1. Douglas M. Baker, President and CEO (left)
GO
Allan L. Schuman, Chairman of the Board (right)
We to the ends
of the earth
to deliver superior customer results
and shareholder value.
To our shareholders: effort to contribute to their success. nine years and as an Ecolab associate for 47
As you can see, at Ecolab, the operative We don’t let anything slow us down. We years, remains chairman of the company’s
word is GO. pride ourselves in our ability to manage and board of directors.
Our team of more than 21,000 associates adapt to change. Our successful leadership While Ecolab’s leadership may have
is continually on the move, around the clock, transition proved, once again, the power of changed, there is no question the character
across the globe. We go aggressively – our dedicated team to do just that. Doug and pillars that support Ecolab’s success
anywhere, anytime – to help our business Baker, a 15-year veteran of Ecolab, became remain constant. We’ve never stopped
partners. We work relentlessly to solve their chief executive officer on July 1, retaining his pushing toward our unwavering and
problems. We zealously protect their title of president of Ecolab. Al Schuman, who unstoppable objective: growth. We
reputations. And, above all, we spare no served as Ecolab’s chief executive officer for accomplish this in the same manner we
10 • GO • Ecolab

2. always have – innovative systems and $4.2 billion and increased 11 percent over way the industry approaches floor care. We
second-to-none service for our hundreds of 2003. also unveiled our Grease Exxpress line, which
thousands of customers around the globe. • Operating income was $534 million for includes a high-temperature grill cleaner and
This uncompromising drive for results on 2004, an increase of 11 percent from $483 fast foam degreaser that both significantly
behalf of our customers and shareholders is million in 2003. Operating income speed up the grease removal process in
nothing new. Ecolab has been aggressively represented 12.8 percent of net sales, restaurants and foodservice operations.
driving growth for more than 80 years. consistent with last year’s 12.8 percent, and The Gatekeeper and Gatekeeper XP
Certainly a lot has changed since we began. was led by differentiated new products and traps allow for discreet, pesticide-free rodent
We started out as a one-employee operation operating efficiencies. protection both indoors and out. Our CanCare
selling a single cleaning product to a handful • Diluted net income per share was $1.19 technology prevents corrosion, spotting and
of hospitality customers. Today we’re a for 2004, up 12 percent from $1.06 in 2003. scale buildup on canned products that use
growing $4+ billion enterprise that provides a Excluding unusual items, diluted income per water for process heating and cooling. And
myriad of differentiated cleaning, sanitation share from ongoing operations increased 16 Asepti-Solid II offers exceptional instrument
and service offerings to customers in an array percent from $1.03 in 2003. cleaning for healthcare facilities with hard
of industries the world over. Our success is • Our return on beginning shareholders’ water issues.
based, in large part, on the fact that we equity was 24 percent for 2004, the 13th You can see more of our latest offerings
never run from a challenge. consecutive year in which the company in the “Review of Operations” section of
Our culture – spirit, pride, determination, exceeded its long-term financial objective of this report.
commitment, passion and integrity – a 20 percent return on beginning The No. 1 sales force in the industry
continues to thrive throughout Ecolab’s global shareholders’ equity. grew even bigger and better in 2004. We
ranks, keeping us focused squarely on • Ecolab’s share price rose 28 percent in added more than 800 new associates to our
tomorrow and our unstoppable quest 2004 – outperforming the Standard & Poor’s global field organization, which is now over
for growth. 500 by 19 percentage points. In addition, we 12,000 members strong. And their expertise
The strength of our Ecolab culture has increased our annual dividend rate for the reached a new level as well, with the
never changed – and never will. Nor will our 13th consecutive year as it rose 9 percent in addition of robust training initiatives
company’s unwavering commitment to December 2004 to an annual rate of $0.35 including Ecolab University online and cross-
excellence in everything we do, from per common share. functional mentoring programs.
