Document and Entity Information
Document and Entity Information | 3 Months Ended |
Mar. 31, 2020shares | |
Document Type | 10-Q |
Document Quarterly Report | true |
Document Transition Report | false |
Document Period End Date | Mar. 31, 2020 |
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 Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Entity Common Stock, Shares Outstanding | 289,201,752 |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Year Focus | 2020 |
Document Fiscal Period Focus | Q1 |
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 | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Net sales | $ 3,581.4 | $ 3,505.4 |
Cost of sales (including special charges of (a)) | 2,116.8 | 2,089.6 |
Selling, general and administrative expenses | 1,015 | 1,008.3 |
Special (gains) and charges | 52.4 | 40.3 |
Operating income | 397.2 | 367.2 |
Other (income) expense | (15.2) | (21.2) |
Interest expense, net | 48.1 | 49.4 |
Income before income taxes | 364.3 | 339 |
Provision for income taxes | 74.1 | 38.6 |
Net income including noncontrolling interest | 290.2 | 300.4 |
Net income attributable to noncontrolling interest | 6.8 | 3.9 |
Net income attributable to Ecolab | $ 283.4 | $ 296.5 |
Earnings attributable to Ecolab per common share | ||
Basic (in dollars per share) | $ 0.98 | $ 1.03 |
Diluted (in dollars per share) | $ 0.97 | $ 1.01 |
Weighted-average common shares outstanding | ||
Basic (in shares) | 288.8 | 288.2 |
Diluted (in shares) | 292.6 | 292.3 |
Product and sold equipment | ||
Net sales | $ 2,930 | $ 2,886.3 |
Cost of sales (including special charges of (a)) | 1,715.9 | 1,710 |
Service and lease equipment | ||
Net sales | 651.4 | 619.1 |
Cost of sales (including special charges of (a)) | $ 400.9 | $ 379.6 |
CONSOLIDATED STATEMENT OF INC_2
CONSOLIDATED STATEMENT OF INCOME (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Special charges | $ 52.4 | $ 40.3 |
Cost of sales | ||
Special charges | 9.1 | 3.6 |
Interest expense | ||
Special charges | 0.2 | 0.2 |
Product and sold equipment | Cost of sales | ||
Special charges | $ 9.1 | $ 3.6 |
CONSOLIDATED STATEMENT OF COMPR
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | ||
Net income including noncontrolling interest | $ 290.2 | $ 300.4 |
Foreign currency translation adjustments | ||
Foreign currency translation | (38.2) | 105.1 |
Gain (loss) on net investment hedges | (1.1) | (6.6) |
Total foreign currency translation adjustments | (39.3) | 98.5 |
Derivatives and hedging instruments | 2.9 | (5.6) |
Pension and postretirement benefits | ||
Amortization of net actuarial loss and prior service cost included in net periodic pension and postretirement costs | 12.9 | (4) |
Total pension and postretirement benefits | 12.9 | (4) |
Subtotal | (23.5) | 88.9 |
Total comprehensive income, including noncontrolling interest | 266.7 | 389.3 |
Comprehensive income attributable to noncontrolling interest | 7.3 | 4.8 |
Comprehensive income attributable to Ecolab | $ 259.4 | $ 384.5 |
CONSOLIDATED BALANCE SHEET
CONSOLIDATED BALANCE SHEET - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets | ||
Cash and cash equivalents | $ 1,661.9 | $ 186.4 |
Accounts receivable, net | 2,855.9 | 2,796.5 |
Inventories | 1,529.7 | 1,505.6 |
Other current assets | 389.6 | 339.9 |
Total current assets | 6,437.1 | 4,828.4 |
Property, plant and equipment, net | 3,920.7 | 3,954.9 |
Goodwill | 7,231.5 | 7,251.7 |
Other intangible assets, net | 3,591.9 | 3,672.5 |
Operating lease assets | 558.5 | 577.5 |
Other assets | 599.9 | 584.1 |
Total assets | 22,339.6 | 20,869.1 |
Current liabilities | ||
Short-term debt | 1,038.3 | 380.6 |
Accounts payable | 1,279.5 | 1,284.3 |
Compensation and benefits | 513.5 | 599.5 |
Income taxes | 140.8 | 142.8 |
Other current liabilities | 1,285.3 | 1,223.4 |
Total current liabilities | 4,257.4 | 3,630.6 |
Long-term debt | 6,744 | 5,973.5 |
Postretirement health care and pension benefits | 1,072 | 1,088 |
Deferred income taxes | 737.4 | 740.4 |
Operating lease liabilities | 406.9 | 425.2 |
Other liabilities | 261.3 | 285.6 |
Total liabilities | 13,479 | 12,143.3 |
Commitments and contingencies (Note 15) | ||
Equity | ||
Common stock | 360.8 | 359.6 |
Additional paid-in capital | 6,018.1 | 5,907.1 |
Retained earnings | 10,136.9 | 9,993.7 |
Accumulated other comprehensive loss | (2,113.7) | (2,089.7) |
Treasury stock | (5,580) | (5,485.4) |
Total Ecolab shareholders' equity | 8,822.1 | 8,685.3 |
Noncontrolling interest | 38.5 | 40.5 |
Total equity | 8,860.6 | 8,725.8 |
Total liabilities and equity | $ 22,339.6 | $ 20,869.1 |
CONSOLIDATED BALANCE SHEET (Par
CONSOLIDATED BALANCE SHEET (Parenthetical) - $ / shares shares in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
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 | 289.2 | 288.4 |
CONSOLIDATED STATEMENT OF CASH
CONSOLIDATED STATEMENT OF CASH FLOWS € in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | |
OPERATING ACTIVITIES | ||
Net income including noncontrolling interest | $ 290.2 | $ 300.4 |
Adjustments to reconcile net income to cash provided by operating activities: | ||
Depreciation | 169.3 | 159 |
Amortization | 80.3 | 79.8 |
Deferred income taxes | (5.3) | (5) |
Share-based compensation expense | 29.1 | 32.2 |
Pension and postretirement plan contributions | (20.6) | (19) |
Pension and postretirement plan expense | 9.9 | 4.9 |
Restructuring charges, net of cash paid | (16.2) | 16.3 |
Other, net | 11.8 | 6.4 |
Changes in operating assets and liabilities, net of effect of acquisitions: | ||
Accounts receivable | (76.2) | 8 |
Inventories | (26) | (83) |
Other assets | (48.8) | 5.9 |
Accounts payable | (35.3) | |
Other liabilities | (25.7) | (92.5) |
Cash provided by operating activities | 371.8 | 378.1 |
INVESTING ACTIVITIES | ||
Capital expenditures | (160.7) | (187) |
Property and other assets sold | 1.4 | 1.4 |
Acquisitions and investments in affiliates, net of cash acquired | (1.5) | (281.8) |
Other, net | (4.9) | (10) |
Cash used for investing activities | (165.7) | (477.4) |
FINANCING ACTIVITIES | ||
Net issuances of commercial paper and notes payable | 957.6 | 487.9 |
Long-term debt borrowings | 766.6 | |
Long-term debt repayments | (299.7) | (400.3) |
Reacquired shares | (95) | (131.4) |
Dividends paid | (145.5) | (141.4) |
Exercise of employee stock options | 83.4 | 67.7 |
Acquisition related liabilities and contingent consideration | (2.5) | |
Other, net | 0.9 | |
Cash provided by (used for) financing activities | 1,265.8 | (117.5) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 3.6 | 1.8 |
Increase (decrease) in cash, cash equivalents and restricted cash | 1,475.5 | (215) |
Cash, cash equivalents and restricted cash, beginning of period | 186.4 | 294 |
Cash, cash equivalents and restricted cash, end of period | $ 1,661.9 | $ 79 |
CONSOLIDATED STATEMENT OF CAS_2
CONSOLIDATED STATEMENT OF CASH FLOWS (Parenthetical) - USD ($) $ in Millions | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2018 |
Restricted Cash, Asset, Statement of Financial Position [Extensible List] | Other Assets, Current | ||
Other Assets | |||
Restricted Cash | $ 0 | $ 0 | $ 179.3 |
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, 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 | 296.5 | 296.5 | 3.9 | 300.4 | ||||
Comprehensive income (loss) activity | 88 | 88 | 0.9 | 88.9 | ||||
Cash dividends declared | (132.6) | (132.6) | (9) | (141.6) | ||||
Stock options and awards | 99.8 | 1.2 | 97.8 | 0.8 | 99.8 | |||
Reacquired shares | (131.4) | (131.4) | (131.4) | |||||
Balance at Mar. 31, 2019 | 8,220.7 | 358.2 | 5,731 | 9,131.8 | (1,734.9) | (5,265.4) | 46.2 | 8,266.9 |
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 |
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 |
Increase (Decrease) in Stockholders' Equity | ||||||||
New accounting guidance adoption | (4.3) | (4.3) | (4.3) | |||||
Net income | 283.4 | 283.4 | 6.8 | 290.2 | ||||
Comprehensive income (loss) activity | (24) | (24) | 0.5 | (23.5) | ||||
Cash dividends declared | (135.9) | (135.9) | (10) | (145.9) | ||||
Changes in noncontrolling interest | 0.7 | 0.7 | ||||||
Stock options and awards | 112.6 | 1.2 | 111 | 0.4 | 112.6 | |||
Reacquired shares | (95) | (95) | (95) | |||||
Balance at Mar. 31, 2020 | $ 8,822.1 | $ 360.8 | $ 6,018.1 | $ 10,136.9 | $ (2,113.7) | $ (5,580) | $ 38.5 | $ 8,860.6 |
CONSOLIDATED STATEMENT OF EQU_2
CONSOLIDATED STATEMENT OF EQUITY (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
CONSOLIDATED STATEMENT OF EQUITY | ||
Dividends declared per common share (in dollars per share) | $ 0.47 | $ 0.46 |
CONSOLIDATED FINANCIAL INFORMAT
CONSOLIDATED FINANCIAL INFORMATION | 3 Months Ended |
Mar. 31, 2020 | |
CONSOLIDATED FINANCIAL INFORMATION | |
CONSOLIDATED FINANCIAL INFORMATION | 1. CONSOLIDATED FINANCIAL INFORMATION The unaudited consolidated financial information for the first quarter ended March 31, 2020 and 2019 reflects, in the opinion of management, all adjustments necessary for a fair statement of the financial position, results of operations, comprehensive income (loss), equity and cash flows of Ecolab Inc. ("Ecolab" or "the Company") for the interim periods presented. Any adjustments consist of normal recurring items. The financial results for any interim period are not necessarily indicative of results for the full year. The consolidated balance sheet data as of December 31, 2019 was derived from the audited consolidated financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. The unaudited consolidated financial information should be read in conjunction with the consolidated financial statements and notes thereto incorporated in the Company's Annual Report on Form 10-K for the year ended December 31, 2019. Sales, cost of sales and selling, general and administrative expenses in the selected consolidated income statement information includes immaterial revisions to amounts previously reported in the Company’s quarterly report on Form 10-Q for the first quarter of 2019. The revision had no impact on previously reported total net sales or operating income. Except for the changes due to adoption of the new accounting standards, the Company has consistently applied the accounting policies to all periods presented in these consolidated financial statements. With respect to the unaudited financial information of the Company for the first quarter ended March 31, 2020 and 2019 included in this Form 10-Q, PricewaterhouseCoopers LLP reported that they have applied limited procedures in accordance with professional standards for a review of such information. Their separate report dated May 7, 2020 appearing herein states that they did not audit and they do not express an opinion on that unaudited financial information. Accordingly, the degree of reliance on their report on such information should be restricted in light of the limited nature of the review procedures applied. PricewaterhouseCoopers LLP is not subject to the liability provisions of Section 11 of the Securities Act of 1933, as amended (the "Act"), for their report on the unaudited financial information because that report is not a "report" or a "part" of a registration statement prepared or certified by PricewaterhouseCoopers LLP within the meaning of Sections 7 and 11 of the Act. ChampionX Separation On December 18, 2019, the Company entered into definitive agreements with ChampionX Holding Inc. (ChampionX), a wholly owned subsidiary of the Company formed for the purpose of holding the Upstream Energy business, and Apergy Corporation (Apergy) pursuant to which the Company will separate the Upstream Energy business and combine it with Apergy in a tax-efficient Reverse Morris Trust transaction. The transaction will occur in a multi-step process pursuant to which, prior to the merger between ChampionX and Apergy, the Company will transfer certain assets, liabilities and entities to ChampionX and its subsidiaries. In exchange, the Company will receive shares of ChampionX common stock and a cash payment, and all shares of ChampionX common stock will be distributed to Ecolab stockholders in an exchange offer. Under the terms of the exchange offer, Ecolab stockholders have the option to exchange all, some or none of their shares of Ecolab common stock for shares of ChampionX common stock. If the exchange offer is fully subscribed and at the conclusion of this exchange, the shares of ChampionX common stock will immediately be converted into shares of Apergy common stock as part of the Merger. All shares of Ecolab common stock that will be tendered and accepted in the exchange will be retired and reduce the number of shares of common stock outstanding. As a result of and immediately following the Transactions, ChampionX stockholders will own, in the aggregate, approximately 62% of the issued and outstanding Apergy common stock on a fully diluted basis and Apergy stock and equity holders will own, in the aggregate, approximately 38% of the issued and outstanding Apergy common stock on a fully diluted basis ( 127 million shares). Ecolab stockholders that do not participate in this Exchange Offer will retain the shares of Ecolab common stock that they held prior to the Merger. In connection with the transaction, ChampionX will enter into a credit agreement with respect to an estimated $537 million senior secured term loan credit facility to finance the one-time special cash payment to Ecolab and will otherwise pay certain expenses in connection with the transaction. The Company intends to use the proceeds to repay debt, pay dividends, repurchase its stock, or a combination thereof. Ecolab will account for this transaction as a sale and will recognize a gain or loss based on the excess or deficit of consideration received over the carrying value of ChampionX. Consideration received includes a one-time special cash payment (net of cash included on the opening ChampionX balance sheet) from ChampionX and the fair value of the shares of Ecolab common stock tendered and retired as part of the exchange. The cash consideration Ecolab will receive of $0.5 billion is less than the carrying value of ChampionX of about $3.7 billion. As a result, the gain or loss calculated by subtracting the remaining book value of ChampionX from the non-cash share consideration will be a non-cash gain or loss. The fair value of the Ecolab common stock tendered in the exchange less stock-based equity is based on the 62% (approximately 122.6 million shares) of the outstanding stock of Apergy multiplied by the value of the volume-weighted average Apergy share price of the last three full trading days ending on the expiration date of the exchange offer. As of March 31, 2020 the price of Apergy’s stock was $5.75 and during the quarter ended March 31, 2020 the average price was $21.00 . Utilizing the $5.75 and the $21.00 Apergy stock prices to calculate the fair value of the non-cash Ecolab common stock consideration yields a non-cash loss of ( $2.5 billion) and ( $0.8 billion), respectively. 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. ChampionX continues to be classified as held for use as of March 31, 2020. |
SPECIAL (GAINS) AND CHARGES
SPECIAL (GAINS) AND CHARGES | 3 Months Ended |
Mar. 31, 2020 | |
SPECIAL (GAINS) AND CHARGES | |
