Document and Entity Information
Document and Entity Information | 3 Months Ended |
Mar. 31, 2017shares | |
Document and Entity Information | |
Entity Registrant Name | ECOLAB INC. |
Entity Central Index Key | 31,462 |
Document Type | 10-Q |
Document Period End Date | Mar. 31, 2017 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Entity Current Reporting Status | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 290,045,399 |
Document Fiscal Year Focus | 2,017 |
Document Fiscal Period Focus | Q1 |
CONSOLIDATED STATEMENT OF INCOM
CONSOLIDATED STATEMENT OF INCOME - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
CONSOLIDATED STATEMENT OF INCOME | ||
Net sales | $ 3,161.6 | $ 3,097.4 |
Cost of sales (including special charges of $1.5 in 2017) | 1,691.5 | 1,631.4 |
Selling, general and administrative expenses | 1,090.6 | 1,088.2 |
Special (gains) and charges | 6.2 | 6.3 |
Operating income | 373.3 | 371.5 |
Interest expense, net | 62.5 | 66.1 |
Income before income taxes | 310.8 | 305.4 |
Provision for income taxes | 54 | 73.4 |
Net income including noncontrolling interest | 256.8 | 232 |
Net income attributable to noncontrolling interest (including special charges (a)) | 3.3 | 1.2 |
Net income attributable to Ecolab | $ 253.5 | $ 230.8 |
Earnings attributable to Ecolab per common share | ||
Basic (in dollars per share) | $ 0.87 | $ 0.78 |
Diluted (in dollars per share) | 0.86 | 0.77 |
Dividends declared per common share (in dollars per share) | $ 0.370 | $ 0.350 |
Weighted-average common shares outstanding | ||
Basic (in shares) | 290.6 | 294.4 |
Diluted (in shares) | 295 | 298.3 |
CONSOLIDATED STATEMENT OF INCO3
CONSOLIDATED STATEMENT OF INCOME (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Special charges | $ 6.2 | $ 6.3 |
Cost of sales | ||
Special charges | $ 1.5 |
CONSOLIDATED STATEMENT OF COMPR
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | ||
Net income including noncontrolling interest | $ 256.8 | $ 232 |
Foreign currency translation adjustments | ||
Foreign currency translation | 81.2 | (96.3) |
Gain (loss) on net investment hedges | 2.8 | (15) |
Total foreign currency translation adjustments | 84 | (111.3) |
Derivatives and hedging instruments | (9.2) | (10.5) |
Pension and postretirement benefits | ||
Amortization of net actuarial loss and prior service cost included in net periodic pension and postretirement costs | 3.3 | 5.6 |
Total pension and postretirement benefits | 3.3 | 5.6 |
Subtotal | 78.1 | (116.2) |
Total comprehensive income, including noncontrolling interest | 334.9 | 115.8 |
Comprehensive income attributable to noncontrolling interest | 4.5 | 4.6 |
Comprehensive income attributable to Ecolab | $ 330.4 | $ 111.2 |
CONSOLIDATED BALANCE SHEET
CONSOLIDATED BALANCE SHEET - USD ($) $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 |
Current assets | ||
Cash and cash equivalents | $ 212.1 | $ 327.4 |
Accounts receivable, net | 2,358 | 2,341.2 |
Inventories | 1,428.3 | 1,319.4 |
Other current assets | 308.9 | 291.4 |
Total current assets | 4,307.3 | 4,279.4 |
Property, plant and equipment, net | 3,424.9 | 3,365 |
Goodwill | 6,947.8 | 6,383 |
Other intangible assets, net | 4,086 | 3,817.8 |
Other assets | 457 | 485 |
Total assets | 19,223 | 18,330.2 |
Current liabilities | ||
Short-term debt | 1,699.4 | 541.3 |
Accounts payable | 1,039.3 | 983.2 |
Compensation and benefits | 463.4 | 516.3 |
Income taxes | 95.2 | 87.4 |
Other current liabilities | 908 | 891.2 |
Total current liabilities | 4,205.3 | 3,019.4 |
Long-term debt | 5,841.6 | 6,145.7 |
Postretirement health care and pension benefits | 1,014.4 | 1,019.2 |
Deferred income taxes | 1,076.2 | 970.2 |
Other liabilities | 207 | 204.8 |
Total liabilities | 12,344.5 | 11,359.3 |
Equity | ||
Common stock | 353.5 | 352.6 |
Additional paid-in capital | 5,284.3 | 5,270.8 |
Retained earnings | 7,123.1 | 6,975 |
Accumulated other comprehensive loss | (1,636.1) | (1,712.9) |
Treasury stock | (4,315.4) | (3,984.4) |
Total Ecolab shareholders' equity | 6,809.4 | 6,901.1 |
Noncontrolling interest | 69.1 | 69.8 |
Total equity | 6,878.5 | 6,970.9 |
Total liabilities and equity | $ 19,223 | $ 18,330.2 |
CONSOLIDATED BALANCE SHEET (Par
CONSOLIDATED BALANCE SHEET (Parenthetical) - $ / shares shares in Millions | Mar. 31, 2017 | Dec. 31, 2016 |
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 | 290 | 291.8 |
CONSOLIDATED STATEMENT OF CASH
CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
OPERATING ACTIVITIES | ||
Net income including noncontrolling interest | $ 256.8 | $ 232 |
Adjustments to reconcile net income to cash provided by operating activities: | ||
Depreciation | 142.2 | 139.6 |
Amortization | 73.8 | 72.6 |
Deferred income taxes | 3.2 | 41.1 |
Share-based compensation expense | 30.9 | 29.1 |
Excess tax benefits from share-based payment arrangements | (6.7) | |
Pension and postretirement plan contributions | (23) | (24) |
Pension and postretirement plan expense | 8.8 | 14.2 |
Restructuring charges, net of cash paid | (6.2) | (13.7) |
Other, net | 4.7 | 7.5 |
Changes in operating assets and liabilities, net of effect of acquisitions: | ||
Accounts receivable | 76.3 | 113.3 |
Inventories | (67.5) | (1.2) |
Other assets | (13.7) | (5.4) |
Accounts payable | 12.9 | (58.2) |
Other liabilities | (73.5) | (67.7) |
Cash provided by operating activities | 425.7 | 472.5 |
INVESTING ACTIVITIES | ||
Capital expenditures | (152) | (140.1) |
Capitalized software expenditures | (15.5) | (8.6) |
Property and other assets sold | 0.5 | 7.3 |
Acquisitions and investments in affiliates, net of cash acquired | (826.6) | (9.5) |
Deposit into acquisition related escrow | (1.7) | |
Restricted cash activity | 53.8 | |
Cash used for investing activities | (941.5) | (150.9) |
FINANCING ACTIVITIES | ||
Net issuances (repayments) of commercial paper and notes payable | 858.8 | (329.6) |
Long-term debt borrowings | 794.1 | |
Long-term debt repayments | (0.4) | (125.7) |
Reacquired shares | (374.5) | (389.9) |
Dividends paid | (113.2) | (108) |
Exercise of employee stock options | 25.7 | 9.3 |
Excess tax benefits from share-based payment arrangements | 6.7 | |
Acquisition related liabilities and contingent consideration | (2.3) | |
Other, net | (0.9) | |
Cash provided by (used for) financing activities | 395.5 | (145.4) |
Effect of exchange rate changes on cash and cash equivalents | 5 | (0.5) |
Increase (decrease) in cash and cash equivalents | (115.3) | 175.7 |
Cash and cash equivalents, beginning of period | 327.4 | 92.8 |
Cash and cash equivalents, end of period | $ 212.1 | $ 268.5 |
CONSOLIDATED FINANCIAL INFORMAT
CONSOLIDATED FINANCIAL INFORMATION | 3 Months Ended |
Mar. 31, 2017 | |
CONSOLIDATED FINANCIAL INFORMATION | |
CONSOLIDATED FINANCIAL INFORMATION | CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 1. CONSOLIDATED FINANCIAL INFORMATION The unaudited consolidated financial information for the first quarter ended March 31, 2017 and 2016 reflect, in the opinion of company management, all adjustments necessary for a fair presentation of the financial position, results of operations, comprehensive income (loss) and cash flows of Ecolab Inc. ("Ecolab" or "the Company") for the interim periods presented. Any adjustments consist of normal recurring items. The financial results for any interim period are not necessarily indicative of results for the full year. The consolidated balance sheet data as of December 31, 2016 was derived from the audited consolidated financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. The unaudited consolidated financial information should be read in conjunction with the consolidated financial statements and notes thereto incorporated in the Company's Annual Report on Form 10-K for the year ended December 31, 2016. During the first quarter of 2017, the Company adopted the accounting guidance issued in March 2016 that amends certain aspects of share-based compensation for employees, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classifications on the Consolidated Statement of Cash Flows. Under the new guidance, all excess tax benefits or deficiencies are to be recognized prospectively as discrete income tax items on the Consolidated Statement of Income, while previous guidance required realized excess tax benefits or deficiencies to be recognized in additional paid-in capital. The Company recorded $16.0 million of tax benefits associated with excess tax benefits during the first quarter of 2017. The extent of excess tax benefits is subject to variation in stock price and stock option exercises. Adoption of the accounting standard also eliminated the requirement that excess tax benefits be realized before they can be recognized, and as a result, the Company recorded a $1.9 million cumulative-effect adjustment for previously unrecognized excess tax benefits. The Company’s adoption also resulted in associated excess tax benefits being classified as operating activity in the statement of cash flows prospectively beginning January 1, 2017 with no changes to the prior year. Based on the adoption methodology applied, employee taxes paid remain classified as a financing activity on the statement of cash flows, and the statement of cash flows classification of prior periods has not changed. With regards to forfeitures, the new guidance allows companies either to continue to estimate the number of awards that will be forfeited or to account for forfeitures as they occur. The Company has elected to continue to estimate the number of awards that will be forfeited based on an estimate of the number of outstanding awards expected to vest. With respect to the unaudited financial information of the Company for the first quarter ended March 31, 2017 and 2016 included in this Form 10-Q, PricewaterhouseCoopers LLP reported that they have applied limited procedures in accordance with professional standards for a review of such information. Their separate report dated May 4, 2017 appearing herein states that they did not audit and they do not express an opinion on that unaudited financial information. Accordingly, the degree of reliance on their report on such information should be restricted in light of the limited nature of the review procedures applied. PricewaterhouseCoopers LLP is not subject to the liability provisions of Section 11 of the Securities Act of 1933, as amended (the "Act"), for their report on the unaudited financial information because that report is not a "report" or a "part" of a registration statement prepared or certified by PricewaterhouseCoopers LLP within the meaning of Sections 7 and 11 of the Act. |
SPECIAL (GAINS) AND CHARGES
SPECIAL (GAINS) AND CHARGES | 3 Months Ended |
Mar. 31, 2017 | |
SPECIAL (GAINS) AND CHARGES | |
SPECIAL (GAINS) AND CHARGES | 2. SPECIAL (GAINS) AND CHARGES Special (gains) and charges reported on the Consolidated Statement of Income include the following: First Quarter Ended March 31 (millions) 2017 2016 Cost of sales Inventory fair value step-up $ 1.5 $ - Special (gains) and charges Restructuring activities (0.3) 3.0 Acquisition and integration costs 6.3 2.3 Other 0.2 1.0 Subtotal 6.2 6.3 Total special (gains) and charges $ 7.7 $ 6.3 For segment reporting purposes, special (gains) and charges are not allocated to reportable segments, which is consistent with the Company’s internal management reporting. Inventory fair value step-up The recognition of fair value step-up in Laboratoires Anios (“Anios”) inventory, which is maintained on a FIFO basis, of $1.5 million ($1.1 million after tax) is recorded in cost of sales on the Consolidated Statement of Income. Further information related to the Anios acquisition is included in Note 3. Restructuring activities The Company’s restructuring activities are associated with plans to enhance its efficiency and effectiveness and sharpen its competitiveness. 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 when the actions are probable and the amounts are estimable, which typically is when management approves the actions. Contract termination costs include charges to terminate leases prior to the end of their respective terms and other contract terminations. Asset write-downs and disposals include leasehold improvement write-downs, other asset write-downs associated with combining operations and disposal of assets. Restructuring activities have been included as a component of special (gains) and charges on the Consolidated Statement of Income. Restructuring liabilities have been classified as a component of both other current and other noncurrent liabilities on the Consolidated Balance Sheet. During the first quarter of 2017, restructuring gains and charges were minimal. During the first quarter of 2016, net restructuring charges were $3.0 million ($1.7 million after tax). The restructuring liability balance was $33.6 million and $39.6 million as of March 31, 2017 and December 31, 2016, respectively. The reduction in liability was driven primarily by severance and other cash payments. The remaining accrual is expected to be paid over a period of a few months to several quarters and continues to be funded from operating activities. Acquisition and integration related costs The Company’s acquisition and integration costs include $6.3 million ($4.2 million after tax) and $2.3 million ($1.4 million after tax) of acquisition costs, advisory and legal fees, and integration charges for the Anios and Swisher Hygiene Inc. (“Swisher”) acquisitions during the first quarter of 2017 and 2016, respectively. Further information related to the Company’s acquisitions is included in Note 3. |
ACQUISITIONS AND DISPOSITIONS
ACQUISITIONS AND DISPOSITIONS | 3 Months Ended |
Mar. 31, 2017 | |
ACQUISITIONS AND DISPOSITIONS | |
