Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2020 | Oct. 23, 2020 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2020 | |
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 | 180,231,989 | |
Entity Shell Company | false | |
Entity Central Index Key | 0001524472 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
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 $0.01 per share | |
Trading Symbol | XYL | |
Security Exchange Name | NYSE | |
Senior Notes Due 2023, 2.250% | ||
Document Information [Line Items] | ||
Title of 12(b) Security | 2.250% Senior Notes due 2023 | |
Trading Symbol | XYL23 | |
Security Exchange Name | NYSE |
Recently Issued Accounting Pron
Recently Issued Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements Recently Adopted Pronouncements In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-13, "Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments," amending the accounting for the impairment of financial instruments, including trade receivables. Under previous guidance, credit losses were recognized when the applicable losses had a probable likelihood of occurring and this assessment was based on past events and current conditions. The amended current guidance eliminates the |
Condensed Consolidated Income S
Condensed Consolidated Income Statements (Unaudited) - USD ($) shares in Thousands, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Statement [Abstract] | ||||
Revenues | $ 1,220 | $ 1,296 | $ 3,503 | $ 3,878 |
Cost of revenue | 759 | 787 | 2,199 | 2,369 |
Gross profit | 461 | 509 | 1,304 | 1,509 |
Selling, general and administrative expenses | 266 | 273 | 851 | 870 |
Research and development expenses | 45 | 44 | 138 | 142 |
Restructuring and asset impairment charges | 19 | 33 | 69 | 58 |
Goodwill impairment charge | 58 | 148 | 58 | 148 |
Operating income | 73 | 11 | 188 | 291 |
Interest expense | 22 | 16 | 56 | 52 |
Other non-operating expense, net | (1) | (7) | (5) | (2) |
Gain from sale of business | 0 | 0 | 0 | 1 |
Income (loss) before taxes | 50 | (12) | 127 | 238 |
Income tax expense (benefit) | 13 | (77) | 21 | (45) |
Net income | $ 37 | $ 65 | $ 106 | $ 283 |
Earnings per share: | ||||
Basic (usd per share) | $ 0.20 | $ 0.36 | $ 0.59 | $ 1.57 |
Diluted (usd per share) | $ 0.20 | $ 0.36 | $ 0.58 | $ 1.56 |
Weighted average number of shares: | ||||
Basic (in shares) | 180,022 | 180,072 | 180,055 | 179,938 |
Diluted (in shares) | 180,968 | 181,212 | 180,956 | 181,159 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 37 | $ 65 | $ 106 | $ 283 |
Other comprehensive loss, before tax: | ||||
Foreign currency translation adjustment | (10) | (20) | (53) | (9) |
Net change in derivative hedge agreements: | ||||
Unrealized gain (loss) | 4 | (5) | 8 | (14) |
Amount of (gain) loss reclassified into net income | (2) | 3 | 1 | 7 |
Net change in postretirement benefit plans: | ||||
Net loss | 0 | (11) | 0 | (11) |
Amortization of prior service credit | (1) | (1) | (3) | (3) |
Amortization of net actuarial loss into net income | 5 | 2 | 15 | 8 |
Settlement/Curtailment | 0 | 8 | 0 | 8 |
Other comprehensive loss, before tax | (4) | (24) | (32) | (14) |
Income tax (benefit) expense related to items of other comprehensive loss | (17) | 13 | (10) | 14 |
Other comprehensive income (loss), net of tax | 13 | (37) | (22) | (28) |
Comprehensive income | 50 | 28 | 84 | 255 |
Less: comprehensive loss attributable to noncontrolling interests | 0 | 0 | (1) | 0 |
Comprehensive income attributable to Xylem | $ 50 | $ 28 | $ 85 | $ 255 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 1,402 | $ 724 |
Short-term investments | 200 | 0 |
Receivables, less allowances for discounts, returns and doubtful accounts of $40 and $35 in 2020 and 2019, respectively | 968 | 1,036 |
Inventories | 582 | 539 |
Prepaid and other current assets | 159 | 151 |
Total current assets | 3,311 | 2,450 |
Property, plant and equipment, net | 633 | 658 |
Goodwill | 2,795 | 2,839 |
Other intangible assets, net | 1,090 | 1,174 |
Other non-current assets | 619 | 589 |
Total assets | 8,448 | 7,710 |
Current liabilities: | ||
Accounts payable | 495 | 597 |
Accrued and other current liabilities | 745 | 628 |
Short-term borrowings and current maturities of long-term debt | 40 | 276 |
Total current liabilities | 1,280 | 1,501 |
Long-term debt | 3,053 | 2,040 |
Accrued postretirement benefits | 455 | 445 |
Deferred income tax liabilities | 283 | 310 |
Other non-current accrued liabilities | 502 | 447 |
Total liabilities | 5,573 | 4,743 |
Commitments and contingencies (Note 18) | ||
Stockholders’ equity: | ||
Common Stock | 2 | 2 |
Capital in excess of par value | 2,021 | 1,991 |
Retained earnings | 1,828 | 1,866 |
Treasury stock – at cost 14.5 shares and 13.7 shares in 2020 and 2019, respectively | (588) | (527) |
Accumulated other comprehensive loss | (396) | (375) |
Total stockholders’ equity | 2,867 | 2,957 |
Non-controlling interests | 8 | 10 |
Total equity | 2,875 | 2,967 |
Total liabilities and stockholders’ equity | $ 8,448 | $ 7,710 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Allowances for discounts and doubtful accounts on receivables | $ 40 | $ 35 |
Common Stock, par value | $ 0.01 | $ 0.01 |
Common Stock, shares authorized | 750,000,000 | 750,000,000 |
Common Stock, shares issued | 194,600,000 | 193,900,000 |
Treasury Stock, shares | 14,500,000 | 13,700,000 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Operating Activities | ||
Net income | $ 106 | $ 283 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 88 | 88 |
Amortization | 101 | 104 |
Share-based compensation | 19 | 23 |
Restructuring and asset impairment charges | 69 | 58 |
Goodwill impairment charge | 58 | 148 |
Gain from sale of business | 0 | (1) |
Other, net | 33 | 7 |
Payments for restructuring | (25) | (21) |
Changes in assets and liabilities (net of acquisitions): | ||
Changes in receivables | 43 | (73) |
Changes in inventories | (48) | (2) |
Changes in accounts payable | (91) | (30) |
Changes in accrued taxes | (5) | (140) |
Other, net | 106 | 7 |
Net Cash – Operating activities | 454 | 451 |
Investing Activities | ||
Capital expenditures | (136) | (175) |
Acquisitions of businesses, net of cash acquired | 0 | (18) |
Proceeds from sale of business | 0 | (2) |
Proceeds from the sale of property, plant and equipment | 1 | 0 |
Cash received from investments | 0 | 3 |
Cash paid for investments | (200) | 0 |
Other, net | 9 | 7 |
Net Cash – Investing activities | (326) | (185) |
Financing Activities | ||
Short-term debt issued, net | 359 | 317 |
Short-term debt repaid | (600) | (254) |
Long-term debt issued, net | 985 | 0 |
Repurchase of common stock | (61) | (39) |
Proceeds from exercise of employee stock options | 10 | 10 |
Dividends paid | (142) | (131) |
Other, net | (1) | (2) |
Net Cash – Financing activities | 550 | (99) |
Effect of exchange rate changes on cash | 0 | (10) |
Net change in cash and cash equivalents | 678 | 157 |
Cash and cash equivalents at beginning of year | 724 | 296 |
Cash and cash equivalents at end of period | 1,402 | 453 |
Cash paid during the period for: | ||
Interest | 46 | 46 |
Income taxes (net of refunds received) | $ 27 | $ 94 |
Restructuring Charges
Restructuring Charges | 9 Months Ended |
Sep. 30, 2020 | |
Restructuring and Related Activities [Abstract] | |
Restructuring Charges | Restructuring and Asset Impairment Charges Restructuring In response to the changes in business and economic conditions arising as a result of the COVID-19 pandemic, on June 2, 2020 management committed to a restructuring plan that includes actions across our businesses and functions globally. The plan is designed to support our long-term financial resilience and simplify our operations, strengthen our competitive positioning and better serve our customers. As a result of the plan, during the three and nine months ended September 30, 2020, we recognized restructuring charges of $8 million and $48 million, respectively. These charges included reduction of headcount across all segments and asset impairments within our Measurement & Control Solutions segment. Immaterial restructuring charges incurred during the first quarter are included in the plan information presented below. 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. 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) 2020 2019 2020 2019 By component: Severance and other charges $ 8 $ 26 $ 31 $ 46 Lease related charges — — — 1 Asset impairment — — 17 1 Other restructuring charges 1 — 1 — Reversal of restructuring accruals (1) — (1) — Total restructuring charges $ 8 $ 26 $ 48 $ 48 Asset impairment 11 7 21 10 Total restructuring and asset impairment charges $ 19 $ 33 $ 69 $ 58 By segment: Water Infrastructure $ 6 $ 6 $ 14 $ 17 Applied Water 1 2 3 4 Measurement & Control Solutions 12 25 52 37 The following table displays a roll-forward of the restructuring accruals, presented on our Condensed Consolidated Balance Sheets within "Accrued and other current liabilities" and "other non-current accrued liabilities", for the nine months ended September 30, 2020 and 2019: (in millions) 2020 2019 Restructuring accruals - January 1 $ 27 $ 5 Restructuring charges 48 48 Cash payments (25) (21) Asset impairment (17) — Foreign currency and other — (2) Restructuring accruals - September 30 $ 33 $ 30 By segment: Water Infrastructure $ 5 $ 1 Applied Water 1 1 Measurement & Control Solutions 22 21 Regional selling locations (a) 4 7 Corporate and other 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. The following table presents expected restructuring spend in 2020 and thereafter: (in millions) Water Infrastructure Applied Water Measurement & Control Solutions Corporate Total Actions Commenced in 2020: Total expected costs $ 27 $ 11 $ 35 $ 3 $ 76 Costs incurred during Q1 2020 1 — — — 1 Costs incurred during Q2 2020 5 2 30 — 37 Costs incurred during Q3 2020 7 1 1 — 9 Total expected costs remaining $ 14 $ 8 $ 4 $ 3 $ 29 Actions Commenced in 2019: Total expected costs $ 19 $ 5 $ 27 $ — $ 51 Costs incurred during 2019 18 5 27 — 50 Costs incurred during Q1 2020 1 — — — 1 Costs incurred during Q2 2020 1 — — — 1 Costs incurred during Q3 2020 (1) — — — (1) Total expected costs remaining $ — $ — $ — $ — $ — The Water Infrastructure, Applied Water, and Measurement & Control Solutions actions commenced in 2020 consist primarily of severance charges across segments and asset impairment charges in our Measurement & Control Solutions segment. These actions are expected to continue through 2021. The Water Infrastructure, Applied Water, and Measurement & Control Solutions actions commenced in 2019 consist primarily of severance charges. The actions commenced in 2019 are complete. During the second quarter of 2020, the discontinuance of a product line resulted in $17 million of asset impairments, primarily related to customer relationships, trademarks and fixed assets within our Measurement & Control Solutions segment. Asset Impairment During the third quarter of 2020, we determined that certain assets including software and proprietary technology within our Measurement & Control Solutions segment were impaired. Accordingly we recognized an impairment charge of $11 million. Refer to Note 9, "Goodwill and Other Intangible Assets," for additional information. During the second quarter of 2020, we determined that internally developed in-process software within our Measurement & Control Solutions segment was impaired as a result of actions taken to prioritize strategic investments. Accordingly we recognized an impairment charge of $10 million. Refer to Note 9, "Goodwill and Other Intangible Assets," for additional information. 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 9, "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 9, "Goodwill and Other Intangible Assets," for additional information. |
Background and Basis of Present
Background and Basis of Presentation | 9 Months Ended |
Sep. 30, 2020 | |
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 19, "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 statement 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, 2019 ("2019 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 2019 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 condensed consolidated 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. The global outbreak of the novel coronavirus (COVID-19) disease in March 2020, declared a pandemic by the World Health Organization, has created significant global volatility, uncertainty and economic disruption. The COVID-19 pandemic also has caused increased uncertainty in estimates and assumptions affecting the condensed consolidated financial statements. 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. |
Acquisitions and Divestitures
Acquisitions and Divestitures | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Acquisitions and Divestitures | Acquisitions and Divestitures Acquisitions During the three and nine months ended September 30, 2020 we spent approximately $0 million, net of cash received on acquisition activity. 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. |
