
foodservice, hospitality and healthcare equipment, systems and services for programs and services, including water
industries, including warewashing, the agribusiness, beverage, brewery, recycling and energy solutions, and data
on-premise laundry, housekeeping, pharmaceutical, dairy, meat, poultry management systems, for commercial
water filtration and conditioning, food and food processing industries. laundries serving the work wear, linen
safety products, specialty kitchen and and healthcare markets.
GCS SERVICE
laundry products, and pool and spa
VEHICLE CARE
management. Service and parts for the repair and
maintenance of commercial foodservice Vehicle cleaning, protection and
KAY equipment. detailing products and services for
Cleaning and sanitizing products, full-service tunnel, quick-service in-bay,
services and training programs for PROFESSIONAL PRODUCTS self-service and detail car wash
quickservice restaurants, food retail Janitorial cleaning and floor care operations and corporate-owned
markets, movie theaters and products, systems and services for the transportation fleets.
convenience stores. retail, building services and industrial
WATER CARE SERVICES
markets.
PEST ELIMINATION Industrial water treatment products and
Service and technology for the services for boilers, cooling water and
HEALTHCARE
detection, identification, elimination waste treatment systems.
Products and services including
and prevention of pests in commercial healthcare personnel hand wash,
facilities, as well as food safety audit surgical scrubs, cleaning and
and training services. disinfection products used in processing
surgical instruments and hard surface
Note: All product names and certain
disinfection. information appearing in italic type in the
text of this Annual Report are trademarks,
brand names, service marks or copyrighted
material of Ecolab Inc., Kay Chemical
Company or Ecolab GmbH & Co. OHG.

NET SALES ECOLAB BUSINESS MIX 2005
(dollars in millions)
$4,535
$4,185
● International 49%
United States 51%
$3,762
● Institutional 25% Europe/Middle East/Africa 34%
● Food & Beverage 7% Asia Pacific 8%
● Pest Elimination 6% Canada 3%
● Kay 5% Latin America 3%
● GCS Service 3% Other 1%
● Professional Products 1%
● Healthcare 1%
● Vehicle Care 1%
● Textile Care 1%
● Water Care Services 1%
2003 2004 2005

CUSTOMERS/MARKETS SERVED
CUSTOMER SEGMENTS
Food, beverage and brewery plants Government facilities
Full-service restaurants
Pharmaceutical and cosmetic facilities Airlines
Quickservice restaurants
Office buildings Light manufacturing industries
Hotels
Shopping malls Vehicle wash and detailing
Food retail
Retail facilities
Schools
MARKETS
Movie theaters
Colleges and universities
Recreational facilities United States
Laundries and textile rental
Amusement parks Europe/Middle East/Africa
Hospitals
Building service contractors Asia Pacific
Nursing homes
Cruise lines Canada
Other healthcare facilities
Correctional facilities Latin America
Dairy farms and plants

ECOLAB STOCK PERFORMANCE SALES-AND-SERVICE ASSOCIATES
(December 31) 2003 2004 2005
2003 2004 2005
Quarter Low High Low High Low High Institutional* 3,1 90 3,055 3,1 55
Kay 275 325 350
First $23.08 $26.00 $26.1 2 $28.6 1 $31.20 $35.08
Pest Elimination 1,645 1,725 1,830
Second 24. 2 1 27.92 27.95 31 .77 30.68 34.23
Professional Products** 180 95 90
Third 23.78 26.80 29.04 31.80 30.75 34.1 4
Healthcare** - 70 80
Fourth 25.1 5 27.89 31.32 35.59 30.93 37. 1 5 GCS Service 535 470 470
Textile Care 80 75 75
Food & Beverage 405 450 425
ECOLAB STOCK PERFORMANCE COMPARISON Water Care Services 95 95 1 25
Vehicle Care 1 00 1 00 1 00
Europe/Africa/ME 3,285 3,9 1 5 4,1 50
• Ecolab Stock Price Index, Dec. 31, 2002 = 1.00
$38 1.60
Asia Pacific 1,01 5 960 995
• Ecolab Stock Price 31, 2002 = 1.00
ECOLAB, S&P 500 INDICES

$36
• S&P 500 Index, Dec. Canada 340 355 375
1.50
ECOLAB STOCK PRICE

Latin America 540 590 690
$34
Total 1 1,685 12,280 12,9 1 0
1.40
$32
*2004 decrease of 250 associates due to the sale of a
1.30 grease management product line.
$30 **2004 reflects the separation of Healthcare from
1.20 Professional Products.
$28
1. 10
$26
1.00
$24

$22 0.90
4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2002 2003 2004 2005

Only one company stands out as
the clear leader, offering the finest
premium programs, technology and
service for every aspect of “clean.”
Only one company invests resources
as deeply to research and develop the
next innovative breakthroughs. Only
one company has the largest and
best-trained global sales-and-service
team in the industry. And for
customers who want only the best for
their cleaning and sanitation needs,
there is only one clear choice.
Clearly Ecolab.

