Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2018 | Feb. 15, 2019 | Jun. 30, 2018 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | Xylem Inc. | ||
Entity Central Index Key | 1,524,472 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | FY | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | false | ||
Entity Shell Company | false | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 12 | ||
Entity Common Stock, Shares Outstanding | 179,552,698 |
Consolidated Income Statements
Consolidated Income Statements - USD ($) shares in Thousands, $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement [Abstract] | |||
Revenue | $ 5,207 | $ 4,707 | $ 3,771 |
Cost of revenue | 3,181 | 2,860 | 2,309 |
Gross profit | 2,026 | 1,847 | 1,462 |
Selling, general and administrative expenses | 1,161 | 1,089 | 914 |
Research and development expenses | 189 | 181 | 110 |
Restructuring and asset impairment charges | 22 | 25 | 30 |
Operating income | 654 | 552 | 408 |
Interest expense | 82 | 82 | 70 |
Other non-operating income, net | 13 | 6 | 2 |
(Loss)/gain on sale of businesses | 0 | (10) | 0 |
Income before taxes | 585 | 466 | 340 |
Income tax expense | 36 | 136 | 80 |
Net income | 549 | 330 | 260 |
Less: Net loss attributable to non-controlling interests | 0 | (1) | 0 |
Net income attributable to Xylem | $ 549 | $ 331 | $ 260 |
Earnings per share: | |||
Basic (in dollars per share) | $ 3.05 | $ 1.84 | $ 1.45 |
Diluted (in dollars per share) | $ 3.03 | $ 1.83 | $ 1.45 |
Basic (in shares) | 179,777 | 179,629 | 179,106 |
Weighted average common shares outstanding — Diluted | 181,132 | 180,857 | 180,038 |
Dividends declared per share (in usd per share) | $ 0.8400 | $ 0.7200 | $ 0.6196 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 549 | $ 330 | $ 260 |
Other comprehensive (loss) income, before tax: | |||
Foreign currency translation adjustment | (85) | 79 | (65) |
Net change in derivative hedge agreements: | |||
Unrealized (loss) gain | (8) | 9 | 0 |
Amount of loss (gain) reclassified into net income | 4 | (5) | (2) |
Net change in postretirement benefit plans: | |||
Net loss | (37) | (19) | (20) |
Prior service credit | 0 | 1 | 1 |
Amortization of prior service credit cost | (4) | (3) | (3) |
Amortization of net actuarial loss into net income | 13 | 13 | 13 |
Settlement | 1 | 1 | 0 |
Foreign currency translation adjustment | 15 | (18) | 19 |
Other comprehensive (loss) income, before tax | (101) | 58 | (57) |
Income tax expense (benefit) related to other comprehensive loss | 10 | (50) | 23 |
Other comprehensive (loss) income, net of tax | (111) | 108 | (80) |
Comprehensive income | 438 | 438 | 180 |
Less: comprehensive loss attributable to noncontrolling interests | (2) | 0 | 0 |
Comprehensive income | $ 440 | $ 438 | $ 180 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 296 | $ 414 |
Receivables, less allowances for discounts, returns and doubtful accounts of $35 and $35 in 2018 and 2017, respectively | 1,031 | 956 |
Inventories | 595 | 524 |
Prepaid and other current assets | 172 | 177 |
Total current assets | 2,094 | 2,071 |
Property, plant and equipment, net | 656 | 643 |
Goodwill | 2,976 | 2,768 |
Other intangible assets, net | 1,232 | 1,168 |
Other non-current assets | 264 | 210 |
Total assets | 7,222 | 6,860 |
Current liabilities: | ||
Accounts payable | 586 | 549 |
Accrued and other current liabilities | 546 | 551 |
Short-term borrowings and current maturities of long-term debt | 257 | 0 |
Total current liabilities | 1,389 | 1,100 |
Long-term debt, net | 2,051 | 2,200 |
Accrued postretirement benefits | 400 | 442 |
Deferred income tax liabilities | 303 | 252 |
Other non-current accrued liabilities | 297 | 347 |
Total liabilities | 4,440 | 4,341 |
Commitment and Contingencies (Note 19) | ||
Common stock — par value $0.01 per share: | ||
Authorized 750.0 shares, issued 192.9 and 192.3 shares in 2018 and 2017, respectively | 2 | 2 |
Capital in excess of par value | 1,950 | 1,912 |
Retained earnings | 1,639 | 1,227 |
Treasury stock – at cost 13.2 shares and 12.4 shares in 2018 and 2017, respectively | (487) | (428) |
Accumulated other comprehensive loss | (336) | (210) |
Total stockholders’ equity | 2,768 | 2,503 |
Non-controlling interest | 14 | 16 |
Total equity | 2,782 | 2,519 |
Total liabilities and stockholders’ equity | $ 7,222 | $ 6,860 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Millions, $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Allowances for discounts and doubtful accounts on receivables (in usd) | $ 35 | $ 35 |
Common Stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common Stock, shares authorized | 750 | 750 |
Common Stock, shares issued | 192.9 | 192.3 |
Treasury Stock, shares | 13.2 | 12.4 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Statement of Cash Flows [Abstract] | |||
Net income | $ 549 | $ 330 | $ 260 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation | 117 | 109 | 87 |
Amortization | 144 | 125 | 64 |
Deferred income taxes | (47) | (33) | 14 |
Share-based compensation | 30 | 21 | 18 |
Restructuring and asset impairment charges | 22 | 25 | 30 |
Loss/(gain) from sale of businesses | 0 | 10 | 0 |
Other, net | 9 | 19 | 6 |
Payments for restructuring | (21) | (28) | (16) |
Contributions to postretirement benefit plans | (41) | (33) | (27) |
Changes in assets and liabilities (net of acquisitions): | |||
Changes in receivables | (103) | (79) | (6) |
Changes in inventories | (97) | 27 | (15) |
Changes in accounts payable | 51 | 50 | 61 |
Changes in accrued liabilities | (6) | 28 | 13 |
Changes in accrued taxes | 0 | 104 | (13) |
Net changes in other assets and liabilities | (21) | 11 | 21 |
Net Cash — Operating activities | 586 | 686 | 497 |
Investing Activities | |||
Capital expenditures | (237) | (170) | (124) |
Proceeds from the sale of property, plant and equipment | 0 | 1 | 1 |
Acquisitions of businesses and assets, net of cash acquired | (433) | (33) | (1,782) |
Proceeds from sale of businesses | 22 | 16 | 0 |
Cash received from investments | 11 | 10 | 0 |
Cash paid for investments | (11) | (11) | 0 |
Other, net | 5 | 6 | 19 |
Net Cash — Investing activities | (643) | (181) | (1,886) |
Financing Activities | |||
Short-term debt issued | 335 | 0 | 274 |
Short-term debt repaid, net | (52) | (282) | (80) |
Long-term debt issued, net | 1 | 0 | 1,540 |
Long-term debt repaid | (120) | 0 | (608) |
Repurchase of common stock | (59) | (25) | (4) |
Proceeds from exercise of employee stock options | 7 | 16 | 24 |
Dividends paid | (152) | (130) | (112) |
Other, net | 0 | 0 | 0 |
Net Cash — Financing activities | (40) | (421) | 1,034 |
Effect of exchange rate changes on cash | (21) | 22 | (17) |
Net change in cash and cash equivalents | (118) | 106 | (372) |
Cash and cash equivalents at beginning of year | 414 | 308 | 680 |
Cash and cash equivalents at end of year | 296 | 414 | 308 |
Cash paid during the year for: | |||
Interest | 78 | 78 | 49 |
Income taxes (net of refunds received) | $ 75 | $ 57 | $ 78 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Millions | Total | Common Stock | Capital in Excess of Par Value | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Non-Controlling Interest |
Balance at Dec. 31, 2015 | $ 2,084 | $ 2 | $ 1,834 | $ 885 | $ (238) | $ (399) | $ 0 |
Stockholders' Equity [Roll Forward] | |||||||
Net income | 260 | 260 | |||||
Other comprehensive loss, net | (80) | (80) | |||||
Dividends declared | (112) | (112) | |||||
Stock incentive plan activity | 42 | 42 | |||||
Repurchase of common stock | (4) | (4) | |||||
Acquisition activity | 17 | 17 | |||||
Balance at Dec. 31, 2016 | 2,207 | 2 | 1,876 | 1,033 | (318) | (403) | 17 |
Stockholders' Equity [Roll Forward] | |||||||
Cumulative effect of change in accounting principle | (7) | (7) | |||||
Net income | 330 | 331 | (1) | ||||
Other comprehensive loss, net | 108 | 108 | |||||
Dividends declared | (130) | (130) | |||||
Stock incentive plan activity | 31 | 36 | (5) | ||||
Repurchase of common stock | (20) | (20) | |||||
Balance at Dec. 31, 2017 | 2,519 | 2 | 1,912 | 1,227 | (210) | (428) | 16 |
Stockholders' Equity [Roll Forward] | |||||||
Cumulative effect of change in accounting principle | (3) | 14 | (17) | ||||
Net income | 549 | 549 | |||||
Other comprehensive loss, net | (111) | (109) | (2) | ||||
Dividends declared | (151) | (151) | |||||
Stock incentive plan activity | 29 | 38 | (9) | ||||
Repurchase of common stock | (50) | (50) | |||||
Balance at Dec. 31, 2018 | $ 2,782 | $ 2 | $ 1,950 | $ 1,639 | $ (336) | $ (487) | $ 14 |
Consolidated Statements of Ch_2
Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - $ / shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Statement of Stockholders' Equity [Abstract] | |||
Cash dividends paid per share (in usd per share) | $ 0.8400 | $ 0.7200 | $ 0.6196 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies 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 operates in three segments, Water Infrastructure, Applied Water and Measurement & Control Solutions. The Water Infrastructure segment focuses on the transportation and treatment of water, offering a range of products including water and wastewater pumps, treatment equipment, and controls and systems. The Applied Water segment serves many of the primary uses of water and focuses on the residential, commercial and industrial markets. The Applied Water segment’s major products include pumps, valves, heat exchangers, controls and dispensing equipment. The Measurement & Control Solutions segment focuses on developing advanced technology solutions that enable intelligent use and conservation of critical water and energy resources as well as analytical instrumentation used in the testing of water. The Measurement & Control Solutions segment's major products include smart metering, networked communications, measurement and control technologies, critical infrastructure technologies, software and services including cloud-based analytics, remote monitoring and data management, leak detection and pressure monitoring solutions and testing equipment. On October 31, 2011 (the "Distribution Date"), ITT Corporation (“ITT”) completed the Spin-off (the “Spin-off”) of Xylem, formerly ITT’s water equipment and services businesses. The Spin-off was completed pursuant to the Distribution Agreement, dated as of October 25, 2011 (the “Distribution Agreement”), among ITT (now ITT LLC), Exelis Inc., acquired by Harris Inc. on May 29, 2015, (“Exelis”) and Xylem. Xylem Inc. was incorporated in Indiana on May 4, 2011 in connection with the Spin-off. 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. References in the notes to the consolidated financial statements to “ITT” or “ former parent” refers to ITT Corporation (now ITT LLC) and its consolidated subsidiaries (other than Xylem Inc.). Basis of Presentation The 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 intercompany transactions between our businesses have been eliminated. Use of Estimates 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, valuation of intangible assets, goodwill and indefinite lived intangible impairment testing and contingent liabilities. Actual results could differ from these estimates. Consolidation Principles We consolidate companies in which we have a controlling financial interest or when Xylem is considered the primary beneficiary of a variable interest entity. We account for investments in companies over which we have the ability to exercise significant influence but do not hold a controlling financial interest under the equity method, and we record our proportionate share of income or losses in the Consolidated Income Statements. Equity method investments are reviewed for impairment when events or circumstances indicate the investment may be other than temporarily impaired. This requires significant judgment, including an assessment of the investee’s financial condition, the possibility of subsequent rounds of financing, and the investee’s historical and projected results of operations. If the actual results of operations for the investee are significantly different from projections, we may incur future charges for the impairment of these investments. Foreign Currency Translation The national currencies of our foreign companies are generally the functional currencies. Balance sheet accounts are translated at the exchange rate in effect at the end of each period; income statement accounts are translated at the average rates of exchange prevailing during the period. Gains and losses on foreign currency translations are reflected in the cumulative translation adjustments component of stockholders’ equity. Net gains or losses from foreign currency transactions are reported currently in selling, general and administrative expenses. Revenue Recognition As discussed in Note 2, "Recently Issued Accounting Pronouncements", Xylem adopted the new guidance on recognizing revenue from contracts with customers as of January 1, 2018. In accordance with this new guidance Xylem recognizes revenue in a manner that depicts the transfer of promised goods and services to customers in an amount that reflects the consideration to which it expects to be entitled to for providing those goods and services. For each arrangement with a customer, we identify the contract, the associated performance obligations within the contract, determine the transaction price of that contract, allocate the transaction price to each performance obligation and recognize revenue as each performance obligation is satisfied. The satisfaction of performance obligations in a contract is based upon when the customer obtains control over the asset. Depending on the nature of the performance obligation, control transfers either at a particular point in time, or over time which determines the recognition pattern of revenue. For product sales, other than long-term construction-type contracts, we recognize revenue once control has passed at a point in time, which is generally when products are shipped. In instances where contractual terms include a provision for customer acceptance, revenue is recognized when either (i) we have previously demonstrated that the product meets the specified criteria based on either seller or customer specified objective criteria or (ii) upon formal acceptance received from the customer where the product has not been previously demonstrated to meet customer specified objective criteria. We recognize revenue on product sales to channel partners, including resellers, distributors or value-added solution providers at the point in time when control is transferred which is determined based on when the risks and rewards, possession, and title have transferred to the customer, which usually occurs at the point of delivery. Revenue from performance obligations related to services is recognized over time, as the performance obligations are satisfied. In these instances, the customer consumes the benefit of the service as Xylem performs. Certain businesses also enter into long-term construction-type sales contracts where revenue is recognized over time. In these instances, revenue is recognized using a measure of progress that applies an input method based on costs incurred in relation to total estimated costs. We also recognize revenue for certain of these arrangements using the output method and measure progress based on shipments of product where control has transferred to the customer. If shipping and handling activities are performed after a customer obtains control of a good, we account for the shipping and handling activities as activities to fulfill a promise to transfer a good. Shipping and handling related costs are accrued as revenue is recognized. For all contracts with customers, we determine the transaction price in the arrangement and allocate the transaction price to each performance obligation identified in the contract. Judgment is required to determine the appropriate unit of account, and we separate out the performance obligations if they are capable of being distinct and if they are distinct within the context of the contract. We base our allocation of the transaction price to the performance obligations on the relative standalone selling prices for the goods or services contained in a particular performance obligation. The standalone selling prices are determined first by reference to observable prices. In the event observable prices are not available, we estimate the stand-alone selling price by maximizing observable inputs and apply an adjusted market assessment approach, expected cost plus margin approach, or a residual approach in limited situations. Revenue in these instances is recognized on individual performance obligations within the same contract as they are satisfied. The transaction price is adjusted for our estimate of variable consideration which may include a right of return, discounts, rebates, penalties and retainage. To estimate variable consideration, we apply the expected value or the most likely amount method, based on whichever method most appropriately predicts the amount of consideration we expect to receive. The method applied is typically based on historical experience and known trends. We constrain the amounts of variable consideration that are included in the transaction price, to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur or when uncertainties around the variable consideration are resolved. We exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with specific revenue-producing transaction and collected from a customer, for example sales, use, value added and some excise taxes. For all contracts with customers, payment received for our products and services may not necessarily follow the same pattern of revenue recognition to which it relates and are dictated by the terms and conditions of our contracts with customers. Payments received for product sales typically occur following delivery and the satisfaction of the performance obligation based upon the terms outlined in the contracts. Payments received for services typically occur following the services being rendered. For long-term construction-type projects, payments are typically made throughout the contract as progress is made. In limited situations, contracts with customers include financing components where payment terms exceed one year, however, we believe that the financing effects are not significant to Xylem. In addition, we apply a practical expedient and do not adjust the promised amount of consideration in a contract for the effects of significant financing components when we expect payment terms to be one year or less from the time the goods or services are transferred until ultimate payment. We offer standard warranties for our products to ensure that our products comply with agreed-upon specifications in our contracts. For standard warranties, these do not give rise to performance obligations and represent assurance-type warranties. In certain instances, product warranty terms are adjusted to account for the specific nature of the contract. In these instances, we assess the warranties to determine whether they represent service-type warranties, and should be accounted for as a separate performance obligation in the contract. Costs to obtain a contract include incremental costs that the Company has incurred which it expects to recover. Incremental costs only include costs that the Company would not have incurred had the contract not been obtained. Costs that would have been incurred regardless of whether or not the contract was obtained are expensed as incurred, unless they are explicitly chargeable to the customer whether or not the contract is obtained. Costs to obtain contracts are capitalized when incurred. The costs to obtain contracts are then amortized in a manner that is consistent with the pattern of transfer of the related goods or services provided in the contract. The Company elects to apply the practical expedient to expense costs to obtain contracts when the associated amortization period of those costs would be one year or less. For annual periods prior to January 1, 2018, revenue is recognized when persuasive evidence of an arrangement exists, the price is fixed or determinable, collectability is reasonably assured and delivery has occurred or services have been rendered. For product sales, other than long-term construction-type contracts, we recognize revenue at the time title, and risks and rewards of ownership pass, which is generally when products are shipped. Certain contracts with customers require delivery, installation, testing, certification or other acceptance provisions to be satisfied before revenue is recognized. We recognize revenue on product sales to channel partners, including resellers, distributors or value-added solution providers at the time of sale when the channel partners have economic substance apart from Xylem and Xylem has completed its obligations related to the sale. Revenue from the rental of equipment is recognized over the rental period. Service revenue is recognized as services are performed. For agreements that contain multiple deliverables, we recognize revenue based on the relative selling price if the deliverable has stand-alone value to the customer and, in arrangements that include a general right of return relative to the delivered element, performance of the undelivered element is considered probable and substantially in the Company’s control. The selling price for a deliverable is based on vendor-specific objective evidence of selling price (“VSOE”), if available, third-party evidence of selling price (“TPE”) if VSOE is not available, or best estimated selling price, if neither VSOE nor TPE is available. The deliverables in our arrangements with multiple elements include various products and may include related services, such as installation and start-up services. Generally, these elements are satisfied within the same reporting period although certain contracts may be completed over 6 months. We allocate arrangement consideration based on the relative selling prices of the separate units of accounting determined in accordance with the hierarchy described above. For deliverables that are sold separately, we establish VSOE based on the price when the deliverable is sold separately. We establish TPE, generally for services, based on prices similarly situated customers pay for similar services from third-party vendors. For those deliverables for which we are unable to establish VSOE or TPE, we estimate the selling price considering various factors including market and pricing trends, geography, product customization, and profit objectives. Revenue for multiple element arrangements is recognized when the appropriate revenue recognition criteria for the individual deliverable have been satisfied. Certain businesses enter into long-term construction-type sales contracts for which revenue is recognized under the percentage-of-completion method based upon percentage of costs incurred to total estimated costs. Shipping and Handling Costs Shipping and handling costs are recorded as a component of cost of revenue. Share-Based Compensation Share-based awards issued to employees and members of the Board of Directors include non-qualified stock options, restricted stock unit awards and performance share unit awards. Compensation costs resulting from share-based payment transactions are recognized primarily within selling, general and administrative expenses, at fair value over the requisite service period (typically three years) on a straight-line basis. The calculated compensation cost is adjusted based on an estimate of awards ultimately expected to vest. For performance awards, the calculated compensation cost is adjusted based on an estimate of awards ultimately expected to vest and our assessment of the probable outcome of the performance condition. The fair value of a non-qualified stock option is determined on the date of grant using a binomial lattice pricing model incorporating multiple and variable assumptions over time, including assumptions such as employee exercise patterns, stock price volatility and changes in dividends. The fair value of restricted stock unit awards is determined using the closing price of our common stock on date of grant. The fair value of Return on Invested Capital ("ROIC") performance share units at 100% target is determined using the closing price of our common stock on date of grant. The fair value of Total Shareholder Return ("TSR") performance share units is calculated on the date of grant using a Monte Carlo simulation model utilizing several key assumptions, including expected Company and peer company share price volatility, correlation coefficients between peers, the risk-free rate of return, the expected dividend yield and other award design features. Research and Development We conduct research and development activities, which consist primarily of the development of new products, product applications, and manufacturing processes. To the extent these activities are related to developing software that is sold to our customers, we capitalize the applicable development costs. All other research and development costs are charged to expense as incurred. Exit and Disposal Costs We periodically initiate management-approved restructuring activities to achieve cost savings through reduced operational redundancies and to position ourselves strategically in the market in response to prevailing economic conditions and associated customer demand. Costs associated with restructuring actions can include severance, infrastructure charges to vacate facilities or consolidate operations, contract termination costs and other related charges. For involuntary separation plans, a liability is recognized when it is probable and reasonably estimable. For voluntary separation plans, a liability is recognized when the employee irrevocably accepts the voluntary termination. For one-time termination benefits, such as additional severance pay or benefit payouts, and other exit costs, such as lease termination costs, the liability is measured and recognized initially at fair value in the period in which the liability is incurred, with subsequent changes to the liability recognized as adjustments in the period of change. Deferred Financing Costs Deferred financing costs represent costs incurred in conjunction with our debt financing activities and are capitalized in long-term debt and amortized over the life of the related financing arrangements. If the debt is retired early, the related unamortized deferred financing costs are written off in the period the debt is retired and are recorded in the results of operations under the caption “interest expense.” Income Taxes Income taxes are calculated using the asset and liability method. Deferred tax assets and liabilities are determined based on the estimated future tax effects of temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities, as measured by the current enacted tax rates. We maintain valuation allowances when it is more likely than not that all or a portion of a deferred asset will not be realized. The valuation allowance is intended in part to provide for the uncertainty regarding the ultimate utilization of our U.S. capital loss carryforwards, U.S. foreign tax credit carryovers, and foreign net operating loss carryforwards. In determining whether a valuation allowance is warranted, we consider all positive and negative evidence and all sources of taxable income such as prior earnings history, expected future earnings, carryback and carryforward periods and tax strategies to estimate if sufficient future taxable income will be generated to realize the deferred tax asset. The assessment of the adequacy of our valuation allowance is based on our estimates of taxable income by jurisdiction in which we operate and the period over which our deferred tax assets will be recoverable. In the event that actual results differ from these estimates, or we adjust these estimates in future periods for current trends or expected changes in our estimating assumptions, we may need to modify the level of valuation allowance that could materially impact our business, financial condition and results of operations. Due to the U.S. Tax Cuts and Jobs Act (the "Tax Act"), we have recorded net foreign withholding taxes and state income taxes on earnings that are expected to be repatriated to the U.S. parent. We have not recorded any deferred taxes on the amounts that the Company currently does not intend to repatriate as the determination of any deferred taxes on this amount is not practicable. Tax benefits are recognized for an uncertain tax position when, in management’s judgment, it is more likely than not that the position will be sustained upon examination by a taxing authority. For a tax position that meets the more-likely-than-not recognition threshold, the tax benefit is measured as the largest amount that is judged to have a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority. The liability associated with unrecognized tax benefits is adjusted periodically due to changing circumstances and when new information becomes available. Such adjustments are recognized in the period in which they are identified. The effective tax rate includes the net impact of changes in the liability for unrecognized tax benefits and subsequent adjustments as considered appropriate by management. While it is often difficult to predict the final outcome or the timing of resolution of any particular tax matter, we believe our liability for unrecognized tax benefits is adequate. We classify interest relating to unrecognized tax benefits as a component of other non-operating (expense) income, net and tax penalties as a component of income tax expense in our Consolidated Income Statements. Earnings Per Share We present two calculations of earnings per share (“EPS”). “Basic” EPS equals net income divided by weighted average shares outstanding during the period. “Diluted” EPS equals net income divided by the sum of weighted average common shares outstanding during the period plus potentially dilutive shares. Potentially dilutive common shares that are anti-dilutive are excluded from diluted EPS. Cash Equivalents We consider all liquid investments purchased with an original maturity of three months or less to be cash equivalents. Receivables and Allowance for Doubtful Accounts and Discounts Receivables primarily comprise uncollected amounts owed to us from transactions with customers and are presented net of allowances for doubtful accounts, returns and early payment discounts. We determine our allowance for doubtful accounts using a combination of factors to reduce our trade receivable balances to their estimated net realizable amount. We maintain an allowance for doubtful accounts based on a variety of factors, including the length of time receivables are past due, macroeconomic trends and conditions, significant one-time events, historical experience and the financial condition of customers. In addition, we record a specific reserve for individual accounts when we become aware of specific customer circumstances, such as in the case of bankruptcy filings or deterioration in the customer’s operating results or financial position. The past due or delinquency status of a receivable is based on the contractual payment terms of the receivable. If circumstances related to the specific customer change, we adjust estimates of the recoverability of receivables as appropriate. We determine our allowance for early payment discounts primarily based on historical experience with customers. Credit risk with respect to accounts receivable is generally diversified due to the large number of entities comprising our customer base and their dispersion across many different geographical regions. We perform ongoing credit evaluations of the financial condition of our third-party distributors, resellers and other customers and require collateral, such as letters of credit and bank guarantees, in certain circumstances. As of December 31, 2018 and 2017 we do not believe we have any significant concentrations of credit risk. Inventories Inventories, which include the costs of material, labor and overhead, are stated at the lower of cost or net realizable value using the first in, first out ("FIFO") method. Estimated losses from obsolete and slow-moving inventories are recorded to reduce inventory values to their estimated net realizable value. Our manufacturing operations recognize costs of sales using standard costs with full overhead absorption, which generally approximates actual cost. Property, Plant and Equipment These assets are recorded at historical cost and are depreciated using the straight-line method of depreciation over the estimated useful lives as follows: Estimated Life Buildings and improvements 5 to 40 years Machinery and equipment 2 to 10 years Furniture and fixtures 3 to 7 years Equipment held for lease or rental 2 to 10 years Leasehold improvements are depreciated over the shorter of their estimated useful life or the term of the lease. Costs related to maintenance and repairs that do not prolong the assets' useful lives are expensed as incurred. Goodwill and Intangible Assets Goodwill represents purchase consideration paid in a business combination that exceeds the values assigned to the net assets of acquired businesses. Intangible assets include customer relationships, proprietary technology, brands and trademarks, patents, software and other intangible assets. Intangible assets with a finite life are amortized on a straight-line basis over an estimated economic useful life which ranges from 1 to 25 years and is included in cost of revenue or selling, general and administrative expense. Certain of our intangible assets, namely certain brands and trademarks, as well as FCC licenses, have an indefinite life and are not amortized. Long-Lived Asset Impairment Long-lived assets, including intangible assets with finite lives, are amortized and tested for impairment whenever events or changes in circumstances indicate their carrying value may not be recoverable. We assess the recoverability of long-lived assets based on the undiscounted future cash flow the assets are expected to generate and recognize an impairment loss when estimated undiscounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. When an impairment is identified, we reduce the carrying amount of the asset to its estimated fair value based on a discounted cash flow approach or, when available and appropriate, to comparable market values. Goodwill and indefinite-lived intangible assets are not amortized, but rather are tested for impairment annually (or more frequently if impairment indicators arise, such as changes to the reporting unit structure, significant adverse changes in the business climate or an adverse action or assessment by a regulator). We conduct our annual impairment testing on the first day of our fourth quarter. For goodwill, the estimated fair value of each reporting unit is compared to the carrying value of the net assets assigned to that reporting unit. If the estimated fair value of the reporting unit exceeds its carrying value, goodwill is not impaired. If the carrying value of the reporting unit exceeds its estimated fair value, then an impairment charge is recognized for that excess up to the amount of recorded goodwill. We estimate the fair value of our reporting units using an income approach. We estimate the fair value of our intangible assets with indefinite lives using either the income approach or the market approach. Under the income approach, we calculate fair value based on the present value of estimated future cash flows. Under the market approach, we calculate fair value based on recent sales and selling prices of similar assets. Product Warranties For assurance-type warranties, we accrue for the estimated cost of product warranties at the time revenue is recognized and record it as a component of cost of revenue. Our product warranty liability reflects our best estimate of probable liability under the terms and conditions of our product warranties offered to customers. We estimate the liability based on our standard warranty terms, the historical frequency of claims and the cost to replace or repair our products under warranty. Factors that impact our warranty liability include the number of units sold, the length of warranty term, historical and anticipated rates of warranty claims and cost per claim. We also record a warranty liability for specific matters. We assess the adequacy of our recorded warranty liabilities quarterly and adjust amounts as necessary. For service-type warranties (i.e. non-standard warranties) costs incurred to fulfill the extended or service warranty are recognized/recorded as the costs are incurred. Postretirement Benefit Plans The determination of defined benefit pension and postretirement plan obligations and their associated costs requires the use of actuarial computations to estimate participant plan benefits to which the employees wil l be entitled. The significant assumptions primarily relate to discount rates, expected long-term rates of return on plan assets, rate of future compensation increases, mortality, years of service and other factors. We develop each assumption using relevant company experience in conjunction with market-related data for each individual country in which such plans exist. All actuarial assumptions are reviewed annually with third-party consultants and adjusted as necessary. For the recognition of net periodic postretirement cost, the calculation of the expected return on plan assets is generally derived by applying the expected long-term rate of return on the market-related value of plan assets. The market-related value of plan assets is based on average asset values at the measurement date over the last five years. Actual results that differ from our assumptions are accumulated and amortized on a straight-line basis only to the extent they exceed 10% of the higher of the market-related value or the projected benefit obligation, over the average remaining service period of active participants, or for plans with all or substantially all inactive participants, over the average remaining life expectancy. The fair value of plan assets is determined based on market prices or estimated fair value at the measurement date. We consider changes to a plan’s benefit formula that eliminate the accrual for future service but continue to allow for future salary increases (i.e. “soft freeze”) to be a curtailment. Business Combinations We allocate the purchase price of acquisitions to the tangible and intangible assets acquired, liabilities assumed, and non-controlling interests in the acquiree based on their estimated fair value at the acquisition date. The excess of the acquisition price over those estimated fair values is recorded as goodwill. Changes to the acquisition date provisional fair values prior to the expiration of the measurement period, a period not to exceed 12 months from date of acquisition, are recorded as an adjustment to the associated goodwill. Acquisition-related expenses and restructuring costs, if any, are recognized separately from the business combination and are expensed as incurred. Derivative Financial Instruments We record all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on whether we have elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flo |
