PART I

Except where the context otherwise requires, references in this Form 10-K to “Ecolab,” “Company,” “we” and “our” are to Ecolab Inc. and its subsidiaries, collectively.

Forward-Looking Statements

This Annual Report on Form 10-K, including “Management’s Discussion and Analysis of Financial Condition and Results of Operation” incorporated by reference into Item 7 of this Form 10-K,  contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements include: scope, timing, costs, cash expenditures, timing of cash payments, benefits and headcount impact of our restructuring initiatives; utilization of recorded restructuring liabilities; Champion purchase price allocation adjustments; capital investments and strategic business acquisitions; share repurchases; impact of Venezuela currency re-measurement; payment of litigation settlement funds; borrowing capacity; global market risk; objective to improve credit rating; long-term potential of our business; impact of changes in exchange rates and interest rates; leveraging and simplifying global supply chain; losses due to concentration of credit risk; recognition of share-based compensation expense; future benefit plan payments; amortization expense; benefits of and synergies from the Champion and Nalco transactions; bad debt experiences and customer credit worthiness; disputes, claims and litigation; environmental contingencies; returns on pension plan assets; future cash flow and uses for cash; dividends; debt repayments; contributions to pension and postretirement healthcare plans; liquidity requirements and borrowing methods; impact of credit rating downgrade; impact of new accounting pronouncements; tax deductibility of goodwill; non-performance of counterparties; timing of hedged transactions; and income taxes, including loss carryforwards, unrecognized tax benefits and uncertain tax positions.  Without limiting the foregoing, words or phrases such as “will likely result,” “are expected to,” “will continue,” “is anticipated,” “we believe,” “we expect,” “estimate,” “project” (including the negative or variations thereof) or similar terminology, generally identify forward-looking statements.  Forward-looking statements may also represent challenging goals for us.  These statements, which represent the Company’s expectations or beliefs concerning various future events, are based on current expectations that involve a number of risks and uncertainties that could cause actual results to differ materially from those of such forward-looking statements. We caution that undue reliance should not be placed on such forward-looking statements, which speak only as of the date made.  Some of the factors which could cause results to differ from those expressed in any forward-looking statement are set forth under Item 1A of this Form 10-K, entitled Risk Factors.

·                   Global Energy consists of the Global Energy operating unit.

·                   Other consists of the Global Pest Elimination and Equipment Care operating units.

Consistent with our internal management reporting, we also present a Corporate segment which includes amortization specifically from the Nalco merger, certain integration costs from both the Nalco and Champion transactions and the special (gains) and charges reported on our Consolidated Statement of Income.

In 2013, we took the following actions to continue to build our business:

·                               In January, we completed the acquisition of Mexico-based Quimiproductos S.A. de C.V., a producer and supplier of cleaning, sanitizing and water treatment goods and services to breweries and beverage companies located in Central and South America.  Pre-acquisition annual sales were approximately $43 million and the business became part of our Global Industrial reportable segment during the first quarter of 2013.

·                               In April, we acquired Champion Technologies, and its related company Corsicana Technologies (collectively “Champion”), a Houston-based global energy specialty products and services company, to strengthen our position in the fast-growing energy services market. Champion’s 2012 sales for the business acquired were approximately $1.3 billion and the business became part of our Global Energy reportable segment during the second quarter of 2013.

·                               In April, we acquired Russia-based OOO Master Chemicals (“Master Chemicals”).  Master Chemicals sells oil field chemicals to oil and gas producers located throughout Russia and parts of the Ukraine.  Pre-acquisition annual sales of the business were approximately $29 million.  The business became part of our Global Energy reportable segment during the second quarter of 2013.

·                               In August, we sold substantially all the equipment design and build business of our Mobotec air emissions control business.  The Mobotec equipment design and build business had 2012 sales of approximately $27 million, which were within our Global Industrial reportable segment. We retained Mobotec’s chemical business.

