Ecolab Annual Report 2017

FY2017 Annual Report · Ecolab

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Accelerating
GROWTH

A N N U A L R E P O R T 2 0 1 7

ECOLAB OVERVIEW

Accelerating growth through
innovation and expertise

Ecolab is Everywhere It MattersTM, because clean water,
safe food, abundant energy and healthy environments
matter everywhere

A trusted partner at nearly 3 million customer locations, Ecolab Inc. is the global leader in
water, hygiene and energy technologies and services that protect people and vital resources.
Ecolab’s 48,000 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.

From restaurants and hotels to refineries and manufacturing facilities, Ecolab’s more than
26,500 sales-and-service associates, the industry’s largest and best-trained direct sales-
and-service force, help 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.

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

www.facebook.com/ecolab or LinkedIn at www.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 is located on page 14 of the Form 10-K.

ECOLAB STOCK
PERFORMANCE

HIGH

LOW

2017 4Q

$137.96

$128.38

134.28

127.18

134.89

124.42

126.17

117.29

2016 4Q

$122.28

$110.65

124.60

116.66

121.81

109.83

113.69

98.62

2015 4Q

$122.48

$109.64

117.69

103.09

118.27

110.03

117.00

97.78

BUSINESS MIX 2017 PERCENT OF TOTAL SALES

36%
Global Industrial

35%
Global Institutional

23%
Global Energy

6%
Other

SALES BY REGION 2017 PERCENT OF TOTAL SALES

58%
North America

2 ECOLAB ANNUAL REPORT 2017

19%
Europe

Latin America

12%

Asia Pacific
(including Greater China)

Middle East
and Africa

NET SALES MILLIONS

$14,281

$13,253

$13,545

$13,153

$13,838

2013

2014

2015

2016

2017

NET INCOME
ATTRIBUTABLE
TO ECOLAB MILLIONS

$1,203

$968

$1,002

$1,508

$1,230

SUMMARY

MILLIONS, EXCEPT PER SHARE

2017

2016

2015

2017

2016

PERCENT CHANGE

Net Sales

$13,838.3

$13,152.8

$13,545.1

(3)%

Net Income Attributable to Ecolab

1,508.4

1,229.6

1,002.1

23%

10.9%

5.13

9.3%

4.14

7.4%

3.32

24%

25%

4.69

4.37

Percent of Sales

Diluted Earnings per Share

Adjusted Diluted Earnings per Share

(non-GAAP measure)

Diluted Weighted-Average Common
Shares Outstanding

Cash Dividends Declared per
Common Share

294.0

296.7

301.4

(1)%

(2)%

2013

2014

2015

2016

2017

1.520

1.420

1.340

Cash Provided by Operating Activities

2,091.3

1,939.7

1,999.8

(3)%

Capital Expenditures

789.6

707.4

771.0

12%

(8)%

Ecolab Shareholders’ Equity

7,618.5

6,901.1

6,909.9

10%

Return on Beginning Equity

21.8%

17.9%

13.8%

DILUTED EARNINGS
PER SHARE DOLLARS

$5.13

REPORTED

$3.93

$3.32

$4.14

Total Debt

7,322.7

6,687.0

6,465.5

10%

$3.16

Total Debt to Capitalization

48.8%

49.0%

48.1%

Total Assets

$19,962.4

$18,330.2

$18,641.7

(2)%

ECOLAB STOCK PERFORMANCE AND COMPARISON

$3.54
2013

$4.18
2014

$4.37
2015

$4.37
2016

$4.69
2017

ADJUSTED (NON-GAAP MEASURE)*

DIVIDENDS DECLARED
PER SHARE DOLLARS

$1.340

$1.420

$1.520

$1.155

$0.965

2013

2014

2015

2016

2017

*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 47 of the Form 10-K.

ECOLAB ANNUAL REPORT 2017 3

$90$110$100$120$130$1401.201.000.901Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q20162015ECOLAB INDEXECOLAB STOCK PRICES&P 500 INDEX20171.101.30ECOLAB STOCK PRICEECOLAB, S&P 500 INDICES

A LETTER FROM ECOLAB’S CHAIRMAN AND CHIEF EXECUTIVE OFFICER

Building momentum to drive customer value

GROWTH ACCELERATION

Throughout 2017, our momentum continued to accelerate. Net new
business gains, better pricing and new products drove improved
sales growth, along with efficiencies that helped us manage
higher delivered product costs. Our continued focus on bringing
innovative solutions to our customers, our world-class corporate
accounts team and the improving global economy all combined to
drive our strong performance.

Our sales and earnings showed sequential quarterly acceleration
through 2017 as our businesses worked aggressively to drive sales
wins. We begin 2018 with top and bottom line momentum and
expanding global opportunities.

GROWTH OPPORTUNITIES UNSHACKLED

We gained momentum as external conditions improved and we
were able to more fully realize the growth potential of our business
model. The business performed well even though we faced some
challenges, from increased raw material prices to literal headwinds
from the severe hurricane season, which had a significant impact
on our large energy, water and paper customers and on our
3,000+ associates in the affected areas.

Our continued focus on bringing innovative
solutions to our customers, our world-class
corporate accounts team and the improving
global economy all combined to drive our
strong performance.

It was heartening to see how the Ecolab team came together to
help each other out and get our customers and our communities
back up and running. It was a true testament to the strength of
the Ecolab culture.

CONTINUED INVESTMENTS IN
GROWTH OPPORTUNITIES

During the year, we completed 12 transactions to expand our
opportunities in healthcare, paper, water management and pest
elimination. Through these investments, we increased market
coverage and added significant new capabilities. We completed
the sale of our equipment care business, further sharpening our
focus on our core businesses.

4 ECOLAB ANNUAL REPORT 2017

We also continue to create new opportunities for growth through
innovation. With our 2017 innovation pipeline exceeding $1 billion,
our newest solutions will help our customers further improve
operations, product quality, safety, sustainability and the bottom
line, and help ensure that we continue to lead in the marketplace.

We’re managing costs through efficiencies and pricing so that we
can continue to invest in growth. We continue to make the right
investments to improve our financial and talent management
systems, expand our supply chain capacity and support our
innovation capabilities.

STRENGTHENING OUR DIGITAL CAPABILITIES

Ecolab’s innovation strategy supports our business model, which
combines chemistry, digital technology and service to deliver
exponential customer value. Through digital technology, we are
increasing our ability to offer real-time, actionable insights and
smarter solutions that drive predictive and preventive service,
enable greater field mobility and productivity, and deliver a
superior customer experience and better outcomes. We are
also gaining internal efficiencies in our field and general and
administrative expenses.

We have three significant advantages in harnessing the benefits
of new technology. First, because we are on the ground in
nearly 3 million customer locations, we have unmatched access
to information at the facility level. Second, our solutions are
hardwired into our customers’ operations, generating data on food
safety, water and energy use. And third, our 95 years of research
and development expertise and field force capability enable us
to turn data into actionable insights and develop solutions to
customer problems quickly and comprehensively.

DIGITAL INNOVATION IS ALREADY DRIVING
BETTER OUTCOMES

We’ve been a pioneer in providing improved visibility and increased
operational control through digital technology, introducing our
3D TRASAR™ Cooling Water Technology more than 30 years ago.
We continue to refine 3D TRASAR, which combines chemistry,
remote services and sophisticated monitoring and control to
improve a range of industrial operations.

We’re expanding the impact of 3D TRASAR technology to other
industries. For example, one dairy processing plant can produce
over a million data points related to cleaning in just one year,
but right now, much of that is captured manually or in separate
IT systems. Our clean-in-place system has advanced sensor
technologies that allow us to assess every wash parameter
at all times — helping customers verify performance, validate
compliance and manage costs and resources.

Through digital technology, we are increasing
our ability to offer real-time, actionable insights
and smarter solutions . . . and deliver a superior
customer experience and better outcomes.

The MARKETGUARD™ 365 System, which provides food service
operators with essential operational insights to support food
safety, and our SMARTPOWER™ warewashing system, which
continuously monitors what’s going on inside the dishmachine
to ensure proper sanitation, are two more examples.

Another recent innovation is our KAY® PROTECT™ Program for
quick-service restaurants, which automates food safety checklists
and integrates data across sources such as food safety audits,
health department inspections and cleaning and sanitation
product usage. This helps streamline complex restaurant
processes, minimize specific sanitation challenges and better
protect consumers against food safety and public health risks.

These are just a few of the digital tools in our portfolio. With
analytics, software and the power of machine learning and
human intervention, we believe the next wave of performance
enhancements, quality assurance and industrial productivity
can be unlocked.

OUR PEOPLE DELIVER HUGE VALUE

As we advance our digital capabilities, our longstanding business
model — the very best products backed by the very best on-site
service — will continue to be the foundation for our success. How
we deliver value through that model will continue to advance with
new tools and technologies, but our competitive advantage will
remain our ability to produce the best results at the lowest total
cost of operation for our customers.

Accelerating
GROWTH

Because our people are key to delivering our full value to our
customers, we continue to focus on bringing the best talent to
Ecolab, and retaining that talent. We made significant progress in
2017 in articulating our employer brand promise and strengthening
our recruiting efforts. Talent will continue to be a major focus of
our growth plan.

POSITIONED FOR GROWTH

We are in an excellent position to continue our growth trajectory. We
know that the world will continue to face increased water shortages,
greater demands for food and energy and growing expectations for
improved public health. We have the solutions, service and insights
to make a difference in the world and reward our shareowners while
doing it.

This is an exciting time for Ecolab. Thank you for the trust you’ve
placed in us.

Sincerely,

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

ECOLAB ANNUAL REPORT 2017 5

2017

FINANCIAL
HIGHLIGHTS

NET SALES

OPERATING INCOME

DILUTED EARNINGS

$13.8

BILLION

$2.0

BILLION

+5%

$5.13

PER SHARE REPORTED

+24%

$4.69

PER SHARE ADJUSTED
+7%

ANNUAL CASH
DIVIDEND RATE

$1.48

PER COMMON SHARE

CASH FLOW
FROM OPERATIONS

YEAR-END
SHARE PRICE

$2.1

BILLION

$134.18

+6%

+8%

+14%

6 ECOLAB ANNUAL REPORT 2017

ECOLAB APPROACH

WORLD-CLASS
SERVICE

INNOVATIVE
TECHNOLOGY
AND PRODUCTS

SOLVE OUR CUSTOMERS’
TOUGHEST CHALLENGES

In every industry we serve, we combine world-class service with
innovative technology and products to help solve our customers’
toughest challenges. This gives us a competitive advantage no
other company can match.

Our 48,000 associates are the key to our success and ability to
deliver superior results for our customers. That’s why we strive
to be the destination for the world’s most capable talent. We
seek out the brightest people — with a variety of backgrounds
and experiences — and help them provide training, a diverse and
inclusive environment and opportunities to grow their own potential
along with our collective impact.

Ecolab’s 26,500 sales-and-service associates make up the industry’s
largest and best trained direct sales-and-service force. Every
day, they help our customers effectively manage their cleaning,
sanitizing, food safety, water and energy management needs at

nearly 3 million customer locations around the world. Their deep
knowledge of our customers’ operations and concerns is invaluable.
Combined with data collected from the advanced, real-time
technologies we use to monitor customer systems and processes,
we can shape our innovation process to ensure new products and
programs solve our customers’ most critical challenges.

Our approach to innovation creates best-in-class products that are
responsibly sourced and developed with close attention to human
and environmental impact. With our expertise in core technologies,
including antimicrobials, dispensing and monitoring, personal and
environmental hygiene, polymers, surfactants, solid chemistry,
water management and digital solutions, our team of 1,600
scientists, engineers and technical specialists improve operational
efficiency, product quality and safety for our customers.

ECOLAB ANNUAL REPORT 2017 7

SUSTAINABILITY

Sustainability is core to our business strategy. We deliver
sustainable solutions that help companies around the world
achieve business results while minimizing environmental and
social impact. The work we do matters, and the way we do
it matters to our employees, customers, investors and the
communities in which we and our customers operate.

ECOLAB’S SUSTAINABILITY GOALS
AND PERFORMANCE

Stewardship of natural resources is an integral part of our
operational and business strategy, from the way we run our
plants and facilities to the products we develop and the way we
serve our customers. We have a history of strong environmental
performance and have made significant strides in recent years
to reduce our environmental impact. As our company grows,
entering new industries and geographies, minimizing the impact
of our own operations is increasingly important.

Our 2020 environmental goals reflect our commitment to
continuous improvement across our global footprint. With a
focus on locations where our risks and impact are most relevant,
we remain committed to achieving these targets.

OUR 2020 SUSTAINABILITY GOALS:

REDUCE WATER
WITHDRAWAL BY

25%

REDUCE GREENHOUSE
GAS EMISSIONS BY

10%

Percentage change from 2015 baseline; measured by intensity
per million dollars in sales.

8 ECOLAB ANNUAL REPORT 2017

HELPING OUR CUSTOMERS REDUCE THEIR
ENVIRONMENTAL IMPACT

Our solutions help customers achieve ambitious business and
environmental goals. With an unparalleled combination of science
and service, we deliver exponential outcomes that benefit
customers and communities. Fundamental to our approach is an
understanding that real and lasting change is accelerated when
economic and environmental benefits align. We call this our
eROISM outcome: the exponential value of improved performance,
operational efficiency and sustainable impact. Measurement is a
critical component of our process to deliver exponential outcomes.
Using our proprietary eROI value approach, we measure our
impact and quantify customers’ return on investment.

By 2030, Ecolab aims to conserve 300 billion gallons of water
annually by reducing water consumption within our own and our
customers’ operations. In 2017, we helped our customers save
more than 171 billion gallons of water. This is equivalent to the
annual drinking water needs of more than 587 million people.
We also helped our customers eliminate more than 44.7 million
pounds of waste and save more than 12 trillion BTUs of energy.

REDUCING AND REUSING WATER IN
OUR OPERATIONS

At Ecolab’s plant in Clearing, Ill., we implemented a water reuse
project in the colloidal silica process, which is projected to reduce
Clearing’s water use by more than 25 percent, contributing to
a nearly 5 percent reduction of Ecolab’s enterprise water use
reduction goal.

AWARDS AND RECOGNITION

Ecolab is recognized for our leadership, innovation, corporate and social

responsibility and commitment to sustainability. In 2017, Ecolab received

recognition from a broad range of leading organizations, including those

shown below.

2017 WORLD’S MOST
ADMIRED COMPANIES

Ecolab was named to Fortune’s 2017 list of
the World’s Most Admired Companies, ranking
third in the chemicals industry and first for
social responsibility, quality of management
and long-term investment value.

2017 WORLD’S MOST
ETHICAL COMPANIES

For the 11th consecutive year, Ecolab was
named to Ethisphere Institute’s list of
the World’s Most Ethical Companies. The
Ethisphere Institute is a leading organization
dedicated to the advancement and sharing of
best practices in business ethics, governance,
anti-corruption and sustainability.

2017 CDP WATER
LEADERSHIP LIST

CDP, a nonprofit global environmental
disclosure platform, named Ecolab to its
Water A List, which recognized 73 global
companies who manage water sustainably.
Ecolab is among 10 percent of companies
participating in CDP’s water program to be
named to the Water A List.

2017 WORLD’S
GREENEST COMPANIES

Newsweek ranked Ecolab second on the U.S.
500 List of the World’s Greenest Companies.
The rankings are based on an evaluation of
the 500 largest publicly traded companies
in the U.S.

2017 DOW JONES
SUSTAINABILITY INDEX

Ecolab was named to the 2017 Dow Jones
Sustainability North America Index for the
third consecutive year. The index is based
on an analysis of corporate economic,
environmental and social performance,
including corporate governance, risk
management, branding, climate change
mitigation, supply chain standards and
labor practices.

2017 AMERICA’S MOST
JUST COMPANIES

Ecolab was recognized as one of America’s
Most Just Companies by Forbes magazine
and JUST Capital, a nonprofit that ranks the
largest publicly traded U.S. corporations on
issues like worker pay and treatment, job
creation, healthy products and communities
and environmental impact.

2017 CIVIC 50 LIST

Ecolab was recognized by Points of Light,
the world’s largest organization dedicated
to volunteer service, as one of the most
community-minded companies in the U.S.
The list recognizes companies that use their
time, skills and other resources to improve
the quality of life in the communities where
they operate.

2017 BEST PLACES TO WORK
FOR LGBT EQUALITY

Ecolab received a perfect score of
100 percent in the 2017 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 2017 9

REPORTING SEGMENTS

Ecolab’s “Circle the Customer — Circle the Globe” strategy provides an array of innovative programs, products and

services that integrate to meet the specific operational and sustainability needs of customers throughout the world.

Through this strategy and our varied solution and service mix, one customer may utilize the offerings of several of

our reportable segments.

GLOBAL INDUSTRIAL
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, commercial laundry
and personal care and pharmaceutical manufacturers. Operating units within the Global Industrial reportable segment include Nalco Water,
Food & Beverage, Paper, Textile Care and Life Sciences.

The Nalco Water business provides water treatment products and programs to a wide range of industries for cooling water, boiler water,
process water and wastewater applications. 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. Paper provides water and process applications for the pulp and paper industries. Textile
Care provides wash process solutions for large-scale commercial operations including uniform and linen rental, hospitality and healthcare
laundries. Life Sciences provides comprehensive solutions to serve personal care and pharmaceutical manufacturers in their cleaning,
sanitation and contamination control needs while also ensuring product quality, safety and improved operating efficiency.

GLOBAL INSTITUTIONAL
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 business
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
Operating under the Nalco Champion name, we serve 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 composed of 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 leading supermajor, major, independent and national oil companies.

OTHER
Provides pest elimination through the Pest Elimination business. 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 restaurants and
grocery operations and other customers.

10 ECOLAB ANNUAL REPORT 2017

2017

BUSINESS
HIGHLIGHTS

ACQUIRED ABEDNEGO
January

We acquired this automotive chemical and service business,
focused on helping automotive customers achieve superior
outcomes in their paint operations. With 2016 sales of
approximately $40 million, this transaction broadens the
suite of water management products and services we provide
to automobile manufacturers.

ACQUIRED LABORATOIRES ANIOS
February

We acquired one of Europe’s leading
manufacturers of hygiene and
disinfection products that primarily
serves the healthcare market. The
acquisition expands the solutions we
offer while providing a complementary
geographic footprint. 2016 sales of the

acquired business were approximately $245 million, along with an
attractive international distribution business.

EXPANDED WATER RISK MONETIZER
March

We launched an enhanced version
of our Water Risk Monetizer, the
industry’s first publicly available
financial modeling tool that enables
businesses to factor current and
future water risks into decision
making. The enhanced tool now
incorporates water quality into
its site-specific risk analysis.

NEW LEAD DIRECTOR APPOINTED

May

The independent directors of the
board appointed Jeffrey M. Ettinger
as independent lead director of the
board. Mr. Ettinger replaces Jerry W.
Levin, who retired from the board
after more than 24 years of service.

OPENED WATER UNIVERSITY
October

We opened our new Water University
in Naperville, Ill. This facility provides
the tools and training businesses need
to strategically manage water more
efficiently and showcases our water
management technologies in a variety
of industries.

SOLD EQUIPMENT CARE
November

We completed the sale of our Equipment Care business as we
sharpened our focus on our core businesses. Equipment Care had
2016 sales of $180 million.

ACQUIRED GEORGIA-PACIFIC
CHEMICALS
November

We acquired a leading paper chemicals
business, bringing additional innovative
chemistries and solutions to our paper
and pulp business. The acquired business
had 2016 revenues of approximately
$43 million.

ACQUIRED ARPAL GROUP
December

We agreed to acquire a cleaning and sanitizing chemical business
that provides products and services in the U.K. and Middle East. With
2016 sales of approximately $20 million, the acquisition strengthens
our capabilities and reach in the U.K. and United Arab Emirates.

ACQUIRED REGIONAL PEST FIRMS
December

We acquired three pest services businesses that provide specialized
capabilities in food storage, strengthening our pest service offerings
to food and beverage customers. Sales for the combined companies
were $36 million in 2016.

ECOLAB ANNUAL REPORT 2017 11

PRODUCT INNOVATION

In 2017, Ecolab’s innovation pipeline was our biggest yet, and is expected to deliver more than $1.2 billion

in total annual revenue in five years. We introduced several new solutions, enabled by digital technology,

to help our customers improve their operational efficiency while reducing

environmental impact.

SMARTPOWER™
is a new warewashing
program that combines
innovative chemistry and advanced cloud computing to help
restaurants reduce rewash by 60 percent, saving them water,
energy and labor costs. By feeding sensor data into the cloud, our
sales-and-service teams can analyze dishwasher performance in
real time to pinpoint and better solve potential issues.

Ultrasil
MembraneCARE 2.0 is Ecolab’s next-generation
ultrafiltration membrane cleaning program, designed for
dairy manufacturers producing premium-quality products. Its
proprietary chemistry reduces cleaning time and water and
energy use by 15 percent and increases membrane capacity
by 10 percent.

Hand Hygiene
Compliance
Monitoring System helps hospitals accurately
monitor hand hygiene to increase compliance and reduce
the risk of healthcare-associated infections (HAIs) through
a system of RFID badges and readers placed in key areas
of patient rooms. Data is compiled to track performance
by individual, department, hospital or system to identify
compliance trends and improve performance.

Legionella
water safety management program
is a comprehensive approach to help healthcare facilities
reduce the risk of a Legionellosis outbreak and establish
compliance. It includes a risk assessment, water safety
plan, training, routine testing and an on-site emergency
response plan and has led to a 60 percent reduction in
cooling tower Legionella positives.

Corrosion Inhibitor
Cortron RN-629 is a proprietary
product that helps oil pipeline operators
meet high environmental standards for
underwater pipelines and extend asset
life by nearly 300 percent.

12 ECOLAB ANNUAL REPORT 2017

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

(cid:2) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2017

OR
(cid:3) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 1-9328

ECOLAB INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)

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

1 Ecolab Place, St. Paul, Minnesota 55102
(Address of principal executive offices) (Zip Code)

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

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

Title of each class
Common Stock, $1.00 par value
2.625% Euro Notes due 2025
1.000% Euro Notes due 2024

Name of each exchange on which registered
New York Stock Exchange, Inc.
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. (cid:2) YES (cid:3) 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. (cid:3) YES (cid:2) 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. (cid:2) YES (cid:3) NO

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. (cid:2) YES (cid:3) 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. (cid:2)

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

Large accelerated filer (cid:2)
Non-accelerated filer (cid:3) (Do not check if a smaller reporting company)

Accelerated filer (cid:3)
Smaller reporting company (cid:3)
Emerging growth company (cid:3)

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new
or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. (cid:3)
Indicate by check mark whether the registrant is a shell Company (as defined in Rule 12b-2 of the Exchange Act). (cid:3) YES (cid:2) NO

Aggregate market value of voting and non-voting common equity held by non-affiliates of registrant on June 30, 2017: $38,254,640,512 (see Item 12,
under Part III hereof), based on a closing price of registrant’s Common Stock of $132.75 per share.

The number of shares of registrant’s Common Stock, par value $1.00 per share, outstanding as of January 31, 2018: 288,858,441 shares.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s Proxy Statement for the Annual Meeting of Stockholders to be held May 3, 2018 and to be filed within 120 days after the
registrant’s fiscal year ended December 31, 2017 (hereinafter referred to as “Proxy Statement”) are incorporated by reference into Part III.

ECOLAB INC.
FORM 10-K
For the Year Ended December 31, 2017

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.
Item 9B. Other Information.

PART III

Item 10. Directors, Executive Officers 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.
Item 16. Form 10-K Summary.

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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”, “Nalco Company” and “Nalco Champion” 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.

General Development of Business.

Ecolab was incorporated as a Delaware corporation in 1924. Our fiscal year is the calendar year ending December 31. International
subsidiaries are included in the financial statements on the basis of their U.S. GAAP (accounting principles generally accepted in the
United States of America) November 30 fiscal year-ends to facilitate the timely inclusion of such entities in our consolidated financial
reporting.

In 2017, we continued to invest in and build our business through various acquisitions that complement our strategic vision. Most notably,
we completed the acquisition of Laboratoires Anios (“Anios”), a leading European manufacturer and marketer of hygiene and disinfection
products for the healthcare, food service, and food and beverage processing industries in February 2017. In November 2017, we
completed the sale of our Equipment Care division which had annualized net sales of approximately $180 million. See Part II, Item 8,
Note 4 of this Form 10-K for additional information about the acquisitions and divestitures of the Company.

Financial Information About Operating Segments and Geographic Areas.

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.

Narrative Description of Business.

General

With 2017 sales of $13.8 billion, we are the global leader in water, hygiene and energy technologies and services that protect people and
vital resources. We deliver comprehensive programs, products and services 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 around the world. Our cleaning and sanitizing programs and products, and pest elimination 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 provided
equipment maintenance and repair services prior to disposal of our Equipment Care business in the fourth quarter of 2017.

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 operating 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, 2017, which are located in Item 8 of Part II of this Form 10-K. Nine of our ten operating segments (eleven
prior to the sale of Equipment Care), have been aggregated into three reportable segments: Global Industrial, Global Institutional and
Global Energy. Our two operating segments that are primarily fee-for-service have been combined into Other, and do not meet the
quantitative criteria to be separately reported. We provide similar information for Other as compared to our three reportable segments as
we consider the information regarding its underlying operating segments as useful in understanding our consolidated results.

2017 Sales by Reportable Segment

2017 Sales by Region

23%

36%

Global Industrial

Global Institutional

Global Energy

Other

19%

North America
Europe
Asia Pacific, excl. Greater China
Greater China
Latin America
MEA

58%

35%

Global Industrial

This reportable segment consists of the Water, Food & Beverage, Paper, Life Sciences and Textile Care operating segments, which
provide 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, pharmaceutical
and commercial laundry industries. The underlying operating segments exhibit similar manufacturing processes, distribution methods and
economic characteristics. Descriptions of the five operating segments which comprise our Global Industrial reportable segment follow
below.

Water

Water serves customers across industrial and institutional markets, with the exception of the pulp and paper industry which is serviced by
Paper and the energy industries which are served by Energy. Within Water, our institutional clients include commercial buildings,
hospitals, universities and hotels. Light industry markets include food and beverage, manufacturing and transportation. Heavy industries
served include power, mining, chemicals and primary metals.

Water provides water treatment products and water technologies programs for cooling water, waste water, boiler water and process
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. Our
wastewater products and programs focus on improving overall plant economics, addressing compliance issues, optimizing equipment
efficiency and improving operator capabilities and effectiveness. 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 in the
use of water for plant processes by optimizing the performance of treatment chemicals and equipment in order to minimize costs and
maximize return on investment.

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. We provide products and programs for water treatment and process applications aimed at
combining environmental benefits with economic gains for our customers. 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 offerings are sold primarily by our
corporate account and field sales employees.

We believe that we are one of the leading suppliers world-wide among suppliers of products and programs for chemical applications
within the industrial water treatment industry.

Food & Beverage

Food & Beverage addresses cleaning and sanitation 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 in processing facilities are sold primarily by our corporate account and field sales employees, while products for use on
farms are sold through dealers and independent, third-party distributors.

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

Paper

Paper provides water and process applications for the pulp and paper industries, offering 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 similar types of products and programs for water treatment and wastewater treatment
as those offered by Water. Also, Paper offers two specialty programs that differentiate its offerings from Water—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
corporate account and 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.

Life Sciences

Effective in the first quarter of 2017, we established the Life Sciences operating segment. Life Science provides contamination control,
cleaning and sanitizing solutions to personal care and pharmaceutical manufacturers. Life Sciences provides detergents, cleaners,
sanitizers, disinfectant, as well as cleaning systems, electronic dispensers and chemical injectors for the application of chemical
products. Additionally, sterile alcohols, sterile biocides, residue removal and dilution solutions, surface wipes, dispensing equipment and
aerosol sprays are primarily sold for application within clean room environments. Products and programs are sold primarily through field
sales personnel and corporate account personnel, and to a lesser extent through distributors.

Life Sciences is comprised of customers and accounts previously included in our Food & Beverage and Healthcare operating segments,
which were related to manufacturing in the following industries: pharmaceutical, animal health and medicine, biologic products, cosmetics
and medical device. Our tailored, comprehensive solutions and technical know-how focus on ensuring product quality and safety while
improving operational efficiency in customers’ cleaning, sanitation and disinfection processes.

Textile Care

Textile Care 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
laundry 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 we are 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 segments, which provide specialized cleaning
and sanitizing products to the foodservice, hospitality, lodging, healthcare, government, education and retail industries. The underlying
operating segments exhibit similar manufacturing processes, distribution methods and economic characteristics. Descriptions of the three
operating segments which comprise our Global Institutional reportable segment follow below.

Institutional

Institutional 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,
Institutional 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 its field sales and corporate account sales personnel. 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 field sales 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 one of the leading global suppliers of warewashing and laundry products and programs to the food service,
hospitality and lodging markets.

Specialty

Specialty 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 “Ecolab” and “Kay” 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 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 manages relationships 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. QSR customers are primarily supplied through third
party distributors while most food retail customers utilize their own distribution networks. While Specialty’s customer base has broadened
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 one of the leading suppliers 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

Healthcare provides infection prevention, surgical solutions and contamination control solutions to acute care hospitals, surgery centers,
medical device Original Equipment Manufacturers (“OEM”), 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", "Microtek" and “Anios” 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 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 segment, which
serves the process chemicals and water treatment needs of the global petroleum and petrochemical industries in both upstream and
downstream applications.

Energy provides on-site, technology-driven solutions to the global drilling and completion, oil and gas production and refining and
petrochemical industries. Our product portfolio includes: additives for drilling and well stimulation, corrosion inhibitors, oil and water
separation, scale control, paraffin and asphaltene control, biocides, hydrate control, hydrogen sulfide removal, oil dispersants, foamers
and anti-foamers, flow improvers, anti-foulants, crude desalting, monomer inhibitors, anti-oxidants, fuel and lubricant additives, and
traditional water treatment.

