Ecolab Annual Report 2015

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FY2015 Annual Report · Ecolab

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A N N U A L R E P O R T 2 0 1 5

EXCEPTIONAL TECHNOLOGY.
PREMIER SERVICE.
PROVEN RESULTS.

This report was designed and printed

by WBENC-Certified firms. Printed using

agri-based inks on FSC®-certified paper.

Global Headquarters
370 Wabasha Street N St. Paul, MN 55102
www.ecolab.com 1 800 2 ECOLAB

ECOLAB OVERVIEW

DELIVERING RESULTS
FOR OUR CUSTOMERS
AND SHAREHOLDERS

A TRUSTED PARTNER AT MORE THAN 1 MILLION CUSTOMER LOCATIONS, ECOLAB INC. IS THE
GLOBAL LEADER IN WATER, HYGIENE AND ENERGY TECHNOLOGIES AND SERVICES THAT PROTECT
PEOPLE AND VITAL RESOURCES.

From restaurants and hotels to refineries and manufacturing facilities, Ecolab’s 47,000
associates work to deliver comprehensive solutions, expertise and on-site service to
promote safe food, maintain clean environments, optimize water and energy use and
improve operational efficiencies for customers in the food, healthcare, energy, hospitality
and industrial markets in more than 170 countries.

Ecolab’s 25,000 sales-and-service associates comprise the industry’s largest and best-
trained direct sales-and-service force, dedicated to helping customers manage their
cleaning, sanitizing and water and energy management challenges. Many of the world’s
most recognizable brands rely on Ecolab to help ensure operational efficiencies, product
integrity and brand reputation.

Headquartered in St. Paul, Minn., Ecolab common stock is listed and traded on the
New York Stock Exchange under the symbol ECL. For more company information, visit
www.ecolab.com or call 1.800.2.ECOLAB. Follow us on Twitter @ecolab, facebook.com/

ecolab or linkedin.com/company/ecolab.

FORWARD-LOOKING STATEMENTS AND RISK FACTORS

We refer readers to the company’s disclosure entitled “Forward-Looking Statements

and Risk Factors,” which begins on page 15 of the Form 10-K.

ECOLAB STOCK PERFORMANCE

2015 4Q

$122.48

$109.64

117.69

103.09

118.27

110.03

117.00

97.78

2014 4Q

$115.39

$101.26

2013

118.46

107.31

111.57

101.82

111.83

97.65

$108.34

$96.44

99.45

85.48

89.47

78.74

80.69

HIGH

71.99

LOW

BUSINESS MIX 2015
PERCENT OF TOTAL SALES

OTHER 5%

SALES BY REGION 2015
PERCENT OF TOTAL SALES

ASIA PACIFIC

LATIN AMERICA

GLOBAL
ENERGY

28%

35%

GLOBAL
INDUSTRIAL

MIDDLE EAST
AND AFRICA

32%

GLOBAL
INSTITUTIONAL

2 ECOLAB ANNUAL REPORT 2015

EUROPE

12%

18%

57%

NORTH
AMERICA

BOARD OF DIRECTORS

DOUGLAS M. BAKER, JR.
Chairman of the Board and Chief Executive Officer,
Ecolab Inc., Director since 2004

BARBARA J. BECK
Chief Executive Officer, Learning Care Group Inc.
(early education/child care provider), Director
since 2008, Safety, Health and Environment and
Governance Committees

LESLIE S. BILLER
Chief Executive Officer of Harborview Capital
(private investment and consulting company),
Director since 1997, Compensation and
Finance* Committees

CARL M. CASALE
President and Chief Executive Officer of CHS Inc.
(global agribusiness), Director since 2013, Audit and
Governance Committees

STEPHEN I. CHAZEN
President and Chief Executive Officer of Occidental
Petroleum Corporation (oil, natural gas and chemical
producer), Director since 2013, Audit and
Finance Committees

JEFFREY M. ETTINGER
Chairman of the Board and Chief Executive Officer
of Hormel Foods Corporation (food products),
Director since 2015, Compensation and Safety,
Health and Environment Committees

COMMUNICATION WITH DIRECTORS

JERRY A. GRUNDHOFER
Chairman Emeritus and retired Chairman of the
Board, US Bancorp (financial services), Director
since 1999, Compensation* and Finance Committees

DAVID W. MACLENNAN
Chairman and Chief Executive Officer of Cargill,
Incorporated, Director since 2015, Audit and
Governance Committees

ARTHUR J. HIGGINS
Consultant, Blackstone Healthcare Partners of The
Blackstone Group (asset management and advisory
firm), Director since 2010, Compensation and
Governance Committees

JOEL W. JOHNSON
Retired Chairman and Chief Executive Officer,
Hormel Foods Corporation (food products), Director
since 1996, Audit* and Governance Committees

MICHAEL LARSON
Chief investment officer to William H. Gates III and
Business Manager of Cascade Investment, L.L.C.,
Director since 2012, Finance and Safety, Health and
Environment Committees

JERRY W. LEVIN
Chairman, JW Levin Management Partners LLC
(private investment and advisory firm), Director
since 1992, Compensation and Governance*
Committees and Lead Director

ROBERT L. LUMPKINS
Chairman of the Board, The Mosaic Company
(crop and animal nutrition products and services),
Director since 1999, Audit and Safety, Health and
Environment* Committees

TRACY B. MCKIBBEN
Founder and President, MAC Energy Advisors LLC
(consulting company for alternative energy and
clean technology investments), Director since 2015,
Audit and Finance Committees

VICTORIA J. REICH
Former Senior Vice President and Chief Financial
Officer, Essendant Inc. (formerly United Stationers
Inc. and a wholesale distributor of business
products), Director since 2009, Audit and Safety,
Health and Environment Committees

SUZANNE M. VAUTRINOT
President of Kilovolt Consulting Inc. and a retired
Major General of the United States Air Force,
Director since February 2014, Audit and
Finance Committees

JOHN J. ZILLMER
Retired President and Chief Executive Officer,
Univar Inc. (industrial chemicals and related
specialty services), Director since 2006,
Compensation and Governance Committees

*Denotes committee chair

Stakeholders and other interested parties, including our investors and associates, with substantive matters requiring the attention of our board
(e.g., governance issues or potential accounting, control or auditing irregularities) may use the contact information for our board located on our
website at www.ecolab.com/investors/corporate-governance.

Matters not requiring the direct attention of our board — such as employment inquiries, sales solicitations, questions about our products and
other such matters — should be submitted to the company’s management at our Global Headquarters in St. Paul, Minn.

In addition to online communication, interested parties may direct correspondence to our board at:

Ecolab Inc.
Attn: Corporate Secretary
370 Wabasha Street North
St. Paul, MN 55102

CORPORATE OFFICERS

DOUGLAS M. BAKER, JR.
Chairman of the Board and Chief Executive Officer

THOMAS W. HANDLEY
President and Chief Operating Officer

JUDY M. MCNAMARA
Vice President — Tax

CHRISTOPHE BECK
Executive Vice President and President —
Global Water and Process Services

MICHAEL A. HICKEY
Executive Vice President and President —
Global Institutional

LARRY L. BERGER
Executive Vice President and Chief Technical Officer

BRYAN L. HUGHES
Senior Vice President and Corporate Controller

ALEX N. BLANCO
Executive Vice President and
Chief Supply Chain Officer

ROBERTO INCHAUSTEGUI
Executive Vice President and President —
Global Services and Specialty

DARRELL BROWN
Executive Vice President and President — Europe

LAURIE M. MARSH
Executive Vice President — Human Resources

ANGELA M. BUSCH
Senior Vice President — Corporate Development

MICHAEL C. MCCORMICK
Chief Compliance Officer and Assistant Secretary

CHING-MENG CHEW
Vice President and Treasurer

STEWART H. MCCUTCHEON
Executive Vice President and
Chief Information Officer

TIMOTHY P. MULHERE
Executive Vice President and President — Regions

DANIEL J. SCHMECHEL
Chief Financial Officer

JAMES J. SEIFERT
Executive Vice President, General Counsel
and Secretary

ELIZABETH SIMERMEYER
Executive Vice President — Global Marketing
and Communications

STEPHEN M. TAYLOR
Executive Vice President and President —
Nalco Champion

JILL S. WYANT
Executive Vice President and President —
Global Food & Beverage and Healthcare

ECOLAB ANNUAL REPORT 2015

SUMMARY

MILLIONS, EXCEPT PER SHARE

PERCENT CHANGE

2015

2014

2013

2015

2014

Net Sales

$13,545.1

$14,280.5

$13,253.4

Net Income Attributable to Ecolab

1,002.1

1,202.8

967.8

(5)

(17)

Percent of Sales

7.4 %

8.4 %

7.3 %

NET SALES
MILLIONS

2015

2014

2013

2012

2011

$13,545

$14,281

$13,253

$11,839

$6,799

Diluted Net Income Attributable to
Ecolab per Common Share

Adjusted Diluted Net Income Attributable

to Ecolab per Common Share
(non-GAAP measure)

Diluted Weighted-Average Common
Shares Outstanding

Cash Dividends Declared per
Common Share

Cash Provided by Operating Activities

Capital Expenditures

3.32

4.37

3.93

4.18

3.16

(16)

3.54

301.4

305.9

1.340

1,999.8

771.0

1.155

1,815.6

748.7

0.965

1,559.8

625.1

–

(1)

(6)

Ecolab Shareholders’ Equity

6,909.9

7,315.9

7,344.3

Return on Beginning Equity

13.8 %

16.5 %

15.8 %

Total Debt

6,465.5

6,548.2

6,875.8

(1)

(5)

Total Debt to Capitalization

48.1 %

47.0 %

48.1 %

Total Assets

$18,641.7

$19,427.4

$19,607.8

(4)

(1)%

ECOLAB STOCK PERFORMANCE AND COMPARISON

E
C
R
P
K
C
O
T
S
B
A
L
O
C
E

$120

$110

$100

$90

$80

$70

$60

$50

2.20

2.00

1.80

1.60

1.40

1.20

1.00

S
E
C
D
N

0
0
5
P
&
S

B
A
L
O
C
E

2013

2014

2015

ECOLAB STOCK PRICE

ECOLAB INDEX

S&P 500 INDEX

NET INCOME ATTRIBUTABLE TO ECOLAB
MILLIONS

2015

2014

2013

2012

2011

$1,002

$1,203

$968

$704

$463

DILUTED NET INCOME ATTRIBUTABLE
TO ECOLAB PER SHARE
DOLLARS

2015

$3.32

2014

$3.93

2013

$3.16

2012

$2.35

2011

$1.91

$4.37

$4.18

$3.54

$2.98

$2.54

REPORTED

ADJUSTED
(NON-GAAP MEASURE)*

DIVIDENDS DECLARED PER SHARE
DOLLARS

2015

2014

2013

2012

2011

$1.340

$1.155

$0.965

$0.830

$0.725

* This Annual Report includes certain Non-GAAP

financial measures. We refer readers to the
company’s disclosure entitled “Non-GAAP
Financial Measures,” which begins on page 48
of the Form 10-K.

ECOLAB ANNUAL REPORT 2015 3

A LETTER FROM ECOLAB’S CHAIRMAN
AND CHIEF EXECUTIVE OFFICER

OUR BUSINESS MODEL
PROVED RESILIENT IN A
TOUGH ENVIRONMENT.

In a year of significant headwinds for business globally, the
Ecolab team turned in another strong performance, increasing
adjusted earnings per share by 12 percent before currency
translation and the effects of the Venezuelan bolivar devaluation.
Once again our business model – and our people -- proved to be
resilient in a tough environment.

It was a challenging year in many respects. Global growth slowed,
with softness in many key markets. Oil prices dropped to a 12-year
low in December, depressing demand in our energy business.
The dollar soared in value versus other currencies, unfavorably
impacting certain costs and the translation of non-dollar currencies
in our financial statements.

Our team rose to the challenge, delivering $1.1 billion in net new
business wins against these substantial headwinds. The turnaround
in Europe continued and Energy outperformed a difficult market.
We also negotiated better prices for our raw materials, reduced our
transportation costs and tightened spending in our discretionary
areas, offsetting the currency and energy market challenges.

CONTINUED INVESTMENT IN OUR FUTURE

Importantly, we delivered earnings growth while also increasing
our combined investments in R&D, systems and field technology.
We had a record innovation pipeline of $1.1 billion, up 15% over last
year. We leveraged our core technologies and anchor platforms
across business segments: antimicrobials; hygiene; clean-in-place;
solids chemistry; scale, deposit and corrosion control; polymers;
and dispensing and monitoring; driving better outcomes at lowest
in-use cost. We continued simplifying the number of IT systems that
manage global business data, improving the information we provide
our teams to operate. And we equipped our sales and service teams
with better technology to enhance service quality.

We also invested in five acquisitions, with combined revenue of
$305 million, to strengthen our ability to serve our customers. In
November, we acquired the U.S. operations of Swisher Hygiene,
expanding our Institutional customer base and service coverage.
We also acquired the assets and operations of Ultra Fab Industries,
a privately held company based in Calgary, Canada, that designs

and manufactures customized solutions and specialized chemical
injection systems for the oil and gas industry. This acquisition
broadened Nalco Champion’s offerings and market opportunity.
Earlier in the year, we acquired Jianghai Environmental Protection
Co. Ltd., which increased our total water business in China by 50
percent, significantly strengthening long-term growth opportunities
in this water-stressed country.

MACRO TRENDS ARE IN OUR FAVOR

Our decision to make these investments is driven by our confidence
in our future. While it’s difficult to predict how the world might
change in any given year, it’s easier to predict what won’t change
over the long term. The world’s growing population will require
more food, more water and more energy. In developed markets,
populations are aging and healthcare safety and costs will come
under more scrutiny. In emerging markets, the middle class is
growing and demanding more products and services. Technology
is driving an interconnected world, creating both new risks, and
the potential for new solutions. Resource constraints are driving
increased interest in sustainable solutions. Water scarcity in
particular is gaining recognition as a major obstacle to business
growth and economic vitality. We are well positioned to help our
customers and society deal with all of these challenges.

RIGHT FOCUS, RIGHT BUSINESS

OUR GLOBAL SCALE
ENABLES US TO
PROVIDE CONSISTENT
SERVICE QUALITY TO
THE LARGEST PLAYERS.

Our focus on clean water,
safe food, abundant energy
and healthy environments
continues to be vital. Our
global scale enables us to
provide consistent service
quality to the largest players
in the industries that deliver
these benefits to society. By
leveraging and developing technologies that deliver world-class
results with the lowest environmental and economic impact, we are
further expanding these customer relationships.

4 ECOLAB ANNUAL REPORT 2015

CONFIDENCE IN THE FUNDAMENTALS

We expect the marketplace dynamics we saw in 2015 to continue in
2016. While we can’t control the economic environment, we know
that if we stay focused on taking care of customers and associates,
launching better solutions, earning new business — all the things
that we do so well — we will continue to succeed and grow. That’s
what we’re planning to do in 2016. We remain confident in the
fundamentals of our strategy, business model and portfolio, and in
our ambitions.

For us, winning in the marketplace means making the world a better
place to live. We have a winning plan and a proven model, we like to
win and we love making a difference. The good news is that for us,
they go hand in hand.

We have a world-class team, and we have important work to do. I am
looking forward to all that we will accomplish in 2016.

Douglas M. Baker, Jr.
Chairman and Chief Executive Officer

Our business model combines on-site service with technology to
provide our customers with maximum benefits and useful insights.
Ecolab is a pioneer in utilizing remote monitoring, diagnostics
and controls to help our customers operate more efficiently, with
thousands of connected controllers in the marketplace already.
Continued investments in connectivity will support our business
model by empowering Ecolab associates with insights, enabling
proactive service and enhancing the value we bring to our
customers.

This year we sold more than $500 million in new food safety and
environmental hygiene products, services and programs across the
agriculture, food processing, pharmaceutical, healthcare, beverage,
food distribution and food service businesses. We generated
nearly $300 million in new water technology sales across the
power, primary metal, manufacturing, food & beverage, hospitality
and commercial building industries. We continue to analyze our
opportunities and we are refining our five-year plan.

PUTTING THE CUSTOMER FIRST

IN THE YEAR AHEAD, WE
WILL CONTINUE TO HELP
OUR CUSTOMERS OPERATE
MORE EFFICIENTLY AND
REDUCE COSTS.

Ecolab has always
succeeded because we
provide outstanding service,
personally delivered. We
have a significant competitive
advantage in every one of
our businesses -- unparalleled
customer relationships,
deep understanding of their
businesses and their needs, and exceptional technology, products
and services to offer them. In the year ahead, we will continue to
help our customers operate more efficiently and reduce costs,
which is something they will care even more about given the
continuing challenging economic environment.

Ecolab serves more than 1 million customer locations in a broad
range of industries in more than 170 countries around the world.
The fact that our business is balanced across both geographies and
industries is a benefit in challenging times like these, enabling us to
produce continued growth in spite of the uneven economies around
the world.

ECOLAB ANNUAL REPORT 2015 5

BUSINESS HIGHLIGHTS

BROADENING OUR CAPABILITIES
AND GLOBAL IMPACT

ECOLAB ACQUIRES JIANGHAI
ENVIRONMENTAL PROTECTION
CO. LTD., A LEADING WATER
TREATMENT PROVIDER IN CHINA.

With sales of approximately
$90 million, the acquisition
complements Ecolab’s current
industrial water treatment
offerings under the Nalco
name and strengthens
the company’s long-term
growth opportunities in the
increasingly water-stressed
China market.

ECOLAB CLOSES ON ITS
ACQUISITION OF THE U.S.
OPERATIONS OF
SWISHER HYGIENE.

The acquisition of this
hygiene and sanitizing
solutions provider, which had
2014 sales of approximately
$176 million, expands
the customer base and
service capabilities of our
Institutional business.

NALCO CHAMPION ACQUIRES
THE OPERATIONS OF ULTRA
FAB INDUSTRIES, A SPECIALIZED
PROCESS TECHNOLOGY PROVIDER
TO THE OIL AND GAS INDUSTRY.

Ultra Fab designs and manufactures
customized solutions and
specialized chemical injection
systems. With 2015 sales of
approximately $35 million, the
acquisition broadens Nalco
Champion’s offerings and market
opportunity while providing
new and differentiated programs
to meet the market’s increasing
regulatory and safety requirements.

2016

2015

JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER JANUARY FEBRUARY

THE BOARD OF
DIRECTORS APPOINTS
JEFFREY M. ETTINGER
TO THE ECOLAB BOARD.

Mr. Ettinger is chairman of
the board, president and
chief executive officer of
Hormel Foods Corporation.

6 ECOLAB ANNUAL REPORT 2015

ECOLAB CLOSES ON PURCHASE
OF NEW HEADQUARTERS BUILDING
IN ST. PAUL, MINN.

The 17-story former Travelers
North Tower in downtown St. Paul
will become the new Ecolab Global
Headquarters. In the coming
months, associates from the
three buildings in downtown
St. Paul that currently comprise
Ecolab’s Global Headquarters
will relocate to this newer,
more energy-efficient building.

THE BOARD OF DIRECTORS
APPOINTS DAVID W. MACLENNAN
TO THE ECOLAB BOARD.

Mr. MacLennan is chairman and
chief executive officer of Cargill, Inc.,
a leading global producer and
marketer of food, agricultural,
financial and industrial products
and services headquartered
in Minneapolis.

FINANCIAL HIGHLIGHTS

STRONG PERFORMANCE
DESPITE GLOBAL HEADWINDS

The Ecolab team delivered a strong performance in 2015 despite substantial and diverse global headwinds.

Our robust business model proved itself again in the face of a very challenging period. We maintained our strong focus on serving our
customers and providing superior solutions to help significantly improve operating efficiencies while reducing water and energy use.
Strong new account growth, product introductions and solid fixed currency sales growth in our Global Institutional, Global Industrial and
Other segments more than offset softening economies and the very challenging market for our Global Energy segment. We also achieved
significant raw material cost savings and tightened discretionary spending.

NET SALES

$13.5

BILLION

Reported net sales decreased
5 percent to $13.5 billion in 2015.
When measured in fixed currency
rates, 2015 sales increased 1 percent
compared to 2014 sales.

DILUTED EARNINGS

$3.32

PER SHARE

Reported diluted earnings per share
(EPS) were $3.32, a decrease of
16 percent from 2014‘s reported EPS
of $3.93. Amounts for both 2015 and
2014 include special gains and charges
and discrete tax items. Excluding these
items, adjusted diluted EPS increased
5 percent to $4.37 in 2015 compared to
adjusted diluted EPS of $4.18 in 2014.

OPERATING INCOME

$1.6

BILLION

CASH FLOW FROM
OPERATIONS

$2.0

BILLION

QUARTERLY CASH
DIVIDEND RATE

$1.40

PER COMMON SHARE

We increased our quarterly cash dividend
rate, raising it 6 percent in December
2015 to an indicated annual payout of
$1.40 per common share. This represents
Ecolab’s 24th consecutive annual
dividend rate increase. We have paid a
cash dividend for 79 consecutive years.

SHARE PRICE

$114.38

Reported operating income was
$1.6 billion in 2015, a decrease of
20 percent. Excluding special gains and
charges and when measured in fixed
currency rates, 2015 adjusted fixed
currency operating income increased
7 percent over 2014 operating income.
Growth was driven largely by delivered
product cost savings and synergies.

Cash flow from operations was
$2.0 billion. Total debt to total
capitalization ratio was 48 percent.
Our net debt was equal to 2.2 times
our adjusted EBITDA (earnings before
interest, taxes, depreciation and
amortization). Our debt rating remained
within the investment grade categories
of the major rating agencies during 2015.

Our share price rose nicely in 2015,
increasing 9 percent, compared with a
1 percent decrease by the S&P 500 index.
Our share performance has exceeded the
S&P 500 in 21 of the past 25 years, rising
4,206 percent compared with the S&P
500’s 519 percent increase.

ECOLAB ANNUAL REPORT 2015 7

BUSINESS ALIGNED WITH
GLOBAL MACRO TRENDS

Continued population growth, a growing middle class and global
diets shifting from grains to proteins are placing ever-increasing
pressure on the world’s natural resources. By 2030, it is estimated
that the world will need 35 percent more food, 40 percent more
clean water and 50 percent more energy.

Food, energy and water are interconnected. It takes water and
energy to provide food, water to provide energy and energy
to provide water. This is the food-energy-water nexus, and the
interconnectivity of these vital resources will place increasing
demands on the world’s limited fresh water supply.

As the global population grows, more water will be needed to
irrigate crops. As people become more prosperous, more animal
protein will be consumed, requiring 20 times more water than a
grain- or plant-based diet.

The world also will need more energy. New sources of energy
promise plentiful energy for years to come, but are increasingly
more challenging to reach and require water to extract.

Ecolab is operating at the forefront of the food-energy-water nexus,
helping companies in more than 40 industries throughout the world
reduce water and energy use. We are helping food and foodservice
businesses produce safe food. We are helping energy companies
produce energy more efficiently.

Our impact is significant. For example, in 2015 alone, we helped
customers conserve more than 127 billion gallons of water.

The importance of our work has never been greater, and our
business is well positioned to meet growing global demand for
clean water, safe food, abundant energy and healthy environments.

FOOD-ENERGY-WATER NEXUS

FOOD

ENERGY

WATER

8 ECOLAB ANNUAL REPORT 2015

EXCEPTIONAL TECHNOLOGY.
PREMIER SERVICE.

EXCEPTIONAL TECHNOLOGY

PREMIER SERVICE

Ecolab’s Research, Development and Engineering (RD&E) team
continues to introduce a broad range of innovative solutions to
further our ability to solve complex customer challenges. The RD&E
team develops solutions that help make our customers’ operations
more productive and more profitable.

Our technologies and processes are designed to improve
operational efficiency, product quality and safety while reducing
water and energy use and waste. When combined with our real-time
monitoring and data analytics capabilities, our solutions provide
customers with unmatched insight, system performance and value.

Innovation is a cornerstone of Ecolab’s growth. In 2015, we delivered
another record innovation pipeline, the largest in company history.
We introduced more new products than ever before, and delivered
breakthrough solutions in every Ecolab division and across every
region. We forecast the 2015 innovation pipeline to deliver more
than $1 billion in new revenue in five years.

At Ecolab, the responsibility for innovation extends beyond
our RD&E team to include our corporate account managers,
marketers and industry-leading field team of 25,000 sales-and-
service associates. Our corporate account managers work with
our customers’ leadership teams to understand their goals and
challenges, and our sales-and-service associates are on site at
more than 1 million customer locations, identifying potential issues
and implementing solutions.

Our knowledgeable sales-and-service team has extensive visibility
into our customers’ operations, and our associates serve as trusted
partners to identify and solve the operational challenges our
customers face. The insight gained by our sales-and-service team is
critical to our ability to develop and implement effective solutions.

Ecolab’s unique combination of innovative solutions and industry-
leading service gives us a competitive advantage that no other
company can match.

1,600

RD&E SCIENTISTS, ENGINEERS
AND TECHNICAL SPECIALISTS

INNOVATION AND
TECHNICAL SUPPORT
FACILITIES

25,000

SALES-AND-SERVICE
ASSOCIATES

7,100

PATENTS

WE FORECAST THE 2015 INNOVATION
PIPELINE TO DELIVER MORE THAN

$1 BILLION

IN NEW REVENUE IN FIVE YEARS

INNOVATION SPOTLIGHT

SYNERGEXTM AND 3D TRASARTM TECHNOLOGY FOR CIP

The food and beverage industry is transforming the way it does business and Ecolab is leading with innovations that proactively help
manage safe and efficient processing environments. Synergex is the latest addition to our industry-leading antimicrobial solutions for
dairy, food, beverage and brewery customers. This U.S. EPA-registered, mixed peracid-based sanitizer and disinfectant provides broad
microbiological kill to deliver up to 15 percent additional quality assurance for fresh milk and other products, giving customers a competitive
advantage by increasing distribution networks, decreasing waste and increasing profitability. This proprietary chemistry complements our
3D TRASAR CIP platform and addresses increasing food safety and operational efficiency needs. (Synergex™ EPA Reg. No. 1677-250)

ECOLAB ANNUAL REPORT 2015 9

PROVEN RESULTS

BY LINKING PERFORMANCE
OUTCOMES TO SUSTAINABILITY
METRICS AND COST SAVINGS,
WE ARE ABLE TO CLEARLY
QUANTIFY THE BENEFITS OF
THE SOLUTIONS WE PROVIDE.

Ecolab’s purpose is to make the world cleaner, safer and healthier. Our solutions help
ensure safe food, prevent infection, improve water and energy management, increase
operational efficiency, enhance safety and preserve natural resources. We are committed
to helping our customers meet their operational and sustainability goals. And we deliver
measurable results.

Leading global brands rely on Ecolab to help ensure operational efficiencies, product
integrity and brand reputation. Our innovative products and services touch virtually every
aspect of daily life and are used in hospitals, hotels, restaurants, schools, commercial
buildings, food processing facilities, breweries, light and heavy manufacturing plants,
refineries, power generation facilities and a host of other locations throughout the world.

We measure the impact of our solutions and quantify our customers’ return on
investment, helping them track operational improvements and progress across a range
of performance goals.

Our proprietary eROISM approach documents operational, economic and resource savings
across a comprehensive set of sustainability categories. By starting with what matters most
to our customers — performance — and linking performance outcomes to sustainability
metrics and cost savings, we are able to effectively quantify the total benefits of the
solutions we provide.

Ecolab is working to tackle the world’s most pressing and complex business challenges.
Our work is vital to the success of our customers and vital to society.

SAFETY

AIR

WASTE

WATER

ENERGY

ASSETS

INNOVATION SPOTLIGHT

3D TRASAR™ HIGH CHARGE POLYMERS AND DUAL CATHODIC INHIBITORS FOR COOLING WATER

As the leader in cooling water technology, Nalco focuses on finding innovative solutions to issues impacting cooling system reliability and
asset life such as varying water quality and increasing system stress. Patented Dual Cathodic Inhibitors (DCI) and High Charge Polymers,
monitored and controlled in real time with 3D TRASAR technology, deliver improved scale inhibition and corrosion control, reduce fouling,
extend asset life and provide significant water savings. Nalco’s innovative chemistries are a critical component of our 3D TRASAR program,
the industry’s most comprehensive technology for both heavy and light industrial cooling water systems.

10 ECOLAB ANNUAL REPORT 2015

AWARDS AND RECOGNITION

In 2015, Ecolab was recognized by several leading organizations for innovation, leadership, corporate social responsibility and commitment
to sustainability, including:

2015 WORLD’S MOST ADMIRED COMPANIES

Ecolab was named to Fortune’s 2015 list
of the World’s Most Admired Companies,
ranking second overall in the chemicals
industry and first for social responsibility
and long-term investment value.

2015 WORLD’S MOST ETHICAL COMPANIES

For the ninth consecutive year, Ecolab
was named to Ethisphere Institute’s list of
the World’s Most Ethical Companies. The
Ethisphere Institute is a leading international
organization dedicated to the creation,
advancement and sharing of best practices in
business ethics, governance, anti-corruption
and sustainability.

2015 BEST COMPANIES FOR LEADERS

For the third consecutive year, Chief
Executive magazine ranked Ecolab as
one of the 40 Best Companies for Leaders.
The rankings are based on specific criteria
related to an organization’s leadership
development program.

NEWSWEEK’S 2015 LIST OF THE
WORLD’S GREENEST COMPANIES

Newsweek ranked Ecolab seventh on
the U.S. 500 List and 12th on the Global 500
List of the World’s Greenest Companies.
These rankings are based on an evaluation
of the 500 largest publicly traded companies
in the United States and globally.

2015 DOW JONES SUSTAINABILITY INDEX

Ecolab was named to the 2015 Dow Jones
Sustainability North America Index. The
annual Dow Jones Sustainability Indices
are based on an analysis of corporate
economic, environmental and social
performance, assessing issues such as
corporate governance, risk management,
branding, climate change mitigation,
supply chain standards and labor practices.

2015 FTSE4GOOD INDEX

Ecolab was again named to the FTSE4Good
Index for meeting its globally recognized
corporate social responsibility standards
related to environmental, social and
governance practices.

CR MAGAZINE’S 2015 100 BEST
CORPORATE CITIZENS

CR Magazine named Ecolab ninth on its List
of 100 Best Corporate Citizens of 2015. The
rankings are based on disclosure, policies and
performance across the following categories:
climate change, employee relations,
environmental, financial, governance,
human rights and philosophy.

CORPORATE KNIGHTS 2015 GLOBAL 100 MOST
SUSTAINABLE COMPANIES

Ecolab was named to Corporate Knights’
Global 100 Index of Most Sustainable
Companies, an index of the top overall
sustainability performers in industrial sectors.

FORTUNE MAGAZINE’S
CHANGE THE WORLD LIST

Ecolab was listed in Fortune magazine’s
2015 Change the World list, which
recognizes 50 companies that are
“doing well by doing good.”

2015 BEST PLACES TO WORK
FOR LGBT EQUALITY

Ecolab received a perfect score of 100
percent in the 2015 Corporate Equality
Index, a national report on corporate policies
and practices related to LGBT workplace
equality, administered by the Human
Rights Campaign Foundation.

ECOLAB ANNUAL REPORT 2015 11

REPORTING SEGMENTS

Ecolab pursues a “Circle the Customer — Circle the Globe” strategy by providing an array of innovative programs, products and services
designed to meet the specific operational and sustainability needs of our customers throughout the world. Through this strategy and our
varied product and service mix, one customer may utilize the offerings of several of our reportable segments.

GLOBAL INDUSTRIAL

GLOBAL INSTITUTIONAL

Provides water treatment and process applications, and cleaning
and sanitizing solutions primarily to large industrial customers
within the manufacturing, food and beverage processing,
chemical, mining and primary metals, power generation, pulp
and paper and commercial laundry industries. Operating units
within the Global Industrial reportable segment include Food &
Beverage, Water, Paper and Textile Care.

Food & Beverage provides cleaners, sanitizers, antimicrobial
solutions, lubricants, cleaning systems, dispensers and chemical
injectors and animal health products to dairy plants, dairy
farms, breweries, soft-drink bottling plants and meat, poultry
and other food processors. Operating under the Nalco name,
the Water operating unit provides water treatment products
and programs to a wide range of industries for cooling water,
boiler water, process water and wastewater applications. Paper
provides water and process applications for the pulp and paper
industries, and Textile Care provides wash process solutions for
large-scale commercial operations including uniform and linen
rental, hospitality and healthcare laundries.

Provides specialized cleaning and sanitizing products to the
foodservice, hospitality, lodging, healthcare, government,
education and retail industries. Operating units within the
Global Institutional segment include Institutional, Specialty and
Healthcare. The Institutional operating unit provides specialized
cleaners, sanitizers and equipment for warewashing, on-premise
laundries and general food safety and housekeeping functions.
Specialty supplies cleaning and sanitizing products to quick
service restaurants and food retailers. Healthcare provides
infection prevention and other offerings to acute care hospitals
and surgery centers.

GLOBAL ENERGY

OTHER

Operating under the Nalco Champion name, this business
serves the process chemical and water treatment needs of
the global petroleum and petrochemical industries in both
upstream and downstream applications. Global Energy is
divided into an Upstream group composed of the Wellchem
and oilfield chemicals businesses, and a Downstream group
comprising the refinery and petrochemical processing
businesses. Global Energy provides a full range of process and
water treatment offerings to enhance customers’ production,
asset integrity, recovery rates and environmental compliance.
Nalco Champion customers comprise nearly all of the
supermajor, major, independent and national oil companies.

Provides pest elimination and kitchen equipment repair and
maintenance through the Pest Elimination and Equipment Care
operating units. Pest Elimination provides services designed
to detect, eliminate and prevent pests in restaurants, food
and beverage processing plants, educational and healthcare
facilities, hotels, quick service restaurant and grocery
operations and other customers. Equipment Care provides
equipment repair, maintenance and preventive maintenance
services for the U.S. commercial foodservice industry.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K

(Mark One)

 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2015

Commission File No. 1-9328



TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934

For the transition period from to
ECOLAB INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or
organization)

370 Wabasha Street North, St. Paul, Minnesota
(Address of principal executive offices)

Registrant’s telephone number, including area code: 1-800-232-6522

Securities registered pursuant to Section 12(b) of the Act:

41-0231510
(I.R.S. Employer Identification No.)

55102
(Zip Code)

Title of each class
Common Stock, $1.00 par value
2.625% Euro Notes due 2025

Name of each exchange on which registered
New York Stock Exchange, Inc.
New York Stock Exchange, Inc.

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  YES  NO

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  YES  NO

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  NO

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files.  YES  NO

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer 
Non-accelerated filer 
(Do not check if a smaller reporting company)

Accelerated filer 
Smaller reporting company 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  YES  NO

Aggregate market value of voting and non-voting common equity held by non-affiliates of registrant on June 30, 2015: $33,339,392,886 (see Item 12,
under Part III hereof), based on a closing price of registrant’s Common Stock of $112.39 per share.

The number of shares of registrant’s Common Stock, par value $1.00 per share, outstanding as of January 29, 2016: 296,001,857 shares.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s Proxy Statement for the Annual Meeting of Stockholders to be held May 5, 2016 and to be filed within 120 days after the
registrant’s fiscal year ended December 31, 2015 (hereinafter referred to as “Proxy Statement”) are incorporated by reference into Part III.

1111

ECOLAB INC.
FORM 10-K
For the Year Ended December 31, 2015

TABLE OF CONTENTS

PART I

Item 1. Business.
Item 1A. Risk Factors.
Item 1B. Unresolved Staff Comments.
Item 2. Properties.
Item 3. Legal Proceedings.
Item 4. Mine Safety Disclosures.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of

Equity Securities.

Item 6. Selected Financial Data.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
Item 8. Financial Statements and Supplementary Data.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
Item 9A. Controls and Procedures.

PART III

Item 10. Directors, Executive Officers of the Registrant and Corporate Governance.
Item 11. Executive Compensation.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder

Matters.

Item 13. Certain Relationships and Related Transactions, and Director Independence.
Item 14. Principal Accounting Fees and Services.

PART IV

Item 15. Exhibits, Financial Statement Schedules.

Beginning
Page

3
16
20
20
22
22

25
26
49
50
99
99

100
100
100

100
100

101

PART I

Except where the context otherwise requires, references in this Form 10-K to (i) “Ecolab,” “Company,” “we” and “our” are to Ecolab Inc.
and its subsidiaries, collectively; (ii) “Nalco” or “Nalco Company” are to Nalco Company LLC, a wholly-owned subsidiary of the Company;
(iii) “Nalco transaction” are to the merger of Ecolab and Nalco Holding Company completed in December 2011; and (iv) “Champion
transaction” are to our acquisition of privately held Champion Technologies and its related company Corsicana Technologies in April
2013.

Item 1. Business.

Item 1(a) General Development of Business.

Ecolab was incorporated as a Delaware corporation in 1924. Our fiscal year is the calendar year ending December 31.

In 2015, we took several actions to continue to invest in and build our business, including: the June 2015 acquisition of Jianghai
Environmental Protection Co. Ltd, an industrial water treatment company headquartered in Changzhou, China; the November 2015
acquisition of the U.S. operations of Charlotte, N.C. – based Swisher Hygiene Inc, a provider of hygiene and sanitizing solutions for the
foodservice, hospitality, retail and healthcare markets; and the November 2015 acquisition of the assets and operations of Calgary –
based Ultra Fab Industries Ltd, which manufactures customized solutions and specialized chemical injection systems for the oil and gas
industry. See Part II, Item 8, Note 4 of this Form 10-K for additional information about these three acquisitions as well as additional
actions taken by the Company.

Item 1(b) Financial Information About Operating Segments.

The financial information about reportable segments appearing under the heading “Operating Segments and Geographic Information” is
incorporated by reference from Part II, Item 8, Note 17 of this Form 10-K.

Item 1(c) Narrative Description of Business.

General

With 2015 sales of $13.5 billion, we are the global leader in water, hygiene and energy technologies and services that protect people and
vital resources. We deliver comprehensive programs and services to promote safe food, maintain clean environments, optimize water
and energy use, and improve operational efficiencies for customers in the food, energy, healthcare, industrial and hospitality markets in
more than 170 countries. Our cleaning and sanitizing programs and products, pest elimination services, and equipment maintenance and
repair services support customers in the foodservice, food and beverage processing, hospitality, healthcare, government and education,
retail, textile care and commercial facilities management sectors. Our products and technologies are also used in water treatment,
pollution control, energy conservation, oil production and refining, steelmaking, papermaking, mining and other industrial processes.

We pursue a “Circle the Customer – Circle the Globe” strategy by providing an array of innovative programs, products and services
designed to meet the specific operational and sustainability needs of our customers throughout the world. Through this strategy and our
varied product and service mix, one customer may utilize the offerings of several of our reportable segments.

The following description of our business is based upon our reportable segments as reported in our consolidated financial statements for
the year ended December 31, 2015, which are located in Item 8 of Part II of this Form 10-K. Eight of our ten operating units have been
aggregated into three reportable segments, Global Industrial, Global Institutional and Global Energy. Our two operating units that are
primarily fee-for-service have been combined into the Other segment, and do not meet the quantitative criteria to be separately reported.
We provide similar information for the Other segment as compared to our three reportable segments as we consider the information
regarding its two underlying operating units as useful in understanding our consolidated results.

Other
5%

2015 Sales by Reportable Segment

Global Energy
28%

Global Industrial

35%

Global Institutional

32%

Global Industrial

This reportable segment consists of the Water, Food & Beverage, Paper and Textile Care operating units. It provides water treatment
and process applications, and cleaning and sanitizing solutions primarily to large industrial customers within the manufacturing, food and
beverage processing, chemical, mining and primary metals, power generation, pulp and paper, and commercial laundry industries. The
underlying operating units exhibit similar manufacturing processes, distribution methods and economic characteristics. Descriptions of
the four operating units which comprise our Global Industrial segment follow below.

Water

Our Water business serves customers across industrial and institutional markets, with the exception of the pulp and paper industry which
is serviced by our Paper business and the energy industries which are served by our Energy business. Within Water, we serve customers
in aerospace, chemical, pharmaceutical, mining and primary metals, power, food and beverage and medium and light manufacturing, as
well as institutional clients such as hospitals, universities, commercial buildings and hotels. We provide products and programs for water
treatment and process applications aimed at combining environmental benefits with economic gains for our customers. Our offerings
include specialty products such as scale and corrosion inhibitors, antifoulants, pre-treatment solutions, membrane treatments, coagulants
and flocculants, and anti-foams, as well as our 3D TRASARTM technology, which combines chemistry, remote services and monitoring
and control. Typically, water savings, energy savings, maintenance and capital expenditure avoidance are among the primary sources of
value to our customers, with product quality and production enhancement improvements also providing a key differentiating feature for
many of our offerings.

Our Water business provides water treatment products and programs for cooling water, boiler water, process water and waste water
applications. Our cooling water treatment programs are designed to control the main problems associated with cooling water systems —
corrosion, scale and microbial fouling and contamination — in open recirculating, once-through and closed systems. We provide
integrated chemical solutions, process improvements and mechanical component modifications to optimize boiler performance and
control corrosion and scale build-up. Our programs assist the production of potable water or water for plant processes by optimizing the
performance of treatment chemicals and equipment in order to minimize costs and maximize return on investment. Our wastewater
products and programs focus on improving overall plant economics, addressing compliance issues, optimizing equipment efficiency and
improving operator capabilities and effectiveness. Our offerings are sold primarily by our corporate account and field sales employees.

We believe that we have the leading market position world-wide among suppliers of products and programs for chemical treatment
applications for industrial water treatment applications.

Food & Beverage

Our Food & Beverage business addresses cleaning and sanitation at the beginning of the food chain to facilitate the processing of
products for human consumption. Food & Beverage provides detergents, cleaners, sanitizers, lubricants and animal health products, as
well as cleaning systems, electronic dispensers and chemical injectors for the application of chemical products, primarily to dairy plants,
dairy farms, breweries, soft-drink bottling plants, and meat, poultry and other food processors. Food & Beverage is also a leading
developer and marketer of antimicrobial products used in direct contact with meat, poultry, seafood and produce during processing in
order to reduce microbial contamination. Food & Beverage also designs, engineers and installs CIP (“clean-in-place”) process control
systems and facility cleaning systems for its customer base. Products for use on farms are sold through dealers and independent, third-
party distributors, while products for use in processing facilities are sold primarily by our corporate account and field sales employees.

We believe that we are the leading supplier world-wide of cleaning and sanitizing products to the dairy plant, dairy farm, food, meat and
poultry, and beverage/brewery processor industries.

Paper

Our Paper business provides water and process applications for the pulp and paper industries. Our Paper segment offers a
comprehensive portfolio of programs that are used in all principal steps of the papermaking process and across all grades of paper,
including graphic grades, board and packaging, and tissue and towel. Paper provides its customers the same types of products and
programs for water treatment and wastewater treatment as those offered by Water. Also, Paper offers two specialty programs—pulp
applications and paper applications. Our pulp applications maximize process efficiency and increase pulp cleanliness and brightness in
bleaching operations, as well as predict and monitor scaling potential utilizing on-line monitoring to design effective treatment programs
and avoid costly failures. Our paper process applications focus on improving our customers’ operational efficiency. Advanced sensing,
monitoring and automation combine with innovative chemistries and detailed process knowledge to provide a broad range of customer
solutions. Specialty products include flocculants, coagulants, dewatering aids, and digester yield enhances. Our offerings are sold
primarily by our field sales employees.

We believe that we are one of the leading suppliers world-wide of water treatment products and process aids to the pulp and
papermaking industry.

Textile Care

Our Textile Care business provides products and services that manage the entire wash process through custom designed programs,
premium products, dispensing equipment, water and energy management, and real time data management for large scale, complex
commercial operations including uniform rental, hospitality, linen rental and healthcare laundries. Textile Care’s programs are designed to
meet our customers’ needs for exceptional cleaning, while extending the useful life of linen and reducing our customers’ overall operating
costs. Products and programs are marketed primarily through field sales employees and, to a lesser extent, through distributors.

We believe that our Textile Care business is one of the leading suppliers world-wide in the laundry markets in which we compete.

Global Institutional

This reportable segment consists of the Institutional, Specialty and Healthcare operating units. It provides specialized cleaning and
sanitizing products to the foodservice, hospitality, lodging, healthcare, government, education and retail industries. The underlying
operating units exhibit similar manufacturing processes, distribution methods and economic characteristics. Descriptions of the three
operating units which comprise our Global Institutional segment follows below.

Institutional

Our Institutional business sells specialized cleaners and sanitizers for washing dishes, glassware, flatware, foodservice utensils and
kitchen equipment (“warewashing”), plus specialized cleaners for various applications throughout food service operations; for on-premise
laundries (typically used by hotel and healthcare customers); and for general housekeeping functions, as well as food safety products
and equipment, water filters, dishwasher racks and related kitchen sundries to the foodservice, lodging, educational and healthcare
industries. Institutional also provides pool and spa treatment programs for hospitality and other commercial customers, as well as a broad
range of janitorial cleaning and floor care products and programs to customers in hospitality, healthcare and commercial facilities.
Institutional develops various chemical dispensing systems which are used by our customers to efficiently and safely dispense our
cleaners and sanitizers. In addition, the Institutional operating unit markets a lease program comprised of energy-efficient dishwashing
machines, detergents, rinse additives and sanitizers, including full machine maintenance. Through our EcoSure Food Safety
Management business, Institutional also provides customized on-site evaluations, training and quality assurance services to foodservice
operations.

Institutional sells its products and programs primarily through Company-employed field sales personnel. In addition, corporate account
sales personnel establish relationships and negotiate contracts with larger multi-unit or “chain” customers. We also utilize independent,
third-party foodservice, broad-line and janitorial distributors to provide logistics to end customers for accounts that prefer to purchase
through these distributors. Many of these distributors also participate in marketing our product and service offerings to the end
customers. Through our Company-employed field sales and service personnel, we generally provide the same customer support to end-
use customers supplied by these distributors as we do to direct customers.

We believe that we are the leading global supplier of warewashing and laundry products and programs to the food service and hospitality
markets.

Specialty

Our Specialty operating unit supplies cleaning and sanitizing chemical products and related items primarily to regional, national and
international quick service restaurant (“QSR”) chains and food retailers (i.e., supermarkets and grocery stores). Its products include
specialty and general purpose hard surface cleaners, degreasers, sanitizers, polishes, hand care products and assorted cleaning tools
and equipment which are primarily sold under the “Kay” and “Ecolab” brand names. Specialty’s cleaning and sanitation programs are
customized to meet the needs of the market segments it serves and are designed to provide highly effective cleaning performance,
promote food safety, reduce labor costs and enhance user and guest safety. A number of dispensing options are available for products in
the core product range. Specialty supports its product sales with employee training programs and technical support designed to meet the
special needs of its customers.

Both Specialty’s QSR business and its food retail business utilize a corporate account sales force which establishes relationships and
negotiates contracts with customers at the corporate headquarters and regional office levels (and, in the QSR market segment, at the
franchisee level) and a field sales force which provides program support at the individual restaurant or store level. Customers in the QSR
market segment are primarily supplied through third party distributors while most food retail customers utilize their own distribution
networks. While Specialty’s customer base has grown over the years, Specialty’s business remains largely dependent upon a limited
number of major QSR chains and franchisees and large food retail customers.

We believe that Specialty is the leading supplier of cleaning and sanitizing products to the global QSR market and a leading supplier of
cleaning and sanitizing products to the global food retail market.

Healthcare

Our Healthcare business provides infection prevention, surgical solutions and contamination control solutions to acute care hospitals,
surgery centers, medical device OEM manufacturers, and pharmaceutical and hospital clean room environments. Healthcare’s
proprietary infection prevention and surgical solutions (hand hygiene, hard surface disinfection, instrument cleaning, patient drapes,
equipment drapes and surgical fluid warming and cooling systems) are sold primarily under the "Ecolab" and "Microtek" brand names to
various departments within the acute care environment (Infection Control, Environmental Services, Central Sterile and Operating Room).
Healthcare sells its products and programs primarily through Company-employed field sales personnel and corporate account personnel
but also sells through healthcare distributors.

