Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Jan. 31, 2020 | Jun. 28, 2019 | |
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2019 | ||
Entity File Number | 1-9328 | ||
Entity Registrant Name | ECOLAB INC. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 41-0231510 | ||
Entity Address, Address Line One | 1 Ecolab Place | ||
Entity Address, City or Town | St. Paul | ||
Entity Address, State or Province | MN | ||
Entity Address, Postal Zip Code | 55102 | ||
City Area Code | 800 | ||
Local Phone Number | 232-6522 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 56,547,973,473 | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 288,166,440 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Entity Central Index Key | 0000031462 | ||
Amendment Flag | false | ||
Common Stock | |||
Title of 12(b) Security | Common Stock, $1.00 par value | ||
Trading Symbol | ECL | ||
Security Exchange Name | NYSE | ||
2.625% Euro Notes due 2025 | |||
Title of 12(b) Security | 2.625% Euro Notes due 2025 | ||
Trading Symbol | ECL 25 | ||
Security Exchange Name | NYSE | ||
1.000% Euro Notes due 2024 | |||
Title of 12(b) Security | 1.000% Euro Notes due 2024 | ||
Trading Symbol | ECL 24 | ||
Security Exchange Name | NYSE |
CONSOLIDATED STATEMENT OF INCOM
CONSOLIDATED STATEMENT OF INCOME - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Net sales | $ 14,906.3 | $ 14,668.2 | $ 13,835.9 |
Cost of sales (including special charges of (a)) | 8,723.4 | 8,625.9 | 8,064.2 |
Selling, general and administrative expenses | 3,957.5 | 3,968.6 | 3,825.3 |
Special (gains) and charges | 211.6 | 126.7 | (3.7) |
Operating income | 2,013.8 | 1,947 | 1,950.1 |
Other (income) expense | (76.3) | (79.9) | (67.3) |
Interest expense, net | 191.2 | 222.3 | 255 |
Income before income taxes | 1,898.9 | 1,804.6 | 1,762.4 |
Provision for income taxes | 322.7 | 364.3 | 243.8 |
Net income including noncontrolling interest | 1,576.2 | 1,440.3 | 1,518.6 |
Net income attributable to noncontrolling interest | 17.3 | 11.2 | 14 |
Net income attributable to Ecolab | $ 1,558.9 | $ 1,429.1 | $ 1,504.6 |
Earnings attributable to Ecolab per common share | |||
Basic (in dollars per share) | $ 5.41 | $ 4.95 | $ 5.20 |
Diluted (in dollars per share) | $ 5.33 | $ 4.88 | $ 5.12 |
Weighted-average common shares outstanding | |||
Basic (in shares) | 288.1 | 288.6 | 289.6 |
Diluted (in shares) | 292.5 | 292.8 | 294 |
Product and sold equipment | |||
Net sales | $ 12,238.9 | $ 12,128.6 | $ 11,431.8 |
Cost of sales (including special charges of (a)) | 7,106.4 | 7,078.5 | 6,576.9 |
Service and lease equipment | |||
Net sales | 2,667.4 | 2,539.6 | 2,404.1 |
Cost of sales (including special charges of (a)) | $ 1,617 | $ 1,547.4 | $ 1,487.3 |
CONSOLIDATED STATEMENT OF INC_2
CONSOLIDATED STATEMENT OF INCOME (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Special charges | $ 61 | $ 60.4 | $ 49.9 | $ 40.3 | $ 13 | $ 75.6 | $ 12.1 | $ 26 | $ 211.6 | $ 126.7 | $ (3.7) |
Cost of sales | |||||||||||
Special charges | 15.7 | $ 11.3 | $ 7.9 | 3.6 | 5.8 | $ 3.6 | $ (0.1) | 38.5 | 9.3 | 44 | |
Other (income) expense | |||||||||||
Special charges | $ 9.5 | 9.5 | |||||||||
Interest expense | |||||||||||
Special charges | $ 0.2 | $ 0.3 | 0.2 | 0.3 | 21.9 | ||||||
Product and sold equipment | Cost of sales | |||||||||||
Special charges | $ 38.5 | $ 9.3 | $ 44 |
CONSOLIDATED STATEMENT OF COMPR
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | |||
Net income including noncontrolling interest | $ 1,576.2 | $ 1,440.3 | $ 1,518.6 |
Foreign currency translation adjustments | |||
Foreign currency translation | (45.1) | (223.3) | 208 |
Gain (loss) on net investment hedges | 31.4 | 57.5 | (109.7) |
Total foreign currency translation adjustments | (13.7) | (165.8) | 98.3 |
Derivatives and hedging instruments | (3.4) | 28.4 | (17.9) |
Pension and postretirement benefits | |||
Current period net actuarial loss | (251.1) | (37.8) | (33.4) |
Pension and postretirement prior period service costs and benefits | (0.3) | (2.3) | (0.5) |
Amortization of net actuarial loss and prior service cost included in net periodic pension and postretirement costs | (0.2) | 13.2 | 24.7 |
Postretirement benefits changes | 44.9 | ||
Total pension and postretirement benefits | (251.6) | 18 | (9.2) |
Subtotal | (268.7) | (119.4) | 71.2 |
Total comprehensive income, including noncontrolling interest | 1,307.5 | 1,320.9 | 1,589.8 |
Comprehensive income attributable to noncontrolling interest | 15.4 | 10.1 | 15.7 |
Comprehensive income attributable to Ecolab | $ 1,292.1 | $ 1,310.8 | $ 1,574.1 |
CONSOLIDATED BALANCE SHEET
CONSOLIDATED BALANCE SHEET - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets | ||
Cash and cash equivalents | $ 186.4 | $ 114.7 |
Accounts receivable, net | 2,796.5 | 2,662.5 |
Inventories | 1,505.6 | 1,546.4 |
Other current assets | 339.9 | 354.1 |
Total current assets | 4,828.4 | 4,677.7 |
Property, plant and equipment, net | 3,954.9 | 3,836 |
Goodwill | 7,251.7 | 7,078 |
Other intangible assets, net | 3,672.5 | 3,797.7 |
Operating lease assets | 577.5 | |
Other assets | 584.1 | 685.1 |
Total assets | 20,869.1 | 20,074.5 |
Current liabilities | ||
Short-term debt | 380.6 | 743.6 |
Accounts payable | 1,284.3 | 1,255.6 |
Compensation and benefits | 599.5 | 579.7 |
Income taxes | 142.8 | 100.6 |
Other current liabilities | 1,223.4 | 1,006.1 |
Total current liabilities | 3,630.6 | 3,685.6 |
Long-term debt | 5,973.5 | 6,301.6 |
Postretirement health care and pension benefits | 1,088 | 944.3 |
Deferred income taxes | 740.4 | 764.6 |
Operating lease liabilities | 425.2 | |
Other liabilities | 285.6 | 324.8 |
Total liabilities | 12,143.3 | 12,020.9 |
Commitments and contingencies (Note 15) | ||
Equity | ||
Common stock | 359.6 | 357 |
Additional paid-in capital | 5,907.1 | 5,633.2 |
Retained earnings | 9,993.7 | 8,909.5 |
Accumulated other comprehensive loss | (2,089.7) | (1,761.7) |
Treasury stock | (5,485.4) | (5,134.8) |
Total Ecolab shareholders' equity | 8,685.3 | 8,003.2 |
Noncontrolling interest | 40.5 | 50.4 |
Total equity | 8,725.8 | 8,053.6 |
Total liabilities and equity | $ 20,869.1 | $ 20,074.5 |
CONSOLIDATED BALANCE SHEET (Par
CONSOLIDATED BALANCE SHEET (Parenthetical) - $ / shares shares in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
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 | 288.4 | 287.7 |
CONSOLIDATED STATEMENT OF CASH
CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
OPERATING ACTIVITIES | |||
Net income including noncontrolling interest | $ 1,576.2 | $ 1,440.3 | $ 1,518.6 |
Adjustments to reconcile net income to cash provided by operating activities: | |||
Depreciation | 654.1 | 621.3 | 585.7 |
Amortization | 319.2 | 317 | 307.6 |
Deferred income taxes | (37.6) | 85.1 | (353.5) |
Share-based compensation expense | 91.1 | 94.4 | 90.5 |
Pension and postretirement plan contributions | (186) | (60) | (144.1) |
Pension and postretirement plan expense | 28.1 | 31.9 | 36.9 |
Restructuring charges, net of cash paid | 35.2 | 43.5 | 5.2 |
Gain on sale of businesses | (50.6) | ||
Asset charges and write-downs | 15.1 | ||
Other, net | 19.8 | 24 | 37.4 |
Changes in operating assets and liabilities, net of effect of acquisitions: | |||
Accounts receivable | (137.2) | (164.1) | (91.5) |
Inventories | 41 | (141.1) | (85.5) |
Other assets | (81.5) | (80.7) | (48.9) |
Accounts payable | 22.3 | 113.5 | 121.1 |
Other liabilities | 76 | (47.4) | 147.3 |
Cash provided by operating activities | 2,420.7 | 2,277.7 | 2,091.3 |
INVESTING ACTIVITIES | |||
Capital expenditures | (800.6) | (847.1) | (868.6) |
Property and other assets sold | 10.9 | 30 | 10.7 |
Acquisitions and investments in affiliates, net of cash acquired | (391.4) | (229.8) | (989.2) |
Divestiture of businesses | 6.8 | 9.2 | 118.8 |
Settlement of net investment hedges | 14.1 | 2.1 | |
Other, net | (24.8) | (6.4) | (0.8) |
Cash used for investing activities | (1,199.1) | (1,030) | (1,727) |
FINANCING ACTIVITIES | |||
Net issuances of commercial paper and notes payable | (252) | 341.8 | (43.7) |
Long-term debt borrowings | 1,309.4 | ||
Long-term debt repayments | (400.6) | (551.6) | (799) |
Reacquired shares | (353.7) | (562.4) | (600.3) |
Dividends paid | (554.9) | (496.5) | (448.7) |
Exercise of employee stock options | 186.8 | 114.5 | 83.8 |
Acquisition related liabilities and contingent consideration | (1.5) | (10.1) | (8.5) |
Other, net | 26.3 | (8.4) | (15.7) |
Cash used for financing activities | (1,349.6) | (1,172.7) | (522.7) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 20.4 | 7.6 | (10.6) |
Decrease (increase) in cash, cash equivalents and restricted cash | (107.6) | 82.6 | (169) |
Cash, cash equivalents and restricted cash, beginning of period | 294 | 211.4 | 380.4 |
Cash, cash equivalents and restricted cash, end of period | 186.4 | 294 | 211.4 |
SUPPLEMENTAL CASH FLOW INFORMATION | |||
Income taxes paid | 356.3 | 395.2 | 402.8 |
Interest paid | $ 189.4 | $ 206.4 | $ 239.3 |
CONSOLIDATED STATEMENT OF CAS_2
CONSOLIDATED STATEMENT OF CASH FLOWS (Parenthetical) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
CONSOLIDATED STATEMENT OF CASH FLOWS | ||||
Restricted Cash | $ 0 | $ 179.3 | $ 0 | $ 53 |
Restricted Cash, Asset, Statement of Financial Position [Extensible List] | Other Assets, Noncurrent | Other Assets, Noncurrent | Other Assets, Noncurrent |
CONSOLIDATED STATEMENT OF EQUIT
CONSOLIDATED STATEMENT OF EQUITY - USD ($) $ in Millions | Ecolab Shareholders Equity | Common Stock | Additional Paid-in Capital | Retained Earnings | OCI (Loss) | Treasury Stock | Non-Controlling Interest | Total |
Balance at Dec. 31, 2016 | $ 6,871.2 | $ 352.6 | $ 5,270.8 | $ 6,945.1 | $ (1,712.9) | $ (3,984.4) | $ 69.8 | $ 6,941 |
Increase (Decrease) in Stockholders' Equity | ||||||||
New accounting guidance adoption | 1.9 | 1.9 | 1.9 | |||||
Net income | 1,504.6 | 1,504.6 | 14 | 1,518.6 | ||||
Comprehensive income (loss) activity | 69.5 | 69.5 | 1.7 | 71.2 | ||||
Cash dividends declared | (440) | (440) | (19.3) | (459.3) | ||||
Acquisition of and changes in noncontrolling interests | (4) | (4) | ||||||
Stock options and awards | 176.7 | $ 2.1 | 170.3 | $ 4.3 | 176.7 | |||
Stock options (in shares) | 1,714,214 | 41,767 | ||||||
Stock awards (in shares) | 393,941 | 55,431 | ||||||
Reacquired shares | (600.3) | (5.4) | $ (594.9) | (600.3) | ||||
Reacquired shares | (4,707,629) | |||||||
Balance at Dec. 31, 2017 | 7,583.6 | $ 354.7 | 5,435.7 | 8,011.6 | (1,643.4) | $ (4,575) | 70.2 | 7,653.8 |
Increase (Decrease) in Stockholders' Equity | ||||||||
New accounting guidance adoption | (43.6) | (43.6) | (43.6) | |||||
Net income | 1,429.1 | 1,429.1 | 11.2 | 1,440.3 | ||||
Comprehensive income (loss) activity | (118.3) | (118.3) | (1.1) | (119.4) | ||||
Cash dividends declared | (487.6) | (487.6) | (22.7) | (510.3) | ||||
Acquisition of and changes in noncontrolling interests | (7.7) | (7.7) | (7.2) | (14.9) | ||||
Stock options and awards | 210 | $ 2.3 | 205.2 | $ 2.5 | 210 | |||
Stock options (in shares) | 1,833,004 | 38,679 | ||||||
Stock awards (in shares) | 409,200 | 18,481 | ||||||
Reacquired shares | (562.3) | $ (562.3) | (562.3) | |||||
Reacquired shares | (3,908,041) | |||||||
Balance at Dec. 31, 2018 | 8,003.2 | $ 357 | 5,633.2 | 8,909.5 | (1,761.7) | $ (5,134.8) | 50.4 | 8,053.6 |
Increase (Decrease) in Stockholders' Equity | ||||||||
New accounting guidance adoption | (2.8) | 58.4 | (61.2) | (2.8) | ||||
Net income | 1,558.9 | 1,558.9 | 17.3 | 1,576.2 | ||||
Comprehensive income (loss) activity | (266.8) | (266.8) | (1.9) | (268.7) | ||||
Cash dividends declared | (533.1) | (533.1) | (25.1) | (558.2) | ||||
Acquisition of and changes in noncontrolling interests | (0.2) | (0.2) | 0.2 | |||||
Stock options and awards | 279.4 | $ 2.6 | 273.7 | $ 3.1 | 279.4 | |||
Stock options (in shares) | 2,220,815 | 41,575 | ||||||
Stock awards (in shares) | 390,319 | 29,173 | ||||||
Reacquired shares | (353.7) | $ (353.7) | (353.7) | |||||
Reacquired shares | (1,986,241) | |||||||
Balance at Dec. 31, 2019 | $ 8,685.3 | $ 359.6 | $ 5,907.1 | $ 9,993.7 | $ (2,089.7) | $ (5,485.4) | $ 40.5 | $ 8,725.8 |
CONSOLIDATED STATEMENT OF EQU_2
CONSOLIDATED STATEMENT OF EQUITY (Parenthetical) - $ / shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
CONSOLIDATED STATEMENT OF EQUITY | |||
Dividends declared per common share (in dollars per share) | $ 1.85 | $ 1.69 | $ 1.52 |
NATURE OF BUSINESS
NATURE OF BUSINESS | 12 Months Ended |
Dec. 31, 2019 | |
NATURE OF BUSINESS | |
NATURE OF BUSINESS | 1. NATURE OF BUSINESS Ecolab is the global leader in water, hygiene and energy technologies and services that protect people and vital resources. The Company delivers comprehensive solutions and on-site service to promote safe food, maintain clean environments, optimize water and energy use and improve operational efficiencies for customers in the food, healthcare, energy, hospitality and industrial markets in more than 170 countries. The Company’s cleaning and sanitizing programs and products and pest elimination services support customers in the foodservice, food and beverage processing, hospitality, healthcare, government and education, retail, textile care and commercial facilities management sectors. The Company’s products and technologies are also used in water treatment, pollution control, energy conservation, oil production and refining, steelmaking, papermaking, mining and other industrial processes. ChampionX Separation On December 18, 2019, the Company entered into definitive agreements with ChampionX Holding Inc., a wholly owned subsidiary of the Company (ChampionX), and Apergy Corporation (Apergy) pursuant to which the Company will separate the Upstream Energy business of its Global Energy segment and combine it with Apergy in a tax-efficient reverse Morris Trust transaction. Subject to the terms and conditions of those agreements, the Company will transfer the Upstream Energy business of its Global Energy segment to ChampionX, after which, the Company will distribute by means of a split-off all of the issued and outstanding shares of common stock of ChampionX held by the Company, and immediately after the distribution of ChampionX common stock, a wholly owned subsidiary of Apergy, will merge with and into ChampionX, with ChampionX surviving as a wholly owned subsidiary of Apergy and the shares of ChampionX common stock being converted into shares of Apergy common stock. Upon completion of the merger, ChampionX’s stockholders will receive approximately 62% of the outstanding common stock of Apergy on a fully diluted basis. Completion of the transaction is subject to the satisfaction or waiver of customary closing conditions, including approval by Apergy’s stockholders, approval by certain foreign regulatory authorities and receipt of opinions with respect to the tax-free nature of the transaction. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2019 | |
SIGNIFICANT ACCOUNTING POLICIES | |
SIGNIFICANT ACCOUNTING POLICIES | 2. SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The consolidated financial statements include the accounts of the Company and all subsidiaries in which the Company has a controlling financial interest. Investments in companies, joint ventures or partnerships in which the Company does not have control but has the ability to exercise significant influence over operating and financial decisions, are reported using the equity method of accounting. The cost method of accounting is used in circumstances where the Company does not significantly influence the investee, and the investment has no readily determinable fair value. International subsidiaries are included in the financial statements on the basis of their U.S. GAAP November 30 fiscal year-ends to facilitate the timely inclusion of such entities in the Company’s consolidated financial reporting. All intercompany transactions and profits are eliminated in consolidation. Use of Estimates The preparation of the Company’s financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates. The Company’s critical accounting estimates include revenue recognition, valuation allowances and accrued liabilities, actuarially determined liabilities, restructuring, income taxes, long-lived assets, intangible assets and goodwill. Foreign Currency Translation Financial position and reported results of operations of the Company’s non-U.S. dollar functional currency international subsidiaries are measured using local currencies as the functional currency. Assets and liabilities of these operations are translated at the exchange rates in effect at each fiscal year end. The translation adjustments related to assets and liabilities that arise from changes in exchange rates from period to period are included in accumulated other comprehensive loss in shareholders’ equity. Income statement accounts are translated at average rates of exchange prevailing during the year. As discussed in Note 18 Operating Segments and Geographic Information, the Company evaluates its international operations based on fixed rates of exchange; however, changes in exchange rates from period to period impact the amount of reported income from consolidated operations. Concentration of Credit Risk Credit risk represents the accounting loss that would be recognized at the reporting date if counterparties failed to perform as contracted. The Company believes the likelihood of incurring material losses due to concentration of credit risk is minimal. The principal financial instruments subject to credit risk are as follows: Cash and Cash Equivalents Accounts Receivable Foreign Currency and Interest Rate Contracts and Derivatives Cash and Cash Equivalents Cash equivalents include highly-liquid investments with a maturity of three months or less when purchased. Restricted Cash Cash and cash equivalents that are restricted as to withdrawal or use under the terms of certain contractual agreements are recorded in Other assets on the Consolidated Balance Sheet and primarily relate to acquisition activities. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are carried at the invoiced amounts, less an allowance for doubtful accounts, and generally do not bear interest. The Company estimates the balance of allowance for doubtful accounts by analyzing accounts receivable balances by age and applying historical write-off and collection trend rates. The Company’s estimates separately considered specific circumstances and credit conditions of customer receivables, and whether it is probable balances will be collected. Account balances are written off against the allowance when it is determined the receivable will not be recovered. The Company’s allowance for doubtful accounts balance also includes an allowance for the expected return of products shipped and credits related to pricing or quantities shipped of $18 million, $17 million and $15 million as of December 31, 2019, 2018, and 2017, respectively. Returns and credit activity is recorded directly as a reduction to revenue. The following table summarizes the activity in the allowance for doubtful accounts: (millions) 2019 2018 2017 Beginning balance $60.6 $71.5 $67.6 Bad debt expense 21.7 15.7 17.1 Write-offs (19.1) (23.6) (15.7) Other (a) (1.2) (3.0) 2.5 Ending balance $62.0 $60.6 $71.5 (a) Other amounts are primarily the effects of changes in currency translations and the impact of allowance for returns and credits. Inventory Valuations Inventories are valued at the lower of cost or net realizable value. Certain U.S. inventory costs are determined on a last-in, first-out (“LIFO”) basis. LIFO inventories represented 37% of consolidated inventories as of December 31, 2019 and 2018. All other inventory costs are determined using either the average cost or first-in, first-out (“FIFO”) methods. Inventory values at FIFO, as shown in Note 5, approximate replacement cost. Property, Plant and Equipment Property, plant and equipment assets are stated at cost. Merchandising and customer equipment consists principally of various dispensing systems for the Company’s cleaning and sanitizing products, warewashing machines and process control and monitoring equipment. Certain dispensing systems capitalized by the Company are accounted for on a mass asset basis, whereby equipment is capitalized and depreciated as a group and written off when fully depreciated. The Company capitalizes both internal and external costs to develop or purchase computer software. Costs incurred for data conversion, training and maintenance associated with capitalized software are expensed as incurred. Expenditures for major renewals and improvements, which significantly extend the useful lives of existing plant and equipment, are capitalized and depreciated. Expenditures for repairs and maintenance are charged to expense as incurred. Upon retirement or disposition of plant and equipment, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in income. Depreciation is charged to operations using the straight-line method over the assets’ estimated useful lives ranging from 5 to 40 years for buildings and leasehold improvements, 3 to 20 years for machinery and equipment, 3 to 20 years for merchandising and customer equipment and 3 to 7 years for capitalized software. The straight-line method of depreciation reflects an appropriate allocation of the cost of the assets to earnings in proportion to the amount of economic benefits obtained by the Company in each reporting period. Depreciation expense was $654 million, $621 million and $586 million for 2019, 2018 and 2017, respectively. During 2019 and 2018, the Company impaired certain assets as part of a restructuring program. During 2017, the Company impaired certain assets related to a portion of one of its businesses. See Note 3 for additional information regarding these asset impairments. 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. During the second quarter of 2019, the Company completed its annual assessment for goodwill impairment across its eleven reporting units through a two-step quantitative analysis, utilizing a discounted cash flow approach, which incorporates assumptions regarding future growth rates, terminal values, and discount rates. The first step involves estimating the fair value of each reporting unit and comparing them to the respective carrying values, including goodwill. If the fair value of a reporting unit exceeds its carrying value, goodwill of the reporting unit is considered not to be impaired, and the second step of the impairment test is unnecessary. If the carrying amount of the reporting unit exceeds its fair value, the second step of the goodwill impairment test would be performed to measure the amount of impairment loss to be recorded, if any. The Company’s goodwill impairment assessment for 2019 indicated the estimated fair value of each of its reporting units exceeded its carrying amount by a significant margin. Additionally, no events occurred during the second half of 2019 that indicated a need to update the Company’s conclusions reached during the second quarter of 2019. If significant events or circumstances are identified that indicate it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company will test a reporting unit’s goodwill for impairment during interim periods between its annual tests. There has been no impairment of goodwill in any of the years presented. The changes in the carrying amount of goodwill for each of the Company’s reportable segments are as follows: Global Global Global (millions) Industrial Institutional Energy Other Total December 31, 2017 $2,725.3 $1,027.0 $3,203.7 $211.1 $7,167.1 Current year business combinations (a) 71.6 12.4 - - 84.0 Prior year business combinations (b) (1.2) - - (0.9) (2.1) Dispositions (0.5) - (2.9) - (3.4) Effect of foreign currency translation (64.4) (24.1) (74.2) (4.9) (167.6) December 31, 2018 $2,730.8 $1,015.3 $3,126.6 $205.3 $7,078.0 Current year business combinations (a) 92.2 142.1 - 0.7 235.0 Prior year business combinations (b) (0.2) - - - (0.2) Effect of foreign currency translation (23.6) (9.7) (26.1) (1.7) (61.1) December 31, 2019 $2,799.2 $1,147.7 $3,100.5 $204.3 $7,251.7 (a) For 2019, $49.4 million of the goodwill related to businesses acquired is expected to be tax deductible. For 2018, the Company does not expect any of the goodwill related to businesses acquired to be tax deductible. (b) Represents purchase price allocation adjustments for acquisitions deemed preliminary as of the end of the prior year. Other Intangible Assets The Nalco trade name is the Company’s principal indefinite life intangible asset. During the second quarter of 2019, the Company completed its annual indefinite life intangible asset impairment assessment using a relief from royalty method approach, which incorporates assumptions regarding future sales projections, royalty rates and discount rates. Based on this testing, the estimated fair value of the asset exceeded its carrying value by a significant margin, therefore, no adjustment to the $1.2 billion carrying value of this asset was necessary. Additionally, no events during the second half of 2019 indicated a need to update the Company’s conclusions reached during the second quarter of 2019. 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 recognized at fair value from the Company’s business combinations. The fair value of identifiable intangible assets is estimated at acquisition using discounted cash flow approaches or other acceptable valuation methods. Other intangible assets are amortized on a straight-line basis over their estimated economic lives. The weighted-average useful life of amortizable intangible assets was 14 years as of both December 31, 2019 and 2018. The weighted-average useful life by type of amortizable asset at December 31, 2019 is as follows: (years) Customer relationships 14 Trademarks 13 Patents 14 Other technology 5 The straight-line method of amortization reflects an appropriate allocation of the cost of the intangible assets to earnings in proportion to the amount of economic benefits obtained by the Company in each reporting period. The Company evaluates the remaining useful life of its intangible assets that are being amortized each reporting period to determine whether events and circumstances warrant a change to the estimated remaining period of amortization. If the estimate of an intangible asset’s remaining useful life is changed, the remaining carrying amount of the intangible asset will be amortized prospectively over the revised remaining useful life. Total amortization expense related to other intangible assets during the last three years and future estimated amortization is as follows: (millions) 2017 $ 308 2018 317 2019 319 2020 320 2021 316 2022 309 2023 302 2024 289 Long-Lived Assets The Company reviews its long-lived and amortizable intangible assets for impairment when significant events or changes in business circumstances indicate that the carrying value of the assets may not be recoverable. Such circumstances may include a significant decrease in the market price of an asset, a significant adverse change in the manner in which the asset is being used or in its physical condition or history of operating or cash flow losses associated with the use of an asset. An impairment loss may be recognized when the carrying amount of an asset exceeds the anticipated future undiscounted cash flows expected to result from the use of the asset and its eventual disposition. The amount of the impairment loss to be recorded, if any, is calculated by the excess of the asset’s carrying value over its fair value. In addition, the Company periodically reassesses the estimated remaining useful lives of its long-lived assets. Changes to estimated useful lives would impact the amount of depreciation and amortization recorded in earnings. The Company has not experienced significant changes in the carrying value or estimated remaining useful lives of its long-lived or amortizable intangible assets. Rental and Leases Lessee The Company determines whether a lease exists at the inception of the arrangement. In assessing whether a contract is or contains a lease, the Company considers a lease a contract that conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company accounts for lease components separately from the nonlease components (e.g., common-area maintenance costs). Operating leases are recorded in operating lease assets, other current liabilities and operating lease liabilities in the Consolidated Balance Sheet. Operating lease assets and operating lease liabilities are measured and recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The Company uses the rate implicit in the lease when available or determinable. When the rate implicit in the lease is not determinable, the Company uses its incremental borrowing rate based on the information available at commencement date to determine the present value of future payments. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Variable lease payments are not included in the lease liability and are recognized as incurred. The Company identified real estate, vehicles and other equipment as the primary classes of leases. Certain leases with a similar class of underlying assets are accounted for as a portfolio of leases. The Company does not record operating lease assets or liabilities for leases with terms of twelve months or less. Those lease payments will continue to be recognized in the Consolidated Statement of Income on a straight-line basis over the lease term. Most leases include one or more options to renew, which is at the Company’s sole discretion, with renewal terms that can extend the lease term from one month to multiple years. The lease start date is when the asset is available for use and in possession of the Company. The lease end date, which includes any options to renew that are reasonably certain to be exercised, is based on the terms of the contract. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. The Company’s lease agreements do not contain any material restrictive covenants. Lessor The Company accounts for lease and nonlease components separately. The nonlease components, such as product and service revenue, are accounted for under Topic 606 Revenue from Contracts with Customers, refer to Note 17 for more information. Revenue from leasing equipment is recognized on a straight-line basis over the life of the lease. Cost of sales includes the depreciation expense for assets under operating leases. The assets are depreciated over their estimated useful lives. Initial lease terms range from one year to five years and most leases include renewal options. Lease contracts convey the right for the customer to control the equipment for a period of time as defined by the contract. There are no options for the customer to purchase the equipment and therefore the equipment remains the property of the Company at the end of the lease term. See Note 13 for additional information regarding rental and leases. Income Taxes Income taxes are recognized during the period in which transactions enter into the determination of financial statement income, with deferred income taxes provided for the tax effect of temporary differences between the carrying amount of assets and liabilities and their tax bases. The Company records a valuation allowance to reduce its deferred tax assets when uncertainty regarding their realizability exists. The Company records liabilities for income tax uncertainties in accordance with the U.S. GAAP recognition and measurement criteria guidance. On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was enacted, which reduced the U.S. federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxes on certain foreign sourced earnings. The Tax Act added many new provisions including changes to bonus depreciation, the deduction for executive compensation and interest expense, a tax on global intangible low taxed income (GILTI), the base erosion anti abuse tax (BEAT) and a deduction for foreign derived intangible income (FDII). The Company has elected the period cost method and considers the estimated GILTI impact in tax expense beginning in 2018. See Note 12 for additional information regarding income taxes. Share-Based Compensation The Company measures compensation expense for share-based awards at fair value at the date of grant and recognizes compensation expense over the service period for awards expected to vest. The majority of grants to retirement eligible recipients (age 55 with required years of service) are recorded to expense using the non-substantive vesting method and are fully expensed over a six-month period following the date of grant. In addition, the Company includes a forfeiture estimate in the amount of compensation expense being recognized based on an estimate of the number of outstanding awards expected to vest. All excess tax benefits or deficiencies are recognized as discrete income tax items on the Consolidated Statement of Income. The Company recorded $43.1 million, $28.1 million and $39.7 million of excess tax benefits during 2019, 2018 and 2017, respectively. The extent of excess tax benefits is subject to variation in stock price and stock option exercises. See Note 11 for additional information regarding equity compensation plans. Restructuring Activities The Company’s restructuring activities are associated with plans to enhance its efficiency, effectiveness and sharpen its competitiveness. These restructuring plans include net costs associated with significant actions involving employee-related severance charges, contract termination costs and asset write-downs and disposals. Employee termination costs are largely based on policies and severance plans, and include personnel reductions and related costs for severance, benefits and outplacement services. These charges are reflected in the quarter in which the actions are probable and the amounts are estimable, which typically is when management approves the associated actions. Contract termination costs include charges to terminate leases prior to the end of their respective terms and other contract termination costs. Asset write-downs and disposals include leasehold improvement write-downs, other asset write-downs associated with combining operations and disposal of assets. See Note 3 for additional information regarding restructuring activities. Revenue Recognition Revenue is measured as the amount of consideration expected to be received in exchange for transferring goods or providing service. Product and Sold Equipment Revenue from product and sold equipment is recognized when obligations under the terms of a contract with the customer are satisfied, which generally occurs with the transfer of the product or delivery of the equipment. Service and Lease Equipment Revenue from service and leased equipment is recognized when the services are provided, or the customer receives the benefit from the leased equipment, which is over time. Service revenue is recognized over time utilizing an input method and aligns with when the services are provided. Typically, revenue is recognized using costs incurred to date because the effort provided by the field selling and service organization represents services provided, which corresponds with the transfer of control. Revenue for leased equipment is accounted for under Topic 842 Leases and recognized on a straight-line basis over the length of the lease contract. Other Considerations Contracts with customers may include multiple performance obligations. For contracts with multiple performance obligations, the consideration is allocated between products and services based on their stand-alone selling prices. Stand-alone selling prices are generally based on the prices charged to customers or using an expected cost plus margin. Judgment is used in determining the amount of service that is embedded within the contracts, which is based on the amount of time spent on the performance obligation activities. The level of effort, including the estimated margin that would be charged, is used to determine the amount of service revenue. Depending on the terms of the contract, the Company may defer the recognition of revenue when a future performance obligation has not yet occurred. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, which are collected by the Company from a customer, are excluded from revenue. Shipping and handling costs associated with outbound freight are recognized in cost of sales when control over the product has transferred to the customer. Other estimates used in recognizing revenue include allocating variable consideration to customer programs and incentive offerings, including pricing arrangements, promotions and other volume-based incentives at the time the sale is recorded. These estimates are based primarily on historical experience and anticipated performance over the contract period. Based on the certainty in estimating these amounts, they are included in the transaction price of the contracts and the associated remaining performance obligations. The Company recognizes revenue when collection of the consideration expected to be received in exchange for transferring goods or providing services is probable. The Company’s revenue policies do not provide for general rights of return. Estimates used in recognizing revenue include the delay between the time that products are shipped and when they are received by customers, when title transfers and the amount of credit memos issued in subsequent periods. Depending on market conditions, the Company may increase customer incentive offerings, which could reduce gross profit margins over the term of the incentive. Earnings Per Common Share The difference in the weighted average common shares outstanding for calculating basic and diluted earnings attributable to Ecolab per common share 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 earnings attributable to Ecolab per common share because they would not have had a dilutive effect. The computations of the basic and diluted earnings attributable to Ecolab per share amounts were as follows: (millions, except per share) 2019 2018 2017 Net income attributable to Ecolab $1,558.9 $1,429.1 $1,504.6 Weighted-average common shares outstanding Basic 288.1 288.6 289.6 Effect of dilutive stock options and units 4.4 4.2 4.4 Diluted 292.5 292.8 294.0 Basic EPS $ 5.41 $ 4.95 $ 5.20 Diluted EPS $ 5.33 $ 4.88 $ 5.12 Anti-dilutive securities excluded from the computation of diluted EPS 1.1 2.9 3.4 Amounts do not necessarily sum due to rounding. Other Significant Accounting Policies The following table includes a reference to additional significant accounting policies that are described in other notes to the financial statements, including the note number: Policy Note Fair value measurements 7 Derivatives and hedging transactions 8 Share-based compensation 11 Research and development expenditures 14 Legal contingencies 15 Pension and post-retirement benefit plans 16 Reportable segments 18 New Accounting Pronouncements Standards that are not yet adopted: Required Date of Date of Effect on the Standard Issuance Description Adoption Financial Statements ASU 2019-12 - Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes December 2019 Simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 Income Taxes related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and recognition of deferred tax liabilities for outside basis difference. The new standard also simplifies the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the basis of goodwill. January 1, 2021 The Company is currently evaluating the impact of adoption. ASU 2018-15 - Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force) August 2018 Aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The amendments require an entity (customer) in a hosting arrangement that is a service contract to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. January 1, 2020 The Company is anticipating adopting the ASU prospectively. Adoption of the ASU is not expected to have a material impact on the Company's financial statements. ASU 2018-14 - Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans August 2018 Modifies disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. This includes, but is not limited to, the removal of the requirement to disclose the amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year, and the addition of a requirement to disclose the weighted-average interest crediting rates for cash balance plans and other plans with promised interest crediting rates. January 1, 2020 The new disclosure requirements are applied on a retrospective basis to all periods presented. Adoption of the ASU is not expected to have a material impact on the Company's financial statements. 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. As described in Note 2 the Company has passed Step 1 of its annual impairment assessment, accordingly, adoption of the ASU is not expected to have a material impact on the Company's financial statements when completing future impairment analyses. Credit Losses ASUs: Various 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 The Company has identified the financial assets to primarily include trade and notes receivable. The Company is updating current accounting policies to be in accordance with the new standard, and the impact of adoption is not expected to be material to the Company's financial statements. Standards that were adopted: Date of Date of Effect on the Standard Issuance Description Adoption Financial Statements ASU 2018-02 - Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income February 2018 Allows entities to reclassify stranded tax effects resulting from the Tax Cut and Jobs Act (“the Act”) from accumulated other comprehensive income to retained earnings. Tax effects stranded in other comprehensive income for reasons other than the impact of the Act cannot be reclassified. January 1, 2019 In order to improve the usefulness and transparency, the Company made the election to reclassify $61.2 million of income tax effects of the Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings related to pension and derivatives. ASU 2018-16 - Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes Various Amends the hedge accounting recognition and presentation requirements. Simplifies the application of hedge accounting and the requirements for hedge documentation and effectiveness testing. Requires presentation of all items that affect earnings in the same income statement line as the hedged item. Expands the benchmark interest rates that can be used for hedge accounting. January 1, 2019 Adoption of this guidance |
