Table	of	Contents

# UNITED	STATES

# SECURITIES	AND	EXCHANGE	COMMISSION

# (Mark	One)

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

For	the	Fiscal	Year	Ended	December	31,	2016

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

# ECOLAB	INC.

(Exact	name	of	registrant	as	specified	in	its	charter)

Delaware

(State	or	other	jurisdiction	of	incorporation	or organization)

1	Ecolab	Place,	St.	Paul,	Minnesota

(Address	of	principal	executive	offices)

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

(Zip	Code)

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

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	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	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	is	a	large	accelerated	filer,	an	accelerated	filer,	a	non-accelerated	filer,	or	a	smaller	reporting	Company.		See	the definitions	of	"large	accelerated	filer,"		"accelerated	filer"	and	"smaller	reporting	Company"	in	Rule	12b-2	of	the	Exchange	Act.

Large	accelerated	filer	☒

Non-accelerated	filer	☐

Accelerated	filer	☐

Smaller	reporting	Company	☐

(Do	not	check	if	a	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,	2016:	$34,464,699,245	(see	Item	12,	under Part	III	hereof),	based	on	a	closing	price	of	registrant's	Common	Stock	of	$118.60	per	share.

# DOCUMENTS	INCORPORATED	BY	REFERENCE

Portions	of	the	registrant's	Proxy	Statement	for	the	Annual	Meeting	of	Stockholders	to	be	held	May	4,	2017	and	to	be	filed	within	120	days	after	the	registrant's fiscal	year	ended	December	31,	2016	(hereinafter	referred	to	as	"Proxy	Statement")	are	incorporated	by	reference	into	Part	III.

| TABLE	OF	CONTENTS | Beginning<br>Page |
| :--- | :--- |
| Item\t1.\t\t\t\t\t\tBusiness. | 3 |
| Item\t1A.\t\t\tRisk\tFactors. | 15 |
| Item\t1B.\t\t\tUnresolved\tStaff\tComments. | 20 |
| Item\t2.\t\t\t\t\t\tProperties. | 20 |
| Item\t3.\t\t\t\t\t\tLegal\tProceedings. | 21 |
| Item\t4.\t\t\t\t\t\tMine\tSafety\tDisclosures. | 21 |
| Item\t5.\t\t\t\t\tMarket\tfor\tRegistrant's\tCommon\tEquity,\tRelated\tStockholder\tMatters\tand\tIssuer\tPurchases\tof | 22 |
| Equity\tSecurities. |  |
| Item\t6.\t\t\t\t\tSelected\tFinancial\tData. | 23 |
| Item\t7.\t\t\t\t\tManagement's\tDiscussion\tand\tAnalysis\tof\tFinancial\tCondition\tand\tResults\tof\tOperations. | 24 |
| Item\t7A.\t\tQuantitative\tand\tQualitative\tDisclosures\tabout\tMarket\tRisk. | 45 |
| Item\t8.\t\t\t\t\tFinancial\tStatements\tand\tSupplementary\tData. | 46 |
| Item\t9.\t\t\t\t\tChanges\tin\tand\tDisagreements\tWith\tAccountants\ton\tAccounting\tand\tFinancial\tDisclosure. | 92 |
| Item\t9A.\t\tControls\tand\tProcedures. | 92 |
| Item\t9B.\t\tOther\tInformation. | 92 |
| Item\t10.\t\t\tDirectors,\tExecutive\tOfficers\tof\tthe\tRegistrant\tand\tCorporate\tGovernance. | 93 |
| Item\t11.\t\t\tExecutive\tCompensation. | 93 |
| Item\t12.\t\t\tSecurity\tOwnership\tof\tCertain\tBeneficial\tOwners\tand\tManagement\tand\tRelated\tStockholder | 93 |
| Matters. |  |
| Item\t13.\t\t\tCertain\tRelationships\tand\tRelated\tTransactions,\tand\tDirector\tIndependence. | 94 |
| Item\t14.\t\t\tPrincipal\tAccounting\tFees\tand\tServices. | 94 |
| Item\t15.\t\t\tExhibits,\tFinancial\tStatement\tSchedules. | 95 |
| Item\t16.\t\t\tForm\t10-K\tSummary. | 100 |

# PART	I

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

# Item	1.		Business.

# Item	1(a)	General	Development	of	Business.

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

In	2016,	we	continued	to	invest	in	and	build	our	business,	including	the	July	2016	acquisition	of	a	33%	minority	investment	in	Aquatech International	LLC	("Aquatech").	Based	in	Canonsburg,	PA,	Aquatech	is	a	global	leader	in	the	design	and	engineering	of	complex	and comprehensive	water	treatment	solutions	that	improve	water	quality	and	reduce	net	water	usage.	On	February	1,	2017,	we	acquired Laboratoires	Anios	("Anios"),	a	leading	European	manufacturer	and	marketer	of	hygiene	and	disinfection	products	for	the	healthcare,	food service,	and	food	and	beverage	processing	industries.	See	Part	II,	Item	8,	Note	4	of	this	Form	10-K	for	additional	information	about	these acquisitions.

# Item	1(b)	Financial	Information	About	Operating	Segments.

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

# Item	1(c)	Narrative	Description	of	Business.

# General

With	2016	sales	of	$13.2	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,	healthcare,	energy,	hospitality	and	industrial	markets	in	more	than	170 countries	around	the	world.	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,	2016,	which	are	located	in	Item	8	of	Part	II	of	this	Form	10-K.	Eight	of	our	ten	operating	segments	have	been aggregated	into	three	reportable	segments:	Global	Industrial,	Global	Institutional	and	Global	Energy.	Our	two	operating	segments	that	are primarily	fee-for-service	have	been	combined	into	Other,	and	do	not	meet	the	quantitative	criteria	to	be	separately	reported.	We	provide	similar information	for	Other	as	compared	to	our	three	reportable	segments	as	we	consider	the	information	regarding	its	two	underlying	operating segments	as	useful	in	understanding	our	consolidated	results.

Picture	3

# Global	Industrial

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

# Water

Water	serves	customers	across	industrial	and	institutional	markets,	with	the	exception	of	the	pulp	and	paper	industry	which	is	serviced	by	Paper and	the	energy	industries	which	are	served	by	Energy.	Within	Water,	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.

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

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	TRASAR 	technology,	which	combines	chemistry,	remote	services	and monitoring	and	control.	We	provide	products	and	programs	for	water	treatment	and	process	applications	aimed	at	combining	environmental benefits	with	economic	gains	for	our	customers.		Typically,	water	savings,	energy	savings,	maintenance	and	capital	expenditure	avoidance	are among	the	primary	sources	of	value	to	our	customers,	with	product	quality	and	production	enhancement	improvements	also	providing	a	key differentiating	feature	for	many	of	our	offerings.	Our	offerings	are	sold	primarily	by	our	corporate	account	and	field	sales	employees. TM

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

# Food	&	Beverage

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

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

# Paper

Paper	provides	water	and	process	applications	for	the	pulp	and	paper	industries,	offering	a	comprehensive	portfolio	of	programs	that	are	used	in all	principal	steps	of	the	papermaking	process	and	across	all	grades	of	paper,	including	graphic	grades,	board	and	packaging,	and	tissue	and towel.	Paper	provides	its	customers	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	corporate	account	and	field	sales	employees.

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

# Textile	Care

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

We	believe	that	we	are	one	of	the	leading	suppliers	world-wide	in	the	laundry	markets	in	which	we	compete.

# Global	Institutional

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

# Institutional

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

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

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

# Specialty

Specialty	supplies	cleaning	and	sanitizing	chemical	products	and	related	items	primarily	to	regional,	national	and	international	quick	service restaurant	("QSR")	chains	and	food	retailers	(i.e.,	supermarkets	and	grocery	stores).	Its	products	include	specialty	and	general	purpose	hard surface	cleaners,	degreasers,	sanitizers,	polishes,	hand	care	products	and	assorted	cleaning	tools	and	equipment	which	are	primarily	sold	under the	"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	training programs	and	technical	support	designed	to	meet	the	special	needs	of	its	customers.

Both	Specialty's	QSR	business	and	its	food	retail	business	utilize	a	corporate	account	sales	force	which	manages	relationships	with	customers at	the	corporate	headquarters	and	regional	office	levels	(and,	in	the	QSR	market	segment,	at	the	franchisee	level)	and	a	field	sales	force	which provides	program	support	at	the	individual	restaurant	or	store	level.	QSR	customers	are	primarily	supplied	through	third	party	distributors	while most	food	retail	customers	utilize	their	own	distribution	networks.	While	Specialty's	customer	base	has	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	one	of	the	leading	suppliers	of	cleaning	and	sanitizing	products	to	the	global	QSR	market	and	a	leading	supplier	of cleaning	and	sanitizing	products	to	the	global	food	retail	market.

# Healthcare

Healthcare	provides	infection	prevention,	surgical	solutions	and	contamination	control	solutions	to	acute	care	hospitals,	surgery	centers,	medical device	Original	Equipment	Manufacturers	("OEM"),	and	pharmaceutical	and	hospital	clean	room	environments.	Healthcare's	proprietary infection	prevention	and	surgical	solutions	(hand	hygiene,	hard	surface	disinfection,	instrument	cleaning,	patient	drapes,	equipment	drapes	and surgical	fluid	warming	and	cooling	systems)	are	sold	primarily	under	the	"Ecolab"	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	field	sales	personnel	and	corporate	account	personnel	but	also	sells	through	healthcare	distributors.

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

# Global	Energy

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

Energy	provides	on-site,	technology-driven	solutions	to	the	global	drilling	and	completion,	oil	and	gas	production	and	refining	and	petrochemical industries.	Our	product	portfolio	includes;	additives	for	drilling	and	well	stimulation,	corrosion	inhibitors,	oil	and	water	separation,	scale	control, paraffin	and	asphaltene	control,	biocides,	hydrate	control,	hydrogen	sulfide	removal,	oil	dispersants,	foamers	and	anti-foamers,	flow	improvers, anti-foulants,	crude	desalting,	monomer	inhibitors,	anti-oxidants,	fuel	and	lubricant	additives,	and	traditional	water	treatment.	Our	customers include	nearly	all	of	the	largest	publicly	traded	oil	companies,	as	well	as	national	oil	companies	and	large	independent	oil	companies.	Our Energy	offerings	are	sold	primarily	by	our	corporate	account	and	field	sales	employees	and,	to	a	lesser	extent,	through	distributors,	sales	agents and	joint	ventures.

# Our	upstream	and	downstream	applications	consist	of	the	following:

· Well	Stimulation	and	Completion:	Our	WellChem	business	supplies	chemicals	for	the	drilling,	cementing,	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	production	and	full-scale	manufacturing	and	logistics	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	through	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	H S	mitigation	systems	that	help	to	ensure	optimized	and	effective	treatment. 2

· Downstream	Applications:	Our	customized	process	and	water	treatment	programs	are	delivered	by	onsite	technical	experts	serving the	petroleum	refining,	petrochemical	and	fuels	industry.	We	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.	Our process	programs	mitigate	fouling,	desalting,	corrosion,	foaming	and	the	effects	of	heavy	metals.	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	also	offer	an	entire	line	of	fuel	additives	including	corrosion	inhibitors,	fuel	stabilizers, pour	point	depressants,	cetane	improvers,	detergents	and	antioxidants	for	home	heating	oil	and	premium	diesel	and	gasoline packages.

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

# Other

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

# Pest	Elimination

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

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

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

# Equipment	Care

Equipment	Care	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.	The	Equipment	Care	business	operates solely	in	the	United	States.

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

# Additional	Information

# International	Operations

We	directly	operate	in	approximately	100	countries	outside	of	the	United	States	through	wholly-owned	subsidiaries	or,	in	some	cases,	through	a joint	venture	with	a	local	partner.	In	certain	countries,	selected	products	are	sold	by	our	export	operations	to	distributors,	agents	or	licensees, although	the	volume	of	those	sales	is	not	significant	in	terms	of	our	overall	revenues.	In	general,	our	businesses	conducted	outside	the	United States	are	similar	to	those	conducted	in	the	United	States.

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

# Competition

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

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

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

# Sales

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

# Number	of	Employees

# 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	2016	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	11%	and	10%	of	consolidated	net	sales	in	2016	and	2015,	respectively.

# Patents	and	Trademarks

We	own	and	license	a	number	of	patents,	trademarks	and	other	intellectual	property.	While	we	have	an	active	program	to	protect	our	intellectual property	by	filing	for	patents	or	trademarks	and	pursuing	legal	action,	when	appropriate,	to	prevent	infringement,	except	for	the	items	listed below,	we	do	not	believe	that	our	overall	business	is	materially	dependent	on	any	individual	patent	or	trademark.

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

· Trademarks	related	to	Ecolab,	Nalco	and	3D	TRASAR,	which	collectively	are	material	to	all	of	our	reportable	segments.	The	Ecolab, Nalco	Company	and	3D	TRASAR	trademarks	are	registered	or	applied	for	in	all	of	our	key	markets,	and	we	anticipate	maintaining them	indefinitely.

# Seasonality

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

# Investments	in	Equipment

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

# Manufacturing	and	Distribution

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

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

# Raw	Materials

Raw	materials	purchased	for	use	in	manufacturing	our	products	are	inorganic	chemicals,	including	alkalis,	acids,	biocides,	phosphonates, phosphorous	materials,	silicates	and	salts;	and	organic	chemicals,	including	acids,	alcohols,	amines,	fatty	acids,	surfactants,	solvents, monomers	and	polymers.	Healthcare	purchases	plastic	films	and	parts	to	manufacture	medical	devices	that	serve	the	surgical	and	infection prevention	markets.	Pesticides	used	by	Pest	Elimination	are	purchased	as	finished	products	under	contract	or	purchase	order	from	the producers	or	their	distributors.	We	also	purchase	packaging	materials	for	our	manufactured	products	and	components	for	our	specialized cleaning	equipment	and	systems.	We	purchase	more	than	10,000	raw	materials,	with	the	largest	single	raw	material	representing	less	than	2% of	raw	material	purchases.	Our	raw	materials,	with	the	exception	of	a	few	specialized	chemicals	which	we

manufacture,	are	generally	purchased	on	an	annual	contract	basis	and	are	ordinarily	available	in	adequate	quantities	from	a	diverse	group	of suppliers	globally.	When	practical,	global	sourcing	is	used	so	that	purchasing	or	production	locations	can	be	shifted	to	control	product	costs	at globally	competitive	levels.

# Research	and	Development

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

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

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

# Joint	Ventures

Over	time,	we	have	entered	into	partnerships	or	joint	ventures	in	order	to	meet	local	ownership	requirements,	to	achieve	quicker	operational scale,	to	expand	our	ability	to	provide	our	customers	a	more	fully	integrated	offering	or	to	provide	other	benefits	to	our	business	or	customers. During	2016,	the	impact	on	our	consolidated	net	income	of	our	joint	ventures,	in	the	aggregate,	was	less	than	three	percent.	The	table	below identifies	our	most	significant	consolidated	and	non-consolidated	joint	ventures,	summarized	by	the	primary	purpose	of	the	joint	venture.

# Local	Ownership	Requirements	/	Geographic	Expansion

Joint	Venture Katayama	Nalco	Inc.

Operational	Scale	/	Geographic	Critical	Mass Location Japan

Segment Global	Industrial

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

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

# Environmental	and	Regulatory	Considerations

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

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

Ingredient	Legislation:	Various	laws	and	regulations	have	been	enacted	by	state,	local	and	foreign	jurisdictions	pertaining	to	the	sale of	products	which	contain	phosphorous,	volatile	organic	compounds,	or	other	ingredients	that	may	impact	human	health	or	the environment.		Under	California	Proposition	65,	for	example,	label	disclosures	are	required	for	certain	products	containing	chemicals listed	by	California.	Chemical	management	initiatives	that	promote	pollution	prevention	through	research	and	development	of	safer chemicals	and	safer	chemical	processes	are	being	advanced	by	certain	states,	including	California,	Maine,	Maryland,	Massachusetts, Minnesota,	Oregon	and	South	Carolina.	Environmentally	preferable	purchasing	programs	for	cleaning	products	have	been	enacted	in nine	states	to	date,	and	in	recent	years	have	been	considered	by	several	other	state	legislatures.	Cleaning	product	ingredient disclosure	legislation	has	been	introduced	in	the	U.S.	Congress	in	each	of	the	past	few	years	but	has	not	passed,	and	several	states are	considering	further	regulations	in	this	area.	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:	The	nation's	primary	chemicals	management	law,	the	Toxic	Substances	Control	Act	("TSCA"),	was	updated	for	the	first	time	in 40	years	with	the	passage	of	the	Frank	R.	Lautenberg	Chemical	Safety	for	the	21st	Century	Act	("LCSA")	in	2016.	The	LCSA modernizes	the	original	1976	legislation,	aiming	to	establish	greater	public	confidence	in	the	safety	of	chemical	substances	in commerce,	improve	the	U.S.	Environmental	Protection	Agency	("EPA")	EPA's	capability	and	authority	to	regulate	existing	and	new chemical	substances,	and	prevent	further	state	action	or	more	other	notification	programs	like	REACH	(see	below).		For	Ecolab,	the new	TSCA	rules	will	mainly	impact	testing	and	submission	costs	for	new	chemical	substances	in	the	United	States.		In	addition,	the EPA	likely	will	be	more	aggressively	using	the	existing	TSCA	tools	to	manage	chemicals	of	concern.	We	anticipate	that	compliance with	new	requirements	under	TSCA	could	be	similar	to	the	costs	associated	with	REACH	in	the	European	Union,	which	is	discussed below.

REACH:	The	European	Union	has	enacted	a	regulatory	framework	for	the	Registration,	Evaluation	and	Authorization	of	Chemicals ("REACH").	It	established	a	new	European	Chemicals	Agency	("ECHA")	in	Helsinki,	Finland,	which	is	responsible	for	evaluating	data to	determine	hazards	and	risks	and	to	manage	this	program	for	authorizing	chemicals	for	sale	and	distribution	in	Europe.	We	met	the pre-registration	requirements	of	REACH,	the	2010	and	2013	registration	deadlines,	and	are	on	track	to	meet	the	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	(e.g.,	June	2017	is	the	final	deadline	for	Canada	and	Australia).	Potential	costs	to	us	are	not	expected	to	have	a	material adverse	effect	on	our	consolidated	results	of	operations	or	cash	flows	in	any	one	reporting	period	or	on	our	financial	position.

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

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

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

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

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

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

Other	Environmental	Legislation:	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	$60	million	in	2016	and	$55 million	in	2015.	Approximately	$90	million	has	been	budgeted	globally	for	projects	in	2017.	The	increase	in	2017	over	2016	is	due	to continued	spending	on	process	safety	and	compliance	matters	throughout	the	Company,	including	facilities	acquired	in	connection with	the	Champion	transaction.

Climate	Change:	Various	laws	and	regulations	pertaining	to	climate	change	have	been	implemented	or	are	being	considered	for implementation	at	the	international,	national,	regional	and	state	levels,	particularly	as	they	relate	to	the	reduction	of	greenhouse	gas ("GHG")	emissions.	None	of	these	laws	and	regulations	directly	apply	to	Ecolab	at	the	present	time;	however,	as	a	matter	of	corporate policy,	we	support	a	balanced	approach	to	reducing	GHG	emissions	while	sustaining	economic	growth.	We	are	committed	to	reducing our	carbon	footprint	and	have	made	significant	strides	in	recent	years.	In	2014,	we	received	a	Climate	Leadership	Award,	co- sponsored	by	EPA,	recognizing	Ecolab	for	achieving	an	absolute	global	greenhouse	gas	emissions	reduction	of	more	than	12.5 percent	(22.4	percent	intensity	reduction).

Our	current	global	sustainability	targets	were	established	in	2016.	They	include	a	25	percent	reduction	in	water	withdrawals	and	a	10 percent	reduction	in	greenhouse	gas	emissions	by	2020.	In	addition	to	our	internal	sustainability	performance,	we	partner	with customers	at	more	than	1.0	million	customer	locations	around	the	world	to	reduce	energy	and	greenhouse	gas	emissions	through	our high-efficiency	solutions	in	cleaning	and	sanitation,	water,	paper	and	energy	services.	We	also	introduced	a	customer	impact	goal	for the	first	time.		By	partnering	with	our	customers	to	help	them	do	more	with	less	through	the	use	of	our	solutions,	we	aim	to	conserve more	than	300	billion	gallons	of	water	annually	by	2030.

Environmental	Remediation	and	Proceedings:	Along	with	numerous	other	potentially	responsible	parties	("PRP"),	we	are	currently involved	with	waste	disposal	site	clean-up	activities	imposed	by	the	federal	Comprehensive	Environmental	Response,	Compensation and	Liability	Act	("CERCLA")	or	state	equivalents	at	24	sites	in	the	United	States.	Additionally,	we	have	similar	liability	at	six	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.

As	previously	reported,	the	Texas	Commission	on	Environmental	Quality	("TCEQ")	issued	a	Notice	of	Enforcement	and	Notice	of Violation	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.	On	June	24,	2015,	the	TCEQ	issued	a	draft	consent	decree	to	Ecolab	for	certain	violations,	with	the	TCEQ ultimately	seeking	an	administrative	penalty	of	approximately	$850,000.	The	company	signed	an	Agreed	Order	with	the	TCEQ	on	May 2,	2016	to	pay	this	penalty,	which	is	subject	to	approval	by	the	TCEQ,	and	simultaneously	paid	the	first	installment	of	approximately $425,000.	The	final	installment	will	be	paid	upon	approval	of	the	Agreed	Order	by	the	TCEQ.

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	$9.0	million	in	2016	and	$6.5	million	in	2015.	Our worldwide	accruals	at	December	31,	2016	for	probable	future	remediation	expenditures,	excluding	potential	insurance reimbursements,	totaled	approximately	$22	million.	We	review	our	exposure	for	contamination	remediation	costs	periodically	and	our accruals	are	adjusted	as	considered	appropriate.	While	the	final	resolution	of	these	issues	could	result	in	costs	below	or	above current	accruals	and,	therefore,	have	an	impact	on	our	consolidated	financial	results	in	a	future	reporting	period,	we	believe	the ultimate	resolution	of	these	matters	will	not	have	a	material	effect	on	our	consolidated	results	of	operations,	financial	position	or	cash flows.

# Iran	Threat	Reduction	and	Syria	Human	Rights	Act	of	2012

Under	the	Iran	Threat	Reduction	and	Syria	Human	Rights	Act	of	2012,	which	added	Section	13(r)	of	the	Securities	Exchange	Act	of	1934,	the Company	is	required	to	disclose	in	its	periodic	reports	if	it	or	any	of	its	affiliates	knowingly	engaged	in	certain	activities,	transactions	or	dealings relating	to	Iran	or	with	entities	or	individuals	designated	pursuant	to	certain	Executive	Orders.	Disclosure	is	required	even	where	the	activities are	conducted	outside	the	U.S.	by	non-U.S.	affiliates	in	compliance	with	applicable	law,	and	even	if	the	activities	are	not	covered	or	prohibited by	U.S.	law.	After	the	easing	of	certain	sanctions	by	the	United	States	against	Iran	in	January	2016	and	in	compliance	with	the	economic sanctions	regulations	administered	by	U.S.	Treasury's	Office	of	Foreign	Assets	Control	(OFAC)	and	U.S.	export	control	laws,	a	wholly-owned non-U.S.	subsidiary	of	the	Company	completed	the	following	sales	related	to	businesses	in	our	Energy	operating	segment	pursuant	to	and	in compliance	with	the	terms	and	conditions	of	OFAC's	General	License	H:	sales	of	products	used	for	process	and	water	treatment	applications	in (i)	upstream	oil	and	gas	production	and	(ii)	petrochemical	plants	totaling	$535,000	during	the	subsidiary's	fiscal	year	ended	November	30,	2016, and	additional	sales	of	such	products	totaling	$571,000	during	December	2016,	were	made	to	a	distributor	in	Dubai	and	two	distributors	in	Iran. The	net	profit	before	taxes	associated	with	these	sales	is	estimated	to	be	$117,180	and	$351,192,	respectively.	Our	non-U.S.	subsidiary	intends to	continue	doing	business	in	Iran	under	General	License	H	in	compliance	with	U.S.	economic	sanctions	and	export	control	laws,	which	sales may	require	additional	disclosure	pursuant	to	the	abovementioned	statute.

# Item	1(d)	Financial	Information	About	Geographic	Areas.

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

# Item	1(e)	Available	Information.

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

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

# Executive	Officers	of	the	Registrant.

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

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

# Forward-Looking	Statements

This	Form	10-K,	including	the	MD&A	within	Part	II,	Item	7,	contains	forward-looking	statements	within	the	meaning	of	the	Private	Securities Litigation	Reform	Act	of	1995.	The	following	factors,	among	others,	could	cause	actual	results	and	future	events	to	differ	materially	from	those set	forth	or	contemplated	in	the	forward-looking	statements:

· amount,	funding	and	timing	of	cash	expenditures	relating	to	our	restructuring	and	other	initiatives

· capital	investments	and	strategic	business	acquisitions

· impact	of	oil	price	fluctuations,	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

· non-performance	of	counterparties

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

· market	position

· doing	business	in	Iran

· impact	from	Brexit

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.	For	a	further	discussion	of	these	and	other	factors	which could	cause	results	to	differ	from	those	expressed	in	any	forward-looking	statement,	see	Item	1A	of	this	Form	10-K,	entitled	"Risk	Factors". Except	as	may	be	required	under	applicable	law,	we	undertake	no	duty	to	update	our	forward-looking	statements.

# Item	1A.	Risk	Factors.

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

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

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

Economic	downturns,	and	in	particular	downturns	in	our	larger	markets	including	the	energy,	foodservice,	hospitality,	travel,	health	care,	food processing,	pulp	and	paper,	mining	and	steel	industries,	can	adversely	impact	our	end-users.	The	well	completion	and	stimulation,	oil	and	gas production	and	refinery	and	petrochemical	plant	markets	served	by	our	Global	Energy	segment	may	be	impacted	by	substantial	fluctuations	in oil	and	gas	prices;	in	2015	and	2016,	the	Global	Energy	segment	experienced	decreased	sales	as	a	result	of	very	challenging	global	energy market	conditions.	In	recent	years,	the	weaker	global	economic	environment,	particularly	in	Europe	and	emerging	markets	such	as	China	and Brazil,	has	also	negatively	impacted	many	of	our	end-markets.	Weaker	economic	activity	may	continue	to	adversely	affect	these	markets. During	such	cycles,	these	end-users	may	reduce	or	discontinue	their	volume	of	purchases	of	cleaning	and	sanitizing	products	and	water treatment	and	process	chemicals,	which	has	had,	and	may	continue	to	have,	an	adverse	effect	on	our	business.

# Our	results	are	impacted	by	general	worldwide	economic	factors.

Economic	factors	such	as	the	worldwide	economy,	capital	flows,	interest	rates	and	currency	movements,	including,	in	particular,	our	exposure	to foreign	currency	risk,	have	affected	our	business	in	the	past	and	may	have	a	material	adverse	impact	on	our	business	in	the	future.	In	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.	Additionally,	the	June	2016	Brexit	vote	resulted	in	a	sharp	decline	in	the	value	of	the	British	pound, as	compared	to	the	U.S.	dollar	and	other	currencies,	and	the	possibility	for	referendum	by	other	EU	member	states	may	lead	to	further	market volatility.		Other	regions	of	the	world,	including	emerging	market	areas,	also	expose	us	to	foreign	currency	risk.	As	a	result	of	increasing currency	controls,	importation	restrictions,	workforce	regulations,	pricing	constraints	and	local	capitalization	requirements,	we	deconsolidated our	Venezuelan	subsidiaries	effective	as	of	the	end	of	the	fourth	quarter	of	2015.	Prior	to	deconsolidation,	across	the	second	through	fourth quarters	of	2015,	we	devalued	our	Venezuelan	bolivar	operations	within	our	Water,	Paper,	Food	&	Beverage,	Institutional	and	Energy	operating segments.	Similar	currency	devaluations,	credit	market	disruptions	or	other	economic	turmoil	in	other	countries	could	have	a	material	adverse impact	on	our	consolidated	results	of	operations,	financial	position	and	cash	flows	by	negatively	impacting	economic	activity,	including	in	our	key end-markets,	and	by	further	weakening	the	local	currency	versus	the	U.S.	dollar,	resulting	in	reduced	sales	and	earnings	from	our	foreign operations,	which	are	generated	in	the	local	currency,	and	then	translated	to	U.S.	dollars.

# 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.

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	information	technology	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.	Additionally,	we	may	undertake	in	the	future	business manufacturing	initiatives	similar	to	the	substantially	completed	Energy	Restructuring	Plan	and	Combined	Restructuring	Plan	discussed	under Note	3,	entitled	"Special	Gains	and	Charges"	of	this	Form	10-K.	If	the	projects	in	which	we	are	investing	or	the	initiatives	which	we	are	pursuing are	not	successfully	executed,	our	consolidated	results	of	operations,	financial	position	or	cash	flows	could	be	adversely	affected.

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

We	rely	to	a	large	extent	upon	information	technology	systems	and	infrastructure	to	operate	our	business.	The	size	and	complexity	of	our information	technology	systems	make	them	potentially	vulnerable	to	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;	or	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	2016,	approximately	47%	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	or	trade	sanctions	affecting	international	commercial transactions;

· impact	from	Brexit	and	the	possibility	of	similar	events	in	other	EU	member	states;

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

· requirements	to	include	local	ownership	or	management	in	our	business;

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

· exposure	to	possible	expropriation,	nationalization	or	other	government	actions;

· restrictions	on	our	ability	to	repatriate	dividends	from	our	subsidiaries;

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

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

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

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

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

# Our	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	several	wage	hour	lawsuits	claiming	violations	of	the	Fair	Labor	Standards	Act	("FLSA")	or	a	similar	state	law,	certain	of which	have	either	been	certified	for	class	treatment	or	are	seeking	such	certification.	While	one	of	the	lawsuits	has	been	tentatively	settled,	there can	be	no	assurance	that	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	effect	on	our	consolidated	results	of	operations,	financial	position	or	cash	flows.

In	May	2016,	Nalco	was	named	in	nine	additional	complaints	filed	by	individuals	alleging,	among	other	things,	business	and	economic	loss resulting	from	the	Deepwater	Horizon	oil	spill.		The	plaintiffs	in	these	lawsuits	are	generally	seeking	awards	of	unspecified	compensatory	and punitive	damages,	and	attorneys'	fees	and	costs.		These	actions	have	been	consolidated	in	the	MDL	and	we	expect	they	will	be	dismissed pursuant	to	the	Court's	November	28,	2012	order	granting	Nalco's	motion	for	summary	judgment.

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

# 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.

# Consolidation	of	our	customers	and	vendors	can	affect	our	results.

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

# We	have	substantial	indebtedness	which	will	impact	our	financial	flexibility.

As	of	December	31,	2016,	we	had	net	debt	(total	debt	minus	cash	and	cash	equivalents)	of	$6.4	billion.	Our	substantial	indebtedness	may adversely	affect	our	business,	consolidated	results	of	operations	and	financial	position,	including	in	the	following	respects:

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

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

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

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

· increasing	our	vulnerability	to	adverse	general	economic	and	industry	conditions.

In	addition,	as	of	December	31,	2016	approximately	$1.5	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	$11	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.

# 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.

# 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.

# 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.

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

We	are	subject	to	income	and	other	taxes	in	the	United	States	and	foreign	jurisdictions,	and	our	operations,	plans	and	results	are	affected	by	tax and	other	initiatives	around	the	world.	In	particular,	we	are	affected	by	the	impact	of	changes	to	tax	laws	or	related	authoritative	interpretations	in the	United	States,	including	potential	reforms	under	the	President	Trump	administration,	and	elsewhere,	such	as	interpretations	as	to	the	legality of	tax	advantages	granted	under	the	European	Union	state	aid	rules.		We	are	also	impacted	by	settlements	of	pending	or	any	future adjustments	proposed	by	the	IRS	or	other	taxing	authorities	in	connection	with	our	tax	audits,	all	of	which	will	depend	on	their	timing,	nature	and scope.	Increases	in	income	tax	rates,	changes	in	income	tax	laws	or	unfavorable	resolution	of	tax	matters	could	have	a	material	adverse	impact on	our	financial	results.

# 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,	2016,	we	had	goodwill	of	$6.4	billion	which	is	maintained	in	various	reporting	units,	including	goodwill	from the	Nalco	and	Champion	transactions.	If	we	determine	that	any	of	the	assets	or	goodwill	recorded	in	connection	with	the	Nalco	and	Champion transactions	or	any	other	prior	or	future	acquisitions	or	joint	venture	transactions	have	become	impaired,	we	will	be	required	to	record	a	loss resulting	from	the	impairment.	Impairment	losses	could	be	significant	and	could	adversely	affect	our	consolidated	results	of	operations	and financial	position.

# A	chemical	spill	or	release	could	adversely	impact	our	business.

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

# Extraordinary	events	may	significantly	impact	our	business.

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

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

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

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

# Item	1B.		Unresolved	Staff	Comments.

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

# Item	2.		Properties.

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

Our	manufacturing	facilities	produce	chemical	products	as	well	as	medical	devices	and	equipment	for	all	of	our	operating	segments,	although the	Pest	Elimination	and	Equipment	Care	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.

# PLANT	PROFILES

Generally,	our	manufacturing	facilities	are	adequate	to	meet	our	existing	in-house	production	needs.	We	continue	to	invest	in	our	plant	sites	to maintain	viable	operations	and	to	add	capacity	as	necessary	to	meet	business	imperatives.

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

At	year	end	2016	Ecolab's	corporate	headquarters	was	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.	The	second	building	is	leased through	2019.	The	Company	intends	to	vacate	the	current	leased	buildings	in	2018.	The	third	building	is	owned.	Ecolab	acquired	the	17-story North	Tower	from	The	Travelers	Indemnity	Company	in	downtown	St.	Paul,	Minnesota	on	August	4,	2015.	This	building	became	the	corporate headquarters	in	2017.	A	90	acre	campus	in	Eagan,	Minnesota	is	owned	and	provides	for	future	growth.	The	Eagan	facility	houses	a	significant research	and	development	center,	a	data	center	and	training	facilities	as	well	as	several	of	our	administrative	functions.

We	also	have	a	significant	business	presence	in	Naperville,	Illinois,	where	our	Water	and	Paper	operating	segment	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	operating	segment	maintains	administrative	and	research facilities	in	Sugar	Land,	Texas	and	additional	research	facilities	in	Fresno,	Texas.	In	December	2013,	we	announced	the	construction	of	a	new 133,000	square-foot	headquarters	building	adjacent	to	the	existing	Sugar	Land	operations	which	was	completed	in	early	2016	and	renovation	of the	existing	45,000	square-foot	research	facilities	in	Sugar	Land.

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

Other	environmental-related	legal	proceedings	are	discussed	at	Part	I,	Item	1(c)	above,	under	the	heading	"Environmental	and	Regulatory Considerations"	and	is	incorporated	herein	by	reference.

# Item	4.	Mine	Safety	Disclosures.

Not	applicable.

# PART	II

# Item	5.		Market	for	Registrant's	Common	 Equity,	 Related	 Stockholder	 Matters	 and

# Issuer	Purchases	of	Equity

# Securities.

# Market	Information

Our	Common	Stock	is	listed	on	the	New	York	Stock	Exchange	under	the	symbol	"ECL."	The	Common	Stock	is	also	traded	on	an	unlisted	basis on	certain	other	United	States	exchanges.	The	high	and	low	sales	prices	of	our	Common	Stock	on	the	consolidated	transaction	reporting system	during	2016	and	2015	were	as	follows:

| Quarter | High | Low | High | Low |
| :--- | :--- | :--- | :--- | :--- |
| First | $113.69 | $98.62 | $117.00 | $97.78 |
| Second | 121.81 | 109.83 | 118.27 | 110.03 |
| Third | 124.60 | 116.66 | 117.69 | 103.09 |
| Fourth | 122.28 | 110.65 | 122.48 | 109.64 |

# Holders

# Dividends

We	have	paid	Common	Stock	dividends	for	80	consecutive	years.	Cash	dividends	of	$0.33	per	share	were	declared	in	February,	May	and August	2015.	Cash	dividends	of	$0.35	per	share	were	declared	in	December	2015,	and	February,	May	and	August	2016.	A	dividend	of	$0.37 per	share	was	declared	in	December	2016.

# Issuer	Purchases	of	Equity	Securities

|  |  |  | Total	number	of	shares | Maximum	number	of |
| :--- | :--- | :--- | :--- | :--- |
| Period | Total\tnumber\tof\nshares\tpurchased\t(1) | Average\tprice\tpaid\nper\tshare\t(2) | purchased\tas\tpart\tof\npublicly\tannounced\nplans\tor\tprograms\t(3) | shares\tthat\tmay\tyet\tbe\npurchased\tunder\tthe\nplans\tor\tprograms\t(3) |
| October\t1-31,\t2016 | 2,451 | $\t115.2107 | \t- | 16,772,526 |
| November\t1-30,\t2016 | \t- | \t- | \t- | 16,772,526 |
| December\t1-31,\t2016 | 13,365 | 117.6511 | \t- | 16,772,526 |
| Total | 15,816 | 117.2730 | \t- | 16,772,526 |

(1) Includes	15,816	shares	reacquired	from	employees	and/or	directors	to	satisfy	the	exercise	price	of	stock	options	or	shares	surrendered	to satisfy	minimum	statutory	tax	obligations	under	our	stock	incentive	plans.

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

(3) As	announced	on	February	24,	2015,	our	Board	of	Directors	authorized	the	repurchase	of	up	to	20,000,000	shares.	Subject	to	market conditions,	we	expect	to	repurchase	all	shares	under	these	authorizations,	for	which	no	expiration	date	has	been	established,	in	open market	or	privately	negotiated	transactions,	including	pursuant	to	Rule	10b5-1	and	accelerated	share	repurchase	program.