Recently Issued Accounting Pron
Recently Issued Accounting Pronouncements | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements Pronouncements Not Yet Adopted In August 2018, the Financial Accounting Standards Board (“FASB”) issued guidance regarding the accounting for implementation costs of a hosting arrangement that is a service contract. The guidance establishes the requirement to capitalize certain implementation costs incurred in a hosting arrangement that is a service contract, effectively aligning with the requirement to capitalize certain implementation costs incurred to develop or obtain internal-use software. This guidance is effective for interim and annual periods beginning after December 15, 2019 with early adoption permitted. The requirements of the amended guidance may be applied using either a retrospective or prospective approach. We are evaluating the impact of the guidance on our financial condition and results of operations. In June 2016, the FASB issued guidance amending the accounting for the impairment of financial instruments, including trade receivables. Under current guidance, credit losses are recognized when the applicable losses are probable of occurring and this assessment is based on past events and current conditions. The amended guidance eliminates the “probable” threshold and requires an entity to use a broader range of information, including forecast information when estimating expected credit losses. Generally, this should result in a more timely recognition of credit losses. This guidance is effective for interim and annual periods beginning after December 15, 2019 with early adoption permitted for interim and annual periods beginning after December 15, 2018. The requirements of the amended guidance should be applied using a modified retrospective approach except for debt securities, which require a prospective transition approach. We are evaluating the impact of the guidance on our financial condition and results of operations. In February 2016, the FASB issued guidance amending the accounting for leases. Specifically, the amended guidance requires all lessees to record a lease liability at lease inception, with a corresponding right of use asset ("ROU"), except for short-term leases. Lessor accounting is not fundamentally changed. This amended guidance is effective for interim and annual periods beginning after December 15, 2018 using a modified retrospective approach. Early adoption is permitted. We will apply the modified retrospective approach by recording a cumulative effect adjustment as of the date of adoption, whereby prior comparative periods will not be retrospectively presented in the consolidated financial statements. As a result, adoption of the standard will result in the recognition of ROU assets and lease liabilities for operating leases of between $255 million and $285 million , as of January 1, 2019, the date of initial application. The guidance will not have a material impact on our consolidated income statements and statements of cash flow. Recently Adopted Pronouncements In August 2017, the FASB issued amended guidance on hedging activities. The amendment better aligns a company’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying for hedging relationships and the presentation of hedge results. Specifically, the guidance: (1) Eliminates the concept of recognizing periodic hedge ineffectiveness for cash flow and net investment hedges; (2) Eliminates the benchmark interest rate concept of variable - rate instruments in cash flow hedges and allows companies to designate the contractually specified interest rate as the hedged risk; (3) Requires a company to present the earnings effect of the hedging instrument in the same income statement line item in which the earnings effect of the hedged item is reported; and (4) Provides the ability to perform subsequent hedge effectiveness tests qualitatively. This guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those annual periods. Early adoption is permitted with the effect of adoption reflected as of the beginning of the fiscal year of adoption. For cash flow and net investment hedges existing at the date of adoption, a cumulative-effect adjustment related to eliminating the separate measurement of ineffectiveness is required. Other presentation and disclosure guidance is required only prospectively. We adopted this guidance in the fourth quarter of 2018. The adoption resulted in the recognition of $2 million of interest income as a result of our transition from the forward rate method to the spot rate method in accounting for our net investment hedges. In February 2018, the FASB issued new guidance on the reclassification of certain tax effects in Accumulated Other Comprehensive Income ("AOCI"). The guidance allows a reclassification from AOCI to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act (the “Tax Act”). This guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those annual periods. Early adoption is permitted. The guidance may be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Act is recognized. We early adopted this guidance effective the first quarter of 2018, and elected to reclassify the income tax effects of the Tax Act from AOCI to retained earnings. As a result of adopting the guidance, AOCI was reduced by $17 million and retained earnings increased by $17 million . This amount includes the effect of the change in the US federal corporate income tax rate. In March 2017, the FASB issued amended guidance on the presentation of net periodic benefit costs. The amendment requires that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components are required to be presented in the income statement separately and outside a subtotal of income from operations, if one is presented. The amendment also requires entities to disclose the income statement lines that contain the other components if they are not appropriately described. This guidance is effective retrospectively for periods beginning after December 15, 2017, including interim periods within those annual periods. Early adoption is permitted. We adopted this guidance effective the first quarter of 2018. The prior period consolidated income statements and segment results have been retrospectively adjusted in accordance with the new guidance. The impact to the presentation between operating income and other non-operating income within Xylem's Consolidated Income Statements was approximately $4 million and $2 million for the years ended December 31, 2017 and 2016, respectively. 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 interim and annual reporting periods beginning after December 15, 2017 and may be applied retrospectively to each prior period presented or using a modified retrospective approach with the cumulative effect recognized as of the date of initial application. Early adoption is permitted for interim and annual reporting periods beginning after December 15, 2016. We adopted this guidance as of January 1, 2018 using the modified retrospective transition method. The adoption of the guidance did not have a material impact on our financial condition and results of operations. See Note 4, "Revenue", for further details. In May 2017, the FASB issued guidance, which amends the scope of modification accounting guidance for share-based payment arrangements. The guidance outlines the types of changes to the terms or conditions of share-based payment arrangements that would require the use of modification accounting. Specifically, modification accounting would not apply if the fair value, vesting conditions, and classification of the award as equity or liability are the same immediately before and after the modification. This guidance is effective prospectively for interim and annual reporting periods beginning December 15, 2017 and early adoption is permitted. We elected to early adopt this guidance effective the second quarter of 2017. The adoption of this guidance did not impact our financial condition or results from operations. In January 2017, the FASB issued guidance amending the impairment testing of goodwill. Under current guidance, the testing of goodwill for impairment is performed at least annually using a two-step test. Step one involves comparing the fair value of a “reporting unit” to its carrying amount. If the applicable book value exceeds the reporting unit’s fair value then step two must be performed. Step two involves comparing the fair value of the reporting unit’s goodwill to the applicable carrying amount of the asset and recognizing an impairment charge equal to the amount by which the carrying amount of the goodwill exceeds its implied fair value. The amended guidance eliminates step two of the impairment test and allows an entity to record an impairment charge equal to the amount that the carrying amount of the applicable reporting unit exceeds its fair value, up to the value of the recorded goodwill. This guidance is effective prospectively for interim and annual goodwill impairment tests beginning after December 15, 2019 with early adoption permitted for interim or annual tests after January 1, 2017. We elected to early adopt this guidance effective the first quarter of 2017. The adoption of this guidance did not impact our financial condition or results of operations. In October 2016, the FASB issued guidance amending the accounting for income taxes. Under current guidance the recognition of current and deferred income taxes for an intra-entity asset transfer is prohibited until the asset has been sold to an outside party. The amended guidance eliminates the prohibition against immediate recognition of current and deferred income tax amounts associated with intra-entity transfers of assets other than inventory. This guidance is effective for interim and annual periods beginning after December 15, 2017 with early adoption permitted as of the beginning of an annual reporting period for which financial statements (interim or annual) have not been issued or made available for issuance. The requirements of the amended guidance should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. We elected to early adopt this guidance effective the first quarter of 2017. As a result of adopting the amended guidance, prepaid tax assets were reduced by $14 million , long-term deferred tax assets increased $3 million , and accrued taxes were reduced by $4 million . The net impact of these adjustments on retained earnings was a decrease of $7 million . |
Acquisitions and Divestitures
Acquisitions and Divestitures | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
Acquisitions and Divestitures | Acquisitions and Divestitures 2018 Acquisitions and Divestitures Pure Technologies Ltd. On January 31, 2018, we acquired all the issued and outstanding shares of Pure Technologies Ltd. (“Pure”), a leader in intelligent leak detection and condition assessment solutions for water distribution networks for approximately $420 million , net of cash received. Acquisition costs of $4 million were reflected as a component of selling, general and administrative expenses in our Consolidated Income Statement. Pure’s results of operations were consolidated with the Company effective February 1, 2018 and are reflected in the Measurement & Control Solutions segment. The Pure purchase price allocation as of January 31, 2018 is shown in the following table. (in millions) Amount Cash $ 14 Receivables 23 Inventories 4 Prepaid and other current assets 2 Property, plant and equipment 22 Intangible assets 149 Other long-term assets 1 Accounts payable (3 ) Accrued and other current liabilities (12 ) Deferred income tax liabilities (25 ) Other non-current accrued liabilities (2 ) Total identifiable net assets 173 Goodwill 261 Total consideration $ 434 During the fourth quarter of 2018 we finalized the Pure purchase price allocation. The fair values of Pure's assets and liabilities were determined based on estimates and assumptions which management believes are reasonable. Goodwill arising from the acquisition consists largely of synergies and economies of scale expected from combining the operations of Pure and Xylem. All of the goodwill was assigned to the Measurement & Control Solutions segment and is not deductible for tax purposes. The estimate of the fair value of Pure identifiable intangible assets was determined primarily using the “income approach,” which requires a forecast of all of the expected future cash flows either through the use of the multi-period excess earnings method or the relief-from-royalty method. Some of the more significant assumptions inherent in the development of intangible asset values include: the amount and timing of projected future cash flows, the discount rate selected to measure the risks inherent in the future cash flows, the assessment of the intangible asset’s life cycle, as well as other factors. The following table summarizes key information underlying identifiable intangible assets related to the Pure acquisition: Category Life Amount (in millions) Customer Relationships 17 - 18 years $ 84 Technology 3 - 10 years 38 Tradenames 20 years 21 Internally Developed Software 3 years 6 Total $ 149 The following table summarizes, on an unaudited pro forma basis, the condensed combined results of operations of the Company for the years ended December 31, 2018 and 2017, respectively, assuming the acquisition of Pure was made on January 1, 2017. (in millions) Year Ended December 31, 2018 2017 Revenue $5,212 $4,809 Net income $546 $323 The foregoing unaudited pro forma results are for informational purposes only and are not necessarily indicative of the actual results of operations that might have occurred had the acquisition occurred on January 1, 2017, nor are they necessarily indicative of future results. The pro forma financial information includes the impact of purchase accounting and other nonrecurring items directly attributable to the acquisition, which include: • Amortization expense of acquired intangibles • Adjustments to the depreciation of property, plant and equipment reflecting the impact of the calculated fair value of those assets in accordance with purchase accounting • Adjustments to interest expense to remove historical Pure interest costs and reflect Xylem's current debt profile • The related tax impact of the above referenced adjustments The pro forma results do not include any cost savings or operational synergies that may be generated or realized due to the acquisition of Pure. During the eleven month period ended December 31, 2018 Pure had revenue and an operating loss of $96 million and $2 million , respectively. Other Acquisition Activity During the twelve months ended December 31, 2018 we spent approximately $13 million , net of cash received on other acquisition activity. During the third quarter we divested our Precision Die Casting business for approximately $22 million , net of cash assumed. The sale resulted in an immaterial gain, which is reflected in gain from sale of business in our Consolidated Income Statement. The business, which was part of our Measurement & Controls Solutions segment, provided aluminum die casting products primarily to customers in the automotive sector. The business reported 2017 annual revenue of approximately $32 million . 2017 Acquisitions and Divestitures Acquisition Activity During 2017 we spent approximately $33 million on acquisition activity, including the acquisition of EmNet LLC (“EmNet”), a developer of software and data analytics solutions for municipalities. Divestitures On October 31, 2017, we divested our Flowtronex and Water Equipment Technologies (WET) businesses for $6 million . The sale resulted in a gain of approximately $1 million , which is reflected in gain from sale of business in our Consolidated Income Statement. The business, which was part of our Applied Water segment, provided turf and reverse osmosis packages to customers in the agricultural and industrial sectors. The business reported approximately $9 million of revenue in the first 10 months of 2017. On February 17, 2017, we divested our United Kingdom and Poland based membranes business for approximately $10 million . The sale resulted in a gain of $5 million , which is reflected in gain from sale of business in our Consolidated Income Statement. The business, which was part of our Applied Water segment, provided membrane filtration products primarily to customers in the municipal water and industrial sectors. The business reported 2016 annual revenue of approximately $8 million . Assets Held for Sale During the fourth quarter of 2017 two of our businesses qualified as held for sale treatment. Accordingly an estimated loss of $16 million was recognized. 2016 Acquisitions Sensus Worldwide Limited On October 31, 2016, we acquired all of the outstanding equity interests of Sensus Worldwide Limited (other than Sensus Industries Limited) (“Sensus”) effective October 31, 2016 for $1,766 million ( $1,710 million net of cash acquired), including a $6 million payment in 2017 for a working capital adjustment. Sensus develops advanced technology solutions that enable intelligent use and conservation of critical water and energy resources. Sensus' major products include smart metering, networked communications, measurement and control technologies, software and services including cloud-based analytics, remote monitoring and data management . The Company acquired Sensus because it believes that, within its market category, its products have superior qualities and usefulness to customers. The Company also acquired Sensus on the strength of its developed technology that we plan to leverage across our existing base of products and customers. Acquisition costs of $19 million were reflected as a component of selling, general and administrative expenses in our Consolidated Income Statements. Sensus results of operations were consolidated with the Company effective November 1, 2016 and it is part of the Measurement & Control Solutions segment. Refer to Note 21, "Segment and Geographic Data" for Measurement & Control Solutions segment information. The Sensus purchase price allocation as of October 31, 2016 is shown in the following table. (in millions) Amount Cash $ 56 Receivables 104 Inventories 79 Prepaid and other current assets 19 Property, plant and equipment 176 Intangible assets 782 Other long-term assets 5 Accounts payable (69 ) Accrued and other current liabilities (90 ) Deferred income tax liabilities (198 ) Accrued post retirement benefits (84 ) Other non-current accrued liabilities (60 ) Total identifiable net assets 720 Goodwill 1,063 Non-controlling interest (17 ) Total consideration $ 1,766 In the third quarter of 2017 we finalized the Sensus purchase price allocation. The fair values of Sensus' assets and liabilities were determined based on estimates and assumptions which management believes are reasonable. Goodwill arising from the acquisition consists largely of synergies and economies of scale expected from combining the operations of Sensus and Xylem. All of the goodwill was assigned to the Measurement & Control Solutions segment and is not deductible for tax purposes. The estimate of the fair value of Sensus identifiable intangible assets was determined primarily using the “income approach,” which requires a forecast of all of the expected future cash flows either through the use of the multi-period excess earnings method or the relief-from-royalty method. Some of the more significant assumptions inherent in the development of intangible asset values include: the amount and timing of projected future cash flows, the discount rate selected to measure the risks inherent in the future cash flows, the assessment of the intangible asset’s life cycle, as well as other factors. The following table summarizes key information underlying identifiable intangible assets related to the Sensus acquisition: Category Life Amount (in millions) Customer and Distributor Relationships 2 - 18 years $ 543 Tradenames 10 - 25 years 98 Internally Developed Network Software 7 years 60 FCC Licenses Indefinite lived 24 Technology 5 - 15 years 39 Other 1 - 16 years 18 Total $ 782 The following table summarizes, on an unaudited proforma basis, the condensed combined results of operations of the Company for the year ended December 31, 2016 assuming the acquisition of Sensus was made on January 1, 2015. Year Ended December 31, (in millions) 2016 Revenue $ 4,528 Net income $ 286 The foregoing unaudited proforma results are for informational purposes only and are not necessarily indicative of the actual results of operations that might have occurred had the acquisition occurred on January 1, 2015, nor are they necessarily indicative of future results. The pro forma financial information includes the impact of purchase accounting and other nonrecurring items directly attributable to the acquisition, which include: • Adjustments to revenue resulting from the valuation of the acquired deferred revenue balance to fair value as part of purchase accounting • Amortization expense of acquired intangibles • Amortization of the fair value step-up in inventory • Adjustments to the depreciation of property, plant and equipment reflecting the impact of the calculated fair value of those assets in accordance with purchase accounting • Amortization of the fair value adjustment for warranty liabilities • Adjustments to interest expense to remove historical Sensus interest costs and reflect Xylem's current debt profile • The related tax impact of the above referenced adjustments The pro forma results do not include any cost savings or operational synergies that may be generated or realized due to the acquisition of Sensus. For the two month period ended December 31, 2016 Sensus had revenue and an operating loss of $132 million and $13 million, respectively. Visenti Pte. Ltd On October 18, 2016, we acquired Visenti Pte. Ltd. (“Visenti”), a smart water analytics company focused on leak detection and pressure monitoring solutions to help water utilities manage their water networks for $8 million . Visenti, a privately-owned company headquartered in Singapore, has approximately 25 employees. Our consolidated financial statements include Visenti's results of operations prospectively from October 18, 2016 within the Measurement & Control Solutions segment. Tideland Signal Corporation On February 1, 2016, we acquired Tideland Signal Corporation (“Tideland”), a leading producer of analytics solutions in the coastal and ocean management sectors, for $70 million . Tideland, a privately-owned company headquartered in Texas, has approximately 160 |
Restructuring and Asset Impairm
Restructuring and Asset Impairment Charges | 12 Months Ended |
Dec. 31, 2018 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Asset Impairment Charges | Restructuring and Asset Impairment Charges From time to time, the Company will incur costs related to restructuring actions in order to optimize our cost base and more strategically position ourselves based on the economic environment and customer demand. During 2018 , 2017 and 2016, the costs incurred primarily relate to an effort to reposition our European and North American businesses to optimize our cost structure and improve our operational efficiency and effectiveness. In 2018, the charges included the reduction of headcount and consolidation of facilities within our Measurement & Control Solutions and Water Infrastructure segments, as well as headcount reductions within our Applied Water segment. In 2017 and 2016 the charges included the reduction of headcount and consolidation of facilities within our Applied Water, Water Infrastructure, and Measurement & Control Solutions segments, as well as Corporate headcount reductions. The components of restructuring charges incurred during each of the previous three years ended are presented below. Year Ended December 31, (in millions) 2018 2017 2016 By component: Severance and other charges $ 19 $ 20 $ 28 Lease related charges 1 — 2 Other restructuring charges 1 2 1 Reversal of restructuring accruals (1 ) (2 ) (1 ) Total restructuring charges 20 20 30 Asset impairment charges 2 5 — Total restructuring and asset impairment charges $ 22 $ 25 $ 30 By segment: Water Infrastructure $ 11 $ 7 $ 12 Applied Water 2 13 10 Measurement & Control Solutions 9 5 6 Corporate and other — — 2 Restructuring The following table displays a rollforward of the restructuring accruals, presented on our Consolidated Balance Sheets within accrued and other current liabilities, for the years ended December 31, 2018 and 2017 . (in millions) 2018 2017 Restructuring accruals - January 1 $ 7 $ 15 Restructuring charges 20 20 Cash payments (21 ) (28 ) Foreign currency and other (1 ) — Restructuring accruals - December 31 $ 5 $ 7 By segment: Water Infrastructure $ 1 $ 1 Applied Water 1 1 Measurement & Control Solutions 2 2 Regional selling locations (a) 1 3 Corporate and other — — (a) Regional selling locations consist primarily of selling and marketing organizations that incurred restructuring expense which was allocated to the segments. The liabilities associated with restructuring expense were not allocated to the segments. The following is a rollforward of employee position eliminations associated with restructuring activities for the years ended December 31, 2018 and 2017 . 2018 2017 Planned reductions - January 1 47 188 Additional planned reductions 206 151 Actual reductions and reversals (184 ) (292 ) Planned reductions - December 31 69 47 The following table presents expected restructuring spend: (in millions) Water Infrastructure Applied Water Measurement & Control Solutions Corporate Total Actions Commenced in 2018: Total expected costs $ 9 $ 1 $ 7 $ — $ 17 Costs incurred during 2018 7 1 7 — 15 Total expected costs remaining $ 2 $ — $ — $ — $ 2 Actions Commenced in 2017: Total expected costs $ 18 $ 12 $ 3 $ — $ 33 Costs incurred during 2017 5 4 2 — 11 Costs incurred during 2018 2 1 1 — 4 Total expected costs remaining $ 11 $ 7 $ — $ — $ 18 Actions Commenced in 2016: Total expected costs $ 13 $ 14 $ 10 $ 2 $ 39 Costs incurred during 2016 11 10 6 2 29 Costs incurred during 2017 2 4 3 — 9 Costs incurred during 2018 — — 1 — 1 Total expected costs remaining $ — $ — $ — $ — $ — The Water Infrastructure, Applied Water and Measurement & Control Solutions actions commenced in 2018 consist primarily of severance charges and are expected to continue through the third quarter of 2019. The Water Infrastructure, Applied Water and Measurement & Control Solutions actions commenced in 2017 consist primarily of severance charges and are expected to continue through the second quarter of 2020. The Water Infrastructure, Applied Water, Measurement & Control Solutions and Corporate actions commenced in 2016 consist primarily of severance charges and are complete. Asset Impairment Charges During the fourth quarter of 2018 we determined that certain assets within our Water Infrastructure segment, including certain software, were impaired. Accordingly we recognized an impairment charge of $2 million . During the first quarter of 2017 we determined that certain assets within our Applied Water segment, including a tradename, were impaired. Accordingly we recognized an impairment charge of $5 million |
Revenue
Revenue | 12 Months Ended |
Dec. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue Disaggregation of Revenue The following table illustrates the sources of revenue: Twelve Months Ended (in millions) December 31, 2018 Revenue from contracts with customers $ 4,963 Other 244 Total $ 5,207 The following table reflects revenue from contracts with customers by application: Twelve Months Ended (in millions) December 31, 2018 Water Infrastructure Transport $ 1,535 Treatment 397 Applied Water Commercial Building Services 596 Residential Building Services 232 Industrial Water 706 Measurement and Control Solutions Water 692 Electric 143 Gas 195 Software and Services/Other 123 Test 344 Total $ 4,963 The following table reflects revenue from contracts with customers by geographical region: Twelve Months Ended (in millions) December 31, 2018 Water Infrastructure United States $ 539 Europe 758 Emerging Markets & Other 635 Applied Water United States 797 Europe 386 Emerging Markets & Other 351 Measurement and Control Solutions United States 913 Europe 273 Emerging Markets & Other 311 Total $ 4,963 Contract Balances We receive payments from customers based on a billing schedule as established in our contracts. Contract assets relate to revenue recognized in advance of scheduled billings. Contract liabilities relate to payments received in advance of performance under the contracts. Change in contract assets and liabilities are due to our performance under the contract. The table below provides contract assets, contract liabilities, and significant changes in contract assets and liabilities. (in millions) Contract Assets (a) Contract Liabilities Balance at 1/1/2018 $ 89 $ 107 Additions, net 87 101 Revenue recognized from opening balance — (89 ) Billings (76 ) — Foreign currency and other (4 ) (6 ) Balance at 12/31/2018 $ 96 $ 113 (a) Excludes receivable balances which are disclosed on the balance sheet Performance obligations Delivery schedules vary from customer to customer based upon their requirements. Typically, large projects require longer lead production cycles and delays can occur from time to time. As of December 31, 2018 , the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied for contracts with performance obligations, amount to $258 million . We expect to recognize revenue upon the completion of satisfying the majority of these performance obligations in the following 12 to 36 |
Other Non-Operating Income, Net
Other Non-Operating Income, Net | 12 Months Ended |
Dec. 31, 2018 | |
Other Income and Expenses [Abstract] | |
Other Non-Operating Income, Net | Other Non-Operating Income, Net The components of other non-operating income, net are as follows: Year Ended December 31, (in millions) 2018 2017 2016 Interest income $ 4 $ 3 $ 2 Income from joint ventures 5 3 3 Other income (expense) – net 4 — (3 ) Total other non-operating income, net $ 13 $ 6 $ 2 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The source of pre-tax income and the components of income tax expense are as follows: Year Ended December 31, (in millions) 2018 2017 2016 Income components: Domestic $ 208 $ 162 $ 80 Foreign 377 304 260 Total pre-tax income $ 585 $ 466 $ 340 Income tax expense components: Current: Domestic – federal $ 9 $ 109 $ 19 Domestic – state and local 13 9 5 Foreign 61 51 42 Total Current 83 169 66 Deferred: Domestic – federal $ 17 $ (29 ) $ 19 Domestic – state and local 5 10 1 Foreign (69 ) (14 ) (6 ) Total Deferred (47 ) (33 ) 14 Total income tax provision $ 36 $ 136 $ 80 Effective income tax rate 6.1 % 29.2 % 23.5 % Reconciliations between taxes at the U.S. federal income tax rate and taxes at our effective income tax rate on earnings before income taxes are as follows: Year Ended December 31, 2018 2017 2016 Tax provision at U.S. statutory rate 21.0 % 35.0 % 35.0 % Increase (decrease) in tax rate resulting from: State income taxes 2.3 1.6 0.8 Uncertain tax positions 2.6 1.6 (6.4 ) Valuation allowance (47.1 ) 3.3 18.5 Tax exempt interest (1.4 ) (10.6 ) (14.3 ) Foreign tax rate differential 2.9 (6.7 ) (7.9 ) Impact of foreign earnings, net (1.7 ) 37.0 5.9 Tax incentives (6.2 ) (6.6 ) (8.9 ) Intercompany sale of assets 35.5 — — Other – net (1.8 ) (2.5 ) 0.8 Rate change — (22.9 ) — Effective income tax rate 6.1 % 29.2 % 23.5 % We operate under tax incentives, which are effective January 2013 through December 2023 and may be extended if certain additional requirements are satisfied. The tax incentives are conditional upon our meeting and maintaining certain employment thresholds. The inability to meet the thresholds would have a prospective impact and at this time we continue to believe we will meet the requirements. Deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and tax bases of assets and liabilities, applying enacted tax rates in effect for the year in which we expect the differences will reverse. The following is a summary of the components of the net deferred tax assets and liabilities recognized in the Consolidated Balance Sheets: December 31, (in millions) 2018 2017 Deferred tax assets: Employee benefits $ 97 $ 108 Accrued expenses 30 34 Loss and other tax credit carryforwards 279 419 Inventory 7 8 Other 11 24 424 593 Valuation allowance (234 ) (350 ) Net deferred tax asset $ 190 $ 243 Deferred tax liabilities: Intangibles $ 247 $ 300 Investment in foreign subsidiaries 8 20 Property, plant, and equipment 69 57 Other 29 49 Total deferred tax liabilities $ 353 $ 426 Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to realize existing deferred tax assets. On the basis of this evaluation, as of December 31, 2018 , a valuation allowance of $234 million has been established to reduce the deferred income tax asset related to certain U.S. and foreign net operating losses and U.S. and foreign capital loss carryforwards. A reconciliation of our valuation allowance on deferred tax assets is as follows: (in millions) 2018 2017 2016 Valuation allowance — January 1 $ 350 $ 311 $ 248 Change in assessment (a) 1 (28 ) 17 Current year operations (271 ) 48 38 Foreign currency and other (b) 154 19 (32 ) Acquisitions — — 40 Valuation allowance — December 31 $ 234 $ 350 $ 311 (a) Increase in assessment in 2018 is primarily attributable to loss positions in various jurisdictions. Decrease in assessment in 2017 is primarily attributable to Foreign Tax Credits utilization resulting from the Tax Act. (b) Included in foreign currency and other in 2018 is an increase in net operating losses due to amended prior year tax returns for which a valuation allowance was recorded. Deferred taxes are classified net of unrecognized tax benefits in the Consolidated Balance Sheets as follows: December 31, (in millions) 2018 2017 Non-current assets $ 140 $ 69 Non-current liabilities (303 ) (252 ) Total net deferred tax liabilities $ (163 ) $ (183 ) Tax attributes available to reduce future taxable income begin to expire as follows: (in millions) December 31, 2018 First Year of Expiration U.S. net operating loss $ 12 December 31, 2024 State net operating loss 98 December 31, 2019 State excess interest expense 12 Indefinitely State tax credits 2 Indefinitely Foreign net operating loss 1,119 December 31, 2019 Foreign tax credits 3 December 31, 2030 The Company has provided a deferred tax liability of $13 million for net foreign withholding taxes and state income taxes on $1.9 billion of earnings expected to be repatriated to the U.S. parent, as of December 31, 2018. The Company currently does not intend to repatriate approximately $1.1 billion taxed under the Tax Act, and has not recorded any deferred taxes related to such amounts as the determination of the amount is not practicable. 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 or litigation, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such positions are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: (in millions) 2018 2017 2016 Unrecognized tax benefits — January 1 $ 130 $ 67 $ 47 Current year tax positions — 56 12 Prior year tax positions 7 7 (22 ) Acquisitions — — 30 Settlements (1 ) — — Unrecognized tax benefits — December 31 $ 136 $ 130 $ 67 The amount of unrecognized tax benefits at December 31, 2018 which, if ultimately recognized, will reduce our annual effective tax rate is $136 million . We believe that it is reasonably possible that the unrecognized tax benefits will be reduced by approximately $8 million within the next 12 months as a result of the expiration of certain statute of limitations. We classify interest relating to unrecognized tax benefits as a component of other non-operating (expense) income, net and tax penalties as a component of income tax expense in our Consolidated Income Statements. The amount of accrued interest relating to unrecognized tax benefits as of December 31, 2018 and 2017 was $7 million and $4 million . The following table summarizes our earliest open tax years by major jurisdiction: Jurisdiction Earliest Open Year Italy 2013 Luxembourg 2016 Sweden 2013 Germany 2009 United Kingdom 2011 United States 2016 Switzerland 2013 Tax Act On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code. The SEC staff issued SAB 118, which provided guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. Our accounting for the reduction of U.S. federal corporate tax rate is complete. We recorded a provisional tax benefit for corporate tax rate reduction of $107 million as of December 31, 2017. Upon further analysis of our deferred tax assets and liabilities, we recognized a measurement-period adjustment of $1.5 million as an additional decrease of the net deferred tax liabilities and recorded a corresponding deferred tax benefit of $1.5 million during the period ended December 31, 2018. The effect of this measurement period adjustment on the 2018 effective tax rate was about 0.3% . A total decrease of the net deferred tax liabilities of $108 million has been recorded for the corporate rate reduction, with a corresponding deferred tax benefit of $108 million . Our accounting for the Deemed Repatriation Transition Tax ("Transition Tax") is complete. We made an estimate of the Transition Tax and recorded a provisional Transition Tax liability of $153 million as of December 31, 2017. On the basis of revised E&P computations that were completed and additional guidance, we recognized a measurement-period adjustment of a $9 million decrease to the income tax expense in 2018. The effect of the measurement-period adjustment on the 2018 effective tax rate was approximately 1.6% . A total Transition Tax obligation to date of $144 million has been recorded, with a corresponding adjustment of $144 million to income tax expense. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The following is a reconciliation of the shares used in calculating basic and diluted earnings per share. Year Ended December 31, 2018 2017 2016 Net income attributable to Xylem (in millions) $ 549 $ 331 $ 260 Shares (in thousands): Weighted average common shares outstanding 179,750 179,602 179,069 Add: Participating securities (a) 27 27 37 Weighted average common shares outstanding — Basic 179,777 179,629 179,106 Plus incremental shares from assumed conversions: (b) Dilutive effect of stock options 876 712 499 Dilutive effect of restricted stock units and performance share units 479 516 433 Weighted average common shares outstanding — Diluted 181,132 180,857 180,038 Basic earnings per share $ 3.05 $ 1.84 $ 1.45 Diluted earnings per share $ 3.03 $ 1.83 $ 1.45 (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 units 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 units and performance share units, reduced by the repurchase of shares with the proceeds from the assumed exercises and unrecognized compensation expense for outstanding awards. Performance share units are included in the treasury stock calculation of diluted earnings per share based upon achievement of underlying performance and market conditions at the end of the reporting period, as applicable. See Note 16 , "Stock-Based Compensation Plans" for further detail on the performance share units. Year Ended December 31, (in thousands) 2018 2017 2016 Stock options 1,300 1,626 1,892 Restricted stock units 333 379 514 Performance share units 465 504 373 |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories The components of total inventories are summarized as follows: December 31, (in millions) 2018 2017 Finished goods $ 248 $ 223 Work in process 45 42 Raw materials 302 259 Total inventories $ 595 $ 524 |
