Ecolab
ECL
#309
Rank
S$98.12 B
Marketcap
S$350.03
Share price
0.90%
Change (1 day)
-0.86%
Change (1 year)
Text size:
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended DECEMBER 31, 1999 Commission File No. 1-9328

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

For the transition period from ............ to .............

ECOLAB INC.
------------------------------------------------------------------
(Exact name of registrant as specified in its charter)

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

370 N. WABASHA STREET, ST. PAUL, MINNESOTA 55102
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(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (651) 293-2233

Securities registered pursuant to Section 12(b) of the Act:

TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED

Common Stock, $1.00 par value New York Stock Exchange, Inc.
Pacific Exchange, Inc.

Preferred Stock Purchase Rights New York Stock Exchange, Inc.
Pacific Exchange, Inc.

Securities registered pursuant to Section 12(g) of the Act: None

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
--- ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /X/

Aggregate market value of voting stock held by non-affiliates of Registrant on
March 1, 2000: $3,720,609,931 (see Item 12, on page 20 hereof). The number of
shares of Registrant's Common Stock, par value $1.00 per share, outstanding as
of March 1, 2000: 129,652,991shares.


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DOCUMENTS INCORPORATED BY REFERENCE

1. Portions of Registrant's Annual Report to Stockholders for the
year ended December 31, 1999 (hereinafter referred to as "Annual
Report") are incorporated by reference into Parts I, II and IV.

2. Portions of the Proxy Statement for the Annual Meeting of
Stockholders to be held May 12, 2000 and to be filed within 120
days after the Registrant's fiscal year ended December 31, 1999
(hereinafter referred to as "Proxy Statement") are incorporated
by reference into Part III.

PART I

FORWARD-LOOKING STATEMENTS AND RISK FACTORS

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements. In this Report on Form 10-K (including Management's
Discussion and Analysis of Financial Condition and Results of Operations
incorporated into Item 7 hereof), Management discusses expectations regarding
future performance of the Company which may include anticipated financial
performance, business prospects, prospects for international growth, investments
in the sales and service force, the impact of legislation and environmental
compliance, the effect of litigation, production capability, share repurchases,
the effect of new accounting pronouncements and similar matters. Without
limiting the foregoing, words or phrases such as "will likely result," "are
expected to," "will continue," "is anticipated," "we believe," "estimate,"
"project" (including the negative or variations thereof) or similar terminology,
generally identify forward-looking statements.

Forward-looking statements represent challenging goals for the Company. As such,
they are based on certain assumptions and estimates and are subject to certain
risks and uncertainties. The Company cautions that undue reliance should not be
placed on such forward-looking statements which speak only as of the date made.
In order to comply with the terms of the safe harbor, the Company hereby
identifies important factors which could affect the Company's financial
performance and could cause the Company's actual results for future periods to
differ materially from the anticipated results or other expectations expressed
in the forward-looking statements. These factors should be considered, together
with any similar risk factors or other cautionary language which may be made in
the section of this Report on Form 10-K containing the forward-looking
statement.

Risks and uncertainties that may affect operating results and business
performance include: restraints on pricing flexibility due to competitive
factors and customer consolidations, cost increases due to higher oil prices,
availability of adequate and reasonably-priced raw materials; the occurrence
of capacity constraints, or the loss of a key supplier, which in either case
limit the production of certain products; ability to carry out the Company's
acquisition strategy, including difficulties in rationalizing acquired
businesses and in realizing related cost savings and other benefits; the
costs and effects of complying with (i) the significant environmental laws
and regulations which apply to the Company's operations and facilities, (ii)
government regulations relating to the manufacture, storage, distribution and
labeling of the Company's products and (iii) changes in tax, fiscal,
governmental and other regulatory policies; economic factors such as the
worldwide economy, interest rates, currency movements, Euro

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conversion and the development of markets; the occurrence of (i) litigation or
claims, (ii) natural or man-made disasters and (iii) severe weather conditions
affecting the food service and hospitality industry; loss of, or changes in,
executive management; the Company's ability to continue product introductions
and technological innovations; and other uncertainties or risks reported from
time-to-time in the Company's reports to the Securities and Exchange Commission.
In addition, the Company notes that its stock price can be affected by
fluctuations in quarterly earnings. Despite favorable year-over-year quarterly
comparisons in recent years, there can be no assurances that earnings will
continue to increase or that the degree of improvement will meet investors'
expectations.

ITEM 1. BUSINESS

ITEM 1(a) GENERAL DEVELOPMENT OF BUSINESS

Except where the context otherwise requires, the terms "Company" and "Ecolab,"
as used herein, include Ecolab Inc. and its subsidiaries. Ecolab Inc. was
incorporated as a Delaware corporation in 1924. The Company's fiscal year is the
calendar year ending December 31.

The Company and Henkel KGaA of Dusseldorf, Germany ("Henkel"), each have a 50%
economic interest in a joint venture which operates institutional and industrial
cleaning and sanitizing businesses in Europe, and which is referred to hereafter
as "Henkel-Ecolab." Strategic decisions concerning Henkel-Ecolab require the
agreement of Henkel and the Company. Henkel has a tie-breaking vote on certain
matters pertaining to continuation of business in the event mutual agreement is
not reached. These include the appointment of Henkel-Ecolab senior executives
and adoption of the annual business plan. The Company accounts for its interest
in Henkel-Ecolab under the equity method of accounting and therefore does not
consolidate the Henkel-Ecolab balance sheet accounts, revenues and expenses or
cash flows. Financial statements of Henkel-Ecolab, as listed under Item 14, I(3)
of Part IV hereof, are included as a part of this Report and a review of
Henkel-Ecolab financial performance is found under the heading "Henkel-Ecolab"
contained in the Financial Discussion which is incorporated from the Annual
Report into Item 7 hereof. Except where Henkel-Ecolab is specifically referred
to, the description of business in Part I does not include the business of
Henkel-Ecolab.

During 1999, the Company continued to make business acquisitions which broadened
its product and service offerings in line with its "Circle the Customer - Circle
the Globe" strategy. The Company added to its line of products and services in
its Vehicle Care operations through the acquisition of Blue Coral Systems.
Additional products and services were added to the United States commercial
kitchen equipment repair services business and to the Company's South African
operations through business acquisitions. Details of these acquisitions are
found under the heading "Business Acquisitions" in Note 6, located on pages 48
and 49 of the Annual Report and incorporated into Item 14 hereof. In 2000, the
Company expanded its operations in Latin America with the acquisition of Spartan
de Chile Limitada and Spartan de Argentina S.A. In addition, the Company added
to its Kay business in 2000 by acquiring Southwest Sanitary Distributing Company
of Carrolton, Texas.

ITEM 1(b) FINANCIAL INFORMATION ABOUT OPERATING SEGMENTS

The financial information about reportable segments appearing under the heading
"Operating Segments" in Note 15, located on pages 54 and 55 of the Annual
Report, is incorporated herein by reference.



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ITEM 1(c) NARRATIVE DESCRIPTION OF BUSINESS

GENERAL: The Company is engaged in the development and marketing of premium
products and services for the hospitality, institutional and industrial markets.
The Company provides cleaning, sanitizing, pest elimination, maintenance and
repair products, systems and services primarily to hotels and restaurants,
foodservice, healthcare and educational facilities, quickservice (fast-food and
other convenience store) units, grocery stores, commercial and institutional
laundries, light industry, dairy plants and farms, food and beverage processors,
pharmaceutical and cosmetics facilities and the vehicle wash industry. A strong
commitment to customer support is a distinguishing characteristic of the
Company. Additional information on the Company's business philosophy is found
below under the heading "Additional Information - Competition" of this Item
1(c).

The following description of business is based upon the Company's three
reportable segments ("segments") as reported in the Company's financial
statements. However, the Company pursues a "Circle the Customer - Circle the
Globe" strategy by providing products, systems and services which serve the
Company's customer base, and does so on a global basis to meet the needs of its
customer's various operations around the world. Therefore, one customer may
utilize the services of all three of the segments. Thus, there is a degree of
interdependence among the operating segments--particularly between the
International Cleaning and Sanitizing and the United States Cleaning and
Sanitizing businesses.

UNITED STATES CLEANING AND SANITIZING SEGMENT

The "United States Cleaning and Sanitizing" segment is comprised of seven
divisions which provide cleaning and sanitizing services to United States
markets.

INSTITUTIONAL: The Institutional Division is the Company's largest division and
sells specialized cleaners and sanitizers for washing dishes, glassware,
flatware, foodservice utensils and kitchen equipment ("warewashing"), for
on-premise laundries (typically used by customers having smaller machines and
laundry needs) and for general housekeeping functions, as well as dishwasher
racks and related kitchen sundries to the foodservice, lodging, educational and
healthcare industries and water filters to the foodservice industry. The
Division also provides pool and spa treatment programs for commercial and
hospitality customers. The Institutional Division also markets various chemical
dispensing device systems, which are made available to customers, to dispense
the Company's cleaners and sanitizers. Through its Ecotemp offering, the
Institutional Division markets, primarily to smaller and mid-size customer
units, a program comprised of energy-efficient dishwashing machines, detergents,
rinse additives and sanitizers, including full machine maintenance.

The Company believes it is the leading supplier of chemical warewashing products
to institutions in the United States.

The Institutional Division sells its products and services primarily through
Company-employed field sales and service personnel. However, the Company, to a
significant degree, also utilizes food-service distributors to market and sell
its products to smaller accounts or accounts which purchase through food
distributors and the Company provides the same service to accounts served by
food distributors as to direct customers.


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KAY: The Kay Division (which operates as a wholly-owned subsidiary of the
Company) supplies chemical cleaning and sanitizing products primarily to the
quick-service restaurant industry. This includes traditional fast food
restaurants but, increasingly, other retail locations where "fast food" is
prepared and served, such as convenience stores, airport and shopping center
kiosks, discount stores, stadiums and other venues. Kay also sells cleaning and
sanitizing products to the food retail (i.e., grocery store) industry. Kay's
products include specialty and general purpose hard surface cleaners,
degreasers, sanitizers, polishes, hand care products and assorted cleaning
tools. Products are sold under the "Kay" brand or the customer's private label.
In addition, Kay supports its product sales with employee training programs and
technical support designed to meet the special needs of its customers. Kay's
customized cleaning and sanitation programs are designed to reduce labor costs
and product usage while increasing sanitation levels, cleaning performance,
equipment life and safety levels.

Kay employs a direct field sales force which primarily calls upon national and
regional quickservice restaurant chains and franchisees, although the sales are
made to distributors who supply the chain or franchisee's restaurants.

The Company believes that its Kay Division is the leading supplier of chemical
cleaning and sanitizing products to the quickservice restaurant industry in the
United States. While Kay's customer base has been growing, Kay's business is
largely dependent upon a limited number of major quickservice restaurant chains
and franchisees.

FOOD & BEVERAGE: The Food & Beverage Division addresses cleaning and sanitation
at the start of the food chain to facilitate the production of products for
human consumption. The Division provides detergents, cleaners, sanitizers,
lubricants, animal health and water treatment products, as well as cleaning
systems, electronic dispensers and chemical injectors for the application of
chemical products, primarily to dairy plants, dairy, poultry and swine farms,
breweries, soft-drink bottling plants, and meat, poultry and other food
processors as well as to pharmaceutical and cosmetic plants. The Food & Beverage
Division also designs, engineers and installs CIP ("clean-in-place") process
control systems and facility cleaning systems for its customer base. Farm
products are sold through dealers and distributors, while plant products are
sold primarily by the Company's field sales personnel. The Company believes that
it is one of the leading suppliers of cleaning and sanitizing products to the
dairy plant, dairy farm and beverage processor industries in the United States.

TEXTILE CARE: The Textile Care Division provides chemical laundry products and
proprietary dispensing systems, as well as related services, to large
institutional and commercial laundries and to certain smaller laundry
operations. Typically these customers process a minimum of 1,000,000 pounds of
linen each year and include free-standing laundry plants used by institutions
such as hotels, restaurants and healthcare facilities as well as industrial,
textile rental and shirt laundries. Products and services include laundry
cleaning and specialty products and related dispensing equipment, which are
marketed primarily through a Company-employed sales force and, to a lesser
extent, through distributors. The Division's programs are designed to meet the
customer's need for exceptional cleaning, while extending the useful life of
linen and reducing the customer's overall operating cost. Textile Care offerings
complement the Institutional Division's offerings to small-to-medium size
on-premise laundry facilities.


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PROFESSIONAL PRODUCTS: The Professional Products Division provides a full line
of infection-prevention and janitorial offerings that are sold to the medical
and janitorial markets in the United States. The Professional Products Division
sells its proprietary products under the brand names Airkem (detergents, general
purpose cleaners, carpet care, furniture polishes, disinfectants, floor care
products, hand soaps and odor counteractants) and Huntington (skin care,
disinfectants, instrument sterilants and gym floor products).

The Company believes it is among the largest suppliers of infection-prevention
and general cleaners to the United States healthcare industry as well as one of
the market leaders in the overall United States janitorial market. Products are
sold through a Company-employed sales force as well as a network of distributors
and independent manufacturing representatives in both janitorial and medical
markets who sell products and services to the institutional, healthcare and
industrial marketplaces. A private-label program also manufactures
non-proprietary janitorial-related products for resale by major distributor
organizations and infection prevention products to companies selling into
consumer markets. In addition, the Division, through its JaniSource operation,
markets brand name products for sale through mass distribution.

VEHICLE CARE: The Company's Vehicle Care Division provides vehicle appearance
products which include soaps, polishes, wheel and tire treatments and air
fresheners. Products are sold to vehicle rental, fleet and consumer car wash and
detail operations. The acquisition of Blue Coral Systems in February 1999
significantly expanded product and service offerings, and increased the
Division's sales coverage.

WATER CARE SERVICES: The Water Care Services Division supplements the Company's
"Circle the Customer - Circle the Globe" strategy by adding an offering which is
critical to companies in the Company's customer base--water treatment programs.
The Division provides water and wastewater treatment products, services and
systems for commercial/institutional customers (hospitals, healthcare,
commercial real estate, government, shopping malls and commercial laundries) and
light industry (food and beverage accounts, textile mills, electronic plants and
other industries). Water Care Services works closely with the Company's
Institutional, Textile Care and Food & Beverage divisions to offer customized
water care strategies to their accounts that have water care needs, primarily to
treat water used in heating and cooling systems and manufacturing processes and
to treat waste water.

UNITED STATES OTHER SERVICES SEGMENT

The "United States Other Services" segment is comprised of three business units:
Pest Elimination Division; Jackson MSC and GCS Service. In general, all three
businesses provide service or equipment which can augment or extend the
Company's product offering to its business customers as a part of the "Circle
the Customer" approach.

PEST ELIMINATION: The Pest Elimination Division provides services for the
elimination and prevention of pests to restaurants, food and beverage
processors, educational and healthcare facilities, hotels, quickservice
restaurant and grocery operations and other institutional and commercial
customers. These services are sold and performed by Company-employed sales and
service personnel. The Pest Elimination business acquires all of its
insecticides and pesticides from third-party vendors. The Company believes it is
the largest provider of premium pest elimination services to institutions in the
United States.


