UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2009

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 1-9328

ECOLAB INC.

(Exact name of registrant as specified in its charter)

Delaware	41-0231510
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

370 Wabasha Street N., St. Paul, Minnesota 55102

(Address of principal executive offices)(Zip Code)

1-800-232-6522

(Registrant’s telephone number, including area code)

(Not Applicable)

(Former name, former address and former fiscal year,

if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x	Accelerated filer o

Non-accelerated filer o	Smaller reporting company o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of October 30, 2009.

237,554,525 shares of common stock, par value $1.00 per share.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

ECOLAB INC.

CONSOLIDATED STATEMENT OF INCOME

	Third Quarter Ended
	September 30
(millions, except per share)	2009		2008
	(unaudited)

Net sales	$	1,546.4	$	1,626.3

Cost of sales (including special charges of $1.3 in 2009)	763.9		834.3

Selling, general and administrative expenses	554.1		578.8

Special gains and charges	5.4		11.8

Operating income	223.0		201.4

Interest expense, net	15.1		16.0

Income before income taxes	207.9		185.4

Provision for income taxes	62.7		59.5

Net income including noncontrolling interest	145.2		125.9

Less: Net income (loss) attributable to noncontrolling interest	0.2		(0.3		)

Net income attributable to Ecolab	$	145.0	$	126.2

Net income attributable to Ecolab per common share
Basic	$	0.61	$	0.51
Diluted	$	0.60	$	0.50

Dividends declared per common share	$	0.1400	$	0.1300

Weighted-average common shares outstanding
Basic	237.0		247.5
Diluted	240.6		251.8

The accompanying notes are an integral part of the consolidated financial information.

ECOLAB INC.

CONSOLIDATED STATEMENT OF INCOME

	Nine Months Ended
	September 30
(millions, except per share)	2009		2008
	(unaudited)

Net sales	$	4,336.1	$	4,654.2

Cost of sales (including special charges of $9.4 in 2009)	2,196.9		2,371.4

Selling, general and administrative expenses	1,596.8		1,715.8

Special gains and charges	56.9		(5.6		)

Operating income	485.5		572.6

Interest expense, net	46.1		46.1

Income before income taxes	439.4		526.5

Provision for income taxes	137.0		158.5

Net income including noncontrolling interest	302.4		368.0

Less: Net income (loss) attributable to noncontrolling interest	0.9		(0.1		)

Net income attributable to Ecolab	$	301.5	$	368.1

Net income attributable to Ecolab per common share
Basic	$	1.27	$	1.49
Diluted	$	1.26	$	1.46

Dividends declared per common share	$	0.4200	$	0.3900

Weighted-average common shares outstanding
Basic	236.5		247.2
Diluted	239.6		251.7

The accompanying notes are an integral part of the consolidated financial information.

ECOLAB INC.

CONSOLIDATED BALANCE SHEET

	September 30		December 31
(millions)	2009		2008
	(unaudited)

ASSETS

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)	1,013.0		971.0

Inventories	474.8		467.2

Deferred income taxes	93.8		94.7

Other current assets	126.9		91.5

Total current assets	1,816.0		1,691.1

Property, plant and equipment, net	1,149.1		1,135.2

Goodwill	1,369.8		1,267.7

Other intangible assets, net	312.2		326.7

Other assets	341.7		336.2

Total assets	$	4,988.8	$	4,756.9

The accompanying notes are an integral part of the consolidated financial information.

(Continued)

ECOLAB INC.