Revenue
Revenue | 9 Months Ended |
Sep. 30, 2020 | |
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) 2020 2019 2020 2019 Revenue from contracts with customers $ 1,170 $ 1,231 $ 3,358 $ 3,690 Lease Revenue 50 65 145 188 Total $ 1,220 $ 1,296 $ 3,503 $ 3,878 The following table reflects revenue from contracts with customers by application: Three Months Ended Nine Months Ended September 30, September 30, (in millions) 2020 2019 2020 2019 Water Infrastructure Transport $ 374 $ 369 $ 1,042 $ 1,111 Treatment 100 96 276 274 Applied Water Building Services 205 207 579 636 Industrial Water 159 169 460 513 Measurement & Control Solutions Water 166 193 510 587 Energy 65 90 207 248 Software as a Service 23 26 67 75 Test 78 81 217 246 Total $ 1,170 $ 1,231 $ 3,358 $ 3,690 The following table reflects revenue from contracts with customers by geographical region: Three Months Ended Nine Months Ended September 30, September 30, (in millions) 2020 2019 2020 2019 Water Infrastructure United States $ 142 $ 141 $ 407 $ 434 Europe 181 170 515 509 Asia Pacific 96 92 236 260 Other 55 62 160 182 Applied Water United States 185 196 559 609 Europe 92 89 255 275 Asia Pacific 46 41 105 121 Other 41 50 120 144 Measurement & Control Solutions United States 202 251 636 739 Europe 65 63 197 199 Asia Pacific 29 27 76 85 Other 36 49 92 133 Total $ 1,170 $ 1,231 $ 3,358 $ 3,690 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, 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 Balance at January 1, 2020 $ 106 $ 135 Additions, net 95 98 Revenue recognized from opening balance — (83) Billings (89) — Other — (1) Balance at September 30, 2020 $ 112 $ 149 (a) Excludes receivable balances which are disclosed on the balance sheet |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
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, 2020 was $13 million resulting in an effective tax rate of 26.2%, compared to a benefit of $77 million resulting in an effective tax rate of 623.6% (on a pre-tax loss for the period) for the same period in 2019. The income tax provision for the nine months ended September 30, 2020 was $21 million resulting in an effective tax rate of 16.6%, compared to a benefit of $45 million resulting in an effective tax rate of (18.9)% for the same period in 2019. The effective tax rate for the three and nine month periods ended September 30, 2020 differs from the United States federal statutory rate primarily due to the mix of earnings in jurisdictions, partially offset by the Global Intangible Low-Taxed Income ("GILTI") inclusion and goodwill impairment charge. Additionally, the effective tax rate for the three and nine month periods ended September 30, 2020 differs from the same periods in 2019 due primarily to the impact of the changes in tax law in Switzerland in 2019 along with the impact of the larger 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, 2020 was $125 million, as compared to $129 million at December 31, 2019, 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 $1 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 (benefit)" in our Condensed Consolidated Income Statements. As of September 30, 2020, we had $9 million of interest accrued for unrecognized tax benefits. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2020 | |
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, 2020 2019 2020 2019 Net income (in millions) $ 37 $ 65 $ 106 $ 283 Shares (in thousands): Weighted average common shares outstanding 180,006 180,044 180,031 179,909 Add: Participating securities (a) 16 28 24 29 Weighted average common shares outstanding — Basic 180,022 180,072 180,055 179,938 Plus incremental shares from assumed conversions: (b) Dilutive effect of stock options 656 790 648 819 Dilutive effect of restricted stock units and performance share units 290 350 253 402 Weighted average common shares outstanding — Diluted 180,968 181,212 180,956 181,159 Basic earnings per share $ 0.20 $ 0.36 $ 0.59 $ 1.57 Diluted earnings per share $ 0.20 $ 0.36 $ 0.58 $ 1.56 (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 15, "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) 2020 2019 2020 2019 Stock options 1,699 1,390 1,611 1,401 Restricted stock units 408 351 387 360 Performance share units 334 391 311 439 |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories The components of total inventories are summarized as follows: (in millions) September 30, December 31, Finished goods $ 237 $ 212 Work in process 53 47 Raw materials 292 280 Total inventories $ 582 $ 539 |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 9 Months Ended |
Sep. 30, 2020 | |
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, 2020 are as follows: (in millions) Water Infrastructure Applied Water Measurement & Control Solutions Total Balance as of January 1, 2020 $ 651 $ 513 $ 1,675 $ 2,839 Activity in 2020 Impairment — — (58) (58) Foreign currency and other 3 6 5 14 Balance as of September 30, 2020 $ 654 $ 519 $ 1,622 $ 2,795 During the third quarter of 2020, the Company recorded a goodwill impairment charge of $58 million related to the Advanced Infrastructure Analytics (“AIA”) goodwill reporting unit within our Measurement & Control Solutions segment. The AIA reporting unit is comprised of our assessment services business (primarily the Pure Technologies Ltd. ("Pure") acquisition) as well as our digital solutions business. The impairment resulted from management's updated forecast of future cash flows for the AIA businesses, which reflects significant negative volume impacts from the COVID-19 pandemic, primarily on our assessment services business. Our ongoing investment in the AIA businesses also continues to impact near term profitability. 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. During the third quarter of 2019, the Company recorded a goodwill impairment charge of $148 million related to the AIA goodwill reporting unit within our Measurement & Control Solutions segment. 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. Other Intangible Assets Information regarding our other intangible assets is as follows: September 30, 2020 December 31, 2019 (in millions) Carrying Amount Accumulated Amortization Net Intangibles Carrying Amount Accumulated Amortization Net Intangibles Customer and distributor relationships $ 929 $ (391) $ 538 $ 945 $ (352) $ 593 Proprietary technology and patents 202 (125) 77 204 (111) 93 Trademarks 141 (59) 82 148 (52) 96 Software 471 (249) 222 428 (206) 222 Other 21 (17) 4 20 (16) 4 Indefinite-lived intangibles 167 — 167 166 — 166 Other Intangibles $ 1,931 $ (841) $ 1,090 $ 1,911 $ (737) $ 1,174 Amortization expense related to finite-lived intangible assets was $33 million and $101 million for the three and nine month periods ended September 30, 2020, respectively, and $34 million and $104 million for the three and nine month periods ended September 30, 2019, respectively. During the third quarter of 2020, the Company assessed whether the carrying amounts of the AIA reporting unit’s long-lived assets may not be recoverable based on the updated forecast of future cash flows, and therefore impaired. Our assessment resulted in an impairment charge of $11 million, primarily related to software and proprietary technology. 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 second quarter of 2020, we recognized impairment charges of $16 million primarily related to customer relationships and trademarks due to discontinuance of a product line within our Measurement & Control Solutions segment. We also determined that internally developed in-process software within our Measurement & Control Solutions segment was impaired as a result of actions taken to prioritize strategic investments and recognized an impairment charge of $10 million. 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. 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 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, 2020 | |
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 $137 million and $0 million as of September 30, 2020 and December 31, 2019, respectively. As of September 30, 2020, 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 $52 million, $47 million, $12 million, $8 million, $8 million and $7 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 and third quarter of 2020 we entered into additional cross currency swaps. The total notional amount of derivative instruments designated as net investment hedges was $1,189 million and $714 million as of September 30, 2020 and December 31, 2019, 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 $581 million and $554 million as of September 30, 2020 and December 31, 2019, 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) 2020 2019 2020 2019 Cash Flow Hedges Foreign Exchange Contracts Amount of gain (loss) recognized in OCI $ 4 $ (5) $ 7 $ (14) Amount of (gain) loss reclassified from OCI into revenue (2) 2 — 4 Amount of loss reclassified from OCI into cost of revenue — 1 2 3 Net Investment Hedges Cross Currency Swaps Amount of gain (loss) recognized in OCI $ (53) $ 31 $ (30) $ 30 Amount of income recognized in Interest Expense 5 4 $ 14 $ 11 Foreign Currency Denominated Debt Amount of gain (loss) recognized in OCI $ (21) $ 22 $ (26) $ 23 As of September 30, 2020, $6 million of net gains on cash flow hedges are expected to be reclassified into earnings in the next 12 months. As of September 30, 2020, no gains or losses on the net investment hedges are expected to be reclassified into earnings over their duration. 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 $ 4 $ — Net Investment Hedges Other non-current assets $ 8 $ 4 Liabilities Net Investment Hedges Other non-current accrued liabilities $ (54) $ (24) The fair value of our long-term debt, due in 2023, designated as a net investment hedge was $611 million and $591 million as of September 30, 2020 and December 31, 2019, respectively. |
Accrued and Other Current Liabi
Accrued and Other Current Liabilities | 9 Months Ended |
Sep. 30, 2020 | |
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 $ 230 $ 199 Customer-related liabilities 173 153 Accrued taxes 96 79 Lease liabilities 61 61 Accrued warranty costs 59 36 Other accrued liabilities 126 100 Total accrued and other current liabilities $ 745 $ 628 |
Credit Facilities and Debt
Credit Facilities and Debt | 9 Months Ended |
Sep. 30, 2020 | |
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) 583 557 3.250% Senior Notes due 2026 (a) 500 500 1.950% Senior Notes due 2028 (b) 500 — 2.250% Senior Notes due 2031 (b) 500 — 4.375% Senior Notes due 2046 (a) 400 400 Commercial paper 40 276 Debt issuance costs and unamortized discount (c) (30) (17) Total debt 3,093 2,316 Less: short-term borrowings and current maturities of long-term debt 40 276 Total long-term debt $ 3,053 $ 2,040 (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 $627 million and $629 million as of September 30, 2020 and December 31, 2019, respectively. The fair value of our Senior Notes due 2023 was $611 million and $591 million as of September 30, 2020 and December 31, 2019, respectively. The fair value of our Senior Notes due 2026 was $555 million and $518 million as of September 30, 2020 and December 31, 2019, respectively. The fair value of our Senior Notes due 2046 was $474 million and $431 million as of September 30, 2020 and December 31, 2019, respectively. (b) 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 2028 and 2031 was $522 million and $530 million, respectively, as of September 30, 2020. (c) 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 June 26, 2020, we issued 1.950% Senior Notes of $500 million aggregate principal amount due January 2028 (the “Senior Notes due 2028”) and 2.250% Senior Notes of $500 million aggregate principal amount due January 2031 (the “Senior Notes due 2031" and, together with the Senior Notes due 2028, the “Green Bond”). The Green Bond includes covenants that restrict our ability, and the ability of our restricted subsidiaries, to incur debt secured by liens on certain property above a threshold, to engage in certain sale and leaseback transactions involving certain property above a threshold, and to consolidate or merge, or convey or transfer all or substantially all of our assets. We may redeem the Green Bond at any time, at our option, subject to certain conditions, at specified redemption prices, plus accrued and unpaid interest to the redemption date. If a change of control triggering event (as defined in the applicable Green Bond indenture) occurs, we will be required to make an offer to purchase the notes at a price equal to 101% of their principal amount plus accrued and unpaid interest to the date of repurchase. Interest on the Green Bond is payable on January 30 and July 30 of each year beginning on January 30, 2021. As of September 30, 2020, we are in compliance with all covenants for the Green Bond. 