Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Jan. 31, 2015 | Jun. 30, 2014 | |
Document and Entity Information | |||
Entity Registrant Name | ECOLAB INC | ||
Entity Central Index Key | 31462 | ||
Document Type | 10-K | ||
Document Period End Date | 31-Dec-14 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -19 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $33,229,723,000 | ||
Entity Common Stock, Shares Outstanding | 299,250,034 | ||
Document Fiscal Year Focus | 2014 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED_STATEMENT_OF_INCO
CONSOLIDATED STATEMENT OF INCOME (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Millions, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
CONSOLIDATED STATEMENT OF INCOME | |||||||||||
Net sales | $3,680.80 | $3,694.90 | $3,568.20 | $3,336.60 | $3,559.50 | $3,484 | $3,337.80 | $2,872.10 | $14,280.50 | $13,253.40 | $11,838.70 |
Cost of sales (including special charges of $14.3, $43.2 and $93.9 in 2014, 2013 and 2012, respectively) | 1,979.90 | 1,970.60 | 1,909.40 | 1,819.20 | 1,945.20 | 1,866.10 | 1,810.20 | 1,539.70 | 7,679.10 | 7,161.20 | 6,385.40 |
Selling, general and administrative expenses | 1,142.10 | 1,145.90 | 1,152.70 | 1,136.90 | 1,123.50 | 1,114.10 | 1,101.70 | 1,021 | 4,577.60 | 4,360.30 | 4,018.30 |
Special (gains) and charges | 38.3 | 7 | -6.1 | 29.6 | 20.2 | 27.8 | 73.6 | 49.7 | 68.8 | 171.3 | 145.7 |
Operating income | 520.5 | 571.4 | 512.2 | 350.9 | 470.6 | 476 | 352.3 | 261.7 | 1,955 | 1,560.60 | 1,289.30 |
Interest expense, net (including special charges of $2.5 and $19.3 in 2013 and 2012, respectively) | 62 | 63.3 | 66.2 | 65.1 | 67.6 | 67 | 66.2 | 61.5 | 256.6 | 262.3 | 276.7 |
Income before income taxes | 458.5 | 508.1 | 446 | 285.8 | 403 | 409 | 286.1 | 200.2 | 1,698.40 | 1,298.30 | 1,012.60 |
Provision for income taxes | 115.2 | 138.7 | 131 | 91.3 | 113.4 | 101.8 | 70.3 | 39.2 | 476.2 | 324.7 | 311.3 |
Net income including noncontrolling interest | 343.3 | 369.4 | 315 | 194.5 | 289.6 | 307.2 | 215.8 | 161 | 1,222.20 | 973.6 | 701.3 |
Less: Net income (loss) attributable to noncontrolling interest (including special charges of $0.5 and $4.5 in 2013 and 2012, respectively) | 7.8 | 4.5 | 3.6 | 3.5 | 2.5 | -0.8 | 2.7 | 1.4 | 19.4 | 5.8 | -2.3 |
Net income attributable to Ecolab | $335.50 | $364.90 | $311.40 | $191 | $287.10 | $308 | $213.10 | $159.60 | $1,202.80 | $967.80 | $703.60 |
Earnings attributable to Ecolab per common share | |||||||||||
Basic (in dollars per share) | $1.12 | $1.22 | $1.04 | $0.64 | $0.95 | $1.02 | $0.71 | $0.54 | $4.01 | $3.23 | $2.41 |
Diluted (in dollars per share) | $1.10 | $1.19 | $1.02 | $0.62 | $0.93 | $1 | $0.69 | $0.53 | $3.93 | $3.16 | $2.35 |
Dividends declared per common share (in dollars per share) | $1.16 | $0.97 | $0.83 | ||||||||
Weighted-average common shares outstanding | |||||||||||
Basic (in shares) | 300.1 | 300 | 299.6 | 300.6 | 301.2 | 301.2 | 301.5 | 295.4 | 300.1 | 299.9 | 292.5 |
Diluted (in shares) | 305.6 | 305.7 | 305.2 | 306.5 | 307.5 | 307.2 | 307.4 | 300.9 | 305.9 | 305.9 | 298.9 |
CONSOLIDATED_STATEMENT_OF_INCO1
CONSOLIDATED STATEMENT OF INCOME (Parenthetical) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Special charges | $68.80 | $171.30 | $145.70 |
Cost of sales | |||
Special charges | 14.3 | 43.2 | 93.9 |
Interest expense | |||
Special charges | 0 | 2.5 | 19.3 |
Net income (loss) attributable to noncontrolling interest | |||
Special charges | $0 | $0.50 | $4.50 |
CONSOLIDATED_STATEMENT_OF_COMP
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) | |||
Net income including noncontrolling interest | $1,222.20 | $973.60 | $701.30 |
Foreign currency translation adjustments | |||
Foreign currency translation | -350.3 | -240 | 4.8 |
Gain (loss) on net investment hedge | 34.7 | -11.4 | 9.8 |
Total foreign currency translation adjustments | -315.6 | -251.4 | 14.6 |
Derivatives and hedging instruments | 3.9 | 7 | -0.1 |
Pension and postretirement benefits | |||
Current period net actuarial income (loss) | -354.8 | 337.2 | -184 |
Pension and postretirement prior period service costs and benefits adjustments | -0.6 | -1 | 21.8 |
Amortization of net actuarial loss and prior service cost included in net periodic pension and postretirement costs | 12.1 | 46.7 | 31 |
Total pension and postretirement benefits | -343.3 | 382.9 | -131.2 |
Subtotal | -655 | 138.5 | -116.7 |
Total comprehensive income, including noncontrolling interest | 567.2 | 1,112.10 | 584.6 |
Less: Comprehensive income (loss) attributable to noncontrolling interest | 11.1 | -10.2 | -4.2 |
Comprehensive income attributable to Ecolab | $556.10 | $1,122.30 | $588.80 |
CONSOLIDATED_BALANCE_SHEET
CONSOLIDATED BALANCE SHEET (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | ||
In Millions, unless otherwise specified | ||||
Current assets | ||||
Cash and cash equivalents | $209.60 | $339.20 | ||
Accounts receivable, net | 2,626.70 | 2,568 | ||
Inventories | 1,466.90 | 1,321.90 | ||
Deferred income taxes | 183.2 | 163 | ||
Other current assets | 384.7 | 306.3 | ||
Total current assets | 4,871.10 | 4,698.40 | ||
Property, plant and equipment, net | 3,050.60 | 2,882 | ||
Goodwill | 6,717 | 6,862.90 | ||
Other intangible assets, net | 4,456.80 | 4,785.30 | ||
Other assets | 371.2 | 407.9 | ||
Total assets | 19,466.70 | 19,636.50 | ||
Current liabilities | ||||
Short-term debt | 1,705.40 | 861 | ||
Accounts payable | 1,162.40 | 1,021.90 | ||
Compensation and benefits | 560.4 | 571.1 | ||
Income taxes | 88.6 | 80.9 | ||
Other current liabilities | 869.8 | 953.8 | ||
Total current liabilities | 4,386.60 | 3,488.70 | ||
Long-term debt | 4,864 | 6,043.50 | ||
Postretirement health care and pension benefits | 1,188.50 | 795.6 | ||
Other liabilities | 1,645.50 | 1,899.30 | ||
Total liabilities | 12,084.60 | 12,227.10 | ||
Equity | ||||
Common stock | 347.7 | [1] | 345.1 | [1] |
Additional paid-in capital | 4,874.50 | 4,692 | ||
Retained earnings | 5,555.10 | 4,699 | ||
Accumulated other comprehensive loss | -951.9 | -305.2 | ||
Treasury stock | -2,509.50 | -2,086.60 | ||
Total Ecolab shareholders' equity | 7,315.90 | 7,344.30 | ||
Noncontrolling interest | 66.2 | 65.1 | ||
Total equity | 7,382.10 | 7,409.40 | ||
Total liabilities and equity | $19,466.70 | $19,636.50 | ||
[1] | Common stock, 800.0 million shares authorized, $1.00 par value, 299.9 million shares outstanding at December 31, 2014, 301.1 million shares outstanding at December 31, 2013. Shares outstanding are net of treasury stock. |
CONSOLIDATED_BALANCE_SHEET_Par
CONSOLIDATED BALANCE SHEET (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, except Per Share data, unless otherwise specified | ||
CONSOLIDATED BALANCE SHEET | ||
Common stock, shares authorized | 800 | 800 |
Common stock, par value per share (in dollars per share) | $1 | $1 |
Common stock, shares outstanding | 299.9 | 301.1 |
CONSOLIDATED_STATEMENT_OF_CASH
CONSOLIDATED STATEMENT OF CASH FLOWS (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
OPERATING ACTIVITIES | |||
Net income including noncontrolling interest | $1,222.20 | $973.60 | $701.30 |
Adjustments to reconcile net income including noncontrolling interest to cash provided by operating activities: | |||
Depreciation | 558.1 | 514.2 | 468.2 |
Amortization | 313.9 | 302 | 246.3 |
Deferred income taxes | -121.5 | -130.5 | -3.2 |
Share-based compensation expense | 71.1 | 69.6 | 65.8 |
Excess tax benefits from share-based payment arrangements | -55.9 | -36.6 | -50.1 |
Pension and postretirement plan contributions | -76.7 | -80 | -254.9 |
Pension and postretirement plan expense | 83.9 | 142.4 | 114.6 |
Restructuring, net of cash paid | 0.3 | -39.8 | 66.6 |
Venezuela currency devaluation | 23.2 | ||
(Gain) loss on sale of business | -4.8 | 1.9 | -89.3 |
Other, net | 7.8 | 16.4 | 5.6 |
Changes in operating assets and liabilities, net of effect of acquisitions: | |||
Accounts receivable | -175.4 | -147.4 | -189.7 |
Inventories | -210.8 | -30.5 | -2 |
Other assets | -106.3 | -68.7 | 18.6 |
Accounts payable | 174.7 | 50.6 | 79 |
Other liabilities | 135 | -0.6 | 26.2 |
Cash provided by operating activities | 1,815.60 | 1,559.80 | 1,203 |
INVESTING ACTIVITIES | |||
Capital expenditures | -748.7 | -625.1 | -574.5 |
Capitalized software expenditures | -45.2 | -37.2 | -33 |
Property and other assets sold | 10.9 | 18.1 | 15.9 |
Businesses acquired and investments in affiliates, net of cash acquired | -82.6 | -1,437.70 | -43 |
Divestiture of businesses | 10.4 | -8.3 | 130.7 |
Deposit into acquisition related escrow | -9.4 | -10.5 | -1.3 |
Release from acquisition related escrow | 8.7 | 13 | 17.3 |
Other, net | 7.6 | ||
Cash used for investing activities | -848.3 | -2,087.70 | -487.9 |
FINANCING ACTIVITIES | |||
Net issuances (repayments) of commercial paper and notes payable | 599.6 | -278.3 | -387.3 |
Long-term debt borrowings | 900.1 | 1,001.20 | |
Long-term debt repayments | -907.8 | -511.2 | -1,694.90 |
Reacquired shares | -428.6 | -307.6 | -209.9 |
Dividends paid | -344.4 | -218.1 | -306.8 |
Exercise of employee stock options | 65.4 | 97 | 163.7 |
Excess tax benefits from share-based payment arrangements | 55.9 | 36.6 | 50.1 |
Acquisition related contingent consideration | -98.7 | -11.3 | |
Acquisition of noncontrolling interest | -8.4 | ||
Other, net | -4 | 0.2 | -9.7 |
Cash used for financing activities | -1,071 | -292.6 | -1,393.60 |
Effect of exchange rate changes on cash and cash equivalents | -25.9 | 1.9 | -7.3 |
Decrease in cash and cash equivalents | -129.6 | -818.6 | -685.8 |
Cash and cash equivalents, beginning of year | 339.2 | 1,157.80 | 1,843.60 |
Cash and cash equivalents, end of year | 209.6 | 339.2 | 1,157.80 |
SUPPLEMENTAL CASH FLOW INFORMATION | |||
Income taxes paid | 522 | 434.2 | 222.6 |
Interest paid | $255.50 | $258.90 | $279 |
CONSOLIDATED_STATEMENT_OF_EQUI
CONSOLIDATED STATEMENT OF EQUITY (USD $) | TOTAL ECOLAB SHAREHOLDERS' EQUITY | COMMON STOCK | ADDITIONAL PAID-IN CAPITAL | RETAINED EARNINGS | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | TREASURY STOCK | NON-CONTROLLING INTEREST | Total |
In Millions, except Share data, unless otherwise specified | ||||||||
Balance at Dec. 31, 2011 | $5,666.70 | $336.10 | $3,980.80 | $3,559.90 | ($344.90) | ($1,865.20) | $74.40 | $5,741.10 |
Balance (in shares) at Dec. 31, 2011 | 336,088,243 | -44,113,799 | ||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net income (loss) | 703.6 | 703.6 | -2.3 | 701.3 | ||||
Comprehensive income (loss) activity | -114.8 | -114.8 | -1.9 | -116.7 | ||||
Total comprehensive income (loss) | 588.8 | -4.2 | 584.6 | |||||
Cash dividends declared | -242.9 | -242.9 | -3.9 | -246.8 | ||||
Champion acquisition and Nalco Merger | 0.3 | 0.3 | 16.8 | 17.1 | ||||
Stock options and awards | 274 | 6 | 260.7 | 7.3 | 274 | |||
Stock options (in shares) | 5,430,997 | 208,239 | ||||||
Stock awards, net issuances (in shares) | 587,341 | -21,257 | ||||||
Reacquired shares | -209.9 | 7.3 | -217.2 | -209.9 | ||||
Reacquired shares (in shares) | -3,457,740 | |||||||
Balance at Dec. 31, 2012 | 6,077 | 342.1 | 4,249.10 | 4,020.60 | -459.7 | -2,075.10 | 83.1 | 6,160.10 |
Balance (in shares) at Dec. 31, 2012 | 342,106,581 | -47,384,557 | ||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net income (loss) | 967.8 | 967.8 | 5.8 | 973.6 | ||||
Comprehensive income (loss) activity | 154.5 | 154.5 | -16 | 138.5 | ||||
Total comprehensive income (loss) | 1,122.30 | -10.2 | 1,112.10 | |||||
Cash dividends declared | -289.4 | -289.4 | -11.4 | -300.8 | ||||
Champion acquisition and Nalco Merger | 543 | 258.1 | 284.9 | 3.6 | 546.6 | |||
Champion acquisition and Nalco Merger (in shares) | 6,596,444 | |||||||
Stock options and awards | 199 | 3 | 184.8 | 11.2 | 199 | |||
Stock options (in shares) | 2,206,661 | 254,680 | ||||||
Stock awards, net issuances (in shares) | 787,767 | 11,008 | ||||||
Reacquired shares | -307.6 | -307.6 | -307.6 | |||||
Reacquired shares (in shares) | -3,443,405 | |||||||
Balance at Dec. 31, 2013 | 7,344.30 | 345.1 | 4,692 | 4,699 | -305.2 | -2,086.60 | 65.1 | 7,409.40 |
Balance (in shares) at Dec. 31, 2013 | 345,101,009 | -43,965,830 | 301,100,000 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net income (loss) | 1,202.80 | 1,202.80 | 19.4 | 1,222.20 | ||||
Comprehensive income (loss) activity | -646.7 | -646.7 | -8.3 | -655 | ||||
Total comprehensive income (loss) | 556.1 | 11.1 | 567.2 | |||||
Cash dividends declared | -346.7 | -346.7 | -14 | -360.7 | ||||
Champion acquisition and Nalco Merger | -2.9 | -2.9 | ||||||
Purchase of shares from noncontrolling interest | -0.3 | -0.3 | 6.9 | 6.6 | ||||
Stock options and awards | 191.1 | 2.6 | 182.8 | 5.7 | 191.1 | |||
Stock options (in shares) | 1,850,757 | 122,455 | ||||||
Stock awards, net issuances (in shares) | 773,022 | 8,231 | ||||||
Reacquired shares | -428.6 | -428.6 | -428.6 | |||||
Reacquired shares (in shares) | -4,037,188 | |||||||
Balance at Dec. 31, 2014 | $7,315.90 | $347.70 | $4,874.50 | $5,555.10 | ($951.90) | ($2,509.50) | $66.20 | $7,382.10 |
Balance (in shares) at Dec. 31, 2014 | 347,724,788 | -47,872,332 | 299,900,000 |
NATURE_OF_BUSINESS
NATURE OF BUSINESS | 12 Months Ended |
Dec. 31, 2014 | |
NATURE OF BUSINESS | |
NATURE OF BUSINESS | |
1. NATURE OF BUSINESS | |
Ecolab Inc. (“Ecolab” or “the company”) is the global leader in water, hygiene and energy technologies and services that protect people and vital resources. The company delivers comprehensive solutions and on-site service to ensure safe food, maintain clean environments, optimize water and energy use and improve operational efficiencies for customers in the food, healthcare, energy, hospitality and industrial markets in more than 170 countries. | |
The company’s cleaning and sanitizing programs and products, pest elimination services, and equipment maintenance and repair services support customers in the foodservice, food and beverage processing, hospitality, healthcare, government and education, retail, textile care and commercial facilities management sectors. The company’s products and technologies are also used in water treatment, pollution control, energy conservation, oil production and refining, steelmaking, papermaking, mining and other industrial processes. | |
SIGNIFICANT_ACCOUNTING_POLICIE
SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
SIGNIFICANT ACCOUNTING POLICIES | ||||||||||||||||||||
SIGNIFICANT ACCOUNTING POLICIES | 2. SIGNIFICANT ACCOUNTING POLICIES | |||||||||||||||||||
Principles of Consolidation | ||||||||||||||||||||
The consolidated financial statements include the accounts of the company and all subsidiaries in which the company has a controlling financial interest. Investments in companies, joint ventures or partnerships in which the company does not have control, but has the ability to exercise significant influence over operating and financial policies, are reported using the equity method. International subsidiaries are included in the financial statements on the basis of their U.S. GAAP November 30 fiscal year-ends to facilitate the timely inclusion of such entities in the company’s consolidated financial reporting. All intercompany transactions and profits are eliminated in consolidation. | ||||||||||||||||||||
Revisions | ||||||||||||||||||||
Effective in the first quarter of 2014, certain employee-related costs from the company’s recently acquired businesses that were historically presented within cost of sales were revised and reclassified to SG&A on the Consolidated Statement of Income. These immaterial revisions were made to conform with management’s view of the respective costs within the global organizational model. Total costs reclassified were $78.9 million and $98.1 million for the years ended December 31, 2013 and 2012, respectively. | ||||||||||||||||||||
Results for 2013 and 2012 have been revised to conform to the current year presentation. The reclassification had no impact on earnings, financial position or cash flows. | ||||||||||||||||||||
Use of Estimates | ||||||||||||||||||||
The preparation of the company’s financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates. The company’s critical accounting estimates include revenue recognition, valuation allowances and accrued liabilities, actuarially determined liabilities, restructuring, income taxes and long-lived assets, intangible assets and goodwill. | ||||||||||||||||||||
Foreign Currency Translation | ||||||||||||||||||||
Financial position and reported results of operations of the company’s international subsidiaries are measured using local currencies as the functional currency. Assets and liabilities of these operations are translated at the exchange rates in effect at each fiscal year end. The translation adjustments related to assets and liabilities that arise from the use of differing exchange rates from period to period are included in accumulated other comprehensive income (loss) in shareholders’ equity. Income statement accounts are translated at average rates of exchange prevailing during the year. The company evaluates its International operations based on fixed rates of exchange; however, the different exchange rates from period to period impact the amount of reported income from consolidated operations. The foreign currency fluctuations of any foreign subsidiaries that operate in highly inflationary environments are included in results of operations. Further details related to the highly inflationary environment in Venezuela are included in Note 3. | ||||||||||||||||||||
Concentration of Credit Risk | ||||||||||||||||||||
Credit risk represents the accounting loss that would be recognized at the reporting date if counterparties failed to perform as contracted. The company believes the likelihood of incurring material losses due to concentration of credit risk is remote. The principal financial instruments subject to credit risk are as follows: | ||||||||||||||||||||
Cash and Cash Equivalents - The company maintains cash deposits with major banks, which from time to time may exceed insured limits. The possibility of loss related to financial condition of major banks has been deemed minimal. Additionally, the company’s investment policy limits exposure to concentrations of credit risk and changes in market conditions. | ||||||||||||||||||||
Accounts Receivable - A large number of customers in diverse industries and geographies, as well as the practice of establishing reasonable credit lines, limits credit risk. Based on historical trends and experiences, the allowance for doubtful accounts is adequate to cover potential credit risk losses. | ||||||||||||||||||||
Foreign Currency Contracts and Derivatives - Exposure to credit risk is limited by internal policies and active monitoring of counterparty risks. In addition, the company selects a diversified group of major international banks and financial institutions as counterparties. The company does not anticipate nonperformance by any of these counterparties. | ||||||||||||||||||||
Cash and Cash Equivalents | ||||||||||||||||||||
Cash equivalents include highly-liquid investments with a maturity of three months or less when purchased. | ||||||||||||||||||||
Accounts Receivable and Allowance For Doubtful Accounts | ||||||||||||||||||||
Accounts receivable are carried at their face amounts less an allowance for doubtful accounts. Accounts receivable are recorded at the invoiced amount and generally do not bear interest. The company estimates the balance of allowance for doubtful accounts by analyzing accounts receivable balances by age and applying historical write-off and collection trend rates. The company’s estimates include separately providing for customer balances based on specific circumstances and credit conditions, and when it is deemed probable that the balance is uncollectible. Account balances are charged off against the allowance when it is determined the receivable will not be recovered. | ||||||||||||||||||||
The company’s allowance for doubtful accounts balance also includes an allowance for the expected return of products shipped and credits related to pricing or quantities shipped of $15 million, $14 million and $13 million as of December 31, 2014, 2013 and 2012, respectively. Returns and credit activity is recorded directly to sales. | ||||||||||||||||||||
The following table summarizes the activity in the allowance for doubtful accounts: | ||||||||||||||||||||
MILLIONS | 2014 | 2013 | 2012 | |||||||||||||||||
Beginning balance | $ | 81 | $ | 73 | $ | 49 | ||||||||||||||
Bad debt expense | 23 | 28 | 37 | |||||||||||||||||
Write-offs | (20 | ) | (21 | ) | (13 | ) | ||||||||||||||
Other(a) | (7 | ) | 1 | – | ||||||||||||||||
Ending balance | $ | 77 | $ | 81 | $ | 73 | ||||||||||||||
(a) | Other amounts are primarily the effects of changes in currency translations and the impact of allowance for returns and credits. | |||||||||||||||||||
Inventory Valuations | ||||||||||||||||||||
Inventories are valued at the lower of cost or market. Certain U.S. inventory costs are determined on a last-in, first-out (LIFO) basis. LIFO inventories represented 37% and 34% of consolidated inventories as of December 31, 2014 and 2013, respectively. LIFO inventories include certain legacy Nalco U.S. inventory acquired at fair value as part of the Nalco merger. All other inventory costs are determined using either the average cost or first-in, first-out (FIFO) methods. Inventory values at FIFO, as shown in Note 5, approximate replacement cost. | ||||||||||||||||||||
Property, Plant and Equipment | ||||||||||||||||||||
Property, plant and equipment assets are stated at cost. Merchandising and customer equipment consists principally of various dispensing systems for the company’s cleaning and sanitizing products, dishwashing machines and process control and monitoring equipment. Certain dispensing systems capitalized by the company are accounted for on a mass asset basis, whereby equipment is capitalized and depreciated as a group and written off when fully depreciated. The company capitalizes both internal and external costs of development or purchase of computer software for internal use. Costs incurred for data conversion, training and maintenance associated with capitalized software are expensed as incurred. Expenditures for major renewals and improvements, which significantly extend the useful lives of existing plant and equipment, are capitalized and depreciated. Expenditures for repairs and maintenance are charged to expense as incurred. Upon retirement or disposition of plant and equipment, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in income. | ||||||||||||||||||||
Depreciation is charged to operations using the straight-line method over the assets’ estimated useful lives ranging from 5 to 40 years for buildings and leasehold improvements, 3 to 18 years for machinery and equipment and 3 to 10 years for merchandising and customer equipment and capitalized software. Total depreciation expense was $558 million, $514 million and $468 million for 2014, 2013 and 2012, respectively. | ||||||||||||||||||||
Goodwill and Other Intangible Assets | ||||||||||||||||||||
Goodwill | ||||||||||||||||||||
Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired. The company’s reporting units are aligned with its ten operating segments. | ||||||||||||||||||||
During the second quarter of 2014, the company completed its annual test for goodwill impairment. The company used a “step zero” qualitative test to assess all ten of its reporting units given substantial levels of headroom and other strong qualitative indicators. Qualitative testing evaluated factors including, but not limited to, economic, market and industry conditions, cost factors and the overall financial performance of the reporting units. Based on the “step zero” testing performed, no adjustment to the carrying value of goodwill was necessary. Additionally, the company noted no changes in events or circumstances which would have required the completion of the two-step quantitative goodwill impairment analysis for any of the assessed reporting units. | ||||||||||||||||||||
If circumstances change significantly, the company would also test a reporting unit’s goodwill for impairment during interim periods between its annual tests. Based on the current and expected performance of the company’s reporting units, updating the impairment testing during the second half of 2014 was not deemed necessary. There has been no impairment of goodwill since the adoption of Financial Accounting Standards Board (“FASB”) guidance for goodwill and other intangibles on January 1, 2002. | ||||||||||||||||||||
The Nalco and Champion transactions resulted in the addition of $4.5 billion and $1.0 billion of goodwill, respectively, within the Energy, Water and Paper reporting units. Subsequent performance of these reporting units relative to projections used for the purchase price allocation of goodwill could result in an impairment if there is either underperformance by the reporting unit or if the carrying value of the reporting unit were to fluctuate significantly due to reasons that did not proportionately change fair value. | ||||||||||||||||||||
The changes in the carrying amount of goodwill for each of the company’s reportable segments are as follows: | ||||||||||||||||||||
GLOBAL | GLOBAL | GLOBAL | ||||||||||||||||||
MILLIONS | INDUSTRIAL | INSTITUTIONAL | ENERGY | OTHER | TOTAL | |||||||||||||||
December 31, 2012 | $ | 2,751.60 | $ | 720.6 | $ | 2,325.30 | $ | 123 | $ | 5,920.50 | ||||||||||
Acquisitions(a) | 33.9 | — | 1,037.90 | — | 1,071.80 | |||||||||||||||
Dispositions | (2.1 | ) | — | — | — | (2.1 | ) | |||||||||||||
Effect of foreign currency translation | (53.9 | ) | (14.0 | ) | (57.0 | ) | (2.4 | ) | (127.3 | ) | ||||||||||
December 31, 2013 | 2,729.50 | 706.6 | 3,306.20 | 120.6 | 6,862.90 | |||||||||||||||
Current year acquisitions(a) | 18.5 | — | 9.9 | 4.6 | 33 | |||||||||||||||
Prior year acquisitions(b) | (0.1 | ) | — | 16.9 | — | 16.8 | ||||||||||||||
Dispositions | — | (0.4 | ) | — | (0.2 | ) | (0.6 | ) | ||||||||||||
Reclassifications(c) | (28.9 | ) | 5 | 23.9 | — | — | ||||||||||||||
Effect of foreign currency translation | (76.8 | ) | (20.0 | ) | (94.8 | ) | (3.5 | ) | (195.1 | ) | ||||||||||
December 31, 2014 | $ | 2,642.20 | $ | 691.2 | $ | 3,262.10 | $ | 121.5 | $ | 6,717.00 | ||||||||||
(a) | For 2014, the company expects $20.7 million of the goodwill related to businesses acquired to be tax deductible. For 2013, none of the goodwill related to businesses acquired is expected to be tax deductible. | |||||||||||||||||||
(b) | Represents purchase price allocation adjustments for 2013 acquisitions deemed preliminary as of December 31, 2013. | |||||||||||||||||||
(c) | Represents immaterial transfers related to certain changes to the company’s reportable segments during the first quarter of 2014. | |||||||||||||||||||
Other Intangible Assets | ||||||||||||||||||||
As part of the Nalco merger, the company added the “Nalco” trade name as an indefinite life intangible asset. During the second quarter of 2014, using the qualitative assessment method, the company completed its annual test for indefinite life intangible asset impairment. Based on this testing, no adjustment to the $1.2 billion carrying value of this asset was necessary. Additionally, based on the ongoing performance of its operating units, updating the impairment testing during the second half of 2014 was not deemed necessary. There has been no impairment of the Nalco trade name intangible asset since it was acquired. | ||||||||||||||||||||
Intangible assets subject to amortization primarily include customer relationships, trademarks, patents and other technology. The fair value of identifiable intangible assets is estimated based upon discounted future cash flow projections and other acceptable valuation methods. Other intangible assets are amortized on a straight-line basis over their estimated economic lives. The weighted-average useful life of amortizable intangible assets was 14 years as of December 31, 2014 and 2013. | ||||||||||||||||||||
The weighted-average useful life by type of amortizable asset at December 31, 2014 is as follows: | ||||||||||||||||||||
NUMBER OF YEARS | ||||||||||||||||||||
Customer relationships | 14 | |||||||||||||||||||
Trademarks | 14 | |||||||||||||||||||
Patents | 14 | |||||||||||||||||||
Other technology | 8 | |||||||||||||||||||
The straight-line method of amortization reflects an appropriate allocation of the cost of the intangible assets to earnings in proportion to the amount of economic benefits obtained by the company in each reporting period. The company evaluates the remaining useful life of its intangible assets that are being amortized each reporting period to determine whether events and circumstances warrant a change to the remaining period of amortization. If the estimate of an intangible asset’s remaining useful life is changed, the remaining carrying amount of the intangible asset will be amortized prospectively over that revised remaining useful life. Total amortization expense related to other intangible assets during the last three years and future estimated amortization is as follows: | ||||||||||||||||||||
MILLIONS | ||||||||||||||||||||
2012 | $ | |||||||||||||||||||
237 | ||||||||||||||||||||
2013 | 293 | |||||||||||||||||||
2014 | 305 | |||||||||||||||||||
2015 | 299 | |||||||||||||||||||
2016 | 295 | |||||||||||||||||||
2017 | 292 | |||||||||||||||||||
2018 | 286 | |||||||||||||||||||
2019 | 273 | |||||||||||||||||||
Long-Lived Assets | ||||||||||||||||||||
The company periodically reviews its long-lived and amortizable intangible assets for impairment and assesses whether significant events or changes in business circumstances indicate that the carrying value of the assets may not be recoverable. Such circumstances may include a significant decrease in the market price of an asset, a significant adverse change in the manner in which the asset is being used or in its physical condition or history of operating or cash flow losses associated with the use of an asset. An impairment loss may be recognized when the carrying amount of an asset exceeds the anticipated future undiscounted cash flows expected to result from the use of the asset and its eventual disposition. The amount of the impairment loss to be recorded, if any, is calculated by the excess of the asset’s carrying value over its fair value. In addition, the company periodically reassesses the estimated remaining useful lives of its long-lived assets. Changes to estimated useful lives would impact the amount of depreciation and amortization recorded in earnings. The company has not experienced significant changes in the carrying value or estimated remaining useful lives of its long-lived or amortizable intangible assets. | ||||||||||||||||||||
Asset Retirement Obligations | ||||||||||||||||||||
The fair value of a liability for an asset retirement obligation associated with the retirement of tangible long-lived assets is recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The liability is adjusted to its present value in subsequent periods as accretion expense is recorded. The corresponding asset retirement costs are capitalized as part of the carrying amount of the related long-lived asset and depreciated over the asset’s useful life. The company’s asset retirement obligation liability was $9.5 million and $10.5 million, respectively, at December 31, 2014 and 2013. | ||||||||||||||||||||
Income Taxes | ||||||||||||||||||||
Income taxes are recognized during the period in which transactions enter into the determination of financial statement income, with deferred income taxes being provided for the tax effect of temporary differences between the carrying amount of assets and liabilities and their tax bases. The company records a valuation allowance to reduce its deferred tax assets when uncertainty regarding their realizability exists. Deferred income taxes are provided on the undistributed earnings of foreign subsidiaries except to the extent such earnings are considered to be permanently reinvested in the subsidiary. | ||||||||||||||||||||
The company records liabilities for income tax uncertainties in accordance with the recognition and measurement criteria prescribed in authoritative guidance issued by the FASB. | ||||||||||||||||||||
See Note 12 for additional information regarding income taxes. | ||||||||||||||||||||
Restructuring Activities | ||||||||||||||||||||
The company’s restructuring activities are associated with plans to enhance its efficiency, effectiveness and sharpen its competitiveness. These restructuring plans include net costs associated with significant actions involving employee-related severance charges, contract termination costs and asset write-downs and disposals. Employee termination costs are largely based on policies and severance plans, and include personnel reductions and related costs for severance, benefits and outplacement services. These charges are reflected in the quarter in which the actions are probable and the amounts are estimable, which is generally when management approves the associated actions. Contract termination costs include charges to terminate leases prior to the end of their respective terms and other contract termination costs. Asset write-downs and disposals include leasehold improvement write-downs, other asset write-downs associated with combining operations and disposal of assets. | ||||||||||||||||||||
See Note 3 for additional information regarding restructuring. | ||||||||||||||||||||
Revenue Recognition | ||||||||||||||||||||
The company recognizes revenue on product sales at the time evidence of an arrangement exists, title to the product and risk of loss transfers to the customer, the price is fixed and determinable and collection is reasonably assured. The company recognizes revenue on services as they are performed. While the company employs a sales and service team to ensure customer’s needs are best met in a high quality way, the vast majority of the company’s revenue is generated from product sales. Outside of the service businesses and service offerings discussed in Note 17, any other services are either incidental to a product sale and not sold separately or are insignificant. | ||||||||||||||||||||
The company’s sales policies do not provide for general rights of return. Critical estimates used in recognizing revenue include the delay between the time that products are shipped, when they are received by customers, when title transfers and the amount of credit memos issued in subsequent periods. The company records estimated reductions to revenue for customer programs and incentive offerings, including pricing arrangements, promotions and other volume-based incentives at the time the sale is recorded. The company also records estimated reserves for anticipated uncollectible accounts and for product returns and credits at the time of sale. Depending on market conditions, the company may increase customer incentive offerings, which could reduce gross profit margins at the time the incentive is offered. | ||||||||||||||||||||
Earnings Per Common Share | ||||||||||||||||||||
The computations of the basic and diluted earnings attributable to Ecolab per share amounts were as follows: | ||||||||||||||||||||
MILLIONS | ||||||||||||||||||||
EXCEPT PER SHARE | 2014 | 2013 | 2012 | |||||||||||||||||
Net income attributable to Ecolab | $ | 1,202.8 | $ | 967.8 | $ | 703.6 | ||||||||||||||
Weighted-average common shares outstanding | ||||||||||||||||||||
Basic | 300.1 | 299.9 | 292.5 | |||||||||||||||||
Effect of dilutive stock options, units and awards | 5.8 | 6.0 | 6.4 | |||||||||||||||||
Diluted | 305.9 | 305.9 | 298.9 | |||||||||||||||||
Earnings attributable to Ecolab per common share | ||||||||||||||||||||
Basic | $ | 4.01 | $ | 3.23 | $ | 2.41 | ||||||||||||||
Diluted | $ | 3.93 | $ | 3.16 | $ | 2.35 | ||||||||||||||
Anti-dilutive securities excluded from the computation of earnings per share | 3.4 | 1.8 | 2.6 | |||||||||||||||||
Other Significant Accounting Policies | ||||||||||||||||||||
The following table includes a reference to additional significant accounting policies that are described in other notes to the financial statements, including the note number and first page of the note: | ||||||||||||||||||||
POLICY | NOTE | PAGE | ||||||||||||||||||
Fair value measurements | 7 | 47 | ||||||||||||||||||
Derivatives and hedging transactions | 8 | 48 | ||||||||||||||||||
Share-based compensation | 11 | 51 | ||||||||||||||||||
Legal contingencies | 15 | 54 | ||||||||||||||||||
Pension and post-retirement benefit plans | 16 | 56 | ||||||||||||||||||
Reportable segments | 17 | 61 | ||||||||||||||||||
New Accounting Pronouncements | ||||||||||||||||||||
DATE OF | DATE OF | EFFECT ON THE | ||||||||||||||||||
STANDARD | ISSUANCE | DESCRIPTION | ADOPTION | FINANCIAL STATEMENTS | ||||||||||||||||
Standards that are not yet adopted | ||||||||||||||||||||
ASU 2014-08—Presentation of Financial Statements (Topic 205): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity | April 2014 | Updated criteria for determining which disposals should be presented as discontinued operations as well as modifications to the related disclosure requirements. | January 1, 2015 | The company does not expect the updated guidance to have a material impact on future financial statements. | ||||||||||||||||
ASU 2014-09—Revenue from Contracts with Customers (Topic 606) | May 2014 | Recognition standard contains principles for entities to apply to determine the measurement of revenue and timing of when the revenue is recognized. The underlying principle of the updated guidance will have entities recognize revenue to depict the transfer of goods or services to customers at an amount that is expected to be received in exchange for those goods or services. | January 1, 2017 | The company is currently evaluating the impact of adoption. | ||||||||||||||||
ASU 2014-15—Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern | Aug-14 | Management’s responsibility to evaluate whether there is substantial doubt about the organization’s ability to continue as a going concern and to provide related footnote disclosures. | January 1, 2017 | The company does not expect the guidance to have an impact on future financial statements. | ||||||||||||||||
ASU 2014-16—Derivatives and Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share is More Akin to Debt or to Equity | Nov-14 | For hybrid financial instruments issued in the form of a share, an entity (an issuer or an investor) should determine the nature of the host contract by considering all stated and implied substantive terms and features of the basis of relevant facts and circumstances. | January 1, 2015 | The company does not expect the updated guidance to have a material impact on future financial statements. | ||||||||||||||||
ASU 2015-01—Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items | Jan-15 | Entities should no longer segregate extraordinary and unusual items from the results of ordinary operations on the Income Statement and should no longer disclose the applicable income taxes and earnings-per-share data for applicable extraordinary items. | January 1, 2016 | The company does not expect the updated guidance to have an impact on future financial statements. | ||||||||||||||||
Standards that were adopted | ||||||||||||||||||||
ASU 2013-05—Foreign Currency Matters (Topic 830): Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity | March 2013 | Resolve diversity in practice regarding the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investments in a foreign entity. In addition, the standard resolves diversity in practice for the treatment of business combinations achieved in stages involving a foreign entity. | January 1, 2014 | The adoption did not impact the company’s consolidated financial statements and is not expected to have a material impact on future financial statements. | ||||||||||||||||
ASU 2013-11—Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists | July 2013 | Presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss or a tax credit carryforward exists. | January 1, 2014 | The adoption did not have a material impact on the company’s consolidated financial Statements. | ||||||||||||||||
ASU 2014-17—Business Combinations (Topic 805): Pushdown Accounting (A consensus of the FASB Emerging Issues Task Force) | Nov-14 | An acquired entity has the option to apply pushdown accounting in its stand-alone financial statements upon occurrence of a change-in- control event. | Nov-14 | The adoption did not impact the company’s consolidated financial statements and is not expected to have a material impact on future financial statements. | ||||||||||||||||
No other new accounting pronouncement issued or effective has had or is expected to have a material impact on the company’s consolidated financial statements. | ||||||||||||||||||||
SPECIAL_GAINS_AND_CHARGES
SPECIAL (GAINS) AND CHARGES | 12 Months Ended | |||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||
SPECIAL (GAINS) AND CHARGES | ||||||||||||||||||
SPECIAL (GAINS) AND CHARGES | ||||||||||||||||||
3. SPECIAL (GAINS) AND CHARGES | ||||||||||||||||||
Special (gains) and charges reported on the Consolidated Statement of Income included the following: | ||||||||||||||||||
MILLIONS | 2014 | 2013 | 2012 | |||||||||||||||
Cost of sales | ||||||||||||||||||
Restructuring charges | $ | 13.9 | $ | 6.6 | $ | 22.7 | ||||||||||||
Recognition of inventory fair value step-up | 0.4 | 36.6 | 71.2 | |||||||||||||||
Subtotal | 14.3 | 43.2 | 93.9 | |||||||||||||||
Special (gains) and charges | ||||||||||||||||||
Restructuring charges | 69.2 | 83.4 | 116.6 | |||||||||||||||
Champion acquisition and integration costs | 19.9 | 49.7 | 18.3 | |||||||||||||||
Nalco merger and integration costs | 8.5 | 18.6 | 70.9 | |||||||||||||||
Venezuela currency devaluation | — | 23.2 | — | |||||||||||||||
Gain on sale of businesses, litigation activity, settlements and other gains | (28.8 | ) | (3.6 | ) | (60.1 | ) | ||||||||||||
Subtotal | 68.8 | 171.3 | 145.7 | |||||||||||||||
Operating income subtotal | 83.1 | 214.5 | 239.6 | |||||||||||||||
Interest expense, net | ||||||||||||||||||
Acquisition debt costs | — | 2.5 | 1.1 | |||||||||||||||
Debt extinguishment costs | — | — | 18.2 | |||||||||||||||
Subtotal | — | 2.5 | 19.3 | |||||||||||||||
Net income attributable to noncontrolling interest | ||||||||||||||||||
Venezuela currency devaluation | — | (0.5 | ) | — | ||||||||||||||
Recognition of inventory fair value step-up | — | — | (4.5 | ) | ||||||||||||||
Subtotal | — | (0.5 | ) | (4.5 | ) | |||||||||||||
Total special (gains) and charges | $ | 83.1 | $ | 216.5 | $ | 254.4 | ||||||||||||
For segment reporting purposes, special (gains) and charges are included in the Corporate segment, which is consistent with the company’s internal management reporting. | ||||||||||||||||||
Restructuring charges | ||||||||||||||||||
Restructuring charges have been included as a component of both cost of sales and special (gains) and charges on the Consolidated Statement of Income. Amounts included as a component of cost of sales include supply chain related severance and other asset write-downs associated with combining operations. Restructuring liabilities have been classified as a component of both other current and other noncurrent liabilities on the Consolidated Balance Sheet. | ||||||||||||||||||
Energy Restructuring Plan | ||||||||||||||||||
In April 2013, following the completion of the acquisition of Champion, the company commenced plans to undertake restructuring and other cost-saving actions to realize its acquisition-related cost synergies as well as streamline and strengthen Ecolab’s position in the fast growing global energy market (the “Energy Restructuring Plan”). Actions associated with the acquisition to improve the effectiveness and efficiency of the business continue to include a reduction of the combined business’s current global workforce. Actions also include leveraging and simplifying its global supply chain, including the reduction of plant, distribution center and redundant facility locations and product line optimization. | ||||||||||||||||||
The total pre-tax restructuring charges under the Energy Restructuring Plan are expected to be approximately $80 million ($55 million after tax). The restructuring charges are expected to be substantially complete by the end of 2015, although certain actions will likely continue into 2016. The company anticipates that approximately $60 million of the $80 million of the pre-tax charges represent cash expenditures. The remaining pre-tax charges represent estimated asset write-downs and disposals. No decisions have been made regarding any additional asset disposals and estimates could vary depending on the actual actions taken. | ||||||||||||||||||
As a result of activities under the Energy Restructuring Plan, the company recorded restructuring charges of $9.5 million ($6.4 million after tax) and $27.4 million ($19.4 million after tax) during 2014 and 2013, respectively. | ||||||||||||||||||
Restructuring charges and activity related to the Energy Restructuring Plan since inception of the underlying actions include the following: | ||||||||||||||||||
Energy Restructuring Plan | ||||||||||||||||||
EMPLOYEE | ||||||||||||||||||
TERMINATION | ASSET | |||||||||||||||||
MILLIONS | COSTS | DISPOSALS | OTHER | TOTAL | ||||||||||||||
2013 Activity | ||||||||||||||||||
Recorded expense and accrual | $ | 22.9 | $ | 3.6 | $ | 0.9 | $ | 27.4 | ||||||||||
Cash payments | (16.7 | ) | — | (0.8 | ) | (17.5 | ) | |||||||||||
Non-cash charges | — | (3.6 | ) | — | (3.6 | ) | ||||||||||||
Effect of foreign currency translation | 0.6 | — | — | 0.6 | ||||||||||||||
Restructuring liability, December 31, 2013 | 6.8 | — | 0.1 | 6.9 | ||||||||||||||
2014 Activity | ||||||||||||||||||
Recorded expense and accrual | 7.9 | 0.6 | 1 | 9.5 | ||||||||||||||
Cash payments | (12.9 | ) | — | (1.0 | ) | (13.9 | ) | |||||||||||
Non-cash charges | — | (0.6 | ) | — | (0.6 | ) | ||||||||||||
Effect of foreign currency translation | 0.2 | — | — | 0.2 | ||||||||||||||
Restructuring liability, December 31, 2014 | $ | 2 | $ | — | $ | 0.1 | $ | 2.1 | ||||||||||
As shown in the previous table, cash payments under the Energy Restructuring Plan were $13.9 million and $17.5 million for 2014 and 2013, respectively. The majority of cash payments under this plan are related to severance, with the current accrual expected to be paid over a period of a few months to several quarters. | ||||||||||||||||||
Combined Restructuring Plan | ||||||||||||||||||
In February 2011, the company commenced a comprehensive plan to substantially improve the efficiency and effectiveness of its European business, as well as undertake certain restructuring activities outside of Europe, historically referred to as the 2011 Restructuring Plan. | ||||||||||||||||||
Additionally, in January 2012, following the merger with Nalco, the company formally commenced plans to undertake restructuring actions related to the reduction of its global workforce and optimization of its supply chain and office facilities, including planned reductions of plant and distribution center locations, historically referred to as the Merger Restructuring Plan. | ||||||||||||||||||
During the first quarter of 2013, the company determined that because the objectives of the plans discussed above were aligned, the previously separate restructuring plans should be combined into one plan. | ||||||||||||||||||
The combined restructuring plan (the “Combined Plan”) combines opportunities and initiatives from both plans and continues to follow the original format of the Merger Restructuring Plan by focusing on global actions related to optimization of the supply chain and office facilities, including reductions of the global workforce and plant and distribution center locations. During the fourth quarter of 2014, the company identified additional opportunities to optimize its supply chain, increase efficiency and effectiveness and reduce workforce, which increased total planned charges under the Combined Plan from $330 million ($245 million after tax) to $390 million ($295 million after tax). | ||||||||||||||||||
The restructuring charges are expected to be substantially complete by the end of 2015, although certain actions will likely continue into 2016. | ||||||||||||||||||