Property, Plant and Equipment
Property, Plant and Equipment | 12 Months Ended |
Dec. 31, 2018 | |
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: December 31, (in millions) 2018 2017 Land, buildings and improvements $ 326 $ 329 Machinery and equipment 819 799 Equipment held for lease or rental 249 241 Furniture and fixtures 109 101 Construction work in progress 107 85 Other 22 21 Total property, plant and equipment, gross 1,632 1,576 Less accumulated depreciation 976 933 Total property, plant and equipment, net $ 656 $ 643 Depreciation expense was $117 million , $109 million , and $87 million for 2018 , 2017 , and 2016 |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 12 Months Ended |
Dec. 31, 2018 | |
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 during the years ended December 31, 2018 and 2017 are as follows: (in millions) Water Applied Water Measurement & Control Solutions Total Balance as of December 31, 2016 $ 640 $ 505 $ 1,487 $ 2,632 Activity in 2017 Divested/acquired — (3 ) 10 7 Foreign currency and other 27 24 78 129 Balance as of December 31, 2017 $ 667 $ 526 $ 1,575 $ 2,768 Activity in 2018 Acquired — — 279 279 Foreign currency and other (14 ) (10 ) (47 ) (71 ) Balance as of December 31, 2018 $ 653 $ 516 $ 1,807 $ 2,976 During the fourth quarter of 2018, we performed our annual impairment assessment and determined that the estimated fair values of our goodwill reporting units were in excess of each of their carrying values. 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: (in millions) December 31, 2018 December 31, 2017 Carrying Amount Accumulated Amortization Net Intangibles Carrying Amount Accumulated Amortization Net Intangibles Customer and distributor relationships $ 951 $ (286 ) $ 665 $ 906 $ (241 ) $ 665 Proprietary technology and patents 198 (93 ) 105 163 (75 ) 88 Trademarks 148 (41 ) 107 138 (37 ) 101 Software 355 (164 ) 191 277 (130 ) 147 Other 24 (19 ) 5 26 (20 ) 6 Indefinite-lived intangibles 159 — 159 161 — 161 Other intangibles $ 1,835 $ (603 ) $ 1,232 $ 1,671 $ (503 ) $ 1,168 We determined that no impairment of the indefinite-lived intangibles existed as of the measurement date of our impairment assessment in 2018 or 2017. Future impairment tests could result in a charge to earnings. We will continue to evaluate 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. Customer and distributor relationships, proprietary technology and patents, trademarks, software and other are amortized over weighted average lives of approximately 14 years, 14 years, 13 years, 5 years and 5 years, respectively. Total amortization expense for intangible assets was $144 million , $125 million , and $64 million for 2018 , 2017 and 2016 , respectively. Estimated amortization expense for each of the five succeeding years is as follows: (in millions) 2019 $ 135 2020 127 2021 112 2022 102 2023 97 During the first quarter of 2017 we determined that the intended use of a finite lived trade name within our Applied Water segment had changed. Accordingly we recorded a $4 million |
Derivative Financial Instrument
Derivative Financial Instruments | 12 Months Ended |
Dec. 31, 2018 | |
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 interest rates and exchange rates that may impact revenue, expenses, cash receipts, cash payments, and the value of our stockholders' equity. 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 and reduce the volatility in stockholders' equity. 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 with exposure to foreign currency exchange risks have designated certain currency forward agreements as cash flow hedges of forecasted intercompany inventory purchases and sales. Our principal currency exposures relate to the Euro, Swedish Krona, British Pound, Canadian Dollar, Polish Zloty, and Australian Dollar. We had foreign exchange contracts with purchase notional amounts totaling $506 million and $455 million as of December 31, 2018 and 2017, respectively. As of December 31, 2018, our most significant foreign currency derivatives included contracts to sell U.S. Dollar and purchase Euro, purchase Swedish Krona and sell Euro, sell British Pound and purchase Euro, purchase Polish Zloty and sell Euro, purchase U.S. Dollar and sell Canadian Dollar and to sell Canadian Dollar and purchase Euro. The purchase notional amounts associated with these currency derivatives were $191 million , $168 million , $52 million , $37 million , $29 million and $22 million , respectively. As of December 31, 2017, the purchase notional amounts associated with these currency derivatives were $147 million , $149 million , $66 million , $34 million , $28 million and $25 million , respectively. Hedges of Net Investments in Foreign Operations We are exposed to changes in foreign currencies impacting our net investments held in foreign subsidiaries. Cross Currency Swaps We enter into cross currency swaps to manage our exposure to fluctuations in the Euro-U.S. Dollar exchange rate. The total notional amount of derivative instruments designated as net investment hedges was $426 million and $446 million as of December 31, 2018 and 2017, respectively. Foreign Currency Denominated Debt On March 11, 2016, we issued 2.250% Senior Notes of € 500 million aggregate principal amount due March 2023. We designated the entirety of the outstanding balance, or $566 million and $592 million as of December 31, 2018 and 2017, respectively, net of unamortized discount, as a hedge of a net investment in certain foreign subsidiaries. Forward Contracts On September 23, 2016, we entered into forward contacts with a total notional amount of €300 million to manage our exposure to fluctuations in the Euro-U.S. Dollar exchange rate. The contracts were designated as net investment hedges and were settled in 2016. The table below presents the effect of our derivative financial instruments on the Consolidated Income Statements and Consolidated Statements of Comprehensive Income. Year Ended December 31, (in millions) 2018 2017 2016 Derivatives in Cash Flow Hedges Foreign Exchange Contracts Amount of (loss) gain recognized in OCI (a) $ (8 ) $ 9 $ — Amount of (gain) reclassified from OCI into revenue (a) — (6 ) (2 ) Amount of loss reclassified from OCI into cost of revenue (a) 4 1 — Derivatives in Net Investment Hedges Cross Currency Swaps Amount of (loss) gain recognized in OCI (a) $ 22 $ (53 ) $ 19 Amount income recognized in Interest Expense 2 — — Foreign Currency Denominated Debt Amount of (loss) gain recognized in OCI (a) $ 27 $ (74 ) $ 28 Forward Contracts Amount of gain recognized in OCI (a) $ — $ — $ 9 (a) Effective portion As of December 31, 2018 , $1 million of the net losses on cash flow hedges is expected to be reclassified into earnings in the next 12 months. As of December 31, 2018 , no gains or losses on the net investment hedges are expected to be reclassified into earnings over the next 12 months. The ineffective portion of the change in fair value of a cash flow hedge was not material for 2018 , 2017 , and 2016 . The net investment hedges did not experience any ineffectiveness in 2018 , 2017 and 2016. The fair values of our derivative assets and liabilities are measured on a recurring basis using Level 2 inputs and are determined through the use of models that consider various assumptions including yield curves, time value and other measurements. The fair values of our derivative contracts currently included in our hedging program were as follows: December 31, (in millions) 2018 2017 Derivatives designated as hedging instruments Assets Cash Flow Hedges Other current assets $ 3 $ 3 Liabilities Cash Flow Hedges Other current liabilities (1 ) (1 ) Net Investment Hedges Other non-current liabilities (46 ) (64 ) The fair value of our long-term debt, due in 2023, designated as a net investment hedge was $599 million and $638 million |
Accrued and Other Current Liabi
Accrued and Other Current Liabilities | 12 Months Ended |
Dec. 31, 2018 | |
Payables and Accruals [Abstract] | |
Accrued and Other Current Liabilities | Accrued and Other Current Liabilities December 31, (in millions) 2018 2017 Compensation and other employee-benefits $ 194 $ 203 Customer-related liabilities 129 119 Accrued warranty costs 44 55 Accrued taxes 85 75 Other accrued liabilities 94 99 Total accrued and other current liabilities $ 546 $ 551 |
Credit Facilities and Long-Term
Credit Facilities and Long-Term Debt | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Credit Facilities and Long-Term Debt | Credit Facilities and Long-Term Debt Total debt outstanding is summarized as follows: December 31, (in millions) 2018 2017 4.875% Senior Notes due 2021 (a) $ 600 $ 600 2.250% Senior Notes due 2023 (a) 570 597 3.250% Senior Notes due 2026 (a) 500 500 4.375% Senior Notes due 2046 (a) 400 400 Research and development finance contract — 125 Term loan 257 — Debt issuance costs and unamortized discount (b) (19 ) (22 ) Total debt 2,308 2,200 Less: short-term borrowings and current maturities of long-term debt 257 — Total long-term debt $ 2,051 $ 2,200 (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 2021 (as defined below) was $620 million and $648 million as of December 31, 2018 and 2017 , respectively. The fair value of our Senior Notes due 2023 (as defined below) was $599 million and $638 million as of December 31, 2018 and 2017, respectively. The fair value of our Senior Notes due 2026 (as defined below) was $476 million and $498 million as of December 31, 2018 and 2017, respectively. The fair value of our Senior Notes due 2046 (as defined below) was $397 million and $431 million as of December 31, 2018 and 2017, respectively. (b) The debt issuance costs and unamortized discount is recognized as a reduction in the carrying value of the Senior Notes in the Consolidated Balance Sheets and is being amortized to interest expense in our Consolidated Income Statements over the expected remaining terms of the Senior Notes. Senior Notes On September 20, 2011, we issued 4.875% Senior Notes of $600 million aggregate principal amount due October 2021 (the "Senior Notes due 2021"). On March 11, 2016, we issued 2.250% Senior Notes of € 500 million aggregate principal amount due March 2023 (the "Senior Notes due 2023"). On October 11, 2016, we issued 3.250% Senior Notes of $500 million aggregate principal amount due October 2026 (the “Senior Notes due 2026”) and 4.375% Senior Notes of $400 million aggregate principal amount due October 2046 (the “Senior Notes due 2046” and, together with the Senior Notes due 2021, the Senior Notes due 2023 and the Senior Notes due 2026, the “Senior Notes”). The Senior Notes include covenants that 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. We may also redeem the Senior Notes in certain other circumstances, as set forth in the applicable Senior Notes indenture. If a change of control triggering event (as defined in the applicable 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 2021 is payable on April 1 and October 1 of each year. Interest on the Senior Notes due 2023 is payable on March 11 of each year. Interest on the Senior Notes due 2026 and the Senior Notes due 2046 is payable on May 1 and November 1 of each year beginning on May 1, 2017. As of December 31, 2018, we were in compliance with all covenants for the Senior Notes. We used the net proceeds of the Senior Notes due 2026 and the Senior Notes due 2046, together with cash on hand, proceeds from issuances under our existing commercial paper program and borrowings under the Term Facility (as described below), to fund the acquisition of Sensus (refer to Note 3 for further information on the Sensus acquisition). Credit Facilities Five-Year Revolving Credit Facility Effective March 27, 2015, Xylem entered into a Five-Year Revolving Credit Facility (the "Credit Facility") with Citibank, 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) revolving extensions of credit (the "revolving loans") outstanding at any time and (ii) the issuance of letters of credit in a face amount not in excess of $100 million outstanding at any time. The Credit Facility provides for increases of up to $200 million for a possible maximum total of $800 million in aggregate principal amount at our request and with the consent of the institutions providing such increased commitments. 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 Citibank, 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 of an amendment to the Credit Facility dated August 30, 2016, we may not exceed a maximum leverage ratio of 4.00 to 1.00 (based on a ratio of total debt to earnings before interest, taxes, depreciation and amortization) for a period of 12-months following the Sensus acquisition and a maximum leverage ratio of 3.50 to 1.00 through the rest of the term. The Credit Facility also contains limitations on, among other things, incurring secured debt, granting liens, entering into sale and leaseback transactions, mergers, consolidations, liquidations, dissolutions and sales of assets. 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 December 31, 2018 the Credit Facility was undrawn and we are in compliance with all covenants. European Investment Bank - R&D Finance Contract On October 28, 2016, the Company entered into a Finance Contract (the “Finance Contract”) with the European Investment Bank (the “EIB”). 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 Finance Contract and Xylem Inc. is the Guarantor. The Finance Contract provides for up to €105 million (approximately $120 million ) to finance research, development and innovation projects in the field of sustainable water and wastewater solutions during the period from 2017 through 2019 in Sweden, Germany, Italy, the United Kingdom, Hungary and Austria. The Company has unconditionally guaranteed the performance of the borrowers under the Finance Contract. Under the Finance Contract, the borrowers are able to draw loans on or before April 28, 2018, with a maturity of no longer than 11 years. The Finance Contract is subject to the same leverage ratio as the Credit Facility. Both agreements also contain limitations on, among other things, incurring debt, granting liens, and entering into sale and leaseback transactions, as well as other terms and conditions, such as customary representations and warranties, additional covenants and customary events of default. The Finance Contract provides for fixed rate loans and floating rate loans. Under the Finance Contract, 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 is 59 basis points (0.59%). As of December 31, 2017, there was $125 million outstanding under the Finance Contract. On November 28, 2018, the Finance Contract was repaid and settled for $120 million. Term Loan Facility On January 26, 2018, the Company’s subsidiary, Xylem Europe GmbH (the “borrower”) entered into a 12-month €225 million (approximately $257 million ) term loan facility (the “Term Facility”) the terms of which are set forth in a term loan agreement, among the borrower, the Company, as parent guarantor and ING Bank. The Company has entered into a parent guarantee in favor of ING Bank also dated January 26, 2018 to secure all present and future obligations of the borrower under the Term Loan Agreement. The Term Facility was used to partially fund the acquisition of Pure Technologies Ltd.. On January 25, 2019, the Company extended the Term Facility for another month and intends to further extend the Term Facility at the next maturity. Commercial Paper Our commercial paper program generally serves as a means of short-term funding and has a combined outstanding limit of $600 million inclusive of the Five-Year Revolving Credit Facility. As of December 31, 2018 and December 31, 2017, none of the Company's $600 million commercial paper program was outstanding. We will periodically borrow under this program and may borrow under it in future periods. |
Postretirement Benefit Plans
Postretirement Benefit Plans | 12 Months Ended |
Dec. 31, 2018 | |
Retirement Benefits [Abstract] | |
Postretirement Benefit Plans | Postretirement Benefit Plans Defined contribution plans – Xylem and certain of our subsidiaries maintain various defined contribution savings plans, which allow employees to contribute a portion of their pre-tax and/or after-tax income in accordance with specified guidelines. Several of the plans require us to match a percentage of the employee contributions up to certain limits, generally between 3.0% – 7.0% of employee eligible pay. Matching obligations, the majority of which were funded in cash in connection with the plans, and other company contributions are as follows: (in millions) Defined Contribution 2018 $ 39 2017 38 2016 35 The Xylem Stock Fund, an investment option under the defined contribution plan in which Company employees participate is considered an Employee Stock Ownership Plan. As a result, participants in the Xylem Stock Fund may receive dividends in cash or may reinvest such dividends into the Xylem Stock Fund. Company employees held approximately 328 thousand and 344 thousand shares of Xylem Inc. common stock in the Xylem Stock Fund at December 31, 2018 and 2017 , respectively. Defined benefit pension plans and other postretirement plans – We historically have maintained qualified and nonqualified defined benefit retirement plans covering certain current and former employees, including hourly and union plans as well as salaried plans, which generally require up to 5 years of service to be vested and for which the benefits are determined based on years of credited service and either specified rates, final pay, or final average pay. The other postretirement benefit plans are all unfunded plans in the U.S. and Canada. During 2018 and 2017, we made several amendments to plans that had no material impact to the Company's financial statements. Amounts recognized in the Consolidated Balance Sheets for pension and other employee-related benefit plans (collectively, postretirement plans) reflect the funded status of the postretirement benefit plans. The following table provides a summary of the funded status of our postretirement plans, the presentation of such balances and a summary of amounts recorded within accumulated other comprehensive income. (in millions) December 31, 2018 December 31, 2017 Pension Other Total Pension Other Total Fair value of plan assets $ 567 $ — $ 567 $ 628 $ — $ 628 Projected benefit obligation (862 ) (52 ) (914 ) (950 ) (55 ) (1,005 ) Funded status $ (295 ) $ (52 ) $ (347 ) $ (322 ) $ (55 ) $ (377 ) Amounts recognized in the balance sheet Other non-current assets $ 68 $ — $ 68 $ 81 $ — $ 81 Accrued and other current liabilities (12 ) (3 ) (15 ) (13 ) (3 ) (16 ) Accrued postretirement benefits (351 ) (49 ) (400 ) (390 ) (52 ) (442 ) Net amount recognized $ (295 ) $ (52 ) $ (347 ) $ (322 ) $ (55 ) $ (377 ) Accumulated other comprehensive income (loss): Net actuarial losses $ (260 ) $ (24 ) $ (284 ) $ (251 ) $ (24 ) $ (275 ) Prior service credit (4 ) 12 8 (1 ) 12 11 Total $ (264 ) $ (12 ) $ (276 ) $ (252 ) $ (12 ) $ (264 ) The unrecognized amounts recorded in accumulated other comprehensive income will be subsequently recognized as expense on a straight-line basis only to the extent they exceed 10% of the higher of the market-related value or the projected benefit obligation, over the average remaining service period of active participants, or for plans with all or substantially all inactive participants, over the average remaining life expectancy. Actuarial gains and losses incurred in future periods and not recognized as expense in those periods will be recognized as increases or decreases in other comprehensive income, net of tax. The net actuarial loss included in accumulated other comprehensive income at the end of 2018 and expected to be recognized in net periodic benefit cost during 2019 is $12 million ( $9 million , net of tax). The prior service credit included in accumulated other comprehensive income to be recognized in 2019 is $4 million ( $3 million , net of tax). The benefit obligation, fair value of plan assets, funded status, and amounts recognized in the consolidated financial statements for our defined benefit domestic and international pension plans were: Domestic Plans International Plans December 31, December 31, (in millions) 2018 2017 2018 2017 Change in benefit obligation: Benefit obligation at beginning of year $ 107 $ 100 $ 843 $ 754 Service cost 3 3 9 12 Interest cost 4 4 19 21 Benefits paid (5 ) (5 ) (36 ) (30 ) Actuarial loss (gain) (10 ) 5 (20 ) 10 Plan amendments, settlements and curtailments — 1 3 (2 ) Foreign currency translation/other — (1 ) (55 ) 78 Benefit obligation at end of year $ 99 $ 107 $ 763 $ 843 Change in plan assets: Fair value of plan assets at beginning of year $ 84 69 $ 544 $ 493 Employer contributions 22 10 16 20 Actual return on plan assets (4 ) 10 (20 ) 21 Benefits paid (5 ) (5 ) (36 ) (30 ) Plan amendments, settlements and curtailments — — — (3 ) Foreign currency translation/other — — (34 ) 43 Fair value of plan assets at end of year $ 97 $ 84 $ 470 $ 544 Unfunded status of the plans $ (2 ) $ (23 ) $ (293 ) $ (299 ) The following table provides a rollforward of the projected benefit obligation for the other postretirement employee benefit plans: (in millions) 2018 2017 Change in benefit obligation: Benefit obligation at beginning of year $ 55 $ 64 Service cost — 1 Interest cost 2 2 Benefits paid (3 ) (3 ) Actuarial gain/(loss) 1 (5 ) Plan Amendment and other (3 ) (4 ) Benefit obligation at the end of year $ 52 $ 55 The accumulated benefit obligation (“ABO”) for all the defined benefit pension plans was $829 million and $916 million at December 31, 2018 and 2017 , respectively. For defined benefit pension plans in which the ABO was in excess of the fair value of the plans’ assets, the projected benefit obligation, ABO and fair value of the plans’ assets were as follows: December 31, (in millions) 2018 2017 Projected benefit obligation $ 500 $ 528 Accumulated benefit obligation 470 499 Fair value of plan assets 137 126 The components of net periodic benefit cost for our defined benefit pension plans are as follows: Year Ended December 31, (in millions) 2018 2017 2016 Domestic defined benefit pension plans: Service cost $ 3 $ 3 $ 3 Interest cost 4 4 4 Expected return on plan assets (7 ) (6 ) (5 ) Amortization of net actuarial loss 2 2 2 Net periodic benefit cost $ 2 $ 3 $ 4 International defined benefit pension plans: Service cost $ 9 $ 12 $ 10 Interest cost 19 21 21 Expected return on plan assets (35 ) (34 ) (30 ) Amortization of net actuarial loss 9 9 8 Settlement 1 1 — Net periodic benefit cost $ 3 $ 9 $ 9 Total net periodic benefit cost $ 5 $ 12 $ 13 The components of net periodic benefit cost other than the service cost component are included in the line item "other non-operating income (expense), net" in the Consolidated Income Statements. Other changes in assets and benefit obligations recognized in other comprehensive loss, as they pertain to our defined benefit pension plans are as follows: Year Ended December 31, (in millions) 2018 2017 2016 Domestic defined benefit pension plans: Net (gain) loss $ 1 $ 1 $ (1 ) Prior service cost — 1 — Amortization of net actuarial loss (2 ) (2 ) (2 ) (Gains) losses recognized in other comprehensive loss $ (1 ) $ — $ (3 ) International defined benefit pension plans: Net (gain) loss $ 35 $ 23 $ 18 Prior service credit 3 1 (1 ) Amortization of net actuarial loss (9 ) (9 ) (8 ) Settlement (1 ) (1 ) — Foreign Exchange (15 ) 19 (20 ) (Gains) losses recognized in other comprehensive loss $ 13 $ 33 $ (11 ) Total (gains) losses recognized in other comprehensive loss $ 12 $ 33 $ (14 ) Total (gains) losses recognized in comprehensive income $ 17 $ 45 $ (1 ) The components of net periodic benefit cost for other postretirement employee benefit plans are as follows: Year Ended December 31, (in millions) 2018 2017 2016 Service cost $ — $ 1 $ 1 Interest cost 2 2 3 Amortization of prior service credit (4 ) (3 ) (3 ) Amortization of net actuarial loss 2 2 3 Net periodic benefit cost $ — $ 2 $ 4 Other changes in benefit obligations recognized in other comprehensive loss, as they pertain to other postretirement employee benefit plans are as follows: Year Ended December 31, (in millions) 2018 2017 2016 Net loss (gain) $ 1 $ (5 ) $ 3 Prior service credit (3 ) (3 ) — Amortization of prior service credit 4 3 3 Amortization of net actuarial loss (2 ) (2 ) (3 ) Foreign Exchange/Other — (1 ) 1 Losses (gains) recognized in other comprehensive loss $ — $ (8 ) $ 4 Total losses (gains) recognized in comprehensive income $ — $ (6 ) $ 8 Assumptions The following table provides the weighted-average assumptions used to determine projected benefit obligations and net periodic benefit cost, as they pertain to our pension plans. 2018 2017 2016 U.S. Int’l U.S. Int’l U.S. Int’l Benefit Obligation Assumptions Discount rate 4.50 % 2.60 % 3.75 % 2.43 % 4.25 % 2.63 % Rate of future compensation increase NM 2.92 % NM 2.93 % NM 2.76 % Net Periodic Benefit Cost Assumptions Discount rate 3.75 % 2.43 % 4.25 % 2.63 % 4.27 % 3.44 % Expected long-term return on plan assets 8.00 % 7.23 % 8.00 % 7.20 % 8.00 % 7.25 % Rate of future compensation increase NM 2.93 % NM 2.76 % NM 3.29 % NM Not meaningful. The pension benefits for future service for all the U.S. pension plans are based on years of service and not impacted by future compensation increases. Management develops each assumption using relevant company experience in conjunction with market-related data for each individual country in which plans exist. Assumptions are reviewed annually and adjusted as necessary. The expected long-term rate of return on assets reflects the expected returns for each major asset class in which the plans hold investments, the weight of each asset class in the target mix, the correlations among asset classes and their expected volatilities. The assets of the pension plans are held by a number of independent trustees, managed by several investment institutions and are accounted for separately in the Company’s pension funds. Our expected return on plan assets is estimated by evaluating both historical returns and estimates of future returns. Specifically, we analyze the plans’ actual historical annual return on assets, net of fees, over the past 15, 20 and 25 years; estimate future returns based on independent estimates of asset class returns; and evaluate historical broad market returns over long-term timeframes based on our asset allocation range. For the U.S. Master Trust which has only existed since 2011, historical returns were estimated using a constructed portfolio that reflects the Company’s strategic asset allocation and the historical compound geometric returns of each asset class for the longest time period available. Based on this approach, the weighted average expected long-term rate of return for all of our plan assets to be used in determining net periodic benefit costs for 2019 is estimated at 7.09% . The table below provides the weighted average actual rate of return generated on all of our plan assets during each of the years presented as compared to the weighted average expected long-term rates of return utilized in calculating the net periodic benefit costs. 2018 2017 2016 Expected long-term rate of return on plan assets 7.34 % 7.30 % 7.32 % Actual rate of return (loss) on plan assets (3.85 )% 5.70 % 12.20 % The assumed rate of future increases in the per capita cost of health care (the health care trend rate) is 8.24% for 2019 , decreasing ratably to 4.48% in 2027 . An increase or decrease in the health care trend rates by one percent per year would impact the aggregate annual service and interest components by less than $1 million , and impact the benefit obligation by approximately $3 million . Investment Policy The investment strategy for managing worldwide postretirement benefit plan assets is to seek an optimal rate of return relative to an appropriate level of risk for each plan. Investment strategies vary by plan, depending on the specific characteristics of the plan, such as plan size and design, funded status, liability profile and legal requirements. In general, the plans are managed closely to their strategic allocations. On April 3, 2017 the liquid assets in two United Kingdom Plans transitioned into a new fund structure. The restructuring involved transferring a portion of the assets into pooled diversified growth funds, while some investments were sold off and some were kept in place. At December 31, 2018, the pooled funds make up 54% of the assets of the two United Kingdom Plans. Liability hedging and illiquid assets remain outside of this arrangement. The following table provides the actual asset allocations of plan assets as of December 31, 2018 and 2017 , and the related asset target allocation ranges by asset category. 2018 2017 Target Allocation Ranges Equity securities 29.7 % 35.6 % 10-50% Fixed income 24.5 % 23.4 % 10-40% Hedge funds 11.8 % 17.0 % 0-40% Private equity 1.1 % 1.6 % 0-30% Cash, insurance contracts and other 32.9 % 22.4 % 0-60% Fair Value of Plan Assets In measuring plan assets at fair value, the fair value hierarchy is applied which categorizes and prioritizes the inputs used to estimate fair value into three levels. See Note 1 "Summary of Significant Accounting Policies" for further detail on fair value hierarchy. In certain instances, fair value is estimated using quoted market prices obtained from external pricing services. In obtaining such data from the pricing service, we have evaluated the methodologies used to develop the estimate of fair value in order to assess whether such valuations are representative of fair value, including net asset value ("NAV"). Additionally, in certain circumstances, the NAV reported by an asset manager may be adjusted when sufficient evidence indicates NAV is not representative of fair value. The following is a description of the valuation methodologies and inputs used to measure fair value for major categories of investments. • Equity securities — Equities (including common and preferred shares, domestic listed and foreign listed, closed end mutual funds and exchange traded funds) are generally valued at the closing price reported on the major market on which the individual securities are traded at the measurement date. Equity securities held by the Company that are publicly traded in active markets are classified within Level 1 of the fair value hierarchy. Those equities that are held in proprietary funds pooled with other investor accounts measured at fair value using the NAV per share practical expedient are not classified in the fair value hierarchy. • Fixed income — United States government securities are generally valued using quoted prices of securities with similar characteristics. Corporate bonds and notes are generally valued by using pricing models (e.g. discounted cash flows), quoted prices of securities with similar characteristics or broker quotes. Fixed income securities listed on active markets are classified in Level 1. Fixed income held in proprietary funds pooled with other investor accounts measured at fair value using the NAV per share practical expedient are not classified in the fair value hierarchy. Hedging Instruments are collateralized daily with either cash or government bonds, have daily liquidity and pricing based on observable inputs from over-the-counter markets, and are classified as Level 2. • Hedge funds — Hedge funds are pooled funds that employ a range of investment strategies including equity and fixed income, credit driven, macro and multi oriented strategies. The valuation of limited partnership interests in hedge funds may require significant management judgment. Generally, hedge funds are valued using the NAV reported by the asset manager, and are adjusted when it is determined that NAV is not representative of fair value. In making such an assessment, a variety of factors is reviewed, including, but not limited to, the timeliness of NAV as reported by the asset manager and changes in general economic and market conditions subsequent to the last NAV reported by the asset manager. All of the hedge funds held have lockups and/or gates. Hedge funds have unfunded commitments of $0 million and $5 million at December 31, 2018 and 2017 , respectively. • Private equity — Private equity includes a diversified range of strategies, including buyout funds, distressed funds, venture and growth equity funds and mezzanine funds with long-term commitments, and redemptions beginning no earlier than 2018. The valuation of limited partnership interests in private equity funds may require significant management judgment. Generally, private equity is valued using the NAV reported by the asset manager, and is adjusted when it is determined that NAV is not representative of fair value. In making such an assessment, a variety of factors is reviewed, including, but not limited to, the timeliness of NAV as reported by the asset manager and changes in general economic and market conditions subsequent to the last NAV reported by the asset manager. Private equity is not liquid and has unfunded commitments of $3 million and $4 million at December 31, 2018 and 2017 , respectively. • Cash, insurance contracts and other — Primarily comprised of insurance contracts and cash. Insurance contracts are valued at contract value, which approximates fair value, and is calculated using the prior year balance adjusted for investment returns and cash flows and are generally classified as Level 3. Insurance contracts are held by certain foreign pension plans. Cash and cash equivalents are held in accounts with brokers or custodians for liquidity and investment collateral and are classified as Level 1. The following table provides the fair value of plan assets held by our pension benefit plans by asset class. 