SPECIAL (GAINS) AND CHARGES
SPECIAL (GAINS) AND CHARGES | 12 Months Ended |
Dec. 31, 2019 | |
SPECIAL (GAINS) AND CHARGES | |
SPECIAL (GAINS) AND CHARGES | 3. SPECIAL (GAINS) AND CHARGES Special (gains) and charges reported on the Consolidated Statement of Income included the following: (millions) 2019 2018 2017 Cost of sales Restructuring activities $20.4 $12.1 $4.6 Acquisition and integration activities 7.6 (0.6) 13.2 Other 10.5 (2.2) 26.2 Cost of sales subtotal 38.5 9.3 44.0 Special (gains) and charges Restructuring activities 116.8 89.4 39.9 ChampionX separation 77.3 - - Acquisition and integration activities 5.6 8.8 15.4 Gain on sale of business - - (46.1) Venezuela related gain - - (11.5) Other 11.9 28.5 (1.4) Special (gains) and charges subtotal 211.6 126.7 (3.7) Operating income subtotal 250.1 136.0 40.3 Interest expense, net 0.2 0.3 21.9 Other (income) expense 9.5 - - Total special (gains) and charges $259.8 $136.3 $62.2 For segment reporting purposes, special (gains) and charges are not allocated to reportable segments, which is consistent with the Company’s internal management reporting. Restructuring Activities Restructuring activities in 2019 and 2018 are primarily related to Accelerate 2020 (described below). Restructuring activities have been included as a component of both cost of sales and special (gains) and charges on the Consolidated Statement of Income. Restructuring liabilities have been classified as a component of other current and other noncurrent liabilities on the Consolidated Balance Sheet. Accelerate 2020 During the third quarter of 2018, the Company formally commenced a restructuring plan Accelerate 2020 (“the Plan”), to leverage technology and systems investments and organizational changes. During the first quarter of 2019, the Company raised its goals for the Plan to simplify and automate processes and tasks, reduce complexity and management layers, consolidate facilities and focus on key long-term growth areas by leveraging technology and structural improvements. The Company expects that the restructuring activities will be completed by the end of 2020, with anticipated costs of $260 million ($200 million after tax) over this period of time. Costs are expected to be primarily cash expenditures for severance costs and some facility closure costs relating to team reorganizations. Actual costs may vary from these estimates depending on actions taken. The Company recorded restructuring charges of $136.6 million ($104.4 million after tax) and $104.6 million ($79.6 million after tax) in 2019 and 2018, respectively, primarily related to severance. Of these expenses, $2.0 million ($1.5 million after tax) is recorded in other income expense and related to pension settlements and curtailments. The liability related to this Restructuring Plan was $104.0 million and $63.9 million as of December 31, 2019 and 2018, respectively. The Company has recorded $241.2 million ($184.0 million after tax) of cumulative restructuring charges under the Plan. Restructuring activity related to the Plan since inception of the underlying actions includes the following: Employee Termination Asset (millions) Costs Disposals Other Total 2018 Activity Recorded expense $94.1 $5.0 $5.5 $104.6 Net cash payments (32.8) - (2.4) (35.2) Non-cash charges - (5.0) - (5.0) Effect of foreign currency translation (0.5) - - (0.5) Restructuring liability, December 31, 2018 60.8 - 3.1 63.9 2019 Activity Recorded expense 122.0 0.2 14.4 136.6 Net cash payments (79.8) 1.2 (14.0) (92.6) Non-cash charges - (1.4) (2.0) (3.4) Effect of foreign currency translation (0.5) - - (0.5) Restructuring liability, December 31, 2019 $102.5 $- $1.5 $104.0 Other Restructuring Activities During 2019, the Company incurred restructuring charges of $4.1 million ($3.3 million after tax) related to an immaterial restructuring plan. The charges are comprised of severance, facility closure costs, including asset disposals and consulting fees. Prior to 2018, the Company engaged in a number of restructuring plans. During 2017, the Company commenced restructuring and other cost-saving actions in order to streamline operations. These actions include a reduction of the Company’s global workforce, as well as asset disposals and lease terminations. Actions were substantially completed in 2017. The Company also has restructuring plans that commenced prior to 2016. During 2019, net restructuring gains related to prior year plans were $1.5 million ($1.1 million after tax). During 2018, net restructuring gains related to prior year plans were $3.1 million ($2.4 million after tax). The gains recorded were due to finalizing estimates upon completion of projects. During 2017, the Company recorded restructuring charges of $44.5 million ($32.3 million after tax). The restructuring liability balance for all plans excluding Accelerate 2020 was $7.7 million and $14.9 million as of December 31, 2019 and 2018, respectively. The reduction in liability was driven primarily by severance payments. The remaining liability is expected to be paid over a period of a few months to several quarters and will continue to be funded from operating activities. Cash payments during 2019 related to these restructuring plans were $8.3 million. ChampionX Separation On December 18, 2019, the Company entered into definitive agreements with ChampionX and Apergy pursuant to which the Company will separate the Upstream Energy business of its Global Energy segment and combine it with Apergy in a tax-efficient reverse Morris Trust transaction. During 2019, the charges associated with the separation reported in special (gains) and charges on the Consolidated Statement of Income include $77.3 million ($65.8 million after tax), which are primarily related to professional fees to support the separation. ChampionX separation costs reported in other income expense on the Consolidated Statement of Income in 2019 include $7.5 million ($5.7 million after tax), related to pension settlements and curtailments due to the separation. Acquisition and integration related costs Acquisition and integration costs reported in special (gains) and charges on the Consolidated Statement of Income in 2019 include $5.6 million ($4.1 million after tax). Charges are related to the Bioquell, PLC (“Bioquell”) and the Laboratoires Anios (“Anios”) acquisition and consist of integration costs, advisory and legal fees. Acquisition and integration costs reported in product and equipment cost of sales on the Consolidated Statement of Income in 2019 include $7.6 million ($5.6 million after tax) and are related to recognition of fair value step-up in the Bioquell inventory and facility closure costs. In conjunction with its acquisitions, the Company incurred $0.2 million ($0.1 million after tax) of interest expense in 2019. During 2018, acquisition and integration costs reported in special (gains) and charges on the Consolidated Statement of Income included $8.8 million ($6.1 million after tax). Charges are primarily related to Anios integration costs, advisory and legal fees. The acquisition and integration gain reported in product and equipment cost of sales on the Consolidated Statement of Income in 2018 relate to changes in estimates related to an early lease exit. In conjunction with its acquisitions, the Company incurred $0.3 million ($0.2 million after tax) of interest expense in 2018. During 2017, acquisition and integration costs reported in special (gains) and charges on the Consolidated Statement of Income included $15.4 million ($9.9 million after tax) of acquisition costs, advisory and legal fees, and integration charges for the Anios and Swisher acquisitions. Acquisition and integration costs reported in cost of sales on the Consolidated Statement of Income in 2017 included $13.2 million ($8.6 million after tax) related primarily to disposal of excess inventory upon the closure of Swisher plants, accelerated rent expense, and amounts related to recognition of fair value step up in the Anios inventory. Further information related to the Company’s acquisitions is included in Note 4. Gain on sale of business During 2017, the Company disposed of the Equipment Care business and recorded a gain of $46.1 million ($12.4 million after tax primarily due to non-deductible goodwill) net of working capital adjustments, costs to sell and other transaction expenses. The gain has been included as a component of special (gains) and charges on the Consolidated Statement of Income. Venezuela related activities Effective as of the end of the fourth quarter of 2015, the Company deconsolidated its Venezuelan subsidiaries. The Company recorded gains due to U.S. dollar cash recoveries of intercompany receivables written off at the time of deconsolidation of $11.5 million ($7.2 million after tax) in 2017. No such gains occurred in 2019 or 2018. Other During 2019, the Company recorded other special charges of $11.9 million ($7.5 million after tax) which primarily related to legal charges partially offset by a litigation settlement. Other special charges reported in product and equipment cost of sales on the Consolidated Statement of Income in 2019 of $10.5 million ($7.1 million after tax) relate to a Healthcare product recall in Europe. During 2018, the Company recorded other special charges of $28.5 million ($21.5 million after tax) which primarily consisted of a $25.0 million ($18.9 million after tax) commitment to the Ecolab Foundation. Other charges, primarily litigation related charges, were minimal and have been included as a component of special (gains) and charges on the Consolidated Statement of Income. Other special gains reported in product and equipment cost of sales on the Consolidated Statement of Income in 2018 of $2.2 million ($1.7 million after tax) relate to changes in estimates for an inventory LIFO reserve. During 2017, the Company recorded other charges of $24.8 million ($19.0 million after tax), primarily related to fixed asset impairments, a Global Energy vendor contract termination and litigation related charges. These charges have been included as a component of both cost of sales and special (gains) and charges on the Consolidated Statement of Income. Other (Income) Expense During 2019, the Company recorded other expense of $9.5 million ($7.2 million after tax) related to pension curtailments and settlements due to the ChampionX separation and Accelerate 2020, respectively, as discussed further above. These charges have been included as a component of other income expense on the Consolidated Statement of Income. Interest Expense, net During 2019 and 2018, an immaterial amount of interest expense was recorded due to acquisition and integration costs. During 2017, in anticipation of U.S. tax reform and a potential limit on interest deductibility in future years, the Company entered into transactions to exchange or retire certain long-term debt, and incurred debt exchange and extinguishment charges of $21.9 million ($13.6 million after tax). This charge has been included as a component of interest expense, net on the Consolidated Statement of Income. |
ACQUISITIONS AND DISPOSITIONS
ACQUISITIONS AND DISPOSITIONS | 12 Months Ended |
Dec. 31, 2019 | |
ACQUISITIONS AND DISPOSITIONS | |
ACQUISITIONS AND DISPOSITIONS | 4. ACQUISITIONS AND DISPOSITIONS Acquisitions The Company makes business acquisitions that align with its strategic business objectives. The assets and liabilities of the acquired businesses have been recorded as of the acquisition date, at their respective fair values, and are included in the Consolidated Balance Sheet. 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 2019, 2018 and 2017 were not significant to the Company’s consolidated financial statements; therefore, pro forma financial information is not presented. 2019 Activity During 2019, the Company acquired Bioquell, a life sciences business which sells bio-decontamination products and services to the Life Sciences and Healthcare industries. This business became part of the Global Industrial reportable segment. During 2018, the Company deposited $179.3 million ( £ 140.5 million) in an escrow account that was released upon closing of the transaction in February 2019. As shown within Note 5, this was recorded as restricted cash within other assets on the Consolidated Balance Sheet as of December 31, 2018. The Company also acquired Lobster Ink, a leading provider of end-to-end online customer training solutions. This acquired business became part of the Global Institutional reportable segment. The purchase price included an earn-out based on certain revenue thresholds in any of the full three years following the acquisition. The acquisition date fair value of the earn-out was reflected in the overall purchase consideration exchanged for the acquisition and recorded as contingent consideration. The earn-out has not yet been paid or settled and the contingent consideration liability is recorded within other liabilities as of December 31, 2019. The Company also acquired Chemstar Corporation, a leading provider of cleaning and sanitizing products for the retail industry with a focus on cleaning chemicals and food safety. This acquired business became part of the Global Institutional reportable segment. The Company also acquired Gallay Medical & Scientific which sells, installs, and services medical equipment and associated chemistry primarily for hospitals, healthcare facilities, and dental clinics. The acquired business became part of the Global Institutional reportable segment. Purchase accounting for these transactions is not yet complete pending finalization of certain estimated values. The amounts recorded reflect the Company’s best estimates as of December 31, 2019 and are subject to change. Annualized pre-acquisition sales for the businesses acquired in 2019 were $134 million. There were insignificant purchase price adjustments related to prior year acquisitions. 2018 Activity During 2018, the Company acquired a water business which provides a range of services to Nalco Water institutional customers. This acquired business became part of the Company’s Global Industrial reportable segment. In addition, the Company acquired an institutional business which provides a range of cleaning and disinfection products for the hospitality, leisure, residential care, housekeeping and janitorial sectors. These acquisitions have been accounted for using the acquisition method of accounting. In addition, there were insignificant purchase price adjustments related to prior year acquisitions. 2017 Activity In 2017, the Company acquired a business which provides water solutions to automotive customers and a paper chemicals business. These businesses became part of the Company’s Global Industrial reportable segment. Also in 2017, the Company acquired U.S. based pest elimination businesses that provide specialized capabilities in food storage. These businesses became part of the Company’s Other reportable segment. Additional acquisitions were made during the year which became part of the Company’s Global Energy and Global Industrial reportable segments. Annualized pre-acquisition sales of the businesses acquired were approximately $135 million. Acquisitions The components of the cash paid for other acquisitions, excluding the Anios transaction (as further disclosed below), for transactions during 2019, 2018 and 2017, are shown in the following table. (millions) 2019 2018 2017 Net tangible assets (liabilities) acquired and equity method investments $(8.0) $30.1 $29.8 Identifiable intangible assets Customer relationships 115.7 101.5 67.0 Trademarks 24.1 3.9 2.5 Non-compete agreements - 2.6 0.2 Other technology 48.9 6.5 7.6 Total intangible assets 188.7 114.5 77.3 Goodwill 234.8 81.9 87.4 Total aggregate purchase price 415.5 226.5 194.5 Acquisition-related liabilities and contingent considerations (24.1) (1.5) 5.6 Net cash paid for acquisitions, including acquisition-related liabilities and contingent considerations $391.4 $225.0 $200.1 The 2019 and 2018 acquisition-related liabilities primarily consist of holdback liabilities and contingent considerations. 2017 acquisition-related liabilities are related primarily to payments of settled liabilities from previous transactions. The weighted average useful lives of identifiable intangible assets acquired, excluding the Anios transaction were, 12 , 13 , and 12 years as of December 31, 2019, 2018 and 2017, respectively. Anios Acquisition On February 1, 2017, the Company acquired Anios for total consideration of $798.3 million, including satisfaction of outstanding debt. Anios had annualized pre-acquisition sales of approximately $245 million and 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. 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. 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. See Note 3 for additional information related to the Company’s special (gains) and charges related to such activities. The components of the cash paid for Anios are shown in the following table. (millions) 2017 Tangible assets $139.8 Identifiable intangible assets Customer relationships 252.0 Trademarks 65.7 Other technology 16.1 Total assets acquired 473.6 Goodwill 511.7 Total liabilities 187.0 Total consideration transferred 798.3 Long-term debt repaid upon close 192.8 Net consideration transferred to sellers $605.5 Tangible assets are primarily comprised of accounts receivable of $64.8 million, property, plant and equipment of $24.7 million and inventory of $29.1 million. Liabilities primarily consist of deferred tax liabilities of $102.3 million and current liabilities of $62.5 million. Customer relationships, trademarks and other technology are being amortized over weighted average lives of 20 , 17 , and 11 years, respectively. Goodwill of $511.7 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. The goodwill was allocated to the Institutional, Healthcare, and Specialty operating segments within the Global Institutional reportable segment and the Food & Beverage and Life Sciences operating segments within the Global Industrial reportable segment. None of the goodwill recognized is expected to be deductible for income tax purposes. Dispositions In November 2017, the Company completed the sale of its Equipment Care business to a third party for $132.6 million, net of working capital adjustments, costs to sell and other transaction expenses. Prior to its sale, Equipment Care provided equipment repair, maintenance, and preventative maintenance services for the commercial food service industry. Consideration received consisted of $118.8 million of cash, a note receivable of $15.0 million and a $5.0 million equity interest in the acquiring entity. The Company recognized a gain of $46.1 million ($12.4 million after tax, primarily due to non-deductible goodwill), which is recorded in special (gains) and charges in the Consolidated Statement of Income. Equipment Care sales were approximately $180 million in 2016 and were included in Other. No dispositions were significant to the Company’s consolidated financial statements for 2019, 2018 or 2017. Subsequent Event Activity Subsequent to year-end, the Company reached an agreement to purchase CID Lines, a leading provider of livestock biosecurity and hygiene solutions. The acquisition is expected to close in the second quarter of 2020 subject to various regulatory clearances. |
BALANCE SHEET INFORMATION
BALANCE SHEET INFORMATION | 12 Months Ended |
Dec. 31, 2019 | |
BALANCE SHEET INFORMATION | |
BALANCE SHEET INFORMATION | 5. BALANCE SHEET INFORMATION December 31 December 31 (millions) 2019 2018 Accounts receivable, net Accounts receivable $2,858.5 $2,723.1 Allowance for doubtful accounts (62.0) (60.6) Total $2,796.5 $2,662.5 Inventories Finished goods $936.5 $1,016.9 Raw materials and parts 559.8 525.6 Inventories at FIFO cost 1,496.3 1,542.5 FIFO cost to LIFO cost difference 9.3 3.9 Total $1,505.6 $1,546.4 Other current assets Prepaid assets $118.8 $132.1 Taxes receivable 133.7 144.2 Derivative assets 54.3 42.8 Other 33.1 35.0 Total $339.9 $354.1 Property, plant and equipment, net Land $215.1 $214.5 Buildings and leasehold improvements 1,363.1 1,279.4 Machinery and equipment 2,467.8 2,313.7 Merchandising and customer equipment 2,787.8 2,565.5 Capitalized software 779.7 666.2 Construction in progress 406.7 400.2 8,020.2 7,439.5 Accumulated depreciation (4,065.3) (3,603.5) Total $3,954.9 $3,836.0 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 3,742.1 3,649.3 Trademarks 409.9 384.9 Patents 479.4 470.2 Other technology 297.2 242.8 4,928.6 4,747.2 Accumulated amortization Customer relationships (1,835.9) (1,604.0) Trademarks (205.1) (175.2) Patents (231.6) (207.3) Other technology (213.5) (193.0) (2,486.1) (2,179.5) Net intangible assets subject to amortization 2,442.5 2,567.7 Total $3,672.5 $3,797.7 Other assets Deferred income taxes $155.6 $105.1 Pension 31.1 39.0 Derivative asset 25.4 11.8 Restricted cash - 179.3 Other 372.0 349.9 Total $584.1 $685.1 December 31 December 31 (millions) 2019 2018 Other current liabilities Discounts and rebates $331.4 $291.3 Dividends payable 135.6 132.4 Interest payable 40.9 44.5 Taxes payable, other than income 113.4 116.9 Derivative liabilities 5.8 20.1 Restructuring 107.1 73.7 Contract liability 84.7 75.8 Operating lease liabilities 153.2 - Other 251.3 251.4 Total $1,223.4 $1,006.1 Accumulated other comprehensive loss Unrealized gain (loss) on derivative financial instruments, net of tax $(4.1) $2.0 Unrecognized pension and postretirement benefit expense, net of tax (823.8) (518.9) Cumulative translation, net of tax (1,261.8) (1,244.8) Total $(2,089.7) $(1,761.7) |
DEBT AND INTEREST
DEBT AND INTEREST | 12 Months Ended |
Dec. 31, 2019 | |
DEBT AND INTEREST | |
DEBT AND INTEREST | 6. DEBT AND INTEREST Short-term Debt The following table provides the components of the Company’s short-term debt obligations, along with applicable interest rates as of December 31, 2019 and 2018: 2019 2018 Average Average Carrying Interest Carrying Interest (millions) Value Rate Value Rate Short-term debt Commercial paper $55.1 (0.30) % $165.4 0.18 % Notes payable 24.6 3.53 % 176.8 1.47 % Long-term debt, current maturities 300.9 401.4 Total $380.6 $743.6 Line of Credit As of December 31, 2019, the Company had in place a $2.0 billion multi-currency revolving credit facility which matures in November 2022. 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 December 31, 2019 and 2018. 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 commercial paper programs may not exceed $2.0 billion. As of December 31, 2019 and 2018, the Company had $55.1 As of December 31, 2019, the Company’s short-term borrowing program was rated A-2 by Standard & Poor’s, P-2 by Moody’s and F-1 by Fitch. Notes Payable The Company’s notes payable consists of uncommitted credit lines with major international banks and financial institutions, primarily to support global cash pooling structures. As of December 31, 2019 and 2018, the Company had $24.6 million and $176.8 million, respectively, outstanding under these credit lines. Approximately $1,264 million and $575 million of these credit lines were available for use as of December 31, 2019 and 2018, respectively. Long-term Debt The following table provides the components of the Company’s long-term debt obligations, along with applicable interest rates as of December 31, 2019 and 2018: 2019 2018 Stated Effective Stated Effective Maturity Carrying Interest Interest Carrying Interest Interest (millions) by Year Value Rate Rate Value Rate Rate Long-term debt Public notes (2019 principal amount) Three year 2016 senior notes ($400 million) 2019 $ - - % - % $399.7 2.00 % 3.24 % Five year 2015 senior notes ($300 million) 2020 300.0 2.25 % 2.79 % 299.5 2.25 % 2.79 % Ten year 2011 senior notes ($1.02 billion) 2021 1,018.3 4.35 % 4.43 % 1,017.6 4.35 % 4.43 % Five year 2017 senior notes ($500 million) 2022 497.8 2.38 % 2.55 % 496.9 2.38 % 2.55 % Seven year 2016 senior notes ($400 million) 2023 398.5 3.25 % 3.49 % 398.0 3.25 % 3.49 % Seven year 2016 senior notes (€575 million) 2024 628.4 1.00 % 1.10 % 644.1 1.00 % 1.09 % Ten year 2015 senior notes (€575 million) 2025 630.0 2.63 % 2.96 % 646.3 2.63 % 2.94 % Ten year 2016 senior notes ($750 million) 2026 744.5 2.70 % 2.93 % 743.8 2.70 % 2.93 % Ten year 2017 senior notes ($500 million) 2027 495.4 3.25 % 3.37 % 494.8 3.25 % 3.37 % Thirty year 2011 senior notes ($458 million) 2041 451.9 5.50 % 5.56 % 451.6 5.50 % 5.56 % Thirty year 2016 senior notes ($250 million) 2046 246.2 3.70 % 3.76 % 246.1 3.70 % 3.76 % Thirty year 2017 senior notes ($700 million) 2047 610.4 3.95 % 4.15 % 609.0 3.95 % 4.14 % Private notes (2019 principal amount) Series B private placement senior notes ($250 million) 2023 249.6 4.32 % 4.36 % 249.4 4.32 % 4.36 % Finance lease obligations and other 3.4 6.2 Total debt 6,274.4 6,703.0 Long-term debt, current maturities (300.9) (401.4) Total long-term debt $5,973.5 $6,301.6 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 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 Note The Company’s private note may be redeemed by the Company at its option at a redemption price that includes 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 note 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 note upon the occurrence of specified merger events or asset sales involving the Company, when accompanied by a downgrade of the private note below investment grade rating, within a specified time period. The private note is an unsecured senior obligation of the Company and ranks equal in right of payment with all other senior indebtedness of the Company. The private note shall be unconditionally guaranteed by subsidiaries of the Company in certain circumstances, as described in the note purchase agreement as amended. Covenants and Future Maturities The Company is in compliance with all covenants under the Company’s outstanding indebtedness at December 31, 2019. As of December 31, 2019, the aggregate annual maturities of long-term debt for the next five years were: (millions) 2020 $ 301 2021 1,020 2022 498 2023 648 2024 628 Net Interest Expense Interest expense and interest income incurred during 2019, 2018 and 2017 were as follows: (millions) 2019 2018 2017 Interest expense $215.3 $237.2 $274.6 Interest income (24.1) (14.9) (19.6) Interest expense, net $191.2 $222.3 $255.0 Interest expense generally includes the expense associated with the interest on the Company’s outstanding borrowings. Interest expense also includes the amortization of debt issuance costs and debt discounts, which are both recognized over the term of the related debt. During 2017, in anticipation of U.S. tax reform and a potential limit on interest deductibility in future years, the Company entered into transactions to exchange or retire certain long-term debt, and incurred debt exchange and extinguishment charges of $21.9 million ($13.6 million after tax) |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2019 | |
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, contingent consideration obligations, 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 Level 2 Level 3 The carrying amount and the estimated fair value for assets and liabilities measured on a recurring basis were: December 31, 2019 (millions) Carrying Fair Value Measurements Amount Level 1 Level 2 Level 3 Assets Foreign currency forward contracts $83.9 $- $83.9 $- Liabilities Foreign currency forward contracts 10.0 - 10.0 - December 31, 2018 (millions) Carrying Fair Value Measurements Amount Level 1 Level 2 Level 3 Assets Foreign currency forward contracts $72.3 $- $72.3 $- Liabilities Foreign currency forward contracts 41.1 - 41.1 - Interest rate swap agreements 0.2 - 0.2 - 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 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. Contingent consideration liabilities are recognized and measured at fair value at the acquisition date and thereafter until paid or settled. Contingent consideration is classified within level 3 as the underlying fair value is determined using income-based valuation approaches appropriate for the terms and conditions of each respective earn-out. The consideration expected to be transferred is based on the Company’s expectations of various financial measures. The ultimate payment of contingent consideration could deviate from current estimates based on the actual results of these financial measures. Contingent consideration activities during 2019 and 2018 were not significant to the Company’s consolidated financial statements. There were no contingent consideration activities during 2017. 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: December 31, 2019 December 31, 2018 Carrying Fair Carrying Fair Amount Value Amount Value Long-term debt, including current maturities $6,274.4 $6,862.0 $6,703.0 $6,844.7 |
DERIVATIVES AND HEDGING TRANSAC
DERIVATIVES AND HEDGING TRANSACTIONS | 12 Months Ended |
Dec. 31, 2019 | |
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. 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 below, no cash collateral had been received or pledged related to the underlying derivatives. The respective net amounts are included in other current assets, other assets, other current liabilities and other liabilities on the Consolidated Balance Sheet. The following table summarizes the gross fair value and the net value of the Company’s outstanding derivatives. (millions) Derivatives Assets Derivatives Liabilities December 31 December 31 December 31 December 31 (millions) 2019 2018 2019 2018 Derivatives designated as hedging instruments Foreign currency forward contracts $67.4 $40.4 $2.1 $10.2 Interest rate swap agreements - - - 0.2 Derivatives not designated as hedging instruments Foreign currency forward contracts 16.5 31.9 7.9 30.9 Gross value of derivatives 83.9 72.3 10.0 41.3 Gross amounts offset in the Consolidated Balance Sheet (4.2) (17.7) (4.2) (17.7) Net value of derivatives $79.7 $54.6 $5.8 $23.6 The following table summarizes the notional values of the Company’s outstanding derivatives. Notional Values December 31 December 31 (millions) 2019 2018 Foreign currency forward contracts $ 4,004 $ 6,226 Interest rate agreements - 400 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, intercompany loans, management fee and other payments. These forward contracts are designated as cash flow hedges. 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 four years. For forward contracts designated as hedges of foreign currency exchange rate risk associated with forecasted foreign currency transactions, the Company excludes the changes in fair value attributable to time value from the assessment of hedge effectiveness. The initial value of the excluded component (i.e., the forward points) is amortized on a straight-line basis over the life of the hedging instrument and recognized in the same line item in the Consolidated Statement of Income as the underlying exposure being hedged for intercompany loans. For all other cash flow hedge types, the forward points are mark-to-market monthly and recognized in the same line item in the Consolidated Statement of Income as the underlying exposure being hedged. The difference between fair value changes of the excluded component and the amount amortized in the Consolidated Statement of Income is recorded in AOCI. 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 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 swap agreement tied to the Company’s $500 million 1.45% debt, $300 million 1.55% debt, $250 million 3.69% and $400 million 2.00% debt expired in December 2017, January 2018, November 2018 and January 2019, respectively, upon repayment of the underlying debt. The interest rate swaps referenced above were designated as fair value hedges. Amounts recognized in the Consolidated Balance Sheet Carrying amount of the hedged liabilities Cumulative amount of the fair value hedging adjustment included in the carrying amount of the hedged liabilities (millions) 2019 2018 2017 2019 2018 2017 Long-term debt $- $399.7 $944.6 $- $0.1 $7.6 Net Investment Hedges The Company designates its outstanding $1,258 million (€1,150 million as of year-end 2019) senior notes (“euronotes”) and related accrued interest as a hedge of existing foreign currency exposures related to investments the Company has in certain euro denominated functional currency subsidiaries. Certain Euro commercial paper was also designated as a hedge of existing foreign currency exposures and matured in the fourth quarter of 2019 and third quarter of 2018. 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: (millions) 2019 2018 2017 Revaluation gains (losses), net of tax $31.4 $57.5 $(109.7) 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. Effect of all Derivative Instruments on Income The gain (loss) of all derivative instruments recognized in product and equipment cost of sales (“COS”), selling, general and administrative expenses (“SG&A”) and interest expense, net (“interest”) is summarized below: 2019 2018 2017 (millions) COS SG&A Interest COS SG&A Interest COS SG&A Interest Gain (loss) on derivatives in cash flow hedging relationship: Foreign currency forward contracts Amount of gain (loss) reclassified from AOCI to income $15.4 $39.5 $- $(7.7) $84.1 $- $(13.7) $(157.2) $- Amount excluded from the assessment of effectiveness recognized in earnings based on changes in fair value - - 28.7 - - 37.4 - - 24.5 Interest rate swap agreements Amount of gain (loss) reclassified from AOCI to income - - (0.9) - - (5.5) - - (7.2) Gain (loss) on derivatives in fair value hedging relationship: Interest rate swaps Hedged items - - 0.2 - - (4.0) - - 0.7 Derivatives designated as hedging instruments - - (0.2) - - 4.0 - - (0.7) Gain (loss) on derivatives not designated as hedging instruments: Foreign currency forward contracts Amount of gain (loss) recognized in income - 30.0 (0.1) - 25.1 5.3 - (38.2) (3.0) Total gain (loss) of all derivative instruments $15.4 $69.5 $27.7 $(7.7) $109.2 $37.2 $(13.7) $(195.4) $14.3 |
OTHER COMPREHENSIVE INCOME (LOS
OTHER COMPREHENSIVE INCOME (LOSS) INFORMATION | 12 Months Ended |
Dec. 31, 2019 | |
OTHER COMPREHENSIVE INCOME (LOSS) INFORMATION | |
OTHER COMPREHENSIVE INCOME (LOSS) INFORMATION | 9. OTHER COMPREHENSIVE INCOME (LOSS) 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 table provides other comprehensive income (loss) information related to the Company’s derivatives and hedging instruments and pension and postretirement benefits. See Note 8 for additional information related to the Company’s derivatives and hedging transactions. See Note 16 for additional information related to the Company’s pension and postretirement benefits activity. (millions) 2019 2018 2017 Derivative and Hedging Instruments Unrealized gains (losses) on derivative & hedging instruments Amount recognized in AOCI $78.1 $144.4 $(173.4) (Gains) losses reclassified from AOCI into income COS (15.4) 7.7 13.7 SG&A (39.5) (84.1) 157.2 Interest (income) expense, net (27.8) (31.9) (17.3) (82.7) (108.3) 153.6 Other activity 0.8 - 0.2 Tax impact 0.4 (7.7) 1.7 Net of tax $(3.4) $28.4 $(17.9) Pension and Postretirement Benefits Amount recognized in AOCI Current period net actuarial income (loss) and prior service costs $(326.3) $(56.5) $(46.9) Amount reclassified from AOCI into income Amortization of net actuarial loss and prior service costs and benefits 0.4 28.4 21.5 Pension and postretirement benefits changes - 59.3 - (325.9) 31.2 (25.4) Tax impact 74.3 (13.2) 16.2 Net of tax $(251.6) $18.0 $(9.2) |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2019 | |
SHAREHOLDERS' EQUITY | |
SHAREHOLDERS' EQUITY | 10. SHAREHOLDERS’ EQUITY Authorized common stock, par value $1.00 per share, was 800 million shares at December 31, 2019, 2018 and 2017. Treasury stock is stated at cost. Dividends declared per share of common stock were $1.85 for 2019, $1.69 for 2018 and $1.52 for 2017. The Company has 15 million shares, without par value, of authorized but unissued and undesignated preferred stock. Share Repurchase Authorization In February 2015, the Company’s Board of Directors authorized the repurchase of up to 20 million additional shares of its common stock, including shares to be repurchased under Rule 10b5-1. As of December 31, 2019, 6,805,010 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 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. In connection with the final settlement of the ASR agreement in June 2017, the Company received an additional 286,620 shares of common stock. The final per share purchase price and the total number of shares to be repurchased was based on the volume-weighted average price of the Company’s common stock during the term of the agreement and all shares acquired were recorded as treasury stock. During the open periods in 2017, the ASR was not dilutive to the Company’s earnings per share calculations, nor did it trigger the two-class earnings per share methodology. Additionally, the unsettled portion of ASR during the open periods met the criteria to be accounted for as a forward contract indexed to the Company’s stock and qualified as an equity transaction. 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. Share Repurchases During 2019 and 2018, the Company reacquired 1,986,241 and 3,908,041 shares, respectively, of its common stock, of which 1,846,384 and 3,706,716, respectively, related to share repurchases through open market or private purchases, and 139,857 and 201,325, respectively, related to shares withheld for taxes on exercise of stock options and vesting of stock awards and units. |
EQUITY COMPENSATION PLANS
EQUITY COMPENSATION PLANS | 12 Months Ended |
Dec. 31, 2019 | |