ACQUISITIONS AND DISPOSITIONS | 3. ACQUISITIONS AND DISPOSITIONS Acquisitions The Company makes acquisitions that align with 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 included in the Consolidated Balance Sheet and results of the Company from the date of acquisition. The purchase price allocation is based on estimates of the fair value of assets acquired and liabilities assumed. The aggregate purchase price of acquisitions has been reduced for any cash or cash equivalents acquired with the acquisition. Acquisitions during the first three months of 2017 and 2016 were not material to the Company’s consolidated financial statements; therefore pro forma financial information is not presented. Anios Acquisition On February 1, 2017, the Company acquired Anios for total consideration of $798.5 million in cash, including satisfaction of outstanding debt. Anios is a leading European manufacturer and marketer of hygiene and disinfection products for the healthcare, food service, and food and beverage processing industries. Anios provides an innovative product line that expands the solutions the Company is able to offer while also providing a complementary geographic footprint within the healthcare market. With pre-acquisition annual sales of approximately $245 million, the acquired business became part of the Company’s Global Institutional reportable segment during the first quarter of 2017. During 2016, the Company deposited €50 million in an escrow account that was released back to the Company upon closing of the transaction in February 2017. As shown within Note 4, this was recorded as restricted cash within Other Assets on the Consolidated Balance Sheet as of December 31, 2016. The Company incurred certain acquisition and integration costs associated with the transaction that were expensed and are reflected in the Consolidated Statement of Income. A total of $6.0 million ($4.2 million after tax) of charges were incurred during the first quarter of 2017, of which $1.5 million ($1.1 million after tax) were included in cost of sales and are related to recognition of fair value step-up in Anios inventory, which is maintained on a FIFO basis. The Anios 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. Certain estimated values are not yet finalized and are subject to change. Amounts for certain deferred tax assets and liabilities, environmental reserves, certain tangible and intangible assets, income tax uncertainties, and goodwill remain subject to change, as information necessary to complete the analysis is obtained. The Company expects to finalize these by the filing of the 2017 Form 10-K. The following table summarizes the preliminary value of Anios assets acquired and liabilities assumed as of the acquisition date. (millions) Tangible assets $ 142.7 Identifiable intangible assets: Customer relationships 250.9 Trademarks 49.5 Other technology 15.1 Total assets acquired 458.2 Total liabilities assumed 190.1 Goodwill 530.4 Total consideration transferred 798.5 Long-term debt repaid upon close 193.0 Net consideration transferred to sellers $ 605.5 Net tangible assets are primarily comprised of accounts receivable of $66.2 million, property, plant and equipment of $25.6 million and inventory of $29.7 million. The customer relationships, trademarks, and other technology are being amortized over weighted average lives of 18, 11, and 12 years, respectively. Goodwill of $530.4 million arising from the acquisition consists largely of the synergies and economies of scale expected through adding complementary geographies and innovative products to the Company’s healthcare portfolio. All of the goodwill was assigned to the Healthcare operating segment within the Global Institutional reportable segment. None of the goodwill recognized is expected to be deductible for income tax purposes. Other Acquisitions During the first quarter of 2017, the Company paid $28 million for acquisitions, of which $18 million was attributed to certain identifiable intangible assets. The weighted average useful life of these identifiable intangible assets acquired was 12 years. Additionally, there were immaterial purchase price adjustments related to prior year acquisitions. During the first quarter of 2016, the Company paid $12 million for acquisitions, of which $2.5 million was attributed to certain identifiable intangible assets. The weighted average useful life of these identifiable intangible assets acquired was 5 years. Additionally, there were immaterial purchase price adjustments related to prior year acquisitions. Dispositions There were no business dispositions during the first quarter of 2017 or 2016. |
BALANCE SHEET INFORMATION
BALANCE SHEET INFORMATION | 3 Months Ended |
Mar. 31, 2017 | |
BALANCE SHEET INFORMATION | |
BALANCE SHEET INFORMATION | 4. BALANCE SHEET INFORMATION March 31 December 31 (millions) 2017 2016 Accounts receivable, net Accounts receivable $ 2,428.7 $ 2,408.8 Allowance for doubtful accounts (70.7) (67.6) Total $ 2,358.0 $ 2,341.2 Inventories Finished goods $ 956.6 $ 860.0 Raw materials and parts 425.4 408.4 Inventories at FIFO cost 1,382.0 1,268.4 FIFO cost to LIFO cost difference 46.3 51.0 Total $ 1,428.3 $ 1,319.4 Other current assets Prepaid assets $ 124.3 $ 98.3 Taxes receivable 98.8 105.0 Derivative assets 37.2 46.3 Other 48.6 41.8 Total $ 308.9 $ 291.4 Property, plant and equipment, net Land $ 215.1 $ 211.0 Buildings and leasehold improvements 1,133.5 1,121.2 Machinery and equipment 2,112.5 2,035.8 Merchandising and customer equipment 2,256.6 2,199.4 Capitalized software 554.9 531.1 Construction in progress 347.0 344.1 6,619.6 6,442.6 Accumulated depreciation (3,194.7) (3,077.6) Total $ 3,424.9 $ 3,365.0 Other intangible assets, net Intangible assets not subject to amortization Trade names $ 1,230.0 $ 1,230.0 Intangible assets subject to amortization Customer relationships $ 3,483.1 $ 3,206.1 Trademarks 353.8 303.3 Patents 450.8 446.5 Other technology 225.8 210.5 4,513.5 4,166.4 Accumulated amortization Customer relationships (1,208.3) (1,148.2) Trademarks (131.0) (125.2) Patents (164.5) (157.3) Other technology (153.7) (147.9) (1,657.5) (1,578.6) Net intangible assets subject to amortization 2,856.0 2,587.8 Total $ 4,086.0 $ 3,817.8 Other assets Deferred income taxes $ 102.5 $ 92.3 Pension 29.4 27.2 Derivative assets 36.6 21.5 Restricted cash - 53.0 Other 288.5 291.0 Total $ 457.0 $ 485.0 March 31 December 31 (millions) 2017 2016 Other current liabilities Discounts and rebates $ 294.3 $ 275.2 Dividends payable 107.3 108.0 Interest payable 73.1 37.3 Taxes payable, other than income 94.5 103.7 Derivative liabilities 25.7 24.6 Restructuring 27.8 30.5 Other 285.3 311.9 Total $ 908.0 $ 891.2 Accumulated other comprehensive loss Unrealized gain (loss) on derivative financial instruments, net of tax $ (17.7) $ (8.5) Unrecognized pension and postretirement benefit expense, net of tax (508.2) (511.4) Cumulative translation, net of tax (1,110.2) (1,193.0) Total $ (1,636.1) $ (1,712.9) |
DEBT AND INTEREST
DEBT AND INTEREST | 3 Months Ended |
Mar. 31, 2017 | |
DEBT AND INTEREST | |
DEBT AND INTEREST | 5. DEBT AND INTEREST Short-term Debt The following table provides the components of the Company’s short-term debt obligations as of March 31, 2017 and December 31, 2016. March 31 December 31 (millions) 2017 2016 Short-term debt Commercial paper $ 874.6 $ - Notes payable 15.5 29.9 Long-term debt, current maturities 809.3 511.4 Total $ 1,699.4 $ 541.3 Line of Credit As of March 31, 2017, the Company had in place a $2.0 billion multi-year credit facility which expires in December 2019. The credit facility has been established with a diverse syndicate of banks and supports the Company’s U.S. and Euro commercial paper programs. There were no borrowings under the Company’s credit facility as of either March 31, 2017 or December 31, 2016. Commercial Paper The Company’s commercial paper program is used as a potential source of liquidity and consists of a $2.0 billion U.S. commercial paper program and a $2.0 billion Euro commercial paper program. The maximum aggregate amount of commercial paper that may be issued by the Company under its U.S. commercial paper program and its Euro commercial paper program may not exceed $2.0 billion. As of the end of the first quarter of 2017, the Company had $662.7 million and $211.9 million (€200 million) of commercial paper outstanding under its U.S. and Euro programs, respectively. As of December 31, 2016, the Company had no commercial paper outstanding under either programs. Long-term Debt The following table provides the components of the Company’s long-term debt obligations, including current maturities, as of March 31, 2017 and December 31, 2016. Maturity March 31 December 31 (millions) by Year 2017 2016 Long-term debt Public notes (2017 principal amount) Five year 2012 senior notes ($500 million) 2017 $ 498.7 $ 498.9 Three year 2015 senior notes ($300 million) 2018 298.8 298.9 Three year 2016 senior notes ($400 million) 2019 395.6 395.9 Five year 2015 senior notes ($300 million) 2020 298.7 298.6 Ten year 2011 senior notes ($1.25 billion) 2021 1,245.0 1,244.8 Seven year 2016 senior notes ($400 million) 2023 397.2 397.0 Seven year 2016 senior notes (€575 million) 2024 600.7 608.4 Ten year 2015 senior notes (€575 million) 2025 603.9 604.3 Ten year 2016 senior notes ($750 million) 2026 742.3 742.1 Thirty year 2011 senior notes ($750 million) 2041 738.8 738.7 Thirty year 2016 senior notes ($250 million) 2046 245.9 245.9 Private notes (2017 principal amount) Series A private placement senior notes ($250 million) 2018 248.5 248.9 Series B private placement senior notes ($250 million) 2023 249.2 249.2 Capital lease obligations 5.2 5.2 Other 82.4 80.3 Total debt 6,650.9 6,657.1 Long-term debt, current maturities (809.3) (511.4) Total long-term debt $ 5,841.6 $ 6,145.7 Public Notes The Company’s 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 would 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 The Company’s 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 would 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 would 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 agreement as amended. Covenants The Company is in compliance with its debt covenants as of March 31, 2017. Net Interest Expense Interest expense and interest income recognized during the first quarter of 2017 and 2016 were as follows: First Quarter Ended March 31 (millions) 2017 2016 Interest expense $ 66.6 $ 68.9 Interest income (4.1) (2.8) Interest expense, net $ 62.5 $ 66.1 |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2017 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
GOODWILL AND OTHER INTANGIBLE ASSETS | 6. GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in a business combination. The Company’s reporting units are its operating segments. The Company tests goodwill for impairment on an annual basis during the second quarter. 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 first quarter of 2017 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 changes in the carrying amount of goodwill for each of the Company's reportable segments during the three months ended March 31, 2017 were as follows: Global Global Global (millions) Industrial Institutional Energy Other Total December 31, 2016 $ 2,522.3 $ 653.4 $ 3,093.6 $ 113.7 $ 6,383.0 Reclassifications (a) 62.7 (62.7) - - - December 31, 2016 revised $ 2,585.0 $ 590.7 $ 3,093.6 $ 113.7 $ 6,383.0 Current year business combinations (b) 4.2 530.4 - - 534.6 Prior year business combinations (c) - - 0.3 - 0.3 Effect of foreign currency translation 11.2 4.8 13.4 0.5 29.9 March 31, 2017 $ 2,600.4 $ 1,125.9 $ 3,107.3 $ 114.2 $ 6,947.8 (a) Relates to establishment of the Life Sciences reporting unit, and goodwill being allocated to Life Sciences based on fair value allocation of goodwill. The Life Sciences reporting unit is included in the Industrial reportable segment and is comprised of operations previously recorded in the Food & Beverage and Healthcare reporting units, which are aggregated and reported in the Global Industrial and Global Institutional reportable segments, respectively. See Note 14 for further information. (b) Represents goodwill associated with current year acquisitions. Of the goodwill acquired, the Company expects $4.2 of the goodwill related to businesses acquired to be tax deductible. (c) Represents purchase price allocation adjustments for 2016 acquisitions deemed preliminary as of December 31, 2016. Other Intangible Assets The Nalco trade name is the Company’s principal indefinite life intangible asset, which is tested for impairment on an annual basis during the second quarter. Based on the ongoing performance of the Company’s reporting units associated with the trade name, updating the impairment testing during the first quarter of 2017 was not deemed necessary. There has been no impairment of the Nalco trade name intangible asset since it was acquired. The Company’s 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. Total amortization expense related to other intangible assets during the first quarter ended March 31, 2017 and 2016 was $73.8 million and $72.6 million, respectively. Estimated amortization of intangible assets for the remaining nine month period of 2017 related to other amortizable intangible assets is expected to be approximately $233 million. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2017 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | 7. FAIR VALUE MEASUREMENTS The Company’s financial instruments include cash and cash equivalents, restricted cash, accounts receivable, accounts payable, commercial paper, notes payable, foreign currency forward contracts, interest rate swap agreements and long-term debt. Fair value is defined as 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 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: 2017 March 31, (millions) Carrying Fair Value Measurements Amount Level 1 Level 2 Level 3 Assets Foreign currency forward contracts 91.3 - 91.3 - Liabilities Foreign currency forward contracts 38.0 - 38.0 - Interest rate swap agreements 5.2 - 5.2 - 2016 December 31, (millions) Carrying Fair Value Measurements Amount Level 1 Level 2 Level 3 Assets Foreign currency forward contracts 93.4 - 93.4 - Liabilities Foreign currency forward contracts 46.7 - 46.7 - Interest rate swap agreements 3.5 - - 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. For purposes of fair value disclosure above, derivative values are presented gross. See further discussion of gross versus net presentation of the Company's derivatives within Note 8. The carrying values of accounts receivable, accounts payable, cash and cash equivalents, restricted cash, 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 classified as level 2. The carrying amount and the estimated fair value of long-term debt, including current maturities, held by the Company were: March 31 December 31 (millions) 2017 2016 Carrying Fair Carrying Fair Amount Value Amount Value Long-term debt, including current maturities $ 6,650.9 $ 7,007.1 $ 6,657.1 $ 6,963.9 |
DERIVATIVES AND HEDGING TRANSAC
DERIVATIVES AND HEDGING TRANSACTIONS | 3 Months Ended |
Mar. 31, 2017 | |
DERIVATIVES AND HEDGING TRANSACTIONS | |
