Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2019 | Oct. 25, 2019 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2019 | |
Document Transition Report | false | |
Entity File Number | 1-35229 | |
Entity Registrant Name | Xylem Inc. | |
Entity Incorporation, State or Country Code | IN | |
Entity Tax Identification Number | 45-2080495 | |
Entity Address, Address Line One | 1 International Drive | |
Entity Address, City or Town | Rye Brook | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10573 | |
City Area Code | 914 | |
Local Phone Number | 323-5700 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 180,078,871 | |
Entity Shell Company | false | |
Entity Central Index Key | 0001524472 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --12-31 | |
Common Stock | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Trading Symbol | XYL | |
Security Exchange Name | NYSE | |
Senior Notes Due 2023, 2.250% | ||
Document Information [Line Items] | ||
Title of 12(b) Security | 2.250% Senior Notes due 2023 | |
Trading Symbol | XYL23 | |
Security Exchange Name | NYSE |
Condensed Consolidated Income S
Condensed Consolidated Income Statements (Unaudited) - USD ($) shares in Thousands, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Statement [Abstract] | ||||
Revenues | $ 1,296 | $ 1,287 | $ 3,878 | $ 3,821 |
Cost of revenue | 787 | 782 | 2,369 | 2,337 |
Gross profit | 509 | 505 | 1,509 | 1,484 |
Selling, general and administrative expenses | 273 | 279 | 870 | 868 |
Research and development expenses | 44 | 46 | 142 | 137 |
Restructuring and asset impairment charges | 33 | 4 | 58 | 19 |
Goodwill impairment charge | 148 | 0 | 148 | 0 |
Operating income | 11 | 176 | 291 | 460 |
Interest expense | 16 | 21 | 52 | 63 |
Other non-operating (expense) income, net | (7) | 4 | (2) | 9 |
Gain from sale of business | 0 | 2 | 1 | 0 |
(Loss) income before taxes | (12) | 161 | 238 | 406 |
Income tax (benefit) expense | (77) | 31 | (45) | 82 |
Net income | $ 65 | $ 130 | $ 283 | $ 324 |
Earnings per share: | ||||
Basic (usd per share) | $ 0.36 | $ 0.73 | $ 1.57 | $ 1.80 |
Diluted (usd per share) | $ 0.36 | $ 0.72 | $ 1.56 | $ 1.79 |
Weighted average number of shares: | ||||
Basic (in shares) | 180,072 | 179,676 | 179,938 | 179,788 |
Diluted (in shares) | 181,212 | 181,090 | 181,159 | 181,166 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 65 | $ 130 | $ 283 | $ 324 |
Other comprehensive loss, before tax: | ||||
Foreign currency translation adjustment | (20) | (9) | (9) | (61) |
Net change in derivative hedge agreements: | ||||
Unrealized loss | (5) | 0 | (14) | (9) |
Amount of loss reclassified into net income | 3 | 3 | 7 | 1 |
Net change in postretirement benefit plans: | ||||
Net loss | (11) | 0 | (11) | 0 |
Amortization of prior service credit | (1) | (2) | (3) | (4) |
Amortization of net actuarial loss into net income | 2 | 4 | 8 | 11 |
Settlement/Curtailment | 8 | 0 | 8 | 1 |
Other comprehensive loss, before tax | (24) | (4) | (14) | (61) |
Income tax expense (benefit) related to items of other comprehensive income | 13 | (3) | 14 | 7 |
Other comprehensive loss, net of tax | (37) | (1) | (28) | (68) |
Comprehensive income | 28 | 129 | 255 | 256 |
Less: comprehensive loss attributable to noncontrolling interests | 0 | (2) | 0 | (2) |
Comprehensive income attributable to Xylem | $ 28 | $ 131 | $ 255 | $ 258 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 453 | $ 296 |
Receivables, less allowances for discounts and doubtful accounts of $33 and $35 in 2019 and 2018, respectively | 1,078 | 1,031 |
Inventories | 580 | 595 |
Prepaid and other current assets | 152 | 172 |
Total current assets | 2,263 | 2,094 |
Property, plant and equipment, net | 641 | 656 |
Goodwill | 2,811 | 2,976 |
Other intangible assets, net | 1,180 | 1,232 |
Other non-current assets | 620 | 264 |
Total assets | 7,515 | 7,222 |
Current liabilities: | ||
Accounts payable | 521 | 586 |
Accrued and other current liabilities | 634 | 546 |
Short-term borrowings and current maturities of long-term debt | 306 | 257 |
Total current liabilities | 1,461 | 1,389 |
Long-term debt | 2,030 | 2,051 |
Accrued postretirement benefits | 385 | 400 |
Deferred income tax liabilities | 310 | 303 |
Other non-current accrued liabilities | 434 | 297 |
Total liabilities | 4,620 | 4,440 |
Commitments and contingencies (Note 19) | ||
Stockholders’ equity: | ||
Common Stock | 2 | 2 |
Capital in excess of par value | 1,983 | 1,950 |
Retained earnings | 1,791 | 1,639 |
Treasury stock – at cost 13.7 shares and 13.2 shares in 2019 and 2018, respectively | (526) | (487) |
Accumulated other comprehensive loss | (364) | (336) |
Total stockholders’ equity | 2,886 | 2,768 |
Non-controlling interests | 9 | 14 |
Total equity | 2,895 | 2,782 |
Total liabilities and stockholders’ equity | $ 7,515 | $ 7,222 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Allowances for discounts and doubtful accounts on receivables | $ 33 | $ 35 |
Common Stock, par value | $ 0.01 | $ 0.01 |
Common Stock, shares authorized | 750,000,000 | 750,000,000 |
Common Stock, shares issued | 193,800,000 | 192,900,000 |
Treasury Stock, shares | 13,700,000 | 13,200,000 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Operating Activities | ||
Net income | $ 283 | $ 324 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 88 | 87 |
Amortization | 104 | 108 |
Share-based compensation | 23 | 23 |
Restructuring and asset impairment charges | 58 | 19 |
Goodwill impairment charge | 148 | 0 |
Gain from sale of business | (1) | 0 |
Other, net | 7 | 2 |
Payments for restructuring | (21) | (18) |
Changes in assets and liabilities (net of acquisitions): | ||
Changes in receivables | (73) | (76) |
Changes in inventories | (2) | (115) |
Changes in accounts payable | (30) | 51 |
Changes in accrued taxes | (140) | 20 |
Other, net | 7 | (37) |
Net Cash – Operating activities | 451 | 388 |
Investing Activities | ||
Capital expenditures | (175) | (171) |
Acquisitions of businesses, net of cash acquired | (18) | (433) |
Proceeds from sale of business | (2) | 22 |
Cash received from investments | 3 | 0 |
Other, net | 7 | 3 |
Net Cash – Investing activities | (185) | (579) |
Financing Activities | ||
Short-term debt issued, net | 317 | 410 |
Short-term debt repaid | (254) | (50) |
Repurchase of common stock | (39) | (58) |
Proceeds from exercise of employee stock options | 10 | 7 |
Dividends paid | (131) | (114) |
Other, net | (2) | 0 |
Net Cash – Financing activities | (99) | 195 |
Effect of exchange rate changes on cash | (10) | (14) |
Net change in cash and cash equivalents | 157 | (10) |
Cash and cash equivalents at beginning of year | 296 | 414 |
Cash and cash equivalents at end of period | 453 | 404 |
Cash paid during the period for: | ||
Interest | 46 | 47 |
Income taxes (net of refunds received) | $ 94 | $ 60 |
Background and Basis of Present
Background and Basis of Presentation | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Background and Basis of Presentation | Background and Basis of Presentation Background Xylem Inc. (“Xylem” or the “Company”) is a leading equipment and service provider for water and wastewater applications with a broad portfolio of products and services addressing the full cycle of water, from collection, distribution and use to the return of water to the environment. Xylem operates in three segments, Water Infrastructure, Applied Water and Measurement & Control Solutions. See Note 20, "Segment Information" to the condensed consolidated financial statements for further segment background information. Except as otherwise indicated or unless the context otherwise requires, "Xylem," "we," "us," "our" and the "Company" refer to Xylem Inc. and its subsidiaries. Basis of Presentation The interim condensed consolidated financial statements reflect our financial position and results of operations in conformity with accounting principles generally accepted in the United States of America ("GAAP"). All intercompany transactions between our businesses have been eliminated. The unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and, in the opinion of management, reflect all adjustments (which include normal recurring adjustments) considered necessary for a fair presentation of the financial position and results of operations for the periods presented. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such SEC rules. We believe that the disclosures made are adequate to make the information presented not misleading. We consistently applied the accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2018 ("2018 Annual Report") in preparing these unaudited condensed consolidated financial statements, with the exception of accounting standard updates described in Note 2. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes included in our 2018 Annual Report. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Estimates are revised as additional information becomes available. Estimates and assumptions are used for, but not limited to, postretirement obligations and assets, revenue recognition, income tax contingency accruals and valuation allowances, goodwill and indefinite lived intangible impairment testing, contingent liabilities and lease accounting. Actual results could differ from these estimates. Our quarterly financial periods end on the Saturday closest to the last day of the calendar quarter, except for the fourth quarter which ends on December 31. For ease of presentation, the condensed consolidated financial statements included herein are described as ending on the last day of the calendar quarter. |
Recently Issued Accounting Pron
Recently Issued Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements Pronouncements Not Yet Adopted 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 have a probable likelihood 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. Recently Adopted Pronouncements 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 adopted this guidance prospectively as of April 1, 2019. This guidance did not have a material impact 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 ("ROU") asset, 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 was permitted. We adopted this guidance as of January 1, 2019 using the modified retrospective approach whereby prior comparative periods were not retrospectively restated in the condensed consolidated financial statements. The adoption of the standard resulted in the recognition of ROU assets and lease liabilities of $267 million and $265 million , respectively, as well as deferred tax assets and deferred tax liabilities of $68 million , as of January 1, 2019, the date of initial application. The guidance did not have a material impact on our Condensed Consolidated Income Statements and Statements of Cash Flow. See Note 9, "Leases" for further details. |
Acquisitions and Divestitures
Acquisitions and Divestitures | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
Acquisitions and Divestitures | Acquisitions and Divestitures 2019 Acquisitions During the three and nine months ended September 30, 2019 we spent approximately $0 million and $18 million , net of cash received on acquisition activity, respectively. 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 Condensed Consolidated Income Statement for the year ended December 31, 2018. 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 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 three and nine month periods ended September 30, 2018 assuming the acquisition of Pure was made on January 1, 2017: (in millions) Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018 Revenue N/A $ 3,826 Net income N/A $ 321 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 three months ended September 30, 2018 Pure had revenue and an operating loss of $25 million and $2 million , respectively. During the eight months ended September 30, 2018 Pure had revenue and an operating loss of $67 million and $5 million , respectively. Other Acquisition Activity During the three and nine months ended September 30, 2018 we spent approximately $3 million and $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 for the three and nine months ended September 30, 2018, which is reflected in gain from sale of business in our Condensed 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 . |
Restructuring Charges
Restructuring Charges | 9 Months Ended |
Sep. 30, 2019 | |
Restructuring and Related Activities [Abstract] | |
Restructuring Charges | Restructuring and Asset Impairment Charges Restructuring 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 the three and nine months ended September 30, 2019 , we recognized restructuring charges of $26 million and $48 million , respectively. We incurred these charges primarily as a continuation of our efforts to reposition our European and North American businesses to optimize our cost structure and improve our operational efficiency and effectiveness. 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. During the three and nine months ended September 30, 2018 , we recognized restructuring charges of $4 million and $19 million , respectively. We incurred these charges primarily as a continuation of our efforts to reposition our European and North American businesses to optimize our cost structure and improve our operational efficiency and effectiveness. 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. The following table presents the components of restructuring expense and asset impairment charges: Three Months Ended Nine Months Ended September 30, September 30, (in millions) 2019 2018 2019 2018 By component: Severance and other charges $ 26 $ 4 $ 46 $ 18 Lease related charges — — 1 1 Other restructuring charges — — 1 — Total restructuring charges $ 26 $ 4 $ 48 $ 19 Asset impairment 7 — 10 — Total restructuring and asset impairment charges $ 33 $ 4 $ 58 $ 19 By segment: Water Infrastructure $ 6 $ 2 $ 17 $ 8 Applied Water 2 1 4 2 Measurement & Control Solutions 25 1 37 9 The following table displays a roll-forward of the restructuring accruals, presented on our Condensed Consolidated Balance Sheets within accrued and other current liabilities, for the nine months ended September 30, 2019 and 2018 : (in millions) 2019 2018 Restructuring accruals - January 1 $ 5 $ 7 Restructuring charges 48 19 Cash payments (21 ) (18 ) Foreign currency and other (2 ) (1 ) Restructuring accruals - September 30 $ 30 $ 7 By segment: Water Infrastructure $ 1 $ 1 Applied Water 1 1 Measurement & Control Solutions 21 3 Regional selling locations (a) 7 2 Corporate and other — — (a) Regional selling locations consist primarily of selling and marketing organizations and related support services 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 roll-forward for the nine months ended September 30, 2019 and 2018 of employee position eliminations associated with restructuring activities: 2019 2018 Planned reductions - January 1 69 47 Additional planned reductions 621 176 Actual reductions and reversals (465 ) (135 ) Planned reductions - September 30 225 88 The following table presents expected restructuring spend for actions commenced as of September 30, 2019: (in millions) Water Infrastructure Applied Water Measurement & Control Solutions Corporate Total Actions Commenced in 2019: Total expected costs $ 18 $ 5 $ 27 $ — $ 50 Costs incurred during Q1 2019 3 — 3 — 6 Costs incurred during Q2 2019 7 2 5 — 14 Costs incurred during Q3 2019 6 2 18 — 26 Total expected costs remaining $ 2 $ 1 $ 1 $ — $ 4 Actions Commenced in 2018: Total expected costs $ 8 $ 1 $ 7 $ — $ 16 Costs incurred during 2018 7 1 7 — 15 Costs incurred during Q1 2019 1 — — — 1 Costs incurred during Q2 2019 — — — — — Costs incurred during Q3 2019 — — — — — Total expected costs remaining $ — $ — $ — $ — $ — Actions Commenced in 2017: Total expected costs $ 12 $ 7 $ 4 $ — $ 23 Costs incurred during 2017 5 4 2 — 11 Costs incurred during 2018 2 1 1 — 4 Costs incurred during Q1 2019 — — 1 — 1 Costs incurred during Q2 2019 — — — — — Costs incurred during Q3 2019 — — — — — Total expected costs remaining $ 5 $ 2 $ — $ — $ 7 The Water Infrastructure, Applied Water, and Measurement & Control Solutions actions commenced in 2019 consist primarily of severance charges and are expected to continue through the end of 2019. The Water Infrastructure, Applied Water, and Measurement & Control Solutions actions commenced in 2018 consist primarily of severance charges and are complete. 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 fourth quarter of 2020. Asset Impairment During the third quarter of 2019 we determined that certain assets within our Measurement & Control Solutions segment, including customer relationships, internally developed software, proprietary technology, and plant property & equipment, were impaired. Accordingly we recognized an impairment charge of $7 million . Refer to Note 10 , "Goodwill and Other Intangible Assets," for additional information. During the first quarter of 2019 we determined that certain assets within our Measurement & Control Solutions segment, including a customer relationship, were impaired. Accordingly we recognized an impairment charge of $3 million . Refer to Note 10 , "Goodwill and Other Intangible Assets," for additional information. |
Revenue
Revenue | 9 Months Ended |