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, and the ability of our restricted subsidiaries, to incur debt secured by liens on certain property above a threshold, to engage in certain sale and leaseback transactions involving certain property above a threshold, and to consolidate or merge, or convey or transfer all or substantially all of our assets. 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. As of September 30, 2020, we are in compliance with all covenants for the Senior Notes. Credit Facilities 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 (or maximum leverage ratio), which will be based on the last four fiscal quarters; and in addition contains 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 Facility 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 Facility. On June 22, 2020, Xylem entered into Amendment No. 1 to the 2019 Credit Facility (the "Amendment") which modified the financial covenant from a test based on the maximum leverage ratio (defined as consolidated total debt to consolidated EBITDA) to a test based on the net leverage ratio (defined as consolidated total debt less unrestricted cash and cash equivalents to consolidated EBITDA). This modification is effective through the quarter ending September 30, 2021, after which the covenant will revert back to the prior maximum leverage ratio test. The Amendment also restricts stock repurchases until March 31, 2021, except for shares of common stock in an amount not to exceed the number of shares issued after the date of the Amendment, subject to customary exceptions. As of September 30, 2020, the 2019 Credit Facility was undrawn and we are in compliance with all revolver 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 Credit Facility. As of September 30, 2020 and December 31, 2019, $40 million and $0 million of the U.S. Dollar commercial paper program was outstanding, respectively, at a weighted average interest rate of 2.20%. We have the ability to continue borrowing under this program going forward 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 $583 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, 2020 and December 31, 2019, $0 million and $276 million of the Company's Euro commercial paper program was outstanding, respectively. We have the ability to continue borrowing under this program going forward in future periods. Term Loan Facilities ING Bank Term Loan Facility On April 25, 2020, the Company’s subsidiary, Xylem Europe GmbH (the “Borrower”) entered into a 12-month €100 million (approximately $117 million) term loan facility, the terms of which are set forth in a term loan agreement among the Borrower, the Company, as parent guarantor and ING Bank. The Company entered into a parent guarantee in favor of ING Bank also dated April 25, 2020 to secure all present and future obligations of the Borrower under the Term Loan Agreement. Borrowings accrue interest at a rate equal to the EURIBOR or a replacement base rate, plus an applicable margin based on Xylem's credit rating. Xylem will also pay quarterly fees whether such commitment is used or unused. As of September 30, 2020, the ING Bank Term Loan Facility was undrawn. Australia & New Zealand Banking Group Limited Term Loan Facility On April 30, 2020, the Company entered into a 12-month $50 million term loan facility the terms of which are set forth in a term loan agreement among the Company and Australia and New Zealand Banking Group Limited. Borrowings accrue interest at a rate equal to an adjusted LIBOR rate plus 1.50%. As of September 30, 2020, the Australia & New Zealand Banking Group Limited Term Loan Facility was undrawn. Time Deposits Certain Green Bond proceeds were invested in time deposits. Time deposits with original maturity periods of three months or less are included within “Cash and cash equivalents” on the Condensed Consolidated Balance Sheets, while time deposits with original maturity periods greater than three months but less than one year are separately presented as "Short-term investments". Time deposits are recorded at cost, which approximates fair value as of September 30, 2020 and is considered a Level 1 input. The fair value of time deposits classified as “Cash and cash equivalents” and “Short-term investments” was $550 million and $200 million, respectively, as of September 30, 2020. There were no time deposits as of December 31, 2019. |
Postretirement Benefit Plans
Postretirement Benefit Plans | 9 Months Ended |
Sep. 30, 2020 | |
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) 2020 2019 2020 2019 Domestic defined benefit pension plans: Service cost $ — $ 1 $ 2 $ 2 Interest cost 1 1 3 3 Expected return on plan assets (1) (2) (5) (6) Amortization of net actuarial loss — — 2 1 Net periodic benefit cost $ — $ — $ 2 $ — International defined benefit pension plans: Service cost $ 3 $ 2 $ 9 $ 7 Interest cost 3 4 11 14 Expected return on plan assets (4) (4) (10) (22) Amortization of net actuarial loss 4 2 10 6 Settlement/Curtailment — 8 — 8 Net periodic benefit cost $ 6 $ 12 $ 20 $ 13 Total net periodic benefit cost $ 6 $ 12 $ 22 $ 13 The components of net periodic benefit cost other than the service cost component are included in the line item "Other non-operating expense, 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 the three and nine months ended September 30, 2020, including net credits recognized into other comprehensive income of less than $1 million and $1 million, respectively, for the three and nine months ended September 30, 2020. 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 of $1 million and $2 million, respectively, for the three and nine months ended September 30, 2019. We contributed $19 million and $14 million to our defined benefit plans during the nine months ended September 30, 2020 and 2019, respectively. Additional contributions ranging between approximately $5 million and $10 million are expected during the remainder of 2020. During the first quarter of 2020, the Company purchased a bulk annuity policy with an insurance company for its largest defined benefit plan in the U.K., as a plan asset, to facilitate the termination and buy-out of the plan. The bulk annuity fully insures the benefits payable to the participants of the plan until a full buy-out of the plan can be executed, which is expected to occur in 2021. Included in the Company's nine months ended September 30, 2020 contributions is $5 million paid to meet the shortfall between the cost of the bulk annuity policy and the plan assets. As a result of the change in assets from a mix of equities and bonds to the bulk annuity, the plan's expected rate of return on assets was reduced to 1.00% at December 31, 2019. The rate at December 31, 2018 was 7.25%. On January 27, 2020, the plan's assets of $336 million were transferred to the insurance company for the purchase of the bulk annuity. |
Equity
Equity | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Equity | Equity The following table shows the changes in stockholders' equity for the nine months ended September 30, 2020: Common Capital in Excess of Par Value Retained Accumulated Other Treasury Stock Non-Controlling Interest Total Balance at January 1, 2020 $ 2 $ 1,991 $ 1,866 $ (375) $ (527) $ 10 $ 2,967 Cumulative effect of change in accounting principle — — (2) — — — (2) Net income — — 38 — — 38 Other comprehensive loss, net — — — (86) — (1) (87) Dividends declared ($0.26 per share) — — (48) — — — (48) Stock incentive plan activity — 13 — — (10) — 3 Repurchase of common stock — — — — (50) — (50) Balance at March 31, 2020 $ 2 $ 2,004 $ 1,854 $ (461) $ (587) $ 9 $ 2,821 Net income — — 31 — — — 31 Other comprehensive income, net — — — 52 — — 52 Dividends declared ($0.26 per share) — — (47) — — — (47) Stock incentive plan activity — 8 — — — — 8 Balance at June 30, 2020 $ 2 $ 2,012 $ 1,838 $ (409) $ (587) $ 9 $ 2,865 Net income — — 37 — — — 37 Other comprehensive income, net — — — 13 — — 13 Distribution to minority shareholders — — — — — (1) (1) Dividends declared ($0.26 per share) — — (47) — — — (47) Stock incentive plan activity — 9 — — (1) — 8 Balance at September 30, 2020 $ 2 $ 2,021 $ 1,828 $ (396) $ (588) $ 8 $ 2,875 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 |
Share-Based Compensation Plans
Share-Based Compensation Plans | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Share-Based Compensation Plans | Share-Based Compensation PlansShare-based compensation expense was $3 million and $19 million during the three and nine months ended September 30, 2020, respectively, and $7 million and $23 million during the three and nine months ended September 30, 2019, respectively. The unrecognized compensation expense related to our stock options, restricted stock units and performance share units was $7 million, $25 million and $10 million, respectively, at September 30, 2020 and is expected to be recognized over a weighted average period of 1.9, 1.9 and 2 years, respectively. The amount of cash received from the exercise of stock options was $10 million and $10 million for the nine months ended September 30, 2020 and 2019, respectively. Stock Option Grants The following is a summary of the changes in outstanding stock options for the nine months ended September 30, 2020 : Share units (in thousands) Weighted Average Exercise Price / Share Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in millions) Outstanding at January 1, 2020 2,040 $ 48.56 6.3 Granted 548 74.00 Exercised (260) 37.95 Forfeited and expired (65) 77.45 Outstanding at September 30, 2020 2,263 $ 55.11 6.6 $ 64 Options exercisable at September 30, 2020 1,487 $ 45.33 5.3 $ 56 Vested and expected to vest as of September 30, 2020 2,175 $ 54.37 6.4 $ 62 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, 2020 was $12.0 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 2020 grants: Volatility 24.07 % Risk-free interest rate 15.12 % Dividend yield 1.43 % Expected term (in years) 5.8 Weighted-average fair value / share $ 14.69 Expected volatility is calculated based on an analysis of historic volatility measures for 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, 2020 . 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, 2020 512 $ 68.95 Granted 334 75.35 Vested (251) 63.86 Forfeited (38) 75.41 Outstanding at September 30, 2020 557 $ 74.59 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, 2020. 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, 2020 225 $ 64.51 Granted 78 78.30 Vested (89) 49.15 Forfeited (16) 76.83 Outstanding at September 30, 2020 198 $ 75.86 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, 2020: Share units (in thousands) Weighted Average Grant Date Fair Value /Share Outstanding at January 1, 2020 225 $ 75.80 Granted 78 100.69 Adjustment for Market Condition Achieved (a) 35 49.15 Vested (124) 49.15 Forfeited (16) 76.83 Outstanding at September 30, 2020 198 $ 96.41 (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 2020 grants: Volatility 22.6 % Risk-free interest rate 1.08 % |
Capital Stock
Capital Stock | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Capital Stock | Capital StockFor the three and nine months ended September 30, 2020, the Company repurchased less than 0.1 million shares of common stock for approximately $1 million and approximately 0.8 million shares of common stock for $61 million, respectively. For the three and nine months ended September 30, 2019, the Company repurchased less than 0.1 million shares of common stock for less than $1 million and approximately 0.5 million shares of common stock 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 the program for the three months ended September 30, 2020. For the nine months ended September 30, 2020, we repurchased approximately 0.7 million shares for $50 million. There were no shares repurchased under the 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 are up to $288 million in shares that may still be purchased under this plan as of September 30, 2020. Aside from the aforementioned repurchase program, we repurchased less than 0.1 million shares and approximately 0.1 million shares for approximately $1 million and $11 million for the three and nine months ended September 30, 2020, 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 0.2 million shares for less than $1 million and approximately $14 million for the three and nine months ended September 30, 2019, respectively. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 9 Months Ended |
Sep. 30, 2020 | |