DERIVATIVES AND HEDGING TRANSACTIONS | 8. DERIVATIVES AND HEDGING TRANSACTIONS The Company uses foreign currency forward contracts, interest rate swap agreements 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 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 global 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. Derivative Positions Summary Certain of 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 and as of the applicable dates presented in the following table no cash collateral had been received or pledged related to the underlying derivatives. The respective net amounts are included in other current assets, other non-current assets and other current liabilities on the Consolidated Balance Sheet. The following table summarizes the gross fair value and the net value of the Company’s outstanding derivatives. Asset Derivatives Liability Derivatives March 31 December 31 March 31 December 31 (millions) 2017 2016 2017 2016 Derivatives designated as hedging instruments Foreign currency forward contracts $ 66.6 $ 73.4 $ 20.3 $ 19.8 Interest rate swap agreements - - 5.2 3.5 Derivatives not designated as hedging instruments Foreign currency forward contracts 24.7 20.0 17.7 26.9 Gross value of derivatives 91.3 93.4 43.2 50.2 Gross amounts offset in the Consolidated Balance Sheet (17.5) (25.7) (17.5) (25.7) Net value of derivatives $ 73.8 $ 67.7 $ 25.7 $ 24.5 The following table summarizes the notional values of the Company’s outstanding derivatives. Notional Values March 31 December 31 (millions) 2017 2016 Foreign currency forward contracts $ 5,261 $ 4,317 Interest rate agreements $ 1,450 $ 1,450 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, management fee and other 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. Cash flow hedged transactions impacting AOCI are forecasted to occur within the next two years. The Company occasionally enters into treasury lock and forward starting interest rate swap agreements to manage interest rate exposure. During 2016, 2015, and 2014 the Company entered into and subsequently closed a series of treasury lock and forward starting interest rate swap agreements, in conjunction with its public debt issuances. The agreements were designated and effective as cash flow hedges of the expected interest payments related to the anticipated future debt issuances. Amounts recorded in AOCI are recognized as part of interest expense over the remaining life of the notes as the forecasted interest transactions occur. The effective portion of gains and losses recognized into AOCI and earnings from derivative contracts that qualified as cash flow hedges was as follows: First Quarter Ended March 31 (millions) 2017 2016 Unrealized gain (loss) recognized into AOCI Foreign currency forward contracts AOCI (equity) $ (15.4) $ (3.7) Interest rate swap agreements AOCI (equity) - (8.3) Total (15.4) (12.0) Gain (loss) recognized in income Foreign currency forward contracts Cost of sales (2.5) 12.7 SG&A 0.6 (10.6) Interest expense, net 1.4 1.5 Subtotal (0.5) 3.6 Interest rate swap agreements Interest expense, net (1.8) (1.6) Total $ (2.3) $ 2.0 Gains and losses recognized in income related to the ineffective portion of the Company’s cash flow hedges were insignificant during the first three months of 2017 and 2016. 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 January 2016, the Company entered into an interest rate swap agreement that converted its $400 million 2.00% debt from a fixed interest rate to a floating interest rate. In January 2015, the Company entered into interest rate swap agreements that converted its $300 million 1.55% debt and its $250 million 3.69% debt from fixed interest rates to floating interest rates. 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 interest rate. The interest rate swaps referenced above were designated as fair value hedges. The impact on earnings from derivative contracts that qualified as fair value hedges was as follows: First Quarter Ended March 31 (millions) 2017 2016 Gain (loss) on derivative recognized income Interest rate swap Interest expense, net $ (1.7) $ 10.7 Gain (loss) on hedged item recognized income Interest rate swap Interest expense, net $ 1.7 $ (10.7) Net Investment Hedges The Company designates its outstanding €1,150 million (total of $1,218 million at the end of the first quarter of 2017) senior notes (“euronotes”) and €200 million ($212 million at the end of the first quarter of 2017) Euro commercial paper and related accrued interest as hedges of existing foreign currency exposures related to investments the Company has in certain euro denominated functional currency subsidiaries. The revaluation gains and losses on the euronotes and Euro commercial paper, 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 and were as follows: First Quarter Ended March 31 (millions) 2017 2016 Revaluation gains (losses), net of tax $ 2.8 $ (15.0) 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: First Quarter Ended March 31 (millions) 2017 2016 Gain (loss) recognized in income Foreign currency forward contracts SG&A $ 7.0 $ (32.6) Interest expense, net 0.1 (0.5) Total $ 7.1 $ (33.1) 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. |
OTHER COMPREHENSIVE INCOME INFO
OTHER COMPREHENSIVE INCOME INFORMATION | 3 Months Ended |
Mar. 31, 2017 | |
OTHER COMPREHENSIVE INCOME INFORMATION | |
OTHER COMPREHENSIVE INCOME INFORMATION | 9. OTHER COMPREHENSIVE INCOME INFORMATION Other 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 tables provide other comprehensive income 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 13 for additional information related to the Company’s pension and postretirement benefits activity. First Quarter Ended March 31 (millions) 2017 2016 Derivative and Hedging Instruments Unrealized gains (losses) on derivative & hedging instruments Amount recognized in AOCI $ (15.4) $ (12.0) (Gains) losses reclassified from AOCI into income Cost of sales 2.5 (12.7) SG&A (0.6) 10.6 Interest expense, net 0.4 0.1 2.3 (2.0) Other activity 0.1 0.8 Tax impact 3.8 2.7 Net of tax $ (9.2) $ (10.5) Pension and Postretirement Benefits Amount reclassified from AOCI into income Actuarial losses 11.0 10.9 Prior service costs (6.1) (2.0) 4.9 8.9 Tax impact (1.6) (3.3) Net of tax $ 3.3 $ 5.6 The following table summarizes the derivative and pension and postretirement benefit amounts reclassified from AOCI into income. First Quarter Ended March 31 2017 2016 (millions) Derivative losses (gains) reclassified from AOCI into income, net of tax $ 1.6 $ (1.8) Pension and postretirement benefits net actuarial losses and prior services costs reclassified from AOCI into income, net of tax $ 3.3 $ 5.6 |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 3 Months Ended |
Mar. 31, 2017 | |
SHAREHOLDERS' EQUITY | |
SHAREHOLDERS' EQUITY | 10. SHAREHOLDERS’ EQUITY Share Repurchase Authorization In February 2015, the Company’s Board of Directors authorized the repurchase of up to 20 million shares of its common stock, including shares to be repurchased under Rule 10b5–1. As of March 31, 2017, 14,222,229 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. Accelerated Stock Repurchase (“ASR”) Agreements In February 2017, the Company entered into an ASR agreement to repurchase $300 million of its common stock for the period through the second quarter of 2017 and received 2,077,224 shares of its common stock, which was approximately 85% of the total number of shares the Company expected to be repurchased under the ASR, based on the price of the Company’s common stock at that time. The final per share purchase price and the total number of shares to be repurchased under the February 2017 ASR agreement generally will be based on the volume-weighted average price of the Company’s common stock during the term of the agreement. Upon final settlement of the February 2017 ASR agreement, under certain circumstances, the financial institution will be obligated to deliver additional shares to the Company or the Company will be obligated to deliver additional shares of common stock or make a cash payment, at the Company’s election, to the financial institution. In February 2016, the Company entered into an ASR agreement to repurchase $300 million of its common stock and received 2,459,490 shares of its common stock, which was approximately 85% of the total number of shares the Company expected to be repurchased under the ASR, based on the price of the Company’s common stock at that time. Upon final settlement of the ASR agreement in May 2016, the Company received an additional 232,012 shares of common stock. All shares acquired under the ASR agreements were recorded as treasury stock. During their respective open periods in 2017 and 2016, neither of the ASRs was dilutive to the Company’s earnings per share calculations, nor did they trigger the two-class earnings per share methodology. Additionally, the unsettled portion of ASRs during their respective open periods met the criteria to be accounted for as a forward contract indexed to the Company’s stock and qualified as equity transactions. The initial delivery of shares, as well as the additional receipt of shares at settlement resulted in a reduction to the Company’s common stock outstanding used to calculate earnings per share, the impact of which was not material. Share Repurchases During the first three months of 2017, the Company reacquired 2,698,082 shares of its common stock, of which 2,550,297 related to share repurchases through open market or private purchases, including the February 2017 ASR discussed above, and 147,785 related to shares withheld for taxes on the exercise of stock options and the vesting of stock awards and units. During all of 2016, the Company reacquired 6,403,198 shares of its common stock, of which 6,126,033 related to share repurchases through open market or private purchases, including the February 2016 ASR discussed above, and 357,165 related to shares withheld for taxes on the exercise of stock options and the vesting of stock awards and units. |
EARNINGS ATTRIBUTABLE TO ECOLAB
EARNINGS ATTRIBUTABLE TO ECOLAB PER COMMON SHARE ("EPS") | 3 Months Ended |
Mar. 31, 2017 | |
EARNINGS ATTRIBUTABLE TO ECOLAB PER COMMON SHARE ("EPS") | |
EARNINGS ATTRIBUTABLE TO ECOLAB PER COMMON SHARE ("EPS") | 11. EARNINGS ATTRIBUTABLE TO ECOLAB PER COMMON SHARE (“EPS”) The difference in the weighted average common shares outstanding for calculating basic and diluted EPS is a result of the dilution associated with the Company’s equity compensation plans. As noted in the table below, certain stock options and units outstanding under these equity compensation plans were not included in the computation of diluted EPS because they would not have had a dilutive effect. The computations of the basic and diluted EPS amounts were as follows: First Quarter Ended March 31 (millions, except per share) 2017 2016 Net income attributable to Ecolab $ 253.5 $ 230.8 Weighted-average common shares outstanding Basic 290.6 294.4 Effect of dilutive stock options and units 4.4 3.9 Diluted 295.0 298.3 Basic EPS $ 0.87 $ 0.78 Diluted EPS $ 0.86 $ 0.77 Anti-dilutive securities excluded from the computation of EPS 3.6 3.6 The Company’s diluted EPS for the first quarter of 2017 was impacted by the adoption of the new accounting guidance issued in March 2016 that amends the calculation of diluted EPS for share-based payments to exclude excess tax benefits or deficiencies from assumed proceeds during application of the treasury stock method. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2017 | |
INCOME TAXES | |
INCOME TAXES | 12. INCOME TAXES The Company’s tax rate was 17.4% and 24.0% for the first quarter of 2017 and 2016, respectively. The change in the Company’s tax rate for the first quarter 2017 compared to first quarter of 2016 was primarily driven by the recognition of $16.0 million of excess tax benefits beginning in 2017, related to employee share-based payments (resulting from the adoption of a new accounting standard as discussed in Note 1) and, to a lesser extent, global tax planning strategies. The Company recognized net benefits related to discrete tax items of $22.8 million and $4.8 million during the first quarter of 2017 and 2016, respectively. First quarter 2017 net benefits related to discrete tax items were driven primarily by the $16.0 million of share-based compensation excess tax benefits noted above. The remaining $6.8 million discrete tax benefits were primarily related to the release of reserves for uncertain tax positions due to the expiration of statute of limitations in non-U.S. jurisdictions. First quarter 2016 net benefits related to discrete tax items were driven primarily by the release of reserves for uncertain tax positions due to the expiration of statute of limitations in non-U.S. jurisdictions. |
PENSION AND POSTRETIREMENT PLAN
PENSION AND POSTRETIREMENT PLANS | 3 Months Ended |
Mar. 31, 2017 | |
PENSION AND POSTRETIREMENT PLANS | |
PENSION AND POSTRETIREMENT PLANS | 13. PENSION AND POSTRETIREMENT 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. Various international subsidiaries also have defined benefit pension plans. The Company provides postretirement health care benefits to certain U.S. employees and retirees. The components of net periodic pension and postretirement health care benefit costs for the first quarter ended March 31, 2017 and 2016 are as follows: U.S. International U.S. Postretirement Pension Pension Health Care (millions) 2017 2016 2017 2016 2017 2016 Service cost $ 17.5 $ 16.8 $ 7.5 $ 6.9 $ 0.7 $ 0.8 Interest cost on benefit obligation 20.9 20.4 6.9 8.0 1.5 2.0 Expected return on plan assets (37.4) (35.9) (13.6) (13.5) (0.1) (0.2) Recognition of net actuarial (gain) loss 7.2 7.7 4.4 3.6 (0.6) (0.4) Amortization of prior service cost (benefit) (1.7) (1.7) (0.2) (0.2) (4.2) (0.1) Total expense $ 6.5 $ 7.3 $ 5.0 $ 4.8 $ (2.7) $ 2.1 As of March 31, 2017, the Company is in compliance with all funding requirements of its U.S. pension and postretirement health care plans. During the first quarter of 2017, the Company made payments of $2 million to its U.S. non-contributory non-qualified defined benefit plans and estimates that it will make payments of approximately an additional $5 million to such plans during the remainder of 2017. The Company contributed $17 million to its international pension benefit plans during the first three months of 2017. The Company estimates that it will contribute approximately an additional $25 million to such plans during the remainder of 2017. During the first three months of 2017, the Company made payments of $4 million to its U.S. postretirement health care benefit plans and estimates that it will make payments of approximately an additional $12 million to such plans during the remainder of 2017. The Company’s U.S. postretirement health care costs decreased in the first quarter 2017 relative to the costs incurred in the comparable period of the prior year, as a result of moving the U.S. postretirement healthcare plans to a Retiree Exchange approach for post-65 retiree medical coverage beginning in 2018 and the merger of Nalco U.S. postretirement health care plan with the Ecolab U.S. postretirement plan. |
OPERATING SEGMENTS
OPERATING SEGMENTS | 3 Months Ended |
Mar. 31, 2017 | |
OPERATING SEGMENTS | |
