Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2014 | Oct. 24, 2014 | |
Document and Entity Information [Abstract] | ' | ' |
Entity Registrant Name | 'Xylem Inc. | ' |
Entity Central Index Key | '0001524472 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-14 | ' |
Amendment Flag | 'false | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Filer Category | 'Large Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 181,874,517 |
Condensed_Consolidated_and_Com
Condensed Consolidated and Combined Income Statements (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, except Share data in Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Income Statement [Abstract] | ' | ' | ' | ' |
Revenue | $963 | $965 | $2,874 | $2,804 |
Cost of revenue | 587 | 581 | 1,768 | 1,715 |
Gross profit | 376 | 384 | 1,106 | 1,089 |
Selling, general and administrative expenses | 222 | 257 | 688 | 747 |
Research and development expenses | 24 | 24 | 78 | 78 |
Restructuring charges | 0 | 5 | 18 | 30 |
Operating income | 130 | 98 | 322 | 234 |
Interest expense | 14 | 14 | 41 | 41 |
Other non-operating income (expense), net | 1 | -1 | 1 | -2 |
Gain from sale of business | 11 | 0 | 11 | 0 |
Income before taxes | 128 | 83 | 293 | 191 |
Income tax expense | 22 | 10 | 52 | 31 |
Net income | $106 | $73 | $241 | $160 |
Earnings per share: | ' | ' | ' | ' |
Basic (usd per share) | $0.58 | $0.39 | $1.31 | $0.86 |
Diluted (usd per share) | $0.58 | $0.39 | $1.31 | $0.86 |
Weighted average number of shares: | ' | ' | ' | ' |
Basic (in shares) | 182,244 | 185,166 | 183,389 | 185,459 |
Diluted (in shares) | 183,432 | 186,002 | 184,573 | 186,186 |
Dividends declared per share (usd per share) | $0.13 | $0.12 | $0.38 | $0.35 |
Condensed_Consolidated_and_Com1
Condensed Consolidated and Combined Statements of Comprehensive Income (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Statement of Comprehensive Income [Abstract] | ' | ' | ' | ' |
Net income | $106 | $73 | $241 | $160 |
Other comprehensive (loss) income, before tax: | ' | ' | ' | ' |
Foreign currency translation adjustment | -114 | 68 | -113 | 4 |
Net change in cash flow hedges: | ' | ' | ' | ' |
Unrealized (losses) gains | -6 | 2 | -14 | 0 |
Amount of loss reclassified into net income | 2 | 1 | 1 | 0 |
Net change in postretirement benefit plans: | ' | ' | ' | ' |
Net gain | 10 | 0 | 3 | 0 |
Amortization of net actuarial loss into net income | 2 | 5 | 8 | 14 |
Other comprehensive (loss) income, before tax | -106 | 76 | -115 | 18 |
Income tax expense related to items of other comprehensive (loss) income | 3 | 2 | 3 | 4 |
Other comprehensive (loss) income, net of tax | -109 | 74 | -118 | 14 |
Comprehensive (loss) income | ($3) | $147 | $123 | $174 |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $529 | $533 |
Receivables, less allowances for discounts and doubtful accounts of $30 and $31 in 2014 and 2013, respectively | 804 | 817 |
Inventories, net | 516 | 475 |
Prepaid and other current assets | 141 | 143 |
Deferred income tax assets | 35 | 41 |
Total current assets | 2,025 | 2,009 |
Property, plant and equipment, net | 454 | 488 |
Goodwill | 1,667 | 1,718 |
Other intangible assets, net | 448 | 488 |
Other non-current assets | 220 | 193 |
Total assets | 4,814 | 4,896 |
Current liabilities: | ' | ' |
Accounts payable | 314 | 332 |
Accrued and other current liabilities | 495 | 479 |
Short-term borrowings and current maturities of long-term debt | 41 | 42 |
Total current liabilities | 850 | 853 |
Long-term debt | 1,199 | 1,199 |
Accrued postretirement benefits | 319 | 348 |
Deferred income tax liabilities | 183 | 191 |
Other non-current accrued liabilities | 70 | 64 |
Total liabilities | 2,621 | 2,655 |
Commitments and contingencies (Note 17) | ' | ' |
Stockholders’ equity: | ' | ' |
Authorized 750.0 shares, issued 188.4 shares and 187.6 shares in 2014 and 2013, respectively | 2 | 2 |
Capital in excess of par value | 1,785 | 1,753 |
Retained earnings | 575 | 405 |
Treasury stock – at cost 6.5 shares and 3.0 shares in 2014 and 2013, respectively | -218 | -86 |
Accumulated other comprehensive income | 49 | 167 |
Total stockholders’ equity | 2,193 | 2,241 |
Total liabilities and stockholders’ equity | $4,814 | $4,896 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, except Share data, unless otherwise specified | ||
Statement of Financial Position [Abstract] | ' | ' |
Allowances for discounts and doubtful accounts on receivables | $30 | $31 |
Common Stock, par value | $0.01 | $0.01 |
Common Stock, shares authorized | 750,000,000 | 750,000,000 |
Common Stock, shares issued | 188,400,000 | 187,600,000 |
Treasury Stock, shares | 6,500,000 | 3,000,000 |
Condensed_Consolidated_and_Com2
Condensed Consolidated and Combined Statements of Cash Flows (Unaudited) (USD $) | 9 Months Ended | |
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Operating Activities | ' | ' |
Net income | $241 | $160 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' |
Depreciation | 70 | 72 |
Amortization | 37 | 38 |
Share-based compensation | 14 | 21 |
Restructuring charges | 18 | 30 |
Gain from sale of business | -11 | 0 |
Other, net | -2 | 11 |
Payments for restructuring | -20 | -24 |
Changes in assets and liabilities (net of acquisitions): | ' | ' |
Changes in receivables | -40 | -71 |
Changes in inventories | -62 | -59 |
Changes in accounts payable | -2 | 4 |
Other, net | 10 | -19 |
Net Cash – Operating activities | 253 | 163 |
Investing Activities | ' | ' |
Capital expenditures | -77 | -91 |
Acquisitions of businesses, net of cash acquired | 0 | -81 |
Proceeds from sale of business | 30 | 0 |
Proceeds from the sale of property, plant and equipment | 2 | 7 |
Net Cash – Investing activities | -45 | -165 |
Financing Activities | ' | ' |
Issuance of short-term debt | 2 | 0 |
Principal payments of debt and capital lease obligations | 0 | 2 |
Repurchase of common stock | -132 | -44 |
Proceeds from exercise of employee stock options | 17 | 2 |
Dividends paid | -71 | -65 |
Excess tax benefit from share based compensation | 1 | 0 |
Other, net | 1 | 0 |
Net Cash – Financing activities | -182 | -109 |
Effect of exchange rate changes on cash | -30 | 1 |
Net change in cash and cash equivalents | -4 | -110 |
Cash and cash equivalents at beginning of year | 533 | 504 |
Cash and cash equivalents at end of period | 529 | 394 |
Cash paid during the period for: | ' | ' |
Interest | 36 | 37 |
Income taxes (net of refunds received) | $69 | $61 |
Background_and_Basis_of_Presen
Background and Basis of Presentation | 9 Months Ended |
Sep. 30, 2014 | |
Accounting Policies [Abstract] | ' |
Background and Basis of Presentation | ' |
Background and Basis of Presentation | |
Background | |
Xylem Inc. ("Xylem" or the "Company") is a leading equipment and service provider for water and wastewater applications with a broad portfolio of products and services addressing the full cycle of water, from collection, distribution and use to the return of water to the environment. Xylem was incorporated in Indiana on May 4, 2011. | |
Xylem has two reportable segments, Water Infrastructure and Applied Water. The Water Infrastructure segment focuses on the transportation, treatment and testing of water, offering a range of products including water and wastewater pumps, treatment and testing equipment, and controls and systems. The Applied Water segment serves many of the primary uses of water and focuses on the residential, commercial, industrial and agricultural markets. The Applied Water segment’s major products include pumps, valves, heat exchangers, controls and dispensing equipment. | |
Hereinafter, except as otherwise indicated or unless the context otherwise requires, "Xylem," "we," "us," "our" and the "Company" refer to Xylem Inc. and its subsidiaries. | |
Basis of Presentation | |
The interim condensed consolidated financial statements reflect our financial position and results of operations in conformity with accounting principles generally accepted in the United States of America ("GAAP"). All transactions between our businesses have been eliminated. | |
The unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and, in the opinion of management, reflect all adjustments (which include normal recurring adjustments) considered necessary for a fair presentation of the financial position and results of operations for the periods presented. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such SEC rules. We believe that the disclosures made are adequate to make the information presented not misleading. We consistently applied the accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2013 ("2013 Annual Report") in preparing these unaudited condensed consolidated financial statements, with the exception of accounting standard updates described in Note 2. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our 2013 Annual Report. Certain prior year amounts have been reclassified to conform to the current year presentation. | |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Estimates are revised as additional information becomes available. Estimates and assumptions are used for, but not limited to, postretirement obligations and assets, revenue recognition, income tax contingency accruals and valuation allowances, goodwill impairment testing and contingent liabilities. Actual results could differ from these estimates. Additionally, our interim condensed consolidated financial statements may not be indicative of our future performance. | |
Our quarterly financial periods end on the Saturday closest to the last day of the calendar quarter, except for the fourth quarter which ends on December 31. For ease of presentation, the condensed consolidated financial statements included herein are described as ending on the last day of the calendar quarter. |
Recently_Issued_Accounting_Pro
Recently Issued Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2014 | |
Accounting Changes and Error Corrections [Abstract] | ' |
Recently Issued Accounting Pronouncements | ' |
Recently Issued Accounting Pronouncements | |
Pronouncements Not Yet Adopted | |
In June 2014, the Financial Accounting Standards Board (“FASB”) issued guidance related to the recognition of compensation on employee share-based payments in which the terms of the award provide that a performance target that affects vesting could be achieved after the requisite service period. The standard states that the performance target should not be reflected in estimating the grant date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the periods for which the service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. This guidance is effective for annual reporting periods beginning after December 15, 2015 with early adoption permitted. The components of the guidance may be applied either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. This guidance is not expected to have an impact on our financial condition or results of operations. | |
In May 2014, the FASB issued guidance on recognizing revenue from contracts with customers. The guidance outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the model is that an entity recognizes revenue to portray the transfer of goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard also expands disclosure requirements regarding revenue recognition. This guidance is effective for annual reporting periods beginning after December 15, 2016 and may be applied retrospectively to each prior period presented or with the cumulative effect recognized as of the date of initial application. Early adoption is not permitted. We are currently evaluating the impact of the guidance on our financial condition and results of operations. | |
In April 2014, the FASB issued guidance related to the reporting of discontinued operations. The guidance states that the disposal of a business or operation is required to be reported as discontinued operations if the disposal represents a strategic shift that will have a major effect on an entity’s operations and financial results. The guidance also expands disclosures about discontinued operations and the disposal of significant businesses that did not qualify for discontinued operations presentation. This standard is effective prospectively, for disposals (or businesses that qualify as “held for sale”) that occur within annual periods beginning on or after December 15, 2014 and interim periods within those years. Early adoption is permitted. The impact of this guidance on our financial condition and results of operations will depend on the occurrence and the significance of disposal transactions that meet the criteria described above. | |
In January 2014, the FASB issued guidance related to service concession arrangements. A service concession arrangement is an arrangement between a public-sector entity grantor and an operating entity under which the operating entity operates the grantor's infrastructure (for example, airports, roads and bridges). The guidance states that service concession arrangements should not be accounted for under the guidance of Accounting Standards Codification Topic 840, Leases, but rather other guidance as deemed appropriate. This guidance is effective for fiscal years beginning on or after December 15, 2014 with early adoption permitted. Opening retained earnings will be adjusted in the year of adoption to reflect the cumulative historical impact of any arrangements existing at the date of adoption and the new guidance will then be applied to the financial statements on a prospective basis. The adoption of this guidance is not expected to have a material impact on our financial condition or results of operations. | |
Recently Adopted Pronouncements | |
In July 2013, the FASB issued guidance on the financial statement presentation of an unrecognized tax benefit. The guidance requires that an unrecognized tax benefit or a portion of an unrecognized tax benefit be presented as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. If an applicable deferred tax asset is not available or a company does not expect to use the applicable deferred tax asset, the unrecognized tax benefit should be presented in an entity's financial statements as a liability and should not be combined with a deferred tax asset. This guidance is effective for fiscal years beginning after December 15, 2013. The adoption of this guidance did not have a material impact on our financial condition or results of operations. | |
In March 2013, the FASB issued guidance on the release of a cumulative translation adjustment ("CTA") related to an entity's investment in a foreign entity into income. The guidance requires such CTA to be released when there has been a: (1) sale of a subsidiary or group of net assets within a foreign entity and the sale represents the substantially complete liquidation of the investment in the foreign entity, (2) loss of a controlling financial interest in an investment in a foreign entity or (3) step acquisition for a foreign entity. This guidance is effective for fiscal years beginning after December 15, 2013. The adoption of this guidance did not have a material impact on our financial condition or results of operations. | |
In February 2013, the FASB issued guidance related to the measurement and disclosure of obligations resulting from joint and several liability arrangements. The new guidance requires companies to measure obligations resulting from joint and several liability arrangements as the sum of: (1) the amount the company agreed to pay on the basis of its arrangement among co-obligors and (2) any additional amount the company expects to pay on behalf of its co-obligors. Additionally, the new guidance requires the disclosure of a description of the joint and several arrangement and the total outstanding amount of the obligation for all joint parties. This guidance is effective for fiscal years beginning after December 15, 2013. The adoption of this guidance did not have a material impact on our financial condition or results of operations. |
Acquisitions_and_Divestitures
Acquisitions and Divestitures | 9 Months Ended |
Sep. 30, 2014 | |
Business Combinations [Abstract] | ' |
Acquisitions and Divestitures | ' |
Acquisitions and Divestitures | |
