Illinois Tool Works (ITW) 10-Q 4 Aug 17 2017 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information	6 Months Ended
	Jun. 30, 2017shares
Document and Entity Information [Abstract]
Entity Registrant Name	ILLINOIS TOOL WORKS INC.
Entity Central Index Key	49,826
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Jun. 30, 2017
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding	344,149,420

Statement of Income (Unaudited)

Statement of Income (Unaudited) - USD ($) shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Income Statement [Abstract]
Operating Revenue	$ 3,599	$ 3,431	$ 7,070	$ 6,705
Cost of revenue	2,087	1,967	4,091	3,863
Selling, administrative, and research and development expenses	586	617	1,191	1,214
Amortization and impairment of intangible assets	52	55	105	114
Operating Income	874	792	1,683	1,514
Interest expense	(65)	(58)	(129)	(116)
Other income (expense)	10	17	14	21
Income Before Taxes	819	751	1,568	1,419
Income Taxes	232	226	445	426
Net Income	$ 587	$ 525	$ 1,123	$ 993
Net Income Per Share:
Basic (in dollars per share)	$ 1.70	$ 1.47	$ 3.25	$ 2.76
Diluted (in dollars per share)	1.69	1.46	3.23	2.75
Cash Dividends Per Share:
Paid (in dollars per share)	0.65	0.55	1.30	1.10
Declared (in dollars per share)	$ 0.65	$ 0.55	$ 1.30	$ 1.10
Shares of Common Stock Outstanding During the Period:
Average (in shares)	344.7	356.6	345.4	359.3
Average assuming dilution (in shares)	347.5	358.5	348.3	361.2

Statement of Comprehensive Inco

Statement of Comprehensive Income (Unaudited) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Statement of Comprehensive Income [Abstract]
Net Income	$ 587	$ 525	$ 1,123	$ 993
Other Comprehensive Income (Loss):
Foreign currency translation adjustments, net of tax	117	(144)	271	20
Pension and other postretirement benefit adjustments, net of tax	10	6	20	14
Comprehensive Income	$ 714	$ 387	$ 1,414	$ 1,027

Statement of Financial Position

Statement of Financial Position (Unaudited) - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
Current Assets:
Cash and equivalents	$ 2,496	$ 2,472
Trade receivables	2,629	2,357
Inventories	1,199	1,076
Prepaid expenses and other current assets	246	218
Total current assets	6,570	6,123
Net plant and equipment	1,726	1,652
Goodwill	4,675	4,558
Intangible assets	1,366	1,463
Deferred income taxes	488	449
Other assets	1,097	956
Total assets	15,922	15,201
Current Liabilities:
Short-term debt	691	652
Accounts payable	582	511
Accrued expenses	1,172	1,202
Cash dividends payable	224	226
Income taxes payable	157	169
Total current liabilities	2,826	2,760
Noncurrent Liabilities:
Long-term debt	7,360	7,177
Deferred income taxes	121	134
Other liabilities	841	871
Total noncurrent liabilities	8,322	8,182
Stockholders’ Equity:
Common stock	6	6
Additional paid-in-capital	1,196	1,188
Retained earnings	20,180	19,505
Common stock held in treasury	(15,095)	(14,638)
Accumulated other comprehensive income (loss)	(1,516)	(1,807)
Noncontrolling interest	3	5
Total stockholders’ equity	4,774	4,259
Total liabilities and stockholders' equity	$ 15,922	$ 15,201

Statement of Financial Positio5

Statement of Financial Position (Unaudited) - Parenthetical - $ / shares shares in Millions	Jun. 30, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, issued (in shares)	550	550
Common stock, outstanding (in shares)	344.1	346.9

