2009 SECOND QUARTER HIGHLIGHTS:

Reported diluted EPS $0.41

Record pro forma EPS +6% to $0.50, excluding special gains and charges and discrete tax items

Reported sales -8% to $1.4 billion; fixed currency sales level with year ago

Strong new account sales, pricing and cost saving actions, offset the effects of global recession, higher delivered product costs and unfavorable foreign exchange

                                          (unaudited)                                                                                                        Second Quarter              %         Six Months                  %        (Millions, except per share)            2009          2008          change    2009          2008          change                                                                                                                      Net Sales                               $  1,441.5    $  1,570.0    -8   %    $  2,789.7    $  3,027.9    -8   %                                                                                                                      Operating Income                           165.0         210.5      -22  %       262.5         371.2      -29  %                                                                                                                      Pretax Income                              149.8         195.2      -23  %       231.5         341.1      -32  %   Taxes                                      50.3          56.2       -10  %       74.3          99.0       -25  %   Net Income Attributable to Ecolab       $  99.1       $  139.0      -29  %    $  156.5      $  241.9      -35  %                                                                                                                      Diluted Net Income Per Share            $  0.41       $  0.55       -25  %    $  0.65       $  0.96       -32  %   Diluted Average Shares Outstanding         239.5         251.4      -5   %       239.1         251.5      -5   %    -------------------------------------------------------------------------------  

Ecolab Inc. reported second quarter pro forma results at the top end of its forecasted range, led by strong new account gains, pricing and cost savings actions which offset the effects of the global recession, higher delivered product costs and unfavorable foreign exchange. The U.S. Kay and Healthcare businesses, along with the Canadian operations, led growth for the quarter as they enjoyed double-digit gains.

Ecolab's reported net sales declined 8% to $1.4 billion in the second quarter of 2009; fixed currency sales were level with the prior year. Reported net income attributable to Ecolab decreased 29% to $99 million. Reported diluted earnings per share declined 25% to $0.41.

Second quarter 2009 and 2008 results included special gains and charges and discrete tax items. Excluding those items, pro forma second quarter 2009 diluted earnings per share were $0.50, a 6% increase from pro forma second quarter 2008 diluted earnings per share of $0.47. Currency translation had a negative impact on second quarter 2009 pro forma diluted earnings per share of approximately $0.05 per share.

Segment review

Second quarter 2009 sales for Ecolab's U.S. Cleaning & Sanitizing operations increased 1% to $671 million. Kay and Healthcare led sales results with double-digit gains. Ecolab's U.S. Cleaning & Sanitizing operating income rose 18% to $126 million.

U.S. Other Services sales declined 5% to $115 million in the second quarter. However, operating income increased 40% to $18 million as cost reductions improved profitability over last year.

Sales of Ecolab's International operations, when measured at fixed currency rates, declined 1% to $656 million in the second quarter. Canada and Latin America enjoyed strong sales growth while Asia Pacific showed good gains; Europe/Middle East/Africa sales were lower. Fixed currency operating income declined 17% to $52 million as delivered product and other operating cost increases outpaced pricing in the quarter, particularly in Europe. When measured at public currency rates, International sales declined 17% and operating income decreased 34%.

The Corporate segment includes special gains and charges, which are reported as a separate line item in the income statement. Special gains and charges for the second quarter 2009 of $25 million included a restructuring charge of $24 million ($19 million after tax) for actions announced in January that were primarily taken to optimize our workforce, as well as other non-recurring costs to optimize our business structure. Second quarter 2008 results included an $0.08 per share benefit from special gains and charges, primarily due to a gain on the sale of a plant. The Corporate segment also includes investments in the development of business systems and other corporate investments we are making as part of our ongoing efforts to improve our efficiency and returns.

The reported income tax rate for the second quarter 2009 was 33.6% compared to the reported tax rate of 28.8% for the second quarter 2008. Excluding the tax rate impact of special gains and charges and discrete tax items, the adjusted effective income tax rate for the second quarter 2009 was 31.3% compared with 32.8% for the same period last year. The decrease in the adjusted second quarter effective tax rate was due primarily to tax planning efforts as well as global rate reductions.

CEO comment

Commenting on the quarter, Douglas M. Baker, Jr., Ecolab's Chairman, President and Chief Executive Officer said, "Results were on target, and we are very pleased with our progress. We generated strong new account growth, appropriate pricing and significant cost savings to offset weak market conditions and higher raw material costs, yielding the good pro forma earnings improvement. Our team continues to deliver in spite of tough conditions.