CONSOLIDATED BALANCE SHEET (Continued)

	September 30			December 31
(millions, except per share)	2009			2008
	(unaudited)

LIABILITIES AND EQUITY

Current liabilities

Short-term debt	$	121.0		$	338.9

Accounts payable	367.3			359.6

Compensation and benefits	271.8			261.1

Income taxes	31.0			46.3

Other current liabilities	501.8			436.0

Total current liabilities	1,292.9			1,441.9

Long-term debt	850.0			799.3

Postretirement health care and pension benefits	601.7			680.2

Other liabilities	274.2			256.5

Equity (a)
Common stock	329.5			328.0
Additional paid-in capital	1,154.0			1,090.5
Retained earnings	2,819.2			2,617.0
Accumulated other comprehensive loss	(224.6		)	(359.1		)
Treasury stock	(2,116.3		)	(2,104.8		)
Total Ecolab shareholders’ equity	1,961.8			1,571.6
Noncontrolling interest	8.2			7.4
Total equity	1,970.0			1,579.0

Total liabilities and equity	$	4,988.8		$	4,756.9

(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.

The accompanying notes are an integral part of the consolidated financial information.

ECOLAB INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

	Nine Months Ended
	September 30
(millions)	2009			2008
	(unaudited)

OPERATING ACTIVITIES

Net income including noncontrolling interest	$	302.4		$	368.0

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

The accompanying notes are an integral part of the consolidated financial information.

(Continued)

ECOLAB INC.

CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)

	Nine Months Ended
	September 30
(millions)	2009			2008
	(unaudited)

INVESTING ACTIVITIES

Capital expenditures	$	(169.0	)	$	(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	—			(21.0		)

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	(5.0		)	(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	4.0			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

The accompanying notes are an integral part of the consolidated financial information.

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Consolidated Financial Information

The unaudited consolidated financial information for the third quarter and nine months ended September 30, 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 December 31, 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 company’s Annual Report on Form 10-K for the year ended December 31, 2008.

With respect to the unaudited financial information of the company for the three and nine-month periods ended September 30, 2009 and 2008 included in this Form 10-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 November 6, 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 Section 11 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.

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
	September 30				September 30
(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	)

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. Special Gains and Charges (Continued)

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 company’s 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 September 30, 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, March 31, 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, June 30, 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, September 30, 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 write-downs related to the discontinuance of product lines which are not consistent with the company’s long-term strategies. Other charges include one-time curtailment and settlement charges related to the company’s International pension plans and U.S. postretirement health care benefits plan.

The restructuring plan is expected to be finalized and actions completed during the current year. The company anticipates additional restructuring expenses during the remainder of 2009, which are expected to result in total pretax charges of approximately $70 million ($50 million after tax) for the full year 2009. The company anticipates that approximately $65 million of the total restructuring charges represent cash expenditures, of which $33 million has been paid as of September 30, 2009 and the majority of the remainder is expected to be paid within the next twelve months.

For segment reporting purposes, special gains and charges are included in the Corporate segment, which is consistent with the company’s internal management reporting.

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. Selected Balance Sheet Information

	September 30			December 31
(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

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. Selected Balance Sheet Information (Continued)

	September 30			December 31
(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	)

4. Interest

	Third Quarter Ended						Nine Months Ended
	September 30						September 30
(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

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 company’s 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.

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5. Financial Instruments and Hedging Transactions (Continued)

Derivatives Designated as Cash Flow Hedges

The company utilizes foreign currency forward contracts to hedge the effect of foreign currency exchange rate fluctuations on forecasted foreign currency transactions, including: sales, inventory purchases, and intercompany royalty and management fee payments. These forward contracts are designated as cash flow hedges. The effective portions of the changes in fair value of these contracts are recorded in AOCI until the hedged items affect earnings, at which time the gain or loss is reclassified into the same line item in the Consolidated Statement of Income as the underlying exposure being hedged. All hedged transactions are forecasted to occur within the next twelve months.

The company occasionally enters into interest rate swap contracts to manage interest rate exposures. In 2006 the company entered into and subsequently closed two forward starting swap contracts related to the issuance of its senior euro notes. The settlement payment was recorded in AOCI and is recognized in earnings as part of interest expense over the remaining life of the notes as the forecasted interest transactions occur.

Derivatives Not Designated as Hedging Instruments

The company also uses foreign currency forward contracts to offset its exposure to the change in value of certain foreign currency denominated assets and liabilities, primarily receivables and payables. Although the contracts are effective economic hedges, they are not designated as accounting hedges. Therefore, changes in the value of these derivatives are recognized immediately in earnings, thereby offsetting the current earnings effect of the related foreign currency denominated assets and liabilities.