We believe Healthcare is a leading supplier of infection prevention and surgical solutions in the United States and Europe.

Global Energy

This reportable segment, which operates primarily under the Nalco Champion name, consists of the Energy operating unit. It serves the
process chemicals and water treatment needs of the global petroleum and petrochemical industries in both upstream and downstream
applications.

Our Energy business provides on-site, technology-driven solutions to the global drilling, oil and gas production, refining, and
petrochemical industries. Our product and service portfolio includes corrosion inhibitors, scale control additives, biocides, cleaners,
hydrate control, hydrogen sulfide scavengers, oil dispersants, asphaltene and paraffin control, foamers and anti-foams, flow assurance,
oil/water separation, heavy crude desalting, monomer inhibitors, anti-oxidants, fuel and lubricant additives, air emission control and
combustion efficiency, and traditional water treatment. Our customers include nearly all of the largest publicly traded oil companies, as
well as national oil companies and large independent oil companies. Our Energy offerings are sold primarily by our corporate account
and field sales employees. The Energy business operates an Upstream group composed of our WellChem and Oilfield Chemicals
businesses and a Downstream refinery and petrochemical processing business.

• Well Stimulation and Completion: Our WellChem business supplies chemicals for the cementing, drilling, fracturing and

acidizing phases of well drilling and stimulation. Our integrated approach to product development combines marketing and
research efforts supported with process simulation, pilot plants and full-scale manufacturing capabilities.

• Oilfield Applications: Our Oilfield Chemicals business provides solutions to the oil and gas production sector. We have

expertise in crude oil and natural gas production, pipeline gathering/transmission systems, gas processing, heavy oil and
bitumen upgrading and enhanced oil recovery. Our priority is to safely manage the critical challenges facing today’s oil and
gas producers throughout the lifecycle of their assets. Starting with the design/capital investment phase to asset
decommission, a lifecycle approach to chemical solutions and offerings helps our customers minimize risk, achieve their
production targets and maximize profitability.

•

Custom Equipment and Facilities: Our FabTech business designs, fabricates and commissions custom, high-quality oil and
gas equipment for a range of applications. Our UltraFab business designs, fabricates and commissions compact, modular,
and custom-engineered H2S mitigation systems that help to ensure optimized and effective treatment.

•

Downstream Refining Applications: Our industry-focused sales engineers provide products and programs for process and
water treatment applications specific to the petroleum refining and fuels industry, enabling our customers to profitably refine
and upgrade hydrocarbons. Our heavy oil upgrading programs minimize operation costs and mitigate fouling, corrosion,
foaming and the effects of heavy metals when refining opportunity crudes. We also offer an entire line of fuel additives,
including corrosion inhibitors, to protect engine fuel systems and pre-market underground storage tanks and piping. In
addition, we offer fuel stabilizers, pour point depressants, cetane improvers, detergents and antioxidants for home heating oil
and premium diesel and gasoline packages.

Downstream Chemical Processing Applications: Our customized process and water treatment programs are delivered by
onsite technical experts who are focused on providing improved system reliability, reduced total cost of operations,
environmental compliance, sustainability in the form of energy and water savings and reduced carbon emissions.

• Water Treatment Applications: We provide total water and wastewater management solutions specific to customers’ refining

and chemical processing needs including boiler treatment, cooling water treatment and wastewater treatment.

We believe Energy is a leading global provider of specialty chemicals to the upstream oil and gas industry, refineries and petrochemical
operations.

Other

Other consists of the Pest Elimination and Equipment Care operating units. It provides pest elimination and kitchen repair and
maintenance, with its two operating units that are primarily fee-for-service businesses. In general, these businesses provide service
which can augment or extend our product offerings to our business customers as a part of our “Circle the Customer” approach and, in
particular, by enhancing our food safety capabilities.

Pest Elimination

Pest Elimination provides services designed to detect, eliminate and prevent pests, such as rodents and insects, in restaurants, food and
beverage processors, educational and healthcare facilities, hotels, quick service restaurant and grocery operations and other institutional
and commercial customers. The services of Pest Elimination are sold and performed by Company-employed field sales and service
personnel.

Our Pest Elimination business continues to expand its geographic coverage. In addition to the United States, which constitutes the
largest operation, we operate this business in various countries in Asia Pacific, Western Europe, Latin America and South Africa, with the
largest operations in France, the United Kingdom, Greater China and Brazil.

We believe Pest Elimination is one of the leading suppliers of pest elimination programs to the commercial, hospitality and institutional
markets in the geographies it serves.

Equipment Care

Our Equipment Care business provides equipment repair, maintenance and preventive maintenance services for the commercial food
service industry. Repair services are offered for in-warranty repair, acting as the manufacturer’s authorized service agent, as well as
after-warranty repair. In addition, Equipment Care operates as a parts distributor to repair service companies and end-use customers. At
this time, the Equipment Care business operates solely in the United States.

We believe that Equipment Care is a leading provider of equipment maintenance and repair programs to the commercial food service
industry in the United States locations in which we compete.

Additional Information

International Operations

We directly operate in approximately 90 countries outside of the United States through wholly-owned subsidiaries or, in some cases,
through a joint venture with a local partner. In certain countries, selected products are sold by our export operations to distributors,
agents or licensees, although the volume of those sales is not significant in terms of our overall revenues. In general, our businesses
conducted outside the United States are similar to those conducted in the United States.

MEA
5%

Latin America
8%

2015 Sales by Region

Europe
18%

Asia
Paciﬁc
12%

North
America
57%

Our business operations outside the United States are subject to the usual risks of foreign operations, including possible changes in
trade and foreign investment laws, international business laws and regulations, tax laws, currency exchange rates and economic and
political conditions. The profitability of our International operations has historically been lower than the profitability of our businesses in
the United States, due to (i) the additional cost of operating in numerous and diverse foreign jurisdictions, (ii) higher costs of importing
certain raw materials and finished goods in some regions, (iii) the smaller scale of international operations where certain operating
locations are smaller in size, and (iv) the additional reliance on distributors and agents in certain countries which can negatively impact
our margins. Proportionately larger investments in sales and technical support are also necessary in certain geographies in order to
facilitate the growth of our international operations.

Competition

In general, the markets in which the businesses in our Global Industrial segment compete are led by a few large companies, with the rest
of the market served by smaller entities focusing on more limited geographic regions or a smaller subset of products and services. Our
businesses in this segment compete on the basis of their demonstrated value, technical expertise, chemical formulations, customer
support, detection equipment, monitoring services, and dosing and metering equipment.

The businesses in our Global Institutional and Other segments have two significant classes of competitors. First, we compete with a small
number of large companies selling directly or through distributors on a national or international scale. Second, we have numerous smaller
regional or local competitors which focus on more limited geographies, product lines and/or end-use customer segments. We believe we
compete principally by providing superior value, premium customer support and differentiated products to help our customers protect
their brand reputation.

Our Global Energy segment competes with a limited number of multinational companies, with the remainder of the market comprised of
smaller, regional niche companies focused on limited geographic areas. We compete in this business on the basis of our product and
service quality, technical expertise, chemical formulations and emphasis on safety and environmental leadership.

Sales

Products, systems and services are primarily marketed in domestic and international markets by Company-trained field sales personnel
who also advise and assist our customers in the proper and efficient use of the products and systems in order to meet a full range of
cleaning and sanitation, water treatment and process chemistry needs. Independent, third-party distributors are utilized in several
markets, as described in the business unit descriptions found above.

Number of Employees

We had approximately 47,000 employees as of December 31, 2015.

Customers and Classes of Products

We believe that our business is not materially dependent upon a single customer. Additionally, although we have a diverse customer
base and no customer or distributor constitutes 10 percent or more of our 2015 consolidated revenues, we do have customers and
independent, third-party distributors, the loss of which could have a material adverse effect on results of operations for the affected
earnings periods; however, we consider it unlikely that such an event would have a material adverse impact on our financial position. No
material part of our business is subject to renegotiation or termination at the election of a governmental unit.

We sold one class of products within the Global Institutional segment which comprised 10% or more of consolidated net sales in two of
the last three years. Sales of warewashing products were approximately 10% of consolidated net sales in both 2015 and 2013.

Patents and Trademarks

We own and license a number of patents, trademarks and other intellectual property. While we have an active program to protect our
intellectual property by filing for patents or trademarks and pursuing legal action, when appropriate, to prevent infringement, we do not
believe that our overall business is materially dependent on any individual patent or trademark except patents related to our TRASAR
and 3D TRASAR technology, which are material to our Water and Paper segments, and trademarks related to Ecolab, Nalco and 3D
TRASAR. The Ecolab trademarks are material to the Global Industrial, Global Institutional and Other segments and the Nalco trademarks
are material to the Water, Paper and Energy businesses. The 3D TRASAR trademarks predominantly relate to our Water and Paper
segments. U.S. and foreign patents protect aspects of our key TRASAR and 3D TRASAR technology until at least 2024. The Ecolab,
Nalco Company and 3D TRASAR trademarks are registered or applied for in all of our key markets, and we anticipate maintaining them
indefinitely.

Seasonality

We experience variability in our quarterly operating results due to seasonal sales volume and business mix fluctuations in our operating
segments. Part II, Item 8, Note 18, entitled “Quarterly Financial Data” of this Form 10-K is incorporated herein by reference.

Investments in Equipment

We have no unusual working capital requirements. We have invested in the past, and will continue to invest in the future, in process
control and monitoring equipment consisting primarily of systems used by customers to dispense our products as well as to monitor water
systems. The investment in such equipment is discussed under the heading "Investing Activities" in Management's Discussion and
Analysis of Financial Condition and Results of Operations of this Form 10-K.

Manufacturing and Distribution

We manufacture most of our products and related equipment in Company-operated manufacturing facilities. Some products are also
produced for us by third-party contract manufacturers. Other products and equipment are purchased from third-party suppliers. Additional
information on product/equipment sourcing is found in the segment discussions above and additional information on our manufacturing
facilities is located under Part I, Item 2. “Properties,” of this Form 10-K.

Deliveries to customers are made from our manufacturing plants and a network of distribution centers and third-party logistics service
providers. We use common carriers, our own delivery vehicles, and distributors for transport. Additional information on our plant and
distribution facilities is located under Part I, Item 2. “Properties,” of this Form 10-K.

Raw Materials

Raw materials purchased for use in manufacturing our products are inorganic chemicals, including alkalis, acids, biocides, phosphonates,
phosphorous materials, silicates and salts; and organic chemicals, including acids, alcohols, amines, fatty acids, surfactants, solvents,
monomers and polymers. Healthcare purchases plastic films and parts to manufacture medical devices that serve the surgical and
infection prevention markets. Pesticides used by our Pest Elimination business are purchased as finished products under contract or
purchase order from the producers or their distributors. We also purchase packaging materials for our manufactured products and
components for our specialized cleaning equipment and systems. We purchase more than 10,000 raw materials, with the largest single
raw material representing less than 2% of raw material purchases. Our raw materials, with the exception of a few specialized chemicals
which we manufacture, are generally purchased on an annual contract basis and are ordinarily available in adequate quantities from a
diverse group of suppliers globally. When practical, global sourcing is used so that purchasing or production locations can be shifted to
control product costs at globally competitive levels.

Research and Development

Our research and development program consists principally of developing and validating the performance of new products, processes,
techniques and equipment, improving the efficiency of existing ones, improving service program content, evaluating the environmental
compatibility of products and technical support. Key disciplines include analytical and formulation chemistry, microbiology, process and
packaging engineering, remote monitoring engineering and product dispensing technology. Substantially all of our principal products
have been developed by our research, development and engineering personnel. At times, technology has also been licensed from third
parties to develop offerings.

We believe that continued research and development activities are critical to maintaining our leadership position within the industry and
will provide us with a competitive advantage as we seek additional business with new and existing customers.

Part II, Item 8, Note 14, entitled “Research and Development Expenditures” of this Form 10-K is incorporated herein by reference.

Joint Ventures

Over time, certain of our business units have entered into partnerships or joint ventures in order to meet local ownership requirements, to
achieve quicker operational scale, to expand our ability to provide our customers a more fully integrated offering or to provide other
benefits to our business or customers. In particular, our Energy and Water businesses are parties to numerous joint ventures, though
many of our other business units also conduct some business through joint ventures. During 2015, the impact on our consolidated net
income of our joint ventures, in the aggregate, was less than two percent. The table below identifies our most significant consolidated and
non-consolidated joint ventures, summarized by the primary purpose of the joint venture.

Joint Venture

Local Ownership Requirements / Geographic Expansion
Location

Segment

Nalco Angola Prestaca de Servicos, Limitada

Nalco Saudi Co. Ltd.

RauanNalco LLP

Angola

Saudi Arabia

Kazakhstan

Emirates National Chemical Company LLC

United Arab Emirates

Malaysian Energy Chemical & Services Sdn. Bhd.

Malaysia

Nalco Champion Dai-ichi India Private Limited

India

Nalco Champion EG Sarl

AGS Champion LLP

Joint Venture
Katayama Nalco Inc.

Equatorial Guinea

Kazakhstan
Operational Scale / Geographic Critical Mass
Location
Japan

Global Energy

Global Energy, Global Industrial

Global Energy

Segment

Global Industrial

Joint Venture

Technology / Expanded Product Offering / Manufacturing Capability
Location

Segment

Treated Water Outsourcing

Derypol, S.A.

Kogalym Chemicals Plant LLC

CJSC Nalco Element JV
Century LLC

OWT Oil-Water Treatment Services B.V.

United States

Spain

Russia

United States

Netherlands

Global Industrial

Global Energy

Global Energy
Global Institutional

Global Energy

Additionally, we continue to be party to the Ecolab S.A. joint venture in Venezuela, which historically operated businesses in our Global
Industrial and Global Institutional segments. This joint venture was included among the Venezuelan subsidiaries that we deconsolidated
for U.S. GAAP purposes effective at the end of the fourth quarter of 2015, as further described within the MD&A and Part II, Item 8, Note
3 of this Form 10-K.

We will continue to evaluate the potential for partnerships and joint ventures that can assist us in increasing our geographic,
technological and product reach.

Environmental and Regulatory Considerations

Our businesses are subject to various legislative enactments and regulations relating to the protection of the environment and public
health. While we cooperate with governmental authorities and take commercially practicable measures to meet regulatory requirements
and avoid or limit environmental effects, some risks are inherent in our businesses. Among the risks are costs associated with
transporting and managing hazardous materials and waste disposal and plant site clean-up, fines and penalties if we are found to be in
violation of law, as well as modifications, disruptions or discontinuation of certain operations or types of operations including product
recalls and reformulations. Similarly, the need for certain of our products and services is dependent upon or might be limited by
governmental laws and regulations. Changes in such laws and regulations, including among others, air pollution regulations and
regulations relating to oil and gas production (including those related to hydraulic fracturing), could impact the sales of some of our
products or services. In addition to an increase in costs of manufacturing and delivering products, a change in production regulations or
product regulations could result in interruptions to our business and potentially cause economic or consequential losses should we be
unable to meet the demands of our customers for products.

Additionally, although we are not currently aware of any such circumstances, there can be no assurance that future legislation or
enforcement policies will not have a material adverse effect on our consolidated results of operations, financial position or cash flows.
Environmental and regulatory matters most significant to us are discussed below.

Ingredient Legislation: Various laws and regulations have been enacted by state, local and foreign jurisdictions
pertaining to the sale of products which contain phosphorous, volatile organic compounds, or other ingredients that
may impact human health or the environment. Under California Proposition 65, for example, label disclosures are
required for certain products containing chemicals listed by California. Chemical management initiatives that
promote pollution prevention through research and development of safer chemicals and safer chemical processes
are being advanced by certain states, including California, Maine, Maryland, Massachusetts, Minnesota, Oregon
and South Carolina. Environmentally preferable purchasing programs for cleaning products have been enacted in
nine states to date, and in recent years have been considered by several other state legislatures. Cleaning product
ingredient disclosure legislation has been introduced in the U.S. Congress in each of the past few years but has not
passed, and several states including California and New York are considering further regulations in this area. The
California Safer Consumer Products Act regulations became effective in 2013 and focus on ingredients in consumer
products that have the potential for widespread public exposure. The U.S. Government is monitoring “green
chemistry” initiatives through a variety of initiatives, including its “Design for the Environment” (“DfE”)/”Safer Choice”
program. DfE/Safer Choice has three broad areas of work (recognition of safer products on a DfE/Safer Choice
label, development of best practices for industrial processes and evaluation of safer chemicals), and we are
involved in these to varying degrees. Our Global Institutional and Global Industrial cleaning products are subject to
the regulations and may incur additional stay-in-market expenses associated with conducting the required
alternatives analyses for chemicals of concern. To date, we generally have been able to comply with such
legislative requirements by reformulation or labeling modifications. Such legislation has not had a material adverse
effect on our consolidated results of operations, financial position or cash flows to date.

TSCA: Re-authorization of the Toxic Substances Control Act (“TSCA”) and an update of the chemicals on the
TSCA Inventory (the so-called “reset” of the TSCA Inventory) were passed by both chambers of the U.S. Congress,
and final enactment of legislation is likely to occur in the first half of 2016. The U.S. Environmental Protection
Agency (“EPA”) also is more aggressively using the existing TSCA tools to manage chemicals of concern. We
anticipate that compliance with new requirements under TSCA could be similar to the costs associated with REACH
in the European Union, which is discussed below.

REACH: The European Union has enacted a regulatory framework for the Registration, Evaluation and
Authorization of Chemicals (“REACH”). It established a new European Chemicals Agency (“ECHA”) in Helsinki,
Finland, which is responsible for evaluating data to determine hazards and risks and to manage this program for
authorizing chemicals for sale and distribution in Europe. We met the pre-registration requirements of REACH, the
2010 and 2013 registration deadlines, and are on track to meet the upcoming registration deadlines and
requirements in 2018. To help manage this program, we have been simplifying our product lines and working with
chemical suppliers to comply with registration requirements. In addition, Korea, Taiwan and other countries are
planning similar requirements. Potential costs to us are not yet fully quantifiable, but are not expected to have a
material adverse effect on our consolidated results of operations or cash flows in any one reporting period or on our
financial position.

GHS: In 2003, the United Nations adopted a standard on hazard communication and labeling of chemical products
known as the Globally Harmonized System of Classification and Labeling of Chemicals (“GHS”). GHS is designed
to facilitate international trade and increase safe handling and use of hazardous chemicals through a worldwide
system that classifies chemicals based on their intrinsic hazards and communicates information about those
hazards through standardized product labels and safety data sheets (“SDSs”). Most countries in which we operate
will adopt GHS-related legislation, and numerous countries already have done so. The primary cost of compliance
revolves around reclassifying products and revising SDSs and product labels. We met the 2015 deadlines in the
U.S. and European Union and are working toward a phased-in approach to mitigate the costs of GHS
implementation in other countries. Potential costs to us are not expected to have a material adverse effect on our
consolidated results of operations or cash flows in any one reporting period or on our financial position.

Pesticide and Biocide Legislation: Various international, federal and state environmental laws and regulations
govern the manufacture and/or use of pesticides. We manufacture and sell certain disinfecting, sanitizing and
material preservation products that kill or reduce microorganisms (bacteria, viruses, fungi) on hard environmental
surfaces, in process fluids and on certain food products. Such products constitute “pesticides” or “antimicrobial
pesticides” under the current definitions of the Federal Insecticide, Fungicide, and Rodenticide Act (“FIFRA”), as
amended by the Food Quality Protection Act of 1996, the principal federal statute governing the manufacture,
labeling, handling and use of pesticides. We maintain several hundred product registrations with the U.S.
Environmental Protection Agency (“EPA”). Registration entails the necessity to meet certain efficacy, toxicity and
labeling requirements and to pay on-going registration fees. In addition, each state in which these products are sold
requires registration and payment of a fee. In general, the states impose no substantive requirements different from
those required by FIFRA. However, California and certain other states have adopted additional regulatory
programs, and California imposes a tax on total pesticide sales in that state. While the cost of complying with rules
as to pesticides has not had a material adverse effect on our consolidated results of operations, financial condition,
or cash flows to date, the costs and delays in receiving necessary approvals for these products continue to

increase. Total fees paid to the EPA and the states to obtain or maintain pesticide registrations are not expected to
significantly affect our consolidated results of operations or cash flows in any one reporting period or our financial
position.

In Europe, the Biocidal Product Directive and the more recent Biocidal Products Regulation established a program
to evaluate and authorize marketing of biocidal active substances and products. We are working with suppliers and
industry groups to manage these requirements and have met the first relevant deadline of the program by the timely
submission of dossiers for active substances. Anticipated registration costs, which will be incurred through the
multi-year phase-in period, will be significant; however, these costs are not expected to significantly affect our
consolidated results of operations or cash flows in any one reporting period or our financial position.

In addition, our Pest Elimination business applies restricted-use pesticides that it generally purchases from third
parties. That business must comply with certain standards pertaining to the use of such pesticides and to the
licensing of employees who apply such pesticides. Such regulations are enforced primarily by the states or local
jurisdictions in conformity with federal regulations. We have not experienced material difficulties in complying with
these requirements.

FDA Antimicrobial Product Requirements: Various laws and regulations have been enacted by federal, state,
local and foreign jurisdictions regulating certain products manufactured and sold by us for controlling microbial
growth on humans, animals and foods. In the United States, these requirements generally are administered by the
U.S. Food and Drug Administration ("FDA"). However, the U.S. Department of Agriculture and EPA also may share
in regulatory jurisdiction of antimicrobials applied to food. The FDA codifies regulations for these product categories
in order to ensure product quality, safety and effectiveness. The FDA also has been expanding requirements
applicable to such products, including proposing regulations for over-the-counter antiseptic drug products, which
may impose additional requirements associated with antimicrobial hand care products and associated costs when
finalized by the FDA. FDA regulations associated with the Food Safety Modernization Act may impose additional
requirements related to safety product lines. To date, such requirements have not had a material adverse effect on
our consolidated results of operations, financial position or cash flows.

Medical Device and Drug Product Requirements: As a manufacturer, distributor and marketer of medical devices
and human drugs, we also are subject to regulation by the FDA and corresponding regulatory agencies of the state,
local and foreign governments in which we sell our products. These regulations govern the development, testing,
manufacturing, packaging, labeling, distribution and marketing of medical devices and medicinal products. We also
are required to register with the FDA as a medical device and drug manufacturer, comply with post-market reporting
(e.g., Adverse Event Reporting, MDR and Recall) requirements, and to comply with the FDA’s current Good
Manufacturing Practices and Quality System Regulations which require that we have a quality system for the
design and production of our products intended for commercial distribution in the United States and satisfy
recordkeeping requirements with respect to our manufacturing, testing and control activities. Countries in the
European Union require that certain products being sold within their jurisdictions obtain a “CE mark”, an
international symbol of adherence to quality assurance standards, and be manufactured in compliance with certain
requirements (e.g., Medical Device Directive 93/42/EE and ISO 13485). We have CE mark approval to sell various
medical device and medicinal products in Europe. Our other international non-European operations also are subject
to government regulation and country-specific rules and regulations. Regulators at the federal, state and local level
have imposed, are currently considering and are expected to continue to impose regulations on medical devices
and drug products. No prediction can be made of the potential effect of any such future regulations, and there can
be no assurance that future legislation or regulations will not increase the costs of our products or prohibit the sale
or use of certain products.

Other Environmental Legislation; Capital Expenditures: Our manufacturing plants are subject to federal, state,
local or foreign jurisdiction laws and regulations relating to discharge of hazardous substances into the environment
and to the transportation, handling and disposal of such substances. The primary federal statutes that apply to our
activities in the United States are the Clean Air Act, the Clean Water Act and the Resource Conservation and
Recovery Act. We are also subject to the Superfund Amendments and Reauthorization Act of 1986, which imposes
certain reporting requirements as to emissions of hazardous substances into the air, land and water. The products
we produce and distribute into Europe are also subject to directives governing electrical waste (WEEE Directive
2012/19/EU) and restrictive substances (RoHS Directive 2011/65/EU). Similar legal requirements apply to Ecolab’s
facilities globally. We make capital investments and expenditures to comply with environmental laws and
regulations, to promote employee safety and to carry out our announced environmental sustainability principles. To
date, such expenditures have not had a significant adverse effect on our consolidated results of operations,
financial position or cash flows. Our capital expenditures for environmental, health and safety projects worldwide
were approximately $55 million in 2015 and $53 million in 2014. Approximately $67 million has been budgeted
globally for projects in 2016. The increase in 2016 over 2015 is due to continued spending on process safety
matters throughout the Company, including facilities acquired in connection with the Champion transaction.

Climate Change: Various laws and regulations pertaining to climate change have been implemented or are being
considered for implementation at the international, national, regional and state levels, particularly as they relate to
the reduction of greenhouse gas (“GHG”) emissions. None of these laws and regulations directly apply to Ecolab at
the present time; however, as a matter of corporate policy, we support a balanced approach to reducing GHG

emissions while sustaining economic growth. We are committed to reducing our carbon footprint and have made
significant strides in recent years. In 2014, we received a Climate Leadership Award, co-sponsored by EPA,
recognizing Ecolab for achieving an absolute global greenhouse gas emissions reduction of more than 12.5 percent
(22.4 percent intensity reduction).

Our current global sustainability targets were established in 2014. They include a 25 percent reduction in effluent
discharge and waste, a 20 percent reduction in water use and a 10 percent reduction in greenhouse gas emissions
by 2017. In addition to our internal sustainability performance, we partner with customers at more than 1.3 million
customer locations around the world to reduce energy and greenhouse gas emissions through our high-efficiency
solutions in cleaning and sanitation, water, paper and energy services. These actions directly reduce greenhouse
gas emissions by lessening the demand for energy.

Environmental Remediation and Proceedings: Along with numerous other potentially responsible parties
(“PRP”), we are currently involved with waste disposal site clean-up activities imposed by the federal
Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) or state equivalents at 23
sites in the United States. Additionally, we have similar liability at nine sites outside the United States. In general,
under CERCLA, we and each other PRP that actually contributed hazardous substances to a Superfund site are
jointly and severally liable for the costs associated with cleaning up the site. Customarily, the PRPs will work with
the EPA to agree and implement a plan for site remediation.

Based on an analysis of our experience with such environmental proceedings, our estimated share of all hazardous
materials deposited on the sites referred to in the preceding paragraph, and our estimate of the contribution to be
made by other PRPs which we believe have the financial ability to pay their shares, we have accrued our best
estimate of our probable future costs relating to such known sites. Unasserted claims are not reflected in the
accrual. In establishing accruals, potential insurance reimbursements are not included. The accrual is not
discounted. It is not feasible to predict when the amounts accrued will be paid due to the uncertainties inherent in
the environmental remediation and associated regulatory processes.

The Texas Commission on Environmental Quality (“TCEQ”) issued a Notice of Enforcement (“NOE”) and Notice of
Violation (“NOV”) related to Ecolab’s facility in Fresno, TX on August 29, 2014, alleging violations of the facility’s air
permits and various state and federal air laws. We have provided information to the TCEQ regarding the alleged
violations and met with them to discuss our response to the NOV and NOE and the corrective actions already
implemented. On June 24, 2015, the TCEQ issued a draft consent decree to Ecolab for certain violations, and the
TCEQ is now seeking an administrative penalty of approximately $0.9 million. We anticipate that this matter will not
have a material effect on our consolidated results of operations, financial position or cash flows.

We have also been named as a defendant in lawsuits where our products have not caused injuries, but the
claimants wish to be monitored for potential future injuries. We cannot predict with certainty the outcome of any
such tort claims or the involvement we or our products might have in such matters in the future, and there can be
no assurance that the discovery of previously unknown conditions will not require significant expenditures. In each
of these chemical exposure cases, our insurance carriers have accepted the claims on our behalf (with or without
reservation) and our financial exposure should be limited to the amount of our deductible; however, we cannot
predict the number of claims that we may have to defend in the future and we may not be able to continue to
maintain such insurance.

We have also been named as a defendant in a number of lawsuits alleging personal injury due to exposure to
hazardous substances, including multi-party lawsuits alleging personal injury in connection with our products and
services. While we do not believe that any of these suits will be material to us based upon present information,
there can be no assurance that these environmental matters could not have, either individually or in the aggregate,
a material adverse effect on our consolidated results of operations, financial position or cash flows.

Our worldwide net expenditures for contamination remediation were approximately $6.5 million in 2015 and $5.0 million in
2014. Our worldwide accruals at December 31, 2015 for probable future remediation expenditures, excluding potential
insurance reimbursements, totaled approximately $26 million. We review our exposure for contamination remediation costs
periodically and our accruals are adjusted as considered appropriate. While the final resolution of these issues could result in
costs below or above current accruals and, therefore, have an impact on our consolidated financial results in a future reporting
period, we believe the ultimate resolution of these matters will not have a material effect on our consolidated results of
operations, financial position or cash flows.

Item 1(d) Financial Information About Geographic Areas.

The financial information about geographic areas appearing under the heading “Operating Segments and Geographic Information” is
incorporated by reference from Part II, Item 8, Note 17 of this Form 10-K.

Item 1(e) Available Information.

Our Internet address is www.ecolab.com. Copies of our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on
Form 8-K, and amendments to these reports, are available free of charge on our website www.ecolab.com/investor as soon as
reasonably practicable after such material is filed with, or furnished to, the Securities and Exchange Commission.

In addition, the following governance materials are available on our web site at www.ecolab.com/investors/corporate-governance: (i)
charters of the Audit, Compensation, Finance, Governance and Safety, Health and Environment Committees of our Board of Directors;
(ii) our Board's Corporate Governance Principles; and (iii) our Code of Conduct.

Executive Officers of the Registrant.

The persons listed in the following table are our current executive officers. Officers are elected annually. There is no family relationship
among any of the directors or executive officers, and except as otherwise noted, no executive officer has been involved during the past
ten years in any legal proceedings described in applicable Securities and Exchange Commission regulations.

Name

Age

Office

Positions Held Since
Jan. 1, 2011

Douglas M.
Baker, Jr.

57 Chairman of the Board and Chief Executive Officer

Chairman of the Board, President and Chief Executive Officer

Dec. 2011 – Present
Jan. 2011 – Nov. 2011

Christophe Beck

48 Executive Vice President and President – Global Water

May 2015 - Present

& Process Services
Executive Vice President and President – Regions
Executive Vice President – Global Integration
Executive Vice President – Institutional

Larry L. Berger

55 Executive Vice President and Chief Technical Officer
Senior Vice President and Chief Technical Officer

Alex N. Blanco

55 Executive Vice President and Chief Supply Chain Officer

Thomas W. Handley

61 President and Chief Operating Officer

Senior Executive Vice President and President – Global Food & Beverage
and Asia Pacific Latin America
President, Global Food & Beverage and Asia Pacific Latin America
Sectors

Michael A. Hickey

54 Executive Vice President and President – Global Institutional

Executive Vice President and President – Institutional
Executive Vice President Global Services Sector

Bryan L. Hughes

47 Senior Vice President and Corporate Controller
Vice President-Finance, Global Institutional

Oct. 2012 – May 2015
Dec. 2011 – Sep. 2012
Jan. 2011 – Nov. 2011

Oct. 2011 – Present
Jan. 2011 – Sep. 2011

Jan. 2013 – Present 1

Sep. 2012 – Present

Oct. 2011 – Aug. 2012

Jan. 2011 – Sep. 2011

Oct. 2012 – Present
Aug. 2011 – Sep. 2012
Jan. 2011 – Jul. 2011

May 2014 - Present
Jan. 2011 – Apr. 2014

Roberto
Inchaustegui

60 Executive Vice President and President – Global Services

Sep. 2012 - Present

and Specialty
Executive Vice President and President – Global Specialty
Executive Vice President – Global Specialty Sector
Senior Vice President – Global Food Retail Services

Laurie M. Marsh

52 Executive Vice President – Human Resources

Vice President – Total Rewards and HR Service Delivery & Technology

Timothy P. Mulhere

53 Executive Vice President and President – Regions

Executive Vice President and President – Global Water and Process
Services

Executive Vice President and President – Global Healthcare

Senior Vice President and General Manager – Food & Beverage North
America

Daniel J.
Schmechel

56 Chief Financial Officer

Senior Vice President – Services and Systems
Senior Vice President and Chief Transformation Officer – EMEA

Oct. 2012 – Present
Jun. 2012 – Sep. 2012
Jan. 2011 – May 2012

Dec. 2011 – Sep. 2012
May 2011 – Dec. 2011
Jan. 2011 – May 2011

Nov. 2013 – Present
Dec. 2011 – Oct.2013 2

May 2015 – Present

Oct. 2012 – May 2015

Feb. 2012 – Sep. 2012
Jan. 2011 – Jan. 2012

Name
James J. Seifert

Age

Office

59 Executive Vice President, General Counsel and Secretary

General Counsel & Secretary

Stephen M. Taylor

54 Executive Vice President and President – Nalco Champion

Executive Vice President and President – Global Energy Services
Executive Vice President – Energy Services

Jill S. Wyant

Executive Vice President and President – Global Food & Beverage and
Healthcare

Executive Vice President and President – Global Food & Beverage

Senior Vice President and General Manager – North America and Latin
America

Positions Held Since
Jan. 1, 2011
Oct. 2011 – Present
Jan. 2011 – Sep. 2011

Apr. 2013 – Present
Oct. 2012 – March 2013
Dec. 2011 – Sep. 2012 3

Aug. 2015 – Present

Oct. 2012 – July 2015
Jan. 2012 – Sep. 2012

Senior Vice President – Food & Beverage Asia Pacific and Latin America Jan. 2011 – Dec. 2011

1. Prior to joining Ecolab in 2013, Mr. Blanco was employed by Procter & Gamble Co., for 30 years, most recently as Vice President,

Product Supply Global Beauty Sector.

2. Prior to joining Ecolab in 2011 upon the closing of the Nalco merger, Ms. Marsh was employed by Nalco for 20 years, most recently

as Executive Vice President of Human Resources.

3. Prior to joining Ecolab in 2011 upon closing of the Nalco merger, Mr. Taylor was employed by Nalco for 17 years. Mr. Taylor led

Nalco’s Energy Services Division since 2007 after a series of leadership roles in the division.

Forward-Looking Statements

This Annual Report on Form 10-K, including the MD&A within Part II, Item 7 of this Form 10-K, contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. These statements include expectations concerning items such as:

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amount, funding and timing of cash expenditures; scope; timing; costs; benefits; synergies and headcount impact relating to
our restructuring initiatives
utilization of recorded restructuring liabilities
capital investments and strategic business acquisitions
share repurchases
payments under operating leases
borrowing capacity
global market risk
impact of oil price fluctuations, expectations concerning production at certain projects and comparative performance and
prospects of businesses in our Global Energy segment
targeted credit rating metrics
long-term potential of our business
impact of changes in exchange rates and interest rates
losses due to concentration of credit risk
recognition of share-based compensation expense
future benefit plan payments
amortization expense
customer retention rate
bad debt experiences and customer credit worthiness
disputes, claims and litigation
environmental contingencies
returns on pension plan assets
funding of cash requirements, future cash flow and uses for cash
dividends
debt repayments
contributions to pension and postretirement healthcare plans
liquidity requirements and borrowing methods
impact of credit rating downgrade
impact of new accounting pronouncements
tax deductibility of goodwill
non-performance of counterparties
income taxes, including valuation allowances, loss carryforwards, unrecognized tax benefits and uncertain tax positions

Without limiting the foregoing, words or phrases such as “will likely result,” “are expected to,” “will continue,” “is anticipated,” “we believe,”
“we expect,” “estimate,” “project” (including the negative or variations thereof) or similar terminology, generally identify forward-looking
statements. Forward-looking statements may also represent challenging goals for us. These statements, which represent the Company’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 such forward-looking statements, which speak only as of the date made. Some of the factors which
could cause results to differ from those expressed in any forward-looking statement are set forth under Item 1A of this Form 10-K, entitled
Risk Factors. Except as may be required under applicable law, we undertake no duty to update our Forward-Looking Statements.

Item 1A. Risk Factors.

The following are important factors which could affect our financial performance and could cause our actual results for future periods to
differ materially from our anticipated results or other expectations, including those expressed in any forward-looking statements made in
this Form 10-K. See the section entitled Forward-Looking Statements set forth above.

We may also refer to this disclosure to identify factors that may cause results to differ from those expressed in other forward-looking
statements including those made in oral presentations, including telephone conferences and/or webcasts open to the public.

Our results depend upon the continued vitality of the markets we serve.

Economic downturns, and in particular downturns in the energy, foodservice, hospitality, travel, health care, food processing, pulp and
paper, mining and steel industries, can adversely impact our end-users. The well completion and stimulation, oil and gas production and
refinery and petrochemical plant markets served by our Global Energy segment may be impacted by substantial fluctuations in oil and
gas prices; in 2015, the Global Energy Segment experienced a decrease in sales as a result of challenging global energy market
conditions. In recent years, the weaker global economic environment, particularly in Europe and emerging markets such as China and
Brazil, has negatively impacted many of our end-markets. Weaker economic activity may continue to adversely affect these markets.
During such cycles, these end-users may reduce their volume of purchases of cleaning and sanitizing products and water treatment and
process chemicals, which has had, and may continue to have, an adverse effect on our business.

Our results are impacted by general worldwide economic factors.

Economic factors such as the worldwide economy, capital flows, interest rates and currency movements, including, in particular, our
exposure to foreign currency risk, have affected our business in the past and may have a material adverse impact on our business in the
future. In 2008 and 2009, the global economy experienced considerable disruption and volatility, and the disruption was particularly acute
in the global credit markets. In 2011 and 2012, the European Union’s sovereign debt crisis negatively impacted economic activity in that
region as well as the strength of the euro versus the U.S. dollar. Other regions of the world, including emerging market areas, also
expose us to foreign currency risk. For example, as more fully described in the MD&A located in Item 7 of Part II of this Form 10-K,
continued deteriorating economic conditions and currency exchange control regulations have resulted in a charge of $123.4 million
during the fourth quarter of 2015 related to the deconsolidation of our Venezuelan subsidiaries. This charge was preceded by charges of
$165.9 million, $154.8 million including the impact of $11.1 million within net income (loss) attributable to non-controlling interest, through
the first three quarters of 2015 related to Venezuela bolivar’s devaluation. Similar currency devaluations, credit market disruptions or
other economic turmoil in other countries could have a material adverse impact on our consolidated results of operations, financial
position and cash flows by negatively impacting economic activity, including in our key end-markets, and by further weakening the local
currency versus the U.S. dollar, resulting in reduced sales and earnings from our foreign operations, which are generated in the local
currency, and then translated to U.S. dollars.

We depend on key personnel to lead our business.

Our continued success will largely depend on our ability to attract and retain a high caliber of talent and on the efforts and abilities of our
executive officers and certain other key employees, particularly those with sales and sales management responsibilities. This is
especially crucial as we continue the integration of new businesses, which may be led by personnel that we believe are critical to the
success of the integration and the prospects of the business. Our operations could be adversely affected if for any reason we were
unable to attract or retain such officers or key employees.

If we are unsuccessful in executing on key business initiatives, our business could be adversely affected.

In addition to the Energy Restructuring Plan and Combined Restructuring Plan discussed under Note 3, entitled “Special Gains and
Charges” of this Form 10-K, we continue to make investments and execute business initiatives to develop business systems and
optimize our business structure as part of our ongoing efforts to improve our efficiency and returns. In particular, we continue to invest in
our ERP systems to integrate and streamline our processes and to improve our competitiveness. These initiatives involve complex
business process design and a breakdown in certain of these processes could result in business disruption. If the projects in which we
are investing or the initiatives which we are pursuing are not successfully executed, our consolidated results of operations, financial
position or cash flows could be adversely affected.

We may be subject to information technology system failures, network disruptions and breaches in data security.

We rely to a large extent upon information technology systems and infrastructure to operate our business. The size and complexity of our
computer systems make them potentially vulnerable to breakdown, malicious intrusion and random attack. Recent acquisitions, including
the Nalco and Champion transactions, have resulted in further de-centralization of systems and additional complexity in our systems
infrastructure. Likewise, data privacy breaches by employees and others with permitted access to our systems may pose a risk that
sensitive data may be exposed to unauthorized persons or to the public. While we have invested in protection of data and information
technology, there can be no assurance that our efforts will prevent breakdowns, cybersecurity attacks or breaches in our systems that
could cause reputational damage, business disruption and legal and regulatory costs; could result in third-party claims; could result in
compromise or misappropriation of our intellectual property, trade secrets and sensitive information; and could otherwise adversely affect
our business.

Our significant non-U.S. operations expose us to global economic, political and legal risks that could impact our profitability.

We have significant operations outside the United States, including joint ventures and other alliances. We conduct business in
approximately 170 countries and, in 2015, approximately 48% of our net sales originated outside the United States. There are inherent
risks in our international operations, including:

•
•
•
•
•
•
•

exchange controls and currency restrictions;
currency fluctuations and devaluations;
tariffs and trade barriers;
export duties and quotas;
changes in the availability and pricing of raw materials, energy and utilities;
changes in local economic conditions;
changes in laws and regulations, including the imposition of economic sanctions affecting commercial transactions in countries
such as the Russian Federation;
difficulties in managing international operations and the burden of complying with foreign laws;
requirements to include local ownership or management in our business;
economic and business objectives that differ from those of our joint venture partners;
exposure to possible expropriation, nationalization or other government actions;
restrictions on our ability to repatriate dividends from our subsidiaries;
unsettled political conditions, military action, civil unrest, acts of terrorism, force majeure, war or other armed conflict; and
countries whose governments have been hostile to U.S.-based businesses.

Also, because of uncertainties regarding the interpretation and application of laws and regulations and the enforceability of intellectual
property and contract rights, we face risks in some countries that our intellectual property rights and contract rights would not be enforced
by local governments. We are also periodically faced with the risk of economic uncertainty, which has impacted our business in some
countries. Other risks in international business also include difficulties in staffing and managing local operations, including managing
credit risk to local customers and distributors.

Further, our operations outside the United States require us to comply with a number of United States and international regulations,
including anti-corruption laws such as the United States Foreign Corrupt Practices Act and the United Kingdom Bribery Act, as well as
U.S. and international economic sanctions regulations. We have internal policies and procedures relating to such regulations; however,
there is risk that such policies and procedures will not always protect us from the reckless acts of employees or representatives,
particularly in the case of recently acquired operations that may not have significant training in applicable compliance policies and
procedures. Violations of such laws and regulations could result in disruptive investigations of the Company, significant fines and
sanctions, which could adversely affect our consolidated results of operations, financial position or cash flows.

Our overall success as a global business depends, in part, upon our ability to succeed in differing economic, social, legal and political
conditions. We may not continue to succeed in developing and implementing policies and strategies that are effective in each location
where we do business, which could adversely affect our consolidated results of operations, financial position or cash flows.

Our business depends on our ability to comply with laws and governmental regulations, and we may be adversely affected by
changes in laws and regulations.

Our business is subject to numerous laws and regulations relating to the environment, including evolving climate change standards, and
to the manufacture, storage, distribution, sale and use of our products as well as to the conduct of our business generally, including
employment and labor laws. Compliance with these laws and regulations exposes us to potential financial liability and increases our
operating costs. Regulation of our products and operations continues to increase with more stringent standards, causing increased costs
of operations and potential for liability if a violation occurs. The potential cost to us relating to environmental and product registration laws
and regulations is uncertain due to factors such as the unknown magnitude and type of possible contamination and clean-up costs, the
complexity and evolving nature of laws and regulations, and the timing and expense of compliance. Changes to current laws (including
tax laws), regulations and policies could impose new restrictions, costs or prohibitions on our current practices which would adversely
affect our consolidated results of operations, financial position or cash flows.

We are a defendant in five wage hour lawsuits claiming violations of the Fair Labor Standards Act (“FLSA”) or a similar state law. While
we have settled one wage hour case during the past year - namely, Cancilla v. Ecolab Inc., U.S. District Court – Northern District of

California, case no. CV 12-03001; and obtained summary judgment in Ecolab’s favor on FLSA claims in another – namely, Charlot v.
Ecolab Inc., U.S. District Court – Eastern District of New York, case no. CV 12-04543 - there can be no assurance that other pending or
future wage hour lawsuits can be successfully defended or settled.

Our subsidiaries are defendants in pending lawsuits alleging negligence and injury resulting from the use of our COREXIT
dispersant in response to the Deepwater Horizon oil spill, which could expose us to monetary damages or settlement costs.

Our subsidiaries were named as defendants in pending lawsuits alleging negligence and injury resulting from the use of our COREXIT
dispersant in response to the Deepwater Horizon oil spill, which could expose us to monetary damages or settlement costs. On April 22,
2010, the deepwater drilling platform, the Deepwater Horizon, operated by a subsidiary of BP plc, sank in the Gulf of Mexico after a
catastrophic explosion and fire that began on April 20, 2010. A massive oil spill resulted. Approximately one week following the incident,
subsidiaries of BP plc, under the authorization of the responding federal agencies, formally requested our indirect subsidiary, Nalco
Company, to supply large quantities of COREXIT 9500, a Nalco oil dispersant product listed on the U.S. EPA National Contingency Plan
Product Schedule. Nalco Company responded immediately by providing available COREXIT and increasing production to supply the
product to BP’s subsidiaries for use, as authorized and directed by agencies of the federal government.

Nalco Company and certain affiliates (collectively “Nalco”) were named as a defendant in a series of class action and individual plaintiff
lawsuits arising from this event. The plaintiffs in these matters claimed damages under products liability, tort and other theories. Nalco
was also named as a third party defendant in certain matters. Nalco was indemnified in these matters by another of the defendants.

All but one of these cases have been administratively transferred to a judge in the United States District Court for the Eastern District of
Louisiana with other related cases under In Re: Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, on April 20, 2010,
Case No. 10-md-02179 (E.D. La.) (the “MDL”). The remaining case was Franks v. Sea Tow of South Miss, Inc., et al, Cause No. A2402-
10-228 (Circuit Court of Harrison County Mississippi). The Franks case was dismissed in May 2014.

Nalco Company, the incident defendants and the other responder defendants have been named as third party defendants by Transocean
Deepwater Drilling, Inc. and its affiliates (the “Transocean Entities”) (In re the Complaint and Petition of Triton Asset Leasing GmbH, et al,
MDL No. 2179, Civil Action 10-2771). In April and May 2011, the Transocean Entities, Cameron International Corporation, Halliburton
Energy Services, Inc., M-I L.L.C., Weatherford U.S., L.P. and Weatherford International, Inc. (collectively, the “Cross Claimants”) filed
cross claims in MDL 2179 against Nalco Company and other unaffiliated cross defendants. The Cross Claimants generally allege, among
other things, that if they are found liable for damages resulting from the Deepwater Horizon explosion, oil spill and/or spill response, they
are entitled to indemnity or contribution from the cross defendants.

On November 28, 2012, the Federal Court in the MDL entered an order dismissing all claims against Nalco. Because claims remain
pending against other defendants, the Court’s decision is not a “final judgment” for purposes of appeal. Plaintiffs will have 30 days after
entry of final judgment to appeal the Court’s decision. We cannot predict whether there will be an appeal of the dismissal, the
involvement we might have in these matters in the future or the potential for future litigation. However, if an appeal by plaintiffs in these
lawsuits is brought and won, these suits could have a material adverse affect on our consolidated results of operations, financial position
or cash flows.

Our growth depends upon our ability to successfully compete with respect to value, innovation and customer support.

Our competitive market is made up of numerous global, national, regional and local competitors. Our ability to compete depends in part
upon our ability to maintain a superior technological capability and to continue to identify, develop and commercialize innovative, high
value-added products for niche applications. There can be no assurance that we will be able to accomplish this or that technological
developments by our competitors will not place certain of our products at a competitive disadvantage in the future. In addition, certain of
the new products that we have under development will be offered in markets in which we do not currently compete, and there can be no
assurance that we will be able to compete successfully in those new markets. If we fail to introduce new technologies on a timely basis,
we may lose market share and our consolidated results of operations, financial position or cash flows could be adversely affected.

