Table of Contents

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.   20549

 

FORM 11-K/A

 

(Amendment No. 1)

 

(Mark One)

 

x                              ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended December 31, 2013

 

OR

 

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

 

For the transition period from      to      

 

Commission file number 1-09328

 

A.                        Full title of the plan and the address of the plan, if different from that of the issuer named below:

 

ECOLAB SAVINGS PLAN AND ESOP

 

B.                        Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

 

ECOLAB INC.

370 Wabasha Street North

Saint Paul, Minnesota  55102-1390

 

 

 



Table of Contents

 

ECOLAB SAVINGS PLAN AND ESOP

 

FINANCIAL STATEMENTS

 

as of December 31, 2013 and 2012

 

and

 

for the year ended December 31, 2013

 

AND SUPPLEMENTAL SCHEDULE

 

as of December 31, 2013

 



Table of Contents

 

INDEX

 

 

Page(s)

 

 

Explanatory Note

2

 

 

Financial Statements:

 

 

 

Statements of Net Assets Available for Benefits (Unaudited)

3

 

 

Statement of Changes in Net Assets Available for Benefits (Unaudited)

4

 

 

Notes to Financial Statements (Unaudited)

5 - 19

 

 

Supplemental Schedule:

 

Schedule H, Line 4i - Schedule of Assets (Held at End of Year) (Unaudited)

20

 



Table of Contents

 

Explanatory Note

 

This Amendment No. 1 on Form 11-K/A (“Amendment No. 1”) to the Annual Report on Form 11-K for the fiscal year ended December 31, 2013 filed by the Ecolab Savings Plan and ESOP (the “Registrant”) with the Securities and Exchange Commission (the “SEC”) on June 25, 2014 (the “Original Filing”) is being filed by the Registrant to amend the Original Filing to remove the audit report (the “Audit Report”) of McGladrey LLP (“McGladrey”), the Registrant’s former independent accounting firm, on the financial statements in the Original Filing, which comprise the statements of net assets available for benefits as of December 31, 2013 and 2012, the related statement of changes in net assets available for benefits for the year ended December 31, 2013 and the notes to the financial statements, and to mark such financial statements as being unaudited. As a result, the Audit Report should not be relied upon.

 

The Registrant is filing this Amendment No. 1 in response to McGladrey’s notice dated August 5, 2015 of its determination that an associated entity of McGladrey provided certain prohibited non-audit services to an international affiliate of the Registrant’s sponsor, Ecolab Inc., during the fiscal years ended December 31, 2013 and 2014. Despite its belief that the services at issue did not impact its integrity and objectivity, McGladrey has concluded that its independence has been impaired with respect to the Registrant in accordance with the rules of the SEC and the Public Company Accounting Oversight Board, has withdrawn the Audit Report and has resigned as the Registrant’s independent accounting firm.

 

Unless expressly noted otherwise, the disclosures in this Amendment No. 1 continue to speak as of the date of the Original Filing, and do not reflect events occurring after the filing of the Original Filing.

 

2



Table of Contents

 

ECOLAB SAVINGS PLAN AND ESOP

STATEMENT OF NET ASSETS AVAILABLE for BENEFITS

December 31, 2013 and 2012

(Unaudited)

 

(in thousands)

 

2013

 

2012

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Investments, at fair value:

 

 

 

 

 

Plan interest in Ecolab Savings Plan Master Trust

 

$

1,172,587

 

$

 

Ecolab Stock Fund

 

 

634,198

 

Registered investment companies

 

 

498,249

 

Common/collective trusts

 

 

205,977

 

Total investments

 

1,172,587

 

1,338,424

 

 

 

 

 

 

 

Receivables:

 

 

 

 

 

Notes receivable from participants

 

22,078

 

27,068

 

Dividends receivable

 

157

 

 

Employer contributions receivable

 

3,608

 

1,083

 

Employee contributions receivable

 

464

 

 

Transfer from Permian Mud Service, Inc. 401(k) Savings Plan

 

118,662

 

 

Total Receivables

 

144,969

 

28,151

 

 

 

 

 

 

 

Total assets

 

1,317,556

 

1,366,575

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

Accrued distributions and withdrawals

 

 

(621

)

 

 

 

 

 

 

Net assets reflecting investments at fair value

 

1,317,556

 

1,365,954

 

 

 

 

 

 

 

Adjustment from fair value to contract value for fully benefit-responsive investment contracts

 

(2,531

)

(1,495

)

 

 

 

 

 

 

NET ASSETS AVAILABLE FOR BENEFITS

 

$

1,315,025

 

$

1,364,459

 

 

The accompanying notes are an integral

part of the financial statements.