Divestiture Activity | |
On July 2, 2014, we divested our Wolverhampton, U.K.-based pneumatic and hydraulic valves business for approximately $30 million. The sale resulted in a gain of $11 million reflected in gain from sale of business in our Condensed Consolidated Income Statement. The business, which was part of our Applied Water segment, provided a wide range of products, primarily to industrial original equipment manufacturer customers in the oil and gas sector. The business reported 2013 annual revenue of approximately $25 million. | |
Acquisition Activity | |
During the nine months ended September 30, 2014, we did not make any acquisitions. During the nine months ended September 30, 2013, we spent $84 million ($81 million, net of cash acquired) on acquisitions that were not material individually or in the aggregate to our results of operations or financial position. |
Restructuring_Charges
Restructuring Charges | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Restructuring and Related Activities [Abstract] | ' | |||||||||||||||
Restructuring Charges | ' | |||||||||||||||
Restructuring Charges | ||||||||||||||||
During the three and nine months ended September 30, 2014, we recognized restructuring charges of less than $1 million and $18 million, respectively. We incurred these charges primarily in an effort to reposition our European and North American businesses to optimize our cost structure and improve our operational efficiency and effectiveness. The charges relate to a reduction in structural costs, including the elimination of headcount and consolidation of facilities within both our Water Infrastructure and Applied Water segments. | ||||||||||||||||
During the three and nine months ended September 30, 2013 we recognized restructuring charges of $5 million and $30 million, respectively, which related to the reduction in structural costs, including the elimination of headcount and consolidation of facilities within both our Water Infrastructure and Applied Water segments. | ||||||||||||||||
The following table presents the components of restructuring expense for the three and nine months ended September 30, 2014 and 2013. | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(in millions) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
By component: | ||||||||||||||||
Severance and other charges | $ | — | $ | 4 | $ | 18 | $ | 28 | ||||||||
Lease related charges | — | 1 | — | 1 | ||||||||||||
Other restructuring charges | — | — | — | 1 | ||||||||||||
Reversal of restructuring accruals | — | — | — | — | ||||||||||||
Total restructuring charges | $ | — | $ | 5 | $ | 18 | $ | 30 | ||||||||
By segment: | ||||||||||||||||
Water Infrastructure | $ | — | $ | 3 | $ | 12 | $ | 24 | ||||||||
Applied Water | — | 2 | 6 | 6 | ||||||||||||
The following table displays a rollforward of the restructuring accruals, presented on our Condensed Consolidated Balance Sheets within accrued and other current liabilities, for the nine months ended September 30, 2014 and 2013. | ||||||||||||||||
(in millions) | 2014 | 2013 | ||||||||||||||
Restructuring accruals - January 1 | $ | 13 | $ | 9 | ||||||||||||
Restructuring charges | 18 | 30 | ||||||||||||||
Cash payments | (20 | ) | (24 | ) | ||||||||||||
Other | — | — | ||||||||||||||
Restructuring accruals - September 30 | $ | 11 | $ | 15 | ||||||||||||
By segment: | ||||||||||||||||
Water Infrastructure | $ | 8 | $ | 12 | ||||||||||||
Applied Water | 3 | 3 | ||||||||||||||
The following is a rollforward for the nine months ended September 30, 2014 and 2013 of employee position eliminations associated with restructuring activities. | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Planned reductions - January 1 | 51 | 54 | ||||||||||||||
Additional planned reductions | 233 | 439 | ||||||||||||||
Actual reductions | (206 | ) | (346 | ) | ||||||||||||
Planned reductions - September 30 | 78 | 147 | ||||||||||||||
Total expected costs associated with actions that commenced during the nine months ended September 30, 2014 are approximately $12 million for Water Infrastructure and approximately $9 million for Applied Water. These costs primarily consist of severance charges. Related to these actions, we incurred less than $1 million and $11 million for Water Infrastructure during the three and nine months ended September 30, 2014, respectively, and less than $1 million and $6 million for Applied Water during the three and nine months ended September 30, 2014, respectively. We currently expect activity related to these actions to continue through 2015. | ||||||||||||||||
Total expected costs associated with actions that commenced during 2013 are approximately $33 million for Water Infrastructure. Approximately $31 million of the expected cost was incurred in 2013, $0 million and $1 million was incurred during the three and nine months ended September 30, 2014, respectively, and $1 million is expected to be incurred through the end of 2014. Total expected costs associated with actions that commenced during 2013 are approximately $9 million for Applied Water. Approximately $8 million of the expected cost was incurred in 2013 and approximately $1 million is expected to be incurred through the end of 2014. |
Income_Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2014 | |
Income Tax Disclosure [Abstract] | ' |
Income Taxes | ' |
Income Taxes | |
Our quarterly provision for income taxes is measured using an estimated annual effective tax rate, adjusted for discrete items within periods presented. The comparison of our effective tax rate between periods is significantly impacted by the level and mix of earnings and losses by tax jurisdiction, foreign income tax rate differentials and amount of permanent book-to-tax differences. | |
The income tax provision for the three months ended September 30, 2014 was $22 million at an effective tax rate of 17.5%, compared to $10 million at an effective tax rate of 12.1% for the same period in 2013. The income tax provision for the nine months ended September 30, 2014 was $52 million at an effective tax rate of 17.7%, compared to $31 million at an effective tax rate of 16.4% for the same period in 2013. The effective tax rate was lower than the United States Federal statutory rate in each period primarily due to geographic mix of earnings. Additionally, the effective tax rate was higher for the three and nine months ended September 30, 2014 compared to the same periods in 2013 due to the tax impacts from special charges incurred by the Company in 2013 associated with the settlement of legal proceedings with Xylem Group LLC and the impact of one-time costs incurred for the change in chief executive officer. | |
Unrecognized Tax Benefits | |
We recognize tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized from such positions are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. | |
The amount of unrecognized tax benefits at September 30, 2014 was $30 million which, if ultimately recognized, will reduce our annual effective tax rate. We do not believe that the unrecognized tax benefits will significantly change within the next twelve months. | |
We classify interest expense relating to unrecognized tax benefits as a component of other non-operating expense, net and tax penalties as a component of income tax expense in our Condensed Consolidated Income Statements. As of September 30, 2014, we had $1 million of interest accrued for unrecognized tax benefits. |
Earnings_Per_Share
Earnings Per Share | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Earnings Per Share [Abstract] | ' | |||||||||||||||
Earnings Per Share | ' | |||||||||||||||
Earnings Per Share | ||||||||||||||||
The following is a reconciliation of the shares used in calculating basic and diluted net earnings per share. | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Net income (in millions) | $ | 106 | $ | 73 | $ | 241 | $ | 160 | ||||||||
Shares (in thousands): | ||||||||||||||||
Weighted average common shares outstanding | 182,196 | 185,044 | 183,343 | 185,294 | ||||||||||||
Add: Participating securities (a) | 48 | 122 | 46 | 165 | ||||||||||||
Weighted average common shares outstanding — Basic | 182,244 | 185,166 | 183,389 | 185,459 | ||||||||||||
Plus incremental shares from assumed conversions: (b) | ||||||||||||||||
Dilutive effect of stock options | 646 | 175 | 655 | 180 | ||||||||||||
Dilutive effect of restricted stock | 542 | 661 | 529 | 547 | ||||||||||||
Weighted average common shares outstanding — Diluted | 183,432 | 186,002 | 184,573 | 186,186 | ||||||||||||
Basic earnings per share | $ | 0.58 | $ | 0.39 | $ | 1.31 | $ | 0.86 | ||||||||
Diluted earnings per share | $ | 0.58 | $ | 0.39 | $ | 1.31 | $ | 0.86 | ||||||||
(a) | Restricted stock awards containing rights to non-forfeitable dividends that participate in undistributed earnings with common shareholders are considered participating securities for purposes of computing earnings per share. | |||||||||||||||
(b) | Incremental shares from stock options, restricted stock and performance share units are computed by the treasury stock method. The weighted average shares listed below were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive for the periods presented or were otherwise excluded under the treasury stock method. The treasury stock method calculates dilution assuming the exercise of all in-the-money options and vesting of restricted stock and performance share awards, reduced by the repurchase of shares with the proceeds from the assumed exercises, unrecognized compensation expense for outstanding awards and the estimated tax benefit of the assumed exercises. Performance share units will be included in the treasury stock calculation of diluted earnings per share upon achievement of underlying performance conditions. See Note 14, "Share-Based Compensation Plans" for further detail on the performance share units. | |||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(in thousands) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Stock options | 2,709 | 4,414 | 2,769 | 4,342 | ||||||||||||
Restricted stock | 534 | 655 | 532 | 758 | ||||||||||||
Performance shares | 136 | 106 | 114 | 88 | ||||||||||||
Inventories
Inventories | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Inventory Disclosure [Abstract] | ' | |||||||
Inventories | ' | |||||||
Inventories | ||||||||
The components of total inventories, net are summarized as follows: | ||||||||
(in millions) | September 30, | December 31, | ||||||
2014 | 2013 | |||||||
Finished goods | $ | 213 | $ | 189 | ||||
Work in process | 37 | 31 | ||||||
Raw materials | 266 | 255 | ||||||
Total inventories, net | $ | 516 | $ | 475 | ||||
Property_Plant_and_Equipment
Property, Plant and Equipment | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Property, Plant and Equipment [Abstract] | ' | |||||||
Property, Plant and Equipment | ' | |||||||
Property, Plant and Equipment | ||||||||
The components of total property, plant and equipment, net are as follows: | ||||||||
(in millions) | September 30, | December 31, | ||||||
2014 | 2013 | |||||||
Land, buildings and improvements | $ | 247 | $ | 263 | ||||
Machinery and equipment | 661 | 685 | ||||||
Equipment held for lease or rental | 205 | 192 | ||||||
Furniture and fixtures | 90 | 93 | ||||||
Construction work in progress | 50 | 49 | ||||||
Other | 22 | 22 | ||||||
Total property, plant and equipment, gross | 1,275 | 1,304 | ||||||
Less accumulated depreciation | 821 | 816 | ||||||
Total property, plant and equipment, net | $ | 454 | $ | 488 | ||||
Depreciation expense of $23 million and $70 million was recognized during the three and nine months ended September 30, 2014, respectively, and $23 million and $72 million for the three and nine months ended September 30, 2013, respectively. |
Goodwill_and_Other_Intangible_
Goodwill and Other Intangible Assets | 9 Months Ended | |||||||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | |||||||||||||||||||||||
Goodwill and Other Intangible Assets | ' | |||||||||||||||||||||||
Goodwill and Other Intangible Assets | ||||||||||||||||||||||||
Changes in the carrying value of goodwill by reportable segment for the nine months ended September 30, 2014 are as follows: | ||||||||||||||||||||||||
(in millions) | Water | Applied Water | Total | |||||||||||||||||||||
Infrastructure | ||||||||||||||||||||||||
Balance as of January 1, 2014 | $ | 1,149 | $ | 569 | $ | 1,718 | ||||||||||||||||||
Activity in 2014 | ||||||||||||||||||||||||
Goodwill (divested) acquired (a) | — | (6 | ) | (6 | ) | |||||||||||||||||||
Foreign currency and other | (29 | ) | (16 | ) | (45 | ) | ||||||||||||||||||
Balance as of September 30, 2014 | $ | 1,120 | $ | 547 | $ | 1,667 | ||||||||||||||||||
(a) | On July 2, 2014, we divested our Wolverhampton, U.K.-based pneumatic and hydraulic valves business which had $6 million of goodwill associated with the business. | |||||||||||||||||||||||
Based on the results of our latest annual impairment tests, we determined that no impairment of goodwill existed as of the measurement date in 2013. However, future goodwill impairment tests could result in a charge to earnings. We will continue to evaluate goodwill on an annual basis as of the beginning of our fourth quarter and whenever events and changes in circumstances indicate there may be a potential impairment. | ||||||||||||||||||||||||
Other Intangible Assets | ||||||||||||||||||||||||
Information regarding our other intangible assets is as follows: | ||||||||||||||||||||||||
30-Sep-14 | December 31, 2013 | |||||||||||||||||||||||
(in millions) | Carrying | Accumulated | Net | Carrying | Accumulated | Net | ||||||||||||||||||
Amount | Amortization | Intangibles | Amount | Amortization | Intangibles | |||||||||||||||||||
Customer and distributor relationships | $ | 339 | $ | (118 | ) | $ | 221 | $ | 352 | $ | (104 | ) | $ | 248 | ||||||||||
Proprietary technology | 107 | (40 | ) | 67 | 109 | (36 | ) | 73 | ||||||||||||||||
Trademarks | 34 | (17 | ) | 17 | 35 | (16 | ) | 19 | ||||||||||||||||
Patents and other | 19 | (17 | ) | 2 | 20 | (17 | ) | 3 | ||||||||||||||||
Indefinite-lived intangibles | 141 | — | 141 | 145 | — | 145 | ||||||||||||||||||
$ | 640 | $ | (192 | ) | $ | 448 | $ | 661 | $ | (173 | ) | $ | 488 | |||||||||||
Based on the results of our most recent annual impairment tests, we recorded a $2 million charge related to three trade names within our Water Infrastructure segment in the fourth quarter 2013. As of September 30, 2014, no events or circumstances have occurred that indicate an additional impairment has occurred. We will continue to monitor the indefinite-lived intangible assets on an annual basis as of the beginning of our fourth quarter and whenever events and changes in circumstances indicate there may be a potential impairment. | ||||||||||||||||||||||||
Amortization expense related to finite-lived intangible assets was $9 million and $27 million for the three and nine months ended September 30, 2014, respectively, and $9 million and $28 million for the three and nine months ended September 30, 2013, respectively. |
Derivative_Financial_Instrumen
Derivative Financial Instruments | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | |||||||||||||||
Derivative Financial Instruments | ' | |||||||||||||||
Derivative Financial Instruments | ||||||||||||||||
Risk Management Objective of Using Derivatives | ||||||||||||||||
We are exposed to certain risks arising from both our business operations and economic conditions and principally manage our exposures to these risks through management of our core business activities. Certain of our foreign operations expose us to fluctuations of foreign interest rates and exchange rates that may impact revenues, expenses, cash receipts and payments. We enter into derivative financial instruments to protect the value or fix the amount of certain cash flows in terms of the functional currency of the business unit with that exposure. | ||||||||||||||||
Cash Flow Hedges of Foreign Exchange Risk | ||||||||||||||||