Our results can be adversely affected by difficulties in securing the supply of certain raw materials or by fluctuations in the
cost of raw materials.

The prices of raw materials used in our business can fluctuate from time to time, and in recent years we have experienced periods of
increased raw material costs. Changes in raw material prices, unavailability of adequate and reasonably priced raw materials or
substitutes for those raw materials, or the inability to obtain or renew supply agreements on favorable terms can adversely affect our
consolidated results of operations, financial position or cash flows. In addition, volatility and disruption in economic activity and conditions
could disrupt or delay the performance of our suppliers and thus impact our ability to obtain raw materials at favorable prices or on
favorable terms, which may adversely affect our business.

We have substantial indebtedness which will impact our financial flexibility.

As of December 31, 2015, we had net debt (total debt minus cash and cash equivalents) of approximately $6.4 billion. Our substantial
indebtedness may adversely affect our business, consolidated results of operations and financial position, including in the following
respects:

•

requiring us to dedicate a substantial portion of our cash flows to debt service obligations, thereby potentially reducing the
availability of cash flows to pay cash dividends and to fund working capital, capital expenditures, acquisitions, investments and
other general operating requirements and opportunities;

limiting our ability to obtain additional financing to fund our working capital requirements, capital expenditures, acquisitions,
investments, debt service obligations and other general operating requirements;

placing us at a relative competitive disadvantage compared to competitors that have less debt;

limiting flexibility to plan for, or react to, changes in the businesses and industries in which we operate, which may adversely
affect our operating results and ability to meet our debt service obligations; and

increasing our vulnerability to adverse general economic and industry conditions.

In addition, as of December 31, 2015 approximately $2.2 billion of our debt is floating rate debt. A one percentage point increase in the
average interest rate on our floating rate debt would increase future interest expense by approximately $22 million per year. Accordingly,
a significant spike in interest rates would adversely affect our consolidated results of operations and cash flows.

If we incur additional indebtedness, the risks related to our substantial indebtedness may intensify.

If we are unsuccessful in integrating acquisitions, our business could be adversely affected.

As part of our long-term strategy, we seek to acquire complementary businesses. There can be no assurance that we will find attractive
acquisition candidates or succeed at effectively managing the integration of acquired businesses into existing businesses. If the
underlying business performance of such acquired businesses deteriorates, the expected synergies from such transactions do not
materialize or we fail to successfully integrate new businesses into our existing businesses, our consolidated results of operations,
financial position or cash flows could be adversely affected.

We enter into multi-year contracts with customers that can impact our results.

Our multi-year contracts with some of our customers include terms affecting our pricing flexibility. There can be no assurance that these
restraints will not have an adverse impact on our margins and consolidated results of operations.

Consolidation of our customers and vendors can affect our results.

Customers and vendors in the foodservice, hospitality, travel, healthcare, food processing and pulp and paper industries, as well as other
industries we serve, have consolidated in recent years and that trend may continue. This consolidation could have an adverse impact on
our ability to retain customers and on our margins and consolidated results of operations.

Severe public health outbreaks may adversely impact our business.

Our business could be adversely affected by the effect of a public health epidemic. The United States and other countries have
experienced, and may experience in the future, public health outbreaks such as Zika virus, Avian Flu, SARS and H1N1 influenza. A
prolonged occurrence of a contagious disease such as these could result in a significant downturn in the foodservice, hospitality and
travel industries and also may result in health or other government authorities imposing restrictions on travel further impacting our end
markets. Any of these events could result in a significant drop in demand for some of our products and services and adversely affect our
business.

We incur significant expenses related to the amortization of intangible assets and may be required to report losses resulting
from the impairment of goodwill or other assets recorded in connection with the Nalco and Champion transactions and other
acquisitions.

Ecolab expects to continue to complete selected acquisitions and joint venture transactions in the future. In connection with acquisition
and joint venture transactions, applicable accounting rules generally require the tangible and intangible assets of the acquired business
to be recorded on the balance sheet of the acquiring company at their fair values. Intangible assets other than goodwill are required to be
amortized over their estimated useful lives and this expense may be significant. Any excess in the purchase price paid by the acquiring
company over the fair value of tangible and intangible assets of the acquired business is recorded as goodwill. If it is later determined
that the anticipated future cash flows from the acquired business may be less than the carrying values of the assets and goodwill of the
acquired business, the assets or goodwill may be deemed to be impaired. In this case, the acquiring company may be required under
applicable accounting rules to write down the value of the assets or goodwill on its balance sheet to reflect the extent of the impairment.
This write-down of assets or goodwill is generally recognized as a non-cash expense in the statement of operations of the acquiring
company for the accounting period during which the write down occurs. As of December 31, 2015, we had goodwill of $6.5 billion which
is maintained in various reporting units, including goodwill from the Nalco and Champion transactions which resulted in the addition of
$4.5 billion and $1.0 billion of goodwill, respectively. If we determine that any of the assets or goodwill recorded in connection with the
Nalco and Champion transactions or any other prior or future acquisitions or joint venture transactions have become impaired, we will be
required to record a loss resulting from the impairment. Impairment losses could be significant and could adversely affect our
consolidated results of operations and financial position.

Future events may impact our deferred tax position, including the utilization of foreign tax credits and undistributed earnings of
international affiliates that are considered to be reinvested indefinitely.

We evaluate the recoverability of deferred tax assets and the need for deferred tax liabilities based on available evidence. This process
involves significant management judgment about assumptions that are subject to change from period to period based on changes in tax
laws or variances between future projected operating performance and actual results. We are required to establish a valuation allowance
for deferred tax assets if we determine, based on available evidence at the time the determination is made, that it is more likely than not
that some portion or all of the deferred tax assets will not be realized. In making this determination, we evaluate all positive and negative
evidence as of the end of each reporting period. Future adjustments (either increases or decreases), to the deferred tax asset valuation
allowance are determined based upon changes in the expected realization of the net deferred tax assets. The realization of the deferred
tax assets ultimately depends on the existence of sufficient taxable income in either the carry-back or carry-forward periods under the tax
law. Due to significant estimates used to establish the valuation allowance and the potential for changes in facts and circumstances, it is
reasonably possible that we will be required to record adjustments to the valuation allowance in future reporting periods. Changes to the
valuation allowance or the amount of deferred tax liabilities could adversely affect our consolidated results of operations or financial
position. Further, should the Company change its assertion regarding the permanent reinvestment of the undistributed earnings of
international affiliates, a deferred tax liability may need to be established.

A chemical spill or release could adversely impact our business.

As a manufacturer and supplier of chemical products, there is a potential for chemicals to be accidentally spilled, released or discharged,
either in liquid or gaseous form, during production, transportation, storage or use. Such a release could result in environmental
contamination as well as a human or animal health hazard. Accordingly, such a release could have a material adverse effect on our
consolidated results of operations, financial position or cash flows.

Extraordinary events may significantly impact our business.

The occurrence of (a) litigation or claims, (b) the loss or insolvency of a major customer or distributor, (c) war (including acts of terrorism
or hostilities which impact our markets), (d) natural or manmade disasters, (e) water shortages or (f) severe weather conditions affecting
the energy, foodservice, hospitality and travel industries may have a material adverse effect on our business.

Defense of litigation, particularly certain types of actions such as antitrust, patent infringement, wage hour and class action lawsuits, can
be costly and time consuming even if ultimately successful, and if not successful could have a material adverse effect on our
consolidated results of operations, financial position or cash flows.

While we have a diverse customer base and no customer or distributor constitutes 10 percent or more of our consolidated revenues, we
do have customers and independent, third-party distributors, the loss of which could have a material adverse effect on our consolidated
results of operations or cash flows for the affected earnings periods.

War (including acts of terrorism or hostilities), natural or manmade disasters, water shortages or severe weather conditions affecting the
energy, foodservice, hospitality, travel, health care, food processing, pulp and paper, mining, steel and other industries can cause a
downturn in the business of our customers, which in turn can have a material adverse effect on our consolidated results of operations,
financial position or cash flows.

Item 1B. Unresolved Staff Comments.

We have no unresolved comments from the staff of the Securities and Exchange Commission.

Item 2. Properties.

Our manufacturing philosophy is to manufacture products wherever an economic, process or quality assurance advantage exists or
where proprietary manufacturing techniques dictate in-house production. Currently, most products that we sell are manufactured at our
facilities. We position our manufacturing locations and warehouses in a manner to permit ready access to our customers.

Our manufacturing facilities produce chemical products as well as medical devices and equipment for all of our businesses, although the
businesses constituting the Other segment purchase the majority of their products and equipment from outside suppliers. Our chemical
production process consists of producing intermediates via basic reaction chemistry and subsequently blending and packaging those
intermediates with other purchased raw materials into finished products in powder, solid and liquid form. Our devices and equipment
manufacturing operations consist of producing chemical product dispensers and injectors and other mechanical equipment, medical
devices, dishwasher racks, related sundries, dish machine refurbishment and water monitoring and maintenance equipment system from
purchased components and subassemblies.

The following table profiles our more significant physical properties with approximately 70,000 square feet or more with ongoing
production activities. In general, manufacturing facilities located in the United States serve our U.S. markets and facilities located outside
of the United States serve our International markets. However, most of the United States facilities do manufacture products for export.

Location
Joliet, IL USA
Tai Cang, CHINA
Sugar Land, TX USA
South Beloit, IL USA
Chalons, FRANCE
Clearing, IL USA
Jurong Island, SINGAPORE
Garland, TX USA
Martinsburg, WV USA
Elwood City, PA USA
Weavergate, UNITED KINGDOM
Greensboro, NC USA
Fresno, TX USA
Nieuwegein, NETHERLANDS
La Romana, DOMINICAN REPUBLIC
Tessenderlo, BELGIUM
Cheltenham, AUSTRALIA
Suzano, BRAZIL
McDonough, GA USA
Darra, AUSTRALIA
Corsicana, TX USA
Burlington, Ontario, CANADA
Eagan, MN USA
Huntington, IN USA
Rozzano, ITALY
City of Industry, CA USA
Garyville, LA USA
Mississauga, CANADA
Aberdeen, UNITED KINGDOM
Elk Grove Village, IL USA
Nanjing, CHINA
Biebesheim, GERMANY
Fort Worth, TX USA
Johannesburg, SOUTH AFRICA

PLANT PROFILES

Approximate
Size (Sq. Ft.)

610,000
450,000
350,000
313,000
280,000
270,000
250,000
239,000
228,000
222,000
222,000
193,000
192,000
168,000
160,000
153,000
145,000
142,000
141,000
138,000
137,000
136,000
133,000
127,000
126,000
125,000
122,000
120,000
118,000
115,000
112,000
109,000
101,000
100,000

Segment
Global Institutional, Global Industrial
Global Institutional
Global Energy, Global Industrial
Global Institutional, Global Industrial, Other
Global Institutional, Global Industrial
Global Energy, Global Industrial
Global Energy, Global Industrial
Global Institutional, Global Industrial
Global Institutional, Global Industrial
Global Energy, Global Industrial
Global Industrial, Global Institutional
Global Institutional
Global Energy
Global Institutional, Global Industrial
Global Institutional
Global Institutional
Global Institutional, Global Industrial
Global Energy, Global Industrial
Global Institutional, Global Industrial
Global Institutional, Global Industrial
Global Energy
Global Energy, Global Industrial
Global Institutional, Global Industrial, Other
Global Institutional, Global Industrial
Global Institutional, Global Industrial
Global Institutional, Global Industrial
Global Energy, Global Industrial
Global Institutional, Global Industrial
Global Energy
Global Institutional
Global Energy, Global Industrial
Global Energy, Global Industrial
Global Institutional
Global Institutional, Global Industrial

Majority
Owned or
Leased
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Leased
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Leased
Owned
Leased
Owned
Owned
Leased
Owned

Generally, our manufacturing facilities are adequate to meet our existing in-house production needs. We continue to invest in our plant
sites to maintain viable operations and to add capacity as necessary to meet business imperatives. A new leased facility in the
Dominican Republic is expected to be completed in 2016 and will service our Global Institutional segment.

Most of our manufacturing plants also serve as distribution centers. In addition, we operate distribution centers around the world, most of
which are leased, and utilize third party logistics service providers to facilitate the distribution of our products and services.

Ecolab’s current corporate headquarters is comprised of three adjacent multi-storied buildings located in downtown St. Paul, Minnesota.
The main 19-story building was constructed to our specifications and is leased through June 30, 2018. Thereafter, it is subject to multiple
renewals at our option. The second building is leased through 2019 with additional options available. The third building is owned. The
corporate headquarters includes an employee training center. Ecolab acquired the 17-story North Tower from The Travelers Indemnity
Company in downtown St. Paul, Minnesota on August 4, 2015. The Company intends to move from its existing three buildings to this
building over the next two years. A 90 acre campus in Eagan, Minnesota is owned and provides for future growth. The Eagan facility
houses a significant research and development center, a data center and training facilities as well as several of our administrative
functions.

We also have a significant business presence in Naperville, Illinois, where our Water and Paper business units maintain their principal
administrative offices and research center. As discussed in Part II, Item 8, Note 6, “Debt and Interest” of this Form 10-K, the Company
acquired the beneficial interest in the trust owning these facilities during 2015. Our Energy business maintains administrative and
research facilities in Sugar Land, Texas and additional research facilities in Fresno, Texas. Additionally, the business leases
administrative space in Houston, Texas. In December 2013, we announced the construction of a new 133,000 square-foot headquarters
building adjacent to the existing Sugar Land operations scheduled for completion in early 2016 and renovation of the existing 45,000
square-foot research facilities in Sugar Land. The administrative and research development and engineering employees from Houston
and Fresno will relocate to the new facilities upon completion.

Significant regional administrative and/or research facilities are located in Leiden, Netherlands, Campinas, Brazil, and Pune, India, which
we own, and in Monheim, Germany, Singapore, Shanghai, China, and Zurich, Switzerland, which we lease. We also have a network of
small leased sales offices in the United States and, to a lesser extent, in other parts of the world.

Item 3. Legal Proceedings.

Discussion of legal matters is incorporated by reference from Part II, Item 8, Note 15, “Commitments and Contingencies,” of this Form 10-
K and should be considered an integral part of Part I, Item 3, “Legal Proceedings.”

Other matters arising under laws relating to protection of the environment are discussed at Part I, Item 1(c) above, under the heading
“Environmental and Regulatory Considerations.”

Item 4. Mine Safety Disclosures.

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities.

Market Information

Our Common Stock is listed on the New York Stock Exchange under the symbol “ECL.” The Common Stock is also traded on an unlisted
basis on certain other United States exchanges. The high and low sales prices of our Common Stock on the consolidated transaction
reporting system during 2015 and 2014 were as follows:

Quarter

High

Low

High

Low

2015

2014

The closing Common Stock price on the New York Stock Exchange on January 29, 2016 was $107.87.

Holders

On January 29, 2016, we had 7,274 holders of Common Stock of record.

Dividends

We have paid Common Stock dividends for 79 consecutive years. Quarterly cash dividends of $0.275 per share were declared in
February, May and August 2014. Cash dividends of $0.33 per share were declared in December 2014, and February, May and August
2015. A dividend of $0.35 per share was declared in December 2015.

Issuer Purchases of Equity Securities

Period

(a)
Total number of
shares purchased (1)

(b)
Average price paid
per share (2)

(c)

Number of shares
purchased as part of
publicly announced
plans or programs (3)

(d)
Maximum number of
shares that may yet be
purchased under the
plans or programs (3)

(1)

Includes 161,554 shares reacquired from employees and/or directors to satisfy the exercise price of stock options or shares
surrendered to satisfy minimum statutory tax obligations under our stock incentive plans.

(2) The average price paid per share includes brokerage commissions associated with publicly announced plan purchases plus the

value of such other reacquired shares.

(3) As announced on August 23, 2011, the Finance Committee of our Board of Directors, via delegation by our Board of Directors,

authorized the repurchase of up to 10,000,000 shares of Common Stock contingent upon completion of the merger with Nalco. As
announced on February 24, 2015, our Board of Directors authorized the repurchase of up to an additional 20,000,000 shares. The
Company also announced on February 24, 2015 a $1.0 billion share repurchase program under the existing share repurchase
authorizations. Subject to market conditions, we expect to repurchase all shares under these authorizations, for which no expiration
date has been established, in open market or privately negotiated transactions, including pursuant to Rule 10b5-1 and accelerated
share repurchase program.

Performance Graph

The following chart assumes investment of $100 in Ecolab Common Stock, the Standard & Poor’s 500 Index and an index comprised of
the company’s self-selected composite peer group on December 31, 2010, and reinvestment of all dividends.

Comparison of Cumulative Five Year Total Return

300

200

100

s
r
a

l
l

o
D

0
2010

2011

2012

2013

2014

2015

Ecolab Inc.

S&P 500 Index

Peer Group

The companies comprising the peer group are set forth below. The peer group has remained the same for the past two years. Further
information regarding this peer group can be found in our definitive Proxy Statement to be filed on or about March 18, 2016.

PEER GROUP:

3M Co.
Air Products and Chemicals Inc.
Airgas Inc.
Ashland Inc.
Baker Hughes Inc.
Cameron International Corp.
Celanese Corp.
Danaher Corp.
Dow Chemical Company
E.I. du Pont de Nemours and Co.

Eastman Chemical Co.
Halliburton Co.
Monsanto Co.
National Oilwell Varco Inc.
PPG Industries Inc.
Praxair Inc.
Schlumberger Ltd.
Sealed Air Corp.
Sherwin-Williams Co.
Weatherford International plc

Item 6. Selected Financial Data.

December 31, millions, except per share amounts and employees
OPERATIONS
Net sales (including special (gains) and charges (1))
Cost of sales (including special (gains) and charges (1)(2))
Selling, general and administrative expenses (2)
Special (gains) and charges
Operating income
Net interest expense (including special (gains) and charges (1))
Income before income taxes
Provision for income taxes
Net income including noncontrolling interest
Less: Net income (loss) attributable to noncontrolling interest (including

special (gains) and charges (1))
Net income attributable to Ecolab
Diluted earnings per share, as reported (GAAP)
Diluted earnings per share, as adjusted (Non-GAAP) (3)
Weighted-average common shares outstanding - basic
Weighted-average common shares outstanding - diluted

SELECTED INCOME STATEMENT RATIOS
Gross margin
Selling, general and administrative expenses
Operating income
Income before income taxes
Net income attributable to Ecolab
Effective income tax rate

FINANCIAL POSITION
Current assets (4)
Property, plant and equipment, net
Goodwill, intangible and other assets (5)

Total assets

Current liabilities (4) (5)
Long-term debt (5)
Postretirement health care and pension benefits
Other liabilities

Total liabilities

Ecolab shareholders’ equity
Noncontrolling interest

Total equity
Total liabilities and equity

SELECTED CASH FLOW INFORMATION
Cash provided by operating activities
Cash used for investing activities
Cash provided by (used for) financing activities
Depreciation and amortization
Capital expenditures
Cash dividends declared per common share

SELECTED FINANCIAL MEASURES/OTHER
Total debt
Total debt to capitalization
Book value per common share
Return on beginning equity
Dividends per share/diluted earnings per common share
Net interest coverage
Year end market capitalization
Annual common stock price range

Number of employees

2015

2014

2013

2012

2011

$ 13,545.1
7,223.5
4,345.5
414.8
1,561.3
243.6
1,317.7
300.5
1,017.2

15.1
$ 1,002.1
$ 3.32
$ 4.37
296.4
301.4

$ 14,280.5
7,679.1
4,577.6
68.8
1,955.0
256.6
1,698.4
476.2
1,222.2

19.4
$ 1,202.8
$ 3.93
$ 4.18
300.1
305.9

$ 13,253.4
7,161.2
4,360.3
171.3
1,560.6
262.3
1,298.3
324.7
973.6

$ 11,838.7
6,385.4
4,018.3
145.7
1,289.3
276.7
1,012.6
311.3
701.3

$ 6,798.5
3,475.6
2,438.1
131.0
753.8
74.2
679.6
216.3
463.3

5.8
$ 967.8
$ 3.16
$ 3.54
299.9
305.9

(2.3)
$ 703.6
$ 2.35
$ 2.98
292.5
298.9

0.8
$ 462.5
$ 1.91
$ 2.54
236.9
242.1

46.7 %
32.1
11.5
9.7
7.4
22.8 %

46.2 %
32.1
13.7
11.9
8.4
28.0 %

46.0 %
32.9
11.8
9.8
7.3
25.0 %

46.1 %
33.9
10.9
8.6
5.9
30.7 %

48.9 %
35.9
11.1
10.0
6.8
31.8 %

$ 4,447.5
3,228.3
10,965.9
$ 18,641.7
$ 4,764.4
4,260.2
1,117.1
1,519.6
11,661.3
6,909.9
70.5
6,980.4
$ 18,641.7

$ 4,853.0
3,050.6
11,523.8
$ 19,427.4
$ 4,367.9
4,843.4
1,188.5
1,645.5
12,045.3
7,315.9
66.2
7,382.1
$ 19,427.4

$ 4,698.4
2,882.0
12,027.4
$ 19,607.8
$ 3,487.5
6,016.0
795.6
1,899.3
12,198.4
7,344.3
65.1
7,409.4
$ 19,607.8

$ 4,892.0
2,409.1
10,234.5
$ 17,535.6
$ 3,052.4
5,699.7
1,220.5
1,402.9
11,375.5
6,077.0
83.1
6,160.1
$ 17,535.6

$ 5,396.0
2,295.4
10,460.1
$ 18,151.5
$ 3,166.3
6,580.0
1,173.4
1,490.7
12,410.4
5,666.7
74.4
5,741.1
$ 18,151.5

$ 1,999.8
(915.8)
(1,150.9)
859.5
771.0
1.340

$ 1,815.6
(848.3)
(1,071.0)
872.0
748.7
1.155

$ 1,559.8
(2,078.7)
(292.6)
816.2
625.1
0.965

$ 1,203.0
(487.9)
(1,393.6)
714.5
574.5
0.830

$ 685.5
(2,024.3)
2,933.8
395.7
341.7
0.725

$ 6,465.5

$ 6,548.2

$ 6,875.8

$ 6,505.2

$ 7,603.0

48.1 %

$ 23.35

13.8 %
40.4 %
6.4
$ 33,852.7
$ 122.48 -
97.78
47,145

47.0 %

48.1 %

51.4 %

$ 24.40

$ 24.39

$ 20.62

57.0 %

$ 19.41

15.8 %
30.5 %

16.5 %
29.4 %
7.6
$ 31,340.6
$ 118.46 -
97.65
47,430

5.9
$ 31,399.4
$ 108.34 -
71.99
45,415

12.2 %
35.3 %
4.7
$ 21,190.5
$ 72.79 -
57.44
40,860

21.7 %
38.0 %
10.2
$ 16,879.0
$ 58.13 -
43.81
40,200

On April 10, 2013 and on December 1, 2011, the company completed its acquisition of Champion and merger with Nalco, respectively, which significantly impacts the
comparability of certain 2011 through 2014 financial data against 2011.
(1) Net sales includes special charges of $29.6 in 2011; Cost of sales includes special charges of $80.6 in 2015, $14.3 in 2014, $43.2 in 2013, $93.9 in 2012, $8.9 in
2011; Net interest expense includes special charges of $2.5 in 2013, $19.3 in 2012 and $1.5 in 2011; Net income attributable to non-controlling interest includes special
charges of $12.8 in 2015, $0.5 in 2013 and $4.5 in 2012.
(2) Effective in the first quarter of 2014, certain employee related costs from the company’s recently acquired business that were historically presented within cost of
sales were revised and reclassified to SG&A. These immaterial revisions were made to conform with management’s view of the respective costs within the global
organizational model. Total costs reclassified were $78.9 and $98.1 in 2013 and 2012, respectively.
(3) Amounts exclude the impact of special (gains) and charges, discrete tax items and for 2011, post merger legacy Nalco activity.
(4) During 2015, the company changed its accounting policy for presenting derivatives subject to master netting agreements with the same counterparties, resulting in a
reduction in its December 31, 2014 current assets and current liabilities.
(5) During 2015, the company early adopted the accounting guidance related to simplifying the presentation of debt issue costs, resulting in reductions to other assets,
current liabilities and long-term debt across the 2011 to 2014 years presented.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following management discussion and analysis (“MD&A”) provides information that we believe is useful in understanding the
operating results, cash flows and financial condition of Ecolab Inc. (“Ecolab”, “the company”, “we” or “our”). We provide quantitative
information about the material sales drivers including the impact of changes in volume and pricing and the effect of acquisitions and
changes in foreign currency at the corporate level, and the quantitative impact of acquisitions and changes in foreign currency at the
segment level. We also provide quantitative information regarding special (gains) and charges, discrete tax items and other significant
factors we believe are useful for understanding our results. Such quantitative drivers are supported by comments meant to be qualitative
in nature. Qualitative factors are generally ordered based on estimated significance.

The discussion should be read in conjunction with the consolidated financial information and related notes included in this Form 10-K.
Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of
America (“U.S. GAAP”). This discussion contains various “Non-GAAP Financial Measures” and also contains various “Forward-Looking
Statements” within the meaning of the Private Securities Litigation Reform Act of 1995. We refer readers to the statements and
information set forth in the sections entitled “Non-GAAP Financial Measures” at the end of this MD&A, and “Forward-Looking Statements”
and “Risk Factors” within Items 1 and 1A of this Form 10-K.

Comparability of Results

Fixed Currency Foreign Exchange Rates

We evaluate the sales and operating income performance of our non-U.S. dollar functional currency international operations based on
fixed currency exchange rates, which eliminate the impact of exchange rate fluctuations on our international operations. Fixed currency
amounts are updated annually at the beginning of each year based on translation into U.S. dollars at foreign currency exchange rates
established by management, with all periods presented using such rates. Fixed currency exchange rates are generally based on existing
market rates at the time they are established.

Impact of Acquisitions and Divestitures

2015 versus 2014

To provide a more meaningful period-over-period comparison, our 2015 versus 2014 acquisition adjusted growth rates exclude the
results of our acquired businesses from the first twelve months post acquisition, exclude the results of the divested businesses from the
twelve months prior to divestiture, and exclude our Venezuelan results of operations from both 2015 and 2014.

2014 versus 2013

On April 10, 2013, we completed our acquisition of privately held Champion Technologies and its related company Corsicana
Technologies (collectively “Champion”). The Champion business became part of our Global Energy reportable segment in the second
quarter of 2013. The pro forma impact of the Champion acquisition was not material to our consolidated financial statements; therefore,
pro forma information is not presented.

Specific to the Champion transaction, due to the rapid pace at which the business has been integrated within our Global Energy
segment, including all customer selling activity, discrete financial data specific to the legacy Champion business is no longer available for
post-acquisition periods. As such, to allow for a more meaningful 2014 versus 2013 comparison, specific to the Champion transaction,
Champion’s results for the period prior to acquisition in 2013 have been included for purposes of providing acquisition adjusted growth
rates. All other acquisitions and divestitures continue to be handled consistent with the mechanics described in the 2015 versus 2014
discussion above. The 2014 versus 2013 acquisition adjusted growth rates do not exclude the Venezuelan results of operations from
either 2014 or 2013.

EXECUTIVE SUMMARY

In 2015, we delivered mid-single digit adjusted earnings per share growth in spite of declines in the energy and emerging markets and
significant currency headwinds, including the devaluation of our Venezuelan Bolivares Fuertes (“bolivar”) businesses throughout 2015.
Our Global Institutional, Global Industrial and Other segments delivered strong results, which more than offset weaker Global Energy
results. We continued to drive positive adjusted fixed currency operating growth and margin trends through product cost savings,
synergies and appropriate pricing.

Through our focused actions, we once again delivered superior operating results for our shareholders in 2015 while continuing to build
our future opportunities. Our performance underscored the strength and long-term potential of our business, our people and our
strategies.

Sales

Reported sales declined 5% to $13.5 billion in 2015 from $14.3 billion in 2014. Sales were negatively impacted by unfavorable foreign
currency exchange rates compared to the prior year. When measured in fixed rates of foreign currency exchange, fixed currency sales
increased 1% compared to the prior year. See the section entitled Non-GAAP Financial Measures within this MD&A for further
information on our Non-GAAP measures and the Net Sales table on page 32 and the Sales by Reportable Segment table on page 39 for
reconciliation information.

Gross Margin

Our reported gross margin was 46.7% of sales for 2015, which compared to 2014 reported gross margin of 46.2%. Excluding the impact
of special (gains) and charges included in cost of sales from both 2015 and 2014, our adjusted gross margin was 47.3% in 2015 and
46.3% in 2014. See the section entitled Non-GAAP Financial Measures within this MD&A for further information on our Non-GAAP
measures and the Cost of Sales and Gross Margin table on page 33 for reconciliation information.

Operating Income

Reported operating income decreased 20% to $1.6 billion in 2015, compared to $2.0 billion in 2014. Adjusted operating income,
excluding the impact of special (gains) and charges, increased 1% in 2015. When measured in fixed rates of foreign currency exchange,
adjusted fixed currency operating income increased 7%. See the section entitled Non-GAAP Financial Measures within this MD&A for
further information on our Non-GAAP measures and the Operating Income table on page 37 and Operating Income by Reportable
Segment table on page 39 for reconciliation information.

Earnings Per Share

Reported diluted earnings per share decreased 16% to $3.32 in 2015 compared to $3.93 in 2014. Special (gains) and charges had an
impact on both years, driven primarily by Venezuelan related actions in 2015 and restructuring charges, acquisition and integration
related costs, and other gains and charges in both 2015 and 2014. Adjusted diluted earnings per share, which exclude the impact of
special (gains) and charges and discrete tax items from both 2015 and 2014 increased 5% to $4.37 in 2015 compared to $4.18 in 2014.
See the section entitled Non-GAAP Financial Measures within this MD&A for further information on our Non-GAAP measures, and the
Diluted Earnings Attributable to Ecolab Per Common Share table on page 38 for reconciliation information.

Balance Sheet

We remain committed to our stated objective of having an investment grade balance sheet, supported by our current credit ratings of
BBB+/Baa1 by the major ratings agencies, and to achieving “A” range ratings metrics. We believe that our strong balance sheet has
allowed us continued access to capital at attractive rates.

Net Debt to EBITDA

Our net debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”) was 2.6 and 2.2 for 2015 and 2014,
respectively. Our net debt to adjusted EBITDA, defined as the sum of EBITDA and special (gains) and charges impacting EBITDA, was
2.2 for both 2015 and 2014. We view these measures as an important indicator of our creditworthiness and demonstrates our ability to
generate earnings sufficient to service our debt. See the section entitled Non-GAAP Financial Measures within this MD&A for further
information on our Non-GAAP measures, and the Net Debt to EBITDA table on page 42 for reconciliation information.

Cash Flow

Cash flow from operating activities was $2.0 billion in 2015 compared to $1.8 billion in 2014. We continued to generate strong cash flow
from operations, allowing us to fund our ongoing operations, acquisitions, investments in our business, debt repayments, pension
obligations and return cash to our shareholders through share repurchases and dividend payments. See the section entitled Cash Flows
within this MD&A for further information.

Dividends

We increased our quarterly cash dividend 6% in December 2015 to an indicated annual rate of $1.40 per share. The increase represents
our 24th consecutive annual dividend rate increase and the 79th consecutive year we have paid cash dividends. Our outstanding
dividend history reflects our continued growth and development, strong cash flows, solid financial position and confidence in our business
prospects for the years ahead.

Restructuring Initiatives

Restructuring charges were substantially completed during 2015 under our two open restructuring plans, the Combined Plan and the
Energy Restructuring Plan. The plans were commenced in 2011 and 2013, respectively, to reduce our global workforce, leverage and
simplify our supply chain, reduce our distribution center locations and other facilities and strengthen our position in the global energy
market. See the section entitled Restructuring Charges within this MD&A for further information.

Venezuela Activities

As a result of the increasing currency controls, importation restrictions, workforce regulations, pricing constraints and local capitalization
requirements, we deconsolidated our Venezuelan subsidiaries effective as of the end of the fourth quarter of 2015, and began accounting
for the investments in our Venezuelan subsidiaries using the cost method of accounting effective in the first quarter of 2016. This action,
coupled with the devaluations of our Venezuelan Water and Paper businesses during the second quarter of 2015 and our Venezuelan
Food & Beverage and Institutional and bolivar portion of our Venezuelan Energy businesses during the third quarter of 2015, resulted in a
total charge of $289.3 million ($246.8 million after tax), and $235.7 million net of the impact from noncontrolling interest, during 2015.

CRITICAL ACCOUNTING ESTIMATES

Our consolidated financial statements are prepared in accordance with U.S. GAAP. We have adopted various accounting policies to
prepare the consolidated financial statements in accordance with U.S. GAAP. Our significant accounting policies are disclosed in Note 2
of the Notes to the Consolidated Financial Statements (“Notes”).

Preparation of our consolidated financial statements, in conformity with U.S. GAAP, requires us to make estimates and assumptions that
affect the amounts reported in the consolidated financial statements and accompanying notes. Estimates are considered to be critical if
they meet both of the following criteria: (1) the estimate requires assumptions to be made about matters that are highly uncertain at the
time the accounting estimate is made, and (2) different estimates that the company reasonably could have used for the accounting
estimate in the current period, or changes in the accounting estimate that are reasonably likely to occur from period to period, have a
material impact on the presentation of the company’s financial condition or results of operations.

Besides estimates that meet the “critical” estimate criteria, we make many other accounting estimates in preparing our financial
statements and related disclosures. All estimates, whether or not deemed critical, affect reported amounts of assets, liabilities, revenues
or expenses as well as disclosures of contingent assets and liabilities. Estimates are based on experience and other information
available prior to the issuance of the financial statements. Materially different results can occur as circumstances change and additional
information becomes known, even from estimates not deemed critical. Our critical accounting estimates include the following:

Revenue Recognition

We recognize revenue on product sales at the time evidence of an arrangement exists, title to the product and risk of loss transfers to the
customer, the price is fixed and determinable and collection is reasonably assured. We recognize revenue on services as they are
performed. While we employ a sales and service team to ensure our customers’ needs are best met in a high quality way, the majority of
our revenue is generated from product sales. Our service businesses and service offerings are discussed in Note 17.

Our sales policies do not provide for general rights of return. We record estimated reductions to revenue for customer programs and
incentive offerings including pricing arrangements, promotions and other volume-based incentives at the time the sale is recorded. We
also record estimated reserves for anticipated uncollectible accounts and for product returns and credits at the time of sale, as discussed
below. Depending on market conditions, we may increase customer incentive offerings, which could reduce gross profit margins at the
time the incentive is offered.

Valuation Allowances and Accrued Liabilities

Allowances for Doubtful Accounts

We estimate our allowance for doubtful accounts by analyzing accounts receivable balances by age and applying historical write-off and
collection trend rates. In addition, our estimates also include separately providing for customer balances based on specific circumstances
and credit conditions, and when it is deemed probable that the balance is uncollectible. We estimate our sales returns and allowances by
analyzing historical returns and credits, and apply these trend rates to calculate estimated reserves for future credits. Actual results could
differ from these estimates under different assumptions.

Our allowance for doubtful accounts balance was $75 million and $77 million, as of December 31, 2015 and 2014, respectively. These
amounts include our allowance for sales returns and credits of $15 million as of both December 31, 2015 and 2014. Our bad debt
expense as a percent of reported net sales was 0.2% in 2015, 2014 and 2013. We believe that it is reasonably likely that future results
will be consistent with historical trends and experience. However, if the financial condition of our customers were to deteriorate, resulting
in an inability to make payments, or if unexpected events, economic downturns, or significant changes in future trends were to occur,
additional allowances may be required.

Accrued Liabilities

Our business and operations are subject to extensive environmental laws and regulations governing, among other things, air emissions,
wastewater discharges, the use and handling of hazardous substances, waste disposal and the investigation and remediation of soil and
groundwater contamination. As with other companies engaged in similar manufacturing activities and providing similar services, some
risk of environmental liability is inherent in our operations.

We record liabilities related to pending litigation, environmental claims and other contingencies when a loss is probable and can be
reasonably estimated. Estimates used to record such liabilities are based on our best estimate of probable future costs. We record the
amounts that represent the points in the range of estimates that we believe are most probable or the minimum amount when no amount
within the range is a better estimate than any other amount. Potential insurance reimbursements generally are not anticipated in our
accruals for environmental liabilities or other insured losses. Expected insurance proceeds are recorded as receivables when recovery is
probable. While the final resolution of litigation and environmental contingencies could result in amounts different than current accruals,
and therefore have an impact on our consolidated financial results in a future reporting period, we believe the ultimate outcome will not
have a significant effect on our consolidated financial position.

For additional information on our commitments and contingencies, see Note 15.

Actuarially Determined Liabilities

Pension and Postretirement Healthcare Benefit Plans

The measurement of our pension and postretirement benefit obligations are dependent on a variety of assumptions determined by
management and used by our actuaries. These assumptions affect the amount and timing of future contributions and expenses.

The significant assumptions used in developing the required estimates are the discount rate, expected return on assets, projected salary
and health care cost increases and mortality table.

•

The discount rate assumptions for the U.S. plans are assessed using a yield curve constructed from a subset of bonds yielding
greater than the median return from a population of non-callable, corporate bond issues rated Aa by Moody’s Investor Services or
AA by Standard & Poors. The discount rate is calculated by matching the plans’ projected cash flows to the bond yield curve. For
2015, we measured service and interest costs utilizing a single weighted-average discount rate derived from the yield curve used to
measure the plan obligations. For 2016, we elected to measure service and interest costs by applying the specific spot rates along
that yield curve to the plans’ liability cash flows. We believe the new approach provides a more precise measurement of service and
interest costs by aligning the timing of the plans’ liability cash flows to the corresponding spot rates on the yield curve. This change
does not affect the measurement of our plan obligations or the funded status of our plans. In determining our U.S. pension
obligations for 2015, our discount rate increased to 4.51% from 4.14% at year-end 2014. In determining our U.S. postretirement
health care obligation for 2015, our discount rate increased to 4.38% from 4.08% at year-end 2014.

The expected rate of return on plan assets reflects asset allocations, investment strategies and views of investment advisors, and
represents our expected long-term return on plan assets. Our weighted-average expected return on U.S. plan assets used for
determining both the 2015 and 2016 U.S. pension and U.S. postretirement health care expenses was 7.75%.

Projected salary and health care cost increases are based on our long-term actual experience, the near term outlook and assumed
inflation. Our weighted-average projected salary increase used in determining both the 2015 and 2016 U.S. pension expenses was
4.32%. as of both December 31, 2015 and 2014. For postretirement benefit measurement purposes as of December 31, 2015, the
annual rates of increase in the per capita cost of covered health care were assumed to be 7.25%. The rates are assumed to
decrease each year until they reach 5% in 2027 and remain at those levels thereafter.

In determining our U.S. pension and U.S. postretirement health care obligation for 2015, we utilized the RP-2014 mortality table
adjusting back to 2006 using MP-2014, and then projected forward using projection scale MP-2015.

The effects of actual results differing from our assumptions, as well as changes in assumptions, are reflected in the unrecognized
actuarial loss and amortized over future periods and, therefore, will generally affect our recognized expense in future periods. Significant
differences in actual experience or significant changes in assumptions may materially affect future pension and other postretirement
obligations. The unrecognized net actuarial loss on our U.S. qualified and non-qualified pension plans decreased to $513 million as of
December 31, 2015 from $556 million as of December 31, 2014 (both before tax), primarily due to amortization of prior year net actuarial
losses.

The effect of a decrease in the discount rate or decrease in the expected return on assets assumption as of December 31, 2015, on the
December 31, 2015 funded status and 2016 expense is shown below, assuming no changes in benefit levels and no amortization of
gains or losses for our significant U.S. plans:

(millions)
Discount rate
Expected return on assets

Effect on U.S. Pension Plans
Increase in
Recorded
Obligation

Assumption
Change

-0.25 pts
-0.25 pts

$ 67.6
N/A

Effect on U.S. Postretirement
Health Care Benefits Plans
Increase in
Assumption Recorded
Obligation
Change

-0.25 pts
-0.25 pts

$ 7.0
N/A

Higher
2016
Expense
$ 6.4
4.4

Higher
2016
Expense
$ 0.5
0.0

Our international pension obligations and underlying plan assets represent approximately one third of our global pension plans, with the
majority of the amounts held in the U.K. and Eurozone countries. We use assumptions similar to our U.S. plan assumptions to measure
our international pension obligations. However, the assumptions used vary by country based on specific local country requirements and
information.

See Note 16 for further discussion concerning our accounting policies, estimates, funded status, contributions and overall financial
positions of our pension and postretirement plan obligations.

Self Insurance

Globally we have high deductible insurance policies for property and casualty losses. We are insured for losses in excess of these
deductibles and have recorded both a liability and an offsetting receivable for amounts in excess of these deductibles. We are self-
insured for health care claims for eligible participating employees, subject to certain deductibles and limitations. We determine our
liabilities for claims on an actuarial basis. A change in these actuarial assumptions would have an immaterial impact to our reported
results.

Restructuring

Our restructuring activities are associated with plans to enhance our efficiency, effectiveness and sharpen the competitiveness of our
businesses. These restructuring plans include costs associated with significant actions involving employee-related severance charges,
contract termination costs and asset write-downs and disposals. Employee termination costs are largely based on policies and severance
plans, and include personnel reductions and related costs for severance, benefits and outplacement services. These charges are
reflected in the quarter in which the actions are probable and the amounts are estimable, which is when management approves the
associated actions. Contract termination costs include charges to terminate leases prior to the end of their respective terms and other
contract termination costs. Asset write-downs and disposals include leasehold improvement write-downs, other asset write-downs
associated with combining operations and disposal of assets.

Restructuring charges have been included as a component of cost of sales, special (gains) and charges and net income (loss)
attributable to noncontrolling interest on the Consolidated Statement of Income. Amounts included as a component of cost of sales
include supply chain related severance and other asset write-downs associated with combining operations. Restructuring liabilities have
been classified as a component of both other current and other noncurrent liabilities on the Consolidated Balance Sheet. During 2015, we
incurred approximately $100 million under our two active plans (Combined and Energy). Restructuring charges were substantially
completed within both plans during the fourth quarter of 2015. Our restructuring liability balance was $90 million and $76 million as of
December 31, 2015 and 2014, respectively.

For additional information on our current restructuring activities, see Note 3.

Income Taxes

Judgment is required to determine the annual effective income tax rate, deferred tax assets and liabilities, any valuation allowances
recorded against net deferred tax assets and uncertain tax positions.

Effective Income Tax Rate

Our effective income tax rate is based on annual income, statutory tax rates and tax planning available in the various jurisdictions in
which we operate. Our annual effective income tax rate includes the impact of reserve provisions. We recognize the largest amount of tax
benefit that is greater than 50% likely of being realized upon settlement with a taxing authority. We adjust these reserves in light of
changing facts and circumstances. During interim periods, this expected annual rate is then applied to our year-to-date operating results.
In the event that there is a significant discrete item recognized in our interim operating results, the tax attributable to that item would be
separately calculated and recorded in the same period.

Tax regulations require items to be included in our tax returns at different times than the items are reflected in our financial statements.
As a result, the effective income tax rate reflected in our financial statements differs from that reported in our tax returns. Some of these
differences are permanent, such as expenses that are not deductible on our tax return, and some are temporary differences, such as
depreciation expense.

Deferred Tax Assets and Liabilities and Valuation Allowances

Temporary differences create deferred tax assets and liabilities. Deferred tax assets generally represent items that can be used as a tax
deduction or credit in our tax return in future years for which we have already recorded the tax benefit in our income statement. We
establish valuation allowances for our deferred tax assets when the amount of expected future taxable income is not likely to support the
utilization of the entire deduction or credit. Relevant factors in determining the realizability of deferred tax assets include historical results,
future taxable income, the expected timing of the reversal of temporary differences, tax planning strategies and the expiration dates of
the various tax attributes. Deferred tax liabilities generally represent items for which we have already taken a deduction in our tax return,
but have not yet recognized that tax benefit in our financial statements.

U.S. deferred income taxes are not provided on certain unremitted foreign earnings that are considered permanently reinvested.
Undistributed earnings of foreign subsidiaries are considered to have been reinvested indefinitely or are available for distribution with
foreign tax credits available to offset the amount of applicable income tax and foreign withholding taxes that might be payable on
earnings. It is impractical to determine the amount of incremental taxes on an ongoing basis that might arise if all undistributed earnings
were distributed.

Uncertain Tax Positions

A number of years may elapse before a particular tax matter, for which we have established a reserve, is audited and finally resolved.
The number of tax years with open tax audits varies depending on the tax jurisdiction. The Internal Revenue Service (“IRS”) has
completed its examinations of our federal income tax returns (Ecolab and Nalco) through 2012. To date, the 2012 U.S. income tax return
of Champion has not been audited. Our Ecolab U.S. federal (including Nalco and Champion) income tax returns for the years 2013 and
2014 are currently under audit. In addition to the U.S. federal examinations, we have ongoing audit activity in several U.S. state and
foreign jurisdictions.

The tax positions we take are based on our interpretations of tax laws and regulations in the applicable federal, state and international
jurisdictions. We believe that our tax returns properly reflect the tax consequences of our operations, and that our reserves for tax
contingencies are appropriate and sufficient for the positions taken. Because of the uncertainty of the final outcome of these
examinations, we have reserved for potential reductions of tax benefits (including related interest and penalties) for amounts that do not
meet the more-likely-than-not thresholds for recognition and measurement as required by authoritative guidance. The tax reserves are
reviewed throughout the year, taking into account new legislation, regulations, case law and audit results. Settlement of any particular
issue could result in offsets to other balance sheet accounts, cash payments or receipts and/or adjustments to tax expense. The majority
of our tax reserves are presented in the balance sheet within other non-current liabilities. Our gross liability for uncertain tax positions
was $75 million and $79 million as of December 31, 2015 and 2014, respectively.

For additional information on income taxes, see Note 12.

Long-Lived Assets, Intangible Assets and Goodwill

Long-Lived and Intangible Assets

We periodically review our long-lived and amortizable intangible assets, the net value of which was $6.5 billion and $6.6 billion as of
December 31, 2015 and 2014, respectively, for impairment and to assess whether significant events or changes in business
circumstances indicate that the carrying value of the assets may not be recoverable. Such circumstances may include a significant
decrease in the market price of an asset, a significant adverse change in the manner in which the asset is being used or in its physical
condition or history of operating or cash flow losses associated with the use of the asset. Impairment losses could occur when the
carrying amount of an asset exceeds the anticipated future undiscounted cash flows expected to result from the use of the asset and its
eventual disposition. The amount of the impairment loss to be recorded, if any, is calculated as the excess of the asset’s carrying value
over its estimated fair value.

During 2015, as part of the actions taken regarding our Venezuelan businesses, we wrote-off customer relationship intangible assets and
other long-lived assets. See Note 3 for additional information regarding Venezuela. Also during 2015, we impaired certain long-lived
assets related to a product line within one of our U.S. plants. See Note 3 for additional information regarding this asset impairment.

We use the straight-line method to recognize amortization expense related to our amortizable intangible assets, including our customer
relationships. We consider various factors when determining the appropriate method of amortization for our customer relationships,
including projected sales data, customer attrition rates and length of key customer relationships.

Globally, we have a broad customer base. Our retention rate of significant customers has aligned with our acquisition assumptions,
including the customer base acquired in our recent Nalco and Champion transactions, which make up the majority of our unamortized
customer relationships. Our historical retention rate, coupled with our consistent track record of keeping long-term relationships with our
customers, supports our expectation of consistent sales generation for the foreseeable future from the acquired customer base. Our
customer retention rate and history of maintaining long-term relationships with our significant customers are not expected to change in
the future. Additionally, other less certain post-acquisition operational assumptions related to future capital investments and working
capital, as well as the impact of discount rate assumptions, induce variability and uncertainty in the pattern of economic benefits of our
acquired customer relationships. If our customer retention rate or other post-acquisition operational activities changed materially, we
would evaluate the financial impact and any corresponding triggers which could result in an acceleration of amortization or impairment of
our customer relationship intangible assets.