 

3



Table of Contents

 

ECOLAB SAVINGS PLAN AND ESOP

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

for the year ended December 31, 2013

(Unaudited)

 

(in thousands)

 

 

 

 

 

 

 

Investment results:

 

 

 

Plan interest in Ecolab Savings Plan Master Trust 

 

$

91,442

 

 

 

 

 

Interest income on notes receivable from participants

 

449

 

 

 

 

 

Contributions:

 

 

 

Participants

 

34,404

 

Employer

 

25,120

 

Rollovers

 

3,651

 

 

 

63,175

 

 

 

 

 

Deductions:

 

 

 

Distributions to participants

 

(34,899

)

Plan expenses

 

(587

)

 

 

(35,486

)

 

 

 

 

Net increase before transfers

 

119,580

 

 

 

 

 

Transfers due to Plan Spin Off and Mergers:

 

 

 

Transfer to Ecolab Savings Plan and ESOP for Traditional Benefit Employees

 

(1,244,601

)

Transfer from Nalco Company Profit Sharing and Savings Plan

 

956,925

 

Pending transfer from Permian Mud Service, Inc. 401(k) Savings Plan

 

118,662

 

 

 

(169,014

)

 

 

 

 

Net decrease after transfers

 

(49,434

)

 

 

 

 

Net assets available for benefits:

 

 

 

Beginning of year

 

1,364,459

 

 

 

 

 

End of year

 

$

1,315,025

 

 

The accompanying notes are an integral

part of the financial statements.

 

4



Table of Contents

 

ECOLAB SAVINGS PLAN AND ESOP

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

1.                          Description of Plan

 

The following brief description of the Ecolab Savings Plan and ESOP (“the Plan”) is provided for general information purposes only. Participants should refer to the Plan document for more complete information regarding the Plan’s definitions, benefits, eligibility and other matters.

 

PLAN SPIN OFF AND MERGERS:

 

Effective January 1, 2013, a new plan benefiting active employees accruing final average pay or legacy cash balance pension benefits under the Ecolab Pension Plan was spun off from the Plan and into the Ecolab Savings Plan and ESOP for Traditional Benefit Employees (“the New Plan”) resulting in $1,244,601,000 participant account balances transferring into the New Plan. Each qualified employee accruing a benefit under the final average pay formula or the 5% cash balance formula of the Ecolab Pension Plan was no longer eligible to participate in the Plan and instead became eligible to participate in the New Plan. Each qualified employee eligible to accrue benefits under the 3% cash balance formula of the Ecolab Pension Plan remained eligible to participate in the Plan. As of January 1, 2014, the employer matching contribution was increased to the formula described below.

 

Effective August 2, 2013, the Nalco Company Profit Sharing and Savings Plan (“Nalco Savings Plan”) merged into and became part of the Plan and eligible legacy Nalco employees began receiving matching contributions as discussed below. Following the merger, participants in the Nalco Savings Plan are participants in the Plan and the assets and liabilities of the Nalco Savings Plan of $956,925,000 have been transferred to the Plan. Employees of Nalco Company hired subsequent to the merger will become eligible to participate in the Plan under the Plan’s standard provisions.

 

Effective as of December 31, 2013, the Permian Mud Service, Inc. 401(k) Savings Plan (the “Permian Savings Plan”) was merged into the Plan, and participants in the Permian Savings Plan became participants in the Plan. Following the merger, the assets and liabilities of the Permian Savings Plan of $118,662,000 were transferred to the Plan. Such assets were liquidated from the Permian Savings Plan on December 31, 2013. The amounts were shown as a pending transfer in the statement of changes in net assets available for the year ended December 31, 2013, and a receivable in the statement of net assets as of December 31, 2013, as the investments were not received by the Plan until January 2, 2014. Participants in the Permian Savings Plan are able to participate in the Plan beginning January 1, 2014.