We are exposed to fluctuations in various foreign currencies against our functional currencies. We use foreign currency derivatives including currency forward agreements to manage our exposure to fluctuations in the various exchange rates. Currency forward agreements involve fixing the foreign currency exchange rate for delivery of a specified amount of foreign currency on a specified date. | ||||||||||||||||
Certain business units within our segments with exposure to foreign currency exchange risks have designated certain currency forward agreements as cash flow hedges of forecasted intercompany inventory purchases and sales. | ||||||||||||||||
Listed in the table below are the outstanding foreign currency derivatives that were used to hedge foreign exchange risks as of September 30, 2014. | ||||||||||||||||
(in millions; except number of instruments) | ||||||||||||||||
Foreign Currency Derivative | Number of | Total Notional | Sell Notional Currency | Total Notional | Buy Notional | |||||||||||
Instruments | Sold | Purchased | Currency | |||||||||||||
Buy HUF/Sell EUR Forward | 7 | 8 | Euro (EUR) | 2,423 | Hungarian Forint (HUF) | |||||||||||
Buy PLN/Sell EUR Forward | 14 | 12 | Euro (EUR) | 50 | Polish Zloty (PLN) | |||||||||||
Buy SEK/Sell EUR Forward | 15 | 94 | Euro (EUR) | 852 | Swedish Krona (SEK) | |||||||||||
Buy USD/Sell CAD Forward | 13 | 17 | Canadian Dollar (CAD) | 15 | United States Dollar (USD) | |||||||||||
Sell AUD/Buy EUR Forward | 16 | 16 | Australian Dollar (AUD) | 11 | Euro (EUR) | |||||||||||
Sell AUD/Buy USD Forward | 7 | 5 | Australian Dollar (AUD) | 5 | United States Dollar (USD) | |||||||||||
Sell CAD/Buy EUR Forward | 17 | 21 | Canadian Dollar (CAD) | 14 | Euro (EUR) | |||||||||||
Sell GBP/Buy EUR Forward | 20 | 25 | British Pound Sterling (GBP) | 31 | Euro (EUR) | |||||||||||
Sell USD/Buy EUR Forward | 34 | 89 | United States Dollar (USD) | 66 | Euro (EUR) | |||||||||||
The table below presents the effect of our derivative financial instruments on the Condensed Consolidated Income Statements and Statements of Comprehensive Income. | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(in millions) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Derivatives in Cash Flow Hedges | ||||||||||||||||
Foreign Exchange Contracts | ||||||||||||||||
Amount of (loss) gain recognized in Other Comprehensive Income (a) | $ | (6 | ) | $ | 2 | $ | (14 | ) | $ | — | ||||||
Amount of loss (gain) reclassified from Other Comprehensive Income into revenue (a) | 1 | — | — | (1 | ) | |||||||||||
Amount of loss (gain) reclassified from Other Comprehensive Income into cost of revenue (a) | 1 | 1 | 1 | 1 | ||||||||||||
(a) | Effective portion | |||||||||||||||
As of September 30, 2014, $11 million of the net unrealized losses on cash flow hedges is expected to be reclassified into earnings in the next 12 months. The ineffective portion of the change in fair value of a cash flow hedge is excluded from effectiveness testing and is recognized immediately in selling, general and administrative expenses in the Condensed Consolidated Income Statements. For the three and nine months ended September 30, 2014 and 2013, the amounts were not material. | ||||||||||||||||
The fair values of our foreign exchange contracts currently included in our hedging program were as follows: | ||||||||||||||||
(in millions) | September 30, | December 31, | ||||||||||||||
2014 | 2013 | |||||||||||||||
Derivatives designated as hedging instruments | ||||||||||||||||
Assets | ||||||||||||||||
Other current assets | $ | 1 | $ | 1 | ||||||||||||
Liabilities | ||||||||||||||||
Other current liabilities | (9 | ) | — | |||||||||||||
Accrued_and_Other_Current_Liab
Accrued and Other Current Liabilities | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Payables and Accruals [Abstract] | ' | |||||||
Accrued and Other Current Liabilities | ' | |||||||
Accrued and Other Current Liabilities | ||||||||
The components of total accrued and other current liabilities are as follows: | ||||||||
(in millions) | September 30, | December 31, | ||||||
2014 | 2013 | |||||||
Compensation and other employee benefits | $ | 185 | $ | 215 | ||||
Customer-related liabilities | 69 | 63 | ||||||
Accrued warranty costs | 32 | 36 | ||||||
Accrued taxes | 74 | 45 | ||||||
Other accrued liabilities | 135 | 120 | ||||||
Total accrued and other current liabilities | $ | 495 | $ | 479 | ||||
Credit_Facilities_and_LongTerm
Credit Facilities and Long-Term Debt | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Debt Disclosure [Abstract] | ' | |||||||
Credit Facilities and Long-Term Debt | ' | |||||||
Credit Facilities and Long-Term Debt | ||||||||
Total debt outstanding is summarized as follows: | ||||||||
(in millions) | September 30, | December 31, | ||||||
2014 | 2013 | |||||||
Short-term borrowings and current maturities of long-term debt | $ | 41 | $ | 42 | ||||
Long-term debt | ||||||||
3.550% Senior Notes due 2016 (a) | $ | 600 | $ | 600 | ||||
4.875% Senior Notes due 2021 (a) | 600 | 600 | ||||||
Unamortized discount (b) | (1 | ) | (1 | ) | ||||
Long-term debt | $ | 1,199 | $ | 1,199 | ||||
Total debt | $ | 1,240 | $ | 1,241 | ||||
(a) | The fair value of our Senior Notes (as defined below) was determined using quoted prices in active markets for identical securities, which are considered Level 1 inputs. The fair value of our Senior Notes due 2016 (as defined below) was $627 million and $635 million as of September 30, 2014 and December 31, 2013, respectively. The fair value of our Senior Notes due 2021 (as defined below) was $652 million and $629 million as of September 30, 2014 and December 31, 2013, respectively. | |||||||
(b) | The unamortized discount is recognized as a reduction in the carrying value of the Senior Notes in the Condensed Consolidated Balance Sheets and is being amortized to interest expense in our Condensed Consolidated Income Statements over the expected remaining terms of the Senior Notes. | |||||||
Senior Notes | ||||||||
On September 20, 2011, we issued 3.550% Senior Notes of $600 million aggregate principal amount due September 2016 (the "Senior Notes due 2016") and 4.875% Senior Notes of $600 million aggregate principal amount due October 2021 (the "Senior Notes due 2021" and together with the Senior Notes due 2016 the "Senior Notes"). | ||||||||
The Senior Notes include covenants which restrict our ability, subject to exceptions, to incur debt secured by liens and engage in sale and leaseback transactions, as well as provide for customary events of default (subject, in certain cases, to receipt of notice of default and/or customary grace and cure periods). We may redeem the Senior Notes, as applicable, in whole or in part, at any time at a redemption price equal to the principal amount of the Senior Notes to be redeemed, plus a make-whole premium. As of September 30, 2014, we were in compliance with all covenants. If a change of control triggering event (as defined in the Senior Notes indenture) occurs, we will be required to make an offer to purchase the Senior Notes at a price equal to 101% of their principal amount plus accrued and unpaid interest to the date of repurchase. | ||||||||
Interest on the Senior Notes due 2016 is payable on March 20 and September 20 of each year. Interest on the Senior Notes due 2021 is payable on April 1 and October 1 of each year. | ||||||||
Four Year Competitive Advance and Revolving Credit Facility | ||||||||
Effective October 31, 2011, Xylem and its subsidiaries entered into a Four Year Competitive Advance and Revolving Credit Facility (the "Credit Facility") with JPMorgan Chase Bank, N.A., as administrative agent, and a syndicate of lenders. The Credit Facility provides for an aggregate principal amount of up to $600 million of: (i) a competitive advance borrowing option which will be provided on an uncommitted competitive advance basis through an auction mechanism (the "competitive loans"), (ii) revolving extensions of credit (the "revolving loans") outstanding at any time and (iii) the issuance of letters of credit in a face amount not in excess of $100 million outstanding at any time. | ||||||||
At our election, the interest rate per annum applicable to the competitive advances will be based on either (i) a Eurodollar rate determined by reference to LIBOR, plus an applicable margin offered by the lender making such loans and accepted by us or (ii) a fixed percentage rate per annum specified by the lender making such loans. At our election, the interest rate per annum applicable to the revolving loans will be based on either (i) a Eurodollar rate determined by reference to LIBOR, adjusted for statutory reserve requirements, plus an applicable margin or (ii) a fluctuating rate of interest determined by reference to the greatest of: (a) the prime rate of JPMorgan Chase Bank, N.A., (b) the U.S. Federal Funds effective rate plus half of 1% or (c) the Eurodollar rate determined by reference to LIBOR, adjusted for statutory reserve requirements, in each case, plus an applicable margin. | ||||||||
In accordance with the terms, we may not exceed a maximum leverage ratio of 3.50 (based on a ratio of total debt to earnings before interest, taxes, depreciation and amortization) throughout the term. As of September 30, 2014, we were in compliance with all covenants. The Credit Facility also contains limitations on, among other things, incurring debt, granting liens, and entering sale and leaseback transactions. In addition, the Credit Facility contains other terms and conditions such as customary representations and warranties, additional covenants and customary events of default. | ||||||||
As of September 30, 2014, the Credit Facility remains undrawn. | ||||||||
Research and Development Facility Agreement | ||||||||
On December 4, 2013, the Company amended and restated its Risk Sharing Finance Facility Agreement (the "R&D Facility Agreement") with The European Investment Bank (the "EIB") to add an additional borrower under the facility. The facility provides an aggregate principal amount of up to €120 million (approximately $153 million) to finance research projects and infrastructure development in the European Union. The Company's wholly owned subsidiaries in Luxembourg, Xylem Holdings S.á r.l. and Xylem International S.á r.l., are the borrowers under the R&D Facility Agreement. The obligations of the borrowers under the R&D Facility Agreement are guaranteed by the Company under an Amended and Restated Deed of Guarantee, dated as of December 4, 2013, in favor of the EIB. The funds are available to finance research and development projects during the period from 2013 through 2016 at the Company's R&D facilities in Sweden, Germany, Italy, the United Kingdom, Austria, Norway and Hungary. | ||||||||
Under the R&D Facility Agreement, the borrower can draw loans on or before June 14, 2015 with a maturity of no longer than 12 years. The R&D Facility Agreement provides for Fixed Rate loans and Floating Rate loans. The interest rate per annum applicable to Fixed Rate loans is at a fixed percentage rate per annum specified by the EIB which includes the applicable margin. The interest rate per annum applicable to Floating Rate loans is at the rate determined by reference to EURIBOR for loans drawn in Euros and LIBOR for loans drawn in Pounds Sterling or U.S. Dollars, plus an applicable spread specified by the EIB which includes the applicable margin. The applicable margin for both Fixed Rate loans and Floating Rate loans is determined by reference to the credit rating of the Company. | ||||||||
In accordance with the terms of the R&D Facility Agreement, we may not exceed a maximum leverage ratio of 3.50 (based on a ratio of total debt to earnings before interest, taxes, depreciation and amortization) throughout the term. As of September 30, 2014, we were in compliance with all covenants. The R&D Facility Agreement also contains limitations on, among other things, incurring debt, granting liens, and entering into sale and leaseback transactions. In addition, the R&D Facility Agreement contains other terms and conditions, such as customary representations and warranties, additional covenants and customary events of default. | ||||||||
As of September 30, 2014, $36 million was outstanding under the R&D Facility Agreement. Although the borrowing term for this arrangement is for five years, we have classified it as short-term debt on our Condensed Consolidated Balance Sheet since we intend to repay this obligation in less than one year. |
Postretirement_Benefit_Plans
Postretirement Benefit Plans | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | ' | |||||||||||||||
Postretirement Benefit Plans | ' | |||||||||||||||
Postretirement Benefit Plans | ||||||||||||||||
The following table provides the components of net periodic benefit cost for our defined benefit pension plans, disaggregated by domestic and international plans. | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(in millions) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Domestic defined benefit pension plans: | ||||||||||||||||
Service cost | $ | 1 | $ | 1 | $ | 2 | $ | 2 | ||||||||
Interest cost | — | 1 | 2 | 3 | ||||||||||||
Expected return on plan assets | (1 | ) | (1 | ) | (3 | ) | (3 | ) | ||||||||
Amortization of net actuarial loss | — | 1 | 1 | 3 | ||||||||||||
Net periodic benefit cost | $ | — | $ | 2 | $ | 2 | $ | 5 | ||||||||
International defined benefit pension plans: | ||||||||||||||||
Service cost | $ | 3 | $ | 3 | $ | 11 | $ | 10 | ||||||||
Interest cost | 8 | 7 | 22 | 21 | ||||||||||||
Expected return on plan assets | (8 | ) | (7 | ) | (25 | ) | (23 | ) | ||||||||
Amortization of net actuarial loss | 2 | 3 | 6 | 9 | ||||||||||||
Net periodic benefit cost | $ | 5 | $ | 6 | $ | 14 | $ | 17 | ||||||||
Total net periodic benefit cost | $ | 5 | $ | 8 | $ | 16 | $ | 22 | ||||||||
The total net periodic benefit cost for other postretirement employee benefit plans was $1 million and $4 million for the three and nine months ended September 30, 2014, respectively, including amounts recognized in other comprehensive income of less than $1 million and $1 million, respectively. The total net periodic benefit cost for other postretirement employee benefit plans was $2 million and $5 million for the three and nine months ended September 30, 2013, respectively, including amounts recognized in other comprehensive income of $1 million and $2 million, respectively. | ||||||||||||||||
We contributed $30 million and $32 million to postretirement benefit plans during the nine months ended September 30, 2014 and 2013, respectively. Additional contributions ranging between approximately $5 million and $10 million are expected during the remainder of 2014. | ||||||||||||||||
During the third quarter 2014, we amended one of our international pension plans as well as one of our domestic other postretirement plans. The pension plan amendment froze the accrual of benefits and closed the plan to new entrants. The other postretirement plan amendment modified the accrual of benefits and closed the plan to new entrants. The overall impact of these changes to our third quarter financial statements was a $10 million increase to funded status. This included a net loss of $3 million ($1 million net of tax) and a prior service credit of $13 million ($8 million net of tax) recognized in other comprehensive income. |
StockBased_Compensation_Plans
Stock-Based Compensation Plans | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ||||||||
Stock-Based Compensation Plans | ' | ||||||||
Share-Based Compensation Plans | |||||||||
Share-based compensation expense was $5 million and $14 million during the three and nine months ended September 30, 2014, respectively, and $9 million and $21 million during the three and nine months ended September 30, 2013, respectively. The unamortized compensation expense related to our stock options, restricted stock and performance based shares was $7 million, $20 million and $4 million, respectively, at September 30, 2014 and is expected to be recognized over a weighted average period of 2.0, 1.8 and 2.2 years, respectively. The amount of cash received from the exercise of stock options was $17 million and $2 million for the nine months ended September 30, 2014 and 2013, respectively. | |||||||||
