ECOLAB INC (Form: 10-Q, Received: 10/30/2014 16:32:27)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2014

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

For the transition period from to

Commission File No. 1-9328

ECOLAB INC.

(Exact name of registrant as specified in its charter)

Delaware		41-0231510
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

370 Wabasha Street N., St. Paul, Minnesota 55102

(Address of principal executive offices) (Zip Code)

1-800-232-6522

(Registrant’s telephone number, including area code)

(Not Applicable)

(Former name, former address and former fiscal year,

if changed since last report)

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 x No o

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 Regulations 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 x No o

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 x		Accelerated filer o

Non-accelerated filer o		Smaller reporting company o
(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 o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of September 30, 2014.

300,116,468 shares of common stock, par value $1.00 per share.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

ECOLAB INC.

CONSOLIDATED STATEMENT OF INCOME

	Third Quarter Ended
	September 30
(millions, except per share amounts)	2014		2013
	(unaudited)
Net sales	$	3,694.9	$	3,484.0

Cost of sales (including special charges of $0.8 in 2014 and $6.3 in 2013)	1,970.6		1,866.1

Selling, general and administrative expenses	1,145.9		1,114.1

Special (gains) and charges	7.0		27.8

Operating income	571.4		476.0

Interest expense, net	63.3		67.0

Income before income taxes	508.1		409.0

Provision for income taxes	138.7		101.8

Net income including noncontrolling interest	369.4		307.2

Less: Net income (loss) attributable to noncontrolling interest	4.5		(0.8		)

Net income attributable to Ecolab	$	364.9	$	308.0

Earnings attributable to Ecolab per common share
Basic	$	1.22	$	1.02
Diluted	$	1.19	$	1.00

Dividends declared per common share	$	0.2750	$	0.2300

Weighted-average common shares outstanding
Basic	300.0		301.2
Diluted	305.7		307.2

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

ECOLAB INC.

CONSOLIDATED STATEMENT OF INCOME

	Nine Months Ended
	September 30
(millions, except per share amounts)	2014		2013
	(unaudited)
Net sales	$	10,599.7	$	9,693.9

Cost of sales (including special charges of $7.9 in 2014 and $23.5 in 2013)	5,699.2		5,216.0

Selling, general and administrative expenses	3,435.5		3,236.8

Special (gains) and charges	30.5		151.1

Operating income	1,434.5		1,090.0

Interest expense, net (including special charges of $2.5 in 2013)	194.6		194.7

Income before income taxes	1,239.9		895.3

Provision for income taxes	361.0		211.3

Net income including noncontrolling interest	878.9		684.0

Less: Net income attributable to noncontrolling interest (including special charges of $0.5 in 2013)	11.6		3.3

Net income attributable to Ecolab	$	867.3	$	680.7

Earnings attributable to Ecolab per common share
Basic	$	2.89	$	2.27
Diluted	$	2.83	$	2.23

Dividends declared per common share	$	0.8250	$	0.6900

Weighted-average common shares outstanding
Basic	300.1		299.4
Diluted	306.0		305.3

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

ECOLAB INC.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

	Third Quarter Ended						Nine Months Ended
	September 30						September 30
(millions)	2014			2013			2014			2013
	(unaudited)
Net income including noncontrolling interest	$	369.4		$	307.2		$	878.9		$	684.0

Other comprehensive income (loss), net of tax

Foreign currency translation adjustments
Foreign currency translation	(41.5		)	(126.2		)	(86.3		)	(276.9		)
Gain (loss) on net investment hedge	7.4			(4.2		)	5.6			(4.2		)
	(34.1		)	(130.4		)	(80.7		)	(281.1		)

Derivatives and hedging instruments	5.0			1.6			0.9			9.1

Pension and postretirement benefits
Amortization of net actuarial loss and prior service cost included in net periodic pension and postretirement costs	2.6			10.4			7.7			31.3

Subtotal	(26.5		)	(118.4		)	(72.1		)	(240.7		)

Total comprehensive income, including noncontrolling interest	342.9			188.8			806.8			443.3

Less: Comprehensive income (loss) attributable to noncontrolling interest	3.2			—			10.3			(11.0		)

Comprehensive income attributable to Ecolab	$	339.7		$	188.8		$	796.5		$	454.3

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

ECOLAB INC.

CONSOLIDATED BALANCE SHEET

	September 30		December 31
(millions)	2014		2013
	(unaudited)
ASSETS

Current assets

Cash and cash equivalents	$	197.8	$	339.2

Accounts receivable, net	2,694.4		2,568.0

Inventories	1,464.4		1,321.9

Deferred income taxes	166.1		163.0

Other current assets	349.1		306.3

Total current assets	4,871.8		4,698.4

Property, plant and equipment, net	2,978.5		2,882.0

Goodwill	6,849.1		6,862.9

Other intangible assets, net	4,583.1		4,785.3

Other assets	403.3		407.9

Total assets	$	19,685.8	$	19,636.5

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

(Continued)

ECOLAB INC.

CONSOLIDATED BALANCE SHEET (continued)

	September 30			December 31
(millions, except shares and per share amounts)	2014			2013
	(unaudited)
LIABILITIES AND EQUITY

Current liabilities

Short-term debt	$	1,922.8		$	861.0

Accounts payable	1,047.3			1,021.9

Compensation and benefits	547.1			571.1

Income taxes	81.9			80.9

Other current liabilities	855.9			953.8

Total current liabilities	4,455.0			3,488.7

Long-term debt	4,874.0			6,043.5

Postretirement health care and pension benefits	785.0			795.6

Other liabilities	1,805.5			1,899.3

Total liabilities	11,919.5			12,227.1

Equity (a)
Common stock	347.2			345.1
Additional paid-in capital	4,832.6			4,692.0
Retained earnings	5,318.7			4,699.0
Accumulated other comprehensive loss	(377.3		)	(305.2		)
Treasury stock	(2,423.3		)	(2,086.6		)
Total Ecolab shareholders’ equity	7,697.9			7,344.3
Noncontrolling interest	68.4			65.1
Total equity	7,766.3			7,409.4

Total liabilities and equity	$	19,685.8		$	19,636.5

(a) Common stock, 800 million shares authorized, $1.00 par value per share, 300.1 million shares outstanding at September 30, 2014, 301.1 million shares outstanding at December 31, 2013. Shares outstanding are net of treasury stock.

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

ECOLAB INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

	Nine Months Ended
	September 30
(millions)	2014			2013
	(unaudited)
OPERATING ACTIVITIES

Net income including noncontrolling interest	$	878.9		$	684.0

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

Depreciation	417.4			381.3
Amortization	236.6			220.5
Deferred income taxes	(79.1		)	(102.7		)
Share-based compensation expense	55.1			53.6
Excess tax benefits from share-based payment arrangements	(41.7		)	(26.2		)
Pension and postretirement plan contributions	(61.0		)	(62.0		)
Pension and postretirement plan expense	65.4			106.9
Restructuring, net of cash paid	(22.4		)	(20.5		)
Venezuela currency devaluation	—			23.3
Gain on sale of business	(1.4		)	—
Other, net	8.4			12.9

Changes in operating assets and liabilities, net of effect of acquisitions:

Accounts receivable	(163.5		)	(70.3		)
Inventories	(168.7		)	(92.3		)
Other assets	(51.7		)	(109.5		)
Accounts payable	29.5			(40.7		)
Other liabilities	43.2			(29.1		)

Cash provided by operating activities	$	1,145.0		$	929.2

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

(Continued)

ECOLAB INC.

CONSOLIDATED STATEMENT OF CASH FLOWS (continued)

	Nine Months Ended
	September 30
(millions)	2014			2013
	(unaudited)

INVESTING ACTIVITIES

Capital expenditures	$	(488.7	)	$	(423.4	)
Capitalized software expenditures	(31.9		)	(25.7		)
Property and other assets sold	8.6			9.6
Businesses acquired and investments in affiliates, net of cash acquired	(70.8		)	(1,442.3		)
Divestiture of businesses	9.2			(7.9		)
Deposit into indemnification escrow	—			(10.6		)
Release from indemnification escrow	8.7			13.0

Cash used for investing activities	(564.9		)	(1,887.3		)

FINANCING ACTIVITIES

Net issuances (repayments) of commercial paper and notes payable	310.2			(90.6		)
Long-term debt borrowings	—			900.1
Long-term debt repayments	(407.3		)	(337.8		)
Reacquired shares	(341.0		)	(228.5		)
Dividends paid	(258.9		)	(143.6		)
Exercise of employee stock options	51.5			77.7
Excess tax benefits from share-based payment arrangements	41.7			26.2
Acquisition related liabilities and contingent consideration	(101.5		)	(9.8		)
Acquisition of noncontrolling interest	(8.4		)	—
Other, net	—			0.6

Cash provided by (used for) financing activities	(713.7		)	194.3

Effect of exchange rate changes on cash	(7.8		)	0.4

Decrease in cash and cash equivalents	(141.4		)	(763.4		)

Cash and cash equivalents, beginning of period	339.2			1,157.8

Cash and cash equivalents, end of period	$	197.8		$	394.4

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

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Consolidated Financial Information

The unaudited consolidated financial information for the third quarter and nine months ended September 30, 2014 and 2013 reflect, in the opinion of management, all adjustments necessary for a fair presentation of the financial position, results of operations, comprehensive income and cash flows of Ecolab Inc. (“Ecolab” or “the company”) for the interim periods presented. The financial results for any interim period are not necessarily indicative of results for the full year. The consolidated balance sheet data as of December 31, 2013 was derived from the audited consolidated financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. The unaudited consolidated financial information should be read in conjunction with the consolidated financial statements and notes thereto incorporated in the company’s Annual Report on Form 10-K for the year ended December 31, 2013.

With respect to the unaudited financial information of the company for the third quarter and nine months ended September 30, 2014 and 2013 included in this Form 10-Q, PricewaterhouseCoopers LLP reported that they have applied limited procedures in accordance with professional standards for a review of such information. However, their separate report dated October 30, 2014 appearing herein states that they did not audit and they do not express an opinion on that unaudited financial information. Accordingly, the degree of reliance on their report on such information should be restricted in light of the limited nature of the review procedures applied. PricewaterhouseCoopers LLP is not subject to the liability provisions of Section 11 of the Securities Act of 1933, as amended (the “Act”), for their report on the unaudited financial information because that report is not a “report” or a “part” of a registration statement prepared or certified by PricewaterhouseCoopers LLP within the meaning of Sections 7 and 11 of the Act.

Effective in the first quarter of 2014, certain employee-related costs from the company’s recently acquired businesses that were historically presented within cost of sales were revised and reclassified to selling, general and administrative expenses (“SG&A”) on the Consolidated Statement of Income. These immaterial revisions were made to conform with management’s view of the respective costs within the global organizational model. Total costs reclassified were $16.7 million for the third quarter ended September 30, 2013, $60.3 million for the nine months ended September 30, 2013 and $78.9 million for the year ended December 31, 2013.

Results for 2013 have been revised to conform to the current year presentation. The reclassification had no impact on net earnings, financial position or cash flows.

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. Special (Gains) and Charges

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

	Third Quarter Ended						Nine Months Ended
	September 30						September 30
(millions)	2014			2013			2014			2013
Cost of sales
Restructuring charges	$	0.4		$	1.9		$	7.5		$	5.5
Recognition of inventory fair value step-up	0.4			4.4			0.4			18.0
Subtotal	0.8			6.3			7.9			23.5

Special (gains) and charges
Restructuring charges	6.3			11.9			34.9			75.4
Champion acquisition and integration costs	4.1			10.7			15.8			42.5
Nalco merger and integration costs	2.0			5.3			4.8			13.5
Venezuela currency devaluation	—			(0.1		)	—			23.3
Litigation activity, settlements, and other gains	(5.4		)	—			(25.0		)	(3.6		)
Subtotal	7.0			27.8			30.5			151.1

Operating income subtotal	7.8			34.1			38.4			174.6

Interest expense, net
Acquisition debt costs	—			—			—			2.5

Net income attributable to noncontrolling interest
Venezuela currency devaluation	—			—			—			(0.5		)

Total special (gains) and charges	$	7.8		$	34.1		$	38.4		$	176.6

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

Restructuring Charges

The company incurs net costs for restructuring activities associated with plans to enhance its efficiency and 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 when 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 terminations. 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 both cost of sales and special (gains) and charges on the Consolidated Statement of Income. Amounts included within 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 non-current liabilities on the Consolidated Balance Sheet.

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. Special (Gains) and Charges (continued)

Energy Restructuring Plan

On April 10, 2013, the company completed its acquisition of privately held Champion Technologies and its related company Corsicana Technologies (collectively “Champion”).

In April 2013, following the completion of the acquisition of Champion, the company commenced plans to undertake restructuring and other cost-saving actions to realize its acquisition-related cost synergies as well as streamline and strengthen Ecolab’s position in the fast growing global energy market (the “Energy Restructuring Plan”). Actions associated with the acquisition to improve the effectiveness and efficiency of the business include a reduction of the combined business’s current global workforce by approximately 500 positions. A number of these reductions are expected to be achieved through eliminating open positions and attrition. The company also anticipates leveraging and simplifying its global supply chain, including the reduction of plant and distribution center locations and product line optimization, as well as the reduction of other redundant facilities.

The company expects to incur pre-tax restructuring charges of approximately $80 million ($55 million after tax) under the Energy Restructuring Plan through substantial completion of the Plan in 2015. During 2013, the company incurred $27 million ($19 million after tax) of charges related to the Energy Restructuring Plan. Approximately $15 million ($10 million after tax) of charges are expected to occur in 2014.

The company anticipates that approximately $60 million of the $80 million of the pre-tax charges represent cash expenditures. The remaining pre-tax charges represent estimated asset write-downs and disposals. No decisions have been made for any asset disposals and estimates could vary depending on the actual actions taken.

The company recorded restructuring charges related to the Energy Restructuring Plan of $1.3 million ($0.7 million after tax) and $8.4 million ($6.7 million after tax) during the third quarter of 2014 and 2013, respectively. During the nine months ended September 30, 2014 and 2013, the company incurred charges of $8.9 million ($5.9 million after tax) and $20.6 million ($14.3 million after tax), respectively.

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

	Energy Restructuring Plan
	Employee
	Termination			Asset
(millions)	Costs			Disposals			Other			Total
2013 Activity:
Recorded expense and accrual	$	22.9		$	3.6		$	0.9		$	27.4
Cash payments	(16.7		)	—			(0.8		)	(17.5		)
Non-cash charges	—			(3.6		)	—			(3.6		)
Effect of foreign currency translation	0.6			—			—			0.6
Restructuring liability, December 31, 2013	6.8			—			0.1			6.9

2014 Activity:
Recorded expense and accrual	7.5			0.5			0.9			8.9
Cash payments	(11.9		)	—			(0.9		)	(12.8		)
Non-cash charges	—			(0.5		)	—			(0.5		)
Effect of foreign currency translation	0.3			—			—			0.3
Restructuring liability, September 30, 2014	$	2.7		$	—		$	0.1		$	2.8

As shown in the previous table, cash payments under the Energy Restructuring Plan were $12.8 million during the first nine months of 2014 and $17.5 million during 2013. The majority of cash payments under this Plan are related to severance, with the current accrual expected to be paid over the next twelve months.

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. Special (Gains) and Charges (continued)

Combined Restructuring 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 (the “2011 Restructuring Plan”). Additionally, in January 2012, following the merger with Nalco Holding Company (“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 reductions of plant and distribution center locations (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 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 and plant and distribution center locations.

During 2013, the company incurred $64 million ($48 million after tax) of charges related to the Combined Plan. The company recorded restructuring charges related to the Combined Plan of $5.4 million ($3.3 million after tax) and $5.3 million ($2.1 million after tax), during the third quarter of 2014 and 2013, respectively. During the nine months ended September 30, 2014 and 2013, the company incurred charges of $33.4 million ($27.0 million after tax) and $60.5 million ($42.5 million after tax), respectively.

Through substantial completion of the Combined Plan at the end of 2015, the company expects to incur pretax charges of approximately $50 million ($40 million after tax) during the remainder of 2014 and 2015.

The company anticipates that substantially all of the remaining Combined Plan pre-tax charges will represent net cash expenditures.

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

	Combined Plan
	Employee
	Termination			Asset
(millions)	Costs			Disposals			Other			Total
2011 - 2013 Activity:
Recorded net expense and accrual	$	248.2		$	(1.2	)	$	30.7		$	277.7
Net cash payments	(182.2		)	9.1			(19.1		)	(192.2		)
Non-cash net charges	—			(7.9		)	(4.3		)	(12.2		)
Effect of foreign currency translation	(0.1		)	—			—			(0.1		)
Restructuring liability, December 31, 2013	65.9			—			7.3			73.2

2014 Activity:
Recorded net expense and accrual	28.9			(1.1		)	5.6			33.4
Net cash payments	(47.4		)	2.6			(7.0		)	(51.8		)
Non-cash net charges	—			(1.5		)	—			(1.5		)
Effect of foreign currency translation	(0.7		)	—			—			(0.7		)
Restructuring liability, September 30, 2014	$	46.7		$	—		$	5.9		$	52.6

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. Special (Gains) and Charges (continued)

As shown in the previous table, net cash payments under the Combined Plan were $51.8 million during the first nine months of 2014 and $192.2 million from 2011 through 2013. 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.

Non-restructuring Special (Gains) and Charges

Champion acquisition and integration costs

As a result of the Champion acquisition completed in 2013, the company incurred charges of $4.1 million ($2.7 million after tax) and $15.1 million ($10.3 million after tax) during the third quarter of 2014 and 2013, respectively. During the nine months ended September 30, 2014 and 2013, the company incurred charges of $15.8 million ($10.2 million after tax) and $63.0 million ($44.9 million after tax), respectively.

Champion related costs have been included as a component of cost of sales, special (gains) and charges and net interest expense on the Consolidated Statement of Income. Amounts within cost of sales include the recognition of fair value step-up in Champion international inventory, which is maintained on a FIFO basis. Amounts included in special (gains) and charges include acquisition costs, advisory and legal fees and integration charges. Amounts included in net interest expense include the interest expense through the close date of the Champion transaction of the company’s $500 million public debt issuance in December 2012 as well as amortizable fees to secure term loans and short-term debt, all of which were initiated to fund the Champion acquisition. Further information related to the acquisition of Champion is included in Note 3.

Nalco merger and integration costs

As a result of the Nalco merger completed in 2011, the company incurred net charges of $2.0 million ($2.0 million after tax) and $5.3 million ($3.5 million after tax) during the third quarter of 2014 and 2013, respectively. During the nine months ended September 30, 2014 and 2013, the company incurred charges of $4.8 million ($4.0 million after tax) and $13.5 million ($9.2 million after tax), respectively. Nalco related special charges for 2014 and 2013 have been included as a component of special (gains) and charges on the Consolidated Statement of Income, and include integration charges.

Venezuelan currency devaluation

Venezuela is a country with a highly inflationary economy under U.S. GAAP. As a result, the U.S. dollar is the functional currency for our subsidiaries in Venezuela. Any currency remeasurement adjustments for non-dollar denominated monetary assets and liabilities held by our subsidiaries and other transactional foreign exchange gains and losses are reflected in earnings.

On February 8, 2013, the Venezuelan government devalued its currency, the Bolivar Fuerte (“bolivar”) from 4.30 bolivars to 1 U.S. dollar to 6.30 bolivars to 1 U.S. dollar, resulting in a charge during 2013 of $22.7 million ($16.1 million after tax), due to the remeasurement of the local balance sheet. As a result of the ownership structure in place in Venezuela, the company also reflected a portion of the devaluation impact as a component of net income (loss) attributable to noncontrolling interest on the Consolidated Statement of Income.

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. Special (Gains) and Charges (continued)

In 2013, the Venezuelan government created a new foreign exchange mechanism known as the “Complementary System of Foreign Currency Acquirement” (“SICAD 1”). It operates similar to an auction system and allows entities to exchange a limited number of bolivars for U.S. dollars at a bid rate established via weekly auctions under SICAD 1. As of August 31, 2014, the fiscal quarter end for the company’s international operations, the SICAD 1 exchange rate closed at 11.5 bolivars to 1 U.S. dollar. The company does not use the SICAD 1 rate or expect to use the SICAD 1 currency exchange mechanism.

In January 2014, the Venezuelan government announced the replacement of the Commission for the Administration of Foreign Exchange (“CADIVI”) with a new foreign currency administration, the National Center for Foreign Commerce (“CENCOEX”). As of August 31, 2014, the company had $102 million of net monetary assets denominated in bolivars that were required to be remeasured to U.S. dollars. During the nine month period ended August 31, 2014, the company continued to obtain approvals and authorization to pay amounts at the CENCOEX fixed currency exchange rate of 6.30 bolivars to 1 U.S. dollar. As the company believes the fixed currency exchange rate of 6.30 bolivars to 1 U.S. dollar remains legally available to it and the company continues to transact at this rate, the company intends to continue to remeasure the net monetary assets of its Venezuela subsidiaries at this rate.

In March 2014, the Venezuelan government introduced an additional currency exchange auction mechanism (“SICAD 2”). At August 31, 2014, the SICAD 2 exchange rate closed at 49.97 bolivars to 1 U.S. dollar. The company does not use the SICAD 2 rate, but is evaluating whether it will use the SICAD 2 currency exchange mechanism in future periods.

Net sales within Venezuela are approximately 1% of the company’s consolidated net sales. Assets held in Venezuela at August 31, 2014 represented less than 2% of the company’s consolidated assets.

Other special (gains) and charges

The company recognized other special gains of $5.0 million ($3.1 million after tax) and $24.6 million ($19.5 million after tax) during the third quarter and the first nine months of 2014, respectively. The gain recognized in the third quarter of 2014 resulted from the consolidation of the Emirates National Chemicals Company LLC (“Emochem”) entity and removal of the corresponding equity method investment. The gains recognized during the first six months of 2014 related to a favorable licensing settlement and other settlement gains.

3. Acquisitions and Dispositions

Champion acquisition

On April 10, 2013, the company completed its acquisition of Champion, a global energy specialty products and services company delivering its offerings to the oil and gas industry. The total fair value of cash and stock consideration transferred to acquire all of Champion’s stock was approximately $2.1 billion. Champion’s sales for the business acquired by the company were approximately $1.3 billion in 2012. The business became part of the company’s Global Energy reportable segment in the second quarter of 2013.

The company incurred certain acquisition related costs associated with the transaction that were expensed as incurred and are reflected in the Consolidated Statement of Income. Amounts included in cost of sales relate to recognition of fair value step-up in Champion international inventory, which is maintained on a FIFO basis. Amounts included in special (gains) and charges include acquisition costs, advisory and legal fees and integration charges. Amounts included in net interest expense include the interest expense through the close date of the Champion transaction of the company’s $500 million public debt issuance in December 2012 as well as amortizable fees to secure term loans and short-term debt, all of which were initiated to fund the Champion acquisition.

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. Acquisitions and Dispositions (continued)

The Champion acquisition has been accounted for using the acquisition method of accounting, which requires, among other things, that most assets acquired and liabilities assumed be recognized at fair value as of the acquisition date.

The following table summarizes the value of Champion assets acquired and liabilities assumed as of December 31, 2013. During 2013, adjustments of $37.1 million were made to the preliminary purchase price allocation of the assets and liabilities assumed with a corresponding adjustment to goodwill.

Also summarized in the table, during the first quarter of 2014, net adjustments of $16.9 million were made to the value of Champion assets acquired and liabilities assumed. As the adjustments were not significant, they have been recorded in 2014 and are not reflected in the 2013 Consolidated Balance Sheet. Purchase price allocations were finalized during the first quarter of 2014.

(millions)	Allocation at December 31, 2013			Purchase Price Adjustments			Final Allocation at March 31, 2014
Current assets	$	592.3		$	(4.5	)	$	587.8
Property, plant and equipment	357.8			(2.5		)	355.3
Other assets	16.2			0.1			16.3
Identifiable intangible assets
Customer relationships	840.0			—			840.0
Trademarks	120.0			—			120.0
Other technology	36.5			—			36.5
Total assets acquired	1,962.8			(6.9		)	1,955.9

Current liabilities	409.5			3.6			413.1
Long-term debt	70.8			—			70.8
Net deferred tax liability	427.4			9.3			436.7
Noncontrolling interest and other liabilities	30.5			(2.9		)	27.6
Total liabilities and noncontrolling interests assumed	938.2			10.0			948.2

Goodwill	1,030.1			16.9			1,047.0
Total aggregate purchase price	2,054.7			—			2,054.7
Future consideration payable to sellers	(86.4		)	86.4			—
Total consideration transferred	$	1,968.3		$	86.4		$	2,054.7

The adjustments to the purchase price allocation during the first quarter of 2014 primarily related to estimated contingent liabilities, updated property, plant and equipment values and deferred taxes.

In accordance with the acquisition agreement, except under limited circumstances, the company was required to pay an additional amount in cash, up to $100 million in the aggregate, equal to 50% of the incremental tax on the merger consideration as a result of increases in applicable gains and investment taxes after December 31, 2012. In January 2014, in accordance with the above discussion, an additional payment of $86.4 million was made to the acquired entity’s former stockholders.

The customer relationships, trademarks and other technology are being amortized over weighted average lives of 14, 12 and 7 years, respectively.

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. Acquisitions and Dispositions (continued)

The results of Champion’s operations have been included in the company’s consolidated financial statements since the close of the acquisition in April 2013. Due to the rapid pace at which the business has been integrated with the company’s Global Energy segment, including all customer selling activity, discrete financial data specific to the legacy Champion business is no longer available post acquisition.

Based on applicable accounting and reporting guidance, the Champion acquisition is not material to the company’s consolidated financial statements; therefore, pro forma financial information has not been presented.

Other acquisition activity

2014 Activity

During the first nine months of 2014, the company completed six business combination transactions. In addition, one transaction was completed subsequent to the end of the third quarter.

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

In March 2014, the company acquired AK Kraus & Hiller Schädlingsbekämpfung, one of Germany’s leading commercial pest elimination service providers. Pre-acquisition annual sales of the business were approximately $4 million. The business became part of the company’s Other reportable segment during the second quarter of 2014.

In March 2014, the company purchased the remaining interest in a joint venture held in South Africa. The transaction is not significant to the company’s operations.

In June 2014, the company purchased the remaining interest in a joint venture in Indonesia. The transaction is not significant to the company’s operations.

In July 2014, the company obtained control of 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 is not significant to the company’s operations. As discussed in Note 2, the company recognized a gain of $5.0 million during the third quarter of 2014 as a result of this transaction.

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

In September 2014, subsequent to the company’s third quarter end for international operations, the company acquired certain assets in Turkey. The transaction is not significant to the company’s operations.

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. Acquisitions and Dispositions (continued)

2013 Activity

During the first nine months of 2013, in addition to the Champion acquisition, the company completed two business combination transactions.

In January 2013, the company completed the acquisition of Mexico-based Quimiproductos S.A. de C.V. (“Quimiproductos”), a wholly-owned subsidiary of Fomento Economico Mexicano, S.A.B. de C.V. (commonly known as FEMSA). Quimiproductos produces and supplies cleaning, sanitizing and water treatment goods and services to breweries and beverage companies located in Mexico and Central and South America. Pre-acquisition annual sales of the business were approximately $43 million. Approximately $8 million of the purchase price was placed in an escrow account for indemnification purposes related to general representations and warranties. During the third quarter of 2014 the escrow balance was paid to the seller. The business became part of the company’s Global Industrial reportable segment during the first quarter of 2013.