Clearly
Ecolab Ecolab | Annual Report 2005 | 1

Clearly
Ecolab TO OUR SHAREHOLDERS:
At Ecolab, we want our message to be
loud and clear. When it comes to
providing the most comprehensive
solutions and dedicated service to our
customers, we know there is only one
choice. And that choice is clearly
Ecolab.
It is clear that our people make the
difference. When we say our team of
22,000 associates is our most
important asset, we back it up by
investing in them, carefully selecting,
training and developing them so they
can make exciting and important
contributions to grow our business.
These investments not only drive the
strong performance and add to the
impressive results from our exceptional
team, but also deepen our commitment
and dedication to serving our customers
in every way possible.
We guide our business with a clear,
coherent, proven strategy. Our Circle
the Customer – Circle the Globe
strategy continues to provide a solid
strategic platform for exceeding our
customers’ expectations, and providing
solutions for every customer need,
everywhere our customers need it.
And we keep a clear eye on the Douglas M. Baker, President and CEO (left),
challenges to our business, whether Allan L. Schuman, Chairman of the Board (right)
it’s a tough rising raw material cost
solutions for our customers’ changing
environment or a change in our
requirements.
customers’ expectations of their
Above all, our ultimate goal is
business partners. This is especially
crystal clear – to fuel growth and
clear as we streamline our operations
success for our customers, our
to keep costs at a minimum while
associates and our shareholders. So we
protecting our investments in our
ask the questions. We do the research.
business, and as we create new turnkey

| Ecolab | Annual Report 2005
2

For example, we introduced our 360º of
Protection program for foodservice and
Only one company stands out as the hospitality customers, which provides a
customized plan for the full spectrum of
clear leader in providing premium cleaning and hygiene issues an
operation faces. The program includes
programs, technology and service new products, such as Oasis 146

for every aspect of “clean.” Multi-Quat Sanitizer, which provides a
broad sanitizing range that helps
simplify use and minimize the risk of
health code violations, with innovative
technologies such as our advanced
no-rinse enzyme-based floor cleaner
Wash ‘n Walk. A wide-ranging
We innovate. We build relationships. We $1.23 for 2005, up 13 percent from $1.09
combination of products, systems,
serve. We produce. We deliver. And by in 2004. Excluding a $0.01 per share
training aids and service combine to
doing these well, we grow. charge related to the repatriation of
make 360º of Protection the industry’s
We stay true to our mission, our foreign earnings under the American
most comprehensive solution for today’s
culture and ourselves. And because we Jobs Creation Act (AJCA), diluted
increasingly busy customers.
dedicate ourselves to all of these things, income per share from ongoing
For commercial laundries, we
only one company stands out as the operations increased 14 percent
unveiled full cycle solutions, designed
clear leader in providing premium from 2004.
specifically to meet laundry challenges
❙
programs, technology and service for Our return on beginning
and reduce total operating costs
every aspect of “clean.” That company shareholders’ equity was 20 percent in
through a combination of chemistry,
2005, the 14th consecutive year in which
is clearly Ecolab.
service, engineering, technology and
Read on for a clear picture of our the company achieved its long-term
water care solutions. This program
2005 accomplishments: financial objective of a 20 percent
allows customers to economize their
return on beginning shareholders’
operations in an incredibly competitive
CLEAR equity.
market environment.
❙
FINANCIAL PERFORMANCE Our share price rose 3 percent in
And we expanded our MarketGuard
❙ We adopted the new accounting 2005 – slightly outperforming the
program globally to give food retailers
standard for expensing stock options Standard & Poor’s 500. Our share
worldwide access to the best food
and restated our prior year financial performance has exceeded that of the
safety, pest elimination and floor care
statements in transitioning to the new S&P 500 in 12 of the past 15 years. In
solutions to achieve the highest
rules. All financial information in this addition, we increased our quarterly
standards of cleanliness and sanitation
dividend rate for the 14th consecutive
report reflects these restatements. See
in their operations. MarketGuard
the Notes to the Consolidated Financial year, as it rose 14 percent in December
represents the success both Ecolab and
Statements for more information. to an indicated annual rate of $0.40 per
our customers achieve when we employ
❙ We are proud to report that our net common share.
the best practices from our many areas
❙
sales rose to $4.5 billion in 2005, an We achieved record cash flow from
of expertise to create one customized
increase of 8 percent over 2004, fueled operating activities of $590 million, and
solution for our customers.
by double-digit growth from Kay, Pest our total debt to capitalization ratio
Check out more of our latest
Elimination, Healthcare, Vehicle Care remained unchanged from year-end
product, program and service offerings
and Latin America, along with strong 2004 at 31 percent. These results
in the “Review of Operations” section of
gains from Institutional, GCS Service allowed us to retain our debt rating
this report.
and Asia Pacific. within the “A” categories of the major
Because service to customers is our
❙ Operating income was $542 million rating agencies during 2005.
first priority and our ultimate customer
in 2005, up 11 percent from $490 million
solution, we continued to invest in our
CLEAR PRODUCT AND
in 2004, leveraging the strong sales
sales-and-service organization in 2005.
SERVICE DIFFERENTIATION
gain and effective cost-savings
We added more than 600 new
initiatives. Operating income increased In 2005, we committed to providing
associates to our global field
to 12.0 percent of net sales, compared customers with even more complete
organization, which is now nearly 13,000
to last year’s 1 1.7 percent. solutions and new programs to meet
strong. We also made significant
❙ Diluted net income per share was every need in their operations.