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JACKSON MSC: Jackson MSC (which operates as a wholly-owned subsidiary of the
Company) designs, manufactures and markets dishwashing and customized machines
for the foodservice industry. Jackson, which manufactures its equipment at its
Barbourville, Kentucky facility, sells products for use by the Company's other
businesses, most notably the energy-efficient dishwashing machines used by the
Institutional Division in its Ecotemp offering. Jackson also sells its equipment
to third parties through independent sales representatives and foodservice
dealers.

GCS SERVICE: GCS (which operates as a wholly-owned subsidiary of the Company)
provides commercial kitchen parts and equipment repair services. GCS offers both
chain account customers of the Company and equipment manufacturers the benefits
of working with a single national equipment repair service provider.

INTERNATIONAL CLEANING AND SANITIZING SEGMENT

The Company conducts business in approximately 40 countries outside of the
United States through wholly-owned subsidiaries or, in the case of Venezuela and
China, through majority-owned joint ventures with local partners. In other
countries, selected products are sold by the Company's export operations to
distributors, agents or licensees, although those sales are not significant in
terms of the Company's overall sales. The largest International operations are
located in Asia Pacific, Latin America and Canada with smaller operations in
Africa. With limited exceptions, the Company does not conduct business directly
in Europe. In that region, business is conducted by Henkel-Ecolab which is
described in Item 1(a) hereof under the heading "General Development of
Business."

In general, the businesses conducted internationally are similar to those
conducted in the United States through the United States Cleaning and Sanitizing
Segment. Institutional and Food & Beverage businesses are the largest
businesses. They are conducted at virtually all international locations, and
relative to the United States, constitute a larger portion of the overall
business. Kay has sales in a number of international locations. A significant
portion of its international sales are to non-United States units of United
States-based quickservice restaurant chains. Consequently, a substantial portion
of Kay's international sales are made either to domestic or
internationally-located distributors who serve these chains. The other
businesses (Textile Care, Professional Products and Water Care Services) as well
as the Pest Elimination business, are conducted less extensively in
international locations. However, in general, all of the businesses conducted in
the United States are operated in Canada.

International businesses are subject to the usual risks of foreign operations
including possible changes in trade and foreign investment laws, tax laws,
currency exchange rates and economic and political conditions abroad. The
profitability of International operations is lower than the profitability of
businesses in the United States. This is due to lower International operating
income margins caused by the difference in scale of International operations
where operating locations are smaller in size as well as to the additional cost
of operating in numerous and diverse foreign jurisdictions. Proportionately
larger investments in sales, administrative and technical personnel are also
necessary in order to facilitate growth in International operations.


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ADDITIONAL INFORMATION

COMPETITION: The Company's business units have two significant classes of
competitors. First, each business unit competes with a small number of large
companies selling directly or through distributors on a national or
international scale. Some of these large competitors have substantially greater
assets and financial resources than the Company. Second, all of the Company's
business units have numerous smaller regional or local competitors which focus
on more limited geographies, product lines and/or end-user segments.

The Company's objective is to achieve a significant presence in each of its
business markets. In general, competition is based on service, product
performance and price. The Company believes it competes principally by providing
superior value and differentiated products. Value is provided by
state-of-the-art cleaning, sanitation and maintenance products and systems
coupled with high customer support standards and dedication to customer
satisfaction after the initial sale. This is made possible, in part, by the
Company's significant on-going investment in training and technology development
and by the Company's standard practice of advising customers on means to lower
operating costs and comply with safety, environmental and sanitation
regulations. In addition, the Company emphasizes its ability to uniformly
provide a variety of related premium cleaning and sanitation services to its
customers and to provide that level of service to multiple locations of chain
customer organizations worldwide. This approach is succinctly stated in the
Company's "Circle the Customer - Circle the Globe" strategy which is discussed
above in this Item 1(c) under the heading "General."

SALES AND SERVICE: Products, systems and services are primarily marketed in
domestic and international markets by Company-trained sales and service
personnel who also advise and assist customers in the proper and efficient use
of the products and systems in order to meet a full range of cleaning and
sanitation needs. Distributors are utilized in several markets, as described in
the business unit descriptions found under the discussion of the three
reportable segments above.

CUSTOMERS AND CLASSES OF SERVICE: The Company believes that its business is not
materially dependent upon a single customer although, as described above in this
Item 1(c) under the description of the Kay business, Kay is largely dependent
upon a limited number of national and international quickservice chains and
franchisees. No material part of the Company's business is subject to
renegotiation or termination at the election of a governmental unit. The Company
sells two classes of products which each constitute 10 percent or more of its
sales. Worldwide sales of warewashing products in 1999, 1998 and 1997
approximated 27, 28 and 31 percent, respectively, of the Company's consolidated
net sales. In addition, the Company, through its Institutional and Textile Care
businesses, sells laundry products and services to a broad range of laundry
customers. Total laundry sales in 1999, 1998 and 1997 approximated 12, 13 and 14
percent, respectively, of the Company's consolidated net sales.

PATENTS AND TRADEMARKS: The Company owns a number of patents and trademarks.
Management does not believe that the Company's overall business is materially
dependent on any individual patent or trademark.

SEASONALITY: The Company's business has little seasonality.


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WORKING CAPITAL: The Company has invested in the past, and will continue to
invest in the future, in merchandising equipment consisting primarily of systems
used by customers to dispense the Company's cleaning and sanitizing products.
The Company, otherwise, has no unusual working capital requirements. The
investment in merchandising equipment is discussed under the heading "Cash
Flows" located on page 41 of the Annual Report and incorporated into Item 7
hereof.

MANUFACTURING AND DISTRIBUTION: The Company manufactures most of its products
and related equipment in Company-owned manufacturing facilities. Some are also
produced for the Company by third party contract manufacturers. Other products
and equipment are purchased from third party suppliers. Additional information
on product/equipment sourcing is found in the segment discussions above and
additional information on the Company's manufacturing facilities is located in
Item 2 under the heading "Properties" on pages 15 and 16 hereof.

Deliveries to customers are made from the Company's manufacturing plants and a
network of distribution centers and public warehouses. The Company uses common
carriers, its own delivery vehicles and distributors. Additional information on
the Company's plant and distribution facilities is located in Item 2 under the
heading "Properties" on pages 15 and 16 hereof.

RAW MATERIALS: Raw materials purchased for use in manufacturing products for the
Company are inorganic chemicals, including phosphates, silicates, alkalies,
salts and petrochemical-based materials, including surfactants and solvents.
These materials are generally purchased on an annual contract basis from a
diverse group of chemical manufacturers. Pesticides used by the Pest Elimination
Division are purchased as finished products under contract or purchase order
from the producers or their distributors. The Company also purchases packaging
materials for its manufactured products and components for its specialized
cleaning equipment and systems. Most raw materials, or substitutes for those
materials, used by the Company, with the exception of a few specialized
chemicals which the Company manufactures, are available from several suppliers.

RESEARCH AND DEVELOPMENT: The Company's research and development program
consists principally of devising and testing new products, processes, techniques
and equipment, improving the efficiency of existing ones, improving service
program content, and evaluating the environmental compatibility of products. Key
disciplines include analytical and formulation chemistry, microbiology, process
and packaging engineering and product dispensing technology. Substantially all
of the Company's principal products have been developed by its research,
development and engineering personnel. At times, technology may be licensed from
outside the Company to develop offerings. Note 12, entitled "Research
Expenditures" located on page 52 of the Annual Report, is incorporated herein by
reference.

ENVIRONMENTAL CONSIDERATIONS: This discussion of Environmental Considerations
should be read in light of the Forward-Looking Statements and Risk Factors
discussion found under Part I at the beginning of this Report. The Company's
businesses are subject to various legislative enactments and regulations
relating to the protection of the environment. While the Company cooperates with
governmental authorities and takes commercially practicable measures to meet
regulatory requirements and avoid or limit environmental effects, some risks are
inherent in the Company's businesses. Among the risks are costs associated with
managing hazardous substances, waste disposal or plant site clean-up, fines and
penalties if the Company were found in violation of law,


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as well as modifications, disruptions or discontinuation of certain operations
or types of operations. Additionally, although the Company is not currently
aware of any such circumstances, there can be no assurance that future
legislation or enforcement policies will not have a material adverse effect on
the Company's financial condition, results of operations or cash flows.
Environmental matters most significant to the Company are discussed below.

PHOSPHOROUS LEGISLATION: Various laws and regulations have been
enacted by state, local and foreign jurisdictions pertaining to the
sale of products which contain phosphorous. To date, the Company has
been able to comply with legislative requirements and, where
necessary, has developed products which contain no phosphorous or
lower amounts of phosphorous. In limited geographic areas, the Company
has obtained a variance from existing zero-phosphorous legislation.
Phosphorous legislation has not had a material negative effect on the
Company's operations to date.

PESTICIDE LEGISLATION: Various federal and state environmental laws
and regulations govern the manufacture and/or use of pesticides. The
Company manufactures and sells certain disinfecting and sanitizing
products which kill microorganisms (bacteria, viruses, fungi) on
environmental surfaces. Such products constitute "pesticides" or
"antimicrobial pesticides" under the current definitions of the
Federal Insecticide Fungicide and Rodenticide Act ("FIFRA"), as
amended by the Food Quality Protection Act of 1996, the principal
federal statute governing the manufacture, labeling, handling and use
of pesticides. Approximately 375 of these products must be registered
with the United States Environmental Protection Agency ("EPA").
Registration entails the necessity to meet certain efficacy, toxicity
and labeling requirements and to pay initial and on-going registration
fees. In addition, each state in which these products are sold
requires registration and payment of a fee. In general, the states
impose no substantive requirements different from those required by
FIFRA. However, California does have its own regulatory scheme and
certain other states have regulatory schemes under consideration. In
addition, California imposes a tax on total pesticide sales in that
State. While the cost of complying with rules as to pesticides has not
had a material adverse effect on the Company's financial condition,
liquidity or the results of its operations to date, the costs and
delays in receiving necessary approvals for these products have
increased in recent years. Total fees paid to the EPA and the states
to obtain or maintain pesticide registrations, and for the California
tax, were approximately $1,900,000 in 1999. Such costs will increase
somewhat in 2000, but, based on the Company's best information, not in
amounts which are expected to significantly affect the Company's
results of operations, financial position or liquidity.

In addition, the Company's Pest Elimination Division applies
restricted-use pesticides which it purchases from third parties. That
Division must comply with certain standards pertaining to the use of
such pesticides and to the licensing of employees who apply such
pesticides. Such regulations are enforced primarily by the states or
local jurisdictions in conformity with federal regulations. The
Company has not experienced material difficulties in complying with
these requirements.


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OTHER ENVIRONMENTAL LEGISLATION: The Company's manufacturing plants
are subject to federal, state, local or foreign jurisdiction laws and
regulations relating to discharge of hazardous substances into the
environment and to the transportation, handling and disposal of such
substances. The primary federal statutes that apply to the Company's
activities are the Clean Air Act, the Clean Water Act and the Resource
Conservation and Recovery Act ("RCRA"). The Company is also subject to
the Superfund Amendments and Reauthorization Act of 1986, which
imposes certain reporting requirements as to emissions of toxic
substances into the air, land and water. The Company makes capital
investments and expenditures to comply with environmental laws and
regulations, to ensure employee safety and to carry out its announced
environmental stewardship principles. To date, such expenditures have
not had a significant adverse effect on the financial condition of the
Company or its results of operations. The Company's capital
expenditures for environmental control projects incurred for 1999 were
approximately $1,200,000 and approximately $3,000,000 has been
budgeted for 2000.

ENVIRONMENTAL REMEDIATION AND PROCEEDINGS: Along with numerous other
potentially responsible parties ("PRPs"), the Company is currently
involved with waste disposal site clean-up activities imposed by the
federal Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA") or state equivalents at approximately 18
sites. In general, under CERCLA, the Company and each other PRP which
actually contributes hazardous substances to a superfund site are
jointly and severally liable for the costs associated with cleaning up
the site. Customarily, the PRPs will work with the EPA to agree and
implement a plan for site remediation.

Based on an analysis of the Company's experience with such
environmental proceedings, the Company's estimated share of all
hazardous materials deposited on the 18 sites referred to in the
preceding paragraph, and the Company's estimate of the contribution to
be made by other PRPs which the Company believes have the financial
ability to pay their shares, the Company has accrued its best estimate
of the Company's probable future costs relating to such known sites.

Three manufacturing facility properties owned by the Company in
Australia and New Jersey have been identified as subject to
environmental impacts. The Company has accrued for estimated probable
future costs relating to these properties.

A legal action commenced in August, 1989 in the District Court in
Zwolle, Netherlands, by the Netherlands government against a former
subsidiary of the Company remains pending. Netherlands authorities are
seeking monetary damages to cover the cost of investigation and
planned clean-up of soil and groundwater contamination, allegedly
resulting from the discharge of wastewater and chemicals during a
period ended in 1981, when the subsidiary operated a plant on the
site. Damages claimed are approximately $5,000,000 although the
parties are in discussions to reach a final settlement which could
reduce the amount. The former subsidiary, now owned by Henkel-Ecolab,
has denied liability and believes it complied with applicable
Netherlands law. The Company has agreed to indemnify Henkel-Ecolab
as to any liability associated with this matter. Accordingly, an
accrual has been recorded, reflecting management's best estimate of
probable future costs.


- 11 -
During 1999, the Company's net expenditures for contamination
remediation were approximately $3,100,000. The accrual at the end of
1999 for probable future remediation expenditures was approximately
$8,800,000. The Company reviews its exposure for contamination
remediation costs periodically and its accruals are adjusted as
considered appropriate. In establishing accruals, potential insurance
reimbursements are not included. While the final resolution of these
issues could result in costs below or above current accruals and,
therefore, have an impact on the Company's consolidated financial
results in a future reporting period, the Company believes the
ultimate resolution of these matters will not have a significant
effect on the Company's consolidated financial position, results of
operations or liquidity.

In addition, the Company has retained responsibility for certain sites
where the Company's former ChemLawn business is a PRP. Currently there
are eight such locations and, at each, ChemLawn is a de minimis party.
Anticipated costs currently accrued for these matters were included in
the Company's loss from its discontinued ChemLawn operations in 1991.
The accrual remaining reflects management's best estimate of probable
future costs.

NUMBER OF EMPLOYEES: The Company currently has approximately 12,900 employees
worldwide.

ITEM 1(d) FINANCIAL INFORMATION ABOUT GEOGRAPHIC AREAS

The financial information about geographic areas appearing under the heading
"Operating Segments" in Note 15, located on pages 54 and 55 of the Annual
Report, is incorporated herein by reference.

EXECUTIVE OFFICERS OF THE COMPANY

The persons listed in the following table are the current executive officers of
the Company. Officers are elected annually. There is no family relationship
among any of the directors or executive officers, and none of such persons has
been involved during the past five years in any legal proceedings described in
applicable Securities and Exchange Commission regulations.