 

MASTER TRUST:

 

Beginning January 1, 2013, the Plan is a participating entity in the Ecolab Savings Plan Master Trust (“the Master Trust”) with assets held by Fidelity Management Trust Company (“Fidelity” or “trustee”). The Master Trust was established on January 1, 2013 to hold the qualified defined contribution investment assets of both the Plan and the New Plan sponsored by the Company.

 

5



Table of Contents

 

ECOLAB SAVINGS PLAN AND ESOP

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

1.                          Description of Plan (continued)

 

GENERAL AND ELIGIBILITY:

 

The Plan is a contributory qualified defined contribution plan available to certain employees of the Company as discussed above. Eligible employees regularly scheduled to work at least 20 hours per week may participate immediately in the Plan provided they are not subject to a collective bargaining agreement which does not provide for their inclusion. Part-time employees working less than 20 hours a week must be employed for a twelve consecutive month period during which they have worked at least 1,000 hours to be eligible to participate. Employee participation in the Plan is voluntary.

 

The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and the Internal Revenue Code of 1986, as amended (“the Code”).

 

CONTRIBUTIONS:

 

Contributions are made to the Plan as “participant savings contributions” and “employer matching contributions.”

 

Participant savings contributions are either pre-tax contributions made by the Company on behalf of participants who have agreed to have their taxable compensation reduced or Roth Savings contributions made by the Company on behalf of participants who have agreed to have their after-tax compensation reduced. Participants may reduce their compensation up to 50% subject to a statutory annual maximum of $17,500 for 2013 for the purpose of making savings contributions to the Plan.

 

Participants who have attained age 50 or above are allowed to make additional catch-up contributions up to the statutory annual maximum ($5,500 in 2013).

 

Participant contributions of up to 4% of eligible compensation are matched 100% by the Company and participant contributions over 4% and up to 8% of eligible compensation are matched 50% by the Company. The Plan also allows additional employer matching contributions to true-up the employer match. This true-up ensures all participants receive their full annualized employer match.

 

The Plan contains a separate Employee Stock Ownership Plan (“ESOP”) account for employer and participant contributions which are invested in the Ecolab Stock Fund. The ESOP allows participants to elect the withdrawal of dividends paid on shares to the ESOP account. The levels of contributions made by or on behalf of participants who are highly compensated, as defined in the Code, are subject to limitations under the Code.

 

6



Table of Contents

 

ECOLAB SAVINGS PLAN AND ESOP

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

1.         Description of Plan (continued)

 

VESTING:

 

Participants are fully vested in their account at all times.

 

PLAN BENEFITS:

 

As participants are fully vested at all times, benefits to participants are equal to their account balances. Upon retirement, death, disability or separation from service, a distribution may be made to the participant or beneficiary equal to the participant’s account balance. Employees are able to withdraw any part or all of their account balance upon attainment of age 59 1/2. In-service withdrawals for hardships are also available. A participant distribution or withdrawal from the Plan generally is subject to federal income tax and may be subject to an early withdrawal penalty, unless rolled over to a qualified plan or an individual retirement account.

 

NOTES RECEIVABLE FROM PARTICIPANTS:

 

Active participants (and beneficiaries who are parties in interest as defined by ERISA) are permitted to borrow from their accounts. The total amount of a participant’s note may not exceed the lesser of (a) $50,000 minus the participant’s highest outstanding note balance for the previous twelve-month period, or (b) 50% of the participant’s interest in his or her account. When a note is granted, the appropriate account balances are reduced and a separate note account is created.

 

Note payments, together with interest at a market rate determined by the Plan Administrator, are repaid generally over 5 years unless the note is for the purchase of a principal residence, in which case the term can be up to 10 years (15 years for notes originating after December 31, 2012). Notes receivable from participants at December 31, 2013 had interest rates ranging from 3.25% to 10.50% and are due at various dates through December 2028. A participant can have no more than two notes outstanding at any time.

 

Notes receivable from participants are collateralized by the borrower’s account balance and are repaid through ratable payroll deductions.

 

PARTICIPANT ACCOUNTS AND ALLOCATION:

 

Fidelity provides investment management, recordkeeping and trustee services for the Plan directly or indirectly through one or more of its subsidiaries. The Master Trust agreement authorizes services to be performed by the trustee, its agents or affiliates.