Ecolab | Annual Report 2005 | 3

IR Magazine. Recipients of this honor
investments in additional training and and his outstanding leadership abilities
tools for our associates in the field, and focus were great assets as he built are selected by means of an
including our portable 360º Advisor our international business, especially independent survey of more than 4,000
computers, so they can continue to do during his role leading the Ecolab investors. The increased emphasis on
what they do best – build long-lasting Europe business to create one global corporate governance makes this award
relationships with our valued customers. Ecolab. particularly meaningful to Ecolab, and is
❙ In August, Jochen Krautter retired a credit to the high standards of
CLEAR EXPANSION STRATEGY from Ecolab’s board of directors. Jochen conduct in which we hold ourselves in
We continue to execute a disciplined had served on Ecolab’s board since all areas of our work.
In addition, IndustryWeek named
acquisition strategy to ensure the 2002 as a member of the Finance
businesses we acquire are a sound Committee. We thank Jochen for his Ecolab to its “50 Best Manufacturing
strategic fit and meet our financial valued service on the board and to our Companies” report, which identifies the
criteria. company, and wish him well. top-performing manufacturers in the
❙ United States. IndustryWeek focuses on
In January 2005, we acquired Also in August, Ecolab’s board of
Kansas-based Midland Research directors appointed Kasper Rorstad to financial measures that pertain to
Laboratories, a $16 million provider of fill the vacancy created by Jochen operational efficiency and operating
water treatment products, process Krautter’s retirement. Kasper is success in order to determine the best
chemicals and services serving the executive vice president of Human manufacturing companies, which is
commercial, institutional, industrial, Resources, IT and Logistics & another great acknowledgement of our
food and sugar processing markets. We Purchasing for Henkel KGaA of company.
also acquired Kilco Chemicals Ltd., of Düsseldorf, Germany. We welcome him And paying tribute to our dedicated
salesforce, Selling Power magazine
Belfast, Northern Ireland, in April 2005. to the Ecolab board.
❙
With annual sales of $5 million, Kilco Finally, in February 2006, we again praised Ecolab as one of the best
offers products, systems and services regretfully accepted the resignation of companies in America to sell for. Our
for the food and beverage processing Steve Newlin. Steve served as the ongoing commitment to training,
industry, further expanding Ecolab’s president of our Industrial Sector for compensation and development of our
reach in this core market. We continue the past three years, and was a strong field sales-and-service team earned us
to be active in our acquisition efforts to and valued member of our management this notable recognition for the second
broaden our business, improve scale team. We appreciate Steve’s straight year.
and increase our capacity to better contributions to our business, and wish
OUTLOOK FOR 2006
serve our customer needs. him success in his new venture.
As we look ahead at the opportunities
CLEAR CLEAR and challenges we face, our vision
LEADERSHIP DEVELOPMENT ACHIEVEMENT & RECOGNITION remains as clear as ever. We will deliver
As detailed in the sidebar of this letter, For the sixth consecutive year, we were strong and sustainable growth.
Ecolab’s Chairman of the Board Al honored to be named one of the “100 We will continue our long tradition
Best Corporate Citizens” by Business
Schuman will retire in May 2006 after of growth in 2006 and beyond by
Ethics magazine. Ecolab is one of only
a remarkable 49 years of service to focusing on what we do best:
Ecolab. We thank him for his dedication 19 companies to receive this recognition surrounding our customers with an
and many contributions in building every year since its inception. Corporate expanding array of solutions, entering
Ecolab. The Ecolab board of directors integrity and good citizenship are new market segments where we can
has announced that it plans to elect essential pillars of our business, and clearly differentiate and add unique
Doug Baker to the post of chairman recognition like this reaffirms our value, and making the right strategic
upon Al’s retirement. Additional ongoing commitment to conducting our investments in our business to better
important leadership developments business the right way for our serve our many stakeholders.
include the following: customers, our shareholders and our To achieve this, we will leverage our
❙ In June, John Spooner retired associates. Circle the Customer strategy through
from Ecolab after 11 years of service. Ecolab was also recognized for cross-selling and cross-marketing of our
John held a number of significant “Best Corporate Governance” among many divisional services, as well as
management posts during his tenure, mid- to large-cap companies by introducing a new stable of

4

improvements and cost savings allow us
to strengthen our infrastructure and
create more robust solutions within our
supply chain, information technology,
and capital investments.
Saluting None of this is possible without