The company anticipates that approximately two-thirds of the remaining Combined Plan pre-tax charges will represent net cash expenditures. No decisions have been made regarding any additional non-cash charges and estimates could vary depending on the actual actions taken. | ||||||||||||||||||
As a result of activities under the Combined Plan, the company recorded restructuring charges of $73.5 million ($58.5 million after tax) and $63.6 million ($48.3 million after tax) during 2014 and 2013, respectively. | ||||||||||||||||||
Restructuring charges and activity related to the Combined Plan since inception of the underlying actions include the following: | ||||||||||||||||||
Combined Plan | ||||||||||||||||||
EMPLOYEE | ||||||||||||||||||
TERMINATION | ASSET | |||||||||||||||||
MILLIONS | COSTS | DISPOSALS | OTHER | TOTAL | ||||||||||||||
2011-2013 Activity | ||||||||||||||||||
Recorded net expense and accrual | $ | 248.2 | $ | (1.2 | ) | $ | 30.7 | $ | 277.7 | |||||||||
Net cash payments | (182.2 | ) | 9.1 | (19.1 | ) | (192.2 | ) | |||||||||||
Non-cash net charges | — | (7.9 | ) | (4.3 | ) | (12.2 | ) | |||||||||||
Effect of foreign currency translation | (0.1 | ) | — | — | (0.1 | ) | ||||||||||||
Restructuring liability, December 31, 2013 | 65.9 | — | 7.3 | 73.2 | ||||||||||||||
2014 Activity | ||||||||||||||||||
Recorded net expense and accrual | 60.6 | — | 12.9 | 73.5 | ||||||||||||||
Net cash payments | (60.2 | ) | 2.6 | (11.2 | ) | (68.8 | ) | |||||||||||
Non-cash net charges | — | (2.6 | ) | — | (2.6 | ) | ||||||||||||
Effect of foreign currency translation | (1.8 | ) | — | — | (1.8 | ) | ||||||||||||
Restructuring liability, December 31, 2014 | $ | 64.5 | $ | — | $ | 9 | $ | 73.5 | ||||||||||
As shown in the previous table, net cash payments under the Combined Plan were $68.8 million during 2014 and $192.2 million across 2011 to 2013. The majority of cash payments under this Plan are related to severance, with the current accrual expected to be paid over a period of a few months to several quarters. | ||||||||||||||||||
Asset disposals in 2013 include gains of $7.4 million from the sale of facilities. | ||||||||||||||||||
Non-restructuring special (gains) and charges | ||||||||||||||||||
Champion acquisition costs | ||||||||||||||||||
As a result of the Champion acquisition completed in 2013, the company incurred charges of $19.9 million ($12.8 million after tax), $88.8 million ($61.4 million after tax) and $19.4 million ($16.7 million after tax) during 2014, 2013 and 2012, respectively. | ||||||||||||||||||
Champion related costs have been included as a component of cost of sales, special (gains) and charges and net interest expense on the Consolidated Statement of Income. Amounts within cost of sales include the recognition of fair value step-up in Champion international inventory, which is maintained on a FIFO basis, and Champion U.S. inventory, which was associated with the adoption of LIFO and integration into an existing LIFO pool. Amounts within special (gains) and charges include acquisition costs, advisory and legal fees and integration charges. Amounts within net interest expense include the interest expense through the close date of the Champion transaction of the company’s $500 million public debt issuance in December 2012 as well as amortizable fees to secure term loans and short-term debt, all of which were initiated to fund the Champion acquisition. Further information related to the acquisition of Champion is included in Note 4. | ||||||||||||||||||
Nalco merger and integration costs | ||||||||||||||||||
As a result of the Nalco merger completed in 2011, the company incurred charges of $8.5 million ($7.0 million after tax), $18.6 million ($14.2 million after tax) and $155.8 million ($113.7 million after tax), during 2014, 2013 and 2012, respectively. | ||||||||||||||||||
Nalco merger and integration charges have been included as a component of cost of sales, special (gains) and charges, net interest expense and net income (loss) attributable to noncontrolling interest on the Consolidated Statement of Income. Amounts within cost of sales and net income (loss) attributable to noncontrolling interest include recognition of fair value step-up in Nalco international inventory which is maintained on a FIFO basis. Amounts within special (gains) and charges include merger and integration charges. Amounts within net interest expense include a loss on the extinguishment of Nalco’s senior notes, which were assumed as part of the merger. Further information related to the Nalco merger is included in Note 4. | ||||||||||||||||||
Venezuelan currency devaluation | ||||||||||||||||||
Venezuela is a country experiencing a highly inflationary economy as defined under U.S. GAAP. As a result, the U.S. dollar is the functional currency for the company’s subsidiaries in Venezuela. Any currency remeasurement adjustments for non-dollar denominated monetary assets and liabilities held by our subsidiaries and other transactional foreign exchange gains and losses are reflected in earnings. | ||||||||||||||||||
On February 8, 2013, the Venezuelan government devalued its currency from 4.30 bolivars to 1 U.S. dollar to 6.30 bolivars to 1 U.S. dollar, resulting in a charge during 2013 of $22.7 million ($16.1 million after tax), due to the remeasurement of the local balance sheet. As a result of the ownership structure of our operations in Venezuela, the company also reflected a portion of the devaluation impact as a component of net income (loss) attributable to noncontrolling interest on the Consolidated Statement of Income. | ||||||||||||||||||
In 2013, the Venezuelan government created a new foreign exchange mechanism known as SICAD 1. It operates similar to an auction system and allows entities to exchange a limited number of bolivars for U.S. dollars at a bid rate established via weekly auctions under SICAD 1. As of November 30, 2014, the fiscal year end for the company’s international operations, the SICAD 1 exchange rate closed at 12.0 bolivars to 1 U.S. dollar. The company does not use the SICAD 1 rate or expect to use the SICAD 1 currency exchange mechanism. | ||||||||||||||||||
In January 2014, the Venezuelan government announced the replacement of the CADIVI with a new foreign currency administration, CENCOEX. During 2014, the company continued to obtain approvals and authorization to pay amounts at the CENCOEX fixed currency exchange rate of 6.30 bolivars to 1 U.S. dollar, however at a slightly lower rate. As the fixed currency exchange rate of 6.30 bolivars to 1 U.S. dollar remained legally available to it and the company continued to transact at this rate, the company continued to remeasure the net monetary assets of its Venezuela subsidiaries at this rate. | ||||||||||||||||||
In March 2014, the Venezuelan government introduced SICAD 2. At November 30, 2014, the SICAD 2 exchange rate closed at 49.98 bolivars to 1 U.S. dollar. In February 2015, SICAD 2 was replaced by SIMADI, with an exchange rate upon introduction of approximately 170 bolivars to 1 U.S. dollar. | ||||||||||||||||||
As of November 30, 2014, the company had $104 million of net monetary assets denominated in bolivars that were required to be remeasured to U.S. dollars. Net sales within Venezuela are approximately 1% of the company’s consolidated net sales. Assets held in Venezuela at November 30, 2014 represented less than 2% of the company’s consolidated assets. | ||||||||||||||||||
Other special (gains) and charges | ||||||||||||||||||
During 2014, the company recorded a special gain of $28.4 million ($23.3 million after tax) as a result of a favorable licensing settlement and other settlement gains, the consolidation of the Emochem entity and removal of the corresponding equity method investment and the disposition of a business. | ||||||||||||||||||
During 2012, the company recorded a net special gain of $60.1 million ($35.7 million after tax) related to the sale of its Vehicle Care division, the receipt of additional payments related to the sale of an investment in a U.S. business, originally sold prior to 2012 and litigation-related charges. | ||||||||||||||||||
ACQUISITIONS_AND_DISPOSITIONS
ACQUISITIONS AND DISPOSITIONS | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
ACQUISITIONS AND DISPOSITIONS | |||||||||||||
ACQUISITIONS AND DISPOSITIONS | |||||||||||||
4. ACQUISITIONS AND DISPOSITIONS | |||||||||||||
Acquisitions | |||||||||||||
Ecolab makes acquisitions that align with the company’s strategic business objectives. The assets and liabilities of the acquired entities have been recorded as of the acquisition date, at their respective fair values, and are consolidated with the company. The purchase price allocation is based on estimates of the fair value of assets acquired and liabilities assumed. The results of operations related to each acquired entity have been included in the results of the company from the date each entity was acquired. The aggregate purchase price of acquisitions has been reduced for any cash or cash equivalents acquired with the acquisition. | |||||||||||||
Champion Acquisition | |||||||||||||
On April 10, 2013, the company completed its acquisition of Champion, a global energy specialty products and services company delivering its offerings to the oil and gas industry. The total fair value of cash and stock consideration transferred to acquire all of Champion’s stock was approximately $2.1 billion. Champion’s sales for the business acquired by the company were approximately $1.3 billion in 2012. The business became part of the company’s Global Energy reportable segment in the second quarter of 2013. | |||||||||||||
Pursuant to terms of the acquisition agreement, the final consideration transferred to acquire all of Champion’s stock was as follows: | |||||||||||||
MILLIONS, EXCEPT PER SHARE | |||||||||||||
Cash consideration | $ | 1,511.7 | |||||||||||
Stock consideration | |||||||||||||
Ecolab shares issued at closing | 6.6 | ||||||||||||
Ecolab’s closing stock price on April 10, 2013 | $ | 82.31 | |||||||||||
Total value of stock consideration | $ | 543.0 | |||||||||||
Total fair value of cash and stock consideration | $ | 2,054.7 | |||||||||||
The company deposited approximately $100 million of the above stock consideration in an escrow account to fund post-closing adjustments to the consideration and covenant and other indemnification obligations of the acquired entity’s former stockholders for a period of two years following the effective date of the acquisition. | |||||||||||||
The company incurred certain acquisition related costs associated with the transaction that were expensed as incurred and are reflected in the Consolidated Statement of Income. Amounts included in cost of sales relate to recognition of fair value step-up in Champion international inventory, which is maintained on a FIFO basis and Champion U.S. inventory, which was associated with the adoption of LIFO and integration into an existing LIFO pool. Amounts included in special (gains) and charges include acquisition costs, advisory and legal fees and integration charges. Amounts included in net interest expense include the interest expense through the close date of the Champion transaction of the company’s $500 million public debt issuance in December 2012 as well as amortizable fees to secure term loans and short-term debt, all of which were initiated to fund the Champion acquisition. | |||||||||||||
The company funded the initial cash component of the merger consideration through a $900 million unsecured term loan, initiated in April 2013, the proceeds from the December 2012 issuance of $500 million 1.450% senior notes and commercial paper borrowings backed by its syndicated credit facility. See Note 6 for further discussion on the company’s debt. | |||||||||||||
The Champion acquisition has been accounted for using the acquisition method of accounting, which requires, among other things, that most assets acquired and liabilities assumed be recognized at fair value as of the acquisition date. | |||||||||||||
The following table summarizes the value of Champion assets acquired and liabilities assumed as of December 31, 2013. During 2013, adjustments of $37.1 million were made to the preliminary purchase price allocation of the assets and liabilities assumed with a corresponding adjustment to goodwill. | |||||||||||||
Also summarized in the table, during the first quarter of 2014, net adjustments of $16.9 million were made to the value of Champion assets acquired and liabilities assumed. As the adjustments were not significant, they have been recorded in 2014 and are not reflected in the 2013 Consolidated Balance Sheet. Purchase price allocations were finalized during the first quarter of 2014. | |||||||||||||
FINAL | |||||||||||||
ALLOCATION | PURCHASE | ALLOCATION | |||||||||||
AT DECEMBER 31, | PRICE | AT MARCH 31, | |||||||||||
MILLIONS | 2013 | ADJUSTMENTS | 2014 | ||||||||||
Current assets | $ | 592.3 | $ | (4.5 | ) | $ | 587.8 | ||||||
Property, plant and equipment | 357.8 | (2.5 | ) | 355.3 | |||||||||
Other assets | 16.2 | 0.1 | 16.3 | ||||||||||
Identifiable intangible assets: | |||||||||||||
Customer relationships | 840 | — | 840 | ||||||||||
Trademarks | 120 | — | 120 | ||||||||||
Other technology | 36.5 | — | 36.5 | ||||||||||
Total assets acquired | 1,962.80 | (6.9 | ) | 1,955.90 | |||||||||
Current liabilities | 409.5 | 3.6 | 413.1 | ||||||||||
Long-term debt | 70.8 | — | 70.8 | ||||||||||
Net deferred tax liability | 427.4 | 9.3 | 436.7 | ||||||||||
Noncontrolling interests and other liabilities | 30.5 | (2.9 | ) | 27.6 | |||||||||
Total liabilities and noncontrolling interests assumed | 938.2 | 10 | 948.2 | ||||||||||
Goodwill | 1,030.10 | 16.9 | 1,047.00 | ||||||||||
Total aggregate purchase price | 2,054.70 | — | 2,054.70 | ||||||||||
Future consideration payable to sellers | (86.4 | ) | 86.4 | — | |||||||||
Total consideration transferred | $ | 1,968.30 | $ | 86.4 | $ | 2,054.70 | |||||||
The adjustments to the purchase price allocation during the first quarter of 2014 primarily related to estimated liabilities, updated property, plant and equipment values and deferred taxes. | |||||||||||||
In accordance with the acquisition agreement, except under limited circumstances, the company was required to pay an additional amount in cash, up to $100 million in the aggregate, equal to 50% of the incremental tax on the merger consideration as a result of increases in applicable gains and investment taxes after December 31, 2012. In January 2014, in accordance with the above discussion, an additional payment of $86.4 million was made to the acquired entity’s former stockholders. | |||||||||||||
The customer relationships, trademarks and other technology are being amortized over weighted average lives of 14, 12 and 7 years, respectively. | |||||||||||||
Goodwill is calculated as the excess of consideration transferred over the fair value of identifiable net assets acquired and represents the expected synergies and other benefits of combining the operations of Champion with the operations of the company’s existing Global Energy business. Key areas of cost synergies include leveraging and simplifying the global supply chain, including the reduction of plant and distribution center locations and product line optimization, as well as the reduction of other redundant facilities. | |||||||||||||
The results of Champion’s operations have been included in the company’s consolidated financial statements since the close of the acquisition in April 2013. Due to the rapid pace at which the business has been integrated with the company’s Global Energy segment, including all customer selling activity, discrete financial data specific to the legacy Champion business is no longer available for post-acquisition periods. | |||||||||||||
Based on applicable accounting and reporting guidance, the Champion acquisition is not material to the company’s consolidated financial statements; therefore, pro forma financial information has not been presented. | |||||||||||||
Other acquisition activity | |||||||||||||
Subsequent Event Activity | |||||||||||||
In December 2014, subsequent to the company’s fiscal year end for international operations, the company entered into a licensing agreement and business acquisition with Aseptix Health Sciences NV. With pre-acquisition sales of less than $1 million, the acquired business will become part of the company’s Global Institutional reportable segment during the first quarter of 2015. | |||||||||||||
Also in December 2014, subsequent to the company’s fiscal year end for international operations, the company acquired Commercial Pest Control Pty Ltd, an Australian commercial pest control company. With pre-acquisition sales of less than $1 million, the acquired business will become part of the company’s Other segment during the first quarter of 2015. | |||||||||||||
2014 Activity | |||||||||||||
In December 2013, subsequent to the company’s fiscal year end for international operations, the company completed the acquisition of AkzoNobel’s Purate business (“Purate”). Headquartered in Sweden, Purate specializes in global antimicrobial water treatment. Pre-acquisition annual sales of the business were approximately $23 million. The acquired business became part of the company’s Global Industrial reportable segment during the first quarter of 2014. | |||||||||||||
In March 2014, the company acquired AK Kraus & Hiller Schädlingsbekämpfung, one of Germany’s leading commercial pest elimination service providers. Pre-acquisition annual sales of the business were approximately $4 million. The business became part of the company’s Other segment during the second quarter of 2014. | |||||||||||||
In March 2014, the company purchased the remaining interest in a joint venture held in South Africa. The transaction was not significant to the company’s operations. | |||||||||||||
In June 2014, the company purchased the remaining interest in a joint venture in Indonesia. The transaction was not significant to the company’s operations. | |||||||||||||
In July 2014, the company obtained control of Emochem, a joint venture in the United Arab Emirates through an amendment in the related shareholder agreements. This amendment resulted in the company consolidating the entity and removing the related equity method investment. The transaction was not significant to the company’s operations. As discussed in Note 3, the company recognized a $5.0 million gain during the third quarter of 2014 as a result of this transaction. | |||||||||||||
In July 2014, the company acquired the chemical division of AKJ Industries, a leading provider of chemical solutions in the coal industry in the U.S. Pre-acquisition annual sales of the business were approximately $21 million. The business became part of the company’s Global Industrial reportable segment during the third quarter of 2014. | |||||||||||||
In September 2014, the company acquired certain assets from Oksa Kimya Sanayii. Based in Turkey, the transaction was not significant to the company’s operations. | |||||||||||||
In November 2014, the company acquired the dairy hygiene chemical businesses of EXL Laboratories, LLC and Hyprod Canada, providers of cleaning and sanitizing products for use on dairy farms in the U.S. and Canada. Pre-acquisition annual sales of the businesses were approximately $25 million. The business became part of the company’s Global Industrial reportable segment during the fourth quarter of 2014. | |||||||||||||
2013 Activity | |||||||||||||
In January 2013, the company completed the acquisition of Mexico-based Quimiproductos S.A. de C.V. (“Quimiproductos”), a wholly-owned subsidiary of Fomento Economico Mexicano, S.A.B. de C.V. (commonly known as FEMSA). Quimiproductos produces and supplies cleaning, sanitizing and water treatment goods and services to breweries and beverage companies located in Mexico and Central and South America. Pre-acquisition annual sales of the business were approximately $43 million. Approximately $8 million of the purchase price was placed in an escrow account for potential indemnification purposes related to general representations and warranties. During the third quarter of 2014, the escrow balance was paid to the seller. The business became part of the company’s Global Industrial reportable segment during the first quarter of 2013. | |||||||||||||
In April 2013, the company completed the acquisition of Russia-based OOO Master Chemicals (“Master Chemicals”). Master Chemicals sells oil field chemicals to oil and gas producers located throughout Russia and parts of the Ukraine. Pre-acquisition annual sales of the business were approximately $29 million. Approximately $3 million of the purchase price was placed in an escrow account for indemnification purposes related to general representations and warranties. The business became part of the company’s Global Energy reportable segment during the second quarter of 2013. | |||||||||||||
2012 Activity | |||||||||||||
In December 2011, subsequent to the company’s fiscal year end for international operations, the company completed the acquisition of Esoform SpA, an independent Italian healthcare manufacturer focused on infection prevention and personal care. Based outside of Venice, Italy, with pre-acquisition annual sales of approximately $12 million, the business is included in the company’s Global Institutional reportable segment. | |||||||||||||
Also in December 2011, the company completed the acquisition of the InsetCenter pest elimination business in Brazil. Pre-acquisition annual sales of the acquired business were approximately $6 million. The business operations and staff have been integrated with the company’s existing Brazil Pest Elimination business, and is included in the company’s Other segment. | |||||||||||||
In March 2012, the company acquired Econ Indústria e Comércio de Produtos de Higiene e Limpeza Ltda., a provider of cleaning and sanitizing products and services to the Brazilian foodservice industry. Based in Sao Paulo, Brazil, its pre-acquisition annual sales were approximately $9 million. The business operations have been integrated within the company’s existing Brazil Institutional business and its results are part of the company’s Global Institutional reportable segment. | |||||||||||||
Other Acquisition Activity | |||||||||||||
The other acquisitions during 2014, 2013 and 2012 discussed above were not material to the company’s consolidated financial statements; therefore, pro forma financial information has not been presented. The aggregate purchase price of acquisitions has been reduced for any cash or cash equivalents acquired with the acquisitions. Based upon purchase price allocations, the components of the aggregate purchase prices of 2014, 2013 and 2012 acquisitions, excluding the Champion transaction, are shown in the following table. | |||||||||||||
MILLIONS | 2014 | 2013 | 2012 | ||||||||||
Net tangible assets acquired (liabilities assumed) including impact of joint venture consolidation activity | $ | 9.5 | $ | (2.8 | ) | $ | (1.0 | ) | |||||
Identifiable intangible assets | |||||||||||||
Customer relationships | 32 | 58.8 | 8.4 | ||||||||||
Patents | — | 1.4 | 2.8 | ||||||||||
Trademarks | 3.4 | — | 0.5 | ||||||||||
Other technology | 4.5 | 1 | 0.3 | ||||||||||
Total intangible assets | 39.9 | 61.2 | 12 | ||||||||||
Goodwill | 32.9 | 41.7 | 23.3 | ||||||||||
Total aggregate purchase price | 82.3 | 100.1 | 34.3 | ||||||||||
Acquisition related liabilities and contingent consideration | 12.3 | 11.3 | (2.6 | ) | |||||||||
Liability for indemnification, net | 8.7 | 2.4 | 16 | ||||||||||
Net cash paid for acquisitions, including contingent consideration | $ | 103.3 | $ | 113.8 | $ | 47.7 | |||||||
The 2014 and 2013 contingent consideration activity primarily relates to payments on legacy Nalco acquisitions. The 2012 contingent consideration relates to immaterial acquisitions completed during the year. | |||||||||||||
The weighted average useful lives of identifiable intangible assets acquired, excluding the Champion transaction, was 10 years as of December 31, 2014, and 13 years as of both December 2013 and 2012. | |||||||||||||
Dispositions | |||||||||||||
In April 2014, the company sold an immaterial business in Italy that was part of the company’s Global Institutional reportable segment. | |||||||||||||
In November 2014, the company sold an immaterial business in New Zealand that was part of the company’s Other segment. | |||||||||||||
In August 2013, the company sold substantially all the equipment design and build business of its Mobotec air emissions control business. The Mobotec equipment design and build business had 2012 sales of approximately $27 million, which were within the company’s Global Industrial reportable segment. The company has retained Mobotec’s chemical business. | |||||||||||||
In December 2012, the company completed the sale of its Vehicle Care division for $116.9 million, resulting in a gain of $76.3 million, recorded in special (gains) and charges. Vehicle Care sales were approximately $65 million in 2011, and were included in the company’s Other reportable segment. Net cash proceeds were used to repay debt and for general corporate purposes. | |||||||||||||
During the third quarter of 2012, the company received additional payments of $13.0 million related to the sale of an investment in a U.S. business, originally sold prior to 2012. The corresponding gain of $13.0 million recognized during the third quarter of 2012 was recorded in special (gains) and charges. | |||||||||||||
BALANCE_SHEET_INFORMATION
BALANCE SHEET INFORMATION | 12 Months Ended | |||||||||
Dec. 31, 2014 | ||||||||||
BALANCE SHEET INFORMATION | ||||||||||
BALANCE SHEET INFORMATION | ||||||||||
5. BALANCE SHEET INFORMATION | ||||||||||
DECEMBER 31 (MILLIONS) | 2014 | 2013 | ||||||||
Accounts receivable, net | ||||||||||
Accounts receivable | $ | 2,704.20 | $ | 2,648.90 | ||||||
Allowance for doubtful accounts | (77.5 | ) | (80.9 | ) | ||||||
Total | $ | 2,626.70 | $ | 2,568.00 | ||||||
Inventories | ||||||||||
Finished goods | $ | 1,044.10 | $ | 953.3 | ||||||
Raw materials and parts | 447.3 | 391 | ||||||||
Inventories at FIFO cost | 1,491.40 | 1,344.30 | ||||||||
Excess of FIFO cost over LIFO cost | (24.5 | ) | (22.4 | ) | ||||||
Total | $ | 1,466.90 | $ | 1,321.90 | ||||||
Property, plant and equipment, net | ||||||||||
Land | $ | 199.9 | $ | 191.4 | ||||||
Buildings and improvements | 759.9 | 666 | ||||||||
Leasehold improvements | 84.6 | 87.9 | ||||||||
Machinery and equipment | 1,858.10 | 1,677.50 | ||||||||
Merchandising and customer equipment | 1,917.50 | 1,802.80 | ||||||||
Capitalized software | 443.9 | 435.4 | ||||||||
Construction in progress | 277.5 | 291.6 | ||||||||
5,541.40 | 5,152.60 | |||||||||
Accumulated depreciation | (2,490.8 | ) | (2,270.6 | ) | ||||||
Total | $ | 3,050.60 | $ | 2,882.00 | ||||||
Other intangible assets, net | ||||||||||
Cost of intangible assets not subject to amortization: | ||||||||||
Trade names | $ | 1,230.00 | $ | 1,230.00 | ||||||
Cost of intangible assets subject to amortization: | ||||||||||
Customer relationships | $ | 3,385.70 | $ | 3,455.60 | ||||||
Trademarks | 311.1 | 308.1 | ||||||||
Patents | 434.5 | 425.6 | ||||||||
Other technology | 214 | 210.2 | ||||||||
4,345.30 | 4,399.50 | |||||||||
Accumulated amortization: | ||||||||||
Customer relationships | (794.6 | ) | (594.9 | ) | ||||||
Trademarks | (91.5 | ) | (70.4 | ) | ||||||
Patents | (124.9 | ) | (95.7 | ) | ||||||
Other technology | (107.5 | ) | (83.2 | ) | ||||||
Total | $ | 4,456.80 | $ | 4,785.30 | ||||||
Other assets | ||||||||||
Deferred income taxes | $ | 71.5 | $ | 54.5 | ||||||
Deferred financing costs | 27.1 | 31.7 | ||||||||
Pension | 15.9 | 90.2 | ||||||||
Other | 256.7 | 231.5 | ||||||||
Total | $ | 371.2 | $ | 407.9 | ||||||
Other current liabilities | ||||||||||
Discounts and rebates | $ | 255.4 | $ | 263.2 | ||||||
Dividends payable | 99.1 | 82.8 | ||||||||
Interest payable | 18.9 | 19.6 | ||||||||
Taxes payable, other than income | 122.6 | 115.3 | ||||||||
Derivative liabilities | 52.1 | 14.2 | ||||||||
Restructuring | 66.3 | 68.3 | ||||||||
Future consideration payable to Champion sellers | — | 86.4 | ||||||||
Other | 255.4 | 304 | ||||||||
Total | $ | 869.8 | $ | 953.8 | ||||||
Other liabilities | ||||||||||
Deferred income taxes | $ | 1,415.80 | $ | 1,661.30 | ||||||
Income taxes payable — noncurrent | 86.4 | 90.2 | ||||||||
Restructuring | 9.3 | 12.9 | ||||||||
Other | 134 | 134.9 | ||||||||
Total | $ | 1,645.50 | $ | 1,899.30 | ||||||
Accumulated other comprehensive loss | ||||||||||
Unrealized gain (loss) on derivative financial instruments, net of tax | $ | (2.7 | ) | $ | (6.6 | ) | ||||
Unrecognized pension and postretirement benefit expense, net of tax | (552.5 | ) | (235.0 | ) | ||||||
Cumulative translation, net of tax | (396.7 | ) | (63.6 | ) | ||||||
Total | $ | (951.9 | ) | $ | (305.2 | ) | ||||
DEBT_AND_INTEREST
DEBT AND INTEREST | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
DEBT AND INTEREST | ||||||||||||||||||||
DEBT AND INTEREST | ||||||||||||||||||||
6. DEBT AND INTEREST | ||||||||||||||||||||
The following table provides the components of the company’s short-term debt obligations, along with applicable interest rates as of December 31, 2014 and 2013: | ||||||||||||||||||||
MILLIONS, | 2014 | 2013 | ||||||||||||||||||
EXCEPT INTEREST RATES | AVERAGE | AVERAGE | ||||||||||||||||||
INTEREST | INTEREST | |||||||||||||||||||
PAYABLE | RATE | PAYABLE | RATE | |||||||||||||||||
Short-term debt | ||||||||||||||||||||
Commercial paper | $ | 887.8 | 0.46 | % | $ | 304.8 | 0.34 | % | ||||||||||||
Notes payable | 62.1 | 9.65 | % | 50.9 | 9.43 | % | ||||||||||||||
Long-term debt, current maturities | 755.5 | 505.3 | ||||||||||||||||||
Total | $ | 1,705.4 | $ | 861.0 | ||||||||||||||||
In December 2014, the company increased its multi-year credit facility from $1.5 billion to $2.0 billion and extended the maturity date from September 2016 to December 2019. The credit facility has been established with a diverse syndicate of banks and supports the company’s $2.0 billion U.S. commercial paper program, which was increased to $2.0 billion from $1.5 billion following the increase in the multi-year credit facility, and the company’s $200 million European commercial paper program. Combined borrowing under these two commercial paper programs may not exceed $2.0 billion. The company’s U.S. commercial paper program, as shown in the previous table, had $888 million and $305 million outstanding as of December 31, 2014 and 2013, respectively. The company had no commercial paper outstanding under its European program at December 31, 2014 or 2013. | ||||||||||||||||||||
As of December 31, 2014, the company’s short-term borrowing program was rated A-2 by Standard & Poor’s and P-2 by Moody’s. | ||||||||||||||||||||
The following table provides the components of the company’s long-term debt obligations, along with applicable interest rates as of December 31, 2014 and 2013: | ||||||||||||||||||||
MILLIONS, EXCEPT INTEREST RATES | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
AVERAGE | EFFECTIVE | AVERAGE | EFFECTIVE | |||||||||||||||||
MATURITY | CARRYING | INTEREST | INTEREST | CARRYING | INTEREST | INTEREST | ||||||||||||||
BY YEAR | VALUE | RATE | RATE | VALUE | RATE | RATE | ||||||||||||||
Long-term debt | ||||||||||||||||||||
Description / 2014 Principal Amount | ||||||||||||||||||||
Three year 2011 senior notes ($0 million) | 2014 | — | — | — | $ | 499.9 | 2.38 | % | 2.4 | % | ||||||||||
Seven year 2008 senior notes ($250 million) | 2015 | $ | 250 | 4.88 | % | 4.99 | % | 249.7 | 4.88 | % | 4.99 | % | ||||||||
Three year 2012 senior notes ($500 million) | 2015 | 500 | 1 | % | 1.02 | % | 499.9 | 1 | % | 1.02 | % | |||||||||
Series B private placement senior notes (€175 million) | 2016 | 217.9 | 4.59 | % | 4.67 | % | 237.8 | 4.59 | % | 4.67 | % | |||||||||
Five year 2011 senior notes ($1.25 billion) | 2016 | 1,249.10 | 3 | % | 3.04 | % | 1,248.60 | 3 | % | 3.04 | % | |||||||||
Term loan ($400 million) | 2016 | 400 | 1.29 | % | 1.29 | % | 800 | 1.33 | % | 1.33 | % | |||||||||
Five year 2012 senior notes ($500 million) | 2017 | 497.6 | 1.45 | % | 0.93 | % | 499.7 | 1.45 | % | 1.47 | % | |||||||||
Series A private placement senior notes ($250 million) | 2018 | 250 | 3.69 | % | 5.15 | % | 250 | 3.69 | % | 5.15 | % | |||||||||
Ten year 2011 senior notes ($1.25 billion) | 2021 | 1,249.40 | 4.35 | % | 4.36 | % | 1,249.30 | 4.35 | % | 4.36 | % | |||||||||
Series B private placement senior notes ($250 million) | 2023 | 250 | 4.32 | % | 4.32 | % | 250 | 4.32 | % | 4.32 | % | |||||||||
Thirty year 2011 senior notes ($750 million) | 2041 | 743.1 | 5.5 | % | 5.53 | % | 742.8 | 5.5 | % | 5.53 | % | |||||||||
Capital lease obligations | 9.3 | 12.7 | ||||||||||||||||||
Other | 3.1 | 8.4 | ||||||||||||||||||
Total debt | 5,619.50 | 6,548.80 | ||||||||||||||||||
Long-term debt, current maturities | (755.5 | ) | (505.3 | ) | ||||||||||||||||
Total long-term debt | $ | 4,864.00 | $ | 6,043.50 | ||||||||||||||||
Term Loans | ||||||||||||||||||||
In November 2012, the company entered into a $900 million term loan credit agreement with various banks. In April 2013, in connection with the close of the Champion transaction, the company initiated term loan borrowings of $900 million. Under the agreement, the term loan bears interest at a floating base rate plus a credit rating based margin. The term loan can be repaid in part or in full at any time without penalty, but in any event must be repaid in full by April 2016. In February 2014, April 2014 and September 2014, the company repaid $100 million, $150 million and $150 million, respectively, of term loan borrowings. In September 2013, the company repaid $100 million of term loan borrowings. | ||||||||||||||||||||
Public Notes | ||||||||||||||||||||
In January 2015, subsequent to the company’s year end, the company issued $600 million of debt securities in a public offering consisting of $300 million that mature in 2018 at a rate of 1.55% and $300 million that mature in 2020 at a rate of 2.25%. The proceeds were used to repay a portion of the company’s outstanding commercial paper and for general corporate purposes. | ||||||||||||||||||||
In December 2012, in a public offering, the company issued $500 million of debt securities that mature in 2017 at a rate of 1.45%. The proceeds were used to finance a portion of the cash consideration paid in connection with the Champion acquisition. | ||||||||||||||||||||
In August 2012, in a public offering, the company issued $500 million of debt securities that mature in 2015 at a rate of 1.00%. The proceeds were used to refinance outstanding commercial paper and for general corporate purposes. | ||||||||||||||||||||
In December 2011, the company issued $3.75 billion of debt securities in a public debt offering. The offering was a multi-tranche transaction consisting of three, five, ten and thirty year maturities. Interest rates range from 2.38% to 5.50%. The proceeds were used to repay outstanding commercial paper, which was issued to fund a portion of the cash component of the Nalco merger, repay the Nalco term loans and fund share repurchases. The $500 million 2.38% notes were repaid at maturity in December 2014. | ||||||||||||||||||||
In February 2008, the company issued and sold $250 million aggregate principal amount of senior unsecured notes that mature in 2015 at a rate of 4.88% in a public debt offering. The proceeds were used to refinance outstanding commercial paper and for general corporate purposes. The $250 million 4.88% notes were repaid at maturity in February 2015, subsequent to the company’s year end. | ||||||||||||||||||||
The series of notes issued by the company in January 2015, December 2012, August 2012 and December 2011, pursuant to public debt offerings (the “Public Notes”) may be redeemed by the company at its option at redemption prices that include accrued and unpaid interest and a make-whole premium. Upon the occurrence of a change of control accompanied by a downgrade of the Public Notes below investment grade rating, within a specified time period, the company will be required to offer to repurchase the Public Notes at a price equal to 101% of the aggregate principal amount thereof, plus any accrued and unpaid interest to the date of repurchase. | ||||||||||||||||||||
The Public Notes are senior unsecured and unsubordinated obligations of the company and rank equally with all other senior and unsubordinated indebtedness of the company. | ||||||||||||||||||||
Private Notes | ||||||||||||||||||||
In October 2011, the company entered into a Note Purchase Agreement to issue and sell $500 million private placement senior notes, split into two series: $250 million of seven year notes that mature in 2018 at a rate of 3.69% and $250 million of twelve year notes that mature in 2023 at a rate of 4.32%. Both series of the notes were funded in November 2011. The proceeds were used for general corporate purposes, including partially funding the Nalco merger. | ||||||||||||||||||||
In July 2006, the company entered into a Note Purchase Agreement to issue and sell €175 million ($218 million as of December 31, 2014) private placement Series B Senior Notes that mature in 2016 at a rate of 4.59%. The notes were issued in December 2006. | ||||||||||||||||||||
The series of notes issued by the company in December 2006 and November 2011 pursuant to private debt offerings (the “Private Notes”) may be redeemed by the company at its option at redemption prices that include accrued and unpaid interest and a make-whole premium. Upon the occurrence of specified changes of control involving the company, the company will be required to offer to repurchase the Private Notes at a price equal to 100% of the aggregate principal amount thereof, plus any accrued and unpaid interest to the date of repurchase. Additionally, the company will be required to make a similar offer to repurchase the Private Notes upon the occurrence of specified merger events or asset sales involving the company, when accompanied by a downgrade of the Private Notes below investment grade rating, within a specified time period. | ||||||||||||||||||||
The Private Notes are unsecured senior obligations of the company and rank equal in right of payment with all other senior indebtedness of the company. The Private Notes shall be unconditionally guaranteed by subsidiaries of the company in certain circumstances, as described in the note purchase agreements as amended. | ||||||||||||||||||||
Covenants and Future Maturities | ||||||||||||||||||||
The company is in compliance with all covenants under the company’s outstanding indebtedness at December 31, 2014. | ||||||||||||||||||||
As of December 31, 2014, the aggregate annual maturities of long-term debt for the next five years were: | ||||||||||||||||||||
MILLIONS | ||||||||||||||||||||
2015 | $ | 756 | ||||||||||||||||||
2016 | 1,869 | |||||||||||||||||||
2017 | 499 | |||||||||||||||||||
2018 | 250 | |||||||||||||||||||
2019 | 1 | |||||||||||||||||||
Net Interest Expense | ||||||||||||||||||||
Interest expense and interest income incurred during 2014, 2013 and 2012 were as follows: | ||||||||||||||||||||
MILLIONS | 2014 | 2013 | 2012 | |||||||||||||||||
Interest expense | $ | 268 | $ | 272.8 | $ | 285.6 | ||||||||||||||
Interest income | (11.4 | ) | (10.5 | ) | (8.9 | ) | ||||||||||||||
Interest expense, net | $ | 256.6 | $ | 262.3 | $ | 276.7 | ||||||||||||||
Interest expense generally includes the expense associated with the interest on the company’s outstanding borrowings. Interest expense also includes the amortization of debt issuance costs and debt discounts, which are both recognized over the term of the related debt. | ||||||||||||||||||||
FAIR_VALUE_MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
FAIR VALUE MEASUREMENTS | ||||||||||||||||
FAIR VALUE MEASUREMENTS | ||||||||||||||||
7. FAIR VALUE MEASUREMENTS | ||||||||||||||||
The company’s financial instruments include cash and cash equivalents, investments held in rabbi trusts, accounts receivable, accounts payable, contingent consideration obligations, commercial paper, notes payable, foreign currency forward contracts, interest rate swap contracts and long-term debt. | ||||||||||||||||
Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. A hierarchy has been established for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The hierarchy is broken down into three levels: | ||||||||||||||||
Level 1 - Inputs are quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities. | ||||||||||||||||
Level 2 - Inputs include observable inputs other than quoted prices in active markets. | ||||||||||||||||
Level 3 - Inputs are unobservable inputs for which there is little or no market data available. | ||||||||||||||||
The carrying amount and the estimated fair value for assets and liabilities measured on a recurring basis were: | ||||||||||||||||
DECEMBER 31 (MILLIONS) | 2014 | |||||||||||||||
CARRYING | FAIR VALUE MEASUREMENTS | |||||||||||||||
AMOUNT | LEVEL 1 | LEVEL 2 | LEVEL 3 | |||||||||||||
Assets: | ||||||||||||||||
Investments held in rabbi trusts | $ | 3.4 | $ | 3.4 | $ | — | $ | — | ||||||||
Foreign currency forward contracts | 75.5 | — | 75.5 | — | ||||||||||||
Contingent consideration | 0.3 | — | — | 0.3 | ||||||||||||
Liabilities: | ||||||||||||||||
Foreign currency forward contracts | 27.9 | — | 27.9 | — | ||||||||||||
Interest rate swap contracts | 24.2 | — | 24.2 | — | ||||||||||||
Contingent consideration | 1.6 | — | — | 1.6 | ||||||||||||
DECEMBER 31 (MILLIONS) | 2013 | |||||||||||||||
CARRYING | FAIR VALUE MEASUREMENTS | |||||||||||||||
AMOUNT | LEVEL 1 | LEVEL 2 | LEVEL 3 | |||||||||||||
Assets: | ||||||||||||||||
Investments held in rabbi trusts | $ | 4.3 | $ | 4.3 | $ | — | $ | — | ||||||||
Foreign currency forward contracts | 20.2 | — | 20.2 | — | ||||||||||||
Liabilities: | ||||||||||||||||
Foreign currency forward contracts | 14.2 | — | 14.2 | — | ||||||||||||
Contingent consideration | 16.4 | — | — | 16.4 | ||||||||||||
Future consideration payable to Champion sellers | 86.4 | — | — | 86.4 | ||||||||||||
Investments held in rabbi trusts are classified within level 1 because they are valued using quoted prices in active markets. The carrying value of foreign currency forward contracts is at fair value, which is determined based on foreign currency exchange rates as of the balance sheet date, and is classified within level 2. The carrying value of interest rate swap contracts is at fair value, which is determined based on current interest rates and forward interest rates as of the balance sheet date and is classified within level 2. The future consideration payable to Champion sellers was valued using level 3 inputs, and as discussed in Note 4 was paid in January 2014. | ||||||||||||||||
Contingent consideration obligations are recognized and measured at fair value at the acquisition date. Contingent consideration is classified within level 3 as the underlying fair value is measured based on the probability-weighted present value of the consideration expected to be transferred. The consideration expected to be transferred is based on the company’s expectations of various financial measures. The ultimate payment of contingent consideration could deviate from current estimates based on the actual results of these financial measures. Changes in the fair value of contingent consideration obligations during 2014 and 2013 were as follows: | ||||||||||||||||
MILLIONS | 2014 | 2013 | ||||||||||||||
Contingent consideration at beginning of year | $ | 16.4 | $ | 27.3 | ||||||||||||
Amount recognized at transaction date | (0.4 | ) | — | |||||||||||||
Losses (gains) recognized in earnings | (0.4 | ) | 0.4 | |||||||||||||
Settlements | (14.3 | ) | (11.3 | ) | ||||||||||||
Foreign currency translation | — | — | ||||||||||||||
Contingent consideration at end of year | $ | 1.3 | $ | 16.4 | ||||||||||||
The carrying values of accounts receivable, accounts payable, cash and cash equivalents, commercial paper and notes payable approximate fair value because of their short maturities, and as such are classified within level 1. | ||||||||||||||||
The fair value of long-term debt is based on quoted market prices for the same or similar debt instruments. The carrying amount and the estimated fair value of long-term debt, including current maturities, held by the company were: | ||||||||||||||||
DECEMBER 31 (MILLIONS) | 2014 | 2013 | ||||||||||||||
CARRYING | FAIR | CARRYING | FAIR | |||||||||||||
AMOUNT | VALUE | AMOUNT | VALUE | |||||||||||||
Long-term debt (including current maturities) | $ | 5,619.5 | $ | 5,980.9 | $ | 6,548.8 | $ | 6,766.0 | ||||||||
DERIVATIVES_AND_HEDGING_TRANSA
DERIVATIVES AND HEDGING TRANSACTIONS | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
DERIVATIVES AND HEDGING TRANSACTIONS | ||||||||||||||
DERIVATIVES AND HEDGING TRANSACTIONS | ||||||||||||||
8. DERIVATIVES AND HEDGING TRANSACTIONS | ||||||||||||||
The company uses foreign currency forward contracts, interest rate swaps and foreign currency debt to manage risks associated with foreign currency exchange rates, interest rates and net investments in foreign operations. The company does not hold derivative financial instruments of a speculative nature or for trading purposes. The company records all derivatives as assets and liabilities on the balance sheet at fair value. Changes in fair value are recognized immediately in earnings unless the derivative qualifies and is designated as a hedge. Cash flows from derivatives are classified in the statement of cash flows in the same category as the cash flows from the items subject to designated hedge or undesignated (economic) hedge relationships. The company evaluates hedge effectiveness at inception and on an ongoing basis. If a derivative is no longer expected to be effective, hedge accounting is discontinued. Hedge ineffectiveness, if any, is recorded in earnings. | ||||||||||||||
The company is exposed to credit risk in the event of nonperformance of counterparties for foreign currency forward exchange contracts and interest rate swap agreements. The company monitors its exposure to credit risk by using credit approvals and credit limits and by selecting major international banks and financial institutions as counterparties. The company does not anticipate nonperformance by any of these counterparties, and therefore, recording a valuation allowance against the company’s derivative balance is not considered necessary. | ||||||||||||||
Cash Flow Hedges | ||||||||||||||
The company utilizes foreign currency forward contracts to hedge the effect of foreign currency exchange rate fluctuations on forecasted foreign currency transactions, including: inventory purchases and intercompany royalty and management fee payments. These forward contracts are designated as cash flow hedges. The effective portions of the changes in fair value of these contracts are recorded in accumulated other comprehensive income (“AOCI”) until the hedged items affect earnings, at which time the gain or loss is reclassified into the same line item in the Consolidated Statement of Income as the underlying exposure being hedged. All hedged transactions are forecasted to occur within the next twelve months. | ||||||||||||||
The company occasionally enters into forward starting interest rate swap agreements to manage interest rate exposure. In September 2014, the company entered into a series forward starting swap agreements to hedge against changes in interest rates that could impact a future debt issuance. The underlying loss recognized in 2014 was recorded in AOCI. | ||||||||||||||
In September 2014, the company entered into a series of forward starting interest rate swap agreements in connection with its U.S. public debt issuance completed in January 2015. The interest rate swap agreements were designated and effective as cash flow hedges of the expected interest payments related to the anticipated debt issuance. The underlying loss recognized in 2014 was recorded in AOCI, and will be recognized as part of interest expense over the remaining life of the notes as the forecasted interest transactions occur. The swap contracts closed in January 2015 in conjunction with the debt issuance discussed in Note 6. | ||||||||||||||