The Energy operating segment operates under an upstream group composed primarily of our WellChem and Oil Field Chemicals
businesses and a downstream refinery and petrochemical processing group. Our upstream group provides solutions to the oil and gas
production sector, including crude oil and natural gas production, pipeline gathering/transmission systems, gas processing, heavy oil and
bitumen upgrading and enhanced oil recovery. Upstream also supplies chemicals for the cementing, drilling, fracturing and acidizing
phases of well drilling and stimulation. Our priority is to safely manage the critical challenges facing today’s oil and gas producers
throughout the life cycle of their assets, with such an approach helping our customers minimize risk, achieve their production targets and
maximize profitability. Our downstream group provides 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 operational costs and mitigate fouling, corrosion, foaming and the effects of heavy metals during the refining process.
We also offer fuel additives, including corrosion inhibitors, to protect engine fuel systems and pre-market underground storage tanks and
piping. 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 and, to a lesser
extent, through distributors, sales agents and joint ventures.

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

Other

Other consists of the Pest Elimination and Equipment Care, prior to its sale in November 2017, operating segments. We provide pest
elimination and kitchen repair and maintenance through our 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 field sales and service personnel.

Pest Elimination continues to expand its geographic coverage. In addition to the United States, which constitutes the largest operation,
we operate 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 Mexico.

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

Equipment Care

Prior to its sale in November 2017, Equipment Care provided equipment repair, maintenance and preventive maintenance services for
the commercial food service industry. Repair services were offered for in-warranty repair, acting as the manufacturer’s authorized service
agent, as well as after-warranty repair. In addition, Equipment Care operated as a parts distributor to repair service companies and end-
use customers. Operations were solely in the United States.

Additional Information

International Operations

We directly operate in approximately 100 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.

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 is generally 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 and regulations, (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 reportable 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 capabilities, and dosing and metering equipment.

The businesses in our Global Institutional reportable segment and Other 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 compete principally by providing superior value, premium customer support and differentiated products to help our
customers protect their brand reputation.

Our Global Energy reportable 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 quality, technical expertise, chemical formulations, effective global supply chain, strong customer service 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 and, to a lesser extent, sales
agents, are utilized in several markets, as described in the segment descriptions found above.

Number of Employees

We had 48,400 employees as of December 31, 2017.

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 2017 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 the last
three years. Sales of warewashing products were approximately 11% of consolidated net sales in 2017 and 2016 and 10% of
consolidated net sales in 2015.

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, except for
the items listed below, we do not believe that our overall business is materially dependent on any individual patent or trademark.

(cid:2)

Patents related to our TRASAR and 3D TRASAR technology, which are material to our Global Industrial reportable segment.
U.S. and foreign patents protect aspects of our key TRASAR and 3D TRASAR technology until at least 2024.

Trademarks related to Ecolab, Nalco and 3D TRASAR, which collectively are material to all of our reportable segments. The
Ecolab, Nalco 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 Pest Elimination 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.

We believe 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, we 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. During 2017, the impact on our consolidated net income of our joint ventures, in the aggregate, was less than
three percent. The table below identifies our most significant consolidated and non-consolidated joint ventures, summarized by the
primary purpose of the joint venture.

Local Ownership Requirements / Geographic Expansion

Joint Venture

Nalco Saudi Co. Ltd.

AGS Champion LLP

Location

Saudi Arabia

Kazakhstan

Nalco Angola Prestação de Serviços, Limitada

Angola

Segment

Global Energy, Global Industrial

Global Energy

RauanNalco LLP

Nalco Champion EG Sarl

Kazakhstan

Equatorial Guinea

Global Energy

Emirates National Chemical Company LLC

United Arab Emirates

Global Energy

Malaysian Energy Chemical & Services Sdn. Bhd.

Malaysia

Global Energy

Arpal Gulf, LLC

United Arab Emirates

Global Institutional

Nalco Champion Dai-ichi India Private Limited

Nalco Champion Ghana Limited

India

Ghana

Operational Scale / Geographic Critical Mass

Location
Japan

Global Energy

Segment
Global Industrial

Technology / Expanded Product Offering / Manufacturing Capability

Aquatech International, LLC
Treated Water Outsourcing
Derypol, S.A.
Century LLC
CJSC Nalco Element JV
Kogalym Chemicals Plant LLC
Petrochem Performance Products
HanSteel Nalco Water Treatment (Handan) Co., Limited

Location
United States
United States

Spain

United States
Russia
Russia
Azerbaijan

China

Segment
Global Industrial
Global Industrial
Global Industrial
Global Institutional
Global Energy
Global Energy
Global Energy
Global Industrial

Joint Venture

Katayama Nalco Inc.

Joint Venture

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 are considering further regulations in this area. Last year, California passed
the Cleaning Product Right to Know Act of 2017, which will require ingredient transparency on-line and on-label by 2020 and
2021, respectively. New York is in the process of drafting similar regulations with an expected passage in 2018. 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: The nation’s primary chemicals management law, the Toxic Substances Control Act (“TSCA”), was updated for the first
time in 40 years with the passage of the Frank R. Lautenberg Chemical Safety for the 21st Century Act (“LCSA”) in 2016. The
LCSA modernizes the original 1976 legislation, aiming to establish greater public confidence in the safety of chemical
substances in commerce, improve the U.S. Environmental Protection Agency (“EPA”) EPA’s capability and authority to regulate
existing and new chemical substances, and prevent further state action or other notification programs like REACH (see below).
For Ecolab, the new TSCA rules will mainly impact testing and submission costs for new chemical substances in the United
States. In addition, the EPA likely will be 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 final 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 implementing 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 (e.g., Thailand). 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. The same is true for emerging biocide regulations in Asia.

In addition, Pest Elimination 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.

Equipment: Ecolab’s products are dispensed by equipment that is subject to state and local regulatory requirements, as well
as being subject to UL, NSF, and other approval requirements. We have both dedicated manufacturing facilities and third-party
production of our equipment. We are developing processes to monitor and manage changing regulatory regimes and assist
with equipment systems compliance. To date, such requirements have not had a material adverse effect on our consolidated
results of operations, financial position or cash flows.

Other Environmental Legislation: 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 $70 million in 2017
and $60 million in 2016. Approximately $43 million has been budgeted globally for projects in 2018. The decrease in 2018 from
2017 is due to the completion of several large safety projects at our manufacturing facilities.

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 2016. They include a 25 percent reduction in water withdrawals
and a 10 percent reduction in greenhouse gas emissions by 2020. In addition to our internal sustainability performance, we
partner with customers at more than one 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. We also
introduced a customer impact goal for the first time. By partnering with our customers to help them do more with less through
the use of our solutions, we aim to help our customers conserve more than 300 billion gallons of water annually by 2030.

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 35 sites in the United States. Additionally, we have similar
liability at seven 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. 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.

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 million in 2017 and $9 million in 2016.
Our worldwide accruals at December 31, 2017 for probable future remediation expenditures, excluding potential insurance
reimbursements, totaled approximately $21 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.

Iran Threat Reduction and Syria Human Rights Act of 2012

Under the Iran Threat Reduction and Syria Human Rights Act of 2012, which added Section 13(r) of the Securities Exchange Act of
1934, the Company is required to disclose in its periodic reports if it or any of its affiliates knowingly engaged in certain activities,
transactions or dealings relating to Iran or with entities or individuals designated pursuant to certain Executive Orders. Disclosure is
required even where the activities are conducted outside the U.S. by non-U.S. affiliates in compliance with applicable law, and even if the
activities are not covered or prohibited by U.S. law. After the easing of certain sanctions by the United States against Iran in January
2016 and in compliance with the economic sanctions regulations administered by U.S. Treasury’s Office of Foreign Assets Control

(OFAC) and U.S. export control laws, a wholly-owned non-U.S. subsidiary of the Company completed the following sales related to
businesses in our Energy operating segment pursuant to and in compliance with the terms and conditions of OFAC’s General License H:
sales of products used for process and water treatment applications in (i) upstream oil and gas production and (ii) petrochemical plants
totaling $5.9 million during the subsidiary’s fiscal year ended November 30, 2017, and additional sales of such products totaling $0.4
million during December 2017, were made to a distributor in Dubai and two distributors in Iran. The net profit before taxes associated with
these sales is estimated to be $1.6 million and $0.1 million, respectively. Our non-U.S. subsidiary intends to continue doing business in
Iran under General License H in compliance with U.S. economic sanctions and export control laws, which sales may require additional
disclosure pursuant to the abovementioned statute.

Available Information.

We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any reports,
statements or other information we file with the Securities and Exchange Commission (“SEC”) at the SEC’s Public Reference Room at
100 F Street, N.E., Washington, D.C. 20549. You may obtain information about the operation of the SEC Public Reference Room in
Washington, D.C. by calling the SEC at (800) 732-0330. The SEC maintains a website that contains reports, proxy and information
statements, and other information regarding issuers, including the Company, that file electronically with the SEC at http://www.sec.gov.

General information about us, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on
Form 8-K, as well as any amendments and exhibits to those reports, are available free of charge through our website at
www.ecolab.com/investor as soon as reasonably practicable after we file them with, or furnish them to, the SEC.

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.

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 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, 2013

Douglas M. Baker, Jr.

59 Chairman of the Board and Chief Executive Officer

Jan. 2013 – Present

Christophe Beck

Executive Vice President and President – Global Nalco Water
Executive Vice President and President – Global Water & Process
Services
Executive Vice President and President – Regions

May 2017 – Present

May 2015 – May 2017

Jan. 2013 – May 2015

Larry L. Berger

Executive Vice President and Chief Technical Officer

Jan. 2013 – Present

Alex N. Blanco

Executive Vice President and Chief Supply Chain Officer

Jan. 2013 – Present

Darrell R. Brown

Executive Vice President and President – Energy Services
Executive Vice President, Global Downstream and WellChem
Executive Vice President and President – Europe
Executive Vice President and President – Asia Pacific

Jan. 2018 – Present
Apr. 2017 – Dec. 2017
Feb. 2014 – Mar. 2017
Jan. 2013 – Jan. 2014

Thomas W. Handley

President and Chief Operating Officer

Jan. 2013 – Present

Michael A. Hickey

Executive Vice President and President – Global Institutional

Jan. 2013 – Present

Roberto Inchaustegui

Executive Vice President and President – Global Services and Specialty

Jan. 2013 – Present

Bruno Lavandier

Senior Vice President and Corporate Controller
Senior Vice President, Ecolab Catalyst Program
Senior Vice President of Finance, Global Supply Chain
Vice President of Finance, Global Supply Chain
President TIORCO and Vice President of Nalco EOR (Enhanced Oil
Recovery) Solutions

May 2017 – Present
Mar. 2017 – Apr. 2017
Jan. 2015 – Feb. 2017
Aug. 2014 – Dec. 2014
Jan. 2013 – July 2014

Laurie M. Marsh

Executive Vice President – Human Resources
Vice President – Total Rewards and HR Service Delivery & Technology

Nov. 2013 – Present
Jan. 2013 – Oct. 2013

Name

Age

Office

Positions Held Since
Jan. 1, 2013

Michael C. McCormick

Executive Vice President, General Counsel and Secretary
Executive Vice President, General Counsel and Assistant Secretary
Chief Compliance Officer, Deputy General Counsel and Assistant
Secretary
Chief Compliance Officer and Assistant Secretary
Corporate Compliance Officer, Associate General Counsel and Assistant
Secretary

Oct. 2017 – Present
Mar. 2017 – Sep. 2017
June 2016 – Feb. 2017

Mar. 2014 – May 2016
Jan. 2013 – Feb. 2014

Timothy P. Mulhere

Executive Vice President and President – Regions
Executive Vice President and President – Global Water and Process
Services

May 2015 – Present

Jan. 2013 – May 2015

Daniel J. Schmechel

58 Chief Financial Officer and Treasurer

Chief Financial Officer

Jan. 2017 – Present
Jan. 2013 – Dec. 2016

Jill S. Wyant

Executive Vice President and President – Global Regions and Global
Healthcare
Executive Vice President and President – Global Food & Beverage,
Healthcare and Life Sciences
Executive Vice President and President – Global Food & Beverage

Jan. 2018 – Present

May 2016 – Dec. 2017

Jan. 2013 – Apr. 2016

Forward-Looking Statements

This Form 10-K, including Part I, Item 1, entitled “Business”, and the MD&A within Part II, Item 7, 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 relating to our restructuring and other initiatives
future cash flows, access to capital, targeted credit rating metrics and impact of credit rating downgrade
uses for cash, including dividends, share repurchases, debt repayments, capital investments and strategic business
acquisitions
global market risk
impact of oil price fluctuations, comparative performance and prospects of businesses in our Global Energy segment
long-term potential of our business
impact of changes in exchange rates and interest rates
customer retention rate
bad debt experience, non-performance of counterparties and losses due to concentration of credit risk
disputes, claims and litigation
environmental contingencies
impact and cost of complying with laws and regulations
sustainability targets
returns on pension plan assets
contributions to pension and postretirement healthcare plans
amortization expense
impact of new accounting pronouncements
income taxes, including valuation allowances, loss carryforwards, unrecognized tax benefits, uncertain tax positions and
deductibility of goodwill
recognition of share-based compensation expense
payments under operating leases
future benefit plan payments

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doing business in Iran

Without limiting the foregoing, words or phrases such as “will likely result,” “are expected to,” “will be”, “will continue,” “is anticipated,” “we
believe,” “we expect,” “estimate,” “project” (including the negative or variations thereof), “intends,” “could” 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. For a
further discussion of these and other factors which could cause results to differ from those expressed in any forward-looking statement,
see 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 our larger markets including 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 and 2016, the Global Energy segment experienced decreased sales as a result of
very 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 also 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 or discontinue 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 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. Additionally, the June 2016 Brexit vote resulted in a sharp decline in the value of the British
pound, as compared to the U.S. dollar and other currencies, and the possibility for referendum by other EU member states may lead to
further market volatility. Other regions of the world, including emerging market areas, also expose us to foreign currency risk. As a result
of 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. Prior to deconsolidation, across the
second through fourth quarters of 2015, we devalued our Venezuelan bolivar operations within our Water, Paper, Food & Beverage,
Institutional and Energy operating segments. 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.

If we are unsuccessful in executing on key business initiatives, including our Enterprise Resource Planning (“ERP”) system
upgrade, our business could be adversely affected.

We continue to execute key business initiatives, including investments to develop business systems and restructurings such as those
discussed under Note 3 entitled “Special (Gains) and Charges” of this Form 10-K, as part of our ongoing efforts to improve our efficiency
and returns. In particular, we are implementing an ERP system upgrade, which is expected to occur in phases over the next several
years. This upgrade, which includes supply chain and certain finance functions, is expected to improve the efficiency of certain financial
and related transactional processes. The upgrade involves complex business process design and a failure of 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
information technology systems make them potentially vulnerable to failure, malicious intrusion and random attack. The Nalco and
Champion transactions, as well as more recent acquisitions, have resulted in further de-centralization of systems and additional
complexity in our systems infrastructure. Likewise, data security 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 failures, 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; or could otherwise
adversely affect our business. There may be other related challenges and risks as we continue to implement our ERP system upgrade.

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.

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 2017, approximately 47% of our net sales originated outside the United States. There are inherent
risks in our international operations, including:

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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 or trade sanctions affecting international commercial
transactions;
impact from Brexit and the possibility of similar events in other EU member states;
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 misconduct or 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 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 and commercial digital 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 or commercialize our digital offerings 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 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. Changes to labor and employment laws and regulations, as
well as related rulings by courts and administrative bodies, could adversely affect our operations and expose us to potential financial
liability.

Our results could 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.

Consolidation of our customers and vendors could affect our results.

Customers and vendors in the foodservice, hospitality, travel, healthcare, energy, 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.

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.

These cases were 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”).

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 remained
pending against other defendants, the Court’s decision was 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 effect on our consolidated results of operations, financial position
or cash flows.

In December 2012 and January 2013, the MDL 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 Company and its related entities.

Nalco was named in nine additional complaints in May 2016, and two additional complaints in April 2017, filed by individuals alleging,
among other things, business and economic loss resulting from 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. These actions have been
consolidated in the MDL. Certain of these complaints were dismissed on July 19, 2017.

On February 22, 2017, the Federal Court in the MDL ordered that plaintiffs who had previously filed a claim and who had “opted out” of
and not released their claims under the Medical Benefits Class Action Settlement either: (1) complete a sworn statement indicating,
among other things, that they opted out of the Medical Benefits Class Action Settlement (to be completed by plaintiffs who previously filed
an individual complaint); or (2) file an individual lawsuit attaching the sworn statement as an exhibit, by a deadline date set by the Court.
On July 18, 2017, the Court dismissed certain claims not complying with such order.

There currently remain nine cases pending against Nalco. We expect they will be dismissed pursuant to the Court’s November 28, 2012
order granting Nalco’s motion for summary judgment.

Nalco continues to sell the COREXIT oil dispersant product and could be exposed to future lawsuits from the use of such product. We
cannot predict the potential for future litigation with respect to such sales. However, if one or more of such lawsuits are brought and won,
these suits could have a material adverse impact on our financial results.

We enter into multi-year contracts with customers that could 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.

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.

Changes in tax laws and unanticipated tax liabilities could adversely affect the taxes we pay and our profitability.

We are subject to income and other taxes in the United States and foreign jurisdictions, and our operations, plans and results are
affected by tax and other initiatives around the world. In particular, we are affected by the impact of changes to tax laws or related
authoritative interpretations in the United States, including tax reform under the Tax Cuts and Jobs Act (the “Tax Act”) signed by the
President of the United States on December 22, 2017, which includes broad and complex changes to the United States tax code and the
state tax response to the Tax Act, including, but not limited to variability in our future tax rate. We are also subject to changes in tax law
outside the United States, such as interpretation as to the legality of tax advantages granted under the European Union state aid rules. In
addition, we are impacted by settlements of pending or any future adjustments proposed by the IRS or other taxing authorities in
connection with our tax audits, all of which will depend on their timing, nature and scope. Increases in income tax rates, changes in
income tax laws or unfavorable resolution of tax matters could have a material adverse impact on our financial results.

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 we change our assertion regarding the permanent reinvestment of the undistributed earnings of international
affiliates, a deferred tax liability may need to be established.

Our indebtedness may limit our operations and our use of our cash flow, and any failure to comply with the covenants that
apply to our indebtedness could adversely affect our liquidity and financial statements.

As of December 31, 2017, we had approximately $7.3 billion in outstanding indebtedness, with approximately $1.0 billion in the form of
floating rate debt. Our debt level and related debt service obligations may have negative consequences, including:

(cid:2)

requiring us to dedicate significant cash flow from operations to the payment of principal and interest on our debt, which
reduces the funds we have available for other purposes such as acquisitions and capital investment;

reducing our flexibility in planning for or reacting to changes in our business and market conditions;

exposing us to interest rate risk since a portion of our debt obligations are at variable rates. For example, a one percentage
point increase in the average interest rate on our floating rate debt at December 31, 2017 would increase future interest
expense by approximately $10 million per year; and

increasing our cost of funds and adversely affecting our liquidity and access to the capital markets should we fail to maintain
the credit ratings assigned to us by independent rating agencies.

If we add new debt, the risks described above could increase.

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.

We expect 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, 2017, we had goodwill of $7.2 billion which
is maintained in various reporting units, including goodwill from the Nalco and Champion transactions. 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.

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 operating segments,
although Pest Elimination purchases 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, as well as certain other facilities important in terms of specialization and sources of supply. 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
Sainghin, FRANCE
Sugar Land, TX USA
South Beloit, IL USA
Jianghai, CHINA
Chalons, FRANCE
Soledad, COLUMBIA
Clearing, IL USA
Jurong Island, SINGAPORE
Nanjing, CHINA
Garland, TX USA
Martinsburg, WV USA
Elwood City, PA USA
Weavergate, UNITED KINGDOM
Celra, SPAIN
Greensboro, NC USA
Fresno, TX USA
Freeport, TX USA
Las Americas, DOMINICAN REPUBLIC
Jacksonville, FL USA
Garyville, LA USA
Nieuwegein, NETHERLANDS
La Romana, DOMINICAN REPUBLIC
Tessenderlo, BELGIUM
Cheltenham, AUSTRALIA

PLANT PROFILES

Approximate
Size (Sq. Ft.)

Segment

610,000
468,000
360,000
350,000
313,000
296,000
280,000
276,000
270,000
250,000
240,000
239,000
228,000
222,000
222,000
218,000
193,000
192,000
189,000
182,000
181,000
178,000
168,000
160,000
153,000
145,000

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

Majority
Owned or
Leased

Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Leased
Owned
Owned
Leased
Owned
Owned

Location

Suzano, BRAZIL
McDonough, GA USA
Darra, AUSTRALIA
Corsicana, TX USA
Burlington, ON CANADA
Eagan, MN USA
Huntington, IN USA
Rozzano, ITALY
City of Industry, CA USA
Mississauga, ON CANADA
Aberdeen, UNITED KINGDOM
Elk Grove Village, IL USA
Biebesheim, GERMANY
Fort Worth, TX USA
Johannesburg, SOUTH AFRICA
Hamilton, NEW ZEALAND
Calgary, AB CANADA
Kwinana, AUSTRALIA
Yangsan, KOREA
Cisterna, ITALY
Cuautitlan, MEXICO
Barueri, BRAZIL
Mullingar, IRELAND
Mosta, MALTA
Noviciado, CHILE
Navanakorn, THAILAND
Aubagne, FRANCE
Rovigo, ITALY
Siegsdorf, GERMANY
Verona, ITALY
Guangzhou, CHINA
Lerma, MEXICO
Maribor, SLOVENIA
Leeds, UNITED KINGDOM
Baglan, UNITED KINGDOM
Noda, JAPAN
Steritimak, RUSSIA

Approximate
Size (Sq. Ft.)

Segment

142,000
141,000
138,000
137,000
136,000
133,000
127,000
126,000
125,000
120,000
118,000
115,000
109,000
101,000
100,000
96,000
94,000
87,000
85,000
80,000
76,000
75,000
74,000
73,000
70,000
67,000
65,000
60,000
56,000
55,000
55,000
49,000
46,400
25,000
24,400
22,000
20,000

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 Institutional, Global Industrial
Global Energy
Global Institutional
Global Energy, Global Industrial
Global Institutional
Global Institutional, Global Industrial
Global Institutional, Global Industrial
Global Energy
Global Institutional, Global Industrial
Global Energy, Global Industrial
Global Industrial
Global Institutional, Global Industrial
Global Institutional, Global Industrial
Global Institutional, Global Industrial
Global Institutional
Global Industrial, Global Institutional
Global Institutional, Global Industrial
Global Institutional
Global Institutional
Global Institutional, Global Industrial
Global Institutional
Global Institutional, Global Industrial
Global Industrial
Global Institutional, Global Industrial
Global Institutional
Global Institutional
Global Institutional, Global Industrial
Global Energy, Global Industrial

Majority
Owned or
Leased

Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Leased
Owned
Leased
Owned
Leased
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Leased
Leased
Leased
Owned
Leased
Leased
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Leased
Owned
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.

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.

At year-end 2017, our corporate headquarters was comprised of four multi-storied buildings located in downtown St. Paul, Minnesota. We
own two of the buildings – a six story building and the 17-story building purchased from The Travelers Indemnity Company on August 4,
2015. This building, with 485,000 square feet of office space, became the principal office of the Company in 2017, replacing the 280,000-
square foot, 19-story building previously serving as the principal office. The process of vacating the former principal office will be
completed during 2018. The fourth building, which is leased through 2019, has been substantially vacated by the Company. 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 operating segments 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, we
previously acquired the beneficial interest in the trust owning the Naperville facility in 2015 and repaid the remaining debt on the facility
during 2017. The lease on the facility has since been terminated and the trust has conveyed its ownership interest in the facility to the
Company. Our Energy operating segment maintains Company-owned administrative and research facilities in Sugar Land, Texas and
additional research facilities in Fresno, Texas.

Significant regional administrative and/or research facilities are located in Campinas, Brazil, Leiden, Netherlands, and Pune, India, which
we own, and in and Dubai, UAE, Lille, France, Miramar, Florida, 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 proceedings 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.”

Discussion of other environmental-related legal proceedings is incorporated by reference from Part I, Item 1 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.” Our 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 2017 and 2016 were as follows:

Quarter
First
Second
Third
Fourth

Holders

2017

2016

High

Low

High

Low

$ 126.17
134.89
134.28
137.96

$ 117.29
124.42
127.18
128.38

$ 113.69
121.81
124.60
122.28

$ 98.62
109.83
116.66
110.65

On January 31, 2018, we had 6,324 holders of record of our Common Stock.

Dividends

We have paid common stock dividends for 81 consecutive years. Cash dividends of $0.35 per share were declared in February, May and
August 2016. Cash dividends of $0.37 per share were declared in December 2016, February, May and August 2017. A dividend of $0.41
per share was declared in December 2017.

Issuer Purchases of Equity Securities

Period
October 1-31, 2017
November 1-30, 2017
December 1-31, 2017

Total

Total number of

shares purchased (1)

Average price paid
per share (2)

4,284
1,267
87,432
92,983

$131.3391
131.6250
136.2796
135.9886

Total number of shares Maximum number of
shares that may yet be
purchased as part of
purchased under the
publicly announced
plans or programs (3)
plans or programs (3)
12,358,110
12,358,110
12,358,110
12,358,110

-
-
-
-

(1)

Includes 92,983 shares reacquired from employees and/or directors to satisfy the exercise price of stock options or shares
surrendered to satisfy 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 February 24, 2015, our Board of Directors authorized the repurchase of up to 20,000,000 shares. 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.

Item 6. Selected Financial Data.

December 31, millions, except per share amounts and employees
OPERATIONS
Net sales
Cost of sales (including special (gains) and charges (1))
Selling, general and administrative expenses
Special (gains) and charges
Operating income
Interest expense, net (including special (gains) and charges (1))
Income before income taxes
Provision for income taxes
Net income including noncontrolling interest
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) (2)
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
Property, plant and equipment, net
Goodwill, intangible and other assets

Total assets
Current liabilities
Long-term debt
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 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

2017

2016

2015

2014

2013

$13,838.3
7,405.1
4,417.1
(3.7)
2,019.8
255.0
1,764.8
242.4
1,522.4

14.0
$1,508.4
$ 5.13
$ 4.69
289.6
294.0

$13,152.8
6,898.9
4,299.4
39.5
1,915.0
264.6
1,650.4
403.3
1,247.1

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

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

17.5
$1,229.6
$ 4.14
$ 4.37
292.5
296.7

15.1
$1,002.1
$ 3.32
$ 4.37
296.4
301.4

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

5.8
$967.8
$ 3.16
$ 3.54
299.9
305.9

46.5 %
31.9
14.6
12.8
10.9
13.7 %

47.5 %
32.7
14.6
12.5
9.3

24.4 %

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 %

$4,596.4
3,707.1
11,658.9
$19,962.4
$3,431.8
6,758.3
1,025.5
1,058.1
12,273.7
7,618.5
70.2
7,688.7
$19,962.4

$2,091.3
(1,673.2)
(522.7)
893.3
789.6
1.520

$4,279.4
3,365.0
10,685.8
$18,330.2
$3,019.4
6,145.7
1,019.2
1,175.0
11,359.3
6,901.1
69.8
6,970.9
$18,330.2

$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

$1,939.7
(829.5)
(868.2)
850.7
707.4
1.420

$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
(2,087.7)
(292.6)
816.2
625.1
0.965

$7,322.7

$6,687.0

$6,465.5

$6,548.2

$6,875.8

48.8 %

$ 26.33

21.8 %
29.6 %
7.9
$38,821.3
$137.96 to
$117.29
48,400

49.0 %

48.1 %

47.0 %

$ 23.65

$ 23.35

$ 24.40

17.9 %
34.3 %

13.8 %
40.4 %

7.2
$34,207.7
$ 124.60 to
$98.62
47,565

6.4
$33,852.7
$ 122.48 to
$97.78
47,145

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

48.1 %

$ 24.39

15.8 %
30.5 %
5.9
$31,399.4
$ 108.34 to
$71.99
45,415

(1) Cost of sales includes special charges of $44.0 in 2017, $66.0 in 2016, $80.6 in 2015, $14.3 in 2014, and $43.2 in 2013; Interest expense, net includes special
charges of $21.9 in 2017 and $2.5 in 2013; Net income (loss) attributable to non-controlling interest includes special charges of $12.8 in 2015 and $0.5 in 2013.
(2) Amounts exclude the impact of special (gains) and charges and discrete tax items.

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 our
operating results, cash flows and financial condition. 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 and reportable
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 statements and related notes included in this Form 10-K.
Our consolidated financial statements are prepared in accordance with 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

Management evaluates 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. Fixed currency amounts for 2015 also reflect all Venezuelan bolivar operations,
prior to the deconsolidation of our Venezuelan operations, at the Marginal Currency System (“SIMADI”) rate at year end 2015 of
approximately 200 bolivares to 1 U.S. dollar. Public currency rate data provided within the “Segment Performance” section of this MD&A
reflect amounts translated at actual public average rates of exchange prevailing during the corresponding period, and is provided for
informational purposes only.

Venezuela Related Activities

Effective as of the end of the fourth quarter of 2015, we deconsolidated our Venezuelan subsidiaries. Prior to deconsolidation, due to the
country’s highly inflationary economy, the functional currency of our Venezuelan subsidiaries was the U.S. dollar. As a result, currency
remeasurement adjustments for non-U.S. dollar denominated monetary assets and liabilities of our Venezuelan subsidiaries and other
transactional foreign currency exchange gains and losses were reflected in earnings. Across the second through fourth quarters of 2015,
the Venezuelan bolivar operations within our Water, Paper, Food & Beverage, Institutional and Energy operating segments were
converted from the official exchange rate at the time of 6.3 bolivares to 1 U.S. dollar to the SIMADI rate at the time of approximately 200
bolivares to 1 U.S. dollar. As noted above, within our fixed currency sales and operating results, to present our historical Venezuelan
bolivar operations at a consistent conversion rate, we have reflected all Venezuelan bolivar results for the 2015 reporting year at a
SIMADI conversion rate of approximately 200 bolivares to 1 U.S. dollar.

Impact of Acquisitions and Divestitures

Acquisition adjusted growth rates exclude the results of our acquired businesses from the first twelve months post acquisition, exclude
the results of our divested businesses from the twelve months prior to divestiture, and exclude the Venezuelan results of operations from
all comparable periods.