49 years of service the intense focus and exceptional
performance of our global workforce.
They clearly possess the drive and the
talent required to push us to greater
In an exceptional career that has spanned five decades, Al Schuman has achievements. They have done it year
been a key figure in molding the future of Ecolab. He began his remarkable after year, and we are confident they
journey with Ecolab in 1957 as a junior salesman in Queens, New York. will do it again in 2006, because we
After a decade of service in the field, he went on to create the very have a culture built squarely on service
successful national accounts structure that helped drive Ecolab’s success, execution and value-based results.
to work tirelessly as general manager of our largest businesses, and to Our expectations of our global
serve nine impressive years as chief executive officer, from 1995 to 2004. associate base are absolutely clear.
Our spirit, pride, determination,
commitment, passion and integrity are
In May 2006, after 49 years of service, performance, and aggressive
growth, Al will retire as Ecolab’s Chairman of the Board, a post in which he unparalleled. Ecolab associates embody
has served since 2000. Al has been a thoughtful, tenacious and devoted these traits by living this culture every
member of Ecolab’s board since 1991, and his wise counsel, enthusiasm day. We care deeply about our
and motivational approach will be missed. customers, our company and one
another. Clearly, that’s what being part
Al’s legacy at Ecolab will continue in many ways, from the company’s of the Ecolab family is all about.
strong commitment to service and customer relationships to its focus on There is no mystery to Ecolab.
training and development for associates. His steadfast commitment, deep We’re clear about the high expectations
industry knowledge, and unstoppable drive for success for our associates, we set for ourselves and our company,
our customers and our company has helped secure and solidify Ecolab’s our demanding performance standards,
place as the market leader in premium cleaning and sanitation products and our passion for serving our
and services worldwide. Thank you, Al, for sharing your unwavering customers and shareholders. So when
dedication and determination on behalf of our company and all of us our associates, customers and
in the Ecolab family. shareholders think of the company that
provides these better than any other,
the answer is clear.
Clearly Ecolab.

leading-edge product solutions. This will field headcount in the face of rising raw
be fueled by the strong global customer materials and other costs, we choose to
relationships already established by our invest in our people, their training and
core Institutional, Pest Elimination, Food field technology. We know there is no
& Beverage, and Kay businesses. more powerful driver for customer
Douglas M. Baker
Our continued investments in the satisfaction – and our success – than
President and Chief Executive Officer
strategic pillars of our organization will ensuring we have the best possible
also play a critical role in continued service force that executes effectively.
growth. We will make further Our strategy for reducing costs in
investments in our winning sales-and- this tough operating environment is
service force by adding more talented based on carefully reviewing and
people to our undisputed industry- streamlining our business processes to
leading field team. While some find ways to more efficiently and Allan L. Schuman
competitors have chosen to reduce their effectively serve our customers. These Chairman of the Board


6

Why compromise quality or quantity when
you can have both? Not only do we equip our
field service team with the best tools and
technology to serve our customers, but we
also continually invest in expanding this
critical link to customers. That’s why only
one company can say it has the largest,
best-trained, and most talented sales-and-
service team in the industry. Clearly Ecolab.

Clearly
Ecolab

8

Clearly
Ecolab
The next big breakthrough is rarely clear from
the beginning. It takes research, both in the
lab and in the customer environment, to
understand the opportunities. It takes vision,
to clearly see the possibilities and the path to
realize them. It takes dedication, to persevere in
the work and remain relentlessly committed to
development until the answer is better than
just right. All of this must be done with the
customer clearly in mind. One company has
this down to a science. Clearly Ecolab.


10

We don’t just offer our customers products.
We provide them with solutions. By asking
customers what they really need. By combing
their operations in search of potential problem
areas. And by factoring in key considerations
that matter most to the customer, including
use-cost, operating efficiencies, and time
and labor savings. That’s why our industry
recognizes one company as the clear leader
in revolutionary solutions for its customers.
Clearly Ecolab.

Clearly
Ecolab


12

Clearly
Ecolab
Service. Innovation. Solutions. Many factors
contribute to our success. But when we look at
the ultimate key to our success, it’s clearly our
people. Our team is talented, dynamic and
enthusiastic. Knowledgeable, creative and
passionate. We aggressively pursue what’s best
for our customers, our shareholders and our
company every day. Our commitment is what
makes our future so clear. Clearly Ecolab.


Clearly
UNITED STATES: INSTITUTIONAL
Institutional delivered record sales in
2005, growing 7%, thanks to new
business gains, increased market
penetration and successful new product
launches. The division also implemented
comprehensive cost-saving initiatives to
help offset substantial rises in raw
material and fuel costs.

Ecolab
HIGHLIGHTS
• Launched the highly successful
360º of Protection program, which
2005 dramatically increases food safety,
operating efficiency, guest satisfaction
REVIEW OF and employee safety for Ecolab’s
foodservice, hospitality and long-term
OPERATIONS care customers.
• Entered into a strategic alliance with
Minnesota-based Pentair, Inc., a
provider of industry-leading water
Innovative solutions. purification solutions, including
Reliable results. Everpure® water filtration and
conditioning systems, thus enhancing
Clearly, Ecolab delivers. Ecolab’s ability to develop and market
Our business units water management solutions in its
core account base.
consistently provide • Introduced a slate of new products
and services, including EcoLogic, a
our customers with the new line of cleaners that includes
right products, systems products certified by Green Seal as
meeting its environmental standards
and service expertise and features less packaging to reduce
to help streamline their waste, Pathways Solid Drain Sanitizer,
a drain treatment program, and Oasis
operations. Ecolab is 146 Multi-Quat Sanitizer, a food
contact hard surface sanitizer.
clearly committed to • Successfully integrated the Daydots
being a trusted partner acquisition and leveraged its food
safety product line for the foodservice
for every customer, and restaurant segments globally.
every day. • Strengthened its sales-and-service
infrastructure with enhanced training
programs, a new e-learning platform
and service automation.
The following is a
detailed summary of OUTLOOK
Institutional plans to leverage its proven
2005 and outlook for programs to drive expanded growth in
2006 from each of our 2006. This growth is expected to be
driven primarily by delivering more
core businesses. superior product and service solutions
to existing accounts, new account gains,
new product launches including a
next-generation warewashing program,
new water management solutions, and
sales force additions.