OPERATING SEGMENTS | 14. OPERATING SEGMENTS The Company’s organizational structure consists of global business unit and global regional leadership teams. The Company’s 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 segment level. The Company’s operating segments that share similar economic characteristics and future prospects, nature of the products and production processes, end-use markets, channels of distribution and regulatory environment have been aggregated into three reportable segments: Global Industrial, Global Institutional and Global Energy. The Company’s operating segments that do not meet the quantitative criteria to be separately reported have been combined into the Other segment. The Company provides similar information for the Other segment as the Company considers the information regarding its underlying operating segments as useful in understanding its consolidated results. Comparability of Reportable Segments The Company evaluates the performance of its non-U.S. dollar functional currency international operations based on fixed currency exchange rates, which eliminate the impact of exchange rate fluctuations on its international operations. Fixed currency amounts are updated annually at the beginning of each year based on translation into U.S. dollars at foreign currency exchange rates established by management, with all periods presented using such rates. Fixed currency rates are generally based on existing market rates at the time they are established. The “Fixed Currency Rate Change” column shown in the following table reflects the impact on previously reported values related to fixed currency exchange rates established by management at the beginning of 2017. Effective in the first quarter of 2017, the Company established the Life Sciences operating segment, to align with the strategy for growth in the pharmaceutical and personal care manufacturing operations, Life Sciences is comprised of operations previously recorded in the Food & Beverage and Healthcare operating segments and has been aggregated into the Global Industrial reportable segment. The Company also made immaterial changes to its reportable segments, including the movement of certain customers and cost allocations between reportable segments. These changes are presented in "Segment Change" column of the table below. The impact of the preceding changes on previously reported full year 2016 reportable segment net sales and operating income is summarized as follows: December 31, 2016 Fixed Values at Currency Segment Values at (millions) 2016 Rates Rate Change Change 2017 Rates Net Sales Global Industrial $ 4,617.1 $ 6.9 $ 63.2 $ 4,687.2 Global Institutional 4,495.6 7.7 (63.2) 4,440.1 Global Energy 3,035.8 40.0 - 3,075.8 Other 806.5 (4.8) - 801.7 Subtotal at fixed currency rates 12,955.0 49.8 - 13,004.8 Effect of foreign currency translation 197.8 (49.8) - 148.0 Consolidated reported GAAP net sales $ 13,152.8 $ - $ - $ 13,152.8 Operating Income Global Industrial $ 703.0 $ (0.9) $ 17.9 $ 720.0 Global Institutional 966.7 3.0 (19.2) 950.5 Global Energy 337.1 7.9 1.7 346.7 Other 148.1 (2.5) (0.4) 145.2 Corporate (272.1) (0.5) - (272.6) Subtotal at fixed currency rates 1,882.8 7.0 - 1,889.8 Effect of foreign currency translation 32.2 (7.0) - 25.2 Consolidated reported GAAP operating income $ 1,915.0 $ - $ - $ 1,915.0 Reportable Segment Information Financial information for each of the Company’s reportable segments, including the impact of all preceding segment structure changes, is as follows: First Quarter Ended March 31 (millions) 2017 2016 Net Sales Global Industrial $ 1,128.6 $ 1,095.5 Global Institutional 1,078.1 1,037.4 Global Energy 757.0 771.6 Other 196.8 186.7 Subtotal at fixed currency rates 3,160.5 3,091.2 Effect of foreign currency translation 1.1 6.2 Consolidated reported GAAP net sales $ 3,161.6 $ 3,097.4 Operating Income Global Industrial $ 127.0 $ 131.5 Global Institutional 192.1 192.7 Global Energy 73.0 62.6 Other 29.9 29.6 Corporate (49.4) (48.1) Subtotal at fixed currency rates 372.6 368.3 Effect of foreign currency translation 0.7 3.2 Consolidated reported GAAP operating income $ 373.3 $ 371.5 The profitability of the Company’s operating segments is evaluated by management based on operating income. The Company has no intersegment revenues. Consistent with the Company’s internal management reporting, Corporate amounts in the table above include amortization specifically from the Nalco merger and special (gains) and charges, as discussed in Note 2, that are not allocated to the Company’s reportable segments. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2017 | |
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 also has contractual obligations related to lease commitments. Insurance Globally, the Company has insurance policies with varying deductible levels 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 40 locations, excluding recently acquired Anios locations that are currently under review. The majority of these locations are in the U.S. 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 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. 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. 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”). Nalco Company was named, along with other unaffiliated defendants, in six putative class action complaints related to the Deepwater Horizon oil spill and 21 complaints filed by individuals. Those complaints were consolidated in MDL 2179. The complaints generally allege, among other things, strict liability and negligence relating to the use of our Corexit dispersant in connection with the Deepwater Horizon oil spill. 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 remained pending against other defendants, the Court’s decision was 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. 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 Company and its related entities. 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 May 2016, Nalco was named in nine additional complaints filed by individuals alleging, among other things, business and economic loss resulting from the Deepwater Horizon oil spill. In April 2017, Nalco was named in two additional complaints filed by individuals seeking, among other things, business and economic loss resulting from 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. These actions have been consolidated in the MDL and the Company expects they will be dismissed pursuant to the Court’s November 28, 2012 order granting Nalco’s motion for summary judgment. On February 22, 2017, the Court dismissed the “B3” Master Complaint and ordered that Plaintiffs who had previously filed a claim that fell within the scope of the “B3” Master Complaint and who had “opted out” of and not released their claims under the Medical Benefits Class Action Settlement either: (1) complete a sworn statement indicating, among other things, that they opted out of the Medical Benefits Class Action Settlement (to be completed by Plaintiffs who previously filed an individual complaint); or (2) file an individual lawsuit attaching the sworn statement as an exhibit, by a deadline date set by the Court. The Court will then determine which “B3” Plaintiffs are entitled to pursue their claims and the procedures for addressing those claims. 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 . |
NEW ACCOUNTING PRONOUNCEMENTS
NEW ACCOUNTING PRONOUNCEMENTS | 3 Months Ended |
Mar. 31, 2017 | |
NEW ACCOUNTING PRONOUNCEMENTS | |
NEW ACCOUNTING PRONOUNCEMENTS | 16. NEW ACCOUNTING PRONOUNCEMENTS Required Date of Date of Effect on the Standard Issuance Description Adoption Financial Statements Standards that are not yet adopted: ASU 2017-08 - Receivables - Nonrefundable Fees and Other Costs (Topic 310): Premium Amortization on Purchased Callable Debt Securities March 2017 The ASU amendment shortens the amortization period for certain callable debt securities held at a premium to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. January 1, 2019 The Company is currently evaluating the impact of adoption. ASU 2017-07 - Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and the Net Periodic Postretirement Benefit Cost March 2017 Amends the requirements related to income statement presentation of the components of net periodic benefit costs. New requirements include (1) disaggregate the current-service-cost component from the other components of net benefit cost (the “other components") and present it with other current compensation costs for related employees in the income statement and (2) present the other components elsewhere in the income statement and outside of income from operations if such a subtotal is presented. January 1, 2018 Upon adoption of the standard, the Company will record only the service cost component with compensation cost in Cost of Sales and Selling, General, and Administrative costs. The other components of net period benefit cost will be presented below operating income. The Company will adopt the standard January 1, 2018. The Company is currently evaluating the impact of adoption. ASU 2017-05 - Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Topic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets February 2017 Clarifies the scope of guidance on nonfinancial asset derecognition (ASC 610-20) including the accounting for partial sales of nonfinancial assets. The ASU defines "in-substance nonfinancial asset". Also clarifies the decrecognition of all businesses should be accounted for in accordance with derecognition and deconsolidation guidance in 810-10. January 1, 2018 The Company is currently evaluating the impact of adoption. ASU 2017-04 - Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment January 2017 Simplifies subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. January 1, 2020 The ASU must be applied on a prospective basis upon adoption. The Company is currently evaluating the impact of adoption. ASU 2017-01--Business Combinations (Topic 805): Clarifying the Definition of a Business January 2017 Clarifies the definition of a business and provides guidance on whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. January 1, 2018 The Company is currently evaluating the impact of adoption. ASU 2016-18 - Statement of Cash Flows (Topic 230): Restricted Cash November 2016 Clarifies guidance on the classification and presentation of restricted cash in the statement of cash flows. January 1, 2018 Presentation impact only related to restricted cash. The Company does not expect the updated guidance to have a significant impact on future financial statements. ASU 2016-16 - Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory October 2016 Simplifies the guidance on the accounting for the income tax consequences of intra-entity transfers of assets other than inventory (e.g. intellectual property). January 1, 2018 The Company is currently evaluating the impact of adoption. ASU 2016-15 - Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments August 2016 The guidance's objective is to reduce diversity in practice of how certain cash receipts and cash payments are presented and classified in the statement of cash flow. January 1, 2018 Presentation impact only related to eight specific cash flow items. The Company is currently evaluating the impact of adoption. ASU 2016-13 - Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments June 2016 Addresses the recognition, measurement, presentation and disclosure of credit losses on trade and reinsurance receivables, loans, debt securities, net investments in leases, off-balance-sheet credit exposures and certain other instruments. Amends guidance on reporting credit losses from an incurred model to an expected model for assets held at amortized cost, such as accounts receivable, loans and held-to-maturity debt securities. Additional disclosures will also be required. January 1, 2020 Adoption of the standard will change how the allowance for trade and other receivables is calculated. The Company is currently evaluating the impact of adoption. ASU 2016-02 - Leases (Topic 842) February 2016 Introduces the recognition of lease assets and lease liabilities by lessors for those leases classified as operating leases under previous guidance. January 1, 2019 See additional information regarding the impact of this guidance on the Company's financials at the bottom of this table in note (a). Revenue Recognition ASUs: Various 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, 2018 See additional information regarding the impact of this guidance on the Company's financials at the bottom of this table in note (b). (a) As part of implementing the new standard, the Company is in process of reviewing current accounting policies and assessing the practical expedients allowed under the new accounting guidance. The Company expects that most of its operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon adoption and is currently evaluating other impacts on the consolidated financial statements. The standard requires a modified retrospective transition to be applied at the beginning of the earliest comparative period presented in the year of adoption. (b) The Company’s approach to implementing the new standard includes performing a detailed review of key contracts representative of its different businesses, and comparing historical accounting policies and practices to the new standard. The Company is focusing on the identification and evaluation of performance obligations within certain contracts, as well as the classification of certain costs associated with the identified performance obligations. The Company anticipates certain costs currently classified in Selling, General, and Administrative expenses will be reclassified as Cost of Sales as they are tied to satisfaction of a performance obligation. In addition to expanded disclosures associated with the new standard, the Company is continuing to assess the impact on the consolidated financial statements. The guidance permits two methods of adoption, retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). The Company currently anticipates utilizing the full retrospective method of adoption on January 1, 2018, which is dependent upon the completion of our analysis of information necessary to restate prior period financial statements. Date of Date of Effect on the Standard Issuance Description Adoption Financial Statements Standards that were adopted: ASU 2015-11 - Inventory (Topic 330): Simplifying the Measurement of Inventory July 2015 The amendment requires entities to measure inventory under the FIFO or average cost methods at the lower of cost or net realizable value. January 1, 2017 The adoption of the guidance did not have a material impact on the Company's financial statements. ASU 2016-01 - Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities January 2016 The amendment revises accounting related to the classification and measurement of investments in equity securities and the presentation of certain fair value changes for financial liabilities measured at fair value. The ASU also amends certain disclosure requirements associated with the fair value of financial instruments. January 1, 2017 The adoption of the guidance did not have a material impact on the Company's financial statements. ASU 2016-05 - Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships March 2016 The amendment clarifies language related to hedge accounting criteria that a change in the counterparty is not in and of itself considered a termination of the derivative or critical term of the hedging relationship. January 1, 2017 The adoption of the guidance did not have a material impact on the Company's financial statements. ASU 2016-07 - Investments - Equity Method and Joint Ventures: Simplifying the Transition to the Equity Method of Accounting March 2016 Simplifies the transition to equity method accounting for entities that have an investment that becomes qualified for the equity method of accounting as a result of an increase in the level of ownership interest or degree of influence. January 1, 2017 The adoption of the guidance did not have a material impact on the Company's financial statements. ASU 2016-09 - Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting March 2016 The amendment includes provisions intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements. January 1, 2017 The Company included appropriate disclosures within the first quarter 2017 10-Q to adhere to this new ASU. ASU 2017-03 - Accounting Changes and Error Corrections (Topic 250) and Investments-Equity Method and Joint Ventures (Topic 323) January 2017 Amends the disclosure requirements associated with certain recently issued Accounting Standards and how they will have an impact on the Financial Statements of a registrant when such standards are adopted in a future period. It applies to ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606); ASU No. 2016-02, Leases (Topic 842); and ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and any subsequent amendments to these ASU's. Effective Immediately The Company included appropriate disclosure requirements within the first quarter 2017 10-Q to adhere to this new ASU. |