<TABLE>

Positions Held
Name Age Office Since Jan. 1, 1995
- ---- --- ------ ------------------
<S> <C> <C> <C>
A. L. Schuman 65 Chairman of the Board, President Jan. 2000 - Present
and Chief Executive Officer

President and Chief Mar. 1995 - Dec. 1999
Executive Officer

President and Chief Jan. 1995 - Feb. 1995
Operating Officer

L. T. Bell 52 Vice President-Law Jan. 1998 - Present
and General Counsel


- 12 -
L. T. Bell (con't.)                      Vice President, Assistant                   Jan. 1997 - Dec. 1997
General Counsel and
Assistant Secretary

Associate General Counsel Jul. 1995 - Dec. 1996
and Assistant Secretary

Associate General Counsel Jan. 1995 - Jun. 1995

P. D'Almada 52 Senior Vice President - Jan. 1999 - Present
Institutional North America

Senior Vice President - Mar. 1996 - Dec. 1998
Global Accounts

Vice President - May 1995 - Feb. 1996
Institutional Corporate
Accounts and Distributor Sales

Vice President - Jan. 1995 - Apr. 1995
Institutional National
Accounts and Distributor Sales

S. L. Fritze 45 Vice President and Controller Jul. 1999 - Present

Vice President and Mar. 1995 - Jun. 1999
Treasurer

Institutional Vice Jan. 1995 - Feb. 1995
President, Planning
and Control

A. E. Henningsen, Jr. 53 Senior Vice President and Jul. 1999 - Present
Chief Planning Officer

Senior Vice President Mar. 1996 - Jun. 1999
and Controller

Vice President and Jan. 1995 - Feb. 1996
Controller

R. L. Marcantonio 50 Executive Vice President - Jan. 1999 - Present
Industrial Group

Senior Vice President- Mar. 1997 - Dec. 1998
Industrial


- 13 -
L. W. Matthews, III              54      Executive Vice President and                Jul. 1999 - Present
Chief Financial Officer

J. L. McCarty 62 Senior Executive Vice Jan. 1999 - Present
President - Institutional Group

Senior Vice President- Jan. 1995 - Dec. 1998
Institutional North America

M. Nisita 59 Senior Vice President- Jan. 1995 - Present
Global Operations


M. J. Schumacher 43 Vice President and May 1999 - Present
Chief Technical Officer

Vice President - Marketing and May 1998 - Apr. 1999
New Business Development

Vice President - Marketing Jan. 1997 - Apr.1998

Institutional Vice President, Jan. 1995 - Dec. 1996
Research & Development

J. P. Spooner 53 Executive Vice President - Jan. 1999 - Present
International Group

Senior Vice President- Jun. 1996 - Dec. 1998
International

Senior Vice President - Jan. 1995 - May 1996
Industrial
</TABLE>

Mr. Matthews joined the company in his current position in July 1999. Prior to
joining the Company, Mr. Matthews was employed by Union Pacific for 21 years.
For the most recent nine years, he served as Executive Vice President and Chief
Financial Officer of Union Pacific. He also served as a member of Union
Pacific's Board of Directors.

Mr. Marcantonio joined the Company as Senior Vice President-Industrial in March
1997. Prior to joining the Company, Mr. Marcantonio was employed by subsidiaries
of United Biscuits (Holdings) Plc. for 20 years, holding various positions in
sales, marketing and general management including, most recently, Senior Vice
President - Cookies and Crackers of the Keebler Company.


- 14 -
ITEM 2.  PROPERTIES

The Company's manufacturing facilities produce chemical products or equipment
for all the Company's businesses, although the Pest Elimination Division and the
GCS business purchase most of their products and equipment from outside
suppliers. The Company's chemical production process consists primarily of
blending and packaging powders and liquids and casting solids. The Company's
equipment manufacturing operations consist primarily of producing chemical
product dispensers and ejectors and other mechanical equipment (South Beloit,
Illinois), dishwasher racks and related sundries (Elk Grove Village, Illinois
and Shika, Japan) and dishwashing machines, a portion of which is sold to third
party dishwashing machine distributors (Barbourville, Kentucky). The Company's
philosophy is to manufacture products wherever an economic, process or quality
assurance advantage exists or where proprietary manufacturing techniques dictate
internal production processes. Currently, most products sold by the Company are
manufactured at Company facilities.

The following chart profiles the Company's manufacturing facilities which are
approximately 50,000 square feet or larger in size.

In general, manufacturing facilities located in the United States serve the
"United States Cleaning and Sanitizing" segment and facilities located outside
of the United States serve the "International Cleaning and Sanitizing" segment.
However, certain of the United States facilities do manufacture products for
export and which are used by the International segment. The facilities having
export involvement are marked with an asterisk(*). The Barbourville, Kentucky
manufacturing facility is operated by the Jackson MSC unit which is reported
herein as a part of the "United States Other Services" segment.

ECOLAB OPERATIONS PLANT PROFILES

<TABLE>
<CAPTION>
SIZE OWNED/
LOCATION (SQ. FT.) TYPES OF PRODUCTS LEASED
- -------- --------- ----------------- ------
<S> <C> <C> <C>
UNITED STATES
*Joliet, IL 610,000 Solids, Liquids, Powders Owned
*Woodbridge, NJ 248,000 Solids, Liquids Owned
*Garland, TX 239,000 Solids, Liquids Owned
*Greensboro, NC 193,000 Liquids, Powders Owned
*Hebron, OH 192,000 Liquids Owned
San Jose, CA 175,000 Liquids Owned
*South Beloit, IL 155,000 Equipment Owned
*McDonough, GA 141,000 Solids, Liquids Owned
Eagan, MN (pilot plant) 133,000 Solids, Liquids, Emulsions, Powders Owned
City of Industry, CA 125,000 Liquids Owned
*Barbourville, KY 109,000 Equipment Owned
*Huntington, IN 90,000 Liquids, Powders Owned
*Elk Grove Village, IL 66,000 Equipment Leased


- 15 -
INTERNATIONAL
Santa Cruz, BRAZIL 142,000 Liquids, Powders Owned
Melbourne, AUSTRALIA 130,000 Liquids, Powders Owned
Johannesburg, SOUTH AFRICA 100,000 Liquids, Powders Owned
Botany, AUSTRALIA 97,000 Liquids, Powders Owned
Toronto, CANADA 88,000 Liquids Leased
Shika, JAPAN 60,000 Liquids, Powders Owned
Hamilton, NEW ZEALAND 58,000 Solids, Liquids, Powders Owned
Sydney, AUSTRALIA 51,000 Liquids, Powders Leased
Noda, JAPAN 49,000 Liquids, Powders Owned
</TABLE>

Additional smaller United States manufacturing facilities owned by the Company
are located in Tucson, Arizona, North Kansas City, Missouri, Grand Forks, North
Dakota and Memphis, Tennessee. A new U.S. manufacturing facility located in
Martinsburgh, West Virginia is expected to commence operations during 2000. The
Company also owns or leases smaller international manufacturing facilities in
Argentina, Australia, Chile, Columbia, Costa Rica, Fiji, Indonesia, Japan,
Kenya, Mexico, Papua New Guinea, People's Republic of China, Philippines, Puerto
Rico, Singapore, South Korea, Tanzania and Thailand.

The Company believes its manufacturing facilities are in good condition and are
adequate to meet existing production needs.

Most of the Company's manufacturing plants also serve as distribution centers.
In addition, around the world, the Company operates distribution centers, all of
which are leased, and utilizes various public warehouses to facilitate the
distribution of its products and services. In the United States, the Company's
sales associates are located in approximately 150 leased offices. Additional
sales offices are located internationally.

The Company's corporate headquarters is comprised of three multi-storied
buildings located adjacent to one another in downtown St. Paul, Minnesota. The
main 19-story building was constructed to the Company's specifications and is
leased through 2003. Thereafter, it is subject to multiple renewals at the
Company's option. The second building is also subject to a long-term lease by
the Company and the third building is owned. The corporate headquarters includes
a state-of-the-art training center. The Company also owns a computer center in
St. Paul and a research facility located in a suburb of St. Paul.

ITEM 3. LEGAL PROCEEDINGS

Proceedings arising under laws relating to protection of the environment are
discussed at Item 1(c) above, under the heading "Environmental Considerations."


- 16 -
DISTRIBUTOR LITIGATION: As previously reported in the Company's Form 10-K for
the year ended December 31, 1997, and in certain previous quarterly reports on
Form 10-Q, ten distributors of the Company's Airkem Janitorial product line (a
unit of the Professional Products Division) brought action in 1995 against the
Company in Hennepin County District Court, Minnesota alleging 16 causes of
action including anti-trust violations, breach of contract and breach of the
Minnesota Franchise Act.

The Company has reached settlement with eight of the distributors on a basis
which were not adversely material to the Company and paid $29,000 following a
trial on one other case. The remaining distributor case is pending and not
currently scheduled for trial. The Company has accrued best estimates of
probable future costs.

LUBRICANT LITIGATION: Diversey Lever, Inc. filed suit against the Company in
Federal District Court, Eastern District of Michigan, Southern Division on July
1, 1996. The suit alleges that two Company products, which lubricate plastic
beverage bottles, infringe two patents held by Diversey Lever.

As previously reported in the Company's Form 10-Q for the quarter ended
September 30, 1999, the Company had appealed the District Courts 1998 finding
that the Company had infringed the two patents held by Diversey Lever. On
September 10, 1999, the Federal Circuit Court of Appeals ruled against the
Company on its appeal. On October 21, 1999, the Federal Circuit Court of Appeals
ruled against the Company on its requests for rehearing and rehearing EN BANC.

The case will now be remanded back to the District Court for a trial on past
damages. The Company continues to believe Diversey Lever's damage request will
be in the range of $3,000,000 to $5,000,000. Diversey Lever is also requesting
that damages be enhanced up to three times if willful infringement is found. The
Company has accrued best estimates of probable future costs.

OTHER LITIGATION: The Company and certain of its subsidiaries are defendants in
various other lawsuits and claims arising out of the normal course of business.
Accruals have been established reflecting management's best estimate of probable
future costs relating to such matters and, in the opinion of management, the
ultimate resolution of this litigation will not have a material adverse effect
on the Company's results of operations, financial position or liquidity.
However, the estimated effects of the future results of existing litigation is
subject to certain estimates, assumptions and uncertainties and should be
considered in light of the discussion of Forward-Looking Statements and Risk
Factors found under Part I at the beginning of this Report.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of the security holders, through the
solicitation of proxies, or otherwise, during the fourth quarter of 1999.

PART II

ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

All per share and number of share data in Item 5, including dividends per share
in Item 5(c), reflect a two-for-one stock split paid January 15, 1998 in the
form of a 100% stock dividend to shareholders of record on December 26, 1997.


- 17 -
ITEM 5(a) MARKET INFORMATION

The Company's Common Stock is listed on the New York Stock Exchange and the
Pacific Exchange, Inc. under the symbol "ECL." The Common Stock is also traded
on an unlisted basis on certain other United States exchanges. The high and low
sales prices of the Company's Common Stock on the consolidated transaction
reporting system during 1999 and 1998 were as follows:

<TABLE>
<CAPTION>
1999 1998
---- ----
Quarter High Low High Low
- ------- ---- --- ---- ----

<S> <C> <C> <C> <C>
First $41-1/4 $34-5/8 $29-5/8 $26-5/8

Second $44-7/16 $34-11/16 $33 $28-3/16

Third $43-7/8 $31-11/16 $33-29/256 $27-1/8

Fourth $39-1/4 $32-1/2 $38 $26-1/8

</TABLE>


The closing stock price on March 1, 2000 was $28-7/8.

ITEM 5(b) HOLDERS

On March 1, 2000, the Company had 5,559 holders of Common Stock of record.

ITEM 5(c) DIVIDENDS

Quarterly cash dividends customarily are paid on the 15th of January, April,
July and October. Dividends of $0.095 per share were declared in February, May
and August, 1998. Dividends of $0.105 per share were declared in December, 1998
and February, May and August, 1999. A dividend of $0.12 per share was declared
in December 1999.

ITEM 6. SELECTED FINANCIAL DATA

The comparative data for the years ended December 31, 1999, 1998, 1997, 1996 and
1995 inclusive, which are set forth under the heading entitled "Summary
Operating and Financial Data" located on pages 58 and 59 of the Annual Report,
are incorporated herein by reference.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The material appearing under the heading entitled "Financial Discussion,"
located on pages 32 through 41 of the Annual Report, is incorporated herein by
reference.


- 18 -
ITEM 7(a) QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company enters into contractual arrangements (derivatives) in the ordinary
course of business to manage foreign currency exposure and interest rate risks.
The Company does not enter into derivatives for trading purposes. The Company's
use of derivatives is subject to internal policies which provide guidelines for
control, counterparty risk and ongoing monitoring and reporting.

The Company enters into forward contracts, swaps, and foreign currency options
to hedge certain intercompany financing arrangements, and to hedge against the
effect of exchange rate fluctuations on transactions related to cash flows
denominated in currencies other than U.S. dollars.

The Company manages interest expense using a mix of fixed and floating rate
debt. To help manage borrowing costs, the Company may enter into interest rate
swaps. Under these arrangements, the Company agrees to exchange, at specified
intervals, the difference between fixed and floating interest amounts calculated
by reference to an agreed-upon notional principal amount.

Based on a sensitivity analysis (assuming a 10% adverse change in market rates)
of the Company's foreign exchange and interest rate derivatives and other
financial instruments outstanding at December 31, 1999, changes in exchange
rates or interest rates would not materially affect the Company's results of
operations, financial position or liquidity.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements and material which are an integral part of the
financial statements listed under Item 14 I(1) below and located on pages 42
through 57 of the Annual Report, are filed as a part of this Report and are
incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

The biographical material regarding directors and the paragraph relating to
understandings concerning the election of directors between Henkel KGaA and the
Company located in the Proxy Statement appearing under the heading entitled
"Election of Directors," is incorporated herein by reference. Information
regarding executive officers is presented under the heading "Executive Officers
of the Company" in Part I of this Report on pages 12 through 14.

ITEM 11. EXECUTIVE COMPENSATION

The material appearing under the heading entitled "Executive Compensation"
located in the Proxy Statement is incorporated herein by reference. However,
pursuant to Securities and Exchange Commission Regulation S-K, Item 402(a)(9),
the material appearing under the headings entitled "Report of the Compensation
Committee on Executive Compensation" and "Comparison of Five Year Cumulative
Total Return" located in the Proxy Statement is not incorporated herein.


- 19 -
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The material appearing under the headings entitled "Security Ownership of
Certain Beneficial Owners" and "Security Ownership of Management" located in the
Proxy Statement is incorporated herein by reference. The holdings of Henkel KGaA
and HC Investments, Inc. are subject to certain limitations with respect to the
Company's voting securities as more fully described in the Company's Proxy
Statement under the heading "Stockholder Agreement," which is incorporated
herein by reference.

A total of 800,699 shares of Common Stock held by the Company's current
directors and executive officers, some of whom may be affiliates of the Company,
have been excluded from the computation of market value of the Company's Common
Stock on the cover page of this Report. This total represents that portion of
the shares reported as beneficially owned by directors and executive officers of
the Company as of March 1, 2000, which are actually issued and outstanding.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The material appearing under the headings entitled "Certain Transactions,"
"Stockholder Agreement" and "Company Transactions" located in the Proxy
Statement and the biographical material located in the Proxy Statement appearing
under the heading entitled "Election of Directors" pertaining to Messrs. Roland
Schulz, Hugo Uyterhoeven and Albrecht Woeste, is incorporated herein by
reference.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS ON FORM 8-K

I(1). The following financial statements of the Company, included in the
Annual Report, are incorporated in Item 8 hereof.

(i) Consolidated Statement of Income for the years ended
December 31, 1999, 1998 and 1997, Annual Report page
42.

(ii) Consolidated Balance Sheet at December 31, 1999, 1998
and 1997, Annual Report page 43.