EQUITY COMPENSATION PLANS | |
EQUITY COMPENSATION PLANS | 11. EQUITY COMPENSATION PLANS The Company’s equity compensation plans provide for grants of stock options, performance-based restricted stock units (“PBRSUs”) and non-performance-based restricted stock units (“RSUs”) and restricted stock awards (“RSAs”). Common shares available for grant as of December 31, 2019, 2018 and 2017 were 9,029,645, 10,152,863 and 11,685,090, respectively. The Company generally issues authorized but previously unissued shares to satisfy stock option exercises and stock award vestings. The Company’s annual long-term incentive share-based compensation program is made up of 50% stock options and 50% PBRSUs. The Company also periodically grants RSUs. Total compensation expense related to all share-based compensation plans was $91 million ($76 million net of tax benefit), $94 million ( $78 million net of tax benefit) and $90 million ( $62 million net of tax benefit) for 2019, 2018 and 2017, respectively. As of December 31, 2019, there was $124 million of total measured but unrecognized compensation expense related to non-vested share-based compensation arrangements granted under all of the Company’s plans. That cost is expected to be recognized over a weighted-average period of 2.1 years. Stock Options Stock options are granted to purchase shares of the Company’s stock at the average daily share price on the date of grant. These options generally expire within ten years from the grant date. The Company generally recognizes compensation expense for these awards on a straight-line basis over the three year vesting period. Stock option grants to retirement eligible recipients are attributed to expense using the non-substantive vesting method. A summary of stock option activity and average exercise prices is as follows: 2019 2018 2017 Number of Exercise Number of Exercise Number of Exercise Options Price (a) Options Price (a) Options Price (a) Outstanding, beginning of year 10,516,633 $ 108.28 11,380,013 $ 95.76 11,910,501 $ 84.22 Granted 879,862 184.31 1,202,314 158.23 1,491,893 136.87 Exercised (2,270,374) 82.93 (1,942,192) 64.63 (1,951,920) 56.00 Canceled (83,801) 143.08 (123,502) 127.02 (70,461) 116.44 Outstanding, end of year 9,042,320 $ 108.28 10,516,633 $ 108.28 11,380,013 $ 95.76 Exercisable, end of year 7,048,422 $ 109.34 7,993,297 $ 97.13 8,371,809 $ 84.40 Vested and expected to vest, end of year 8,923,240 $ 121.14 (a) Represents weighted average price per share. The total aggregate intrinsic value of options (the amount by which the stock price exceeded the exercise price of the option on the date of exercise) that were exercised during 2019, 2018 and 2017 was $227 million, $161 million and $142 million, respectively. The total aggregate intrinsic value of options outstanding as of December 31, 2019 was $636 million, with a corresponding weighted-average remaining contractual life of 6.3 years. The total aggregate intrinsic value of options exercisable as of December 31, 2019 was $583 million, with a corresponding weighted-average remaining contractual life of 5.5 years. The total aggregate intrinsic value of options vested and expected to vest as of December 31, 2019 was $633 million, with a corresponding weighted-average remaining contractual life of 6.2 years. The lattice (binomial) option-pricing model is used to estimate the fair value of options at grant date. The Company’s primary employee option grant occurs during the fourth quarter. The weighted-average grant-date fair value of options granted and the significant assumptions used in determining the underlying fair value of each option grant, on the date of grant were as follows: 2019 2018 2017 Weighted-average grant-date fair value of options granted at market prices $ 40.30 $ 37.34 $ 30.34 Assumptions Risk-free rate of return 1.6 % 2.8 % 2.2 % Expected life 6 years 6 years 6 years Expected volatility 23.0 % 22.5 % 22.7 % Expected dividend yield 1.0 % 1.2 % 1.2 % The risk-free rate of return is determined based on a yield curve of U.S. treasury rates from one month to ten years and a period commensurate with the expected life of the options granted. Expected volatility is established based on historical volatility of the Company’s stock price. The expected dividend yield is determined based on the Company’s annual dividend amount as a percentage of the average stock price at the time of the grant. PBRSUs, RSUs and RSAs The expense associated with PBRSUs is based on the average of the high and low share price of the Company’s common stock on the date of grant, adjusted for the absence of future dividends. The awards vest based on the Company achieving a defined performance target and with continued service for a three year period. Upon vesting, the Company issues shares of its common stock such that one award unit equals one share of common stock. The Company assesses the probability of achieving the performance target and recognizes expense over the three year vesting period when it is probable the performance target will be met. PBRSU awards granted to retirement eligible recipients are attributed to expense using the non-substantive vesting method. The awards are generally subject to forfeiture in the event of termination of employment. The expense associated with shares of non-performance based RSUs and RSAs is based on the average of the high and low share price of the Company’s common stock on the date of grant, adjusted for the absence of future dividends and is amortized on a straight-line basis over the periods during which the restrictions lapse. The Company currently has RSUs that vest over periods between 12 and 60 months . The awards are generally subject to forfeiture in the event of termination of employment. A summary of non-vested PBRSUs and restricted stock activity is as follows: PBRSU Grant Date RSAs and Grant Date Awards Fair Value (a) RSUs Fair Value (a) December 31, 2016 1,386,687 $ 107.70 254,387 $ 107.95 Granted 323,750 131.71 96,980 125.34 Vested / Earned (312,745) 99.65 (86,622) 102.02 Canceled (34,856) 108.16 (15,343) 109.72 December 31, 2017 1,362,836 $ 115.24 249,402 $ 116.66 Granted 284,104 152.59 109,074 138.69 Vested / Earned (324,561) 103.15 (92,032) 113.03 Canceled (55,026) 114.25 (19,975) 115.05 December 31, 2018 1,267,353 $ 126.75 246,469 $ 127.09 Granted 207,704 178.20 102,941 177.38 Vested / Earned (334,351) 114.38 (64,597) 119.08 Canceled (23,808) 135.70 (19,300) 124.77 December 31, 2019 1,116,898 $ 139.83 265,513 $ 149.46 (a) Represents weighted average price per share. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2019 | |
INCOME TAXES | |
INCOME TAXES | 12. INCOME TAXES Income before income taxes consisted of: (millions) 2019 2018 2017 United States $752.6 $728.3 $847.3 International 1,146.3 1,076.3 915.1 Total $1,898.9 $1,804.6 $1,762.4 The provision (benefit) for income taxes consisted of: (millions) 2019 2018 2017 Federal and state $135.4 $103.5 $241.8 International 225.0 175.7 355.1 Total current 360.4 279.2 596.9 Federal and state 32.7 51.8 (331.4) International (70.4) 33.3 (21.7) Total deferred (37.7) 85.1 (353.1) Provision for income taxes $322.7 $364.3 $243.8 The Company’s overall net deferred tax assets and deferred tax liabilities were comprised of the following: December 31 (millions) 2019 2018 Deferred tax assets Other accrued liabilities $141.5 $130.9 Loss carryforwards 71.3 217.2 Share-based compensation 58.4 60.5 Pension and other comprehensive income 208.6 145.8 Lease liability 117.9 - Other, net 83.0 68.5 Valuation allowance (45.4) (184.4) Total deferred tax assets 635.3 438.5 Deferred tax liabilities Property, plant and equipment basis differences (307.9) (268.5) Intangible assets (729.8) (783.3) Lease asset (118.4) - Other, net (64.0) (46.2) Total deferred tax liabilities (1,220.1) (1,098.0) Net deferred tax liabilities balance $(584.8) $(659.5) As of December 31, 2019, the Company has tax effected federal, state and international net operating loss carryforwards of $0.2 million, $19.1 million and $52.0 million, respectively, which will be available to offset future taxable income. The state loss carryforwards expire from 2020 to 2040. For the international loss carryforwards, $27.1 million expire from 2020 to 2040 and $24.9 million have no expiration. The Company has valuation allowances on certain deferred tax assets of $45.4 million and $184.4 million at December 31, 2019 and 2018, respectively. The decrease in valuation allowance from year end 2018 to year end 2019 was due to changes in future utilization of losses related to an internal entity reorganization from 2018 which has subsequently been deemed a worthless asset and therefore the Company has written off both the loss carryforward and related valuation allowance. Current year losses increased the valuation allowance while foreign currency translation decreased the valuation allowance. In 2019, the Company obtained tax benefits from tax holidays in two foreign jurisdictions, the Dominican Republic and Singapore. The Company received a permit of operation, which expires in July 2021, from the National Council of Free Zones of Exportation for the Dominican Republic. Companies operating under the Free Zones are not subject to income tax in the Dominican Republic on export income. The Company has two tax incentives awarded by the Singapore Economic Development Board. These incentives provide for a preferential 10% tax rate on certain headquarter income which expires in January 2021 and a 0% tax rate on manufacturing profits generated at the Company’s facility located on Jurong Island which expires in December 2024. The tax reduction as the result of the tax holidays for 2019 was $29.8 million ($0.10 per diluted share), 2018 was $25.6 million ($0.09 per diluted share) and 2017 was $16.9 million ($0.06 per diluted share). A reconciliation of the statutory U.S. federal income tax rate to the Company’s effective income tax rate is as follows: 2019 2018 2017 Statutory U.S. rate 21.0 % 21.0 % 35.0 % One-time transition tax (0.2) 3.7 9.1 State income taxes, net of federal benefit 1.8 1.2 0.4 Foreign operations 4.8 (13.5) (7.4) Domestic manufacturing deduction - - (2.2) R&D credit (1.1) (1.0) (1.0) Change in valuation allowance (7.4) 9.1 0.2 Audit settlements and refunds - (0.8) (0.1) Excess stock benefits (2.3) (1.6) (2.3) Change in federal tax rate (deferred taxes) - (0.6) (18.2) Prior year adjustments - 2.5 - Other, net 0.4 0.2 0.3 Effective income tax rate 17.0 % 20.2 % 13.8 % The change in the Company’s tax rate includes the tax impact of special (gains) and charges and discrete tax items, which have impacted the comparability of the Company’s historical reported tax rates, as amounts included in special (gains) and charges are derived from tax jurisdictions with rates that vary from the Company’s tax rate, and discrete tax items are not necessarily consistent across periods. The tax impact of special (gains) and charges and discrete tax items will likely continue to impact comparability of the Company’s reported tax rate in the future. The enactment of the Tax Act also significantly impacted the comparability of the Company’s reported tax rate. In 2017, the Company recorded a provisional amount for the income tax effects related to the one-time transition tax of $160.1 million which is subject to payment over eight years . In 2019 and 2018, the Company recorded additional discrete benefit of $3.1 million and discrete expense of $66.0 million, respectively, related to the one-time transition tax primarily due to the issuance of further technical guidance with respect to the Tax Act and the finalization of certain estimates as a result of the filing the 2017 and 2018 U.S. federal tax returns. The Company continues to assert permanent reinvestment of the undistributed earnings of international affiliates, and, if there are policy changes, the Company would record the applicable taxes in that period of change. Accordingly, no deferred taxes have been provided for withholding taxes or other taxes as it is not practical to estimate the tax liability that might be incurred if such earnings were remitted to the U.S. The Company files U.S. federal income tax returns and income tax returns in various U.S. state and non- U.S. jurisdictions. With few exceptions, the Company is no longer subject to state and foreign income tax examinations by tax authorities for years before 2016. The IRS has completed examinations of the Company’s U.S. federal income tax returns through 2016, and the years 2017 and 2018 are currently under audit. In addition to the U.S. federal examination, there is ongoing audit activity in several U.S. state and foreign jurisdictions. The Company anticipates changes to uncertain tax positions due to closing of various audit years mentioned above. The Company does not believe these changes will result in a material impact during the next twelve months. Decreases in the Company’s gross liability could result in offsets to other balance sheet accounts, cash payments, and adjustments to tax expense. The occurrence of these events and/or other events not included above within the next twelve months could change depending on a variety of factors and result in amounts different from above. The Company’s 2019 reported tax rate includes $3.1 million of net benefit associated with the Tax Act, $57.2 million of net tax benefits on special (gains) and charges, and net tax benefits of $55.3 million associated with discrete tax items. During 2019, the Company recorded a discrete tax benefit of $43.1 million related to excess tax benefits resulting from the treatment of tax benefits on share-based compensation. The extent of excess tax benefits is subject to variation in stock price and stock option exercises. The Company recognized $15.6 million tax benefit related to changes in local tax law, which primarily includes $30.4 million benefit due to the passage of the Swiss Tax Reform and AHV Financing Act, a Swiss federal tax law, offset by a tax expense of $10.2 million due to the release of the final Treasury Regulation governing taxation of foreign dividends. The Company recorded changes in reserves in non-U.S. and U.S. jurisdictions due to audit settlements and statutes of limitations which resulted in a $16.8 million tax benefit. The Company finalized the 2015 and 2016 IRS audit in 2019, which resulted in a discrete tax expense of $11.0 million. The remaining discrete tax expense was primarily related to changes in estimates in non-U.S. jurisdictions. The Company’s 2018 reported tax rate includes $66.0 million of net tax expense associated with the Tax Act, $33.5 million of net tax benefits on special (gains) and charges, and net tax benefits of $61.3 million associated with discrete tax items. During 2018, the Company recorded a discrete tax benefit of $28.1 million related to excess tax benefits resulting from the adoption of accounting changes regarding the treatment of tax benefits on share-based compensation. The extent of excess tax benefits is subject to variation in stock price and stock option exercises. In addition, the Company recorded net discrete benefit of $39.9 million related to adjustments from filing the 2017 U.S. federal income tax return and IRS approved method change. Included within the 2018 provision for income taxes is $44.2 million of discrete charges recorded in the fourth quarter to correct immaterial errors in prior years. The remaining discrete expense was primarily related to changes in reserves, audit settlements, international and U.S. changes in estimates, and accounting for internal entity reorganization. The Company’s 2017 reported tax rate includes $158.9 million of net tax benefits associated with the Tax Act, $6.2 million of net tax benefits on special (gains) and charges, and net tax benefits of $25.3 million associated with discrete tax items. In connection with the Company’s initial analysis of the impact of the Tax Act, as noted above, a provisional net discrete tax benefit of $158.9 million was recorded in the period ended December 31, 2017, which includes $319.0 million tax benefit for recording deferred tax assets and liabilities at the U.S. enacted tax rate, and a net expense for the one-time transition tax of $160.1 million. Special (gains) and charges represent the tax impact of special (gains) and charges, as well as additional tax benefits utilized in anticipation of U.S. tax reform of $7.8 million. During 2017, the Company recorded a discrete tax benefit of $39.7 million related to excess tax benefits, resulting from the adoption of accounting changes regarding the treatment of tax benefits on share-based compensation. The extent of excess tax benefits is subject to variation in stock price and stock option exercises. In addition, the Company recorded net discrete expenses of $14.4 million related to recognizing adjustments from filing the 2016 U.S. federal income tax return and international adjustments due to changes in estimates, partially offset by the release of reserves for uncertain tax positions due to the expiration of statute of limitations in state tax matters. A reconciliation of the beginning and ending amount of gross liability for unrecognized tax benefits is as follows: (millions) 2019 2018 2017 Balance at beginning of year $49.7 $61.5 $75.9 Additions based on tax positions related to the current year 2.1 3.0 3.2 Additions for tax positions of prior years 1.0 2.0 — Reductions for tax positions of prior years (18.4) (8.7) (4.9) Reductions for tax positions due to statute of limitations (5.7) (5.8) (14.0) Settlements (0.6) (0.8) (10.8) Assumed in connection with acquisitions - - 10.0 Foreign currency translation (0.4) (1.5) 2.1 Balance at end of year $27.7 $49.7 $61.5 The total amount of unrecognized tax benefits, if recognized would have affected the effective tax rate by $24.5 million as of December 31, 2019, $36.4 million as of December 31, 2018 and $47.1 million as of December 31, 2017. The Company recognizes interest and penalties related to unrecognized tax benefits in its provision for income taxes. During 2019, 2018 and 2017 the Company released $1.8 million, $1.2 million and $0.9 million related to interest and penalties, respectively. The Company had $6.2 million, $8.1 million and $9.3 million of accrued interest, including minor amounts for penalties, at December 31, 2019, 2018, and 2017, respectively. |
RENTALS AND LEASES
RENTALS AND LEASES | 12 Months Ended |
Dec. 31, 2019 | |
RENTALS AND LEASES | |
RENTAL AND LEASES | 13. RENTALS AND LEASES Lessee The Company leases sales and administrative office facilities, distribution centers, research and manufacturing facilities, as well as vehicles and other equipment under operating leases. The Company also enters into insignificant finance leases. The Company’s operating lease cost was as follows: (millions) 2019 Operating lease cost* $219.4 *Includes immaterial short-term and variable lease costs Future maturity of operating lease liabilities as of December 31, 2019 is as follows: (millions) 2020 174 2021 150 2022 109 2023 68 2024 37 Thereafter 121 Total lease payments 659 Less: imputed interest 81 Present value of lease liabilities $ 578 Total rental expense under the Company’s operating leases was $210 million in 2018 and $239 million in 2017. As of December 31, 2018, identifiable future minimum payments with non-cancelable terms in excess of one year were: (millions) 2019 $ 172 2020 141 2021 108 2022 72 2023 37 Thereafter 104 Total $ 634 The Company’s operating leases term and discount rate were as follows: December 31 2019 Weighted-average remaining lease terms (years) 6.03 Weighted-average discount rate 4.00% The Company’s other lease information was as follows: (millions) 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $200.8 Leased assets obtained in exchange for new operating lease liabilities 181.6 Lessor The Company leases warewashing and water treatment equipment to customers under operating leases. Gross assets under operating leases recorded in Property, plant and equipment, net is $1,113.6 million and related accumulated depreciation is $621.8 million as of December 31, 2019. The Company’s operating lease revenue was as follows: (millions) 2019 Operating lease revenue* $441.3 *Includes immaterial variable lease revenue Revenue from operating leases for existing contracts as of December 31, 2019 is as follows: (millions) 2020 382 2021 292 2022 222 2023 143 2024 58 Thereafter 17 Total lease revenue $ 1,114 The Company mitigates the risk of residual value subsequent to the lease term by redeploying assets. As such, the Company expects to receive revenue from the operating lease assets through the remaining useful life and therefore subsequent to the initial contract termination date. |
RESEARCH AND DEVELOPMENT EXPEND
RESEARCH AND DEVELOPMENT EXPENDITURES | 12 Months Ended |
Dec. 31, 2019 | |
RESEARCH AND DEVELOPMENT EXPENDITURES | |
RESEARCH AND DEVELOPMENT EXPENDITURES | 14. RESEARCH AND DEVELOPMENT EXPENDITURES Research expenditures that relate to the development of new products and processes, including significant improvements and refinements to existing products, are expensed as incurred. Such costs were $209 million in 2019, $216 million in 2018 and $201 million in 2017. The Company did not participate in any material customer sponsored research during any of the years. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2019 | |
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, income taxes, environmental matters and lawsuits. The Company is also subject to various claims and contingencies related to income taxes, which are discussed in Note 12. The Company also has contractual obligations including to lease commitments, which are discussed in Note 13. The Company records liabilities where a contingent loss is probable and can be reasonably estimated. If the reasonable estimate of a probable loss is a range, the Company records the most probable estimate of the loss or the minimum amount when no amount within the range is a better estimate than any other amount. The Company discloses a contingent liability even if the liability is not probable or the amount is not estimable, or both, if there is a reasonable possibility that a material loss may have been incurred. Insurance Globally, the Company has 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, the majority of which are in the U.S., and environmental liabilities have been accrued reflecting management’s best estimate of future costs. Potential insurance reimbursements are not anticipated in the Company’s accruals for environmental liabilities. Matters Related to 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 certain entities that are or will become subsidiaries of ChampionX upon completion of the transactions to separate and combine our Upstream Energy business with Apergy Corporation as discussed in Note 1 (collectively the “COREXIT Defendants”) to supply large quantities of COREXIT™ 9500, an oil dispersant product listed on the U.S. EPA National Contingency Plan Product Schedule. The COREXIT Defendants 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, the COREXIT Defendants 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 of the United States 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 the COREXIT Defendants, “to ensure decisions about ongoing dispersant use in the Gulf of Mexico are grounded in the best available science.” The COREXIT Defendants 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™, the COREXIT Defendants have 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 (the “Court”) 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”). The COREXIT Defendants were 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 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 the COREXIT Defendants and others that responded to the Deepwater Horizon oil spill (known as the “B3 Master Complaint”). On May 18, 2012, the COREXIT Defendants filed a motion for summary judgment against the claims in the B3 Master Complaint, on the grounds that: (i) the plaintiffs’ claims are preempted by the comprehensive oil spill response scheme set forth in the Clean Water Act and National Oil and Hazardous Substances Pollution Contingency Plan (the “National Contingency Plan”); and (ii) the COREXIT Defendants are entitled to derivative immunity from suit. On November 28, 2012, the Court granted the COREXIT Defendants’ motion and dismissed with prejudice the claims in the B3 Master Complaint asserted against the COREXIT Defendants. 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 the COREXIT Defendants. The COREXIT Defendants, 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 the COREXIT Defendants 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, the COREXIT Defendants filed counterclaims against the Cross Claimants. In its counterclaims, the COREXIT Defendants generally allege that if they are found liable for damages resulting from the Deepwater Horizon explosion, oil spill and/or spill response, they is entitled to contribution or indemnity from the Cross Claimants. In May 2016, the COREXIT Defendants were named in nine additional complaints filed by individuals alleging, among other things, business and economic loss resulting from the Deepwater Horizon oil spill (“B1” claims). In April 2017, the COREXIT Defendants were named in two additional complaints filed by individuals alleging, 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 MDL 2179. 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. On July 10, 2018, the Court entered an order dismissing the “B1” claims against the COREXIT Defendants. In light of the Court’s orders dismissing various B3 and “B1” claims in their entirety, for most plaintiffs the Court’s November 28, 2012 grant of summary judgment for the COREXIT Defendants is now final and the deadline to appeal has passed. On October 23, 2018, a plaintiff filed a new B3 complaint against the COREXIT Defendants and other unaffiliated defendants generally alleging, among other things, negligence and gross negligence related to the use of COREXIT™ dispersant in connection with the Deepwater Horizon oil spill. The complaint was consolidated in MDL 2179. There currently remain three cases pending against the COREXIT Defendants relating to the Deepwater Horizon oil spill, all of which are expected to ultimately be dismissed pursuant to the Court’s November 28, 2012 order granting the COREXIT Defendants’ motion for summary judgment. ChampionX believes the claims asserted against the COREXIT Defendants are without merit and intends to defend these lawsuits vigorously. ChampionX also believes that it has rights to contribution and/or indemnification (including legal expenses) from third parties. However, ChampionX cannot predict the outcome of these lawsuits, the involvement it might have in these matters in the future, or the potential for future litigation. |
RETIREMENT PLANS
RETIREMENT PLANS | 12 Months Ended |
Dec. 31, 2019 | |
RETIREMENT PLANS | |
RETIREMENT PLANS | 16. RETIREMENT PLANS Pension and Postretirement Health Care Benefits Plans The Company has a non-contributory, qualified, defined benefit pension plan covering the majority of its U.S. employees. The Company also has 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 have defined benefit pension plans. The Company provides postretirement health care benefits to certain U.S. employees and retirees. The non-qualified plans are not funded and the recorded benefit obligation for the non-qualified plans was $127 million and $119 million at December 31, 2019 and 2018, respectively. The measurement date used for determining the U.S. pension plan assets and obligations is December 31. International plans are funded based on local country requirements. The measurement date used for determining the international pension plan assets and obligations is November 30, the fiscal year-end of the Company’s international affiliates. The U.S. postretirement health care plans are contributory based on years of service and choice of coverage (family or single), with retiree contributions adjusted annually. The measurement date used to determine the U.S. postretirement health care plan assets and obligations is December 31. Certain employees outside the U.S. are covered under government-sponsored programs, which are not required to be fully funded. The expense and obligation for providing international postretirement health care benefits are not significant. The following table sets forth financial information related to the Company’s pension and postretirement health care plans: U.S. International U.S. Postretirement Pension (a) Pension Health Care (millions) 2019 2018 2019 2018 2019 2018 Accumulated benefit obligation, end of year $2,535.9 $2,189.0 $1,585.5 $1,349.9 $165.7 $147.3 Projected benefit obligation Projected benefit obligation, beginning of year $2,241.0 $2,485.1 $1,436.7 $1,537.9 $147.3 $181.3 Service cost 72.8 74.5 30.2 33.2 1.4 2.7 Interest cost 89.0 83.1 31.2 29.1 5.6 5.6 Participant contributions - - 3.0 3.5 3.4 3.5 Medicare subsidies received - - - - - - Curtailments and settlements 3.4 - (18.6) (22.8) 0.6 - Plan amendments - (40.4) 0.1 - - (13.7) Actuarial (gain) loss 336.4 (181.3) 235.8 (42.7) 22.2 (18.4) Assumed through acquisitions - - - 11.4 - - Other events - - 0.6 - - - Benefits paid (180.1) (180.0) (37.6) (38.7) (14.8) (13.7) Foreign currency translation - - (13.8) (74.2) - - Projected benefit obligation, end of year $2,562.5 $2,241.0 $1,667.6 $1,436.7 $165.7 $147.3 Plan assets Fair value of plan assets, beginning of year $1,981.4 $2,226.4 $925.6 $981.1 $6.0 $7.6 Actual returns on plan assets 366.9 (70.7) 110.5 2.6 1.1 (0.2) Company contributions 129.0 5.7 43.3 42.0 13.8 12.3 Participant contributions - - 3.0 3.5 - - Acquisitions - - - 6.4 - - Curtailments and settlements (4.3) - (17.6) (22.8) - - Benefits paid (180.1) (180.0) (37.6) (38.7) (14.8) (13.7) Foreign currency translation - - (0.1) (48.5) - - Fair value of plan assets, end of year $2,292.9 $1,981.4 $1,027.1 $925.6 $6.1 $6.0 Funded Status, end of year $(269.6) $(259.6) $(640.5) $(511.1) $(159.6) $(141.3) Amounts recognized in the Consolidated Balance Sheet: Other assets $- $- $31.1 $39.0 $- $- Other current liabilities (12.5) (5.9) (23.6) (24.4) (5.2) (5.0) Postretirement healthcare and pension benefits (257.1) (253.7) (647.8) (525.7) (154.4) (136.3) Net liability $(269.6) $(259.6) $(640.3) $(511.1) $(159.6) $(141.3) Amounts recognized in accumulated other comprehensive loss (income): Unrecognized net actuarial loss (gain) $632.4 $539.2 $527.7 $368.0 $(10.5) $(36.0) Unrecognized net prior service costs (benefits) (40.0) (52.3) 0.6 (6.0) (11.0) (34.4) Tax (benefit) expense (149.1) (194.4) (129.6) (92.7) 3.4 27.6 Accumulated other comprehensive loss (income), net of tax $443.3 $292.5 $398.7 $269.3 $(18.1) $(42.8) Change in accumulated other comprehensive loss (income): Amortization of net actuarial (gain) loss $(23.5) $(38.9) $(17.3) $(16.5) $4.1 $1.9 Amortization of prior service costs 11.5 6.8 1.1 0.9 23.2 19.7 Current period net actuarial loss (gain) 119.0 51.2 185.8 17.9 21.4 (17.8) Current period prior service costs - - 0.1 - - 5.2 Curtailments and settlements (1.5) - 1.8 (2.3) 0.2 - Tax (benefit) expense (25.7) 5.1 (36.9) 5.7 (11.7) 2.4 Pension and postretirement benefits changes - (40.4) - - - (18.9) Foreign currency translation - - (5.2) (19.2) - - Other comprehensive loss (income) $79.8 $(16.2) $129.4 $(13.5) $37.2 $(7.5) (a) Includes qualified and non-qualified plans Estimated amounts in accumulated other comprehensive loss expected to be reclassified to net period cost during 2020 are as follows: U.S. Post- U.S. International Retirement (millions) Pension (a) Pension Health Care Net actuarial loss $51.9 $25.5 $0.1 Net prior service benefits (7.4) (0.1) (11.0) Total $44.5 $25.4 $(10.9) (a) Includes qualified and non-qualified plans Service cost is included with employee compensation cost in cost of sales and selling, general and administrative expenses in the Consolidated Statement of Income while all other components are included in other (income) expense in the Consolidated Statement of Income. The aggregate projected benefit obligation, accumulated benefit obligation and fair value of pension plan assets for plans with accumulated benefit obligations in excess of plan assets were as follows: December 31, (millions) 2019 2018 Aggregate projected benefit obligation $3,970.3 $3,427.1 Accumulated benefit obligation 3,877.4 3,308.4 Fair value of plan assets 3,040.5 2,624.3 These plans include the U.S. non-qualified pension plans which are not funded as well as the U.S. qualified pension plan. These plans also include various international pension plans which are funded consistent with local practices and requirements. Net Periodic Benefit Costs and Plan Assumptions Pension and postretirement health care benefits expense for the Company’s operations are as follows: U.S. International U.S. Postretirement Pension (a) Pension Health Care (millions) 2019 2018 2017 2019 2018 2017 2019 2018 2017 Service cost $72.8 $74.5 $70.2 $30.2 $33.2 $31.4 $1.4 $2.7 $2.6 Interest cost on benefit obligation 89.0 83.1 83.4 31.2 29.1 28.4 5.6 5.6 5.8 Expected return on plan assets (149.5) (161.9) (149.9) (59.9) (63.2) (56.3) (0.4) (0.4) (0.5) Recognition of net actuarial loss (gain) 23.6 39.0 28.7 16.3 17.2 18.5 (4.1) (1.9) (2.4) Amortization of prior service benefit (11.5) (6.8) (6.8) (0.9) (0.9) (0.7) (23.2) (19.7) (16.7) Curtailments and settlements 9.1 - 0.3 (1.9) 2.3 0.9 0.3 - - Total expense (benefit) $33.5 $27.9 $25.9 $15.0 $17.7 $22.2 $(20.4) $(13.7) $(11.2) (a) Includes qualified and non-qualified plans Plan Assumptions U.S. International U.S. Postretirement Pension (a) Pension Health Care (percent) 2019 2018 2017 2019 2018 2017 2019 2018 2017 Weighted-average actuarial assumptions used to determine benefit obligations as of year end: Discount rate 3.20 % 4.34 % 3.70 % 1.52 % 2.49 % 2.17 % 3.16 % 4.29 % 3.66 % Projected salary increase 4.03 4.03 4.03 2.50 2.46 2.46 Weighted-average actuarial assumptions used to determine net cost: Discount rate 4.34 3.70 4.27 2.66 2.29 2.32 4.29 3.66 4.14 Expected return on plan assets 7.25 7.75 7.75 6.66 6.67 6.67 7.25 7.75 7.75 Projected salary increase 4.03 4.03 4.03 2.70 2.67 2.83 (a) Includes qualified and non-qualified plans The discount rate assumptions for the U.S. plans are developed using a bond yield curve constructed from a population of high-quality, non-callable, corporate bond issues with maturities ranging from six months to thirty years . A discount rate is estimated for the U.S. plans and is based on the durations of the underlying plans. The Company measures service and interest costs by applying the specific spot rates along that yield curve to the plans’ liability cash flows. The Company believes this approach provides a more precise measurement of service and interest costs by aligning the timing of the plans’ liability cash flows to the corresponding spot rates on the yield curve. The expected long-term rate of return used for the U.S. plans is based on the pension plan’s asset mix. The Company considers expected long-term real returns on asset categories, expectations for inflation, and estimates of the impact of active management of the assets in determining the final rate to use. The Company also considers actual historical returns. The expected long-term rate of return used for the Company’s international plans is determined in each local jurisdiction and is based on the assets held in that jurisdiction, the expected rate of returns for the type of assets held and any guaranteed rate of return provided by the investment. The other assumptions used to measure the international pension obligations, including discount rate, vary by country based on specific local requirements and information. As previously noted, the measurement date for these plans is November 30. The Company uses most recently available mortality tables as of the respective U.S. and international measurement dates. For postretirement benefit measurement purposes as of December 31, 2019, the annual rates of increase in the per capita cost of covered health care were assumed to be 8.00% for pre-65 costs and 10.75% for post-65 costs. The rates are assumed to decrease each year until they reach 5% in 2028 and remain at those levels thereafter. Health care costs for certain employees which are eligible for subsidy by the Company are limited by a cap on the subsidy. During the second quarter of 2018, an amendment to eligibility requirements of the U.S. retiree death benefit plan was approved and communicated to all eligible participants. As a result of the approval and communication to the beneficiaries, the plan was remeasured, resulting in an $18.9 million ($14.4 million after tax), reduction of postretirement benefit obligations, with a corresponding impact to accumulated other comprehensive income (AOCI). The re-measurement was completed using a discount rate of 4.36%. As a result of this action, the Company’s U.S. postretirement healthcare costs decreased by $4.5 million in 2018. During the fourth quarter of 2018, the qualified U.S. pension plan was amended to allow unlimited lump sums for participants with the Final Average Pay benefit formula, effective with payments starting on or after June 1, 2019. This amendment allows participants to receive a lump sum benefit based on the present value of the accrued benefit at normal retirement age based on IRC 417(e) interest and mortality rates. As a result of this action, the U.S pension plan benefit obligation was reduced by $40.4 million with a corresponding impact to accumulated other comprehensive income (AOCI). Assumed health care cost trend rates have an effect on the amounts reported for the Company’s U.S. postretirement health care benefits plan. A one-percentage point change in the assumed health care cost trend rates would have an immaterial impact on total service and interest costs as well as total postretirement benefit obligation. Plan Asset Management The Company’s U.S. investment strategy and policies are designed to maximize the possibility of having sufficient funds to meet the long-term liabilities of the pension fund, while achieving a balance between the goals of asset growth of the plan and keeping risk at a reasonable level. Current income is not a key goal of the policy. The asset allocation position reflects the Company’s ability and willingness to accept relatively more short-term variability in the performance of the pension plan portfolio in exchange for the expectation of better long-term returns, lower pension costs and better funded status in the long run. The pension fund is diversified across a number of asset classes and securities. Selected individual portfolios within the asset classes may be undiversified while maintaining the diversified nature of total plan assets. The Company has no significant concentration of risk in its U.S. plan assets. Assets of funded retirement plans outside the U.S. are managed in each local jurisdiction and asset allocation strategy is set in accordance with local rules, regulations and practice. Therefore, no overall target asset allocation is presented. Although non-U.S. equity securities are all considered international for the Company, some equity securities are considered domestic for the local plan. The funds are invested in a variety of equities, bonds and real estate investments and, in some cases, the assets are managed by insurance companies which may offer a guaranteed rate of return. The Company has no significant concentration of risk in its international plan assets. The fair value hierarchy is used to categorize investments measured at fair value in one of three levels in the fair value hierarchy. This categorization is based on the observability of the inputs used in valuing the investments. See Note 7 for definitions of these levels. The fair value of the Company’s U.S. plan assets for its defined benefit pension and postretirement health care benefit plans are as follows: Fair Value as of Fair Value as of (millions) December 31, 2019 December 31, 2018 Level 1 Level 2 Total Level 1 Level 2 Total Cash $13.2 $- $13.2 $7.1 $- $7.1 Equity securities: Large cap equity 785.9 - 785.9 683.5 - 683.5 Small cap equity 201.7 - 201.7 168.6 - 168.6 International equity 350.4 - 350.4 285.0 - 285.0 Fixed income: Core fixed income 410.0 - 410.0 358.3 - 358.3 High-yield bonds 107.9 - 107.9 107.6 - 107.6 Emerging markets 41.7 - 41.7 39.4 - 39.4 Insurance company accounts - 0.3 0.3 - 0.3 0.3 Total investments at fair value 1,910.8 0.3 1,911.1 1,649.5 0.3 1,649.8 Investments measured at NAV 387.9 337.6 Total $1,910.8 $0.3 $2,299.0 $1,649.5 $0.3 $1,987.4 The Company had no level 3 assets as part of its U.S. plan assets as of December 31, 2019 or 2018. The allocation of the Company’s U.S. plan assets for its defined benefit pension and postretirement health care benefit plans are as follows: Target Asset Asset Category Allocation Percentage Percentage of Plan Assets December 31 2019 2018 2019 2018 Cash - % - % 1 % - % Equity securities: Large cap equity 34 34 34 34 Small cap equity 9 9 8 9 International equity 15 15 15 14 Fixed income: Core fixed income 18 18 18 19 High-yield bonds 5 5 5 5 Emerging markets 2 2 2 2 Other: Real estate 6 6 7 8 Private equity 8 8 7 7 Distressed debt 3 3 3 2 Total 100 % 100 % 100 % 100 % The fair value of the Company’s international plan assets for its defined benefit pension plans are as follows: Fair Value as of Fair Value as of (millions) December 31, 2019 December 31, 2018 Level 1 Level 2 Total Level 1 Level 2 Total Cash $7.7 $- $7.7 $7.1 $- $7.1 Equity securities: International equity - 418.1 418.1 - 412.1 412.1 Fixed income: Corporate bonds 8.2 207.6 215.8 7.9 162.1 170.0 Government bonds 12.6 215.8 228.4 12.3 169.2 181.5 Insurance company accounts - 144.2 144.2 - 140.5 140.5 Total investments at fair value 28.5 985.7 1,014.2 27.3 883.9 911.2 Investments measured at NAV 12.9 14.4 Total $28.5 $985.7 $1,027.1 $27.3 $883.9 $925.6 The Company had no level 3 assets as part of its international plan assets as of December 31, 2019 or 2018. The allocation of plan assets of the Company’s international plan assets for its defined benefit pension plans are as follows: Percentage Asset Category of Plan Assets December 31 2019 2018 Cash 1 % 1 % Equity securities: International equity 41 45 Fixed income: Corporate bonds 21 18 Government bonds 22 20 Total fixed income 43 38 Other: Insurance contracts 14 15 Real estate 1 1 Total 100 % 100 % Cash Flows As of year-end 2019, the Company’s estimate of benefits expected to be paid in each of the next five fiscal years and in the aggregate for the five fiscal years thereafter for the Company’s pension and postretirement health care benefit plans are as follows: (millions) All Plans 2020 $ 253 2021 232 2022 263 2023 239 2024 251 2025 - 2029 1,244 Depending on plan funding levels, the U.S. defined benefit qualified pension plan provides certain terminating participants with an option to receive their pension benefits in the form of lump sum payments. The Company is currently in compliance with all funding requirements of its U.S. pension and postretirement health care plans. In September of 2019 and 2017, the Company made voluntary contributions of $120 million and $80 million, respectively, to its non-contributory qualified U.S. pension plan. The Company is required to fund certain international pension benefit plans in accordance with local legal requirements. The Company estimates contributions to be made to its international plans will approximate $46 million in 2020. The Company seeks to maintain an asset balance that meets the long-term funding requirements identified by the projections of the pension plan’s actuaries while simultaneously satisfying the fiduciary responsibilities prescribed in ERISA. The Company also takes into consideration the tax deductibility of contributions to the benefit plans. The Company is not aware of any expected refunds of plan assets within the next twelve months from any of its existing U.S. or international pension or postretirement benefit plans. Savings Plan and ESOP The Company provides a 401(k) savings plan for the majority of its U.S. employees under the Company’s two main 401(k) savings plans, the Ecolab Savings Plan and ESOP for Traditional Benefit Employees (the “Traditional Plan”) and the Ecolab Savings Plan and ESOP (the “Ecolab Plan”). Employees under the Traditional Plan are limited to active employees accruing a final average pay or 5% cash balance benefits in the Ecolab Pension Plan. Employee before-tax contributions made under the Traditional Plan of up to 3% of eligible compensation are matched 100% by the Company and employee before-tax contributions over 3% and up to 5% of eligible compensation are matched 50% by the Company. Employees under the Ecolab Plan are limited to active employees accruing benefits under the 3% cash balance formula of the Ecolab Pension Plan and employees of Nalco eligible for certain legacy final average pay benefits. Employee before-tax contributions made under the Ecolab Plan of up to 4% of eligible compensation are matched 100% by the Company and employee before-tax contributions over 4% and up to 8% of eligible compensation are matched 50% by the Company. The Company’s matching contributions are 100% vested immediately. The Company’s matching contribution expense was $87 million, $83 million and $82 million in 2019, 2018 and 2017, respectively. |