EXECUTIVE SUMMARY

We achieved accelerating sales and earnings growth through 2017 as we drove new product introductions, new business wins and
improved operating efficiency in a mixed market environment. Increased pricing was implemented to offset higher delivered product
costs. Earnings per share leveraged the solid operating income growth, benefiting from lower interest expense, taxes and shares
outstanding, to deliver the solid EPS growth.

Sales

Reported sales increased 5% to $13.8 billion in 2017 from $13.2 billion in 2016. Sales were positively impacted by volume, pricing and
acquisitions. When measured in fixed rates of foreign currency exchange, fixed currency sales increased 5% 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 38 for reconciliation information.

Gross Margin

Our reported gross margin was 46.5% of sales for 2017, compared to our 2016 reported gross margin of 47.5%. Excluding the impact of
special (gains) and charges included in cost of sales from both 2017 and 2016, our adjusted gross margin was 46.8% in 2017 and 48.0%
in 2016. 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 Profit Margin” table on page 32 for reconciliation information.

Operating Income

Reported operating income increased 5% to $2.0 billion in 2017, compared to $1.9 billion in 2016. Adjusted operating income, excluding
the impact of special (gains) and charges, increased 2% in 2017. When measured in fixed rates of foreign currency exchange, adjusted
fixed currency operating income increased 2%. 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 35 and “Operating Income by Reportable Segment”
table on page 38 for reconciliation information.

Earnings Attributable to Ecolab Per Common Share (“EPS”)

Reported diluted EPS increased 24% to $5.13 in 2017 compared to $4.14 in 2016. Special (gains) and charges had an impact on both
years. Special (gains) and charges in 2017 were driven primarily by the impact of income tax reform, restructuring charges, other discrete
taxes, acquisition and integration charges and the gain on sale of Equipment Care. Special (gains) and charges in 2016 were driven
primarily by Energy related charges, Venezuelan related actions, restructuring charges and other gains and charges. Adjusted diluted
EPS, which exclude the impact of special (gains) and charges and discrete tax items increased to $4.69 in 2017 compared to $4.37 in
2016. See the section entitled “Non-GAAP Financial Measures” within this MD&A for further information on our non-GAAP measures,
and the “Diluted EPS” table on page 37 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 A-
/Baa1 by the major ratings agencies, and to achieving “A” range ratings metrics. We believe 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 2.4 and 2.3 for 2017 and 2016,
respectively. Our net debt to adjusted EBITDA, defined as the sum of EBITDA and special (gains) and charges impacting EBITDA, was
2.4 for 2017 and 2.2 for 2016. We view these ratios as important indicators of the operational and financial health of our organization.
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 43 for reconciliation information.

Cash Flow

Cash flow from operating activities was $2.1 billion in 2017 compared to $1.9 billion in 2016. 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 11% in December 2017 to an indicated annual rate of $1.64 per share. The increase
represents our 26th consecutive annual dividend rate increase and the 81st 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.

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 we 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 our 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 product returns and credits at the time of sale and anticipated uncollectible accounts, as discussed
below. Depending on market conditions, we may increase customer incentive offerings, which could reduce gross profit margins over the
term of the incentive.

On January 1, 2018, we adopted Accounting Standards Committee 606 (ASC 606), Revenue from Contracts with Customers, which
provides guidance on how revenue with customers should be recognized. For additional information on our adoption of this accounting
standard, see Note 2.

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 receivables based on specific
circumstances and credit conditions, and when it is deemed probable 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.

Our allowance for doubtful accounts balance was $72 million and $68 million, as of December 31, 2017 and 2016, respectively. These
amounts include our allowance for sales returns and credits of $15 million and $14 million as of December 31, 2017 and 2016,
respectively. Our bad debt expense as a percent of reported net sales was 0.1% in 2017 and 0.2% in 2016 and 2015. We believe 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.

For additional information on our allowance for doubtful accounts, see Note 2.

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 products and
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
deemed certain. 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 impact 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.

(cid:2)

The discount rate assumptions for our 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
2017 and 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 this 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. 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.
The change in approach did not affect the measurement of our plan obligations or the funded status of our plans. In determining our
U.S. pension obligations for 2017, our weighted-average discount rate decreased to 3.70% from 4.27% at year-end 2016. In
determining our U.S. postretirement health care obligation for 2017, our weighted-average discount rate decreased to 3.66% from
4.14% at year-end 2016.

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 the 2016, 2017 and 2018 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 the 2016 U.S. pension expenses was 4.32%, for 2017
it was 4.03%, and for 2018 it is 4.03%.

For postretirement benefit measurement purposes as of December 31, 2017, the annual rates of increase in the per capita cost of
covered health care were assumed to be 8.25% for pre-65 costs and 11.5% for post-65 costs. The rates are assumed to decrease
each year until they reach 5% in 2028 and remain at those levels thereafter.

In determining our U.S. pension and U.S. postretirement health care obligation for 2017, we utilized the most recent mortality table,
MP-2017 projection scale (applied to the RP-2006 mortality table).

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 $527 million as of
December 31, 2017 from $533 million as of December 31, 2016 (both before tax), primarily due to the amortization of prior period 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, 2017, on the
December 31, 2017 funded status and 2018 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
Assumption Recorded
Obligation
Change
$77.2
-0.25 pts
N/A
-0.25 pts

Higher
2018
Expense
$6.0
5.2

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

-0.25 pts
-0.25 pts

$5.2
N/A

Higher
2018
Expense
$0.6
-

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 insurance policies with varying deductible levels for property and casualty losses. We are insured for losses in excess
of these deductibles, subject to policy terms and conditions 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.

Restructuring

Our restructuring activities are associated with plans to enhance our efficiency, effectiveness and sharpen the competitiveness of our
businesses. 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 typically 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. Our
restructuring liability balance was $42 million and $40 million as of December 31, 2017 and 2016, respectively.

For additional information on our 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.

On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (the “Tax Act”), which reduces the
U.S. federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign
subsidiaries that were previously indefinitely reinvested and creates new taxes on certain foreign sourced earnings. The Tax Act adds
many new provisions including changes to bonus depreciation, the deduction for executive compensation and interest expense, a tax on
global intangible low taxed income (GILTI), the base erosion anti abuse tax (BEAT) and a deduction for foreign derived intangible income
(FDII). Some of these provisions, such as the tax on GILTI, may not apply to the Company with full effect until future years. The Company
is assessing the impact of the provisions of the Act that do not apply until later years.

The two material items that impact us for 2017 are the reduction in the U.S. federal tax rate, as it relates to deferred tax assets and
liabilities recorded on the balance sheet, and the one-time transition tax that is imposed on our unremitted foreign earnings. We have
recorded provisional amounts for the income tax effects that included the reporting period the Tax Act was enacted. Judgement was used
when applying the provisions of the Tax Act, including assumptions related to the impact of the lower corporate rate, and other analyses
including, but not limited to, estimates of assets and liabilities at future dates and our calculation of deemed repatriation of deferred
foreign income. Our provisional amounts are subject to further adjustments during the measurement period of up to one year following
enactment of the Tax Act, as provided by recent SEC guidance.

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. 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.

Prior to the enactment of the Tax Act, U.S. deferred income taxes had not been 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. Upon enactment of the Tax Act, we recorded a one-time transition tax on certain unremitted foreign
earnings of foreign subsidiaries, which is payable over eight years. We will continue to assert permanent reinvestment of the
undistributed earnings of international affiliates, and if our policy changes we would record applicable taxes.

For additional information on income taxes see Note 12.

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 2014. Our U.S. federal income tax returns for
the years 2015 and 2016 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 our tax returns properly reflect the tax consequences of our operations, and 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 Consolidated Balance Sheet within other non-current liabilities. Our gross liability for uncertain tax positions was $62
million and $76 million as of December 31, 2017 and 2016, respectively.

For additional information on income taxes see Note 12.

Long-Lived Assets, Intangible Assets and Goodwill

Long-Lived and Amortizable Intangible Assets

We periodically review our long-lived and amortizable intangible assets, the net value of which was $7.0 billion and $6.4 billion as of
December 31, 2017 and 2016, 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.

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.

Goodwill and Indefinite Life Intangible Assets

We had total goodwill of $7.2 billion and $6.4 billion as of December 31, 2017 and 2016, respectively. We test our goodwill for impairment
at the reporting unit level on an annual basis during the second quarter. Our reporting units are aligned with our eleven operating
segments (ten subsequent to the divestiture of the Equipment Care business).

For our 2017 impairment assessment, we completed our assessment for goodwill impairment across our eleven reporting units through a
quantitative analysis, utilizing a discounted cash flow approach. The two-step quantitative process involved comparing the estimated fair
value of each reporting unit to the reporting unit’s carrying value, including goodwill. If the fair value of a reporting unit exceeds its
carrying value, goodwill of the reporting unit is considered not to be impaired, and the second step of the impairment test is unnecessary.
If the carrying amount of the reporting 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 2017 indicated the estimated fair
value of each of our reporting units exceeded the unit’s carrying amount by a significant margin. We will continue to assess the need to
test our reporting units for impairment during interim periods between our scheduled annual assessments. In the fourth quarter of 2017
we sold the Equipment Care business, which was one of our reporting units and operating segments, and the goodwill associated with
Equipment Care was disposed of upon sale. No goodwill impairment was realized as a result of the sale, and no other events occurred
during the second half of 2017 indicating a need to update our conclusions reached during the second quarter of 2017.

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, 2017 and 2016. The carrying value of the indefinite life trade name was subject to annual impairment testing,
using a relief from royalty assessment method, during the second quarter of 2017. Based on this testing, no adjustment to the carrying
value was necessary. Additionally, no events during the second half of 2017 indicated a need to update our conclusions reached during
the second quarter of 2017.

RESULTS OF OPERATIONS

Net Sales

(millions)
Reported GAAP net sales

Effect of foreign currency translation

Non-GAAP fixed currency sales

2017
$13,838.3
(192.1)
$13,646.2

2016
$13,152.8
(148.0)
$13,004.8

2015
$13,545.1
(566.6)
$12,978.5

2017
5 %

2016
(3)%

5 %

0 %

Percent Change

The percentage components of the year-over-year sales change are shown below:

(percent)
Volume
Price changes

Acquisition adjusted fixed currency sales change

Acquisitions & divestitures

Fixed currency sales change

Foreign currency translation

Reported GAAP net sales change

2017
3%
1
4
1
5
0
5%

2016
(1)%
0
(1)
1
0
(3)
(3)%

Cost of Sales (“COS”) and Gross Profit Margin (“Gross Margin”)

(millions/percent)
Reported GAAP COS and gross margin

Special (gains) and charges

Non-GAAP adjusted COS and gross margin

2017

2016

2015

COS
$7,405.1
44.0
$7,361.1

Gross
Margin
46.5 %
0.3
46.8 %

COS
$6,898.9
66.0
$6,832.9

Gross
Margin
47.5 %
0.5
48.0 %

COS
$7,223.5
80.6
$7,142.9

Gross
Margin
46.7 %
0.6
47.3 %

Our COS values and corresponding 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 46.5%, 47.5%, and 46.7% for 2017, 2016, and 2015, respectively. Our 2017, 2016 and 2015 reported
gross margins were negatively impacted by special (gains) and charges of $44.0 million, $66.0 million, and $80.6 million, respectively.
Special (gains) and charges items impacting COS are shown within the “Special (Gains) and Charges” table on page 33.

Excluding the impact of special (gains) and charges, our 2017 adjusted gross margin was 46.8% compared against a 2016 adjusted
gross margin of 48.0%. The decrease was driven primarily by higher delivered product costs and an increase in Global Energy (which on
average has a lower gross margin), which more than offset pricing and cost savings.

Excluding the impact of special (gains) and charges, our adjusted gross margin was 48.0% and 47.3% for 2016 and 2015, respectively.
The increase was driven primarily by lower delivered product costs, cost efficiencies and the impact of the decline in Global Energy,
which on average has a lower gross margin.

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

(percent)
SG&A Ratio

2017
31.9 %

2016
32.7 %

2015
32.1 %

The decreased SG&A ratio (SG&A expenses as a percentage of reported net sales) comparing 2017 against 2016 was driven primarily
by sales volume leverage and cost savings, which more than offset investments in the business and the impact of acquisitions.

The increased SG&A ratio (SG&A expenses as a percentage of reported net sales) comparing 2016 against 2015 was driven primarily by
the impact of acquisitions, investments in the business, and the decline in Global Energy, which on average has a lower SG&A ratio.

Special (Gains) and Charges

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

(millions)
Cost of sales

Restructuring activities
Acquisition and integration costs
Fixed asset impairment and other charges
Inventory costs and reserves
Energy related charges
Venezuela related activities

Subtotal

Special (gains) and charges
Restructuring activities
Acquisition and integration costs
Gain on sale of business
Energy related charges
Venezuela related activities
Other

Subtotal

Operating income subtotal

Interest expense, net

Net income attributable to noncontrolling interest

Restructuring activities
Venezuela related activities

Subtotal

2017

2016

2015

$4.6
13.2
26.2
-
-
-
44.0

39.9
15.4
(46.1)
-
(11.5)
(1.4)
(3.7)

40.3

21.9

-
-
-

$(0.4)
-
10.0
(6.2)
62.6
-
66.0

(8.7)
8.6
-
14.2
(7.8)
33.2
39.5

105.5

-
-
-

$16.5
-
24.7
6.1
-
33.3
80.6

83.8
18.7
-
-
256.0
56.3
414.8

495.4

(1.7)
(11.1)
(12.8)

Total special (gains) and charges

$62.2

$105.5

$482.6

For segment reporting purposes, special (gains) and charges are not allocated to reportable segments, which is consistent with our
internal management reporting.

Restructuring Activities

During the second quarter of 2017, we commenced restructuring and other cost-saving actions in order to streamline our operations.
These actions include a reduction of our global workforce by approximately 570 positions, as well as asset disposals and lease
terminations. As a result of these actions, we have incurred restructuring charges of $45.5 million ($32.7 million after tax) or $0.11 per
diluted share, during 2017. Actions were substantially completed in 2017. As of December 31, 2017, the restructuring liability balance
related to these activities was $23.2 million. The majority of the pretax charges represent net cash expenditures which are expected to be
paid over a period of a few months to several quarters and will be funded from operating activities. Cash payments during 2017, related
to actions initiated in 2017, were $17.8 million.

We recorded net restructuring gains related to legacy restructuring plans that commenced prior to 2015 of $1.0 million ($0.04 million after
tax) or less than $0.01 per diluted share during 2017. We recorded net restructuring gains of $9.1 million ($10.8 million after tax) or $0.04
per diluted share in 2016 and net restructuring charges of $100.3 million ($77.2 million after tax) or $0.25 per diluted share during 2015.
The legacy restructuring plans liability balance was $18.3 million, $39.6 million, and $90.1 million as of December 31, 2017, 2016 and
2015, respectively. The reduction in liability balance was driven primarily by severance and other cash payments. The remaining accrual
is expected to be paid over a period of a few months to several quarters and continues to be funded from operating activities.

Acquisition and integration related costs

Acquisition and integration costs reported in cost of sales on the Consolidated Statement of Income in 2017 include $13.2 million ($8.6
million after tax) or $0.03 per diluted share related primarily to disposal of excess inventory upon the closure of Swisher plants,
accelerated rent expense, and amounts related to recognition of fair value step-up in the Anios inventory.

Acquisition and integration costs reported in special (gains) and charges on the Consolidated Statement of Income in 2017 include $15.4
million ($9.9 million after tax) or $0.03 per diluted share of acquisition costs, advisory and legal fees, and integration charges for the
Anios and Swisher acquisitions during 2017.

During 2016, we incurred acquisition and integration charges of $8.6 million ($5.4 million after tax) or $0.02 per diluted share primarily
related to the Swisher acquisition. During 2015, as a result of the Champion acquisition and Nalco merger, we incurred charges of $18.7
million ($12.0 million after tax) or $0.05 per diluted share. The charges have been included as a component of special (gains) and
charges on the Consolidated Statement of Income. Further information related to our acquisitions is included in Note 4.

Fixed asset impairment and other charges

During 2017, we recorded other charges of $26.2 million ($19.7 million after tax), or $0.07 per diluted share, primarily relating to fixed
asset impairments and a Global Energy vendor contract termination.

During 2015, we recorded fixed asset impairment charge of $24.7 million ($15.4 million after tax), or $0.05 per diluted share, consisting of
certain production equipment and buildings within one of our U.S. plants. During 2016, we recorded an additional charge of $10.0 million
($6.3 million after tax), or $0.02 per diluted share related to the dry polymer fixed asset impairment, as well as related inventory charges.
Subsequent to the charge, the remaining value of the underlying fixed assets was less than $5 million. Inventory charges include
adjustments due to the significant decline in activity and related prices of the corresponding dry polymer products.

These items have been included as a component of cost of sales on the Consolidated Statement of Income.

Inventory costs and reserve

During 2015, we improved and standardized estimates related to our inventory reserves and product costing, resulting in a net pre-tax
charge of $6.1 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. During 2016, we took additional actions related to the capitalization
of certain cost components into inventory, which resulted in a gain of $6.2 million ($4.6 million after tax), or $0.02 per diluted share.

Energy related charges

Oil industry activity was depressed during 2016 when compared with 2014 levels, resulting from excess oil supply pressures, which
negatively impacted exploration and production investments in the energy industry, particularly in North America. As a result of these
conditions and their corresponding impact on our business outlook, we recorded total charges of $76.8 million ($50.0 million after tax) or
$0.17 per diluted share, comprised of inventory write-downs and related disposal costs, fixed asset charges, headcount reductions and
other charges in 2016. No such charges were incurred in 2017.

The inventory write-downs and related disposal costs of $40.5 million include adjustments due to the significant decline in activity and
related prices of certain specific-use and other products, coupled with declines in replacement costs, as well as estimated costs to
dispose the respective excess inventory. The fixed asset charges of $20.4 million resulted from the write-down of certain assets related
to the reduction of certain aspects of our North American operations within the Global Energy segment, as well as abandonment of
certain projects under construction. The carrying value of the corresponding fixed assets was reduced to zero. The employee termination
costs of $13.1 million include a reduction in our Global Energy segment’s global workforce to better align its workforce with anticipated
activity levels in the near term. As of the end of 2017, the remaining severance liability was minimal.

The charges discussed above have been included as a component of both cost of sales and special (gains) and charges on the
Consolidated Statement of Income.

Venezuela related activities

Effective as of the end of the fourth quarter of 2015, we deconsolidated our Venezuelan subsidiaries and began accounting for the
investments in our Venezuelan subsidiaries using the cost method of accounting effective in the first quarter of 2016. The conditions
within Venezuela driving this decision remained in place during 2016 and 2017. Prior to deconsolidation, we remeasured our Venezuelan
bolivar operations within our Water, Paper, Food & Beverage, Institutional and the bolivar portion of our Venezuelan operations within
Energy operating segments from the official exchange rate at the time of 6.3 bolivares to 1 U.S. dollar to the SIMADI rate at the time of
approximately 200 bolivares to 1 U.S. dollar. As a result of the ownership structure of our Food & Beverage and Institutional operations in
Venezuela, we reflected a portion of the devaluation impact as a component of net income (loss) attributable to noncontrolling interest on
the Consolidated Statement of Income. Upon deconsolidation, we recorded a charge to fully write off our intercompany receivables and
investment. The total charges during 2015 related to our actions in Venezuela were $289.3 million ($246.8 million after tax). 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 $235.7 million or $0.78 per diluted share.

We recorded gains due to U.S. dollar cash recoveries of intercompany receivables written off at the time of deconsolidation of $11.5
million ($7.2 million after tax) or $0.02 per diluted share and $7.8 million ($4.9 million after tax) or $0.02 per diluted share in 2017 and
2016, respectively.

Gain on sale of business

During 2017, we disposed of the Equipment Care business and recorded a gain of $46.1 million ($12.4 million after tax primarily due to
non-deductible goodwill), or $0.04 per diluted share, net of working capital adjustments, costs to sell and other transaction expenses. The
gain has been included as a component of special (gains) and charges on the Consolidated Statement of Income.

Other

We recorded net gains of $1.4 million ($0.7 million after tax), or less than $0.01 per diluted share, net charges of $33.2 million ($21.1
million after tax) or $0.07 per diluted share, and net charges of $56.3 million ($34.5 million after tax), or $0.11 per diluted share in 2017,
2016, and 2015, respectively, primarily related to litigation related charges and settlements. In 2015, this also included 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. These items have been included as a component of special (gains) and charges on the Consolidated Statement
of Income.

Interest Expense, net

During 2017, in anticipation of U.S. tax reform and a potential limit on interest deductibility in future years, we entered into transactions to
exchange or retire certain long-term debt, and incurred debt exchange and extinguishment charges of $21.9 million ($13.6 million after
tax), or $0.05 per diluted share. This charge has been included as a component of interest expense, net on the Consolidated Statement
of Income.

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

2017
$2,019.8
40.3
2,060.1
(32.9)
$2,027.2

2016
$1,915.0
105.5
2,020.5
(25.2)
$1,995.3

2015
$1,561.3
495.4
2,056.7
(119.8)
$1,936.9

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

operating income margin

2017

14.6 %
14.9 %

2016
14.6 %
15.4 %

2015
11.5 %
15.2 %

14.9 %

15.3 %

14.9 %

Percent Change

2017
5 %

2016
23 %

(2)

2 %

3 %

Our operating income and corresponding operating income margin are shown in the previous tables. Operating income margin is defined
as operating income divided by sales.

Our reported operating income increased 5% when comparing 2017 to 2016 and increased 23% when comparing 2016 to 2015. Our
reported operating income for 2017, 2016 and 2015 was impacted by special (gains) and charges. Excluding the impact of special (gains)
and charges from all three years, 2017 adjusted operating income increased 2% when compared to 2016 adjusted operating income and
2016 adjusted fixed currency operating income decreased 2% when compared to 2015 adjusted operating income.

As shown in the previous table, foreign currency translation had a minimal impact on adjusted operating income growth for 2017. Foreign
currency translation had a negative impact on adjusted fixed currency operating income growth for 2016, as adjusted fixed currency
operating income increased 3%.

Interest Expense, Net

(millions)
Reported GAAP interest expense, net

Special (gains) and charges

Non-GAAP adjusted interest expense, net

2017

$255.0
21.9
$233.1

2016
$264.6
-
$264.6

2015
$243.6
-
$243.6

Reported net interest expense totaled $255.0 million, $264.6 million and $243.6 million during 2017, 2016 and 2015, respectively.

The decrease in our 2017 adjusted net interest expense compared to 2016 was driven primarily by an increased mix of lower cost Euro
interest and lower interest rates on refinanced debt. The increase when comparing 2016 to 2015 was driven primarily by higher weighted
average interest rates on outstanding debt.

Provision for Income Taxes

The following table provides a summary of our tax rate:

(percent)
Reported GAAP tax rate
Tax rate impact of:
The Tax Act
Special gains and charges
Discrete tax items

Non-GAAP adjusted tax rate

2017
13.7 %

2016
24.4 %

8.8
(0.1)
1.4
23.8 %

0.0
1.0
(0.2)

25.2 %

2015
22.8 %

0.0
(0.4)
3.5
25.9 %

Our reported tax rate for 2017, 2016 and 2015 includes the tax impact of special gains and charges and discrete tax items, which have
impacted the comparability of our historical reported tax rates, as amounts included in our special gains and charges are derived from tax
jurisdictions with rates that vary from our tax rate, and discrete tax items are not necessarily consistent across periods. The tax impact of
special (gains) and charges and discrete tax items will likely continue to impact comparability of our reported tax rate in the future. The
enactment of the Tax Act also significantly impacted the comparability of our reported tax rate.

Our 2017 reported tax rate includes $160.9 million of net tax benefits associated with the Tax Act, $6.2 million of net tax benefits on
special gains and charges and net tax benefits of $25.3 million associated with discrete tax items. In connection with our analysis of the
impact of the Tax Act, we recorded a provisional net discrete tax benefit of $160.9 million in the period ended December 31, 2017, which
includes a $321.0 million tax benefit for recording deferred tax assets and liabilities at the U.S. enacted tax rate and a net expense for the
one-time transition tax of $160.1 million. While we are able to make an estimate of the impact of the reduction in the U.S. rate, it may be
affected by other analyses related to the Tax Act, including, but not limited to, estimates of assets and liabilities at future dates, our
calculation of deemed repatriation of deferred foreign income and the state tax effect of adjustments made to federal temporary
differences. In addition, federal and state tax authorities continue to issue technical guidance which may change the provisional amounts
recorded in our financial statements.

Special (gains) and charges represent the tax impact of special (gains) and charges, as well as additional tax benefits utilized in
anticipation of U.S. tax reform of $7.8 million. During 2017, we also recorded a discrete tax benefit of $39.7 million related to excess tax
benefits, resulting from the adoption of accounting changes regarding the treatment of tax benefits on share-based compensation. The
extent of excess tax benefits is subject to variation in stock price and stock option exercises. In addition, we recorded net discrete
expenses of $14.4 million related to recognizing adjustments from filing our 2016 U.S. federal income tax return and international
adjustments due to changes in estimates, partially offset by the release of reserves for uncertain tax positions due to the expiration of
statute of limitations in state tax matters.

Our 2016 reported tax rate includes $43.1 million of net tax benefits on special gains and charges and net expenses of $3.9 million
associated with discrete tax items. 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. The net expenses related to discrete tax items in 2016 were driven
primarily by recognizing adjustments from filing our 2015 U.S. federal income tax return, partially offset by settlement of international tax
matters and remeasurement of certain deferred tax assets and liabilities resulting from the application of updated tax rates in international
jurisdictions. Net expenses were also impacted by adjustments to deferred tax asset and liability positions and the release of reserves for
uncertain tax positions due to the expiration of statute of limitations in international jurisdictions.

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.

The change in our adjusted tax rate from 2015 to 2017 was primarily driven by global tax planning projects and geographic income mix.
Future comparability of our adjusted tax rate may be impacted by various factors, including but not limited to, the Tax Act, other changes
in global tax rules, further tax planning projects and geographic income mix.

Net Income Attributable to Ecolab

(millions)
Reported GAAP net income attributable to Ecolab
Adjustments:

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

Non-GAAP adjusted net income attributable to Ecolab

2017
$1,508.4

2016
$1,229.6

2015
$1,002.1

2017
23 %

2016

23 %

56.0
(186.2)

$1,378.2

62.4
3.9
$1,295.9

376.9
(63.3)
$1,315.7

6 %

(2)%

Percent Change

Diluted EPS

(dollars)
Reported GAAP diluted EPS
Adjustments:

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

Non-GAAP adjusted diluted EPS

Percent Change

2017
$ 5.13

2016
$ 4.14

2015
$ 3.32

2017
24 %

2016

25 %

0.19
(0.63)

$ 4.69

0.21
0.01
$ 4.37

1.25
(0.21)
$ 4.37

7 %

0 %

Per share amounts do not necessarily sum due to rounding.

Currency translation had minimal impact on reported and adjusted diluted EPS comparability across 2017 and 2016, but had a significant
unfavorable impact of approximately $0.31 per share for 2016 compared to 2015.

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 2017. 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. Fixed currency amounts for
2015 also reflect all Venezuelan bolivar operations, prior to deconsolidation of our Venezuelan operations, at a SIMADI rate of
approximately 200 bolivares to 1 U.S. dollar. 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 2017, 2016 and 2015 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

2017
$4,878.5
4,744.9
3,199.3
823.5
13,646.2
192.1
$13,838.3

2017

$722.0
985.7
338.5
149.3
(208.6)
1,986.9
32.9
$2,019.8

2016

$4,687.2
4,440.1
3,075.8
801.7
13,004.8
148.0
$13,152.8

Percent Change

2015

$4,551.1
4,164.6
3,520.1
742.7
12,978.5
566.6
$13,545.1

2017
4 %
7
4
3
5

2016
3 %
7
(13)
8
0

5 %

(3)%

Percent Change

2016

2015

$720.0
950.5
346.7
145.2
(272.6)
1,889.8
25.2
$1,915.0

$638.9
867.1
475.3
124.6
(664.4)
1,441.5
119.8
$1,561.3

2017

0 %
4
(2)
3

2016
13 %
10
(27)
17

5 %

23 %

The following tables reconcile the impact of acquisitions and divestitures within our reportable segments.
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

Non-GAAP adjusted fixed currency
operating income
Special (gains) and charges
Subtotal at fixed currency

Effect of foreign currency translation
Total reported operating income

2017
Impact of
Acquisitions
and
Divestitures

$(46.7)
(207.4)
(9.0)
(2.1)
(265.2)

Acquisition
Adjusted
$4,831.8
4,537.5
3,190.3
821.4
13,381.0

Fixed
Currency
$4,687.2
4,440.1
3,075.8
801.7
13,004.8
148.0
$13,152.8

2016
Impact of
Acquisitions
and
Divestitures

$(11.0)
(28.9)
(33.5)
(28.9)
(102.3)

Acquisition
Adjusted
$4,676.2
4,411.2
3,042.3
772.8
12,902.5

2017
Impact of
Acquisitions
and
Divestitures

Acquisition
Adjusted

$(3.4)
(25.8)
(2.9)
0.6
-

$718.6
959.9
335.6
149.9
(168.3)

(31.5)

1,995.7

2016
Impact of
Acquisitions
and
Divestitures

$(2.5)
0.8
(13.8)
(2.1)
-

Acquisition
Adjusted

$717.5
951.3
332.9
143.1
(167.1)

(17.6)

1,977.7

Fixed
Currency
$720.0
950.5
346.7
145.2
(167.1)

1,995.3
105.5
1,889.8
25.2
$1,915.0

Fixed
Currency
$4,878.5
4,744.9
3,199.3
823.5
13,646.2
192.1
$13,838.3

Fixed
Currency
$722.0
985.7
338.5
149.3
(168.3)

2,027.2
40.3
1,986.9
32.9
$2,019.8

Global Industrial

Sales at fixed currency (millions)
Sales at public currency (millions)

Volume
Price changes

Acquisition adjusted fixed currency sales change

Acquisitions and divestitures

Fixed currency sales change

Foreign currency translation

Public currency sales change

2017
$4,878.5
4,974.4

2016
$4,687.2
4,766.6

2015
$4,551.1
4,773.9

2 %
1 %
3 %
1 %
4 %
0 %
4 %

2 %
1 %
2 %
1 %
3 %
(3) %
(0) %

Operating income at fixed currency (millions)
Operating income at public currency (millions)

$722.0
740.7

$720.0
735.9

$638.9
684.1

Fixed currency operating income change
Fixed currency operating income margin
Acquisition adjusted fixed currency operating income change
Acquisition adjusted fixed currency operating income margin
Public currency operating income change

0 %
14.8 %
- %
14.9 %
1 %

13 %
15.4 %
12 %
15.3 %
8 %

14.0 %

14.1 %

Amounts do not necessarily sum due to rounding.