(iii) Consolidated Statement of Cash Flows for the years
ended December 31, 1999, 1998 and 1997, Annual Report
page 44.

(iv) Consolidated Statement of Comprehensive Income and
Shareholders' Equity for the years ended December 31,
1999, 1998 and 1997, Annual Report page 45.

(v) Notes to Consolidated Financial Statements, Annual
Report pages 46 through 56.

(vi) Report of Independent Accountants, Annual Report page
57.

I(2). The following financial statement schedule to the Company's
financial statements listed in Item 14 I(1) for the years ended
December 31, 1999, 1998 and 1997 located on page


- 20 -
33 hereof, and the Report of Independent Accountants on Financial
Statement Schedule at page 31 hereof, are filed as part of this
Report.

(i) Schedule II -- Valuation and Qualifying Accounts for
the years ended December 31, 1999, 1998 and 1997.

All other schedules, for which provision is made in the
applicable regulations of the Securities and Exchange
Commission, are not required under the related instructions or
are inapplicable and therefore have been omitted. All
significant majority-owned subsidiaries are included in the
filed consolidated financial statements.

I(3). The following financial statements of the Henkel-Ecolab Joint
Venture located on pages 34 to 58 hereof, are filed as part of this
Report.

(i) (a) Report of Independent Accountants -
PricewaterhouseCoopers Gesellschaft mit
beschrankter Haftung
Wirtschaftsprufungsgesellschaft.

(b) Report of Independent Accountants - KPMG
Deutsche Treuhand-Gesellschaft
Aktiengesellschaft
Wirtschaftsprufungsgesellschaft.

(ii) Combined Statements of Income and Comprehensive
Income for the years ended November 30, 1999, 1998
and 1997.

(iii) Combined Balance Sheets at November 30, 1999 and
1998.

(iv) Combined Statements of Cash Flows for the years ended
November 30, 1999, 1998 and 1997.

(v) Combined Statements of Equity for the years ended
November 30, 1999, 1998 and 1997.

(vi) Notes to the Combined Financial Statements.

I(4). The following financial statement schedule to the Henkel-Ecolab
Joint Venture financial statements listed in Item 14 I(3) for the
years ended November 30, 1999, 1998 and 1997 located on page 59
hereof, and the Report of the Independent Accountants on page 34
hereof are filed as part of this Report.

(i) Schedule -- Valuation and Qualifying Accounts and
Reserves for the years ended November 30, 1999, 1998
and 1997.

All other schedules, for which provision is made in the
applicable regulations of the Securities and Exchange
Commission, are not required under the related instructions or
are inapplicable and therefore have been omitted. All entities
of the Henkel-Ecolab Joint Venture are included in the filed
combined financial statements.


- 21 -
II.         The following documents are filed as exhibits to this Report. The
Company will, upon request and payment of a fee not exceeding the
rate at which copies are available from the Securities and Exchange
Commission, furnish copies of any of the following exhibits to
stockholders. The Financial Data Schedule (Exhibit 27) is filed as
an Exhibit to this Report but, pursuant to paragraph (c)(1)(iv) of
Item 601 of Regulation S-K, shall not be deemed filed for purposes
of Section 11 of the Securities Act of 1933 or Section 18 of the
Securities Exchange Act of 1934.

(3)A. Restated Certificate of Incorporation - Incorporated
by reference to Exhibit (3) to the Company's Current
Report on Form 8-K dated October 22, 1997.

B. By-Laws, as amended through February 18, 1999 -
Incorporated by reference to Exhibit (3)B of the
Company's Form 10-K Annual Report for the year ended
December 31, 1998.

(4)A. Common Stock - see Exhibits (3)A and (3)B.

B. Form of Common Stock Certificate - Incorporated by
reference to Exhibit (4)B of the Company's Form 10-K
Annual Report for the year ended December 31, 1995.

C. Rights Agreement dated as of February 24, 1996 -
Incorporated by reference to Exhibit (4) of the
Company's Current Report on Form 8-K dated February
24, 1996.

D. Note Agreement dated as of October 1, 1991 relating
to $100,000,000 9.68% Senior Notes Due October 1,
2001 between the Company and the insurance companies
named therein Incorporated by reference to Exhibit
(4)F of the Company's Form 10-K Annual Report for the
year ended December 31, 1991.

E. (i) Multicurrency Credit Agreement ("Credit
Agreement") dated as of September 29, 1993,
as Amended and Restated as of October 17,
1997, among the Company, the financial
institutions party thereto, Citibank, N.A.,
as Agent, Citibank International Plc, as
Euro-Agent and Morgan Guaranty Trust Company
of New York as Co-Agent - Incorporated by
reference to Exhibit (4)A of the Company's
Form 10-Q for the quarter ended September
30, 1997.

(ii) Australian Dollar Local Currency Addendum to
the Credit Agreement - Incorporated by
reference to Exhibit (4)B of the Company's
Form 10-Q for the quarter ended September
30, 1997.


- 22 -
(iii)    Amendment No. 1 dated as of June 23, 1998 to
Multicurrency Credit Agreement dated as of
September 29, 1993, as Amended and Restated
as of October 17, 1997, and to Local
Currency Addendum dated as of October 17,
1997, with respect to the Multicurrency
Credit Agreement, among Ecolab Inc., the
Banks parties thereto, Citibank, N.A., as
Agent for the Banks, Citibank International
Plc, as Euro-Agent for the Banks and Morgan
Guaranty Trust Company of New York as
Co-Agent; and with respect to the Local
Currency Addendum among Ecolab Inc., Ecolab
PTY Limited, the Local Currency Banks party
thereto, Citibank, N.A., as Agent and
Citisecurities Limited, as Local Currency
Agent - Incorporated by reference to Exhibit
(4)A of the Company's Form 10-Q for the
quarter ended June 30, 1998.

(iv) Australian Dollar Local Currency Addendum
dated as of June 23, 1998 among Ecolab
Finance PTY Limited, Ecolab Inc., Citibank,
N.A., the Local Currency Agent named therein
and the Local Currency Banks party thereto -
Incorporated by reference to Exhibit (4)B of
the Company's Form 10-Q for the quarter
ended June 30, 1998.

F. Indenture dated as of November 1, 1996 as amended and
supplemented, between the Company and the First
National Bank of Chicago as Trustee - Incorporated by
reference to Exhibit 4.1 of the Company's Amendment
No. 1 to Form S-3 filed November 15, 1996.

G. Form of Underwriting Agreement - Incorporated by
reference to Exhibit 1 of the Company's Amendment No.
1 to Form S-3 filed November 15, 1996.

Copies of other constituent instruments defining the rights of
holders of long-term debt of the Company and its subsidiaries
are not filed herewith, pursuant to Section (b)(4)(iii) of
Item 601 of Regulation S-K, because the aggregate amount of
securities authorized under each of such instruments is less
than 10% of the total assets of the Company and its
subsidiaries on a consolidated basis. The Company hereby
agrees that it will, upon request by the Securities and
Exchange Commission, furnish to the Commission a copy of each
such instrument.

(9) Amended and Restated Stockholder's Agreement - See
Exhibit (10) P(v) hereof.

(10)A. Ecolab Inc. 1977 Stock Incentive Plan, as amended
through November 1, 1996 - Incorporated by reference
to Exhibit (10)A of the Company's Form 10-K Annual
Report for the year ended December 31, 1997.


- 23 -
B.       Ecolab Inc. 1993 Stock Incentive Plan - Incorporated
by reference to Exhibit (10)B of the Company's Form
10-K Annual Report for the year ended December 31,
1992.

C. Amended and Restated Ecolab Inc. 1997 Stock Incentive
Plan - Incorporated by reference to Exhibit (10)C of
the Company's Form 10-K Annual Report for the year
ended December 31, 1998.

(i) Non-Statutory Stock Option Agreement between
the Company and Allan L. Schuman with
respect to premium-priced option grant
effective February 20, 1998 under the Ecolab
Inc. 1997 Stock Incentive Plan. Similar
option grants were made to each of the named
executive officers of the Company covering
varying, but smaller number of shares -
Incorporated by reference to Exhibit (10) of
the Company's Form 10-Q for the quarter
ended June 30, 1998.

D. 1988 Non-Employee Director Stock Option Plan as
amended through February 23, 1991 - Incorporated by
reference to Exhibit (10)D of the Company's Form 10-K
Annual Report for the year ended December 31, 1990.

E. (i) 1995 Non-Employee Director Stock Option Plan
- Incorporated by reference to Exhibit (10)D
of the Company's Form 10-K Annual Report for
the year ended December 31, 1994.

(ii) Amendment No. 1 to 1995 Non-Employee
Director Stock Option Plan effective
February 25, 2000.

F. Ecolab Inc. 1997 Non-Employee Director Deferred
Compensation Plan - Incorporated by reference to
Exhibit (10)F of the Company's Form 10-K for the year
ended December 31, 1996.

G. Form of Director Indemnification Agreement dated
August 11, 1989. Substantially identical agreements
are in effect as to each director of the Company -
Incorporated by reference to Exhibit (19)A of the
Company's Form 10-Q for the quarter ended September
30, 1989.

H. (i) Ecolab Executive Death Benefits Plan, as
amended and restated effective March 1, 1994
- Incorporated by reference to Exhibit (10)J
of the Company's Form 10-K Annual Report for
the year ended December 31, 1994. See also
Exhibit (10)N hereof.


- 24 -
(ii)     Amendment No. 1 to Ecolab Executive Death
Benefits Plan - Incorporated by reference
to Exhibit (10)H(ii) of the Company's Form
10-K Annual Report for the year ended
December 31, 1998.

(iii) Second Declaration of Amendment to Ecolab
Executive Death Benefits Plan, effective
March 1, 1998 - Incorporated by reference to
Exhibit (10)H(iii) of the Company's Form
10-K Annual Report for the year ended
December 31, 1998.

I. Ecolab Executive Long-Term Disability Plan, as
amended and restated effective January 1, 1994 -
Incorporated by reference to Exhibit (10)K of the
Company's 10-K Annual Report for the year ended
December 31, 1994. See also Exhibit (10)N hereof.

J. Ecolab Executive Financial Counseling Plan -
Incorporated by reference to Exhibit (10)K of the
Company's Form 10-K Annual Report for the year ended
December 31, 1992.

K. (i) Ecolab Supplemental Executive Retirement
Plan, as amended and restated effective July
1, 1994 - Incorporated by reference to
Exhibit (10)M(i) of the Company's 10-K
Annual Report for the year ended December
31, 1994. See also Exhibit (10)N hereof.

(ii) First Declaration of Amendment to Ecolab
Supplemental Executive Retirement Plan
effective as of July 1, 1994 - Incorporated
by reference to Exhibit (10)M(ii) of the
Company's 10-K Annual Report for the year
ended December 31, 1994.

(iii) Second Declaration of Amendment to Ecolab
Supplemental Executive Retirement Plan
effective as of July 1, 1994 - Incorporated
by reference to Exhibit (10)M(iii) of the
Company's Form 10-K Annual Report for the
year ended December 31, 1995.

(iv) Third Declaration of Amendment to Ecolab
Supplemental Executive Retirement Plan,
effective March 1, 1998 - Incorporated by
reference to Exhibit (10)K(iv) of the
Company's Form 10-K Annual Report for the
year ended December 31, 1998.

L. (i) Ecolab Mirror Savings Plan, as amended and
restated effective September 1, 1994 -
Incorporated by reference to Exhibit (10)N
of the Company's 10-K Annual Report for the
year ended December 31, 1994. See also
Exhibit (10)N hereof.


- 25 -
(ii)     First Declaration of Amendment to Ecolab
Mirror Savings Plan effective as of January
1, 1995 - Incorporated by reference to
Exhibit (10)N(ii) of the Company's Form 10-K
Annual Report for the year ended December
31, 1995.

(iii) Second Declaration of Amendment to Ecolab
Mirror Savings Plan effective January 1,
1997 - Incorporated by reference to Exhibit
(10)O(iii) of the Company's Form 10-K Annual
Report for the year ended December 31, 1996.

(iv) Third Declaration of Amendment to Ecolab
Mirror Savings Plan effective November 13,
1997 - Incorporated by reference to Exhibit
(10)L(iv) of the Company's Form 10-K Annual
Report for the year ended December 31, 1998.

(v) Fourth Declaration of Amendment to Ecolab
Mirror Savings Plan, effective September 1,
1998 - Incorporated by reference to Exhibit
(10)L(v) of the Company's Form 10-K Annual
Report for the year ended December 31, 1998.

M. (i) Ecolab Mirror Pension Plan effective July 1,
1994 - Incorporated by reference to Exhibit
(10)O(i) of the Company's Annual Report on
Form 10-K for the year ended December 31,
1994. See also Exhibit (10)N hereof.

(ii) First Declaration of Amendment to Ecolab
Mirror Pension Plan effective as of July 1,
1994 - Incorporated by reference to Exhibit
(10)O(ii) of the Company's Annual Report on
Form 10-K for the year ended December 31,
1994.

(iii) Second Declaration to Amendment to Ecolab
Mirror Pension Plan effective as of July 1,
1994 - Incorporated by reference to Exhibit
(10)O(iii) of the Company's Form 10-K Annual
Report for the year ended December 31, 1995.

(iv) Third Declaration of Amendment to Ecolab
Mirror Pension Plan, effective March 1, 1998
- Incorporated by reference to Exhibit
(10)M(iv) of the Company's Form 10-K Annual
Report for the year ended December 31, 1998.

N. (i) Ecolab Inc. Administrative Document for
Non-Qualified Benefit Plans - Incorporated
by reference to Exhibit (10)N of the
Company's 10-K Annual Report for the year
ended December 31, 1994.


- 26 -
(ii)     Amendment No. 1 to the Ecolab Inc.
Administrative Document for Non-Qualified
Benefit Plans effective July 1, 1997 -
Incorporated by reference to Exhibit
(10)N(ii) of the Company's Form 10-K Annual
Report for the year ended December 31, 1998.

(iii) First Declaration of Amendment to the Ecolab
Inc. Administrative Document for
Non-Qualified Benefit Plans effective
November 13, 1997 - Incorporated by
reference to Exhibit (10)N(iii) of the
Company's Form 10-K Annual Report for the
year ended December 31, 1998.

(iv) Third Declaration of Amendment to the Ecolab
Inc. Administrative Document for
Non-Qualified Benefit Plans effective July
1, 1999.

O. 1999 Ecolab Inc. Management Performance Incentive
Plan - Incorporated by reference to Exhibit (10)O of
the Company's Form 10-K Annual Report for the year
ended December 31, 1998.

P. (i) Amended and Restated Umbrella Agreement
between Henkel KGaA and Ecolab Inc. dated
June 26, 1991 - Incorporated by reference to
Exhibit 13 of HC Investments, Inc.'s and
Henkel KGaA's Amendment No. 4 to Schedule
13D dated July 16, 1991.

(ii) Amended and Restated Joint Venture Agreement
between Henkel KGaA and Ecolab Inc. dated
June 26, 1991 - Incorporated by reference to
Exhibit 14 of HC Investments, Inc.'s and
Henkel KGaA's Amendment No. 4 to Schedule
13D dated July 16, 1991.

(iii) Amendment to the Amended and Restated Joint
Venture Agreement between Henkel KGaA and
Ecolab Inc. dated June 13, 1994 -
Incorporated by reference to Exhibit (10) P
(iii) of the Company's Form 10-K Annual
Report for the year ended December 31, 1998.