REVENUES
REVENUES | 12 Months Ended |
Dec. 31, 2019 | |
REVENUES | |
REVENUES | 17. REVENUES Revenue Recognition Product and Sold Equipment Product revenue is generated from cleaning, sanitizing, water, energy and colloidal silica products sold to customers in the Global Industrial, Global Institutional, Global Energy segments and Other. In addition, the Company sells equipment which may be used in combination with its specialized products. Revenue recognized from product and sold equipment is recognized at the point in time when the obligations in the contract with the customer are satisfied, which generally occurs with the transfer of the product or delivery of the equipment. Service and Lease Equipment Service and lease equipment revenue is generated from providing services or leasing equipment to customers. Service offerings include installing or repairing certain types of equipment, activities that supplement or replace headcount at the customer location, or fulfilling deliverables included in the contract. Services provided in Other primary includes services designed to detect, eliminate and prevent pests. Global Energy services include process and water treatment offerings to the global petroleum and petrochemical industries, while services in the Global Industrial segment are associated with water treatment and paper process applications. Global Institutional services include water treatment programs and process applications, and wash process solutions. Revenue recognized from leased equipment primarily relates to warewashing and water treatment equipment. Service revenue is recognized over time utilizing an input method and aligns with when the services are provided. Typically, revenue is recognized over time using costs incurred to date because the effort provided by the field selling and service organization represents services provided, which corresponds with the transfer of control. Revenue for leased equipment is accounted for under Topic 842 Leases and recognized on a straight-line basis over the length of the lease contract. Refer to Note 13 for additional information related to lease equipment. Practical Expedients and Exemptions The revenue standard can be applied to a portfolio of contracts with similar characteristics if it is reasonable that the effects of applying the standard at the portfolio would not be significantly different than applying the standard at the individual contract level. The Company applies the portfolio approach primarily within each operating segment by geographical region. Application of the portfolio approach was focused on those characteristics that have the most significant accounting consequences in terms of their effect on the timing of revenue recognition or the amount of revenue recognized. The Company determined the key criteria to assess with respect to the portfolio approach, including the related deliverables, the characteristics of the customers and the timing and transfer of goods and services, which most closely aligned within the operating segments. In addition, the accountability for the business operations, as well as the operational decisions on how to go to market and the product offerings, are performed at the operating segment level. The following table shows principal activities, separated by reportable segments, from which the Company generates its revenue. For more information about the Company’s reportable segments, refer to Note 18. Net sales at public exchange rates by reportable segment are as follows: (millions) 2019 2018 2017 Global Industrial Product and sold equipment $4,819.1 $4,626.2 $4,305.3 Service and lease equipment 681.6 660.3 612.7 Global Institutional Product and sold equipment 4,433.5 4,415.4 4,136.2 Service and lease equipment 753.5 683.1 640.0 Global Energy Product and sold equipment 2,898.7 3,004.4 2,837.5 Service and lease equipment 419.0 416.7 392.5 Other Product and sold equipment 87.6 82.6 152.8 Service and lease equipment 813.3 779.5 758.9 Total Total product and sold equipment $12,238.9 $12,128.6 $11,431.8 Total service and lease equipment 2,667.4 2,539.6 2,404.1 Net sales at public exchange rates by geographic region are as follows: Global Industrial Global Institutional (millions) 2019 2018 2017 2019 2018 2017 United States $2,374.4 $2,269.7 $2,087.8 $3,403.1 $3,279.2 $3,107.2 Europe 1,358.7 1,288.4 1,183.0 988.8 1,038.4 928.8 Asia Pacific 708.1 685.8 661.4 256.1 250.4 237.1 Latin America 497.7 474.3 448.0 166.7 165.6 163.6 Greater China 267.5 278.4 267.0 120.6 113.8 102.1 Canada 148.3 148.9 137.4 192.3 191.6 175.3 Middle East and Africa ("MEA") 146.0 141.0 133.4 59.4 59.5 62.1 Total $5,500.7 $5,286.5 $4,918.0 $5,187.0 $5,098.5 $4,776.2 Global Energy Other (millions) 2019 2018 2017 2019 2018 2017 United States $1,604.1 $1,630.1 $1,481.1 $601.7 $569.2 $648.2 Europe 405.2 398.4 404.4 136.1 133.1 119.5 Asia Pacific 247.9 262.7 253.1 40.3 40.2 33.6 Latin America 212.3 219.7 239.3 47.6 46.7 44.8 Greater China 79.4 76.5 70.5 55.7 50.5 45.0 Canada 298.8 335.6 322.3 9.1 11.5 9.4 MEA 470.0 498.1 459.3 10.4 10.9 11.2 Total $3,317.7 $3,421.1 $3,230.0 $900.9 $862.1 $911.7 Net sales by geographic region were determined based on origin of sale. There were no sales from a single foreign country or individual customer that were material to the Company’s consolidated net sales. Sales of warewashing products were approximately 11% of consolidated net sales in 2019, 2018 and 2017. Contract Liability Payments received from customers are based on invoices or billing schedules as established in contracts with customers. Accounts receivable are recorded when the right to consideration becomes unconditional. The contract liability relates to billings in advance of performance (primarily service obligations) under the contract. Contract liabilities are recognized as revenue when the performance obligation has been performed, which primarily occurs during the subsequent quarter. December 31 December 31 (millions) 2019 2018 Contract liability as of beginning of the year $75.8 $79.0 Revenue recognized in the year from: Amounts included in the contract liability at the beginning of the year (75.8) (79.0) Increases due to billings excluding amounts recognized as revenue during the year ended 78.2 74.3 Business combinations 6.5 1.5 Contract liability as of end of year $84.7 $75.8 |
OPERATING SEGMENTS
OPERATING SEGMENTS | 12 Months Ended |
Dec. 31, 2019 | |
OPERATING SEGMENTS | |
OPERATING SEGMENTS | 18. OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION The Company’s organizational structure consists of global business unit and global regional leadership teams. The Company’s eleven 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. Nine of the Company’s eleven operating segments have been aggregated into three reportable segments based on similar economic characteristics and future prospects, nature of the products and production processes, end-use markets, channels of distribution and regulatory environment. The Company’s reportable segments are Global Industrial, Global Institutional and Global Energy. Operating segments that do not meet the quantitative criteria to be separately reported have been combined into Other. The Company provides similar information for Other as compared to its three reportable segments as the Company considers the information regarding its two underlying operating segments as useful in understanding its consolidated results. The Company’s eleven operating segments are aggregated as follows: Global Industrial Includes the Water, Food & Beverage, Paper, Life Sciences and Textile Care operating segments. It provides water treatment and process applications, and cleaning and sanitizing solutions primarily to large industrial customers within the manufacturing, food and beverage processing, chemical, mining and primary metals, power generation, pulp and paper, and commercial laundry industries. The underlying operating segments exhibit similar manufacturing processes, distribution methods and economic characteristics. Global Institutional Includes the Institutional, Specialty and Healthcare operating segments. It provides specialized cleaning and sanitizing products to the foodservice, hospitality, lodging, healthcare, government and education and retail industries. The underlying operating segments exhibit similar manufacturing processes, distribution methods and economic characteristics. Global Energy Includes the Energy operating segment. It serves the process chemicals and water treatment needs of the global petroleum and petrochemical industries in both upstream and downstream applications. Other Includes the Pest Elimination operating segment which provides services to detect, eliminate and prevent pests, such as rodents and insects and the CTG operating segment which produces and sells colloidal silica, which is comprised of nano-sized particles of silica in water used primarily for binding and polishing applications. Corporate Consistent with the Company’s internal management reporting, Corporate amounts in the table above include intangible asset amortization specifically from the Nalco merger and special (gains) and charges, as discussed in Note 3, that are not allocated to the Company’s reportable segments. 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. 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 2019. The “Other” column in the table reflects immaterial changes between segments, primarily cost allocations. Further information related to the Company’s special (gains) and charges is included in Note 3. The impact of the preceding changes on previously reported full year 2018 and 2017 reportable segment net sales and operating income is summarized as follows: December 31, 2018 2018 Reported Fixed 2018 Revised Valued at 2018 Currency Valued at 2019 (millions) Management Rates Other Rate Change Management Rates Net Sales Global Industrial $5,462.4 $- $(242.2) $5,220.2 Global Institutional 5,204.5 - (138.5) 5,066.0 Global Energy 3,501.8 - (113.0) 3,388.8 Other 877.6 - (21.9) 855.7 Subtotal at fixed currency rates 15,046.3 - (515.6) 14,530.7 Effect of foreign currency translation (378.1) - 515.6 137.5 Consolidated reported GAAP net sales $14,668.2 $- $- $14,668.2 Operating Income Global Industrial $768.1 $(1.4) $(42.3) $724.4 Global Institutional 1,026.9 - (19.6) 1,007.3 Global Energy 358.5 (0.4) (19.6) 338.5 Other 161.3 1.8 (3.1) 160.0 Corporate (307.1) - 3.5 (303.6) Subtotal at fixed currency rates 2,007.7 - (81.1) 1,926.6 Effect of foreign currency translation (60.7) - 81.1 20.4 Consolidated reported GAAP operating income $1,947.0 $- $- $1,947.0 December 31, 2017 2017 Reported Fixed 2017 Revised Valued at 2018 Currency Valued at 2019 (millions) Management Rates Other Rate Change Management Rates Net Sales Global Industrial $5,106.8 $- $(211.0) $4,895.8 Global Institutional 4,910.0 - (124.2) 4,785.8 Global Energy 3,281.7 - (75.9) 3,205.8 Other 931.5 - (20.8) 910.7 Subtotal at fixed currency rates 14,230.0 - (431.9) 13,798.1 Effect of foreign currency translation (394.1) - 431.9 37.8 Consolidated reported GAAP net sales $13,835.9 $- $- $13,835.9 Operating Income Global Industrial $758.5 $(0.8) $(35.7) $722.0 Global Institutional 979.8 (0.5) (16.6) 962.7 Global Energy 336.1 0.2 (13.4) 322.9 Other 142.5 1.1 (2.9) 140.7 Corporate (213.9) - 3.6 (210.3) Subtotal at fixed currency rates 2,003.0 - (65.0) 1,938.0 Effect of foreign currency translation (52.9) - 65.0 12.1 Consolidated reported GAAP operating income $1,950.1 $- $- $1,950.1 Reportable Segment Information Financial information for each of the Company’s reportable segments is as follows: Net Sales Operating Income (Loss) (millions) 2019 2018 2017 2019 2018 2017 Global Industrial $5,569.9 $5,220.2 $4,895.8 $854.7 $724.4 $722.0 Global Institutional 5,235.5 5,066.0 4,785.8 1,042.2 1,007.3 962.7 Global Energy 3,334.0 3,388.8 3,205.8 379.1 338.5 322.9 Other 907.5 855.7 910.7 167.3 160.0 140.7 Corporate - - - (409.1) (303.6) (210.3) Subtotal at fixed currency 15,046.9 14,530.7 13,798.1 2,034.2 1,926.6 1,938.0 Effect of foreign currency translation (140.6) 137.5 37.8 (20.4) 20.4 12.1 Consolidated $14,906.3 $14,668.2 $13,835.9 $2,013.8 $1,947.0 $1,950.1 The profitability of the Company’s operating segments is evaluated by management based on operating income. The Company has an integrated supply chain function that serves all of its reportable segments. As such, asset and capital expenditure information by reportable segment has not been provided and is not available, since the Company does not produce or utilize such information internally. In addition, although depreciation and amortization expense is a component of each reportable segment’s operating results, it is not discretely identifiable. Geographic Information Long-lived assets at public exchange rates by geographic region are as follows: Long-Lived Assets, net (millions) 2019 2018 United States $9,223.6 $9,175.4 Europe 2,641.6 2,538.7 Asia Pacific, excluding Greater China 1,015.1 1,003.4 Latin America 522.4 565.8 MEA 299.2 302.1 Canada 598.1 616.8 Greater China 1,163.1 1,194.6 Total $15,463.1 $15,396.8 Geographic data for long-lived assets is based on physical location of those assets. Refer to Note 17 for net sales by geographic region. |
QUARTERLY FINANCIAL DATA (UNAUD
QUARTERLY FINANCIAL DATA (UNAUDITED) | 12 Months Ended |
Dec. 31, 2019 | |
QUARTERLY FINANCIAL DATA (UNAUDITED) | |
QUARTERLY FINANCIAL DATA (UNAUDITED) | 19. QUARTERLY FINANCIAL DATA (UNAUDITED) First Second Third Fourth (millions, except per share) Quarter Quarter Quarter Quarter Year 2019 Net sales $3,505.4 $3,759.4 $3,817.9 $3,823.6 $14,906.3 Operating expenses Cost of sales 2,089.6 2,208.2 2,207.4 2,218.2 8,723.4 Selling, general and administrative expenses 1,008.3 1,002.7 962.5 984.0 3,957.5 Special (gains) and charges 40.3 49.9 60.4 61.0 211.6 Operating income 367.2 498.6 587.6 560.4 2,013.8 Other (income) expense (21.2) (20.9) (20.8) (13.4) (76.3) Interest expense, net 49.4 49.5 46.1 46.2 191.2 Income before income taxes 339.0 470.0 562.3 527.6 1,898.9 Provision for income taxes 38.6 97.8 93.0 93.3 322.7 Net income including noncontrolling interest 300.4 372.2 469.3 434.3 1,576.2 Net income attributable to noncontrolling interest 3.9 3.6 5.1 4.7 17.3 Net income attributable to Ecolab $296.5 $368.6 $464.2 $429.6 $1,558.9 Earnings attributable to Ecolab per common share Basic $ 1.03 $ 1.28 $ 1.61 $ 1.49 $ 5.41 Diluted $ 1.01 $ 1.26 $ 1.59 $ 1.47 $ 5.33 Weighted-average common shares outstanding Basic 288.2 287.6 288.1 288.3 288.1 Diluted 292.3 292.1 292.8 292.6 292.5 2018 Net sales $3,470.9 $3,689.6 $3,747.2 $3,760.5 $14,668.2 Operating expenses Cost of sales 2,072.3 2,146.1 2,190.7 2,216.8 8,625.9 Selling, general and administrative expenses 1,018.3 1,036.8 964.7 948.8 3,968.6 Special (gains) and charges 26.0 12.1 75.6 13.0 126.7 Operating income 354.3 494.6 516.2 581.9 1,947.0 Other (income) expense (19.4) (19.6) (21.0) (19.9) (79.9) Interest expense, net 56.4 56.3 55.7 53.9 222.3 Income before income taxes 317.3 457.9 481.5 547.9 1,804.6 Provision for income taxes 69.1 104.3 43.2 147.7 364.3 Net income including noncontrolling interest 248.2 353.6 438.3 400.2 1,440.3 Net income attributable to noncontrolling interest 0.9 2.3 2.9 5.1 11.2 Net income attributable to Ecolab $247.3 $351.3 $435.4 $395.1 $1,429.1 Earnings attributable to Ecolab per common share Basic $ 0.86 $ 1.22 $ 1.51 $ 1.37 $ 4.95 Diluted $ 0.84 $ 1.20 $ 1.48 $ 1.35 $ 4.88 Weighted-average common shares outstanding Basic 288.6 288.8 288.8 288.0 288.6 Diluted 292.7 293.3 293.4 292.2 292.8 Per share amounts do not necessarily sum due to changes in the calculation of shares outstanding for each discrete period and rounding. Gross profit is calculated as net sales minus cost of sales. The Company has conformed the first quarter of 2019 with current accounting policies. There was no impact to net sales or operating income. (a) Cost of sales includes special charges of $3.6 , $7.9 , $11.3 and $15.7 million in Q1, Q2, Q3 and Q4 of 2019, respectively and $(0.1) , $3.6 , and $5.8 million in Q2, Q3 and Q4 of 2018, respectively. Other (income) expense includes special charges of $9.5 million in Q4 of 2019. Net interest expense includes special charges of $0.2 million in Q1 of 2019 and $0.3 million in Q4 of 2018. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and all subsidiaries in which the Company has a controlling financial interest. Investments in companies, joint ventures or partnerships in which the Company does not have control but has the ability to exercise significant influence over operating and financial decisions, are reported using the equity method of accounting. The cost method of accounting is used in circumstances where the Company does not significantly influence the investee, and the investment has no readily determinable fair value. International subsidiaries are included in the financial statements on the basis of their U.S. GAAP November 30 fiscal year-ends to facilitate the timely inclusion of such entities in the Company’s consolidated financial reporting. All intercompany transactions and profits are eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of the Company’s financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates. The Company’s critical accounting estimates include revenue recognition, valuation allowances and accrued liabilities, actuarially determined liabilities, restructuring, income taxes, long-lived assets, intangible assets and goodwill. |
Foreign Currency Translation | Foreign Currency Translation Financial position and reported results of operations of the Company’s non-U.S. dollar functional currency international subsidiaries are measured using local currencies as the functional currency. Assets and liabilities of these operations are translated at the exchange rates in effect at each fiscal year end. The translation adjustments related to assets and liabilities that arise from changes in exchange rates from period to period are included in accumulated other comprehensive loss in shareholders’ equity. Income statement accounts are translated at average rates of exchange prevailing during the year. As discussed in Note 18 Operating Segments and Geographic Information, the Company evaluates its international operations based on fixed rates of exchange; however, changes in exchange rates from period to period impact the amount of reported income from consolidated operations. |
Concentration of Credit Risk | Concentration of Credit Risk Credit risk represents the accounting loss that would be recognized at the reporting date if counterparties failed to perform as contracted. The Company believes the likelihood of incurring material losses due to concentration of credit risk is minimal. The principal financial instruments subject to credit risk are as follows: Cash and Cash Equivalents Accounts Receivable Foreign Currency and Interest Rate Contracts and Derivatives |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash equivalents include highly-liquid investments with a maturity of three months or less when purchased. |
Restricted Cash | Restricted Cash Cash and cash equivalents that are restricted as to withdrawal or use under the terms of certain contractual agreements are recorded in Other assets on the Consolidated Balance Sheet and primarily relate to acquisition activities. |
Accounts Receivable and Allowance For Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are carried at the invoiced amounts, less an allowance for doubtful accounts, and generally do not bear interest. The Company estimates the balance of allowance for doubtful accounts by analyzing accounts receivable balances by age and applying historical write-off and collection trend rates. The Company’s estimates separately considered specific circumstances and credit conditions of customer receivables, and whether it is probable balances will be collected. Account balances are written off against the allowance when it is determined the receivable will not be recovered. The Company’s allowance for doubtful accounts balance also includes an allowance for the expected return of products shipped and credits related to pricing or quantities shipped of $18 million, $17 million and $15 million as of December 31, 2019, 2018, and 2017, respectively. Returns and credit activity is recorded directly as a reduction to revenue. The following table summarizes the activity in the allowance for doubtful accounts: (millions) 2019 2018 2017 Beginning balance $60.6 $71.5 $67.6 Bad debt expense 21.7 15.7 17.1 Write-offs (19.1) (23.6) (15.7) Other (a) (1.2) (3.0) 2.5 Ending balance $62.0 $60.6 $71.5 (a) Other amounts are primarily the effects of changes in currency translations and the impact of allowance for returns and credits. |
Inventory Valuations | Inventory Valuations Inventories are valued at the lower of cost or net realizable value. Certain U.S. inventory costs are determined on a last-in, first-out (“LIFO”) basis. LIFO inventories represented 37% of consolidated inventories as of December 31, 2019 and 2018. All other inventory costs are determined using either the average cost or first-in, first-out (“FIFO”) methods. Inventory values at FIFO, as shown in Note 5, approximate replacement cost. |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment assets are stated at cost. Merchandising and customer equipment consists principally of various dispensing systems for the Company’s cleaning and sanitizing products, warewashing machines and process control and monitoring equipment. Certain dispensing systems capitalized by the Company are accounted for on a mass asset basis, whereby equipment is capitalized and depreciated as a group and written off when fully depreciated. The Company capitalizes both internal and external costs to develop or purchase computer software. Costs incurred for data conversion, training and maintenance associated with capitalized software are expensed as incurred. Expenditures for major renewals and improvements, which significantly extend the useful lives of existing plant and equipment, are capitalized and depreciated. Expenditures for repairs and maintenance are charged to expense as incurred. Upon retirement or disposition of plant and equipment, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in income. Depreciation is charged to operations using the straight-line method over the assets’ estimated useful lives ranging from 5 to 40 years for buildings and leasehold improvements, 3 to 20 years for machinery and equipment, 3 to 20 years for merchandising and customer equipment and 3 to 7 years for capitalized software. The straight-line method of depreciation reflects an appropriate allocation of the cost of the assets to earnings in proportion to the amount of economic benefits obtained by the Company in each reporting period. Depreciation expense was $654 million, $621 million and $586 million for 2019, 2018 and 2017, respectively. During 2019 and 2018, the Company impaired certain assets as part of a restructuring program. During 2017, the Company impaired certain assets related to a portion of one of its businesses. See Note 3 for additional information regarding these asset impairments. |
Goodwill | 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. During the second quarter of 2019, the Company completed its annual assessment for goodwill impairment across its eleven reporting units through a two-step quantitative analysis, utilizing a discounted cash flow approach, which incorporates assumptions regarding future growth rates, terminal values, and discount rates. The first step involves estimating the fair value of each reporting unit and comparing them to the respective carrying values, including goodwill. If the fair value of a reporting unit exceeds its carrying value, goodwill of the reporting unit is considered not to be impaired, and the second step of the impairment test is unnecessary. If the carrying amount of the reporting unit exceeds its fair value, the second step of the goodwill impairment test would be performed to measure the amount of impairment loss to be recorded, if any. The Company’s goodwill impairment assessment for 2019 indicated the estimated fair value of each of its reporting units exceeded its carrying amount by a significant margin. Additionally, no events occurred during the second half of 2019 that indicated a need to update the Company’s conclusions reached during the second quarter of 2019. If significant events or circumstances are identified that indicate it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company will test a reporting unit’s goodwill for impairment during interim periods between its annual tests. There has been no impairment of goodwill in any of the years presented. The changes in the carrying amount of goodwill for each of the Company’s reportable segments are as follows: Global Global Global (millions) Industrial Institutional Energy Other Total December 31, 2017 $2,725.3 $1,027.0 $3,203.7 $211.1 $7,167.1 Current year business combinations (a) 71.6 12.4 - - 84.0 Prior year business combinations (b) (1.2) - - (0.9) (2.1) Dispositions (0.5) - (2.9) - (3.4) Effect of foreign currency translation (64.4) (24.1) (74.2) (4.9) (167.6) December 31, 2018 $2,730.8 $1,015.3 $3,126.6 $205.3 $7,078.0 Current year business combinations (a) 92.2 142.1 - 0.7 235.0 Prior year business combinations (b) (0.2) - - - (0.2) Effect of foreign currency translation (23.6) (9.7) (26.1) (1.7) (61.1) December 31, 2019 $2,799.2 $1,147.7 $3,100.5 $204.3 $7,251.7 (a) For 2019, $49.4 million of the goodwill related to businesses acquired is expected to be tax deductible. For 2018, the Company does not expect any of the goodwill related to businesses acquired to be tax deductible. (b) Represents purchase price allocation adjustments for acquisitions deemed preliminary as of the end of the prior year. |
Other Intangible Assets | Other Intangible Assets The Nalco trade name is the Company’s principal indefinite life intangible asset. During the second quarter of 2019, the Company completed its annual indefinite life intangible asset impairment assessment using a relief from royalty method approach, which incorporates assumptions regarding future sales projections, royalty rates and discount rates. Based on this testing, the estimated fair value of the asset exceeded its carrying value by a significant margin, therefore, no adjustment to the $1.2 billion carrying value of this asset was necessary. Additionally, no events during the second half of 2019 indicated a need to update the Company’s conclusions reached during the second quarter of 2019. 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 recognized at fair value from the Company’s business combinations. The fair value of identifiable intangible assets is estimated at acquisition using discounted cash flow approaches or other acceptable valuation methods. Other intangible assets are amortized on a straight-line basis over their estimated economic lives. The weighted-average useful life of amortizable intangible assets was 14 years as of both December 31, 2019 and 2018. The weighted-average useful life by type of amortizable asset at December 31, 2019 is as follows: (years) Customer relationships 14 Trademarks 13 Patents 14 Other technology 5 The straight-line method of amortization reflects an appropriate allocation of the cost of the intangible assets to earnings in proportion to the amount of economic benefits obtained by the Company in each reporting period. The Company evaluates the remaining useful life of its intangible assets that are being amortized each reporting period to determine whether events and circumstances warrant a change to the estimated remaining period of amortization. If the estimate of an intangible asset’s remaining useful life is changed, the remaining carrying amount of the intangible asset will be amortized prospectively over the revised remaining useful life. Total amortization expense related to other intangible assets during the last three years and future estimated amortization is as follows: (millions) 2017 $ 308 2018 317 2019 319 2020 320 2021 316 2022 309 2023 302 2024 289 |
Long-Lived Assets | Long-Lived Assets The Company reviews its long-lived and amortizable intangible assets for impairment when significant events or changes in business circumstances indicate that the carrying value of the assets may not be recoverable. Such circumstances may include a significant decrease in the market price of an asset, a significant adverse change in the manner in which the asset is being used or in its physical condition or history of operating or cash flow losses associated with the use of an asset. An impairment loss may be recognized when the carrying amount of an asset exceeds the anticipated future undiscounted cash flows expected to result from the use of the asset and its eventual disposition. The amount of the impairment loss to be recorded, if any, is calculated by the excess of the asset’s carrying value over its fair value. In addition, the Company periodically reassesses the estimated remaining useful lives of its long-lived assets. Changes to estimated useful lives would impact the amount of depreciation and amortization recorded in earnings. The Company has not experienced significant changes in the carrying value or estimated remaining useful lives of its long-lived or amortizable intangible assets. |
Rental and Leases, Lessee | Lessee The Company determines whether a lease exists at the inception of the arrangement. In assessing whether a contract is or contains a lease, the Company considers a lease a contract that conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company accounts for lease components separately from the nonlease components (e.g., common-area maintenance costs). Operating leases are recorded in operating lease assets, other current liabilities and operating lease liabilities in the Consolidated Balance Sheet. Operating lease assets and operating lease liabilities are measured and recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The Company uses the rate implicit in the lease when available or determinable. When the rate implicit in the lease is not determinable, the Company uses its incremental borrowing rate based on the information available at commencement date to determine the present value of future payments. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Variable lease payments are not included in the lease liability and are recognized as incurred. The Company identified real estate, vehicles and other equipment as the primary classes of leases. Certain leases with a similar class of underlying assets are accounted for as a portfolio of leases. The Company does not record operating lease assets or liabilities for leases with terms of twelve months or less. Those lease payments will continue to be recognized in the Consolidated Statement of Income on a straight-line basis over the lease term. Most leases include one or more options to renew, which is at the Company’s sole discretion, with renewal terms that can extend the lease term from one month to multiple years. The lease start date is when the asset is available for use and in possession of the Company. The lease end date, which includes any options to renew that are reasonably certain to be exercised, is based on the terms of the contract. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. The Company’s lease agreements do not contain any material restrictive covenants. |
Rental and Leases, Lessor | Lessor The Company accounts for lease and nonlease components separately. The nonlease components, such as product and service revenue, are accounted for under Topic 606 Revenue from Contracts with Customers, refer to Note 17 for more information. Revenue from leasing equipment is recognized on a straight-line basis over the life of the lease. Cost of sales includes the depreciation expense for assets under operating leases. The assets are depreciated over their estimated useful lives. Initial lease terms range from one year to five years and most leases include renewal options. Lease contracts convey the right for the customer to control the equipment for a period of time as defined by the contract. There are no options for the customer to purchase the equipment and therefore the equipment remains the property of the Company at the end of the lease term. See Note 13 for additional information regarding rental and leases. |
Income Taxes | Income Taxes Income taxes are recognized during the period in which transactions enter into the determination of financial statement income, with deferred income taxes provided for the tax effect of temporary differences between the carrying amount of assets and liabilities and their tax bases. The Company records a valuation allowance to reduce its deferred tax assets when uncertainty regarding their realizability exists. The Company records liabilities for income tax uncertainties in accordance with the U.S. GAAP recognition and measurement criteria guidance. On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was enacted, which reduced the U.S. federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxes on certain foreign sourced earnings. The Tax Act added many new provisions including changes to bonus depreciation, the deduction for executive compensation and interest expense, a tax on global intangible low taxed income (GILTI), the base erosion anti abuse tax (BEAT) and a deduction for foreign derived intangible income (FDII). The Company has elected the period cost method and considers the estimated GILTI impact in tax expense beginning in 2018. See Note 12 for additional information regarding income taxes. |
Share-based compensation | Share-Based Compensation The Company measures compensation expense for share-based awards at fair value at the date of grant and recognizes compensation expense over the service period for awards expected to vest. The majority of grants to retirement eligible recipients (age 55 with required years of service) are recorded to expense using the non-substantive vesting method and are fully expensed over a six-month period following the date of grant. In addition, the Company includes a forfeiture estimate in the amount of compensation expense being recognized based on an estimate of the number of outstanding awards expected to vest. All excess tax benefits or deficiencies are recognized as discrete income tax items on the Consolidated Statement of Income. The Company recorded $43.1 million, $28.1 million and $39.7 million of excess tax benefits during 2019, 2018 and 2017, respectively. The extent of excess tax benefits is subject to variation in stock price and stock option exercises. See Note 11 for additional information regarding equity compensation plans. |