Statement of Cash Flows (Unaudi

Statement of Cash Flows (Unaudited) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Cash Provided by (Used for) Operating Activities:
Net Income	$ 1,123	$ 993
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation	123	118
Amortization and impairment of intangible assets	105	114
Change in deferred income taxes	23	(203)
Provision for uncollectible accounts	2	6
(Income) loss from investments	(11)	(3)
(Gain) loss on sale of plant and equipment	1	1
(Gain) loss on sale of operations and affiliates	0	6
Stock-based compensation expense	19	20
Other non-cash items, net	4	1
(Increase) decrease in-
Trade receivables	(186)	(210)
Inventories	(82)	(54)
Prepaid expenses and other assets	(112)	(58)
Increase (decrease) in-
Accounts payable	47	68
Accrued expenses and other liabilities	(115)	0
Income taxes	(14)	216
Other, net	0	(1)
Net cash provided by operating activities	927	1,014
Cash Provided by (Used for) Investing Activities:
Acquisition of businesses (excluding cash and equivalents) and additional interest in affiliates	(3)	(2)
Additions to plant and equipment	(141)	(121)
Proceeds from investments	18	10
Proceeds from sale of plant and equipment	3	4
Proceeds from sales of operations and affiliates	2	2
Other, net	(1)	(8)
Net cash provided by (used for) investing activities	(122)	(115)
Cash Provided by (Used for) Financing Activities:
Cash dividends paid	(450)	(398)
Issuance of common stock	45	57
Repurchases of common stock	(500)	(1,000)
Net proceeds from (repayments of) debt with original maturities of three months or less	691	(311)
Proceeds from debt with original maturities of more than three months	0	1
Repayments of debt with original maturities of more than three months	(652)	(1)
Excess tax benefits from stock-based compensation	0	19
Other, net	(13)	(11)
Net cash provided by (used for) financing activities	(879)	(1,644)
Effect of Exchange Rate Changes on Cash and Equivalents	98	10
Cash and Equivalents:
Increase (decrease) during the period	24	(735)
Beginning of period	2,472	3,090
End of period	2,496	2,355
Supplementary Cash and Non-Cash Information:
Cash Paid During the Period for Interest	146	133
Cash Paid During the Period for Income Taxes, Net of Refunds	$ 436	$ 394

Significant Accounting Policies

Significant Accounting Policies	6 Months Ended
	Jun. 30, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Significant Accounting Policies	Significant Accounting Policies Financial Statements - The unaudited financial statements included herein have been prepared by Illinois Tool Works Inc. and Subsidiaries (the “Company”). In the opinion of management, the interim financial statements reflect all adjustments of a normal recurring nature necessary for a fair statement of the results for interim periods. It is suggested that these financial statements be read in conjunction with the financial statements and notes to financial statements included in the Company’s 2016 Annual Report on Form 10-K. Certain reclassifications of prior year data have been made to conform with current year reporting. New Accounting Pronouncements - In May 2014, the Financial Accounting Standards Board (the "FASB") issued authoritative guidance to change the criteria for revenue recognition. The core principle of the new standard is that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, several new revenue recognition disclosures will be required. Under current guidance, the Company generally recognizes operating revenue when ownership and risk of loss are transferred to the customer, which is typically at the time of product shipment or delivery of service. While the Company continues to assess the potential impact of the new guidance, we do not currently expect that the adoption of this guidance will have a material impact on our operating revenue, results of operations or financial position. However, the Company expects to provide additional disclosures in the notes to financial statements required under the new guidance. The new guidance will be effective for the Company beginning January 1, 2018 and allows for either full or modified retrospective adoption methods. The Company expects to adopt the new revenue accounting guidance utilizing the modified retrospective method. In February 2016, the FASB issued authoritative guidance to change the criteria for recognizing leasing transactions. Under the new guidance, a lessee will be required to recognize a lease liability and lease asset for all leases with a lease term greater than twelve months in the statement of financial position, including operating leases. Subsequent measurement, including presentation of expenses and cash flows, will depend on the classification of the lease as either a financing or operating lease. In addition, several new disclosures will be required. This guidance will be effective for the Company beginning January 1, 2019, with early adoption permitted. While the Company has not yet completed its evaluation of the impact the new lease accounting guidance will have on the consolidated financial statements and related disclosures, the Company expects to recognize right of use assets and liabilities for its operating leases in the statement of financial position upon adoption. In March 2016, the FASB issued authoritative guidance that included several changes to simplify the accounting for stock-based compensation, including the accounting for income taxes, forfeitures, statutory tax withholding requirements and classification of tax benefits in the statement of cash flows. Among the more significant changes, the new guidance requires the income tax effects associated with the settlement of stock-based awards to be recognized through income tax expense rather than directly in equity. Additionally, the income tax effects related to excess tax benefits should be presented within operating cash flows in the statement of cash flows rather than as a financing activity. Excess tax benefits recognized in equity under the prior guidance were $19 million for the six months ended June 30, 2016. The Company adopted the new guidance effective January 1, 2017 and applied the newly adopted provisions prospectively. Excess tax benefits of $13 million and $26 million were included in Income Taxes in the statement of income for the three and six month periods ended June 30, 2017, respectively. The expected effect on income tax expense or net cash provided from operating activities related to future stock-based award settlements will vary each quarter and will depend on inputs such as the stock price at the time of settlement and the number of awards settled in the period presented. In October 2016, the FASB issued authoritative guidance requiring the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs rather than when transferred to a third party as required under the current guidance. The new guidance is effective for the Company beginning January 1, 2018. The Company is currently assessing the potential impact the new guidance will have upon adoption. In March 2017, the FASB issued authoritative guidance which changes the income statement presentation of the components of net periodic benefit cost related to defined benefit pension and other postretirement plans. The primary change under the new guidance is that only the service cost component of net periodic benefit cost should be included in operating income and is eligible for capitalization as an asset. The other components of net periodic benefit cost, such as interest cost, the expected return on assets, and amortization of actuarial gains and losses and prior service cost, should be presented below operating income. The guidance is effective for the Company starting January 1, 2018 and will be applied retrospectively to the presentation of net periodic benefit cost and prospectively to the capitalization of service cost. The Company does not expect the adoption of this guidance to have a material impact on the results of operations or financial position.