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, 2020: (in millions) Foreign Currency Translation Postretirement Benefit Plans Derivative Instruments Total Balance at January 1, 2020 $ (103) $ (269) $ (3) $ (375) Foreign currency translation adjustment (77) — — (77) Tax on foreign currency translation adjustment (13) — — (13) Amortization of prior service cost and net actuarial loss on postretirement benefit plans into other non-operating income (expense), net — 4 — 4 Income tax impact on amortization of postretirement benefit plan items — (1) — (1) Unrealized loss on derivative hedge agreements — — (2) (2) 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 March 31, 2020 $ (193) $ (266) $ (2) $ (461) Foreign currency translation adjustment 35 — — 35 Tax on foreign currency translation adjustment 9 — — 9 Amortization of prior service cost and net actuarial loss on postretirement benefit plans into other non-operating income (expense), net — 4 — 4 Income tax impact on amortization of postretirement benefit plan items — (1) — (1) Unrealized gain on derivative hedge agreements — — 6 6 Income tax benefit on unrealized gain on derivative hedge agreements — — (1) (1) Reclassification of unrealized gain 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, 2020 $ (149) $ (263) $ 3 $ (409) Foreign currency translation adjustment (10) — — (10) Tax on foreign currency translation adjustment 18 — — 18 Amortization of prior service cost and net actuarial loss on postretirement benefit plans into other non-operating income (expense), net — 4 — 4 Income tax impact on amortization of postretirement benefit plan items — (1) — (1) Unrealized gain on derivative hedge agreements — — 4 4 Reclassification of unrealized gain on foreign exchange agreements into revenue — — (2) (2) Balance at September 30, 2020 $ (141) $ (260) $ 5 $ (396) 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 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) |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
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 matters including environmental, tax, intellectual property, acquisitions or divestitures, product liability and personal injury, privacy, employment, labor and pension, 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 $3 million and $5 million as of September 30, 2020 and December 31, 2019, respectively, for these general legal matters. Indemnifications As part of our 2011 spin-off from our former parent, ITT Corporation (now ITT LLC), Exelis Inc. and Xylem will indemnify, defend and hold harmless each of the other parties with respect to such parties’ assumed or retained liabilities under the Distribution Agreement and breaches of the Distribution Agreement or related spin agreements. The former parent’s indemnification obligations include asserted and unasserted asbestos and silica liability claims that relate to the presence or alleged presence of asbestos or silica in products manufactured, repaired or sold prior to October 31, 2011, the Distribution Date, subject to limited exceptions with respect to certain employee claims, or in the structure or material of any building or facility, subject to exceptions with respect to employee claims relating to Xylem buildings or facilities. The indemnification associated with pending and future asbestos claims does not expire. Xylem has not recorded a liability for material matters for which we expect to be indemnified by the former parent or Exelis Inc. through the Distribution Agreement and we are not aware of any claims or other circumstances that would give rise to material payments from us under such indemnifications. On May 29, 2015, Harris Inc. acquired Exelis. As the parent of Exelis, Harris Inc. is responsible for Exelis’ 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, 2020 and December 31, 2019, the amount of surety bonds, bank guarantees, insurance letters of credit and stand-by letters of credit was $378 million and $340 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 $3 million as of September 30, 2020 and December 31, 2019 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) 2020 2019 Warranty accrual – January 1 $ 41 $ 60 Net charges for product warranties in the period 44 20 Settlement of warranty claims (24) (32) Warranty accrual - September 30 $ 62 $ 46 |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2020 | |
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, wastewater and storm water 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 2019 Annual Report). The following tables contain financial information for each reportable segment: Three Months Ended Nine Months Ended September 30, September 30, (in millions) 2020 2019 2020 2019 Revenue: Water Infrastructure $ 524 $ 531 $ 1,463 $ 1,574 Applied Water 364 376 1,039 1,149 Measurement & Control Solutions 332 389 1,001 1,155 Total $ 1,220 $ 1,296 $ 3,503 $ 3,878 Operating Income: Water Infrastructure $ 89 $ 97 $ 201 $ 246 Applied Water 56 61 144 179 Measurement & Control Solutions (62) (136) (120) (94) Corporate and other (10) (11) (37) (40) Total operating income $ 73 $ 11 $ 188 $ 291 Interest expense $ 22 $ 16 $ 56 $ 52 Other non-operating (expense) income, net (1) (7) (5) (2) Gain from sale of business — — — 1 Income (loss) before taxes $ 50 $ (12) $ 127 $ 238 Depreciation and Amortization: Water Infrastructure $ 13 $ 15 $ 44 $ 46 Applied Water 7 5 18 17 Measurement & Control Solutions 36 36 106 107 Regional selling locations (a) 4 6 15 14 Corporate and other 3 3 6 8 Total $ 63 $ 65 $ 189 $ 192 Capital Expenditures: Water Infrastructure $ 9 $ 14 $ 27 $ 65 Applied Water 4 5 16 15 Measurement & Control Solutions 22 21 73 74 Regional selling locations (b) 6 4 18 13 Corporate and other — 2 2 8 Total $ 41 $ 46 $ 136 $ 175 (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, 2020 | |
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 statement 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, 2019 ("2019 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 2019 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 condensed consolidated 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. The global outbreak of the novel coronavirus (COVID-19) disease in March 2020, declared a pandemic by the World Health Organization, has created significant global volatility, uncertainty and economic disruption. The COVID-19 pandemic also has caused increased uncertainty in estimates and assumptions affecting the condensed consolidated financial statements. 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. |
Pronouncements Not Yet Adopted and Recently Adopted Pronouncements | Recently Adopted Pronouncements In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-13, "Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments," amending the accounting for the impairment of financial instruments, including trade receivables. Under previous guidance, credit losses were recognized when the applicable losses had a probable likelihood of occurring and this assessment was based on past events and current conditions. The amended current guidance eliminates the |
Restructuring Charges (Tables)
Restructuring Charges (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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) 2020 2019 2020 2019 By component: Severance and other charges $ 8 $ 26 $ 31 $ 46 Lease related charges — — — 1 Asset impairment — — 17 1 Other restructuring charges 1 — 1 — Reversal of restructuring accruals (1) — (1) — Total restructuring charges $ 8 $ 26 $ 48 $ 48 Asset impairment 11 7 21 10 Total restructuring and asset impairment charges $ 19 $ 33 $ 69 $ 58 By segment: Water Infrastructure $ 6 $ 6 $ 14 $ 17 Applied Water 1 2 3 4 Measurement & Control Solutions 12 25 52 37 |
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" and "other non-current accrued liabilities", for the nine months ended September 30, 2020 and 2019: (in millions) 2020 2019 Restructuring accruals - January 1 $ 27 $ 5 Restructuring charges 48 48 Cash payments (25) (21) Asset impairment (17) — Foreign currency and other — (2) Restructuring accruals - September 30 $ 33 $ 30 By segment: Water Infrastructure $ 5 $ 1 Applied Water 1 1 Measurement & Control Solutions 22 21 Regional selling locations (a) 4 7 Corporate and other 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. |
Expected Restructuring Costs | The following table presents expected restructuring spend in 2020 and thereafter: (in millions) Water Infrastructure Applied Water Measurement & Control Solutions Corporate Total Actions Commenced in 2020: Total expected costs $ 27 $ 11 $ 35 $ 3 $ 76 Costs incurred during Q1 2020 1 — — — 1 Costs incurred during Q2 2020 5 2 30 — 37 Costs incurred during Q3 2020 7 1 1 — 9 Total expected costs remaining $ 14 $ 8 $ 4 $ 3 $ 29 Actions Commenced in 2019: Total expected costs $ 19 $ 5 $ 27 $ — $ 51 Costs incurred during 2019 18 5 27 — 50 Costs incurred during Q1 2020 1 — — — 1 Costs incurred during Q2 2020 1 — — — 1 Costs incurred during Q3 2020 (1) — — — (1) Total expected costs remaining $ — $ — $ — $ — $ — |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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) 2020 2019 2020 2019 Revenue from contracts with customers $ 1,170 $ 1,231 $ 3,358 $ 3,690 Lease Revenue 50 65 145 188 Total $ 1,220 $ 1,296 $ 3,503 $ 3,878 The following table reflects revenue from contracts with customers by application: Three Months Ended Nine Months Ended September 30, September 30, (in millions) 2020 2019 2020 2019 Water Infrastructure Transport $ 374 $ 369 $ 1,042 $ 1,111 Treatment 100 96 276 274 Applied Water Building Services 205 207 579 636 Industrial Water 159 169 460 513 Measurement & Control Solutions Water 166 193 510 587 Energy 65 90 207 248 Software as a Service 23 26 67 75 Test 78 81 217 246 Total $ 1,170 $ 1,231 $ 3,358 $ 3,690 The following table reflects revenue from contracts with customers by geographical region: Three Months Ended Nine Months Ended September 30, September 30, (in millions) 2020 2019 2020 2019 Water Infrastructure United States $ 142 $ 141 $ 407 $ 434 Europe 181 170 515 509 Asia Pacific 96 92 236 260 Other 55 62 160 182 Applied Water United States 185 196 559 609 Europe 92 89 255 275 Asia Pacific 46 41 105 121 Other 41 50 120 144 Measurement & Control Solutions United States 202 251 636 739 Europe 65 63 197 199 Asia Pacific 29 27 76 85 Other 36 49 92 133 Total $ 1,170 $ 1,231 $ 3,358 $ 3,690 |
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, 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 Balance at January 1, 2020 $ 106 $ 135 Additions, net 95 98 Revenue recognized from opening balance — (83) Billings (89) — Other — (1) Balance at September 30, 2020 $ 112 $ 149 (a) Excludes receivable balances which are disclosed on the balance sheet |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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, 2020 2019 2020 2019 Net income (in millions) $ 37 $ 65 $ 106 $ 283 Shares (in thousands): Weighted average common shares outstanding 180,006 180,044 180,031 179,909 Add: Participating securities (a) 16 28 24 29 Weighted average common shares outstanding — Basic 180,022 180,072 180,055 179,938 Plus incremental shares from assumed conversions: (b) Dilutive effect of stock options 656 790 648 819 Dilutive effect of restricted stock units and performance share units 290 350 253 402 Weighted average common shares outstanding — Diluted 180,968 181,212 180,956 181,159 Basic earnings per share $ 0.20 $ 0.36 $ 0.59 $ 1.57 Diluted earnings per share $ 0.20 $ 0.36 $ 0.58 $ 1.56 (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 15, "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) 2020 2019 2020 2019 Stock options 1,699 1,390 1,611 1,401 Restricted stock units 408 351 387 360 Performance share units 334 391 311 439 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories | The components of total inventories are summarized as follows: (in millions) September 30, December 31, Finished goods $ 237 $ 212 Work in process 53 47 Raw materials 292 280 Total inventories $ 582 $ 539 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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, 2020 are as follows: (in millions) Water Infrastructure Applied Water Measurement & Control Solutions Total Balance as of January 1, 2020 $ 651 $ 513 $ 1,675 $ 2,839 Activity in 2020 Impairment — — (58) (58) Foreign currency and other 3 6 5 14 Balance as of September 30, 2020 $ 654 $ 519 $ 1,622 $ 2,795 |
Other Intangible Assets | Information regarding our other intangible assets is as follows: September 30, 2020 December 31, 2019 (in millions) Carrying Amount Accumulated Amortization Net Intangibles Carrying Amount Accumulated Amortization Net Intangibles Customer and distributor relationships $ 929 $ (391) $ 538 $ 945 $ (352) $ 593 Proprietary technology and patents 202 (125) 77 204 (111) 93 Trademarks 141 (59) 82 148 (52) 96 Software 471 (249) 222 428 (206) 222 Other 21 (17) 4 20 (16) 4 Indefinite-lived intangibles 167 — 167 166 — 166 Other Intangibles $ 1,931 $ (841) $ 1,090 $ 1,911 $ (737) $ 1,174 |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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) 2020 2019 2020 2019 Cash Flow Hedges Foreign Exchange Contracts Amount of gain (loss) recognized in OCI $ 4 $ (5) $ 7 $ (14) Amount of (gain) loss reclassified from OCI into revenue (2) 2 — 4 Amount of loss reclassified from OCI into cost of revenue — 1 2 3 Net Investment Hedges Cross Currency Swaps Amount of gain (loss) recognized in OCI $ (53) $ 31 $ (30) $ 30 Amount of income recognized in Interest Expense 5 4 $ 14 $ 11 Foreign Currency Denominated Debt Amount of gain (loss) recognized in OCI $ (21) $ 22 $ (26) $ 23 |