 

7



Table of Contents

 

ECOLAB SAVINGS PLAN AND ESOP

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

1.                    Description of Plan (continued)

 

Each participant’s account is credited with the participant’s contributions, the employer matching contributions and investment income thereon, net of Plan expenses. Allocations are based on participant earnings, account balances, or specific participant transactions, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.

 

All participant contributions made under the Plan are paid to and invested by Fidelity in one or more of the available investment options as directed by the participants.

 

Participants are allowed to allocate their entire account balance in any combination of the available investment options. Participants can transfer their account balance among the investment options and/or change the investment of their future contributions, and earnings thereon, daily. These transfers and changes must be made in whole dollar amounts of at least $250 and/or in whole percent increments.

 

PLAN TERMINATION:

 

Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA.

 

2.                          Summary of Significant Accounting Policies

 

BASIS OF PRESENTATION:

 

The accompanying financial statements have been prepared on the accrual basis of accounting.

 

Investment contracts held by a defined contribution plan are required to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan. The statement of net assets available for benefits presents the fair value of the investment contracts as well as the adjustment of the fully benefit-responsive investment contracts from fair value to contract value. The statement of changes in net assets available for benefits is prepared using the contract value basis for fully benefit-responsive investment contracts.

 

8



Table of Contents

 

ECOLAB SAVINGS PLAN AND ESOP

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

2.                          Summary of Significant Accounting Policies (continued)

 

USE OF ESTIMATES:

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates.

 

VALUATION OF INVESTMENTS AND INCOME RECOGNITION:

 

Fidelity holds the Plan’s assets and executes transactions therein based upon instructions received from the Plan Administrator, the Company and the participants of the Plan. The Plan’s investments are stated at fair value. Fair value is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. See Note 4 for discussion of fair value measurements.

 

Interest income is recorded as earned on an accrual basis and dividend income is recorded on the ex-dividend date. Purchases and sales of securities and realized gains and losses related to sales of investments are recorded on a trade-date basis. Unrealized gains and losses are recorded based on the fair values as of the reporting date. In 2013, investment income and investment expenses of the Master Trust are allocated to the Plan according to the investment elections of participants within the Plan. In addition, certain administrative expenses are allocated to the Plan based upon its pro rata share in the net assets of the Master Trust.

 

NOTES RECEIVABLE FROM PARTICIPANTS:

 

Notes receivable from participants are measured at their unpaid principal balances plus any accrued interest. Interest income is recorded on the accrual basis of accounting. Related fees are recorded as administrative expenses and are expensed when they are incurred. No allowance for credit losses has been recorded as of December 31, 2013. If a participant ceases to make loan repayments and the Plan Administrator deems the participant loan to be in default, the participant loan balance is reduced and a benefit payment is recorded.

 

CONTRIBUTIONS:

 

Participant contributions are recorded in the period the employer makes the payroll deductions. Employer matching contributions are recorded based on participant contributions in the same period.

 

9



Table of Contents

 

ECOLAB SAVINGS PLAN AND ESOP

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

2.                          Summary of Significant Accounting Policies (continued)

 

RISKS AND UNCERTAINTIES:

 

The Plan provides for various investment options in various combinations of investment funds. Investments are exposed to various risks, such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, including Ecolab Inc. common stock, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and those changes could materially affect participants’ account balances and the amounts reported in the 2013 statement of net assets available for benefits.

 

CONCENTRATION OF MARKET RISK:

 

At December 31, 2013 approximately 4% of the Plan’s total assets were invested in the common stock of the Company. The underlying value of the Ecolab Stock Fund is dependent on the performance of the Company and the market’s evaluation of such performance.

 

DISTRIBUTIONS TO PARTICIPANTS:

 

Distributions to participants are recorded when paid.

 

PLAN EXPENSES:

 

The Company pays a portion of the administrative expenses of the Plan and a portion is paid by Plan participants within the Plan. Certain asset management and administrative fees of the Plan are charged against the Plan’s investment results.

 

SUBSEQUENT EVENTS:

 

The Plan Administrator has evaluated subsequent events through the date and time the financial statements were issued.