Net Sales

Fixed currency sales growth for Global Industrial in both 2017 and 2016 was driven by volume gains and pricing. At a regional level, the
2017 sales increase was impacted by good growth in Latin America, North America and Greater China. Regional results for 2016 were
impacted by good growth in Latin America and moderate growth in Middle East/Africa (“MEA”) and Europe.

At an operating segment level, Water fixed currency sales increased 5% in 2017 (increase of 3% acquisition adjusted). Light industry
sales growth was led by innovative technology and service offerings. Fixed currency sales increased 3% in 2016, (increase of 1%
acquisition adjusted) as growth in light industry sales was offset by a double digit decline in the mining industry. Food & Beverage fixed
currency sales increased 4% in 2017, benefiting from new business wins and pricing, which more than offset generally flat industry
trends. Growth was led by the food, beverage and brew markets. Fixed currency sales increased 3% in 2016, benefiting from corporate
account and share gains, which more than offset generally flat industry trends. Paper fixed currency sales increased 3% in 2017
benefiting from strong sales efforts and business wins, which more than offset challenging market conditions in China and Europe. Fixed
currency sales increased 2% in 2016, helped by strong sales efforts and business wins. Textile Care fixed currency sales increased 2%
in 2017 and 4% in 2016, benefiting from new customer accounts in Europe. Life Sciences fixed currency sales increased 7% in 2017 as
business wins and pricing drove sales growth in both the pharmaceutical and personal care markets.

Operating Income

Fixed currency operating income for Global Industrial was flat in 2017 and increased in 2016 when compared to prior periods. Fixed
currency operating income margins for Global Industrial decreased in 2017 and increased in 2016. Acquisitions had a minimal impact on
the fixed currency operating income growth and the fixed currency operating income margins in 2017 and positively impacted fixed
currency operating income growth and had minimal impact on fixed currency operating income margins in 2016.

Acquisition adjusted fixed currency operating income margins decreased 0.4 percentage points in 2017, negatively impacted by
approximately 2.0 percentage points related to higher delivered product costs and investments in the business, partially offset by 1.9
percentage points from favorable impact of pricing and volume gains and cost savings initiatives. Acquisition adjusted fixed currency
operating income margins increased 1.2 percentage points in 2016, benefiting from favorable impact of sales volume gains, product mix
changes and pricing gains.

Global Institutional

Sales at fixed currency (millions)
Sales at public currency (millions)

Volume
Price changes

Acquisition adjusted fixed currency sales change

Acquisitions and divestitures

Fixed currency sales change

Foreign currency translation

Public currency sales change

2017
$4,744.9
4,802.5

2016
$4,440.1
4,483.5

2015
$4,164.6
4,260.6

1 %
2 %
3 %
4 %
7 %
0 %
7 %

3 %
2 %
5 %
2 %
7 %
(1) %
5 %

Operating income at fixed currency (millions)
Operating income at public currency (millions)

$985.7
993.8

$950.5
956.7

$867.1
878.6

4 %
20.8 %
1 %
21.2 %
4 %

10 %
21.4 %
12 %
21.6 %
9 %

20.8 %

21.0 %

Amounts do not necessarily sum due to rounding.

Net Sales

Fixed currency sales growth for Global Institutional in both 2017 and 2016 benefited from volume growth, acquisitions and pricing gains.
At a regional level, the 2017 sales increase was led by good growth in North America. The 2016 sales increase was led by good growth
in North America, Latin America and Asia Pacific.

At an operating segment level, Institutional fixed currency sales increased 1% in 2017 (increase of 2% acquisition adjusted). Global
lodging demand continued to show moderate growth while global full service restaurant industry foot traffic remained weak, particularly in
North America. Fixed currency sales increased 8% in 2016 (increase of 5% acquisition adjusted). New business wins, led by demand for
our leading product innovation in key platforms, along with appropriate pricing, drove our results. Specialty fixed currency sales
increased 7% in 2017, led primarily by new account wins and growth in global quick service accounts, leveraging generally modest
industry trends. New business gains remain robust, driven by improved service coverage, new product innovations, additional customer
solutions and a continued focus among our customers on food safety as fresh products become more prevalent and require more
cleaning. Fixed currency sales increased 7% in 2016. Both quick service and food retail sales growth were solid, led by account growth,
new customers and product penetration. Healthcare fixed currency sales increased 42% in 2017 (increase of 3%, when adjusted for the
Anios acquisition), with modest growth for Healthcare in North America and Europe. Fixed currency sales increased 4% in 2016, as
improving trends in both North America and Europe reflected the continued focus on our value proposition, leading to customer gains and
product penetration.

Operating Income

Fixed currency operating income for Global Institutional increased in both 2017 and 2016 when compared to prior periods. Fixed
currency operating income margins decreased for Global Institutional in 2017 and increased in 2016. Acquisitions had a positive impact
on fixed currency operating income growth in 2017 and a negative impact in 2016. Acquisitions had a negative impact on fixed currency
operating income margins in both 2017 and 2016.

Acquisition adjusted fixed currency operating income margins decreased 0.4 percentage points in 2017, negatively impacted by
approximately 1.6 percentage points related business investments and higher delivered product costs. Pricing gains, product mix and
sales volume favorably impacted acquisition adjusted fixed currency operating income margins by adding approximately 1.5 percentage
points in 2017. Acquisition adjusted fixed currency operating income margins increased 0.6 percentage points in 2016. The favorable
impact of pricing gains, product mix changes and sales volume increases added approximately 1.9 percentage points in 2016, partially
offset by investments in the business.

Global Energy

Sales at fixed currency (millions)
Sales at public currency (millions)

Volume
Price changes

Acquisition adjusted fixed currency sales change

Acquisitions and divestitures

Fixed currency sales change

Foreign currency translation

Public currency sales change

2017
$3,199.3
3,230.0

2016
$3,075.8
3,092.9

2015
$3,520.1
3,747.2

6 %
(1) %
5 %
(1) %
4 %
0 %
4 %

(10) %
(3) %
(13) %
(0) %
(13) %
(5) %
(17) %

Operating income at fixed currency (millions)
Operating income at public currency (millions)

$338.5
344.2

$346.7
349.2

$475.3
538.5

(2) %
10.6 %
1 %
10.5 %
(1) %

(27) %
11.3 %
(28) %
10.9 %
(35) %

13.5 %

13.2 %

Amounts do not necessarily sum due to rounding.

Net Sales

Fixed currency sales for Global Energy in 2017 had a strong growth in the well stimulation business, while the production business
showed a modest decline, as growth in North America was offset by international markets. Sales in our downstream business rose
moderately. In 2016, fixed currency sales for Global Energy were negatively impacted by volume reductions and lower pricing. Continued
difficult operating conditions negatively impacted our well stimulation and production businesses due to lower pricing and customer
product usage. Sales in our downstream business were flat in 2016. Market challenges in North America drove the reductions from a
regional perspective in 2016.

Operating Income

Fixed currency operating income for Global Energy decreased during both 2017 and 2016 as compared to the prior year. Fixed currency
operating income margins also decreased during both comparable periods. Acquisitions had a negative impact on fixed currency
operating income in 2017 and minimal impact on the fixed currency operating income in 2016. Acquisitions had a minimal impact on
fixed currency operating income margins during both 2017 and 2016.

Acquisition adjusted fixed currency operating income margins for our Global Energy segment decreased 0.4 and 2.3 percentage points in
2017 and 2016, respectively. Higher delivered product costs and business investments negatively impacted 2017 by 1.7 percentage
points, partially offset by cost savings of 1.0 percentage points. Reductions in sales volume, product mix changes and lower pricing
contributed approximately 5.7 percentage points to the decline in 2016, which offset the benefit of lower delivered product costs,
synergies and other cost reduction actions.

Other

Sales at fixed currency (millions)
Sales at public currency (millions)

Volume
Price changes

Acquisition adjusted fixed currency sales change

Acquisitions and divestitures

Fixed currency sales change

Foreign currency translation

Public currency sales change

2017
$823.5
831.4

2016
$801.7
809.8

2015
$742.7
763.4

4 %
2 %
6 %
(3) %
3 %
(0) %
3 %

6 %
2 %
8 %
(0) %
8 %
(2) %
6 %

Operating income at fixed currency (millions)
Operating income at public currency (millions)

$149.3
151.2

$145.2
147.2

$124.6
128.3

3 %
18.1 %
5 %
18.2 %
3 %

17 %
18.1 %
16 %
18.5 %
15 %

16.8 %

17.1 %

Amounts do not necessarily sum due to rounding.

Net Sales

Fixed currency sales growth for Other in both 2017 and 2016 was driven by volume increases and pricing gains. At a regional level, the
2017 sales increase was led by good growth in North America. The 2016 sales increase was led by good growth in Asia Pacific, Latin
America, North America and MEA.

At an operating segment level, Pest Elimination fixed currency sales increased 8% in 2017 (increase of 7% acquisition adjusted), sales
to food beverage and hospitality, and good growth in restaurants led the growth. Fixed currency sales increased 8% in 2016, impacted by
continued gains in the foodservice market, benefiting from customer penetration and new service offerings. Prior to the sale of
Equipment Care, fixed currency sales increased 2% in 2017. Fixed currency sales increased 7% in 2016, driven by continued increases
in both service and parts sales, benefiting from new customer additions.

Operating Income

Fixed currency operating income increased in both 2017 and 2016 as compared to the prior year. The corresponding operating margin
for our Other segment remained flat in 2017 and increased in 2016.

Acquisition adjusted fixed currency operating income margins for our Other segment decreased 0.3 percentage points in 2017 and
increased 1.4 percentage points in 2016. Field investments and other cost increases negatively impacted 2017 margins by 1.8
percentage points, offsetting the benefit of pricing volume and mix gains of 1.5 percentage points. In 2016, the favorable impact of
pricing gains, product mix changes and sales volume increases added approximately 2.4 percentage points and was partially offset by
investments in business and other cost increases.

Corporate

Consistent with our internal management reporting, Corporate amounts in the table on page 38 include intangible asset amortization
specifically from the Nalco merger and special (gains) and charges that are not allocated to our reportable segments. Items included
within special (gains) and charges are shown in the table on page 33.

FINANCIAL POSITION, CASH FLOW AND LIQUIDITY

Financial Position

Total assets were $20.0 billion as of December 31, 2017, compared to total assets of $18.3 billion as of December 31, 2016. The
increase in assets during 2017 was driven primarily by increased goodwill and intangibles as a result of the Anios and other acquisitions
and the positive impact of foreign currency exchange rates on the value of our foreign assets translated into U.S. dollars as of year end
2017.

Total liabilities were $12.3 billion as of December 31, 2017, compared to total liabilities of $11.4 billion as of December 31, 2016. Total
debt was $7.3 billion as of December 31, 2017 and $6.7 billion as of December 31, 2016. 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. EBITDA and adjusted EBITDA are non-GAAP
measures, which are discussed further in the “Non-GAAP Financial Measures” section of this MD&A.

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

(millions)
Total debt
Cash

Net debt

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

Special (gains) and charges impacting EBITDA

Adjusted EBITDA

Cash Flows

Operating Activities

2017

2016

2015

2.4
2.4

2.3
2.2

2.6
2.2

$7,322.7
211.4
$7,111.3

$6,687.0
327.4
$6,359.6

$6,465.5
92.8
$6,372.7

$1,522.4
242.4
255.0
585.7
307.6
2,913.1

$1,247.1
403.3
264.6
561.0
289.7
2,765.7

$1,017.2
300.5
243.6
559.5
300.0
2,420.8

40.3
$2,953.4

105.5
$2,871.2

495.4
$2,916.2

Dollar Change

(millions)
Cash provided by operating activities

2017
$2,091.3

2016
$1,939.7

2015
$1,999.8

2017
$151.6

2016
$(60.1)

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

Comparability of cash generated from operating activities across 2015 to 2017 was impacted by fluctuations in accounts receivable,
inventories and accounts payable (“working capital”), the combination of which increased $56 million, $35 million and $119 million in
2017, 2016 and 2015 respectively. The cash flow impact across the three years from working capital accounts was driven by changes in
sales volumes and timing of collections; timing of purchases and production and usage levels; and volume of purchases and timing of
payments.

The impact on operating cash flows of 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

2017
$144.1
39.2
402.8
239.3

2016
$211.8
51.6
359.1
267.0

2015
$64.9
61.7
533.1
237.2

2017
$(67.7)
(12.4)
43.7
(27.7)

2016
$146.9
(10.1)
(174.0)
29.8

Dollar Change

Investing Activities

(millions)
Cash used for investing activities

2017
$(1,673.2)

2016
$(829.5)

2015

$(915.8)

Dollar Change

2017
$(843.7)

2016
$86.3

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 2017, 2016 and 2015 was $870
million, $49 million and $265 million, respectively. Our acquisitions and divestitures across 2017, 2016 and 2015 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 merchandising and customer equipment and manufacturing facilities.
Total capital expenditures, including software, were $869 million, $757 million and $815 million in 2017, 2016 and 2015, respectively.

Financing Activities

Dollar Change

(millions)
Cash used for financing activities

2017
$(522.7)

2016
$(868.2)

2015
$(1,150.9)

2017
$345.5

2016
$282.7

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 considerations.

Shares are repurchased for the purpose of partially offsetting the dilutive effect of our equity compensation plans and stock issued in
acquisitions, to manage our capital structure and to efficiently return capital to shareholders. We repurchased a total of $600 million, $740
million, and $755 million of shares in 2017, 2016 and 2015, respectively. These amounts include $300 million of shares repurchased
each year from 2015 through 2017 through our ASR programs. See Note 10 for further information regarding our ASR programs. Cash
proceeds and tax benefits from stock option exercises provide a portion of the funding for repurchase activity.

The impact on financing cash flows of commercial paper and notes payable repayments, long-term debt borrowings and long-term debt
repayments, are shown in the following table:

(millions)
Net repayments of commercial paper and notes payable
Long-term debt borrowings
Long-term debt repayments

2017
$(43.7)
1,309.4
(799.0)

2016
$(606.4)

2,390.0
(1,569.6)

2015
$(312.1)
1,223.7
(1,034.7)

2017
$562.7
(1,080.6)
770.6

2016
$(294.3)
1,166.3
(534.9)

In December 2017, we increased our indicated annual dividend rate by 11%. This represents the 26th consecutive year we have
increased our dividend. We have paid dividends on our common stock for 81 consecutive years. Cash dividends declared per share of
common stock, by quarter, for each of the last three years were as follows:

Dollar Change

2017
2016
2015

First
Quarter
$0.370
0.350
0.330

Second
Quarter
$0.370
0.350
0.330

Third
Quarter
$0.370
0.350
0.330

Fourth
Quarter
$0.410
0.370
0.350

Year
$1.520
1.420
1.340

Liquidity and Capital Resources

We currently expect to fund all of our cash requirements which are reasonably foreseeable for 2018, including scheduled debt
repayments, new investments in the business, share repurchases, dividend payments, possible business acquisitions and pension
contributions, with cash from operating activities, and as needed, additional short-term and/or long-term borrowings. We continue to
expect our operating cash flow to remain strong.

As of December 31, 2017, we had $211 million of cash and cash equivalents on hand, of which $151 million was held outside of the
U.S.

As of December 31, 2016, we had $327 million of cash and cash equivalents on hand, of which $184 million was held outside of the U.S.

As of December 31, 2015, we had $26 million of deferred tax liabilities for pre-acquisition foreign earnings associated with the legacy
Nalco entities and legacy Champion entities that we intended to repatriate. These liabilities were recorded as part of the respective
purchase price accounting of each transaction. The remaining foreign earnings were repatriated in 2016, reducing the deferred tax
liabilities to zero at December 31, 2016.

As of December 31, 2017 we had a $2.0 billion multi-year credit facility, which expires in November 2022. The credit facility has been
established with a diverse syndicate of banks. There were no borrowings under our credit facility as of December 31, 2017 or 2016.

The credit facility supports our $2.0 billion U.S. commercial paper program and $2.0 billion European commercial paper program.
Combined borrowing under these two commercial paper programs may not exceed $2.0 billion. At year-end, we had no amount
outstanding under the European commercial paper program and no amount outstanding under the U.S. commercial paper program.

Additionally, we have uncommitted credit lines of $660 million with major international banks and financial institutions to support our
general global funding needs. Most of these lines are used to support global cash pooling structures. Approximately $643 million of these
credit lines were available for use as of year-end 2017. Bank supported letters of credit, surety bonds and guarantees total $198 million
and represent commercial business transactions. We do not have any other significant unconditional purchase obligations or commercial
commitments.

As of December 31, 2017, our short-term borrowing program was rated A-2 by Standard & Poor’s and P-2 by Moody’s.
As of December 31, 2017, Standard & Poor’s and Moody’s rated our long-term credit at A- (stable 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.

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

A schedule of our various obligations as of December 31, 2017 are summarized in the following table:

(millions)
Notes payable
One-time transition tax
Long-term debt
Capital lease obligations
Operating leases
Interest*
Total

Less
Than
1 Year

Payments Due by Period

2-3
Years

4-5
Years

$ 15
13
549
1
131
242
$ 951

$ -
26
696
1
211
436
$ 1,370

$ -
26
1,513
1
160
375
$ 2,075

More
Than
5 Years

$ -
95
4,545
2
115
1,700
$ 6,457

Total

$ 15
160
7,303
5
617
2,753
$ 10,853

Interest on variable rate debt was calculated using the interest rate at year-end 2017.

During the fourth quarter of 2017, we recorded a one-time transition tax related to enactment of the Tax Act. The expense is primarily
related to the one-time transition tax, which is payable over eight years. As discussed further in Note 12, this balance is a provisional
amount and is subject to adjustment during the measurement period of up to one year following the enactment of the Tax Act, as
provided by recent SEC guidance.

As of December 31, 2017, our gross liability for uncertain tax positions was $68 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 do not have required minimum cash contribution obligations for our qualified pension plans in 2018. 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 $49 million in 2018. 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.

Off-Balance Sheet Arrangements

Other than operating leases, as discussed further in Note 13, we do not participate in off-balance sheet financing arrangements. 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
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,
2017, we had a total of €1,150 million senior notes 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, 2017, we had interest rate
swaps outstanding with notional values of $950 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 increase/decrease our financial position and liquidity
by approximately $322 million. The effect on our results of operations would be substantially offset by the impact of the hedged items.

GLOBAL ECONOMIC AND POLITICAL ENVIRONMENT

Energy Markets

Approximately 23% of our sales are 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.

During 2017, oil industry activity gradually recovered from 2016’s lows, with strong gains in North America drilling activity over the past
year and related recovering capital expenditure trends. Demand for oil and overall energy consumption has shown modest growth with oil
prices rising from their lows in early 2016.

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.

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.

Brexit Referendum

On March 29, 2017, the United Kingdom (“U.K.”) government gave formal notice to the European Union (“EU”) to begin the process of
negotiating the U.K.’s exit (“Brexit”) from the EU. The effects of Brexit will depend on any agreements the U.K. makes to retain access to
the EU markets either during a transitional period or more permanently. The negotiations might also impact various tax reliefs and

exemptions that apply to transactions between the U.K. and EU. In the longer term, any impact from Brexit on our U.K. operations will
depend, in part, on the outcome of tariff, trade, regulatory, and other negotiations. We will continue to monitor the status of tax law
changes and tax treaty negotiations at the U.K. and EU.

During 2017, net sales of our U.K. operations were approximately 2% of our consolidated net sales.

NEW ACCOUNTING PRONOUNCEMENTS

Information regarding new accounting pronouncements is included in Note 2.

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:

(cid:2) Fixed currency sales
(cid:2) Acquisition adjusted fixed currency sales
(cid:2) Adjusted cost of sales
(cid:2) Adjusted gross margin
(cid:2) Fixed currency operating income
(cid:2) Fixed currency operating income margin
(cid:2) Adjusted operating income
(cid:2) Adjusted operating income margin
(cid:2) Adjusted fixed currency operating income
(cid:2) Adjusted fixed currency operating income margin
(cid:2) Acquisition adjusted fixed currency operating income
(cid:2) Acquisition adjusted fixed currency operating income margin
(cid:2) EBITDA
(cid:2) Adjusted EBITDA
(cid:2) Adjusted tax rate
(cid:2) Adjusted net income attributable to Ecolab
(cid:2) Adjusted diluted EPS
(cid:2) Adjusted interest expense, net

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.

Our non-GAAP financial measures for cost of sales, gross margin, interest expense and operating income exclude the impact of special
(gains) and charges, and our non-GAAP measures for tax rate, net income attributable to Ecolab and diluted EPS further exclude the
impact of discrete tax items. We include items within special (gains) and charges and discrete tax items that we believe can significantly
affect the period-over-period assessment of operating results and not necessarily reflect costs and/or income associated with historical
trends and future results. After tax special (gains) and charges are derived by applying the applicable local jurisdictional tax rate to the
corresponding pre-tax special (gains) and charges.

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.
EBITDA and adjusted EBITDA are used as inputs to our net debt to EBITDA and net debt to adjusted EBITDA ratios. We view these
ratios as important indicators of the operational and financial health of our organization.

We evaluate the performance of our international operations based on fixed currency rates of foreign exchange. Fixed currency amounts
included in this Form 10-K are based on translation into U.S. dollars at the fixed foreign currency exchange rates established by
management at the beginning of 2017. Fixed currency amounts also reflect all Venezuelan bolivar operations, prior to the
deconsolidation of our Venezuelan operations, at a SIMADI rate of approximately 200 bolivares to 1 U.S. dollar, which was the
approximate conversion rate for SIMADI at year end 2015.

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.

The discussion under the heading entitled "Market Risk" and “Global Economic and Political Environment” is incorporated by reference
from Part II, Item 7 of this Form 10-K.

Item 8. Financial Statements and Supplementary Data.

REPORTS OF MANAGEMENT

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, 2017.

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, 2017 as stated in their report which is included herein.

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

Daniel J. Schmechel
Chief Financial Officer and Treasurer

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Ecolab Inc. and its subsidiaries as of December 31, 2017 and 2016,
and the related consolidated statements of income, comprehensive income, equity and cash flows for each of the three years in the
period ended December 31, 2017, including the related notes (collectively referred to as the “consolidated financial statements”). We
also have audited the Company's internal control over financial reporting as of December 31, 2017, based on criteria established in
Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the
Company as of December 31, 2017 and 2016, and the results of their operations and their cash flows for each of the three years in the
period ended December 31, 2017 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, 2017,
based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated 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 the Company’s
consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public
accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to
error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the consolidated financial statements. 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.

Definition and Limitations of Internal Control over Financial Reporting

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 23, 2018

We have served as the Company’s auditor since 1970.

CONSOLIDATED STATEMENT OF INCOME

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

2017

2016

2015

Net sales
Operating expenses

Cost of sales (including special charges (a))
Selling, general and administrative expenses
Special (gains) and charges

Operating income
Interest expense, net (including special charges (b))
Income before income taxes
Provision for income taxes
Net income including noncontrolling interest
Net income attributable to noncontrolling interest (including special charges (c))
Net income attributable to Ecolab

Earnings attributable to Ecolab per common share

Basic
Diluted

Dividends declared per common share

Weighted-average common shares outstanding

Basic
Diluted

$13,838.3

$13,152.8

$13,545.1

7,405.1
4,417.1

(3.7)

2,019.8
255.0
1,764.8
242.4
1,522.4
14.0
$1,508.4

6,898.9
4,299.4
39.5
1,915.0
264.6
1,650.4
403.3
1,247.1
17.5
$1,229.6

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

$ 5.21
$ 5.13

$ 4.20
$ 4.14

$ 3.38
$ 3.32

$1.520

$1.420

$1.340

289.6
294.0

292.5
296.7

296.4
301.4

(a) Cost of sales includes special charges of $44.0 in 2017, $66.0 in 2016, and $80.6 in 2015, respectively.
(b)
(c) Net income attributable to noncontrolling interest includes special charges of $12.8 in 2015.

Interest expense, net includes special charges of $21.9 in 2017.

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

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Year ended December 31, (millions)

2017

2016

2015

Net income including noncontrolling interest

$1,522.4

$1,247.1

$1,017.2

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 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

Postretirement benefits changes
Reclassification associated with Venezuelan entities

Subtotal

209.1
(109.7)
-
99.4

(17.9)

(33.4)
(0.5)

24.7
-
-
(9.2)

72.3

(230.4)
(2.5)
-
(232.9)

(626.8)
101.3
2.4
(523.1)

(17.5)

11.7

(102.3)
7.7

20.2
33.9
-
(40.5)

(2.3)
4.5

33.6
-
2.2
38.0

(290.9)

(473.4)

Total comprehensive income, including noncontrolling interest
Comprehensive income attributable to noncontrolling interest
Comprehensive income attributable to Ecolab

1,594.7
15.7
$1,579.0

956.2
16.2
$940.0

543.8
13.1
$530.7

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

CONSOLIDATED BALANCE SHEET

December 31, (millions, except per share amounts)

2017

2016

ASSETS
Current assets

Cash and cash equivalents
Accounts receivable, net
Inventories
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
Deferred income taxes
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

$211.4
2,574.1
1,445.9
365.0
4,596.4
3,707.1
7,167.1
4,017.6
474.2
$19,962.4

$564.4
1,177.1
549.4
183.6
957.3
3,431.8
6,758.3
1,025.5
642.8
415.3
12,273.7

354.7
5,435.7
8,045.4
(1,642.3)
(4,575.0)
7,618.5
70.2
7,688.7
$19,962.4

$327.4
2,341.2
1,319.4
291.4
4,279.4
3,365.0
6,383.0
3,817.8
485.0
$18,330.2

$541.3
983.2
516.3
87.4
891.2
3,019.4
6,145.7
1,019.2
970.2
204.8
11,359.3

352.6
5,270.8
6,975.0
(1,712.9)
(3,984.4)
6,901.1
69.8
6,970.9
$18,330.2

(a) Common stock, 800.0 million shares authorized, $1.00 par value, 289.3 million shares outstanding at December 31, 2017, 291.8

million shares outstanding at December 31, 2016. 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)

2017

2016

2015

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

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 charges, net of cash paid
Venezuelan charges
(Gain) Loss on sale of business
Asset charges and write-downs
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
Release from (deposit into) acquisition related escrow
Reduction of cash due to Venezuelan deconsolidation
Restricted cash activity
Settlement of net investment hedges
Cash used for investing activities

FINANCING ACTIVITIES
Net 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
Other, net
Cash used for financing activities

$1,522.4

$1,247.1

$1,017.2

585.7
307.6
(354.5)
90.5
-
(144.1)
36.9
5.2
-
(50.6)
15.1
37.4

(91.8)
(85.5)
(48.9)
121.1
144.8
2,091.3

(789.6)
(79.0)
10.7
(989.2)
118.8
(0.8)
-
53.8
2.1
(1,673.2)

(43.7)
1,309.4
(799.0)
(600.3)
(448.7)
83.8
-
(8.5)
(15.7)
(522.7)

561.0
289.7
(90.6)
85.7
(43.6)
(211.8)
54.1
(60.5)
-
(0.5)
65.9
14.2

0.9
18.8
(34.9)
(55.1)
99.3
1,939.7

(707.4)
(49.4)
30.5
(49.5)
0.9
-
-
(55.9)
1.3
(829.5)

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)

(606.4)
2,390.0
(1,569.6)
(739.6)
(427.5)
76.8
43.6
(35.5)
-
(868.2)

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

Effect of exchange rate changes on cash and cash equivalents

(11.4)

(7.4)

(49.9)

(Decrease) increase in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period

SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid
Interest paid

(116.0)
327.4
$211.4

234.6
92.8
$327.4

(116.8)
209.6
$92.8

$402.8
239.3

$359.1
267.0

$533.1
237.2

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

CONSOLIDATED STATEMENT OF EQUITY

Ecolab Shareholders

(millions)
Balance, December 31, 2014

Net income
Comprehensive income (loss) activity
Cash dividends declared
Venezuela deconsolidation
Stock options and awards
Reacquired shares

Balance, December 31, 2015

350.3

Net income
Comprehensive income (loss) activity
Cash dividends declared
Stock options and awards
Reacquired shares

2.3

Balance, December 31, 2016

352.6

New accounting guidance adoption (a)
Net income
Comprehensive income (loss) activity
Cash dividends declared
Acquisition of noncontrolling interests
Stock options and awards
Reacquired shares

Balance, December 31, 2017

Additional

Common Paid-in
Capital
Stock

$347.7

$4,874.5

Retained

Earnings
$5,555.1

Ecolab

Non-

OCI
(Loss)
$(951.9)

Treasury

Shareholders' Controlling

Total
Interest Equity

Stock

$(2,509.5)

Equity
$7,315.9

1,002.1

(396.9)

(471.4)

1,002.1
(471.4)
(396.9)

2.6

205.4
6.2
5,086.1

200.2
(15.5)
5,270.8

6,160.3

(1,423.3)

1,229.6

(414.9)

(289.6)

6,975.0

(1,712.9)

1.9
1,508.4

(439.9)

70.6

2.1

$354.7

170.3
(5.4)
$5,435.7

$8,045.4

$(1,642.3)

4.3
(594.9)
$(4,575.0)

$66.2

$7,382.1

15.1
(2.0)
(8.3)
(0.5)

70.5

17.5
(1.3)
(16.9)

69.8

14.0
1.7
(19.3)
4.0

$70.2

1,017.2
(473.4)
(405.2)
(0.5)
215.3
(755.1)
6,980.4

1,247.1
(290.9)
(431.8)
205.7
(739.6)
6,970.9

1.9
1,522.4
72.3
(459.2)
4.0
176.7
(600.3)
$7,688.7

7.3
(761.3)
(3,263.5)

215.3
(755.1)
6,909.9

3.2
(724.1)
(3,984.4)

1,229.6
(289.6)
(414.9)
205.7
(739.6)
6,901.1

1.9
1,508.4
70.6
(439.9)

176.7
(600.3)
$7,618.5

(a) Upon adoption of ASU 2016-09, Compensation – Stock Compensation, a valuation allowance was released for previously

unrecognized excess tax benefits resulting in an adjustment to beginning retained earnings.