# Item	6.		Selected	Financial	Data.

| December	31,	millions,	except	per	share	amounts	and	employees | 2016 | 2015 | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| OPERATIONS |  |  |  |  |  |
| Net\tsales | $13,152.8 | $13,545.1 | $14,280.5 | $13,253.4 | $11,838.7 |
| Cost\tof\tsales\t(including\tspecial\t(gains)\tand\tcharges\t(1)) | 6,898.9 | 7,223.5 | 7,679.1 | 7,161.2 | 6,385.4 |
| Selling,\tgeneral\tand\tadministrative\texpenses | 4,299.4 | 4,345.5 | 4,577.6 | 4,360.3 | 4,018.3 |
| Special\t(gains)\tand\tcharges | 39.5 | 414.8 | 68.8 | 171.3 | 145.7 |
| Operating\tincome | 1,915.0 | 1,561.3 | 1,955.0 | 1,560.6 | 1,289.3 |
| Interest\texpense,\tnet\t(including\tspecial\t(gains)\tand\tcharges\t(1)) | 264.6 | 243.6 | 256.6 | 262.3 | 276.7 |
| Income\tbefore\tincome\ttaxes | 1,650.4 | 1,317.7 | 1,698.4 | 1,298.3 | 1,012.6 |
| Provision\tfor\tincome\ttaxes | 403.3 | 300.5 | 476.2 | 324.7 | 311.3 |
| Net\tincome\tincluding\tnoncontrolling\tinterest | 1,247.1 | 1,017.2 | 1,222.2 | 973.6 | 701.3 |
| Net\tincome\t(loss)\tattributable\tto\tnoncontrolling\tinterest\t(including |  |  |  |  |  |
| special\t(gains)\tand\tcharges\t(1)) | 17.5 | 15.1 | 19.4 | 5.8 | (2.3) |
| Net\tincome\tattributable\tto\tEcolab | $1,229.6 | $1,002.1 | $1,202.8 | $967.8 | $703.6 |
| Diluted\tearnings\tper\tshare,\tas\treported\t(GAAP) | $4.14 | $3.32 | $3.93 | $3.16 | $2.35 |
| Diluted\tearnings\tper\tshare,\tas\tadjusted\t(Non-GAAP)\t(2) | $4.37 | $4.37 | $4.18 | $3.54 | $2.98 |
| Weighted-average\tcommon\tshares\toutstanding\t-\tbasic | 292.5 | 296.4 | 300.1 | 299.9 | 292.5 |
| Weighted-average\tcommon\tshares\toutstanding\t-\tdiluted | 296.7 | 301.4 | 305.9 | 305.9 | 298.9 |
| SELECTED\tINCOME\tSTATEMENT\tRATIOS |  |  |  |  |  |
| Gross\tmargin | 47.5 % | 46.7 % | 46.2 % | 46.0 % | 46.1 % |
| Selling,\tgeneral\tand\tadministrative\texpenses | 32.7 | 32.1 | 32.1 | 32.9 | 33.9 |
| Operating\tincome | 14.6 | 11.5 | 13.7 | 11.8 | 10.9 |
| Income\tbefore\tincome\ttaxes | 12.5 | 9.7 | 11.9 | 9.8 | 8.6 |
| Net\tincome\tattributable\tto\tEcolab | 9.3 | 7.4 | 8.4 | 7.3 | 5.9 |
| Effective\tincome\ttax\trate | 24.4 % | 22.8 % | 28.0 % | 25.0 % | 30.7 % |
| FINANCIAL\tPOSITION |  |  |  |  |  |
| Current\tassets\t(3) | $4,279.4 | $4,447.5 | $4,853.0 | $4,698.4 | $4,892.0 |
| Property,\tplant\tand\tequipment,\tnet | 3,365.0 | 3,228.3 | 3,050.6 | 2,882.0 | 2,409.1 |
| Goodwill,\tintangible\tand\tother\tassets\t(4) | 10,685.8 | 10,965.9 | 11,523.8 | 12,027.4 | 10,234.5 |
| Total\tassets | $18,330.2 | $18,641.7 | $19,427.4 | $19,607.8 | $17,535.6 |
| Current\tliabilities\t(3)\t(4) | $3,019.4 | $4,764.4 | $4,367.9 | $3,487.5 | $3,052.4 |
| Long-term\tdebt\t(4) | 6,145.7 | 4,260.2 | 4,843.4 | 6,016.0 | 5,699.7 |
| Postretirement\thealth\tcare\tand\tpension\tbenefits | 1,019.2 | 1,117.1 | 1,188.5 | 795.6 | 1,220.5 |
| Other\tliabilities | 1,175.0 | 1,519.6 | 1,645.5 | 1,899.3 | 1,402.9 |
| Total\tliabilities | 11,359.3 | 11,661.3 | 12,045.3 | 12,198.4 | 11,375.5 |
| Ecolab\tshareholders'\tequity | 6,901.1 | 6,909.9 | 7,315.9 | 7,344.3 | 6,077.0 |
| Noncontrolling\tinterest | 69.8 | 70.5 | 66.2 | 65.1 | 83.1 |
| Total\tequity | 6,970.9 | 6,980.4 | 7,382.1 | 7,409.4 | 6,160.1 |
| Total\tliabilities\tand\tequity | $18,330.2 | $18,641.7 | $19,427.4 | $19,607.8 | $17,535.6 |
| SELECTED\tCASH\tFLOW\tINFORMATION |  |  |  |  |  |
| Cash\tprovided\tby\toperating\tactivities | $1,939.7 | $1,999.8 | $1,815.6 | $1,559.8 | $1,203.0 |
| Cash\tused\tfor\tinvesting\tactivities | (829.5) | (915.8) | (848.3) | (2,078.7) | (487.9) |
| Cash\tused\tfor\tfinancing\tactivities | (868.2) | (1,150.9) | (1,071.0) | (292.6) | (1,393.6) |
| Depreciation\tand\tamortization | 850.7 | 859.5 | 872.0 | 816.2 | 714.5 |
| Capital\texpenditures | 707.4 | 771.0 | 748.7 | 625.1 | 574.5 |
| Cash\tdividends\tdeclared\tper\tcommon\tshare | 1.420 | 1.340 | 1.155 | 0.965 | 0.830 |
| SELECTED\tFINANCIAL\tMEASURES/OTHER |  |  |  |  |  |
| Total\tdebt | $6,687.0 | $6,465.5 | $6,548.2 | $6,875.8 | $6,505.2 |
| Total\tdebt\tto\tcapitalization | 49.0 % | 48.1 % | 47.0 % | 48.1 % | 51.4 % |
| Book\tvalue\tper\tcommon\tshare | $23.65 | $23.35 | $24.40 | $24.39 | $20.62 |
| Return\ton\tbeginning\tequity | 17.9 % | 13.8 % | 16.5 % | 15.8 % | 12.2 % |
| Dividends\tper\tshare/diluted\tearnings\tper\tcommon\tshare | 34.3 % | 40.4 % | 29.4 % | 30.5 % | 35.3 % |
| Net\tinterest\tcoverage | 7.2 | 6.4 | 7.6 | 5.9 | 4.7 |
| Year\tend\tmarket\tcapitalization | $34,207.7 | $33,852.7 | $31,340.6 | $31,399.4 | $21,190.5 |
| Annual\tcommon\tstock\tprice\trange | \t$\t124.60\t- | \t$\t122.48\t- | \t$\t118.46\t- | \t$\t108.34\t- | $\t72.79\t- |
|  | 98.62 | 97.78 | 97.65 | 71.99 | 57.44 |
| Number\tof\temployees | 47,565 | 47,145 | 47,430 | 45,415 | 40,860 |

(2)	Amounts	exclude	the	impact	of	special	(gains)	and	charges	and	discrete	tax	items.

(3)	During	2015,	the	Company	changed	its	accounting	policy	for	presenting	derivatives	subject	to	master	netting	agreements	with	the	same	counterparties,	resulting	in	a reduction	in	its	December	31,	2014	current	assets	and	current	liabilities.

(4)	During	2015,	the	Company	adopted	the	accounting	guidance	related	to	simplifying	the	presentation	of	debt	issue	costs,	resulting	in	reductions	to	other	assets,	current liabilities	and	long-term	debt	across	the	2012	to	2014	years	presented.

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

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

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

# Comparability	of	Results

# Fixed	Currency	Foreign	Exchange	Rates

Management	evaluates	the	sales	and	operating	income	performance	of	our	non-U.S.	dollar	functional	currency	international	operations	based on	fixed	currency	exchange	rates,	which	eliminate	the	impact	of	exchange	rate	fluctuations	on	our	international	operations.	Fixed	currency amounts	are	updated	annually	at	the	beginning	of	each	year	based	on	translation	into	U.S.	dollars	at	foreign	currency	exchange	rates established	by	management,	with	all	periods	presented	using	such	rates.	Fixed	currency	exchange	rates	are	generally	based	on	existing	market rates	at	the	time	they	are	established.	Fixed	currency	amounts	for	both	2015	and	2014	also	reflect	all	Venezuelan	bolivar	operations,	prior	to	the deconsolidation	of	our	Venezuelan	operations,	at	the	Marginal	Currency	System	("SIMADI")	rate	at	year	end	2015	of	approximately	200 bolivares	to	1	U.S.	dollar.	Public	currency	rate	data	provided	within	the	"Segment	Performance"	section	of	this	MD&A	reflect	amounts	translated at	actual	public	average	rates	of	exchange	prevailing	during	the	corresponding	period,	and	is	provided	for	informational	purposes	only.

# Venezuela	Related	Activities

Effective	as	of	the	end	of	the	fourth	quarter	of	2015,	we	deconsolidated	our	Venezuelan	subsidiaries.	Prior	to	deconsolidation,	due	to	the country's	highly	inflationary	economy,	the	functional	currency	of	our	Venezuelan	subsidiaries	was	the	U.S.	dollar.	As	a	result,	currency remeasurement	adjustments	for	non-U.S.	dollar	denominated	monetary	assets	and	liabilities	of	our	Venezuelan	subsidiaries	and	other transactional	foreign	currency	exchange	gains	and	losses	were	reflected	in	earnings.	Across	the	second	through	fourth	quarters	of	2015,	the Venezuelan	bolivar	operations	within	our	Water,	Paper,	Food	&	Beverage,	Institutional	and	Energy	operating	segments	were	converted	from	the official	exchange	rate	at	the	time	of	6.3	bolivares	to	1	U.S.	dollar	to	the	SIMADI	rate	at	the	time	of	approximately	200	bolivares	to	1	U.S.	dollar. As	noted	above,	within	our	fixed	currency	sales	and	operating	results,	to	present	our	historical	Venezuelan	bolivar	operations	at	a	consistent conversion	rate,	we	have	reflected	all	Venezuelan	bolivar	results	for	the	2015	and	2014	reporting	years	at	a	SIMADI	conversion	rate	of approximately	200	bolivares	to	1	U.S.	dollar.

# Impact	of	Acquisitions	and	Divestitures

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

# EXECUTIVE	SUMMARY

We	continued	to	work	aggressively	through	2016's	difficult	environment,	where	lackluster	global	economies,	significantly	unfavorable	foreign currency	translation	and	continued	depressed	energy	market	activity	presented	multiple	headwinds	to	our	growth.		We	once	again	delivered superior	results	for	customers	at	the	lowest	total	operating	cost	to	them,	while	also	working	aggressively	to	deliver	margin	improvement.	We also	continued	to	make	significant	investments	in	our	customer,	field	and	infrastructure	technology	as	well	as	in	our	talent	management systems,	all	key	areas	that	will	be	critical	to	our	long-term	success.

In	this	environment,	our	Global	Institutional,	Global	Industrial	and	Other	segments	continued	to	show	good	fixed	currency	sales	and	earnings results.	However,	these	were	offset	by	a	decline	in	the	Global	Energy	segment,	coupled	with	significantly	unfavorable	currency	translation	due to	the	strong	dollar	appreciation	relative	to	other	currencies.	We	worked	aggressively	to	offset	these	headwinds,	while	making	progress	in	our work	to	strengthen	our	businesses	and	position	them	for	better	growth	in	2017.

Reported	sales	declined	3%	to	$13.2	billion	in	2016	from	$13.5	billion	in	2015.	Sales	were	negatively	impacted	by	unfavorable	foreign	currency exchange	rates	compared	to	the	prior	year.	When	measured	in	fixed	rates	of	foreign	currency	exchange,	fixed	currency	sales	were	flat compared	to	the	prior	year.	See	the	section	entitled	"Non-GAAP	Financial	Measures"	within	this	MD&A	for	further	information	on	our	non-GAAP measures	and	the	"Net	Sales"	table	on	page	30	and	the	"Sales	by	Reportable	Segment"	table	on	page	36	for	reconciliation	information.

# Gross	Margin

Our	reported	gross	margin	was	47.5%	of	sales	for	2016,	which	compared	to	our	2015	reported	gross	margin	of	46.7%.	Excluding	the	impact	of special	(gains)	and	charges	included	in	cost	of	sales	from	both	2016	and	2015,	our	adjusted	gross	margin	was	48.0%	in	2016	and	47.3%	in 2015.	See	the	section	entitled	"Non-GAAP	Financial	Measures"	within	this	MD&A	for	further	information	on	our	non-GAAP	measures	and	the "Cost	of	Sales	and	Gross	Profit	Margin"	table	on	page	30	for	reconciliation	information.

# Operating	Income

Reported	operating	income	increased	23%	to	$1.9	billion	in	2016,	compared	to	$1.6	billion	in	2015.	Adjusted	operating	income,	excluding	the impact	of	special	(gains)	and	charges,	decreased	2%	in	2016.	When	measured	in	fixed	rates	of	foreign	currency	exchange,	adjusted	fixed currency	operating	income	increased	3%.	See	the	section	entitled	"Non-GAAP	Financial	Measures"	within	this	MD&A	for	further	information	on our	non-GAAP	measures	and	the	"Operating	Income"	table	on	page	34	and	Operating	Income	by	Reportable	Segment	table	on	page	36	for reconciliation	information.

# Earnings	Attributable	to	Ecolab	Per	Common	Share	("EPS")

Reported	diluted	EPS	increased	25%	to	$4.14	in	2016	compared	to	$3.32	in	2015.	Special	(gains)	and	charges	had	an	impact	on	both	years, driven	primarily	by	Energy	related	charges	in	2016	and	Venezuelan	related	actions,	restructuring	charges	and	other	gains	and	charges	in	both 2016	and	2015.	Also	in	2015,	special	(gains)	and	charges	included	acquisition	and	integration	related	costs	that	were	completed	during	the fourth	quarter	of	2015.	Adjusted	diluted	EPS,	which	exclude	the	impact	of	special	(gains)	and	charges	and	discrete	tax	items	from	both	2016	and 2015	were	flat	at	$4.37	in	both	2016	and	2015.	See	the	section	entitled	"Non-GAAP	Financial	Measures"	within	this	MD&A	for	further information	on	our	non-GAAP	measures,	and	the	"Diluted	EPS"	table	on	page	35	for	reconciliation	information.

# Balance	Sheet

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

# Net	Debt	to	EBITDA

Our	net	debt	to	earnings	before	interest,	taxes,	depreciation	and	amortization	("EBITDA")	was	2.3	and	2.6	for	2016	and	2015,	respectively.	Our net	debt	to	adjusted	EBITDA,	defined	as	the	sum	of	EBITDA	and	special	(gains)	and	charges	impacting	EBITDA,	was	2.2	for	both	2016	and 2015.	We	view	these	ratios	as	important	indicators	of	the	operational	and	financial	health	of	our	organization.	See	the	section	entitled	"Non- GAAP	Financial	Measures"	within	this	MD&A	for	further	information	on	our	non-GAAP	measures,	and	the	"Net	Debt	to	EBITDA"	table	on	page 40	for	reconciliation	information.

# Cash	Flow

Cash	flow	from	operating	activities	was	$1.9	billion	in	2016	compared	to	$2.0	billion	in	2015.	We	continued	to	generate	strong	cash	flow	from operations,	allowing	us	to	fund	our	ongoing	operations,	acquisitions,	investments	in	our	business,	debt	repayments,	pension	obligations	and return	cash	to	our	shareholders	through	share	repurchases	and	dividend	payments.	See	the	section	entitled	"Cash	Flows"	within	this	MD&A	for further	information.

We	increased	our	quarterly	cash	dividend	6%	in	December	2016	to	an	indicated	annual	rate	of	$1.48	per	share.	The	increase	represents	our 25th	consecutive	annual	dividend	rate	increase	and	the	80th	consecutive	year	we	have	paid	cash	dividends.	Our	outstanding	dividend	history reflects	our	continued	growth	and	development,	strong	cash	flows,	solid	financial	position	and	confidence	in	our	business	prospects	for	the years	ahead.

# CRITICAL	ACCOUNTING	ESTIMATES

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

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

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

# Revenue	Recognition

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

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

# Valuation	Allowances	and	Accrued	Liabilities

# Allowances	for	Doubtful	Accounts

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

Our	allowance	for	doubtful	accounts	balance	was	$68	million	and	$75	million,	as	of	December	31,	2016	and	2015,	respectively.	These	amounts include	our	allowance	for	sales	returns	and	credits	of	$14	million	and	$15	million	as	of	December	31,	2016	and	2015,	respectively.	Our	bad	debt expense	as	a	percent	of	reported	net	sales	was	0.2%	in	2016,	2015	and	2014.	We	believe	that	it	is	reasonably	likely	that	future	results	will	be consistent	with	historical	trends	and	experience.	However,	if	the	financial	condition	of	our	customers	were	to	deteriorate,	resulting	in	an	inability to	make	payments,	or	if	unexpected	events,	economic	downturns,	or	significant	changes	in	future	trends	were	to	occur,	additional	allowances may	be	required.

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

# Accrued	Liabilities

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

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

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

# Actuarially	Determined	Liabilities

# Pension	and	Postretirement	Healthcare	Benefit	Plans

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

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

· The	discount	rate	assumptions	for	our	U.S.	plans	are	assessed	using	a	yield	curve	constructed	from	a	subset	of	bonds	yielding	greater	than the	median	return	from	a	population	of	non-callable,	corporate	bond	issues	rated	Aa	by	Moody's	Investor	Services	or	AA	by	Standard	& Poors.	The	discount	rate	is	calculated	by	matching	the	plans'	projected	cash	flows	to	the	bond	yield	curve.	For	2016,	we	elected	to measure	service	and	interest	costs	by	applying	the	specific	spot	rates	along	that	yield	curve	to	the	plans'	liability	cash	flows.	We	believe this	approach	provides	a	more	precise	measurement	of	service	and	interest	costs	by	aligning	the	timing	of	the	plans'	liability	cash	flows	to the	corresponding	spot	rates	on	the	yield	curve.	For	2015	and	2014,	we	measured	service	and	interest	costs	utilizing	a	single	weighted- average	discount	rate	derived	from	the	yield	curve	used	to	measure	the	plan	obligations.	The	change	in	approach	did	not	affect	the measurement	of	our	plan	obligations	or	the	funded	status	of	our	plans.	In	determining	our	U.S.	pension	obligations	for	2016,	our	weighted- average	discount	rate	decreased	to	4.27%	from	4.51%	at	year-end	2015.	In	determining	our	U.S.	postretirement	health	care	obligation	for 2016,	our	weighted-average	discount	rate	decreased	to	4.14%	from	4.38%	at	year-end	2015.

· The	expected	rate	of	return	on	plan	assets	reflects	asset	allocations,	investment	strategies	and	views	of	investment	advisors,	and represents	our	expected	long-term	return	on	plan	assets.	Our	weighted-average	expected	return	on	U.S.	plan	assets	used	for	determining the	2015,	2016	and	2017	U.S.	pension	and	U.S.	postretirement	health	care	expenses	was	7.75%.

· Projected	salary	and	health	care	cost	increases	are	based	on	our	long-term	actual	experience,	the	near	term	outlook	and	assumed	inflation. Our	weighted-average	projected	salary	increase	used	in	determining	the	2015	and	2016	U.S.	pension	expenses	was	4.32%	and	for	2017	it is	4.03%.	For	postretirement	benefit	measurement	purposes	as	of	December	31,	2016,	the	annual	rates	of	increase	in	the	per	capita	cost	of covered	health	care	were	assumed	to	be	6.75%	for	pre-65	costs	and	7.25%	for	post-65	costs.	The	rates	are	assumed	to	decrease	each year	until	they	reach	5%	in	2023	and	remain	at	those	levels	thereafter.

· In	determining	our	U.S.	pension	and	U.S.	postretirement	health	care	obligation	for	2016,	we	utilized	the	most	recent	mortality	table,	MP- 2016	projection	scale	(applied	to	the	RP-2006	mortality	table).

The	effects	of	actual	results	differing	from	our	assumptions,	as	well	as	changes	in	assumptions,	are	reflected	in	the	unrecognized	actuarial	loss and	amortized	over	future	periods	and,	therefore,	will	generally	affect	our	recognized	expense	in	future	periods.	Significant	differences	in	actual experience	or	significant	changes	in	assumptions	may	materially	affect	future	pension	and	other	postretirement	obligations.	The	unrecognized net	actuarial	loss	on	our	U.S.	qualified	and	non-qualified	pension	plans	increased	to	$533	million	as	of	December	31,	2016	from	$513	million	as of	December	31,	2015	(both	before	tax),	primarily	due	to	current	period	net	actuarial	losses.

The	effect	of	a	decrease	in	the	discount	rate	or	decrease	in	the	expected	return	on	assets	assumption	as	of	December	31,	2016,	on	the December	31,	2016	funded	status	and	2017	expense	is	shown	below,	assuming	no	changes	in	benefit	levels	and	no	amortization	of	gains	or losses	for	our	significant	U.S.	plans:

# Effect	on	U.S.	Pension	Plans

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

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

# Self	Insurance

Globally	we	have	insurance	policies	with	varying	deductible	levels	for	property	and	casualty	losses.	We	are	insured	for	losses	in	excess	of	these deductibles,	subject	to	policy	terms	and	conditions	and	have	recorded	both	a	liability	and	an	offsetting	receivable	for	amounts	in	excess	of	these deductibles.	We	are	self-insured	for	health	care	claims	for	eligible	participating	employees,	subject	to	certain	deductibles	and	limitations.	We determine	our	liabilities	for	claims	on	an	actuarial	basis.

# Restructuring

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

Restructuring	charges	have	been	included	as	a	component	of	cost	of	sales,	special	(gains)	and	charges	and	net	income	(loss)	attributable	to noncontrolling	interest	on	the	Consolidated	Statement	of	Income.	Amounts	included	as	a	component	of	cost	of	sales	include	supply	chain	related severance	and	other	asset	write-downs	associated	with	combining	operations.	Restructuring	liabilities	have	been	classified	as	a	component	of both	other	current	and	other	noncurrent	liabilities	on	the	Consolidated	Balance	Sheet.	Restructuring	charges	were	substantially	completed	within our	two	active	plans	(Combined	and	Energy)	during	the	fourth	quarter	of	2015.	Our	restructuring	liability	balance	was	$40	million	and	$90	million as	of	December	31,	2016	and	2015,	respectively.

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

# Income	Taxes

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

# Effective	Income	Tax	Rate

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

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

# Deferred	Tax	Assets	and	Liabilities	and	Valuation	Allowances

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

During	the	first	quarter	of	2016	we	early-adopted	the	accounting	guidance	that	requires	all	deferred	tax	assets	and	liabilities	to	be	classified	as noncurrent	on	the	Consolidated	Balance	Sheet,	using	the	prospective	application	method.	Periods	prior	to	the	first	quarter	of	2016	have	not been	retrospectively	adjusted	for	adoption	of	this	guidance.

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

# Uncertain	Tax	Positions

A	number	of	years	may	elapse	before	a	particular	tax	matter,	for	which	we	have	established	a	reserve,	is	audited	and	finally	resolved.	The number	of	tax	years	with	open	tax	audits	varies	depending	on	the	tax	jurisdiction.	The	Internal	Revenue	Service	("IRS")	has	completed	its examinations	of	our	federal	income	tax	returns	(Ecolab	and	Nalco)	through	2012.	The	IRS	has	completed	examinations	of	our	U.S.	federal income	tax	returns	(Champion)	through	2011	and	tax	year	2012	is	closed	by	statute	of	limitations.	Our	U.S.	federal	income	tax	returns	for	the years	2013	and	2014	are	currently	under	audit.	In	addition	to	the	U.S.	federal	examinations,	we	have	ongoing	audit	activity	in	several	U.S.	state and	foreign	jurisdictions.

The	tax	positions	we	take	are	based	on	our	interpretations	of	tax	laws	and	regulations	in	the	applicable	federal,	state	and	international jurisdictions.	We	believe	that	our	tax	returns	properly	reflect	the	tax	consequences	of	our	operations,	and	that	our	reserves	for	tax	contingencies are	appropriate	and	sufficient	for	the	positions	taken.	Because	of	the	uncertainty	of	the	final	outcome	of	these	examinations,	we	have	reserved for	potential	reductions	of	tax	benefits	(including	related	interest	and	penalties)	for	amounts	that	do	not	meet	the	more-likely-than-not	thresholds for	recognition	and	measurement	as	required	by	authoritative	guidance.	The	tax	reserves	are	reviewed	throughout	the	year,	taking	into	account new	legislation,	regulations,	case	law	and	audit	results.	Settlement	of	any	particular	issue	could	result	in	offsets	to	other	balance	sheet accounts,	cash	payments	or	receipts	and/or	adjustments	to	tax	expense.	The	majority	of	our	tax	reserves	are	presented	in	the	Consolidated Balance	Sheet	within	other	non-current	liabilities.	Our	gross	liability	for	uncertain	tax	positions	was	$76	million	and	$75	million	as	of December	31,	2016	and	2015,	respectively.

For	additional	information	on	income	taxes	and	adoption	of	new	accounting	guidance	related	to	classification	of	deferred	tax	assets	and	liabilities on	the	Consolidated	Balance	Sheet,	see	Note	12	and	Note	2,	respectively.

# Long-Lived	Assets,	Intangible	Assets	and	Goodwill

# Long-Lived	and	Amortizable	Intangible	Assets

We	periodically	review	our	long-lived	and	amortizable	intangible	assets,	the	net	value	of	which	was	$6.4	billion	and	$6.5	billion	as	of December	31,	2016	and	2015,	respectively,	for	impairment	and	to	assess	whether	significant	events	or	changes	in	business	circumstances indicate	that	the	carrying	value	of	the	assets	may	not	be	recoverable.	Such	circumstances	may	include	a	significant	decrease	in	the	market	price of	an	asset,	a	significant	adverse	change	in	the	manner	in	which	the	asset	is	being	used	or	in	its	physical	condition	or	history	of	operating	or cash	flow	losses	associated	with	the	use	of	the	asset.	Impairment	losses	could	occur	when	the	carrying	amount	of	an	asset	exceeds	the anticipated	future	undiscounted	cash	flows	expected	to	result	from	the	use	of	the	asset	and	its	eventual	disposition.	The	amount	of	the impairment	loss	to	be	recorded,	if	any,	is	calculated	as	the	excess	of	the	asset's	carrying	value	over	its	estimated	fair	value.

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

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

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

# Goodwill	and	Indefinite	Life	Intangible	Assets

We	had	total	goodwill	of	$6.4	billion	and	$6.5	billion	as	of	December	31,	2016	and	2015,	respectively.	We	test	our	goodwill	for	impairment	at	the reporting	unit	level	on	an	annual	basis	during	the	second	quarter.	Our	reporting	units	are	aligned	with	our	ten	operating	segments.

For	our	2016	impairment	assessment,	we	completed	our	assessment	for	goodwill	impairment	across	our	ten	reporting	units	through	a quantitative	analysis,	utilizing	a	discounted	cash	flow	approach.	The	two-step	quantitative	process	involved	comparing	the	estimated	fair	value of	each	reporting	unit	to	the	reporting	unit's	carrying	value,	including	goodwill.	If	the	fair	value	of	a	reporting	unit	exceeds	its	carrying	value, goodwill	of	the	reporting	unit	is	considered	not	to	be	impaired,	and	the	second	step	of	the	impairment	test	is	unnecessary.	If	the	carrying	amount of	the	reporting	unit	exceeds	its	fair	value,	the	second	step	of	the	goodwill	impairment	test	would	be	performed	to	measure	the	amount	of impairment	loss	to	be	recorded,	if	any.	Our	goodwill	impairment	assessment	for	2016	indicated	the	estimated	fair	value	of	each	of	our	reporting units	exceeded	the	unit's	carrying	amount	by	a	significant	margin.	We	will	continue	to	assess	the	need	to	test	our	reporting	units	for	impairment during	interim	periods	between	our	scheduled	annual	assessments.	No	events	during	the	second	half	of	2016	indicated	a	need	to	update	our conclusions	reached	during	the	second	quarter	of	2016.

As	part	of	the	Nalco	merger,	we	added	the	"Nalco"	trade	name	as	an	indefinite	life	intangible	asset,	the	total	value	of	which	was	$1.2	billion	as	of December	31,	2016	and	2015.	The	carrying	value	of	the	indefinite	life	trade	name	was	subject	to	annual	impairment	testing,	using	a	relief	from royalty	assessment	method,	during	the	second	quarter	of	2016.	Based	on	this	testing,	no	adjustment	to	the	carrying	value	was	necessary.

Additionally,	no	events	during	the	second	half	of	2016	indicated	a	need	to	update	our	conclusions	reached	during	the	second	quarter	of	2016.

# RESULTS	OF	OPERATIONS

# Net	Sales

| (millions) | 2016 | 2015 | 2014 | 2016 | 2015 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Reported\tGAAP\tnet\tsales | $13,152.8 | $13,545.1 | $14,280.5 | (3)% | (5)% |
| Effect\tof\tforeign\tcurrency\ttranslation | (197.8) | (630.8) | (1,514.8) |  |  |
| Non-GAAP\tfixed\tcurrency\tsales | $12,955.0 | $12,914.3 | $12,765.7 | 0 % | 1 % |

As	shown	in	the	table	above,	foreign	currency	exchange	negatively	impacted	sales	growth	during	both	2016	and	2015	reporting	years.	The percentage	components	of	the	year-over-year	sales	change	are	shown	below:

| (percent) | 2016 | 2015 |
| :--- | :--- | :--- |
| Volume | (1)% | 0% |
| Price\tchanges | 0 | 0 |
| Acquisition\tadjusted\tfixed\tcurrency\tsales\tchange | (1) | 0 |
| Acquisitions\t&amp;\tdivestitures | 1 | 1 |
| Fixed\tcurrency\tsales\tchange | 0 | 1 |
| Foreign\tcurrency\ttranslation | (3) | (6) |
| Reported\tGAAP\tnet\tsales\tchange | (3)% | (5)% |

# Cost	of	Sales	("COS")	and	Gross	Profit	Margin	("Gross	Margin")

|  | 2016 |  | 2015 |  | 2014 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Gross |  | Gross |  | Gross |
| (millions/percent) | COS | Margin | COS | Margin | COS | Margin |
| Reported\tGAAP\tCOS\tand\tgross\tmargin | $6,898.9 | 47.5 % | $7,223.5 | 46.7 % | $7,679.1 | 46.2 % |
| Special\t(gains)\tand\tcharges | 66.0 | 0.5 | 80.6 | 0.6 | 14.3 | 0.1 |
| Non-GAAP\tadjusted\tCOS\tand\tgross\tmargin | $6,832.9 | 48.0 % | $7,142.9 | 47.3 % | $7,664.8 | 46.3 % |

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

Our	reported	gross	margin	was	47.5%,	46.7%	and	46.2%	for	2016,	2015	and	2014,	respectively.	Our	2016,	2015	and	2014	reported	gross margins	were	negatively	impacted	by	special	(gains)	and	charges	of	$66.0	million,	$80.6	million	and	$14.3	million,	respectively.	Special	(gains) and	charges	items	impacting	COS	are	shown	within	the	special	(gains)	and	charges	table	on	page	31.

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

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

# Selling,	General	and	Administrative	Expenses	("SG&A")

| (percent) | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- |
| SG&amp;A\tRatio | 32.7 % | 32.1 % | 32.1 % |

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

The	consistent	SG&A	ratio	comparing	2015	against	2014	resulted	from	the	impact	of	net	synergies	and	cost	savings	actions	which	were	offset by	investments	in	the	business.

# Special	(Gains)	and	Charges

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

| (millions) | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- |
| Cost\tof\tsales |  |  |  |
| Restructuring\tactivities | $(0.4) | $16.5 | $13.9 |
| Inventory\tcosts | (6.2) | (14.5) | \t- |
| Inventory\treserves | \t- | 20.6 | \t- |
| Energy\trelated\tcharges | 62.6 | \t- | \t- |
| Fixed\tasset\timpairment\tand\tother\tinventory\tcharges | 10.0 | 24.7 | 0.4 |
| Venezuela\trelated\tactivities | \t- | 33.3 | \t- |
| Subtotal | 66.0 | 80.6 | 14.3 |
| Special\t(gains)\tand\tcharges |  |  |  |
| Restructuring\tactivities | (8.7) | 83.8 | 69.2 |
| Champion\tand\tNalco\tintegration\tcosts | \t- | 18.7 | 28.4 |
| Energy\trelated\tcharges | 14.2 | \t- | \t- |
| Venezuela\trelated\tactivities | (7.8) | 256.0 | \t- |
| Other | 41.8 | 56.3 | (28.8) |
| Subtotal | 39.5 | 414.8 | 68.8 |
| Operating\tincome\tsubtotal | 105.5 | 495.4 | 83.1 |
| Net\tincome\tattributable\tto\tnoncontrolling\tinterest |  |  |  |
| Restructuring\tactivities | \t- | (1.7) | \t- |
| Venezuela\trelated\tactivities | \t- | (11.1) | \t- |
| Subtotal | \t- | (12.8) | \t- |
| Total\tspecial\t(gains)\tand\tcharges | $105.5 | $482.6 | $83.1 |

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

# Restructuring	Activities

Restructuring	charges	have	been	included	as	a	component	of	cost	of	sales,	special	(gains)	and	charges	and	net	income	(loss)	attributable	to noncontrolling	interest	on	the	Consolidated	Statement	of	Income.	Further	details	related	to	our	restructuring	charges	are	included	in	Note	3.

# Energy	Restructuring	Plan

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

Restructuring	charges	within	the	Energy	Restructuring	Plan	were	substantially	completed	during	the	fourth	quarter	of	2015	with	certain immaterial	actions	continuing	into	2016.	Cumulative	restructuring	charges	of	$89	million	($60	million	after	tax	and	net	of	the	impact	from noncontrolling	interest),	are	materially	consistent	with	our	initial	expectation	of	$80	million	($55	million	after	tax).

We	recorded	restructuring	charges	of	$4.5	million	($2.6	million	after	tax)	or	$0.01	per	diluted	share,	$47.2	million	($33.0	million	after	tax)	or $0.10	per	diluted	share	and	$9.5	million	($6.4	million	after	tax)	or	$0.02	per	diluted	share	during	2016,	2015	and	2014,	respectively.	As	a	result of	the	ownership	structure	of	certain	entities	holding	Energy	Restructuring	charges,	we	reflected	$1.7	million	of	the	2015	charges	as	a component	of	net	income	(loss)	attributable	to	noncontrolling	interest	on	the	Consolidated	Statement	of	Income.

Net	cash	payments	under	the	Energy	Restructuring	Plan	were	$14.4	million	during	2016	and	$42.5	million	from	2013	through	2015.	The	majority of	cash	payments	under	this	plan	are	related	to	severance,	with	the	current	accrual	expected	to	be	paid	over	a	period	of	a	few	months	to	several quarters.	We	anticipate	the	remaining	cash	expenditures	will	be	funded	from	operating	activities.

During	2016	the	Energy	Restructuring	Plan	achieved	approximately	$25	million	of	incremental	savings	as	compared	to	2015.	Cumulative	cost savings	from	this	plan,	along	with	synergies	achieved	in	connection	with	the	acquisition,	were	approximately	$150	million	through	2016	and	are materially	consistent	with	our	original	expectations.

# Combined	Restructuring	Plan

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

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

Restructuring	charges	within	the	Combined	Plan	were	substantially	completed	during	the	fourth	quarter	of	2015,	with	certain	immaterial	actions continuing	into	2016.	Cumulative	restructuring	charges	of	$391	million	($297	million	after	tax),	are	materially	consistent	with	our	initial expectation	of	$400	million	($300	million	after	tax).

We	recorded	net	gains	of	$13.6	million	($13.4	million	after	tax)	or	$0.05	per	diluted	share	during	2016	primarily	related	to	gains	on	the	sale	of certain	facilities	related	to	previous	restructuring	initiatives.	We	recorded	net	charges	of	$53.0	million	($44.2	million	after	tax)	or	$0.15	per	diluted share	and	$73.5	million	($58.5	million	after	tax)	or	$0.19	per	diluted	share	during	2015	and	2014,	respectively.

Net	cash	payments	under	the	Combined	Plan	were	$14.9	million	during	2016	and	$303.1	million	from	2011	through	2015.	The	majority	of	cash payments	under	the	Combined	Plan	are	related	to	severance,	with	the	current	accrual	expected	to	be	paid	over	a	period	of	a	few	months	to several	quarters.	We	anticipate	the	remaining	cash	expenditures	will	continue	to	be	funded	from	operating	activities.

During	2016,	the	Combined	Plan	achieved	approximately	$25	million	of	incremental	savings	as	compared	to	2015.	Cumulative	cost	savings	from this	plan,	along	with	annual	cost	saving	and	synergies,	were	approximately	$420	million	through	2016	and	are	materially	consistent	with	our original	expectations.

# Non-Restructuring	Special	(Gains)	and	Charges

# Energy	related	charges

Oil	industry	activity	remained	depressed	during	2016	when	compared	with	2014	levels,	resulting	from	continued	excess	oil	supply	pressures, which	have	negatively	impacted	exploration	and	production	investments	in	the	energy	industry,	particularly	in	North	America.	During	the	second and	fourth	quarters	of	2016,	as	a	result	of	these	conditions	and	their	corresponding	impact	on	our	business	outlook,	we	recorded	total	charges	of $76.8	million	($50.0	million	after	tax)	or	$0.17	per	diluted	share,	comprised	of	inventory	write-downs	and	related	disposal	costs,	fixed	asset charges,	headcount	reductions	and	other	charges.

The	inventory	write-downs	and	related	disposal	costs	of	$40.5	million	include	adjustments	due	to	the	significant	decline	in	activity	and	related prices	of	certain	specific-use	and	other	products,	coupled	with	declines	in	replacement	costs,	as	well	as	estimated	costs	to	dispose	the respective	excess	inventory.	The	fixed	asset	charges	of	$20.4	million	resulted	from	the	write-down	of	certain	assets	related	to	the	reduction	of certain	aspects	of	our	North	American	operations	within	the	Global	Energy	segment,	as	well	as	abandonment	of	certain	projects	under construction.	The	carrying	value	of	the	corresponding	fixed	assets	was	reduced	to	zero.	The	employee	termination	costs	of	$13.1	million	include a	reduction	in	our	Global	Energy	segment's	global	workforce	to	better	align	its	workforce	with	anticipated	activity	levels	in	the	near	term.	As	of the	end	of	2016,	we	had	$7.4	million	of	corresponding	severance	remaining	to	be	paid,	which	is	expected	to	be	paid	within	the	next	twelve months	and	be	funded	from	operating	activities.

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

Effective	as	of	the	end	of	the	fourth	quarter	of	2015,	we	deconsolidated	our	Venezuelan	subsidiaries	and	began	accounting	for	the	investments in	our	Venezuelan	subsidiaries	using	the	cost	method	of	accounting	effective	in	the	first	quarter	of	2016.	We	used	the	cost	method	of	accounting for	the	investment	in	our	Venezuelan	subsidiaries	throughout	2016	as	the	conditions	within	Venezuela	driving	this	decision	remained	in	place during	2016.	Prior	to	deconsolidation,	we	remeasured	our	Venezuelan	bolivar	operations	within	our	Water,	Paper,	Food	&	Beverage,	Institutional and	the	bolivar	portion	of	our	Venezuelan	operations	within	Energy	operating	segments	from	the	official	exchange	rate	at	the	time	of	6.3 bolivares	to	1	U.S.	dollar	to	the	SIMADI	rate	at	the	time	of	approximately	200	bolivares	to	1	U.S.	dollar.	As	a	result	of	the	ownership	structure	of our	Food	&	Beverage	and	Institutional	operations	in	Venezuela,	we	reflected	a	portion	of	the	devaluation	impact	as	a	component	of	net	income (loss)	attributable	to	noncontrolling	interest	on	the	Consolidated	Statement	of	Income.	Upon	deconsolidation,	we	recorded	a	charge	to	fully	write off	our	intercompany	receivables	and	investment.	The	total	charges	during	2015	related	to	our	actions	in	Venezuela	were	$289.3	million	($246.8 million	after	tax).	As	a	result	of	the	ownership	structure	of	our	Food	&	Beverage	and	Institutional	operations	in	Venezuela,	we	reflected	$11.1 million	of	the	above	charges	as	a	component	of	net	income	(loss)	attributable	to	noncontrolling	interest	on	the	Consolidated	Statement	of Income,	resulting	in	a	net	charge	of	$235.7	million	or	$0.78	per	diluted	share.

During	2016,	we	recorded	a	gain	of	$7.8	million	($4.9	million	after	tax)	or	$0.02	per	diluted	share	resulting	from	U.S.	dollar	cash	recoveries	of intercompany	receivables	written	off	at	the	time	of	deconsolidation.

Venezuela	related	charges	have	been	included	as	a	component	of	cost	of	sales,	special	(gains)	and	charges	and	net	income	(loss)	attributable to	noncontrolling	interest	on	the	Consolidated	Statement	of	Income.

# Fixed	asset	impairment	and	other	inventory	charges

During	2015,	we	recorded	a	fixed	asset	impairment	charge	of	$24.7	million	($15.4	million	after	tax),	or	$0.05	per	diluted	share,	consisting	of certain	production	equipment	and	buildings	within	one	of	our	U.S.	plants.	The	impaired	facility	is	a	specialized	facility	used	for	dry	polymer production.	Due	to	market	contraction	in	the	oil	and	the	mining	industries,	and	the	aggressive	competitive	pricing	environment	for	dry	polymers, the	facility	has	not	reached	production	volumes	to	recover	the	value	of	the	underlying	fixed	assets.

During	2016,	we	recorded	an	additional	charge	of	$10.0	million	($6.3	million	after	tax)	or	$0.02	per	diluted	share	related	to	the	dry	polymer	fixed asset	impairment,	as	well	as	related	inventory	charges.	Subsequent	to	the	charge,	the	remaining	value	of	the	underlying	fixed	assets	is	less than	$5	million.	Inventory	charges	include	adjustments	due	to	the	significant	decline	in	activity	and	related	prices	of	the	corresponding	dry polymer	products.

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

# Inventory	costs	and	inventory	reserve

During	2015,	we	improved	and	standardized	estimates	related	to	our	inventory	reserves	and	product	costing,	resulting	in	a	net	pre-tax	charge	of approximately	$6	million.	Separately,	the	actions	resulted	in	a	charge	of	$20.6	million	($15.9	million	after	tax),	or	$0.05	per	diluted	share,	related to	inventory	reserve	calculations,	partially	offset	by	a	gain	of	$14.5	million	($12.2	million	after	tax),	or	$0.04	per	diluted	share,	related	to	the capitalization	of	certain	cost	components	into	inventory.	During	2016,	we	took	additional	actions	related	to	the	capitalization	of	certain	cost components	into	inventory,	which	resulted	in	a	gain	of	$6.2	million	($4.6	million	after	tax),	or	$0.02	per	diluted	share.

# Champion	and	Nalco	integration	costs

Integration	related	special	charges	for	the	Champion	acquisition	and	Nalco	merger	were	completed	during	the	fourth	quarter	of	2015,	and	we did	not	incur	any	special	charges	related	to	such	transactions	during	2016.	As	a	result	of	the	Champion	acquisition	and	Nalco	merger,	we incurred	charges	of	$18.7	million	($12.0	million	after	tax)	or	$0.05	per	diluted	share	and	$28.4	million	($19.8	million	after	tax)	or	$0.06	per	diluted share,	during	2015	and	2014,	respectively.	Champion	and	Nalco	integration	charges	have	been	included	as	a	component	of	special	(gains)	and charges	on	the	Consolidated	Statement	of	Income.

# Other	special	(gains)	and	charges

During	2016,	we	recorded	charges	of	$41.8	million	($26.4	million	after	tax)	or	$0.09	per	diluted	share,	primarily	consisting	of	litigation	related charges.