14

PROFESSIONAL PRODUCTS
PEST ELIMINATION
KAY
Kay achieved another year of Professional Products sales rose 2% in
Pest Elimination posted another year
2005, fueled by new product offerings,
double-digit growth, increasing sales of double-digit sales growth in 2005,
effective utilization of the Circle the
increasing 12%, driven by strong
1 1%, with continued strong
Customer strategy, and a strong focus
performances in all of its market
performances across its markets. Kay
on the retail market segment.
segments. These gains were led by
also streamlined processes and drove
government, food and beverage, and
costs out of its operations to further
non-food retail sectors.
enhance and drive its aggressive
growth goals.

HIGHLIGHTS HIGHLIGHTS
HIGHLIGHTS
• Introduced successful new tools, • Solidified its retail floor care presence
• Continued to serve as principal driver
including the Allur-Ring Pheromone
of the enhanced MarketGuard through participation in the cross-
Pad for cockroach control, the divisional MarketGuard program and
program, which combines the best in
Electronic Duster, a metering tool for the aggressive marketing and
food safety, pest elimination and floor
successful launch of the Bright FX
dispensing dust-type insecticides, and
care to enable food retail customers
Protector System, a family of High Performance Floor Care System,
to complete the cleaning and
products that improve the safety and which provides exceptional gloss and
sanitation circle.
• Introduced Q-Sure Towels, featuring efficiency of Ecolab’s service durability in high-traffic areas.
• Introduced the GlossTek line of
patented QuatSmart technology, specialists.
• Added two new sales training premium ultra-durable floor finishes,
which help maintain more constant
programs that are driving increased offering exceptional durability and
quat sanitizer concentration within
sales productivity, as well as a new high gloss floors for facilities where
the holding solution, thereby reducing
food retail training program for all regular burnishing is not feasible,
health code violations.
• Launched its new Chlorinated field associates. such as patient rooms, nursing
Cleaner, designed for heavy-protein • Achieved double-digit sales and stations and corridors in healthcare
operating income growth in its and acute care facilities.
soils common in food retail
EcoSure food safety and quality
environments, and Coffee Pot • Entered the stone care market with a
Cleaner, a high-performance solution assurance business through major complete line of stone care products,
account gains, expansion into the equipment and tools that clean,
that cleans hard-to-reach buildup and
hospitality segment and increased restore and protect natural and
stains without scrubbing.
penetration with existing customers. manufactured stone floors.
• Gained significant new business by
• Introduced territory routing software
securing several new corporate
to field associates, which helps OUTLOOK
account customers.
improve service efficiency and Professional Products expects to
response. continue building on the successful
OUTLOOK
• Improved worker and driver safety foundation of 2005 by partnering with
Kay is primed for further attractive
performance among field associates. key distributors and large customers, as
growth in 2006 in its markets,
well as leveraging the proven Circle the
propelled by additional corporate
OUTLOOK Customer strategy. In 2006, the division
accounts gains and new product
Pest Elimination’s field service and plans to continue to strengthen its field
innovations. Kay’s focus on process
sales organizations are well positioned team to better serve the unique needs
improvement and driving its new
for growth in 2006. Increases in of large corporate accounts. The
business pipeline should continue to
corporate accounts and better division also expects further success in
enhance its position as the market
penetration of existing markets are the retail market and additional
leader in quickservice and food retail
expected to again drive double-digit penetration of the healthcare arena
markets.
sales and operating income growth. through the introduction of new
In addition, programs that further product innovations.
demonstrate Ecolab’s superior
responsiveness to customer needs
should help fully circle customers and
increase sales within existing accounts.


HEALTHCARE GCS SERVICE TEXTILE CARE
Establishing itself as an industry leader On the heels of extensive operational In 2005, Textile Care sales grew 5% and
in infection control, Healthcare enjoyed improvements, GCS achieved 8% sales profitability improved. New product
a strong 16% sales increase in 2005 as growth in 2005 and significantly offerings, cross-divisional partnerships,
the business further penetrated its core improved its bottom line. Growth within highly trained service personnel and
markets and made its first entrance existing accounts and major corporate gains in the tunnel washer segment
into the operating room, while account gains helped drive sales, along helped drive sales growth, and cost-
simultaneously building its long-term with a continued emphasis on quality savings initiatives offset a significant
product pipeline. control, associate retention and increase in raw material prices.
expense-control management.