·                               In December, subsequent to our fiscal year end for international operations, we completed the acquisition of AkzoNobel B.V.’s Purate business which specializes in global antimicrobial water treatment.  With 2012 revenues of approximately $23 million, the Purate business provides patented, proprietary chlorine dioxide generation programs for use in a wide array of water treatment applications.  Beginning in the first quarter of 2014, the business will become part of our Global Industrial reportable segment.

Item 1(b) Financial Information About Operating Segments .

The financial information about reportable segments appearing under the heading “Operating Segments and Geographic Information” in Note 17, located on pages 63 and 64 of the Annual Report, is incorporated herein by reference.

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Item 1(c) Narrative Description of Business .

General

With 2013 sales of $13.3 billion, we are the global leader in water, hygiene and energy technologies and services that protect people and vital resources.  We deliver comprehensive programs and services to promote safe food, maintain clean environments, optimize water and energy use and improve operational efficiencies for customers in the food, energy, healthcare, industrial and hospitality markets in more than 170 countries.  Our cleaning and sanitizing programs and products, pest elimination services, and equipment maintenance and repair services support customers in the foodservice, food and beverage processing, hospitality, healthcare, government and education, retail, textile care and commercial facilities management sectors.  Our chemicals 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 programs, products and services which serve our customer base, and do so on a global basis to meet the needs of our customers’ various operations around 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 four reportable segments as reported in our consolidated financial statements for the year ended December 31, 2013, as incorporated by reference into Part II of this Form 10-K.  We aggregate our ten operating units into the following four reportable segments: Global Industrial; Global Institutional; Global Energy; and Other.

Global Industrial

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

Global Water :  Our Global Water business serves customers across industrial and institutional markets, with the exception of the pulp and paper industry which is serviced by our Global Paper business and

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the energy industries which are served by our Global Energy business.  Within Global Water, we provide products and programs for water treatment and process applications aimed at combining environmental benefits with economic gains for our customers. Our offerings include specialty products such as scale and corrosion inhibitors, antifoulants, pre-treatment solutions, membrane treatments, coagulants and flocculants, and anti-foams, as well as our 3D TRASAR TM  technology, which combines chemistry, remote services and monitoring and control. Typically, water savings, energy savings, maintenance and capital expenditure avoidance are among the primary sources of value to our customers, with product quality and production enhancement improvements also providing a key differentiating feature for many of our offerings. We serve customers in the 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.

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

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

Global Food & Beverage :  Our Global Food & Beverage business addresses cleaning and sanitation at the beginning of the food chain to facilitate the processing of products for human consumption.  Global 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.  Global 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.  Global Food & Beverage also designs, engineers and installs CIP (“clean-in-place”) process control systems and facility cleaning systems for its customer base.  Products for use on farms are sold through dealers and independent, third-party distributors, while products for use in processing facilities are sold primarily by our corporate account and field sales employees.

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

Global Paper :  Our Global Paper business provides water and process applications for the pulp and paper industries.  Our Global Paper segment offers a comprehensive portfolio of programs that are used in all principal steps of the papermaking process and across all grades of paper, including graphic grades, board and packaging, and tissue and towel.  Global Paper provides its customers the same types of products and programs for water treatment and wastewater treatment as those offered by Global Water.  Also, Global Paper offers two additional 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

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and automation combine with innovative chemistries and detailed process knowledge to provide a broad range of customer solutions. Specialty products include flocculants, coagulants, dewatering aids, and digester yield enhances.  Our offerings are sold primarily by our field sales employees.

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

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

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

Global Institutional

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

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

Global Institutional sells its products and programs primarily through Company-employed field 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 Company-employed field sales and service personnel, we generally provide the same customer support to end-use customers supplied by these distributors as we do to direct customers.

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

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Global Specialty :  Our Global Specialty operating unit supplies cleaning and sanitizing chemical products and related items primarily to regional, national and international quick service restaurant (“QSR”) chains and food retailers (i.e., supermarkets and grocery stores).  Its products include specialty and general purpose hard surface cleaners, degreasers, sanitizers, polishes, hand care products and assorted cleaning tools and equipment which are primarily sold under the “Kay” and “Ecolab” brand names.  Global 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 product dispensing options are available for products in the core product range.  Global Specialty supports its product sales with employee training programs and technical support designed to meet the special needs of its customers.

