notes to consolidated financial statements

Business Acquisitions
Business acquisitions made by the company during 2003, 2002 and 2001, excluding the acquisition of Henkel-Ecolab, were as follows:

Business Acquired	Date of   Acquisition	Ecolab   Operating   Segment – Type   of Business	Estimated   Annual Sales   Prior to   Acquisition   (millions)
			(unaudited)
2003
Adams Healthcare	Dec. 2002	Europe	$19
2002
Kleencare Hygiene	Jan. 2002	Europe	30
Audits International	Jan. 2002	Pest Elimination	3
Terminix Ltd.	Sept. 2002	Europe	65
2001
Ecolab S.A. – 23.5% interest in addition to prior 51% interest	Dec. 2000	Latin America	8
Randall International LLC – 25% interest	Jan. 2001	Institutional	8
Envirocare Service Pte. Ltd.	March 2001	Asia Pacific	1
Microbiotecnica	July 2001	Latin America	3
Commercial Parts & Services, Inc.	Oct. 2001	GCS	28

The total cash consideration paid by the company for these acquisitions and cash adjustments to prior year acquisitions was approximately $32 million and $63 million for 2003 and 2002, respectively. The total cash consideration paid by the company for the 2001 acquisitions, excluding Henkel-Ecolab, was approximately $30 million, of which approximately $18 million was allocated to goodwill.

These acquisitions have been accounted for as purchases and, accordingly, the results of their operations have been included in the financial statements of the company from the dates of acquisition. Net sales and operating income of these businesses were not significant to the company's consolidated results of operations, financial position and cash flows.

In January 2004, the company acquired Nigiko, a Paris-based provider of commercial pest elimination services throughout France. Nigiko pest elimination has annual sales of approximately $55 million. These operations will become part of the company's International Cleaning & Sanitizing operations in 2004.

In February 2004, the company acquired Daydots International, a Texas-based provider of food safety products. Daydots has annual sales of approximately $22 million. These operations will become part of the company's U.S. Cleaning & Sanitizing operations in 2004.

The changes in the carrying amount of goodwill for each of the company's reportable segments for the years ended December 31, 2003 and 2002 are as follows:

	United States			International   Cleaning &   Sanitizing	Consolidated
(thousands)	Cleaning &   Sanitizing	Other   Services	Total   United States
Balance    December 31, 2001	$121,046	$ 44,796	$165,842	$431,083	$596,925
Goodwill acquired during year*	3,532	4,510	8,042	58,862	66,904
Foreign currency translation				38,472	38,472
Impairment losses upon adoption of SFAS       No. 142 on January 1, 2002				(4,002)	(4,002)
Impairment losses during 2002	(2,599)		(2,599)		(2,599)
Balance    December 31, 2002	121,979	49,306	171,285	524,415	695,700
Goodwill acquired during year*	367	(377)	(10)	825	815
Goodwill allocated to business dispositions				(2,708)	(2,708)
Foreign currency translation				103,404	103,404
Balance    December 31, 2003	$122,346	$ 48,929	$171,275	$625,936	$797,211

*All of the goodwill related to businesses acquired in 2003 and 2002 is expected to be tax deductible. Goodwill acquired in 2003 and 2002 also includes adjustments to prior year acquisitions. United States Other Services goodwill acquired during 2003 includes a reduction of $0.4 million for an adjustment related to the Audits International acquisition. International Cleaning and Sanitizing goodwill acquired during 2003 includes a reduction of $4.7 million for the Terminix acquisition primarily related to a finalization of the pension valuation at the date of acquisition.

Business Dispositions
In December 2002, the company sold its Darenas janitorial products distribution business based in Birmingham, United Kingdom. This sale resulted in a loss of approximately $1.7 million principally due to the amount of goodwill allocated to the disposed business. The annualized sales of this entity were approximately $30 million. In June 2003, the company sold its minority interest investment in Comac S.p.A., a floor care machine manufacturing company based in Verona, Italy, for a gain of approximately $11.1 million ($6.7 million after tax). The company accounted for this investment under the equity method of accounting. In September 2003, the company sold the consumer dermatology business of its recently acquired Adams Healthcare business at a nominal gain. Goodwill allocated to the sale of the dermatology business was approximately $1.0 million. The annualized sales of the dermatology business that was sold were approximately $2.5 million. These operations and investment were a part of the company's International Cleaning & Sanitizing segment.