During	2015,	we	recorded	a	net	charge	of	$56.3	million	($34.5	million	after	tax),	or	$0.11	per	diluted	share,	primarily	made	up	of	litigation	related charges	and	the	recognition	of	a	loss	on	the	sale	of	a	portion	of	our	Ecovation	business,	offset	partially	by	the	recovery	of	funds	deposited	into escrow	as	part	of	the	Champion	transaction.

During	2014,	we	recorded	a	special	gain	of	$28.4	million	($23.3	million	after	tax),	or	$0.08	per	diluted	share,	as	a	result	of	a	favorable	licensing settlement	and	other	settlement	gains,	the	consolidation	of	the	Emirates	National	Chemicals	Company	LLC	("Emochem")	entity	and	removal	of the	corresponding	equity	method	investment	and	the	disposition	of	a	business.

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

# Operating	Income	and	Operating	Income	Margin

Our	reported	operating	income	increased	23%	when	comparing	2016	to	2015	and	decreased	20%	when	comparing	2015	to	2014.	Our	reported operating	income	for	2016,	2015	and	2014	was	impacted	by	special	(gains)	and	charges.	Excluding	the	impact	of	special	(gains)	and	charges from	all	three	years,	2016	adjusted	operating	income	decreased	2%	when	compared	to	2015	adjusted	operating	income	and	2015	adjusted operating	income	increased	1%	when	compared	to	2014	adjusted	operating	income.

As	shown	in	the	previous	table,	foreign	currency	translation	had	a	negative	impact	on	adjusted	operating	income	growth	for	both	2016	and 2015,	as	adjusted	fixed	currency	operating	income	increased	3%	for	2016	and	8%	for	2015.	Acquisitions	and	divestitures	negatively	impacted our	2016	adjusted	fixed	currency	operating	income	growth	rates	by	approximately	1	percentage	point.	In	2015,	acquisitions	and	divestitures added	1	percentage	point	to	fixed	currency	operating	income	growth.

As	addressed	further	in	the	"Segment	Performance"	section	of	this	MD&A,	comparisons	across	2014	to	2016	were	impacted	by	growth	in	Global Industrial,	Global	Institutional	and	Other	offset	by	the	continued	challenges	within	Global	Energy.

# Interest	Expense,	Net

Reported	net	interest	expense	totaled	$264.6	million,	$243.6	million	and	$256.6	million	during	2016,	2015	and	2014,	respectively.	The	increase in	2016	net	interest	expense	compared	to	2015	net	interest	expense	was	driven	primarily	by	higher	weighted	average	interest	rates	on outstanding	debt.	The	decrease	in	2015	net	interest	expense	compared	to	2014	net	interest	expense	was	driven	primarily	by	lower	weighted average	interest	rates	on	outstanding	debt.

# Provision	for	Income	Taxes

The	following	table	provides	a	summary	of	our	tax	rate:

| (percent) | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- |
| Reported\tGAAP\ttax\trate | 24.4 % | 22.8 % | 28.0 % |
| Tax\trate\timpact\tof: |  |  |  |
| Special\tgains\tand\tcharges | 1.0 | (0.4) | (0.1) |
| Discrete\ttax\titems | (0.2) | 3.5 | (0.7) |
| Non-GAAP\tadjusted\ttax\trate | 25.2 % | 25.9 % | 27.2 % |

Our	reported	tax	rate	for	2016,	2015	and	2014	includes	the	tax	impact	of	special	gains	and	charges	and	discrete	tax	items,	which	have	impacted the	comparability	of	our	historical	reported	tax	rates,	as	amounts	included	in	our	special	gains	and	charges	are	derived	from	tax	jurisdictions with	rates	that	vary	from	our	overall	non-GAAP	adjusted	tax	rate,	and	discrete	tax	items	are	not	necessarily	consistent	across	periods.	The	tax impact	of	special	gains	and	charges	and	discrete	tax	items	will	likely	continue	to	impact	comparability	of	our	reported	tax	rate	in	the	future.

Our	2016	reported	tax	rate	includes	$43.1	million	of	net	tax	benefits	on	special	gains	and	charges	and	net	expenses	of	$3.9	million	associated with	discrete	tax	items.	Our	2015	reported	tax	rate	includes	$105.7	million	of	net	tax	benefits	on	special	gains	and	charges	and	net	benefits	of $63.3	million	associated	with	discrete	tax	items.	Our	2014	reported	tax	rate	includes	$21.6	million	of	net	tax	benefits	on	special	gains	and charges	and	net	expense	of	$13.2	million	associated	with	discrete	tax	items.	The	corresponding	impact	of	these	items	on	the	reported	tax	rate	is shown	in	the	table	above.

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

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

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

The	decrease	in	our	adjusted	tax	rate	from	2014	to	2016	was	impacted	by	global	tax	planning	projects,	as	well	as	favorable	geographic	income mix.	Future	comparability	of	our	adjusted	tax	rate	may	be	impacted	by	various	factors,	including	but	not	limited	to,	U.S.	domestic	tax	reform proposals,	further	tax	planning	projects	and	geographic	income	mix.

# Net	Income	Attributable	to	Ecolab

| (millions) | 2016 | 2015 | 2014 | 2016 | 2015 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Reported\tGAAP\tnet\tincome\tattributable\tto\tEcolab | $1,229.6 | $1,002.1 | $1,202.8 | 23 % | (17)% |
| Adjustments: |  |  |  |  |  |
| Special\t(gains)\tand\tcharges,\tafter\ttax | 62.4 | 376.9 | 61.5 |  |  |
| Discrete\ttax\tnet\texpense\t(benefit) | 3.9 | (63.3) | 13.2 |  |  |
| Non-GAAP\tadjusted\tnet\tincome\tattributable\tto\tEcolab | $1,295.9 | $1,315.7 | $1,277.5 | (2)% | 3 % |

# Diluted	EPS

| (dollars) | 2016 | 2015 | 2014 | 2016 | 2015 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Reported\tGAAP\tdiluted\tEPS | $4.14 | $3.32 | $3.93 | 25 % | (16)% |
| Adjustments: |  |  |  |  |  |
| Special\t(gains)\tand\tcharges | 0.21 | 1.25 | 0.20 |  |  |
| Discrete\ttax\tnet\texpense\t(benefit) | 0.01 | (0.21) | 0.04 |  |  |
| Non-GAAP\tadjusted\tdiluted\tEPS | $4.37 | $4.37 | $4.18 | 0 % | 5 % |

Per	share	amounts	do	not	necessarily	sum	due	to	rounding.

Currency	translation	had	a	significant	unfavorable	impact	on	reported	and	adjusted	diluted	EPS	comparability	across	2014	to	2016,	with headwinds	of	approximately	$0.31	per	share	for	2016	compared	to	2015	and	approximately	$0.30	per	share	for	2015	compared	to	2014.

# SEGMENT	PERFORMANCE

The	non-U.S.	dollar	functional	international	amounts	included	within	our	reportable	segments	are	based	on	translation	into	U.S.	dollars	at	the fixed	currency	exchange	rates	used	by	management	for	2016.	The	difference	between	the	fixed	currency	exchange	rates	and	the	actual currency	exchange	rates	is	reported	as	"effect	of	foreign	currency	translation"	in	the	following	tables.	Fixed	currency	amounts	for	both	2015	and 2014	also	reflect	all	Venezuelan	bolivar	operations,	prior	to	deconsolidation	of	our	Venezuelan	operations,	at	a	SIMADI	rate	of	approximately	200 bolivares	to	1	U.S.	dollar.	All	other	accounting	policies	of	the	reportable	segments	are	consistent	with	U.S.	GAAP	and	the	accounting	policies described	in	Note	2.	Additional	information	about	our	reportable	segments	is	included	in	Note	17.

Fixed	currency	net	sales	and	operating	income	for	2016,	2015	and	2014	for	our	reportable	segments	are	shown	in	the	following	tables.

| (millions) | 2016 | 2015 | 2014 | 2016 | 2015 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Global\tIndustrial | $4,617.1 | $4,485.5 | $4,261.9 | 3 % | 5 % |
| Global\tInstitutional | 4,495.6 | 4,210.9 | 3,982.8 | 7 | 6 |
| Global\tEnergy | 3,035.8 | 3,470.8 | 3,815.8 | (13) | (9) |
| Other | 806.5 | 747.1 | 705.2 | 8 | 6 |
| Subtotal\tat\tfixed\tcurrency | 12,955.0 | 12,914.3 | 12,765.7 | 0 | 1 |
| Effect\tof\tforeign\tcurrency\ttranslation | 197.8 | 630.8 | 1,514.8 |  |  |
| Total\treported\tnet\tsales | $13,152.8 | $13,545.1 | $14,280.5 | (3)% | (5)% |

| (millions) | 2016 | 2015 | 2014 | 2016 | 2015 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Global\tIndustrial | $703.0 | $626.4 | $538.8 | 12 % | 16 % |
| Global\tInstitutional | 966.7 | 876.6 | 772.6 | 10 | 13 |
| Global\tEnergy | 337.1 | 465.5 | 534.8 | (28) | (13) |
| Other | 148.1 | 127.5 | 109.9 | 16 | 16 |
| Corporate | (272.1) | (663.8) | (252.4) |  |  |
| Subtotal\tat\tfixed\tcurrency | 1,882.8 | 1,432.2 | 1,703.7 | 31 | (16) |
| Effect\tof\tforeign\tcurrency\ttranslation | 32.2 | 129.1 | 251.3 |  |  |
| Total\treported\toperating\tincome | $1,915.0 | $1,561.3 | $1,955.0 | 23 % | (20)% |

|  | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- |
| Sales\tat\tfixed\tcurrency\t(millions) | $4,617.1 | $4,485.5 | $4,261.9 |
| Sales\tat\tpublic\tcurrency\t(millions) | 4,709.8 | 4,726.9 | 4,907.6 |
| Volume | 2 % | 2 % |  |
| Price\tchanges | 1 % | 1 % |  |
| Acquisition\tadjusted\tfixed\tcurrency\tsales\tchange | 2 % | 3 % |  |
| Acquisitions\tand\tdivestitures | 1 % | 2 % |  |
| Fixed\tcurrency\tsales\tchange | 3 % | 5 % |  |
| Foreign\tcurrency\ttranslation | (3)% | (9)% |  |
| Public\tcurrency\tsales\tchange | (0)% | (4)% |  |
| Operating\tincome\tat\tfixed\tcurrency\t(millions) | $703.0 | $626.4 | $538.8 |
| Operating\tincome\tat\tpublic\tcurrency\t(millions) | 719.9 | 673.0 | 643.1 |
| Fixed\tcurrency\toperating\tincome\tchange | 12 % | 16 % |  |
| Fixed\tcurrency\toperating\tincome\tmargin | 15.2 % | 14.0 % | 12.6 % |
| Acquisition\tadjusted\tfixed\tcurrency\toperating\tincome\tchange | 12 % | 14 % |  |
| Acquisition\tadjusted\tfixed\tcurrency\toperating\tincome\tmargin | 15.4 % | 14.1 % | 12.8 % |
| Public\tcurrency\toperating\tincome\tchange | 7 % | 5 % |  |

Amounts	do	not	necessarily	sum	due	to	rounding.

Fixed	currency	sales	growth	for	Global	Industrial	in	both	2016	and	2015	was	driven	by	volume	gains	and	pricing.	At	a	regional	level,	the	2016 sales	increase	was	impacted	by	good	growth	in	Latin	America	and	moderate	growth	in	Middle	East/Africa	("MEA")	and	Europe.	Regional	results for	2015	were	impacted	by	strong	growth	in	Latin	America	and	MEA,	moderate	growth	in	Europe	and	modest	gains	in	North	America.

At	an	operating	segment	level,	Water	fixed	currency	sales	increased	3%	in	2016	(increase	of	1%	acquisition	adjusted),	as	growth	in	light industry	sales	was	offset	by	a	double	digit	decline	in	the	mining	industry.	Fixed	currency	sales	increased	6%	in	2015,	(increase	of	3% acquisition	adjusted)	with	good	growth	in	the	light	and	heavy	industries,	which	offset	slower	sales	in	mining.	Food	&	Beverage	fixed	currency sales	increased	3%	in	2016,	benefiting	from	corporate	account	and	share	gains,	which	more	than	offset	generally	flat	industry	trends.	Sales	in the	beverage	and	food	markets	showed	good	growth,	with	slower	sales	in	the	dairy	and	agri	markets.	Fixed	currency	sales	increased	6%	in 2015,	(increase	of	4%	acquisition	adjusted).	Growth	was	led	by	the	beverage	and	brewing	market,	with	modest	gains	in	the	dairy	and	food markets.	Paper	fixed	currency	sales	increased	2%	in	2016,	helped	by	strong	sales	efforts	and	business	wins.	Market	conditions	in	Asia	Pacific, including	Greater	China,	have	remained	challenging.	Fixed	currency	sales	increased	2%	in	2015	impacted	by	new	account	gains	and	continued technology	penetration.	Textile	Care	fixed	currency	sales	increased	4%	in	2016,	benefiting	from	new	customer	accounts	in	Europe.	Fixed currency	sales	increased	5%	in	2015,	impacted	by	new	accounts	and	customer	penetration	within	North	America	and	Europe.

Fixed	currency	operating	income	and	fixed	currency	operating	income	margins	for	Global	Industrial	increased	in	both	2016	and	2015. Acquisitions	negatively	impacted	fixed	currency	operating	income	growth	and	fixed	currency	operating	income	margins.

Acquisition	adjusted	fixed	currency	operating	income	margins	increased	1.3	percentage	points	in	both	2016	and	2015,	benefiting	from	favorable impact	of	sales	volume	gains,	product	mix	changes	and	pricing	gains,	which	added	approximately	1.3	and	1.2	percentage	points	in	2016	and 2015,	respectively.	Acquisition	adjusted	fixed	currency	operating	income	margins	were	also	impacted	by	cost	savings	initiatives	and	lower delivered	product	costs,	offset	by	investments	in	the	business.

|  | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- |
| Sales\tat\tfixed\tcurrency\t(millions) | $4,495.6 | $4,210.9 | $3,982.8 |
| Sales\tat\tpublic\tcurrency\t(millions) | 4,540.3 | 4,307.6 | 4,310.5 |
| Volume | 3 % | 4 % |  |
| Price\tchanges | 2 % | 1 % |  |
| Acquisition\tadjusted\tfixed\tcurrency\tsales\tchange | 5 % | 5 % |  |
| Acquisitions\tand\tdivestitures | 2 % | 1 % |  |
| Fixed\tcurrency\tsales\tchange | 7 % | 6 % |  |
| Foreign\tcurrency\ttranslation | (1)% | (6)% |  |
| Public\tcurrency\tsales\tchange | 5 % | (0)% |  |
| Operating\tincome\tat\tfixed\tcurrency\t(millions) | $966.7 | $876.6 | $772.6 |
| Operating\tincome\tat\tpublic\tcurrency\t(millions) | 972.7 | 889.2 | 820.6 |
| Fixed\tcurrency\toperating\tincome\tchange | 10 % | 13 % |  |
| Fixed\tcurrency\toperating\tincome\tmargin | 21.5 % | 20.8 % | 19.4 % |
| Acquisition\tadjusted\tfixed\tcurrency\toperating\tincome\tchange | 12 % | 14 % |  |
| Acquisition\tadjusted\tfixed\tcurrency\toperating\tincome\tmargin | 22.3 % | 21.0 % | 19.4 % |
| Public\tcurrency\toperating\tincome\tchange | 9 % | 8 % |  |

Fixed	currency	sales	growth	for	Global	Institutional	in	both	2016	and	2015	benefited	from	volume	increases	and	pricing	gains.	At	a	regional	level, the	2016	sales	increase	was	led	by	good	growth	in	North	America,	Latin	America	and	Asia	Pacific.	The	2015	sales	increase	was	led	by	strong growth	in	Asia	Pacific	and	MEA,	good	growth	in	North	America	and	Latin	America,	and	modest	gains	in	Europe.

At	an	operating	segment	level,	Institutional	fixed	currency	sales	increased	8%	in	2016	(increase	of	5%	acquisition	adjusted).	New	business wins,	led	by	demand	for	our	leading	product	innovation	in	key	platforms,	along	with	appropriate	pricing,	drove	our	results.

Global	lodging	demand	showed	marginal	growth	while	restaurant	foot	traffic	data	remains	soft.	Fixed	currency	sales	increased	7%	(increase	of 6%	acquisition	adjusted)	in	2015,	as	sales	initiatives,	new	accounts	and	globalization	of	our	leading	technologies	drove	growth.	Specialty	fixed currency	sales	increased	7%	in	2016.	Both	quick	service	and	food	retail	sales	growth	were	solid,	led	by	account	growth,	new	customers	and product	penetration.	Fixed	currency	sales	increased	7%	in	2015.	Quick	service	sales	were	solid,	benefiting	from	new	accounts	and	new	product penetration;	our	food	retail	business	showed	good	sales	growth.	Healthcare	fixed	currency	sales	increased	4%	in	2016,	as	improving	trends	in both	North	America	and	Europe	reflected	the	continued	focus	on	our	value	proposition,	leading	to	customer	gains	and	product	penetration.	Fixed currency	sales	increased	2%	in	2015,	benefiting	from	new	account	growth,	customer	penetration	and	product	introductions.

Fixed	currency	operating	income	and	fixed	currency	operating	income	margins	increased	for	Global	Institutional	in	both	2016	and 2015.		Acquisitions	negatively	impacted	fixed	currency	operating	income	growth	and	fixed	currency	operating	income	margins.

Acquisition	adjusted	fixed	currency	operating	income	margins	increased	1.3	and	1.6	percentage	points	in	2016	and	2015,	respectively.	The favorable	impact	of	pricing	gains,	product	mix	changes	and	sales	volume	increases	added	approximately	1.9	and	2.3	percentage	points	in	both 2016	and	2015,	respectively,	partially	offset	by	investments	in	the	business.	Delivered	product	cost	savings	in	2015	also	impacted	comparisons.

|  | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- |
| Sales\tat\tfixed\tcurrency\t(millions) | $3,035.8 | $3,470.8 | $3,815.8 |
| Sales\tat\tpublic\tcurrency\t(millions) | 3,092.9 | 3,747.2 | 4,310.6 |
| Volume | (10)% | (8)% |  |
| Price\tchanges | (3)% | (2)% |  |
| Acquisition\tadjusted\tfixed\tcurrency\tsales\tchange | (13)% | (10)% |  |
| Acquisitions\tand\tdivestitures | 0 % | 1 % |  |
| Fixed\tcurrency\tsales\tchange | (13)% | (9)% |  |
| Foreign\tcurrency\ttranslation | (5)% | (4)% |  |
| Public\tcurrency\tsales\tchange | (17)% | (13)% |  |
| Operating\tincome\tat\tfixed\tcurrency\t(millions) | $337.1 | $465.5 | $534.8 |
| Operating\tincome\tat\tpublic\tcurrency\t(millions) | 348.4 | 538.0 | 638.4 |
| Fixed\tcurrency\toperating\tincome\tchange | (28)% | (13)% |  |
| Fixed\tcurrency\toperating\tincome\tmargin | 11.1 % | 13.4 % | 14.0 % |
| Acquisition\tadjusted\tfixed\tcurrency\toperating\tincome\tchange | (28)% | (14)% |  |
| Acquisition\tadjusted\tfixed\tcurrency\toperating\tincome\tmargin | 10.8 % | 13.2 % | 13.9 % |
| Public\tcurrency\toperating\tincome\tchange | (35)% | (16)% |  |

Fixed	currency	sales	for	Global	Energy	were	negatively	impacted	by	volume	reductions	and	lower	pricing	for	both	2016	and	2015.	Across	both comparable	periods,	continued	difficult	operating	conditions	negatively	impacted	our	well	stimulation	and	production	businesses	due	to	lower pricing	and	customer	product	usage.	Sales	in	our	downstream	business	were	flat	in	2016	and	grew	modestly	in	2015.	Market	challenges	in North	America	drove	the	reductions	from	a	regional	perspective	in	both	2016	and	2015.

Fixed	currency	operating	income	for	Global	Energy	decreased	during	both	2016	and	2015.	Fixed	currency	operating	income	margins	also decreased	during	both	comparable	periods.	Acquisitions	had	a	minimal	impact	on	the	fixed	currency	operating	income	and	fixed	currency operating	income	margins	during	both	2016	and	2015.

Acquisition	adjusted	fixed	currency	operating	income	margins	for	our	Global	Energy	segment	decreased	2.4	and	0.7	percentage	points	in	2016 and	2015,	respectively.	Reductions	in	sales	volume,	product	mix	changes	and	lower	pricing	contributed	approximately	5.7	and	3.5	percentage points	to	the	decline	in	2016	and	2015,	respectively,	and	which	offset	the	benefit	of	lower	delivered	product	costs,	synergies	and	other	cost reduction	actions.

|  | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- |
| Sales\tat\tfixed\tcurrency\t(millions) | $806.5 | $747.1 | $705.2 |
| Sales\tat\tpublic\tcurrency\t(millions) | 809.8 | 763.4 | 751.8 |
| Volume | 6 % | 4 % |  |
| Price\tchanges | 2 % | 2 % |  |
| Acquisition\tadjusted\tfixed\tcurrency\tsales\tchange | 8 % | 7 % |  |
| Acquisitions\tand\tdivestitures | (0)% | (1)% |  |
| Fixed\tcurrency\tsales\tchange | 8 % | 6 % |  |
| Foreign\tcurrency\ttranslation | (2)% | (4)% |  |
| Public\tcurrency\tsales\tchange | 6 % | 2 % |  |
| Operating\tincome\tat\tfixed\tcurrency\t(millions) | $148.1 | $127.5 | $109.9 |
| Operating\tincome\tat\tpublic\tcurrency\t(millions) | 148.0 | 129.3 | 116.3 |
| Fixed\tcurrency\toperating\tincome\tchange | 16 % | 16 % |  |
| Fixed\tcurrency\toperating\tincome\tmargin | 18.4 % | 17.1 % | 15.6 % |
| Acquisition\tadjusted\tfixed\tcurrency\toperating\tincome\tchange | 16 % | 16 % |  |
| Acquisition\tadjusted\tfixed\tcurrency\toperating\tincome\tmargin | 18.4 % | 17.1 % | 15.6 % |
| Public\tcurrency\toperating\tincome\tchange | 14 % | 11 % |  |

Fixed	currency	sales	growth	for	Other	in	both	2016	and	2015	was	driven	by	volume	increases	and	pricing	gains.	At	a	regional	level,	the	2016 sales	increase	was	led	by	good	growth	in	Asia	Pacific,	Latin	America,	North	America	and	MEA.	The	2015	sales	increase	was	led	by	good growth	in	Latin	America,	North	America	and	Asia	Pacific,	with	moderate	gains	in	Europe.

At	an	operating	segment	level,	Pest	Elimination	fixed	currency	sales	increased	8%	in	2016,	impacted	by	continued	gains	in	the	foodservice market,	benefiting	from	customer	penetration	and	new	service	offerings.	Fixed	currency	sales	increased	7%	in	2015,	impacted	by	gains	in	the foodservice	market.	Equipment	Care	fixed	currency	sales	increased	7%	in	2016,	driven	by	continued	increases	in	both	service	and	parts	sales, benefiting	from	new	customer	additions.	Fixed	currency	sales	increased	7%	in	2015,	driven	by	increases	in	both	service	and	parts	sales.

Fixed	currency	operating	income	growth	and	the	corresponding	operating	margin	for	our	Other	segment	increased	in	both	2016	and	2015.

Fixed	currency	operating	income	and	fixed	currency	operating	income	margins	for	our	Other	segment	increased	1.3	and	1.5	percentage	points in	2016	and	2015,	respectively.	The	favorable	impact	of	pricing	gains,	product	mix	changes	and	sales	volume	increases	added	approximately 2.4	and	2.7	percentage	points	for	2016	and	2015,	respectively	and	was	partially	offset	by	investments	in	business	and	other	cost	increases.

# Corporate

Consistent	with	our	internal	management	reporting,	Corporate	amounts	in	the	table	on	page	36	include	intangible	asset	amortization	specifically from	the	Nalco	merger	and	special	(gains)	and	charges	that	are	not	allocated	to	our	reportable	segments.	Items	included	within	special	(gains) and	charges	are	shown	in	the	table	on	page	31.

# FINANCIAL	POSITION,	CASH	FLOW	AND	LIQUIDITY

# Financial	Position

Total	assets	were	$18.3	billion	as	of	December	31,	2016,	compared	to	total	assets	of	$18.6	billion	as	of	December	31,	2015.	The	decrease	in assets	was	driven	primarily	by	the	negative	impact	of	foreign	currency	exchange	rates	on	the	value	of	our	foreign	assets	translated	into	U.S. dollars	as	of	year	end	2016	and	2015,	the	impact	of	adopting	the	accounting	guidance	related	to	the	presentation	of	deferred	tax	assets	and liabilities,	as	discussed	in	Note	2,	and	the	impact	of	intangible	asset	amortization.

Total	liabilities	were	$11.4	billion	as	of	December	31,	2016,	compared	to	total	liabilities	of	$11.7	billion	as	of	December	31,	2015.	Total	debt	was $6.7	billion	as	of	December	31,	2016	and	$6.5	billion	as	of	December	31,	2015.	See	further	discussion	of	our	debt	activity	within	the	"Liquidity and	Capital	Resources"	section	of	this	MD&A.

Our	net	debt	to	EBITDA	and	net	debt	to	adjusted	EBIDTA	are	shown	in	the	following	table.	EBITDA	and	adjusted	EBITDA	are	non-GAAP measures,	which	are	discussed	further	in	the	"Non-GAAP	Financial	Measures"	section	of	this	MD&A.

|  | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- |
| (ratio) |  |  |  |
| Net\tdebt\tto\tEBITDA | 2.3 | 2.6 | 2.2 |
| Net\tdebt\tto\tadjusted\tEBITDA | 2.2 | 2.2 | 2.2 |
| (millions) |  |  |  |
| Total\tdebt | $6,687.0 | $6,465.5 | $6,548.2 |
| Cash | 327.4 | 92.8 | 209.6 |
| Net\tdebt | $6,359.6 | $6,372.7 | $6,338.6 |
| Net\tincome\tincluding\tnon-controlling\tinterest | $1,247.1 | $1,017.2 | $1,222.2 |
| Provision\tfor\tincome\ttaxes | 403.3 | 300.5 | 476.2 |
| Interest\texpense,\tnet | 264.6 | 243.6 | 256.6 |
| Depreciation | 561.0 | 559.5 | 558.1 |
| Amortization | 289.7 | 300.0 | 313.9 |
| EBITDA | 2,765.7 | 2,420.8 | 2,827.0 |
| Special\t(gains)\tand\tcharges\timpacting\tEBITDA | 105.5 | 495.4 | 83.1 |
| Adjusted\tEBITDA | $2,871.2 | $2,916.2 | $2,910.1 |

# Cash	Flows

| (millions) | 2016 | 2015 | 2014 | 2016 | 2015 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Cash\tprovided\tby\toperating\tactivities | $1,939.7 | $1,999.8 | $1,815.6 | $(60.1) | $184.2 |

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

Comparability	of	cash	generated	from	operating	activities	across	2014	to	2016	was	impacted	by	fluctuations	in	accounts	receivable,	inventories and	accounts	payable	("working	capital"),	the	combination	of	which	increased	$35	million,	$119	million	and	$212	million	in	2016,	2015	and	2014 respectively.	The	cash	flow	impact	across	the	three	years	from	accounts	receivable	was	driven	by	changes	in	sales	volumes	and	timing	of collections.	The	cash	flow	impact	across	the	three	years	from	inventories	was	impacted	by	timing	of	purchases	and	production	and	usage	levels, and	from	accounts	payable	was	impacted	by	volume	of	purchases	and	timing	of	payments.

The	impact	on	operating	cash	flows	of	pension	and	postretirement	plan	contributions,	cash	activity	related	to	restructuring,	cash	paid	for	income taxes	and	cash	paid	for	interest,	are	shown	in	the	following	table:

| (millions) | 2016 | 2015 | 2014 | 2016 | 2015 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Pensions\tand\tpostretirement\tplan\tcontributions | $211.8 | $64.9 | $76.7 | $146.9 | $(11.8) |
| Restructuring\tpayments | 51.6 | 61.7 | 85.3 | (10.1) | (23.6) |
| Income\ttax\tpayments | 359.1 | 533.1 | 522.0 | (174.0) | 11.1 |
| Interest\tpayments | 267.0 | 237.2 | 255.5 | 29.8 | (18.3) |

| (millions) | 2016 | 2015 | 2014 | 2016 | 2015 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Cash\tused\tfor\tinvesting\tactivities | $(829.5) | $(915.8) | $(848.3) | $86.3 | $(67.5) |

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

Total	cash	paid	for	acquisitions,	net	of	cash	acquired	and	net	of	cash	received	from	dispositions,	in	2016,	2015	and	2014	was	$49	million,	$265 million	and	$72	million,	respectively.	Our	acquisitions	and	divestitures	across	2016,	2015	and	2014	are	discussed	further	in	Note	4.	We	continue to	target	strategic	business	acquisitions	which	complement	our	growth	strategy	and	expect	to	continue	to	make	capital	investments	and acquisitions	in	the	future	to	support	our	long-term	growth.

We	continue	to	make	capital	investments	in	the	business,	including	merchandising	and	customer	equipment	and	manufacturing	facilities.	Total capital	expenditures,	including	software,	were	$757	million,	$815	million	and	$794	million	in	2016,	2015	and	2014,	respectively.

Comparability	of	cash	used	for	investing	activities	across	2014	to	2016	was	impacted	by	other	factors,	including	the	following:

· Restricted	cash	activity	in	2016	related	to	the	pending	Anios	transaction,	as	discussed	further	in	Note	4.

· Receipt	of	Champion	related	escrow	funds	in	2015.

# Financing	Activities

| (millions) | 2016 | 2015 | 2014 | 2016 | 2015 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Cash\tused\tfor\tfinancing\tactivities | $(868.2) | $(1,150.9) | $(1,071.0) | $282.7 | $(79.9) |

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

Our	2016	debt	financing	activities	included	the	issuance	of	€575	million	1.00%,	$750	million	2.70%,	$250	million	3.70%,	$400	million	2.00%	and $400	million	3.25%	fixed	rate	senior	notes;	the	scheduled	repayment	of	our	$1.25	billion	3.00%	and	€175	million	4.585%	senior	notes	and repayment	of	the	remaining	$125	million	of	our	term	loan	borrowings.	Net	issuances	and	repayments	of	commercial	paper	and	notes	payable	led to	a	net	decrease	of	$606	million	during	2016.

Our	2015	debt	financing	activities	included	the	issuance	of	$300	million	1.55%,	$300	million	2.25%	and	€575	million	2.625%	fixed	rate	senior notes;	the	scheduled	repayment	of	our	$250	million	4.875%	and	$500	million	1.00%	senior	notes;	and	repayment	of	$275	million	of	term	loan borrowings.	Net	repayments	of	commercial	paper	and	notes	payable	led	to	a	net	decrease	of	$312	million	during	2015.

Our	2014	debt	financing	activities	included	the	repayment	of	$400	million	of	term	loan	borrowings,	and	the	scheduled	repayment	of	our	$500 million	2.375%	senior	notes.	Net	borrowings	of	commercial	paper	and	notes	payable	led	to	a	net	cash	inflow	of	$600	million	during	2014.

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

In	February	2015,	we	announced	a	$1.0	billion	share	repurchase	program,	which	was	completed	during	the	second	quarter	of	2016.	We repurchased	a	total	of	$740	million	and	$755	million	of	shares	in	2016	and	2015,	respectively.	These	amounts	include	$300	million	of	shares repurchased	through	the	ASR	program	in	both	2016	and	2015,	respectively.	See	Note	10	for	further	information	regarding	our	ASR	programs. During	2014,	we	repurchased	$429	million	of	shares.	Cash	proceeds	and	tax	benefits	from	stock	option	exercises	provide	a	portion	of	the funding	for	repurchase	activity.

In	December	2016,	we	increased	our	indicated	annual	dividend	rate	by	6%.	This	represents	the	25th	consecutive	year	we	have	increased	our dividend.	We	have	paid	dividends	on	our	common	stock	for	80	consecutive	years.	Cash	dividends	declared	per	share	of	common	stock,	by quarter,	for	each	of	the	last	three	years	were	as	follows:

|  | First | Second | Third | Fourth |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | Quarter | Quarter | Quarter | Quarter | Year |
| 2016 | $0.350 | $0.350 | $0.350 | $0.370 | $1.420 |
| 2015 | 0.330 | 0.330 | 0.330 | 0.350 | 1.340 |
| 2014 | 0.275 | 0.275 | 0.275 | 0.330 | 1.155 |

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

# Liquidity	and	Capital	Resources

We	currently	expect	to	fund	all	of	our	cash	requirements	which	are	reasonably	foreseeable	for	2017,	including	scheduled	debt	repayments,	new investments	in	the	business,	share	repurchases,	dividend	payments,	possible	business	acquisitions	and	pension	contributions,	with	cash	from operating	activities,	and	as	needed,	additional	short-term	and/or	long-term	borrowings.	We	continue	to	expect	our	operating	cash	flow	to	remain strong.

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

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

We	consider	the	remaining	portion	of	our	foreign	earnings	to	be	indefinitely	reinvested	in	foreign	jurisdictions	and	we	have	no	intention	to repatriate	such	funds.	We	continue	to	be	focused	on	building	our	global	business	and	these	funds	are	available	for	use	by	our	international operations.	To	the	extent	the	remaining	portion	of	the	foreign	earnings	would	be	repatriated,	such	amounts	would	be	subject	to	income	tax	or foreign	withholding	tax	liabilities	that	may	be	fully	or	partially	offset	by	foreign	tax	credits,	both	in	the	U.S.	and	in	various	applicable	foreign jurisdictions.

As	of	December	31,	2016	we	had	a	$2.0	billion	multi-year	credit	facility,	which	expires	in	December	2019.	The	credit	facility	has	been established	with	a	diverse	syndicate	of	banks.	There	were	no	borrowings	under	our	credit	facility	as	of	December	31,	2016	or	2015.

The	credit	facility	supports	our	$2.0	billion	U.S.	commercial	paper	program	and	$2.0	billion	European	commercial	paper	program.	We	increased the	European	commercial	paper	program	from	$200	million	during	the	third	quarter	of	2016.	Combined	borrowing	under	these	two	commercial paper	programs	may	not	exceed	$2.0	billion.	As	of	December	31,	2016,	we	had	no	amount	outstanding	under	either	our	U.S.	or	European commercial	paper	programs.

Additionally,	we	have	other	committed	and	uncommitted	credit	lines	of	$746	million	with	major	international	banks	and	financial	institutions	to support	our	general	global	funding	needs,	including	with	respect	to	bank	supported	letters	of	credit,	performance	bonds	and	guarantees. Approximately	$554	million	of	these	credit	lines	were	available	for	use	as	of	year-end	2016.

As	of	December	31,	2016,	our	short-term	borrowing	program	was	rated	A-2	by	Standard	&	Poor's	and	P-2	by	Moody's.

As	of	December	31,	2016,	Standard	&	Poor's	and	Moody's	rated	our	long-term	credit	at	A-	(stable	outlook)	and	Baa1	(stable	outlook), respectively.	A	reduction	in	our	credit	ratings	could	limit	or	preclude	our	ability	to	issue	commercial	paper	under	our	current	programs,	or	could also	adversely	affect	our	ability	to	renew	existing,	or	negotiate	new,	credit	facilities	in	the	future	and	could	increase	the	cost	of	these	facilities. Should	this	occur,	we	could	seek	additional	sources	of	funding,	including	issuing	additional	term	notes	or	bonds.	In	addition,	we	have	the	ability, at	our	option,	to	draw	upon	our	$2.0	billion	of	committed	credit	facility	prior	to	termination.

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

A	 schedule	 of	 our	 obligations	 as	 of	 December	 31,	 2016	 under	 various	 notes	 payable,	 long-term	 debt	 agreements,	 operating leases	 with noncancelable	terms	in	excess	of	one	year	and	interest	obligations	are	summarized	in	the	following	table:

* Interest	on	variable	rate	debt	was	calculated	using	the	interest	rate	at	year-end	2016.

As	of	December	31,	2016,	our	gross	liability	for	uncertain	tax	positions	was	$76	million.	We	are	not	able	to	reasonably	estimate	the	amount	by which	the	liability	will	increase	or	decrease	over	an	extended	period	of	time	or	whether	a	cash	settlement	of	the	liability	will	be	required.

Therefore,	these	amounts	have	been	excluded	from	the	schedule	of	contractual	obligations.

We	are	not	required	to	make	any	contributions	to	our	U.S.	pension	and	postretirement	healthcare	benefit	plans	in	2017	based	on	plan	asset values	as	of	December	31,	2016.	We	are	required	to	fund	certain	international	pension	benefit	plans	in	accordance	with	local	legal requirements.	We	estimate	contributions	to	be	made	to	our	international	plans	will	approximate	$42	million	in	2017.	These	amounts	have	been excluded	from	the	schedule	of	contractual	obligations.

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

Except	for	the	approximately	$192	million	utilized	under	the	bank	lines	noted	previously	supporting	domestic	and	international	commercial relationships	and	transactions,	we	do	not	have	significant	unconditional	purchase	obligations	or	significant	other	commercial	commitments.

# Off-Balance	Sheet	Arrangements

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

# Market	Risk

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

We	enter	into	foreign	currency	forward	contracts	to	hedge	certain	intercompany	financial	arrangements,	and	to	hedge	against	the	effect	of exchange	rate	fluctuations	on	transactions	related	to	cash	flows	denominated	in	currencies	other	than	U.S.	dollars.	We	use	net	investment hedges	as	hedging	instruments	to	manage	risks	associated	with	our	investments	in	foreign	operations.	As	of	December	31,	2016,	we	had	a total	of	€1,150	million	senior	notes	designated	as	net	investment	hedges.

We	manage	interest	expense	using	a	mix	of	fixed	and	floating	rate	debt.	To	help	manage	borrowing	costs,	we	may	enter	into	interest	rate	swap agreements.	Under	these	arrangements,	we	agree	to	exchange,	at	specified	intervals,	the	difference	between	fixed	and	floating	interest	amounts calculated	by	reference	to	an	agreed-upon	notional	principal	amount.	As	of	December	31,	2016,	we	had	interest	rate	swaps	outstanding	with notional	values	of	$1,450	million.

# See	Note	8	for	further	information	on	our	hedging	activity.

Based	on	a	sensitivity	analysis	(assuming	a	10%	adverse	change	in	market	rates)	of	our	foreign	exchange	and	interest	rate	derivatives	and other	financial	instruments,	changes	in	exchange	rates	or	interest	rates	would	increase/decrease	our	financial	position	and	liquidity	by approximately	$50	million.	The	effect	on	our	results	of	operations	would	be	substantially	offset	by	the	impact	of	the	hedged	items.

# GLOBAL	ECONOMIC	AND	POLITICAL	ENVIRONMENT

# Energy	Markets

During	2016,	approximately	23%	of	our	sales	were	generated	from	Global	Energy,	the	results	of	which,	as	noted	further	below,	are	subject	to volatility	in	the	oil	and	gas	commodity	markets.

Oil	industry	activity	remained	depressed	during	2016,	when	compared	with	2014	levels,	resulting	from	continued	excess	oil	supply	pressures, which	have	negatively	impacted	exploration	and	production	investments	in	the	energy	industry,	particularly	in	North	America.	We	also experienced	additional	pricing	headwinds	in	2016	when	compared	to	2015.	As	a	result	of	these	conditions,	we	recorded	charges	related	to inventory	write-downs	and	related	disposal	costs,	fixed	asset	charges,	employee	termination	costs	and	other	charges	during	the	second	and fourth	quarters	of	2016,	as	discussed	further	in	Note	3.

Demand	for	oil	and	overall	energy	consumption	has	remained	consistent.

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

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

# Global	Economies

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

# Brexit	Referendum

The	June	23,	2016	referendum	by	British	voters	to	exit	the	European	Union	("Brexit")	resulted	in	a	sharp	decline	in	the	value	of	the	British pound,	as	compared	to	the	U.S.	dollar	and	other	currencies.

Brexit	is	non-binding;	however,	if	passed	into	law,	negotiations	would	commence	to	determine	the	future	terms	of	the	U.K.'s	relationship	with	the European	Union.	The	effects	of	Brexit	will	depend	on	any	agreements	the	U.K.	makes	to	retain	access	to	European	Union	markets	either	during a	transitional	period	or	more	permanently.	Volatility	in	exchange	rates	is	expected	to	continue	in	the	short	term	as	the	U.K.	negotiates	its	exit from	the	European	Union.	In	the	longer	term,	any	impact	from	Brexit	on	our	U.K.	operations	will	depend,	in	part,	on	the	outcome	of	tariff,	trade, regulatory,	and	other	negotiations.

During	2016,	net	sales	of	our	U.K.	operations	were	approximately	3%	of	our	consolidated	net	sales.

# Global	Foreign	Currency	Markets

The	U.S.	dollar	remained	strong	against	most	global	currencies	during	2016,	when	compared	against	both	2015	and	2014	levels,	impacting	our comparative	results.	As	described	in	Note	8,	we	utilize	our	derivative	program	to	mitigate	risks	associated	with	certain	foreign	currency exposures	and	our	investments	in	foreign	operations.

# NEW	ACCOUNTING	PRONOUNCEMENTS

Information	regarding	new	accounting	pronouncements	is	included	in	Note	2.