Sep. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue Disaggregation of Revenue The following table illustrates the sources of revenue: Three Months Ended Nine Months Ended September 30, September 30, (in millions) 2019 2018 2019 2018 Revenue from contracts with customers $ 1,231 $ 1,222 $ 3,690 $ 3,642 Lease Revenue 65 65 188 179 Total $ 1,296 $ 1,287 $ 3,878 $ 3,821 The following table reflects revenue from contracts with customers by application: Three Months Ended Nine Months Ended September 30, September 30, (in millions) 2019 2018 2019 2018 Water Infrastructure Transport $ 369 $ 380 $ 1,111 $ 1,114 Treatment 96 96 274 274 Applied Water Building Services 207 208 636 608 Industrial Water 169 170 513 524 Measurement & Control Solutions Water 193 168 587 514 Energy 90 90 248 254 Software as a Service/Other 26 26 75 96 Test 81 84 246 258 Total $ 1,231 $ 1,222 $ 3,690 $ 3,642 The following table reflects revenue from contracts with customers by geographical region: Three Months Ended Nine Months Ended September 30, September 30, (in millions) 2019 2018 2019 2018 Water Infrastructure United States $ 141 $ 139 $ 434 $ 387 Europe 170 174 509 542 Asia Pacific 92 91 260 252 Other 62 72 182 207 Applied Water United States 196 197 609 583 Europe 89 93 275 291 Asia Pacific 41 40 121 115 Other 50 48 144 143 Measurement & Control Solutions United States 251 238 739 674 Europe 63 59 199 214 Asia Pacific 27 31 85 106 Other 49 40 133 128 Total $ 1,231 $ 1,222 $ 3,690 $ 3,642 Contract Balances We receive payments from customers based on a billing schedule as established in our contracts. Contract assets relate to costs incurred to perform in advance of scheduled billings. Contract liabilities relate to payments received in advance of performance under the contracts. Changes 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 January 1, 2018 $ 89 $ 107 Additions, net 68 92 Revenue recognized from opening balance — (83 ) Billings (62 ) — Other (4 ) (6 ) Balance at September 30, 2018 $ 91 $ 110 Balance at January 1, 2019 $ 96 $ 113 Additions, net 71 97 Revenue recognized from opening balance — (82 ) Billings (58 ) — Other 9 (3 ) Balance at September 30, 2019 $ 118 $ 125 (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 September 30, 2019 , the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied for contracts with performance obligations, amount to $388 million . We expect to recognize the majority of revenue upon the completion of satisfying these performance obligations in the following 60 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Our quarterly provision for income taxes is measured using an estimated annual effective tax rate, adjusted for discrete items within periods presented. The comparison of our effective tax rate between periods is significantly impacted by the level and mix of earnings and losses by tax jurisdiction and discrete items. The income tax provision for the three months ended September 30, 2019 was a benefit of $77 million resulting in an effective tax rate of 623.6% (on a pre-tax loss for the period), compared to a $31 million charge resulting in an effective tax rate of 19.0% for the same period in 2018 . The income tax provision for the nine months ended September 30, 2019 was a benefit of $45 million resulting in an effective tax rate of (18.9)% , compared to an $82 million charge resulting in an effective tax rate of 20.1% for the same period in 2018 . The effective tax rates for the three and nine month periods ended September 30, 2019 differ from the United States federal statutory rate primarily due to the income tax benefit that resulted from changes in tax law in Switzerland and the impact of the goodwill impairment charge on income before taxes in 2019. 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 condensed 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. The amount of unrecognized tax benefits at September 30, 2019 was $126 million , as compared to $136 million at December 31, 2018, which if ultimately recognized will reduce our effective tax rate. We believe that it is reasonably possible that the unrecognized tax benefits will be reduced by approximately $4 million within the next 12 months as a result of the expiration of certain statutes of limitations. We classify interest expense relating to unrecognized tax benefits as a component of other non-operating expense, net, and tax penalties as a component of income tax expense in our Condensed Consolidated Income Statements. As of September 30, 2019 , we had $8 million of interest accrued for unrecognized tax benefits. In June 2019, Xylem’s Swedish subsidiary received a tax assessment for the 2013 tax year related to the tax treatment of an intercompany transfer of certain intellectual property that was made in connection with a reorganization of our European businesses. The assessment asserts an aggregate amount of approximately $80 million for tax, penalties and interest. In July 2019, Xylem filed an appeal with the Administrative Court of Stockholm. Management, in consultation with external legal advisors, believes it is more likely than not that Xylem will prevail on the proposed assessment and intends to vigorously defend our position through litigation. At this time, we have not recorded any unrecognized tax benefits related to this uncertain tax position. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The following is a reconciliation of the shares used in calculating basic and diluted net earnings per share: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Net income (in millions) $ 65 $ 130 $ 283 $ 324 Shares (in thousands): Weighted average common shares outstanding 180,044 179,650 179,909 179,760 Add: Participating securities (a) 28 26 29 28 Weighted average common shares outstanding — Basic 180,072 179,676 179,938 179,788 Plus incremental shares from assumed conversions: (b) Dilutive effect of stock options 790 895 819 903 Dilutive effect of restricted stock units and performance share units 350 519 402 475 Weighted average common shares outstanding — Diluted 181,212 181,090 181,159 181,166 Basic earnings per share $ 0.36 $ 0.73 $ 1.57 $ 1.80 Diluted earnings per share $ 0.36 $ 0.72 $ 1.56 $ 1.79 (a) Restricted stock unit 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 will be included in the treasury stock calculation of diluted earnings per share upon achievement of underlying performance or market conditions at the end of the reporting period. See Note 16 , "Share-Based Compensation Plans" to the condensed consolidated financial statements for further detail on the performance share units. Three Months Ended Nine Months Ended September 30, September 30, (in thousands) 2019 2018 2019 2018 Stock options 1,390 1,292 1,401 1,290 Restricted stock units 351 334 360 338 Performance share units 391 415 439 490 |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories The components of total inventories are summarized as follows: (in millions) September 30, December 31, Finished goods $ 231 $ 248 Work in process 54 45 Raw materials 295 302 Total inventories $ 580 $ 595 |
Leases
Leases | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Leases | Leases As discussed in Note 2, “Recently Issued Accounting Pronouncements,” Xylem adopted the new guidance on accounting for leases. Leasing Arrangements We lease certain offices, manufacturing buildings, transportation equipment, machinery, computers and other equipment. Our most significant lease liabilities relate to real estate leases. These leases include renewal, termination or purchase options, and we have assessed these to determine whether it is reasonably certain for us to exercise any of the previously mentioned options. All periods relating to options that are reasonably certain to be exercised have been included in the lease term of the respective leases. We have recorded ROU assets for lease arrangements that are reasonably certain to extend beyond 12 months. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments under the lease. ROU assets and liabilities are recognized at lease commencement date based on the present value of lease payments over the lease term. The implicit rate within our leases is generally not determinable, and we use our incremental borrowing rate at the lease commencement date to determine the net present value of lease payments. The determination of the appropriate incremental borrowing rate requires judgment. We determine the appropriate incremental borrowing rate for each lease using our current borrowing rate, adjusted for various factors including geographic region, level of collateralization and term, to align with the term of the underlying lease. Many of our leases are subject to payment adjustments to reflect annual changes in price indexes, such as the Consumer Price Index. While associated lease liabilities are not re-measured as a result of changes in the applicable price indexes, changes to required lease payments are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred. Leases with a lease term of 12 months or less, including renewal options that are reasonably certain to be exercised, that also do not include an option to purchase the underlying asset that is reasonably certain of exercise, are not recorded on the balance sheet. Instead, lease payments for these leases are recognized as a lease cost on a straight-line basis over the lease term. We elected the package of practical expedients, which among other things, does not require reassessment of lease classification. Additionally, we have made an accounting policy election whereby we chose not to separate non-lease components from lease components in agreements in all leases which we are the lessee. We did not identify any events or conditions during the three and nine month periods ended September 30, 2019 to indicate that a reassessment or re-measurement of our existing leases was required. There were also no impairment indicators identified during the three and nine month periods ended September 30, 2019 that required an impairment test for the Company’s ROU assets or other long-lived assets in accordance with ASC 360-10. Our current lease liabilities of $60 million are included in "Accrued and other current liabilities" and our non-current lease liabilities of $184 million are included in "Other non-current accrued liabilities" as of September 30, 2019 . Our ROU asset balances are included in "Other non-current assets". The net balance of our ROU assets as of September 30, 2019 was $247 million . These balances include an immaterial amount related to finance leases. The components of our lease cost were as follows: Three Months Ended Nine Months Ended (in millions) September 30, 2019 September 30, 2019 Lease cost Operating lease cost $ 20 $ 58 Short-term lease cost 2 7 Variable lease cost 3 13 Total lease cost $ 25 $ 78 The supplemental cash flow information related to leases are as follows: Nine Months Ended (in millions) September 30, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 54 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 26 Information relating to the lease term and discount rate are as follows: Nine Months Ended September 30, 2019 Weighted-average remaining lease term (years) Operating leases 6 Weighted-average discount rate Operating leases 2.8% As of September 30, 2019 , the maturities of operating lease liabilities were as follows: (in millions) 2019 $ 18 2020 61 2021 46 2022 34 2023 26 2024 20 Thereafter 59 Total lease payments 264 Less: Imputed interest (21 ) Total $ 243 Disclosures related to periods prior to adoption of the New Lease Standard as reported and provided in our 2018 Annual Report. As of December 31, 2018, we were obligated to make minimum future rental payments under operating leases as follows: (in millions) 2019 $ 76 2020 61 2021 43 2022 33 2023 22 Thereafter 64 Total lease payments 299 Lessor arrangements In addition to manufacturing and selling equipment, we also lease out equipment to customers in exchange for consideration. These arrangements are generally short term in nature and predominantly involve the rental of pumps and accessories within the Water Infrastructure segment. Rental arrangements generally do not provide the customer the right to purchase the equipment as Xylem’s strategy is to rent these items over their useful lives. Customers may be billed based on daily, weekly or monthly rates depending on the expected rental period. We assessed that these arrangements constitute a lease under ASC 842, and have recognized them as operating leases. In situations where arrangements contain both the sale of products and a leasing component, contract consideration is allocated based on relative standalone selling price. Total revenue from lease arrangements were $65 million and $188 million for the three and nine month periods ended September 30, 2019 , respectively. Our gross assets available for rent and related accumulated amortization were $262 million and $171 million , respectively, as of September 30, 2019 . Depreciation expense for these assets were $7 million and $21 million for the three and nine month periods ended September 30, 2019 |
Leases | As discussed in Note 2, “Recently Issued Accounting Pronouncements,” Xylem adopted the new guidance on accounting for leases. Leasing Arrangements We lease certain offices, manufacturing buildings, transportation equipment, machinery, computers and other equipment. Our most significant lease liabilities relate to real estate leases. These leases include renewal, termination or purchase options, and we have assessed these to determine whether it is reasonably certain for us to exercise any of the previously mentioned options. All periods relating to options that are reasonably certain to be exercised have been included in the lease term of the respective leases. We have recorded ROU assets for lease arrangements that are reasonably certain to extend beyond 12 months. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments under the lease. ROU assets and liabilities are recognized at lease commencement date based on the present value of lease payments over the lease term. The implicit rate within our leases is generally not determinable, and we use our incremental borrowing rate at the lease commencement date to determine the net present value of lease payments. The determination of the appropriate incremental borrowing rate requires judgment. We determine the appropriate incremental borrowing rate for each lease using our current borrowing rate, adjusted for various factors including geographic region, level of collateralization and term, to align with the term of the underlying lease. Many of our leases are subject to payment adjustments to reflect annual changes in price indexes, such as the Consumer Price Index. While associated lease liabilities are not re-measured as a result of changes in the applicable price indexes, changes to required lease payments are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred. Leases with a lease term of 12 months or less, including renewal options that are reasonably certain to be exercised, that also do not include an option to purchase the underlying asset that is reasonably certain of exercise, are not recorded on the balance sheet. Instead, lease payments for these leases are recognized as a lease cost on a straight-line basis over the lease term. We elected the package of practical expedients, which among other things, does not require reassessment of lease classification. Additionally, we have made an accounting policy election whereby we chose not to separate non-lease components from lease components in agreements in all leases which we are the lessee. We did not identify any events or conditions during the three and nine month periods ended September 30, 2019 to indicate that a reassessment or re-measurement of our existing leases was required. There were also no impairment indicators identified during the three and nine month periods ended September 30, 2019 that required an impairment test for the Company’s ROU assets or other long-lived assets in accordance with ASC 360-10. Our current lease liabilities of $60 million are included in "Accrued and other current liabilities" and our non-current lease liabilities of $184 million are included in "Other non-current accrued liabilities" as of September 30, 2019 . Our ROU asset balances are included in "Other non-current assets". The net balance of our ROU assets as of September 30, 2019 was $247 million . These balances include an immaterial amount related to finance leases. The components of our lease cost were as follows: Three Months Ended Nine Months Ended (in millions) September 30, 2019 September 30, 2019 Lease cost Operating lease cost $ 20 $ 58 Short-term lease cost 2 7 Variable lease cost 3 13 Total lease cost $ 25 $ 78 The supplemental cash flow information related to leases are as follows: Nine Months Ended (in millions) September 30, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 54 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 26 Information relating to the lease term and discount rate are as follows: Nine Months Ended September 30, 2019 Weighted-average remaining lease term (years) Operating leases 6 Weighted-average discount rate Operating leases 2.8% As of September 30, 2019 , the maturities of operating lease liabilities were as follows: (in millions) 2019 $ 18 2020 61 2021 46 2022 34 2023 26 2024 20 Thereafter 59 Total lease payments 264 Less: Imputed interest (21 ) Total $ 243 Disclosures related to periods prior to adoption of the New Lease Standard as reported and provided in our 2018 Annual Report. As of December 31, 2018, we were obligated to make minimum future rental payments under operating leases as follows: (in millions) 2019 $ 76 2020 61 2021 43 2022 33 2023 22 Thereafter 64 Total lease payments 299 Lessor arrangements In addition to manufacturing and selling equipment, we also lease out equipment to customers in exchange for consideration. These arrangements are generally short term in nature and predominantly involve the rental of pumps and accessories within the Water Infrastructure segment. Rental arrangements generally do not provide the customer the right to purchase the equipment as Xylem’s strategy is to rent these items over their useful lives. Customers may be billed based on daily, weekly or monthly rates depending on the expected rental period. We assessed that these arrangements constitute a lease under ASC 842, and have recognized them as operating leases. In situations where arrangements contain both the sale of products and a leasing component, contract consideration is allocated based on relative standalone selling price. Total revenue from lease arrangements were $65 million and $188 million for the three and nine month periods ended September 30, 2019 , respectively. Our gross assets available for rent and related accumulated amortization were $262 million and $171 million , respectively, as of September 30, 2019 . Depreciation expense for these assets were $7 million and $21 million for the three and nine month periods ended September 30, 2019 |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill Changes in the carrying value of goodwill by reportable segment for the nine months ended September 30, 2019 are as follows: (in millions) Water Infrastructure Applied Water Measurement & Control Solutions Total Balance as of January 1, 2019 $ 653 $ 516 $ 1,807 $ 2,976 Activity in 2019 Divested/Acquired — — 19 19 Impairment — — (148 ) (148 ) Foreign currency and other (9 ) (7 ) (20 ) (36 ) Balance as of September 30, 2019 $ 644 $ 509 $ 1,658 $ 2,811 During the third quarter of 2019, the Company recorded a goodwill impairment charge of $148 million related to the Advanced Infrastructure Analytics (“AIA”) goodwill reporting unit. The impairment resulted from a downward revision of forecasted future cash flows. Factors that contributed to the revised forecast in the third quarter include lower than expected results as compared to prior forecasts, largely as a result of slower-than-expected conversion of pipeline opportunities to revenue. Additionally, we have continued to invest in the AIA platform ahead of the adoption curve, which has also impacted the near term profitability of the business. These factors drove the decrease in forecasted cash flows, and as such, the calculated fair value of the AIA reporting unit below its carrying value as of the third quarter. To determine the fair value of the AIA reporting unit, the Company used the income approach. Under the income approach, the fair value of the AIA reporting unit was based on the present value of the estimated cash flows that the reporting unit is expected to generate over its remaining life. Cash flow projections were based on management’s estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. The discount rate was based on the weighted average cost of capital appropriate for the AIA reporting unit. Other Intangible Assets Information regarding our other intangible assets is as follows: September 30, 2019 December 31, 2018 (in millions) Carrying Amount Accumulated Amortization Net Intangibles Carrying Amount Accumulated Amortization Net Intangibles Customer and distributor relationships $ 939 $ (334 ) $ 605 $ 951 $ (286 ) $ 665 Proprietary technology and patents 203 (105 ) 98 198 (93 ) 105 Trademarks 147 (49 ) 98 148 (41 ) 107 Software 405 (195 ) 210 355 (164 ) 191 Other 20 (16 ) 4 24 (19 ) 5 Indefinite-lived intangibles 165 — 165 159 — 159 Other Intangibles $ 1,879 $ (699 ) $ 1,180 $ 1,835 $ (603 ) $ 1,232 Amortization expense related to finite-lived intangible assets was $35 million and $104 million for the three and nine months ended September 30, 2019 , respectively, and $34 million and $108 million for the three and nine months ended September 30, 2018 , respectively. During the third quarter of 2019, the Company also assessed whether the carrying amounts of the AIA reporting unit’s long-lived assets may not be recoverable based on the revised forecasted cash flows, and therefore impaired. Our assessment resulted in an impairment charge of $7 million , primarily related to customer relationships, proprietary technology, software and property, plant and equipment. The charge was calculated using an income approach, which is considered a Level 3 input for fair value measurement, and is reflected in “Restructuring and asset impairment charges” in our Condensed Consolidated Income Statements. During the first quarter of 2019, we determined that the intended use of a finite lived customer relationship within the test application of our Measurement & Control Solutions segment had changed. Accordingly we recorded a $3 million impairment charge. The charge was also calculated using the income approach and is reflected in “Restructuring and asset impairment charges” in our Condensed Consolidated Income Statements. |