In April 2013, the company completed the acquisition of Russia-based OOO Master Chemicals (“Master Chemicals”). Master Chemicals sells oil field chemicals to oil and gas producers located throughout Russia and parts of the Ukraine. Pre-acquisition annual sales of the business were approximately $29 million. Approximately $3 million of the purchase price was placed in an escrow account for indemnification purposes related to general representations and warranties. The business became part of the company’s Global Energy reportable segment during the second quarter of 2013.

Other acquisition summary

Other acquisitions during the first nine months of 2014 and all of 2013 were not material to the company’s consolidated financial statements; therefore, pro forma financial information has not been presented. The aggregate purchase price of acquisitions has been reduced for any cash or cash equivalents acquired with the acquisitions. Based upon purchase price allocations, the components of the aggregate purchase prices of other completed acquisitions during the third quarter and first nine months of 2014 and 2013 are shown in the following table.

	Third Quarter Ended					Nine Months Ended
	September 30					September 30
(millions)	2014			2013		2014		2013
Net tangible assets acquired, including impact of joint venture consolidation activity	$	(18.8	)	$	—	$	4.1	$	(2.3	)
Identifiable intangible assets
Customer relationships	27.7			—		30.6		58.8
Trademarks	2.6			—		3.4		1.4
Other technology	1.2			—		4.1		1.0
Non-compete	—			—		0.1		—
Total intangible assets	31.5			—		38.2		61.2
Goodwill	16.8			—		28.1		41.2
Total aggregate purchase price	29.5			—		70.4		100.1
Acquisition related liabilities and contingent consideration	15.0			—		15.1		9.8
Liability for indemnification, net	8.0			—		8.7		2.4
Net cash paid for acquisitions, including contingent consideration	$	52.5		$	—	$	94.2	$	112.3

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. Acquisitions and Dispositions (continued)

The contingent consideration activity primarily relates to payments on legacy Nalco acquisitions. During the first quarter of 2013, the remaining $13 million escrow balance related to the O.R. Solutions Inc. acquisition was paid to the seller. As previously discussed, during the first quarter of 2013, approximately $8 million of the Quimiproductos purchase price was placed in an escrow account and was subsequently paid to the seller in the third quarter of 2014. During the third quarter of 2013, approximately $3 million of the Master Chemicals purchase price was placed in an escrow account.

The weighted average useful lives of identifiable intangible assets acquired during the first nine months of 2014 and 2013, as shown in the previous table, were 10 and 12 years, respectively.

Dispositions

2014 Activity

In April 2014, the company sold an immaterial business in Italy that was part of the company’s Institutional reportable segment.

There were no other business disposals during the first nine months of 2014.

2013 Activity

In August 2013, the company sold substantially all the capital equipment design and build business of its Mobotec air emissions control business. The Mobotec equipment design and build business had 2012 sales of approximately $27 million, which were within the company’s Global Industrial reportable segment. An insignificant loss related to the sale was recorded in special (gains) and charges during the third quarter of 2013. The company retained Mobotec’s chemical business.

There were no other business disposals during the first nine months of 2013.

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4. Balance Sheet Information

	September 30			December 31
(millions)	2014			2013
	(unaudited)
Accounts receivable, net
Accounts receivable	$	2,779.6		$	2,648.9
Allowance for doubtful accounts	(85.2		)	(80.9		)
Total	$	2,694.4		$	2,568.0

Inventories
Finished goods	$	1,020.0		$	953.3
Raw materials and parts	457.7			391.0
Inventories at FIFO cost	1,477.7			1,344.3
Excess of FIFO cost over LIFO cost	(13.3		)	(22.4		)
Total	$	1,464.4		$	1,321.9

Property, plant and equipment, net
Land	$	193.0		$	191.4
Buildings and improvements	698.1			666.0
Leasehold improvements	86.7			87.9
Machinery and equipment	1,750.1			1,677.5
Merchandising and customer equipment	1,942.5			1,802.8
Capitalized software	456.7			435.4
Construction in progress	398.2			291.6
	5,525.3			5,152.6
Accumulated depreciation	(2,546.8		)	(2,270.6		)
Total	$	2,978.5		$	2,882.0

Other intangible assets, net
Cost of intangible assets not subject to amortization
Trade names	$	1,230.0		$	1,230.0
Cost of intangible assets subject to amortization
Customer relationships	$	3,459.8		$	3,455.6
Trademarks	311.7			308.1
Patents	432.7			425.6
Other technology	214.1			210.2
	$	4,418.3		$	4,399.5

Accumulated amortization
Customer relationships	$	(759.4	)	$	(594.9	)
Trademarks	(86.5		)	(70.4		)
Patents	(117.7		)	(95.7		)
Other technology	(101.6		)	(83.2		)
Other intangible assets, net	$	4,583.1		$	4,785.3

Other assets
Deferred income taxes	$	48.2		$	54.5
Deferred financing costs	25.0			31.7
Pension	88.7			90.2
Other	241.4			231.5
Total	$	403.3		$	407.9

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4. Balance Sheet Information (continued)

	September 30			December 31
(millions)	2014			2013
	(unaudited)
Other current liabilities
Discounts and rebates	$	261.0		$	263.2
Dividends payable	82.5			82.8
Interest payable	65.3			19.6
Taxes payable, other than income	121.7			115.3
Derivative liabilities	19.9			14.2
Restructuring	46.6			68.3
Future consideration payable to Champion sellers	—			86.4
Other	258.9			304.0
Total	$	855.9		$	953.8

Other liabilities
Deferred income taxes	$	1,583.1		$	1,661.3
Income taxes payable - non-current	86.5			90.2
Restructuring	8.8			12.9
Other	127.1			134.9
Total	$	1,805.5		$	1,899.3

Accumulated other comprehensive loss
Unrealized loss on derivative financial instruments, net of tax	$	(5.7	)	$	(6.6	)
Unrecognized pension and postretirement benefit expense, net of tax	(224.2		)	(235.0		)
Cumulative translation, net of tax	(147.4		)	(63.6		)
Total	$	(377.3	)	$	(305.2	)

5. Debt and Interest

The following table provides the components of the company’s short-term debt obligations as of September 30, 2014 and December 31, 2013.

	September 30		December 31
(millions)	2014		2013
	(unaudited)
Short-term debt
Commercial paper	$	630.2	$	304.8
Notes payable	36.8		50.9
Long-term debt, current maturities	1,255.8		505.3
Total	$	1,922.8	$	861.0

As of September 30, 2014, the company had in place a $1.5 billion multi-year credit facility, which expires in September 2016. The credit facility has been established with a diverse syndicate of banks and supports the company’s $1.5 billion U.S. commercial paper program and the company’s $200 million European commercial paper program. Combined borrowing under these two commercial paper programs may not exceed $1.5 billion. The company’s U.S. commercial paper program, as shown in the previous table, had $630 million and $305 million outstanding as of September 30, 2014 and December 31, 2013, respectively.

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5. Debt and Interest (continued)

The following table provides the components of the company’s long-term debt obligations, including current maturities, as of September 30, 2014 and December 31, 2013.

	Maturity	September 30			December 31
(millions)	by year	2014			2013
		(unaudited)
Long-term debt
Description / 2014 Principal Amount
Three year 2011 senior notes ($500 million)	2014	$	500.0		$	499.9
Seven year 2008 senior notes ($250 million)	2015	249.9			249.7
Three year 2012 senior notes ($500 million)	2015	499.9			499.9
Series B private placement senior euro notes (175 million euro)	2016	229.9			237.8
Five year 2011 senior notes ($1.25 billion)	2016	1,248.9			1,248.6
Term loan ($400 million)	2016	400.0			800.0
Five year 2012 senior notes ($500 million)	2017	495.5			499.7
Series A private placement senior notes ($250 million)	2018	250.0			250.0
Ten year 2011 senior notes ($1.25 billion)	2021	1,249.4			1,249.3
Series B private placement senior notes ($250 million)	2023	250.0			250.0
Thirty year 2011 senior notes ($750 million)	2041	743.0			742.8
Capital lease obligations		10.2			12.7
Other		3.1			8.4
Total debt		6,129.8			6,548.8
Long-term debt, current maturities		(1,255.8		)	(505.3		)
Total long-term debt		$	4,874.0		$	6,043.5

In February 2014, April 2014 and September 2014, the company repaid $100 million, $150 million and $150 million, respectively, of the term loan borrowings.

The company is in compliance with its debt covenants as of September 30, 2014.

Interest expense and interest income recognized during the third quarter and first nine months 2014 and 2013 were as follows:

	Third Quarter Ended						Nine Months Ended
	September 30						September 30
(millions)	2014			2013			2014			2013

Interest expense	$	66.1		$	69.2		$	202.0		$	203.0
Interest income	(2.8		)	(2.2		)	(7.4		)	(8.3		)
Interest expense, net	$	63.3		$	67.0		$	194.6		$	194.7

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6. Goodwill and Other Intangible Assets

Goodwill

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

During the second quarter of 2014, the company completed its annual test for goodwill impairment. The company used a “step zero” qualitative test to assess all ten of its reporting units given substantial levels of headroom and other strong qualitative indicators. Qualitative testing evaluated factors including, but not limited to, economic, market and industry conditions, cost factors and the overall financial performance of the reporting units. Based on the “step zero” testing performed, no adjustment to the carrying value of goodwill was necessary.

If circumstances change significantly, the company would also test a reporting unit’s goodwill for impairment during interim periods between its annual tests. Based on the current performance of the company’s operating units, updating the impairment testing during the third quarter of 2014 was not deemed necessary. There has been no impairment of goodwill since the adoption of Financial Accounting Standards Board (“FASB”) guidance for goodwill and other intangibles on January 1, 2002.

The merger with Nalco and the acquisition of Champion resulted in the addition of $4.5 billion and $1.0 billion of goodwill, respectively. Subsequent performance of the reporting units holding the additional goodwill relative to projections used for the purchase price allocation of goodwill could result in an impairment if there is either underperformance by the reporting unit or if the carrying value of the reporting unit were to fluctuate significantly due to reasons that did not proportionately change fair value.

The changes in the carrying amount of goodwill for each of the company’s reportable segments during the nine months ended September 30, 2014 were as follows:

	Global			Global			Global
(millions)	Industrial			Institutional			Energy			Other			Total
Goodwill as of December 31, 2013	$	2,729.5		$	706.6		$	3,306.2		$	120.6		$	6,862.9
Current year business acquisitions(a)	14.4			—			9.2			4.6			28.2
Prior year business acquisitions	(0.1		)	—			16.9			—			16.8
Business disposals	—			(0.4		)				—			(0.4		)
Reclassifications(b)	(28.9		)	5.0			23.9			—			—
Effect of foreign currency translation	(22.9		)	(6.0		)	(28.4		)	(1.1		)	(58.4		)
Goodwill as of September 30, 2014	$	2,692.0		$	705.2		$	3,327.8		$	124.1		$	6,849.1

(a) For 2014, none of the goodwill related to businesses acquired is expected to be tax deductible.

(b) The reclassifications line represents immaterial transfers related to certain changes to the company’s reportable segments during the first quarter of 2014. See Note 14 for additional information.

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6. Goodwill and Other Intangible Assets (continued)

Other Intangible Assets

As part of the Nalco merger, the company added the “Nalco” trade name as an indefinite life intangible asset. During the second quarter of 2014, using the qualitative assessment method, the company completed its annual test for indefinite life intangible asset impairment. Based on this testing, no adjustment to the $1.2 billion carrying value of this asset was necessary. Additionally, based on the current performance of the company’s operating units, updating the impairment testing during the third quarter of 2014 was not deemed necessary. There has been no impairment of the Nalco trade name intangible asset since it was acquired.

The company’s other intangible assets subject to amortization primarily include customer relationships, trademarks, patents and other technology. Other intangible assets are amortized on a straight-line basis over their estimated economic lives. Total amortization expense related to other intangible assets during the third quarter ended September 30, 2014 and 2013 was $75.2 million and $79.0 million, respectively. Total amortization expense related to other intangible assets during the first nine months of 2014 and 2013 was $230.0 million and $214.1 million, respectively.

As of September 30, 2014, future estimated expense related to amortizable other identifiable intangible assets is expected to be:

(millions)

2014 (Remainder: three-month period)	$	77
2015	306
2016	301
2017	298
2018	285
2019	277

7. Fair Value Measurements

The company’s financial instruments include cash and cash equivalents, investments held in rabbi trusts, accounts receivable, accounts payable, contingent consideration obligations, commercial paper, notes payable, foreign currency forward contracts, interest rate swap contracts and long-term debt.

Fair value is defined as the exit price, or 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.

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7. Fair Value Measurements (continued)

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

	2014
	Carrying		Fair Value Measurements
September 30 (millions)	Amount		Level 1		Level 2		Level 3
Assets:
Investments held in rabbi trusts	$	2.7	$	2.7	$	—	$	—
Foreign currency forward contracts	19.2		—		19.2		—
Interest rate swap contracts	0.5		—		0.5		—
Contingent consideration	0.4		—		0.4		—

Liabilities:
Foreign currency forward contracts	15.5		—		15.5		—
Interest rate swap contracts	4.4		—		4.4		—
Contingent consideration	2.0		—		—		2.0

	2013
	Carrying		Fair Value Measurements
December 31 (millions)	Amount		Level 1		Level 2		Level 3
Assets:
Investments held in rabbi trusts	$	4.3	$	4.3	$	—	$	—
Foreign currency forward contracts	20.2		—		20.2		—

Liabilities:
Foreign currency forward contracts	14.2		—		14.2		—
Contingent consideration	16.4		—		—		16.4
Future consideration payable to Champion sellers	86.4		—		—		86.4

Investments held in rabbi trusts are classified within level 1 because they are valued using quoted prices in active markets. 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 LIBOR rates as of the balance sheet date, and is classified within level 2. Prior to its repayment in January 2014, the future consideration payable to Champion sellers was valued using level 3 inputs.

Contingent consideration is recognized and measured at fair value at the acquisition date. Contingent consideration is classified within level 3 as the underlying fair value is measured based on the probability-weighted present value of the consideration expected to be transferred. The consideration expected to be transferred is based on the company’s expectations of various financial measures. The ultimate settlement 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 for the nine months ended September 30, 2014 were as follows:

(millions)
Contingent consideration, December 31, 2013	$	16.4
Amount recognized at transaction date	(0.4		)
Loss (gain) recognized in earnings	(0.2		)
Settlements	(14.2		)
Foreign currency translation	—
Contingent consideration, September 30, 2014	$	1.6

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7. Fair Value Measurements (continued)

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

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

	September 30, 2014				December 31, 2013
	Carrying		Fair		Carrying		Fair
(millions)	Amount		Value		Amount		Value

Long-term debt (including current maturities)	$	6,129.8	$	6,471.3	$	6,548.8	$	6,766.0

8. Derivatives and Hedging Transactions

The company uses foreign currency forward contracts, interest rate swaps and foreign currency debt to manage risks associated with foreign currency exchange rates, interest rates and net investments in foreign operations. The company does not hold derivative financial instruments of a speculative nature or for trading purposes. The company records all 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. The company evaluates hedge effectiveness at inception and on an ongoing basis. If a derivative is no longer expected to be effective, hedge accounting is discontinued. Hedge ineffectiveness, if any, is recorded in earnings.

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

Cash Flow Hedges

The company utilizes foreign currency forward contracts to hedge the effect of foreign currency exchange rate fluctuations on forecasted foreign currency transactions, including: inventory purchases and intercompany royalty and management fee 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 hedged transactions are forecasted to occur within the next twelve months.

The company occasionally enters into forward starting interest rate swap contracts to manage interest rate exposure. In September 2014, the company entered into a series of U.S. dollar denominated forward starting swap agreements to hedge against changes in interest rates that could impact a future debt issuance. The interest rate swap agreements were designated and effective as cash flow hedges of the expected interest payments related to the anticipated future debt issuance. The underlying gain recognized in the third quarter of 2014 was recorded in AOCI.

Also in September 2014, subsequent to the company’s third quarter end for international operations, the company entered into a series of euro denominated forward starting swap agreements to hedge against changes in interest rates that could impact a future debt issuance.

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. Derivatives and Hedging Transactions (continued)

In 2011, the company entered into and subsequently closed a series of forward starting swap agreements in connection with the issuance of its private placement debt during the fourth quarter of 2011. In 2006, the company entered into and subsequently closed two forward starting swap contracts related to the issuance of its senior euro notes. The amounts recorded in AOCI for both the 2011 and 2006 transactions are recognized as part of interest expense over the remaining life of the notes as the forecasted interest transactions occur.

The company did not have any forward starting interest rate swap agreements outstanding at December 31, 2013.

The impact on AOCI and earnings from derivative contracts that qualified as cash flow hedges was as follows:

		Third Quarter Ended						Nine Months Ended
		September 30						September 30
(millions)	Location	2014			2013			2014			2013

Unrealized gain (loss) recognized into AOCI (effective portion)

Foreign currency forward contracts	AOCI (equity)	$	5.5		$	1.4		$	2.8		$	8.0

Interest rate swap contract	AOCI (equity)	0.5			—			0.5			—
		$	6.0		$	1.4		$	3.3		$	8.0

Gain (loss) reclassified from AOCI into income (effective portion)

Foreign currency forward contracts	Cost of sales	$	0.9		$	0.1		$	3.4		$	(1.6	)
	SG&A	—			0.4			1.0			0.6
		0.9			0.5			4.4			(1.0		)

Interest rate swap	Interest expense, net	(1.0		)	(1.0		)	(3.0		)	(3.0		)
		$	(0.1	)	$	(0.5	)	$	1.4		$	(4.0	)

Gains and losses recognized in income related to the ineffective portion of the company’s cash flow hedges were insignificant during the first nine months of 2014 and 2013.

Fair Value Hedges

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

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. Derivatives and Hedging Transactions (continued)

In May 2014, the company entered into an interest rate swap agreement that converted its $500 million 1.45% debt from a fixed rate to a floating or variable interest rate. The interest rate swap was designated as a fair value hedge.

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

		Third Quarter Ended					Nine Months Ended
		September 30					September 30
(millions)	Location	2014			2013		2014			2013

Gain (loss) on derivative recognized in income

Interest rate swap	Interest expense, net	$	(3.4	)	$	—	$	(4.4	)	$	—

Gain (loss) on hedged item recognized in income

Interest rate swap	Interest expense, net	$	3.4		$	—	$	4.4		$	—

Net Investment Hedges

The company designates its outstanding euro 175 million ($230 million as of September 30, 2014) senior notes and related accrued interest as a hedge of existing foreign currency exposures related to net investments the company has in certain euro functional subsidiaries.

Prior to maturing in December 2013, the Ecolab Series A euro denominated senior notes were also designated as a hedge of existing foreign currency exposures.

In the third quarter of 2012, the company entered into a forward contract with a notional amount of euro 100 million to hedge an additional portion of the company’s net investment in euro functional subsidiaries. The forward contract was closed during the second quarter of 2013. In the third quarter of 2014, the company entered into forward contracts with a total notional value of euro 75 million to hedge an additional portion of its net investment in euro functional subsidiaries. Also, in September 2014, subsequent to the company’s international quarter end, the company entered into a forward contract with a notional amount of euro 495 million to hedge future foreign currency exposures.

The revaluation gains and losses on the euronotes and of the forward contracts, which are designated and effective as hedges of the company’s net investments, have been included as a component of the cumulative translation adjustment account.

Total revaluation gains and losses related to the euronotes and forward contracts charged to shareholders’ equity were as follows:

	Third Quarter Ended					Nine Months Ended
	September 30					September 30
(millions)	2014		2013			2014		2013

Revaluation gains (losses), net of tax	$	7.4	$	(4.2	)	$	5.6	$	(4.2	)

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. Derivatives and Hedging Transactions (continued)

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:

		Third Quarter Ended						Nine Months Ended
		September 30						September 30
(millions)	Location	2014			2013			2014			2013

Gain (loss) recognized in income

Foreign currency forward contracts	SG&A	$	(0.6	)	$	8.9		$	6.2		$	4.4
	Interest expense, net	(2.7		)	(0.6		)	(8.1		)	(3.2		)
		$	(3.3	)	$	8.3		$	(1.9	)	$	1.2

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

Derivative Summary

The following table summarizes the fair value of the company’s outstanding derivatives. The amounts represent gross values of derivative assets and liabilities and are included in other current assets and other current liabilities on the Consolidated Balance Sheet.

	Asset Derivatives				Liability Derivatives
	September 30		December 31		September 30		December 31
(millions)	2014		2013		2014		2013

Derivatives designated as hedging instruments

Foreign currency forward contracts	$	5.2	$	4.4	$	3.2	$	1.1

Interest rate swap contracts	0.5		—		4.4		—

Derivatives not designated as hedging instruments

Foreign currency forward contracts	14.0		15.8		12.3		13.1

Total	$	19.7	$	20.2	$	19.9	$	14.2

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. Derivatives and Hedging Transactions (continued)

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. Had the company elected to offset amounts in its Consolidated Balance Sheet, it would have a net liability of $0.2 million and a net asset of $6.0 million as of September 30, 2014 and December 31, 2013, respectively.

The company had foreign currency forward exchange contracts with notional values that totaled approximately $2.0 billion at both September 30, 2014 and December 31, 2013, interest rate swap agreements with notional values of $725 million at September 30, 2014, and net investment hedges, excluding the euro denominated debt, with notional values of $75 million at September 30, 2014.

9. Other Comprehensive Income 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 information related to the company’s derivatives and hedging instruments and pension and postretirement benefits.

	Third Quarter Ended						Nine Months Ended
	September 30						September 30
(millions)	2014			2013			2014			2013
Derivative & Hedging Instruments
Unrealized gains (losses) on derivative & hedging instruments
Amount recognized into AOCI	$	6.0		$	1.4		$	3.3		$	8.0

(Gains) losses reclassified from AOCI into income
Cost of sales	(0.9		)	(0.1		)	(3.4		)	1.6
SG&A	—			(0.4		)	(1.0		)	(0.6		)
Interest expense, net	1.0			1.0			3.0			3.0
	0.1			0.5			(1.4		)	4.0

Translation & other insignificant activity	(0.4		)	0.2			(0.1		)	—
Tax impact	(0.7		)	(0.5		)	(0.9		)	(2.9		)
Net of tax	$	5.0		$	1.6		$	0.9		$	9.1

Pension & Postretirement Benefits
Amounts reclassified from AOCI into income
Actuarial losses	$	5.7		$	18.6		$	17.2		$	55.8
Prior service costs	(1.6		)	(1.9		)	(5.0		)	(5.6		)
	4.1			16.7			12.2			50.2
Tax impact	(1.5		)	(6.3		)	(4.5		)	(18.9		)
Net of tax	$	2.6		$	10.4		$	7.7		$	31.3

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9. Other Comprehensive Income Information (continued)

The derivative losses reclassified from AOCI into income, net of tax, were $0.1 million and $0.4 million in third quarter of 2014 and 2013, respectively. The derivative gain reclassified from AOCI into income during the first nine months of 2014, net of tax, was $1.0 million. The derivative loss reclassified from AOCI into income during the first nine months of 2013, net of tax, was $2.9 million.

The pension and postretirement net actuarial loss and prior service cost reclassified from AOCI into income, net of tax, were $2.6 million and $10.4 million in third quarter of 2014 and 2013, respectively. During the first nine months of 2014 and 2013 the pension and postretirement net actuarial loss and prior service cost reclassified from AOCI into income, net of tax, were $7.7 million and $31.3 million, respectively.

See Note 8 for additional information related to the company’s derivatives and hedging transactions. See Note 13 for additional information related to the company’s recognition of net actuarial losses and amortization of prior service benefits.

10. Shareholders’ Equity

Champion acquisition

On April 10, 2013, the company issued 6,596,444 shares of common stock for the stock consideration portion of the Champion acquisition. Of the total shares issued, the company deposited 1,258,115 shares, or approximately $100 million of the total consideration, into an escrow fund to satisfy adjustments to the consideration and indemnification obligations of the acquired company’s stockholders. Further information related to the acquisition of Champion is included in Note 3.

Share repurchases

In May 2011, the company’s Board of Directors authorized the repurchase of up to 15 million shares of common stock, including shares to be repurchased under Rule 10b5-1. This repurchase authorization was completed in May 2014. 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 an additional 10 million common shares which was contingent upon completion of the merger with Nalco.

In accordance with its share repurchase program through open market or private purchases, the company reacquired 3,096,464 shares of its common stock during 2013. The number of shares repurchased in 2013 includes 1,258,115 shares the company repurchased from the Champion escrow account, with the cash paid to the beneficial shareholders deposited back into escrow. During 2013 the company also reacquired 346,941 shares withheld for taxes related to the exercise of stock options and the vesting of stock awards and units.

During the first nine months of 2014, the company reacquired 3,201,021 shares of its common stock, of which 2,827,334 related to share repurchases through open market or private purchases and reacquired 373,687 shares withheld for taxes related to the exercise of stock options and the vesting of stock awards and units.

As of September 30, 2014, 9,886,298 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.

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11. Earnings Attributable to Ecolab Per Common Share

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

	Third Quarter Ended				Nine Months Ended
	September 30				September 30
(millions, except per share amounts)	2014		2013		2014		2013

Net income attributable to Ecolab	$	364.9	$	308.0	$	867.3	$	680.7
Weighted-average common shares outstanding
Basic	300.0		301.2		300.1		299.4
Effect of dilutive stock options, units and awards	5.7		6.0		5.9		5.9
Diluted	305.7		307.2		306.0		305.3

Earnings attributable to Ecolab per common share
Basic	$	1.22	$	1.02	$	2.89	$	2.27
Diluted	$	1.19	$	1.00	$	2.83	$	2.23

Anti-dilutive securities excluded from computation of earnings per share	—		—		1.5		—

12. Income Taxes

The company’s tax rate was 27.3% and 24.9% for the third quarter of 2014 and 2013, respectively, and 29.1% and 23.6% for the first nine months of 2014 and 2013, respectively. The changes in the company’s tax rate for the third quarter and nine month periods were primarily driven by the tax rate impact of special gains and charges and discrete tax items, with lesser impacts from the expiration of the U.S. R&D credit and favorable geographic income mix.

The company recognized discrete tax net benefits of $1.9 million during the third quarter of 2014 and discrete tax net expense of $16.3 million during the first nine months of 2014.

Third quarter 2014 discrete tax net benefits were driven primarily by recognizing adjustments from filing the company’s 2013 U.S. federal income tax return, offset partially by the net impact of foreign audit settlements and adjustments.

Discrete tax net expense for the first nine months of 2014 was also impacted by an update to non-current tax liabilities for global tax audits, an adjustment related to the re-characterization of intercompany payments between the company’s U.S. and foreign affiliates, a rate differential on certain prior year shared costs and the remeasurement of certain deferred tax assets and liabilities resulting from a change in the state tax rate for certain entities following the merger of Champion operations, which collectively more than offset the net change of valuation allowances based on the realizability of foreign deferred tax assets and benefits from other foreign country audit settlements.

The company recognized discrete tax net benefits of $12.5 million during the third quarter of 2013 and $40.1 million during the first nine months of 2013.