In 2011, the company entered into and subsequently closed a series of forward starting swap agreements in connection with the issuance of its private placement debt during the fourth quarter of 2011. In 2006, the company entered into and subsequently closed a series of forward starting swap contracts related to the issuance of its senior euro notes. The amounts recorded in AOCI for both the 2011 and 2006 transactions are recognized as part of interest expense over the remaining life of the notes as the forecasted interest transactions occur. | ||||||||||||||
The company did not have any forward starting interest rate swap agreements outstanding at December 31, 2013 and 2012. | ||||||||||||||
The impact on AOCI and earnings from derivative contracts that qualified as cash flow hedges was as follows: | ||||||||||||||
MILLIONS | LOCATION | 2014 | 2013 | 2012 | ||||||||||
Unrealized gain (loss) recognized into AOCI (effective portion) | ||||||||||||||
Foreign currency forward contracts | AOCI (equity) | $ | 26.7 | $ | 4.7 | $ | (1.9 | ) | ||||||
Interest rate swap contracts | AOCI (equity) | -22.1 | –– | — | ||||||||||
Total | 4.6 | 4.7 | (1.9 | ) | ||||||||||
Gain (loss) recognized in income (effective portion) | ||||||||||||||
Foreign currency forward contracts | Sales | –– | — | (0.1 | ) | |||||||||
Cost of sales | 6.1 | -0.8 | 2 | |||||||||||
SG&A | 1.5 | — | 0.2 | |||||||||||
Total | 7.6 | -0.8 | 2.1 | |||||||||||
Interest rate swap contracts | Interest expense, net | -4.1 | -4.1 | (4.1 | ) | |||||||||
Total | $ | 3.5 | $ | -4.9 | $ | (2.0 | ) | |||||||
Gains and losses recognized in income related to the ineffective portion of the company’s cash flow hedges were insignificant during 2014, 2013 and 2012. | ||||||||||||||
Fair Value Hedges | ||||||||||||||
The company manages interest expense using a mix of fixed and floating rate debt. To help manage exposure to interest rate movements and to reduce borrowing costs, the company may enter into interest rate swaps under which the company agrees to exchange, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed upon notional principal amount. The mark-to-market of these fair value hedges is recorded as gains or losses in interest expense and is offset by the gain or loss of the underlying debt instrument, which also is recorded in interest expense. These fair value hedges are highly effective and thus, there is no impact on earnings due to hedge ineffectiveness. | ||||||||||||||
In May 2014, the company entered into an interest rate swap agreement that converted its $500 million 1.45% debt from a fixed rate to a floating or variable interest rate. The interest rate swap was designated as a fair value hedge. | ||||||||||||||
The impact on earnings from derivative contracts that qualified as fair value hedges was as follows: | ||||||||||||||
MILLIONS | LOCATION | 2014 | 2013 | 2012 | ||||||||||
Gain (loss) on derivative recognized income | ||||||||||||||
Interest rate swap | Interest expense, net | $ | -2.1 | $ | — | $ | — | |||||||
Gain (loss) on hedged item recognized income | ||||||||||||||
Interest rate swap | Interest expense, net | $ | 2.1 | $ | — | $ | — | |||||||
In January 2015, subsequent to the company’s year end, it entered into interest rate swap agreements that converted its $300 million 1.55% debt issued in January 2015, its $250 million 3.69% debt and a portion of its $1.25 billion 3.00% debt from fixed rates to floating or variable interest rates. The interest rate swaps were designated as fair value hedges. | ||||||||||||||
Net Investment Hedges | ||||||||||||||
The company designates its outstanding €175 million ($218 million as of December 31, 2014) senior notes (“euro notes”) and related accrued interest as a hedge of existing foreign currency exposures related to net investments the company has in certain euro denominated functional currency subsidiaries. Prior to maturing in December 2013, the Ecolab Series A euro denominated senior notes were also designated as a hedge of existing foreign currency exposures. | ||||||||||||||
In the third quarter of 2012, the company entered into forward contracts with a notional amount of €100 million to hedge an additional portion of the company’s net investment in euro functional subsidiaries. The forward contracts were closed during the second quarter of 2013. | ||||||||||||||
In the second half of 2014, the company entered into forward contracts with total notional values of €75 million and €495 million, respectively, to hedge an additional portion of its net investment in euro denominated functional currency subsidiaries. The €75 million hedge was closed during the fourth quarter of 2014. The €495 million hedge remained open as of December 31, 2014. | ||||||||||||||
In January 2015, subsequent to the company’s year end, it entered into forward contracts with notional values of €360 million, to hedge an additional portion of its net investments in euro functional subsidiaries. | ||||||||||||||
The revaluation gains and losses on the euro notes and of the forward contracts, which are designated and effective as hedges of the company’s net investments, have been included as a component of the cumulative translation adjustment account. | ||||||||||||||
Total revaluation gains and losses related to the euro notes and forward contracts charged to shareholders’ equity were as follows: | ||||||||||||||
MILLIONS | 2014 | 2013 | 2012 | |||||||||||
Revaluation gains (losses), net of tax | $ | 34.7 | $ | -11.4 | $ | 9.8 | ||||||||
Derivatives Not Designated as Hedging Instruments | ||||||||||||||
The company also uses foreign currency forward contracts to offset its exposure to the change in value of certain foreign currency denominated assets and liabilities held at foreign subsidiaries, primarily receivables and payables, which are remeasured at the end of each period. Although the contracts are effective economic hedges, they are not designated as accounting hedges. Therefore, changes in the value of these derivatives are recognized immediately in earnings, thereby offsetting the current earnings effect of the related foreign currency denominated assets and liabilities. | ||||||||||||||
The impact on earnings from derivative contracts that are not designated as hedging instruments was as follows: | ||||||||||||||
MILLIONS | LOCATION | 2014 | 2013 | 2012 | ||||||||||
Gain (loss) recognized in income | ||||||||||||||
Foreign currency forward contracts | SG&A | $ | 8.6 | $ | -1.4 | $ | (0.9 | ) | ||||||
Interest expense, net | -9 | -6.6 | (7.0 | ) | ||||||||||
Total | $ | -0.4 | $ | -8 | $ | (7.9 | ) | |||||||
The amounts recognized in SG&A above offset the earnings impact of the related foreign currency denominated assets and liabilities. | ||||||||||||||
The amounts recognized in interest expense above represent the component of the hedging gains (losses) attributable to the difference between the spot and forward rates of the hedges as a result of interest rate differentials. | ||||||||||||||
Derivative Summary | ||||||||||||||
The following table summarizes the fair value of the company’s outstanding derivatives. The amounts represent gross values of derivative assets and liabilities and are included in other current assets and other current liabilities on the Consolidated Balance Sheet. | ||||||||||||||
ASSET DERIVATIVES | LIABILITY DERIVATIVES | |||||||||||||
MILLIONS | 2014 | 2013 | 2014 | 2013 | ||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||
Foreign currency forward contracts | $ | 17.9 | $ | 4.4 | $ | 0.6 | $ | 1.1 | ||||||
Interest rate swap contracts | — | — | 24.2 | — | ||||||||||
Derivatives not designated as hedging instruments: | ||||||||||||||
Foreign currency forward contracts | 57.6 | 15.8 | 27.3 | 13.1 | ||||||||||
Total | $ | 75.5 | $ | 20.2 | $ | 52.1 | $ | 14.2 | ||||||
The company’s derivative transactions are subject to master netting arrangements that allow the company to net settle contracts with the same counterparties. These arrangements generally do not call for collateral. Had the company elected to offset amounts in its Consolidated Balance Sheet, it would have a net asset of $23.4 million and $6.0 million as of December 31, 2014 and December 31, 2013, respectively. | ||||||||||||||
The company had foreign currency forward exchange contracts with notional values that totaled approximately $2.8 billion and $2.0 billion at December 31, 2014 and December 31, 2013, respectively, interest rate swap agreements with notional values of $725 million and €400 million at December 31, 2014, and net investment hedges, excluding the euro denominated debt, with notional values of €495 million at December 31, 2014. | ||||||||||||||
OTHER_COMPREHENSIVE_INCOME_LOS
OTHER COMPREHENSIVE INCOME (LOSS) INFORMATION | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
OTHER COMPREHENSIVE INCOME (LOSS) INFORMATION | |||||||||||
OTHER COMPREHENSIVE INCOME (LOSS) INFORMATION | |||||||||||
9. OTHER COMPREHENSIVE INCOME (LOSS) INFORMATION | |||||||||||
Comprehensive income (loss) includes net income, foreign currency translation adjustments, unrecognized gains and losses on securities, defined benefit pension and postretirement plan adjustments, gains and losses on derivative instruments designated and effective as cash flow hedges and non-derivative instruments designated and effective as foreign currency net investment hedges that are charged or credited to the accumulated other comprehensive loss account in shareholders’ equity. | |||||||||||
The following table provides other comprehensive income (loss) information related to the company’s derivatives and hedging instruments and pension and postretirement benefits. | |||||||||||
See Note 8 for additional information related to the company’s derivatives and hedging transactions. See Note 16 for additional information related to the company’s recognition of net actuarial losses and amortization of prior service benefits. | |||||||||||
MILLIONS | 2014 | 2013 | 2012 | ||||||||
Derivative & Hedging Instruments | |||||||||||
Unrealized gains (losses) on derivative & hedging instruments | $ | 4.6 | $ | 4.7 | $ | (1.9 | ) | ||||
Amount recognized in AOCI | |||||||||||
(Gains) losses reclassified from AOCI into income | |||||||||||
Sales | — | — | 0.1 | ||||||||
Cost of sales | -6.1 | 0.8 | (2.0 | ) | |||||||
SG&A | -1.5 | — | (0.2 | ) | |||||||
Interest expense, net | 4.1 | 4.1 | 4.1 | ||||||||
-3.5 | 4.9 | 2 | |||||||||
Translation & other insignificant activity | — | 0.9 | 0.5 | ||||||||
Tax impact | 2.8 | -3.5 | (0.7 | ) | |||||||
Net of tax | $ | 3.9 | $ | 7 | $ | (0.1 | ) | ||||
Pension & Postretirement Benefits | |||||||||||
Amount recognized in AOCI | |||||||||||
Current period net actuarial income (loss) and prior service costs | $ | -517.7 | $ | 528.2 | $ | (238.6 | ) | ||||
Amount reclassified from AOCI | |||||||||||
Amortization of net actuarial loss and prior service costs and benefits adjustments | 17.5 | 72.9 | 50.3 | ||||||||
-500.2 | 601.1 | (188.3 | ) | ||||||||
Tax impact | 156.9 | -218.2 | 57.1 | ||||||||
Net of tax | $ | -343.3 | $ | 382.9 | $ | (131.2 | ) | ||||
The derivative (gains) losses reclassified from AOCI into income, net of tax, were $(3.0) million, $3.2 million and $1.1 million in 2014, 2013 and 2012, respectively. The pension and postretirement losses reclassified from AOCI into income, net of tax, were $12.1 million, $46.4 million and $35.0 million in 2014, 2013 and 2012, respectively. | |||||||||||
SHAREHOLDERS_EQUITY
SHAREHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2014 | |
SHAREHOLDERS' EQUITY | |
SHAREHOLDERS' EQUITY | |
10. SHAREHOLDERS’ EQUITY | |
Authorized common stock, par value $1.00 per share, was 800 million shares at December 31, 2014, 2013 and 2012. Treasury stock is stated at cost. Dividends declared per share of common stock were $1.1550 for 2014, $0.9650 for 2013 and $0.8300 for 2012. | |
The company has 15 million shares, without par value, of authorized but unissued and undesignated preferred stock. The company’s former shareholder rights agreement was amended in December 2012 and the rights agreement was terminated as of December 31, 2012. Prior to termination of the rights agreement, 0.4 million shares of preferred stock were designated as Series A Junior Participating Preferred Stock and were reserved for issuance in connection with the rights agreement, with the remaining 14.6 million shares of preferred stock being undesignated. Following termination of the rights agreement, a Certificate of Elimination of the Series A Junior Participating Preferred Stock was filed on January 2, 2013 with the Delaware Secretary of State to restore the 0.4 million shares designated as Series A Junior Participating Preferred Stock to the status of undesignated preferred stock. | |
Champion Acquisition | |
On April 10, 2013, the company issued 6,596,444 shares of common stock for the stock consideration portion of the Champion acquisition. Of the total shares issued, the company deposited 1,258,115 shares, or approximately $100 million of the total consideration, into an escrow fund to satisfy adjustments to the consideration and indemnification obligations of the acquired company’s stockholders. Further information related to the acquisition of Champion is included in Note 4. | |
Share Repurchases | |
In May 2011, the company’s Board of Directors authorized the repurchase of up to 15 million shares of common stock, including shares to be repurchased under Rule 10b5-1. This repurchase authorization was completed in May 2014. In August 2011, the Finance Committee of the company’s Board of Directors, via delegation by the company’s Board of Directors, authorized the repurchase of an additional 10 million common shares which was contingent upon completion of the merger with Nalco. In February 2015, subsequent to the company’s year end, the company’s Board of Directors authorized the repurchase of up to 20 million additional shares of its common stock, including shares to be repurchased under Rule 10b5-1. In February 2015, the company entered into an accelerated stock repurchase with a financial institution to repurchase $300 million of its common stock. | |
In accordance with its share repurchase program through open market or private purchases, the company reacquired 3,547,334 shares, 3,096,464 shares and 2,600,569 shares of its common stock in 2014, 2013 and 2012, respectively. The number of shares repurchased in 2013 includes 1,258,115 shares the company repurchased from the Champion escrow account, with the cash paid to the beneficial shareholders deposited back into escrow. As of December 31, 2014, 9,166,298 shares remained to be repurchased under the company’s repurchase authorization. The company intends to repurchase all shares under its authorization, for which no expiration date has been established, in open market or privately negotiated transactions, subject to market conditions. | |
The company also reacquired 489,854, 346,941 and 734,857 shares withheld for taxes related to the exercise of stock options and the vesting of stock awards and units in 2014, 2013 and 2012, respectively. | |
EQUITY_COMPENSATION_PLANS
EQUITY COMPENSATION PLANS | 12 Months Ended | |||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||
EQUITY COMPENSATION PLANS | ||||||||||||||||||
EQUITY COMPENSATION PLANS | ||||||||||||||||||
11. EQUITY COMPENSATION PLANS | ||||||||||||||||||
The company measures compensation expense for share-based awards at fair value at the date of grant and recognizes compensation expense over the service period for awards expected to vest. The majority of grants to retirement eligible recipients (age 55 with required years of service) are attributed to expense using the non-substantive vesting method and are fully expensed over a six month period following the date of grant. In addition, the company includes a forfeiture estimate in the amount of compensation expense being recognized based on an estimate of the number of outstanding awards expected to vest. | ||||||||||||||||||
The company’s equity compensation plans provide for grants of stock options, restricted stock awards and restricted stock unit awards. Common shares available for grant as of December 31, 2014, 2013 and 2012 were 17,999,689, 20,269,664 and 5,316,532, respectively. Common shares available for grant reflect 17 million shares approved by shareholders in May 2013 for issuance under the plans. The company generally issues authorized but previously unissued shares to satisfy stock option exercises. The company has a share repurchase program and generally repurchases shares on the open market to help offset the dilutive effect of share-based compensation. | ||||||||||||||||||
The company’s annual long-term incentive share-based compensation program is made up of 50% stock options and 50% performance-based restricted stock units (“PBRSU”). The company also grants non-performance based restricted stock units (“RSU”), and has a limited number of non-performance based restricted stock awards (“RSA”) outstanding. | ||||||||||||||||||
Total compensation expense related to all share-based compensation plans was $71 million ($49 million net of tax benefit), $70 million ($48 million net of tax benefit) and $66 million ($45 million net of tax benefit) for 2014, 2013 and 2012, respectively. | ||||||||||||||||||
As of December 31, 2014, there was $128 million of total measured but unrecognized compensation expense related to non-vested share-based compensation arrangements granted under all of the company’s plans. That cost is expected to be recognized over a weighted-average period of 2.1 years. | ||||||||||||||||||
Stock Options | ||||||||||||||||||
Options are granted to purchase shares of the company’s stock at the average daily share price on the date of grant. These options generally expire within ten years from the grant date. The company generally recognizes compensation expense for these awards on a straight-line basis over the three year vesting period. As previously noted, stock option grants to retirement eligible recipients are attributed to expense using the non-substantive vesting method. | ||||||||||||||||||
A summary of stock option activity and average exercise prices is as follows: | ||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||
NUMBER OF | EXERCISE | NUMBER OF | EXERCISE | NUMBER OF | EXERCISE | |||||||||||||
OPTIONS | PRICE(a) | OPTIONS | PRICE(a) | OPTIONS | PRICE(a) | |||||||||||||
Outstanding, beginning of year | 13,926,256 | $ | 55.66 | 15,125,156 | $ | 48.29 | 20,126,579 | $ | 41.45 | |||||||||
Granted | 1,645,937 | 107.63 | 1,640,210 | 101.22 | 2,238,267 | 71.17 | ||||||||||||
Exercised | (2,316,918 | ) | 44.79 | (2,583,026 | ) | 40.68 | (6,774,032 | ) | 35.16 | |||||||||
Canceled | (85,499 | ) | 83.81 | (256,084 | ) | 63 | (465,658 | ) | 53.61 | |||||||||
Outstanding, end of year | 13,169,776 | $ | 63.88 | 13,926,256 | $ | 55.66 | 15,125,156 | $ | 48.29 | |||||||||
Exercisable, end of year | 9,820,826 | $ | 52.21 | 10,233,265 | $ | 46.33 | 11,036,700 | $ | 42.77 | |||||||||
Vested and expected to vest, end of year | 12,944,608 | $ | 63.35 | |||||||||||||||
(a) | Represents weighted average price. | |||||||||||||||||
The total aggregate intrinsic value of options (the amount by which the stock price exceeded the exercise price of the option on the date of exercise) that were exercised during 2014, 2013 and 2012 was $150 million, $123 million and $211 million, respectively. | ||||||||||||||||||
The total aggregate intrinsic value of options outstanding as of December 31, 2014 was $548 million, with a corresponding weighted-average remaining contractual life of 6.3 years. The total aggregate intrinsic value of options exercisable as of December 31, 2014 was $520 million, with a corresponding weighted-average remaining contractual life of 5.3 years. The total aggregate intrinsic value of options vested and expected to vest as of December 31, 2014 was $545 million, with a corresponding weighted-average remaining contractual life of 6.2 years. | ||||||||||||||||||
The lattice (binomial) option-pricing model is used to estimate the fair value of options at grant date. The company’s primary employee option grant occurs during the fourth quarter. The weighted-average grant-date fair value of options granted and the significant assumptions used in determining the underlying fair value of each option grant, on the date of grant were as follows: | ||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||
Weighted-average grant-date fair value of options granted at market prices | $ | 23.18 | $ | 22.53 | $ | 13.77 | ||||||||||||
Assumptions | ||||||||||||||||||
Risk-free rate of return | 1.8% | 1.8% | 0.9% | |||||||||||||||
Expected life | 6 years | 6 years | 6 years | |||||||||||||||
Expected volatility | 22.9% | 23.0% | 22.8% | |||||||||||||||
Expected dividend yield | 1.2% | 1.1% | 1.3% | |||||||||||||||
The risk-free rate of return is determined based on a yield curve of U.S. treasury rates from one month to ten years and a period commensurate with the expected life of the options granted. Expected volatility is established based on historical volatility of the company’s stock price. The expected dividend yield is determined based on the company’s annual dividend amount as a percentage of the average stock price at the time of the grant. | ||||||||||||||||||
Restricted Stock Units and Awards | ||||||||||||||||||
The expense associated with PBRSUs is based on the average of the high and low share price of the company’s common stock on the date of grant, adjusted for the absence of future dividends. The awards vest based on the company achieving a defined performance target and with continued service for a three year period. Upon vesting, the company issues shares of its common stock such that one award unit equals one share of common stock. The company assesses the probability of achieving the performance target and recognizes expense over the three year vesting period when it is probable the performance target will be met. PBRSU awards granted to retirement eligible recipients are attributed to expense using the non-substantive vesting method. The awards are generally subject to forfeiture in the event of termination of employment. | ||||||||||||||||||
The expense associated with shares of non-performance based RSUs and RSAs is based on the average of the high and low share price of the company’s common stock on the date of grant, adjusted for the absence of future dividends and is amortized on a straight-line basis over the periods during which the restrictions lapse. The company currently has RSUs and RSAs that vest over periods between 12 and 84 months. The awards are generally subject to forfeiture in the event of termination of employment. | ||||||||||||||||||
A summary of non-vested PBRSUs and restricted stock activity is as follows: | ||||||||||||||||||
GRANT | GRANT | |||||||||||||||||
PBRSU | DATE FAIR | RSAs AND | DATE FAIR | |||||||||||||||
AWARDS | VALUE(a) | RSUs | VALUE(a) | |||||||||||||||
31-Dec-11 | 2,140,665 | $ | 50.68 | 1,016,660 | $ | 53.67 | ||||||||||||
Granted | 454,620 | 68.63 | 230,193 | 64.1 | ||||||||||||||
Vested / Earned | (285,249 | ) | 55.62 | (362,926 | ) | 53.8 | ||||||||||||
Canceled | (218,764 | ) | 53.14 | (86,714 | ) | 52.03 | ||||||||||||
31-Dec-12 | 2,091,272 | $ | 53.65 | 797,213 | $ | 56.79 | ||||||||||||
Granted | 342,207 | 99.63 | 109,212 | 90.56 | ||||||||||||||
Vested / Earned | (594,366 | ) | 47.6 | (249,093 | ) | 53.59 | ||||||||||||
Canceled | (88,844 | ) | 57.71 | (35,311 | ) | 56.2 | ||||||||||||
31-Dec-13 | 1,750,269 | $ | 64.49 | 622,021 | $ | 64.04 | ||||||||||||
Granted | 373,337 | 103.1 | 109,665 | 102.62 | ||||||||||||||
Vested / Earned | (503,324 | ) | 47.98 | (306,830 | ) | 55.83 | ||||||||||||
Canceled | (27,048 | ) | 74.09 | (23,785 | ) | 73.01 | ||||||||||||
31-Dec-14 | 1,593,234 | $ | 78.59 | 401,071 | $ | 80.33 | ||||||||||||
(a) | Represents weighted average price. | |||||||||||||||||
INCOME_TAXES
INCOME TAXES | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
INCOME TAXES | |||||||||||||
INCOME TAXES | |||||||||||||
12. INCOME TAXES | |||||||||||||
Income before income taxes consisted of: | |||||||||||||
MILLIONS | 2014 | 2013 | 2012 | ||||||||||
United States | $ | 937.7 | $ | 725.8 | $ | 594.8 | |||||||
International | 760.7 | 572.5 | 417.8 | ||||||||||
Total | $ | 1,698.4 | $ | 1,298.3 | $ | 1,012.6 | |||||||
The provision for income taxes consisted of: | |||||||||||||
MILLIONS | 2014 | 2013 | 2012 | ||||||||||
Federal and state | $ | 344.3 | $ | 301.3 | $ | 141.3 | |||||||
International | 253.4 | 153.8 | 173.2 | ||||||||||
Total current | 597.7 | 455.1 | 314.5 | ||||||||||
Federal and state | (67.7 | ) | (124.0 | ) | 31.7 | ||||||||
International | (53.8 | ) | (6.5 | ) | (34.9 | ) | |||||||
Total deferred | (121.5 | ) | (130.5 | ) | (3.2 | ) | |||||||
Provision for income taxes | $ | 476.2 | $ | 324.7 | $ | 311.3 | |||||||
The company’s overall net deferred tax assets and deferred tax liabilities were comprised of the following: | |||||||||||||
DECEMBER 31 (MILLIONS) | 2014 | 2013 | |||||||||||
Deferred tax assets | |||||||||||||
Other accrued liabilities | $ | 122.9 | $ | 125.9 | |||||||||
Loss carryforwards | 86 | 106.3 | |||||||||||
Share-based compensation | 70.9 | 70.1 | |||||||||||
Pension and other comprehensive income | 357.3 | 160.9 | |||||||||||
Foreign tax credits | 15.6 | 29.9 | |||||||||||
Other, net | 78.2 | 150 | |||||||||||
Valuation allowance | (74.2 | ) | (88.3 | ) | |||||||||
Total | 656.7 | 554.8 | |||||||||||
Deferred tax liabilities | |||||||||||||
Property, plant and equipment basis differences | 269.2 | 287.3 | |||||||||||
Intangible assets | 1,392.20 | 1,488.00 | |||||||||||
Unremitted foreign earnings | 37.4 | 94.5 | |||||||||||
Other, net | 126.1 | 132 | |||||||||||
Total | 1,824.90 | 2,001.80 | |||||||||||
Net deferred tax liabilities balance | $ | (1,168.2 | ) | $ | (1,447.0 | ) | |||||||
As of December 31, 2014 the company has tax effected federal, state and international net operating loss carryforwards of approximately $1 million, $6 million and $79 million, respectively, which will be available to offset future taxable income. The state loss carryforwards expire from 2015 to 2034. For the international loss carryforwards, $41 million expire from 2015 to 2024 and $38 million have no expiration. | |||||||||||||
The company has recorded a $74 million valuation allowance on certain deferred tax assets based on management’s determination that it is more likely than not that the tax benefits will not be utilized. The company anticipates that approximately one-half of the December 31, 2014 valuation allowance balance may be released during 2015 based on the income trends in the underlying foreign entities. | |||||||||||||
The company’s U.S. foreign tax credit carryforward of $16 million has a ten-year carryforward period and will expire between 2019 and 2024 if not utilized. | |||||||||||||
The company has a tax holiday in one foreign jurisdiction that resulted in tax reductions during 2014, 2013 and 2012. The company received a permit of operation, which expires in July 2021, from the National Council of Free Zones of Exportation for the Dominican Republic. Companies operating under the Free Zones are not subject to income tax in the Dominican Republic on export income. The tax reduction as the result of the permit for 2014 was $4.6 million, or approximately $0.01 per diluted share. The impact of the tax holiday was similar during 2013 and 2012. | |||||||||||||
A reconciliation of the statutory U.S. federal income tax rate to the company’s effective income tax rate is as follows: | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Statutory U.S. rate | 35.00% | 35.00% | 35.00% | ||||||||||
State income taxes, net of federal benefit | 1.6 | 1.1 | 1.1 | ||||||||||
Foreign operations | -6.1 | -4.5 | -3 | ||||||||||
Domestic manufacturing deduction | -2 | -2.6 | -2.6 | ||||||||||
R&D credit | -0.7 | -1.4 | — | ||||||||||
Change in valuation allowance | (0 .1) | -1 | — | ||||||||||
Nondeductible deal costs | — | 0.2 | 0.5 | ||||||||||
Audit settlements and refunds | 0.2 | -0.8 | 0.1 | ||||||||||
Other, net | 0.1 | -1 | -0.4 | ||||||||||
Effective income tax rate | 28.00% | 25.00% | 30.70% | ||||||||||
As of December 31, 2014 and 2013, the company has recorded deferred tax liabilities of $37.4 million and $94.5 million, respectively, on foreign earnings of the legacy Nalco entities and legacy Champion entities that the company intends to repatriate. The deferred tax liabilities originated based on purchase accounting decisions made in connection with the Nalco merger and Champion acquisition and were the result of extensive studies required to calculate the impact at the purchase date. | |||||||||||||
U.S. deferred income taxes are not provided on certain other unremitted foreign earnings that are considered permanently reinvested which as of December 31, 2014 and 2013 were approximately $1.8 billion and $1.6 billion, respectively. These earnings are considered to be reinvested indefinitely or available for distribution with foreign tax credits to offset the amount of applicable income tax and foreign withholding taxes that may be payable on remittance. It is impractical due to the complexities associated with its hypothetical calculation to determine the amount of incremental taxes that might arise if all undistributed earnings were distributed. | |||||||||||||
The company files income tax returns in the U.S. federal jurisdiction and various U.S. state and international jurisdictions. With few exceptions, the company is no longer subject to state and foreign income tax examinations by tax authorities for years before 2011. The IRS has completed examinations of the company’s U.S. federal income tax returns through 2010. The Ecolab (including Nalco) U.S. income tax returns for the years 2011 and 2012 are currently under audit. The audit of legacy Champion U.S. income tax return for the year 2012 has not yet begun. In addition to the U.S. federal examination, there is ongoing audit activity in several U.S. state and foreign jurisdictions. The company anticipates changes to its uncertain tax positions due to closing of various audit years mentioned above. The company does not believe these changes will result in a material impact during the next twelve months. Decreases in the company’s gross liability could result in offsets to other balance sheet accounts, cash payments, and/or adjustments to tax expense. The occurrence of these events and/or other events not included above within the next twelve months could change depending on a variety of factors and result in amounts different from above. | |||||||||||||
During 2014, the company recognized discrete tax items net expense of $13.2 million. The net expense in 2014 was driven primarily by an update to non-current tax liabilities for certain global tax audits, an adjustment related to the re-characterization of intercompany payments between our U.S. and foreign affiliates, the remeasurement of certain deferred tax assets and liabilities resulting from changes in our deferred state tax rate, recognizing adjustments from filing our 2013 U.S. federal and state tax returns, net changes of valuation allowances based on the realizability of foreign deferred tax assets and the impact from other foreign country audit settlements. | |||||||||||||
During 2013, the company recognized discrete tax items net benefits of $41.7 million. The net benefit in 2013 was driven primarily by the net release of valuation allowances related to the realizability of foreign deferred tax assets of $11.5 million, the remeasurement of certain deferred tax assets and liabilities of $11.3 million and recognizing adjustments from filing our 2012 U.S. federal and state tax returns of $11.0 million. The remaining discrete tax items relate primarily to recognizing settlements related to prior year income tax audits, law changes within a foreign jurisdiction, the retroactive extension during first quarter 2013 of the U.S. R&D credit for 2012, foreign audit adjustments and other adjustments to deferred tax assets and liabilities. | |||||||||||||
During 2012, the company recognized discrete tax items net benefits of $9.2 million. The net benefit in 2012 was based largely on benefits related to remeasurement of certain deferred tax assets and liabilities resulting from changing tax jurisdictions, recognizing adjustments from filing the company’s 2011 U.S. federal tax return as well as a release of a valuation allowance related to a capital loss carryforward. Discrete tax items benefits were partially offset by the remeasurement of certain deferred tax assets and liabilities resulting from changes in local country tax rates, state and foreign country audit settlements and adjustments. | |||||||||||||
A reconciliation of the beginning and ending amount of gross liability for unrecognized tax benefits is as follows: | |||||||||||||
MILLIONS | 2014 | 2013 | 2012 | ||||||||||
Balance at beginning of year | $ | 98.7 | $ | 93.1 | $ | 89.5 | |||||||
Additions based on tax positions related to the current year | 5.3 | 9.1 | 7.5 | ||||||||||
Additions for tax positions of prior years | 5.2 | 6.1 | 5 | ||||||||||
Reductions for tax positions of prior years | (17.8 | ) | (15.6 | ) | (3.4 | ) | |||||||
Reductions for tax positions due to statute of limitations | (0.2 | ) | (3.6 | ) | (0.8 | ) | |||||||
Settlements | (9.0 | ) | (0.7 | ) | (8.0 | ) | |||||||
Assumed in connection with the Champion acquisition | — | 9.8 | — | ||||||||||
Assumed in connection with the Nalco merger | — | — | 7.8 | ||||||||||
Foreign currency translation | (3.5 | ) | 0.5 | (4.5 | ) | ||||||||
Balance at end of year | $ | 78.7 | $ | 98.7 | $ | 93.1 | |||||||
All tax positions included in the gross liability for unrecognized tax benefits balance at December 31, 2014, depending on the ultimate resolution, could impact the annual effective tax rate in future periods. | |||||||||||||
The company recognizes penalties and interest related to unrecognized tax benefits in the company’s provision for income taxes. During 2014, 2013 and 2012, the company accrued $7 million, $2 million and $3 million in interest and penalties, respectively. The company had approximately $14 million and $12 million of accrued interest, including minor amounts for penalties, at December 31, 2014 and 2013, respectively. | |||||||||||||
RENTALS_AND_LEASES
RENTALS AND LEASES | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
RENTALS AND LEASES | |||||
RENTALS AND LEASES | |||||
13. RENTALS AND LEASES | |||||
The company leases sales and administrative office facilities, distribution centers, research and manufacturing facilities, as well as vehicles and other equipment under operating leases. Total rental expense under the company’s operating leases was $237 million in 2014, $217 million in 2013 and $183 million in 2012. As of December 31, 2014, identifiable future minimum payments with non-cancelable terms in excess of one year were: | |||||
MILLIONS | |||||
2015 | $ | 133 | |||
2016 | 116 | ||||
2017 | 103 | ||||
2018 | 86 | ||||
2019 | 67 | ||||
Thereafter | 158 | ||||
Total | $ | 663 | |||
The company enters into operating leases for vehicles whose non-cancelable terms are one year or less in duration with month-to-month renewal options. These leases have been excluded from the table above. The company estimates payments under such leases will approximate $58 million in 2015. These vehicle leases have guaranteed residual values that have historically been satisfied by the proceeds on the sale of the vehicles. | |||||
RESEARCH_EXPENDITURES
RESEARCH EXPENDITURES | 12 Months Ended |
Dec. 31, 2014 | |
RESEARCH EXPENDITURES | |
RESEARCH EXPENDITURES | |
14. RESEARCH EXPENDITURES | |
Research expenditures that relate to the development of new products and processes, including significant improvements and refinements to existing products, are expensed as incurred. Such costs were $197 million in 2014, $188 million in 2013 and $183 million in 2013. The company did not participate in any material customer sponsored research during 2014, 2013 or 2012. | |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2014 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | |
15. COMMITMENTS AND CONTINGENCIES | |
The company is subject to various claims and contingencies related to, among other things, workers’ compensation, general liability (including product liability), automobile claims, health care claims, environmental matters and lawsuits. The company is also subject to various claims and contingencies related to income taxes, which are covered in Note 12. The company also has contractual obligations including lease commitments, which are covered in Note 13. | |
The company records liabilities where a contingent loss is probable and can be reasonably estimated. If the reasonable estimate of a probable loss is a range, the company records the most probable estimate of the loss or the minimum amount when no amount within the range is a better estimate than any other amount. The company discloses a contingent liability even if the liability is not probable or the amount is not estimable, or both, if there is a reasonable possibility that a material loss may have been incurred. | |
Insurance: Globally, the company has high deductible insurance policies for property and casualty losses. The company is insured for losses in excess of these deductibles, subject to policy terms and conditions and has recorded both a liability and an offsetting receivable for amounts in excess of these deductibles. The company is self-insured for health care claims for eligible participating employees, subject to certain deductibles and limitations. The company determines its liabilities for claims on an actuarial basis. | |
Litigation and Environmental Matters: The company and certain subsidiaries are party to various lawsuits, claims and environmental actions that have arisen in the ordinary course of business. These include from time to time antitrust, commercial, patent infringement, product liability and wage hour lawsuits, as well as possible obligations to investigate and mitigate the effects on the environment of the disposal or release of certain chemical substances at various sites, such as Superfund sites and other operating or closed facilities. The company has established accruals for certain lawsuits, claims and environmental matters. The company currently believes that there is not a reasonably possible risk of material loss in excess of the amounts accrued related to these legal matters. Because litigation is inherently uncertain, and unfavorable rulings or developments could occur, there can be no certainty that the company may not ultimately incur charges in excess of recorded liabilities. A future adverse ruling, settlement or unfavorable development could result in future charges that could have a material adverse effect on the company’s results of operations or cash flows in the period in which they are recorded. The company currently believes that such future charges related to suits and legal claims, if any, would not have a material adverse effect on the company’s consolidated financial position. | |
Environmental Matters | |
The company is currently participating in environmental assessments and remediation at approximately 35 locations, most of which are in the U.S., and environmental liabilities have been accrued reflecting management’s best estimate of future costs. Potential insurance reimbursements are not anticipated in the company’s accruals for environmental liabilities. | |
Matters Related to Wage Hour Claims | |
In Cooper v. Ecolab Inc., California State Court —Superior Court-Los Angeles County, case no. BC486875, the plaintiffs sought certification of a purported class of terminated California employees of any business for alleged violation of statutory obligations regarding payment of accrued vacation upon termination. The company reached a preliminary settlement with the plaintiffs, which was approved by the court on March 17, 2014. The settlement amount, which was not material to the company’s operations or financial position, was paid in June 2014. | |
The company is a defendant in six other pending wage hour lawsuits claiming violations of the Fair Labor Standards Act (“FLSA”) or a similar state law. Of these six suits, two have been certified for class action status. Ross (formerly Icard) v. Ecolab, U.S. District Court — Northern District of California, case no. C 13-05097 PJH, an action under California state law, has been certified for class treatment of California Institutional employees. In Cancilla v. Ecolab, U.S. District Court - Northern District of California, case no. CV 12-03001, the Court conditionally certified a nationwide class of Pest Elimination Service Specialists for alleged FLSA violations. The suit also seeks a purported California sub-class for alleged California wage hour law violations and certifications of classes for state law violations in Washington, Colorado, Maryland, Illinois, Missouri, Wisconsin and North Carolina. A third pending suit, Charlot v. Ecolab Inc., U.S. District Court-Eastern District of New York, case no. CV 12-04543, seeks nationwide class certification of Institutional employees for alleged FLSA violations as well as purported state sub-classes in New York, New Jersey, Washington and Pennsylvania alleging violations of state wage hour laws. A fourth pending suit, Schneider v. Ecolab, Circuit Court of Cook County, Illinois, case no. 2014 CH 193, seeks certification of a class of Institutional employees for alleged violations of Illinois wage and hour laws. A fifth pending suit, Martino v. Ecolab, Santa Clara County California Superior Court, seeks certification of a California state class of Institutional employees for alleged violations of California wage and hour laws. The Martino case has been removed to the United States District Court for the Northern District of California. A sixth pending suit, LaValley v. Ecolab, United States District Court for the District of Minnesota, seeks certification of a class of Territory Representatives for alleged violations of the FLSA and New York state wage and hour laws. | |
Matters Related to Deepwater Horizon Incident Response | |
On April 22, 2010, the deepwater drilling platform, the Deepwater Horizon, operated by a subsidiary of BP plc, sank in the Gulf of Mexico after a catastrophic explosion and fire that began on April 20, 2010. A massive oil spill resulted. Approximately one week following the incident, subsidiaries of BP plc, under the authorization of the responding federal agencies, formally requested Nalco Company, now an indirect subsidiary of Ecolab, to supply large quantities of COREXIT® 9500, a Nalco oil dispersant product listed on the U.S. EPA National Contingency Plan Product Schedule. Nalco Company responded immediately by providing available COREXIT and increasing production to supply the product to BP’s subsidiaries for use, as authorized and directed by agencies of the federal government throughout the incident. Prior to the incident, Nalco and its subsidiaries had not provided products or services or otherwise had any involvement with the Deepwater Horizon platform. On July 15, 2010, BP announced that it had capped the leaking well, and the application of dispersants by the responding parties ceased shortly thereafter. | |
On May 1, 2010, the President appointed retired U.S. Coast Guard Commandant Admiral Thad Allen to serve as the National Incident Commander in charge of the coordination of the response to the incident at the national level. The EPA directed numerous tests of all the dispersants on the National Contingency Plan Product Schedule, including those provided by Nalco Company, “to ensure decisions about ongoing dispersant use in the Gulf of Mexico are grounded in the best available science.” Nalco Company cooperated with this testing process and continued to supply COREXIT, as requested by BP and government authorities. After review and testing of a number of dispersants, on September 30, 2010, and on August 2, 2010, the EPA released toxicity data for eight oil dispersants. | |
The use of dispersants by the responding parties was one tool used by the government and BP to avoid and reduce damage to the Gulf area from the spill. Since the spill occurred, the EPA and other federal agencies have closely monitored conditions in areas where dispersant was applied. Nalco Company has encouraged ongoing monitoring and review of COREXIT and other dispersants and has cooperated fully with the governmental review and approval process. However, in connection with its provision of COREXIT, Nalco Company has been named in several lawsuits as described below. | |
Cases arising out of the Deepwater Horizon accident were administratively transferred for pre-trial purposes to a judge in the United States District Court for the Eastern District of Louisiana with other related cases under In Re: Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, on April 20, 2010, Case No. 10-md-02179 (E.D. La.) (“MDL 2179”). | |
Putative Class Action Litigation | |
Nalco Company was named, along with other unaffiliated defendants, in six putative class action complaints related to the Deepwater Horizon oil spill: Adams v. Louisiana, et al., Case No. 11-cv-01051 (E.D. La.); Elrod, et al. v. BP Exploration & Production Inc., et al., 12-cv-00981 (E.D. La.); Harris, et al. v. BP, plc, et al., Case No. 2:10-cv-02078-CJBSS (E.D. La.); Irelan v. BP Products, Inc., et al., Case No. 11-cv-00881 (E.D. La.); Petitjean, et al. v. BP, plc, et al., Case No. 3:10-cv-00316-RS-EMT (N.D. Fla.); and, Wright, et al. v. BP, plc, et al., Case No. 1:10-cv-00397-B (S.D. Ala.). The cases were filed on behalf of various potential classes of persons who live and work in or derive income from the effected Coastal region. Each of the actions contains substantially similar allegations, generally alleging, among other things, negligence relating to the use of our COREXIT dispersant in connection with the Deepwater Horizon oil spill. The plaintiffs in these putative class action lawsuits are generally seeking awards of unspecified compensatory and punitive damages, and attorneys’ fees and costs. These cases have been consolidated in MDL 2179. | |
Other Related Claims Pending in MDL 2179 | |
Nalco Company was also named, along with other unaffiliated defendants, in 23 complaints filed by individuals: Alexander, et al. v. BP Exploration & Production, et al., Case No. 11-cv-00951 (E.D. La.); Best v. British Petroleum plc, et al., Case No. 11-cv-00772 (E.D. La.); Black v. BP Exploration & Production, Inc., et al. Case No. 2:11-cv- 867, (E.D. La.); Brooks v. Tidewater Marine LLC, et al., Case No. 11-cv- 00049 (S.D. Tex.); Capt Ander, Inc. v. BP, plc, et al., Case No. 4:10-cv-00364-RH-WCS (N.D. Fla.); Coco v. BP Products North America, Inc., et al. (E.D. La.); Danos, et al. v. BP Exploration et al., Case No. 00060449 (25th Judicial Court, Parish of Plaquemines, Louisiana); Doom v. BP Exploration & Production, et al. , Case No. 12-cv-2048 (E.D. La.); Duong, et al., v. BP America Production Company, et al., Case No. 13-cv-00605 (E.D. La.); Esponge v. BP, P.L.C., et al., Case No. 0166367 (32nd Judicial District Court, Parish of Terrebonne, Louisiana); Ezell v. BP, plc, et al., Case No. 2:10-cv-01920-KDE-JCW (E.D. La.); Fitzgerald v. BP Exploration, et al., Case No. 13-cv-00650 (E.D. La.); Hill v. BP, plc, et al., Case No. 1:10-cv-00471-CG-N (S.D. Ala.); Hogan v. British Petroleum Exploration & Production, Inc., et al., Case No. 2012-22995 (District Court, Harris County, Texas); Hudley v. BP, plc, et al., Case No. 10-cv-00532-N (S.D. Ala.); In re of Jambon Supplier II, L.L.C., et al., Case No. 12-426 (E.D. La.); Kolian v. BP Exploration & Production, et al. , Case No. 12-cv-2338 (E.D. La.); Monroe v. BP, plc, et al., Case No. 1:10-cv-00472-M (S.D. Ala.); Pearson v. BP Exploration & Production, Inc., Case No. 2:11-cv-863, (E.D. La.); Shimer v. BP Exploration and Production, et al, Case No. 2:13-cv-4755 (E.D. La.); Top Water Charters, LLC v. BP, P.L.C., et al., No. 0165708 (32nd Judicial District Court, Parish of Terrebonne, Louisiana); Toups, et al. v Nalco Company, et al., Case No. 59-121 (25th Judicial District Court, Parish of Plaquemines, Louisiana); and, Trehern v. BP, plc, et al., Case No. 1:10-cv-00432-HSO-JMR (S.D. Miss.). The cases were filed on behalf of individuals and entities that own property, live, and/ or work in or derive income from the effected Coastal region. Each of the actions contains substantially similar allegations, generally alleging, among other things, negligence relating to the use of our COREXIT dispersant in connection with the Deepwater Horizon oil spill. The plaintiffs in these lawsuits are generally seeking awards of unspecified compensatory and punitive damages, and attorneys’ fees and costs. | |