SPECIAL (GAINS) AND CHARGES | 2. SPECIAL (GAINS) AND CHARGES Special (gains) and charges reported on the Consolidated Statement of Income include the following: First Quarter Ended March 31 (millions) 2020 2019 Cost of sales Restructuring activities 3.0 3.4 Acquisition and integration activities 0.4 0.2 Other 5.7 - Cost of sales subtotal 9.1 3.6 Special (gains) and charges Restructuring activities 4.3 37.1 ChampionX separation 36.6 4.3 Acquisition and integration activities 5.4 2.5 Other 6.1 (3.6) Special (gains) and charges subtotal 52.4 40.3 Operating income subtotal 61.5 43.9 Interest expense, net - 0.2 Total special (gains) and charges $61.5 $44.1 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 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 system 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 further leveraging technology and structural improvements. T he Company expects that the restructuring activities will be completed by the end of 2020, with total anticipated costs of $260 million ($200 million after tax) over this period of time. The 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 $6.4 million ($5.4 million after tax) in the first quarter of 2020, primarily related to severance. The liability related to the Plan was $87.2 million as of the end of the first quarter of 2020. The Company has recorded $247.6 million ($189.4 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 - 2019 Activity Recorded expense 216.1 5.2 19.9 241.2 Net cash payments (112.6) 1.2 (16.4) (127.8) Non-cash charges - (6.4) (2.0) (8.4) Effect of foreign currency translation (1.0) - - (1.0) Restructuring liability, December 31, 2019 102.5 - 1.5 104.0 2020 Activity Recorded expense 4.3 - 2.1 6.4 Net cash payments (22.1) - (1.1) (23.2) Non-cash charges - - - - Effect of foreign currency translation - - - - Restructuring liability, March 31, 2020 $84.7 $- $2.5 $87.2 Other Restructuring Activities During the first quarter of 2020, the Company incurred restructuring charges of $0.9 million ($0.7 million after tax) related to an immaterial restructuring plan. The charges are primarily related to severance. Prior to 2018, the Company engaged in a number of restructuring plans. During the first quarters of 2020 and 2019, net restructuring charges related to prior year plans were minimal. The restructuring liability balance for all plans other than Accelerate 2020 was $7.4 million and $7.7 million as of March 31, 2020 and December 31, 2019, 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 2020 related to all other restructuring plans excluding Accelerate 2020 were $0.4 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 and combine it with Apergy in a tax-efficient Reverse Morris Trust transaction. During the first quarter of 2020 and 2019, the charges associated with the separation reported in special (gains) and charges on the Consolidated Statement of Income include $36.6 million ($31.8 million after tax) and $4.3 million ($3.3 million after tax), respectively, which are primarily related to professional fees to support the separation. Acquisition and integration related costs Acquisition and integration costs reported in special (gains) and charges on the Consolidated Statement of Income include $5.4 million ($3.6 million after tax) and $2.5 million ($1.8 million after tax) in the first quarter of 2020 and 2019, respectively. Charges are related to the Bioquell, PLC (“Bioquell”) and the Laboratoires Anios (“Anios”) acquisitions and consist of integration costs, advisory and legal fees. Acquisition and integration costs reported in product and equipment cost of sales of $0.4 million ($0.3 million after tax) and $0.2 million ($0.1 million after tax) on the Consolidated Statement of Income in the first quarter of 2020 and 2019, respectively, related to severance related to the closure of a facility. The Company also incurred $0.2 million ($0.1 million after tax) of interest expense in the first quarter of 2019. Further information related to the Company’s acquisitions is included in Note 3. Other During the first quarter of 2020, the Company recorded special charges of $5.7 million ($3.8 million after tax) in product and equipment cost of sales on the Consolidated Statement of Income related to a Healthcare product recall in Europe. Other special charges of $6.1 million ($4.6 million after tax) recorded in the first quarter of 2020 relate primarily to legal charges and are recorded in special (gains) and charges on the Consolidated Statement of Income. During the first quarter of 2019, the Company recorded other special gains in special (gains) and charges on the Consolidated Statement of Income, of $3.6 million ($4.3 million after tax) which primarily related to a litigation settlement which was offset with other legal charges. . |
ACQUISITIONS AND DISPOSITIONS
ACQUISITIONS AND DISPOSITIONS | 3 Months Ended |
Mar. 31, 2020 | |
ACQUISITIONS AND DISPOSITIONS | |
ACQUISITIONS AND DISPOSITIONS | 3. ACQUISITIONS AND DISPOSITIONS Acquisitions The Company makes business acquisitions that align with its strategic business objectives. The assets and liabilities of the acquired businesses are 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 are reduced for any cash or cash equivalents acquired. During the first quarter of 2020, the Company reached an agreement to purchase CID Lines, a leading global provider of livestock biosecurity and hygiene solutions. The acquisition is expected to close in the second quarter of 2020 and is subject to various regulatory clearances. The Company did not close on any other business acquisitions during the first quarter of 2020. During the first quarter of 2019, the Company acquired Bioquell, a life sciences business which sells bio-decontamination products and services to the Life Sciences and Healthcare industries. During the first quarter of 2020, Bioquell was moved into the Global Healthcare and Life Sciences reportable segment as a result of changes to the Company’s reporting structure. During 2018, the Company deposited $179.3 million ( £ 140.5 million) in an escrow account that was released to the Company upon closing of the transaction in February 2019. Also, during the first quarter of 2019, the Company 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 the achievement of certain revenue thresholds in any of the three years following the acquisition. The acquisition date fair value of the earn-out was reflected in the overall purchase consideration exchanged for Lobster Ink and recorded as contingent consideration liability as part of the Company’s purchase accounting. The earn-out has not yet been paid or settled and the contingent consideration liability is recorded within other liabilities as of March 31, 2020 at its current fair value. Acquisitions during the first quarter of 2019 were not significant to the Company’s consolidated financial statements; therefore, pro forma financial information is not presented. These acquisitions have been accounted for using the acquisition method of accounting. The purchase accounting for both Bioquell and Lobster Ink were finalized in the first quarter of 2020 with insignificant purchase price adjustments recognized in the first quarter of 2020. The components of the cash paid for acquisitions for transactions during the first quarter of 2020 and 2019 are shown in the following table. First Quarter Ended March 31 (millions) 2020 2019 Net tangible assets (liabilities) acquired and equity method investments $- $(14.6) Identifiable intangible assets Customer relationships - 70.4 Trademarks - 20.4 Other technology - 45.8 Total intangible assets - 136.6 Goodwill - 180.3 Total aggregate purchase price - 302.3 Acquisition-related liabilities and contingent considerations - (20.5) Net cash paid for acquisitions, including acquisition-related liabilities and contingent considerations $- $281.8 During the first quarter of 2020, the Company made $2.5 million of acquisition-related payments associated with prior transactions that primarily consist of the payment of holdback liabilities and contingent consideration. The weighted average useful life of identifiable intangible assets acquired in the first quarter of 2019 was 12 years . Dispositions There were no significant business dispositions during the first quarter of 2020 or 2019. |
BALANCE SHEET INFORMATION
BALANCE SHEET INFORMATION | 3 Months Ended |
Mar. 31, 2020 | |
BALANCE SHEET INFORMATION | |
BALANCE SHEET INFORMATION | 4. BALANCE SHEET INFORMATION March 31 December 31 (millions) 2020 2019 Accounts receivable, net Accounts receivable $2,931.8 $2,858.5 Allowance for doubtful accounts (75.9) (62.0) Total $2,855.9 $2,796.5 Inventories Finished goods $976.3 $936.5 Raw materials and parts 543.2 559.8 Inventories at FIFO cost 1,519.5 1,496.3 FIFO cost to LIFO cost difference 10.2 9.3 Total $1,529.7 $1,505.6 Other current assets Prepaid assets $148.9 $118.8 Taxes receivable 150.2 133.7 Derivative assets 57.1 54.3 Other 33.4 33.1 Total $389.6 $339.9 Property, plant and equipment, net Land $213.8 $215.1 Buildings and leasehold improvements 1,365.5 1,363.1 Machinery and equipment 2,487.5 2,467.8 Merchandising and customer equipment 2,807.1 2,787.8 Capitalized software 816.3 779.7 Construction in progress 379.5 406.7 8,069.7 8,020.2 Accumulated depreciation (4,149.0) (4,065.3) Total $3,920.7 $3,954.9 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 3,735.8 3,742.1 Trademarks 409.8 409.9 Patents 478.3 479.4 Other technology 291.4 297.2 4,915.3 4,928.6 Accumulated amortization Customer relationships (1,893.7) (1,835.9) Trademarks (211.8) (205.1) Patents (231.3) (231.6) Other technology (216.6) (213.5) (2,553.4) (2,486.1) Net intangible assets subject to amortization 2,361.9 2,442.5 Total $3,591.9 $3,672.5 Other assets Deferred income taxes $153.9 $155.6 Pension 33.7 31.1 Derivative asset 43.1 25.4 Other 369.2 372.0 Total $599.9 $584.1 March 31 December 31 (millions) 2020 2019 Other current liabilities Discounts and rebates $339.1 $331.4 Dividends payable 135.9 135.6 Interest payable 69.4 40.9 Taxes payable, other than income 128.5 113.4 Derivative liabilities 5.1 5.8 Restructuring 91.0 107.1 Contract liability 88.3 84.7 Operating lease liabilities 152.5 153.2 Other 275.5 251.3 Total $1,285.3 $1,223.4 Accumulated other comprehensive loss Unrealized gain (loss) on derivative financial instruments, net of tax $(1.2) $(4.1) Unrecognized pension and postretirement benefit expense, net of tax (810.9) (823.8) Cumulative translation, net of tax (1,301.6) (1,261.8) Total $(2,113.7) $(2,089.7) |
DEBT AND INTEREST
DEBT AND INTEREST | 3 Months Ended |
Mar. 31, 2020 | |
DEBT AND INTEREST | |
DEBT AND INTEREST | 5. DEBT AND INTEREST Short-term Debt The following table provides the components of the Company’s short-term debt obligations as of March 31, 2020 and December 31, 2019. March 31 December 31 (millions) 2020 2019 Short-term debt Commercial paper $1,000.9 $55.1 Notes payable 36.2 24.6 Long-term debt, current maturities 1.2 300.9 Total $1,038.3 $380.6 Line of Credit As of March 31, 2020, the Company had a $2.0 billion multi-year credit facility which expires 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 either March 31, 2020 or December 31, 2019. Commercial Paper The Company’s commercial paper program is used as a 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 March 31, 2020, the Company had $297.5 million (€270.0 million) of commercial paper outstanding under its Euro program and $703.4 million outstanding under its U.S. program. As of December 31, 2019, the Company had $55.1 million (€50.0 million) of commercial paper outstanding under its Euro program. 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 March 31, 2020 and December 31, 2019, the Company had $36.2 million and $24.6 million, respectively, outstanding under these credit lines. Long-term Debt The following table provides the components of the Company’s long-term debt obligations, including current maturities, as of March 31, 2020 and December 31, 2019. Maturity March 31 December 31 (millions) by Year 2020 2019 Long-term debt Public notes (2020 principal amount) Five year 2015 senior notes ($300 million) 2020 $- $300.0 Ten year 2011 senior notes ($1.02 billion) 2021 1,018.6 1,018.3 Five year 2017 senior notes ($500 million) 2022 498.0 497.8 Seven year 2016 senior notes ($400 million) 2023 398.6 398.5 Seven year 2016 senior notes (€575 million) 2024 629.4 628.4 Ten year 2015 senior notes (€575 million) 2025 630.8 630.0 Ten year 2016 senior notes ($750 million) 2026 744.7 744.5 Ten year 2017 senior notes ($500 million) 2027 495.6 495.4 Ten year 2020 senior notes ($750 million) 2030 766.6 - Thirty year 2011 senior notes ($458 million) 2041 452.0 451.9 Thirty year 2016 senior notes ($250 million) 2046 246.3 246.2 Thirty year 2017 senior notes ($700 million) 2047 610.7 610.4 Private notes (2020 principal amount) Series B private placement senior notes ($250 million) 2023 249.6 249.6 Finance lease obligations and other 4.3 3.4 Total debt 6,745.2 6,274.4 Long-term debt, current maturities (1.2) (300.9) Total long-term debt $6,744.0 $5,973.5 Public Notes In March 2020, the Company issued $750 million aggregate principal ten year fixed rate notes with a coupon rate of 4.80% , with an effective interest rate of 4.58% . The proceeds will be used to repay a portion of the Company’s outstanding commercial paper and for general corporate purposes. The Company’s public notes may be redeemed by the Company at its option at redemption prices that include accrued and unpaid interest and a make-whole premium. Upon the occurrence of a change of control accompanied by a downgrade of the public notes below investment grade rating, within a specified time period, the Company would be required to offer to repurchase the public notes at a price equal to 101% of the aggregate principal amount thereof, plus any accrued and unpaid interest to the date of repurchase. The public notes are senior unsecured and unsubordinated obligations of the Company and rank equally with all other senior and unsubordinated indebtedness of the Company. Private Notes The Company’s private notes may be redeemed by the Company at its option at redemption prices that include accrued and unpaid interest and a make-whole premium. Upon the occurrence of specified changes of control involving the Company, the Company would be required to offer to repurchase the private notes at a price equal to 100% of the aggregate principal amount thereof, plus any accrued and unpaid interest to the date of repurchase. Additionally, the Company would be required to make a similar offer to repurchase the private notes upon the occurrence of specified merger events or asset sales involving the Company, when accompanied by a downgrade of the private notes below investment grade rating, within a specified time period. The private notes are unsecured senior obligations of the Company and rank equal in right of payment with all other senior indebtedness of the Company. The private notes shall be unconditionally guaranteed by subsidiaries of the Company in certain circumstances, as described in the note purchase agreement as amended. Covenants The Company is in compliance with its debt covenants as of March 31, 2020. Net Interest Expense Interest expense and interest income recognized during the first quarter of 2020 and 2019 were as follows: First Quarter Ended March 31 (millions) 2020 2019 Interest expense $52.7 $56.1 Interest income (4.6) (6.7) Interest expense, net $48.1 $49.4 Subsequent Events In April 2020, the Company executed a $500 million 364 -day revolving credit agreement to be used for general corporate purposes with a diverse syndicate of banks. In addition, the Company executed a $305 million term credit agreement that expires on June 15, 2020. |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2020 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