developing the latest product, system and • We achieved record cash flow from
service innovations for our customers to operating activities of $582 million, and our GO Acquisitions
delivering consistently strong returns to our total debt to capitalization ratio declined to & divestitures
many valued shareholders. 31 percent. These results allowed us to again We further expanded our wide-ranging
Ecolab is well-positioned to go as far as earn a debt rating within the “A” categories food safety offering with the acquisition of
our imaginations can take us – as our most of the major rating agencies during 2004. Daydots International in February. Daydots,
recent performance clearly demonstrates. based in Fort Worth, Texas, is a manufacturer
Here is a rundown of our 2004 GO Product offerings and supplier of food safety products,
accomplishments: & service capabilities including food rotation labels and food
In 2004, we continued to go to great preparation and handling bags. Its sales were
GO Financial lengths to deliver innovative new solutions to approximately $22 million. Daydots helps
performance our customers. We introduced our pioneering customers in more effective and safe
We are pleased to report that Ecolab’s enzyme-based no-rinse floor cleaner, management of their food inventory, food
net sales for 2004 reached a record-breaking Wash ‘n Walk, which is revolutionizing the handling and other kitchen product needs
Ecolab • GO • 11

3. through unique food labels and handling bags. GO Leadership team GO Recognition
• In April, we sold a $20 million grease As mentioned earlier in this letter, we & achievement
management product line to National Fire executed a smooth leadership transition when For the fifth straight year, Ecolab was
Services of Gurnee, Ill. This action allows us Doug Baker succeeded Al Schuman as CEO, proud to be named to Business Ethics
to focus our resources where we believe they effective July 1, 2004. Doug had served as magazine’s list of the “100 Best Corporate
can generate greater customer and president and COO since 2002, and has been Citizens” in America. As always, it is an honor
shareholder value. with Ecolab since 1989 in a variety of to be included on this elite list, which
• In May, we purchased Elimco, a $4 business leadership positions. Doug was also applauds corporate integrity and good
million pest services provider based in Cape elected to Ecolab’s board of directors in citizenship. This year we were proud to be
Town, South Africa. This acquisition, along February 2004. ranked 10th on the list. We have a great
with the earlier pest services acquisitions in Other significant developments in our responsibility to all of our stakeholders, and
the United Kingdom and France, supports leadership team include: we continue to focus on doing what’s right for
Ecolab’s efforts to build a worldwide Pest • In May, we were pleased to welcome our associates, our customers and our
Elimination organization. the return of Phil Mason, who is now shareholders.
• In June, we acquired VIC International’s executive vice president of Asia Pacific and Ecolab was also named as one of the
restoration and maintenance business unit Latin America. Phil previously worked at best companies for sales professionals by
located in Knoxville, Tenn. The business, Ecolab from 1974 to 1997, and was Selling Power magazine. We’ve always
which focuses on professional stone care instrumental in building our international known Ecolab’s most important asset is its
products designed to protect, repair and business in Asia. We are fortunate to have dedicated sales-and-service team. This
restore natural stone floors, had annual sales someone with Phil’s experience and business recognition is a terrific acknowledgement of
of approximately $5 million. savvy lead these important growth regions. our efforts to carefully select, train,
• In July, we acquired Alcide, a Redmond, • After 30 years of service, Maurizio Nisita compensate and develop our field associates.
Wash.-based producer of biocidal and retired from Ecolab in June. Maurizio most In addition, Ecolab was also highlighted
sanitation products that are primarily used in recently served as Ecolab’s senior vice as one of the 26 “Best-Managed Companies
the agribusiness, meat and poultry industries. president of Global Operations, overseeing in America” by Forbes magazine. This was a
It had worldwide sales of approximately $24 the company’s 55 manufacturing plants and reaffirmation of our commitment to ongoing
million in calendar 2003. Alcide offers Ecolab distribution centers around the globe. His talent development, performance and results.
proven, valuable technology that will provide unwavering commitment to exceptional We were proud to receive recognition for
a great addition to our product offering for our standards secured consistency and uniformity these efforts.
food and beverage customers, and for hard of Ecolab’s products on a global basis.
surface and skin sanitation in other markets. • And in February 2005, William L. Jews Outlook for 2005:
• And, in January 2005, we announced our retired from Ecolab’s board of directors. Bill The message is clear: At Ecolab, we
acquisition of Midland Research Laboratories, had served on Ecolab’s board since 1999, never stop. We GO.