SPECIAL (GAINS) AND CHARGES (Ta
SPECIAL (GAINS) AND CHARGES (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
SPECIAL (GAINS) AND CHARGES | |
Special (gains) and charges | First Quarter Ended March 31 (millions) 2017 2016 Cost of sales Inventory fair value step-up $ 1.5 $ - Special (gains) and charges Restructuring activities (0.3) 3.0 Acquisition and integration costs 6.3 2.3 Other 0.2 1.0 Subtotal 6.2 6.3 Total special (gains) and charges $ 7.7 $ 6.3 |
ACQUISITIONS AND DISPOSITIONS (
ACQUISITIONS AND DISPOSITIONS (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Anios | |
Business acquisitions | |
Schedule of assets acquired and liabilities assumed | (millions) Tangible assets $ 142.7 Identifiable intangible assets: Customer relationships 250.9 Trademarks 49.5 Other technology 15.1 Total assets acquired 458.2 Total liabilities assumed 190.1 Goodwill 530.4 Total consideration transferred 798.5 Long-term debt repaid upon close 193.0 Net consideration transferred to sellers $ 605.5 |
BALANCE SHEET INFORMATION (Tabl
BALANCE SHEET INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
BALANCE SHEET INFORMATION | |
Balance Sheet Information | March 31 December 31 (millions) 2017 2016 Accounts receivable, net Accounts receivable $ 2,428.7 $ 2,408.8 Allowance for doubtful accounts (70.7) (67.6) Total $ 2,358.0 $ 2,341.2 Inventories Finished goods $ 956.6 $ 860.0 Raw materials and parts 425.4 408.4 Inventories at FIFO cost 1,382.0 1,268.4 FIFO cost to LIFO cost difference 46.3 51.0 Total $ 1,428.3 $ 1,319.4 Other current assets Prepaid assets $ 124.3 $ 98.3 Taxes receivable 98.8 105.0 Derivative assets 37.2 46.3 Other 48.6 41.8 Total $ 308.9 $ 291.4 Property, plant and equipment, net Land $ 215.1 $ 211.0 Buildings and leasehold improvements 1,133.5 1,121.2 Machinery and equipment 2,112.5 2,035.8 Merchandising and customer equipment 2,256.6 2,199.4 Capitalized software 554.9 531.1 Construction in progress 347.0 344.1 6,619.6 6,442.6 Accumulated depreciation (3,194.7) (3,077.6) Total $ 3,424.9 $ 3,365.0 Other intangible assets, net Intangible assets not subject to amortization Trade names $ 1,230.0 $ 1,230.0 Intangible assets subject to amortization Customer relationships $ 3,483.1 $ 3,206.1 Trademarks 353.8 303.3 Patents 450.8 446.5 Other technology 225.8 210.5 4,513.5 4,166.4 Accumulated amortization Customer relationships (1,208.3) (1,148.2) Trademarks (131.0) (125.2) Patents (164.5) (157.3) Other technology (153.7) (147.9) (1,657.5) (1,578.6) Net intangible assets subject to amortization 2,856.0 2,587.8 Total $ 4,086.0 $ 3,817.8 Other assets Deferred income taxes $ 102.5 $ 92.3 Pension 29.4 27.2 Derivative assets 36.6 21.5 Restricted cash - 53.0 Other 288.5 291.0 Total $ 457.0 $ 485.0 March 31 December 31 (millions) 2017 2016 Other current liabilities Discounts and rebates $ 294.3 $ 275.2 Dividends payable 107.3 108.0 Interest payable 73.1 37.3 Taxes payable, other than income 94.5 103.7 Derivative liabilities 25.7 24.6 Restructuring 27.8 30.5 Other 285.3 311.9 Total $ 908.0 $ 891.2 Accumulated other comprehensive loss Unrealized gain (loss) on derivative financial instruments, net of tax $ (17.7) $ (8.5) Unrecognized pension and postretirement benefit expense, net of tax (508.2) (511.4) Cumulative translation, net of tax (1,110.2) (1,193.0) Total $ (1,636.1) $ (1,712.9) |
DEBT AND INTEREST (Tables)
DEBT AND INTEREST (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
DEBT AND INTEREST | |
Schedule of short-term debt obligations | March 31 December 31 (millions) 2017 2016 Short-term debt Commercial paper $ 874.6 $ - Notes payable 15.5 29.9 Long-term debt, current maturities 809.3 511.4 Total $ 1,699.4 $ 541.3 |
Schedule of long-term debt obligations including current maturities | Maturity March 31 December 31 (millions) by Year 2017 2016 Long-term debt Public notes (2017 principal amount) Five year 2012 senior notes ($500 million) 2017 $ 498.7 $ 498.9 Three year 2015 senior notes ($300 million) 2018 298.8 298.9 Three year 2016 senior notes ($400 million) 2019 395.6 395.9 Five year 2015 senior notes ($300 million) 2020 298.7 298.6 Ten year 2011 senior notes ($1.25 billion) 2021 1,245.0 1,244.8 Seven year 2016 senior notes ($400 million) 2023 397.2 397.0 Seven year 2016 senior notes (€575 million) 2024 600.7 608.4 Ten year 2015 senior notes (€575 million) 2025 603.9 604.3 Ten year 2016 senior notes ($750 million) 2026 742.3 742.1 Thirty year 2011 senior notes ($750 million) 2041 738.8 738.7 Thirty year 2016 senior notes ($250 million) 2046 245.9 245.9 Private notes (2017 principal amount) Series A private placement senior notes ($250 million) 2018 248.5 248.9 Series B private placement senior notes ($250 million) 2023 249.2 249.2 Capital lease obligations 5.2 5.2 Other 82.4 80.3 Total debt 6,650.9 6,657.1 Long-term debt, current maturities (809.3) (511.4) Total long-term debt $ 5,841.6 $ 6,145.7 |
Schedule of interest expense and interest income | First Quarter Ended March 31 (millions) 2017 2016 Interest expense $ 66.6 $ 68.9 Interest income (4.1) (2.8) Interest expense, net $ 62.5 $ 66.1 |
GOODWILL AND OTHER INTANGIBLE28
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
Changes in the carrying amount of goodwill | Global Global Global (millions) Industrial Institutional Energy Other Total December 31, 2016 $ 2,522.3 $ 653.4 $ 3,093.6 $ 113.7 $ 6,383.0 Reclassifications (a) 62.7 (62.7) - - - December 31, 2016 revised $ 2,585.0 $ 590.7 $ 3,093.6 $ 113.7 $ 6,383.0 Current year business combinations (b) 4.2 530.4 - - 534.6 Prior year business combinations (c) - - 0.3 - 0.3 Effect of foreign currency translation 11.2 4.8 13.4 0.5 29.9 March 31, 2017 $ 2,600.4 $ 1,125.9 $ 3,107.3 $ 114.2 $ 6,947.8 (a) Relates to establishment of the Life Sciences reporting unit, and goodwill being allocated to Life Sciences based on fair value allocation of goodwill. The Life Sciences reporting unit is included in the Industrial reportable segment and is comprised of operations previously recorded in the Food & Beverage and Healthcare reporting units, which are aggregated and reported in the Global Industrial and Global Institutional reportable segments, respectively. See Note 14 for further information. (b) Represents goodwill associated with current year acquisitions. Of the goodwill acquired, the Company expects $4.2 of the goodwill related to businesses acquired to be tax deductible. (c) Represents purchase price allocation adjustments for 2016 acquisitions deemed preliminary as of December 31, 2016. |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
FAIR VALUE MEASUREMENTS | |
Schedule of the carrying amount and estimated fair value of assets and liabilities measured on recurring basis | 2017 March 31, (millions) Carrying Fair Value Measurements Amount Level 1 Level 2 Level 3 Assets Foreign currency forward contracts 91.3 - 91.3 - Liabilities Foreign currency forward contracts 38.0 - 38.0 - Interest rate swap agreements 5.2 - 5.2 - 2016 December 31, (millions) Carrying Fair Value Measurements Amount Level 1 Level 2 Level 3 Assets Foreign currency forward contracts 93.4 - 93.4 - Liabilities Foreign currency forward contracts 46.7 - 46.7 - Interest rate swap agreements 3.5 - - |
Schedule of carrying amount and estimated fair value of long-term debt | March 31 December 31 (millions) 2017 2016 Carrying Fair Carrying Fair Amount Value Amount Value Long-term debt, including current maturities $ 6,650.9 $ 7,007.1 $ 6,657.1 $ 6,963.9 |
DERIVATIVES AND HEDGING TRANS30
DERIVATIVES AND HEDGING TRANSACTIONS (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
DERIVATIVES AND HEDGING TRANSACTIONS | |
Gross fair value of the company's outstanding derivative assets and liabilities | Asset Derivatives Liability Derivatives March 31 December 31 March 31 December 31 (millions) 2017 2016 2017 2016 Derivatives designated as hedging instruments Foreign currency forward contracts $ 66.6 $ 73.4 $ 20.3 $ 19.8 Interest rate swap agreements - - 5.2 3.5 Derivatives not designated as hedging instruments Foreign currency forward contracts 24.7 20.0 17.7 26.9 Gross value of derivatives 91.3 93.4 43.2 50.2 Gross amounts offset in the Consolidated Balance Sheet (17.5) (25.7) (17.5) (25.7) Net value of derivatives $ 73.8 $ 67.7 $ 25.7 $ 24.5 |
Summary of notional values of outstanding derivatives | Notional Values March 31 December 31 (millions) 2017 2016 Foreign currency forward contracts $ 5,261 $ 4,317 Interest rate agreements $ 1,450 $ 1,450 |
Impact on AOCI and earnings from derivative contracts qualified as cash flow hedges | First Quarter Ended March 31 (millions) 2017 2016 Unrealized gain (loss) recognized into AOCI Foreign currency forward contracts AOCI (equity) $ (15.4) $ (3.7) Interest rate swap agreements AOCI (equity) - (8.3) Total (15.4) (12.0) Gain (loss) recognized in income Foreign currency forward contracts Cost of sales (2.5) 12.7 SG&A 0.6 (10.6) Interest expense, net 1.4 1.5 Subtotal (0.5) 3.6 Interest rate swap agreements Interest expense, net (1.8) (1.6) Total $ (2.3) $ 2.0 |
Impact on earnings from derivative contracts that qualified as fair value hedges | First Quarter Ended March 31 (millions) 2017 2016 Gain (loss) on derivative recognized income Interest rate swap Interest expense, net $ (1.7) $ 10.7 Gain (loss) on hedged item recognized income Interest rate swap Interest expense, net $ 1.7 $ (10.7) |
Revaluation gains and losses on euronotes and forward contracts | First Quarter Ended March 31 (millions) 2017 2016 Revaluation gains (losses), net of tax $ 2.8 $ (15.0) |
Impact on earnings from derivative contracts not designated as hedging instruments | First Quarter Ended March 31 (millions) 2017 2016 Gain (loss) recognized in income Foreign currency forward contracts SG&A $ 7.0 $ (32.6) Interest expense, net 0.1 (0.5) Total $ 7.1 $ (33.1) |
OTHER COMPREHENSIVE INCOME IN31
OTHER COMPREHENSIVE INCOME INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
OTHER COMPREHENSIVE INCOME INFORMATION | |
Schedule of other comprehensive income information related to the Company's derivatives and hedging instruments and pension and postretirement benefits | First Quarter Ended March 31 (millions) 2017 2016 Derivative and Hedging Instruments Unrealized gains (losses) on derivative & hedging instruments Amount recognized in AOCI $ (15.4) $ (12.0) (Gains) losses reclassified from AOCI into income Cost of sales 2.5 (12.7) SG&A (0.6) 10.6 Interest expense, net 0.4 0.1 2.3 (2.0) Other activity 0.1 0.8 Tax impact 3.8 2.7 Net of tax $ (9.2) $ (10.5) Pension and Postretirement Benefits Amount reclassified from AOCI into income Actuarial losses 11.0 10.9 Prior service costs (6.1) (2.0) 4.9 8.9 Tax impact (1.6) (3.3) Net of tax $ 3.3 $ 5.6 |
Summary of the net of tax derivative and pension and postretirement benefit amounts reclassified from AOCI into income | First Quarter Ended March 31 2017 2016 (millions) Derivative losses (gains) reclassified from AOCI into income, net of tax $ 1.6 $ (1.8) Pension and postretirement benefits net actuarial losses and prior services costs reclassified from AOCI into income, net of tax $ 3.3 $ 5.6 |
EARNINGS ATTRIBUTABLE TO ECOL32
EARNINGS ATTRIBUTABLE TO ECOLAB PER COMMON SHARE ("EPS") (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
EARNINGS ATTRIBUTABLE TO ECOLAB PER COMMON SHARE ("EPS") | |
Computations of the basic and diluted EPS | First Quarter Ended March 31 (millions, except per share) 2017 2016 Net income attributable to Ecolab $ 253.5 $ 230.8 Weighted-average common shares outstanding Basic 290.6 294.4 Effect of dilutive stock options and units 4.4 3.9 Diluted 295.0 298.3 Basic EPS $ 0.87 $ 0.78 Diluted EPS $ 0.86 $ 0.77 Anti-dilutive securities excluded from the computation of EPS 3.6 3.6 |
PENSION AND POSTRETIREMENT PL33
PENSION AND POSTRETIREMENT PLANS (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
PENSION AND POSTRETIREMENT PLANS | |
Net periodic pension and postretirement health care benefit costs | U.S. International U.S. Postretirement Pension Pension Health Care (millions) 2017 2016 2017 2016 2017 2016 Service cost $ 17.5 $ 16.8 $ 7.5 $ 6.9 $ 0.7 $ 0.8 Interest cost on benefit obligation 20.9 20.4 6.9 8.0 1.5 2.0 Expected return on plan assets (37.4) (35.9) (13.6) (13.5) (0.1) (0.2) Recognition of net actuarial (gain) loss 7.2 7.7 4.4 3.6 (0.6) (0.4) Amortization of prior service cost (benefit) (1.7) (1.7) (0.2) (0.2) (4.2) (0.1) Total expense $ 6.5 $ 7.3 $ 5.0 $ 4.8 $ (2.7) $ 2.1 |
OPERATING SEGMENTS (Tables)
OPERATING SEGMENTS (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
OPERATING SEGMENTS | |
Schedule of financial information for each of the entity's reportable segments | First Quarter Ended March 31 (millions) 2017 2016 Net Sales Global Industrial $ 1,128.6 $ 1,095.5 Global Institutional 1,078.1 1,037.4 Global Energy 757.0 771.6 Other 196.8 186.7 Subtotal at fixed currency rates 3,160.5 3,091.2 Effect of foreign currency translation 1.1 6.2 Consolidated reported GAAP net sales $ 3,161.6 $ 3,097.4 Operating Income Global Industrial $ 127.0 $ 131.5 Global Institutional 192.1 192.7 Global Energy 73.0 62.6 Other 29.9 29.6 Corporate (49.4) (48.1) Subtotal at fixed currency rates 372.6 368.3 Effect of foreign currency translation 0.7 3.2 Consolidated reported GAAP operating income $ 373.3 $ 371.5 |
Schedule of financial information for each of the entity's reportable segments, including the impact of the preceding changes on previously reported full year 2016 net sales and oeprating income | December 31, 2016 Fixed Values at Currency Segment Values at (millions) 2016 Rates Rate Change Change 2017 Rates Net Sales Global Industrial $ 4,617.1 $ 6.9 $ 63.2 $ 4,687.2 Global Institutional 4,495.6 7.7 (63.2) 4,440.1 Global Energy 3,035.8 40.0 - 3,075.8 Other 806.5 (4.8) - 801.7 Subtotal at fixed currency rates 12,955.0 49.8 - 13,004.8 Effect of foreign currency translation 197.8 (49.8) - 148.0 Consolidated reported GAAP net sales $ 13,152.8 $ - $ - $ 13,152.8 Operating Income Global Industrial $ 703.0 $ (0.9) $ 17.9 $ 720.0 Global Institutional 966.7 3.0 (19.2) 950.5 Global Energy 337.1 7.9 1.7 346.7 Other 148.1 (2.5) (0.4) 145.2 Corporate (272.1) (0.5) - (272.6) Subtotal at fixed currency rates 1,882.8 7.0 - 1,889.8 Effect of foreign currency translation 32.2 (7.0) - 25.2 Consolidated reported GAAP operating income $ 1,915.0 $ - $ - $ 1,915.0 |