Restructuring Activities | Restructuring Activities The Company’s restructuring activities are associated with plans to enhance its efficiency, effectiveness and sharpen its competitiveness. These restructuring plans include net costs associated with significant actions involving employee-related severance charges, contract termination costs and asset write-downs and disposals. Employee termination costs are largely based on policies and severance plans, and include personnel reductions and related costs for severance, benefits and outplacement services. These charges are reflected in the quarter in which the actions are probable and the amounts are estimable, which typically is when management approves the associated actions. Contract termination costs include charges to terminate leases prior to the end of their respective terms and other contract termination costs. Asset write-downs and disposals include leasehold improvement write-downs, other asset write-downs associated with combining operations and disposal of assets. See Note 3 for additional information regarding restructuring activities. |
Revenue Recognition | Revenue Recognition Revenue is measured as the amount of consideration expected to be received in exchange for transferring goods or providing service. Product and Sold Equipment Revenue from product and sold equipment is recognized when obligations under the terms of a contract with the customer are satisfied, which generally occurs with the transfer of the product or delivery of the equipment. Service and Lease Equipment Revenue from service and leased equipment is recognized when the services are provided, or the customer receives the benefit from the leased equipment, which is over time. Service revenue is recognized over time utilizing an input method and aligns with when the services are provided. Typically, revenue is recognized using costs incurred to date because the effort provided by the field selling and service organization represents services provided, which corresponds with the transfer of control. Revenue for leased equipment is accounted for under Topic 842 Leases and recognized on a straight-line basis over the length of the lease contract. Other Considerations Contracts with customers may include multiple performance obligations. For contracts with multiple performance obligations, the consideration is allocated between products and services based on their stand-alone selling prices. Stand-alone selling prices are generally based on the prices charged to customers or using an expected cost plus margin. Judgment is used in determining the amount of service that is embedded within the contracts, which is based on the amount of time spent on the performance obligation activities. The level of effort, including the estimated margin that would be charged, is used to determine the amount of service revenue. Depending on the terms of the contract, the Company may defer the recognition of revenue when a future performance obligation has not yet occurred. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, which are collected by the Company from a customer, are excluded from revenue. Shipping and handling costs associated with outbound freight are recognized in cost of sales when control over the product has transferred to the customer. Other estimates used in recognizing revenue include allocating variable consideration to customer programs and incentive offerings, including pricing arrangements, promotions and other volume-based incentives at the time the sale is recorded. These estimates are based primarily on historical experience and anticipated performance over the contract period. Based on the certainty in estimating these amounts, they are included in the transaction price of the contracts and the associated remaining performance obligations. The Company recognizes revenue when collection of the consideration expected to be received in exchange for transferring goods or providing services is probable. The Company’s revenue policies do not provide for general rights of return. Estimates used in recognizing revenue include the delay between the time that products are shipped and when they are received by customers, when title transfers and the amount of credit memos issued in subsequent periods. Depending on market conditions, the Company may increase customer incentive offerings, which could reduce gross profit margins over the term of the incentive. |
Earnings Per Common Share | Earnings Per Common Share The difference in the weighted average common shares outstanding for calculating basic and diluted earnings attributable to Ecolab per common share 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 earnings attributable to Ecolab per common share because they would not have had a dilutive effect. The computations of the basic and diluted earnings attributable to Ecolab per share amounts were as follows: (millions, except per share) 2019 2018 2017 Net income attributable to Ecolab $1,558.9 $1,429.1 $1,504.6 Weighted-average common shares outstanding Basic 288.1 288.6 289.6 Effect of dilutive stock options and units 4.4 4.2 4.4 Diluted 292.5 292.8 294.0 Basic EPS $ 5.41 $ 4.95 $ 5.20 Diluted EPS $ 5.33 $ 4.88 $ 5.12 Anti-dilutive securities excluded from the computation of diluted EPS 1.1 2.9 3.4 Amounts do not necessarily sum due to rounding. |
Fair value measurements | The Company’s financial instruments include cash and cash equivalents, restricted cash, accounts receivable, accounts payable, contingent consideration obligations, 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 Level 2 Level 3 |
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. 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. |
Research and development expenditures | Research expenditures that relate to the development of new products and processes, including significant improvements and refinements to existing products, are expensed as incurred. |
Legal 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, income taxes, environmental matters and lawsuits. The Company is also subject to various claims and contingencies related to income taxes, which are discussed in Note 12. The Company also has contractual obligations including to lease commitments, which are discussed in Note 13. The Company records liabilities where a contingent loss is probable and can be reasonably estimated. If the reasonable estimate of a probable loss is a range, the Company records the most probable estimate of the loss or the minimum amount when no amount within the range is a better estimate than any other amount. The Company discloses a contingent liability even if the liability is not probable or the amount is not estimable, or both, if there is a reasonable possibility that a material loss may have been incurred. Insurance Globally, the Company has 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. |
Pension and post-retirement benefit plans | The Company has a non-contributory, qualified, defined benefit pension plan covering the majority of its U.S. employees. The Company also has 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 have defined benefit pension plans. The Company provides postretirement health care benefits to certain U.S. employees and retirees. The non-qualified plans are not funded and the recorded benefit obligation for the non-qualified plans was $127 million and $119 million at December 31, 2019 and 2018, respectively. The measurement date used for determining the U.S. pension plan assets and obligations is December 31. International plans are funded based on local country requirements. The measurement date used for determining the international pension plan assets and obligations is November 30, the fiscal year-end of the Company’s international affiliates. The U.S. postretirement health care plans are contributory based on years of service and choice of coverage (family or single), with retiree contributions adjusted annually. The measurement date used to determine the U.S. postretirement health care plan assets and obligations is December 31. Certain employees outside the U.S. are covered under government-sponsored programs, which are not required to be fully funded. The expense and obligation for providing international postretirement health care benefits are not significant. |
Reportable segments | The Company’s organizational structure consists of global business unit and global regional leadership teams. The Company’s eleven 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. Nine of the Company’s eleven operating segments have been aggregated into three reportable segments based on similar economic characteristics and future prospects, nature of the products and production processes, end-use markets, channels of distribution and regulatory environment. The Company’s reportable segments are Global Industrial, Global Institutional and Global Energy. Operating segments that do not meet the quantitative criteria to be separately reported have been combined into Other. The Company provides similar information for Other as compared to its three reportable segments as the Company considers the information regarding its two underlying operating segments as useful in understanding its consolidated results. |
New Accounting Pronouncements | New Accounting Pronouncements Standards that are not yet adopted: Required Date of Date of Effect on the Standard Issuance Description Adoption Financial Statements ASU 2019-12 - Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes December 2019 Simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 Income Taxes related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and recognition of deferred tax liabilities for outside basis difference. The new standard also simplifies the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the basis of goodwill. January 1, 2021 The Company is currently evaluating the impact of adoption. ASU 2018-15 - Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force) August 2018 Aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The amendments require an entity (customer) in a hosting arrangement that is a service contract to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. January 1, 2020 The Company is anticipating adopting the ASU prospectively. Adoption of the ASU is not expected to have a material impact on the Company's financial statements. ASU 2018-14 - Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans August 2018 Modifies disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. This includes, but is not limited to, the removal of the requirement to disclose the amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year, and the addition of a requirement to disclose the weighted-average interest crediting rates for cash balance plans and other plans with promised interest crediting rates. January 1, 2020 The new disclosure requirements are applied on a retrospective basis to all periods presented. Adoption of the ASU is not expected to have a material impact on the Company's financial statements. 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. As described in Note 2 the Company has passed Step 1 of its annual impairment assessment, accordingly, adoption of the ASU is not expected to have a material impact on the Company's financial statements when completing future impairment analyses. Credit Losses ASUs: Various 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 The Company has identified the financial assets to primarily include trade and notes receivable. The Company is updating current accounting policies to be in accordance with the new standard, and the impact of adoption is not expected to be material to the Company's financial statements. Standards that were adopted: Date of Date of Effect on the Standard Issuance Description Adoption Financial Statements ASU 2018-02 - Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income February 2018 Allows entities to reclassify stranded tax effects resulting from the Tax Cut and Jobs Act (“the Act”) from accumulated other comprehensive income to retained earnings. Tax effects stranded in other comprehensive income for reasons other than the impact of the Act cannot be reclassified. January 1, 2019 In order to improve the usefulness and transparency, the Company made the election to reclassify $61.2 million of income tax effects of the Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings related to pension and derivatives. ASU 2018-16 - Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes Various Amends the hedge accounting recognition and presentation requirements. Simplifies the application of hedge accounting and the requirements for hedge documentation and effectiveness testing. Requires presentation of all items that affect earnings in the same income statement line as the hedged item. Expands the benchmark interest rates that can be used for hedge accounting. January 1, 2019 Adoption of this guidance did not have a material impact on the results of operations, financial position or cash flows. Required disclosures under the new guidance are included in Note 8. Lease ASUs: Various Introduces the recognition of lease assets and lease liabilities by lessees 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 financial statements at the bottom of this table in note (a). No other new accounting pronouncement issued or effective has had or is expected to have a material impact on the Company’s consolidated financial statements. (a) Leases On January 1, 2019, the Company adopted Topic 842 Leases (“the new lease standard”) prospectively and recorded a cumulative effect adjustment to the opening balance of retained earnings of $2.8 million. The Company elected the package of practical expedients permitted under the transition guidance within the new lease standard, which allows the Company to carryforward the historical lease classification, to not reassess whether existing contracts are or contain a lease and not to reassess initial direct costs. The Company also elected the land easement practical expedient . In addition, the Company elected the hindsight practical expedient to determine the lease term for existing leases. When applying the hindsight expedient, the Company determined that it was not reasonably certain that most renewal options would be exercised and therefore the Company did not include the renewal period in our determination of the expected lease term. The Company made an accounting policy election to not apply the recognition requirements of the new standard to leases with terms of twelve months or less and which do not include an option to purchase the underlying assets which is reasonably certain of exercise. Adoption of the new standard resulted in the recording of additional net operating lease assets and operating lease liabilities of $572.2 million and $575.0 million, respectively, as of January 1, 2019. The difference between the operating lease assets and operating lease liabilities was recorded as an adjustment to retained earnings. There was no impact to consolidated net earnings or cash flows. Further information related to the Company’s adoption of the new lease standard is included in Note 13. |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Summarized activity in the allowance for doubtful accounts | (millions) 2019 2018 2017 Beginning balance $60.6 $71.5 $67.6 Bad debt expense 21.7 15.7 17.1 Write-offs (19.1) (23.6) (15.7) Other (a) (1.2) (3.0) 2.5 Ending balance $62.0 $60.6 $71.5 (a) Other amounts are primarily the effects of changes in currency translations and the impact of allowance for returns and credits. |
Changes in the carrying amount of goodwill | Global Global Global (millions) Industrial Institutional Energy Other Total December 31, 2017 $2,725.3 $1,027.0 $3,203.7 $211.1 $7,167.1 Current year business combinations (a) 71.6 12.4 - - 84.0 Prior year business combinations (b) (1.2) - - (0.9) (2.1) Dispositions (0.5) - (2.9) - (3.4) Effect of foreign currency translation (64.4) (24.1) (74.2) (4.9) (167.6) December 31, 2018 $2,730.8 $1,015.3 $3,126.6 $205.3 $7,078.0 Current year business combinations (a) 92.2 142.1 - 0.7 235.0 Prior year business combinations (b) (0.2) - - - (0.2) Effect of foreign currency translation (23.6) (9.7) (26.1) (1.7) (61.1) December 31, 2019 $2,799.2 $1,147.7 $3,100.5 $204.3 $7,251.7 (a) For 2019, $49.4 million of the goodwill related to businesses acquired is expected to be tax deductible. For 2018, the Company does not expect any of the goodwill related to businesses acquired to be tax deductible. (b) Represents purchase price allocation adjustments for acquisitions deemed preliminary as of the end of the prior year. |
Weighted-average useful life by type of asset | The weighted-average useful life by type of amortizable asset at December 31, 2019 is as follows: (years) Customer relationships 14 Trademarks 13 Patents 14 Other technology 5 |
Future estimated amortization expenses | (millions) 2017 $ 308 2018 317 2019 319 2020 320 2021 316 2022 309 2023 302 2024 289 |
Computations of the basic and diluted EPS | (millions, except per share) 2019 2018 2017 Net income attributable to Ecolab $1,558.9 $1,429.1 $1,504.6 Weighted-average common shares outstanding Basic 288.1 288.6 289.6 Effect of dilutive stock options and units 4.4 4.2 4.4 Diluted 292.5 292.8 294.0 Basic EPS $ 5.41 $ 4.95 $ 5.20 Diluted EPS $ 5.33 $ 4.88 $ 5.12 Anti-dilutive securities excluded from the computation of diluted EPS 1.1 2.9 3.4 Amounts do not necessarily sum due to rounding. |
Other significant accounting policies | Policy Note Fair value measurements 7 Derivatives and hedging transactions 8 Share-based compensation 11 Research and development expenditures 14 Legal contingencies 15 Pension and post-retirement benefit plans 16 Reportable segments 18 |
Schedule of new accounting pronouncements | Standards that are not yet adopted: Required Date of Date of Effect on the Standard Issuance Description Adoption Financial Statements ASU 2019-12 - Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes December 2019 Simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 Income Taxes related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and recognition of deferred tax liabilities for outside basis difference. The new standard also simplifies the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the basis of goodwill. January 1, 2021 The Company is currently evaluating the impact of adoption. ASU 2018-15 - Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force) August 2018 Aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The amendments require an entity (customer) in a hosting arrangement that is a service contract to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. January 1, 2020 The Company is anticipating adopting the ASU prospectively. Adoption of the ASU is not expected to have a material impact on the Company's financial statements. ASU 2018-14 - Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans August 2018 Modifies disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. This includes, but is not limited to, the removal of the requirement to disclose the amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year, and the addition of a requirement to disclose the weighted-average interest crediting rates for cash balance plans and other plans with promised interest crediting rates. January 1, 2020 The new disclosure requirements are applied on a retrospective basis to all periods presented. Adoption of the ASU is not expected to have a material impact on the Company's financial statements. 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. As described in Note 2 the Company has passed Step 1 of its annual impairment assessment, accordingly, adoption of the ASU is not expected to have a material impact on the Company's financial statements when completing future impairment analyses. Credit Losses ASUs: Various 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 The Company has identified the financial assets to primarily include trade and notes receivable. The Company is updating current accounting policies to be in accordance with the new standard, and the impact of adoption is not expected to be material to the Company's financial statements. Standards that were adopted: Date of Date of Effect on the Standard Issuance Description Adoption Financial Statements ASU 2018-02 - Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income February 2018 Allows entities to reclassify stranded tax effects resulting from the Tax Cut and Jobs Act (“the Act”) from accumulated other comprehensive income to retained earnings. Tax effects stranded in other comprehensive income for reasons other than the impact of the Act cannot be reclassified. January 1, 2019 In order to improve the usefulness and transparency, the Company made the election to reclassify $61.2 million of income tax effects of the Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings related to pension and derivatives. ASU 2018-16 - Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes Various Amends the hedge accounting recognition and presentation requirements. Simplifies the application of hedge accounting and the requirements for hedge documentation and effectiveness testing. Requires presentation of all items that affect earnings in the same income statement line as the hedged item. Expands the benchmark interest rates that can be used for hedge accounting. January 1, 2019 Adoption of this guidance did not have a material impact on the results of operations, financial position or cash flows. Required disclosures under the new guidance are included in Note 8. Lease ASUs: Various Introduces the recognition of lease assets and lease liabilities by lessees 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 financial statements at the bottom of this table in note (a). No other new accounting pronouncement issued or effective has had or is expected to have a material impact on the Company’s consolidated financial statements. (a) Leases On January 1, 2019, the Company adopted Topic 842 Leases (“the new lease standard”) prospectively and recorded a cumulative effect adjustment to the opening balance of retained earnings of $2.8 million. The Company elected the package of practical expedients permitted under the transition guidance within the new lease standard, which allows the Company to carryforward the historical lease classification, to not reassess whether existing contracts are or contain a lease and not to reassess initial direct costs. The Company also elected the land easement practical expedient . In addition, the Company elected the hindsight practical expedient to determine the lease term for existing leases. When applying the hindsight expedient, the Company determined that it was not reasonably certain that most renewal options would be exercised and therefore the Company did not include the renewal period in our determination of the expected lease term. The Company made an accounting policy election to not apply the recognition requirements of the new standard to leases with terms of twelve months or less and which do not include an option to purchase the underlying assets which is reasonably certain of exercise. Adoption of the new standard resulted in the recording of additional net operating lease assets and operating lease liabilities of $572.2 million and $575.0 million, respectively, as of January 1, 2019. The difference between the operating lease assets and operating lease liabilities was recorded as an adjustment to retained earnings. There was no impact to consolidated net earnings or cash flows. Further information related to the Company’s adoption of the new lease standard is included in Note 13. |
SPECIAL (GAINS) AND CHARGES (Ta
SPECIAL (GAINS) AND CHARGES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
SPECIAL (GAINS) AND CHARGES | |
Special (gains) and charges | (millions) 2019 2018 2017 Cost of sales Restructuring activities $20.4 $12.1 $4.6 Acquisition and integration activities 7.6 (0.6) 13.2 Other 10.5 (2.2) 26.2 Cost of sales subtotal 38.5 9.3 44.0 Special (gains) and charges Restructuring activities 116.8 89.4 39.9 ChampionX separation 77.3 - - Acquisition and integration activities 5.6 8.8 15.4 Gain on sale of business - - (46.1) Venezuela related gain - - (11.5) Other 11.9 28.5 (1.4) Special (gains) and charges subtotal 211.6 126.7 (3.7) Operating income subtotal 250.1 136.0 40.3 Interest expense, net 0.2 0.3 21.9 Other (income) expense 9.5 - - Total special (gains) and charges $259.8 $136.3 $62.2 |
Restructuring activity | Employee Termination Asset (millions) Costs Disposals Other Total 2018 Activity Recorded expense $94.1 $5.0 $5.5 $104.6 Net cash payments (32.8) - (2.4) (35.2) Non-cash charges - (5.0) - (5.0) Effect of foreign currency translation (0.5) - - (0.5) Restructuring liability, December 31, 2018 60.8 - 3.1 63.9 2019 Activity Recorded expense 122.0 0.2 14.4 136.6 Net cash payments (79.8) 1.2 (14.0) (92.6) Non-cash charges - (1.4) (2.0) (3.4) Effect of foreign currency translation (0.5) - - (0.5) Restructuring liability, December 31, 2019 $102.5 $- $1.5 $104.0 |
ACQUISITIONS AND DISPOSITIONS (
ACQUISITIONS AND DISPOSITIONS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Anios | |
Business acquisitions | |
Schedule of assets acquired and liabilities assumed | (millions) 2017 Tangible assets $139.8 Identifiable intangible assets Customer relationships 252.0 Trademarks 65.7 Other technology 16.1 Total assets acquired 473.6 Goodwill 511.7 Total liabilities 187.0 Total consideration transferred 798.3 Long-term debt repaid upon close 192.8 Net consideration transferred to sellers $605.5 |
Other Acquisitions | |
Business acquisitions | |
Schedule of assets acquired and liabilities assumed | (millions) 2019 2018 2017 Net tangible assets (liabilities) acquired and equity method investments $(8.0) $30.1 $29.8 Identifiable intangible assets Customer relationships 115.7 101.5 67.0 Trademarks 24.1 3.9 2.5 Non-compete agreements - 2.6 0.2 Other technology 48.9 6.5 7.6 Total intangible assets 188.7 114.5 77.3 Goodwill 234.8 81.9 87.4 Total aggregate purchase price 415.5 226.5 194.5 Acquisition-related liabilities and contingent considerations (24.1) (1.5) 5.6 Net cash paid for acquisitions, including acquisition-related liabilities and contingent considerations $391.4 $225.0 $200.1 |
BALANCE SHEET INFORMATION (Tabl
BALANCE SHEET INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
BALANCE SHEET INFORMATION | |
Balance Sheet Information | December 31 December 31 (millions) 2019 2018 Accounts receivable, net Accounts receivable $2,858.5 $2,723.1 Allowance for doubtful accounts (62.0) (60.6) Total $2,796.5 $2,662.5 Inventories Finished goods $936.5 $1,016.9 Raw materials and parts 559.8 525.6 Inventories at FIFO cost 1,496.3 1,542.5 FIFO cost to LIFO cost difference 9.3 3.9 Total $1,505.6 $1,546.4 Other current assets Prepaid assets $118.8 $132.1 Taxes receivable 133.7 144.2 Derivative assets 54.3 42.8 Other 33.1 35.0 Total $339.9 $354.1 Property, plant and equipment, net Land $215.1 $214.5 Buildings and leasehold improvements 1,363.1 1,279.4 Machinery and equipment 2,467.8 2,313.7 Merchandising and customer equipment 2,787.8 2,565.5 Capitalized software 779.7 666.2 Construction in progress 406.7 400.2 8,020.2 7,439.5 Accumulated depreciation (4,065.3) (3,603.5) Total $3,954.9 $3,836.0 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 3,742.1 3,649.3 Trademarks 409.9 384.9 Patents 479.4 470.2 Other technology 297.2 242.8 4,928.6 4,747.2 Accumulated amortization Customer relationships (1,835.9) (1,604.0) Trademarks (205.1) (175.2) Patents (231.6) (207.3) Other technology (213.5) (193.0) (2,486.1) (2,179.5) Net intangible assets subject to amortization 2,442.5 2,567.7 Total $3,672.5 $3,797.7 Other assets Deferred income taxes $155.6 $105.1 Pension 31.1 39.0 Derivative asset 25.4 11.8 Restricted cash - 179.3 Other 372.0 349.9 Total $584.1 $685.1 December 31 December 31 (millions) 2019 2018 Other current liabilities Discounts and rebates $331.4 $291.3 Dividends payable 135.6 132.4 Interest payable 40.9 44.5 Taxes payable, other than income 113.4 116.9 Derivative liabilities 5.8 20.1 Restructuring 107.1 73.7 Contract liability 84.7 75.8 Operating lease liabilities 153.2 - Other 251.3 251.4 Total $1,223.4 $1,006.1 Accumulated other comprehensive loss Unrealized gain (loss) on derivative financial instruments, net of tax $(4.1) $2.0 Unrecognized pension and postretirement benefit expense, net of tax (823.8) (518.9) Cumulative translation, net of tax (1,261.8) (1,244.8) Total $(2,089.7) $(1,761.7) |
DEBT AND INTEREST (Tables)
DEBT AND INTEREST (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
DEBT AND INTEREST | |
Schedule of short-term debt obligations | 2019 2018 Average Average Carrying Interest Carrying Interest (millions) Value Rate Value Rate Short-term debt Commercial paper $55.1 (0.30) % $165.4 0.18 % Notes payable 24.6 3.53 % 176.8 1.47 % Long-term debt, current maturities 300.9 401.4 Total $380.6 $743.6 |
Schedule of long-term debt obligations including current maturities | 2019 2018 Stated Effective Stated Effective Maturity Carrying Interest Interest Carrying Interest Interest (millions) by Year Value Rate Rate Value Rate Rate Long-term debt Public notes (2019 principal amount) Three year 2016 senior notes ($400 million) 2019 $ - - % - % $399.7 2.00 % 3.24 % Five year 2015 senior notes ($300 million) 2020 300.0 2.25 % 2.79 % 299.5 2.25 % 2.79 % Ten year 2011 senior notes ($1.02 billion) 2021 1,018.3 4.35 % 4.43 % 1,017.6 4.35 % 4.43 % Five year 2017 senior notes ($500 million) 2022 497.8 2.38 % 2.55 % 496.9 2.38 % 2.55 % Seven year 2016 senior notes ($400 million) 2023 398.5 3.25 % 3.49 % 398.0 3.25 % 3.49 % Seven year 2016 senior notes (€575 million) 2024 628.4 1.00 % 1.10 % 644.1 1.00 % 1.09 % Ten year 2015 senior notes (€575 million) 2025 630.0 2.63 % 2.96 % 646.3 2.63 % 2.94 % Ten year 2016 senior notes ($750 million) 2026 744.5 2.70 % 2.93 % 743.8 2.70 % 2.93 % Ten year 2017 senior notes ($500 million) 2027 495.4 3.25 % 3.37 % 494.8 3.25 % 3.37 % Thirty year 2011 senior notes ($458 million) 2041 451.9 5.50 % 5.56 % 451.6 5.50 % 5.56 % Thirty year 2016 senior notes ($250 million) 2046 246.2 3.70 % 3.76 % 246.1 3.70 % 3.76 % Thirty year 2017 senior notes ($700 million) 2047 610.4 3.95 % 4.15 % 609.0 3.95 % 4.14 % Private notes (2019 principal amount) Series B private placement senior notes ($250 million) 2023 249.6 4.32 % 4.36 % 249.4 4.32 % 4.36 % Finance lease obligations and other 3.4 6.2 Total debt 6,274.4 6,703.0 Long-term debt, current maturities (300.9) (401.4) Total long-term debt $5,973.5 $6,301.6 |
Schedule of aggregate annual maturities of long-term debt | (millions) 2020 $ 301 2021 1,020 2022 498 2023 648 2024 628 |
Schedule of interest expense and interest income | (millions) 2019 2018 2017 Interest expense $215.3 $237.2 $274.6 Interest income (24.1) (14.9) (19.6) Interest expense, net $191.2 $222.3 $255.0 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
FAIR VALUE MEASUREMENTS | |
Schedule of the carrying amount and estimated fair value of assets and liabilities measured on recurring basis | December 31, 2019 (millions) Carrying Fair Value Measurements Amount Level 1 Level 2 Level 3 Assets Foreign currency forward contracts $83.9 $- $83.9 $- Liabilities Foreign currency forward contracts 10.0 - 10.0 - December 31, 2018 (millions) Carrying Fair Value Measurements Amount Level 1 Level 2 Level 3 Assets Foreign currency forward contracts $72.3 $- $72.3 $- Liabilities Foreign currency forward contracts 41.1 - 41.1 - Interest rate swap agreements 0.2 - 0.2 - |
Schedule of carrying amount and estimated fair value of long-term debt | December 31, 2019 December 31, 2018 Carrying Fair Carrying Fair Amount Value Amount Value Long-term debt, including current maturities $6,274.4 $6,862.0 $6,703.0 $6,844.7 |
DERIVATIVES AND HEDGING TRANS_2
DERIVATIVES AND HEDGING TRANSACTIONS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
DERIVATIVES AND HEDGING TRANSACTIONS | |
Gross fair value of the company's outstanding derivative assets and liabilities | (millions) Derivatives Assets Derivatives Liabilities December 31 December 31 December 31 December 31 (millions) 2019 2018 2019 2018 Derivatives designated as hedging instruments Foreign currency forward contracts $67.4 $40.4 $2.1 $10.2 Interest rate swap agreements - - - 0.2 Derivatives not designated as hedging instruments Foreign currency forward contracts 16.5 31.9 7.9 30.9 Gross value of derivatives 83.9 72.3 10.0 41.3 Gross amounts offset in the Consolidated Balance Sheet (4.2) (17.7) (4.2) (17.7) Net value of derivatives $79.7 $54.6 $5.8 $23.6 |
Summary of notional values of outstanding derivatives | Notional Values December 31 December 31 (millions) 2019 2018 Foreign currency forward contracts $ 4,004 $ 6,226 Interest rate agreements - 400 |
Schedule of amounts on the Balance Sheet related to cumulative basis adjustments for fair value hedges | Amounts recognized in the Consolidated Balance Sheet Carrying amount of the hedged liabilities Cumulative amount of the fair value hedging adjustment included in the carrying amount of the hedged liabilities (millions) 2019 2018 2017 2019 2018 2017 Long-term debt $- $399.7 $944.6 $- $0.1 $7.6 |
Revaluation gains and losses on euronotes and forward contracts | (millions) 2019 2018 2017 Revaluation gains (losses), net of tax $31.4 $57.5 $(109.7) |
Impact on AOCI and earnings from derivative contracts qualified as cash flow hedges | 2019 2018 2017 (millions) COS SG&A Interest COS SG&A Interest COS SG&A Interest Gain (loss) on derivatives in cash flow hedging relationship: Foreign currency forward contracts Amount of gain (loss) reclassified from AOCI to income $15.4 $39.5 $- $(7.7) $84.1 $- $(13.7) $(157.2) $- Amount excluded from the assessment of effectiveness recognized in earnings based on changes in fair value - - 28.7 - - 37.4 - - 24.5 Interest rate swap agreements Amount of gain (loss) reclassified from AOCI to income - - (0.9) - - (5.5) - - (7.2) Gain (loss) on derivatives in fair value hedging relationship: Interest rate swaps Hedged items - - 0.2 - - (4.0) - - 0.7 Derivatives designated as hedging instruments - - (0.2) - - 4.0 - - (0.7) Gain (loss) on derivatives not designated as hedging instruments: Foreign currency forward contracts Amount of gain (loss) recognized in income - 30.0 (0.1) - 25.1 5.3 - (38.2) (3.0) Total gain (loss) of all derivative instruments $15.4 $69.5 $27.7 $(7.7) $109.2 $37.2 $(13.7) $(195.4) $14.3 |
OTHER COMPREHENSIVE INCOME (L_2
OTHER COMPREHENSIVE INCOME (LOSS) INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
OTHER COMPREHENSIVE INCOME (LOSS) INFORMATION | |
Schedule of other comprehensive income information related to the Company's derivatives and hedging instruments and pension and postretirement benefits | (millions) 2019 2018 2017 Derivative and Hedging Instruments Unrealized gains (losses) on derivative & hedging instruments Amount recognized in AOCI $78.1 $144.4 $(173.4) (Gains) losses reclassified from AOCI into income COS (15.4) 7.7 13.7 SG&A (39.5) (84.1) 157.2 Interest (income) expense, net (27.8) (31.9) (17.3) (82.7) (108.3) 153.6 Other activity 0.8 - 0.2 Tax impact 0.4 (7.7) 1.7 Net of tax $(3.4) $28.4 $(17.9) Pension and Postretirement Benefits Amount recognized in AOCI Current period net actuarial income (loss) and prior service costs $(326.3) $(56.5) $(46.9) Amount reclassified from AOCI into income Amortization of net actuarial loss and prior service costs and benefits 0.4 28.4 21.5 Pension and postretirement benefits changes - 59.3 - (325.9) 31.2 (25.4) Tax impact 74.3 (13.2) 16.2 Net of tax $(251.6) $18.0 $(9.2) |
EQUITY COMPENSATION PLANS (Tabl
EQUITY COMPENSATION PLANS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
EQUITY COMPENSATION PLANS | |
Summary of stock option activity and average exercise prices | 2019 2018 2017 Number of Exercise Number of Exercise Number of Exercise Options Price (a) Options Price (a) Options Price (a) Outstanding, beginning of year 10,516,633 $ 108.28 11,380,013 $ 95.76 11,910,501 $ 84.22 Granted 879,862 184.31 1,202,314 158.23 1,491,893 136.87 Exercised (2,270,374) 82.93 (1,942,192) 64.63 (1,951,920) 56.00 Canceled (83,801) 143.08 (123,502) 127.02 (70,461) 116.44 Outstanding, end of year 9,042,320 $ 108.28 10,516,633 $ 108.28 11,380,013 $ 95.76 Exercisable, end of year 7,048,422 $ 109.34 7,993,297 $ 97.13 8,371,809 $ 84.40 Vested and expected to vest, end of year 8,923,240 $ 121.14 (a) Represents weighted average price per share. |
Weighted-average grant-date fair value of options granted and significant assumptions used in determining the underlying fair value of each option grant | 2019 2018 2017 Weighted-average grant-date fair value of options granted at market prices $ 40.30 $ 37.34 $ 30.34 Assumptions Risk-free rate of return 1.6 % 2.8 % 2.2 % Expected life 6 years 6 years 6 years Expected volatility 23.0 % 22.5 % 22.7 % Expected dividend yield 1.0 % 1.2 % 1.2 % |
Summary of non-vested PBRSU awards and restricted stock activity | PBRSU Grant Date RSAs and Grant Date Awards Fair Value (a) RSUs Fair Value (a) December 31, 2016 1,386,687 $ 107.70 254,387 $ 107.95 Granted 323,750 131.71 96,980 125.34 Vested / Earned (312,745) 99.65 (86,622) 102.02 Canceled (34,856) 108.16 (15,343) 109.72 December 31, 2017 1,362,836 $ 115.24 249,402 $ 116.66 Granted 284,104 152.59 109,074 138.69 Vested / Earned (324,561) 103.15 (92,032) 113.03 Canceled (55,026) 114.25 (19,975) 115.05 December 31, 2018 1,267,353 $ 126.75 246,469 $ 127.09 Granted 207,704 178.20 102,941 177.38 Vested / Earned (334,351) 114.38 (64,597) 119.08 Canceled (23,808) 135.70 (19,300) 124.77 December 31, 2019 1,116,898 $ 139.83 265,513 $ 149.46 (a) Represents weighted average price per share. |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
INCOME TAXES | |
Income before income taxes | (millions) 2019 2018 2017 United States $752.6 $728.3 $847.3 International 1,146.3 1,076.3 915.1 Total $1,898.9 $1,804.6 $1,762.4 |
Provision (benefit) for income taxes | (millions) 2019 2018 2017 Federal and state $135.4 $103.5 $241.8 International 225.0 175.7 355.1 Total current 360.4 279.2 596.9 Federal and state 32.7 51.8 (331.4) International (70.4) 33.3 (21.7) Total deferred (37.7) 85.1 (353.1) Provision for income taxes $322.7 $364.3 $243.8 |
Net deferred tax assets and deferred tax liabilities | December 31 (millions) 2019 2018 Deferred tax assets Other accrued liabilities $141.5 $130.9 Loss carryforwards 71.3 217.2 Share-based compensation 58.4 60.5 Pension and other comprehensive income 208.6 145.8 Lease liability 117.9 - Other, net 83.0 68.5 Valuation allowance (45.4) (184.4) Total deferred tax assets 635.3 438.5 Deferred tax liabilities Property, plant and equipment basis differences (307.9) (268.5) Intangible assets (729.8) (783.3) Lease asset (118.4) - Other, net (64.0) (46.2) Total deferred tax liabilities (1,220.1) (1,098.0) Net deferred tax liabilities balance $(584.8) $(659.5) |
Reconciliation of the statutory U.S. federal income tax rate to the company's effective income tax rate | 2019 2018 2017 Statutory U.S. rate 21.0 % 21.0 % 35.0 % One-time transition tax (0.2) 3.7 9.1 State income taxes, net of federal benefit 1.8 1.2 0.4 Foreign operations 4.8 (13.5) (7.4) Domestic manufacturing deduction - - (2.2) R&D credit (1.1) (1.0) (1.0) Change in valuation allowance (7.4) 9.1 0.2 Audit settlements and refunds - (0.8) (0.1) Excess stock benefits (2.3) (1.6) (2.3) Change in federal tax rate (deferred taxes) - (0.6) (18.2) Prior year adjustments - 2.5 - Other, net 0.4 0.2 0.3 Effective income tax rate 17.0 % 20.2 % 13.8 % |
Reconciliation of the beginning and ending amount of gross liability for unrecognized tax benefits | (millions) 2019 2018 2017 Balance at beginning of year $49.7 $61.5 $75.9 Additions based on tax positions related to the current year 2.1 3.0 3.2 Additions for tax positions of prior years 1.0 2.0 — Reductions for tax positions of prior years (18.4) (8.7) (4.9) Reductions for tax positions due to statute of limitations (5.7) (5.8) (14.0) Settlements (0.6) (0.8) (10.8) Assumed in connection with acquisitions - - 10.0 Foreign currency translation (0.4) (1.5) 2.1 Balance at end of year $27.7 $49.7 $61.5 |