2018 2017 (in millions) Level 1 Level 2 Level 3 NAV Practical Expedient Total Level 1 Level 2 Level 3 NAV Practical Expedient Total Equity securities Global stock funds/securities $ 88 $ — $ — $ 29 $ 117 $ 101 $ — $ — $ 29 $ 130 Index funds — — — 1 1 — — — 3 3 Diversified Growth and Income Funds — — — 51 51 — — — 92 92 Fixed income Corporate bonds 34 — — 25 59 24 — — 8 32 Government bonds 31 — — 20 51 48 — — 5 53 Hedging Instruments 5 22 — — 27 5 36 — — 41 Diversified Growth and Income Funds — — — 2 2 — — — 20 20 Hedge funds — — — 67 67 — — — 107 107 Private equity — — — 6 6 — — — 10 10 Cash, insurance contracts and other 104 — 12 70 186 90 — 17 33 140 Total plan assets subject to leveling $ 262 $ 22 $ 12 $ 271 $ 567 $ 268 $ 36 $ 17 $ 307 $ 628 The following table presents a reconciliation of the beginning and ending balances of fair value measurement within our pension plans using significant unobservable inputs (Level 3). (in millions) Insurance Contracts and Other Balance, December 31, 2016 $ 24 Purchases, sales, settlements (8 ) Currency impact 1 Balance, December 31, 2017 $ 17 Purchases, sales, settlements (5 ) Currency impact — Balance, December 31, 2018 $ 12 Contributions and Estimated Future Benefit Payments Funding requirements under governmental regulations are a major consideration in making contributions to our postretirement plans. We made contributions of $41 million and $33 million to our pension and postretirement defined benefit plans during 2018 and 2017 , respectively. Discretionary contributions were made to the U.S. Plan in the third quarter of 2017 for $6 million and the third quarter of 2018 for $19 million to increase the funding ratio and reduce regulatory fees. We currently anticipate making contributions to our pension and postretirement defined benefit plans in the range of $15 million to $25 million during 2019 , of which approximately $5 million is expected to be made in the first quarter. The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid as follows: (in millions) Pension Other Benefits 2019 $ 35 $ 3 2020 36 4 2021 36 4 2022 37 4 2023 39 4 Years 2023 - 2027 205 19 |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation Plans | Stock-Based Compensation Plans Our stock-based compensation program is a broad-based program designed to attract and retain employees while also aligning employees’ interests with the interests of our shareholders. In addition, members of our Board of Directors participate in our stock-based compensation program in connection with their service on our board. Share-based awards issued to employees include non-qualified stock options, restricted stock unit awards and performance share unit awards. Under the 2011 Omnibus Incentive Plan, the number of shares initially available for awards was 18 million . As of December 31, 2018 , there were approximately 6 million shares of common stock available for future grants. Total share-based compensation costs recognized for 2018 , 2017 and 2016 were $30 million , $21 million , and $18 million , respectively. The unamortized compensation expense at December 31, 2018 related to our stock options, restricted share units and performance share units was $6 million , $20 million and $16 million , respectively, and is expected to be recognized over a weighted average period of 1.8 , 1.9 and 1.7 years, respectively. The amount of cash received from the exercise of stock options was $7 million for 2018 with a tax benefit of $11 million realized associated with stock option exercises and vesting of restricted stock units. We classify as an operating activity the cash flows attributable to excess tax benefits arising from stock option exercises and restricted stock unit vestings. Stock Option Grants Options are awarded with a contractual term of ten years and generally vest over a three-year period and are exercisable within the contractual term, except in certain instances of death, retirement or disability. The exercise price per share is the fair market value of the underlying common stock on the date each option is granted. At December 31, 2018 , there were options to purchase an aggregate of 2.1 million shares of common stock. The following is a summary of the changes in outstanding stock options for 2018 : Share units (in thousands) Weighted Average Exercise Price / Share Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in millions) Outstanding at January 1, 2018 2,076 $ 37.44 7.0 Granted 316 $ 75.11 Exercised (214 ) $ 34.08 Forfeited and expired (53 ) $ 49.36 Outstanding at December 31, 2018 2,125 $ 43.08 6.5 $ 53 Options exercisable at December 31, 2018 1,403 $ 35.46 5.5 $ 44 Vested and non-vested expected to vest as of December 31, 2018 2,065 $ 42.37 6.4 $ 53 The amount of non-vested options outstanding was 0.7 million , 0.9 million and 1.0 million at a weighted average fair value of $58.00 , $42.84 and $37.10 as of December 31, 2018 , 2017 and 2016 , 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 2018 , 2017 and 2016 was $9 million , $14 million and $12 million , respectively. 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 used for 2018 , 2017 , and 2016 : 2018 2017 2016 Dividend yield 1.12 % 1.49 % 1.63 % Volatility 23.41 % 25.39 % 28.87 % Risk-free interest rate 2.76 % 2.07 % 1.41 % Expected term (in years) 5.1 5.10 5.60 Weighted-average fair value per option $ 17.80 $ 10.66 $ 9.05 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 risk-free rate is based on the U.S. Treasury yield curve in effect at the time of option grant. Restricted Stock Unit Grants Restricted shares granted to employees in 2018 vest over a three-year period. Restricted shares granted to employees prior to 2017 generally become fully vested upon the third anniversary of the date of grant. Prior to the time a restricted share becomes fully vested, the awardees cannot transfer, pledge, hypothecate or encumber such shares. Prior to the time a restricted share is fully vested, the awardees do not have certain rights of a stockholder, such as the right to vote and receive dividends; however, dividends accrue during the vesting period and are paid upon vesting. If an employee leaves prior to vesting, whether through resignation or termination for cause, the restricted stock unit and related accrued dividends are forfeited. If an employee retires, a pro rata portion of the restricted stock unit may vest in accordance with the terms of the grant agreements. Restricted stock units granted to Board members become fully vested upon the day prior to the next annual meeting. The fair value of the restricted share unit awards is determined using the closing price of our common stock on date of grant. Our restricted stock units activity was as follows for 2018 : Share Units (in thousands) Weighted Average Grant Date Fair Value / Share Outstanding at January 1, 2018 779 $ 35.39 Granted 274 74.81 Vested (458 ) 40.39 Forfeited (58 ) 53.09 Outstanding at December 31, 2018 537 59.41 Performance Share Units Performance share units granted under the long-term incentive plan vest based upon performance by the Company over a three -year period against targets approved by the Compensation Committee of the Company's Board of Directors prior to the grant date. For the performance periods, the performance share units were granted at a target of 100% with actual payout contingent upon the achievement of a pre-set, three-year adjusted Return on Invested Capital and cumulative adjusted net income performance target for ROIC performance share units and a relative TSR performance for TSR performance share units. The calculated compensation cost for ROIC performance share units is adjusted based on an estimate of awards ultimately expected to vest and our assessment of the probable outcome of the performance condition. ROIC Performance Share Unit Grants The fair value of the ROIC performance share unit awards is determined using the closing price of our common stock on date of grant. Our ROIC performance share unit activity was as follows for 2018 : Share units (in thousands) Weighted Average Grant Date Fair Value / Share Outstanding at January 1, 2018 298 $ 41.48 Granted 77 75.12 Forfeited (101 ) 38.39 Outstanding at December 31, 2018 274 52.11 TSR Performance Share Unit Grants The following is a summary of our TSR performance share unit grants for 2018 . Share units (in thousands) Weighted Average Grant Date Fair Value /Share Outstanding at January 1, 2018 213 $ 47.04 Granted 77 98.86 Forfeited (16 ) 51.39 Outstanding at December 31, 2018 274 61.04 The fair value of TSR performance share units were calculated on the date of grant using a Monte Carlo simulation model utilizing several key assumptions, including expected Company and peer company share price volatility, correlation coefficients between peers, the risk-free rate of return, the expected dividend yield and other award design features. The following are weighted-average key assumptions for 2018 grants. Volatility 26.80 % Risk-free interest rate 2.44 % |
Capital Stock
Capital Stock | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Capital Stock | Capital Stock The Company has the authority to issue an aggregate of 750 million shares of common stock having a par value of $0.01 per share. The stockholders of Xylem common stock are entitled to receive dividends as declared by the Xylem Board of Directors. Dividends declared were $0.8400 , $0.7200 and $0.6196 during 2018 , 2017 and 2016 , respectively. The changes in shares of common stock outstanding for the three years ended December 31 are as follows: (share units in thousands) 2018 2017 2016 Beginning Balance, January 1 179,862 179,367 178,377 Stock incentive plan net activity 672 985 1,085 Repurchase of common stock (810 ) (490 ) (95 ) Ending Balance, December 31 179,724 179,862 179,367 For the years ended December 31, 2018 and December 31, 2017 the Company repurchased 0.8 million shares for $59 million of common stock and repurchased 0.5 million shares for $25 million of common stock, respectively. Repurchases include both share repurchase programs approved by the Board of Directors and repurchases in relation to settlement of employee income tax withholding obligations due as a result of the vesting of restricted stock units. The detail of repurchases by each program are as follows: On August 24, 2015, our Board of Directors authorized the repurchase of up to $500 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. For the year ended December 31, 2018 we repurchased 0.7 million shares for $50 million . For the year ended December 31, 2017 we repurchased 0.1 million shares for $7 million . There are up to $363 million in shares that may still be purchased under this plan as of December 31, 2018 . On August 18, 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. For the year ended December 31, 2017 we repurchased 0.3 million shares for $13 million . As of June 2017, we have exhausted the authorized amount to repurchase shares under this plan. Aside from the aforementioned repurchase programs, we repurchased 0.1 million and 0.1 million shares for $9 million and $5 million during 2018 and 2017 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 12 Months Ended |
Dec. 31, 2018 | |
Accumulated Other Comprehensive Income [Abstract] | |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss The following table provides the components of accumulated other comprehensive loss for 2018 , 2017 and 2016 : (in millions) Foreign Currency Translation Postretirement Benefit Plans Derivative Instruments Total Balance at January 1, 2016 $ (43 ) $ (185 ) $ (10 ) $ (238 ) Foreign currency translation adjustment (65 ) (65 ) Foreign currency gain reclassified into gain on sale of business (21 ) (21 ) Changes in postretirement benefit plans (19 ) (19 ) Income tax expense on changes in postretirement benefit plans 3 3 Foreign currency translation adjustment for postretirement benefit plans 19 19 Amortization of prior service cost and net actuarial loss on postretirement benefit plans into other non-operating income (expense), net 10 10 Income tax impact on amortization of postretirement benefit plan items (5 ) (5 ) Reclassification of unrealized loss on derivative hedge agreements into revenue (2 ) (2 ) Reclassification of unrealized loss on derivative hedge agreements into cost of revenue (11 ) 11 — Balance at December 31, 2016 $ (140 ) $ (177 ) $ (1 ) $ (318 ) Foreign currency translation adjustment 79 79 Income tax impact on foreign currency translation adjustment 46 46 Changes in postretirement benefit plans (18 ) (18 ) Income tax expense on changes in postretirement benefit plans 7 7 Foreign currency translation adjustment for postretirement benefit plans (18 ) (18 ) Amortization of prior service cost and net actuarial loss on postretirement benefit plans into other non-operating income (expense), net 11 11 Income tax impact on amortization of postretirement benefit plan items (3 ) (3 ) Unrealized loss on derivative hedge agreements 9 9 Reclassification of unrealized (gain) loss on foreign exchange agreements into revenue (6 ) (6 ) Reclassification of unrealized (gain) loss on foreign exchange agreements into cost of revenue — 1 1 Balance at December 31, 2017 $ (15 ) $ (198 ) $ 3 $ (210 ) (in millions) Foreign Currency Translation Postretirement Benefit Plans Derivative Instruments Total Cumulative effect of change in accounting principle (11 ) (6 ) (17 ) Foreign currency translation adjustment (83 ) (83 ) Income tax impact on foreign currency translation adjustment (12 ) (12 ) Changes in postretirement benefit plans (36 ) (36 ) Foreign currency translation adjustment for postretirement benefit plans 15 15 Income tax expense on changes in postretirement benefit plans 5 5 Amortization of prior service cost and net actuarial loss on postretirement benefit plans into other non-operating income (expense), net 9 9 Income tax impact on amortization of postretirement benefit plan items (3 ) (3 ) Unrealized loss on derivative hedge agreements (8 ) (8 ) Reclassification of unrealized (gain) loss on foreign exchange agreements into cost of revenue 4 4 Balance at December 31, 2018 $ (121 ) $ (214 ) $ (1 ) $ (336 ) |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal Proceedings From time to time we are involved in legal and regulatory proceedings that are incidental to the operation of our businesses (or the business operations of previously owned entities). These proceedings may seek remedies relating to environmental matters, tax, intellectual property matters, acquisitions or divestitures, product liability and personal injury claims, privacy, employment, labor and pension matters, government contract issues and commercial or contractual disputes. 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 among ITT Corporation (now ITT LLC), Exelis and Xylem, ITT Corporation (now ITT LLC) 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 ITT’s legacy products. 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 the aggregate, will have a material adverse effect on our results of operations, or financial condition. We have estimated and accrued $7 million and $10 million as of December 31, 2018 and 2017 , respectively for these general legal matters. Indemnifications As part of our 2011 spin-off from our former parent, ITT Corporation (now ITT LLC), 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. On May 29, 2015, Harris Inc. acquired Exelis. As the parent of Exelis, Harris Inc. is responsible for Exelis’s indemnification obligations under the Distribution Agreement. Guarantees We obtain certain stand-by letters of credit, bank guarantees and surety bonds from third-party financial institutions in the ordinary course of business when required under contracts or to satisfy insurance related requirements. As of December 31, 2018, the amount of stand-by letters of credit, bank guarantees and surety bonds was $275 million . 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 $4 million and $4 million as of December 31, 2018 and 2017 , respectively, for environmental matters. 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. Operating Leases We lease certain offices, manufacturing buildings, machinery, computers and other equipment. We often pay maintenance, insurance and tax expense related to leased assets. Total rent expense for the three years ended December 31, 2018 was as follows: (in millions) Total 2018 $ 81 2017 70 2016 63 At December 31, 2018 , we are obligated to make minimum rental payments under operating leases which are as follows: (in millions) 2019 2020 2021 2022 2023 Thereafter Minimum rental payments $ 76 $ 61 $ 43 $ 33 $ 22 $ 64 Warranties We warrant numerous products, the terms of which vary widely. In general, we warrant products against defect and specific non-performance. Warranty expense was $20 million , $28 million , and $32 million for 2018 , 2017 and 2016 , respectively. The table below provides changes in the combined current and non-current product warranty accruals over each period. (in millions) 2018 2017 Warranty accrual – January 1 $ 82 $ 99 Net charges for product warranties in the period 20 28 Settlement of warranty claims (42 ) (48 ) Foreign currency and other — 3 Warranty accrual – December 31 $ 60 $ 82 |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Sales to and purchases from unconsolidated entities for 2018 , 2017 and 2016 are as follows: (in millions) 2018 2017 2016 Sales to unconsolidated affiliates $ 10 $ 12 $ 11 Purchases from unconsolidated affiliates 22 17 22 |
Segment and Geographic Data
Segment and Geographic Data | 12 Months Ended |
Dec. 31, 2018 | |
Segment Reporting Information [Line Items] | |
Segment and Geographic Data | Segment and Geographic Data Our business has three reportable segments: Water Infrastructure, Applied Water and Measurement & Control Solutions. When determining the reportable segments, the Company aggregated operating segments based on their similar economic and operating characteristics. The Water Infrastructure segment focuses on the transportation and treatment of water, offering a range of products including water and wastewater pumps, treatment equipment, and controls and systems. The Applied Water segment serves many of the primary uses of water and focuses on the residential, commercial and industrial markets. The Applied Water segment's major products include pumps, valves, heat exchangers, controls and dispensing equipment. The Measurement & Control Solutions segment focuses on developing advanced technology solutions that enable intelligent use and conservation of critical water and energy resources as well as analytical instrumentation used in the testing of water. The Measurement & Control Solutions segment's major products include smart metering, networked communications, measurement and control technologies, critical infrastructure technologies, software and services including cloud-based analytics, remote monitoring and data management, leak detection and pressure monitoring solutions and testing equipment. The accounting policies of each segment are the same as those described in the summary of significant accounting policies (see Note 1). The following tables contain financial information for each reportable segment: Year Ended December 31, (in millions) 2018 2017 2016 Revenue: Water Infrastructure $ 2,176 $ 2,004 $ 1,932 Applied Water 1,534 1,421 1,393 Measurement & Control Solutions 1,497 1,282 446 Total $ 5,207 $ 4,707 $ 3,771 Operating income: Water Infrastructure $ 359 $ 312 $ 295 Applied Water 236 194 188 Measurement & Control Solutions 118 110 — Corporate and other (59 ) (64 ) (75 ) Total operating income 654 552 408 Interest expense 82 82 70 Other non-operating income (expense) 13 6 2 (Loss)/gain from sale of businesses — (10 ) — Income before taxes $ 585 $ 466 $ 340 Depreciation and amortization: Water Infrastructure $ 66 $ 64 $ 66 Applied Water 22 23 24 Measurement & Control Solutions 144 122 41 Regional selling locations (a) 20 17 11 Corporate and other 9 8 9 Total $ 261 $ 234 $ 151 Capital expenditures: Water Infrastructure $ 84 $ 58 $ 62 Applied Water 28 20 21 Measurement & Control Solutions 101 69 13 Regional selling locations (b) 16 18 24 Corporate and other 8 5 4 Total $ 237 $ 170 $ 124 (a) Depreciation and amortization expense incurred by the Regional selling locations was included in an overall allocation of Regional selling location costs to the segments; however, a certain portion of that expense was not specifically identified to a segment. That is the expense captured in this Regional selling location line. (b) Represents capital expenditures incurred by the Regional selling locations not allocated to the segments. The following table illustrates revenue by product category, net of intercompany revenue. Year Ended December 31, (in millions) 2018 2017 2016 Pumps, accessories, parts and service $ 3,322 $ 2,998 $ 2,888 Other (a) 1,885 1,709 883 Total $ 5,207 $ 4,707 $ 3,771 (a) Other includes treatment equipment, analytical instrumentation, heat exchangers, valves, controls and smart meters. The following table contains the total assets for each reportable segment as of December 31, 2018 , 2017 and 2016 . Total Assets (in millions) 2018 2017 2016 Water Infrastructure $ 1,233 $ 1,232 $ 1,179 Applied Water 1,051 1,002 990 Measurement & Control Solutions 3,576 3,198 3,102 Regional selling locations (a) 1,181 1,119 965 Corporate and other (b) 181 309 238 Total $ 7,222 $ 6,860 $ 6,474 (a) The Regional selling locations have assets that consist primarily of cash, accounts receivable and inventory which are not allocated to the segments. (b) Corporate and other consists of items pertaining to our corporate headquarters function, which principally consist of cash, deferred tax assets, pension assets and certain plant and equipment. Geographical Information Revenue is attributed to countries based upon the location of the customer. Property, Plant & Equipment is attributed to countries based upon the location of the assets. Revenue Year Ended December 31, (in millions) 2018 2017 2016 United States $ 2,424 $ 2,161 $ 1,574 Europe 1,449 1,335 1,195 Asia Pacific 660 611 518 Other 674 600 484 Total $ 5,207 $ 4,707 $ 3,771 Property, Plant & Equipment December 31, (in millions) 2018 2017 2016 United States $ 281 $ 258 $ 255 Europe 250 259 237 Asia Pacific 66 85 87 Other 59 41 37 Total $ 656 $ 643 $ 616 |
Valuation and Qualifying Accoun
Valuation and Qualifying Accounts | 12 Months Ended |
Dec. 31, 2018 | |
SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |
Valuation and Qualifying Accounts | Valuation and Qualifying Accounts The table below provides changes in the allowance for doubtful accounts over each period. (in millions) 2018 2017 2016 Balance at beginning of year $ 25 $ 21 $ 22 Additions charged to expense 5 5 4 Deductions/other (5 ) (1 ) (5 ) Balance at end of year $ 25 $ 25 $ 21 |
Quarterly Financial Data (Unaud
Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Data (Unaudited) | Quarterly Financial Data (Unaudited) 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. 2018 Quarter Ended (in millions, except per share amounts) Dec. 31 Sept. 30 June 30 Mar. 31 Revenue $ 1,386 $ 1,287 $ 1,317 $ 1,217 Gross profit 542 505 519 460 Operating income 194 176 171 113 Net income attributable to Xylem $ 225 $ 130 $ 115 $ 79 Earnings per share: Basic $ 1.25 $ 0.73 $ 0.64 $ 0.44 Diluted $ 1.24 $ 0.72 $ 0.64 $ 0.43 2017 Quarter Ended (in millions, except per share amounts) Dec. 31 Sept. 30 June 30 Mar. 31 Revenue $ 1,277 $ 1,195 $ 1,164 $ 1,071 Gross profit 507 471 457 412 Operating income 177 152 137 86 Net income attributable to Xylem $ 71 $ 105 $ 99 $ 56 Earnings per share: Basic $ 0.40 $ 0.58 $ 0.55 $ 0.31 Diluted $ 0.40 $ 0.58 $ 0.55 $ 0.31 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of PresentationThe 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 intercompany transactions between our businesses have been eliminated. |
Use of Estimates | Use of EstimatesThe 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, valuation of intangible assets, goodwill and indefinite lived intangible impairment testing and contingent liabilities. Actual results could differ from these estimates. |
Consolidation Principles | Consolidation PrinciplesWe consolidate companies in which we have a controlling financial interest or when Xylem is considered the primary beneficiary of a variable interest entity. We account for investments in companies over which we have the ability to exercise significant influence but do not hold a controlling financial interest under the equity method, and we record our proportionate share of income or losses in the Consolidated Income Statements. Equity method investments are reviewed for impairment when events or circumstances indicate the investment may be other than temporarily impaired. This requires significant judgment, including an assessment of the investee’s financial condition, the possibility of subsequent rounds of financing, and the investee’s historical and projected results of operations. If the actual results of operations for the investee are significantly different from projections, we may incur future charges for the impairment of these investments. |
Foreign Currency Translation | Foreign Currency Translation The national currencies of our foreign companies are generally the functional currencies. Balance sheet accounts are translated at the exchange rate in effect at the end of each period; income statement accounts are translated at the average rates of exchange prevailing during the period. Gains and losses on foreign currency translations are reflected in the cumulative translation adjustments component of stockholders’ equity. Net gains or losses from foreign currency transactions are reported currently in selling, general and administrative expenses. |
Revenue Recognition | Revenue Recognition As discussed in Note 2, "Recently Issued Accounting Pronouncements", Xylem adopted the new guidance on recognizing revenue from contracts with customers as of January 1, 2018. In accordance with this new guidance Xylem recognizes revenue in a manner that depicts the transfer of promised goods and services to customers in an amount that reflects the consideration to which it expects to be entitled to for providing those goods and services. For each arrangement with a customer, we identify the contract, the associated performance obligations within the contract, determine the transaction price of that contract, allocate the transaction price to each performance obligation and recognize revenue as each performance obligation is satisfied. The satisfaction of performance obligations in a contract is based upon when the customer obtains control over the asset. Depending on the nature of the performance obligation, control transfers either at a particular point in time, or over time which determines the recognition pattern of revenue. For product sales, other than long-term construction-type contracts, we recognize revenue once control has passed at a point in time, which is generally when products are shipped. In instances where contractual terms include a provision for customer acceptance, revenue is recognized when either (i) we have previously demonstrated that the product meets the specified criteria based on either seller or customer specified objective criteria or (ii) upon formal acceptance received from the customer where the product has not been previously demonstrated to meet customer specified objective criteria. We recognize revenue on product sales to channel partners, including resellers, distributors or value-added solution providers at the point in time when control is transferred which is determined based on when the risks and rewards, possession, and title have transferred to the customer, which usually occurs at the point of delivery. Revenue from performance obligations related to services is recognized over time, as the performance obligations are satisfied. In these instances, the customer consumes the benefit of the service as Xylem performs. Certain businesses also enter into long-term construction-type sales contracts where revenue is recognized over time. In these instances, revenue is recognized using a measure of progress that applies an input method based on costs incurred in relation to total estimated costs. We also recognize revenue for certain of these arrangements using the output method and measure progress based on shipments of product where control has transferred to the customer. If shipping and handling activities are performed after a customer obtains control of a good, we account for the shipping and handling activities as activities to fulfill a promise to transfer a good. Shipping and handling related costs are accrued as revenue is recognized. For all contracts with customers, we determine the transaction price in the arrangement and allocate the transaction price to each performance obligation identified in the contract. Judgment is required to determine the appropriate unit of account, and we separate out the performance obligations if they are capable of being distinct and if they are distinct within the context of the contract. We base our allocation of the transaction price to the performance obligations on the relative standalone selling prices for the goods or services contained in a particular performance obligation. The standalone selling prices are determined first by reference to observable prices. In the event observable prices are not available, we estimate the stand-alone selling price by maximizing observable inputs and apply an adjusted market assessment approach, expected cost plus margin approach, or a residual approach in limited situations. Revenue in these instances is recognized on individual performance obligations within the same contract as they are satisfied. The transaction price is adjusted for our estimate of variable consideration which may include a right of return, discounts, rebates, penalties and retainage. To estimate variable consideration, we apply the expected value or the most likely amount method, based on whichever method most appropriately predicts the amount of consideration we expect to receive. The method applied is typically based on historical experience and known trends. We constrain the amounts of variable consideration that are included in the transaction price, to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur or when uncertainties around the variable consideration are resolved. We exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with specific revenue-producing transaction and collected from a customer, for example sales, use, value added and some excise taxes. For all contracts with customers, payment received for our products and services may not necessarily follow the same pattern of revenue recognition to which it relates and are dictated by the terms and conditions of our contracts with customers. Payments received for product sales typically occur following delivery and the satisfaction of the performance obligation based upon the terms outlined in the contracts. Payments received for services typically occur following the services being rendered. For long-term construction-type projects, payments are typically made throughout the contract as progress is made. In limited situations, contracts with customers include financing components where payment terms exceed one year, however, we believe that the financing effects are not significant to Xylem. In addition, we apply a practical expedient and do not adjust the promised amount of consideration in a contract for the effects of significant financing components when we expect payment terms to be one year or less from the time the goods or services are transferred until ultimate payment. We offer standard warranties for our products to ensure that our products comply with agreed-upon specifications in our contracts. For standard warranties, these do not give rise to performance obligations and represent assurance-type warranties. In certain instances, product warranty terms are adjusted to account for the specific nature of the contract. In these instances, we assess the warranties to determine whether they represent service-type warranties, and should be accounted for as a separate performance obligation in the contract. Costs to obtain a contract include incremental costs that the Company has incurred which it expects to recover. Incremental costs only include costs that the Company would not have incurred had the contract not been obtained. Costs that would have been incurred regardless of whether or not the contract was obtained are expensed as incurred, unless they are explicitly chargeable to the customer whether or not the contract is obtained. Costs to obtain contracts are capitalized when incurred. The costs to obtain contracts are then amortized in a manner that is consistent with the pattern of transfer of the related goods or services provided in the contract. The Company elects to apply the practical expedient to expense costs to obtain contracts when the associated amortization period of those costs would be one year or less. For annual periods prior to January 1, 2018, revenue is recognized when persuasive evidence of an arrangement exists, the price is fixed or determinable, collectability is reasonably assured and delivery has occurred or services have been rendered. For product sales, other than long-term construction-type contracts, we recognize revenue at the time title, and risks and rewards of ownership pass, which is generally when products are shipped. Certain contracts with customers require delivery, installation, testing, certification or other acceptance provisions to be satisfied before revenue is recognized. We recognize revenue on product sales to channel partners, including resellers, distributors or value-added solution providers at the time of sale when the channel partners have economic substance apart from Xylem and Xylem has completed its obligations related to the sale. Revenue from the rental of equipment is recognized over the rental period. Service revenue is recognized as services are performed. For agreements that contain multiple deliverables, we recognize revenue based on the relative selling price if the deliverable has stand-alone value to the customer and, in arrangements that include a general right of return relative to the delivered element, performance of the undelivered element is considered probable and substantially in the Company’s control. The selling price for a deliverable is based on vendor-specific objective evidence of selling price (“VSOE”), if available, third-party evidence of selling price (“TPE”) if VSOE is not available, or best estimated selling price, if neither VSOE nor TPE is available. The deliverables in our arrangements with multiple elements include various products and may include related services, such as installation and start-up services. Generally, these elements are satisfied within the same reporting period although certain contracts may be completed over 6 months. We allocate arrangement consideration based on the relative selling prices of the separate units of accounting determined in accordance with the hierarchy described above. For deliverables that are sold separately, we establish VSOE based on the price when the deliverable is sold separately. We establish TPE, generally for services, based on prices similarly situated customers pay for similar services from third-party vendors. For those deliverables for which we are unable to establish VSOE or TPE, we estimate the selling price considering various factors including market and pricing trends, geography, product customization, and profit objectives. Revenue for multiple element arrangements is recognized when the appropriate revenue recognition criteria for the individual deliverable have been satisfied. |
Shipping and Handling Costs | Shipping and Handling CostsShipping and handling costs are recorded as a component of cost of revenue. |
Share-Based Compensation | Share-Based CompensationShare-based awards issued to employees and members of the Board of Directors include non-qualified stock options, restricted stock unit awards and performance share unit awards. Compensation costs resulting from share-based payment transactions are recognized primarily within selling, general and administrative expenses, at fair value over the requisite service period (typically three years) on a straight-line basis. The calculated compensation cost is adjusted based on an estimate of awards ultimately expected to vest. For performance awards, the calculated compensation cost is adjusted based on an estimate of awards ultimately expected to vest and our assessment of the probable outcome of the performance condition. The fair value of a non-qualified stock option is determined on the date of grant using a binomial lattice pricing model incorporating multiple and variable assumptions over time, including assumptions such as employee exercise patterns, stock price volatility and changes in dividends. The fair value of restricted stock unit awards is determined using the closing price of our common stock on date of grant. The fair value of Return on Invested Capital ("ROIC") performance share units at 100% target is determined using the closing price of our common stock on date of grant. The fair value of Total Shareholder Return ("TSR") performance share units is calculated on the date of grant using a Monte Carlo simulation model utilizing several key assumptions, including expected Company and peer company share price volatility, correlation coefficients between peers, the risk-free rate of return, the expected dividend yield and other award design features. |
Research and Development | Research and DevelopmentWe conduct research and development activities, which consist primarily of the development of new products, product applications, and manufacturing processes. To the extent these activities are related to developing software that is sold to our customers, we capitalize the applicable development costs. All other research and development costs are charged to expense as incurred. |
Exit and Disposal Costs | Exit and Disposal CostsWe periodically initiate management-approved restructuring activities to achieve cost savings through reduced operational redundancies and to position ourselves strategically in the market in response to prevailing economic conditions and associated customer demand. Costs associated with restructuring actions can include severance, infrastructure charges to vacate facilities or consolidate operations, contract termination costs and other related charges. For involuntary separation plans, a liability is recognized when it is probable and reasonably estimable. For voluntary separation plans, a liability is recognized when the employee irrevocably accepts the voluntary termination. For one-time termination benefits, such as additional severance pay or benefit payouts, and other exit costs, such as lease termination costs, the liability is measured and recognized initially at fair value in the period in which the liability is incurred, with subsequent changes to the liability recognized as adjustments in the period of change. |
Deferred Financing Costs | Deferred Financing CostsDeferred financing costs represent costs incurred in conjunction with our debt financing activities and are capitalized in long-term debt and amortized over the life of the related financing arrangements. If the debt is retired early, the related unamortized deferred financing costs are written off in the period the debt is retired and are recorded in the results of operations under the caption “interest expense.” |