Pursuant to orders issued by the court in MDL 2179, the claims were consolidated in several master complaints, including one naming Nalco Company and others who responded to the Gulf Oil Spill (known as the “B3 Master Complaint”). On May 18, 2012, Nalco filed a motion for summary judgment against the claims in the “B3” Master Complaint, on the grounds that: (i) Plaintiffs’ claims are preempted by the comprehensive oil spill response scheme set forth in the Clean Water Act and National Contingency Plan; and (ii) Nalco is entitled to derivative immunity from suit. On November 28, 2012, the Court granted Nalco’s motion and dismissed with prejudice the claims in the “B3” Master Complaint asserted against Nalco. The Court held that such claims were preempted by the Clean Water Act and National Contingency Plan. Because claims in the “B3” Master Complaint remain pending against other defendants, the Court’s decision is not a “final judgment” for purposes of appeal. Under Federal Rule of Appellate Procedure 4(a), plaintiffs will have 30 days after entry of final judgment to appeal the Court’s decision. | |
Nalco Company, the incident defendants and the other responder defendants have been named as first party defendants by Transocean Deepwater Drilling, Inc. and its affiliates (the “Transocean Entities”) (In re the Complaint and Petition of Triton Asset Leasing GmbH, et al, MDL No. 2179, Civil Action 10-2771). In April and May 2011, the Transocean Entities, Cameron International Corporation, Halliburton Energy Services, Inc., M-I L.L.C., Weatherford U.S., L.P. and Weatherford International, Inc. (collectively, the “Cross Claimants”) filed cross claims in MDL 2179 against Nalco Company and other unaffiliated cross defendants. The Cross Claimants generally allege, among other things, that if they are found liable for damages resulting from the Deepwater Horizon explosion, oil spill and/or spill response, they are entitled to indemnity or contribution from the cross defendants. | |
In April and June 2011, in support of its defense of the claims against it, Nalco Company filed counterclaims against the Cross Claimants. In its counterclaims, Nalco Company generally alleges that if it is found liable for damages resulting from the Deepwater Horizon explosion, oil spill and/or spill response, it is entitled to contribution or indemnity from the Cross Claimants. | |
In December 2012 and January 2013, the MDL 2179 court issued final orders approving two settlements between BP and Plaintiffs’ Class Counsel: (1) a proposed Medical Benefits Class Action Settlement; and (2) a proposed Economic and Property Damages Class Action Settlement. Pursuant to the proposed settlements, class members agree to release claims against BP and other released parties, including Nalco Energy Services, LP, Nalco Holding Company, Nalco Finance Holdings LLC, Nalco Finance Holdings Inc., Nalco Holdings LLC and Nalco Company. | |
Other Related Actions | |
In March 2011, Nalco Company was named, along with other unaffiliated defendants, in an amended complaint filed by an individual in the Circuit Court of Harrison County, Mississippi, Second Judicial District (Franks v. Sea Tow of South Miss, Inc., et al., Cause No. A2402-10-228 (Circuit Court of Harrison County, Mississippi)). The amended complaint generally asserts, among other things, negligence and strict product liability claims relating to the plaintiff’s alleged exposure to chemical dispersants manufactured by Nalco Company. The plaintiff seeks unspecified compensatory damages, medical expenses, and attorneys’ fees and costs. Plaintiff’s allegations place him within the scope of the MDL 2179 Medical Benefits Class. In approving the Medical Benefits Settlement, the MDL 2179 Court barred Medical Benefits Settlement class members from prosecuting claims of injury from exposure to oil and dispersants related to the Response. As a result of the MDL court’s order, on April 11, 2013, the Mississippi court stayed proceedings in the Franks case. The Franks case was dismissed in May 2014. | |
The company believes the claims asserted against Nalco Company are without merit and intends to defend these lawsuits vigorously. The company also believes that it has rights to contribution and/ or indemnification (including legal expenses) from third parties. However, the company cannot predict the outcome of these lawsuits, the involvement it might have in these matters in the future, or the potential for future litigation. | |
RETIREMENT_PLANS
RETIREMENT PLANS | 12 Months Ended | ||||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||||
RETIREMENT PLANS | |||||||||||||||||||||||||||||
RETIREMENT PLANS | |||||||||||||||||||||||||||||
16. RETIREMENT PLANS | |||||||||||||||||||||||||||||
Pension and Postretirement Health Care Benefits Plans | |||||||||||||||||||||||||||||
The company has a non-contributory qualified defined benefit pension plan covering the majority of its U.S. employees. The company also has U.S. non-contributory non-qualified defined benefit plans, which provide for benefits to employees in excess of limits permitted under its U.S. pension plans. Certain legacy Champion employees became eligible to participate in the U.S. qualified and non-qualified pension plans on January 1, 2014. The non-qualified plans are not funded and the recorded benefit obligation for the non-qualified plans was $113 million and $96 million at December 31, 2014 and 2013, respectively. The measurement date used for determining the U.S. pension plan assets and obligations is December 31. | |||||||||||||||||||||||||||||
Various international subsidiaries have defined benefit pension plans. International plans are funded based on local country requirements. The measurement date used for determining the international pension plan assets and obligations is November 30, the fiscal year-end of the company’s international affiliates. | |||||||||||||||||||||||||||||
The company provides postretirement health care benefits to certain U.S. employees. The corresponding plans are contributory based on years of service and choice of coverage (family or single), with retiree contributions adjusted annually. The measurement date used to determine the U.S. postretirement health care plan assets and obligations is December 31. Certain employees outside the U.S. are covered under government-sponsored programs, which are not required to be fully funded. The expense and obligation for providing international postretirement health care benefits are not significant. | |||||||||||||||||||||||||||||
The following table sets forth financial information related to the company’s pension and postretirement health care plans: | |||||||||||||||||||||||||||||
U.S. | INTERNATIONAL | U.S. POSTRETIREMENT | |||||||||||||||||||||||||||
PENSION(a) | PENSION | HEALTH CARE | |||||||||||||||||||||||||||
MILLIONS | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||||
Accumulated Benefit Obligation, end of year | $ 2,075.0 | $ 1,748.1 | $ 1,304.6 | $ 1,124.5 | $ 240.4 | $ 234.1 | |||||||||||||||||||||||
Projected Benefit Obligation | |||||||||||||||||||||||||||||
Projected benefit obligation, beginning of year | 1,886.3 | 2,105.1 | 1,243.6 | 1,180.6 | 234.1 | 281.5 | |||||||||||||||||||||||
Service cost | 66.4 | 68.6 | 32.2 | 36.0 | 4.3 | 5.9 | |||||||||||||||||||||||
Interest | 90.0 | 84.7 | 49.8 | 47.2 | 10.8 | 10.8 | |||||||||||||||||||||||
Participant contributions | — | — | 3.6 | 3.7 | 10.4 | 9.6 | |||||||||||||||||||||||
Medicare subsidies received | — | — | — | — | 2.0 | 0.7 | |||||||||||||||||||||||
Curtailments and settlements | — | — | -15.9 | -7.3 | — | — | |||||||||||||||||||||||
Plan amendments | — | — | 0.1 | 2.2 | 0.9 | — | |||||||||||||||||||||||
Actuarial loss (gain) | 329.4 | -270.5 | 248.8 | -11.1 | — | -52.2 | |||||||||||||||||||||||
Assumed through acquisitions | — | — | -0.2 | 8.5 | — | — | |||||||||||||||||||||||
Benefits paid | -119.4 | -101.6 | -38.1 | -39.2 | -22.1 | -22.2 | |||||||||||||||||||||||
Foreign currency translation | — | — | -99 | 23.0 | — | — | |||||||||||||||||||||||
Projected benefit obligation, end of year | 2,252.7 | 1,886.3 | 1,424.9 | 1,243.6 | 240.4 | 234.1 | |||||||||||||||||||||||
Plan Assets | |||||||||||||||||||||||||||||
Fair value of plan assets, beginning of year | 1,848.9 | 1,633.5 | 787.6 | 689.3 | 14.8 | 15.1 | |||||||||||||||||||||||
Actual returns on plan assets | 136.4 | 307.3 | 108.6 | 64.7 | 0.9 | 2.8 | |||||||||||||||||||||||
Company contributions | 5.7 | 9.7 | 52.8 | 52.6 | 18.2 | 17.7 | |||||||||||||||||||||||
Participant contributions | — | — | 3.6 | 3.7 | 1.5 | 1.4 | |||||||||||||||||||||||
Assumed through acquisitions | — | — | — | 5.9 | — | — | |||||||||||||||||||||||
Settlements | — | — | -12.8 | -1.5 | — | — | |||||||||||||||||||||||
Benefits paid | -119.4 | -101.6 | -38.1 | -39.2 | -22.1 | -22.2 | |||||||||||||||||||||||
Foreign currency translation | — | — | -54 | 12.1 | — | — | |||||||||||||||||||||||
Fair value of plan assets, end of year | 1,871.6 | 1,848.9 | 847.7 | 787.6 | 13.3 | 14.8 | |||||||||||||||||||||||
Funded Status, end of year | -381.1 | -37.4 | -577.2 | -456 | -227.1 | -219.3 | |||||||||||||||||||||||
Amounts recognized in Consolidated Balance Sheet: | |||||||||||||||||||||||||||||
Other assets | — | 58.6 | 15.9 | 31.6 | — | — | |||||||||||||||||||||||
Other current liabilities | -9.6 | -6.8 | -15.7 | -14.6 | -7 | -6 | |||||||||||||||||||||||
Postretirement healthcare and pension benefits | -371.5 | -89.2 | -577.4 | -473 | -220.1 | -213.3 | |||||||||||||||||||||||
Net liability | -381.1 | -37.4 | -577.2 | -456 | -227.1 | -219.3 | |||||||||||||||||||||||
Amounts recognized in Accumulated | |||||||||||||||||||||||||||||
Other Comprehensive Loss (Income): | |||||||||||||||||||||||||||||
Unrecognized net actuarial loss | 555.8 | 258.1 | 358.0 | 198.5 | -33.6 | -42.3 | |||||||||||||||||||||||
Unrecognized net prior service benefits | -40.6 | -47.5 | -2.6 | -3 | — | -1.2 | |||||||||||||||||||||||
Tax benefit | -201.8 | -85.9 | -93.4 | -56.1 | 10.7 | 14.4 | |||||||||||||||||||||||
Accumulated other comprehensive loss (income), net of tax | 313.4 | 124.7 | 262.0 | 139.4 | -22.9 | -29.1 | |||||||||||||||||||||||
Change in Accumulated Other Comprehensive Loss (Income): | |||||||||||||||||||||||||||||
Amortization of net actuarial loss | -23.7 | -62.3 | -9.1 | -17.7 | 8.2 | -0.6 | |||||||||||||||||||||||
Amortization of prior service costs (benefits) | 6.9 | 6.9 | -0.1 | 1.4 | 0.3 | 0.3 | |||||||||||||||||||||||
Current period net actuarial loss (gain) | 321.4 | -447.7 | 194.8 | -28.7 | 0.5 | -54 | |||||||||||||||||||||||
Current period prior service costs (benefits) | — | — | 0.1 | 2.2 | 0.9 | — | |||||||||||||||||||||||
Settlement | — | -0.9 | — | — | — | — | |||||||||||||||||||||||
Tax expense (benefit) | -115.9 | 187.1 | -37.3 | 11.0 | -3.7 | 20.1 | |||||||||||||||||||||||
Foreign currency translation | — | — | -25.8 | 4.1 | — | — | |||||||||||||||||||||||
Other comprehensive loss (income) | 188.7 | -316.9 | 122.6 | -27.7 | 6.2 | -34.2 | |||||||||||||||||||||||
(a) | Includes qualified and non-qualified plans | ||||||||||||||||||||||||||||
Estimated amounts in accumulated other comprehensive loss expected to be reclassified to net period cost during 2015 are as follows: | |||||||||||||||||||||||||||||
U.S. | INTERNATIONAL | U. S. POSTRETIREMENT | |||||||||||||||||||||||||||
MILLIONS | PENSION (a) | PENSION | HEALTH CARE | ||||||||||||||||||||||||||
Net actuarial loss (gain) | $ | 48.5 | $ | 16.9 | $ | -6.2 | |||||||||||||||||||||||
Net prior service costs (benefits) | -6.9 | -0.1 | -0.1 | ||||||||||||||||||||||||||
Total | $ | 41.6 | $ | 16.8 | $ | -6.3 | |||||||||||||||||||||||
(a) | Includes qualified and non-qualified plans | ||||||||||||||||||||||||||||
The aggregate projected benefit obligation, accumulated benefit obligation and fair value of pension plan assets for plans with accumulated benefit obligations in excess of plan assets were as follows: | |||||||||||||||||||||||||||||
DECEMBER 31 (MILLIONS) | 2014 | 2013 | |||||||||||||||||||||||||||
Aggregate projected benefit obligation | $ | 3,272.1 | $ | 869.2 | |||||||||||||||||||||||||
Accumulated benefit obligation | 3,011.9 | 794.9 | |||||||||||||||||||||||||||
Fair value of plan assets | 2,315.7 | 309.9 | |||||||||||||||||||||||||||
These plans include the U.S. non-qualified pension plans which are not funded as well as the U.S. qualified pension plan. These plans also include various international pension plans which are funded consistent with local practices and requirements. | |||||||||||||||||||||||||||||
Net Periodic Benefit Costs | |||||||||||||||||||||||||||||
Pension and postretirement health care benefits expense for the company’s operations are as follows: | |||||||||||||||||||||||||||||
U.S. | INTERNATIONAL | U.S. POSTRETIREMENT | |||||||||||||||||||||||||||
PENSION(a) | PENSION | HEALTH CARE | |||||||||||||||||||||||||||
MILLIONS | 2014 | 2013 | 2012 | 2014 | 2013 | 2012 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Service cost — employee benefits earned during the year | $ | 66.4 | $ | 68.6 | $ | 50.5 | $ | 32.2 | $ | 36 | $ | 29.6 | $ | 4.3 | $ | 5.9 | $ | 5.1 | |||||||||||
Interest cost on benefit obligation | 90 | 84.7 | 89.3 | 49.8 | 47.2 | 48.3 | 10.8 | 10.8 | 12.9 | ||||||||||||||||||||
Expected return on plan assets | (128.4 | ) | (130.1 | ) | (127.1 | ) | (54.6 | ) | (46.9 | ) | (42.3 | ) | (1.0 | ) | (1.1 | ) | (1.2 | ) | |||||||||||
Recognition of net actuarial loss | 23.7 | 62.3 | 45.1 | 7 | 11.3 | 3.9 | (8.2 | ) | 0.6 | 0.4 | |||||||||||||||||||
Amortization of prior service cost (benefit) | (6.9 | ) | (6.9 | ) | (4.2 | ) | 0.4 | (0.3 | ) | 0.2 | (0.3 | ) | (0.3 | ) | 0.1 | ||||||||||||||
Settlements/Curtailments | –– | 0.9 | 2.4 | (1.3 | ) | (0.3 | ) | 1.6 | — | — | — | ||||||||||||||||||
Total expense | $ | 44.8 | $ | 79.5 | $ | 56 | $ | 33.5 | $ | 47 | $ | 41.3 | $ | 5.6 | $ | 15.9 | $ | 17.3 | |||||||||||
(a) | Includes qualified and non-qualified plans | ||||||||||||||||||||||||||||
Plan Assumptions | U.S. | INTERNATIONAL | U.S. POSTRETIREMENT | ||||||||||||||||||||||||||
PENSION(a) | PENSION | HEALTH CARE | |||||||||||||||||||||||||||
PERCENT | 2014 | 2013 | 2012 | 2014 | 2013 | 2012 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Weighted-average actuarial assumptions used to determine benefit obligations as of year end: | |||||||||||||||||||||||||||||
Discount rate | 4.14% | 4.92% | 4.14% | 3.02% | 4.09% | 4.04% | 4.08% | 4.77% | 3.95% | ||||||||||||||||||||
Projected salary increase | 4.32 | 4.32 | 4.32 | 2.66 | 2.73 | 2.74 | |||||||||||||||||||||||
Weighted-average actuarial assumptions used to determine net cost: | |||||||||||||||||||||||||||||
Discount rate | 4.92 | 4.14 | 4.85 | 4.45 | 4.34 | 5.17 | 4.77 | 3.95 | 4.8 | ||||||||||||||||||||
Expected return on plan assets | 7.75 | 8.25 | 8.25 | 6.9 | 6.79 | 6.87 | 7.75 | 8.25 | 8.25 | ||||||||||||||||||||
Projected salary increase | 4.32 | 4.32 | 4.08 | 3.58 | 3.7 | 3.59 | |||||||||||||||||||||||
(a) | Includes qualified and non-qualified plans | ||||||||||||||||||||||||||||
The discount rate assumptions for the U.S. plans are developed using a bond yield curve constructed from a population of high-quality, non-callable, corporate bond issues with maturities ranging from six months to thirty years. A discount rate is estimated for the U.S. plans and is based on the durations of the underlying plans. | |||||||||||||||||||||||||||||
The expected long-term rate of return used for the U.S. plans is based on the pension plan’s asset mix. The company considers expected long-term real returns on asset categories, expectations for inflation, and estimates of the impact of active management of the assets in coming to the final rate to use. The company also considers actual historical returns. | |||||||||||||||||||||||||||||
The expected long-term rate of return used for the company’s international plans is determined in each local jurisdiction and is based on the assets held in that jurisdiction, the expected rate of returns for the type of assets held and any guaranteed rate of return provided by the investment. The other assumptions used to measure the international pension obligations, including discount rate, vary by country based on specific local requirements and information. As previously noted, the measurement date for these plans is November 30. | |||||||||||||||||||||||||||||
For postretirement benefit measurement purposes as of December 31, 2014, the annual rates of increase in the per capita cost of covered health care were assumed to be 7.5%. The rates are assumed to decrease each year until they reach 5% in 2023 and remain at those levels thereafter. Health care costs for certain employees which are eligible for subsidy by the company are limited by a cap on the subsidy. | |||||||||||||||||||||||||||||
Assumed health care cost trend rates have an effect on the amounts reported for the company’s U.S. postretirement health care benefits plan. A one-percentage point change in the assumed health care cost trend rates would have the following effects: | |||||||||||||||||||||||||||||
1-PERCENTAGE POINT | |||||||||||||||||||||||||||||
MILLIONS | INCREASE | DECREASE | |||||||||||||||||||||||||||
Effect on total of service and interest cost components | $ | -0.1 | $ | 0.1 | |||||||||||||||||||||||||
Effect on postretirement benefit obligation | 1.0 | -1.5 | |||||||||||||||||||||||||||
Plan Asset Management | |||||||||||||||||||||||||||||
The company’s U.S. investment strategy and policies are designed to maximize the possibility of having sufficient funds to meet the long-term liabilities of the pension fund, while achieving a balance between the goals of asset growth of the plan and keeping risk at a reasonable level. Current income is not a key goal of the policy. The asset allocation position reflects the ability and willingness to accept relatively more short-term variability in the performance of the pension plan portfolio in exchange for the expectation of better long-term returns, lower pension costs and better funded status in the long run. | |||||||||||||||||||||||||||||
The pension fund is diversified across a number of asset classes and securities. Selected individual portfolios within the asset classes may be undiversified while maintaining the diversified nature of total plan assets. The company has no significant concentration of risk in its U.S. plan assets. | |||||||||||||||||||||||||||||
Assets of funded retirement plans outside the U.S. are managed in each local jurisdiction and asset allocation strategy is set in accordance with local rules, regulations and practice. Therefore, no overall target asset allocation is presented. Although non-U.S. equity securities are all considered international for the company, some equity securities are considered domestic for the local plan. The funds are invested in a variety of equities, bonds and real estate investments and, in some cases, the assets are managed by insurance companies which may offer a guaranteed rate of return. The company has no significant concentration of risk in its international plan assets. | |||||||||||||||||||||||||||||
The discussion that follows references the fair value measurements in terms of levels 1, 2 and 3. See Note 7 for definitions of these levels. Plan assets by level are as follows: | |||||||||||||||||||||||||||||
Level 1 - Cash, and certain equity securities and fixed income: Valued at the quoted market prices of shares held by the plans at year-end in the active market on which the individual securities are traded. | |||||||||||||||||||||||||||||
Level 2 - Real estate, insurance contracts, and certain equity securities and fixed income: Valued based on inputs other than quoted prices that are observable for the securities. | |||||||||||||||||||||||||||||
Level 3 - Hedge funds and private equity: Valued based on the net asset values of the underlying partnerships. The net asset values of the partnerships are based on the fair values of the underlying investments of the partnerships. Quoted market prices are used to value the underlying investments of the partnerships, where available. | |||||||||||||||||||||||||||||
U.S. Assets | |||||||||||||||||||||||||||||
The allocation and fair value of the company’s U.S. plan assets for its defined benefit pension and postretirement health care benefit plans are as follows: | |||||||||||||||||||||||||||||
TARGET | |||||||||||||||||||||||||||||
ASSET | ASSET | ||||||||||||||||||||||||||||
CATEGORY | ALLOCATION | PERCENTAGE | |||||||||||||||||||||||||||
PERCENTAGE | OF PLAN ASSETS | ||||||||||||||||||||||||||||
DECEMBER 31 (%) | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||||||||
Large cap equity | 34% | 34% | 37% | 37% | |||||||||||||||||||||||||
Small cap equity | 9 | 9 | 9 | 11 | |||||||||||||||||||||||||
International equity | 13 | 13 | 13 | 14 | |||||||||||||||||||||||||
Fixed income: | |||||||||||||||||||||||||||||
Core fixed income | 18 | 18 | 18 | 17 | |||||||||||||||||||||||||
High-yield bonds | 5 | 5 | 5 | 5 | |||||||||||||||||||||||||
Emerging markets | 2 | 2 | 2 | 2 | |||||||||||||||||||||||||
Other: | |||||||||||||||||||||||||||||
Real estate | 4 | 4 | 4 | 3 | |||||||||||||||||||||||||
Hedge funds | 9 | 9 | 8 | 8 | |||||||||||||||||||||||||
Private equity | 6 | 6 | 4 | 3 | |||||||||||||||||||||||||
Total | 100% | 100% | 100% | 100% | |||||||||||||||||||||||||
FAIR VALUE AS OF | |||||||||||||||||||||||||||||
MILLIONS | DECEMBER 31, 2014 | ||||||||||||||||||||||||||||
LEVEL 1 | LEVEL 2 | LEVEL 3 | TOTAL | ||||||||||||||||||||||||||
Cash | $ | 7.4 | $ | 7.4 | |||||||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||||||||
Large cap equity | 693.5 | 693.5 | |||||||||||||||||||||||||||
Small cap equity | 174.9 | 174.9 | |||||||||||||||||||||||||||
International equity | 246.2 | 246.2 | |||||||||||||||||||||||||||
Fixed income: | |||||||||||||||||||||||||||||
Core fixed income | 344.7 | 344.7 | |||||||||||||||||||||||||||
High-yield bonds | 90.5 | 90.5 | |||||||||||||||||||||||||||
Emerging markets | 29.4 | 29.4 | |||||||||||||||||||||||||||
Other: | |||||||||||||||||||||||||||||
Real estate | $ | 72.6 | 72.6 | ||||||||||||||||||||||||||
Hedge funds | $ | 152.0 | 152.0 | ||||||||||||||||||||||||||
Private equity | 73.4 | 73.4 | |||||||||||||||||||||||||||
Other | 0.3 | 0.3 | |||||||||||||||||||||||||||
Total | $ | 1,586.6 | $ | 72.9 | $ | 225.4 | $ | 1,884.9 | |||||||||||||||||||||
FAIR VALUE AS OF | |||||||||||||||||||||||||||||
MILLIONS | DECEMBER 31, 2013 | ||||||||||||||||||||||||||||
LEVEL 1 | LEVEL 2 | LEVEL 3 | TOTAL | ||||||||||||||||||||||||||
Cash | $ | 3.1 | $ | 3.1 | |||||||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||||||||
Large cap equity | 695.2 | 695.2 | |||||||||||||||||||||||||||
Small cap equity | 196.9 | 196.9 | |||||||||||||||||||||||||||
International equity | 258.5 | 258.5 | |||||||||||||||||||||||||||
Fixed income: | |||||||||||||||||||||||||||||
Core fixed income | 323.2 | 323.2 | |||||||||||||||||||||||||||
High-yield bonds | 88.4 | 88.4 | |||||||||||||||||||||||||||
Emerging markets | 29.8 | 29.8 | |||||||||||||||||||||||||||
Other: | |||||||||||||||||||||||||||||
Real estate | $ | 64.7 | 64.7 | ||||||||||||||||||||||||||
Hedge funds | $ | 148.5 | 148.5 | ||||||||||||||||||||||||||
Private equity | 54.9 | 54.9 | |||||||||||||||||||||||||||
Other | 0.5 | 0.5 | |||||||||||||||||||||||||||
Total | $ | 1,595.1 | $ | 65.2 | $ | 203.4 | $ | 1,863.7 | |||||||||||||||||||||
For those assets that are valued using significant unobservable inputs (level 3), the following is a rollforward of the significant activity for the year: | |||||||||||||||||||||||||||||
HEDGE | PRIVATE | ||||||||||||||||||||||||||||
MILLIONS | FUNDS | EQUITY | |||||||||||||||||||||||||||
Balance at December 31, 2012 | $ | 134.6 | $ | 48.2 | |||||||||||||||||||||||||
Unrealized gains | 13.9 | 6.2 | |||||||||||||||||||||||||||
Realized gains | — | 3.6 | |||||||||||||||||||||||||||
Purchases, sales and settlements, net | — | (3.1 | ) | ||||||||||||||||||||||||||
Transfers in and/or out | — | — | |||||||||||||||||||||||||||
Balance at December 31, 2013 | $ | 148.5 | $ | 54.9 | |||||||||||||||||||||||||
Unrealized gains | 3.5 | 2.5 | |||||||||||||||||||||||||||
Realized gains | — | 10 | |||||||||||||||||||||||||||
Purchases, sales and settlements, net | — | 6 | |||||||||||||||||||||||||||
Transfers in and/or out | — | — | |||||||||||||||||||||||||||
Balance at December 31, 2014 | $ | 152 | $ | 73.4 | |||||||||||||||||||||||||
The company is responsible for the valuation process and seeks to obtain quoted market prices for all investments. When quoted market prices are not available, a number of methodologies are used to establish fair value estimates, including discounted cash flow models, prices from recently executed transactions of similar securities or broker/dealer quotes using market observable information to the extent possible. The company reviews the values generated by those models for reasonableness and, in some cases, further analyzes and researches values generated to ensure their accuracy, which includes reviewing other publicly available information. | |||||||||||||||||||||||||||||
International Assets | |||||||||||||||||||||||||||||
The allocation of plan assets and fair value of the company’s international plan assets for its defined benefit pension plans are as follows: | |||||||||||||||||||||||||||||
ASSET | PERCENTAGE | ||||||||||||||||||||||||||||
CATEGORY | OF PLAN ASSETS | ||||||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||||||
DECEMBER 31 (%) | |||||||||||||||||||||||||||||
Cash | 1% | 1% | |||||||||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||||||||
International equity | 43 | 43 | |||||||||||||||||||||||||||
Fixed income: | |||||||||||||||||||||||||||||
Corporate bonds | 22 | 21 | |||||||||||||||||||||||||||
Government bonds | 19 | 18 | |||||||||||||||||||||||||||
Total fixed income | 41 | 39 | |||||||||||||||||||||||||||
Other: | |||||||||||||||||||||||||||||
Insurance contracts | 13 | 15 | |||||||||||||||||||||||||||
Real estate | 2 | 2 | |||||||||||||||||||||||||||
Total | 100% | 100% | |||||||||||||||||||||||||||
FAIR VALUE AS OF | |||||||||||||||||||||||||||||
MILLIONS | 31-Dec-14 | ||||||||||||||||||||||||||||
LEVEL 1 | LEVEL 2 | LEVEL 3 | TOTAL | ||||||||||||||||||||||||||
Cash | $ | 7.2 | $ | 7.2 | |||||||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||||||||
International equity | $ | 363.5 | 363.5 | ||||||||||||||||||||||||||
Fixed income: | |||||||||||||||||||||||||||||
Corporate bonds | 5.1 | 184.2 | 189.3 | ||||||||||||||||||||||||||
Government bonds | 7.7 | 156.7 | 164.4 | ||||||||||||||||||||||||||
Other: | |||||||||||||||||||||||||||||
Insurance contracts | 109.8 | 109.8 | |||||||||||||||||||||||||||
Real estate | 12.7 | 12.7 | |||||||||||||||||||||||||||
Other | 0.5 | 0.3 | 0.8 | ||||||||||||||||||||||||||
Total | $ | 20.5 | $ | 827.2 | $ | 847.7 | |||||||||||||||||||||||
FAIR VALUE AS OF | |||||||||||||||||||||||||||||
MILLIONS | 31-Dec-13 | ||||||||||||||||||||||||||||
LEVEL 1 | LEVEL 2 | LEVEL 3 | TOTAL | ||||||||||||||||||||||||||
Cash | $ | 3.6 | $ | 3.6 | |||||||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||||||||
International equity | $ | 342.5 | 342.5 | ||||||||||||||||||||||||||
Fixed income: | |||||||||||||||||||||||||||||
Corporate bonds | 5.5 | 162.1 | 167.6 | ||||||||||||||||||||||||||
Government bonds | 8.7 | 134.6 | 143.3 | ||||||||||||||||||||||||||
Other: | |||||||||||||||||||||||||||||
Insurance contracts | 116.2 | 116.2 | |||||||||||||||||||||||||||
Real estate | 11.4 | 11.4 | |||||||||||||||||||||||||||
Other | 2.6 | 0.4 | 3.0 | ||||||||||||||||||||||||||
Total | $ | 20.4 | $ | 767.2 | $ | 787.6 | |||||||||||||||||||||||
Multiemployer Plan | |||||||||||||||||||||||||||||
The company has historically contributed to a multiemployer defined benefit pension plan (“MEPP”) under the terms of a collective-bargaining agreement that covers certain union-represented former employees. The company contributed $0.2 million and $0.5 million during 2013 and 2012, respectively to its MEPP. No contributions were made during 2014. | |||||||||||||||||||||||||||||
During the fourth quarter of 2012, the company determined that a withdrawal from the MEPP was probable and based on the underfunded status of the MEPP recorded an estimated withdrawal liability of $4.7 million. During 2013, the company withdrew from the MEPP and as of December 31, 2014, the present value of the company’s withdrawal liability to the MEPP was $4.5 million. | |||||||||||||||||||||||||||||
The risks of participating in a MEPP are different from single-employer pension plans such that assets contributed to the MEPP by one employer may be used to provide benefits to employees of other participating employers. Additionally, if a participating employer stops contributing to the MEPP, the unfunded obligations of the plan may be borne by the remaining participating employers. Participation in the MEPP is not considered significant to the company. | |||||||||||||||||||||||||||||
Cash Flows | |||||||||||||||||||||||||||||
As of year-end 2014, the company’s estimate of benefits expected to be paid in each of the next five fiscal years and in the aggregate for the five fiscal years thereafter for the company’s pension and postretirement health care benefit plans are as follows: | |||||||||||||||||||||||||||||
MEDICARE SUBSIDY | |||||||||||||||||||||||||||||
MILLIONS | ALL PLANS | RECEIPTS | |||||||||||||||||||||||||||
2015 | $ | 159 | $ | 1 | |||||||||||||||||||||||||
2016 | 170 | – | |||||||||||||||||||||||||||
2017 | 177 | – | |||||||||||||||||||||||||||
2018 | 185 | – | |||||||||||||||||||||||||||
2019 | 203 | – | |||||||||||||||||||||||||||
2020-2024 | 1,176 | – | |||||||||||||||||||||||||||
Depending on plan funding levels, the U.S. defined benefit qualified pension plan provides certain terminating participants with an option to receive their pension benefits in the form of lump sum payments. | |||||||||||||||||||||||||||||
The company is currently in compliance with all funding requirements of its U.S. pension and postretirement health care plans. | |||||||||||||||||||||||||||||
No voluntary contributions were made to the merged U.S. pension plan during 2014 and 2013. Based on plan asset values as of December 31, 2011, the company was required to make contributions of $38 million to its Nalco U.S. pension plan during 2012. During 2012, a total of $180 million was funded to the Nalco U.S. pension plan. | |||||||||||||||||||||||||||||
The company seeks to maintain an asset balance that meets the long-term funding requirements identified by the projections of the pension plan’s actuaries while simultaneously satisfying the fiduciary responsibilities prescribed in ERISA. The company also takes into consideration the tax deductibility of contributions to the benefit plans. | |||||||||||||||||||||||||||||
The company is not aware of any expected refunds of plan assets within the next twelve months from any of its existing U.S. or international pension or postretirement benefit plans. | |||||||||||||||||||||||||||||
Savings Plan, ESOP and Profit Sharing | |||||||||||||||||||||||||||||
The company provides a 401(k) savings plan for the majority of its U.S. employees. | |||||||||||||||||||||||||||||
On January 1, 2013, a new plan benefiting active employees accruing final average pay or legacy cash balance pension benefits under the Ecolab Pension Plan was spun off from the Ecolab Savings Plan and ESOP (the “Ecolab Plan”) and into the Ecolab Savings Plan and ESOP for Traditional Benefit Employees (the “New Plan”). Under the New Plan, 401(k) contributions of up to 3% of eligible compensation are matched 100% by the company and 401(k) contributions over 3% and up to 5% of eligible compensation are matched 50% by the company. | |||||||||||||||||||||||||||||
All other active legacy Ecolab U.S. employees remain in the Ecolab Plan and beginning January 1, 2013, received a 100% match on 401(k) contributions of up to 4% of eligible compensation and a 50% match on 401(k) contributions of over 4% and up to 8% of eligible compensation. | |||||||||||||||||||||||||||||
On August 2, 2013, the legacy Nalco Company Profit Sharing and Savings Plan (the “Nalco Plan”) merged into and became part of the Ecolab Plan and eligible legacy Nalco employees began receiving matching contributions as discussed above. Prior to the merger of the plans, beginning January 1, 2013, eligible legacy Nalco employees received a 100% match on 401(k) contributions of up to 4% of eligible compensation and a 50% match on 401(k) contributions of over 4% and up to 8% of eligible compensation. Prior to January 1, 2013, the Nalco Plan provided for matching contributions of up to 4% of eligible compensation for employees who elected to contribute to 401(k) accounts and annual profit sharing contributions based on the company’s financial performance. Profit sharing contributions were no longer made for plan years after December 31, 2012. | |||||||||||||||||||||||||||||
On December 31, 2013, the legacy Champion Permian Mud Service, Inc. 401(k) Savings Plan (the “Permian Plan”) merged into and became part of the Ecolab Plan and eligible legacy Champion employees began receiving matching contributions as discussed above. Prior to January 1, 2014, the Champion Plan provided a discretionary matching contribution of 100% on 401(k) contributions of up to 3% of eligible compensation and 50% on 401(k) contributions of over 3% and up to 6% of eligible compensation. | |||||||||||||||||||||||||||||
The company’s matching contributions are 100% vested immediately. The company’s matching contribution expense was $67 million in 2014. The company’s matching contribution expense for legacy Ecolab and legacy Nalco employees was $54 million and $43 million in 2013 and 2012, respectively. The company’s profit sharing expense for legacy Nalco employees was $13 million in 2012. Ecolab’s matching contribution to the Permian Plan during 2013, from the close of the Champion acquisition in April 2013 to December 2013, was $5 million. | |||||||||||||||||||||||||||||
OPERATING_SEGMENTS_AND_GEOGRAP
OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION | 12 Months Ended | |||||||||||||||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||||||||||||||
OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION | ||||||||||||||||||||||||||||||||
OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION | ||||||||||||||||||||||||||||||||
17. OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION | ||||||||||||||||||||||||||||||||
The company’s organizational structure consists of global business unit and global regional leadership teams. The company’s ten operating units, which are also operating segments, follow its commercial and product-based activities and are based on engagement in business activities, availability of discrete financial information and review of operating results by the Chief Operating Decision Maker at the identified operating unit level. | ||||||||||||||||||||||||||||||||
Eight of the company’s ten operating units have been aggregated into three reportable segments based on similar economic characteristics and future prospects, nature of the products and production processes, end-use markets, channels of distribution and regulatory environment. The company’s reportable segments are Global Industrial, Global Institutional and Global Energy. The company’s two operating units that are primarily fee-for-service businesses have been combined into the Other segment and do not meet the quantitative criteria to be separately reported. The company reports the Other segment as a reportable segment as it considers information regarding its two underlying operating units as useful in understanding its consolidated results. | ||||||||||||||||||||||||||||||||
Our ten operating units are aggregated as follows: | ||||||||||||||||||||||||||||||||
Global Industrial — Includes the Water, Food & Beverage, Paper and Textile Care operating units. It provides water treatment and process applications, and cleaning and sanitizing solutions primarily to large industrial customers within the manufacturing, food and beverage processing, chemical, mining and primary metals, power generation, pulp and paper, and commercial laundry industries. The underlying operating units exhibit similar manufacturing processes, distribution methods and economic characteristics. | ||||||||||||||||||||||||||||||||
Global Institutional - Includes the Institutional, Specialty and Healthcare operating units. It provides specialized cleaning and sanitizing products to the foodservice, hospitality, lodging, healthcare, government and education and retail industries. The underlying operating units exhibit similar manufacturing processes, distribution methods and economic characteristics. | ||||||||||||||||||||||||||||||||
Global Energy - Includes the Energy operating unit. It serves the process chemicals and water treatment needs of the global petroleum and petrochemical industries in both upstream and downstream applications. | ||||||||||||||||||||||||||||||||
Other - Includes the Pest Elimination and Equipment Care operating units, which provide pest elimination and kitchen repair and maintenance. Its two operating units are primarily fee-for-service businesses. | ||||||||||||||||||||||||||||||||
Reportable Segment Information | ||||||||||||||||||||||||||||||||
Effective in the first quarter of 2014, the company made immaterial changes to its reportable segments, including the movement of certain customers between reportable segments to reflect its continued integration of businesses and consistency across its global markets and customers. In addition, the company’s management made immaterial changes to the way it measures and reports segment operating income by updating the internal allocations of certain supply chain and SG&A expenses related to its centralized functions. | ||||||||||||||||||||||||||||||||
The company evaluates the performance of its international operations within its reportable segments based on fixed currency exchange rates which eliminate the impact of exchange rate fluctuations on its international operations. The difference between the fixed currency exchange rates and the actual currency exchange rates is reported as “effect of foreign currency translation” in the following tables. All other accounting policies of the reportable segments are consistent with U.S. GAAP and the accounting policies of the company described in Note 2. | ||||||||||||||||||||||||||||||||
Fixed currency amounts for the “Previously Reported” values shown in the 2013 and 2012 sections of the following tables are based on translation into U.S. dollars at fixed foreign currency exchange rates established by management at the beginning of 2013. The “Changes in Currency Rates” column reflects the impact on previously reported values related to fixed currency exchange rates established by management at the beginning of 2014. The “Segment Changes” column reflects the segment changes discussed above. Presenting the “Revised” column at 2014 management rates was done to allow for consistent comparisons against 2014 results. | ||||||||||||||||||||||||||||||||
The following table presents net sales and operating income (loss) by reportable segment, including the impact of the preceding changes on previously reported 2013 and 2012 reportable segment values: | ||||||||||||||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||||||||||||||
CHANGES IN | CHANGES IN | |||||||||||||||||||||||||||||||
PREVIOUSLY | CURRENCY | SEGMENT | PREVIOUSLY | CURRENCY | SEGMENT | |||||||||||||||||||||||||||
MILLIONS | 2014 | REPORTED | RATES | CHANGES | REVISED | REPORTED | RATES | CHANGES | REVISED | |||||||||||||||||||||||
Net Sales | ||||||||||||||||||||||||||||||||
Global Industrial | $ | 4,886.70 | $ | 4,905.10 | $ | (149.3 | ) | $ | (13.0 | ) | $ | 4,742.80 | $ | 4,762.20 | $ | (137.4 | ) | $ | (10.7 | ) | $ | 4,614.10 | ||||||||||
Global Institutional | 4,314.50 | 4,202.50 | (55.4 | ) | 5.4 | 4,152.50 | 4,063.20 | (48.2 | ) | 2.5 | 4,017.50 | |||||||||||||||||||||
Global Energy | 4,283.30 | 3,532.80 | (113.1 | ) | 7.6 | 3,427.30 | 2,275.40 | (60.2 | ) | 8.3 | 2,223.50 | |||||||||||||||||||||
Other | 750.3 | 715 | (5.7 | ) | — | 709.3 | 736.3 | (5.6 | ) | (0.1 | ) | 730.6 | ||||||||||||||||||||
Subtotal at fixed currency | 14,234.80 | 13,355.40 | (323.5 | ) | — | 13,031.90 | 11,837.10 | (251.4 | ) | — | 11,585.70 | |||||||||||||||||||||
Effect of foreign currency translation | 45.7 | (102.0 | ) | 323.5 | — | 221.5 | 1.6 | 251.4 | — | 253 | ||||||||||||||||||||||
Total reported net sales | $ | 14,280.50 | $ | 13,253.40 | $ | — | — | $ | 13,253.40 | $ | 11,838.70 | $ | — | $ | — | $ | 11,838.70 | |||||||||||||||
Operating Income (Loss) | ||||||||||||||||||||||||||||||||
Global Industrial | $ | 642.6 | $ | 637.3 | $ | (27.1 | ) | $ | (7.2 | ) | $ | 603 | $ | 569.5 | $ | (22.9 | ) | $ | (4.4 | ) | $ | 542.2 | ||||||||||
Global Institutional | 821.2 | 764.5 | (11.7 | ) | 15.4 | 768.2 | 700.7 | (11.8 | ) | 14.1 | 703 | |||||||||||||||||||||
Global Energy | 634.9 | 492.1 | (19.2 | ) | (14.0 | ) | 458.9 | 360.7 | (8.7 | ) | (15.1 | ) | 336.9 | |||||||||||||||||||
Other | 116.5 | 97.9 | 0.4 | 5.8 | 104.1 | 103 | (0.9 | ) | 5.4 | 107.5 | ||||||||||||||||||||||
Corporate | (263.4 | ) | (411.6 | ) | 2.5 | — | (409.1 | ) | (442.3 | ) | — | — | (442.3 | ) | ||||||||||||||||||
Subtotal at fixed currency rates | 1,951.80 | 1,580.20 | (55.1 | ) | — | 1,525.10 | 1,291.60 | (44.3 | ) | — | 1,247.30 | |||||||||||||||||||||
Effect of foreign currency translation | 3.2 | (19.6 | ) | 55.1 | — | 35.5 | (2.3 | ) | 44.3 | — | 42 | |||||||||||||||||||||
Total reported operating income | $ | 1,955.00 | $ | 1,560.60 | $ | — | $ | — | $ | 1,560.60 | $ | 1,289.30 | $ | — | $ | — | $ | 1,289.30 | ||||||||||||||
The profitability of the company’s operating units is evaluated by management based on operating income. The company has no intersegment revenues. | ||||||||||||||||||||||||||||||||
Consistent with the company’s internal management reporting, the Corporate segment includes intangible asset amortization specifically from the Nalco merger and in 2013 and 2012 certain integration costs for both the Nalco and Champion transactions. The Corporate segment also includes special (gains) and charges, as discussed in Note 3, reported on the Consolidated Statement of Income. | ||||||||||||||||||||||||||||||||
The company has an integrated supply chain function that serves all of its reportable segments. As such, asset and capital expenditure information by reportable segment has not been provided and is not available, since the company does not produce or utilize such information internally. In addition, although depreciation and amortization expense is a component of each reportable segment’s operating results, it is not discretely identifiable. | ||||||||||||||||||||||||||||||||
The company had one class of products which comprised 10% or more of consolidated net sales in any of the last three years. Sales of warewashing products were approximately 10% and 11% of consolidated net sales in 2013 and 2012, respectively. | ||||||||||||||||||||||||||||||||
The vast majority of the company’s revenue is driven by the sale of its chemical products, with any corresponding service generally considered incidental to the product sale. The exception to this is the Pest Elimination and Equipment Care operating units, which are within the Other segment and as previously noted, are primarily fee-for-service businesses. In addition, the Global Industrial, Global Institutional and Global Energy reportable segments derive a small amount of revenue directly from service offerings. All other service based revenue is insignificant. | ||||||||||||||||||||||||||||||||
Total service revenue at public exchange rates by reportable segment is shown below. | ||||||||||||||||||||||||||||||||
Service Revenue | ||||||||||||||||||||||||||||||||
MILLIONS | 2014 | 2013 | 2012 | |||||||||||||||||||||||||||||
Global Industrial | $ | 53.2 | $ | 51.9 | $ | 48.3 | ||||||||||||||||||||||||||
Global Institutional | 31.1 | 27.0 | 23.8 | |||||||||||||||||||||||||||||
Global Energy | 294.1 | 179.3 | 156.0 | |||||||||||||||||||||||||||||
Other | 655.1 | 619.4 | 590.1 | |||||||||||||||||||||||||||||
Geographic Information | ||||||||||||||||||||||||||||||||
Net sales and long-lived assets at public exchange rates by geographic region are as follows: | ||||||||||||||||||||||||||||||||
Net Sales | Long-Lived Assets, net | |||||||||||||||||||||||||||||||
MILLIONS | 2014 | 2013 | 2012 | 2014 | 2013 | |||||||||||||||||||||||||||
United States | $ | 7,233.6 | $ | 6,696.0 | $ | 5,865.3 | $ | 8,677.2 | $ | 8,755.8 | ||||||||||||||||||||||
EMEA | 3,470.6 | 3,255.0 | 3,027.9 | 2,066.8 | 2,180.2 | |||||||||||||||||||||||||||
Asia Pacific | 1,685.9 | 1,631.8 | 1,586.8 | 2,339.8 | 2,368.6 | |||||||||||||||||||||||||||
Latin America | 1,177.4 | 1,022.6 | 849.7 | 779.8 | 832.4 | |||||||||||||||||||||||||||
Canada | 713.0 | 648.0 | 509.0 | 732.0 | 801.1 | |||||||||||||||||||||||||||
Total | $ | 14,280.5 | $ | 13,253.4 | $ | 11,838.7 | $ | 14,595.6 | $ | 14,938.1 | ||||||||||||||||||||||
Net sales by geographic region were determined based on origin of sale. Geographic data for long-lived assets is based on physical location of those assets. There were no sales from a single foreign country or individual customer that were material to the company’s consolidated net sales. | ||||||||||||||||||||||||||||||||
QUARTERLY_FINANCIAL_DATA_UNAUD
QUARTERLY FINANCIAL DATA (UNAUDITED) | 12 Months Ended | |||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||
QUARTERLY FINANCIAL DATA (UNAUDITED) | ||||||||||||||||||
QUARTERLY FINANCIAL DATA (UNAUDITED) | ||||||||||||||||||
18. QUARTERLY FINANCIAL DATA (UNAUDITED) | ||||||||||||||||||
FIRST | SECOND | THIRD | FOURTH | |||||||||||||||
MILLIONS, EXCEPT PER SHARE | QUARTER | QUARTER | QUARTER | QUARTER | YEAR | |||||||||||||
2014 | ||||||||||||||||||
Net sales | $ | 3,336.60 | $ | 3,568.20 | $ | 3,694.90 | $ | 3,680.80 | $ | 14,280.50 | ||||||||
Cost of sales (including special charges of $6.0, $1.1, $0.8 and $6.4 in Q1, Q2, Q3 and Q4, respectively) | 1,819.20 | 1,909.40 | 1,970.60 | 1,979.90 | 7,679.10 | |||||||||||||
Selling, general and administrative expenses | 1,136.90 | 1,152.70 | 1,145.90 | 1,142.10 | 4,577.60 | |||||||||||||
Special (gains) and charges | 29.6 | (6.1 | ) | 7 | 38.3 | 68.8 | ||||||||||||
Operating income | 350.9 | 512.2 | 571.4 | 520.5 | 1,955.00 | |||||||||||||
Interest expense, net | 65.1 | 66.2 | 63.3 | 62 | 256.6 | |||||||||||||
Income before income taxes | 285.8 | 446 | 508.1 | 458.5 | 1,698.40 | |||||||||||||
Provision for income taxes | 91.3 | 131 | 138.7 | 115.2 | 476.2 | |||||||||||||
Net income including noncontrolling interest | 194.5 | 315 | 369.4 | 343.3 | 1,222.20 | |||||||||||||
Less: Net income attributable to noncontrolling interest | 3.5 | 3.6 | 4.5 | 7.8 | 19.4 | |||||||||||||
Net income attributable to Ecolab | $ | 191 | $ | 311.4 | $ | 364.9 | $ | 335.5 | $ | 1,202.80 | ||||||||
Earnings attributable to Ecolab per common share | ||||||||||||||||||
Basic | $ | 0.64 | $ | 1.04 | $ | 1.22 | $ | 1.12 | $ | 4.01 | ||||||||
Diluted | $ | 0.62 | $ | 1.02 | $ | 1.19 | $ | 1.1 | $ | 3.93 | ||||||||
Weighted-average common shares outstanding | ||||||||||||||||||
Basic | 300.6 | 299.6 | 300 | 300.1 | 300.1 | |||||||||||||
Diluted | 306.5 | 305.2 | 305.7 | 305.6 | 305.9 | |||||||||||||
2013 | ||||||||||||||||||
Net sales | $ | 2,872.10 | $ | 3,337.80 | $ | 3,484.00 | $ | 3,559.50 | $ | 13,253.40 | ||||||||
Cost of sales (including special charges of $2.0, $15.2, $6.3 and $19.7 in Q1, Q2, Q3 and Q4, respectively) | 1,539.70 | 1,810.20 | 1,866.10 | 1,945.20 | 7,161.20 | |||||||||||||
Selling, general and administrative expenses | 1,021.00 | 1,101.70 | 1,114.10 | 1,123.50 | 4,360.30 | |||||||||||||
Special (gains) and charges | 49.7 | 73.6 | 27.8 | 20.2 | 171.3 | |||||||||||||
Operating income | 261.7 | 352.3 | 476 | 470.6 | 1,560.60 | |||||||||||||
Interest expense, net (including special charges of $2.2 and $0.3 in Q1 and Q2, respectively) | 61.5 | 66.2 | 67 | 67.6 | 262.3 | |||||||||||||