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

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

Global Healthcare : Our Global Healthcare business provides infection prevention and other healthcare-related offerings to acute care hospitals, surgery centers, dental offices and veterinary clinics.  Global Healthcare’s proprietary infection prevention products (hand hygiene, hard surface disinfectants, instrument cleaners, patient drapes, fluid control products, equipment drapes and surgical fluid, warming and cooling systems) are sold primarily under the “Ecolab”, “Microtek” and “OR Solutions” brand names to various departments within the acute care environment (Infection Control, Environmental Services, Central Sterile and Operating Room). Global Healthcare’s Microtek Medical business is a leader in niche branded specialty surgical drapes and fluid control products.  Global Healthcare’s OR Solutions business is a leading developer and marketer of surgical fluid warming and cooling systems.  Global Healthcare sells its products and programs primarily through Company-employed field sales personnel but also sells through healthcare distributors. Primarily in Europe, Global Healthcare also manufactures and markets disinfectants and related products for contamination control in critical environments such as pharmaceutical and hospital clean rooms.

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

Global Energy

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

Our Global Energy segment provides on-site, technology-driven solutions to the global drilling, oil and gas production, refining, and petrochemical industries.  Our product and service portfolio includes corrosion inhibitors, scale control additives, biocides, cleaners, hydrate control, H s S scavengers, oil dispersants, asphaltene and paraffin control, foamers and anti-foams, flow assurance, oil/water separation, heavy crude desalting, monomer inhibitors, anti-oxidants, fuel and lubricant additives, air

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emission control and combustion efficiency, and traditional water treatment.  Our customers include nearly all of the largest publicly traded oil companies.  Our Global Energy offerings are sold primarily by our corporate account and field sales employees.  The Global Energy segment operates an Upstream group composed of our WellChem, Oilfield Chemicals and Enhanced Oil Recovery businesses and a Downstream refinery and petrochemical processing business.

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

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

·                   Enhanced Oil Recovery:   We provide custom engineered chemical solutions that increase production of crude oil and gas from existing fields, which are marketed primarily through our TIORCO TM  joint venture with Stepan Company.  TIORCO integrates enhanced oil recovery (“EOR”) processes by leveraging our polymer and reservoir expertise and Stepan’s global surfactant technology and manufacturing capabilities.

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

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

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

We believe that our Global Energy segment has a leading market position in the geographic markets it serves.

Other

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

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and, in particular, by enhancing our food safety capabilities.

Global Pest Elimination :  Global 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 Global Pest Elimination are sold and performed by Company-employed field sales and service personnel.

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

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

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

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

Additional Information

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

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 abroad.  The profitability of our International operations has historically been lower than the profitability of our

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businesses in the United States, due to (i) the additional cost of operating in numerous and diverse foreign jurisdictions, (ii) higher costs of importing certain raw materials and finished goods in some regions, (iii) the smaller scale of international operations where certain operating locations are smaller in size and (iv) the additional reliance on distributors and agents in certain countries which can negatively impact our margins.  Proportionately larger investments in sales and technical support are also necessary in certain geographies in order to facilitate the growth of our international operations.

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

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

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

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

Number of Employees : We had approximately 45,415 employees as of December 31, 2013.

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 2013 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 two classes of products within the Global Institutional segment which comprised 10% or more of consolidated net sales in any of the last three years.  Sales of warewashing products were approximately 10% of 2013 consolidated net sales, approximately 11% in 2012 and approximately 18% in 2011.  In addition, through our Institutional and Textile Care businesses around the world, we sell laundry products to a broad range of laundry customers.  Sales of laundry products were approximately 10% of consolidated net sales in 2011.