GOODWILL AND OTHER INTANGIBLE ASSETS | 6. GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in a business combination. The Company’s reporting units are its operating segments. The Company assesses goodwill for impairment on an annual basis during the second quarter. If circumstances change significantly, the Company would complete an interim goodwill assessment of a reporting unit’s goodwill prior to its next annual assessment. During the first quarter of 2020, oil prices decreased significantly due to decreased demand following the coronavirus outbreak and falling prices stemming from a lack of consensus among OPEC member nations on production reductions and oil producing nations’ response to reduced prices. The culmination of these events has created instability in the oil and gas industry and resulted in sharp declines in the stock prices of most industry participants. In addition, the uncertainty related to oil demand continues to have a significant impact on the investment and operating plans of Upstream Energy customers. As a result, the Company performed an interim goodwill impairment assessment for the Upstream Energy reporting unit as of March 31, 2020. The Company used the discounted cash flow method to determine the fair value of the Upstream Energy reporting unit. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions, estimates, and market factors. Included in the estimated fair value of the Upstream Energy reporting unit are assumptions and estimates regarding Upstream Energy’s future projections, as well as industry projections. These assumptions and estimates include estimated future growth rates, the discount rate, the terminal growth rate, and other market factors. Development of these assumption included significant observable market information and considered current market conditions as of March 31, 2020. Based on the analysis performed, the Company concluded that the fair value of the Upstream Energy reporting unit exceeded the carrying value by more than 30% . If current expectations of future sales growth and margins are not met, if market factors outside the Company’s control result in changes to valuation assumption, most notably the discount rate, or if management’s expectations or plans otherwise change, then the Upstream Energy reporting unit may become impaired in the future. Recognizing the volatility of current markets, the Company completed various sensitivities. An increase in the discount rate of 1.0 percentage point, holding all other assumptions constant, would continue to result in a fair value that exceeds the carrying value. Similarly, a decrease in Upstream Energy’s projected terminal growth rate by 1.0 percentage point would also result in a fair value that exceeds the carrying value, when holding all other assumption constant. The Company also considered the implied value of the Upstream Energy reporting unit based on the ChampionX separation transaction (refer to Note 1 for more information). In each of these scenarios, the fair value of the Upstream Energy reporting unit would be above its carrying amount as of March 31, 2020 and the Upstream Energy reporting unit’s goodwill would not be impaired. The changes in the carrying amount of goodwill for each of the Company's reportable segments during the first quarter ended March 31, 2020 were as follows: Global Global Global Healthcare and Upstream Global (millions) Industrial Institutional Life Sciences Energy Energy Other Total December 31, 2019 $2,799.2 $1,147.7 $- $- $3,100.5 $204.3 $7,251.7 Segment changes (a) 1,124.6 (599.4) 859.3 1,682.6 (3,100.5) 33.4 - December 31, 2019 revised 3,923.8 548.3 859.3 1,682.6 - 237.7 7,251.7 Prior year business combinations (b) - - (0.1) - - - (0.1) Dispositions - - - (3.2) - - (3.2) Effect of foreign currency translation (10.2) (0.6) (1.8) (3.9) - (0.4) (16.9) March 31, 2020 $3,913.6 $547.7 $857.4 $1,675.5 $- $237.3 $7,231.5 (a) Relates to reclassifications made to reportable segments in the current year. In anticipation of the Upstream separation, the Company created the Upstream Energy and Downstream operating segment, which are also reporting units, from the Global Energy operating segment, which was also a reporting unit. Goodwill was allocated to each reporting unit based on a relative fair value allocation. The Downstream operating segment has been aggregated into the Global Industrial reportable segment, while the Upstream Energy operating segment is a separate reportable segment. In addition, the Company established the Global Healthcare and Life Sciences reportable segment. The Global Healthcare and Life Sciences reportable segment is comprised of the Healthcare and Life Sciences operating segments, which were previously included in the Global Institutional and Global Industrial reportable segment, respectively. These were and continue to be reporting units therefore no goodwill allocation was performed. Refer to Note 15 for further information. (b) Represents the 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, which is tested for impairment on an annual basis during the second quarter. Based on the ongoing performance of the Company’s reporting units associated with the trade name, an interim impairment assessment during the first quarter of 2020 was not deemed necessary. There has been no impairment of the Nalco trade name intangible since it was acquired. The Company’s intangible assets subject to amortization primarily include customer relationships, trademarks, patents and other technology. The fair value of identifiable intangible assets is estimated based upon discounted future cash flow projections and other acceptable valuation methods. Other intangible assets are amortized on a straight-line basis over their estimated economic lives. Total amortization expense related to other intangible assets during the first quarter of 2020 and 2019 was $80.3 million and $79.8 million, respectively. Estimated amortization for the remaining nine-month period of 2020 related to other amortizable intangible assets is expected to be approximately $240 million. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2020 | |
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 - Inputs are quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities. Level 2 - Inputs include observable inputs other than quoted prices in active markets. Level 3 - Inputs are unobservable inputs for which there is little or no market data available. The carrying amount and the estimated fair value for assets and liabilities measured on a recurring basis were: March 31, 2020 (millions) Carrying Fair Value Measurements Amount Level 1 Level 2 Level 3 Assets Foreign currency forward contracts $117.2 $- $117.2 $- Liabilities Foreign currency forward contracts 22.1 - 22.1 - 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 - The carrying value of foreign currency forward contracts is at fair value, which is determined based on foreign currency exchange rates as of the balance sheet date and is classified within Level 2. The carrying value of interest rate swap contracts is at fair value, which is determined based on current interest rates and forward interest rates as of the balance sheet date and is classified within Level 2. For purposes of fair value disclosure above, derivative values are presented gross. See further discussion of gross versus net presentation of the Company's derivatives within Note 8. Contingent consideration obligations are recognized and measured at fair value at the acquisition date and thereafter until settlement. 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 was not material to the Company’s consolidated financial statements. The carrying values of accounts receivable, accounts payable, cash and cash equivalents, restricted cash, commercial paper and notes payable approximate fair value because of their short maturities and as such are classified within Level 1. The fair value of long-term debt is based on quoted market prices for the same or similar debt instruments (classified as Level 2). The carrying amount and the estimated fair value of long-term debt, including current maturities, held by the Company were: March 31, 2020 December 31, 2019 Carrying Fair Carrying Fair Amount Value Amount Value Long-term debt, including current maturities $6,745.2 $7,142.0 $6,274.4 $6,862.0 |
DERIVATIVES AND HEDGING TRANSAC
DERIVATIVES AND HEDGING TRANSACTIONS | 3 Months Ended |
Mar. 31, 2020 | |
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 in the following table, no cash collateral had been received or pledged related to the underlying derivatives. The respective net amounts are included in other current assets, other 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 March 31 December 31 March 31 December 31 (millions) 2020 2019 2020 2019 Derivatives designated as hedging instruments Foreign currency forward contracts $75.8 $67.4 $1.4 $2.1 Derivatives not designated as hedging instruments Foreign currency forward contracts 41.4 16.5 20.7 7.9 Gross value of derivatives 117.2 83.9 22.1 10.0 Gross amounts offset in the Consolidated Balance Sheet (17.0) (4.2) (17.0) (4.2) Net value of derivatives $100.2 $79.7 $5.1 $5.8 The following table summarizes the notional values of the Company’s outstanding derivatives. Notional Values March 31 December 31 (millions) 2020 2019 Foreign currency forward contracts $ 5,697 $ 4,004 Cash Flow Hedges The Company utilizes foreign currency forward contracts to hedge the effect of foreign currency exchange rate fluctuations on forecasted foreign currency transactions, including inventory purchases and intercompany royalty, management fee and other payments. These forward contracts are designated as cash flow hedges. The 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. 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. The interest rate swap agreement tied to the Company’s $400 million 2.00% debt expired in January 2019, upon repayment of the underlying debt. The interest rate swap was designated as a fair value hedge. Net Investment Hedges The Company designates its outstanding $1,260 million (€1,150 million at the end of the first quarter of 2020) senior notes (“euronotes”) and related accrued interest as hedges of existing foreign currency exposures related to investments the Company has in certain euro denominated functional currency subsidiaries. $221 million (€200 million at the end of the first quarter of 2020) of Euro commercial paper were also designated as a hedge of existing foreign currency exposures. The revaluation gains and losses on the euronotes and Euro commercial paper, which are designated and effective as hedges of the Company’s net investments, have been included as a component of the cumulative translation adjustment account, and were as follows: First Quarter Ended March 31 (millions) 2020 2019 Revaluation gains (losses), net of tax $(1.1) $(6.6) 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: First Quarter Ended March 31 2020 2019 (millions) 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 $2.2 $(1.1) $- $4.4 $(7.1) $- Amount excluded from the assessment of effectiveness recognized in earnings based on changes in fair value - - 5.4 - - 7.0 Interest rate swap agreements Amount of gain (loss) reclassified from AOCI to income - - (0.2) - - (0.2) Gain (loss) on derivatives in fair value hedging relationship: Interest rate swaps Hedged items - - - - - 0.2 Derivatives designated as hedging instruments - - - - - (0.2) Gain (loss) on derivatives not designated as hedging instruments: Foreign currency forward contracts Amount of gain (loss) recognized in income - 17.2 1.2 - 6.1 - Total gain (loss) of all derivative instruments $2.2 $16.1 $6.4 $4.4 $(1.0) $6.8 |
OTHER COMPREHENSIVE INCOME (LOS
OTHER COMPREHENSIVE INCOME (LOSS) INFORMATION | 3 Months Ended |
Mar. 31, 2020 | |
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 tables provide other comprehensive income information related to the Company’s derivatives and hedging instruments and pension and postretirement benefits. Refer to Note 8 for additional information related to the Company’s derivatives and hedging transactions. Refer to Note 13 for additional information related to the Company’s pension and postretirement benefits activity. First Quarter Ended March 31 (millions) 2020 2019 Derivative and Hedging Instruments Unrealized gains (losses) on derivative & hedging instruments Amount recognized in AOCI $9.8 $(2.9) (Gains) losses reclassified from AOCI into income COS (2.2) (4.4) SG&A 1.1 7.1 Interest (income) expense, net (5.2) (6.8) (6.3) (4.1) Tax impact (0.6) 1.4 Net of tax $2.9 $(5.6) Pension and Postretirement Benefits Amount recognized in AOCI Current period net actuarial income (loss) and prior service costs Amount reclassified from AOCI into income Amortization of net actuarial loss and prior service costs and benefits 14.8 - 14.8 - Other activity 1.7 (4.0) Tax impact (3.6) - Net of tax $12.9 $(4.0) The following table summarizes the derivative and pension and postretirement benefit amounts reclassified from AOCI into income. First Quarter Ended March 31 2020 2019 (millions) Derivative (gains) losses reclassified from AOCI into income, net of tax $(4.8) $(3.0) Pension and postretirement benefits net actuarial losses and prior services costs reclassified from AOCI into income, net of tax 12.9 (4.0) |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 3 Months Ended |
Mar. 31, 2020 | |
SHAREHOLDERS' EQUITY | |
SHAREHOLDERS' EQUITY | 10. SHAREHOLDERS’ EQUITY Share Repurchase Authorization In February 2015, the Company’s Board of Directors authorized the repurchase of up to 20 million shares of its common stock, including shares to be repurchased under Rule 10b5–1. As of March 31, 2020, 6,432,246 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. Share Repurchases During the first quarter of 2020, the Company reacquired 497,260 shares of its common stock, of which 372,764 related to share repurchases through open market or private purchases, and 124,496 related to shares withheld for taxes on the exercise of stock options and the vesting of stock awards and units. During all of 2019, the Company reacquired 1,986,241 shares of its common stock, of which 1,846,384 related to share repurchases through open market or private purchases, and 139,857 related to shares withheld for taxes on the exercise of stock options and the vesting of stock awards and units. |
EARNINGS ATTRIBUTABLE TO ECOLAB
EARNINGS ATTRIBUTABLE TO ECOLAB PER COMMON SHARE ("EPS") | 3 Months Ended |
Mar. 31, 2020 | |
EARNINGS ATTRIBUTABLE TO ECOLAB PER COMMON SHARE ("EPS") | |