Income Taxes | Income Taxes Income taxes are calculated using the asset and liability method. Deferred tax assets and liabilities are determined based on the estimated future tax effects of temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities, as measured by the current enacted tax rates. We maintain valuation allowances when it is more likely than not that all or a portion of a deferred asset will not be realized. The valuation allowance is intended in part to provide for the uncertainty regarding the ultimate utilization of our U.S. capital loss carryforwards, U.S. foreign tax credit carryovers, and foreign net operating loss carryforwards. In determining whether a valuation allowance is warranted, we consider all positive and negative evidence and all sources of taxable income such as prior earnings history, expected future earnings, carryback and carryforward periods and tax strategies to estimate if sufficient future taxable income will be generated to realize the deferred tax asset. The assessment of the adequacy of our valuation allowance is based on our estimates of taxable income by jurisdiction in which we operate and the period over which our deferred tax assets will be recoverable. In the event that actual results differ from these estimates, or we adjust these estimates in future periods for current trends or expected changes in our estimating assumptions, we may need to modify the level of valuation allowance that could materially impact our business, financial condition and results of operations. Due to the U.S. Tax Cuts and Jobs Act (the "Tax Act"), we have recorded net foreign withholding taxes and state income taxes on earnings that are expected to be repatriated to the U.S. parent. We have not recorded any deferred taxes on the amounts that the Company currently does not intend to repatriate as the determination of any deferred taxes on this amount is not practicable. |
Earnings Per Share | Earnings Per ShareWe present two calculations of earnings per share (“EPS”). “Basic” EPS equals net income divided by weighted average shares outstanding during the period. “Diluted” EPS equals net income divided by the sum of weighted average common shares outstanding during the period plus potentially dilutive shares. Potentially dilutive common shares that are anti-dilutive are excluded from diluted EPS. |
Cash Equivalents | Cash EquivalentsWe consider all liquid investments purchased with an original maturity of three months or less to be cash equivalents. |
Receivables and Allowance for Doubtful Accounts and Discounts | Receivables and Allowance for Doubtful Accounts and Discounts Receivables primarily comprise uncollected amounts owed to us from transactions with customers and are presented net of allowances for doubtful accounts, returns and early payment discounts. We determine our allowance for doubtful accounts using a combination of factors to reduce our trade receivable balances to their estimated net realizable amount. We maintain an allowance for doubtful accounts based on a variety of factors, including the length of time receivables are past due, macroeconomic trends and conditions, significant one-time events, historical experience and the financial condition of customers. In addition, we record a specific reserve for individual accounts when we become aware of specific customer circumstances, such as in the case of bankruptcy filings or deterioration in the customer’s operating results or financial position. The past due or delinquency status of a receivable is based on the contractual payment terms of the receivable. If circumstances related to the specific customer change, we adjust estimates of the recoverability of receivables as appropriate. We determine our allowance for early payment discounts primarily based on historical experience with customers. Credit risk with respect to accounts receivable is generally diversified due to the large number of entities comprising our customer base and their dispersion across many different geographical regions. We perform ongoing credit evaluations of the financial condition of our third-party distributors, resellers and other customers and require collateral, such as letters of credit and bank guarantees, in certain circumstances. As of December 31, 2018 and 2017 |
Inventories | InventoriesInventories, which include the costs of material, labor and overhead, are stated at the lower of cost or net realizable value using the first in, first out ("FIFO") method. Estimated losses from obsolete and slow-moving inventories are recorded to reduce inventory values to their estimated net realizable value. Our manufacturing operations recognize costs of sales using standard costs with full overhead absorption, which generally approximates actual cost. |
Property, Plant and Equipment | Property, Plant and Equipment These assets are recorded at historical cost and are depreciated using the straight-line method of depreciation over the estimated useful lives as follows: Estimated Life Buildings and improvements 5 to 40 years Machinery and equipment 2 to 10 years Furniture and fixtures 3 to 7 years Equipment held for lease or rental 2 to 10 years |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill represents purchase consideration paid in a business combination that exceeds the values assigned to the net assets of acquired businesses. Intangible assets include customer relationships, proprietary technology, brands and trademarks, patents, software and other intangible assets. Intangible assets with a finite life are amortized on a straight-line basis over an estimated economic useful life which ranges from 1 to 25 |
Long-Lived Asset Impairment | Long-Lived Asset Impairment Long-lived assets, including intangible assets with finite lives, are amortized and tested for impairment whenever events or changes in circumstances indicate their carrying value may not be recoverable. We assess the recoverability of long-lived assets based on the undiscounted future cash flow the assets are expected to generate and recognize an impairment loss when estimated undiscounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. When an impairment is identified, we reduce the carrying amount of the asset to its estimated fair value based on a discounted cash flow approach or, when available and appropriate, to comparable market values. |
Product Warranties | Product Warranties For assurance-type warranties, we accrue for the estimated cost of product warranties at the time revenue is recognized and record it as a component of cost of revenue. Our product warranty liability reflects our best estimate of probable liability under the terms and conditions of our product warranties offered to customers. We estimate the liability based on our standard warranty terms, the historical frequency of claims and the cost to replace or repair our products under warranty. Factors that impact our warranty liability include the number of units sold, the length of warranty term, historical and anticipated rates of warranty claims and cost per claim. We also record a warranty liability for specific matters. We assess the adequacy of our recorded warranty liabilities quarterly and adjust amounts as necessary. |
Postretirement Benefit Plans | Postretirement Benefit Plans The determination of defined benefit pension and postretirement plan obligations and their associated costs requires the use of actuarial computations to estimate participant plan benefits to which the employees wil l be entitled. The significant assumptions primarily relate to discount rates, expected long-term rates of return on plan assets, rate of future compensation increases, mortality, years of service and other factors. We develop each assumption using relevant company experience in conjunction with market-related data for each individual country in which such plans exist. All actuarial assumptions are reviewed annually with third-party consultants and adjusted as necessary. For the recognition of net periodic postretirement cost, the calculation of the expected return on plan assets is generally derived by applying the expected long-term rate of return on the market-related value of plan assets. The market-related value of plan assets is based on average asset values at the measurement date over the last five years. Actual results that differ from our assumptions are accumulated and amortized on a straight-line basis only to the extent they exceed 10% of the higher of the market-related value or the projected benefit obligation, over the average remaining service period of active participants, or for plans with all or substantially all inactive participants, over the average remaining life expectancy. The fair value of plan assets is determined based on market prices or estimated fair value at the measurement date. |
Business Combinations | Business CombinationsWe allocate the purchase price of acquisitions to the tangible and intangible assets acquired, liabilities assumed, and non-controlling interests in the acquiree based on their estimated fair value at the acquisition date. The excess of the acquisition price over those estimated fair values is recorded as goodwill. Changes to the acquisition date provisional fair values prior to the expiration of the measurement period, a period not to exceed 12 months from date of acquisition, are recorded as an adjustment to the associated goodwill. Acquisition-related expenses and restructuring costs, if any, are recognized separately from the business combination and are expensed as incurred. |
Derivative Financial Instruments | Derivative Financial Instruments We record all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on whether we have elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, including forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. We may enter into derivative contracts that are intended to hedge certain risks economically, even though hedge accounting does not apply or we elect not to apply hedge accounting. During the fourth quarter of 2018 we adopted new accounting guidance that eliminates the concept of ineffectiveness for cash flow and net investment hedges (refer to Note 2, “Recently Issued Accounting Pronouncements”). Prior to this adoption, the effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges of foreign exchange risk was recorded in other comprehensive income ("OCI") and was subsequently reclassified into either revenue or cost of revenue (hedge of sales classified into revenue and hedge of purchases classified into cost of revenue) in the period that the hedged forecasted transaction affects earnings. Any ineffective portion of the change in fair value of the derivative was recognized directly in selling, general and administrative expenses. Our policy was to de-designate cash flow hedges at the time forecasted transactions are recognized as assets or liabilities on a business unit’s balance sheet and report subsequent changes in fair value through selling, general and administrative expenses where the gain or loss due to movements in currency rates on the underlying asset or liability is revalued. If it became probable that the originally forecasted transaction would not occur, the gain or loss related to the hedge recorded within accumulated other comprehensive income ("AOCI") was immediately recognized into net income. Prior to the adoption of the new guidance, changes in the fair value of derivatives designated and that qualify as net investment hedges of foreign exchange risk were recorded in OCI. Amounts in AOCI were reclassified into earnings at the time the hedged net investment is sold or substantially liquidated. Effectiveness of derivatives designated as net investment hedges was assessed using the forward method. Subsequent to adopting the new hedge guidance, changes in the fair value of derivatives designated and that qualify as cash flow hedges of foreign exchange risk are recorded in other comprehensive income ("OCI") and are subsequently reclassified into either revenue or cost of revenue (hedge of sales classified into revenue and hedge of purchases classified into cost of revenue) in the period that the hedged forecasted transaction affects earnings. Our policy is to de-designate cash flow hedges at the time forecasted transactions are recognized as assets or liabilities on a business unit’s balance sheet and report subsequent changes in fair value through selling, general and administrative expenses where the gain or loss due to movements in currency rates on the underlying asset or liability is revalued. If it becomes probable that the originally forecasted transaction will not occur, the gain or loss related to the hedge recorded within accumulated other comprehensive income ("AOCI") is immediately recognized into net income. |
Commitments and Contingencies | Commitments and Contingencies We record accruals for commitments and loss contingencies for those which are both probable and for which the amount can be reasonably estimated. In addition, legal fees are accrued for cases where a loss is probable and the related fees can be reasonably estimated. Significant judgment is required to determine both probability and the estimated amount of loss. We review these accruals quarterly and adjust the accruals to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other current information. |
Concentrations of Credit Risk | Concentrations of Credit RiskFinancial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and cash equivalents, and accounts receivable from trade customers. We maintain cash and cash equivalents and derivative contracts with various financial institutions. These financial institutions are located in many different geographical regions, and our policy is designed to limit exposure with any one institution. As part of our cash and risk management processes, we perform periodic evaluations of the relative credit standing of the financial institutions. We have not sustained any material credit losses during the previous three years from instruments held at financial institutions. We may utilize forward contracts to protect against the effects of foreign currency fluctuations. Such contracts involve the risk of non-performance by the counterparty. Credit risk with respect to accounts receivable is generally diversified due to the large number of entities comprising our customer base and their dispersion across many different industries and geographic regions. We perform ongoing credit evaluations of the financial condition of our third-party distributors, resellers and other customers and require collateral, such as letters of credit and bank guarantees, in certain circumstances. |
Fair Value Measurements | Fair Value Measurements We determine fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We use a hierarchical structure to prioritize the inputs to valuation techniques used to measure fair value into three broad levels defined as follows: • Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. • Level 2 inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices (in non-active markets or in active markets for similar assets or liabilities), inputs other than quoted prices that are observable, and inputs that are derived principally from or corroborated by observable market data by correlation or other means. • Level 3 inputs are unobservable inputs for the assets or liabilities. The fair value hierarchy is based on maximizing the use of observable inputs and minimizing the use of unobservable inputs when measuring fair value. Classification within the fair value hierarchy is based on the lowest level input that is significant to the fair value measurement. |
Pronouncements Not Yet Adopted | Pronouncements Not Yet Adopted In August 2018, the Financial Accounting Standards Board (“FASB”) issued guidance regarding the accounting for implementation costs of a hosting arrangement that is a service contract. The guidance establishes the requirement to capitalize certain implementation costs incurred in a hosting arrangement that is a service contract, effectively aligning with the requirement to capitalize certain implementation costs incurred to develop or obtain internal-use software. This guidance is effective for interim and annual periods beginning after December 15, 2019 with early adoption permitted. The requirements of the amended guidance may be applied using either a retrospective or prospective approach. We are evaluating the impact of the guidance on our financial condition and results of operations. In June 2016, the FASB issued guidance amending the accounting for the impairment of financial instruments, including trade receivables. Under current guidance, credit losses are recognized when the applicable losses are probable of occurring and this assessment is based on past events and current conditions. The amended guidance eliminates the “probable” threshold and requires an entity to use a broader range of information, including forecast information when estimating expected credit losses. Generally, this should result in a more timely recognition of credit losses. This guidance is effective for interim and annual periods beginning after December 15, 2019 with early adoption permitted for interim and annual periods beginning after December 15, 2018. The requirements of the amended guidance should be applied using a modified retrospective approach except for debt securities, which require a prospective transition approach. We are evaluating the impact of the guidance on our financial condition and results of operations. In February 2016, the FASB issued guidance amending the accounting for leases. Specifically, the amended guidance requires all lessees to record a lease liability at lease inception, with a corresponding right of use asset ("ROU"), except for short-term leases. Lessor accounting is not fundamentally changed. This amended guidance is effective for interim and annual periods beginning after December 15, 2018 using a modified retrospective approach. Early adoption is permitted. We will apply the modified retrospective approach by recording a cumulative effect adjustment as of the date of adoption, whereby prior comparative periods will not be retrospectively presented in the consolidated financial statements. As a result, adoption of the standard will result in the recognition of ROU assets and lease liabilities for operating leases of between $255 million and $285 million , as of January 1, 2019, the date of initial application. The guidance will not have a material impact on our consolidated income statements and statements of cash flow. Recently Adopted Pronouncements In August 2017, the FASB issued amended guidance on hedging activities. The amendment better aligns a company’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying for hedging relationships and the presentation of hedge results. Specifically, the guidance: (1) Eliminates the concept of recognizing periodic hedge ineffectiveness for cash flow and net investment hedges; (2) Eliminates the benchmark interest rate concept of variable - rate instruments in cash flow hedges and allows companies to designate the contractually specified interest rate as the hedged risk; (3) Requires a company to present the earnings effect of the hedging instrument in the same income statement line item in which the earnings effect of the hedged item is reported; and (4) Provides the ability to perform subsequent hedge effectiveness tests qualitatively. This guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those annual periods. Early adoption is permitted with the effect of adoption reflected as of the beginning of the fiscal year of adoption. For cash flow and net investment hedges existing at the date of adoption, a cumulative-effect adjustment related to eliminating the separate measurement of ineffectiveness is required. Other presentation and disclosure guidance is required only prospectively. We adopted this guidance in the fourth quarter of 2018. The adoption resulted in the recognition of $2 million of interest income as a result of our transition from the forward rate method to the spot rate method in accounting for our net investment hedges. In February 2018, the FASB issued new guidance on the reclassification of certain tax effects in Accumulated Other Comprehensive Income ("AOCI"). The guidance allows a reclassification from AOCI to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act (the “Tax Act”). This guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those annual periods. Early adoption is permitted. The guidance may be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Act is recognized. We early adopted this guidance effective the first quarter of 2018, and elected to reclassify the income tax effects of the Tax Act from AOCI to retained earnings. As a result of adopting the guidance, AOCI was reduced by $17 million and retained earnings increased by $17 million . This amount includes the effect of the change in the US federal corporate income tax rate. In March 2017, the FASB issued amended guidance on the presentation of net periodic benefit costs. The amendment requires that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components are required to be presented in the income statement separately and outside a subtotal of income from operations, if one is presented. The amendment also requires entities to disclose the income statement lines that contain the other components if they are not appropriately described. This guidance is effective retrospectively for periods beginning after December 15, 2017, including interim periods within those annual periods. Early adoption is permitted. We adopted this guidance effective the first quarter of 2018. The prior period consolidated income statements and segment results have been retrospectively adjusted in accordance with the new guidance. The impact to the presentation between operating income and other non-operating income within Xylem's Consolidated Income Statements was approximately $4 million and $2 million for the years ended December 31, 2017 and 2016, respectively. 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 interim and annual reporting periods beginning after December 15, 2017 and may be applied retrospectively to each prior period presented or using a modified retrospective approach with the cumulative effect recognized as of the date of initial application. Early adoption is permitted for interim and annual reporting periods beginning after December 15, 2016. We adopted this guidance as of January 1, 2018 using the modified retrospective transition method. The adoption of the guidance did not have a material impact on our financial condition and results of operations. See Note 4, "Revenue", for further details. In May 2017, the FASB issued guidance, which amends the scope of modification accounting guidance for share-based payment arrangements. The guidance outlines the types of changes to the terms or conditions of share-based payment arrangements that would require the use of modification accounting. Specifically, modification accounting would not apply if the fair value, vesting conditions, and classification of the award as equity or liability are the same immediately before and after the modification. This guidance is effective prospectively for interim and annual reporting periods beginning December 15, 2017 and early adoption is permitted. We elected to early adopt this guidance effective the second quarter of 2017. The adoption of this guidance did not impact our financial condition or results from operations. In January 2017, the FASB issued guidance amending the impairment testing of goodwill. Under current guidance, the testing of goodwill for impairment is performed at least annually using a two-step test. Step one involves comparing the fair value of a “reporting unit” to its carrying amount. If the applicable book value exceeds the reporting unit’s fair value then step two must be performed. Step two involves comparing the fair value of the reporting unit’s goodwill to the applicable carrying amount of the asset and recognizing an impairment charge equal to the amount by which the carrying amount of the goodwill exceeds its implied fair value. The amended guidance eliminates step two of the impairment test and allows an entity to record an impairment charge equal to the amount that the carrying amount of the applicable reporting unit exceeds its fair value, up to the value of the recorded goodwill. This guidance is effective prospectively for interim and annual goodwill impairment tests beginning after December 15, 2019 with early adoption permitted for interim or annual tests after January 1, 2017. We elected to early adopt this guidance effective the first quarter of 2017. The adoption of this guidance did not impact our financial condition or results of operations. In October 2016, the FASB issued guidance amending the accounting for income taxes. Under current guidance the recognition of current and deferred income taxes for an intra-entity asset transfer is prohibited until the asset has been sold to an outside party. The amended guidance eliminates the prohibition against immediate recognition of current and deferred income tax amounts associated with intra-entity transfers of assets other than inventory. This guidance is effective for interim and annual periods beginning after December 15, 2017 with early adoption permitted as of the beginning of an annual reporting period for which financial statements (interim or annual) have not been issued or made available for issuance. The requirements of the amended guidance should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. We elected to early adopt this guidance effective the first quarter of 2017. As a result of adopting the amended guidance, prepaid tax assets were reduced by $14 million , long-term deferred tax assets increased $3 million , and accrued taxes were reduced by $4 million . The net impact of these adjustments on retained earnings was a decrease of $7 million . |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Property, Plant and Equipment | Property, Plant and Equipment These assets are recorded at historical cost and are depreciated using the straight-line method of depreciation over the estimated useful lives as follows: Estimated Life Buildings and improvements 5 to 40 years Machinery and equipment 2 to 10 years Furniture and fixtures 3 to 7 years Equipment held for lease or rental 2 to 10 years December 31, (in millions) 2018 2017 Land, buildings and improvements $ 326 $ 329 Machinery and equipment 819 799 Equipment held for lease or rental 249 241 Furniture and fixtures 109 101 Construction work in progress 107 85 Other 22 21 Total property, plant and equipment, gross 1,632 1,576 Less accumulated depreciation 976 933 Total property, plant and equipment, net $ 656 $ 643 |
Acquisitions and Divestitures (
Acquisitions and Divestitures (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
Purchase Price Allocation | The Pure purchase price allocation as of January 31, 2018 is shown in the following table. (in millions) Amount Cash $ 14 Receivables 23 Inventories 4 Prepaid and other current assets 2 Property, plant and equipment 22 Intangible assets 149 Other long-term assets 1 Accounts payable (3 ) Accrued and other current liabilities (12 ) Deferred income tax liabilities (25 ) Other non-current accrued liabilities (2 ) Total identifiable net assets 173 Goodwill 261 Total consideration $ 434 (in millions) Amount Cash $ 56 Receivables 104 Inventories 79 Prepaid and other current assets 19 Property, plant and equipment 176 Intangible assets 782 Other long-term assets 5 Accounts payable (69 ) Accrued and other current liabilities (90 ) Deferred income tax liabilities (198 ) Accrued post retirement benefits (84 ) Other non-current accrued liabilities (60 ) Total identifiable net assets 720 Goodwill 1,063 Non-controlling interest (17 ) Total consideration $ 1,766 |
Summary of Intangible Assets Acquired | The following table summarizes key information underlying identifiable intangible assets related to the Pure acquisition: Category Life Amount (in millions) Customer Relationships 17 - 18 years $ 84 Technology 3 - 10 years 38 Tradenames 20 years 21 Internally Developed Software 3 years 6 Total $ 149 Category Life Amount (in millions) Customer and Distributor Relationships 2 - 18 years $ 543 Tradenames 10 - 25 years 98 Internally Developed Network Software 7 years 60 FCC Licenses Indefinite lived 24 Technology 5 - 15 years 39 Other 1 - 16 years 18 Total $ 782 |
Pro Forma Information | Year Ended December 31, (in millions) 2016 Revenue $ 4,528 Net income $ 286 (in millions) Year Ended December 31, 2018 2017 Revenue $5,212 $4,809 Net income $546 $323 |
Restructuring and Asset Impai_2
Restructuring and Asset Impairment Charges (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Restructuring and Related Activities [Abstract] | |
Components of restructuring and asset impairment charges | The components of restructuring charges incurred during each of the previous three years ended are presented below. Year Ended December 31, (in millions) 2018 2017 2016 By component: Severance and other charges $ 19 $ 20 $ 28 Lease related charges 1 — 2 Other restructuring charges 1 2 1 Reversal of restructuring accruals (1 ) (2 ) (1 ) Total restructuring charges 20 20 30 Asset impairment charges 2 5 — Total restructuring and asset impairment charges $ 22 $ 25 $ 30 By segment: Water Infrastructure $ 11 $ 7 $ 12 Applied Water 2 13 10 Measurement & Control Solutions 9 5 6 Corporate and other — — 2 |
Restructuring accruals | The following table presents expected restructuring spend: (in millions) Water Infrastructure Applied Water Measurement & Control Solutions Corporate Total Actions Commenced in 2018: Total expected costs $ 9 $ 1 $ 7 $ — $ 17 Costs incurred during 2018 7 1 7 — 15 Total expected costs remaining $ 2 $ — $ — $ — $ 2 Actions Commenced in 2017: Total expected costs $ 18 $ 12 $ 3 $ — $ 33 Costs incurred during 2017 5 4 2 — 11 Costs incurred during 2018 2 1 1 — 4 Total expected costs remaining $ 11 $ 7 $ — $ — $ 18 Actions Commenced in 2016: Total expected costs $ 13 $ 14 $ 10 $ 2 $ 39 Costs incurred during 2016 11 10 6 2 29 Costs incurred during 2017 2 4 3 — 9 Costs incurred during 2018 — — 1 — 1 Total expected costs remaining $ — $ — $ — $ — $ — December 31, 2018 and 2017 . (in millions) 2018 2017 Restructuring accruals - January 1 $ 7 $ 15 Restructuring charges 20 20 Cash payments (21 ) (28 ) Foreign currency and other (1 ) — Restructuring accruals - December 31 $ 5 $ 7 By segment: Water Infrastructure $ 1 $ 1 Applied Water 1 1 Measurement & Control Solutions 2 2 Regional selling locations (a) 1 3 Corporate and other — — (a) |
Planned employee reductions associated with restructuring | The following is a rollforward of employee position eliminations associated with restructuring activities for the years ended December 31, 2018 and 2017 . 2018 2017 Planned reductions - January 1 47 188 Additional planned reductions 206 151 Actual reductions and reversals (184 ) (292 ) Planned reductions - December 31 69 47 |
Revenue (Tables)
Revenue (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The following table illustrates the sources of revenue: Twelve Months Ended (in millions) December 31, 2018 Revenue from contracts with customers $ 4,963 Other 244 Total $ 5,207 The following table reflects revenue from contracts with customers by application: Twelve Months Ended (in millions) December 31, 2018 Water Infrastructure Transport $ 1,535 Treatment 397 Applied Water Commercial Building Services 596 Residential Building Services 232 Industrial Water 706 Measurement and Control Solutions Water 692 Electric 143 Gas 195 Software and Services/Other 123 Test 344 Total $ 4,963 The following table reflects revenue from contracts with customers by geographical region: Twelve Months Ended (in millions) December 31, 2018 Water Infrastructure United States $ 539 Europe 758 Emerging Markets & Other 635 Applied Water United States 797 Europe 386 Emerging Markets & Other 351 Measurement and Control Solutions United States 913 Europe 273 Emerging Markets & Other 311 Total $ 4,963 |
Contract with Customer, Asset and Liability | The table below provides contract assets, contract liabilities, and significant changes in contract assets and liabilities. (in millions) Contract Assets (a) Contract Liabilities Balance at 1/1/2018 $ 89 $ 107 Additions, net 87 101 Revenue recognized from opening balance — (89 ) Billings (76 ) — Foreign currency and other (4 ) (6 ) Balance at 12/31/2018 $ 96 $ 113 (a) |
Other Non-Operating Income, N_2
Other Non-Operating Income, Net (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Other Income and Expenses [Abstract] | |
Components of Other Non-Operating Income, Net | The components of other non-operating income, net are as follows: Year Ended December 31, (in millions) 2018 2017 2016 Interest income $ 4 $ 3 $ 2 Income from joint ventures 5 3 3 Other income (expense) – net 4 — (3 ) Total other non-operating income, net $ 13 $ 6 $ 2 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Source of pre-tax income and components of income tax expense | The source of pre-tax income and the components of income tax expense are as follows: Year Ended December 31, (in millions) 2018 2017 2016 Income components: Domestic $ 208 $ 162 $ 80 Foreign 377 304 260 Total pre-tax income $ 585 $ 466 $ 340 Income tax expense components: Current: Domestic – federal $ 9 $ 109 $ 19 Domestic – state and local 13 9 5 Foreign 61 51 42 Total Current 83 169 66 Deferred: Domestic – federal $ 17 $ (29 ) $ 19 Domestic – state and local 5 10 1 Foreign (69 ) (14 ) (6 ) Total Deferred (47 ) (33 ) 14 Total income tax provision $ 36 $ 136 $ 80 Effective income tax rate 6.1 % 29.2 % 23.5 % |
Schedule of effective income tax rate reconciliation | Reconciliations between taxes at the U.S. federal income tax rate and taxes at our effective income tax rate on earnings before income taxes are as follows: Year Ended December 31, 2018 2017 2016 Tax provision at U.S. statutory rate 21.0 % 35.0 % 35.0 % Increase (decrease) in tax rate resulting from: State income taxes 2.3 1.6 0.8 Uncertain tax positions 2.6 1.6 (6.4 ) Valuation allowance (47.1 ) 3.3 18.5 Tax exempt interest (1.4 ) (10.6 ) (14.3 ) Foreign tax rate differential 2.9 (6.7 ) (7.9 ) Impact of foreign earnings, net (1.7 ) 37.0 5.9 Tax incentives (6.2 ) (6.6 ) (8.9 ) Intercompany sale of assets 35.5 — — Other – net (1.8 ) (2.5 ) 0.8 Rate change — (22.9 ) — Effective income tax rate 6.1 % 29.2 % 23.5 % |
Components of net deferred tax assets and liabilities | The following is a summary of the components of the net deferred tax assets and liabilities recognized in the Consolidated Balance Sheets: December 31, (in millions) 2018 2017 Deferred tax assets: Employee benefits $ 97 $ 108 Accrued expenses 30 34 Loss and other tax credit carryforwards 279 419 Inventory 7 8 Other 11 24 424 593 Valuation allowance (234 ) (350 ) Net deferred tax asset $ 190 $ 243 Deferred tax liabilities: Intangibles $ 247 $ 300 Investment in foreign subsidiaries 8 20 Property, plant, and equipment 69 57 Other 29 49 Total deferred tax liabilities $ 353 $ 426 |
Reconciliation of Deferred Tax Asset Valuation Allowance | A reconciliation of our valuation allowance on deferred tax assets is as follows: (in millions) 2018 2017 2016 Valuation allowance — January 1 $ 350 $ 311 $ 248 Change in assessment (a) 1 (28 ) 17 Current year operations (271 ) 48 38 Foreign currency and other (b) 154 19 (32 ) Acquisitions — — 40 Valuation allowance — December 31 $ 234 $ 350 $ 311 (a) Increase in assessment in 2018 is primarily attributable to loss positions in various jurisdictions. Decrease in assessment in 2017 is primarily attributable to Foreign Tax Credits utilization resulting from the Tax Act. (b) |
Deferred taxes classification | Deferred taxes are classified net of unrecognized tax benefits in the Consolidated Balance Sheets as follows: December 31, (in millions) 2018 2017 Non-current assets $ 140 $ 69 Non-current liabilities (303 ) (252 ) Total net deferred tax liabilities $ (163 ) $ (183 ) |
Tax attributes available to reduce future taxable income | Tax attributes available to reduce future taxable income begin to expire as follows: (in millions) December 31, 2018 First Year of Expiration U.S. net operating loss $ 12 December 31, 2024 State net operating loss 98 December 31, 2019 State excess interest expense 12 Indefinitely State tax credits 2 Indefinitely Foreign net operating loss 1,119 December 31, 2019 Foreign tax credits 3 December 31, 2030 |
Reconciliation of the beginning and ending amount of unrecognized tax benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: (in millions) 2018 2017 2016 Unrecognized tax benefits — January 1 $ 130 $ 67 $ 47 Current year tax positions — 56 12 Prior year tax positions 7 7 (22 ) Acquisitions — — 30 Settlements (1 ) — — Unrecognized tax benefits — December 31 $ 136 $ 130 $ 67 |
Earliest open tax years by major jurisdiction | The following table summarizes our earliest open tax years by major jurisdiction: Jurisdiction Earliest Open Year Italy 2013 Luxembourg 2016 Sweden 2013 Germany 2009 United Kingdom 2011 United States 2016 Switzerland 2013 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
Basic and diluted net earnings per share | The following is a reconciliation of the shares used in calculating basic and diluted earnings per share. Year Ended December 31, 2018 2017 2016 Net income attributable to Xylem (in millions) $ 549 $ 331 $ 260 Shares (in thousands): Weighted average common shares outstanding 179,750 179,602 179,069 Add: Participating securities (a) 27 27 37 Weighted average common shares outstanding — Basic 179,777 179,629 179,106 Plus incremental shares from assumed conversions: (b) Dilutive effect of stock options 876 712 499 Dilutive effect of restricted stock units and performance share units 479 516 433 Weighted average common shares outstanding — Diluted 181,132 180,857 180,038 Basic earnings per share $ 3.05 $ 1.84 $ 1.45 Diluted earnings per share $ 3.03 $ 1.83 $ 1.45 (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 units 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 units and performance share units, reduced by the repurchase of shares with the proceeds from the assumed exercises and unrecognized compensation expense for outstanding awards. Performance share units are included in the treasury stock calculation of diluted earnings per share based upon achievement of underlying performance and market conditions at the end of the reporting period, as applicable. See Note 16 |