Income before income taxes | 200.2 | 286.1 | 409 | 403 | 1,298.30 | |||||||||||||
Provision for income taxes | 39.2 | 70.3 | 101.8 | 113.4 | 324.7 | |||||||||||||
Net income including noncontrolling interest | 161 | 215.8 | 307.2 | 289.6 | 973.6 | |||||||||||||
Less: Net income attributable to noncontrolling interest (including special charges of $0.5 in Q1) | 1.4 | 2.7 | (0.8 | ) | 2.5 | 5.8 | ||||||||||||
Net income attributable to Ecolab | $ | 159.6 | $ | 213.1 | $ | 308 | $ | 287.1 | $ | 967.8 | ||||||||
Earnings attributable to Ecolab per common share | ||||||||||||||||||
Basic | $ | 0.54 | $ | 0.71 | $ | 1.02 | $ | 0.95 | $ | 3.23 | ||||||||
Diluted | $ | 0.53 | $ | 0.69 | $ | 1 | $ | 0.93 | $ | 3.16 | ||||||||
Weighted-average common shares outstanding | ||||||||||||||||||
Basic | 295.4 | 301.5 | 301.2 | 301.2 | 299.9 | |||||||||||||
Diluted | 300.9 | 307.4 | 307.2 | 307.5 | 305.9 | |||||||||||||
Per share amounts do not necessarily sum due to changes in the calculation of shares outstanding for each discrete period and rounding. | ||||||||||||||||||
SIGNIFICANT_ACCOUNTING_POLICIE1
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
SIGNIFICANT ACCOUNTING POLICIES | ||||||||||||||||||||
Principles of Consolidation | ||||||||||||||||||||
Principles of Consolidation | ||||||||||||||||||||
The consolidated financial statements include the accounts of the company and all subsidiaries in which the company has a controlling financial interest. Investments in companies, joint ventures or partnerships in which the company does not have control, but has the ability to exercise significant influence over operating and financial policies, are reported using the equity method. International subsidiaries are included in the financial statements on the basis of their U.S. GAAP November 30 fiscal year-ends to facilitate the timely inclusion of such entities in the company’s consolidated financial reporting. All intercompany transactions and profits are eliminated in consolidation. | ||||||||||||||||||||
Revisions | ||||||||||||||||||||
Revisions | ||||||||||||||||||||
Effective in the first quarter of 2014, certain employee-related costs from the company’s recently acquired businesses that were historically presented within cost of sales were revised and reclassified to SG&A on the Consolidated Statement of Income. These immaterial revisions were made to conform with management’s view of the respective costs within the global organizational model. Total costs reclassified were $78.9 million and $98.1 million for the years ended December 31, 2013 and 2012, respectively. | ||||||||||||||||||||
Results for 2013 and 2012 have been revised to conform to the current year presentation. The reclassification had no impact on earnings, financial position or cash flows. | ||||||||||||||||||||
Use of Estimates | ||||||||||||||||||||
Use of Estimates | ||||||||||||||||||||
The preparation of the company’s financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates. The company’s critical accounting estimates include revenue recognition, valuation allowances and accrued liabilities, actuarially determined liabilities, restructuring, income taxes and long-lived assets, intangible assets and goodwill. | ||||||||||||||||||||
Foreign Currency Translation | ||||||||||||||||||||
Foreign Currency Translation | ||||||||||||||||||||
Financial position and reported results of operations of the company’s international subsidiaries are measured using local currencies as the functional currency. Assets and liabilities of these operations are translated at the exchange rates in effect at each fiscal year end. The translation adjustments related to assets and liabilities that arise from the use of differing exchange rates from period to period are included in accumulated other comprehensive income (loss) in shareholders’ equity. Income statement accounts are translated at average rates of exchange prevailing during the year. The company evaluates its International operations based on fixed rates of exchange; however, the different exchange rates from period to period impact the amount of reported income from consolidated operations. The foreign currency fluctuations of any foreign subsidiaries that operate in highly inflationary environments are included in results of operations. Further details related to the highly inflationary environment in Venezuela are included in Note 3. | ||||||||||||||||||||
Concentration of Credit Risk | ||||||||||||||||||||
Concentration of Credit Risk | ||||||||||||||||||||
Credit risk represents the accounting loss that would be recognized at the reporting date if counterparties failed to perform as contracted. The company believes the likelihood of incurring material losses due to concentration of credit risk is remote. The principal financial instruments subject to credit risk are as follows: | ||||||||||||||||||||
Cash and Cash Equivalents - The company maintains cash deposits with major banks, which from time to time may exceed insured limits. The possibility of loss related to financial condition of major banks has been deemed minimal. Additionally, the company’s investment policy limits exposure to concentrations of credit risk and changes in market conditions. | ||||||||||||||||||||
Accounts Receivable - A large number of customers in diverse industries and geographies, as well as the practice of establishing reasonable credit lines, limits credit risk. Based on historical trends and experiences, the allowance for doubtful accounts is adequate to cover potential credit risk losses. | ||||||||||||||||||||
Foreign Currency Contracts and Derivatives - Exposure to credit risk is limited by internal policies and active monitoring of counterparty risks. In addition, the company selects a diversified group of major international banks and financial institutions as counterparties. The company does not anticipate nonperformance by any of these counterparties. | ||||||||||||||||||||
Cash and Cash Equivalents | ||||||||||||||||||||
Cash and Cash Equivalents | ||||||||||||||||||||
Cash equivalents include highly-liquid investments with a maturity of three months or less when purchased. | ||||||||||||||||||||
Accounts Receivable and Allowance For Doubtful Accounts | ||||||||||||||||||||
Accounts Receivable and Allowance For Doubtful Accounts | ||||||||||||||||||||
Accounts receivable are carried at their face amounts less an allowance for doubtful accounts. Accounts receivable are recorded at the invoiced amount and generally do not bear interest. The company estimates the balance of allowance for doubtful accounts by analyzing accounts receivable balances by age and applying historical write-off and collection trend rates. The company’s estimates include separately providing for customer balances based on specific circumstances and credit conditions, and when it is deemed probable that the balance is uncollectible. Account balances are charged off against the allowance when it is determined the receivable will not be recovered. | ||||||||||||||||||||
The company’s allowance for doubtful accounts balance also includes an allowance for the expected return of products shipped and credits related to pricing or quantities shipped of $15 million, $14 million and $13 million as of December 31, 2014, 2013 and 2012, respectively. Returns and credit activity is recorded directly to sales. | ||||||||||||||||||||
The following table summarizes the activity in the allowance for doubtful accounts: | ||||||||||||||||||||
MILLIONS | 2014 | 2013 | 2012 | |||||||||||||||||
Beginning balance | $ | 81 | $ | 73 | $ | 49 | ||||||||||||||
Bad debt expense | 23 | 28 | 37 | |||||||||||||||||
Write-offs | (20 | ) | (21 | ) | (13 | ) | ||||||||||||||
Other(a) | (7 | ) | 1 | – | ||||||||||||||||
Ending balance | $ | 77 | $ | 81 | $ | 73 | ||||||||||||||
(a) | Other amounts are primarily the effects of changes in currency translations and the impact of allowance for returns and credits. | |||||||||||||||||||
Inventory Valuations | ||||||||||||||||||||
Inventory Valuations | ||||||||||||||||||||
Inventories are valued at the lower of cost or market. Certain U.S. inventory costs are determined on a last-in, first-out (LIFO) basis. LIFO inventories represented 37% and 34% of consolidated inventories as of December 31, 2014 and 2013, respectively. LIFO inventories include certain legacy Nalco U.S. inventory acquired at fair value as part of the Nalco merger. All other inventory costs are determined using either the average cost or first-in, first-out (FIFO) methods. Inventory values at FIFO, as shown in Note 5, approximate replacement cost. | ||||||||||||||||||||
Property, Plant and Equipment | ||||||||||||||||||||
Property, Plant and Equipment | ||||||||||||||||||||
Property, plant and equipment assets are stated at cost. Merchandising and customer equipment consists principally of various dispensing systems for the company’s cleaning and sanitizing products, dishwashing machines and process control and monitoring equipment. Certain dispensing systems capitalized by the company are accounted for on a mass asset basis, whereby equipment is capitalized and depreciated as a group and written off when fully depreciated. The company capitalizes both internal and external costs of development or purchase of computer software for internal use. Costs incurred for data conversion, training and maintenance associated with capitalized software are expensed as incurred. Expenditures for major renewals and improvements, which significantly extend the useful lives of existing plant and equipment, are capitalized and depreciated. Expenditures for repairs and maintenance are charged to expense as incurred. Upon retirement or disposition of plant and equipment, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in income. | ||||||||||||||||||||
Depreciation is charged to operations using the straight-line method over the assets’ estimated useful lives ranging from 5 to 40 years for buildings and leasehold improvements, 3 to 18 years for machinery and equipment and 3 to 10 years for merchandising and customer equipment and capitalized software. Total depreciation expense was $558 million, $514 million and $468 million for 2014, 2013 and 2012, respectively. | ||||||||||||||||||||
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets | |||||||||||||||||||
Goodwill | ||||||||||||||||||||
Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired. The company’s reporting units are aligned with its ten operating segments. | ||||||||||||||||||||
During the second quarter of 2014, the company completed its annual test for goodwill impairment. The company used a “step zero” qualitative test to assess all ten of its reporting units given substantial levels of headroom and other strong qualitative indicators. Qualitative testing evaluated factors including, but not limited to, economic, market and industry conditions, cost factors and the overall financial performance of the reporting units. Based on the “step zero” testing performed, no adjustment to the carrying value of goodwill was necessary. Additionally, the company noted no changes in events or circumstances which would have required the completion of the two-step quantitative goodwill impairment analysis for any of the assessed reporting units. | ||||||||||||||||||||
If circumstances change significantly, the company would also test a reporting unit’s goodwill for impairment during interim periods between its annual tests. Based on the current and expected performance of the company’s reporting units, updating the impairment testing during the second half of 2014 was not deemed necessary. There has been no impairment of goodwill since the adoption of Financial Accounting Standards Board (“FASB”) guidance for goodwill and other intangibles on January 1, 2002. | ||||||||||||||||||||
The Nalco and Champion transactions resulted in the addition of $4.5 billion and $1.0 billion of goodwill, respectively, within the Energy, Water and Paper reporting units. Subsequent performance of these reporting units relative to projections used for the purchase price allocation of goodwill could result in an impairment if there is either underperformance by the reporting unit or if the carrying value of the reporting unit were to fluctuate significantly due to reasons that did not proportionately change fair value. | ||||||||||||||||||||
The changes in the carrying amount of goodwill for each of the company’s reportable segments are as follows: | ||||||||||||||||||||
GLOBAL | GLOBAL | GLOBAL | ||||||||||||||||||
MILLIONS | INDUSTRIAL | INSTITUTIONAL | ENERGY | OTHER | TOTAL | |||||||||||||||
December 31, 2012 | $ | 2,751.60 | $ | 720.6 | $ | 2,325.30 | $ | 123 | $ | 5,920.50 | ||||||||||
Acquisitions(a) | 33.9 | — | 1,037.90 | — | 1,071.80 | |||||||||||||||
Dispositions | (2.1 | ) | — | — | — | (2.1 | ) | |||||||||||||
Effect of foreign currency translation | (53.9 | ) | (14.0 | ) | (57.0 | ) | (2.4 | ) | (127.3 | ) | ||||||||||
December 31, 2013 | 2,729.50 | 706.6 | 3,306.20 | 120.6 | 6,862.90 | |||||||||||||||
Current year acquisitions(a) | 18.5 | — | 9.9 | 4.6 | 33 | |||||||||||||||
Prior year acquisitions(b) | (0.1 | ) | — | 16.9 | — | 16.8 | ||||||||||||||
Dispositions | — | (0.4 | ) | — | (0.2 | ) | (0.6 | ) | ||||||||||||
Reclassifications(c) | (28.9 | ) | 5 | 23.9 | — | — | ||||||||||||||
Effect of foreign currency translation | (76.8 | ) | (20.0 | ) | (94.8 | ) | (3.5 | ) | (195.1 | ) | ||||||||||
December 31, 2014 | $ | 2,642.20 | $ | 691.2 | $ | 3,262.10 | $ | 121.5 | $ | 6,717.00 | ||||||||||
(a) | For 2014, the company expects $20.7 million of the goodwill related to businesses acquired to be tax deductible. For 2013, none of the goodwill related to businesses acquired is expected to be tax deductible. | |||||||||||||||||||
(b) | Represents purchase price allocation adjustments for 2013 acquisitions deemed preliminary as of December 31, 2013. | |||||||||||||||||||
(c) | Represents immaterial transfers related to certain changes to the company’s reportable segments during the first quarter of 2014. | |||||||||||||||||||
Other Intangible Assets | ||||||||||||||||||||
As part of the Nalco merger, the company added the “Nalco” trade name as an indefinite life intangible asset. During the second quarter of 2014, using the qualitative assessment method, the company completed its annual test for indefinite life intangible asset impairment. Based on this testing, no adjustment to the $1.2 billion carrying value of this asset was necessary. Additionally, based on the ongoing performance of its operating units, updating the impairment testing during the second half of 2014 was not deemed necessary. There has been no impairment of the Nalco trade name intangible asset since it was acquired. | ||||||||||||||||||||
Intangible assets subject to amortization primarily include customer relationships, trademarks, patents and other technology. The fair value of identifiable intangible assets is estimated based upon discounted future cash flow projections and other acceptable valuation methods. Other intangible assets are amortized on a straight-line basis over their estimated economic lives. The weighted-average useful life of amortizable intangible assets was 14 years as of December 31, 2014 and 2013. | ||||||||||||||||||||
The weighted-average useful life by type of amortizable asset at December 31, 2014 is as follows: | ||||||||||||||||||||
NUMBER OF YEARS | ||||||||||||||||||||
Customer relationships | 14 | |||||||||||||||||||
Trademarks | 14 | |||||||||||||||||||
Patents | 14 | |||||||||||||||||||
Other technology | 8 | |||||||||||||||||||
The straight-line method of amortization reflects an appropriate allocation of the cost of the intangible assets to earnings in proportion to the amount of economic benefits obtained by the company in each reporting period. The company evaluates the remaining useful life of its intangible assets that are being amortized each reporting period to determine whether events and circumstances warrant a change to the remaining period of amortization. If the estimate of an intangible asset’s remaining useful life is changed, the remaining carrying amount of the intangible asset will be amortized prospectively over that revised remaining useful life. Total amortization expense related to other intangible assets during the last three years and future estimated amortization is as follows: | ||||||||||||||||||||
MILLIONS | ||||||||||||||||||||
2012 | $ | |||||||||||||||||||
237 | ||||||||||||||||||||
2013 | 293 | |||||||||||||||||||
2014 | 305 | |||||||||||||||||||
2015 | 299 | |||||||||||||||||||
2016 | 295 | |||||||||||||||||||
2017 | 292 | |||||||||||||||||||
2018 | 286 | |||||||||||||||||||
2019 | 273 | |||||||||||||||||||
Long-Lived Assets | ||||||||||||||||||||
Long-Lived Assets | ||||||||||||||||||||
The company periodically reviews its long-lived and amortizable intangible assets for impairment and assesses whether significant events or changes in business circumstances indicate that the carrying value of the assets may not be recoverable. Such circumstances may include a significant decrease in the market price of an asset, a significant adverse change in the manner in which the asset is being used or in its physical condition or history of operating or cash flow losses associated with the use of an asset. An impairment loss may be recognized when the carrying amount of an asset exceeds the anticipated future undiscounted cash flows expected to result from the use of the asset and its eventual disposition. The amount of the impairment loss to be recorded, if any, is calculated by the excess of the asset’s carrying value over its fair value. In addition, the company periodically reassesses the estimated remaining useful lives of its long-lived assets. Changes to estimated useful lives would impact the amount of depreciation and amortization recorded in earnings. The company has not experienced significant changes in the carrying value or estimated remaining useful lives of its long-lived or amortizable intangible assets. | ||||||||||||||||||||
Asset Retirement Obligations | ||||||||||||||||||||
Asset Retirement Obligations | ||||||||||||||||||||
The fair value of a liability for an asset retirement obligation associated with the retirement of tangible long-lived assets is recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The liability is adjusted to its present value in subsequent periods as accretion expense is recorded. The corresponding asset retirement costs are capitalized as part of the carrying amount of the related long-lived asset and depreciated over the asset’s useful life. The company’s asset retirement obligation liability was $9.5 million and $10.5 million, respectively, at December 31, 2014 and 2013. | ||||||||||||||||||||
Income Taxes | ||||||||||||||||||||
Income Taxes | ||||||||||||||||||||
Income taxes are recognized during the period in which transactions enter into the determination of financial statement income, with deferred income taxes being provided for the tax effect of temporary differences between the carrying amount of assets and liabilities and their tax bases. The company records a valuation allowance to reduce its deferred tax assets when uncertainty regarding their realizability exists. Deferred income taxes are provided on the undistributed earnings of foreign subsidiaries except to the extent such earnings are considered to be permanently reinvested in the subsidiary. | ||||||||||||||||||||
The company records liabilities for income tax uncertainties in accordance with the recognition and measurement criteria prescribed in authoritative guidance issued by the FASB. | ||||||||||||||||||||
See Note 12 for additional information regarding income taxes. | ||||||||||||||||||||
Restructuring Activities | ||||||||||||||||||||
Restructuring Activities | ||||||||||||||||||||
The company’s restructuring activities are associated with plans to enhance its efficiency, effectiveness and sharpen its competitiveness. These restructuring plans include net costs associated with significant actions involving employee-related severance charges, contract termination costs and asset write-downs and disposals. Employee termination costs are largely based on policies and severance plans, and include personnel reductions and related costs for severance, benefits and outplacement services. These charges are reflected in the quarter in which the actions are probable and the amounts are estimable, which is generally when management approves the associated actions. Contract termination costs include charges to terminate leases prior to the end of their respective terms and other contract termination costs. Asset write-downs and disposals include leasehold improvement write-downs, other asset write-downs associated with combining operations and disposal of assets. | ||||||||||||||||||||
See Note 3 for additional information regarding restructuring. | ||||||||||||||||||||
Revenue Recognition | ||||||||||||||||||||
Revenue Recognition | ||||||||||||||||||||
The company recognizes revenue on product sales at the time evidence of an arrangement exists, title to the product and risk of loss transfers to the customer, the price is fixed and determinable and collection is reasonably assured. The company recognizes revenue on services as they are performed. While the company employs a sales and service team to ensure customer’s needs are best met in a high quality way, the vast majority of the company’s revenue is generated from product sales. Outside of the service businesses and service offerings discussed in Note 17, any other services are either incidental to a product sale and not sold separately or are insignificant. | ||||||||||||||||||||
The company’s sales policies do not provide for general rights of return. Critical estimates used in recognizing revenue include the delay between the time that products are shipped, when they are received by customers, when title transfers and the amount of credit memos issued in subsequent periods. The company records estimated reductions to revenue for customer programs and incentive offerings, including pricing arrangements, promotions and other volume-based incentives at the time the sale is recorded. The company also records estimated reserves for anticipated uncollectible accounts and for product returns and credits at the time of sale. Depending on market conditions, the company may increase customer incentive offerings, which could reduce gross profit margins at the time the incentive is offered. | ||||||||||||||||||||
Earnings Per Common Share | ||||||||||||||||||||
Earnings Per Common Share | ||||||||||||||||||||
The computations of the basic and diluted earnings attributable to Ecolab per share amounts were as follows: | ||||||||||||||||||||
MILLIONS | ||||||||||||||||||||
EXCEPT PER SHARE | 2014 | 2013 | 2012 | |||||||||||||||||
Net income attributable to Ecolab | $ | 1,202.8 | $ | 967.8 | $ | 703.6 | ||||||||||||||
Weighted-average common shares outstanding | ||||||||||||||||||||
Basic | 300.1 | 299.9 | 292.5 | |||||||||||||||||
Effect of dilutive stock options, units and awards | 5.8 | 6.0 | 6.4 | |||||||||||||||||
Diluted | 305.9 | 305.9 | 298.9 | |||||||||||||||||
Earnings attributable to Ecolab per common share | ||||||||||||||||||||
Basic | $ | 4.01 | $ | 3.23 | $ | 2.41 | ||||||||||||||
Diluted | $ | 3.93 | $ | 3.16 | $ | 2.35 | ||||||||||||||
Anti-dilutive securities excluded from the computation of earnings per share | 3.4 | 1.8 | 2.6 | |||||||||||||||||
Fair Value Measurements | The company’s financial instruments include cash and cash equivalents, investments held in rabbi trusts, accounts receivable, accounts payable, contingent consideration obligations, commercial paper, notes payable, foreign currency forward contracts, interest rate swap contracts and long-term debt. | |||||||||||||||||||
Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. A hierarchy has been established for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The hierarchy is broken down into three levels: | ||||||||||||||||||||
Level 1 - Inputs are quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities. | ||||||||||||||||||||
Level 2 - Inputs include observable inputs other than quoted prices in active markets. | ||||||||||||||||||||
Level 3 - Inputs are unobservable inputs for which there is little or no market data available. | ||||||||||||||||||||
Derivatives and Hedging Transactions | ||||||||||||||||||||
The company uses foreign currency forward contracts, interest rate swaps and foreign currency debt to manage risks associated with foreign currency exchange rates, interest rates and net investments in foreign operations. The company does not hold derivative financial instruments of a speculative nature or for trading purposes. The company records all derivatives as assets and liabilities on the balance sheet at fair value. Changes in fair value are recognized immediately in earnings unless the derivative qualifies and is designated as a hedge. Cash flows from derivatives are classified in the statement of cash flows in the same category as the cash flows from the items subject to designated hedge or undesignated (economic) hedge relationships. The company evaluates hedge effectiveness at inception and on an ongoing basis. If a derivative is no longer expected to be effective, hedge accounting is discontinued. Hedge ineffectiveness, if any, is recorded in earnings. | ||||||||||||||||||||
The company is exposed to credit risk in the event of nonperformance of counterparties for foreign currency forward exchange contracts and interest rate swap agreements. The company monitors its exposure to credit risk by using credit approvals and credit limits and by selecting major international banks and financial institutions as counterparties. The company does not anticipate nonperformance by any of these counterparties, and therefore, recording a valuation allowance against the company’s derivative balance is not considered necessary. | ||||||||||||||||||||
Equity Compensation Plans | ||||||||||||||||||||
The company measures compensation expense for share-based awards at fair value at the date of grant and recognizes compensation expense over the service period for awards expected to vest. The majority of grants to retirement eligible recipients (age 55 with required years of service) are attributed to expense using the non-substantive vesting method and are fully expensed over a six month period following the date of grant. In addition, the company includes a forfeiture estimate in the amount of compensation expense being recognized based on an estimate of the number of outstanding awards expected to vest. | ||||||||||||||||||||
Commitments and Contingencies | ||||||||||||||||||||
The company is subject to various claims and contingencies related to, among other things, workers’ compensation, general liability (including product liability), automobile claims, health care claims, environmental matters and lawsuits. The company is also subject to various claims and contingencies related to income taxes, which are covered in Note 12. The company also has contractual obligations including lease commitments, which are covered in Note 13. | ||||||||||||||||||||
The company records liabilities where a contingent loss is probable and can be reasonably estimated. If the reasonable estimate of a probable loss is a range, the company records the most probable estimate of the loss or the minimum amount when no amount within the range is a better estimate than any other amount. The company discloses a contingent liability even if the liability is not probable or the amount is not estimable, or both, if there is a reasonable possibility that a material loss may have been incurred. | ||||||||||||||||||||
Insurance: Globally, the company has high deductible insurance policies for property and casualty losses. The company is insured for losses in excess of these deductibles, subject to policy terms and conditions and has recorded both a liability and an offsetting receivable for amounts in excess of these deductibles. The company is self-insured for health care claims for eligible participating employees, subject to certain deductibles and limitations. The company determines its liabilities for claims on an actuarial basis. | ||||||||||||||||||||
Litigation and Environmental Matters: The company and certain subsidiaries are party to various lawsuits, claims and environmental actions that have arisen in the ordinary course of business. These include from time to time antitrust, commercial, patent infringement, product liability and wage hour lawsuits, as well as possible obligations to investigate and mitigate the effects on the environment of the disposal or release of certain chemical substances at various sites, such as Superfund sites and other operating or closed facilities. The company has established accruals for certain lawsuits, claims and environmental matters. The company currently believes that there is not a reasonably possible risk of material loss in excess of the amounts accrued related to these legal matters. Because litigation is inherently uncertain, and unfavorable rulings or developments could occur, there can be no certainty that the company may not ultimately incur charges in excess of recorded liabilities. A future adverse ruling, settlement or unfavorable development could result in future charges that could have a material adverse effect on the company’s results of operations or cash flows in the period in which they are recorded. The company currently believes that such future charges related to suits and legal claims, if any, would not have a material adverse effect on the company’s consolidated financial position. | ||||||||||||||||||||
Pension and Post-retirement Health Care Benefit Plans | ||||||||||||||||||||
The company has a non-contributory qualified defined benefit pension plan covering the majority of its U.S. employees. The company also has U.S. non-contributory non-qualified defined benefit plans, which provide for benefits to employees in excess of limits permitted under its U.S. pension plans. Certain legacy Champion employees became eligible to participate in the U.S. qualified and non-qualified pension plans on January 1, 2014. The non-qualified plans are not funded and the recorded benefit obligation for the non-qualified plans was $113 million and $96 million at December 31, 2014 and 2013, respectively. The measurement date used for determining the U.S. pension plan assets and obligations is December 31. | ||||||||||||||||||||
Various international subsidiaries have defined benefit pension plans. International plans are funded based on local country requirements. The measurement date used for determining the international pension plan assets and obligations is November 30, the fiscal year-end of the company’s international affiliates. | ||||||||||||||||||||
The company provides postretirement health care benefits to certain U.S. employees. The corresponding plans are contributory based on years of service and choice of coverage (family or single), with retiree contributions adjusted annually. The measurement date used to determine the U.S. postretirement health care plan assets and obligations is December 31. Certain employees outside the U.S. are covered under government-sponsored programs, which are not required to be fully funded. The expense and obligation for providing international postretirement health care benefits are not significant. | ||||||||||||||||||||
The company’s U.S. investment strategy and policies are designed to maximize the possibility of having sufficient funds to meet the long-term liabilities of the pension fund, while achieving a balance between the goals of asset growth of the plan and keeping risk at a reasonable level. Current income is not a key goal of the policy. The asset allocation position reflects the ability and willingness to accept relatively more short-term variability in the performance of the pension plan portfolio in exchange for the expectation of better long-term returns, lower pension costs and better funded status in the long run. | ||||||||||||||||||||
The pension fund is diversified across a number of asset classes and securities. Selected individual portfolios within the asset classes may be undiversified while maintaining the diversified nature of total plan assets. The company has no significant concentration of risk in its U.S. plan assets. | ||||||||||||||||||||
Assets of funded retirement plans outside the U.S. are managed in each local jurisdiction and asset allocation strategy is set in accordance with local rules, regulations and practice. Therefore, no overall target asset allocation is presented. Although non-U.S. equity securities are all considered international for the company, some equity securities are considered domestic for the local plan. The funds are invested in a variety of equities, bonds and real estate investments and, in some cases, the assets are managed by insurance companies which may offer a guaranteed rate of return. The company has no significant concentration of risk in its international plan assets. | ||||||||||||||||||||
Reportable Segments Information | ||||||||||||||||||||
The company’s organizational structure consists of global business unit and global regional leadership teams. The company’s ten operating units, which are also operating segments, follow its commercial and product-based activities and are based on engagement in business activities, availability of discrete financial information and review of operating results by the Chief Operating Decision Maker at the identified operating unit level. | ||||||||||||||||||||
Eight of the company’s ten operating units have been aggregated into three reportable segments based on similar economic characteristics and future prospects, nature of the products and production processes, end-use markets, channels of distribution and regulatory environment. The company’s reportable segments are Global Industrial, Global Institutional and Global Energy. The company’s two operating units that are primarily fee-for-service businesses have been combined into the Other segment and do not meet the quantitative criteria to be separately reported. The company reports the Other segment as a reportable segment as it considers information regarding its two underlying operating units as useful in understanding its consolidated results. | ||||||||||||||||||||
New Accounting Pronouncements | ||||||||||||||||||||
New Accounting Pronouncements | ||||||||||||||||||||
DATE OF | DATE OF | EFFECT ON THE | ||||||||||||||||||
STANDARD | ISSUANCE | DESCRIPTION | ADOPTION | FINANCIAL STATEMENTS | ||||||||||||||||
Standards that are not yet adopted | ||||||||||||||||||||
ASU 2014-08—Presentation of Financial Statements (Topic 205): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity | April 2014 | Updated criteria for determining which disposals should be presented as discontinued operations as well as modifications to the related disclosure requirements. | January 1, 2015 | The company does not expect the updated guidance to have a material impact on future financial statements. | ||||||||||||||||
ASU 2014-09—Revenue from Contracts with Customers (Topic 606) | May 2014 | Recognition standard contains principles for entities to apply to determine the measurement of revenue and timing of when the revenue is recognized. The underlying principle of the updated guidance will have entities recognize revenue to depict the transfer of goods or services to customers at an amount that is expected to be received in exchange for those goods or services. | January 1, 2017 | The company is currently evaluating the impact of adoption. | ||||||||||||||||
ASU 2014-15—Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern | Aug-14 | Management’s responsibility to evaluate whether there is substantial doubt about the organization’s ability to continue as a going concern and to provide related footnote disclosures. | January 1, 2017 | The company does not expect the guidance to have an impact on future financial statements. | ||||||||||||||||
ASU 2014-16—Derivatives and Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share is More Akin to Debt or to Equity | Nov-14 | For hybrid financial instruments issued in the form of a share, an entity (an issuer or an investor) should determine the nature of the host contract by considering all stated and implied substantive terms and features of the basis of relevant facts and circumstances. | January 1, 2015 | The company does not expect the updated guidance to have a material impact on future financial statements. | ||||||||||||||||
ASU 2015-01—Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items | Jan-15 | Entities should no longer segregate extraordinary and unusual items from the results of ordinary operations on the Income Statement and should no longer disclose the applicable income taxes and earnings-per-share data for applicable extraordinary items. | January 1, 2016 | The company does not expect the updated guidance to have an impact on future financial statements. | ||||||||||||||||
Standards that were adopted | ||||||||||||||||||||
ASU 2013-05—Foreign Currency Matters (Topic 830): Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity | March 2013 | Resolve diversity in practice regarding the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investments in a foreign entity. In addition, the standard resolves diversity in practice for the treatment of business combinations achieved in stages involving a foreign entity. | January 1, 2014 | The adoption did not impact the company’s consolidated financial statements and is not expected to have a material impact on future financial statements. | ||||||||||||||||
ASU 2013-11—Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists | July 2013 | Presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss or a tax credit carryforward exists. | January 1, 2014 | The adoption did not have a material impact on the company’s consolidated financial Statements. | ||||||||||||||||
ASU 2014-17—Business Combinations (Topic 805): Pushdown Accounting (A consensus of the FASB Emerging Issues Task Force) | Nov-14 | An acquired entity has the option to apply pushdown accounting in its stand-alone financial statements upon occurrence of a change-in- control event. | Nov-14 | The adoption did not impact the company’s consolidated financial statements and is not expected to have a material impact on future financial statements. | ||||||||||||||||
No other new accounting pronouncement issued or effective has had or is expected to have a material impact on the company’s consolidated financial statements. | ||||||||||||||||||||
SIGNIFICANT_ACCOUNTING_POLICIE2
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
SIGNIFICANT ACCOUNTING POLICIES | ||||||||||||||||||||
Summarized activity in the allowance for doubtful accounts | ||||||||||||||||||||
MILLIONS | 2014 | 2013 | 2012 | |||||||||||||||||
Beginning balance | $ | 81 | $ | 73 | $ | 49 | ||||||||||||||
Bad debt expense | 23 | 28 | 37 | |||||||||||||||||
Write-offs | (20 | ) | (21 | ) | (13 | ) | ||||||||||||||
Other(a) | (7 | ) | 1 | – | ||||||||||||||||
Ending balance | $ | 77 | $ | 81 | $ | 73 | ||||||||||||||
(a) | Other amounts are primarily the effects of changes in currency translations and the impact of allowance for returns and credits. | |||||||||||||||||||
Changes in the carrying amount of goodwill | ||||||||||||||||||||
GLOBAL | GLOBAL | GLOBAL | ||||||||||||||||||
MILLIONS | INDUSTRIAL | INSTITUTIONAL | ENERGY | OTHER | TOTAL | |||||||||||||||
December 31, 2012 | $ | 2,751.60 | $ | 720.6 | $ | 2,325.30 | $ | 123 | $ | 5,920.50 | ||||||||||
Acquisitions(a) | 33.9 | — | 1,037.90 | — | 1,071.80 | |||||||||||||||
Dispositions | (2.1 | ) | — | — | — | (2.1 | ) | |||||||||||||
Effect of foreign currency translation | (53.9 | ) | (14.0 | ) | (57.0 | ) | (2.4 | ) | (127.3 | ) | ||||||||||
December 31, 2013 | 2,729.50 | 706.6 | 3,306.20 | 120.6 | 6,862.90 | |||||||||||||||
Current year acquisitions(a) | 18.5 | — | 9.9 | 4.6 | 33 | |||||||||||||||
Prior year acquisitions(b) | (0.1 | ) | — | 16.9 | — | 16.8 | ||||||||||||||
Dispositions | — | (0.4 | ) | — | (0.2 | ) | (0.6 | ) | ||||||||||||
Reclassifications(c) | (28.9 | ) | 5 | 23.9 | — | — | ||||||||||||||
Effect of foreign currency translation | (76.8 | ) | (20.0 | ) | (94.8 | ) | (3.5 | ) | (195.1 | ) | ||||||||||
December 31, 2014 | $ | 2,642.20 | $ | 691.2 | $ | 3,262.10 | $ | 121.5 | $ | 6,717.00 | ||||||||||
(a) | For 2014, the company expects $20.7 million of the goodwill related to businesses acquired to be tax deductible. For 2013, none of the goodwill related to businesses acquired is expected to be tax deductible. | |||||||||||||||||||
(b) | Represents purchase price allocation adjustments for 2013 acquisitions deemed preliminary as of December 31, 2013. | |||||||||||||||||||
(c) | Represents immaterial transfers related to certain changes to the company’s reportable segments during the first quarter of 2014. | |||||||||||||||||||
Weighted-average useful life by type of asset | The weighted-average useful life by type of amortizable asset at December 31, 2014 is as follows: | |||||||||||||||||||
NUMBER OF YEARS | ||||||||||||||||||||
Customer relationships | 14 | |||||||||||||||||||
Trademarks | 14 | |||||||||||||||||||
Patents | 14 | |||||||||||||||||||
Other technology | 8 | |||||||||||||||||||
Future estimated amortization expenses | ||||||||||||||||||||
MILLIONS | ||||||||||||||||||||
2012 | $ | |||||||||||||||||||
237 | ||||||||||||||||||||
2013 | 293 | |||||||||||||||||||
2014 | 305 | |||||||||||||||||||
2015 | 299 | |||||||||||||||||||
2016 | 295 | |||||||||||||||||||
2017 | 292 | |||||||||||||||||||
2018 | 286 | |||||||||||||||||||
2019 | 273 | |||||||||||||||||||
Computations of the basic and diluted earnings attributable to Ecolab per share amounts | ||||||||||||||||||||
MILLIONS | ||||||||||||||||||||
EXCEPT PER SHARE | 2014 | 2013 | 2012 | |||||||||||||||||
Net income attributable to Ecolab | $ | 1,202.8 | $ | 967.8 | $ | 703.6 | ||||||||||||||
Weighted-average common shares outstanding | ||||||||||||||||||||
Basic | 300.1 | 299.9 | 292.5 | |||||||||||||||||
Effect of dilutive stock options, units and awards | 5.8 | 6.0 | 6.4 | |||||||||||||||||
Diluted | 305.9 | 305.9 | 298.9 | |||||||||||||||||
Earnings attributable to Ecolab per common share | ||||||||||||||||||||
Basic | $ | 4.01 | $ | 3.23 | $ | 2.41 | ||||||||||||||
Diluted | $ | 3.93 | $ | 3.16 | $ | 2.35 | ||||||||||||||
Anti-dilutive securities excluded from the computation of earnings per share | 3.4 | 1.8 | 2.6 | |||||||||||||||||
Other significant accounting policies | ||||||||||||||||||||
POLICY | NOTE | PAGE | ||||||||||||||||||
Fair value measurements | 7 | 47 | ||||||||||||||||||
Derivatives and hedging transactions | 8 | 48 | ||||||||||||||||||
Share-based compensation | 11 | 51 | ||||||||||||||||||
Legal contingencies | 15 | 54 | ||||||||||||||||||
Pension and post-retirement benefit plans | 16 | 56 | ||||||||||||||||||
Reportable segments | 17 | 61 | ||||||||||||||||||
SPECIAL_GAINS_AND_CHARGES_Tabl
SPECIAL (GAINS) AND CHARGES (Tables) | 12 Months Ended | |||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||
Restructuring Reserve: | ||||||||||||||||||
Special (gains) and charges | ||||||||||||||||||
MILLIONS | 2014 | 2013 | 2012 | |||||||||||||||
Cost of sales | ||||||||||||||||||
Restructuring charges | $ | 13.9 | $ | 6.6 | $ | 22.7 | ||||||||||||
Recognition of inventory fair value step-up | 0.4 | 36.6 | 71.2 | |||||||||||||||
Subtotal | 14.3 | 43.2 | 93.9 | |||||||||||||||
Special (gains) and charges | ||||||||||||||||||
Restructuring charges | 69.2 | 83.4 | 116.6 | |||||||||||||||
Champion acquisition and integration costs | 19.9 | 49.7 | 18.3 | |||||||||||||||
Nalco merger and integration costs | 8.5 | 18.6 | 70.9 | |||||||||||||||
Venezuela currency devaluation | — | 23.2 | — | |||||||||||||||
Gain on sale of businesses, litigation activity, settlements and other gains | (28.8 | ) | (3.6 | ) | (60.1 | ) | ||||||||||||
Subtotal | 68.8 | 171.3 | 145.7 | |||||||||||||||
Operating income subtotal | 83.1 | 214.5 | 239.6 | |||||||||||||||
Interest expense, net | ||||||||||||||||||
Acquisition debt costs | — | 2.5 | 1.1 | |||||||||||||||
Debt extinguishment costs | — | — | 18.2 | |||||||||||||||
Subtotal | — | 2.5 | 19.3 | |||||||||||||||
Net income attributable to noncontrolling interest | ||||||||||||||||||
Venezuela currency devaluation | — | (0.5 | ) | — | ||||||||||||||
Recognition of inventory fair value step-up | — | — | (4.5 | ) | ||||||||||||||
Subtotal | — | (0.5 | ) | (4.5 | ) | |||||||||||||
Total special (gains) and charges | $ | 83.1 | $ | 216.5 | $ | 254.4 | ||||||||||||
Energy Restructuring Plan | ||||||||||||||||||
Restructuring Reserve: | ||||||||||||||||||
Restructuring charges and subsequent activity | ||||||||||||||||||
Energy Restructuring Plan | ||||||||||||||||||
EMPLOYEE | ||||||||||||||||||
TERMINATION | ASSET | |||||||||||||||||
MILLIONS | COSTS | DISPOSALS | OTHER | TOTAL | ||||||||||||||
2013 Activity | ||||||||||||||||||
Recorded expense and accrual | $ | 22.9 | $ | 3.6 | $ | 0.9 | $ | 27.4 | ||||||||||
Cash payments | (16.7 | ) | — | (0.8 | ) | (17.5 | ) | |||||||||||
Non-cash charges | — | (3.6 | ) | — | (3.6 | ) | ||||||||||||
Effect of foreign currency translation | 0.6 | — | — | 0.6 | ||||||||||||||
Restructuring liability, December 31, 2013 | 6.8 | — | 0.1 | 6.9 | ||||||||||||||
2014 Activity | ||||||||||||||||||
Recorded expense and accrual | 7.9 | 0.6 | 1 | 9.5 | ||||||||||||||
Cash payments | (12.9 | ) | — | (1.0 | ) | (13.9 | ) | |||||||||||
Non-cash charges | — | (0.6 | ) | — | (0.6 | ) | ||||||||||||
Effect of foreign currency translation | 0.2 | — | — | 0.2 | ||||||||||||||
Restructuring liability, December 31, 2014 | $ | 2 | $ | — | $ | 0.1 | $ | 2.1 | ||||||||||
Combined Plan | ||||||||||||||||||
Restructuring Reserve: | ||||||||||||||||||
Restructuring charges and subsequent activity | ||||||||||||||||||
Combined Plan | ||||||||||||||||||
EMPLOYEE | ||||||||||||||||||
TERMINATION | ASSET | |||||||||||||||||
MILLIONS | COSTS | DISPOSALS | OTHER | TOTAL | ||||||||||||||
2011-2013 Activity | ||||||||||||||||||
Recorded net expense and accrual | $ | 248.2 | $ | (1.2 | ) | $ | 30.7 | $ | 277.7 | |||||||||
Net cash payments | (182.2 | ) | 9.1 | (19.1 | ) | (192.2 | ) | |||||||||||
Non-cash net charges | — | (7.9 | ) | (4.3 | ) | (12.2 | ) | |||||||||||
Effect of foreign currency translation | (0.1 | ) | — | — | (0.1 | ) | ||||||||||||
Restructuring liability, December 31, 2013 | 65.9 | — | 7.3 | 73.2 | ||||||||||||||
2014 Activity | ||||||||||||||||||
Recorded net expense and accrual | 60.6 | — | 12.9 | 73.5 | ||||||||||||||
Net cash payments | (60.2 | ) | 2.6 | (11.2 | ) | (68.8 | ) | |||||||||||
Non-cash net charges | — | (2.6 | ) | — | (2.6 | ) | ||||||||||||
Effect of foreign currency translation | (1.8 | ) | — | — | (1.8 | ) | ||||||||||||
Restructuring liability, December 31, 2014 | $ | 64.5 | $ | — | $ | 9 | $ | 73.5 | ||||||||||
ACQUISITIONS_AND_DISPOSITIONS_
ACQUISITIONS AND DISPOSITIONS (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Business acquisitions | |||||||||||||
Schedule of assets acquired and liabilities assumed | |||||||||||||
MILLIONS | 2014 | 2013 | 2012 | ||||||||||
Net tangible assets acquired (liabilities assumed) including impact of joint venture consolidation activity | $ | 9.5 | $ | (2.8 | ) | $ | (1.0 | ) | |||||
Identifiable intangible assets | |||||||||||||
Customer relationships | 32 | 58.8 | 8.4 | ||||||||||
Patents | — | 1.4 | 2.8 | ||||||||||
Trademarks | 3.4 | — | 0.5 | ||||||||||
Other technology | 4.5 | 1 | 0.3 | ||||||||||
Total intangible assets | 39.9 | 61.2 | 12 | ||||||||||
Goodwill | 32.9 | 41.7 | 23.3 | ||||||||||
Total aggregate purchase price | 82.3 | 100.1 | 34.3 | ||||||||||
Acquisition related liabilities and contingent consideration | 12.3 | 11.3 | (2.6 | ) | |||||||||
Liability for indemnification, net | 8.7 | 2.4 | 16 | ||||||||||
Net cash paid for acquisitions, including contingent consideration | $ | 103.3 | $ | 113.8 | $ | 47.7 | |||||||
Champion | |||||||||||||
Business acquisitions | |||||||||||||
Schedule of final consideration transferred to acquire all of the acquired entity's stock | |||||||||||||