(iv) Amended and Restated ROW Purchase Agreement
between Henkel KGaA and Ecolab Inc. dated
June 26, 1991 - Incorporated by reference to
Exhibit (7) of the Company's Current Report
on Form 8-K dated July 11, 1991.

(v) Amended and Restated Stockholder's Agreement
between Henkel KGaA and Ecolab Inc. dated
June 26, 1991 - Incorporated by reference to
Exhibit 15 of HC Investments, Inc.'s and
Henkel KGaA's Amendment No. 4 to Schedule
13D dated July 16, 1991.


- 27 -
Q.   Description of Ecolab Management Incentive Plan.

(13) Those portions of the Company's Annual Report to
Stockholders for the year ended December 31, 1999
which are incorporated by reference into Parts I, II
and IV hereof.

(21) List of Subsidiaries as of March 1, 2000.

(23)A. Consent of PricewaterhouseCoopers LLP to
Incorporation by Reference at page 32 hereof is filed
as a part hereof.

B. Consent of PricewaterhouseCoopers Gesellschaft mit
beschrankter Haftung Wirschaftsprufungsgesellschaft.

C. Consent of KPMG Deutsche Treuhand-Gesellschaft
Aktiengesellschaft Wirtschaftsprufungsgesellschaft.

(24) Powers of Attorney.

(27) Financial Data Schedule for year ended December 31,
1999.


EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS

Included in the preceding list of exhibits are the following management
contracts or compensatory plans or arrangements:

Exhibit No. Description
- ----------- -----------

(10)A. Ecolab Inc. 1977 Stock Incentive Plan.

(10)B. Ecolab Inc. 1993 Stock Incentive Plan.

(10)C. Amended and Restated Ecolab Inc. 1997 Stock Incentive Plan.

(10)D. 1988 Non-Employee Director Stock Option Plan.

(10)E. 1995 Non-Employee Director Stock Option Plan.

(10)F. Ecolab Inc. 1997 Non-Employee Director Deferred Compensation Plan.

(10)H. Ecolab Executive Death Benefits Plan.

(10)I. Ecolab Executive Long-Term Disability Plan.

(10)J. Ecolab Executive Financial Counseling Plan.

(10)K. Ecolab Supplemental Executive Retirement Plan.


- 28 -
(10)L.       Ecolab Mirror Savings Plan.

(10)M. Ecolab Mirror Pension Plan.

(10)N. The Ecolab Inc. Administrative Document for Non-Qualified Benefit
Plans.

(10)O. Ecolab Management Performance Incentive Plan.

(10)Q. Ecolab Management Incentive Plan.

III. Reports on Form 8-K:

No reports on Form 8-K were filed during the quarter ended December
31, 1999.


- 29 -
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Ecolab Inc. has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized, on the 13th day of March, 2000.

ECOLAB INC.
(Registrant)

By /s/ Allan L. Schuman
--------------------------------
Allan L. Schuman, Chairman of the Board,
President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of Ecolab Inc. and in
the capacities indicated, on the 13th day of March, 2000.

/s/ Allan L. Schuman Chairman of the Board,
- ------------------------------ President and Chief Executive Officer
Allan L. Schuman (Principal Executive Officer
and Director)


/s/ L. White Matthews, III Executive Vice President and
- ------------------------------ Chief Financial Officer
L. White Matthews, III (Principal Financial Officer
and Director)


/s/ Steven L. Fritze Vice President and Controller
- ------------------------------ (Principal Accounting Officer)
Steven L. Fritze

/s/ Kenneth A. Iverson Directors
- ------------------------------
Kenneth A. Iverson
as attorney-in-fact for
Les S. Biller, Ruth S. Block,
Jerry A. Grundhofer, James J. Howard,
William L. Jews, Joel W. Johnson,
Jerry W. Levin, Robert L. Lumpkins,
Reuben F. Richards, Richard L. Schall,
Roland Schulz, Hugo Uyterhoeven and
Albrecht Woeste


- 30 -
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE

To the Shareholders and Directors of Ecolab Inc.

Our audits of the consolidated financial statements referred to in our report
dated February 28, 2000 appearing in the 1999 Annual Report to Shareholders
of Ecolab Inc. (which report and consolidated financial statements are
incorporated by reference in this Annual Report on Form 10-K) also included
an audit of the financial statement schedule listed in Item 14.I(2)(i) of
this Form 10-K. In our opinion, this financial statement schedule presents
fairly, in all material respects, the information set forth therein when read
in conjunction with the related consolidated financial statements.

/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP


Saint Paul, Minnesota
February 28, 2000


- 31 -
CONSENT OF PRICEWATERHOUSECOOPERS LLP
TO INCORPORATION BY REFERENCE






We consent to the incorporation by reference in the Registration Statements
of Ecolab Inc. on Form S-8 (Registration Nos. 2-60010; 2-74944; 33-1664;
33-41828; 2-90702; 33-18202; 33-55986; 33-56101; 333-95043; 33-26241;
33-34000; 33-56151; 333-18627; 33-39228; 33-56125; 333-70835; 33-60266;
333-95041; 33-65364; 33-59431; 333-18617; 333-79449; 333-21167; 333-35519;
333-40239; 333-95037; 333-50969; and 333-62183) and Form S-3 (Registration
No. 333-14771) of our report dated February 28, 2000 relating to the
consolidated financial statements of Ecolab Inc. as of December 31, 1999,
1998 and 1997 and for the years then ended, which appears in the Annual
Report to Shareholders, which is incorporated in this Annual Report on Form
10-K. We also consent to the incorporation by reference of our report dated
February 28, 2000 relating to the financial statement schedule of Ecolab Inc.
as of December 31, 1999, 1998 and 1997 for the years then ended, which
appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP




Saint Paul, Minnesota
March 13, 2000


- 32 -
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
ECOLAB INC.
(In Thousands)

- ------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
- ------------------------------------------------------------------------------------------------------------
Additions
- ----------------------------------------------- ------------------------- ------------------------------
Balance at Charged to Charged Balance
Beginning Costs and to Other at End
Description of Period Expenses Accounts Deductions (A) of Period
- ------------------------------------------------------------------------------------------------------------

Allowance for Doubtful Accounts:


<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1999 $12,893 $14,385 $ 44 $(6,353) $20,969

Year Ended December 31, 1998 $10,878 $ 8,090 $438 $(6,513) $12,893

Year Ended December 31, 1997 $ 9,343 $ 6,644 $ 58 $(5,167) $10,878
</TABLE>




(A) Uncollectible accounts charged off, net of recovery of accounts previously
written off.


- 33 -
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders
of Henkel-Ecolab


In our opinion, the combined financial statements listed in the index appearing
under Item 14.I(3) of this Form 10-K present fairly, in all material respects,
the financial position of Henkel-Ecolab at November 30, 1999 and 1998, and the
results of its operations and its cash flows for each of the two years in the
period ended November 30, 1999 in conformity with accounting principles
generally accepted in the United States. In addition, in our opinion, the
financial statement schedule listed in the index appearing under Item 14.I(4) of
this Form 10-K presents fairly, in all material respects, the information set
forth therein when read in conjunction with the related combined financial
statements. These financial statements and financial statement schedule are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements and financial statement schedule based on
our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States, which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.


/s/Pricewaterhouse Coopers GmbH
- -------------------------------
PricewaterhouseCoopers
Gesellschaft mit beschrankter Haftung
Wirtschaftsprufungsgesellschaft
January 28, 2000


- 34 -
Independent Auditors' Report

The Board of Directors

Henkel-Ecolab Joint Venture:

We have audited the combined statements of income, equity, and cash flows of
Henkel-Ecolab Joint Venture for the year ended November 30, 1997. These
financial statements are the responsibility of the Joint Venture's
management. Our responsibility is to express an opinion on these combined
financial statements based on our audits.

We conducted our audits in accordance with German generally accepted auditing
standards which in all material respects are similar to auditing standards
generally accepted in the United States. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the results of operations and the cash
flows of the Henkel-Ecolab Joint Venture for the year ended November 30, 1997
in conformity with accounting principles generally accepted in the United
States.

Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information included
in the Financial Statement Schedule: Valuation and Qualifying Accounts and
Reserves for the year ended November 30, 1997 is presented for purposes of
additional analysis and is not a required part of the basic financial
statements. Such information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion,
is fairly stated in all material respects in relation to the basic financial
statements taken as a whole.

Dusseldorf, Germany

January 23, 1998

KPMG DEUTSCHE TREUHAND-GESELLSCHAFT
AKTIENGESELLSCHAFT
WIRTSCHAFTSPRUFUNGSGESELLSCHAFT

/s/ Stefan Haas /s/ Bernhard Momken
- --------------- -------------------
Stefan Haas Bernhard Momken
Wirtschaftsprufer Wirtschaftsprufer


- 35 -
HENKEL ECOLAB

<TABLE>
<CAPTION>

COMBINED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

Twelve Months ended Twelve Months ended Twelve Months ended
(Thousands DM) November 30, 1999 November 30, 1998 November 30, 1997
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales 1,703,218 1,596,572 1,447,443
Cost of Sales 747,702 713,535 640,396
Selling, General and Administrative Expenses 786,993 736,197 671,635
Royalties to Parents 14,959 26,568 24,372
- ------------------------------------------------------------------------------------------------------------------
Operating Income 153,564 120,272 111,040
Other Expenses / Income, net 3,783 3,759 2,065
- ------------------------------------------------------------------------------------------------------------------
Income before Income Taxes 149,781 116,513 108,975
Provision for Income Taxes 65,128 48,421 51,267
- ------------------------------------------------------------------------------------------------------------------
Net Income 84,653 68,092 57,708
------ ------ ------
Other Comprehensive Income:
Foreign Currency Translation Adjustments 7,530 (4,992) 797
Minimum Pension Liability Adjustments 1,013 (958) (392)
Income Tax (Expense) / Benefit Related to
Minimum Pension Liability Adjustments (456) 431 174
- ------------------------------------------------------------------------------------------------------------------
Other Comprehensive Income, net of Tax 8,087 (5,519) 579
- ------------------------------------------------------------------------------------------------------------------
Comprehensive Income 92,740 62,573 58,287
------ ------ ------
</TABLE>

See accompanying Notes to Combined Financial Statements


- 36 -
HENKEL ECOLAB

<TABLE>
<CAPTION>

COMBINED BALANCE SHEETS
November 30, November 30,
(Thousands DM) 1999 1998
- -------------------------------------------------------------------------------------------
Assets

<S> <C> <C>
Cash and Cash Equivalents 11,807 20,375
Accounts Receivable, net 382,734 324,140
Accounts Receivable from Related Parties 11,205 11,133
Loans to Related Parties 10,152 7,342
Inventories 203,926 196,807
Prepaid Expenses and Other Current Assets 53,746 56,519
Deferred Taxes 7,029 7,380
- -------------------------------------------------------------------------------------------
Current Assets 680,599 623,696
- -------------------------------------------------------------------------------------------
Property, Plant and Equipment, net 188,244 183,381
Intangible and Other Assets, net 129,502 110,341
Deferred Taxes 27,114 9,473
- -------------------------------------------------------------------------------------------
Total Assets 1,025,459 926,891
--------- -------
- -------------------------------------------------------------------------------------------
Liabilities and Equity

Accounts Payable 122,647 106,839
Accounts Payable to Related Parties 15,835 17,808
Accrued Liabilities 208,224 189,599
Income Taxes Payable 72,249 47,309
Deferred Taxes 887 -
Current Portion of Long Term Debt 657 657
Short Term Debt 47,430 49,066
Current Portion of Employee Benefit Obligations 9,611 9,000
- -------------------------------------------------------------------------------------------
Current Liabilities 477,540 420,278

Contingent Liabilities
- -------------------------------------------------------------------------------------------
Employee Benefit Obligations, less Current Portion 131,733 121,661
Long Term Debt, less Current Maturities 4,108 4,768
Deferred Taxes 7,195 2,747
- -------------------------------------------------------------------------------------------
Combined Equity

Contributed Capital 167,270 165,889
Retained Earnings 253,912 235,934
Other Accumulated Comprehensive Income (16,299) (24,386)
--------------- ---------------
404,883 377,437
- -------------------------------------------------------------------------------------------
Total Liabilities and Equity 1,025,459 926,891
--------- -------
</TABLE>

See accompanying Notes to Combined Financial Statements


- 37 -
HENKEL ECOLAB

<TABLE>
<CAPTION>

COMBINED STATEMENTS OF CASH FLOWS

Twelve Months ended Twelve Months ended Twelve Months ended
(Thousands DM) November, 30 1999 November, 30 1998 November, 30 1997
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET INCOME 84,653 68,092 57,708

ADJUSTMENTS TO RECONCILE NET INCOME TO CASH
PROVIDED BY OPERATING ACTIVITIES
Depreciation and Amortization 87,686 74,534 64,556
Equity in Income of Affiliated Company (571) (1,421) (406)
Provision for Doubtful Accounts and Other 4,222 9,325 6,668
Gain on Sale of Property and Equipment (1,233) (976) (996)
Deferred Income Taxes (11,955) 2,162 (3,509)

CHANGES IN OPERATING ASSETS AND LIABILITIES
(Increase) in Accounts Receivable (60,144) (6,926) (45,557)
(Increase) Decrease in Accounts Receivable from Related Parties (72) 2,081 (2,038)
(Increase) Decrease in Inventories (9,444) (11,449) 5,092
Increase in Accounts Payable and Accrued Liabilities 25,780 12,199 2,530
(Decrease) Increase in Accounts Payable to Related Parties (1,973) (14,032) 14,724
Increase (Decrease) in Income Taxes Payable 26,299 (7,291) 17,597
Decrease (Increase) in Prepaid Expenses and Other Current Assets 3,005 (16,628) (7,619)
Increase in Employee Benefit Obligations 9,946 1,418 15,802
------------- -------------- ------------
Cash Provided by Operating Activities 156,199 111,088 124,552
------------- -------------- ------------
INVESTING ACTIVITIES
Expenditures for Property and Equipment (80,659) (74,847) (72,764)
Expenditures for Intangible and Other Assets (19,626) (28,534) (4,662)
Proceeds from Investment in Affiliated Company 571 700 -
Purchase of Businesses Net of Cash Acquired (15,535) (32,748) (32,961)
Proceeds from Sale of Property and Equipment 15,859 9,989 12,374
------------- -------------- ------------
Cash Used for Investing Activities (99,390) (125,440) (98,013)
------------- --------------- ------------
FINANCING ACTIVITIES

(Repayments) Proceeds from Bank Debt, net (2,296) 24,755 (48,672)
Proceeds from Capital Contributions, net 1,381 1,670 1,515
(Decrease) in Loans from Related Parties - (1,159) (6,286)
(Increase) Decrease in Loans to Related Parties (2,810) (448) 1,113
Dividends paid (68,092) (22,204) (67,045)
------------- -------------- ------------
Cash (Used for) Provided by Financing Activities (71,817) 2,614 (119,375)
------------- -------------- ------------
EFFECT OF EXCHANGE RATE CHANGES ON NET CASH 6,440 (2,120) 1,424
------------- -------------- ------------
(DECREASE) IN CASH AND CASH EQUIVALENTS (8,568) (13,858) (91,412)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 20,375 34,233 125,645
------------- -------------- ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD 11,807 20,375 34,233
============= ============== ============
</TABLE>

See accompanying Notes to Combined Financial Statements


- 38 -
HENKEL ECOLAB

COMBINED STATEMENTS OF EQUITY

(Thousands DM)

<TABLE>
<CAPTION>
Contributed Retained Cumulative Cumulative
Capital Earnings Foreign Minimum Total
Currency Pension
Translation Liability
Adjustment
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance
November 30, 1996 162,704 137,068 (19,446) 280,326

Net Income 57,708 57,708

Dividends (4,730) (4,730)

Contributions 1,515 1,515

Minimum Pension Liability (218) (218)

Translation
Adjustment 797 797
---------------------------------------------------------------------------------------
Balance
November 30, 1997 164,219 190,046 (18,649) (218) 335,398
,
Net Income 68,092 68,092

Dividends (22,204) (22,204)

Contributions 1,670 1,670

Minimum Pension Liability (527) (527)

Translation
Adjustment (4,992) (4,992)
---------------------------------------------------------------------------------------
Balance
November 30, 1998 165,889 235,934 (23,641) (745) 377,437

Net Income 84,653 84,653

Dividends (66,675) (66,675)

Contributions 1,381 1,381

Minimum Pension Liability 557 557

Translation
Adjustment 7,530 7,530
---------------------------------------------------------------------------------------
Balance
November 30, 1999 167,270 253,912 (16,111) (188) 404,883
</TABLE>


See accompanying Notes to Combined Financial Statements


- 39 -
1. DESCRIPTION OF BUSINESS

Henkel Ecolab (the "Company" or the "Joint Venture") is a leading European
company providing total cleaning and hygiene systems and service solutions
to institutional and industrial companies. See Basis of Presentation within
Note 2 of the combined financial statements. The Company's offerings include
detergents, sanitation cleaners, dosing and measuring equipment, cleaning
machines, training and service. Customers include hotels and restaurants;
food service, healthcare and educational facilities; commercial laundries;
light industry; dairy plants and farms as well as food and beverage
processors throughout Europe.