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12. Income Taxes (continued)

Third quarter 2013 discrete tax net benefits were driven primarily by recognizing adjustments from filing the company’s 2012 U.S. federal tax return and the recognition of settlements related to prior year income tax audits, partially offset by the remeasurement of certain deferred tax assets.

Discrete tax net benefits for the first nine months of 2013 were also impacted by the release of a valuation allowance related to the realizability of foreign deferred tax assets, law changes within a foreign jurisdiction, recognition of settlements related to our 2009 through 2010 U.S. income tax returns, the remeasurement of certain deferred tax assets and liabilities and the retroactive extension during first quarter 2013 of the U.S. R&D credit, all of which were partially offset by foreign audit adjustments.

13. Pension and Postretirement Plans

The company has a non-contributory qualified defined benefit pension plan covering the majority of its U.S. employees. The company also has U.S. non-contributory non-qualified defined benefit plans, which provide for benefits to employees in excess of limits permitted under its U.S. pension plans. On January 1, 2014, certain legacy Champion employees became eligible to participate in the U.S. qualified and non-qualified pension plans. Various international subsidiaries also have defined benefit pension plans. The company provides postretirement health care benefits to certain U.S. employees and retirees.

The components of net periodic pension and postretirement health care benefit costs for the third quarter ended September 30 are as follows:

													U.S.
							International						Postretirement
	U.S. Pension						Pension						Health Care
(millions)	2014			2013			2014			2013			2014			2013
Service cost	$	16.6		$	17.2		$	8.5		$	9.0		$	1.1		$	1.5
Interest cost on benefit obligation	22.5			21.2			12.2			11.7			2.7			2.7
Expected return on plan assets	(32.1		)	(32.5		)	(13.4		)	(11.6		)	(0.2		)	(0.3		)
Recognition of net actuarial (gain) loss	5.9			15.6			1.9			2.8			(2.1		)	0.2
Amortization of prior service cost (benefit)	(1.7		)	(1.7		)	0.2			(0.1		)	(0.1		)	(0.1		)
Settlements/curtailments	—			—			—			—			—			—
	$	11.2		$	19.8		$	9.4		$	11.8		$	1.4		$	4.0

The components of net periodic pension and postretirement health care benefit costs for the nine months ended September 30 are as follows:

													U.S.
							International						Postretirement
	U.S. Pension						Pension						Health Care
(millions)	2014			2013			2014			2013			2014			2013
Service cost	$	49.8		$	51.5		$	25.1		$	27.0		$	3.2		$	4.5
Interest cost on benefit obligation	67.5			63.6			37.5			35.2			8.1			8.1
Expected return on plan assets	(96.3		)	(97.6		)	(41.0		)	(34.9		)	(0.8		)	(0.8		)
Recognition of net actuarial (gain) loss	17.7			46.8			5.6			8.5			(6.1		)	0.5
Amortization of prior service cost (benefit)	(5.2		)	(5.2		)	0.4			(0.1		)	(0.2		)	(0.3		)
Settlements/curtailments	—			—			0.1			0.1			—			—
	$	33.5		$	59.1		$	27.7		$	35.8		$	4.2		$	12.0

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. Pension and Postretirement Plans (continued)

As of September 30, 2014, the company is in compliance with all funding requirements of its U.S. pension and postretirement health care plans.

During the first nine months of 2014, the company made payments of $6 million to its U.S. non-contributory non-qualified defined benefit plans, and estimates that it will make payments of approximately an additional $1 million to such plans during the remainder of 2014.

The company contributed $42 million to its international pension benefit plans during the first nine months of 2014. The company currently estimates that it will contribute approximately an additional $11 million to the international pension benefit plans during the remainder of 2014.

During the first nine months of 2014, the company made payments of $13 million to its U.S. postretirement health care benefit plans, and estimates that it will make payments of approximately an additional $4 million to such plans during the remainder of 2014.

14. Operating Segments

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

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

Comparability of Reportable Segments

Effective in the first quarter of 2014, the company made immaterial changes to its reportable segments, including the movement of certain customers between reportable segments, reflecting its continued integration of businesses and consistency across its global markets and customers. In addition, the company’s management made immaterial changes to the way it measures and reports segment operating income by updating the internal allocations of certain supply chain and SG&A expenses related to its centralized functions. The changes had no impact on the company’s consolidated sales or operating income.

The company evaluates the performance of its international operations based on fixed currency exchange rates, which eliminate the impact of exchange rate fluctuations on its international operations.

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14. Operating Segments (continued)

Fixed currency amounts for the “Previously Reported” values shown in the following table are based on translation into U.S. dollars at fixed foreign currency exchange rates established by management at the beginning of 2013. The “Changes in Currency Rates” column reflects the impact on previously reported values related to fixed currency exchange rates established by management at the beginning of 2014. The “Segment Changes” column reflects the segment changes discussed above. Presenting the “Revised” column at 2014 management rates was done to allow for consistent comparisons against 2014 results.

The impact of the preceding changes on previously reported full year 2013 reportable segment net sales and operating income is summarized as follows:

	2013
Year ended December 31 (millions)	Previously Reported			Changes in Currency Rates			Segment Changes			Revised
Net Sales
Global Industrial	$	4,905.1		$	(149.3	)	$	(13.0	)	$	4,742.8
Global Institutional	4,202.5			(55.4		)	5.4			4,152.5
Global Energy	3,532.8			(113.1		)	7.6			3,427.3
Other	715.0			(5.7		)	—			709.3
Subtotal at fixed currency rates	13,355.4			(323.5		)	—			13,031.9
Effect of foreign currency translation	(102.0		)	323.5			—			221.5
Consolidated	$	13,253.4		$	—		$	—		$	13,253.4

	2013
Year ended December 31 (millions)	Previously Reported			Changes in Currency Rates			Segment Changes			Revised
Operating Income
Global Industrial	$	637.3		$	(27.1	)	$	(7.2	)	$	603.0
Global Institutional	764.5			(11.7		)	15.4			768.2
Global Energy	492.1			(19.2		)	(14.0		)	458.9
Other	97.9			0.4			5.8			104.1
Corporate	(411.6		)	2.5			—			(409.1		)
Subtotal at fixed currency rates	1,580.2			(55.1		)	—			1,525.1
Effect of foreign currency translation	(19.6		)	55.1			—			35.5
Consolidated	$	1,560.6		$	—		$	—		$	1,560.6

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14. Operating Segments (continued)

Reportable Segment Information

The profitability of the company’s operating units is evaluated by management based on operating income. The company has no intersegment revenues. The international amounts included within each of the company’s four reportable segments are based on translation into U.S. dollars at the fixed currency exchange rates used by management for 2014.

Financial information for each of the company’s reportable segments, including the impact of all preceding segment structure changes, is as follows:

	Third Quarter Ended						Nine Months Ended
	September 30						September 30
(millions)	2014			2013			2014			2013

Net Sales
Global Industrial	$	1,251.1		$	1,219.5		$	3,602.7		$	3,504.1
Global Institutional	1,125.5			1,086.9			3,195.8			3,092.2
Global Energy	1,089.2			957.2			3,145.0			2,400.3
Other	196.6			183.5			560.2			528.2
Subtotal at fixed currency rates	3,662.4			3,447.1			10,503.7			9,524.8
Effect of foreign currency translation	32.5			36.9			96.0			169.1
Consolidated	$	3,694.9		$	3,484.0		$	10,599.7		$	9,693.9

Operating Income
Global Industrial	$	175.2		$	171.9		$	456.7		$	433.0
Global Institutional	237.5			225.8			593.0			565.8
Global Energy	174.1			125.1			462.5			306.2
Other	33.0			28.6			84.6			78.0
Corporate	(52.8		)	(81.8		)	(173.6		)	(320.0		)
Subtotal at fixed currency rates	567.0			469.6			1,423.2			1,063.0
Effect of foreign currency translation	4.4			6.4			11.3			27.0
Consolidated	$	571.4		$	476.0		$	1,434.5		$	1,090.0

Consistent with the company’s internal management reporting, the Corporate segment includes amortization specifically from the Nalco merger and in 2013 certain integration costs for both the Nalco and Champion transactions. The Corporate segment also includes special (gains) and charges, as discussed in Note 2, reported on the Consolidated Statement of Income.

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 and has contractual obligations related to legal commitments.

The company records liabilities when 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.

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 50 locations, most of which are in the U.S. and environmental liabilities have been accrued reflecting management’s best estimate of future costs. Potential insurance reimbursements are not anticipated in the company’s accruals for environmental liabilities.

Matters Related to Wage Hour Claims

In Cooper v. Ecolab Inc., California State Court — Superior Court-Los Angeles County, case no. BC486875, the plaintiffs sought certification of a purported class of terminated California employees of any business for alleged violation of statutory obligations regarding payment of accrued vacation upon termination. The company reached a preliminary settlement with the plaintiffs, which was approved by the court on March 17, 2014. The settlement amount, which is not material to the company’s operations or financial position, was paid in June 2014.

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

15. Commitments and Contingencies (continued)

The company is a defendant in six other pending wage hour lawsuits claiming violations of the Fair Labor Standards Act (“FLSA”) or a similar state law. Of these six suits, two have been certified for class action status. Ross (formerly Icard) v. Ecolab, U.S. District Court — Northern District of California, case no. C 13-05097 PJH, an action under California state law, has been certified for class treatment of California Institutional employees. In Cancilla v. Ecolab, U.S. District Court - Northern District of California, case no. CV 12-03001, the Court conditionally certified a nationwide class of Pest Elimination Service Specialists for alleged FLSA violations. The suit also seeks a purported California sub-class for alleged California wage hour law violations and certifications of classes for state law violations in Washington, Colorado, Maryland, Illinois, Missouri, Wisconsin and North Carolina. A third pending suit, Charlot v. Ecolab Inc., U.S. District Court-Eastern District of New York, case no. CV 12-04543, seeks nationwide class certification of Institutional employees for alleged FLSA violations as well as purported state sub-classes in New York, New Jersey, Washington and Pennsylvania alleging violations of state wage hour laws. A fourth pending suit, Schneider v. Ecolab, Circuit Court of Cook County, Illinois, case no. 2014 CH 193, seeks certification of a class of Institutional employees for alleged violations of Illinois wage and hour laws. A fifth pending suit, Martino v. Ecolab, Santa Clara County California Superior Court, seeks certification of a California state class of Institutional employees for alleged violations of California wage and hour laws. The Martino case has been removed to the United States District Court for the Northern District of California. A sixth pending suit, LaValley v. Ecolab, United States District Court for the District of Minnesota, seeks certification of a class of Territory Representatives for alleged violations of the FLSA and New York state wage and hour laws.

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.

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

15. Commitments and Contingencies (continued)

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

Putative Class Action Litigation

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

Other Related Claims Pending in MDL 2179

Nalco Company was also named, along with other unaffiliated defendants, in 23 complaints filed by individuals: Alexander, et al. v. BP Exploration & Production, et al., Case No. 11-cv-00951 (E.D. La.); Best v. British Petroleum plc, et al., Case No. 11-cv-00772 (E.D. La.); Black v. BP Exploration & Production, Inc., et al. Case No. 2:11-cv- 867, (E.D. La.); Brooks v. Tidewater Marine LLC, et al., Case No. 11-cv- 00049 (S.D. Tex.); Capt Ander, Inc. v. BP, plc, et al., Case No. 4:10-cv-00364-RH-WCS (N.D. Fla.); Coco v. BP Products North America, Inc., et al. (E.D. La.); Danos, et al. v. BP Exploration et al., Case No. 00060449 (25th Judicial Court, Parish of Plaquemines, Louisiana); Doom v. BP Exploration & Production, et al. , Case No. 12-cv-2048 (E.D. La.); Duong, et al., v. BP America Production Company, et al., Case No. 13-cv-00605 (E.D. La.); Esponge v. BP, P.L.C., et al., Case No. 0166367 (32nd Judicial District Court, Parish of Terrebonne, Louisiana); Ezell v. BP, plc, et al., Case No. 2:10-cv-01920-KDE-JCW (E.D. La.); Fitzgerald v. BP Exploration, et al., Case No. 13-cv-00650 (E.D. La.); Hill v. BP, plc, et al., Case No. 1:10-cv-00471-CG-N (S.D. Ala.); Hogan v. British Petroleum Exploration & Production, Inc., et al., Case No. 2012-22995 (District Court, Harris County, Texas); Hudley v. BP, plc, et al., Case No. 10-cv-00532-N (S.D. Ala.); In re of Jambon Supplier II, L.L.C., et al., Case No. 12-426 (E.D. La.); Kolian v. BP Exploration & Production, et al. , Case No. 12-cv-2338 (E.D. La.); Monroe v. BP, plc, et al., Case No. 1:10-cv-00472-M (S.D. Ala.); Pearson v. BP Exploration & Production, Inc., Case No. 2:11-cv-863, (E.D. La.); Shimer v. BP Exploration and Production, et al, Case No. 2:13-cv-4755 (E.D. La.); Top Water Charters, LLC v. BP, P.L.C., et al., No. 0165708 (32nd Judicial District Court, Parish of Terrebonne, Louisiana); Toups, et al. v Nalco Company, et al., Case No. 59-121 (25th Judicial District Court, Parish of Plaquemines, Louisiana); and, Trehern v. BP, plc, et al., Case No. 1:10-cv-00432-HSO-JMR (S.D. Miss.). The cases were filed on behalf of individuals and entities that own property, live, and/ or work in or derive income from the effected Coastal region. Each of the actions contains substantially similar allegations, generally alleging, among other things, negligence relating to the use of our COREXIT dispersant in connection with the Deepwater Horizon oil spill. The plaintiffs in these lawsuits are generally seeking awards of unspecified compensatory and punitive damages, and attorneys’ fees and costs.

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

15. Commitments and Contingencies (continued)

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

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

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

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

Other Related Actions

In March 2011, Nalco Company was named, along with other unaffiliated defendants, in an amended complaint filed by an individual in the Circuit Court of Harrison County, Mississippi, Second Judicial District (Franks v. Sea Tow of South Miss, Inc., et al., Cause No. A2402-10-228 (Circuit Court of Harrison County, Mississippi)). The amended complaint generally asserts, among other things, negligence and strict product liability claims relating to the plaintiff’s alleged exposure to chemical dispersants manufactured by Nalco Company. The plaintiff seeks unspecified compensatory damages, medical expenses, and attorneys’ fees and costs. Plaintiff’s allegations place him within the scope of the MDL 2179 Medical Benefits Class. In approving the Medical Benefits Settlement, the MDL 2179 Court barred Medical Benefits Settlement class members from prosecuting claims of injury from exposure to oil and dispersants related to the Response. As a result of the MDL court’s order, on April 11, 2013, the Mississippi court stayed proceedings in the Franks case. The Franks case was dismissed in May 2014.

ECOLAB INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

15. Commitments and Contingencies (continued)

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. New Accounting Pronouncements

In March 2013, FASB issued a final standard to resolve diversity in practice regarding the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investments in a foreign entity. In addition, the standard resolves diversity in practice for the treatment of business combinations achieved in stages involving a foreign entity. The company adopted the guidance effective January 1, 2014. The adoption did not impact the company’s consolidated financial statements and is not expected to have a significant impact on future financial statements.

In July 2013, the FASB issued updated guidance on presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss or a tax credit carryforward exists. The company adopted the updated guidance effective January 1, 2014. The adoption did not have a material impact on the company’s consolidated financial statements.

In April 2014, the FASB issued updated guidance on reporting discontinued operations and the related disclosures, which changes the criteria for determining which disposals should be presented as discontinued operations and modifies the related disclosure requirements. The updated guidance is effective for annual and interim periods beginning after December 15, 2014. The company does not expect the updated guidance to have a significant impact on future financial statements.

In May 2014, the FASB issued updated guidance on revenue recognition. The updated revenue 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. The updated guidance is effective for annual and interim periods beginning after December 15, 2016. The company is currently evaluating the impact of adoption.

In August 2014, the FASB issued guidance on management’s responsibility to evaluate whether there is substantial doubt about the organization’s ability to continue as a going concern and to provide related footnote disclosures. The guidance is effective for annual periods ending after December 15, 2016 and interim periods within annual periods beginning after December 15, 2016. The company does not expect the guidance to have an impact on future financial statements.

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

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of Ecolab Inc.

We have reviewed the accompanying consolidated balance sheet of Ecolab Inc. and its subsidiaries as of September 30, 2014, and the related consolidated statements of income and comprehensive income for the three-month and nine-month period ended September 30, 2014 and 2013 and the consolidated statement of cash flows for the nine-month periods ended September 30, 2014 and 2013. These interim financial statements are the responsibility of the Company’s management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet as of December 31, 2013, and the related consolidated statements of income, comprehensive income and equity, and of cash flows for the year then ended (not presented herein), and in our report dated February 28, 2014, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet information as of December 31, 2013, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived.

/s/ PricewaterhouseCoopers LLP


PricewaterhouseCoopers LLP
Minneapolis, Minnesota
October 30, 2014

ECOLAB INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Item 2. 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 level, and the quantitative impact of acquisitions and changes in foreign currency at the segment level. We also provide quantitative information regarding special (gains) and charges, discrete tax items and other significant factors we believe are useful for understanding our results. Such 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 both the unaudited consolidated financial information and related notes included in this Form 10-Q, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2013. 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 entitled “Non-GAAP Financial Measures” and “Forward-Looking Statements” located at the end of Part I of this report.

Comparability of Results

Statement of Income Data

Effective in the first quarter of 2014, certain employee-related costs from our recently acquired businesses that were historically presented within cost of sales were revised and reclassified to selling, general and administrative expenses (“SG&A”) on the Consolidated Statement of Income. These immaterial revisions were made to conform with management’s view of the respective costs within the global organizational model. Total costs reclassified were $16.7 million for the third quarter ended September 30, 2013, $60.3 million for the nine months ended September 30, 2013 and $78.9 million for the year ended December 31, 2013.

Results for 2013 have been revised to conform to the current year presentation. The reclassification had no impact on earnings, financial position or cash flows.

Reportable Segments and Operating Units

Effective in the first quarter of 2014, we made immaterial changes to our reportable segments, including the movement of certain customers between reportable segments, reflecting our continued integration of businesses and consistency across our global markets and customers. In addition, we made immaterial changes to the way we measure and report segment operating income by updating the internal allocations of certain supply chain and SG&A expenses related to our centralized functions.

Segment results for 2013 have been revised to conform to the current year presentation. The changes had no impact on our consolidated sales or operating income.

Beginning in the first quarter of 2014, the term “Global” has been removed from the description of our operating units. This change had no impact on the underlying structure of the respective operating units.

Fixed Currency Foreign Exchange Rates

We evaluate the performance of our 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.

ECOLAB INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Comparability of Results (continued)

Impact of Acquisitions and Divestitures

Our historical practice for providing growth rates adjusted for acquisitions and divestitures has been to exclude the results of the acquired business from the first twelve months post acquisition and exclude the results of the divested business from the previous twelve months prior to divestiture, thus allowing for a more meaningful period-over-period comparison. Presentation of acquisition adjusted growth rates, with the exception of the Champion transaction, continues to be handled in this way. Specific to the Champion transaction, due to the rapid pace at which the business has been integrated within our Global Energy segment, including all customer selling activity, discrete financial data specific to the legacy Champion business is no longer available post acquisition. As such, to allow for the most meaningful period-over-period comparison, specific to the Champion transaction, Champion’s results for the comparable period of the prior year have been included for purposes of providing acquisition adjusted growth rates. Throughout the following MD&A, reference to “acquisition adjusted” growth rates follows the above methodology.

Overview of the Third Quarter Ended September 30, 2014

Third quarter 2014 sales increased 6% compared to third quarter 2013 sales. Third quarter fixed currency sales also increased 6%. Sales growth was led by the Energy and Specialty operating units and the Other segment. The Latin America region had strong gains while North America and Asia Pacific had good results.

Third quarter 2014 operating income and diluted earnings per share attributable to Ecolab increased 20% and 19%, respectively, compared to third quarter 2013 results.

Both 2014 and 2013 results of operations included special (gains) and charges as well as discrete tax items which impact the period-over-period comparisons.

Excluding special (gains) and charges from both 2014 and 2013 results, third quarter 2014 adjusted operating income increased 14% when compared to third quarter 2013 adjusted operating income. Excluding special (gains) and charges and discrete tax items, growth in adjusted diluted earnings per share attributable to Ecolab was strong, increasing 16% in the third quarter of 2014 versus the prior year third quarter.

Sales Performance

As summarized in the tables on pages 44 and 53:

· Third quarter 2014 sales increased 6% to $3.7 billion. Fixed currency sales and acquisition adjusted fixed currency sales both also increased 6%.

· Fixed currency sales for our Global Industrial segment increased 3% to $1,251 million when comparing third quarter 2014 against third quarter 2013, led by growth in Food & Beverage and Water. Acquisition adjusted fixed currency sales increased 2%.

· Third quarter 2014 Global Institutional segment sales, when measured in fixed rates of currency exchange, increased 4% to $1,126 million, led by strong growth in Specialty. Institutional reported moderate sales gains.

· Fixed currency sales for our Global Energy segment increased 14% to $1,089 million when comparing third quarter 2014 against third quarter 2013. The Champion acquisition was fully annualized as of the third quarter of 2014.

· Third quarter 2014 Other segment sales, when measured in fixed rates of currency exchange, increased 7% to $197 million. Both Pest Elimination and Equipment Care had strong sales growth.

ECOLAB INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Financial Performance

As summarized in the tables on pages 50 through 52:

· Third quarter 2014 operating income increased 20% to $571 million compared to third quarter 2013 operating income of $476 million. Excluding the impact of special (gains) and charges from both 2014 and 2013 reported results, 2014 adjusted operating income increased 14% when compared to 2013 adjusted operating income. Currency had a minimal impact on adjusted operating income growth, as adjusted fixed currency operating income also increased 14% when compared to 2013 adjusted fixed currency operating income.

· Third quarter 2014 net income attributable to Ecolab increased 18% to $365 million. Excluding the impact of special (gains) and charges and discrete tax items from 2014 and 2013 reported results, adjusted net income attributable to Ecolab increased 16% compared to the prior year’s third quarter.

· Third quarter 2014 diluted earnings per share attributable to Ecolab of $1.19 increased 19% compared to the third quarter of 2013. Excluding the impact of special (gains) and charges and discrete tax items from 2014 and 2013 reported results, adjusted diluted earnings per share attributable to Ecolab increased 16% to $1.21 for the third quarter of 2014 compared to $1.04 in the third quarter of 2013.

· Our effective income tax rate was 27.3% for the third quarter of 2014 compared to 24.9% for the third quarter of 2013. Excluding the tax rate impact of special (gains) and charges and discrete tax items from 2014 and 2013 results, our adjusted effective income tax rate was 27.7% and 28.4% for the third quarter of 2014 and 2013, respectively.

Results of Operations — Third Quarter and Nine Months Ended September 30, 2014

Net Sales

	Third Quarter Ended							Nine Months Ended
	September 30						%	September 30						%
(millions)	2014			2013			Change	2014			2013			Change

Reported GAAP net sales	$	3,694.9		$	3,484.0		6%	$	10,599.7		$	9,693.9		9%
Effect of foreign currency translation	(32.5		)	(36.9		)		(96.0		)	(169.1		)
Non-GAAP fixed currency sales	$	3,662.4		$	3,447.1		6%	$	10,503.7		$	9,524.8		10%

As shown in the previous table, foreign currency exchange had a minimal impact on sales growth during the third quarter and first nine months of 2014. The percentage change components of the period-over-period 2014 sales increase are shown below:

	Third Quarter Ended	Nine Months Ended
(percent)	September 30	September 30

Volume	5%	4%
Price changes	1	1
Acquisition adjusted fixed currency sales increase	6	5
Acquisitions & divestitures	—	5
Fixed currency sales increase	6	10
Foreign currency exchange	—	(1)
Total net sales increase	6%	9%

ECOLAB INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations — Third Quarter and Nine Months Ended September 30, 2014 (continued)

Cost of Sales (“COS”) and Gross Margin

	Third Quarter Ended
	2014			2013
			Gross			Gross
(millions / percent)	COS		Margin	COS		Margin

Reported GAAP COS and gross margin	$	1,970.6	46.7%	$	1,866.1	46.4%
Special (gains) and charges	0.8		0.0	6.3		0.2
Non-GAAP adjusted COS and gross margin	$	1,969.8	46.7%	$	1,859.8	46.6%

	Nine Months Ended
	2014			2013
			Gross			Gross
(millions / percent)	COS		Margin	COS		Margin

Reported GAAP COS and gross margin	$	5,699.2	46.2%	$	5,216.0	46.2%
Special (gains) and charges	7.9		0.1	23.5		0.2
Non-GAAP adjusted COS and gross margin	$	5,691.3	46.3%	$	5,192.5	46.4%

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

Our reported gross margin was 46.7% and 46.4% for the third quarter of 2014 and 2013, respectively. Our reported gross margin for the first nine months of 2014 and 2013 was 46.2% for both periods. Our third quarter and first nine months of 2014 reported gross margins were negatively impacted by special (gains) and charges of $0.8 million and $7.9 million, respectively. Our third quarter and first nine months of 2013 reported gross margins were negatively impacted by special (gains) and charges of $6.3 million and $23.5 million, respectively. Special (gains) and charges items included within COS are shown within the table on page 46.

Excluding the impact of special (gains) and charges, our third quarter 2014 adjusted gross margin was unchanged at 46.7% and our adjusted gross margin for the first nine months of 2014 was 46.3%. These percentages compared against a third quarter 2013 adjusted gross margin of 46.6% and an adjusted gross margin of 46.4% for the first nine months of 2013.

The small increase in adjusted gross margin when comparing the third quarter of 2014 against the third quarter of 2013 is attributable primarily to pricing gains. For the first nine months of 2014 and 2013, the small decrease in adjusted gross margin was impacted by unfavorable business mix within Global Energy, including the impact of the Champion acquisition, which generally has lower gross margins compared to our other businesses, which more than offset pricing gains.

The impact of acquisitions and divestitures had a minimal impact on adjusted gross margins when comparing the third quarter of 2014 to the third quarter of 2013. Including the impact of acquisitions and divestitures, adjusted gross margins increased 0.4 percentage points for comparable first nine months of 2014 and 2013.

ECOLAB INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations — Third Quarter and Nine Months Ended September 30, 2014 (continued)

Selling, General and Administrative Expense

Selling, general and administrative (“SG&A”) expenses as a percentage of sales were 31.0% for the third quarter of 2014 compared to 32.0% in 2013. For the nine month periods, SG&A expenses were 32.4% of sales in 2014 compared to 33.4% in 2013. The decrease in SG&A to sales ratio during 2014 was driven by sales leverage and net synergies and cost savings.

The net impact of acquisitions and divestitures had minimal impact on the SG&A to sales ratio for the third quarter of 2014 compared to the third quarter of 2013. Including the net impact of acquisitions and divestitures, the SG&A to sales ratio decreased 0.8 percentage points for the first nine months of 2014 compared to the first nine months of 2013.