MILLIONS, EXCEPT PER SHARE | |||||||||||||
Cash consideration | $ | 1,511.7 | |||||||||||
Stock consideration | |||||||||||||
Ecolab shares issued at closing | 6.6 | ||||||||||||
Ecolab’s closing stock price on April 10, 2013 | $ | 82.31 | |||||||||||
Total value of stock consideration | $ | 543.0 | |||||||||||
Total fair value of cash and stock consideration | $ | 2,054.7 | |||||||||||
Schedule of assets acquired and liabilities assumed | |||||||||||||
FINAL | |||||||||||||
ALLOCATION | PURCHASE | ALLOCATION | |||||||||||
AT DECEMBER 31, | PRICE | AT MARCH 31, | |||||||||||
MILLIONS | 2013 | ADJUSTMENTS | 2014 | ||||||||||
Current assets | $ | 592.3 | $ | (4.5 | ) | $ | 587.8 | ||||||
Property, plant and equipment | 357.8 | (2.5 | ) | 355.3 | |||||||||
Other assets | 16.2 | 0.1 | 16.3 | ||||||||||
Identifiable intangible assets: | |||||||||||||
Customer relationships | 840 | — | 840 | ||||||||||
Trademarks | 120 | — | 120 | ||||||||||
Other technology | 36.5 | — | 36.5 | ||||||||||
Total assets acquired | 1,962.80 | (6.9 | ) | 1,955.90 | |||||||||
Current liabilities | 409.5 | 3.6 | 413.1 | ||||||||||
Long-term debt | 70.8 | — | 70.8 | ||||||||||
Net deferred tax liability | 427.4 | 9.3 | 436.7 | ||||||||||
Noncontrolling interests and other liabilities | 30.5 | (2.9 | ) | 27.6 | |||||||||
Total liabilities and noncontrolling interests assumed | 938.2 | 10 | 948.2 | ||||||||||
Goodwill | 1,030.10 | 16.9 | 1,047.00 | ||||||||||
Total aggregate purchase price | 2,054.70 | — | 2,054.70 | ||||||||||
Future consideration payable to sellers | (86.4 | ) | 86.4 | — | |||||||||
Total consideration transferred | $ | 1,968.30 | $ | 86.4 | $ | 2,054.70 | |||||||
BALANCE_SHEET_INFORMATION_Tabl
BALANCE SHEET INFORMATION (Tables) | 12 Months Ended | |||||||||
Dec. 31, 2014 | ||||||||||
BALANCE SHEET INFORMATION | ||||||||||
Balance Sheet Information | ||||||||||
DECEMBER 31 (MILLIONS) | 2014 | 2013 | ||||||||
Accounts receivable, net | ||||||||||
Accounts receivable | $ | 2,704.20 | $ | 2,648.90 | ||||||
Allowance for doubtful accounts | (77.5 | ) | (80.9 | ) | ||||||
Total | $ | 2,626.70 | $ | 2,568.00 | ||||||
Inventories | ||||||||||
Finished goods | $ | 1,044.10 | $ | 953.3 | ||||||
Raw materials and parts | 447.3 | 391 | ||||||||
Inventories at FIFO cost | 1,491.40 | 1,344.30 | ||||||||
Excess of FIFO cost over LIFO cost | (24.5 | ) | (22.4 | ) | ||||||
Total | $ | 1,466.90 | $ | 1,321.90 | ||||||
Property, plant and equipment, net | ||||||||||
Land | $ | 199.9 | $ | 191.4 | ||||||
Buildings and improvements | 759.9 | 666 | ||||||||
Leasehold improvements | 84.6 | 87.9 | ||||||||
Machinery and equipment | 1,858.10 | 1,677.50 | ||||||||
Merchandising and customer equipment | 1,917.50 | 1,802.80 | ||||||||
Capitalized software | 443.9 | 435.4 | ||||||||
Construction in progress | 277.5 | 291.6 | ||||||||
5,541.40 | 5,152.60 | |||||||||
Accumulated depreciation | (2,490.8 | ) | (2,270.6 | ) | ||||||
Total | $ | 3,050.60 | $ | 2,882.00 | ||||||
Other intangible assets, net | ||||||||||
Cost of intangible assets not subject to amortization: | ||||||||||
Trade names | $ | 1,230.00 | $ | 1,230.00 | ||||||
Cost of intangible assets subject to amortization: | ||||||||||
Customer relationships | $ | 3,385.70 | $ | 3,455.60 | ||||||
Trademarks | 311.1 | 308.1 | ||||||||
Patents | 434.5 | 425.6 | ||||||||
Other technology | 214 | 210.2 | ||||||||
4,345.30 | 4,399.50 | |||||||||
Accumulated amortization: | ||||||||||
Customer relationships | (794.6 | ) | (594.9 | ) | ||||||
Trademarks | (91.5 | ) | (70.4 | ) | ||||||
Patents | (124.9 | ) | (95.7 | ) | ||||||
Other technology | (107.5 | ) | (83.2 | ) | ||||||
Total | $ | 4,456.80 | $ | 4,785.30 | ||||||
Other assets | ||||||||||
Deferred income taxes | $ | 71.5 | $ | 54.5 | ||||||
Deferred financing costs | 27.1 | 31.7 | ||||||||
Pension | 15.9 | 90.2 | ||||||||
Other | 256.7 | 231.5 | ||||||||
Total | $ | 371.2 | $ | 407.9 | ||||||
Other current liabilities | ||||||||||
Discounts and rebates | $ | 255.4 | $ | 263.2 | ||||||
Dividends payable | 99.1 | 82.8 | ||||||||
Interest payable | 18.9 | 19.6 | ||||||||
Taxes payable, other than income | 122.6 | 115.3 | ||||||||
Derivative liabilities | 52.1 | 14.2 | ||||||||
Restructuring | 66.3 | 68.3 | ||||||||
Future consideration payable to Champion sellers | — | 86.4 | ||||||||
Other | 255.4 | 304 | ||||||||
Total | $ | 869.8 | $ | 953.8 | ||||||
Other liabilities | ||||||||||
Deferred income taxes | $ | 1,415.80 | $ | 1,661.30 | ||||||
Income taxes payable — noncurrent | 86.4 | 90.2 | ||||||||
Restructuring | 9.3 | 12.9 | ||||||||
Other | 134 | 134.9 | ||||||||
Total | $ | 1,645.50 | $ | 1,899.30 | ||||||
Accumulated other comprehensive loss | ||||||||||
Unrealized gain (loss) on derivative financial instruments, net of tax | $ | (2.7 | ) | $ | (6.6 | ) | ||||
Unrecognized pension and postretirement benefit expense, net of tax | (552.5 | ) | (235.0 | ) | ||||||
Cumulative translation, net of tax | (396.7 | ) | (63.6 | ) | ||||||
Total | $ | (951.9 | ) | $ | (305.2 | ) | ||||
DEBT_AND_INTEREST_Tables
DEBT AND INTEREST (Tables) | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
DEBT AND INTEREST | ||||||||||||||||||||
Schedule of short-term debt obligations | ||||||||||||||||||||
MILLIONS, | 2014 | 2013 | ||||||||||||||||||
EXCEPT INTEREST RATES | AVERAGE | AVERAGE | ||||||||||||||||||
INTEREST | INTEREST | |||||||||||||||||||
PAYABLE | RATE | PAYABLE | RATE | |||||||||||||||||
Short-term debt | ||||||||||||||||||||
Commercial paper | $ | 887.8 | 0.46 | % | $ | 304.8 | 0.34 | % | ||||||||||||
Notes payable | 62.1 | 9.65 | % | 50.9 | 9.43 | % | ||||||||||||||
Long-term debt, current maturities | 755.5 | 505.3 | ||||||||||||||||||
Total | $ | 1,705.4 | $ | 861.0 | ||||||||||||||||
Schedule of long-term debt obligations | ||||||||||||||||||||
MILLIONS, EXCEPT INTEREST RATES | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
AVERAGE | EFFECTIVE | AVERAGE | EFFECTIVE | |||||||||||||||||
MATURITY | CARRYING | INTEREST | INTEREST | CARRYING | INTEREST | INTEREST | ||||||||||||||
BY YEAR | VALUE | RATE | RATE | VALUE | RATE | RATE | ||||||||||||||
Long-term debt | ||||||||||||||||||||
Description / 2014 Principal Amount | ||||||||||||||||||||
Three year 2011 senior notes ($0 million) | 2014 | — | — | — | $ | 499.9 | 2.38 | % | 2.4 | % | ||||||||||
Seven year 2008 senior notes ($250 million) | 2015 | $ | 250 | 4.88 | % | 4.99 | % | 249.7 | 4.88 | % | 4.99 | % | ||||||||
Three year 2012 senior notes ($500 million) | 2015 | 500 | 1 | % | 1.02 | % | 499.9 | 1 | % | 1.02 | % | |||||||||
Series B private placement senior notes (€175 million) | 2016 | 217.9 | 4.59 | % | 4.67 | % | 237.8 | 4.59 | % | 4.67 | % | |||||||||
Five year 2011 senior notes ($1.25 billion) | 2016 | 1,249.10 | 3 | % | 3.04 | % | 1,248.60 | 3 | % | 3.04 | % | |||||||||
Term loan ($400 million) | 2016 | 400 | 1.29 | % | 1.29 | % | 800 | 1.33 | % | 1.33 | % | |||||||||
Five year 2012 senior notes ($500 million) | 2017 | 497.6 | 1.45 | % | 0.93 | % | 499.7 | 1.45 | % | 1.47 | % | |||||||||
Series A private placement senior notes ($250 million) | 2018 | 250 | 3.69 | % | 5.15 | % | 250 | 3.69 | % | 5.15 | % | |||||||||
Ten year 2011 senior notes ($1.25 billion) | 2021 | 1,249.40 | 4.35 | % | 4.36 | % | 1,249.30 | 4.35 | % | 4.36 | % | |||||||||
Series B private placement senior notes ($250 million) | 2023 | 250 | 4.32 | % | 4.32 | % | 250 | 4.32 | % | 4.32 | % | |||||||||
Thirty year 2011 senior notes ($750 million) | 2041 | 743.1 | 5.5 | % | 5.53 | % | 742.8 | 5.5 | % | 5.53 | % | |||||||||
Capital lease obligations | 9.3 | 12.7 | ||||||||||||||||||
Other | 3.1 | 8.4 | ||||||||||||||||||
Total debt | 5,619.50 | 6,548.80 | ||||||||||||||||||
Long-term debt, current maturities | (755.5 | ) | (505.3 | ) | ||||||||||||||||
Total long-term debt | $ | 4,864.00 | $ | 6,043.50 | ||||||||||||||||
Schedule of aggregate annual maturities of long-term debt | As of December 31, 2014, the aggregate annual maturities of long-term debt for the next five years were: | |||||||||||||||||||
MILLIONS | ||||||||||||||||||||
2015 | $ | 756 | ||||||||||||||||||
2016 | 1,869 | |||||||||||||||||||
2017 | 499 | |||||||||||||||||||
2018 | 250 | |||||||||||||||||||
2019 | 1 | |||||||||||||||||||
Schedule of interest expense and interest income | ||||||||||||||||||||
MILLIONS | 2014 | 2013 | 2012 | |||||||||||||||||
Interest expense | $ | 268 | $ | 272.8 | $ | 285.6 | ||||||||||||||
Interest income | (11.4 | ) | (10.5 | ) | (8.9 | ) | ||||||||||||||
Interest expense, net | $ | 256.6 | $ | 262.3 | $ | 276.7 | ||||||||||||||
FAIR_VALUE_MEASUREMENTS_Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
FAIR VALUE MEASUREMENTS | ||||||||||||||||
Schedule of the carrying amount and estimated fair value of assets and liabilities measured on recurring basis | ||||||||||||||||
DECEMBER 31 (MILLIONS) | 2014 | |||||||||||||||
CARRYING | FAIR VALUE MEASUREMENTS | |||||||||||||||
AMOUNT | LEVEL 1 | LEVEL 2 | LEVEL 3 | |||||||||||||
Assets: | ||||||||||||||||
Investments held in rabbi trusts | $ | 3.4 | $ | 3.4 | $ | — | $ | — | ||||||||
Foreign currency forward contracts | 75.5 | — | 75.5 | — | ||||||||||||
Contingent consideration | 0.3 | — | — | 0.3 | ||||||||||||
Liabilities: | ||||||||||||||||
Foreign currency forward contracts | 27.9 | — | 27.9 | — | ||||||||||||
Interest rate swap contracts | 24.2 | — | 24.2 | — | ||||||||||||
Contingent consideration | 1.6 | — | — | 1.6 | ||||||||||||
DECEMBER 31 (MILLIONS) | 2013 | |||||||||||||||
CARRYING | FAIR VALUE MEASUREMENTS | |||||||||||||||
AMOUNT | LEVEL 1 | LEVEL 2 | LEVEL 3 | |||||||||||||
Assets: | ||||||||||||||||
Investments held in rabbi trusts | $ | 4.3 | $ | 4.3 | $ | — | $ | — | ||||||||
Foreign currency forward contracts | 20.2 | — | 20.2 | — | ||||||||||||
Liabilities: | ||||||||||||||||
Foreign currency forward contracts | 14.2 | — | 14.2 | — | ||||||||||||
Contingent consideration | 16.4 | — | — | 16.4 | ||||||||||||
Future consideration payable to Champion sellers | 86.4 | — | — | 86.4 | ||||||||||||
Schedule of changes in fair value of contingent consideration | ||||||||||||||||
MILLIONS | 2014 | 2013 | ||||||||||||||
Contingent consideration at beginning of year | $ | 16.4 | $ | 27.3 | ||||||||||||
Amount recognized at transaction date | (0.4 | ) | — | |||||||||||||
Losses (gains) recognized in earnings | (0.4 | ) | 0.4 | |||||||||||||
Settlements | (14.3 | ) | (11.3 | ) | ||||||||||||
Foreign currency translation | — | — | ||||||||||||||
Contingent consideration at end of year | $ | 1.3 | $ | 16.4 | ||||||||||||
Schedule of carrying amount and estimated fair value of long-term debt | ||||||||||||||||
DECEMBER 31 (MILLIONS) | 2014 | 2013 | ||||||||||||||
CARRYING | FAIR | CARRYING | FAIR | |||||||||||||
AMOUNT | VALUE | AMOUNT | VALUE | |||||||||||||
Long-term debt (including current maturities) | $ | 5,619.5 | $ | 5,980.9 | $ | 6,548.8 | $ | 6,766.0 | ||||||||
DERIVATIVES_AND_HEDGING_TRANSA1
DERIVATIVES AND HEDGING TRANSACTIONS (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
DERIVATIVES AND HEDGING TRANSACTIONS | ||||||||||||||
Impact on AOCI and earnings from derivative contracts qualified as cash flow hedges | ||||||||||||||
MILLIONS | LOCATION | 2014 | 2013 | 2012 | ||||||||||
Unrealized gain (loss) recognized into AOCI (effective portion) | ||||||||||||||
Foreign currency forward contracts | AOCI (equity) | $ | 26.7 | $ | 4.7 | $ | (1.9 | ) | ||||||
Interest rate swap contracts | AOCI (equity) | -22.1 | –– | — | ||||||||||
Total | 4.6 | 4.7 | (1.9 | ) | ||||||||||
Gain (loss) recognized in income (effective portion) | ||||||||||||||
Foreign currency forward contracts | Sales | –– | — | (0.1 | ) | |||||||||
Cost of sales | 6.1 | -0.8 | 2 | |||||||||||
SG&A | 1.5 | — | 0.2 | |||||||||||
Total | 7.6 | -0.8 | 2.1 | |||||||||||
Interest rate swap contracts | Interest expense, net | -4.1 | -4.1 | (4.1 | ) | |||||||||
Total | $ | 3.5 | $ | -4.9 | $ | (2.0 | ) | |||||||
Impact on earnings from derivative contracts that qualified as fair value hedges | ||||||||||||||
MILLIONS | LOCATION | 2014 | 2013 | 2012 | ||||||||||
Gain (loss) on derivative recognized income | ||||||||||||||
Interest rate swap | Interest expense, net | $ | -2.1 | $ | — | $ | — | |||||||
Gain (loss) on hedged item recognized income | ||||||||||||||
Interest rate swap | Interest expense, net | $ | 2.1 | $ | — | $ | — | |||||||
Revaluation gains and losses on net investment hedges | ||||||||||||||
MILLIONS | 2014 | 2013 | 2012 | |||||||||||
Revaluation gains (losses), net of tax | $ | 34.7 | $ | -11.4 | $ | 9.8 | ||||||||
Impact on earnings from derivative contracts not designated as hedging instruments | ||||||||||||||
MILLIONS | LOCATION | 2014 | 2013 | 2012 | ||||||||||
Gain (loss) recognized in income | ||||||||||||||
Foreign currency forward contracts | SG&A | $ | 8.6 | $ | -1.4 | $ | (0.9 | ) | ||||||
Interest expense, net | -9 | -6.6 | (7.0 | ) | ||||||||||
Total | $ | -0.4 | $ | -8 | $ | (7.9 | ) | |||||||
Fair value of the company's outstanding derivative assets and liabilities | ||||||||||||||
ASSET DERIVATIVES | LIABILITY DERIVATIVES | |||||||||||||
MILLIONS | 2014 | 2013 | 2014 | 2013 | ||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||
Foreign currency forward contracts | $ | 17.9 | $ | 4.4 | $ | 0.6 | $ | 1.1 | ||||||
Interest rate swap contracts | — | — | 24.2 | — | ||||||||||
Derivatives not designated as hedging instruments: | ||||||||||||||
Foreign currency forward contracts | 57.6 | 15.8 | 27.3 | 13.1 | ||||||||||
Total | $ | 75.5 | $ | 20.2 | $ | 52.1 | $ | 14.2 | ||||||
OTHER_COMPREHENSIVE_INCOME_LOS1
OTHER COMPREHENSIVE INCOME (LOSS) INFORMATION (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
OTHER COMPREHENSIVE INCOME (LOSS) INFORMATION | |||||||||||
Schedule of other comprehensive income information related to the Company's derivatives and hedging instruments and pension and postretirement benefits | |||||||||||
MILLIONS | 2014 | 2013 | 2012 | ||||||||
Derivative & Hedging Instruments | |||||||||||
Unrealized gains (losses) on derivative & hedging instruments | $ | 4.6 | $ | 4.7 | $ | (1.9 | ) | ||||
Amount recognized in AOCI | |||||||||||
(Gains) losses reclassified from AOCI into income | |||||||||||
Sales | — | — | 0.1 | ||||||||
Cost of sales | -6.1 | 0.8 | (2.0 | ) | |||||||
SG&A | -1.5 | — | (0.2 | ) | |||||||
Interest expense, net | 4.1 | 4.1 | 4.1 | ||||||||
-3.5 | 4.9 | 2 | |||||||||
Translation & other insignificant activity | — | 0.9 | 0.5 | ||||||||
Tax impact | 2.8 | -3.5 | (0.7 | ) | |||||||
Net of tax | $ | 3.9 | $ | 7 | $ | (0.1 | ) | ||||
Pension & Postretirement Benefits | |||||||||||
Amount recognized in AOCI | |||||||||||
Current period net actuarial income (loss) and prior service costs | $ | -517.7 | $ | 528.2 | $ | (238.6 | ) | ||||
Amount reclassified from AOCI | |||||||||||
Amortization of net actuarial loss and prior service costs and benefits adjustments | 17.5 | 72.9 | 50.3 | ||||||||
-500.2 | 601.1 | (188.3 | ) | ||||||||
Tax impact | 156.9 | -218.2 | 57.1 | ||||||||
Net of tax | $ | -343.3 | $ | 382.9 | $ | (131.2 | ) | ||||
EQUITY_COMPENSATION_PLANS_Tabl
EQUITY COMPENSATION PLANS (Tables) | 12 Months Ended | |||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||
EQUITY COMPENSATION PLANS | ||||||||||||||||||
Summary of stock option activity and average exercise prices | ||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||
NUMBER OF | EXERCISE | NUMBER OF | EXERCISE | NUMBER OF | EXERCISE | |||||||||||||
OPTIONS | PRICE(a) | OPTIONS | PRICE(a) | OPTIONS | PRICE(a) | |||||||||||||
Outstanding, beginning of year | 13,926,256 | $ | 55.66 | 15,125,156 | $ | 48.29 | 20,126,579 | $ | 41.45 | |||||||||
Granted | 1,645,937 | 107.63 | 1,640,210 | 101.22 | 2,238,267 | 71.17 | ||||||||||||
Exercised | (2,316,918 | ) | 44.79 | (2,583,026 | ) | 40.68 | (6,774,032 | ) | 35.16 | |||||||||
Canceled | (85,499 | ) | 83.81 | (256,084 | ) | 63 | (465,658 | ) | 53.61 | |||||||||
Outstanding, end of year | 13,169,776 | $ | 63.88 | 13,926,256 | $ | 55.66 | 15,125,156 | $ | 48.29 | |||||||||
Exercisable, end of year | 9,820,826 | $ | 52.21 | 10,233,265 | $ | 46.33 | 11,036,700 | $ | 42.77 | |||||||||
Vested and expected to vest, end of year | 12,944,608 | $ | 63.35 | |||||||||||||||
(a) | Represents weighted average price. | |||||||||||||||||
Weighted-average grant-date fair value of options granted and significant assumptions used in determining the underlying fair value of each option grant | ||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||
Weighted-average grant-date fair value of options granted at market prices | $ | 23.18 | $ | 22.53 | $ | 13.77 | ||||||||||||
Assumptions | ||||||||||||||||||
Risk-free rate of return | 1.8% | 1.8% | 0.9% | |||||||||||||||
Expected life | 6 years | 6 years | 6 years | |||||||||||||||
Expected volatility | 22.9% | 23.0% | 22.8% | |||||||||||||||
Expected dividend yield | 1.2% | 1.1% | 1.3% | |||||||||||||||
Summary of non-vested PBRSU awards and restricted stock activity | ||||||||||||||||||
GRANT | GRANT | |||||||||||||||||
PBRSU | DATE FAIR | RSAs AND | DATE FAIR | |||||||||||||||
AWARDS | VALUE(a) | RSUs | VALUE(a) | |||||||||||||||
31-Dec-11 | 2,140,665 | $ | 50.68 | 1,016,660 | $ | 53.67 | ||||||||||||
Granted | 454,620 | 68.63 | 230,193 | 64.1 | ||||||||||||||
Vested / Earned | (285,249 | ) | 55.62 | (362,926 | ) | 53.8 | ||||||||||||
Canceled | (218,764 | ) | 53.14 | (86,714 | ) | 52.03 | ||||||||||||
31-Dec-12 | 2,091,272 | $ | 53.65 | 797,213 | $ | 56.79 | ||||||||||||
Granted | 342,207 | 99.63 | 109,212 | 90.56 | ||||||||||||||
Vested / Earned | (594,366 | ) | 47.6 | (249,093 | ) | 53.59 | ||||||||||||
Canceled | (88,844 | ) | 57.71 | (35,311 | ) | 56.2 | ||||||||||||
31-Dec-13 | 1,750,269 | $ | 64.49 | 622,021 | $ | 64.04 | ||||||||||||
Granted | 373,337 | 103.1 | 109,665 | 102.62 | ||||||||||||||
Vested / Earned | (503,324 | ) | 47.98 | (306,830 | ) | 55.83 | ||||||||||||
Canceled | (27,048 | ) | 74.09 | (23,785 | ) | 73.01 | ||||||||||||
31-Dec-14 | 1,593,234 | $ | 78.59 | 401,071 | $ | 80.33 | ||||||||||||
(a) | Represents weighted average price. | |||||||||||||||||
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
INCOME TAXES | |||||||||||||
Income before income taxes | |||||||||||||
MILLIONS | 2014 | 2013 | 2012 | ||||||||||
United States | $ | 937.7 | $ | 725.8 | $ | 594.8 | |||||||
International | 760.7 | 572.5 | 417.8 | ||||||||||
Total | $ | 1,698.4 | $ | 1,298.3 | $ | 1,012.6 | |||||||
Provision for income taxes | |||||||||||||
MILLIONS | 2014 | 2013 | 2012 | ||||||||||
Federal and state | $ | 344.3 | $ | 301.3 | $ | 141.3 | |||||||
International | 253.4 | 153.8 | 173.2 | ||||||||||
Total current | 597.7 | 455.1 | 314.5 | ||||||||||
Federal and state | (67.7 | ) | (124.0 | ) | 31.7 | ||||||||
International | (53.8 | ) | (6.5 | ) | (34.9 | ) | |||||||
Total deferred | (121.5 | ) | (130.5 | ) | (3.2 | ) | |||||||
Provision for income taxes | $ | 476.2 | $ | 324.7 | $ | 311.3 | |||||||
Net deferred tax assets and deferred tax liabilities | |||||||||||||
DECEMBER 31 (MILLIONS) | 2014 | 2013 | |||||||||||
Deferred tax assets | |||||||||||||
Other accrued liabilities | $ | 122.9 | $ | 125.9 | |||||||||
Loss carryforwards | 86 | 106.3 | |||||||||||
Share-based compensation | 70.9 | 70.1 | |||||||||||
Pension and other comprehensive income | 357.3 | 160.9 | |||||||||||
Foreign tax credits | 15.6 | 29.9 | |||||||||||
Other, net | 78.2 | 150 | |||||||||||
Valuation allowance | (74.2 | ) | (88.3 | ) | |||||||||
Total | 656.7 | 554.8 | |||||||||||
Deferred tax liabilities | |||||||||||||
Property, plant and equipment basis differences | 269.2 | 287.3 | |||||||||||
Intangible assets | 1,392.20 | 1,488.00 | |||||||||||
Unremitted foreign earnings | 37.4 | 94.5 | |||||||||||
Other, net | 126.1 | 132 | |||||||||||
Total | 1,824.90 | 2,001.80 | |||||||||||
Net deferred tax liabilities balance | $ | (1,168.2 | ) | $ | (1,447.0 | ) | |||||||
Reconciliation of the statutory U.S. federal income tax rate to the company's effective income tax rate | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Statutory U.S. rate | 35.00% | 35.00% | 35.00% | ||||||||||
State income taxes, net of federal benefit | 1.6 | 1.1 | 1.1 | ||||||||||
Foreign operations | -6.1 | -4.5 | -3 | ||||||||||
Domestic manufacturing deduction | -2 | -2.6 | -2.6 | ||||||||||
R&D credit | -0.7 | -1.4 | — | ||||||||||
Change in valuation allowance | (0 .1) | -1 | — | ||||||||||
Nondeductible deal costs | — | 0.2 | 0.5 | ||||||||||
Audit settlements and refunds | 0.2 | -0.8 | 0.1 | ||||||||||
Other, net | 0.1 | -1 | -0.4 | ||||||||||
Effective income tax rate | 28.00% | 25.00% | 30.70% | ||||||||||
Reconciliation of the beginning and ending amount of gross liability for unrecognized tax benefits | |||||||||||||
MILLIONS | 2014 | 2013 | 2012 | ||||||||||
Balance at beginning of year | $ | 98.7 | $ | 93.1 | $ | 89.5 | |||||||
Additions based on tax positions related to the current year | 5.3 | 9.1 | 7.5 | ||||||||||
Additions for tax positions of prior years | 5.2 | 6.1 | 5 | ||||||||||
Reductions for tax positions of prior years | (17.8 | ) | (15.6 | ) | (3.4 | ) | |||||||
Reductions for tax positions due to statute of limitations | (0.2 | ) | (3.6 | ) | (0.8 | ) | |||||||
Settlements | (9.0 | ) | (0.7 | ) | (8.0 | ) | |||||||
Assumed in connection with the Champion acquisition | — | 9.8 | — | ||||||||||
Assumed in connection with the Nalco merger | — | — | 7.8 | ||||||||||
Foreign currency translation | (3.5 | ) | 0.5 | (4.5 | ) | ||||||||
Balance at end of year | $ | 78.7 | $ | 98.7 | $ | 93.1 | |||||||
RENTALS_AND_LEASES_Tables
RENTALS AND LEASES (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
RENTALS AND LEASES | |||||
Future minimum payments under operating leases with noncancelable terms in excess of one year | As of December 31, 2014, identifiable future minimum payments with non-cancelable terms in excess of one year were: | ||||
MILLIONS | |||||
2015 | $ | 133 | |||
2016 | 116 | ||||
2017 | 103 | ||||
2018 | 86 | ||||
2019 | 67 | ||||
Thereafter | 158 | ||||
Total | $ | 663 | |||
RETIREMENT_PLANS_Tables
RETIREMENT PLANS (Tables) | 12 Months Ended | ||||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||||
Pension and Postretirement Plans | |||||||||||||||||||||||||||||
Financial information related to pension and postretirement health care plans | |||||||||||||||||||||||||||||
U.S. | INTERNATIONAL | U.S. POSTRETIREMENT | |||||||||||||||||||||||||||
PENSION(a) | PENSION | HEALTH CARE | |||||||||||||||||||||||||||
MILLIONS | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||||
Accumulated Benefit Obligation, end of year | $ 2,075.0 | $ 1,748.1 | $ 1,304.6 | $ 1,124.5 | $ 240.4 | $ 234.1 | |||||||||||||||||||||||
Projected Benefit Obligation | |||||||||||||||||||||||||||||
Projected benefit obligation, beginning of year | 1,886.3 | 2,105.1 | 1,243.6 | 1,180.6 | 234.1 | 281.5 | |||||||||||||||||||||||
Service cost | 66.4 | 68.6 | 32.2 | 36.0 | 4.3 | 5.9 | |||||||||||||||||||||||
Interest | 90.0 | 84.7 | 49.8 | 47.2 | 10.8 | 10.8 | |||||||||||||||||||||||
Participant contributions | — | — | 3.6 | 3.7 | 10.4 | 9.6 | |||||||||||||||||||||||
Medicare subsidies received | — | — | — | — | 2.0 | 0.7 | |||||||||||||||||||||||
Curtailments and settlements | — | — | -15.9 | -7.3 | — | — | |||||||||||||||||||||||
Plan amendments | — | — | 0.1 | 2.2 | 0.9 | — | |||||||||||||||||||||||
Actuarial loss (gain) | 329.4 | -270.5 | 248.8 | -11.1 | — | -52.2 | |||||||||||||||||||||||
Assumed through acquisitions | — | — | -0.2 | 8.5 | — | — | |||||||||||||||||||||||
Benefits paid | -119.4 | -101.6 | -38.1 | -39.2 | -22.1 | -22.2 | |||||||||||||||||||||||
Foreign currency translation | — | — | -99 | 23.0 | — | — | |||||||||||||||||||||||
Projected benefit obligation, end of year | 2,252.7 | 1,886.3 | 1,424.9 | 1,243.6 | 240.4 | 234.1 | |||||||||||||||||||||||
Plan Assets | |||||||||||||||||||||||||||||
Fair value of plan assets, beginning of year | 1,848.9 | 1,633.5 | 787.6 | 689.3 | 14.8 | 15.1 | |||||||||||||||||||||||
Actual returns on plan assets | 136.4 | 307.3 | 108.6 | 64.7 | 0.9 | 2.8 | |||||||||||||||||||||||
Company contributions | 5.7 | 9.7 | 52.8 | 52.6 | 18.2 | 17.7 | |||||||||||||||||||||||
Participant contributions | — | — | 3.6 | 3.7 | 1.5 | 1.4 | |||||||||||||||||||||||
Assumed through acquisitions | — | — | — | 5.9 | — | — | |||||||||||||||||||||||
Settlements | — | — | -12.8 | -1.5 | — | — | |||||||||||||||||||||||
Benefits paid | -119.4 | -101.6 | -38.1 | -39.2 | -22.1 | -22.2 | |||||||||||||||||||||||
Foreign currency translation | — | — | -54 | 12.1 | — | — | |||||||||||||||||||||||
Fair value of plan assets, end of year | 1,871.6 | 1,848.9 | 847.7 | 787.6 | 13.3 | 14.8 | |||||||||||||||||||||||
Funded Status, end of year | -381.1 | -37.4 | -577.2 | -456 | -227.1 | -219.3 | |||||||||||||||||||||||
Amounts recognized in Consolidated Balance Sheet: | |||||||||||||||||||||||||||||
Other assets | — | 58.6 | 15.9 | 31.6 | — | — | |||||||||||||||||||||||
Other current liabilities | -9.6 | -6.8 | -15.7 | -14.6 | -7 | -6 | |||||||||||||||||||||||
Postretirement healthcare and pension benefits | -371.5 | -89.2 | -577.4 | -473 | -220.1 | -213.3 | |||||||||||||||||||||||
Net liability | -381.1 | -37.4 | -577.2 | -456 | -227.1 | -219.3 | |||||||||||||||||||||||
Amounts recognized in Accumulated | |||||||||||||||||||||||||||||
Other Comprehensive Loss (Income): | |||||||||||||||||||||||||||||
Unrecognized net actuarial loss | 555.8 | 258.1 | 358.0 | 198.5 | -33.6 | -42.3 | |||||||||||||||||||||||
Unrecognized net prior service benefits | -40.6 | -47.5 | -2.6 | -3 | — | -1.2 | |||||||||||||||||||||||
Tax benefit | -201.8 | -85.9 | -93.4 | -56.1 | 10.7 | 14.4 | |||||||||||||||||||||||
Accumulated other comprehensive loss (income), net of tax | 313.4 | 124.7 | 262.0 | 139.4 | -22.9 | -29.1 | |||||||||||||||||||||||
Change in Accumulated Other Comprehensive Loss (Income): | |||||||||||||||||||||||||||||
Amortization of net actuarial loss | -23.7 | -62.3 | -9.1 | -17.7 | 8.2 | -0.6 | |||||||||||||||||||||||
Amortization of prior service costs (benefits) | 6.9 | 6.9 | -0.1 | 1.4 | 0.3 | 0.3 | |||||||||||||||||||||||
Current period net actuarial loss (gain) | 321.4 | -447.7 | 194.8 | -28.7 | 0.5 | -54 | |||||||||||||||||||||||
Current period prior service costs (benefits) | — | — | 0.1 | 2.2 | 0.9 | — | |||||||||||||||||||||||
Settlement | — | -0.9 | — | — | — | — | |||||||||||||||||||||||
Tax expense (benefit) | -115.9 | 187.1 | -37.3 | 11.0 | -3.7 | 20.1 | |||||||||||||||||||||||
Foreign currency translation | — | — | -25.8 | 4.1 | — | — | |||||||||||||||||||||||
Other comprehensive loss (income) | 188.7 | -316.9 | 122.6 | -27.7 | 6.2 | -34.2 | |||||||||||||||||||||||
(a) | Includes qualified and non-qualified plans | ||||||||||||||||||||||||||||
Estimated amounts in accumulated other comprehensive loss expected to be reclassified to net period cost during 2015 | Estimated amounts in accumulated other comprehensive loss expected to be reclassified to net period cost during 2015 are as follows: | ||||||||||||||||||||||||||||
U.S. | INTERNATIONAL | U. S. POSTRETIREMENT | |||||||||||||||||||||||||||
MILLIONS | PENSION (a) | PENSION | HEALTH CARE | ||||||||||||||||||||||||||
Net actuarial loss (gain) | $ | 48.5 | $ | 16.9 | $ | -6.2 | |||||||||||||||||||||||
Net prior service costs (benefits) | -6.9 | -0.1 | -0.1 | ||||||||||||||||||||||||||
Total | $ | 41.6 | $ | 16.8 | $ | -6.3 | |||||||||||||||||||||||
(a) | Includes qualified and non-qualified plans | ||||||||||||||||||||||||||||
Aggregate projected benefit obligation, accumulated benefit obligation and fair value of pension plan assets for plans with accumulated benefit obligations in excess of plan assets | |||||||||||||||||||||||||||||
DECEMBER 31 (MILLIONS) | 2014 | 2013 | |||||||||||||||||||||||||||
Aggregate projected benefit obligation | $ | 3,272.1 | $ | 869.2 | |||||||||||||||||||||||||
Accumulated benefit obligation | 3,011.9 | 794.9 | |||||||||||||||||||||||||||
Fair value of plan assets | 2,315.7 | 309.9 | |||||||||||||||||||||||||||
Net periodic pension and postretirement health care benefit costs | |||||||||||||||||||||||||||||
U.S. | INTERNATIONAL | U.S. POSTRETIREMENT | |||||||||||||||||||||||||||
PENSION(a) | PENSION | HEALTH CARE | |||||||||||||||||||||||||||
MILLIONS | 2014 | 2013 | 2012 | 2014 | 2013 | 2012 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Service cost — employee benefits earned during the year | $ | 66.4 | $ | 68.6 | $ | 50.5 | $ | 32.2 | $ | 36 | $ | 29.6 | $ | 4.3 | $ | 5.9 | $ | 5.1 | |||||||||||
Interest cost on benefit obligation | 90 | 84.7 | 89.3 | 49.8 | 47.2 | 48.3 | 10.8 | 10.8 | 12.9 | ||||||||||||||||||||
Expected return on plan assets | (128.4 | ) | (130.1 | ) | (127.1 | ) | (54.6 | ) | (46.9 | ) | (42.3 | ) | (1.0 | ) | (1.1 | ) | (1.2 | ) | |||||||||||
Recognition of net actuarial loss | 23.7 | 62.3 | 45.1 | 7 | 11.3 | 3.9 | (8.2 | ) | 0.6 | 0.4 | |||||||||||||||||||
Amortization of prior service cost (benefit) | (6.9 | ) | (6.9 | ) | (4.2 | ) | 0.4 | (0.3 | ) | 0.2 | (0.3 | ) | (0.3 | ) | 0.1 | ||||||||||||||
Settlements/Curtailments | –– | 0.9 | 2.4 | (1.3 | ) | (0.3 | ) | 1.6 | — | — | — | ||||||||||||||||||
Total expense | $ | 44.8 | $ | 79.5 | $ | 56 | $ | 33.5 | $ | 47 | $ | 41.3 | $ | 5.6 | $ | 15.9 | $ | 17.3 | |||||||||||
(a) | Includes qualified and non-qualified plans | ||||||||||||||||||||||||||||
Plan Assumptions | |||||||||||||||||||||||||||||
Plan Assumptions | U.S. | INTERNATIONAL | U.S. POSTRETIREMENT | ||||||||||||||||||||||||||
PENSION(a) | PENSION | HEALTH CARE | |||||||||||||||||||||||||||
PERCENT | 2014 | 2013 | 2012 | 2014 | 2013 | 2012 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Weighted-average actuarial assumptions used to determine benefit obligations as of year end: | |||||||||||||||||||||||||||||
Discount rate | 4.14% | 4.92% | 4.14% | 3.02% | 4.09% | 4.04% | 4.08% | 4.77% | 3.95% | ||||||||||||||||||||
Projected salary increase | 4.32 | 4.32 | 4.32 | 2.66 | 2.73 | 2.74 | |||||||||||||||||||||||
Weighted-average actuarial assumptions used to determine net cost: | |||||||||||||||||||||||||||||
Discount rate | 4.92 | 4.14 | 4.85 | 4.45 | 4.34 | 5.17 | 4.77 | 3.95 | 4.8 | ||||||||||||||||||||
Expected return on plan assets | 7.75 | 8.25 | 8.25 | 6.9 | 6.79 | 6.87 | 7.75 | 8.25 | 8.25 | ||||||||||||||||||||
Projected salary increase | 4.32 | 4.32 | 4.08 | 3.58 | 3.7 | 3.59 | |||||||||||||||||||||||
(a) | Includes qualified and non-qualified plans | ||||||||||||||||||||||||||||
Effects of one-percentage point change in the assumed health care cost trend rates | |||||||||||||||||||||||||||||
1-PERCENTAGE POINT | |||||||||||||||||||||||||||||
MILLIONS | INCREASE | DECREASE | |||||||||||||||||||||||||||
Effect on total of service and interest cost components | $ | -0.1 | $ | 0.1 | |||||||||||||||||||||||||
Effect on postretirement benefit obligation | 1.0 | -1.5 | |||||||||||||||||||||||||||
U.S. Level 3 plan assets rollforward | |||||||||||||||||||||||||||||
HEDGE | PRIVATE | ||||||||||||||||||||||||||||
MILLIONS | FUNDS | EQUITY | |||||||||||||||||||||||||||
Balance at December 31, 2012 | $ | 134.6 | $ | 48.2 | |||||||||||||||||||||||||
Unrealized gains | 13.9 | 6.2 | |||||||||||||||||||||||||||
Realized gains | — | 3.6 | |||||||||||||||||||||||||||
Purchases, sales and settlements, net | — | (3.1 | ) | ||||||||||||||||||||||||||
Transfers in and/or out | — | — | |||||||||||||||||||||||||||
Balance at December 31, 2013 | $ | 148.5 | $ | 54.9 | |||||||||||||||||||||||||
Unrealized gains | 3.5 | 2.5 | |||||||||||||||||||||||||||
Realized gains | — | 10 | |||||||||||||||||||||||||||
Purchases, sales and settlements, net | — | 6 | |||||||||||||||||||||||||||
Transfers in and/or out | — | — | |||||||||||||||||||||||||||
Balance at December 31, 2014 | $ | 152 | $ | 73.4 | |||||||||||||||||||||||||
Estimated future benefits payments | |||||||||||||||||||||||||||||
MEDICARE SUBSIDY | |||||||||||||||||||||||||||||
MILLIONS | ALL PLANS | RECEIPTS | |||||||||||||||||||||||||||
2015 | $ | 159 | $ | 1 | |||||||||||||||||||||||||
2016 | 170 | – | |||||||||||||||||||||||||||
2017 | 177 | – | |||||||||||||||||||||||||||
2018 | 185 | – | |||||||||||||||||||||||||||
2019 | 203 | – | |||||||||||||||||||||||||||
2020-2024 | 1,176 | – | |||||||||||||||||||||||||||
U.S. Pension and Postretirement Health Care Benefits | |||||||||||||||||||||||||||||
Pension and Postretirement Plans | |||||||||||||||||||||||||||||
Allocation and fair value of plan assets for defined benefit pension and postretirement health care benefit plans | |||||||||||||||||||||||||||||
TARGET | |||||||||||||||||||||||||||||
ASSET | ASSET | ||||||||||||||||||||||||||||
CATEGORY | ALLOCATION | PERCENTAGE | |||||||||||||||||||||||||||
PERCENTAGE | OF PLAN ASSETS | ||||||||||||||||||||||||||||
DECEMBER 31 (%) | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||||||||
Large cap equity | 34% | 34% | 37% | 37% | |||||||||||||||||||||||||
Small cap equity | 9 | 9 | 9 | 11 | |||||||||||||||||||||||||
International equity | 13 | 13 | 13 | 14 | |||||||||||||||||||||||||
Fixed income: | |||||||||||||||||||||||||||||
Core fixed income | 18 | 18 | 18 | 17 | |||||||||||||||||||||||||
High-yield bonds | 5 | 5 | 5 | 5 | |||||||||||||||||||||||||
Emerging markets | 2 | 2 | 2 | 2 | |||||||||||||||||||||||||
Other: | |||||||||||||||||||||||||||||
Real estate | 4 | 4 | 4 | 3 | |||||||||||||||||||||||||
Hedge funds | 9 | 9 | 8 | 8 | |||||||||||||||||||||||||
Private equity | 6 | 6 | 4 | 3 | |||||||||||||||||||||||||
Total | 100% | 100% | 100% | 100% | |||||||||||||||||||||||||
FAIR VALUE AS OF | |||||||||||||||||||||||||||||
MILLIONS | DECEMBER 31, 2014 | ||||||||||||||||||||||||||||
LEVEL 1 | LEVEL 2 | LEVEL 3 | TOTAL | ||||||||||||||||||||||||||
Cash | $ | 7.4 | $ | 7.4 | |||||||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||||||||
Large cap equity | 693.5 | 693.5 | |||||||||||||||||||||||||||
Small cap equity | 174.9 | 174.9 | |||||||||||||||||||||||||||
International equity | 246.2 | 246.2 | |||||||||||||||||||||||||||
Fixed income: | |||||||||||||||||||||||||||||
Core fixed income | 344.7 | 344.7 | |||||||||||||||||||||||||||
High-yield bonds | 90.5 | 90.5 | |||||||||||||||||||||||||||
Emerging markets | 29.4 | 29.4 | |||||||||||||||||||||||||||
Other: | |||||||||||||||||||||||||||||
Real estate | $ | 72.6 | 72.6 | ||||||||||||||||||||||||||
Hedge funds | $ | 152.0 | 152.0 | ||||||||||||||||||||||||||
Private equity | 73.4 | 73.4 | |||||||||||||||||||||||||||
Other | 0.3 | 0.3 | |||||||||||||||||||||||||||
Total | $ | 1,586.6 | $ | 72.9 | $ | 225.4 | $ | 1,884.9 | |||||||||||||||||||||
FAIR VALUE AS OF | |||||||||||||||||||||||||||||
MILLIONS | DECEMBER 31, 2013 | ||||||||||||||||||||||||||||
LEVEL 1 | LEVEL 2 | LEVEL 3 | TOTAL | ||||||||||||||||||||||||||
Cash | $ | 3.1 | $ | 3.1 | |||||||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||||||||
Large cap equity | 695.2 | 695.2 | |||||||||||||||||||||||||||
Small cap equity | 196.9 | 196.9 | |||||||||||||||||||||||||||
International equity | 258.5 | 258.5 | |||||||||||||||||||||||||||
Fixed income: | |||||||||||||||||||||||||||||
Core fixed income | 323.2 | 323.2 | |||||||||||||||||||||||||||
High-yield bonds | 88.4 | 88.4 | |||||||||||||||||||||||||||
Emerging markets | 29.8 | 29.8 | |||||||||||||||||||||||||||
Other: | |||||||||||||||||||||||||||||
Real estate | $ | 64.7 | 64.7 | ||||||||||||||||||||||||||
Hedge funds | $ | 148.5 | 148.5 | ||||||||||||||||||||||||||
Private equity | 54.9 | 54.9 | |||||||||||||||||||||||||||
Other | 0.5 | 0.5 | |||||||||||||||||||||||||||
Total | $ | 1,595.1 | $ | 65.2 | $ | 203.4 | $ | 1,863.7 | |||||||||||||||||||||
International Pension | |||||||||||||||||||||||||||||
Pension and Postretirement Plans | |||||||||||||||||||||||||||||
Allocation and fair value of plan assets for defined benefit pension and postretirement health care benefit plans | |||||||||||||||||||||||||||||
ASSET | PERCENTAGE | ||||||||||||||||||||||||||||
CATEGORY | OF PLAN ASSETS | ||||||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||||||
DECEMBER 31 (%) | |||||||||||||||||||||||||||||
Cash | 1% | 1% | |||||||||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||||||||
International equity | 43 | 43 | |||||||||||||||||||||||||||
Fixed income: | |||||||||||||||||||||||||||||
Corporate bonds | 22 | 21 | |||||||||||||||||||||||||||
Government bonds | 19 | 18 | |||||||||||||||||||||||||||
Total fixed income | 41 | 39 | |||||||||||||||||||||||||||
Other: | |||||||||||||||||||||||||||||
Insurance contracts | 13 | 15 | |||||||||||||||||||||||||||
Real estate | 2 | 2 | |||||||||||||||||||||||||||
Total | 100% | 100% | |||||||||||||||||||||||||||
FAIR VALUE AS OF | |||||||||||||||||||||||||||||
MILLIONS | 31-Dec-14 | ||||||||||||||||||||||||||||
LEVEL 1 | LEVEL 2 | LEVEL 3 | TOTAL | ||||||||||||||||||||||||||
Cash | $ | 7.2 | $ | 7.2 | |||||||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||||||||
International equity | $ | 363.5 | 363.5 | ||||||||||||||||||||||||||
Fixed income: | |||||||||||||||||||||||||||||
Corporate bonds | 5.1 | 184.2 | 189.3 | ||||||||||||||||||||||||||
Government bonds | 7.7 | 156.7 | 164.4 | ||||||||||||||||||||||||||
Other: | |||||||||||||||||||||||||||||
Insurance contracts | 109.8 | 109.8 | |||||||||||||||||||||||||||
Real estate | 12.7 | 12.7 | |||||||||||||||||||||||||||
Other | 0.5 | 0.3 | 0.8 | ||||||||||||||||||||||||||
Total | $ | 20.5 | $ | 827.2 | $ | 847.7 | |||||||||||||||||||||||
FAIR VALUE AS OF | |||||||||||||||||||||||||||||
MILLIONS | 31-Dec-13 | ||||||||||||||||||||||||||||
LEVEL 1 | LEVEL 2 | LEVEL 3 | TOTAL | ||||||||||||||||||||||||||
Cash | $ | 3.6 | $ | 3.6 | |||||||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||||||||
International equity | $ | 342.5 | 342.5 | ||||||||||||||||||||||||||
Fixed income: | |||||||||||||||||||||||||||||
Corporate bonds | 5.5 | 162.1 | 167.6 | ||||||||||||||||||||||||||
Government bonds | 8.7 | 134.6 | 143.3 | ||||||||||||||||||||||||||
Other: | |||||||||||||||||||||||||||||
Insurance contracts | 116.2 | 116.2 | |||||||||||||||||||||||||||
Real estate | 11.4 | 11.4 | |||||||||||||||||||||||||||
Other | 2.6 | 0.4 | 3.0 | ||||||||||||||||||||||||||
Total | $ | 20.4 | $ | 767.2 | $ | 787.6 | |||||||||||||||||||||||
OPERATING_SEGMENTS_AND_GEOGRAP1
OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION (Tables) | 12 Months Ended | |||||||||||||||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||||||||||||||
OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION | ||||||||||||||||||||||||||||||||
Schedule of financial information for each of the entity's reportable segments, including the impact of the preceding changes on previously reported 2013 and 2012 reportable segment values | ||||||||||||||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||||||||||||||
CHANGES IN | CHANGES IN | |||||||||||||||||||||||||||||||
PREVIOUSLY | CURRENCY | SEGMENT | PREVIOUSLY | CURRENCY | SEGMENT | |||||||||||||||||||||||||||
MILLIONS | 2014 | REPORTED | RATES | CHANGES | REVISED | REPORTED | RATES | CHANGES | REVISED | |||||||||||||||||||||||
Net Sales | ||||||||||||||||||||||||||||||||
Global Industrial | $ | 4,886.70 | $ | 4,905.10 | $ | (149.3 | ) | $ | (13.0 | ) | $ | 4,742.80 | $ | 4,762.20 | $ | (137.4 | ) | $ | (10.7 | ) | $ | 4,614.10 | ||||||||||
Global Institutional | 4,314.50 | 4,202.50 | (55.4 | ) | 5.4 | 4,152.50 | 4,063.20 | (48.2 | ) | 2.5 | 4,017.50 | |||||||||||||||||||||
Global Energy | 4,283.30 | 3,532.80 | (113.1 | ) | 7.6 | 3,427.30 | 2,275.40 | (60.2 | ) | 8.3 | 2,223.50 | |||||||||||||||||||||
Other | 750.3 | 715 | (5.7 | ) | — | 709.3 | 736.3 | (5.6 | ) | (0.1 | ) | 730.6 | ||||||||||||||||||||
Subtotal at fixed currency | 14,234.80 | 13,355.40 | (323.5 | ) | — | 13,031.90 | 11,837.10 | (251.4 | ) | — | 11,585.70 | |||||||||||||||||||||
Effect of foreign currency translation | 45.7 | (102.0 | ) | 323.5 | — | 221.5 | 1.6 | 251.4 | — | 253 | ||||||||||||||||||||||
Total reported net sales | $ | 14,280.50 | $ | 13,253.40 | $ | — | — | $ | 13,253.40 | $ | 11,838.70 | $ | — | $ | — | $ | 11,838.70 | |||||||||||||||
Operating Income (Loss) | ||||||||||||||||||||||||||||||||
Global Industrial | $ | 642.6 | $ | 637.3 | $ | (27.1 | ) | $ | (7.2 | ) | $ | 603 | $ | 569.5 | $ | (22.9 | ) | $ | (4.4 | ) | $ | 542.2 | ||||||||||
Global Institutional | 821.2 | 764.5 | (11.7 | ) | 15.4 | 768.2 | 700.7 | (11.8 | ) | 14.1 | 703 | |||||||||||||||||||||
Global Energy | 634.9 | 492.1 | (19.2 | ) | (14.0 | ) | 458.9 | 360.7 | (8.7 | ) | (15.1 | ) | 336.9 | |||||||||||||||||||
Other | 116.5 | 97.9 | 0.4 | 5.8 | 104.1 | 103 | (0.9 | ) | 5.4 | 107.5 | ||||||||||||||||||||||
Corporate | (263.4 | ) | (411.6 | ) | 2.5 | — | (409.1 | ) | (442.3 | ) | — | — | (442.3 | ) | ||||||||||||||||||
Subtotal at fixed currency rates | 1,951.80 | 1,580.20 | (55.1 | ) | — | 1,525.10 | 1,291.60 | (44.3 | ) | — | 1,247.30 | |||||||||||||||||||||
Effect of foreign currency translation | 3.2 | (19.6 | ) | 55.1 | — | 35.5 | (2.3 | ) | 44.3 | — | 42 | |||||||||||||||||||||
Total reported operating income | $ | 1,955.00 | $ | 1,560.60 | $ | — | $ | — | $ | 1,560.60 | $ | 1,289.30 | $ | — | $ | — | $ | 1,289.30 | ||||||||||||||
Schedule of total service revenue at public exchange rates by reportable segment | ||||||||||||||||||||||||||||||||
Service Revenue | ||||||||||||||||||||||||||||||||
MILLIONS | 2014 | 2013 | 2012 | |||||||||||||||||||||||||||||
Global Industrial | $ | 53.2 | $ | 51.9 | $ | 48.3 | ||||||||||||||||||||||||||
Global Institutional | 31.1 | 27.0 | 23.8 | |||||||||||||||||||||||||||||
Global Energy | 294.1 | 179.3 | 156.0 | |||||||||||||||||||||||||||||
Other | 655.1 | 619.4 | 590.1 | |||||||||||||||||||||||||||||
Schedule of net sales and long-lived assets at public exchange rates by geographic region | ||||||||||||||||||||||||||||||||
Net Sales | Long-Lived Assets, net | |||||||||||||||||||||||||||||||
MILLIONS | 2014 | 2013 | 2012 | 2014 | 2013 | |||||||||||||||||||||||||||
United States | $ | 7,233.6 | $ | 6,696.0 | $ | 5,865.3 | $ | 8,677.2 | $ | 8,755.8 | ||||||||||||||||||||||
EMEA | 3,470.6 | 3,255.0 | 3,027.9 | 2,066.8 | 2,180.2 | |||||||||||||||||||||||||||
Asia Pacific | 1,685.9 | 1,631.8 | 1,586.8 | 2,339.8 | 2,368.6 | |||||||||||||||||||||||||||
Latin America | 1,177.4 | 1,022.6 | 849.7 | 779.8 | 832.4 | |||||||||||||||||||||||||||
Canada | 713.0 | 648.0 | 509.0 | 732.0 | 801.1 | |||||||||||||||||||||||||||
Total | $ | 14,280.5 | $ | 13,253.4 | $ | 11,838.7 | $ | 14,595.6 | $ | 14,938.1 | ||||||||||||||||||||||
QUARTERLY_FINANCIAL_DATA_UNAUD1
QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables) | 12 Months Ended | |||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||
QUARTERLY FINANCIAL DATA (UNAUDITED) | ||||||||||||||||||
Quarterly financial data | ||||||||||||||||||
FIRST | SECOND | THIRD | FOURTH | |||||||||||||||
MILLIONS, EXCEPT PER SHARE | QUARTER | QUARTER | QUARTER | QUARTER | YEAR | |||||||||||||
2014 | ||||||||||||||||||
Net sales | $ | 3,336.60 | $ | 3,568.20 | $ | 3,694.90 | $ | 3,680.80 | $ | 14,280.50 | ||||||||
Cost of sales (including special charges of $6.0, $1.1, $0.8 and $6.4 in Q1, Q2, Q3 and Q4, respectively) | 1,819.20 | 1,909.40 | 1,970.60 | 1,979.90 | 7,679.10 | |||||||||||||
Selling, general and administrative expenses | 1,136.90 | 1,152.70 | 1,145.90 | 1,142.10 | 4,577.60 | |||||||||||||
Special (gains) and charges | 29.6 | (6.1 | ) | 7 | 38.3 | 68.8 | ||||||||||||
Operating income | 350.9 | 512.2 | 571.4 | 520.5 | 1,955.00 | |||||||||||||
Interest expense, net | 65.1 | 66.2 | 63.3 | 62 | 256.6 | |||||||||||||
Income before income taxes | 285.8 | 446 | 508.1 | 458.5 | 1,698.40 | |||||||||||||
Provision for income taxes | 91.3 | 131 | 138.7 | 115.2 | 476.2 | |||||||||||||
Net income including noncontrolling interest | 194.5 | 315 | 369.4 | 343.3 | 1,222.20 | |||||||||||||
Less: Net income attributable to noncontrolling interest | 3.5 | 3.6 | 4.5 | 7.8 | 19.4 | |||||||||||||
Net income attributable to Ecolab | $ | 191 | $ | 311.4 | $ | 364.9 | $ | 335.5 | $ | 1,202.80 | ||||||||
Earnings attributable to Ecolab per common share | ||||||||||||||||||
Basic | $ | 0.64 | $ | 1.04 | $ | 1.22 | $ | 1.12 | $ | 4.01 | ||||||||
Diluted | $ | 0.62 | $ | 1.02 | $ | 1.19 | $ | 1.1 | $ | 3.93 | ||||||||
Weighted-average common shares outstanding | ||||||||||||||||||
Basic | 300.6 | 299.6 | 300 | 300.1 | 300.1 | |||||||||||||
Diluted | 306.5 | 305.2 | 305.7 | 305.6 | 305.9 | |||||||||||||
2013 | ||||||||||||||||||
Net sales | $ | 2,872.10 | $ | 3,337.80 | $ | 3,484.00 | $ | 3,559.50 | $ | 13,253.40 | ||||||||
Cost of sales (including special charges of $2.0, $15.2, $6.3 and $19.7 in Q1, Q2, Q3 and Q4, respectively) | 1,539.70 | 1,810.20 | 1,866.10 | 1,945.20 | 7,161.20 | |||||||||||||
Selling, general and administrative expenses | 1,021.00 | 1,101.70 | 1,114.10 | 1,123.50 | 4,360.30 | |||||||||||||
Special (gains) and charges | 49.7 | 73.6 | 27.8 | 20.2 | 171.3 | |||||||||||||
Operating income | 261.7 | 352.3 | 476 | 470.6 | 1,560.60 | |||||||||||||
Interest expense, net (including special charges of $2.2 and $0.3 in Q1 and Q2, respectively) | 61.5 | 66.2 | 67 | 67.6 | 262.3 | |||||||||||||
Income before income taxes | 200.2 | 286.1 | 409 | 403 | 1,298.30 | |||||||||||||
Provision for income taxes | 39.2 | 70.3 | 101.8 | 113.4 | 324.7 | |||||||||||||
Net income including noncontrolling interest | 161 | 215.8 | 307.2 | 289.6 | 973.6 | |||||||||||||
Less: Net income attributable to noncontrolling interest (including special charges of $0.5 in Q1) | 1.4 | 2.7 | (0.8 | ) | 2.5 | 5.8 | ||||||||||||
Net income attributable to Ecolab | $ | 159.6 | $ | 213.1 | $ | 308 | $ | 287.1 | $ | 967.8 | ||||||||
Earnings attributable to Ecolab per common share | ||||||||||||||||||
Basic | $ | 0.54 | $ | 0.71 | $ | 1.02 | $ | 0.95 | $ | 3.23 | ||||||||
Diluted | $ | 0.53 | $ | 0.69 | $ | 1 | $ | 0.93 | $ | 3.16 | ||||||||
Weighted-average common shares outstanding | ||||||||||||||||||
Basic | 295.4 | 301.5 | 301.2 | 301.2 | 299.9 | |||||||||||||
Diluted | 300.9 | 307.4 | 307.2 | 307.5 | 305.9 | |||||||||||||
NATURE_OF_BUSINESS_Details
NATURE OF BUSINESS (Details) (Minimum) | Dec. 31, 2014 |
country | |
Minimum | |
Nature of business | |
Number of countries in which company delivers comprehensive programs and services | 170 |
SIGNIFICANT_ACCOUNTING_POLICIE3
SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Selling, general and administrative expenses | ||
Reclassification adjustment | $78.90 | $98.10 |
Cost of sales | ||
Reclassification adjustment | ($78.90) | ($98.70) |
SIGNIFICANT_ACCOUNTING_POLICIE4
SIGNIFICANT ACCOUNTING POLICIES (Details 2) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
SIGNIFICANT ACCOUNTING POLICIES | |||
Allowance for doubtful accounts, returns and credits | $15 | $14 | $13 |
Allowance for Doubtful Accounts | |||
Activity in the allowance for doubtful accounts | |||
Allowance for doubtful accounts, beginning balance | 81 | 73 | 49 |
Bad debt expense | 23 | 28 | 37 |
Write-offs | -20 | -21 | -13 |
Other | -7 | 1 | |
Allowance for doubtful accounts, ending balance | $77 | $81 | $73 |
SIGNIFICANT_ACCOUNTING_POLICIE5
SIGNIFICANT ACCOUNTING POLICIES (Details 3) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Inventory valuation | |||
LIFO inventory as percentage of consolidated inventory | 37.00% | 34.00% | |
Property, Plant and Equipment | |||
Total depreciation expense | $558.10 | $514.20 | $468.20 |
Buildings and Leasehold Improvements | Minimum | |||
Property, Plant and Equipment | |||
Estimated useful life | 5 years | ||
Buildings and Leasehold Improvements | Maximum | |||
Property, Plant and Equipment | |||
Estimated useful life | 40 years | ||
Machinery and Equipment | Minimum | |||
Property, Plant and Equipment | |||
Estimated useful life | 3 years | ||
Machinery and Equipment | Maximum | |||
Property, Plant and Equipment | |||
Estimated useful life | 18 years | ||
Merchandising and Customer Equipment and Capital Software | Minimum | |||
Property, Plant and Equipment | |||
Estimated useful life | 3 years | ||
Merchandising and Customer Equipment and Capital Software | Maximum | |||
Property, Plant and Equipment | |||
Estimated useful life | 10 years |
SIGNIFICANT_ACCOUNTING_POLICIE6
SIGNIFICANT ACCOUNTING POLICIES (Details 4) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 |
segment | |||
SIGNIFICANT ACCOUNTING POLICIES | |||
Number of reporting units for which qualitative test is used | 10 | ||
Impairment of goodwill | $0 | ||
Changes in the carrying amount of goodwill | |||
Beginning goodwill, net | 6,862.90 | 5,920.50 | |
Current year business acquisitions | 33 | 1,071.80 | |