# SUBSEQUENT	EVENTS

In	January	2017,	we	acquired	Abednego	Environmental	Services	("Abednego"),	a	privately	held	company	based	in	Novi,	Michigan.	Abednego provides	water	solutions	to	automotive	customers.	Pre-acquisition	annual	sales	were	approximately	$40	million.

On	February	1,	2017,	we	acquired	Anios	for	a	total	consideration	of	approximately	$800	million	in	cash,	inclusive	of	the	satisfaction	of outstanding	debt.	Anios	is	a	leading	European	manufacturer	and	marketer	of	hygiene	and	disinfection	products	for	the	healthcare,	food	service, and	food	and	beverage	processing	industries.	Anios	provides	an	innovative	product	line	that	expands	the	solutions	we	are	able	to	offer	while also	providing	a	complementary	geographic	footprint	within	the	healthcare	market.	Pre-acquisition	annual	sales	were	approximately	$245 million.

In	February	2017,	we	entered	into	an	ASR	agreement	with	a	financial	institution	to	repurchase	$300	million	of	our	common	stock.

# NON-GAAP	FINANCIAL	MEASURES

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

 Fixed	currency	sales

 Acquisition	adjusted	fixed	currency	sales

 Adjusted	cost	of	sales

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

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

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

We	evaluate	the	performance	of	our	international	operations	based	on	fixed	currency	rates	of	foreign	exchange.	Fixed	currency	amounts included	in	this	Form	10-K	are	based	on	translation	into	U.S.	dollars	at	the	fixed	foreign	currency	exchange	rates	established	by	management	at the	beginning	of	2016.	Fixed	currency	amounts	also	reflect	all	Venezuelan	bolivar	operations,	prior	to	the	deconsolidation	of	our	Venezuelan operations,	at	a	SIMADI	rate	of	approximately	200	bolivares	to	1	U.S.	dollar,	which	was	the	approximate	conversion	rate	for	SIMADI	at	year	end 2015.

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

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

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

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

# Item	8.		Financial	Statements	and	Supplementary	Data.

# REPORTS	OF	MANAGMENT

# To	our	Shareholders:

# Management's	Responsibility	for	Financial	Statements

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

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

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

# Management's	Report	on	Internal	Control	Over	Financial	Reporting

Management	is	responsible	for	establishing	and	maintaining	adequate	internal	control	over	financial	reporting,	as	such	term	is	defined	in Exchange	Act	Rule	13a-15(f).	Under	the	supervision	and	with	the	participation	of	management,	including	the	principal	executive	officer	and principal	financial	officer,	an	evaluation	of	the	design	and	operating	effectiveness	of	internal	control	over	financial	reporting	was	conducted	based on	the	2013	framework	in	Internal	Control	—	Integrated	Framework	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway Commission.	Based	on	the	evaluation	under	the	framework	in	Internal	Control	—	Integrated	Framework,	management	concluded	that	internal control	over	financial	reporting	was	effective	as	of	December	31,	2016.

The	Company's	independent	registered	public	accounting	firm,	PricewaterhouseCoopers	LLP,	has	audited	the	effectiveness	of	the	Company's internal	control	over	financial	reporting	as	of	December	31,	2016	as	stated	in	their	report	which	is	included	herein.

Douglas	M.	Baker,	Jr.

Chairman	and	Chief	Executive	Officer

Daniel	J.	Schmechel

Chief	Financial	Officer	and	Treasurer

# REPORT	OF	INDEPENDENT	REGISTERED	PUBLIC	ACCOUNTING	FIRM

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

In	our	opinion,	the	accompanying	consolidated	balance	sheets	and	the	related	consolidated	statements	of	income,	comprehensive	income, equity	and	cash	flows	present	fairly,	in	all	material	respects,	the	financial	position	of	Ecolab	Inc.	and	its	subsidiaries	at	December	31,	2016	and 2015,	and	the	results	of	their	operations	and	their	cash	flows	for	each	of	the	three	years	in	the	period	ended	December	31,	2016	in	conformity with	accounting	principles	generally	accepted	in	the	United	States	of	America.	Also	in	our	opinion,	the	Company	maintained,	in	all	material respects,	effective	internal	control	over	financial	reporting	as	of	December	31,	2016,	based	on	criteria	established	in	Internal	Control	-	Integrated Framework	(2013)	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	(COSO).	The	Company's	management is	responsible	for	these	financial	statements,	for	maintaining	effective	internal	control	over	financial	reporting	and	for	its	assessment	of	the effectiveness	of	internal	control	over	financial	reporting,	included	in	the	accompanying	Management's	Report	on	Internal	Control	over	Financial Reporting.	Our	responsibility	is	to	express	opinions	on	these	financial	statements	and	on	the	Company's	internal	control	over	financial	reporting based	on	our	integrated	audits.	We	conducted	our	audits	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board (United	States).	Those	standards	require	that	we	plan	and	perform	the	audits	to	obtain	reasonable	assurance	about	whether	the	financial statements	are	free	of	material	misstatement	and	whether	effective	internal	control	over	financial	reporting	was	maintained	in	all	material respects.	Our	audits	of	the	financial	statements	included	examining,	on	a	test	basis,	evidence	supporting	the	amounts	and	disclosures	in	the financial	statements,	assessing	the	accounting	principles	used	and	significant	estimates	made	by	management,	and	evaluating	the	overall financial	statement	presentation.	Our	audit	of	internal	control	over	financial	reporting	included	obtaining	an	understanding	of	internal	control	over financial	reporting,	assessing	the	risk	that	a	material	weakness	exists,	and	testing	and	evaluating	the	design	and	operating	effectiveness	of internal	control	based	on	the	assessed	risk.	Our	audits	also	included	performing	such	other	procedures	as	we	considered	necessary	in	the circumstances.	We	believe	that	our	audits	provide	a	reasonable	basis	for	our	opinions.

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

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

PricewaterhouseCoopers	LLP Minneapolis,	Minnesota February	24,	2017

# CONSOLIDATED	STATEMENT	OF	INCOME

| Year	ended	December	31,	(millions,	except	per	share	amounts) | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- |
| Net\tsales | $13,152.8 | $13,545.1 | $14,280.5 |
| Operating\texpenses |  |  |  |
| Cost\tof\tsales\t(including\tspecial\tcharges\t(a)) | 6,898.9 | 7,223.5 | 7,679.1 |
| Selling,\tgeneral\tand\tadministrative\texpenses | 4,299.4 | 4,345.5 | 4,577.6 |
| Special\t(gains)\tand\tcharges | 39.5 | 414.8 | 68.8 |
| Operating\tincome | 1,915.0 | 1,561.3 | 1,955.0 |
| Interest\texpense,\tnet | 264.6 | 243.6 | 256.6 |
| Income\tbefore\tincome\ttaxes | 1,650.4 | 1,317.7 | 1,698.4 |
| Provision\tfor\tincome\ttaxes | 403.3 | 300.5 | 476.2 |
| Net\tincome\tincluding\tnoncontrolling\tinterest | 1,247.1 | 1,017.2 | 1,222.2 |
| Net\tincome\tattributable\tto\tnoncontrolling\tinterest\t(including\tspecial\tcharges\t(a)) | 17.5 | 15.1 | 19.4 |
| Net\tincome\tattributable\tto\tEcolab | $1,229.6 | $1,002.1 | $1,202.8 |
| Earnings\tattributable\tto\tEcolab\tper\tcommon\tshare |  |  |  |
| Basic | $4.20 | $3.38 | $4.01 |
| Diluted | $4.14 | $3.32 | $3.93 |
| Dividends\tdeclared\tper\tcommon\tshare | $1.420 | $1.340 | $1.155 |
| Weighted-average\tcommon\tshares\toutstanding |  |  |  |
| Basic | 292.5 | 296.4 | 300.1 |
| Diluted | 296.7 | 301.4 | 305.9 |

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

# CONSOLIDATED	STATEMENT	OF	COMPREHENSIVE	INCOME

| Year	ended	December	31,	(millions) | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- |
| Net\tincome\tincluding\tnoncontrolling\tinterest | $1,247.1 | $1,017.2 | $1,222.2 |
| Other\tcomprehensive\tincome\t(loss),\tnet\tof\ttax |  |  |  |
| Foreign\tcurrency\ttranslation\tadjustments |  |  |  |
| Foreign\tcurrency\ttranslation | (230.4) | (626.8) | (350.3) |
| Gain\t(loss)\ton\tnet\tinvestment\thedges | (2.5) | 101.3 | 34.7 |
| Reclassification\tassociated\twith\tVenezuelan\tentities | \t- | 2.4 | \t- |
|  | (232.9) | (523.1) | (315.6) |
| Derivatives\tand\thedging\tinstruments | (17.5) | 11.7 | 3.9 |
| Pension\tand\tpostretirement\tbenefits |  |  |  |
| Current\tperiod\tnet\tactuarial\tincome\t(loss) | (102.3) | (2.3) | (354.8) |
| Pension\tand\tpostretirement\tprior\tperiod\tservice\tcosts\tand\tbenefits\tadjustments | 7.7 | 4.5 | (0.6) |
| Amortization\tof\tnet\tactuarial\tloss\tand\tprior\tservice\tcosts\tincluded\tin |  |  |  |
| net\tperiodic\tpension\tand\tpostretirement\tcosts | 20.2 | 33.6 | 12.1 |
| Postretirement\tbenefits\tchanges | 33.9 | \t- | \t- |
| Reclassification\tassociated\twith\tVenezuelan\tentities | \t- | 2.2 | \t- |
|  | (40.5) | 38.0 | (343.3) |
| Subtotal | (290.9) | (473.4) | (655.0) |
| Total\tcomprehensive\tincome,\tincluding\tnoncontrolling\tinterest | 956.2 | 543.8 | 567.2 |
| Comprehensive\tincome\tattributable\tto\tnoncontrolling\tinterest | 16.2 | 13.1 | 11.1 |
| Comprehensive\tincome\tattributable\tto\tEcolab | $940.0 | $530.7 | $556.1 |

# CONSOLIDATED	BALANCE	SHEET

| December	31,	(millions,	except	per	share	amounts) | 2016 | 2015 |
| :--- | :--- | :--- |
| ASSETS |  |  |
| Current\tassets |  |  |
| Cash\tand\tcash\tequivalents | $327.4 | $92.8 |
| Accounts\treceivable,\tnet | 2,341.2 | 2,390.2 |
| Inventories | 1,319.4 | 1,388.2 |
| Deferred\tincome\ttaxes | \t- | 250.0 |
| Other\tcurrent\tassets | 291.4 | 326.3 |
| Total\tcurrent\tassets | 4,279.4 | 4,447.5 |
| Property,\tplant\tand\tequipment,\tnet | 3,365.0 | 3,228.3 |
| Goodwill | 6,383.0 | 6,490.8 |
| Other\tintangible\tassets,\tnet | 3,817.8 | 4,109.2 |
| Other\tassets | 485.0 | 365.9 |
| Total\tassets | $18,330.2 | $18,641.7 |
| LIABILITIES\tAND\tEQUITY |  |  |
| Current\tliabilities |  |  |
| Short-term\tdebt | $541.3 | $2,205.3 |
| Accounts\tpayable | 983.2 | 1,049.6 |
| Compensation\tand\tbenefits | 516.3 | 509.0 |
| Income\ttaxes | 87.4 | 52.2 |
| Other\tcurrent\tliabilities | 891.2 | 948.3 |
| Total\tcurrent\tliabilities | 3,019.4 | 4,764.4 |
| Long-term\tdebt | 6,145.7 | 4,260.2 |
| Postretirement\thealth\tcare\tand\tpension\tbenefits | 1,019.2 | 1,117.1 |
| Deferred\tincome\ttaxes | 970.2 | 1,281.2 |
| Other\tliabilities | 204.8 | 238.4 |
| Total\tliabilities | 11,359.3 | 11,661.3 |
| Equity\t(a) |  |  |
| Common\tstock | 352.6 | 350.3 |
| Additional\tpaid-in\tcapital | 5,270.8 | 5,086.1 |
| Retained\tearnings | 6,975.0 | 6,160.3 |
| Accumulated\tother\tcomprehensive\tloss | (1,712.9) | (1,423.3) |
| Treasury\tstock | (3,984.4) | (3,263.5) |
| Total\tEcolab\tshareholders'\tequity | 6,901.1 | 6,909.9 |
| Noncontrolling\tinterest | 69.8 | 70.5 |
| Total\tequity | 6,970.9 | 6,980.4 |
| Total\tliabilities\tand\tequity | $18,330.2 | $18,641.7 |

(a) Common	stock,	800.0	million	shares	authorized,	$1.00	par	value,	291.8	million	shares	outstanding	at	December	31,	2016,	296.0	million shares	outstanding	at	December	31,	2015.	Shares	outstanding	are	net	of	treasury	stock.

# CONSOLIDATED	STATEMENT	OF	CASH	FLOWS

| Year	ended	December	31,	(millions) | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- |
| OPERATING\tACTIVITIES |  |  |  |
| Net\tincome\tincluding\tnoncontrolling\tinterest | $1,247.1 | $1,017.2 | $1,222.2 |
| Adjustments\tto\treconcile\tnet\tincome\tto\tcash\tprovided\tby\toperating\tactivities: |  |  |  |
| Depreciation | 561.0 | 559.5 | 558.1 |
| Amortization | 289.7 | 300.0 | 313.9 |
| Deferred\tincome\ttaxes | (90.6) | (244.5) | (121.5) |
| Share-based\tcompensation\texpense | 85.7 | 78.2 | 71.1 |
| Excess\ttax\tbenefits\tfrom\tshare-based\tpayment\tarrangements | (43.6) | (57.8) | (55.9) |
| Pension\tand\tpostretirement\tplan\tcontributions | (211.8) | (64.9) | (76.7) |
| Pension\tand\tpostretirement\tplan\texpense | 54.1 | 113.8 | 83.9 |
| Restructuring\tcharges,\tnet\tof\tcash\tpaid | (60.5) | 38.4 | 0.3 |
| Venezuelan\tcharges | \t- | 289.3 | \t- |
| (Gain)\tLoss\ton\tsale\tof\tbusiness | (0.5) | 13.7 | (4.8) |
| Asset\tcharges\tand\twrite-downs | 65.9 | 24.7 | \t- |
| Other,\tnet | 14.2 | 11.6 | 7.8 |
| Changes\tin\toperating\tassets\tand\tliabilities,\tnet\tof\teffect\tof\tacquisitions: |  |  |  |
| Accounts\treceivable | 0.9 | (24.0) | (175.4) |
| Inventories | 18.8 | (48.6) | (210.8) |
| Other\tassets | (34.9) | (69.1) | (106.3) |
| Accounts\tpayable | (55.1) | (46.1) | 174.7 |
| Other\tliabilities | 99.3 | 108.4 | 135.0 |
| Cash\tprovided\tby\toperating\tactivities | 1,939.7 | 1,999.8 | 1,815.6 |
| INVESTING\tACTIVITIES |  |  |  |
| Capital\texpenditures | (707.4) | (771.0) | (748.7) |
| Capitalized\tsoftware\texpenditures | (49.4) | (44.2) | (45.2) |
| Property\tand\tother\tassets\tsold | 30.5 | 15.0 | 10.9 |
| Acquisitions\tand\tinvestments\tin\taffiliates,\tnet\tof\tcash\tacquired | (49.5) | (265.9) | (82.6) |
| Divestiture\tof\tbusinesses | 0.9 | 0.5 | 10.4 |
| Deposit\tinto\tacquisition\trelated\tescrow | \t- | \t- | (9.4) |
| Release\tfrom\tacquisition\trelated\tescrow | \t- | 45.6 | 8.7 |
| Reduction\tof\tcash\tdue\tto\tVenezuelan\tdeconsolidation | \t- | (4.2) | \t- |
| Restricted\tcash\tactivity | (55.9) | \t- | \t- |
| Settlement\tof\tnet\tinvestment\thedges | 1.3 | 108.4 | 7.6 |
| Cash\tused\tfor\tinvesting\tactivities | (829.5) | (915.8) | (848.3) |
| FINANCING\tACTIVITIES |  |  |  |
| Net\tissuances\t(repayments)\tof\tcommercial\tpaper\tand\tnotes\tpayable | (606.4) | (312.1) | 599.6 |
| Long-term\tdebt\tborrowings | 2,390.0 | 1,223.7 | \t- |
| Long-term\tdebt\trepayments | (1,569.6) | (1,034.7) | (907.8) |
| Reacquired\tshares | (739.6) | (755.1) | (428.6) |
| Dividends\tpaid | (427.5) | (400.7) | (344.4) |
| Exercise\tof\temployee\tstock\toptions | 76.8 | 83.1 | 65.4 |
| Excess\ttax\tbenefits\tfrom\tshare-based\tpayment\tarrangements | 43.6 | 57.8 | 55.9 |
| Acquisition\trelated\tliabilities\tand\tcontingent\tconsideration | (35.5) | (12.9) | (98.7) |
| Acquisition\tof\tnoncontrolling\tinterests | \t- | \t- | (8.4) |
| Other,\tnet | \t- | \t- | (4.0) |
| Cash\tused\tfor\tfinancing\tactivities | (868.2) | (1,150.9) | (1,071.0) |
| Effect\tof\texchange\trate\tchanges\ton\tcash\tand\tcash\tequivalents | (7.4) | (49.9) | (25.9) |
| Increase\t(decrease)\tin\tcash\tand\tcash\tequivalents | 234.6 | (116.8) | (129.6) |
| Cash\tand\tcash\tequivalents,\tbeginning\tof\tperiod | 92.8 | 209.6 | 339.2 |
| Cash\tand\tcash\tequivalents,\tend\tof\tperiod | $327.4 | $92.8 | $209.6 |
| SUPPLEMENTAL\tCASH\tFLOW\tINFORMATION |  |  |  |
| Income\ttaxes\tpaid | $359.1 | $533.1 | $522.0 |
| Interest\tpaid | 267.0 | 237.2 | 255.5 |

# CONSOLIDATED	STATEMENT	OF	EQUITY

# Ecolab	Shareholders

|  |  | Additional |  |  |  | Ecolab | Non- |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Common | Paid-in | Retained | OCI | Treasury | Shareholders' | Controlling | Total |
| (millions) | Stock | Capital | Earnings | (Loss) | Stock | Equity | Interest | Equity |
| Balance,\tDecember\t31,\t2013 | $345.1 | $4,692.0 | $4,699.0 | $(305.2) | $(2,086.6) | $7,344.3 | $\t65.1 | $7,409.4 |
| Net\tincome |  |  | 1,202.8 |  |  | 1,202.8 | 19.4 | 1,222.2 |
| Comprehensive\tincome\t(loss)\tactivity |  |  |  | (646.7) |  | (646.7) | (8.3) | (655.0) |
| Cash\tdividends\tdeclared |  |  | (346.7) |  |  | (346.7) | (14.0) | (360.7) |
| Champion\tacquisition |  |  |  |  |  |  | (2.9) | (2.9) |
| Acquisition\tof\tnoncontrolling\tinterests |  | (0.3) |  |  |  | (0.3) | 6.9 | 6.6 |
| Stock\toptions\tand\tawards | 2.6 | 182.8 |  |  | 5.7 | 191.1 |  | 191.1 |
| Reacquired\tshares |  |  |  |  | (428.6) | (428.6) |  | (428.6) |
| Balance,\tDecember\t31,\t2014 | 347.7 | 4,874.5 | 5,555.1 | (951.9) | (2,509.5) | 7,315.9 | 66.2 | 7,382.1 |
| Net\tincome |  |  | 1,002.1 |  |  | 1,002.1 | 15.1 | 1,017.2 |
| Comprehensive\tincome\t(loss)\tactivity |  |  |  | (471.4) |  | (471.4) | (2.0) | (473.4) |
| Cash\tdividends\tdeclared |  |  | (396.9) |  |  | (396.9) | (8.3) | (405.2) |
| Venezuela\tdeconsolidation |  |  |  |  |  |  | (0.5) | (0.5) |
| Stock\toptions\tand\tawards | 2.6 | 205.4 |  |  | 7.3 | 215.3 |  | 215.3 |
| Reacquired\tshares |  | 6.2 |  |  | (761.3) | (755.1) |  | (755.1) |
| Balance,\tDecember\t31,\t2015 | 350.3 | 5,086.1 | 6,160.3 | (1,423.3) | (3,263.5) | 6,909.9 | 70.5 | 6,980.4 |
| Net\tincome |  |  | 1,229.6 |  |  | 1,229.6 | 17.5 | 1,247.1 |
| Comprehensive\tincome\t(loss)\tactivity |  |  |  | (289.6) |  | (289.6) | (1.3) | (290.9) |
| Cash\tdividends\tdeclared |  |  | (414.9) |  |  | (414.9) | (16.9) | (431.8) |
| Stock\toptions\tand\tawards | 2.3 | 200.2 |  |  | 3.2 | 205.7 |  | 205.7 |
| Reacquired\tshares |  | (15.5) |  |  | (724.1) | (739.6) |  | (739.6) |
| Balance,\tDecember\t31,\t2016 | $352.6 | $5,270.8 | $6,975.0 | $(1,712.9) | $(3,984.4) | $6,901.1 | $69.8 | $6,970.9 |

# COMMON	STOCK	ACTIVITY

|  |  | 2016 | 2015 |  | 2014 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Common | Treasury | Common | Treasury | Common | Treasury |
| Year\tended\tDecember\t31(shares) | Stock | Stock | Stock | Stock | Stock | Stock |
| Shares,\tbeginning\tof\tyear | 350,339,820 | (54,372,729) | 347,724,788 | (47,872,332) | 345,101,009 | (43,965,830) |
| Stock\toptions | 1,778,821 | 58,969 | 1,962,360 | 151,261 | 1,850,757 | 122,455 |
| Stock\tawards | 489,100 | 14,291 | 652,672 | 14,745 | 773,022 | 8,231 |
| Reacquired\tshares |  | (6,483,198) |  | (6,666,403) |  | (4,037,188) |
| Shares,\tend\tof\tyear | 352,607,741 | (60,782,667) | 350,339,820 | (54,372,729) | 347,724,788 | (47,872,332) |

# NOTES	TO	CONSOLIDATED	FINANCIAL	STATEMENTS

# 1.	NATURE	OF	BUSINESS

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

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

# 2.	SIGNIFICANT	ACCOUNTING	POLICIES

# Principles	of	Consolidation

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

# Use	of	Estimates

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

# Foreign	Currency	Translation

Financial	position	and	reported	results	of	operations	of	the	Company's	non-U.S.	dollar	functional	international	subsidiaries	are	measured	using local	currencies	as	the	functional	currency.	Assets	and	liabilities	of	these	operations	are	translated	at	the	exchange	rates	in	effect	at	each	fiscal year	end.	The	translation	adjustments	related	to	assets	and	liabilities	that	arise	from	the	use	of	differing	exchange	rates	from	period	to	period are	included	in	accumulated	other	comprehensive	income	(loss)	in	shareholders'	equity.	Income	statement	accounts	are	translated	at	average rates	of	exchange	prevailing	during	the	year.	The	Company	evaluates	its	international	operations	based	on	fixed	rates	of	exchange;	however, the	different	exchange	rates	from	period	to	period	impact	the	amount	of	reported	income	from	consolidated	operations.

# Concentration	of	Credit	Risk

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

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

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

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

# Cash	and	Cash	Equivalents

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

# Accounts	Receivable	and	Allowance	For	Doubtful	Accounts

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

The	Company's	allowance	for	doubtful	accounts	balance	also	includes	an	allowance	for	the	expected	return	of	products	shipped	and	credits related	to	pricing	or	quantities	shipped	of	$14	million,	$15	million	and	$14	million	as	of	December	31,	2016,	2015,	and	2014,	respectively. Returns	and	credit	activity	is	recorded	directly	to	sales	as	a	reduction.

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

| (millions) | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- |
| Beginning\tbalance | $75 | $77 | $81 |
| Bad\tdebt\texpense | 20 | 26 | 23 |
| Write-offs | (25) | (22) | (20) |
| Other\t(a) | (2) | (6) | (7) |
| Ending\tbalance | $68 | $75 | $77 |

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

# Inventory	Valuations

Inventories	are	valued	at	the	lower	of	cost	or	market.	Certain	U.S.	inventory	costs	are	determined	on	a	last-in,	first-out	("LIFO")	basis.	LIFO inventories	represented	40%	and	39%	of	consolidated	inventories	as	of	December	31,	2016	and	2015,	respectively.	LIFO	inventories	include certain	legacy	Nalco	U.S.	inventory	acquired	at	fair	value	as	part	of	the	Nalco	merger.	All	other	inventory	costs	are	determined	using	either	the average	cost	or	first-in,	first-out	("FIFO")	methods.	Inventory	values	at	FIFO,	as	shown	in	Note	5,	approximate	replacement	cost.

During	2015,	the	Company	improved	and	standardized	estimates	related	to	its	inventory	reserves	and	product	costing,	resulting	in	a	net	pre-tax charge	of	approximately	$6	million.	Separately,	the	actions	resulted	in	a	charge	of	$20.6	million	related	to	inventory	reserve	calculations, partially	offset	by	a	gain	of	$14.5	million	related	to	the	capitalization	of	certain	cost	components	into	inventory.	During	2016,	the	Company	took additional	actions	to	improve	and	standardize	estimates	related	to	the	capitalization	of	certain	cost	components	into	inventory,	which	resulted	in a	gain	of	$6.2	million.	These	items	are	reflected	within	special	(gains)	and	charges,	as	discussed	in	Note	3.

# Property,	Plant	and	Equipment

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

Depreciation	is	charged	to	operations	using	the	straight-line	method	over	the	assets'	estimated	useful	lives	ranging	from	5	to	40	years	for buildings	and	leasehold	improvements,	3	to	20	years	for	machinery	and	equipment,	3	to	15	years	for	merchandising	and	customer	equipment and	3	to	7	years	for	capitalized	software.	The	straight-line	method	of	depreciation	reflects	an	appropriate	allocation	of	the	cost	of	the	assets	to earnings	in	proportion	to	the	amount	of	economic	benefits	obtained	by	the	Company	in	each	reporting	period.	Depreciation	expense	was	$561 million,	$560	million	and	$558	million	for	2016,	2015	and	2014,	respectively.

# Goodwill	and	Other	Intangible	Assets

# Goodwill

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

During	the	second	quarter	of	2016,	the	Company	completed	its	scheduled	annual	assessment	for	goodwill	impairment	across	its	ten	reporting units	through	a	quantitative	analysis,	utilizing	a	discounted	cash	flow	approach,	which	incorporates	assumptions	regarding	future	growth	rates, terminal	values,	and	discount	rates.	The	two-step	quantitative	process	involved	comparing	the	estimated	fair	value	of	each	reporting	unit	to	the reporting	unit's	carrying	value,	including	goodwill.	If	the	fair	value	of	a	reporting	unit	exceeds	its	carrying	value,	goodwill	of	the	reporting	unit	is considered	not	to	be	impaired,	and	the	second	step	of	the	impairment	test	is	unnecessary.	If	the	carrying	amount	of	the	reporting	unit	exceeds	its fair	value,	the	second	step	of	the	goodwill	impairment	test	would	be	performed	to	measure	the	amount	of	impairment	loss	to	be	recorded,	if	any. The	Company's	goodwill	impairment	assessment	for	2016	indicated	the	estimated	fair	value	of	each	of	its	reporting	units	exceeded	its	carrying amount	by	a	significant	margin.	Additionally,	no	events	during	the	second	half	of	2016	indicated	a	need	to	update	the	Company's	conclusions reached	during	the	second	quarter	of	2016.

If	circumstances	change	significantly,	the	Company	would	also	test	a	reporting	unit's	goodwill	for	impairment	during	interim	periods	between	its annual	tests.		There	has	been	no	impairment	of	goodwill	in	any	of	the	years	presented.

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

|  | Global | Global | Global |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
| (millions) | Industrial | Institutional | Energy | Other | Total |
| December\t31,\t2014 | $2,642.2 | $691.2 | $3,262.1 | $121.5 | $6,717.0 |
| Current\tyear\tbusiness\tcombinations\t(a) | 84.2 | 6.1 | 45.0 | 0.9 | 136.2 |
| Prior\tyear\tbusiness\tcombinations\t(b) | 0.7 | \t- | \t- | \t- | 0.7 |
| Dispositions | (0.4) | \t- | (0.1) | \t- | (0.5) |
| Reclassifications\t(c) | (23.7) | 2.9 | 20.8 | \t- | \t- |
| Effect\tof\tforeign\tcurrency\ttranslation | (142.2) | (37.5) | (176.3) | (6.6) | (362.6) |
| December\t31,\t2015 | $2,560.8 | $662.7 | $3,151.5 | $115.8 | $6,490.8 |
| Current\tyear\tbusiness\tcombinations\t(a) | \t- | 3.1 | 0.6 | \t- | 3.7 |
| Prior\tyear\tbusiness\tcombinations\t(b) | 3.5 | \t- | 0.1 | \t- | 3.6 |
| Reclassifications\t(c) | 3.5 | (0.6) | (2.9) | \t- | \t- |
| Effect\tof\tforeign\tcurrency\ttranslation | (45.5) | (11.8) | (55.7) | (2.1) | (115.1) |
| December\t31,\t2016 | $2,522.3 | $653.4 | $3,093.6 | $113.7 | $6,383.0 |

(a) For	2016,	the	Company	expects	approximately	$3.0	million	of	the	goodwill	related	to	businesses	acquired	to	be	tax	deductible.	For	2015, $45.9	million	of	the	goodwill	related	to	businesses	acquired	is	expected	to	be	tax	deductible.

(b) Represents	purchase	price	allocation	adjustments	for	acquisitions	deemed	preliminary	as	of	the	end	of	the	prior	year.

(c) Represents	immaterial	reclassifications	of	beginning	balances	to	conform	to	the	current	or	prior	year	presentation	due	to	customer reclassifications	across	reporting	segments	completed	in	the	first	quarter	of	the	respective	year.

# Other	Intangible	Assets

The	Nalco	trade	name	is	the	Company's	principal	indefinite	life	intangible	asset.	During	the	second	quarter	of	2016,	the	Company	completed	its annual	test	for	indefinite	life	intangible	asset	impairment	using	a	relief	from	royalty	method	of	assessment,	which	incorporates	assumptions regarding	future	sales	projections	and	discount	rates.	Based	on	this	testing,	the	estimated	fair	value	of	the	asset	exceeded	its	carrying	value	by	a significant	margin,	therefore,	no	adjustment	to	the	$1.2	billion	carrying	value	of	this	asset	was	necessary.	Additionally,	no	events	during	the second	half	of	2016	indicated	a	need	to	update	the	Company's	conclusions	reached	during	the	second	quarter	of	2016.	There	has	been	no impairment	of	the	Nalco	trade	name	intangible	asset	since	it	was	acquired.

The	Company's	intangible	assets	subject	to	amortization	primarily	include	customer	relationships,	trademarks,	patents	and	other	technology. The	fair	value	of	identifiable	intangible	assets	is	estimated	based	upon	discounted	future	cash	flow	projections	and	other	acceptable	valuation methods.	Other	intangible	assets	are	amortized	on	a	straight-line	basis	over	their	estimated	economic	lives.	The	weighted-average	useful	life	of amortizable	intangible	assets	was	14	years	as	of	both	December	31,	2016	and	2015.

The	weighted-average	useful	life	by	type	of	amortizable	asset	at	December	31,	2016	is	as	follows:

(years)

| (years) |  |
| :--- | :--- |
| Customer\trelationships | 14 |
| Trademarks | 14 |
| Patents | 14 |
| Other\ttechnology | 7 |

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

# Long-Lived	Assets

The	Company	periodically	reviews	its	long-lived	and	amortizable	intangible	assets	for	impairment	and	assesses	whether	significant	events	or changes	in	business	circumstances	indicate	that	the	carrying	value	of	the	assets	may	not	be	recoverable.	Such	circumstances	may	include	a significant	decrease	in	the	market	price	of	an	asset,	a	significant	adverse	change	in	the	manner	in	which	the	asset	is	being	used	or	in	its physical	condition	or	history	of	operating	or	cash	flow	losses	associated	with	the	use	of	an	asset.	An	impairment	loss	may	be	recognized	when the	carrying	amount	of	an	asset	exceeds	the	anticipated	future	undiscounted	cash	flows	expected	to	result	from	the	use	of	the	asset	and	its eventual	disposition.	The	amount	of	the	impairment	loss	to	be	recorded,	if	any,	is	calculated	by	the	excess	of	the	asset's	carrying	value	over	its fair	value.	In	2015,	as	part	of	the	actions	taken	regarding	its	Venezuelan	businesses,	the	Company	wrote-off	customer	relationship	intangible assets	and	other	long-lived	assets.	See	Note	3	for	additional	information	regarding	Venezuela.	Also	during	2015	and	2016,	the	Company impaired	certain	long-lived	assets	related	to	a	product	line	within	one	of	its	U.S.	plants.	See	Note	3	for	additional	information	regarding	this	asset impairment.

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

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

During	the	first	quarter	of	2016,	the	Company	early-adopted	the	accounting	guidance	issued	in	November	2015	that	requires	all	deferred	tax assets	and	liabilities	to	be	classified	as	noncurrent	on	the	Consolidated	Balance	Sheet,	using	the	prospective	application	method.	Periods	prior to	the	first	quarter	of	2016	have	not	been	retrospectively	adjusted	for	adoption	of	this	guidance.	Previous	guidance	required	the	deferred	taxes for	each	jurisdiction	to	be	presented	as	a	net	current	asset	or	liability	and	net	noncurrent	asset	or	liability.	As	a	result	of	the	new	guidance,	each jurisdiction	now	only	has	one	net	noncurrent	deferred	tax	asset	or	liability.	The	new	guidance	does	not	change	the	existing	requirement	that	only permits	offsetting	deferred	tax	assets	and	liabilities	within	a	single	jurisdiction.

See	Note	12	for	additional	information	regarding	income	taxes.

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

Restructuring	charges	have	been	included	as	a	component	of	cost	of	sales,	special	(gains)	and	charges	and	net	income	(loss)	attributable	to noncontrolling	interest	on	the	Consolidated	Statement	of	Income.	Amounts	included	as	a	component	of	cost	of	sales	include	supply	chain	related severance	and	other	asset	write-downs	associated	with	combining	operations.	Restructuring	liabilities	have	been	classified	as	a	component	of both	other	current	and	other	noncurrent	liabilities	on	the	Consolidated	Balance	Sheet.

See	Note	3	for	additional	information	regarding	restructuring.

The	Company	recognizes	revenue	on	product	sales	at	the	time	evidence	of	an	arrangement	exists,	title	to	the	product	and	risk	of	loss	transfers to	the	customer,	the	price	is	fixed	and	determinable	and	collection	is	reasonably	assured.	The	Company	recognizes	revenue	on	services	as	they are	performed.	While	the	Company	employs	a	sales	and	service	team	to	ensure	customer's	needs	are	best	met	in	a	high	quality	way,	the majority	of	the	Company's	revenue	is	generated	from	product	sales.	The	Company's	service	businesses	and	service	offerings	are	discussed	in Note	17.	See	the	"New	Accounting	Pronouncements"	table	within	this	Note	for	discussion	on	future	changes	to	revenue	recognition.

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

# Earnings	Per	Common	Share

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

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

| (millions,	except	per	share) | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- |
| Net\tincome\tattributable\tto\tEcolab | $1,229.6 | $1,002.1 | $1,202.8 |
| Weighted-average\tcommon\tshares\toutstanding |  |  |  |
| Basic | 292.5 | 296.4 | 300.1 |
| Effect\tof\tdilutive\tstock\toptions\tand\tunits | 4.2 | 5.0 | 5.8 |
| Diluted | 296.7 | 301.4 | 305.9 |
| Basic\tEPS | $4.20 | $3.38 | $4.01 |
| Diluted\tEPS | $4.14 | $3.32 | $3.93 |
| Anti-dilutive\tsecurities\texcluded\tfrom\tthe\tcomputation\tof\tEPS | 3.6 | 3.5 | 3.4 |

# Other	Significant	Accounting	Policies

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

| including	the	note	number: |  |
| :--- | :--- |
| Policy | Note |
| Fair\tvalue\tmeasurements | 7 |
| Derivatives\tand\thedging\ttransactions | 8 |
| Share-based\tcompensation | 11 |
| Research\tand\tdevelopment\texpenditures | 14 |
| Legal\tcontingencies | 15 |
| Pension\tand\tpost-retirement\tbenefit\tplans | 16 |
| Reportable\tsegments | 17 |

2016-13,	Financial	Instruments—Credit	Losses

(Topic	326):	Measurement	of	Credit	Losses	on

# ASU	2016-05	-	Effect	of	Derivative	Contract	Novations	on	Existing	Hedge Accounting	Relationships March	2016 The	amendment	clarifies	language	related	to hedge	accounting	criteria	that	a	change	in	the counterparty	is	not	in	and	of	itself	considered	a January	1, 2017 The	Company	does	not expect	the	updated guidance	to	have	a

termination	of	the	derivative	or	critical	term	of	the hedging	relationship.

significant	impact	on	future financial	statements.

ASU	2016-02	-	Leases	(Topic	842) February	2016 Introduces	the	recognition	of	lease	assets	and lease	liabilities	by	lessors	for	those	leases classified	as	operating	leases	under	previous guidance. January	1, 2019 See	additional	information regarding	the	impact	of	this guidance	on	the	Company's financials	at	the	bottom	of this	table	in	note	(a).

ASU	2016-01	-	Financial	Instruments	–	Overall	(Subtopic	825-10): Recognition	and	Measurement	of	Financial	Assets	and	Financial Liabilities January	2016 The	amendment	revises	accounting	related	to the	classification	and	measurement	of investments	in	equity	securities	and	the presentation	of	certain	fair	value	changes	for financial	liabilities	measured	at	fair	value.	The ASU	also	amends	certain	disclosure requirements	associated	with	the	fair	value	of financial	instruments. January	1, 2017 The	Company	does	not expect	the	updated guidance	to	have	a significant	impact	on	future financial	statements.

ASU	2015-11	-	Inventory	(Topic	330):	Simplifying	the	Measurement	of Inventory July	2015 The	amendment	requires	entities	to	measure inventory	under	the	FIFO	or	average	cost methods	at	the	lower	of	cost	or	net	realizable value. January	1, 2017 The	Company	does	not expect	the	updated guidance	to	have	a significant	impact	on	future financial	statements. Revenue	Recognition	ASUs: 2014-09	-	Revenue	from	Contracts	with	Customers 2015-14	-	Deferral	of	the	Effective	Date 2016-08	-	Principal	Versus	Agent	Considerations 2016-10	-	Identifying	Performance	Obligations	and	Licensing 2016-11	-	Revenue	Recognition	and	Derivatives	and	Hedging 2016-12	-	Narrow-Scope	Improvements	&	Practical	Expedients 2016-20--Technical	Corrections	and	Improvements Various Recognition	standard	contains	principles	for entities	to	apply	to	determine	the	measurement of	revenue	and	timing	of	when	the	revenue	is recognized.	The	underlying	principle	of	the updated	guidance	will	have	entities	recognize revenue	to	depict	the	transfer	of	goods	or services	to	customers	at	an	amount	that	is expected	to	be	received	in	exchange	for	those goods	or	services. January	1, 2018 See	additional	information regarding	the	impact	of	this guidance	on	the	Company's financials	at	the	bottom	of this	table	in	note	(b).

(a) As	part	of	implementing	the	new	standard,	the	Company	is	in	process	of	reviewing	current	accounting	policies	and	assessing	the	practical	expedients	allowed	under	the	new	accounting guidance.	The	Company	expects	that	most	of	its	operating	lease	commitments	will	be	subject	to	the	new	standard	and	recognized	as	operating	lease	liabilities	and	right-of-use	assets upon	adoption	and	is	currently	evaluating	other	impacts	on	the	consolidated	financial	statements.	The	standard	requires	a	modified	retrospective	transition	to	be	applied	at	the	beginning of	the	earliest	comparative	period	presented	in	the	year	of	adoption.

(b) The	Company's	approach	to	implementing	the	new	standard	includes	performing	a	detailed	review	of	key	contracts	representative	of	its	different	businesses,	and	comparing	historical accounting	policies	and	practices	to	the	new	standard.	The	Company	is	focusing	on	the	identification	and	evaluation	of	performance	obligations	within	certain	contracts,	as	well	as	the classification	of	certain	costs	associated	with	the	identified	performance	obligations.	In	addition	to	expanded	disclosures	associated	with	the	new	standard,	the	Company	is	continuing	to assess	the	impact	on	the	Company's	consolidated	financial	statements.	The	guidance	permits	two	methods	of	adoption,	retrospectively	to	each	prior	reporting	period	presented	(full retrospective	method),	or	retrospectively	with	the	cumulative	effect	of	initially	applying	the	guidance	recognized	at	the	date	of	initial	application	(the	cumulative	catch-up	transition method).		The	Company	has	not	yet	selected	the	method	of	adoption.

