Notes to Consolidated Financial Statements

NOTE 16. OPERATING SEGMENTS

The company's operating segments have generally similar products and services and the company is organized to manage its operations geographically. The company's operating segments have been aggregated into three reportable segments.

The "United States Cleaning & Sanitizing" segment provides cleaning and sanitizing products and services to United States markets through its Institutional, Kay, Textile Care, Professional Products, Healthcare, Vehicle Care, Water Care Services and Food & Beverage operations.

The "United States Other Services" segment includes all other U.S. operations of the company. This segment provides pest elimination and kitchen equipment repair and maintenance through its Pest Elimination and GCS Service operations.

The company's "International" segment provides cleaning and sanitizing product and service offerings as well as pest elimination services to international markets in Europe, Asia Pacific, Latin America and Canada.

Information on the types of products and services of each of the company's operating segments is included on the inside front cover under "Services/Products Provided" of the Ecolab Overview section of this Annual Report.

The company evaluates the performance of its International operations based on fixed management currency exchange rates. All other accounting policies of the reportable segments are consistent with accounting principles generally accepted in the United States of America and the accounting policies of the company described in Note 2 of these notes to consolidated financial statements. The profitability of the company's operating segments is evaluated by management based on operating income. Intersegment sales and transfers were not significant.

Financial information for each of the company's reportable segments is as follows:

	United States				Other
(thousands)	Cleaning & Sanitizing	Other Services	Total United States	International	Foreign Currency Translation	Corporate	Consolidated
Net sales
2004	$1,796,355	$339,305	$2,135,660	$1,931,321	$ 117,952		$4,184,933
2003	1,694,323	320,444	2,014,767	1,797,400	(50,348)		3,761,819
2002	1,615,171	308,329	1,923,500	1,759,000	(278,915)		3,403,585
Operating income (loss)
2004	290,366	24,432	314,798	210,595	13,090	$ (4,361)	534,122
2003	285,212	21,031	306,243	187,864	(6,615)	(4,834)	482,658
2002	271,838	33,051	304,889	165,182	(28,197)	(46,008)	395,866
Depreciation & amortization
2004	119,831	5,254	125,085	107,716	8,654	5,927	247,382
2003	114,516	4,903	119,419	106,563	(3,276)	6,950	229,656
2002	112,303	4,615	116,918	109,914	(10,852)	7,448	223,428
Total assets
2004	1,284,006	146,701	1,430,707	2,033,246	182,274	69,947	3,716,174
2003	1,112,994	143,552	1,256,546	1,874,450	(10,716)	108,638	3,228,918
2002	1,067,226	129,498	1,196,724	1,897,541	(300,735)	72,377	2,865,907
Capital expenditures
2004	153,503	4,993	158,496	111,703	5,672		275,871
2003	117,361	3,726	121,087	93,701	(2,894)	141	212,035
2002	$   111,349	$    3,105	$   114,454	$   110,954	$  (13,140)	$     489	$   212,757

Consistent with the company's internal management reporting, corporate operating income includes special charges included on the consolidated statement of income and recorded for 2004, 2003 and 2002. In addition, corporate expense includes an adjustment made for death benefits for retired executives in 2003. Corporate assets are principally cash and cash equivalents.

The company has two classes of products and services within its United States Cleaning & Sanitizing and International operations which comprise 10 percent or more of consolidated net sales. Sales of warewashing products were approximately 22 percent, 23 percent and 23 percent of consolidated net sales in 2004, 2003 and 2002, respectively. Sales of laundry products and services were approximately 10 percent, 10 percent and 11 percent of consolidated net sales in 2004, 2003 and 2002, respectively.

Property, plant and equipment of the company's United States and International operations were as follows:

December 31 (thousands)	2004	2003	2002
United States	$476,804	$404,209	$418,973
International	319,493	322,801	290,049
Corporate			4,653
Effect of foreign currency translation	38,433	9,787	(33,410)
Consolidated	$834,730	$736,797	$680,265