In addition, we periodically reassess the estimated remaining useful lives of our long-lived and amortizable intangible assets. Changes to
estimated useful lives would impact the amount of depreciation and amortization expense recorded in earnings. We have experienced no
significant changes in the carrying value or estimated remaining useful lives of our long-lived or amortizable intangible assets.

As part of the Nalco merger, we added the “Nalco” trade name as an indefinite life intangible asset, the total value of which was $1.2
billion as of December 31, 2015 and 2014. The carrying value of the indefinite life trade name was subject to annual impairment testing,
using the qualitative assessment method, during the second quarter of 2015. Based on this testing, no adjustment to the carrying value
was necessary. Additionally, no events during the second half of 2015 indicated a need to update to our conclusions reached during the
second quarter of 2015.

Goodwill

We had total goodwill of $6.5 billion and $6.7 billion as of December 31, 2015 and 2014, respectively. We test our goodwill for impairment
at the operating unit level on an annual basis during the second quarter. Our operating units are aligned with our ten operating segments.

For our 2015 impairment assessment, in order to refresh the estimated fair value of all ten of our operating units, we elected to bypass
the qualitative assessment and perform a quantitative test. The two-step quantitative process involved comparing the estimated fair value
of each operating unit to the operating unit’s carrying value, including goodwill. If the fair value of an operating unit exceeds its carrying
value, goodwill of the operating unit is considered not to be impaired, and the second step of the impairment test is unnecessary. If the
carrying amount of the operating unit exceeds its fair value, the second step of the goodwill impairment test would be performed to
measure the amount of impairment loss to be recorded, if any.

Our goodwill impairment assessment for 2015 indicated the fair value of each of our operating units exceeded their respective carrying
amount by a significant margin. If circumstances change significantly, we would also test an operating unit’s goodwill for impairment
during interim periods between our annual tests. As a result of the Venezuela deconsolidation, we updated our goodwill impairment
assessment for the Global Energy reportable segment during the fourth quarter of 2015, which indicated no impairment, and a continued
significant margin of fair value exceeding carrying value.

RESULTS OF OPERATIONS

Net Sales

(millions)
Reported GAAP net sales

Effect of foreign currency translation

Non-GAAP fixed currency sales

2015
$ 13,545.1
305.0
$ 13,850.1

2014
$ 14,280.5
(623.3)
$ 13,657.2

2013
$ 13,253.4
(756.8)
$ 12,496.6

Percent Change

2015
(5)%

2014
8 %

1 %

9 %

Reported net sales for 2015 decreased 5%, negatively impacted by the effect of foreign currency translation. Fixed currency sales
increased 1% in 2015.

Reported net sales for 2014 increased 8%, with growth benefiting from the Champion acquisition. Foreign currency negatively impacted
reported sales growth in 2014 as fixed currency sales increased 9%. Acquisition adjusted fixed currency sales increased 5% in 2014.

The percentage change components of the year-over-year sales increase are as follows:

(percent)
Volume
Price changes

Acquisition adjusted fixed currency sales increase

Acquisitions & divestitures

Fixed currency sales increase

Foreign currency translation

Reported GAAP net sales increase (decrease)

Note: Amounts do not necessarily sum due to rounding.

Cost of Sales (“COS”) and Gross Margin

(millions/percent)
Reported GAAP COS and gross margin

Special (gains) and charges

Non-GAAP adjusted COS and gross margin

2015

0 %
0
0
1
1
(7)
(5)%

2014
4 %
1
5
4
9
(1)
8 %

2015

COS
$ 7,223.5
80.6
$ 7,142.9

Gross
Margin
46.7 %
0.6
47.3 %

2014

Gross

COS
$ 7,679.1
14.3
$ 7,664.8

Margin

COS

46.2 % $ 7,161.2
43.2
46.3 % $ 7,118.0

0.1

2013

Gross
Margin
46.0 %
0.3
46.3 %

Our COS values and corresponding gross profit margin (“gross margin”) are shown in the previous table. Our gross margin is defined as
sales less cost of sales divided by sales.

Our reported gross margin was 46.7%, 46.2% and 46.0% for 2015, 2014 and 2013, respectively. Our 2015, 2014 and 2013 reported
gross margins were negatively impacted by special (gains) and charges of $80.6 million, $14.3 million and $43.2 million, respectively.
Special (gains) and charges items impacting COS are shown within the special (gains) and charges table on page 34.

Excluding the impact of special (gains) and charges, our 2015 adjusted gross margin was 47.3% compared against a 2014 adjusted
gross margin of 46.3%. The increase was due primarily to delivered product cost savings and synergies.

Excluding the impact of special (gains) and charges, our adjusted gross margin was 46.3% for both 2014 and 2013. The adjusted gross
margin across 2014 and 2013 was impacted by the growth within Global Energy, including the impact of the Champion acquisition, which
generally has a lower gross margin compared to our other segments, which offset pricing gains.

Selling, General and Administrative Expenses (“SG&A”)

(percent)
SG&A Ratio

2015
32.1 %

2014
32.1 %

2013
32.9 %

The consistent SG&A ratio (SG&A expenses as a percentage of reported net sales) comparing 2015 against 2014 resulted from the
impact of net synergies and cost savings actions which were offset by investments in the business.

The reduction in SG&A ratio when comparing 2014 against 2013 resulted from increased sales leverage, net synergies and cost savings
actions.

Special (Gains) and Charges

Special (gains) and charges reported on the Consolidated Statement of Income included the following items:

(millions)
Cost of sales

Restructuring charges
Venezuela related charges
Inventory costs
Inventory reserves
Fixed asset impairment
Recognition of inventory fair value step-up

Subtotal

Special (gains) and charges
Restructuring charges
Champion acquisition and integration costs
Nalco merger and integration costs
Venezuela related charges
(Gains) losses related to litigation activities, sale of businesses, settlements

and other
Subtotal

Operating income subtotal

Interest expense, net

Acquisition debt costs

Net income attributable to noncontrolling interest

Restructuring charges
Venezuela related charges

Subtotal

2015

$ 16.5
33.3
(14.5)
20.6
24.7
-
80.6

83.8
17.1
1.6
256.0

56.3
414.8

495.4

(1.7)
(11.1)
(12.8)

2014

$ 13.9
-
-
-
-
0.4
14.3

69.2
19.9
8.5
-

(28.8)
68.8

83.1

-
-
-

2013

$ 6.6
-
-
-
-
36.6
43.2

83.4
49.7
18.6
23.2

(3.6)
171.3

214.5

2.5

-
(0.5)
(0.5)

Total special (gains) and charges

$ 482.6

$ 83.1

$ 216.5

For segment reporting purposes, special (gains) and charges have been included in our corporate segment, which is consistent with our
internal management reporting.

Restructuring Charges

Energy Restructuring Plan

In April 2013, following the completion of the acquisition of Champion we commenced plans to undertake restructuring and other cost-
saving actions to realize our acquisition-related cost synergies as well as streamline and strengthen our position in the global energy
market (the “Energy Restructuring Plan”). Actions associated with the acquisition to improve the effectiveness and efficiency of the
business included a reduction of the combined business’s current global workforce. Actions also included leveraging and simplifying our
global supply chain, including the reduction of plant, distribution center and redundant facility locations and product line optimization.

Restructuring charges within the Energy Restructuring Plan were substantially completed during the fourth quarter of 2015. Certain
immaterial actions may continue into 2016. Ongoing cash payments will continue into 2016. Cumulative restructuring charges of $82
million ($59 million after tax), are materially consistent with our expectation of $80 million ($55 million after tax).

We recorded restructuring charges of $47.2 million ($33.0 million after tax), $31.3 million net of the impact from noncontrolling interest, or
$0.10 per diluted share, $9.5 million ($6.4 million after tax) or $0.02 per diluted share and $27.4 million ($19.4 million after tax) or $0.06
per diluted share during 2015, 2014 and 2013, respectively. As a result of the ownership structure of certain entities holding Energy
Restructuring charges, we reflected $1.7 million of the 2015 charges as a component of net income (loss) attributable to noncontrolling
interest on the Consolidated Statement of Income.

Net cash payments under the Energy Restructuring Plan were $11.1 million during 2015 and $31.4 million from 2013 through 2014. The
majority of cash payments under this plan are related to severance, with the current accrual expected to be paid over a period of a few
months to several quarters. We anticipate the remaining cash expenditures will be funded from operating activities.

During 2015 the Energy Restructuring Plan achieved approximately $45 million of incremental savings as compared to 2014. Cumulative
cost savings from this plan, along with synergies achieved in connection with the acquisition, were $125 million in 2015. We anticipate
annualized cumulative cost savings and synergies of $150 million by the end of 2016.

Combined Restructuring Plan

In February 2011, we commenced a comprehensive plan to substantially improve the efficiency and effectiveness of our European
business, as well as to undertake certain restructuring activities outside of Europe, historically referred to as the “2011 Restructuring
Plan”. Additionally, in January 2012 and following the merger with Nalco, we formally commenced plans to undertake restructuring
actions related to the reduction of our global workforce and optimization of our supply chain and office facilities, including planned
reduction of plant and distribution center locations, historically referred to as the “Merger Restructuring Plan”. During the first quarter of
2013, we determined that because the objectives of the plans discussed above were aligned, the previously separate restructuring plans
should be combined into one plan.

The combined restructuring plan (the “Combined Plan”) combines opportunities and initiatives from both plans and continues to follow the
original format of the Merger Restructuring Plan by focusing on global actions related to optimization of the supply chain and office
facilities, including reductions of the global workforce, plant and distribution center locations.

Restructuring charges within the Combined Plan were substantially completed during the fourth quarter of 2015. Certain immaterial
actions may continue into 2016. Ongoing cash payments will continue into 2016. Cumulative restructuring charges of $404 million ($310
million after tax), are materially consistent with our expectation of $400 million ($300 million after tax).

We recorded restructuring charges of $53.0 million ($44.2 million after tax) or $0.15 per diluted share, $73.5 million ($58.5 million after
tax) or $0.19 per diluted share and $63.6 million ($48.3 million after tax) or $0.16 per diluted share during 2015, 2014 and 2013,
respectively.

Net cash payments under the Combined Plan were $42.1 million during 2015 and $261.0 million from 2011 through 2014. The majority of
cash payments under the Combined Plan are related to severance, with the current accrual expected to be paid over a period of a few
months to several quarters. We anticipate the remaining cash expenditures will continue to be funded from operating activities.

During 2015, the Combined Plan achieved approximately $60 million of incremental savings as compared to 2014. Cumulative cost
savings from this plan, along with annual cost saving and synergies, were $395 million in 2015. We anticipate annualized cumulative cost
savings and synergies of $420 million by the end of 2016.

Non-Restructuring Special (Gains) and Charges

Champion acquisition and integration costs

As a result of the Champion acquisition completed in 2013, we incurred charges of $17.1 million ($10.7 million after tax) or $0.04 per
diluted share, $19.9 million ($12.8 million after tax) or $0.04 per diluted share and $88.8 million ($61.4 million) or $0.20 per diluted share,
during 2015, 2014 and 2013, respectively.

Champion acquisition and integration related costs have been included as a component of cost of sales, special (gains) and charges and
net interest expense on the Consolidated Statement of Income. Amounts within cost of sales include the recognition of fair value step-up
in Champion international inventory, which is maintained on a FIFO basis, and Champion U.S. inventory which was associated with the
adoption of LIFO and integration into an existing LIFO pool. Amounts within special (gains) and charges include acquisition costs and
integration charges. Amounts within net interest expense include the interest expense through the April 2013 close date of the Champion
transaction of our $500 million public debt issuance in December 2012 as well as amortizable fees to secure term loans and short-term
debt, all of which were initiated to fund the Champion acquisition.

Nalco merger and integration costs

As a result of the Nalco merger completed in 2011, we incurred charges of $1.6 million ($1.3 million after tax) or less than $0.01 per
diluted share, $8.5 million ($7.0 million after tax), or $0.02 per diluted share and $18.6 million ($14.2 million after tax), or $0.05 per diluted
share during 2015, 2014 and 2013, respectively.

Nalco merger and integration charges have been included as a component of special (gains) and charges on the Consolidated Statement
of Income. Amounts within special (gains) and charges include merger and integration charges.

Venezuela

As of the end of 2015, the increasingly restrictive exchange control regulations and reduced access to dollars through official currency
exchange markets have resulted in an other-than-temporary lack of exchangeability between the Venezuelan bolivar and the U.S. dollar.
This has significantly impacted our ability to effectively manage our Venezuelan businesses, including restrictions on the ability of our
Venezuelan businesses to settle U.S. dollar-denominated obligations. The currency controls, coupled with importation restrictions,
workforce regulations, pricing constraints and local capitalization requirements have significantly influenced our ability to make and
execute operational decisions regarding our businesses in Venezuela. The inability of our Venezuelan businesses to pay dividends,
which remain subject to Venezuelan government approvals, has continued to restrict our ability to realize the earnings generated out of
our Venezuelan businesses. We expect the conditions described above will continue for the foreseeable future. Further, during the fourth
quarter of 2015, given our high level of intercompany receivables, we pursued cash basis transactions to limit additional investment.

As a result of these factors, we concluded that effective as of the end of the fourth quarter of 2015, we do not meet the U.S. GAAP
accounting criteria for control over our Venezuelan subsidiaries. Therefore, we deconsolidated our Venezuelan subsidiaries effective as
of the end of the fourth quarter of 2015, and began accounting for the investments in our Venezuelan subsidiaries using the cost method
of accounting effective in the first quarter of 2016. This action resulted in a charge of $123.4 million ($80.9 million after tax) or $0.27 per
diluted share during the fourth quarter of 2015, to reduce the value of the cost method investments to their estimated fair values, resulting
in a full impairment. The fourth quarter 2015 charge included $85 million of intercompany receivables, as well as net assets of our
Venezuelan businesses and accumulated foreign currency.

The decision to deconsolidate our Venezuelan subsidiaries was preceded by the remeasurement of our Venezuelan Water and Paper
net assets during the second quarter of 2015 at the Marginal Currency System (“SIMADI”) exchange rate and the remeasurement of our
Venezuelan Food & Beverage and Institutional net assets and bolivar portion of our Venezuelan Energy net assets at the SIMADI
exchange rate during the third quarter of 2015. The combination of these actions resulted in charges of $165.9 million ($165.9 million
after tax) through the first three quarters of 2015. As a result of the ownership structure of our Food & Beverage and Institutional
operations in Venezuela, we reflected $11.1 million of the above charges as a component of net income (loss) attributable to
noncontrolling interest on the Consolidated Statement of Income, resulting in a net charge of $154.8 million.

The total charges during 2015 related to our actions in Venezuela were $289.3 million ($246.8 million after tax), $235.7 million net of the
impact from noncontrolling interest, or $0.78 per share.

On February 8, 2013, the Venezuelan government devalued its currency from 4.3 bolivares to 1 U.S. dollar to 6.3 bolivars to 1 U.S.
dollar, resulting in a charge during 2013 of $22.7 million ($16.1 million after tax), or $0.05 per diluted share, due to the remeasurement of
the local balance sheet.

Other special (gains) and charges

During 2015, we recorded a charge of $24.7 million ($15.4 million after tax), or $0.05 per diluted share, related to a fixed asset
impairment, consisting of certain production equipment and buildings within one of our U.S. plants, resulting from lower than anticipated
production. Also during 2015, we improved estimates related to our inventory reserves and product costing, resulting in a net pre-tax
charge of approximately $6 million. Separately, the actions resulted in a charge of $20.6 million ($15.9 million after tax), or $0.05 per
diluted share, related to inventory reserve calculations, partially offset by a gain of $14.5 million ($12.2 million after tax), or $0.04 per
diluted share, related to the capitalization of certain cost components into inventory. These items have been included as a component of
cost of sales on the Consolidated Statement of Income.

Also during 2015, we recognized a net charge of $56.3 million ($34.5 million after tax), or $0.11 per diluted share, primarily made up of
litigation related charges and the recognition of a loss on the sale of a portion of our Ecovation business, offset partially by the recovery
of funds deposited into escrow as part of the Champion transaction. The net charges have been included as a component of special
(gains) and charges on the Consolidated Statement of Income.

During 2014, we recorded a special gain of $28.4 million ($23.3 million after tax), or $0.08 per diluted share, as a result of a favorable
licensing settlement and other settlement gains, the consolidation of the Emirates National Chemicals Company LLC (“Emochem”) entity
and removal of the corresponding equity method investment and the disposition of a business. The net charges have been included as a
component of special (gains) and charges on the Consolidated Statement of Income.

Further details related to our non-restructuring special (gains) and charges are included in Note 3.

Operating Income and Operating Income Margin

(millions)
Reported GAAP operating income
Special (gains) and charges

Non-GAAP adjusted operating income

Effect of foreign currency translation

Non-GAAP adjusted fixed currency operating income

2015
$ 1,561.3
495.4
2,056.7
44.0
$ 2,100.7

(percent)
Reported GAAP operating income margin
Non-GAAP adjusted operating income margin
Non-GAAP adjusted fixed currency operating income margin

2015
11.5 %
15.2 %
15.2 %

Percent Change

2015
(20) %

2014
25 %

7 %

17 %

Reported operating income decreased 20% when comparing 2015 to 2014 and increased 25% when comparing 2014 to 2013. Our
reported operating income for 2015, 2014 and 2013 was impacted by special (gains) and charges. Excluding the impact of special (gains)
and charges from all three years, 2015 adjusted operating income increased 1% when compared to 2014 adjusted operating income and
2014 adjusted operating income increased 15% when compared to 2013 adjusted operating income. As shown in the previous table,
foreign currency translation had a negative impact on adjusted operating income growth for both 2015 and 2014, as adjusted fixed
currency operating income increased 7% for 2015 and 17% for 2014.

The 2015 adjusted fixed currency operating income increase and the improving adjusted fixed currency operating margin trend was
driven by delivered product cost savings and synergies, which more than offset investment in the business and other costs.

The 2014 adjusted fixed currency operating income increase and the improving adjusted fixed currency operating margin trend was
driven by sales volume increases, pricing gains, net cost savings and synergies. The impact of acquisitions and divestitures added
approximately 2 percentage points to our 2014 adjusted fixed currency operating income growth rate.

Interest Expense, Net

(millions)
Reported GAAP interest expense, net

Special (gains) and charges

Non-GAAP adjusted interest expense, net

2015
$ 243.6
-
$ 243.6

2014
$ 256.6
-
$ 256.6

2013
$ 262.3
2.5
$ 259.8

Percent Change

2015
(5) %

2014
(2)%

(5) %

(1)%

Reported net interest expense totaled $243.6 million, $256.6 million and $262.3 million during 2015, 2014 and 2013, respectively.

Special (gains) and charges reported within net interest expense in 2013 included the interest expense of our $500 million public debt
issuance in December 2012 through the April 2013 close date of the Champion acquisition, as well as amortizable fees to secure term
loans and short-term debt, all of which were initiated to fund the Champion acquisition.

The decrease in 2015 net interest expense compared to 2014 net interest expense was driven primarily by lower interest rates paid on
outstanding debt. The decrease in 2014 adjusted net interest expense compared to 2013 adjusted net interest expense was due primarily
to lower comparable outstanding debt, offset partially by increased net expense related to our foreign currency hedging program and
other interest-related fees.

Provision for Income Taxes

The following table provides a summary of our tax rate:

(percent)
Reported GAAP tax rate
Tax rate impact of:

Special gains and charges
Discrete tax items

Non-GAAP adjusted tax rate

2015
22.8 %

(0.4)
3.5
25.9 %

2014
28.0 %

(0.1)
(0.7)
27.2 %

2013
25.0 %

0.4
2.7
28.1 %

Our reported tax rate for 2015, 2014 and 2013 includes the tax impact of special gains and charges and discrete tax items. Depending on
the nature of our special gains and charges and discrete tax items, our reported tax rate may not be consistent on a period to period
basis, as amounts included in our special gains and charges are derived from tax jurisdictions with rates that vary from our overall non-
GAAP adjusted tax rate.

Our 2015 reported tax rate includes $105.7 million of net tax benefits on special gains and charges and net benefits of $63.3 million
associated with discrete tax items. Our 2014 reported tax rate includes $21.6 million of net tax benefits on special gains and charges and
net expense of $13.2 million associated with discrete tax items. Our 2013 reported tax rate includes $60.1 million of net tax benefits on
special gains and charges and net benefits of $41.7 million associated with discrete tax items. The corresponding impact of these items
on the reported tax rate is shown in the table above.

Net benefits related to discrete tax items in 2015 were driven primarily by the release of $20.6 million of valuation allowances based on
the realizability of foreign deferred tax assets and our ability to recognize a worthless stock deduction of $39.0 million for the tax basis in
a wholly-owned domestic subsidiary.

Net expense related to discrete tax items in 2014 was driven primarily by an update to non-current tax liabilities for certain global tax
audits, an adjustment related to the re-characterization of intercompany payments between our U.S. and foreign affiliates, the
remeasurement of certain deferred tax assets and liabilities resulting from changes in our deferred state tax rate, recognizing
adjustments from filing our 2013 U.S. federal and state tax returns, net changes of valuation allowances based on the realizability of
foreign deferred tax assets and the impact from other foreign country audit settlements.

Net benefits related to discrete tax items in 2013 were driven primarily by the net release of valuation allowances related to the
realizability of foreign deferred tax assets of $11.5 million, the remeasurement of certain deferred tax assets and liabilities of $11.3 million
and recognizing adjustments from filing our 2012 U.S. federal and state tax returns of $11.0 million. The remaining net discrete tax items
relate primarily to recognizing settlements related to prior year income tax audits, law changes within a foreign jurisdiction, the retroactive
extension during first quarter 2013 of the U.S. R&D credit for 2012, foreign audit adjustments and other adjustments to deferred tax
assets and liabilities.

The decrease in our adjusted effective tax rate from 2013 to 2015 was impacted by global tax planning projects. The decrease in our
2014 adjusted effective tax rate compared to 2013 was also impacted by favorable geographic income mix.

Net Income Attributable to Ecolab

(millions)
Reported GAAP net income
Adjustments:

Special (gains) and charges, after tax
Discrete tax net expense (benefit)

Non-GAAP adjusted net income

Percent Change

2015

$ 1,002.1

2014
$ 1,202.8

2013
$ 967.8

2015

(17)%

2014
24 %

376.9
(63.3)
$ 1,315.7

61.5
13.2
$ 1,277.5

156.4
(41.7)
$ 1,082.5

3 %

18 %

Diluted Earnings Attributable to Ecolab Per Common Share (EPS)

(dollars)
Reported GAAP diluted EPS
Adjustments:

Special (gains) and charges
Discrete tax net expense (benefit)

Non-GAAP adjusted diluted EPS

2015
$ 3.32

1.25
(0.21)
$ 4.37

Percent Change

2014
$ 3.93

2013
$ 3.16

2015

(16)%

2014
24 %

0.20
0.04
$ 4.18

0.51
(0.14)
$ 3.54

5 %

18 %

Note: Per share amounts do not necessarily sum due to rounding.

Reported net income attributable to Ecolab totaled $1,002.1 million, $1,202.8 million and $967.8 million during 2015, 2014 and 2013,
respectively, which resulted in reported diluted earnings per share of $3.32, $3.93 and $3.16 for the corresponding periods.

Amounts for 2015, 2014 and 2013 include special (gains) and charges and discrete tax items. Excluding special (gains) and charges and
the impact of discrete tax items from 2015, 2014 and 2013, adjusted net income and adjusted diluted earnings per share increased 3%
and 5%, respectively, when comparing 2015 to 2014 and both increased 18%, when comparing 2014 to 2013.

Currency translation has had significant unfavorable impact on reported and adjusted diluted earnings per share comparability across
2013 to 2015, with headwinds of approximately $0.30 per share for 2015 compared to 2014 and approximately $0.07 per share for 2014
compared to 2013.

SEGMENT PERFORMANCE

The non-U.S. dollar functional international amounts included within our reportable segments are based on translation into U.S. dollars at
the fixed currency exchange rates used by management for 2015. The difference between the fixed currency exchange rates and the
actual currency exchange rates is reported as “effect of foreign currency translation” in the following tables. All other accounting policies
of the reportable segments are consistent with U.S. GAAP and the accounting policies described in Note 2. Additional information about
our reportable segments is included in Note 17.

Fixed currency net sales and operating income for 2015, 2014 and 2013 for our reportable segments are shown in the following tables.

Net Sales

(millions)
Global Industrial
Global Institutional
Global Energy
Other

Subtotal at fixed currency

Effect of foreign currency translation
Total reported net sales

Operating Income

(millions)
Global Industrial
Global Institutional
Global Energy
Other
Corporate

Subtotal at fixed currency

Effect of foreign currency translation
Total reported operating income

Global Industrial

Net Sales

Sales at fixed currency (millions)
Percentage change at fixed currency
Acquisition adjusted percentage change at fixed currency
Percentage change at public currency

Operating Income

Operating income at fixed currency (millions)
Percentage change at fixed currency
Acquisition adjusted percentage change at fixed currency
Percentage change at public currency
Operating income margin at fixed currency

Net Sales

Percent Change

2015
$ 4,857.8
4,393.2
3,825.7
773.4
13,850.1
(305.0)
$ 13,545.1

2014

2013

$ 4,623.2
4,157.9
4,145.0
731.1
13,657.2
623.3
$ 14,280.5

$ 4,487.3
3,998.0
3,320.1
691.2
12,496.6
756.8
$ 13,253.4

2015
5 %
6
(8)
6
1

2014
3 %
4
25
6
9

(5)%

8 %

Percent Change

2015
$ 692.7

900.7
550.7
132.0
(670.8)
1,605.3
(44.0)
$ 1,561.3

2014
$ 605.1
800.8
612.5
113.4
(258.8)
1,873.0
82.0
$ 1,955.0

2013
$ 575.9
753.5
435.0
102.8
(404.6)
1,462.6
98.0
$ 1,560.6

2015
14 %
12
(10)
16

2014

5 %
6
41
10

(14)

(20)%

25 %

2015

2014

2013

$ 4,857.8

$ 4,623.2

$ 4,487.3

5 %
3 %
(4)%

3 %
3 %
1 %

$ 692.7

$ 605.1

$ 575.9

14 %
13 %
5 %
14.3 %

5 %
4 %
3 %
13.1 %

12.8 %

Fixed currency sales growth for our Global Industrial segment in both 2015 and 2014 was driven by volume gains and pricing. At a
regional level, the 2015 sales increase was impacted by strong growth in Latin America and Middle East/Africa (“MEA”), moderate growth
in Europe and modest gains in North America. Regional results for 2014 were impacted by strong growth in Latin America, with moderate
growth in MEA and modest gains in Asia Pacific and North America.

At an operating unit level, Water fixed currency sales increased 6% in 2015 (increase of 3% acquisition adjusted), with good growth in
the light and heavy industries, which offset slower sales in the mining industry. Fixed currency sales increased 5% in 2014, (increase of
4% acquisition adjusted) led by gains in heavy, light and mining. Food & Beverage fixed currency sales increased 6% in 2015 (increase
of 5% acquisition adjusted), benefiting from share gains. Growth was led by the beverage and brewing market, with modest gains in the
dairy and food markets. Fixed currency sales increased 4% in 2014, (increase of 3% acquisition adjusted) driven by gains in agri, dairy
and beverage and brewing. Paper fixed currency sales increased 1% in 2015 (increase of 2% acquisition adjusted), impacted by new
account gains and continued technology penetration. Fixed currency sales were flat in 2014 (decrease of 2% acquisition adjusted) with
unfavorable volume impact from below capacity plant utilization at customer locations and customer plant closures. Textile Care fixed
currency sales increased 5% in 2015, impacted by new accounts and customer penetration within North America and Europe. Fixed
currency sales decreased 1% in 2014, impacted by lower comparable sales in Europe.

Operating Income

Fixed currency operating income growth in 2015 and the corresponding operating margin increase benefited from delivered product cost
savings, synergies and pricing gains, which more than offset investments in the business. Fixed currency operating income growth in
2014 and the corresponding operating margin increase benefited from pricing gains, sales volume increases and net cost savings.

Global Institutional

Net Sales

Sales at fixed currency (millions)
Percentage change at fixed currency
Acquisition adjusted percentage change at fixed currency
Percentage change at public currency

Operating Income

Net Sales

2015

2014

2013

$ 4,393.2

$ 4,157.9

$ 3,998.0

6 %
5 %
0 %

4 %
4 %
3 %

$ 900.7

$ 800.8

$ 753.5

12 %
13 %
8 %
20.5 %

6 %
7 %
6 %
19.3 %

18.8 %

Fixed currency sales growth for our Global Institutional segment in both 2015 and 2014 benefited from volume increases and pricing
gains. At a regional level, the 2015 sales increase was led by strong growth in Asia Pacific and MEA, good growth in North America and
Latin America, and modest gains in Europe. The 2014 sales increase was led by strong growth in Latin America, and good gains in Asia
Pacific and North America, which collectively offset slower sales in Europe.

At an operating unit level, Institutional fixed currency sales increased 6% in 2015, as sales initiatives, new accounts and globalization of
our leading technologies continued to drive growth. Global lodging experienced moderate growth, while foodservice trends remained soft.
Fixed currency sales increased 4% in 2014, benefiting from new accounts, sales initiatives and effective product programs. Specialty
fixed currency sales increased 7% in 2015. Quick service sales remained solid, benefiting from new accounts and new product
penetration; our food retail business showed good sales growth. Fixed currency sales increased 8% in 2014, driven by solid results from
both of our quick service and food retail businesses. Healthcare fixed currency sales increased 2% in 2015, benefiting from new account
growth, customer penetration and product introductions. Fixed currency sales increased 1% in 2014, driven by new account growth and
product introductions.

Operating Income

Fixed currency operating income growth in 2015 and the corresponding operating margin increase benefited from pricing gains, sales
volume increases and delivered product cost savings, which more than offset investments in the business. Fixed currency operating
income growth in 2014 and the corresponding operating margin increase benefited from the net impact of pricing gains, sales volume
increases and net cost savings.

Global Energy

Net Sales

Sales at fixed currency (millions)
Percentage change at fixed currency
Acquisition adjusted percentage change at fixed currency
Percentage change at public currency

Operating Income

Net Sales

2015

2014

2013

$ 3,825.7

$ 4,145.0

$ 3,320.1

(8)%
(9)%
(13)%

25 %
10 %
23 %

$ 550.7

$ 612.5

$ 435.0

(10)%
(13)%
(16)%
14.4 %

41 %
33 %
35 %
14.8 %

13.1 %

Lower 2015 fixed currency sales for our Global Energy segment were negatively impacted by volume reductions and lower pricing. The
decrease in 2015 fixed currency sales primarily reflected significant reductions in our well stimulation business and slightly lower sales in
our production business; these more than offset growth in our downstream business. Continued growth in our international regions was
offset by soft North America results, reflecting the reduction in North America drilling and well completion activity, customer spending and
price reductions.

Fixed currency sales growth in 2014 was impacted by the Champion acquisition. The acquisition adjusted fixed currency sales increase
reflected double-digit growth in our upstream business, led by strong international performance and good growth in North America.
Deepwater and on-shore conventional sources produced solid results. Sales growth in our downstream business resulted from improved
international performance and market share gains in North America.

Operating Income

Fixed currency operating income reductions in 2015 and the corresponding operating margin slippage were driven by sales volume
declines and lower pricing, which more than offset delivered product cost savings and synergies.

Fixed currency operating income growth in 2014 was impacted by the Champion acquisition. Acquisition adjusted fixed currency
operating income and the corresponding operating income margin increase were largely driven by sales volume increases and business
mix changes, with the corresponding benefit to operating income. The remainder of the increase can largely be attributed to the net
impact of pricing gains, synergies, investments in the business and other costs.

Other

Net Sales

Sales at fixed currency (millions)
Percentage change at fixed currency
Acquisition adjusted percentage change at fixed currency
Percentage change at public currency

Operating Income

Net Sales

2015

2014

2013

$ 773.4

$ 731.1

$ 691.2

6 %
6 %
2 %

6 %
5 %
6 %

$ 132.0

$ 113.4

$ 102.8

16 %
17 %
12 %
17.1 %

10 %
11 %
12 %
15.5 %

14.9 %

Fixed currency sales growth for our Other segment in both 2015 and 2014 was driven by volume increases and pricing gains. At a
regional level, the 2015 sales increase was led by good growth in Latin America, North America and Asia Pacific, with moderate gains in
Europe. The 2014 sales increase was led by strong growth in Latin America and Asia Pacific. North America had good sales gains.

At an operating unit level, Pest Elimination fixed currency sales increased 7% in 2015, impacted by continued gains in the foodservice
market, benefiting from customer penetration and new service offerings. Fixed currency sales increased 5% in 2014 benefiting from gains
in the food and beverage and foodservice markets. Equipment Care fixed currency sales increased 7% in 2015, driven by increases in
both service and parts sales, benefiting from new customer additions. Fixed currency sales increased 7% in 2014, with service and
installed parts sales increases benefiting the growth.

Operating Income

Fixed currency operating income growth in both 2015 and 2014, and the corresponding operating margin increases, benefited from
pricing gains and sales volume increases, which more than offset other cost increases.

Corporate

Consistent with our internal management reporting, the Corporate segment includes intangible asset amortization specifically from the
Nalco merger and in 2013 certain integration costs for both the Nalco and Champion transactions. The Corporate segment also includes
special (gains) and charges reported on the Consolidated Statement of Income. Items included within special (gains) and charges are
shown in the table on page 34.

FINANCIAL POSITION & LIQUIDITY

Financial Position

Total assets were $18.6 billion as of December 31, 2015, compared to total assets of $19.4 billion as of December 31, 2014. The
negative impact of foreign currency exchange rates on the value of our foreign assets translated into U.S. dollars as of December 31,
2015 and the impact of intangible asset amortization more than offset the increase in assets from acquisitions and ongoing business
activities.

Total liabilities were $11.7 billion as of December 31, 2015, compared to total liabilities of $12.0 billion as of December 31, 2014. Total
debt was $6.5 billion as of both December 31, 2015 and 2014. See further discussion of our debt activity within the Liquidity and Capital
Resources section of this MD&A.

Our net debt to EBITDA and net debt to adjusted EBIDTA are shown in the following table. We view our net debt to EBITDA and net debt
to adjusted EBITDA ratios as important indicators of our creditworthiness. EBITDA and adjusted EBITDA are non-GAAP measures. As
shown below, EBITDA is defined as the sum of net income including non-controlling interest, provision for income taxes, net interest
expense, depreciation and amortization. Adjusted EBITDA is defined as the sum of EBITDA and special (gains) and charges impacting
EBITDA.

(ratio)
Net debt to EBITDA
Net debt to adjusted EBITDA

(millions)
Net Debt

Total debt
Cash

Net debt

EBITDA

Net income including non-controlling interest
Provision for income taxes
Interest expense, net
Depreciation
Amortization
EBITDA

Special (gains) and charges impacting EBITDA

Adjusted EBITDA

2015

2.6
2.2

$ 6,465.5
92.8
$ 6,372.7

$ 1,017.2
300.5
243.6
559.5
300.0
2,420.8

495.4
$ 2,916.2

2014

2.2
2.2

2013

2.8
2.5

$ 6,548.2
209.6
$ 6,338.6

$ 1,222.2
476.2
256.6
558.1
313.9
2,827.0

83.1
$ 2,910.1

$ 6,875.8
339.2
$ 6,536.6

$ 973.6
324.7
262.3
514.2
302.0
2,376.8

214.5
$ 2,591.3

Cash Flows

Operating Activities

Dollar Change

(millions)
Cash provided by operating activities

2015

$ 1,999.8

2014
$ 1,815.6

2013
$ 1,559.8

2015
$ 184.2

2014
$ 255.8

We continue to generate strong cash flow from operations, allowing us to fund our ongoing operations, acquisitions, investments in the
business, debt repayments and pension obligations and return cash to our shareholders through dividend payments and share
repurchases.

Comparability of cash generated from operating activities across 2013 to 2015 was impacted by various factors, including the following:

•

Increased income, adjusted for the non-cash impact of the Venezuela charges, the fixed asset impairment and other charges.

Fluctuations in accounts receivable, inventories and accounts payable (“working capital”), the combination of which increased
$119 million, $212 million and $127 million in 2015, 2014 and 2013 respectively. The cash flow impact across the three years
from accounts receivable was driven by changes in sales volumes and timing of collections. The cash flow impact across the
three years from inventories was impacted by timing of purchases and production and usage levels, and from accounts
payable was impacted by volume of purchases and timing of payments.

Payment of certain non-recurring items in 2013 related to liabilities assumed with the Champion acquisition.

Pension and postretirement plan contributions, cash activity related to restructuring, cash paid for income taxes and cash paid for interest
are shown in the following table.

(millions)
Pensions and postretirement plan contributions
Restructuring payments
Income tax payments
Interest payments

2015
$ 64.9
53.2
533.1
237.2

2014
$ 76.7
82.7
522.0
255.5

2013
$ 80.0
120.6
434.2
258.9

Investing Activities

Dollar Change

2015
$ (11.8)
(29.5)
11.1
(18.3)

2014
$ (3.3)
(37.9)
87.8
(3.4)

Dollar Change

(millions)
Cash used for investing activities

2015
$ (915.8)

2014
$ (848.3)

2013

$ (2,087.7)

2015
$ (67.5)

2014
$ 1,239.4

Cash used for investing activities is primarily impacted by the timing of business acquisitions and dispositions as well as from capital
investments in the business.

Total cash paid for acquisitions, net of cash acquired and net of cash received from dispositions, in 2015, 2014 and 2013 was $265
million, $72 million and $1.4 billion, respectively. The Champion acquisition accounted for $1.3 billion of the net cash paid for acquisitions
in 2013. Our acquisitions and divestitures across 2015, 2014 and 2013 are discussed further in Note 4. We continue to target strategic
business acquisitions which complement our growth strategy and expect to continue to make capital investments and acquisitions in the
future to support our long-term growth.

We continue to make capital investments in the business, including process control and monitoring equipment, equipment used by our
customers to dispense our products and manufacturing facilities. Total capital expenditures, including software, were $815 million, $794
million and $662 million in 2015, 2014 and 2013, respectively.

Investing related cash flows in 2015 were also impacted by settlement of a net investment hedge and receipt of Champion related escrow
funds.

Financing Activities

Dollar Change

(millions)
Cash used for financing activities

2015

2014

$ (1,150.9)

$ (1,071.0)

2013
$ (292.6)

2015
$ (79.9)

2014
$ (778.4)

Our cash flows from financing activities primarily reflect the issuances and repayment of debt, common stock repurchases, proceeds from
common stock issuances related to our equity incentive programs, dividend payments and acquisition-related contingent consideration.

Our 2015 debt financing activities included the issuance of $300 million 1.55%, $300 million 2.25% and €575 million 2.63% fixed rate
senior notes; the scheduled repayment of our $250 million 4.88% and $500 million 1.00% senior notes; and repayment of $275 million of
term loan borrowings. Net repayments of commercial paper and notes payable led to a net decrease of $312 million during 2015.

Our 2014 debt financing activities included the repayment of $400 million of term loan borrowings, over the course of 2014, and the
scheduled repayment of our $500 million 2.38% senior notes. Net borrowings of commercial paper and notes payable led to a net cash
inflow of $600 million during 2014.

Our 2013 debt financing activities included $900 million of term loan borrowings initiated in connection with the Champion transaction, the
scheduled repayment of our €125 million Series A notes ($170 million) in December 2013, the redemption of debt acquired through the
Champion transaction and repayment of $100 million of term loan borrowings. Net repayments of commercial paper and notes payable
led to a net cash outflow of $278 million during 2013.

Shares are repurchased for the purpose of partially offsetting the dilutive effect of our equity compensation plans and stock issued in
acquisitions and to efficiently return capital to shareholders.

In February 2015, we announced a $1.0 billion share repurchase program, of which $382 million remains to be repurchased as of
December 31, 2015. We expect the program to be completed by mid-2016. During 2015, we repurchased a total of $755 million of
shares, which includes $300 million of shares through the ASR program discussed further in Note 10. During 2014 and 2013, we
repurchased $429 million and $308 million of shares, respectively. Cash proceeds and tax benefits from stock option exercises provide a
portion of the funding for repurchase activity.

In December 2015, we increased our indicated annual dividend rate by 6%. This represents the 24th consecutive year we have
increased our dividend. We have paid dividends on our common stock for 79 consecutive years. Cash dividends declared per share of
common stock, by quarter, for each of the last three years were as follows:

2015
2014
2013

First
Quarter
$ 0.330
0.275
0.230

Second
Quarter
$ 0.330
0.275
0.230

Third
Quarter
$ 0.330
0.275
0.230

Fourth
Quarter
$ 0.350
0.330
0.275

Year
$ 1.340
1.155
0.965

Comparability of dividends paid across 2013 to 2015 was impacted by the dividend rate increase noted in the above table, as well as the
payment timing of dividends declared in the fourth quarter of 2013 and 2012.

Financing activities for 2014 also included an acquisition-related contingent consideration payment of $86 million made to Champion’s
former shareholders.

Liquidity and Capital Resources

We currently expect to fund all of our cash requirements which are reasonably foreseeable for 2016, including scheduled debt
repayments, new investments in the business, share repurchases, dividend payments, possible business acquisitions and pension
contributions, with cash from operating activities, cash reserves available in certain foreign jurisdictions and additional short-term and/or
long-term borrowings. We continue to expect our operating cash flow to remain strong.

As of December 31, 2015, we had $92.8 million of cash and cash equivalents on hand, of which $88.3 million was held outside of the
U.S.

We have recorded deferred tax liabilities of $25.8 million and $37.4 million as of December 31, 2015 and 2014, respectively, for pre-
acquisition foreign earnings associated with the Nalco merger and Champion acquisition that we intend to repatriate. These liabilities
were recorded as part of the respective purchase price accounting of each transaction. We consider the remaining portion of our foreign
earnings to be indefinitely reinvested in foreign jurisdictions and we have no intention to repatriate such funds. We continue to be focused
on building our global business and these funds are available for use by our international operations. To the extent the remaining portion
of the foreign earnings would be repatriated, such amounts would be subject to income tax or foreign withholding tax liabilities that may
be fully or partially offset by foreign tax credits, both in the U.S. and in various applicable foreign jurisdictions.

As of December 31, 2015 we had a $2.0 billion multi-year credit facility, which expires in December 2019. The credit facility has been
established with a diverse syndicate of banks. There were no borrowings under our credit facility as of December 31, 2015 and 2014.

The credit facility supports our $2.0 billion U.S. commercial paper program and $200 million European commercial paper program.
Combined borrowing under these two commercial paper programs may not exceed $2.0 billion. As of December 31, 2015, we had $605
million in outstanding U.S. commercial paper, with an average annual interest rate of 0.7%, and no amounts outstanding under our
European commercial paper program. As of December 31, 2015, both programs were rated A-2 by Standard & Poor’s and P-2 by
Moody’s.

Additionally, we have other committed and uncommitted credit lines of $766 million with major international banks and financial
institutions to support our general global funding needs, including with respect to bank supported letters of credit, performance bonds and
guarantees. Approximately $570 million of these credit lines was unutilized and available for use as of year-end 2015.

Our long-term debt issuance and repayment activity is discussed in the Cash Flow - Financing Activities section of this MD&A.

As of December 31, 2015, our short-term borrowing program was rated A-2 by Standard & Poor’s and P-2 by Moody’s.
As of December 31, 2015, Standard & Poor’s and Moody’s rated our long-term credit at BBB+ (positive outlook) and Baa1 (stable
outlook), respectively. A reduction in our credit ratings could limit or preclude our ability to issue commercial paper under our current
programs, or could also adversely affect our ability to renew existing, or negotiate new, credit facilities in the future and could increase
the cost of these facilities. Should this occur, we could seek additional sources of funding, including issuing additional term notes or
bonds. In addition, we have the ability, at our option, to draw upon our $2.0 billion of committed credit facility prior to termination.

We are in compliance with our debt covenants and other requirements of our credit agreements and indentures.

A schedule of our obligations as of December 31, 2015 under various notes payable, long-term debt agreements, operating leases with
noncancelable terms in excess of one year and interest obligations are summarized in the following table:

Payments Due by Period

(millions)
Notes payable
Commercial paper
Long-term debt
Capital lease obligations
Operating leases
Interest*
Total

Less
Than
1 Year
$

605
1,568
1
102
199
$ 2,506

2-3
Years
$

-
-
1,067
1
150
297
$ 1,515

Total
$

605
5,824
6
434
1,800
$ 8,700

4-5
Years
$

-
-
321
1
102
262
686

More
Than
5 Years
$

-
-
2,868
3
80
1,042
$ 3,993

Interest on variable rate debt was calculated using the interest rate at year-end 2015.

As of December 31, 2015, our gross liability for uncertain tax positions was $85 million. We are not able to reasonably estimate the
amount by which the liability will increase or decrease over an extended period of time or whether a cash settlement of the liability will be
required. Therefore, these amounts have been excluded from the schedule of contractual obligations.

We are not required to make any contributions to our U.S. pension and postretirement healthcare benefit plans in 2016 based on plan
asset values as of December 31, 2015. We are required to fund certain international pension benefit plans in accordance with local legal
requirements. We estimate contributions to be made to our international plans will approximate $42 million in 2016. These amounts have
been excluded from the schedule of contractual obligations.

We lease certain sales and administrative office facilities, distribution centers, research and manufacturing facilities and other equipment
under longer-term operating leases. Vehicle leases are generally shorter in duration. Vehicle leases have guaranteed residual value
requirements that have historically been satisfied primarily by the proceeds on the sale of the vehicles.

Except for the approximately $196 million utilized under the bank lines noted previously supporting domestic and international
commercial relationships and transactions, we do not have significant unconditional purchase obligations or significant other commercial
commitments.

Off-Balance Sheet Arrangements

Other than operating leases, we do not have any off-balance sheet financing arrangements. See Note 13 for information on our operating
leases. Through the normal course of business, we have established various joint ventures that have not been consolidated within our
financial statements as we are not the primary beneficiary. The joint ventures help us meet local ownership requirements, achieve
quicker operational scale, expand our ability to provide customers a more fully integrated offering or provide other benefits to our
business or customers. These entities have not been utilized as special purposes entities, which are sometimes established for the
purpose of facilitating off-balance sheet financial arrangements or other contractually narrow or limited purposes. As such, we are not
exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.

Market Risk

We enter into contractual arrangements (derivatives) in the ordinary course of business to manage foreign currency exposure and
interest rate risks. We do not enter into derivatives for speculative or trading purposes. Our use of derivatives is subject to internal
policies that provide guidelines for control, counterparty risk, and ongoing monitoring and reporting, and is designed to reduce the
volatility associated with movements in foreign exchange and interest rates on our income statement and cash flows.

We enter into foreign currency forward contracts to hedge certain intercompany financial arrangements, and to hedge against the effect
of exchange rate fluctuations on transactions related to cash flows denominated in currencies other than U.S. dollars. We use net
investment hedges as hedging instruments to manage risks associated with our investments in foreign operations. As of December 31,
2015, we had €175 million and €575 million senior notes and a €25 million forward contract designated as net investment hedges.

We manage interest expense using a mix of fixed and floating rate debt. To help manage borrowing costs, we may enter into interest rate
swap agreements. Under these arrangements, we agree to exchange, at specified intervals, the difference between fixed and floating
interest amounts calculated by reference to an agreed-upon notional principal amount. As of December 31, 2015, we had interest rate
swaps outstanding with notional values of $1,675 million.

See Note 8 for further information on our hedging activity.