# ASU	2015-16	-	Business	Combinations	(Topic	805):	Simplifying	the

# Accounting	for	Measurement-Period	Adjustments

September	2015 The	amendment	requires	an	acquirer	to recognize	adjustments	identified	during	the measurement	period	in	the	reporting	period	in which	the	adjustment	amounts	are	determined and	to	recognize	a	cumulative	catch-up,	if	any,	in the	same	period	on	the	income	statement	as	a result	of	the	adjustment,	calculated	as	if	the accounting	had	been	completed	on	the acquisition	date.	The	amendment	also	requires an	entity	to	present	separately	on	the	face	of	the income	statement	or	disclose	in	the	notes	the amount	of	the	cumulative	adjustment	by	line item.

# January	1, The	adoption	of	the

guidance	did	not	have	a material	impact	on	the

Company's	financial statements.

ASU	2015-17-	Income	Taxes	(Topic	740):	Balance	Sheet	Classification	of Deferred	Taxes November	2015 The	amendment	requires	that	all	deferred	tax assets	and	liabilities	be	classified	as	non-current in	the	consolidated	balance	sheet. January	1, 2016 As	discussed	in	Note	2,	the Company	early-adopted	the updated	guidance	in	the	first

quarter	of	2016,	resulting	in

presentation	related	changes

to	its	deferred	tax	assets	and liabilities.

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

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

| (millions) | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- |
| Cost\tof\tsales |  |  |  |
| Restructuring\tactivities | $(0.4) | $16.5 | $13.9 |
| Inventory\tcosts | (6.2) | (14.5) | \t- |
| Inventory\treserves | \t- | 20.6 | \t- |
| Energy\trelated\tcharges | 62.6 | \t- | \t- |
| Fixed\tasset\timpairment\tand\tother\tinventory\tcharges | 10.0 | 24.7 | 0.4 |
| Venezuela\trelated\tactivities | \t- | 33.3 | \t- |
| Subtotal | 66.0 | 80.6 | 14.3 |
| Special\t(gains)\tand\tcharges |  |  |  |
| Restructuring\tactivities | (8.7) | 83.8 | 69.2 |
| Champion\tand\tNalco\tintegration\tcosts | \t- | 18.7 | 28.4 |
| Energy\trelated\tcharges | 14.2 | \t- | \t- |
| Venezuela\trelated\tactivities | (7.8) | 256.0 | \t- |
| Other | 41.8 | 56.3 | (28.8) |
| Subtotal | 39.5 | 414.8 | 68.8 |
| Operating\tincome\tsubtotal | 105.5 | 495.4 | 83.1 |
| Net\tincome\tattributable\tto\tnoncontrolling\tinterest |  |  |  |
| Restructuring\tactivities | \t- | (1.7) | \t- |
| Venezuela\trelated\tactivities | \t- | (11.1) | \t- |
| Subtotal | \t- | (12.8) | \t- |
| Total\tspecial\t(gains)\tand\tcharges | $105.5 | $482.6 | $83.1 |

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

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

Restructuring	charges	within	the	Energy	Restructuring	Plan	were	substantially	completed	during	the	fourth	quarter	of	2015	with	certain immaterial	actions	continuing	into	2016.	Cumulative	restructuring	charges	of	$89	million	($60	million	after	tax	and	net	of	the	impact	from noncontrolling	interest),	are	materially	consistent	with	the	Company's	initial	expectation	of	$80	million	($55	million	after	tax).

The	Company	recorded	restructuring	charges	of	$4.5	million	($2.6	million	after	tax),	$47.2	million	($33.0	million	after	tax)	and	$9.5	million	($6.4 million	after	tax)	during	2016,	2015	and	2014,	respectively.	As	a	result	of	the	ownership	structure	of	certain	entities	holding	Energy	Restructuring Plan	charges,	the	Company	reflected	$1.7	million	of	the	2015	charges	as	a	component	of	net	income	(loss)	attributable	to	noncontrolling	interest on	the	Consolidated	Statement	of	Income.

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

|  | Employee |  |  |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Termination | Asset |  |  |
| (millions) | Costs | Disposals | Other | Total |
| 2013\t-\t2015\tActivity |  |  |  |  |
| Recorded\texpense\tand\taccrual | $55.6 | $13.2 | $15.3 | $84.1 |
| Net\tcash\tpayments | (44.3) | 3.9 | (2.1) | (42.5) |
| Non-cash\tcharges | \t- | (17.1) | \t- | (17.1) |
| Effect\tof\tforeign\tcurrency\ttranslation | 0.4 | \t- | \t- | 0.4 |
| Restructuring\tliability,\tDecember\t31,\t2015 | 11.7 | \t- | 13.2 | 24.9 |
| 2016\tActivity |  |  |  |  |
| Recorded\texpense\t(income)\tand\taccrual | (1.0) | 0.8 | 4.7 | 4.5 |
| Net\tcash\tpayments | (6.2) | \t- | (8.2) | (14.4) |
| Non-cash\tcharges | \t- | (0.8) | \t- | (0.8) |
| Effect\tof\tforeign\tcurrency\ttranslation | (0.2) | \t- | \t- | (0.2) |
| Restructuring\tliability,\tDecember\t31,\t2016 | $4.3 | $\t- | $9.7 | $14.0 |

The	majority	of	cash	payments	under	this	plan	are	related	to	severance,	with	the	current	accrual	expected	to	be	paid	over	a	period	of	a	few months	to	several	quarters.	The	Company	anticipates	the	remaining	cash	expenditures	will	continue	to	be	funded	from	operating	activities.

# Combined	Plan

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

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

Restructuring	charges	within	the	Combined	Plan	were	substantially	completed	during	the	fourth	quarter	of	2015,	with	certain	immaterial	actions continuing	into	2016.	Cumulative	restructuring	charges	of	$391	million	($297	million	after	tax),	are	materially	consistent	with	the	Company's initial	expectation	of	$400	million	($300	million	after	tax).

The	Company	recorded	net	gains	of	$13.6	million	($13.4	million	after	tax)	during	2016	primarily	related	to	gains	on	the	sale	of	certain	facilities related	to	previous	restructuring	initiatives.	The	Company	recorded	net	charges	of	$53.0	million	($44.2	million	after	tax)	and	$73.5	million	($58.5 million	after	tax)	during	2015	and	2014,	respectively.

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

|  | Employee |  |  |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Termination | Asset |  |  |
| (millions) | Costs | Disposals | Other | Total |
| 2011\t-\t2015\tActivity |  |  |  |  |
| Recorded\texpense\tand\taccrual | $349.7 | $6.1 | $48.4 | $404.2 |
| Net\tcash\tpayments | (281.3) | 16.3 | (38.1) | (303.1) |
| Non-cash\tnet\tcharges | 0.6 | (22.4) | (4.7) | (26.5) |
| Effect\tof\tforeign\tcurrency\ttranslation | (9.4) | \t- | \t- | (9.4) |
| Restructuring\tliability,\tDecember\t31,\t2015 | 59.6 | \t- | 5.6 | 65.2 |
| 2016\tActivity |  |  |  |  |
| Recorded\texpense\t(income)\tand\taccrual | (3.1) | (9.9) | (0.6) | (13.6) |
| Net\tcash\tpayments | (32.8) | 22.3 | (4.4) | (14.9) |
| Non-cash\tnet\tcharges | \t- | (12.4) | \t- | (12.4) |
| Effect\tof\tforeign\tcurrency\ttranslation | 1.3 | \t- | \t- | 1.3 |
| Restructuring\tliability,\tDecember\t31,\t2016 | $25.0 | $\t- | $0.6 | $25.6 |

The	majority	of	cash	payments	under	the	Combined	Plan	are	related	to	severance,	with	the	current	accrual	expected	to	be	paid	over	a	period	of a	few	months	to	several	quarters.	The	Company	anticipates	the	remaining	cash	expenditures	will	continue	to	be	funded	from	operating	activities.

Oil	industry	activity	remained	depressed	during	2016	when	compared	with	2014	levels,	resulting	from	continued	excess	oil	supply	pressures, which	have	negatively	impacted	exploration	and	production	investments	in	the	energy	industry,	particularly	in	North	America.	During	the	second and	fourth	quarters	of	2016,	as	a	result	of	these	conditions	and	their	corresponding	impact	on	the	Company's	business	outlook,	the	Company recorded	total	charges	of	$76.8	million	($50.0	million	after	tax),	comprised	of	inventory	write-downs	and	related	disposal	costs,	fixed	asset charges,	headcount	reductions	and	other	charges.

The	inventory	write-downs	and	related	disposal	costs	of	$40.5	million	include	adjustments	due	to	the	significant	decline	in	activity	and	related prices	of	certain	specific-use	and	other	products,	coupled	with	declines	in	replacement	costs,	as	well	as	estimated	costs	to	dispose	the respective	excess	inventory.	The	fixed	asset	charges	of	$20.4	million	resulted	from	the	write-down	of	certain	assets	related	to	the	reduction	of certain	aspects	of	the	Company's	North	American	operations	within	Global	Energy	segment,	as	well	as	abandonment	of	certain	projects	under construction.	The	carrying	value	of	the	corresponding	fixed	assets	was	reduced	to	zero.	The	employee	termination	costs	of	$13.1	million	include a	reduction	in	the	Company's	Global	Energy	segment's	global	workforce	to	better	align	its	workforce	with	anticipated	activity	levels	in	the	near term.	As	of	the	end	of	2016,	the	Company	had	$7.4	million	of	corresponding	severance	remaining	to	be	paid,	which	is	expected	to	be	paid	within the	next	twelve	months	and	be	funded	from	operating	activities.

Effective	as	of	the	end	of	the	fourth	quarter	of	2015,	the	Company	deconsolidated	its	Venezuelan	subsidiaries	and	began	accounting	for	the investments	in	its	Venezuelan	subsidiaries	using	the	cost	method	of	accounting	effective	in	the	first	quarter	of	2016.	The	Company	used	the cost	method	of	accounting	for	the	investment	in	its	Venezuelan	subsidiaries	throughout	2016	as	the	conditions	within	Venezuela	driving	this decision	remained	in	place	during	2016.	Prior	to	deconsolidation,	the	Company	remeasured	its	Venezuelan	bolivar	operations	within	its	Water, Paper,	Food	&	Beverage,	Institutional	and	the	bolivar	portion	of	the	Company's	Venezuelan	operations	included	within	Energy	operating segments	from	the	official	exchange	rate	at	the	time	of	6.3	bolivares	to	1	U.S.	dollar	to	the	SIMADI	rate	at	the	time	of	approximately	200 bolivares	to	1	U.S.	dollar.	Upon	deconsolidation,	the	Company	recorded	a	charge	to	fully	write	off	its	intercompany	receivables	and	investment.

The	total	charges	during	2015	related	to	the	Company's	actions	in	Venezuela	were	$289.3	million	($246.8	million	after	tax).	As	a	result	of	the ownership	structure	of	the	Company's	Food	&	Beverage	and	Institutional	operations	in	Venezuela,	it	reflected	$11.1	million	as	a	component	of net	income	(loss)	attributable	to	noncontrolling	interest	on	the	Consolidated	Statement	of	Income,	resulting	in	a	net	charge	of	$235.7	million	net of	the	impact	from	noncontrolling	interest.

During	2016,	the	Company	recorded	a	gain	of	$7.8	million	($4.9	million	after	tax)	resulting	from	U.S.	dollar	cash	recoveries	of	intercompany receivables	written	off	at	the	time	of	deconsolidation.

During	2015,	the	Company	recorded	a	fixed	asset	impairment	charge	of	$24.7	million	($15.4	million	after	tax),	consisting	of	certain	production equipment	and	buildings	within	one	of	the	Company's	U.S.	plants.	The	impaired	facility	is	a	specialized	facility	used	for	dry	polymer	production. Due	to	market	contraction	in	the	oil	and	the	mining	industries,	and	the	aggressive	competitive	pricing	environment	for	dry	polymers,	the	facility has	not	reached	production	volumes	to	recover	the	value	of	the	underlying	fixed	assets.	The	fair	value	of	the	underlying	assets	was	determined using	the	discounted	cash	flow	method.

During	2016,	the	Company	recorded	an	additional	charge	of	$10.0	million	($6.3	million	after	tax)	related	to	the	dry	polymer	fixed	asset impairment,	as	well	as	related	inventory	charges.	Subsequent	to	the	charge,	the	remaining	value	of	the	underlying	fixed	assets	is	less	than	$5 million.	Inventory	charges	include	adjustments	due	to	the	significant	decline	in	activity	and	related	prices	of	the	corresponding	dry	polymer products.

During	2015,	the	Company	improved	and	standardized	estimates	related	to	its	inventory	reserves	and	product	costing,	resulting	in	a	net	pre-tax charge	of	approximately	$6	million.	Separately,	the	actions	resulted	in	a	charge	of	$20.6	million	($15.9	million	after	tax),	related	to	inventory reserve	calculations,	partially	offset	by	a	gain	of	$14.5	million	($12.2	million	after	tax),	related	to	the	capitalization	of	certain	cost	components into	inventory.	During	2016,	the	Company	took	additional	actions	related	to	capitalization	of	certain	cost	components	into	inventory,	which resulted	in	a	gain	of	$6.2	million	($4.6	million	after	tax).

Integration	related	special	charges	for	the	Champion	acquisition	and	Nalco	merger	were	completed	during	the	fourth	quarter	of	2015,	and	the Company	did	not	incur	any	special	charges	related	to	such	transactions	during	2016.	As	a	result	of	the	Champion	acquisition	and	Nalco	merger, the	Company	incurred	charges	of	$18.7	million	($12.0	million	after	tax)	and	$28.4	million	($19.8	million	after	tax),	during	2015	and	2014, respectively.

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

During	2016,	the	Company	recorded	other	charges	of	$41.8	million	($26.4	million	after	tax),	primarily	consisting	of	litigation	related	charges.

During	2015,	the	Company	recorded	a	net	charge	of	$56.3	million	($34.5	million	after	tax),	primarily	made	up	of	litigation	related	charges	and	the recognition	of	a	loss	on	the	sale	of	a	portion	of	the	Company's	Ecovation	business,	offset	partially	by	the	recovery	of	funds	deposited	into escrow	as	part	of	the	Champion	transaction.

During	2014,	the	Company	recorded	a	special	gain	of	$28.4	million	($23.3	million	after	tax),	as	a	result	of	a	favorable	licensing	settlement	and other	settlement	gains,	the	consolidation	of	the	Emochem	entity	and	removal	of	the	corresponding	equity	method	investment	and	the	disposition of	a	business.

# 4.	ACQUISITIONS	AND	DISPOSITIONS

# Acquisitions

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

Acquisitions	during	2016,	2015	and	2014	were	not	material	to	the	Company's	consolidated	financial	statements.	The	components	of	the	cash paid	for	acquisitions,	including	acquisition	related	liability	and	contingent	consideration	activity	for	current	and	prior	year	transactions,	during 2016,	2015,	and	2014,	are	shown	in	the	following	table.

| (millions) | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- |
| Net\ttangible\tassets\tacquired\tand\tequity\tmethod\tinvestments | $46.9 | $103.7 | $18.2 |
| Identifiable\tintangible\tassets |  |  |  |
| Customer\trelationships | 2.6 | 65.6 | 32.0 |
| Patents | \t- | 6.7 | \t- |
| Trademarks | \t- | 13.5 | 3.4 |
| Non-compete\tagreements | \t- | 4.2 | \t- |
| Other\ttechnology | 1.1 | 8.7 | 4.5 |
| Total\tintangible\tassets | 3.7 | 98.7 | 39.9 |
| Goodwill | 7.3 | 136.9 | 32.9 |
| Total\taggregate\tpurchase\tprice | 57.9 | 339.3 | 91.0 |
| Acquisition\trelated\tliabilities\tand\tcontingent\tconsideration | 27.1 | (60.5) | 12.3 |
| Net\tcash\tpaid\tfor\tacquisitions,\tincluding\tacquisition\trelated |  |  |  |
| liabilities\tand\tcontingent\tconsideration | $85.0 | $278.8 | $103.3 |

The	acquisition	related	liability	activity	during	2016	is	related	primarily	to	payments	of	settled	liabilities	from	previous	transactions.	The	2015 acquisition	related	liability	is	related	to	hold-back	liabilities	and	contingent	consideration	as	part	of	the	Jianghai,	Swisher	and	UltraFab acquisitions,	as	discussed	further	below.	The	2014	contingent	consideration	activity	primarily	related	to	payments	on	legacy	Nalco	acquisitions.

The	weighted	average	useful	lives	of	identifiable	intangible	assets	acquired,	was	4	years	as	of	December	2016	and	10	years	as	of	both December	2015	and	December	2014

# Subsequent	Event	Activity

In	January	2017,	the	Company	acquired	Abednego	Environmental	Services	("Abednego"),	a	privately	held	company	based	in	Novi,	Michigan. Abednego	provides	water	solutions	to	automotive	customers.	With	pre-acquisition	annual	sales	of	approximately	$40	million,	the	acquired business	will	become	part	of	the	Company's	Global	Industrial	reportable	segment	during	the	first	quarter	of	2017.

On	February	1,	2017,	the	Company	acquired	Anios	for	a	total	consideration	of	approximately	$800	million	in	cash,	inclusive	of	the	satisfaction	of outstanding	debt.	Anios	is	a	leading	European	manufacturer	and	marketer	of	hygiene	and	disinfection	products	for	the	healthcare,	food	service, and	food	and	beverage	processing	industries.	Anios	provides	an	innovative	product	line	that	expands	the	solutions	the	Company	is	able	to	offer while	also	providing	a	complementary	geographic	footprint	within	the	healthcare	market.	With	pre-acquisition	annual	sales	of	approximately $245	million,	the	acquired	business	will	become	part	of	the	Company's	Global	Institutional	reportable	segment	during	the	first	quarter	of	2017.

The	Company	anticipates	intangible	assets	related	to	customer	relationships,	patents,	tradenames,	and	technology	and	goodwill	to	be	recorded as	part	of	this	transaction.	However,	due	to	the	timing	of	the	close	of	the	transaction,	the	fair	value	of	all	assets	acquired	and	liabilities	assumed within	the	transaction	have	not	been	finalized	and	remain	subject	to	change.	The	Company	will	finalize	the	amounts	recognized	as	information necessary	to	complete	the	analysis	is	obtained.	During	2016,	the	Company	deposited	approximately	$50	million	in	an	escrow	account	that	was released	back	to	the	Company	upon	closing	of	the	transaction.	As	shown	within	Note	5,	this	was	recorded	as	restricted	cash	within	Other	Assets on	the	Consolidated	Balance	Sheet.

In	July	2016,	the	Company	made	a	33%	minority	investment	in	Aquatech.	Based	in	Canonsburg,	Pennsylvania,	Aquatech	is	a	global	leader	in the	design	and	engineering	of	complex	and	comprehensive	water	treatment	solutions	that	improve	water	quality	and	reduce	net

water	usage.	The	Company	determined	that	it	exerts	significant	influence,	but	less	than	controlling	interest,	over	Aquatech	and	therefore	has accounted	for	the	investment	using	the	equity	method	of	accounting.

Also	during	2016,	the	Company	acquired	certain	assets	of	Keedak	Limited,	an	oilfield	chemical	distributor	in	Nigeria,	which	became	part	of	the Company's	Global	Energy	segment.

In	June	2015,	the	Company	acquired	Jianghai	Environmental	Protection	Co.	Ltd	("Jianghai"),	an	industrial	water	treatment	Company headquartered	in	Changzhou,	China.	The	purchase	price	of	the	acquired	business	was	approximately	$190	million.	Significant	assets	acquired include	customer	relationships,	trademarks	and	other	technology,	with	goodwill	calculated	as	the	excess	of	consideration	transferred	over	the fair	value	of	identifiable	net	assets	acquired.	With	pre-acquisition	annual	sales	of	approximately	$90	million,	the	acquired	business	became	part of	the	Company's	Global	Industrial	reportable	segment	during	the	third	quarter	of	2015.	Purchase	price	allocation	adjustments	were	finalized	in 2016,	the	impact	of	which	was	not	material.

In	November	2015,	the	Company	completed	the	acquisition	of	the	U.S.	operations	of	Charlotte,	N.C.	-	based	Swisher	Hygiene	Inc.	("Swisher") for	approximately	$40	million.	Swisher	provides	hygiene	and	sanitizing	solutions	for	the	foodservice,	hospitality,	retail	and	healthcare	markets. Sales	in	2014	for	the	operations	included	in	the	agreement	were	approximately	$176	million.	The	acquired	business	became	part	of	the Company's	Global	Institutional	reportable	segment	in	the	fourth	quarter	of	2015.	Purchase	price	allocation	adjustments	were	finalized	in	2016, the	impact	of	which	was	not	material.

In	November	2015,	the	Company	acquired	Ultra	Fab	Industries	Ltd	("Ultrafab")	for	approximately	$115	million.	Based	in	Calgary,	Canada, Ultrafab	manufactures	customized	solutions	and	specialized	chemical	injection	systems	for	the	oil	and	gas	industry.	With	pre-acquisition	sales	of approximately	$35	million,	the	acquired	business	became	part	of	the	Company's	Global	Energy	reportable	segment	during	the	fourth	quarter	of 2015.	Purchase	price	allocation	adjustments	were	finalized	in	2016,	the	impact	of	which	was	not	material.

Also	during	2015,	the	Company	acquired	Aseptix	Health	Sciences	NV,	Commercial	Pest	Control	Pty	Lt	and	Clariant	AG,	which	became	part	of the	Company's	Global	Institutional,	Other	and	Global	Industrial	segments,	respectively.

In	December	2013,	subsequent	to	the	Company's	fiscal	year	end	for	international	operations,	the	Company	completed	the	acquisition	of AkzoNobel's	Purate	business	("Purate").	Headquartered	in	Sweden,	Purate	specializes	in	global	antimicrobial	water	treatment.	Pre-	acquisition annual	sales	of	the	business	were	approximately	$23	million.	The	acquired	business	became	part	of	the	Company's	Global	Industrial	reportable segment	during	the	first	quarter	of	2014.

In	July	2014,	the	Company	acquired	the	chemical	division	of	AKJ	Industries,	a	leading	provider	of	chemical	solutions	in	the	coal	industry	in	the U.S.	Pre-acquisition	annual	sales	of	the	business	were	approximately	$21	million.	The	business	became	part	of	the	Company's	Global	Industrial reportable	segment	during	the	third	quarter	of	2014.

Also	in	July	2014,	the	Company	obtained	control	of	Emochem,	a	joint	venture	in	the	United	Arab	Emirates	through	an	amendment	in	the	related shareholder	agreements.	This	amendment	resulted	in	the	Company	consolidating	the	entity	and	removing	the	related	equity	method	investment. The	transaction	was	not	significant	to	the	Company's	operations.	As	discussed	in	Note	3,	the	Company	recognized	a	$5.0	million	gain	during 2014	as	a	result	of	this	transaction.

In	November	2014,	the	Company	acquired	the	dairy	hygiene	chemical	businesses	of	EXL	Laboratories,	LLC	and	Hyprod	Canada,	providers	of cleaning	and	sanitizing	products	for	use	on	dairy	farms	in	the	U.S.	and	Canada.	Pre-acquisition	annual	sales	of	the	businesses	were approximately	$25	million.	The	business	became	part	of	the	Company's	Global	Industrial	reportable	segment	during	the	fourth	quarter	of	2014.

Also	during	2014,	the	Company	acquired	AK	Kraus	&	Hiller	Schädlingsbekämpfung,	which	became	part	of	the	Company's	Other	segment, certain	assets	from	Oksa	Kimya	Sanayii	and	remaining	interest	in	joint	ventures	in	South	Africa	and	Indonesia.

# Dispositions

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

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

In	April	2014,	the	Company	sold	a	business	in	Italy	that	was	part	of	its	Global	Institutional	segment.	In	November	2014,	the	Company	sold	a business	in	New	Zealand	that	was	part	of	its	Other	segment.

None	of	the	dispositions	above	were	material	to	the	Company's	consolidated	financial	statements.

# 5.	BALANCE	SHEET	INFORMATION

|  | December	31 | December	31 |
| :--- | :--- | :--- |
| (millions) | 2016 | 2015 |
| Accounts\treceivable,\tnet |  |  |
| Accounts\treceivable | $2,408.8 | $2,465.5 |
| Allowance\tfor\tdoubtful\taccounts | (67.6) | (75.3) |
| Total | $2,341.2 | $2,390.2 |
| Inventories |  |  |
| Finished\tgoods | $860.0 | $886.5 |
| Raw\tmaterials\tand\tparts | 408.4 | 440.9 |
| Inventories\tat\tFIFO\tcost | 1,268.4 | 1,327.4 |
| FIFO\tcost\tto\tLIFO\tcost\tdifference | 51.0 | 60.8 |
| Total | $1,319.4 | $1,388.2 |
| Other\tcurrent\tassets |  |  |
| Prepaid\tassets | $98.3 | $94.6 |
| Taxes\treceivable | 105.0 | 137.6 |
| Derivative\tassets | 46.3 | 58.7 |
| Other | 41.8 | 35.4 |
| Total | $291.4 | $326.3 |
| Property,\tplant\tand\tequipment,\tnet |  |  |
| Land | $211.0 | $223.7 |
| Buildings\tand\tleasehold\timprovements | 1,121.2 | 996.0 |
| Machinery\tand\tequipment | 2,035.8 | 1,896.7 |
| Merchandising\tand\tcustomer\tequipment | 2,199.4 | 1,988.1 |
| Capitalized\tsoftware | 531.1 | 479.9 |
| Construction\tin\tprogress | 344.1 | 371.1 |
|  | 6,442.6 | 5,955.5 |
| Accumulated\tdepreciation | (3,077.6) | (2,727.2) |
| Total | $3,365.0 | $3,228.3 |
| Other\tintangible\tassets,\tnet |  |  |
| Intangible\tassets\tnot\tsubject\tto\tamortization |  |  |
| Trade\tnames | $1,230.0 | $1,230.0 |
| Intangible\tassets\tsubject\tto\tamortization |  |  |
| Customer\trelationships | $3,206.1 | $3,232.3 |
| Trademarks | 303.3 | 303.6 |
| Patents | 446.5 | 433.4 |
| Other\ttechnology | 210.5 | 213.5 |
|  | 4,166.4 | 4,182.8 |
| Accumulated\tamortization |  |  |
| Customer\trelationships | (1,148.2) | (945.1) |
| Trademarks | (125.2) | (104.7) |
| Patents | (157.3) | (129.0) |
| Other\ttechnology | (147.9) | (124.8) |
|  | (1,578.6) | (1,303.6) |
| Net\tintangible\tassets\tsubject\tto\tamortization | 2,587.8 | 2,879.2 |
| Total | $3,817.8 | $4,109.2 |
| Other\tassets |  |  |
| Deferred\tincome\ttaxes | $92.3 | $58.3 |
| Pension | 27.2 | 28.0 |
| Derivative\tassets | 21.5 | 42.7 |
| Restricted\tcash | 53.0 | - |
| Other | 291.0 | 236.9 |
| Total | $485.0 | $365.9 |

|  | December	31 | December	31 |
| :--- | :--- | :--- |
| (millions) | 2016 | 2015 |
| Other\tcurrent\tliabilities |  |  |
| Discounts\tand\trebates | $275.2 | $270.5 |
| Dividends\tpayable | 108.0 | 103.6 |
| Interest\tpayable | 37.3 | 24.2 |
| Taxes\tpayable,\tother\tthan\tincome | 103.7 | 110.5 |
| Derivative\tliabilities | 24.6 | 31.5 |
| Restructuring | 30.5 | 73.9 |
| Other | 311.9 | 334.1 |
| Total | $891.2 | $948.3 |
| Accumulated\tother\tcomprehensive\tloss |  |  |
| Unrealized\tgain\t(loss)\ton\tderivative\tfinancial\tinstruments,\tnet\tof\ttax | $(8.5) | $9.0 |
| Unrecognized\tpension\tand\tpostretirement\tbenefit\texpense,\tnet\tof\ttax | (511.4) | (486.9) |
| Cumulative\ttranslation,\tnet\tof\ttax | (1,193.0) | (945.4) |
| Total | $(1,712.9) | $(1,423.3) |

# 6.	DEBT	AND	INTEREST

# Short-term	Debt

The	following	table	provides	the	components	of	the	Company's	short-term	debt	obligations,	along	with	applicable	interest	rates	as	of December	31,	2016	and	2015:

|  |  | Average |  | Average |
| :--- | :--- | :--- | :--- | :--- |
|  | Carrying | Interest | Carrying | Interest |
| (millions,\texcept\tinterest\trates) | Value | Rate | Value | Rate |
| Short-term\tdebt |  |  |  |  |
| Commercial\tpaper | $\t- | \t- % | $605.0 | 0.70 % |
| Notes\tpayable | 29.9 | 2.92 % | 30.9 | 3.33 % |
| Long-term\tdebt,\tcurrent\tmaturities | 511.4 |  | 1,569.4 |  |
| Total | $541.3 |  | $2,205.3 |  |

# Line	of	Credit

As	of	December	2016,	the	Company	had	in	place	a	$2.0	billion	multi-year	credit	facility	which	expires	in	December	2019.	The	credit	facility	has been	established	with	a	diverse	syndicate	of	banks	and	supports	the	Company's	U.S.	and	European	commercial	paper	programs.	There	were no	borrowings	under	the	Company's	credit	facility	as	of	December	31,	2016	and	2015.

# Commercial	Paper

The	Company's	commercial	paper	program	is	used	as	a	potential	source	of	liquidity	and	consists	of	a	$2.0	billion	U.S.	commercial	paper program	and	a	$2.0	billion	European	commercial	paper	program.	During	the	third	quarter	of	2016,	the	Company	amended	its	existing	$200.0 million	European	commercial	paper	program	by,	among	other	things,	increasing	the	aggregate	amount	of	the	euro	commercial	paper	notes	that may	be	issued	from	$200.0	million	to	$2.0	billion.	The	maximum	aggregate	amount	of	commercial	paper	that	may	be	issued	by	the	Company under	its	U.S.	commercial	paper	program	and	its	euro	commercial	paper	program	may	not	exceed	$2.0	billion.

As	shown	in	the	previous	table,	the	Company	had	no	commercial	paper	outstanding	under	its	U.S.	program	as	of	December	31,	2016	and $605.0	million	outstanding	as	of	December	31,	2015.	The	Company	had	no	commercial	paper	outstanding	under	its	European	program	as	of either	December	31,	2016	or	2015.

As	of	December	31,	2016,	the	Company's	short-term	borrowing	program	was	rated	A-2	by	Standard	&	Poor's	and	P-2	by	Moody's.

# Long-term	Debt

The	following	table	provides	the	components	of	the	Company's	long-term	debt	obligations,	along	with	applicable	interest	rates	as	of December	31,	2016	and	2015:

|  |  |  | 2016 |  |  | 2015 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (millions) | Maturity\nby\tYear | Carrying\nValue | Average\nInterest\nRate | Effective\nInterest\nRate | Carrying\nValue | Average\nInterest\nRate | Effective\nInterest\nRate |
| Long-term\tdebt |  |  |  |  |  |  |  |
| Description\t/\t2016\tPrincipal\tAmount |  |  |  |  |  |  |  |
| Term\tloan\t($0) | 2016 | $\t- | \t- % | \t- % | $125.0 | 1.40 % | 1.40 % |
| Series\tB\tprivate\tplacement\tsenior\tnotes\t(€0) | 2016 | \t- | \t- % | \t- % | 184.9 | 4.59 % | 4.73 % |
| Five\tyear\t2011\tsenior\tnotes\t($0) | 2016 | \t- | \t- % | \t- % | 1,247.3 | 3.00 % | 3.08 % |
| Five\tyear\t2012\tsenior\tnotes\t($500\tmillion) | 2017 | 498.9 | 1.45 % | 1.22 % | 497.9 | 1.45 % | 0.82 % |
| Three\tyear\t2015\tsenior\tnotes\t($300\tmillion) | 2018 | 298.9 | 1.55 % | 1.43 % | 297.8 | 1.55 % | 0.98 % |
| Series\tA\tprivate\tplacement\tsenior\tnotes\t($250\tmillion) | 2018 | 248.9 | 3.69 % | 4.65 % | 248.6 | 3.69 % | 4.32 % |
| Three\tyear\t2016\tsenior\tnotes\t($400\tmillion) | 2019 | 395.9 | 2.00 % | 1.78 % | \t- | \t- % | \t- % |
| Five\tyear\t2015\tsenior\tnotes\t($300\tmillion) | 2020 | 298.6 | 2.25 % | 2.79 % | 298.1 | 2.25 % | 2.30 % |
| Ten\tyear\t2011\tsenior\tnotes\t($1.25\tbillion) | 2021 | 1,244.8 | 4.35 % | 4.43 % | 1,243.7 | 4.35 % | 4.43 % |
| Series\tB\tprivate\tplacement\tsenior\tnotes\t($250\tmillion) | 2023 | 249.2 | 4.32 % | 4.36 % | 249.1 | 4.32 % | 4.36 % |
| Seven\tyear\t2016\tsenior\tnotes\t($400\tmillion) | 2023 | 397.0 | 3.25 % | 3.49 % | \t- | \t- % | \t- % |
| Seven\tyear\t2016\tsenior\tnotes\t(€575\tmillion) | 2024 | 608.4 | 1.00 % | 1.20 % | \t- | \t- % | \t- % |
| Ten\tyear\t2015\tsenior\tnotes\t(€575\tmillion) | 2025 | 604.3 | 2.63 % | 2.88 % | 601.8 | 2.63 % | 2.99 % |
| Ten\tyear\t2016\tsenior\tnotes\t($750\tmillion) | 2026 | 742.1 | 2.70 % | 2.94 % | \t- | \t- % | \t- % |
| Thirty\tyear\t2011\tsenior\tnotes\t($750\tmillion) | 2041 | 738.7 | 5.50 % | 5.56 % | 738.3 | 5.50 % | 5.56 % |
| Thirty\tyear\t2016\tsenior\tnotes\t($250\tmillion) | 2046 | 245.9 | 3.70 % | 3.75 % | \t- | \t- % | \t- % |
| Capital\tlease\tobligations |  | 5.2 |  |  | 5.6 |  |  |
| Other |  | 80.3 |  |  | 91.5 |  |  |
| Total\tdebt |  | 6,657.1 |  |  | 5,829.6 |  |  |
| Long-term\tdebt,\tcurrent\tmaturities |  | (511.4) |  |  | (1,569.4) |  |  |
| Total\tlong-term\tdebt |  | $6,145.7 |  |  | $4,260.2 |  |  |

# Term	Loans

In	November	2012,	the	Company	entered	into	a	$900	million	term	loan	credit	agreement	with	various	banks.	In	April	2013,	in	connection	with	the close	of	the	Champion	transaction,	the	Company	initiated	term	loan	borrowings	of	$900	million.	Under	the	agreement,	the	term	loan	bore interest	at	a	floating	base	rate	plus	a	credit	rating	based	margin.	The	term	loan	could	have	been	repaid	in	part	or	in	full	at	any	time	without penalty,	but	in	any	event	was	required	to	be	repaid	in	full	by	April	2016.	The	Company	repaid	$275	million,	$400	million	and	$100	million	of	term loan	borrowings	during	2015,	2014	and	2013,	respectively.	In	January	2016,	the	Company	repaid	the	remaining	$125	million	term	loan	balance.

# Public	Notes

In	December	2016,	the	Company	issued	a	€575	million	aggregate	principal	seven	year	fixed	rate	note	with	a	coupon	rate	of	1.00%	($608	million as	of	December	31,	2016).	The	proceeds	were	used	to	repay	a	portion	of	the	Company's	3.00%	senior	notes	due	at	maturity	in	December	2016 and	its	4.585%	series	B	euro	notes	due	at	maturity	in	December	2016.

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

In	January	2016,	the	Company	issued	$800	million	of	debt	securities	consisting	of	a	$400	million	aggregate	principal	three	year	fixed	rate	note with	a	coupon	rate	of	2.00%	and	a	$400	million	aggregate	principal	seven	year	fixed	rate	note	with	a	coupon	rate	of	3.25%.	The	proceeds	were used	to	repay	a	portion	of	the	Company's	outstanding	commercial	paper,	repay	the	remaining	term	loan	balance,	and	for	general	corporate purposes.

In	July	2015,	the	Company	issued	a	€575	million	aggregate	principal	ten	year	fixed	rate	note	with	a	coupon	rate	of	2.625%	($604	million	as	of December	31,	2016).	The	proceeds	were	used	to	repay	a	portion	of	the	Company's	outstanding	commercial	paper.

In	January	2015,	the	Company	issued	$600	million	of	debt	securities	consisting	of	a	$300	million	aggregate	principal	three	year	fixed	rate	note with	a	coupon	rate	of	1.55%	and	a	$300	million	aggregate	principal	five	year	fixed	rate	note	with	a	coupon	rate	of	2.25%.	The	proceeds	were used	to	repay	a	portion	of	the	Company's	outstanding	commercial	paper	and	for	general	corporate	purposes.

The	series	of	notes	issued	by	the	Company	in	December,	October	and	January	2016,	July	and	January	2015,	December	2012	and	December 2011,	pursuant	to	public	debt	offerings	(the	"Public	Notes")	may	be	redeemed	by	the	Company	at	its	option	at	redemption

prices	that	include	accrued	and	unpaid	interest	and	a	make-whole	premium.	Upon	the	occurrence	of	a	change	of	control	accompanied	by	a downgrade	of	the	Public	Notes	below	investment	grade	rating,	within	a	specified	time	period,	the	Company	will	be	required	to	offer	to	repurchase the	Public	Notes	at	a	price	equal	to	101%	of	the	aggregate	principal	amount	thereof,	plus	any	accrued	and	unpaid	interest	to	the	date	of repurchase.

The	Public	Notes	are	senior	unsecured	and	unsubordinated	obligations	of	the	Company	and	rank	equally	with	all	other	senior	and unsubordinated	indebtedness	of	the	Company.

# Private	Notes

In	July	2006,	the	Company	entered	into	a	Note	Purchase	Agreement	to	issue	a	€175	million	aggregate	principal	ten	year	private	placement	fixed rate	note	with	a	coupon	rate	of	4.585%.	The	notes	were	repaid	in	December	2016.

The	series	of	notes	issued	by	the	Company	in	November	2011	pursuant	to	private	debt	offerings	(the	"Private	Notes")	may	be	redeemed	by	the Company	at	its	option	at	redemption	prices	that	include	accrued	and	unpaid	interest	and	a	make-whole	premium.	Upon	the	occurrence	of specified	changes	of	control	involving	the	Company,	the	Company	will	be	required	to	offer	to	repurchase	the	Private	Notes	at	a	price	equal	to 100%	of	the	aggregate	principal	amount	thereof,	plus	any	accrued	and	unpaid	interest	to	the	date	of	repurchase.	Additionally,	the	Company	will be	required	to	make	a	similar	offer	to	repurchase	the	Private	Notes	upon	the	occurrence	of	specified	merger	events	or	asset	sales	involving	the Company,	when	accompanied	by	a	downgrade	of	the	Private	Notes	below	investment	grade	rating,	within	a	specified	time	period.

The	Private	Notes	are	unsecured	senior	obligations	of	the	Company	and	rank	equal	in	right	of	payment	with	all	other	senior	indebtedness	of	the Company.	The	Private	Notes	shall	be	unconditionally	guaranteed	by	subsidiaries	of	the	Company	in	certain	circumstances,	as	described	in	the note	purchase	agreements	as	amended.

# Other	Debt

During	2015,	the	Company	acquired	the	beneficial	interest	in	the	trust	owning	the	leased	Naperville	facility	resulting	in	debt	assumption	of $100.2	million	and	the	addition	of	$135.2	million	in	property,	plant	and	equipment.	Certain	administrative,	divisional,	and	research	and development	personnel	are	based	at	the	Naperville	facility.	Cash	paid	as	a	result	of	the	transaction	was	$19.8	million.	The	assumed	debt	which has	been	reduced	by	payment	activity,	is	reflected	within	the	"Other"	line	of	the	table	above.	The	assumption	of	debt	and	the	majority	of	the property,	plant	and	equipment	addition	represented	non-cash	financing	and	investing	activities,	respectively.

# Covenants	and	Future	Maturities

The	Company	is	in	compliance	with	all	covenants	under	the	Company's	outstanding	indebtedness	at	December	31,	2016.

As	of	December	31,	2016,	the	aggregate	annual	maturities	of	long-term	debt	for	the	next	five	years	were:

| (millions) |  |
| :--- | :--- |
| 2017 | $511 |
| 2018 | 560 |
| 2019 | 408 |
| 2020 | 311 |
| 2021 | 1,257 |

# Net	Interest	Expense

Interest	expense	and	interest	income	incurred	during	2016,	2015	and	2014	were	as	follows:

| (millions) | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- |
| Interest\texpense | $285.4 | $253.7 | $268.0 |
| Interest\tincome | (20.8) | (10.1) | (11.4) |
| Interest\texpense,\tnet | $264.6 | $243.6 | $256.6 |

Interest	expense	generally	includes	the	expense	associated	with	the	interest	on	the	Company's	outstanding	borrowings.	Interest	expense	also includes	the	amortization	of	debt	issuance	costs	and	debt	discounts,	which	are	both	recognized	over	the	term	of	the	related	debt.

# 7.	FAIR	VALUE	MEASUREMENTS

The	Company's	financial	instruments	include	cash	and	cash	equivalents,	restricted	cash,	accounts	receivable,	accounts	payable,	contingent consideration	obligations,	commercial	paper,	notes	payable,	foreign	currency	forward	contracts,	interest	rate	swap	agreements	and	long-term debt.