Prior year acquisitions | 16.8 | ||
Business divestiture | -0.6 | -2.1 | |
Effect of foreign currency translation | -195.1 | -127.3 | |
Ending goodwill, net | 6,717 | 6,862.90 | |
Goodwill expected to be tax deductible | 20.7 | 0 | |
Nalco | |||
Changes in the carrying amount of goodwill | |||
Ending goodwill, net | 4,500 | ||
Nalco | Trademarks | |||
Changes in the carrying amount of goodwill | |||
Carrying value of asset subject to impairment testing | 1,200 | ||
Impairment of indefinite life intangible asset | 0 | 0 | |
Champion | |||
Changes in the carrying amount of goodwill | |||
Ending goodwill, net | 1,000 | ||
Champion | Adjustment | |||
Changes in the carrying amount of goodwill | |||
Beginning goodwill, net | 16.9 | ||
Ending goodwill, net | 16.9 | ||
Net adjustment made to the preliminary purchase price allocation | 37.1 | ||
Global Industrial | |||
Changes in the carrying amount of goodwill | |||
Beginning goodwill, net | 2,729.50 | 2,751.60 | |
Current year business acquisitions | 18.5 | 33.9 | |
Prior year acquisitions | -0.1 | ||
Business divestiture | -2.1 | ||
Reclassifications | -28.9 | ||
Effect of foreign currency translation | -76.8 | -53.9 | |
Ending goodwill, net | 2,642.20 | 2,729.50 | |
Global Institutional | |||
Changes in the carrying amount of goodwill | |||
Beginning goodwill, net | 706.6 | 720.6 | |
Business divestiture | -0.4 | ||
Reclassifications | 5 | ||
Effect of foreign currency translation | -20 | -14 | |
Ending goodwill, net | 691.2 | 706.6 | |
Global Energy | |||
Changes in the carrying amount of goodwill | |||
Beginning goodwill, net | 3,306.20 | 2,325.30 | |
Current year business acquisitions | 9.9 | 1,037.90 | |
Prior year acquisitions | 16.9 | ||
Reclassifications | 23.9 | ||
Effect of foreign currency translation | -94.8 | -57 | |
Ending goodwill, net | 3,262.10 | 3,306.20 | |
Other | |||
Changes in the carrying amount of goodwill | |||
Beginning goodwill, net | 120.6 | 123 | |
Current year business acquisitions | 4.6 | ||
Business divestiture | -0.2 | ||
Effect of foreign currency translation | -3.5 | -2.4 | |
Ending goodwill, net | $121.50 | $120.60 |
SIGNIFICANT_ACCOUNTING_POLICIE7
SIGNIFICANT ACCOUNTING POLICIES (Details 5) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Other intangible assets | |||
Weighted-average useful life of other amortizable assets | 14 years | 14 years | |
Total amortization expense related to other intangible assets | $305 | $293 | $237 |
Future estimated amortization expense related to amortizable other identifiable intangible assets | |||
2015 | 299 | ||
2016 | 295 | ||
2017 | 292 | ||
2018 | 286 | ||
2019 | $273 | ||
Customer relationships | |||
Other intangible assets | |||
Weighted-average useful life of other amortizable assets | 14 years | ||
Trademarks | |||
Other intangible assets | |||
Weighted-average useful life of other amortizable assets | 14 years | ||
Patents | |||
Other intangible assets | |||
Weighted-average useful life of other amortizable assets | 14 years | ||
Other technology | |||
Other intangible assets | |||
Weighted-average useful life of other amortizable assets | 8 years |
SIGNIFICANT_ACCOUNTING_POLICIE8
SIGNIFICANT ACCOUNTING POLICIES (Details 6) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Millions, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Asset Retirement Obligations | |||||||||||
Asset retirement obligation liability | $9.50 | $10.50 | $9.50 | $10.50 | |||||||
Computations of the basic and diluted earnings attributable to Ecolab per share amounts | |||||||||||
Net income attributable to Ecolab | $335.50 | $364.90 | $311.40 | $191 | $287.10 | $308 | $213.10 | $159.60 | $1,202.80 | $967.80 | $703.60 |
Weighted-average common shares outstanding | |||||||||||
Basic (in shares) | 300.1 | 300 | 299.6 | 300.6 | 301.2 | 301.2 | 301.5 | 295.4 | 300.1 | 299.9 | 292.5 |
Effect of dilutive stock options, units and awards (in shares) | 5.8 | 6 | 6.4 | ||||||||
Diluted (in shares) | 305.6 | 305.7 | 305.2 | 306.5 | 307.5 | 307.2 | 307.4 | 300.9 | 305.9 | 305.9 | 298.9 |
Earnings attributable to Ecolab per common share | |||||||||||
Basic (in dollars per share) | $1.12 | $1.22 | $1.04 | $0.64 | $0.95 | $1.02 | $0.71 | $0.54 | $4.01 | $3.23 | $2.41 |
Diluted (in dollars per share) | $1.10 | $1.19 | $1.02 | $0.62 | $0.93 | $1 | $0.69 | $0.53 | $3.93 | $3.16 | $2.35 |
Anti-dilutive securities excluded from the computation of earnings per share (in shares) | 3.4 | 1.8 | 2.6 |
SPECIAL_GAINS_AND_CHARGES_Deta
SPECIAL (GAINS) AND CHARGES (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Special (gains) and charges | |||||||||||
Venezuela currency devaluation | $23.20 | ||||||||||
Subtotal | 38.3 | 7 | -6.1 | 29.6 | 20.2 | 27.8 | 73.6 | 49.7 | 68.8 | 171.3 | 145.7 |
Total special (gains) and charges | 83.1 | 216.5 | 254.4 | ||||||||
Cost of sales | |||||||||||
Special (gains) and charges | |||||||||||
Restructuring charges | 13.9 | 6.6 | 22.7 | ||||||||
Acquisition costs | 0.4 | 36.6 | 71.2 | ||||||||
Subtotal | 14.3 | 43.2 | 93.9 | ||||||||
Special (gains) and charges | |||||||||||
Special (gains) and charges | |||||||||||
Restructuring charges | 69.2 | 83.4 | 116.6 | ||||||||
Venezuela currency devaluation | 23.2 | ||||||||||
Gain on sale of businesses, litigation activity, settlements and other gains | -28.8 | -3.6 | -60.1 | ||||||||
Subtotal | 68.8 | 171.3 | 145.7 | ||||||||
Special (gains) and charges | Champion | |||||||||||
Special (gains) and charges | |||||||||||
Acquisition costs | 19.9 | 49.7 | 18.3 | ||||||||
Special (gains) and charges | Nalco | |||||||||||
Special (gains) and charges | |||||||||||
Acquisition costs | 8.5 | 18.6 | 70.9 | ||||||||
Interest expense, net | |||||||||||
Special (gains) and charges | |||||||||||
Acquisition costs | 2.5 | 1.1 | |||||||||
Debt extinguishment costs | 18.2 | ||||||||||
Subtotal | 2.5 | 19.3 | |||||||||
Net income attributable to noncontrolling interest | |||||||||||
Special (gains) and charges | |||||||||||
Venezuela currency devaluation | -0.5 | ||||||||||
Subtotal | -0.5 | -4.5 | |||||||||
Net income attributable to noncontrolling interest | Nalco | |||||||||||
Special (gains) and charges | |||||||||||
Acquisition costs | -4.5 | ||||||||||
Operating income subtotal | |||||||||||
Special (gains) and charges | |||||||||||
Subtotal | $83.10 | $214.50 | $239.60 |
SPECIAL_GAINS_AND_CHARGES_Deta1
SPECIAL (GAINS) AND CHARGES (Details 2) (USD $) | 12 Months Ended | 36 Months Ended | |||||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Feb. 08, 2013 | Feb. 07, 2013 | Nov. 30, 2014 | Feb. 28, 2015 | Sep. 30, 2014 |
Restructuring reserve | |||||||||
Restructuring liability | $66.30 | $68.30 | $68.30 | ||||||
Non-restructuring Special (Gains) and Charges | |||||||||
Foreign currency translation charges associated with remeasurement, before tax | 22.7 | ||||||||
Foreign currency translation charges associated with remeasurement, after tax | 16.1 | ||||||||
Exchange rate | 6.3 | 4.3 | |||||||
Net sales within Venezuela as a percent of consolidated net sales | 1.00% | ||||||||
SICAD 1 | |||||||||
Non-restructuring Special (Gains) and Charges | |||||||||
Exchange rate | 12 | ||||||||
CENCOEX | |||||||||
Non-restructuring Special (Gains) and Charges | |||||||||
Exchange rate | 6.3 | ||||||||
Net assets | 104 | ||||||||
SICAD 2 | |||||||||
Non-restructuring Special (Gains) and Charges | |||||||||
Exchange rate | 49.98 | ||||||||
SIMADI | Subsequent event | |||||||||
Non-restructuring Special (Gains) and Charges | |||||||||
Exchange rate | 170 | ||||||||
Maximum | |||||||||
Non-restructuring Special (Gains) and Charges | |||||||||
Assets held in Venezuela as a percentage of consolidated assets | 2.00% | ||||||||
Vehicle Care division | |||||||||
Non-restructuring Special (Gains) and Charges | |||||||||
Gain (charges) on sale of business and litigation related charges, before tax | 60.1 | ||||||||
Gain (charges) on sale of business and litigation related charges, after tax | 35.7 | ||||||||
Emochem | |||||||||
Non-restructuring Special (Gains) and Charges | |||||||||
Gain (charges) on removal of equity method investment and other, before tax | 28.4 | ||||||||
Gain (charges) on removal of equity method investment and other, after tax | -23.3 | ||||||||
Champion | |||||||||
Non-restructuring Special (Gains) and Charges | |||||||||
Business combination and integration related costs, pre tax | 19.9 | 88.8 | 19.4 | ||||||
Business combination and integration related costs, after tax | -12.8 | 61.4 | 16.7 | ||||||
Aggregate principal amount | 500 | ||||||||
Nalco | |||||||||
Non-restructuring Special (Gains) and Charges | |||||||||
Business combination and integration related costs, pre tax | 8.5 | 18.6 | 155.8 | ||||||
Business combination and integration related costs, after tax | -7 | 14.2 | 113.7 | ||||||
Energy Restructuring Plan | |||||||||
Restructuring reserve | |||||||||
Recorded expense and accrual | 9.5 | 27.4 | |||||||
Cash payments | -13.9 | -17.5 | |||||||
Non-cash charges | -0.6 | -3.6 | |||||||
Effect of foreign currency translation | 0.2 | 0.6 | |||||||
Restructuring liability | 2.1 | 6.9 | 6.9 | ||||||
Other restructuring information | |||||||||
Restructuring charge expected to be incurred, pre-tax | 80 | ||||||||
Restructuring charge expected to be incurred, after tax | 55 | ||||||||
Restructuring charge incurred, pretax | 9.5 | 27.4 | |||||||
Restructuring charges, expected cash expenditures | 60 | ||||||||
Restructuring charges, after tax | -6.4 | 19.4 | |||||||
Energy Restructuring Plan | Employee termination costs | |||||||||
Restructuring reserve | |||||||||
Recorded expense and accrual | 7.9 | 22.9 | |||||||
Cash payments | -12.9 | -16.7 | |||||||
Effect of foreign currency translation | 0.2 | 0.6 | |||||||
Restructuring liability | 2 | 6.8 | 6.8 | ||||||
Energy Restructuring Plan | Asset disposals | |||||||||
Restructuring reserve | |||||||||
Recorded expense and accrual | 0.6 | 3.6 | |||||||
Non-cash charges | -0.6 | -3.6 | |||||||
Energy Restructuring Plan | Other | |||||||||
Restructuring reserve | |||||||||
Recorded expense and accrual | 1 | 0.9 | |||||||
Cash payments | -1 | -0.8 | |||||||
Restructuring liability | 0.1 | 0.1 | 0.1 | ||||||
Combined Plan | |||||||||
Restructuring reserve | |||||||||
Recorded expense and accrual | 73.5 | 277.7 | |||||||
Cash payments | -68.8 | -192.2 | |||||||
Non-cash charges | -2.6 | -12.2 | |||||||
Effect of foreign currency translation | -1.8 | -0.1 | |||||||
Restructuring liability | 73.5 | 73.2 | 73.2 | ||||||
Other restructuring information | |||||||||
Restructuring charge expected to be incurred, pre-tax | 390 | 330 | |||||||
Restructuring charge expected to be incurred, after tax | 295 | 245 | |||||||
Restructuring charge incurred, pretax | 73.5 | 63.6 | |||||||
Restructuring charge incurred, after tax | -58.5 | 48.3 | |||||||
Combined Plan | Employee termination costs | |||||||||
Restructuring reserve | |||||||||
Recorded expense and accrual | 60.6 | 248.2 | |||||||
Cash payments | -60.2 | -182.2 | |||||||
Effect of foreign currency translation | -1.8 | -0.1 | |||||||
Restructuring liability | 64.5 | 65.9 | 65.9 | ||||||
Combined Plan | Asset disposals | |||||||||
Restructuring reserve | |||||||||
Recorded expense and accrual | -1.2 | ||||||||
Cash payments | 2.6 | 9.1 | |||||||
Non-cash charges | -2.6 | -7.9 | |||||||
Gain on sale of facilities | 7.4 | ||||||||
Combined Plan | Other | |||||||||
Restructuring reserve | |||||||||
Recorded expense and accrual | 12.9 | 30.7 | |||||||
Cash payments | -11.2 | -19.1 | |||||||
Non-cash charges | -4.3 | ||||||||
Restructuring liability | $9 | $7.30 | $7.30 |
ACQUISITIONS_AND_DISPOSITIONS_1
ACQUISITIONS AND DISPOSITIONS (Details) (USD $) | 0 Months Ended | 12 Months Ended | ||||
In Millions, except Per Share data, unless otherwise specified | Apr. 10, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 | Apr. 30, 2013 |
Five year 2012 senior notes | ||||||
Stock consideration | ||||||
Long-term debt, aggregate principal amount | $500 | $500 | ||||
Interest rate (as a percent) | 1.45% | 1.45% | ||||
Term loan | ||||||
Stock consideration | ||||||
Long-term debt, aggregate principal amount | 400 | 900 | ||||
Champion | ||||||
Acquisitions and Dispositions | ||||||
Estimated annual sales pre-acquisition | 1,300 | |||||
Cash consideration | 1,511.70 | |||||
Stock consideration | ||||||
Ecolab shares issued at closing | 6.6 | |||||
Ecolab's closing stock price on April 10, 2013 (in dollars per share) | $82.31 | |||||
Total fair value of stock consideration | 543 | |||||
Total consideration transferred | 2,054.70 | |||||
Portion of consideration transferred and deposited in an escrow account to fund post-closing adjustments to the consideration and covenant and other indemnification obligations | 100 | |||||
Period of escrow deposit | 2 years | |||||
Long-term debt, aggregate principal amount | 500 | |||||
Champion | Term loan | ||||||
Stock consideration | ||||||
Long-term debt, aggregate principal amount | $900 |
ACQUISITIONS_AND_DISPOSITIONS_2
ACQUISITIONS AND DISPOSITIONS (Details 2) (USD $) | 12 Months Ended | 0 Months Ended | 1 Months Ended | 3 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Apr. 10, 2013 | Jan. 31, 2014 | Mar. 31, 2014 |
Assets acquired and liabilities assumed | ||||||
Goodwill | $6,717 | $6,862.90 | $5,920.50 | |||
Weighted average useful lives of identifiable intangible assets acquired | 10 years | 13 years | 13 years | |||
Champion | ||||||
Assets acquired and liabilities assumed | ||||||
Goodwill | 1,000 | |||||
Total consideration transferred | 2,054.70 | |||||
Additional amount of cash required to be paid as a percentage of incremental tax on merger consideration | 50.00% | |||||
Additional payment associated with acquisition | 86.4 | |||||
Champion | Maximum | ||||||
Assets acquired and liabilities assumed | ||||||
Future consideration payable to sellers | 100 | |||||
Champion | Customer relationships | ||||||
Assets acquired and liabilities assumed | ||||||
Weighted average useful lives of identifiable intangible assets acquired | 14 years | |||||
Champion | Trademarks | ||||||
Assets acquired and liabilities assumed | ||||||
Weighted average useful lives of identifiable intangible assets acquired | 12 years | |||||
Champion | Other technology | ||||||
Assets acquired and liabilities assumed | ||||||
Weighted average useful lives of identifiable intangible assets acquired | 7 years | |||||
Champion | Previously reported | ||||||
Assets acquired and liabilities assumed | ||||||
Current assets | 592.3 | |||||
Property, plant and equipment | 357.8 | |||||
Other assets | 16.2 | |||||
Total assets acquired | 1,962.80 | |||||
Current liabilities | 409.5 | |||||
Long-term debt | 70.8 | |||||
Net deferred tax liability | 427.4 | |||||
Noncontrolling interests and other liabilities | 30.5 | |||||
Total liabilities and noncontrolling interests assumed | 938.2 | |||||
Goodwill | 1,030.10 | |||||
Total aggregate purchase price | 2,054.70 | |||||
Future consideration payable to sellers | -86.4 | |||||
Total consideration transferred | 1,968.30 | |||||
Champion | Previously reported | Customer relationships | ||||||
Assets acquired and liabilities assumed | ||||||
Identifiable intangible assets | 840 | |||||
Champion | Previously reported | Trademarks | ||||||
Assets acquired and liabilities assumed | ||||||
Identifiable intangible assets | 120 | |||||
Champion | Previously reported | Other technology | ||||||
Assets acquired and liabilities assumed | ||||||
Identifiable intangible assets | 36.5 | |||||
Champion | Adjustment | ||||||
Acquisitions and Dispositions | ||||||
Net adjustment made to the preliminary purchase price allocation | 37.1 | |||||
Assets acquired and liabilities assumed | ||||||
Current assets | -4.5 | |||||
Property, plant and equipment | -2.5 | |||||
Other assets | 0.1 | |||||
Total assets acquired | -6.9 | |||||
Current liabilities | 3.6 | |||||
Net deferred tax liability | 9.3 | |||||
Noncontrolling interests and other liabilities | -2.9 | |||||
Total liabilities and noncontrolling interests assumed | 10 | |||||
Goodwill | 16.9 | |||||
Future consideration payable to sellers | 86.4 | |||||
Total consideration transferred | 86.4 | |||||
Champion | As Reported | ||||||
Assets acquired and liabilities assumed | ||||||
Current assets | 587.8 | |||||
Property, plant and equipment | 355.3 | |||||
Other assets | 16.3 | |||||
Total assets acquired | 1,955.90 | |||||
Current liabilities | 413.1 | |||||
Long-term debt | 70.8 | |||||
Net deferred tax liability | 436.7 | |||||
Noncontrolling interests and other liabilities | 27.6 | |||||
Total liabilities and noncontrolling interests assumed | 948.2 | |||||
Goodwill | 1,047 | |||||
Total aggregate purchase price | 2,054.70 | |||||
Total consideration transferred | 2,054.70 | |||||
Champion | As Reported | Customer relationships | ||||||
Assets acquired and liabilities assumed | ||||||
Identifiable intangible assets | 840 | |||||
Champion | As Reported | Trademarks | ||||||
Assets acquired and liabilities assumed | ||||||
Identifiable intangible assets | 120 | |||||
Champion | As Reported | Other technology | ||||||
Assets acquired and liabilities assumed | ||||||
Identifiable intangible assets | 36.5 |
ACQUISITIONS_AND_DISPOSITIONS_3
ACQUISITIONS AND DISPOSITIONS (Details 3) (USD $) | 12 Months Ended | 3 Months Ended | 1 Months Ended | 12 Months Ended | |||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2014 | Jan. 31, 2013 | Apr. 30, 2013 | Dec. 31, 2011 |
Components of the aggregate purchase prices of the completed acquisitions | |||||||
Net tangible assets acquired, including impact of joint venture consolidation activity | $9.50 | ($2.80) | ($1) | ||||
Identifiable intangible assets | |||||||
Customer relationships | 32 | 58.8 | 8.4 | ||||
Patents | 1.4 | 2.8 | |||||
Trademarks | 3.4 | 0.5 | |||||
Other technology | 4.5 | 1 | 0.3 | ||||
Total intangible assets | 39.9 | 61.2 | 12 | ||||
Goodwill | 32.9 | 41.7 | 23.3 | ||||
Total aggregate purchase price | 82.3 | 100.1 | 34.3 | ||||
Contingent consideration | 12.3 | 11.3 | -2.6 | ||||
Liability for indemnification, net | 8.7 | 2.4 | 16 | ||||
Net cash paid for acquisitions, including contingent consideration | 103.3 | 113.8 | 47.7 | ||||
Weighted average useful lives of identifiable intangible assets acquired | 10 years | 13 years | 13 years | ||||
Aseptix Health Sciences NV | Maximum | |||||||
Acquisitions and Dispositions | |||||||
Pre-acquisition annual sales | 1 | ||||||
Commercial Pest Control Pty Ltd | Maximum | |||||||
Acquisitions and Dispositions | |||||||
Pre-acquisition annual sales | 1 | ||||||
Akzo Nobel N.V. | |||||||
Acquisitions and Dispositions | |||||||
Pre-acquisition annual sales | 23 | ||||||
AK Kraus and Hiller Schadlingsbekampfung | |||||||
Acquisitions and Dispositions | |||||||
Pre-acquisition annual sales | 4 | ||||||
United Arab Emirates Joint Venture | |||||||
Acquisitions and Dispositions | |||||||
Gain (charges) on removal of equity method investment and other, after tax | 5 | ||||||
Chemical division of AKJ Industries | |||||||
Acquisitions and Dispositions | |||||||
Pre-acquisition annual sales | 21 | ||||||
Chemical Business of EXL Laboratories and Hyprod Canada | |||||||
Acquisitions and Dispositions | |||||||
Pre-acquisition annual sales | 25 | ||||||
Quimiproductos S.A. de C.V. | |||||||
Acquisitions and Dispositions | |||||||
Pre-acquisition annual sales | 43 | ||||||
Portion of purchase price transferred in an escrow fund for indemnification purchases related to general representations and warranties | 8 | ||||||
Master Chemicals | |||||||
Acquisitions and Dispositions | |||||||
Pre-acquisition annual sales | 29 | ||||||
Portion of purchase price transferred in an escrow fund for indemnification purchases related to general representations and warranties | 3 | ||||||
Esoform SpA | |||||||
Acquisitions and Dispositions | |||||||
Pre-acquisition annual sales | 12 | ||||||
InsetCenter | |||||||
Acquisitions and Dispositions | |||||||
Pre-acquisition annual sales | 6 | ||||||
Econ Industria e Comercio de Produtos de Higiene e Limpeza Ltda | |||||||
Acquisitions and Dispositions | |||||||
Pre-acquisition annual sales | $9 |
ACQUISITIONS_AND_DISPOSITIONS_4
ACQUISITIONS AND DISPOSITIONS (Details 4) (USD $) | 3 Months Ended | 12 Months Ended | 1 Months Ended | 12 Months Ended |
In Millions, unless otherwise specified | Sep. 30, 2012 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2011 |
Dispositions | ||||
Consideration from sale of business | $13 | |||
Gain on sale of investment | 13 | |||
Mobotec equipment design and build business | ||||
Dispositions | ||||
Sales of disposed operation | 27 | |||
Vehicle Care division | ||||
Dispositions | ||||
Sales of disposed operation | 65 | |||
Consideration from sale of business | 116.9 | |||
Gain on sale of business, before tax | $76.30 |
BALANCE_SHEET_INFORMATION_Deta
BALANCE SHEET INFORMATION (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Accounts receivable, net | ||
Accounts receivable | $2,704.20 | $2,648.90 |
Allowance for doubtful accounts | -77.5 | -80.9 |
Total | 2,626.70 | 2,568 |
Inventories | ||
Finished goods | 1,044.10 | 953.3 |
Raw materials and parts | 447.3 | 391 |
Inventories at FIFO cost | 1,491.40 | 1,344.30 |
Excess of FIFO cost over LIFO cost | -24.5 | -22.4 |
Total | 1,466.90 | 1,321.90 |
Property, plant and equipment, net | ||
Land | 199.9 | 191.4 |
Buildings and improvements | 759.9 | 666 |
Leasehold improvements | 84.6 | 87.9 |
Machinery and equipment | 1,858.10 | 1,677.50 |
Merchandising and customer equipment | 1,917.50 | 1,802.80 |
Capitalized software | 443.9 | 435.4 |
Construction in progress | 277.5 | 291.6 |
Property, plant and equipment, gross | 5,541.40 | 5,152.60 |
Accumulated depreciation | -2,490.80 | -2,270.60 |
Total | 3,050.60 | 2,882 |
Cost of intangible assets subject to amortization: | ||
Other intangible assets, gross | 4,345.30 | 4,399.50 |
Total | 4,456.80 | 4,785.30 |
Other assets | ||
Deferred income taxes | 71.5 | 54.5 |
Deferred financing costs | 27.1 | 31.7 |
Pension | 15.9 | 90.2 |
Other | 256.7 | 231.5 |
Total | 371.2 | 407.9 |
Other current liabilities | ||
Discounts and rebates | 255.4 | 263.2 |
Dividends payable | 99.1 | 82.8 |
Interest payable | 18.9 | 19.6 |
Taxes payable, other than income | 122.6 | 115.3 |
Derivative liabilities | 52.1 | 14.2 |
Restructuring | 66.3 | 68.3 |
Future consideration payable to Champion sellers | 86.4 | |
Other | 255.4 | 304 |
Total | 869.8 | 953.8 |
Other liabilities | ||
Deferred income taxes | 1,415.80 | 1,661.30 |
Income taxes payable - non-current | 86.4 | 90.2 |
Restructuring | 9.3 | 12.9 |
Other | 134 | 134.9 |
Total | 1,645.50 | 1,899.30 |
Accumulated other comprehensive loss | ||
Unrealized gain (loss) on derivative financial instruments, net of tax | -2.7 | -6.6 |
Unrecognized pension and postretirement benefit expense, net of tax | -552.5 | -235 |
Cumulative translation, net of tax | -396.7 | -63.6 |
Total | -951.9 | -305.2 |
Customer relationships | ||
Cost of intangible assets subject to amortization: | ||
Other intangible assets, gross | 3,385.70 | 3,455.60 |
Accumulated amortization | -794.6 | -594.9 |
Trademarks | ||
Cost of intangible assets subject to amortization: | ||
Other intangible assets, gross | 311.1 | 308.1 |
Accumulated amortization | -91.5 | -70.4 |
Patents | ||
Cost of intangible assets subject to amortization: | ||
Other intangible assets, gross | 434.5 | 425.6 |
Accumulated amortization | -124.9 | -95.7 |
Other technology | ||
Cost of intangible assets subject to amortization: | ||
Other intangible assets, gross | 214 | 210.2 |
Accumulated amortization | -107.5 | -83.2 |
Trade names | ||
Cost of intangible assets not subject to amortization: | ||
Other intangible assets, gross | $1,230 | $1,230 |
DEBT_AND_INTEREST_Details
DEBT AND INTEREST (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
item | ||
Components of the company's debt obligations | ||
Long-term debt, current maturities | $755,500,000 | $505,300,000 |
Short-term debt including current maturities of long-term debt | 1,705,400,000 | 861,000,000 |
Commercial paper. | ||
Components of the company's debt obligations | ||
Short-term debt | 887,800,000 | 304,800,000 |
Number of commercial paper programs | 2 | |
Combined maximum borrowing capacity, commercial paper | 2,000,000,000 | |
Average interest rate (as a percent) | 0.46% | 0.34% |
U.S. commercial paper program | ||
Components of the company's debt obligations | ||
Maximum borrowing capacity, commercial paper before expiration | 1,500,000,000 | |
Maximum borrowing capacity, commercial paper | 2,000,000,000 | |
Outstanding commercial paper | 888,000,000 | 305,000,000 |
European commercial paper | ||
Components of the company's debt obligations | ||
Maximum borrowing capacity, commercial paper | 200,000,000 | |
Outstanding commercial paper | 0 | 0 |
Notes payable | ||
Components of the company's debt obligations | ||
Short-term debt | 62,100,000 | 50,900,000 |
Average interest rate (as a percent) | 9.65% | 9.43% |
Credit facility | ||
Components of the company's debt obligations | ||
Maximum borrowing capacity under the credit agreement before amendment | 1,500,000,000 | |
Maximum borrowing capacity under the credit agreement | $2,000,000,000 |
DEBT_AND_INTEREST_Details_2
DEBT AND INTEREST (Details 2) | 3 Months Ended | 12 Months Ended | 12 Months Ended | 1 Months Ended | 1 Months Ended | 1 Months Ended | 1 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | 1 Months Ended | 12 Months Ended | 1 Months Ended | 12 Months Ended | 1 Months Ended | 1 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2006 | Dec. 31, 2014 | Dec. 31, 2013 | Feb. 29, 2008 | Feb. 28, 2015 | Dec. 31, 2014 | Dec. 31, 2014 | Oct. 31, 2011 | Oct. 31, 2011 | Dec. 31, 2014 | Dec. 31, 2013 | Oct. 31, 2011 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Aug. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 | Sep. 30, 2014 | Apr. 30, 2014 | Feb. 28, 2014 | Sep. 30, 2013 | Apr. 30, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2011 | Dec. 31, 2011 | Dec. 31, 2011 | Jan. 31, 2015 | Jan. 31, 2015 | Jan. 31, 2015 |
USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | Champion | Series B senior euro notes, due 2016 | Series B senior euro notes, due 2016 | Seven year 2008 senior notes | Seven year 2008 senior notes | Seven year 2008 senior notes | Seven year 2008 senior notes | Series of notes issued by the company in December, 2006 and November, 2011 | Series of notes issued by the company in January 2015, December 2012, August 2012 and December 2011 | Private placement senior notes | Series A private placement senior notes due 2018 | Series A private placement senior notes due 2018 | Series A private placement senior notes due 2018 | Series B private placement senior notes due 2023 | Series B private placement senior notes due 2023 | Series B private placement senior notes due 2023 | Series B private placement senior euro notes, due 2016 | Series B private placement senior euro notes, due 2016 | Three year 2011 senior notes | Three year 2011 senior notes | Three year 2011 senior notes | Five year 2011 senior notes | Five year 2011 senior notes | Ten year 2011 senior notes | Ten year 2011 senior notes | Thirty year 2011 senior notes | Thirty year 2011 senior notes | Three year 2012 senior notes | Three year 2012 senior notes | Three year 2012 senior notes | Five year 2012 senior notes | Five year 2012 senior notes | Five year 2012 senior notes | Term loan | Term loan | Term loan | Term loan | Term loan | Term loan | Term loan | Term loan | Capital lease obligations | Capital lease obligations | Other | Other | 2011 Public Debt Offering | 2011 Public Debt Offering | 2011 Public Debt Offering | 2015 Public Debt Offering | Three year 2018 senior notes | Five year 2020 senior notes | |
USD ($) | EUR (€) | EUR (€) | USD ($) | USD ($) | USD ($) | Subsequent event | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | Champion | Champion | Champion | Champion | Champion | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | Minimum | Maximum | Subsequent event | Subsequent event | Subsequent event | |||||||||||||||
USD ($) | series | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CARRYING VALUE | $5,619.50 | $6,548.80 | $5,619.50 | $6,548.80 | $250 | $249.70 | $250 | $250 | $250 | $250 | $250 | $250 | $217.90 | $237.80 | $499.90 | $1,249.10 | $1,248.60 | $1,249.40 | $1,249.30 | $743.10 | $742.80 | $500 | $499.90 | $497.60 | $499.70 | $400 | $800 | $9.30 | $12.70 | $3.10 | $8.40 | $3,750 | ||||||||||||||||||||||||||||||
AVERAGE INTEREST RATE (as a percent) | 4.88% | 4.88% | 4.88% | 3.69% | 3.69% | 3.69% | 4.32% | 4.32% | 4.32% | 4.59% | 4.59% | 2.38% | 3.00% | 3.00% | 4.35% | 4.35% | 5.50% | 5.50% | 1.00% | 1.00% | 1.45% | 1.45% | 1.29% | 1.33% | ||||||||||||||||||||||||||||||||||||||
EFFECTIVE INTEREST RATE (as a percent) | 4.99% | 4.99% | 5.15% | 5.15% | 4.32% | 4.32% | 4.67% | 4.67% | 2.40% | 3.04% | 3.04% | 4.36% | 4.36% | 5.53% | 5.53% | 1.02% | 1.02% | 0.93% | 1.47% | 1.29% | 1.33% | |||||||||||||||||||||||||||||||||||||||||
Long-term debt, current maturities | -755.5 | -505.3 | -755.5 | -505.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term debt | 4,864 | 6,043.50 | 4,864 | 6,043.50 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate principal amount | 500 | 175 | 175 | 250 | 250 | 500 | 250 | 250 | 1,250 | 1,250 | 750 | 500 | 500 | 500 | 400 | 900 | 900 | 600 | ||||||||||||||||||||||||||||||||||||||||||||
Repayment of debt | 250 | 500 | 150 | 150 | 100 | 100 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of Debt securities | 500 | 500 | 300 | 300 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest rate (as a percent) | 1.00% | 1.45% | 1.45% | 2.38% | 5.50% | 1.55% | 2.25% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, term | 7 years | 7 years | 12 years | 3 years | 5 years | 10 years | 30 years | 3 years | 5 years | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Principal outstanding plus accrued unpaid interest payable at prepayment of notes (as a percent) | 100.00% | 101.00% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Number of series of senior notes | 2 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate annual maturities of long-term debt | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2015 | 756 | 756 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | 1,869 | 1,869 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | 499 | 499 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 250 | 250 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | 1 | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest expense | 268 | 272.8 | 285.6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest income | -11.4 | -10.5 | -8.9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest expense, net | $62 | $63.30 | $66.20 | $65.10 | $67.60 | $67 | $66.20 | $61.50 | $256.60 | $262.30 | $276.70 |
FAIR_VALUE_MEASUREMENTS_Detail
FAIR VALUE MEASUREMENTS (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Liabilities: | ||
Future consideration payable to Champion sellers | $86.40 | |
Recurring | Level 1 | ||
Assets: | ||
Investments held in rabbi trusts | 3.4 | 4.3 |
Recurring | Level 2 | ||
Assets: | ||
Foreign currency forward contracts | 75.5 | 20.2 |
Liabilities: | ||
Foreign currency forward contracts | 27.9 | 14.2 |
Interest rate swap contracts | 24.2 | |
Recurring | Level 3 | ||
Assets: | ||
Contingent consideration | 0.3 | |
Liabilities: | ||
Contingent consideration obligations | 1.6 | 16.4 |
Future consideration payable to Champion sellers | 86.4 | |
Carrying Amount | Recurring | ||
Assets: | ||
Investments held in rabbi trusts | 3.4 | 4.3 |
Foreign currency forward contracts | 75.5 | 20.2 |
Contingent consideration | 0.3 | |
Liabilities: | ||
Foreign currency forward contracts | 27.9 | 14.2 |
Interest rate swap contracts | 24.2 | |
Contingent consideration obligations | 1.6 | 16.4 |
Future consideration payable to Champion sellers | $86.40 |
FAIR_VALUE_MEASUREMENTS_Detail1
FAIR VALUE MEASUREMENTS (Details 2) (Contingent consideration, USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Contingent consideration | ||
Changes in liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) | ||
Balance at beginning of year | $16.40 | $27.30 |
Liabilities recognized at acquisition date | -0.4 | |
Losses (gains) recognized in earnings | -0.4 | 0.4 |
Settlements | -14.3 | -11.3 |
Balance at end of year | $1.30 | $16.40 |
FAIR_VALUE_MEASUREMENTS_Detail2
FAIR VALUE MEASUREMENTS (Details 3) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Carrying Amount | ||
Carrying amount and fair value of financial instruments | ||
Long-term debt (including current maturities) | $5,619.50 | $6,548.80 |
Fair Value | ||
Carrying amount and fair value of financial instruments | ||
Long-term debt (including current maturities) | $5,980.90 | $6,766 |
DERIVATIVES_AND_HEDGING_TRANSA2
DERIVATIVES AND HEDGING TRANSACTIONS (Details) | 12 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Jan. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | 31-May-14 | Jan. 31, 2015 | Jan. 31, 2015 | Jan. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Sep. 30, 2012 | Jan. 31, 2015 | Dec. 31, 2014 |
USD ($) | USD ($) | USD ($) | Three year 2018 senior notes | Series A private placement senior notes due 2018 | Five year 2011 senior notes | Foreign currency forward contracts | Foreign currency forward contracts | Interest rate swap | Interest rate swap | Cash Flow Hedges | Cash Flow Hedges | Cash Flow Hedges | Cash Flow Hedges | Cash Flow Hedges | Cash Flow Hedges | Cash Flow Hedges | Cash Flow Hedges | Cash Flow Hedges | Cash Flow Hedges | Cash Flow Hedges | Cash Flow Hedges | Cash Flow Hedges | Cash Flow Hedges | Cash Flow Hedges | Cash Flow Hedges | Cash Flow Hedges | Cash Flow Hedges | Cash Flow Hedges | Cash Flow Hedges | Cash Flow Hedges | Cash Flow Hedges | Cash Flow Hedges | Cash Flow Hedges | Cash Flow Hedges | Cash Flow Hedges | Cash Flow Hedges | Cash Flow Hedges | Fair Value Hedges | Fair Value Hedges | Fair Value Hedges | Fair Value Hedges | Fair Value Hedges | Net Investment Hedges | Net Investment Hedges | Net Investment Hedges | Net Investment Hedges | Net Investment Hedges | Net Investment Hedges | Net Investment Hedges | Net Investment Hedges | Net Investment Hedges | Net Investment Hedges | |
Subsequent event | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | EUR (€) | Derivatives designated as hedging instruments | Derivatives designated as hedging instruments | Derivatives designated as hedging instruments | Foreign currency forward contracts | Foreign currency forward contracts | Foreign currency forward contracts | Foreign currency forward contracts | Foreign currency forward contracts | Foreign currency forward contracts | Foreign currency forward contracts | Foreign currency forward contracts | Foreign currency forward contracts | Foreign currency forward contracts | Foreign currency forward contracts | Foreign currency forward contracts | Foreign currency forward contracts | Foreign currency forward contracts | Foreign currency forward contracts | Foreign currency forward contracts | Foreign currency forward contracts | Foreign currency forward contracts | Foreign currency forward contracts | Foreign currency forward contracts | Foreign currency forward contracts | Interest rate swap | Interest rate swap | Interest rate swap | Interest rate swap | Interest rate swap | Interest rate swap | Interest rate swap | Interest rate swap | Interest rate swap | USD ($) | USD ($) | USD ($) | EUR (€) | Senior euro notes | Senior euro notes | Foreign currency forward contracts | Foreign currency forward contracts | Foreign currency forward contracts. | Foreign currency forward contracts. | ||||
USD ($) | USD ($) | USD ($) | Derivatives designated as hedging instruments | Derivatives designated as hedging instruments | Derivatives designated as hedging instruments | Derivatives designated as hedging instruments | Derivatives designated as hedging instruments | Derivatives designated as hedging instruments | Derivatives designated as hedging instruments | Derivatives designated as hedging instruments | Derivatives designated as hedging instruments | Derivatives designated as hedging instruments | Derivatives designated as hedging instruments | Derivatives designated as hedging instruments | Derivatives not designated as hedging instruments | Derivatives not designated as hedging instruments | Derivatives not designated as hedging instruments | Derivatives not designated as hedging instruments | Derivatives not designated as hedging instruments | Derivatives not designated as hedging instruments | Derivatives not designated as hedging instruments | Derivatives not designated as hedging instruments | Derivatives not designated as hedging instruments | Derivatives designated as hedging instruments | Derivatives designated as hedging instruments | Derivatives designated as hedging instruments | Derivatives designated as hedging instruments | USD ($) | Three year 2018 senior notes | Series A private placement senior notes due 2018 | Five year 2011 senior notes | Interest expense, net | USD ($) | EUR (€) | EUR (€) | EUR (€) | EUR (€) | EUR (€) | |||||||||||||||
USD ($) | USD ($) | USD ($) | AOCI (equity) | AOCI (equity) | AOCI (equity) | Sales | Cost of sales | Cost of sales | Cost of sales | Selling, general and administrative expenses | Selling, general and administrative expenses | USD ($) | USD ($) | USD ($) | Selling, general and administrative expenses | Selling, general and administrative expenses | Selling, general and administrative expenses | Interest expense, net | Interest expense, net | Interest expense, net | AOCI (equity) | Interest expense, net | Interest expense, net | Interest expense, net | Subsequent event | Subsequent event | Subsequent event | USD ($) | |||||||||||||||||||||||||
USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | ||||||||||||||||||||||||||||||||
DERIVATIVES AND HEDGING TRANSACTIONS | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Maximum period for hedged transactions | 12 months | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized gain (loss) recognized into AOCI (effective portion) | $4.60 | $4.70 | ($1.90) | $26.70 | $4.70 | ($1.90) | ($22.10) | ||||||||||||||||||||||||||||||||||||||||||||||
Gain (loss) recognized in income (effective portion) | 3.5 | -4.9 | -2 | 7.6 | -0.8 | 2.1 | -0.1 | 6.1 | -0.8 | 2 | 1.5 | 0.2 | -4.1 | -4.1 | -4.1 | ||||||||||||||||||||||||||||||||||||||
Aggregate principal amount | 250 | 1,250 | 500 | 300 | 250 | 1,250 | |||||||||||||||||||||||||||||||||||||||||||||||
Interest rate (as a percent) | 1.55% | 1.45% | 1.55% | 3.69% | 3.00% | ||||||||||||||||||||||||||||||||||||||||||||||||
Gain (loss) on derivative recognized in income | -0.4 | -8 | -7.9 | 8.6 | -1.4 | -0.9 | -9 | -6.6 | -7 | -2.1 | |||||||||||||||||||||||||||||||||||||||||||
Gain (loss) on hedged item recognized in income | 2.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Investment Hedge: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Euro-denominated debt outstanding | 218 | 175 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Notional amount of forward contract | 2,800 | 2,000 | 725 | 400 | 495 | 75 | 100 | 360 | 495 | ||||||||||||||||||||||||||||||||||||||||||||
Revaluation gains (losses), net of tax | $34.70 | ($11.40) | $9.80 | $34.70 | ($11.40) | $9.80 |
DERIVATIVES_AND_HEDGING_TRANSA3
DERIVATIVES AND HEDGING TRANSACTIONS (Details 2) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Sep. 30, 2012 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | USD ($) | USD ($) | Net Investment Hedges | Netting | Netting | Foreign currency forward contracts | Foreign currency forward contracts | Foreign currency forward contracts | Foreign currency forward contracts | Interest rate swap | Interest rate swap | Derivatives designated as hedging instruments | Derivatives designated as hedging instruments | Derivatives designated as hedging instruments | Derivatives not designated as hedging instruments | Derivatives not designated as hedging instruments |
EUR (€) | USD ($) | USD ($) | USD ($) | USD ($) | Net Investment Hedges | Net Investment Hedges | USD ($) | EUR (€) | Foreign currency forward contracts | Foreign currency forward contracts | Interest rate swap | Foreign currency forward contracts | Foreign currency forward contracts | |||
EUR (€) | EUR (€) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | ||||||||||
Fair value of the company's outstanding derivatives | ||||||||||||||||
Asset Derivatives | $75.50 | $20.20 | $17.90 | $4.40 | $57.60 | $15.80 | ||||||||||
Liability Derivatives | 52.1 | 14.2 | 0.6 | 1.1 | 24.2 | 27.3 | 13.1 | |||||||||
Net asset (liability) | 23.4 | 6 | ||||||||||||||
Notional values | € 495 | $2,800 | $2,000 | € 75 | € 100 | $725 | € 400 |
OTHER_COMPREHENSIVE_INCOME_LOS2
OTHER COMPREHENSIVE INCOME (LOSS) INFORMATION (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Reclassification adjustments | |||||||||||
Net sales | $3,680.80 | $3,694.90 | $3,568.20 | $3,336.60 | $3,559.50 | $3,484 | $3,337.80 | $2,872.10 | $14,280.50 | $13,253.40 | $11,838.70 |
Cost of sales | 1,979.90 | 1,970.60 | 1,909.40 | 1,819.20 | 1,945.20 | 1,866.10 | 1,810.20 | 1,539.70 | 7,679.10 | 7,161.20 | 6,385.40 |
SG&A | 1,142.10 | 1,145.90 | 1,152.70 | 1,136.90 | 1,123.50 | 1,114.10 | 1,101.70 | 1,021 | 4,577.60 | 4,360.30 | 4,018.30 |
Interest expense, net | 62 | 63.3 | 66.2 | 65.1 | 67.6 | 67 | 66.2 | 61.5 | 256.6 | 262.3 | 276.7 |
Income before income taxes | -458.5 | -508.1 | -446 | -285.8 | -403 | -409 | -286.1 | -200.2 | -1,698.40 | -1,298.30 | -1,012.60 |
Tax impact | 115.2 | 138.7 | 131 | 91.3 | 113.4 | 101.8 | 70.3 | 39.2 | 476.2 | 324.7 | 311.3 |
Net of Tax | -343.3 | -369.4 | -315 | -194.5 | -289.6 | -307.2 | -215.8 | -161 | -1,222.20 | -973.6 | -701.3 |
Derivative (gains) losses reclassified from AOCI into income, net of tax | -3 | 3.2 | 1.1 | ||||||||
Pension and postretirement net actuarial loss and prior service cost reclassified from AOCI into income | 12.1 | 46.4 | 35 | ||||||||
Derivative & Hedging Instruments | Reclassifications adjustments | |||||||||||
Reclassification adjustments | |||||||||||
Income before income taxes | -3.5 | 4.9 | 2 | ||||||||
Translation & other insignificant activity | 0.9 | 0.5 | |||||||||
Tax impact | 2.8 | -3.5 | -0.7 | ||||||||
Net of Tax | 3.9 | 7 | -0.1 | ||||||||
Derivative & Hedging Instruments | Foreign currency forward contracts | |||||||||||
Reclassification adjustments | |||||||||||
Amount recognized in AOCI | 4.6 | 4.7 | -1.9 | ||||||||
Derivative & Hedging Instruments | Foreign currency forward contracts | Reclassifications adjustments | |||||||||||
Reclassification adjustments | |||||||||||
Net sales | 0.1 | ||||||||||
Cost of sales | -6.1 | 0.8 | -2 | ||||||||
SG&A | -1.5 | -0.2 | |||||||||
Derivative & Hedging Instruments | Interest rate swap | Reclassifications adjustments | |||||||||||
Reclassification adjustments | |||||||||||
Interest expense, net | 4.1 | 4.1 | 4.1 | ||||||||
Pension & Postretirement Benefits | |||||||||||
Reclassification adjustments | |||||||||||
Amount recognized in AOCI | -517.7 | 528.2 | -238.6 | ||||||||
Amount reclassified from AOCI Amortization of net actuarial loss and prior service costs and benefits adjustments | 17.5 | 72.9 | 50.3 | ||||||||
Pension & Postretirement Benefits | Reclassifications adjustments | |||||||||||
Reclassification adjustments | |||||||||||
Income before income taxes | -500.2 | 601.1 | -188.3 | ||||||||
Tax impact | 156.9 | -218.2 | 57.1 | ||||||||
Net of Tax | ($343.30) | $382.90 | ($131.20) |
SHAREHOLDERS_EQUITY_Details
SHAREHOLDERS' EQUITY (Details) (USD $) | 12 Months Ended | 1 Months Ended | |||||
In Millions, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Feb. 28, 2015 | Aug. 31, 2011 | Apr. 10, 2013 | 31-May-11 |
Shareholder's Equity | |||||||
Par value of common stock (in dollars per share) | $1 | $1 | |||||
Authorized common stock (in shares) | 800,000,000 | 800,000,000 | |||||
Dividend declared, per share of common stock (in dollars per share) | $1.16 | $0.97 | $0.83 | ||||
Number of undesignated preferred stock designated as Series A Junior Participating Preferred Stock | 400,000 | ||||||
Champion | |||||||
Shareholder's Equity | |||||||
Portion of consideration transferred and deposited in an escrow account to fund post-closing adjustments to the consideration and covenant and other indemnification obligations | $100 | ||||||
COMMON STOCK | |||||||
Shareholder's Equity | |||||||
Par value of common stock (in dollars per share) | $1 | $1 | $1 | ||||
Authorized common stock (in shares) | 800,000,000 | 800,000,000 | 800,000,000 | ||||
Dividend declared, per share of common stock (in dollars per share) | $1.16 | $0.97 | $0.83 | ||||
Common stock, shares authorized to be repurchased | 15,000,000 | ||||||
Common stock, shares reacquired through open and private market purchases | 3,547,334 | 3,096,464 | 2,600,569 | ||||
Shares authorized to be repurchased | 9,166,298 | ||||||
Number of shares reacquired related to the withholding of taxes for the exercise of stock options and the vesting of stock awards | 489,854 | 346,941 | 734,857 | ||||
COMMON STOCK | Subsequent event | |||||||
Shareholder's Equity | |||||||
Common stock, shares authorized to be repurchased | 20,000,000 | ||||||
Amount of common stock to be repurchased under ASR agreement | $300 | ||||||
COMMON STOCK | Champion | |||||||
Shareholder's Equity | |||||||
Common stock, shares issued | 6,596,444 | ||||||
Consideration transferred in the form of common stock, and deposited in an escrow fund to satisfy adjustments to consideration and indemnification obligations (in shares) | 1,258,115 | ||||||
Number of shares repurchased from escrow account | 1,258,115 | ||||||
COMMON STOCK | Nalco | |||||||
Shareholder's Equity | |||||||
Additional shares authorized to be repurchased contingent upon merger | 10,000,000 | ||||||
Undesignated preferred stock | |||||||
Shareholder's Equity | |||||||
Preferred stock, shares authorized | 15,000,000 | ||||||
Remaining number of undesignated shares | 14,600,000 |
EQUITY_COMPENSATION_PLANS_Deta
EQUITY COMPENSATION PLANS (Details) (USD $) | 12 Months Ended | |||
In Millions, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | 31-May-13 |
EQUITY COMPENSATION PLANS | ||||
Retirement eligible grant recipients, minimum age | 55 years | |||
Grants to retirement eligible recipients, expense period | 6 months | |||
Common shares available for grant (in shares) | 17,999,689 | 20,269,664 | 5,316,532 | |
Shares approved for issuance under the plan (in shares) | 17,000,000 | |||
Value of awards granted, portion from stock options under current program (as a percent) | 50.00% | |||
Value of awards granted, portion from PBRSUs under current program (as a percent) | 50.00% | |||
Total compensation expense related to all share-based compensation plans | $71 | $70 | $66 | |
Total compensation expense, net of tax benefit | 49 | 48 | 45 | |
Weighted-average period over which unrecognized compensation costs on nonvested awards expected to be recognized | 2 years 1 month 6 days | |||
Total measured but unrecognized compensation expense related to non-vested share-based compensation arrangements granted under all of the company's plans | $128 |
EQUITY_COMPENSATION_PLANS_Deta1
EQUITY COMPENSATION PLANS (Details 2) (Stock Options, USD $) | 12 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Stock Options | |||
Stock incentive and option plans | |||
Stock option expiration period | 10 years | ||
Stock option vesting period | 3 years | ||
SHARES | |||
Outstanding, beginning of year (in shares) | 13,926,256 | 15,125,156 | 20,126,579 |
Granted (in shares) | 1,645,937 | 1,640,210 | 2,238,267 |
Exercised (in shares) | -2,316,918 | -2,583,026 | -6,774,032 |
Canceled (in shares) | -85,499 | -256,084 | -465,658 |
Outstanding, end of year (in shares) | 13,169,776 | 13,926,256 | 15,125,156 |
Exercisable, end of year (in shares) | 9,820,826 | 10,233,265 | 11,036,700 |
Vested and expected to vest, end of year (in shares) | 12,944,608 | ||
AVERAGE PRICE PER SHARE | |||
Outstanding, beginning of year (in dollars per share) | $55.66 | $48.29 | $41.45 |
Granted (in dollars per share) | $107.63 | $101.22 | $71.17 |
Exercised (in dollars per share) | $44.79 | $40.68 | $35.16 |
Canceled (in dollars per share) | $83.81 | $63 | $53.61 |
Outstanding, end of year (in dollars per share) | $63.88 | $55.66 | $48.29 |
Exercisable, end of year (in dollars per share) | $52.21 | $46.33 | $42.77 |