The Company was formed in 1991 by Henkel KGaA (Henkel) and Ecolab, Inc.
(Ecolab) as a joint venture of their respective European institutional and
industrial hygiene businesses. Under the terms of the Amended and Restated
Joint Venture Agreement dated June 26, 1991 (Joint Venture Agreement),
Henkel and Ecolab have joint control over the activities of the Joint
Venture. The Joint Venture Agreement also provides that both partners will
share an equal economic interest in the profits or losses of the Joint
Venture.

ACQUISITIONS

Gibson Acquisition: In May 1999, the Company acquired certain assets of
Gibson UK Limited for a cash price of approximately TDM 16,089 from Ecolab.
Gibson, located in Reading, England, provides warewashing and surface
hygiene products and services for customers in the retail markets. The
acquisition has been accounted for as a purchase and, accordingly, the
results of operations of Gibson are included in the accompanying financial
statements since the date of acquisition. The purchase price has been
allocated to assets acquired and liabilities assumed based on the fair value
at the date of acquisition. The excess of purchase price over the fair
market value of net assets acquired has been allocated to goodwill in the
amount of TDM 17,658 and is being amortized over 15 years.

Darenas Acquisition: In February 1998, the Company acquired certain assets
of ISS-Darenas Limited (Darenas) for a cash price of TDM 23,334. Darenas,
located in Birmingham, England, provides janitorial products and services
for contract and building cleaning as well as the catering industries. The
acquisition of Darenas was recorded under the purchase method of accounting,
and accordingly, the results of operations of Darenas for the period from
February 1, 1998 are included in the accompanying financial statements. The
purchase price has been allocated to assets acquired and liabilities assumed
based on the fair value at the date of the acquisition. The excess of
purchase price over fair value of the assets and liabilities has been
allocated to goodwill in the amount of TDM 17,302 and is being amortized
over 15 years.


- 40 -
Ecosan Acquisition: In September 1997 and in December 1997, the Company
acquired 75% and 25%, respectively, of the outstanding shares of Ecosan
Hygiene GmbH (Ecosan) for a cash price of TDM 37,600 (TDM 28,200 in
September 1997 and TDM 9,400 in December 1997). Ecosan, located in Hanau,
Germany, distributes institutional products and services in Germany. The
acquisition of Ecosan was recorded under the purchase method of accounting,
and, accordingly, the results of operations of Ecosan for the period from
September 16, 1997 are included in the accompanying financial statements.
The purchase price has been allocated to assets acquired and liabilities
assumed based on the fair value at the date of acquisition. The excess of
purchase price over fair value of the assets and liabilities has been
allocated to goodwill in the amount of TDM 36,486 (TDM 27,153 as of November
30, 1997) and is being amortized over 15 years.

The Company made additional acquisitions during the fiscal years ended
November 30, 1999 and 1998; the impact of which was immaterial to the
combined financial statements.


- 41 -
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The financial statements are presented on a combined basis in accordance
with the generally accepted accounting principles in the United States. The
Joint Venture is comprised of various entities. These entities have varying
legal structures, including stock corporations, limited liability
corporations and partnerships formed under the applicable laws in the
jurisdictions in which the Joint Venture operates. These entities are owned
beneficially by identical shareholders or their wholly- owned subsidiaries
and are, therefore, considered entities under common control. All
significant intergroup or affiliated company accounts and transactions have
been eliminated in combination. The Joint Venture's fiscal year end has been
designated as November 30.

FOREIGN CURRENCY TRANSLATION

The accounts of all foreign subsidiaries and affiliates are generally
measured using the local currency as the functional currency, except for
three countries where, due to hyperinflation, the functional currency (for
one country since 1994 and two beginning in 1998) has been changed to the
German Mark. With the exception of the hyperinflation countries, assets and
liabilities are translated into German Marks, the Company's reporting
currency, at period-end exchange rates. Income statement accounts are
translated to German Marks at the average rates of exchange prevailing
during the year.

Net unrealized exchange gains or losses resulting from such translation are
excluded from net earnings and accumulated in a separate component of
combined equity. Gains and losses arising from foreign currency transactions
during the year are included in the related income statement category.

The Joint Venture enters into foreign currency forward and option contracts
to hedge specific foreign currency exposures. Gains and losses on these
contracts are deferred and recognized as part of the specific transaction
hedged or included in Other Expenses/Income, net, principally interest
expense. The cash flows from such contracts are classified in the same
category as the transaction hedged in the Combined Statements of Cash Flows.

CASH EQUIVALENTS

Cash equivalents are highly liquid investments with a maturity of three
months or less when purchased.


- 42 -
INVENTORIES

Inventories are stated at the lower of cost or market with cost determined
using the first-in first-out and average cost methods.

PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment are stated at historical cost. Merchandising
equipment consists primarily of various systems for dispensing cleaning and
sanitizing products. Depreciation and amortization are charged to operations
using the straight-line and declining balance methods over the following
estimated useful lives:

Buildings and improvements 8 to 40 years
Machinery and equipment 3 to 20 years
Furniture, fixtures and merchandising equipment 3 to 16 years

Leasehold improvements are amortized on a straight-line basis over a period
which is the lesser of the useful life of the asset or the remaining term of
the associated lease. Betterments, renewals and extraordinary repairs that
extend the life of the asset are capitalized; other repairs and maintenance
costs are expensed. The cost and accumulated depreciation / amortization
applicable to the assets retired or disposed of are removed from the
accounts and any gain or loss is reflected in the Company's net income in
the year of disposal.

Total depreciation expense for property, plant and equipment amounted to TDM
65,083, TDM 60,948, and TDM 53,320 for the years ended November 30, 1999,
1998 and 1997, respectively.

INTANGIBLE ASSETS

Intangible assets primarily consist of goodwill, capitalized software,
concessions and licenses. These assets are amortized on a straight-line
basis over their estimated lives, periods from 3 to 15 years. Total
amortization expense for all intangible assets amounted to TDM 22,603, TDM
13,586 and TDM 11,188 during the years ended November 30, 1999, 1998, 1997,
respectively.

During 1998, the Company adopted Statement of Position (SOP) 98-1,
"Accounting for the Costs of Software Developed or Obtained for Internal
Use." The impact of this adoption was immaterial to the combined financial
statements. In accordance with SOP 98-1, the Company capitalizes costs
associated with purchased software for internal use which is ready for
service and external development costs incurred from the time technological
feasibility of the software is established until the software is ready for
use to provide processing for internal purposes.


- 43 -
The software development costs and costs of purchased software are amortized
using the straight-line method over a maximum of three to five years or the
expected life of the product, whichever is less. The carrying value of a
software and development asset is regularly reviewed by the Company and a
loss is recognized if the unamortized cost is in excess of the net
realizable value.

LONG-LIVED ASSETS

The company periodically assesses the recoverability of long-lived and
intangible assets based on anticipated future earnings and operating cash
flows.

ADVERTISING COSTS

The Company expenses the production costs of advertising in the period in
which the costs are incurred. Advertising expenses were TDM 38,504, TDM
35,696 and TDM 34,113 for the years ended November 30, 1999, 1998 and 1997,
respectively.

USE OF ESTIMATES

The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the dates of
the financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results may differ from those
estimates.

NEW ACCOUNTING PRONOUNCEMENTS

During 1999, the Company adopted Statement of Financial Accounting Standards
No 130, "Reporting Comprehensive Income". The standard requires the display
and reporting of comprehensive income, which includes all changes in
combined equity with the exception of additional investments by shareholders
or distributions to shareholders. Comprehensive income for the Company
includes net income, foreign currency translation and minimum pension
liability adjustment that is charged or credited to the cumulative
translation and minimum pension liability adjustment accounts, respectively,
within combined equity.

On June 16, 1998 the FASB issued Statement of Financial Accounting Standards
(FAS) No. 133, "Accounting for Derivative Instruments and Hedging
Activities." FAS 133 establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts, (collectively referred to as derivatives) and for hedging
activities. It requires that an entity recognize all derivatives as either
assets or liabilities in the statement of financial position and measure
those instruments at fair value. If certain conditions are met, a derivative
may be specifically designated as (a) a hedge of the exposure to changes in
the fair


- 44 -
value of a recognized asset or liability or an unrecognized firm commitment,
(b) a hedge of the exposure to variable cash flows of a forecasted
transaction, or (c) a hedge of the foreign currency exposure of a net
investment in a foreign operation, an unrecognized firm commitment, and
available-for-sale security, or a foreign-currency-denominated forecasted
transaction. Management expects to adopt FAS 133 in the first quarter of the
fiscal year ended November 30, 2001 and is in the process of evaluating the
impact on the financial statements of adoption of this Statement.

REVENUE RECOGNITION

Substantially all revenue is recognized when products are shipped to
customers or distributors.

RECLASSIFICATION

Certain prior year amounts have been reclassified to conform with current
year presentation. These reclassifications had no effect on previously
reported net income or combined equity.


- 45 -
3. BALANCE SHEET INFORMATION
<TABLE>
<CAPTION>

(Thousands DM) November 30, November 30,
1999 1998
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ACCOUNTS RECEIVABLE,
Accounts Receivable, Trade 401,784 341,458
Allowance for Doubtful Accounts 19,050 17,318
------------- -------------
382,734 324,140
-------- --------

INVENTORIES
Raw Materials 40,922 41,550
Work in Process 8,945 11,075
Finished Goods 154,059 144,182
------------- -------------
Total 203,926 196,807
------- -------

PROPERTY, PLANT AND EQUIPMENT, NET
Land 5,750 6,612
Buildings and Improvements 79,604 77,437
Machinery and Equipment 162,420 147,417
Merchandising Equipment and Other 309,016 273,305
Construction in Progress 4,641 9,539
------------- -------------
561,431 514,310
Accumulated Depreciation and Amortization 373,187 330,929
------------- -------------
Total 188,244 183,381
------- -------

INTANGIBLE AND OTHER ASSETS, NET
Goodwill on Acquisitions prior to July 1,1991 20,941 20,941
Goodwill on Acquisitions after July 1,1991 101,951 79,850

Other Intangible Assets, including Capitalized 86,594 64,803
Computer Software
Additional Minimum Pension Liability 4,824 5,123
------------- -------------
214,310 170,717
Accumulated Amortization 91,511 66,550
------------- -------------
Total Intangible Assets, net 122,799 104,167
Other Assets, net 6,703 6,174
------------- -------------
Total 129,502 110,341
------- -------
</TABLE>


- 46 -
4. RELATED PARTY TRANSACTIONS

The Joint Venture has entered into various contractual arrangements,
including those discussed in the following paragraphs, for the supply of
products, the performance of general and administrative services and the
transfer of technology.

Certain Joint Venture entities purchase institutional and industrial
hygiene products (primarily finished goods inventories) from Henkel and its
subsidiaries under a variety of supply agreements. The terms of these
agreements allow these entities to purchase specified quantities at agreed
upon prices as defined by an annual supply plan submitted to the related
manufacturing facility. Henkel also provides certain Joint Venture entities
with elective services which include, but are not limited to, general
administration, payroll administration, accounting and research and
development. The costs of services are charged by Henkel on a monthly basis
and may not reflect the costs which the Joint Venture would incur if it were
necessary to procure such services from outside sources or if such services
were performed internally by the Joint Venture. Related party purchases and
fees incurred by the Joint Venture in consideration for these services
totaled TDM 231,754, TDM 227,768 and TDM 236,148 for the years ended
November 30, 1999, 1998, and 1997, respectively.

Royalty payments are shared equally by both parent companies based upon a
technology transfer agreement which provides for the payment of royalties as
a percentage of third party sales. Effective January 1, 1999 the parent
companies agreed to reduce the royalty paid by the Joint Venture from 2% to
1% of net sales (as defined). Royalty expense related to this technology
transfer agreement amounted to TDM 14,959, TDM 26,568 and TDM 24,372 during
the twelve month periods ended November 30, 1999, 1998 and 1997,
respectively.

The Joint Venture has entered into agreements with Henkel under which the
Joint Venture can both borrow from and lend to Henkel both on an overdraft
basis and through short term loans of no more than 3 months. There is
currently no maximum level of borrowing specified under these agreements.
The interest rate basis for both arrangements is the Euro London Interbank
Offering Rate (EURO-LIBOR). At November 30, 1999 the interest rates were
3.125% for German Mark overdrafts and 3.56 % for 3 month short term German
Mark loans. On overdrafts, approximately 0.5 percentage points are paid to
compensate Henkel for administration costs.

At November 30, 1999 and 1998 loans receivable from Henkel and its
subsidiaries totaled TDM 10,152 and TDM 7,342, respectively. The fair values
of related party loans receivable and payable approximate book value.


- 47 -
During 1997, the Joint Venture began to charge the parents for certain costs
incurred on behalf of the parents which by their nature are not arm's
length. The Joint Venture has reflected such costs, net of tax, in the
amount of TDM 1,381, TDM 1,670 and TDM 1,515 as contributed capital for the
years ended November 30, 1999, 1998 and 1997, respectively.