EARNINGS ATTRIBUTABLE TO ECOLAB PER COMMON SHARE ("EPS") | 11. EARNINGS ATTRIBUTABLE TO ECOLAB PER COMMON SHARE (“EPS”) The difference in the weighted average common shares outstanding for calculating basic and diluted EPS is a result of the dilution associated with the Company’s equity compensation plans. As noted in the table below, certain stock options and units outstanding under these equity compensation plans were not included in the computation of diluted EPS because they would not have had a dilutive effect. The computations of the basic and diluted EPS amounts were as follows: First Quarter Ended March 31 (millions, except per share) 2020 2019 Net income attributable to Ecolab $283.4 $296.5 Weighted-average common shares outstanding Basic 288.8 288.2 Effect of dilutive stock options and units 3.8 4.1 Diluted 292.6 292.3 Basic EPS $ 0.98 $ 1.03 Diluted EPS $ 0.97 $ 1.01 Anti-dilutive securities excluded from the computation of diluted EPS 1.1 1.4 Amounts do not necessarily sum due to rounding. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2020 | |
INCOME TAXES | |
INCOME TAXES | 12. INCOME TAXES The Company’s tax rate was 20.3% and 11.4% for the first quarter of 2020 and 2019, respectively. The change in the Company’s tax rate for the first quarter of 2020 compared to the first quarter of 2019 was driven primarily by the impact of discrete tax items and special (gains) and charges. The Company recognized net tax benefits related to discrete tax items of $2.3 million in the first quarter of 2020. Share-based compensation excess tax benefit contributed $23.4 million in the first quarter of 2020. The Company also recognized tax expense related to friction costs associated with ChampionX separation activity of $18.8 million. Additionally, the Company recognized expense of $5.8 million related to foreign and U.S. changes in estimates. The remaining discrete benefit of $3.5 million was due to reserves released during the quarter. The Company recognized total net benefit related to discrete tax items of $27.7 million in the first quarter of 2019. Share-based compensation excess tax benefit contributed $18.7 million. The Company also recognized a $5.1 million benefit due to issuance of technical guidance during the quarter related to the one-time transition tax imposed by the Tax Cuts and Jobs Act (the “Act”). The remaining discrete benefit was primarily related to changes in tax rates in non-U.S. jurisdictions. |
PENSION AND POSTRETIREMENT PLAN
PENSION AND POSTRETIREMENT PLANS | 3 Months Ended |
Mar. 31, 2020 | |
PENSION AND POSTRETIREMENT PLANS | |
PENSION AND POSTRETIREMENT PLANS | 13. PENSION AND POSTRETIREMENT PLANS The Company has a non-contributory, qualified defined benefit pension plan covering the majority of its U.S. employees. The Company also has U.S. non-contributory non-qualified defined benefit plans, which provide for benefits to employees in excess of limits permitted under its U.S. pension plans. Various international subsidiaries also have defined benefit pension plans. The Company provides postretirement health care benefits to certain U.S. employees and retirees. The components of net periodic pension and postretirement health care benefit costs for the first quarter ended March 31 are as follows: U.S. International U.S. Postretirement Pension Pension Health Care (millions) 2020 2019 2020 2019 2020 2019 Service cost $17.1 $18.2 $7.7 $7.6 $0.3 $0.3 Interest cost on benefit obligation 17.5 22.3 5.4 7.8 1.1 1.4 Expected return on plan assets (38.2) (37.4) (15.7) (15.2) (0.1) (0.1) Recognition of net actuarial loss (gain) 13.0 5.9 6.4 4.1 - (1.0) Amortization of prior service benefit (1.8) (2.9) - (0.3) (2.8) (5.8) Total expense (benefit) $7.6 $6.1 $3.8 $4.0 $(1.5) $(5.2) Service cost is included with employee compensation cost within either cost of sales or selling, general and administrative expenses in the Consolidated Statement of Income based on employee roles, while non-service components are included in other (income) expense in the Consolidated Statement of Income. As of March 31, 2020, the Company is in compliance with all funding requirements of its U.S. pension and postretirement health care plans. During the first quarter of 2020, the Company made contributions of $2 million to its U.S. non-contributory non-qualified defined benefit plans and estimates it will contribute an additional $10 million to such plans during the remainder of 2020. During the first quarter of 2020, the Company made contributions of $15 million to its international pension benefit plans and estimates it will contribute an additional $31 million to such plans during the remainder of 2020. During the first quarter of 2020, the Company made contributions of $3 million to its U.S. postretirement health care benefit plans and estimates it will contribute an additional $8 million to such plans during the remainder of 2020. |
REVENUES
REVENUES | 3 Months Ended |
Mar. 31, 2020 | |
REVENUES | |
REVENUES | 14. REVENUES Revenue Recognition Product and Sold Equipment Product revenue is generated from cleaning, sanitizing, water, energy and colloidal silica products sold to customers. 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 primarily includes services designed to detect, eliminate and prevent pests. Upstream 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. Global Healthcare and Life Sciences services include pharmaceutical, personal care, infection and containment control 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. The Company’s operating lease revenue was as follows: First Quarter Ended March 31 (millions) 2020 2019 Operating lease revenue* $108.4 $102.9 *Includes immaterial variable lease revenue The following table shows principal activities, separated by reportable segments, from which the Company generates its revenue. The reportable segments have been revised to align with the Company’s reportable segments in the current year. For more information about the Company’s reportable segments, refer to Note 15. Net sales at public exchange rates by reportable segment are as follows: First Quarter Ended March 31 (millions) 2020 2019 Global Industrial Product and sold equipment $1,232.5 $1,213.7 Service and lease equipment 202.0 188.3 Global Institutional Product and sold equipment 888.9 855.6 Service and lease equipment 178.3 165.2 Global Healthcare and Life Sciences Product and sold equipment 221.9 209.9 Service and lease equipment 21.7 17.7 Upstream Energy Product and sold equipment 505.5 524.8 Service and lease equipment 54.9 55.2 Other Product and sold equipment 81.2 82.3 Service and lease equipment 194.5 192.7 Total Total product and sold equipment $2,930.0 $2,886.3 Total service and lease equipment 651.4 619.1 Net sales at public exchange rates by geographic region for the first quarter ended March 31 are as follows: Global Global Global Healthcare Industrial Institutional and Life Sciences Upstream Energy Other (millions) 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 North America $691.6 $673.6 $779.8 $740.1 $107.7 $99.9 $351.3 $358.5 $168.2 $166.6 Europe 281.2 277.2 142.5 143.1 120.3 119.9 68.1 71.3 59.7 58.3 Asia Pacific 183.7 181.7 60.0 56.0 10.5 3.6 20.2 18.2 18.1 18.1 Latin America 129.1 125.2 39.8 39.5 1.0 1.0 41.2 40.8 12.0 12.3 Greater China 74.2 76.4 33.7 31.2 0.6 0.4 0.5 4.6 13.5 15.6 Middle East and Africa 74.7 67.9 11.4 10.9 3.5 2.8 79.1 86.6 4.2 4.1 Total $1,434.5 $1,402.0 $1,067.2 $1,020.8 $243.6 $227.6 $560.4 $580.0 $275.7 $275.0 Net sales by geographic region were determined based on origin of sale. Revenues in the United States made up 54% and 54% of total revenues as of March 31, 2020 and 2019, respectively. 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. March 31 March 31 (millions) 2020 2019 Contract liability as of beginning of the year $84.7 $75.8 Revenue recognized in the year from: Amounts included in the contract liability at the beginning of the year (84.7) (75.8) Increases due to billings excluding amounts recognized as revenue during the year ended 88.3 82.4 Business combinations - 3.0 Contract liability as of end of period $88.3 $85.4 |
OPERATING SEGMENTS
OPERATING SEGMENTS | 3 Months Ended |
Mar. 31, 2020 | |
OPERATING SEGMENTS | |
OPERATING SEGMENTS | 15. OPERATING SEGMENTS The Company’s organizational structure consists of global business unit and global regional leadership teams. The Company’s operating segments follow its commercial and product-based activities and are based on engagement in business activities, availability of discrete financial information and review of operating results by the Chief Operating Decision Maker at the identified operating segment level. The Company’s operating segments that share similar economic characteristics and future prospects, nature of the products and production processes, end-use markets, channels of distribution and regulatory environment have been aggregated into four reportable segments: Global Industrial, Global Institutional, Global Healthcare and Life Sciences and Upstream Energy. The Company’s 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 the Company considers the information regarding its underlying operating segments as useful in understanding its consolidated results. Comparability of Reportable Segments Effective in the first quarter of 2020, and in anticipation of the separation of the Upstream Energy business under ChampionX, the Company created the Upstream Energy and Downstream operating segments from the Global Energy operating segment, which was also a reportable segment. The table below reflects the elimination of the Global Energy reportable segment and creation of the Downstream operating segment and the Upstream Energy operating segments, which are reported in the Global Industrial reportable segment and newly established Upstream Energy reportable segment, respectively. Also, in the first quarter of 2020, the Company announced leadership changes which allow for shared oversight and focus on the Healthcare and Life Sciences operating segments and established the Global Healthcare and Life Sciences reportable segment. This segment is comprised of the Healthcare operating segment which was previously aggregated in the Global Institutional reportable segment and the Life Sciences operating segment which was previously aggregated in the Global Industrial reportable segment. Additionally, the table reflects the Textile Care operating segment being reported in Other, which had previously been aggregated in the Global Industrial reportable segment. The Company made other immaterial changes, including the movement of certain customers and cost allocations between reportable segments. These changes are presented in "Segment Change" columns of the table below. The Company evaluates the performance of its non-U.S. dollar functional currency international operations based on fixed currency exchange rates, which eliminates 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 2020, rather than the 2019 established rates. The difference between the fixed currency exchange rates and the actual currency exchange rates is reported within the “Effect of foreign currency translation” row in the table below. The impact of the preceding changes on previously reported full year 2019 reportable segment net sales and operating income is summarized as follows: December 31, 2019 2019 Reported Fixed 2019 Revised Valued at 2019 Segment Currency Valued at 2020 (millions) Management Rates Change Rate Change Management Rates Net Sales Global Industrial $5,569.9 $479.2 $(52.7) $5,996.4 Global Institutional 5,235.5 (800.1) (23.3) 4,412.1 Global Healthcare and Life Sciences - 991.7 (12.7) 979.0 Upstream Energy - 2,350.0 2.9 2,352.9 Global Energy 3,334.0 (3,334.0) - - Other 907.5 313.2 (9.0) 1,211.7 Subtotal at fixed currency rates 15,046.9 - (94.8) 14,952.1 Effect of foreign currency translation (140.6) - 94.8 (45.8) Consolidated reported GAAP net sales $14,906.3 $- $- $14,906.3 Operating Income Global Industrial $854.7 $133.4 $(7.5) $980.6 Global Institutional 1,042.2 (93.4) (1.5) 947.3 Global Healthcare and Life Sciences - 136.7 (1.6) 135.1 Upstream Energy - 188.2 (0.3) 187.9 Global Energy 379.1 (379.1) - - Other 167.3 14.2 (0.9) 180.6 Corporate (409.1) - 1.2 (407.9) Subtotal at fixed currency rates 2,034.2 - (10.6) 2,023.6 Effect of foreign currency translation (20.4) - 10.6 (9.8) Consolidated reported GAAP operating income $2,013.8 $- $- $2,013.8 Reportable Segment Information Financial information for each of the Company’s reportable segments, is as follows: First Quarter Ended March 31 (millions) 2020 2019 Net Sales Global Industrial $1,444.0 $1,397.4 Global Institutional 1,072.3 1,020.2 Global Healthcare and Life Sciences 246.2 227.0 Upstream Energy 562.7 581.7 Other 277.8 274.7 Subtotal at fixed currency rates 3,603.0 3,501.0 Effect of foreign currency translation (21.6) 4.4 Consolidated reported GAAP net sales $3,581.4 $3,505.4 Operating Income Global Industrial $226.9 $181.2 Global Institutional 183.5 176.2 Global Healthcare and Life Sciences 25.6 27.3 Upstream Energy 39.0 36.5 Other 25.3 28.9 Corporate (100.2) (83.4) Subtotal at fixed currency rates 400.1 366.7 Effect of foreign currency translation (2.9) 0.5 Consolidated reported GAAP operating income $397.2 $367.2 The profitability of the Company’s operating segments is evaluated by management based on operating income. 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 2, that are not allocated to the Company’s reportable segments. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2020 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 16. 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. The Company also has contractual obligations including to lease commitments. 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. 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. |
NEW ACCOUNTING PRONOUNCEMENTS
NEW ACCOUNTING PRONOUNCEMENTS | 3 Months Ended |
Mar. 31, 2020 | |
NEW ACCOUNTING PRONOUNCEMENTS | |
NEW ACCOUNTING PRONOUNCEMENTS | 17. 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 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 2020-04 - Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting March 2020 LIBOR, a widely used reference rate for pricing financial products is scheduled to be discontinued on December 31, 2021. This standard provides optional expedients and exceptions if certain criteria are met when accounting for contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. Application of guidance is optional until December 31, 2022 and varies based on expedient elected. The Company has not elected any expedients to date and is currently evaluating any potential future impacts on the Company's financial statements. Standards that were adopted: Date of Date of Effect on the Standard Issuance Description Adoption Financial Statements 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 adopted the prospective transition method. Adoption of this guidance did not 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 Adoption of the standard did not impact the Company's consolidated balance sheet or income statement. Annual disclosure requirements will be updated to align with the new standard, and changes in disclosure will not be material. 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 new standard changes the manner of how goodwill impairment losses are measured when a reporting unit does not pass Step 1 of goodwill assessment guidance. Adoption of this standard will impact the financial statements to the extent any of the reporting units do not pass Step 1 during future goodwill assessments. 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 adopted the standard for expected credit losses using the modified retrospective approach. The effects of adoption were reflected as a $4.3 million reduction to retained earnings as of January 1, 2020 and did not materially impact the Company's consolidated balance sheet, income statement or cash flows. 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) 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 allowance for doubtful accounts for expected credit losses by analyzing accounts receivable balances by age and applying historical write-off and collection trend rates. The Company’s estimates separately consider 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 and $17 million as of March 31, 2020 and 2019, 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: First Quarter Ended March 31 (millions) 2020 2019 Beginning balance $62.0 $60.6 Adoption of new standard 4.3 - Bad debt expense 16.1 3.4 Write-offs (5.3) (4.2) Other (b) (1.2) (1.4) Ending balance $75.9 $58.4 (b) Other amounts are primarily the effects of changes in currency translations and the impact of allowance for returns and credits. |