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 $ 4 $ — Net Investment Hedges Other non-current assets $ 8 $ 4 Liabilities Net Investment Hedges Other non-current accrued liabilities $ (54) $ (24) |
Accrued and Other Current Lia_2
Accrued and Other Current Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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 $ 230 $ 199 Customer-related liabilities 173 153 Accrued taxes 96 79 Lease liabilities 61 61 Accrued warranty costs 59 36 Other accrued liabilities 126 100 Total accrued and other current liabilities $ 745 $ 628 |
Credit Facilities and Debt (Tab
Credit Facilities and Debt (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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) 583 557 3.250% Senior Notes due 2026 (a) 500 500 1.950% Senior Notes due 2028 (b) 500 — 2.250% Senior Notes due 2031 (b) 500 — 4.375% Senior Notes due 2046 (a) 400 400 Commercial paper 40 276 Debt issuance costs and unamortized discount (c) (30) (17) Total debt 3,093 2,316 Less: short-term borrowings and current maturities of long-term debt 40 276 Total long-term debt $ 3,053 $ 2,040 (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 $627 million and $629 million as of September 30, 2020 and December 31, 2019, respectively. The fair value of our Senior Notes due 2023 was $611 million and $591 million as of September 30, 2020 and December 31, 2019, respectively. The fair value of our Senior Notes due 2026 was $555 million and $518 million as of September 30, 2020 and December 31, 2019, respectively. The fair value of our Senior Notes due 2046 was $474 million and $431 million as of September 30, 2020 and December 31, 2019, respectively. (b) 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 2028 and 2031 was $522 million and $530 million, respectively, as of September 30, 2020. (c) 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, 2020 | |
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) 2020 2019 2020 2019 Domestic defined benefit pension plans: Service cost $ — $ 1 $ 2 $ 2 Interest cost 1 1 3 3 Expected return on plan assets (1) (2) (5) (6) Amortization of net actuarial loss — — 2 1 Net periodic benefit cost $ — $ — $ 2 $ — International defined benefit pension plans: Service cost $ 3 $ 2 $ 9 $ 7 Interest cost 3 4 11 14 Expected return on plan assets (4) (4) (10) (22) Amortization of net actuarial loss 4 2 10 6 Settlement/Curtailment — 8 — 8 Net periodic benefit cost $ 6 $ 12 $ 20 $ 13 Total net periodic benefit cost $ 6 $ 12 $ 22 $ 13 |
Equity (Tables)
Equity (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Schedule of Stockholders Equity | The following table shows the changes in stockholders' equity for the nine months ended September 30, 2020: Common Capital in Excess of Par Value Retained Accumulated Other Treasury Stock Non-Controlling Interest Total Balance at January 1, 2020 $ 2 $ 1,991 $ 1,866 $ (375) $ (527) $ 10 $ 2,967 Cumulative effect of change in accounting principle — — (2) — — — (2) Net income — — 38 — — 38 Other comprehensive loss, net — — — (86) — (1) (87) Dividends declared ($0.26 per share) — — (48) — — — (48) Stock incentive plan activity — 13 — — (10) — 3 Repurchase of common stock — — — — (50) — (50) Balance at March 31, 2020 $ 2 $ 2,004 $ 1,854 $ (461) $ (587) $ 9 $ 2,821 Net income — — 31 — — — 31 Other comprehensive income, net — — — 52 — — 52 Dividends declared ($0.26 per share) — — (47) — — — (47) Stock incentive plan activity — 8 — — — — 8 Balance at June 30, 2020 $ 2 $ 2,012 $ 1,838 $ (409) $ (587) $ 9 $ 2,865 Net income — — 37 — — — 37 Other comprehensive income, net — — — 13 — — 13 Distribution to minority shareholders — — — — — (1) (1) Dividends declared ($0.26 per share) — — (47) — — — (47) Stock incentive plan activity — 9 — — (1) — 8 Balance at September 30, 2020 $ 2 $ 2,021 $ 1,828 $ (396) $ (588) $ 8 $ 2,875 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 |
Share-Based Compensation Plans
Share-Based Compensation Plans (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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, 2020 . 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, 2020 512 $ 68.95 Granted 334 75.35 Vested (251) 63.86 Forfeited (38) 75.41 Outstanding at September 30, 2020 557 $ 74.59 |
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, 2020. 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, 2020 225 $ 64.51 Granted 78 78.30 Vested (89) 49.15 Forfeited (16) 76.83 Outstanding at September 30, 2020 198 $ 75.86 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, 2020: Share units (in thousands) Weighted Average Grant Date Fair Value /Share Outstanding at January 1, 2020 225 $ 75.80 Granted 78 100.69 Adjustment for Market Condition Achieved (a) 35 49.15 Vested (124) 49.15 Forfeited (16) 76.83 Outstanding at September 30, 2020 198 $ 96.41 |
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, 2020 : Share units (in thousands) Weighted Average Exercise Price / Share Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in millions) Outstanding at January 1, 2020 2,040 $ 48.56 6.3 Granted 548 74.00 Exercised (260) 37.95 Forfeited and expired (65) 77.45 Outstanding at September 30, 2020 2,263 $ 55.11 6.6 $ 64 Options exercisable at September 30, 2020 1,487 $ 45.33 5.3 $ 56 Vested and expected to vest as of September 30, 2020 2,175 $ 54.37 6.4 $ 62 |
Stock option valuation assumptions | The following are weighted-average assumptions for 2020 grants: Volatility 24.07 % Risk-free interest rate 15.12 % Dividend yield 1.43 % Expected term (in years) 5.8 Weighted-average fair value / share $ 14.69 |
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 2020 grants: Volatility 22.6 % Risk-free interest rate 1.08 % |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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, 2020: (in millions) Foreign Currency Translation Postretirement Benefit Plans Derivative Instruments Total Balance at January 1, 2020 $ (103) $ (269) $ (3) $ (375) Foreign currency translation adjustment (77) — — (77) Tax on foreign currency translation adjustment (13) — — (13) Amortization of prior service cost and net actuarial loss on postretirement benefit plans into other non-operating income (expense), net — 4 — 4 Income tax impact on amortization of postretirement benefit plan items — (1) — (1) Unrealized loss on derivative hedge agreements — — (2) (2) 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 March 31, 2020 $ (193) $ (266) $ (2) $ (461) Foreign currency translation adjustment 35 — — 35 Tax on foreign currency translation adjustment 9 — — 9 Amortization of prior service cost and net actuarial loss on postretirement benefit plans into other non-operating income (expense), net — 4 — 4 Income tax impact on amortization of postretirement benefit plan items — (1) — (1) Unrealized gain on derivative hedge agreements — — 6 6 Income tax benefit on unrealized gain on derivative hedge agreements — — (1) (1) Reclassification of unrealized gain 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, 2020 $ (149) $ (263) $ 3 $ (409) Foreign currency translation adjustment (10) — — (10) Tax on foreign currency translation adjustment 18 — — 18 Amortization of prior service cost and net actuarial loss on postretirement benefit plans into other non-operating income (expense), net — 4 — 4 Income tax impact on amortization of postretirement benefit plan items — (1) — (1) Unrealized gain on derivative hedge agreements — — 4 4 Reclassification of unrealized gain on foreign exchange agreements into revenue — — (2) (2) Balance at September 30, 2020 $ (141) $ (260) $ 5 $ (396) 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 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) |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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) 2020 2019 Warranty accrual – January 1 $ 41 $ 60 Net charges for product warranties in the period 44 20 Settlement of warranty claims (24) (32) Warranty accrual - September 30 $ 62 $ 46 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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 2019 Annual Report). The following tables contain financial information for each reportable segment: Three Months Ended Nine Months Ended September 30, September 30, (in millions) 2020 2019 2020 2019 Revenue: Water Infrastructure $ 524 $ 531 $ 1,463 $ 1,574 Applied Water 364 376 1,039 1,149 Measurement & Control Solutions 332 389 1,001 1,155 Total $ 1,220 $ 1,296 $ 3,503 $ 3,878 Operating Income: Water Infrastructure $ 89 $ 97 $ 201 $ 246 Applied Water 56 61 144 179 Measurement & Control Solutions (62) (136) (120) (94) Corporate and other (10) (11) (37) (40) Total operating income $ 73 $ 11 $ 188 $ 291 Interest expense $ 22 $ 16 $ 56 $ 52 Other non-operating (expense) income, net (1) (7) (5) (2) Gain from sale of business — — — 1 Income (loss) before taxes $ 50 $ (12) $ 127 $ 238 Depreciation and Amortization: Water Infrastructure $ 13 $ 15 $ 44 $ 46 Applied Water 7 5 18 17 Measurement & Control Solutions 36 36 106 107 Regional selling locations (a) 4 6 15 14 Corporate and other 3 3 6 8 Total $ 63 $ 65 $ 189 $ 192 Capital Expenditures: Water Infrastructure $ 9 $ 14 $ 27 $ 65 Applied Water 4 5 16 15 Measurement & Control Solutions 22 21 73 74 Regional selling locations (b) 6 4 18 13 Corporate and other — 2 2 8 Total $ 41 $ 46 $ 136 $ 175 (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, 2020 | |
Background and Basis of Presentation (Textual) [Abstract] | |
Number of operating segment | 3 |
Acquisitions and Divestitures (
Acquisitions and Divestitures (Textuals) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Business Combinations [Abstract] | ||||
Acquisition of business, net of cash acquired | $ 0 | $ 0 | $ 0 | $ 18 |
Restructuring Charges (Textuals
Restructuring Charges (Textuals) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2020 | Jun. 30, 2020 | Sep. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring charges | $ 8 | $ 26 | $ 48 | $ 48 | ||
Asset impairment | 17 | 0 | ||||
Asset impairment charges | 11 | 7 | 21 | 10 | ||
Measurement & Control Solutions | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring charges | 12 | 25 | 52 | $ 37 | ||
Asset impairment charges | $ 11 | $ 10 | $ 7 | $ 3 | ||
Operating Segments | 2020 Plan | Measurement & Control Solutions | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Asset impairment | $ 17 |
Restructuring Charges (Restruct
Restructuring Charges (Restructuring Charges) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2020 | Jun. 30, 2020 | Sep. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Restructuring Cost and Impairment Charge | ||||||
Severance and other charges | $ 8 | $ 26 | $ 31 | $ 46 | ||
Lease related charges | 0 | 0 | 0 | 1 | ||
Asset impairment | 0 | 0 | 17 | 1 | ||
Other restructuring charges | 1 | 0 | 1 | 0 | ||
Reversal of restructuring accruals | (1) | 0 | (1) | 0 | ||
Restructuring charges | 8 | 26 | 48 | 48 | ||
Asset impairment charges | 11 | 7 | 21 | 10 | ||
Total restructuring and asset impairment charges | 19 | 33 | 69 | 58 | ||
Water Infrastructure | ||||||
Restructuring Cost and Impairment Charge | ||||||
Restructuring charges | 6 | 6 | 14 | 17 | ||
Applied Water | ||||||
Restructuring Cost and Impairment Charge | ||||||
Restructuring charges | 1 | 2 | 3 | 4 | ||
Measurement & Control Solutions | ||||||
Restructuring Cost and Impairment Charge | ||||||
Restructuring charges | 12 | 25 | $ 52 | $ 37 | ||
Asset impairment charges | $ 11 | $ 10 | $ 7 | $ 3 |
Restructuring Charges (Accrual
Restructuring Charges (Accrual Rollfoward) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | ||
Restructuring Reserve [Roll Forward] | |||||
Restructuring accruals - January 1 | $ 27 | $ 5 | |||
Restructuring charges | $ 8 | $ 26 | 48 | 48 | |
Cash payments | (25) | (21) | |||
Asset impairment | (17) | 0 | |||
Foreign currency and other | 0 | (2) | |||
Restructuring accruals - September 30 | 33 | 30 | 33 | 30 | |
Water Infrastructure | |||||
Restructuring Reserve [Roll Forward] | |||||
Restructuring charges | 6 | 6 | 14 | 17 | |
Restructuring accruals - September 30 | 5 | 1 | 5 | 1 | |
Applied Water | |||||
Restructuring Reserve [Roll Forward] | |||||
Restructuring charges | 1 | 2 | 3 | 4 | |
Restructuring accruals - September 30 | 1 | 1 | 1 | 1 | |
Measurement & Control Solutions | |||||
Restructuring Reserve [Roll Forward] | |||||
Restructuring charges | 12 | 25 | 52 | 37 | |
Restructuring accruals - September 30 | 22 | 21 | 22 | 21 | |
Regional Selling Locations | |||||