 

10



Table of Contents

 

ECOLAB SAVINGS PLAN AND ESOP

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

3.                          Investments

 

Beginning January 1, 2013, the Plan’s investments are included in the investments of the Master Trust. Each participating retirement plan has a divided interest in the Master Trust. The value of the Plan’s interest in the Master Trust is based on the value of the Plan’s interest in the Master Trust at the time the Master Trust was formed on January 1, 2013, plus actual contributions and allocated investment income (loss) less actual distributions and allocated administrative expenses. Investment income (loss), investment management fees and other direct expenses relating to the Master Trust are allocated to the individual participating plans based on the average daily balances. The Plan’s interest in the Master Trust was approximately 44 percent as of December 31, 2013.

 

The following is a summary of the Master Trust investments, the Plan’s interest in the investments of the Master Trust, and the Plan’s interest percentage ownership of the Master Trust investments as of December 31, 2013:

 

 

 

December 31, 2013

 

(in thousands)

 

Master
Trust
Investments

 

Plan’s
Interest in
Master
Trust

 

Plan’s
Percent
Interest
in Master
Trust

 

Investments at fair value:

 

 

 

 

 

 

 

Ecolab Inc. common stock

 

$

849,217

 

$

58,972

 

7

%

Interest bearing cash

 

9,276

 

644

 

7

%

Registered Investment companies

 

1,048,971

 

590,050

 

56

%

Common/collective trusts

 

757,373

 

522,921

 

69

%

Total Investments, at fair value

 

2,664,837

 

1,172,587

 

44

%

 

 

 

 

 

 

 

 

Adjustment from fair value to contract value for fully benefit-responsive investment contracts

 

(3,214

)

(2,531

)

79

%

 

 

 

 

 

 

 

 

Investments available for benefits

 

$

2,661,623

 

$

1,170,056

 

44

%

 

11



Table of Contents

 

ECOLAB SAVINGS PLAN AND ESOP

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

3.                          Investments (continued)

 

The following table presents the investments that represent 5 percent or more of the Master Trust’s total assets or 5 percent or more of the Plan’s total asset share in the Master Trust as of December 31, 2013:

 

 

 

December 31, 2013

 

 

 

Master Trust

 

 

 

(in thousands)

 

Assets

 

Plan

 

 

 

 

 

 

 

Ecolab Inc. common stock

 

$

849,217

 

$

*

 

Spartan 500 Index — Inst. Class Fund

 

385,685

 

271,605

 

Fidelity Managed Income Portfolio II

 

228,325

 

179,797

 

Spartan Ext. Market Index — Adv. Class Fund

 

148,729

 

115,210

 

Dodge and Cox International Stock Fund

 

143,910

 

75,004

 

SSGA Target Retirement 2020 — Class II Fund

 

133,557

 

85,999

 

SSGA Target Retirement 2030 — Class II Fund

 

*

 

88,159

 

SSGA Target Retirement 2040 — Class II Fund

 

*

 

97,898

 

Pimco Total Return - Inst. Class Fund

 

*

 

58,766

 

 

*                             Investment was less than 5 percent of the net assets available for benefits in the year indicated.

 

During 2012, the Plan held investments directly. Investments that represented 5 percent or more of the Plan’s total assets, at December 31, 2012 are summarized as follows:

 

 

 

December 31, 2012

 

(in thousands)

 

Plan

 

 

 

 

 

Ecolab Inc. common stock

 

$

625,818

 

Spartan 500 Index — Inst. Class Fund

 

95,130

 

 

12



Table of Contents

 

ECOLAB SAVINGS PLAN AND ESOP

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

3.                          Investments (continued)

 

During 2013, the Master Trust’s investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value as follows:

 

(in thousands)

 

 

 

 

 

 

 

Investment in:

 

 

 

Ecolab Inc. common stock

 

$

271,783

 

Registered investment companies

 

120,220

 

Common/collective trusts

 

45,165

 

Net appreciation in fair value of investments

 

$

437,168

 

 

The following are changes in investments for the Master Trust for the year ended December 31, 2013:

 

(in thousands)

 

 

 

 

 

 

 

Investment results:

 

 

 

Net appreciation in fair value of investments

 

$

437,168

 

Interest and dividends

 

31,067

 

Net investment results

 

468,235

 

 

 

 

 

Net transfers

 

2,193,388

 

Increase in net investments

 

2,661,623

 

 

 

 

 

Net investments:

 

 

 

Beginning of year

 

 

End of year

 

$

2,661,623

 

 

4.                          Fair Value Measurements

 

Accounting guidance establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under accounting guidance are described below:

 

Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

 

13



Table of Contents

 

ECOLAB SAVINGS PLAN AND ESOP

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

4.                          Fair Value Measurements (continued)

 

Level 2 - Inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly; and fair value is determined through the use of models or other valuation methodologies. If the asset or liability has a specific (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability. A significant adjustment to a Level 2 input could result in the Level 2 measurement becoming a Level 3 measurement.