Incremental shares from stock options and restricted stock | Year Ended December 31, (in thousands) 2018 2017 2016 Stock options 1,300 1,626 1,892 Restricted stock units 333 379 514 Performance share units 465 504 373 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories | The components of total inventories are summarized as follows: December 31, (in millions) 2018 2017 Finished goods $ 248 $ 223 Work in process 45 42 Raw materials 302 259 Total inventories $ 595 $ 524 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Property, Plant and Equipment These assets are recorded at historical cost and are depreciated using the straight-line method of depreciation over the estimated useful lives as follows: Estimated Life Buildings and improvements 5 to 40 years Machinery and equipment 2 to 10 years Furniture and fixtures 3 to 7 years Equipment held for lease or rental 2 to 10 years December 31, (in millions) 2018 2017 Land, buildings and improvements $ 326 $ 329 Machinery and equipment 819 799 Equipment held for lease or rental 249 241 Furniture and fixtures 109 101 Construction work in progress 107 85 Other 22 21 Total property, plant and equipment, gross 1,632 1,576 Less accumulated depreciation 976 933 Total property, plant and equipment, net $ 656 $ 643 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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 during the years ended December 31, 2018 and 2017 are as follows: (in millions) Water Applied Water Measurement & Control Solutions Total Balance as of December 31, 2016 $ 640 $ 505 $ 1,487 $ 2,632 Activity in 2017 Divested/acquired — (3 ) 10 7 Foreign currency and other 27 24 78 129 Balance as of December 31, 2017 $ 667 $ 526 $ 1,575 $ 2,768 Activity in 2018 Acquired — — 279 279 Foreign currency and other (14 ) (10 ) (47 ) (71 ) Balance as of December 31, 2018 $ 653 $ 516 $ 1,807 $ 2,976 |
Other Intangible Assets | Information regarding our other intangible assets is as follows: (in millions) December 31, 2018 December 31, 2017 Carrying Amount Accumulated Amortization Net Intangibles Carrying Amount Accumulated Amortization Net Intangibles Customer and distributor relationships $ 951 $ (286 ) $ 665 $ 906 $ (241 ) $ 665 Proprietary technology and patents 198 (93 ) 105 163 (75 ) 88 Trademarks 148 (41 ) 107 138 (37 ) 101 Software 355 (164 ) 191 277 (130 ) 147 Other 24 (19 ) 5 26 (20 ) 6 Indefinite-lived intangibles 159 — 159 161 — 161 Other intangibles $ 1,835 $ (603 ) $ 1,232 $ 1,671 $ (503 ) $ 1,168 |
Estimated Amortization Expense | Estimated amortization expense for each of the five succeeding years is as follows: (in millions) 2019 $ 135 2020 127 2021 112 2022 102 2023 97 |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Effect of derivative financial instruments | The table below presents the effect of our derivative financial instruments on the Consolidated Income Statements and Consolidated Statements of Comprehensive Income. Year Ended December 31, (in millions) 2018 2017 2016 Derivatives in Cash Flow Hedges Foreign Exchange Contracts Amount of (loss) gain recognized in OCI (a) $ (8 ) $ 9 $ — Amount of (gain) reclassified from OCI into revenue (a) — (6 ) (2 ) Amount of loss reclassified from OCI into cost of revenue (a) 4 1 — Derivatives in Net Investment Hedges Cross Currency Swaps Amount of (loss) gain recognized in OCI (a) $ 22 $ (53 ) $ 19 Amount income recognized in Interest Expense 2 — — Foreign Currency Denominated Debt Amount of (loss) gain recognized in OCI (a) $ 27 $ (74 ) $ 28 Forward Contracts Amount of gain recognized in OCI (a) $ — $ — $ 9 (a) |
Schedule of Foreign Exchange Contracts, Statement of Financial Position | The fair values of our derivative contracts currently included in our hedging program were as follows: December 31, (in millions) 2018 2017 Derivatives designated as hedging instruments Assets Cash Flow Hedges Other current assets $ 3 $ 3 Liabilities Cash Flow Hedges Other current liabilities (1 ) (1 ) Net Investment Hedges Other non-current liabilities (46 ) (64 ) The fair value of our long-term debt, due in 2023, designated as a net investment hedge was $599 million and $638 million |
Accrued and Other Current Lia_2
Accrued and Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Payables and Accruals [Abstract] | |
Accrued and Other Current Liabilities | December 31, (in millions) 2018 2017 Compensation and other employee-benefits $ 194 $ 203 Customer-related liabilities 129 119 Accrued warranty costs 44 55 Accrued taxes 85 75 Other accrued liabilities 94 99 Total accrued and other current liabilities $ 546 $ 551 |
Credit Facilities and Long-Te_2
Credit Facilities and Long-Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Credit Facilities and Long-Term Debt | Total debt outstanding is summarized as follows: December 31, (in millions) 2018 2017 4.875% Senior Notes due 2021 (a) $ 600 $ 600 2.250% Senior Notes due 2023 (a) 570 597 3.250% Senior Notes due 2026 (a) 500 500 4.375% Senior Notes due 2046 (a) 400 400 Research and development finance contract — 125 Term loan 257 — Debt issuance costs and unamortized discount (b) (19 ) (22 ) Total debt 2,308 2,200 Less: short-term borrowings and current maturities of long-term debt 257 — Total long-term debt $ 2,051 $ 2,200 (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 2021 (as defined below) was $620 million and $648 million as of December 31, 2018 and 2017 , respectively. The fair value of our Senior Notes due 2023 (as defined below) was $599 million and $638 million as of December 31, 2018 and 2017, respectively. The fair value of our Senior Notes due 2026 (as defined below) was $476 million and $498 million as of December 31, 2018 and 2017, respectively. The fair value of our Senior Notes due 2046 (as defined below) was $397 million and $431 million as of December 31, 2018 and 2017, respectively. (b) |
Postretirement Benefit Plans (T
Postretirement Benefit Plans (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block | |
Schedule of Net Benefit Costs | The components of net periodic benefit cost for other postretirement employee benefit plans are as follows: Year Ended December 31, (in millions) 2018 2017 2016 Service cost $ — $ 1 $ 1 Interest cost 2 2 3 Amortization of prior service credit (4 ) (3 ) (3 ) Amortization of net actuarial loss 2 2 3 Net periodic benefit cost $ — $ 2 $ 4 |
Schedule of Changes in Accumulated Postemployment Benefit Obligations | Other changes in benefit obligations recognized in other comprehensive loss, as they pertain to other postretirement employee benefit plans are as follows: Year Ended December 31, (in millions) 2018 2017 2016 Net loss (gain) $ 1 $ (5 ) $ 3 Prior service credit (3 ) (3 ) — Amortization of prior service credit 4 3 3 Amortization of net actuarial loss (2 ) (2 ) (3 ) Foreign Exchange/Other — (1 ) 1 Losses (gains) recognized in other comprehensive loss $ — $ (8 ) $ 4 Total losses (gains) recognized in comprehensive income $ — $ (6 ) $ 8 |
Defined benefit contributions by employer | Matching obligations, the majority of which were funded in cash in connection with the plans, and other company contributions are as follows: (in millions) Defined Contribution 2018 $ 39 2017 38 2016 35 |
Summary of amounts recorded within accumulated other comprehensive income | The following table provides a summary of the funded status of our postretirement plans, the presentation of such balances and a summary of amounts recorded within accumulated other comprehensive income. (in millions) December 31, 2018 December 31, 2017 Pension Other Total Pension Other Total Fair value of plan assets $ 567 $ — $ 567 $ 628 $ — $ 628 Projected benefit obligation (862 ) (52 ) (914 ) (950 ) (55 ) (1,005 ) Funded status $ (295 ) $ (52 ) $ (347 ) $ (322 ) $ (55 ) $ (377 ) Amounts recognized in the balance sheet Other non-current assets $ 68 $ — $ 68 $ 81 $ — $ 81 Accrued and other current liabilities (12 ) (3 ) (15 ) (13 ) (3 ) (16 ) Accrued postretirement benefits (351 ) (49 ) (400 ) (390 ) (52 ) (442 ) Net amount recognized $ (295 ) $ (52 ) $ (347 ) $ (322 ) $ (55 ) $ (377 ) Accumulated other comprehensive income (loss): Net actuarial losses $ (260 ) $ (24 ) $ (284 ) $ (251 ) $ (24 ) $ (275 ) Prior service credit (4 ) 12 8 (1 ) 12 11 Total $ (264 ) $ (12 ) $ (276 ) $ (252 ) $ (12 ) $ (264 ) |
Summary of the funded status of postretirement plans | The benefit obligation, fair value of plan assets, funded status, and amounts recognized in the consolidated financial statements for our defined benefit domestic and international pension plans were: Domestic Plans International Plans December 31, December 31, (in millions) 2018 2017 2018 2017 Change in benefit obligation: Benefit obligation at beginning of year $ 107 $ 100 $ 843 $ 754 Service cost 3 3 9 12 Interest cost 4 4 19 21 Benefits paid (5 ) (5 ) (36 ) (30 ) Actuarial loss (gain) (10 ) 5 (20 ) 10 Plan amendments, settlements and curtailments — 1 3 (2 ) Foreign currency translation/other — (1 ) (55 ) 78 Benefit obligation at end of year $ 99 $ 107 $ 763 $ 843 Change in plan assets: Fair value of plan assets at beginning of year $ 84 69 $ 544 $ 493 Employer contributions 22 10 16 20 Actual return on plan assets (4 ) 10 (20 ) 21 Benefits paid (5 ) (5 ) (36 ) (30 ) Plan amendments, settlements and curtailments — — — (3 ) Foreign currency translation/other — — (34 ) 43 Fair value of plan assets at end of year $ 97 $ 84 $ 470 $ 544 Unfunded status of the plans $ (2 ) $ (23 ) $ (293 ) $ (299 ) |
Accumulated benefit obligation and fair value of the plans' assets | For defined benefit pension plans in which the ABO was in excess of the fair value of the plans’ assets, the projected benefit obligation, ABO and fair value of the plans’ assets were as follows: December 31, (in millions) 2018 2017 Projected benefit obligation $ 500 $ 528 Accumulated benefit obligation 470 499 Fair value of plan assets 137 126 |
Weighted-average assumptions used to determine projected benefit obligations and net periodic benefit cost | The following table provides the weighted-average assumptions used to determine projected benefit obligations and net periodic benefit cost, as they pertain to our pension plans. 2018 2017 2016 U.S. Int’l U.S. Int’l U.S. Int’l Benefit Obligation Assumptions Discount rate 4.50 % 2.60 % 3.75 % 2.43 % 4.25 % 2.63 % Rate of future compensation increase NM 2.92 % NM 2.93 % NM 2.76 % Net Periodic Benefit Cost Assumptions Discount rate 3.75 % 2.43 % 4.25 % 2.63 % 4.27 % 3.44 % Expected long-term return on plan assets 8.00 % 7.23 % 8.00 % 7.20 % 8.00 % 7.25 % Rate of future compensation increase NM 2.93 % NM 2.76 % NM 3.29 % NM |
Actual plan returns | The table below provides the weighted average actual rate of return generated on all of our plan assets during each of the years presented as compared to the weighted average expected long-term rates of return utilized in calculating the net periodic benefit costs. 2018 2017 2016 Expected long-term rate of return on plan assets 7.34 % 7.30 % 7.32 % Actual rate of return (loss) on plan assets (3.85 )% 5.70 % 12.20 % |
Allocation of plan assets | The following table provides the fair value of plan assets held by our pension benefit plans by asset class. 2018 2017 (in millions) Level 1 Level 2 Level 3 NAV Practical Expedient Total Level 1 Level 2 Level 3 NAV Practical Expedient Total Equity securities Global stock funds/securities $ 88 $ — $ — $ 29 $ 117 $ 101 $ — $ — $ 29 $ 130 Index funds — — — 1 1 — — — 3 3 Diversified Growth and Income Funds — — — 51 51 — — — 92 92 Fixed income Corporate bonds 34 — — 25 59 24 — — 8 32 Government bonds 31 — — 20 51 48 — — 5 53 Hedging Instruments 5 22 — — 27 5 36 — — 41 Diversified Growth and Income Funds — — — 2 2 — — — 20 20 Hedge funds — — — 67 67 — — — 107 107 Private equity — — — 6 6 — — — 10 10 Cash, insurance contracts and other 104 — 12 70 186 90 — 17 33 140 Total plan assets subject to leveling $ 262 $ 22 $ 12 $ 271 $ 567 $ 268 $ 36 $ 17 $ 307 $ 628 2018 and 2017 , and the related asset target allocation ranges by asset category. 2018 2017 Target Allocation Ranges Equity securities 29.7 % 35.6 % 10-50% Fixed income 24.5 % 23.4 % 10-40% Hedge funds 11.8 % 17.0 % 0-40% Private equity 1.1 % 1.6 % 0-30% Cash, insurance contracts and other 32.9 % 22.4 % 0-60% |
Reconciliation of the beginning and ending balances of fair value measurements with pension plans using significant unobservable inputs (level 3) | The following table presents a reconciliation of the beginning and ending balances of fair value measurement within our pension plans using significant unobservable inputs (Level 3). (in millions) Insurance Contracts and Other Balance, December 31, 2016 $ 24 Purchases, sales, settlements (8 ) Currency impact 1 Balance, December 31, 2017 $ 17 Purchases, sales, settlements (5 ) Currency impact — Balance, December 31, 2018 $ 12 |
Expected benefit payments | The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid as follows: (in millions) Pension Other Benefits 2019 $ 35 $ 3 2020 36 4 2021 36 4 2022 37 4 2023 39 4 Years 2023 - 2027 205 19 |
Other postretirement benefit plans | |
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block | |
Projected benefit obligations | The following table provides a rollforward of the projected benefit obligation for the other postretirement employee benefit plans: (in millions) 2018 2017 Change in benefit obligation: Benefit obligation at beginning of year $ 55 $ 64 Service cost — 1 Interest cost 2 2 Benefits paid (3 ) (3 ) Actuarial gain/(loss) 1 (5 ) Plan Amendment and other (3 ) (4 ) Benefit obligation at the end of year $ 52 $ 55 |
Pension | |
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block | |
Schedule of Net Benefit Costs | The components of net periodic benefit cost for our defined benefit pension plans are as follows: Year Ended December 31, (in millions) 2018 2017 2016 Domestic defined benefit pension plans: Service cost $ 3 $ 3 $ 3 Interest cost 4 4 4 Expected return on plan assets (7 ) (6 ) (5 ) Amortization of net actuarial loss 2 2 2 Net periodic benefit cost $ 2 $ 3 $ 4 International defined benefit pension plans: Service cost $ 9 $ 12 $ 10 Interest cost 19 21 21 Expected return on plan assets (35 ) (34 ) (30 ) Amortization of net actuarial loss 9 9 8 Settlement 1 1 — Net periodic benefit cost $ 3 $ 9 $ 9 Total net periodic benefit cost $ 5 $ 12 $ 13 |
Components of net periodic benefit cost and other amounts recognized in other comprehensive income | Other changes in assets and benefit obligations recognized in other comprehensive loss, as they pertain to our defined benefit pension plans are as follows: Year Ended December 31, (in millions) 2018 2017 2016 Domestic defined benefit pension plans: Net (gain) loss $ 1 $ 1 $ (1 ) Prior service cost — 1 — Amortization of net actuarial loss (2 ) (2 ) (2 ) (Gains) losses recognized in other comprehensive loss $ (1 ) $ — $ (3 ) International defined benefit pension plans: Net (gain) loss $ 35 $ 23 $ 18 Prior service credit 3 1 (1 ) Amortization of net actuarial loss (9 ) (9 ) (8 ) Settlement (1 ) (1 ) — Foreign Exchange (15 ) 19 (20 ) (Gains) losses recognized in other comprehensive loss $ 13 $ 33 $ (11 ) Total (gains) losses recognized in other comprehensive loss $ 12 $ 33 $ (14 ) Total (gains) losses recognized in comprehensive income $ 17 $ 45 $ (1 ) |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of the changes in outstanding stock options | The following is a summary of the changes in outstanding stock options for 2018 : Share units (in thousands) Weighted Average Exercise Price / Share Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in millions) Outstanding at January 1, 2018 2,076 $ 37.44 7.0 Granted 316 $ 75.11 Exercised (214 ) $ 34.08 Forfeited and expired (53 ) $ 49.36 Outstanding at December 31, 2018 2,125 $ 43.08 6.5 $ 53 Options exercisable at December 31, 2018 1,403 $ 35.46 5.5 $ 44 Vested and non-vested expected to vest as of December 31, 2018 2,065 $ 42.37 6.4 $ 53 |
Weighted-average assumptions | The following are weighted-average assumptions used for 2018 , 2017 , and 2016 : 2018 2017 2016 Dividend yield 1.12 % 1.49 % 1.63 % Volatility 23.41 % 25.39 % 28.87 % Risk-free interest rate 2.76 % 2.07 % 1.41 % Expected term (in years) 5.1 5.10 5.60 Weighted-average fair value per option $ 17.80 $ 10.66 $ 9.05 |
Summary of restricted stock activity | Our restricted stock units activity was as follows for 2018 : Share Units (in thousands) Weighted Average Grant Date Fair Value / Share Outstanding at January 1, 2018 779 $ 35.39 Granted 274 74.81 Vested (458 ) 40.39 Forfeited (58 ) 53.09 Outstanding at December 31, 2018 537 59.41 |
Schedule of Share-based Compensation, Performance-Based Units Award Activity | Our ROIC performance share unit activity was as follows for 2018 : Share units (in thousands) Weighted Average Grant Date Fair Value / Share Outstanding at January 1, 2018 298 $ 41.48 Granted 77 75.12 Forfeited (101 ) 38.39 Outstanding at December 31, 2018 274 52.11 TSR Performance Share Unit Grants The following is a summary of our TSR performance share unit grants for 2018 . Share units (in thousands) Weighted Average Grant Date Fair Value /Share Outstanding at January 1, 2018 213 $ 47.04 Granted 77 98.86 Forfeited (16 ) 51.39 Outstanding at December 31, 2018 274 61.04 |
Fair value assumptions for performance-based awards | The following are weighted-average key assumptions for 2018 grants. Volatility 26.80 % Risk-free interest rate 2.44 % |
Capital Stock (Tables)
Capital Stock (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Schedule of Common Stock Outstanding Roll Forward | The changes in shares of common stock outstanding for the three years ended December 31 are as follows: (share units in thousands) 2018 2017 2016 Beginning Balance, January 1 179,862 179,367 178,377 Stock incentive plan net activity 672 985 1,085 Repurchase of common stock (810 ) (490 ) (95 ) Ending Balance, December 31 179,724 179,862 179,367 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accumulated Other Comprehensive Income [Abstract] | |
Components of Accumulated Other Comprehensive Loss | The following table provides the components of accumulated other comprehensive loss for 2018 , 2017 and 2016 : (in millions) Foreign Currency Translation Postretirement Benefit Plans Derivative Instruments Total Balance at January 1, 2016 $ (43 ) $ (185 ) $ (10 ) $ (238 ) Foreign currency translation adjustment (65 ) (65 ) Foreign currency gain reclassified into gain on sale of business (21 ) (21 ) Changes in postretirement benefit plans (19 ) (19 ) Income tax expense on changes in postretirement benefit plans 3 3 Foreign currency translation adjustment for postretirement benefit plans 19 19 Amortization of prior service cost and net actuarial loss on postretirement benefit plans into other non-operating income (expense), net 10 10 Income tax impact on amortization of postretirement benefit plan items (5 ) (5 ) Reclassification of unrealized loss on derivative hedge agreements into revenue (2 ) (2 ) Reclassification of unrealized loss on derivative hedge agreements into cost of revenue (11 ) 11 — Balance at December 31, 2016 $ (140 ) $ (177 ) $ (1 ) $ (318 ) Foreign currency translation adjustment 79 79 Income tax impact on foreign currency translation adjustment 46 46 Changes in postretirement benefit plans (18 ) (18 ) Income tax expense on changes in postretirement benefit plans 7 7 Foreign currency translation adjustment for postretirement benefit plans (18 ) (18 ) Amortization of prior service cost and net actuarial loss on postretirement benefit plans into other non-operating income (expense), net 11 11 Income tax impact on amortization of postretirement benefit plan items (3 ) (3 ) Unrealized loss on derivative hedge agreements 9 9 Reclassification of unrealized (gain) loss on foreign exchange agreements into revenue (6 ) (6 ) Reclassification of unrealized (gain) loss on foreign exchange agreements into cost of revenue — 1 1 Balance at December 31, 2017 $ (15 ) $ (198 ) $ 3 $ (210 ) (in millions) Foreign Currency Translation Postretirement Benefit Plans Derivative Instruments Total Cumulative effect of change in accounting principle (11 ) (6 ) (17 ) Foreign currency translation adjustment (83 ) (83 ) Income tax impact on foreign currency translation adjustment (12 ) (12 ) Changes in postretirement benefit plans (36 ) (36 ) Foreign currency translation adjustment for postretirement benefit plans 15 15 Income tax expense on changes in postretirement benefit plans 5 5 Amortization of prior service cost and net actuarial loss on postretirement benefit plans into other non-operating income (expense), net 9 9 Income tax impact on amortization of postretirement benefit plan items (3 ) (3 ) Unrealized loss on derivative hedge agreements (8 ) (8 ) Reclassification of unrealized (gain) loss on foreign exchange agreements into cost of revenue 4 4 Balance at December 31, 2018 $ (121 ) $ (214 ) $ (1 ) $ (336 ) |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Total rent expense under operating leases | Total rent expense for the three years ended December 31, 2018 was as follows: (in millions) Total 2018 $ 81 2017 70 2016 63 |
Minimum rental payments under operating leases | At December 31, 2018 , we are obligated to make minimum rental payments under operating leases which are as follows: (in millions) 2019 2020 2021 2022 2023 Thereafter Minimum rental payments $ 76 $ 61 $ 43 $ 33 $ 22 $ 64 |
Changes in product warranty accrual | The table below provides changes in the combined current and non-current product warranty accruals over each period. (in millions) 2018 2017 Warranty accrual – January 1 $ 82 $ 99 Net charges for product warranties in the period 20 28 Settlement of warranty claims (42 ) (48 ) Foreign currency and other — 3 Warranty accrual – December 31 $ 60 $ 82 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | Sales to and purchases from unconsolidated entities for 2018 , 2017 and 2016 are as follows: (in millions) 2018 2017 2016 Sales to unconsolidated affiliates $ 10 $ 12 $ 11 Purchases from unconsolidated affiliates 22 17 22 |
Segment and Geographic Data (Ta
Segment and Geographic Data (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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). The following tables contain financial information for each reportable segment: Year Ended December 31, (in millions) 2018 2017 2016 Revenue: Water Infrastructure $ 2,176 $ 2,004 $ 1,932 Applied Water 1,534 1,421 1,393 Measurement & Control Solutions 1,497 1,282 446 Total $ 5,207 $ 4,707 $ 3,771 Operating income: Water Infrastructure $ 359 $ 312 $ 295 Applied Water 236 194 188 Measurement & Control Solutions 118 110 — Corporate and other (59 ) (64 ) (75 ) Total operating income 654 552 408 Interest expense 82 82 70 Other non-operating income (expense) 13 6 2 (Loss)/gain from sale of businesses — (10 ) — Income before taxes $ 585 $ 466 $ 340 Depreciation and amortization: Water Infrastructure $ 66 $ 64 $ 66 Applied Water 22 23 24 Measurement & Control Solutions 144 122 41 Regional selling locations (a) 20 17 11 Corporate and other 9 8 9 Total $ 261 $ 234 $ 151 Capital expenditures: Water Infrastructure $ 84 $ 58 $ 62 Applied Water 28 20 21 Measurement & Control Solutions 101 69 13 Regional selling locations (b) 16 18 24 Corporate and other 8 5 4 Total $ 237 $ 170 $ 124 (a) Depreciation and amortization expense incurred by the Regional selling locations was included in an overall allocation of Regional selling location costs to the segments; however, a certain portion of that expense was not specifically identified to a segment. That is the expense captured in this Regional selling location line. (b) |
Revenue by product category | The following table illustrates revenue by product category, net of intercompany revenue. Year Ended December 31, (in millions) 2018 2017 2016 Pumps, accessories, parts and service $ 3,322 $ 2,998 $ 2,888 Other (a) 1,885 1,709 883 Total $ 5,207 $ 4,707 $ 3,771 (a) |
Total assets for each reportable segment | The following table contains the total assets for each reportable segment as of December 31, 2018 , 2017 and 2016 . Total Assets (in millions) 2018 2017 2016 Water Infrastructure $ 1,233 $ 1,232 $ 1,179 Applied Water 1,051 1,002 990 Measurement & Control Solutions 3,576 3,198 3,102 Regional selling locations (a) 1,181 1,119 965 Corporate and other (b) 181 309 238 Total $ 7,222 $ 6,860 $ 6,474 (a) The Regional selling locations have assets that consist primarily of cash, accounts receivable and inventory which are not allocated to the segments. (b) |
Revenues and Property, Plant and Equipment by geographic location | Revenue is attributed to countries based upon the location of the customer. Property, Plant & Equipment is attributed to countries based upon the location of the assets. Revenue Year Ended December 31, (in millions) 2018 2017 2016 United States $ 2,424 $ 2,161 $ 1,574 Europe 1,449 1,335 1,195 Asia Pacific 660 611 518 Other 674 600 484 Total $ 5,207 $ 4,707 $ 3,771 Property, Plant & Equipment December 31, (in millions) 2018 2017 2016 United States $ 281 $ 258 $ 255 Europe 250 259 237 Asia Pacific 66 85 87 Other 59 41 37 Total $ 656 $ 643 $ 616 |
Valuation and Qualifying Acco_2
Valuation and Qualifying Accounts (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |
Schedule of Valuation and Qualifying Accounts | The table below provides changes in the allowance for doubtful accounts over each period. (in millions) 2018 2017 2016 Balance at beginning of year $ 25 $ 21 $ 22 Additions charged to expense 5 5 4 Deductions/other (5 ) (1 ) (5 ) Balance at end of year $ 25 $ 25 $ 21 |
Quarterly Financial Data (Una_2
Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Data (Unaudited) | 2018 Quarter Ended (in millions, except per share amounts) Dec. 31 Sept. 30 June 30 Mar. 31 Revenue $ 1,386 $ 1,287 $ 1,317 $ 1,217 Gross profit 542 505 519 460 Operating income 194 176 171 113 Net income attributable to Xylem $ 225 $ 130 $ 115 $ 79 Earnings per share: Basic $ 1.25 $ 0.73 $ 0.64 $ 0.44 Diluted $ 1.24 $ 0.72 $ 0.64 $ 0.43 2017 Quarter Ended (in millions, except per share amounts) Dec. 31 Sept. 30 June 30 Mar. 31 Revenue $ 1,277 $ 1,195 $ 1,164 $ 1,071 Gross profit 507 471 457 412 Operating income 177 152 137 86 Net income attributable to Xylem $ 71 $ 105 $ 99 $ 56 Earnings per share: Basic $ 0.40 $ 0.58 $ 0.55 $ 0.31 Diluted $ 0.40 $ 0.58 $ 0.55 $ 0.31 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Property, Plant and Equipment, Useful Lives) (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Building and improvements | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment estimated useful lives | 5 years |
Building and improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment estimated useful lives | 40 years |
Machinery and equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment estimated useful lives | 2 years |
Machinery and equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment estimated useful lives | 10 years |
Furniture and fixtures | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment estimated useful lives | 3 years |
Furniture and fixtures | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment estimated useful lives | 7 years |
Equipment held for lease or rental | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment estimated useful lives | 2 years |
Equipment held for lease or rental | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment estimated useful lives | 10 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details Textual) $ in Millions | 12 Months Ended | |
Dec. 31, 2018USD ($)Segment | Dec. 31, 2017USD ($) | |
Operating segments | Segment | 3 | |
Requisite service period | 3 years | |
Average term of contract | 6 months | |
Minimum | ||
Intangible assets estimated economic useful lives | 1 year | |
Maximum | ||
Intangible assets estimated economic useful lives | 25 years | |
Foreign Currency | ||
Cash | $ | $ 274 | $ 373 |
Recently Issued Accounting Stan
Recently Issued Accounting Standards (Details Textual) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Jan. 01, 2019 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||
Retained earnings | $ (1,639) | $ (1,227) | $ (1,639) | $ (1,227) | ||||||||
Cumulative effect of change in accounting principle | (3) | (3) | $ (7) | |||||||||
Operating Income (Loss) | 194 | $ 176 | $ 171 | $ 113 | 177 | $ 152 | $ 137 | $ 86 | 654 | 552 | 408 | |
Accounting Standards Update 2017-12 | ||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||
Cumulative effect of change in accounting principle | $ 2 | $ 2 | ||||||||||
Accounting Standards Update 2016-16 | ||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||
Deferred tax assets, current | 14 | |||||||||||
Deferred tax assets, noncurrent | 3 | |||||||||||
Taxes payable | 4 | |||||||||||
Retained earnings | $ 7 | |||||||||||
Adjustments for New Accounting Pronouncement | ||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||
Operating Income (Loss) | 4 | 2 | ||||||||||
Minimum | Forecast | Accounting Standards Update 2016-02 | ||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||
Operating lease liability | $ 255 | |||||||||||
Right of use asset | 240 | |||||||||||
Maximum | Forecast | Accounting Standards Update 2016-02 | ||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||
Operating lease liability | 285 | |||||||||||
Right of use asset | $ 270 | |||||||||||
Accumulated Other Comprehensive Income (Loss) | ||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||
Cumulative effect of change in accounting principle | (17) | (17) | ||||||||||
Accumulated Other Comprehensive Income (Loss) | Accounting Standards Update 2018-02 | ||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||
Cumulative effect of change in accounting principle | (17) | (17) | ||||||||||
Retained Earnings | ||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||
Cumulative effect of change in accounting principle | 14 | 14 | $ (7) | |||||||||
Retained Earnings | Accounting Standards Update 2018-02 | ||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||
Cumulative effect of change in accounting principle | $ 17 | $ 17 |
Acquisitions and Divestitures_2
Acquisitions and Divestitures (Details Textual) $ in Millions | Jan. 31, 2018USD ($) | Oct. 31, 2017USD ($) | Feb. 17, 2017USD ($) | Nov. 01, 2016USD ($) | Oct. 18, 2016USD ($)employee | Feb. 01, 2016USD ($)employee | Sep. 30, 2018USD ($) | Dec. 31, 2017USD ($) | Oct. 31, 2017USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) |
Business Acquisition [Line Items] | ||||||||||||
Cash payment to acquire business, net of cash acquired | $ 433 | $ 33 | $ 1,782 | |||||||||
Acquisition costs | 19 | |||||||||||
Proceeds from divestiture of businesses | 22 | 16 | 0 | |||||||||
Pure | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Cash payment to acquire business, net of cash acquired | $ 420 | |||||||||||
Acquisition costs | $ 4 | |||||||||||
Revenue | 96 | |||||||||||
Net income | 2 | |||||||||||
Revenue | 5,212 | 4,809 | ||||||||||
Other Acquisitions | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Cash payment to acquire business, net of cash acquired | 13 | |||||||||||
Sensus Worldwide Limited | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Cash payment to acquire business | $ 1,766 | |||||||||||
Cash payment to acquire business, net of cash acquired | $ 1,710 | $ 6 | ||||||||||
Revenue | 132 | |||||||||||
Net income | $ 13 | |||||||||||
Revenue | 4,528 | |||||||||||
VIsenti | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Cash payment to acquire business | $ 8 | |||||||||||
Number of employees at acquired business | employee | 25 | |||||||||||
Tideland Signal Corporation | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Cash payment to acquire business | $ 70 | |||||||||||
Number of employees at acquired business | employee | 160 | |||||||||||
Disposals | Precision Die Casting | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Proceeds from divestiture of businesses | $ 22 | |||||||||||
Revenue | 32 | |||||||||||
Disposals | Flowtronex and WET | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Consideration | $ 6 | $ 6 | ||||||||||
Gain (loss) on disposal | $ 1 | |||||||||||
Revenue | $ 9 | |||||||||||
Disposals | UK and Poland Based Membranes Business | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Consideration | $ 10 | |||||||||||
Gain (loss) on disposal | $ 5 | |||||||||||
Revenue | $ 8 | |||||||||||
Assets held-for-sale | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Gain (loss) on disposal | $ (16) |
Acquisitions and Divestitures_3
Acquisitions and Divestitures (Summary of Assets Acquired and Liabilities Assumed) (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Jan. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Nov. 01, 2016 |
Business Acquisition [Line Items] | |||||
Goodwill | $ 2,976 | $ 2,768 | $ 2,632 | ||
Pure | |||||
Business Acquisition [Line Items] | |||||
Cash | $ 14 | ||||
Receivables | 23 | ||||
Inventories | 4 | ||||
Prepaid and other current assets | 2 | ||||
Property, plant and equipment | 22 | ||||
Intangible assets | 149 | ||||
Other long-term assets | 1 | ||||
Accounts payable | (3) | ||||
Accrued and other current liabilities | (12) | ||||
Deferred income tax liabilities | (25) | ||||
Other non-current accrued liabilities | (2) | ||||
Total identifiable net assets | 173 | ||||
Goodwill | 261 | ||||
Total consideration | $ 434 | ||||
Sensus Worldwide Limited | |||||
Business Acquisition [Line Items] | |||||
Cash | $ 56 | ||||
Receivables | 104 | ||||
Inventories | 79 | ||||
Prepaid and other current assets | 19 | ||||
Property, plant and equipment | 176 | ||||
Intangible assets | 782 | ||||
Other long-term assets | 5 | ||||
Accounts payable | (69) | ||||
Accrued and other current liabilities | (90) | ||||
Deferred income tax liabilities | (198) | ||||
Accrued post retirement benefits | (84) | ||||
Other non-current accrued liabilities | (60) | ||||
Total identifiable net assets | 720 | ||||
Goodwill | 1,063 | ||||
Non-controlling interest | (17) | ||||
Total consideration | $ 1,766 |
Acquisitions and Divestitures_4
Acquisitions and Divestitures (Summary of Intangible Assets Acquired) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Jan. 31, 2018 | Nov. 01, 2016 | |
Pure | |||
Business Acquisition [Line Items] | |||
Intangible assets | $ 149 | ||
Sensus Worldwide Limited | |||
Business Acquisition [Line Items] | |||
Intangible assets | $ 782 | ||
FCC Licenses | Sensus Worldwide Limited | |||
Business Acquisition [Line Items] | |||
Intangible assets | 24 | ||
Customer Relationships | Pure | |||
Business Acquisition [Line Items] | |||
Intangible assets | 84 | ||
Customer and Distributor Relationships | Sensus Worldwide Limited | |||
Business Acquisition [Line Items] | |||
Intangible assets | 543 | ||
Tradenames | Pure | |||
Business Acquisition [Line Items] | |||
Life | 20 years | ||
Intangible assets | 21 | ||
Tradenames | Sensus Worldwide Limited | |||
Business Acquisition [Line Items] | |||
Intangible assets | 98 | ||
Internally Developed Network Software | Sensus Worldwide Limited | |||
Business Acquisition [Line Items] | |||
Life | 7 years | ||
Intangible assets | 60 | ||
Technology | Pure | |||
Business Acquisition [Line Items] | |||
Intangible assets | 38 | ||
Technology | Sensus Worldwide Limited | |||
Business Acquisition [Line Items] | |||
Intangible assets | 39 | ||
Other | Sensus Worldwide Limited | |||
Business Acquisition [Line Items] | |||
Intangible assets | $ 18 | ||
Software Development | Pure | |||
Business Acquisition [Line Items] | |||
Intangible assets | $ 6 | ||
Minimum | Customer Relationships | Pure | |||
Business Acquisition [Line Items] | |||
Life | 17 years | ||
Minimum | Customer and Distributor Relationships | Sensus Worldwide Limited | |||
Business Acquisition [Line Items] | |||
Life | 4 years | ||
Minimum | Tradenames | Sensus Worldwide Limited | |||
Business Acquisition [Line Items] | |||
Life | 10 years | ||
Minimum | Technology | Pure | |||
Business Acquisition [Line Items] | |||
Life | 3 years | ||
Minimum | Technology | Sensus Worldwide Limited | |||
Business Acquisition [Line Items] | |||
Life | 3 years | ||
Minimum | Other | Sensus Worldwide Limited | |||
Business Acquisition [Line Items] | |||
Life | 1 year | ||
Minimum | Software Development | Pure | |||
Business Acquisition [Line Items] | |||
Life | 3 years | ||
Maximum | Customer Relationships | Pure | |||
Business Acquisition [Line Items] | |||
Life | 18 years | ||
Maximum | Customer and Distributor Relationships | Sensus Worldwide Limited | |||
Business Acquisition [Line Items] | |||
Life | 18 years | ||
Maximum | Tradenames | Sensus Worldwide Limited | |||
Business Acquisition [Line Items] | |||
Life | 25 years | ||
Maximum | Technology | Pure | |||
Business Acquisition [Line Items] | |||
Life | 10 years | ||
Maximum | Technology | Sensus Worldwide Limited | |||
Business Acquisition [Line Items] | |||
Life | 5 years | ||
Maximum | Other | Sensus Worldwide Limited | |||
Business Acquisition [Line Items] | |||
Life | 16 years |
Acquisitions and Divestitures_5
Acquisitions and Divestitures (Summary of Pro Forma Information) (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Pure | ||
Business Acquisition [Line Items] | ||
Revenue | $ 5,212 | $ 4,809 |
Net income | $ 546 | 323 |
Sensus Worldwide Limited | ||
Business Acquisition [Line Items] | ||
Revenue | 4,528 | |
Net income | $ 286 |
Restructuring and Asset Impai_3
Restructuring and Asset Impairment Charges (Components of Restructuring Charges and Segment Allocation) (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Restructuring Cost and Reserve [Line Items] | |||||
Severance and other charges | $ 19 | $ 20 | $ 28 | ||
Lease related charges | 1 | 0 | 2 | ||
Other restructuring charges | 1 | 2 | 1 | ||
Reversal of restructuring accruals | (1) | (2) | (1) | ||
Total restructuring charges | 20 | 20 | 30 | ||
Asset impairment charges | 2 | 5 | 0 | ||
Total restructuring and asset impairment charges | 22 | 25 | 30 | ||
Restructuring and asset impairment charges | 22 | 25 | 30 | ||
Water Infrastructure | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Asset impairment charges | $ 2 | ||||
Restructuring and asset impairment charges | 11 | 7 | 12 | ||
Applied Water | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Asset impairment charges | $ 5 | ||||
Restructuring and asset impairment charges | 2 | 13 | 10 | ||
Measurement & Control Solutions | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring and asset impairment charges | 9 | 5 | 6 | ||