Acquisition

Acquisition	6 Months Ended
	Jun. 30, 2017
Business Combinations [Abstract]
Acquisition	Acquisition On July 1, 2016, the Company completed the acquisition of the Engineered Fasteners and Components business ("EF&C") from ZF TRW for a purchase price of approximately $ 450 million . The acquisition of EF&C did not materially affect the Company’s results of operations or financial position for the periods presented. EF&C had operating revenue of $256 million for the six months ended June 30, 2017 which was reported within the Company’s Automotive OEM segment. As a result of the EF&C transaction, the Company recorded $185 million of goodwill and $134 million of amortizable intangible assets primarily related to customer relationships and technology. The intangible assets are expected to be amortized on a straight-line basis over their estimated useful lives ranging from 4 to 17 years, with a weighted average amortization period of 16 years. Subsequent purchase accounting adjustments may change the initial amounts recorded. The allocation of the purchase price will be completed no later than one year from the acquisition date.

Income Taxes

Income Taxes	6 Months Ended
	Jun. 30, 2017
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes The Company and its subsidiaries file tax returns in the U.S. and various state, local and foreign jurisdictions. These tax returns are routinely audited by the tax authorities in these jurisdictions, including the Internal Revenue Service ("IRS"), Her Majesty's Revenue and Customs, German Fiscal Authority, French Fiscal Authority, and Australian Tax Office, and a number of these audits are currently ongoing, which may increase the amount of the unrecognized tax benefits in future periods. Due to the ongoing audits, the Company believes it is reasonably possible that within the next twelve months the amount of the Company's unrecognized tax benefits may be decreased by approximately $58 million related predominantly to various intercompany transactions. The Company has recorded its best estimate of the potential exposure for these issues. On February 18, 2014, the Company received a Notice of Deficiency (“NOD”) from the IRS asserting that a non-taxable return of capital received from a subsidiary was a taxable dividend distribution. The NOD assesses additional taxes of $70 million for the 2006 tax year, plus interest and penalties. In May 2014, the Company petitioned the United States Tax Court to challenge the NOD. The Company's petition was subsequently denied and the case proceeded to court with the trial taking place in the third quarter of 2016. Final decision by the tax court is expected in 2017 or 2018. Although the court's final decision cannot be predicted with certainty, the Company believes its position continues to be supportable. Accordingly, no reserve has been recorded related to this matter.