Restructuring Reserve [Roll Forward] | |||||
Restructuring accruals - September 30 | [1] | 4 | 7 | 4 | 7 |
Corporate Segment [Member] | |||||
Restructuring Reserve [Roll Forward] | |||||
Restructuring accruals - September 30 | $ 1 | $ 0 | $ 1 | $ 0 | |
[1] | 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. |
Restructuring Charges (Estimate
Restructuring Charges (Estimated Restructuring Costs) (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | |
2020 Plan | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total expected costs | $ 76 | |||
Restructuring costs incurred during period | 9 | $ 37 | $ 1 | |
Total expected costs remaining | 29 | |||
2019 Plan | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total expected costs | 51 | |||
Restructuring costs incurred during period | (1) | 1 | 1 | $ 50 |
Total expected costs remaining | 0 | |||
Operating Segments | Water Infrastructure | 2020 Plan | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total expected costs | 27 | |||
Restructuring costs incurred during period | 7 | 5 | 1 | |
Total expected costs remaining | 14 | |||
Operating Segments | Water Infrastructure | 2019 Plan | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total expected costs | 19 | |||
Restructuring costs incurred during period | (1) | 1 | 1 | 18 |
Total expected costs remaining | 0 | |||
Operating Segments | Applied Water | 2020 Plan | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total expected costs | 11 | |||
Restructuring costs incurred during period | 1 | 2 | 0 | |
Total expected costs remaining | 8 | |||
Operating Segments | Applied Water | 2019 Plan | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total expected costs | 5 | |||
Restructuring costs incurred during period | 0 | 0 | 0 | 5 |
Total expected costs remaining | 0 | |||
Operating Segments | Measurement & Control Solutions | 2020 Plan | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total expected costs | 35 | |||
Restructuring costs incurred during period | 1 | 30 | 0 | |
Total expected costs remaining | 4 | |||
Operating Segments | Measurement & Control Solutions | 2019 Plan | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total expected costs | 27 | |||
Restructuring costs incurred during period | 0 | 0 | 0 | 27 |
Total expected costs remaining | 0 | |||
Corporate | 2020 Plan | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total expected costs | 3 | |||
Restructuring costs incurred during period | 0 | 0 | 0 | |
Total expected costs remaining | 3 | |||
Corporate | 2019 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 |
Revenue - Disaggregation of Rev
Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | $ 1,170 | $ 1,231 | $ 3,358 | $ 3,690 |
Lease Revenue | 50 | 65 | 145 | 188 |
Total | 1,220 | 1,296 | 3,503 | 3,878 |
Water Infrastructure | ||||
Disaggregation of Revenue [Line Items] | ||||
Total | 524 | 531 | 1,463 | 1,574 |
Water Infrastructure | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 142 | 141 | 407 | 434 |
Water Infrastructure | Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 181 | 170 | 515 | 509 |
Water Infrastructure | Asia Pacific | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 96 | 92 | 236 | 260 |
Water Infrastructure | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 55 | 62 | 160 | 182 |
Water Infrastructure | Transport | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 374 | 369 | 1,042 | 1,111 |
Water Infrastructure | Treatment | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 100 | 96 | 276 | 274 |
Applied Water | ||||
Disaggregation of Revenue [Line Items] | ||||
Total | 364 | 376 | 1,039 | 1,149 |
Applied Water | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 185 | 196 | 559 | 609 |
Applied Water | Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 92 | 89 | 255 | 275 |
Applied Water | Asia Pacific | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 46 | 41 | 105 | 121 |
Applied Water | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 41 | 50 | 120 | 144 |
Applied Water | Building Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 205 | 207 | 579 | 636 |
Applied Water | Industrial Water | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 159 | 169 | 460 | 513 |
Measurement & Control Solutions | ||||
Disaggregation of Revenue [Line Items] | ||||
Total | 332 | 389 | 1,001 | 1,155 |
Measurement & Control Solutions | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 202 | 251 | 636 | 739 |
Measurement & Control Solutions | Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 65 | 63 | 197 | 199 |
Measurement & Control Solutions | Asia Pacific | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 29 | 27 | 76 | 85 |
Measurement & Control Solutions | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 36 | 49 | 92 | 133 |
Measurement & Control Solutions | Water | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 166 | 193 | 510 | 587 |
Measurement & Control Solutions | Energy | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 65 | 90 | 207 | 248 |
Measurement & Control Solutions | Software as a Service | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 23 | 26 | 67 | 75 |
Measurement & Control Solutions | Test | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | $ 78 | $ 81 | $ 217 | $ 246 |
Revenue (Details)
Revenue (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Change in Contract with Customer, Asset [Abstract] | ||
Beginning balance | $ 106 | $ 96 |
Additions, net | 95 | 71 |
Billings | (89) | (58) |
Other | 0 | 9 |
Ending balance | 112 | 118 |
Change in Contract with Customer, Liability [Abstract] | ||
Beginning balance | 135 | 113 |
Additions, net | 98 | 97 |
Revenue recognized from opening balance | (83) | (82) |
Other | (1) | (3) |
Ending balance | $ 149 | $ 125 |
Revenue (Narrative) (Details)
Revenue (Narrative) (Details) $ in Millions | Sep. 30, 2020USD ($) |
Revenue from Contract with Customer [Abstract] | |
Remaining performance obligation | $ 459 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-04-01 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Expected timing of recognition | 60 months |
Income Taxes (Textuals) (Detail
Income Taxes (Textuals) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||||
Sep. 30, 2020 | Sep. 30, 2019 | Jun. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |||||||
Income tax provision | $ 13 | $ (77) | $ 21 | $ (45) | |||
Effective tax rate | 26.20% | 623.60% | 16.60% | (18.90%) | |||
Unrecognized tax benefits | $ 125 | $ 125 | $ 129 | ||||
Interest accrued for unrecognized tax benefits | $ 9 | $ 9 | |||||
Assessment for tax, penalties and interest | $ 80 | ||||||
Scenario, Forecast | |||||||
Income Tax Contingency [Line Items] | |||||||
Reduction from statute of limitations | $ 1 |
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, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | ||
Basic and diluted net earnings per share: | |||||
Net income attributable to Xylem (in usd) | $ 37 | $ 65 | $ 106 | $ 283 | |
Shares | |||||
Weighted average common shares outstanding | 180,006 | 180,044 | 180,031 | 179,909 | |
Add: Participating securities | [1] | 16 | 28 | 24 | 29 |
Weighted average common shares outstanding — Basic | 180,022 | 180,072 | 180,055 | 179,938 | |
Plus incremental shares from assumed conversions: | |||||
Weighted average common shares outstanding — Diluted | 180,968 | 181,212 | 180,956 | 181,159 | |
Basic earnings per share (usd per share) | $ 0.20 | $ 0.36 | $ 0.59 | $ 1.57 | |
Diluted earnings per share (usd per share) | $ 0.20 | $ 0.36 | $ 0.58 | $ 1.56 | |
Stock Options | |||||
Plus incremental shares from assumed conversions: | |||||
Dilutive effect of common shares | [2] | 656 | 790 | 648 | 819 |
Restricted Stock | |||||
Plus incremental shares from assumed conversions: | |||||
Dilutive effect of common shares | [2] | 290 | 350 | 253 | 402 |
[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 15, "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, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Stock Options | ||||
Incremental shares from stock options and restricted stock: | ||||
Antidilutive securities (in shares) | 1,699 | 1,390 | 1,611 | 1,401 |
Restricted Stock | ||||
Incremental shares from stock options and restricted stock: | ||||
Antidilutive securities (in shares) | 408 | 351 | 387 | 360 |
Performance Based Shares | ||||
Incremental shares from stock options and restricted stock: | ||||
Antidilutive securities (in shares) | 334 | 391 | 311 | 439 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Inventories | ||
Finished goods | $ 237 | $ 212 |
Work in process | 53 | 47 |
Raw materials | 292 | 280 |
Total inventories | $ 582 | $ 539 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets (Goodwill Rollforward) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Changes in the carrying value of goodwill by operating segment | ||||
Balance as of January 1, 2020 | $ 2,839 | |||
Impairment | $ (58) | $ (148) | (58) | $ (148) |
Foreign currency and other | 14 | |||
Balance as of September 30, 2020 | 2,795 | 2,795 | ||
Water Infrastructure | ||||
Changes in the carrying value of goodwill by operating segment | ||||
Balance as of January 1, 2020 | 651 | |||
Impairment | 0 | |||
Foreign currency and other | 3 | |||
Balance as of September 30, 2020 | 654 | 654 | ||
Applied Water | ||||
Changes in the carrying value of goodwill by operating segment | ||||
Balance as of January 1, 2020 | 513 | |||
Impairment | 0 | |||
Foreign currency and other | 6 | |||
Balance as of September 30, 2020 | 519 | 519 | ||
Measurement & Control Solutions | ||||
Changes in the carrying value of goodwill by operating segment | ||||
Balance as of January 1, 2020 | 1,675 | |||
Impairment | (58) | |||
Foreign currency and other | 5 | |||
Balance as of September 30, 2020 | $ 1,622 | $ 1,622 |
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, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Goodwill and Other Intangible Assets | |||||
Accumulated Amortization | $ (841) | $ (841) | $ (737) | ||
Intangible Assets Gross, Carrying Amount | 1,931 | 1,931 | 1,911 | ||
Intangible Assets, Net Intangibles | 1,090 | 1,090 | 1,174 | ||
Amortization | 33 | $ 34 | 101 | $ 104 | |
Customer and distributor relationships | |||||
Goodwill and Other Intangible Assets | |||||
Carrying Amount | 929 | 929 | 945 | ||
Accumulated Amortization | (391) | (391) | (352) | ||
Net Intangibles | 538 | 538 | 593 | ||
Proprietary technology and patents | |||||
Goodwill and Other Intangible Assets | |||||
Carrying Amount | 202 | 202 | 204 | ||
Accumulated Amortization | (125) | (125) | (111) | ||
Net Intangibles | 77 | 77 | 93 | ||
Trademarks | |||||
Goodwill and Other Intangible Assets | |||||
Carrying Amount | 141 | 141 | 148 | ||
Accumulated Amortization | (59) | (59) | (52) | ||
Net Intangibles | 82 | 82 | 96 | ||
Software | |||||
Goodwill and Other Intangible Assets | |||||
Carrying Amount | 471 | 471 | 428 | ||
Accumulated Amortization | (249) | (249) | (206) | ||
Net Intangibles | 222 | 222 | 222 | ||
Other | |||||
Goodwill and Other Intangible Assets | |||||
Carrying Amount | 21 | 21 | 20 | ||
Accumulated Amortization | (17) | (17) | (16) | ||
Net Intangibles | 4 | 4 | 4 | ||
Indefinite-lived intangibles | |||||
Goodwill and Other Intangible Assets | |||||
Accumulated Amortization | 0 | 0 | 0 | ||
Indefinite-lived intangibles | $ 167 | $ 167 | $ 166 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets (Details Textual) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Finite-Lived Intangible Assets | |||||||
Amortization expense related to finite-lived intangible assets | $ 33 | $ 34 | $ 101 | $ 104 | |||
Impairment charge | 11 | $ 3 | 7 | ||||
Asset impairment charges | 11 | 7 | 21 | 10 | |||
Goodwill impairment charge | 58 | 148 | 58 | $ 148 | |||
Measurement & Control Solutions | |||||||
Finite-Lived Intangible Assets | |||||||
Asset impairment charges | 11 | $ 10 | 7 | $ 3 | |||
Goodwill impairment charge | $ 58 | ||||||
Measurement & Control Solutions | AIA Goodwill Reporting Unit | |||||||
Finite-Lived Intangible Assets | |||||||
Goodwill impairment charge | $ 58 | $ 148 | |||||
Operating Segments | Measurement & Control Solutions | Customer Relationships and Trademarks | |||||||
Finite-Lived Intangible Assets | |||||||
Impairment charge | $ 16 |
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, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Derivative Financial Instruments | ||||
Amount of gain (loss) recognized in OCI | $ (4) | $ 5 | $ (8) | $ 14 |
Amount of gain reclassified from OCI into revenue | (1,220) | (1,296) | (3,503) | (3,878) |
Reclassification out of Accumulated Other Comprehensive Income | Foreign Exchange Contract | ||||
Derivative Financial Instruments | ||||
Amount of gain reclassified from OCI into revenue | (2) | 2 | 0 | 4 |
Amount of (gain) loss reclassified from OCI into cost of revenue | 0 | 1 | 2 | 3 |
Cash Flow Hedging [Member] | Foreign Exchange Contract | ||||