Based on a sensitivity analysis (assuming a 10% adverse change in market rates) of our foreign exchange and interest rate derivatives
and other financial instruments, changes in exchange rates or interest rates would not materially affect our financial position and liquidity.
The effect on our results of operations would be substantially offset by the impact of the hedged items.

GLOBAL ECONOMIC AND POLITICAL ENVIRONMENT

Oil Markets and Global Energy Investments

During 2015, approximately 28% of our sales were generated from our Global Energy segment, the results of which, as noted further
below, are subject to volatility in the oil and gas commodity markets.

Energy Markets

Oil prices remained sharply lower in 2015 when compared to 2014, with continued supply pressures negatively impacting exploration and
production investments, particularly in North America. Additionally, we experienced pricing headwinds in 2015 when compared to 2014.
Demand for oil and overall energy consumption has remained consistent.

Lower oil prices slowed our 2015 Global Energy segment results. Our global footprint and broad business portfolio within the Global
Energy segment, as well as our strong execution capabilities are expected to provide the required resilience to outperform in the current
market. As such, we continue to remain confident in the long-term growth prospects of the segment.

As petroleum derived materials are key inputs to many of our chemical products, lower oil prices will continue to provide benefits across
our segments in the form of lower raw material costs.

Energy Investments

We have a joint venture in Kazakhstan, which we acquired as part of the Champion transaction that holds a contract to supply production
chemicals for use in the Kashagan oil project, a Caspian Sea shallow water oil field. The startup of production at the Kashagan project
has been significantly delayed and output was indefinitely halted after pipeline failures were discovered in October 2013. We anticipate
that the pipelines will be repaired and production restarted; however, if this does not occur, or does not occur in a timely manner, we
believe the impact of such events would not have a material adverse effect on our consolidated financial position or results of operations.
Our remaining inventory investment is $10 million, which is a reduction of approximately $15 million from the third quarter of 2015. The
reduction resulted from the sale of inventory during the fourth quarter of 2015.

Global Economies

Approximately half of our sales are outside of the United States. Our international operations subject us to changes in economic
conditions and foreign currency exchange rates as well as political uncertainty in some countries which could impact future operating
results.

Global Foreign Currency Markets

During 2015, the U.S. dollar continued to strengthen against most global currencies, impacting our comparative results against 2014. We
anticipate the trend to continue into 2016. As described in Note 8, we utilize our derivative program to mitigate risks associated with
certain foreign currency exposures and our investments in foreign operations.

Russia and Ukraine

The ongoing political turmoil, economic sanctions, as well as the depressed oil markets, have led to foreign currency pressure as well as
higher localized interest rates within Russia and Ukraine. We have experienced no significant impact from these trends, and will continue
to monitor the economic and political trends within the region. Net sales within Russia and Ukraine are approximately 1% of our
consolidated net sales. Assets held in Russia and Ukraine at November 30, 2015 represented less than 1% of our consolidated assets.

Venezuela

Venezuela is a country experiencing a highly inflationary economy as defined under U.S. GAAP. As a result, the U.S. dollar has been the
functional currency for our subsidiaries in Venezuela. Prior to the deconsolidation of our Venezuelan subsidiaries, any currency
remeasurement adjustments for non-U.S. dollar denominated monetary assets and liabilities held by our subsidiaries and other
transactional foreign exchange gains and losses were reflected in earnings.

The Venezuelan government has maintained currency controls since 2003 and has directed a series of formal currency devaluations, the
last of which established the Venezuelan currency at 6.3 bolivares to 1 U.S. dollar. During the last two years, the Venezuelan
government has taken the following actions:

•

•
•

In 2013, the establishment of a new foreign exchange mechanism known as the “Complementary System of Foreign Currency
Acquirement” (“SICAD 1”). It operates similar to an auction system and allows entities to exchange a limited number of
bolivares for U.S. dollars at a bid rate established via weekly auctions. As of November 30, 2015, the fiscal year end for our
international operations, the SICAD 1 exchange rate closed at 13.5 bolivares to 1 U.S. dollar.
In January 2014, the replacement of the Commission for the Administration of Foreign Exchange (“CADIVI”) with a new foreign
currency administration, the National Center for Foreign Commerce (“CENCOEX”), which did not impact the official fixed
currency exchange rate of 6.3 bolivares to 1 U.S. dollar.
In March 2014, the establishment of SICAD 2, which operated similar to SICAD 1.
In February 2015, SICAD 2 was replaced by SIMADI. The SIMADI exchange rate at November 30, 2015 was 199.5 bolivares
to 1 U.S. dollar.

The exchange mechanisms discussed above have become increasingly illiquid, and we believe that significant uncertainty continues to
exist regarding the exchange mechanisms in Venezuela.

Beginning in 2016, we will exclude the operating results of our Venezuelan subsidiaries from our consolidated financial statements and
record revenue related to the sale of inventory to our Venezuelan subsidiaries to the extent that cash is received for those sales. Any
dividends received from our Venezuelan subsidiaries will be recorded as income upon receipt of cash.

The decision to deconsolidate our Venezuelan subsidiaries was preceded by the remeasurement of our Venezuelan Water and Paper
net assets during the second quarter of 2015 at the SIMADI exchange rate and the remeasurement of our Venezuelan Food & Beverage
and Institutional net assets and bolivar portion of our Venezuelan Energy net assets at the SIMADI exchange rate during the third quarter
of 2015. The combination of these actions resulted in charges of $165.9 million ($165.9 million after tax) through the first three quarters of
2015. As a result of the ownership structure of our Food & Beverage and Institutional operations in Venezuela, we reflected $11.1 million
of the above charges as a component of net income (loss) attributable to noncontrolling interest on the Consolidated Statement of
Income, resulting in a net charge of $154.8 million.

The total charges during 2015 related to our actions in Venezuela were $278.2 million ($235.7 million after tax), $235.7 million net of the
impact from noncontrolling interest, or $0.78 per diluted share.

During 2015, Venezuelan net sales represented approximately 2% of our consolidated net sales and Venezuelan operating income
represented approximately 4% of our consolidated operating income.

NEW ACCOUNTING PRONOUNCEMENTS

Information regarding new accounting pronouncements is included in Note 2.

SUBSEQUENT EVENTS

During January 2016, we issued $800 million of debt securities consisting of a three year 2.00% fixed rate noted for a par amount of $400
million and a seven year 3.25% fixed rate note for a par amount of $400 million. The proceeds were used to repay a portion of our
outstanding commercial paper, repay the remaining term loan balance of $125 million and for general corporate purposes.

Also during January 2016, we entered into an interest rate swap agreement that converted our $400 million 2.00% debt mentioned above
from a fixed rate to a floating rate interest rate. The interest rate swap was designated as a fair value hedge.

Also during January 2016, we purchased certain assets of Keedak Limited, an oilfield chemical distributor in Nigeria. Pre-acquisition
sales of the acquired business are approximately $15 million.

During February 2016, we entered into an accelerated stock repurchase agreement with a financial institution to repurchase $300 million
of our common stock.

NON-GAAP FINANCIAL MEASURES

This MD&A includes financial measures that have not been calculated in accordance with U.S. GAAP. These non-GAAP measures
include:

• Fixed currency sales
• Acquisition adjusted fixed currency sales
• Adjusted cost of sales
• Adjusted gross margin
• Fixed currency operating income
• Adjusted operating income
• Adjusted operating income margin
• Adjusted fixed currency operating income
• Adjusted fixed currency operating income margin
• EBITDA
• Adjusted EBITDA
• Adjusted net interest expense
• Adjusted tax rate
• Adjusted net income
• Adjusted diluted earnings per share

We provide these measures as additional information regarding our operating results. We use these non-GAAP measures internally to
evaluate our performance and in making financial and operational decisions, including with respect to incentive compensation. We
believe that our presentation of these measures provides investors with greater transparency with respect to our results of operations and
that these measures are useful for period-to-period comparison of results.

We include in special (gains) and charges items that are unusual in nature and significant in amount. In order to better allow investors to
compare underlying business performance period-to-period, we provide adjusted cost of sales, adjusted gross margin, adjusted operating
income, adjusted operating income margin, adjusted fixed currency operating income, adjusted fixed currency operating income margin,
adjusted EBITDA, adjusted net interest expense, adjusted net income and adjusted diluted earnings per share, which exclude special
(gains) and charges and discrete tax items. The exclusion of special (gains) and charges and discrete tax items in such adjusted
amounts help provide a better understanding of underlying business performance.

EBITDA is defined as the sum of net income including non-controlling interest, provision for income taxes, net interest expense,
depreciation and amortization. Adjusted EBITDA is defined as the sum of EBITDA and special (gains) and charges impacting operating
income. EBITDA and adjusted EBITDA are used as inputs to our net debt to EBITDA and net debt to adjusted EBITDA ratios, which we
view as important indicators of our creditworthiness.

The adjusted tax rate measure promotes period-to-period comparability of the underlying effective tax rate because it excludes the tax
rate impact of special (gains) and charges and discrete tax items which do not necessarily reflect costs associated with historical trends
or expected future results.

We evaluate the performance of our international operations based on fixed currency rates of foreign exchange. Fixed currency sales,
acquisition adjusted fixed currency sales, fixed currency operating income and adjusted fixed currency operating income measures
eliminate the impact of exchange rate fluctuations on our sales, acquisition adjusted sales, operating income, adjusted operating income
and acquisition adjusted operating income, respectively, and promote a better understanding of our underlying sales and operating
income trends. Fixed currency amounts are based on translation into U.S. dollars at fixed foreign currency exchange rates established by
management at the beginning of 2015. Fixed currency exchange rates are generally based on existing market rates at the time they are
established.

Acquisition adjusted growth rates generally exclude the results of any acquired business from the first twelve months post acquisition and
exclude the results of divested businesses from the twelve months prior to divestiture. Presentation of 2015 versus 2014 acquisition
adjusted growth rates continue to be handled in such a way. In addition, 2015 versus 2014 acquisition adjusted growth rates exclude our
Venezuelan results of operations from both 2015 and 2014.

For presentation of 2014 versus 2013 acquisition adjusted growth rates, due to the rapid pace at which the Champion business has been
integrated within our Global Energy segment, including all customer selling activity, discrete financial data specific to the legacy
Champion business is no longer available for post-acquisition periods. As such, to allow for a more meaningful 2014 versus 2013
comparison, specific to the Champion transaction, Champion’s results for the period prior to acquisition in 2013 have been included for
purposes of providing acquisition adjusted growth rates. All other acquisitions and divestitures continue to be handled consistent with the
mechanics described in the 2015 versus 2014 discussion above. The 2014 versus 2013 acquisition adjusted growth rates do not exclude
the Venezuelan results of operations from either 2014 or 2013.

These non-GAAP measures are not in accordance with, or an alternative to U.S. GAAP, and may be different from non-GAAP measures
used by other companies. Investors should not rely on any single financial measure when evaluating our business. We recommend that
investors view these measures in conjunction with the U.S. GAAP measures included in this MD&A and we have provided reconciliations
of reported U.S. GAAP amounts to the non-GAAP amounts.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk.

See discussion appearing under the headings entitled "Market Risk" and “Global Environment” within the MD&A of this Form 10-K.

Item 8. Financial Statements and Supplementary Data.

REPORTS OF MANAGMENT

To our Shareholders:

Management’s Responsibility for Financial Statements

Management is responsible for the integrity and objectivity of the consolidated financial statements. The statements have been prepared
in accordance with accounting principles generally accepted in the United States of America and, accordingly, include certain amounts
based on management’s best estimates and judgments.

The Board of Directors, acting through its Audit Committee composed solely of independent directors, is responsible for determining that
management fulfills its responsibilities in the preparation of financial statements and maintains internal control over financial reporting.
The Audit Committee recommends to the Board of Directors the appointment of the company’s independent registered public accounting
firm, subject to ratification by the shareholders. It meets regularly with management, the internal auditors and the independent registered
public accounting firm.

The independent registered public accounting firm has audited the consolidated financial statements included in this annual report and
have expressed their opinion regarding whether these consolidated financial statements present fairly in all material respects our
financial position and results of operation and cash flows as stated in their report presented separately herein.

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in
Exchange Act Rule 13a-15(f). Under the supervision and with the participation of management, including the principal executive officer
and principal financial officer, an evaluation of the design and operating effectiveness of internal control over financial reporting was
conducted based on the 2013 framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on the evaluation under the framework in Internal Control — Integrated Framework,
management concluded that internal control over financial reporting was effective as of December 31, 2015.

The company’s independent registered public accounting firm, PricewaterhouseCoopers LLP, has audited the effectiveness of the
company’s internal control over financial reporting as of December 31, 2015 as stated in their report which is included herein.

Douglas M. Baker, Jr.
Chairman and Chief Executive Officer

Daniel J. Schmechel
Chief Financial Officer

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of Ecolab Inc.:

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, comprehensive
income, equity and cash flows present fairly, in all material respects, the financial position of Ecolab Inc. and its subsidiaries at
December 31, 2015 and 2014, and the results of their operations and their cash flows for each of the three years in the period ended
December 31, 2015 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the
Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015, based on
criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in 2013. The Company’s management is responsible for these financial statements, for maintaining effective
internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in
the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on these
financial statements and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our
audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material
misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the
financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement
presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in
the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on
the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.

PricewaterhouseCoopers LLP
Minneapolis, Minnesota
February 26, 2016

CONSOLIDATED STATEMENT OF INCOME

Year ended December 31, (millions, except per share amounts)

2015

2014

2013

Net sales
Operating expenses

Cost of sales (including special charges of $80.6 in 2015, $14.3 in 2014 and

$43.2 in 2013, respectively)

Selling, general and administrative expenses
Special (gains) and charges

Operating income
Interest expense, net (including special charges of $2.5 in 2013)
Income before income taxes
Provision for income taxes
Net income including noncontrolling interest
Less: Net income (loss) attributable to noncontrolling interest (including special

charges of $12.8 in 2015, $0.5 in 2013)

Net income attributable to Ecolab

Earnings attributable to Ecolab per common share

Basic
Diluted

$ 13,545.1

$ 14,280.5

$ 13,253.4

7,223.5
4,345.5
414.8
1,561.3
243.6
1,317.7
300.5
1,017.2

7,679.1
4,577.6
68.8
1,955.0
256.6
1,698.4
476.2
1,222.2

15.1
$ 1,002.1

19.4
$ 1,202.8

7,161.2
4,360.3
171.3
1,560.6
262.3
1,298.3
324.7
973.6

5.8
$ 967.8

$ 3.38
$ 3.32

$ 4.01
$ 3.93

$ 3.23
$ 3.16

Dividends declared per common share

$ 1.340

$ 1.155

$ 0.965

Weighted-average common shares outstanding

Basic
Diluted

296.4
301.4

300.1
305.9

299.9
305.9

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

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Year ended December 31, (millions)

2015

2014

2013

Net income including noncontrolling interest

$ 1,017.2

$ 1,222.2

$ 973.6

Other comprehensive income (loss), net of tax

Foreign currency translation adjustments

Foreign currency translation
Gain (loss) on net investment hedges
Reclassification associated with Venezuelan entities

Derivatives and hedging instruments

Pension and postretirement benefits

Current period net actuarial income (loss)
Pension and postretirement prior period service costs and benefits adjustments
Amortization of net actuarial loss and prior service costs included in net periodic

pension and postretirement costs

Reclassification associated with Venezuelan entities

(626.8)
101.3
2.4
(523.1)

11.7

(2.3)
4.5

33.6
2.2
38.0

(350.3)
34.7
-
(315.6)

(240.0)
(11.4)
-
(251.4)

3.9

7.0

(354.8)
(0.6)

12.1
-
(343.3)

337.2
(1.0)

46.7
-
382.9

Subtotal

(473.4)

(655.0)

138.5

Total comprehensive income, including noncontrolling interest
Less: Comprehensive income (loss) attributable to noncontrolling interest
Comprehensive income attributable to Ecolab

543.8
13.1
$ 530.7

567.2
11.1
$ 556.1

1,112.1
(10.2)
$ 1,122.3

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

CONSOLIDATED BALANCE SHEET

December 31, (millions, except per share amounts)

2015

2014

ASSETS
Current assets

Cash and cash equivalents
Accounts receivable, net
Inventories
Deferred income taxes
Other current assets
Total current assets

Property, plant and equipment, net
Goodwill
Other intangible assets, net
Other assets
Total assets

LIABILITIES AND EQUITY
Current liabilities

Short-term debt
Accounts payable
Compensation and benefits
Income taxes
Other current liabilities
Total current liabilities

Long-term debt
Postretirement health care and pension benefits
Other liabilities
Total liabilities
Equity (a)

Common stock
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Treasury stock

Total Ecolab shareholders’ equity

Noncontrolling interest

Total equity
Total liabilities and equity

$ 92.8
2,390.2
1,388.2
250.0
326.3
4,447.5
3,228.3
6,490.8
4,109.2
365.9
$ 18,641.7

$ 2,205.3
1,049.6
509.0
52.2
948.3
4,764.4
4,260.2
1,117.1
1,519.6
11,661.3

350.3
5,086.1
6,160.3
(1,423.3)
(3,263.5)
6,909.9
70.5
6,980.4
$ 18,641.7

$ 209.6
2,626.7
1,466.9
183.2
366.6
4,853.0
3,050.6
6,717.0
4,456.8
350.0
$ 19,427.4

$ 1,704.8
1,162.4
560.4
88.6
851.7
4,367.9
4,843.4
1,188.5
1,645.5
12,045.3

347.7
4,874.5
5,555.1
(951.9)
(2,509.5)
7,315.9
66.2
7,382.1
$ 19,427.4

(a) Common stock, 800.0 million shares authorized, $1.00 par value, 296.0 million shares outstanding at December 31, 2015, 299.9

million shares outstanding at December 31, 2014. Shares outstanding are net of treasury stock.

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

CONSOLIDATED STATEMENT OF CASH FLOWS

Year ended December 31, (millions)

2015

2014

2013

OPERATING ACTIVITIES
Net income including noncontrolling interest
Adjustments to reconcile net income including noncontrolling interest to cash provided by

operating activities:

$ 1,017.2

$ 1,222.2

$ 973.6

Depreciation
Amortization
Deferred income taxes
Share-based compensation expense
Excess tax benefits from share-based payment arrangements
Pension and postretirement plan contributions
Pension and postretirement plan expense
Restructuring, net of cash paid
Venezuelan charges
(Gain) loss on sale of businesses
Fixed asset impairment
Other, net
Changes in operating assets and liabilities, net of effect of acquisitions:

Accounts receivable
Inventories
Other assets
Accounts payable
Other liabilities

Cash provided by operating activities

INVESTING ACTIVITIES
Capital expenditures
Capitalized software expenditures
Property and other assets sold
Acquisitions and investments in affiliates, net of cash acquired
Divestiture of businesses
Deposit into acquisition related escrow
Release from acquisition related escrow
Reduction of cash due to Venezuelan deconsolidation
Settlement of net investment hedges
Cash used for investing activities

FINANCING ACTIVITIES
Net issuances (repayments) of commercial paper and notes payable
Long-term debt borrowings
Long-term debt repayments
Reacquired shares
Dividends paid
Exercise of employee stock options
Excess tax benefits from share-based payment arrangements
Acquisition related liabilities and contingent consideration
Acquisition of noncontrolling interests
Other, net
Cash used for financing activities

Effect of exchange rate changes on cash and cash equivalents

Decrease in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year

SUPPLEMENTAL CASH FLOW INFORMATION

Income taxes paid
Interest paid

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

559.5
300.0
(244.5)
78.2
(57.8)
(64.9)
113.8
38.4
289.3
13.7
24.7
11.6

(24.0)
(48.6)
(69.1)
(46.1)
108.4
1,999.8

(771.0)
(44.2)
15.0
(265.9)
0.5
-
45.6
(4.2)
108.4
(915.8)

(312.1)
1,223.7
(1,034.7)
(755.1)
(400.7)
83.1
57.8
(12.9)
-
-
(1,150.9)

(49.9)

(116.8)
209.6
$ 92.8

558.1
313.9
(121.5)
71.1
(55.9)
(76.7)
83.9
0.3
-
(4.8)
-
7.8

(175.4)
(210.8)
(106.3)
174.7
135.0
1,815.6

(748.7)
(45.2)
10.9
(82.6)
10.4
(9.4)
8.7
-
7.6
(848.3)

599.6
-
(907.8)
(428.6)
(344.4)
65.4
55.9
(98.7)
(8.4)
(4.0)
(1,071.0)

(25.9)

(129.6)
339.2
$ 209.6

514.2
302.0
(130.5)
69.6
(36.6)
(80.0)
142.4
(39.8)
23.2
1.9
-
16.4

(147.4)
(30.5)
(68.7)
50.6
(0.6)
1,559.8

(625.1)
(37.2)
18.1
(1,437.7)
(8.3)
(10.5)
13.0
-
-
(2,087.7)

(278.3)
900.1
(511.2)
(307.6)
(218.1)
97.0
36.6
(11.3)
-
0.2
(292.6)

1.9

(818.6)
1,157.8
$ 339.2

$ 533.1
237.2

$ 522.0
255.5

$ 434.2
258.9

CONSOLIDATED STATEMENT OF EQUITY

Ecolab Shareholders

(millions)
Balance, December 31, 2012

Net income
Comprehensive income (loss) activity
Total comprehensive income (loss)

Cash dividends declared
Champion acquisition
Stock options and awards
Reacquired shares
Balance, December 31, 2013

Net income
Comprehensive income (loss) activity
Total comprehensive income (loss)

Cash dividends declared
Champion acquisition
Acquisition of noncontrolling interests
Stock options and awards
Reacquired shares
Balance, December 31, 2014

Net income
Comprehensive income (loss) activity
Total comprehensive income (loss)

Cash dividends declared
Venezuela deconsolidation
Stock options and awards
Reacquired shares
Balance, December 31, 2015

COMMON STOCK ACTIVITY

Year ended December 31, (shares)
Shares, beginning of year

Stock options
Stock awards
Champion acquisition
Reacquired shares

Shares, end of year

Additional

Common Paid-in
Capital

Stock

Retained

OCI
Earnings (Loss)

Ecolab

Non-

Treasury

Shareholders' Controlling

Total
Interest Equity

Stock

Equity

$ 342.1

$ 4,249.1

$ 4,020.6

$ (459.7)

$ (2,075.1)

$ 6,077.0

$ 83.1

$ 6,160.1

154.5

967.8

(289.4)

3.0

258.1
184.8

345.1

4,692.0

4,699.0

(305.2)

1,202.8

(646.7)

(346.7)

2.6

(0.3)
182.8

347.7

4,874.5

5,555.1

(951.9)

284.9
11.2
(307.6)
(2,086.6)

5.7
(428.6)
(2,509.5)

(471.4)

1,002.1

(396.9)

2.6

$ 350.3

205.4
6.2
$ 5,086.1

$ 6,160.3

$ (1,423.3)

7.3
(761.3)
$ (3,263.5)

967.8
154.5
1,122.3

5.8

(16.0)
(10.2)

973.6
138.5
1,112.1

(289.4)
543.0
199.0
(307.6)
7,344.3

1,202.8
(646.7)
556.1

(346.7)

(0.3)
191.1
(428.6)
7,315.9

1,002.1
(471.4)
530.7

(396.9)

215.3
(755.1)
$ 6,909.9

(11.4)
3.6

65.1

19.4
(8.3)
11.1

(14.0)
(2.9)
6.9

66.2

15.1
(2.0)
13.1

(8.3)
(0.5)

$ 70.5

(300.8)
546.6
199.0
(307.6)
7,409.4

1,222.2
(655.0)
567.2

(360.7)
(2.9)
6.6
191.1
(428.6)
7,382.1

1,017.2
(473.4)
543.8

(405.2)
(0.5)
215.3
(755.1)
$ 6,980.4

2015

2014

2013

Common

Treasury

Common

Treasury

Common

Treasury

Stock

Stock
347,724,788
1,962,360
652,672

350,339,820

(47,872,332)
151,261
14,745

(6,666,403)
(54,372,729)

Stock
345,101,009
1,850,757
773,022

(43,965,830) 342,106,581
2,206,661
787,767

122,455
8,231

347,724,788

(47,872,332) 345,101,009

(4,037,188)

(47,384,557)
254,680
11,008
6,596,444
(3,443,405)
(43,965,830)

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF BUSINESS

Ecolab Inc. (“Ecolab” or “the company”) is the global leader in water, hygiene and energy technologies and services that protect people
and vital resources. The company delivers comprehensive solutions and on-site service to promote safe food, maintain clean
environments, optimize water and energy use and improve operational efficiencies for customers in the food, healthcare, energy,
hospitality and industrial markets in more than 170 countries.

The company’s cleaning and sanitizing programs and products, pest elimination services, and equipment maintenance and repair
services support customers in the foodservice, food and beverage processing, hospitality, healthcare, government and education, retail,
textile care and commercial facilities management sectors. The company’s products and technologies are also used in water treatment,
pollution control, energy conservation, oil production and refining, steelmaking, papermaking, mining and other industrial processes.

2. SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of the company and all subsidiaries in which the company has a controlling
financial interest. Investments in companies, joint ventures or partnerships in which the company does not have control, but has the
ability to exercise significant influence over operating and financial policies, are reported using the equity method. Effective as of the end
of the fourth quarter of 2015, the company determined that it does not meet the accounting criteria for control over its Venezuelan
subsidiaries. Therefore, the company deconsolidated its Venezuelan subsidiaries effective as of the end of the fourth quarter of 2015,
and began accounting for the investments in its Venezuelan subsidiaries using the cost method of accounting, effective in the first quarter
of 2016. The cost method of accounting is used in circumstances where the company has no substantial influence over the investee, and
the investment has no easily determinable fair value. International subsidiaries are included in the financial statements on the basis of
their U.S. GAAP November 30 fiscal year-ends to facilitate the timely inclusion of such entities in the company’s consolidated financial
reporting. All intercompany transactions and profits are eliminated in consolidation.

Reclassifications

During the third quarter of 2015, the company early-adopted the updated accounting guidance related to simplifying the presentation of
debt issue costs, using the retrospective application method. The company updated its December 31, 2014 Consolidated Balance
Sheet, resulting in reductions to other assets, short-term debt and long-term debt of $21.2 million, $0.6 million and $20.6 million,
respectively. The corresponding footnote disclosures have also been updated to reflect the changes. Debt issuance costs incurred
related to the company’s credit facility remain within other assets on the Consolidated Balance Sheet. The updated guidance had no
impact on previously reported earnings or consolidated cash flows.

As discussed further in Note 8, the company made a policy election regarding gross versus net presentation of its derivatives subject to
master netting arrangements, which resulted in a reduction in other current assets and other current liabilities of $18.1 million within the
December 31, 2014 Consolidated Balance Sheet.

Use of Estimates

The preparation of the company’s financial statements requires management to make certain estimates and assumptions that affect the
reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from these estimates. The company’s critical accounting estimates include
revenue recognition, valuation allowances and accrued liabilities, actuarially determined liabilities, restructuring, income taxes and long-
lived assets, intangible assets and goodwill.

Foreign Currency Translation

Financial position and reported results of operations of the company’s international subsidiaries are measured using local currencies as
the functional currency. Assets and liabilities of these operations are translated at the exchange rates in effect at each fiscal year end.
The translation adjustments related to assets and liabilities that arise from the use of differing exchange rates from period to period are
included in accumulated other comprehensive income (loss) in shareholders’ equity. Income statement accounts are translated at
average rates of exchange prevailing during the year. The company evaluates its international operations based on fixed rates of
exchange; however, the different exchange rates from period to period impact the amount of reported income from consolidated
operations. The foreign currency fluctuations of any foreign subsidiaries that operate in highly inflationary environments are included in
results of operations. Further details related to the highly inflationary environment in Venezuela and the company's actions taken to
address the current conditions are included in Note 3.

Concentration of Credit Risk

Credit risk represents the accounting loss that would be recognized at the reporting date if counterparties failed to perform as contracted.
The company believes the likelihood of incurring material losses due to concentration of credit risk is remote. The principal financial
instruments subject to credit risk are as follows:

Cash and Cash Equivalents - The company maintains cash deposits with major banks, which from time to time may exceed insured
limits. The possibility of loss related to financial condition of major banks has been deemed minimal. Additionally, the company’s
investment policy limits exposure to concentrations of credit risk and changes in market conditions.

Accounts Receivable - A large number of customers in diverse industries and geographies, as well as the practice of establishing
reasonable credit lines, limits credit risk. Based on historical trends and experiences, the allowance for doubtful accounts is adequate to
cover potential credit risk losses.

Foreign Currency and Interest Rate Contracts and Derivatives - Exposure to credit risk is limited by internal policies and active monitoring
of counterparty risks. In addition, the company uses a diversified group of major international banks and financial institutions as
counterparties. The company does not anticipate nonperformance by any of these counterparties.

Cash and Cash Equivalents

Cash equivalents include highly-liquid investments with a maturity of three months or less when purchased.

Accounts Receivable and Allowance For Doubtful Accounts

Accounts receivable are carried at their face amounts less an allowance for doubtful accounts. Accounts receivable are recorded at the
invoiced amount and generally do not bear interest. The company estimates the balance of allowance for doubtful accounts by analyzing
accounts receivable balances by age and applying historical write-off and collection trend rates. The company’s estimates include
separately providing for customer balances based on specific circumstances and credit conditions, and when it is deemed probable that
the balance is uncollectible. Account balances are charged off against the allowance when it is determined the receivable will not be
recovered.

The company’s allowance for doubtful accounts balance also includes an allowance for the expected return of products shipped and
credits related to pricing or quantities shipped of $15 million as of December 31, 2015 and 2014 and $14 million as of December 31,
2013. Returns and credit activity is recorded directly to sales.

The following table summarizes the activity in the allowance for doubtful accounts:

(millions)

Beginning balance

Bad debt expense
Write-offs
Other (a)

Ending balance

2015

2014

2013

$ 77
26
(22)
(6)

$ 75

$ 81
23
(20)
(7)
$ 77

$ 73
28
(21)
1
$ 81

(a) Other amounts are primarily the effects of changes in currency translations and the impact of allowance for returns and credits.

Inventory Valuations

Inventories are valued at the lower of cost or market. Certain U.S. inventory costs are determined on a last-in, first-out (LIFO) basis. LIFO
inventories represented 39% and 37% of consolidated inventories as of December 31, 2015 and 2014, respectively. LIFO inventories
include certain legacy Nalco U.S. inventory acquired at fair value as part of the Nalco merger. All other inventory costs are determined
using either the average cost or first-in, first-out (FIFO) methods. Inventory values at FIFO, as shown in Note 5, approximate replacement
cost.

During the fourth quarter of 2015, the company improved estimates related to its inventory reserves and product costing, resulting in a
net pre-tax charge of approximately $6 million. Separately, the actions resulted in charge of $20.6 million related to inventory reserve
calculations, partially offset by a gain of $14.5 million related to the capitalization of certain cost components into inventory. Both of these
items are reflected in Note 3.

Property, Plant and Equipment

Property, plant and equipment assets are stated at cost. Merchandising and customer equipment consists principally of various
dispensing systems for the company’s cleaning and sanitizing products, dishwashing machines and process control and monitoring
equipment. Certain dispensing systems capitalized by the company are accounted for on a mass asset basis, whereby equipment is
capitalized and depreciated as a group and written off when fully depreciated. The company capitalizes both internal and external costs
of development or purchase of computer software for internal use. Costs incurred for data conversion, training and maintenance
associated with capitalized software are expensed as incurred. Expenditures for major renewals and improvements, which significantly
extend the useful lives of existing plant and equipment, are capitalized and depreciated. Expenditures for repairs and maintenance are
charged to expense as incurred. Upon retirement or disposition of plant and equipment, the cost and related accumulated depreciation
are removed from the accounts and any resulting gain or loss is recognized in income.

Depreciation is charged to operations using the straight-line method over the assets’ estimated useful lives ranging from 5 to 40 years for
buildings and leasehold improvements, 3 to 20 years for machinery and equipment and 3 to 15 years for merchandising and customer
equipment and capitalized software. The straight-line method of depreciation reflects an appropriate allocation of the cost of the assets to
earnings in proportion to the amount of economic benefits obtained by the company in each reporting period. Total depreciation expense
was $560 million, $558 million and $514 million for 2015, 2014 and 2013, respectively.

Goodwill and Other Intangible Assets

Goodwill

Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired. The company’s operating
units are aligned with its ten operating segments.

During the second quarter of 2015, the company completed its annual test for goodwill impairment. In order to refresh the estimated fair
value of all ten of its operating units, the company elected to bypass the qualitative assessment and perform a quantitative test. The two-
step quantitative process involved comparing the estimated fair value of each operating unit to the operating unit’s carrying value,
including goodwill. If the fair value of an operating unit exceeds its carrying value, goodwill of the operating unit is considered not to be
impaired, and the second step of the impairment test is unnecessary. If the carrying amount of the operating unit exceeds its fair value,
the second step of the goodwill impairment test would be performed to measure the amount of impairment loss to be recorded, if any.

The company's goodwill impairment assessment for 2015 indicated the fair value of each of its operating units exceeded its carrying
amount by a significant margin. If circumstances change considerably, the company would also test an operating unit’s goodwill for
impairment during interim periods between its annual tests. As a result of Venezuela deconsolidation, the company updated its goodwill
impairment assessment for the Global Energy reportable segment, which indicated no impairment, and a continued significant margin of
fair value exceeding carrying value. There has been no impairment of goodwill since the adoption of Financial Accounting Standards
Board (“FASB”) guidance for goodwill and other intangibles on January 1, 2002.

The changes in the carrying amount of goodwill for each of the company’s reportable segments are as follows:

(millions)
December 31, 2013

Current year business combinations (a)
Prior year business combinations (b)
Dispositions
Reclassifications (c)
Effect of foreign currency translation

December 31, 2014

Current year business combinations (a)
Prior year business combinations (b)
Dispositions
Reclassifications (d)
Effect of foreign currency translation

December 31, 2015

Global
Industrial

$ 2,729.5
18.5
(0.1)
-
(28.9)
(76.8)
2,642.2
84.2
0.7
(0.4)
(23.7)
(142.2)
$ 2,560.8

Global

Institutional
$ 706.6
-
-
(0.4)
5.0
(20.0)
691.2
6.1
-
-
2.9
(37.5)
$ 662.7

Global
Energy
$ 3,306.2
9.9
16.9
-
23.9
(94.8)
3,262.1
45.0
-
(0.1)
20.8
(176.3)
$ 3,151.5

Other

$ 120.6
4.6
-
(0.2)
-
(3.5)
121.5
0.9
-
-
-
(6.6)
$ 115.8

Total
$ 6,862.9
33.0
16.8
(0.6)
-
(195.1)
6,717.0
136.2
0.7
(0.5)
-
(362.6)
$ 6,490.8

(a) For 2015, the company expects $45.9 million of the goodwill related to businesses acquired to be tax deductible. For 2014, $20.7

million of the goodwill related to businesses acquired is expected to be tax deductible.

(b) Represents purchase price allocation adjustments for acquisitions deemed preliminary as of the end of the prior year.
(c) Represents immaterial transfers related to certain changes to the company’s reportable segments during the first quarter of 2014.
(d) Represents immaterial reclassifications of 2014 balances to conform to the current year presentation.

Other Intangible Assets

As part of the Nalco merger, the company added the “Nalco” trade name as an indefinite life intangible asset. During the second quarter
of 2015, using the qualitative assessment method, the company completed its annual test for indefinite life intangible asset impairment.
Based on this testing, no adjustment to the $1.2 billion carrying value of this asset was necessary. Additionally, no events during the
second half of 2015 indicated a need to update the company’s conclusions reached during the second quarter of 2015. There has been
no impairment of the Nalco trade name intangible asset since it was acquired.

Intangible assets subject to amortization primarily include customer relationships, trademarks, patents and other technology. The fair
value of identifiable intangible assets is estimated based upon discounted future cash flow projections and other acceptable valuation
methods. Other intangible assets are amortized on a straight-line basis over their estimated economic lives. The weighted-average useful
life of amortizable intangible assets was 14 years as of December 31, 2015 and 2014.

The weighted-average useful life by type of amortizable asset at December 31, 2015 is as follows:

(years)
Customer relationships
Trademarks
Patents
Other technology

14
14
14
7

The straight-line method of amortization reflects an appropriate allocation of the cost of the intangible assets to earnings in proportion to
the amount of economic benefits obtained by the company in each reporting period. The company evaluates the remaining useful life of
its intangible assets that are being amortized each reporting period to determine whether events and circumstances warrant a change to
the remaining period of amortization. If the estimate of an intangible asset’s remaining useful life is changed, the remaining carrying
amount of the intangible asset will be amortized prospectively over that revised remaining useful life. Total amortization expense related
to other intangible assets during the last three years and future estimated amortization is as follows:

(millions)
2013
2014
2015
2016
2017
2018
2019
2020

Long-Lived Assets

$ 293
305
292
294
290
285
272
270

The company periodically reviews its long-lived and amortizable intangible assets for impairment and assesses whether significant
events or changes in business circumstances indicate that the carrying value of the assets may not be recoverable. Such circumstances
may include a significant decrease in the market price of an asset, a significant adverse change in the manner in which the asset is being
used or in its physical condition or history of operating or cash flow losses associated with the use of an asset. An impairment loss may
be recognized when the carrying amount of an asset exceeds the anticipated future undiscounted cash flows expected to result from the
use of the asset and its eventual disposition. The amount of the impairment loss to be recorded, if any, is calculated by the excess of the
asset’s carrying value over its fair value. In 2015, as part of the actions taken regarding its Venezuelan businesses, the company wrote-
off customer relationship intangible assets and other long-lived assets. See Note 3 for additional information regarding Venezuela. Also
during 2015, the company impaired certain long-lived assets related to a product line within one of its U.S. plants. See Note 3 for
additional information regarding this asset impairment.

In addition, the company periodically reassesses the estimated remaining useful lives of its long-lived assets. Changes to estimated
useful lives would impact the amount of depreciation and amortization recorded in earnings. The company has not experienced
significant changes in the carrying value or estimated remaining useful lives of its long-lived or amortizable intangible assets.

Asset Retirement Obligations

The fair value of a liability for an asset retirement obligation associated with the retirement of tangible long-lived assets is recognized in
the period in which it is incurred if a reasonable estimate of fair value can be made. The liability is adjusted to its present value in
subsequent periods as accretion expense is recorded. The corresponding asset retirement costs are capitalized as part of the carrying
amount of the related long-lived asset and depreciated over the asset’s useful life. The company’s asset retirement obligation liability was
$10.2 million and $9.5 million, respectively, at December 31, 2015 and 2014.

Income Taxes

Income taxes are recognized during the period in which transactions enter into the determination of financial statement income, with
deferred income taxes being provided for the tax effect of temporary differences between the carrying amount of assets and liabilities and
their tax bases. The company records a valuation allowance to reduce its deferred tax assets when uncertainty regarding their
realizability exists. Deferred income taxes are provided on the undistributed earnings of foreign subsidiaries except to the extent such
earnings are considered to be permanently reinvested in the subsidiary.

The company records liabilities for income tax uncertainties in accordance with the recognition and measurement criteria prescribed in
authoritative guidance issued by the FASB.

See Note 12 for additional information regarding income taxes.

Restructuring Activities

The company’s restructuring activities are associated with plans to enhance its efficiency, effectiveness and sharpen its competitiveness.
These restructuring plans include net costs associated with significant actions involving employee-related severance charges, contract
termination costs and asset write-downs and disposals. Employee termination costs are largely based on policies and severance plans,
and include personnel reductions and related costs for severance, benefits and outplacement services. These charges are reflected in
the quarter in which the actions are probable and the amounts are estimable, which is when management approves the associated
actions. Contract termination costs include charges to terminate leases prior to the end of their respective terms and other contract
termination costs. Asset write-downs and disposals include leasehold improvement write-downs, other asset write-downs associated with
combining operations and disposal of assets.

See Note 3 for additional information regarding restructuring.

Revenue Recognition

The company recognizes revenue on product sales at the time evidence of an arrangement exists, title to the product and risk of loss
transfers to the customer, the price is fixed and determinable and collection is reasonably assured. The company recognizes revenue on
services as they are performed. While the company employs a sales and service team to ensure customer’s needs are best met in a high
quality way, the majority of the company’s revenue is generated from product sales. The company’s service businesses and service
offerings are discussed in Note 17.

The company’s sales policies do not provide for general rights of return. Critical estimates used in recognizing revenue include the delay
between the time that products are shipped, when they are received by customers, when title transfers and the amount of credit memos
issued in subsequent periods. The company records estimated reductions to revenue for customer programs and incentive offerings,
including pricing arrangements, promotions and other volume-based incentives at the time the sale is recorded. The company also
records estimated reserves for anticipated uncollectible accounts and for product returns and credits at the time of sale. Depending on
market conditions, the company may increase customer incentive offerings, which could reduce gross profit margins at the time the
incentive is offered.

Earnings Per Common Share

The difference in the weighted average common shares outstanding for calculating basic and diluted earnings attributable to Ecolab per
common share is a result of the dilution associated with the company’s equity compensation plans. As noted in the table below, certain
stock options, units and awards outstanding under these equity compensation plans were not included in the computation of diluted
earnings attributable to Ecolab per common share because they would not have had a dilutive effect.

The computations of the basic and diluted earnings attributable to Ecolab per share amounts were as follows:

(millions, except per share)

2015

2014

2013

Net income attributable to Ecolab

$ 1,002.1

$ 1,202.8

$ 967.8

Weighted-average common shares outstanding

Basic
Effect of dilutive stock options, units and awards
Diluted

Earnings attributable to Ecolab per common share

Basic
Diluted

296.4
5.0
301.4

300.1
5.8
305.9

299.9
6.0
305.9

$ 3.38
$ 3.32

$ 4.01
$ 3.93

$ 3.23
$ 3.16

Anti-dilutive securities excluded from the computation of

earnings per share

3.5

3.4

1.8

Other Significant Accounting Policies

The following table includes a reference to additional significant accounting policies that are described in other notes to the financial
statements, including the note number:

Policy

Fair value measurements

Derivatives and hedging transactions

Share-based compensation

Research and development expenditures

Legal contingencies

Pension and post-retirement benefit plans

Reportable segments

Note

New Accounting Pronouncements

Standard

Standards that are not yet adopted:

ASU 2015-02 — Consolidation (Topic 810):
Amendments to the Consolidation Analysis

Date of
Issuance

Description

Date of
Adoption

Effect on the
Financial Statements

February 2015

Certain factors that previously required

January 1, 2016 The company does not expect the

ASU 2015-05 — Intangibles - Goodwill and
Other - Internal Use Software (Subtopic 350-
40): Customer's Accounting for Fees Paid in
a Cloud Computing Arrangement

ASU 2015-07 - Fair Value Measurement
(Topic 820): Disclosures for Investments in
Certain Entities That Calculate Net Asset
Value per Share (or its Equivalent) (a
consensus of the Emerging Issues Taskforce)

April 2015

May 2015

ASU 2015-16 - Business Combinations
(Topic 805): Simplifying the Accounting for
Measurement-Period Adjustments

September 2015

The amendment requires an acquirer to

January 1, 2016 The company does not expect the

reporting entities to consolidate a given legal
entity have been eliminated, requiring fewer
legal entities to be consolidated under the
new guidance.

An entity that is the customer in a cloud
computing arrangement that includes a
software license should account for the
software license element of the arrangement
consistent with the acquisition of other
software licenses.

Investments for which fair value is measured
at net asset value per share (or its
equivalent) using the practical expedient of
ASC 820 should not be categorized in the fair
value hierarchy. However, the reporting entity
should continue to disclose information on
such investments.

updated guidance to have a significant
impact on future financial statements.

January 1, 2016 The company does not expect the

updated guidance to have an impact on
future financial statements.

January 1, 2016 Presentation impact related to pension

plan asset disclosures.

recognize adjustments identified during the
measurement period in the reporting period
in which the adjustment amounts are
determined and to recognize a cumulative
catch-up, if any, in the same period on the
income statement as a result of the
adjustment, calculated as if the accounting
had been completed on the acquisition date.
The amendment also requires an entity to
present separately on the face of the income
statement or disclose in the notes the
amount of the cumulative adjustment by line
item.

The amendment requires entities to measure
inventory under the FIFO or average cost
methods at the lower of cost or net realizable
value.

updated guidance to have a significant
impact on future financial statements.

January 1, 2017 The company is currently evaluating the
impact of adoption.

January 1, 2017 Presentation impact only related to

deferred tax assets and deferred tax
liabilities. The company does not expect
the updated guidance to have a
significant impact on future financial
statements.

January 1, 2018 The company is currently evaluating the
impact of adoption.

ASU 2015-11 - Inventory (Topic 330):
Simplifying the Measurement of Inventory)

July 2015

ASU 2015-17- Income Taxes (Topic 740):
Balance Sheet Classification of Deferred
Taxes

November 2015

The amendment requires that all deferred tax
assets and liabilities be classified as non-
current in the consolidated balance sheet.

May 2014

Recognition standard contains principles for

entities to apply to determine the
measurement of revenue and timing of when
the revenue is recognized. The underlying
principle of the updated guidance will have
entities recognize revenue to depict the
transfer of goods or services to customers at
an amount that is expected to be received in
exchange for those goods or services.

ASU 2014-09 — Revenue from Contracts
with Customers (Topic 606) and ASU 2015-
14 - Revenue from Contracts with Customers
(Topic 606): Deferral of the Effective Date

Standards that were adopted:

ASU 2015-03 — Interest - Imputation of
Interest (Subtopic 835-30): Simplifying the
Presentation of Debt Issuance Costs and
ASU 2015-15 (Subtopic 835-30) -
Presentation and Subsequent Measurement
of Debt Issuance Costs Associated with Line-
of-Credit Arrangements

April 2015

Debt issuance costs should no longer be

July 1, 2015

As discussed in Note 1, the company

recognized as a deferred charge -asset but
rather should be recorded as a direct
deduction from the carrying amount of the
debt liability. The subsequent amendment
relates to deferring and presenting debt
issuance costs as an asset and subsequently
amortizing the deferred debt issuance costs
ratably over the term of the line-of-credit
arrangement, regardless of whether there are
any outstanding borrowings on the line-of-
credit arrangement.

early-adopted the updated guidance in
the third quarter of 2015, resulting in
presentation related changes to its
deferred financing costs and debt.

No other new accounting pronouncement issued or effective has had or is expected to have a material impact on the company’s
consolidated financial statements.

3. SPECIAL (GAINS) AND CHARGES

Special (gains) and charges reported on the Consolidated Statement of Income included the following:

(millions)
Cost of sales

Restructuring charges
Venezuela related charges
Inventory costs
Inventory reserves
Fixed asset impairment
Recognition of inventory fair value step-up

Subtotal

Special (gains) and charges

Restructuring charges
Champion acquisition and integration costs
Nalco merger and integration costs
Venezuela related charges
(Gains) losses related to litigation activities, sale of businesses,

settlements and other
Subtotal

Operating income subtotal

Interest expense, net

Acquisition debt costs

Net income attributable to noncontrolling interest

Restructuring charges
Venezuela related charges

Subtotal

2015

2014

2013

$ 16.5
33.3
(14.5)
20.6
24.7
-
80.6

83.8
17.1
1.6
256.0

56.3
414.8

495.4

(1.7)
(11.1)
(12.8)

$ 13.9
-
-
-
-
0.4
14.3

69.2
19.9
8.5
-

(28.8)
68.8

83.1

-
-
-

$ 6.6
-
-
-
-
36.6
43.2

83.4
49.7
18.6
23.2

(3.6)
171.3

214.5

2.5

-
(0.5)
(0.5)

Total special (gains) and charges

$ 482.6

$ 83.1

$ 216.5

For segment reporting purposes, special (gains) and charges are included in the Corporate segment, which is consistent with the
company’s internal management reporting.

