ecl_Current folio_10K

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Washington, D.C. 20549




(Mark One)








For the Fiscal Year Ended December 31, 2015

Commission File No. 1-9328








For the transition period from                 to                 



(Exact name of registrant as specified in its charter)








(State or other jurisdiction of incorporation or


(I.R.S. Employer Identification No.)




370 Wabasha Street North, St. Paul, Minnesota



(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


Name of each exchange on which registered

Common Stock, $1.00 par value

2.625% Euro Notes due 2025


New York Stock Exchange, Inc.

New York Stock Exchange, Inc.


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


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


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


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES NO


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


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


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



Large accelerated filer

Accelerated filer

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

Smaller reporting company


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


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


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




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





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For the Year Ended December 31, 2015











Item 1.      Business.



Item 1A.   Risk Factors.



Item 1B.   Unresolved Staff Comments.



Item 2.      Properties.



Item 3.      Legal Proceedings.



Item 4.      Mine Safety Disclosures.







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 10.   Directors, Executive Officers of the Registrant and Corporate Governance.



Item 11.    Executive Compensation.



Item 12.   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.



Item 13.    Certain Relationships and Related Transactions, and Director Independence.



Item 14.   Principal Accounting Fees and Services.







Item 15.   Exhibits, Financial Statement Schedules.





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


Item 1.  Business.


Item 1(a) General Development of Business.


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


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



Item 1(b) Financial Information About Operating Segments.


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



Item 1(c) Narrative Description of Business.




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


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


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



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We provide similar information for the Other segment as compared to our three reportable segments as we consider the information regarding its two underlying operating units as useful in understanding our consolidated results.


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Global Industrial


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




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


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


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


Food & Beverage 


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




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




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


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


Textile Care

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

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

Global Institutional


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




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


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


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




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


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


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




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

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

Global Energy


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


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



Well Stimulation and Completion: Our WellChem business supplies chemicals for the cementing, drilling, fracturing and acidizing phases of well drilling and stimulation. Our integrated approach to product development combines marketing and research efforts supported with process simulation, pilot plants and full-scale manufacturing capabilities. 



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



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




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



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



Water Treatment Applications: We provide total water and wastewater management solutions specific to customers’ refining and chemical processing needs including boiler treatment, cooling water treatment and wastewater treatment. 


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



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


Pest Elimination


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


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

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


Equipment Care


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


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




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Additional Information


International Operations 


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


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




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


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


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




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


Number of Employees


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




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Customers and Classes of Products


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

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


Patents and Trademarks


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




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


Investments in Equipment


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


Manufacturing and Distribution


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


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


Raw Materials


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


Research and Development


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




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


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


Joint Ventures


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







Local Ownership Requirements / Geographic Expansion

Joint Venture





  Nalco Angola Prestaca de Servicos, Limitada




Global Energy

  Nalco Saudi Co. Ltd.


Saudi Arabia


Global Energy,  Global Industrial

  RauanNalco LLP




Global Energy

  Emirates National Chemical Company LLC


United Arab Emirates


Global Energy

  Malaysian Energy Chemical & Services Sdn. Bhd.




Global Energy

  Nalco Champion Dai-ichi India Private Limited 




Global Energy

  Nalco Champion EG Sarl


Equatorial Guinea


Global Energy

  AGS Champion LLP




Global Energy

Operational Scale / Geographic Critical Mass 

Joint Venture





  Katayama Nalco Inc.




Global Industrial

Technology / Expanded Product Offering / Manufacturing Capability

Joint Venture





  Treated Water Outsourcing


United States


Global Industrial

  Derypol, S.A.




Global Industrial

  Kogalym Chemicals Plant LLC




Global Energy

  CJSC Nalco Element JV




Global Energy

  Century LLC


United States


Global Institutional

  OWT Oil-Water Treatment Services B.V.




Global Energy


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


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


Environmental and Regulatory Considerations


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




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


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


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


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


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


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



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


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


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


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


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


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


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



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


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


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


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


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


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


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


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



Item 1(d) Financial Information About Geographic Areas.


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





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Item 1(e) Available Information.


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


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


Executive Officers of the Registrant.


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








Positions Held Since
Jan. 1, 2011








Douglas M.




Chairman of the Board and Chief Executive Officer


Dec. 2011 – Present

  Baker, Jr.