Derivative Financial Instruments | ||||
Amount of gain (loss) recognized in OCI | 4 | (5) | 7 | (14) |
Cash Flow Hedging [Member] | Cross Currency Swaps | ||||
Derivative Financial Instruments | ||||
Amount of gain (loss) recognized in OCI | (53) | 31 | 30 | 30 |
Cash Flow Hedging [Member] | Foreign Currency Denominated Debt | ||||
Derivative Financial Instruments | ||||
Amount of gain (loss) recognized in OCI | (21) | 22 | (26) | 23 |
Interest Expense | Cross Currency Swaps | ||||
Derivative Financial Instruments | ||||
Amount of gain (loss) recognized in OCI | $ 5 | $ 4 | $ 14 | $ 11 |
Derivative Financial Instrume_4
Derivative Financial Instruments (Balance Sheet Location of Derivative Instruments) (Details) - Derivatives designated as hedging instruments - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Other current assets | ||
Derivatives, Fair Value | ||
Assets | $ 4 | $ 0 |
Other non-current assets | ||
Derivatives, Fair Value | ||
Assets | 8 | 4 |
Other non-current accrued liabilities | ||
Derivatives, Fair Value | ||
Liabilities | $ (54) | $ (24) |
Derivative Financial Instrume_5
Derivative Financial Instruments (Details Textual) $ in Millions | Sep. 30, 2020USD ($) | Dec. 31, 2019USD ($) | Mar. 11, 2016USD ($) | Mar. 11, 2016EUR (€) |
Derivative [Line Items] | ||||
Net losses expected to be reclassified in next 12 months | $ 6 | |||
Foreign Exchange Contract | ||||
Derivative [Line Items] | ||||
Notional amount | 137 | $ 0 | ||
Derivatives designated as hedging instruments | Sell USD Buy EUR | ||||
Derivative [Line Items] | ||||
Notional amount | 52 | |||
Derivatives designated as hedging instruments | Buy KR Sell EUR | ||||
Derivative [Line Items] | ||||
Notional amount | 47 | |||
Derivatives designated as hedging instruments | Sell GBP Buy EUR | ||||
Derivative [Line Items] | ||||
Notional amount | 12 | |||
Derivatives designated as hedging instruments | Sell EUR Buy PLN | ||||
Derivative [Line Items] | ||||
Notional amount | 8 | |||
Derivatives designated as hedging instruments | Buy USD Sell CDN | ||||
Derivative [Line Items] | ||||
Notional amount | 8 | |||
Derivatives designated as hedging instruments | Sell CDN Buy EUR | ||||
Derivative [Line Items] | ||||
Notional amount | 7 | |||
Derivatives designated as hedging instruments | Cross Currency Swaps | ||||
Derivative [Line Items] | ||||
Notional amount | 1,189 | 714 | ||
Long-term debt | Derivatives designated as hedging instruments | ||||
Derivative [Line Items] | ||||
Net Investment Hedges | 581 | 554 | ||
Senior Notes Due 2023, 2.250% | ||||
Derivative [Line Items] | ||||
Long-term Debt, Fair Value | $ 611 | $ 591 | ||
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, 2020 | Dec. 31, 2019 |
Accrued and Other Current Liabilities | ||
Compensation and other employee benefits | $ 230 | $ 199 |
Customer-related liabilities | 173 | 153 |
Accrued taxes | 96 | 79 |
Lease liabilities | 61 | 61 |
Accrued warranty costs | 59 | 36 |
Other accrued liabilities | 126 | 100 |
Total accrued and other current liabilities | $ 745 | $ 628 |
Credit Facilities and Debt (Sum
Credit Facilities and Debt (Summary of Debt Outstanding) (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 | |
Credit Facilities and Long-Term Debt : | |||
Debt issuance costs and unamortized discount | [1] | $ (30) | $ (17) |
Total debt | 3,093 | 2,316 | |
Less: short-term borrowings and current maturities of long-term debt | 40 | 276 | |
Long-term debt | 3,053 | 2,040 | |
Senior Notes Due 2021, 4.875% | |||
Credit Facilities and Long-Term Debt : | |||
Senior Notes Due | [2] | 600 | 600 |
Long-term Debt, Fair Value | 627 | 629 | |
Senior Notes Due 2023, 2.250% | |||
Credit Facilities and Long-Term Debt : | |||
Senior Notes Due | [2] | 583 | 557 |
Long-term Debt, Fair Value | 611 | 591 | |
Senior Notes due 2026 | |||
Credit Facilities and Long-Term Debt : | |||
Senior Notes Due | [2] | 500 | 500 |
Long-term Debt, Fair Value | 555 | 518 | |
Senior Notes Due Twenty Twenty Eight | |||
Credit Facilities and Long-Term Debt : | |||
Senior Notes Due | 500 | 0 | |
Long-term Debt, Fair Value | 522 | ||
Senior Notes Due Twenty Thirty One | |||
Credit Facilities and Long-Term Debt : | |||
Senior Notes Due | 500 | 0 | |
Long-term Debt, Fair Value | 530 | ||
Senior Notes due 2046 | |||
Credit Facilities and Long-Term Debt : | |||
Senior Notes Due | [2] | 400 | 400 |
Long-term Debt, Fair Value | 474 | 431 | |
Commercial paper | |||
Credit Facilities and Long-Term Debt : | |||
Senior Notes Due | $ 40 | $ 276 | |
[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 $627 million and $629 million as of September 30, 2020 and December 31, 2019, respectively. The fair value of our Senior Notes due 2023 was $611 million and $591 million as of September 30, 2020 and December 31, 2019, respectively. The fair value of our Senior Notes due 2026 was $555 million and $518 million as of September 30, 2020 and December 31, 2019, respectively. The fair value of our Senior Notes due 2046 was $474 million and $431 million as of September 30, 2020 and December 31, 2019, respectively. (b) 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 2028 and 2031 was $522 million and $530 million, respectively, as of September 30, 2020. |
Credit Facilities and Debt (Tex
Credit Facilities and Debt (Textuals) (Details) | Jun. 26, 2020USD ($) | Apr. 30, 2020USD ($) | Sep. 20, 2011USD ($) | Sep. 30, 2020USD ($) | Apr. 25, 2020USD ($) | Apr. 25, 2020EUR (€) | Dec. 31, 2019USD ($) | Jun. 03, 2019USD ($) | Jun. 03, 2019EUR (€) | Mar. 05, 2019USD ($) | Jan. 26, 2018USD ($) | Oct. 11, 2016USD ($) | Mar. 11, 2016USD ($) | Mar. 11, 2016EUR (€) | |
Short-term Investments [Member] | |||||||||||||||
Debt Instrument | |||||||||||||||
Time deposits | $ 200,000,000 | ||||||||||||||
Cash and Cash Equivalents [Member] | |||||||||||||||
Debt Instrument | |||||||||||||||
Time deposits | 550,000,000 | ||||||||||||||
Senior Notes | |||||||||||||||
Debt Instrument | |||||||||||||||
Redemption price percentage | 101.00% | ||||||||||||||
Line of Credit [Member] | |||||||||||||||
Debt Instrument | |||||||||||||||
Face amount | $ 583,000,000 | ||||||||||||||
Senior Notes Due 2021, 4.875% | |||||||||||||||
Debt Instrument | |||||||||||||||
Fair value of senior notes due | 627,000,000 | $ 629,000,000 | |||||||||||||
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 | 611,000,000 | 591,000,000 | |||||||||||||
Senior Notes Due | [1] | 583,000,000 | 557,000,000 | ||||||||||||
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 | 555,000,000 | 518,000,000 | |||||||||||||
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 | 474,000,000 | 431,000,000 | |||||||||||||
Interest rate | 4.375% | ||||||||||||||
Senior Notes Due | [1] | $ 400,000,000 | 400,000,000 | ||||||||||||
Face amount | $ 400,000,000 | ||||||||||||||
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 | ||||||||||||||
US Dollar Commercial Paper Program | Commercial paper | |||||||||||||||
Debt Instrument | |||||||||||||||
Long-term Debt | 40,000,000 | 0 | |||||||||||||
Commercial paper | |||||||||||||||
Debt Instrument | |||||||||||||||
Senior Notes Due | 40,000,000 | 276,000,000 | |||||||||||||
Euro Commercial Paper Program | |||||||||||||||
Debt Instrument | |||||||||||||||
Face amount | € | € 500,000,000 | ||||||||||||||
Commercial Paper | $ 0 | $ 276,000,000 | |||||||||||||
Weighted average interest rate (as a percent) | 2.20% | ||||||||||||||
Term Loan Facility | |||||||||||||||
Debt Instrument | |||||||||||||||
Face amount | $ 50,000,000 | ||||||||||||||
Term Loan Facility | Adjusted LIBOR | |||||||||||||||
Debt Instrument | |||||||||||||||
Debt Instrument, Basis Spread on Variable Rate | 1.50% | ||||||||||||||
Term Loan Facility | Subsidiary | |||||||||||||||
Debt Instrument | |||||||||||||||
Face amount | $ 117,000,000 | € 100,000,000 | |||||||||||||
Senior Notes Due Twenty Twenty Eight | |||||||||||||||
Debt Instrument | |||||||||||||||
Fair value of senior notes due | $ 522,000,000 | ||||||||||||||
Interest rate | 1.95% | ||||||||||||||
Senior Notes Due | 500,000,000 | 0 | |||||||||||||
Face amount | $ 500,000,000 | ||||||||||||||
Senior Notes Due Twenty Thirty One | |||||||||||||||
Debt Instrument | |||||||||||||||
Fair value of senior notes due | 530,000,000 | ||||||||||||||
Interest rate | 2.25% | ||||||||||||||
Senior Notes Due | $ 500,000,000 | $ 0 | |||||||||||||
Face amount | $ 500,000,000 | ||||||||||||||
Green Bond | Senior Notes | |||||||||||||||
Debt Instrument | |||||||||||||||
Redemption price percentage | 101.00% | ||||||||||||||
[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 $627 million and $629 million as of September 30, 2020 and December 31, 2019, respectively. The fair value of our Senior Notes due 2023 was $611 million and $591 million as of September 30, 2020 and December 31, 2019, respectively. The fair value of our Senior Notes due 2026 was $555 million and $518 million as of September 30, 2020 and December 31, 2019, respectively. The fair value of our Senior Notes due 2046 was $474 million and $431 million as of September 30, 2020 and December 31, 2019, respectively. (b) 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 2028 and 2031 was $522 million and $530 million, respectively, as of September 30, 2020. |
Postretirement Benefit Plans (S
Postretirement Benefit Plans (Summary of Net Periodic Benefit Cost) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Net periodic benefit cost: | ||||
Amortization of net actuarial loss | $ 1 | $ 1 | $ 1 | $ 2 |
Net periodic benefit cost | 6 | 12 | 22 | 13 |
Domestic defined benefit pension plans | ||||
Net periodic benefit cost: | ||||
Service cost | 0 | 1 | 2 | 2 |
Interest cost | 1 | 1 | 3 | 3 |
Expected return on plan assets | (1) | (2) | (5) | (6) |
Amortization of net actuarial loss | 0 | 2 | 1 | |
Net periodic benefit cost | 0 | 2 | ||
International defined benefit pension plans | ||||
Net periodic benefit cost: | ||||
Service cost | 3 | 2 | 9 | 7 |
Interest cost | 3 | 4 | 11 | 14 |
Expected return on plan assets | (4) | (4) | (10) | (22) |
Amortization of net actuarial loss | 4 | 2 | 10 | 6 |
Settlement/Curtailment | 0 | 8 | 0 | 8 |
Net periodic benefit cost | $ 6 | $ 12 | $ 20 | $ 13 |
Postretirement Benefit Plans _2
Postretirement Benefit Plans (Textuals) (Details) - USD ($) $ in Millions | Jan. 27, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 |
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block | |||||||
Other postretirement benefit expense | $ 1 | $ 1 | $ 1 | $ 1 | |||
Amortization of net actuarial loss | 1 | 1 | 1 | 2 | |||
Employer contribution to defined benefit plan | 19 | 14 | |||||
Contributions to meet shortfall | 5 | ||||||
Expected rate of return | 1.00% | 7.25% | |||||
Plan assets transferred to insurance company | $ 336 | ||||||
Minimum | |||||||
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block | |||||||
Additional contributions | 5 | 5 | |||||
Maximum | |||||||
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block | |||||||
Additional contributions | 10 | 10 | |||||
Foreign Plan [Member] | |||||||
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block | |||||||
Amortization of net actuarial loss | $ 4 | $ 2 | $ 10 | $ 6 |
Equity - Summary of Shareholder
Equity - Summary of Shareholders' Equity (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Dividends declared per share (usd per share) | $ 0.26 | $ 0.26 | $ 0.26 | $ 0.24 | $ 0.24 | $ 0.24 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning balance | $ 2,865 | $ 2,821 | $ 2,967 | $ 2,906 | $ 2,808 | $ 2,782 | $ 2,967 | $ 2,782 |
Sale of business | (2) | |||||||
Net income | 37 | 31 | 38 | 65 | 139 | 79 | 106 | 283 |
Other comprehensive income (loss), net | 13 | 52 | (87) | (37) | (11) | 20 | ||
Distribution to minority shareholders | (1) | (3) | ||||||
Dividends declared | (47) | (47) | (48) | (44) | (43) | (44) | ||
Stock incentive plan activity | 8 | 8 | 3 | 8 | 13 | (2) | ||
Repurchase of common stock | (50) | (25) | ||||||
Ending balance | 2,875 | 2,865 | 2,821 | 2,895 | 2,906 | 2,808 | 2,875 | 2,895 |
Cumulative Effect, Period of Adoption, Adjustment | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning balance | (2) | (2) | ||||||
Common Stock | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning balance | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 |
Ending balance | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 |
Capital in Excess of Par Value | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning balance | 2,012 | 2,004 | 1,991 | 1,975 | 1,962 | 1,950 | 1,991 | 1,950 |
Stock incentive plan activity | 9 | 8 | 13 | 8 | 13 | 12 | ||
Ending balance | 2,021 | 2,012 | 2,004 | 1,983 | 1,975 | 1,962 | 2,021 | 1,983 |
Retained Earnings | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning balance | 1,838 | 1,854 | 1,866 | 1,770 | 1,674 | 1,639 | 1,866 | 1,639 |
Net income | 37 | 31 | 38 | 65 | 139 | 79 | ||
Dividends declared | (47) | (47) | (48) | (44) | (43) | (44) | ||
