(Mark One)

For the quarterly period ended September 30, 2002

OR

For the transition period from                 to                

Commission File No. 1-9328

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   ý      No   o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).  Yes   ý     No   o

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of October 31, 2002.April 30, 2003.

129,566,265131,395,820 shares of common stock, par value $1.00 per share.

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements.

ECOLAB INC.

CONSOLIDATED STATEMENT OF INCOME

Per share amounts do not necessarily sum due to rounding.

The accompanying notes are an integral part of the consolidated financial information.

2

ECOLAB INC.

CONSOLIDATED STATEMENT OF INCOME

The accompanying notes are an integral part of the consolidated financial information.

3

ECOLAB INC.

CONSOLIDATED BALANCE SHEET

The accompanying notes are an integral part of the consolidated financial information.

(Continued)

43

ECOLAB INC.

CONSOLIDATED BALANCE SHEET (Continued)

The accompanying notes are an integral part of the consolidated financial information.

54

ECOLAB INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

The accompanying notes are an integral part of the consolidated financial information.

(Continued)

65

ECOLAB INC.

CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)

The accompanying notes are an integral part of the consolidated financial information.

76

ECOLAB INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.       Consolidated Financial Statements

The unaudited consolidated financial statements as of September 30, 2002 and for the threefirst quarter ended March 31, 2003 and nine-month periods ended September 30, 2002, and 2001, reflect, in the opinion of management, all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows of the company for the interim periods presented.  Except for adjustments for special charges, a goodwill impairment charge and a gain from discontinued operations, these adjustments consisted of normal, recurring items. The financial results for any interim period are not necessarily indicative of results for the full year.  The consolidated balance sheet data as of December 31, 20012002 was derived from audited consolidated financial statements, but do not include all disclosures required by accounting principles generally accepted in the United States of America.  The unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto incorporated in the company’s Annual Report on Form 10-K for the year ended December 31, 2001.2002.

With respect to the unaudited financial information of Ecolab Inc. as of September 30, 2002 and for the third quarter ended March 31, 2003 and nine-month periods ended September 30, 2002, and 2001, included in this Form 10-Q, PricewaterhouseCoopers LLP reported that they have applied limited procedures in accordance with professional standards, which do not require an audit, for a review of such information. Therefore, their separate report dated OctoberApril 22, 20022003, appearing herein, states that they did not audit and they do not express an opinion on that unaudited financial information. Accordingly, the degree of reliance on their report on such information should be restricted in light of the limited nature of the review procedures applied.  PricewaterhouseCoopers LLP is not subject to the liability provisions of Section 11 of the Securities Act of 1933 (the “Act”) for their report on the unaudited financial information because that report is not a report or a part of a registration statement prepared or certified by PricewaterhouseCoopers LLP within the meaning of Sections 7 and 11 of the Act.

2.       Selected Balance Sheet InformationStock-Based Compensation

The company measures compensation cost for its stock incentive and option plans using the intrinsic value-based method of accounting.

8Had the company used the fair value-based method of accounting to measure compensation expense for its stock incentive and option plans and charged compensation cost against income over the vesting periods, based on the fair value of options at the date of grant, net income and the related basic and diluted per common share amounts for the first quarters ended March 31, 2003 and 2002 would have been reduced to the following pro forma amounts:

7

ECOLAB INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2.       Stock-Based Compensation (Continued)

3.       Selected Balance Sheet Information

8

ECOLAB INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3.       Selected Balance Sheet Information (Continued)

Accumulated other comprehensive loss as of September 30, 2002March 31, 2003 consists of $3,196,000$2,593,000 of net unrealized gainslosses on primarily financial instruments and $76,308,000$40,250,000 of cumulative translation losses.  Accumulated other comprehensive loss as of December 31, 20012002 consists of $586,000$1,571,000 of net unrealized losses on financial instruments and $95,037,000$74,537,000 of cumulative translation losses.

3.4.       Financial Instruments

In February 2002, subsequent to the company’s most recent fiscal year-end, the company issued euro 300 million of 5.375 percent Eurobonds,Euronotes, due February 2007.  The issuance of this debt gives rise to foreign currency exposures and in order to manage this risk the company designated a portion (approximately euro 200 million)250 million as of the end of the first quarter 2003) of this EurobondEuronote debt as a hedge of existing foreign currency exposures related to net investments the company has in certain European subsidiaries.  Accordingly, the transaction gains and losses on the portion of the EurobondsEuronotes that are designated and are effective as hedges of the company’s net investments have been included as a component of the cumulative translation account.  Total transaction losses related to the EurobondsEuronotes charged to shareholders’ equity were approximately $9.8 million and $23.9$17.1 million for the thirdfirst quarter and first nine months of 2002, respectively.

The company also entered into an interest rate swap agreement in connection with the issuance of its Eurobonds.  This agreement was used to help the company achieve a desired proportion of variable versus fixed rate debt.  The interest rate swap agreement is effective until February 2007 and essentially converts approximately euro 80 million of the Eurobond debt from a fixed interest rate to a floating or variable interest rate.2003.

4.5.       Comprehensive Income

Comprehensive income was as follows:

9

ECOLAB INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5.     Reclassifications6.