Chairman of the Board, President and Chief Executive Officer


Jan. 2011 – Nov. 2011








Christophe Beck




Executive Vice President and President – Global Water


May 2015 - Present





& Process Services







Executive Vice President and President – Regions


Oct. 2012 – May 2015





Executive Vice President – Global Integration


Dec. 2011 – Sep. 2012





Executive Vice President – Institutional


Jan. 2011 – Nov. 2011








Larry L. Berger




Executive Vice President and Chief Technical Officer


Oct. 2011 – Present





Senior Vice President and Chief Technical Officer


Jan. 2011 – Sep. 2011








Alex N. Blanco




Executive Vice President and Chief Supply Chain Officer


Jan. 2013 – Present 1








Thomas W. Handley




President and Chief Operating Officer


Sep.  2012 – Present





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


Oct. 2011 – Aug. 2012





President, Global Food & Beverage and Asia Pacific Latin America Sectors


Jan. 2011 – Sep. 2011








Michael A. Hickey




Executive Vice President and President – Global Institutional


Oct. 2012 – Present





Executive Vice President and President – Institutional


Aug. 2011 – Sep. 2012





Executive Vice President Global Services Sector


Jan. 2011 – Jul. 2011








Bryan L. Hughes




Senior Vice President and Corporate Controller


May 2014 - Present





Vice President-Finance, Global Institutional


Jan. 2011 – Apr. 2014












Executive Vice President and President – Global Services


Sep. 2012 - Present





and Specialty







Executive Vice President and President – Global Specialty


Dec. 2011 – Sep. 2012





Executive Vice President – Global Specialty Sector


May 2011 – Dec. 2011





Senior Vice President – Global Food Retail Services


Jan. 2011 – May 2011








Laurie M. Marsh




Executive Vice President – Human Resources


Nov. 2013 – Present





Vice President – Total Rewards and HR Service Delivery & Technology


Dec. 2011 – Oct.2013 2








Timothy P. Mulhere




Executive Vice President and President – Regions


May 2015 – Present





Executive Vice President and President – Global Water and Process Services


Oct. 2012 – May 2015





Executive Vice President and President – Global Healthcare


Feb. 2012 – Sep. 2012





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


Jan. 2011 – Jan. 2012








Daniel J.




Chief Financial Officer


Oct. 2012 – Present





Senior Vice President – Services and Systems


Jun. 2012 – Sep. 2012





Senior Vice President and Chief Transformation Officer – EMEA


Jan. 2011 – May 2012











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Positions Held Since
Jan. 1, 2011

James J. Seifert




Executive Vice President, General Counsel and Secretary


Oct. 2011 – Present





General Counsel & Secretary


Jan. 2011 – Sep. 2011








Stephen M. Taylor




Executive Vice President and President – Nalco Champion


Apr. 2013 – Present





Executive Vice President and President – Global Energy Services


Oct. 2012 – March 2013





Executive Vice President – Energy Services


Dec. 2011 – Sep. 2012 3








Jill S. Wyant




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


Aug. 2015 – Present





Executive Vice President and President – Global Food & Beverage


Oct. 2012 – July 2015





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


Jan. 2012 – Sep. 2012





Senior Vice President – Food & Beverage Asia Pacific and Latin America


Jan. 2011 – Dec. 2011



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


Prior to joining Ecolab in 2011 upon the closing of the Nalco merger, Ms. Marsh was employed by Nalco for 20 years, most recently as Executive Vice President of Human Resources.


Prior to joining Ecolab in 2011 upon closing of the Nalco merger, Mr. Taylor was employed by Nalco for 17 years. Mr. Taylor led Nalco’s Energy Services Division since 2007 after a series of leadership roles in the division.



Forward-Looking Statements


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



amount, funding and timing of cash expenditures; scope; timing; costs; benefits; synergies and headcount impact relating to our restructuring initiatives


utilization of recorded restructuring liabilities


capital investments and strategic business acquisitions


share repurchases


payments under operating leases


borrowing capacity


global market risk


impact of oil price fluctuations, expectations concerning production at certain projects and comparative performance and prospects of businesses in our Global Energy segment


targeted credit rating metrics


long-term potential of our business


impact of changes in exchange rates and interest rates


losses due to concentration of credit risk


recognition of share-based compensation expense


future benefit plan payments


amortization expense


customer retention rate


bad debt experiences and customer credit worthiness


disputes, claims and litigation


environmental contingencies


returns on pension plan assets


funding of cash requirements, future cash flow and uses for cash




debt repayments


contributions to pension and postretirement healthcare plans


liquidity requirements and borrowing methods


impact of credit rating downgrade


impact of new accounting pronouncements


tax deductibility of goodwill


non-performance of counterparties


income taxes, including valuation allowances, loss carryforwards, unrecognized tax benefits and uncertain tax positions