Ending balance | 1,828 | 1,838 | 1,854 | 1,791 | 1,770 | 1,674 | 1,828 | 1,791 |
Retained Earnings | Cumulative Effect, Period of Adoption, Adjustment | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning balance | (2) | (2) | ||||||
Accumulated Other Comprehensive Income (Loss) | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning balance | (409) | (461) | (375) | (327) | (316) | (336) | (375) | (336) |
Other comprehensive income (loss), net | 13 | 52 | (86) | (37) | (11) | 20 | ||
Ending balance | (396) | (409) | (461) | (364) | (327) | (316) | (396) | (364) |
Treasury Stock | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning balance | (587) | (587) | (527) | (526) | (526) | (487) | (527) | (487) |
Stock incentive plan activity | (1) | (10) | (14) | |||||
Repurchase of common stock | (50) | (25) | ||||||
Ending balance | (588) | (587) | (587) | (526) | (526) | (526) | (588) | (526) |
Non-Controlling Interest | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning balance | 9 | 9 | 10 | 12 | 12 | 14 | 10 | 14 |
Sale of business | (2) | |||||||
Other comprehensive income (loss), net | (1) | |||||||
Distribution to minority shareholders | (1) | (3) | ||||||
Ending balance | $ 8 | $ 9 | $ 9 | $ 9 | $ 12 | $ 12 | $ 8 | $ 9 |
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, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Share-based compensation | $ 3 | $ 7 | $ 19 | $ 23 |
Shares Awarded (in shares) | 548 | |||
Stock-Based Compensation Plans (Textual) [Abstract] | ||||
Proceeds from exercise of employee stock options | $ 10 | $ 10 | ||
Total intrinsic value of options exercised | 12 | |||
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 | 25 | $ 25 | ||
Weighted average period | 1 year 10 months 24 days | |||
Shares Awarded (in shares) | 334 | |||
Performance Based Shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Unamortized compensation expense | $ 10 | $ 10 | ||
Weighted average period | 2 years |
Share-Based Compensation Plan_3
Share-Based Compensation Plans (Summary of Stock Options Grant) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 6 Months Ended | 9 Months Ended |
Jun. 30, 2020 | Sep. 30, 2020 | |
Summary of the changes in outstanding stock options | ||
Outstanding, beginning of period (in shares) | 2,040 | 2,040 |
Granted (in shares) | 548 | |
Exercised (in shares) | (260) | |
Forfeited (in shares) | (65) | |
Outstanding, end of period (in shares) | 2,263 | |
Options exercisable, ending of period (in shares) | 1,487 | |
Vested and expected, end of period (in shares) | 2,175 | |
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) | $ 48.56 | $ 48.56 |
Granted (in usd per share) | 74 | |
Exercised (in usd per share) | 37.95 | |
Forfeited (in usd per share) | 77.45 | |
Outstanding, end of period (in usd per share) | 55.11 | |
Options exercisable, end of period (in usd per share) | 45.33 | |
Vested and expected, end of period (in usd per share) | $ 54.37 | |
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 3 months 18 days | 6 years 7 months 6 days |
Aggregate intrinsic value, outstanding | $ 64 | |
Options exercisable, end of period | 5 years 3 months 18 days | |
Aggregate intrinsic value, exercisable | $ 56 | |
Vested and expected to vest, end of period | 6 years 4 months 24 days | |
Aggregate intrinsic value, vested and expected to vest | $ 62 |
Share-Based Compensation Plan_4
Share-Based Compensation Plans (Stock Option Fair Value Assumptions) (Details) - Stock Options | 9 Months Ended |
Sep. 30, 2020$ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Volatility | 24.07% |
Risk-free interest rate | 15.12% |
Dividend yield | 1.43% |
Expected term (in years) | 5 years 9 months 18 days |
Weighted-average fair value / share (in usd per share) | $ 14.69 |
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, 2020$ / sharesshares | |
Summary of restricted stock activity | |
Outstanding, beginning of period (in shares) | shares | 512 |
Granted (in shares) | shares | 334 |
Vested (in shares) | shares | (251) |
Forfeited (in shares) | shares | (38) |
Outstanding, end of period (in shares) | shares | 557 |
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 | $ 68.95 |
Granted (in usd per share) | $ / shares | 75.35 |
Vested (in usd per share) | $ / shares | 63.86 |
Forfeited (in usd per share) | $ / shares | 75.41 |
Outstanding, end of period (in usd per share) | $ / shares | $ 74.59 |
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, 2020$ / sharesshares | |
Summary of performance share activity | |
Outstanding, beginning of period (in shares) | shares | 225 |
Granted (in shares) | shares | 78 |
Vested (in shares) | shares | (89) |
Forfeited (in shares) | shares | (16) |
Outstanding, end of period (in shares) | shares | 198 |
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 | $ 64.51 |
Granted (in usd per share) | $ / shares | 78.30 |
Vested (in usd per share) | $ / shares | 49.15 |
Forfeited (in usd per share) | $ / shares | 76.83 |
Outstanding, end of period (in usd per share) | $ / shares | $ 75.86 |
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, 2020$ / sharesshares | |
Summary of performance share activity | |
Outstanding, beginning of period (in shares) | shares | 225 |
Granted (in shares) | shares | 78 |
Adjustment for Condition Achieved (in shares) | shares | 35 |
Vested (in shares) | shares | (124) |
Forfeited (in shares) | shares | (16) |
Outstanding, end of period (in shares) | shares | 198 |
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 | $ 75.80 |
Granted (in usd per share) | $ / shares | 100.69 |
Adjustment for Condition Achieved (in usd per share) | $ / shares | 49.15 |
Vested (in usd per share) | $ / shares | 49.15 |
Forfeited (in usd per share) | $ / shares | 76.83 |
Outstanding, end of period (in usd per share) | $ / shares | $ 96.41 |
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, 2020$ / 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 | (16) |
Volatility | 22.60% |
Risk-free interest rate | 1.08% |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value | $ / shares | $ 76.83 |
Capital Stock (Textuals) (Detai
Capital Stock (Textuals) (Details) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Aug. 24, 2015 | |
Equity, Class of Treasury Stock [Line Items] | |||||||
Shares repurchased (less than $1 million) | $ 50 | $ 25 | |||||
Share Repurchase Programs | |||||||
Equity, Class of Treasury Stock [Line Items] | |||||||
Shares repurchased (in shares - less than 0.1 million) | 0.1 | 0.1 | 0.8 | 0.5 | |||
Shares repurchased (less than $1 million) | $ 1 | $ 1 | $ 61 | $ 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) | 0.7 | 0.3 | |||||
Shares repurchased (less than $1 million) | $ 50 | $ 25 | |||||
Remaining authorized amount of repurchase | $ 288 | $ 288 | |||||
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 | 0.1 | 0.2 | |||
Shares repurchased (less than $1 million) | $ 1 | $ 1 | $ 11 | $ 14 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||||||
Beginning balance | $ (375) | $ (375) | ||||||
Foreign currency translation adjustment | $ (10) | $ (20) | (53) | $ (9) | ||||
Changes in postretirement benefit plans | 0 | (11) | 0 | (11) | ||||
Ending balance | (396) | (396) | ||||||
Foreign Currency Translation | ||||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||||||
Beginning balance | (149) | $ (193) | (103) | (111) | $ (96) | $ (121) | (103) | (121) |
Foreign currency translation adjustment | (10) | 35 | (77) | (20) | (18) | 29 | ||
Tax on foreign currency translation adjustment | 18 | 9 | (13) | (13) | 3 | (4) | ||
Ending balance | (141) | (149) | (193) | (144) | (111) | (96) | (141) | (144) |
Postretirement Benefit Plans | ||||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||||||
Beginning balance | (263) | (266) | (269) | (211) | (213) | (214) | (269) | (214) |
Changes in postretirement benefit plans | (11) | |||||||
Income tax impact on amortization of postretirement benefit plan items | (1) | (1) | (1) | (1) | ||||
Ending balance | (260) | (263) | (266) | (213) | (211) | (213) | (260) | (213) |
Derivative Instruments | ||||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||||||
Beginning balance | 3 | (2) | (3) | (5) | (7) | (1) | (3) | (1) |
Unrealized loss on derivative hedge agreements | 4 | 6 | (2) | (9) | ||||
Income tax benefit on unrealized loss on derivative hedge agreements | (1) | 1 | ||||||
Ending balance | 5 | 3 | (2) | (7) | (5) | (7) | 5 | (7) |
Total | ||||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||||||
Beginning balance | (409) | (461) | (375) | (327) | (316) | (336) | (375) | (336) |
Foreign currency translation adjustment | (10) | 35 | (77) | (20) | (18) | 29 | ||
Tax on foreign currency translation adjustment | 18 | 9 | (13) | (13) | 3 | (4) | ||
Changes in postretirement benefit plans | (11) | |||||||
Income tax impact on amortization of postretirement benefit plan items | (1) | (1) | (1) | (1) | ||||
Unrealized loss on derivative hedge agreements | 4 | 6 | (2) | (9) | ||||
Income tax benefit on unrealized loss on derivative hedge agreements | (1) | 1 | ||||||
Ending balance | (396) | (409) | (461) | (364) | (327) | (316) | $ (396) | $ (364) |
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 | 4 | 4 | 4 | 1 | 2 | 2 | ||
Settlement/Curtailment | (8) | |||||||
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 | 4 | 4 | 4 | 1 | 2 | 2 | ||
Settlement/Curtailment | (8) | |||||||
Revenue | Derivative Instruments | ||||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||||||
Reclassification of unrealized gain (loss) on foreign exchange agreements | (2) | (1) | 2 | 2 | 1 | 1 | ||
Revenue | Total | ||||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||||||
Reclassification of unrealized gain (loss) on foreign exchange agreements | $ (2) | (1) | 2 | 2 | $ 1 | 1 | ||
Cost of Revenue | Derivative Instruments | ||||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||||||
Unrealized loss on derivative hedge agreements | 5 | |||||||
Reclassification of unrealized gain (loss) on foreign exchange agreements | 1 | 1 | 1 | 1 | ||||
Cost of Revenue | Total | ||||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||||||
Unrealized loss on derivative hedge agreements | 5 | |||||||
Reclassification of unrealized gain (loss) on foreign exchange agreements | $ 1 | $ 1 | $ 1 | $ 1 |
Commitments and Contingencies_2
Commitments and Contingencies (Summary of Warranties) (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Warranties | ||
Warranty accrual – January 1 | $ 41 | $ 60 |
Net charges for product warranties in the period | 44 | 20 |
Settlement of warranty claims | (24) | (32) |
Warranty accrual - September 30 | $ 62 | $ 46 |
Commitments and Contingencies_3
Commitments and Contingencies (Details Textual) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Commitments and Contingencies Disclosure [Abstract] | ||
Loss Contingency Accrual | $ 3 | $ 5 |
Guarantee amounts | 378 | 340 |
Estimated environmental matters | $ 3 | $ 3 |
Segment Information (Summary of
Segment Information (Summary of Operations by Segment) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | ||
Financial information for each reportable segment | |||||
Revenues | $ 1,220 | $ 1,296 | $ 3,503 | $ 3,878 | |
Operating income | 73 | 11 | 188 | 291 | |
Interest Expense | 22 | 16 | 56 | 52 | |
Other Nonoperating Income (Expense) | (1) | (7) | (5) | (2) | |
Gain from sale of business | 0 | 0 | 0 | 1 | |
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest | 50 | (12) | 127 | 238 | |
Depreciation and amortization | 63 | 65 | 189 | 192 | |
Capital expenditures | 41 | 46 | 136 | 175 | |
Water Infrastructure | |||||
Financial information for each reportable segment | |||||
Revenues | 524 | 531 | 1,463 | 1,574 | |
Operating income | 89 | 97 | 201 | 246 | |
Depreciation and amortization | 13 | 15 | 44 | 46 | |
Capital expenditures | 9 | 14 | 27 | 65 | |
Applied Water | |||||
Financial information for each reportable segment | |||||
Revenues | 364 | 376 | 1,039 | 1,149 | |
Operating income | 56 | 61 | 144 | 179 | |
Depreciation and amortization | 7 | 5 | 18 | 17 | |
Capital expenditures | 4 | 5 | 16 | 15 | |
Measurement & Control Solutions | |||||
Financial information for each reportable segment | |||||
Revenues | 332 | 389 | 1,001 | 1,155 | |
Operating income | (62) | (136) | (120) | (94) | |
Depreciation and amortization | 36 | 36 | 106 | 107 | |
Capital expenditures | 22 | 21 | 73 | 74 | |
Regional Selling Locations | |||||
Financial information for each reportable segment | |||||
Depreciation and amortization | [1] | 4 | 6 | 15 | 14 |
Capital expenditures | [2] | 6 | 4 | 18 | 13 |
Corporate and other | |||||
Financial information for each reportable segment | |||||
Operating income | (10) | (11) | (37) | (40) | |
Depreciation and amortization | 3 | 3 | 6 | 8 | |
Capital expenditures | $ 0 | $ 2 | $ 2 | $ 8 | |
[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, 2020Segment | |
Segment Information (Textual) [Abstract] | |
Number of reportable segments | 3 |