SPECIAL (GAINS) AND CHARGES (Ta
SPECIAL (GAINS) AND CHARGES (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
SPECIAL (GAINS) AND CHARGES | |
Special (gains) and charges | First Quarter Ended March 31 (millions) 2020 2019 Cost of sales Restructuring activities 3.0 3.4 Acquisition and integration activities 0.4 0.2 Other 5.7 - Cost of sales subtotal 9.1 3.6 Special (gains) and charges Restructuring activities 4.3 37.1 ChampionX separation 36.6 4.3 Acquisition and integration activities 5.4 2.5 Other 6.1 (3.6) Special (gains) and charges subtotal 52.4 40.3 Operating income subtotal 61.5 43.9 Interest expense, net - 0.2 Total special (gains) and charges $61.5 $44.1 |
Restructuring activity | Employee Termination Asset (millions) Costs Disposals Other Total 2018 - 2019 Activity Recorded expense 216.1 5.2 19.9 241.2 Net cash payments (112.6) 1.2 (16.4) (127.8) Non-cash charges - (6.4) (2.0) (8.4) Effect of foreign currency translation (1.0) - - (1.0) Restructuring liability, December 31, 2019 102.5 - 1.5 104.0 2020 Activity Recorded expense 4.3 - 2.1 6.4 Net cash payments (22.1) - (1.1) (23.2) Non-cash charges - - - - Effect of foreign currency translation - - - - Restructuring liability, March 31, 2020 $84.7 $- $2.5 $87.2 |
ACQUISITIONS AND DISPOSITIONS (
ACQUISITIONS AND DISPOSITIONS (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
ACQUISITIONS AND DISPOSITIONS | |
Schedule of assets acquired and liabilities assumed | First Quarter Ended March 31 (millions) 2020 2019 Net tangible assets (liabilities) acquired and equity method investments $- $(14.6) Identifiable intangible assets Customer relationships - 70.4 Trademarks - 20.4 Other technology - 45.8 Total intangible assets - 136.6 Goodwill - 180.3 Total aggregate purchase price - 302.3 Acquisition-related liabilities and contingent considerations - (20.5) Net cash paid for acquisitions, including acquisition-related liabilities and contingent considerations $- $281.8 |
BALANCE SHEET INFORMATION (Tabl
BALANCE SHEET INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
BALANCE SHEET INFORMATION | |
Balance Sheet Information | March 31 December 31 (millions) 2020 2019 Accounts receivable, net Accounts receivable $2,931.8 $2,858.5 Allowance for doubtful accounts (75.9) (62.0) Total $2,855.9 $2,796.5 Inventories Finished goods $976.3 $936.5 Raw materials and parts 543.2 559.8 Inventories at FIFO cost 1,519.5 1,496.3 FIFO cost to LIFO cost difference 10.2 9.3 Total $1,529.7 $1,505.6 Other current assets Prepaid assets $148.9 $118.8 Taxes receivable 150.2 133.7 Derivative assets 57.1 54.3 Other 33.4 33.1 Total $389.6 $339.9 Property, plant and equipment, net Land $213.8 $215.1 Buildings and leasehold improvements 1,365.5 1,363.1 Machinery and equipment 2,487.5 2,467.8 Merchandising and customer equipment 2,807.1 2,787.8 Capitalized software 816.3 779.7 Construction in progress 379.5 406.7 8,069.7 8,020.2 Accumulated depreciation (4,149.0) (4,065.3) Total $3,920.7 $3,954.9 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 3,735.8 3,742.1 Trademarks 409.8 409.9 Patents 478.3 479.4 Other technology 291.4 297.2 4,915.3 4,928.6 Accumulated amortization Customer relationships (1,893.7) (1,835.9) Trademarks (211.8) (205.1) Patents (231.3) (231.6) Other technology (216.6) (213.5) (2,553.4) (2,486.1) Net intangible assets subject to amortization 2,361.9 2,442.5 Total $3,591.9 $3,672.5 Other assets Deferred income taxes $153.9 $155.6 Pension 33.7 31.1 Derivative asset 43.1 25.4 Other 369.2 372.0 Total $599.9 $584.1 March 31 December 31 (millions) 2020 2019 Other current liabilities Discounts and rebates $339.1 $331.4 Dividends payable 135.9 135.6 Interest payable 69.4 40.9 Taxes payable, other than income 128.5 113.4 Derivative liabilities 5.1 5.8 Restructuring 91.0 107.1 Contract liability 88.3 84.7 Operating lease liabilities 152.5 153.2 Other 275.5 251.3 Total $1,285.3 $1,223.4 Accumulated other comprehensive loss Unrealized gain (loss) on derivative financial instruments, net of tax $(1.2) $(4.1) Unrecognized pension and postretirement benefit expense, net of tax (810.9) (823.8) Cumulative translation, net of tax (1,301.6) (1,261.8) Total $(2,113.7) $(2,089.7) |
DEBT AND INTEREST (Tables)
DEBT AND INTEREST (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
DEBT AND INTEREST | |
Schedule of short-term debt obligations | March 31 December 31 (millions) 2020 2019 Short-term debt Commercial paper $1,000.9 $55.1 Notes payable 36.2 24.6 Long-term debt, current maturities 1.2 300.9 Total $1,038.3 $380.6 |
Schedule of long-term debt obligations including current maturities | Maturity March 31 December 31 (millions) by Year 2020 2019 Long-term debt Public notes (2020 principal amount) Five year 2015 senior notes ($300 million) 2020 $- $300.0 Ten year 2011 senior notes ($1.02 billion) 2021 1,018.6 1,018.3 Five year 2017 senior notes ($500 million) 2022 498.0 497.8 Seven year 2016 senior notes ($400 million) 2023 398.6 398.5 Seven year 2016 senior notes (€575 million) 2024 629.4 628.4 Ten year 2015 senior notes (€575 million) 2025 630.8 630.0 Ten year 2016 senior notes ($750 million) 2026 744.7 744.5 Ten year 2017 senior notes ($500 million) 2027 495.6 495.4 Ten year 2020 senior notes ($750 million) 2030 766.6 - Thirty year 2011 senior notes ($458 million) 2041 452.0 451.9 Thirty year 2016 senior notes ($250 million) 2046 246.3 246.2 Thirty year 2017 senior notes ($700 million) 2047 610.7 610.4 Private notes (2020 principal amount) Series B private placement senior notes ($250 million) 2023 249.6 249.6 Finance lease obligations and other 4.3 3.4 Total debt 6,745.2 6,274.4 Long-term debt, current maturities (1.2) (300.9) Total long-term debt $6,744.0 $5,973.5 |
Schedule of interest expense and interest income | First Quarter Ended March 31 (millions) 2020 2019 Interest expense $52.7 $56.1 Interest income (4.6) (6.7) Interest expense, net $48.1 $49.4 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
Changes in the carrying amount of goodwill | Global Global Global Healthcare and Upstream Global (millions) Industrial Institutional Life Sciences Energy Energy Other Total December 31, 2019 $2,799.2 $1,147.7 $- $- $3,100.5 $204.3 $7,251.7 Segment changes (a) 1,124.6 (599.4) 859.3 1,682.6 (3,100.5) 33.4 - December 31, 2019 revised 3,923.8 548.3 859.3 1,682.6 - 237.7 7,251.7 Prior year business combinations (b) - - (0.1) - - - (0.1) Dispositions - - - (3.2) - - (3.2) Effect of foreign currency translation (10.2) (0.6) (1.8) (3.9) - (0.4) (16.9) March 31, 2020 $3,913.6 $547.7 $857.4 $1,675.5 $- $237.3 $7,231.5 (a) Relates to reclassifications made to reportable segments in the current year. In anticipation of the Upstream separation, the Company created the Upstream Energy and Downstream operating segment, which are also reporting units, from the Global Energy operating segment, which was also a reporting unit. Goodwill was allocated to each reporting unit based on a relative fair value allocation. The Downstream operating segment has been aggregated into the Global Industrial reportable segment, while the Upstream Energy operating segment is a separate reportable segment. In addition, the Company established the Global Healthcare and Life Sciences reportable segment. The Global Healthcare and Life Sciences reportable segment is comprised of the Healthcare and Life Sciences operating segments, which were previously included in the Global Institutional and Global Industrial reportable segment, respectively. These were and continue to be reporting units therefore no goodwill allocation was performed. Refer to Note 15 for further information. (b) Represents the purchase price allocation adjustments for acquisitions deemed preliminary as of the end of the prior year. |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
FAIR VALUE MEASUREMENTS | |
Schedule of the carrying amount and estimated fair value of assets and liabilities measured on recurring basis | March 31, 2020 (millions) Carrying Fair Value Measurements Amount Level 1 Level 2 Level 3 Assets Foreign currency forward contracts $117.2 $- $117.2 $- Liabilities Foreign currency forward contracts 22.1 - 22.1 - 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 - |
Schedule of carrying amount and estimated fair value of long-term debt | March 31, 2020 December 31, 2019 Carrying Fair Carrying Fair Amount Value Amount Value Long-term debt, including current maturities $6,745.2 $7,142.0 $6,274.4 $6,862.0 |
DERIVATIVES AND HEDGING TRANS_2
DERIVATIVES AND HEDGING TRANSACTIONS (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
DERIVATIVES AND HEDGING TRANSACTIONS | |
Gross fair value of the company's outstanding derivative assets and liabilities | (millions) Derivatives Assets Derivatives Liabilities March 31 December 31 March 31 December 31 (millions) 2020 2019 2020 2019 Derivatives designated as hedging instruments Foreign currency forward contracts $75.8 $67.4 $1.4 $2.1 Derivatives not designated as hedging instruments Foreign currency forward contracts 41.4 16.5 20.7 7.9 Gross value of derivatives 117.2 83.9 22.1 10.0 Gross amounts offset in the Consolidated Balance Sheet (17.0) (4.2) (17.0) (4.2) Net value of derivatives $100.2 $79.7 $5.1 $5.8 |
Summary of notional values of outstanding derivatives | Notional Values March 31 December 31 (millions) 2020 2019 Foreign currency forward contracts $ 5,697 $ 4,004 |
Revaluation gains and losses on euronotes and forward contracts | First Quarter Ended March 31 (millions) 2020 2019 Revaluation gains (losses), net of tax $(1.1) $(6.6) |
Impact on AOCI and earnings from derivative contracts qualified as cash flow hedges | First Quarter Ended March 31 2020 2019 (millions) 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 $2.2 $(1.1) $- $4.4 $(7.1) $- Amount excluded from the assessment of effectiveness recognized in earnings based on changes in fair value - - 5.4 - - 7.0 Interest rate swap agreements Amount of gain (loss) reclassified from AOCI to income - - (0.2) - - (0.2) Gain (loss) on derivatives in fair value hedging relationship: Interest rate swaps Hedged items - - - - - 0.2 Derivatives designated as hedging instruments - - - - - (0.2) Gain (loss) on derivatives not designated as hedging instruments: Foreign currency forward contracts Amount of gain (loss) recognized in income - 17.2 1.2 - 6.1 - Total gain (loss) of all derivative instruments $2.2 $16.1 $6.4 $4.4 $(1.0) $6.8 |
OTHER COMPREHENSIVE INCOME (L_2
OTHER COMPREHENSIVE INCOME (LOSS) INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
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 | First Quarter Ended March 31 (millions) 2020 2019 Derivative and Hedging Instruments Unrealized gains (losses) on derivative & hedging instruments Amount recognized in AOCI $9.8 $(2.9) (Gains) losses reclassified from AOCI into income COS (2.2) (4.4) SG&A 1.1 7.1 Interest (income) expense, net (5.2) (6.8) (6.3) (4.1) Tax impact (0.6) 1.4 Net of tax $2.9 $(5.6) Pension and Postretirement Benefits Amount recognized in AOCI Current period net actuarial income (loss) and prior service costs Amount reclassified from AOCI into income Amortization of net actuarial loss and prior service costs and benefits 14.8 - 14.8 - Other activity 1.7 (4.0) Tax impact (3.6) - Net of tax $12.9 $(4.0) |
Summary of the net of tax derivative and pension and postretirement benefit amounts reclassified from AOCI into income | First Quarter Ended March 31 2020 2019 (millions) Derivative (gains) losses reclassified from AOCI into income, net of tax $(4.8) $(3.0) Pension and postretirement benefits net actuarial losses and prior services costs reclassified from AOCI into income, net of tax 12.9 (4.0) |
EARNINGS ATTRIBUTABLE TO ECOL_2
EARNINGS ATTRIBUTABLE TO ECOLAB PER COMMON SHARE ("EPS") (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
EARNINGS ATTRIBUTABLE TO ECOLAB PER COMMON SHARE ("EPS") | |
Computations of the basic and diluted EPS | First Quarter Ended March 31 (millions, except per share) 2020 2019 Net income attributable to Ecolab $283.4 $296.5 Weighted-average common shares outstanding Basic 288.8 288.2 Effect of dilutive stock options and units 3.8 4.1 Diluted 292.6 292.3 Basic EPS $ 0.98 $ 1.03 Diluted EPS $ 0.97 $ 1.01 Anti-dilutive securities excluded from the computation of diluted EPS 1.1 1.4 Amounts do not necessarily sum due to rounding. |
PENSION AND POSTRETIREMENT PL_2
PENSION AND POSTRETIREMENT PLANS (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
PENSION AND POSTRETIREMENT PLANS | |
Net periodic pension and postretirement health care benefit costs | The components of net periodic pension and postretirement health care benefit costs for the first quarter ended March 31 are as follows: U.S. International U.S. Postretirement Pension Pension Health Care (millions) 2020 2019 2020 2019 2020 2019 Service cost $17.1 $18.2 $7.7 $7.6 $0.3 $0.3 Interest cost on benefit obligation 17.5 22.3 5.4 7.8 1.1 1.4 Expected return on plan assets (38.2) (37.4) (15.7) (15.2) (0.1) (0.1) Recognition of net actuarial loss (gain) 13.0 5.9 6.4 4.1 - (1.0) Amortization of prior service benefit (1.8) (2.9) - (0.3) (2.8) (5.8) Total expense (benefit) $7.6 $6.1 $3.8 $4.0 $(1.5) $(5.2) |
REVENUES (Tables)
REVENUES (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
REVENUES | |
Schedule of operating lease revenue | First Quarter Ended March 31 (millions) 2020 2019 Operating lease revenue* $108.4 $102.9 |