 

Level 3 - Inputs are unobservable for the asset or liability and include situations where there is little, if any, market activity for the asset or liability. The inputs into the determination of fair value are based upon the best information in the circumstances and may require significant management judgment or estimation.

 

The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

 

The following is a description of the valuation methodologies used for investments measured at fair value. There have been no changes in the methodologies used at December 31, 2013 and 2012.

 

Registered investment companies and Ecolab Inc. common stock: Investments in registered investment companies are recorded at the underlying net asset value per unit, which approximates fair value based on the publicly quoted market price of these funds. Investments in Ecolab Inc. common stock are recorded at fair value based on the quoted market price of Ecolab Inc.’s common stock on the New York Stock Exchange.

 

Common/Collective Trusts:  Investments in common/collective trusts, with the exception of the investment in fully benefit-responsive investment contracts, are recorded at the underlying net asset value per unit, which approximates fair value based on the audited financial statements of these funds. The fair value of fully benefit-responsive investment contracts is calculated using a discounted cash flow model which considers recent fee bids as determined by recognized dealers, discount rate and the duration of the underlying portfolio securities.

 

14



Table of Contents

 

ECOLAB SAVINGS PLAN AND ESOP

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

4.                          Fair Value Measurements (continued)

 

The Plan reviews the fair value hierarchy classification on an annual basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy. The Plan’s policy is to recognize transfers into and out of levels within the fair value hierarchy at the end of the fiscal year in which the actual event or change in circumstances that caused the transfer occurs. There were no transfers between Level 1 and Level 2 during the years ended December 31, 2013 and 2012. When a determination is made to classify an asset or liability within Level 3, the determination is based upon the significance of the unobservable inputs to the overall fair value measurement. The Plan did not have any assets or liabilities classified within Level 3 at December 31, 2013 and 2012.

 

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

 

The following table represents the 2013 Master Trust’s fair value hierarchy for those assets measured at fair value on a recurring basis as of December 31, 2013. As discussed in Note 1, the Master Trust was established on January 1, 2013.

 

 

 

Investment Assets at Fair Value
As of December 31, 2013

 

(in thousands)

 

Master Trust
Total

 

Level 1

 

Level 2

 

Level 3

 

Ecolab Inc. common stock

 

$

849,217

 

$

849,217

 

$

 

$

 

Interest bearing cash

 

9,276

 

9,276

 

 

 

 

 

Registered investment companies:

 

 

 

 

 

 

 

 

 

Large cap equity

 

497,208

 

497,208

 

 

 

Mid cap equity

 

181,118

 

181,118

 

 

 

International equity

 

148,321

 

148,321

 

 

 

Fixed Income

 

141,905

 

141,905

 

 

 

Money Market

 

44,704

 

44,704

 

 

 

Small cap equity

 

35,715

 

35,715

 

 

 

Common/collective trusts:

 

 

 

 

 

 

 

 

 

Life cycle

 

529,048

 

 

529,048

 

 

Stable value

 

228,325

 

 

228,325

 

 

Total investment assets at fair value

 

$

2,664,837

 

$

1,907,464

 

$

757,373

 

$

 

 

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Table of Contents

 

ECOLAB SAVINGS PLAN AND ESOP

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

4.                          Fair Value Measurements (continued)

 

The following table represents the Plan’s fair value hierarchy for those assets measured at fair value on a recurring basis as of December 31, 2012:

 

 

 

Investment Assets at Fair Value
As of December 31, 2012

 

(in thousands)

 

Plan Total

 

Level 1

 

Level 2

 

Level 3

 

Ecolab Inc. common stock

 

$

625,818

 

$

625,818

 

$

 

$

 

Interest bearing cash

 