Derivative Financial Instrument
Derivative Financial Instruments | 9 Months Ended |
Sep. 30, 2019 | |
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 we principally manage our exposures to these risks through management of our core business activities. Certain of our foreign operations expose us to fluctuations of foreign interest rates and exchange rates that may impact 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 purchased notional amounts totaling $117 million and $506 million as of September 30, 2019 and December 31, 2018 , respectively. As of September 30, 2019 , 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 purchased notional amounts associated with these currency derivatives are $45 million , $39 million , $11 million , $9 million , $7 million and $5 million , respectively. As of December 31, 2018, the purchased notional amounts associated with these currency derivatives were $191 million , $168 million , $52 million , $37 million , $29 million and $22 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 Beginning in 2015, we entered into cross currency swaps to manage our exposure to fluctuations in the Euro-U.S. Dollar exchange rate. During the second quarter of 2019 we entered into additional cross currency swaps. The total notional amount of derivative instruments designated as net investment hedges was $702 million and $426 million as of September 30, 2019 and December 31, 2018 , 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 $544 million and $566 million as of September 30, 2019 and December 31, 2018 , respectively, net of unamortized discount, as a hedge of a net investment in certain foreign subsidiaries. The table below presents the effect of our derivative financial instruments on the Condensed Consolidated Income Statements and Statements of Comprehensive Income: Three Months Ended Nine Months Ended September 30, September 30, (in millions) 2019 2018 2019 2018 Cash Flow Hedges Foreign Exchange Contracts Amount of (loss) recognized in OCI (a) $ (5 ) $ — $ (14 ) $ (9 ) Amount of (gain) loss reclassified from OCI into revenue (a) 2 1 4 (1 ) Amount of loss reclassified from OCI into cost of revenue (a) 1 2 3 2 Net Investment Hedges Cross Currency Swaps Amount of gain (loss) recognized in OCI (a) $ 31 $ (5 ) $ 30 $ 8 Amount of income recognized in Interest Expense 4 — $ 11 $ — Foreign Currency Denominated Debt Amount of gain (loss) recognized in OCI (a) $ 22 $ (8 ) $ 23 $ 11 (a) Effective portion As of September 30, 2019 , $8 million of net losses on cash flow hedges are expected to be reclassified into earnings in the next 12 months. The ineffective portion of a cash flow hedge is recognized immediately in Selling, general and administrative expenses in the Condensed Consolidated Income Statements and was not material for the three and nine months ended September 30, 2019 and 2018 . As of September 30, 2019 , no gains or losses on the net investment hedges are expected to be reclassified into earnings over their duration. The net investment hedges did not experience any ineffectiveness for the three and nine months ended September 30, 2019 . 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 foreign exchange contracts currently included in our hedging program designated as hedging instruments were as follows: (in millions) September 30, December 31, Derivatives designated as hedging instruments Assets Cash Flow Hedges Other current assets $ — $ 3 Net Investment Hedges Other non-current assets $ 7 $ — Liabilities Cash Flow Hedges Other current liabilities $ (5 ) $ (1 ) Net Investment Hedges Other non-current accrued liabilities $ (19 ) $ (46 ) The fair value of our long-term debt, due in 2023, designated as a net investment hedge was $583 million and $599 million as of September 30, 2019 and December 31, 2018 , respectively. |
Accrued and Other Current Liabi
Accrued and Other Current Liabilities | 9 Months Ended |
Sep. 30, 2019 | |
Payables and Accruals [Abstract] | |
Accrued and Other Current Liabilities | Accrued and Other Current Liabilities The components of total accrued and other current liabilities are as follows: (in millions) September 30, December 31, Compensation and other employee benefits $ 189 $ 194 Customer-related liabilities 144 129 Accrued taxes 69 85 Lease liabilities 60 — Accrued warranty costs 39 44 Other accrued liabilities 133 94 Total accrued and other current liabilities $ 634 $ 546 |
Credit Facilities and Debt
Credit Facilities and Debt | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Credit Facilities and Debt | Credit Facilities and Debt Total debt outstanding is summarized as follows: (in millions) September 30, December 31, 4.875% Senior Notes due 2021 (a) $ 600 $ 600 2.250% Senior Notes due 2023 (a) 547 570 3.250% Senior Notes due 2026 (a) 500 500 4.375% Senior Notes due 2046 (a) 400 400 Commercial paper 306 — Term loan — 257 Debt issuance costs and unamortized discount (b) (17 ) (19 ) Total debt 2,336 2,308 Less: short-term borrowings and current maturities of long-term debt 306 257 Total long-term debt $ 2,030 $ 2,051 (a) The fair value of our Senior Notes 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 was $631 million and $620 million as of September 30, 2019 and December 31, 2018 , respectively. The fair value of our Senior Notes due 2023 was $583 million and $599 million as of September 30, 2019 and December 31, 2018, respectively. The fair value of our Senior Notes due 2026 was $515 million and $476 million as of September 30, 2019 and December 31, 2018, respectively. The fair value of our Senior Notes due 2046 was $455 million and $397 million as of September 30, 2019 and December 31, 2018 , respectively. (b) The debt issuance costs and unamortized discount are recognized as a reduction in the carrying value of the Senior Notes in the Condensed Consolidated Balance Sheets and are being amortized to interest expense in our Condensed Consolidated Income Statements over the expected remaining terms of the Senior Notes. Senior Notes On September 20, 2011, we issued 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 September 30, 2019 , we are in compliance with all covenants for the Senior Notes. Credit Facilities 2015 Five -Year Revolving Credit Facility Effective March 27, 2015, Xylem entered into a Five-Year Revolving Credit Facility (the "2015 Credit Facility") with Citibank, N.A., as Administrative Agent, and a syndicate of lenders. The 2015 Credit Facility provided 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 2015 Credit Facility provided for increases of up to $200 million for a maximum aggregate principle amount of $800 million in aggregate principal amount at our request and with the consent of the institutions providing such increased commitments. On March 5, 2019 Xylem terminated the 2015 Credit Facility among the Company, certain lenders and Citibank, N.A. as Administrative Agent. 2019 Five -Year Revolving Credit Facility On March 5, 2019, Xylem entered into a Five -Year Revolving Credit Facility (the “2019 Credit Facility”) with Citibank, N.A., as Administrative Agent, and a syndicate of lenders. The 2019 Credit Facility provides for an aggregate principal amount of up to $800 million (available in U.S. Dollars and in Euros), with increases of up to $200 million for a maximum aggregate principal amount of $1 billion at the request of Xylem and with the consent of the institutions providing such increased commitments. Interest on all loans under the 2019 Credit Facility is payable either quarterly or at the expiration of any LIBOR or EURIBOR interest period applicable thereto. Borrowings accrue interest at a rate equal to, at Xylem's election, a base rate or an adjusted LIBOR or EURIBOR rate plus an applicable margin. The 2019 Credit Facility includes customary provisions for implementation of replacement rates for LIBOR-based and EURIBOR-based loans. The 2019 Credit Facility also includes a pricing grid that determines the applicable margin based on Xylem's credit rating, with a further adjustment depending on Xylem's annual Sustainalytics Environmental, Social and Governance score. Xylem will also pay quarterly fees to each lender for such lender’s commitment to lend accruing on such commitment at a rate based on our credit rating, whether such commitment is used or unused, as well as a quarterly letter of credit fee accruing on the letter of credit exposure of such lender during the preceding quarter at a rate based on the credit rating of Xylem (as adjusted for the Environmental, Social and Governance score). The 2019 Credit facility requires that Xylem maintain a consolidated total debt to consolidated EBITDA ratio, which will be based on the last four fiscal quarters, and in addition a number of customary covenants, including limitations on the incurrence of secured debt and debt of subsidiaries, liens, sale and lease-back transactions, mergers, consolidations, liquidations, dissolutions and sales of assets. The 2019 Credit Agreement also contains customary events of default. Finally, Xylem has the ability to designate subsidiaries that can borrow under the 2019 Credit Facility, subject to certain requirements and conditions set forth in the 2019 Credit Agreement. As of September 30, 2019 , the 2019 Credit Facility was undrawn and we are in compliance with all covenants. Commercial Paper U.S. Dollar Commercial Paper Program Our U.S. Dollar commercial paper program generally serves as a means of short-term funding with a $600 million maximum issuing balance and a combined limit of $800 million inclusive of the 2019 Five -Year Revolving Credit Facility. As of September 30, 2019 and December 31, 2018 , none of the Company's $600 million U.S. Dollar commercial paper program was outstanding. We have the ability to continue borrowing under this program going forward in in future periods. Euro Commercial Paper Program On June 3, 2019 Xylem entered into a Euro commercial paper program with ING Bank N.V., as administrative agent, and a syndicate of dealers. The Euro commercial paper program provides for a maximum issuing balance of up to €500 million (approximately $547 million ) which may be denominated in a variety of currencies. The maximum issuing balance may be increased in accordance with the Dealer Agreement. As of September 30, 2019 , $306 million of the Company's Euro commercial paper program was outstanding at a weighted average interest rate of (0.20)% . We have the ability to continue borrowing under this program going forward in future periods. Term Loan Facility On January 26, 2018, the Company’s subsidiary, Xylem Europe GmbH (the “borrower”) entered into a 12-month €225 million (approximately $246 million ) term loan facility (the “Term Facility”) at an interest rate of 0.45% in which the terms are set forth in a Term Loan Agreement, among the borrower, the Company, as parent guarantor and ING Bank. The Company entered into a parental 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 in 2018 and the maturity date has since been extended through February 2020. As of September 30, 2019 and December 31, 2018 , $0 million and $257 million |
Postretirement Benefit Plans
Postretirement Benefit Plans | 9 Months Ended |
Sep. 30, 2019 | |
Retirement Benefits [Abstract] | |
Postretirement Benefit Plans | Postretirement Benefit Plans The components of net periodic benefit cost for our defined benefit pension plans are as follows: Three Months Ended Nine Months Ended September 30, September 30, (in millions) 2019 2018 2019 2018 Domestic defined benefit pension plans: Service cost $ 1 $ — $ 2 $ 2 Interest cost 1 1 3 3 Expected return on plan assets (2 ) (2 ) (6 ) (5 ) Amortization of net actuarial loss — 1 1 2 Net periodic benefit cost $ — $ — $ — $ 2 International defined benefit pension plans: Service cost $ 2 $ 3 $ 7 $ 8 Interest cost 4 5 14 15 Expected return on plan assets (4 ) (9 ) (22 ) (28 ) Amortization of net actuarial loss 2 2 6 7 Settlement/Curtailment 8 — 8 1 Net periodic benefit cost $ 12 $ 1 $ 13 $ 3 Total net periodic benefit cost $ 12 $ 1 $ 13 $ 5 The components of net periodic benefit cost other than the service cost component are included in the line item "Other non-operating income, net" in the Condensed Consolidated Income Statements. The total net periodic benefit cost for other postretirement employee benefit plans was less than $1 million for both the three and nine months ended September 30, 2019 , including net credits recognized into other comprehensive income ("OCI") of $1 million and $2 million , respectively, for the three and nine months ended September 30, 2019 . The total net periodic benefit cost for other postretirement employee benefit plans was less than $1 million for both the three and nine months ended September 30, 2018, including net credits recognized in OCI of $1 million and $2 million , respectively, for the three and nine months ended September 30, 2018 . We contributed $14 million and $37 million to our defined benefit plans during the nine months ended September 30, 2019 and 2018 , respectively. Discretionary contributions of $19 million were made to the U.S. Plan in the third quarter of 2018, to increase the funding ratio and reduce regulatory fees. Additional contributions ranging between approximately $4 million and $8 million are expected during the remainder of 2019 . The Company has initiated the process for a full buy-out of its largest defined benefit plan in the UK. In order to prepare for a buy-out, the plan’s assets were converted to cash, cash equivalents or other highly liquid assets as of the third quarter. In addition, the Company completed an enhanced transfer value (“ETV”) exercise for the deferred vested participants of the plan. The ETV offered the participants an enhanced lump sum to transfer their full pension rights out of the plan. Lump sum payments of $21 million were paid out of the plan assets, and the Company recorded a settlement charge of $8 million during the quarter. Prior to the settlement accounting, the plan was re-measured as of July 31, 2019, resulting in an increase in the plan’s projected benefit obligation of $37 million , an increase in plan assets of $26 million and an increase to losses in accumulated other comprehensive income of $11 million . The assumptions used to re-measure the plan were developed in the same manner as at December 31, 2018. However, due to the recent change in the investment assets, the expected rate of return on assets was changed from 7.25% to 0.70% . The discount rate used in the re-measurement was 2.00% , down from 3.00% at December 31, 2018. The Company recorded incremental net periodic benefit cost of $3 million |
Equity
Equity | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
Equity | Equity The following table shows the changes in stockholders' equity for the nine months ended September 30, 2019 : Common Retained Accumulated Other Treasury Stock Non-Controlling Interest Total Balance at January 1, 2019 $ 2 $ 1,950 $ 1,639 $ (336 ) $ (487 ) $ 14 $ 2,782 Sale of business (2 ) (2 ) Net income 79 79 Other comprehensive income, net 20 20 Dividends declared ($0.24 per share) (44 ) (44 ) Stock incentive plan activity 12 (14 ) (2 ) Repurchase of common stock (25 ) (25 ) Balance at March 31, 2019 $ 2 $ 1,962 $ 1,674 $ (316 ) $ (526 ) $ 12 $ 2,808 Net income 139 139 Other comprehensive loss, net (11 ) (11 ) Dividends declared ($0.24 per share) (43 ) (43 ) Stock incentive plan activity 13 — 13 Balance at June 30, 2019 $ 2 $ 1,975 $ 1,770 $ (327 ) $ (526 ) $ 12 $ 2,906 Net income 65 65 Other comprehensive loss, net (37 ) (37 ) Distribution to minority shareholders (3 ) (3 ) Dividends declared ($0.24 per share) (44 ) (44 ) Stock incentive plan activity 8 — 8 Balance at September 30, 2019 $ 2 $ 1,983 $ 1,791 $ (364 ) $ (526 ) $ 9 $ 2,895 The following table shows the changes in stockholders' equity for the nine months ended September 30, 2018 : Common Retained Accumulated Other Treasury Stock Non-Controlling Interest Total Balance at January 1, 2018 $ 2 $ 1,912 $ 1,227 $ (210 ) $ (428 ) $ 16 $ 2,519 Cumulative effect of change in accounting principle 14 (17 ) (3 ) Net income 79 79 Other comprehensive income, net 20 20 Dividends declared ($0.21 per share) (38 ) (38 ) Stock incentive plan activity 13 (8 ) 5 Repurchase of common stock (25 ) (25 ) Balance at March 31, 2018 $ 2 $ 1,925 $ 1,282 $ (207 ) $ (461 ) $ 16 $ 2,557 Net income 115 115 Other comprehensive loss, net (87 ) (87 ) Dividends declared ($0.21 per share) (38 ) (38 ) Stock incentive plan activity 7 7 Repurchase of common stock (25 ) (25 ) Balance at June 30, 2018 $ 2 $ 1,932 $ 1,359 $ (294 ) $ (486 ) $ 16 $ 2,529 Net income 130 130 Other comprehensive income, net 1 (2 ) (1 ) Dividends declared ($0.21 per share) (37 ) (37 ) Stock incentive plan activity 10 — 10 Balance at September 30, 2018 $ 2 $ 1,942 $ 1,452 $ (293 ) $ (486 ) $ 14 $ 2,631 |
Share-Based Compensation Plans
Share-Based Compensation Plans | 9 Months Ended |