COMMON STOCK ACTIVITY

2017

2016

2015

Treasury
Stock
(54,372,729)
58,969
14,291
(6,483,198)
(60,782,667)

Common

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

350,339,820

Treasury
Stock
(47,872,332)
151,261
14,745
(6,666,403)
(54,372,729)

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

Stock options
Stock awards
Reacquired shares

Shares, end of year

Common
Stock
352,607,741
1,714,214
393,941
-
354,715,896

Treasury
Stock
(60,782,667)
41,767
55,431
(4,707,629)
(65,393,098)

Common

Stock
350,339,820
1,778,821
489,100

352,607,741

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF BUSINESS

Ecolab 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 and pest elimination 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 it did 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.

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 non-U.S. dollar functional 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. As discussed in Note 17 Operating Segments and
Geographic Information, 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.

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 the invoiced amounts, less an allowance for doubtful accounts, 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 receivables based on
specific circumstances and credit conditions, and when it is deemed probable that the balance is uncollectible. Account balances are
written 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, $14 million and $15 million as of December 31, 2017, 2016, and 2015,
respectively. Returns and credit activity is recorded directly to sales as a reduction.

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

(millions)

2017

2016

2015

Beginning balance

Bad debt expense
Write-offs
Other (a)

Ending balance

$67.6
17.1
(15.7)
2.5
$71.5

$75.3
20.1
(24.6)
(3.2)

$67.6

$77.5
25.8
(21.9)
(6.1)
$75.3

(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 net realizable value. Certain U.S. inventory costs are determined on a last-in, first-out
(“LIFO”) basis. LIFO inventories represented 39% and 40% of consolidated inventories as of December 31, 2017 and 2016, respectively.
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.

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, 3 to 15 years for merchandising and customer
equipment and 3 to 7 years for 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.
Depreciation expense was $586 million, $561 million and $560 million for 2017, 2016 and 2015, respectively.

Goodwill and Other Intangible Assets

Goodwill

Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in a business combination.
The Company’s reporting units are its operating segments.

During the second quarter of 2017, the Company completed its scheduled annual assessment for goodwill impairment across its eleven
reporting units through a quantitative analysis, utilizing a discounted cash flow approach, which incorporates assumptions regarding
future growth rates, terminal values, and discount rates. The two-step quantitative process involved comparing the estimated fair value of
each reporting unit to the reporting unit’s carrying value, including goodwill. If the fair value of a reporting unit exceeds its carrying value,
goodwill of the reporting unit is considered not to be impaired, and the second step of the impairment test is unnecessary. If the carrying
amount of the reporting 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 2017 indicated the estimated fair
value of each of its reporting units exceeded its carrying amount by a significant margin.

If circumstances change significantly, the Company would also test a reporting unit’s goodwill for impairment during interim periods
between its annual tests. There has been no impairment of goodwill in any of the years presented. In the fourth quarter of 2017, the
Company sold the Equipment Care business, which was a reporting unit, and the goodwill associated with Equipment Care was disposed
of upon sale. No other events occurred during the second half of 2017 that indicated a need to update the Company’s conclusions
reached during the second quarter of 2017.

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

(millions)
December 31, 2015

Segment change (a)

December 31, 2015 revised

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

December 31, 2016

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

December 31, 2017

Global
Industrial

Global

Global
Institutional Energy

Other

$2,560.8
62.7
$2,623.5
-
3.5
3.5
(45.5)
$2,585.0
123.4
(0.2)
-
88.8
$2,797.0

$662.7
(62.7)
$600.0
3.1
-
(0.6)
(11.8)
$590.7
403.7
-
-
32.6
$1,027.0

$3,151.5
-
$3,151.5
0.6
0.1
(2.9)
(55.7)
$3,093.6
8.1
0.3
-
101.7
$3,203.7

$115.8
-
$115.8
-
-
-
(2.1)
$113.7
63.9
-
(42.6)
4.4
$139.4

Total
$6,490.8
-
$6,490.8
3.7
3.6
-
(115.1)
$6,383.0
599.1
0.1
(42.6)
227.5
$7,167.1

(a) Relates to establishment of the Life Sciences reporting unit in the first quarter of 2017, and goodwill being allocated to Life Sciences

based on a fair value allocation of goodwill. The Life Sciences reporting unit is included in the Industrial reportable segment and is
comprised of operations previously recorded in the Food & Beverage and Healthcare reporting units, which are aggregated and
reported in the Global Industrial and Global Institutional reportable segments, respectively. See Note 17 for further information.
(b) For 2017, the Company expects $79.2 million of the goodwill related to businesses acquired to be tax deductible. For 2016, $3.0

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

(c) Represents purchase price allocation adjustments for acquisitions deemed preliminary as of the end of the prior year.
(d) Represents immaterial reclassifications of beginning balances to conform to the current or prior year presentation due to

customer reclassifications across reporting segments completed in the first quarter of the respective year.

Other Intangible Assets

The Nalco trade name is the Company’s principal indefinite life intangible asset. During the second quarter of 2017, the Company
completed its annual test for indefinite life intangible asset impairment using a relief from royalty method of assessment, which
incorporates assumptions regarding future sales projections and discount rates. Based on this testing, the estimated fair value of the
asset exceeded its carrying value by a significant margin, therefore, no adjustment to the $1.2 billion carrying value of this asset was
necessary. Additionally, no events during the second half of 2017 indicated a need to update the Company’s conclusions reached during
the second quarter of 2017. There has been no impairment of the Nalco trade name intangible asset since it was acquired.

The Company’s 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 both December 31, 2017 and 2016.

The weighted-average useful life by type of amortizable asset at December 31, 2017 is as follows:

(years)
Customer relationships
Trademarks
Patents
Other technology

14
14
14
6

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)
2015
2016
2017
2018
2019
2020
2021
2022

Long-Lived Assets

$ 292
290
308
315
302
297
292
286

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. During 2017, the Company impaired certain long-lived assets related to a portion of one of its
businesses. During 2016, the Company impaired certain long-lived assets related to a product line within one of its U.S. plants. 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 these asset impairments.

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.

Income Taxes

Income taxes are recognized during the period in which transactions enter into the determination of financial statement income, with
deferred income taxes 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. The Company records liabilities for income tax uncertainties in accordance with the U.S. GAAP recognition and measurement
criteria guidance.

On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (the “Act”), which reduces the U.S.
federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign
subsidiaries that were previously tax deferred and creates new taxes on certain foreign sourced earnings.

The Tax Act adds many new provisions including changes to bonus depreciation, the deduction for executive compensation and interest
expense, a tax on global intangible low taxed income (GILTI), the base erosion anti abuse tax (BEAT) and a deduction for foreign derived
intangible income (FDII). Some of these provisions, such as the tax on GILTI, may not apply to the Company with full effect until future
years.

The SEC staff issued Staff Accounting Bulletin (SAB 118), which provides guidance on accounting for enactment effects of the Tax Act.
SAB 118 provides a measurement period of up to one year from the Tax Act’s enactment date for companies to complete their
accounting. In accordance with SAB 118, to the extent that a company’s accounting for certain income tax effects of the Tax Act is
incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a
company cannot determine a provisional estimate to be included in its financial statements, it should continue to account for the
provisions of the tax laws that were in effect immediately before enactment of the Tax Act. The Company has reported provisional
amounts for the income tax effects that included the reporting period the Tax Act was enacted.

The two principle elements impacting the 2017 financial statements are the reduction in the tax rate and the one-time tax that is imposed
on our unremitted foreign earnings. The Company has accounted for the impacts of the Tax Act to the extent a reasonable estimate
could be made, and will continue to refine its estimates throughout the measurement period or until the accounting is complete. The
Company is assessing the impact of the provisions of the Act which impact the Company in future years, and has not made a reasonable
estimate of its related effects.

See Note 12 for additional information regarding income taxes.

Share-Based Compensation

During the first quarter of 2017, the Company adopted the accounting guidance issued in March 2016 that amends certain aspects of
share-based compensation for employees, including the accounting for income taxes, forfeitures, and statutory tax withholding
requirements, as well as classifications on the Consolidated Statement of Cash Flows. Under the new guidance, all excess tax benefits
or deficiencies are to be recognized prospectively as discrete income tax items on the Consolidated Statement of Income, while previous
guidance required realized excess tax benefits or deficiencies to be recognized in additional paid-in capital. The Company recorded
$39.7 million of excess tax benefits during 2017. The extent of excess tax benefits is subject to variation in stock price and stock option
exercises. Adoption of the accounting standard also eliminated the requirement that excess tax benefits be realized before they can be
recognized, and as a result, the Company recorded a $1.9 million cumulative-effect adjustment for previously unrecognized excess tax
benefits.

The Company’s adoption also resulted in associated excess tax benefits being classified as an operating activity in the statement of cash
flows prospectively beginning January 1, 2017 with no changes to the prior year. Based on the adoption methodology applied, employee
taxes paid remain classified as a financing activity on the statement of cash flows, and the statement of cash flows classification of prior
periods has not changed. With regards to forfeitures, the new guidance allows companies either to continue to estimate the number of
awards that will be forfeited or to account for forfeitures as they occur. The Company has elected to continue to estimate the number of
awards that will be forfeited based on an estimate of the number of outstanding awards expected to vest.

See Note 11 for additional information regarding equity compensation plans.

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 typically 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. Estimates used in recognizing revenue include the delay
between the time that products are shipped and 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 over the term of
the incentive.

On January 1, 2018, the Company adopted Accounting Standards Committee 606 (ASC 606), Revenue from Contracts with Customers,
which provides guidance on how revenue with customers should be recognized. See the “New Accounting Pronouncements” table within
this Note for discussion on future changes to revenue recognition.

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 and units 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)

2017

2016

2015

Net income attributable to Ecolab

$1,508.4

$1,229.6

$1,002.1

Weighted-average common shares outstanding

Basic
Effect of dilutive stock options and units
Diluted

Basic EPS
Diluted EPS

Anti-dilutive securities excluded from the computation of EPS

Other Significant Accounting Policies

289.6
4.4
294.0

$ 5.21
$ 5.13

3.4

292.5
4.2
296.7

$ 4.20
$ 4.14

3.6

296.4
5.0
301.4

$ 3.38
$ 3.32

3.5

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
7
8
11
14
15
16
17

New Accounting Pronouncements

Standard

Standards that are not yet adopted:

Date of
Issuance

Description

Required
Date of
Adoption

Effect on the
Financial Statements

ASU 2018-02 - Income Statement—Reporting Comprehensive
Income (Topic 220): Reclassification of Certain Tax Effects from
Accumulated Other Comprehensive Income

February 2018

ASU 2017-12 - Derivatives and Hedging (Topic 815): Targeted
Improvements to Accounting for Hedging Activities

August 2017

ASU 2017-09 - Compensation - Stock Compensation (Topic 718):
Scope of Modification Accounting

May 2017

ASU 2017-07 - Compensation - Retirement Benefits (Topic 715):
Improving the Presentation of Net Periodic Pension Cost and the
Net Periodic Postretirement Benefit Cost

March 2017

ASU 2017-05 - Other Income - Gains and Losses from the
Derecognition of Nonfinancial Assets (Topic 610-20): Clarifying
the Scope of Asset Derecognition Guidance and Accounting for
Partial Sales of Nonfinancial Assets

February 2017

ASU 2017-04 - Intangibles - Goodwill and Other (Topic 350):
Simplifying the Test for Goodwill Impairment

January 2017

ASU 2017-01 - Business Combinations (Topic 805): Clarifying the
Definition of a Business

January 2017

Amends ASC 220 to allow entities to
reclassify stranded tax effects resulting
from the Tax Cut and Jobs Act (“the Act”)
from accumulated OCI to retained
earnings. Tax effects stranded in OCI for
reasons other than the impact of the Act
cannot be reclassified.

Amends the hedge accounting recognition
and presentation requirements in ASC
815. Simplifies the guidance on the
application of hedge accounting and the
requirements for hedge documentation
and effectiveness testing. Requires
presentation of all items that affect
earnings in the same income statement
line as the hedged item.

Clarifies the definition of what's considered
a substantive modification related to a
change in terms or conditions of a share-
based payment award and when it's
appropriate to apply modification
accounting. The current definition of
"modification" is too broad, resulting in
diverse interpretations of what's
considered a substantive modification.

Amends the requirements related to
income statement presentation of the
components of net periodic benefit costs.
New requirements include (1)
disaggregate the current-service-cost
component from the other components of
net benefit cost (the “other components")
and present it with other current
compensation costs for related employees
in the income statement and (2) present
the other components elsewhere in the
income statement and outside of income
from operations if such a subtotal is
presented.

Clarifies the scope of guidance on
nonfinancial asset derecognition (ASC
610-20) including the accounting for partial
sales of nonfinancial assets. The ASU
defines "in-substance nonfinancial asset".
Also clarifies the derecognition of all
businesses should be accounted for in
accordance with derecognition and
deconsolidation guidance in 810-10.

Simplifies subsequent measurement of
goodwill by eliminating Step 2 from the
goodwill impairment test. Step 2 measures
a goodwill impairment loss by comparing
the implied fair value of a reporting unit’s
goodwill with the carrying amount of that
goodwill.

Clarifies the definition of a business and
provides guidance on whether transactions
should be accounted for as acquisitions (or
disposals) of assets or businesses.

January 1, 2019

The reclassification is optional
and can be applied
retrospectively or in the period of
adoption. The Company is
currently evaluating the impact
of adoption.

January 1, 2019

The Company is currently
evaluating the impact of
adoption, and certain transition
elections provided for by the
ASU.

January 1, 2018

January 1, 2020

January 1, 2018

This ASU must be applied
prospectively to an award
modified on or after the adoption
date. The Company has not
historically modified awards, and
will apply the modification
guidance prospectively.

Upon adoption of the standard,
the Company will record only the
service cost component with
compensation cost in Cost of
Sales and Selling, General, and
Administrative costs. The other
components of net period benefit
cost will be presented below
operating income. The Company
will revise 2016 and 2017
financial statements, and as a
result will reclassify $44 million
and $67 million of income
related to non-service
components, respectively, below
operating income.

The Company is required to
apply this ASU on a
retrospective basis. The
Company is currently evaluating
the impact of adoption. Adoption
is not expected to have a
material impact on the
Company's financial statements.

The ASU must be applied on a
prospective basis upon
adoption. Adoption of the ASU is
not expected to have a material
impact on the Company's
financial statements.

The ASU must be applied
prospectively on or after the
effective date, and no
disclosures are required at
transition. The Company is
currently evaluating the impact
of adoption, and the ASU is not
expected to have a material
impact on the Company's
financial statements.

Presentation impact only related
to restricted cash associated
with the Anios acquisition. The
Company will adopt the standard
and restate the cash flow
statement to align with the new
guidance.

ASU 2016-18 - Statement of Cash Flows (Topic 230): Restricted
Cash

November 2016

Clarifies guidance on the classification and
presentation of restricted cash in the
statement of cash flows.

January 1, 2018

ASU 2016-16 - Income Taxes (Topic 740): Intra-Entity Transfers
of Assets Other Than Inventory

October 2016

Simplifies the guidance on the accounting
for the income tax consequences of intra-
entity transfers of assets other than
inventory (e.g. intellectual property).

January 1, 2018

ASU 2016-15 - Statement of Cash Flows (Topic 230):
Classification of Certain Cash Receipts and Cash Payments

August 2016

ASU 2016-13 - Financial Instruments - Credit Losses (Topic 326):
Measurement of Credit Losses on Financial Instruments

June 2016

The guidance's objective is to reduce
diversity in practice of how certain cash
receipts and cash payments are presented
and classified in the statement of cash
flow.

January 1, 2018

January 1, 2020

Addresses the recognition, measurement,
presentation and disclosure of credit
losses on trade and reinsurance
receivables, loans, debt securities, net
investments in leases, off-balance-sheet
credit exposures and certain other
instruments. Amends guidance on
reporting credit losses from an incurred
model to an expected model for assets
held at amortized cost, such as accounts
receivable, loans and held-to-maturity debt
securities. Additional disclosures will also
be required.

This ASU must be applied on a
modified retrospective basis
through a cumulative-effect
adjustment directly to retained
earnings as of the beginning of
the period of adoption. The
Company has deferred tax
impacts associated primarily
with transferring intellectual
property (IP) between entities,
which will be recognized upon
adoption. Upon adoption, the
Company expects to recognize
approximately $43 million to
beginning retained earnings, and
record deferred tax assets of $2
million.

Presentation impact only related
to eight specific cash flow items.
Adoption and restatement of the
cash flow statement for the new
standard is not expected to be
material.

Adoption of the standard will
change how the allowance for
trade and other receivables is
calculated. The Company is
currently evaluating the impact
of adoption.

Lease ASUs:
ASU 2016-02 - Leases (Topic 842)
ASU 2018-01 - Leases (Topic 842): Land Easement Practical
Expedient

Revenue Recognition ASUs:
2014-09 - Revenue from Contracts with Customers
2015-14 - Deferral of the Effective Date
2016-08 - Principal Versus Agent Considerations
2016-10 - Identifying Performance Obligations and Licensing
2016-11 - Revenue Recognition and Derivatives and Hedging
2016-12 - Narrow-Scope Improvements & Practical Expedients
2016-20 - Technical Corrections and Improvements

Various

Introduces the recognition of lease assets
and lease liabilities by lessees for those
leases classified as operating leases
under previous guidance.

January 1, 2019 See additional information
regarding the impact of this
guidance on the Company's
financial statements at the
bottom of this table in note (a).

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.

January 1, 2018 See additional information
regarding the impact of this
guidance on the Company's
financial statements at the
bottom of this table in note (b).

(a)

(b)

As part of implementing the new lease standard, the Company is in process of reviewing current accounting policies, developing future policies, and assessing the
practical expedients allowed under the new accounting guidance and proposed under the FASB’s tentative decision on November 29, 2017. The tentative decision
relieves the requirements to restate comparative periods in the period of adoption and to separately disclose lease and nonlease components for lessor accounting when
certain conditions are met. In addition, the project team is defining future processes to identify, accumulate, and report on the Company’s various leases. The Company
expects most of its operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon adoption
and is currently evaluating other impacts on the consolidated financial statements. The standard currently requires a modified retrospective transition to be applied at the
beginning of the earliest comparative period presented in the year of adoption; however, this requirement may be relieved based upon the tentative decision noted
above.

The Company adopted the new standard using the full retrospective method on January 1, 2018. The Company reached conclusions on key accounting assessments
related to the standard and is finalizing the related accounting policies. The Company’s evaluation of performance obligations within certain contracts identified additional
performance obligations which relate to providing services to customers. These additional performance obligations, when aggregated with the service revenue that is
currently reported are expected to represent more than 10% of consolidated net sales. The Company will separately report revenue from service and leases, “Service
Revenue”, from product revenues “Product Revenue” on the income statement. Additionally, certain costs currently classified in Selling, General, and Administrative
expenses will be reclassified to Cost of Sales as they are tied to satisfaction of a service performance obligation. The impact of this reclassification is expected to be an
increase in cost of sales, which is a decrease in gross margin of 400 bps – 600 bps. Adoption of the standard is not expected to have a material impact on net income or
EPS. In addition to formalizing the additional disclosures associated with the new standard, the Company is finalizing the impact on the consolidated financial statements,
including the impact of the prior year restatements.

Standard

Standards that were adopted:

Date of
Issuance

Description

Date of
Adoption

Effect on the
Financial Statements

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

July 2015

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

January 1, 2017 The adoption of the

guidance did not have a
material impact on the
Company's financial
statements.

ASU 2016-01 - Financial Instruments – Overall (Subtopic 825-10):
Recognition and Measurement of Financial Assets and Financial
Liabilities

ASU 2016-05 - Effect of Derivative Contract Novations on Existing
Hedge Accounting Relationships

ASU 2016-07 - Investments - Equity Method and Joint Ventures:
Simplifying the Transition to the Equity Method of Accounting

January 2016 The amendment revises accounting related

January 1, 2017 The adoption of the

to the classification and measurement of
investments in equity securities and the
presentation of certain fair value changes for
financial liabilities measured at fair value.
The ASU also amends certain disclosure
requirements associated with the fair value of
financial instruments.

guidance did not have a
material impact on the
Company's financial
statements.

March 2016 The amendment clarifies language related to

January 1, 2017 The adoption of the

hedge accounting criteria that a change in
the counterparty is not in and of itself
considered a termination of the derivative or
critical term of the hedging relationship.

guidance did not have a
material impact on the
Company's financial
statements.

March 2016 Simplifies the transition to equity method

January 1, 2017 The adoption of the

accounting for entities that have an
investment that becomes qualified for the
equity method of accounting as a result of an
increase in the level of ownership interest or
degree of influence.

guidance did not have a
material impact on the
Company's financial
statements.

ASU 2016-09 - Compensation—Stock Compensation (Topic 718):
Improvements to Employee Share-Based Payment Accounting

March 2016 The amendment includes provisions intended

to simplify various aspects related to how
share-based payments are accounted for
and presented in the financial statements.

ASU 2017-03 - Accounting Changes and Error Corrections (Topic
250) and Investments-Equity Method and Joint Ventures (Topic 323)

January 2017

Amends the disclosure requirements
associated with certain recently issued
Accounting Standards and how they will have
an impact on the Financial Statements of a
registrant when such standards are adopted
in a future period. It applies to ASU No.
2014-09, Revenue from Contracts with
Customers (Topic 606); ASU No. 2016-02,
Leases (Topic 842); and ASU No. 2016-13,
Financial Instruments—Credit Losses (Topic
326): Measurement of Credit Losses on
Financial Instruments and any subsequent
amendments to these ASU's.

January 1, 2017 The Company included
appropriate disclosures
within the current year
10-K to adhere to this
new ASU.

Effective
Immediately

The Company included
appropriate disclosure
requirements within this
10-K to adhere to this
new ASU.

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 activities
Acquisition and integration costs
Fixed asset impairment and other charges
Inventory costs and reserves
Energy related charges
Venezuela related activities

Subtotal

Special (gains) and charges
Restructuring activities
Acquisition and integration costs
Gain on sale of business
Energy related charges
Venezuela related activities
Other

Subtotal

Operating income subtotal

Interest expense, net

Net income attributable to noncontrolling interest

Restructuring activities
Venezuela related activities

Subtotal

2017

2016

2015

$4.6
13.2
26.2
-
-
-
44.0

39.9
15.4
(46.1)
-
(11.5)
(1.4)
(3.7)

40.3

21.9

-
-
-

$(0.4)
-
10.0
(6.2)
62.6
-
66.0

(8.7)
8.6
-
14.2
(7.8)
33.2
39.5

105.5

-
-
-

$16.5
-
24.7
6.1
-
33.3
80.6

83.8
18.7
-
-
256.0
56.3
414.8

495.4

(1.7)
(11.1)
(12.8)

Total special (gains) and charges

$62.2

$105.5

$482.6

For segment reporting purposes, special (gains) and charges are not allocated to reportable segments, which is consistent with the
Company’s internal management reporting.

Restructuring Activities

During the second quarter of 2017, the Company commenced restructuring and other cost-saving actions in order to streamline
operations. These actions include a reduction of the Company’s global workforce by approximately 570 positions, as well as asset
disposals and lease terminations. As a result of these actions, the Company has incurred restructuring charges of $45.5 million ($32.7
million after tax) during 2017. Actions were substantially completed in 2017. As of December 31, 2017, the restructuring liability balance
related to these activities was $23.2 million. The majority of the pretax charges represent net cash expenditures which are expected to be
paid over a period of a few months to several quarters and will be funded from operating activities. Cash payments during 2017, related
to actions initiated in 2017, were $17.8 million.

We recorded net restructuring gains related to legacy restructuring plans that commenced prior to 2015 of $1.0 million ($0.04 million after
tax) during 2017. The Company recorded net restructuring gains of $9.1 million ($10.8 million after tax) in 2016 and net restructuring
charges of $100.3 million ($77.2 million after tax) during 2015. The legacy restructuring plans liability balance was $18.3 million, $39.6
million, and $90.1 million as of December 31, 2017, 2016 and 2015, respectively. The reduction in liability balance was driven primarily
by severance and other cash payments. The remaining accrual is expected to be paid over a period of a few months to several quarters
and continues to be funded from operating activities.

Restructuring activities have been included as a component of both cost of sales and special (gains) and charges 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.

Acquisition and integration related costs

Acquisition and integration costs reported in cost of sales on the Consolidated Statement of Income in 2017 include $13.2 million ($8.6
million after tax) related primarily to disposal of excess inventory upon the closure of Swisher plants, accelerated rent expense, and
amounts related to recognition of fair value step-up in the Anios inventory.

Acquisition and integration costs reported in special (gains) and charges on the Consolidated Statement of Income in 2017 include $15.4
million ($9.9 million after tax) of acquisition costs, advisory and legal fees, and integration charges for the Anios and Swisher acquisitions
during 2017.

During 2016, the Company incurred acquisition and integration charges of $8.6 million ($5.4 million after tax) primarily related to the
Swisher acquisition. During 2015, as a result of the Champion acquisition and Nalco merger, the Company incurred charges of $18.7
million ($12.0 million after tax). The charges have been included as a component of special (gains) and charges on the Consolidated
Statement of Income. Further information related to the Company’s acquisitions is included in Note 4.

Fixed asset impairment and other charges

During 2017, the Company recorded other charges of $26.2 million ($19.7 million after tax) primarily relating to fixed asset impairments
and a Global Energy vendor contract termination.

During 2015, the Company recorded fixed asset impairment charge of $24.7 million ($15.4 million after tax), consisting of certain
production equipment and buildings within one of the Company’s U.S. plants. During 2016, the Company recorded an additional charge
of $10.0 million ($6.3 million after tax) related to the dry polymer fixed asset impairment, as well as related inventory charges.
Subsequent to the charge, the remaining value of the underlying fixed assets was less than $5 million. Inventory charges include
adjustments due to the significant decline in activity and related prices of the corresponding dry polymer products.

These items have been included as a component of cost of sales on the Consolidated Statement of Income.

Inventory costs and reserve

During 2015, the Company improved and standardized estimates related to its inventory reserves and product costing, resulting in a net
pre-tax charge of $6.1 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 the capitalization of certain cost
components into inventory.

During 2016, the Company took additional actions related to capitalization of certain cost components into inventory, which resulted in a
gain of $6.2 million ($4.6 million after tax).

Energy related charges

Oil industry activity remained depressed during 2016 when compared with 2014 levels, resulting from excess oil supply pressures, which
negatively impacted exploration and production investments in the energy industry, particularly in North America. As a result of these
conditions and their corresponding impact on the Company’s business outlook, the Company recorded total charges of $76.8 million
($50.0 million after tax), comprised of inventory write-downs and related disposal costs, fixed asset charges, headcount reductions and
other charges in 2016. No such charges were incurred in 2017.

The inventory write-downs and related disposal costs of $40.5 million include adjustments due to the significant decline in activity and
related prices of certain specific-use and other products, coupled with declines in replacement costs, as well as estimated costs to
dispose the respective excess inventory. The fixed asset charges of $20.4 million resulted from the write-down of certain assets related
to the reduction of certain aspects of the Company’s North American operations within the Global Energy segment, as well as
abandonment of certain projects under construction. The carrying value of the corresponding fixed assets was reduced to zero. The
employee termination costs of $13.1 million include a reduction in the Company’s Global Energy segment’s global workforce to better
align its workforce with anticipated activity levels in the near term. As of the end of 2017, the remaining severance liability was minimal.

The charges discussed above have been included as a component of both cost of sales and special (gains) and charges on the
Consolidated Statement of Income.

Venezuela related activities

Effective as of the end of the fourth quarter of 2015, the Company deconsolidated its Venezuelan subsidiaries and began accounting for
the investments in its Venezuelan subsidiaries using the cost method of accounting effective in the first quarter of 2016. The conditions
within Venezuela driving this decision remained in place during 2016 and 2017. Prior to deconsolidation, the Company remeasured the
Venezuelan bolivar operations within its Water, Paper, Food & Beverage, Institutional and the bolivar portion of the Company’s
Venezuelan operations within Energy operating segments from the official exchange rate at the time of 6.3 bolivares to 1 U.S. dollar to
the SIMADI rate at the time of approximately 200 bolivares to 1 U.S. dollar. As a result of the ownership structure of the Company’s Food
& Beverage and Institutional operations in Venezuela, the Company reflected a portion of the devaluation impact as a component of net
income (loss) attributable to noncontrolling interest on the Consolidated Statement of Income. Upon deconsolidation, the Company
recorded a charge to fully write off its intercompany receivables and investment. The total charges during 2015 related to the Company’s
actions in Venezuela were $289.3 million ($246.8 million after tax). 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 $235.7 million.

The Company recorded gains due to U.S. dollar cash recoveries of intercompany receivables written off at the time of deconsolidation of
$11.5 million ($7.2 million after tax) and $7.8 million ($4.9 million after tax) in 2017 and 2016, respectively.

Gain on sale of business

During 2017, the Company disposed of the Equipment Care business and recorded a gain of $46.1 million ($12.4 million after tax
primarily due to non-deductible goodwill) net of working capital adjustments, costs to sell and other transaction expenses. The gain has
been included as a component of special (gains) and charges on the Consolidated Statement of Income.

Other

The Company recorded net gains of $1.4 million ($0.7 million after tax), net charges of $33.2 million ($21.1 million after tax), and net
charges of $56.3 million ($34.5 million after tax) in 2017, 2016, and 2015, respectively, primarily related to litigation related charges and
settlements. In 2015, this also included the recognition of a loss on the sale of a portion of the Ecovation business, offset partially by the
recovery of funds deposited into escrow as part of the Champion transaction. These charges have been included as a component of
special (gains) and charges on the Consolidated Statement of Income.