Schedule of principal activities, separated by reportable segments and geographic region | Net sales at public exchange rates by reportable segment are as follows: First Quarter Ended March 31 (millions) 2020 2019 Global Industrial Product and sold equipment $1,232.5 $1,213.7 Service and lease equipment 202.0 188.3 Global Institutional Product and sold equipment 888.9 855.6 Service and lease equipment 178.3 165.2 Global Healthcare and Life Sciences Product and sold equipment 221.9 209.9 Service and lease equipment 21.7 17.7 Upstream Energy Product and sold equipment 505.5 524.8 Service and lease equipment 54.9 55.2 Other Product and sold equipment 81.2 82.3 Service and lease equipment 194.5 192.7 Total Total product and sold equipment $2,930.0 $2,886.3 Total service and lease equipment 651.4 619.1 Net sales at public exchange rates by geographic region for the first quarter ended March 31 are as follows: Global Global Global Healthcare Industrial Institutional and Life Sciences Upstream Energy Other (millions) 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 North America $691.6 $673.6 $779.8 $740.1 $107.7 $99.9 $351.3 $358.5 $168.2 $166.6 Europe 281.2 277.2 142.5 143.1 120.3 119.9 68.1 71.3 59.7 58.3 Asia Pacific 183.7 181.7 60.0 56.0 10.5 3.6 20.2 18.2 18.1 18.1 Latin America 129.1 125.2 39.8 39.5 1.0 1.0 41.2 40.8 12.0 12.3 Greater China 74.2 76.4 33.7 31.2 0.6 0.4 0.5 4.6 13.5 15.6 Middle East and Africa 74.7 67.9 11.4 10.9 3.5 2.8 79.1 86.6 4.2 4.1 Total $1,434.5 $1,402.0 $1,067.2 $1,020.8 $243.6 $227.6 $560.4 $580.0 $275.7 $275.0 Net sales by geographic region were determined based on origin of sale. Revenues in the United States made up 54% and 54% of total revenues as of March 31, 2020 and 2019, respectively. |
Schedule of contract liability | March 31 March 31 (millions) 2020 2019 Contract liability as of beginning of the year $84.7 $75.8 Revenue recognized in the year from: Amounts included in the contract liability at the beginning of the year (84.7) (75.8) Increases due to billings excluding amounts recognized as revenue during the year ended 88.3 82.4 Business combinations - 3.0 Contract liability as of end of period $88.3 $85.4 |
OPERATING SEGMENTS AND GEOGRAPH
OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
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 2019 net sales and oeprating income | December 31, 2019 2019 Reported Fixed 2019 Revised Valued at 2019 Segment Currency Valued at 2020 (millions) Management Rates Change Rate Change Management Rates Net Sales Global Industrial $5,569.9 $479.2 $(52.7) $5,996.4 Global Institutional 5,235.5 (800.1) (23.3) 4,412.1 Global Healthcare and Life Sciences - 991.7 (12.7) 979.0 Upstream Energy - 2,350.0 2.9 2,352.9 Global Energy 3,334.0 (3,334.0) - - Other 907.5 313.2 (9.0) 1,211.7 Subtotal at fixed currency rates 15,046.9 - (94.8) 14,952.1 Effect of foreign currency translation (140.6) - 94.8 (45.8) Consolidated reported GAAP net sales $14,906.3 $- $- $14,906.3 Operating Income Global Industrial $854.7 $133.4 $(7.5) $980.6 Global Institutional 1,042.2 (93.4) (1.5) 947.3 Global Healthcare and Life Sciences - 136.7 (1.6) 135.1 Upstream Energy - 188.2 (0.3) 187.9 Global Energy 379.1 (379.1) - - Other 167.3 14.2 (0.9) 180.6 Corporate (409.1) - 1.2 (407.9) Subtotal at fixed currency rates 2,034.2 - (10.6) 2,023.6 Effect of foreign currency translation (20.4) - 10.6 (9.8) Consolidated reported GAAP operating income $2,013.8 $- $- $2,013.8 |
Schedule of financial information for each of the entity's reportable segments | First Quarter Ended March 31 (millions) 2020 2019 Net Sales Global Industrial $1,444.0 $1,397.4 Global Institutional 1,072.3 1,020.2 Global Healthcare and Life Sciences 246.2 227.0 Upstream Energy 562.7 581.7 Other 277.8 274.7 Subtotal at fixed currency rates 3,603.0 3,501.0 Effect of foreign currency translation (21.6) 4.4 Consolidated reported GAAP net sales $3,581.4 $3,505.4 Operating Income Global Industrial $226.9 $181.2 Global Institutional 183.5 176.2 Global Healthcare and Life Sciences 25.6 27.3 Upstream Energy 39.0 36.5 Other 25.3 28.9 Corporate (100.2) (83.4) Subtotal at fixed currency rates 400.1 366.7 Effect of foreign currency translation (2.9) 0.5 Consolidated reported GAAP operating income $397.2 $367.2 |
NEW ACCOUNTING PRONOUNCEMENTS (
NEW ACCOUNTING PRONOUNCEMENTS (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
NEW ACCOUNTING PRONOUNCEMENTS | |
Schedule of new accounting pronouncements | Standards that are not yet adopted: |
Summarized activity in the allowance for doubtful accounts | First Quarter Ended March 31 (millions) 2020 2019 Beginning balance $62.0 $60.6 Adoption of new standard 4.3 - Bad debt expense 16.1 3.4 Write-offs (5.3) (4.2) Other (b) (1.2) (1.4) Ending balance $75.9 $58.4 (b) Other amounts are primarily the effects of changes in currency translations and the impact of allowance for returns and credits. |
CONSOLIDATED FINANCIAL INFORM_2
CONSOLIDATED FINANCIAL INFORMATION (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | Dec. 18, 2019 | Mar. 31, 2020 | Dec. 31, 2019 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Cash consideration | $ 500 | ||
Carrying value | $ 8,822.1 | $ 8,685.3 | |
Non-cash loss at 5.75 | 2,500 | ||
Non-cash loss at 21.00 | $ 800 | ||
Apergy | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Percentage of ownership interest | 38.00% | ||
Number of shares owned | 127 | ||
Percentage of stock tendered on exchange | 62.00% | ||
Number of stocks tendered on exchange | 122.6 | ||
Number of trade days of stock average price | 3 days | ||
Stock price per share | $ 5.75 | ||
Weighted average price per share | $ 21 | ||
Championx Holding Inc | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Credit facility amount | $ 537 | ||
Carrying value | $ 3,700 |
SPECIAL (GAINS) AND CHARGES - C
SPECIAL (GAINS) AND CHARGES - Charges Reported on Statement of Income (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Special (gains) and charges | ||
Other special gains and charges | $ 5.7 | |
Other (income) expense | 52.4 | $ 40.3 |
Total special (gains) and charges | 61.5 | 44.1 |
Cost of sales | ||
Special (gains) and charges | ||
Restructuring activities | 3 | 3.4 |
Acquisition and integration activities | 0.4 | 0.2 |
Other (income) expense | 9.1 | 3.6 |
Special (gains) and charges | ||
Special (gains) and charges | ||
Restructuring activities | 4.3 | 37.1 |
ChampionX Separation | 36.6 | 4.3 |
Acquisition and integration activities | 5.4 | 2.5 |
Other special gains and charges | 6.1 | (3.6) |
Other (income) expense | 52.4 | 40.3 |
Operating income subtotal | ||
Special (gains) and charges | ||
Other (income) expense | 61.5 | 43.9 |
Interest expense | ||
Special (gains) and charges | ||
Acquisition and integration activities | 0.2 | |
Other (income) expense | $ 0.2 | $ 0.2 |
SPECIAL (GAINS) AND CHARGES - R
SPECIAL (GAINS) AND CHARGES - Restructuring and Non-Restructuring Activity (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Restructuring | |||
Recorded expense | $ 6.4 | $ 241.2 | |
Net cash payments | (23.2) | (127.8) | |
Non-cash charges | (8.4) | ||
Effect of foreign currency translation | (1) | ||
Restructuring liability | 87.2 | 104 | |
Other restructuring information | |||
Special (gains) and charges | 52.4 | $ 40.3 | |
Other special gains and charges | 5.7 | ||
Non-restructuring Special (Gains) and Charges | |||
Property, Plant and Equipment, Net | 3,920.7 | 3,954.9 | |
Special (gains) and charges | |||
Other restructuring information | |||
Restructuring charges incurred, pre-tax | 4.3 | 37.1 | |
ChampionX Separation | 36.6 | 4.3 | |
ChampionX Separation, after tax | 31.8 | 3.3 | |
Special (gains) and charges | 52.4 | 40.3 | |
Business combination advisory and legal fees, pre tax | 5.4 | 2.5 | |
Business combination advisory and legal fees, after tax | 3.6 | 1.8 | |
Other special gains and charges | 6.1 | (3.6) | |
Other special gains and charges, after-tax | 4.6 | (4.3) | |
Cost of sales | |||
Other restructuring information | |||
Restructuring charges incurred, pre-tax | 3 | 3.4 | |
Special (gains) and charges | 9.1 | 3.6 | |
Business combination advisory and legal fees, pre tax | 0.4 | 0.2 | |
Interest expense | |||
Other restructuring information | |||
Special (gains) and charges | 0.2 | 0.2 | |
Business combination advisory and legal fees, pre tax | 0.2 | ||
Business combination advisory and legal fees, after tax | 0.1 | ||
Employee termination costs | |||
Restructuring | |||
Recorded expense | 4.3 | 216.1 | |
Net cash payments | (22.1) | (112.6) | |
Effect of foreign currency translation | (1) | ||
Restructuring liability | 84.7 | 102.5 | |
Asset disposals | |||
Restructuring | |||
Recorded expense | 5.2 | ||
Net cash payments | 1.2 | ||
Non-cash charges | (6.4) | ||
Other | |||
Restructuring | |||
Recorded expense | 2.1 | 19.9 | |
Net cash payments | (1.1) | (16.4) | |
Non-cash charges | (2) | ||
Restructuring liability | 2.5 | 1.5 | |
Product and sold equipment | Cost of sales | |||
Other restructuring information | |||
Special (gains) and charges | 9.1 | 3.6 | |
Business combination advisory and legal fees, pre tax | 0.4 | 0.2 | |
Business combination advisory and legal fees, after tax | 0.3 | $ 0.1 | |
Other special gains and charges | 5.7 | ||
Other special gains and charges, after-tax | 3.8 | ||
2018 Restructuring Plan | |||
Other restructuring information | |||
Restructuring charge expected to be incurred, pre-tax | 260 | ||
Restructuring charge expected to be incurred, after tax | 200 | ||
2018 Restructuring Plan | Special (gains) and charges | |||
Restructuring | |||
Restructuring liability | 87.2 | ||
Other restructuring information | |||
Restructuring charges incurred to date, pre-tax | 247.6 | ||
Restructuring charges incurred to date, after-tax | 189.4 | ||
Restructuring charges incurred, pre-tax | 6.4 | ||
Restructuring charges incurred, after tax | 5.4 | ||
Immaterial Restructuring Plan | |||
Other restructuring information | |||
Restructuring charges incurred, pre-tax | 0.9 | ||
Restructuring charges incurred, after tax | 0.7 | ||
Prior Year Plans | |||
Restructuring | |||
Cash payments | (0.4) | ||
Restructuring liability | 7.4 | $ 7.7 | |
Other restructuring information | |||
Cash payments | $ 0.4 |
ACQUISITIONS AND DISPOSITIONS -
ACQUISITIONS AND DISPOSITIONS - Acquisition Summary (Details) € in Millions, $ in Millions | 3 Months Ended | ||||
Mar. 31, 2020USD ($) | Mar. 31, 2020EUR (€) | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2018EUR (€) | |
Acquisitions and Dispositions | |||||
Total consideration transferred | $ 281.8 | ||||
Components of the aggregate purchase prices of the completed acquisitions | |||||
Net tangible assets (liabilities) acquired and equity method investments | (14.6) | ||||
Identifiable intangible assets | |||||
Customer relationships | 70.4 | ||||
Trademarks | 20.4 | ||||
Other technology | 45.8 | ||||
Total intangible assets | 136.6 | ||||
Goodwill | 180.3 | ||||
Total aggregate purchase price | 302.3 | ||||
Acquisition related liabilities and contingent consideration | (20.5) | ||||
Total consideration transferred | $ 281.8 | ||||
Acquisition related liabilities and contingent consideration | $ 2.5 | € 2.5 | |||
Weighted average useful lives of identifiable intangible assets acquired | 12 years | ||||
Cost of sales | |||||
Acquisitions and Dispositions | |||||
Acquisition and integration activities | $ 0.4 | $ 0.2 | |||
Bioquell | |||||
Acquisitions and Dispositions | |||||
Portion of purchase price transferred to an escrow fund | $ 179.3 | € 140.5 | |||
Lobster Ink | |||||
Acquisitions and Dispositions | |||||
Earn-out term | 3 years |
BALANCE SHEET INFORMATION (Deta
BALANCE SHEET INFORMATION (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Accounts receivable, net | ||||
Accounts receivable | $ 2,931.8 | $ 2,858.5 | ||
Allowance for doubtful accounts | (75.9) | (62) | $ (58.4) | $ (60.6) |
Total | 2,855.9 | 2,796.5 | ||
Inventories | ||||
Finished goods | 976.3 | 936.5 | ||
Raw materials and parts | 543.2 | 559.8 | ||
Inventories at FIFO cost | 1,519.5 | 1,496.3 | ||
FIFO cost to LIFO cost difference | 10.2 | 9.3 | ||
Total | 1,529.7 | 1,505.6 | ||
Other current assets | ||||
Prepaid assets | 148.9 | 118.8 | ||
Taxes receivable | 150.2 | 133.7 | ||
Derivative assets | 57.1 | 54.3 | ||
Other current assets | 33.4 | 33.1 | ||
Total | 389.6 | 339.9 | ||
Property, plant and equipment, net | ||||
Land | 213.8 | 215.1 | ||
Buildings and leasehold improvements | 1,365.5 | 1,363.1 | ||
Machinery and equipment | 2,487.5 | 2,467.8 | ||
Merchandising and customer equipment | 2,807.1 | 2,787.8 | ||
Capitalized software | 816.3 | 779.7 | ||
Construction in progress | 379.5 | 406.7 | ||
Property, plant and equipment, gross | 8,069.7 | 8,020.2 | ||
Accumulated depreciation | (4,149) | (4,065.3) | ||
Total | 3,920.7 | 3,954.9 | ||
Intangible assets subject to amortization: | ||||
Other intangible assets, gross | 4,915.3 | 4,928.6 | ||
Accumulated amortization | (2,553.4) | (2,486.1) | ||
Net intangible assets subject to amortization | 2,361.9 | 2,442.5 | ||
Total | 3,591.9 | 3,672.5 | ||
Other assets | ||||
Deferred income taxes | 153.9 | 155.6 | ||
Pension | 33.7 | 31.1 | ||
Derivative asset | 43.1 | 25.4 | ||
Other | 369.2 | 372 | ||
Total | 599.9 | 584.1 | ||
Other current liabilities | ||||
Discounts and rebates | 339.1 | 331.4 | ||
Dividends payable | 135.9 | 135.6 | ||
Interest payable | 69.4 | 40.9 | ||
Taxes payable, other than income | 128.5 | 113.4 | ||
Derivative liabilities | 5.1 | 5.8 | ||
Restructuring | 91 | 107.1 | ||
Contract liability | 88.3 | 84.7 | ||
Operating lease liabilities | 152.5 | 153.2 | ||
Other | 275.5 | 251.3 | ||
Total | 1,285.3 | 1,223.4 | ||
Accumulated other comprehensive loss | ||||
Unrealized gain (loss) on derivative financial instruments, net of tax | (1.2) | (4.1) | ||
Unrecognized pension and postretirement benefit expense, net of tax | (810.9) | (823.8) | ||
Cumulative translation, net of tax | (1,301.6) | (1,261.8) | ||
Total | (2,113.7) | (2,089.7) | ||
Customer relationships | ||||
Intangible assets subject to amortization: | ||||
Other intangible assets, gross | 3,735.8 | 3,742.1 | ||
Accumulated amortization | (1,893.7) | (1,835.9) | ||
Trademarks | ||||
Intangible assets subject to amortization: | ||||
Other intangible assets, gross | 409.8 | 409.9 | ||
Accumulated amortization | (211.8) | (205.1) | ||
Patents | ||||
Intangible assets subject to amortization: | ||||
Other intangible assets, gross | 478.3 | 479.4 | ||
Accumulated amortization | (231.3) | (231.6) | ||
Other technology | ||||
Intangible assets subject to amortization: | ||||
Other intangible assets, gross | 291.4 | 297.2 | ||
Accumulated amortization | (216.6) | (213.5) | ||
Trade names | ||||
Intangible assets not subject to amortization: | ||||
Other intangible assets, gross | $ 1,230 | $ 1,230 |
DEBT AND INTEREST (Details)
DEBT AND INTEREST (Details) € in Millions, $ in Millions | Mar. 31, 2020USD ($) | Mar. 31, 2020EUR (€) | Dec. 31, 2019USD ($) | Dec. 31, 2019EUR (€) |
Components of the company's debt obligations | ||||
Long-term debt, current maturities | $ 1.2 | $ 300.9 | ||
Short-term debt including current maturities of long-term debt | 1,038.3 | 380.6 | ||
Commercial paper. | ||||
Components of the company's debt obligations | ||||
Short-term debt | 1,000.9 | 55.1 | ||
Maximum borrowing capacity, commercial paper | 2,000 | |||
U.S. commercial paper program | ||||
Components of the company's debt obligations | ||||
Maximum borrowing capacity, commercial paper | 2,000 | |||
Outstanding commercial paper | 703.4 | |||
European commercial paper | ||||
Components of the company's debt obligations | ||||
Maximum borrowing capacity, commercial paper | 2,000 | |||
Outstanding commercial paper | 297.5 | € 270 | 55.1 | € 50 |
Notes payable | ||||
Components of the company's debt obligations | ||||
Short-term debt | 36.2 | 24.6 | ||
Credit facility | ||||
Components of the company's debt obligations | ||||
Maximum borrowing capacity under the credit agreement | 2,000 | |||
Amount outstanding under the credit agreement | $ 0 | $ 0 |
DEBT AND INTEREST - Other Debt
DEBT AND INTEREST - Other Debt Information (Details) € in Millions, $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||