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

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related to our TRASAR and 3D TRASAR technology, which are material to our Global Water and Global Paper segments, and trademarks related to Ecolab, Nalco Company and 3D TRASAR.  The Ecolab trademarks are material to the Global Industrial, Global Institutional and Other segments and the Nalco trademarks are material to the Global Water, Global Paper and Global Energy businesses.  The 3D TRASAR trademarks predominantly relate to our Global Water and Global Paper segments.  U.S. and foreign patents protect aspects of our key TRASAR and 3D TRASAR technology until at least 2024. The Ecolab, Nalco Company and 3D TRASAR trademarks are registered or applied for in all of our key markets, and we anticipate maintaining them indefinitely.

Seasonality :  We experience variability in our quarterly operating results due to seasonal sales volume and business mix fluctuations in our operating segments.  Note 18, entitled “Quarterly Financial Data” located on page 65 of the Annual Report, is incorporated herein by reference.

Working Capital :  We have invested in the past, and will continue to invest in the future, in merchandising and customer equipment consisting primarily of systems used by customers to dispense our products as well as to monitor water systems.  Otherwise, we have no unusual working capital requirements.

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 beginning at page 26 of this Form 10-K under the heading “Properties.”

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 beginning at page 26 of this Form 10-K under the heading “Properties.”

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, amines, fatty acids, surfactants, solvents, monomers and polymers.  Global Healthcare purchases plastic films and parts to manufacture medical devices that serve the surgical and infection prevention markets.  Pesticides used by our Pest Elimination Division 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 8,000 raw materials, with the largest single raw material representing less than 3% 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 devising and testing new products, processes, techniques and equipment, improving the efficiency of existing ones, improving service program content, evaluating the environmental compatibility of products and technical support. Key disciplines include analytical and formulation chemistry, microbiology, process and packaging engineering, remote monitoring engineering and product dispensing technology.  Substantially all of our principal products have been developed by our research, development and engineering personnel. At times, technology has also been licensed from third parties to develop offerings.

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

Note 14, entitled “Research Expenditures” located on page 56 of the Annual Report, is incorporated herein by reference.

Joint Ventures : Over time, certain of our business units have entered into partnerships or joint ventures in order to meet local ownership requirements, to more quickly achieve operational scale, to expand our ability to provide our customers a more fully integrated offering or to provide other benefits to our business or customers.  In particular, our Global Energy and Global Water businesses are parties to numerous joint ventures, though many of our other business units also conduct some business through joint ventures.  During 2013, the impact on our consolidated net income of our joint ventures, in the aggregate, was less than one percent.  The table below identifies our most significant consolidated and non-consolidated joint ventures, summarized by the primary purpose of the joint venture.

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

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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 2012 were considered by several other state legislatures.  Cleaning product ingredient disclosure legislation has been introduced in the U.S. Congress in each of the past few years but has not passed, and several states including California and New York are considering further regulations in this area.  The California Safer Consumer Products Act regulations became effective in 2013 and focus on ingredients in consumer products that have the potential for widespread public exposure.  The U.S. Government is monitoring “green chemistry” initiatives through a variety of initiatives, including its “Design for the Environment” (“DfE”) program.  DfE has three broad areas of work (recognition of safer products on a DfE label, development of best practices for industrial processes and evaluation of safer chemicals), and we are involved in these to varying degrees.  Ecolab’s Institutional 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, Ecolab generally has been able to comply with such legislative requirements by reformulation or labeling modifications.  Such legislation has not had a material adverse effect on our consolidated results of operations, financial position or cash flows to date.

TSCA :  Re-authorization of the Toxic Substances Control Act (“TSCA”) and an update of the chemicals on the TSCA Inventory (the so-called “reset” of the TSCA Inventory) are again being discussed in the U.S. Congress, and also has garnered considerable discussion with the business and non-governmental communities. The U.S. Environmental Protection Agency (“EPA”) also is more aggressively using the existing TSCA tools to manage chemicals of concern.  We anticipate that compliance with new requirements under TSCA could be similar to the costs associated with REACH in the European Union, which is discussed below.