Inventories

Inventories	6 Months Ended
	Jun. 30, 2017
Inventory Disclosure [Abstract]
Inventories	Inventories Inventories as of June 30, 2017 and December 31, 2016 were as follows: In millions June 30, 2017 December 31, 2016 Raw material $ 452 $ 407 Work-in-process 139 126 Finished goods 692 629 LIFO reserve (84 ) (86 ) Total inventories $ 1,199 $ 1,076

Pension and Other Postretiremen

Pension and Other Postretirement Benefits	6 Months Ended
	Jun. 30, 2017
Retirement Benefits [Abstract]
Pension and Other Postretirement Benefits	Pension and Other Postretirement Benefits Beginning in 2017, the Company changed the method used to estimate the service and interest cost components of net periodic benefit cost related to pension and other postretirement benefit plans. The new method provides a more precise measure of the service and interest cost components of net periodic benefit cost by applying specific spot rates along the yield curve to the projected cash flows rather than a single weighted-average rate. The Company accounted for this change as a change in estimate prospectively. The change did not have a material impact on the 2017 net periodic pension and other postretirement benefit costs. Pension and other postretirement benefit costs for the three and six months ended June 30, 2017 and 2016 were as follows: Three Months Ended Six Months Ended June 30, June 30, Pension Other Postretirement Benefits Pension Other Postretirement Benefits In millions 2017 2016 2017 2016 2017 2016 2017 2016 Components of net periodic benefit cost: Service cost $ 16 $ 16 $ 2 $ 3 $ 32 $ 32 $ 4 $ 5 Interest cost 18 24 5 6 36 47 10 12 Expected return on plan assets (33 ) (36 ) (5 ) (5 ) (66 ) (73 ) (11 ) (11 ) Amortization of actuarial loss 14 10 (1 ) — 28 21 (1 ) — Amortization of prior service income — — — (1 ) — — — (1 ) Total net periodic benefit cost $ 15 $ 14 $ 1 $ 3 $ 30 $ 27 $ 2 $ 5 The Company expects to contribute approximately $179 million to its pension plans and $5 million to its other postretirement plans in 2017 . During the six months ended June 30, 2017 , the Company made contributions of $170 million to its pension plans, which include an additional $115 million discretionary contribution made in the second quarter of 2017. Contributions of $3 million have been made to other postretirement plans during the six months ended June 30, 2017.

Debt

Debt	6 Months Ended
	Jun. 30, 2017
Debt Disclosure [Abstract]
Debt	Debt Short-term debt as of June 30, 2017 included commercial paper of $688 million . Short-term debt as of December 31, 2016 included $650 million related to the 0.90% notes paid on the February 25, 2017 due date. The approximate fair value and related carrying value of the Company's total long-term debt, including current maturities of long-term debt presented as short-term debt, as of June 30, 2017 and December 31, 2016 were as follows: In millions June 30, 2017 December 31, 2016 Fair value $ 7,898 $ 8,281 Carrying value 7,360 7,827 The approximate fair values of the Company's long-term debt, including current maturities, were based on a valuation model using Level 2 observable inputs which included market rates for comparable instruments for the respective periods.

Legal Settlement

Legal Settlement	6 Months Ended
	Jun. 30, 2017
Commitments and Contingencies Disclosure [Abstract]
Legal Settlement	Legal Settlement In the second quarter of 2017, the Company entered into a confidential settlement agreement to resolve a litigation matter. Based on the terms of the agreement, the Company expects to receive a total of $95 million within 120 days of the execution of the agreement. The receipt of the settlement is primarily expected to have a favorable impact on the third quarter 2017 results. In the second quarter of 2017, the Company recorded a $15 million gain related to this matter which is included in operating income.