RENTALS AND LEASES (Tables)
RENTALS AND LEASES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
RENTALS AND LEASES | |
Schedule of operating lease cost | (millions) 2019 Operating lease cost* $219.4 *Includes immaterial short-term and variable lease costs |
Schedule of future maturity of operating lease liabilities | Future maturity of operating lease liabilities as of December 31, 2019 is as follows: (millions) 2020 174 2021 150 2022 109 2023 68 2024 37 Thereafter 121 Total lease payments 659 Less: imputed interest 81 Present value of lease liabilities $ 578 Total rental expense under the Company’s operating leases was $210 million in 2018 and $239 million in 2017. As of December 31, 2018, identifiable future minimum payments with non-cancelable terms in excess of one year were: (millions) 2019 $ 172 2020 141 2021 108 2022 72 2023 37 Thereafter 104 Total $ 634 |
Schedule of operating leases term and discount rate | December 31 2019 Weighted-average remaining lease terms (years) 6.03 Weighted-average discount rate 4.00% |
Schedule of other lease information | (millions) 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $200.8 Leased assets obtained in exchange for new operating lease liabilities 181.6 |
Schedule of operating lease revenue | (millions) 2019 Operating lease revenue* $441.3 |
Schedule of revenue from operating leases for existing contracts | Revenue from operating leases for existing contracts as of December 31, 2019 is as follows: (millions) 2020 382 2021 292 2022 222 2023 143 2024 58 Thereafter 17 Total lease revenue $ 1,114 |
RETIREMENT PLANS (Tables)
RETIREMENT PLANS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Pension and Postretirement Plans | |
Financial information related to pension and postretirement health care plans | U.S. International U.S. Postretirement Pension (a) Pension Health Care (millions) 2019 2018 2019 2018 2019 2018 Accumulated benefit obligation, end of year $2,535.9 $2,189.0 $1,585.5 $1,349.9 $165.7 $147.3 Projected benefit obligation Projected benefit obligation, beginning of year $2,241.0 $2,485.1 $1,436.7 $1,537.9 $147.3 $181.3 Service cost 72.8 74.5 30.2 33.2 1.4 2.7 Interest cost 89.0 83.1 31.2 29.1 5.6 5.6 Participant contributions - - 3.0 3.5 3.4 3.5 Medicare subsidies received - - - - - - Curtailments and settlements 3.4 - (18.6) (22.8) 0.6 - Plan amendments - (40.4) 0.1 - - (13.7) Actuarial (gain) loss 336.4 (181.3) 235.8 (42.7) 22.2 (18.4) Assumed through acquisitions - - - 11.4 - - Other events - - 0.6 - - - Benefits paid (180.1) (180.0) (37.6) (38.7) (14.8) (13.7) Foreign currency translation - - (13.8) (74.2) - - Projected benefit obligation, end of year $2,562.5 $2,241.0 $1,667.6 $1,436.7 $165.7 $147.3 Plan assets Fair value of plan assets, beginning of year $1,981.4 $2,226.4 $925.6 $981.1 $6.0 $7.6 Actual returns on plan assets 366.9 (70.7) 110.5 2.6 1.1 (0.2) Company contributions 129.0 5.7 43.3 42.0 13.8 12.3 Participant contributions - - 3.0 3.5 - - Acquisitions - - - 6.4 - - Curtailments and settlements (4.3) - (17.6) (22.8) - - Benefits paid (180.1) (180.0) (37.6) (38.7) (14.8) (13.7) Foreign currency translation - - (0.1) (48.5) - - Fair value of plan assets, end of year $2,292.9 $1,981.4 $1,027.1 $925.6 $6.1 $6.0 Funded Status, end of year $(269.6) $(259.6) $(640.5) $(511.1) $(159.6) $(141.3) Amounts recognized in the Consolidated Balance Sheet: Other assets $- $- $31.1 $39.0 $- $- Other current liabilities (12.5) (5.9) (23.6) (24.4) (5.2) (5.0) Postretirement healthcare and pension benefits (257.1) (253.7) (647.8) (525.7) (154.4) (136.3) Net liability $(269.6) $(259.6) $(640.3) $(511.1) $(159.6) $(141.3) Amounts recognized in accumulated other comprehensive loss (income): Unrecognized net actuarial loss (gain) $632.4 $539.2 $527.7 $368.0 $(10.5) $(36.0) Unrecognized net prior service costs (benefits) (40.0) (52.3) 0.6 (6.0) (11.0) (34.4) Tax (benefit) expense (149.1) (194.4) (129.6) (92.7) 3.4 27.6 Accumulated other comprehensive loss (income), net of tax $443.3 $292.5 $398.7 $269.3 $(18.1) $(42.8) Change in accumulated other comprehensive loss (income): Amortization of net actuarial (gain) loss $(23.5) $(38.9) $(17.3) $(16.5) $4.1 $1.9 Amortization of prior service costs 11.5 6.8 1.1 0.9 23.2 19.7 Current period net actuarial loss (gain) 119.0 51.2 185.8 17.9 21.4 (17.8) Current period prior service costs - - 0.1 - - 5.2 Curtailments and settlements (1.5) - 1.8 (2.3) 0.2 - Tax (benefit) expense (25.7) 5.1 (36.9) 5.7 (11.7) 2.4 Pension and postretirement benefits changes - (40.4) - - - (18.9) Foreign currency translation - - (5.2) (19.2) - - Other comprehensive loss (income) $79.8 $(16.2) $129.4 $(13.5) $37.2 $(7.5) (a) Includes qualified and non-qualified plans |
Estimated amounts in accumulated other comprehensive loss expected to be reclassified to net period cost | Estimated amounts in accumulated other comprehensive loss expected to be reclassified to net period cost during 2020 are as follows: U.S. Post- U.S. International Retirement (millions) Pension (a) Pension Health Care Net actuarial loss $51.9 $25.5 $0.1 Net prior service benefits (7.4) (0.1) (11.0) Total $44.5 $25.4 $(10.9) (a) Includes qualified and non-qualified plans |
Aggregate projected benefit obligation, accumulated benefit obligation and fair value of pension plan assets for plans with accumulated benefit obligations in excess of plan assets | December 31, (millions) 2019 2018 Aggregate projected benefit obligation $3,970.3 $3,427.1 Accumulated benefit obligation 3,877.4 3,308.4 Fair value of plan assets 3,040.5 2,624.3 |
Net periodic pension and postretirement health care benefit costs | U.S. International U.S. Postretirement Pension (a) Pension Health Care (millions) 2019 2018 2017 2019 2018 2017 2019 2018 2017 Service cost $72.8 $74.5 $70.2 $30.2 $33.2 $31.4 $1.4 $2.7 $2.6 Interest cost on benefit obligation 89.0 83.1 83.4 31.2 29.1 28.4 5.6 5.6 5.8 Expected return on plan assets (149.5) (161.9) (149.9) (59.9) (63.2) (56.3) (0.4) (0.4) (0.5) Recognition of net actuarial loss (gain) 23.6 39.0 28.7 16.3 17.2 18.5 (4.1) (1.9) (2.4) Amortization of prior service benefit (11.5) (6.8) (6.8) (0.9) (0.9) (0.7) (23.2) (19.7) (16.7) Curtailments and settlements 9.1 - 0.3 (1.9) 2.3 0.9 0.3 - - Total expense (benefit) $33.5 $27.9 $25.9 $15.0 $17.7 $22.2 $(20.4) $(13.7) $(11.2) (a) Includes qualified and non-qualified plans Plan Assumptions U.S. International U.S. Postretirement Pension (a) Pension Health Care (percent) 2019 2018 2017 2019 2018 2017 2019 2018 2017 Weighted-average actuarial assumptions used to determine benefit obligations as of year end: Discount rate 3.20 % 4.34 % 3.70 % 1.52 % 2.49 % 2.17 % 3.16 % 4.29 % 3.66 % Projected salary increase 4.03 4.03 4.03 2.50 2.46 2.46 Weighted-average actuarial assumptions used to determine net cost: Discount rate 4.34 3.70 4.27 2.66 2.29 2.32 4.29 3.66 4.14 Expected return on plan assets 7.25 7.75 7.75 6.66 6.67 6.67 7.25 7.75 7.75 Projected salary increase 4.03 4.03 4.03 2.70 2.67 2.83 (a) Includes qualified and non-qualified plans |
Plan Assumptions | |
Estimated future benefits payments | (millions) All Plans 2020 $ 253 2021 232 2022 263 2023 239 2024 251 2025 - 2029 1,244 |
Pension and Postretirement Health Care Benefit Plans | |
Pension and Postretirement Plans | |
Allocation and fair value of plan assets for defined benefit pension and postretirement health care benefit plans | The fair value of the Company’s U.S. plan assets for its defined benefit pension and postretirement health care benefit plans are as follows: Fair Value as of Fair Value as of (millions) December 31, 2019 December 31, 2018 Level 1 Level 2 Total Level 1 Level 2 Total Cash $13.2 $- $13.2 $7.1 $- $7.1 Equity securities: Large cap equity 785.9 - 785.9 683.5 - 683.5 Small cap equity 201.7 - 201.7 168.6 - 168.6 International equity 350.4 - 350.4 285.0 - 285.0 Fixed income: Core fixed income 410.0 - 410.0 358.3 - 358.3 High-yield bonds 107.9 - 107.9 107.6 - 107.6 Emerging markets 41.7 - 41.7 39.4 - 39.4 Insurance company accounts - 0.3 0.3 - 0.3 0.3 Total investments at fair value 1,910.8 0.3 1,911.1 1,649.5 0.3 1,649.8 Investments measured at NAV 387.9 337.6 Total $1,910.8 $0.3 $2,299.0 $1,649.5 $0.3 $1,987.4 The Company had no level 3 assets as part of its U.S. plan assets as of December 31, 2019 or 2018. The allocation of the Company’s U.S. plan assets for its defined benefit pension and postretirement health care benefit plans are as follows: Target Asset Asset Category Allocation Percentage Percentage of Plan Assets December 31 2019 2018 2019 2018 Cash - % - % 1 % - % Equity securities: Large cap equity 34 34 34 34 Small cap equity 9 9 8 9 International equity 15 15 15 14 Fixed income: Core fixed income 18 18 18 19 High-yield bonds 5 5 5 5 Emerging markets 2 2 2 2 Other: Real estate 6 6 7 8 Private equity 8 8 7 7 Distressed debt 3 3 3 2 Total 100 % 100 % 100 % 100 % |
International | |
Pension and Postretirement Plans | |
Allocation and fair value of plan assets for defined benefit pension and postretirement health care benefit plans | Fair Value as of Fair Value as of (millions) December 31, 2019 December 31, 2018 Level 1 Level 2 Total Level 1 Level 2 Total Cash $7.7 $- $7.7 $7.1 $- $7.1 Equity securities: International equity - 418.1 418.1 - 412.1 412.1 Fixed income: Corporate bonds 8.2 207.6 215.8 7.9 162.1 170.0 Government bonds 12.6 215.8 228.4 12.3 169.2 181.5 Insurance company accounts - 144.2 144.2 - 140.5 140.5 Total investments at fair value 28.5 985.7 1,014.2 27.3 883.9 911.2 Investments measured at NAV 12.9 14.4 Total $28.5 $985.7 $1,027.1 $27.3 $883.9 $925.6 The Company had no level 3 assets as part of its international plan assets as of December 31, 2019 or 2018. The allocation of plan assets of the Company’s international plan assets for its defined benefit pension plans are as follows: Percentage Asset Category of Plan Assets December 31 2019 2018 Cash 1 % 1 % Equity securities: International equity 41 45 Fixed income: Corporate bonds 21 18 Government bonds 22 20 Total fixed income 43 38 Other: Insurance contracts 14 15 Real estate 1 1 Total 100 % 100 % |
REVENUES (Tables)
REVENUES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
REVENUES | |
Schedule of principal activities, separated by reportable segments and geographic region | (millions) 2019 2018 2017 Global Industrial Product and sold equipment $4,819.1 $4,626.2 $4,305.3 Service and lease equipment 681.6 660.3 612.7 Global Institutional Product and sold equipment 4,433.5 4,415.4 4,136.2 Service and lease equipment 753.5 683.1 640.0 Global Energy Product and sold equipment 2,898.7 3,004.4 2,837.5 Service and lease equipment 419.0 416.7 392.5 Other Product and sold equipment 87.6 82.6 152.8 Service and lease equipment 813.3 779.5 758.9 Total Total product and sold equipment $12,238.9 $12,128.6 $11,431.8 Total service and lease equipment 2,667.4 2,539.6 2,404.1 Net sales at public exchange rates by geographic region are as follows: Global Industrial Global Institutional (millions) 2019 2018 2017 2019 2018 2017 United States $2,374.4 $2,269.7 $2,087.8 $3,403.1 $3,279.2 $3,107.2 Europe 1,358.7 1,288.4 1,183.0 988.8 1,038.4 928.8 Asia Pacific 708.1 685.8 661.4 256.1 250.4 237.1 Latin America 497.7 474.3 448.0 166.7 165.6 163.6 Greater China 267.5 278.4 267.0 120.6 113.8 102.1 Canada 148.3 148.9 137.4 192.3 191.6 175.3 Middle East and Africa ("MEA") 146.0 141.0 133.4 59.4 59.5 62.1 Total $5,500.7 $5,286.5 $4,918.0 $5,187.0 $5,098.5 $4,776.2 Global Energy Other (millions) 2019 2018 2017 2019 2018 2017 United States $1,604.1 $1,630.1 $1,481.1 $601.7 $569.2 $648.2 Europe 405.2 398.4 404.4 136.1 133.1 119.5 Asia Pacific 247.9 262.7 253.1 40.3 40.2 33.6 Latin America 212.3 219.7 239.3 47.6 46.7 44.8 Greater China 79.4 76.5 70.5 55.7 50.5 45.0 Canada 298.8 335.6 322.3 9.1 11.5 9.4 MEA 470.0 498.1 459.3 10.4 10.9 11.2 Total $3,317.7 $3,421.1 $3,230.0 $900.9 $862.1 $911.7 |
Schedule of contract liability | December 31 December 31 (millions) 2019 2018 Contract liability as of beginning of the year $75.8 $79.0 Revenue recognized in the year from: Amounts included in the contract liability at the beginning of the year (75.8) (79.0) Increases due to billings excluding amounts recognized as revenue during the year ended 78.2 74.3 Business combinations 6.5 1.5 Contract liability as of end of year $84.7 $75.8 |
OPERATING SEGMENTS AND GEOGRAPH
OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
OPERATING SEGMENTS | |
Schedule of financial information for each of the entity's reportable segments, including the impact of the preceding changes on previously reported full year 2018 net sales and oeprating income | December 31, 2018 2018 Reported Fixed 2018 Revised Valued at 2018 Currency Valued at 2019 (millions) Management Rates Other Rate Change Management Rates Net Sales Global Industrial $5,462.4 $- $(242.2) $5,220.2 Global Institutional 5,204.5 - (138.5) 5,066.0 Global Energy 3,501.8 - (113.0) 3,388.8 Other 877.6 - (21.9) 855.7 Subtotal at fixed currency rates 15,046.3 - (515.6) 14,530.7 Effect of foreign currency translation (378.1) - 515.6 137.5 Consolidated reported GAAP net sales $14,668.2 $- $- $14,668.2 Operating Income Global Industrial $768.1 $(1.4) $(42.3) $724.4 Global Institutional 1,026.9 - (19.6) 1,007.3 Global Energy 358.5 (0.4) (19.6) 338.5 Other 161.3 1.8 (3.1) 160.0 Corporate (307.1) - 3.5 (303.6) Subtotal at fixed currency rates 2,007.7 - (81.1) 1,926.6 Effect of foreign currency translation (60.7) - 81.1 20.4 Consolidated reported GAAP operating income $1,947.0 $- $- $1,947.0 December 31, 2017 2017 Reported Fixed 2017 Revised Valued at 2018 Currency Valued at 2019 (millions) Management Rates Other Rate Change Management Rates Net Sales Global Industrial $5,106.8 $- $(211.0) $4,895.8 Global Institutional 4,910.0 - (124.2) 4,785.8 Global Energy 3,281.7 - (75.9) 3,205.8 Other 931.5 - (20.8) 910.7 Subtotal at fixed currency rates 14,230.0 - (431.9) 13,798.1 Effect of foreign currency translation (394.1) - 431.9 37.8 Consolidated reported GAAP net sales $13,835.9 $- $- $13,835.9 Operating Income Global Industrial $758.5 $(0.8) $(35.7) $722.0 Global Institutional 979.8 (0.5) (16.6) 962.7 Global Energy 336.1 0.2 (13.4) 322.9 Other 142.5 1.1 (2.9) 140.7 Corporate (213.9) - 3.6 (210.3) Subtotal at fixed currency rates 2,003.0 - (65.0) 1,938.0 Effect of foreign currency translation (52.9) - 65.0 12.1 Consolidated reported GAAP operating income $1,950.1 $- $- $1,950.1 |
Schedule of financial information for each of the entity's reportable segments | Net Sales Operating Income (Loss) (millions) 2019 2018 2017 2019 2018 2017 Global Industrial $5,569.9 $5,220.2 $4,895.8 $854.7 $724.4 $722.0 Global Institutional 5,235.5 5,066.0 4,785.8 1,042.2 1,007.3 962.7 Global Energy 3,334.0 3,388.8 3,205.8 379.1 338.5 322.9 Other 907.5 855.7 910.7 167.3 160.0 140.7 Corporate - - - (409.1) (303.6) (210.3) Subtotal at fixed currency 15,046.9 14,530.7 13,798.1 2,034.2 1,926.6 1,938.0 Effect of foreign currency translation (140.6) 137.5 37.8 (20.4) 20.4 12.1 Consolidated $14,906.3 $14,668.2 $13,835.9 $2,013.8 $1,947.0 $1,950.1 |
Schedule of net sales and long-lived assets at public exchange rates by geographic region | Long-Lived Assets, net (millions) 2019 2018 United States $9,223.6 $9,175.4 Europe 2,641.6 2,538.7 Asia Pacific, excluding Greater China 1,015.1 1,003.4 Latin America 522.4 565.8 MEA 299.2 302.1 Canada 598.1 616.8 Greater China 1,163.1 1,194.6 Total $15,463.1 $15,396.8 |
QUARTERLY FINANCIAL DATA (UNA_2
QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
QUARTERLY FINANCIAL DATA (UNAUDITED) | |
Quarterly financial data | First Second Third Fourth (millions, except per share) Quarter Quarter Quarter Quarter Year 2019 Net sales $3,505.4 $3,759.4 $3,817.9 $3,823.6 $14,906.3 Operating expenses Cost of sales 2,089.6 2,208.2 2,207.4 2,218.2 8,723.4 Selling, general and administrative expenses 1,008.3 1,002.7 962.5 984.0 3,957.5 Special (gains) and charges 40.3 49.9 60.4 61.0 211.6 Operating income 367.2 498.6 587.6 560.4 2,013.8 Other (income) expense (21.2) (20.9) (20.8) (13.4) (76.3) Interest expense, net 49.4 49.5 46.1 46.2 191.2 Income before income taxes 339.0 470.0 562.3 527.6 1,898.9 Provision for income taxes 38.6 97.8 93.0 93.3 322.7 Net income including noncontrolling interest 300.4 372.2 469.3 434.3 1,576.2 Net income attributable to noncontrolling interest 3.9 3.6 5.1 4.7 17.3 Net income attributable to Ecolab $296.5 $368.6 $464.2 $429.6 $1,558.9 Earnings attributable to Ecolab per common share Basic $ 1.03 $ 1.28 $ 1.61 $ 1.49 $ 5.41 Diluted $ 1.01 $ 1.26 $ 1.59 $ 1.47 $ 5.33 Weighted-average common shares outstanding Basic 288.2 287.6 288.1 288.3 288.1 Diluted 292.3 292.1 292.8 292.6 292.5 2018 Net sales $3,470.9 $3,689.6 $3,747.2 $3,760.5 $14,668.2 Operating expenses Cost of sales 2,072.3 2,146.1 2,190.7 2,216.8 8,625.9 Selling, general and administrative expenses 1,018.3 1,036.8 964.7 948.8 3,968.6 Special (gains) and charges 26.0 12.1 75.6 13.0 126.7 Operating income 354.3 494.6 516.2 581.9 1,947.0 Other (income) expense (19.4) (19.6) (21.0) (19.9) (79.9) Interest expense, net 56.4 56.3 55.7 53.9 222.3 Income before income taxes 317.3 457.9 481.5 547.9 1,804.6 Provision for income taxes 69.1 104.3 43.2 147.7 364.3 Net income including noncontrolling interest 248.2 353.6 438.3 400.2 1,440.3 Net income attributable to noncontrolling interest 0.9 2.3 2.9 5.1 11.2 Net income attributable to Ecolab $247.3 $351.3 $435.4 $395.1 $1,429.1 Earnings attributable to Ecolab per common share Basic $ 0.86 $ 1.22 $ 1.51 $ 1.37 $ 4.95 Diluted $ 0.84 $ 1.20 $ 1.48 $ 1.35 $ 4.88 Weighted-average common shares outstanding Basic 288.6 288.8 288.8 288.0 288.6 Diluted 292.7 293.3 293.4 292.2 292.8 Per share amounts do not necessarily sum due to changes in the calculation of shares outstanding for each discrete period and rounding. Gross profit is calculated as net sales minus cost of sales. The Company has conformed the first quarter of 2019 with current accounting policies. There was no impact to net sales or operating income. (a) Cost of sales includes special charges of $3.6 , $7.9 , $11.3 and $15.7 million in Q1, Q2, Q3 and Q4 of 2019, respectively and $(0.1) , $3.6 , and $5.8 million in Q2, Q3 and Q4 of 2018, respectively. Other (income) expense includes special charges of $9.5 million in Q4 of 2019. Net interest expense includes special charges of $0.2 million in Q1 of 2019 and $0.3 million in Q4 of 2018. |
NATURE OF BUSINESS (Details)
NATURE OF BUSINESS (Details) - country | Dec. 31, 2019 | Dec. 18, 2019 |
Minimum | ||
Nature of business | ||
Number of countries in which company delivers comprehensive programs and services | 170 | |
ChampionX | ||
Nature of business | ||
Percentage of shares to be received | 62.00% |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES - Valuation Allowance and Reserves (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Accounts Receivable and Allowance for Doubtful Accounts | |||
Allowance for doubtful accounts, returns and credits | $ 18 | $ 17 | $ 15 |
Allowance for Doubtful Accounts | |||
Activity in the allowance for doubtful accounts | |||
Allowance for doubtful accounts, beginning balance | 60.6 | 71.5 | 67.6 |
Bad debt expense | 21.7 | 15.7 | 17.1 |
Write-offs | (19.1) | (23.6) | (15.7) |
Other | (1.2) | (3) | 2.5 |
Allowance for doubtful accounts, ending balance | $ 62 | $ 60.6 | $ 71.5 |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES - Property, Plant and Equipement (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Inventory Valuations | |||
LIFO inventory as percentage of consolidated inventory | 37.00% | ||
Property, Plant and Equipment | |||
Total depreciation expense | $ 654.1 | $ 621.3 | $ 585.7 |
Buildings and Leasehold Improvements | Minimum | |||
Property, Plant and Equipment | |||
Estimated useful life | 5 years | ||
Buildings and Leasehold Improvements | Maximum | |||
Property, Plant and Equipment | |||
Estimated useful life | 40 years | ||
Machinery and Equipment | Minimum | |||
Property, Plant and Equipment | |||
Estimated useful life | 3 years | ||
Machinery and Equipment | Maximum | |||
Property, Plant and Equipment | |||
Estimated useful life | 20 years | ||
Merchandising and Customer Equipment | Minimum | |||
Property, Plant and Equipment | |||
Estimated useful life | 3 years | ||
Merchandising and Customer Equipment | Maximum | |||
Property, Plant and Equipment | |||
Estimated useful life | 20 years | ||
Capitalized Software | Minimum | |||
Property, Plant and Equipment | |||
Estimated useful life | 3 years | ||
Capitalized Software | Maximum | |||
Property, Plant and Equipment | |||
Estimated useful life | 7 years |
SIGNIFICANT ACCOUNTING POLICI_6
SIGNIFICANT ACCOUNTING POLICIES - Goodwill and Other Intangible Assets (Details) $ in Millions | 12 Months Ended | |||
Dec. 31, 2019USD ($)item | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Jun. 30, 2019USD ($) | |
Changes in the carrying amount of goodwill for each of the company's reportable segments | ||||
Number of reporting units | item | 11 | |||
Changes in the carrying amount of goodwill | ||||
Beginning goodwill | $ 7,078 | $ 7,167.1 | ||
Current year business combinations | 235 | 84 | ||
Prior year business combinations | (0.2) | (2.1) | ||
Reclassifications | (3.4) | |||
Effect of foreign currency translation | (61.1) | (167.6) | ||
Ending goodwill | 7,251.7 | 7,078 | $ 7,167.1 | |
Impairment of goodwill | 0 | 0 | 0 | |
Goodwill expected to be tax deductible | 49.4 | |||
Nalco | Trademarks | ||||
Changes in the carrying amount of goodwill | ||||
Carrying value of asset subject to impairment testing | $ 1,200 | |||
Impairment of indefinite life intangible asset | 0 | |||
Global Industrial | ||||
Changes in the carrying amount of goodwill | ||||
Beginning goodwill | 2,730.8 | 2,725.3 | ||
Current year business combinations | 92.2 | 71.6 | ||
Prior year business combinations | (0.2) | (1.2) | ||
Reclassifications | (0.5) | |||
Effect of foreign currency translation | (23.6) | (64.4) | ||
Ending goodwill | 2,799.2 | 2,730.8 | 2,725.3 | |
Global Institutional | ||||
Changes in the carrying amount of goodwill | ||||
Beginning goodwill | 1,015.3 | 1,027 | ||
Current year business combinations | 142.1 | 12.4 | ||
Effect of foreign currency translation | (9.7) | (24.1) | ||
Ending goodwill | 1,147.7 | 1,015.3 | 1,027 | |
Global Energy | ||||
Changes in the carrying amount of goodwill | ||||
Beginning goodwill | 3,126.6 | 3,203.7 | ||
Reclassifications | (2.9) | |||
Effect of foreign currency translation | (26.1) | (74.2) | ||
Ending goodwill | 3,100.5 | 3,126.6 | 3,203.7 | |
Other | ||||
Changes in the carrying amount of goodwill | ||||
Beginning goodwill | 205.3 | 211.1 | ||
Current year business combinations | 0.7 | |||
Prior year business combinations | (0.9) | |||
Effect of foreign currency translation | (1.7) | (4.9) | ||
Ending goodwill | $ 204.3 | $ 205.3 | $ 211.1 |
SIGNIFICANT ACCOUNTING POLICI_7
SIGNIFICANT ACCOUNTING POLICIES - Other Intangible Assets (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Total amortization expense related to other intangible assets during the last three years and future estimated amortization | |||
Total amortization expense related to other intangible assets | $ 319 | $ 317 | $ 308 |
2020 | 320 | ||
2021 | 316 | ||
2022 | 309 | ||
2023 | 302 | ||
2024 | $ 289 | ||
Customer relationships | |||
Other intangible assets | |||
Weighted-average useful life of other amortizable assets | 14 years | ||
Trademarks | |||
Other intangible assets | |||
Weighted-average useful life of other amortizable assets | 13 years | ||
Patents | |||
Other intangible assets | |||
Weighted-average useful life of other amortizable assets | 14 years | ||
Other technology | |||
Other intangible assets | |||
Weighted-average useful life of other amortizable assets | 5 years | ||
Other intangibles | |||
Other intangible assets | |||
Weighted-average useful life of other amortizable assets | 14 years | 14 years |
SIGNIFICANT ACCOUNTING POLICI_8
SIGNIFICANT ACCOUNTING POLICIES - Rentals and Leases (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Lessor, Operating Lease, Description [Abstract] | |
Lessor, Operating Lease, Existence of Lessee Option to Purchase Underlying Asset [true false] | false |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Renewal term - Operating | 1 month |
Lessor, Operating Lease, Description [Abstract] | |
Lessor, Operating Lease, Term of Contract | 1 year |
Maximum | |
Lessor, Operating Lease, Description [Abstract] | |
Lessor, Operating Lease, Term of Contract | 5 years |
SIGNIFICANT ACCOUNTING POLICI_9
SIGNIFICANT ACCOUNTING POLICIES - Income Taxes (Details) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
SIGNIFICANT ACCOUNTING POLICIES | |||
Statutory U.S. rate (as a percent) | 21.00% | 21.00% | 35.00% |
SIGNIFICANT ACCOUNTING POLIC_10
SIGNIFICANT ACCOUNTING POLICIES - Earnings Per Common Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share-Based Compensation | |||||||||||
Excess tax benefits, share-based compensation | $ 43.1 | $ 28.1 | $ 39.7 | ||||||||
New accounting guidance, cumulative effect | (2.8) | (43.6) | 1.9 | ||||||||
Computations of the basic and diluted earnings attributable to Ecolab per share amounts | |||||||||||
Net income attributable to Ecolab | $ 429.6 | $ 464.2 | $ 368.6 | $ 296.5 | $ 395.1 | $ 435.4 | $ 351.3 | $ 247.3 | $ 1,558.9 | $ 1,429.1 | $ 1,504.6 |
Weighted-average common shares outstanding | |||||||||||
Basic (in shares) | 288.3 | 288.1 | 287.6 | 288.2 | 288 | 288.8 | 288.8 | 288.6 | 288.1 | 288.6 | 289.6 |
Effect of dilutive stock options and units (in shares) | 4.4 | 4.2 | 4.4 | ||||||||
Diluted (in shares) | 292.6 | 292.8 | 292.1 | 292.3 | 292.2 | 293.4 | 293.3 | 292.7 | 292.5 | 292.8 | 294 |
Earnings attributable to Ecolab per common share | |||||||||||
Basic (in dollars per share) | $ 1.49 | $ 1.61 | $ 1.28 | $ 1.03 | $ 1.37 | $ 1.51 | $ 1.22 | $ 0.86 | $ 5.41 | $ 4.95 | $ 5.20 |
Diluted (in dollars per share) | $ 1.47 | $ 1.59 | $ 1.26 | $ 1.01 | $ 1.35 | $ 1.48 | $ 1.20 | $ 0.84 | $ 5.33 | $ 4.88 | $ 5.12 |
Anti-dilutive stock options, units and awards excluded from computation of earnings per share (in shares) | 1.1 | 2.9 | 3.4 |
SIGNIFICANT ACCOUNTING POLIC_11
SIGNIFICANT ACCOUNTING POLICIES - New Accounting Pronouncements (Details) - USD ($) $ in Millions | Jan. 01, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
New Accounting Pronouncements | ||||
New accounting guidance, cumulative effect | $ (2.8) | $ (43.6) | $ 1.9 | |
Operating lease assets | $ 577.5 | |||
Accounting Standards Update 2018-02 | ||||
New Accounting Pronouncements | ||||
New accounting guidance, cumulative effect | $ 61.2 | |||
Accounting Standards Update Codification Topic 842 Leases | ||||
New Accounting Pronouncements | ||||
New accounting guidance, cumulative effect | $ (2.8) | |||
Lease, Practical Expedients, Package [true false] | true | |||
Lease, Practical Expedient, Land Easement [true false] | true | |||
Lease, Practical Expedient, Use of Hindsight [true false] | true | |||
Operating lease assets | $ 572.2 | |||
Operating lease liabilities | $ 575 |
SPECIAL (GAINS) AND CHARGES - C
SPECIAL (GAINS) AND CHARGES - Charges Reported on Statement of Income (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Special (gains) and charges | |||||||||||
Restructuring activities | $ 44.5 | ||||||||||
ChampionX Separation | $ 77.3 | ||||||||||
Gain on sale of business | $ (50.6) | ||||||||||
Other (income) expense | $ 61 | $ 60.4 | $ 49.9 | $ 40.3 | $ 13 | $ 75.6 | $ 12.1 | $ 26 | 211.6 | 126.7 | (3.7) |
Total special (gains) and charges | 259.8 | 136.3 | 62.2 | ||||||||
Cost of sales | |||||||||||
Special (gains) and charges | |||||||||||
Restructuring activities | 20.4 | 12.1 | 4.6 | ||||||||
Acquisition and integration activities | 7.6 | (0.6) | 13.2 | ||||||||
Other special gains and charges | 10.5 | (2.2) | 26.2 | ||||||||
Other (income) expense | 15.7 | $ 11.3 | $ 7.9 | 3.6 | 5.8 | $ 3.6 | $ (0.1) | 38.5 | 9.3 | 44 | |
Special (gains) and charges | |||||||||||
Special (gains) and charges | |||||||||||
Restructuring activities | 116.8 | 89.4 | 39.9 | ||||||||
ChampionX Separation | 77.3 | ||||||||||
Acquisition and integration activities | 5.6 | 8.8 | 15.4 | ||||||||
Gain on sale of business | (46.1) | ||||||||||
Venezuela related gain | (11.5) | ||||||||||
Other special gains and charges | 11.9 | 28.5 | (1.4) | ||||||||
Other (income) expense | 211.6 | 126.7 | (3.7) | ||||||||
Operating income subtotal | |||||||||||
Special (gains) and charges | |||||||||||
Other (income) expense | 250.1 | 136 | 40.3 | ||||||||
Interest expense | |||||||||||
Special (gains) and charges | |||||||||||
Other special gains and charges | 0.2 | 0.3 | 21.9 | ||||||||
Other (income) expense | $ 0.2 | $ 0.3 | 0.2 | $ 0.3 | $ 21.9 | ||||||
Other (income) expense | |||||||||||
Special (gains) and charges | |||||||||||
Other (income) expense | $ 9.5 | 9.5 | |||||||||
Other (income) expense, net of tax | $ 7.2 |
SPECIAL (GAINS) AND CHARGES - R
SPECIAL (GAINS) AND CHARGES - Restructuring and Non-Restructuring Activity (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||||
Nov. 30, 2017 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Restructuring | ||||||||||||
Recorded expense | $ 136.6 | $ 104.6 | ||||||||||
Net cash payments | (92.6) | (35.2) | ||||||||||
Non-cash charges | (3.4) | (5) | ||||||||||
Effect of foreign currency translation | (0.5) | (0.5) | ||||||||||
Restructuring liability | $ 104 | $ 63.9 | 104 | 63.9 | ||||||||
Other restructuring information | ||||||||||||
Restructuring charges incurred, pre-tax | 44.5 | |||||||||||
Restructuring charges incurred, after tax | 32.3 | |||||||||||
ChampionX Separation | 77.3 | |||||||||||
ChampionX Separation, after tax | 65.8 | |||||||||||
Special (gains) and charges | 61 | $ 60.4 | $ 49.9 | $ 40.3 | 13 | $ 75.6 | $ 12.1 | $ 26 | 211.6 | 126.7 | $ (3.7) | |
Interest expense, special charges | 0.3 | |||||||||||
Interest expense, special charges, after tax | 0.2 | |||||||||||
Non-restructuring Special (Gains) and Charges | ||||||||||||
Property, Plant and Equipment, Net | 3,954.9 | 3,836 | 3,954.9 | 3,836 | ||||||||
Fixed asset impairment and contract termination costs, pre tax | 24.8 | |||||||||||
Fixed asset impairment and contract termination costs, after tax | 19 | |||||||||||
Debt extinguishment charges | 21.9 | |||||||||||
Debt extinguishment charges, net of tax | 13.6 | |||||||||||
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Equipment Care Business | ||||||||||||
Non-restructuring Special (Gains) and Charges | ||||||||||||
Gain (loss) on sale of business, before tax | $ 46.1 | 46.1 | ||||||||||
Gain (loss) on sale of business, net of tax | $ 12.4 | 12.4 | ||||||||||
Special (gains) and charges | ||||||||||||
Restructuring | ||||||||||||
Recorded expense | 2 | |||||||||||
Other restructuring information | ||||||||||||
Restructuring charges, after tax | 1.5 | |||||||||||
Restructuring charges incurred, pre-tax | 116.8 | 89.4 | 39.9 | |||||||||
ChampionX Separation | 77.3 | |||||||||||
Special (gains) and charges | 211.6 | 126.7 | (3.7) | |||||||||
Business combination advisory and legal fees, pre tax | 5.6 | 8.8 | 15.4 | |||||||||
Other special gains and charges | 11.9 | 28.5 | (1.4) | |||||||||
Other special gains and charges, after-tax | 7.5 | 21.5 | ||||||||||
Other, Ecolab Foundation, pre-tax | 25 | |||||||||||
Other, Ecolab Foundation, after tax | 18.9 | |||||||||||
Non-restructuring Special (Gains) and Charges | ||||||||||||
Foreign currency translation (charges) recovery associated with remeasurement and deconsolidation, before tax | 11.5 | |||||||||||
Cost of sales | ||||||||||||
Other restructuring information | ||||||||||||
Restructuring charges incurred, pre-tax | 20.4 | 12.1 | 4.6 | |||||||||
Special (gains) and charges | 15.7 | $ 11.3 | $ 7.9 | 3.6 | 5.8 | $ 3.6 | $ (0.1) | 38.5 | 9.3 | 44 | ||
Business combination advisory and legal fees, pre tax | 7.6 | (0.6) | 13.2 | |||||||||
Other special gains and charges | 10.5 | (2.2) | 26.2 | |||||||||
Non-restructuring Special (Gains) and Charges | ||||||||||||
Fixed asset impairment and related inventory charges, before tax | 13.2 | |||||||||||
Fixed asset impairment and related inventory charges, after tax | 8.6 | |||||||||||
Interest expense | ||||||||||||
Other restructuring information | ||||||||||||
Special (gains) and charges | $ 0.2 | 0.3 | 0.2 | 0.3 | 21.9 | |||||||
Other special gains and charges | 0.2 | 0.3 | 21.9 | |||||||||
Other (income) expense | ||||||||||||
Other restructuring information | ||||||||||||
Special (gains) and charges | 9.5 | 9.5 | ||||||||||
Other (income) expense | ChampionX | ||||||||||||
Other restructuring information | ||||||||||||
Pension settlements and curtailments | 7.5 | |||||||||||
Pension settlements and curtailments, after tax | 5.7 | |||||||||||
VENEZUELA | ||||||||||||
Non-restructuring Special (Gains) and Charges | ||||||||||||
Foreign currency translation (charges) recovery associated with remeasurement and deconsolidation, before tax | 0 | 0 | 11.5 | |||||||||
Foreign currency translation (charges) recovery associated with remeasurement and deconsolidation, after tax | 7.2 | |||||||||||
Bioquell | Interest expense | ||||||||||||
Other restructuring information | ||||||||||||
Interest expense, special charges | 0.2 | |||||||||||
Interest expense, special charges, after tax | 0.1 | |||||||||||
Bioquell and Anios | ||||||||||||
Other restructuring information | ||||||||||||
Business combination advisory and legal fees, pre tax | 5.6 | |||||||||||
Business combination advisory and legal fees, after tax | 4.1 | |||||||||||
Anios and Swisher | Special (gains) and charges | ||||||||||||
Other restructuring information | ||||||||||||
Business combination advisory and legal fees, pre tax | 8.8 | |||||||||||
Business combination advisory and legal fees, after tax | 6.1 | |||||||||||
Non-restructuring Special (Gains) and Charges | ||||||||||||
Business combination and integration related costs, pre tax | 15.4 | |||||||||||
Business combination and integration related costs, after tax | 9.9 | |||||||||||
Employee termination costs | ||||||||||||
Restructuring | ||||||||||||
Recorded expense | 122 | 94.1 | ||||||||||
Net cash payments | (79.8) | (32.8) | ||||||||||
Effect of foreign currency translation | (0.5) | (0.5) | ||||||||||
Restructuring liability | 102.5 | 60.8 | 102.5 | 60.8 | ||||||||
Asset disposals | ||||||||||||
Restructuring | ||||||||||||
Recorded expense | 0.2 | 5 | ||||||||||
Net cash payments | 1.2 | |||||||||||
Non-cash charges | (1.4) | (5) | ||||||||||
Other | ||||||||||||
Restructuring | ||||||||||||
Recorded expense | 14.4 | 5.5 | ||||||||||
Net cash payments | (14) | (2.4) | ||||||||||
Non-cash charges | (2) | |||||||||||
Restructuring liability | 1.5 | 3.1 | 1.5 | 3.1 | ||||||||
Product and sold equipment | Special (gains) and charges | ||||||||||||
Other restructuring information | ||||||||||||
Other special gains and charges | 10.5 | |||||||||||
Other special gains and charges, after-tax | 7.1 | |||||||||||
Product and sold equipment | Cost of sales | ||||||||||||
Other restructuring information | ||||||||||||
Special (gains) and charges | 38.5 | 9.3 | $ 44 | |||||||||
Non-restructuring Special (Gains) and Charges | ||||||||||||
Inventory cost alignment, before tax | 2.2 | |||||||||||
Inventory cost alignment, after tax | 1.7 | |||||||||||
Product and sold equipment | Bioquell | ||||||||||||
Other restructuring information | ||||||||||||
Business combination advisory and legal fees, pre tax | 7.6 | |||||||||||
Business combination advisory and legal fees, after tax | 5.6 | |||||||||||
2018 Restructuring Plan | ||||||||||||
Restructuring | ||||||||||||
Recorded expense | 136.6 | 104.6 | ||||||||||
Restructuring liability | 104 | 63.9 | 104 | 63.9 | ||||||||
Other restructuring information | ||||||||||||
Restructuring charge expected to be incurred, pre-tax | 260 | 260 | ||||||||||
Restructuring charge expected to be incurred, after tax | 200 | 200 | ||||||||||
Restructuring charges incurred to date, pre-tax | 241.2 | 241.2 | ||||||||||
Restructuring charges incurred to date, after-tax | 184 | 184 | ||||||||||
Restructuring charges, after tax | 104.4 | 79.6 | ||||||||||
Immaterial Restructuring Plan | ||||||||||||
Restructuring | ||||||||||||
Recorded expense | 4.1 | |||||||||||
Other restructuring information | ||||||||||||
Restructuring charges, after tax | 3.3 | |||||||||||
Prior Year Plans | ||||||||||||
Restructuring | ||||||||||||
Cash payments | (8.3) | |||||||||||
Restructuring liability | $ 7.7 | $ 14.9 | 7.7 | 14.9 | ||||||||
Other restructuring information | ||||||||||||
Restructuring net gain | 1.5 | 3.1 | ||||||||||
Restructuring net gain, net of tax | 1.1 | $ 2.4 | ||||||||||
Cash payments | $ 8.3 |
ACQUISITIONS AND DISPOSITIONS -
ACQUISITIONS AND DISPOSITIONS - Acquisition Summary (Details) € in Millions, $ in Millions | Feb. 01, 2017EUR (€) | Feb. 01, 2017USD ($) | Feb. 28, 2019EUR (€) | Dec. 31, 2019EUR (€) | Dec. 31, 2019USD ($) | Dec. 31, 2018EUR (€) | Dec. 31, 2018USD ($) | Dec. 31, 2017EUR (€) | Dec. 31, 2017USD ($) | Dec. 31, 2016EUR (€) | Dec. 31, 2016USD ($) | Dec. 31, 2019USD ($) | Feb. 01, 2017USD ($) |
Identifiable intangible assets | |||||||||||||
Goodwill expected to be tax deductible | $ | $ 49.4 | ||||||||||||
Cost of sales | |||||||||||||
Acquisitions and Dispositions | |||||||||||||
Acquisition and integration activities | $ | $ 7.6 | $ (0.6) | $ 13.2 | ||||||||||
Bioquell | |||||||||||||
Acquisitions and Dispositions | |||||||||||||
Pre-acquisition annual sales | $ | $ 134 | ||||||||||||
Portion of purchase price transferred to an escrow fund | € 140.5 | $ 179.3 | |||||||||||
Escrow released | € 179.3 | ||||||||||||
Earn-out term | 3 years | 3 years | |||||||||||
Anios | |||||||||||||
Acquisitions and Dispositions | |||||||||||||
Total consideration transferred | € 798.3 | ||||||||||||
Pre-acquisition annual sales | € 245 | ||||||||||||
Increase (decrease) in restricted cash | € 50 | ||||||||||||
Components of the aggregate purchase prices of the completed acquisitions | |||||||||||||
Net tangible assets (liabilities) acquired and equity method investments | 139.8 | ||||||||||||
Identifiable intangible assets | |||||||||||||
Customer relationships | 252 | ||||||||||||
Trademarks | 65.7 | ||||||||||||
Other technology | 16.1 | ||||||||||||
Total assets acquired | 473.6 | ||||||||||||
Goodwill | 511.7 | $ 511.7 | |||||||||||
Total liabilities assumed | 187 | ||||||||||||
Goodwill expected to be tax deductible | $ | $ 0 | ||||||||||||
Long-term debt repaid upon close | 192.8 | ||||||||||||
Net consideration transferred to sellers | 605.5 | ||||||||||||
Total consideration transferred | 798.3 | ||||||||||||
Accounts receivable | 64.8 | ||||||||||||
Property, plant and equipment | 24.7 | ||||||||||||
Inventory | 29.1 | ||||||||||||
Deferred tax liabilities | 102.3 | ||||||||||||
Current liabilities | € 62.5 | ||||||||||||
Other Acquisitions | |||||||||||||
Acquisitions and Dispositions | |||||||||||||
Pre-acquisition annual sales | $ | $ 135 | ||||||||||||
Components of the aggregate purchase prices of the completed acquisitions | |||||||||||||
Net tangible assets (liabilities) acquired and equity method investments | € (8) | € 30.1 | 29.8 | ||||||||||
Identifiable intangible assets | |||||||||||||
Customer relationships | 115.7 | 101.5 | 67 | ||||||||||
Trademarks | 24.1 | 3.9 | 2.5 | ||||||||||
Non-compete agreements | 2.6 | 0.2 | |||||||||||
Other technology | 48.9 | 6.5 | 7.6 | ||||||||||
Total assets acquired | 188.7 | 114.5 | 77.3 | ||||||||||
Goodwill | 234.8 | 81.9 | 87.4 | ||||||||||
Acquisition related liabilities and contingent consideration | (24.1) | (1.5) | 5.6 | ||||||||||
Net consideration transferred to sellers | 391.4 | 225 | 200.1 | ||||||||||
Net cash paid for acquisitions, including acquisition related liabiities and contingent consideration | € 415.5 | € 226.5 | € 194.5 | ||||||||||