Special (Gains) and Charges

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

	Third Quarter Ended						Nine Months Ended
	September 30						September 30
(millions)	2014			2013			2014			2013
Cost of sales
Restructuring charges	$	0.4		$	1.9		$	7.5		$	5.5
Recognition of inventory fair value step-up	0.4			4.4			0.4			18.0
Subtotal	0.8			6.3			7.9			23.5

Special (gains) and charges
Restructuring charges	6.3			11.9			34.9			75.4
Champion acquisition and integration costs	4.1			10.7			15.8			42.5
Nalco merger and integration costs	2.0			5.3			4.8			13.5
Venezuela currency devaluation	—			(0.1		)	—			23.3
Litigation activity, settlements and other gains	(5.4		)	—			(25.0		)	(3.6		)
Subtotal	7.0			27.8			30.5			151.1

Operating income subtotal	7.8			34.1			38.4			174.6

Interest expense, net
Acquisition debt costs	—			—			—			2.5

Net income attributable to noncontrolling interest
Venezuela currency devaluation	—			—			—			(0.5		)

Total special (gains) and charges	$	7.8		$	34.1		$	38.4		$	176.6

ECOLAB INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations — Third Quarter and Nine Months Ended September 30, 2014 (continued)

Restructuring charges

Energy Restructuring Plan

In April 2013, following the completion of the Champion acquisition, 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 fast growing global energy market (the “Energy Restructuring Plan”). Actions associated with the acquisition to improve the effectiveness and efficiency of the business include a reduction of the combined business’s current global workforce by approximately 500 positions. A number of these reductions are expected to be achieved through eliminating open positions and attrition. We also anticipate leveraging and simplifying our global supply chain, including the reduction of plant and distribution center locations and product line optimization, as well as the reduction of other redundant facilities.

The pre-tax restructuring charges under the Energy Restructuring Plan are expected to be approximately $80 million ($55 million after tax) through substantial completion of the Plan in 2015. During 2013, we incurred $27 million ($19 million after tax) of charges related to the Energy Restructuring Plan. Approximately $15 million ($10 million after tax) of charges are expected to occur in 2014.

We anticipate that approximately $60 million of the $80 million pre-tax charges will represent cash expenditures. The remaining pre-tax charges represent estimated asset write-downs and disposals. No decisions have been made for any remaining asset disposals and estimates could vary depending on the actual actions taken.

We recorded restructuring charges related to the Energy Restructuring Plan of $1.3 million ($0.7 million after tax) or less than $0.01 per diluted share and $8.4 million ($6.7 million after tax) or $0.02 per diluted share during the third quarter of 2014 and 2013, respectively. During the nine months ended September 30, 2014 and 2013, we incurred charges of $8.9 million ($5.9 million after tax) or $0.02 per diluted share and $20.6 million ($14.3 million after tax) or $0.05 per diluted share, respectively.

Cash payments under the Energy Restructuring Plan during the first nine months of 2014 were $12.8 million. The majority of cash payments under this Plan are related to severance, with the current accrual expected to be paid over the next twelve months. We anticipate the remaining cash expenditures will be funded from operating activities.

We anticipate cumulative cost savings from the Energy Restructuring Plan, along with synergies achieved in connection with the acquisition, of at least $80 million in 2014, with annual cost savings and synergies of $150 million by the end of 2015. For the first nine months of 2014, the Energy Restructuring Plan has achieved approximately $45 million of savings as compared to 2013.

Combined Restructuring Plan

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

ECOLAB INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations — Third Quarter and Nine Months Ended September 30, 2014 (continued)

Restructuring charges (continued)

During 2013, we incurred $64 million ($48 million after tax) of charges related to the Combined Plan. We recorded restructuring charges related to the Combined Plan of $5.4 million ($3.3 million after tax) or $0.01 per diluted share and $5.3 million ($2.1 million after tax) or $0.01 per diluted share during the third quarter of 2014 and 2013, respectively. During the nine months ended September 30, 2014 and 2013, we incurred charges of $33.4 million ($27.0 million after tax) or $0.09 per diluted share and $60.5 million ($42.5 million after tax) or $0.14 per diluted share, respectively.

Through substantial completion of the Combined Plan at the end of 2015, we expect to incur pre-tax charges of approximately $50 million ($40 million after tax) during the remainder of 2014 and 2015.

We anticipate that substantially all of the remaining Combined Plan pre-tax charges will represent net cash expenditures.

Net cash payments under the Combined Plan during the first nine months of 2014 were $51.8 million. 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. Cash payments are expected to continue at a consistent level through the end of the Plan, and subsequently are expected to progressively decline. We anticipate the remaining cash expenditures will continue to be funded from operating activities.

We anticipate cumulative cost savings and synergies from the Combined Plan of at least $335 million in 2014. The 2014 expected savings are consistent with the original goals established under the previously separate plans. For the first nine months of 2014, the Combined Plan has achieved approximately $60 million of savings as compared to 2013.

Restructuring charges have been included as a component of both cost of sales and special (gains) and charges on the Consolidated Statement of Income. Further details related to our reported restructuring charges are included in Note 2.

Non-restructuring special (gains) and charges

Champion acquisition and integration costs

As a result of the Champion acquisition completed in 2013, we incurred charges of $4.1 million ($2.7 million after tax) or $0.01 per diluted share and $15.1 million ($10.3 million after tax) or $0.03 per diluted share during the third quarter of 2014 and 2013, respectively. During the nine months ended September 30, 2014 and 2013, we incurred charges of $15.8 million ($10.2 million after tax) or $0.03 per diluted share and $63.0 million ($44.9 million after tax) or $0.15 per diluted share, respectively.

ECOLAB INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations — Third Quarter and Nine Months Ended September 30, 2014 (continued)

Non-restructuring special (gains) and charges (continued)

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

Nalco merger and integration costs

As a result of the Nalco merger completed in 2011, we incurred net charges of $2.0 million ($2.0 million after tax), or $0.01 per diluted share and $5.3 million ($3.5 million after tax), or $0.01 per diluted share during the third quarter of 2014 and 2013, respectively. During the nine months ended September 30, 2014 and 2013, we incurred charges of $4.8 million ($4.0 million after tax) or $0.01 per diluted share and $13.5 million ($9.2 million after tax) or $0.03 per diluted share, respectively.

Nalco related special charges for 2014 and 2013 have been included as a component of special (gains) and charges on the Consolidated Statement of Income, and include integration charges.

Venezuelan currency devaluation

On February 8, 2013, the Venezuelan government devalued the bolivar from 4.30 bolivars to 1 U.S. dollar to 6.30 bolivars to 1 U.S. dollar, resulting in a charge during 2013 of $22.7 million ($16.1 million after tax) or $0.05 per diluted share, due to the remeasurement of the local balance sheet. As a result of the ownership structure in place in Venezuela, we also reflected a portion of the devaluation impact as a component of net income (loss) attributable to noncontrolling interest on the Consolidated Statement of Income.

Further details related to Venezuela’s foreign currency are included in the “Global Environment” section of this MD&A, beginning on page 59.

Other special (gains) and charges

We recognized other special gains of $5.0 million ($3.1 million after tax), or $0.01 per diluted share and $24.6 million ($19.5 million after tax), or $0.06 per diluted share during the third quarter and first nine months of 2014, respectively. The gain recognized in the third quarter of 2014 resulted from the consolidation of the Emirates National Chemicals Company LLC (“Emochem”) entity and removal of the corresponding equity method investment. The gains recognized during the first six months of 2014 related to a favorable licensing settlement and other settlement gains.

Further details related to our reported non-restructuring special (gains) and charges are included in Note 2, and further details related to acquisitions and dispositions are included in Note 3.

ECOLAB INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations — Third Quarter and Nine Months Ended September 30, 2014 (continued)

Operating Income

	Third Quarter Ended							Nine Months Ended
	September 30						%	September 30						%
(millions)	2014			2013			Change	2014			2013			Change

Reported GAAP operating income	$	571.4		$	476.0		20%	$	1,434.5		$	1,090.0		32%
Special (gains) and charges	7.8			34.1				38.4			174.6
Non-GAAP adjusted operating income	579.2			510.1			14%	1,472.9			1,264.6			16%
Effect of foreign currency translation	(4.4		)	(6.4		)		(11.3		)	(27.0		)
Non-GAAP adjusted fixed currency operating income	$	574.8		$	503.7		14%	$	1,461.6		$	1,237.6		18%

Reported operating income increased 20% and 32% in the third quarter and first nine months of 2014, respectively, versus the comparable periods of 2013.

Our reported operating income for both 2014 and 2013 was impacted by special (gains) and charges. Excluding the impact of special (gains) and charges from 2014 and 2013 reported results, third quarter 2014 adjusted operating income increased 14% when compared against third quarter 2013 adjusted operating income. Our adjusted operating income for the first nine months of 2014 increased 16% when compared against adjusted operating income for the first nine months of 2013. As shown in the previous table, foreign currency had a negative impact on operating income growth during the nine month comparable periods, as adjusted fixed currency operating income increased 18% in the first nine months of 2014. The net impact of acquisitions and divestitures had a minimal impact on our third quarter 2014 adjusted fixed currency operating income growth rate and added approximately 2 percentage points to our first nine months of 2014 adjusted fixed currency operating income growth rate.

The third quarter and first nine months of 2014 adjusted fixed currency operating income increase as compared to 2013 adjusted fixed currency operating income was driven primarily by sales volume increases, pricing gains and net cost savings and synergies.

Interest Expense, Net

	Third Quarter Ended					Nine Months Ended
	September 30				%	September 30				%
(millions)	2014		2013		Change	2014		2013		Change

Reported GAAP interest expense, net	$	63.3	$	67.0	(6)%	$	194.6	$	194.7	—
Adjustments:
Special (gains) and charges	—		—			—		2.5
Non-GAAP adjusted interest expense, net	$	63.3	$	67.0	(6)%	$	194.6	$	192.2	1%

Reported net interest expense was $63 million in the third quarter of 2014 and $67 million in the third quarter of 2013. Reported net interest expense was $195 million in both the first nine months of 2014 and 2013.

ECOLAB INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations — Third Quarter and Nine Months Ended September 30, 2014 (continued)

Interest Expense, Net (continued)

Special (gains) and charges did not impact interest expense in 2014, or the third quarter of 2013. Special (gains) and charges during the first nine months of 2013 included the interest expense through the April 2013 close date of the Champion acquisition of our $500 million public debt issued in December 2012, as well as fees to secure term loans and short-term debt, all of which were initiated to fund the Champion acquisition.

The decrease in net interest expense when comparing the third quarter of 2014 against the third quarter for 2013 was driven primarily by lower comparable outstanding debt. Our adjusted net interest expense was comparable across the first nine months of 2014 and 2013, as the benefit of lower interest on our euro denominated borrowings was offset by higher interest on our term loan borrowings, increased net expense related to our hedging program and other interest related fees.

Provision for Income Taxes

The following table provides a summary of our tax rate:

	Third Quarter Ended		Nine Months Ended
	September 30		September 30
(percent)	2014	2013	2014	2013

Reported GAAP tax rate	27.3%	24.9%	29.1%	23.6%
Tax rate impact of:
Special gains and charges	0.0	0.7	0.0	1.1
Discrete tax items	0.4	2.8	(1.3)	3.7
Non-GAAP adjusted tax rate	27.7%	28.4%	27.8%	28.4%

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

Our third quarter 2014 reported tax expense included $2.1 million of net tax benefits on special gains and charges and $1.9 million of discrete tax net benefits. For the first nine months of 2014, our reported tax expense included $10.7 million of net tax benefits on special gains and charges and $16.3 million of discrete tax net expense. The corresponding impact of these items to the reported tax rate is shown in the previous table.

Third quarter 2014 discrete tax net benefits were driven primarily by recognizing adjustments from filing our 2013 U.S. federal income tax return, offset partially by the net impact of foreign audit settlements and adjustments.

Discrete tax net expense for the first nine months of 2014 was also impacted by an update to non-current tax liabilities for global tax audits, an adjustment related to the re-characterization of intercompany payments between our U.S. and foreign affiliates, a rate differential on certain prior year shared costs and the remeasurement of certain deferred tax assets and liabilities resulting from a change in the state tax rate for certain entities following the merger of Champion operations, which collectively more than offset the net change of valuation allowances based on the realizability of foreign deferred tax assets and benefits from other foreign country audit settlements.

ECOLAB INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations — Third Quarter and Nine Months Ended September 30, 2014 (continued)

Provision for Income Taxes (continued)

Our third quarter 2013 reported tax expense included $11.5 million of net tax benefits on special gains and charges and $12.5 million of discrete tax net benefits. For the first nine months of 2013, our reported tax expense included $53.1 million of net tax benefits on special gains and charges and $40.1 million of discrete tax net benefits. The corresponding impact of these items to the reported tax rate is shown in the previous table.

Third quarter 2013 discrete tax net benefits were driven primarily by recognizing adjustments from filing our 2012 U.S. federal tax return and the recognition of settlements related to prior year income tax audits, partially offset by the remeasurement of certain deferred tax assets. Discrete tax net benefits for the first nine months of 2013 were also impacted by the release of a valuation allowance related to the realizability of foreign deferred tax assets, law changes within a foreign jurisdiction, recognition of settlements related to our 2009 through 2010 U.S. income tax returns, the remeasurement of certain deferred tax assets and liabilities and the retroactive extension during first quarter 2013 of the U.S. R&D credit, all of which were partially offset by foreign audit adjustments.

The decrease in the 2014 adjusted effective tax rate compared to 2013 was due primarily to favorable geographic income mix, which more than offset the expired U.S. R&D credit.

Net Income Attributable to Ecolab

	Third Quarter Ended							Nine Months Ended
	September 30						%	September 30
(millions)	2014			2013			Change	2014		2013			Change
Reported GAAP net income	$	364.9		$	308.0		18%	$	867.3	$	680.7		27%
Adjustments:
Special (gains) and charges, net of tax	5.7			22.6				27.7		123.5
Discrete tax net expense (benefits)	(1.9		)	(12.5		)		16.3		(40.1		)
Non-GAAP adjusted net income	$	368.7		$	318.1		16%	$	911.3	$	764.1		19%

Diluted Earnings Per Share Attributable to Ecolab (EPS)

	Third Quarter Ended							Nine Months Ended
	September 30						%	September 30					%
(dollars)	2014			2013			Change	2014		2013			Change
Reported GAAP diluted EPS	$	1.19		$	1.00		19%	$	2.83	$	2.23		27%
Adjustments:
Special (gains) and charges	0.02			0.07				0.09		0.40
Discrete tax net expense (benefits)	(0.01		)	(0.04		)		0.05		(0.13		)
Non-GAAP adjusted diluted EPS	$	1.21		$	1.04		16%	$	2.98	$	2.50		19%

Note: Per share amounts in the table above do not necessarily sum due to changes in shares outstanding and rounding.

Currency translation had an insignificant impact on diluted earnings per share for the third quarter of 2014 and an unfavorable impact of approximately $0.03 on diluted earnings per share for first nine months of 2014, compared to the same periods of 2013.

ECOLAB INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Segment Performance

Fixed currency sales and operating income for the third quarter and first nine months of 2014 and 2013 for each of our reportable segments were as follows:

	Net Sales					Net Sales
	Third Quarter Ended					Nine Months Ended
	September 30				%	September 30				%
(millions)	2014		2013		Change	2014		2013		Change

Global Industrial	$	1,251.1	$	1,219.5	3%	$	3,602.7	$	3,504.1	3%
Global Institutional	1,125.5		1,086.9		4%	3,195.8		3,092.2		3%
Global Energy	1,089.2		957.2		14%	3,145.0		2,400.3		31%
Other	196.6		183.5		7%	560.2		528.2		6%
Subtotal at fixed currency rates	3,662.4		3,447.1		6%	10,503.7		9,524.8		10%
Effect of foreign currency translation	32.5		36.9			96.0		169.1
Consolidated	$	3,694.9	$	3,484.0	6%	$	10,599.7	$	9,693.9	9%

	Operating Income							Operating Income
	Third Quarter Ended							Nine Months Ended
	September 30						%	September 30						%
(millions)	2014			2013			Change	2014			2013			Change

Global Industrial	$	175.2		$	171.9		2%	$	456.7		$	433.0		5%
Global Institutional	237.5			225.8			5%	593.0			565.8			5%
Global Energy	174.1			125.1			39%	462.5			306.2			51%
Other	33.0			28.6			15%	84.6			78.0			8%
Corporate	(52.8		)	(81.8		)		(173.6		)	(320.0		)
Subtotal at fixed currency rates	567.0			469.6			21%	1,423.2			1,063.0			34%
Effect of foreign currency translation	4.4			6.4				11.3			27.0
Consolidated	$	571.4		$	476.0		20%	$	1,434.5		$	1,090.0		32%

Global Industrial

	Third Quarter Ended						Nine Months Ended
	September 30						September 30
	2014			2013			2014			2013

Net Sales
Sales at fixed currency (millions)	$	1,251.1		$	1,219.5		$	3,602.7		$	3,504.1
Percentage change at fixed currency	3		%				3		%
Acquisition adjusted percentage change at fixed currency	2		%				3		%
Percentage change at public currency	2		%				1		%

Operating Income
Operating income at fixed currency (millions)	$	175.2		$	171.9		$	456.7		$	433.0
Percentage change at fixed currency	2		%				5		%
Acquisition adjusted percentage change at fixed currency	1		%				5		%
Percentage change at public currency	1		%				3		%
Operating income margin	14.0		%	14.1		%	12.7		%	12.4		%

ECOLAB INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Segment Performance (continued)

Net Sales

Fixed currency sales for our Global Industrial segment increased 3% in both the third quarter and first nine months of 2014. As shown in the previous table, acquisitions had a small impact on sales growth for the third quarter of 2014. Sales growth was driven by both volume gains and pricing. Our Water and Food & Beverage operating units led the sales growth for both the third quarter and nine month periods. At a regional level, both the third quarter and nine month periods were impacted by strong growth in Latin America, with modest gains in Asia Pacific, North America and EMEA.

At an operating unit level, Water fixed currency sales increased 4% in both the third quarter and first nine months of 2014 (increase of 3% acquisition adjusted for the third quarter of 2014), led by gains in the heavy and light industries, with modest gains in mining. Food & Beverage fixed currency sales increased 4% in both the third quarter and first nine months of 2014, impacted by continued gains in the dairy, agri and beverage & brewing markets. Paper fixed currency sales decreased 2% (decrease of 3% acquisition adjusted) in the third quarter and were flat (decrease of 1% acquisition adjusted) in the first nine months of 2014, with continued unfavorable impact from low plant utilization at customer locations and other customer plant closures. Textile Care fixed currency sales decreased 4% and 2% in the third quarter and first nine months of 2014, respectively. The sales decrease was impacted by lower sales in EMEA.

Operating Income

Fixed currency operating income for our Global Industrial segment increased 2% for the third quarter and 5% for the first nine months of 2014. As shown in the previous table, acquisitions had a small impact on operating income growth for the third quarter of 2014. The operating income margin decreased 0.1 percentage points in the third quarter and increased 0.3 percentage points in the first nine months of 2014. Fixed currency operating income growth benefited from pricing gains and sales volume growth, with the mixed results in operating income margins impacted by underlying business mix changes, particularly within our Paper operating unit.

Global Institutional

	Third Quarter Ended						Nine Months Ended
	September 30						September 30
	2014			2013			2014			2013

Net Sales
Sales at fixed currency (millions)	$	1,125.5		$	1,086.9		$	3,195.8		$	3,092.2
Percentage change at fixed currency	4		%				3		%
Acquisition adjusted percentage change at fixed currency	4		%				4		%
Percentage change at public currency	4		%				3		%

Operating Income
Operating income at fixed currency (millions)	$	237.5		$	225.8		$	593.0		$	565.8
Percentage change at fixed currency	5		%				5		%
Acquisition adjusted percentage change at fixed currency	6		%				5		%
Percentage change at public currency	5		%				4		%
Operating income margin	21.1		%	20.8		%	18.6		%	18.3		%

ECOLAB INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Segment Performance (continued)

Net Sales

Fixed currency sales for our Global Institutional segment increased 4% in the third quarter of 2014 and 3% in the first nine months of 2014. As shown in the previous table, divestitures had a small impact in sales growth for the first nine months of 2014. Sales growth was driven by both volume gains and pricing. Our Specialty and Institutional operating units showed strong and moderate sales growth, respectively, for both the third quarter and nine month periods. At a regional level, both the third quarter and nine month periods were led by good growth in Latin America, Asia Pacific and North America which collectively offset lower sales in EMEA.

At an operating unit level, Institutional fixed currency sales increased 3% in both the third quarter and first nine months of 2014 (increase of 4% for the third quarter of 2014 when adjusting for a small divestiture), led by sales initiatives, targeting new accounts and effective product programs. Demand from lodging customers increased moderately while foodservice foot traffic remained soft. Specialty fixed currency sales increased 9% in the third quarter of 2014 and 8% in the first nine months of 2014. Our quick service and food retail businesses both continued to produce solid sales gains. Healthcare fixed currency sales decreased 1% in the third quarter of 2014 and were flat for the first nine months of 2014, as new accounts and product penetration were negatively impacted by slow overall market trends.

Operating Income

Fixed currency operating income for our Global Institutional segment increased 5% for both the third quarter and first nine months of 2014. As shown in the previous table, divestitures had a small impact on operating income growth for the third quarter of 2014. Our operating income margin increased 0.3 percentage points in both the third quarter of 2014 and the first nine months of 2014. The increase in fixed currency operating income and improved operating income margin were driven primarily by the impact of pricing gains and sales volume increases.

Global Energy

	Third Quarter Ended						Nine Months Ended
	September 30						September 30
	2014			2013			2014			2013

Net Sales
Sales at fixed currency (millions)	$	1,089.2		$	957.2		$	3,145.0		$	2,400.3
Percentage change at fixed currency	14		%				31		%
Acquisition adjusted percentage change at fixed currency	14		%				10		%
Percentage change at public currency	13		%				29		%

Operating Income
Operating income at fixed currency (millions)	$	174.1		$	125.1		$	462.5		$	306.2
Percentage change at fixed currency	39		%				51		%
Acquisition adjusted percentage change at fixed currency	42		%				39		%
Percentage change at public currency	37		%				48		%
Operating income margin	16.0		%	13.1		%	14.7		%	12.8		%

ECOLAB INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Segment Performance (continued)

Net Sales

Fixed currency sales for our Global Energy segment increased 14% in the third quarter of 2014 and 31% in the first nine months of 2014. The Champion acquisition fully annualized as of the third quarter of 2014. However, full year sales growth comparability continues to be impacted, as acquisition adjusted fixed currency sales increased 10% during the first nine months of 2014, largely impacted by volume gains.

The increase in acquisition adjusted fixed currency sales reflected double-digit growth in our upstream business, led by a strong international performance and good growth in North America. Deepwater and on-shore conventional sources continued to produce solid results. Sales growth in our downstream business resulted from improved international performance and continued market share gains in North America.

Operating Income

Fixed currency operating income for our Global Energy segment increased 39% for the third quarter of 2014 and 51% for the first nine months of 2014, with continued impact from the Champion acquisition on the comparable nine month periods. Our operating income margin increased 2.9 percentage points in the third quarter and 1.9 percentage points in the first nine months of 2014. Acquisition adjusted fixed currency operating income increased 42% in the third quarter and 39% in the first nine months of 2014, with the operating income margin adjusted for acquisitions increasing 3.1 percentage points for the third quarter and first nine months of 2014.

The strong increase in acquisition adjusted fixed currency operating income and operating income margin gains were largely driven by sales volume increases and business mix changes, with the corresponding impact to operating income. The majority of the remainder of the increase can be attributed to the impact of pricing gains and synergies.

Other

	Third Quarter Ended						Nine Months Ended
	September 30						September 30
	2014			2013			2014			2013

Net Sales
Sales at fixed currency (millions)	$	196.6		$	183.5		$	560.2		$	528.2
Percentage change at fixed currency	7		%				6		%
Acquisition adjusted percentage change at fixed currency	7		%				6		%
Percentage change at public currency	8		%				6		%

Operating Income
Operating income at fixed currency (millions)	$	33.0		$	28.6		$	84.6		$	78.0
Percentage change at fixed currency	15		%				8		%
Acquisition adjusted percentage change at fixed currency	16		%				9		%
Percentage change at public currency	17		%				9		%
Operating income margin	16.8		%	15.6		%	15.1		%	14.8		%

ECOLAB INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Segment Performance (continued)

Net Sales

Fixed currency sales for our Other segment increased 7% in the third quarter and 6% in the first nine months of 2014, driven by both volume gains and pricing. At a regional level, both the third quarter and nine month periods were led by strong growth in Asia Pacific and Latin America. North America and EMEA had good gains.

At an operating unit level, Pest Elimination fixed currency sales increased 6% in the third quarter of 2014 and 5% in the first nine months of 2014, impacted by gains in the food and beverage and foodservice markets. Equipment Care sales increased 10% in the third quarter of 2014 and 9% in the first nine months of 2014, driven largely by increases from service and installed parts sales. Direct parts sales showed improving trends, increasing in both the quarter and year to date periods.

Operating Income

Fixed currency operating income for our Other segment increased 15% for the third quarter and 8% in the first nine months of 2014. As shown in the previous table, acquisitions had a small impact on operating income growth for the third quarter and first nine months of 2014. Our operating income margin increased 1.2 percentage points in the third quarter and 0.3 percentage points in the first nine months of 2014. Fixed currency operating income results and the corresponding operating income margins were impacted largely by pricing gains and sales volume growth.

Corporate

Consistent with the company’s internal management reporting, the Corporate segment includes amortization specifically from the Nalco merger and in 2013 it also included certain integration costs for both the Nalco and Champion transactions. The Corporate segment also includes special (gains) and charges reported on the Consolidated Statement of Income. Items included within special (gains) and charges are shown in the table on page 46.

Financial Position and Liquidity

Financial Position

Total assets were $19.7 billion as of September 30, 2014, compared to total assets of $19.6 billion at December 31, 2013. The increase in assets from acquisitions and ongoing business activities was offset by intangible amortization and the negative impact of foreign currency exchange rates on the value of our international assets.

Total liabilities were $11.9 billion and $12.2 billion as of September 30, 2014 and December 31, 2013, respectively. Total debt was $6.8 billion as of September 30, 2014 and $6.9 billion as of December 31, 2013. The ratio of total debt to capitalization (total debt plus total equity) was 47% at September 30, 2014 compared to 48% at December 31, 2013. We are in compliance with our debt covenants and believe we have sufficient borrowing capacity to meet our foreseeable operating needs.

Cash Flows

Cash provided by operating activities totaled $1,145 million for the first nine months of 2014 compared to $929 million for the first nine months of 2013.

ECOLAB INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Financial Position and Liquidity (continued)

Year-over-year comparability was favorably impacted by increased income, driven by the impact of the Champion acquisition and lower comparable special (gains) and charges. We continue to generate strong cash flow from operations which has allowed us to fund our ongoing operations and investments in the business, fund acquisitions, return cash to shareholders through share repurchases and dividend payments and repay debt.

Cash used for investing activities was $565 million for the first nine months of 2014 compared to $1.9 billion for the first nine months of 2013.

The fluctuation across the periods is driven primarily by business acquisitions. During the first nine months of 2014, acquisitions included AkzoNobel’s Purate business, AK Kraus & Hiller Schädlingsbekämpfung and the chemical division of AKJ Industries. Acquisitions during the first nine months of 2013 included Champion, Quimiproductos S.A. de C.V. and OOO Master Chemicals. See Note 3 for further information on our business acquisition activity.