Accumulated Other Comprehensive

Accumulated Other Comprehensive Income (Loss)	6 Months Ended
	Jun. 30, 2017
Equity [Abstract]
Accumulated Other Comprehensive Income (Loss)	Accumulated Other Comprehensive Income (Loss) The following table summarizes changes in Accumulated other comprehensive income (loss) for the three and six months ended June 30, 2017 and 2016 : Three Months Ended Six Months Ended June 30, June 30, In millions 2017 2016 2017 2016 Beginning balance $ (1,643 ) $ (1,332 ) $ (1,807 ) $ (1,504 ) Foreign currency translation adjustments during the period 60 (124 ) 204 — Foreign currency translation adjustments reclassified to income — — — 1 Income taxes 57 (20 ) 67 19 Total foreign currency translation adjustments, net of tax 117 (144 ) 271 20 Pension and other postretirement benefit adjustments during the period — — — 1 Pension and other postretirement benefit adjustments reclassified to income 13 9 27 20 Income taxes (3 ) (3 ) (7 ) (7 ) Total pension and other postretirement benefit adjustments, net of tax 10 6 20 14 Ending balance $ (1,516 ) $ (1,470 ) $ (1,516 ) $ (1,470 ) The Company designated the € 1.0 billion of Euro notes issued in May 2015 and the € 1.0 billion of Euro notes issued in May 2014 as hedges of a portion of its net investment in Euro-denominated foreign operations to reduce foreign currency risk associated with the investment in these operations. The carrying values of the 2015 and 2014 Euro notes were $1.1 billion and $1.1 billion , respectively, as of June 30, 2017 . Changes in the value of this debt resulting from fluctuations in the Euro to U.S. dollar exchange rate have been recorded as foreign currency translation adjustments within Accumulated other comprehensive income (loss). The unrealized pre-tax gain recorded in Accumulated other comprehensive income (loss) related to the net investment hedge was $195 million and $375 million as of June 30, 2017 and December 31, 2016 , respectively. The ending balance of Accumulated other comprehensive income (loss) as of June 30, 2017 and 2016 consisted of cumulative translation adjustment losses, net of tax, of $ 1.1 billion and $ 1.1 billion , respectively, and unrecognized pension and other postretirement benefits costs, net of tax, of $ 385 million and $ 365 million , respectively.

Segment Information

Segment Information	6 Months Ended
	Jun. 30, 2017
Segment Reporting [Abstract]
Segment Information	Segment Information The Company has seven reportable segments: Automotive OEM; Food Equipment; Test & Measurement and Electronics; Welding; Polymers & Fluids; Construction Products; and Specialty Products. See Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations for information regarding operating revenue and operating income for the Company's segments.

Significant Accounting Polici16

Significant Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
New Accounting Pronouncements	New Accounting Pronouncements - In May 2014, the Financial Accounting Standards Board (the "FASB") issued authoritative guidance to change the criteria for revenue recognition. The core principle of the new standard is that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, several new revenue recognition disclosures will be required. Under current guidance, the Company generally recognizes operating revenue when ownership and risk of loss are transferred to the customer, which is typically at the time of product shipment or delivery of service. While the Company continues to assess the potential impact of the new guidance, we do not currently expect that the adoption of this guidance will have a material impact on our operating revenue, results of operations or financial position. However, the Company expects to provide additional disclosures in the notes to financial statements required under the new guidance. The new guidance will be effective for the Company beginning January 1, 2018 and allows for either full or modified retrospective adoption methods. The Company expects to adopt the new revenue accounting guidance utilizing the modified retrospective method. In February 2016, the FASB issued authoritative guidance to change the criteria for recognizing leasing transactions. Under the new guidance, a lessee will be required to recognize a lease liability and lease asset for all leases with a lease term greater than twelve months in the statement of financial position, including operating leases. Subsequent measurement, including presentation of expenses and cash flows, will depend on the classification of the lease as either a financing or operating lease. In addition, several new disclosures will be required. This guidance will be effective for the Company beginning January 1, 2019, with early adoption permitted. While the Company has not yet completed its evaluation of the impact the new lease accounting guidance will have on the consolidated financial statements and related disclosures, the Company expects to recognize right of use assets and liabilities for its operating leases in the statement of financial position upon adoption. In March 2016, the FASB issued authoritative guidance that included several changes to simplify the accounting for stock-based compensation, including the accounting for income taxes, forfeitures, statutory tax withholding requirements and classification of tax benefits in the statement of cash flows. Among the more significant changes, the new guidance requires the income tax effects associated with the settlement of stock-based awards to be recognized through income tax expense rather than directly in equity. Additionally, the income tax effects related to excess tax benefits should be presented within operating cash flows in the statement of cash flows rather than as a financing activity. Excess tax benefits recognized in equity under the prior guidance were $19 million for the six months ended June 30, 2016. The Company adopted the new guidance effective January 1, 2017 and applied the newly adopted provisions prospectively. Excess tax benefits of $13 million and $26 million were included in Income Taxes in the statement of income for the three and six month periods ended June 30, 2017, respectively. The expected effect on income tax expense or net cash provided from operating activities related to future stock-based award settlements will vary each quarter and will depend on inputs such as the stock price at the time of settlement and the number of awards settled in the period presented. In October 2016, the FASB issued authoritative guidance requiring the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs rather than when transferred to a third party as required under the current guidance. The new guidance is effective for the Company beginning January 1, 2018. The Company is currently assessing the potential impact the new guidance will have upon adoption. In March 2017, the FASB issued authoritative guidance which changes the income statement presentation of the components of net periodic benefit cost related to defined benefit pension and other postretirement plans. The primary change under the new guidance is that only the service cost component of net periodic benefit cost should be included in operating income and is eligible for capitalization as an asset. The other components of net periodic benefit cost, such as interest cost, the expected return on assets, and amortization of actuarial gains and losses and prior service cost, should be presented below operating income. The guidance is effective for the Company starting January 1, 2018 and will be applied retrospectively to the presentation of net periodic benefit cost and prospectively to the capitalization of service cost. The Company does not expect the adoption of this guidance to have a material impact on the results of operations or financial position.