Interest Expense, net

During 2017, in anticipation of U.S. tax reform and a potential limit on interest deductibility in future years, the Company entered into
transactions to exchange or retire certain long-term debt, and incurred debt exchange and extinguishment charges of $21.9 million
($13.6 million after tax). This charge has been included as a component of interest expense, net on the Consolidated Statement of
Income.

4. ACQUISITIONS AND DISPOSITIONS

Acquisitions

The Company makes acquisitions that align with its 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 included in the Consolidated Balance Sheet. The
purchase price allocation is based on estimates of the fair value of assets acquired and liabilities assumed. The aggregate purchase
price of acquisitions has been reduced for any cash or cash equivalents acquired with the acquisition. Acquisitions during 2017, 2016
and 2015 were not significant to the Company’s consolidated financial statements; therefore, pro forma financial information is not
presented.

Anios Acquisition

On February 1, 2017, the Company acquired Anios for total consideration of $798.3 million, including satisfaction of outstanding debt.
Anios had annualized pre-acquisition sales of approximately $245 million and is a leading European manufacturer and marketer of
hygiene and disinfection products for the healthcare, food service, and food and beverage processing industries. Anios provides an
innovative product line that expands the solutions the Company is able to offer, while also providing a complementary geographic
footprint within the healthcare market. During 2016, the Company deposited €50 million in an escrow account that was released back to
the Company upon closing of the transaction in February 2017. As shown within Note 5, this was recorded as restricted cash within other
assets on the Consolidated Balance Sheet as of December 31, 2016.

The Company incurred certain acquisition and integration costs associated with the transaction that were expensed and are reflected in
the Consolidated Statement of Income. See Note 3 for additional information related to the Company’s special (gains) and charges
related to such activities.

The components of the cash paid for Anios are shown in the following table.

(millions)
Tangible assets
Identifiable intangible assets
Customer relationships
Trademarks
Other technology
Total assets acquired

Goodwill

Total liabilities
Total consideration transferred

Long-term debt repaid upon close
Net consideration transferred to sellers

2017

$139.8

252.0
65.7
16.1
473.6

511.7

187.0
798.3

192.8
$605.5

Tangible assets are primarily comprised of accounts receivable of $64.8 million, property, plant and equipment of $24.7 million and
inventory of $29.1 million. Liabilities primarily consist of deferred tax liabilities of $102.3 million and current liabilities of $62.5 million.

Customer relationships, trademarks and other technology are being amortized over weighted average lives of 20, 17, and 11 years,
respectively.

Goodwill of $511.7 million arising from the acquisition consists largely of the synergies and economies of scale expected through adding
complementary geographies and innovative products to the Company’s healthcare portfolio. The goodwill was allocated to the
Institutional, Healthcare, and Specialty operating segments within the Global Institutional reportable segment and the Food & Beverage
and Life Sciences operating segments within the Global Industrial reportable segment. None of the goodwill recognized is expected to be
deductible for income tax purposes.

Other Acquisitions

The components of the cash paid for other acquisitions, excluding the Anios transaction, for the current and prior year transactions during
2017, 2016 and 2015, are shown in the following table.

(millions)
Net tangible assets acquired and equity method investments

2017

$29.8

2016

$46.9

2015

$103.7

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 acquisition related

liabilities and contingent consideration

67.0
-
2.5
0.2
7.6
77.3

87.4
194.5

5.6

2.6
-
-
-
1.1
3.7

7.3
57.9

27.1

65.6
6.7
13.5
4.2
8.7
98.7

136.9
339.3

(60.5)

$200.1

$85.0

$278.8

The 2017 and 2016 acquisition related liabilities are related primarily to payments of settled liabilities from previous transactions. The
2015 acquisition related liability is related to holdback liabilities and contingent consideration as part of the Jianghai, Swisher, and
UltraFab acquisitions.

The weighted average useful lives of identifiable intangible assets acquired, excluding the Anios transaction, was 12, 4, and 10 years as
of December 31, 2017, 2016 and 2015, respectively.

2017 Activity

In January 2017, the Company acquired a business which provides water solutions to automotive customers. The acquired business
became part of the Company’s Global Industrial reportable segment. In September 2017, the Company acquired a paper chemicals
business which became a part of the Company’s Global Industrial reportable segment. In December 2017, the Company acquired U.S.
based pest elimination businesses that provide specialized capabilities in food storage. These businesses became part of the Company’s
Other reportable segment. Additional acquisitions were made during the year which became part of the Company’s Global Energy and
Global Industrial reportable segments. Annualized pre-acquisition sales of the businesses acquired were approximately $135 million.

2016 Activity

In July 2016, the Company made an equity method investment in a global leader in the design and engineering of complex and
comprehensive water treatment solutions that improve water quality and reduce net water usage which became part of the Company’s
Global Industrial reportable segment. Also during 2016, the Company acquired certain assets of an oilfield chemical distributor which
became part of the Company’s Global Energy reportable segment.

2015 Activity

In June 2015, the Company acquired an industrial water treatment business, which became part of the Company’s Global Industrial
reportable segment. In November 2015, the Company acquired a U.S. based hygiene and sanitizing solutions business in the
foodservice, hospitality, retail and healthcare markets. The acquired business became part of the Company’s Global Institutional
reportable segment. The Company also acquired, in November 2015, a business which manufactures customized solutions and
specialized chemical injection systems for the oil and gas industry. The acquired business became part of the Company’s Global Energy
reportable segment. Additional acquisitions were made during the year which became part of the Company’s Global Institutional, Other
and Global Industrial reportable segments. Annualized pre-acquisition sales of the businesses acquired were approximately $300
million.

Dispositions

In November 2017, the Company completed the sale of its Equipment Care business to a third party for $132.6 million, net of working
capital adjustments, costs to sell and other transaction expenses. Prior to its sale, Equipment Care provided equipment repair,
maintenance, and preventative maintenance services for the commercial food service industry. Consideration received consisted of
$118.8 million of cash, a note receivable of $15.0 million and a $5.0 million equity interest in the acquiring entity. The Company
recognized a gain of $46.1 million ($12.4 million after tax, primarily due to non-deductible goodwill), which is recorded in special (gains)
and charges in the Consolidated Statement of Income. Equipment Care sales were approximately $180 million in 2016 and were
included in the Company’s Other reportable segment.

In October 2016, the Company sold the restroom cleaning business initially acquired through the November 2015 Swisher acquisition.

In November 2015, the Company sold a business in Europe that was part of its Global Energy segment. In June 2015, the Company sold
a portion of its Ecovation business, resulting in a loss of $13.7 million ($8.6 million after tax), recorded in special gains and charges. The
business was part of the Company’s Global Industrial segment.

None of the dispositions above were significant to the Company’s consolidated financial statements.

Subsequent Event Activity

The Company entered into various purchase and sale agreements which are expected to close in the first quarter of 2018. None of the
agreements are significant to the consolidated financial statements, individually or in the aggregate.

5. BALANCE SHEET INFORMATION

(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

Total

Property, plant and equipment, net

Land
Buildings and leasehold improvements
Machinery and equipment
Merchandising and customer equipment
Capitalized software
Construction in progress

Accumulated depreciation

Total

Other intangible assets, net

Intangible assets not subject to amortization

Trade names

Intangible assets subject to amortization

Customer relationships
Trademarks
Patents
Other technology

Accumulated amortization
Customer relationships
Trademarks
Patents
Other technology

Net intangible assets subject to amortization

Total

Other assets

Deferred income taxes
Pension
Derivative assets
Restricted cash
Other

Total

December 31
2017

December 31
2016

$2,645.6
(71.5)
$2,574.1

$974.3
438.7
1,413.0
32.9
$1,445.9

$153.5
129.2
28.8
53.5
$365.0

$224.1
1,207.4
2,280.9
2,399.4
585.8
438.7
7,136.3
(3,429.2)
$3,707.1

$2,408.8
(67.6)
$2,341.2

$860.0
408.4
1,268.4
51.0
$1,319.4

$98.3
105.0
46.3
41.8
$291.4

$211.0
1,121.2
2,035.8
2,199.4
531.1
344.1
6,442.6
(3,077.6)
$3,365.0

$1,230.0

$3,620.3
380.6
462.7
232.6
4,696.2

(1,403.8)
(147.6)
(187.9)
(169.3)
(1,908.6)
2,787.6
$4,017.6

$102.2
41.7
-
-
330.3
$474.2

$3,206.1
303.3
446.5
210.5
4,166.4

(1,148.2)
(125.2)
(157.3)
(147.9)
(1,578.6)
2,587.8
$3,817.8

$92.3
27.2
21.5
53.0
291.0
$485.0

(millions)
Other current liabilities

Discounts and rebates
Dividends payable
Interest payable
Taxes payable, other than income
Derivative liabilities
Restructuring
Other

Total

Accumulated other comprehensive loss

Unrealized 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

Short-term Debt

December 31
2017

December 31
2016

$302.8
118.6
50.7
129.9
62.2
36.0
257.1
$957.3

$(26.4)
(555.8)
(1,060.1)
$(1,642.3)

$275.2
108.0
37.3
103.7
24.6
30.5
311.9
$891.2

$(8.5)
(511.4)
(1,193.0)
$(1,712.9)

The following table provides the components of the Company’s short-term debt obligations, along with applicable interest rates as of
December 31, 2017 and 2016:

(millions)
Short-term debt

Commercial paper
Notes payable
Long-term debt, current maturities

Total

Line of Credit

2017

2016

Carrying
Value

$-
14.7
549.7
$564.4

Average
Interest
Rate

- %
2.77 %

Carrying
Value

$-
29.9
511.4
$541.3

Average
Interest
Rate

- %
2.92 %

In November 2017, the Company entered into an amended and restated $2.0 billion multi-currency revolving credit facility which
extended the maturity from December 2019 to November 2022. The credit facility has been established with a diverse syndicate of banks
and supports the Company’s U.S. and European commercial paper programs. There were no borrowings under the Company’s credit
facility as of December 31, 2017 and 2016.

Commercial Paper

The Company’s commercial paper program is used as a potential source of liquidity and consists of a $2.0 billion U.S. commercial paper
program and a $2.0 billion European commercial paper program. The maximum aggregate amount of commercial paper that may be
issued by the Company under its commercial paper programs may not exceed $2.0 billion.

The Company had no commercial paper outstanding under either program as of December 31, 2017 or December 31, 2016.

As of December 31, 2017, the Company’s short-term borrowing program was rated A-2 by Standard & Poor’s and P-2 by Moody’s.

Long-term Debt

The following table provides the components of the Company’s long-term debt obligations, along with applicable interest rates as of
December 31, 2017 and 2016:

(millions)

Long-term debt
Public and 144A notes (2017 principal amount)
Five year 2012 senior notes ($500 million)
Three year 2015 senior notes ($300 million)
Three year 2016 senior notes ($400 million)
Five year 2015 senior notes ($300 million)
Ten year 2011 senior notes ($1.02 billion)
Five year 2017 senior notes ($500 million)
Seven year 2016 senior notes ($400 million)
Seven year 2016 senior notes (€575 million)
Ten year 2015 senior notes (€575 million)
Ten year 2016 senior notes ($750 million)
Ten year 2017 144A notes ($500 million)
Thirty year 2011 senior notes ($458 million)
Thirty year 2016 senior notes ($250 million)
Thirty year 2017 144A notes ($700 million)

Private notes (2017 principal amount)

Series A private placement senior notes ($250
million)
Series B private placement senior notes ($250
million)

Capital lease obligations
Other

Total debt

Long-term debt, current maturities

Total long-term debt

Public and 144A Notes

Maturity
by Year

Carrying

Value

2017
Stated
Effective
Interest Interest Carrying
Rate

Value

Rate

2016

Stated

Interest

Rate

Effective
Interest
Rate

2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2041
2046
2047

2018

2023

- %
- %
299.9 1.55 % 1.94 %
396.1 2.00 % 2.26 %
299.1 2.25 % 2.79 %
1,016.6 4.35 % 4.45 %
496.3 2.38 % 2.55 %
397.5 3.25 % 3.49 %
676.6 1.00 % 1.17 %
679.4 2.63 % 2.85 %
742.8 2.70 % 2.93 %
494.7 3.25 % 3.36 %
451.3 5.50 % 5.60 %
246.0 3.70 % 3.76 %
607.8 3.95 % 4.14 %

$498.9
298.9
395.9
298.6
1,244.8
-
397.0
608.4
604.3
742.1
-
738.7
245.9
-

1.45 %
1.55 %
2.00 %
2.25 %
4.35 %
-
3.25 %
1.00 %
2.63 %
2.70 %
-
5.50 %
3.70 %
-

1.22 %
1.43 %
1.78 %
2.79 %
4.43 %
-
3.49 %
1.20 %
2.88 %
2.94 %
-
5.56 %
3.75 %
-

248.5 3.69 % 5.16 %

248.9

3.69 %

4.65 %

249.3 4.32 % 4.36 %

4.32 %

4.36 %

4.6
1.5
7,308.0
(549.7)
$6,758.3

249.2
5.2
80.3
6,657.1
(511.4)
$6,145.7

In November 2017, the Company completed a private offering of $825 million of debt securities consisting of a $500 million aggregate
principal ten year fixed rate note with a coupon rate of 3.25% (“New 10-year Notes”) and a $325 million aggregate principal thirty year
fixed rate note with a coupon rate of 3.95% (“New 30-year Notes” and, together with the New 10-year Notes, “144A Notes”). Immediately
following the offering, the Company completed a private offering to exchange a portion of the outstanding senior notes due 2041 (“Old
30-year Notes”), for $375 million of the New 30-year Notes. In connection with the exchange offering, $292 million of Old 30-year Notes
were validly tendered and subsequently cancelled.

The New 30-year Notes bear a lower fixed coupon rate while requiring a higher principal repayment on an extended maturity date,
compared with the Old 30-year Notes that were exchanged. There were no other significant changes to the terms between the Old 30-
year Notes and the New 30-year Notes. The exchange was accounted for as a debt modification, and there were no cash payments to or
cash receipts from the note holders as a result of the exchange. Existing deferred financing costs associated with the Old Notes, as well
as discounts associated with the New Notes aggregating $87 million, are being accreted over the term of the New Notes and recorded as
interest expense.

In December 2017, the Company completed a partial retirement on $230 million of the 4.35% senior note due 2021 which was accounted
for as a debt extinguishment. The payout premium of $15.7 million was expensed immediately and is reflected as a financing cash flow
activity.

In August 2017, the Company issued a $500 million aggregate principal five year fixed rate note with a coupon rate of 2.375%. The
proceeds were used to repay a portion of the Company’s outstanding commercial paper and for general corporate purposes.

In December 2016, the Company issued a €575 million aggregate principal seven year fixed rate note with a coupon rate of 1.00% ($677
million as of December 31, 2017). The proceeds were used to repay a portion of the Company’s 3.00% senior notes due at maturity in
December 2016 and its 4.585% series B euro notes due at maturity in December 2016.

In October 2016, the Company issued $1.0 billion of debt securities consisting of a $750 million aggregate principal ten year fixed rate
note with a coupon rate of 2.70% and a $250 million aggregate principal thirty year fixed rate note with a coupon rate of 3.70%. The
proceeds were used to repay commercial paper and a portion of the Company’s 3.00% senior notes due at maturity in December 2016.

In January 2016, the Company 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.

The Company’s public notes and 144A 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 notes
below investment grade rating, within a specified time period, the Company would be required to offer to repurchase the public notes and
144A 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 and 144A Notes are senior unsecured and unsubordinated obligations of the Company and rank equally
with all other senior and unsubordinated indebtedness of the Company.

The Company entered into a registration rights agreement in connection with the issuance of the 144A Notes. Subject to certain
limitations set forth in the registration rights agreement, the Company has agreed to (i) file a registration statement (the “Exchange Offer
Registration Statement”) with respect to registered offers to exchange the 144A Notes for exchange notes (the “Exchange Notes”), which
will have terms identical in all material respects to the New 10-year Notes and New 30-year Notes, as applicable, except that the
Exchange Notes will not contain transfer restrictions and will not provide for any increase in the interest rate thereon in certain
circumstances and (ii) use commercially reasonable efforts to cause the Exchange Offer Registration Statement to be declared effective
within 270 days after the date of issuance of the 144A Notes. Until such time as the Exchange Offer Registration Statement is declared
effective, the 144A Notes may only be sold in accordance with Rule 144A or Regulation S of the Securities Act of 1933, as amended.

Private Notes

The Company’s 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 would
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 would 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 assumption of
debt and the majority of the property, plant and equipment addition represented non-cash financing and investing activities, respectively.
The remaining balance on the assumed debt was settled in December 2017 and was reflected in the "Other" line of the table above at
December 31, 2016.

Covenants and Future Maturities

The Company is in compliance with all covenants under the Company’s outstanding indebtedness at December 31, 2017.

As of December 31, 2017, the aggregate annual maturities of long-term debt for the next five years were:

(millions)
2018
2019
2020
2021
2022

$ 550
397
300
1,017
497

Net Interest Expense

Interest expense and interest income incurred during 2017, 2016 and 2015 were as follows:

(millions)
Interest expense
Interest income

Interest expense, net

2017
$274.6
(19.6)
$255.0

2016
$285.4
(20.8)
$264.6

2015
$253.7
(10.1)
$243.6

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.

During 2017, in anticipation of U.S. tax reform and a potential limit on interest deductibility in future years, the Company entered into
transactions to exchange or retire certain long-term debt, and incurred debt exchange and extinguishment charges of $21.9 million
($13.6 million after tax), which are included as a component of interest expense, net on the Consolidated Statement of Income.

7. FAIR VALUE MEASUREMENTS

The Company’s financial instruments include cash and cash equivalents, restricted cash, accounts receivable, accounts payable,
contingent consideration obligations, commercial paper, notes payable, foreign currency forward contracts, interest rate swap
agreements 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:

(millions)

Assets

Foreign currency forward contracts

Liabilities

Foreign currency forward contracts
Interest rate swap agreements

(millions)

Assets

Foreign currency forward contracts

Liabilities

Foreign currency forward contracts
Interest rate swap agreements

Carrying
Amount

$45.8

153.1
4.2

Carrying
Amount

$93.4

46.7
3.5

December 31, 2017

Level 1

Fair Value Measurements
Level 2

Level 3

$45.8

-
-

153.1
4.2

-
-

December 31, 2016

Level 1

Fair Value Measurements
Level 2

Level 3

$93.4

-
-

46.7
3.5

-
-

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 and thereafter until settlement.
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.

There were no contingent consideration activities during 2017. Changes in the fair value of contingent consideration obligations during
2016 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

2016

$15.6
-
(2.4)
(12.6)
(0.6)
$-

The carrying values of accounts receivable, accounts payable, cash and cash equivalents, restricted cash, 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 (classified as level 2). The
carrying amount and the estimated fair value of long-term debt, including current maturities, held by the Company were:

Long-term debt, including current maturities

8. DERIVATIVES AND HEDGING TRANSACTIONS

2017

2016

Carrying
Amount
$7,308.0

Fair
Value
$7,716.0

Carrying
Amount
$6,657.1

Fair
Value
$6,963.9

The Company uses foreign currency forward contracts, interest rate swap agreements 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.

Derivative Positions 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.

The respective net amounts are included in other current assets, other assets, other current liabilities and other liabilities on the
Consolidated Balance Sheet.

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 agreements

Derivatives not designated as hedging instruments

Foreign currency forward contracts

Gross value of derivatives

Gross amounts offset in the Consolidated Balance Sheet

Net value of derivatives

Asset Derivatives

2017

2016

Liability Derivatives

2017

2016

$19.6
-

26.2
45.8

(17.0)
$28.8

$73.4
-

20.0
93.4

(25.7)
$67.7

$125.2
4.2

27.9
157.3

(17.0)
$140.3

$19.8
3.5

26.9
50.2

(25.7)
$24.5

The following table summarized the notional values of the Company’s outstanding derivatives.

(millions)

Foreign currency forward contracts
Interest rate agreements

Cash Flow Hedges

Notional Values

2017

2016

$ 5,593
$ 950

$ 4,317
$ 1,450

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. Cash flow hedged
transactions impacting AOCI are forecasted to occur within the next five years.

The Company occasionally enters into treasury lock and forward starting interest rate swap agreements to manage interest rate
exposure. During 2016 and 2015, the Company entered into and subsequently closed a series of treasury lock and forward starting
interest rate swap agreements, in conjunction with its public debt issuances. The agreements were designated and effective as cash flow
hedges of the expected interest payments related to the anticipated future debt issuances. Amounts recorded in AOCI are recognized as
interest expense over the remaining life of the notes as the forecasted interest transactions occur.

The effective portion of gains and losses recognized into AOCI and earnings from derivative contracts that qualified as cash flow hedges
was as follows:

(millions)
Unrealized gain (loss) recognized into AOCI

Foreign currency forward contracts
Interest rate swap agreements

Gain (loss) recognized in income

Foreign currency forward contracts

AOCI (equity)
AOCI (equity)

Total

AOCI (equity)
AOCI (equity)
Total

$(173.4)
-
(173.4)

$7.0
(9.3)
(2.3)

$68.4
3.6
72.0

2017

2016

2015

Cost of sales

SG&A

Interest expense, net

Subtotal

Cost of sales
SG&A
Interest expense, net
Total

(13.7)
(157.2)
24.5
(146.4)

23.0
(0.1)
5.8
28.7

30.9
24.7
2.9
58.5

Interest rate swap agreements

Interest expense, net

Total

Interest expense, net
Total

(7.2)
$(153.6)

(6.6)
$22.1

(5.5)
$53.0

Gains and losses recognized in income related to the ineffective portion of the Company’s cash flow hedges were insignificant during
2017, 2016 and 2015.

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 2016, the Company entered into an interest rate swap agreement that converted its $400 million 2.00% debt from a fixed rate
to a floating rate. 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. 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 interest
rate. The interest rate swap agreement tied to the Company’s $500 million 1.45% debt and the interest rate swap agreement tied to a
portion of the Company’s $1.25 billion 3.00% debt expired in December 2017 and December 2016, respectively, upon repayment of the
underlying debt.

The interest rate swaps referenced above were designated as fair value hedges.

The impact on earnings from derivative contracts that qualified as fair value hedges was as follows:

(millions)

2017

2016

2015

Gain (loss) on derivative recognized income

Interest rate swap

Gain (loss) on hedged item recognized income

Interest rate swap

Net Investment Hedges

Interest expense, net

$(0.7)

$(1.4)

$0.0

Interest expense, net

$0.7

$1.4

$(0.0)

The Company designates its outstanding €1,150 million ($1,356 million as of year-end 2017) senior notes (“euronotes”) and related
accrued interest as a hedge of existing foreign currency exposures related to investments the Company has in certain euro denominated
functional currency subsidiaries. The European commercial paper and the series B euro denominated private placement notes were also
designated as a hedge of existing foreign currency exposures and matured in December 2017 and December 2016, respectively.

The revaluation gains and losses on the euro notes and European commercial paper, 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, and were as
follows:

(millions)
Revaluation gains (losses), net of tax

2017
$(109.7)

2016
$(2.5)

2015
$101.3

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

2017

2016

2015

SG&A
Interest expense, net
Total

$(38.2)
(3.0)
$(41.2)

$(6.0)
(8.4)
$(14.4)

$15.9
(8.6)
$7.3

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.

9. OTHER COMPREHENSIVE INCOME (LOSS) INFORMATION

Other 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 pension and postretirement benefits activity.

(millions)
Derivative and 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 (income) expense, net

Other activity
Tax impact
Net of tax

Pension and Postretirement Benefits
Amount recognized in AOCI

2017

2016

2015

$(173.4)

$(2.3)

$72.0

13.7
157.2
(17.3)
153.6
0.2
1.7
$(17.9)

(23.0)
0.1
0.8
(22.1)
(0.2)
7.1
$(17.5)

(30.9)
(24.7)
2.6
(53.0)
1.7
(9.0)
$11.7

Current period net actuarial income (loss) and prior service costs

$(46.9)

$(136.0)

$2.8

Amount reclassified from AOCI into income

Amortization of net actuarial loss and prior service costs and benefits adjustments
Reclassification associated with Venezuelan entities

Postretirement benefits changes

Tax impact
Net of tax

10. SHAREHOLDERS’ EQUITY

21.5
-
-
(25.4)
16.2
$(9.2)

32.2
-
54.0
(49.8)
9.3
$(40.5)

52.0
3.5
-
58.3
(20.3)
$38.0

Authorized common stock, par value $1.00 per share, was 800 million shares at December 31, 2017, 2016 and 2015. Treasury stock is
stated at cost. Dividends declared per share of common stock were $1.520 for 2017, $1.420 for 2016 and $1.340 for 2015.

The Company has 15 million shares, without par value, of authorized but unissued and undesignated preferred stock.

Share Repurchase Authorization

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, 2017, 12,358,110 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.

Accelerated Stock Repurchase (“ASR”) Agreements

In February 2017, the Company entered into an ASR agreement to repurchase $300 million of its common stock and received 2,077,224
shares of its common stock, which was approximately 85% 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. In connection with the final settlement of the ASR
agreement in June 2017, the Company received an additional 286,620 shares of common stock.

In February 2016, the Company entered into an ASR agreement to repurchase $300 million of its common stock and received 2,459,490
shares of its common stock, which was approximately 85% 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. Upon final settlement of the ASR agreement in May
2016, the Company received an additional 232,012 shares of common stock.

The final per share purchase price and the total number of shares to be repurchased under the 2017 and 2016 ASR agreements
generally were based on the volume-weighted average price of the Company’s common stock during the term of the agreements.

All shares acquired under the ASR agreements were recorded as treasury stock.

During their respective open periods in 2017 and 2016, neither of the ASRs was dilutive to the Company’s earnings per share
calculations, nor did they trigger the two-class earnings per share methodology. Additionally, the unsettled portion of ASRs during their
respective open periods met the criteria to be accounted for as a forward contract indexed to the Company’s stock and qualified as equity
transactions.

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.

Share Repurchases

During 2017, the Company reacquired 4,707,629 shares of its common stock, of which 4,414,416 related to share repurchases through
open market or private purchases, including the February 2017 ASR discussed above, and 293,213 related to shares withheld for taxes
on exercise of stock options and the vesting of stock awards and units.

During 2016, the Company reacquired 6,483,198 shares of its common stock, of which 6,126,033 related to share repurchases through
open market or private purchases, including the February 2016 ASR discussed above, and 357,165 related to shares withheld for taxes
on exercise of stock options and the vesting of stock awards and units.

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, 2017, 2016 and 2015 were 11,685,090, 13,649,667 and 15,888,937, respectively. The Company generally issues
authorized but previously unissued shares to satisfy stock option exercises and stock award vestings.

The Company’s annual long-term incentive share-based compensation program is made up of 50% stock options and 50% PBRSUs.
The Company also periodically grants RSUs. Total compensation expense related to all share-based compensation plans was $90
million ($62 million net of tax benefit), $86 million ($59 million net of tax benefit) and $78 million ($54 million net of tax benefit) for 2017,
2016 and 2015, respectively. As of December 31, 2017, there was $141 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:

2017

2016

2015

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
11,910,501
1,491,893
(1,951,920)
(70,461)
11,380,013
8,371,809
11,200,505

(a) Represents weighted average price per share.

$ 84.22
136.87
56.00
116.44
$ 95.76
$ 84.40
$ 95.25

12,378,372
1,679,941
(2,061,553)
(86,259)
11,910,501
8,720,943

$ 74.23
117.60
50.33
111.08
$ 84.22
$ 72.35

13,169,776
1,686,816
(2,316,025)
(162,195)
12,378,372
9,248,880

$ 63.88
118.99
46.22
99.67
$ 74.23
$ 61.18

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 2017, 2016 and 2015 was $142 million, $140 million and $160 million, respectively.

The total aggregate intrinsic value of options outstanding as of December 31, 2017 was $445 million, with a corresponding weighted-
average remaining contractual life of 6.4 years. The total aggregate intrinsic value of options exercisable as of December 31, 2017 was
$422 million, with a corresponding weighted-average remaining contractual life of 5.4 years. The total aggregate intrinsic value of options
vested and expected to vest as of December 31, 2017 was $443 million, with a corresponding weighted-average remaining contractual
life of 6.4 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

2017

2016

2015

$ 30.34

$ 25.59

$ 25.71

2.2 %

6 years

22.7 %
1.2 %

2.0 %

6 years

22.9 %
1.3 %

1.8 %

6 years

22.9 %
1.2 %

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, 2014

Granted
Vested / Earned
Canceled

December 31, 2015

Granted
Vested / Earned
Canceled

December 31, 2016

Granted
Vested / Earned
Canceled

December 31, 2017

PBRSU
Awards
1,593,234
368,373
(468,317)
(49,101)
1,444,189
371,859
(402,509)
(26,852)
1,386,687
323,750
(312,745)
(34,856)
1,362,836

Grant Date
Fair Value (a)
$ 78.59
114.31
52.97
90.97
$ 95.59
112.29
68.64
105.09
$ 107.70
131.71
99.65
108.16
$ 115.24

RSAs and
RSUs
401,071
103,841
(212,576)
(19,101)
273,235
88,437
(96,874)
(10,411)
254,387
96,980
(86,622)
(15,343)
249,402

Grant Date
Fair Value (a)
$ 80.33
112.90
67.70
81.06
$ 102.49
109.27
94.06
105.07
$ 107.95
125.34
102.02
109.72
$ 116.66

(a) Represents weighted average price per share.