Restructuring charges

Energy Restructuring Plan

In April 2013, following the completion of the acquisition of Champion the company commenced plans to undertake restructuring and
other cost-saving actions to realize its acquisition-related cost synergies as well as streamline and strengthen Ecolab’s position in the
global energy market. Actions associated with the acquisition to improve the effectiveness and efficiency of the business included a
reduction of the combined business’s current global workforce. Actions also included leveraging and simplifying its global supply chain,
including the reduction of plant, distribution center and redundant facility locations and product line optimization.

Restructuring charges within the Energy Restructuring Plan were substantially completed during the fourth quarter of 2015. Certain
immaterial actions may continue into 2016. Ongoing cash payments will continue into 2016. Cumulative restructuring charges of $82
million ($59 million after tax), are materially consistent with the company’s expectation of $80 million ($55 million after tax).

The company recorded restructuring charges within net income including noncontrolling interest of $47.2 million ($33.0 million after tax),
$9.5 million ($6.4 million after tax) and $27.4 million ($19.4 million after tax) during 2015, 2014 and 2013, respectively. As a result of the
ownership structure of certain entities holding Energy Restructuring Plan charges, the company reflected $1.7 million of the 2015
charges as a component of net income (loss) attributable to noncontrolling interest on the Consolidated Statement of Income.

Restructuring charges and activity related to the Energy Restructuring Plan since inception of the underlying actions include the
following:

(millions)
2013 - 2014 Activity

Recorded expense and accrual
Cash payments
Non-cash charges
Effect of foreign currency translation

Restructuring liability, December 31, 2014

2015 Activity

Recorded expense and accrual
Cash payments
Non-cash charges
Effect of foreign currency translation

Restructuring liability, December 31, 2015

Employee
Termination

Asset

Energy Restructuring Plan

Costs

Disposals

Other

Total

$ 30.8
(29.6)
-
0.8
2.0

24.8
(14.7)
-
(0.4)
$ 11.7

4.2
-
(4.2)
-
-

9.0
3.9
(12.9)
-
-

1.9
(1.8)
-
-
0.1

13.4
(0.3)
-
-
$ 13.2

$ 36.9
(31.4)
(4.2)
0.8
2.1

47.2
(11.1)
(12.9)
(0.4)
$ 24.9

As shown in the previous table, net cash payments under the Energy Plan were $11.1 million during 2015 and $31.4 million from 2013
through 2014. The majority of cash payments under this plan are related to severance, with the current accrual expected to be paid over
a period of a few months to several quarters. The company anticipates the remaining cash expenditures will continue to be funded from
operating activities.

Combined Plan

In February 2011, the company commenced a comprehensive plan to substantially improve the efficiency and effectiveness of its
European business, as well as to undertake certain restructuring activities outside of Europe, historically referred to as the “2011
Restructuring Plan”. Additionally, in January 2012 and following the merger with Nalco, the company formally commenced plans to
undertake restructuring actions related to the reduction of its global workforce and optimization of its supply chain and office facilities,
including planned reduction of plant and distribution center locations, historically referred to as the “Merger Restructuring Plan”. During
the first quarter of 2013, the company determined that because the objectives of the plans discussed above were aligned, the previously
separate restructuring plans should be combined into one plan.

The Combined Plan combines opportunities and initiatives from both plans and continues to follow the original format of the Merger
Restructuring Plan by focusing on global actions related to optimization of the supply chain and office facilities, including reductions of the
global workforce, plant and distribution center locations.

Restructuring charges within the Combined Plan were substantially completed during the fourth quarter of 2015. Certain immaterial
actions may continue into 2016. Ongoing cash payments will continue into 2016. Cumulative restructuring charges of $404 million ($310
million after tax), are materially consistent with the company’s expectation of $400 million ($300 million after tax).

The company recorded restructuring charges of $53.0 million ($44.2 million after tax), $73.5 million ($58.5 million after tax) and $63.6
million ($48.3 million after tax) during 2015, 2014 and 2013, respectively.

Restructuring charges and activity related to the Combined Plan since inception of the underlying actions include the following:

Combined Plan

Asset
Disposals

(1.2)
11.7
(10.5)
-
-

7.3
4.6
(11.9)
-
-

Other

Total

43.6
(30.3)
(4.3)
-
9.0

4.8
(7.8)
(0.4)
-
5.6

$
351.2
(261.0)
(14.8)
(1.9)
73.5

53.0
(42.1)
(11.7)
(7.5)
65.2

(millions)
2011 - 2014 Activity

Recorded net expense and accrual
Net cash payments
Non-cash net charges
Effect of foreign currency translation

Restructuring liability, December 31, 2014

2015 Activity

Recorded net expense and accrual
Net cash payments
Non-cash net charges
Effect of foreign currency translation

Restructuring liability, December 31, 2015

Employee
Termination
Costs

$
308.8
(242.4)
-
(1.9)
64.5

40.9
(38.9)
0.6
(7.5)
59.6

As shown in the previous table, net cash payments under the Combined Plan were $42.1 million during 2015 and $261.0 million from
2011 through 2014. The majority of cash payments under the Combined Plan are related to severance, with the current accrual expected
to be paid over a period of a few months to several quarters. The company anticipates the remaining cash expenditures will continue to
be funded from operating activities.

Non-restructuring special (gains) and charges

Champion acquisition costs

As a result of the Champion acquisition completed in 2013, the company incurred charges of $17.1 million ($10.7 million after tax), $19.9
million ($12.8 million after tax) and $88.8 million ($61.4 million), during 2015, 2014 and 2013, respectively.

Champion acquisition and integration related costs have been included as a component of cost of sales, special (gains) and charges and
net interest expense on the Consolidated Statement of Income. Amounts within cost of sales include the recognition of fair value step-up
in Champion international inventory, which is maintained on a FIFO basis, and Champion U.S. inventory which was associated with the
adoption of LIFO and integration into an existing LIFO pool. Amounts within special (gains) and charges include acquisition costs and
integration charges. Amounts within net interest expense include the interest expense through the April 2013 close date of the Champion
transaction of the company’s $500 million public debt issuance in December 2012 as well as amortizable fees to secure term loans and
short-term debt, all of which were initiated to fund the Champion acquisition.

Nalco merger and integration costs

As a result of the Nalco merger completed in 2011, the company incurred charges of $1.6 million ($1.3 million after tax), $8.5 million
($7.0 million after tax) and $18.6 million ($14.2 million after tax) during 2015, 2014 and 2013, respectively.

Nalco merger and integration charges have been included as a component of special (gains) and charges on the Consolidated
Statement of Income, and include merger and integration charges.

Venezuela

Venezuela is a country experiencing a highly inflationary economy as defined under U.S. GAAP. As a result, the U.S. dollar has been the
functional currency for the company’s subsidiaries in Venezuela. Prior to the deconsolidation of the company’s Venezuelan subsidiaries,
any currency remeasurement adjustments for non-U.S. dollar denominated monetary assets and liabilities held by the company’s
subsidiaries and other transactional foreign exchange gains and losses were reflected in earnings.

•

•
•

In 2013, the establishment a new foreign exchange mechanism known as SICAD 1. It operates similar to an auction system
and allows entities to exchange a limited number of bolivares for U.S. dollars at a bid rate established via weekly auctions. As
of November 30, 2015, the fiscal year end for the company’s international operations, the SICAD 1 exchange rate closed at
13.5 bolivares to 1 U.S. dollar.
In January 2014, the replacement of CADIVI with a new foreign currency administration, CENCOEX, which did not impact the
fixed currency exchange rate of 6.3 bolivares to 1 U.S. dollar.
In March 2014, the establishment of SICAD 2, which operated similar to SICAD 1.
In February 2015, SICAD 2 was replaced by SIMADI, a free-floating rate, with an exchange rate at November 30, 2015 of
199.5 bolivares to 1 U.S. dollar.

The exchange mechanisms discussed above have become increasingly illiquid, and the company believes that significant uncertainty
continues to exist regarding the exchange mechanisms in Venezuela.

As of the end of 2015, the increasingly restrictive exchange control regulations and reduced access to dollars through official currency
exchange markets have resulted in an other-than-temporary lack of exchangeability between the Venezuelan bolivar and the U.S. dollar.
This has significantly impacted the company’s ability to effectively manage its Venezuelan businesses, including restrictions on the ability
of its Venezuelan businesses to settle U.S. dollar-denominated obligations. The currency controls, coupled with importation restrictions,
workforce regulations, pricing constraints and local capitalization requirements have significantly influenced the company’s ability to
make and execute operational decisions regarding its businesses in Venezuela. The inability of the company’s Venezuelan businesses to
pay dividends, which remain subject to Venezuelan government approvals, has continued to restrict the company’s ability to realize the
earnings generated out of its Venezuelan businesses. The company expects the conditions described above will continue for the
foreseeable future. Further, during the fourth quarter of 2015, given the company’s high level of intercompany receivables, it pursued
cash basis transactions to limit additional investment.

As a result of these factors, the company concluded that effective as of the end of the fourth quarter of 2015, it does not meet the U.S.
GAAP accounting criteria for control over its Venezuelan subsidiaries. Therefore, the company deconsolidated its Venezuelan
subsidiaries effective as of the end of the fourth quarter of 2015, and began accounting for the investments in its Venezuelan subsidiaries
using the cost method of accounting, effective in the first quarter of 2016. This action resulted in a charge of $123.4 million ($80.9 million
after tax) during the fourth quarter of 2015, to reduce the value of the cost method investments to their estimated fair values, resulting in
a full impairment. The fourth quarter 2015 charge included $85 million of intercompany receivables, as well as net assets of the
company’s Venezuelan businesses and accumulated foreign currency translation.

Beginning in 2016, the company will exclude the operating results of its Venezuelan subsidiaries from its consolidated financial
statements and record revenue related to the sale of inventory to its Venezuelan subsidiaries to the extent that cash is received for those
sales. Any dividends received from the company’s Venezuelan subsidiaries will be recorded as income upon receipt of cash.

The decision to deconsolidate the company’s Venezuelan subsidiaries was preceded by the remeasurement of its Venezuelan Water
and Paper net assets during the second quarter of 2015 at the SIMADI exchange rate and the remeasurement of its Venezuelan Food &
Beverage and Institutional net assets and bolivar portion of its Venezuelan Energy net assets at the SIMADI exchange rate during the
third quarter of 2015. The combination of these actions resulted in charges of $165.9 million ($165.9 million after tax) through the first
three quarters of 2015. As a result of the ownership structure of the company’s Food & Beverage and Institutional operations in
Venezuela, the company reflected $11.1 million of the above charges as a component of net income (loss) attributable to noncontrolling
interest on the Consolidated Statement of Income, resulting in a net charge of $154.8 million.

Total charges during 2015 related to the company’s actions in Venezuela were $289.3 million ($246.8 million after tax), and $235.7
million net of the impact from noncontrolling interest.

During 2015, Venezuelan net sales represented approximately 2% of the company’s consolidated net sales and Venezuelan operating
income represented approximately 4% of the company’s consolidated operating income.

On February 8, 2013, the Venezuelan government devalued its currency from 4.3 bolivares to 1 U.S. dollar to 6.3 bolivars to 1 U.S.
dollar, resulting in a charge during 2013 of $22.7 million ($16.1 million after tax), due to the remeasurement of the local balance sheet.

Other special (gains) and charges

During 2015, the company recorded a charge of $24.7 million ($15.4 million after tax) related to a fixed asset impairment, consisting of
certain production equipment and buildings within one of the company’s U.S. plants, resulting from lower than anticipated production.
The fair value of the underlying assets was determined using the discounted cash flow method. Also during 2015, the company improved
estimates related to its inventory reserves and product costing, resulting in a net pre-tax charge of approximately $6 million. Separately,
the actions resulted in a charge of $20.6 million ($15.9 million after tax) related to inventory reserve calculations, partially offset by a gain
of $14.5 million ($12.2 million after tax) related to capitalization of certain costs components into inventory. These items have been
included as a component of cost of sales on the Consolidated Statement of Income.

Also during 2015, the company recognized a net charge of $56.3 million ($34.5 million after tax) primarily made up of litigation related
charges and the recognition of a loss on the sale of a portion of its Ecovation business, offset partially by the recovery of funds deposited
into escrow as part of the Champion transaction. The net charges have been included as a component of special (gains) and charges on
the Consolidated Statement of Income.

During 2014, the company recorded a special gain of $28.4 million ($23.3 million after tax), as a result of a favorable licensing settlement
and other settlement gains, the consolidation of Emochem and removal of the corresponding equity method investment, and the
disposition of a business. The net charges have been included as a component of special (gains) and charges on the Consolidated
Statement of Income.

4. ACQUISITIONS AND DISPOSITIONS

Acquisitions

Ecolab makes acquisitions that align with the company’s strategic business objectives. The assets and liabilities of the acquired entities
have been recorded as of the acquisition date, at their respective fair values, and are consolidated with the company. The purchase price
allocation is based on estimates of the fair value of assets acquired and liabilities assumed. The results of operations related to each
acquired entity have been included in the results of the company from the date each entity was acquired. The aggregate purchase price
of acquisitions has been reduced for any cash or cash equivalents acquired with the acquisition.

Subsequent Event Activity

In January 2016, the company purchased certain assets of Keedak Limited, an oilfield chemical distributor in Nigeria. With pre-acquisition
sales of approximately $15 million, the acquired business will become part of the company’s Global Energy reportable segment during
the first quarter of 2016.

2015 Activity

In December 2014, subsequent to the company’s fiscal year end for international operations, the company entered into a licensing
agreement and business acquisition with Aseptix Health Sciences NV. With pre-acquisition annual sales of less than $1 million, the
acquired business became part of the company’s Global Institutional reportable segment during the first quarter of 2015.

In December 2014, subsequent to the company’s fiscal year end for international operations, the company acquired Commercial Pest
Control Pty Ltd, an Australian commercial pest control company. With pre-acquisition annual sales of less than $1 million, the acquired
business became part of the company’s Other segment during the first quarter of 2015.

In April 2015, the company acquired certain assets from Clariant AG, based in Brazil and Argentina. With pre-acquisition annual sales of
approximately $4 million, the acquired business became part of the company’s Global Industrial reportable segment during the second
quarter of 2015. An immaterial portion of the transaction based in Colombia closed effective September 2015.

In June 2015, the company acquired Jianghai Environmental Protection Co. Ltd (“Jianghai”), an industrial water treatment company
headquartered in Changzhou, China. The purchase price of the acquired business was approximately $190 million. Significant assets
acquired include customer relationships, trademarks and other technology, with goodwill calculated as the excess of consideration
transferred over the fair value of identifiable net assets acquired. With pre-acquisition annual sales of approximately $90 million, the
acquired business became part of the company’s Global Industrial reportable segment during the third quarter of 2015. The company has
finalized the majority of the purchase price allocation adjustments as of December 31, 2015. Amounts for certain accounts receivable,
certain contingent liabilities, certain plant and equipment valuations, certain deferred tax assets and liabilities, and goodwill remain
subject to change. The company expects to finalize remaining purchase price allocation adjustments no later than one year from the
acquisition date.

In November 2015, the company completed the acquisition of the U.S. operations of Charlotte, N.C. - based Swisher Hygiene Inc.
(“Swisher”) for approximately $40 million. Swisher provides hygiene and sanitizing solutions for the foodservice, hospitality, retail and
healthcare markets. Sales in 2014 for the operations included in the agreement were approximately $176 million. The acquired business
became part of the company’s Global Institutional reportable segment in the fourth quarter of 2015. The purchase price allocation is
preliminary, pending completion of fair value determination of the acquired assets and liabilities. The company expects to finalize
remaining purchase price allocation adjustments no later than one year from the acquisition date.

In November 2015, the company acquired Ultra Fab Industries Ltd (“Ultrafab”) for approximately $115 million. Based in Calgary, Canada,
Ultrafab manufactures customized solutions and specialized chemical injection systems for the oil and gas industry. With pre-acquisition
sales of approximately $35 million, the acquired business became part of the company’s Global Energy reportable segment during the
fourth quarter of 2015. The purchase price allocation is preliminary, pending completion of fair value determination of the acquired assets
and liabilities. The company expects to finalize remaining purchase price allocation adjustments no later than one year from the
acquisition date.

2014 Activity

In December 2013, subsequent to the company’s fiscal year end for international operations, the company completed the acquisition of
AkzoNobel’s Purate business (“Purate”). Headquartered in Sweden, Purate specializes in global antimicrobial water treatment. Pre-
acquisition annual sales of the business were approximately $23 million. The acquired business became part of the company’s Global
Industrial reportable segment during the first quarter of 2014.

In March 2014, the company acquired AK Kraus & Hiller Schädlingsbekämpfung, one of Germany’s leading commercial pest elimination
service providers. Pre-acquisition annual sales of the business were approximately $4 million. The business became part of the
company’s Other segment during the second quarter of 2014.

In March 2014, the company purchased the remaining interest in a joint venture held in South Africa. The transaction was not significant
to the company’s operations.

In June 2014, the company purchased the remaining interest in a joint venture in Indonesia. The transaction was not significant to the
company’s operations.

In July 2014, the company obtained control of Emochem, a joint venture in the United Arab Emirates through an amendment in the
related shareholder agreements. This amendment resulted in the company consolidating the entity and removing the related equity
method investment. The transaction was not significant to the company’s operations. As discussed in Note 3, the company recognized a
$5.0 million gain during the third quarter of 2014 as a result of this transaction.

In July 2014, the company acquired the chemical division of AKJ Industries, a leading provider of chemical solutions in the coal industry
in the U.S. Pre-acquisition annual sales of the business were approximately $21 million. The business became part of the company’s
Global Industrial reportable segment during the third quarter of 2014.

In September 2014, the company acquired certain assets from Oksa Kimya Sanayii. Based in Turkey, the transaction was not significant
to the company’s operations.

In November 2014, the company acquired the dairy hygiene chemical businesses of EXL Laboratories, LLC and Hyprod Canada,
providers of cleaning and sanitizing products for use on dairy farms in the U.S. and Canada. Pre-acquisition annual sales of the
businesses were approximately $25 million. The business became part of the company’s Global Industrial reportable segment during the
fourth quarter of 2014.

2013 Activity

In January 2013, the company completed the acquisition of Mexico-based Quimiproductos S.A. de C.V. (“Quimiproductos”), a wholly-
owned subsidiary of Fomento Economico Mexicano, S.A.B. de C.V. (commonly known as FEMSA). Quimiproductos produces and
supplies cleaning, sanitizing and water treatment goods and services to breweries and beverage companies located in Mexico and
Central and South America. Pre-acquisition annual sales of the business were approximately $43 million. Approximately $8 million of the
purchase price was placed in an escrow account for potential indemnification purposes related to general representations and
warranties. During the third quarter of 2014, the escrow balance was paid to the seller. The business became part of the company’s
Global Industrial reportable segment during the first quarter of 2013.

In April 2013, the company completed the acquisition of Russia-based OOO Master Chemicals (“Master Chemicals”). Master Chemicals
sells oil field chemicals to oil and gas producers located throughout Russia and parts of the Ukraine. Pre-acquisition annual sales of the
business were approximately $29 million. Approximately $3 million of the purchase price was placed in an escrow account for
indemnification purposes related to general representations and warranties. During the fourth quarter of 2015, the escrow balance was
paid to the seller. The business became part of the company’s Global Energy reportable segment during the second quarter of 2013.

Acquisition Summary

The other acquisitions during 2015, 2014 and 2013 discussed above were not material to the company’s consolidated financial
statements; therefore, pro forma financial information has not been presented. The aggregate purchase price of acquisitions has been
reduced for any cash or cash equivalents acquired with the acquisitions. The components of the cash paid for acquisitions, including
acquisition related liability and contingent consideration activity for current and prior year transactions, during 2015, 2014 and 2013,
excluding the Champion transaction, are shown in the following table.

(millions)

2015

2014

2013

Net tangible assets acquired (liabilities assumed) including impact of joint

venture consolidation activity

Identifiable intangible assets
Customer relationships
Patents
Trademarks
Non-compete agreements
Other technology

Total intangible assets

Goodwill

Total aggregate purchase price

Acquisition related liabilities and contingent consideration
Net cash paid for acquisitions, including contingent consideration

$ 103.7

$ 18.2

$ (0.3)

65.6
6.7
13.5
4.2
8.7
98.7

136.9
339.3

(60.5)
$ 278.8

32.0
-
3.4
-
4.5
39.9

32.9
91.0

12.3
$ 103.3

58.8
1.4
-
-
1.0
61.2

41.7
102.6

11.3
$ 113.9

The acquisition related liability activity during 2015 is related to hold-back liabilities and contingent consideration as part of the Jianghai,
Swisher and UltraFab acquisitions, payable from the fourth quarter of 2015 through the second quarter of 2017. The 2014 and 2013
contingent consideration activity primarily relates to payments on legacy Nalco acquisitions.

The weighted average useful lives of identifiable intangible assets acquired, excluding the Champion transaction, was 10 years as of
both December 2015 and December 2014 and 13 years as of December 2013.

Champion Acquisition

On April 10, 2013, the company completed its acquisition of Champion, a global energy specialty products and services company
delivering its offerings to the oil and gas industry. The total fair value of cash and stock consideration transferred to acquire all of
Champion’s stock was approximately $2.1 billion. Champion’s sales for the business acquired by the company were approximately $1.3
billion in 2012. The business became part of the company’s Global Energy reportable segment in the second quarter of 2013.

The company funded the initial cash component of the merger consideration through a $900 million unsecured term loan, initiated in April
2013, the proceeds from the December 2012 issuance of $500 million 1.450% senior notes and commercial paper borrowings backed by
its syndicated credit facility. See Note 6 for further discussion on the company’s debt.

The company incurred certain acquisition related costs associated with the transaction that were expensed as incurred and are reflected
in the Consolidated Statement of Income. Amounts included in cost of sales relate to recognition of fair value step-up in Champion
international inventory, which is maintained on a FIFO basis and Champion U.S. inventory, which was associated with the adoption of
LIFO and integration into an existing LIFO pool. Amounts included in special (gains) and charges include acquisition costs, advisory and
legal fees and integration charges. Amounts included in net interest expense include the interest expense through the close date of the
Champion transaction of the company’s $500 million public debt issuance in December 2012 as well as amortizable fees to secure term
loans and short-term debt, all of which were initiated to fund the Champion acquisition.

During the first quarter of 2014 purchase price allocations were finalized, resulting in net adjustments of $16.9 million to the value of
Champion assets acquired and liabilities assumed, with an offset to goodwill. The adjustments primarily related to estimated liabilities,
updated property, plant and equipment values and deferred taxes. As the adjustments were not significant, they were recorded in 2014
upon identification.

In accordance with the acquisition agreement, except under limited circumstances, the company was required to pay an additional
amount in cash, up to $100 million in the aggregate, equal to 50% of the incremental tax on the merger consideration as a result of
increases in applicable gains and investment taxes after December 31, 2012. In January 2014, in accordance with the above discussion,
an additional payment of $86.4 million was made to the acquired entity’s former stockholders.

The company deposited approximately $100 million of the original Champion purchase price consideration in an escrow account to fund
post-closing adjustments to the consideration, and covenant and other indemnification obligations of the acquired entities’ former
stockholders for a period of two years following the effective date of the acquisition. During 2015, the company reached a settlement of
approximately $35 million regarding the indemnification obligations of the acquired entities’ former stockholders. The recovered funds
adjusted certain other asset and other liability positions of approximately $30 million on the company’s Consolidated Balance Sheet.
Approximately $4 million was reflected in selling, general and administrative expenses, with the remainder recorded in special (gains)
and charges, both within the Consolidated Statement of Income.

Dispositions

In November 2015, the company sold an immaterial business in Europe that was part of the company’s Global Energy reportable
segment.

In June 2015, the company sold a portion of its Ecovation business, resulting in a loss of $13.7 million ($8.6 after tax), recorded in special
(gains) and charges. The business was part of the company’s Global Industrial reportable segment.

In April 2014, the company sold an immaterial business in Italy that was part of the company’s Global Institutional reportable segment.

In November 2014, the company sold an immaterial business in New Zealand that was part of the company’s Other segment.

In August 2013, the company sold substantially all the equipment design and build business of its Mobotec air emissions control
business. The Mobotec equipment design and build business had 2012 sales of approximately $27 million, which were within the
company’s Global Industrial reportable segment. The company has retained Mobotec’s chemical business.

2015

2014

$ 2,465.5
(75.3)
$ 2,390.2

$ 929.6
440.9
1,370.5
17.7
$ 1,388.2

$ 94.6
137.6
58.7
35.4
$ 326.3

$ 223.7
914.9
81.1
1,896.7
1,988.1
479.9
371.1
5,955.5
(2,727.2)
$ 3,228.3

$ 2,704.2
(77.5)
$ 2,626.7

$ 1,044.1
447.3
1,491.4
(24.5)
$ 1,466.9

$ 104.7
133.0
57.4
71.5
$ 366.6

$ 199.9
759.9
84.6
1,858.1
1,917.5
443.9
277.5
5,541.4
(2,490.8)
$ 3,050.6

$ 1,230.0

$ 3,232.3
303.6
433.4
213.5
4,182.8

(945.1)
(104.7)
(129.0)
(124.8)
$ 4,109.2

$ 58.3
28.0
279.6
$ 365.9

$ 3,385.7
311.1
434.5
214.0
4,345.3

(794.6)
(91.5)
(124.9)
(107.5)
$ 4,456.8

$ 71.5
15.9
262.6
$ 350.0

5. BALANCE SHEET INFORMATION

December 31, (millions)
Accounts receivable, net
Accounts receivable
Allowance for doubtful accounts

Total

Inventories

Finished goods
Raw materials and parts
Inventories at FIFO cost
FIFO cost to LIFO cost difference

Total

Other current assets
Prepaid assets
Taxes receivable
Derivative assets
Other current assets

Total

Property, plant and equipment, net

Land
Buildings and improvements
Leasehold improvements
Machinery and equipment
Merchandising and customer equipment
Capitalized software
Construction in progress

Accumulated depreciation

Total

Other intangible assets, net

Cost of intangible assets not subject to amortization:

Trade names

Cost of intangible assets subject to amortization:

Customer relationships
Trademarks
Patents
Other technology

Accumulated amortization
Customer relationships
Trademarks
Patents
Other technology
Total

Other assets

Deferred income taxes
Pension
Other

Total

December 31, (millions)
Other current liabilities

Discounts and rebates
Dividends payable
Interest payable
Taxes payable, other than income
Derivative liabilities
Restructuring
Other

Total

Other liabilities

Deferred income taxes
Income taxes payable - noncurrent
Restructuring
Other

Total

Accumulated other comprehensive loss

Unrealized gain (loss) on derivative financial instruments, net of tax
Unrecognized pension and postretirement benefit expense, net of tax
Cumulative translation, net of tax

Total

6. DEBT AND INTEREST

2015

$ 270.5
103.6
24.2
110.5
31.5
73.9
334.1
$ 948.3

$ 1,281.2
81.2
16.2
141.0
$ 1,519.6

$ 9.0
(486.9)
(945.4)
$ (1,423.3)

2014

$ 255.4
99.1
18.9
122.6
34.0
66.3
255.4
$ 851.7

$ 1,415.8
86.4
9.3
134.0
$ 1,645.5

$ (2.7)
(552.5)
(396.7)
$ (951.9)

The following table provides the components of the company’s short-term debt obligations, along with applicable interest rates as of
December 31, 2015 and 2014:

(millions, except interest rates)

Short-term debt

Commercial paper
Notes payable
Long-term debt, current maturities

Total

2015

2014

Carrying
Value

$ 605.0
30.9
1,569.4
$ 2,205.3

Average
Interest
Rate

0.70 %
3.33 %

Carrying
Value

$ 887.8
62.1
754.9
$ 1,704.8

Average
Interest
Rate

0.46 %
9.65 %

As of December 2015, the company had in place a $2.0 billion multi-year credit facility, which expires in December 2019. The credit
facility has been established with a diverse syndicate of banks and supports the company’s $2.0 billion U.S. commercial paper program
and the company’s $200 million European commercial paper program. Combined borrowing under these two commercial paper
programs may not exceed $2.0 billion. The company’s U.S. commercial paper program, as shown in the previous table, had $605 million
and $888 million outstanding as of December 31, 2015 and 2014, respectively. The company had no commercial paper outstanding
under its European program at December 31, 2015 or 2014.

As of December 31, 2015, the company’s short-term borrowing program was rated A-2 by Standard & Poor’s and P-2 by Moody’s.

The following table provides the components of the company’s long-term debt obligations, along with applicable interest rates as of
December 31, 2015 and 2014:

(millions, except interest rates)
Long-term debt
Description / 2015 Principal Amount

Seven year 2008 senior notes ($0 million)
Three year 2012 senior notes ($0 million)
Term loan ($125 million)
Series B private placement senior notes (€175

million)

Five year 2011 senior notes ($1.25 billion)
Five year 2012 senior notes ($500 million)
Three year 2015 senior notes ($300 million)
Series A private placement senior notes ($250

million)

Five year 2015 senior notes ($300 million)
Ten year 2011 senior notes ($1.25 billion)
Series B private placement senior notes ($250

million)

Ten year 2015 senior notes (€575 million)
Thirty year 2011 senior notes ($750 million)
Capital lease obligations
Other

Total debt

Long-term debt, current maturities

Total long-term debt

Term Loans

Maturity
by Year

Carrying

Value

2015
Average
Interest
Rate

Effective
Interest
Rate

Carrying

Value

2014

Average
Interest
Rate

Effective
Interest
Rate

2015
2015
2016

2016
2016
2017
2018

2018
2020
2021

2023
2025
2041

- %
- %
1.40 %

4.73 %
3.08 %
0.82 %
0.98 %

4.32 %
2.30 %
4.43 %

4.36 %
2.99 %
5.56 %

$ -
-
125.0

184.9
1,247.3
497.9
297.8

- %
- %
1.40 %

4.59 %
3.00 %
1.45 %
1.55 %

248.6
298.1
1,243.7

3.69 %
2.25 %
4.35 %

4.32 %
2.63 %
5.50 %

249.1
601.8
738.3
5.6
91.5
5,829.6
(1,569.4)
$ 4,260.2

5.03 %
1.02 %
1.37 %

4.73 %
3.20 %
1.10 %
- %

5.22 %
- %
4.43 %

4.36 %
- %
5.56 %

$ 250.0
499.4
399.7

4.88 %
1.00 %
1.37 %

217.7
1,245.3
495.0
-

4.59 %
3.00 %
1.45 %
- %

249.3
-
1,242.7

3.69 %
- %
4.35 %

4.32 %
- %
5.50 %

249.0
-
737.8
9.3
3.1
5,598.3
(754.9)
$ 4,843.4

In November 2012, the company entered into a $900 million term loan credit agreement with various banks. In April 2013, in connection
with the close of the Champion transaction, the company initiated term loan borrowings of $900 million. Under the agreement, the term
loan bears interest at a floating base rate plus a credit rating based margin. The term loan can be repaid in part or in full at any time
without penalty, but in any event must be repaid in full by April 2016. The company repaid $275 million, $400 million and $100 million of
term loan borrowings during 2015, 2014 and 2013, respectively. In January 2016, subsequent to the company’s year end, it repaid the
remaining $125 million term loan.

Public Notes

In January 2016, subsequent to the company’s year end, it issued $800 million of debt securities consisting of a $400 million aggregate
principal three year fixed rate note with a coupon rate of 2.00% and a $400 million aggregate principal seven year fixed rate note with a
coupon rate of 3.25%. The proceeds were used to repay a portion of the company’s outstanding commercial paper, repay the remaining
term loan balance, and for general corporate purposes.

In July 2015, the company issued a €575 million aggregate principal ten year fixed rate note with a coupon rate of 2.625% ($602 million
as of December 31, 2015). The proceeds were used to repay a portion of the company’s outstanding commercial paper.

In January 2015, the company issued $600 million of debt securities consisting of a $300 million aggregate principal three year fixed rate
note with a coupon rate of 1.55% and a $300 million aggregate principal five year fixed rate note with a coupon rate of 2.25%. The
proceeds were used to repay a portion of the company’s outstanding commercial paper and for general corporate purposes.

In December 2012, the company issued a $500 million aggregate principal five year fixed rate note with a coupon rate of 1.45%. The
proceeds were used to finance a portion of the cash consideration paid in connection with the Champion acquisition.

In August 2012, the company issued a $500 million aggregate principal three year fixed rate note with a coupon rate of 1.00%. The
proceeds were used to refinance outstanding commercial paper and for general corporate purposes. The debt was repaid at maturity in
August 2015.

In December 2011, the company issued $3.75 billion aggregate principal of debt securities. The offering was a multi-tranche transaction
consisting of three, five, ten and thirty year maturities. Interest rates range from 2.375% to 5.50%. The proceeds were used to repay
outstanding commercial paper, which was issued to fund a portion of the cash component of the Nalco merger, repay the Nalco term
loans and fund share repurchases. The $500 million 2.375% notes were repaid at maturity in December 2014.

In February 2008, the company issued a $250 million aggregate principal seven year fixed rate note with a coupon rate of 4.875%. The
proceeds were used to refinance outstanding commercial paper and for general corporate purposes. The $250 million 4.875% notes
were repaid at maturity in February 2015.

The series of notes issued by the company in January 2016, July 2015, January 2015, December 2012 and December 2011, pursuant to
public debt offerings (the “Public Notes”) may be redeemed by the company at its option at redemption prices that include accrued and
unpaid interest and a make-whole premium. Upon the occurrence of a change of control accompanied by a downgrade of the Public
Notes below investment grade rating, within a specified time period, the company will be required to offer to repurchase the Public Notes
at a price equal to 101% of the aggregate principal amount thereof, plus any accrued and unpaid interest to the date of repurchase.

The Public Notes are senior unsecured and unsubordinated obligations of the company and rank equally with all other senior and
unsubordinated indebtedness of the company.

Private Notes

In October 2011, the company entered into a Note Purchase Agreement to issue and sell $500 million aggregate principal private
placement senior notes, split into two series: a $250 million aggregate principal seven year fixed rate note with a coupon rate of 3.69%
and a $250 million aggregate principal twelve year fixed rate note with a coupon rate of 4.32%. Both series of the notes were funded in
November 2011. The proceeds were used for general corporate purposes, including partially funding the Nalco merger.

In July 2006, the company entered into a Note Purchase Agreement to issue a €175 million aggregate principal ($185 million as of
December 31, 2015) ten year private placement fixed rate note with a coupon rate of 4.585%. The notes were funded in December 2006.

The series of notes issued by the company in December 2006 and November 2011 pursuant to private debt offerings (the “Private
Notes”) may be redeemed by the company at its option at redemption prices that include accrued and unpaid interest and a make-whole
premium. Upon the occurrence of specified changes of control involving the company, the company will be required to offer to
repurchase the Private Notes at a price equal to 100% of the aggregate principal amount thereof, plus any accrued and unpaid interest to
the date of repurchase. Additionally, the company will be required to make a similar offer to repurchase the Private Notes upon the
occurrence of specified merger events or asset sales involving the company, when accompanied by a downgrade of the Private Notes
below investment grade rating, within a specified time period.

The Private Notes are unsecured senior obligations of the company and rank equal in right of payment with all other senior indebtedness
of the company. The Private Notes shall be unconditionally guaranteed by subsidiaries of the company in certain circumstances, as
described in the note purchase agreements as amended.

Other Debt

During 2015, the company acquired the beneficial interest in the trust owning the leased Naperville facility resulting in debt assumption of
$100.2 million and the addition of $135.2 million in property, plant and equipment. Certain administrative, divisional, and research and
development personnel are based at the Naperville facility. Cash paid as a result of the transaction was $19.8 million. The assumed debt
is reflected within the "Other" line of the table above. The assumption of debt and the majority of the property, plant and equipment
addition represented non-cash financing and investing activities, respectively.

Covenants and Future Maturities

The company is in compliance with all covenants under the company’s outstanding indebtedness at December 31, 2015.

As of December 31, 2015, the aggregate annual maturities of long-term debt for the next five years were:

(millions)
2016
2017
2018
2019
2020

Net Interest Expense

$ 1,569
510
558
12
310

Interest expense and interest income incurred during 2015, 2014 and 2013 were as follows:

(millions)
Interest expense
Interest income
Interest expense, net

2015
$ 253.7
(10.1)
$ 243.6

2014
$ 268.0
(11.4)
$ 256.6

2013
$ 272.8
(10.5)
$ 262.3

Interest expense generally includes the expense associated with the interest on the company’s outstanding borrowings. Interest expense
also includes the amortization of debt issuance costs and debt discounts, which are both recognized over the term of the related debt.

7. FAIR VALUE MEASUREMENTS

The company’s financial instruments include cash and cash equivalents, investments held in rabbi trusts, accounts receivable, accounts
payable, contingent consideration obligations, commercial paper, notes payable, foreign currency forward contracts, interest rate swap
contracts and long-term debt.

Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants as of the measurement date. A hierarchy has been established for inputs used in measuring fair value that maximizes
the use of observable inputs and minimizes the use of unobservable inputs by requiring the most observable inputs be used when
available. The hierarchy is broken down into three levels:

Level 1 - Inputs are quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities.

Level 2 - Inputs include observable inputs other than quoted prices in active markets.

Level 3 - Inputs are unobservable inputs for which there is little or no market data available.

The carrying amount and the estimated fair value for assets and liabilities measured on a recurring basis were:

December 31 (millions)

Assets:

Investments held in rabbi trusts
Foreign currency forward contracts
Contingent consideration

Liabilities:

Foreign currency forward contracts
Interest rate swap contracts
Contingent consideration

December 31 (millions)

Assets:

Investments held in rabbi trusts
Foreign currency forward contracts
Contingent consideration

Liabilities:

Foreign currency forward contracts
Interest rate swap contracts

Contingent consideration

Carrying
Amount

$ 2.0
111.2
0.3

35.9
5.4
15.9

Carrying
Amount

$ 3.4
75.5
0.3

27.9
24.2

1.6

2015
Fair Value Measurements
Level 2

Level 1

Level 3

$ 2.0
-
-

-
-
-

$ -
111.2
-

35.9
5.4
-

$ -
-
0.3

-
-
15.9

2014

Fair Value Measurements

Level 1

Level 2

Level 3

$ 3.4
-
-

-
-

$ -
75.5
-

27.9
24.2

$ -
-
0.3

-
-

1.6

The carrying value of investments held in rabbi trusts is at fair value, which is determined using quoted prices in active markets, and is
classified within level 1. The carrying value of foreign currency forward contracts is at fair value, which is determined based on foreign
currency exchange rates as of the balance sheet date, and is classified within level 2. The carrying value of interest rate swap contracts
is at fair value, which is determined based on current interest rates and forward interest rates as of the balance sheet date and is
classified within level 2. For purposes of fair value disclosure above, derivative values are presented gross. See further discussion of
gross versus net presentation of the company's derivatives within Note 8.

Contingent consideration obligations are recognized and measured at fair value at the acquisition date. Contingent consideration is
classified within level 3 as the underlying fair value is measured based on the probability-weighted present value of the consideration
expected to be transferred. The consideration expected to be transferred is based on the company’s expectations of various financial
measures. The ultimate payment of contingent consideration could deviate from current estimates based on the actual results of these
financial measures.

Changes in the fair value of contingent consideration obligations during 2015 and 2014 were as follows:

(millions)
Contingent consideration at beginning of year

Amount recognized at transaction date
Losses (gains) recognized in earnings
Settlements
Foreign currency translation

Contingent consideration at end of year

2015

$ 1.3
16.0
(0.2)
(1.0)
(0.5)
$ 15.6

2014

$ 16.4
(0.4)
(0.4)
(14.3)
-
$ 1.3

The carrying values of accounts receivable, accounts payable, cash and cash equivalents, commercial paper and notes payable
approximate fair value because of their short maturities, and as such are classified within level 1.

The fair value of long-term debt is based on quoted market prices for the same or similar debt instruments. The carrying amount and the
estimated fair value of long-term debt, including current maturities, held by the company were:

December 31, (millions)

Long-term debt

(including current maturities)

2015

2014

Carrying
Amount

Fair
Value

Carrying
Amount

Fair
Value

$ 5,829.6

$ 6,113.6

$ 5,598.3

$ 5,980.9

8. DERIVATIVES AND HEDGING TRANSACTIONS

The company uses foreign currency forward contracts, interest rate swaps and foreign currency debt to manage risks associated with
foreign currency exchange rates, interest rates and net investments in foreign operations. The company does not hold derivative financial
instruments of a speculative nature or for trading purposes. The company records derivatives as assets and liabilities on the balance
sheet at fair value. Changes in fair value are recognized immediately in earnings unless the derivative qualifies and is designated as a
hedge. Cash flows from derivatives are classified in the statement of cash flows in the same category as the cash flows from the items
subject to designated hedge or undesignated (economic) hedge relationships. The company evaluates hedge effectiveness at inception
and on an ongoing basis. If a derivative is no longer expected to be effective, hedge accounting is discontinued. Hedge ineffectiveness, if
any, is recorded in earnings.

The company is exposed to credit risk in the event of nonperformance of counterparties for foreign currency forward exchange contracts
and interest rate swap agreements. The company monitors its exposure to credit risk by using credit approvals and credit limits and by
selecting major international banks and financial institutions as counterparties. The company does not anticipate nonperformance by any
of these counterparties, and therefore, recording a valuation allowance against the company’s derivative balance is not considered
necessary.

Cash Flow Hedges

The company utilizes foreign currency forward contracts to hedge the effect of foreign currency exchange rate fluctuations on forecasted
foreign currency transactions, including inventory purchases and intercompany royalty, management fee and other payments. These
forward contracts are designated as cash flow hedges. The effective portions of the changes in fair value of these contracts are recorded
in accumulated other comprehensive income (“AOCI”) until the hedged items affect earnings, at which time the gain or loss is reclassified
into the same line item in the Consolidated Statement of Income as the underlying exposure being hedged. All cash flow hedged
transactions are forecasted to occur within the next three years.

The company occasionally enters into forward starting interest rate swap agreements to manage interest rate exposure.

During 2015, the company entered into a series of forward starting interest rate swap agreements to hedge against changes in interest
rates that could impact future debt issuances. The agreements were designated and effective as cash flow hedges of the expected
interest payments related to the anticipated future debt issuances. The underlying net gain recognized during 2015 was recorded within
AOCI. Certain agreements closed in January 2016, in conjunction with the debt issuance discussed in Note 6.

During 2014, the company entered into a series of forward starting interest rate swap agreements in connection with both its U.S. public
debt issuance completed in January 2015 and its euro public debt issuance completed in July 2015. The agreements closed in January
2015 and July 2015, in conjunction with the respective U.S. and euro debt issuances discussed in Note 6. During 2011, the company
entered into and subsequently closed a series of forward starting interest rate swap agreements in connection with the issuance of its
private placement debt. During 2006, the company entered into and subsequently closed two forward starting interest rate swap
agreements related to the issuance of its senior euro notes.

The 2015, 2014, 2011 and 2006 forward starting interest rate swap agreements were designated and effective as cash flow hedges of
the expected interest payments related to the debt issuances. The amounts recorded in AOCI for the respective transactions are
recognized as part of interest expense over the remaining life of the notes as the forecasted interest transactions occur.

The impact on AOCI and earnings from derivative contracts that qualified as cash flow hedges was as follows:

(millions)
Unrealized gain (loss) recognized into AOCI (effective portion)

2015

2014

2013

Foreign currency forward contracts
Interest rate swap contracts

Gain (loss) recognized in income (effective portion)

Foreign currency forward contracts

Interest rate swap contracts

AOCI (equity)
AOCI (equity)
Total

Cost of sales
SG&A

Interest expense, net

Total

$ 68.4
3.6
72.0

30.9
24.7
2.9
58.5

Interest expense, net

Total

(5.5)
$ 53.0

$ 26.7
(22.1)
4.6

6.1
1.5
-
7.6

(4.1)
$ 3.5

$ 4.7
-
4.7

(0.8)
-
-
(0.8)

(4.1)
$ (4.9)

Gains and losses recognized in income related to the ineffective portion of the company’s cash flow hedges were insignificant during
2015, 2014 and 2013.

Fair Value Hedges

The company manages interest expense using a mix of fixed and floating rate debt. To help manage exposure to interest rate
movements and to reduce borrowing costs, the company may enter into interest rate swaps under which the company agrees to
exchange, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed upon
notional principal amount. The mark-to-market of these fair value hedges is recorded as gains or losses in interest expense and is offset
by the gain or loss of the underlying debt instrument, which also is recorded in interest expense. These fair value hedges are highly
effective and thus, there is no impact on earnings due to hedge ineffectiveness.

In January 2015, the company entered into interest rate swap agreements that converted its $300 million 1.55% debt, its $250 million
3.69% debt and a portion of its $1.25 billion 3.00% debt from fixed rates to floating interest rates. The interest rate swaps were
designated as fair value hedges.

In May 2014, the company entered into an interest rate swap agreement that converted its $500 million 1.45% debt from a fixed rate to a
floating or variable interest rate. The interest rate swap was designated as a fair value hedge.

The impact on earnings from derivative contracts that qualified as fair value hedges was as follows:

(millions)
Gain (loss) on derivative recognized income

Interest rate swap

Gain (loss) on hedged item recognized income

2015

2014

Interest expense, net

$ 0.0

$ (2.1)

2013

$ -

Interest rate swap

Interest expense, net

$ (0.0)

$ 2.1

$ -

In January 2016, subsequent to the company’s year end, it entered into an interest rate swap agreement that converted its $400 million
2.00% debt from a fixed rate to a floating rate. The interest rate swap was designated as a fair value hedge.

Net Investment Hedges

The company designates its outstanding €175 million and €575 million (total of $787 million as of year-end 2015) senior notes and
related accrued interest as a hedge of existing foreign currency exposures related to net investments the company has in certain euro
denominated functional currency subsidiaries.

In addition to the euro-denominated debt designated as net investment hedges, the company also occasionally enters into forward
contracts to hedge an additional portion of its net investment in euro denominated functional currency subsidiaries. During 2014, the
company entered into forward contracts totaling €570 million, of which €75 million was closed during 2014 and €495 million was closed
during 2015. During 2015, the company entered into forward contracts totaling €490 million, of which €105 million was closed during
2015. Also during 2015, the company de-designated €360 million of the forward contracts opened in 2015, and initiated undesignated
hedges for €360 million to offset the impact of the original €360 million forward contracts.

The revaluation gains and losses on the euro notes and of the forward contracts, which are designated and effective as hedges of the
company’s net investments, have been included as a component of the cumulative translation adjustment account.

Total revaluation gains and losses related to the euro notes and forward contracts charged to shareholders’ equity were as follows:

(millions)
Revaluation gains (losses), net of tax

2015
$ 101.3

2014
$ 34.7

2013
$ (11.4)

Derivatives Not Designated as Hedging Instruments

The company also uses foreign currency forward contracts to offset its exposure to the change in value of certain foreign currency
denominated assets and liabilities held at foreign subsidiaries, primarily receivables and payables, which are remeasured at the end of
each period. Although the contracts are effective economic hedges, they are not designated as accounting hedges. Therefore, changes
in the value of these derivatives are recognized immediately in earnings, thereby offsetting the current earnings effect of the related
foreign currency denominated assets and liabilities.

The impact on earnings from derivative contracts that are not designated as hedging instruments was as follows:

(millions)
Gain (loss) recognized in income

Foreign currency forward contracts

SG&A

Interest expense, net

Total

2015

2014

2013

$ 15.9
(8.6)
$ 7.3

$ 8.6
(9.0)
$ (0.4)

$ (1.4)
(6.6)
$ (8.0)

The amounts recognized in SG&A above offset the earnings impact of the related foreign currency denominated assets and liabilities.
The amounts recognized in interest expense above represent the component of the hedging gains (losses) attributable to the difference
between the spot and forward rates of the hedges as a result of interest rate differentials.

Derivative Summary

Certain of the company’s derivative transactions are subject to master netting arrangements that allow the company to net settle
contracts with the same counterparties. These arrangements generally do not call for collateral and as of the applicable dates presented
below, no cash collateral had been received or pledged related to the underlying derivatives.