- 48 -
5. INCOME TAXES
The components of income before income taxes and the provision for income taxes
for the years ended November 30, 1999, 1998 and 1997, respectively, are as
follows:

<TABLE>

1999 1998 1997
---- ---- ----
TDM TDM TDM
<S> <C> <C> <C>
Income before income taxes:
Domestic 35,757 19,466 23,887
Foreign 114,024 97,047 85,088
-------- -------- --------
Total 149,781 116.513 108,975
======== ======== ========

Income tax provision (benefit):
Current
Domestic 23,051 8,856 17,627
Foreign 53,878 37,403 37,149
-------- -------- --------
Total current 76,929 46,259 54,776

Deferred
Domestic (3,346) 2,063 (113)
Foreign (8,455) 99 (3,396)
-------- -------- --------
Total deferred (11,801) 2,162 (3,509)

Total income tax provision 65,128 48,421 51,267
======== ======== ========
</TABLE>

The components of the Joint Venture's overall net deferred tax asset at
November 30:

<TABLE>

1999 1998
---- ----
TDM TDM
Deferred tax assets:
<S> <C> <C>
Tax loss carry forwards 2,958 7,705
Accrued expenses 10,474 4,668
Inventory valuation reserves 2,709 4,169
Accounts receivable reserves 1,825 1,106
Pension provision 14,241 8,530
Investment in affiliated company 0 1,158
Depreciation on fixed assets 3,251 5,074
Other 42 1,445
------------------
Total deferred tax assets 35,500 33,855
Valuation allowance (1,357) (11,693)
-----------------
Total deferred tax assets,
net of valuation allowance 34,143 22,162
----------------
Deferred tax liabilities:
Amortization on intangible assets (1,474) (1,187)
Depreciation on fixed assets (6,144) (4,158)
Other (464) (2,711)
-----------------
Total deferred tax liabilities (8,082) (8,056)
-----------------
Net deferred tax asset 26,061 14,106
===================
</TABLE>

At November 30, 1999 and 1998, the Joint Venture had net foreign operating
loss carry forwards for tax purposes of approximately


- 49 -
TDM 10,233 and TDM 24,297, respectively. A significant portion of these
losses have an indefinite carry forward period; the remaining losses have
expiration dates up to five years.

In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred
tax assets will not be realized. The ultimate realization of deferred tax
assets is dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible.

Management considers the scheduled reversal of deferred tax liabilities and
projected future taxable income in making this assessment. Based upon the
level of historical taxable income and projections for future taxable income
over the periods which the deferred tax assets are deductible, management
believes it is more likely than not the Joint Venture will realize the
benefits of these deductible differences, net of the existing valuation
allowances at November 30, 1999 and 1998. During 1999, 1998 and 1997, the
valuation allowance increased/(decreased) by TDM (10,336), TDM (3,757) and
TDM 5,063, respectively.

A reconciliation of the weighted average European effective tax rate to the
effective income tax rate is as follows:

<TABLE>

1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Weighted average European
statutory rate 39.7 38.8 39.7
Non deductible items,
principally goodwill 4.5 0.8 0.1
Provision for tax examinations 6.3 1.0 4.6
Deferred taxes refundable to
parent 1.1 1.0 0.2
Change in valuation allowance (6.8) (3.2) 4.6
Other (1.3) 3.2 (2.2)
----- ----- -----
Effective income tax rate 43.5% 41.6% 47.0%
===== ===== ======
</TABLE>


The deferred taxes refundable to parent reflect the Joint Venture Agreement
in which the partners also agreed that all tax benefits realized after the
formation of the Joint Venture should be refunded to the respective parents
if the benefits relate to temporary differences that originated in periods
prior to the formation of the Joint Venture.

Cash paid for taxes for the years ended November 30, 1999, 1998 and 1997 was
TDM 51,980, TDM 35,897 and TDM 32,756, respectively.


- 50 -
6. PENSION AND OTHER BENEFIT PLANS

Henkel Ecolab sponsors several pension plans for its employees throughout
Europe including Germany, France, Netherlands, Belgium, Turkey, Greece, the
United Kingdom, Italy, Spain, Austria, Slovenia, Norway, Switzerland and
Ireland.

The following tables provide a reconciliation of the changes in the plans
benefit obligations and fair value of assets over the two year period ended
November 30, 1999 and November 30, 1998 and a statement of the funded status
as of November 30, 1999 and November 30, 1998 of both years with the
exception of the Italian termination indemnity plan:

<TABLE>

1999 1998
---- ----
TDM TDM
<S> <C> <C>
Reconciliation of benefit obligation:
Obligation at December 1, 1998
and 1997, respectively 228,867 204,673
Service cost 11,144 9,100
Interest cost 11,966 11,187
Participant contributions 1,759 999
Actuarial (gain) loss (2,952) 12,717
Prior service cost 612 (2,723)
Acquisitions 5,533 0
Benefit payments (7,408) (5,773)
Foreign currency translation adjustment 3,374 (1,313)
----- ------
Obligation at November 30, 252,895 228,867
======= =======

1999 1998
---- ----
TDM TDM

Reconciliation of fair value of plan assets:
Fair value of plan assets at December 1, 1998
and 1997, respectively 101,565 82,209
Actual return on plan assets 7,794 11,508
Acquisitions 4,243 0
Company contribution 9,853 13,846
Participant contribution 1,759 999
Benefits payments (7,408) (5,773)
Foreign currency translation adjustment 3,654 (1,224)
------- -------
Fair value of plan assets at November 30, 121,460 101,565
======= =======

1999 1998
---- ----
TDM TDM
Funded status:
Funded status as of November 30, (131,435) (127,302)
Unrecognized transition obligation 7,232 7,529
Unrecognized prior service cost (1,877) (2,196)
Unrecognized net (gain) loss 578 7,295
-------- ---------
Net amount recognized (125,502) (114,674)
======== =========
</TABLE>


- 51 -
The following table provides the amounts recognized in the statement of
financial position as of November 30, 1999 and November 30,1998:

<TABLE>

1999 1998
---- ----
TDM TDM

<S> <C> <C>
Accrued benefit liability (130,514) (120,542)
Italy termination indemnity plan (10,830) (10,119)
-------- --------
Employee benefit obligation (141,344) (130,661)

Intangible asset 4,824 5,123
Accumulated other comprehensive income 188 745
--- ---
Additional minimum pension liability,
net of tax 5,012 5,868

Net amount recognized (136,332) (124,793)
========= =======
</TABLE>

Included within the Employee Benefit Obligation in the balance sheet is the
Italian termination indemnity plan which provides a benefit that is payable
upon termination of employment virtually in all cases of termination. This
plan has no assets and is not included within the pension disclosures
provided within this footnote with the exception of the information provided
above.

The following table provides the components of net periodic cost for the
plans for the fiscal years ended November 30, 1999, 1998 and 1997:

<TABLE>

1999 1998 1997
---- ---- ----
TDM TDM TDM

<S> <C> <C> <C>
Components of net periodic pension
cost:
Service cost 11,144 9,100 8,224
Interest cost 11,966 11,187 10,429
Expected return on plan assets (6,220) (4,807) (4,178)

Amortization of transition
Obligation 729 674 774
Amortization of net loss (gain) (143) 44 (95)
Amortization of prior service cost 101 (56) 89
------ ------- ------
Net amortization 687 662 768

Net periodic pension cost 17,577 16,142 15,243
====== ======= ======
</TABLE>

Pursuant to the provisions of Statement Of Financial Accounting Standards
No. 87 "Employer`s Accounting for Pensions", the Company has recorded an
additional pension liability adjustment, net of tax of TDM 5,012 and TDM
5,868 as of November 30, 1999 and 1998, respectively, representing the amount
by which the accumulated benefit obligation over the fair value of plan
assets exceeded the accrued pension liability for certain German pension
plans.

- 52 -
The accumulated benefit obligation for these German plans was TDM 97,107 at
November 30, 1999 and TDM 90,069 at November 30, 1998.

The following amounts, net of tax, have been included within other
comprehensive income arising from a change in the additional minimum pension
liability for the year ended November 30, 1999, 1998 and 1997, respectively
TDM (456), TDM 431 and TDM 174.

The assumptions used in the measurement of the company`s benefit obligation
are shown in the following table:

<TABLE>

1999 1998 1997
<S> <C> <C> <C>

Range of rates used throughout
Europe

Assumed discount rate 4.0-6.25% 4.0-6.0% 6.0- 7.5%

Expected return on plan assets 4.0-8.0% 4.0-8.5% 6.0-10.0%

Rate of increase in future 1.5-5.5% 1.75-4.5% 2.5-6.0%
compensation levels
</TABLE>


- 53 -
7. TOTAL INDEBTEDNESS

SHORT TERM DEBT

Short term debt payable to banks of TDM 47,430 and TDM 49,066 at November 30,
1999 and 1998, respectively, consists primarily of short term credit
facilities and bank overdrafts. The weighted average interest rate on short
term debt outstanding (in all borrowing entities across Europe) was 6.5% at
November 30, 1999 and 7.5% at November 30, 1998.

At November 30, 1999 the company had TDM 166,318 available through multiple
bank lines of credit under which the company may borrow on an overdraft or
short term basis. Interest rates are based on local money market rates.

LONG TERM DEBT

Long term debt of November 30, 1999 and 1998 consists of the following:

<TABLE>

1999 1998
---- ----
TDM TDM

<S> <C> <C>
Notes 4,765 5,425
Less current maturities 657 657
---- ----
Total 4,108 4,768
===== =====
</TABLE>

All notes are denominated in Danish Krona at fixed annual interest rates
ranging from 10.07% to 10.30% at November 30, 1999. As of November 30, 1999,
the aggregate annual maturities of long term debt were:

2000 - TDM 657 2001 - TDM 165
2002 - TDM 3,943

The fair value of short and long term debt approximates the book value.


- 54 -
8. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

The Joint Venture operates internationally, giving rise to exposure to
market risks from changes in interest rates and foreign exchange rates.
Derivative financial instruments are utilized by the Joint Venture to reduce
certain of these risks. The Joint Venture does not hold or issue financial
instruments for trading purposes. The Joint Venture is exposed to
credit-related losses in the event of nonperformance by counterparties to
financial instruments, but it does not expect any counterparties to fail to
meet their obligations given their high credit ratings.

a) Notional Amounts and Credit Exposures of Derivatives

The notional amounts of derivatives summarized in section b) do not
represent amounts exchanged by the parties and, thus, are not a measure of
the exposure of the Joint Venture through its use of derivatives. The
amounts exchanged are calculated on the basis of the notional amounts and
the other terms of the derivatives, which relate to exchange rates.

b) Foreign Exchange Risk Management

The Joint Venture enters into various types of foreign exchange contracts in
managing its foreign exchange risk, as indicated in the following table
(TDM):

<TABLE>

November 30, 1999 November 30,1998
----------------- ----------------
Notional Credit Notional Credit
Amount Exposure Amount Exposure
------ -------- ------ --------
Forward exchange
<S> <C> <C> <C> <C>
contracts 172,943 0 94,779 0
Options purchased 0 0 2,553 0
------- - ------ -
172,943 0 97,332 0
======= = ====== =
</TABLE>


The purpose of foreign exchange contracts and options purchased is to hedge
various intercompany loans and hedge certain existing and anticipated future
net foreign exchange exposures. The anticipated future foreign exchange
exposure of the Joint Venture is the total of the net balances of all known
and planned incoming and outgoing payments of the Joint Venture's companies
in foreign currencies during a twelve month time horizon. Gains and losses
arising on hedged loan transactions are accrued to income over the period of
the hedge. The deferred gains and losses as of November 30, 1999 and 1998
were not material. Losses on hedges of anticipated exchange rate exposure are
recorded as incurred whereas gains are deferred.


- 55 -
The table below summarizes by major currency the contractual amounts of the
Joint Venture's forward exchange and option contracts in German Marks.
Foreign currency amounts are translated at rates current at the reporting
date. The "buy" amounts represent the German Marks equivalent of commitments
to purchase foreign currencies, and the "sell" amounts represent the German
Marks equivalent of commitments to sell foreign currencies (TDM):

<TABLE>

1999 1998
--------------- --------------
Buy Sell Buy Sell

<S> <C> <C> <C> <C>
Pound Sterling/German Mark 95,919 95,919 44,362 44,362
US Dollar/German Mark 56,076 56,076 7,489 7,489
Swiss Franc/German Mark 16,095 16,095 14,925 14,925
Swedish Krona/German Mark 2,936 2,936 2,626 2,626
Danish Krona/German Mark 1,314 1,314 - -
Norwegian Krona/German Mark 603 603 - -
Italian Lira/US Dollar - - 27,374 27,374
Czech Krona/German Mark - - 556 556
--------------------------------
172,943 172,943 97,332 97,332
======= ======= ====== ======
</TABLE>

c) Fair Value of Off Balance Sheet Financial Instruments

The difference between the fair value and contract value of off balance
sheet financial instruments at November 30, 1999 and 1998 is not
significant.


- 56 -
9. RESEARCH EXPENDITURES

Research expenditures which relate to the development of new products and
processes, including significant improvements and refinements to existing
products, were MDM 36.5, MDM 34.6, and MDM 35.7 for the years ended November
30, 1999, 1998 and 1997, respectively.


- 57 -
10. COMMITMENTS AND CONTINGENCIES

The Joint Venture has a number of operating lease agreements primarily
involving motor vehicles, computer and other office equipment. The following
is a schedule by year of the future minimum lease payments required under
the operating leases that have initial or remaining noncancellable lease
terms in excess of one year as of November 30, 1999 (TDM):

<TABLE>

<S> <C>
2000 25,888
2001 22,158
2002 11,658
2003 4,782
2004 1,775
thereafter 4,317
-----
Total 70,578
======
</TABLE>

Rent expense for the twelve month period ended November 30, 1999, 1998 and
1997, was approximately TDM 31,370, TDM 31,369 and TDM 27,416, respectively.

The Joint Venture is subject to lawsuits and claims arising out of the
conduct of its business, including those relating to commercial transactions
and environmental safety. Although the outcomes of such matters are
unpredictable, management believes that the final disposition will not have
a material adverse effect on the combined financial position or results of
operations of the Joint Venture.

As an integral part of the Joint Venture agreement, Henkel and Ecolab have
provided certain representations and warranties against future expenditures
related to lawsuits arising from operations prior to July 1,1991. A
subsidiary of the Joint Venture is named in an environmental legal action
related to the conduct of its business prior to the formation of the Joint
Venture on July 1, 1991. Based on the facts currently known to the Joint
Venture, and after consultation with legal counsel, management believes that
the Joint Venture is indemnified against any potential liability arising
from such action under the terms and conditions of the Amended and Restated
Umbrella Agreement dated June 26, 1991, by and between Henkel and Ecolab.
Therefore, the Joint Venture does not expect material adverse effects on its
financial position, results of operations or liquidity from the outcome of
this claim.

The Joint Venture's operations and customers are located throughout Europe
and operate in the industrial and institutional hygiene business. No single
customer accounted for a significant amount of the Joint Venture's sales in
1999, 1998 or 1997, and there were no significant accounts receivable from a
single customer at November 30, 1999 or 1998. The Joint Venture establishes
an allowance for doubtful accounts based upon factors surrounding the credit
risk of specific customers, historical trends and other information.