Sep. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Share-Based Compensation Plans | Share-Based Compensation Plans Share-based compensation expense was $7 million and $23 million during the three and nine months ended September 30, 2019 , respectively, and $7 million and $23 million during the three and nine months ended September 30, 2018 , respectively. The unrecognized compensation expense related to our stock options, restricted stock units and performance share units was $7 million , $26 million and $18 million , respectively, at September 30, 2019 and is expected to be recognized over a weighted average period of 1.9 , 2 and 1.9 years, respectively. The amount of cash received from the exercise of stock options was $10 million and $7 million for the nine months ended September 30, 2019 and 2018 , respectively. Stock Option Grants The following is a summary of the changes in outstanding stock options for the nine months ended September 30, 2019 : Share units (in thousands) Weighted Average Exercise Price / Share Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in millions) Outstanding at January 1, 2019 2,125 $ 43.08 6.5 Granted 334 74.08 Exercised (286 ) 35.71 Forfeited and expired (46 ) 67.04 Outstanding at September 30, 2019 2,127 $ 48.42 6.5 $ 67 Options exercisable at September 30, 2019 1,492 $ 39.60 5.5 $ 60 Vested and expected to vest as of September 30, 2019 2,067 $ 47.71 6.4 $ 66 The total intrinsic value of options exercised (which is the amount by which the stock price exceeded the exercise price of the options on the date of exercise) during the nine months ended September 30, 2019 was $11.9 million . Stock Option Fair Value The fair value of each option grant was estimated on the date of grant using the binomial lattice pricing model which incorporates multiple and variable assumptions over time, including assumptions such as employee exercise patterns, stock price volatility and changes in dividends. The following are weighted-average assumptions for 2019 grants: Volatility 24.10 % Risk-free interest rate 2.55 % Dividend yield 1.30 % Expected term (in years) 5.4 Weighted-average fair value / share $ 17.04 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 United States Treasury yield curve in effect at the time of option grant. Restricted Stock Unit Grants The following is a summary of restricted stock unit activity for the nine months ended September 30, 2019 . The fair value of the restricted share unit awards is determined using the closing price of our common stock on date of grant. Share units (in thousands) Weighted Average Grant Date Fair Value /Share Outstanding at January 1, 2019 537 $ 59.41 Granted 284 74.32 Vested (247 ) 55.42 Forfeited (44 ) 67.59 Outstanding at September 30, 2019 530 $ 68.50 ROIC Performance Share Unit Grants The following is a summary of Return on Invested Capital ("ROIC") performance share unit grants for the nine months ended September 30, 2019 . The fair value of the ROIC performance share units is equal to the closing share price on the date of the grant. Share units (in thousands) Weighted Average Grant Date Fair Value /Share Outstanding at January 1, 2019 274 $ 52.11 Granted 77 74.07 Adjustment for Performance Condition Achieved (a) 74 37.86 Vested (174 ) 37.86 Forfeited (17 ) 63.18 Outstanding at September 30, 2019 234 $ 64.54 (a) Represents an increase in the number of original ROIC performance share units awarded based on the final performance criteria achievement at the end of the performance period of such awards. TSR Performance Share Unit Grants The following is a summary of our Total Shareholder Return ("TSR") performance share unit grants for the nine months ended September 30, 2019 : Share units (in thousands) Weighted Average Grant Date Fair Value /Share Outstanding at January 1, 2019 274 $ 61.04 Granted 77 89.62 Adjustment for Market Condition Achieved (a) 74 37.86 Vested (174 ) 37.86 Forfeited (17 ) 63.18 Outstanding at September 30, 2019 234 $ 75.82 (a) Represents an increase in the number of original TSR performance share units awarded based on the final market condition achievement at the end of the performance period of such awards. The fair value of TSR performance share units was 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 assumptions for 2019 grants: Volatility 20.9 % Risk-free interest rate 2.52 % |
Capital Stock
Capital Stock | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
Capital Stock | Capital Stock For the three and nine months ended September 30, 2019 the Company repurchased common stock of less than 0.1 million shares for less than $1 million and approximately 0.5 million shares for $39 million , respectively. Repurchases include both share repurchase programs approved by the Board of Directors and repurchases in relation to settlement of employee tax withholding obligations due as a result of the vesting of restricted stock units. The details 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. There were no shares repurchased under this program for the three months ended September 30, 2019 . For the nine months ended September 30, 2019 , we repurchased approximately 0.3 million shares for $25 million . There were no shares repurchased under this program for the three months ended September 30, 2018. For the nine months ended September 30, 2018 , we repurchased approximately 0.7 million shares for $50 million . There are up to $338 million in shares that may still be purchased under this plan as of September 30, 2019 . Aside from the aforementioned repurchase program, we repurchased less than 0.1 million shares and approximately 0.2 million shares for less than $1 million and approximately $14 million for the three and nine months ended September 30, 2019 , respectively, in relation to settlement of employee tax withholding obligations due as a result of the vesting of restricted stock units. Likewise, we repurchased less than 0.1 million shares and approximately 0.1 million shares for less than $1 million and approximately $8 million for the three and nine months ended September 30, 2018 , respectively. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Loss The following table provides the components of accumulated other comprehensive loss for the nine months ended September 30, 2019 : (in millions) Foreign Currency Translation Postretirement Benefit Plans Derivative Instruments Total Balance at January 1, 2019 $ (121 ) $ (214 ) $ (1 ) $ (336 ) Foreign currency translation adjustment 29 — — 29 Tax on foreign currency translation adjustment (4 ) — — (4 ) Amortization of prior service cost and net actuarial loss on postretirement benefit plans into other non-operating income (expense), net — 2 — 2 Income tax impact on amortization of postretirement benefit plan items — (1 ) — (1 ) Unrealized loss on derivative hedge agreements — — (9 ) (9 ) Income tax benefit on unrealized loss on derivative hedge agreements — — 1 1 Reclassification of unrealized loss on foreign exchange agreements into revenue — — 1 1 Reclassification of unrealized loss on foreign exchange agreements into cost of revenue — — 1 1 Balance at March 31, 2019 $ (96 ) $ (213 ) $ (7 ) $ (316 ) Foreign currency translation adjustment (18 ) — — (18 ) Tax on foreign currency translation adjustment 3 — — 3 Amortization of prior service cost and net actuarial loss on postretirement benefit plans into other non-operating income (expense), net — 2 — 2 Unrealized loss on derivative hedge agreements — — — — Reclassification of unrealized loss on foreign exchange agreements into revenue — — 1 1 Reclassification of unrealized loss on foreign exchange agreements into cost of revenue — — 1 1 Balance at June 30, 2019 $ (111 ) $ (211 ) $ (5 ) $ (327 ) Foreign currency translation adjustment (20 ) — — (20 ) Tax on foreign currency translation adjustment (13 ) — — (13 ) Changes in postretirement benefit plans — (11 ) — (11 ) Amortization of prior service cost and net actuarial loss on postretirement benefit plans into other non-operating income (expense), net — 1 — 1 Settlement charge released into other non-operating income (expense), net — 8 — 8 Unrealized loss on derivative hedge agreements — — (5 ) (5 ) Reclassification of unrealized loss on foreign exchange agreements into revenue — — 2 2 Reclassification of unrealized loss on foreign exchange agreements into cost of revenue — — 1 1 Balance at September 30, 2019 $ (144 ) $ (213 ) $ (7 ) $ (364 ) The following table provides the components of accumulated other comprehensive loss for the nine months ended September 30, 2018 : (in millions) Foreign Currency Translation Postretirement Benefit Plans Derivative Instruments Total Balance at January 1, 2018 $ (15 ) $ (198 ) $ 3 $ (210 ) Cumulative effect of change in accounting principle (11 ) (6 ) — (17 ) Foreign currency translation adjustment 8 — — 8 Tax on foreign currency translation adjustment 11 — — 11 Changes in postretirement benefit plans — 1 — 1 Amortization of prior service cost and net actuarial loss on postretirement benefit plans into other non-operating income (expense), net — 2 — 2 Income tax impact on amortization of postretirement benefit plan items — (1 ) — (1 ) Reclassification of unrealized gain on derivative hedge agreements into revenue — — (1 ) (1 ) Balance at March 31, 2018 $ (7 ) $ (202 ) $ 2 $ (207 ) Foreign currency translation adjustment (60 ) — — (60 ) Tax on foreign currency translation adjustment (19 ) — — (19 ) Amortization of prior service cost and net actuarial loss on postretirement benefit plans into other non-operating income (expense), net — — — — Other non-operating income — 3 — 3 Income tax impact on amortization of postretirement benefit plan items — (1 ) — (1 ) Unrealized loss on derivative hedge agreements — — (9 ) (9 ) Reclassification of unrealized gain on derivative hedge agreements into revenue — — (1 ) (1 ) Balance at June 30, 2018 $ (86 ) $ (200 ) $ (8 ) $ (294 ) Foreign currency translation adjustment (7 ) — — (7 ) Tax on foreign currency translation adjustment 3 — — 3 Amortization of prior service cost and net actuarial loss on postretirement benefit plans into other non-operating income (expense), net — 2 — 2 Reclassification of unrealized gain on foreign exchange agreements into revenue — — 1 1 Reclassification of unrealized gain on foreign exchange agreements into cost of revenue — — 2 2 Balance at September 30, 2018 (90 ) (198 ) (5 ) (293 ) |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2019 | |
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. We believe ITT Corporation (now ITT LLC) remains a substantial entity with sufficient financial resources to honor its obligations to us. See Note 6 "Income Taxes", of our condensed consolidated financial statements for a description of a pending tax litigation matter. 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 believe it is reasonably possible that any asserted or unasserted legal claims or proceedings, individually or in aggregate, will have a material adverse effect on our results of operations, or financial condition. We have estimated and accrued $6 million and $7 million as of September 30, 2019 and December 31, 2018 , respectively, for these general litigation 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’ indemnification obligations under the Distribution Agreement. Guarantees We obtain certain stand-by letters of credit, bank guarantees, surety bonds and insurance letters of credit from third-party financial institutions in the ordinary course of business when required under contracts or to satisfy insurance related requirements. As of September 30, 2019 and December 31, 2018 , the amount of stand-by letters of credit, bank guarantees and surety bonds was $302 million and $275 million , respectively. 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 United States 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 our 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 $ 3 million and $4 million as of September 30, 2019 and December 31, 2018 , 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. Warranties We warrant numerous products, the terms of which vary widely. In general, we warrant products against defect and specific non-performance. The table below provides the changes in our product warranty accrual: (in millions) 2019 2018 Warranty accrual – January 1 $ 60 $ 82 Net charges for product warranties in the period 20 16 Settlement of warranty claims (32 ) (33 ) Foreign currency and other (2 ) 1 Warranty accrual - September 30 $ 46 $ 66 |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information 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. Additionally, we have Regional selling locations, which consist primarily of selling and marketing organizations and related support services, that offer products and services across our reportable segments. Corporate and other consists of corporate office expenses including compensation, benefits, occupancy, depreciation, and other administrative costs, as well as charges related to certain matters, such as environmental matters, that are managed at a corporate level and are not included in the business segments in evaluating performance or allocating resources. The accounting policies of each segment are the same as those described in the summary of significant accounting policies (see Note 1 in the 2018 Annual Report). The following tables contain financial information for each reportable segment: Three Months Ended Nine Months Ended September 30, September 30, (in millions) 2019 2018 2019 2018 Revenue: Water Infrastructure $ 531 $ 541 $ 1,574 $ 1,567 Applied Water 376 378 1,149 1,132 Measurement & Control Solutions 389 368 1,155 1,122 Total $ 1,296 $ 1,287 $ 3,878 $ 3,821 Operating Income: Water Infrastructure $ 97 $ 99 $ 246 $ 240 Applied Water 61 59 179 170 Measurement & Control Solutions (136 ) 31 (94 ) 95 Corporate and other (11 ) (13 ) (40 ) (45 ) Total operating income $ 11 $ 176 $ 291 $ 460 Interest expense $ 16 21 $ 52 $ 63 Other non-operating (expense) income, net (7 ) 4 (2 ) 9 Gain from sale of business — 2 1 — Income before taxes $ (12 ) $ 161 $ 238 $ 406 Depreciation and Amortization: Water Infrastructure $ 15 $ 17 $ 46 $ 50 Applied Water 5 5 17 16 Measurement & Control Solutions 36 34 107 107 Regional selling locations (a) 6 5 14 15 Corporate and other 3 2 8 7 Total $ 65 $ 63 $ 192 $ 195 Capital Expenditures: Water Infrastructure $ 14 $ 20 $ 65 $ 60 Applied Water 5 5 15 19 Measurement & Control Solutions 21 26 74 72 Regional selling locations (b) 4 3 13 11 Corporate and other 2 6 8 9 Total $ 46 $ 60 $ 175 $ 171 (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 expense is captured in this Regional selling location line. (b) Represents capital expenditures incurred by the Regional selling locations not allocated to the segments. |
Background and Basis of Prese_2
Background and Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The interim condensed consolidated financial statements reflect our financial position and results of operations in conformity with accounting principles generally accepted in the United States of America ("GAAP"). All intercompany transactions between our businesses have been eliminated. The unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and, in the opinion of management, reflect all adjustments (which include normal recurring adjustments) considered necessary for a fair presentation of the financial position and results of operations for the periods presented. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such SEC rules. We believe that the disclosures made are adequate to make the information presented not misleading. We consistently applied the accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2018 ("2018 Annual Report") in preparing these unaudited condensed consolidated financial statements, with the exception of accounting standard updates described in Note 2. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes included in our 2018 Annual Report. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Estimates are revised as additional information becomes available. Estimates and assumptions are used for, but not limited to, postretirement obligations and assets, revenue recognition, income tax contingency accruals and valuation allowances, goodwill and indefinite lived intangible impairment testing, contingent liabilities and lease accounting. Actual results could differ from these estimates. Our quarterly financial periods end on the Saturday closest to the last day of the calendar quarter, except for the fourth quarter which ends on December 31. For ease of presentation, the condensed consolidated financial statements included herein are described as ending on the last day of the calendar quarter. |
Recently Issued Accounting Pr_2
Recently Issued Accounting Pronouncements (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Pronouncements Not Yet Adopted and Recently Adopted Pronouncements | and $265 million , respectively, as well as deferred tax assets and deferred tax liabilities of $68 million , as of January 1, 2019, the date of initial application. The guidance did not have a material impact on our Condensed Consolidated Income Statements and Statements of Cash Flow. See Note 9, "Leases" for further details. |
Acquisitions and Divestitures (
Acquisitions and Divestitures (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
Purchase Price Allocation | (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 |
Summary of Intangible Assets Acquired | 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 |
Pro Forma Information | (in millions) Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018 Revenue N/A $ 3,826 Net income N/A $ 321 |
Restructuring Charges (Tables)
Restructuring Charges (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Restructuring and Related Activities [Abstract] | |
Components of restructuring and asset impairment charges | The following table presents the components of restructuring expense and asset impairment charges: Three Months Ended Nine Months Ended September 30, September 30, (in millions) 2019 2018 2019 2018 By component: Severance and other charges $ 26 $ 4 $ 46 $ 18 Lease related charges — — 1 1 Other restructuring charges — — 1 — Total restructuring charges $ 26 $ 4 $ 48 $ 19 Asset impairment 7 — 10 — Total restructuring and asset impairment charges $ 33 $ 4 $ 58 $ 19 By segment: Water Infrastructure $ 6 $ 2 $ 17 $ 8 Applied Water 2 1 4 2 Measurement & Control Solutions 25 1 37 9 |
Restructuring Accruals | The following table displays a roll-forward of the restructuring accruals, presented on our Condensed Consolidated Balance Sheets within accrued and other current liabilities, for the nine months ended September 30, 2019 and 2018 : (in millions) 2019 2018 Restructuring accruals - January 1 $ 5 $ 7 Restructuring charges 48 19 Cash payments (21 ) (18 ) Foreign currency and other (2 ) (1 ) Restructuring accruals - September 30 $ 30 $ 7 By segment: Water Infrastructure $ 1 $ 1 Applied Water 1 1 Measurement & Control Solutions 21 3 Regional selling locations (a) 7 2 Corporate and other — — (a) Regional selling locations consist primarily of selling and marketing organizations and related support services that incurred restructuring expense which was allocated to the segments. The liabilities associated with restructuring expense were not allocated to the segments. |