HIGHLIGHTS
• Introduced full cycle solutions, a
• Picked up business with several large,
• Significantly expanded its presence
multi-unit national corporate account comprehensive program of products,
with integrated delivery networks with
customers and laid the foundation for equipment and service that helps
the continued success of the
more new business expansion in commercial laundries economize their
Asepti-Solid line for convenient,
2006. operations and reduce costs.
effective instrument cleaning, as well
• Introduced Unitrax, which assists • Leveraged collaboration with its
as the introduction of new products
customers in tracking important European counterparts to develop the
and technologies.
information regarding their kitchen industry’s most experienced and
• Successfully entered the operating
equipment, providing details such as best-trained service specialists for the
room market with the launch of
cost per unit and frequency of repair. tunnel washer segment, resulting in
Endure 450, a surgical hand
• Continued its aggressive efforts to good growth.
antiseptic that provides excellent
enhance customer satisfaction and • Successfully made key customer gains
persistent antimicrobial protection
quality while simultaneously in the healthcare and hospitality
while maintaining skin health with a
improving associate productivity, segments.
combination of moisturizers and
performance and retention. • Continued working with Ecolab’s
conditioners.
• Made additional improvements and Water Care Services Division to bring
• Bolstered its infrastructure through
investments to its service model, solutions to customers in both the
growth of its sales-and-service team,
improving service excellence through wash aisle and wastewater areas.
and leveraged the Circle the
its quality assurance initiative.
Customer strategy through key
OUTLOOK
partnerships for preventive
OUTLOOK Textile Care expects continued growth
maintenance with other businesses
GCS Service plans to aggressively in 2006 on the strength of groundwork
in the Ecolab team.
leverage Ecolab’s Circle the Customer laid in 2005. While higher raw material
• Achieved ongoing success with its
strategy in 2006 as it continues prices will present operating challenges,
established waterless hand hygiene
partnering with sister divisions to help Textile Care plans to leverage new
and central sterile processing
drive strong growth. Increases in both product offerings and effectively utilize
solutions.
parts and service sales are expected, its corporate accounts team to expand
building on the momentum generated business with several large, multi-unit
OUTLOOK
in 2005. The division also plans to national operators. In addition, the
Healthcare expects another robust year
expand its corporate accounts team as division will continue its partnership
in 2006 as it builds on investments
it continues to streamline its internal with other divisions to offer full cycle
made in its sales-and-service force,
operating systems and division-wide solutions and realize Ecolab’s
differentiated new product and system
infrastructure. value-added proposition.
solutions, and innovative research and
development. These effective tools
should be key drivers for Healthcare as
it expects to continue to grow its
business scale and drive strong organic
growth.

16

FOOD & BEVERAGE WATER CARE SERVICES VEHICLE CARE
Food & Beverage experienced a 9% Water Care Services increased its Vehicle Care enjoyed a solid year,
sales increase in 2005, due to the national presence in 2005 with the growing sales 12% in 2005, spurred by
successful integration of the Alcide acquisition of Midland Research the introduction of new, innovative
acquisition and outstanding perform- Laboratories Inc., which – along with products, sales-and-service automation
ance in the dairy and beverage markets. good organic growth – enabled the tools and several large account gains.
Global customer relationships were also division to drive a 34% sales increase. These results were bolstered by
an impetus for growth for the division, New products and systems focused on Ecolab’s ability to offer complete
with several key customers seeking energy and cost savings added depth service solutions to its customers.
standardized operations worldwide. to the division’s product offering.

HIGHLIGHTS
• Introduced Rain-X Online Protectant,
• Integrated Midland Research
• Leveraged the power of Sanova, the
Laboratories Inc., a Kansas-based the industry’s first complete surface
revolutionary antimicrobial food
water treatment company, enhancing protectant used across full-service,
additive that significantly reduces
Ecolab’s national coverage and quickservice, self-service and fleet
pathogens on food surfaces, which is
gaining a strong position in the sugar markets. This innovative technology
generating excitement and new
processing market. delivers outstanding shine, enhanced
business in the antimicrobial market.
• Significantly expanded and visibility in poor weather, and advanced
• Effectively marketed its value
reorganized its sales team, creating all-weather protection for multiple
proposition, emphasizing food safety,
nearly two dozen new territories and vehicle surfaces.
time savings and operational
adding scale in areas such as • Expanded service coverage by adding
efficiencies to help customer facilities
marketing, finance and R&D. sales-and-service associates, and
run more smoothly.
• Made key investments in sales force continued developing its strong distri-
• Helped to significantly expand
productivity, including a training bution network with strategic partners.
Ecolab’s international business
program based on its value • Increased its fleet segment sales using
through key corporate account gains,
proposition and the addition of tablet the proven Circle the Customer model
resulting from its strong global
personal computers for field with large corporate accounts.
customer relationships and the Circle
personnel. • Successfully developed new detail
the Customer strategy.
• Introduced new products and segment sales by building new
• Introduced WPA-1000, a whey
equipment specifically focused on business around large dealership
processing additive that prevents
saving energy and reducing costs, chains as well as local and regional
mineral deposits and buildup in
including Precision Plus, a customers.
processing equipment, and Eco-Wipe
revolutionary boiler technology, EZ • Enjoyed strong results in the self-serve
FCS, a convenient, easy-to-use hard
Blue Controller, an all-in-one cooling market due to a focus and
surface sanitizing wipe ideal for
water control system, and ChillerCalc, revitalization of Westley’s Self-Serve
cleaning and sanitizing areas where
an efficiency tool for chillers. product line.
water use is limited.
• Automated sales-and-service functions
OUTLOOK for field personnel through wireless
OUTLOOK
In 2006, Water Care Services plans to personal computers and printers,
Food & Beverage expects continued
leverage its strengthened field presence enabling quicker, more efficient
growth in sales to the dairy and food
to better serve its customers with its training, enhanced multimedia product
processing markets in 2006. Its
broadened product and service launches, and real-time service reports
partnership with Ecolab’s Water Care
offerings. Despite challenges from high for customer operations.
Services group should offer additional
energy and raw material costs, the
avenues for growth by enhancing
division expects continued growth OUTLOOK
Ecolab’s complete customer solutions
through aggressive sales efforts, new Vehicle Care expects continued
for commercial and institutional
program offerings and strategic attractive growth in 2006. This will be
customers. The division also expects to
acquisitions, as well as further utilizing driven by new product innovation,
continue to invest in and capitalize on
including developments in the Rain-X,
its cross-selling strategy to enhance
the highly successful Sanova product
Blue Coral and Black Magic product lines,
Ecolab’s integrated customer solutions
line to further penetrate the
to food and beverage, commercial and as well as by continued expansion in the
antimicrobial food treatment market.
institutional customers. detail and fleet segments. The division
also plans to leverage its four-pronged
value-added model, which is based on
advanced technology, superior service,
operational excellence and powerful
marketing programs.