Cash used by financing activities was $714 million for the first nine months of 2014 compared to cash provided by financing activities of $194 million for the first nine months of 2013.

Our 2014 financing activities included repayments of $100 million, $150 million and $150 million of term loan borrowings in February, April and September 2014, respectively. Our 2013 financing activities included $900 million of term loan borrowings initiated in connection with the Champion transaction, as well as $338 million of long-term debt repayments, which included the redemption of debt acquired through the Champion transaction as well as $100 million repayments of term loan borrowings. During the first nine months of 2014, net issuances and repayments of commercial paper and notes payable led to a net increase of $310 million, compared to a net decrease of $91 million in 2013.

We reacquired shares of $341 million and $229 million during the first nine months of 2014 and 2013, respectively. Cash payments for dividends are comparably higher for the first nine months of 2014 as the dividend declared in December 2013 was paid in January 2014, whereas the dividend declared in December 2012 was paid in December 2012.

The first nine months of 2014 includes 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 the cash requirements which are reasonably foreseeable for the next twelve months, including scheduled debt repayments, new investments in the business, share repurchases, dividend payments, possible business acquisitions and pension and postretirement contributions with cash from operating activities, cash reserves and additional short-term and/or long-term borrowings. We continue to expect our operating cash flow to remain strong.

As of September 30, 2014, we had $198 million of cash and cash equivalents on hand, of which $186 million was held outside of the U.S.

As of September 30, 2014 we had a $1.5 billion multi-year credit facility, which expires in September 2016. The credit facility has been established with a diverse syndicate of banks. There were no borrowings under our credit facility as of September 30, 2014 or December 31, 2013.

ECOLAB INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Liquidity and Capital Resources (continued)

The credit facility supports our $1.5 billion US commercial paper program and $200 million European commercial paper program. Combined borrowing under these two commercial paper programs may not exceed $1.5 billion. As of September 30, 2014, we had $630 million in outstanding U.S. commercial paper, with an average annual interest rate of 0.3%, and no amounts outstanding under our European commercial paper program. As of September 30, 2014, both programs were rated A-2 by Standard & Poor’s and P-2 by Moody’s.

As of September 30, 2014, Standard & Poor’s and Moody’s rated our long-term credit at BBB+ (positive outlook) and Baa1 (negative outlook), respectively.

The schedule of contractual obligations included in the Financial Position and Liquidity section of our Form 10-K for the year ended December 31, 2013 disclosed total notes payable and long-term debt due within one year of $861 million. As of September 30, 2014, the total notes payable and long-term debt due within one year increased to $1.9 billion. The increase reflected additional commercial paper borrowing during 2014 and the short-term debt classification of our $250 million Senior Notes due in February 2015 and our $500 million Senior Notes due in August 2015.

We repaid $100 million, $150 million and $150 million of term loan borrowings in February, April and September 2014, respectively.

Our gross liability for uncertain tax positions was $94 million as of September 30, 2014 and $99 million as of December 31, 2013. We are not able to reasonably estimate the amount by which the liability will increase or decrease over time; however, at this time, we do not expect significant payments related to these obligations within the next year.

Global Environment

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.

During 2013 and 2014, economic conditions in Europe have remained challenging. Certain countries continued to experience instability in credit markets, including diminished liquidity and credit availability as well as currency fluctuations which could negatively impact our customers located in these and other geographic areas. We currently do not foresee any specific credit or market risks that would have a significant impact to our results of operations.

We have operations within Ukraine and Russia and have experienced no significant impact from the recent turmoil in the region. Net sales within these countries are approximately 1% of our consolidated net sales. We will continue to monitor economic and political trends within Ukraine and Russia.

We have joint venture operations tied to the Kashagan project, a Caspian Sea shallow-water oil-field located near the Kazakhstan coast, which we acquired with our recent Champion acquisition in April 2013. The startup of the Kashagan project has experienced delays including operations being stopped in October 2013 in order to repair pipeline failures. We have approximately $25 million invested in a joint venture in the region related to inventory in preparation for production. We anticipate that the pipelines will be restored and operations will be restarted; however, if production is not restored or if we encounter other delays or setbacks, we believe that the impact of such events would not have a material adverse effect on our consolidated financial position or results of operations. We continue to monitor the situation.

ECOLAB INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Financial Position and Liquidity (continued)

Global Environment (continued)

Venezuela Foreign Currency Translation

In 2013, the Venezuelan government created a new foreign exchange mechanism known as the SICAD 1. It operates similar to an auction system and allows entities to exchange a limited number of bolivars for U.S. dollars at a bid rate established via weekly auctions under SICAD 1. As of August 31, 2014, the fiscal quarter end for our international operations, the SICAD 1 exchange rate closed at 11.5 bolivars to 1 U.S. dollar. We do not use the SICAD 1 rate or expect to use the SICAD 1 currency exchange mechanism.

In January 2014, the Venezuelan government announced the replacement of CADIVI with a new foreign currency administration, CENCOEX. As of August 31, 2014, we have $102 million of net monetary assets denominated in bolivars that were required to be remeasured to U.S. dollars. During the nine month period ended August 31, 2014, we continued to obtain approvals and authorization to pay amounts at the CENCOEX fixed currency exchange rate of 6.30 bolivars to 1 U.S. dollar. As we believe the fixed currency exchange rate of 6.30 bolivars to 1 U.S. dollar remains legally available to us and we continue to transact at this rate, we intend to continue to remeasure the net monetary assets of our Venezuela subsidiaries at this rate.

In March 2014, the Venezuelan government introduced SICAD 2, an additional currency exchange auction mechanism. At August 31, 2014, the SICAD 2 exchange rate closed at 49.97 bolivars to 1 U.S. dollar. We do not use the SICAD 2 rate, but are evaluating whether we will use the SICAD 2 currency exchange mechanism in future periods.

If we determine our net monetary assets should be remeasured utilizing the SICAD 2 rate in a subsequent period, we could recognize a currency devaluation pre-tax loss of approximately $90 million based on the August 31, 2014 rates and net monetary assets. This loss would be a component of special (gains) and charges within our Consolidated Statement of Income.

Net sales within Venezuela are approximately 1% of our consolidated net sales. Assets held in Venezuela at August 31, 2014 represented less than 2% of our consolidated assets.

New Accounting Pronouncements

For information on new accounting pronouncements, see Note 16 to the Consolidated Financial Statements.

ECOLAB INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Subsequent Events

In September 2014, subsequent to our third quarter end for international operations, we acquired certain assets in Turkey. The transaction is not significant to our operations.

In September 2014, subsequent to our third quarter end for international operations, we entered into a series of euro denominated forward starting swap agreements to hedge against changes in interest rates that could impact a future debt issuance.

In September 2014, subsequent to our third quarter end for international operations, we entered into a forward contract with a notional amount of euro 495 million to hedge future foreign currency exposures.

Non-GAAP Financial Measures

This Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operation” in Item 2, contains financial measures that have not been calculated in accordance with accounting principles generally accepted in the U.S. (GAAP). These non-GAAP measures include:

· Fixed currency sales

· Acquisition adjusted fixed currency sales

· Adjusted cost of sales

· Adjusted gross margin

· Fixed currency operating income

· Adjusted operating income

· Adjusted fixed currency operating income

· Acquisition adjusted fixed currency operating income

· Adjusted net interest expense

· Adjusted tax rate

· Adjusted net income

· Adjusted diluted earnings per share

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

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

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

ECOLAB INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Non-GAAP Financial Measures (continued)

We evaluate the performance of our international operations based on fixed currency rates of foreign exchange. Fixed currency sales, acquisition adjusted fixed currency sales, fixed currency operating income, adjusted fixed currency operating income and acquisition adjusted fixed currency operating income measures eliminate the impact of exchange rate fluctuations on our international sales, acquisition adjusted sales, operating income, adjusted operating income and acquisition adjusted operating income, respectively, and promote a better understanding of our underlying sales and operating income trends. Fixed currency amounts are based on translation into U.S. dollars at fixed foreign currency exchange rates established by management at the beginning of 2014.

Acquisition adjusted growth rates generally exclude the results of any acquired business from the first twelve months post acquisition and exclude the results of divested businesses from the previous twelve months prior to divestiture. Champion is an exception. Due to the rapid pace at which the business has been integrated within our Global Energy segment, including all customer selling activity, discrete financial data specific to the legacy Champion business is no longer available post acquisition. As such, to allow for the most meaningful period-over-period comparison, specific to the Champion transaction, Champion’s results for the comparable period of the prior year have been included for purposes of providing acquisition adjusted growth rates.

These non-GAAP measures are not in accordance with, or an alternative to, 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 GAAP measures included in this MD&A and have provided reconciliations of reported GAAP amounts to the non-GAAP amounts on pages 44-52.

Forward-Looking Statements

This Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operation” in Item 2, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include expectations concerning the timing, scope, costs, cash expenditures, timing of cash payments, benefits and headcount impact of our restructuring initiatives; synergies; utilization of recorded restructuring liabilities; payment of contingent consideration; contributions to pension and post-retirement health care benefit plans; tax deductibility of goodwill; amortization expense; share repurchases and dividends; the impact of new accounting pronouncements; the impact of potential lawsuits or claims; payment of litigation settlement funds; gross liability for uncertain tax positions and payments related thereto; timing of hedged transactions; borrowing capacity; potential additional devaluation of Venezuelan currency; the impact of delay or shutdown of Kashagan operations; global market risk; future cash flow; cash requirements and sources of funding; anticipated future debt issuances; and nonperformance of financial counterparties.

ECOLAB INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements (continued)

Without limiting the foregoing, words or phrases such as “will likely result,” “are expected to,” “will continue,” “is anticipated,” “we believe,” “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. In particular, the ultimate results of any restructuring and business improvement actions, including cost synergies, depend on a number of factors, including the development of final plans, the impact of local regulatory requirements regarding employee terminations, the time necessary to develop and implement the restructuring and other business improvement initiatives and the level of success achieved through such actions in improving competitiveness, efficiency and effectiveness. 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 Part II, Item 1A of this Form 10-Q. Except as required under applicable law, we undertake no duty to update our Forward-Looking Statements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We primarily use foreign currency forward contracts, foreign currency debt and interest rate swaps to manage risks generally associated with interest rate and foreign exchange rate volatility and net investments in our foreign operations. We do not hold derivative financial instruments of a speculative nature. For a more detailed discussion of derivative instruments, refer to Note 8, entitled “Derivatives and Hedging Transactions”, of the consolidated financial statements located under Part I, Item 1 of this quarterly report on Form 10-Q, beginning on page 25.

Item 4. Controls and Procedures

As of September 30, 2014, we carried out an evaluation, under the supervision and with the participation of our management, including the Chairman of the Board and Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, our Chairman of the Board and Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures are effective.

During the period July 1 through September 30, 2014, 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.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Note 15, entitled “Commitments and Contingencies” located under Part I, Item 1 of this Form 10-Q beginning on page 36, is incorporated herein by reference.

Item 1A. Risk Factors

In our report on Form 10-K for the year ended December 31, 2013, filed with the Securities and Exchange Commission on February 28, 2014, we identify under Item 1A 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-Q. See the section entitled Forward-Looking Statements located on pages 62-63 of this Form 10-Q. We may also refer to such disclosure to identify factors that may cause results to differ from those expressed in other forward-looking statements made in oral presentations, including telephone conferences and/or webcasts open to the public.

The discussion below includes updates to these risk factors.

Our results are impacted by general worldwide economic factors : Economic factors such as the worldwide economy, capital flows, interest rates and currency movements, including, in particular, our exposure to foreign currency risk, have affected our business in the past and may have a material adverse impact on our business in the future. In 2008 and 2009, the global economy experienced considerable disruption and volatility, and the disruption was particularly acute in the global credit markets. In 2011 and 2012, the European Union’s sovereign debt crisis negatively impacted economic activity in that region as well as the strength of the euro versus the U.S. dollar. Other regions of the world, including emerging market areas, also expose us to foreign currency risk. For example, we do business in Venezuela, which experienced a currency devaluation in 2010 and again in 2013, and as discussed on page 60 of this Form 10-Q, we may experience the recognition of a currency devaluation loss in future periods in the event we utilize current or future foreign exchange mechanisms established by the Venezuelan government. 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.

Risk Factors (continued)

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 2013, approximately 49% 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;

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

· difficulties in collecting receivables or realizing other assets, including with respect to a joint venture investment in Kazakhstan as discussed at page 58 of this Form 10-Q;

· 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.

Risk Factors (continued)

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. economic sanctions regulations. We have internal policies and procedures relating to such regulations; however, there is risk that such policies and procedures will not always protect us from the reckless acts of employees or representatives, particularly in the case of recently acquired operations that may not have significant training in applicable compliance policies and procedures. Violations of such laws and regulations could result in disruptive investigations of the Company, significant fines and sanctions, which could adversely affect our consolidated results of operations, financial position or cash flows.

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

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Period	(a) Total number of shares purchased(1)	(b) Average price paid per share(2)		(c) Number of shares purchased as part of publicly announced plans or programs(3)	(d) Maximum number of shares that may yet be purchased under the plans or programs(3)
July 1-31, 2014	475	$	109.4101	0	9,886,298
August 1-31, 2014	33,567	$	109.3740	0	9,886,298
September 1-30, 2014	5,780	$	115.3251	0	9,886,298
Total	39,822	$	110.2382	0	9,886,298

(1) Represents 39,822 shares reacquired from employees and/or directors as swaps for the cost of stock options, or shares surrendered to satisfy minimum statutory tax obligations under our stock incentive plans.

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

(3) As announced on August 23, 2011, the Finance Committee, via delegation by our Board of Directors, authorized the repurchase of up to an additional 10,000,000 shares contingent upon completion of the merger with Nalco. We intend to repurchase all shares under this remaining authorization, for which no expiration date has been established, in open market or privately negotiated transactions, subject to market conditions.

Item 4. Mine Safety Disclosures

Not applicable.

Item 6. Exhibits

(a) The following documents are filed as exhibits to this report:

(10.1) Documents comprising global Commercial Paper Programs:

U.S. $1,500,000,000 U.S. Commercial Paper Program

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

	(b) Commercial Paper 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.

	(c) Corporate Commercial Paper — Master Note dated September 22, 2014, together with Annex thereto.

(10.2)	Ecolab Inc. Management Performance Incentive Plan, as amended and restated effective February 27, 2014.

(15.1)	Letter regarding unaudited interim financial information.

(31.1)	Rule 13a - 14(a) Certifications.

(32.1)	Section 1350 Certifications.

(101.1)	Interactive Data File.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

	ECOLAB INC.


Date: October 30, 2014	By:	/s/Bryan L. Hughes
		Bryan L. Hughes
		Senior Vice President & Corporate Controller
		(duly authorized Officer and
		Chief Accounting Officer)

EXHIBIT INDEX

Exhibit No.	Document	Method of Filing

(10.1)	Documents comprising global Commercial Paper Programs: U.S. $1,500,000,000 U.S. Commercial Paper Program

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

	(b) Commercial Paper 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.	Filed herewith Electronically

	(c) Corporate Commercial Paper — Master Note dated September 22, 2014, together with Annex thereto.	Filed herewith electronically

(10.2)	Ecolab Inc. Management Performance Incentive Plan, as amended and restated effective February 27, 2014.	Incorporated by reference to Exhibit (10.1) of our Form 8-K dated May 8, 2014.

(15.1)	Letter regarding unaudited interim financial information.	Filed herewith electronically

(31.1)	Rule 13a - 14(a) Certifications.	Filed herewith electronically

(32.1)	Section 1350 Certifications.	Filed herewith electronically

(101.1)	Interactive Data File.	Filed herewith electronically

Exhibit 10.1(a)

Commercial Paper Dealer Agreement

4(a)(2) Program

Between:

Ecolab Inc., as Issuer

and

[ ], as Dealer

Concerning Notes to be issued pursuant to an Issuing and Paying Agent Agreement dated as of September 22, 2014 between the Issuer and Deutsche Bank Trust Company Americas, as Issuing and Paying Agent.

Dated as of

September 22, 2014

Commercial Paper Dealer Agreement

4(a)(2) Program

This agreement (“Agreement”) sets forth the understandings between the Issuer and the Dealer, each named above, in connection with the issuance and sale by the Issuer of its short-term promissory notes (the “Notes”) through the Dealer.

Certain terms used in this Agreement are defined in Section 6 hereof.

The Addendum to this Agreement, and any Annexes or Exhibits described in this Agreement or such Addendum, are hereby incorporated into this Agreement and made fully a part hereof.

1. Offers, Sales and Resales of Notes.

1.1 While (i) the Issuer has and shall have no obligation to sell the Notes to the Dealer or to permit the Dealer to arrange any sale of the Notes for the account of the Issuer, and (ii) the Dealer has and shall have no obligation to purchase the Notes from the Issuer or to arrange any sale of the Notes for the account of the Issuer, the parties hereto agree that in any case where the Dealer purchases Notes from the Issuer, or arranges for the sale of Notes by the Issuer, such Notes will be purchased or sold by the Dealer in reliance on the representations, warranties, covenants and agreements of the Issuer contained herein or made pursuant hereto and on the terms and conditions and in the manner provided herein.

1.2 So long as this Agreement shall remain in effect, and in addition to the limitations contained in Section 1.7 hereof, the Issuer shall not, without the consent of the Dealer, offer, solicit or accept offers to purchase, or sell, any Notes except (a) in transactions with one or more dealers which may from time to time after the date hereof become dealers with respect to the Notes by executing with the Issuer one or more agreements which contain provisions substantially identical to those contained in Section 1 of this Agreement, of which the Issuer hereby undertakes to provide the Dealer prompt notice or (b) in transactions with the other dealers listed on the Addendum hereto, which have executed agreements with the Issuer which contain provisions substantially identical to Section 1 of this Agreement. In no event shall the Issuer offer, solicit or accept offers to purchase, or sell, any Notes directly on its own behalf in transactions with persons other than broker-dealers as specifically permitted in this Section 1.2.

1.3 The Notes shall be in a minimum denomination of $250,000 or integral multiples of $1,000 in excess thereof, will bear such interest rates, if interest bearing, or will be sold at such discount from their face amounts, as shall be agreed upon by the Dealer and the Issuer, shall have a maturity not exceeding 270 days from the date of issuance (exclusive of days of grace) and shall not contain any provision for extension, renewal or automatic “rollover.”

1.4 The authentication and issuance of, and payment for, the Notes shall be effected in accordance with the Issuing and Paying Agent Agreement, and the Notes shall be either individual physical certificates or book-entry notes evidenced by a Master Note registered in the name of DTC or its nominee, in the form or forms annexed to the Issuing and Paying Agent Agreement.

1.5 If the Issuer and the Dealer shall agree on the terms of the purchase of any Note by the Dealer or the sale of any Note arranged by the Dealer (including, but not limited to, agreement with respect to the date of issue, purchase price, principal amount, maturity and interest rate (in the case of interest-bearing Notes) or discount thereof (in the case of Notes issued on a discount basis), and appropriate compensation for the Dealer’s services hereunder) pursuant to this Agreement, the Issuer shall cause such Note to be issued and delivered in accordance with the terms of the Issuing and Paying Agent Agreement and payment for such Note shall be made by the purchaser thereof, either directly or through the Dealer, to the Issuing and Paying Agent, for the account of the Issuer. Except as otherwise agreed, in the event that the Dealer is acting as an agent and a purchaser shall either fail to accept delivery of or make payment for a Note on the date fixed for settlement, the Dealer shall promptly notify the Issuer, and if the Dealer has theretofore paid the Issuer for the Note, the Issuer will promptly return such funds to the Dealer against its return of the Note to the Issuer, in the case of a certificated Note, and upon notice of such failure in the case of a book-entry Note. If such failure occurred for any reason other than default by the Dealer, the Issuer shall reimburse the Dealer on an equitable basis for the Dealer’s loss of the use of such funds for the period such funds were credited to the Issuer’s account.

1.6 The Dealer and the Issuer hereby establish and agree to observe the following procedures in connection with offers, sales and subsequent resales or other transfers of the Notes:

(a) Offers and sales of the Notes by or through the Dealer shall be made only to: (i) investors reasonably believed by the Dealer to be Qualified Institutional Buyers or Institutional Accredited Investors and (ii) non-bank fiduciaries or agents that are Institutional Accredited Investors purchasing Notes for one or more accounts, each of which is reasonably believed by the Dealer to be an Institutional Accredited Investor.

(b) Resales and other transfers of the Notes by the holders thereof shall be made only in accordance with the restrictions in the legend described in clause (e) below.

(c) No general solicitation or general advertising shall be used in connection with the offering of the Notes. Without limiting the generality of the foregoing, no party shall issue any press release or place or publish any “tombstone” or other advertisement relating to the Notes without the prior written consent of the other party hereto.

(d) No sale of Notes to any one purchaser shall be for less than $250,000 principal or face amount, and no Note shall be issued in a smaller principal or face amount. If the purchaser is a non-bank fiduciary acting on behalf of others, each person for whom such purchaser is acting must purchase at least $250,000 principal or face amount of Notes.

(e) Offers and sales of the Notes by the Issuer through the Dealer acting as agent for the Issuer shall be made in accordance with Section 4(a)(2) of the Securities Act, and shall be subject to the restrictions described in the legend appearing on Exhibit A hereto. A legend substantially to the effect of such Exhibit A shall appear as part of the Private Placement Memorandum used in connection with offers and sales of Notes hereunder, as well as on each individual certificate representing a Note and each Master Note representing book-entry Notes offered and sold pursuant to this Agreement.

(f) The Dealer shall furnish or shall have furnished to each purchaser of Notes for which it has acted as the Dealer a copy of the then-current Private Placement Memorandum unless such purchaser has previously received a copy of the Private Placement Memorandum as then in effect. The Private Placement Memorandum shall expressly state that any person to whom Notes are offered shall have an opportunity to ask questions of, and receive information from, the Issuer and the Dealer and shall provide the names, addresses and telephone numbers of the persons from whom information regarding the Issuer may be obtained.

(g) The Issuer agrees, for the benefit of the Dealer and each of the holders and prospective purchasers from time to time of the Notes that, if at any time the Issuer shall not be subject to Section 13 or 15 (d) of the Exchange Act, the Issuer will furnish, upon request and at its expense, to the Dealer and to holders and prospective purchasers of Notes information required by Rule 144A(d) (4) (i) in compliance with Rule 144A(d).

(h) In the event that any Note offered or to be offered by the Dealer would be ineligible for resale under Rule 144A, the Issuer shall immediately notify the Dealer (by telephone, confirmed in writing) of such fact and shall promptly prepare and deliver to the Dealer an amendment or supplement to the Private Placement Memorandum describing the Notes that are ineligible, the reason for such ineligibility and any other relevant information relating thereto.

(i) The Issuer represents that it is not currently issuing commercial paper in the United States market in reliance upon the exemption provided by Section 3(a)(3) of the Securities Act. In that connection, the Issuer agrees that in the event that it shall, after the date hereof, issue commercial paper in the United States in reliance upon the exemption provided by Section 3(a)(3) of the Securities Act, (a) the proceeds from the

sale of the Notes will be segregated from the proceeds of the sale of any such commercial paper by being placed in a separate account; (b) the Issuer will institute appropriate corporate procedures to ensure that the offers and sales of notes issued by the Issuer pursuant to the Section 3(a)(3) exemption are not integrated with offerings and sales of Notes hereunder; and (c) the Issuer will comply with each of the requirements of Section 3(a)(3) of the Securities Act in selling commercial paper or other short-term debt securities other than the Notes in the United States.

1.7 The Issuer hereby represents and warrants to the Dealer, in connection with offers, sales and resales of Notes, as follows:

(a) Issuer hereby confirms to the Dealer that (except as permitted by Section 1.6(i)) within the preceding six months neither the Issuer nor any person other than the Dealer or the other dealers referred to in Section 1.2 hereof acting on behalf of the Issuer has offered or sold any Notes, or any substantially similar security of the Issuer, to, or solicited offers to buy any such security from, any person other than the Dealer or the other dealers referred to in Section 1.2 hereof. The Issuer also agrees that (except as permitted by Section 1.6(i)), as long as the Notes are being offered for sale by the Dealer and the other dealers referred to in Section 1.2 hereof as contemplated hereby and until at least six months after the offer of Notes hereunder has been terminated, neither the Issuer nor any person other than the Dealer or the other dealers referred to in Section 1.2 hereof (except as contemplated by Section 1.2 hereof) will offer the Notes or any substantially similar security of the Issuer for sale to, or solicit offers to buy any such security from, any person other than the Dealer or the other dealers referred to in Section 1.2 hereof, it being understood that such agreement is made with a view to bringing the offer and sale of the Notes within the exemption provided by Section 4(a)(2) of the Securities Act and shall survive any termination of this Agreement. The Issuer hereby represents and warrants that it has not taken or omitted to take, and will not take or omit to take, any action that would cause the offering and sale of Notes hereunder to be integrated with any other offering of securities, whether such offering is made by the Issuer or some other party or parties.

(b) In the event that the Issuer determines to use proceeds of the sale of the Notes for the purpose of buying, carrying or trading securities, whether in connection with an acquisition of another company or otherwise, the Issuer shall give the Dealer notice at least five business days’ prior to the actual date that it commences to purchase securities with the proceeds of the Notes. Thereafter, in the event that the Dealer purchases Notes as principal and does not resell such Notes on the day of such purchase, to the extent necessary to comply with Regulation T and the interpretations thereunder, the Dealer will sell such Notes either (i) only to offerees it reasonably believes to be QIBs or to QIBs it reasonably believes are acting for other QIBs, in each case in accordance with Rule 144A or (ii) in a manner which would not cause a violation of Regulation T and the interpretations thereunder.

2. Representations and Warranties of Issuer.

The Issuer represents and warrants that:

2.1 The Issuer is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all the requisite power and authority to execute, deliver and perform its obligations under the Notes, this Agreement and the Issuing and Paying Agent Agreement.

2.2 This Agreement and the Issuing and Paying Agent Agreement have been duly authorized, executed and delivered by the Issuer and constitute legal, valid and binding obligations of the Issuer enforceable against the Issuer in accordance with their terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law) and subject to public policy limitations on indemnification obligations.

2.3 The establishment of the commercial paper program contemplated hereby has been duly authorized. When the Notes are issued as provided in the Issuing and Paying Agent Agreement, such Notes will be duly and validly issued and will constitute legal, valid and binding obligations of the Issuer, enforceable against the Issuer in accordance with their terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

2.4 The offer and sale of Notes in the manner contemplated hereby do not require registration of the Notes under the Securities Act, pursuant to the exemption from registration contained in Section 4(a)(2) thereof, and no indenture in respect of the Notes is required to be qualified under the Trust Indenture Act of 1939, as amended.

2.5 The Notes will rank at least pari passu with all other unsecured and unsubordinated indebtedness of the Issuer.

2.6 No consent or action of, or filing or registration with, any governmental or public regulatory body or authority, including the SEC, is required to authorize, or is otherwise required in connection with the execution, delivery or performance of, this Agreement, the Notes or the Issuing and Paying Agent Agreement, except as may be required by the securities or Blue Sky laws of the various states in connection with the offer and sale of the Notes.