Planned Employee Reductions Associated with Restructuring | The following is a roll-forward for the nine months ended September 30, 2019 and 2018 of employee position eliminations associated with restructuring activities: 2019 2018 Planned reductions - January 1 69 47 Additional planned reductions 621 176 Actual reductions and reversals (465 ) (135 ) Planned reductions - September 30 225 88 |
Expected Restructuring Costs | The following table presents expected restructuring spend for actions commenced as of September 30, 2019: (in millions) Water Infrastructure Applied Water Measurement & Control Solutions Corporate Total Actions Commenced in 2019: Total expected costs $ 18 $ 5 $ 27 $ — $ 50 Costs incurred during Q1 2019 3 — 3 — 6 Costs incurred during Q2 2019 7 2 5 — 14 Costs incurred during Q3 2019 6 2 18 — 26 Total expected costs remaining $ 2 $ 1 $ 1 $ — $ 4 Actions Commenced in 2018: Total expected costs $ 8 $ 1 $ 7 $ — $ 16 Costs incurred during 2018 7 1 7 — 15 Costs incurred during Q1 2019 1 — — — 1 Costs incurred during Q2 2019 — — — — — Costs incurred during Q3 2019 — — — — — Total expected costs remaining $ — $ — $ — $ — $ — Actions Commenced in 2017: Total expected costs $ 12 $ 7 $ 4 $ — $ 23 Costs incurred during 2017 5 4 2 — 11 Costs incurred during 2018 2 1 1 — 4 Costs incurred during Q1 2019 — — 1 — 1 Costs incurred during Q2 2019 — — — — — Costs incurred during Q3 2019 — — — — — Total expected costs remaining $ 5 $ 2 $ — $ — $ 7 |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The following table illustrates the sources of revenue: Three Months Ended Nine Months Ended September 30, September 30, (in millions) 2019 2018 2019 2018 Revenue from contracts with customers $ 1,231 $ 1,222 $ 3,690 $ 3,642 Lease Revenue 65 65 188 179 Total $ 1,296 $ 1,287 $ 3,878 $ 3,821 The following table reflects revenue from contracts with customers by application: Three Months Ended Nine Months Ended September 30, September 30, (in millions) 2019 2018 2019 2018 Water Infrastructure Transport $ 369 $ 380 $ 1,111 $ 1,114 Treatment 96 96 274 274 Applied Water Building Services 207 208 636 608 Industrial Water 169 170 513 524 Measurement & Control Solutions Water 193 168 587 514 Energy 90 90 248 254 Software as a Service/Other 26 26 75 96 Test 81 84 246 258 Total $ 1,231 $ 1,222 $ 3,690 $ 3,642 The following table reflects revenue from contracts with customers by geographical region: Three Months Ended Nine Months Ended September 30, September 30, (in millions) 2019 2018 2019 2018 Water Infrastructure United States $ 141 $ 139 $ 434 $ 387 Europe 170 174 509 542 Asia Pacific 92 91 260 252 Other 62 72 182 207 Applied Water United States 196 197 609 583 Europe 89 93 275 291 Asia Pacific 41 40 121 115 Other 50 48 144 143 Measurement & Control Solutions United States 251 238 739 674 Europe 63 59 199 214 Asia Pacific 27 31 85 106 Other 49 40 133 128 Total $ 1,231 $ 1,222 $ 3,690 $ 3,642 |
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 January 1, 2018 $ 89 $ 107 Additions, net 68 92 Revenue recognized from opening balance — (83 ) Billings (62 ) — Other (4 ) (6 ) Balance at September 30, 2018 $ 91 $ 110 Balance at January 1, 2019 $ 96 $ 113 Additions, net 71 97 Revenue recognized from opening balance — (82 ) Billings (58 ) — Other 9 (3 ) Balance at September 30, 2019 $ 118 $ 125 (a) Excludes receivable balances which are disclosed on the balance sheet |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
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 net earnings per share: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Net income (in millions) $ 65 $ 130 $ 283 $ 324 Shares (in thousands): Weighted average common shares outstanding 180,044 179,650 179,909 179,760 Add: Participating securities (a) 28 26 29 28 Weighted average common shares outstanding — Basic 180,072 179,676 179,938 179,788 Plus incremental shares from assumed conversions: (b) Dilutive effect of stock options 790 895 819 903 Dilutive effect of restricted stock units and performance share units 350 519 402 475 Weighted average common shares outstanding — Diluted 181,212 181,090 181,159 181,166 Basic earnings per share $ 0.36 $ 0.73 $ 1.57 $ 1.80 Diluted earnings per share $ 0.36 $ 0.72 $ 1.56 $ 1.79 (a) Restricted stock unit 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 will be included in the treasury stock calculation of diluted earnings per share upon achievement of underlying performance or market conditions at the end of the reporting period. See Note 16 , "Share-Based Compensation Plans" to the condensed consolidated financial statements for further detail on the performance share units. Three Months Ended Nine Months Ended September 30, September 30, (in thousands) 2019 2018 2019 2018 Stock options 1,390 1,292 1,401 1,290 Restricted stock units 351 334 360 338 Performance share units 391 415 439 490 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | The components of total inventories are summarized as follows: (in millions) September 30, December 31, Finished goods $ 231 $ 248 Work in process 54 45 Raw materials 295 302 Total inventories $ 580 $ 595 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Lease, Cost | The components of our lease cost were as follows: Three Months Ended Nine Months Ended (in millions) September 30, 2019 September 30, 2019 Lease cost Operating lease cost $ 20 $ 58 Short-term lease cost 2 7 Variable lease cost 3 13 Total lease cost $ 25 $ 78 Information relating to the lease term and discount rate are as follows: Nine Months Ended September 30, 2019 Weighted-average remaining lease term (years) Operating leases 6 Weighted-average discount rate Operating leases 2.8% |
Assets and Liabilities, Leases | The supplemental cash flow information related to leases are as follows: Nine Months Ended (in millions) September 30, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 54 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 26 |
Lessee, Operating Lease, Liability, Maturity | Nine Months Ended September 30, 2019 Weighted-average remaining lease term (years) Operating leases 6 Weighted-average discount rate Operating leases 2.8% As of September 30, 2019 , the maturities of operating lease liabilities were as follows: (in millions) 2019 $ 18 2020 61 2021 46 2022 34 2023 26 2024 20 Thereafter 59 Total lease payments 264 Less: Imputed interest (21 ) Total $ 243 |
Schedule of Future Minimum Rental Payments for Operating Leases | As of December 31, 2018, we were obligated to make minimum future rental payments under operating leases as follows: (in millions) 2019 $ 76 2020 61 2021 43 2022 33 2023 22 Thereafter 64 Total lease payments 299 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Changes in the carrying value of goodwill by operating segment | Changes in the carrying value of goodwill by reportable segment for the nine months ended September 30, 2019 are as follows: (in millions) Water Infrastructure Applied Water Measurement & Control Solutions Total Balance as of January 1, 2019 $ 653 $ 516 $ 1,807 $ 2,976 Activity in 2019 Divested/Acquired — — 19 19 Impairment — — (148 ) (148 ) Foreign currency and other (9 ) (7 ) (20 ) (36 ) Balance as of September 30, 2019 $ 644 $ 509 $ 1,658 $ 2,811 |
Other Intangible Assets | Information regarding our other intangible assets is as follows: September 30, 2019 December 31, 2018 (in millions) Carrying Amount Accumulated Amortization Net Intangibles Carrying Amount Accumulated Amortization Net Intangibles Customer and distributor relationships $ 939 $ (334 ) $ 605 $ 951 $ (286 ) $ 665 Proprietary technology and patents 203 (105 ) 98 198 (93 ) 105 Trademarks 147 (49 ) 98 148 (41 ) 107 Software 405 (195 ) 210 355 (164 ) 191 Other 20 (16 ) 4 24 (19 ) 5 Indefinite-lived intangibles 165 — 165 159 — 159 Other Intangibles $ 1,879 $ (699 ) $ 1,180 $ 1,835 $ (603 ) $ 1,232 |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
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 Condensed Consolidated Income Statements and Statements of Comprehensive Income: Three Months Ended Nine Months Ended September 30, September 30, (in millions) 2019 2018 2019 2018 Cash Flow Hedges Foreign Exchange Contracts Amount of (loss) recognized in OCI (a) $ (5 ) $ — $ (14 ) $ (9 ) Amount of (gain) loss reclassified from OCI into revenue (a) 2 1 4 (1 ) Amount of loss reclassified from OCI into cost of revenue (a) 1 2 3 2 Net Investment Hedges Cross Currency Swaps Amount of gain (loss) recognized in OCI (a) $ 31 $ (5 ) $ 30 $ 8 Amount of income recognized in Interest Expense 4 — $ 11 $ — Foreign Currency Denominated Debt Amount of gain (loss) recognized in OCI (a) $ 22 $ (8 ) $ 23 $ 11 (a) Effective portion |
Fair values of foreign exchange contracts | The fair values of our foreign exchange contracts currently included in our hedging program designated as hedging instruments were as follows: (in millions) September 30, December 31, Derivatives designated as hedging instruments Assets Cash Flow Hedges Other current assets $ — $ 3 Net Investment Hedges Other non-current assets $ 7 $ — Liabilities Cash Flow Hedges Other current liabilities $ (5 ) $ (1 ) Net Investment Hedges Other non-current accrued liabilities $ (19 ) $ (46 ) |
Accrued and Other Current Lia_2
Accrued and Other Current Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Payables and Accruals [Abstract] | |
Accrued and Other Current Liabilities | The components of total accrued and other current liabilities are as follows: (in millions) September 30, December 31, Compensation and other employee benefits $ 189 $ 194 Customer-related liabilities 144 129 Accrued taxes 69 85 Lease liabilities 60 — Accrued warranty costs 39 44 Other accrued liabilities 133 94 Total accrued and other current liabilities $ 634 $ 546 |
Credit Facilities and Debt (Tab
Credit Facilities and Debt (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Credit Facilities and Long-Term Debt | Total debt outstanding is summarized as follows: (in millions) September 30, December 31, 4.875% Senior Notes due 2021 (a) $ 600 $ 600 2.250% Senior Notes due 2023 (a) 547 570 3.250% Senior Notes due 2026 (a) 500 500 4.375% Senior Notes due 2046 (a) 400 400 Commercial paper 306 — Term loan — 257 Debt issuance costs and unamortized discount (b) (17 ) (19 ) Total debt 2,336 2,308 Less: short-term borrowings and current maturities of long-term debt 306 257 Total long-term debt $ 2,030 $ 2,051 (a) The fair value of our Senior Notes 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 was $631 million and $620 million as of September 30, 2019 and December 31, 2018 , respectively. The fair value of our Senior Notes due 2023 was $583 million and $599 million as of September 30, 2019 and December 31, 2018, respectively. The fair value of our Senior Notes due 2026 was $515 million and $476 million as of September 30, 2019 and December 31, 2018, respectively. The fair value of our Senior Notes due 2046 was $455 million and $397 million as of September 30, 2019 and December 31, 2018 , respectively. (b) The debt issuance costs and unamortized discount are recognized as a reduction in the carrying value of the Senior Notes in the Condensed Consolidated Balance Sheets and are being amortized to interest expense in our Condensed Consolidated Income Statements over the expected remaining terms of the Senior Notes. |
Postretirement Benefit Plans (T
Postretirement Benefit Plans (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Retirement Benefits [Abstract] | |
Components of net periodic benefit cost and other amounts recognized in other comprehensive income | The components of net periodic benefit cost for our defined benefit pension plans are as follows: Three Months Ended Nine Months Ended September 30, September 30, (in millions) 2019 2018 2019 2018 Domestic defined benefit pension plans: Service cost $ 1 $ — $ 2 $ 2 Interest cost 1 1 3 3 Expected return on plan assets (2 ) (2 ) (6 ) (5 ) Amortization of net actuarial loss — 1 1 2 Net periodic benefit cost $ — $ — $ — $ 2 International defined benefit pension plans: Service cost $ 2 $ 3 $ 7 $ 8 Interest cost 4 5 14 15 Expected return on plan assets (4 ) (9 ) (22 ) (28 ) Amortization of net actuarial loss 2 2 6 7 Settlement/Curtailment 8 — 8 1 Net periodic benefit cost $ 12 $ 1 $ 13 $ 3 Total net periodic benefit cost $ 12 $ 1 $ 13 $ 5 |
Equity (Tables)
Equity (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
Schedule of Stockholders Equity | The following table shows the changes in stockholders' equity for the nine months ended September 30, 2019 : Common Retained Accumulated Other Treasury Stock Non-Controlling Interest Total Balance at January 1, 2019 $ 2 $ 1,950 $ 1,639 $ (336 ) $ (487 ) $ 14 $ 2,782 Sale of business (2 ) (2 ) Net income 79 79 Other comprehensive income, net 20 20 Dividends declared ($0.24 per share) (44 ) (44 ) Stock incentive plan activity 12 (14 ) (2 ) Repurchase of common stock (25 ) (25 ) Balance at March 31, 2019 $ 2 $ 1,962 $ 1,674 $ (316 ) $ (526 ) $ 12 $ 2,808 Net income 139 139 Other comprehensive loss, net (11 ) (11 ) Dividends declared ($0.24 per share) (43 ) (43 ) Stock incentive plan activity 13 — 13 Balance at June 30, 2019 $ 2 $ 1,975 $ 1,770 $ (327 ) $ (526 ) $ 12 $ 2,906 Net income 65 65 Other comprehensive loss, net (37 ) (37 ) Distribution to minority shareholders (3 ) (3 ) Dividends declared ($0.24 per share) (44 ) (44 ) Stock incentive plan activity 8 — 8 Balance at September 30, 2019 $ 2 $ 1,983 $ 1,791 $ (364 ) $ (526 ) $ 9 $ 2,895 The following table shows the changes in stockholders' equity for the nine months ended September 30, 2018 : Common Retained Accumulated Other Treasury Stock Non-Controlling Interest Total Balance at January 1, 2018 $ 2 $ 1,912 $ 1,227 $ (210 ) $ (428 ) $ 16 $ 2,519 Cumulative effect of change in accounting principle 14 (17 ) (3 ) Net income 79 79 Other comprehensive income, net 20 20 Dividends declared ($0.21 per share) (38 ) (38 ) Stock incentive plan activity 13 (8 ) 5 Repurchase of common stock (25 ) (25 ) Balance at March 31, 2018 $ 2 $ 1,925 $ 1,282 $ (207 ) $ (461 ) $ 16 $ 2,557 Net income 115 115 Other comprehensive loss, net (87 ) (87 ) Dividends declared ($0.21 per share) (38 ) (38 ) Stock incentive plan activity 7 7 Repurchase of common stock (25 ) (25 ) Balance at June 30, 2018 $ 2 $ 1,932 $ 1,359 $ (294 ) $ (486 ) $ 16 $ 2,529 Net income 130 130 Other comprehensive income, net 1 (2 ) (1 ) Dividends declared ($0.21 per share) (37 ) (37 ) Stock incentive plan activity 10 — 10 Balance at September 30, 2018 $ 2 $ 1,942 $ 1,452 $ (293 ) $ (486 ) $ 14 $ 2,631 |
Share-Based Compensation Plans
Share-Based Compensation Plans (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Summary of restricted stock activity | The following is a summary of restricted stock unit activity for the nine months ended September 30, 2019 . The fair value of the restricted share unit awards is determined using the closing price of our common stock on date of grant. Share units (in thousands) Weighted Average Grant Date Fair Value /Share Outstanding at January 1, 2019 537 $ 59.41 Granted 284 74.32 Vested (247 ) 55.42 Forfeited (44 ) 67.59 Outstanding at September 30, 2019 530 $ 68.50 |
Summary of performance based share grants | The following is a summary of Return on Invested Capital ("ROIC") performance share unit grants for the nine months ended September 30, 2019 . The fair value of the ROIC performance share units is equal to the closing share price on the date of the grant. Share units (in thousands) Weighted Average Grant Date Fair Value /Share Outstanding at January 1, 2019 274 $ 52.11 Granted 77 74.07 Adjustment for Performance Condition Achieved (a) 74 37.86 Vested (174 ) 37.86 Forfeited (17 ) 63.18 Outstanding at September 30, 2019 234 $ 64.54 (a) Represents an increase in the number of original ROIC performance share units awarded based on the final performance criteria achievement at the end of the performance period of such awards. TSR Performance Share Unit Grants The following is a summary of our Total Shareholder Return ("TSR") performance share unit grants for the nine months ended September 30, 2019 : Share units (in thousands) Weighted Average Grant Date Fair Value /Share Outstanding at January 1, 2019 274 $ 61.04 Granted 77 89.62 Adjustment for Market Condition Achieved (a) 74 37.86 Vested (174 ) 37.86 Forfeited (17 ) 63.18 Outstanding at September 30, 2019 234 $ 75.82 |
Summary of the changes in outstanding stock options | The following is a summary of the changes in outstanding stock options for the nine months ended September 30, 2019 : Share units (in thousands) Weighted Average Exercise Price / Share Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in millions) Outstanding at January 1, 2019 2,125 $ 43.08 6.5 Granted 334 74.08 Exercised (286 ) 35.71 Forfeited and expired (46 ) 67.04 Outstanding at September 30, 2019 2,127 $ 48.42 6.5 $ 67 Options exercisable at September 30, 2019 1,492 $ 39.60 5.5 $ 60 Vested and expected to vest as of September 30, 2019 2,067 $ 47.71 6.4 $ 66 |
Stock option valuation assumptions | The following are weighted-average assumptions for 2019 grants: Volatility 24.10 % Risk-free interest rate 2.55 % Dividend yield 1.30 % Expected term (in years) 5.4 Weighted-average fair value / share $ 17.04 |