During 2015, the company made an accounting policy election regarding the presentation of derivatives subject to master netting
arrangements with the same counterparties within its Consolidated Balance Sheet. The company previously presented all derivative
positions on a gross basis and began presenting derivatives subject to master netting arrangements with the same counterparties on a
net basis during the first quarter of 2015. The company reclassified the presentation of derivatives subject to master netting
arrangements with the same counterparty as of December 31, 2014 to conform to the new accounting policy which resulted in a
reduction in other current assets and other current liabilities of $18.1 million. The immaterial reclassification had no impact on previously
reported earnings or cash flows.

The respective net amounts are included in other current assets, other non-current assets and other current liabilities on the
Consolidated Balance Sheet.

(millions)

Asset Derivatives

2015

2014

Liability Derivatives
2015
2014

Gross value of derivatives
Gross amounts offset in the Consolidated Balance Sheet
Net value of derivatives presented in the Consolidated Balance Sheet

$ 111.2
(9.8)
$ 101.4

$ 75.5
(18.1)
$ 57.4

$ 41.3
(9.8)
$ 31.5

$ 52.1
(18.1)
$ 34.0

The following table summarizes the gross fair value of the company’s outstanding derivatives.

(millions)
Derivatives designated as hedging instruments:

Foreign currency forward contracts
Interest rate swap contracts

Derivatives not designated as hedging instruments:

Foreign currency forward contracts

Total

Asset Derivatives

Liability Derivatives

2015

2014

2015

2014

$ 70.2
-

41.0
$ 111.2

$ 17.9
-

57.6
$ 75.5

$ 3.2
5.4

32.7
$ 41.3

$ 0.6
24.2

27.3
$ 52.1

The following table summarized the notional values of the company’s outstanding derivatives.

(millions)

Foreign currency forward contracts

Interest rate swap agreements

Net investment hedge contracts (a)

Notional Values

2015

2014

$ 4,000

$ 1,675

€

$ 2,800

€

725

400

495

(a) The net investment hedge contracts exclude the company’s euro denominated debt.

9. OTHER COMPREHENSIVE INCOME (LOSS) INFORMATION

Comprehensive income (loss) includes net income, foreign currency translation adjustments, unrecognized gains and losses on
securities, defined benefit pension and postretirement plan adjustments, gains and losses on derivative instruments designated and
effective as cash flow hedges and non-derivative instruments designated and effective as foreign currency net investment hedges that
are charged or credited to the accumulated other comprehensive loss account in shareholders’ equity.

The following table provides other comprehensive income (loss) information related to the company’s derivatives and hedging
instruments and pension and postretirement benefits. See Note 8 for additional information related to the company’s derivatives and
hedging transactions. See Note 16 for additional information related to the company’s recognition of net actuarial losses and amortization
of prior service benefits.

(millions)
Derivative & Hedging Instruments

Unrealized gains (losses) on derivative & hedging instruments

Amount recognized in AOCI

(Gains) losses reclassified from AOCI into income

Cost of sales
SG&A
Interest expense, net

Translation & other insignificant activity
Tax impact
Net of tax

Pension & Postretirement Benefits
Amount recognized in AOCI

2015

2014

2013

$ 72.0

$ 4.6

(30.9)
(24.7)
2.6
(53.0)
1.7
(9.0)

$ 11.7

(6.1)
(1.5)
4.1
(3.5)
-
2.8
$ 3.9

$ 4.7

0.8
-
4.1
4.9
0.9
(3.5)
$ 7.0

Current period net actuarial income (loss) and prior service costs

$ 2.8

$ (517.7)

$ 528.2

Amount reclassified from AOCI

Amortization of net actuarial loss and prior service costs and benefits adjustments
Reclassification associated with Venezuelan entities

Tax impact
Net of tax

52.0
3.5
58.3
(20.3)
$ 38.0

17.5
-

(500.2)
156.9
$ (343.3)

72.9
-
601.1
(218.2)
$ 382.9

The derivative (gains) losses reclassified from AOCI into income, net of tax, were $(40.6) million, $(3.0) million and $3.2 million in 2015,
2014 and 2013, respectively. The pension and postretirement losses reclassified from AOCI into income, net of tax, were $35.8 million,
$12.1 million and $46.4 million in 2015, 2014 and 2013, respectively.

10. SHAREHOLDERS’ EQUITY

Authorized common stock, par value $1.00 per share, was 800 million shares at December 31, 2015, 2014 and 2013. Treasury stock is
stated at cost. Dividends declared per share of common stock were $1.340 for 2015, $1.155 for 2014 and $0.965 for 2013.

The company has 15 million shares, without par value, of authorized but unissued and undesignated preferred stock. The company’s
former shareholder rights agreement was amended in December 2012 and the rights agreement was terminated as of December 31,
2012. Prior to termination of the rights agreement, 0.4 million shares of preferred stock were designated as Series A Junior Participating
Preferred Stock and were reserved for issuance in connection with the rights agreement, with the remaining 14.6 million shares of
preferred stock being undesignated. Following termination of the rights agreement, a Certificate of Elimination of the Series A Junior
Participating Preferred Stock was filed on January 2, 2013 with the Delaware Secretary of State to restore the 0.4 million shares
designated as Series A Junior Participating Preferred Stock to the status of undesignated preferred stock.

Share Repurchases

In August 2011, the Finance Committee of the company’s Board of Directors, via delegation by the company’s Board of Directors,
authorized the repurchase of 10 million common shares, including shares to be repurchased under Rule 10b5-1, which was contingent
upon completion of the merger with Nalco. In February 2015, the company’s Board of Directors authorized the repurchase of up to 20
million additional shares of its common stock, including shares to be repurchased under Rule 10b5-1. As of December 31, 2015,
22,898,559 shares remained to be repurchased under the company’s repurchase authorization. The company intends to repurchase all
shares under its authorization, for which no expiration date has been established, in open market or privately negotiated transactions,
subject to market conditions.

In February 2015, under the existing repurchase authorization discussed above, the company announced a $1.0 billion share repurchase
program, of which $382 million remains to be repurchased as of December 31, 2015. The company expects the program to be completed
by mid-2016.

As part of this program, the company entered into an accelerated stock repurchase (“ASR”) agreement with a financial institution to
repurchase $300 million of its common stock. Under the ASR, the company received 2,066,293 shares of its common stock in February
2015, which was approximately 80% of the total number of shares the company expected to be repurchased under the ASR, based on
the price of the company’s common stock at that time.

The final per share purchase price and the total number of shares to be repurchased under the ASR agreement generally were based on
the volume-weighted average price of the company’s common stock during the term of the agreement. Upon final settlement of the ASR
agreement, under certain circumstances, the financial institution was obligated to deliver additional shares to the company or the
company was obligated to deliver additional shares of common stock or make a cash payment, at the company’s election, to the financial
institution. In connection with the finalization of the ASR in April 2015, the company received an additional 555,511 shares of common
stock. All shares acquired under the ASR agreement were recorded as treasury stock.

From February 2015 through settlement in April 2015, the ASR was not dilutive to the company’s earnings per share calculation.
Additionally, the ASR agreement did not trigger the two-class earnings per share methodology. From February 2015 through settlement
in April 2015, the unsettled portion of the ASR met the criteria to be accounted for as a forward contract indexed to the company’s stock
and qualified as an equity transaction.

The initial delivery of shares, as well as the additional receipt of shares at settlement resulted in a reduction to the company’s common
stock outstanding used to calculate earnings per share, the impact of which was not material.

In accordance with its share repurchase program through open market or private purchases, including the ASR discussed above, the
company reacquired 6,267,699 shares, 3,547,334 shares and 3,096,464 shares of its common stock in 2015, 2014 and 2013,
respectively. The number of shares repurchased in 2013 includes 1,258,115 shares the company repurchased from the Champion
escrow account, with the cash paid to the beneficial shareholders deposited back into escrow. See further discussion of the Champion
escrow settlement in Note 4.

In February 2016, separate from the ASR discussed above, the company entered into an ASR agreement with a financial institution to
repurchase $300 million of its common stock.

The company also reacquired 398,704, 489,854 and 346,941 shares withheld for taxes related to the exercise of stock options and the
vesting of stock awards and units in 2015, 2014 and 2013, respectively.

Champion Acquisition

On April 10, 2013, the company issued 6,596,444 shares of common stock for the stock consideration portion of the Champion
acquisition. Of the total shares issued, the company deposited 1,258,115 shares, or approximately $100 million of the total consideration,
into an escrow fund to satisfy adjustments to the consideration and indemnification obligations of the acquired company’s stockholders.
Further information related to the acquisition of Champion is included in Note 4.

11. EQUITY COMPENSATION PLANS

The company measures compensation expense for share-based awards at fair value at the date of grant and recognizes compensation
expense over the service period for awards expected to vest. The majority of grants to retirement eligible recipients (age 55 with required
years of service) are attributed to expense using the non-substantive vesting method and are fully expensed over a six month period
following the date of grant. In addition, the company includes a forfeiture estimate in the amount of compensation expense being
recognized based on an estimate of the number of outstanding awards expected to vest.

The company’s equity compensation plans provide for grants of stock options, performance-based restricted stock units (“PBRSUs”) and
non-performance-based restricted stock units (“RSUs”) and restricted stock awards (“RSAs”). Common shares available for grant as of
December 31, 2015, 2014 and 2013 were 15,888,937, 17,999,689 and 20,269,664,respectively. The company generally issues
authorized but previously unissued shares to satisfy stock option exercises. The company has a share repurchase program and
generally repurchases shares on the open market to help offset the dilutive effect of share-based compensation.

The company’s annual long-term incentive share-based compensation program is made up of 50% stock options and 50% PBRSUs. The
company also grants RSUs. The remaining RSAs vested during 2015. Total compensation expense related to all share-based
compensation plans was $78 million ($54 million net of tax benefit), $71 million ($49 million net of tax benefit) and $70 million ($48 million
net of tax benefit) for 2015, 2014 and 2013, respectively. As of December 31, 2015, there was $137 million of total measured but
unrecognized compensation expense related to non-vested share-based compensation arrangements granted under all of the company’s
plans. That cost is expected to be recognized over a weighted-average period of 2.1 years.

Stock Options

Stock options are granted to purchase shares of the company’s stock at the average daily share price on the date of grant. These options
generally expire within ten years from the grant date. The company generally recognizes compensation expense for these awards on a
straight-line basis over the three year vesting period. As previously noted, stock option grants to retirement eligible recipients are
attributed to expense using the non-substantive vesting method.

A summary of stock option activity and average exercise prices is as follows:

2015

2014

2013

Number of

Exercise

Number of

Price (a) Options

Exercise
Price (a)

Number of
Options

Exercise
Price (a)

Outstanding, beginning of year

Granted
Exercised
Canceled

Outstanding, end of year
Exercisable, end of year
Vested and expected to vest, end of year

Options
13,169,776
1,686,816
(2,316,025)
(162,195)
12,378,372
9,248,880
12,194,511

(a) Represents weighted average price per share.

$ 63.88
118.99
46.22
99.67
$ 74.23
$ 61.18
$ 73.64

13,926,256
1,645,937
(2,316,918)
(85,499)
13,169,776
9,820,826

$ 55.66
107.63
44.79
83.81
$ 63.88
$ 52.21

15,125,156
1,640,210
(2,583,026)
(256,084)
13,926,256
10,233,265

$ 48.29
101.22
40.68
63.00
$ 55.66
$ 46.33

The total aggregate intrinsic value of options (the amount by which the stock price exceeded the exercise price of the option on the date
of exercise) that were exercised during 2015, 2014 and 2013 was $160 million, $150 million and $123 million, respectively.

The total aggregate intrinsic value of options outstanding as of December 31, 2015 was $514 million, with a corresponding weighted-
average remaining contractual life of 6.3 years. The total aggregate intrinsic value of options exercisable as of December 31, 2015 was
$500 million, with a corresponding weighted-average remaining contractual life of 5.3 years. The total aggregate intrinsic value of options
vested and expected to vest as of December 31, 2015 was $513 million, with a corresponding weighted-average remaining contractual
life of 6.3 years.

The lattice (binomial) option-pricing model is used to estimate the fair value of options at grant date. The company’s primary employee
option grant occurs during the fourth quarter. The weighted-average grant-date fair value of options granted and the significant
assumptions used in determining the underlying fair value of each option grant, on the date of grant were as follows:

Weighted-average grant-date fair value of options granted at market
prices
Assumptions

Risk-free rate of return
Expected life
Expected volatility
Expected dividend yield

2015

2014

2013

$ 25.71

$ 23.18

$ 22.53

1.8 %

6 years

22.9 %
1.2 %

1.8 %

6 years

22.9 %
1.2 %

1.8 %

6 years

23.0 %
1.1 %

The risk-free rate of return is determined based on a yield curve of U.S. treasury rates from one month to ten years and a period
commensurate with the expected life of the options granted. Expected volatility is established based on historical volatility of the
company’s stock price. The expected dividend yield is determined based on the company’s annual dividend amount as a percentage of
the average stock price at the time of the grant.

PBRSUs, RSUs and RSAs

The expense associated with PBRSUs is based on the average of the high and low share price of the company’s common stock on the
date of grant, adjusted for the absence of future dividends. The awards vest based on the company achieving a defined performance
target and with continued service for a three year period. Upon vesting, the company issues shares of its common stock such that one
award unit equals one share of common stock. The company assesses the probability of achieving the performance target and
recognizes expense over the three year vesting period when it is probable the performance target will be met. PBRSU awards granted to
retirement eligible recipients are attributed to expense using the non-substantive vesting method. The awards are generally subject to
forfeiture in the event of termination of employment.

The expense associated with shares of non-performance based RSUs and RSAs is based on the average of the high and low share
price of the company’s common stock on the date of grant, adjusted for the absence of future dividends and is amortized on a straight-
line basis over the periods during which the restrictions lapse. The company currently has RSUs that vest over periods between 12 and
84 months. The remaining RSAs vested during 2015. The awards are generally subject to forfeiture in the event of termination of
employment.

A summary of non-vested PBRSUs and restricted stock activity is as follows:

December 31, 2012

Granted
Vested / Earned
Canceled

December 31, 2013

Granted
Vested / Earned
Canceled

December 31, 2014

Granted
Vested / Earned
Canceled

December 31, 2015

PBRSU
Awards
2,091,272
342,207
(594,366)
(88,844)
1,750,269
373,337
(503,324)
(27,048)
1,593,234
368,373
(468,317)
(49,101)
1,444,189

Grant
Date Fair
Value (a)

$ 53.65
99.63
47.60
57.71
$ 64.49
103.10
47.98
74.09
$ 78.59
114.31
52.97
90.97
$ 95.59

RSAs and
RSUs
797,213
109,212
(249,093)
(35,311)
622,021
109,665
(306,830)
(23,785)
401,071
103,841
(212,576)
(19,101)
273,235

Grant
Date Fair
Value (a)

$ 56.79
90.56
53.59
56.20
$ 64.04
102.62
55.83
73.01
$ 80.33
112.90
67.70
81.06
$ 102.49

(a) Represents weighted average price per share.

12. INCOME TAXES

Income before income taxes consisted of:

(millions)
United States
International

Total

The provision for income taxes consisted of:

(millions)
Federal and state
International

Total current
Federal and state
International

Total deferred

Provision for income taxes

2015
$ 733.0
584.7
$ 1,317.7

2015
$ 241.4
303.6
545.0
(185.4)
(59.1)
(244.5)
$ 300.5

2014
$ 937.7
760.7
$ 1,698.4

2013
$ 725.8
572.5
$ 1,298.3

2014
$ 344.3
253.4
597.7
(67.7)
(53.8)
(121.5)
$ 476.2

2013
$ 301.3
153.9
455.2
(124.0)
(6.5)
(130.5)
$ 324.7

The company’s overall net deferred tax assets and deferred tax liabilities were comprised of the following:

December 31 (millions)
Deferred tax assets

Other accrued liabilities
Loss carryforwards
Share-based compensation
Pension and other comprehensive income
Foreign tax credits
Other, net
Valuation allowance

Total
Deferred tax liabilities

Property, plant and equipment basis differences
Intangible assets
Unremitted foreign earnings
Other, net

Total
Net deferred tax liabilities balance

2015

2014

$ 172.7
62.4
75.2
309.0
31.3
78.5
(31.8)
697.3

267.5
1,227.7
25.8
158.4
1,679.4
$ (982.1)

$ 122.9
86.0
70.9
357.3
15.6
78.2
(74.2)
656.7

269.2
1,392.2
37.4
126.1
1,824.9
$ (1,168.2)

As of December 31, 2015 the company has tax effected federal, state and international net operating loss carryforwards of $0.8 million,
$6.0 million and $55.6 million, respectively, which will be available to offset future taxable income. The state loss carryforwards expire
from 2016 to 2035. For the international loss carryforwards, $24.8 million expire from 2016 to 2035 and $30.8 million have no expiration.

The company had valuation allowances on certain deferred tax assets of $31.8 million and $74.2 million at December 31, 2015 and
2014, respectively. During 2015, the company determined sufficient positive income trends existed to conclude it was more likely than
not it would be able to realize the benefits of the net operating losses and other deferred tax assets within certain underlying foreign
entities for which valuation allowances had been recorded, thus resulting in a $20.6 million valuation allowance release. The reduction in
the valuation allowance from year end 2014 to year end 2015 was also driven by current year utilization and foreign currency translation.

The company’s U.S. foreign tax credit carryforward of $31.3 million has a ten-year carryforward period and will expire between 2018 and
2025 if not utilized.

The company has a tax holiday in one foreign jurisdiction that resulted in tax reductions during 2015, 2014 and 2013. The company
received a permit of operation, which expires in July 2021, from the National Council of Free Zones of Exportation for the Dominican
Republic. Companies operating under the Free Zones are not subject to income tax in the Dominican Republic on export income. The tax
reduction as the result of the permit for 2015 was $4.8 million, or approximately $0.02 per diluted share. The impact of the tax holiday
was similar during 2014 and 2013.

A reconciliation of the statutory U.S. federal income tax rate to the company’s effective income tax rate is as follows:

Statutory U.S. rate
State income taxes, net of federal benefit
Foreign operations
Domestic manufacturing deduction
R&D credit
Change in valuation allowance
Nondeductible deal costs
Audit settlements and refunds
Venezuela charges
Worthless stock deduction
Other, net

Effective income tax rate

2015
35.0 %

0.4
(8.1)
(2.7)
(1.0)
(1.7)
(0.1)
(0.7)
4.5
(3.0)
0.2
22.8 %

2014
35.0 %
1.6
(6.1)
(2.0)
(0.7)
(0.1)
-
0.2
-
-
0.1
28.0 %

2013
35.0 %
1.1
(4.5)
(2.6)
(1.4)
(1.0)
0.2
(0.8)
-
-
(1.0)
25.0 %

As of December 31, 2015 and 2014, the company has recorded deferred tax liabilities of $25.8 million and $37.4 million, respectively, on
foreign earnings of the legacy Nalco entities and legacy Champion entities that the company intends to repatriate. The deferred tax
liabilities originated based on purchase accounting decisions made in connection with the Nalco merger and Champion acquisition and
were the result of extensive studies required to calculate the impact at the purchase date.

U.S. deferred income taxes are not provided on certain other unremitted foreign earnings that are considered permanently reinvested
which as of December 31, 2015 and 2014 were approximately $1.8 billion for both periods. These earnings are considered to be
reinvested indefinitely or available for distribution with foreign tax credits to offset the amount of applicable income tax and foreign
withholding taxes that may be payable on remittance. It is impractical due to the complexities associated with its hypothetical calculation
to determine the amount of incremental taxes that might arise if all undistributed earnings were distributed.

The company files income tax returns in the U.S. federal jurisdiction and various U.S. state and international jurisdictions. With few
exceptions, the company is no longer subject to state and foreign income tax examinations by tax authorities for years before 2011. The
IRS has completed examinations of the company’s U.S. federal income tax returns (Ecolab and Nalco) through 2012. To date, the 2012
U.S. income tax return of Champion has not been audited. The company’s Ecolab U.S. federal (including Nalco and Champion) income
tax returns for the years 2013 and 2014 are currently under audit. In addition to the U.S. federal examination, there is ongoing audit
activity in several U.S. state and foreign jurisdictions. The company anticipates changes to its uncertain tax positions due to closing of
various audit years mentioned above. The company does not believe these changes will result in a material impact during the next twelve
months. Decreases in the company’s gross liability could result in offsets to other balance sheet accounts, cash payments, and/or
adjustments to tax expense. The occurrence of these events and/or other events not included above within the next twelve months could
change depending on a variety of factors and result in amounts different from above.

During 2015, the company recognized net benefits related to discrete tax items of $63.3 million. The net benefits were driven primarily by
the release of $20.6 million of valuation allowances, as previously discussed, and the ability to recognize a worthless stock deduction of
$39.0 million for the tax basis in a wholly-owned domestic subsidiary.

During 2014, the company recognized net expense related to discrete tax items of $13.2 million. The net expense in 2014 was driven
primarily by an update to non-current tax liabilities for certain global tax audits, an adjustment related to the re-characterization of
intercompany payments between its U.S. and foreign affiliates, the remeasurement of certain deferred tax assets and liabilities resulting
from changes in its deferred state tax rate, recognizing adjustments from filing its 2013 U.S. federal and state tax returns, net changes of
valuation allowances based on the realizability of foreign deferred tax assets and the impact from other foreign country audit settlements.

During 2013, the company recognized net benefits related to discrete taxes of $41.7 million. The net benefit in 2013 was driven primarily
by the net release of valuation allowances related to the realizability of foreign deferred tax assets of $11.5 million, the remeasurement of
certain deferred tax assets and liabilities of $11.3 million and recognizing adjustments from filing its 2012 U.S. federal and state tax
returns of $11.0 million. The remaining discrete tax items relate primarily to recognizing settlements related to prior year income tax
audits, law changes within a foreign jurisdiction, the retroactive extension during first quarter 2013 of the U.S. R&D credit for 2012,
foreign audit adjustments and other adjustments to deferred tax assets and liabilities.

A reconciliation of the beginning and ending amount of gross liability for unrecognized tax benefits is as follows:

(millions)
Balance at beginning of year

Additions based on tax positions related to the current year
Additions for tax positions of prior years
Reductions for tax positions of prior years
Reductions for tax positions due to statute of limitations
Settlements
Assumed in connection with acquisitions
Foreign currency translation

Balance at end of year

2015

2014

2013

$ 78.7
5.8
0.9
(8.8)
(1.6)
(4.2)
8.0
(4.2)
$ 74.6

$ 98.7
5.3
5.2
(17.8)
(0.2)
(9.0)
-
(3.5)
$ 78.7

$ 93.1
9.1
6.1
(15.6)
(3.6)
(0.7)
9.8
0.5
$ 98.7

The total amount of unrecognized tax benefits, if recognized would have affected the effective tax rate by $59.2 million as of December
31, 2015, $64.0 million as of December 31, 2014 and $90.9 million as of December 31, 2013.

The company recognizes interest and penalties related to unrecognized tax benefits in its provision for income taxes. During 2015 the
company released $1.4 million related to interest and penalties and during 2014 and 2013, it accrued $6.6 million and $1.8 million in
interest and penalties, respectively. The company had $13.1 million and $14.5 million of accrued interest, including minor amounts for
penalties, at December 31, 2015 and 2014, respectively.

13. RENTALS AND LEASES

The company leases sales and administrative office facilities, distribution centers, research and manufacturing facilities, as well as
vehicles and other equipment under operating leases. Total rental expense under the company’s operating leases was $221 million in
2015, $237 million in 2014 and $217 million in 2013. As of December 31, 2015, identifiable future minimum payments with non-
cancelable terms in excess of one year were:

(millions)
2016
2017
2018
2019
2020
Thereafter
Total

$ 102
83
67
59
43
80
$ 434

The company enters into operating leases for vehicles whose non-cancelable terms are one year or less in duration with month-to-month
renewal options. These leases have been excluded from the table above. The company estimates payments under such leases will
approximate $55 million in 2016. These vehicle leases have guaranteed residual values that have historically been satisfied by the
proceeds on the sale of the vehicles.

14. RESEARCH AND DEVELOPMENT EXPENDITURES

Research expenditures that relate to the development of new products and processes, including significant improvements and
refinements to existing products, are expensed as incurred. Such costs were $191 million in 2015, $197 million in 2014 and $188 million
in 2013. The company did not participate in any material customer sponsored research during 2015, 2014 or 2013.

15. COMMITMENTS AND CONTINGENCIES

The company is subject to various claims and contingencies related to, among other things, workers’ compensation, general liability
(including product liability), automobile claims, health care claims, environmental matters and lawsuits. The company is also subject to
various claims and contingencies related to income taxes, which are covered in Note 12. The company also has contractual obligations
including lease commitments, which are covered in Note 13.

The company records liabilities where a contingent loss is probable and can be reasonably estimated. If the reasonable estimate of a
probable loss is a range, the company records the most probable estimate of the loss or the minimum amount when no amount within the
range is a better estimate than any other amount. The company discloses a contingent liability even if the liability is not probable or the
amount is not estimable, or both, if there is a reasonable possibility that a material loss may have been incurred.

Insurance

Globally, the company has high deductible insurance policies for property and casualty losses. The company is insured for losses in
excess of these deductibles, subject to policy terms and conditions and has recorded both a liability and an offsetting receivable for
amounts in excess of these deductibles. The company is self-insured for health care claims for eligible participating employees, subject
to certain deductibles and limitations. The company determines its liabilities for claims on an actuarial basis.

Litigation and Environmental Matters

The company and certain subsidiaries are party to various lawsuits, claims and environmental actions that have arisen in the ordinary
course of business. These include from time to time antitrust, commercial, patent infringement, product liability and wage hour lawsuits,
as well as possible obligations to investigate and mitigate the effects on the environment of the disposal or release of certain chemical
substances at various sites, such as Superfund sites and other operating or closed facilities. The company has established accruals for
certain lawsuits, claims and environmental matters. The company currently believes that there is not a reasonably possible risk of
material loss in excess of the amounts accrued related to these legal matters. Because litigation is inherently uncertain, and unfavorable
rulings or developments could occur, there can be no certainty that the company may not ultimately incur charges in excess of recorded
liabilities. A future adverse ruling, settlement or unfavorable development could result in future charges that could have a material
adverse effect on the company’s results of operations or cash flows in the period in which they are recorded. The company currently
believes that such future charges related to suits and legal claims, if any, would not have a material adverse effect on the company’s
consolidated financial position.

Environmental Matters

The company is currently participating in environmental assessments and remediation at approximately 35 locations, most of which are
in the U.S., and environmental liabilities have been accrued reflecting management’s best estimate of future costs. Potential insurance
reimbursements are not anticipated in the company’s accruals for environmental liabilities.

Matters Related to Wage Hour Claims

The company is a defendant in five pending wage hour lawsuits claiming violations of the Fair Labor Standards Act (“FLSA”) or a similar
state law. Of these five suits, two have been certified for class action status.

Ross (formerly Icard) v. Ecolab, U.S. District Court — Northern District of California, case no. C 13-05097 PJH, an action under California
state law, has been certified for class treatment of California Institutional employees. The Court in Ross recently granted plaintiffs’ motion
for partial summary judgment, finding that Institutional Route Sales Managers are not exempt from overtime pay under California wage
and hour laws. The company is seeking an appeal of this judgment. The court has not determined damages; however the company has
established an accrual, which is not material to its results of operations or financial position.

In Cancilla v. Ecolab, U.S. District Court - Northern District of California, case no. CV 12-03001, the Court conditionally certified a
nationwide class of Pest Elimination Service Specialists for alleged FLSA violations. The suit also seeks a purported California sub-class
for alleged California wage hour law violations and certifications of classes for state law violations in Washington, Colorado, Maryland,
Illinois, Missouri, Wisconsin and North Carolina. The Cancilla lawsuit has been settled. The settlement amount, which was not material to
the company’s operations or financial position, will be paid in the first quarter of 2016.

A third pending suit, Charlot v. Ecolab Inc., U.S. District Court-Eastern District of New York, case no. CV 12-04543, seeks nationwide
class certification of Institutional employees for alleged FLSA violations as well as purported state sub-classes in New York, New Jersey,
Washington and Pennsylvania alleging violations of state wage hour laws. The Court in Charlot recently granted the company’s motion for
summary judgment against plaintiffs on the federal FLSA claims. Plaintiffs’ claims under state law remain pending and the judgment in
favor of Ecolab may be subject to appeal by Plaintiffs.

A fourth pending suit, Schneider v. Ecolab, United States District Court for the Northern District of Illinois, case no. 14 C 01044, seeks
certification of a class of Institutional employees for alleged violations of Illinois wage and hour laws.

A fifth pending suit, Martino v. Ecolab, Santa Clara County California Superior Court, seeks certification of a California state class of
Institutional employees for alleged violations of California wage and hour laws. The Martino case has been removed to the United States
District Court for the Northern District of California. Case no. 5:14-cv-04358-PSG.

In addition to the five pending suits, the court entered an order of dismissal on August 12, 2015 in connection with the settlement of a sixth
suit, LaValley v. Ecolab, United States District Court for the District of Minnesota, which sought certification of a class of Territory
Representatives for alleged violations of the FLSA and New York state wage and hour laws. The settlement amount, which is not material
to the company’s operations or financial position, was paid in August 2015.

Matters Related to Deepwater Horizon Incident Response

On April 22, 2010, the deepwater drilling platform, the Deepwater Horizon, operated by a subsidiary of BP plc, sank in the Gulf of Mexico
after a catastrophic explosion and fire that began on April 20, 2010. A massive oil spill resulted. Approximately one week following the
incident, subsidiaries of BP plc, under the authorization of the responding federal agencies, formally requested Nalco Company, now an
indirect subsidiary of Ecolab, to supply large quantities of COREXIT® 9500, a Nalco oil dispersant product listed on the U.S. EPA
National Contingency Plan Product Schedule. Nalco Company responded immediately by providing available COREXIT and increasing
production to supply the product to BP’s subsidiaries for use, as authorized and directed by agencies of the federal government
throughout the incident. Prior to the incident, Nalco and its subsidiaries had not provided products or services or otherwise had any
involvement with the Deepwater Horizon platform. On July 15, 2010, BP announced that it had capped the leaking well, and the
application of dispersants by the responding parties ceased shortly thereafter.

On May 1, 2010, the President appointed retired U.S. Coast Guard Commandant Admiral Thad Allen to serve as the National Incident
Commander in charge of the coordination of the response to the incident at the national level. The EPA directed numerous tests of all the
dispersants on the National Contingency Plan Product Schedule, including those provided by Nalco Company, “to ensure decisions
about ongoing dispersant use in the Gulf of Mexico are grounded in the best available science.” Nalco Company cooperated with this
testing process and continued to supply COREXIT, as requested by BP and government authorities. After review and testing of a number
of dispersants, on September 30, 2010, and on August 2, 2010, the EPA released toxicity data for eight oil dispersants.

The use of dispersants by the responding parties was one tool used by the government and BP to avoid and reduce damage to the Gulf
area from the spill. Since the spill occurred, the EPA and other federal agencies have closely monitored conditions in areas where
dispersant was applied. Nalco Company has encouraged ongoing monitoring and review of COREXIT and other dispersants and has
cooperated fully with the governmental review and approval process. However, in connection with its provision of COREXIT, Nalco
Company has been named in several lawsuits as described below.

Cases arising out of the Deepwater Horizon accident were administratively transferred for pre-trial purposes to a judge in the United
States District Court for the Eastern District of Louisiana with other related cases under In Re: Oil Spill by the Oil Rig “Deepwater
Horizon” in the Gulf of Mexico, on April 20, 2010, Case No. 10-md-02179 (E.D. La.) (“MDL 2179”).

Putative Class Action Litigation

Nalco Company was named, along with other unaffiliated defendants, in six putative class action complaints related to the Deepwater
Horizon oil spill: Adams v. Louisiana, et al., Case No. 11-cv-01051 (E.D. La.); Elrod, et al. v. BP Exploration & Production Inc., et al., 12-
cv-00981 (E.D. La.); Harris, et al. v. BP, plc, et al., Case No. 2:10-cv-02078-CJBSS (E.D. La.); Irelan v. BP Products, Inc., et al., Case
No. 11-cv-00881 (E.D. La.); Petitjean, et al. v. BP, plc, et al., Case No. 3:10-cv-00316-RS-EMT (N.D. Fla.); and, Wright, et al. v. BP, plc,
et al., Case No. 1:10-cv-00397-B (S.D. Ala.). The cases were filed on behalf of various potential classes of persons who live and work in
or derive income from the effected Coastal region. Each of the actions contains substantially similar allegations, generally alleging,
among other things, negligence relating to the use of our COREXIT dispersant in connection with the Deepwater Horizon oil spill. The
plaintiffs in these putative class action lawsuits are generally seeking awards of unspecified compensatory and punitive damages, and
attorneys’ fees and costs. These cases have been consolidated in MDL 2179.

Other Related Claims Pending in MDL 2179

Nalco Company was also named, along with other unaffiliated defendants, in 23 complaints filed by individuals: Alexander, et al. v. BP
Exploration & Production, et al., Case No. 11-cv-00951 (E.D. La.); Best v. British Petroleum plc, et al., Case No. 11-cv-00772 (E.D. La.);
Black v. BP Exploration & Production, Inc., et al. Case No. 2:11-cv- 867, (E.D. La.); Brooks v. Tidewater Marine LLC, et al., Case No. 11-
cv- 00049 (S.D. Tex.); Capt Ander, Inc. v. BP, plc, et al., Case No. 4:10-cv-00364-RH-WCS (N.D. Fla.); Coco v. BP Products North
America, Inc., et al. (E.D. La.); Danos, et al. v. BP Exploration et al., Case No. 00060449 (25th Judicial Court, Parish of Plaquemines,
Louisiana); Doom v. BP Exploration & Production, et al. , Case No. 12-cv-2048 (E.D. La.); Duong, et al., v. BP America Production
Company, et al., Case No. 13-cv-00605 (E.D. La.); Esponge v. BP, P.L.C., et al., Case No. 0166367 (32nd Judicial District Court, Parish
of Terrebonne, Louisiana); Ezell v. BP, plc, et al., Case No. 2:10-cv-01920-KDE-JCW (E.D. La.); Fitzgerald v. BP Exploration, et al.,
Case No. 13-cv-00650 (E.D. La.); Hill v. BP, plc, et al., Case No. 1:10-cv-00471-CG-N (S.D. Ala.); Hogan v. British Petroleum Exploration
& Production, Inc., et al., Case No. 2012-22995 (District Court, Harris County, Texas); Hudley v. BP, plc, et al., Case No. 10-cv-00532-N
(S.D. Ala.); In re of Jambon Supplier II, L.L.C., et al., Case No. 12-426 (E.D. La.); Kolian v. BP Exploration & Production, et al. , Case No.
12-cv-2338 (E.D. La.); Monroe v. BP, plc, et al., Case No. 1:10-cv-00472-M (S.D. Ala.); Pearson v. BP Exploration & Production, Inc.,
Case No. 2:11-cv-863, (E.D. La.); Shimer v. BP Exploration and Production, et al, Case No. 2:13-cv-4755 (E.D. La.); Top Water
Charters, LLC v. BP, P.L.C., et al., No. 0165708 (32nd Judicial District Court, Parish of Terrebonne, Louisiana); Toups, et al. v Nalco
Company, et al., Case No. 59-121 (25th Judicial District Court, Parish of Plaquemines, Louisiana); and, Trehern v. BP, plc, et al., Case
No. 1:10-cv-00432-HSO-JMR (S.D. Miss.). The cases were filed on behalf of individuals and entities that own property, live, and/or work
in or derive income from the effected Coastal region. Each of the actions contains substantially similar allegations, generally alleging,
among other things, negligence relating to the use of our COREXIT dispersant in connection with the Deepwater Horizon oil spill. The
plaintiffs in these lawsuits are generally seeking awards of unspecified compensatory and punitive damages, and attorneys’ fees and
costs.

Pursuant to orders issued by the court in MDL 2179, the claims were consolidated in several master complaints, including one naming
Nalco Company and others who responded to the Gulf Oil Spill (known as the “B3 Master Complaint”). On May 18, 2012, Nalco filed a
motion for summary judgment against the claims in the “B3” Master Complaint, on the grounds that: (i) Plaintiffs’ claims are preempted by
the comprehensive oil spill response scheme set forth in the Clean Water Act and National Contingency Plan; and (ii) Nalco is entitled to
derivative immunity from suit. On November 28, 2012, the Court granted Nalco’s motion and dismissed with prejudice the claims in the
“B3” Master Complaint asserted against Nalco. The Court held that such claims were preempted by the Clean Water Act and National
Contingency Plan. Because claims in the “B3” Master Complaint remain pending against other defendants, the Court’s decision is not a
“final judgment” for purposes of appeal. Under Federal Rule of Appellate Procedure 4(a), plaintiffs will have 30 days after entry of final
judgment to appeal the Court’s decision.

Nalco Company, the incident defendants and the other responder defendants have been named as first party defendants by Transocean
Deepwater Drilling, Inc. and its affiliates (the “Transocean Entities”) (In re the Complaint and Petition of Triton Asset Leasing GmbH, et al,
MDL No. 2179, Civil Action 10-2771). In April and May 2011, the Transocean Entities, Cameron International Corporation, Halliburton
Energy Services, Inc., M-I L.L.C., Weatherford U.S., L.P. and Weatherford International, Inc. (collectively, the “Cross Claimants”) filed
cross claims in MDL 2179 against Nalco Company and other unaffiliated cross defendants. The Cross Claimants generally allege, among
other things, that if they are found liable for damages resulting from the Deepwater Horizon explosion, oil spill and/or spill response, they
are entitled to indemnity or contribution from the cross defendants.

In April and June 2011, in support of its defense of the claims against it, Nalco Company filed counterclaims against the Cross Claimants.
In its counterclaims, Nalco Company generally alleges that if it is found liable for damages resulting from the Deepwater Horizon
explosion, oil spill and/or spill response, it is entitled to contribution or indemnity from the Cross Claimants.

In December 2012 and January 2013, the MDL 2179 court issued final orders approving two settlements between BP and Plaintiffs’
Class Counsel: (1) a proposed Medical Benefits Class Action Settlement; and (2) a proposed Economic and Property Damages Class
Action Settlement. Pursuant to the proposed settlements, class members agree to release claims against BP and other released parties,
including Nalco Energy Services, LP, Nalco Holding Company, Nalco Finance Holdings LLC, Nalco Finance Holdings Inc., Nalco
Holdings LLC and Nalco Company.

Other Related Actions

In March 2011, Nalco Company was named, along with other unaffiliated defendants, in an amended complaint filed by an individual in
the Circuit Court of Harrison County, Mississippi, Second Judicial District (Franks v. Sea Tow of South Miss, Inc., et al., Cause No.
A2402-10-228 (Circuit Court of Harrison County, Mississippi)). The amended complaint generally asserts, among other things,
negligence and strict product liability claims relating to the plaintiff’s alleged exposure to chemical dispersants manufactured by Nalco
Company. The plaintiff seeks unspecified compensatory damages, medical expenses, and attorneys’ fees and costs. Plaintiff’s
allegations place him within the scope of the MDL 2179 Medical Benefits Class. In approving the Medical Benefits Settlement, the MDL
2179 Court barred Medical Benefits Settlement class members from prosecuting claims of injury from exposure to oil and dispersants
related to the Response. As a result of the MDL court’s order, on April 11, 2013, the Mississippi court stayed proceedings in the Franks
case. The Franks case was dismissed in May 2014.

The company believes the claims asserted against Nalco Company are without merit and intends to defend these lawsuits vigorously.
The company also believes that it has rights to contribution and/ or indemnification (including legal expenses) from third parties.
However, the company cannot predict the outcome of these lawsuits, the involvement it might have in these matters in the future, or the
potential for future litigation.

16. RETIREMENT PLANS

Pension and Postretirement Health Care Benefits Plans

The company has a non-contributory qualified defined benefit pension plan covering the majority of its U.S. employees. The company
also has U.S. non-contributory non-qualified defined benefit plans, which provide for benefits to employees in excess of limits permitted
under its U.S. pension plans. The company provides postretirement health care benefits to certain U.S. employees and retirees. The
non-qualified plans are not funded and the recorded benefit obligation for the non-qualified plans was $122 million and $113 million at
December 31, 2015 and 2014, respectively. The measurement date used for determining the U.S. pension plan assets and obligations is
December 31.

Various international subsidiaries have defined benefit pension plans. International plans are funded based on local country
requirements. The measurement date used for determining the international pension plan assets and obligations is November 30, the
fiscal year-end of the company’s international affiliates.

The U.S postretirement health care plans are contributory based on years of service and choice of coverage (family or single), with
retiree contributions adjusted annually. The measurement date used to determine the U.S. postretirement health care plan assets and
obligations is December 31. Certain employees outside the U.S. are covered under government-sponsored programs, which are not
required to be fully funded. The expense and obligation for providing international postretirement health care benefits are not significant.

The following table sets forth financial information related to the company’s pension and postretirement health care plans:

(millions)
Accumulated Benefit Obligation, end of year
Projected Benefit Obligation

U.S.
Pension (a)

International
Pension

U.S. Postretirement

Health Care

2015
$ 2,040.2

2014
$ 2,075.0

2015

2014

$ 1,185.7 $ 1,304.6

2015
$ 229.2

2014
$ 240.4

Projected benefit obligation, beginning of year
Service cost
Interest
Participant contributions
Medicare subsidies received
Curtailments and settlements
Plan amendments
Actuarial loss (gain)
Assumed through acquisitions
Benefits paid
Reclassification associated with Venezuelan entities
Foreign currency translation

Projected benefit obligation, end of year

$ 2,252.7
76.5
91.1
-
-
(1.2)
-
(126.0)
-
(106.3)
-
-
$ 2,186.8

$ 1,886.3
66.4
90.0
-
-
-
-
329.4
-
(119.4)
-
-
$ 2,252.7

$ 1,424.9 $ 1,243.6
32.2
49.8
3.6
-
(15.9)
0.1
248.8
(0.2)
(38.1)
-
(99.0)
$ 1,279.9 $ 1,424.9

31.8
38.1
3.4
-
(5.5)
(5.3)
(13.5)
-
(37.5)
(13.1)
(143.4)

$ 240.4
3.8
9.6
8.7
1.1
-
-

(13.4)

(21.0)

-
-
$ 229.2

$ 234.1
4.3
10.8
10.4
2.0
-
0.9
-
-
(22.1)
-
-
$ 240.4

Plan Assets

Fair value of plan assets, beginning of year
Actual returns on plan assets
Company contributions
Participant contributions
Settlements
Benefits paid
Foreign currency translation

Fair value of plan assets, end of year

Funded Status, end of year

Amounts recognized in Consolidated Balance Sheet:

Other assets
Other current liabilities
Postretirement healthcare and pension benefits
Net liability

Amounts recognized in Accumulated Other
Comprehensive Loss (Income):

Unrecognized net actuarial loss (gain)
Unrecognized net prior service benefits
Tax benefit

Accumulated other comprehensive loss (income), net
of tax

Change in Accumulated Other Comprehensive Loss
(Income):

Amortization of net actuarial loss
Amortization of prior service costs (benefits)
Current period net actuarial loss (gain)
Current period prior service costs (benefits)
Settlement
Tax expense (benefit)
Reclassification associated with Venezuelan entities
Foreign currency translation

Other comprehensive loss (income)

(a)

Includes qualified and non-qualified plans

0.4
6.2
-
(1.2)
(106.3)
-

$ 1,871.6 $ 1,848.9
136.4
5.7
-
-
(119.4)
-
$ 1,770.7 $ 1,871.6
$ (381.1)

$ (416.1)

$ 847.7
32.9
41.2
3.4
(5.5)
(37.5)
(68.7)
$ 813.5
$ (466.4)

$ 787.6
108.6
52.8
3.6
(12.8)
(38.1)
(54.0)
$ 847.7
$ (577.2)

$ -
(12.1)
(404.0)
$ (416.1)

$ -
(9.6)
(371.5)
$ (381.1)

$ 28.0
(16.9)
(477.5)
$ (466.4)

$ 15.9
(15.7)
(577.4)
$ (577.2)

$ 13.3
0.1
17.5
1.4
-

$ 14.8
0.9
18.2
1.5
-
(22.1)
-
$ 13.3
$ (217.9) $ (227.1)

-
$ 11.3

(21.0)

$ -

$ -
(7.0)
(220.1)
$ (218.0) $ (227.1)

(7.3)
(210.7)

$ 512.8
(33.7)
(188.4)

$ 555.8
(40.6)
(201.8)

$ 310.1
(9.9)
(77.1)

$ 358.0
(2.6)
(93.4)

$ (40.0)
0.1
13.0

$ (33.6)
-
10.7

$ 290.7

$ 313.4

$ 223.1

$ 262.0

$ (26.9)

$ (22.9)

$ (48.5)
6.9
6.2
-
(0.7)
13.4
-
-
$ (22.7)

$ (23.7)
6.9
321.4
-
-
(115.9)
-
-
$ 188.7

$ (15.4)
0.4
9.2
(5.6)
(1.0)
16.3
(3.5)
(39.3)
$ (38.9)

$ (9.1)
(0.1)
194.8
0.1
-
(37.3)
-
(25.8)
$ 122.6

$ 6.2
0.1
(12.6)

-
-
2.3
-
-

$ (4.0)

$ 8.2
0.3
0.5
0.9
-
(3.7)
-
-
$ 6.2

Estimated amounts in accumulated other comprehensive loss expected to be reclassified to net period cost during 2016 are as follows:

(millions)
Net actuarial loss (gain)
Net prior service costs (benefits)
Total

(a)

Includes qualified and non-qualified plans

U.S.
Pension (a)
$ 30.8
(6.9)
$ 23.9

International
Pension

$ 14.3
(0.9)
$ 13.4

U.S. Post-
Retirement
Health Care
$ (1.7)
(0.2)
$ (1.9)

The aggregate projected benefit obligation, accumulated benefit obligation and fair value of pension plan assets for plans with
accumulated benefit obligations in excess of plan assets were as follows:

December 31 (millions)
Aggregate projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets

2015
$ 3,088.0
2,882.5
2,190.6

2014
$ 3,272.1
3,011.9
2,315.7

These plans include the U.S. non-qualified pension plans which are not funded as well as the U.S. qualified pension plan. These plans
also include various international pension plans which are funded consistent with local practices and requirements.

Net Periodic Benefit Costs

Pension and postretirement health care benefits expense for the company’s operations are as follows:

U.S.
Pension (a)

International
Pension

U.S. Postretirement
Health Care

(millions)
Service cost - employee benefits

earned during the year

Interest cost on benefit obligation
Expected return on plan assets
Recognition of net actuarial loss
Amortization of prior service cost

(benefit)

Settlements/Curtailments
Total expense

2015

2014

2013

2015

2014 2013

2015 2014 2013

$ 76.5
91.1
(132.6)
48.5

(6.9)
0.7
$ 77.3

$ 66.4
90.0
(128.4)
23.7

$ 68.6
84.7
(130.1)
62.3

$ 31.8
38.1
(55.6)
15.4

$ 32.2
49.8
(54.6)
7.0

$ 36.0
47.2
(46.9)
11.3

$ 3.8
9.6
(0.9)
(6.2)

(6.9)
-
$ 44.8

(6.9)
0.9
$ 79.5

(0.4)
1.0
$ 30.3

0.4
(1.3)
$ 33.5

(0.3)
(0.3)
$ 47.0

(0.1)
-
$ 6.2

$ 4.3
10.8
(1.0)
(8.2)

(0.3)
-
$ 5.6

$ 5.9
10.8
(1.1)
0.6

(0.3)
-
$ 15.9

(a)

Includes qualified and non-qualified plans

Plan Assumptions

U.S.
Pension (a)

International
Pension

U.S. Postretirement
Health Care

(percent)
Weighted-average actuarial assumptions
used to determine benefit obligations as
of year end:

2015

2014

2013 2015

2014

2013

2015

2014

2013

Discount rate
Projected salary increase

Weighted-average actuarial assumptions

used to determine net cost:

Discount rate
Expected return on plan assets
Projected salary increase

4.51 % 4.14 % 4.92 % 2.93 %
4.32

4.32 4.32

2.50

3.02 % 4.09 % 4.38 %
2.66 2.73

4.08 %

4.77 %

4.14
7.75
4.32

4.92 4.14
7.75 8.25
4.32 4.32

2.78
6.80
2.83

4.45 4.34
6.90 6.79
3.58 3.70

4.08
7.75

4.77
7.75

3.95
8.25

(a)

Includes qualified and non-qualified plans

The discount rate assumptions for the U.S. plans are developed using a bond yield curve constructed from a population of high-quality,
non-callable, corporate bond issues with maturities ranging from six months to thirty years. A discount rate is estimated for the U.S. plans
and is based on the durations of the underlying plans.