2.7 Neither the execution and delivery of this Agreement and the Issuing and Paying Agent Agreement, nor the issuance of the Notes in accordance with the Issuing and Paying Agent Agreement, nor the fulfillment of or compliance with the terms and provisions hereof or thereof by the Issuer, will (i) result in the creation or imposition of any mortgage, lien, charge or encumbrance of any nature whatsoever upon any of the properties or assets of the Issuer, or (ii) violate or result in a breach or a default under any of the terms of the Issuer’s charter documents or by-laws, any contract or instrument to which the Issuer is a party or by which it or its property is bound, or any law or regulation, or any order, writ, injunction or decree of any court or government

instrumentality, to which the Issuer is subject or by which it or its property is bound, which breach, violation or default is reasonably likely to result in a material adverse change in the condition (financial or otherwise), operations or business prospects of the Issuer and its consolidated subsidiaries, taken as a whole, which would be material to the holders of Notes or to potential holders of Notes or the ability of the Issuer to perform its obligations under this Agreement, the Notes or the Issuing and Paying Agent Agreement.

2.8 Other than as set forth in the Company Information, there is no litigation or governmental proceeding pending, or to the knowledge of the Issuer threatened, against or affecting the Issuer or any of its subsidiaries which is reasonably likely to result in a material adverse change in the condition (financial or otherwise), operations or business prospects of the Issuer or the ability of the Issuer and its consolidated subsidiaries, taken as a whole, which would be material to the holders of Notes or to potential holders of Notes to perform its obligations under this Agreement, the Notes or the Issuing and Paying Agent Agreement.

2.9 The Issuer is not an “investment company” or an entity “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

2.10 Neither the Private Placement Memorandum nor the Company Information contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

2.11 Each (a) issuance of Notes by the Issuer hereunder and (b) amendment or supplement of the Private Placement Memorandum shall be deemed a representation and warranty by the Issuer to the Dealer, as of the date thereof, that, both before and after giving effect to such issuance and after giving effect to such amendment or supplement, (i) the representations and warranties given by the Issuer set forth above in this Section 2 remain true and correct on and as of such date as if made on and as of such date, (ii) in the case of an issuance of Notes, the Notes being issued on such date have been duly and validly issued and constitute legal, valid and binding obligations of the Issuer, enforceable against the Issuer in accordance with their terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law) and (iii) in the case of an issuance of Notes, since the date of the most recent Private Placement Memorandum, there has been no material adverse change in the condition (financial or otherwise), operations or business prospects of the Issuer and its consolidated subsidiaries, taken as a whole, which would be material to the holders of Notes or to potential holders of Notes which has not been disclosed in the Company Information or to the Dealer in writing.

3. Covenants and Agreements of Issuer.

The Issuer covenants and agrees that:

3.1 The Issuer will give the Dealer prompt notice (but in any event prior to any subsequent issuance of Notes hereunder) of any amendment to, modification of or waiver with

respect to, the Notes or the Issuing and Paying Agent Agreement, including a complete copy of any such amendment, modification or waiver.

3.2 The Issuer shall, whenever there shall occur any adverse change in the Issuer’s condition (financial or otherwise), operations or business prospects or any development or occurrence in relation to the Issuer that would be material to holders of the Notes or potential holders of the Notes (including any downgrading or receipt of any notice of intended or potential downgrading or any review for potential change in the rating accorded any of the Issuer’s securities by any nationally recognized statistical rating organization which has published a rating of the Notes), promptly, and in any event prior to any subsequent issuance of Notes hereunder, notify the Dealer (by telephone, confirmed in writing) of such change, development or occurrence.

3.3 The Issuer shall from time to time furnish to the Dealer such information as the Dealer may reasonably request, including, without limitation, any press releases or material provided by the Issuer to any national securities exchange or rating agency, regarding (i) the Issuer’s operations and financial condition, (ii) the due authorization and execution of the Notes and (iii) the Issuer’s ability to pay the Notes as they mature.

3.4 The Issuer will take all such action as the Dealer may reasonably request to ensure that each offer and each sale of the Notes will comply with any applicable state Blue Sky laws; provided, however, that the Issuer shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation in any jurisdiction in which it is not so qualified or subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject.

3.5 The Issuer will not be in default of any of its obligations hereunder, under the Notes or under the Issuing and Paying Agent Agreement, at any time that any of the Notes are outstanding.

3.6 The Issuer shall not issue Notes hereunder until the Dealer shall have received (a) an opinion of counsel to the Issuer, addressed to the Dealer, satisfactory in form and substance to the Dealer, (b) a copy of the executed Issuing and Paying Agent Agreement as then in effect, (c) a copy of resolutions adopted by the Board of Directors of the Issuer, satisfactory in form and substance to the Dealer and certified by the Secretary or similar officer of the Issuer, authorizing execution and delivery by the Issuer of this Agreement, the Issuing and Paying Agent Agreement and the Notes and consummation by the Issuer of the transactions contemplated hereby and thereby, (d) prior to the issuance of any Notes represented by a book-entry note registered in the name of DTC or its nominee, a copy of the executed Letter of Representations among the Issuer, the Issuing and Paying Agent and DTC and (e) such other certificates, opinions, letters and documents as the Dealer shall have reasonably requested.

3.7 The Issuer shall reimburse the Dealer for all of the Dealer’s out-of-pocket expenses related to this Agreement, including expenses incurred in connection with its preparation and negotiation, and the transactions contemplated hereby (including, but not limited to, the printing and distribution of the Private Placement Memorandum), and, if applicable, for the reasonable fees and out-of-pocket expenses of the Dealer’s counsel.

3.8 The Issuer shall not file a Form D (as referenced in Rule 503 under the Securities Act) at any time in respect of the offer or sale of the Notes.

3.9 Without limiting any obligation of the Issuer pursuant to this Agreement to provide the Dealer with credit and financial information, the Issuer hereby acknowledges and agrees that the Dealer may share the Company Information and any other information or matters relating to the Issuer or the transactions contemplated hereby with affiliates of the Dealer, including, but not limited to, [Name of Affiliate] and that such affiliates may likewise share information relating to the Issuer or such transactions with the Dealer.

3.10 (a) The parties hereto agree that the Issuer may, in accordance with the terms of this Section 3.10, from time to time replace the party which is then acting as Issuing and Paying Agent (the “Current Issuing and Paying Agent”) with another party (such other party, the “Replacement Issuing and Paying Agent”), and enter into an agreement with the Replacement Issuing and Paying Agent covering the provision of issuing and paying agency functions in respect of the Notes by the Replacement Issuing and Paying Agent (the “Replacement Issuing and Paying Agent Agreement”) (any such replacement, a “Replacement”).

(b) From and after the effective date of any Replacement, (A) to the extent that the Issuing and Paying Agent Agreement provides that the Current Issuing and Paying Agent will continue to act in respect of Notes outstanding as of the effective date of such Replacement (the “Outstanding Notes”), then (i) the “Issuing and Paying Agent” for the Notes shall be deemed to be the Current Issuing and Paying Agent, in respect of the Outstanding Notes, and the Replacement Issuing and Paying Agent, in respect of Notes issued on or after the Replacement, (ii) all references to the “Issuing and Paying Agent” herein shall be deemed to refer to the Current Issuing and Paying Agent, in respect of the Outstanding Notes, and the Replacement Issuing and Paying Agent, in respect of Notes issued on or after the Replacement, and (iii) all references to the “Issuing and Paying Agent Agreement” herein shall be deemed to refer to the existing Issuing and Paying Agent Agreement, in respect of the Outstanding Notes, and the Replacement Issuing and Paying Agent Agreement, in respect of Notes issued on or after the Replacement; and (B) to the extent that the Issuing and Paying Agent Agreement does not provide that the Current Issuing and Paying Agent will continue to act in respect of the Outstanding Notes, then (i) the “Issuing and Paying Agent” for the Notes shall be deemed to be the Replacement Issuing and Paying Agent, (ii) all references to the “Issuing and Paying Agent” herein shall be deemed to refer to the Replacement Issuing and Paying Agent, and (iii) all references to the “Issuing and Paying Agent Agreement” herein shall be deemed to refer to the Replacement Issuing and Paying Agent Agreement.

(c) From and after the effective date of any Replacement, the Issuer shall not issue any Notes hereunder unless and until the Dealer shall have received: (i) a copy of the executed Replacement Issuing and Paying Agent Agreement, (ii) a copy of the executed Master Note authenticated by the Replacement Issuing and Paying Agent and registered in the name of DTC or its nominee, (iii) an amendment or supplement to the Private Placement Memorandum describing the Replacement Issuing and Paying Agent as the Issuing and Paying Agent for the Notes, and reflecting any other changes thereto necessary in light of the Replacement so that the Private Placement Memorandum, as amended or supplemented, satisfies the requirements of this Agreement, and (iv) a legal

opinion of counsel to the Issuer, addressed to the Dealer, satisfactory in form and substance reasonably satisfactory to the Dealer, as to (a) the due authorization, delivery, validity and enforceability of Notes issued pursuant to the Replacement Issuing and Paying Agent Agreement, and (b) such other matters as the Dealer may reasonably request.

4. Disclosure.

4.1 The Private Placement Memorandum and its contents (other than the Dealer Information) shall be the sole responsibility of the Issuer. The Private Placement Memorandum shall contain a statement expressly offering an opportunity for each prospective purchaser to ask questions of, and receive answers from, the Issuer concerning the offering of Notes and to obtain relevant additional information which the Issuer possesses or can acquire without unreasonable effort or expense.

4.2 The Issuer agrees to promptly furnish the Dealer the Company Information as it becomes available.

4.3 (a) The Issuer further agrees to notify the Dealer promptly upon the occurrence of any event relating to or affecting the Issuer that would cause the Company Information then in existence to include an untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements contained therein, in light of the circumstances under which they are made, not misleading.

(b) In the event that the Issuer gives the Dealer notice pursuant to Section 4.3 (a) and the Dealer notifies the Issuer that it then has Notes it is holding in inventory, the Issuer agrees promptly to, at its option, either (i) supplement or amend the Private Placement Memorandum so that the Private Placement Memorandum, as amended or supplemented, shall not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and the Issuer shall make such supplement or amendment available to the Dealer or (ii) purchase such Notes from the Dealer at a purchase price equal to the original issue price plus any accrued or accreted interest.

(c) In the event that (i) the Issuer gives the Dealer notice pursuant to Section 4.3 (a), (ii) the Dealer does not notify the Issuer that it is then holding Notes in inventory and (iii) the Issuer chooses not to promptly amend or supplement the Private Placement Memorandum in the manner described in clause (b) above, then all solicitations and sales of Notes shall be suspended until such time as the Issuer has so amended or supplemented the Private Placement Memorandum, and made such amendment or supplement available to the Dealer.

5. Indemnification and Contribution.

5.1 The Issuer will indemnify and hold harmless the Dealer, each individual, corporation, partnership, trust, association or other entity controlling the Dealer, any affiliate of the Dealer or any such controlling entity and their respective directors, officers, employees, partners, incorporators, shareholders, servants, trustees and agents (hereinafter the

“Indemnitees”) against any and all liabilities, penalties, suits, causes of action, losses, damages, claims, costs and expenses (including, without limitation, reasonable fees and disbursements of counsel) or judgments of whatever kind or nature (each a “Claim”), imposed upon, incurred by or asserted against the Indemnitees arising out of or based upon (i) any allegation that the Private Placement Memorandum, the Company Information or any information provided by the Issuer to the Dealer included (as of any relevant time) or includes an untrue statement of a material fact or omitted (as of any relevant time) or omits to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading or (ii) arising out of or based upon the breach by the Issuer of any agreement, covenant or representation made in or pursuant to this Agreement. This indemnification shall not apply to the extent that the Claim arises out of or is based upon Dealer Information.

5.2 Provisions relating to claims made for indemnification under this Section 5 are set forth on Exhibit B to this Agreement.

5.3 In order to provide for just and equitable contribution in circumstances in which the indemnification provided for in this Section 5 is held to be unavailable or insufficient to hold harmless the Indemnitees, although applicable in accordance with the terms of this Section 5, the Issuer shall contribute to the aggregate costs incurred by the Dealer in connection with any Claim in the proportion of the respective economic interests of the Issuer and the Dealer; provided, however, that such contribution by the Issuer shall be in an amount such that the aggregate costs incurred by the Dealer do not exceed the aggregate of the commissions and fees earned by the Dealer hereunder with respect to the issue or issues of Notes to which such Claim relates. The respective economic interests shall be calculated by reference to the aggregate proceeds to the Issuer of the Notes issued hereunder and the aggregate commissions and fees earned by the Dealer hereunder.

6. Definitions.

6.1 “Claim” shall have the meaning set forth in Section 5.1.

6.2 “Company Information” at any given time shall mean the Private Placement Memorandum together with, to the extent applicable, (i) the Issuer’s most recent report on Form 10-K filed with the SEC and each report on Form 10-Q or 8-K filed by the Issuer with the SEC since the most recent Form 10-K, (ii) the Issuer’s most recent annual audited financial statements and each interim financial statement or report prepared subsequent thereto, if not included in item (i) above, (iii) the Issuer’s and its affiliates’ other publicly available reports provided to their respective shareholders, (iv) any other information or disclosure prepared pursuant to Section 4.3 hereof and (v) any information prepared or approved by the Issuer for dissemination to investors or potential investors in the Notes.

6.3 “Current Issuing and Paying Agent” shall have the meaning set forth in Section 3.10(a).

6.4 “Dealer Information” shall mean material concerning the Dealer provided by the Dealer in writing expressly for inclusion in the Private Placement Memorandum.

6.5 “DTC” shall mean The Depository Trust Company.

6.6 “Exchange Act” shall mean the U.S. Securities Exchange Act of 1934, as amended.

6.7 “Indemnitee” shall have the meaning set forth in Section 5.l.

6.8 “Institutional Accredited Investor” shall mean an institutional investor that is an accredited investor within the meaning of Rule 501 under the Securities Act and that has such knowledge and experience in financial and business matters that it is capable of evaluating and bearing the economic risk of an investment in the Notes, including, but not limited to, a bank, as defined in Section 3 (a)(2) of the Securities Act, or a savings and loan association or other institution, as defined in Section 3 (a)(5)(A) of the Securities Act, whether acting in its individual or fiduciary capacity.

6.9 “Issuing and Paying Agent Agreement” shall mean the issuing and paying agent agreement described on the first page of this Agreement, , or any replacement thereof, as such agreement may be amended or supplemented from time to time.

6.10 “Issuing and Paying Agent” shall mean the party designated as such on the first page of this Agreement, or any successor thereto or replacement thereof, as issuing and paying agent under the Issuing and Paying Agent Agreement.

6.11 “Non-bank fiduciary or agent” shall mean a fiduciary or agent other than (a) a bank, as defined in Section 3 (a) (2) of the Securities Act, or (b) a savings and loan association, as defined in Section 3 (a) (5) (A) of the Securities Act.

6.12 “Private Placement Memorandum” shall mean the private placement memorandum prepared in accordance with Section 4 (including materials referred to therein or incorporated by reference therein) provided to purchasers and prospective purchasers of the Notes, and shall include amendments and supplements thereto which may be prepared from time to time in accordance with this Agreement (other than any amendment or supplement that has been completely superseded by a later amendment or supplement).

6.13 “Qualified Institutional Buyer” shall have the meaning assigned to that term in Rule 144A under the Securities Act.

6.14 Replacement” shall have the meaning set forth in Section 3.10(a).

6.15 “Replacement Issuing and Paying Agent” shall have the meaning set forth in Section 3.10(a).

6.18. “Replacement Issuing and Paying Agent Agreement” shall have the meaning set forth in Section 3.10(a).

6.19 “Rule 144A” shall mean Rule 144A under the Securities Act.

6.20 “SEC” shall mean the U.S. Securities and Exchange Commission.

6.21 “Securities Act” shall mean the U.S. Securities Act of 1933, as amended.

7. General

7.1 Unless otherwise expressly provided herein, all notices under this Agreement to parties hereto shall be in writing and shall be effective when received at the address of the respective party set forth in the Addendum to this Agreement.

7.2 This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to its conflict of laws provisions.

7.3 The Issuer agrees that any suit, action or proceeding brought by the Issuer against the Dealer in connection with or arising out of this Agreement or the Notes or the offer and sale of the Notes shall be brought solely in the United States federal courts located in the Borough of Manhattan or the courts of the State of New York located in the Borough of Manhattan. Each of the Dealer and the Issuer waives its right to trial by jury in any suit, action or proceeding with respect to this Agreement or the transactions contemplated hereby.

7.4 This Agreement may be terminated, at any time, by the Issuer, upon three business days’ prior notice to such effect to the Dealer, or by the Dealer upon three business days’ prior notice to such effect to the Issuer. Any such termination, however, shall not affect the obligations of the Issuer under Sections 3.7, 5 and 7.3 hereof or the respective representations, warranties, agreements, covenants, rights or responsibilities of the parties made or arising prior to the termination of this Agreement.

7.5 This Agreement is not assignable by either party hereto without the written consent of the other party; provided, however, that the Dealer may assign its rights and obligations under this Agreement to any affiliate of the Dealer.

7.6 This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

7.7 This Agreement is for the exclusive benefit of the parties hereto, and their respective permitted successors and assigns hereunder, and shall not be deemed to give any legal or equitable right, remedy or claim to any other person whatsoever.

7.8 This Agreement shall supercede in its entirety the Commercial Paper Dealer Agreement dated as of [Date of Dealer Agreement] between the Issuer and the Dealer (the “Prior Agreement”) and the issuance and sale of Notes by the Issuer through the Dealer on and after the date hereof shall be governed by the provisions of this Agreement and not the Prior Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date and year first above written.

ECOLAB INC., as Issuer			[DEALER NAME], as Dealer


By:			By:
Name: Ching-Meng Chew			Name:
Title: Vice President and Treasurer			Title:

Addendum

The following additional clauses shall apply to the Agreement and be deemed a part thereof.

1. The other dealers referred to in clause (b) of Section 1.2 of the Agreement are the following:

· Citigroup Global Markets, Inc.

· Credit Suisse Securities (USA) LLC

· Merrill Lynch, Pierce, Fenner & Smith Incorporated

· J.P. Morgan Securities LLC

· RBS Securities Inc.

· Wells Fargo Securities, LLC

2. The addresses of the respective parties for purposes of notices under Section 7.1 are as follows:

For the Issuer:

Address: 370 Wabasha Street North, St. Paul, Minnesota 55102

Attention: Ching-Meng Chew, Vice President and Treasurer

Telephone number: 651-250-2938

Fax number: 651-306-5392

For the Dealer:

Address:

Attention:

Telephone number:

Fax number:

Exhibit A

Form of Legend for Private Placement Memorandum and Notes

THE NOTES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY OTHER APPLICABLE SECURITIES LAW, AND OFFERS AND SALES THEREOF MAY BE MADE ONLY IN COMPLIANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS. BY ITS ACCEPTANCE OF A NOTE, THE PURCHASER WILL BE DEEMED TO REPRESENT THAT IT HAS BEEN AFFORDED AN OPPORTUNITY TO INVESTIGATE MATTERS RELATING TO THE COMPANY AND THE NOTES, THAT IT IS NOT ACQUIRING SUCH NOTE WITH A VIEW TO ANY DISTRIBUTION THEREOF AND THAT IT IS EITHER (A) AN INSTITUTIONAL INVESTOR THAT IS AN ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501 (a) UNDER THE ACT (AN “INSTITUTIONAL ACCREDITED INVESTOR”) AND THAT EITHER IS PURCHASING NOTES FOR ITS OWN ACCOUNT, IS A U.S. BANK (AS DEFINED IN SECTION 3 (a) (2) OF THE ACT) OR A SAVINGS AND LOAN ASSOCIATION OR OTHER INSTITUTION (AS DEFINED IN SECTION 3 (a) (5) (A) OF THE ACT) ACTING IN ITS INDIVIDUAL OR FIDUCIARY CAPACITY OR IS A FIDUCIARY OR AGENT (OTHER THAN A U.S. BANK OR SAVINGS AND LOAN ASSOCIATION OR OTHER SUCH INSTITUTION) PURCHASING NOTES FOR ONE OR MORE ACCOUNTS EACH OF WHICH IS SUCH AN INSTITUTIONAL ACCREDITED INVESTOR AND WITH RESPECT TO WHICH THE PURCHASER HAS SOLE INVESTMENT DISCRETION; OR (B) A QUALIFIED INSTITUTIONAL BUYER (“QIB”) WITHIN THE MEANING OF RULE 144A UNDER THE ACT WHICH IS ACQUIRING NOTES FOR ITS OWN ACCOUNT OR FOR ONE OR MORE ACCOUNTS, EACH OF WHICH IS A QIB AND WITH RESPECT TO EACH OF WHICH THE PURCHASER HAS SOLE INVESTMENT DISCRETION; AND THE PURCHASER ACKNOWLEDGES THAT IT IS AWARE THAT THE SELLER MAY RELY UPON THE EXEMPTION FROM THE REGISTRATION PROVISIONS OF SECTION 5 OF THE ACT PROVIDED BY RULE 144A. BY ITS ACCEPTANCE OF A NOTE, THE PURCHASER THEREOF SHALL ALSO BE DEEMED TO AGREE THAT ANY RESALE OR OTHER TRANSFER THEREOF WILL BE MADE ONLY (A) IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE ACT, EITHER (1) TO THE ISSUER OR TO [DEALER NAME] OR ANOTHER PERSON DESIGNATED BY THE COMPANY AS A DEALER FOR THE NOTES (COLLECTIVELY, THE “DEALERS”), NONE OF WHICH SHALL HAVE ANY OBLIGATION TO ACQUIRE SUCH NOTE, (2) THROUGH A DEALER TO AN INSTITUTIONAL ACCREDITED INVESTOR OR A QIB, OR (3) TO A QIB IN A TRANSACTION THAT MEETS THE REQUIREMENTS OF RULE 144A AND (B) IN MINIMUM AMOUNTS OF $250,000.

Exhibit B

Further Provisions Relating to Indemnification

(a) The Issuer agrees to reimburse each Indemnitee for all expenses (including reasonable fees and disbursements of internal and external counsel) as they are incurred by it in connection with investigating or defending any loss, claim, damage, liability or action in respect of which indemnification may be sought under Section 5 of the Agreement (whether or not it is a party to any such proceedings).

(b) Promptly after receipt by an Indemnitee of notice of the existence of a Claim, such Indemnitee will, if a claim in respect thereof is to be made against the Issuer, notify the Issuer in writing of the existence thereof; provided that (i) the omission so to notify the Issuer will not relieve the Issuer from any liability which it may have hereunder unless and except to the extent it did not otherwise learn of such Claim and such failure results in the forfeiture by the Issuer of substantial rights and defenses, and (ii) the omission so to notify the Issuer will not relieve it from liability which it may have to an Indemnitee otherwise than on account of this indemnity agreement. In case any such Claim is made against any Indemnitee and it notifies the Issuer of the existence thereof, the Issuer will be entitled to participate therein, and to the extent that it may elect by written notice delivered to the Indemnitee, to assume the defense thereof, with counsel reasonably satisfactory to such Indemnitee; provided that if the defendants in any such Claim include both the Indemnitee and the Issuer, and the Indemnitee shall have concluded that there may be legal defenses available to it which are different from or additional to those available to the Issuer, the Issuer shall not have the right to direct the defense of such Claim on behalf of such Indemnitee, and the Indemnitee shall have the right to select separate counsel to assert such legal defenses on behalf of such Indemnitee. Upon receipt of notice from the Issuer to such Indemnitee of the Issuer’s election so to assume the defense of such Claim and approval by the Indemnitee of counsel, the Issuer will not be liable to such Indemnitee for expenses incurred thereafter by the Indemnitee in connection with the defense thereof (other than reasonable costs of investigation) unless (i) the Indemnitee shall have employed separate counsel in connection with the assertion of legal defenses in accordance with the proviso to the next preceding sentence (it being understood, however, that the Issuer shall not be liable for the expenses of more than one separate counsel (in addition to any local counsel in the jurisdiction in which any Claim is brought), approved by the Dealer, representing the Indemnitee who is party to such Claim), (ii) the Issuer shall not have employed counsel reasonably satisfactory to the Indemnitee to represent the Indemnitee within a reasonable time after notice of existence of the Claim or (iii) the Issuer has authorized in writing the employment of counsel for the Indemnitee. The indemnity, reimbursement and contribution obligations of the Issuer hereunder shall be in addition to any other liability the Issuer may otherwise have to an Indemnitee and shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Issuer and any Indemnitee. The Issuer agrees that without the Dealer’s prior written consent, it will not settle, compromise or consent to the entry of any judgment in any Claim in respect of which indemnification may be sought under the indemnification provision of the Agreement (whether or not the Dealer or any other Indemnitee is an actual or potential party to such Claim), unless such settlement, compromise or consent includes an unconditional release of each Indemnitee from all liability arising out of such Claim.

Exhibit 10.1(b)

COMMERCIAL PAPER
ISSUING AND PAYING AGENT AGREEMENT
(Book-Entry and Obligations
Using DTC Facilities
and Physical Notes)

THIS AGREEMENT (“Agreement”) dated as of September 22, 2014 (“Effective Date”) is entered into by and between Ecolab Inc. (the “Issuer”) with offices at 370 Wabasha Street North, St. Paul, Minnesota 55102 and Deutsche Bank Trust Company Americas (the “Bank”) with offices at 60 Wall St, 16 th Floor, New York, NY 10005.

WHEREAS: The Issuer had entered into the Issuing and Paying Agent Agreement with JPMorgan Chase Bank, National Association (as successor to Banc One, National Association), dated July 10, 2000 (the “Prior IPA Agreement”);

WHEREAS: The Issuer has advised that the Prior IPA Agreement will be terminated effective September 22, 2014;

WHEREAS: The Bank has agreed to act as successor Paying Agent for any Notes issued pursuant to the Prior IPA Agreement, issued prior to the Effective Date hereof; and

WHEREAS: The Bank has agreed to act as Paying Agent in respect of Notes issued on and after the Effective Date.

Section 1. Appointment

The Issuer requests and authorizes the Bank to act as agent for the Issuer in connection with the issuance and payment of unsecured (a) book-entry obligations (each an “Obligation” and collectively the “Obligations”) as evidenced by Master Note Certificate(s) together with the Annex thereto, in the form appended hereto in Exhibit A (the “Note Certificate(s)”) and (b) bearer short term promissory notes of the Issuer (each of both (a) and (b), a “Note” and collectively the “Notes”). Unless specifically provided otherwise in the Instructions (as hereinafter defined), all Notes issued pursuant to this Agreement will be book-entry obligations evidenced by the Note Certificate. In addition, the Bank shall act as agent pursuant to the terms hereof for the Issuer in connection with any Notes issued pursuant to the Prior IPA Agreement and outstanding as of the Effective Date. The Bank agrees to act as such agent for the Issuer subject to the provisions of this Agreement commencing on the Effective Date shown above.

Insofar as the context requires, all references herein to an Issuer’s “Obligation” shall be deemed to include the Issuer’s Note, and all references herein to an Issuer’s “Obligations” or “Book-entry Obligations” shall be deemed to include the Issuer’s Notes.