NEW ACCOUNTING PRONOUNCEMENTS (
NEW ACCOUNTING PRONOUNCEMENTS (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
NEW ACCOUNTING PRONOUNCEMENTS | |
Schedule of new accounting pronouncements | Required Date of Date of Effect on the Standard Issuance Description Adoption Financial Statements Standards that are not yet adopted: ASU 2017-08 - Receivables - Nonrefundable Fees and Other Costs (Topic 310): Premium Amortization on Purchased Callable Debt Securities March 2017 The ASU amendment shortens the amortization period for certain callable debt securities held at a premium to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. January 1, 2019 The Company is currently evaluating the impact of adoption. ASU 2017-07 - Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and the Net Periodic Postretirement Benefit Cost March 2017 Amends the requirements related to income statement presentation of the components of net periodic benefit costs. New requirements include (1) disaggregate the current-service-cost component from the other components of net benefit cost (the “other components") and present it with other current compensation costs for related employees in the income statement and (2) present the other components elsewhere in the income statement and outside of income from operations if such a subtotal is presented. January 1, 2018 Upon adoption of the standard, the Company will record only the service cost component with compensation cost in Cost of Sales and Selling, General, and Administrative costs. The other components of net period benefit cost will be presented below operating income. The Company will adopt the standard January 1, 2018. The Company is currently evaluating the impact of adoption. ASU 2017-05 - Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Topic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets February 2017 Clarifies the scope of guidance on nonfinancial asset derecognition (ASC 610-20) including the accounting for partial sales of nonfinancial assets. The ASU defines "in-substance nonfinancial asset". Also clarifies the decrecognition of all businesses should be accounted for in accordance with derecognition and deconsolidation guidance in 810-10. January 1, 2018 The Company is currently evaluating the impact of adoption. ASU 2017-04 - Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment January 2017 Simplifies subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. January 1, 2020 The ASU must be applied on a prospective basis upon adoption. The Company is currently evaluating the impact of adoption. ASU 2017-01--Business Combinations (Topic 805): Clarifying the Definition of a Business January 2017 Clarifies the definition of a business and provides guidance on whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. January 1, 2018 The Company is currently evaluating the impact of adoption. ASU 2016-18 - Statement of Cash Flows (Topic 230): Restricted Cash November 2016 Clarifies guidance on the classification and presentation of restricted cash in the statement of cash flows. January 1, 2018 Presentation impact only related to restricted cash. The Company does not expect the updated guidance to have a significant impact on future financial statements. ASU 2016-16 - Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory October 2016 Simplifies the guidance on the accounting for the income tax consequences of intra-entity transfers of assets other than inventory (e.g. intellectual property). January 1, 2018 The Company is currently evaluating the impact of adoption. ASU 2016-15 - Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments August 2016 The guidance's objective is to reduce diversity in practice of how certain cash receipts and cash payments are presented and classified in the statement of cash flow. January 1, 2018 Presentation impact only related to eight specific cash flow items. The Company is currently evaluating the impact of adoption. ASU 2016-13 - Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments June 2016 Addresses the recognition, measurement, presentation and disclosure of credit losses on trade and reinsurance receivables, loans, debt securities, net investments in leases, off-balance-sheet credit exposures and certain other instruments. Amends guidance on reporting credit losses from an incurred model to an expected model for assets held at amortized cost, such as accounts receivable, loans and held-to-maturity debt securities. Additional disclosures will also be required. January 1, 2020 Adoption of the standard will change how the allowance for trade and other receivables is calculated. The Company is currently evaluating the impact of adoption. ASU 2016-02 - Leases (Topic 842) February 2016 Introduces the recognition of lease assets and lease liabilities by lessors for those leases classified as operating leases under previous guidance. January 1, 2019 See additional information regarding the impact of this guidance on the Company's financials at the bottom of this table in note (a). Revenue Recognition ASUs: Various 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, 2018 See additional information regarding the impact of this guidance on the Company's financials at the bottom of this table in note (b). (a) As part of implementing the new standard, the Company is in process of reviewing current accounting policies and assessing the practical expedients allowed under the new accounting guidance. The Company expects that most of its operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon adoption and is currently evaluating other impacts on the consolidated financial statements. The standard requires a modified retrospective transition to be applied at the beginning of the earliest comparative period presented in the year of adoption. (b) The Company’s approach to implementing the new standard includes performing a detailed review of key contracts representative of its different businesses, and comparing historical accounting policies and practices to the new standard. The Company is focusing on the identification and evaluation of performance obligations within certain contracts, as well as the classification of certain costs associated with the identified performance obligations. The Company anticipates certain costs currently classified in Selling, General, and Administrative expenses will be reclassified as Cost of Sales as they are tied to satisfaction of a performance obligation. In addition to expanded disclosures associated with the new standard, the Company is continuing to assess the impact on the consolidated financial statements. The guidance permits two methods of adoption, retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). The Company currently anticipates utilizing the full retrospective method of adoption on January 1, 2018, which is dependent upon the completion of our analysis of information necessary to restate prior period financial statements. Date of Date of Effect on the Standard Issuance Description Adoption Financial Statements Standards that were adopted: ASU 2015-11 - Inventory (Topic 330): Simplifying the Measurement of Inventory July 2015 The amendment requires entities to measure inventory under the FIFO or average cost methods at the lower of cost or net realizable value. January 1, 2017 The adoption of the guidance did not have a material impact on the Company's financial statements. ASU 2016-01 - Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities January 2016 The amendment revises accounting related to the classification and measurement of investments in equity securities and the presentation of certain fair value changes for financial liabilities measured at fair value. The ASU also amends certain disclosure requirements associated with the fair value of financial instruments. January 1, 2017 The adoption of the guidance did not have a material impact on the Company's financial statements. ASU 2016-05 - Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships March 2016 The amendment clarifies language related to hedge accounting criteria that a change in the counterparty is not in and of itself considered a termination of the derivative or critical term of the hedging relationship. January 1, 2017 The adoption of the guidance did not have a material impact on the Company's financial statements. ASU 2016-07 - Investments - Equity Method and Joint Ventures: Simplifying the Transition to the Equity Method of Accounting March 2016 Simplifies the transition to equity method accounting for entities that have an investment that becomes qualified for the equity method of accounting as a result of an increase in the level of ownership interest or degree of influence. January 1, 2017 The adoption of the guidance did not have a material impact on the Company's financial statements. ASU 2016-09 - Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting March 2016 The amendment includes provisions intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements. January 1, 2017 The Company included appropriate disclosures within the first quarter 2017 10-Q to adhere to this new ASU. ASU 2017-03 - Accounting Changes and Error Corrections (Topic 250) and Investments-Equity Method and Joint Ventures (Topic 323) January 2017 Amends the disclosure requirements associated with certain recently issued Accounting Standards and how they will have an impact on the Financial Statements of a registrant when such standards are adopted in a future period. It applies to ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606); ASU No. 2016-02, Leases (Topic 842); and ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and any subsequent amendments to these ASU's. Effective Immediately The Company included appropriate disclosure requirements within the first quarter 2017 10-Q to adhere to this new ASU. |
CONSOLIDATED FINANCIAL INFORM36
CONSOLIDATED FINANCIAL INFORMATION (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Recognized discrete tax benefits | $ 22.8 | $ 4.8 |
Accounting Standards Update 2016-09 | ||
Recognized discrete tax benefits | 16 | |
Cumulative effect of new accounting principle in period of adoption | $ 1.9 |
SPECIAL (GAINS) AND CHARGES - C
SPECIAL (GAINS) AND CHARGES - Charges Reported on Statement of Income (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Special (gains) and charges | ||
Acquisition and integration costs | $ 6.3 | $ 2.3 |
Subtotal | 6.2 | 6.3 |
Total special (gains) and charges | 7.7 | 6.3 |
Cost of sales | ||
Special (gains) and charges | ||
Acquisition and integration costs | 1.5 | |
Subtotal | 1.5 | |
Special (gains) and charges | ||
Special (gains) and charges | ||
Restructuring activities | (0.3) | 3 |
Other | 0.2 | 1 |
Subtotal | $ 6.2 | $ 6.3 |
SPECIAL (GAINS) AND CHARGES - R
SPECIAL (GAINS) AND CHARGES - Restructuring Activities, Acquisition and Integration Related Costs (Details) 10Q - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Non-restructuring Special (Gains) and Charges | |||
Acquisition and integration costs | $ 6.3 | $ 2.3 | |
Anios and Swisher | |||
Non-restructuring Special (Gains) and Charges | |||
Acquisition and integration costs | 6.3 | 2.3 | |
Acquisition and integration costs, after tax | 4.2 | 1.4 | |
Other current and noncurrent liabilities | |||
Restructuring | |||
Restructuring liability | 33.6 | $ 39.6 | |
Special (gains) and charges | |||
Restructuring | |||
Restructuring charge incurred, pretax | (0.3) | 3 | |
Restructuring charge incurred, after tax | $ 1.7 | ||
Cost of sales | |||
Non-restructuring Special (Gains) and Charges | |||
Acquisition and integration costs | 1.5 | ||
Cost of sales | Anios | |||
Non-restructuring Special (Gains) and Charges | |||
Acquisition and integration costs | 1.5 | ||
Acquisition and integration costs, after tax | $ 1.1 |
ACQUISITIONS AND DISPOSITIONS -
ACQUISITIONS AND DISPOSITIONS - Acquisition Summary (Details) € in Millions, $ in Millions | Feb. 01, 2017USD ($) | Mar. 31, 2017USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2016EUR (€) | Dec. 31, 2016USD ($) |
Acquisitions and Dispositions | |||||
Increase (decrease) in restricted cash | $ (53.8) | ||||
Acquisition and integration costs | 6.3 | $ 2.3 | |||
Identifiable intangible assets | |||||
Goodwill expected to be tax deductible | 4.2 | ||||
Cost of sales | |||||
Acquisitions and Dispositions | |||||
Acquisition and integration costs | 1.5 | ||||
Anios | |||||
Acquisitions and Dispositions | |||||
Total consideration transferred | $ 798.5 | ||||
Pre-acquisition annual sales | $ 245 | ||||
Increase (decrease) in restricted cash | € | € 50 | ||||
Acquisition and integration costs | 6 | ||||
Acquisition and integration costs, after tax | (4.2) | ||||
Components of the aggregate purchase prices of the completed acquisitions | |||||
Tangible Assets | 142.7 | ||||
Identifiable intangible assets | |||||
Customer relationships | 250.9 | ||||
Trademarks | 49.5 | ||||
Other technology | 15.1 | ||||
Total assets acquired | 458.2 | ||||
Total liabilities assumed | 190.1 | ||||
Goodwill | 530.4 | ||||
Total consideration transferred | 798.5 | ||||
Long-term debt satisfied upon close | 193 | ||||
Net consideration transferred to sellers | 605.5 | ||||
Accounts receivable | 66.2 | ||||
Property, plant and equipment | 25.6 | ||||
Inventory | 29.7 | ||||
Goodwill expected to be tax deductible | $ 0 | ||||
Anios | Cost of sales | |||||
Acquisitions and Dispositions | |||||
Acquisition and integration costs | 1.5 | ||||
Acquisition and integration costs, after tax | (1.1) | ||||
Other Acquisitions | |||||
Acquisitions and Dispositions | |||||
Total consideration transferred | 28 | 12 | |||
Identifiable intangible assets | |||||
Intangible assets | 18 | 2.5 | |||
Total consideration transferred | $ 28 | $ 12 | |||
Weighted average useful lives of identifiable intangible assets acquired | 12 years | 5 years | |||
Customer relationships | Anios | |||||
Identifiable intangible assets | |||||
Weighted average useful lives of identifiable intangible assets acquired | 18 years | ||||
Other technology | Anios | |||||
Identifiable intangible assets | |||||
Weighted average useful lives of identifiable intangible assets acquired | 12 years | ||||
Trademarks | Anios | |||||
Identifiable intangible assets | |||||
Weighted average useful lives of identifiable intangible assets acquired | 11 years |
ACQUISITIONS AND DISPOSITIONS40
ACQUISITIONS AND DISPOSITIONS - Dispositions (Details) - item | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
ACQUISITIONS AND DISPOSITIONS | ||
Number of business dispositions | 0 | 0 |
BALANCE SHEET INFORMATION (Deta
BALANCE SHEET INFORMATION (Details) - USD ($) $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 |
Accounts receivable, net | ||
Accounts receivable | $ 2,428.7 | $ 2,408.8 |
Allowance for doubtful accounts | (70.7) | (67.6) |
Total | 2,358 | 2,341.2 |
Inventories | ||
Finished goods | 956.6 | 860 |
Raw materials and parts | 425.4 | 408.4 |
Inventories at FIFO cost | 1,382 | 1,268.4 |