INTERNATIONAL: EUROPE/MIDDLE EAST/AFRICA ASIA PACIFIC
Asia Pacific accelerated sales in 2005,
Despite sluggish markets in the larger Western European countries, Europe grew
growing 8% in fixed currency exchange
its business 3% in fixed currency exchange rates, leveraging new products,
rates, turning in strong performances
strengthening its food distributor network, and leveraging the Circle the Customer
throughout the region, most notably in
approach to secure new corporate account customers. Europe also achieved good
China and Australia. The business also
geographical expansion, turning in strong results in Eastern Europe and Turkey.
worked closely with its many customers
Middle East and Africa experienced solid sales growth through customer gains in
in recovery and rebuilding efforts in the
Institutional and Pest Elimination.
aftermath of the Southeast Asia tsunami
that struck the region in December 2004.

• Pest Elimination solidified its strong
market position in the United Kingdom
• Institutional secured new corporate • Introduced new technologies for the
and France, with double-digit sales
accounts, enjoyed good growth Food & Beverage market, including
growth from new programs including Lubodrive AP and Lubodrive ZF,
through its expanded partnerships
EcoPro for Food & Beverage
with food distributors and its core conveyor lubricants that increase
customers and bird protection
product range, invested in training for production speeds while reducing
systems for the food retail segment. bottle tipping, and Advantis, a
its field organization and successfully
• Middle East and Africa recorded
partnered with Professional Products value-added line of clean-in-place
strong gains, led by solid Institutional
to capitalize on large floor care detergents that work well in ambient
growth, as well as good results in
opportunities. temperatures, therefore reducing
Turkey and the South African Pest
• Food & Beverage benefited from a time and energy requirements at
Elimination business.
pan-European approach, which bottling facilities.
resulted in growth gains organically, • Aggressively entered the retail
OUTLOOK
with new corporate account market in East Asia and Japan
Europe expects improved growth in
customers and via successful through the cross-divisional
2006, based on its strengthened MarketGuard program for food
acquisition integration. Eastern
foodservice distributor network,
Europe was a source of good growth retailers.
expanded cross-divisional and
for the division, as was the • Accelerated its floor care offering
pan-European efforts, incremental with the introduction of Wash ’n Walk,
pharmaceutical market.
additions to its field sales-and-service
• Healthcare strengthened its position the revolutionary no-rinse floor
force, and introduction of proven
as market leader in endoscope cleaner first introduced by
programs including 360º of Protection.
reprocessing with Sekusept easy, a Institutional in North America.
Europe also plans to continue to explore
high-level disinfectant for manual and • Achieved significant corporate
additional opportunities for geographic
automatic reprocessing that offers no account gains, creating a platform
expansion of smaller divisions in 2006.
activation period, short contact times for future growth in the region.
and easy disposal, as well as increased
focus on hand care disinfectants and OUTLOOK
investments in automatic instrument Asia Pacific plans to continue its
disinfection. attractive performance in 2006. The
• Textile Care growth was driven by Asia Pacific team expects to leverage
key corporate account gains that new product and program introductions
expanded its market share, as well as in floor care and lubes to continue to
a focus on its next generation of water gain market share in the Institutional
and energy-saving systems that and Food & Beverage markets across
strengthen customers’ bottom line the region. In addition, the division will
by reducing natural resource continue to focus on the high growth
consumption. China market, as well as accelerate
• Professional Products strengthened development of Ecolab’s new business
its approach to the retail market, in India. Asia Pacific also plans to
drove its innovation portfolio in the invest in its infrastructure, with key
Healthcare segment with HealthGuard, investments in its sales-and-service
an all-in-one janitorial cleaning system team and in strengthening its supply
for healthcare facilities, and chain position to meet the increasing
strengthened its cross-divisional customer needs of this growing region.
approach with Institutional.