12. INCOME TAXES

Income before income taxes consisted of:

(millions)
United States
International

Total

The provision (benefit) for income taxes consisted of:

(millions)
Federal and state
International

Total current
Federal and state
International

Total deferred

Provision for income taxes

2017
$848.4
916.4
$1,764.8

2016
$656.1
994.3
$1,650.4

2015
$733.0
584.7
$1,317.7

2017
$241.8
355.1
596.9
(332.8)
(21.7)
(354.5)
$242.4

2016
$224.2
269.7
493.9
(49.2)
(41.4)
(90.6)
$403.3

2015
$241.4
303.6
545.0
(185.4)
(59.1)
(244.5)
$300.5

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
Other, net

Total
Net deferred tax liabilities balance

2017

2016

$144.4
67.3
58.9
195.2
-
122.2
(21.3)
566.7

(178.4)
(865.6)
(63.2)
(1,107.2)
$(540.5)

$187.4
54.8
83.1
264.7
21.8
111.1
(19.9)
703.0

(275.4)
(1,151.4)
(154.1)
(1,580.9)
$(877.9)

Deferred tax assets and liabilities are recorded based on the rates at which they are expected to reverse in the future. At December 31,
2017, U.S. deferred tax assets and liabilities were recorded at the U.S. federal tax rate of 21%, reduced from 35% by the Tax Act. The
Company recorded a provisional income tax benefit of $321.0 million to record U.S. deferred tax assets and liabilities at the enacted tax
rate, which is a discrete tax item within income tax expense. The Company’s provisional amount is based on an estimate of the impact of
the reduction in the U.S. tax rate on deferred tax assets and liabilities, and is subject to final calculations related to the filing of the
Company’s 2017 U.S. federal income tax return. The Company’s estimates are subject to continued technical guidance which may
change the provisional amounts recorded in the financial statements, and will be evaluated throughout the measurement period, as
permitted by SAB 118.

Deferred assets and liabilities were recorded at a U.S. federal tax rate of 35% as of December 31, 2016.

As of December 31, 2017 the Company has tax effected federal, state and international net operating loss carryforwards of $0.5 million,
$23.2 million and $43.6 million, respectively, which will be available to offset future taxable income. The state loss carryforwards expire
from 2018 to 2038. For the international loss carryforwards, $17.0 million expire from 2018 to 2038 and $26.6 million have no expiration.

The Company has valuation allowances on certain deferred tax assets of $21.3 million and $19.9 million at December 31, 2017 and
2016, respectively. The increase in valuation allowance from year end 2016 to year end 2017 was driven by current year losses and
foreign currency translation.

In 2017, the Company obtained tax benefits from tax holidays in two foreign jurisdictions, the Dominican Republic and Singapore. 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 Company has two tax incentives awarded by the Singapore Economic Development Board. These incentives provide for a
preferential 10% tax rate on certain headquarter income and a 0% tax rate on manufacturing profits generated at the Company’s facility
located on Jurong Island. In 2016 and 2015 one of the Company’s legal entities in China was entitled to the benefit of incentives provided
by the Chinese government to technology companies in order to encourage development of the high-tech industry, including reduced tax
rates and other measures. As a result, the Company was entitled to a preferential enterprise income tax rate of 15%. The Company did
not recognize a benefit related to this China tax incentive in 2017. The tax reduction as the result of the tax holidays for 2017 was $16.9
million and 2016 was $6.4 million. The impact of the tax holiday in 2015 was similar to 2016.

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
One time transition tax
State income taxes, net of federal benefit
Foreign operations
Domestic manufacturing deduction
R&D credit
Change in valuation allowance
Audit settlements and refunds
Excess stock benefits
Change in federal tax rate (deferred taxes)
Venezuela charges
Worthless stock deduction
Other, net

Effective income tax rate

2017
35.0 %

9.1
0.4
(7.4)
(2.2)
(1.0)
0.2
(0.1)
(2.3)
(18.2)
-
-
0.2
13.7 %

2016
35.0 %
-
0.9
(8.0)
(2.0)
(1.1)
(0.7)
(0.2)
-
-
-
0.4
0.1
24.4 %

2015
35.0 %
-
0.4
(8.1)
(2.7)
(1.0)
(1.7)
(0.7)
-
-
4.5
(3.0)
0.1
22.8 %

Prior to enactment of the Tax Act, the Company did not recognize a deferred tax liability related to unremitted foreign earnings because it
overcame the presumption of the repatriation of foreign earnings. Upon enactment, the Tax Act imposes a tax on certain foreign earnings
and profits at various tax rates. The Company recorded a provisional amount for the income tax effects related to the one-time transition
tax of $160.1 million which is subject to payment over eight years. The one-time transition tax is based on certain foreign earnings and
profits for which earnings had been previously indefinitely reinvested, as well as estimates of assets and liabilities at future dates. The
transition tax is based in part on the amount of those earnings held in cash and other specified assets, and is subject to change when the
calculation of foreign earnings and profits is finalized, and the amount of specific assets and liabilities held at a future date is known. No
additional income taxes have been provided for any remaining undistributed foreign earnings not subject to the transition tax and any
additional outside basis differences inherent in these entities as these amounts continue to be indefinitely reinvested in foreign
operations. The Company’s provisional amount is based on an estimate of the one-time transition tax, and subject to finalization of
estimates of assets and liabilities at future dates, the calculation of deemed repatriation of foreign income and the state tax effect of
adjustments made to federal temporary differences. In addition, federal and state tax authorities continue to issue technical guidance
which may differ from our initial interpretations. The provisional amount is subject to adjustment during the measurement period of up to
one year following the December 2017 enactment of the Tax Act. The Company continues to assert permanent reinvestment of the
undistributed earnings of international affiliates, and, if there are policy changes, the Company would record the applicable taxes. The
Company’s estimates are subject to continued technical guidance which may change the provisional amounts recorded in the financial
statements, and will be evaluated throughout the measurement period, as permitted by SAB 118.

As of December 31, 2015, the Company had deferred tax liabilities of $25.8 million on foreign earnings of the legacy Nalco entities and
legacy Champion entities that the Company intended 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. The remaining foreign earnings were repatriated in 2016, thus reducing the deferred tax
liabilities to zero as of December 31, 2016.

The Company files U.S. federal income tax returns and income tax returns in various U.S. state and non- U.S. jurisdictions. With few
exceptions, the Company is no longer subject to state and foreign income tax examinations by tax authorities for years before 2014. The
IRS has completed examinations of the Company’s U.S. federal income tax returns (Ecolab and Nalco) through 2014. The Company’s
U.S. federal income tax return for the years 2015 and 2016 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.

The Company’s 2017 reported tax rate includes $160.9 million of net tax benefits associated with the Tax Act, $6.2 million of net tax
benefits on special gains and charges, and net tax benefits of $25.3 million associated with discrete tax items. In connection with the
Company’s initial analysis of the impact of the Tax Act, as noted above, a provisional net discrete tax benefit of $160.9 million was
recorded in the period ended December 31, 2017, which includes $321.0 million tax benefit for recording deferred tax assets and
liabilities at the U.S. enacted tax rate, and a net expense for the one-time transition tax of $160.1 million. While the Company was able
to make an estimate of the impact of the reduction in the U.S. rate on deferred tax assets and liabilities and the one-time transition tax, it
may be affected by other analyses related to the Tax Act, as indicated above.

Special (gains) and charges represent the tax impact of special (gains) and charges, as well as additional tax benefits utilized in
anticipation of U.S. tax reform of $7.8 million. During 2017, the Company recorded a discrete tax benefit of $39.7 million related to
excess tax benefits, resulting from the adoption of accounting changes regarding the treatment of tax benefits on share-based
compensation. The extent of excess tax benefits is subject to variation in stock price and stock option exercises. In addition, the
Company recorded net discrete expenses of $14.4 million related to recognizing adjustments from filing the 2016 U.S. federal income tax
return and international adjustments due to changes in estimates, partially offset by the release of reserves for uncertain tax positions
due to the expiration of statute of limitations in state tax matters.

During 2016, the Company recognized net expense related to discrete tax items of $3.9 million. The net expenses were driven primarily
by recognizing adjustments from filing the Company’s 2015 U.S. federal income tax return, partially offset by settlement of international
tax matters and remeasurement of certain deferred tax assets and liabilities resulting from the application of updated tax rates in
international jurisdictions. Net expense was also impacted by adjustments to deferred tax asset and liability positions and the release of
reserves for uncertain tax positions due to the expiration of statute of limitations in non-U.S. jurisdictions.

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, based on the realizability of foreign deferred tax assets and the ability to recognize a
worthless stock deduction of $39.0 million for the tax basis in a wholly-owned domestic subsidiary.

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

2017

2016

2015

$75.9
3.2
-
(4.9)
(14.0)
(10.8)
10.0
2.1
$61.5

$74.6
8.8
2.1
(1.0)
(5.5)
(2.0)
-
(1.1)
$75.9

$78.7
5.8
0.9
(8.8)
(1.6)
(4.2)
8.0
(4.2)
$74.6

The total amount of unrecognized tax benefits, if recognized would have affected the effective tax rate by $47.1 million as of December
31, 2017, $57.5 million as of December 31, 2016 and $59.2 million as of December 31, 2015.

The Company recognizes interest and penalties related to unrecognized tax benefits in its provision for income taxes. During 2017, 2016
and 2015 the Company released $0.9 million, $2.9 million and $1.4 million related to interest and penalties, respectively. The Company
had $9.3 million, $10.2 million and $13.1 million of accrued interest, including minor amounts for penalties, at December 31, 2017, 2016,
and 2015, 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 $239 million in
2017 and $221 million in both 2016 and 2015. As of December 31, 2017, identifiable future minimum payments with non-cancelable
terms in excess of one year were:

(millions)
2018
2019
2020
2021
2022
Thereafter
Total

$ 131
115
96
86
74
115
$ 617

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 $62 million in 2018. 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 $201 million in 2017, $189 million in 2016 and $191 million
in 2015. The Company did not participate in any material customer sponsored research during 2017, 2016 or 2015.

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 discussed in Note 12. The Company also has contractual
obligations including lease commitments, which are discussed 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 insurance policies with varying deductibility levels 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 45 locations, the majority 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 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. 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.

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”). Nalco Company was named, along
with other unaffiliated defendants, in six putative class action complaints related to the Deepwater Horizon oil spill and 21 complaints filed
by individuals. Those complaints were consolidated in MDL 2179. The complaints generally allege, among other things, strict liability and
negligence relating to the use of our Corexit dispersant in connection with the Deepwater Horizon oil spill.

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 remained pending against other defendants, the Court’s decision was
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.

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 Company and its related entities.

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 May 2016, Nalco was named in nine additional complaints filed by individuals alleging, among other things, business and economic
loss resulting from the Deepwater Horizon oil spill (“B1” claims). In April 2017, Nalco was named in two additional complaints filed by
individuals seeking, among other things, business and economic loss resulting from 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. These
actions have been consolidated in the MDL and the Company expects they will be dismissed pursuant to the Court’s November 28, 2012
order granting Nalco’s motion for summary judgment.

On February 22, 2017, the Court dismissed the “B3” Master Complaint and ordered that Plaintiffs who had previously filed a claim that
fell within the scope of the “B3” Master Complaint and who had “opted out” of and not released their claims under the Medical Benefits
Class Action Settlement either: (1) complete a sworn statement indicating, among other things, that they opted out of the Medical
Benefits Class Action Settlement (to be completed by Plaintiffs who previously filed an individual complaint); or (2) file an individual
lawsuit attaching the sworn statement as an exhibit, by a deadline date set by the Court.

On July 18, 2017, the Court dismissed with prejudice certain “B3” claims not complying with the February 22, 2017 order. On July 19,
2017, the Court dismissed with prejudice certain “B1” claims not complying with three prior orders pertaining to “B1” claims and requiring,
among other things, “B1” Plaintiffs to file sworn statements detailing their claim. On January 11, 2018, the Court entered an order
requiring the remaining “B1” Plaintiffs to file sworn statements of causation and damages by no later than April 11, 2018, pursuant to
which the Court will determine which “B1” Plaintiffs are entitled to pursue their claims. There currently remain nine cases pending
against Nalco, all of which are expected to ultimately be dismissed pursuant to the Court’s November 28, 2012 order granting Nalco’s
motion for summary judgment.

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 non-contributory non-qualified defined benefit plans, which provide for benefits to employees in excess of limits permitted under
its U.S. pension plans. Various international subsidiaries have defined benefit 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 $124 million and $125 million
at December 31, 2017 and 2016, respectively. The measurement date used for determining the U.S. pension plan assets and obligations
is December 31.

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

Projected benefit obligation, beginning of year
Service cost
Interest
Participant contributions
Medicare subsidies received
Curtailments and settlements
Plan amendments
Actuarial loss
Assumed through acquisitions
Benefits paid
Foreign currency translation

Projected benefit obligation, end of year

Plan Assets

Fair value of plan assets, beginning of year
Actual returns on plan assets
Company contributions
Participant contributions
Acquisitions
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 expense (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)
Postretirement benefits changes
Foreign currency translation

Other comprehensive loss (income)

(a)

Includes qualified and non-qualified plans

U.S.
Pension (a)

International
Pension

U.S. Postretirement

Health Care

2017
$2,399.5

2016

$2,147.1

2017
$1,434.5

2016
$1,239.8

2017
$181.3

2016
$173.5

$2,267.9
70.2
83.4
-
-
0.1
-
183.1
-
(119.6)
-
$2,485.1

$2,186.8
67.1
81.5
-
-
(0.8)
1.2
60.2
-
(128.1)
-
$2,267.9

$1,335.6
31.4
28.4
3.5
-
(10.7)
-
31.9
24.1
(35.8)
129.5
$1,537.9

$1,279.9
27.8
31.9
3.3
-
(12.3)
2.0
123.9
6.7
(35.5)
(92.1)
$1,335.6

$173.5
2.6
5.8
8.3
0.5
-
1.8
9.2
-

(20.4)

-
$181.3

$1,950.1
310.2
85.9
-
-
(0.2)
(119.6)
-
$2,226.4
$(258.7)

$1,770.7
152.3
156.0
-
-
(0.8)
(128.1)
-
$1,950.1
$(317.8)

$821.9
76.1
41.0
3.5
12.5
(10.7)
(35.8)
72.6
$981.1
$(556.8)

$813.5
89.2
39.4
3.3
2.6
(8.3)
(35.5)
(82.3)
$821.9
$(513.7)

$9.6
1.2
17.2
-
-
-

(20.4)

-
$7.6
$(173.7)

$229.2
3.0
7.4
8.0
0.8
-
(62.2)
7.5
-
(20.2)
-
$173.5

$11.3
0.8
16.4
1.3
-
-
(20.2)
-
$9.6
$(163.9)

$-
(5.6)
(253.1)
$(258.7)

$ -
(6.8)
(311.0)
$(317.8)

$41.7
(23.0)
(575.5)
$(556.8)

$27.2
(20.3)
(520.6)
$(513.7)

$-
(3.5)
(170.2)
$(173.7)

$ -
(2.7)
(161.2)
$(163.9)

$526.9
(18.7)
(199.5)

$533.0
(25.5)
(199.2)

$388.2
(7.0)
(98.4)

$357.6
(7.3)
(89.4)

$(20.1)
(40.4)
25.2

$(30.9)
(59.0)
32.1

$308.7

$308.3

$282.8

$260.9

$(35.3)

$(57.8)

$(28.7)
6.8
22.6
-
-
(0.3)
-
-
$0.4

$(30.7)
6.9
51.5
1.2
(0.5)
(10.8)
-
-
$17.6

$(18.5)
0.7
14.0
-
(0.9)
(9.0)
-
35.6
$21.9

$(12.8)
0.8
87.2
2.0
(1.8)
(12.3)
(4.0)
(21.3)
$37.8

$2.4
16.7
8.5
1.8
-
(6.9)
-
-
$22.5

$1.6
4.3
7.5
(13.4)
-
19.1
(50.0)
-
$(30.9)

Estimated amounts in accumulated other comprehensive loss expected to be reclassified to net period cost during 2018 are as follows:

(millions)
Net actuarial loss (gain)
Net prior service costs (benefits)
Total

U.S.

Pension (a)

$39.0
(6.8)
$32.2

International
Pension
$17.2
(0.9)
$16.3

U.S. Post-
Retirement
Health Care

$(1.9)
(16.2)
$(18.1)

(a)

Includes qualified and non-qualified plans

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

2017
$3,636.2
3,476.1
2,794.0

2016
$3,257.6
3,071.6
2,418.1

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 and Plan Assumptions

Pension and postretirement health care benefits expense for the Company’s operations are as follows:

U.S.
Pension (a)

International
Pension

(millions)
Service cost
Interest cost on benefit obligation
Expected return on plan assets
Recognition of net actuarial (gain) loss
Amortization of prior service

2017 2016
$70.2
83.4
(149.9)
28.7

$67.1
81.5
(143.6)
30.7

2015

2017

2016 2015 2017

$76.5
91.1
(132.6)
48.5

$31.4
28.4
(56.3)
18.5

$27.8
31.9
(52.5)
12.8

$31.8
38.1
(55.6)
15.4

U.S. Postretirement
Health Care
2016 2015
$3.8
9.6
(0.9)
(6.2)

$3.0
7.4
(0.7)
(1.6)

$2.6
5.8
(0.5)
(2.4)

cost (benefit)

Settlements/Curtailments
Total expense (benefit)

(6.8)
0.3
$25.9

(6.9)
0.5
$29.3

(6.9)
0.7
$77.3

(0.7)
0.9
$22.2

(0.8)
1.8
$21.0

(0.4)
1.0
$30.3

(16.7)
-
$(11.2)

(4.3)
-
$3.8

(0.1)
-
$6.2

(a)

Includes qualified and non-qualified plans

Plan Assumptions

U.S.
Pension (a)

(percent)
Weighted-average actuarial assumptions used to
determine benefit obligations as of year end:

2017

2016 2015 2017

International
Pension
2016 2015 2017

Health Care

2016 2015

U.S. Postretirement

Discount rate
Projected salary increase

Weighted-average actuarial assumptions used to

determine net cost:

Discount rate
Expected return on plan assets
Projected salary increase

(a)

Includes qualified and non-qualified plans

3.70 % 4.27 % 4.51 %
4.03 4.32
4.03

2.17 % 2.33 % 2.93 % 3.66 % 4.14 % 4.38 %

2.46 2.52 2.50

4.27
7.75
4.03

4.51 4.14
7.75 7.75
4.32 4.32

2.32 2.68 2.78 4.14 4.38 4.08
6.67 6.71 6.80 7.75 7.75 7.75
2.83 2.75 2.83

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.

At the end of 2015, the Company changed the approach used to measure service and interest costs for its U.S. and material international
pension and other postretirement benefits. Starting in 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 this 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. 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. The change in approach did not affect the measurement of the Company’s plan
obligations or the funded status. 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.

The Company uses most recently available mortality tables as of the respective U.S. and international measurement dates.

For postretirement benefit measurement purposes as of December 31, 2017, the annual rates of increase in the per capita cost of
covered health care were assumed to be 8.25% for pre-65 costs and 11.50% for post-65 costs. The rates are assumed to decrease each
year until they reach 5% in 2028 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.

During the third quarter of 2016, the Compensation Committee of the Company’s Board of Directors approved moving the U.S.
postretirement healthcare plans to a Retiree Exchange approach, rather than the Employee Group Waiver Plan plus Wrap program, for
post-65 retiree medical coverage beginning in 2018, and the Company informed all eligible legacy Ecolab and legacy Nalco retirees of
the change. As a result of the approval and communication to the beneficiaries, the Ecolab and Nalco plans were re-measured, resulting
in a $50 million reduction of postretirement benefit obligations, with a corresponding impact to AOCI of $31 million, net of tax. The
remeasurement was completed using discount rates of 3.29% and 3.60%, respectively. Additionally, at the time of this remeasurement,
the Nalco U.S. postretirement health care plan was merged with the Ecolab U.S. postretirement health care plan. As a result of these
actions, the Company’s U.S. postretirement health care costs decreased by $5 million in 2016.

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 an immaterial impact on total service and
interest costs as well as total postretirement benefit obligation.

Plan Asset Management

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 Company’s 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 fair value hierarchy is used to categorize investments measured at fair value in one of three levels in the fair value hierarchy. This
categorization is based on the observability of the inputs used in valuing the investments. See Note 7 for definitions of these levels.

The fair value of the Company’s U.S. plan assets for its defined benefit pension and postretirement health care benefit plans are as
follows:

(millions)

Cash
Equity securities:

Large cap equity
Small cap equity
International equity

Fixed income:

Core fixed income
High-yield bonds
Emerging markets

Insurance company accounts

Total investments at fair value
Investments measured at NAV

Total

Fair Value as of
December 31, 2017
Level 2

Level 1

$8.0

869.8
198.4
340.2

390.0
109.9
42.9

1,959.2

$1,959.2

$0.3
0.3

$0.3

Total

$8.0

Level 1

$6.3

869.8
198.4
340.2

390.0
109.9
42.9
0.3
1,959.5
274.5
$2,234.0

696.0
179.0
293.4

351.5
107.6
33.5
-
1,667.3

$1,667.3

Fair Value as of
December 31, 2016
Level 2

$0.3
0.3

$0.3

Total

$6.3

696.0
179.0
293.4

351.5
107.6
33.5
0.3
1,667.6
292.1
$1,959.7

The Company had no level 3 assets as part of its U.S. plan assets as of December 31, 2017 or 2016.

The allocation of the Company’s U.S. plan assets for its defined benefit pension and postretirement health care benefit plans are as
follows:

Asset Category

Target Asset
Allocation
Percentage

Percentage
of Plan Assets

December 31 (%)

2017

2016 2017

2016

Cash
Equity securities:

Large cap equity
Small cap equity
International equity

Fixed income:

Core fixed income
High-yield bonds
Emerging markets

Other:

Real estate
Private equity
Distressed debt
Hedge funds

Total

- %

34
9
15

18
5
2

34
9
15

18
5
2

39
9
15

18
5
2

36
9
15

18
5
2

6
8
3
-
100 %

6
6
-
5
100 %

7
5
-
-
100 %

7
5
-
3
100 %

The fair value of the Company’s international plan assets for its defined benefit pension plans are as follows:

(millions)

Cash
Equity securities:

International equity

Fixed income:

Corporate bonds
Government bonds

Insurance company accounts

Total investments at fair value
Investments measured at NAV
Total

Fair Value as of
December 31, 2017

Level 1

Level 2

Total

$8.7

8.2
12.4
-
29.3

442.2

173.0
177.6
144.1
936.9

$29.3

$936.9

$8.7

442.2
-
181.2
190.0
144.1
966.2
14.9
$981.1

Fair Value as of
December 31, 2016

Level 1
$5.5

Level 2

Total

$5.5

363.1

6.4
9.5

21.4

164.6
145.6
114.0
787.3

$21.4

$787.3

171.0
155.1
114.0
808.7
13.2
$821.9

The Company had no level 3 assets as part of its international plan assets as of December 31, 2017 or 2016.

The allocation of plan assets 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

Cash Flows

Percentage
of Plan Assets

2017

2016

1 %

19
19
38

21
19
40

15
1
100 %

14
1
100 %

As of year-end 2017, 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)
2018
2019
2020
2021
2022
2023 - 2027

All Plans

$ 186
201
215
225
240
1,237

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. In
September 2017, the Company made an $80 million voluntary contribution to its non-contributory qualified U.S. pension plan. In April of
2016, the Company made a $150 million voluntary contribution to its non-contributory qualified U.S. pension plan. 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 $49 million in 2018.

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 and ESOP

The Company provides a 401(k) savings plan for the majority of its U.S. employees under the Company’s two main 401(k) savings plans,
the Ecolab Savings Plan and ESOP for Traditional Benefit Employees (the “Traditional Plan”) and the Ecolab Savings Plan and ESOP
(the “Ecolab Plan”).

Employees under the Traditional Plan are limited to active employees accruing a final average pay or 5% cash balance benefits in the
Ecolab Pension Plan. Employee before-tax contributions made under the Traditional Plan of up to 3% of eligible compensation are
matched 100% by the Company and employee before-tax contributions over 3% and up to 5% of eligible compensation are matched
50% by the Company.

Employees under the Ecolab Plan are limited to active employees accruing benefits under the 3% cash balance formula of the Ecolab
Pension Plan and employees of Nalco eligible for certain legacy final average pay benefits. Employee before-tax contributions made
under the Ecolab Plan of up to 4% of eligible compensation are matched 100% by the Company and employee before-tax contributions
over 4% and up to 8% of eligible compensation are matched 50% by the Company.

The Company’s matching contributions are 100% vested immediately. The Company’s matching contribution expense was $82 million,
$74 million and $72 million in 2017, 2016 and 2015, respectively.

17. OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION

The Company’s organizational structure consists of global business unit and global regional leadership teams. The Company’s eleven
operating segments (ten following the divestiture of the Equipment Care operating segment in 2017) 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 segment level.

Nine of the Company’s eleven operating segments 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 segments, including Equipment Care prior to its sale in November 2017, 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 segments as useful in understanding its consolidated results.

The Company’s eleven operating segments are aggregated as follows:

Global Industrial

Includes the Water, Food & Beverage, Paper, Life Sciences and Textile Care operating segments. 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 segments exhibit similar manufacturing processes, distribution methods and economic characteristics.

Global Institutional

Includes the Institutional, Specialty and Healthcare operating segments. It provides specialized cleaning and sanitizing products to the
foodservice, hospitality, lodging, healthcare, government and education and retail industries. The underlying operating segments exhibit
similar manufacturing processes, distribution methods and economic characteristics.

Global Energy

Includes the Energy operating segment. 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 operating segment which provides services to detect, eliminate and prevent pests, such as rodents and
insects. Prior to the sale in November 2017, the Equipment Care operating segment was also included, which provided kitchen repair
and maintenance.

Comparability of Reportable Segments

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. 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 rates are generally based on existing market rates at the time
they are established. The “Fixed Currency Rate Change” column shown in the following table reflects the impact on previously reported
values related to fixed currency exchange rates established by management at the beginning of 2017.

Effective in the first quarter of 2017, the Company established the Life Sciences operating segment, to align with the strategy for growth
in the pharmaceutical and personal care manufacturing operations. Life Sciences is comprised of operations previously recorded in the
Food & Beverage and Healthcare operating segments and has been aggregated into the Global Industrial reportable segment. The
Company also made immaterial changes to its reportable segments, including the movement of certain customers and cost allocations
between reportable segments. These changes are presented in "Segment Change" column of the table below.

The impact of the preceding changes on previously reported full year 2016 reportable segment net sales and operating income is
summarized as follows:

(millions)
Net Sales

Global Industrial
Global Institutional
Global Energy
Other

Subtotal at fixed currency rates
Effect of foreign currency translation
Consolidated reported GAAP net sales

Operating Income

Global Industrial
Global Institutional
Global Energy
Other
Corporate

Subtotal at fixed currency rates
Effect of foreign currency translation

Consolidated reported GAAP operating income

(millions)
Net Sales

Global Industrial
Global Institutional
Global Energy
Other

Subtotal at fixed currency rates
Effect of foreign currency translation
Consolidated reported GAAP net sales

Operating Income

Global Industrial
Global Institutional
Global Energy
Other
Corporate

Subtotal at fixed currency rates
Effect of foreign currency translation

Consolidated reported GAAP operating income

December 31, 2016

Fixed

Values at
Segment Values at
2016 Rates Rate Change Change 2017 Rates

Currency

$4,617.1
4,495.6
3,035.8
806.5
12,955.0
197.8
$13,152.8

$703.0
966.7
337.1
148.1
(272.1)
1,882.8
32.2
$1,915.0

$6.9
7.7
40.0
(4.8)
49.8
(49.8)
$-

$(0.9)
3.0
7.9
(2.5)
(0.5)
7.0
(7.0)
$-

$63.2
(63.2)
-
-
-
-
$-

$4,687.2
4,440.1
3,075.8
801.7
13,004.8
148.0
$13,152.8

$17.9
(19.2)
1.7
(0.4)
-
-
-
$-

$720.0
950.5
346.7
145.2
(272.6)
1,889.8
25.2
$1,915.0

December 31, 2015

Fixed

Values at
Segment Values at
2016 Rates Rate Change Change 2017 Rates

Currency

$4,485.5
4,210.9
3,470.8
747.1
12,914.3
630.8
$13,545.1

$626.4
876.6
465.5
127.5
(663.8)
1,432.2
129.1
$1,561.3

13.2
6.1
49.3
(4.4)
64.2
(64.2)
$-

$0.7
2.8
8.5
(2.1)
(0.6)
9.3
(9.3)
$-

52.4
(52.4)
-
-
-
-
$-

4,551.1
4,164.6
3,520.1
742.7
12,978.5
566.6
$13,545.1

$11.8
(12.3)
1.3
(0.8)
-
-
-
$-

$638.9
867.1
475.3
124.6
(664.4)
1,441.5
119.8
$1,561.3

Reportable Segment Information

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

2017

Net Sales
2016

2015

4,744.9
3,199.3
823.5
-
13,646.2
192.1

$4,878.5 $4,687.2 $4,551.1
4,440.1
3,075.8
801.7
-
13,004.8
148.0
$13,838.3 $13,152.8

4,164.6
3,520.1
742.7
-

566.6
$13,545.1

12,978.5

Operating Income (Loss)
2016
$720.0
950.5
346.7
145.2
(272.6)

2017
$722.0
985.7
338.5
149.3
(208.6)
1,986.9
32.9
$2,019.8

1,889.8

25.2
$1,915.0

2015
$638.9
867.1
475.3
124.6
(664.4)
1,441.5
119.8
$1,561.3

The profitability of the Company’s operating segments is evaluated by management based on operating income. The Company has no
intersegment revenues.

Consistent with the Company’s internal management reporting, Corporate amounts in the table above include intangible asset
amortization specifically from the Nalco merger and special (gains) and charges, as discussed in Note 3, that are not allocated to the
Company’s reportable segments.

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.

Sales of warewashing products were approximately 11% of consolidated net sales in 2017 and 2016 and 10% of consolidated net sales
in 2015.

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 segments, 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 portion 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

2017
$185.5
80.9
179.6
750.7

2016
$162.7
72.2
186.8
711.3

2015
$162.9
70.5
202.8
670.6

Net sales and long-lived assets at public exchange rates by geographic region are as follows:

(millions)
United States
Europe
Asia Pacific, excluding Greater China
Latin America
MEA
Canada
Greater China

Total

2017
$7,324.5
2,652.2
1,184.9
892.8
655.7
644.5
483.7
$13,838.3

Net Sales

2016
$7,035.5
2,361.8
1,159.1
852.8
667.4
576.9
499.3
$13,152.8

2015
$7,073.2
2,442.1
1,131.5
1,100.8
682.3
616.6
498.6
$13,545.1

Long-Lived Assets, net

2017
$8,853.7
2,623.8
1,022.5
605.8
310.1
649.1
1,301.0
$15,366.0

2016
$8,790.8
1,547.6
992.8
567.7
296.8
624.8
1,230.3
$14,050.8

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.

