2. SPECIAL (GAINS) AND CHARGES

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


	First Quarter Ended
	March 31
(millions)	2016		2015
Cost of sales
Restructuring charges		$ -		$ 0.6

Special (gains) and charges
Restructuring charges		3.0		2.1
Champion integration costs		-		5.2
Nalco integration costs		-		0.5
Other		3.3		-
Subtotal		6.3		7.8

Total special (gains) and charges		$ 6.3		$ 8.4

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’s restructuring activities are associated with plans to enhance its efficiency and effectiveness and sharpen its competitiveness. Its 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 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 cost of sales and special (gains) and charges on the Consolidated Statement of Income. Amounts included as a component of cost of sales include supply chain related severance and other asset write-downs associated with combining operations. Restructuring liabilities have been classified as a component of both other current and other noncurrent liabilities on the Consolidated Balance Sheet.

Energy Restructuring Plan

In April 2013, following the completion of the acquisition of privately held Champion Technologies and its related company Corsicana Technologies (collectively “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 global energy market (the “Energy Restructuring Plan”). Actions associated with the acquisition to improve the effectiveness and efficiency of the business included a reduction of the combined business’s global workforce. Actions also included leveraging and simplifying its global supply chain, including the reduction of plant, distribution center and redundant facility locations and product line optimization.

Restructuring charges within the Energy Restructuring Plan were substantially completed during the fourth quarter of 2015. The company recorded $2.9 million ($1.7 million after tax) and $1.0 million ($0.8 million after tax) during the first quarter of 2016 and 2015, respectively.

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



	Employee
	Termination		Asset
(millions)	Costs		Disposals		Other		Total
2013 - 2015 Activity
Recorded expense and accrual	$	55.6	$	13.2	$	15.3	$	84.1
Net cash payments		(44.3)		3.9		(2.1)		(42.5)
Non-cash charges		-		(17.1)		-		(17.1)
Effect of foreign currency translation		0.4		-		-		0.4
Restructuring liability, December 31, 2015		11.7		-		13.2		24.9

2016 Activity
Recorded expense and accrual		(0.4)		-		3.3		2.9
Net cash payments		(2.2)		-		(3.5)		(5.7)
Restructuring liability, March 31, 2016	$	9.1	$	-	$	13.0	$	22.1

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

Combined 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 undertake certain restructuring activities outside of Europe, historically referred to as 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, historically referred to as the “Merger Restructuring Plan”. During the first quarter of 2013, the company determined that the objectives of the plans discussed above were aligned, and consequently, the previously separate restructuring plans were combined into one plan.

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

Restructuring charges within the Combined Plan were substantially completed during the fourth quarter of 2015. Restructuring charge activity under this plan during the first quarter of 2016 was minimal. During the first quarter of 2015 the company’s restructuring charges within this plan were $1.7 million ($0.8 million after tax).

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



	Employee
	Termination		Asset
(millions)	Costs		Disposals		Other		Total
2011 - 2015 Activity
Recorded net expense and accrual	$	349.7	$	6.1	$	48.4	$	404.2
Net cash payments		(281.3)		16.3		(38.1)		(303.1)
Non-cash net charges		0.6		(22.4)		(4.7)		(26.5)
Effect of foreign currency translation		(9.4)		-		-		(9.4)
Restructuring liability, December 31, 2015		59.6		-		5.6		65.2

2016 Activity
Recorded accrual adjustment		(0.2)		-		0.3		0.1
Net cash payments		(10.5)		-		(0.6)		(11.1)
Effect of foreign currency translation		0.8		-		-		0.8
Restructuring liability, March 31, 2016	$	49.7	$	-	$	5.3	$	55.0

Non-restructuring special (gains) and charges

Champion and Nalco integration costs

Integration related special charges for the Champion acquisition and Nalco merger were completed during the fourth quarter of 2015, and the company did not incur any special charges related to such transactions during the first quarter of 2016. As a result of the Champion acquisition, the company incurred charges of $5.2 million ($3.2 million after tax) during the first quarter of 2015. As a result of the Nalco merger, the company incurred charges of $0.5 million ($0.5 million after tax) during the first quarter of 2015.