Corporate and other | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring and asset impairment charges | $ 0 | $ 0 | $ 2 |
Revenue (Details)
Revenue (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Change in Contract with Customer, Asset [Abstract] | |
Beginning balance | $ 89 |
Additions, net | 87 |
Billings | (76) |
Other | (4) |
Ending balance | 96 |
Change in Contract with Customer, Liability [Abstract] | |
Beginning balance | 107 |
Additions, net | 101 |
Revenue recognized from opening balance | (89) |
Other | (6) |
Ending balance | $ 113 |
Restructuring and Asset Impai_4
Restructuring and Asset Impairment Charges (Restructuring Reserve Rollforward) (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Restructuring Reserve [Roll Forward] | ||||
Restructuring accruals | $ 7 | $ 15 | ||
Severance and other | 20 | 20 | $ 30 | |
Cash payments | (21) | (28) | (16) | |
Foreign currency and other | (1) | 0 | ||
Restructuring accruals | 5 | 7 | $ 15 | |
Water Infrastructure | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring accruals | 1 | |||
Restructuring accruals | 1 | 1 | ||
Applied Water | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring accruals | 1 | |||
Restructuring accruals | 1 | 1 | ||
Measurement & Control Solutions | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring accruals | 2 | |||
Restructuring accruals | 2 | 2 | ||
Regional Selling Locations | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring accruals | [1] | 3 | ||
Restructuring accruals | [1] | 1 | 3 | |
Corporate and other | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring accruals | 0 | |||
Restructuring accruals | $ 0 | $ 0 | ||
[1] | Regional selling locations consist primarily of selling and marketing organizations that incurred restructuring expense which was allocated to the segments. The liabilities associated with restructuring expense were not allocated to the segments. |
Revenue - Disaggregation of Rev
Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Disaggregation of Revenue [Line Items] | |||||||||||
Revenue from contracts with customers | $ 4,963 | ||||||||||
Other | 244 | ||||||||||
Total | $ 1,386 | $ 1,287 | $ 1,317 | $ 1,217 | $ 1,277 | $ 1,195 | $ 1,164 | $ 1,071 | 5,207 | $ 4,707 | $ 3,771 |
United States | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total | 2,424 | 2,161 | 1,574 | ||||||||
Europe | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total | 1,449 | 1,335 | 1,195 | ||||||||
Water Infrastructure | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total | 2,176 | 2,004 | 1,932 | ||||||||
Water Infrastructure | United States | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenue from contracts with customers | 539 | ||||||||||
Water Infrastructure | Europe | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenue from contracts with customers | 758 | ||||||||||
Water Infrastructure | Emerging Markets & Other | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenue from contracts with customers | 635 | ||||||||||
Water Infrastructure | Transport | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenue from contracts with customers | 1,535 | ||||||||||
Water Infrastructure | Treatment | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenue from contracts with customers | 397 | ||||||||||
Applied Water | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total | 1,534 | $ 1,421 | $ 1,393 | ||||||||
Applied Water | United States | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenue from contracts with customers | 797 | ||||||||||
Applied Water | Europe | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenue from contracts with customers | 386 | ||||||||||
Applied Water | Emerging Markets & Other | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenue from contracts with customers | 351 | ||||||||||
Applied Water | Commercial Building Services | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenue from contracts with customers | 596 | ||||||||||
Applied Water | Residential Building Services | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenue from contracts with customers | 232 | ||||||||||
Applied Water | Industrial Water | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenue from contracts with customers | 706 | ||||||||||
Measurement & Control Solutions | United States | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenue from contracts with customers | 913 | ||||||||||
Measurement & Control Solutions | Europe | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenue from contracts with customers | 273 | ||||||||||
Measurement & Control Solutions | Emerging Markets & Other | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenue from contracts with customers | 311 | ||||||||||
Measurement & Control Solutions | Water | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenue from contracts with customers | 692 | ||||||||||
Measurement & Control Solutions | Electric | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenue from contracts with customers | 143 | ||||||||||
Measurement & Control Solutions | Gas | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenue from contracts with customers | 195 | ||||||||||
Measurement & Control Solutions | Software and Services/Other | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenue from contracts with customers | 123 | ||||||||||
Measurement & Control Solutions | Test | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenue from contracts with customers | $ 344 |
Restructuring and Asset Impai_5
Restructuring and Asset Impairment Charges (Employee Position Elimination Rollforward) (Details) - employee | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Restructuring and Related Cost, Number of Positions Eliminated [Roll Forward] | ||
Planned reductions, January 1 | 47 | 188 |
Additional planned reductions | 206 | 151 |
Actual reductions | (184) | (292) |
Planned reductions, December 31 | 69 | 47 |
Revenue (Narrative) (Details)
Revenue (Narrative) (Details) $ in Millions | Dec. 31, 2018USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 258 |
Minimum | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Expected timing of recognition | 12 months |
Maximum | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Expected timing of recognition | 36 months |
Restructuring and Asset Impai_6
Restructuring and Asset Impairment Charges - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Restructuring Cost and Reserve [Line Items] | |||||
Asset impairment charges | $ 2 | $ 5 | $ 0 | ||
Water Infrastructure | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Asset impairment charges | $ 2 | ||||
Applied Water | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Asset impairment charges | $ 5 | ||||
2016 Restructuring Plan | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Expected restructuring costs | 33 | 33 | |||
Incurred restructuring costs | 4 | 11 | |||
2015 Restructuring Plan | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Expected restructuring costs | $ 39 | 39 | |||
Incurred restructuring costs | $ 1 | $ 9 | $ 29 |
Restructuring and Asset Impai_7
Restructuring and Asset Impairment Charges - Estimated Restructuring Costs (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
2017 Restructuring Plan | |||
Restructuring Cost and Reserve [Line Items] | |||
Expected restructuring costs | $ 17 | ||
Incurred restructuring costs | 15 | ||
Expected costs remaining | 2 | ||
2016 Restructuring Plan | |||
Restructuring Cost and Reserve [Line Items] | |||
Expected restructuring costs | 33 | ||
Incurred restructuring costs | 4 | $ 11 | |
Expected costs remaining | 18 | ||
2015 Restructuring Plan | |||
Restructuring Cost and Reserve [Line Items] | |||
Expected restructuring costs | 39 | ||
Incurred restructuring costs | 1 | 9 | $ 29 |
Expected costs remaining | 0 | ||
Operating Segments | Water Infrastructure | 2017 Restructuring Plan | |||
Restructuring Cost and Reserve [Line Items] | |||
Expected restructuring costs | 9 | ||
Incurred restructuring costs | 7 | ||
Expected costs remaining | 2 | ||
Operating Segments | Water Infrastructure | 2016 Restructuring Plan | |||
Restructuring Cost and Reserve [Line Items] | |||
Expected restructuring costs | 18 | ||
Incurred restructuring costs | 2 | 5 | |
Expected costs remaining | 11 | ||
Operating Segments | Water Infrastructure | 2015 Restructuring Plan | |||
Restructuring Cost and Reserve [Line Items] | |||
Expected restructuring costs | 13 | ||
Incurred restructuring costs | 0 | 2 | 11 |
Expected costs remaining | 0 | ||
Operating Segments | Applied Water | 2017 Restructuring Plan | |||
Restructuring Cost and Reserve [Line Items] | |||
Expected restructuring costs | 1 | ||
Incurred restructuring costs | 1 | ||
Expected costs remaining | 0 | ||
Operating Segments | Applied Water | 2016 Restructuring Plan | |||
Restructuring Cost and Reserve [Line Items] | |||
Expected restructuring costs | 12 | ||
Incurred restructuring costs | 1 | 4 | |
Expected costs remaining | 7 | ||
Operating Segments | Applied Water | 2015 Restructuring Plan | |||
Restructuring Cost and Reserve [Line Items] | |||
Expected restructuring costs | 14 | ||
Incurred restructuring costs | 0 | 4 | 10 |
Expected costs remaining | 0 | ||
Operating Segments | Measurement & Control Solutions | 2017 Restructuring Plan | |||
Restructuring Cost and Reserve [Line Items] | |||
Expected restructuring costs | 7 | ||
Incurred restructuring costs | 7 | ||
Expected costs remaining | 0 | ||
Operating Segments | Measurement & Control Solutions | 2016 Restructuring Plan | |||
Restructuring Cost and Reserve [Line Items] | |||
Expected restructuring costs | 3 | ||
Incurred restructuring costs | 1 | 2 | |
Expected costs remaining | 0 | ||
Operating Segments | Measurement & Control Solutions | 2015 Restructuring Plan | |||
Restructuring Cost and Reserve [Line Items] | |||
Expected restructuring costs | 10 | ||
Incurred restructuring costs | 1 | 3 | 6 |
Expected costs remaining | 0 | ||
Corporate | 2017 Restructuring Plan | |||
Restructuring Cost and Reserve [Line Items] | |||
Expected restructuring costs | 0 | ||
Incurred restructuring costs | 0 | ||
Expected costs remaining | 0 | ||
Corporate | 2016 Restructuring Plan | |||
Restructuring Cost and Reserve [Line Items] | |||
Expected restructuring costs | 0 | ||
Incurred restructuring costs | 0 | 0 | |
Expected costs remaining | 0 | ||
Corporate | 2015 Restructuring Plan | |||
Restructuring Cost and Reserve [Line Items] | |||
Expected restructuring costs | 2 | ||
Incurred restructuring costs | 0 | $ 0 | $ 2 |
Expected costs remaining | $ 0 |
Other Non-Operating Income, N_3
Other Non-Operating Income, Net (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Other Income and Expenses [Abstract] | |||
Interest income | $ 4 | $ 3 | $ 2 |
Income from joint ventures | 5 | 3 | 3 |
Other income (expense) - net | 4 | 0 | (3) |
Total other non-operating income, net | $ 13 | $ 6 | $ 2 |
Income Taxes (Components of Inc
Income Taxes (Components of Income Tax Expense) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income components: | |||
Domestic | $ 208 | $ 162 | $ 80 |
Foreign | 377 | 304 | 260 |
Income before taxes | 585 | 466 | 340 |
Current: | |||
Domestic – federal | 9 | 109 | 19 |
Domestic – state and local | 13 | 9 | 5 |
Foreign | 61 | 51 | 42 |
Total Current | 83 | 169 | 66 |
Deferred: | |||
Domestic – federal | 17 | (29) | 19 |
Domestic – state and local | 5 | 10 | 1 |
Foreign | (69) | (14) | (6) |
Total Deferred | (47) | (33) | 14 |
Total income tax provision | $ 36 | $ 136 | $ 80 |
Effective income tax rate | 6.10% | 29.20% | 23.50% |
Income Taxes (Income Tax Rate R
Income Taxes (Income Tax Rate Reconciliation) (Details) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |||
Tax provision at U.S. statutory rate | 21.00% | 35.00% | 35.00% |
State income taxes | 2.30% | 1.60% | 0.80% |
Uncertain tax positions | 2.60% | 1.60% | (6.40%) |
Valuation allowance | (47.10%) | 3.30% | 18.50% |
Tax exempt interest | (1.40%) | (10.60%) | (14.30%) |
Foreign tax rate differential | 2.90% | (6.70%) | (7.90%) |
Impact of foreign earnings, net | (1.70%) | 37.00% | 5.90% |
Tax incentives | (6.20%) | (6.60%) | (8.90%) |
Intercompany sale of assets | 35.50% | 0.00% | 0.00% |
Other – net | (1.80%) | (2.50%) | 0.80% |
Rate change | 0.00% | (22.90%) | 0.00% |
Effective income tax rate | 6.10% | 29.20% | 23.50% |
Income Taxes (Components of Def
Income Taxes (Components of Deferred Tax Assets and Liabilities) (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred tax assets: | ||
Employee benefits | $ 97 | $ 108 |
Accrued expenses | 30 | 34 |
Loss and other tax credit carryforwards | 279 | 419 |
Inventory | 7 | 8 |
Other | 11 | 24 |
Total deferred tax assets | 424 | 593 |
Valuation allowance | (234) | (350) |
Net deferred tax asset | 190 | 243 |
Deferred tax liabilities: | ||
Intangibles | 247 | 300 |
Investment in foreign subsidiaries | 8 | 20 |
Property, plant, and equipment | 69 | 57 |
Other | 29 | 49 |
Total deferred tax liabilities | $ 353 | $ 426 |
Income Taxes (Reconciliation of
Income Taxes (Reconciliation of Valuation Allowance of Deferred Tax Assets) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Acquisitions | $ 0 | $ 0 | $ 40 |
Valuation Allowance of Deferred Tax Assets | |||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at beginning of year | 350 | 311 | 248 |
Change in assessment (a) | 1 | (28) | 17 |
Current year operations | (271) | 48 | 38 |
Foreign currency and other | 154 | 19 | (32) |
Balance at end of year | $ 234 | $ 350 | $ 311 |
Income Taxes (Classification of
Income Taxes (Classification of Unrecognized Tax Benefits) (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Income Tax Disclosure [Abstract] | ||
Non-current assets | $ 140 | $ 69 |
Non-current liabilities | (303) | (252) |
Total net deferred tax liabilities | $ (163) | $ (183) |
Income Taxes (Summary of Operat
Income Taxes (Summary of Operating Losses and Tax Credits) (Details) $ in Millions | Dec. 31, 2018USD ($) |
United States | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss | $ 12 |
State | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss | 98 |
Tax credits | 2 |
Foreign | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss | 1,119 |
Tax credits | 3 |
Excess Interest Expense | State | |
Operating Loss Carryforwards [Line Items] | |
Tax credits | $ 12 |
Income Taxes (Summary of Unreco
Income Taxes (Summary of Unrecognized Tax Benefits) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Unrecognized tax benefits — January 1 | $ 130 | $ 67 | $ 47 |
Current year tax positions | 0 | 56 | 12 |
Prior year tax positions | 7 | 7 | |
Prior year tax positions | (22) | ||
Acquisitions | 0 | 0 | 30 |
Settlements | (1) | 0 | 0 |
Unrecognized tax benefits — December 31 | $ 136 | $ 130 | $ 67 |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) $ in Millions | 12 Months Ended | ||||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Contingency [Line Items] | |||||
Reinvestments in foreign operations | $ 1,100 | ||||
Valuation allowance | 234 | $ 350 | |||
Total income tax provision | $ 36 | $ 136 | $ 80 | ||
Effective income tax rate | 6.10% | 29.20% | 23.50% | ||
Unrecognized tax benefits | $ 136 | $ 130 | $ 67 | $ 47 | |
Interest accrued for unrecognized tax benefits | 7 | 4 | |||
Provisional income tax expense | 107 | ||||
Measurement period adjustments | $ 1.5 | ||||
Measurement period adjustment, effect on tax rate | 0.30% | ||||
Decrease of net deferred tax liabilities | $ 108 | ||||
Corresponding deferred tax benefit | 108 | ||||
Provisional transition tax | $ 153 | ||||
Measurement period adjustment, transition tax | $ 9 | ||||
Measurement period adjustment, transition tax, effect on tax rate | 1.60% | ||||
Transition tax accrued | $ 144 | ||||
Foreign | |||||
Income Tax Contingency [Line Items] | |||||
Deferred tax liability | 13 | ||||
State | |||||
Income Tax Contingency [Line Items] | |||||
Deferred tax liability | $ 1,900 | ||||
Forecast | |||||
Income Tax Contingency [Line Items] | |||||
Unrecognized tax benefits, reduction due to lapse of statute of limitations | $ 8 |
Earnings Per Share (Calculation
Earnings Per Share (Calculation of EPS) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Basic and diluted net earnings per share: | |||||||||||
Net income (in usd) | $ 225 | $ 130 | $ 115 | $ 79 | $ 71 | $ 105 | $ 99 | $ 56 | $ 549 | $ 331 | $ 260 |
Net income | $ 549 | $ 330 | $ 260 | ||||||||
Shares | |||||||||||
Weighted average common shares outstanding | 179,750 | 179,602 | 179,069 | ||||||||
Add: Participating securities | 27 | 27 | 37 | ||||||||
Weighted average common shares outstanding — Basic | 179,777 | 179,629 | 179,106 | ||||||||
Plus incremental shares from assumed conversions: | |||||||||||
Weighted average common shares outstanding — Diluted | 181,132 | 180,857 | 180,038 | ||||||||
Basic earnings per share (in usd per share) | $ 1.25 | $ 0.73 | $ 0.64 | $ 0.44 | $ 0.40 | $ 0.58 | $ 0.55 | $ 0.31 | $ 3.05 | $ 1.84 | $ 1.45 |
Diluted earnings per share (in usd per share) | $ 1.24 | $ 0.72 | $ 0.64 | $ 0.43 | $ 0.40 | $ 0.58 | $ 0.55 | $ 0.31 | $ 3.03 | $ 1.83 | $ 1.45 |
Stock Options | |||||||||||
Plus incremental shares from assumed conversions: | |||||||||||
Dilutive effect of common shares | 876 | 712 | 499 | ||||||||
Restricted Stock | |||||||||||
Plus incremental shares from assumed conversions: | |||||||||||
Dilutive effect of common shares | 479 | 516 | 433 |
Earnings Per Share (Summary of
Earnings Per Share (Summary of Antidilutive Securities) (Details) - shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Stock Options | |||
Incremental shares from stock options and restricted stock: | |||
Antidilutive securities | 1,300 | 1,626 | 1,892 |
Restricted Stock | |||
Incremental shares from stock options and restricted stock: | |||
Antidilutive securities | 333 | 379 | 514 |
Performance Based Shares | |||
Incremental shares from stock options and restricted stock: | |||
Antidilutive securities | 465 | 504 | 373 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Inventories | ||
Finished goods | $ 248 | $ 223 |
Work in process | 45 | 42 |
Raw materials | 302 | 259 |
Total inventories | $ 595 | $ 524 |
Property, Plant and Equipment_2
Property, Plant and Equipment (Components of Property, Plant and Equipment) (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment | ||
Property, plant and equipment, gross | $ 1,632 | $ 1,576 |
Less accumulated depreciation | 976 | 933 |
Total property, plant and equipment, net | 656 | 643 |
Land, buildings and improvements | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 326 | 329 |
Machinery and equipment | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 819 | 799 |
Equipment held for lease or rental | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 249 | 241 |
Furniture and fixtures | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 109 | 101 |
Construction work in progress | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 107 | 85 |
Other | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | $ 22 | $ 21 |
Property, Plant and Equipment_3
Property, Plant and Equipment (Details Textual) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |||
Depreciation expense | $ 117 | $ 109 | $ 87 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets (Rollforward of Goodwill) (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Changes in the carrying value of goodwill by operating segment | ||
Beginning Balance | $ 2,768 | $ 2,632 |
Goodwill acquired | 279 | 7 |
Foreign currency and other | (71) | 129 |
Ending Balance | 2,976 | 2,768 |
Water Infrastructure | ||
Changes in the carrying value of goodwill by operating segment | ||
Beginning Balance | 667 | 640 |
Goodwill acquired | 0 | 0 |
Foreign currency and other | (14) | 27 |
Ending Balance | 653 | 667 |
Applied Water | ||
Changes in the carrying value of goodwill by operating segment | ||
Beginning Balance | 526 | 505 |
Goodwill acquired | (3) | |
Divested | 0 | |
Foreign currency and other | (10) | 24 |
Ending Balance | 516 | 526 |
Measurement & Control Solutions | ||
Changes in the carrying value of goodwill by operating segment | ||
Beginning Balance | 1,575 | 1,487 |
Goodwill acquired | 279 | 10 |
Foreign currency and other | (47) | 78 |
Ending Balance | $ 1,807 | $ 1,575 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets (Summary of Other Intangible Assets) (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Goodwill and Other Intangible Assets | ||
Accumulated Amortization | $ (603) | $ (503) |
Indefinite-lived intangibles | 159 | 161 |
Intangible Assets Gross, Carrying Amount | 1,835 | 1,671 |
Intangible Assets, Net Intangibles | 1,232 | 1,168 |
Customer and Distributor Relationships | ||
Goodwill and Other Intangible Assets | ||
Carrying Amount | 951 | 906 |
Accumulated Amortization | (286) | (241) |
Net Intangibles | $ 665 | 665 |
Finite-Lived Intangible Asset, Useful Life | 14 years | |
Proprietary Technology | ||
Goodwill and Other Intangible Assets | ||
Carrying Amount | $ 198 | 163 |
Accumulated Amortization | (93) | (75) |
Net Intangibles | $ 105 | 88 |
Finite-Lived Intangible Asset, Useful Life | 14 years | |
Trademarks | ||
Goodwill and Other Intangible Assets | ||
Carrying Amount | $ 148 | 138 |
Accumulated Amortization | (41) | (37) |
Net Intangibles | $ 107 | 101 |
Finite-Lived Intangible Asset, Useful Life | 13 years | |
Internally Developed Network Software | ||
Goodwill and Other Intangible Assets | ||
Carrying Amount | $ 355 | 277 |
Accumulated Amortization | (164) | (130) |
Net Intangibles | $ 191 | 147 |
Finite-Lived Intangible Asset, Useful Life | 5 years | |
Other | ||
Goodwill and Other Intangible Assets | ||
Carrying Amount | $ 24 | 26 |
Accumulated Amortization | (19) | (20) |
Net Intangibles | $ 5 | $ 6 |
Finite-Lived Intangible Asset, Useful Life | 5 years |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets (Estimated Amortization Expense) (Details) $ in Millions | Dec. 31, 2018USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2,019 | $ 135 |
2,020 | 127 |
2,021 | 112 |
2,022 | 102 |
2,023 | $ 97 |
Goodwill and Other Intangible_6
Goodwill and Other Intangible Assets (Details Textual) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Goodwill and Other Intangible Assets (Textual) [Abstract] | ||||
Goodwill arising from acquisition | $ 2,976 | $ 2,768 | $ 2,632 | |
Impairment of the indefinite-lived intangibles | 0 | 0 | ||
Amortization expense related to finite-lived intangible assets | $ 144 | 125 | 64 | |
Impairment charge | $ 4 | |||
Customer and Distributor Relationships | ||||
Goodwill and Other Intangible Assets (Textual) [Abstract] | ||||
Finite-Lived Intangible Asset, Useful Life | 14 years | |||
Internally Developed Network Software | ||||
Goodwill and Other Intangible Assets (Textual) [Abstract] | ||||
Finite-Lived Intangible Asset, Useful Life | 5 years | |||
Proprietary Technology | ||||
Goodwill and Other Intangible Assets (Textual) [Abstract] | ||||
Finite-Lived Intangible Asset, Useful Life | 14 years | |||
Trademarks | ||||
Goodwill and Other Intangible Assets (Textual) [Abstract] | ||||
Finite-Lived Intangible Asset, Useful Life | 13 years | |||
Other | ||||
Goodwill and Other Intangible Assets (Textual) [Abstract] | ||||
Finite-Lived Intangible Asset, Useful Life | 5 years | |||
Water Infrastructure | ||||
Goodwill and Other Intangible Assets (Textual) [Abstract] | ||||
Goodwill arising from acquisition | $ 653 | $ 667 | $ 640 |
Derivative Financial Instrume_3
Derivative Financial Instruments (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Derivative [Line Items] | |||||||||||
Amount of (gain) loss reclassified from OCI into revenue | $ (1,386) | $ (1,287) | $ (1,317) | $ (1,217) | $ (1,277) | $ (1,195) | $ (1,164) | $ (1,071) | $ (5,207) | $ (4,707) | $ (3,771) |
Amount of gain (loss) recognized in OCI on derivative | 8 | (9) | 0 | ||||||||
Other Comprehensive Income (Loss) | Foreign Exchange Contract | |||||||||||
Derivative [Line Items] | |||||||||||
Amount of gain (loss) recognized in OCI | (8) | 9 | 0 | ||||||||
Other Comprehensive Income (Loss) | Cross Currency Swaps | |||||||||||
Derivative [Line Items] | |||||||||||
Amount of gain (loss) recognized in OCI | 22 | (53) | 19 | ||||||||
Other Comprehensive Income (Loss) | Foreign Currency Denominated Debt | |||||||||||
Derivative [Line Items] | |||||||||||
Amount of gain (loss) recognized in OCI | 27 | (74) | 28 | ||||||||
Other Comprehensive Income (Loss) | Forward Contracts | |||||||||||
Derivative [Line Items] | |||||||||||
Amount of gain (loss) recognized in OCI on derivative | 0 | 0 | 9 | ||||||||
Reclassification out of Accumulated Other Comprehensive Income [Member] | Foreign Exchange Contract | |||||||||||
Derivative [Line Items] | |||||||||||
Amount of (gain) loss reclassified from OCI into revenue | 0 | (6) | (2) | ||||||||
Amount of (gain) loss reclassified from OCI into cost of revenue | 4 | 1 | 0 | ||||||||
Interest Expense | Cross Currency Swaps | |||||||||||
Derivative [Line Items] | |||||||||||
Amount of gain (loss) recognized in OCI | $ 2 | $ 0 | $ 0 |
Derivative Financial Instrume_4
Derivative Financial Instruments (Details Textual) $ in Millions | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Sep. 23, 2016USD ($) | Mar. 11, 2016EUR (€) |
Derivative [Line Items] | ||||
Net unrealized gains on cash flow hedges | $ 1 | |||
Foreign Exchange Contract | ||||
Derivative [Line Items] | ||||
Notional amount | 506 | $ 455 | ||
Sell EUR Buy SEK | ||||
Derivative [Line Items] | ||||
Notional amount | 191 | 147 | ||
Sell USD Buy EUR | ||||
Derivative [Line Items] | ||||
Notional amount | 168 | 149 | ||
Sell GBP Buy EUR | ||||
Derivative [Line Items] | ||||
Notional amount | 52 | 66 | ||
Sell EUR Buy PLN | ||||
Derivative [Line Items] | ||||
Notional amount | 37 | 34 | ||
Buy USD Sell CDN | ||||
Derivative [Line Items] | ||||
Notional amount | 29 | 28 | ||
Sell CDN Buy EUR | ||||
Derivative [Line Items] | ||||
Notional amount | 22 | 25 | ||
Cross Currency Swap | ||||
Derivative [Line Items] | ||||
Notional amount | 426 | 446 | ||
Senior Notes Due 2023 | ||||
Derivative [Line Items] | ||||
Debt fair value | 599 | 638 | ||
Senior Notes Due 2023 | Senior Notes | ||||
Derivative [Line Items] | ||||
Interest rate | 2.25% | |||
Face amount | € | € 500,000,000 | |||
Designated as Hedging Instrument | Sell USD Buy EUR | ||||
Derivative [Line Items] | ||||
Notional amount | $ 300 | |||
Designated as Hedging Instrument | Long-term Debt | ||||
Derivative [Line Items] | ||||
Derivative, fair value | $ 566 | $ 592 |
Derivative Financial Instrume_5
Derivative Financial Instruments - Fair Value of Foreign Exchange Contracts (Details) - Designated as Hedging Instrument - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Assets | $ 3 | $ 3 |
Other current liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Liabilities | (1) | (1) |
Other non-current liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Liabilities | $ (46) | $ (64) |
Accrued and Other Current Lia_3
Accrued and Other Current Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Accrued and Other Current Liabilities | ||
Compensation and other employee-benefits | $ 194 | $ 203 |
Customer-related liabilities | 129 | 119 |
Accrued warranty costs | 44 | 55 |
Accrued taxes | 85 | 75 |
Other accrued liabilities | 94 | 99 |
Total accrued and other current liabilities | $ 546 | $ 551 |
Credit Facilities and Long-Te_3
Credit Facilities and Long-Term Debt (Summary of Debt Outstanding) (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Credit Facilities and Long-Term Debt : | ||
Debt issuance costs and unamortized discount | $ (19) | $ (22) |
Total debt | 2,308 | 2,200 |
Less: short-term borrowings and current maturities of long-term debt | 257 | 0 |
Long-term debt, net | 2,051 | 2,200 |
4.875% Senior Notes Due 2021 | ||
Credit Facilities and Long-Term Debt : | ||
Outstanding balances | 600 | 600 |
2.250% Senior Notes Due 2023 | ||
Credit Facilities and Long-Term Debt : | ||
Outstanding balances | 570 | 597 |
Debt fair value | 599 | 638 |
3.250% Senior Notes Due 2026 | ||
Credit Facilities and Long-Term Debt : | ||
Outstanding balances | 500 | 500 |
Debt fair value | 476 | 498 |
4.375% Senior Notes Due 2046 | ||
Credit Facilities and Long-Term Debt : | ||
Outstanding balances | 400 | 400 |
Debt fair value | 397 | 431 |
Research and development finance contract | ||
Credit Facilities and Long-Term Debt : | ||
Outstanding balances | 0 | 125 |
Term loan | ||
Credit Facilities and Long-Term Debt : | ||
Outstanding balances | $ 257 | $ 0 |
Credit Facilities and Long-Te_4
Credit Facilities and Long-Term Debt (Details Textual) | Sep. 20, 2011USD ($) | Sep. 30, 2017 | Dec. 31, 2018USD ($) | Jan. 26, 2018USD ($) | Jan. 26, 2018EUR (€) | Dec. 31, 2017USD ($) | Oct. 28, 2016USD ($) | Oct. 28, 2016EUR (€) | Oct. 11, 2016USD ($) | Mar. 11, 2016EUR (€) | Mar. 27, 2015USD ($) |
Debt Instrument | |||||||||||
Commercial paper | $ 0 | $ 0 | |||||||||
Interest rate during period | 1.12% | ||||||||||
European Investment Bank - Research and Development Finance Contract | |||||||||||
Debt Instrument | |||||||||||
Credit facility | 125,000,000 | ||||||||||
Repayment on credit facility | $ 120,000,000 | ||||||||||
Term of debt | 11 years | ||||||||||
Basis spread | 0.59% | ||||||||||
Letter of Credit | |||||||||||
Debt Instrument | |||||||||||
Debt instrument aggregate principal amount | $ 100,000,000 | ||||||||||
Revolving Credit Facility | |||||||||||
Debt Instrument | |||||||||||
Increase in borrowing capacity | 200,000,000 | ||||||||||
Maximum increase in borrowing capacity | 800,000,000 | ||||||||||
Debt instrument aggregate principal amount | $ 600,000,000 | ||||||||||
Basis spread | 1.00% | ||||||||||
Maximum leverage ratio | 4 | ||||||||||
Commercial paper | |||||||||||
Debt Instrument | |||||||||||
Senior notes issued | $ 600,000,000 | ||||||||||
Senior Notes | |||||||||||
Debt Instrument | |||||||||||
Redemption price percentage | 101.00% | ||||||||||
Line of Credit | |||||||||||
Debt Instrument | |||||||||||
Senior notes issued | $ 257,000,000 | € 225,000,000 | $ 120,000,000 | € 105,000,000 | |||||||
3.250% Senior Notes Due 2026 | |||||||||||
Debt Instrument | |||||||||||
Fair value of senior notes due | 476,000,000 | 498,000,000 | |||||||||
Interest on notes due | 3.25% | ||||||||||
Senior notes issued | $ 500,000,000 | ||||||||||
Outstanding balances | $ 500,000,000 | 500,000,000 | |||||||||
Risk Sharing Finance Facility Agreement | |||||||||||
Debt Instrument | |||||||||||
Term of debt | 5 years | ||||||||||
Risk Sharing Finance Facility Agreement | Term Loans | |||||||||||
Debt Instrument | |||||||||||
Term of debt | 12 years | ||||||||||
4.875% Senior Notes Due 2021 | |||||||||||
Debt Instrument | |||||||||||
Interest on notes due | 4.875% | ||||||||||
Senior notes issued | $ 600,000,000 | ||||||||||
Outstanding balances | $ 600,000,000 | 600,000,000 | |||||||||
2.250% Senior Notes Due 2023 | |||||||||||
Debt Instrument | |||||||||||
Fair value of senior notes due | 599,000,000 | 638,000,000 | |||||||||
Outstanding balances | $ 570,000,000 | 597,000,000 | |||||||||
2.250% Senior Notes Due 2023 | Senior Notes | |||||||||||
Debt Instrument | |||||||||||
Interest on notes due | 2.25% | ||||||||||
Senior notes issued | € | € 500,000,000 | ||||||||||
Five-Year Revolving Credit Facility | |||||||||||
Debt Instrument | |||||||||||
Maximum leverage ratio | 3.50 | ||||||||||
4.375% Senior Notes Due 2046 | |||||||||||
Debt Instrument | |||||||||||
Fair value of senior notes due | $ 397,000,000 | 431,000,000 | |||||||||
Interest on notes due | 4.375% | ||||||||||
Senior notes issued | $ 400,000,000 | ||||||||||
Outstanding balances | 400,000,000 | 400,000,000 | |||||||||
Level 2 | 4.875% Senior Notes Due 2021 | |||||||||||
Debt Instrument | |||||||||||
Fair value of senior notes due | $ 620,000,000 | $ 648,000,000 |
Postretirement Benefit Plans (S
Postretirement Benefit Plans (Summary of Contributions by Year) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Retirement Benefits [Abstract] | |||
Defined Contribution | $ 39 | $ 38 | $ 35 |
Postretirement Benefit Plans _2
Postretirement Benefit Plans (Summary of Plan Assets, Benefit Obligation and Funded Status) (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | $ 567 | $ 628 | |
Projected benefit obligation | (914) | (1,005) | |
Unfunded status of the plans | (347) | (377) | |
Amounts recognized in the balance sheet | |||
Other non-current assets | 68 | 81 | |
Accrued and other current liabilities | (15) | (16) | |
Accrued postretirement benefits | (400) | (442) | |
Net amount recognized | (347) | (377) | |
Accumulated other comprehensive income: | |||
Net actuarial losses | (284) | (275) | |
Prior service credit | 8 | 11 | |
Total | (276) | (264) | |
Pension | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 567 | 628 | |
Projected benefit obligation | (862) | (950) | |
Unfunded status of the plans | (295) | (322) | |
Amounts recognized in the balance sheet | |||
Other non-current assets | 68 | 81 | |
Accrued and other current liabilities | (12) | (13) | |
Accrued postretirement benefits | (351) | (390) | |
Net amount recognized | (295) | (322) | |
Accumulated other comprehensive income: | |||
Net actuarial losses | (260) | (251) | |
Prior service credit | (4) | (1) | |
Total | (264) | (252) | |
Other Benefits | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 0 | 0 | |
Projected benefit obligation | (52) | (55) | $ (64) |
Unfunded status of the plans | (52) | (55) | |
Amounts recognized in the balance sheet | |||
Other non-current assets | 0 | 0 | |
Accrued and other current liabilities | (3) | (3) | |
Accrued postretirement benefits | (49) | (52) | |
Net amount recognized | (52) | (55) | |
Accumulated other comprehensive income: | |||
Net actuarial losses | (24) | (24) | |
Prior service credit | 12 | 12 | |
Total | (12) | (12) | |
NAV Practical Expedient | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 271 | 307 | |
NAV Practical Expedient | Global stock funds/securities | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 29 | 29 | |
NAV Practical Expedient | Index funds | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 1 | 3 | |
NAV Practical Expedient | Corporate bonds | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 25 | 8 | |
NAV Practical Expedient | Government bonds | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 20 | 5 | |
NAV Practical Expedient | Hedge funds | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 67 | 107 | |
NAV Practical Expedient | Private equity | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 6 | 10 | |
NAV Practical Expedient | Cash, insurance contracts and other | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 70 | ||
Estimate of Fair Value Measurement | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 567 | 628 | |
Estimate of Fair Value Measurement | Global stock funds/securities | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 117 | 130 | |
Estimate of Fair Value Measurement | Index funds | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 1 | 3 | |
Estimate of Fair Value Measurement | Corporate bonds | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 59 | 32 | |
Estimate of Fair Value Measurement | Government bonds | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 51 | 53 | |
Estimate of Fair Value Measurement | Hedging Instruments | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 27 | 41 | |
Estimate of Fair Value Measurement | Hedge funds | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 67 | 107 | |
Estimate of Fair Value Measurement | Private equity | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 6 | 10 | |
Estimate of Fair Value Measurement | Cash, insurance contracts and other | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 186 | 140 | |
Estimate of Fair Value Measurement | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 262 | 268 | |
Estimate of Fair Value Measurement | Level 1 | Global stock funds/securities | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 88 | 101 | |
Estimate of Fair Value Measurement | Level 1 | Index funds | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 0 | 0 | |
Estimate of Fair Value Measurement | Level 1 | Corporate bonds | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 34 | 24 | |
Estimate of Fair Value Measurement | Level 1 | Government bonds | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 31 | 48 | |
Estimate of Fair Value Measurement | Level 1 | Hedging Instruments | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 5 | 5 | |
Estimate of Fair Value Measurement | Level 1 | Hedge funds | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 0 | 0 | |
Estimate of Fair Value Measurement | Level 1 | Cash, insurance contracts and other | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 104 | 90 | |
Estimate of Fair Value Measurement | Level 2 | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 22 | 36 | |
Estimate of Fair Value Measurement | Level 2 | Global stock funds/securities | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 0 | 0 | |
Estimate of Fair Value Measurement | Level 2 | Index funds | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 0 | 0 | |
Estimate of Fair Value Measurement | Level 2 | Corporate bonds | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 0 | 0 | |
Estimate of Fair Value Measurement | Level 2 | Government bonds | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 0 | 0 | |
Estimate of Fair Value Measurement | Level 2 | Hedging Instruments | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 22 | 36 | |
Estimate of Fair Value Measurement | Level 2 | Hedge funds | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 0 | 0 | |
Estimate of Fair Value Measurement | Level 2 | Cash, insurance contracts and other | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 0 | 0 | |
Estimate of Fair Value Measurement | Level 3 | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 12 | 17 | |
Estimate of Fair Value Measurement | Level 3 | Global stock funds/securities | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 0 | 0 | |
Estimate of Fair Value Measurement | Level 3 | Index funds | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 0 | 0 | |
Estimate of Fair Value Measurement | Level 3 | Corporate bonds | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 0 | 0 | |