On March 17, 2014, the Company named Patrick K. Decker as the new President and Chief Executive Officer of Xylem Inc. As part of Mr. Decker's employment agreement, he was awarded 165,584 stock options, 40,342 restricted stock and 40,342 performance-based shares. The award was granted subject to the approval of the Xylem Omnibus Incentive Plan, which was obtained at the annual meeting of shareholders in May 2014. The share and associated expense amounts are included beginning as of the May approval date. | |||||||||
Stock Option Grants | |||||||||
The following is a summary of the changes in outstanding stock options for the nine months ended September 30, 2014: | |||||||||
(shares in thousands) | Shares | Weighted | Weighted Average | ||||||
Average | Remaining | ||||||||
Exercise | Contractual | ||||||||
Price / Share | Term (Years) | ||||||||
Outstanding at January 1, 2014 | 3,504 | $ | 26.8 | 6.4 | |||||
Granted | 543 | $ | 38.16 | 10 | |||||
Exercised | (617 | ) | $ | 27.87 | 4.4 | ||||
Forfeited | (70 | ) | $ | 25.93 | 6 | ||||
Outstanding at September 30, 2014 | 3,360 | $ | 28.47 | 6.6 | |||||
Options exercisable at September 30, 2014 | 1,897 | $ | 26.87 | 5.3 | |||||
Vested and expected to vest as of September 30, 2014 | 3,247 | $ | 28.26 | 6.5 | |||||
The aggregate intrinsic value of the outstanding, exercisable, and vested and expected to vest stock options as of September 30, 2014 was $28 million, $18 million and $28 million, respectively. The total intrinsic value of options exercised (which is the amount by which the stock price exceeded the exercise price of the options on the date of exercise) during the nine months ended September 30, 2014 was $6 million. | |||||||||
Stock Option Fair Value | |||||||||
The fair value of each option grant was estimated on the date of grant using the binomial lattice pricing model which incorporates multiple and variable assumptions over time, including assumptions such as employee exercise patterns, stock price volatility and changes in dividends. The following are weighted-average assumptions for 2014 grants: | |||||||||
Dividend yield | 1.34 | % | |||||||
Volatility | 28.49 | % | |||||||
Risk-free interest rate | 1.82 | % | |||||||
Expected term (in years) | 5.6 | ||||||||
Weighted-average fair value / share | $ | 9.71 | |||||||
Expected volatility is calculated based on a weighted analysis of historic and implied volatility measures for a set of peer companies and Xylem. We use historical data to estimate option exercise and employee termination behavior within the valuation model. Employee groups and option characteristics are considered separately for valuation purposes. The expected term represents an estimate of the period of time options are expected to remain outstanding. The expected term provided above represents the weighted average of expected behavior for certain groups of employees who have historically exhibited different behavior. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of option grant. | |||||||||
Restricted Stock Grants | |||||||||
The following is a summary of restricted stock activity for the nine months ended September 30, 2014: | |||||||||
(shares in thousands) | Shares | Weighted | |||||||
Average | |||||||||
Grant Date | |||||||||
Fair Value /Share | |||||||||
Outstanding at January 1, 2014 | 1,275 | $ | 27.67 | ||||||
Granted | 377 | $ | 38.35 | ||||||
Vested | (230 | ) | $ | 30.98 | |||||
Forfeited | (79 | ) | $ | 29.13 | |||||
Outstanding at September 30, 2014 | 1,343 | $ | 30.06 | ||||||
Performance-Based Share Grants | |||||||||
The following is a summary of performance-based share grants for the nine months ended September 30, 2014: | |||||||||
(shares in thousands) | Shares | Weighted | |||||||
Average | |||||||||
Grant Date | |||||||||
Fair Value /Share | |||||||||
Outstanding at January 1, 2014 | 52 | $ | 27.49 | ||||||
Granted | 84 | $ | 37.87 | ||||||
Vested | — | $ | — | ||||||
Forfeited | — | $ | — | ||||||
Outstanding at September 30, 2014 | 136 | $ | 33.85 | ||||||
Capital_Stock_Capital_Stock
Capital Stock Capital Stock | 9 Months Ended |
Sep. 30, 2014 | |
Equity [Abstract] | ' |
Capital Stock | ' |
Capital Stock | |
As announced on August 21, 2013, the Board of Directors authorized the repurchase of up to $250 million in shares with no expiration date. The program's objective is to deploy our capital in a manner that benefits our shareholders and maintains our focus on growth. During the three and nine months ended September 30, 2014, we repurchased 0.8 million and 3.4 million shares for $30 million and $130 million, respectively, under this program. There are up to $70 million in shares that may still be purchased under this plan as of September 30, 2014. For both the three and nine months ended September 30, 2013, we repurchased 1.0 million shares for $25 million under this program. | |
As announced on August 20, 2012, the Board of Directors authorized the repurchase of up to 2.0 million shares of common stock with no expiration date. The program's objective is to offset dilution associated with various Xylem employee stock plans by acquiring shares in the open market from time to time. There were no shares repurchased under this program during the three and nine months ended September 30, 2014. There are up to 1.0 million shares that may still be purchased under this plan as of September 30, 2014. There were no shares repurchased during the three months ended September 30, 2013. For the nine months ended September 30, 2013, there were 0.6 million shares repurchased for $17 million. | |
Aside from the aforementioned repurchase programs, we repurchased less than 0.1 million shares for less than $1 million during the three months ended September 30, 2014, in relation to settlement of employee tax withholding obligations due as a result of the vesting of restricted stock. We repurchased less than 0.1 million shares for $2 million during the nine months ended September 30, 2014. Likewise, during the three and nine months ended September 30, 2013, we repurchased approximately 0.2 million shares in both periods for $4 million and $6 million, respectively. |
Accumulated_Other_Comprehensiv
Accumulated Other Comprehensive Income (Loss) | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Equity [Abstract] | ' | |||||||||||||||
Accumulated Other Comprehensive Income (Loss) | ' | |||||||||||||||
Accumulated Other Comprehensive Income (Loss) | ||||||||||||||||
The following table provides the components of accumulated other comprehensive income (loss) for the three months ended September 30, 2014: | ||||||||||||||||
(in millions) | Foreign Currency Translation | Postretirement Benefit Plans | Derivative Instruments | Total | ||||||||||||
Balance at July 1, 2014 | $ | 352 | $ | (187 | ) | $ | (7 | ) | $ | 158 | ||||||
Foreign currency translation adjustment | (114 | ) | — | — | (114 | ) | ||||||||||
Changes in postretirement benefit plans | — | 10 | — | 10 | ||||||||||||
Income tax expense on changes in postretirement benefit plans | — | (3 | ) | — | (3 | ) | ||||||||||
Amortization of net actuarial loss on postretirement benefit plans into: | ||||||||||||||||
Cost of revenue | — | 1 | — | 1 | ||||||||||||
Selling, general and administrative expenses | — | 1 | — | 1 | ||||||||||||
Income tax expense on amortization of postretirement benefit plan items | — | (1 | ) | — | (1 | ) | ||||||||||
Unrealized loss on foreign exchange agreements | — | — | (6 | ) | (6 | ) | ||||||||||
Income tax benefit on unrealized loss on foreign exchange agreements | — | — | 1 | 1 | ||||||||||||
Reclassification of unrealized loss on foreign exchange agreements into revenue | — | — | 1 | 1 | ||||||||||||
Reclassification of unrealized loss on foreign exchange agreements into cost of revenue | — | — | 1 | 1 | ||||||||||||
Balance at September 30, 2014 | $ | 238 | $ | (179 | ) | $ | (10 | ) | $ | 49 | ||||||
The following table provides the components of accumulated other comprehensive income (loss) for the nine months ended September 30, 2014: | ||||||||||||||||
(in millions) | Foreign Currency Translation | Postretirement Benefit Plans | Derivative Instruments | Total | ||||||||||||
Balance at January 1, 2014 | $ | 351 | $ | (186 | ) | $ | 2 | $ | 167 | |||||||
Foreign currency translation adjustment | (113 | ) | — | — | (113 | ) | ||||||||||
Changes in postretirement benefit plans | — | 3 | — | 3 | ||||||||||||
Income tax expense on changes in postretirement benefit plans | — | (1 | ) | — | (1 | ) | ||||||||||
Amortization of net actuarial loss on postretirement benefit plans into: | ||||||||||||||||
Cost of revenue | — | 3 | — | 3 | ||||||||||||
Selling, general and administrative expenses | — | 5 | — | 5 | ||||||||||||
Income tax expense on amortization of postretirement benefit plan items | — | (3 | ) | — | (3 | ) | ||||||||||
Unrealized loss on foreign exchange agreements | — | — | (14 | ) | (14 | ) | ||||||||||
Income tax benefit on unrealized loss on foreign exchange agreements | — | — | 1 | 1 | ||||||||||||
Reclassification of unrealized loss on foreign exchange agreements into cost of revenue | — | — | 1 | 1 | ||||||||||||
Balance at September 30, 2014 | $ | 238 | $ | (179 | ) | $ | (10 | ) | $ | 49 | ||||||
Commitments_and_Contingencies
Commitments and Contingencies | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Commitments and Contingencies Disclosure [Abstract] | ' | |||||||
Commitments and Contingencies | ' | |||||||
Commitments and Contingencies | ||||||||
General | ||||||||
From time to time, we are involved in legal proceedings that are incidental to the operation of our businesses, including acquisitions and divestitures, intellectual property matters, product liability and personal injury claims, employment and pension matters, government and commercial contract disputes. | ||||||||
On October 1, 2014, the court approved a settlement agreement with respect to a purchase price dispute with the minority shareholders arising from one of our historical acquisitions. All outstanding claims have been settled and the court proceedings have been terminated. The settlement has been reflected on the September 30, 2014 Condensed Consolidated Balance Sheet and is consistent with what had been previously accrued. | ||||||||
From time to time, claims may be asserted against Xylem alleging injury caused by any of our products resulting from asbestos exposure. We believe there are numerous legal defenses available for such claims and would defend ourselves vigorously. Pursuant to the Distribution Agreement ("Distribution Agreement") dated October 25, 2011 among ITT Corporation ("ITT" or "former parent"), Exelis Inc. and Xylem, the former parent has an obligation to indemnify, defend and hold Xylem harmless for asbestos product liability matters, including settlements, judgments, and legal defense costs associated with all pending and future claims that may arise from past sales of the former parent’s legacy products. We believe the former parent remains a substantial entity with sufficient financial resources to honor its obligations to us. | ||||||||
Although the ultimate outcome of any legal matter cannot be predicted with certainty, based on present information, including our assessment of the merits of the particular claims, we do not expect that any asserted or unasserted legal claims or proceedings, individually or in aggregate, will have a material adverse effect on our results of operations or financial condition. We have estimated and accrued $17 million for these general legal matters as of both September 30, 2014 and December 31, 2013. | ||||||||
Indemnifications | ||||||||
As part of our 2011 spin-off from our former parent, ITT, Exelis Inc. and Xylem will indemnify, defend and hold harmless each of the other parties with respect to such parties’ assumed or retained liabilities under the Distribution Agreement and breaches of the Distribution Agreement or related spin agreements. The former parent’s indemnification obligations include asserted and unasserted asbestos and silica liability claims that relate to the presence or alleged presence of asbestos or silica in products manufactured, repaired or sold prior to October 31, 2011, the Distribution Date, subject to limited exceptions with respect to certain employee claims, or in the structure or material of any building or facility, subject to exceptions with respect to employee claims relating to Xylem buildings or facilities. The indemnification associated with pending and future asbestos claims does not expire. Xylem has not recorded a liability for material matters for which we expect to be indemnified by the former parent or Exelis Inc. through the Distribution Agreement and we are not aware of any claims or other circumstances that would give rise to material payments from us under such indemnifications. | ||||||||
Environmental | ||||||||
In the ordinary course of business, we are subject to federal, state, local, and foreign environmental laws and regulations. We are responsible, or are alleged to be responsible, for ongoing environmental investigation and remediation of sites in various countries. These sites are in various stages of investigation and/or remediation and in many of these proceedings our liability is considered de minimis. We have received notification from the U.S. Environmental Protection Agency, and from similar state and foreign environmental agencies, that a number of sites formerly or currently owned and/or operated by Xylem or for which we are responsible under the Distribution Agreement, and other properties or water supplies that may be or have been impacted from those operations, contain disposed or recycled materials or wastes and require environmental investigation and/or remediation. These sites include instances where we have been identified as a potentially responsible party under federal and state environmental laws and regulations. | ||||||||
Accruals for environmental matters are recorded on a site-by-site basis when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated, based on current law and existing technologies. Our accrued liabilities for these environmental matters represent the best estimates related to the investigation and remediation of environmental media such as water, soil, soil vapor, air and structures, as well as related legal fees. These estimates, and related accruals, are reviewed quarterly and updated for progress of investigation and remediation efforts and changes in facts and legal circumstances. Liabilities for these environmental expenditures are recorded on an undiscounted basis. We have estimated and accrued $6 million and $8 million as of September 30, 2014 and December 31, 2013 for environmental matters, respectively. | ||||||||
It is difficult to estimate the final costs of investigation and remediation due to various factors, including incomplete information regarding particular sites and other potentially responsible parties, uncertainty regarding the extent of investigation or remediation and our share, if any, of liability for such conditions, the selection of alternative remedial approaches, and changes in environmental standards and regulatory requirements. We believe the total amount accrued is reasonable based on existing facts and circumstances. | ||||||||
Warranties | ||||||||
We warrant numerous products, the terms of which vary widely. In general, we warrant products against defect and specific non-performance. The table below provides the changes in our product warranty accrual. | ||||||||
(in millions) | 2014 | 2013 | ||||||
Warranty accrual – January 1 | $ | 37 | $ | 40 | ||||
Net changes for product warranties in the period | 19 | 24 | ||||||
Settlement of warranty claims | (23 | ) | (26 | ) | ||||
Foreign currency and other | (1 | ) | — | |||||
Warranty accrual - September 30 | $ | 32 | $ | 38 | ||||
Segment_Information
Segment Information | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Segment Reporting [Abstract] | ' | |||||||||||||||
Segment Information | ' | |||||||||||||||
Segment Information | ||||||||||||||||