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Without limiting the foregoing, words or phrases such as “will likely result,” “are expected to,” “will continue,” “is anticipated,” “we believe,” “we expect,” “estimate,” “project” (including the negative or variations thereof) or similar terminology, generally identify forward-looking statements.  Forward-looking statements may also represent challenging goals for us. These statements, which represent the Company’s expectations or beliefs concerning various future events, are based on current expectations that involve a number of risks and uncertainties that could cause actual results to differ materially from those of such forward-looking statements. We caution that undue reliance should not be placed on such forward-looking statements, which speak only as of the date made. Some of the factors which could cause results to differ from those expressed in any forward-looking statement are set forth under Item 1A of this Form 10-K, entitled Risk Factors. Except as may be required under applicable law, we undertake no duty to update our Forward-Looking Statements.



Item 1A. Risk Factors.


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


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


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


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


Our results are impacted by general worldwide economic factors. 


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


We depend on key personnel to lead our business.


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


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


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




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


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


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


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



exchange controls and currency restrictions;


currency fluctuations and devaluations;


tariffs and trade barriers;


export duties and quotas;


changes in the availability and pricing of raw materials, energy and utilities;


changes in local economic conditions;


changes in laws and regulations, including the imposition of economic sanctions affecting commercial transactions in countries such as the Russian Federation;


difficulties in managing international operations and the burden of complying with foreign laws;


requirements to include local ownership or management in our business;


economic and business objectives that differ from those of our joint venture partners;


exposure to possible expropriation, nationalization or other government actions;


restrictions on our ability to repatriate dividends from our subsidiaries;


unsettled political conditions, military action, civil unrest, acts of terrorism, force majeure, war or other armed conflict; and


countries whose governments have been hostile to U.S.-based businesses.


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


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


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


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


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


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



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


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


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


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


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


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


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


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


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


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


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


We have substantial indebtedness which will impact our financial flexibility.


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




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


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


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


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


increasing our vulnerability to adverse general economic and industry conditions.


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


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


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


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


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


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


Consolidation of our customers and vendors can affect our results.    


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


Severe public health outbreaks may adversely impact our business.    


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


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


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




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


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


A chemical spill or release could adversely impact our business.    


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


Extraordinary events may significantly impact our business.    


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


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


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


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



Item 1B.  Unresolved Staff Comments.


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



Item 2.  Properties.


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


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


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



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Size (Sq. Ft.)