The following table summarizes the fair value of the company’s outstanding derivatives as of September 30, 2009:

	Asset Derivatives			Liability Derivatives
	Balance			Balance
	Sheet	Fair		Sheet	Fair
(millions)	Location	Value		Location	Value

Derivatives designated as hedging instruments:

Foreign currency forward contracts	Other current assets	$	2.8	Other current liabilities	$	6.8

Derivatives not designated as hedging instruments:

Foreign currency forward contracts	Other current assets	3.3		Other current liabilities	3.2
Total Derivatives		$	6.1		$	10.0

The company had foreign currency forward exchange contracts with notional values that totaled approximately $397 million at September 30, 2009, and $486 million at December 31, 2008.

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5. Financial Instruments and Hedging Transactions (Continued)

For the third quarter and nine months ended September 30, 2009, the impact on AOCI and earnings from derivative contracts that qualified as cash flow hedges was as follows:

		Third			Nine
(millions)	Location	Quarter			Months

Unrealized gain (loss) recognized into AOCI (effective portion)

Foreign currency forward contracts	AOCI (equity)	$	(1.4	)	$	(4.2	)

Gain (loss) reclassified from AOCI into income (effective portion)

Foreign currency forward contracts	Cost of sales	$	3.3		$	6.6

	Selling, general and administrative expenses	0.5			3.0
		3.8			9.6

Interest rate swap contract	Interest expense, net	(0.1		)	(0.3		)
		$	3.7		$	9.3
Gain (loss) recognized in income on derivative (ineffective portion)

Foreign currency forward contracts	Interest expense, net	$	(0.4	)	$	(1.2	)

For the third quarter and nine months ended September 30, 2009, the impact on earnings from derivative contracts that are not designated as hedging instruments was as follows:

		Third			Nine
(millions)	Location	Quarter			Months

Gain (loss) recognized in income

Foreign currency forward contracts	Selling, general and administrative expenses	$	(5.4	)	$	3.3
	Interest expense, net	(4.1		)	(5.4		)
		$	(9.5	)	$	(2.1	)

The amounts recognized in earnings above offset the earnings impact of the related foreign currency denominated assets and liabilities.

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5. Financial Instruments and Hedging Transactions (Continued)

Net Investment Hedge

The company designates its euro 300 million ($430 million as of September 30, 2009) senior notes and related accrued interest as a hedge of existing foreign currency exposures related to net investments the company has in certain European subsidiaries. Accordingly, the transaction gains and losses on the euronotes which are designated and effective as hedges of the company’s net investments have been included as a component of the cumulative translation adjustment account. Total transaction gains and losses related to the euronotes charged to shareholders’ equity were as follows:

	Third Quarter Ended					Nine Months Ended
	September 30					September 30
(millions)	2009			2008		2009			2008

Transaction gains (losses), net of tax	$	(3.3	)	$	16.7	$	(31.1	)	$	(0.4	)

6. Comprehensive Income

	Third Quarter Ended						Nine Months Ended
	September 30						September 30
(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

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7. Business Acquisitions and Investments

In February 2009, 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 company’s 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 company’s 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
	September 30					September 30
(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

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7. Business Acquisitions and Investments (Continued)

The changes in the carrying amount of goodwill for each of the company’s reportable segments for the quarter and nine months ended September 30, 2009 were as follows:

	United States
(unaudited)	Cleaning &		Other
(millions)	Sanitizing		Services		Total		International			Consolidated

Balance as of December 31, 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 March 31, 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 June 30, 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 September 30, 2009	$	443.9	$	50.5	$	494.4	$	875.4		$	1,369.8

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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
	September 30				September 30
(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

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9. Pension and Postretirement Plans

The components of net periodic pension and postretirement health care benefit costs for the third quarter ended September 30 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 September 30 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.