18. QUARTERLY FINANCIAL DATA (UNAUDITED)

(millions, except per share)
2017
Net sales
Operating expenses
Cost of sales (a)
Selling, general and administrative expenses
Special (gains) and charges

Operating income
Interest expense, net (a)
Income before income taxes
Provision for income taxes
Net income including noncontrolling interest
Net income attributable to noncontrolling interest
Net income attributable to Ecolab
Earnings attributable to Ecolab per common share

Basic
Diluted

Weighted-average common shares outstanding

Basic
Diluted

2016
Net sales
Operating expenses
Cost of sales (a)
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
Net income (loss) attributable to

noncontrolling interest

Net income attributable to Ecolab
Earnings attributable to Ecolab per common share

Basic
Diluted

Weighted-average common shares outstanding

Basic
Diluted

First

Quarter

Second
Quarter

Third

Quarter

Fourth
Quarter

Year

$3,161.6

$3,462.7

$3,563.3

$3,650.7

$13,838.3

1,691.5
1,090.6
6.2
373.3
62.5
310.8
54.0
256.8
3.3
$253.5

1,871.6
1,115.3
36.8
439.0
59.6
379.4
81.3
298.1
1.5
$296.6

$ 0.87
$ 0.86

$ 1.02
$ 1.01

290.6
295.0

289.8
294.1

1,891.3
1,087.3
4.9
579.8
55.1
524.7
128.9
395.8
3.4
$392.4

$ 1.36
$ 1.34

289.0
293.4

1,950.7
1,123.9
(51.6)
627.7
77.8
549.9
(21.8)
571.7
5.8
$565.9

$ 1.96
$ 1.93

289.1
293.6

7,405.1
4,417.1
(3.7)
2,019.8
255.0
1,764.8
242.4
1,522.4
14.0
$1,508.4

$ 5.21
$ 5.13

289.6
294.0

$3,097.4

$3,317.2

$3,386.1

$3,352.1

$13,152.8

1,631.4
1,088.2
6.3
371.5
66.1
305.4
73.4
232.0

1,785.2
1,093.3
26.2
412.5
65.3
347.2
83.6
263.6

1.2
$230.8

5.2
$258.4

$ 0.78
$ 0.77

$ 0.88
$ 0.87

294.4
298.3

292.4
296.5

1,737.2
1,071.6
3.2
574.1
64.9
509.2
129.7
379.5

5.4
$374.1

$ 1.28
$ 1.27

291.6
295.7

1,745.1
1,046.3
3.8
556.9
68.3
488.6
116.6
372.0

6,898.9
4,299.4
39.5
1,915.0
264.6
1,650.4
403.3
1,247.1

5.7
$366.3

17.5
$1,229.6

$ 1.26
$ 1.24

291.7
295.5

$ 4.20
$ 4.14

292.5
296.7

Per share amounts do not necessarily sum due to changes in the calculation of shares outstanding for each discrete period and
rounding.

(a) Cost of sales includes special charges of $1.5, $24.4, $0.3, and $17.8 in Q1, Q2, Q3 and Q4 of 2017, respectively and $61.9

and $4.1 in Q2 and Q4 of 2016, respectively. Net interest expense includes special charges of $21.9 in Q4 of 2017.

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, 2017, 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, 2017.

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, 2017. 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, 2017 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.

We are implementing an enterprise resource planning (“ERP”) system upgrade, which is expected to occur in phases over the next
several years beginning in 2018. This upgrade, which includes supply chain and certain finance functions, is expected to improve the
efficiency of certain financial and related transactional processes. The upgrade of the ERP system will affect the processes that
constitute our internal control over financial reporting and will require testing for effectiveness.

Item 9B. Other Information.

None.

PART III

Item 10. Directors, Executive Officers 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 of this
Form 10-K, and is incorporated herein by reference.

Item 11. Executive Compensation.

Information appearing under the following headings of the Proxy Statement is incorporated herein by reference:

(cid:2) Director Compensation for 2017
(cid:2) Compensation Risk Analysis
(cid:2) Compensation Committee Interlocks and Insider Participation
(cid:2) Compensation Committee Report
(cid:2) Compensation Discussion and Analysis
(cid:2) Summary Compensation Table for 2017
(cid:2) Grants of Plan-Based Awards for 2017
(cid:2) Outstanding Equity Awards at Fiscal Year-End for 2017
(cid:2) Option Exercises and Stock Vested for 2017
(cid:2) Pension Benefits for 2017
(cid:2) Non-Qualified Deferred Compensation for 2017
(cid:2) Potential Payments Upon Termination or Change in Control
(cid:2) Pay Ratio Disclosure

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.

A total of 1,210,751 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, 2017 which are actually issued and outstanding.

Equity Compensation Plan Information

Plan Category
Equity compensation plans approved

by security holders

Equity compensation plans not approved

by security holders

Total

(a)
Number of securities to be
issued upon exercise of
outstanding options,
warrants
and rights

(b)

Weighted average exercise
price of outstanding options,

warrants
and rights

(c)
Number of securities remaining
available for future issuance under
equity compensation plans (excluding
securities reflected in column (a))

13,078,614 (1)

$ 96.31 (1)

153,603 (2)

13,232,217

55.60 (2)

$ 95.76

11,685,090

-
11,685,090

(1) Includes 239,966 Common Stock equivalents representing deferred compensation stock units earned by non-employee directors

under our 2001 Non-Employee Director Stock Option and Deferred Compensation Plan, 1,362,836 Common Stock equivalents
under our 2010 Stock Incentive Plan representing performance-based restricted stock units payable to employees, and 249,402
Common Stock equivalents under our 2010 Stock Incentive Plan representing restricted stock units payable to employees. All of
the Common Stock equivalents described in this footnote (1) are not included in the calculation of weighted average exercise price

of outstanding options, warrants and rights in column (b) of this table. The reported amount additionally includes 60,809 shares of
Common Stock subject to stock options assumed by us in connection with the Nalco merger. Such options, which have a weighted-
average exercise price of $29.25, are included in the calculation of weighted average exercise price of outstanding options,
warrants and rights in column (b) of this table.

(2) The reported amount represents shares of our Common Stock which were formerly reserved for future issuance under the

Amended and Restated Nalco Holding Company 2004 Stock Incentive Plan (the “rollover shares”) and granted to legacy Nalco
associates on December 1, 2011, under the Ecolab Inc. 2010 Stock Incentive Plan in the form of stock options. These rollover
shares are deemed exempt from shareholder approval under Rule 303A.08 of the New York Stock Exchange in accordance with
our notice to the New York Stock Exchange dated December 16, 2011. The Nalco plan was amended to prohibit future grants.

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.

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.

Document:

(i) Report of Independent Registered Public Accounting Firm.

(ii) Consolidated Statements of Income for the years ended

December 31, 2017, 2016 and 2015.

(iii) Consolidated Statements of Comprehensive Income for the

years ended December 31, 2017, 2016 and 2015.

(iv) Consolidated Balance Sheets at December 31, 2017 and 2016.

(v) Consolidated Statements of Cash Flows for the years ended

December 31, 2017, 2016 and 2015.

(vi) Consolidated Statements of Equity for the years ended

December 31, 2017, 2016 and 2015.

(vii) Notes to Consolidated Financial Statements.

Page:

Exhibit No.: Document:

Method of Filing:

(a)(2)

Financial Statement Schedules.

(a)(3)

(2.1)

(2.2)

(2.3)

(2.4)

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 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.

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.

Agreement and Plan of Merger, dated 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 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 November 28, 2012, to Agreement
and Plan of Merger dated 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 November 30, 2012, to
Agreement and Plan of Merger dated 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)

Exhibit No.: Document:

Method of Filing:

(2.5)

(2.6)

(3.1)

Third Amendment dated December 28, 2012, to Agreement
and Plan of Merger dated October 11, 2012, among Ecolab
Inc., OFC Technologies Corp. and Permian Mud Services,
Inc.

Fourth Amendment dated April 10, 2013, to Agreement and
Plan of Merger dated 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)

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
January 2, 2013.

Incorporated by reference to Exhibit (3.2) of our
Form 8-K, dated January 2, 2013. (File No. 001-9328)

(3.2)

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)

(4.1)

(4.2)

(4.3)

(4.4)

(4.5)

(4.6)

(4.7)

(4.8)

(4.9)

(4.10)

(4.11)

(4.12)

Common Stock.

See Exhibits (3.1) and (3.2)

Form of Common Stock Certificate effective October 2,
2017

Amended and Restated Indenture, dated 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, N.A. and Bank One, N.A.), as Trustee.

Second Supplemental Indenture, dated December 8, 2011,
between Ecolab Inc., 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, N.A. and Bank One, N.A.), as
original trustee.

Incorporated by reference to Exhibit (4.1) of our
Form 10-Q Quarterly Report for the quarter ended
September 30, 2017. (File No. 001-9328)

Incorporated by reference to Exhibit (4)(A) of our
Form 8-K, dated January 23, 2001. (File No. 001-9328)

Incorporated by reference to Exhibit (4.2) of our
Form 8-K, dated December 5, 2011. (File
No. 001-9328)

Forms of 4.350% Notes due 2021 and 5.500% Notes due
2041.

Included in Exhibit (4.4) above.

Indenture, dated 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 January 15, 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 January 15, 2015. (File No. 001-9328)

Form of 2.250% Notes due 2020.

Included in Exhibit (4.7) above.

Second Supplemental Indenture, dated July 8, 2015, by
and among Ecolab Inc., Wells Fargo Bank, National
Association, as Trustee, Elavon Financial Services Limited,
UK Branch, as paying agent, and Elavon Financial Services
Limited, as transfer agent and registrar.

Incorporated by reference to Exhibit (4.2) of our
Form 8-K, dated July 8, 2015. (File No. 001-9328)

Form of 2.625% Euro Notes due 2025.

Included in Exhibit (4.9) above.

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)

Forms of 2.000% Notes due 2019 and 3.250% Notes due
2023.

Included in Exhibit (4.11) above.

100

Exhibit No.: Document:

Method of Filing:

(4.13)

(4.14)

(4.15)

(4.16)

(4.17)

(4.18)

(4.19)

(4.20)

(4.21)

(4.22)

Fourth Supplemental Indenture, dated October 18, 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 October 13, 2016. (File No. 001-9328)

Forms of 2.700% Notes due 2026 and 3.700% Notes due
2046.

Included in Exhibit (4.13) above.

Fifth Supplemental Indenture, dated December 8, 2016, by
and among Ecolab Inc., Wells Fargo Bank, National
Association, as Trustee, Elavon Financial Services DAC,
UK Branch, as paying agent, and Elavon Financial Services
DAC, as transfer agent and registrar.

Incorporated by reference to Exhibit (4.2) of our
Form 8-K, dated December 1, 2016. (File
No. 001-9328)

Form of 1.000% Euro Notes due 2024.

Included in Exhibit (4.15) above.

Sixth Supplemental Indenture, dated August 10, 2017,
between the Company and Wells Fargo Bank, National
Association, as Trustee.

Incorporated by reference to Exhibit (4.2) of our
Form 8-K, dated August 10, 2017. (File No. 001-9328)

Form of 2.375% Notes due 2022.

Included in Exhibit (4.17) above.

Seventh Supplemental Indenture, dated November 27,
2017, between the Company and Wells Fargo Bank,
National Association, as Trustee.

Incorporated by reference to Exhibit (4.2) of our
Form 8-K, dated November 30, 2017. (File
No. 001-9328)

Form of 3.250% Notes due 2027.

Included in Exhibit (4.19) above.

Form of 3.950% Notes due 2047.

Included in Exhibit (4.19) above.

Registration Rights Agreement, dated November 27, 2017,
by and among Ecolab Inc., Citigroup Global Markets Inc.,
Credit Suisse Securities (USA) LLC, J.P. Morgan Securities
LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated
and MUFG Securities Americas Inc.

Incorporated by reference to Exhibit (4.5) of our
Form 8-K, dated November 30, 2017. (File
No. 001-9328)

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)(i)

Second Amended and Restated $2.0 billion 5-Year
Revolving Credit Facility, dated November 28, 2017,
among Ecolab Inc., the lenders party thereto, the issuing
banks party thereto, Bank of America, N.A., as
administrative agent and swing line 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 November 30, 2017. (File
No. 001-9328)

(10.2)

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)

101

Exhibit No.: Document:

Method of Filing:

(10.3)

Documents comprising global Commercial Paper
Programs.

(i) U.S. $2,000,000,000 Euro-Commercial Paper Programme.

(a) Amended and Restated Dealer Agreement, dated

9 June 2017, between Ecolab Inc., Ecolab Lux 1
S.À R.L., Ecolab Lux 2 S.À R.L., Ecolab NL 10
B.V. and Ecolab NL 11 B.V. (as Issuers), Ecolab
Inc. (as Guarantor in respect of the notes issued
by Ecolab Lux 1 S.À R.L., Ecolab Lux 2 S.À R.L.
and Ecolab NL 10 B.V. and Ecolab NL 11 B.V.),
Credit Suisse Securities (Europe) Limited (as
Arranger), and Citibank Europe plc, UK Branch
and Credit Suisse Securities (Europe) Limited (as
Dealers).

(b) Amended and Restated Note Agency Agreement,
dated 9 June 2017, between Ecolab Inc., Ecolab
Lux 1 S.À R.L., Ecolab Lux 2 S.À R.L., Ecolab NL
10 B.V. Ecolab NL 11 B.V. (as Issuers), Ecolab
Inc. (as Guarantor in respect of the notes issued
by Ecolab Lux 1 S.À R.L., Ecolab Lux 2 S.À R.L.,
Ecolab NL 10 B.V. and Ecolab NL 11 B.V.), and
Citibank, N.A., London Branch (as Issue and
Paying Agent).

Ecolab Inc., Ecolab Lux 1 S.À R.L., Ecolab Lux 2
S.À R.L., Ecolab NL 10 B.V. and Ecolab NL 11
B.V. (as Issuers)

(d) Deed of Guarantee made on 9 June 2017 by

Ecolab Inc. (in respect of notes issued by Ecolab
Lux 1 S.À R.L., Ecolab Lux 2 S.À R.L., Ecolab NL
10 B.V. and Ecolab NL 11 B.V.)

Incorporated by reference to Exhibit (10.1)(a) of our
Form 10-Q for the quarter ended June 30, 2017. (File
No. 001-9328)

Incorporated by reference to Exhibit (10.1)(b) of our
Form 10-Q for the quarter ended June 30, 2017. (File
No. 001-9328)

Incorporated by reference to Exhibit (10.1)(c) of our
Form 10-Q for the quarter ended June 30, 2017. (File
No. 001-9328)

Incorporated by reference to Exhibit (10.1)(d) of our
Form 10-Q for the quarter ended June 30, 2017. (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 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.

(b) Issuing and Paying Agency Agreement, dated
September 18, 2017, between Ecolab Inc. and
MUFG Union Bank, N.A., as Issuing and Paying
Agent.

Incorporated by reference to Exhibit (10.1)(a) of our
Form 10-Q for the quarter ended September 30, 2014.
(File No. 001-9328)

Incorporated by reference to Exhibit (10.1)(a) of our
Form 10-Q for the quarter ended September 30, 2017.
(File No. 001-9328)

dated September 18, 2017, together with annex
thereto.

Incorporated by reference to Exhibit (10.1)(b) of our
Form 10-Q for the quarter ended September 30, 2017.
(File No. 001-9328)

(10.4)

†

(i) Ecolab Inc. 2001 Non-Employee Director Stock

Option and Deferred Compensation Plan, as
amended and restated, effective as of 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) Declaration of Amendment, dated May 5, 2016, to

Ecolab Inc. 2001 Non-Employee Director Stock
Option and Deferred Compensation Plan, as
amended and restated, effective as of August 1, 2013.

Incorporated by reference to Exhibit (10.1) of our
Form 10-Q for the quarter ended June 30, 2016. (File
No. 001-9328)

102

Exhibit No.: Document:

Method of Filing:

†

(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 as of 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)

(10.5)

(i) Note Purchase Agreement, dated 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, dated October 27, 2011, to Note
Purchase Agreement, dated July 26, 2006, 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)

(10.6)

† 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)

(10.7)

†

(i) Ecolab Executive Death Benefits Plan, as amended

and restated, effective as of March 1, 1994.

†

(ii) Amendment No. 1 to Ecolab Executive Death Benefits

Plan, effective as of July 1, 1997.

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 (10.12) hereof.
(File No. 001-9328)

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 as of 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 as of August 12, 2005.

†

(v) Amendment No. 4 to the Ecolab Executive Death

Benefits Plan, effective as of January 1, 2005.

†

(vi) Amendment No. 5 to the Ecolab Executive Death
Benefits Plan, effective as of May 6, 2015.

†

(vii) Amendment No. 6 to the Ecolab Executive Death
Benefits Plan, effective as of June 23, 2017

(10.8)

†

(i) Ecolab Executive Long-Term Disability Plan, as

amended and restated, effective as of January 1,
1994.

†

(ii) Amendment No. 1 to the Ecolab Executive Long-Term
Disability Plan, effective as of August 21, 2015.

(10.9)

†

(i) Ecolab Supplemental Executive Retirement Plan, as
amended and restated, effective as of January 1,
2014.

Incorporated by reference to Exhibit (10)B of our
Form 8-K, dated December 13, 2005. (File
No. 001-9328)

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)

Incorporated by reference to Exhibit 10.2 of our
Form 10-Q for the quarter ended June 30, 2015. (File
No. 001-9328)

Incorporated by reference to Exhibit 10.1(vii) of
Ecolab’s Form 8-K dated June 23, 2017. (File
No. 001-9328)

Incorporated by reference to Exhibit (10)I of our
Form 10-K Annual Report for the year ended
December 31, 2004. See also Exhibit (10.12) hereof.
(File No. 001-9328).

Incorporated by reference to Exhibit 10.1 of our
Form 10-Q for the quarter ended September 30, 2015.
(File No. 001-9328)

Incorporated by reference to Exhibit 10.11 of our
Form 10-K Annual Report for the year ended
December 31, 2013. See also Exhibit (10.12) hereof.
(File No. 001-9328).

103

Exhibit No.: Document:

Method of Filing:

†

(ii) Amendment No. 1 to the Ecolab Supplemental

Executive Retirement Plan, effective as of 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)

(10.10)

† Ecolab Mirror Savings Plan, as amended and restated,

effective as of January 1, 2014.

(10.11)

† Ecolab Mirror Pension 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. See also Exhibit (10.12) hereof.
(File No. 001-9328)

Incorporated by reference to Exhibit 10.13 of our
Form 10-K Annual Report for the year ended
December 31, 2013. See also Exhibit (10.12) hereof.
(File No. 001-9328).

(10.12)

†

(i) Ecolab Inc. Administrative Document for Non-

Qualified Plans, as 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)

(10.13)

† 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)

(10.14)

†

(i) Ecolab Inc. Change in Control Severance

Compensation Policy, as amended and restated,
effective as of February 26, 2010.

Incorporated by reference to Exhibit (10) of our
Form 8-K, dated February 26, 2010. (File
No. 001-9328)

†

(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)

(10.15)

† Description of Ecolab Management Incentive Plan.

Incorporated by reference to Exhibit (10.16) of our
Form 10-K Annual Report for the year ended
December 31, 2015. (File No. 001-9328)

(10.16)

†

(i) Ecolab Inc. 2010 Stock Incentive Plan, as amended

and restated, effective as of 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, adopted May 6, 2010.

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,
adopted May 6, 2010.

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, adopted May 6, 2010.

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, adopted August 4, 2010.

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 Plan, adopted December 2, 2015.

Incorporated by reference to Exhibit (10.17(vi)) of our
Form 10-K Annual Report for the year ended
December 31, 2015. (File No. 001-9328)

†

(vii) Sample form of Performance-Based Restricted Stock

Award Agreement under the Ecolab Inc. 2010 Stock
Incentive Plan, adopted December 7, 2016.

Incorporated by reference to Exhibit (10.16)(vii) on our
Form 10-K Annual Report for the year ended
December 31, 2016. (File No. 001-9328)

104

Exhibit No.: Document:

Method of Filing:

†

(viii) Sample form of Performance-Based Restricted Stock

Filed herewith electronically.

Award Agreement under the Ecolab Inc. 2010 Stock
Incentive Plan, adopted December 6, 2017.

(10.17)

† Policy on Reimbursement of Incentive Payments, adopted

December 4, 2008.

(10.18)

† Second Amended and Restated Nalco Holding Company
2004 Stock Incentive Plan, effective as of December 1,
2011.

(10.19)

† Form of Nalco Company Death Benefit Agreement and

Addendum to Death Benefit Agreement.

(14.1)

Ecolab Code of Conduct, as amended November 26, 2012.

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)

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)

Incorporated by reference from Exhibit (99.2) on
Form 8-K of Nalco Holding Company filed on May 11,
2005. (File No. 001-32342)

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)

(23.1)

(24.1)

(31.1)

(31.2)

(32.1)

List of Subsidiaries.

Consent of Independent Registered Public Accounting
Firm.

Filed herewith electronically.

Powers of Attorney.

Filed herewith electronically.

Rule 13a-14(a) CEO Certification.

Filed herewith electronically.

Rule 13a-14(a) CFO Certification.

Filed herewith electronically.

Section 1350 CEO and CFO Certifications.

Filed herewith electronically.

(101.1)

Interactive Data File.

Filed herewith electronically.

† This exhibit is an executive compensation plan or arrangement.

Item 16. Form 10-K Summary.

None.

105

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 23rd day of February, 2018.

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 23rd day of February, 2018.

/s/ Douglas M. Baker, Jr.
Douglas M. Baker, Jr.

/s/ Daniel J. Schmechel
Daniel J. Schmechel

/s/ Bruno Lavandier
Bruno Lavandier

/s/ Michael C. McCormick
Michael C. McCormick

as attorney-in-fact for:
Barbara J. Beck, Les S. Biller, Carl M. Casale, Stephen I. Chazen,
Jeffrey M. Ettinger, Arthur J. Higgins, Michael Larson, 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 and Treasurer

(Principal Financial Officer)

Senior Vice President and Corporate Controller

(Principal Accounting Officer)

Directors

106

INVESTOR INFORMATION

ANNUAL MEETING
Ecolab’s annual meeting of stockholders will be held on Thursday,
May 3, 2018, at 9:30 a.m. in the Cafeteria of the Ecolab Global
Headquarters, 1 Ecolab Place, St. Paul, MN 55102.

COMMON STOCK
Our stock trading symbol is ECL. Ecolab common stock is listed and
traded on the New York Stock Exchange (NYSE). Ecolab stock is
also traded on an unlisted basis on certain other exchanges. Options
are traded on the NYSE.

Ecolab common stock is included in the S&P 500 Materials sector of
the Global Industry Classification Standard.

As of January 31, 2018, Ecolab had 6,324 shareholders of record.
The closing stock price on the NYSE on January 31, 2018, was $137.68
per share.

DIVIDEND POLICY
Ecolab has paid common stock dividends for 81 consecutive years.
Quarterly cash dividends are typically paid on the 15th of January,
April, July and October, or the ensuing business day.

DIVIDEND REINVESTMENT PLAN
Stockholders of record may elect to reinvest their dividends. Plan
participants may also elect to purchase Ecolab common stock through
this service.

To enroll in the plan, stockholders may contact the plan sponsor,
Computershare, for a brochure and enrollment form.

GOVERNANCE
Disclosures concerning our board of directors’ policies,
governance principles and corporate ethics practices,
including our Code of Conduct, are available online at
www.investor.ecolab.com/corporate‐governance.

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

PricewaterhouseCoopers LLP
225 South Sixth Street
Minneapolis, MN 55402

INVESTOR INQUIRIES
Securities analysts, portfolio managers and representatives of
financial institutions should contact:

Ecolab Investor Relations
1 Ecolab Place
St. Paul, MN 55102
Phone: 651.250.2500

INVESTOR RESOURCES
SEC FILINGS: Copies of Ecolab’s Form 10‐K, 10‐Q and 8‐K reports as
filed with the Securities and Exchange Commission are available free
of charge. These documents may be obtained on our website at
www.investor.ecolab.com/earnings‐center/sec‐filings promptly after
such reports are filed with, or furnished to, the SEC, or by contacting:

Ecolab Inc.
Attn: Corporate Secretary
1 Ecolab Place
St. Paul, MN 55102
Email: investor.info@ecolab.com

REDUCE, RE‐USE, RECYCLE

If you received multiple copies of this report, you may have duplicate investment
accounts. Help save resources. Please contact your broker or the transfer agent
to request assistance with consolidating any duplicate accounts.

All product names appearing in the text of this Annual Report are the
trademarks, brand names, service marks or copyrights of Ecolab USA Inc. or
affiliated Ecolab group companies.

ECOLAB ANNUAL REPORT 2017

INVESTMENT PERFORMANCE
The following stock performance graph 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, 2012, and daily reinvestment of all dividends.

250

200

150

100

S
R
A
L
L
O
D

ECOLAB

S&P 500 INDEX

PEER GROUP

2012

2013

2014

2015

2016

2017

The companies comprising the peer group are set forth below. The
stock performance graph differs from last year’s graph by the addition
of LyondellBasell Industries NV and the deletion of Airgas Inc. (which
was acquired). Additionally, the graph includes data for Dow Chemical
Company and E.I. du Pont de Nemours and Co. from the beginning of
the measurement period until August 31, 2017, which is when these two
companies each merged with wholly owned subsidiaries of DowDuPont
Inc., and data for DowDuPont Inc. from September 1, 2017, through
December 31, 2017. Further information regarding the peer group can
be found in Ecolab’s proxy statement for the annual meeting to be held
on May 3, 2018.

PEER GROUP:

3M Co.
Air Products and Chemicals Inc.
Ashland Global Holdings Inc.
Baker Hughes a GE Co.
Celanese Corp.
Danaher Corp.
Dow Chemical Company
E.I. du Pont de Nemours and Co.
Eastman Chemical Co.
Halliburton Co.

LyondellBasell Industries NV
Monsanto Co.
National Oilwell Varco Inc.
PPG Industries Inc.
Praxair Inc.
Schlumberger Ltd.
Sealed Air Corp.
Sherwin‐Williams Co.
Weatherford International plc

TRANSFER AGENT, REGISTRAR AND DIVIDEND PAYING AGENT
Stockholders of record may contact the transfer agent, Computershare
Trust Company, N.A., to request assistance with a change of address,
transfer of share ownership, replacement of lost stock certificates, dividend
payment or tax reporting issues. If your Ecolab stock is held in a bank or
brokerage account, please contact your bank or broker for assistance.

COURIER ADDRESS:

Computershare Trust
Company, N.A.
211 Quality Circle, Suite 210
College Station, TX 77845

GENERAL CORRESPONDENCE AND
DIVIDEND REINVESTMENT PLAN
CORRESPONDENCE:

Computershare Trust
Company, N.A.
P.O. Box 30170
College Station, TX 77842‐3170

WEBSITE:
www.computershare.com/ecolab

TELEPHONE:
1.312.360.5203 or
1.800.322.8325

HEARING IMPAIRED:
1.312.588.4110

Computershare provides
telephone assistance to
stockholders Monday through
Friday from 8:30 a.m. to 6 p.m.
(Eastern Time). Around‐the‐clock
service also is available online and
via the telephone Interactive Voice
Response system.

BOARD OF DIRECTORS

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

BARBARA J. BECK
Chief Executive Officer of 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 consultive company), Director since
1997, Finance* and Compensation Committees

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

STEPHEN I. CHAZEN
Chairman, President and Executive Officer of
TPG Pace Energy Holdings Corp. (energy and
energy‐related products and services), Director since
2013, Compensation and Finance Committees

JEFFREY M. ETTINGER
Retired Chairman of the Board of Hormel Foods
Corporation (food products), Director since 2015,
Governance* and Compensation Committees and
Lead Director

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

ARTHUR J. HIGGINS
President and Chief Executive Officer of Depomed
Inc. (specialty pharmaceutical company), Director
since 2010, Compensation and Safety, Health and
Environment 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

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

VICTORIA J. REICH
Former Senior Vice President and Chief Financial
Officer of Essendant Inc. (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 United States Air Force, Director
since February 2014, Audit and Finance Committees

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

*Denotes committee chair

COMMUNICATION WITH DIRECTORS

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.investor.ecolab.com/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
1 Ecolab Place
St. Paul, MN 55102

CORPORATE OFFICERS

ANIL ARCALGUD
Executive Vice President and
Chief Information Officer

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

CHRISTOPHE BECK
Executive Vice President and President —
Global Nalco Water

THOMAS W. HANDLEY
President and Chief Operating Officer

TIMOTHY P. MULHERE
Executive Vice President and President — Regions

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

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

JOANNE JIRIK MULLEN
Chief Compliance Officer and Associate General
Counsel — Employment and Compliance

DANIEL J. SCHMECHEL
Chief Financial Officer and Treasurer

ELIZABETH A. SIMERMEYER
Executive Vice President — Global Marketing and
Communications, and Life Sciences

LARRY L. BERGER
Executive Vice President and Chief Technical Officer

BRUNO LAVANDIER
Senior Vice President and Corporate Controller

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

DARRELL R. BROWN
Executive Vice President and President —
Energy Services

LAURIE M. MARSH
Executive Vice President — Human Resources

STEPHEN M. TAYLOR
Executive Vice President — Strategy

MICHAEL C. MCCORMICK
Executive Vice President, General Counsel
and Secretary

JILL S. WYANT
Executive Vice President and President —
Global Regions and Global Healthcare

ANGELA M. BUSCH
Senior Vice President — Corporate Development

JUDY M. MCNAMARA
Senior Vice President — Tax

ECOLAB ANNUAL REPORT 2017

On the cover

Global Client Solutions Manager Amanda Carroll, based in Eagan, Minn.,
is part of Ecolab’s broad work to implement new digital technologies that
increase our ability to offer real-time, actionable insights and smarter
solutions. This effort will drive improved predictive and preventive service,
enable greater field mobility and productivity, and deliver a superior
experience and results for both our internal and external customers.

This report was designed and printed

by WBENC-certified firms. Printed using

agri-based inks on FSC®-certified paper.

Global Headquarters
1 Ecolab Place, St. Paul, MN 55102
www.ecolab.com 1 800 2 ECOLAB