Performance-based shares valuation assumptions | The fair value of TSR performance share units was 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 assumptions for 2019 grants: Volatility 20.9 % Risk-free interest rate 2.52 % |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | The following table provides the components of accumulated other comprehensive loss for the nine months ended September 30, 2019 : (in millions) Foreign Currency Translation Postretirement Benefit Plans Derivative Instruments Total Balance at January 1, 2019 $ (121 ) $ (214 ) $ (1 ) $ (336 ) Foreign currency translation adjustment 29 — — 29 Tax on foreign currency translation adjustment (4 ) — — (4 ) Amortization of prior service cost and net actuarial loss on postretirement benefit plans into other non-operating income (expense), net — 2 — 2 Income tax impact on amortization of postretirement benefit plan items — (1 ) — (1 ) Unrealized loss on derivative hedge agreements — — (9 ) (9 ) Income tax benefit on unrealized loss on derivative hedge agreements — — 1 1 Reclassification of unrealized loss on foreign exchange agreements into revenue — — 1 1 Reclassification of unrealized loss on foreign exchange agreements into cost of revenue — — 1 1 Balance at March 31, 2019 $ (96 ) $ (213 ) $ (7 ) $ (316 ) Foreign currency translation adjustment (18 ) — — (18 ) Tax on foreign currency translation adjustment 3 — — 3 Amortization of prior service cost and net actuarial loss on postretirement benefit plans into other non-operating income (expense), net — 2 — 2 Unrealized loss on derivative hedge agreements — — — — Reclassification of unrealized loss on foreign exchange agreements into revenue — — 1 1 Reclassification of unrealized loss on foreign exchange agreements into cost of revenue — — 1 1 Balance at June 30, 2019 $ (111 ) $ (211 ) $ (5 ) $ (327 ) Foreign currency translation adjustment (20 ) — — (20 ) Tax on foreign currency translation adjustment (13 ) — — (13 ) Changes in postretirement benefit plans — (11 ) — (11 ) Amortization of prior service cost and net actuarial loss on postretirement benefit plans into other non-operating income (expense), net — 1 — 1 Settlement charge released into other non-operating income (expense), net — 8 — 8 Unrealized loss on derivative hedge agreements — — (5 ) (5 ) Reclassification of unrealized loss on foreign exchange agreements into revenue — — 2 2 Reclassification of unrealized loss on foreign exchange agreements into cost of revenue — — 1 1 Balance at September 30, 2019 $ (144 ) $ (213 ) $ (7 ) $ (364 ) The following table provides the components of accumulated other comprehensive loss for the nine months ended September 30, 2018 : (in millions) Foreign Currency Translation Postretirement Benefit Plans Derivative Instruments Total Balance at January 1, 2018 $ (15 ) $ (198 ) $ 3 $ (210 ) Cumulative effect of change in accounting principle (11 ) (6 ) — (17 ) Foreign currency translation adjustment 8 — — 8 Tax on foreign currency translation adjustment 11 — — 11 Changes in postretirement benefit plans — 1 — 1 Amortization of prior service cost and net actuarial loss on postretirement benefit plans into other non-operating income (expense), net — 2 — 2 Income tax impact on amortization of postretirement benefit plan items — (1 ) — (1 ) Reclassification of unrealized gain on derivative hedge agreements into revenue — — (1 ) (1 ) Balance at March 31, 2018 $ (7 ) $ (202 ) $ 2 $ (207 ) Foreign currency translation adjustment (60 ) — — (60 ) Tax on foreign currency translation adjustment (19 ) — — (19 ) Amortization of prior service cost and net actuarial loss on postretirement benefit plans into other non-operating income (expense), net — — — — Other non-operating income — 3 — 3 Income tax impact on amortization of postretirement benefit plan items — (1 ) — (1 ) Unrealized loss on derivative hedge agreements — — (9 ) (9 ) Reclassification of unrealized gain on derivative hedge agreements into revenue — — (1 ) (1 ) Balance at June 30, 2018 $ (86 ) $ (200 ) $ (8 ) $ (294 ) Foreign currency translation adjustment (7 ) — — (7 ) Tax on foreign currency translation adjustment 3 — — 3 Amortization of prior service cost and net actuarial loss on postretirement benefit plans into other non-operating income (expense), net — 2 — 2 Reclassification of unrealized gain on foreign exchange agreements into revenue — — 1 1 Reclassification of unrealized gain on foreign exchange agreements into cost of revenue — — 2 2 Balance at September 30, 2018 (90 ) (198 ) (5 ) (293 ) |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Changes in product warranty accrual | We warrant numerous products, the terms of which vary widely. In general, we warrant products against defect and specific non-performance. The table below provides the changes in our product warranty accrual: (in millions) 2019 2018 Warranty accrual – January 1 $ 60 $ 82 Net charges for product warranties in the period 20 16 Settlement of warranty claims (32 ) (33 ) Foreign currency and other (2 ) 1 Warranty accrual - September 30 $ 46 $ 66 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
Financial information for each reportable segment | Additionally, we have Regional selling locations, which consist primarily of selling and marketing organizations and related support services, that offer products and services across our reportable segments. Corporate and other consists of corporate office expenses including compensation, benefits, occupancy, depreciation, and other administrative costs, as well as charges related to certain matters, such as environmental matters, that are managed at a corporate level and are not included in the business segments in evaluating performance or allocating resources. The accounting policies of each segment are the same as those described in the summary of significant accounting policies (see Note 1 in the 2018 Annual Report). The following tables contain financial information for each reportable segment: Three Months Ended Nine Months Ended September 30, September 30, (in millions) 2019 2018 2019 2018 Revenue: Water Infrastructure $ 531 $ 541 $ 1,574 $ 1,567 Applied Water 376 378 1,149 1,132 Measurement & Control Solutions 389 368 1,155 1,122 Total $ 1,296 $ 1,287 $ 3,878 $ 3,821 Operating Income: Water Infrastructure $ 97 $ 99 $ 246 $ 240 Applied Water 61 59 179 170 Measurement & Control Solutions (136 ) 31 (94 ) 95 Corporate and other (11 ) (13 ) (40 ) (45 ) Total operating income $ 11 $ 176 $ 291 $ 460 Interest expense $ 16 21 $ 52 $ 63 Other non-operating (expense) income, net (7 ) 4 (2 ) 9 Gain from sale of business — 2 1 — Income before taxes $ (12 ) $ 161 $ 238 $ 406 Depreciation and Amortization: Water Infrastructure $ 15 $ 17 $ 46 $ 50 Applied Water 5 5 17 16 Measurement & Control Solutions 36 34 107 107 Regional selling locations (a) 6 5 14 15 Corporate and other 3 2 8 7 Total $ 65 $ 63 $ 192 $ 195 Capital Expenditures: Water Infrastructure $ 14 $ 20 $ 65 $ 60 Applied Water 5 5 15 19 Measurement & Control Solutions 21 26 74 72 Regional selling locations (b) 4 3 13 11 Corporate and other 2 6 8 9 Total $ 46 $ 60 $ 175 $ 171 (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 expense is captured in this Regional selling location line. (b) Represents capital expenditures incurred by the Regional selling locations not allocated to the segments. |
Background and Basis of Prese_3
Background and Basis of Presentation (Details) | 9 Months Ended |
Sep. 30, 2019 | |
Background and Basis of Presentation (Textual) [Abstract] | |
Number of operating segment | 3 |
Recently Issued Accounting Pr_3
Recently Issued Accounting Pronouncements (Textuals) (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Jan. 01, 2019 |
Accounting Policies [Abstract] | ||
Operating lease liability | $ 243 | $ 265 |
Right-of-use assets | $ 247 | 267 |
Deferred tax liabilities | 68 | |
Deferred tax assets | $ 68 |
Acquisitions and Divestitures_2
Acquisitions and Divestitures (Textuals) (Details) - USD ($) $ in Millions | Jan. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2017 |
Business Acquisition [Line Items] | ||||||
Acquisition of business, net of cash acquired | $ 0 | $ 18 | $ 433 | |||
Revenues | 1,296 | $ 1,287 | $ 3,878 | 3,821 | ||
Pure Technologies Ltd | ||||||
Business Acquisition [Line Items] | ||||||
Acquisition of business, net of cash acquired | $ 420 | |||||
Acquisition costs | $ 4 | |||||
Revenue | 25 | 67 | ||||
Operating income (loss) | (2) | (5) | ||||
Other acquisitions | ||||||
Business Acquisition [Line Items] | ||||||
Acquisition of business, net of cash acquired | $ 3 | $ 13 | ||||
Disposed of by Sale | Precision Die Casting | ||||||
Business Acquisition [Line Items] | ||||||
Proceeds from sale of business | $ 22 | |||||
Revenues | $ 32 |
Acquisitions and Divestitures_3
Acquisitions and Divestitures (Purchase Price Allocation) (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 | Jan. 31, 2018 |
Business Acquisition [Line Items] | |||
Goodwill | $ 2,811 | $ 2,976 | |
Pure Technologies Ltd | |||
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 |
Acquisitions and Divestitures_4
Acquisitions and Divestitures (Summary of Intangible Assts Acquired) (Details) - Pure Technologies Ltd - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2019 | Jan. 31, 2018 | |
Business Acquisition [Line Items] | ||
Intangible assets | $ 149 | |
Customer Relationships | ||
Business Acquisition [Line Items] | ||
Intangible assets | 84 | |
Customer Relationships | Minimum | ||
Business Acquisition [Line Items] | ||
Weighted-average useful life | 17 years | |
Customer Relationships | Maximum | ||
Business Acquisition [Line Items] | ||
Weighted-average useful life | 18 years | |
Technology | ||
Business Acquisition [Line Items] | ||
Intangible assets | 38 | |
Technology | Minimum | ||
Business Acquisition [Line Items] | ||
Weighted-average useful life | 3 years | |
Technology | Maximum | ||
Business Acquisition [Line Items] | ||
Weighted-average useful life | 10 years | |
Tradenames | ||
Business Acquisition [Line Items] | ||
Weighted-average useful life | 20 years | |
Intangible assets | 21 | |
Internally Developed Software | ||
Business Acquisition [Line Items] | ||
Intangible assets | $ 6 | |
Internally Developed Software | Minimum | ||
Business Acquisition [Line Items] | ||
Weighted-average useful life | 3 years |
Acquisitions and Divestitures_5
Acquisitions and Divestitures (Summary of Pro Forma Information) (Details) - Pure Technologies Ltd $ in Millions | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Business Acquisition [Line Items] | |
Revenue | $ 3,826 |
Net income | $ 321 |
Restructuring Charges (Textuals
Restructuring Charges (Textuals) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring charges | $ 26 | $ 4 | $ 48 | $ 19 | |
Asset impairment | 7 | 0 | 10 | 0 | |
Measurement & Control Solutions | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring charges | 25 | $ 1 | $ 37 | $ 9 | |
Asset impairment | $ 7 | $ 3 |
Revenue - Disaggregation of Rev
Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | $ 1,231 | $ 1,222 | $ 3,690 | $ 3,642 |
Lease Revenue | 65 | 65 | 188 | 179 |
Total | 1,296 | 1,287 | 3,878 | 3,821 |
Water Infrastructure | ||||
Disaggregation of Revenue [Line Items] | ||||
Total | 531 | 541 | 1,574 | 1,567 |
Water Infrastructure | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 141 | 139 | 434 | 387 |
Water Infrastructure | Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 170 | 174 | 509 | 542 |
Water Infrastructure | Asia Pacific | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 92 | 91 | 260 | 252 |
Water Infrastructure | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 62 | 72 | 182 | 207 |
Water Infrastructure | Transport | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 369 | 380 | 1,111 | 1,114 |
Water Infrastructure | Treatment | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 96 | 96 | 274 | 274 |
Applied Water | ||||
Disaggregation of Revenue [Line Items] | ||||
Total | 376 | 378 | 1,149 | 1,132 |
Applied Water | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 196 | 197 | 609 | 583 |
Applied Water | Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 89 | 93 | 275 | 291 |
Applied Water | Asia Pacific | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 41 | 40 | 121 | 115 |
Applied Water | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 50 | 48 | 144 | 143 |
Applied Water | Building Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 207 | 208 | 636 | 608 |
Applied Water | Industrial Water | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 169 | 170 | 513 | 524 |
Measurement & Control Solutions | ||||
Disaggregation of Revenue [Line Items] | ||||
Total | 389 | 368 | 1,155 | 1,122 |
Measurement & Control Solutions | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 251 | 238 | 739 | 674 |
Measurement & Control Solutions | Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 63 | 59 | 199 | 214 |
Measurement & Control Solutions | Asia Pacific | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 27 | 31 | 85 | 106 |
Measurement & Control Solutions | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 49 | 40 | 133 | 128 |
Measurement & Control Solutions | Water | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 193 | 168 | 587 | 514 |
Measurement & Control Solutions | Energy | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 90 | 90 | 248 | 254 |
Measurement & Control Solutions | Software as a Service/Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 26 | 26 | 75 | 96 |
Measurement & Control Solutions | Test | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | $ 81 | $ 84 | $ 246 | $ 258 |
Restructuring Charges (Restruct
Restructuring Charges (Restructuring Charges) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Restructuring Cost and Impairment Charge | |||||
Severance and other charges | $ 26 | $ 4 | $ 46 | $ 18 | |
Lease related charges | 0 | 0 | 1 | 1 | |
Restructuring charges | 26 | 4 | 48 | 19 | |
Asset impairment | 7 | 0 | 10 | 0 | |
Total restructuring and asset impairment charges | 33 | 4 | 58 | 19 | |
Other Restructuring Costs | 0 | 0 | 1 | 0 | |
Water Infrastructure | |||||
Restructuring Cost and Impairment Charge | |||||
Restructuring charges | 6 | 2 | 17 | 8 | |
Applied Water | |||||
Restructuring Cost and Impairment Charge | |||||
Restructuring charges | 2 | 1 | 4 | 2 | |
Measurement & Control Solutions | |||||
Restructuring Cost and Impairment Charge | |||||
Restructuring charges | 25 | $ 1 | $ 37 | $ 9 | |
Asset impairment | $ 7 | $ 3 |
Revenue (Details)
Revenue (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Change in Contract with Customer, Asset [Abstract] | ||
Beginning balance | $ 96 | $ 89 |
Additions, net | 71 | 68 |
Billings | (58) | (62) |
Other | 9 | (4) |
Ending balance | 118 | 91 |
Change in Contract with Customer, Liability [Abstract] | ||
Beginning balance | 113 | 107 |
Additions, net | 97 | 92 |
Revenue recognized from opening balance | (82) | (83) |
Other | (3) | (6) |
Ending balance | $ 125 | $ 110 |
Restructuring Charges (Accrual
Restructuring Charges (Accrual Rollfoward) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | ||
Restructuring Reserve [Roll Forward] | |||||
Restructuring accruals - January 1 | $ 5 | $ 7 | |||
Restructuring charges | $ 26 | $ 4 | 48 | 19 | |
Cash payments | (21) | (18) | |||
Foreign currency and other | (2) | (1) | |||
Restructuring accruals - September 30 | 30 | 7 | 30 | 7 | |
Water Infrastructure | |||||
Restructuring Reserve [Roll Forward] | |||||
Restructuring charges | 6 | 2 | 17 | 8 | |
Restructuring accruals - September 30 | 1 | 1 | 1 | 1 | |
Applied Water | |||||
Restructuring Reserve [Roll Forward] | |||||
Restructuring charges | 2 | 1 | 4 | 2 | |
Restructuring accruals - September 30 | 1 | 1 | 1 | 1 | |
Measurement & Control Solutions | |||||
Restructuring Reserve [Roll Forward] | |||||
Restructuring charges | 25 | 1 | 37 | 9 | |
Restructuring accruals - September 30 | 21 | 3 | 21 | 3 | |
Regional Selling Locations | |||||
Restructuring Reserve [Roll Forward] | |||||
Restructuring accruals - September 30 | [1] | 7 | 2 | 7 | 2 |
Corporate and other | |||||
Restructuring Reserve [Roll Forward] | |||||
Restructuring accruals - September 30 | $ 0 | $ 0 | $ 0 | $ 0 | |
[1] | (a) Regional selling locations consist primarily of selling and marketing organizations and related support services that incurred restructuring expense which was allocated to the segments. The liabilities associated with restructuring expense were not allocated to the segments. |
Revenue (Narrative) (Details)
Revenue (Narrative) (Details) $ in Millions | Sep. 30, 2019USD ($) |
Revenue from Contract with Customer [Abstract] | |
Remaining performance obligation | $ 388 |
Expected timing of recognition | 60 months |
Restructuring Charges (Number o
Restructuring Charges (Number of Positions Eliminated Rollfoward) (Details) - employee | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Restructuring and Related Cost, Number of Positions Eliminated [Roll Forward] | ||
Planned reductions - January 1 | 69 | 47 |
Additional planned reductions | 621 | 176 |
Actual reductions and reversals | (465) | (135) |
Planned reductions - September 30 | 225 | 88 |
Restructuring Charges (Estimate
Restructuring Charges (Estimated Restructuring Costs) (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
2019 Plan | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Total expected costs | $ 50 | ||||
Restructuring costs incurred during period | 26 | $ 14 | $ 6 | ||
Total expected costs remaining | 4 | ||||
2018 Plan | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Total expected costs | 16 | ||||
Restructuring costs incurred during period | 0 | 0 | 1 | $ 15 | |
Total expected costs remaining | 0 | ||||
2017 Plan | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Total expected costs | 23 | ||||
Restructuring costs incurred during period | 0 | 0 | 1 | 4 | $ 11 |
Total expected costs remaining | 7 | ||||
Operating Segments | Water Infrastructure | 2019 Plan | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Total expected costs | 18 | ||||
Restructuring costs incurred during period | 6 | 7 | 3 | ||
Total expected costs remaining | 2 | ||||
Operating Segments | Water Infrastructure | 2018 Plan | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Total expected costs | 8 | ||||
Restructuring costs incurred during period | 0 | 0 | 1 | 7 | |
Total expected costs remaining | 0 | ||||
Operating Segments | Water Infrastructure | 2017 Plan | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Total expected costs | 12 | ||||
Restructuring costs incurred during period | 0 | 0 | 0 | 2 | 5 |
Total expected costs remaining | 5 | ||||
Operating Segments | Applied Water | 2019 Plan | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Total expected costs | 5 | ||||
Restructuring costs incurred during period | 2 | 2 | 0 | ||
Total expected costs remaining | 1 | ||||
Operating Segments | Applied Water | 2018 Plan | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Total expected costs | 1 | ||||
Restructuring costs incurred during period | 0 | 0 | 0 | 1 | |
Total expected costs remaining | 0 | ||||
Operating Segments | Applied Water | 2017 Plan | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Total expected costs | 7 | ||||
Restructuring costs incurred during period | 0 | 0 | 0 | 1 | 4 |
Total expected costs remaining | 2 | ||||
Operating Segments | Measurement & Control Solutions | 2019 Plan | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Total expected costs | 27 | ||||
Restructuring costs incurred during period | 18 | 5 | 3 | ||
Total expected costs remaining | 1 | ||||
Operating Segments | Measurement & Control Solutions | 2018 Plan | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Total expected costs | 7 | ||||
Restructuring costs incurred during period | 0 | 0 | 0 | 7 | |
Total expected costs remaining | 0 | ||||
Operating Segments | Measurement & Control Solutions | 2017 Plan | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Total expected costs | 4 | ||||
Restructuring costs incurred during period | 0 | 0 | 1 | 1 | 2 |
Total expected costs remaining | 0 | ||||
Corporate | 2019 Plan | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Total expected costs | 0 | ||||
Restructuring costs incurred during period | 0 | 0 | 0 | ||
Total expected costs remaining | 0 | ||||
Corporate | 2018 Plan | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Total expected costs | 0 | ||||
Restructuring costs incurred during period | 0 | 0 | 0 | 0 | |
Total expected costs remaining | 0 | ||||
Corporate | 2017 Plan | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Total expected costs | 0 | ||||
Restructuring costs incurred during period | 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Total expected costs remaining | $ 0 |
Income Taxes (Textuals) (Detail
Income Taxes (Textuals) (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Jun. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |||||||