18

CANADA LATIN AMERICA
In 2005, Canada delivered a healthy Latin America enjoyed another strong
sales performance, rising 8% in fixed year of double-digit growth across the
currency exchange rates, as solid region. Sales grew 15% in fixed
performances in its core markets currency exchange rates, outperforming
benefited from the introduction of new its previous five years of strong double-
products and programs. These were digit growth through good gains with
further leveraged by a renewed focus global accounts, high growth in targeted
on customer satisfaction and segments, and success in rolling out
cross-divisional collaboration. innovative products and solutions.

• Increased its success with both • Continued to leverage the global and
independent restaurants and large regional customer relationships
chains by leveraging the power of established through Institutional, Food
Wash ’n Walk and 360º of Protection & Beverage, Kay and Europe to
for foodservice customers, further accelerate sales growth throughout
penetrating this core market. the region.
• Forged a highly successful partnership • Strengthened growth platforms
with utility companies to offer through enhancing the field firepower
restaurant customers with spray and productivity, developing total
heads that reduce energy, water and solutions to deliver higher value
sewage costs. propositions and targeting high-growth
• Gained market share with building segments.
service contractors through the help • Continued its successful penetration
of Professional Products’ new and expansion of the food retail
GemStar Stratus, a long-lasting, segment with the cross-divisional
MarketGuard program.
durable floor finish ideal for high
traffic areas, as well as strengthened • Aided growth with flagship technology
its presence in the retail floor care upgrades, such as the introduction of
DryExx dry lube for beverage bottling
segment.
• Added strength to its Pest Elimination plants, a dry lubricant that eliminates
service force, as well as emphasizing the need to use water to dilute the
and increasing divisional employee lubricant, resulting in less soil buildup,
safety through dynamic safety no slime formation, and no water or
programs. lubricant dripping on the floor, thereby
increasing productivity, and the Oasis
Pro product line, featuring color-coded
OUTLOOK
Canada expects to continue to build on super-concentrated products, reduced
the momentum of 2005’s focus on packaging, and controlled dispensing,
cross-divisional collaboration in order to into the high-growth hospitality
secure additional business with both market.
large corporate accounts and • Expanded geographic coverage, as well
independent “street” customers. Canada as Pest Elimination and Water Care
also plans to make investments in Services, to deliver the Circle the
additional resources to bolster growth in Customer – Circle the Globe promise
its smaller divisions and further in key areas.
leverage the collaborative efforts
through the Circle the Customer OUTLOOK
strategy. Latin America expects to continue its
strong growth in 2006 as it further
builds on the Circle the Customer
platform by strengthening value
propositions for targeting high-growth
customer segments, enhancing quality
service delivery, improving supply chain
efficiency and enabling better execution.


Environmental
Sustainability
As an industry leader in providing
superior value to our customers, Ecolab
also helps conserve resources and
preserve the quality of the environment.
We believe that corporations should
conduct their business as responsible
stewards of the environment and in a
manner that does not disrupt the earth’s
natural evolutionary processes.
Ecolab has a long track record for
sustainability. We are committed to
helping our customers achieve cleaner,
healthier and safer surroundings so they
can more productively conduct their
business around the globe.
Consistent with our sustainability
objectives, Ecolab is continually
expanding our portfolio of
environmentally responsible cleaning
products. We are dedicated to finding
ways to deliver better product solutions
for our customers in ways that help
preserve our environment.
Our commitment to doing what’s
The Formula 1 laundry system
right for the long term has helped
lowers the risk of product spills
Ecolab achieve sustainable, profitable Ecolab’s key focus of investment
or mixing of incompatible
growth in the past and will continue to in our communities is toward
products. It also does not
guide us in the future. youth and education enrichment
contain caustic soda or chlorine.
programs.

Social
Responsibility
thousands of
At Ecolab we believe that giving
hours of
back to our communities benefits the
volunteer work our associates
economic and social vitality of the entire
commit to charitable
area. We have a strong history of
organizations.
supporting the communities where our
In times of natural
associates live and work. We believe this Ecolab field associates participate in relief efforts in the
disasters, Ecolab assists in
also enables us to attract the talent we wake of Hurricane Katrina.
recovery efforts, and the
need to continue our business growth
Ecolab Foundation has given
and development.
cash grants and matched
Through the Ecolab Foundation, we these terrible disasters.
employee donations to the American
annually contribute 1.2 percent of our Our dedication to social
Red Cross. For example, in the aftermath
U.S. pretax earnings to domestic responsibility, ethics and philanthropy
of the tsunami in Southeast Asia and
charitable organizations. Over the past enhances the health and well-being of
during the worst hurricane season in the
20 years, the Ecolab Foundation has our communities. A company that
history of the United States, Ecolab
contributed more than $35 million to focuses on environmental, social and
donated more than $3 million of
our communities. economic performance is good for
products, primarily hand sanitizers and
We also believe that success is society and good for business.
surface sanitizers, to the relief efforts.
measured not only by the satisfaction of
Cash donations to the Red Cross
our customers, but by the contributions For further details on both of these
topped $300,000 as Ecolab associates
of our employees to their communities. important areas, please visit our
from around the world responded to
Ecolab encourages and fosters the website at www.ecolab.com.

20

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