- 58 -
HENKEL ECOLAB

Schedule - Valuation and Qualifying Accounts and Reserves
(Thousands)

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
Description Balance, Additions Deductions Balance,
Beg. of (a) from Close of
Period Reserve Period
(b)
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Period Ended
November 30, 1997

Allowance for DM 16,199 13,400 7,084 22,515
doubtful
Accounts
----------------------------------------------------------
DM 16,199 13,400 7,084 22,515
==========================================================
Period Ended
November 30, 1998

Allowance for DM 22,515 9,325 14,522 17,318
doubtful
Accounts
----------------------------------------------------------
DM 22,515 9,325 14,522 17,318
==========================================================
Period Ended
November 30, 1999

Allowance for DM 17,318 4,222 2,490 19,050
doubtful
Accounts
----------------------------------------------------------
DM 17,318 4,222 2,490 19,050
==========================================================
</TABLE>


(a) Provision for doubtful accounts
(charged to expenses)

(b) Items determined to be uncollectible,
less recovery of amounts previously written off.


- 59 -
EXHIBIT INDEX

The following documents are filed as exhibits to this Report.

<TABLE>
<CAPTION>

Exhibit No. Document Method of Filing
- ----------- -------- ----------------

<S> <C> <C>
(3)A. Restated Certificate of Incorporation. Incorporated by reference to
Exhibit (3) to the Company's
Current Report on Form 8-K
dated October 22, 1997.

B. By-Laws, as amended through February 18, Incorporated by reference to
1999. Exhibit (3)B of the
Company's Form 10-K
Annual Report, for the year
ended December 31, 1998.

(4)A. Common Stock. See Exhibits (3)A and (3)B.

B. Form of Common Stock Certificate. Incorporated by reference to
Exhibit (4)B of the Company's
Form 10-K Annual Report for
the year ended December 31,
1995.

C. Rights Agreement dated as of February 24, Incorporated by reference to
1996 Exhibit (4) of the Company's
Current Report on Form 8-K
dated February 24, 1996.

D. Note Agreement dated as of October 1, 1991 Incorporated by reference to
relating to $100,000,000 9.68% Senior Exhibit (4)F of the Company's
Notes Due October 1, 2001 between the Form 10-K Annual Report for
Company and the insurance companies the year ended December 31, 1991.
named therein.
</TABLE>


- 60 -
<TABLE>
<CAPTION>

Exhibit No. Document Method of Filing
- ----------- -------- ----------------

<S> <C> <C>
E.(i) Multicurrency Credit Agreement ("Credit Incorporated by reference to
Agreement") dated as of September 29, Exhibit (4)A of the
1993, as Amended and Restated as of Company's Form 10-Q for the
October 17, 1997, among the Company, the quarter ended September 20,
financial institutions party thereto, Citibank, 1997.
N.A., as Agent, Citibank International Plc,
as Euro-Agent and Morgan Guaranty Trust
Company of New York as Co-Agent.

(ii) Australian Dollar Local Currency Incorporated by reference to
Addendum to the Credit Agreement. Exhibit (4)B of the Company's
Form 10-Q for the quarter
ended September 30, 1997.

(iii) Amendment No. 1 dated as of June 23, 1998 Incorporated by reference to
to Multicurrency Credit Agreement dated as Exhibit (4)A of the
of September the 29, 1993, as Amended and Company's Form 10-Q for the
Restated as of October 17, 1997, and to quarter ended June 30, 1998.
Local Currency Addendum dated as of
October 17, 1997, with respect to the
Multicurrency Credit Agreement, among
Ecolab Inc., the Banks parties thereto,
Citibank, N.A., as Agent for the Banks,
Citibank International Plc, as Euro-Agent
for the Banks and Morgan Guaranty Trust
Company of New York as Co-Agent; and
with respect to the Local Currency
Addendum among Ecolab Inc., Ecolab PTY
Limited, the Local Currency Banks party
thereto, Citibank, N.A., as Agent and
Citisecurities Limited, as Local Currency
Agent.

(iv) Australian Dollar Local Currency Incorporated by reference to
Addendum dated as of June 23, 1998 among Exhibit (4)B of the
Ecolab Finance PTY Limited, Ecolab Inc., Company's Form 10-Q for the
Citibank, N.A., the Local Currency Agent quarter ended June 30, 1998.
named therein and the Local Currency Banks party
thereto.
</TABLE>


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<TABLE>
<CAPTION>

Exhibit No. Document Method of Filing
- ----------- -------- ----------------

<S> <C> <C>
F. Indenture dated as of November 1, 1996 as Incorporated by reference to
amended and supplemented, between the Exhibit 4.1 of the Company's
Company and the First National Bank of Amendment No. 1 to Form
Chicago as Trustee. S-3 filed November 15, 1996.


G. Form of Underwriting Agreement. Incorporated by reference to
Exhibit 1 of the Company's
Amendment No. 1 to Form S-3
filed November 15, 1996.

(9) Amended and Restated Stockholder's See Exhibit (10)P(v) hereof.
Agreement.

(10)A. Ecolab Inc. 1977 Stock Incentive Plan, as Incorporated by reference to
amended through November 1, 1996. Exhibit (10)A of the
Company's Form 10-K
Annual Report for the year
ended December 31, 1997.

B. Ecolab Inc. 1993 Stock Incentive Plan. Incorporated by reference to
Exhibit (10)B of the
Company's Form 10-K
Annual Report for the year
ended December 31, 1992.

C. Amended and Restated Ecolab Inc. 1997 Incorporated by reference to
Stock Incentive Plan Exhibit (10)C of the
Company's Form 10-K
Annual Report for the year
ended December 31, 1998,
</TABLE>


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<TABLE>
<CAPTION>

Exhibit No. Document Method of Filing
- ----------- -------- ----------------

<S> <C> <C>
(i) Non-Statutory Stock Option Agreement Incorporated by reference to
between the Company and Allan L. Exhibit (10) of the Company's
Schuman with respect to premium-priced Form 10-Q for the quarter
option grant effective February 20, 1998 ended June 30, 1998.
under the Ecolab Inc. 1997 Stock Incentive
Plan. Similar option grants were made to
each of the named executive officers of the
Company covering varying, but smaller
number of shares.

D. 1988 Non-Employee Director Stock Option Plan as Incorporated by reference to
Plan as amended through February 23, 1991. Exhibit (10)D of the
Company's Form 10-K
Annual Report for the year
ended December 31, 1990.

E.(i) 1995 Non-Employee Director Stock Option Incorporated by reference to
Plan. Exhibit (10)D of the
Company's Form 10-K
Annual Report for the year
ended December 31, 1994.

(ii) Amendment No. 1 to 1995 Non-Employee Filed herewith electronically.
Director Stock Option Plan effective
February 25, 2000.

F. Ecolab Inc. 1997 Non-Employee Director Incorporated by reference to
Deferred Compensation Plan. Exhibit (10)F of the
Company's Form 10-K for the
year ended December 31,
1996.

G. Form of Director Indemnification Incorporated by reference to
Agreement dated August 11, 1989. Exhibit (19)A of the
Substantially identical agreements are in Company's Form 10-Q for the
effect as to each director of the Company. quarter ended September 30,
1989.
</TABLE>


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<TABLE>

Exhibit No. Document Method of Filing
- ----------- -------- ----------------

<S> <C> <C>
H.(i) Ecolab Executive Death Benefits Plan, as Incorporated by reference to
mended and restated effective March 1, Exhibit (10)J of the
1994. Company's 10-K Annual
Report for the year ended
December 31, 1994. See also
Exhibit (10)N hereof.

(ii) Amendment No. 1 to Ecolab Executive Incorporated by reference to Exhibit
Death Benefits Plan. Exhibit (10)H(ii) of the
Company's 10-K Annual
Report for the year ended
December 31, 1998.

(iii) Second Declaration of Amendment to Incorporated by reference to
Ecolab Executive Death Benefits Plan, Exhibit (10)H(iii) of the
effective March 1, 1998. Company's 10-K Annual
Report for the year ended
December 31, 1998.


I. Ecolab Executive Long-Term Disability Incorporated by reference to
Plan, as amended and restated effective Exhibit (10)K of the
January 1, 1994. Company's 10-K Annual
Report for the year ended
December 31, 1994. See also
Exhibit (10)N hereof.

J. Ecolab Executive Financial Counseling Plan Incorporated by reference to
Exhibit (10)K of the
Company's Form 10-K
Annual Report for the year
ended December 31, 1992.

K.(i) Ecolab Supplemental Executive Retirement Incorporated by reference to
Plan, as amended and restated effective Exhibit (10)M(i) of the
July 1, 1994. Company's 10-K Annual
Report for the year ended
December 31, 1994. See also
Exhibit (10)N hereof.
</TABLE>


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<TABLE>

Exhibit No. Document Method of Filing
- ----------- -------- ----------------

<S> <C> <C>
(ii) First Declaration of Amendment to Ecolab Incorporated by reference to
Supplemental Executive Retirement Plan Exhibit (10)M(ii) of the
effective as of July 1, 1994 Company's 10-K Annual
Report for the year ended
December 31, 1994.

(iii) Second Declaration of Amendment to Incorporated by reference to
Ecolab Supplemental Executive Retirement Plan Exhibit (10)M(iii) of the
effective as of July 1, 1994. Company's Form 10-K
Annual Report for the year
ended December 31, 1995.

(iv) Third Declaration of Amendment to Ecolab Incorporated by reference to
Supplemental Executive Retirement Plan, Exhibit (10)M(iii) of the
effective March 1, 1998. Company's Form 10-K
Annual Report for the year
ended December 31, 1998.

L.(i) Ecolab Mirror Savings Plan, as amended
and restated effective September 1, 1994. Incorporated by reference to
Exhibit (10)N of the
Company's 10-K Annual
Report for the year ended
December 31, 1994. See also
Exhibit (10)N hereof.


(ii) First Declaration of Amendment to Ecolab Incorporated by reference to
Mirror Savings Plan effective as of Exhibit (10)N(ii) of the
January 1, 1995. Company's Form 10-K
Annual Report for the year
ended December 31, 1995.

(iii) Second Declaration of Amendment to Incorporated by reference to
Ecolab Mirror Savings Plan effective Exhibit (10)O(iii) of the
January 1, 1997. Company's Form 10-K
Annual Report for the year
ended December 31, 1996.
</TABLE>


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<TABLE>

Exhibit No. Document Method of Filing
- ----------- -------- ----------------

<S> <C> <C>
(iv) Third Declaration of Amendment to Ecolab Incorporated by reference to
Mirror Savings Plan effective November 13, Exhibit (10)L(iv) of the
1997. Company's Form 10-K
Annual Report for the year
ended December 31, 1998.

(v) Fourth Declaration of Amendment to Ecolab Incorporated by reference to
Mirror Savings Plan, effective September 1, Exhibit (10)L(v) of the
1998. Company's Form 10-K
Annual Report for the year
ended December 31, 1998.

M.(i) Ecolab Mirror Pension Plan effective July 1, 1994. Incorporated by reference to
Exhibit (10)O(i) of the
Company's Annual Report on
Form 10-K for the year ended
December 31, 1994. See also
Exhibit (10)N hereof.

(ii) First Declaration of Amendment to Ecolab Incorporated by reference to
Mirror Pension Plan effective as of July 1, Exhibit (10)O(ii) of the
1994. Company's Annual Report on
Form 10-K for the year
ended December 31, 1994.

(iii) Second Declaration of Amendment to Ecolab Incorporated by reference to
Mirror Pension Plan effective as of Exhibit (10)O(iii) of the
July 1, 1994. Company's Form 10-K
Annual Report for the year
ended December 31, 1995.

(iv) Third Declaration of Amendment to Ecolab Incorporated by reference to
Mirror Pension Plan, effective March 1, Exhibit (10)M(iv) of the
1998. Company's Form 10-K
Annual Report for the year
ended December 31, 1998.
</TABLE>


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<TABLE>

Exhibit No. Document Method of Filing
- ----------- -------- ----------------

<S> <C> <C>
N.(i) Ecolab Inc. Administrative Document for Incorporated by reference to
Non-Qualified Benefit Plans. Exhibit (10)P of the
Company's 10-K Annual
Report for the year ended
December 31, 1994.


(ii) Amendment No. 1 to the Ecolab Inc. Incorporated by reference to
Administrative Document for Non-Qualified Exhibit (10)N(ii) of the
Benefit Plans effective July 1, 1997. Company's Form 10-K
Annual Report for the year
ended December 31, 1998.


(iii) First Declaration to Amendment to the Incorporated by reference to
Ecolab Inc. Administrative Document for Exhibit (10)N(iii) of the
Non-Qualified Benefit Plans effective Company's Form 10-K
November 13, 1997. Annual Report for the
year ended December 31, 1998.


(iv) Third Declaration of Amendment to the Filed herewith electronically.
Ecolab Inc. Administrative document for
Non-Qualified Benefit Plans effective July 1, 1999.


O. 1999 Ecolab Inc. Management Performance Incorporated by reference to
Incentive Plan. Exhibit (10)O of the
Company's Form 10-K
Annual Report for the year
ended December 31, 1998.


P.(i) Amended and Restated Umbrella Incorporated by reference to
Agreement between Henkel KGaA and Exhibit 13 of HC Investments,
Ecolab Inc. dated June 26, 1991. Inc.'s and Henkel KGaA's
Amendment No. 4 to
Schedule 13D dated July 16,
1991.
</TABLE>


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<TABLE>

Exhibit No. Document Method of Filing
- ----------- -------- ----------------

<S> <C> <C>
(ii) Amended and Restated Joint Venture Incorporated by reference to
Agreement between Henkel KGaA and Exhibit 14 of HC Investments,
Ecolab Inc. dated June 26, 1991. Inc.'s and Henkel KGaA's
Amendment No. 4 to
Schedule 13D dated July 16,
1991.


(iii) Amendment to the Amended and Restated Incorporated by reference to
Joint Venture Agreement between Henkel Exhibit (10)P(iii) of the
KGaA and Ecolab Inc. dated June 13, 1994. Company's Form 10-K
Annual Report for the year
ended December 31, 1998.


(iv) Amended and Restated ROW Purchase Incorporated by reference to
Agreement between Henkel KGaA and Exhibit (7) of the Company's
Ecolab Inc. dated June 26, 1991. Current Report on Form 8-K
dated July 11, 1991.


(v) Amended and Restated Stockholder's Incorporated by reference to
Agreement between Henkel KGaA and Exhibit 15 of HC Investments,
Ecolab Inc. dated June 26, 1991. Inc.'s and Henkel KGaA's
Amendment No. 4 to
Schedule 13D dated July 16,
1991.


Q. Description of Ecolab Management Filed herewith electronically.
Incentive Plan.


(13) Those portions of the Company's Annual Filed herewith electronically.
Report to Stockholders for the year ended
December 31, 1999 which are incorporated
by reference into Parts I, II and IV hereof.


(21) List of Subsidiaries as of March 1, 2000. Filed herewith electronically.


(23)A. Consent of PricewaterhouseCoopers LLP to See page 32 hereof.
Incorporation by Reference at page 32
hereof is filed as a part hereof.
</TABLE>


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<TABLE>

Exhibit No. Document Method of Filing
- ----------- -------- ----------------

<S> <C> <C>
B. Consent of PricewaterhouseCoopers Filed herewith electronically.
Gesellschaft mit beschrankter Haftung
Wirtschaftsprufungsgesellschaft.


C. Consent of KPMG Deutsche Treuhand- Filed herewith electronically.
Gesellschaft Aktiengesellschaft
Wirtschaftsprufungsgesellschaft.


(24) Powers of Attorney. Filed herewith electronically.


(27) Financial Data Schedule for year ended Filed herewith electronically.
December 31, 1999.

COVER Cover Letter. Filed herewith electronically.
</TABLE>


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