Income tax provision | $ (77) | $ 31 | $ (45) | $ 82 | |||
Effective tax rate | 623.60% | 19.00% | (18.90%) | 20.10% | |||
Unrecognized tax benefits | $ 126 | $ 126 | $ 136 | ||||
Interest accrued for unrecognized tax benefits | $ 8 | $ 8 | |||||
Assessment for tax, penalties and interest | $ 80 | ||||||
Scenario, Forecast | |||||||
Income Tax Contingency [Line Items] | |||||||
Reduction from statute of limitations | $ 4 |
Earnings Per Share (Calculation
Earnings Per Share (Calculations for EPS) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | ||
Basic and diluted net earnings per share: | |||||
Net income attributable to Xylem (in usd) | $ 65 | $ 130 | $ 283 | $ 324 | |
Shares | |||||
Weighted average common shares outstanding | 180,044 | 179,650 | 179,909 | 179,760 | |
Add: Participating securities | [1] | 28 | 26 | 29 | 28 |
Weighted average common shares outstanding — Basic | 180,072 | 179,676 | 179,938 | 179,788 | |
Plus incremental shares from assumed conversions: | |||||
Weighted average common shares outstanding — Diluted | 181,212 | 181,090 | 181,159 | 181,166 | |
Basic earnings per share (usd per share) | $ 0.36 | $ 0.73 | $ 1.57 | $ 1.80 | |
Diluted earnings per share (usd per share) | $ 0.36 | $ 0.72 | $ 1.56 | $ 1.79 | |
Stock Options | |||||
Plus incremental shares from assumed conversions: | |||||
Dilutive effect of common shares | [2] | 790 | 895 | 819 | 903 |
Restricted Stock | |||||
Plus incremental shares from assumed conversions: | |||||
Dilutive effect of common shares | [2] | 350 | 519 | 402 | 475 |
[1] | Restricted stock unit awards containing rights to non-forfeitable dividends that participate in undistributed earnings with common shareholders are considered participating securities for purposes of computing earnings per share. | ||||
[2] | Incremental shares from stock options, restricted stock 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 will be included in the treasury stock calculation of diluted earnings per share upon achievement of underlying performance or market conditions at the end of the reporting period. See Note 16 , "Share-Based Compensation Plans" to the condensed consolidated financial statements for further detail on the performance share units. |
Earnings Per Share (Summary of
Earnings Per Share (Summary of Antidilutive Securities) (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Stock Options | ||||
Incremental shares from stock options and restricted stock: | ||||
Antidilutive securities (in shares) | 1,390 | 1,292 | 1,401 | 1,290 |
Restricted Stock | ||||
Incremental shares from stock options and restricted stock: | ||||
Antidilutive securities (in shares) | 351 | 334 | 360 | 338 |
Performance Based Shares | ||||
Incremental shares from stock options and restricted stock: | ||||
Antidilutive securities (in shares) | 391 | 415 | 439 | 490 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Inventories | ||
Finished goods | $ 231 | $ 248 |
Work in process | 54 | 45 |
Raw materials | 295 | 302 |
Total inventories | $ 580 | $ 595 |
Leases (Textuals) (Details)
Leases (Textuals) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Jan. 01, 2019 | Dec. 31, 2018 | |
Leases [Abstract] | |||||
Operating liability, current | $ 60 | $ 60 | $ 0 | ||
Operating liability, noncurrent | 184 | 184 | |||
Right-of-use assets | 247 | 247 | $ 267 | ||
Revenue from lease arrangements | 65 | 188 | |||
Assets subject to rental | 262 | 262 | |||
Assets subject to rental, accumulated amortization | 171 | 171 | |||
Lessor, Lease, Description [Line Items] | |||||
Depreciation | 88 | $ 87 | |||
Leased Assets | |||||
Lessor, Lease, Description [Line Items] | |||||
Depreciation | $ 7 | $ 21 |
Leases (Lease Costs) (Details)
Leases (Lease Costs) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | |
Leases [Abstract] | ||
Operating lease cost | $ 20 | $ 58 |
Short-term lease cost | 2 | 7 |
Variable lease cost | 3 | 13 |
Total lease cost | $ 25 | $ 78 |
Leases (Supplemental Lease Info
Leases (Supplemental Lease Information) (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Leases [Abstract] | |
Operating cash flows from operating leases | $ 54 |
Operating leases | $ 26 |
Operating leases | 6 years |
Operating leases | 2.80% |
Leases (Lease Maturities) (Deta
Leases (Lease Maturities) (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Operating Leases | |||
2019 | $ 18 | ||
2020 | 61 | ||
2021 | 46 | ||
2022 | 34 | ||
2023 | 26 | ||
2024 | 20 | ||
Thereafter | 59 | ||
Total lease payments | 264 | ||
Less: Imputed interest | (21) | ||
Total | $ 243 | $ 265 | |
Operating Leases | |||
2019 | $ 76 | ||
2020 | 61 | ||
2021 | 43 | ||
2022 | 33 | ||
2023 | 22 | ||
Thereafter | 64 | ||
Total lease payments | $ 299 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets (Goodwill Rollforward) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Changes in the carrying value of goodwill by operating segment | ||||
Balance as of January 1, 2019 | $ 2,976 | |||
Divested/Acquired | 19 | |||
Impairment | $ (148) | $ 0 | (148) | $ 0 |
Foreign currency and other | (36) | |||
Balance as of September 30, 2019 | 2,811 | 2,811 | ||
Water Infrastructure | ||||
Changes in the carrying value of goodwill by operating segment | ||||
Balance as of January 1, 2019 | 653 | |||
Divested/Acquired | 0 | |||
Impairment | 0 | |||
Foreign currency and other | (9) | |||
Balance as of September 30, 2019 | 644 | 644 | ||
Applied Water | ||||
Changes in the carrying value of goodwill by operating segment | ||||
Balance as of January 1, 2019 | 516 | |||
Divested/Acquired | 0 | |||
Impairment | 0 | |||
Foreign currency and other | (7) | |||
Balance as of September 30, 2019 | 509 | 509 | ||
Measurement & Control Solutions | ||||
Changes in the carrying value of goodwill by operating segment | ||||
Balance as of January 1, 2019 | 1,807 | |||
Divested/Acquired | 19 | |||
Impairment | (148) | |||
Foreign currency and other | (20) | |||
Balance as of September 30, 2019 | $ 1,658 | $ 1,658 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets (Summary of Intangible Assets) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Goodwill and Other Intangible Assets | |||||
Accumulated Amortization | $ (699) | $ (699) | $ (603) | ||
Intangible Assets Gross, Carrying Amount | 1,879 | 1,879 | 1,835 | ||
Intangible Assets, Net Intangibles | 1,180 | 1,180 | 1,232 | ||
Amortization | 35 | $ 34 | 104 | $ 108 | |
Customer and distributor relationships | |||||
Goodwill and Other Intangible Assets | |||||
Carrying Amount | 939 | 939 | 951 | ||
Accumulated Amortization | (334) | (334) | (286) | ||
Net Intangibles | 605 | 605 | 665 | ||
Proprietary technology and patents | |||||
Goodwill and Other Intangible Assets | |||||
Carrying Amount | 203 | 203 | 198 | ||
Accumulated Amortization | (105) | (105) | (93) | ||
Net Intangibles | 98 | 98 | 105 | ||
Trademarks | |||||
Goodwill and Other Intangible Assets | |||||
Carrying Amount | 147 | 147 | 148 | ||
Accumulated Amortization | (49) | (49) | (41) | ||
Net Intangibles | 98 | 98 | 107 | ||
Software | |||||
Goodwill and Other Intangible Assets | |||||
Carrying Amount | 405 | 405 | 355 | ||
Accumulated Amortization | (195) | (195) | (164) | ||
Net Intangibles | 210 | 210 | 191 | ||
Other | |||||
Goodwill and Other Intangible Assets | |||||
Carrying Amount | 20 | 20 | 24 | ||
Accumulated Amortization | (16) | (16) | (19) | ||
Net Intangibles | 4 | 4 | 5 | ||
Indefinite-lived intangibles | |||||
Goodwill and Other Intangible Assets | |||||
Accumulated Amortization | 0 | 0 | 0 | ||
Indefinite-lived intangibles | $ 165 | $ 165 | $ 159 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets (Details Textual) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||||
Amortization expense related to finite-lived intangible assets | $ 35 | $ 34 | $ 104 | $ 108 | |
Impairment charge | $ 7 | $ 3 |
Derivative Financial Instrume_3
Derivative Financial Instruments (Effect of Deriative Instruments on Income Statement and Statement of Comprehensive Income) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | ||
Derivative Financial Instruments | |||||
Amount of gain (loss) recognized in OCI | $ 5 | $ 0 | $ 14 | $ 9 | |
Amount of gain reclassified from OCI into revenue | (1,296) | (1,287) | (3,878) | (3,821) | |
Reclassification out of Accumulated Other Comprehensive Income | Foreign Exchange Contract | |||||
Derivative Financial Instruments | |||||
Amount of gain reclassified from OCI into revenue | [1] | 2 | 1 | 4 | (1) |
Amount of (gain) loss reclassified from OCI into cost of revenue | [1] | 1 | 2 | 3 | 2 |
Cash Flow Hedging [Member] | Foreign Exchange Contract | |||||
Derivative Financial Instruments | |||||
Amount of gain (loss) recognized in OCI | [1] | (5) | 0 | (14) | (9) |
Cash Flow Hedging [Member] | Cross Currency Swaps | |||||
Derivative Financial Instruments | |||||
Amount of gain (loss) recognized in OCI | [1] | 31 | (5) | (30) | 8 |
Cash Flow Hedging [Member] | Foreign Currency Denominated Debt | |||||
Derivative Financial Instruments | |||||
Amount of gain (loss) recognized in OCI | [1] | 22 | (8) | 23 | 11 |
Interest Expense | Cross Currency Swaps | |||||
Derivative Financial Instruments | |||||
Amount of gain (loss) recognized in OCI | $ 4 | $ 0 | $ 11 | $ 0 | |
[1] | Effective portion |
Derivative Financial Instrume_4
Derivative Financial Instruments (Balance Sheet Location of Derivative Instruments) (Details) - Derivatives designated as hedging instruments - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Other current assets | ||
Derivatives, Fair Value | ||
Assets | $ 0 | $ 3 |
Other non-current assets | ||
Derivatives, Fair Value | ||
Assets | 7 | 0 |
Other current liabilities | ||
Derivatives, Fair Value | ||
Liabilities | (5) | (1) |
Other non-current accrued liabilities | ||
Derivatives, Fair Value | ||
Liabilities | $ (19) | $ (46) |
Derivative Financial Instrume_5
Derivative Financial Instruments (Details Textual) $ in Millions | Sep. 30, 2019USD ($) | Dec. 31, 2018USD ($) | Mar. 11, 2016USD ($) | Mar. 11, 2016EUR (€) |
Derivative [Line Items] | ||||
Net losses expected to be reclassified in next 12 months | $ 8 | |||
Foreign Exchange Contract | ||||
Derivative [Line Items] | ||||
Notional amount | 117 | $ 506 | ||
Derivatives designated as hedging instruments | Sell USD Buy EUR | ||||
Derivative [Line Items] | ||||
Notional amount | 45 | 191 | ||
Derivatives designated as hedging instruments | Sell EUR Buy PLN | ||||
Derivative [Line Items] | ||||
Notional amount | 9 | 37 | ||
Derivatives designated as hedging instruments | Buy USD Sell CDN | ||||
Derivative [Line Items] | ||||
Notional amount | 7 | 29 | ||
Derivatives designated as hedging instruments | Sell CDN Buy EUR | ||||
Derivative [Line Items] | ||||
Notional amount | 5 | 22 | ||
Derivatives designated as hedging instruments | Sell GBP Buy EUR | ||||
Derivative [Line Items] | ||||
Notional amount | 11 | 52 | ||
Derivatives designated as hedging instruments | Buy KR Sell EUR | ||||
Derivative [Line Items] | ||||
Notional amount | 39 | 168 | ||
Derivatives designated as hedging instruments | Cross Currency Swaps | ||||
Derivative [Line Items] | ||||
Notional amount | 702 | 426 | ||
Long-term debt | Derivatives designated as hedging instruments | ||||
Derivative [Line Items] | ||||
Net Investment Hedges | 544 | 566 | ||
Senior Notes Due 2023, 2.250% | ||||
Derivative [Line Items] | ||||
Long-term Debt, Fair Value | $ 583 | $ 599 | ||
Senior Notes Due 2023, 2.250% | Senior Notes | ||||
Derivative [Line Items] | ||||
Interest on notes due | 2.25% | 2.25% | ||
Face amount | $ 500 | € 500,000,000 |
Accrued and Other Current Lia_3
Accrued and Other Current Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Accrued and Other Current Liabilities | ||
Compensation and other employee benefits | $ 189 | $ 194 |
Customer-related liabilities | 144 | 129 |
Accrued taxes | 69 | 85 |
Lease liabilities | 60 | 0 |
Accrued warranty costs | 39 | 44 |
Other accrued liabilities | 133 | 94 |
Total accrued and other current liabilities | $ 634 | $ 546 |
Credit Facilities and Debt (Sum
Credit Facilities and Debt (Summary of Debt Outstanding) (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 | |
Credit Facilities and Long-Term Debt : | |||
Debt issuance costs and unamortized discount | [1] | $ (17) | $ (19) |
Long-term debt | 2,030 | 2,051 | |
Total debt | 2,336 | 2,308 | |
Short-term borrowings and current maturities of long-term debt | 306 | 257 | |
Senior Notes Due 2021, 4.875% | |||
Credit Facilities and Long-Term Debt : | |||
Senior Notes Due | [2] | 600 | 600 |
Senior Notes Due 2023, 2.250% | |||
Credit Facilities and Long-Term Debt : | |||
Senior Notes Due | [2] | 547 | 570 |
Senior Notes due 2026 | |||
Credit Facilities and Long-Term Debt : | |||
Senior Notes Due | [2] | 500 | 500 |
Senior Notes due 2046 | |||
Credit Facilities and Long-Term Debt : | |||
Senior Notes Due | [2] | 400 | 400 |
Commercial paper | |||
Credit Facilities and Long-Term Debt : | |||
Senior Notes Due | 306 | 0 | |
Term loan | |||
Credit Facilities and Long-Term Debt : | |||
Senior Notes Due | $ 0 | $ 257 | |
[1] | The debt issuance costs and unamortized discount are recognized as a reduction in the carrying value of the Senior Notes in the Condensed Consolidated Balance Sheets and are being amortized to interest expense in our Condensed Consolidated Income Statements over the expected remaining terms of the Senior Notes. | ||
[2] | The fair value of our Senior Notes 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 was $631 million and $620 million as of September 30, 2019 and December 31, 2018 , respectively. The fair value of our Senior Notes due 2023 was $583 million and $599 million as of September 30, 2019 and December 31, 2018, respectively. The fair value of our Senior Notes due 2026 was $515 million and $476 million as of September 30, 2019 and December 31, 2018, respectively. The fair value of our Senior Notes due 2046 was $455 million and $397 million as of September 30, 2019 and December 31, 2018 , respectively. |
Credit Facilities and Debt (Tex
Credit Facilities and Debt (Textuals) (Details) | Sep. 20, 2011USD ($) | Sep. 30, 2019USD ($) | Jun. 03, 2019USD ($) | Jun. 03, 2019EUR (€) | Mar. 05, 2019USD ($) | Dec. 31, 2018USD ($) | Jan. 26, 2018USD ($) | Jan. 26, 2018EUR (€) | Oct. 11, 2016USD ($) | Mar. 11, 2016USD ($) | Mar. 11, 2016EUR (€) | Mar. 27, 2015USD ($) | |
Senior Notes | |||||||||||||
Debt Instrument | |||||||||||||
Redemption price percentage | 101.00% | ||||||||||||
Line of Credit | |||||||||||||
Debt Instrument | |||||||||||||
Interest rate | 0.45% | 0.45% | |||||||||||
Face amount | $ 246,000,000 | € 225,000,000 | |||||||||||
Long-term Line of Credit | $ 0 | $ 257,000,000 | |||||||||||
Senior Notes Due 2021, 4.875% | |||||||||||||
Debt Instrument | |||||||||||||
Fair value of senior notes due | 631,000,000 | 620,000,000 | |||||||||||
Interest rate | 4.875% | ||||||||||||
Senior Notes Due | [1] | 600,000,000 | 600,000,000 | ||||||||||
Face amount | $ 600,000,000 | ||||||||||||
Senior Notes Due 2023, 2.250% | |||||||||||||
Debt Instrument | |||||||||||||
Fair value of senior notes due | 583,000,000 | 599,000,000 | |||||||||||
Senior Notes Due | [1] | 547,000,000 | 570,000,000 | ||||||||||
Senior Notes Due 2023, 2.250% | Senior Notes | |||||||||||||
Debt Instrument | |||||||||||||
Interest rate | 2.25% | 2.25% | |||||||||||
Face amount | $ 500,000,000 | € 500,000,000 | |||||||||||
Senior Notes due 2026 | |||||||||||||
Debt Instrument | |||||||||||||
Fair value of senior notes due | 515,000,000 | 476,000,000 | |||||||||||
Interest rate | 3.25% | ||||||||||||
Senior Notes Due | [1] | 500,000,000 | 500,000,000 | ||||||||||
Face amount | $ 500,000,000 | ||||||||||||
Senior Notes due 2046 | |||||||||||||
Debt Instrument | |||||||||||||
Fair value of senior notes due | 455,000,000 | 397,000,000 | |||||||||||
Interest rate | 4.375% | ||||||||||||
Senior Notes Due | [1] | 400,000,000 | 400,000,000 | ||||||||||
Face amount | $ 400,000,000 | ||||||||||||
Term loan | |||||||||||||
Debt Instrument | |||||||||||||
Senior Notes Due | $ 0 | 257,000,000 | |||||||||||
2015 Five-Year Revolving Credit Facility | Letter of Credit | |||||||||||||
Debt Instrument | |||||||||||||
Debt instrument aggregate principal amount | $ 100,000,000 | ||||||||||||
2015 Five-Year Revolving Credit Facility | Revolving Credit Facility | |||||||||||||
Debt Instrument | |||||||||||||
Term of debt | 5 years | ||||||||||||
Debt instrument aggregate principal amount | 600,000,000 | ||||||||||||
Permitted increases in Credit Facility borrowing base | 200,000,000 | ||||||||||||
Maximum permitted increases in Credit Facility borrowing base | $ 800,000,000 | ||||||||||||
2019 Five-Year Revolving Credit Facility | Revolving Credit Facility | |||||||||||||
Debt Instrument | |||||||||||||
Term of debt | 5 years | ||||||||||||
Debt instrument aggregate principal amount | $ 800,000,000 | ||||||||||||
Permitted increases in Credit Facility borrowing base | 200,000,000 | ||||||||||||
Maximum permitted increases in Credit Facility borrowing base | $ 1,000,000,000 | ||||||||||||
US Dollar Commercial Paper Program | |||||||||||||
Debt Instrument | |||||||||||||
Face amount | $ 600,000,000 | ||||||||||||
Commercial paper | |||||||||||||
Debt Instrument | |||||||||||||
Senior Notes Due | $ 306,000,000 | $ 0 | |||||||||||
Euro Commercial Paper Program | |||||||||||||
Debt Instrument | |||||||||||||
Face amount | $ 547,000,000 | € 500,000,000 | |||||||||||
Commercial Paper | $ 306,000,000 | ||||||||||||
Weighted-average interest rate | (0.20%) | ||||||||||||
[1] | The fair value of our Senior Notes 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 was $631 million and $620 million as of September 30, 2019 and December 31, 2018 , respectively. The fair value of our Senior Notes due 2023 was $583 million and $599 million as of September 30, 2019 and December 31, 2018, respectively. The fair value of our Senior Notes due 2026 was $515 million and $476 million as of September 30, 2019 and December 31, 2018, respectively. The fair value of our Senior Notes due 2046 was $455 million and $397 million as of September 30, 2019 and December 31, 2018 , respectively. |
Postretirement Benefit Plans (S
Postretirement Benefit Plans (Summary of Net Periodic Benefit Cost) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Net periodic benefit cost: | ||||
Amortization of net actuarial loss | $ 1 | $ 1 | $ 2 | $ 2 |
Net periodic benefit cost | 12 | 1 | 13 | 5 |
Domestic defined benefit pension plans | ||||
Net periodic benefit cost: | ||||
Service cost | 1 | 2 | 2 | |
Interest cost | 1 | 1 | 3 | 3 |
Expected return on plan assets | (2) | (2) | (6) | (5) |
Amortization of net actuarial loss | 0 | 1 | 1 | 2 |
Net periodic benefit cost | 0 | 0 | 2 | |
International defined benefit pension plans | ||||
Net periodic benefit cost: | ||||
Service cost | 2 | 3 | 7 | 8 |
Interest cost | 4 | 5 | 14 | 15 |
Expected return on plan assets | (4) | (9) | (22) | (28) |
Amortization of net actuarial loss | 2 | 2 | 6 | 7 |
Settlement/Curtailment | 8 | 0 | 8 | 1 |
Net periodic benefit cost | $ 12 | $ 1 | $ 13 | $ 3 |
Postretirement Benefit Plans _2