Our business has two reportable segments: Water Infrastructure and Applied Water. The Water Infrastructure segment, comprising our Water Solutions and Analytics operating segments, focuses on the transportation, treatment and testing of water, offering a range of products including water and wastewater pumps, treatment and testing equipment, and controls and systems. The Applied Water segment encompasses the uses of water and focuses on the residential, commercial, industrial and agricultural markets offering a wide range of products, including pumps, valves and heat exchangers. Corporate and other consists of corporate office expenses including compensation, benefits, occupancy, depreciation, and other administrative costs, as well as charges related to certain matters, such as environmental matters that are managed at a corporate level and are not included in the business segments in evaluating performance or allocating resources. | ||||||||||||||||
The accounting policies of each segment are the same as those described in the summary of significant accounting policies (see Note 1 in the 2013 Annual Report). The following tables contain financial information for each reportable segment. | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(in millions) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Revenue: | ||||||||||||||||
Water Infrastructure | $ | 619 | $ | 619 | $ | 1,823 | $ | 1,766 | ||||||||
Applied Water | 362 | 360 | 1,105 | 1,086 | ||||||||||||
Eliminations | (18 | ) | (14 | ) | (54 | ) | (48 | ) | ||||||||
Total | $ | 963 | $ | 965 | $ | 2,874 | $ | 2,804 | ||||||||
Operating Income: | ||||||||||||||||
Water Infrastructure | $ | 94 | $ | 88 | $ | 217 | $ | 171 | ||||||||
Applied Water | 52 | 40 | 145 | 125 | ||||||||||||
Corporate and other | (16 | ) | (30 | ) | (40 | ) | (62 | ) | ||||||||
Total | $ | 130 | $ | 98 | $ | 322 | $ | 234 | ||||||||
Depreciation and Amortization: | ||||||||||||||||
Water Infrastructure | $ | 27 | $ | 27 | $ | 81 | $ | 83 | ||||||||
Applied Water | 7 | 7 | 21 | 21 | ||||||||||||
Corporate and other | 1 | 2 | 5 | 6 | ||||||||||||
Total | $ | 35 | $ | 36 | $ | 107 | $ | 110 | ||||||||
Capital Expenditures: | ||||||||||||||||
Water Infrastructure | $ | 19 | $ | 18 | $ | 50 | $ | 57 | ||||||||
Applied Water | 8 | 7 | 21 | 26 | ||||||||||||
Corporate and other | 2 | 5 | 6 | 8 | ||||||||||||
Total | $ | 29 | $ | 30 | $ | 77 | $ | 91 | ||||||||
The following table contains the total assets for each reportable segment. | ||||||||||||||||
Total Assets | ||||||||||||||||
(in millions) | September 30, | December 31, | ||||||||||||||
2014 | 2013 | |||||||||||||||
Water Infrastructure | $ | 2,918 | $ | 2,989 | ||||||||||||
Applied Water | 1,333 | 1,340 | ||||||||||||||
Corporate and other (a) | 563 | 567 | ||||||||||||||
Total | $ | 4,814 | $ | 4,896 | ||||||||||||
(a) | Corporate and other consists of items pertaining to our corporate headquarters function, which principally consist of cash, deferred tax assets, pension assets and certain property, plant and equipment. |
Background_and_Basis_of_Presen1
Background and Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Accounting Policies [Abstract] | ' |
Basis of Presentation | ' |
Basis of Presentation | |
The interim condensed consolidated financial statements reflect our financial position and results of operations in conformity with accounting principles generally accepted in the United States of America ("GAAP"). All transactions between our businesses have been eliminated. | |
The unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and, in the opinion of management, reflect all adjustments (which include normal recurring adjustments) considered necessary for a fair presentation of the financial position and results of operations for the periods presented. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such SEC rules. We believe that the disclosures made are adequate to make the information presented not misleading. We consistently applied the accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2013 ("2013 Annual Report") in preparing these unaudited condensed consolidated financial statements, with the exception of accounting standard updates described in Note 2. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our 2013 Annual Report. Certain prior year amounts have been reclassified to conform to the current year presentation. | |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Estimates are revised as additional information becomes available. Estimates and assumptions are used for, but not limited to, postretirement obligations and assets, revenue recognition, income tax contingency accruals and valuation allowances, goodwill impairment testing and contingent liabilities. Actual results could differ from these estimates. Additionally, our interim condensed consolidated financial statements may not be indicative of our future performance. | |
Our quarterly financial periods end on the Saturday closest to the last day of the calendar quarter, except for the fourth quarter which ends on December 31. For ease of presentation, the condensed consolidated financial statements included herein are described as ending on the last day of the calendar quarter. |
Restructuring_Charges_Tables
Restructuring Charges (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Restructuring and Related Activities [Abstract] | ' | |||||||||||||||
Components of restructuring and asset imparment charges | ' | |||||||||||||||
During the three and nine months ended September 30, 2014, we recognized restructuring charges of less than $1 million and $18 million, respectively. We incurred these charges primarily in an effort to reposition our European and North American businesses to optimize our cost structure and improve our operational efficiency and effectiveness. The charges relate to a reduction in structural costs, including the elimination of headcount and consolidation of facilities within both our Water Infrastructure and Applied Water segments. | ||||||||||||||||
During the three and nine months ended September 30, 2013 we recognized restructuring charges of $5 million and $30 million, respectively, which related to the reduction in structural costs, including the elimination of headcount and consolidation of facilities within both our Water Infrastructure and Applied Water segments. | ||||||||||||||||
The following table presents the components of restructuring expense for the three and nine months ended September 30, 2014 and 2013. | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(in millions) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
By component: | ||||||||||||||||
Severance and other charges | $ | — | $ | 4 | $ | 18 | $ | 28 | ||||||||
Lease related charges | — | 1 | — | 1 | ||||||||||||
Other restructuring charges | — | — | — | 1 | ||||||||||||
Reversal of restructuring accruals | — | — | — | — | ||||||||||||
Total restructuring charges | $ | — | $ | 5 | $ | 18 | $ | 30 | ||||||||
By segment: | ||||||||||||||||
Water Infrastructure | $ | — | $ | 3 | $ | 12 | $ | 24 | ||||||||
Applied Water | — | 2 | 6 | 6 | ||||||||||||
Restructuring Accruals | ' | |||||||||||||||
The following table displays a rollforward of the restructuring accruals, presented on our Condensed Consolidated Balance Sheets within accrued and other current liabilities, for the nine months ended September 30, 2014 and 2013. | ||||||||||||||||
(in millions) | 2014 | 2013 | ||||||||||||||
Restructuring accruals - January 1 | $ | 13 | $ | 9 | ||||||||||||
Restructuring charges | 18 | 30 | ||||||||||||||
Cash payments | (20 | ) | (24 | ) | ||||||||||||
Other | — | — | ||||||||||||||
Restructuring accruals - September 30 | $ | 11 | $ | 15 | ||||||||||||
By segment: | ||||||||||||||||
Water Infrastructure | $ | 8 | $ | 12 | ||||||||||||
Applied Water | 3 | 3 | ||||||||||||||
Planned Employee Reductions Associatied with Restructuring | ' | |||||||||||||||
The following is a rollforward for the nine months ended September 30, 2014 and 2013 of employee position eliminations associated with restructuring activities. | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Planned reductions - January 1 | 51 | 54 | ||||||||||||||
Additional planned reductions | 233 | 439 | ||||||||||||||
Actual reductions | (206 | ) | (346 | ) | ||||||||||||
Planned reductions - September 30 | 78 | 147 | ||||||||||||||
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Earnings Per Share [Abstract] | ' | |||||||||||||||
Basic and diluted net earnings per share | ' | |||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Net income (in millions) | $ | 106 | $ | 73 | $ | 241 | $ | 160 | ||||||||
Shares (in thousands): | ||||||||||||||||
Weighted average common shares outstanding | 182,196 | 185,044 | 183,343 | 185,294 | ||||||||||||
Add: Participating securities (a) | 48 | 122 | 46 | 165 | ||||||||||||
Weighted average common shares outstanding — Basic | 182,244 | 185,166 | 183,389 | 185,459 | ||||||||||||
Plus incremental shares from assumed conversions: (b) | ||||||||||||||||
Dilutive effect of stock options | 646 | 175 | 655 | 180 | ||||||||||||
Dilutive effect of restricted stock | 542 | 661 | 529 | 547 | ||||||||||||
Weighted average common shares outstanding — Diluted | 183,432 | 186,002 | 184,573 | 186,186 | ||||||||||||
Basic earnings per share | $ | 0.58 | $ | 0.39 | $ | 1.31 | $ | 0.86 | ||||||||
Diluted earnings per share | $ | 0.58 | $ | 0.39 | $ | 1.31 | $ | 0.86 | ||||||||
(a) | Restricted stock awards containing rights to non-forfeitable dividends that participate in undistributed earnings with common shareholders are considered participating securities for purposes of computing earnings per share. | |||||||||||||||
(b) | Incremental shares from stock options, restricted stock and performance share units are computed by the treasury stock method. The weighted average shares listed below were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive for the periods presented or were otherwise excluded under the treasury stock method. The treasury stock method calculates dilution assuming the exercise of all in-the-money options and vesting of restricted stock and performance share awards, reduced by the repurchase of shares with the proceeds from the assumed exercises, unrecognized compensation expense for outstanding awards and the estimated tax benefit of the assumed exercises. Performance share units will be included in the treasury stock calculation of diluted earnings per share upon achievement of underlying performance conditions. See Note 14, "Share-Based Compensation Plans" for further detail on the performance share units. | |||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(in thousands) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Stock options | 2,709 | 4,414 | 2,769 | 4,342 | ||||||||||||
Restricted stock | 534 | 655 | 532 | 758 | ||||||||||||
Performance shares | 136 | 106 | 114 | 88 | ||||||||||||
Inventories_Tables
Inventories (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Inventory Disclosure [Abstract] | ' | |||||||
Inventories | ' | |||||||
(in millions) | September 30, | December 31, | ||||||
2014 | 2013 | |||||||
Finished goods | $ | 213 | $ | 189 | ||||
Work in process | 37 | 31 | ||||||
Raw materials | 266 | 255 | ||||||
Total inventories, net | $ | 516 | $ | 475 | ||||
Property_Plant_and_Equipment_T
Property, Plant and Equipment (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Property, Plant and Equipment [Abstract] | ' | |||||||
Property, Plant and Equipment | ' | |||||||
(in millions) | September 30, | December 31, | ||||||
2014 | 2013 | |||||||
Land, buildings and improvements | $ | 247 | $ | 263 | ||||
Machinery and equipment | 661 | 685 | ||||||
Equipment held for lease or rental | 205 | 192 | ||||||
Furniture and fixtures | 90 | 93 | ||||||
Construction work in progress | 50 | 49 | ||||||
Other | 22 | 22 | ||||||
Total property, plant and equipment, gross | 1,275 | 1,304 | ||||||
Less accumulated depreciation | 821 | 816 | ||||||
Total property, plant and equipment, net | $ | 454 | $ | 488 | ||||
Goodwill_and_Other_Intangible_1
Goodwill and Other Intangible Assets (Tables) | 9 Months Ended | |||||||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | |||||||||||||||||||||||
Changes in the carrying value of goodwill by operating segment | ' | |||||||||||||||||||||||
Changes in the carrying value of goodwill by reportable segment for the nine months ended September 30, 2014 are as follows: | ||||||||||||||||||||||||
(in millions) | Water | Applied Water | Total | |||||||||||||||||||||
Infrastructure | ||||||||||||||||||||||||
Balance as of January 1, 2014 | $ | 1,149 | $ | 569 | $ | 1,718 | ||||||||||||||||||
Activity in 2014 | ||||||||||||||||||||||||
Goodwill (divested) acquired (a) | — | (6 | ) | (6 | ) | |||||||||||||||||||
Foreign currency and other | (29 | ) | (16 | ) | (45 | ) | ||||||||||||||||||
Balance as of September 30, 2014 | $ | 1,120 | $ | 547 | $ | 1,667 | ||||||||||||||||||
Other Intangible Assets | ' | |||||||||||||||||||||||
Information regarding our other intangible assets is as follows: | ||||||||||||||||||||||||
30-Sep-14 | December 31, 2013 | |||||||||||||||||||||||
(in millions) | Carrying | Accumulated | Net | Carrying | Accumulated | Net | ||||||||||||||||||
Amount | Amortization | Intangibles | Amount | Amortization | Intangibles | |||||||||||||||||||
Customer and distributor relationships | $ | 339 | $ | (118 | ) | $ | 221 | $ | 352 | $ | (104 | ) | $ | 248 | ||||||||||
Proprietary technology | 107 | (40 | ) | 67 | 109 | (36 | ) | 73 | ||||||||||||||||
Trademarks | 34 | (17 | ) | 17 | 35 | (16 | ) | 19 | ||||||||||||||||
Patents and other | 19 | (17 | ) | 2 | 20 | (17 | ) | 3 | ||||||||||||||||
Indefinite-lived intangibles | 141 | — | 141 | 145 | — | 145 | ||||||||||||||||||
$ | 640 | $ | (192 | ) | $ | 448 | $ | 661 | $ | (173 | ) | $ | 488 | |||||||||||
Derivative_Financial_Instrumen1
Derivative Financial Instruments (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | |||||||||||||||
Outstanding foreign currency derivatives used to hedge foreign exchange risks | ' | |||||||||||||||
Listed in the table below are the outstanding foreign currency derivatives that were used to hedge foreign exchange risks as of September 30, 2014. | ||||||||||||||||
(in millions; except number of instruments) | ||||||||||||||||
Foreign Currency Derivative | Number of | Total Notional | Sell Notional Currency | Total Notional | Buy Notional | |||||||||||
Instruments | Sold | Purchased | Currency | |||||||||||||
Buy HUF/Sell EUR Forward | 7 | 8 | Euro (EUR) | 2,423 | Hungarian Forint (HUF) | |||||||||||
Buy PLN/Sell EUR Forward | 14 | 12 | Euro (EUR) | 50 | Polish Zloty (PLN) | |||||||||||
Buy SEK/Sell EUR Forward | 15 | 94 | Euro (EUR) | 852 | Swedish Krona (SEK) | |||||||||||
Buy USD/Sell CAD Forward | 13 | 17 | Canadian Dollar (CAD) | 15 | United States Dollar (USD) | |||||||||||
Sell AUD/Buy EUR Forward | 16 | 16 | Australian Dollar (AUD) | 11 | Euro (EUR) | |||||||||||
Sell AUD/Buy USD Forward | 7 | 5 | Australian Dollar (AUD) | 5 | United States Dollar (USD) | |||||||||||
Sell CAD/Buy EUR Forward | 17 | 21 | Canadian Dollar (CAD) | 14 | Euro (EUR) | |||||||||||
Sell GBP/Buy EUR Forward | 20 | 25 | British Pound Sterling (GBP) | 31 | Euro (EUR) | |||||||||||
Sell USD/Buy EUR Forward | 34 | 89 | United States Dollar (USD) | 66 | Euro (EUR) | |||||||||||
Effect of derivative financial instruments | ' | |||||||||||||||
The table below presents the effect of our derivative financial instruments on the Condensed Consolidated Income Statements and Statements of Comprehensive Income. | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(in millions) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Derivatives in Cash Flow Hedges | ||||||||||||||||
Foreign Exchange Contracts | ||||||||||||||||
Amount of (loss) gain recognized in Other Comprehensive Income (a) | $ | (6 | ) | $ | 2 | $ | (14 | ) | $ | — | ||||||
Amount of loss (gain) reclassified from Other Comprehensive Income into revenue (a) | 1 | — | — | (1 | ) | |||||||||||
Amount of loss (gain) reclassified from Other Comprehensive Income into cost of revenue (a) | 1 | 1 | 1 | 1 | ||||||||||||
(a) | Effective portion | |||||||||||||||
Fair values of foreign exchange contracts | ' | |||||||||||||||