Fair	value	is	defined	as	the	amount	that	would	be	received	to	sell	an	asset	or	paid	to	transfer	a	liability	in	an	orderly	transaction	between	market participants	as	of	the	measurement	date.	A	hierarchy	has	been	established	for	inputs	used	in	measuring	fair	value	that	maximizes	the	use	of observable	inputs	and	minimizes	the	use	of	unobservable	inputs	by	requiring	the	most	observable	inputs	be	used	when	available.	The	hierarchy is	broken	down	into	three	levels:

Level	1	-	Inputs	are	quoted	prices	in	active	markets	that	are	accessible	at	the	measurement	date	for	identical	assets	or	liabilities.

Level	2	-	Inputs	include	observable	inputs	other	than	quoted	prices	in	active	markets.

Level	3	-	Inputs	are	unobservable	inputs	for	which	there	is	little	or	no	market	data	available.

The	carrying	amount	and	the	estimated	fair	value	for	assets	and	liabilities	measured	on	a	recurring	basis	were:

| December	31,	(millions) | Carrying<br>Amount | Level	1 | Fair	Value	Measurements<br>Level	2 | Level	3 |
| :--- | :--- | :--- | :--- | :--- |
| Assets |  |  |  |  |
| Foreign\tcurrency\tforward\tcontracts | 93.4 | \t- | 93.4 | \t- |
| Liabilities |  |  |  |  |
| Foreign\tcurrency\tforward\tcontracts | 46.7 | \t- | 46.7 | \t- |
| Interest\trate\tswap\tagreements | 3.5 | \t- | 3.5 | \t- |

| December	31,	(millions) | Carrying<br>Amount | Level	1 | 2015<br>Fair	Value	Measurements<br>Level	2 | Level		3 |
| :--- | :--- | :--- | :--- | :--- |
| Assets |  |  |  |  |
| Foreign\tcurrency\tforward\tcontracts | 111.2 | \t- | 111.2 | \t- |
| Contingent\tconsideration | 0.3 | \t- | \t- | 0.3 |
| Liabilities |  |  |  |  |
| Foreign\tcurrency\tforward\tcontracts | 35.9 | \t- | 35.9 | \t- |
| Interest\trate\tswap\tagreements | 5.4 | \t- | 5.4 | \t- |
| Contingent\tconsideration | 15.9 | \t- | \t- | 15.9 |

The	carrying	value	of	foreign	currency	forward	contracts	is	at	fair	value,	which	is	determined	based	on	foreign	currency	exchange	rates	as	of	the balance	sheet	date,	and	is	classified	within	level	2.	The	carrying	value	of	interest	rate	swap	contracts	is	at	fair	value,	which	is	determined	based on	current	interest	rates	and	forward	interest	rates	as	of	the	balance	sheet	date	and	is	classified	within	level	2.	For	purposes	of	fair	value disclosure	above,	derivative	values	are	presented	gross.	See	further	discussion	of	gross	versus	net	presentation	of	the	Company's	derivatives within	Note	8.

Contingent	consideration	obligations	are	recognized	and	measured	at	fair	value	at	the	acquisition	date	and	thereafter	until	settlement. Contingent	consideration	is	classified	within	level	3	as	the	underlying	fair	value	is	measured	based	on	the	probability-weighted	present	value	of the	consideration	expected	to	be	transferred.	The	consideration	expected	to	be	transferred	is	based	on	the	Company's	expectations	of	various financial	measures.	The	ultimate	payment	of	contingent	consideration	could	deviate	from	current	estimates	based	on	the	actual	results	of	these financial	measures.

Changes	in	the	fair	value	of	contingent	consideration	obligations	during	2016	and	2015	were	as	follows:

| (millions) | 2016 | 2015 |
| :--- | :--- | :--- |
| Contingent\tconsideration\tat\tbeginning\tof\tyear | $15.6 | $1.3 |
| Amount\trecognized\tat\ttransaction\tdate | \t- | 16.0 |
| Losses\t(gains)\trecognized\tin\tearnings | (2.4) | (0.2) |
| Settlements | (12.6) | (1.0) |
| Foreign\tcurrency\ttranslation | (0.6) | (0.5) |
| Contingent\tconsideration\tat\tend\tof\tyear | $\t- | $15.6 |

The	carrying	values	of	accounts	receivable,	accounts	payable,	cash	and	cash	equivalents,	restricted	cash,	commercial	paper	and	notes	payable approximate	fair	value	because	of	their	short	maturities,	and	as	such	are	classified	within	level	1.

The	fair	value	of	long-term	debt	is	based	on	quoted	market	prices	for	the	same	or	similar	debt	instruments	(classified	as	level	2).	The	carrying amount	and	the	estimated	fair	value	of	long-term	debt,	including	current	maturities,	held	by	the	Company	were:

| December	31,	(millions) | Carrying | Fair | Carrying | Fair |
| :--- | :--- | :--- | :--- | :--- |
|  | Amount | Value | Amount | Value |
| Long-term\tdebt,\tincluding\tcurrent\tmaturities | $6,657.1 | $6,963.9 | $5,829.6 | $6,113.6 |

# 8.	DERIVATIVES	AND	HEDGING	TRANSACTIONS

The	Company	uses	foreign	currency	forward	contracts,	interest	rate	swap	agreements	and	foreign	currency	debt	to	manage	risks	associated with	foreign	currency	exchange	rates,	interest	rates	and	net	investments	in	foreign	operations.	The	Company	does	not	hold	derivative	financial instruments	of	a	speculative	nature	or	for	trading	purposes.	The	Company	records	derivatives	as	assets	and	liabilities	on	the	balance	sheet	at fair	value.	Changes	in	fair	value	are	recognized	immediately	in	earnings	unless	the	derivative	qualifies	and	is	designated	as	a	hedge.	Cash flows	from	derivatives	are	classified	in	the	statement	of	cash	flows	in	the	same	category	as	the	cash	flows	from	the	items	subject	to	designated hedge	or	undesignated	(economic)	hedge	relationships.	The	Company	evaluates	hedge	effectiveness	at	inception	and	on	an	ongoing	basis.	If	a derivative	is	no	longer	expected	to	be	effective,	hedge	accounting	is	discontinued.	Hedge	ineffectiveness,	if	any,	is	recorded	in	earnings.

The	Company	is	exposed	to	credit	risk	in	the	event	of	nonperformance	of	counterparties	for	foreign	currency	forward	exchange	contracts	and interest	rate	swap	agreements.	The	Company	monitors	its	exposure	to	credit	risk	by	using	credit	approvals	and	credit	limits	and	by	selecting major	international	banks	and	financial	institutions	as	counterparties.	The	Company	does	not	anticipate	nonperformance	by	any	of	these counterparties,	and	therefore,	recording	a	valuation	allowance	against	the	Company's	derivative	balance	is	not	considered	necessary.

# Derivative	Positions	Summary

Certain	of	the	Company's	derivative	transactions	are	subject	to	master	netting	arrangements	that	allow	the	Company	to	net	settle	contracts	with the	same	counterparties.	These	arrangements	generally	do	not	call	for	collateral	and	as	of	the	applicable	dates	presented	below,	no	cash collateral	had	been	received	or	pledged	related	to	the	underlying	derivatives.

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

The	following	table	summarizes	the	gross	fair	value	of	the	Company's	outstanding	derivatives.

|  | Asset	Derivatives | Asset	Derivatives | Liability	Derivatives |  |
| :--- | :--- | :--- | :--- | :--- |
| (millions) | 2016 | 2015 | 2016 | 2015 |
| Derivatives\tdesignated\tas\thedging\tinstruments |  |  |  |  |
| Foreign\tcurrency\tforward\tcontracts | $73.4 | $70.2 | $19.8 | $3.2 |
| Interest\trate\tswap\tagreements | \t- | \t- | 3.5 | 5.4 |
| Derivatives\tnot\tdesignated\tas\thedging\tinstruments |  |  |  |  |
| Foreign\tcurrency\tforward\tcontracts | 20.0 | 41.0 | 26.9 | 32.7 |
| Gross\tvalue\tof\tderivatives | 93.4 | 111.2 | 50.2 | 41.3 |
| Gross\tamounts\toffset\tin\tthe\tConsolidated\tBalance\tSheet | (25.7) | (9.8) | (25.7) | (9.8) |
| Net\tvalue\tof\tderivatives | $67.7 | $101.4 | $24.5 | $31.5 |

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

|  | Notional	Values |  |
| :--- | :--- | :--- |
| (millions) | 2016 | 2015 |
| Foreign\tcurrency\tforward\tcontracts | $4,317 | $4,029 |
| Interest\trate\tagreements | $1,450 | $1,675 |
| Net\tinvestment\thedge\tcontracts\t(a) | €\t0 | €\t25 |

(a) The	net	investment	hedge	contracts	exclude	the	Company's	euro	denominated	debt.

# Cash	Flow	Hedges

The	Company	utilizes	foreign	currency	forward	contracts	to	hedge	the	effect	of	foreign	currency	exchange	rate	fluctuations	on	forecasted foreign	currency	transactions,	including	inventory	purchases	and	intercompany	royalty,	management	fee	and	other	payments.	These	forward contracts	are	designated	as	cash	flow	hedges.	The	effective	portions	of	the	changes	in	fair	value	of	these	contracts	are	recorded	in accumulated	other	comprehensive	income	("AOCI")	until	the	hedged	items	affect	earnings,	at	which	time	the	gain	or	loss	is	reclassified	into	the same	line	item	in	the	Consolidated	Statement	of	Income	as	the	underlying	exposure	being	hedged.	All	cash	flow	hedged	transactions	are forecasted	to	occur	within	the	next	two	years.

The	Company	occasionally	enters	into	forward	starting	interest	rate	swap	or	treasury	lock	agreements	to	manage	interest	rate	exposure.

During	2016	and	2015,	the	Company	entered	into	and	subsequently	closed	a	series	of	treasury	lock	and	forward	starting	interest	rate	swap agreements,	in	conjunction	with	both	its	U.S.	public	debt	issuances	in	January	and	October	2016,	as	discussed	in	Note	6.

During	2014,	the	Company	entered	into	and	subsequently	closed	a	series	of	forward	starting	interest	rate	swap	agreements	in	connection	with both	its	U.S.	public	debt	issuance	completed	in	January	2015	and	its	euro	public	debt	issuance	completed	in	July	2015.	During	2011,	the Company	entered	into	and	subsequently	closed	a	series	of	forward	starting	interest	rate	swap	agreements	in	connection	with	the	issuance	of	its private	placement	debt.	During	2006,	the	Company	entered	into	and	subsequently	closed	two	forward	starting	interest	rate	swap	agreements related	to	the	issuance	of	its	senior	euro	notes.

The	agreements	noted	above	were	designated	and	effective	as	a	cash	flow	hedge	of	the	expected	interest	payments	related	to	the	anticipated future	debt	issuance.	Amounts	recorded	in	AOCI	for	the	respective	transactions	above	are	recognized	as	part	of	interest	expense	over	the remaining	life	of	the	notes	as	the	forecasted	interest	transactions	occur.

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

| (millions) |  |  | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Unrealized\tgain\t(loss)\trecognized\tinto\tAOCI |  |  |  |  |  |
| Foreign\tcurrency\tforward\tcontracts | \tAOCI\t(equity) | \tAOCI\t(equity) | $7.0 | $68.4 | $26.7 |
| Interest\trate\tswap\tagreements | \tAOCI\t(equity) | \tAOCI\t(equity) | (9.3) | 3.6 | (22.1) |
|  | Total | Total | (2.3) | 72.0 | 4.6 |
| (millions) |  |  |  |  |  |
| Gain\t(loss)\trecognized\tin\tincome |  |  |  |  |  |
| Foreign\tcurrency\tforward\tcontracts | \tCost\tof\tsales | \tCost\tof\tsales | 23.0 | 30.9 | 6.1 |
|  | SG&amp;A | \tSG&amp;A | (0.1) | 24.7 | 1.5 |
|  | Interest\texpense,\tnet | \tInterest\texpense,\tnet | 5.8 | 2.9 | \t- |
|  | Subtotal | Total | 28.7 | 58.5 | 7.6 |
| Interest\trate\tswap\tagreements | \tInterest\texpense,\tnet | \tInterest\texpense,\tnet | (6.6) | (5.5) | (4.1) |
|  | Total | Total | $22.1 | $53.0 | $3.5 |

Gains	and	losses	recognized	in	income	related	to	the	ineffective	portion	of	the	Company's	cash	flow	hedges	were	insignificant	during	2016, 2015	and	2014.

# Fair	Value	Hedges

The	Company	manages	interest	expense	using	a	mix	of	fixed	and	floating	rate	debt.	To	help	manage	exposure	to	interest	rate	movements	and to	reduce	borrowing	costs,	the	Company	may	enter	into	interest	rate	swaps	under	which	the	Company	agrees	to	exchange,	at	specified intervals,	the	difference	between	fixed	and	floating	interest	amounts	calculated	by	reference	to	an	agreed	upon	notional	principal	amount.	The mark-to-market	of	these	fair	value	hedges	is	recorded	as	gains	or	losses	in	interest	expense	and	is	offset	by	the	gain	or	loss	of	the	underlying debt	instrument,	which	also	is	recorded	in	interest	expense.	These	fair	value	hedges	are	highly	effective	and	thus,	there	is	no	impact	on	earnings due	to	hedge	ineffectiveness.

In	January	2016,	the	Company	entered	into	an	interest	rate	swap	agreement	that	converted	its	$400	million	2.00%	debt	from	a	fixed	rate	to	a floating	rate.	In	January	2015,	the	Company	entered	into	interest	rate	swap	agreements	that	converted	its	$300	million	1.55%	debt,	its	$250 million	3.69%	debt	and	a	portion	of	its	$1.25	billion	3.00%	debt	from	fixed	rates	to	floating	interest	rates.	In	May	2014,	the	Company	entered	into an	interest	rate	swap	agreement	that	converted	its	$500	million	1.45%	debt	from	a	fixed	rate	to	a	floating	interest	rate.	The	interest	rate	swap agreement	tied	to	a	portion	of	the	Company's	$1.25	billion	3.00%	debt	expired	in	December	2016	upon	repayment	of	the	underlying	debt.

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

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

# Derivatives	Not	Designated	as	Hedging	Instruments

The	Company	also	uses	foreign	currency	forward	contracts	to	offset	its	exposure	to	the	change	in	value	of	certain	foreign	currency	denominated assets	and	liabilities	held	at	foreign	subsidiaries,	primarily	receivables	and	payables,	which	are	remeasured	at	the	end	of	each	period.	Although the	contracts	are	effective	economic	hedges,	they	are	not	designated	as	accounting	hedges.	Therefore,	changes	in	the	value	of	these derivatives	are	recognized	immediately	in	earnings,	thereby	offsetting	the	current	earnings	effect	of	the	related	foreign	currency	denominated assets	and	liabilities.

The	impact	on	earnings	from	derivative	contracts	that	are	not	designated	as	hedging	instruments	was	as	follows:

| (millions) |  | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- | :--- |
| Gain\t(loss)\trecognized\tin\tincome |  |  |  |  |
| Foreign\tcurrency\tforward\tcontracts | \tSG&amp;A | $(6.0) | $15.9 | $8.6 |
|  | Interest\texpense,\tnet | (8.4) | (8.6) | (9.0) |
|  | Total | $(14.4) | $7.3 | $(0.4) |

The	amounts	recognized	in	SG&A	above	offset	the	earnings	impact	of	the	related	foreign	currency	denominated	assets	and	liabilities.	The amounts	recognized	in	interest	expense	above	represent	the	component	of	the	hedging	gains	(losses)	attributable	to	the	difference	between	the spot	and	forward	rates	of	the	hedges	as	a	result	of	interest	rate	differentials.

# 9.	OTHER	COMPREHENSIVE	INCOME	(LOSS)	INFORMATION

Comprehensive	income	(loss)	includes	net	income,	foreign	currency	translation	adjustments,	unrecognized	gains	and	losses	on	securities, defined	benefit	pension	and	postretirement	plan	adjustments,	gains	and	losses	on	derivative	instruments	designated	and	effective	as	cash	flow hedges	and	non-derivative	instruments	designated	and	effective	as	foreign	currency	net	investment	hedges	that	are	charged	or	credited	to	the accumulated	other	comprehensive	loss	account	in	shareholders'	equity.

The	following	table	provides	other	comprehensive	income	(loss)	information	related	to	the	Company's	derivatives	and	hedging	instruments	and pension	and	postretirement	benefits.	See	Note	8	for	additional	information	related	to	the	Company's	derivatives	and	hedging	transactions.	See Note	16	for	additional	information	related	to	the	Company's	pension	and	postretirement	benefits	activity.

| (millions) | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- |
| Derivative\tand\tHedging\tInstruments |  |  |  |
| Unrealized\tgains\t(losses)\ton\tderivative\t&amp;\thedging\tinstruments |  |  |  |
| Amount\trecognized\tin\tAOCI | $(2.3) | $72.0 | $4.6 |
| (Gains)\tlosses\treclassified\tfrom\tAOCI\tinto\tincome |  |  |  |
| Cost\tof\tsales | (23.0) | (30.9) | (6.1) |
| SG&amp;A | 0.1 | (24.7) | (1.5) |
| Interest\texpense,\tnet | 0.8 | 2.6 | 4.1 |
|  | (22.1) | (53.0) | (3.5) |
| Other\tactivity | (0.2) | 1.7 | \t- |
| Tax\timpact | 7.1 | (9.0) | 2.8 |
| Net\tof\ttax | $(17.5) | $11.7 | $3.9 |
| Pension\tand\tPostretirement\tBenefits |  |  |  |
| Amount\trecognized\tin\tAOCI |  |  |  |
| Current\tperiod\tnet\tactuarial\tincome\t(loss)\tand\tprior\tservice\tcosts | $(136.0) | $2.8 | $(517.7) |
| Amount\treclassified\tfrom\tAOCI\tinto\tincome |  |  |  |
| Amortization\tof\tnet\tactuarial\tloss\tand\tprior\tservice\tcosts\tand\tbenefits\tadjustments | 32.2 | 52.0 | 17.5 |
| Reclassification\tassociated\twith\tVenezuelan\tentities | \t- | 3.5 | \t- |
| Postretirement\tbenefits\tchanges | 54.0 | \t- | \t- |
|  | (49.8) | 58.3 | (500.2) |
| Tax\timpact | 9.3 | (20.3) | 156.9 |
| Net\tof\ttax | $(40.5) | $38.0 | $(343.3) |

# 10.	SHAREHOLDERS'	EQUITY

The	Company	has	15	million	shares,	without	par	value,	of	authorized	but	unissued	and	undesignated	preferred	stock.	The	Company's	former shareholder	rights	agreement	was	amended	in	December	2012	and	the	rights	agreement	was	terminated	as	of	December	31,	2012.	Prior	to termination	of	the	rights	agreement,	0.4	million	shares	of	preferred	stock	were	designated	as	Series	A	Junior	Participating	Preferred	Stock	and were	reserved	for	issuance	in	connection	with	the	rights	agreement,	with	the	remaining	14.6	million	shares	of	preferred	stock	being undesignated.	Following	termination	of	the	rights	agreement,	a	Certificate	of	Elimination	of	the	Series	A	Junior	Participating	Preferred	Stock	was filed	on	January	2,	2013	with	the	Delaware	Secretary	of	State	to	restore	the	0.4	million	shares	designated	as	Series	A	Junior	Participating Preferred	Stock	to	the	status	of	undesignated	preferred	stock.

# Share	Repurchase	Authorization

The	Company	has	a	share	repurchase	program	and	generally	repurchases	shares	on	the	open	market	to	offset	the	dilutive	effect	of	its	equity compensation	plans,	with	repurchases	above	that	level	used	to	manage	the	Company's	capital	structure	and	efficiently	return	capital	to shareholders.

In	August	2011,	the	Finance	Committee	of	the	Company's	Board	of	Directors,	via	delegation	by	the	Company's	Board	of	Directors,	authorized the	repurchase	of	10	million	common	shares,	including	shares	to	be	repurchased	under	Rule	10b5-1,	which	was	contingent	upon	completion	of the	merger	with	Nalco.	This	authorization	was	completed	during	the	first	quarter	of	2016.

In	February	2015,	the	Company's	Board	of	Directors	authorized	the	repurchase	of	up	to	20	million	additional	shares	of	its	common	stock, including	shares	to	be	repurchased	under	Rule	10b5-1.	In	February	2015,	under	the	existing	repurchase	authorization,	the	Company	announced a	$1.0	billion	share	repurchase	program,	which	was	completed	during	the	second	quarter	of	2016.

As	of	December	31,	2016,	16,772,526	shares	remained	to	be	repurchased	under	the	Company's	repurchase	authorization.	The	Company intends	to	repurchase	all	shares	under	its	authorization,	for	which	no	expiration	date	has	been	established,	in	open	market	or	privately negotiated	transactions,	subject	to	market	conditions.

# Accelerated	Stock	Repurchase	("ASR")	Agreements

In	February	2015,	the	Company	entered	into	an	ASR	agreement	with	a	financial	institution	to	repurchase	$300	million	of	its	common	stock	and received	2,066,293	shares	of	its	common	stock,	which	was	approximately	80%	of	the	total	number	of	shares	the	Company	expected	to	be repurchased	under	the	ASR,	based	on	the	price	of	the	Company's	common	stock	at	that	time.	In	February	2016,	the	Company	entered	into	an ASR	agreement	to	repurchase	$300	million	of	its	common	stock	and	received	2,459,490	shares	of	its	common	stock,	which	was	approximately 85%	of	the	total	number	of	shares	the	Company	expected	to	be	repurchased	under	the	ASR,	based	on	the	price	of	the	Company's	common stock	at	that	time.

The	final	per	share	purchase	price	and	the	total	number	of	shares	to	be	repurchased	under	both	2016	and	2015	ASR	agreements	generally were	based	on	the	volume-weighted	average	price	of	the	Company's	common	stock	during	the	term	of	the	agreements.	Upon	final	settlement	of the	two	ASR	agreements,	under	certain	circumstances,	the	financial	institutions	were	obligated	to	deliver	additional	shares	to	the	Company	or the	Company	was	obligated	to	deliver	additional	shares	of	common	stock	or	make	a	cash	payment,	at	the	Company's	election,	to	the	financial institutions.

In	connection	with	the	finalization	of	the	ASR	agreement	in	April	2015,	the	Company	received	an	additional	555,511	shares	of	common	stock.	In connection	with	the	finalization	of	the	ASR	agreement	in	May	2016,	the	Company	received	an	additional	232,012	shares	of	common	stock.

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

During	their	respective	open	periods	in	2015	and	2016,	neither	of	the	ASRs	was	dilutive	to	the	Company's	earnings	per	share	calculations,	nor did	they	trigger	the	two-class	earnings	per	share	methodology.	Additionally,	the	unsettled	portion	of	ASRs	during	their	respective	open	periods met	the	criteria	to	be	accounted	for	as	a	forward	contract	indexed	to	the	Company's	stock	and	qualified	as	equity	transactions.

The	initial	delivery	of	shares,	as	well	as	the	additional	receipt	of	shares	at	settlement	resulted	in	a	reduction	to	the	Company's	common	stock outstanding	used	to	calculate	earnings	per	share,	the	impact	of	which	was	not	material.

In	February	2017,	separate	from	the	ASRs	discussed	above,	the	Company	entered	into	an	ASR	agreement	with	a	financial	institution	to repurchase	$300	million	of	its	common	stock.

# Share	Repurchases

In	accordance	with	its	share	repurchase	program	through	open	market	or	private	purchases,	including	the	ASR	discussed	above,	the	Company reacquired	6,126,033	shares,	6,267,699	shares	and	3,547,334	shares	of	its	common	stock	in	2016,	2015	and	2014,	respectively.

The	Company	also	reacquired	357,165,	398,704	and	489,854	shares	withheld	for	taxes	related	to	the	exercise	of	stock	options	and	the	vesting of	stock	awards	and	units	in	2016,	2015	and	2014,	respectively.

# 11.	EQUITY	COMPENSATION	PLANS

The	Company	measures	compensation	expense	for	share-based	awards	at	fair	value	at	the	date	of	grant	and	recognizes	compensation	expense over	the	service	period	for	awards	expected	to	vest.	The	majority	of	grants	to	retirement	eligible	recipients	(age	55	with	required	years	of service)	are	attributed	to	expense	using	the	non-substantive	vesting	method	and	are	fully	expensed	over	a	six	month	period	following	the	date	of grant.	In	addition,	the	Company	includes	a	forfeiture	estimate	in	the	amount	of	compensation	expense	being	recognized	based	on	an	estimate of	the	number	of	outstanding	awards	expected	to	vest.

The	Company's	equity	compensation	plans	provide	for	grants	of	stock	options,	performance-based	restricted	stock	units	("PBRSUs")	and		non- performance-based	restricted	stock	units	("RSUs")	and	restricted	stock	awards	("RSAs").	Common	shares	available	for	grant	as	of December	31,	2016,	2015	and	2014	were	13,649,667,	15,888,937	and	17,999,689,	respectively.	The	Company	generally	issues	authorized	but previously	unissued	shares	to	satisfy	stock	option	exercises	and	stock	award	vestings.

The	Company's	annual	long-term	incentive	share-based	compensation	program	is	made	up	of	50%	stock	options	and	50%	PBRSUs.	The Company	also	periodically	grants	RSUs.	Total	compensation	expense	related	to	all	share-based	compensation	plans	was	$86	million	($59 million	net	of	tax	benefit),	$78	million	($54	million	net	of	tax	benefit)	and	$71	million	($49	million	net	of	tax	benefit)	for	2016,	2015	and	2014, respectively.	As	of	December	31,	2016,	there	was	$137	million	of	total	measured	but	unrecognized	compensation	expense	related	to	non- vested	share-based	compensation	arrangements	granted	under	all	of	the	Company's	plans.	That	cost	is	expected	to	be	recognized	over	a weighted-average	period	of	2.1	years.

# Stock	Options

Stock	options	are	granted	to	purchase	shares	of	the	Company's	stock	at	the	average	daily	share	price	on	the	date	of	grant.	These	options generally	expire	within	ten	years	from	the	grant	date.	The	Company	generally	recognizes	compensation	expense	for	these

awards	on	a	straight-line	basis	over	the	three	year	vesting	period.	As	previously	noted,	stock	option	grants	to	retirement	eligible	recipients	are attributed	to	expense	using	the	non-substantive	vesting	method.

A	summary	of	stock	option	activity	and	average	exercise	prices	is	as	follows:

|  | 2016 |  | 2015 |  | 2014 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Number\tof | Exercise | Number\tof | Exercise | Number\tof | Exercise |
|  | Options | Price\t(a) | Options | Price\t(a) | Options | Price\t(a) |
| Outstanding,\tbeginning\tof\tyear | 12,378,372 | $74.23 | 13,169,776 | $63.88 | 13,926,256 | $55.66 |
| Granted | 1,679,941 | 117.60 | 1,686,816 | 118.99 | 1,645,937 | 107.63 |
| Exercised | (2,061,553) | 50.33 | (2,316,025) | 46.22 | (2,316,918) | 44.79 |
| Canceled | (86,259) | 111.08 | (162,195) | 99.67 | (85,499) | 83.81 |
| Outstanding,\tend\tof\tyear | 11,910,501 | $84.22 | 12,378,372 | $74.23 | 13,169,776 | $63.88 |
| Exercisable,\tend\tof\tyear | 8,720,943 | $72.35 | 9,248,880 | $61.18 | 9,820,826 | $52.21 |
| Vested\tand\texpected\tto\tvest,\tend\tof\tyear | 11,688,758 | $83.63 |  |  |  |  |

# (a) Represents	weighted	average	price	per	share.

The	total	aggregate	intrinsic	value	of	options	(the	amount	by	which	the	stock	price	exceeded	the	exercise	price	of	the	option	on	the	date	of exercise)	that	were	exercised	during	2016,	2015	and	2014	was	$140	million,	$160	million	and	$150	million,	respectively.

The	total	aggregate	intrinsic	value	of	options	outstanding	as	of	December	31,	2016	was	$398	million,	with	a	corresponding	weighted-average remaining	contractual	life	of	6.4	years.	The	total	aggregate	intrinsic	value	of	options	exercisable	as	of	December	31,	2016	was	$395	million,	with a	corresponding	weighted-average	remaining	contractual	life	of	5.3	years.	The	total	aggregate	intrinsic	value	of	options	vested	and	expected	to vest	as	of	December	31,	2016	was	$397	million,	with	a	corresponding	weighted-average	remaining	contractual	life	of	6.3	years.

The	lattice	(binomial)	option-pricing	model	is	used	to	estimate	the	fair	value	of	options	at	grant	date.	The	Company's	primary	employee	option grant	occurs	during	the	fourth	quarter.	The	weighted-average	grant-date	fair	value	of	options	granted	and	the	significant	assumptions	used	in determining	the	underlying	fair	value	of	each	option	grant,	on	the	date	of	grant	were	as	follows:

|  | 2016 | 2015 |  | 2014 |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Weighted-average\tgrant-date\tfair\tvalue\tof\toptions |  |  |  |  |  |
| granted\tat\tmarket\tprices | $25.59 | $25.71 |  | $23.18 |  |
| Assumptions |  |  |  |  |  |
| Risk-free\trate\tof\treturn | 2.0 % | 1.8 % | 1.8 % | 1.8 % | 1.8 % |
| Expected\tlife | 6 years | 6 | years | 6 | years |
| Expected\tvolatility | 22.9 % | 22.9 % | 22.9 % | 22.9 % | 22.9 % |
| Expected\tdividend\tyield | 1.3 % | 1.2 % | 1.2 % | 1.2 % | 1.2 % |

The	risk-free	rate	of	return	is	determined	based	on	a	yield	curve	of	U.S.	treasury	rates	from	one	month	to	ten	years	and	a	period	commensurate with	the	expected	life	of	the	options	granted.	Expected	volatility	is	established	based	on	historical	volatility	of	the	Company's	stock	price.	The expected	dividend	yield	is	determined	based	on	the	Company's	annual	dividend	amount	as	a	percentage	of	the	average	stock	price	at	the	time of	the	grant.

# PBRSUs,	RSUs	and	RSAs

The	expense	associated	with	PBRSUs	is	based	on	the	average	of	the	high	and	low	share	price	of	the	Company's	common	stock	on	the	date	of grant,	adjusted	for	the	absence	of	future	dividends.	The	awards	vest	based	on	the	Company	achieving	a	defined	performance	target	and	with continued	service	for	a	three	year	period.	Upon	vesting,	the	Company	issues	shares	of	its	common	stock	such	that	one	award	unit	equals	one share	of	common	stock.	The	Company	assesses	the	probability	of	achieving	the	performance	target	and	recognizes	expense	over	the	three	year vesting	period	when	it	is	probable	the	performance	target	will	be	met.	PBRSU	awards	granted	to	retirement	eligible	recipients	are	attributed	to expense	using	the	non-substantive	vesting	method.	The	awards	are	generally	subject	to	forfeiture	in	the	event	of	termination	of	employment.

The	expense	associated	with	shares	of	non-performance	based	RSUs	and	RSAs	is	based	on	the	average	of	the	high	and	low	share	price	of	the Company's	common	stock	on	the	date	of	grant,	adjusted	for	the	absence	of	future	dividends	and	is	amortized	on	a	straight-line	basis	over	the periods	during	which	the	restrictions	lapse.	The	Company	currently	has	RSUs	that	vest	over	periods	between	12	and	84	months.	The	remaining RSAs	vested	during	2015.	The	awards	are	generally	subject	to	forfeiture	in	the	event	of	termination	of	employment.

A	summary	of	non-vested	PBRSUs	and	restricted	stock	activity	is	as	follows:

|  | PBRSU<br>Awards | Grant	Date<br>Fair	Value	(a) | RSAs	and<br>RSUs | Grant	Date<br>Fair	Value	(a) |
| :--- | :--- | :--- | :--- | :--- |
| December\t31,\t2013 | 1,750,269 | $64.49 | 622,021 | $64.04 |
| Granted | 373,337 | 103.10 | 109,665 | 102.62 |
| Vested\t/\tEarned | (503,324) | 47.98 | (306,830) | 55.83 |
| Canceled | (27,048) | 74.09 | (23,785) | 73.01 |
| December\t31,\t2014 | 1,593,234 | $78.59 | 401,071 | $80.33 |
| Granted | 368,373 | 114.31 | 103,841 | 112.90 |
| Vested\t/\tEarned | (468,317) | 52.97 | (212,576) | 67.70 |
| Canceled | (49,101) | 90.97 | (19,101) | 81.06 |
| December\t31,\t2015 | 1,444,189 | $95.59 | 273,235 | $102.49 |
| Granted | 371,859 | 112.29 | 88,437 | 109.27 |
| Vested\t/\tEarned | (402,509) | 68.64 | (96,874) | 94.06 |
| Canceled | (26,852) | 105.09 | (10,411) | 105.07 |
| December\t31,\t2016 | 1,386,687 | $107.70 | 254,387 | $107.95 |

Income	before	income	taxes	consisted	of:

The	Company's	overall	net	deferred	tax	assets	and	deferred	tax	liabilities	were	comprised	of	the	following:

| December	31	(millions) | 2016 | 2015 |
| :--- | :--- | :--- |
| Deferred\ttax\tassets |  |  |
| Other\taccrued\tliabilities | $187.4 | $172.7 |
| Loss\tcarryforwards | 54.8 | 62.4 |
| Share-based\tcompensation | 83.1 | 75.2 |
| Pension\tand\tother\tcomprehensive\tincome | 264.7 | 309.0 |
| Foreign\ttax\tcredits | 21.8 | 31.3 |
| Other,\tnet | 111.1 | 78.5 |
| Valuation\tallowance | (19.9) | (31.8) |
| Total | 703.0 | 697.3 |
| Deferred\ttax\tliabilities |  |  |
| Property,\tplant\tand\tequipment\tbasis\tdifferences | (275.4) | (267.5) |
| Intangible\tassets | (1,151.4) | (1,227.7) |
| Unremitted\tforeign\tearnings | \t- | (25.8) |
| Other,\tnet | (154.1) | (158.4) |
| Total | (1,580.9) | (1,679.4) |
| Net\tdeferred\ttax\tliabilities\tbalance | $(877.9) | $(982.1) |

As	of	December	31,	2016	the	Company	has	tax	effected	federal,	state	and	international	net	operating	loss	carryforwards	of	$0.7	million,	$12.1 million	and	$42.0	million,	respectively,	which	will	be	available	to	offset	future	taxable	income.	The	state	loss	carryforwards	expire	from	2017	to 2036.	For	the	international	loss	carryforwards,	$19.7	million	expire	from	2017	to	2036	and	$22.3	million	have	no	expiration.

The	Company	had	valuation	allowances	on	certain	deferred	tax	assets	of	$19.9	million	and	$31.8	million	at	December	31,	2016	and	2015, respectively.	During	2016,	the	Company	determined	sufficient	positive	income	trends	existed	to	conclude	it	was	more	likely	than	not	it	would	be able	to	realize	the	benefits	of	the	net	operating	losses	and	other	deferred	tax	assets	within	certain	underlying	foreign	entities	for	which	valuation allowances	had	been	recorded,	thus	resulting	in	valuation	allowance	releases	of	$11.5	million.	The	reduction	in	valuation	allowance	from	year end	2015	to	year	end	2016	was	also	driven	by	current	year	utilization	and	foreign	currency	translation.

The	Company's	U.S.	foreign	tax	credit	carryforward	of	$21.8	million	has	a	ten-year	carryforward	period	and	will	expire	between	2019	and	2025	if not	utilized.

The	Company	obtains	tax	benefits	from	tax	holidays	in	three	foreign	jurisdictions,	the	Dominican	Republic,	China	and	Singapore.	The	Company received	a	permit	of	operation,	which	expires	in	July	2021,	from	the	National	Council	of	Free	Zones	of	Exportation	for	the	Dominican	Republic. Companies	operating	under	the	Free	Zones	are	not	subject	to	income	tax	in	the	Dominican	Republic	on	export	income.	In	addition,	one	of	the Company's	legal	entities	in	China	is	entitled	to	the	benefit	of	incentives	provided	by	the	Chinese	government	to	technology	companies	in	order to	encourage	development	of	the	high-tech	industry,	including	reduced	tax	rates	and	other	measures.	As	a	result,	the	Company	was	entitled	to	a preferential	enterprise	income	tax	rate	of	15%	so	long	as	the	Company's	manufacturing	facilities	in	China	continue	to	maintain	their	High	and New	Technology	Enterprise	("HNTE")	status.	Finally,	in	Singapore,		the	Company	was	awarded	the	Development	and	Expansion	Incentive under	the	International	Headquarters	program.	This	provides	for	a	preferential	10%	tax	rate	on	certain	headquarter	income	and	is	valid	until February	2018.	The	tax	reduction	as	the	result	of	the	tax	holidays	for	2016	was	$6.4	million,	or	approximately	$0.02	per	diluted	share.	The impact	of	the	tax	holiday	was	similar	during	2015	and	2014.

A	reconciliation	of	the	statutory	U.S.	federal	income	tax	rate	to	the	Company's	effective	income	tax	rate	is	as	follows:

|  | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- |
| Statutory\tU.S.\trate | 35.0 % | 35.0 % | 35.0 % |
| State\tincome\ttaxes,\tnet\tof\tfederal\tbenefit | 0.9 | 0.4 | 1.6 |
| Foreign\toperations | (8.0) | (8.1) | (6.1) |
| Domestic\tmanufacturing\tdeduction | (2.0) | (2.7) | (2.0) |
| R&amp;D\tcredit | (1.1) | (1.0) | (0.7) |
| Change\tin\tvaluation\tallowance | (0.7) | (1.7) | (0.1) |
| Audit\tsettlements\tand\trefunds | (0.2) | (0.7) | 0.2 |
| Venezuela\tcharges | \t- | 4.5 | \t- |
| Worthless\tstock\tdeduction | 0.4 | (3.0) | \t- |
| Other,\tnet | 0.1 | 0.1 | 0.1 |
| Effective\tincome\ttax\trate | 24.4 % | 22.8 % | 28.0 % |

As	of	December	31,	2015,	the	Company	had	deferred	tax	liabilities	of	$25.8	million	on	foreign	earnings	of	the	legacy	Nalco	entities	and	legacy Champion	entities	that	the	Company	intended	to	repatriate.	The	deferred	tax	liabilities	originated	based	on	purchase	accounting	decisions	made in	connection	with	the	Nalco	merger	and	Champion	acquisition	and	were	the	result	of	extensive	studies	required	to	calculate	the	impact	at	the purchase	date.	The	remaining	foreign	earnings	were	repatriated	in	2016,	thus	reducing	the	deferred	tax	liabilities	to	zero	as	of	December	31, 2016.

U.S.	deferred	income	taxes	are	not	provided	on	certain	other	unremitted	foreign	earnings	that	are	considered	permanently	reinvested	which were	approximately	$2.1	billion	and	$1.8	billion	as	of	December	31,	2016	and	2015,	respectively.	These	earnings	are	considered	to	be reinvested	indefinitely	or	available	for	distribution	with	foreign	tax	credits	to	offset	the	amount	of	applicable	income	tax	and	foreign	withholding taxes	that	may	be	payable	on	remittance.	It	is	impractical	due	to	the	complexities	associated	with	its	hypothetical	calculation	to	determine	the amount	of	incremental	taxes	that	might	arise	if	all	undistributed	earnings	were	distributed.

The	Company	files	income	tax	returns	in	the	U.S.	federal	jurisdiction	and	various	U.S.	state	and	international	jurisdictions.	With	few	exceptions, the	Company	is	no	longer	subject	to	state	and	foreign	income	tax	examinations	by	tax	authorities	for	years	before	2012.	The	IRS	has	completed examinations	of	the	Company's	U.S.	federal	income	tax	returns	(Ecolab	and	Nalco)	through	2012.	The	IRS	has	completed	examinations	of	the Company's	U.S.	federal	income	tax	returns	(Champion)	through	2011	and	tax	year	2012	is	closed	by	statute	of	limitations.	The	Company's	U.S. federal	income	tax	return	for	the	years	2013	and	2014	are	currently	under	audit.	In	addition	to	the	U.S.	federal	examination,	there	is	ongoing audit	activity	in	several	U.S.	state	and	foreign	jurisdictions.	The	Company	anticipates	changes	to	its	uncertain	tax	positions	due	to	closing	of various	audit	years	mentioned	above.	The	Company	does	not	believe	these	changes	will	result	in	a	material	impact	during	the	next	twelve months.	Decreases	in	the	Company's	gross	liability	could	result	in	offsets	to	other	balance	sheet	accounts,	cash	payments,	and/or	adjustments to	tax	expense.	The	occurrence	of	these	events	and/or	other	events	not	included	above	within	the	next	twelve	months	could	change	depending on	a	variety	of	factors	and	result	in	amounts	different	from	above.

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

During	2015,	the	Company	recognized	net	benefits	related	to	discrete	tax	items	of	$63.3	million.	The	net	benefits	were	driven	primarily	by	the release	of	$20.6	million	of	valuation	allowances,	based	on	the	realizability	of	foreign	deferred	tax	assets	and	the	ability	to	recognize	a	worthless stock	deduction	of	$39.0	million	for	the	tax	basis	in	a	wholly-owned	domestic	subsidiary.