"While it appears the economy is stabilizing, we have not yet seen markets turn up and we are not relying on a recovery to deliver our results. We continue to work aggressively, driving market share growth and keeping spending in check. At the same time, despite the major global economic challenges, we are using our strength to accelerate key investments in new products, sales force training, strategic growth initiatives, and infrastructure improvements that are critical to developing higher growth and profitability in 2010 and beyond. These actions will both help us gain traction as the economy recovers and benefit future results -- and we are doing these while still expecting to show solid pro forma earnings growth this year. We know these are the right actions in this environment, and are confident we are building an even stronger, more profitable company with more opportunity for superior growth for years to come."

Business Outlook

2009 -- Full Year

Ecolab has tightened its expected pro forma earnings per share forecast, which excludes special gains and charges and discrete tax items, for the full year ending December 31, 2009 to $1.96 to $2.02 from the previous forecast of $1.95 to $2.05.

As previously announced, 2009 special gains and charges are expected to include restructuring charges of approximately $65 million to $75 million. For the full year 2009, special gains and charges, including restructuring charges, are expected to be approximately $0.21 to $0.23 per share.

2009 -- Third Quarter

Ecolab expects third quarter 2009 fixed currency sales to be similar to the third quarter 2008. Currency translation is expected to have an unfavorable effect on reported sales, and we anticipate currency translation to have an unfavorable impact of approximately $0.03 on third quarter pro forma earnings per share.

Our outlook for the third quarter 2009 is as follows:

  Gross Margins                                            50% - 51%             SG&A % of Sales                                          35% - 36%             Interest expense, net                                    approx. $15 million   Effective tax rate                                       approx. 31%           Pro forma EPS, excluding special gains and charges       $0.58 - $0.61          -------------------------------------------------------------------------------  

We expect the third quarter 2009 will include special gains and charges, including restructuring charges, of approximately $0.02 to $0.04 per share. Reported third quarter 2008 earnings per share of $0.50 included special gains and charges and discrete tax items. Excluding those items, third quarter 2008 pro forma diluted earnings per share were $0.55.

With sales of $6 billion and more than 26,000 associates, Ecolab Inc. (NYSE: ECL) is the global leader in cleaning, sanitizing, food safety and infection prevention products and services. Ecolab delivers comprehensive programs and services to the foodservice, food and beverage processing, healthcare, and hospitality markets in more than 160 countries. More news and information is available at www.ecolab.com.

Ecolab will host a live webcast to review the second quarter earnings announcement today at 1:00 p.m. Eastern Time. The webcast, along with related presentation slides, will be available to the public on Ecolab's website at www.ecolab.com/investor. A replay of the webcast and related materials will be available at that site.

Listening to the webcast requires Internet access, the Windows Media Player, Real Player or other compatible streaming media player.

This news release contains various "Forward-Looking Statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements concerning our 2009 third quarter and full year financial and business prospects, including estimated sales, gross margins, selling, general and administrative expense, interest expense, effective tax rates, currency translation, special gains and charges and discrete tax items, and reported and pro forma diluted earnings per share. These statements, which represent Ecolab's expectations or beliefs concerning various future events, are based on current expectations that involve a number of risks and uncertainties that could cause actual results to differ materially from those of such Forward-Looking Statements. We caution that undue reliance should not be placed on Forward-Looking Statements, which speak only as of the date made.

Risks and uncertainties that may affect operating results and business performance are set forth under Item 1A of our most recent Form 10-K and include the vitality of the markets we serve; the impact of worldwide economic factors such as the worldwide economy, credit markets, interest rates and foreign currency risk; fluctuations in raw material and delivered product costs; our ability to develop competitive advantages through innovation; restraints on pricing flexibility due to contractual obligations; pressure on operations from consolidation of customers, vendors or competitors; the ability to acquire complementary businesses and to effectively integrate such businesses; the impact of investments to develop business systems or to optimize our business structure; the costs and effects of complying with laws and regulations relating to the environment and to the manufacture, storage, distribution, sale and use of our products; changes in laws, regulations or accounting standards; the occurrence of litigation or claims, acts of war, terrorism, severe weather or public health epidemics; the loss or insolvency of a major customer, supplier or distributor; our ability to attract and retain high caliber management talent; and other uncertainties or risks reported from time to time in our reports to the Securities and Exchange Commission.

Except as may be required under applicable law, we undertake no duty to update our Forward-Looking Statements.

  ECOLAB INC.