The fair values of our foreign exchange contracts currently included in our hedging program were as follows: | ||||||||||||||||
(in millions) | September 30, | December 31, | ||||||||||||||
2014 | 2013 | |||||||||||||||
Derivatives designated as hedging instruments | ||||||||||||||||
Assets | ||||||||||||||||
Other current assets | $ | 1 | $ | 1 | ||||||||||||
Liabilities | ||||||||||||||||
Other current liabilities | (9 | ) | — | |||||||||||||
Accrued_and_Other_Current_Liab1
Accrued and Other Current Liabilities (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Payables and Accruals [Abstract] | ' | |||||||
Accrued and Other Current Liabilities | ' | |||||||
(in millions) | September 30, | December 31, | ||||||
2014 | 2013 | |||||||
Compensation and other employee benefits | $ | 185 | $ | 215 | ||||
Customer-related liabilities | 69 | 63 | ||||||
Accrued warranty costs | 32 | 36 | ||||||
Accrued taxes | 74 | 45 | ||||||
Other accrued liabilities | 135 | 120 | ||||||
Total accrued and other current liabilities | $ | 495 | $ | 479 | ||||
Credit_Facilities_and_LongTerm1
Credit Facilities and Long-Term Debt (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Debt Disclosure [Abstract] | ' | |||||||
Schedule of Credit Facilities and Long-Term Debt | ' | |||||||
(in millions) | September 30, | December 31, | ||||||
2014 | 2013 | |||||||
Short-term borrowings and current maturities of long-term debt | $ | 41 | $ | 42 | ||||
Long-term debt | ||||||||
3.550% Senior Notes due 2016 (a) | $ | 600 | $ | 600 | ||||
4.875% Senior Notes due 2021 (a) | 600 | 600 | ||||||
Unamortized discount (b) | (1 | ) | (1 | ) | ||||
Long-term debt | $ | 1,199 | $ | 1,199 | ||||
Total debt | $ | 1,240 | $ | 1,241 | ||||
(a) | The fair value of our Senior Notes (as defined below) was determined using quoted prices in active markets for identical securities, which are considered Level 1 inputs. The fair value of our Senior Notes due 2016 (as defined below) was $627 million and $635 million as of September 30, 2014 and December 31, 2013, respectively. The fair value of our Senior Notes due 2021 (as defined below) was $652 million and $629 million as of September 30, 2014 and December 31, 2013, respectively. | |||||||
(b) | The unamortized discount is recognized as a reduction in the carrying value of the Senior Notes in the Condensed Consolidated Balance Sheets and is being amortized to interest expense in our Condensed Consolidated Income Statements over the expected remaining terms of the Senior Notes. |
Postretirement_Benefit_Plans_T
Postretirement Benefit Plans (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | ' | |||||||||||||||
Components of net periodic benefit cost and other amounts recognized in other comprehensive income | ' | |||||||||||||||
he following table provides the components of net periodic benefit cost for our defined benefit pension plans, disaggregated by domestic and international plans. | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(in millions) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Domestic defined benefit pension plans: | ||||||||||||||||
Service cost | $ | 1 | $ | 1 | $ | 2 | $ | 2 | ||||||||
Interest cost | — | 1 | 2 | 3 | ||||||||||||
Expected return on plan assets | (1 | ) | (1 | ) | (3 | ) | (3 | ) | ||||||||
Amortization of net actuarial loss | — | 1 | 1 | 3 | ||||||||||||
Net periodic benefit cost | $ | — | $ | 2 | $ | 2 | $ | 5 | ||||||||
International defined benefit pension plans: | ||||||||||||||||
Service cost | $ | 3 | $ | 3 | $ | 11 | $ | 10 | ||||||||
Interest cost | 8 | 7 | 22 | 21 | ||||||||||||
Expected return on plan assets | (8 | ) | (7 | ) | (25 | ) | (23 | ) | ||||||||
Amortization of net actuarial loss | 2 | 3 | 6 | 9 | ||||||||||||
Net periodic benefit cost | $ | 5 | $ | 6 | $ | 14 | $ | 17 | ||||||||
Total net periodic benefit cost | $ | 5 | $ | 8 | $ | 16 | $ | 22 | ||||||||
StockBased_Compensation_Plans_
Stock-Based Compensation Plans (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ||||||||
Summary of restricted stock activity | ' | ||||||||
The following is a summary of restricted stock activity for the nine months ended September 30, 2014: | |||||||||
(shares in thousands) | Shares | Weighted | |||||||
Average | |||||||||
Grant Date | |||||||||
Fair Value /Share | |||||||||
Outstanding at January 1, 2014 | 1,275 | $ | 27.67 | ||||||
Granted | 377 | $ | 38.35 | ||||||
Vested | (230 | ) | $ | 30.98 | |||||
Forfeited | (79 | ) | $ | 29.13 | |||||
Outstanding at September 30, 2014 | 1,343 | $ | 30.06 | ||||||
Summary of performance based share grants | ' | ||||||||
The following is a summary of performance-based share grants for the nine months ended September 30, 2014: | |||||||||
(shares in thousands) | Shares | Weighted | |||||||
Average | |||||||||
Grant Date | |||||||||
Fair Value /Share | |||||||||
Outstanding at January 1, 2014 | 52 | $ | 27.49 | ||||||
Granted | 84 | $ | 37.87 | ||||||
Vested | — | $ | — | ||||||
Forfeited | — | $ | — | ||||||
Outstanding at September 30, 2014 | 136 | $ | 33.85 | ||||||
Summary of the changes in outstanding stock options | ' | ||||||||
The following is a summary of the changes in outstanding stock options for the nine months ended September 30, 2014: | |||||||||
(shares in thousands) | Shares | Weighted | Weighted Average | ||||||
Average | Remaining | ||||||||
Exercise | Contractual | ||||||||
Price / Share | Term (Years) | ||||||||
Outstanding at January 1, 2014 | 3,504 | $ | 26.8 | 6.4 | |||||
Granted | 543 | $ | 38.16 | 10 | |||||
Exercised | (617 | ) | $ | 27.87 | 4.4 | ||||
Forfeited | (70 | ) | $ | 25.93 | 6 | ||||
Outstanding at September 30, 2014 | 3,360 | $ | 28.47 | 6.6 | |||||
Options exercisable at September 30, 2014 | 1,897 | $ | 26.87 | 5.3 | |||||
Vested and expected to vest as of September 30, 2014 | 3,247 | $ | 28.26 | 6.5 | |||||
Weighted-average assumptions for annual 2014 grants | ' | ||||||||
The following are weighted-average assumptions for 2014 grants: | |||||||||
Dividend yield | 1.34 | % | |||||||
Volatility | 28.49 | % | |||||||
Risk-free interest rate | 1.82 | % | |||||||
Expected term (in years) | 5.6 | ||||||||
Weighted-average fair value / share | $ | 9.71 | |||||||
Accumulated_Other_Comprehensiv1
Accumulated Other Comprehensive Income (Loss) (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Equity [Abstract] | ' | |||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) | ' | |||||||||||||||
The following table provides the components of accumulated other comprehensive income (loss) for the three months ended September 30, 2014: | ||||||||||||||||
(in millions) | Foreign Currency Translation | Postretirement Benefit Plans | Derivative Instruments | Total | ||||||||||||
Balance at July 1, 2014 | $ | 352 | $ | (187 | ) | $ | (7 | ) | $ | 158 | ||||||
Foreign currency translation adjustment | (114 | ) | — | — | (114 | ) | ||||||||||
Changes in postretirement benefit plans | — | 10 | — | 10 | ||||||||||||
Income tax expense on changes in postretirement benefit plans | — | (3 | ) | — | (3 | ) | ||||||||||
Amortization of net actuarial loss on postretirement benefit plans into: | ||||||||||||||||
Cost of revenue | — | 1 | — | 1 | ||||||||||||
Selling, general and administrative expenses | — | 1 | — | 1 | ||||||||||||
Income tax expense on amortization of postretirement benefit plan items | — | (1 | ) | — | (1 | ) | ||||||||||
Unrealized loss on foreign exchange agreements | — | — | (6 | ) | (6 | ) | ||||||||||
Income tax benefit on unrealized loss on foreign exchange agreements | — | — | 1 | 1 | ||||||||||||
Reclassification of unrealized loss on foreign exchange agreements into revenue | — | — | 1 | 1 | ||||||||||||
Reclassification of unrealized loss on foreign exchange agreements into cost of revenue | — | — | 1 | 1 | ||||||||||||
Balance at September 30, 2014 | $ | 238 | $ | (179 | ) | $ | (10 | ) | $ | 49 | ||||||
The following table provides the components of accumulated other comprehensive income (loss) for the nine months ended September 30, 2014: | ||||||||||||||||
(in millions) | Foreign Currency Translation | Postretirement Benefit Plans | Derivative Instruments | Total | ||||||||||||
Balance at January 1, 2014 | $ | 351 | $ | (186 | ) | $ | 2 | $ | 167 | |||||||
Foreign currency translation adjustment | (113 | ) | — | — | (113 | ) | ||||||||||
Changes in postretirement benefit plans | — | 3 | — | 3 | ||||||||||||
Income tax expense on changes in postretirement benefit plans | — | (1 | ) | — | (1 | ) | ||||||||||
Amortization of net actuarial loss on postretirement benefit plans into: | ||||||||||||||||
Cost of revenue | — | 3 | — | 3 | ||||||||||||
Selling, general and administrative expenses | — | 5 | — | 5 | ||||||||||||
Income tax expense on amortization of postretirement benefit plan items | — | (3 | ) | — | (3 | ) | ||||||||||
Unrealized loss on foreign exchange agreements | — | — | (14 | ) | (14 | ) | ||||||||||
Income tax benefit on unrealized loss on foreign exchange agreements | — | — | 1 | 1 | ||||||||||||
Reclassification of unrealized loss on foreign exchange agreements into cost of revenue | — | — | 1 | 1 | ||||||||||||
Balance at September 30, 2014 | $ | 238 | $ | (179 | ) | $ | (10 | ) | $ | 49 | ||||||
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Commitments and Contingencies Disclosure [Abstract] | ' | |||||||
Changes in product warranty accrual | ' | |||||||
We warrant numerous products, the terms of which vary widely. In general, we warrant products against defect and specific non-performance. The table below provides the changes in our product warranty accrual. | ||||||||
(in millions) | 2014 | 2013 | ||||||
Warranty accrual – January 1 | $ | 37 | $ | 40 | ||||
Net changes for product warranties in the period | 19 | 24 | ||||||
Settlement of warranty claims | (23 | ) | (26 | ) | ||||
Foreign currency and other | (1 | ) | — | |||||
Warranty accrual - September 30 | $ | 32 | $ | 38 | ||||
Segment_Information_Tables
Segment Information (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Segment Reporting [Abstract] | ' | |||||||||||||||
Financial information for each reportable segment | ' | |||||||||||||||
The accounting policies of each segment are the same as those described in the summary of significant accounting policies (see Note 1 in the 2013 Annual Report). The following tables contain financial information for each reportable segment. | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(in millions) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Revenue: | ||||||||||||||||
Water Infrastructure | $ | 619 | $ | 619 | $ | 1,823 | $ | 1,766 | ||||||||
Applied Water | 362 | 360 | 1,105 | 1,086 | ||||||||||||
Eliminations | (18 | ) | (14 | ) | (54 | ) | (48 | ) | ||||||||
Total | $ | 963 | $ | 965 | $ | 2,874 | $ | 2,804 | ||||||||
Operating Income: | ||||||||||||||||
Water Infrastructure | $ | 94 | $ | 88 | $ | 217 | $ | 171 | ||||||||
Applied Water | 52 | 40 | 145 | 125 | ||||||||||||
Corporate and other | (16 | ) | (30 | ) | (40 | ) | (62 | ) | ||||||||
Total | $ | 130 | $ | 98 | $ | 322 | $ | 234 | ||||||||
Depreciation and Amortization: | ||||||||||||||||
Water Infrastructure | $ | 27 | $ | 27 | $ | 81 | $ | 83 | ||||||||
Applied Water | 7 | 7 | 21 | 21 | ||||||||||||
Corporate and other | 1 | 2 | 5 | 6 | ||||||||||||
Total | $ | 35 | $ | 36 | $ | 107 | $ | 110 | ||||||||
Capital Expenditures: | ||||||||||||||||
Water Infrastructure | $ | 19 | $ | 18 | $ | 50 | $ | 57 | ||||||||
Applied Water | 8 | 7 | 21 | 26 | ||||||||||||
Corporate and other | 2 | 5 | 6 | 8 | ||||||||||||
Total | $ | 29 | $ | 30 | $ | 77 | $ | 91 | ||||||||
Total assets for each reportable segment | ' | |||||||||||||||
The following table contains the total assets for each reportable segment. | ||||||||||||||||
Total Assets | ||||||||||||||||
(in millions) | September 30, | December 31, | ||||||||||||||
2014 | 2013 | |||||||||||||||
Water Infrastructure | $ | 2,918 | $ | 2,989 | ||||||||||||
Applied Water | 1,333 | 1,340 | ||||||||||||||
Corporate and other (a) | 563 | 567 | ||||||||||||||
Total | $ | 4,814 | $ | 4,896 | ||||||||||||
Background_and_Basis_of_Presen2
Background and Basis of Presentation (Details) | 9 Months Ended |
Sep. 30, 2014 | |
Segment | |
Background and Basis of Presentation (Textual) [Abstract] | ' |
Number of operating segment | 2 |
Acquisitions_and_Divestitures_
Acquisitions and Divestitures (Details) (USD $) | 3 Months Ended | 9 Months Ended | 0 Months Ended | 12 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Jul. 02, 2014 | Dec. 31, 2013 |
Wolverhampton | Wolverhampton | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ' | ' | ' | ' | ' | ' |
Proceeds from sale of business | ' | ' | $30 | $0 | $30 | ' |
Gain from sale of business | 11 | 0 | 11 | 0 | ' | ' |
Revenues | ' | ' | ' | ' | ' | 25 |
Cash payment to acquire business | ' | ' | ' | 84 | ' | ' |
Total spent on business acquisitions | ' | ' | $0 | $81 | ' | ' |
Restructuring_Charges_Restruct
Restructuring Charges (Restructuring Charges) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Restructuring Cost and Impairment Charge | ' | ' | ' | ' |
Severance and other charges | $0 | $4 | $18 | $28 |
Lease related charges | 0 | 1 | 0 | 1 |
Other restructuring charges | 0 | 0 | 0 | 1 |
Reversal of restructuring accruals | 0 | 0 | 0 | 0 |
Restructuring charges | 1 | 5 | 18 | 30 |
Water Infrastructure | ' | ' | ' | ' |
Restructuring Cost and Impairment Charge | ' | ' | ' | ' |
Restructuring charges | 0 | 3 | 12 | 24 |
Applied Water | ' | ' | ' | ' |
Restructuring Cost and Impairment Charge | ' | ' | ' | ' |
Restructuring charges | $0 | $2 | $6 | $6 |
Restructuring_Charges_Accrual_
Restructuring Charges (Accrual Rollfoward) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Restructuring Reserve [Roll Forward] | ' | ' | ' | ' |
Restructuring accruals - January 1 | ' | ' | $13 | $9 |
Restructuring charges | 1 | 5 | 18 | 30 |
Cash payments | ' | ' | -20 | -24 |
Other | ' | ' | 0 | 0 |
Restructuring accruals - September 30 | 11 | 15 | 11 | 15 |
Water Infrastructure | ' | ' | ' | ' |
Restructuring Reserve [Roll Forward] | ' | ' | ' | ' |
Restructuring charges | 0 | 3 | 12 | 24 |
Restructuring accruals - September 30 | 8 | 12 | 8 | 12 |
Applied Water | ' | ' | ' | ' |
Restructuring Reserve [Roll Forward] | ' | ' | ' | ' |
Restructuring charges | 0 | 2 | 6 | 6 |
Restructuring accruals - September 30 | $3 | $3 | $3 | $3 |
Restructuring_Charges_Number_o
Restructuring Charges (Number of Positions Eliminated Rollfoward) (Details) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Employees | Employees | |
Restructuring and Related Cost, Number of Positions Eliminated [Roll Forward] | ' | ' |
Planned reductions - January 1 | 51 | 54 |
Additional planned reductions | 233 | 439 |
Actual reductions | -206 | -346 |
Planned reductions - September 30 | 78 | 147 |
Restructuring_Charges_Textuals
Restructuring Charges (Textuals) (Details) (USD $) | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 |
Water Infrastructure | Water Infrastructure | Water Infrastructure | Water Infrastructure | Applied Water | Applied Water | Applied Water | Applied Water | 2014 Restructuring Plan | 2014 Restructuring Plan | 2014 Restructuring Plan | 2014 Restructuring Plan | 2013 Restructuring Plan | 2013 Restructuring Plan | 2013 Restructuring Plan | 2013 Restructuring Plan | 2013 Restructuring Plan | |||||
Water Infrastructure | Water Infrastructure | Applied Water | Applied Water | Water Infrastructure | Water Infrastructure | Water Infrastructure | Applied Water | Applied Water | |||||||||||||
Restructuring Cost and Reserve [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Restructuring charges (less than $1 million for the three months ended September 30, 2014) | $1 | $5 | $18 | $30 | $0 | $3 | $12 | $24 | $0 | $2 | $6 | $6 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Restructuring and related cost, expected cost | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 12 | ' | 9 | ' | ' | 33 | ' | 9 |
Restructuring and Related Cost, Incurred Cost (less than $1 for three months ended September 30, 2014) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1 | 11 | 1 | 6 | 0 | 1 | 31 | ' | 8 |