Apr. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) | Mar. 31, 2020EUR (€) | Dec. 31, 2019EUR (€) | Jan. 31, 2015USD ($) | |
Debt instrument | ||||||||
CARRYING VALUE | $ 6,745.2 | $ 6,745.2 | $ 6,274.4 | |||||
Long-term debt, current maturities | (1.2) | (1.2) | (300.9) | |||||
Long-term debt | 6,744 | 6,744 | 5,973.5 | |||||
Interest | ||||||||
Interest expense | 52.7 | $ 56.1 | ||||||
Interest income | (4.6) | (6.7) | ||||||
Interest expense, net | $ 48.1 | $ 49.4 | ||||||
Public Notes | ||||||||
Debt instrument | ||||||||
Principal outstanding payable at time of prepayment of notes (as a percent) | 101.00% | |||||||
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 | 1,018.6 | $ 1,018.6 | 1,018.3 | |||||
Aggregate principal amount | 1,020 | $ 1,020 | 1,020 | |||||
Debt instrument, term | 10 years | |||||||
Thirty year 2011 senior notes | ||||||||
Debt instrument | ||||||||
CARRYING VALUE | 452 | $ 452 | 451.9 | |||||
Aggregate principal amount | 458 | $ 458 | 458 | |||||
Debt instrument, term | 30 years | |||||||
Five year 2017 senior notes | ||||||||
Debt instrument | ||||||||
CARRYING VALUE | 498 | $ 498 | 497.8 | |||||
Aggregate principal amount | 500 | $ 500 | 500 | |||||
Debt instrument, term | 5 years | |||||||
Ten year 2017 senior notes | ||||||||
Debt instrument | ||||||||
CARRYING VALUE | 495.6 | $ 495.6 | 495.4 | |||||
Aggregate principal amount | 500 | $ 500 | ||||||
Debt instrument, term | 10 years | |||||||
Thirty year 2017 senior notes | ||||||||
Debt instrument | ||||||||
CARRYING VALUE | 610.7 | $ 610.7 | 610.4 | |||||
Aggregate principal amount | 700 | $ 700 | ||||||
Debt instrument, term | 30 years | |||||||
Ten year 2020 senior notes | ||||||||
Debt instrument | ||||||||
CARRYING VALUE | 766.6 | $ 766.6 | ||||||
Aggregate principal amount | $ 750 | $ 750 | ||||||
Effective interest rate (as a percent) | 4.58% | 4.58% | 4.58% | |||||
Debt instrument, term | 10 years | 10 years | ||||||
Interest rate (as a percent) | 4.80% | 4.80% | 4.80% | |||||
Three year 2016 senior notes | ||||||||
Debt instrument | ||||||||
Aggregate principal amount | $ 400 | |||||||
Interest rate (as a percent) | 2.00% | |||||||
Seven year 2016 senior Notes | ||||||||
Debt instrument | ||||||||
CARRYING VALUE | $ 398.6 | $ 398.6 | 398.5 | |||||
Aggregate principal amount | 400 | $ 400 | 400 | |||||
Debt instrument, term | 7 years | |||||||
Seven year 2016 senior euro notes | ||||||||
Debt instrument | ||||||||
CARRYING VALUE | 629.4 | $ 629.4 | 628.4 | |||||
Aggregate principal amount | € | € 575 | € 575 | ||||||
Debt instrument, term | 7 years | |||||||
Ten year 2016 senior notes | ||||||||
Debt instrument | ||||||||
CARRYING VALUE | 744.7 | $ 744.7 | 744.5 | |||||
Aggregate principal amount | 750 | $ 750 | 750 | |||||
Debt instrument, term | 10 years | |||||||
Thirty year 2016 senior notes | ||||||||
Debt instrument | ||||||||
CARRYING VALUE | 246.3 | $ 246.3 | 246.2 | |||||
Aggregate principal amount | 250 | $ 250 | 250 | |||||
Debt instrument, term | 30 years | |||||||
Five year 2015 senior notes | ||||||||
Debt instrument | ||||||||
CARRYING VALUE | 300 | |||||||
Aggregate principal amount | $ 300 | |||||||
Debt instrument, term | 5 years | |||||||
Ten Year 2015 senior euro notes | ||||||||
Debt instrument | ||||||||
CARRYING VALUE | 630.8 | $ 630.8 | $ 630 | |||||
Aggregate principal amount | € | € 575 | € 575 | ||||||
Debt instrument, term | 10 years | |||||||
Series B private placement senior notes due 2023 | ||||||||
Debt instrument | ||||||||
CARRYING VALUE | 249.6 | $ 249.6 | 249.6 | |||||
Aggregate principal amount | 250 | 250 | 250 | |||||
Other | ||||||||
Debt instrument | ||||||||
CARRYING VALUE | $ 4.3 | $ 4.3 | $ 3.4 | |||||
364-day Revolving Credit Agreement | Subsequent event | ||||||||
Debt instrument | ||||||||
Debt instrument, term | 364 days | |||||||
Maximum borrowing capacity under the credit agreement | $ 500 | |||||||
April 2020 Term Credit Agreement | Subsequent event | ||||||||
Debt instrument | ||||||||
Maximum borrowing capacity under the credit agreement | $ 305 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Changes in the carrying amount of goodwill | |||
Beginning goodwill | $ 7,251.7 | ||
Prior year business combinations | (0.1) | ||
Dispositions | (3.2) | ||
Effect of foreign currency translation | (16.9) | ||
Ending goodwill | 7,231.5 | $ 7,251.7 | |
Future estimated amortization expense related to amortizable other identifiable intangible assets | |||
Estimated expense remaining for the three-month period | 240 | ||
Total amortization expense related to other intangible assets | 80.3 | $ 79.8 | |
Previously Reported | |||
Changes in the carrying amount of goodwill | |||
Beginning goodwill | 7,251.7 | ||
Ending goodwill | 7,251.7 | ||
Nalco | Trademarks | |||
Changes in the carrying amount of goodwill | |||
Impairment of indefinite life intangible asset | 0 | ||
Global Industrial | |||
Changes in the carrying amount of goodwill | |||
Beginning goodwill | 3,923.8 | ||
Segment changes | 1,124.6 | ||
Effect of foreign currency translation | (10.2) | ||
Ending goodwill | 3,913.6 | 3,923.8 | |
Global Industrial | Previously Reported | |||
Changes in the carrying amount of goodwill | |||
Beginning goodwill | 2,799.2 | ||
Ending goodwill | 2,799.2 | ||
Global Institutional | |||
Changes in the carrying amount of goodwill | |||
Beginning goodwill | 548.3 | ||
Segment changes | (599.4) | ||
Effect of foreign currency translation | (0.6) | ||
Ending goodwill | 547.7 | 548.3 | |
Global Institutional | Previously Reported | |||
Changes in the carrying amount of goodwill | |||
Beginning goodwill | 1,147.7 | ||
Ending goodwill | 1,147.7 | ||
Global Healthcare and Life Sciences | |||
Changes in the carrying amount of goodwill | |||
Beginning goodwill | 859.3 | ||
Segment changes | 859.3 | ||
Prior year business combinations | (0.1) | ||
Effect of foreign currency translation | (1.8) | ||
Ending goodwill | 857.4 | 859.3 | |
Upstream Energy | |||
Changes in the carrying amount of goodwill | |||
Beginning goodwill | 1,682.6 | ||
Segment changes | 1,682.6 | ||
Dispositions | (3.2) | ||
Effect of foreign currency translation | (3.9) | ||
Ending goodwill | $ 1,675.5 | 1,682.6 | |
Percentage of fair value in excess of carrying amount | 30.00% | ||
Fair value input, discount rate (as a percent) | 1.00% | ||
Percentage of decrease in terminal growth rate | 1.00% | ||
Global Energy | |||
Changes in the carrying amount of goodwill | |||
Segment changes | (3,100.5) | ||
Global Energy | Previously Reported | |||
Changes in the carrying amount of goodwill | |||
Beginning goodwill | $ 3,100.5 | ||
Ending goodwill | 3,100.5 | ||
Other | |||
Changes in the carrying amount of goodwill | |||
Beginning goodwill | 237.7 | ||
Segment changes | 33.4 | ||
Effect of foreign currency translation | (0.4) | ||
Ending goodwill | 237.3 | 237.7 | |
Other | Previously Reported | |||
Changes in the carrying amount of goodwill | |||
Beginning goodwill | $ 204.3 | ||
Ending goodwill | $ 204.3 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Carrying Amount | ||
Assets: | ||
Foreign currency forward contracts | $ 117.2 | $ 83.9 |
Liabilities: | ||
Foreign currency forward contracts | 22.1 | 10 |
Level 2 | ||
Assets: | ||
Foreign currency forward contracts | 117.2 | 83.9 |
Liabilities: | ||
Foreign currency forward contracts | $ 22.1 | $ 10 |
FAIR VALUE MEASUREMENTS - Long-
FAIR VALUE MEASUREMENTS - Long-term Debt (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Carrying Amount | ||
Carrying amount and fair value of financial instruments | ||
Long-term debt (including current maturities) | $ 6,745.2 | $ 6,274.4 |
Fair Value | Level 2 | ||
Carrying amount and fair value of financial instruments | ||
Long-term debt (including current maturities) | $ 7,142 | $ 6,862 |
DERIVATIVES AND HEDGING TRANS_3
DERIVATIVES AND HEDGING TRANSACTIONS - Derivative Positions Summary (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Asset Derivatives | ||
Gross value of derivatives | $ 117.2 | $ 83.9 |
Gross amounts offset in the Consolidated Balance Sheet | (17) | (4.2) |
Net value of derivatives presented in the Consolidated Balance Sheet | 100.2 | 79.7 |
Liability Derivatives | ||
Gross value of derivatives | 22.1 | 10 |
Gross amounts offset in the Consolidated Balance Sheet | (17) | (4.2) |
Net value of derivatives presented in the Consolidated Balance Sheet | 5.1 | 5.8 |
Cash collateral received | 0 | |
Cash collateral pledged | 0 | |
Foreign currency forward contracts. | ||
Liability Derivatives | ||
Notional values | 5,697 | 4,004 |
Derivatives designated as hedging instruments | Foreign currency forward contracts. | ||
Asset Derivatives | ||
Gross value of derivatives | 75.8 | 67.4 |
Liability Derivatives | ||
Gross value of derivatives | 1.4 | 2.1 |
Derivatives not designated as hedging instruments | Foreign currency forward contracts. | ||
Asset Derivatives | ||
Gross value of derivatives | 41.4 | 16.5 |
Liability Derivatives | ||
Gross value of derivatives | $ 20.7 | $ 7.9 |
DERIVATIVES AND HEDGING TRANS_4
DERIVATIVES AND HEDGING TRANSACTIONS - Information by Type of Derivative and Hedging Activities (Details) € in Millions, $ in Millions | 3 Months Ended | ||||||
Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | Mar. 31, 2020EUR (€) | Dec. 31, 2019USD ($) | Dec. 31, 2019EUR (€) | Jan. 31, 2016USD ($) | Jan. 31, 2015USD ($) | |
Fair Value Hedges | |||||||
Long-term debt | $ 6,744 | $ 5,973.5 | |||||
Net Investment Hedges | |||||||
Revaluation gain (loss), net of tax | $ (1.1) | $ (6.6) | |||||
Derivative Summary | |||||||
Maximum period for hedged transactions | 4 years | ||||||
Cash collateral received | $ 0 | ||||||
Three year 2016 senior notes | |||||||
Impact on AOCI and earnings from derivative contracts | |||||||
Aggregate principal amount | $ 400 | ||||||
Interest rate (as a percent) | 2.00% | ||||||
Ten year 2011 senior notes | |||||||
Impact on AOCI and earnings from derivative contracts | |||||||
Aggregate principal amount | 1,020 | 1,020 | |||||
European commercial paper | |||||||
Net Investment Hedges | |||||||
Notional values | 221 | € 200 | |||||
Ten Year 2015 senior euro notes | |||||||
Impact on AOCI and earnings from derivative contracts | |||||||
Aggregate principal amount | € | 575 | € 575 | |||||
Cost of sales | |||||||
Impact on AOCI and earnings from derivative contracts | |||||||
Gain (loss) on derivative recognized in income | 2.2 | 4.4 | |||||
Selling, general and administrative expenses | |||||||
Impact on AOCI and earnings from derivative contracts | |||||||
Gain (loss) on derivative recognized in income | 16.1 | (1) | |||||
Interest expense, net | |||||||
Impact on AOCI and earnings from derivative contracts | |||||||
Gain (loss) on derivative recognized in income | 6.4 | 6.8 | |||||
Foreign currency forward contracts. | |||||||
Net Investment Hedges | |||||||
Notional values | 5,697 | $ 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 | 17.2 | 6.1 | |||||
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 | 1.2 | ||||||
Cash Flow Hedges | Foreign currency forward contracts. | Derivatives designated as hedging instruments | Cost of sales | |||||||
Impact on AOCI and earnings from derivative contracts | |||||||
Gain (loss) reclassified from AOCI into income (effective portion) | 2.2 | 4.4 | |||||
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) | (1.1) | (7.1) | |||||
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 | 5.4 | 7 | |||||
Derivative Summary | |||||||
Gain (loss) recognized in income (ineffective portion) | 5.4 | 7 | |||||
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) | (0.2) | (0.2) | |||||
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 | Interest expense, net | |||||||
Impact on AOCI and earnings from derivative contracts | |||||||
Gain (loss) on hedged item recognized in income | 0.2 | ||||||
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) | ||||||
Net Investment Hedges | |||||||
Net Investment Hedges | |||||||
Revaluation gain (loss), net of tax | (1.1) | $ (6.6) | |||||
Net Investment Hedges | Senior euro notes | |||||||
Net Investment Hedges | |||||||
Notional values | $ 1,260 | € 1,150 |
OTHER COMPREHENSIVE INCOME (L_3
OTHER COMPREHENSIVE INCOME (LOSS) INFORMATION (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Reclassification adjustments | ||
Cost of sales | $ (2,116.8) | $ (2,089.6) |
SG&A | (1,015) | (1,008.3) |
Interest expense, net | (48.1) | (49.4) |
Subtotal | (23.5) | 88.9 |
Derivative gains reclassified from AOCI into income, net of tax | (4.8) | (3) |
Pension and postretirement net actuarial losses and prior service cost reclassified from AOCI into income, net of tax | 12.9 | (4) |
Derivative & Hedging Instruments. | ||
Reclassification adjustments | ||
Amount recognized in AOCI | 9.8 | (2.9) |
Tax impact | (0.6) | 1.4 |
Subtotal | 2.9 | (5.6) |
Derivative & Hedging Instruments. | Amount reclassified from AOCI | ||
Reclassification adjustments | ||
Cost of sales | (2.2) | (4.4) |
SG&A | 1.1 | 7.1 |
Interest expense, net | (5.2) | (6.8) |
(Gains) losses reclassified from AOCI into income | (6.3) | (4.1) |
Pension & Postretirement Benefits. | ||
Reclassification adjustments | ||
(Gains) losses reclassified from AOCI into income | 14.8 | |
Other activity | 1.7 | (4) |
Tax impact | (3.6) | |
Subtotal | 12.9 | $ (4) |
Pension & Postretirement Benefits. | Amount reclassified from AOCI | ||
Reclassification adjustments | ||
(Gains) losses reclassified from AOCI into income | $ 14.8 |
SHAREHOLDERS' EQUITY (Details)
SHAREHOLDERS' EQUITY (Details) 10Q - Common Stock - shares | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | Feb. 28, 2015 | |
Shareholder's Equity | |||
Common stock, shares authorized to be repurchased | 20,000,000 | ||
Remaining shares authorized to be repurchased | 6,432,246 | ||
Reacquired shares | 497,260 | 1,986,241 | |
Number of shares reacquired through the open market or private purchases | 372,764 | 1,846,384 | |
Number of shares that have been repurchased through the exercise of stock options and vesting of stock awards | 124,496 | 139,857 |
EARNINGS ATTRIBUTABLE TO ECOL_3
EARNINGS ATTRIBUTABLE TO ECOLAB PER COMMON SHARE ("EPS") (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Computations of the basic and diluted earnings attributable to Ecolab per share amounts | ||
Net income attributable to Ecolab | $ 283.4 | $ 296.5 |
Weighted-average common shares outstanding | ||
Basic (in shares) | 288.8 | 288.2 |
Effect of dilutive stock options and units (in shares) | 3.8 | 4.1 |
Diluted (in shares) | 292.6 | 292.3 |
Earnings attributable to Ecolab per common share | ||
Basic (in dollars per share) | $ 0.98 | $ 1.03 |
Diluted (in dollars per share) | $ 0.97 | $ 1.01 |
Anti-dilutive securities excluded from the computation of EPS | 1.1 | 1.4 |
INCOME TAXES (Details) 10Q
INCOME TAXES (Details) 10Q - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
INCOME TAXES | ||
Effective income tax rate (as a percent) | 20.30% | 11.40% |
One-time transition tax due to issuance of technical guidance | $ (5.1) | |
Excess tax benefits, share-based compensation | $ 23.4 | 18.7 |
Recognized discrete tax expense (benefit) | (2.3) | $ (27.7) |
Tax expense, friction costs associated with separation activity | 18.8 | |
Tax expense, change if foreign and domestic estimates | 5.8 | |