FIFO cost to LIFO cost difference | 46.3 | 51 |
Total | 1,428.3 | 1,319.4 |
Other current assets | ||
Prepaid assets | 124.3 | 98.3 |
Taxes receivable | 98.8 | 105 |
Derivative assets | 37.2 | 46.3 |
Other current assets | 48.6 | 41.8 |
Total | 308.9 | 291.4 |
Property, plant and equipment, net | ||
Land | 215.1 | 211 |
Buildings and leasehold improvements | 1,133.5 | 1,121.2 |
Machinery and equipment | 2,112.5 | 2,035.8 |
Merchandising and customer equipment | 2,256.6 | 2,199.4 |
Capitalized software | 554.9 | 531.1 |
Construction in progress | 347 | 344.1 |
Property, plant and equipment, gross | 6,619.6 | 6,442.6 |
Accumulated depreciation | (3,194.7) | (3,077.6) |
Total | 3,424.9 | 3,365 |
Intangible assets subject to amortization: | ||
Other intangible assets, gross | 4,513.5 | 4,166.4 |
Accumulated amortization | (1,657.5) | (1,578.6) |
Net intangible assets subject to amortization | 2,856 | 2,587.8 |
Total | 4,086 | 3,817.8 |
Other assets | ||
Deferred income taxes | 102.5 | 92.3 |
Pension | 29.4 | 27.2 |
Derivative assets | 36.6 | 21.5 |
Restricted cash | 53 | |
Other | 288.5 | 291 |
Total | 457 | 485 |
Other current liabilities | ||
Discounts and rebates | 294.3 | 275.2 |
Dividends payable | 107.3 | 108 |
Interest payable | 73.1 | 37.3 |
Taxes payable, other than income | 94.5 | 103.7 |
Derivative liabilities | 25.7 | 24.6 |
Restructuring | 27.8 | 30.5 |
Other | 285.3 | 311.9 |
Total | 908 | 891.2 |
Accumulated other comprehensive loss | ||
Unrealized gain (loss) on derivative financial instruments, net of tax | (17.7) | (8.5) |
Unrecognized pension and postretirement benefit expense, net of tax | (508.2) | (511.4) |
Cumulative translation, net of tax | (1,110.2) | (1,193) |
Total | (1,636.1) | (1,712.9) |
Customer relationships | ||
Intangible assets subject to amortization: | ||
Other intangible assets, gross | 3,483.1 | 3,206.1 |
Accumulated amortization | (1,208.3) | (1,148.2) |
Trademarks | ||
Intangible assets subject to amortization: | ||
Other intangible assets, gross | 353.8 | 303.3 |
Accumulated amortization | (131) | (125.2) |
Patents | ||
Intangible assets subject to amortization: | ||
Other intangible assets, gross | 450.8 | 446.5 |
Accumulated amortization | (164.5) | (157.3) |
Other technology | ||
Intangible assets subject to amortization: | ||
Other intangible assets, gross | 225.8 | 210.5 |
Accumulated amortization | (153.7) | (147.9) |
Trade names | ||
Intangible assets not subject to amortization: | ||
Other intangible assets, gross | $ 1,230 | $ 1,230 |
DEBT AND INTEREST (Details)
DEBT AND INTEREST (Details) € in Millions, $ in Millions | Mar. 31, 2017EUR (€) | Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($) |
Components of the company's debt obligations | |||
Long-term debt, current maturities | $ 809.3 | $ 511.4 | |
Short-term debt including current maturities of long-term debt | 1,699.4 | 541.3 | |
Commercial paper. | |||
Components of the company's debt obligations | |||
Short-term debt | 874.6 | ||
Maximum borrowing capacity, commercial paper | 2,000 | ||
U.S. commercial paper program | |||
Components of the company's debt obligations | |||
Maximum borrowing capacity, commercial paper | 2,000 | ||
Outstanding commercial paper | 662.7 | 0 | |
European commercial paper | |||
Components of the company's debt obligations | |||
Maximum borrowing capacity, commercial paper | 2,000 | ||
Outstanding commercial paper | € 200 | 211.9 | 0 |
Notes payable | |||
Components of the company's debt obligations | |||
Short-term debt | 15.5 | 29.9 | |
Credit facility | |||
Components of the company's debt obligations | |||
Maximum borrowing capacity under the credit agreement | 2,000 | ||
Amount outstanding under the credit agreement | $ 0 | $ 0 |
DEBT AND INTEREST - Other Debt
DEBT AND INTEREST - Other Debt Inforamtion (Details) € in Millions | 3 Months Ended | |||||
Mar. 31, 2017USD ($) | Mar. 31, 2016USD ($) | Mar. 31, 2017EUR (€) | Mar. 31, 2017USD ($) | Dec. 31, 2016EUR (€) | Dec. 31, 2016USD ($) | |
Debt instrument | ||||||
CARRYING VALUE | $ 6,650,900,000 | $ 6,657,100,000 | ||||
Long-term debt, current maturities | (809,300,000) | (511,400,000) | ||||
Long-term debt | 5,841,600,000 | 6,145,700,000 | ||||
Interest | ||||||
Interest expense | $ 66,600,000 | $ 68,900,000 | ||||
Interest income | (4,100,000) | (2,800,000) | ||||
Interest expense, net | 62,500,000 | $ 66,100,000 | ||||
Public Notes | ||||||
Debt instrument | ||||||
Principal outstanding payable at time of prepayment of notes (as a percent) | 101 | |||||
Private Notes | ||||||
Debt instrument | ||||||
Principal outstanding payable at time of prepayment of notes (as a percent) | $ 100 | |||||
Five year 2012 senior notes | ||||||
Debt instrument | ||||||
CARRYING VALUE | 498,700,000 | 498,900,000 | ||||
Aggregate principal amount | 500,000,000 | 500,000,000 | ||||
Debt instrument, term | 5 years | |||||
Three year 2016 senior notes | ||||||
Debt instrument | ||||||
CARRYING VALUE | 395,600,000 | 395,900,000 | ||||
Aggregate principal amount | 400,000,000 | 400,000,000 | ||||
Debt instrument, term | 3 years | |||||
Seven year 2016 Senior Notes | ||||||
Debt instrument | ||||||
CARRYING VALUE | 397,200,000 | 397,000,000 | ||||
Aggregate principal amount | 400,000,000 | 400,000,000 | ||||
Debt instrument, term | 7 years | |||||
Seven year 2016 senior euro notes | ||||||
Debt instrument | ||||||
CARRYING VALUE | 600,700,000 | 608,400,000 | ||||
Aggregate principal amount | € | € 575 | € 575 | ||||
Debt instrument, term | 7 years | |||||
Ten year 2016 senior notes | ||||||
Debt instrument | ||||||
CARRYING VALUE | 742,300,000 | 742,100,000 | ||||
Aggregate principal amount | 750,000,000 | 750,000,000 | ||||
Debt instrument, term | 10 years | |||||
Thirty year 2016 senior notes | ||||||
Debt instrument | ||||||
CARRYING VALUE | 245,900,000 | 245,900,000 | ||||
Aggregate principal amount | 250,000,000 | 250,000,000 | ||||
Debt instrument, term | 30 years | |||||
Three year 2015 senior notes | ||||||
Debt instrument | ||||||
CARRYING VALUE | 298,800,000 | 298,900,000 | ||||
Aggregate principal amount | 300,000,000 | 300,000,000 | ||||
Debt instrument, term | 3 years | |||||
Five year 2015 senior notes | ||||||
Debt instrument | ||||||
CARRYING VALUE | 298,700,000 | 298,600,000 | ||||
Aggregate principal amount | 300,000,000 | 300,000,000 | ||||
Debt instrument, term | 5 years | |||||
Ten Year 2015 senior euro notes | ||||||
Debt instrument | ||||||
CARRYING VALUE | 603,900,000 | 604,300,000 | ||||
Aggregate principal amount | € | € 575 | € 575 | ||||
Debt instrument, term | 10 years | |||||
Series A private placement senior notes due 2018 | ||||||
Debt instrument | ||||||
CARRYING VALUE | 248,500,000 | 248,900,000 | ||||
Aggregate principal amount | 250,000,000 | 250,000,000 | ||||
Series B private placement senior notes due 2023 | ||||||
Debt instrument | ||||||
CARRYING VALUE | 249,200,000 | 249,200,000 | ||||
Aggregate principal amount | 250,000,000 | 250,000,000 | ||||
Ten year 2011 senior notes | ||||||
Debt instrument | ||||||
CARRYING VALUE | 1,245,000,000 | 1,244,800,000 | ||||
Aggregate principal amount | 1,250,000,000 | 1,250,000,000 | ||||
Debt instrument, term | 10 years | |||||
Thirty year 2011 senior notes | ||||||
Debt instrument | ||||||
CARRYING VALUE | 738,800,000 | 738,700,000 | ||||
Aggregate principal amount | 750,000,000 | 750,000,000 | ||||
Debt instrument, term | 30 years | |||||
Capital lease obligations | ||||||
Debt instrument | ||||||
CARRYING VALUE | 5,200,000 | 5,200,000 | ||||
Other | ||||||
Debt instrument | ||||||
CARRYING VALUE | $ 82,400,000 | $ 80,300,000 |
GOODWILL AND OTHER INTANGIBLE44
GOODWILL AND OTHER INTANGIBLE ASSETS (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Changes in the carrying amount of goodwill | |||
Beginning goodwill, net | $ 6,383 | ||
Current year business combinations | 534.6 | ||
Prior year business combinations | 0.3 | ||
Effect of foreign currency translation | (29.9) | ||
Ending goodwill, net | 6,947.8 | $ 6,383 | |
Goodwill expected to be tax deductible | 4.2 | ||
Impairment of goodwill | 0 | ||
Future estimated amortization expense related to amortizable other identifiable intangible assets | |||
Estimated expense remaining for the year | 233 | ||
Total amortization expense related to other intangible assets | 73.8 | $ 72.6 | |
Previously Reported | |||
Changes in the carrying amount of goodwill | |||
Beginning goodwill, net | 6,383 | ||
Ending goodwill, net | 6,383 | ||
Global Industrial | |||
Changes in the carrying amount of goodwill | |||
Beginning goodwill, net | 2,585 | ||
Current year business combinations | 4.2 | ||
Effect of foreign currency translation | (11.2) | ||
Ending goodwill, net | 2,600.4 | 2,585 | |
Global Industrial | Previously Reported | |||
Changes in the carrying amount of goodwill | |||
Beginning goodwill, net | 2,522.3 | ||
Ending goodwill, net | 2,522.3 | ||
Global Industrial | Adjustment. | |||
Changes in the carrying amount of goodwill | |||
Reclassifications | 62.7 | ||
Global Institutional | |||
Changes in the carrying amount of goodwill | |||
Beginning goodwill, net | 590.7 | ||
Current year business combinations | 530.4 | ||
Effect of foreign currency translation | (4.8) | ||
Ending goodwill, net | 1,125.9 | 590.7 | |
Global Institutional | Previously Reported | |||
Changes in the carrying amount of goodwill | |||
Beginning goodwill, net | 653.4 | ||
Ending goodwill, net | 653.4 | ||
Global Institutional | Adjustment. | |||
Changes in the carrying amount of goodwill | |||
Reclassifications | (62.7) | ||
Global Energy | |||
Changes in the carrying amount of goodwill | |||
Beginning goodwill, net | 3,093.6 | ||
Prior year business combinations | 0.3 | ||
Effect of foreign currency translation | (13.4) | ||
Ending goodwill, net | 3,107.3 | 3,093.6 | |
Global Energy | Previously Reported | |||
Changes in the carrying amount of goodwill | |||
Beginning goodwill, net | 3,093.6 | ||
Ending goodwill, net | 3,093.6 | ||
Other | |||
Changes in the carrying amount of goodwill | |||
Beginning goodwill, net | 113.7 | ||
Effect of foreign currency translation | (0.5) | ||
Ending goodwill, net | 114.2 | 113.7 | |
Other | Previously Reported | |||
Changes in the carrying amount of goodwill | |||
Beginning goodwill, net | $ 113.7 | ||
Ending goodwill, net | $ 113.7 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - Recurring - USD ($) $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 |
Carrying Amount | ||
Assets: | ||
Foreign currency forward contracts | $ 91.3 | $ 93.4 |
Liabilities: | ||
Foreign currency forward contracts | 38 | 46.7 |
Interest rate swap contracts | 5.2 | 3.5 |
Level 2 | ||
Assets: | ||
Foreign currency forward contracts | 91.3 | 93.4 |
Liabilities: | ||
Foreign currency forward contracts | 38 | 46.7 |
Interest rate swap contracts | $ 5.2 | $ 3.5 |
FAIR VALUE MEASUREMENTS - Long-
FAIR VALUE MEASUREMENTS - Long-term Debt (Details) - USD ($) $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 |
Carrying Amount | ||
Carrying amount and fair value of financial instruments | ||
Long-term debt (including current maturities) | $ 6,650.9 | $ 6,657.1 |
Fair Value | Level 2 | ||
Carrying amount and fair value of financial instruments | ||
Long-term debt (including current maturities) | $ 7,007.1 | $ 6,963.9 |
DERIVATIVES AND HEDGING TRANS47
DERIVATIVES AND HEDGING TRANSACTIONS - Derivative Positions Summary (Details) - USD ($) $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 |
Asset Derivatives | ||
Gross value of derivatives | $ 91.3 | $ 93.4 |
Gross amounts offset in the Consolidated Balance Sheet | (17.5) | (25.7) |
Net value of derivatives presented in the Consolidated Balance Sheet | 73.8 | 67.7 |
Liability Derivatives | ||
Gross value of derivatives | 43.2 | 50.2 |
Gross amounts offset in the Consolidated Balance Sheet | (17.5) | (25.7) |
Net value of derivatives presented in the Consolidated Balance Sheet | 25.7 | 24.5 |
Foreign currency forward contracts. | ||
Liability Derivatives | ||
Notional values | 5,261 | 4,317 |
Interest rate swaps | ||
Liability Derivatives | ||
Notional values | 1,450 | 1,450 |
Derivatives designated as hedging instruments | Foreign currency forward contracts. | ||
Asset Derivatives | ||
Gross value of derivatives | 66.6 | 73.4 |
Liability Derivatives | ||
Gross value of derivatives | 20.3 | 19.8 |
Derivatives designated as hedging instruments | Interest rate swaps | ||
Liability Derivatives | ||
Gross value of derivatives | 5.2 | 3.5 |
Derivatives not designated as hedging instruments | Foreign currency forward contracts. | ||
Asset Derivatives | ||
Gross value of derivatives | 24.7 | 20 |
Liability Derivatives | ||
Gross value of derivatives | $ 17.7 | $ 26.9 |
DERIVATIVES AND HEDGING TRANS48
DERIVATIVES AND HEDGING TRANSACTIONS - Information by Type of Derivative and Hedging Activities (Details) € in Millions, $ in Millions | 3 Months Ended | ||||||||
Mar. 31, 2017USD ($) | Mar. 31, 2016USD ($) | Mar. 31, 2017EUR (€) | Mar. 31, 2017USD ($) | Dec. 31, 2016EUR (€) | Dec. 31, 2016USD ($) | Jan. 31, 2016USD ($) | Jan. 31, 2015USD ($) | May 31, 2014USD ($) | |
Net Investment Hedge: | |||||||||
Revaluation gain (loss), net of tax | $ 2.8 | $ (15) | |||||||
Derivative Summary | |||||||||
Maximum period for hedged transactions | 2 years | ||||||||
Three year 2016 senior notes | |||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||
Aggregate principal amount | $ 400 | $ 400 | |||||||
Three year 2015 senior notes | |||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||
Aggregate principal amount | 300 | 300 | |||||||
Series A private placement senior notes due 2018 | |||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||
Aggregate principal amount | 250 | 250 | |||||||
Five year 2012 senior notes | |||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||
Aggregate principal amount | 500 | 500 | |||||||
Ten year 2011 senior notes | |||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||
Aggregate principal amount | 1,250 | 1,250 | |||||||
Ten Year 2015 senior euro notes | |||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||
Aggregate principal amount | € | € 575 | € 575 | |||||||
Foreign currency forward contracts. | |||||||||
Net Investment Hedge: | |||||||||
Notional values | 5,261 | 4,317 | |||||||
Interest rate swaps | |||||||||
Net Investment Hedge: | |||||||||
Notional values | 1,450 | $ 1,450 | |||||||
Cash Flow Hedges | Derivatives designated as hedging instruments | |||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||
Unrealized gain (loss) recognized into AOCI (effective portion) | $ (15.4) | (12) | |||||||
Gain (loss) reclassified from AOCI into income (effective portion) | (2.3) | 2 | |||||||
Cash Flow Hedges | Foreign currency forward contracts. | Derivatives designated as hedging instruments | |||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||
Gain (loss) reclassified from AOCI into income (effective portion) | (0.5) | 3.6 | |||||||
Cash Flow Hedges | Foreign currency forward contracts. | Derivatives designated as hedging instruments | AOCI (equity) | |||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||