Restructuring and Related Cost, Expected Cost Remaining | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $1 | ' | $1 | ' |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Income Taxes (Textual) [Abstract] | ' | ' | ' | ' |
Income tax provision | $22 | $10 | $52 | $31 |
Effective tax rate | 17.50% | 12.10% | 17.70% | 16.40% |
Likelihood of uncertain tax positions | ' | ' | 'greater than 50% | ' |
Tax benefit | ' | ' | 50.00% | ' |
Unrecognized tax benefits | 30 | ' | 30 | ' |
Interest accrued for unrecognized tax benefits | $1 | ' | $1 | ' |
Earnings_Per_Share_Details
Earnings Per Share (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||||||
In Millions, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | ||||
Basic and diluted net earnings per share: | ' | ' | ' | ' | ||||
Net income | $106 | $73 | $241 | $160 | ||||
Shares | ' | ' | ' | ' | ||||
Weighted average common shares outstanding | 182,196,000 | 185,044,000 | 183,343,000 | 185,294,000 | ||||
Add: Participating securities | 48,000 | [1] | 122,000 | [1] | 46,000 | [1] | 165,000 | [1] |
Weighted average common shares outstanding - Basic (in shares) | 182,244,000 | 185,166,000 | 183,389,000 | 185,459,000 | ||||
Plus incremental shares from assumed conversions: | ' | ' | ' | ' | ||||
Weighted average common shares outstanding - Diluted (in shares) | 183,432,000 | 186,002,000 | 184,573,000 | 186,186,000 | ||||
Basic earnings per share (usd per share) | $0.58 | $0.39 | $1.31 | $0.86 | ||||
Diluted earnings per share (usd per share) | $0.58 | $0.39 | $1.31 | $0.86 | ||||
Stock Options | ' | ' | ' | ' | ||||
Plus incremental shares from assumed conversions: | ' | ' | ' | ' | ||||
Dilutive effect of common shares | 646,000 | [2] | 175,000 | [2] | 655,000 | [2] | 180,000 | [2] |
Restricted Stock | ' | ' | ' | ' | ||||
Plus incremental shares from assumed conversions: | ' | ' | ' | ' | ||||
Dilutive effect of common shares | 542,000 | [2] | 661,000 | [2] | 529,000 | [2] | 547,000 | [2] |
[1] | Restricted stock awards containing rights to non-forfeitable dividends that participate in undistributed earnings with common shareholders are considered participating securities for purposes of computing earnings per share. | |||||||
[2] | Incremental shares from stock options, restricted stock and performance share units are computed by the treasury stock method. The weighted average shares listed below were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive for the periods presented or were otherwise excluded under the treasury stock method. The treasury stock method calculates dilution assuming the exercise of all in-the-money options and vesting of restricted stock and performance share awards, reduced by the repurchase of shares with the proceeds from the assumed exercises, unrecognized compensation expense for outstanding awards and the estimated tax benefit of the assumed exercises. Performance share units will be included in the treasury stock calculation of diluted earnings per share upon achievement of underlying performance conditions. See Note 14, "Share-Based Compensation Plans" for further detail on the performance share units. |
Earnings_Per_Share_Details_1
Earnings Per Share (Details 1) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Stock Options | ' | ' | ' | ' |
Incremental shares from stock options and restricted stock: | ' | ' | ' | ' |
Stock Options/ Restricted Shares | 2,709,000 | 4,414,000 | 2,769,000 | 4,342,000 |
Restricted Stock | ' | ' | ' | ' |
Incremental shares from stock options and restricted stock: | ' | ' | ' | ' |
Stock Options/ Restricted Shares | 534,000 | 655,000 | 532,000 | 758,000 |
Performance Based Shares | ' | ' | ' | ' |
Incremental shares from stock options and restricted stock: | ' | ' | ' | ' |
Stock Options/ Restricted Shares | 136,000 | 106,000 | 114,000 | 88,000 |
Inventories_Details
Inventories (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Inventories | ' | ' |
Finished goods | $213 | $189 |
Work in process | 37 | 31 |
Raw materials | 266 | 255 |
Total inventories, net | $516 | $475 |
Property_Plant_and_Equipment_D
Property, Plant and Equipment (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Property, Plant and Equipment | ' | ' |
Property, plant and equipment, gross | $1,275 | $1,304 |
Less accumulated depreciation | 821 | 816 |
Total property, plant and equipment, net | 454 | 488 |
Land, buildings and improvements | ' | ' |
Property, Plant and Equipment | ' | ' |
Property, plant and equipment, gross | 247 | 263 |
Machinery and equipment | ' | ' |
Property, Plant and Equipment | ' | ' |
Property, plant and equipment, gross | 661 | 685 |
Equipment held for lease or rental | ' | ' |
Property, Plant and Equipment | ' | ' |
Property, plant and equipment, gross | 205 | 192 |
Furniture and fixtures | ' | ' |
Property, Plant and Equipment | ' | ' |
Property, plant and equipment, gross | 90 | 93 |
Construction work in progress | ' | ' |
Property, Plant and Equipment | ' | ' |
Property, plant and equipment, gross | 50 | 49 |
Other | ' | ' |
Property, Plant and Equipment | ' | ' |
Property, plant and equipment, gross | $22 | $22 |
Property_Plant_and_Equipment_D1
Property, Plant and Equipment (Details Textual) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Property Plant And Equipment (Textual) [Abstract] | ' | ' | ' | ' |
Depreciation expense | $23 | $23 | $70 | $72 |
Goodwill_and_Other_Intangible_2
Goodwill and Other Intangible Assets (Details) (USD $) | 9 Months Ended |
In Millions, unless otherwise specified | Sep. 30, 2014 |
Changes in the carrying value of goodwill by operating segment | ' |
Balance as of January 1, 2014 | $1,718 |
Goodwill (divested) acquired (a) | -6 |
Foreign currency and other | -45 |
Balance as of September 30, 2014 | 1,667 |
Water Infrastructure | ' |
Changes in the carrying value of goodwill by operating segment | ' |
Balance as of January 1, 2014 | 1,149 |
Goodwill (divested) acquired (a) | 0 |
Foreign currency and other | -29 |
Balance as of September 30, 2014 | 1,120 |
Applied Water | ' |
Changes in the carrying value of goodwill by operating segment | ' |
Balance as of January 1, 2014 | 569 |
Goodwill (divested) acquired (a) | -6 |
Foreign currency and other | -16 |
Balance as of September 30, 2014 | $547 |
Goodwill_and_Other_Intangible_3
Goodwill and Other Intangible Assets (Details 1) (USD $) | 3 Months Ended | 9 Months Ended | |||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 |
Finite-Lived Intangible Assets | ' | ' | ' | ' | ' |
Amortization | $9 | $9 | $27 | $28 | ' |
Goodwill and Other Intangible Assets | ' | ' | ' | ' | ' |
Accumulated Amortization | -192 | ' | -192 | ' | -173 |
Intangible Assets Gross, Carrying Amount | 640 | ' | 640 | ' | 661 |
Intangible Assets, Net Intangibles | 448 | ' | 448 | ' | 488 |
Customer and distributor relationships | ' | ' | ' | ' | ' |
Goodwill and Other Intangible Assets | ' | ' | ' | ' | ' |
Carrying Amount | 339 | ' | 339 | ' | 352 |
Accumulated Amortization | -118 | ' | -118 | ' | -104 |
Net Intangibles | 221 | ' | 221 | ' | 248 |
Proprietary technology | ' | ' | ' | ' | ' |
Goodwill and Other Intangible Assets | ' | ' | ' | ' | ' |
Carrying Amount | 107 | ' | 107 | ' | 109 |
Accumulated Amortization | -40 | ' | -40 | ' | -36 |
Net Intangibles | 67 | ' | 67 | ' | 73 |
Trademarks | ' | ' | ' | ' | ' |
Goodwill and Other Intangible Assets | ' | ' | ' | ' | ' |
Carrying Amount | 34 | ' | 34 | ' | 35 |
Accumulated Amortization | -17 | ' | -17 | ' | -16 |
Net Intangibles | 17 | ' | 17 | ' | 19 |
Patents and other | ' | ' | ' | ' | ' |
Goodwill and Other Intangible Assets | ' | ' | ' | ' | ' |
Carrying Amount | 19 | ' | 19 | ' | 20 |
Accumulated Amortization | -17 | ' | -17 | ' | -17 |
Net Intangibles | 2 | ' | 2 | ' | 3 |
Indefinite-lived intangibles | ' | ' | ' | ' | ' |
Goodwill and Other Intangible Assets | ' | ' | ' | ' | ' |
Accumulated Amortization | 0 | ' | 0 | ' | 0 |
Indefinite-lived intangibles | $141 | ' | $141 | ' | $145 |
Goodwill_and_Other_Intangible_4
Goodwill and Other Intangible Assets (Details Textual) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
In Millions, unless otherwise specified | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Jul. 02, 2014 |
trade_name | Wolverhampton | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ' | ' | ' | ' | ' | ' | ' |
Goodwill | ' | ' | ' | ' | ' | ' | $6 |
Asset Impairment Charges | ' | ' | ' | ' | ' | 2 | ' |
Number of Impaired Trade Names | ' | 3 | ' | ' | ' | ' | ' |
Amortization expense related to finite-lived intangible assets | $9 | ' | $9 | $27 | $28 | ' | ' |
Derivative_Financial_Instrumen2
Derivative Financial Instruments (Details) | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 |
Sell EUR Buy HUF forward | Sell EUR Buy HUF forward | Sell EUR Buy PLN forward | Sell EUR Buy PLN forward | Buy SEK Sell EUR forward | Buy SEK Sell EUR forward | Buy USD Sell CAD Forward [Member] [Domain] | Buy USD Sell CAD Forward [Member] [Domain] | Sell AUD Buy EUR forward | Sell AUD Buy EUR forward | Sell AUD Buy USD forward | Sell AUD Buy USD forward | Sell CAD Buy EUR Forward [Member] | Sell CAD Buy EUR Forward [Member] | Sell GBP Buy EUR forward | Sell GBP Buy EUR forward | Sell USD Buy EUR forward | Sell USD Buy EUR forward | |
EUR (€) | PLN | EUR (€) | HUF | CAD | EUR (€) | CAD | EUR (€) | EUR (€) | SEK | USD ($) | EUR (€) | USD ($) | EUR (€) | AUD | EUR (€) | EUR (€) | GBP (£) | |
Instruments | Instruments | Instruments | Instruments | Instruments | Instruments | Instruments | Instruments | Instruments | ||||||||||
Derivative Financial Instruments | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of Instruments | 7 | 7 | 14 | 14 | 15 | 15 | 13 | 13 | 16 | 16 | 7 | 7 | 17 | 17 | 20 | 20 | 34 | 34 |
Total Notional Sold | € 8,000,000 | ' | € 12,000,000 | ' | 94,000,000 | ' | 17,000,000 | ' | € 16,000,000 | ' | $5,000,000 | ' | $21,000,000 | ' | 25,000,000 | ' | ' | £ 89,000,000 |
Total Notional Purchased | ' | 2,423,000,000 | ' | 50,000,000 | ' | € 852,000,000 | ' | € 15,000,000 | ' | 11,000,000 | ' | € 5,000,000 | ' | € 14,000,000 | ' | € 31,000,000 | € 66,000,000 | ' |
Derivative_Financial_Instrumen3
Derivative Financial Instruments (Details 1) (USD $) | 3 Months Ended | 9 Months Ended | ||||||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | ||||
Derivative Financial Instruments | ' | ' | ' | ' | ||||
Amount of gain (loss) recognized in OCI on derivative | $6 | ($2) | $14 | $0 | ||||
Foreign Exchange Contract | ' | ' | ' | ' | ||||
Derivative Financial Instruments | ' | ' | ' | ' | ||||
Amount of gain (loss) recognized in OCI on derivative | -6 | [1] | 2 | [1] | -14 | [1] | 0 | [1] |
Amount of (gain) loss reclassified from OCI into revenue | 1 | [1] | 0 | [1] | 0 | [1] | -1 | [1] |
Amount of loss (gain) reclassified from Other Comprehensive Income into cost of revenue (a) | $1 | [1] | $1 | [1] | $1 | [1] | $1 | [1] |
[1] | Effective portion |
Derivative_Financial_Instrumen4
Derivative Financial Instruments (Details 2) (Derivatives designated as hedging instruments, USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Other Current Assets [Member] | ' | ' |
Derivatives, Fair Value | ' | ' |
Foreign Currency Contract, Asset, Fair Value Disclosure | $1 | $1 |
Other current liabilities | ' | ' |
Liabilities | ' | ' |
Fair value | ($9) | $0 |
Derivative_Financial_Instrumen5
Derivative Financial Instruments (Details Textual) (USD $) | Sep. 30, 2014 |
In Millions, unless otherwise specified | |
Derivative Financial Instruments (Textual) [Abstract] | ' |
Net unrealized losses on cash flow hedges | $11 |
Accrued_and_Other_Current_Liab2
Accrued and Other Current Liabilities (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Accrued and Other Current Liabilities | ' | ' |
Compensation and other employee benefits | $185 | $215 |
Customer-related liabilities | 69 | 63 |
Accrued warranty costs | 32 | 36 |
Accrued taxes | 74 | 45 |
Other accrued liabilities | 135 | 120 |
Total accrued and other current liabilities | $495 | $479 |
Credit_Facilities_and_LongTerm2
Credit Facilities and Long-Term Debt (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 20, 2011 |
In Millions, unless otherwise specified | |||
Debt Instrument | ' | ' | ' |
Short-term borrowings and current maturities of long-term debt | $41 | $42 | ' |
Credit Facilities and Long-Term Debt : | ' | ' | ' |
Unamortized discount | -1 | -1 | ' |
Long-term debt | 1,199 | 1,199 | ' |
Total debt | 1,240 | 1,241 | ' |
Senior Notes Due 2016, 3.550% | ' | ' | ' |
Credit Facilities and Long-Term Debt : | ' | ' | ' |
Senior Notes Due | 600 | 600 | 600 |
Senior Notes Due 2021, 4.875% | ' | ' | ' |
Credit Facilities and Long-Term Debt : | ' | ' | ' |
Senior Notes Due | $600 | $600 | $600 |
Credit_Facilities_and_LongTerm3
Credit Facilities and Long-Term Debt (Details Textual) | Oct. 31, 2011 | Sep. 30, 2014 | Oct. 31, 2011 | Sep. 30, 2014 | Dec. 14, 2012 | Sep. 20, 2011 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 20, 2011 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 20, 2011 |
In Millions, unless otherwise specified | Letter of Credit | Revolving Credit Facility | Revolving Credit Facility | Risk Sharing Finance Facility Agreement [Member] | Risk Sharing Finance Facility Agreement [Member] | Senior Notes | Senior Notes Due 2016, 3.550% | Senior Notes Due 2016, 3.550% | Senior Notes Due 2016, 3.550% | Senior Notes Due 2021, 4.875% | Senior Notes Due 2021, 4.875% | Senior Notes Due 2021, 4.875% |
USD ($) | USD ($) | USD ($) | EUR (€) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | |||
Credit Facilities and Long-Term Debt [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fair value of senior notes due | ' | ' | ' | ' | ' | ' | $627 | $635 | ' | $652 | $629 | ' |
Interest on notes due | ' | ' | ' | ' | ' | ' | ' | ' | 3.55% | ' | ' | 4.88% |
Long-term Debt, Gross | ' | ' | ' | ' | ' | ' | 600 | 600 | 600 | 600 | 600 | 600 |
Redemption price percentage | ' | ' | ' | ' | ' | 101.00% | ' | ' | ' | ' | ' | ' |
Debt instrument aggregate principal amount | 100 | ' | 600 | 153 | 120 | ' | ' | ' | ' | ' | ' | ' |
Interest rate per annum, effective rate | ' | 1.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum leverage ratio | ' | 3.5 | ' | 3.5 | ' | ' | ' | ' | ' | ' | ' | ' |
Line of Credit Facility, Amount Outstanding | ' | ' | ' | $36 | ' | ' | ' | ' | ' | ' | ' | ' |
Postretirement_Benefit_Plans_D
Postretirement Benefit Plans (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Net periodic benefit cost: | ' | ' | ' | ' |
Amortization of net actuarial loss | $0 | $1 | $1 | $3 |
Net periodic benefit cost | 5 | 8 | 16 | 22 |
Domestic defined benefit pension plans | ' | ' | ' | ' |
Net periodic benefit cost: | ' | ' | ' | ' |
Service cost | 1 | 1 | 2 | 2 |
Interest cost | 0 | 1 | 2 | 3 |
Expected return on plan assets | -1 | -1 | -3 | -3 |
Net periodic benefit cost | 0 | 2 | 2 | 5 |
International defined benefit pension plans | ' | ' | ' | ' |
Net periodic benefit cost: | ' | ' | ' | ' |
Service cost | 3 | 3 | 11 | 10 |
Interest cost | 8 | 7 | 22 | 21 |
Expected return on plan assets | -8 | -7 | -25 | -23 |
Amortization of net actuarial loss | 2 | 3 | 6 | 9 |
Net periodic benefit cost | $5 | $6 | $14 | $17 |
Postretirement_Benefit_Plans_D1
Postretirement Benefit Plans (Details Textual) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block | ' | ' | ' | ' |
Other Postretirement Benefit Expense | $1 | $2 | $4 | $5 |
Amortization of net actuarial loss (less than $1 million for other postretirement benefit plans for the three months ended September 30, 2014) | 0 | 1 | 1 | 3 |
Employer contribution to defined benefit plan | ' | ' | 30 | 32 |
Increase in defined benefit plan funded status | 10 | ' | ' | ' |
Pretax loss related to plan amendment | 3 | ' | ' | ' |
Loss related to plan amendment, net of tax | 1 | ' | ' | ' |
Pretax prior service credit related to plan amendment | 13 | ' | ' | ' |
Prior service credit related to plan amendment, net of tax | 8 | ' | ' | ' |
Minimum | ' | ' | ' | ' |
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block | ' | ' | ' | ' |
Additional contributions | ' | ' | 5 | ' |
Maximum | ' | ' | ' | ' |
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block | ' | ' | ' | ' |
Additional contributions | ' | ' | 10 | ' |
Foreign Postretirement Benefit Plan, Defined Benefit [Member] | ' | ' | ' | ' |