Section 2. Certificate Agreement

The Issuer acknowledges that the Bank has previously entered into a certificate agreement (the “Certificate Agreement”) which copy is appended hereto as Exhibit E, with the Depository Trust Company (“DTC”) and the Issuer also acknowledges that the continuation in effect of the Certificate Agreement is a necessary prerequisite to the Bank’s providing services related to issuance of the Obligations. The Issuer understands and agrees that the Certificate Agreement shall supplement the provisions of this Agreement and that the Issuer is bound by the provisions of the Certificate Agreement.

Section 3. Letter of Representations; Resolutions; Authorized Officers

The Issuer will, prior to the Effective Date, deliver to the Bank an executed Letter of Representations (the “Representations”), a copy of which is appended hereto as Exhibit F. Further, the Issuer understands and agrees that such Representations when executed by the Issuer, the Bank and DTC shall supplement the provisions of this Agreement and that the Issuer, the Bank, and DTC shall be bound by the provisions of the Representations. The Bank and the Issuer agree to comply with the relevant portions of DTC’s Issuing and Paying Agent Manual, and the DTC Same Day Settlement System Rules (collectively the “DTC Rules”).

The Issuer has delivered to the Bank (a) a certified copy of the resolutions adopted by the Board of Directors of the Issuer concerning the issuance of Obligations by the Issuer (the “Resolutions”), which copy is appended hereto as Exhibit B, and (b) a certified original of the Issuer’s certificate of incumbency (the “Certificate of Incumbency”), containing the name, title, and true signature of those officers of the Issuer authorized by the Resolutions to take action with respect to the Obligations (the “Authorized Officers”), which certificate is appended hereto as Exhibit C. The Issuer agrees to provide the Bank with revised certified Resolutions and/or Certificates of Incumbency when and as required by changes in authorization of personnel.

Section 4. Authorized Persons

The Issuer authorizes the Bank to accept and to execute Instructions, as defined in and given pursuant to Section 6 hereof by any one of the employees and/or Agents (defined as sales agents or dealers authorized by a separate agreement between the Issuer and its sales agents or dealers) of the Issuer who are designated in a writing that is signed by the requisite number of Authorized Officers. Such designated employees or Agents shall be hereinafter collectively referred to as “Authorized Persons”. The initial written designation of Authorized Person(s) is appended hereto as Exhibit D. The Issuer agrees to provide the Bank with revised written designations in the form of Exhibit D when and as required by changes in authorization or personnel.

Section 5. Note Certificates

(A) Book entry Obligations :

The Issuer will, on or before the Effective Date, deliver to the Bank a Master Note Certificate, registered in the name of Cede & Co., a nominee of DTC. On or before the Effective Date, the Issuer will also deliver to the Bank a listing by CUSIP of the Notes issued pursuant to the Prior IPA Agreement maturing on or after the Effective Date, which will be attached as Schedule I hereto.

(B) Physical Notes and Signature Stamps:

For use as described in Section 7 hereof, the Issuer will, prior to the Effective Date, (a) deliver to the Bank a supply of the Issuer’s sequentially numbered, blank Notes bearing the manual or facsimile signatures of the requisite number of Authorized Officers and having spaces to show the face or principal amount, payee, date of issue, maturity date and amount of interest (if an interest bearing Note), and/or (b) authorize the Bank to use the Bank’s universal note stock, which has spaces to show the face or principal amount, payee, date of issue, maturity date, amount of interest (if an interest bearing Note) and signature(s) of the Authorized Officers. If the Issuer elects (b), or if the Notes described in (a) do not bear such signature(s) when delivered to the Bank, then the Issuer will deliver to the Bank for each signature required to be placed on the Notes two (2) stamps bearing the facsimile signature of an Authorized Officer.

Any Obligation (as evidenced by the Note Certificate or Note bearing the manual or facsimile signature of an Authorized Officer) shall, upon the Bank’s issuance of such Obligation on behalf of the Issuer, bind the Issuer notwithstanding that such Authorized Officer shall have died or shall have otherwise ceased to hold office on the date such Obligation is issued by the Bank. Furthermore, the Issuer agrees that the Bank shall have no duty or responsibility to determine the genuineness of the facsimile and/or manual signatures appearing on the Note Certificate(s), Notes or stamps.

Section 6. Instructions

The term “Instructions” shall mean a communication, purporting to be from an Authorized Officer or Authorized Person, via (a) a written notice including those transmitted through facsimile transmittal equipment; (b) a telephone call (with confirmation to follow in writing pursuant to this Section 6); (c) a transmission through the instruction communication service DTC’s Pre-Issuance Messaging Service (PIM); or (d) a transmission through the instruction communication service known as “Money Market Agent” or “MMA”, in each case received by the Bank or DTC prior to 2:00 p.m. New York time on the day on which the Instructions are to be operative, which shall be a day the Bank is open for business.

If the Bank, at its option, acts upon Instructions transmitted after 2:00 p.m. New York time on the day on which the Instructions are to be operative, the Issuer understands and agrees that (a) such Instructions shall be acted upon, on a best efforts basis, by the Bank pursuant to the custom and practice of the money market instruments market, and (b) the Bank makes no representations or warranties that the issuance and delivery of any Note or Obligation pursuant to Section 7 hereof shall be completed prior to the close of business on the issue date specified in such Instructions.

Any Instructions given by telephone shall be confirmed to the Bank in a writing purporting to be from an Authorized Officer or Authorized Person prior to 2:00 p.m. New York time on the day on which such Instructions are to be operative. In the absence of the Bank’s timely receipt of such written confirmation or in the event the Bank acts upon Instructions received after 2:00 p.m. New York time on the day on which the Instructions are to be operative, the Issuer understands and agrees that the Instructions given by telephone or received after the

aforementioned 2:00 p.m. New York time, as understood by the Bank, shall be the true and controlling Instructions for all purposes of this Agreement.

Notwithstanding anything to the contrary in this Agreement, the Issuer acknowledges and agrees that the Bank may act upon the Instructions without any duty to make any inquiry regarding the genuineness of such Instructions.

Section 7. Issuance

(A) Book Entry Obligations

The Bank’s sole duties in connection with the issuance of the Obligations when the Issuer delivers the Note Certificate(s) to the Bank in the form described in Section 5(A) herein, shall be as follows:

(i) to hold Note Certificates in safekeeping;

(ii) to assign to each Instruction received from the Issuer a CUSIP number as specified in and in accordance with the CUSIP number assignment received by the Bank from the Issuer;

(iii) to cause to deliver an Obligation on behalf of the Issuer upon receipt of Instructions from the Issuer, or their designated agent(s), as to the face or principal amount, net dollar amount, date of issue, maturity date, interest rate (if any), and amount of interest due at maturity (if an interest bearing Obligation), by way of data entry or data transfer to the DTC Same Day Funds Settlement System (“SDFS”), and to receive from SDFS a confirmation receipt that such delivery was effected; and

(iv) to wire the net proceeds of all deliveries of the Obligations pursuant to instructions provided by the Issuer under advice to the Issuer at the address specified in Section 16 hereof.

(B) Physical Notes:

The Bank’s sole duties in connection with the issuance of the Notes when the Issuer delivers a supply of the Issuer’s blank Notes to the Bank or uses the Bank’s universal note stock pursuant to Section 5(B) hereof shall be as follows:

(i) to hold the blank Notes in safekeeping, pending receipt of the Issuer’s Instructions;

(ii) to complete each Note pursuant to the Instructions as to the face or principal amount, net dollar amount, payee (which shall be “BEARER” unless otherwise specified in the Instructions), date of issue, maturity date, interest rate (if any) and amount of interest due at maturity (if an interest bearing Note);

(iii) to cause a duly authorized officer or duly authorized employee of the Bank to countersign each Note for purposes of authentication of the Note only;

(iv) to deliver the Notes in accordance with the Instructions (i) by hand, against receipt for payment, (ii) by United States Post Office registered mail, addressed as provided in the Instructions or (iii) as otherwise provided in the Instructions; and

(v) to wire the net proceeds of all deliveries of Notes pursuant to instructions provided by the Issuer under advice to the Issuer at the address specified in Section 16 hereof.

The Bank’s additional duties in connection with the issuance of the Notes when the Issuer delivers facsimile signature stamps to the Bank pursuant to Section 5(B) hereof shall be as follows:

(i) to hold the facsimile signature stamps delivered pursuant to Section 5(B) hereof in safekeeping pending receipt of the Instructions; and

(ii) to apply the facsimile signature stamp(s) to the Notes pursuant to the Instructions.

The Issuer acknowledges that pursuant to the custom and practice of the money market instruments market, the delivery or mailing of an Obligation against payment of the net amount of the Obligation (i.e., the principal amount of the Obligation less the discount specified in the Instructions or the principal amount of an interest bearing Obligation) and the actual receipt of payment therefor are not simultaneous transactions.

Therefore, whenever the Instructions direct the Bank to deliver any Obligation against payment, the Bank is authorized to and will deliver such Obligation to the party specified in the Instructions and hold as receipt a confirmation copy generated by SDFS (in the case of Book Entry transactions), or (a) the receipt of the party specified in the Instructions or (b) the United States Post Office’s registered mail (both (a) and (b) in the case of physical Notes) in lieu of immediate payment by the purchaser of the Obligation (the “Purchaser”). The Issuer also acknowledges that pursuant to the custom and practice of the money market

instruments market, the Purchaser is obligated to settle in immediately available funds at or before the close of business on the issue date specified on the Obligation. The Issuer understands and agrees that whenever the Bank delivers an Obligation against receipt of funds as set forth above, the Issuer and not the Bank shall bear the risk of the Purchaser’s failure to remit the net amount of the Obligation purchased, and of the loss or theft of Notes after such Notes are placed in the United States mail.

The Bank shall have no duty or responsibility to make any transfer of the proceeds of the sale of the Issuer’s Obligations, or to advance any monies or effect any credit with respect to such proceeds or transfers unless and until (i) the Bank has actually received the proceeds of the sale of the Obligations, and (ii) such receipt of the proceeds is not subject to reversal or cancellation. If the Bank, at its sole option, effects any such transfer that results in an overdraft in any account of the Issuer, the amount of such overdraft shall be considered as a loan to the Issuer, and the Issuer agrees to pay the Bank on demand the amount of such loan together with interest thereon at the rate of the Federal Funds Daily Rate plus 100 basis points.

Section 8. Payment

Bank’s sole duties in connection with payment of the Obligations shall be, upon presentment at maturity of an issued Obligation, to pay the principal amount of a discounted Obligation or principal plus interest of an interest-at-maturity Obligation to the party entitled thereto, and to debit the Issuer’s account with the Bank (Account No. S99219.1) for such amount under advice to the Issuer at the address specified in Section 16 hereof.

The Bank shall have no obligation to pay, at maturity, the amount referred to in this Section 8 unless sufficient funds have been received by the Bank in collected funds. All interest and/or maturity payments when due, shall be made to the Issuer’s account with the Bank (Account No. S99219.1) in immediately available funds by 2:00 p.m. New York time on the payment date, to ensure obligations under this Agreement have been met.

In the event that the funds to be transmitted in payment of the Obligations are not received by 2:45 p.m. (New York time) on the maturity date, the Bank reserves the right to initiate a “ Refusal to Pay ” in accordance with the procedures of DTC.

Section 9. United States Dollars

The Issuer agrees that the Obligations issued or presented hereunder shall be denominated in United States dollars. The Issuer further agrees that payment of any and all amounts due pursuant to the provisions of this Agreement shall be made solely in United States dollars.

Section 10. MMA System

The Issuer hereby acknowledges that the time-sharing services utilized in connection with MMA are furnished by SS&C Technologies, Inc. (“SS&C”). SS&C has granted permission to the Bank to allow the Bank’s customers to use such time-sharing services and, in consideration for such permission, it is understood and agreed that if the Issuer or another party or person elects to use MMA, such time-sharing services will be supplied “as is” without warranty by SS&C or the Bank. The Issuer hereby waives any claims it may have against SS&C or the Bank arising out of or in connection with the use of such time-sharing services and acknowledges that MMA is proprietary and confidential property disclosed in confidence and only on the terms and conditions and for the purposes set forth in this Agreement.

By this Agreement, neither the Issuer nor any other person acquires title, ownership or sublicensing rights whatsoever in MMA or in any trade secret, trademark, copyright or patent of the Bank or SS&C, now or to become applicable to MMA. Neither the Issuer nor any other person may transfer, sub-license, assign, rent, lease, convey, modify, translate, convert to a programming language, decompile, disassemble, recirculate, republish or redistribute MMA for any purpose without the prior written consent of the Bank.

In the event (a) any action is taken or threatened which may result in a disclosure or transfer of MMA or any part thereof, other than as authorized by this Agreement, or (b) the use of any trademark, trade name, service mark, service name, copyright or patent of the Bank or SS&C by the Bank amounts to unfair competition, or otherwise constitutes a possible violation of any kind, then the Bank or SS&C shall each have the right to take any and all action deemed necessary to protect their rights in MMA, and to avoid the substantial and irreparable damage which would result from such disclosure, transfer or use, including the immediate termination of the Issuer’s or any other person’s right to use MMA.

To permit the use of MMA to transmit information and instructions or obtain reports with respect to the Obligations, the Bank will supply the Issuer with an identification number and initial passwords. From time to time thereafter, the Issuer will keep all information relating

to its identification number and passwords strictly confidential and will be responsible for the maintenance of adequate security over its customer identification number and passwords. For security purposes, the Issuer should change its passwords frequently (at least once a year).

Information and instructions transmitted over MMA and received by the Bank and accompanied by the Issuer’s identification number and the passwords, shall be deemed conclusive evidence that such instructions and information are correct and complete and that the issuance of the Obligations directed thereby has been duly authorized by the Issuer.

Section 11. Representations and Warranties of Issuer

The Issuer hereby represents and warrants as follows:

(a) This Agreement and the Obligations have been duly authorized and this Agreement when executed and the Obligations when issued in accordance with Instructions, will be valid and binding obligations of the Issuer, enforceable against the Issuer in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws of general applicability relating to or affecting creditors’ rights and to general equity principles (regardless of whether such enforceability is considered in a proceeding at equity or in law);

(b) This Agreement and the consummation of the transactions herein contemplated will not (i) conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument for money borrowed to which the Issuer is a party or by which the Issuer is bound or to which any of the property or assets of the Issuer is subject, or (ii) result in any violation of (x) the provisions of the Certificate of Incorporation or the By-Laws of the Issuer or (y) to the best knowledge of the Issuer, any statute or any order, rule or regulation of any court or government agency or body having jurisdiction over the Issuer or any of its properties, in any manner which, in the case of clauses (i) and (ii) (y), would have a material adverse effect on the business of the Issuer and its subsidiaries taken as a whole;

(c) No consent, approval, authorization, order, registration or qualification of or with any court or governmental agency or body having jurisdiction over the Issuer or any of its properties is required for the issue and sale of the Obligations, except such as have been, or will have been obtained prior to the issue and sale of the Obligations,

and such consents, approvals, authorizations, registrations or qualifications as may be required under “blue sky” or state securities laws in connection with the issue and sale of the Obligations by the Issuer; and

(d) Each Obligation issued under this Agreement will be exempt from registration under the Securities Act of 1933, as amended. Each Instruction by the Issuer to issue Obligations under this Agreement shall be deemed a representation and warranty by the Issuer as of the date thereof that the representations and warranties herein are true and correct as if made on and as of such date.

Section 12. Fees and Expenses

(A) The Issuer agrees to pay such compensation for the Bank’s issuing and paying agent services pursuant to this Agreement as agreed to in writing between the Bank and the Issuer, as amended from time to time.

(B) The Issuer shall promptly reimburse the Bank upon its request for all reasonable expenses and disbursements incurred by the Bank in connection with its performance under this Agreement (including without limitation the fees and expenses of its agents and counsel).

Section 13. Indemnification

The Issuer agrees that the Bank shall not be liable for any losses, damages, liabilities or costs suffered or incurred by the Issuer as a result of (a) the Bank’s having executed Instructions, (b) the Bank’s improperly executing or failing to execute any Instructions because of unclear Instructions, failure of communications media or systems or any other circumstances beyond the Bank’s control, (c) the actions or inactions of DTC, any Agent or any broker, dealer, consignee or agent not selected by the Bank, or (d) any other acts or omissions of the Bank (or of any of its agents or correspondents) relating to this Agreement or the transactions or activities contemplated hereby except to the extent, if any, that such other acts or omissions constitute gross negligence, bad faith or willful misconduct by the Bank. The Issuer, in the absence of gross negligence, bad faith or willful misconduct by the Bank, agrees to indemnify the Bank and its directors, officers, employees and agents and hold the same harmless from and against (a) any and all actions, claims (groundless or otherwise), suits, losses, fines and penalties arising out of, in connection with or resulting from the Bank’s having executed any Instructions or otherwise having performed any of its obligations or exercised any of its rights hereunder and (b) any damages, costs, expenses (including reasonable legal fees and disbursements), losses or liabilities relating to any such

actions, claims, suits, losses fines or penalties or to any breach of this Agreement by the Issuer. This Section 13, Indemnification, shall survive any termination of this Agreement and the issuance and payment of any Note(s).

Section 14. Bank’s Rights and Duties

(A) The Bank shall act solely as the agent of the Issuer and will not thereby assume any obligations toward or relationship of agency or trust for or with any of the owners of the Obligations other than as may be explicitly set forth herein.

(B) The Bank shall not be liable for any action taken, suffered, or omitted or for any error of judgment made by the Bank in the performance of the Bank’s duties under this Agreement, except for its own willful misconduct, bad faith or gross negligence, and the Bank shall not be liable for any action or inaction of any other party (or agent thereof) to this Agreement or any related document.

(C) The Bank shall incur no liability in acting upon telephonic, facsimile or other electronic instructions which the Bank believes in good faith to have been given by an Authorized Person, including but not limited to Instructions received in connection with the issuance of Obligations. In addition, in the event that the Issuer or an Agent currently or in the future utilizes a trading system that produces issuance instructions that do not include signatures or initials, the Bank may conclusively rely upon such instructions absent such signatures or initials.

(D) The Bank may conclusively rely and shall be fully protected in acting or refraining from acting upon any communication authorized by this Agreement and upon any written instruction, notice, confirmation, request, direction, consent, report, certificate or other instrument, paper or document authorized by this agreement and believed by the Bank to be genuine, and the Bank need not investigate any statement, representation or warranty or any fact or matter stated in any such document and may conclusively rely as to the truth of the statements and the correctness of the opinions expressed therein.

(E) The Bank may perform its duties and exercise its rights under this Agreement either directly or by or through agents, custodians, nominees or attorneys and shall not be liable for the misconduct or negligence or for the supervision of such agents, custodians, nominees or attorneys appointed with due care.

(F) The Bank undertakes to perform such duties and only such duties as are set forth in this Agreement and no implied covenants shall be read into this Agreement against the Bank.

(G) The Bank, in its individual or any other capacity, may become the owner or pledgee of an Obligation with the same rights it would have if it were not acting hereunder.

(H) Whenever in the administration of this Agreement, the Bank shall deem it necessary that a matter be proved or established prior to acting, suffering or omitting any action hereunder, the Bank may request and shall be entitled to receive a certificate of an Authorized Person and such matter shall be deemed to be conclusively proved and established by such certificate and such certificate shall be full warranty to the Bank for any action taken, suffered or omitted under the provisions of this Agreement in accordance herewith, unless another method is prescribed herein.

(I) The Bank may consult with counsel or other professional advisors, and any advice or written opinion of such counsel or other professional advisors shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by the Bank, in the absence of bad faith, willful misconduct or gross negligence on its part, in reliance on such advice or opinion.

(J) Any corporation or entity into which the Bank may be merged or with which the Bank may be consolidated, or any corporation or entity resulting from any merger or consolidation to which the Bank shall be a party, or any corporation or entity succeeding to its corporate trust business, shall succeed to all of its rights, obligations and immunities hereunder without the execution or filing of any document or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding.

(K) The Bank shall not be required to advance, expend or risk its own funds or otherwise incur or become exposed to liability (financial or otherwise) in the performance of its duties hereunder. Further, the Bank shall not be under any obligation to take any action hereunder which may tend to involve it in any expense or liability, the payment of which within a reasonable time is not in its reasonable opinion assured to it.

(L) In no event shall the Bank be liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever even if the Bank has been advised of the likelihood of such loss or damage and regardless of the form of action.

(M) Except as ordered by a court of competent jurisdiction or as required by law or applicable regulations or as instructed by the Issuer, the Bank shall deem and treat the registered owner of each Obligation of the type specified in clause (a) of Section 1 and the bearer of each Obligation of the type specified in clause (b) of Section 1 as the absolute owner thereof (whether or not such

Obligation shall be overdue and notwithstanding any notice of ownership or writing thereon) for the purpose of making payments and for all other purposes.

(N) On behalf of and at the written request and expense of the Issuer, the Bank shall cause to be delivered to DTC all notices required to be given by the Issuer to the holders of Obligations provided that the Issuer shall provide signed copies of such notices to the Bank not later than two (2) Business Days (or such longer period as the Bank shall reasonably require) prior to the date of delivery.

(O) The Bank shall not have any duty or responsibility in respect of (i) any recording, filing, or depositing of this Agreement or any other agreement or instrument, monitoring or filing any financing statement or continuation statement evidencing a security interest, the maintenance of any such recording, filing or depositing or to any re-recording, re-filing or re-depositing of any thereof, or otherwise monitoring the perfection, continuation of perfection or the sufficiency or validity of any security interest in or related to any collateral, (ii) the acquisition or maintenance of any insurance or (iii) the payment or discharge of any tax, assessment, or other governmental charge or any lien or encumbrance of any kind owing with respect to, assessed or levied against, any part of any collateral.

(P) The Bank makes no representation as to and shall have no responsibility for the correctness of any statement of another party contained in, or the validity or sufficiency of, this Agreement or any documents or instruments referred to in this Agreement or the sufficiency or effectiveness of any security afforded this Agreement or as to or for the validity or collectability of any obligation contemplated by this Agreement.

(Q) The Bank shall not be liable for failing to comply with its obligations under this Agreement or any related document in so far as the performance of such obligations is dependent upon the timely receipt of instructions and/or other information from any party or person which are not received or not received by the time required.

(R) Except as otherwise provided herein, nothing herein shall be construed to impose an obligation on the part of the Bank to recalculate, evaluate, verify or independently determine the accuracy of any report, certificate or other information received from any party or person.

(S) In no event shall the Bank be liable for any failure or delay in the performance of its obligations under this Agreement or any related documents because of circumstances beyond the Bank’s control, including, but not limited to, a failure, termination, or suspension of, or limitations or restrictions in respect of post-payable adjustments through, a clearing house,

securities depositary, settlement system or central payment system in any applicable part of the world or acts of God, flood, war (whether declared or undeclared), civil or military disturbances or hostilities, nuclear or natural catastrophes, political unrest, explosion, severe weather or accident, earthquake, terrorism, fire, riot, labor disturbances, strikes or work stoppages for any reason, embargo, government action, including any laws, ordinances, regulations or the like (whether domestic, federal, state, county or municipal or foreign) which delay, restrict or prohibit the providing of the services contemplated by this Agreement or any related documents, or the unavailability of communications or computer facilities, the failure of equipment or interruption of communications or computer facilities, or the unavailability of the Federal Reserve Bank wire or telex or other wire or communication facility, or any other causes beyond the Bank’s control whether or not of the same class or kind as specified in this Section 14(S); it being understood that the Bank shall use commercially reasonable efforts to resume performance of its obligations hereunder as soon as practicable under the circumstances.

(T) In order to comply with laws, rules, regulations and executive orders in effect from time to time applicable to banking institutions, including those relating to the funding of terrorist activities and money laundering (“Applicable Law” for example section 326 of the USA PATRIOT Act of the United States), the Bank is required to obtain, verify and record certain information relating to individuals and entities which maintain a business relationship with the Bank. Accordingly, the Issuer agrees to provide to the Bank upon its reasonable request from time to time such identifying information and documentation as may be available for the Issuer in order to enable the Bank to comply with Applicable Law.

Section 15. Termination

Either the Bank or the Issuer may terminate this Agreement at any time by not less than ten (10) days’ prior written notice to the other. No such termination shall affect the rights and obligations of the Issuer and the Bank which have accrued under this Agreement prior to termination.

Section 16. Addresses

Instructions hereunder shall be (a) mailed, (b) telephoned, (c) transmitted by facsimile device, to the Bank at the address, telephone number, and/or facsimile number specified below and shall be deemed delivered upon actual receipt by the Bank’s money market instruments operations at the address, telephone number, and/or facsimile number specified below.

Deutsche Bank Trust Company Americas

60 Wall Street, 16th Floor

MS NYC 60-1605

New York, New York 10005

Attention:	Corporate Trust and Agency - Commercial Paper Department
Facsimile No.:	(212) 553-2463
E-mail:	abcp.admin@db.com
Attention:	James Bowden
Tel. No.:	(212) 250-2488
E-mail :	james.bowden@db.com

All notices, requests, demands and other communications hereunder (excluding Instructions) shall be in writing and shall be deemed to have been duly given (a) upon delivery by hand (against receipt), or (b) by United States Post Office registered mail (against receipt) or by regular mail (upon receipt) to the party and at the address set forth below or at such other address as either party may designate by written notice:

(a) ISSUER :

Ecolab Inc.

370 Wabasha Street North

St. Paul, Minnesota 55102

Attention: Treasurer

Tel. No.: (651) 250-2938

With a copy to:

Ecolab Inc.

370 Wabasha Street North

St. Paul, Minnesota 55102

Attention: General Counsel

(b) BANK :

Deutsche Bank Trust Company Americas

60 Wall Street, 16th Floor

MS NYC 60-1605

New York, New York 10005

Attention:	Corporate Trust and Agency - Commercial Paper Department
Facsimile No.:	(212) 553-2463
E-mail:	abcp.admin@db.com

Attention:	James Bowden
Tel. No.:	(212) 250-2488
E-mail :	james.bowden@db.com

Section 17. Miscellaneous

(A) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND AS APPLICABLE, OPERATING CIRCULARS OF THE FEDERAL RESERVE BANK, FEDERAL LAWS AND REGULATIONS AS AMENDED, NEW YORK CLEARING HOUSE RULES, THE DTC RULES, AND GENERAL COMMERCIAL BANK PRACTICES APPLICABLE TO COMMERCIAL PAPER AND CERTIFICATE OF DEPOSIT ISSUANCE AND PAYMENT, FUNDS TRANSFER AND RELATED ACTIVITIES.

(B) SUBMISSION TO JURISDICTION. EACH OF THE PARTIES HERETO IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY FEDERAL OR STATE COURTS SITTING IN THE BOROUGH OF MANHATTAN IN RESPECT OF ANY ACTION OR PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH PROCEEDINGS IN ANY SUCH COURT AND ANY CLAIM THAT ANY PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

(C) WAIVER OF JURY TRIAL . EACH OF THE PARTIES HERETO HEREBY WAIVES THE RIGHT IT MAY HAVE TO A TRIAL BY JURY ON ANY CLAIM, COUNTERCLAIM, SETOFF, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT, OR (B) IN

ANY WAY IN CONNECTION WITH OR PERTAINING TO OR RELATED TO OR INCIDENTAL TO ANY DEALINGS OF THE PARTIES WITH RESPECT TO THIS AGREEMENT OR IN CONNECTION WITH THIS AGREEMENT OR THE EXERCISE OF ANY PARTY’S RIGHTS AND REMEDIES UNDER THIS AGREEMENT OR OTHERWISE, OR THE CONDUCT OR THE RELATIONSHIP OF THE PARTIES HERETO, IN ALL OF THE FOREGOING CASES WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER IN CONTRACT, TORT OR OTHERWISE.