In connection with adopting Emerging Issues Task Force (EITF) 01-09, Accounting for Consideration Given by a Vendor to a Customer, the company reclassified certain customer incentive costs from selling, general and administrative expenses to a component of revenue at the beginning of 2002. Prior year amounts have also been reclassified for consistency purposes.  This reclassification decreased previously reported revenue by approximately $8.6 million for the quarter ended September 30, 2001 and by $26.9 million for the nine months ended September 30, 2001.  Also, at the beginning of 2002, the company reclassified repair part costs from selling, general and administrative expense to cost of sales.  Prior year amounts have also been reclassified for consistency purposes.  The impact of this reclassification increased previously reported cost of sales by approximately $7.9 million for the quarter ended September 30, 2001 and by $23.3 million for the nine months ended September 30, 2001.  These reclassifications had no impact on previously reported net income.

6.                    Special Charges

In the first quarter of 2002, management approved plans to undertake restructuring and cost saving actions during 2002, including costs related to the integration of the company’s European operations.  These actions included global workforce reductions, facility closings, employee benefit changes and product line discontinuations.  AsA portion of these actions were completed during the first quarter of 2002, and as a result, the company recorded restructuring expense of $1,438,000$22,991,000 ($896,000 after tax)in the third quarter of 2002 and $36,554,000 ($22,774,00014,289,000 after tax) in the first nine monthsquarter of 2002.

This includes $18,122,000 for employee termination benefits, $2,999,000 for asset disposals and $1,870,000 for other charges.  The company also incurred non-recurring merger integration costs of $972,000$280,000  ($535,000185,000 after tax) and $2,853,000 ($1,808,000 after tax) in the third quarter and the first nine months of 2002, respectively, related to the integration of European and other operations. TheseRestructuring and merger

9

ECOLAB INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6.Special Charges (Continued)

integration costs have also been included as a component of “special charges” on the consolidated statement of income.

The combinedincome with a portion of restructuring expenses included as a component of “cost of sales”.  Amounts included as a component of “cost of sales” include asset disposals of $2,999,000 and merger integration costs decreased diluted earnings per share by $0.01 and $0.19manufacturing related severance of $2,185,000 for the three and nine-month periods ended September 30, 2002, respectively.first quarter of 2002.

Also included in “special charges” on the consolidated statement of income for the first nine monthsquarter of 2002 is a one-time curtailment gain of $5,791,000 ($3,501,000 after tax), or $0.03 per diluted share in 2002, related to changes to postretirement healthcare benefits made in the first quarter of 2002.

Restructuring liabilities are classified in other current liabilities.

Employee termination benefit expenses in the first quarter of 2002 included approximately 275 net personnel reductions through voluntary and involuntary terminations.  Individuals were affected through facility closures and consolidation primarily within the corporate administrative, operations and research and development functions.

Asset disposals include inventory and property, plant, and equipment charges.  Inventory charges were $957,000 for the first quarter of 2002 and reflect the discontinuance of product lines, which are not consistent with the company’s long-term strategies.  Property, plant and equipment charges during the first quarter of 2002 were $2,042,000, and reflect the downsizing and closure of production facilities as well as global changes to manufacturing and distribution operations in connection with the integration of European operations.

Other charges include lease termination costs and other miscellaneous exit costs.

The first quarter of 2003 includes the reversal of $242,000 of previously accrued severance costs.

The company continued to record restructuring and merger integration charges throughout 2002 and completed these activities by December 31, 2002.

For segment reporting purposes, each of these items has been included in the company’s corporate segment, which is consistent with the company’s internal management reporting.

10

ECOLAB INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6.                    Special Charges (Continued)

The restructuring expenses described above and subsequent reductionsReductions to the relatedrestructuring liability accounts for each quarterly period throughout 2002during the first quarter of 2003 include the following:

11

ECOLAB INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6.     Special Charges (Continued)

Restructuring expenses have been included both as a component of “special charges” and a component of “cost of sales” on the accompanying Consolidated Statement of Income.  Amounts included as a component of “cost of sales” include asset disposals of $187,000 and manufacturing related severance of $114,000 for the third quarter.  Year-to-date asset disposals were $4,810,000 and manufacturing related severance was $2,583,000. Restructuring liabilities for employee termination benefits are classified as a component of compensation and benefits in current liabilities and restructuring liabilities for other costs are classified in other current liabilities.

Employee termination benefit expenses in the third quarter of 2002 included 56 personnel reductions through voluntary and involuntary terminations.  Total net personnel reductions during the first nine months of 2002 were 542 people, with the possibility that additional people will be replaced in the future.  Individuals were affected through facility closures and consolidation primarily within the corporate administrative functions.

Asset disposals include inventory and property, plant, and equipment charges.  Net inventory and property, plant and equipment charges for the third quarter were $187,000 and include the reversal of $202,000 previously expensed in the first quarter.  During the first nine months of 2002 inventory charges were $2,223,000, and reflect the discontinuance of product lines which are not consistent with the company’s long-term strategies.  Property, plant and equipment charges during the first nine months of 2002 were $2,587,000, and reflect the downsizing and closure of production facilities as well as global changes to manufacturing and distribution operations in connection with the integration of European operations.

Other charges of $247,000 and $3,160,000 for the three and nine-month periods ended September 30, 2002, respectively, include lease termination costs and other miscellaneous exit costs.

The company continues to anticipate additional restructuring expenses during the remainder of 2002, which are expected to result in total pre-tax charges of $50 million to $60 million for the full year 2002.