Postretirement Benefit Plans (Textuals) (Details) - USD ($) $ in Millions | Jul. 31, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 |
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block | ||||||
Other postretirement benefit expense | $ 1 | $ 1 | ||||
Amortization of net actuarial loss | $ 1 | 1 | 2 | $ 2 | ||
Employer contribution to defined benefit plan | 19 | 14 | 37 | |||
Increase to losses in AOCI | 11 | 0 | 11 | 0 | ||
Minimum | ||||||
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block | ||||||
Additional contributions | 4 | 4 | ||||
Maximum | ||||||
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block | ||||||
Additional contributions | 8 | 8 | ||||
Foreign Plan [Member] | ||||||
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block | ||||||
Amortization of net actuarial loss | 2 | 2 | 6 | 7 | ||
Lump sum payment | 21 | |||||
Settlement | 8 | $ 0 | $ 8 | $ 1 | ||
Remeasurement of plan's projected benefit obligation | $ 37 | |||||
Plan assets remeasurement | 26 | |||||
Increase to losses in AOCI | $ 11 | |||||
Expected rate of return | 7.25% | 0.70% | ||||
Discount rate | 2.00% | 3.00% | ||||
Incremental net periodic benefit cost | $ 3 |
Equity - Summary of Shareholder
Equity - Summary of Shareholders' Equity (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2017 | |
Dividends declared per share (usd per share) | $ 0.24 | $ 0.24 | $ 0.21 | $ 0.21 | $ 0.24 | $ 0.21 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Beginning balance | $ 2,906 | $ 2,808 | $ 2,782 | $ 2,529 | $ 2,557 | $ 2,519 | $ 2,782 | $ 2,519 | $ 2,782 | $ 2,519 | |
Cumulative effect of change in accounting principle | $ (3) | ||||||||||
Sale of business | (2) | ||||||||||
Net income | 65 | 139 | 79 | 130 | 115 | 79 | 283 | 324 | |||
Other comprehensive income (loss), net | (37) | (11) | 20 | (1) | (87) | 20 | |||||
Distribution to minority shareholders | (3) | ||||||||||
Dividends declared | (44) | (43) | (44) | (37) | (38) | (38) | |||||
Stock incentive plan activity | 8 | 13 | (2) | 10 | 7 | 5 | |||||
Repurchase of common stock | (25) | (25) | (25) | ||||||||
Ending balance | 2,895 | 2,906 | 2,808 | 2,631 | 2,529 | 2,557 | 2,906 | 2,529 | 2,895 | 2,631 | |
Common Stock | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Beginning balance | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | |
Ending balance | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | |
Capital in Excess of Par Value | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Beginning balance | 1,975 | 1,962 | 1,950 | 1,932 | 1,925 | 1,912 | 1,950 | 1,912 | 1,950 | 1,912 | |
Stock incentive plan activity | 8 | 13 | 12 | 10 | 7 | 13 | |||||
Ending balance | 1,983 | 1,975 | 1,962 | 1,942 | 1,932 | 1,925 | 1,975 | 1,932 | 1,983 | 1,942 | |
Retained Earnings | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Beginning balance | 1,770 | 1,674 | 1,639 | 1,359 | 1,282 | 1,227 | 1,639 | 1,227 | 1,639 | 1,227 | |
Cumulative effect of change in accounting principle | 14 | ||||||||||
Net income | 65 | 139 | 79 | 130 | 115 | 79 | |||||
Dividends declared | (44) | (43) | (44) | (37) | (38) | (38) | |||||
Ending balance | 1,791 | 1,770 | 1,674 | 1,452 | 1,359 | 1,282 | 1,770 | 1,359 | 1,791 | 1,452 | |
Accumulated Other Comprehensive Income (Loss) | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Beginning balance | (327) | (316) | (336) | (294) | (207) | (210) | (336) | (210) | (336) | (210) | |
Cumulative effect of change in accounting principle | $ (17) | ||||||||||
Other comprehensive income (loss), net | (37) | (11) | 20 | 1 | (87) | 20 | |||||
Ending balance | (364) | (327) | (316) | (293) | (294) | (207) | (327) | (294) | (364) | (293) | |
Treasury Stock | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Beginning balance | (526) | (526) | (487) | (486) | (461) | (428) | (487) | (428) | (487) | (428) | |
Stock incentive plan activity | (14) | (8) | |||||||||
Repurchase of common stock | (25) | (25) | (25) | ||||||||
Ending balance | (526) | (526) | (526) | (486) | (486) | (461) | (526) | (486) | (526) | (486) | |
Non-Controlling Interest | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Beginning balance | 12 | 12 | 14 | 16 | 16 | 16 | 14 | 16 | 14 | 16 | |
Sale of business | (2) | ||||||||||
Net income | |||||||||||
Other comprehensive income (loss), net | (2) | ||||||||||
Distribution to minority shareholders | (3) | ||||||||||
Ending balance | $ 9 | $ 12 | $ 12 | $ 14 | $ 16 | $ 16 | $ 12 | $ 16 | $ 9 | $ 14 |
Share-Based Compensation Plan_2
Share-Based Compensation Plans (Textuals) (Details) - USD ($) shares in Thousands, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Share-based compensation | $ 7 | $ 7 | $ 23 | $ 23 |
Shares Awarded (in shares) | 334 | |||
Stock-Based Compensation Plans (Textual) [Abstract] | ||||
Proceeds from exercise of employee stock options | $ 10 | $ 7 | ||
Total intrinsic value of options exercised | 11.9 | |||
Stock Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Unamortized compensation expense | 7 | $ 7 | ||
Weighted average period | 1 year 10 months 24 days | |||
Restricted Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Unamortized compensation expense | 26 | $ 26 | ||
Weighted average period | 2 years | |||
Shares Awarded (in shares) | 284 | |||
Performance Based Shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Unamortized compensation expense | $ 18 | $ 18 | ||
Weighted average period | 1 year 10 months 24 days |
Share-Based Compensation Plan_3
Share-Based Compensation Plans (Summary of Stock Options Grant) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Summary of the changes in outstanding stock options | ||
Outstanding, beginning of period (in shares) | 2,125 | |
Granted (in shares) | 334 | |
Exercised (in shares) | (286) | |
Forfeited (in shares) | (46) | |
Outstanding, end of period (in shares) | 2,127 | 2,125 |
Options exercisable, ending of period (in shares) | 1,492 | |
Vested and expected, end of period (in shares) | 2,067 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | ||
Outstanding, beginning of period (in usd per share) | $ 43.08 | |
Granted (in usd per share) | 74.08 | |
Exercised (in usd per share) | 35.71 | |
Forfeited (in usd per share) | 67.04 | |
Outstanding, end of period (in usd per share) | 48.42 | $ 43.08 |
Options exercisable, end of period (in usd per share) | 39.60 | |
Vested and expected, end of period (in usd per share) | $ 47.71 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Weighted Average Remaining Contractual Term [Roll Forward] | ||
Outstanding, weighted average remaining contractual term | 6 years 6 months | 6 years 6 months |
Aggregate intrinsic value, outstanding | $ 67 | |
Options exercisable, end of period | 5 years 6 months | |
Aggregate intrinsic value, exercisable | $ 60 | |
Vested and expected to vest, end of period | 6 years 4 months 24 days | |
Aggregate intrinsic value, vested and expected to vest | $ 66 |
Share-Based Compensation Plan_4
Share-Based Compensation Plans (Stock Option Fair Value Assumptions) (Details) - Stock Options | 9 Months Ended |
Sep. 30, 2019$ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Volatility | 24.10% |
Risk-free interest rate | 2.55% |
Dividend yield | 1.30% |
Expected term (in years) | 5 years 4 months 24 days |
Weighted-average fair value / share (in usd per share) | $ 17.04 |
Share-Based Compensation Plan_5
Share-Based Compensation Plans (Summary of Restricted Stock Unit Grants) (Details) - Restricted Stock [Member] shares in Thousands | 9 Months Ended |
Sep. 30, 2019$ / sharesshares | |
Summary of restricted stock activity | |
Outstanding, beginning of period (in shares) | shares | 537 |
Granted (in shares) | shares | 284 |
Vested (in shares) | shares | (247) |
Forfeited (in shares) | shares | (44) |
Outstanding, end of period (in shares) | shares | 530 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Outstanding, beginning of period (in usd per share) | $ / shares | $ 59.41 |
Granted (in usd per share) | $ / shares | 74.32 |
Vested (in usd per share) | $ / shares | 55.42 |
Forfeited (in usd per share) | $ / shares | 67.59 |
Outstanding, end of period (in usd per share) | $ / shares | $ 68.50 |
Share-Based Compensation Plan_6
Share-Based Compensation Plans Share-Based Compensation Plans (Summary of ROIC Performance Share Unit Grants) (Details) - Return on Invested Capital Performance-Based Shares [Member] - Performance Based Shares shares in Thousands | 9 Months Ended |
Sep. 30, 2019$ / sharesshares | |
Summary of performance share activity | |
Outstanding, beginning of period (in shares) | shares | 274 |
Granted (in shares) | shares | 77 |
Adjustment for Condition Achieved (in shares) | shares | 74 |
Vested (in shares) | shares | (174) |
Forfeited (in shares) | shares | (17) |
Outstanding, end of period (in shares) | shares | 234 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Outstanding, beginning of period (in usd per share) | $ / shares | $ 52.11 |
Granted (in usd per share) | $ / shares | 74.07 |
Adjustment for Condition Achieved (in usd per share) | $ / shares | 37.86 |
Vested (in usd per share) | $ / shares | 37.86 |
Forfeited (in usd per share) | $ / shares | 63.18 |
Outstanding, end of period (in usd per share) | $ / shares | $ 64.54 |
Share-Based Compensation Plan_7
Share-Based Compensation Plans (Summary of Performance-Based Share Grants) (Details) - Total Shareholder Return Performance-Based Shares - Performance Based Shares shares in Thousands | 9 Months Ended |
Sep. 30, 2019$ / sharesshares | |
Summary of performance share activity | |
Outstanding, beginning of period (in shares) | shares | 274 |
Granted (in shares) | shares | 77 |
Adjustment for Condition Achieved (in shares) | shares | 74 |
Vested (in shares) | shares | (174) |
Forfeited (in shares) | shares | (17) |
Outstanding, end of period (in shares) | shares | 234 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Outstanding, beginning of period (in usd per share) | $ / shares | $ 61.04 |
Granted (in usd per share) | $ / shares | 89.62 |
Adjustment for Condition Achieved (in usd per share) | $ / shares | 37.86 |
Vested (in usd per share) | $ / shares | 37.86 |
Forfeited (in usd per share) | $ / shares | 63.18 |
Outstanding, end of period (in usd per share) | $ / shares | $ 75.82 |
Share-Based Compensation Plan_8
Share-Based Compensation Plans (TSR Performance-Based Shares Fair Value Assumptions) (Details) - Total Shareholder Return Performance-Based Shares - Performance Based Shares shares in Thousands | 9 Months Ended |
Sep. 30, 2019$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period | shares | (17) |
Volatility | 20.90% |
Risk-free interest rate | 2.52% |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value | $ / shares | $ 63.18 |
Capital Stock (Textuals) (Detai
Capital Stock (Textuals) (Details) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Aug. 24, 2015 | |
Equity, Class of Treasury Stock [Line Items] | ||||||||
Shares repurchased (less than $1 million) | $ 25 | $ 25 | $ 25 | |||||
Share Repurchase Programs | ||||||||
Equity, Class of Treasury Stock [Line Items] | ||||||||
Shares repurchased (in shares - less than 0.1 million) | 0.1 | 0.5 | ||||||
Shares repurchased (less than $1 million) | $ 1 | $ 39 | ||||||
2015 Stock Repurchase Program | ||||||||
Equity, Class of Treasury Stock [Line Items] | ||||||||
Stock repurchase program, authorized amount | $ 500 | |||||||
Shares repurchased (in shares - less than 0.1 million) | 0 | 0 | 0.3 | 0.7 | ||||
Shares repurchased (less than $1 million) | $ 0 | $ 0 | $ 25 | $ 50 | ||||
Remaining authorized amount of repurchase | $ 338 | $ 338 | ||||||
Settlement of Employee Tax Withholding Obligations | ||||||||
Equity, Class of Treasury Stock [Line Items] | ||||||||
Shares repurchased (in shares - less than 0.1 million) | 0.1 | 0.1 | 0.2 | 0.1 | ||||
Shares repurchased (less than $1 million) | $ 1 | $ 1 | $ 14 | $ 8 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2017 | |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||||||||
Beginning balance | $ (336) | $ (336) | |||||||
Cumulative effect of adoption | $ (3) | ||||||||
Foreign currency translation adjustment | $ (20) | $ (9) | (9) | $ (61) | |||||
Changes in postretirement benefit plans | (11) | 0 | (11) | 0 | |||||
Other non-operating (expense) income, net | (7) | 4 | (2) | 9 | |||||
Ending balance | (364) | (364) | |||||||
Total | |||||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||||||||
Beginning balance | (327) | $ (316) | (336) | (294) | $ (207) | $ (210) | (336) | (210) | |
Cumulative effect of adoption | (17) | ||||||||
Foreign currency translation adjustment | (20) | (18) | 29 | (7) | (60) | 8 | |||
Foreign currency gain reclassified into gain on sale of businesses | (13) | 3 | (4) | 3 | (19) | 11 | |||
Changes in postretirement benefit plans | (11) | 1 | |||||||
Other non-operating (expense) income, net | 3 | ||||||||
Income tax expense on amortization of postretirement benefit plan items | (1) | (1) | (1) | ||||||
Unrealized loss on derivative hedge agreements | (5) | (9) | (9) | ||||||
Income tax benefit on unrealized loss on derivative hedge agreements | 1 | ||||||||
Ending balance | (364) | (327) | (316) | (293) | (294) | (207) | (364) | (293) | |
Foreign Currency Translation | |||||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||||||||
Beginning balance | (111) | (96) | (121) | (86) | (7) | (15) | (121) | (15) | |
Cumulative effect of adoption | (11) | ||||||||
Foreign currency translation adjustment | (20) | (18) | 29 | (7) | (60) | 8 | |||
Foreign currency gain reclassified into gain on sale of businesses | (13) | 3 | (4) | 3 | (19) | 11 | |||
Ending balance | (144) | (111) | (96) | (90) | (86) | (7) | (144) | (90) | |
Postretirement Benefit Plans | |||||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||||||||
Beginning balance | (211) | (213) | (214) | (200) | (202) | (198) | (214) | (198) | |
Cumulative effect of adoption | $ (6) | ||||||||
Changes in postretirement benefit plans | (11) | 1 | |||||||
Other non-operating (expense) income, net | 3 | ||||||||
Income tax expense on amortization of postretirement benefit plan items | (1) | (1) | (1) | ||||||
Ending balance | (213) | (211) | (213) | (198) | (200) | (202) | (213) | (198) | |
Derivative Instruments | |||||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||||||||
Beginning balance | (5) | (7) | (1) | (8) | 2 | 3 | (1) | 3 | |
Unrealized loss on derivative hedge agreements | (5) | (9) | (9) | ||||||
Income tax benefit on unrealized loss on derivative hedge agreements | 1 | ||||||||
Ending balance | (7) | (5) | (7) | (5) | (8) | 2 | $ (7) | $ (5) | |
Other non-operating income | Total | |||||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||||||||
Amortization of prior service cost and net actuarial loss on postretirement benefit plans into other non-operating income (expense), net | 1 | 2 | 2 | 2 | 0 | 2 | |||
Settlement charge released into other non-operating income (expense), net | 8 | ||||||||
Other non-operating income | Postretirement Benefit Plans | |||||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||||||||
Amortization of prior service cost and net actuarial loss on postretirement benefit plans into other non-operating income (expense), net | 1 | 2 | 2 | 2 | 0 | 2 | |||
Settlement charge released into other non-operating income (expense), net | 8 | ||||||||
Revenue | Total | |||||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||||||||
Reclassification of unrealized gain (loss) on foreign exchange agreements | 2 | 1 | 1 | 1 | (1) | (1) | |||
Revenue | Derivative Instruments | |||||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||||||||
Reclassification of unrealized gain (loss) on foreign exchange agreements | 2 | 1 | 1 | 1 | $ (1) | $ (1) | |||
Cost of Revenue | Total | |||||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||||||||
Reclassification of unrealized gain (loss) on foreign exchange agreements | 1 | 1 | 1 | 2 | |||||
Cost of Revenue | Derivative Instruments | |||||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||||||||
Reclassification of unrealized gain (loss) on foreign exchange agreements | $ 1 | $ 1 | $ 1 | $ 2 |
Commitments and Contingencies_2
Commitments and Contingencies (Summary of Warranties) (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Warranties | ||
Warranty accrual – January 1 | $ 60 | $ 82 |
Net charges for product warranties in the period | 20 | 16 |
Settlement of warranty claims | (32) | (33) |
Foreign currency and other | (2) | 1 |
Warranty accrual - September 30 | $ 46 | $ 66 |
Commitments and Contingencies_3
Commitments and Contingencies (Details Textual) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Commitments and Contingencies Disclosure [Abstract] | ||
Loss Contingency Accrual | $ 6 | $ 7 |
Guarantee amounts | 302 | 275 |
Estimated environmental matters | $ 3 | $ 4 |
Segment Information (Summary of
Segment Information (Summary of Operations by Segment) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | ||
Financial information for each reportable segment | |||||
Revenues | $ 1,296 | $ 1,287 | $ 3,878 | $ 3,821 | |
Operating income | 11 | 176 | 291 | 460 | |
Interest Expense | 16 | 21 | 52 | 63 | |
Other Nonoperating Income (Expense) | (7) | 4 | (2) | 9 | |
Gain from sale of business | 0 | 2 | 1 | 0 | |
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest | (12) | 161 | 238 | 406 | |
Depreciation and amortization | 65 | 63 | 192 | 195 | |
Capital expenditures | 46 | 60 | 175 | 171 | |
Water Infrastructure | |||||
Financial information for each reportable segment | |||||
Revenues | 531 | 541 | 1,574 | 1,567 | |
Operating income | 97 | 99 | 246 | 240 | |
Depreciation and amortization | 15 | 17 | 46 | 50 | |
Capital expenditures | 14 | 20 | 65 | 60 | |
Applied Water | |||||
Financial information for each reportable segment | |||||
Revenues | 376 | 378 | 1,149 | 1,132 | |
Operating income | 61 | 59 | 179 | 170 | |
Depreciation and amortization | 5 | 5 | 17 | 16 | |
Capital expenditures | 5 | 5 | 15 | 19 | |
Measurement & Control Solutions | |||||
Financial information for each reportable segment | |||||
Revenues | 389 | 368 | 1,155 | 1,122 | |
Operating income | (136) | 31 | (94) | 95 | |
Depreciation and amortization | 36 | 34 | 107 | 107 | |
Capital expenditures | 21 | 26 | 74 | 72 | |
Regional Selling Locations | |||||
Financial information for each reportable segment | |||||
Depreciation and amortization | [1] | 6 | 5 | 14 | 15 |
Capital expenditures | [2] | 4 | 3 | 13 | 11 |
Corporate and other | |||||
Financial information for each reportable segment | |||||
Operating income | (11) | (13) | (40) | (45) | |
Depreciation and amortization | 3 | 2 | 8 | 7 | |
Capital expenditures | $ 2 | $ 6 | $ 8 | $ 9 | |
[1] | 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 expense is captured in this Regional selling location line. | ||||
[2] | Represents capital expenditures incurred by the Regional selling locations not allocated to the segments. |
Segment Information (Textuals)
Segment Information (Textuals) (Details) | 9 Months Ended |
Sep. 30, 2019Segment | |
Segment Information (Textual) [Abstract] | |
Number of reportable segments | 3 |