Owned or

Joliet, IL USA




Global Institutional, Global Industrial



Tai Cang, CHINA




Global Institutional



Sugar Land, TX USA




Global Energy, Global Industrial



South Beloit, IL USA




Global Institutional, Global Industrial, Other



Chalons, FRANCE




Global Institutional, Global Industrial



Clearing, IL USA




Global Energy, Global Industrial



Jurong Island, SINGAPORE




Global Energy, Global Industrial



Garland, TX USA




Global Institutional, Global Industrial



Martinsburg, WV USA




Global Institutional, Global Industrial



Elwood City, PA USA




Global Energy, Global Industrial







Global Industrial, Global Institutional



Greensboro, NC USA




Global Institutional



Fresno, TX USA




Global Energy







Global Institutional, Global Industrial







Global Institutional



Tessenderlo, BELGIUM




Global Institutional



Cheltenham, AUSTRALIA




Global Institutional, Global Industrial



Suzano, BRAZIL




Global Energy, Global Industrial



McDonough, GA USA




Global Institutional, Global Industrial







Global Institutional, Global Industrial



Corsicana, TX USA




Global Energy



Burlington, Ontario, CANADA




Global Energy, Global Industrial



Eagan, MN USA




Global Institutional, Global Industrial, Other



Huntington, IN USA




Global Institutional, Global Industrial



Rozzano, ITALY




Global Institutional, Global Industrial



City of Industry, CA USA




Global Institutional, Global Industrial



Garyville, LA USA




Global Energy, Global Industrial



Mississauga, CANADA




Global Institutional, Global Industrial







Global Energy



Elk Grove Village, IL USA




Global Institutional



Nanjing, CHINA




Global Energy, Global Industrial



Biebesheim, GERMANY




Global Energy, Global Industrial



Fort Worth, TX USA




Global Institutional



Johannesburg, SOUTH AFRICA




Global Institutional, Global Industrial







Global Institutional, Global Industrial



Calgary, Alberta, CANADA




Global Energy







Global Institutional, Global Industrial







Global Institutional, Global Industrial



Yangsan, KOREA




Global Energy, Global Industrial



Cisterna, ITALY




Global Industrial



Rovigo, ITALY




Global Institutional



Cuautitlan, MEXICO




Global Institutional, Global Industrial



Barueri, BRAZIL




Global Institutional, Global Industrial



Mullingar, IRELAND




Global Institutional, Global Industrial



Mosta, MALTA




Global Institutional




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


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


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



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


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



Item 3. Legal Proceedings.


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


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



Item 4. Mine Safety Disclosures.


Not applicable.




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


Market Information 


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






























$ 117.00


$ 97.78


$ 111.83


$ 97.65

































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




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




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


Issuer Purchases of Equity Securities































Number of shares


Maximum number of








purchased as part of


shares that may yet be




Total number of


Average price paid


publicly announced


purchased under the




shares purchased (1)


per share (2)


plans or programs (3)


plans or programs (3)


October 1-31, 2015





$ 120.0834






November 1-30, 2015











December 1-31, 2015
























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



The average price paid per share includes brokerage commissions associated with publicly announced plan purchases plus the value of such other reacquired shares.



As announced on August 23, 2011, the Finance Committee of our Board of Directors, via delegation by our Board of Directors, authorized the repurchase of up to 10,000,000 shares of Common Stock contingent upon completion of the merger with Nalco. As announced on February 24, 2015, our Board of Directors authorized the repurchase of up to an additional 20,000,000 shares. The Company also announced on February 24, 2015 a $1.0 billion share repurchase program under the existing share repurchase authorizations. Subject to market conditions, we expect to repurchase all shares under these authorizations, for which no expiration date has been established, in open market or privately negotiated transactions, including pursuant to Rule 10b5-1 and accelerated share repurchase program.




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Performance Graph


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


Picture 6



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






3M Co.

Eastman Chemical Co.

Air Products and Chemicals Inc.

Halliburton Co.

Airgas Inc.

Monsanto Co.

Ashland Inc.

National Oilwell Varco Inc.

Baker Hughes Inc.

PPG Industries Inc.

Cameron International Corp.

Praxair Inc.

Celanese Corp.

Schlumberger Ltd.

Danaher Corp.

Sealed Air Corp.

Dow Chemical Company

Sherwin-Williams Co.

E.I. du Pont de Nemours and Co.

Weatherford International plc







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Item 6.  Selected Financial Data.























December 31, millions, except per share amounts and employees




































Net sales (including special (gains) and charges (1))





















Cost of sales (including special (gains) and charges (1)(2))





















Selling, general and administrative expenses (2)





















Special (gains) and charges





















Operating income





















Net interest expense (including special (gains) and charges (1))





















Income before income taxes





















Provision for income taxes





















Net income including noncontrolling interest





















Less: Net income (loss) attributable to noncontrolling interest (including special (gains) and charges (1))





















Net income attributable to Ecolab





















Diluted earnings per share, as reported (GAAP)





















Diluted earnings per share, as adjusted (Non-GAAP) (3)





















Weighted-average common shares outstanding - basic





















Weighted-average common shares outstanding - diluted































































Gross margin


















Selling, general and administrative expenses





















Operating income





















Income before income taxes





















Net income attributable to Ecolab





















Effective income tax rate




























































Current assets (4)





















Property, plant and equipment, net





















Goodwill, intangible and other assets (5)





















Total assets





















Current liabilities (4) (5)





















Long-term debt (5)





















Postretirement health care and pension benefits





















Other liabilities





















Total liabilities





















Ecolab shareholders’ equity





















Noncontrolling interest





















Total equity





















Total liabilities and equity































































Cash provided by operating activities





















Cash used for investing activities





















Cash provided by (used for) financing activities





















Depreciation and amortization





















Capital expenditures





















Cash dividends declared per common share































































Total debt





















Total debt to capitalization


















Book value per common share