During	2014,	the	Company	recognized	net	expenses	related	to	discrete	tax	items	of	$13.2	million.	The	net	expenses	were	driven	primarily	by	an update	to	non-current	tax	liabilities	for	certain	global	tax	audits,	an	adjustment	related	to	the	re-characterization	of	intercompany	payments between	its	U.S.	and	foreign	affiliates,	the	remeasurement	of	certain	deferred	tax	assets	and	liabilities	resulting	from	changes	in	its	deferred state	tax	rate,	recognizing	adjustments	from	filing	its	2013	U.S.	federal	and	state	tax	returns,	net	changes	of	valuation	allowances	based	on	the realizability	of	foreign	deferred	tax	assets	and	the	impact	from	other	foreign	country	audit	settlements.

A	reconciliation	of	the	beginning	and	ending	amount	of	gross	liability	for	unrecognized	tax	benefits	is	as	follows:

| (millions) | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- |
| Balance\tat\tbeginning\tof\tyear | $74.6 | $78.7 | $98.7 |
| Additions\tbased\ton\ttax\tpositions\trelated\tto\tthe\tcurrent\tyear | 8.8 | 5.8 | 5.3 |
| Additions\tfor\ttax\tpositions\tof\tprior\tyears | 2.1 | 0.9 | 5.2 |
| Reductions\tfor\ttax\tpositions\tof\tprior\tyears | (1.0) | (8.8) | (17.8) |
| Reductions\tfor\ttax\tpositions\tdue\tto\tstatute\tof\tlimitations | (5.5) | (1.6) | (0.2) |
| Settlements | (2.0) | (4.2) | (9.0) |
| Assumed\tin\tconnection\twith\tacquisitions | \t- | 8.0 | \t- |
| Foreign\tcurrency\ttranslation | (1.1) | (4.2) | (3.5) |
| Balance\tat\tend\tof\tyear | $75.9 | $74.6 | $78.7 |

The	total	amount	of	unrecognized	tax	benefits,	if	recognized	would	have	affected	the	effective	tax	rate	by	$57.5	million	as	of	December	31, 2016,	$59.2	million	as	of	December	31,	2015	and	$64.0	million	as	of	December	31,	2014.

The	Company	recognizes	interest	and	penalties	related	to	unrecognized	tax	benefits	in	its	provision	for	income	taxes.	During	2016	and	2015	the Company	released	$2.9	million	and	$1.4	million	related	to	interest	and	penalties,	respectively	and	during	2014	it	accrued	$6.6	million	related	to interest	and	penalties.	The	Company	had	$10.2	million	and	$13.1	million	of	accrued	interest,	including	minor	amounts	for	penalties,	at December	31,	2016	and	2015,	respectively.

# 13.	RENTALS	AND	LEASES

The	Company	leases	sales	and	administrative	office	facilities,	distribution	centers,	research	and	manufacturing	facilities,	as	well	as	vehicles	and other	equipment	under	operating	leases.	Total	rental	expense	under	the	Company's	operating	leases	was	$221	million	in	both	2016	and	2015 and	$237	million	in	2014.	As	of	December	31,	2016,	identifiable	future	minimum	payments	with	non-cancelable	terms	in	excess	of	one	year were:

| were: |  |
| :--- | :--- |
| (millions) |  |
| 2017 | $102 |
| 2018 | 83 |
| 2019 | 70 |
| 2020 | 56 |
| 2021 | 49 |
| Thereafter | 71 |
| Total | $431 |

The	Company	enters	into	operating	leases	for	vehicles	whose	non-cancelable	terms	are	one	year	or	less	in	duration	with	month-to-month renewal	options.	These	leases	have	been	excluded	from	the	table	above.	The	Company	estimates	payments	under	such	leases	will approximate	$58	million	in	2017.	These	vehicle	leases	have	guaranteed	residual	values	that	have	historically	been	satisfied	by	the	proceeds	on the	sale	of	the	vehicles.

# 14.	RESEARCH	AND	DEVELOPMENT	EXPENDITURES

Research	expenditures	that	relate	to	the	development	of	new	products	and	processes,	including	significant	improvements	and	refinements	to existing	products,	are	expensed	as	incurred.	Such	costs	were	$189	million	in	2016,	$191	million	in	2015	and	$197	million	in	2014.	The Company	did	not	participate	in	any	material	customer	sponsored	research	during	2016,	2015	or	2014.

# 15.	COMMITMENTS	AND	CONTINGENCIES

The	Company	is	subject	to	various	claims	and	contingencies	related	to,	among	other	things,	workers'	compensation,	general	liability	(including product	liability),	automobile	claims,	health	care	claims,	environmental	matters	and	lawsuits.	The	Company	is	also	subject	to	various	claims	and contingencies	related	to	income	taxes,	which	are	discussed	in	Note	12.	The	Company	also	has	contractual	obligations	including	lease commitments,	which	are	discussed	in	Note	13.

The	Company	records	liabilities	where	a	contingent	loss	is	probable	and	can	be	reasonably	estimated.	If	the	reasonable	estimate	of	a	probable loss	is	a	range,	the	Company	records	the	most	probable	estimate	of	the	loss	or	the	minimum	amount	when	no	amount	within	the	range	is	a better	estimate	than	any	other	amount.	The	Company	discloses	a	contingent	liability	even	if	the	liability	is	not	probable	or	the	amount	is	not estimable,	or	both,	if	there	is	a	reasonable	possibility	that	a	material	loss	may	have	been	incurred.

# Insurance

Globally,	the	Company	has	insurance	policies	with	varying	deductibility	levels	for	property	and	casualty	losses.	The	Company	is	insured	for losses	in	excess	of	these	deductibles,	subject	to	policy	terms	and	conditions	and	has	recorded	both	a	liability	and	an	offsetting	receivable	for amounts	in	excess	of	these	deductibles.	The	Company	is	self-insured	for	health	care	claims	for	eligible	participating	employees,	subject	to certain	deductibles	and	limitations.	The	Company	determines	its	liabilities	for	claims	on	an	actuarial	basis.

# Litigation	and	Environmental	Matters

The	Company	and	certain	subsidiaries	are	party	to	various	lawsuits,	claims	and	environmental	actions	that	have	arisen	in	the	ordinary	course	of business.	These	include	from	time	to	time	antitrust,	commercial,	patent	infringement,	product	liability	and	wage	hour	lawsuits,	as	well	as possible	obligations	to	investigate	and	mitigate	the	effects	on	the	environment	of	the	disposal	or	release	of	certain	chemical	substances	at various	sites,	such	as	Superfund	sites	and	other	operating	or	closed	facilities.	The	Company	has	established	accruals	for	certain	lawsuits, claims	and	environmental	matters.	The	Company	currently	believes	that	there	is	not	a	reasonably	possible	risk	of	material	loss	in	excess	of	the amounts	accrued	related	to	these	legal	matters.	Because	litigation	is	inherently	uncertain,	and	unfavorable	rulings	or	developments	could	occur, there	can	be	no	certainty	that	the	Company	may	not	ultimately	incur	charges	in	excess	of	recorded	liabilities.	A	future	adverse	ruling,	settlement or	unfavorable	development	could	result	in	future	charges	that	could	have	a	material	adverse	effect	on	the	Company's	results	of	operations	or cash	flows	in	the	period	in	which	they	are	recorded.	The	Company	currently	believes	that	such	future	charges	related	to	suits	and	legal	claims,	if any,	would	not	have	a	material	adverse	effect	on	the	Company's	consolidated	financial	position.

# Environmental	Matters

The	Company	is	currently	participating	in	environmental	assessments	and	remediation	at	approximately	40	locations,	the	majority	of	which	are	in the	U.S.,	and	environmental	liabilities	have	been	accrued	reflecting	management's	best	estimate	of	future	costs.	Potential	insurance reimbursements	are	not	anticipated	in	the	Company's	accruals	for	environmental	liabilities.

# Matters	Related	to	Wage	Hour	Claims

The	Company	is	a	defendant	in	several	pending	wage	hour	lawsuits	claiming	violations	of	the	FLSA	or	a	similar	state	law.	In	Martino	v.	Ecolab, United	States	District	Court	for	the	Northern	District	of	California,	case	no.	5:14-cv-04358-SG,	an	action	under	California	state	law,	the	Court	has certified	a	class	of	California	Institutional	Territory	Managers	alleging	violation	of	state	wage	and	hour	laws.		This	matter	has	been	settled.	The Company	has	established	an	accrual	to	fund	the	settlement,	which	is	not	material	to	its	results	of	operations	or	financial	position.	The	Company	is a	defendant	in	other	wage	hour	lawsuits	brought	by	Institutional	Route	Sales	Managers	seeking	class	certification	of	claims	for	overtime	and other	relief	under	federal	or	state	laws.	None	of	these	matters	are	considered	to	be	material	to	the	Company's	results	of	operations	or	financial position.

# Matters	Related	to	Deepwater	Horizon	Incident	Response

On	April	22,	2010,	the	deepwater	drilling	platform,	the	Deepwater	Horizon,	operated	by	a	subsidiary	of	BP	plc,	sank	in	the	Gulf	of	Mexico	after	a catastrophic	explosion	and	fire	that	began	on	April	20,	2010.	A	massive	oil	spill	resulted.	Approximately	one	week	following	the	incident, subsidiaries	of	BP	plc,	under	the	authorization	of	the	responding	federal	agencies,	formally	requested	Nalco	Company,	now	an	indirect subsidiary	of	Ecolab,	to	supply	large	quantities	of	COREXIT®	9500,	a	Nalco	oil	dispersant	product	listed	on	the	U.S.	EPA	National	Contingency Plan	Product	Schedule.	Nalco	Company	responded	immediately	by	providing	available	COREXIT	and	increasing	production	to	supply	the product	to	BP's	subsidiaries	for	use,	as	authorized	and	directed	by	agencies	of	the	federal	government	throughout	the	incident.	Prior	to	the incident,	Nalco	and	its	subsidiaries	had	not	provided	products	or	services	or	otherwise	had	any	involvement	with	the	Deepwater	Horizon platform.	On	July	15,	2010,	BP	announced	that	it	had	capped	the	leaking	well,	and	the	application	of	dispersants	by	the	responding	parties ceased	shortly	thereafter.

On	May	1,	2010,	the	President	appointed	retired	U.S.	Coast	Guard	Commandant	Admiral	Thad	Allen	to	serve	as	the	National	Incident Commander	in	charge	of	the	coordination	of	the	response	to	the	incident	at	the	national	level.	The	EPA	directed	numerous	tests	of	all	the dispersants	on	the	National	Contingency	Plan	Product	Schedule,	including	those	provided	by	Nalco	Company,	"to	ensure	decisions	about ongoing	dispersant	use	in	the	Gulf	of	Mexico	are	grounded	in	the	best	available	science."	Nalco	Company	cooperated	with	this	testing	process and	continued	to	supply	COREXIT,	as	requested	by	BP	and	government	authorities.	After	review	and	testing	of	a	number	of	dispersants,	on September	30,	2010,	and	on	August	2,	2010,	the	EPA	released	toxicity	data	for	eight	oil	dispersants.

The	use	of	dispersants	by	the	responding	parties	was	one	tool	used	by	the	government	and	BP	to	avoid	and	reduce	damage	to	the	Gulf	area from	the	spill.	Since	the	spill	occurred,	the	EPA	and	other	federal	agencies	have	closely	monitored	conditions	in	areas	where	dispersant	was applied.	Nalco	Company	has	encouraged	ongoing	monitoring	and	review	of	COREXIT	and	other	dispersants	and	has	cooperated	fully	with	the governmental	review	and	approval	process.	However,	in	connection	with	its	provision	of	COREXIT,	Nalco	Company	has	been	named	in	several lawsuits	as	described	below.

Cases	arising	out	of	the	Deepwater	Horizon	accident	were	administratively	transferred	for	pre-trial	purposes	to	a	judge	in	the	United	States District	Court	for	the	Eastern	District	of	Louisiana	with	other	related	cases	under	In	Re:	Oil	Spill	by	the	Oil	Rig	"Deepwater	Horizon"	in	the	Gulf	of Mexico,	on	April	20,	2010,	Case	No.	10-md-02179	(E.D.	La.)	("MDL	2179").

# Putative	Class	Action	Litigation

Nalco	Company	was	named,	along	with	other	unaffiliated	defendants,	in	six	putative	class	action	complaints	related	to	the	Deepwater	Horizon oil	spill:	Adams	v.	Louisiana,	et	al.,	Case	No.	11-cv-01051	(E.D.	La.);	Elrod,	et	al.	v.	BP	Exploration	&	Production	Inc.,	et	al.,	12-cv-00981	(E.D. La.);	Harris,	et	al.	v.	BP,	plc,	et	al.,	Case	No.	2:10-cv-02078-CJBSS	(E.D.	La.);	Irelan	v.	BP	Products,	Inc.,	et	al.,	Case	No.	11-cv-00881	(E.D. La.);	Petitjean,	et	al.	v.	BP,	plc,	et	al.,	Case	No.	3:10-cv-00316-RS-EMT	(N.D.	Fla.);	and,	Wright,	et	al.	v.	BP,	plc,	et	al.,	Case	No.	1:10-cv- 00397-B	(S.D.	Ala.).	The	cases	were	filed	on	behalf	of	various	potential	classes	of	persons	who	live	and	work	in	or	derive	income	from	the effected	Coastal	region.	Each	of	the	actions	contains	substantially	similar	allegations,	generally	alleging,	among	other	things,	negligence relating	to	the	use	of	our	COREXIT	dispersant	in	connection	with	the	Deepwater	Horizon	oil	spill.	The	plaintiffs	in	these	putative	class	action lawsuits	are	generally	seeking	awards	of	unspecified	compensatory	and	punitive	damages,	and	attorneys'	fees	and	costs.	These	cases	have been	consolidated	in	MDL	2179.

# Other	Related	Claims	Pending	in	MDL	2179

Pursuant	to	orders	issued	by	the	court	in	MDL	2179,	the	claims	were	consolidated	in	several	master	complaints,	including	one	naming	Nalco Company	and	others	who	responded	to	the	Gulf	Oil	Spill	(known	as	the	"B3	Master	Complaint").	On	May	18,	2012,	Nalco	filed	a	motion	for summary	judgment	against	the	claims	in	the	"B3"	Master	Complaint,	on	the	grounds	that:	(i)	Plaintiffs'	claims	are	preempted	by	the comprehensive	oil	spill	response	scheme	set	forth	in	the	Clean	Water	Act	and	National	Contingency	Plan;	and	(ii)	Nalco	is	entitled	to	derivative immunity	from	suit.	On	November	28,	2012,	the	Court	granted	Nalco's	motion	and	dismissed	with	prejudice	the	claims	in	the	"B3"	Master Complaint	asserted	against	Nalco.	The	Court	held	that	such	claims	were	preempted	by	the	Clean	Water	Act	and	National	Contingency	Plan. Because	claims	in	the	"B3"	Master	Complaint	remain	pending	against	other	defendants,	the	Court's	decision	is	not	a	"final	judgment"	for purposes	of	appeal.	Under	Federal	Rule	of	Appellate	Procedure	4(a),	plaintiffs	will	have	30	days	after	entry	of	final	judgment	to	appeal	the Court's	decision.

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

In	April	and	June	2011,	in	support	of	its	defense	of	the	claims	against	it,	Nalco	Company	filed	counterclaims	against	the	Cross	Claimants.	In	its counterclaims,	Nalco	Company	generally	alleges	that	if	it	is	found	liable	for	damages	resulting	from	the	Deepwater	Horizon	explosion,	oil	spill and/or	spill	response,	it	is	entitled	to	contribution	or	indemnity	from	the	Cross	Claimants.

In	December	2012	and	January	2013,	the	MDL	2179	court	issued	final	orders	approving	two	settlements	between	BP	and	Plaintiffs'	Class Counsel:	(1)	a	proposed	Medical	Benefits	Class	Action	Settlement;	and	(2)	a	proposed	Economic	and	Property	Damages	Class	Action Settlement.	Pursuant	to	the	proposed	settlements,	class	members	agree	to	release	claims	against	BP	and	other	released	parties,	including Nalco	Energy	Services,	LP,	Nalco	Holding	Company,	Nalco	Finance	Holdings	LLC,	Nalco	Finance	Holdings	Inc.,	Nalco	Holdings	LLC	and	Nalco Company.

The	Company	believes	the	claims	asserted	against	Nalco	Company	are	without	merit	and	intends	to	defend	these	lawsuits	vigorously.	The Company	also	believes	that	it	has	rights	to	contribution	and/or	indemnification	(including	legal	expenses)	from	third	parties.	However,	the Company	cannot	predict	the	outcome	of	these	lawsuits,	the	involvement	it	might	have	in	these	matters	in	the	future,	or	the	potential	for	future litigation.

# 16.	RETIREMENT	PLANS

# Pension	and	Postretirement	Health	Care	Benefits	Plans

The	Company	has	a	non-contributory	qualified	defined	benefit	pension	plan	covering	the	majority	of	its	U.S.	employees.	The	Company	also	has non-contributory	non-qualified	defined	benefit	plans,	which	provide	for	benefits	to	employees	in	excess	of	limits	permitted	under	its	U.S.	pension plans.	Various	international	subsidiaries	have	defined	benefit	pension	plans.	The	Company	provides	postretirement	health	care	benefits	to certain	U.S.	employees	and	retirees.

The	non-qualified	plans	are	not	funded	and	the	recorded	benefit	obligation	for	the	non-qualified	plans	was	$125	million	and	$122	million	at December	31,	2016	and	2015,	respectively.	The	measurement	date	used	for	determining	the	U.S.	pension	plan	assets	and	obligations	is December	31.

International	plans	are	funded	based	on	local	country	requirements.	The	measurement	date	used	for	determining	the	international	pension	plan assets	and	obligations	is	November	30,	the	fiscal	year-end	of	the	Company's	international	affiliates.

The	U.S	postretirement	health	care	plans	are	contributory	based	on	years	of	service	and	choice	of	coverage	(family	or	single),	with	retiree contributions	adjusted	annually.	The	measurement	date	used	to	determine	the	U.S.	postretirement	health	care	plan	assets	and	obligations	is December	31.	Certain	employees	outside	the	U.S.	are	covered	under	government-sponsored	programs,	which	are	not	required	to	be	fully funded.	The	expense	and	obligation	for	providing	international	postretirement	health	care	benefits	are	not	significant.

The	following	table	sets	forth	financial	information	related	to	the	Company's	pension	and	postretirement	health	care	plans:

|  | U.S. |  | International |  | U.S.	Postretirement | U.S.	Postretirement |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Pension\t(a) |  | Pension |  | Health\tCare | Health\tCare |
| (millions) | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 |
| Accumulated\tBenefit\tObligation,\tend\tof\tyear | $2,147.1 | $2,040.2 | $1,239.8 | $1,185.7 | $173.5 | $229.2 |
| Projected\tBenefit\tObligation |  |  |  |  |  |  |
| Projected\tbenefit\tobligation,\tbeginning\tof\tyear | $2,186.8 | $2,252.7 | $1,279.9 | $1,424.9 | $229.2 | $240.4 |
| Service\tcost | 67.1 | 76.5 | 27.8 | 31.8 | 3.0 | 3.8 |
| Interest | 81.5 | 91.1 | 31.9 | 38.1 | 7.4 | 9.6 |
| Participant\tcontributions | \t- | \t- | 3.3 | 3.4 | 8.0 | 8.7 |
| Medicare\tsubsidies\treceived | \t- | \t- | \t- | \t- | 0.8 | 1.1 |
| Curtailments\tand\tsettlements | (0.8) | (1.2) | (12.3) | (5.5) | \t- | \t- |
| Plan\tamendments | 1.2 | \t- | 2.0 | (5.3) | (62.2) | \t- |
| Actuarial\tloss\t(gain) | 60.2 | (126.0) | 123.9 | (13.5) | 7.5 | (13.4) |
| Assumed\tthrough\tacquisitions | \t- | \t- | 6.7 | \t- | \t- | \t- |
| Benefits\tpaid | (128.1) | (106.3) | (35.5) | (37.5) | (20.2) | (21.0) |
| Reclassification\tassociated\twith\tVenezuelan\tentities | \t- | \t- | \t- | (13.1) | \t- | \t- |
| Foreign\tcurrency\ttranslation | \t- | \t- | (92.1) | (143.4) | \t- | \t- |
| Projected\tbenefit\tobligation,\tend\tof\tyear | $2,267.9 | $2,186.8 | $1,335.6 | $1,279.9 | $173.5 | $229.2 |
| Plan\tAssets |  |  |  |  |  |  |
| Fair\tvalue\tof\tplan\tassets,\tbeginning\tof\tyear | $1,770.7 | $1,871.6 | $813.5 | $847.7 | $11.3 | $13.3 |
| Actual\treturns\ton\tplan\tassets | 152.3 | 0.4 | 89.2 | 32.9 | 0.8 | 0.1 |
| Company\tcontributions | 156.0 | 6.2 | 39.4 | 41.2 | 16.4 | 17.5 |
| Participant\tcontributions | \t- | \t- | 3.3 | 3.4 | 1.3 | 1.3 |
| Acquisitions | \t- | \t- | 2.6 | \t- | \t- | \t- |
| Settlements | (0.8) | (1.2) | (8.3) | (5.5) | \t- | \t- |
| Benefits\tpaid | (128.1) | (106.3) | (35.5) | (37.5) | (20.2) | (21.0) |
| Foreign\tcurrency\ttranslation | \t- | \t- | (82.3) | (68.7) | \t- | \t- |
| Fair\tvalue\tof\tplan\tassets,\tend\tof\tyear | $1,950.1 | $1,770.7 | $821.9 | $813.5 | $9.6 | $11.2 |
| Funded\tStatus,\tend\tof\tyear | $(317.8) | $(416.1) | $(513.7) | $(466.4) | $(163.9) | $(218.0) |
| Amounts\trecognized\tin\tConsolidated\tBalance\tSheet: |  |  |  |  |  |  |
| Other\tassets | $\t\t\t\t\t\t\t\t- | $\t\t\t\t\t\t\t\t- | $27.2 | $28.0 | $\t\t\t\t\t\t\t- | $\t\t\t\t\t\t\t- |
| Other\tcurrent\tliabilities | (6.8) | (12.1) | (20.3) | (16.9) | (2.7) | (7.3) |
| Postretirement\thealthcare\tand\tpension\tbenefits | (311.0) | (404.0) | (520.6) | (477.5) | (161.2) | (210.7) |
| Net\tliability | $(317.8) | $(416.1) | $(513.7) | $(466.4) | $(163.9) | $(218.0) |
| Amounts\trecognized\tin\tAccumulated\tOther\tComprehensive |  |  |  |  |  |  |
| Loss\t(Income): |  |  |  |  |  |  |
| Unrecognized\tnet\tactuarial\tloss\t(gain) | $533.0 | $512.8 | $357.6 | $310.1 | $(30.9) | $(40.0) |
| Unrecognized\tnet\tprior\tservice\tbenefits | (25.5) | (33.7) | (7.3) | (9.9) | (59.0) | 0.1 |
| Tax\texpense\t(benefit) | (199.2) | (188.4) | (89.4) | (77.1) | 32.1 | 13.0 |
| Accumulated\tother\tcomprehensive\tloss\t(income),\tnet\tof |  |  |  |  |  |  |
| tax | $308.3 | $290.7 | $260.9 | $223.1 | $(57.8) | $(26.9) |
| Change\tin\tAccumulated\tOther\tComprehensive\tLoss |  |  |  |  |  |  |
| (Income): |  |  |  |  |  |  |
| Amortization\tof\tnet\tactuarial\tloss | $(30.7) | $(48.5) | $(12.8) | $(15.4) | $1.6 | $6.2 |
| Amortization\tof\tprior\tservice\tcosts\t(benefits) | 6.9 | 6.9 | 0.8 | 0.4 | 4.3 | 0.1 |
| Current\tperiod\tnet\tactuarial\tloss\t(gain) | 51.5 | 6.2 | 87.2 | 9.2 | 7.5 | (12.6) |
| Current\tperiod\tprior\tservice\tcosts\t(benefits) | 1.2 | \t- | 2.0 | (5.6) | (13.4) | \t- |
| Settlement | (0.5) | (0.7) | (1.8) | (1.0) | \t- | \t- |
| Tax\texpense\t(benefit) | (10.8) | 13.4 | (12.3) | 16.3 | 19.1 | 2.3 |
| Postretirement\tbenefits\tchanges | \t- | \t- | (4.0) | \t- | (50.0) | \t- |
| Reclassification\tassociated\twith\tVenezuelan\tentities | \t- | \t- | \t- | (3.5) | \t- | \t- |
| Foreign\tcurrency\ttranslation | \t- | \t- | (21.3) | (39.3) | \t- | \t- |
| Other\tcomprehensive\tloss\t(income) | $17.6 | $(22.7) | $37.8 | $(38.9) | $(30.9) | $(4.0) |

Estimated	amounts	in	accumulated	other	comprehensive	loss	expected	to	be	reclassified	to	net	period	cost	during	2017	are	as	follows:

|  |  |  | U.S.	Post- |
| :--- | :--- | :--- | :--- |
|  | U.S. | International | Retirement |
| (millions) | Pension\t(a) | Pension | Health\tCare |
| Net\tactuarial\tloss\t(gain) | $28.7 | $17.7 | $(4.8) |
| Net\tprior\tservice\tcosts\t(benefits) | (6.8) | (0.7) | (16.7) |
| Total | $21.9 | $17.0 | $(21.5) |

# (a) Includes	qualified	and	non-qualified	plans

The	aggregate	projected	benefit	obligation,	accumulated	benefit	obligation	and	fair	value	of	pension	plan	assets	for	plans	with	accumulated benefit	obligations	in	excess	of	plan	assets	were	as	follows:

| December	31,	(millions) | 2016 | 2015 |
| :--- | :--- | :--- |
| Aggregate\tprojected\tbenefit\tobligation | $\t3,257.6 | $\t3,088.0 |
| Accumulated\tbenefit\tobligation | 3,071.6 | 2,882.5 |
| Fair\tvalue\tof\tplan\tassets | 2,418.1 | 2,190.6 |

These	plans	include	the	U.S.	non-qualified	pension	plans	which	are	not	funded	as	well	as	the	U.S.	qualified	pension	plan.	These	plans	also include	various	international	pension	plans	which	are	funded	consistent	with	local	practices	and	requirements.

# Net	Periodic	Benefit	Costs	and	Plan	Assumptions

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

|  |  | U.S. |  |  | International |  | U.S.	Postretirement | U.S.	Postretirement | U.S.	Postretirement |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Pension\t(a) |  |  | Pension |  |  | Health\tCare |  |
| (millions) | 2016 | 2015 | 2014 | 2016 | 2015 | 2014 | 2016 | 2015 | 2014 |
| Service\tcost | $67.1 | $76.5 | $66.4 | $27.8 | $31.8 | $32.2 | $3.0 | $3.8 | $4.3 |
| Interest\tcost\ton\tbenefit\tobligation | 81.5 | 91.1 | 90.0 | 31.9 | 38.1 | 49.8 | 7.4 | 9.6 | 10.8 |
| Expected\treturn\ton\tplan\tassets | (143.6) | (132.6) | (128.4) | (52.5) | (55.6) | (54.6) | (0.7) | (0.9) | (1.0) |
| Recognition\tof\tnet\tactuarial\t(gain)\tloss | 30.7 | 48.5 | 23.7 | 12.8 | 15.4 | 7.0 | (1.6) | (6.2) | (8.2) |
| Amortization\tof\tprior\tservice |  |  |  |  |  |  |  |  |  |
| cost\t(benefit) | (6.9) | (6.9) | (6.9) | (0.8) | (0.4) | 0.4 | (4.3) | (0.1) | (0.3) |
| Settlements/Curtailments | 0.5 | 0.7 | \t- | 1.8 | 1.0 | (1.3) | \t- | \t- | \t- |
| Total\texpense | $29.3 | $77.3 | $44.8 | $21.0 | $30.3 | $33.5 | $3.8 | $6.2 | $5.6 |

| Plan	Assumptions |  | U.S. |  |  | International |  | U.S.	Postretirement | U.S.	Postretirement | U.S.	Postretirement |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Pension\t(a) |  |  | Pension |  |  | Health\tCare |  |
| (percent) | 2016 | 2015 | 2014 | 2016 | 2015 | 2014 | 2016 | 2015 | 2014 |
| Weighted-average\tactuarial\tassumptions\tused\tto |  |  |  |  |  |  |  |  |  |
| determine\tbenefit\tobligations\tas\tof\tyear\tend: |  |  |  |  |  |  |  |  |  |
| Discount\trate | 4.27 % | 4.51 % | 4.14 % | \t 2.33% | 2.93 % | 3.02 % | 4.14 % | 4.38 % | 4.08 % |
| Projected\tsalary\tincrease | 4.03 | 4.32 | 4.32 | 2.52 | 2.50 | 2.66 |  |  |  |
| Weighted-average\tactuarial\tassumptions\tused\tto |  |  |  |  |  |  |  |  |  |
| determine\tnet\tcost: |  |  |  |  |  |  |  |  |  |
| Discount\trate | 4.51 | 4.14 | 4.92 | 2.68 | 2.78 | 4.45 | 4.38 | 4.08 | 4.77 |
| Expected\treturn\ton\tplan\tassets | 7.75 | 7.75 | 7.75 | 6.71 | 6.80 | 6.90 | 7.75 | 7.75 | 7.75 |
| Projected\tsalary\tincrease | 4.32 | 4.32 | 4.32 | 2.75 | 2.83 | 3.58 |  |  |  |

The	discount	rate	assumptions	for	the	U.S.	plans	are	developed	using	a	bond	yield	curve	constructed	from	a	population	of	high-quality,	non- callable,	corporate	bond	issues	with	maturities	ranging	from	six	months	to	thirty	years.	A	discount	rate	is	estimated	for	the	U.S.	plans	and	is based	on	the	durations	of	the	underlying	plans.

At	the	end	of	2015,	the	Company	changed	the	approach	used	to	measure	service	and	interest	costs	for	its	U.S.	and	material	international pension	and	other	postretirement	benefits.	For	2016,	the	Company	elected	to	measure	service	and	interest	costs	by	applying	the	specific	spot rates	along	that	yield	curve	to	the	plans'	liability	cash	flows.	The	Company	believes	this	approach	provides	a	more	precise	measurement	of service	and	interest	costs	by	aligning	the	timing	of	the	plans'	liability	cash	flows	to	the	corresponding	spot	rates	on	the	yield	curve.	For	2015,	the Company	measured	service	and	interest	costs	utilizing	a	single	weighted-average	discount	rate	derived	from	the	yield	curve	used	to	measure the	plan	obligations.		The	change	in	approach	did	not	affect	the	measurement	of	the	Company's	plan	obligations	or	the	funded	status.	The Company	has	accounted	for	this	change	as	a	change	in	accounting	estimate	and,	accordingly,	has	accounted	for	it	on	a	prospective	basis.

The	expected	long-term	rate	of	return	used	for	the	U.S.	plans	is	based	on	the	pension	plan's	asset	mix.	The	Company	considers	expected	long- term	real	returns	on	asset	categories,	expectations	for	inflation,	and	estimates	of	the	impact	of	active	management	of	the	assets	in	coming	to	the final	rate	to	use.	The	Company	also	considers	actual	historical	returns.

The	expected	long-term	rate	of	return	used	for	the	Company's	international	plans	is	determined	in	each	local	jurisdiction	and	is	based	on	the assets	held	in	that	jurisdiction,	the	expected	rate	of	returns	for	the	type	of	assets	held	and	any	guaranteed	rate	of	return	provided	by	the investment.	The	other	assumptions	used	to	measure	the	international	pension	obligations,	including	discount	rate,	vary	by	country	based	on specific	local	requirements	and	information.	As	previously	noted,	the	measurement	date	for	these	plans	is	November	30.

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

For	postretirement	benefit	measurement	purposes	as	of	December	31,	2016,	the	annual	rates	of	increase	in	the	per	capita	cost	of	covered health	care	were	assumed	to	be	6.75%	for	pre-65	costs	and	7.25%	for	post-65	costs.	The	rates	are	assumed	to	decrease	each	year	until	they reach	5%	in	2023	and	remain	at	those	levels	thereafter.	Health	care	costs	for	certain	employees	which	are	eligible	for	subsidy	by	the	Company are	limited	by	a	cap	on	the	subsidy.

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

Assumed	health	care	cost	trend	rates	have	an	effect	on	the	amounts	reported	for	the	Company's	U.S.	postretirement	health	care	benefits	plan.	A one-percentage	point	change	in	the	assumed	health	care	cost	trend	rates	would	have	the	following	effects:

1-Percentage	Point

|  | 1-Percentage	Point | 1-Percentage	Point |
| :--- | :--- | :--- |
| (millions) | Increase | \t\t\t\t Decrease |
| Effect\ton\ttotal\tof\tservice\tand\tinterest\tcost\tcomponents | $\t- | $\t- |
| Effect\ton\tpostretirement\tbenefit\tobligation | 0.7 | (0.7) |

# Plan	Asset	Management

The	Company's	U.S.	investment	strategy	and	policies	are	designed	to	maximize	the	possibility	of	having	sufficient	funds	to	meet	the	long-term liabilities	of	the	pension	fund,	while	achieving	a	balance	between	the	goals	of	asset	growth	of	the	plan	and	keeping	risk	at	a	reasonable	level. Current	income	is	not	a	key	goal	of	the	policy.

The	asset	allocation	position	reflects	the	Company's	ability	and	willingness	to	accept	relatively	more	short-term	variability	in	the	performance	of the	pension	plan	portfolio	in	exchange	for	the	expectation	of	better	long-term	returns,	lower	pension	costs	and	better	funded	status	in	the	long run.	The	pension	fund	is	diversified	across	a	number	of	asset	classes	and	securities.	Selected	individual	portfolios	within	the	asset	classes	may be	undiversified	while	maintaining	the	diversified	nature	of	total	plan	assets.	The	Company	has	no	significant	concentration	of	risk	in	its	U.S. plan	assets.

Assets	of	funded	retirement	plans	outside	the	U.S.	are	managed	in	each	local	jurisdiction	and	asset	allocation	strategy	is	set	in	accordance	with local	rules,	regulations	and	practice.	Therefore,	no	overall	target	asset	allocation	is	presented.	Although	non-U.S.	equity	securities	are	all considered	international	for	the	Company,	some	equity	securities	are	considered	domestic	for	the	local	plan.	The	funds	are	invested	in	a	variety of	equities,	bonds	and	real	estate	investments	and,	in	some	cases,	the	assets	are	managed	by	insurance	companies	which	may	offer	a guaranteed	rate	of	return.	The	Company	has	no	significant	concentration	of	risk	in	its	international	plan	assets.

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

In	2016,	the	Company	adopted	the	updated	accounting	guidance	that	removes	the	requirement	to	categorize	all	investments	within	the	fair	value hierarchy	for	which	fair	value	is	measured	using	net	asset	value	per	share	("NAV")	as	a	practical	expedient	and	requires	the	presentation	of	the carrying	amount	of	investments	measured	using	the	NAV	as	a	reconciling	item	between	the	total	amount	of	investments	categorized	within	the fair	value	hierarchy	and	total	investments	measured	at	fair	value.	Investments	valued	at	NAV	include	hedge	funds	and	private	equity,	valued based	on	the	NAV	of	the	underlying	partnerships,	whose	investments	are	based	at	fair	value.	Investments	at	NAV	also	include	real	estate	funds, valued	based	on	inputs	other	than	quoted	prices	that	are	observable	for	the	securities.	The	fair	value	measurement	tables	presented	below	have been	updated	to	follow	the	new	guidance.

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

|  |  | Fair	Value	as	of |  |  | Fair	Value	as	of |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (millions) |  | December\t31,\t2016 |  |  | December\t31,\t2015 |  |
|  | Level\t1 | Level\t2 | Total | Level\t1 | Level\t2 | Total |
| Cash | $6.3 |  | $6.3 | $6.9 |  | $6.9 |
| Equity\tsecurities: |  |  |  |  |  |  |
| Large\tcap\tequity | 696.0 |  | 696.0 | 660.5 |  | 660.5 |
| Small\tcap\tequity | 179.0 |  | 179.0 | 184.2 |  | 184.2 |
| International\tequity | 293.4 |  | 293.4 | 247.4 |  | 247.4 |
| Fixed\tincome: |  |  |  |  |  |  |
| Core\tfixed\tincome | 351.5 |  | 351.5 | 336.5 |  | 336.5 |
| High-yield\tbonds | 107.6 |  | 107.6 | 86.7 |  | 86.7 |
| Emerging\tmarkets | 33.5 |  | 33.5 | 27.1 |  | 27.1 |
| Insurance\tcompany\taccounts | \t- | $0.3 | 0.3 | \t- | $0.3 | 0.3 |
| Total\tinvestments\tat\tfair\tvalue | 1,667.3 | 0.3 | 1,667.6 | 1,549.3 | 0.3 | 1,549.6 |
| Investments\tmeasured\tat\tNAV |  |  | 292.1 |  |  | 232.3 |
| Total | $1,667.3 | $0.3 | $1,959.7 | $1,549.3 | $0.3 | $1,781.9 |

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

| December	31	(%) | 2016 | 2015 | 2016 | 2015 |
| :--- | :--- | :--- | :--- | :--- |
| Cash | \t- % | \t- % | \t- % | \t- % |
| Equity\tsecurities: |  |  |  |  |
| Large\tcap\tequity | 34 | 34 | 36 | 37 |
| Small\tcap\tequity | 9 | 9 | 9 | 10 |
| International\tequity | 15 | 15 | 15 | 14 |
| Fixed\tincome: |  |  |  |  |
| Core\tfixed\tincome | 18 | 18 | 18 | 19 |
| High-yield\tbonds | 5 | 5 | 5 | 5 |
| Emerging\tmarkets | 2 | 2 | 2 | 2 |
| Other: |  |  |  |  |
| Real\testate | 6 | 6 | 7 | 5 |
| Hedge\tfunds | 5 | 5 | 3 | 3 |
| Private\tequity | 6 | 6 | 5 | 5 |
| Total | 100 % | 100 % | 100 % | 100 % |

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

|  |  | Fair	Value	as	of |  |  | Fair	Value	as	of |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (millions) |  | December\t31,\t2016 |  |  | December\t31,\t2015 |  |
|  | Level\t1 | Level\t2 | Total | Level\t1 | Level\t2 | Total |
| Cash | $5.5 |  | $5.5 | $3.1 |  | $3.1 |
| Equity\tsecurities: |  |  |  |  |  |  |
| International\tequity | \t- | 363.1 | 363.1 |  | 356.2 | 356.2 |
| Fixed\tincome: |  |  | \t- |  |  |  |
| Corporate\tbonds | 6.4 | 164.6 | 171.0 | 6.6 | 170.3 | 176.9 |
| Government\tbonds | 9.5 | 145.6 | 155.1 | 9.8 | 146.5 | 156.3 |
| Insurance\tcompany\taccounts |  | 114.0 | 114.0 |  | 106.1 | 106.1 |
| Total\tinvestments\tat\tfair\tvalue | 21.4 | 787.3 | 808.7 | 19.5 | 779.1 | 798.6 |
| Investments\tmeasured\tat\tNAV |  |  | 13.2 |  |  | 14.9 |
| Total | $21.4 | $787.3 | $821.9 | $19.5 | $779.1 | $813.5 |

The	allocation	of	plan	assets	of	the	Company's	international	plan	assets	for	its	defined	benefit	pension	plans	are	as	follows:

| December	31	(%) | 2016 | 2015 |
| :--- | :--- | :--- |
| Cash | 1 % | \t- % |
| Equity\tsecurities: |  |  |
| International\tequity | 44 | 44 |
| Fixed\tincome: |  |  |
| Corporate\tbonds | 21 | 22 |
| Government\tbonds | 19 | 19 |
| Total\tfixed\tincome | 40 | 41 |
| Other: |  |  |
| Insurance\tcontracts | 14 | 13 |
| Real\testate | 1 | 2 |
| Total | 100 % | 100 % |

As	of	year-end	2016,	the	Company's	estimate	of	benefits	expected	to	be	paid	in	each	of	the	next	five	fiscal	years	and	in	the	aggregate	for	the five	fiscal	years	thereafter	for	the	Company's	pension	and	postretirement	health	care	benefit	plans	are	as	follows:

|  |  | Medicare |
| :--- | :--- | :--- |
|  |  | Subsidy |
| (millions) | All\tPlans | Receipts |
| 2017 | $171 | $1 |
| 2018 | 177 | \t- |
| 2019 | 187 | \t- |
| 2020 | 202 | \t- |
| 2021 | 214 | \t- |
| 2022\t-\t2026 | 1,158 | \t- |

Depending	on	plan	funding	levels,	the	U.S.	defined	benefit	qualified	pension	plan	provides	certain	terminating	participants	with	an	option	to receive	their	pension	benefits	in	the	form	of	lump	sum	payments.

The	Company	is	currently	in	compliance	with	all	funding	requirements	of	its	U.S.	pension	and	postretirement	health	care	plans.	In	April	of	2016, the	Company	made	a	$150	million	voluntary	contribution	to	its	non-contributory	qualified	U.S.	pension	plan.	No	voluntary	contributions	were made	to	the	U.S.	pension	plan	during	2015	and	2014.	The	Company	is	required	to	fund	certain	international	pension	benefit	plans	in	accordance with	local	legal	requirements.	The	Company	estimates	contributions	to	be	made	to	its	international	plans	will	approximate	$42	million	in	2017.