Weighted average useful lives of identifiable intangible assets acquired | 12 years | 12 years | 13 years | 13 years | 12 years | 12 years | |||||||
Customer relationships | Anios | |||||||||||||
Identifiable intangible assets | |||||||||||||
Weighted average useful lives of identifiable intangible assets acquired | 20 years | 20 years | |||||||||||
Other technology | Anios | |||||||||||||
Identifiable intangible assets | |||||||||||||
Weighted average useful lives of identifiable intangible assets acquired | 11 years | 11 years | |||||||||||
Trademarks | Anios | |||||||||||||
Identifiable intangible assets | |||||||||||||
Weighted average useful lives of identifiable intangible assets acquired | 17 years | 17 years |
ACQUISITIONS AND DISPOSITIONS_2
ACQUISITIONS AND DISPOSITIONS - Dispositions (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||||
Nov. 30, 2017 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Dispositions | ||||||||||||
Net sales | $ 3,823.6 | $ 3,817.9 | $ 3,759.4 | $ 3,505.4 | $ 3,760.5 | $ 3,747.2 | $ 3,689.6 | $ 3,470.9 | $ 14,906.3 | $ 14,668.2 | $ 13,835.9 | |
Equipment Care Business | Disposal Group, Disposed of by Sale, Not Discontinued Operations | ||||||||||||
Dispositions | ||||||||||||
Total consideration received | $ 132.6 | |||||||||||
Note receivable | 15 | |||||||||||
Equity interests | 5 | |||||||||||
Cash received from sale of business | 118.8 | |||||||||||
Gain (loss) on sale of investment | 46.1 | 46.1 | ||||||||||
Gain (loss) on sale of business, net of tax | $ 12.4 | 12.4 | ||||||||||
Net sales | $ 180 |
BALANCE SHEET INFORMATION (Deta
BALANCE SHEET INFORMATION (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Accounts receivable, net | ||
Accounts receivable | $ 2,858.5 | $ 2,723.1 |
Allowance for doubtful accounts | (62) | (60.6) |
Total | 2,796.5 | 2,662.5 |
Inventories | ||
Finished goods | 936.5 | 1,016.9 |
Raw materials and parts | 559.8 | 525.6 |
Inventories at FIFO cost | 1,496.3 | 1,542.5 |
FIFO cost to LIFO cost difference | 9.3 | 3.9 |
Total | 1,505.6 | 1,546.4 |
Other current assets | ||
Prepaid assets | 118.8 | 132.1 |
Taxes receivable | 133.7 | 144.2 |
Derivative assets | 54.3 | 42.8 |
Other current assets | 33.1 | 35 |
Total | 339.9 | 354.1 |
Property, plant and equipment, net | ||
Land | 215.1 | 214.5 |
Buildings and leasehold improvements | 1,363.1 | 1,279.4 |
Machinery and equipment | 2,467.8 | 2,313.7 |
Merchandising and customer equipment | 2,787.8 | 2,565.5 |
Capitalized software | 779.7 | 666.2 |
Construction in progress | 406.7 | 400.2 |
Property, plant and equipment, gross | 8,020.2 | 7,439.5 |
Accumulated depreciation | (4,065.3) | (3,603.5) |
Total | 3,954.9 | 3,836 |
Intangible assets subject to amortization: | ||
Other intangible assets, gross | 4,928.6 | 4,747.2 |
Accumulated amortization | (2,486.1) | (2,179.5) |
Net intangible assets subject to amortization | 2,442.5 | 2,567.7 |
Total | 3,672.5 | 3,797.7 |
Other assets | ||
Deferred income taxes | 155.6 | 105.1 |
Pension | 31.1 | 39 |
Derivative asset | 25.4 | 11.8 |
Restricted cash | 179.3 | |
Other | 372 | 349.9 |
Total | 584.1 | 685.1 |
Other current liabilities | ||
Discounts and rebates | 331.4 | 291.3 |
Dividends payable | 135.6 | 132.4 |
Interest payable | 40.9 | 44.5 |
Taxes payable, other than income | 113.4 | 116.9 |
Derivative liabilities | 5.8 | 20.1 |
Restructuring | 107.1 | 73.7 |
Contract liability | 84.7 | 75.8 |
Operating lease liabilities | $ 153.2 | |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Total | |
Other | $ 251.3 | 251.4 |
Total | 1,223.4 | 1,006.1 |
Accumulated other comprehensive loss | ||
Unrealized gain (loss) on derivative financial instruments, net of tax | (4.1) | 2 |
Unrecognized pension and postretirement benefit expense, net of tax | (823.8) | (518.9) |
Cumulative translation, net of tax | (1,261.8) | (1,244.8) |
Total | (2,089.7) | (1,761.7) |
Customer relationships | ||
Intangible assets subject to amortization: | ||
Other intangible assets, gross | 3,742.1 | 3,649.3 |
Accumulated amortization | (1,835.9) | (1,604) |
Trademarks | ||
Intangible assets subject to amortization: | ||
Other intangible assets, gross | 409.9 | 384.9 |
Accumulated amortization | (205.1) | (175.2) |
Patents | ||
Intangible assets subject to amortization: | ||
Other intangible assets, gross | 479.4 | 470.2 |
Accumulated amortization | (231.6) | (207.3) |
Other technology | ||
Intangible assets subject to amortization: | ||
Other intangible assets, gross | 297.2 | 242.8 |
Accumulated amortization | (213.5) | (193) |
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 | Dec. 31, 2019EUR (€) | Dec. 31, 2019USD ($) | Dec. 31, 2018EUR (€) | Dec. 31, 2018USD ($) |
Components of the company's debt obligations | ||||
Long-term debt, current maturities | $ 300.9 | $ 401.4 | ||
Short-term debt including current maturities of long-term debt | 380.6 | 743.6 | ||
Amount outstanding under the credit agreement | 0 | 0 | ||
Commercial paper. | ||||
Components of the company's debt obligations | ||||
Short-term debt | 55.1 | $ 165.4 | ||
Maximum borrowing capacity, commercial paper | $ 2,000 | |||
Average interest rate (as a percent) | (0.30%) | (0.30%) | 0.18% | 0.18% |
U.S. commercial paper program | ||||
Components of the company's debt obligations | ||||
Maximum borrowing capacity, commercial paper | $ 2,000 | |||
Outstanding commercial paper | $ 24 | |||
European commercial paper | ||||
Components of the company's debt obligations | ||||
Maximum borrowing capacity, commercial paper | 2,000 | |||
Outstanding commercial paper | € 50 | 55.1 | € 125 | 141.4 |
Notes payable | ||||
Components of the company's debt obligations | ||||
Short-term debt | $ 24.6 | $ 176.8 | ||
Average interest rate (as a percent) | 3.53% | 3.53% | 1.47% | 1.47% |
Remaining capacity | $ 1,264 | $ 575 | ||
Multi-Currency Revolving Credit Facility | ||||
Components of the company's debt obligations | ||||
Maximum borrowing capacity under the credit agreement | $ 2,000 |
DEBT AND INTEREST - Other Debt
DEBT AND INTEREST - Other Debt Information (Details) € in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||||
Dec. 31, 2019USD ($) | Sep. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2019EUR (€) | Dec. 31, 2019USD ($) | |
Debt instrument | |||||||||||||
CARRYING VALUE | $ 6,703 | $ 6,703 | $ 6,274.4 | ||||||||||
Long-term debt, current maturities | (401.4) | (401.4) | (300.9) | ||||||||||
Long-term debt | 6,301.6 | 6,301.6 | 5,973.5 | ||||||||||
Debt instrument, term | 30 years | ||||||||||||
Aggregate annual maturities of long-term debt | |||||||||||||
2019 | 301 | ||||||||||||
2020 | 1,020 | ||||||||||||
2021 | 498 | ||||||||||||
2022 | 648 | ||||||||||||
2023 | 628 | ||||||||||||
Interest | |||||||||||||
Interest expense | $ 215.3 | 237.2 | $ 274.6 | ||||||||||
Interest income | (24.1) | (14.9) | (19.6) | ||||||||||
Interest expense, net | $ 46.2 | $ 46.1 | $ 49.5 | $ 49.4 | 53.9 | $ 55.7 | $ 56.3 | $ 56.4 | $ 191.2 | 222.3 | 255 | ||
Debt extinguishment charges | 21.9 | ||||||||||||
Debt extinguishment charges, after tax | $ 13.6 | ||||||||||||
Private Notes | |||||||||||||
Debt instrument | |||||||||||||
Principal outstanding payable at time of prepayment of notes (as a percent) | 100.00% | ||||||||||||
Ten year 2011 senior notes | |||||||||||||
Debt instrument | |||||||||||||
CARRYING VALUE | $ 1,017.6 | $ 1,017.6 | 1,018.3 | ||||||||||
Aggregate principal amount | $ 1,020 | ||||||||||||
AVERAGE INTEREST RATE (as a percent) | 4.35% | 4.35% | 4.35% | 4.35% | |||||||||
EFFECTIVE INTEREST RATE (as a percent) | 4.43% | 4.43% | 4.43% | 4.43% | |||||||||
Debt instrument, term | 10 years | ||||||||||||
Thirty year 2011 senior notes | |||||||||||||
Debt instrument | |||||||||||||
CARRYING VALUE | $ 451.6 | $ 451.6 | $ 451.9 | ||||||||||
Aggregate principal amount | $ 458 | ||||||||||||
AVERAGE INTEREST RATE (as a percent) | 5.50% | 5.50% | 5.50% | 5.50% | |||||||||
EFFECTIVE INTEREST RATE (as a percent) | 5.56% | 5.56% | 5.56% | 5.56% | |||||||||
Five year 2017 senior notes | |||||||||||||
Debt instrument | |||||||||||||
CARRYING VALUE | $ 496.9 | $ 496.9 | $ 497.8 | ||||||||||
Aggregate principal amount | $ 500 | ||||||||||||
AVERAGE INTEREST RATE (as a percent) | 2.38% | 2.38% | 2.38% | 2.38% | |||||||||
EFFECTIVE INTEREST RATE (as a percent) | 2.55% | 2.55% | 2.55% | 2.55% | |||||||||
Debt instrument, term | 5 years | ||||||||||||
Ten year 2017 senior notes | |||||||||||||
Debt instrument | |||||||||||||
CARRYING VALUE | $ 494.8 | $ 494.8 | $ 495.4 | ||||||||||
Aggregate principal amount | $ 500 | ||||||||||||
AVERAGE INTEREST RATE (as a percent) | 3.25% | 3.25% | 3.25% | 3.25% | |||||||||
EFFECTIVE INTEREST RATE (as a percent) | 3.37% | 3.37% | 3.37% | 3.37% | |||||||||
Debt instrument, term | 10 years | ||||||||||||
Thirty year 2017 senior notes | |||||||||||||
Debt instrument | |||||||||||||
CARRYING VALUE | $ 609 | $ 609 | $ 610.4 | ||||||||||
Aggregate principal amount | $ 700 | ||||||||||||
AVERAGE INTEREST RATE (as a percent) | 3.95% | 3.95% | 3.95% | 3.95% | |||||||||
EFFECTIVE INTEREST RATE (as a percent) | 4.14% | 4.14% | 4.15% | 4.15% | |||||||||
2017 144A notes | |||||||||||||
Debt instrument | |||||||||||||
Principal outstanding payable at time of prepayment of notes (as a percent) | 101.00% | ||||||||||||
Three year 2016 senior notes | |||||||||||||
Debt instrument | |||||||||||||
CARRYING VALUE | $ 399.7 | $ 399.7 | |||||||||||
Aggregate principal amount | $ 400 | ||||||||||||
AVERAGE INTEREST RATE (as a percent) | 2.00% | 2.00% | |||||||||||
EFFECTIVE INTEREST RATE (as a percent) | 3.24% | 3.24% | |||||||||||
Debt instrument, term | 3 years | ||||||||||||
Seven year 2016 senior Notes | |||||||||||||
Debt instrument | |||||||||||||
CARRYING VALUE | $ 398 | $ 398 | 398.5 | ||||||||||
Aggregate principal amount | $ 400 | ||||||||||||
AVERAGE INTEREST RATE (as a percent) | 3.25% | 3.25% | 3.25% | 3.25% | |||||||||
EFFECTIVE INTEREST RATE (as a percent) | 3.49% | 3.49% | 3.49% | 3.49% | |||||||||
Debt instrument, term | 7 years | ||||||||||||
Seven year 2016 senior euro notes | |||||||||||||
Debt instrument | |||||||||||||
CARRYING VALUE | $ 644.1 | $ 644.1 | $ 628.4 | ||||||||||
Aggregate principal amount | € | € 575 | ||||||||||||
AVERAGE INTEREST RATE (as a percent) | 1.00% | 1.00% | 1.00% | 1.00% | |||||||||
EFFECTIVE INTEREST RATE (as a percent) | 1.09% | 1.09% | 1.10% | 1.10% | |||||||||
Debt instrument, term | 7 years | ||||||||||||
Ten year 2016 senior notes | |||||||||||||
Debt instrument | |||||||||||||
CARRYING VALUE | $ 743.8 | $ 743.8 | $ 744.5 | ||||||||||
Aggregate principal amount | $ 750 | ||||||||||||
AVERAGE INTEREST RATE (as a percent) | 2.70% | 2.70% | 2.70% | 2.70% | |||||||||
EFFECTIVE INTEREST RATE (as a percent) | 2.93% | 2.93% | 2.93% | 2.93% | |||||||||
Debt instrument, term | 10 years | ||||||||||||
Thirty year 2016 senior notes | |||||||||||||
Debt instrument | |||||||||||||
CARRYING VALUE | $ 246.1 | $ 246.1 | $ 246.2 | ||||||||||
Aggregate principal amount | $ 250 | ||||||||||||
AVERAGE INTEREST RATE (as a percent) | 3.70% | 3.70% | 3.70% | 3.70% | |||||||||
EFFECTIVE INTEREST RATE (as a percent) | 3.76% | 3.76% | 3.76% | 3.76% | |||||||||
Debt instrument, term | 30 years | ||||||||||||
Five year 2015 senior notes | |||||||||||||
Debt instrument | |||||||||||||
CARRYING VALUE | $ 299.5 | $ 299.5 | $ 300 | ||||||||||
Aggregate principal amount | $ 300 | ||||||||||||
AVERAGE INTEREST RATE (as a percent) | 2.25% | 2.25% | 2.25% | 2.25% | |||||||||
EFFECTIVE INTEREST RATE (as a percent) | 2.79% | 2.79% | 2.79% | 2.79% | |||||||||
Debt instrument, term | 5 years | ||||||||||||
Ten Year 2015 senior euro notes | |||||||||||||
Debt instrument | |||||||||||||
CARRYING VALUE | $ 646.3 | $ 646.3 | $ 630 | ||||||||||
Aggregate principal amount | € | € 575 | ||||||||||||
AVERAGE INTEREST RATE (as a percent) | 2.63% | 2.63% | 2.63% | 2.63% | |||||||||
EFFECTIVE INTEREST RATE (as a percent) | 2.94% | 2.94% | 2.96% | 2.96% | |||||||||
Debt instrument, term | 10 years | ||||||||||||
Series B private placement senior notes due 2023 | |||||||||||||
Debt instrument | |||||||||||||
CARRYING VALUE | $ 249.4 | $ 249.4 | $ 249.6 | ||||||||||
Aggregate principal amount | $ 250 | $ 250 | $ 250 | ||||||||||
AVERAGE INTEREST RATE (as a percent) | 4.32% | 4.32% | 4.32% | 4.32% | |||||||||
EFFECTIVE INTEREST RATE (as a percent) | 4.36% | 4.36% | 4.36% | 4.36% | |||||||||
Other | |||||||||||||
Debt instrument | |||||||||||||
CARRYING VALUE | $ 6.2 | $ 6.2 | $ 3.4 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - Recurring - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Carrying Amount | ||
Assets: | ||
Foreign currency forward contracts | $ 83.9 | $ 72.3 |
Liabilities: | ||
Foreign currency forward contracts | 10 | 41.1 |
Interest rate swap contracts | 0.2 | |
Level 2 | ||
Assets: | ||
Foreign currency forward contracts | 83.9 | 72.3 |
Liabilities: | ||
Foreign currency forward contracts | $ 10 | 41.1 |
Interest rate swap contracts | $ 0.2 |
FAIR VALUE MEASUREMENTS - Long-
FAIR VALUE MEASUREMENTS - Long-term Debt (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Carrying Amount | ||
Carrying amount and fair value of financial instruments | ||
Long-term debt (including current maturities) | $ 6,274.4 | $ 6,703 |
Fair Value | ||
Carrying amount and fair value of financial instruments | ||
Long-term debt (including current maturities) | $ 6,862 | $ 6,844.7 |
DERIVATIVES AND HEDGING TRANS_3
DERIVATIVES AND HEDGING TRANSACTIONS - Derivative Positions Summary (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Asset Derivatives | ||
Gross amounts offset in the Consolidated Balance Sheet | $ (4.2) | $ (17.7) |
Net value of derivatives presented in the Consolidated Balance Sheet | 79.7 | 54.6 |
Liability Derivatives | ||
Gross amounts offset in the Consolidated Balance Sheet | (4.2) | (17.7) |
Net value of derivatives presented in the Consolidated Balance Sheet | 5.8 | 23.6 |
Foreign currency forward contracts. | ||
Liability Derivatives | ||
Notional values | 4,004 | 6,226 |
Interest rate swaps | ||
Liability Derivatives | ||
Notional values | 400 | |
Derivatives designated as hedging instruments | Foreign currency forward contracts. | ||
Asset Derivatives | ||
Gross value of derivatives | 67.4 | 40.4 |
Liability Derivatives | ||
Gross value of derivatives | 2.1 | 10.2 |
Derivatives designated as hedging instruments | Interest rate swaps | ||
Liability Derivatives | ||
Gross value of derivatives | 0.2 | |
Derivatives not designated as hedging instruments | Foreign currency forward contracts. | ||
Asset Derivatives | ||
Gross value of derivatives | 16.5 | 31.9 |
Liability Derivatives | ||
Gross value of derivatives | 7.9 | 30.9 |
Derivatives not designated as hedging instruments | Interest rate swaps | ||
Asset Derivatives | ||
Gross value of derivatives | 83.9 | 72.3 |
Liability Derivatives | ||
Gross value of derivatives | $ 10 | $ 41.3 |
DERIVATIVES AND HEDGING TRANS_4
DERIVATIVES AND HEDGING TRANSACTIONS - Information by Type of Derivative and Hedging Activities (Details) € in Millions, $ in Millions | 12 Months Ended | |||||||
Dec. 31, 2019EUR (€) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2019USD ($) | Jan. 31, 2016USD ($) | Jan. 31, 2015USD ($) | May 31, 2014USD ($) | |
Fair Value Hedges | ||||||||
Long-term debt | $ 6,301.6 | $ 5,973.5 | ||||||
Net Investment Hedges | ||||||||
Revaluation gain (loss), net of tax | $ 31.4 | 57.5 | $ (109.7) | |||||
Three year 2016 senior notes | ||||||||
Impact on AOCI and earnings from derivative contracts | ||||||||
Aggregate principal amount | 400 | |||||||
Ten year 2011 senior notes | ||||||||
Impact on AOCI and earnings from derivative contracts | ||||||||
Aggregate principal amount | 1,020 | |||||||
Ten Year 2015 senior euro notes | ||||||||
Impact on AOCI and earnings from derivative contracts | ||||||||
Aggregate principal amount | € | € 575 | |||||||
Cost of sales | ||||||||
Impact on AOCI and earnings from derivative contracts | ||||||||
Gain (loss) on derivative recognized in income | 15.4 | (7.7) | (13.7) | |||||
Selling, general and administrative expenses | ||||||||
Impact on AOCI and earnings from derivative contracts | ||||||||
Gain (loss) on derivative recognized in income | 69.5 | 109.2 | (195.4) | |||||
Interest expense, net | ||||||||
Impact on AOCI and earnings from derivative contracts | ||||||||
Gain (loss) on derivative recognized in income | 27.7 | 37.2 | 14.3 | |||||
Foreign currency forward contracts. | ||||||||
Net Investment Hedges | ||||||||
Notional values | 6,226 | $ 4,004 | ||||||
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 | 30 | 25.1 | (38.2) | |||||
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) | 5.3 | (3) | |||||
Interest rate swaps | ||||||||
Net Investment Hedges | ||||||||
Notional values | 400 | |||||||
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) | 15.4 | (7.7) | (13.7) | |||||
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) | 39.5 | 84.1 | (157.2) | |||||
Cash Flow Hedges | Foreign currency forward contracts. | Derivatives designated as hedging instruments | Interest expense, net | ||||||||
Impact on AOCI and earnings from derivative contracts | ||||||||
Amount excluded from the assessment of effectiveness recognized in earnings based on changes in fair value | 28.7 | 37.4 | 24.5 | |||||
Net Investment Hedges | ||||||||
Gain (loss) recognized in income (ineffective portion) | 28.7 | 37.4 | 24.5 | |||||
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) | (0.9) | (5.5) | (7.2) | |||||
Fair Value Hedges | Senior notes | ||||||||
Fair Value Hedges | ||||||||
Long-term debt | 399.7 | 944.6 | ||||||
Cumulative amount of fair value hedging adjustment | 0.1 | 7.6 | ||||||
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 hedged item recognized in income | 0.2 | (4) | 0.7 | |||||
Fair Value Hedges | Interest rate swaps | Derivatives designated as hedging instruments | Interest expense, net | ||||||||
Impact on AOCI and earnings from derivative contracts | ||||||||
Gain (loss) on derivative recognized in income | (0.2) | 4 | (0.7) | |||||
Net Investment Hedges | ||||||||
Net Investment Hedges | ||||||||
Revaluation gain (loss), net of tax | 31.4 | $ 57.5 | $ (109.7) | |||||
Net Investment Hedges | Senior euro notes | ||||||||
Net Investment Hedges | ||||||||
Euro-denominated debt outstanding | € 1,150 | $ 1,258 |
DERIVATIVES AND HEDGING TRANS_5
DERIVATIVES AND HEDGING TRANSACTIONS (Details 3) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Asset Derivatives | ||
Gross amounts offset in the Consolidated Balance Sheet | $ (4.2) | $ (17.7) |
Net value of derivatives presented in the Consolidated Balance Sheet | 79.7 | 54.6 |
Liability Derivatives | ||
Gross amounts offset in the Consolidated Balance Sheet | (4.2) | (17.7) |
Net value of derivatives presented in the Consolidated Balance Sheet | $ 5.8 | $ 23.6 |
OTHER COMPREHENSIVE INCOME (L_3
OTHER COMPREHENSIVE INCOME (LOSS) INFORMATION (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Reclassification adjustments | |||||||||||
Cost of sales | $ (2,218.2) | $ (2,207.4) | $ (2,208.2) | $ (2,089.6) | $ (2,216.8) | $ (2,190.7) | $ (2,146.1) | $ (2,072.3) | $ (8,723.4) | $ (8,625.9) | $ (8,064.2) |
SG&A | (984) | (962.5) | (1,002.7) | (1,008.3) | (948.8) | (964.7) | (1,036.8) | (1,018.3) | (3,957.5) | (3,968.6) | (3,825.3) |
Interest expense, net | $ (46.2) | $ (46.1) | $ (49.5) | $ (49.4) | $ (53.9) | $ (55.7) | $ (56.3) | $ (56.4) | (191.2) | (222.3) | (255) |
Subtotal | (268.7) | (119.4) | 71.2 | ||||||||
Derivative & Hedging Instruments. | |||||||||||
Reclassification adjustments | |||||||||||
Amount recognized in AOCI | 78.1 | 144.4 | (173.4) | ||||||||
Other activity | 0.8 | 0.2 | |||||||||
Tax impact | 0.4 | (7.7) | 1.7 | ||||||||
Subtotal | (3.4) | 28.4 | (17.9) | ||||||||
Derivative & Hedging Instruments. | Amount reclassified from AOCI | |||||||||||
Reclassification adjustments | |||||||||||
Cost of sales | (15.4) | 7.7 | 13.7 | ||||||||
SG&A | (39.5) | (84.1) | 157.2 | ||||||||
Interest expense, net | (27.8) | (31.9) | (17.3) | ||||||||
(Gains) losses reclassified from AOCI into income | (82.7) | (108.3) | 153.6 | ||||||||
Pension & Postretirement Benefits. | |||||||||||
Reclassification adjustments | |||||||||||
Amount recognized in AOCI | (326.3) | (56.5) | (46.9) | ||||||||
Other Comprehensive Income (Loss), before Tax | (325.9) | 31.2 | (25.4) | ||||||||
Tax impact | 74.3 | (13.2) | 16.2 | ||||||||
Subtotal | (251.6) | 18 | (9.2) | ||||||||
Actuarial losses | Amount reclassified from AOCI | |||||||||||
Reclassification adjustments | |||||||||||
(Gains) losses reclassified from AOCI into income | $ 0.4 | 28.4 | $ 21.5 | ||||||||
Postretirement benefits changes | Amount reclassified from AOCI | |||||||||||
Reclassification adjustments | |||||||||||
Amount recognized in AOCI | $ 59.3 |
SHAREHOLDERS' EQUITY (Details)
SHAREHOLDERS' EQUITY (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 12 Months Ended | ||||
Jun. 30, 2017 | Feb. 28, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | 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) | $ 1.85 | $ 1.69 | $ 1.52 | |||
Common Stock | ||||||
Shareholder's Equity | ||||||
Common stock, par value per share (in dollars per share) | $ 1 | $ 1 | $ 1 | |||
Common stock, shares authorized | 800,000,000 | 800,000,000 | 800,000,000 | |||
Dividends declared per common share (in dollars per share) | $ 1.85 | $ 1.69 | $ 1.52 | |||
Common stock, shares authorized to be repurchased | 20,000,000 | |||||
Remaining shares authorized to be repurchased | 6,805,010 | |||||
Amount of common stock to be repurchased under ASR agreement | $ 300 | |||||
Shares received under ASR agreement | 286,620 | 2,077,224 | ||||
Shares received under the ASR agreement compared to the shares the company expected to receive (as a percent) | 85.00% | |||||
Reacquired shares | 1,986,241 | 3,908,041 | ||||
Number of shares reacquired through the open market | 1,846,384 | 3,706,716 | ||||
Number of shares that have been repurchased through the exercise of stock options and vesting of stock awards | 139,857 | 201,325 | ||||
Undesignated preferred stock | ||||||
Shareholder's Equity | ||||||
Preferred stock, shares authorized | 15,000,000 |
EQUITY COMPENSATION PLANS (Deta
EQUITY COMPENSATION PLANS (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
EQUITY COMPENSATION PLANS | |||
Common shares available for grant (in shares) | 9,029,645 | 10,152,863 | 11,685,090 |
Value of awards granted, portion from stock options under current program (as a percent) | 50.00% | ||
Value of awards granted, portion from PBRSUs under current program (as a percent) | 50.00% | ||
Total compensation expense related to all share-based compensation plans | $ 91 | $ 94 | $ 90 |
Total compensation expense, net of tax benefit | 76 | $ 78 | $ 62 |
Total measured but unrecognized compensation expense related to non-vested share-based compensation arrangements granted under all of the company's plans | $ 124 | ||
Weighted-average period over which unrecognized compensation costs on nonvested awards expected to be recognized | 2 years 1 month 6 days |
EQUITY COMPENSATION PLANS - Sto
EQUITY COMPENSATION PLANS - Stock Options (Details) - Stock Options - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Stock incentive and option plans | |||
Stock option expiration period | 10 years | ||
Stock option vesting period | 3 years | ||
SHARES | |||
Outstanding, beginning of year (in shares) | 10,516,633 | 11,380,013 | 11,910,501 |
Granted (in shares) | 879,862 | 1,202,314 | 1,491,893 |
Exercised (in shares) | (2,270,374) | (1,942,192) | (1,951,920) |
Canceled (in shares) | (83,801) | (123,502) | (70,461) |
Outstanding, end of year (in shares) | 9,042,320 | 10,516,633 | 11,380,013 |
Exercisable, end of year (in shares) | 7,048,422 | 7,993,297 | 8,371,809 |
Vested and expected to vest, end of year (in shares) | 8,923,240 | ||
AVERAGE PRICE PER SHARE | |||
Outstanding, beginning of year (in dollars per share) | $ 108.28 | $ 95.76 | $ 84.22 |
Granted (in dollars per share) | 184.31 | 158.23 | 136.87 |
Exercised (in dollars per share) | 82.93 | 64.63 | 56 |
Canceled (in dollars per share) | 143.08 | 127.02 | 116.44 |
Outstanding, end of year (in dollars per share) | 108.28 | 108.28 | 95.76 |
Exercisable, end of year (in dollars per share) | 109.34 | $ 97.13 | $ 84.40 |
Vested and expected to vest, end of year (in dollars per shares) | $ 121.14 | ||
Total intrinsic value of options exercised during period | $ 227 | $ 161 | $ 142 |
Total aggregate intrinsic value of in-the-money options outstanding | $ 636 | ||
Weighted-average remaining contractual life of options outstanding | 6 years 3 months 18 days | ||
Total aggregate intrinsic value of in-the-money options exercisable | $ 583 | ||
Weighted-average remaining contractual life of options exercisable | 5 years 6 months | ||
Aggregate intrinsic value of vested and expected to vest options outstanding | $ 633 | ||
Weighted-average remaining contractual life of vested and expected to vest options outstanding | 6 years 2 months 12 days |
EQUITY COMPENSATION PLANS - Fai
EQUITY COMPENSATION PLANS - Fair Value Assumptions (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Stock Options | |||
Assumptions | |||
Weighted average grant date fair value of options granted at market prices (in dollars per share) | $ 40.30 | $ 37.34 | $ 30.34 |
Risk-free rate of return (as a percent) | 1.60% | 2.80% | 2.20% |
Expected life | 6 years | 6 years | 6 years |
Expected volatility (as a percent) | 23.00% | 22.50% | 22.70% |
Expected dividend yield (as a percent) | 1.00% | 1.20% | 1.20% |
Vesting period | 3 years | ||
Stock Options | Minimum | |||
Assumptions | |||
Yield curve of U.S. treasury rates | 1 month | ||
Stock Options | Maximum | |||
Assumptions | |||
Yield curve of U.S. treasury rates | 10 years | ||
PBRSU Awards | |||
Assumptions | |||
Period of requisite continued service | 3 years | ||
Common stock issuable for each vested stock award (in shares) | 1 | ||
Vesting period | 3 years | ||
Restricted Stock Awards and Units | Minimum | |||
Assumptions | |||
Vesting period | 12 months | ||
Restricted Stock Awards and Units | Maximum | |||
Assumptions | |||
Vesting period | 60 months |
EQUITY COMPENSATION PLANS - Oth
EQUITY COMPENSATION PLANS - Other Information (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
PBRSU Awards | |||
Summary of PBRSU awards and restricted stock activity: | |||
Stock awards outstanding, at the beginning of period (in shares) | 1,267,353 | 1,362,836 | 1,386,687 |
Stock awards granted (in shares) | 207,704 | 284,104 | 323,750 |
Stock awards vested/ earned (in shares) | (334,351) | (324,561) | (312,745) |
Stock awards cancelled (in shares) | (23,808) | (55,026) | (34,856) |
Stock awards outstanding, at the end of period (in shares) | 1,116,898 | 1,267,353 | 1,362,836 |
Weighted-average fair value at grant-date of stock awards outstanding, at the beginning of period (in dollars per share) | $ 126.75 | $ 115.24 | $ 107.70 |
Weighted-average fair value at grant-date of stock awards granted (in dollars per share) | 178.20 | 152.59 | 131.71 |
Weighted-average fair value at grant-date of stock awards vested/earned (in dollars per share) | 114.38 | 103.15 | 99.65 |
Weighted-average fair value at grant-date of stock awards cancelled (in dollars per share) | 135.70 | 114.25 | 108.16 |
Weighted-average fair value at grant-date of stock awards outstanding, at the end of period (in dollars per share) | $ 139.83 | $ 126.75 | $ 115.24 |
Restricted Stock Awards and Units | |||
Summary of PBRSU awards and restricted stock activity: | |||
Stock awards outstanding, at the beginning of period (in shares) | 246,469 | 249,402 | 254,387 |
Stock awards granted (in shares) | 102,941 | 109,074 | 96,980 |
Stock awards vested/ earned (in shares) | (64,597) | (92,032) | (86,622) |
Stock awards cancelled (in shares) | (19,300) | (19,975) | (15,343) |
Stock awards outstanding, at the end of period (in shares) | 265,513 | 246,469 | 249,402 |
Weighted-average fair value at grant-date of stock awards outstanding, at the beginning of period (in dollars per share) | $ 127.09 | $ 116.66 | $ 107.95 |
Weighted-average fair value at grant-date of stock awards granted (in dollars per share) | 177.38 | 138.69 | 125.34 |
Weighted-average fair value at grant-date of stock awards vested/earned (in dollars per share) | 119.08 | 113.03 | 102.02 |
Weighted-average fair value at grant-date of stock awards cancelled (in dollars per share) | 124.77 | 115.05 | 109.72 |
Weighted-average fair value at grant-date of stock awards outstanding, at the end of period (in dollars per share) | $ 149.46 | $ 127.09 | $ 116.66 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income before income taxes | |||||||||||
United States | $ 752.6 | $ 728.3 | $ 847.3 | ||||||||
International | 1,146.3 | 1,076.3 | 915.1 | ||||||||
Income before income taxes | $ 527.6 | $ 562.3 | $ 470 | $ 339 | $ 547.9 | $ 481.5 | $ 457.9 | $ 317.3 | 1,898.9 | 1,804.6 | 1,762.4 |
Current income tax expense (benefit) | |||||||||||
Federal and state | 135.4 | 103.5 | 241.8 | ||||||||
International | 225 | 175.7 | 355.1 | ||||||||
Total current | 360.4 | 279.2 | 596.9 | ||||||||
Deferred income tax expense (benefit) | |||||||||||
Federal and state | 32.7 | 51.8 | (331.4) | ||||||||
International | (70.4) | 33.3 | (21.7) | ||||||||
Total deferred | (37.7) | 85.1 | (353.1) | ||||||||
Provision for income taxes | $ 93.3 | $ 93 | $ 97.8 | $ 38.6 | $ 147.7 | $ 43.2 | $ 104.3 | $ 69.1 | $ 322.7 | $ 364.3 | $ 243.8 |
INCOME TAXES - Net Deferred Tax
INCOME TAXES - Net Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred tax assets | ||
Other accrued liabilities | $ 141.5 | $ 130.9 |
Loss carryforwards | 71.3 | 217.2 |
Share-based compensation | 58.4 | 60.5 |
Pension and other comprehensive income | 208.6 | 145.8 |
Lease liability | 117.9 | |
Other, net | 83 | 68.5 |
Valuation allowance | (45.4) | (184.4) |
Total deferred tax assets | 635.3 | 438.5 |
Deferred tax liabilities | ||
Property plant and equipment basis differences | (307.9) | (268.5) |
Intangible assets | (729.8) | (783.3) |
Lease asset | (118.4) | |
Other, net | (64) | (46.2) |
Total deferred tax liabilities | (1,220.1) | (1,098) |
Net deferred tax liabilities balance | $ (584.8) | $ (659.5) |
INCOME TAXES - Loss Carryforwar
INCOME TAXES - Loss Carryforwards (Details) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2019USD ($)$ / shares | Dec. 31, 2018USD ($)item$ / shares | Dec. 31, 2017USD ($)$ / shares | |
Operating loss carryforwards | |||
Statutory U.S. rate (as a percent) | 21.00% | 21.00% | 35.00% |
Net discrete expense (benefit), prior year returns | $ 11 | $ (39.9) | $ 14.4 |
Net operating loss carryforwards | 71.3 | 217.2 | |
Valuation allowance on deferred tax asset | 45.4 | $ 184.4 | |
Number of foreign jurisdictions with a tax holiday | item | 2 | ||
Number of tax incentives awarded by foreign jurisdictions | item | 2 | ||
Federal | |||
Operating loss carryforwards | |||
Net operating loss carryforwards | 0.2 | ||
State | |||
Operating loss carryforwards | |||
Carryforwards subject to expiration | 19.1 | ||
International | |||
Operating loss carryforwards | |||
Net operating loss carryforwards | 52 | ||
Carryforwards subject to expiration | 27.1 | ||
No expiration | 24.9 | ||
Preferential income tax rate, certain headquarter income | 10.00% | ||
Preferential income tax rate, manufacturing profits for a specific location | 0.00% | ||
Tax reduction due to tax holiday | $ 29.8 | $ 25.6 | $ 16.9 |
Tax holiday impact on diluted earnings per share (in dollars per share) | $ / shares | $ 0.10 | $ 0.09 | $ 0.06 |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of the Statutory Rate to Effective Rate (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Reconciliation of the statutory U.S. federal income tax rate to the company's effective income tax rate | ||||
Statutory U.S. rate (as a percent) | 21.00% | 21.00% | 35.00% | |
One time transition tax (as a percent) | (0.2) | 3.7 | 9.1 | |
State income taxes, net of federal benefit (as a percent) | 1.80% | 1.20% | 0.40% | |
Foreign operations (as a percent) | 4.80% | (13.50%) | (7.40%) | |
Domestic manufacturing deduction (as a percent) | (2.20%) | |||
R&D credit (as a percent) | (1.10%) | (1.00%) | (1.00%) | |
Change in valuation allowance (as a percent) | (7.40%) | 9.10% | 0.20% | |
Audit settlements and refunds (as a percent) | (0.80%) | (0.10%) | ||
Exces stock benefits (as a percent) | (2.30%) | (1.60%) | (2.30%) | |
Change in federal tax rate (deferred taxes) (as a percent) | (0.60%) | (18.20%) | ||
Prior years tax return (as a percent) | 2.50% | |||
Other, net (as a percent) | 0.40% | 0.20% | 0.30% | |
Effective income tax rate (as a percent) | 17.00% | 20.20% | 13.80% | |
Payment term for provisional liability | 8 years | |||
Net tax expense (benefits) associated with the Tax Act | $ (3.1) | $ 66 | $ (158.9) | |
Net tax benefit for the one-time transition | 319 | |||
Net expense for the one-time transition | 160.1 | |||
Special gains and charges, recognized discrete tax expense (benefit), net, | (57.2) | (33.5) | (6.2) | |
Recognized discrete tax expense (benefit), net | (55.3) | (61.3) | (25.3) | |
Excess tax benefits, share-based compensation | 43.1 | 28.1 | ||
Additional tax benefit related to tax reform | 7.8 | |||
Net discrete expense (benefit), prior year returns | 11 | (39.9) | 14.4 | |
Out of period charges incurred | $ 44.2 | |||
Tax expense (benefit) due to changes in local tax law | 15.6 | |||
Tax expense (benefit) due to issuance of final regulations governing taxation of foreign dividends | 10.2 | |||
Tax expense (benefit) due to passage of tax reform. | 30.4 | |||
Tax expense (benefit) due to audit settlements and statutes of limitations | 16.8 | |||
Reconciliation of the beginning and ending amount of gross unrecognized tax benefits | ||||
Balance at beginning of year | 49.7 | 61.5 | 75.9 | |
Additions based on tax positions related to the current year | 2.1 | 3 | 3.2 | |
Additions for tax positions of prior years | 1 | 2 | ||
Reductions for tax positions of prior years | (18.4) | (8.7) | (4.9) | |
Reductions for tax positions due to statute of limitations | (5.7) | (5.8) | (14) | |
Settlements | (0.6) | (0.8) | (10.8) | |
Assumed in connection with acquisitions | 10 | |||
Foreign currency translation | (0.4) | (1.5) | 2.1 | |
Balance at end of year | 49.7 | 27.7 | 49.7 | 61.5 |
Unrecognized tax benefits that would affect the annual effective tax rate | 36.4 | 24.5 | 36.4 | 47.1 |
Interest and penalties on unrecognized tax benefits accrued during the period | (1.8) | (1.2) | 0.9 | |
Accrued interest, including minor amounts for penalties | $ 8.1 | $ 6.2 | $ 8.1 | 9.3 |
Accounting Standards Update 2016-09 [Member] | ||||
Reconciliation of the statutory U.S. federal income tax rate to the company's effective income tax rate | ||||
Recognized discrete tax benefits | $ 39.7 |
RENTALS AND LEASES - Lessee (De
RENTALS AND LEASES - Lessee (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
RENTALS AND LEASES | |
Operating lease cost | $ 219.4 |
RENTALS AND LEASES - Future Mat
RENTALS AND LEASES - Future Maturity and Minimum Payments (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Operating leases maturities: | |||
2020 | $ 174 | ||
2021 | 150 | ||
2022 | 109 | ||
2023 | 68 | ||
2024 | 37 | ||
Thereafter | 121 | ||
Total lease payments | 659 | ||
Less: imputed interest | 81 | ||
Present value of lease liabilities | $ 578 | ||
Future minimum payments under operating leases with noncancelable terms in excess of one year were: | |||
2019 | $ 172 | ||
2020 | 141 | ||
2021 | 108 | ||
2022 | 72 | ||
2023 | 37 | ||
Thereafter | 104 | ||
Total | 634 | ||
Total rental expenses | $ 210 | $ 239 | |
Weighted-average remaining lease term - operating leases | 6 years 10 days | ||
Weighted-average discount rate - operating leases | 4.00% | ||
Cash paid for amounts included in the measurement of lease liabilities: | |||
Operating cash flows from operating leases | $ 200.8 | ||
Leased assets obtained in exchange for new operating lease liabilities | $ 181.6 |
RENTALS AND LEASES - Lessor (De
RENTALS AND LEASES - Lessor (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Property Subject to or Available for Operating Lease | ||
Property, plant and equipment, gross | $ 8,020.2 | $ 7,439.5 |
Accumulated depreciation | 4,065.3 | $ 3,603.5 |
Operating Leases, Income Statement, Lease Revenue | ||
Operating lease revenue | 441.3 | |
Operating Leases, Future Minimum Payments Receivable | ||
2020 | 382 | |
2021 | 292 | |
2022 | 222 | |
2023 | 143 | |
2024 | 58 | |
Thereafter | 17 | |
Total lease revenue | 1,114 | |
Operating Leases Recorded in Property, Plant and Equipment | ||
Property Subject to or Available for Operating Lease | ||
Property, plant and equipment, gross | 1,113.6 | |
Accumulated depreciation | $ 621.8 |
RESEARCH AND DEVELOPMENT EXPE_2
RESEARCH AND DEVELOPMENT EXPENDITURES (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
RESEARCH AND DEVELOPMENT EXPENDITURES | |||
Research expenditures related to the development of new products and processes, including significant improvements and refinements to existing products | $ 209 | $ 216 | $ 201 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | 1 Months Ended | 12 Months Ended | ||
Jul. 31, 2018item | Apr. 30, 2017item | May 31, 2016item | Dec. 31, 2019locationitem | |
Loss contingencies | ||||
Number of complaints filed by individuals | 21 | |||
Environmental matters | ||||
Number of locations for environmental assessments and remediation | location | 40 | |||
Deepwater Horizon Incident | ||||
Loss contingencies | ||||
Number of putative class action complaints filed | 6 | |||
Number of complaints filed by individuals | 9 | |||
Number of complaints filed by individuals claiming economic loss | 2 | |||
Period to appeal court's decision after entry of final judgment under Federal Rule of Appellate Procedure | 30 days | |||
Number of proposed class action settlements | 2 | |||
Number of cases pending that are expected to be dismissed | 3 |
RETIREMENT PLANS - Information
RETIREMENT PLANS - Information Related to Pension and Postretirement Plans (Details) € in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2018USD ($) | Dec. 31, 2019EUR (€) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Amounts recognized in Consolidated Balance Sheet: | |||||
Other assets | $ 39 | $ 31.1 | $ 39 | ||
Postretirement health care and pension benefits | (944.3) | (1,088) | (944.3) | ||
Amounts recognized in Accumulated Other Comprehensive Loss (Income): | |||||
Accumulated other comprehensive loss (income), net of tax | 518.9 | 823.8 | 518.9 | ||
Change in Accumulated Other Comprehensive Loss (Income): | |||||
Other comprehensive loss (income) | 251.6 | (18) | $ 9.2 | ||
Aggregate projected benefit obligation, accumulated benefit obligation and fair value of plan assets for pension plans with accumulated benefit obligations in excess of plan assets: | |||||
Aggregate projected benefit obligation | 3,427.1 | 3,970.3 | 3,427.1 | ||
Accumulated benefit obligation | 3,308.4 | 3,877.4 | 3,308.4 | ||
Fair value of plan assets | 2,624.3 | 3,040.5 | 2,624.3 | ||
Non-qualified plan | |||||
Projected Benefit Obligation | |||||
Projected benefit obligation, beginning of year | 119 | ||||
Projected benefit obligation, end of year | 119 | 127 | 119 | ||
U.S. | Pension | |||||
Defined Benefit Plan Disclosure | |||||
Accumulated Benefit Obligation, end of year | 2,189 | 2,535.9 | 2,189 | ||
Projected Benefit Obligation | |||||
Projected benefit obligation, beginning of year | 2,241 | 2,485.1 | |||
Service cost | 72.8 | 74.5 | 70.2 | ||
Interest cost | 89 | 83.1 | 83.4 | ||
Curtailments and settlements | 3.4 | ||||
Plan amendments, decrease in benefit obligation | (40.4) | (40.4) | |||
Actuarial loss (gain) | (336.4) | 181.3 | |||
Benefits paid | (180.1) | (180) | |||
Projected benefit obligation, end of year | 2,241 | 2,562.5 | 2,241 | 2,485.1 | |
Plan Assets | |||||
Fair value of plan assets, beginning of year | 1,981.4 | 2,226.4 | |||
Actual returns on plan assets | 366.9 | (70.7) | |||
Company contributions | 129 | 5.7 | |||
Settlements | (4.3) | ||||
Benefits paid | (180.1) | (180) | |||
Fair value of plan assets, end of year | 1,981.4 | 2,292.9 | 1,981.4 | 2,226.4 | |