Estimate of Fair Value Measurement | Level 3 | Government bonds | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 0 | 0 | |
Estimate of Fair Value Measurement | Level 3 | Hedge funds | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 0 | 0 | |
Estimate of Fair Value Measurement | Level 3 | Cash, insurance contracts and other | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 12 | 17 | |
Estimate of Fair Value Measurement | NAV Practical Expedient | Cash, insurance contracts and other | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 33 | ||
Equity securities | NAV Practical Expedient | Diversified Growth and Income Funds | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 51 | 92 | |
Equity securities | Estimate of Fair Value Measurement | Diversified Growth and Income Funds | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 51 | 92 | |
Fixed income | NAV Practical Expedient | Diversified Growth and Income Funds | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 2 | 20 | |
Fixed income | Estimate of Fair Value Measurement | Diversified Growth and Income Funds | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | $ 2 | $ 20 |
Postretirement Benefit Plans _3
Postretirement Benefit Plans (Summary of Amounts Recognized in Financial Statements) (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Change in benefit obligation: | |||||
Benefit obligation at beginning of year | $ 1,005 | ||||
Benefit obligation at end of year | 914 | $ 1,005 | |||
Change in plan assets: | |||||
Beginning Balance | 628 | ||||
Employer contributions | $ 19 | $ 6 | |||
Ending Balance | 567 | 628 | |||
Unfunded status of the plans | (347) | (377) | |||
Domestic defined benefit pension plans | |||||
Change in benefit obligation: | |||||
Benefit obligation at beginning of year | 107 | 100 | |||
Service cost | 3 | 3 | $ 3 | ||
Interest cost | 4 | 4 | 4 | ||
Benefits paid | (5) | (5) | |||
Actuarial loss (gain) | (10) | 5 | |||
Plan amendments, settlements and curtailments | 0 | 1 | |||
Foreign currency translation/other | 0 | (1) | |||
Benefit obligation at end of year | 99 | 107 | 100 | ||
Change in plan assets: | |||||
Beginning Balance | 84 | 69 | |||
Employer contributions | 22 | 10 | |||
Actual return on plan assets | (4) | 10 | |||
Benefits paid | (5) | (5) | |||
Plan amendments, settlements and curtailments | 0 | 0 | |||
Foreign currency translation/other | 0 | 0 | |||
Ending Balance | 97 | 84 | 69 | ||
Unfunded status of the plans | (2) | (23) | |||
International defined benefit pension plans | |||||
Change in benefit obligation: | |||||
Benefit obligation at beginning of year | 843 | 754 | |||
Service cost | 9 | 12 | 10 | ||
Interest cost | 19 | 21 | 21 | ||
Benefits paid | (36) | (30) | |||
Actuarial loss (gain) | (20) | 10 | |||
Plan amendments, settlements and curtailments | 3 | (2) | |||
Foreign currency translation/other | (55) | 78 | |||
Benefit obligation at end of year | 763 | 843 | 754 | ||
Change in plan assets: | |||||
Beginning Balance | 544 | 493 | |||
Employer contributions | 16 | 20 | |||
Actual return on plan assets | (20) | 21 | |||
Benefits paid | (36) | (30) | |||
Plan amendments, settlements and curtailments | 0 | (3) | |||
Foreign currency translation/other | (34) | 43 | |||
Ending Balance | 470 | 544 | $ 493 | ||
Unfunded status of the plans | $ (293) | $ (299) |
Postretirement Benefit Plans (R
Postretirement Benefit Plans (Rollforward of Obligation) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Change in benefit obligation: | |||
Benefit obligation at beginning of year | $ 1,005 | ||
Benefit obligation at end of year | 914 | $ 1,005 | |
Other postretirement benefit plans | |||
Change in benefit obligation: | |||
Benefit obligation at beginning of year | 55 | 64 | |
Service cost | 0 | 1 | $ 1 |
Interest cost | 2 | 2 | 3 |
Benefits paid | (3) | (3) | |
Actuarial gain/(loss) | 1 | (5) | |
Plan Amendment and other | (3) | (4) | |
Benefit obligation at end of year | $ 52 | $ 55 | $ 64 |
Postretirement Benefit Plans _4
Postretirement Benefit Plans (Summary of Status of Plans) (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Retirement Benefits [Abstract] | ||
Projected benefit obligation | $ 500 | $ 528 |
Accumulated benefit obligation | 470 | 499 |
Fair value of plan assets | $ 137 | $ 126 |
Postretirement Benefit Plans (C
Postretirement Benefit Plans (Components of Pension Plans) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Other changes in plan assets and benefit obligations recognized in other comprehensive income | |||
Net loss | $ 37 | $ 19 | $ 20 |
Prior service cost | 0 | 1 | 1 |
Settlement | (1) | (1) | 0 |
Total recognized in comprehensive income | 0 | (6) | 8 |
Defined benefit pension plans | |||
Net periodic benefit cost: | |||
Net periodic benefit cost | 5 | 12 | 13 |
Other changes in plan assets and benefit obligations recognized in other comprehensive income | |||
Change recognized in other comprehensive income | 12 | 33 | (14) |
Total recognized in comprehensive income | 17 | 45 | (1) |
Domestic defined benefit pension plans | |||
Net periodic benefit cost: | |||
Service cost | 3 | 3 | 3 |
Interest cost | 4 | 4 | 4 |
Expected return on plan assets | (7) | (6) | (5) |
Amortization of net actuarial loss | 2 | 2 | 2 |
Net periodic benefit cost | 2 | 3 | 4 |
Other changes in plan assets and benefit obligations recognized in other comprehensive income | |||
Net loss | 1 | 1 | (1) |
Prior service cost | 0 | (1) | 0 |
Amortization of net actuarial loss | (2) | (2) | (2) |
Change recognized in other comprehensive income | (1) | 0 | (3) |
International defined benefit pension plans | |||
Net periodic benefit cost: | |||
Service cost | 9 | 12 | 10 |
Interest cost | 19 | 21 | 21 |
Expected return on plan assets | (35) | (34) | (30) |
Amortization of net actuarial loss | 9 | 9 | 8 |
Settlement | 1 | 1 | 0 |
Net periodic benefit cost | 3 | 9 | 9 |
Other changes in plan assets and benefit obligations recognized in other comprehensive income | |||
Net loss | 35 | 23 | 18 |
Prior service cost | (3) | (1) | 1 |
Amortization of net actuarial loss | (9) | (9) | (8) |
Settlement | (1) | (1) | 0 |
Foreign Exchange | (15) | 19 | (20) |
Change recognized in other comprehensive income | $ 13 | $ 33 | $ (11) |
Postretirement Benefit Plans (A
Postretirement Benefit Plans (Amounts Recognized in OCI) (Details) - Other Benefits - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Defined Benefit Plan Disclosure | |||
Service cost | $ 0 | $ 1 | $ 1 |
Interest cost | 2 | 2 | 3 |
Defined Benefit Plan, Amortization of Prior Service Cost (Credit) | 4 | 3 | 3 |
Amortization of net actuarial loss | 2 | 2 | 3 |
Net periodic benefit cost | $ 0 | $ 2 | $ 4 |
Postretirement Benefit Plans _5
Postretirement Benefit Plans (Components of Net Periodic Benefit Cost) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Defined Benefit Plan Disclosure | |||
Net loss | $ 37 | $ 19 | $ 20 |
Total recognized in comprehensive income | 0 | (6) | 8 |
Other Benefits | |||
Defined Benefit Plan Disclosure | |||
Net loss | 1 | (5) | 3 |
Defined Benefit Plan, Prior Service Credit | (3) | (3) | 0 |
Amortization of prior service credit | 4 | 3 | 3 |
Amortization of net actuarial loss | (2) | (2) | (3) |
Foreign Exchange/Other | 0 | (1) | 1 |
Change recognized in other comprehensive loss | $ 0 | $ (8) | $ 4 |
Postretirement Benefit Plans (D
Postretirement Benefit Plans (Discount Rates) (Details) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Net Periodic Benefit Cost Assumptions | |||
Expected long-term rate of return on plan assets | 7.34% | 7.30% | 7.32% |
United States | |||
Benefit Obligation Assumptions | |||
Discount rate | 4.50% | 3.75% | 4.25% |
Net Periodic Benefit Cost Assumptions | |||
Discount rate | 3.75% | 4.25% | 4.27% |
Expected long-term rate of return on plan assets | 8.00% | 8.00% | 8.00% |
International | |||
Benefit Obligation Assumptions | |||
Discount rate | 2.60% | 2.43% | 2.63% |
Rate of future compensation increase | 2.92% | 2.93% | 2.76% |
Net Periodic Benefit Cost Assumptions | |||
Discount rate | 2.43% | 2.63% | 3.44% |
Expected long-term rate of return on plan assets | 7.23% | 7.20% | 7.25% |
Rate of future compensation increase | 2.93% | 2.76% | 3.29% |
Postretirement Benefit Plans (V
Postretirement Benefit Plans (Valuation Assumptions) (Details) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Retirement Benefits [Abstract] | |||
Expected long-term rate of return on plan assets | 7.34% | 7.30% | 7.32% |
Actual rate of return (loss) on plan assets | (3.85%) | 5.70% | 12.20% |
Postretirement Benefit Plans _6
Postretirement Benefit Plans (Target Allocations) (Details) | Dec. 31, 2018 | Dec. 31, 2017 |
Equity securities | ||
Defined Benefit Plan Disclosure | ||
Actual allocation of plan assets | 29.70% | 35.60% |
Fixed income | ||
Defined Benefit Plan Disclosure | ||
Actual allocation of plan assets | 24.50% | 23.40% |
Hedge funds | ||
Defined Benefit Plan Disclosure | ||
Actual allocation of plan assets | 11.80% | 17.00% |
Private equity | ||
Defined Benefit Plan Disclosure | ||
Actual allocation of plan assets | 1.10% | 1.60% |
Cash and other | ||
Defined Benefit Plan Disclosure | ||
Actual allocation of plan assets | 32.90% | 22.40% |
Minimum | Equity securities | ||
Defined Benefit Plan Disclosure | ||
Target allocation percentages | 10.00% | |
Minimum | Fixed income | ||
Defined Benefit Plan Disclosure | ||
Target allocation percentages | 10.00% | |
Minimum | Hedge funds | ||
Defined Benefit Plan Disclosure | ||
Target allocation percentages | 0.00% | |
Minimum | Private equity | ||
Defined Benefit Plan Disclosure | ||
Target allocation percentages | 0.00% | |
Minimum | Cash and other | ||
Defined Benefit Plan Disclosure | ||
Target allocation percentages | 0.00% | |
Maximum | Equity securities | ||
Defined Benefit Plan Disclosure | ||
Target allocation percentages | 50.00% | |
Maximum | Fixed income | ||
Defined Benefit Plan Disclosure | ||
Target allocation percentages | 40.00% | |
Maximum | Hedge funds | ||
Defined Benefit Plan Disclosure | ||
Target allocation percentages | 40.00% | |
Maximum | Private equity | ||
Defined Benefit Plan Disclosure | ||
Target allocation percentages | 30.00% | |
Maximum | Cash and other | ||
Defined Benefit Plan Disclosure | ||
Target allocation percentages | 60.00% |
Postretirement Benefit Plans (F
Postretirement Benefit Plans (Fair Value of Plan Assets) (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Defined Benefit Plan Disclosure | ||
Fair value of plan assets | $ 567 | $ 628 |
Estimate of Fair Value Measurement | ||
Defined Benefit Plan Disclosure | ||
Fair value of plan assets | 567 | 628 |
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 1 [Member] | ||
Defined Benefit Plan Disclosure | ||
Fair value of plan assets | 262 | 268 |
Estimate of Fair Value Measurement | Level 2 | ||
Defined Benefit Plan Disclosure | ||
Fair value of plan assets | 22 | 36 |
Estimate of Fair Value Measurement | Level 3 | ||
Defined Benefit Plan Disclosure | ||
Fair value of plan assets | 12 | 17 |
Estimate of Fair Value Measurement | Global stock funds/securities | ||
Defined Benefit Plan Disclosure | ||
Fair value of plan assets | 117 | 130 |
Estimate of Fair Value Measurement | Global stock funds/securities | Fair Value, Inputs, Level 1 [Member] | ||
Defined Benefit Plan Disclosure | ||
Fair value of plan assets | 88 | 101 |
Estimate of Fair Value Measurement | Global stock funds/securities | Level 2 | ||
Defined Benefit Plan Disclosure | ||
Fair value of plan assets | 0 | 0 |
Estimate of Fair Value Measurement | Global stock funds/securities | Level 3 | ||
Defined Benefit Plan Disclosure | ||
Fair value of plan assets | 0 | 0 |
Estimate of Fair Value Measurement | Index funds | ||
Defined Benefit Plan Disclosure | ||
Fair value of plan assets | 1 | 3 |
Estimate of Fair Value Measurement | Index funds | Fair Value, Inputs, Level 1 [Member] | ||
Defined Benefit Plan Disclosure | ||
Fair value of plan assets | 0 | 0 |
Estimate of Fair Value Measurement | Index funds | Level 2 | ||
Defined Benefit Plan Disclosure | ||
Fair value of plan assets | 0 | 0 |
Estimate of Fair Value Measurement | Index funds | Level 3 | ||
Defined Benefit Plan Disclosure | ||
Fair value of plan assets | 0 | 0 |
Estimate of Fair Value Measurement | Corporate bonds | ||
Defined Benefit Plan Disclosure | ||
Fair value of plan assets | 59 | 32 |
Estimate of Fair Value Measurement | Corporate bonds | Fair Value, Inputs, Level 1 [Member] | ||
Defined Benefit Plan Disclosure | ||
Fair value of plan assets | 34 | 24 |
Estimate of Fair Value Measurement | Corporate bonds | Level 2 | ||
Defined Benefit Plan Disclosure | ||
Fair value of plan assets | 0 | 0 |
Estimate of Fair Value Measurement | Corporate bonds | Level 3 | ||
Defined Benefit Plan Disclosure | ||
Fair value of plan assets | 0 | 0 |
Estimate of Fair Value Measurement | Government bonds | ||
Defined Benefit Plan Disclosure | ||
Fair value of plan assets | 51 | 53 |
Estimate of Fair Value Measurement | Government bonds | Fair Value, Inputs, Level 1 [Member] | ||
Defined Benefit Plan Disclosure | ||
Fair value of plan assets | 31 | 48 |
Estimate of Fair Value Measurement | Government bonds | Level 2 | ||
Defined Benefit Plan Disclosure | ||
Fair value of plan assets | 0 | 0 |
Estimate of Fair Value Measurement | Government bonds | Level 3 | ||
Defined Benefit Plan Disclosure | ||
Fair value of plan assets | 0 | 0 |
Estimate of Fair Value Measurement | Hedging Instruments | ||
Defined Benefit Plan Disclosure | ||
Fair value of plan assets | 27 | 41 |
Estimate of Fair Value Measurement | Hedging Instruments | Fair Value, Inputs, Level 1 [Member] | ||
Defined Benefit Plan Disclosure | ||
Fair value of plan assets | 5 | 5 |
Estimate of Fair Value Measurement | Hedging Instruments | Level 2 | ||
Defined Benefit Plan Disclosure | ||
Fair value of plan assets | 22 | 36 |
Estimate of Fair Value Measurement | Hedge funds | ||
Defined Benefit Plan Disclosure | ||
Fair value of plan assets | 67 | 107 |
Estimate of Fair Value Measurement | Hedge funds | Fair Value, Inputs, Level 1 [Member] | ||
Defined Benefit Plan Disclosure | ||
Fair value of plan assets | 0 | 0 |
Estimate of Fair Value Measurement | Hedge funds | Level 2 | ||
Defined Benefit Plan Disclosure | ||
Fair value of plan assets | 0 | 0 |
Estimate of Fair Value Measurement | Hedge funds | Level 3 | ||
Defined Benefit Plan Disclosure | ||
Fair value of plan assets | 0 | 0 |
Estimate of Fair Value Measurement | Cash, insurance contracts and other | ||
Defined Benefit Plan Disclosure | ||
Fair value of plan assets | 186 | 140 |
Estimate of Fair Value Measurement | Cash, insurance contracts and other | Fair Value, Inputs, Level 1 [Member] | ||
Defined Benefit Plan Disclosure | ||
Fair value of plan assets | 104 | 90 |
Estimate of Fair Value Measurement | Cash, insurance contracts and other | Level 2 | ||
Defined Benefit Plan Disclosure | ||
Fair value of plan assets | 0 | 0 |
Estimate of Fair Value Measurement | Cash, insurance contracts and other | Level 3 | ||
Defined Benefit Plan Disclosure | ||
Fair value of plan assets | $ 12 | $ 17 |
Postretirement Benefit Plans _7
Postretirement Benefit Plans (Rollforward of Fair Value Measurements) (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | ||
Beginning Balance | $ 628 | |
Ending Balance | 567 | $ 628 |
Other | Level 3 | ||
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | ||
Beginning Balance | 17 | 24 |
Purchases, sales, settlements | (5) | (8) |
Impact on currency | 0 | 1 |
Ending Balance | $ 12 | $ 17 |
Postretirement Benefit Plans _8
Postretirement Benefit Plans (Future Benefit Payments) (Details) $ in Millions | Dec. 31, 2018USD ($) |
Pension | |
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block | |
2,018 | $ 35 |
2,019 | 36 |
2,020 | 36 |
2,021 | 37 |
2,022 | 39 |
Years 2022-2026 | 205 |
Other Benefits | |
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block | |
2,018 | 3 |
2,019 | 4 |
2,020 | 4 |
2,021 | 4 |
2,022 | 4 |
Years 2022-2026 | $ 19 |
Postretirement Benefit Plans _9
Postretirement Benefit Plans (Details Textual) - USD ($) shares in Thousands | 3 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block | |||||
Number of years eligible employees can receive transition credits | 5 years | ||||
Number of shares held by employees in Employee Stock Ownership Plan | 328 | 344 | |||
Charge resulting from curtailment or settlement recorded | $ 1,000,000 | $ 1,000,000 | $ 0 | ||
Prior service credit | (8,000,000) | (11,000,000) | |||
Net actuarial losses, net of tax | 9,000,000 | ||||
Net actuarial losses expected to be recognized next fiscal year, before tax | 12,000,000 | ||||
Prior service cost expected to be recognized next fiscal year, before tax | 4,000,000 | ||||
Prior service cost expected to be recognized next fiscal year, net of tax | 3,000,000 | ||||
Accumulated benefit obligation | $ 829,000,000 | 916,000,000 | |||
Expected long-term return on plan assets | 7.09% | ||||
Assumed rate of health care costs increases, next fiscal year | 8.24% | ||||
Ultimate assumed average annual health care cost increases | 4.48% | ||||
Effect of increase in health care trends by one percent per year on annual service interest (less than $1 million) | $ 1,000,000 | ||||
Effect of decrease in health care trends by one percent per year on annual service interest (less than $1 million) | 1,000,000 | ||||
Effect of increase in health care trends by one percent per year on benefit obligation | 3,000,000 | ||||
Effect of decrease in health care trends by one percent per year on benefit obligation | 4,000,000 | ||||
Employer Contribution to defined benefit Plan | $ 19,000,000 | $ 6,000,000 | |||
Estimated pension plan contributions during the next fiscal quarter | 5,000,000 | ||||
Pension | |||||
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block | |||||
Prior service credit | 4,000,000 | 1,000,000 | |||
Employer Contribution to defined benefit Plan | 41,000,000 | ||||
Other Benefits | |||||
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block | |||||
Prior service credit | (12,000,000) | (12,000,000) | |||
Net actuarial losses, before tax | (2,000,000) | (2,000,000) | (3,000,000) | ||
Prior service credit, before tax | $ (4,000,000) | (3,000,000) | $ (3,000,000) | ||
Employer Contribution to defined benefit Plan | 33,000,000 | ||||
Minimum | |||||
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block | |||||
Employer matching contribution | 3.00% | ||||
Estimated pension plan contributions during next fiscal year | $ 15,000,000 | ||||
Maximum | |||||
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block | |||||
Employer matching contribution | 7.00% | ||||
Estimated pension plan contributions during next fiscal year | $ 25,000,000 | ||||
Hedge funds | |||||
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block | |||||
Unfunded commitments | 0 | 5,000,000 | |||
Private equity | |||||
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block | |||||
Unfunded commitments | $ 3,000,000 | $ 4,000,000 |
Stock-Based Compensation (Stock
Stock-Based Compensation (Stock Option Activity) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Stock Options Outstanding, Beginning | 2,076 | |
Stock options, Granted | 316 | |
Stock options, Exercised | (214) | |
Stock options, Forfeited | (53) | |
Stock Options Outstanding, Ending | 2,125 | 2,076 |
Options exercisable, Shares | 1,403 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | ||
Weighted Average Exercise Price, Outstanding, Beginning | $ 37.44 | |
Weighted Average Exercise Price / Share, Granted | 75.11 | |
Weighted Average Exercise Price / Share, Exercised | 34.08 | |
Weighted Average Exercise Price / Share, Forfeited | 49.36 | |
Weighted Average Exercise Price, Outstanding, Ending | 43.08 | $ 37.44 |
Options exercisable, Weighted Average Exercise Price | $ 35.46 | |
Weighted Average Remaining Contractual Term, Outstanding | 6 years 6 months | 7 years |
Aggregate intrinsic value of outstanding stock options | $ 53 | |
Weighed average remaining contractual term, Options exercisable | 5 years 6 months | |
Aggregate intrinsic value of exercisable stock options | $ 44 | |
Vested and non-vested expected to vest as of December 31, 2018 | 2,065 | |
Vested and non-vested expected to vest as of December 31, 2018 | $ 42.37 | |
Vested and non-vested expected to vest as of December 31, 2018 | 6 years 4 months 24 days | |
Aggregate intrinsic value, vested and expected to vest | $ 53 |
Stock-Based Compensation (Fair
Stock-Based Compensation (Fair Value Assumptions) (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||
Dividend yield | 1.12% | 1.49% | 1.63% |
Volatility | 23.41% | 25.39% | 28.87% |
Risk-free interest rate | 2.76% | 2.07% | 1.41% |
Expected term (in years) | 5 years 1 month 6 days | 5 years 1 month 6 days | 5 years 7 months 6 days |
Weighted-average fair value / share | $ 17.80 | $ 10.66 | $ 9.05 |
Stock-Based Compensation (Restr
Stock-Based Compensation (Restricted Stock Unit Activity) (Details) - Restricted Stock shares in Thousands | 12 Months Ended |
Dec. 31, 2018$ / sharesshares | |
Summary of restricted stock activity | |
Outstanding Shares, Beginning | shares | 779 |
Restricted Stock, Granted | shares | 274 |
Vested | shares | (458) |
Forfeited | shares | (58) |
Outstanding Shares, Ending | shares | 537 |
Weighted Average Grant Date Fair Value / Share | |
Weighted Average Grant Date Fair Value, Outstanding at January 1, 2016 | $ / shares | $ 35.39 |
Weighted Average Grant Date Fair Value, Granted | $ / shares | 74.81 |
Weighted Average Grant Date Fair Value, Vested | $ / shares | 40.39 |
Weighted Average Grant Date Fair Value, Forfeited | $ / shares | 53.09 |
Weighted Average Grant Date Fair Value, Outstanding at December 31, 2016 | $ / shares | $ 59.41 |
Stock-Based Compensation (Perfo
Stock-Based Compensation (Performance Share Activity) (Details) - Performance Based Shares shares in Thousands | 12 Months Ended |
Dec. 31, 2018$ / sharesshares | |
ROIC Performance Share Unit Grants | |
Summary of Performance-based shares activity | |
Outstanding Shares, Beginning | shares | 298 |
Granted | shares | 77 |
Forfeited | shares | (101) |
Outstanding Shares, Ending | shares | 274 |
Weighted Average Grant Date Fair Value / Share | |
Weighted Average Grant Date Fair Value, Outstanding at January 1, 2016 | $ / shares | $ 41.48 |
Weighted Average Grant Date Fair Value, Granted | $ / shares | 75.12 |
Weighted Average Grant Date Fair Value, Forfeited | $ / shares | 38.39 |
Weighted Average Grant Date Fair Value, Outstanding at December 31, 2016 | $ / shares | $ 52.11 |
TSR Performance Share Unit Grants | |
Summary of Performance-based shares activity | |
Outstanding Shares, Beginning | shares | 213 |
Granted | shares | 77 |
Forfeited | shares | (16) |
Outstanding Shares, Ending | shares | 274 |
Weighted Average Grant Date Fair Value / Share | |
Weighted Average Grant Date Fair Value, Outstanding at January 1, 2016 | $ / shares | $ 47.04 |
Weighted Average Grant Date Fair Value, Granted | $ / shares | 98.86 |
Weighted Average Grant Date Fair Value, Forfeited | $ / shares | 51.39 |
Weighted Average Grant Date Fair Value, Outstanding at December 31, 2016 | $ / shares | $ 61.04 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details Textual) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Oct. 31, 2011 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation | $ 30 | $ 21 | $ 18 | |
Proceeds from exercise of employee stock options | 7 | $ 16 | $ 24 | |
Tax benefit from the exercise of stock options | $ 11 | |||
Shares awarded | 316 | |||
Shares outstanding | 2,125 | 2,076 | ||
Non-vested options outstanding | 700 | 900 | 1,000 | |
Weighted average grant date fair value | $ 58 | $ 42.84 | $ 37.10 | |
Aggregate intrinsic value of outstanding stock options | $ 53 | |||
Aggregate intrinsic value of exercisable stock options | 44 | |||
Total intrinsic value of options exercised | 9 | $ 14 | $ 12 | |
Stock Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unamortized compensation expense | $ 6 | |||
Weighted average period | 1 year 9 months 18 days | |||
Restricted Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unamortized compensation expense | $ 20 | |||
Weighted average period | 1 year 10 months 25 days | |||
Shares awarded | 274 | |||
Performance Based Shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unamortized compensation expense | $ 16 | |||
Weighted average period | 1 year 8 months 12 days | |||
Requisite service periods | 3 years | |||
Target payout percentage | 100.00% | |||
2011 Omnibus Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares initially available for awards | 18,000 | |||
Shares available for future grant | 6,000 |
Stock-Based Compensation (TSR F
Stock-Based Compensation (TSR Fair Value Assumptions) (Details) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Risk-free interest rate | 2.76% | 2.07% | 1.41% |
Dividend yield | 1.12% | 1.49% | 1.63% |
TSR Performance Share Unit Grants | Performance Based Shares | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Volatility | 26.80% | ||
Risk-free interest rate | 2.44% |
Capital Stock (Details Textual)
Capital Stock (Details Textual) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 12 Months Ended | ||||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Aug. 24, 2015 | Aug. 18, 2012 | |
Class of Stock [Line Items] | |||||
Common Stock, shares authorized | 750,000 | 750,000 | |||
Common Stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |||
Dividends declared per share (in usd per share) | $ 0.8400 | $ 0.7200 | $ 0.6196 | ||
Shares repurchased | 810 | 490 | 95 | ||
Shares repurchased, value | $ 59 | $ 25 | |||
2015 Stock Repurchase Program | |||||
Class of Stock [Line Items] | |||||
Authorized amount | $ 500 | ||||
Shares repurchased | 700 | 100 | |||
Shares repurchased, value | $ 50 | $ 7 | |||
Remaining authorized repurchase amount | $ 363 | ||||
2012 Stock Repurchase Program | |||||
Class of Stock [Line Items] | |||||
Shares repurchased | 300 | ||||
Shares repurchased, value | $ 13 | ||||
Number of shares authorized to be repurchased | 2,000 | ||||
Settlement of Employee Tax Withholding Obligations | |||||
Class of Stock [Line Items] | |||||
Shares repurchased | 100 | 100 | |||
Shares repurchased, value | $ 9 | $ 5 |
Capital Stock (Changes in Commo
Capital Stock (Changes in Common Stock Outstanding) (Details) - shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Changes in Common Stock Outstanding [Roll Forward] | |||
Beginning Balance, January 1 | 179,862 | 179,367 | 178,377 |
Stock incentive plan net activity | 672 | 985 | 1,085 |
Repurchase of common stock | (810) | (490) | (95) |
Ending Balance, December 31 | 179,724 | 179,862 | 179,367 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||
Beginning Balance | $ (210) | ||
Cumulative effect of change in accounting principle | $ (3) | $ (7) | |
Foreign currency translation adjustment | (85) | 79 | (65) |
Amortization of prior service credit cost | (4) | (3) | (3) |
Foreign currency translation adjustment for postretirement benefit plans | 15 | (18) | 19 |
Unrealized (loss) gain | (8) | 9 | 0 |
Reclassification of unrealized gain on derivative hedge agreements into revenue | 4 | (5) | (2) |
Ending Balance | (336) | (210) | |
Accumulated Other Comprehensive Income (Loss) | |||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||
Beginning Balance | (210) | (318) | (238) |
Cumulative effect of change in accounting principle | (17) | ||
Foreign currency translation adjustment | (83) | 79 | (65) |
Foreign currency gain reclassified into gain on sale of business | (21) | ||
Income tax impact on foreign currency translation adjustment | (12) | 46 | |
Amortization of prior service credit cost | (36) | (18) | (19) |
Income tax expense on changes in postretirement benefit plans | 5 | 7 | 3 |
Foreign currency translation adjustment for postretirement benefit plans | 15 | (18) | 19 |
Income tax impact on amortization of postretirement benefit plan items | (3) | (3) | (5) |
Unrealized (loss) gain | 9 | ||
Ending Balance | (336) | (210) | (318) |
Foreign Currency Translation | |||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||
Beginning Balance | (15) | (140) | (43) |
Cumulative effect of change in accounting principle | (11) | ||
Foreign currency translation adjustment | (83) | 79 | (65) |
Foreign currency gain reclassified into gain on sale of business | (21) | ||
Income tax impact on foreign currency translation adjustment | (12) | 46 | |
Ending Balance | (121) | (15) | (140) |
Postretirement Benefit Plans | |||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||
Beginning Balance | (198) | (177) | (185) |
Cumulative effect of change in accounting principle | (6) | ||
Amortization of prior service credit cost | (36) | (18) | (19) |
Income tax expense on changes in postretirement benefit plans | 5 | 7 | 3 |
Foreign currency translation adjustment for postretirement benefit plans | 15 | (18) | 19 |
Income tax impact on amortization of postretirement benefit plan items | (3) | (3) | (5) |
Ending Balance | (214) | (198) | (177) |
Derivative Instruments | |||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||
Beginning Balance | 3 | (1) | (10) |
Unrealized (loss) gain | (8) | 9 | |
Ending Balance | (1) | 3 | (1) |
Nonoperating Income (Expense) | Accumulated Other Comprehensive Income (Loss) | |||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||
Income tax impact on amortization of postretirement benefit plan items | 9 | 11 | 10 |
Nonoperating Income (Expense) | Postretirement Benefit Plans | |||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||
Income tax impact on amortization of postretirement benefit plan items | 9 | 11 | 10 |
Cost of Revenue | Accumulated Other Comprehensive Income (Loss) | |||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||
Unrealized (loss) gain | 1 | ||
Reclassification of unrealized gain on derivative hedge agreements into revenue | 0 | ||
Cost of Revenue | Foreign Currency Translation | |||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||
Reclassification of unrealized gain on derivative hedge agreements into revenue | (11) | ||
Cost of Revenue | Derivative Instruments | |||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||
Unrealized (loss) gain | 1 | ||
Reclassification of unrealized gain on derivative hedge agreements into revenue | 11 | ||
Revenue | Accumulated Other Comprehensive Income (Loss) | |||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||
Unrealized (loss) gain | (6) | ||
Reclassification of unrealized gain on derivative hedge agreements into revenue | (2) | ||
Revenue | Derivative Instruments | |||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||
Unrealized (loss) gain | $ (6) | ||
Reclassification of unrealized gain on derivative hedge agreements into revenue | $ (2) | ||
Cross Currency Swaps | Accumulated Other Comprehensive Income (Loss) | |||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||
Reclassification of unrealized gain on derivative hedge agreements into revenue | 4 | ||
Cross Currency Swaps | Foreign Currency Translation | |||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||
Reclassification of unrealized gain on derivative hedge agreements into revenue | |||
Cross Currency Swaps | Derivative Instruments | |||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||
Reclassification of unrealized gain on derivative hedge agreements into revenue | $ 4 |
Commitments and Contingencies_2
Commitments and Contingencies (Rent Expense) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Rent expense | $ 81 | $ 70 | $ 63 |
Commitments and Contingencies_3
Commitments and Contingencies (Future Minimum Rental Payments) (Details) $ in Millions | Dec. 31, 2018USD ($) |
Minimum rental payments under operating leases | |
2,019 | $ 76 |
2,020 | 61 |
2,021 | 43 |
2,022 | 33 |
2,023 | 22 |
Thereafter | $ 64 |
Commitments and Contingencies_4
Commitments and Contingencies (Rollforward of Warranties) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Warranties | |||
Warranty accrual – January 1 | $ 82 | $ 99 | |
Net charges for product warranties in the period | 20 | 28 | $ 32 |
Settlement of warranty claims | (42) | (48) | |
Foreign currency and other | 0 | 3 | |
Warranty accrual – December 31 | $ 60 | $ 82 | $ 99 |
Commitments and Contingencies_5
Commitments and Contingencies (Details Textual) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Loss contingency accrued | $ 7 | $ 10 | |
Guarantee amounts | 275 | ||
Estimated environmental matters | 4 | 4 | |
Warranty expense | $ 20 | $ 28 | $ 32 |
Related Party Transactions (Det
Related Party Transactions (Details) - Affiliated Entity - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Related Party Transaction [Line Items] | |||
Sales to unconsolidated affiliates | $ 10 | $ 12 | $ 11 |
Purchases from unconsolidated affiliates | $ 22 | $ 17 | $ 22 |
Segment and Geographic Data (Su
Segment and Geographic Data (Summary of Operating Results by Segment) (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Financial information for each reportable segment | |||||||||||
Revenue | $ 1,386 | $ 1,287 | $ 1,317 | $ 1,217 | $ 1,277 | $ 1,195 | $ 1,164 | $ 1,071 | $ 5,207 | $ 4,707 | $ 3,771 |
Operating income | $ 194 | $ 176 | $ 171 | $ 113 | $ 177 | $ 152 | $ 137 | $ 86 | 654 | 552 | 408 |
Other non-operating income, net | 13 | 6 | 2 | ||||||||
(Loss)/gain on sale of businesses | 0 | (10) | 0 | ||||||||
Interest Expense | 82 | 82 | 70 | ||||||||
Income before taxes | 585 | 466 | 340 | ||||||||
Depreciation and amortization | 261 | 234 | 151 | ||||||||
Capital expenditures | 237 | 170 | 124 | ||||||||
Water Infrastructure | |||||||||||
Financial information for each reportable segment | |||||||||||
Revenue | 2,176 | 2,004 | 1,932 | ||||||||
Operating income | 359 | 312 | 295 | ||||||||
Depreciation and amortization | 66 | 64 | 66 | ||||||||
Capital expenditures | 84 | 58 | 62 | ||||||||
Applied Water | |||||||||||
Financial information for each reportable segment | |||||||||||
Revenue | 1,534 | 1,421 | 1,393 | ||||||||
Operating income | 236 | 194 | 188 | ||||||||
Depreciation and amortization | 22 | 23 | 24 | ||||||||
Capital expenditures | 28 | 20 | 21 | ||||||||
Measurement & Control Solutions | |||||||||||
Financial information for each reportable segment | |||||||||||
Revenue | 1,497 | 1,282 | 446 | ||||||||
Operating income | 118 | 110 | 0 | ||||||||
Depreciation and amortization | 144 | 122 | 41 | ||||||||
Capital expenditures | 101 | 69 | 13 | ||||||||
Regional Selling Locations | |||||||||||
Financial information for each reportable segment | |||||||||||
Depreciation and amortization | 20 | 17 | 11 | ||||||||
Capital expenditures | 16 | 18 | 24 | ||||||||
Corporate and other | |||||||||||
Financial information for each reportable segment | |||||||||||
Operating income | (59) | (64) | (75) | ||||||||
Depreciation and amortization | 9 | 8 | 9 | ||||||||
Capital expenditures | $ 8 | $ 5 | $ 4 |
Segment and Geographic Data (Re
Segment and Geographic Data (Revenue by Segment) (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Revenue from External Customer [Line Items] | |||||||||||
Revenue | $ 1,386 | $ 1,287 | $ 1,317 | $ 1,217 | $ 1,277 | $ 1,195 | $ 1,164 | $ 1,071 | $ 5,207 | $ 4,707 | $ 3,771 |
Pumps, accessories, parts and service | |||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Revenue | 3,322 | 2,998 | 2,888 | ||||||||
Other | |||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Revenue | $ 1,885 | $ 1,709 | $ 883 |
Segment and Geographic Data (As
Segment and Geographic Data (Assets by Segment (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Total assets for each reportable segment | |||
Total assets | $ 7,222 | $ 6,860 | $ 6,474 |
Water Infrastructure | |||
Total assets for each reportable segment | |||
Total assets | 1,233 | 1,232 | 1,179 |
Applied Water | |||
Total assets for each reportable segment | |||
Total assets | 1,051 | 1,002 | 990 |
Measurement & Control Solutions | |||
Total assets for each reportable segment | |||
Total assets | 3,576 | 3,198 | 3,102 |
Regional Selling Locations | |||
Total assets for each reportable segment | |||
Total assets | 1,181 | 1,119 | 965 |
Corporate and other | |||
Total assets for each reportable segment | |||
Total assets | $ 181 | $ 309 | $ 238 |
Segment and Geographic Data (_2
Segment and Geographic Data (Summary of Revenue and Property, Plant and Equipment by Geographical Location) (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenue | $ 1,386 | $ 1,287 | $ 1,317 | $ 1,217 | $ 1,277 | $ 1,195 | $ 1,164 | $ 1,071 | $ 5,207 | $ 4,707 | $ 3,771 |
Property, plant and equipment | 656 | 643 | 656 | 643 | 616 | ||||||
United States | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenue | 2,424 | 2,161 | 1,574 | ||||||||
Property, plant and equipment | 281 | 258 | 281 | 258 | 255 | ||||||
Europe | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenue | 1,449 | 1,335 | 1,195 | ||||||||
Property, plant and equipment | 250 | 259 | 250 | 259 | 237 | ||||||
Asia Pacific | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenue | 660 | 611 | 518 | ||||||||
Property, plant and equipment | 66 | 85 | 66 | 85 | 87 | ||||||
Other | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenue | 674 | 600 | 484 | ||||||||
Property, plant and equipment | $ 59 | $ 41 | $ 59 | $ 41 | $ 37 |
Valuation and Qualifying Acco_3
Valuation and Qualifying Accounts (Details) - Allowance for Doubtful Accounts - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at beginning of year | $ 25 | $ 21 | $ 22 |
Additions charged to expense | 5 | 5 | 4 |
Deductions/other | (5) | (1) | (5) |
Balance at end of year | $ 25 | $ 25 | $ 21 |
Quarterly Financial Data (Una_3
Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Revenue | $ 1,386 | $ 1,287 | $ 1,317 | $ 1,217 | $ 1,277 | $ 1,195 | $ 1,164 | $ 1,071 | $ 5,207 | $ 4,707 | $ 3,771 |
Gross Profit | 542 | 505 | 519 | 460 | 507 | 471 | 457 | 412 | 2,026 | 1,847 | 1,462 |
Operating income | 194 | 176 | 171 | 113 | 177 | 152 | 137 | 86 | 654 | 552 | 408 |
Net income | $ 225 | $ 130 | $ 115 | $ 79 | $ 71 | $ 105 | $ 99 | $ 56 | $ 549 | $ 331 | $ 260 |
Basic (in dollars per share) | $ 1.25 | $ 0.73 | $ 0.64 | $ 0.44 | $ 0.40 | $ 0.58 | $ 0.55 | $ 0.31 | $ 3.05 | $ 1.84 | $ 1.45 |
Diluted (in dollars per share) | $ 1.24 | $ 0.72 | $ 0.64 | $ 0.43 | $ 0.40 | $ 0.58 | $ 0.55 | $ 0.31 | $ 3.03 | $ 1.83 | $ 1.45 |