Recognized discrete tax benefits, release of reserves for uncertain tax positions | $ 3.5 |
RETIREMENT PLANS (Details)
RETIREMENT PLANS (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Pension | U.S. | ||
Net periodic benefit costs | ||
Service cost | $ 17.1 | $ 18.2 |
Interest cost on benefit obligation | 17.5 | 22.3 |
Expected return on plan assets | (38.2) | (37.4) |
Recognition of net actuarial (gain) loss | 13 | 5.9 |
Amortization of prior service cost (benefit) | (1.8) | (2.9) |
Total expense (benefit) | 7.6 | 6.1 |
Pension | International | ||
Net periodic benefit costs | ||
Service cost | 7.7 | 7.6 |
Interest cost on benefit obligation | 5.4 | 7.8 |
Expected return on plan assets | (15.7) | (15.2) |
Recognition of net actuarial (gain) loss | 6.4 | 4.1 |
Amortization of prior service cost (benefit) | (0.3) | |
Total expense (benefit) | 3.8 | 4 |
Other Pension Plan Information | ||
Contributions to plan | 15 | |
Contributions anticipated to be made during the remainder of 2020 | 31 | |
Pension | Non-qualified plan | U.S. | ||
Other Pension Plan Information | ||
Contributions to plan | 2 | |
Contributions anticipated to be made during the remainder of 2020 | 10 | |
Postretirement Health Care | U.S. | ||
Net periodic benefit costs | ||
Service cost | 0.3 | 0.3 |
Interest cost on benefit obligation | 1.1 | 1.4 |
Expected return on plan assets | (0.1) | (0.1) |
Recognition of net actuarial (gain) loss | (1) | |
Amortization of prior service cost (benefit) | (2.8) | (5.8) |
Total expense (benefit) | (1.5) | $ (5.2) |
Other Pension Plan Information | ||
Contributions to plan | 3 | |
Contributions anticipated to be made during the remainder of 2020 | $ 8 |
REVENUES - Operating Lease Reve
REVENUES - Operating Lease Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Operating Lease, Lease Income | ||
Operating lease revenue | $ 108.4 | $ 102.9 |
REVENUES - Principal Activities
REVENUES - Principal Activities (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Disaggregation of revenue | |||
Net sales | $ 3,581.4 | $ 3,505.4 | $ 14,906.3 |
Global Industrial | |||
Disaggregation of revenue | |||
Net sales | 1,434.5 | 1,402 | |
Global Institutional | |||
Disaggregation of revenue | |||
Net sales | 1,067.2 | 1,020.8 | |
Global Healthcare and Life Sciences | |||
Disaggregation of revenue | |||
Net sales | 243.6 | 227.6 | |
Upstream Energy | |||
Disaggregation of revenue | |||
Net sales | 560.4 | 580 | |
Other | |||
Disaggregation of revenue | |||
Net sales | 275.7 | 275 | |
Product and sold equipment | |||
Disaggregation of revenue | |||
Net sales | 2,930 | 2,886.3 | |
Product and sold equipment | Global Industrial | |||
Disaggregation of revenue | |||
Net sales | 1,232.5 | 1,213.7 | |
Product and sold equipment | Global Institutional | |||
Disaggregation of revenue | |||
Net sales | 888.9 | 855.6 | |
Product and sold equipment | Global Healthcare and Life Sciences | |||
Disaggregation of revenue | |||
Net sales | 221.9 | 209.9 | |
Product and sold equipment | Upstream Energy | |||
Disaggregation of revenue | |||
Net sales | 505.5 | 524.8 | |
Product and sold equipment | Other | |||
Disaggregation of revenue | |||
Net sales | 81.2 | 82.3 | |
Service and lease equipment | |||
Disaggregation of revenue | |||
Net sales | 651.4 | 619.1 | |
Service and lease equipment | Global Industrial | |||
Disaggregation of revenue | |||
Net sales | 202 | 188.3 | |
Service and lease equipment | Global Institutional | |||
Disaggregation of revenue | |||
Net sales | 178.3 | 165.2 | |
Service and lease equipment | Global Healthcare and Life Sciences | |||
Disaggregation of revenue | |||
Net sales | 21.7 | 17.7 | |
Service and lease equipment | Upstream Energy | |||
Disaggregation of revenue | |||
Net sales | 54.9 | 55.2 | |
Service and lease equipment | Other | |||
Disaggregation of revenue | |||
Net sales | 194.5 | 192.7 | |
North America | Global Industrial | |||
Disaggregation of revenue | |||
Net sales | 691.6 | 673.6 | |
North America | Global Institutional | |||
Disaggregation of revenue | |||
Net sales | 779.8 | 740.1 | |
North America | Global Healthcare and Life Sciences | |||
Disaggregation of revenue | |||
Net sales | 107.7 | 99.9 | |
North America | Upstream Energy | |||
Disaggregation of revenue | |||
Net sales | 351.3 | 358.5 | |
North America | Other | |||
Disaggregation of revenue | |||
Net sales | $ 168.2 | $ 166.6 | |
U.S. | |||
Disaggregation of revenue | |||
Percentage of consolidated sales | 54.00% | 54.00% | |
Europe | Global Industrial | |||
Disaggregation of revenue | |||
Net sales | $ 281.2 | $ 277.2 | |
Europe | Global Institutional | |||
Disaggregation of revenue | |||
Net sales | 142.5 | 143.1 | |
Europe | Global Healthcare and Life Sciences | |||
Disaggregation of revenue | |||
Net sales | 120.3 | 119.9 | |
Europe | Upstream Energy | |||
Disaggregation of revenue | |||
Net sales | 68.1 | 71.3 | |
Europe | Other | |||
Disaggregation of revenue | |||
Net sales | 59.7 | 58.3 | |
Asia Pacific | Global Industrial | |||
Disaggregation of revenue | |||
Net sales | 183.7 | 181.7 | |
Asia Pacific | Global Institutional | |||
Disaggregation of revenue | |||
Net sales | 60 | 56 | |
Asia Pacific | Global Healthcare and Life Sciences | |||
Disaggregation of revenue | |||
Net sales | 10.5 | 3.6 | |
Asia Pacific | Upstream Energy | |||
Disaggregation of revenue | |||
Net sales | 20.2 | 18.2 | |
Asia Pacific | Other | |||
Disaggregation of revenue | |||
Net sales | 18.1 | 18.1 | |
Latin America | Global Industrial | |||
Disaggregation of revenue | |||
Net sales | 129.1 | 125.2 | |
Latin America | Global Institutional | |||
Disaggregation of revenue | |||
Net sales | 39.8 | 39.5 | |
Latin America | Global Healthcare and Life Sciences | |||
Disaggregation of revenue | |||
Net sales | 1 | 1 | |
Latin America | Upstream Energy | |||
Disaggregation of revenue | |||
Net sales | 41.2 | 40.8 | |
Latin America | Other | |||
Disaggregation of revenue | |||
Net sales | 12 | 12.3 | |
Greater China | Global Industrial | |||
Disaggregation of revenue | |||
Net sales | 74.2 | 76.4 | |
Greater China | Global Institutional | |||
Disaggregation of revenue | |||
Net sales | 33.7 | 31.2 | |
Greater China | Global Healthcare and Life Sciences | |||
Disaggregation of revenue | |||
Net sales | 0.6 | 0.4 | |
Greater China | Upstream Energy | |||
Disaggregation of revenue | |||
Net sales | 0.5 | 4.6 | |
Greater China | Other | |||
Disaggregation of revenue | |||
Net sales | 13.5 | 15.6 | |
Middle East and Africa ("MEA") | Global Industrial | |||
Disaggregation of revenue | |||
Net sales | 74.7 | 67.9 | |
Middle East and Africa ("MEA") | Global Institutional | |||
Disaggregation of revenue | |||
Net sales | 11.4 | 10.9 | |
Middle East and Africa ("MEA") | Global Healthcare and Life Sciences | |||
Disaggregation of revenue | |||
Net sales | 3.5 | 2.8 | |
Middle East and Africa ("MEA") | Upstream Energy | |||
Disaggregation of revenue | |||
Net sales | 79.1 | 86.6 | |
Middle East and Africa ("MEA") | Other | |||
Disaggregation of revenue | |||
Net sales | $ 4.2 | $ 4.1 |
REVENUES - Contract Liability (
REVENUES - Contract Liability (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Change in contract liability | ||
Contract liability as of beginning of period | $ 84.7 | $ 75.8 |
Revenue recognized: Amounts included in the contract liability at the beginning of the period | (84.7) | (75.8) |
Increases due to invoices issued, excluding amounts recognized as revenues during the period | 88.3 | 82.4 |
Business combination | 3 | |
Contract liability as of end of period | $ 88.3 | $ 85.4 |
OPERATING SEGMENTS (Details)
OPERATING SEGMENTS (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020USD ($)item | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) | |
Financial information of reportable segments | |||
Number of reportable segments | item | 4 | ||
Net sales | $ 3,581.4 | $ 3,505.4 | $ 14,906.3 |
Operating Income (Loss) | 397.2 | 367.2 | 2,013.8 |
Previously Reported | |||
Financial information of reportable segments | |||
Net sales | 14,906.3 | ||
Operating Income (Loss) | 2,013.8 | ||
Global Industrial | |||
Financial information of reportable segments | |||
Net sales | 1,434.5 | 1,402 | |
Global Institutional | |||
Financial information of reportable segments | |||
Net sales | 1,067.2 | 1,020.8 | |
Global Healthcare and Life Sciences | |||
Financial information of reportable segments | |||
Net sales | 243.6 | 227.6 | |
Upstream Energy | |||
Financial information of reportable segments | |||
Net sales | 560.4 | 580 | |
Other | |||
Financial information of reportable segments | |||
Net sales | 275.7 | 275 | |
Operating segment | |||
Financial information of reportable segments | |||
Net sales | 3,603 | 3,501 | 14,952.1 |
Operating Income (Loss) | 400.1 | 366.7 | 2,023.6 |
Operating segment | Previously Reported | |||
Financial information of reportable segments | |||
Net sales | 15,046.9 | ||
Operating Income (Loss) | 2,034.2 | ||
Operating segment | Adjustment | Fixed Currency Rate Change | |||
Financial information of reportable segments | |||
Net sales | (94.8) | ||
Operating Income (Loss) | (10.6) | ||
Operating segment | Global Industrial | |||
Financial information of reportable segments | |||
Net sales | 1,444 | 1,397.4 | 5,996.4 |
Operating Income (Loss) | 226.9 | 181.2 | 980.6 |
Operating segment | Global Industrial | Previously Reported | |||
Financial information of reportable segments | |||
Net sales | 5,569.9 | ||
Operating Income (Loss) | 854.7 | ||
Operating segment | Global Industrial | Adjustment | Segment Change | |||
Financial information of reportable segments | |||
Net sales | 479.2 | ||
Operating Income (Loss) | 133.4 | ||
Operating segment | Global Industrial | Adjustment | Fixed Currency Rate Change | |||
Financial information of reportable segments | |||
Net sales | (52.7) | ||
Operating Income (Loss) | (7.5) | ||
Operating segment | Global Institutional | |||
Financial information of reportable segments | |||
Net sales | 1,072.3 | 1,020.2 | 4,412.1 |
Operating Income (Loss) | 183.5 | 176.2 | 947.3 |
Operating segment | Global Institutional | Previously Reported | |||
Financial information of reportable segments | |||
Net sales | 5,235.5 | ||
Operating Income (Loss) | 1,042.2 | ||
Operating segment | Global Institutional | Adjustment | Segment Change | |||
Financial information of reportable segments | |||
Net sales | (800.1) | ||
Operating Income (Loss) | (93.4) | ||
Operating segment | Global Institutional | Adjustment | Fixed Currency Rate Change | |||
Financial information of reportable segments | |||
Net sales | (23.3) | ||
Operating Income (Loss) | (1.5) | ||
Operating segment | Global Healthcare and Life Sciences | |||
Financial information of reportable segments | |||
Net sales | 246.2 | 227 | 979 |
Operating Income (Loss) | 25.6 | 27.3 | 135.1 |
Operating segment | Global Healthcare and Life Sciences | Adjustment | Segment Change | |||
Financial information of reportable segments | |||
Net sales | 991.7 | ||
Operating Income (Loss) | 136.7 | ||
Operating segment | Global Healthcare and Life Sciences | Adjustment | Fixed Currency Rate Change | |||
Financial information of reportable segments | |||
Net sales | (12.7) | ||
Operating Income (Loss) | (1.6) | ||
Operating segment | Upstream Energy | |||
Financial information of reportable segments | |||
Net sales | 562.7 | 581.7 | 2,352.9 |
Operating Income (Loss) | 39 | 36.5 | 187.9 |
Operating segment | Upstream Energy | Adjustment | Segment Change | |||
Financial information of reportable segments | |||
Net sales | 2,350 | ||
Operating Income (Loss) | 188.2 | ||
Operating segment | Upstream Energy | Adjustment | Fixed Currency Rate Change | |||
Financial information of reportable segments | |||
Net sales | 2.9 | ||
Operating Income (Loss) | (0.3) | ||
Operating segment | Global Energy | Previously Reported | |||
Financial information of reportable segments | |||
Net sales | 3,334 | ||
Operating Income (Loss) | 379.1 | ||
Operating segment | Global Energy | Adjustment | Segment Change | |||
Financial information of reportable segments | |||
Net sales | (3,334) | ||
Operating Income (Loss) | (379.1) | ||
Operating segment | Other | |||
Financial information of reportable segments | |||
Net sales | 277.8 | 274.7 | 1,211.7 |
Operating Income (Loss) | 25.3 | 28.9 | 180.6 |
Operating segment | Other | Previously Reported | |||
Financial information of reportable segments | |||
Net sales | 907.5 | ||
Operating Income (Loss) | 167.3 | ||
Operating segment | Other | Adjustment | Segment Change | |||
Financial information of reportable segments | |||
Net sales | 313.2 | ||
Operating Income (Loss) | 14.2 | ||
Operating segment | Other | Adjustment | Fixed Currency Rate Change | |||
Financial information of reportable segments | |||
Net sales | (9) | ||
Operating Income (Loss) | (0.9) | ||
Currency Impact | |||
Financial information of reportable segments | |||
Net sales | (21.6) | 4.4 | (45.8) |
Operating Income (Loss) | (2.9) | 0.5 | (9.8) |
Currency Impact | Previously Reported | |||
Financial information of reportable segments | |||
Net sales | (140.6) | ||
Operating Income (Loss) | (20.4) | ||
Currency Impact | Adjustment | Fixed Currency Rate Change | |||
Financial information of reportable segments | |||
Net sales | 94.8 | ||
Operating Income (Loss) | 10.6 | ||
Corporate | |||
Financial information of reportable segments | |||
Operating Income (Loss) | $ (100.2) | $ (83.4) | (407.9) |
Corporate | Previously Reported | |||
Financial information of reportable segments | |||
Operating Income (Loss) | (409.1) | ||
Corporate | Adjustment | Fixed Currency Rate Change | |||
Financial information of reportable segments | |||
Operating Income (Loss) | $ 1.2 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - item | 1 Months Ended | 3 Months Ended | ||
Jul. 31, 2018 | Apr. 30, 2017 | May 31, 2016 | Mar. 31, 2020 | |
Environmental matters | ||||
Number of locations for environmental assessments and remediation | 40 | |||
Deepwater Horizon Incident | ||||
Loss contingencies | ||||
Number of putative class action complaints filed | 6 | |||
Number of complaints filed by individuals | 2 | 9 | 21 | |
Period to appeal court's decision after entry of final judgment under Federal Rule of Appellate Procedure | 30 days | |||
Number of cases pending that are expected to be dismissed | 3 |
NEW ACCOUNTING PRONOUNCEMENTS_2
NEW ACCOUNTING PRONOUNCEMENTS (Details) - USD ($) $ in Millions | Jan. 01, 2020 | Mar. 31, 2020 | Mar. 31, 2019 |
New accounting guidance, cumulative effect | $ (4.3) | $ (2.8) | |
Accounting Standards Update 2016-13 | |||
New accounting guidance, cumulative effect | $ 4.3 |
NEW ACCOUNTING PRONOUNCEMENTS -
NEW ACCOUNTING PRONOUNCEMENTS - Valuation Allowance and Reserves (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Accounts Receivable and Allowance for Doubtful Accounts | ||
Allowance for doubtful accounts, returns and credits | $ 18 | $ 17 |
Activity in the allowance for doubtful accounts | ||
Allowance for doubtful accounts, beginning balance | 62 | 60.6 |
Bad debt expense | 16.1 | 3.4 |
Write-offs | (5.3) | (4.2) |
Other (b) | (1.2) | (1.4) |
Allowance for doubtful accounts, ending balance | 75.9 | $ 58.4 |
Accounting Standards Update 2016-13 | Adjustment. | ||
Activity in the allowance for doubtful accounts | ||
Allowance for doubtful accounts, beginning balance | $ 4.3 |