a $16 million Lenexa, Kan.-based provider of most recently as a member of the Audit In 2005 and beyond, we aim to establish
water treatment products, process chemicals Committee and as the chair of the Finance the industry’s next level of performance and
and services for the commercial, institutional, Committee. We thank Bill for his strong deliver the best results for our customers and
industrial, food and sugar processing markets. counsel and outstanding service to Ecolab, shareholders. We’re aggressively pursuing
This acquisition reflects Ecolab’s ongoing and wish him well. higher growth by focusing on the key areas of
interest in water care products and services our Circle the Customer - Circle the Globe
for the middle market. strategy: building our core businesses;
investing in new products, programs and
12 • GO • Ecolab

4. businesses; and backing them up with global scale, and we plan to further expand provide the highest level of professional,
outstanding service. our global presence along the way. We took a personalized service that our customers have
That’s why we offer answers to just quantum leap toward this goal in 2004 by come to rely on.
about every type of cleaning, food safety and establishing our U.S. Healthcare Division, We will press ahead to accomplish these
brand protection issue that anyone can catering to the needs of a growing $3 billion aggressive goals as we move forward, not
imagine. That’s why our products and services market. We’re also rapidly rolling out our only in 2005, but also every year thereafter.
not only produce sparkling clean and hygienic proven Pest Elimination services to new You won’t see us waiting around for
results, but at the same time help save in locations across the globe. And we’re opportunities to come to us. We can’t wait to
major cost areas like water, energy and labor. advancing our core business throughout the go after them.
And that’s why we continue to introduce inno- world with small chains and independent Ecolab is ready for the future. Just
vative technologies to make our customers’ operators in the restaurant and food and watch us GO!
lives easier – cleaner – and better. beverage manufacturing markets, which
As always, new products and programs represent tremendous growth opportunities.
will help lead the charge. Ecolab’s research Above all, we remain committed to
and development team is dedicated to raising growing our global sales-and-service force. Douglas M. Baker
the standard of clean throughout the globe. We already have the largest, most dynamic President and Chief Executive Officer
They strive to elevate industry benchmarks field presence in the industry, and we are
and stay well ahead of the competition. They persistent in making key investments to
tackle this challenge with tenacity and enhance our abilities. We continue to equip
determination – because they relish being our team with the right technology, tools and Allan L. Schuman
the best. training to tackle any challenge. And they Chairman of the Board
We’re driving these advancements on a possess the knowledge and know-how to
Some things should never change – Doug Baker,
and never will President and Chief Executive Officer
In the months leading up to July 1, when I took the reins as Above all, we’re not going to
Ecolab’s new chief executive officer, the same question cropped up change the caring, which is the
in meetings both inside and outside of Ecolab. What are you going heart of the Ecolab culture. We
to change when you become CEO? believe in the real meaning
I think some people were afraid of my response – after all, behind the words spirit, pride,
Ecolab has a long legacy of industry leadership, aggressive growth determination, commitment, passion and integrity, which guide us
and superior shareholder returns. Believe me, we’re certainly not in our daily actions. We care about our customers and one another,
letting up now. and we will do what’s right to succeed.
So when people ask me what’s going to change, I start by But I am committed to change one thing: With the help of all
telling them what’s not going to change. of our associates, we will improve the value of the business and
We’re not going to change the passion. I love Ecolab, and I’m our capabilities – all for the better, each and every day. With more
not alone. It’s a great place to work. We bring our hearts and than 21,000 talented and determined associates around the world
heads to work every day, and put them to good use. It’s truly an giving it everything they’ve got, we can’t go wrong.
incredible team. Ecolab is clear about its mission: Exceed the expectations of
We’re not going to change the attitude. My predecessor Al our customers, achieve excellent returns
GO
Schuman taught us to “think big, act big and be big.” That’s our for our shareholders, and work together
attitude, and it will always remain our attitude. It fuels our to help everyone in our organization be
aggressiveness and pushes us to go after all the goals we want successful. These things should never
to – and will – accomplish. change – and never will.
Ecolab • GO • 13