Funded Status, end of year | (259.6) | (269.6) | (259.6) | ||
Amounts recognized in Consolidated Balance Sheet: | |||||
Other current liabilities | (5.9) | (12.5) | (5.9) | ||
Postretirement health care and pension benefits | (253.7) | (257.1) | (253.7) | ||
Net liability | (259.6) | (269.6) | (259.6) | ||
Amounts recognized in Accumulated Other Comprehensive Loss (Income): | |||||
Unrecognized net actuarial loss | 539.2 | 632.4 | 539.2 | ||
Unrecognized net prior service benefits | (52.3) | (40) | (52.3) | ||
Tax benefit | (194.4) | (149.1) | (194.4) | ||
Accumulated other comprehensive loss (income), net of tax | 292.5 | 443.3 | 292.5 | ||
Change in Accumulated Other Comprehensive Loss (Income): | |||||
Amortization of net actuarial (gain) loss | (23.5) | (38.9) | |||
Amortization of prior service costs | 11.5 | 6.8 | |||
Current period net actuarial loss (gain) | 119 | 51.2 | |||
Settlement | (1.5) | ||||
Tax expense (benefit) | (25.7) | 5.1 | |||
Pension and Postretirement benefit changes | (40.4) | ||||
Other comprehensive loss (income) | 79.8 | (16.2) | |||
Estimated amounts in accumulated other comprehensive loss expected to be reclassified to net period cost during 2014 | |||||
Net actuarial loss (gain) | 51.9 | ||||
Net prior service costs (benefits) | (7.4) | ||||
Total | 44.5 | ||||
U.S. | Postretirement Health Care | |||||
Defined Benefit Plan Disclosure | |||||
Accumulated Benefit Obligation, end of year | 147.3 | 165.7 | 147.3 | ||
Projected Benefit Obligation | |||||
Projected benefit obligation, beginning of year | 147.3 | 181.3 | |||
Service cost | 1.4 | 2.7 | 2.6 | ||
Interest cost | 5.6 | 5.6 | 5.8 | ||
Participant contributions | 3.4 | 3.5 | |||
Curtailments and settlements | 0.6 | ||||
Plan amendments, decrease in benefit obligation | € (18.9) | (13.7) | |||
Actuarial loss (gain) | (22.2) | 18.4 | |||
Benefits paid | (14.8) | (13.7) | |||
Projected benefit obligation, end of year | 147.3 | 165.7 | 147.3 | 181.3 | |
Plan Assets | |||||
Fair value of plan assets, beginning of year | 6 | 7.6 | |||
Actual returns on plan assets | 1.1 | (0.2) | |||
Company contributions | 13.8 | 12.3 | |||
Benefits paid | (14.8) | (13.7) | |||
Fair value of plan assets, end of year | 6 | 6.1 | 6 | 7.6 | |
Funded Status, end of year | (141.3) | (159.6) | (141.3) | ||
Amounts recognized in Consolidated Balance Sheet: | |||||
Other current liabilities | (5) | (5.2) | (5) | ||
Postretirement health care and pension benefits | (136.3) | (154.4) | (136.3) | ||
Net liability | (141.3) | (159.6) | (141.3) | ||
Amounts recognized in Accumulated Other Comprehensive Loss (Income): | |||||
Unrecognized net actuarial loss | (36) | (10.5) | (36) | ||
Unrecognized net prior service benefits | (34.4) | (11) | (34.4) | ||
Tax benefit | 27.6 | 3.4 | 27.6 | ||
Accumulated other comprehensive loss (income), net of tax | (42.8) | (18.1) | (42.8) | ||
Change in Accumulated Other Comprehensive Loss (Income): | |||||
Amortization of net actuarial (gain) loss | 4.1 | 1.9 | |||
Amortization of prior service costs | 23.2 | 19.7 | |||
Current period net actuarial loss (gain) | 21.4 | (17.8) | |||
Current period prior service costs | 5.2 | ||||
Settlement | 0.2 | ||||
Tax expense (benefit) | (11.7) | 2.4 | |||
Pension and Postretirement benefit changes | (18.9) | ||||
Other comprehensive loss (income) | 37.2 | (7.5) | |||
Estimated amounts in accumulated other comprehensive loss expected to be reclassified to net period cost during 2014 | |||||
Net actuarial loss (gain) | 0.1 | ||||
Net prior service costs (benefits) | (11) | ||||
Total | (10.9) | ||||
International | Pension | |||||
Defined Benefit Plan Disclosure | |||||
Accumulated Benefit Obligation, end of year | 1,349.9 | 1,585.5 | 1,349.9 | ||
Projected Benefit Obligation | |||||
Projected benefit obligation, beginning of year | 1,436.7 | 1,537.9 | |||
Service cost | 30.2 | 33.2 | 31.4 | ||
Interest cost | 31.2 | 29.1 | 28.4 | ||
Participant contributions | 3 | 3.5 | |||
Curtailments and settlements | (18.6) | (22.8) | |||
Plan amendments, decrease in benefit obligation | 0.1 | ||||
Actuarial loss (gain) | (235.8) | 42.7 | |||
Assumed through acquisitions | 11.4 | ||||
Other events | 0.6 | ||||
Benefits paid | (37.6) | (38.7) | |||
Foreign currency translation | (13.8) | (74.2) | |||
Projected benefit obligation, end of year | 1,436.7 | 1,667.6 | 1,436.7 | 1,537.9 | |
Plan Assets | |||||
Fair value of plan assets, beginning of year | 925.6 | 981.1 | |||
Actual returns on plan assets | 110.5 | 2.6 | |||
Company contributions | 43.3 | 42 | |||
Participant contributions | 3 | 3.5 | |||
Acquisitions | 6.4 | ||||
Settlements | (17.6) | (22.8) | |||
Benefits paid | (37.6) | (38.7) | |||
Foreign currency translation | (0.1) | (48.5) | |||
Fair value of plan assets, end of year | 925.6 | 1,027.1 | 925.6 | $ 981.1 | |
Funded Status, end of year | (511.1) | (640.5) | (511.1) | ||
Amounts recognized in Consolidated Balance Sheet: | |||||
Other assets | 39 | 31.1 | 39 | ||
Other current liabilities | (24.4) | (23.6) | (24.4) | ||
Postretirement health care and pension benefits | (525.7) | (647.8) | (525.7) | ||
Net liability | (511.1) | (640.3) | (511.1) | ||
Amounts recognized in Accumulated Other Comprehensive Loss (Income): | |||||
Unrecognized net actuarial loss | 368 | 527.7 | 368 | ||
Unrecognized net prior service benefits | (6) | 0.6 | (6) | ||
Tax benefit | (92.7) | (129.6) | (92.7) | ||
Accumulated other comprehensive loss (income), net of tax | $ 269.3 | 398.7 | 269.3 | ||
Change in Accumulated Other Comprehensive Loss (Income): | |||||
Amortization of net actuarial (gain) loss | (17.3) | (16.5) | |||
Amortization of prior service costs | 1.1 | 0.9 | |||
Current period net actuarial loss (gain) | 185.8 | 17.9 | |||
Current period prior service costs | 0.1 | ||||
Settlement | 1.8 | (2.3) | |||
Tax expense (benefit) | (36.9) | 5.7 | |||
Foreign currency translation | (5.2) | (19.2) | |||
Other comprehensive loss (income) | 129.4 | $ (13.5) | |||
Estimated amounts in accumulated other comprehensive loss expected to be reclassified to net period cost during 2014 | |||||
Net actuarial loss (gain) | 25.5 | ||||
Net prior service costs (benefits) | (0.1) | ||||
Total | $ 25.4 |
RETIREMENT PLANS (Details)
RETIREMENT PLANS (Details) € in Millions, $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||
Sep. 30, 2019USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2019EUR (€) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Jun. 30, 2018 | |
Pension | U.S. | ||||||||
Net periodic benefit costs | ||||||||
Service cost | $ 72.8 | $ 74.5 | $ 70.2 | |||||
Interest cost on benefit obligation | 89 | 83.1 | 83.4 | |||||
Expected return on plan assets | (149.5) | (161.9) | (149.9) | |||||
Recognition of net actuarial (gain) loss | 23.6 | 39 | 28.7 | |||||
Amortization of prior service cost (benefit) | (11.5) | (6.8) | (6.8) | |||||
Settlements/curtailments | 9.1 | 0.3 | ||||||
Total expense (benefit) | $ 33.5 | 27.9 | $ 25.9 | |||||
Other Pension Plan Information | ||||||||
Contributions to plan | $ 120 | $ 80 | ||||||
Plan amendments, decrease in benefit obligation | $ 40.4 | $ 40.4 | ||||||
Discount rate (as a percent) | 4.34% | 3.20% | 3.20% | 4.34% | 3.70% | |||
Pension | International | ||||||||
Net periodic benefit costs | ||||||||
Service cost | $ 30.2 | $ 33.2 | $ 31.4 | |||||
Interest cost on benefit obligation | 31.2 | 29.1 | 28.4 | |||||
Expected return on plan assets | (59.9) | (63.2) | (56.3) | |||||
Recognition of net actuarial (gain) loss | 16.3 | 17.2 | 18.5 | |||||
Amortization of prior service cost (benefit) | (0.9) | (0.9) | (0.7) | |||||
Settlements/curtailments | (1.9) | 2.3 | 0.9 | |||||
Total expense (benefit) | 15 | $ 17.7 | $ 22.2 | |||||
Other Pension Plan Information | ||||||||
Plan amendments, decrease in benefit obligation | $ (0.1) | |||||||
Discount rate (as a percent) | 2.49% | 1.52% | 1.52% | 2.49% | 2.17% | |||
Postretirement Health Care | U.S. | ||||||||
Net periodic benefit costs | ||||||||
Service cost | $ 1.4 | $ 2.7 | $ 2.6 | |||||
Interest cost on benefit obligation | 5.6 | 5.6 | 5.8 | |||||
Expected return on plan assets | (0.4) | (0.4) | (0.5) | |||||
Recognition of net actuarial (gain) loss | (4.1) | (1.9) | (2.4) | |||||
Amortization of prior service cost (benefit) | (23.2) | (19.7) | (16.7) | |||||
Settlements/curtailments | 0.3 | |||||||
Total expense (benefit) | $ (20.4) | (13.7) | $ (11.2) | |||||
Other Pension Plan Information | ||||||||
Plan amendments, decrease in benefit obligation | € 18.9 | $ 13.7 | ||||||
Plan amendments, decrease in benefit obligation, net of tax | € | € (14.4) | |||||||
Discount rate (as a percent) | 4.29% | 3.16% | 3.16% | 4.29% | 3.66% | 4.36% | ||
Decrease in defined benefit cost due to re-measurement of benefit plans | $ 4.5 |
RETIREMENT PLANS - Assumption D
RETIREMENT PLANS - Assumption Details (Details) € in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | ||||
Dec. 31, 2018USD ($) | Dec. 31, 2019EUR (€) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017 | Jun. 30, 2018 | |
U.S. | Corporate bonds | Minimum | ||||||
Weighted-average actuarial assumptions used to determine net cost: | ||||||
Maturity period of debt securities | 6 months | 6 months | ||||
U.S. | Corporate bonds | Maximum | ||||||
Weighted-average actuarial assumptions used to determine net cost: | ||||||
Maturity period of debt securities | 30 years | 30 years | ||||
U.S. | Pension | ||||||
Weighted-average actuarial assumptions used to determine benefit obligations as of year end: | ||||||
Discount rate (as a percent) | 4.34% | 3.20% | 3.20% | 4.34% | 3.70% | |
Projected salary increase (as a percent) | 4.03% | 4.03% | 4.03% | 4.03% | 4.03% | |
Weighted-average actuarial assumptions used to determine net cost: | ||||||
Discount rate (as a percent) | 4.34% | 4.34% | 3.70% | 4.27% | ||
Expected return on plan assets (as a percent) | 7.25% | 7.25% | 7.75% | 7.75% | ||
Projected salary increase (as a percent) | 4.03% | 4.03% | 4.03% | 4.03% | ||
Defined Benefit Plan Assumed Health Care Cost Trend Rates | ||||||
Plan amendments, decrease in benefit obligation | $ (40.4) | $ (40.4) | ||||
U.S. | Postretirement Health Care | ||||||
Weighted-average actuarial assumptions used to determine benefit obligations as of year end: | ||||||
Discount rate (as a percent) | 4.29% | 3.16% | 3.16% | 4.29% | 3.66% | 4.36% |
Weighted-average actuarial assumptions used to determine net cost: | ||||||
Discount rate (as a percent) | 4.29% | 4.29% | 3.66% | 4.14% | ||
Expected return on plan assets (as a percent) | 7.25% | 7.25% | 7.75% | 7.75% | ||
Defined Benefit Plan Assumed Health Care Cost Trend Rates | ||||||
Annual rates of increase in the per capita cost of covered health care for pre-age 65 retirees (as a percent) | 8.00% | 8.00% | ||||
Annual rates of increase in the per capita cost of covered health care for post-age 65 retirees (as a percent) | 10.75% | 10.75% | ||||
Rate of per capita cost of covered health care, in 2028 (as a percent) | 5.00% | 5.00% | ||||
Plan amendments, decrease in benefit obligation | € (18.9) | $ (13.7) | ||||
Defined Benefit Plan, Reduction in Benefit Cost | $ 4.5 | |||||
International | Pension | ||||||
Weighted-average actuarial assumptions used to determine benefit obligations as of year end: | ||||||
Discount rate (as a percent) | 2.49% | 1.52% | 1.52% | 2.49% | 2.17% | |
Projected salary increase (as a percent) | 2.46% | 2.50% | 2.50% | 2.46% | 2.46% | |
Weighted-average actuarial assumptions used to determine net cost: | ||||||
Discount rate (as a percent) | 2.66% | 2.66% | 2.29% | 2.32% | ||
Expected return on plan assets (as a percent) | 6.66% | 6.66% | 6.67% | 6.67% | ||
Projected salary increase (as a percent) | 2.70% | 2.70% | 2.67% | 2.83% | ||
Defined Benefit Plan Assumed Health Care Cost Trend Rates | ||||||
Plan amendments, decrease in benefit obligation | $ 0.1 |
RETIREMENT PLANS - Fair Value o
RETIREMENT PLANS - Fair Value of Plan Assets (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Pension | U.S. | |||
Defined Benefit Plan Disclosure | |||
Total | $ 2,292.9 | $ 1,981.4 | $ 2,226.4 |
Pension | International | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 1,014.2 | 911.2 | |
Investments measured at NAV | 12.9 | 14.4 | |
Total | 1,027.1 | 925.6 | $ 981.1 |
Pension | International | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 28.5 | 27.3 | |
Total | 28.5 | 27.3 | |
Pension | International | Level 2 | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 985.7 | 883.9 | |
Total | 985.7 | 883.9 | |
Pension | International | Level 3 | |||
Defined Benefit Plan Disclosure | |||
Total | 0 | 0 | |
Pension | International | Cash | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 7.7 | 7.1 | |
Pension | International | Cash | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 7.7 | 7.1 | |
Pension | International | International equity | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 418.1 | 412.1 | |
Pension | International | International equity | Level 2 | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 418.1 | 412.1 | |
Pension | International | Corporate bonds | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 215.8 | 170 | |
Pension | International | Corporate bonds | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 8.2 | 7.9 | |
Pension | International | Corporate bonds | Level 2 | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 207.6 | 162.1 | |
Pension | International | Government bonds | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 228.4 | 181.5 | |
Pension | International | Government bonds | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 12.6 | 12.3 | |
Pension | International | Government bonds | Level 2 | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 215.8 | 169.2 | |
Pension | International | Insurance company accounts | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 144.2 | 140.5 | |
Pension | International | Insurance company accounts | Level 2 | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 144.2 | 140.5 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 1,911.1 | 1,649.8 | |
Total | 2,299 | 1,987.4 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 1,910.8 | 1,649.5 | |
Total | 1,910.8 | 1,649.5 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | Level 2 | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 0.3 | 0.3 | |
Total | 0.3 | 0.3 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | Level 3 | |||
Defined Benefit Plan Disclosure | |||
Total | 0 | 0 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | Cash | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 13.2 | 7.1 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | Cash | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 13.2 | 7.1 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | Large cap equity | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 785.9 | 683.5 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | Large cap equity | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 785.9 | 683.5 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | Small cap equity | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 201.7 | 168.6 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | Small cap equity | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 201.7 | 168.6 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | International equity | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 350.4 | 285 | |
Investments measured at NAV | 387.9 | 337.6 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | International equity | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 350.4 | 285 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | Core fixed income | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 410 | 358.3 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | Core fixed income | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 410 | 358.3 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | High-yield bonds | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 107.9 | 107.6 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | High-yield bonds | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 107.9 | 107.6 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | Emerging markets | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 41.7 | 39.4 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | Emerging markets | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 41.7 | 39.4 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | Insurance company accounts | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 0.3 | 0.3 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | Insurance company accounts | Level 2 | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | $ 0.3 | $ 0.3 |
RETIREMENT PLANS - Allocation P
RETIREMENT PLANS - Allocation Plan Assets (Details) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Pension | International | ||
Asset allocation percentages | ||
PERCENTAGE OF PLAN ASSETS | 100.00% | 100.00% |
Pension | International | Cash | ||
Asset allocation percentages | ||
PERCENTAGE OF PLAN ASSETS | 1.00% | 1.00% |
Pension | International | International equity | ||
Asset allocation percentages | ||
PERCENTAGE OF PLAN ASSETS | 41.00% | 45.00% |
Pension | International | Corporate bonds | ||
Asset allocation percentages | ||
PERCENTAGE OF PLAN ASSETS | 21.00% | 18.00% |
Pension | International | Government bonds | ||
Asset allocation percentages | ||
PERCENTAGE OF PLAN ASSETS | 22.00% | 20.00% |
Pension | International | Total fixed income | ||
Asset allocation percentages | ||
PERCENTAGE OF PLAN ASSETS | 43.00% | 38.00% |
Pension | International | Insurance company accounts | ||
Asset allocation percentages | ||
PERCENTAGE OF PLAN ASSETS | 14.00% | 15.00% |
Pension | International | Real estate | ||
Asset allocation percentages | ||
PERCENTAGE OF PLAN ASSETS | 1.00% | 1.00% |
Pension and Postretirement Health Care Benefit Plans | U.S. | ||
Asset allocation percentages | ||
TARGET ASSET ALLOCATION PERCENTAGE | 100.00% | 100.00% |
PERCENTAGE OF PLAN ASSETS | 100.00% | 100.00% |
Pension and Postretirement Health Care Benefit Plans | U.S. | Cash | ||
Asset allocation percentages | ||
PERCENTAGE OF PLAN ASSETS | 1.00% | |
Pension and Postretirement Health Care Benefit Plans | U.S. | Large cap equity | ||
Asset allocation percentages | ||
TARGET ASSET ALLOCATION PERCENTAGE | 34.00% | 34.00% |
PERCENTAGE OF PLAN ASSETS | 34.00% | 34.00% |
Pension and Postretirement Health Care Benefit Plans | U.S. | Small cap equity | ||
Asset allocation percentages | ||
TARGET ASSET ALLOCATION PERCENTAGE | 9.00% | 9.00% |
PERCENTAGE OF PLAN ASSETS | 8.00% | 9.00% |
Pension and Postretirement Health Care Benefit Plans | U.S. | International equity | ||
Asset allocation percentages | ||
TARGET ASSET ALLOCATION PERCENTAGE | 15.00% | 15.00% |
PERCENTAGE OF PLAN ASSETS | 15.00% | 14.00% |
Pension and Postretirement Health Care Benefit Plans | U.S. | Core fixed income | ||
Asset allocation percentages | ||
TARGET ASSET ALLOCATION PERCENTAGE | 18.00% | 18.00% |
PERCENTAGE OF PLAN ASSETS | 18.00% | 19.00% |
Pension and Postretirement Health Care Benefit Plans | U.S. | High-yield bonds | ||
Asset allocation percentages | ||
TARGET ASSET ALLOCATION PERCENTAGE | 5.00% | 5.00% |
PERCENTAGE OF PLAN ASSETS | 5.00% | 5.00% |
Pension and Postretirement Health Care Benefit Plans | U.S. | Emerging markets | ||
Asset allocation percentages | ||
TARGET ASSET ALLOCATION PERCENTAGE | 2.00% | 2.00% |
PERCENTAGE OF PLAN ASSETS | 2.00% | 2.00% |
Pension and Postretirement Health Care Benefit Plans | U.S. | Real estate | ||
Asset allocation percentages | ||
TARGET ASSET ALLOCATION PERCENTAGE | 6.00% | 6.00% |
PERCENTAGE OF PLAN ASSETS | 7.00% | 8.00% |
Pension and Postretirement Health Care Benefit Plans | U.S. | Private Equity | ||
Asset allocation percentages | ||
TARGET ASSET ALLOCATION PERCENTAGE | 8.00% | 8.00% |
PERCENTAGE OF PLAN ASSETS | 7.00% | 7.00% |
Pension and Postretirement Health Care Benefit Plans | U.S. | Distressed debt | ||
Asset allocation percentages | ||
TARGET ASSET ALLOCATION PERCENTAGE | 3.00% | 3.00% |
PERCENTAGE OF PLAN ASSETS | 3.00% | 2.00% |
RETIREMENT PLANS - Cash Flows (
RETIREMENT PLANS - Cash Flows (Details) - USD ($) $ in Millions | 1 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2017 | Dec. 31, 2019 | |
Pension | U.S. | |||
Estimate of benefits expected to be paid for company's pension and postretirement health care benefit plans: | |||
Contributions to plan | $ 120 | $ 80 | |
Pension | International | |||
Estimate of benefits expected to be paid for company's pension and postretirement health care benefit plans: | |||
Estimated contribution to pension benefit plan during 2020 | $ 46 | ||
Pension and Postretirement Health Care Benefit Plans | |||
Estimate of benefits expected to be paid for company's pension and postretirement health care benefit plans: | |||
2020 | 253 | ||
2021 | 232 | ||
2022 | 263 | ||
2023 | 239 | ||
2024 | 251 | ||
2025-2029 | $ 1,244 |
RETIREMENT PLANS - Savings Plan
RETIREMENT PLANS - Savings Plan and ESOP (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Defined Contribution Plan Disclosure [Line Items] | |||
Percentage of matching contribution by company vested immediately | 100.00% | ||
Employer matching contribution expense | $ 87 | $ 83 | $ 82 |
Traditional Plan | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Cash balance benefits percentage | 5.00% | ||
Percentage of matching contribution made by company, up to 3% eligible compensation | 100.00% | ||
Percentage of matching contribution made by company for employee contributions between 3% and 5% | 50.00% | ||
Ecolab Plan | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Cash balance benefits percentage | 3.00% | ||
Percentage of matching contribution made by company, up to 4% eligible compensation | 100.00% | ||
Percentage of matching contribution made by company for employee contributions between 4% and 8% | 50.00% | ||
Minimum | Traditional Plan | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Percentage of eligible compensation, matched 50% | 3.00% | ||
Minimum | Ecolab Plan | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Percentage of eligible compensation, matched 50% | 4.00% | ||
Maximum | Traditional Plan | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Percentage of eligible compensation, matched 100% | 3.00% | ||
Percentage of eligible compensation, matched 50% | 5.00% | ||
Maximum | Ecolab Plan | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Percentage of eligible compensation, matched 100% | 4.00% | ||
Percentage of eligible compensation, matched 50% | 8.00% |
REVENUES (Details)
REVENUES (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disaggregation of revenue | |||||||||||
Net sales | $ 3,823.6 | $ 3,817.9 | $ 3,759.4 | $ 3,505.4 | $ 3,760.5 | $ 3,747.2 | $ 3,689.6 | $ 3,470.9 | $ 14,906.3 | $ 14,668.2 | $ 13,835.9 |
Global Industrial | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 5,500.7 | 5,286.5 | 4,918 | ||||||||
Global Institutional | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 5,187 | 5,098.5 | 4,776.2 | ||||||||
Global Energy | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 3,317.7 | 3,421.1 | 3,230 | ||||||||
Other | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 900.9 | 862.1 | 911.7 | ||||||||
Product and sold equipment | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 12,238.9 | 12,128.6 | 11,431.8 | ||||||||
Product and sold equipment | Global Industrial | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 4,819.1 | 4,626.2 | 4,305.3 | ||||||||
Product and sold equipment | Global Institutional | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 4,433.5 | 4,415.4 | 4,136.2 | ||||||||
Product and sold equipment | Global Energy | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 2,898.7 | 3,004.4 | 2,837.5 | ||||||||
Product and sold equipment | Other | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 87.6 | 82.6 | 152.8 | ||||||||
Service and lease equipment | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 2,667.4 | 2,539.6 | 2,404.1 | ||||||||
Service and lease equipment | Global Industrial | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 681.6 | 660.3 | 612.7 | ||||||||
Service and lease equipment | Global Institutional | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 753.5 | 683.1 | 640 | ||||||||
Service and lease equipment | Global Energy | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 419 | 416.7 | 392.5 | ||||||||
Service and lease equipment | Other | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | $ 813.3 | $ 779.5 | $ 758.9 | ||||||||
Warewashing Products | Product concentration | Consolidated net sales | |||||||||||
Disaggregation of revenue | |||||||||||
Percentage of consolidated sales | 11.00% | 11.00% | 11.00% | ||||||||
U.S. | Global Industrial | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | $ 2,374.4 | $ 2,269.7 | $ 2,087.8 | ||||||||
U.S. | Global Institutional | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 3,403.1 | 3,279.2 | 3,107.2 | ||||||||
U.S. | Global Energy | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 1,604.1 | 1,630.1 | 1,481.1 | ||||||||
U.S. | Other | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 601.7 | 569.2 | 648.2 | ||||||||
Europe | Global Industrial | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 1,358.7 | 1,288.4 | 1,183 | ||||||||
Europe | Global Institutional | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 988.8 | 1,038.4 | 928.8 | ||||||||
Europe | Global Energy | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 405.2 | 398.4 | 404.4 | ||||||||
Europe | Other | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 136.1 | 133.1 | 119.5 | ||||||||
Asia Pacific | Global Industrial | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 708.1 | 685.8 | 661.4 | ||||||||
Asia Pacific | Global Institutional | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 256.1 | 250.4 | 237.1 | ||||||||
Asia Pacific | Global Energy | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 247.9 | 262.7 | 253.1 | ||||||||
Asia Pacific | Other | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 40.3 | 40.2 | 33.6 | ||||||||
Latin America | Global Industrial | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 497.7 | 474.3 | 448 | ||||||||
Latin America | Global Institutional | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 166.7 | 165.6 | 163.6 | ||||||||
Latin America | Global Energy | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 212.3 | 219.7 | 239.3 | ||||||||
Latin America | Other | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 47.6 | 46.7 | 44.8 | ||||||||
Greater China | Global Industrial | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 267.5 | 278.4 | 267 | ||||||||
Greater China | Global Institutional | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 120.6 | 113.8 | 102.1 | ||||||||
Greater China | Global Energy | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 79.4 | 76.5 | 70.5 | ||||||||
Greater China | Other | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 55.7 | 50.5 | 45 | ||||||||
Canada | Global Industrial | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 148.3 | 148.9 | 137.4 | ||||||||
Canada | Global Institutional | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 192.3 | 191.6 | 175.3 | ||||||||
Canada | Global Energy | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 298.8 | 335.6 | 322.3 | ||||||||
Canada | Other | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 9.1 | 11.5 | 9.4 | ||||||||
Middle East and Africa ("MEA") | Global Industrial | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 146 | 141 | 133.4 | ||||||||
Middle East and Africa ("MEA") | Global Institutional | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 59.4 | 59.5 | 62.1 | ||||||||
Middle East and Africa ("MEA") | Global Energy | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 470 | 498.1 | 459.3 | ||||||||
Middle East and Africa ("MEA") | Other | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | $ 10.4 | $ 10.9 | $ 11.2 |
REVENUES - Contract Liability (
REVENUES - Contract Liability (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Change in contract liability | ||
Contract liability as of beginning of period | $ 75.8 | $ 79 |
Revenue recognized: Amounts included in the contract liability at the beginning of the period | (75.8) | (79) |
Increases due to invoices issued, excluding amounts recognized as revenues during the period | 78.2 | 74.3 |
Business combination | 6.5 | 1.5 |
Contract liability as of end of period | $ 84.7 | $ 75.8 |
OPERATING SEGMENTS (Details)
OPERATING SEGMENTS (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||||
Dec. 31, 2019USD ($) | Sep. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2019item | Dec. 31, 2019segment | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Financial information of reportable segments | |||||||||||||
Number of operating segments aggregated for classification as reportable segments | segment | 9 | ||||||||||||
Number of operating units | 11 | 11 | |||||||||||
Number of reportable segments | segment | 3 | ||||||||||||
Number of underlying segments | segment | 2 | ||||||||||||
Net sales | $ 3,823.6 | $ 3,817.9 | $ 3,759.4 | $ 3,505.4 | $ 3,760.5 | $ 3,747.2 | $ 3,689.6 | $ 3,470.9 | $ 14,906.3 | $ 14,668.2 | $ 13,835.9 | ||
Operating Income (Loss) | $ 560.4 | $ 587.6 | $ 498.6 | $ 367.2 | $ 581.9 | $ 516.2 | $ 494.6 | $ 354.3 | 2,013.8 | 1,947 | 1,950.1 | ||
Previously Reported | |||||||||||||
Financial information of reportable segments | |||||||||||||
Net sales | 14,668.2 | 13,835.9 | |||||||||||
Operating Income (Loss) | 1,947 | 1,950.1 | |||||||||||
Global Industrial | |||||||||||||
Financial information of reportable segments | |||||||||||||
Net sales | 5,500.7 | 5,286.5 | 4,918 | ||||||||||
Global Institutional | |||||||||||||
Financial information of reportable segments | |||||||||||||
Net sales | 5,187 | 5,098.5 | 4,776.2 | ||||||||||
Global Energy | |||||||||||||
Financial information of reportable segments | |||||||||||||
Net sales | 3,317.7 | 3,421.1 | 3,230 | ||||||||||
Other | |||||||||||||
Financial information of reportable segments | |||||||||||||
Net sales | 900.9 | 862.1 | 911.7 | ||||||||||
Operating segment | |||||||||||||
Financial information of reportable segments | |||||||||||||
Net sales | 15,046.9 | 14,530.7 | 13,798.1 | ||||||||||
Operating Income (Loss) | 2,034.2 | 1,926.6 | 1,938 | ||||||||||
Operating segment | Previously Reported | |||||||||||||
Financial information of reportable segments | |||||||||||||
Net sales | 15,046.3 | 14,230 | |||||||||||
Operating Income (Loss) | 2,007.7 | 2,003 | |||||||||||
Operating segment | Adjustment | Fixed Currency Rate Change | |||||||||||||
Financial information of reportable segments | |||||||||||||
Net sales | (515.6) | (431.9) | |||||||||||
Operating Income (Loss) | (81.1) | (65) | |||||||||||
Operating segment | Global Industrial | |||||||||||||
Financial information of reportable segments | |||||||||||||
Net sales | 5,569.9 | 5,220.2 | 4,895.8 | ||||||||||
Operating Income (Loss) | 854.7 | 724.4 | 722 | ||||||||||
Operating segment | Global Industrial | Previously Reported | |||||||||||||
Financial information of reportable segments | |||||||||||||
Net sales | 5,462.4 | 5,106.8 | |||||||||||
Operating Income (Loss) | 768.1 | 758.5 | |||||||||||
Operating segment | Global Industrial | Adjustment | Segment Change | |||||||||||||
Financial information of reportable segments | |||||||||||||
Operating Income (Loss) | (1.4) | (0.8) | |||||||||||
Operating segment | Global Industrial | Adjustment | Fixed Currency Rate Change | |||||||||||||
Financial information of reportable segments | |||||||||||||
Net sales | (242.2) | (211) | |||||||||||
Operating Income (Loss) | (42.3) | (35.7) | |||||||||||
Operating segment | Global Institutional | |||||||||||||
Financial information of reportable segments | |||||||||||||
Net sales | 5,235.5 | 5,066 | 4,785.8 | ||||||||||
Operating Income (Loss) | 1,042.2 | 1,007.3 | 962.7 | ||||||||||
Operating segment | Global Institutional | Previously Reported | |||||||||||||
Financial information of reportable segments | |||||||||||||
Net sales | 5,204.5 | 4,910 | |||||||||||
Operating Income (Loss) | 1,026.9 | 979.8 | |||||||||||
Operating segment | Global Institutional | Adjustment | Segment Change | |||||||||||||
Financial information of reportable segments | |||||||||||||
Operating Income (Loss) | (0.5) | ||||||||||||
Operating segment | Global Institutional | Adjustment | Fixed Currency Rate Change | |||||||||||||
Financial information of reportable segments | |||||||||||||
Net sales | (138.5) | (124.2) | |||||||||||
Operating Income (Loss) | (19.6) | (16.6) | |||||||||||
Operating segment | Global Energy | |||||||||||||
Financial information of reportable segments | |||||||||||||
Net sales | 3,334 | 3,388.8 | 3,205.8 | ||||||||||
Operating Income (Loss) | 379.1 | 338.5 | 322.9 | ||||||||||
Operating segment | Global Energy | Previously Reported | |||||||||||||
Financial information of reportable segments | |||||||||||||
Net sales | 3,501.8 | 3,281.7 | |||||||||||
Operating Income (Loss) | 358.5 | 336.1 | |||||||||||
Operating segment | Global Energy | Adjustment | Segment Change | |||||||||||||
Financial information of reportable segments | |||||||||||||
Operating Income (Loss) | (0.4) | 0.2 | |||||||||||
Operating segment | Global Energy | Adjustment | Fixed Currency Rate Change | |||||||||||||
Financial information of reportable segments | |||||||||||||
Net sales | (113) | (75.9) | |||||||||||
Operating Income (Loss) | (19.6) | (13.4) | |||||||||||
Operating segment | Other | |||||||||||||
Financial information of reportable segments | |||||||||||||
Net sales | 907.5 | 855.7 | 910.7 | ||||||||||
Operating Income (Loss) | 167.3 | 160 | 140.7 | ||||||||||
Operating segment | Other | Previously Reported | |||||||||||||
Financial information of reportable segments | |||||||||||||
Net sales | 877.6 | 931.5 | |||||||||||
Operating Income (Loss) | 161.3 | 142.5 | |||||||||||
Operating segment | Other | Adjustment | Segment Change | |||||||||||||
Financial information of reportable segments | |||||||||||||
Operating Income (Loss) | 1.8 | 1.1 | |||||||||||
Operating segment | Other | Adjustment | Fixed Currency Rate Change | |||||||||||||
Financial information of reportable segments | |||||||||||||
Net sales | (21.9) | (20.8) | |||||||||||
Operating Income (Loss) | (3.1) | (2.9) | |||||||||||
Currency Impact | |||||||||||||
Financial information of reportable segments | |||||||||||||
Net sales | (140.6) | 137.5 | 37.8 | ||||||||||
Operating Income (Loss) | (20.4) | 20.4 | 12.1 | ||||||||||
Currency Impact | Previously Reported | |||||||||||||
Financial information of reportable segments | |||||||||||||
Net sales | (378.1) | (394.1) | |||||||||||
Operating Income (Loss) | (60.7) | (52.9) | |||||||||||
Currency Impact | Adjustment | Fixed Currency Rate Change | |||||||||||||
Financial information of reportable segments | |||||||||||||
Net sales | 515.6 | 431.9 | |||||||||||
Operating Income (Loss) | 81.1 | 65 | |||||||||||
Corporate | |||||||||||||
Financial information of reportable segments | |||||||||||||
Operating Income (Loss) | $ (409.1) | (303.6) | (210.3) | ||||||||||
Corporate | Previously Reported | |||||||||||||
Financial information of reportable segments | |||||||||||||
Operating Income (Loss) | (307.1) | (213.9) | |||||||||||
Corporate | Adjustment | Fixed Currency Rate Change | |||||||||||||
Financial information of reportable segments | |||||||||||||
Operating Income (Loss) | $ 3.5 | $ 3.6 |
OPERATING SEGMENTS AND GEOGRA_2
OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION - Net Sales and Long-lived Assets by Geographic Region (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Financial information of operating segments | ||
Long-Lived Assets, net | $ 15,463.1 | $ 15,396.8 |
U.S. | ||
Financial information of operating segments | ||
Long-Lived Assets, net | 9,223.6 | 9,175.4 |
Europe | ||
Financial information of operating segments | ||
Long-Lived Assets, net | 2,641.6 | 2,538.7 |
Asia Pacific, excluding Greater China | ||
Financial information of operating segments | ||
Long-Lived Assets, net | 1,015.1 | 1,003.4 |
Latin America | ||
Financial information of operating segments | ||
Long-Lived Assets, net | 522.4 | 565.8 |
MEA | ||
Financial information of operating segments | ||
Long-Lived Assets, net | 299.2 | 302.1 |
Canada | ||
Financial information of operating segments | ||
Long-Lived Assets, net | 598.1 | 616.8 |
Greater China | ||
Financial information of operating segments | ||
Long-Lived Assets, net | $ 1,163.1 | $ 1,194.6 |
QUARTERLY FINANCIAL DATA (UNA_3
QUARTERLY FINANCIAL DATA (UNAUDITED) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Net sales | $ 3,823.6 | $ 3,817.9 | $ 3,759.4 | $ 3,505.4 | $ 3,760.5 | $ 3,747.2 | $ 3,689.6 | $ 3,470.9 | $ 14,906.3 | $ 14,668.2 | $ 13,835.9 |
Cost of sales | 2,218.2 | 2,207.4 | 2,208.2 | 2,089.6 | 2,216.8 | 2,190.7 | 2,146.1 | 2,072.3 | 8,723.4 | 8,625.9 | 8,064.2 |
Selling, general and administrative expenses | 984 | 962.5 | 1,002.7 | 1,008.3 | 948.8 | 964.7 | 1,036.8 | 1,018.3 | 3,957.5 | 3,968.6 | 3,825.3 |
Special (gains) and charges | 61 | 60.4 | 49.9 | 40.3 | 13 | 75.6 | 12.1 | 26 | 211.6 | 126.7 | (3.7) |
Operating Income | 560.4 | 587.6 | 498.6 | 367.2 | 581.9 | 516.2 | 494.6 | 354.3 | 2,013.8 | 1,947 | 1,950.1 |
Other (income) expense | (13.4) | (20.8) | (20.9) | (21.2) | (19.9) | (21) | (19.6) | (19.4) | (76.3) | (79.9) | (67.3) |
Interest expense, net | 46.2 | 46.1 | 49.5 | 49.4 | 53.9 | 55.7 | 56.3 | 56.4 | 191.2 | 222.3 | 255 |
Income before income taxes | 527.6 | 562.3 | 470 | 339 | 547.9 | 481.5 | 457.9 | 317.3 | 1,898.9 | 1,804.6 | 1,762.4 |
Provision for income taxes | 93.3 | 93 | 97.8 | 38.6 | 147.7 | 43.2 | 104.3 | 69.1 | 322.7 | 364.3 | 243.8 |
Net income including noncontrolling interest | 434.3 | 469.3 | 372.2 | 300.4 | 400.2 | 438.3 | 353.6 | 248.2 | 1,576.2 | 1,440.3 | 1,518.6 |
Net income attributable to noncontrolling interest | 4.7 | 5.1 | 3.6 | 3.9 | 5.1 | 2.9 | 2.3 | 0.9 | 17.3 | 11.2 | 14 |
Net income attributable to Ecolab | $ 429.6 | $ 464.2 | $ 368.6 | $ 296.5 | $ 395.1 | $ 435.4 | $ 351.3 | $ 247.3 | $ 1,558.9 | $ 1,429.1 | $ 1,504.6 |
Earnings attributable to Ecolab per common share | |||||||||||
Basic (in dollars per share) | $ 1.49 | $ 1.61 | $ 1.28 | $ 1.03 | $ 1.37 | $ 1.51 | $ 1.22 | $ 0.86 | $ 5.41 | $ 4.95 | $ 5.20 |
Diluted (in dollars per share) | $ 1.47 | $ 1.59 | $ 1.26 | $ 1.01 | $ 1.35 | $ 1.48 | $ 1.20 | $ 0.84 | $ 5.33 | $ 4.88 | $ 5.12 |
Weighted-average common shares outstanding | |||||||||||
Basic (in shares) | 288.3 | 288.1 | 287.6 | 288.2 | 288 | 288.8 | 288.8 | 288.6 | 288.1 | 288.6 | 289.6 |
Diluted (in shares) | 292.6 | 292.8 | 292.1 | 292.3 | 292.2 | 293.4 | 293.3 | 292.7 | 292.5 | 292.8 | 294 |
Interest expense, special charges | $ 0.3 | ||||||||||
Cost of sales | |||||||||||
Special (gains) and charges | $ 15.7 | $ 11.3 | $ 7.9 | $ 3.6 | $ 5.8 | $ 3.6 | $ (0.1) | $ 38.5 | 9.3 | $ 44 | |
Other (income) expense | |||||||||||
Special (gains) and charges | $ 9.5 | 9.5 | |||||||||
Interest expense | |||||||||||
Special (gains) and charges | $ 0.2 | $ 0.3 | $ 0.2 | $ 0.3 | $ 21.9 |
Uncategorized Items - ecl-20191
Label | Element | Value |
Common Stock [Member] | ||
Common Stock, Shares, Outstanding | us-gaap_CommonStockSharesOutstanding | 359,569,234 |
Common Stock, Shares, Outstanding | us-gaap_CommonStockSharesOutstanding | 356,958,100 |
Common Stock, Shares, Outstanding | us-gaap_CommonStockSharesOutstanding | 352,607,741 |
Common Stock, Shares, Outstanding | us-gaap_CommonStockSharesOutstanding | 354,715,896 |
Treasury Stock [Member] | ||
Common Stock, Shares, Outstanding | us-gaap_CommonStockSharesOutstanding | (69,243,979) |
Common Stock, Shares, Outstanding | us-gaap_CommonStockSharesOutstanding | (65,393,098) |
Common Stock, Shares, Outstanding | us-gaap_CommonStockSharesOutstanding | (71,159,472) |
Common Stock, Shares, Outstanding | us-gaap_CommonStockSharesOutstanding | (60,782,667) |