8,380

 

8,380

 

 

 

 

 

Registered investment companies:

 

 

 

 

 

 

 

 

 

Large cap equity

 

160,418

 

160,418

 

 

 

Fixed income

 

109,161

 

109,161

 

 

 

International equity

 

60,510

 

60,510

 

 

 

Money market

 

50,657

 

50,657

 

 

 

Blended fund

 

50,402

 

50,402

 

 

 

Small cap equity

 

40,743

 

40,743

 

 

 

Mid cap equity

 

26,358

 

26,358

 

 

 

Common/collective trusts:

 

 

 

 

 

 

 

 

 

Life cycle

 

150,865

 

 

150,865

 

 

Stable value

 

55,112

 

 

55,112

 

 

Total investment assets at fair value

 

$

1,338,424

 

$

1,132,447

 

$

205,977

 

$

 

 

The following table sets forth additional disclosures of the Master Trust investments as of December 31, 2013 and the Plan investments as of December 31, 2012 whose fair value is estimated using net asset value (“NAV”) per share:

 

 

 

Fair

 

Unfunded

 

Redemption

 

Redemption

 

(in thousands)

 

Value

 

Commitment

 

Frequency

 

Notice Period

 

 

 

 

 

 

 

 

 

 

 

Investment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2013 Common/collective trusts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SSgA Target Retirement Funds

 

$

529,048

 

 

Immediate

 

None

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2012 Common/collective trusts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SSgA Target Retirement Funds

 

$

150,865

 

 

Immediate

 

None

 

 

All of the SSgA Target Retirement funds invest in other collective investment funds which have characteristics consistent with the funds’ overall investment objective.

 

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Table of Contents

 

ECOLAB SAVINGS PLAN AND ESOP

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

4.                          Fair Value Measurements (continued)

 

Each fund’s investment objective, with the exception of the Income Fund, is to allocate its assets across multiple asset classes in a manner that becomes increasingly conservative over time, while seeking to achieve the appropriate level of risk given the participants’ anticipated retirement date. For the Income Fund, the objective is to approximate as closely as practicable, the performance of a custom benchmark index over the long term, while providing participants the ability to purchase and redeem units on an “as of” basis.

 

The fair value of investments in this category has been estimated using the NAV per share of the underlying investments. All of these funds are subject to potential withdrawal safeguards to protect the interest of all participants, while providing the maximum level of liquidity that can be prudently made available to all participants. These withdrawal safeguards permit redemptions resulting from ordinary course activity, subject to certain thresholds. Ordinary course activity also may include periodic participant rebalancing of their investment portfolio between Lending Funds and other State Street Bank collective investment funds. Requests for redemptions above these withdrawal safeguards may result in proceeds consisting of cash, units of other State Street Bank collective investment funds, and units of Cash Collateral Funds that will be converted into units of a liquidating trust or a combination thereof. These withdrawal safeguards have been in effect since October 2008 and may be in effect for an indefinite period of time. The Trustee continues to monitor market conditions and evaluate the need for withdrawal safeguards as appropriate.

 

5.                          Tax Status

 

The Plan constitutes a qualified plan and trust under Section 401(a) of the Code and therefore is exempt from federal income taxes under provisions of Section 501(a). The Plan consists of a profit sharing portion and a stock bonus portion. The stock bonus portion constitutes an employee stock ownership plan within the meaning of Section 4975(e)(7) of the Code. The Plan also complies with the provisions of Section 401(k) of the Code. A tax qualification letter, dated August 8, 2013, was received from the Internal Revenue Service (IRS). The letter stated that the Plan, as designed through January 21, 2011, was in compliance with the applicable requirements of the Code. The Plan has been amended since receiving the tax qualification letter. However, the Plan Administrator believes the Plan is currently designed and being operated in compliance with the applicable requirements of the Code and therefore believes the Plan is qualified and tax-exempt, as described above. Therefore, no provision for income taxes has been included in the Plan’s financial statements.