The	Company	seeks	to	maintain	an	asset	balance	that	meets	the	long-term	funding	requirements	identified	by	the	projections	of	the	pension plan's	actuaries	while	simultaneously	satisfying	the	fiduciary	responsibilities	prescribed	in	ERISA.	The	Company	also	takes	into	consideration the	tax	deductibility	of	contributions	to	the	benefit	plans.

The	Company	is	not	aware	of	any	expected	refunds	of	plan	assets	within	the	next	twelve	months	from	any	of	its	existing	U.S.	or	international pension	or	postretirement	benefit	plans.

# Savings	Plan	and	ESOP

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

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

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

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

# 17.	OPERATING	SEGMENTS	AND	GEOGRAPHIC	INFORMATION

The	Company's	organizational	structure	consists	of	global	business	unit	and	global	regional	leadership	teams.	The	Company's	ten	operating segments	follow	its	commercial	and	product-based	activities	and	are	based	on	engagement	in	business	activities,	availability	of	discrete	financial information	and	review	of	operating	results	by	the	Chief	Operating	Decision	Maker	at	the	identified	operating	segment	level.

Eight	of	the	Company's	ten	operating	segments	have	been	aggregated	into	three	reportable	segments	based	on	similar	economic characteristics	and	future	prospects,	nature	of	the	products	and	production	processes,	end-use	markets,	channels	of	distribution	and	regulatory environment.	The	Company's	reportable	segments	are	Global	Industrial,	Global	Institutional	and	Global	Energy.	The	Company's	two	operating segments	that	are	primarily	fee-for-service	businesses	have	been	combined	into	the	Other	segment	and	do	not	meet	the	quantitative	criteria	to be	separately	reported.	The	Company	provides	similar	information	for	the	Other	segment	as	compared	to	its	three	reportable	segments	as	the Company	considers	the	information	regarding	its	two	underlying	operating	segments	as	useful	in	understanding	its	consolidated	results.

The	Company's	ten	operating	segments	are	aggregated	as	follows:

Includes	the	Water,	Food	&	Beverage,	Paper	and	Textile	Care	operating	segments.	It	provides	water	treatment	and	process	applications,	and cleaning	and	sanitizing	solutions	primarily	to	large	industrial	customers	within	the	manufacturing,	food	and	beverage	processing,	chemical, mining	and	primary	metals,	power	generation,	pulp	and	paper,	and	commercial	laundry	industries.	The	underlying	operating	segments	exhibit similar	manufacturing	processes,	distribution	methods	and	economic	characteristics.

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

Includes	the	Energy	operating	segment.	It	serves	the	process	chemicals	and	water	treatment	needs	of	the	global	petroleum	and	petrochemical industries	in	both	upstream	and	downstream	applications.

Includes	the	Pest	Elimination	and	Equipment	Care	operating	segments,	which	provide	pest	elimination	and	kitchen	repair	and	maintenance.

# Comparability	of	Reportable	Segments

The	Company	evaluates	the	performance	of	its	non-U.S.	dollar	functional	currency	international	operations	based	on	fixed	currency	exchange rates,	which	eliminate	the	impact	of	exchange	rate	fluctuations	on	its	international	operations.	Fixed	currency	amounts	are	updated	annually	at the	beginning	of	each	year	based	on	translation	into	U.S.	dollars	at	foreign	currency	exchange	rates	established	by	management,	with	all periods	presented	using	such	rates.	Fixed	currency	rates	are	generally	based	on	existing	market	rates	at	the	time	they	are	established.	Fixed currency	amounts	for	both	2015	and	2014	also	reflect	all	Venezuela	bolivar	operations,	prior	to	the	deconsolidation	of	the	Company's Venezuelan	operations,	at	a	SIMADI	rate	of	approximately	200	bolivares	to	1	U.S.	dollar.

# Reportable	Segment	Information

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

|  |  | Net	Sales |  |  | Operating	Income	(Loss) |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (millions) | 2016 | 2015 | 2014 | 2016 | 2015 | 2014 |
| Global\tIndustrial | $4,617.1 | $4,485.5 | $4,261.9 | $703.0 | $626.4 | $538.8 |
| Global\tInstitutional | 4,495.6 | 4,210.9 | 3,982.8 | 966.7 | 876.6 | 772.6 |
| Global\tEnergy | 3,035.8 | 3,470.8 | 3,815.8 | 337.1 | 465.5 | 534.8 |
| Other | 806.5 | 747.1 | 705.2 | 148.1 | 127.5 | 109.9 |
| Corporate | \t- | \t- | \t- | (272.1) | (663.8) | (252.4) |
| Subtotal\tat\tfixed\tcurrency | 12,955.0 | 12,914.3 | 12,765.7 | 1,882.8 | 1,432.2 | 1,703.7 |
| Effect\tof\tforeign\tcurrency\ttranslation | 197.8 | 630.8 | 1,514.8 | 32.2 | 129.1 | 251.3 |
| Consolidated | $13,152.8 | $13,545.1 | $14,280.5 | $1,915.0 | $1,561.3 | $1,955.0 |

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

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

The	Company	has	an	integrated	supply	chain	function	that	serves	all	of	its	reportable	segments.	As	such,	asset	and	capital	expenditure information	by	reportable	segment	has	not	been	provided	and	is	not	available,	since	the	Company	does	not	produce	or	utilize	such	information internally.	In	addition,	although	depreciation	and	amortization	expense	is	a	component	of	each	reportable	segment's	operating	results,	it	is	not discretely	identifiable.

Sales	of	warewashing	products	were	approximately	11%	and	10%	of	consolidated	net	sales	in	2016	and	2015,	respectively.	No	class	of products	was	10%	or	more	of	consolidated	net	sales	in	2014.

The	majority	of	the	Company's	revenue	is	driven	by	the	sale	of	its	chemical	products,	with	any	corresponding	service	generally	considered incidental	to	the	product	sale.	The	exception	to	this	is	the	Pest	Elimination	and	Equipment	Care	operating	segments,	which	are	within	the	Other segment	and	as	previously	noted,	are	primarily	fee-for-service	businesses.	In	addition,	the	Global	Industrial,	Global	Institutional	and	Global Energy	reportable	segments	derive	a	small	amount	of	revenue	directly	from	service	offerings.

Total	service	revenue	at	public	exchange	rates	by	reportable	segment	is	shown	below.

| (millions) | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- |
| Global\tIndustrial | $37.2 | $48.4 | $53.2 |
| Global\tInstitutional | 43.1 | 36.4 | 31.1 |
| Global\tEnergy | 263.7 | 291.9 | 294.1 |
| Other | 711.2 | 670.6 | 655.1 |

# Geographic	Information

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

| (millions) | 2016 | 2015 | 2014 | 2016 | 2015 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| United\tStates | $7,035.5 | $7,073.2 | $7,233.6 | $8,790.8 | $8,838.2 |
| Europe | 2,361.8 | 2,442.1 | 2,816.5 | 1,547.6 | 1,508.9 |
| Asia\tPacific,\texcluding\tGreater\tChina | 1,159.1 | 1,131.5 | 1,229.3 | 992.8 | 982.6 |
| Latin\tAmerica | 852.8 | 1,100.8 | 1,177.4 | 567.7 | 564.2 |
| MEA | 667.4 | 682.3 | 654.1 | 296.8 | 331.0 |
| Canada | 576.9 | 616.6 | 713.0 | 624.8 | 636.6 |
| Greater\tChina | 499.3 | 498.6 | 456.6 | 1,230.3 | 1,332.6 |
| Total | $13,152.8 | $13,545.1 | $14,280.5 | $14,050.8 | $14,194.1 |

Net	sales	by	geographic	region	were	determined	based	on	origin	of	sale.	Geographic	data	for	long-lived	assets	is	based	on	physical	location	of those	assets.	There	were	no	sales	from	a	single	foreign	country	or	individual	customer	that	were	material	to	the	Company's	consolidated	net sales.

# 18.	QUARTERLY	FINANCIAL	DATA	(UNAUDITED)

|  | First | Second | Third | Fourth |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
| (millions,\texcept\tper\tshare) | Quarter | Quarter | Quarter | Quarter | Year |
| 2016 |  |  |  |  |  |
| Net\tsales | $3,097.4 | $3,317.2 | $3,386.1 | $3,352.1 | $13,152.8 |
| Operating\texpenses |  |  |  |  |  |
| Cost\tof\tsales\t(a) | 1,631.4 | 1,785.2 | 1,737.2 | 1,745.1 | 6,898.9 |
| Selling,\tgeneral\tand\tadministrative\texpenses | 1,088.2 | 1,093.3 | 1,071.6 | 1,046.3 | 4,299.4 |
| Special\t(gains)\tand\tcharges | 6.3 | 26.2 | 3.2 | 3.8 | 39.5 |
| Operating\tincome | 371.5 | 412.5 | 574.1 | 556.9 | 1,915.0 |
| Interest\texpense,\tnet | 66.1 | 65.3 | 64.9 | 68.3 | 264.6 |
| Income\tbefore\tincome\ttaxes | 305.4 | 347.2 | 509.2 | 488.6 | 1,650.4 |
| Provision\tfor\tincome\ttaxes | 73.4 | 83.6 | 129.7 | 116.6 | 403.3 |
| Net\tincome\tincluding\tnoncontrolling\tinterest | 232.0 | 263.6 | 379.5 | 372.0 | 1,247.1 |
| Net\tincome\tattributable\tto\tnoncontrolling\tinterest | 1.2 | 5.2 | 5.4 | 5.7 | 17.5 |
| Net\tincome\tattributable\tto\tEcolab | $230.8 | $258.4 | $374.1 | $366.3 | $1,229.6 |
| Earnings\tattributable\tto\tEcolab\tper\tcommon\tshare |  |  |  |  |  |
| Basic | $0.78 | $0.88 | $1.28 | $1.26 | $4.20 |
| Diluted | $0.77 | $0.87 | $1.27 | $1.24 | $4.14 |
| Weighted-average\tcommon\tshares\toutstanding |  |  |  |  |  |
| Basic | 294.4 | 292.4 | 291.6 | 291.7 | 292.5 |
| Diluted | 298.3 | 296.5 | 295.7 | 295.5 | 296.7 |
| 2015 |  |  |  |  |  |
| Net\tsales | $3,297.6 | $3,389.1 | $3,446.4 | $3,412.0 | $13,545.1 |
| Operating\texpenses |  |  |  |  |  |
| Cost\tof\tsales\t(a) | 1,765.3 | 1,806.5 | 1,820.0 | 1,831.7 | 7,223.5 |
| Selling,\tgeneral\tand\tadministrative\texpenses | 1,136.8 | 1,079.2 | 1,070.7 | 1,058.8 | 4,345.5 |
| Special\t(gains)\tand\tcharges | 7.8 | 65.6 | 142.7 | 198.7 | 414.8 |
| Operating\tincome | 387.7 | 437.8 | 413.0 | 322.8 | 1,561.3 |
| Interest\texpense,\tnet | 62.5 | 61.2 | 57.6 | 62.3 | 243.6 |
| Income\tbefore\tincome\ttaxes | 325.2 | 376.6 | 355.4 | 260.5 | 1,317.7 |
| Provision\tfor\tincome\ttaxes | 89.8 | 67.8 | 105.3 | 37.6 | 300.5 |
| Net\tincome\tincluding\tnoncontrolling\tinterest | 235.4 | 308.8 | 250.1 | 222.9 | 1,017.2 |
| Net\tincome\t(loss)\tattributable\tto |  |  |  |  |  |
| noncontrolling\tinterest\t(b) | 2.0 | 6.8 | (7.7) | 14.0 | 15.1 |
| Net\tincome\tattributable\tto\tEcolab | $233.4 | $302.0 | $257.8 | $208.9 | $1,002.1 |
| Earnings\tattributable\tto\tEcolab\tper\tcommon\tshare |  |  |  |  |  |
| Basic | $0.78 | $1.02 | $0.87 | $0.71 | $3.38 |
| Diluted | $0.77 | $1.00 | $0.86 | $0.69 | $3.32 |
| Weighted-average\tcommon\tshares\toutstanding |  |  |  |  |  |
| Basic | 298.2 | 296.2 | 295.2 | 295.8 | 296.4 |
| Diluted | 303.2 | 301.1 | 300.0 | 300.6 | 301.4 |

Per	share	amounts	do	not	necessarily	sum	due	to	changes	in	the	calculation	of	shares	outstanding	for	each	discrete	period	and	rounding.

(b) Net	income	(loss)	attributable	to	noncontrolling	interest	includes	special	charges	of	$11.1	and	$1.7	in	Q3	and	Q4	of	2015,	respectively.

# Item	9.	Changes	in	and	Disagreements	With	Accountants	on	Accounting	and	Financial	Disclosure .

None.

# Item	9A.	Controls	and	Procedures.

# Disclosure	Controls	and	Procedures

As	of	December	31,	2016,	we	carried	out	an	evaluation,	under	the	supervision	and	with	the	participation	of	our	management,	including	our Chairman	of	the	Board	and	Chief	Executive	Officer	and	our	Chief	Financial	Officer,	of	the	effectiveness	of	the	design	and	operation	of	our disclosure	controls	and	procedures	(as	such	term	is	defined	in	Rule	13a-15(e)	under	the	Securities	Exchange	Act	of	1934	as	amended).		Based upon	that	evaluation,	our	Chairman	of	the	Board	and	Chief	Executive	Officer	and	our	Chief	Financial	Officer	concluded	that	our	disclosure controls	and	procedures	are	effective.

# Internal	Control	Over	Financial	Reporting

Our	management	is	responsible	for	establishing	and	maintaining	adequate	internal	control	over	financial	reporting.		Under	the	supervision	and with	the	participation	of	our	management,	including	our	Chairman	of	the	Board	and	Chief	Executive	Officer	and	our	Chief	Financial	Officer,	we conducted	an	evaluation	of	the	effectiveness	of	our	internal	control	over	financial	reporting	based	on	the	2013	framework	in	Internal	Control	– Integrated	Framework	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission.		Based	on	our	evaluation	under	this framework,	our	management	concluded	that	our	internal	control	over	financial	reporting	was	effective	as	of	December	31,	2016.

The	Company's	independent	registered	public	accounting	firm,	PricewaterhouseCoopers	LLP,	has	audited	the	effectiveness	of	the	Company's internal	control	over	financial	reporting	as	of	December	31,	2016.	Their	report,	and	our	management	reports,	can	be	found	in	Item	8	of	Part	II	of this	Form	10-K.

During	the	period	October	1	-	December	31,	2016	there	were	no	changes	in	our	internal	control	over	financial	reporting	that	have	materially affected,	or	are	reasonably	likely	to	materially	affect,	our	internal	control	over	financial	reporting.

# Item	9B.	Other	Information.

# PART	III

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

Information	about	our	directors	is	incorporated	by	reference	from	the	discussion	under	the	heading	"Proposal	1:	Election	of	Directors"	located	in the	Proxy	Statement.	Information	about	compliance	with	Section	16(a)	of	the	Securities	Exchange	Act	of	1934,	as	amended,	is	incorporated	by reference	from	the	discussion	under	the	heading	"Section	16(a)	Beneficial	Ownership	Reporting	Compliance"	located	in	the	Proxy	Statement. Information	about	our	Audit	Committee,	including	the	members	of	the	Committee,	and	our	Audit	Committee	financial	experts,	is	incorporated	by reference	from	the	discussion	under	the	heading	"Corporate	Governance,"	and	sub-headings	"Board	Committees"	and	"Audit	Committee," located	in	the	Proxy	Statement.	Information	about	our	Code	of	Conduct	is	incorporated	by	reference	from	the	discussion	under	the	heading "Corporate	Governance	Materials	and	Code	of	Conduct"	located	in	the	Proxy	Statement.		Information	regarding	our	executive	officers	is presented	under	the	heading	"Executive	Officers	of	the	Registrant"	in	Part	I,	Item	1(e)	of	this	Form	10-K,	and	is	incorporated	herein	by reference.

# Item	11.	Executive	Compensation.

Information	appearing	under	the	headings	entitled	"Executive	Compensation"	and	"Director	Compensation"	located	in	the	Proxy	Statement	is incorporated	herein	by	reference.	However,	pursuant	to	Instructions	to	Item	407(e)(5)	of	Securities	and	Exchange	Commission	Regulation	S-K, the	material	appearing	under	the	sub-heading	"Compensation	Committee	Report"	shall	not	be	deemed	to	be	"filed"	with	the	Commission.

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

Information	appearing	under	the	heading	entitled	"Security	Ownership"	located	in	the	Proxy	Statement	is	incorporated	herein	by	reference.

A	total	of	999,154	shares	of	Common	Stock	held	by	our	directors	and	executive	officers,	some	of	whom	may	be	deemed	to	be	"affiliates"	of	the Company,	have	been	excluded	from	the	computation	of	market	value	of	our	Common	Stock	on	the	cover	page	of	this	Form	10-K.		This	total represents	that	portion	of	the	shares	reported	as	beneficially	owned	by	our	directors	and	executive	officers	as	of	June	30,	2016	which	are actually	issued	and	outstanding.

# Equity	Compensation	Plan	Information

	 Number	of	securities	to	be (b) (c)

|  | Number	of	securities	to	be |  | (b) |  | (c) |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | issued\tupon\texercise\tof |  | Weighted\taverage\texercise |  | Number\tof\tsecurities\tremaining |
|  |  |  | price |  |  |
|  | outstanding\toptions, |  | of\toutstanding\toptions, |  | available\tfor\tfuture\tissuance\tunder |
|  | warrants |  | warrants |  | equity\tcompensation\tplans\t(excluding |
| Plan\tCategory | and\trights |  | and\trights |  | securities\treflected\tin\tcolumn\t(a)) |
| Equity\tcompensation\tplans\tapproved |  |  |  |  |  |
| by\tsecurity\tholders | 13,617,443 (1) | 13,617,443 (1) | $84.54 | (1) | 13,649,667 |
| Equity\tcompensation\tplans\tnot\tapproved |  |  |  |  |  |
| by\tsecurity\tholders | 206,900 | (2) | 55.60 | (2) | \t- |
| Total | 13,824,343 |  | $84.04 |  | 13,649,667 |

(1)				Includes	272,768	Common	Stock	equivalents	representing	deferred	compensation	stock	units	earned	by	non-employee	directors	under our	2001	Non-Employee	Director	Stock	Option	and	Deferred	Compensation	Plan,	1,386,687	Common	Stock	equivalents	under	our	2010 Stock	Incentive	Plan	representing	performance-based	restricted	stock	units	payable	to	employees,	and	254,387	Common	Stock equivalents	under	our	2010	Stock	Incentive	Plan	representing	restricted	stock	units	payable	to	employees.		All	of	the	Common	Stock equivalents	described	in	this	footnote	(1)	are	not	included	in	the	calculation	of	weighted	average	exercise	price	of	outstanding	options, warrants	and	rights	in	column	(b)	of	this	table.	The	reported	amount	additionally	includes	74,804	shares	of	Common	Stock	subject	to	stock options	assumed	by	us	in	connection	with	the	Nalco	merger.	Such	options,	which	have	a	weighted-average	exercise	price	of	$27.87,	are included	in	the	calculation	of	weighted	average	exercise	price	of	outstanding	options,	warrants	and	rights	in	column	(b)	of	this	table.

(2)				The	reported	amount	represents	shares	of	our	Common	Stock	which	were	formerly	reserved	for	future	issuance	under	the	Amended	and Restated	Nalco	Holding	Company	2004	Stock	Incentive	Plan	(the	"rollover	shares")	and	granted	to	legacy	Nalco	associates	on December	1,	2011,	under	the	Ecolab	Inc.	2010	Stock	Incentive	Plan	in	the	form	of	stock	options.		These	rollover	shares	are	deemed exempt	from	shareholder	approval	under	Rule	303A.08	of	the	New	York	Stock	Exchange	in	accordance	with	our	notice	to	the	New	York Stock	Exchange	dated	December	16,	2011.		The	Nalco	plan	was	amended	to	prohibit	future	grants.

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

Information	appearing	under	the	headings	entitled	"Director	Independence	Standards	and	Determinations"	and	"Related	Person	Transactions" located	in	the	Proxy	Statement	is	incorporated	herein	by	reference.

# Item	14.		Principal	Accounting	Fees	and	Services.

Information	appearing	under	the	heading	entitled	"Audit	Fees"	located	in	the	Proxy	Statement	is	incorporated	herein	by	reference.

# PART	IV

# Item	15.		Exhibits,	Financial	Statement	Schedules.

The	following	information	required	under	this	item	is	filed	as	part	of	this	report:

(a)(1) Financial	Statements.

(i) Report	of	Independent	Registered	Public	Accounting	Firm.

(iii) Consolidated	Statements	of	Comprehensive	Income	for	the	years	ended	December	31,	2016,	2015	and	2014.

(vii) Notes	to	Consolidated	Financial	Statements.

# (a)(2) Financial	Statement	Schedules.

All	financial	statement	schedules	are	omitted	because	they	are	not	applicable	or	the	required	information	is	shown	in	the	consolidated financial	statements	or	the	accompanying	notes	to	the	consolidated	financial	statements.	The	separate	financial	statements	and summarized	financial	information	of	subsidiaries	not	consolidated	and	of	fifty	percent	or	less	owned	persons	have	been	omitted because	they	do	not	satisfy	the	requirements	for	inclusion	in	this	Form	10-K.

(a)(3) The	documents	below	are	filed	as	exhibits	to	this	Report.		We	will,	upon	request	and	payment	of	a	fee	not	exceeding	the	rate	at	which copies	are	available	from	the	Securities	and	Exchange	Commission,	furnish	copies	of	any	of	the	following	exhibits	to	stockholders.

(2.1) Agreement	and	Plan	of	Merger	dated	as	of	July	19,	2011,	among	Ecolab	Inc.,	Sustainability	Partners	Corporation	and	Nalco	Holding Company	–	Incorporated	by	reference	to	Exhibit	(2.1)	of	our	Form	8-K	dated	July	19,	2011.	(File	No.	001-9328)

(2.3) First	Amendment	dated	as	of	November	28,	2012	to	Agreement	and	Plan	of	Merger,	dated	as	of	October	11,	2012,	among	Ecolab Inc.,	OFC	Technologies	Corp.	and	Permian	Mud	Service,	Inc.	–	Incorporated	by	reference	to	Exhibit	(2.3)	of	our	Form	10-K	Annual Report	for	the	year	ended	December	31,	2012.	(File	No.	001-9328)

(2.4) Second	Amendment	dated	as	of	November	30,	2012	to	Agreement	and	Plan	of	Merger,	dated	as	October	11,	2012,	among	Ecolab Inc.,	OFC	Technologies	Corp.	and	Permian	Mud	Service,	Inc.	–	Incorporated	by	reference	to	Exhibit	(2.1)	of	our	Form	8-K	dated November	30,	2012.	(File	No.	001-9328)

(4.3) Amended	and	Restated	Indenture,	dated	as	of	January	9,	2001,	between	Ecolab	Inc.	and	The	Bank	of	New	York	Trust	Company, N.A.	(as	successor	in	interest	to	J.P.	Morgan	Trust	Company,	National	Association	and	Bank	One,	NA)	as	Trustee	-	Incorporated	by reference	to	Exhibit	(4)(A)	of	our	Form	8-K	dated	January	23,	2001.		(File	No.	001-9328)

(4.4) Second	Supplemental	Indenture,	dated	as	of	December	8,	2011,	between	the	Company,	Wells	Fargo	Bank,	National	Association,	as Trustee	and	the	Bank	of	New	York	Mellon	Trust	Company,	N.A.	(formerly	known	as	The	Bank	of	New	York	Trust	Company,	N.A.,	as successor	in	interest	to	J.P.	Morgan	Trust	Company,	National	Association	and	Bank	One,	National	Association),	as	original	trustee	– Incorporated	by	reference	to	Exhibit	(4.2)	of	our	Form	8-K	dated	December	5,	2011.		(File	No.	001-9328)

(4.6) Fourth	Supplemental	Indenture,	dated	as	of	December	13,	2012,	between	The	Company,	Wells	Fargo	Bank	National	Association,	as Trustee	and	The	Bank	of	New	York	Mellon	Trust	Company,	N.A.	(formerly	known	as	The	Bank	of	New	York	Trust	Company,	N.A.,	as successor	in	interest	to	J.P.	Morgan	Trust	Company,	National	Association	and	Bank	One,	National	Association,	as	original	trustee	– Incorporated	by	reference	to	Exhibit	(4.2)	of	our	Form	8-K	dated	December	13,	2012.		(File	No.	001-9328)

(4.9) First	Supplemental	Indenture,	dated	as	of	January	15,	2015,	between	Ecolab	Inc.	and	Wells	Fargo	Bank,	National	Association,	as Trustee	–	Incorporated	by	reference	to	Exhibit	4.1	of	our	Form	8-K	dated	January	15,	2015.		(File	No.	001-9328)

(4.11) Second	Supplemental	Indenture,	dated	July	8,	2015,	by	and	among	Ecolab	Inc.,	Wells	Fargo	Bank,	National	Association,	Elavon Financial	Services	Limited,	UK	Branch,	as	paying	agent,	and	Elavon	Financial	Services	Limited,	as	transfer	agent	and	registrar	– Incorporated	by	reference	to	Exhibit	4.2	of	our	Form	8-K	dated	July	8,	2015.	(File	No.	001-9328)

(4.13) Third	Supplemental	Indenture,	dated	January	14,	2016,	between	Ecolab	Inc.	and	Wells	Fargo	Bank,	National	Association,	as	Trustee –	Incorporated	by	reference	to	Exhibit	4.2	of	our	Form	8-K	dated	January	11,	2016.	(File	No.	001-9328)

(4.15) Fourth	Supplemental	Indenture,	dated	October	18,	2016,	between	the	Company	and	Wells	Fargo	Bank,	National	Association	– Incorporated	by	reference	to	Exhibit	4.2	of	our	Form	8-K	dated	October	13,	2016.	(File	No.	001-9328)

(4.17) Fifth	Supplemental	Indenture,	dated	December	8,	2016,	by	and	among	the	Company,	Wells	Fargo	Bank,	National	Association, Elavon	Financial	Services	DAC,	UK	Branch,	as	paying	agent,	and	Elavon	Financial	Services	DAC,	as	transfer	agent	and	registrar	- Incorporated	by	reference	to	Exhibit	4.2	of	our	Form	8-K	dated	December	1,	2016.	(File	No.	001-9328)

Copies	of	other	constituent	instruments	defining	the	rights	of	holders	of	our	long-term	debt	are	not	filed	herewith,	pursuant	to	Section (b)(4)(iii)	of	Item	601	of	Regulation	S-K,	because	the	aggregate	amount	of	securities	authorized	under	each	of	such	instruments	is less	than	10%	of	our	total	assets	on	a	consolidated	basis.		We	will,	upon	request	by	the	Securities	and	Exchange	Commission,	furnish to	the	Commission	a	copy	of	each	such	instrument.

(10.1) Amended	and	Restated	$2.0	billion	5-Year	Revolving	Credit	Facility,	dated	as	of	December	3,	2014,	among	Ecolab	Inc.,	the	lenders party	thereto,	the	issuing	banks	party	thereto,	Bank	of	America,	N.A.,	as	administrative	agent	and	Swingline	Bank,	and	Citibank,	N.A., JPMorgan	Chase	Bank,	N.A.	and	The	Bank	of	Tokyo-Mitsubishi	UFJ,	Ltd.,	as	co-syndication	agents	-	Incorporated	by	reference	to Exhibit	(10.1)	of	our	Form	8-K	dated	December	3,	2014.		(File	No.	001-9328)

# (10.3) Documents	comprising	global	Commercial	Paper	Programs.

(a) Amended	and	Restated	Dealer	Agreement	dated	21	September	2016	between	Ecolab	Inc.,	Ecolab	Lux	1	S.à	r.l.,	Ecolab Lux	2	S.à	r.l.	and	Ecolab	NL	10	B.V.	(as	Issuers),	Ecolab	Inc.	(as	Guarantor	in	respect	of	the	notes	issued	by	Ecolab	Lux	1 S.à	r.l.,	Ecolab	Lux	2	S.à	r.l.	and	Ecolab	NL	10	B.V.),	Credit	Suisse	Securities	(Europe)	Limited	(as	Arranger),	and	Citibank Europe	plc,	UK	Branch	and	Credit	Suisse	Securities	(Europe)	Limited	(as	Dealers)	-	Incorporated	by	reference	to	Exhibit 10.1(a)	of	our	Form	8-K	dated	September	21,	2016.	(File	No.	001-9328)

(a) Form	of	Commercial	Paper	Dealer	Agreement	for	4(a)(2)	Program	dated	as	of	September	22,	2014.		The	dealers	for	the program	are	Citigroup	Global	Markets	Inc.,	Credit	Suisse	Securities	(USA)	LLC,	J.P.	Morgan	Securities	LLC,	Merrill	Lynch, Pierce,	Fenner	&	Smith	Incorporated,		Mizuho	Securities	USA	Inc.,	and	Wells	Fargo	Securities,	LLC	-	Incorporated	by reference	to	Exhibit	(10.1)(a)	of	our	Form	10-Q	for	the	quarter	ended	September	30,	2014.		(File	No.	001-9328)

(b) Commercial	Issuing	and	Paying	Agency	Agreement	dated	as	of	September	22,	2014	between	Ecolab	Inc.	and	Deutsche Bank	Trust	Company	Americas	as	Issuing	and	Paying	Agent	-	Incorporated	by	reference	to	Exhibit	(10.1)(b)	of	our	Form 10-Q	for	the	quarter	ended	September	30,	2014.		(File	No.	001-9328)

(c) Corporate	Commercial	Paper	–	Master	Note	dated	September	22,	2014,	together	with	annex	thereto	–	Incorporated	by reference	to	Exhibit	(10.1)(c)	of	our	Form	10-Q	for	the	quarter	ended	September	30,	2014.		(File	No.	001-9328)

(10.4) (i) Ecolab	Inc.	2001	Non-Employee	Director	Stock	Option	and	Deferred	Compensation	Plan,	as	amended	and	restated	effective August	1,	2013	–	Incorporated	by	reference	to	Exhibit	(10.6)	of	our	Form	10-K	Annual	Report	for	the	year	ended	December	31, 2013.		(File	No.	001-9328)

(ii) Declaration	of	Amendment	dated	May	5,	2016	to	Ecolab	Inc.	2001	Non-Employee	Director	Stock	Option	and	Deferred Compensation	Plan,	as	amended	and	restated	effective	August	1,	2013-	Incorporated	by	reference	to	Exhibit	(10.1)	of	our	Form 10-Q	for	the	quarter	ended	June	30,	2016.		(File	No.	001-9328)

(iv) Master	Agreement	Relating	to	Periodic	Options,	as	amended	effective	as	of	May	1,	2004	–	Incorporated	by	reference	to	Exhibit (10)D(ii)	of	our	Form		10-Q	for	the	quarter	ended	June	30,	2004.		(File	No.	001-9328)

(v) Amendment	No.	1	to	Master	Agreement	Relating	to	Periodic	Options,	as	amended	effective	May	2,	2008	–	Incorporated	by reference	to	Exhibit	(10)B	of	our	Form	10-Q	for	the	quarter	ended	September	30,	2008.	(File	No.	001-9328)

(ii) First	Amendment	to	Note	Purchase	Agreement	dated	July	26,	2006,	dated	as	of	October	27,	2011,	by	and	among	Ecolab	Inc. and	the	Noteholders	party	thereto	–	Incorporated	by	reference	to	Exhibit	(10.2)	of	our	Form	8-K	dated	October	27,	2011.		(File No.	001-9328)

(10.6) Form	of	Director	Indemnification	Agreement.		Substantially	identical	agreements	are	in	effect	as	to	each	of	our	directors	– Incorporated	by	reference	to	Exhibit	(10)I	of	our	Form	10-K	Annual	Report	for	the	year	ended	December	31,	2003.		(File	No.	001- 9328)

(ii) Amendment	No.	1	to	Ecolab	Executive	Death	Benefits	Plan,	effective	July	1,	1997	–	Incorporated	by	reference	to	Exhibit (10)H(ii)	of	our	Form	10-K	Annual	Report	for	the	year	ended	December	31,	1998.		(File	No.	001-9328)

(iii) Second	Declaration	of	Amendment	to	Ecolab	Executive	Death	Benefits	Plan,	effective	March	1,	1998	-	Incorporated	by reference	to	Exhibit	(10)H(iii)	of	our	Form	10-K	Annual	Report	for	the	year	ended	December	31,	1998.		(File	No.	001-9328)

(v) Amendment	No.	4	to	the	Ecolab	Executive	Death	Benefits	Plan,	effective	January	1,	2005	–	Incorporated	by	reference	to	Exhibit (10)H(v)	of	our	Form	10-K	Annual	Report	for	the	year	ended	December	31,	2009.		(File	No.	001-9328)

(ii) Amendment	No.	1	to	the	Ecolab	Executive	Long-Term	Disability	Plan,	effective	August	21,	2015	–	Incorporated	by	reference	to Exhibit	10.1	of	our	Form	10-Q	for	the	quarter	ended	September	30,	2015.	(File	No.	001-9328)

(10.9) (i) Ecolab	Supplemental	Executive	Retirement	Plan,	as	amended	and	restated	effective	as	of	January	1,	2014	–	Incorporated	by reference	to	Exhibit	10.11	of	our	Form	10-K	Annual	Report	for	the	year	ended	December	31,	2013.		(File	No.	001-9328).		See also	Exhibit	(10.14)	hereof.

(ii) Amendment	No.	1	to	the	Ecolab	Supplemental	Executive	Retirement	Plan,	effective	May	6,	2015	–	Incorporated	by	reference	to Exhibit	10.1	of	our	Form	10-Q	for	the	quarter	ended	June	30,	2015.	(File	No.	001-9328)

(10.12) (i) Ecolab	Inc.	Administrative	Document	for	Non-Qualified	Plans	(Amended	and	Restated	effective	as	of	January	1,	2011)	– Incorporated	by	reference	to	Exhibit	(10.16)	of	our	Form	10-K	Annual	Report	for	the	year	ended	December	31,	2011.		(File	No. 001-9328)

(ii) Amendment	No.	1	to	the	Ecolab	Inc.	Administrative	Document	for	Non-Qualified	Plans	effective	as	of	January	1,	2013	– Incorporated	by	reference	to	Exhibit	(10.14)(II)	of	our	Form	10-K	Annual	Report	for	the	year	ended	December	31,	2013.		(File No.	001-9328)

(10.14) (i) Ecolab	Inc.	Change	in	Control	Severance	Compensation	Policy,	as	amended	and	restated	effective	February	26,	2010	– Incorporated	by	reference	to	Exhibit	(10)	of	our	Form	8-K	dated	February	26,	2010.		(File	No.	001-9328)

(ii) Amendment	No.	1	to	Ecolab	Inc.	Change-in-Control	Severance	Policy	(as	Amended	and	Restated	effective	as	of	February	26, 2010)	–	Incorporated	by	reference	to	Exhibit	(10.18)(ii)	of	our	Form	10-K	Annual	Report	for	the	year	ended	December	31, 2011.		(File	No.	001-9328)

(10.15) Description	of	Ecolab	Management	Incentive	Plan	-	Incorporated	by	reference	to	Exhibit	(10.16)	of	our	Form	10-K	Annual	Report	for the	year	ended	December	31,	2015.		(File	No.	001-9328)

(ii) Sample	form	of	Non-Statutory	Stock	Option	Agreement	under	the	Ecolab	Inc.	2010	Stock	Incentive	Plan	–	Incorporated	by reference	to	Exhibit	(10)B	of	our	Form	8-K	dated	May	6,	2010.		(File	No.	001-9328)

(iii) Sample	form	of	Restricted	Stock	Award	Agreement	under	the	Ecolab	Inc.	2010	Stock	Incentive	Plan	–	Incorporated	by reference	to	Exhibit	(10)C	of	our	Form	8-K	dated	May	6,	2010.		(File	No.	001-9328)

(iv) Sample	form	of	Performance-Based	Restricted	Stock	Award	Agreement	under	the	Ecolab	Inc.	2010	Stock	Incentive	Plan	– Incorporated	by	reference	to	Exhibit	(10)D	of	our	Form	8-K	dated	May	6,	2010.		(File	No.	001-9328)

(v) Sample	form	of	Restricted	Stock	Unit	Award	Agreement	under	the	Ecolab	Inc.	2010	Stock	Incentive	Plan	–	Incorporated	by reference	to	Exhibit	(10)A	of	our	Form	10-Q	for	the	quarter	ended	September	30,	2010.	(File	No.	001-9328)

(vi) Sample	form	of	Performance-Based	Restricted	Stock	Award	Agreement	under	the	Ecolab	Inc.	2010	Stock	Incentive	as	adopted December	2,	2015	-	Incorporated	by	reference	to	Exhibit	(10.17(vi))	of	our	Form	10-K	Annual	Report	for	the	year	ended December	31,	2015.		(File	No.	001-9328)

(vii) Sample	form	of	Performance-Based	Restricted	Stock	Award	Agreement	under	the	Ecolab	Inc.	2010	Stock	Incentive	Plan,	as adopted	December	7,	2016.

(10.17) Policy	on	Reimbursement	of	Incentive	Payments	adopted	December	4,	2008	–	Incorporated	by	reference	to	Exhibit	(10)W	of	our Form	10-K	Annual	Report	for	the	year	ended	December	31,	2008.		(File	No.	001-9328)

(10.18) Second	Amended	and	Restated	Nalco	Holding	Company	2004	Stock	Incentive	Plan	–	Incorporated	by	reference	to	Exhibit	(4.3)	of	our Post-Effective	Amendment	No.	1	on	Form	S-8	to	Form	S-4	Registration	Statement	dated	December	2,	2011.		(File	No.	001-9328)

(10.19) Form	of	Nalco	Company	Death	Benefit	Agreement	and	Addendum	to	Death	Benefit	Agreement	–	Incorporated	by	reference	from Exhibit	(99.2)	on	Form	8-K	of	Nalco	Holding	Company	filed	on	May	11,	2005.		(File	No.	001-32342)

(10.20) Sublease	Agreement,	dated	as	of	November	4,	2003	between	Leo	Holding	Company,	as	sub-landlord	and	Ondeo	Nalco	Company,	as subtenant	–	Incorporated	by	reference	from	Exhibit	(10.6)	of	the	Registration	Statement	on	Form	S-4	of	Nalco	Company	filed	on	May 17,	2004.		(File	No.	333-115560)

# EXECUTIVE	COMPENSATION	PLANS	AND	ARRANGEMENTS

Included	in	the	preceding	list	of	exhibits	are	the	following	management	contracts	or	compensatory	plans	or	arrangements:

(10.12) Ecolab	Inc.	Administrative	Document	for	Non-Qualified	Plans.

(10.13) Ecolab	Inc.	Management	Performance	Incentive	Plan.

(10.14) Ecolab	Inc.	Change	in	Control	Severance	Compensation	Policy.

(10.15) Description	of	Ecolab	Inc.	Management	Incentive	Plan.

(10.17) Policy	on	Reimbursement	of	Incentive	Payments.

(10.18) Second	Amended	and	Restated	Nalco	Holding	Company	2004	Stock	Incentive	Plan.

(10.19) Nalco	Company	Death	Benefit	Agreement	and	Addendum	to	Death	Benefit	Agreement.

# SIGNATURES

Pursuant	to	the	requirements	of	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934,	Ecolab	Inc.	has	duly	caused	this	report	to	be	signed on	its	behalf	by	the	undersigned,	thereunto	duly	authorized,	on	the	24 	day	of	February,	2017. th

(Registrant)

Chairman	of	the	Board

and	Chief	Executive	Officer

Pursuant	to	the	requirements	of	the	Securities	Exchange	Act	of	1934,	this	report	has	been	signed	below	by	the	following	persons	on	behalf	of Ecolab	Inc.	and	in	the	capacities	indicated,	on	the	24 	day	of	February	2017.

as	attorney-in-fact	for:

Barbara	J.	Beck,	Les	S.	Biller,	Carl	M.	Casale,	Stephen	I.	Chazen,

Jeffrey	M.	Ettinger,	Jerry	A.	Grundhofer,	Arthur	J.	Higgins,	Michael

Larson,	Jerry	W.	Levin,	David	W.	MacLennan,	Tracy	B.	McKibben,

Victoria	J.	Reich,	Suzanne	M.	Vautrinot	and	John	J.	Zillmer

# EXHIBIT	INDEX

# Exhibit Document Method	of	Filing

(d) Deed	of	Guarantee	made	on	21	September	2016	by	Ecolab	Inc.

(a) Form	of	Commercial	Paper	Dealer	Agreement	for	4(a)(2) Program	dated	as	of	September	22,	2014.		The	dealers	for	the program	are	Citigroup	Global	Markets	Inc.,	Credit	Suisse Securities	(USA)	LLC,	J.P.	Morgan	Securities	LLC,	Merrill Lynch,	Pierce,	Fenner	&	Smith	Incorporated,		Mizuho	Securities USA	Inc.,	and	Wells	Fargo	Securities,	LLC.



Question: what portion of cash and cash equivalents on hand are held in u.s . as of december 31 , 2016?
Answer: 43.7%