100

For 2015, the company measured service and interest costs utilizing a single weighted-average discount rate derived from the yield
curve used to measure the plan obligations. At the end of 2015, the company changed the approach used to measure service and
interest costs for pension and other postretirement benefits. For 2016, the company elected to measure service and interest costs by
applying the specific spot rates along that yield curve to the plans’ liability cash flows. The company believes the new approach provides
a more precise measurement of service and interest costs by aligning the timing of the plans’ liability cash flows to the corresponding
spot rates on the yield curve. This change does not affect the measurement of its plan obligations. The company has accounted for this
change as a change in accounting estimate and, accordingly, has accounted for it on a prospective basis.

The expected long-term rate of return used for the U.S. plans is based on the pension plan’s asset mix. The company considers
expected long-term real returns on asset categories, expectations for inflation, and estimates of the impact of active management of the
assets in coming to the final rate to use. The company also considers actual historical returns.

The expected long-term rate of return used for the company’s international plans is determined in each local jurisdiction and is based on
the assets held in that jurisdiction, the expected rate of returns for the type of assets held and any guaranteed rate of return provided by
the investment. The other assumptions used to measure the international pension obligations, including discount rate, vary by country
based on specific local requirements and information. As previously noted, the measurement date for these plans is November 30.

For postretirement benefit measurement purposes as of December 31, 2015, the annual rates of increase in the per capita cost of
covered health care were assumed to be 7.25%. The rates are assumed to decrease each year until they reach 5% in 2027 and remain
at those levels thereafter. Health care costs for certain employees which are eligible for subsidy by the company are limited by a cap on
the subsidy.

Assumed health care cost trend rates have an effect on the amounts reported for the company’s U.S. postretirement health care benefits
plan. A one-percentage point change in the assumed health care cost trend rates would have the following effects:

(millions)
Effect on total of service and interest cost components
Effect on postretirement benefit obligation

Plan Asset Management

1-Percentage Point
Increase Decrease

$ (0.1)
1.4

$ 0.1
(1.6)

The company’s U.S. investment strategy and policies are designed to maximize the possibility of having sufficient funds to meet the long-
term liabilities of the pension fund, while achieving a balance between the goals of asset growth of the plan and keeping risk at a
reasonable level. Current income is not a key goal of the policy. The asset allocation position reflects the ability and willingness to accept
relatively more short-term variability in the performance of the pension plan portfolio in exchange for the expectation of better long-term
returns, lower pension costs and better funded status in the long run.

The pension fund is diversified across a number of asset classes and securities. Selected individual portfolios within the asset classes
may be undiversified while maintaining the diversified nature of total plan assets. The company has no significant concentration of risk in
its U.S. plan assets.

Assets of funded retirement plans outside the U.S. are managed in each local jurisdiction and asset allocation strategy is set in
accordance with local rules, regulations and practice. Therefore, no overall target asset allocation is presented. Although non-U.S. equity
securities are all considered international for the company, some equity securities are considered domestic for the local plan. The funds
are invested in a variety of equities, bonds and real estate investments and, in some cases, the assets are managed by insurance
companies which may offer a guaranteed rate of return. The company has no significant concentration of risk in its international plan
assets.

The discussion that follows references the fair value measurements in terms of levels 1, 2 and 3. See Note 7 for definitions of these
levels. Plan assets by level are as follows:

Level 1 - Cash, and certain equity securities and fixed income: Valued at the quoted market prices of shares held by the plans at year-
end in the active market on which the individual securities are traded.

Level 2 - Real estate, insurance contracts, and certain equity securities and fixed income: Valued based on inputs other than quoted
prices that are observable for the securities.

Level 3 - Hedge funds and private equity: Valued based on the net asset values of the underlying partnerships. The net asset values of
the partnerships are based on the fair values of the underlying investments of the partnerships. Quoted market prices are used to value
the underlying investments of the partnerships, where available.

101

U.S. Assets

The allocation and fair value of the company’s U.S. plan assets for its defined benefit pension and postretirement health care benefit
plans are as follows:

Asset Category

December 31 (%)

Equity securities:

Large cap equity
Small cap equity
International equity

Fixed income:

Core fixed income
High-yield bonds
Emerging markets

Other:

Real estate
Hedge funds
Private equity

Total

(millions)

Cash
Equity securities:

Large cap equity
Small cap equity
International equity

Fixed income:

Core fixed income
High-yield bonds
Emerging markets

Other:

Real estate
Hedge funds
Private equity
Other

Total

Target Asset
Allocation
Percentage

Percentage
of Plan Assets

2015

2014

2015

2014

34 %

9
15

18
5
2

6
5
6
100 %

34 %
9
13

18
5
2

4
9
6
100 %

37 %
10
14

19
5
2

5
3
5
100 %

37 %
9
13

18
5
2

4
8
4
100 %

Fair Value as of

December 31, 2015

Level 1

Level 2

Level 3

Total

$ 6.9

660.5
184.2
247.4

336.5
86.7
27.1

$ 84.5

$ 58.6
89.2

$ 1,549.3

0.3
$ 84.8

$ 147.8

$ 6.9

660.5
184.2
247.4

336.5
86.7
27.1

84.5
58.6
89.2
0.3
$ 1,781.9

102

(millions)

Cash
Equity securities:

Large cap equity
Small cap equity
International equity

Fixed income:

Core fixed income
High-yield bonds
Emerging markets

Other:

Real estate
Hedge funds
Private equity
Other

Total

Fair Value as of
December 31, 2014
Level 3

Level 2

Level 1

$ 7.4

693.5
174.9
246.2

344.7
90.5
29.4

Total

$ 7.4

693.5
174.9
246.2

344.7
90.5
29.4

$ 72.6

0.3
$ 72.9

$ 152.0
73.4

$ 225.4

72.6
152.0
73.4
0.3
$ 1,884.9

$ 1,586.6

For those assets that are valued using significant unobservable inputs (level 3), the following is a rollforward of the significant activity for
the year:

(millions)

Balance at December 31, 2013

Unrealized gains
Realized gains
Purchases, sales and settlements, net
Transfers in and/or out
Balance at December 31, 2014

Unrealized gains
Realized gains
Purchases, sales and settlements, net
Transfers in and/or out
Balance at December 31, 2015

Hedge
Funds

Private
Equity

$ 148.5
3.5
-
-
-
$ 152.0
(18.1)
16.6
(91.9)
-
$ 58.6

$ 54.9
2.5
10.0
6.0
-
$ 73.4
10.0
8.9
(3.1)
-
$ 89.2

The company is responsible for the valuation process and seeks to obtain quoted market prices for all investments. When quoted market
prices are not available, a number of methodologies are used to establish fair value estimates, including discounted cash flow models,
prices from recently executed transactions of similar securities or broker/dealer quotes using market observable information to the extent
possible. The company reviews the values generated by those models for reasonableness and, in some cases, further analyzes and
researches values generated to ensure their accuracy, which includes reviewing other publicly available information.

103

International Assets

The allocation of plan assets and fair value of the company’s international plan assets for its defined benefit pension plans are as follows:

Asset
Category

December 31 (%)

Cash
Equity securities:

International equity

Fixed income:

Corporate bonds
Government bonds
Total fixed income

Other:

Insurance contracts
Real estate

Total

(millions)

Cash
Equity securities:

International equity

Fixed income:

Corporate bonds
Government bonds

Other:

Insurance contracts
Real estate
Other

Total

(millions)

Cash
Equity securities:

International equity

Fixed income:

Corporate bonds
Government bonds

Other:

Insurance contracts
Real estate
Other

Total

Multiemployer Plan

Percentage
of Plan Assets

2015

2014

- %

1 %

22
19
41

13
2
100 %

22
19
41

13
2
100 %

Fair Value as of
December 31, 2015

Level 1 Level 2 Level 3 Total

$ 3.1

$ 356.2

6.6
9.8

170.3
146.5

106.1
13.2
1.7
$ 794.0

$ 19.5

$ 3.1

356.2

176.9
156.3

106.1
13.2
1.7
$ 813.5

Fair Value as of
December 31, 2014

Level 1 Level 2 Level 3 Total

$ 7.2

$ 363.5

5.1
7.7

184.2
156.7

109.8
12.7
0.3
$ 827.2

0.5
$ 20.5

$ 7.2

363.5

189.3
164.4

109.8
12.7
0.8
$ 847.7

The company has historically contributed to a multiemployer defined benefit pension plan (“MEPP”) under the terms of a collective-
bargaining agreement that covers certain union-represented former employees. During the fourth quarter of 2012, the company
determined that a withdrawal from the MEPP was probable and based on the underfunded status of the MEPP recorded an estimated
withdrawal liability of $4.7 million. During 2013, the company withdrew from the MEPP. The present value of the company’s withdrawal
liability to the MEPP was $4.4 million as of December 31, 2015. The risks of participating in a MEPP are different from single-employer
pension plans such that assets contributed to the MEPP by one employer may be used to provide benefits to employees of other
participating employers. Additionally, if a participating employer stops contributing to the MEPP, the unfunded obligations of the plan may
be borne by the remaining participating employers. Participation in the MEPP is not considered significant to the company.

104

Cash Flows

As of year-end 2015, the company’s estimate of benefits expected to be paid in each of the next five fiscal years and in the aggregate for
the five fiscal years thereafter for the company’s pension and postretirement health care benefit plans are as follows:

(millions)
2016
2017
2018
2019
2020
2021 - 2025

Medicare
Subsidy
Receipts

All Plans

$ 171
179
180
193
238
1,169

$ 1
1
-
-
-
-

Depending on plan funding levels, the U.S. defined benefit qualified pension plan provides certain terminating participants with an option
to receive their pension benefits in the form of lump sum payments.

The company is currently in compliance with all funding requirements of its U.S. pension and postretirement health care plans. No
voluntary contributions were made to the U.S. pension plan during 2015 and 2014. The company is required to fund certain international
pension benefit plans in accordance with local legal requirements. The company estimates contributions to be made to its international
plans will approximate $42 million in 2016.

The company seeks to maintain an asset balance that meets the long-term funding requirements identified by the projections of the
pension plan’s actuaries while simultaneously satisfying the fiduciary responsibilities prescribed in ERISA. The company also takes into
consideration the tax deductibility of contributions to the benefit plans.

The company is not aware of any expected refunds of plan assets within the next twelve months from any of its existing U.S. or
international pension or postretirement benefit plans.

Savings Plan, ESOP and Profit Sharing

The company provides a 401(k) savings plan for the majority of its U.S. employees.

On January 1, 2013, a new plan benefiting active employees accruing final average pay or legacy cash balance pension benefits under
the Ecolab Pension Plan was spun off from the Ecolab Savings Plan and ESOP (the “Ecolab Plan”) and into the Ecolab Savings Plan
and ESOP for Traditional Benefit Employees (the “New Plan”). Under the New Plan, 401(k) contributions of up to 3% of eligible
compensation are matched 100% by the company and 401(k) contributions over 3% and up to 5% of eligible compensation are matched
50% by the company.

All other active legacy Ecolab U.S. employees remain in the Ecolab Plan and beginning January 1, 2013, received a 100% match on
401(k) contributions of up to 4% of eligible compensation and a 50% match on 401(k) contributions of over 4% and up to 8% of eligible
compensation.

On August 2, 2013, the legacy Nalco Company Profit Sharing and Savings Plan (the “Nalco Plan”) merged into and became part of the
Ecolab Plan and eligible legacy Nalco employees began receiving matching contributions as discussed above. Prior to the merger of the
plans, beginning January 1, 2013, eligible legacy Nalco employees received a 100% match on 401(k) contributions of up to 4% of eligible
compensation and a 50% match on 401(k) contributions of over 4% and up to 8% of eligible compensation.

On December 31, 2013, the legacy Champion Permian Mud Service, Inc. 401(k) Savings Plan (the “Permian Plan”) merged into and
became part of the Ecolab Plan and eligible legacy Champion employees began receiving matching contributions as discussed above.
Prior to January 1, 2014, the Champion Plan provided a discretionary matching contribution of 100% on 401(k) contributions of up to 3%
of eligible compensation and 50% on 401(k) contributions of over 3% and up to 6% of eligible compensation.

The company’s matching contributions are 100% vested immediately. The company’s matching contribution expense was $72 million
and $67 million in 2015 and 2014, respectively. The company’s matching contribution expense for legacy Ecolab and legacy Nalco
employees was $54 million in 2013. Ecolab’s matching contribution to the Permian Plan during 2013, from the close of the Champion
acquisition in April 2013 to December 2013, was $5 million.

105

17. OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION

The company’s organizational structure consists of global business unit and global regional leadership teams. The company’s ten
operating units, which are also operating segments, follow its commercial and product-based activities and are based on engagement in
business activities, availability of discrete financial information and review of operating results by the Chief Operating Decision Maker at
the identified operating unit level.

Eight of the company’s ten operating units have been aggregated into three reportable segments based on similar economic
characteristics and future prospects, nature of the products and production processes, end-use markets, channels of distribution and
regulatory environment. The company’s reportable segments are Global Industrial, Global Institutional and Global Energy. The
company’s two operating units that are primarily fee-for-service businesses have been combined into the Other segment and do not meet
the quantitative criteria to be separately reported. The company provides similar information for the Other segment as compared to its
three reportable segments as the company considers the information regarding its two underlying operating units as useful in
understanding its consolidated results.

The company’s ten operating units are aggregated as follows:

Global Industrial

Includes the Water, Food & Beverage, Paper and Textile Care operating units. It provides water treatment and process applications, and
cleaning and sanitizing solutions primarily to large industrial customers within the manufacturing, food and beverage processing,
chemical, mining and primary metals, power generation, pulp and paper, and commercial laundry industries. The underlying operating
units exhibit similar manufacturing processes, distribution methods and economic characteristics.

Global Institutional

Includes the Institutional, Specialty and Healthcare operating units. It provides specialized cleaning and sanitizing products to the
foodservice, hospitality, lodging, healthcare, government and education and retail industries. The underlying operating units exhibit
similar manufacturing processes, distribution methods and economic characteristics.

Global Energy

Includes the Energy operating unit. It serves the process chemicals and water treatment needs of the global petroleum and
petrochemical industries in both upstream and downstream applications.

Other

Includes the Pest Elimination and Equipment Care operating units, which provide pest elimination and kitchen repair and maintenance.
Its two operating units are primarily fee-for-service businesses.

Reportable Segment Information

The company evaluates the performance of its non-U.S. dollar functional currency international operations based on fixed currency
exchange rates which eliminate the impact of exchange rate fluctuations on its international operations. The international amounts
included within each of the company’s reportable segments are based on translation into U.S. dollars at the fixed currency exchange
rates used by management for 2015. The difference between the fixed currency exchange rates and the actual currency exchange rates
is reported as “Effect of foreign currency translation” in the following tables.

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

(millions)
Global Industrial
Global Institutional
Global Energy
Other
Corporate

Subtotal at fixed currency

Effect of foreign currency translation

Consolidated

2015

$ 4,857.8
4,393.2
3,825.7
773.4
-

13,850.1

(305.0)
$ 13,545.1

Net Sales
2014
$ 4,623.2
4,157.9
4,145.0
731.1
-
13,657.2
623.3
$ 14,280.5

2013
$ 4,487.3
3,998.0
3,320.1
691.2
-
12,496.6
756.8
$ 13,253.4

2015
$ 692.7

Operating Income (Loss)
2014
$ 605.1
800.8
612.5
113.4
(258.8)
1,873.0
82.0
$ 1,561.3 $ 1,955.0

900.7
550.7
132.0
(670.8)

1,605.3

(44.0)

2013
$ 575.9
753.5
435.0
102.8
(404.6)

1,462.6

98.0
$ 1,560.6

The profitability of the company’s operating units is evaluated by management based on operating income. The company has no
intersegment revenues.

106

Consistent with the company’s internal management reporting, the Corporate segment includes intangible asset amortization specifically
from the Nalco merger and in 2013 certain integration costs for both the Nalco and Champion transactions. The Corporate segment also
includes special (gains) and charges, as discussed in Note 3, reported on the Consolidated Statement of Income.

The company has an integrated supply chain function that serves all of its reportable segments. As such, asset and capital expenditure
information by reportable segment has not been provided and is not available, since the company does not produce or utilize such
information internally. In addition, although depreciation and amortization expense is a component of each reportable segment’s
operating results, it is not discretely identifiable.

The company had one class of products which comprised 10% or more of consolidated net sales in any of the last three years. Sales of
warewashing products were approximately 10% of consolidated net sales in both 2015 and 2013.

The majority of the company’s revenue is driven by the sale of its chemical products, with any corresponding service generally
considered incidental to the product sale. The exception to this is the Pest Elimination and Equipment Care operating units, which are
within the Other segment and as previously noted, are primarily fee-for-service businesses. In addition, the Global Industrial, Global
Institutional and Global Energy reportable segments derive a small amount of revenue directly from service offerings.

Total service revenue at public exchange rates by reportable segment is shown below.

(millions)
Global Industrial
Global Institutional
Global Energy
Other

Geographic Information

Service Revenue

2015

$ 48.4
36.4
291.9
670.6

2014

$ 53.2
31.1
294.1
655.1

2013

$ 51.9
27.0
179.3
619.4

Net sales and long-lived assets at public exchange rates by geographic region are as follows:

(millions)
United States
Europe
Asia Pacific
Latin America
MEA
Canada
Total

2015
$ 7,073.2
2,442.1
1,630.1
1,100.8
682.3
616.6
$ 13,545.1

Net Sales

2014
$ 7,233.6
2,816.5
1,685.9
1,177.4
654.1
713.0
$ 14,280.5

2013
$ 6,696.0
2,707.6
1,631.8
1,022.6
547.4
648.0
$ 13,253.4

Long-Lived Assets, net

2015
$ 8,838.2
1,508.9
2,315.2
564.2
331.0
636.6
$ 14,194.1

2014

$ 8,656.0
1,723.1
2,339.8
779.8
343.7
732.0
$ 14,574.4

Net sales by geographic region were determined based on origin of sale. Geographic data for long-lived assets is based on physical
location of those assets. There were no sales from a single foreign country or individual customer that were material to the company’s
consolidated net sales.

107

18. QUARTERLY FINANCIAL DATA (UNAUDITED)

(millions, except per share)
2015
Net sales
Cost of sales (including special charges of $0.6, $11.0,

$23.8 and $45.2 in Q1, Q2, Q3 and Q4, respectively)

Selling, general and administrative expenses
Special (gains) and charges
Operating income
Interest expense, net
Income before income taxes
Provision for income taxes
Net income including noncontrolling interest
Less: Net income attributable to noncontrolling interest

(including special charges of $11.1 and $1.7 in Q3 and
Q4, respectively)

Net income attributable to Ecolab
Earnings attributable to Ecolab per common share

Basic
Diluted

Weighted-average common shares outstanding

Basic
Diluted

2014
Net sales
Cost of sales (including special charges of $6.0, $1.1,
$0.8 and $6.4 in Q1, Q2, Q3 and Q4, respectively)

Basic
Diluted

Weighted-average common shares outstanding

Basic
Diluted

First

Quarter

Second
Quarter

Third

Quarter

Fourth
Quarter

Year

$ 3,297.6

$ 3,389.1

$ 3,446.4

$ 3,412.0

$ 13,545.1

1,765.3
1,136.8
7.8
387.7
62.5
325.2
89.8
235.4

1,806.5
1,079.2
65.6
437.8
61.2
376.6
67.8
308.8

1,820.0
1,070.7
142.7
413.0
57.6
355.4
105.3
250.1

1,831.7
1,058.8
198.7
322.8
62.3
260.5
37.6
222.9

7,223.5
4,345.5
414.8
1,561.3
243.6
1,317.7
300.5
1,017.2

2.0
$ 233.4

6.8
$ 302.0

(7.7)
$ 257.8

14.0
$ 208.9

15.1
$ 1,002.1

$ 0.78
$ 0.77

298.2
303.2

$ 1.02
$ 1.00

296.2
301.1

$ 0.87
$ 0.86

295.2
300.0

$ 0.71
$ 0.69

295.8
300.6

$ 3.38
$ 3.32

296.4
301.4

$ 3,336.6

$ 3,568.2

$ 3,694.9

$ 3,680.8

$ 14,280.5

1,819.2
1,136.9
29.6
350.9
65.1
285.8
91.3
194.5
3.5
$ 191.0

$ 0.64
$ 0.62

300.6
306.5

1,909.4
1,152.7
(6.1)
512.2
66.2
446.0
131.0
315.0
3.6
$ 311.4

$ 1.04
$ 1.02

299.6
305.2

1,970.6
1,145.9
7.0
571.4
63.3
508.1
138.7
369.4
4.5
$ 364.9

$ 1.22
$ 1.19

300.0
305.7

1,979.9
1,142.1
38.3
520.5
62.0
458.5
115.2
343.3
7.8
$ 335.5

$ 1.12
$ 1.10

300.1
305.6

7,679.1
4,577.6
68.8
1,955.0
256.6
1,698.4
476.2
1,222.2
19.4
$ 1,202.8

$ 4.01
$ 3.93

300.1
305.9

Per share amounts do not necessarily sum due to changes in the calculation of shares outstanding for each discrete period and
rounding.

108

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Disclosure Controls and Procedures

As of December 31, 2015, we carried out an evaluation, under the supervision and with the participation of our management, including
our Chairman of the Board and Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of
our disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 as
amended). Based upon that evaluation, our Chairman of the Board and Chief Executive Officer and our Chief Financial Officer
concluded that our disclosure controls and procedures are effective.

Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Under the
supervision and with the participation of our management, including our Chairman of the Board and Chief Executive Officer and our Chief
Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the 2013
framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Based on our evaluation under this framework, our management concluded that our internal control over financial reporting
was effective as of December 31, 2015.

The Company’s independent registered public accounting firm, PricewaterhouseCoopers LLP, has audited the effectiveness of the
Company’s internal control over financial reporting as of December 31, 2015. Their report, and our management reports, can be found in
Item 8 of Part II of this Form 10-K.

During the period October 1 - December 31, 2015 there were no changes in our internal control over financial reporting that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

109

PART III

Item 10. Directors, Executive Officers of the Registrant and Corporate Governance.

Information about our directors is incorporated by reference from the discussion under the heading “Proposal 1: Election of Directors”
located in the Proxy Statement. Information about compliance with Section 16(a) of the Securities Exchange Act of 1934, as amended, is
incorporated by reference from the discussion under the heading “Section 16(a) Beneficial Ownership Reporting Compliance” located in
the Proxy Statement. Information about our Audit Committee, including the members of the Committee, and our Audit Committee
financial experts, is incorporated by reference from the discussion under the heading “Corporate Governance,” and sub-headings “Board
Committees” and “Audit Committee,” located in the Proxy Statement. Information about our Code of Conduct is incorporated by reference
from the discussion under the heading “Corporate Governance Materials and Code of Conduct” located in the Proxy Statement.
Information regarding our executive officers is presented under the heading “Executive Officers of the Registrant” in Part I, Item 1(e) of
this Form 10-K, and is incorporated herein by reference.

Item 11. Executive Compensation.

Information appearing under the headings entitled “Executive Compensation” and “Director Compensation” located in the Proxy
Statement is incorporated herein by reference. However, pursuant to Instructions to Item 407(e)(5) of Securities and Exchange
Commission Regulation S-K, the material appearing under the sub-heading “Compensation Committee Report” shall not be deemed to
be “filed” with the Commission.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.

Information appearing under the heading entitled “Security Ownership” located in the Proxy Statement is incorporated herein by
reference. Information appearing under the heading entitled “Equity Compensation Plan Information” located in the Proxy Statement is
incorporated herein by reference.

A total of 1,035,650 shares of Common Stock held by our directors and executive officers, some of whom may be deemed to be
“affiliates” of the Company, have been excluded from the computation of market value of our Common Stock on the cover page of this
Form 10-K. This total represents that portion of the shares reported as beneficially owned by our directors and executive officers as of
June 30, 2015 which are actually issued and outstanding.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

Information appearing under the headings entitled “Director Independence Standards and Determinations” and “Related Person
Transactions” located in the Proxy Statement is incorporated herein by reference.

Item 14. Principal Accounting Fees and Services.

Information appearing under the heading entitled “Audit Fees” located in the Proxy Statement is incorporated herein by reference.

100

110

Item 15. Exhibits, Financial Statement Schedules.

PART IV

The following information required under this item is filed as part of this report:

(a)(1)

Financial Statements

(i) Report of Independent Registered Public Accounting Firm.

(ii) Consolidated Statements of Income for the years ended December 31, 2015, 2014 and 2013.

(iii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2015, 2014 and 2013.

(iv) Consolidated Balance Sheets at December 31, 2015 and 2014.

(v) Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013.

(vi) Consolidated Statements of Equity for the years ended December 31, 2015, 2014 and 2013.

(vii) Notes to Consolidated Financial Statements.

(a)(2)

Financial Statement Schedules

All financial statement schedules are omitted because they are not applicable or the required information is shown in
the consolidated financial statements or the accompanying notes to the consolidated financial statements. The separate
financial statements and summarized financial information of majority-owned subsidiaries not consolidated and of fifty
percent or less owned persons have been omitted because they do not satisfy the requirements for inclusion in this
Form 10-K.

(a)(3)

The documents below are filed as exhibits to this Report. We will, upon request and payment of a fee not exceeding
the rate at which copies are available from the Securities and Exchange Commission, furnish copies of any of the
following exhibits to stockholders.

(2.1)

(2.2)

(2.3)

(2.4)

(2.5)

(2.6)

(3.1)

(3.2)

Agreement and Plan of Merger dated as of July 19, 2011, among Ecolab Inc., Sustainability Partners Corporation and
Nalco Holding Company – Incorporated by reference to Exhibit (2.1) of our Form 8-K dated July 19, 2011. (File No. 001-
9328)

Agreement and Plan of Merger, dated as of October 11, 2012, among Ecolab Inc., OFC Technologies Corp. and
Permian Mud Service, Inc. – Incorporated by reference to Exhibit (2.1) of our Form 8-K dated October 12, 2012. (File
No. 001-9328)

First Amendment dated as of November 28, 2012 to Agreement and Plan of Merger, dated as of October 11, 2012,
among Ecolab Inc., OFC Technologies Corp. and Permian Mud Service, Inc. – Incorporated by reference to Exhibit
(2.3) of our Form 10-K Annual Report for the year ended December 31, 2012. (File No. 001-9328)

Second Amendment dated as of November 30, 2012 to Agreement and Plan of Merger, dated as October 11, 2012,
among Ecolab Inc., OFC Technologies Corp. and Permian Mud Service, Inc. – Incorporated by reference to Exhibit
(2.1) of our Form 8-K dated November 30, 2012. (File No. 001-9328)

Third Amendment dated as of December 28, 2012 to Agreement and Plan of Merger, dated as of October 11, 2012,
among Ecolab Inc., OFC Technologies Corp. and Permian Mud Services, Inc. – Incorporated by reference to Exhibit
(2.4) of our Form 8-K dated April 10, 2013. (File No. 001-9328)

Fourth Amendment dated as of April 10, 2013 to Agreement and Plan of Merger, dated as of October 11, 2012, among
Ecolab Inc., OFC Technologies Corp. and Permian Mud Services, Inc. – Incorporated by reference to Exhibit (2.5) of
our Form 8-K dated April 10, 2013. File No. 001-9328)

Restated Certificate of Incorporation of Ecolab Inc., dated as of January 2, 2013 – Incorporated by reference to Exhibit
(3.2) of our Form 8-K dated January 2, 2013. (File No. 001-9328)

By-Laws, as amended through December 3, 2015 – Incorporated by reference to Exhibit (3.1) of our Form 8-K dated
December 3, 2015. (File No. 001-9328)

101

111

(4.1)

Common Stock - see Exhibits (3.1) and (3.2).

(4.2)

(4.3)

(4.4)

(4.5)

(4.6)

Form of Common Stock Certificate effective January 2, 2013 – Incorporated by reference to Exhibit (4.2) of our Form
10-K Annual Report for the year ended December 31, 2012. (File No. 001-9328)

Amended and Restated Indenture, dated as of January 9, 2001, between Ecolab Inc. and The Bank of New York Trust
Company, N.A. (as successor in interest to J.P. Morgan Trust Company, National Association and Bank One, NA) as
Trustee - Incorporated by reference to Exhibit (4)(A) of our Form 8-K dated January 23, 2001. (File No. 001-9328)

Second Supplemental Indenture, dated as of December 8, 2011, between the Company, Wells Fargo Bank, National
Association, as Trustee and the Bank of New York Mellon Trust Company, N.A. (formerly known as The Bank of New
York Trust Company, N.A., as successor in interest to J.P. Morgan Trust Company, National Association and Bank
One, National Association), as original trustee – Incorporated by reference to Exhibit (4.2) of our Form 8-K dated
December 5, 2011. (File No. 001-9328)

Forms of 2.375% Notes due 2014 Notes, 3.000% Notes due 2016, 4.350% Notes due 2021 and 5.500% Notes due
2041 – Included in Exhibit (4.4) above.

Fourth Supplemental Indenture, dated as of December 13, 2012, between The Company, Wells Fargo Bank National
Association, as Trustee and The Bank of New York Mellon Trust Company, N.A. (formerly known as The Bank of New
York Trust Company, N.A., as successor in interest to J.P. Morgan Trust Company, National Association and Bank
One, National Associated as original trustee – Incorporated by reference to Exhibit (4.2) of our Form 8-K dated
December 13, 2012. (File No. 001-9328)

(4.7)

Form of 1.450% Note due December 8, 2017 – Included in Exhibit (4.6) above.

(4.8)

(4.9)

Indenture, dated as of January 12, 2015, between Ecolab Inc. and Wells Fargo Bank, National Association, as Trustee
– Incorporated by reference to Exhibit 4.1 of our Form 8-K dated January 15, 2015. (File No. 001-9328).

First Supplemental Indenture, dated as of January 15, 2015, between Ecolab Inc. and Wells Fargo Bank, National
Association, as Trustee – Incorporated by reference to Exhibit 4.1 of our Form 8-K dated January 15, 2015. (File No.
001-9328).

(4.10)

Forms of 1.550% Notes due 2018 and 2.250% Notes due 2020 -- Included in Exhibit (4.9) above.

(4.11)

Second Supplemental Indenture, dated July 8, 2015, between Ecolab Inc. and Wells Fargo Bank, National Association,
as Trustee – Incorporated by reference to Exhibit 4.2 of our Form 8-K dated July 8, 2015. (File No. 001-9328)

(4.12)

Form of 2.625% Euro Notes due 2025 – Included in Exhibit (4.11) above.

(4.13)

Third Supplemental Indenture, dated January 14, 2016, between Ecolab Inc. and Wells Fargo Bank, National
Association, as Trustee – Incorporated by reference to Exhibit 4.2 of our Form 8-K dated January 11, 2016. (File No.
001-9328)

(4.14)

Forms of 2.000% Notes due 2019 and 3.250% Notes due 2023 – included in Exhibit (4.13) above.

Copies of other constituent instruments defining the rights of holders of our long-term debt are not filed herewith,
pursuant to Section (b)(4)(iii) of Item 601 of Regulation S-K, because the aggregate amount of securities authorized
under each of such instruments is less than 10% of our total assets on a consolidated basis. We will, upon request by
the Securities and Exchange Commission, furnish to the Commission a copy of each such instrument.

(10.1)

(10.2)

Amended and Restated $2.0 billion 5-Year Revolving Credit Facility, dated as of December 3, 2014, among Ecolab Inc.,
the lenders party thereto, the issuing banks party thereto, Bank of America, N.A., as administrative agent and Swingline
Bank, and Citibank, N.A., JPMorgan Chase Bank, N.A. and The Bank of Tokyo-Mitsubishi UFJ, Ltd., as co-syndication
agents – Incorporated by reference to Exhibit (10.1) of our Form 8-K dated December 3, 2014. (File No. 001-9328)

First Amendment to Note Purchase Agreement dated July 26, 2006, dated as of October 27, 2011, by and among
Ecolab Inc. and the Noteholders party thereto – Incorporated by reference to Exhibit (10.2) of our Form 8-K dated
October 27, 2011. (File No. 001-9328)

(10.3)

Note Purchase Agreement dated October 27, 2011, by and among Ecolab Inc. and the Purchasers party thereto –
Incorporated by reference to Exhibit (10.1) of our Form 8-K dated October 27, 2011. (File No. 001-9328)

102

112

(10.4)

Documents comprising global Commercial Paper Programs

(i) U.S. $200,000,000 Euro-Commercial Paper Programme

(a) Amended and Restated Dealer Agreement dated 2 December 2005 between Ecolab Inc. (as Guarantor),

Ecolab B.V. and Ecolab Holding GmbH (as Issuers), Ecolab Inc., Credit Suisse First Boston (Europe) Limited
(as Arranger), and Citibank International plc and Credit Suisse First Boston (Europe) Limited (as Dealers) –
Incorporated by reference to Exhibit (10)B(i)(a) of our Form 10-K Annual Report for the year ended
December 31, 2005. (File No. 001-9328)

(b) Amended and Restated Note Agency Agreement dated as of 2 December 2005 between Ecolab Inc., Ecolab
B.V. and Ecolab Holding GmbH (as Issuers) and Citibank, N.A. as Issue and Paying Agent – Incorporated by
reference to Exhibit (10)B(i)(b) of our Form 10-K Annual Report for the year ended December 31, 2005. (File
No. 001-9328)

Incorporated by reference to Exhibit (10)B(i)(c) of our Form 10-K Annual Report for the year ended December
31, 2005. (File No. 001-9328)

(d) Deed of Guarantee made on 2 December 2005 – Incorporated by reference to Exhibit (10)B(i)(d) of our Form

10-K Annual Report for the year ended December 31, 2005. (File No. 001-9328)

(ii) U.S. $2,000,000,000 U.S. Commercial Paper Program

(a) Form of Commercial Paper Dealer Agreement for 4(a)(2) Program dated as of September 22, 2014. The

dealers for the program are Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, J.P. Morgan
Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Mizuho Securities USA Inc., and Wells
Fargo Securities, LLC - Incorporated by reference to Exhibit (10.1)(a) of our Form 10-Q for the quarter ended
September 30, 2014. (File No. 001-9328)

(b) Commercial Issuing and Paying Agency Agreement dated as of September 22, 2014 between Ecolab Inc.
and Deutsche Bank Trust Company Americas as Issuing and Paying Agent - Incorporated by reference to
Exhibit (10.1)(b) of our Form 10-Q for the quarter ended September 30, 2014. (File No. 001-9328)

Incorporated by reference to Exhibit (10.1)(c) of our Form 10-Q for the quarter ended September 30, 2014.
(File No. 001-9328)

(10.5)

(i) Ecolab Inc. 2001 Non-Employee Director Stock Option and Deferred Compensation Plan, as amended and

restated effective August 1, 2013 – Incorporated by reference to Exhibit (10.6) of our Form 10-K Annual Report for
the year ended December 31, 2013. (File No. 001-9328)

(ii) Master Agreement Relating to Options (as in effect through May 7, 2004) – Incorporated by reference to Exhibit

(10)D(i) of our Form 10-Q for the quarter ended June 30, 2004. (File No. 001-9328)

(iii) Master Agreement Relating to Periodic Options, as amended effective as of May 1, 2004 – Incorporated by

reference to Exhibit (10)D(ii) of our Form 10-Q for the quarter ended June 30, 2004. (File No. 001-9328)

(iv) Amendment No. 1 to Master Agreement Relating to Periodic Options, as amended effective May 2, 2008 –

Incorporated by reference to Exhibit (10)B of our Form 10-Q for the quarter ended September 30, 2008. (File No.
001-9328)

(10.6)

(i) Note Purchase Agreement, dated as of July 26, 2006 by and among Ecolab Inc. and the Purchasers party thereto

– Incorporated by reference to Exhibit (10) of our Form 8-K dated July 26, 2006. (File No. 001-9328)

(ii) First Amendment to Note Purchase Agreement dated July 26, 2006, dated as of October 27, 2011, by and among
Ecolab Inc. and the Noteholders party thereto – Incorporated by reference to Exhibit (10.2) of our Form 8-K dated
October 27, 2011. (File No. 001-9328)

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(10.7)

Form of Director Indemnification Agreement. Substantially identical agreements are in effect as to each of our directors
– Incorporated by reference to Exhibit (10)I of our Form 10-K Annual Report for the year ended December 31, 2003.
(File No. 001-9328)

(10.8)

(i) Ecolab Executive Death Benefits Plan, as amended and restated effective March 1, 1994 – Incorporated by

reference to Exhibit (10)H(i) of our Form 10-K Annual Report for the year ended December 31, 2006. See also
Exhibit (10.14) hereof. (File No. 001-9328)

(ii) Amendment No. 1 to Ecolab Executive Death Benefits Plan, effective July 1, 1997 – Incorporated by reference to
Exhibit (10)H(ii) of our Form 10-K Annual Report for the year ended December 31, 1998. (File No. 001-9328)

(iii) Second Declaration of Amendment to Ecolab Executive Death Benefits Plan, effective March 1, 1998 -

Incorporated by reference to Exhibit (10)H(iii) of our Form 10-K Annual Report for the year ended December 31,
1998. (File No. 001-9328)

(iv) Amendment No. 3 to the Ecolab Executive Death Benefits Plan, effective August 12, 2005 – Incorporated by

reference to Exhibit (10)B of our Form 8-K dated December 13, 2005. (File No. 001-9328)

(v) Amendment No. 4 to the Ecolab Executive Death Benefits Plan, effective January 1, 2005 – Incorporated by

reference to Exhibit (10)H(v) of our Form 10-K Annual Report for the year ended December 31, 2009. (File No.
001-9328)

(vi) Amendment No. 5 to the Ecolab Executive Death Benefits Plan, effective May 6, 2015 – Incorporated by reference

to Exhibit 10.2 of our Form 10-Q for the quarter ended June 30, 2015. (File No. 001-9328)

(10.9)

(i) Ecolab Executive Long-Term Disability Plan, as amended and restated effective January 1, 1994 – Incorporated

by reference to Exhibit (10)I of our Form 10-K Annual Report for the year ended December 31, 2004. (File No.
001-9328). See also Exhibit (10.14) hereof.

(ii) Amendment No. 1 to the Ecolab Executive Long-Term Disability Plan, effective August 21, 2015 – Incorporated by

reference to Exhibit 10.1 of our Form 10-Q for the quarter ended September 30, 2015. (File No. 001-9328)

(10.10)

(i) Ecolab Supplemental Executive Retirement Plan, as amended and restated effective as of January 1, 2014 –
Incorporated by reference to Exhibit 10.11 of our Form 10-K Annual Report for the year ended December 31,
2013. (File No. 001-9328). See also Exhibit (10.14) hereof.

(10.11)

(10.12)

(ii) Amendment No. 1 to the Ecolab Supplemental Executive Retirement Plan, effective May 6, 2015 – Incorporated

by reference to Exhibit 10.1 of our Form 10-Q for the quarter ended June 30, 2015. (File No. 001-9328)

Ecolab Mirror Savings Plan, as amended and restated effective as of January 1, 2014 – Incorporated by reference to
Exhibit 10.12 of our Form 10-K Annual Report for the year ended December 31, 2013. (File No. 001-9328) See also
Exhibit (10.14) hereof.

Ecolab Mirror Pension Plan, as amended and restated effective as of January 1, 2014 – Incorporated by reference to
Exhibit 10.13 of our Form 10-K Annual Report for the year ended December 31, 2013. (File No. 001-9328). See also
Exhibit (10.14) hereof.

(10.13)

(i) Ecolab Inc. Administrative Document for Non-Qualified Plans (Amended and Restated effective as of January 1,

2011) – Incorporated by reference to Exhibit (10.16) of our Form 10-K Annual Report for the year ended December
31, 2011. (File No. 001-9328)

(ii) Amendment No. 1 to the Ecolab Inc. Administrative Document for Non-Qualified Plans effective as of January 1,
2013 – Incorporated by reference to Exhibit (10.14)(II) of our Form 10-K Annual Report for the year ended
December 31, 2013. (File No. 001-9328)

(10.14)

Ecolab Inc. Management Performance Incentive Plan, as amended and restated on February 27, 2014 – Incorporated
by reference to Exhibit (10.1) of our Form 8-K dated May 9, 2014. (File No. 001-9328)

(10.15)

(i) Ecolab Inc. Change in Control Severance Compensation Policy, as amended and restated effective February 26,

2010 – Incorporated by reference to Exhibit (10) of our Form 8-K dated February 26, 2010. (File No. 001-9328)

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(ii) Amendment No. 1 to Ecolab Inc. Change-in-Control Severance Policy (as Amended and Restated effective as of
February 26, 2010) – Incorporated by reference to Exhibit (10.18)(ii) of our Form 10-K Annual Report for the year
ended December 31, 2011. (File No. 001-9328)

(10.16)

Description of Ecolab Management Incentive Plan.

(10.17)

(i) Ecolab Inc. 2010 Stock Incentive Plan, as amended and restated effective May 2, 2013 – Incorporated by

reference to Exhibit (10.1) of our Form 8-K dated May 2, 2013. (File No. 001-9328)

(ii) Sample form of Non-Statutory Stock Option Agreement under the Ecolab Inc. 2010 Stock Incentive Plan –
Incorporated by reference to Exhibit (10)B of our Form 8-K dated May 6, 2010. (File No. 001-9328)

(iii) Sample form of Restricted Stock Award Agreement under the Ecolab Inc. 2010 Stock Incentive Plan –

Incorporated by reference to Exhibit (10)C of our Form 8-K dated May 6, 2010. (File No. 001-9328)

(iv) Sample form of Performance-Based Restricted Stock Award Agreement under the Ecolab Inc. 2010 Stock

Incentive Plan – Incorporated by reference to Exhibit (10)D of our Form 8-K dated May 6, 2010. (File No. 001-
9328)

(v) Sample form of Restricted Stock Unit Award Agreement under the Ecolab Inc. 2010 Stock Incentive Plan –

Incorporated by reference to Exhibit (10)A of our Form 10-Q for the quarter ended September 30, 2010. (File No.
001-9328)

(vi) Sample form of Performance-Based Restricted Stock Award Agreement under the Ecolab Inc. 2010 Stock

Incentive as adopted December 2, 2015.

(10.18)

Policy on Reimbursement of Incentive Payments adopted December 4, 2008 – Incorporated by reference to Exhibit
(10)W of our Form 10-K Annual Report for the year ended December 31, 2008. (File No. 001-9328)

(10.19)

Second Amended and Restated Nalco Holding Company 2004 Stock Incentive Plan – Incorporated by reference to
Exhibit (4.3) of our Post-Effective Amendment No. 1 on Form S-8 to Form S-4 Registration Statement dated December
2, 2011. (File No. 001-9328)

(10.20)

Form of Nalco Company Death Benefit Agreement and Addendum to Death Benefit Agreement – Incorporated by
reference from Exhibit (99.2) on Form 8-K of Nalco Holding Company filed on May 11, 2005. (File No. 001-32342)

(10.21)

Sublease Agreement, dated as of November 4, 2003 between Leo Holding Company, as sub-landlord and Ondeo Nalco
Company, as subtenant – Incorporated by reference from Exhibit (10.6) of the Registration Statement on Form S-4 of
Nalco Company filed on May 17, 2004. (File No. 333-115560)

(14.1)

Ecolab Code of Conduct, as amended November 26, 2012 – Incorporated by reference to Exhibit (14.1) of our Form 10-
K Annual Report for the year ended December 31, 2012. (File No. 001-9328)

(21.1)

List of Subsidiaries.

(23.1)

Consent of Independent Registered Public Accounting Firm.

(24.1)

Powers of Attorney.

(31.1)

Rule 13a-14(a) Certifications.

(32.1)

Section 1350 Certifications.

(101.1)

Interactive Data File.

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EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS

Included in the preceding list of exhibits are the following management contracts or compensatory plans or arrangements:

Exhibit No.

Description

(10.5)

Ecolab Inc. 2001 Non-Employee Director Stock Option and Deferred Compensation Plan.

(10.7)

Form of Director Indemnification Agreement.

(10.8)

Ecolab Executive Death Benefits Plan.

(10.9)

Ecolab Executive Long-Term Disability Plan.

(10.10)

Ecolab Supplemental Executive Retirement Plan.

(10.11)

Ecolab Mirror Savings Plan.

(10.12)

Ecolab Mirror Pension Plan.

(10.13)

Ecolab Inc. Administrative Document for Non-Qualified Plans.

(10.14)

Ecolab Inc. Management Performance Incentive Plan.

(10.15)

Ecolab Inc. Change in Control Severance Compensation Policy.

(10.16)

Description of Ecolab Inc. Management Incentive Plan.

(10.17)

Ecolab Inc. 2010 Stock Incentive Plan.

(10.18)

Policy on Reimbursement of Incentive Payments.

(10.19)

Second Amended and Restated Nalco Holding Company 2004 Stock Incentive Plan.

(10.20)

Nalco Company Death Benefit Agreement and Addendum to Death Benefit Agreement.

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116

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Ecolab Inc. has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized, on the 26th day of February, 2016.

SIGNATURES

ECOLAB INC.
(Registrant)

By: /s/ Douglas M. Baker, Jr.

Douglas M. Baker, Jr.
Chairman of the Board
and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on
behalf of Ecolab Inc. and in the capacities indicated, on the 26th day of February 2016.

/s/ Douglas M. Baker, Jr.
Douglas M. Baker, Jr.

/s/ Daniel J. Schmechel
Daniel J. Schmechel

/s/ Bryan L. Hughes
Bryan L. Hughes

/s/ James J. Seifert
James J. Seifert

as attorney-in-fact for:
Barbara J. Beck, Les S. Biller, Carl M. Casale, Stephen I. Chazen,
Jeffrey M. Ettinger, Jerry A. Grundhofer, Arthur J. Higgins, Joel W.
Johnson, Michael Larson, Jerry W. Levin, Robert L. Lumpkins,
David W. MacLennan, Tracy B. McKibben, Victoria J. Reich,
Suzanne M. Vautrinot and John J. Zillmer

Chairman of the Board and Chief Executive Officer

(Principal Executive Officer and Director)

Chief Financial Officer

(Principal Financial Officer)

Senior Vice President and Corporate Controller

(Principal Accounting Officer)

Directors

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117

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Registration Nos. 2-90702; 33-18202;
33-55986; 33-56101; 333-95043; 333-109890; 33-34000; 33-56151; 333-18627; 333-109891; 33-39228; 33-56125; 333-70835;
33-60266; 333-95041; 333-40239; 333-95037; 333-50969; 333-58360; 333-97927; 333-115567; 333-129427; 333-129428; 333-140988;
333-115568; 333-132139; 333-147148; 333-163837; 333-163838; 333-165130; 333-165132; 333-166646; 333-174028; 333-176601;
333-178300; 333-178302; 333-184650; 333-190317; 333-199729; 333-199730; and 333-199732) and Form S-3 (Registration No. 333-
201445) of Ecolab Inc. of our report dated February 26, 2016 relating to the consolidated financial statements and the effectiveness of
internal control over financial reporting, which appears in this Annual Report on Form 10-K.

/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Minneapolis, Minnesota
February 26, 2016

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