 

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Table of Contents

 

ECOLAB SAVINGS PLAN AND ESOP

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

5.                          Tax Status (continued)

 

With the merger of the Nalco Savings Plan, the Plan acquired a small number of Puerto Rico participants. The Plan was amended to incorporate required provisions of the Puerto Rico tax code and has applied to the Puerto Rico Treasury Department for a determination that the Plan as amended is designed in accordance with the applicable provisions of the 2011 Puerto Rico tax code. The Plan administrator believes that the Plan was designed and operated in accordance with the applicable requirements of the Puerto Rico Internal Revenue Code for periods on or after the Nalco Savings Plan merger. Therefore no provisions for Puerto Rico income taxes has been included in the Plan’s financial statements.

 

U.S. GAAP requires plan management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. The Plan is subject to routine audits by taxing jurisdictions. There is currently a routine audit being performed on the 2010 plan year by the IRS. The Plan Administrator believes it is no longer subject to income tax examinations for years prior to 2010.

 

6.                          Related Party and Party-In-Interest Transactions

 

The trustee is authorized under contract provisions, or by ERISA regulations providing an administrative or statutory exemption, to invest in funds under its control and in securities of the Company. Participant contributions and employer matching contributions are invested in one or more of the investment fund options offered under the Plan, including the Ecolab Stock Fund. The Ecolab Stock Fund consists primarily of Ecolab Inc. common stock and also short-term investment funds under the trustee’s control.

 

During 2013, the Master Trust invested in Ecolab Inc. common stock. The Master Trust held 8,233,361 shares of the Ecolab Inc. common stock at December 31, 2013. During the year ended December 31, 2013, purchases and sales of shares by the Master Trust totaled approximately $374,249,000 and $421,714,000, respectively. During 2012, the Plan invested in Ecolab Inc. common stock. The Plan held 8,777,580 shares of Ecolab Inc. common stock at December 31, 2012.

 

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Table of Contents

 

ECOLAB SAVINGS PLAN AND ESOP

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

7.         Reconciliation of Financial Statements to Form 5500

 

The following is a reconciliation of net assets available for benefits per the Plan financial statements at December 31, 2013 and 2012 to the Form 5500:

 

(in thousands)

 

2013

 

2012

 

 

 

 

 

 

 

Net assets available for benefits per the financial statements

 

$

1,315,025

 

$

1,364,459

 

Adjustment from fair value to contract value for fully benefit-responsive investment contracts

 

2,531

 

1,495

 

Net assets available for benefits per the Form 5500

 

$

1,317,556

 

$

1,365,954

 

 

The following is a reconciliation of the net change in net assets available for benefits before transfers per the Plan financial statements for the year ended December 31, 2013 to the Form 5500:

 

(in thousands)

 

 

 

 

 

 

 

Net increase in net assets available for benefits before transfers per the financial statements

 

$

119,580

 

Prior year adjustment from fair value to contract value of fully benefit-responsive investment contracts

 

(1,495

)

Current year adjustment from fair value to contract value of fully benefit-responsive investment contracts

 

2,531

 

Total increase in net assets available for benefits before transfers per the Form 5500

 

$

120,616

 

 

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Table of Contents

 

ECOLAB SAVINGS PLAN AND ESOP

SCHEDULE H, LINE 4i— SCHEDULE OF ASSETS (HELD AT END OF YEAR)

as of December 31, 2013

(Unaudited)

 

EIN 41-0231510

Plan Number: 003

 

(in thousands, except units)

 

 

 

 

 

(c)

 

 

 

 

 

(b)

 

Description of Investment,

 

 

 

 

 

Identity of Issue,

 

Including Maturity Date,

 

(d)

 

 

 

Borrower, Lessor

 

Rate of Interest, Collateral,

 

Current

 

(a)

 

or Similar Party

 

Par or Maturity Value

 

Value

 

 

 

 

 

 

 

 

 

Notes Receivable From Participant:

 

 

 

 

 

 

 

 

 

 

 

 

 

*

 

Notes Receivable From Participants

 

Participant notes due on various dates through December 2028 (stated interest rates ranging from 3.25% to 10.50%).

 

$

22,078

 

 

 

*         Party-in-interest

 

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Table of Contents

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

ECOLAB SAVINGS PLAN AND ESOP

 

 

 

 

 

 

 

 

Date:

August 25, 2015

 

By:

/s/ Suzanne M. Hanson

 

 

 

Suzanne M. Hanson

 

 

 

Vice President, Global Benefits,

 

 

 

Human Resources
Ecolab Inc.
(Plan Administrator)

 

21