Unrealized gain (loss) recognized into AOCI (effective portion) | (15.4) | (3.7) | |||||||
Cash Flow Hedges | Foreign currency forward contracts. | Derivatives designated as hedging instruments | Cost of sales | |||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||
Gain (loss) reclassified from AOCI into income (effective portion) | (2.5) | 12.7 | |||||||
Cash Flow Hedges | Foreign currency forward contracts. | Derivatives designated as hedging instruments | Selling, general and administrative expenses | |||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||
Gain (loss) reclassified from AOCI into income (effective portion) | 0.6 | (10.6) | |||||||
Cash Flow Hedges | Foreign currency forward contracts. | Derivatives designated as hedging instruments | Interest expense, net | |||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||
Gain (loss) reclassified from AOCI into income (effective portion) | 1.4 | 1.5 | |||||||
Cash Flow Hedges | Foreign currency forward contracts. | Derivatives not designated as hedging instruments | |||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||
Gain (loss) on derivative recognized in income | 7.1 | (33.1) | |||||||
Cash Flow Hedges | Foreign currency forward contracts. | Derivatives not designated as hedging instruments | Selling, general and administrative expenses | |||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||
Gain (loss) on derivative recognized in income | 7 | (32.6) | |||||||
Cash Flow Hedges | Foreign currency forward contracts. | Derivatives not designated as hedging instruments | Interest expense, net | |||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||
Gain (loss) on derivative recognized in income | 0.1 | (0.5) | |||||||
Cash Flow Hedges | Interest rate swaps | Derivatives designated as hedging instruments | AOCI (equity) | |||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||
Unrealized gain (loss) recognized into AOCI (effective portion) | (8.3) | ||||||||
Cash Flow Hedges | Interest rate swaps | Derivatives designated as hedging instruments | Interest expense, net | |||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||
Gain (loss) reclassified from AOCI into income (effective portion) | (1.8) | (1.6) | |||||||
Fair Value Hedges | Interest rate swaps | Three year 2016 senior notes | |||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||
Aggregate principal amount | $ 400 | ||||||||
Interest rate (as a percent) | 2.00% | ||||||||
Fair Value Hedges | Interest rate swaps | Three year 2015 senior notes | |||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||
Aggregate principal amount | $ 300 | ||||||||
Interest rate (as a percent) | 1.55% | ||||||||
Fair Value Hedges | Interest rate swaps | Series A private placement senior notes due 2018 | |||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||
Aggregate principal amount | $ 250 | ||||||||
Interest rate (as a percent) | 3.69% | ||||||||
Fair Value Hedges | Interest rate swaps | Five year 2012 senior notes | |||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||
Aggregate principal amount | $ 500 | ||||||||
Interest rate (as a percent) | 1.45% | ||||||||
Fair Value Hedges | Interest rate swaps | Interest expense, net | |||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||
Gain (loss) on derivative recognized in income | (1.7) | 10.7 | |||||||
Gain (loss) on hedged item recognized in income | 1.7 | (10.7) | |||||||
Net Investment Hedges | |||||||||
Net Investment Hedge: | |||||||||
Revaluation gain (loss), net of tax | $ 2.8 | $ (15) | |||||||
Net Investment Hedges | European commercial paper | |||||||||
Net Investment Hedge: | |||||||||
Notional values | 200 | 212 | |||||||
Net Investment Hedges | Senior euro notes | |||||||||
Net Investment Hedge: | |||||||||
Notional values | € 1,150 | $ 1,218 |
OTHER COMPREHENSIVE INCOME (LOS
OTHER COMPREHENSIVE INCOME (LOSS) INFORMATION (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Reclassification adjustments | ||
Cost of sales | $ (1,691.5) | $ (1,631.4) |
SG&A | (1,090.6) | (1,088.2) |
Interest expense, net | (62.5) | (66.1) |
Subtotal | 78.1 | (116.2) |
Derivative gains reclassified from AOCI into income, net of tax | 1.6 | (1.8) |
Pension and postretirement net actuarial losses and prior service cost reclassified from AOCI into income, net of tax | 3.3 | 5.6 |
Derivative & Hedging Instruments. | ||
Reclassification adjustments | ||
Amount recognized in AOCI | (15.4) | (12) |
Translation & other insignificant activity | 0.1 | 0.8 |
Tax impact | 3.8 | 2.7 |
Subtotal | (9.2) | (10.5) |
Derivative & Hedging Instruments. | Amount reclassified from AOCI | ||
Reclassification adjustments | ||
Cost of sales | 2.5 | (12.7) |
SG&A | (0.6) | 10.6 |
Interest expense, net | 0.4 | 0.1 |
(Gains) losses reclassified from AOCI into income | 2.3 | (2) |
Pension & Postretirement Benefits. | ||
Reclassification adjustments | ||
Tax impact | (1.6) | (3.3) |
Subtotal | 3.3 | 5.6 |
Pension & Postretirement Benefits. | Amount reclassified from AOCI | ||
Reclassification adjustments | ||
(Gains) losses reclassified from AOCI into income | 4.9 | 8.9 |
Amortization of net actuarial loss and prior service costs and benefits adjustments | Amount reclassified from AOCI | ||
Reclassification adjustments | ||
(Gains) losses reclassified from AOCI into income | 11 | 10.9 |
Prior service costs | Amount reclassified from AOCI | ||
Reclassification adjustments | ||
(Gains) losses reclassified from AOCI into income | $ (6.1) | $ (2) |
SHAREHOLDERS' EQUITY (Details)
SHAREHOLDERS' EQUITY (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||
Feb. 28, 2017 | May 31, 2016 | Feb. 29, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | Feb. 28, 2015 | |
Shareholder's Equity | |||||||
Common stock, par value per share (in dollars per share) | $ 1 | $ 1 | |||||
Common stock, shares authorized | 800,000,000 | 800,000,000 | |||||
Dividends declared per common share (in dollars per share) | $ 0.370 | $ 0.350 | |||||
Common Stock | |||||||
Shareholder's Equity | |||||||
Common stock, shares authorized to be repurchased | 20,000,000 | ||||||
Remaining shares authorized to be repurchased | 14,222,229 | ||||||
Amount of common stock to be repurchased under ASR agreement | $ 300 | $ 300 | |||||
Shares received under ASR agreement | 2,077,224 | 232,012 | 2,459,490 | ||||
Shares received under the ASR agreement compared to the shares the company expected to receive (as a percent) | 85.00% | 85.00% | |||||
Reacquired shares | 2,698,082 | 6,403,198 | |||||
Number of shares reacquired through the open market or private purchases | 2,550,297 | 6,126,033 | |||||
Number of shares that have been repurchased through the exercise of stock options and vesting of stock awards | 147,785 | 357,165 |
EARNINGS ATTRIBUTABLE TO ECOL51
EARNINGS ATTRIBUTABLE TO ECOLAB PER COMMON SHARE ("EPS") (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Computations of the basic and diluted earnings attributable to Ecolab per share amounts | ||
Net income attributable to Ecolab | $ 253.5 | $ 230.8 |
Weighted-average common shares outstanding | ||
Basic (in shares) | 290.6 | 294.4 |
Effect of dilutive stock options and units (in shares) | 4.4 | 3.9 |
Diluted (in shares) | 295 | 298.3 |
Earnings attributable to Ecolab per common share | ||
Basic (in dollars per share) | $ 0.87 | $ 0.78 |
Diluted (in dollars per share) | $ 0.86 | $ 0.77 |
Anti-dilutive securities excluded from the computation of EPS | 3.6 | 3.6 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Effective income tax rate (as a percent) | 17.40% | 24.00% |
Recognized discrete tax benefits | $ 22.8 | $ 4.8 |
Recognized discrete tax benefits, release of reserves for uncertain tax positions | 6.8 | |
Accounting Standards Update 2016-09 | ||
Recognized discrete tax benefits | $ 16 |
PENSION AND POSTRETIREMENT PL53
PENSION AND POSTRETIREMENT PLANS (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
U.S. Pension | ||
Net periodic benefit costs | ||
Service cost | $ 17.5 | $ 16.8 |
Interest cost on benefit obligation | 20.9 | 20.4 |
Expected return on plan assets | (37.4) | (35.9) |
Recognition of net actuarial (gain) loss | 7.2 | 7.7 |
Amortization of prior service cost (benefit) | (1.7) | (1.7) |
Total expense | 6.5 | 7.3 |
Other Pension Plan Information | ||
Contributions to plan | 2 | |
Contributions anticipated to be made during the remainder of 2017 | 5 | |
International Pension | ||
Net periodic benefit costs | ||
Service cost | 7.5 | 6.9 |
Interest cost on benefit obligation | 6.9 | 8 |
Expected return on plan assets | (13.6) | (13.5) |
Recognition of net actuarial (gain) loss | 4.4 | 3.6 |
Amortization of prior service cost (benefit) | (0.2) | (0.2) |
Total expense | 5 | 4.8 |
Other Pension Plan Information | ||
Contributions to plan | 17 | |
Contributions anticipated to be made during the remainder of 2017 | 25 | |
U.S. Postretirement Health Care | ||
Net periodic benefit costs | ||
Service cost | 0.7 | 0.8 |
Interest cost on benefit obligation | 1.5 | 2 |
Expected return on plan assets | (0.1) | (0.2) |
Recognition of net actuarial (gain) loss | (0.6) | (0.4) |
Amortization of prior service cost (benefit) | (4.2) | (0.1) |
Total expense | (2.7) | $ 2.1 |
Other Pension Plan Information | ||
Contributions to plan | 4 | |
Contributions anticipated to be made during the remainder of 2017 | $ 12 |
OPERATING SEGMENTS (Details)
OPERATING SEGMENTS (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017USD ($)item | Mar. 31, 2016USD ($) | Dec. 31, 2016USD ($) | |
Financial information of reportable segments | |||
Number of reportable segments | item | 3 | ||
Net sales | $ 3,161.6 | $ 3,097.4 | $ 13,152.8 |
Operating Income (Loss) | 373.3 | 371.5 | 1,915 |
Previously Reported | |||
Financial information of reportable segments | |||
Net sales | 13,152.8 | ||
Operating Income (Loss) | 1,915 | ||
Operating segment | |||
Financial information of reportable segments | |||
Net sales | 3,160.5 | 3,091.2 | 13,004.8 |
Operating Income (Loss) | 372.6 | 368.3 | 1,889.8 |
Operating segment | Previously Reported | |||
Financial information of reportable segments | |||
Net sales | 12,955 | ||
Operating Income (Loss) | 1,882.8 | ||
Operating segment | Adjustment | Fixed Currency Rate Change | |||
Financial information of reportable segments | |||
Net sales | 49.8 | ||
Operating Income (Loss) | 7 | ||
Operating segment | Global Industrial | |||
Financial information of reportable segments | |||
Net sales | 1,128.6 | 1,095.5 | 4,687.2 |
Operating Income (Loss) | 127 | 131.5 | 720 |
Operating segment | Global Industrial | Previously Reported | |||
Financial information of reportable segments | |||
Net sales | 4,617.1 | ||
Operating Income (Loss) | 703 | ||
Operating segment | Global Industrial | Adjustment | Fixed Currency Rate Change | |||
Financial information of reportable segments | |||
Net sales | 6.9 | ||
Operating Income (Loss) | (0.9) | ||
Operating segment | Global Industrial | Adjustment | Other | |||
Financial information of reportable segments | |||
Net sales | 63.2 | ||
Operating Income (Loss) | 17.9 | ||
Operating segment | Global Institutional | |||
Financial information of reportable segments | |||
Net sales | 1,078.1 | 1,037.4 | 4,440.1 |
Operating Income (Loss) | 192.1 | 192.7 | 950.5 |
Operating segment | Global Institutional | Previously Reported | |||
Financial information of reportable segments | |||
Net sales | 4,495.6 | ||
Operating Income (Loss) | 966.7 | ||
Operating segment | Global Institutional | Adjustment | Fixed Currency Rate Change | |||
Financial information of reportable segments | |||
Net sales | 7.7 | ||
Operating Income (Loss) | 3 | ||
Operating segment | Global Institutional | Adjustment | Other | |||
Financial information of reportable segments | |||
Net sales | (63.2) | ||
Operating Income (Loss) | (19.2) | ||
Operating segment | Global Energy | |||
Financial information of reportable segments | |||
Net sales | 757 | 771.6 | 3,075.8 |
Operating Income (Loss) | 73 | 62.6 | 346.7 |
Operating segment | Global Energy | Previously Reported | |||
Financial information of reportable segments | |||
Net sales | 3,035.8 | ||
Operating Income (Loss) | 337.1 | ||
Operating segment | Global Energy | Adjustment | Fixed Currency Rate Change | |||
Financial information of reportable segments | |||
Net sales | 40 | ||
Operating Income (Loss) | 7.9 | ||
Operating segment | Global Energy | Adjustment | Other | |||
Financial information of reportable segments | |||
Operating Income (Loss) | 1.7 | ||
Operating segment | Other | |||
Financial information of reportable segments | |||
Net sales | 196.8 | 186.7 | 801.7 |
Operating Income (Loss) | 29.9 | 29.6 | 145.2 |
Operating segment | Other | Previously Reported | |||
Financial information of reportable segments | |||
Net sales | 806.5 | ||
Operating Income (Loss) | 148.1 | ||
Operating segment | Other | Adjustment | Fixed Currency Rate Change | |||
Financial information of reportable segments | |||
Net sales | (4.8) | ||
Operating Income (Loss) | (2.5) | ||
Operating segment | Other | Adjustment | Other | |||
Financial information of reportable segments | |||
Operating Income (Loss) | (0.4) | ||
Currency Impact | |||
Financial information of reportable segments | |||
Net sales | 1.1 | 6.2 | 148 |
Operating Income (Loss) | 0.7 | 3.2 | 25.2 |
Currency Impact | Previously Reported | |||
Financial information of reportable segments | |||
Net sales | 197.8 | ||
Operating Income (Loss) | 32.2 | ||
Currency Impact | Adjustment | Fixed Currency Rate Change | |||
Financial information of reportable segments | |||
Net sales | (49.8) | ||
Operating Income (Loss) | (7) | ||
Corporate | |||
Financial information of reportable segments | |||
Operating Income (Loss) | (49.4) | $ (48.1) | (272.6) |
Corporate | Previously Reported | |||
Financial information of reportable segments | |||
Operating Income (Loss) | (272.1) | ||
Corporate | Adjustment | Fixed Currency Rate Change | |||
Financial information of reportable segments | |||
Operating Income (Loss) | $ (0.5) | ||
Intersegment | |||
Financial information of reportable segments | |||
Net sales | $ 0 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | 1 Months Ended | 3 Months Ended | |
Apr. 30, 2017complaint | May 31, 2016complaint | Mar. 31, 2017locationitemcomplaint | |
Loss contingencies | |||
Period to appeal court's decision after entry of final judgment under Federal Rule of Appellate Procedure | 30 days | ||
Environmental matters | |||
Number of locations for environmental assessments and remediation | location | 40 | ||
Deepwater Horizon Incident | Nalco | |||
Loss contingencies | |||
Number of putative class action complaints filed | 6 | ||
Number of complaints filed by individuals | 21 | ||
Number of complaints filed by individuals claiming economic loss | 2 | 9 | |
Number of master complaints naming Nalco and others who responded to the oil spill (known as the "B3 Bundle") | 1 | ||
Number of proposed class action settlements | item | 2 |
New Accounting Pronouncements56
New Accounting Pronouncements (Details) | 3 Months Ended |
Mar. 31, 2017item | |
Accounting Standards Update 2016-15 | |
Number of cash flow items impacted | 8 |