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block | ' | ' | ' | ' |
Amortization of net actuarial loss (less than $1 million for other postretirement benefit plans for the three months ended September 30, 2014) | $1 | ' | $1 | $2 |
StockBased_Compensation_Plans_1
Stock-Based Compensation Plans (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' |
Share-based compensation | $5 | $9 | $14 | $21 |
Restricted Stock [Member] | ' | ' | ' | ' |
Summary of restricted stock activity | ' | ' | ' | ' |
Outstanding at January 1, 2014 | ' | ' | 1,275,000 | ' |
Granted | ' | ' | 377,000 | ' |
Vested | ' | ' | -230,000 | ' |
Forfeited | ' | ' | -79,000 | ' |
Outstanding at September 30, 2014 | 1,343,000 | ' | 1,343,000 | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward] | ' | ' | ' | ' |
Weighted Average Grant Date Fair Value, Outstanding at January 1, 2014 (usd per share) | ' | ' | $27.67 | ' |
Weighted Average Grant Date Fair Value, Granted (usd per share) | ' | ' | $38.35 | ' |
Weighted Average Grant Date Fair Value, Vested (usd per share) | ' | ' | $30.98 | ' |
Weighted Average Grant Date Fair Value, Forfeited (usd per share) | ' | ' | $29.13 | ' |
Weighted Average Grant Date Fair Value, Outstanding at September 30, 2014 (usd per share) | $30.06 | ' | $30.06 | ' |
StockBased_Compensation_Plans_2
Stock-Based Compensation Plans (Details 1) (USD $) | 9 Months Ended | 12 Months Ended |
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Dec. 31, 2013 |
Summary of the changes in outstanding stock options | ' | ' |
Outstanding at January 1, 2014 | 3,504 | ' |
Granted | 543 | ' |
Exercised | -617 | ' |
Forfeited | -70 | ' |
Outstanding at September 30, 2014 | 3,360 | 3,504 |
Options exercisable at September 30, 2014 | 1,897 | ' |
Vested and expected to vest as of September 30, 2014 | 3,247 | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | ' | ' |
Weighted Average Exercise Price, Outstanding at January 1, 2014 (usd per share) | $26.80 | ' |
Weighted Average Exercise Price / Share, Granted (usd per share) | $38.16 | ' |
Weighted Average Exercise Price / Share, Exercised (usd per share) | $27.87 | ' |
Weighted Average Exercise Price / Share, Forfeited (usd per share) | $25.93 | ' |
Weighted Average Exercise Price, Outstanding at September 30, 2014 (usd per share) | $28.47 | $26.80 |
Options exercisable, Weighted Average Exercise Price (usd per share) | $26.87 | ' |
Vested and expected to vest as of September 30, 2014 (usd per share) | $28.26 | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Weighted Average Remaining Contractual Term [Roll Forward] | ' | ' |
Outstanding at January 1, 2014 | '6 years 7 months | '6 years 4 months 24 days |
Granted | '10 years | ' |
Exercised | '4 years 4 months 15 days | ' |
Forfeited | '6 years | ' |
Outstanding at September 30, 2014 | '6 years 7 months | '6 years 4 months 24 days |
Options exercisable at September 30, 2014 | '5 years 3 months | ' |
Vested and expected to vest as of September 30, 2014 | '6 years 6 months | ' |
StockBased_Compensation_Plans_3
Stock-Based Compensation Plans Share-Based Compensation Plan (Details 2) (Performance Based Shares, USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Performance Based Shares | ' |
Summary of performance share activity | ' |
Outstanding at January 1, 2014 | 52,000 |
Granted | 84,000 |
Vested | 0 |
Forfeited | 0 |
Outstanding at September 30, 2014 | 136,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward] | ' |
Weighted Average Grant Date Fair Value, Outstanding at January 1, 2014 (usd per share) | $27.49 |
Weighted Average Grant Date Fair Value, Granted (usd per share) | $37.87 |
Weighted Average Grant Date Fair Value, Vested (usd per share) | $0 |
Weighted Average Grant Date Fair Value, Forfeited (usd per share) | $0 |
Weighted Average Grant Date Fair Value, Outstanding at September 30, 2014 (usd per share) | $33.85 |
StockBased_Compensation_Plans_4
Stock-Based Compensation Plans Share-Based Compensation Plans (Details 3) (Stock Options, USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Stock Options | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Dividend yield | 1.34% |
Volatility | 28.49% |
Risk-free interest rate | 1.82% |
Expected term (in years) | '5 years 7 months 6 days |
Weighted-average fair value / share (in usd per share) | $9.71 |
StockBased_Compensation_Plans_5
Stock-Based Compensation Plans (Details Textual) (USD $) | 3 Months Ended | 9 Months Ended | 0 Months Ended | |||||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Mar. 17, 2014 | Mar. 17, 2014 | Mar. 17, 2014 | |
Stock Options | Restricted Stock | Performance Based Shares | Patrick Decker | Patrick Decker | Patrick Decker | |||||
Restricted Stock | Performance Based Shares | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Share-based compensation | $5,000,000 | $9,000,000 | $14,000,000 | $21,000,000 | ' | ' | ' | ' | ' | ' |
Unamortized compensation expense | ' | ' | ' | ' | 7,000,000 | 20,000,000 | 4,000,000 | ' | ' | ' |
Weighted average period | ' | ' | ' | ' | '2 years | '1 year 9 months 18 days | '2 years 2 months 12 days | ' | ' | ' |
Shares Awarded | ' | ' | 543,000 | ' | ' | ' | ' | 165,584 | ' | ' |
Shares Awarded | ' | ' | ' | ' | ' | 377,000 | 84,000 | ' | 40,342 | 40,342 |
Stock-Based Compensation Plans (Textual) [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount of cash received from the exercise of stock options | ' | ' | 17,000,000 | 2,000,000 | ' | ' | ' | ' | ' | ' |
Aggregate intrinsic value of outstanding stock options | 28,000,000 | ' | 28,000,000 | ' | ' | ' | ' | ' | ' | ' |
Aggregate intrinsic value of exercisable stock options | 18,000,000 | ' | 18,000,000 | ' | ' | ' | ' | ' | ' | ' |
Aggregate intrinsic value of vested and expected to vest stock options | 28,000,000 | ' | 28,000,000 | ' | ' | ' | ' | ' | ' | ' |
Total intrinsic value of options exercised | ' | ' | $6,000,000 | ' | ' | ' | ' | ' | ' | ' |
Capital_Stock_Details
Capital Stock (Details) (USD $) | 3 Months Ended | 9 Months Ended | 0 Months Ended | 3 Months Ended | 9 Months Ended | 0 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
In Millions, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Aug. 20, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Aug. 18, 2012 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
2013 Stock Repurchase Program | 2013 Stock Repurchase Program | 2013 Stock Repurchase Program | 2013 Stock Repurchase Program | 2013 Stock Repurchase Program | 2012 Stock Repurchase Program | 2012 Stock Repurchase Program | 2012 Stock Repurchase Program | 2012 Stock Repurchase Program | 2012 Stock Repurchase Program | |||||
Equity, Class of Treasury Stock [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock repurchase program, authorized amount | ' | ' | ' | ' | $250 | ' | ' | ' | ' | $2 | ' | ' | ' | ' |
Shares repurchased (in shares) (less than 0.1 million shares in the three and nine months ended September 30, 2014 repurchased outside of repurchase programs) | ' | 200,000 | 100,000 | 200,000 | ' | 800,000 | 1,000,000 | 3,400,000 | 1,000,000 | ' | 0 | 0 | 0 | 600,000 |
Shares repurchased (in dollars) (less than $1 million in the three months ended September 30, 2014 repurchased outside of repurchase programs) | 1 | 4 | 2 | 6 | ' | 30 | 25 | 130 | 25 | ' | ' | ' | ' | 17 |
Stock repurchase program, remaining authorized repurchase amount | ' | ' | ' | ' | ' | ' | ' | $70 | ' | ' | ' | ' | ' | ' |
Stock repurchase program, remaining number of shares authorized to be repurchased | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,000,000 | ' | 1,000,000 | ' |
Accumulated_Other_Comprehensiv2
Accumulated Other Comprehensive Income (Loss) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ' | ' | ' | ' |
Beginning balance | $158 | ' | $167 | ' |
Foreign currency translation adjustment | -114 | ' | -113 | ' |
Changes in postretirement benefit plans | 10 | 0 | 3 | 0 |
Income tax expense on changes in postretirement benefit plans | -3 | ' | -1 | ' |
Income tax expense on amortization of postretirement benefit plan items | -1 | ' | -3 | ' |
Unrealized loss on foreign exchange agreements | 6 | ' | 14 | ' |
Income tax (expense) benefit on unrealized gain (loss) on foreign exchange agreements | 1 | ' | 1 | ' |
Ending balance | 49 | ' | 49 | ' |
Foreign Currency Translation | ' | ' | ' | ' |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ' | ' | ' | ' |
Beginning balance | 352 | ' | 351 | ' |
Foreign currency translation adjustment | -114 | ' | -113 | ' |
Changes in postretirement benefit plans | 0 | ' | 0 | ' |
Income tax expense on changes in postretirement benefit plans | 0 | ' | 0 | ' |
Income tax expense on amortization of postretirement benefit plan items | 0 | ' | 0 | ' |
Unrealized loss on foreign exchange agreements | 0 | ' | 0 | ' |
Income tax (expense) benefit on unrealized gain (loss) on foreign exchange agreements | 0 | ' | 0 | ' |
Ending balance | 238 | ' | 238 | ' |
Postretirement Benefit Plans | ' | ' | ' | ' |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ' | ' | ' | ' |
Beginning balance | -187 | ' | -186 | ' |
Foreign currency translation adjustment | 0 | ' | 0 | ' |
Changes in postretirement benefit plans | 10 | ' | 3 | ' |
Income tax expense on changes in postretirement benefit plans | -3 | ' | -1 | ' |
Income tax expense on amortization of postretirement benefit plan items | -1 | ' | -3 | ' |
Unrealized loss on foreign exchange agreements | 0 | ' | 0 | ' |
Income tax (expense) benefit on unrealized gain (loss) on foreign exchange agreements | 0 | ' | 0 | ' |
Ending balance | -179 | ' | -179 | ' |
Derivative Instruments | ' | ' | ' | ' |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ' | ' | ' | ' |
Beginning balance | -7 | ' | 2 | ' |
Foreign currency translation adjustment | 0 | ' | 0 | ' |
Changes in postretirement benefit plans | 0 | ' | 0 | ' |
Income tax expense on changes in postretirement benefit plans | 0 | ' | 0 | ' |
Income tax expense on amortization of postretirement benefit plan items | 0 | ' | 0 | ' |
Unrealized loss on foreign exchange agreements | 6 | ' | 14 | ' |
Income tax (expense) benefit on unrealized gain (loss) on foreign exchange agreements | 1 | ' | 1 | ' |
Ending balance | -10 | ' | -10 | ' |
Cost of revenue | ' | ' | ' | ' |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ' | ' | ' | ' |
Amortization of net actuarial loss on postretirement benefit plans into: | 1 | ' | 3 | ' |
Reclassification of unrealized gain (loss) on foreign exchange agreements | 1 | ' | -1 | ' |
Cost of revenue | Foreign Currency Translation | ' | ' | ' | ' |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ' | ' | ' | ' |
Amortization of net actuarial loss on postretirement benefit plans into: | 0 | ' | 0 | ' |
Reclassification of unrealized gain (loss) on foreign exchange agreements | 0 | ' | 0 | ' |
Cost of revenue | Postretirement Benefit Plans | ' | ' | ' | ' |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ' | ' | ' | ' |
Amortization of net actuarial loss on postretirement benefit plans into: | 1 | ' | 3 | ' |
Reclassification of unrealized gain (loss) on foreign exchange agreements | 0 | ' | 0 | ' |
Cost of revenue | Derivative Instruments | ' | ' | ' | ' |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ' | ' | ' | ' |
Amortization of net actuarial loss on postretirement benefit plans into: | 0 | ' | 0 | ' |
Reclassification of unrealized gain (loss) on foreign exchange agreements | 1 | ' | -1 | ' |
Selling, general and administrative expenses | ' | ' | ' | ' |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ' | ' | ' | ' |
Amortization of net actuarial loss on postretirement benefit plans into: | 1 | ' | 5 | ' |
Selling, general and administrative expenses | Foreign Currency Translation | ' | ' | ' | ' |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ' | ' | ' | ' |
Amortization of net actuarial loss on postretirement benefit plans into: | 0 | ' | 0 | ' |
Selling, general and administrative expenses | Postretirement Benefit Plans | ' | ' | ' | ' |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ' | ' | ' | ' |
Amortization of net actuarial loss on postretirement benefit plans into: | 1 | ' | 5 | ' |
Selling, general and administrative expenses | Derivative Instruments | ' | ' | ' | ' |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ' | ' | ' | ' |
Amortization of net actuarial loss on postretirement benefit plans into: | 0 | ' | 0 | ' |
Revenue | ' | ' | ' | ' |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ' | ' | ' | ' |
Reclassification of unrealized gain (loss) on foreign exchange agreements | -1 | ' | ' | ' |
Revenue | Foreign Currency Translation | ' | ' | ' | ' |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ' | ' | ' | ' |
Reclassification of unrealized gain (loss) on foreign exchange agreements | 0 | ' | ' | ' |
Revenue | Postretirement Benefit Plans | ' | ' | ' | ' |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ' | ' | ' | ' |
Reclassification of unrealized gain (loss) on foreign exchange agreements | 0 | ' | ' | ' |
Revenue | Derivative Instruments | ' | ' | ' | ' |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ' | ' | ' | ' |
Reclassification of unrealized gain (loss) on foreign exchange agreements | ($1) | ' | ' | ' |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details) (USD $) | 9 Months Ended | |
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Warranties | ' | ' |
Warranty accrual – January 1 | $37 | $40 |
Net changes for product warranties in the period | 19 | 24 |
Settlement of warranty claims | -23 | -26 |
Foreign currency and other | -1 | 0 |
Warranty accrual - September 30 | $32 | $38 |
Commitments_and_Contingencies_2
Commitments and Contingencies (Details Textual) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Commitments and Contingencies Disclosure [Abstract] | ' | ' |
Accrual for legal matters | $17 | $17 |
Estimated environmental matters | $6 | $8 |
Segment_Information_Details
Segment Information (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Financial information for each reportable segment | ' | ' | ' | ' |
Revenue | $963 | $965 | $2,874 | $2,804 |
Operating income | 130 | 98 | 322 | 234 |
Depreciation and amortization | 35 | 36 | 107 | 110 |
Capital expenditures | 29 | 30 | 77 | 91 |
Water Infrastructure | ' | ' | ' | ' |
Financial information for each reportable segment | ' | ' | ' | ' |
Revenue | 619 | 619 | 1,823 | 1,766 |
Operating income | 94 | 88 | 217 | 171 |
Depreciation and amortization | 27 | 27 | 81 | 83 |
Capital expenditures | 19 | 18 | 50 | 57 |
Applied Water | ' | ' | ' | ' |
Financial information for each reportable segment | ' | ' | ' | ' |
Revenue | 362 | 360 | 1,105 | 1,086 |
Operating income | 52 | 40 | 145 | 125 |
Depreciation and amortization | 7 | 7 | 21 | 21 |
Capital expenditures | 8 | 7 | 21 | 26 |
Eliminations | ' | ' | ' | ' |
Financial information for each reportable segment | ' | ' | ' | ' |
Revenue | -18 | -14 | -54 | -48 |
Corporate and other | ' | ' | ' | ' |
Financial information for each reportable segment | ' | ' | ' | ' |
Operating income | -16 | -30 | -40 | -62 |
Depreciation and amortization | 1 | 2 | 5 | 6 |
Capital expenditures | $2 | $5 | $6 | $8 |
Segment_Information_Details_1
Segment Information (Details 1) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | ||
In Millions, unless otherwise specified | ||||
Total assets for each reportable segment | ' | ' | ||
Total assets | $4,814 | $4,896 | ||
Water Infrastructure | ' | ' | ||
Total assets for each reportable segment | ' | ' | ||
Total assets | 2,918 | 2,989 | ||
Applied Water | ' | ' | ||
Total assets for each reportable segment | ' | ' | ||
Total assets | 1,333 | 1,340 | ||
Corporate and other | ' | ' | ||
Total assets for each reportable segment | ' | ' | ||
Total assets | $563 | [1] | $567 | [1] |
[1] | Corporate and other consists of items pertaining to our corporate headquarters function, which principally consist of cash, deferred tax assets, pension assets and certain property, plant and equipment. |
Segment_Information_Details_Te
Segment Information (Details Textual) | 9 Months Ended |
Sep. 30, 2014 | |
Segment | |
Segment Information (Textual) [Abstract] | ' |
Number of reportable segments | 2 |