Vested and expected to vest, end of year (in dollars per shares) | $63.35 | ||
Total intrinsic value of options exercised during period | $150 | $123 | $211 |
Total aggregate intrinsic value of in-the-money options exercisable | 520 | ||
Total aggregate intrinsic value of in-the-money options outstanding | 548 | ||
Weighted-average remaining contractual life of options outstanding | 6 years 3 months 18 days | ||
Weighted-average remaining contractual life of options exercisable | 5 years 3 months 18 days | ||
Aggregate intrinsic value of vested and expected to vest options outstanding | $545 | ||
Weighted-average remaining contractual life of vested and expected to vest options outstanding | 6 years 2 months 12 days |
EQUITY_COMPENSATION_PLANS_Deta2
EQUITY COMPENSATION PLANS (Details 3) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
EQUITY COMPENSATION PLANS | |||
Weighted average grant date fair value of options granted at market prices (in dollars per share) | $23.18 | $22.53 | $13.77 |
Stock Options | |||
Assumptions | |||
Risk-free rate of return (as a percent) | 1.80% | 1.80% | 0.90% |
Expected life | 6 years | 6 years | 6 years |
Expected volatility (as a percent) | 22.90% | 23.00% | 22.80% |
Expected dividend yield (as a percent) | 1.20% | 1.10% | 1.30% |
Vesting period | 3 years | ||
Stock Options | Minimum | |||
Assumptions | |||
Yield curve of U.S. treasury rates | 1 month | ||
Stock Options | Maximum | |||
Assumptions | |||
Yield curve of U.S. treasury rates | 10 years | ||
PBRSU Awards | |||
Assumptions | |||
Period of requisite continued service | 3 years | ||
Common stock issuable for each vested stock award (in shares) | 1 | ||
Vesting period | 3 years | ||
Restricted Stock Awards and Units | Minimum | |||
Assumptions | |||
Vesting period | 12 months | ||
Restricted Stock Awards and Units | Maximum | |||
Assumptions | |||
Vesting period | 84 months |
EQUITY_COMPENSATION_PLANS_Deta3
EQUITY COMPENSATION PLANS (Details 4) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
PBRSU Awards | |||
Summary of PBRSU awards and restricted stock activity: | |||
Stock awards outstanding, at the beginning of period (in shares) | 1,750,269 | 2,091,272 | 2,140,665 |
Stock awards granted (in shares) | 373,337 | 342,207 | 454,620 |
Stock awards vested/ earned (in shares) | -503,324 | -594,366 | -285,249 |
Stock awards cancelled (in shares) | -27,048 | -88,844 | -218,764 |
Stock awards outstanding, at the end of period (in shares) | 1,593,234 | 1,750,269 | 2,091,272 |
Weighted-average fair value at grant-date of stock awards outstanding, at the beginning of period (in dollars per share) | $64.49 | $53.65 | $50.68 |
Weighted-average fair value at grant-date of stock awards granted (in dollars per share) | $103.10 | $99.63 | $68.63 |
Weighted-average fair value at grant-date of stock awards vested/earned (in dollars per share) | $47.98 | $47.60 | $55.62 |
Weighted-average fair value at grant-date of stock awards cancelled (in dollars per share) | $74.09 | $57.71 | $53.14 |
Weighted-average fair value at grant-date of stock awards outstanding, at the end of period (in dollars per share) | $78.59 | $64.49 | $53.65 |
Restricted Stock Awards and Units | |||
Summary of PBRSU awards and restricted stock activity: | |||
Stock awards outstanding, at the beginning of period (in shares) | 622,021 | 797,213 | 1,016,660 |
Stock awards granted (in shares) | 109,665 | 109,212 | 230,193 |
Stock awards vested/ earned (in shares) | -306,830 | -249,093 | -362,926 |
Stock awards cancelled (in shares) | -23,785 | -35,311 | -86,714 |
Stock awards outstanding, at the end of period (in shares) | 401,071 | 622,021 | 797,213 |
Weighted-average fair value at grant-date of stock awards outstanding, at the beginning of period (in dollars per share) | $64.04 | $56.79 | $53.67 |
Weighted-average fair value at grant-date of stock awards granted (in dollars per share) | $102.62 | $90.56 | $64.10 |
Weighted-average fair value at grant-date of stock awards vested/earned (in dollars per share) | $55.83 | $53.59 | $53.80 |
Weighted-average fair value at grant-date of stock awards cancelled (in dollars per share) | $73.01 | $56.20 | $52.03 |
Weighted-average fair value at grant-date of stock awards outstanding, at the end of period (in dollars per share) | $80.33 | $64.04 | $56.79 |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Income before income taxes | |||||||||||
United States | $937.70 | $725.80 | $594.80 | ||||||||
International | 760.7 | 572.5 | 417.8 | ||||||||
Income before income taxes | 458.5 | 508.1 | 446 | 285.8 | 403 | 409 | 286.1 | 200.2 | 1,698.40 | 1,298.30 | 1,012.60 |
Current income tax expense (benefit) | |||||||||||
Federal and state | 344.3 | 301.3 | 141.3 | ||||||||
International | 253.4 | 153.8 | 173.2 | ||||||||
Total current | 597.7 | 455.1 | 314.5 | ||||||||
Deferred income tax expense (benefit) | |||||||||||
Federal and state | -67.7 | -124 | 31.7 | ||||||||
International | -53.8 | -6.5 | -34.9 | ||||||||
Total deferred | -121.5 | -130.5 | -3.2 | ||||||||
Provision for income taxes | $115.20 | $138.70 | $131 | $91.30 | $113.40 | $101.80 | $70.30 | $39.20 | $476.20 | $324.70 | $311.30 |
INCOME_TAXES_Details_2
INCOME TAXES (Details 2) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Deferred tax assets | ||
Other accrued liabilities | $122.90 | $125.90 |
Loss carryforwards | 86 | 106.3 |
Share-based compensation | 70.9 | 70.1 |
Pension and other comprehensive income | 357.3 | 160.9 |
Foreign tax credits | 15.6 | 29.9 |
Other, net | 78.2 | 150 |
Valuation allowance | -74.2 | -88.3 |
Total deferred tax assets | 656.7 | 554.8 |
Deferred tax liabilities | ||
Property plant and equipment basis differences | 269.2 | 287.3 |
Intangible assets | 1,392.20 | 1,488 |
Unremitted foreign earnings | 37.4 | 94.5 |
Other, net | 126.1 | 132 |
Total deferred tax liabilities | 1,824.90 | 2,001.80 |
Net deferred tax liabilities balance | ($1,168.20) | ($1,447) |
INCOME_TAXES_Details_3
INCOME TAXES (Details 3) (USD $) | 12 Months Ended | ||
In Millions, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
item | item | item | |
Operating loss carryforwards | |||
Net operating loss carryforwards | $86 | 106.3 | |
Valuation allowance on certain deferred tax assets | 74 | ||
Foreign tax credit carryforwards expiring from 2019 to 2024 | 16 | ||
Foreign tax credit carryforwards, expiration period | 10 years | ||
Federal | |||
Operating loss carryforwards | |||
Net operating loss carryforwards | 1 | ||
State | |||
Operating loss carryforwards | |||
Carryforwards subject to expiration | 6 | ||
International | |||
Operating loss carryforwards | |||
Net operating loss carryforwards | 79 | ||
Carryforwards subject to expiration | 41 | ||
No expiration | 38 | ||
Number of foreign jurisdictions with a tax holiday | 1 | 1 | 1 |
Tax reduction due to tax holiday | $4.60 | ||
Tax holiday impact on diluted earnings per share (in dollars per share) | $0.01 |
INCOME_TAXES_Details_4
INCOME TAXES (Details 4) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Reconciliation of the statutory U.S. federal income tax rate to the company's effective income tax rate | |||
Statutory U.S. rate (as a percent) | 35.00% | 35.00% | 35.00% |
State income taxes, net of federal benefit (as a percent) | 1.60% | 1.10% | 1.10% |
Foreign operations (as a percent) | -6.10% | -4.50% | -3.00% |
Domestic manufacturing deduction (as a percent) | -2.00% | -2.60% | -2.60% |
R&D credit (as a percent) | -0.70% | -1.40% | |
Change in valuation allowance (as a percent) | -0.10% | -1.00% | |
Nondeductible deal costs (as a percent) | 0.20% | 0.50% | |
Audit settlements and refunds (as a percent) | 0.20% | -0.80% | 0.10% |
Other, net (as a percent) | 0.10% | -1.00% | -0.40% |
Effective income tax rate (as a percent) | 28.00% | 25.00% | 30.70% |
Unremitted foreign earnings that are considered permanently reinvested | $1,800,000,000 | $1,600,000,000 | |
Unremitted foreign earnings | 37,400,000 | 94,500,000 | |
Recognized discrete tax benefit, net | 13,200,000 | 41,700,000 | 9,200,000 |
Foreign deferred tax assets realized, used to derive net discrete tax benefit | 11,500,000 | ||
Deferred tax assets and liabilities remeasured, used to derive net discrete tax benefit | 11,300,000 | ||
Amount of adjustments recognized from filing 2012 U.S. federal and state tax returns, used to derive net discrete tax benefit | 11,000,000 | ||
Reconciliation of the beginning and ending amount of gross unrecognized tax benefits | |||
Balance at beginning of year | 98,700,000 | 93,100,000 | 89,500,000 |
Additions based on tax positions related to the current year | 5,300,000 | 9,100,000 | 7,500,000 |
Additions for tax positions of prior years | 5,200,000 | 6,100,000 | 5,000,000 |
Reductions for tax positions of prior years | -17,800,000 | -15,600,000 | -3,400,000 |
Reductions for tax positions due to statute of limitations | -200,000 | -3,600,000 | -800,000 |
Settlements | -9,000,000 | -700,000 | -8,000,000 |
Assumed in connection with the Champion acquisition | 9,800,000 | ||
Assumed in connection with the Nalco merger | 7,800,000 | ||
Foreign currency translation | -3,500,000 | 500,000 | -4,500,000 |
Balance at end of year | 78,700,000 | 98,700,000 | 93,100,000 |
Interest on unrecognized tax benefits accrued during the period | 7,000,000 | 2,000,000 | 3,000,000 |
Accrued interest, including minor amounts for penalties | $14,000,000 | $12,000,000 |
RENTALS_AND_LEASES_Details
RENTALS AND LEASES (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
RENTALS AND LEASES | |||
Operating leases, rental expense | $237 | $217 | $183 |
Future minimum payments under operating leases with noncancelable terms in excess of one year were: | |||
2015 | 133 | ||
2016 | 116 | ||
2017 | 103 | ||
2018 | 86 | ||
2019 | 67 | ||
Thereafter | 158 | ||
Total | 663 | ||
Maximum term, operating leases for vehicles with month-to-month renewal | 1 year | ||
Estimated payments under operating leases for vehicles in 2015 | $58 |
RESEARCH_EXPENDITURES_Details
RESEARCH EXPENDITURES (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
RESEARCH EXPENDITURES | |||
Research expenditures related to the development of new products and processes, including significant improvements and refinements to existing products | $197 | $188 | $183 |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Details) | 12 Months Ended |
Dec. 31, 2014 | |
item | |
location | |
lawsuit | |
Environmental matters | |
Number of locations for environmental assessments and remediation | 35 |
Loss contingencies | |
Number of open wage hour lawsuits | 6 |
Period to appeal court's decision after entry of final judgment under Federal Rule of Appellate Procedure | 30 days |
Number of complaints filed by individuals | 23 |
Wage Hour Claims | |
Loss contingencies | |
Number of lawsuits certified for class action status | 2 |
Deepwater Horizon Incident | Nalco | |
Loss contingencies | |
Number of oil dispersants for which the EPA released toxicity data | 8 |
Number of master complaints naming Nalco and others who responded to the oil spill (known as the "B3 Bundle") | 1 |
Number of putative class action complaints filed | 6 |
Number of proposed class action settlements | 2 |
RETIREMENT_PLANS_Details
RETIREMENT PLANS (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Amounts recognized in Consolidated Balance Sheet: | |||
Other assets | $15.90 | $90.20 | |
Postretirement health care and pension benefits | -1,188.50 | -795.6 | |
Amounts recognized in Accumulated Other Comprehensive Loss (Income): | |||
Accumulated other comprehensive loss (income), net of tax | 552.5 | 235 | |
Change in Accumulated Other Comprehensive Loss (Income): | |||
Other comprehensive loss (income) | 343.3 | -382.9 | 131.2 |
Non-qualified plans | |||
Projected Benefit Obligation | |||
Projected benefit obligation, end of year | 113 | 96 | |
U.S. Pension | |||
Defined Benefit Plan Disclosure | |||
Accumulated Benefit Obligation, end of year | 2,075 | 1,748.10 | |
Projected Benefit Obligation | |||
Projected benefit obligation, beginning of year | 1,886.30 | 2,105.10 | |
Service cost | 66.4 | 68.6 | 50.5 |
Interest | 90 | 84.7 | 89.3 |
Actuarial loss (gain) | 329.4 | -270.5 | |
Benefits paid | -119.4 | -101.6 | |
Projected benefit obligation, end of year | 2,252.70 | 1,886.30 | 2,105.10 |
Plan Assets | |||
Fair value of plan assets, beginning of year | 1,848.90 | 1,633.50 | |
Actual returns on plan assets | 136.4 | 307.3 | |
Company contributions | 5.7 | 9.7 | |
Benefits paid | -119.4 | -101.6 | |
Fair value of plan assets, end of year | 1,871.60 | 1,848.90 | 1,633.50 |
Funded Status, end of year | -381.1 | -37.4 | |
Amounts recognized in Consolidated Balance Sheet: | |||
Other assets | 58.6 | ||
Other current liabilities | -9.6 | -6.8 | |
Postretirement health care and pension benefits | -371.5 | -89.2 | |
Net liability | -381.1 | -37.4 | |
Amounts recognized in Accumulated Other Comprehensive Loss (Income): | |||
Unrecognized net actuarial loss | 555.8 | 258.1 | |
Unrecognized net prior service benefits | -40.6 | -47.5 | |
Tax benefit | -201.8 | -85.9 | |
Accumulated other comprehensive loss (income), net of tax | 313.4 | 124.7 | |
Change in Accumulated Other Comprehensive Loss (Income): | |||
Amortization of net actuarial loss | -23.7 | -62.3 | |
Amortization of prior service costs (benefits) | 6.9 | 6.9 | |
Current period net actuarial loss (gain) | 321.4 | -447.7 | |
Settlement | -0.9 | ||
Tax expense (benefit) | -115.9 | 187.1 | |
Other comprehensive loss (income) | 188.7 | -316.9 | |
Estimated amounts in accumulated other comprehensive loss expected to be reclassified to net period cost during 2014 | |||
Net actuarial loss (gain) | 48.5 | ||
Net prior service costs (benefits) | -6.9 | ||
Total | 41.6 | ||
International Pension | |||
Defined Benefit Plan Disclosure | |||
Accumulated Benefit Obligation, end of year | 1,304.60 | 1,124.50 | |
Projected Benefit Obligation | |||
Projected benefit obligation, beginning of year | 1,243.60 | 1,180.60 | |
Service cost | 32.2 | 36 | 29.6 |
Interest | 49.8 | 47.2 | 48.3 |
Participant contributions | 3.6 | 3.7 | |
Curtailments and settlements | -15.9 | -7.3 | |
Plan amendments | 0.1 | 2.2 | |
Actuarial loss (gain) | 248.8 | -11.1 | |
Assumed through acquisitions | -0.2 | 8.5 | |
Benefits paid | -38.1 | -39.2 | |
Foreign currency translation | -99 | 23 | |
Projected benefit obligation, end of year | 1,424.90 | 1,243.60 | 1,180.60 |
Plan Assets | |||
Fair value of plan assets, beginning of year | 787.6 | 689.3 | |
Actual returns on plan assets | 108.6 | 64.7 | |
Company contributions | 52.8 | 52.6 | |
Participant contributions | 3.6 | 3.7 | |
Assumed through acquisitions | 5.9 | ||
Settlements | -12.8 | -1.5 | |
Benefits paid | -38.1 | -39.2 | |
Foreign currency translation | -54 | 12.1 | |
Fair value of plan assets, end of year | 847.7 | 787.6 | 689.3 |
Funded Status, end of year | -577.2 | -456 | |
Amounts recognized in Consolidated Balance Sheet: | |||
Other assets | 15.9 | 31.6 | |
Other current liabilities | -15.7 | -14.6 | |
Postretirement health care and pension benefits | -577.4 | -473 | |
Net liability | -577.2 | -456 | |
Amounts recognized in Accumulated Other Comprehensive Loss (Income): | |||
Unrecognized net actuarial loss | 358 | 198.5 | |
Unrecognized net prior service benefits | -2.6 | -3 | |
Tax benefit | -93.4 | -56.1 | |
Accumulated other comprehensive loss (income), net of tax | 262 | 139.4 | |
Change in Accumulated Other Comprehensive Loss (Income): | |||
Amortization of net actuarial loss | -9.1 | -17.7 | |
Amortization of prior service costs (benefits) | -0.1 | 1.4 | |
Current period net actuarial loss (gain) | 194.8 | -28.7 | |
Current period prior service costs (benefits) | 0.1 | 2.2 | |
Tax expense (benefit) | -37.3 | 11 | |
Foreign currency translation | -25.8 | 4.1 | |
Other comprehensive loss (income) | 122.6 | -27.7 | |
Estimated amounts in accumulated other comprehensive loss expected to be reclassified to net period cost during 2014 | |||
Net actuarial loss (gain) | 16.9 | ||
Net prior service costs (benefits) | -0.1 | ||
Total | 16.8 | ||
U.S. Postretirement Health Care | |||
Defined Benefit Plan Disclosure | |||
Accumulated Benefit Obligation, end of year | 240.4 | 234.1 | |
Projected Benefit Obligation | |||
Projected benefit obligation, beginning of year | 234.1 | 281.5 | |
Service cost | 4.3 | 5.9 | 5.1 |
Interest | 10.8 | 10.8 | 12.9 |
Participant contributions | 10.4 | 9.6 | |
Medicare subsidies received | 2 | 0.7 | |
Plan amendments | 0.9 | ||
Actuarial loss (gain) | -52.2 | ||
Benefits paid | -22.1 | -22.2 | |
Projected benefit obligation, end of year | 240.4 | 234.1 | 281.5 |
Plan Assets | |||
Fair value of plan assets, beginning of year | 14.8 | 15.1 | |
Actual returns on plan assets | 0.9 | 2.8 | |
Company contributions | 18.2 | 17.7 | |
Participant contributions | 1.5 | 1.4 | |
Benefits paid | -22.1 | -22.2 | |
Fair value of plan assets, end of year | 13.3 | 14.8 | 15.1 |
Funded Status, end of year | -227.1 | -219.3 | |
Amounts recognized in Consolidated Balance Sheet: | |||
Other current liabilities | -7 | -6 | |
Postretirement health care and pension benefits | -220.1 | -213.3 | |
Net liability | -227.1 | -219.3 | |
Amounts recognized in Accumulated Other Comprehensive Loss (Income): | |||
Unrecognized net actuarial loss | -33.6 | -42.3 | |
Unrecognized net prior service benefits | -1.2 | ||
Tax benefit | 10.7 | 14.4 | |
Accumulated other comprehensive loss (income), net of tax | -22.9 | -29.1 | |
Change in Accumulated Other Comprehensive Loss (Income): | |||
Amortization of net actuarial loss | 8.2 | -0.6 | |
Amortization of prior service costs (benefits) | 0.3 | 0.3 | |
Current period net actuarial loss (gain) | 0.5 | -54 | |
Current period prior service costs (benefits) | 0.9 | ||
Tax expense (benefit) | -3.7 | 20.1 | |
Other comprehensive loss (income) | 6.2 | -34.2 | |
Estimated amounts in accumulated other comprehensive loss expected to be reclassified to net period cost during 2014 | |||
Net actuarial loss (gain) | -6.2 | ||
Net prior service costs (benefits) | -0.1 | ||
Total | ($6.30) |
RETIREMENT_PLANS_Details_2
RETIREMENT PLANS (Details 2) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Aggregate projected benefit obligation, accumulated benefit obligation and fair value of plan assets for pension plans with accumulated benefit obligations in excess of plan assets: | |||
Aggregate projected benefit obligation | $3,272.10 | $869.20 | |
Accumulated benefit obligation | 3,011.90 | 794.9 | |
Fair value of plan assets | 2,315.70 | 309.9 | |
U.S. Pension | |||
Net periodic benefit costs | |||
Service cost- employee benefits earned during the year | 66.4 | 68.6 | 50.5 |
Interest cost on benefit obligation | 90 | 84.7 | 89.3 |
Expected return on plan assets | -128.4 | -130.1 | -127.1 |
Recognition of net actuarial (gain) loss | 23.7 | 62.3 | 45.1 |
Amortization of prior service cost (benefit) | -6.9 | -6.9 | -4.2 |
Settlements/curtailments | 0.9 | 2.4 | |
Total expense | 44.8 | 79.5 | 56 |
International Pension | |||
Net periodic benefit costs | |||
Service cost- employee benefits earned during the year | 32.2 | 36 | 29.6 |
Interest cost on benefit obligation | 49.8 | 47.2 | 48.3 |
Expected return on plan assets | -54.6 | -46.9 | -42.3 |
Recognition of net actuarial (gain) loss | 7 | 11.3 | 3.9 |
Amortization of prior service cost (benefit) | 0.4 | -0.3 | 0.2 |
Settlements/curtailments | -1.3 | -0.3 | 1.6 |
Total expense | 33.5 | 47 | 41.3 |
U.S. Postretirement Health Care | |||
Net periodic benefit costs | |||
Service cost- employee benefits earned during the year | 4.3 | 5.9 | 5.1 |
Interest cost on benefit obligation | 10.8 | 10.8 | 12.9 |
Expected return on plan assets | -1 | -1.1 | -1.2 |
Recognition of net actuarial (gain) loss | -8.2 | 0.6 | 0.4 |
Amortization of prior service cost (benefit) | -0.3 | -0.3 | 0.1 |
Total expense | $5.60 | $15.90 | $17.30 |
RETIREMENT_PLANS_Details_3
RETIREMENT PLANS (Details 3) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
U.S. Pension | |||
Weighted-average actuarial assumptions used to determine benefit obligations as of year end: | |||
Discount rate (as a percent) | 4.14% | 4.92% | 4.14% |
Projected salary increase (as a percent) | 4.32% | 4.32% | 4.32% |
Weighted-average actuarial assumptions used to determine net cost: | |||
Discount rate (as a percent) | 4.92% | 4.14% | 4.85% |
Expected return on plan assets (as a percent) | 7.75% | 8.25% | 8.25% |
Projected salary increase (as a percent) | 4.32% | 4.32% | 4.08% |
U.S. Pension | Corporate bonds | Maximum | |||
Weighted-average actuarial assumptions used to determine net cost: | |||
Maturity period of debt securities | 30 years | ||
U.S. Pension | Corporate bonds | Minimum | |||
Weighted-average actuarial assumptions used to determine net cost: | |||
Maturity period of debt securities | 6 months | ||
International Pension | |||
Weighted-average actuarial assumptions used to determine benefit obligations as of year end: | |||
Discount rate (as a percent) | 3.02% | 4.09% | 4.04% |
Projected salary increase (as a percent) | 2.66% | 2.73% | 2.74% |
Weighted-average actuarial assumptions used to determine net cost: | |||
Discount rate (as a percent) | 4.45% | 4.34% | 5.17% |
Expected return on plan assets (as a percent) | 6.90% | 6.79% | 6.87% |
Projected salary increase (as a percent) | 3.58% | 3.70% | 3.59% |
U.S. Postretirement Health Care | |||
Weighted-average actuarial assumptions used to determine benefit obligations as of year end: | |||
Discount rate (as a percent) | 4.08% | 4.77% | 3.95% |
Projected salary increase (as a percent) | 0.00% | ||
Weighted-average actuarial assumptions used to determine net cost: | |||
Discount rate (as a percent) | 4.77% | 3.95% | 4.80% |
Expected return on plan assets (as a percent) | 7.75% | 8.25% | 8.25% |
Projected salary increase (as a percent) | 0.00% | ||
Defined Benefit Plan Assumed Health Care Cost Trend Rates | |||
Annual rates of increase in the per capita cost of covered health care (as a percent) | 7.50% | ||
Rate of per capita cost of covered health care in 2023 (as a percent) | 5.00% | ||
Effect of a one-percentage point change in the assumed health care cost trend rate: | |||
Effect on total of service and interest cost components, increase | -0.1 | ||
Effect on total of service and interest cost components, decrease | 0.1 | ||
Effect on postretirement benefit obligation, increase | 1 | ||
Effect on postretirement benefit obligation, decrease | -1.5 |
RETIREMENT_PLANS_Details_4
RETIREMENT PLANS (Details 4) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
U.S. Pension and Postretirement Health Care Benefits | ||
Asset allocation percentages | ||
TARGET ASSET ALLOCATION PERCENTAGE | 100.00% | 100.00% |
PERCENTAGE OF PLAN ASSETS | 100.00% | 100.00% |
U.S. Pension and Postretirement Health Care Benefits | Large cap equity | ||
Asset allocation percentages | ||
TARGET ASSET ALLOCATION PERCENTAGE | 34.00% | 34.00% |
PERCENTAGE OF PLAN ASSETS | 37.00% | 37.00% |
U.S. Pension and Postretirement Health Care Benefits | Small cap equity | ||
Asset allocation percentages | ||
TARGET ASSET ALLOCATION PERCENTAGE | 9.00% | 9.00% |
PERCENTAGE OF PLAN ASSETS | 9.00% | 11.00% |
U.S. Pension and Postretirement Health Care Benefits | International equity | ||
Asset allocation percentages | ||
TARGET ASSET ALLOCATION PERCENTAGE | 13.00% | 13.00% |
PERCENTAGE OF PLAN ASSETS | 13.00% | 14.00% |
U.S. Pension and Postretirement Health Care Benefits | Core fixed income | ||
Asset allocation percentages | ||
TARGET ASSET ALLOCATION PERCENTAGE | 18.00% | 18.00% |
PERCENTAGE OF PLAN ASSETS | 18.00% | 17.00% |
U.S. Pension and Postretirement Health Care Benefits | High-yield bonds | ||
Asset allocation percentages | ||
TARGET ASSET ALLOCATION PERCENTAGE | 5.00% | 5.00% |
PERCENTAGE OF PLAN ASSETS | 5.00% | 5.00% |
U.S. Pension and Postretirement Health Care Benefits | Emerging markets | ||
Asset allocation percentages | ||
TARGET ASSET ALLOCATION PERCENTAGE | 2.00% | 2.00% |
PERCENTAGE OF PLAN ASSETS | 2.00% | 2.00% |
U.S. Pension and Postretirement Health Care Benefits | Real estate | ||
Asset allocation percentages | ||
TARGET ASSET ALLOCATION PERCENTAGE | 4.00% | 4.00% |
PERCENTAGE OF PLAN ASSETS | 4.00% | 3.00% |
U.S. Pension and Postretirement Health Care Benefits | Hedge Funds | ||
Asset allocation percentages | ||
TARGET ASSET ALLOCATION PERCENTAGE | 9.00% | 9.00% |
PERCENTAGE OF PLAN ASSETS | 8.00% | 8.00% |
U.S. Pension and Postretirement Health Care Benefits | Private Equity | ||
Asset allocation percentages | ||
TARGET ASSET ALLOCATION PERCENTAGE | 6.00% | 6.00% |
PERCENTAGE OF PLAN ASSETS | 4.00% | 3.00% |
International Pension | ||
Asset allocation percentages | ||
PERCENTAGE OF PLAN ASSETS | 100.00% | 100.00% |
International Pension | Cash | ||
Asset allocation percentages | ||
PERCENTAGE OF PLAN ASSETS | 1.00% | 1.00% |
International Pension | International equity | ||
Asset allocation percentages | ||
PERCENTAGE OF PLAN ASSETS | 43.00% | 43.00% |
International Pension | Corporate bonds | ||
Asset allocation percentages | ||
PERCENTAGE OF PLAN ASSETS | 22.00% | 21.00% |
International Pension | Government bonds | ||
Asset allocation percentages | ||
PERCENTAGE OF PLAN ASSETS | 19.00% | 18.00% |
International Pension | Total fixed income | ||
Asset allocation percentages | ||
PERCENTAGE OF PLAN ASSETS | 41.00% | 39.00% |
International Pension | Insurance contracts | ||
Asset allocation percentages | ||
PERCENTAGE OF PLAN ASSETS | 13.00% | 15.00% |
International Pension | Real estate | ||
Asset allocation percentages | ||
PERCENTAGE OF PLAN ASSETS | 2.00% | 2.00% |
RETIREMENT_PLANS_Details_5
RETIREMENT PLANS (Details 5) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | |||
U.S. Pension and Postretirement Health Care Benefits | |||
Defined Benefit Plan Disclosure | |||
Fair Value | $1,884.90 | $1,863.70 | |
U.S. Pension and Postretirement Health Care Benefits | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 1,586.60 | 1,595.10 | |
U.S. Pension and Postretirement Health Care Benefits | Level 2 | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 72.9 | 65.2 | |
U.S. Pension and Postretirement Health Care Benefits | Level 3 | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 225.4 | 203.4 | |
U.S. Pension and Postretirement Health Care Benefits | Cash | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 7.4 | 3.1 | |
U.S. Pension and Postretirement Health Care Benefits | Cash | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 7.4 | 3.1 | |
U.S. Pension and Postretirement Health Care Benefits | Large cap equity | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 693.5 | 695.2 | |
U.S. Pension and Postretirement Health Care Benefits | Large cap equity | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 693.5 | 695.2 | |
U.S. Pension and Postretirement Health Care Benefits | Small cap equity | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 174.9 | 196.9 | |
U.S. Pension and Postretirement Health Care Benefits | Small cap equity | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 174.9 | 196.9 | |
U.S. Pension and Postretirement Health Care Benefits | International equity | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 246.2 | 258.5 | |
U.S. Pension and Postretirement Health Care Benefits | International equity | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 246.2 | 258.5 | |
U.S. Pension and Postretirement Health Care Benefits | Core fixed income | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 344.7 | 323.2 | |
U.S. Pension and Postretirement Health Care Benefits | Core fixed income | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 344.7 | 323.2 | |
U.S. Pension and Postretirement Health Care Benefits | High-yield bonds | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 90.5 | 88.4 | |
U.S. Pension and Postretirement Health Care Benefits | High-yield bonds | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 90.5 | 88.4 | |
U.S. Pension and Postretirement Health Care Benefits | Emerging markets | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 29.4 | 29.8 | |
U.S. Pension and Postretirement Health Care Benefits | Emerging markets | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 29.4 | 29.8 | |
U.S. Pension and Postretirement Health Care Benefits | Real estate | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 72.6 | 64.7 | |
U.S. Pension and Postretirement Health Care Benefits | Real estate | Level 2 | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 72.6 | 64.7 | |
U.S. Pension and Postretirement Health Care Benefits | Hedge Funds | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 152 | 148.5 | |
U.S. Pension and Postretirement Health Care Benefits | Hedge Funds | Level 3 | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 152 | 148.5 | 134.6 |
U.S. Pension and Postretirement Health Care Benefits | Private Equity | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 73.4 | 54.9 | |
U.S. Pension and Postretirement Health Care Benefits | Private Equity | Level 3 | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 73.4 | 54.9 | 48.2 |
U.S. Pension and Postretirement Health Care Benefits | Other | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 0.3 | 0.5 | |
U.S. Pension and Postretirement Health Care Benefits | Other | Level 2 | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 0.3 | 0.5 | |
International Pension | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 847.7 | 787.6 | 689.3 |
International Pension | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 20.5 | 20.4 | |
International Pension | Level 2 | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 827.2 | 767.2 | |
International Pension | Cash | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 7.2 | 3.6 | |
International Pension | Cash | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 7.2 | 3.6 | |
International Pension | International equity | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 363.5 | 342.5 | |
International Pension | International equity | Level 2 | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 363.5 | 342.5 | |
International Pension | Corporate bonds | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 189.3 | 167.6 | |
International Pension | Corporate bonds | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 5.1 | 5.5 | |
International Pension | Corporate bonds | Level 2 | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 184.2 | 162.1 | |
International Pension | Government bonds | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 164.4 | 143.3 | |
International Pension | Government bonds | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 7.7 | 8.7 | |
International Pension | Government bonds | Level 2 | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 156.7 | 134.6 | |
International Pension | Real estate | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 12.7 | 11.4 | |
International Pension | Real estate | Level 2 | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 12.7 | 11.4 | |
International Pension | Insurance contracts | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 109.8 | ||
International Pension | Insurance contracts | Level 2 | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 109.8 | 116.2 | |
International Pension | Other | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 0.8 | 3 | |
International Pension | Other | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Fair Value | 0.5 | 2.6 | |
International Pension | Other | Level 2 | |||
Defined Benefit Plan Disclosure | |||
Fair Value | $0.30 | $0.40 |
RETIREMENT_PLANS_Details_6
RETIREMENT PLANS (Details 6) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Multiemployer Plan | |||
Contributions of Ecolab | $0 | $0.20 | $0.50 |
Estimated liability arising from withdrawal of plan | 4.5 | 4.7 | |
Estimate of benefits expected to be paid for company's pension and postretirement health care benefit plans: | |||
2015 | 159 | ||
2016 | 170 | ||
2017 | 177 | ||
2018 | 185 | ||
2019 | 203 | ||
2020-2024 | 1,176 | ||
MEDICAL SUBSIDY RECEIPTS | |||
2015 | 1 | ||
U.S. Pension and Postretirement Health Care Benefits | |||
Defined benefit plan fair value of plan assets level three activity | |||
Fair value of plan assets, end of year | 1,884.90 | 1,863.70 | |
U.S. Pension and Postretirement Health Care Benefits | Level 3 | |||
Defined benefit plan fair value of plan assets level three activity | |||
Fair value of plan assets, end of year | 225.4 | 203.4 | |
U.S. Pension and Postretirement Health Care Benefits | Hedge Funds | |||
Defined benefit plan fair value of plan assets level three activity | |||
Fair value of plan assets, end of year | 152 | 148.5 | |
U.S. Pension and Postretirement Health Care Benefits | Hedge Funds | Level 3 | |||
Defined benefit plan fair value of plan assets level three activity | |||
Fair value of plan assets, beginning of year | 148.5 | 134.6 | |
Unrealized gains | 3.5 | 13.9 | |
Fair value of plan assets, end of year | 152 | 148.5 | |
U.S. Pension and Postretirement Health Care Benefits | Private Equity | |||
Defined benefit plan fair value of plan assets level three activity | |||
Fair value of plan assets, end of year | 73.4 | 54.9 | |
U.S. Pension and Postretirement Health Care Benefits | Private Equity | Level 3 | |||
Defined benefit plan fair value of plan assets level three activity | |||
Fair value of plan assets, beginning of year | 54.9 | 48.2 | |
Unrealized gains | 2.5 | 6.2 | |
Realized gains | 10 | 3.6 | |
Purchases, sales and settlements, net | 6 | -3.1 | |
Fair value of plan assets, end of year | 73.4 | 54.9 | |
U.S. Pension | |||
Defined benefit plan fair value of plan assets level three activity | |||
Fair value of plan assets, beginning of year | 1,848.90 | 1,633.50 | |
Fair value of plan assets, end of year | 1,871.60 | 1,848.90 | |
MEDICAL SUBSIDY RECEIPTS | |||
Employer voluntary contribution to defined benefit plan | 0 | 0 | |
U.S. Pension | Nalco | |||
MEDICAL SUBSIDY RECEIPTS | |||
Required contributions to defined benefit plan in current fiscal year | 38 | ||
Contributions to plan | $180 |
RETIREMENT_PLANS_Details_7
RETIREMENT PLANS (Details 7) (USD $) | 12 Months Ended | 8 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 |
Legacy Ecolab | All other active employees | 401 (K) Plan | ||||
Defined Contribution Plan Disclosure [Line Items] | ||||
Percentage of eligible compensation, matched 100% | 4.00% | 4.00% | ||
Percentage of matching contribution made by company, up to 4% eligible compensation | 100.00% | 100.00% | ||
Percentage of matching contribution made by company for employee contributions between 4% and 8% | 50.00% | 50.00% | ||
Legacy Ecolab | Active employees | 401 (K) Plan | ||||
Defined Contribution Plan Disclosure [Line Items] | ||||
Percentage of eligible compensation, matched 100% | 3.00% | 3.00% | ||
Percentage of matching contribution made by company, up to 3% eligible compensation | 100.00% | 100.00% | ||
Percentage of matching contribution made by company for employee contributions between 3% and 5% | 50.00% | 50.00% | ||
Legacy Ecolab | Minimum | All other active employees | 401 (K) Plan | ||||
Defined Contribution Plan Disclosure [Line Items] | ||||
Percentage of eligible compensation, matched 100% | 4.00% | 4.00% | ||
Legacy Ecolab | Minimum | Active employees | 401 (K) Plan | ||||
Defined Contribution Plan Disclosure [Line Items] | ||||
Percentage of eligible compensation, matched 100% | 3.00% | 3.00% | ||
Legacy Ecolab | Maximum | All other active employees | 401 (K) Plan | ||||
Defined Contribution Plan Disclosure [Line Items] | ||||
Percentage of eligible compensation, matched 100% | 8.00% | 8.00% | ||
Legacy Ecolab | Maximum | Active employees | 401 (K) Plan | ||||
Defined Contribution Plan Disclosure [Line Items] | ||||
Percentage of eligible compensation, matched 100% | 5.00% | 5.00% | ||
Nalco | 401 (K) Plan | ||||
Defined Contribution Plan Disclosure [Line Items] | ||||
Percentage of eligible compensation, matched 100% | 4.00% | 4.00% | 4.00% | |
Percentage of matching contribution made by company, up to 4% eligible compensation | 100.00% | 100.00% | ||
Percentage of matching contribution made by company for employee contributions between 4% and 8% | 50.00% | 50.00% | ||
Nalco | Profit Sharing | ||||
Defined Contribution Plan Disclosure [Line Items] | ||||
Employer contribution | 13 | |||
Nalco | Minimum | 401 (K) Plan | ||||
Defined Contribution Plan Disclosure [Line Items] | ||||
Percentage of eligible compensation, matched 100% | 4.00% | 4.00% | ||
Nalco | Maximum | 401 (K) Plan | ||||
Defined Contribution Plan Disclosure [Line Items] | ||||
Percentage of eligible compensation, matched 100% | 8.00% | 8.00% | ||
Legacy Ecolab and Legacy Nalco | 401 (K) Plan | ||||
Defined Contribution Plan Disclosure [Line Items] | ||||
Percentage of matching contribution by company vested immediately | 100.00% | |||
Employer contribution | 67 | 54 | 43 | |
Champion | 401 (K) Plan | ||||
Defined Contribution Plan Disclosure [Line Items] | ||||
Percentage of eligible compensation, matched 100% | 3.00% | |||
Percentage of matching contribution made by company, up to 3% eligible compensation | 100.00% | |||
Percentage of employer matching contribution when employee before tax contribution is between 3% to 6% of eligible compensation | 50.00% | |||
Employer contribution | $5 | |||
Champion | Minimum | 401 (K) Plan | ||||
Defined Contribution Plan Disclosure [Line Items] | ||||
Percentage of eligible compensation, matched 100% | 3.00% | |||
Champion | Maximum | 401 (K) Plan | ||||
Defined Contribution Plan Disclosure [Line Items] | ||||
Percentage of eligible compensation, matched 100% | 6.00% |
OPERATING_SEGMENTS_AND_GEOGRAP2
OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
segment | |||||||||||
Financial information of reportable segments | |||||||||||
Number of operating segments aggregated for classification as reportable segments | 8 | ||||||||||
Number of operating units | 10 | ||||||||||
Number of reportable segments | 3 | ||||||||||
Net sales | $3,680.80 | $3,694.90 | $3,568.20 | $3,336.60 | $3,559.50 | $3,484 | $3,337.80 | $2,872.10 | $14,280.50 | $13,253.40 | $11,838.70 |
Operating Income (Loss) | 520.5 | 571.4 | 512.2 | 350.9 | 470.6 | 476 | 352.3 | 261.7 | 1,955 | 1,560.60 | 1,289.30 |
Product concentration | Consolidated net sales | |||||||||||
Financial information of reportable segments | |||||||||||
Threshold percentage of product sales to consolidated net sales | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | ||||||
Warewashing Products | Product concentration | Consolidated net sales | |||||||||||
Financial information of reportable segments | |||||||||||
Percentage of consolidated sales | 10.00% | 11.00% | |||||||||
Previously reported | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | 13,253.40 | 11,838.70 | |||||||||
Operating Income (Loss) | 1,560.60 | 1,289.30 | |||||||||
Other | |||||||||||
Financial information of reportable segments | |||||||||||
Number of operating units | 2 | ||||||||||
Other | Product concentration | Consolidated net sales | |||||||||||
Financial information of reportable segments | |||||||||||
Number of product classes comprising 10% or more of consolidated net sales | 1 | 1 | 1 | ||||||||
Operating segment | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | 14,234.80 | 13,031.90 | 11,585.70 | ||||||||
Operating Income (Loss) | 1,951.80 | 1,525.10 | 1,247.30 | ||||||||
Operating segment | Previously reported | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | 13,355.40 | 11,837.10 | |||||||||
Operating Income (Loss) | 1,580.20 | 1,291.60 | |||||||||
Operating segment | Adjustment | Changes in Currency Rates | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | -323.5 | -251.4 | |||||||||
Operating Income (Loss) | -55.1 | -44.3 | |||||||||
Operating segment | Global Industrial | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | 4,866.70 | 4,742.80 | 4,614.10 | ||||||||
Operating Income (Loss) | 642.6 | 603 | 542.2 | ||||||||
Operating segment | Global Industrial | Previously reported | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | 4,905.10 | 4,762.20 | |||||||||
Operating Income (Loss) | 637.3 | 569.5 | |||||||||
Operating segment | Global Industrial | Adjustment | Changes in Currency Rates | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | -149.3 | -137.4 | |||||||||
Operating Income (Loss) | -27.1 | -22.9 | |||||||||
Operating segment | Global Industrial | Adjustment | Segment Changes | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | -13 | -10.7 | |||||||||
Operating Income (Loss) | -7.2 | -4.4 | |||||||||
Operating segment | Global Institutional | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | 4,314.50 | 4,152.50 | 4,017.50 | ||||||||
Operating Income (Loss) | 821.2 | 768.2 | 703 | ||||||||
Operating segment | Global Institutional | Previously reported | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | 4,202.50 | 4,063.20 | |||||||||
Operating Income (Loss) | 764.5 | 700.7 | |||||||||
Operating segment | Global Institutional | Adjustment | Changes in Currency Rates | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | -55.4 | -48.2 | |||||||||
Operating Income (Loss) | -11.7 | -11.8 | |||||||||
Operating segment | Global Institutional | Adjustment | Segment Changes | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | 5.4 | 2.5 | |||||||||
Operating Income (Loss) | 15.4 | 14.1 | |||||||||
Operating segment | Global Energy | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | 4,283.80 | 3,427.30 | 2,223.50 | ||||||||
Operating Income (Loss) | 634.9 | 458.9 | 336.9 | ||||||||
Operating segment | Global Energy | Previously reported | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | 3,532.80 | 2,275.40 | |||||||||
Operating Income (Loss) | 492.1 | 360.7 | |||||||||
Operating segment | Global Energy | Adjustment | Changes in Currency Rates | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | -113.1 | -60.2 | |||||||||
Operating Income (Loss) | -19.2 | -8.7 | |||||||||
Operating segment | Global Energy | Adjustment | Segment Changes | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | 7.6 | 8.3 | |||||||||
Operating Income (Loss) | -14 | -15.1 | |||||||||
Operating segment | Other | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | 750.3 | 709.3 | 730.6 | ||||||||
Operating Income (Loss) | 116.5 | 104.1 | 107.5 | ||||||||
Operating segment | Other | Previously reported | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | 715 | 736.3 | |||||||||
Operating Income (Loss) | 97.9 | 103 | |||||||||
Operating segment | Other | Adjustment | Changes in Currency Rates | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | -5.7 | -5.6 | |||||||||
Operating Income (Loss) | 0.4 | -0.9 | |||||||||
Operating segment | Other | Adjustment | Segment Changes | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | -0.1 | ||||||||||
Operating Income (Loss) | 5.8 | 5.4 | |||||||||
Currency impact | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | 45.7 | 221.5 | 253 | ||||||||
Operating Income (Loss) | 3.2 | 35.5 | 42 | ||||||||
Currency impact | Previously reported | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | -102 | 1.6 | |||||||||
Operating Income (Loss) | -19.6 | -2.3 | |||||||||
Currency impact | Adjustment | Changes in Currency Rates | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | 323.5 | 251.4 | |||||||||
Operating Income (Loss) | 55.1 | 44.3 | |||||||||
Corporate | |||||||||||
Financial information of reportable segments | |||||||||||
Operating Income (Loss) | -263.4 | -409.1 | -442.3 | ||||||||
Corporate | Previously reported | |||||||||||
Financial information of reportable segments | |||||||||||
Operating Income (Loss) | -411.6 | -442.3 | |||||||||
Corporate | Adjustment | Changes in Currency Rates | |||||||||||
Financial information of reportable segments | |||||||||||
Operating Income (Loss) | 2.5 | ||||||||||
Intersegment | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | $0 |
OPERATING_SEGMENTS_AND_GEOGRAP3
OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION (Details 2) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Global Industrial | |||
Financial information of reportable segments | |||
Service revenue at public exchange rates | $53.20 | $51.90 | $48.30 |
Global Institutional | |||
Financial information of reportable segments | |||
Service revenue at public exchange rates | 31.1 | 27 | 23.8 |
Global Energy | |||
Financial information of reportable segments | |||
Service revenue at public exchange rates | 294.1 | 179.3 | 156 |
Other | |||
Financial information of reportable segments | |||
Service revenue at public exchange rates | $655.10 | $619.40 | $590.10 |
OPERATING_SEGMENTS_AND_GEOGRAP4
OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION (Details 3) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Financial information of operating segments | |||||||||||
Net sales | $3,680.80 | $3,694.90 | $3,568.20 | $3,336.60 | $3,559.50 | $3,484 | $3,337.80 | $2,872.10 | $14,280.50 | $13,253.40 | $11,838.70 |
Long-Lived Assets, net | 14,595.60 | 14,938.10 | 14,595.60 | 14,938.10 | |||||||
United States | |||||||||||
Financial information of operating segments | |||||||||||
Net sales | 7,233.60 | 6,696 | 5,865.30 | ||||||||
Long-Lived Assets, net | 8,677.20 | 8,755.80 | 8,677.20 | 8,755.80 | |||||||
EMEA | |||||||||||
Financial information of operating segments | |||||||||||
Net sales | 3,470.60 | 3,255 | 3,027.90 | ||||||||
Long-Lived Assets, net | 2,066.80 | 2,180.20 | 2,066.80 | 2,180.20 | |||||||
Asia Pacific | |||||||||||
Financial information of operating segments | |||||||||||
Net sales | 1,685.90 | 1,631.80 | 1,586.80 | ||||||||
Long-Lived Assets, net | 2,339.80 | 2,368.60 | 2,339.80 | 2,368.60 | |||||||
Latin America | |||||||||||
Financial information of operating segments | |||||||||||
Net sales | 1,177.40 | 1,022.60 | 849.7 | ||||||||
Long-Lived Assets, net | 779.8 | 832.4 | 779.8 | 832.4 | |||||||
Canada | |||||||||||
Financial information of operating segments | |||||||||||
Net sales | 713 | 648 | 509 | ||||||||
Long-Lived Assets, net | $732 | $801.10 | $732 | $801.10 |
QUARTERLY_FINANCIAL_DATA_UNAUD2
QUARTERLY FINANCIAL DATA (UNAUDITED) (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Millions, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
QUARTERLY FINANCIAL DATA (UNAUDITED) | |||||||||||
Net sales | $3,680.80 | $3,694.90 | $3,568.20 | $3,336.60 | $3,559.50 | $3,484 | $3,337.80 | $2,872.10 | $14,280.50 | $13,253.40 | $11,838.70 |
Cost of sales | 1,979.90 | 1,970.60 | 1,909.40 | 1,819.20 | 1,945.20 | 1,866.10 | 1,810.20 | 1,539.70 | 7,679.10 | 7,161.20 | 6,385.40 |
Selling, general and administrative expenses | 1,142.10 | 1,145.90 | 1,152.70 | 1,136.90 | 1,123.50 | 1,114.10 | 1,101.70 | 1,021 | 4,577.60 | 4,360.30 | 4,018.30 |
Special (gains) and charges | 38.3 | 7 | -6.1 | 29.6 | 20.2 | 27.8 | 73.6 | 49.7 | 68.8 | 171.3 | 145.7 |
Operating Income | 520.5 | 571.4 | 512.2 | 350.9 | 470.6 | 476 | 352.3 | 261.7 | 1,955 | 1,560.60 | 1,289.30 |
Interest expense, net | 62 | 63.3 | 66.2 | 65.1 | 67.6 | 67 | 66.2 | 61.5 | 256.6 | 262.3 | 276.7 |
Income before income taxes | 458.5 | 508.1 | 446 | 285.8 | 403 | 409 | 286.1 | 200.2 | 1,698.40 | 1,298.30 | 1,012.60 |
Provision for income taxes | 115.2 | 138.7 | 131 | 91.3 | 113.4 | 101.8 | 70.3 | 39.2 | 476.2 | 324.7 | 311.3 |
Net income including noncontrolling interest | 343.3 | 369.4 | 315 | 194.5 | 289.6 | 307.2 | 215.8 | 161 | 1,222.20 | 973.6 | 701.3 |
Less: Net income attributable to noncontrolling interest | 7.8 | 4.5 | 3.6 | 3.5 | 2.5 | -0.8 | 2.7 | 1.4 | 19.4 | 5.8 | -2.3 |
Net income attributable to Ecolab | 335.5 | 364.9 | 311.4 | 191 | 287.1 | 308 | 213.1 | 159.6 | 1,202.80 | 967.8 | 703.6 |
Earnings attributable to Ecolab per common share | |||||||||||
Basic (in dollars per share) | $1.12 | $1.22 | $1.04 | $0.64 | $0.95 | $1.02 | $0.71 | $0.54 | $4.01 | $3.23 | $2.41 |
Diluted (in dollars per share) | $1.10 | $1.19 | $1.02 | $0.62 | $0.93 | $1 | $0.69 | $0.53 | $3.93 | $3.16 | $2.35 |
Weighted-average common shares outstanding | |||||||||||
Basic (in shares) | 300.1 | 300 | 299.6 | 300.6 | 301.2 | 301.2 | 301.5 | 295.4 | 300.1 | 299.9 | 292.5 |
Diluted (in shares) | 305.6 | 305.7 | 305.2 | 306.5 | 307.5 | 307.2 | 307.4 | 300.9 | 305.9 | 305.9 | 298.9 |
Cost of sales, special charges | 6.4 | 0.8 | 1.1 | 6 | 19.7 | 6.3 | 15.2 | 2 | |||
Interest expense, special charges | 0.3 | 2.2 | |||||||||
Net income (loss) attributable to noncontrolling interest, special charges | $0.50 |