(D) Assignment; Amendment . Neither this Agreement nor any right or obligation created hereunder may be transferred, assigned, pledged or hypothecated by Issuer, other than by operation of law or with the written consent of the Bank. This Agreement may not be modified, or amended or supplemented except by a writing or writings duly executed by the duly authorized representatives of the Issuer and the Bank. The Bank may, but shall not be obligated to, enter into any such amendment which adversely affects the Bank’s own rights, duties, immunities or indemnities under this Agreement or any document contemplated hereby to which the Bank is a party. This Agreement shall inure to the benefit of and shall be binding upon the parties hereto and their respective successors and permitted assigns.

(E) This Agreement contains the entire understanding and agreement between the parties with respect to the subject matter hereof. All prior agreements, understandings, representations, statements, promises, inducements, negotiations and undertakings and all existing contracts previously executed between parties with respect to said subject matter are superseded hereby.

(F) With respect to all references herein to nouns, insofar as the context requires, singular form shall be deemed to include the plural, and the plural form shall be deemed to include the singular.

(G) Accounts . The various accounts referenced herein shall be segregated non-interest bearing trust accounts.

(H) Counterparts . This Agreement may be executed by each of the parties hereto in any number of counterparts, each of which counterpart, when so executed and delivered, shall be deemed to be an original and all such counterparts shall together constitute one and the same agreement. Delivery of a counterpart hereof by facsimile transmission or by e-mail transmission of an Adobe portable document format file (also known as a “PDF” file) shall be effective as delivery of a manually executed counterpart hereof.

(I) Severability . If any one or more of the covenants, agreements, provisions or terms of this Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement.

(J) Headings . Section and subsection headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect.

[Signature Pages Follow]

Agreed to and Accepted by:

ECOLAB INC.,

as Issuer


/s/Ching-Meng Chew
Authorized Officer’s Signature
Name:		Ching-Meng Chew
Title:		Vice President and Treasurer
Date:		September 17, 2014


DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Bank


/s/Rajesh Rampersaud			/s/Michelle Lee
Authorized Officer’s Signature			Authorized Officer’s Signature
Name:	Rajesh Rampersaud		Name:	Michelle Lee
Title:	Assistant Vice President		Title:	Vice President
Date:	9/17/2014		Date:	9/17/14

List of Exhibits

Exhibit A DTC Master Note

Exhibit B Certified Board Resolutions

Exhibit C Certificate of Incumbency

Exhibit D Authorized Persons

Exhibit E DTC Certificate Agreement

Exhibit F DTC Letter of Representations

SCHEDULE I Outstanding Notes

Exhibit 10.1(c)

CCPMN March 2014 The Depository Trust Company A subsidiary of The Depository Trust & Clearing Corporation CORPORATE COMMERCIAL PAPER – MASTER NOTE (Date of Issuance) (“Issuer”), for value received, hereby promises to pay to Cede & Co., as nominee of The Depository Trust Company, or to registered assigns: (i) the principal amount, together with unpaid accrued interest thereon, if any, on the maturity date of each obligation identified on the records of Issuer (the “Underlying Records”) as being evidenced by this Master Note, which Underlying Records are maintained by (“Paying Agent”); (ii) interest on the principal amount of each such obligation that is payable in installments, if any, on the due date of each installment, as specified on the Underlying Records; and (iii) the principal amount of each such obligation that is payable in installments, if any, on the due date of each installment, as specified on the Underlying Records. Interest shall be calculated at the rate and according to the calculation convention specified on the Underlying Records. Payments shall be made by wire transfer to the registered owner from Paying Agent without the necessity of presentation and surrender of this Master Note. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS MASTER NOTE SET FORTH ON THE REVERSE HEREOF. This Master Note is a valid and binding obligation of Issuer. Not Valid Unless Countersigned for Authentication by Paying Agent. (Paying Agent) (Issuer) By:/s/ Rajesh Rampersaud By: /s/ Ching-Meng Chew (Authorized Countersignature) (Authorized Signature) (Guarantor) By: (Authorized Signature) September 22, 2014 Ecolab Inc. Deutsche Bank Trust Company Americas #1503 Deutsche Bank Trust Company Americas #1503 Ecolab Inc.

CCPMN March 2014 (Reverse Side of Note) At the request of the registered owner, Issuer shall promptly issue and deliver one or more separate note certificates evidencing each obligation evidenced by this Master Note. As of the date any such note certificate or certificates are issued, the obligations which are evidenced thereby shall no longer be evidenced by this Master Note. FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto (Name, Address, and Taxpayer Identification Number of Assignee) the Master Note and all rights thereunder, hereby irrevocably constituting and appointing _____________________________________________, attorney to transfer said Master Note on the books of Issuer with full power of substitution in the premises. Dated: __________________ (Signature) Signature(s) Guaranteed: Notice: The signature on this assignment must correspond with the name as written upon the face of this Master Note, in every particular, without alteration or enlargement or any change whatsoever. Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to Issuer or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.

Ecolab Inc.

Annex to Corporate Commercial Paper-Master Note dated September 22, 2014

Statement of Terms for Interest-Bearing Short-Term Notes of Ecolab Inc.

THE PROVISIONS SET FORTH BELOW ARE QUALIFIED TO THE EXTENT APPLICABLE BY THE TRANSACTION SPECIFIC PRICING SUPPLEMENT OR TERM SHEET (THE “SUPPLEMENT”) (IF ANY) SENT TO EACH PURCHASER AT THE TIME OF THE TRANSACTION.

1. General. (a) The obligations of the Issuer to which these terms apply (each a “Note”) are represented by one or more Master Notes (each, a “Master Note”) issued in the name of (or of a nominee for) The Depository Trust Company (“DTC”), which Master Note includes the terms and provisions for the Issuer’s Interest-Bearing Commercial Paper Notes that are set forth in this Statement of Terms, since this Statement of Terms constitutes an integral part of the Underlying Records as defined and referred to in the Master Note.

(b) “Business Day” means any day other than a Saturday or Sunday that is neither a legal holiday nor a day on which banking institutions are authorized or required by law, executive order or regulation to be closed in New York City and, with respect to LIBOR Notes (as defined below) is also a London Business Day. “London Business Day” means, a day, other than a Saturday or Sunday, on which dealings in deposits in U.S. dollars are transacted in the London interbank market.

2. Interest. (a) Each Note will bear interest at a fixed rate (a “Fixed Rate Note”) or at a floating rate (a “Floating Rate Note”).

(b) The Supplement sent to each holder of such Note will describe the following terms: (i) whether such Note is a Fixed Rate Note or a Floating Rate Note and whether such Note is an Original Issue Discount Note (as defined below); (ii) the date on which such Note will be issued (the “Issue Date”); (iii) the Stated Maturity Date (as defined below); (iv) if such Note is a Fixed Rate Note, the rate per annum at which such Note will bear interest, if any, and the Interest Payment Dates; (v) if such Note is a Floating Rate Note, the Base Rate, the Index Maturity, the Interest Reset Dates, the Interest Payment Dates and the Spread and/or Spread Multiplier, if any (all as defined below), and any other terms relating to the particular method of calculating the interest rate for such Note; and (vi) any other terms applicable specifically to such Note. “Original Issue Discount Note” means a Note which has a stated redemption price at the Stated Maturity Date that exceeds its Issue Price by more than a specified de minimis amount and which the Supplement indicates will be an “Original Issue Discount Note”.

(c) Each Fixed Rate Note will bear interest from its Issue Date at the rate per annum specified in the Supplement until the principal amount thereof is paid or made available for payment. Interest on each Fixed Rate Note will be payable on the dates specified in the Supplement (each an “Interest Payment Date” for a Fixed Rate Note) and on the Maturity Date (as defined below). Interest on Fixed Rate Notes will be computed on the basis of a 360-day year of twelve 30-day months.

If any Interest Payment Date or the Maturity Date of a Fixed Rate Note falls on a day that is not a Business Day, the required payment of principal, premium, if any, and/or interest will be payable on the next succeeding Business Day, and no additional interest will accrue in respect of the payment made on that next succeeding Business Day.

(d) The interest rate on each Floating Rate Note for each Interest Reset Period (as defined below) will be determined by reference to an interest rate basis (a “Base Rate”) plus or minus a number of basis points (one basis point equals one-hundredth of a percentage point) (the “Spread”), if any, and/or multiplied by a certain percentage (the “Spread Multiplier”), if any, until the principal thereof is paid or made available for payment. The Supplement will designate which of the following Base Rates is applicable to the related Floating Rate Note: (a) the CD Rate (a “CD Rate Note”), (b) the Commercial Paper Rate (a “Commercial Paper Rate Note”), (c) the Federal Funds Rate (a “Federal Funds Rate Note”), (d) LIBOR (a “LIBOR Note”), (e) the Prime Rate (a “Prime Rate Note”), (f) the Treasury Rate (a “Treasury Rate Note”) or (g) such other Base Rate as may be specified in such Supplement.

The rate of interest on each Floating Rate Note will be reset daily, weekly, monthly, quarterly or semi-annually (the “Interest Reset Period”). The date or dates on which interest will be reset (each an “Interest Reset Date”) will be, unless otherwise specified in the Supplement, in the case of Floating Rate Notes which reset daily, each Business Day, in the case of Floating Rate Notes (other than Treasury Rate Notes) that reset weekly, the Wednesday of each week; in the case of Treasury Rate Notes that reset weekly, the Tuesday of each week; in the case of Floating Rate Notes that reset monthly, the third Wednesday of each month; in the case of Floating Rate Notes that reset quarterly, the third Wednesday of March, June, September and December; and in the case of Floating Rate Notes that reset semiannually, the third Wednesday of the two months specified in the Supplement. If any Interest Reset Date for any Floating Rate Note is not a Business Day, such Interest Reset Date will be postponed to the next day that is a Business Day, except that in the case of a LIBOR Note, if such Business Day is in the next succeeding calendar month, such Interest Reset Date shall be the immediately preceding Business Day. Interest on each Floating Rate Note will be payable monthly, quarterly or semiannually (the “Interest Payment Period”) and on the Maturity Date. Unless otherwise specified in the Supplement, and except as provided below, the date or dates on which interest will be payable (each an “Interest Payment Date” for a Floating Rate Note) will be, in the case of Floating Rate Notes with a monthly Interest Payment Period, on the third Wednesday of each month; in the case of Floating Rate Notes with a quarterly Interest Payment Period, on the third Wednesday of March, June, September and December; and in the case of Floating Rate Notes with a semiannual Interest Payment Period, on the third Wednesday of the two months specified in the Supplement. In addition, the Maturity Date will also be an Interest Payment Date.

If any Interest Payment Date for any Floating Rate Note (other than an Interest Payment Date occurring on the Maturity Date) would otherwise be a day that is not a Business Day, such Interest Payment Date shall be postponed to the next day that is a Business Day, except that in the case of a LIBOR Note, if such Business Day is in the next succeeding calendar month, such Interest Payment Date shall be the immediately preceding Business Day. If the Maturity Date of a Floating Rate Note falls on a day that

is not a Business Day, the payment of principal and interest will be made on the next succeeding Business Day, and no interest on such payment shall accrue for the period from and after such maturity.

Interest payments on each Interest Payment Date for Floating Rate Notes will include accrued interest from and including the Issue Date or from and including the last date in respect of which interest has been paid, as the case may be, to, but excluding, such Interest Payment Date. On the Maturity Date, the interest payable on a Floating Rate Note will include interest accrued to, but excluding, the Maturity Date. Accrued interest will be calculated by multiplying the principal amount of a Floating Rate Note by an accrued interest factor. This accrued interest factor will be computed by adding the interest factors calculated for each day in the period for which accrued interest is being calculated. The interest factor (expressed as a decimal) for each such day will be computed by dividing the interest rate applicable to such day by 360, in the case where the Base Rate is the CD Rate, Commercial Paper Rate, Federal Funds Rate, LIBOR or Prime Rate, or by the actual number of days in the year, in the case where the Base Rate is the Treasury Rate. The interest rate in effect on each day will be (i) if such day is an Interest Reset Date, the interest rate with respect to the Interest Determination Date (as defined below) pertaining to such Interest Reset Date, or (ii) if such day is not an Interest Reset Date, the interest rate with respect to the Interest Determination Date pertaining to the next preceding Interest Reset Date, subject in either case to any adjustment by a Spread and/or a Spread Multiplier.

The “Interest Determination Date” where the Base Rate is the CD Rate or the Commercial Paper Rate will be the second Business Day next preceding an Interest Reset Date. The Interest Determination Date where the Base Rate is the Federal Funds Rate or the Prime Rate will be the Business Day next preceding an Interest Reset Date. The Interest Determination Date where the Base Rate is LIBOR will be the second London Business Day next preceding an Interest Reset Date. The Interest Determination Date where the Base Rate is the Treasury Rate will be the day of the week in which such Interest Reset Date falls when Treasury Bills are normally auctioned. Treasury Bills are normally sold at auction on Monday of each week, unless that day is a legal holiday, in which case the auction is held on the following Tuesday or the preceding Friday. If an auction is so held on the preceding Friday, such Friday will be the Interest Determination Date pertaining to the Interest Reset Date occurring in the next succeeding week.

The “Index Maturity” is the period to maturity of the instrument or obligation from which the applicable Base Rate is calculated.

The “Calculation Date,” where applicable, shall be the earlier of (i) the tenth calendar day following the applicable Interest Determination Date or (ii) the Business Day preceding the applicable Interest Payment Date or Maturity Date.

All times referred to herein reflect New York City time, unless otherwise specified.

The Issuer shall specify in writing to the Issuing and Paying Agent which party will be the calculation agent (the “Calculation Agent”) with respect to the Floating Rate Notes. The Calculation Agent will provide the interest rate then in effect and, if determined, the interest rate which will become effective on the next Interest Reset Date with respect to such Floating Rate Note to the Issuing and Paying Agent as soon as the interest rate with

respect to such Floating Rate Note has been determined and as soon as practicable after any change in such interest rate.

All percentages resulting from any calculation on Floating Rate Notes will be rounded to the nearest one hundred-thousandth of a percentage point, with five-one millionths of a percentage point rounded upwards. For example, 9.876545% (or .09876545) would be rounded to 9.87655% (or .0987655). All dollar amounts used in or resulting from any calculation on Floating Rate Notes will be rounded, in the case of U.S. dollars, to the nearest cent or, in the case of a foreign currency, to the nearest unit (with one-half cent or unit being rounded upwards).

CD Rate Notes

“CD Rate” means the rate on any Interest Determination Date for negotiable certificates of deposit having the Index Maturity as published by the Board of Governors of the Federal Reserve System (the “FRB”) in “Statistical Release H.15(519), Selected Interest Rates” or any successor publication of the FRB (“H.15(519)”) under the heading “CDs (Secondary Market)”.

If the above rate is not published in H.15(519) by 3:00 p.m. on the Calculation Date, the CD Rate will be the rate on such Interest Determination Date set forth in the daily update of H.15(519), available through the world wide website of the FRB at http://www.federalreserve.gov/releases/h15/Update, or any successor site or publication or other recognized electronic source used for the purpose of displaying the applicable rate (“H.15 Daily Update”) under the caption “CDs (Secondary Market)”.

If such rate is not published in either H.15(519) or H.15 Daily Update by 3:00 p.m. on the Calculation Date, the Calculation Agent will determine the CD Rate to be the arithmetic mean of the secondary market offered rates as of 10:00 a.m. on such Interest Determination Date of three leading nonbank dealers(1) in negotiable U.S. dollar certificates of deposit in New York City selected by the Calculation Agent for negotiable U.S. dollar certificates of deposit of major United States money center banks of the highest credit standing in the market for negotiable certificates of deposit with a remaining maturity closest to the Index Maturity in the denomination of $5,000,000.

If the dealers selected by the Calculation Agent are not quoting as set forth above, the CD Rate will remain the CD Rate then in effect on such Interest Determination Date.

Commercial Paper Rate Notes

“Commercial Paper Rate” means the Money Market Yield (calculated as described below) of the rate on any Interest Determination Date for commercial paper having the Index Maturity, as published in H.15(519) under the heading “Commercial Paper-Nonfinancial”.

If the above rate is not published in H.15(519) by 3:00 p.m. on the Calculation Date, then the Commercial Paper Rate will be the Money Market Yield of the rate on such Interest Determination Date for commercial paper of the Index Maturity as published in H.15 Daily Update under the heading “Commercial Paper-Nonfinancial”.

(1) Such nonbank dealers referred to in this Statement of Terms may include affiliates of the Dealer.

If by 3:00 p.m. on such Calculation Date such rate is not published in either H.15(519) or H.15 Daily Update, then the Calculation Agent will determine the Commercial Paper Rate to be the Money Market Yield of the arithmetic mean of the offered rates as of 11:00 a.m. on such Interest

Determination Date of three leading dealers of U.S. dollar commercial paper in New York City selected by the Calculation Agent for commercial paper of the Index Maturity placed for an industrial issuer whose bond rating is “AA,” or the equivalent, from a nationally recognized statistical rating organization.

If the dealers selected by the Calculation Agent are not quoting as mentioned above, the Commercial Paper Rate with respect to such Interest Determination Date will remain the Commercial Paper Rate then in effect on such Interest Determination Date.

“Money Market Yield” will be a yield calculated in accordance with the following formula:

D x 36

Money Market Yield = --------------------- x 100

360 - (D x M)

where “D” refers to the applicable per annum rate for commercial paper quoted on a bank discount basis and expressed as a decimal and “M” refers to the actual number of days in the interest period for which interest is being calculated.

Federal Funds Rate Notes

“Federal Funds Rate” means the rate on any Interest Determination Date for federal funds as published in H.15(519) under the heading “Federal Funds (Effective)” and displayed on Moneyline Telerate (or any successor service) on page 120 (or any other page as may replace the specified page on that service) (“Telerate Page 120”).

If the above rate does not appear on Telerate Page 120 or is not so published by 3:00 p.m. on the Calculation Date, the Federal Funds Rate will be the rate on such Interest Determination Date as published in H.15 Daily Update under the heading “Federal Funds/(Effective)”.

If such rate is not published as described above by 3:00 p.m. on the Calculation Date, the Calculation Agent will determine the Federal Funds Rate to be the arithmetic mean of the rates for the last transaction in overnight U.S. dollar federal funds arranged by each of three leading brokers of Federal Funds transactions in New York City selected by the Calculation Agent prior to 9:00 a.m. on such Interest Determination Date.

If the brokers selected by the Calculation Agent are not quoting as mentioned above, the Federal Funds Rate will remain the Federal Funds Rate then in effect on such Interest Determination Date.

LIBOR Notes

The London Interbank offered rate (“LIBOR”) means, with respect to any Interest Determination Date, the rate for deposits in U.S. dollars having the Index Maturity that appears on the Designated LIBOR Page as of 11:00 a.m., London time, on such Interest Determination Date.

If no rate appears, LIBOR will be determined on the basis of the rates at approximately 11:00 a.m., London time, on such Interest Determination Date at which deposits in U.S. dollars are offered to prime banks in the London interbank market by four major banks in such market selected by the Calculation Agent for a term equal to the Index Maturity, commencing on the related Interest Reset Date, and in principal amount equal to an amount that in the Calculation Agent’s judgment is representative for a single transaction in U.S. dollars in such market at such time (a “Representative Amount”). The Calculation Agent will request the principal London office of each of such banks to provide a quotation of its rate. If at least two such quotations are provided, LIBOR will be the arithmetic mean of such quotations. If fewer than two quotations are provided, LIBOR for such Interest Determination Date will be the arithmetic mean of the rates quoted at approximately 11:00 a.m., in New York City, on such Interest Determination Date by three major banks in New York City, selected by the Calculation Agent, for loans in U.S. dollars to leading European banks, for a term equal to the Index Maturity, commencing on the related Interest Reset Date, and in a Representative Amount; provided, however, that if fewer than three banks so selected by the Calculation Agent are providing such quotations, the then existing LIBOR rate on such Interest Determination Date will remain in effect for the Interest Payment Period for which LIBOR is being determined.

“Designated LIBOR Page” means the display that appears on Reuters on page LIBOR01 (or any other page as may replace such page on such service (or any successor service) for the purposes of displaying London interbank offered rates of major banks for deposits in U.S. dollars).

Prime Rate Notes

“Prime Rate” means the rate on any Interest Determination Date as published in H.15(519) under the heading “Bank Prime Loan”.

If the above rate is not published in H.15(519) prior to 3:00 p.m. on the Calculation Date, then the Prime Rate will be the rate on such Interest Determination Date as published in H.15 Daily Update opposite the caption “Bank Prime Loan”.

If the rate is not published prior to 3:00 p.m. on the Calculation Date in either H.15(519) or H.15 Daily Update, then the Calculation Agent will determine the Prime Rate to be the arithmetic mean of the rates of interest publicly announced by each bank that appears on the Reuters Screen US PRIME1 Page (as defined below) as such bank’s prime rate or base lending rate as of 11:00 a.m., on that Interest Determination Date.

If fewer than four such rates referred to above are so published by 3:00 p.m. on the Calculation Date, the Calculation Agent will determine the Prime Rate to be the arithmetic mean of the prime rates or base lending rates quoted on the basis of the actual number of days in the year divided by 360 as of the close of business on such Interest Determination Date by three major banks in New York City selected by the Calculation Agent.

If the banks selected are not quoting as mentioned above, the Prime Rate will remain the Prime Rate in effect on such Interest Determination Date.

“Reuters Screen US PRIME1 Page” means the display designated as page “US PRIME1” on the Reuters Monitor Money Rates Service (or such other page as may replace the US PRIME1 page on that service for the purpose of displaying prime rates or base lending rates of major United States banks).

Treasury Rate Notes

“Treasury Rate” means:

(1) the rate from the auction held on the Interest Determination Date (the “Auction”) of direct obligations of the United States (“Treasury Bills”) having the Index Maturity specified in the Supplement under the caption “INVESTMENT RATE” on the display on Moneyline Telerate (or any successor service) on page 56 (or any other page as may replace that page on that service) (“Telerate Page 56”) or page 57 (or any other page as may replace that page on that service) (“Telerate Page 57”), or

(2) if the rate referred to in clause (1) is not so published by 3:00 p.m. on the related Calculation Date, the Bond Equivalent Yield (as defined below) of the rate for the applicable Treasury Bills as published in H.15 Daily Update, under the caption “U.S. Government Securities/Treasury Bills/Auction High”, or

(3) if the rate referred to in clause (2) is not so published by 3:00 p.m. on the related Calculation Date, the Bond Equivalent Yield of the auction rate of the applicable Treasury Bills as announced by the United States Department of the Treasury, or

(4) if the rate referred to in clause (3) is not so announced by the United States Department of the Treasury, or if the Auction is not held, the Bond Equivalent Yield of the rate on the particular Interest Determination Date of the applicable Treasury Bills as published in H.15(519) under the caption “U.S. Government Securities/Treasury Bills/Secondary Market”, or

(5) if the rate referred to in clause (4) not so published by 3:00 p.m. on the related Calculation Date, the rate on the particular Interest Determination Date of the applicable Treasury Bills as published in H.15 Daily Update, under the caption “U.S. Government Securities/Treasury Bills/Secondary Market”, or

(6) if the rate referred to in clause (5) is not so published by 3:00 p.m. on the related Calculation Date, the rate on the particular Interest Determination Date calculated by the Calculation Agent as the Bond Equivalent Yield of the arithmetic mean of the secondary market bid rates, as of approximately 3:30 p.m. on that Interest Determination Date, of three primary United States government securities dealers selected by the Calculation Agent, for the issue of Treasury Bills with a remaining maturity closest to the Index Maturity specified in the Supplement, or

(7) if the dealers so selected by the Calculation Agent are not quoting as mentioned in clause (6), the Treasury Rate in effect on the particular Interest Determination Date.

“Bond Equivalent Yield” means a yield (expressed as a percentage) calculated in accordance with the following formula:

D x N

Bond Equivalent Yield = ------------------------- x 100

360 - (D x M)

where “D” refers to the applicable per annum rate for Treasury Bills quoted on a bank discount basis and expressed as a decimal, “N” refers to 365 or 366, as the case may be, and “M” refers to the actual number of days in the applicable Interest Reset Period.

3. Final Maturity. The Stated Maturity Date for any Note will be the date so specified in the Supplement, which shall be no later than 270 days from the date of issuance. On its Stated Maturity Date, or any date prior to the Stated Maturity Date on which the particular Note becomes due and payable, each such date being referred to as a Maturity Date, the principal amount of each Note, together with accrued and unpaid interest thereon, will be immediately due and payable.

4. Obligation Absolute. No provision of the Issuing and Paying Agency Agreement under which the Notes are issued shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and interest on each Note at the times, place and rate, and in the coin or currency, herein prescribed.

5. Supplement . Any term contained in the Supplement shall supercede any conflicting term contained herein.

Exhibit (15.1)

October 30, 2014

Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

RE: Ecolab Inc. Registration Statements on Form S-8 (Registration Nos. 2-90702; 33-18202; 33-55986; 33-56101; 333-95043; 333-109890; 33-34000; 33-56151; 333-18627; 333-109891; 33-39228; 33-56125; 333-70835; 33-60266; 333-95041; 333-18617; 333-79449; 333-40239; 333-95037; 333-50969; 333-58360; 333-97927; 333-115567; 333-129427; 333-129428; 333-140988; 333-115568; 333-132139; 333-147148; 333-163837; 333-163838; 333-165130; 333-165132; 333-166646; 333-174028; 333-176601; 333-178300; 333-178302; 333-184650; and 333-190317) and Form S-3 (Registration No. 333-178273).

Commissioners:

We are aware that our report dated October 30, 2014 on our review of interim financial information of Ecolab Inc. (the “Company”) for the three- and nine-month periods ended September 30, 2014 and included in the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 2014 is incorporated by reference in its Registration Statements listed above.

Yours very truly,


/s/PricewaterhouseCoopers LLP

PRICEWATERHOUSECOOPERS LLP

Minneapolis, Minnesota

Exhibit (31.1)

CERTIFICATIONS

I, Douglas M. Baker, Jr., certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2014 of Ecolab Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 30, 2014


/s/Douglas M. Baker, Jr.
Douglas M. Baker, Jr.
Chairman of the Board and
Chief Executive Officer

I, Daniel J. Schmechel, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2014 of Ecolab Inc.;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 30, 2014


/s/Daniel J. Schmechel
Daniel J. Schmechel
Chief Financial Officer

Exhibit (32.1)

Section 1350 Certifications

Pursuant to 18 U.S.C. Section 1350, each of the undersigned officers of Ecolab Inc. does hereby certify that:

(a) the Quarterly Report on Form 10-Q of Ecolab Inc. for the quarter ended September 30, 2014 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(b) information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Ecolab Inc.

Dated: October 30, 2014	/s/Douglas M. Baker, Jr.
	Douglas M. Baker, Jr.
	Chairman of the Board and Chief Executive Officer


Dated: October 30, 2014	/s/Daniel J. Schmechel
	Daniel J. Schmechel
	Chief Financial Officer