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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 line and working with chemical suppliers to comply with registration 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 issued 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, and we are working toward a phased-in approach to mitigate the costs of GHS implementation.  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.

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, and for the California tax, were approximately $4.2 million in 2013 and $3.7 million in 2012.

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

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these requirements and have met the first relevant deadline of the program by the timely submission of dossiers for active substances. Anticipated registration costs, which will be incurred through the multi-year phase-in period, will be significant; however, these costs are not expected to significantly affect our consolidated results of operations or cash flows in any one reporting period or our financial position.

In addition, our Global Pest Elimination business applies restricted-use pesticides that it generally purchases from third parties. That Division 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 “Good Manufacturing Practices” for these products 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 (“OTC”) antiseptic drug products, which may impose additional requirements associated with antimicrobial hand care products and associated costs when finalized by the FDA. 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, 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.  We also are required to register with the FDA as a medical device manufacturer, comply with post-market reporting (e.g., MDR and Recall) requirements, and to comply with the FDA’s 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/ECC, as amended by 2007/47/EC, and ISO 13485).  We have CE mark approval to sell various medical device 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.

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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. Similar legal requirements apply to Ecolab’s facilities globally.  We make capital investments and expenditures to comply with environmental laws and regulations, to ensure 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 $15 million in 2013 and $20 million in 2012.  Approximately $50 million has been budgeted globally for projects in 2014.

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, Ecolab supports a balanced approach to reducing GHG emissions while sustaining economic growth and competitiveness. Ecolab is committed to reducing its carbon footprint.  To help manage risks from GHG emissions and identify cost-effective reduction opportunities, Ecolab joined  EPA’s Climate Leaders program in 2005.  Though EPA announced in 2010 that it was dissolving the program, Ecolab has continued with much of its work to reduce its carbon footprint.  For example, Ecolab has developed a U.S.-based GHG inventory of the six major greenhouse gases and reported progress against Ecolab’s goal of reducing GHG emissions by 19% per dollar sales from 2006 to 2012.  Using the combined company’s 2012 metrics as an operational baseline, Ecolab set new goals in 2013 to further improve its environmental impact within the next five years. Among these new targets, Ecolab will work to achieve a five percent reduction in greenhouse gas (GHG) emissions, a 10 percent reduction in water use and wastewater discharge, and a 10 percent reduction in the disposal of solid waste, per million dollars in sales. We also leverage over one million customer locations globally to reduce energy and greenhouse gas emissions through high-efficiency solutions in cleaning and sanitation, water, paper and energy services.  These actions directly reduce greenhouse gas emissions by lessening the demand for energy.  We can indirectly reduce energy demand by recognizing the critical connection of water and energy, especially in industrial processes reliant on water to transmit thermal energy.  Our customers employ our technologies and expertise in an exponentially greater scale to improve their own overall energy use.

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 42 sites in the United States. Additionally, we have similar liability at eight 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.

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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.

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 $4.2 million in 2013 and $2.4 million in 2012.  Our worldwide accruals at December 31, 2013 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.

Disclosure of Certain Activities Related to Iran : We had no transactions in 2013 in Iran or any other country subject to comprehensive U.S. economic sanctions, including the Iran Threat Reduction and Syria Human Rights Act of 2012 (the “Iran Threat Reduction Act”), or which would otherwise require disclosure under the Iran Threat Reduction Act.

Item 1(d) Financial Information About Geographic Areas .

The financial information about geographic areas appearing under the heading “Operating Segments and Geographic Information” in Note 17, located on pages 63 and 64 of the Annual Report, is incorporated herein by reference.

Item 1(e) Available Information.

Our Internet address is www.ecolab.com. Copies of our annual report on Form 10-K, quarterly reports

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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.

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

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

(3)          Prior to joining Ecolab in 2010, Mr. Seifert was Vice President, General Counsel and Secretary of Bemis Company, Inc. since 2002.

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

(5)          Prior to joining Ecolab in 2009, Ms. Wyant held multiple leadership positions at General Electric.

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