Inventories (Tables)

Inventories (Tables)	6 Months Ended
	Jun. 30, 2017
Inventory Disclosure [Abstract]
Inventories	Inventories as of June 30, 2017 and December 31, 2016 were as follows: In millions June 30, 2017 December 31, 2016 Raw material $ 452 $ 407 Work-in-process 139 126 Finished goods 692 629 LIFO reserve (84 ) (86 ) Total inventories $ 1,199 $ 1,076

Pension and Other Postretirem18

Pension and Other Postretirement Benefits (Tables)	6 Months Ended
	Jun. 30, 2017
Retirement Benefits [Abstract]
Pension and Other Postretirement Benefit Costs	Pension and other postretirement benefit costs for the three and six months ended June 30, 2017 and 2016 were as follows: Three Months Ended Six Months Ended June 30, June 30, Pension Other Postretirement Benefits Pension Other Postretirement Benefits In millions 2017 2016 2017 2016 2017 2016 2017 2016 Components of net periodic benefit cost: Service cost $ 16 $ 16 $ 2 $ 3 $ 32 $ 32 $ 4 $ 5 Interest cost 18 24 5 6 36 47 10 12 Expected return on plan assets (33 ) (36 ) (5 ) (5 ) (66 ) (73 ) (11 ) (11 ) Amortization of actuarial loss 14 10 (1 ) — 28 21 (1 ) — Amortization of prior service income — — — (1 ) — — — (1 ) Total net periodic benefit cost $ 15 $ 14 $ 1 $ 3 $ 30 $ 27 $ 2 $ 5

Debt (Tables)

Debt (Tables)	6 Months Ended
	Jun. 30, 2017
Debt Disclosure [Abstract]
Approximate Fair Value and Related Carrying Value of Long-term Debt, Including Current Maturities	The approximate fair value and related carrying value of the Company's total long-term debt, including current maturities of long-term debt presented as short-term debt, as of June 30, 2017 and December 31, 2016 were as follows: In millions June 30, 2017 December 31, 2016 Fair value $ 7,898 $ 8,281 Carrying value 7,360 7,827

Accumulated Other Comprehensi20

Accumulated Other Comprehensive Income (Loss) (Tables)	6 Months Ended
	Jun. 30, 2017
Equity [Abstract]
Schedule of Accumulated Other Comprehensive Income (Loss)	The following table summarizes changes in Accumulated other comprehensive income (loss) for the three and six months ended June 30, 2017 and 2016 : Three Months Ended Six Months Ended June 30, June 30, In millions 2017 2016 2017 2016 Beginning balance $ (1,643 ) $ (1,332 ) $ (1,807 ) $ (1,504 ) Foreign currency translation adjustments during the period 60 (124 ) 204 — Foreign currency translation adjustments reclassified to income — — — 1 Income taxes 57 (20 ) 67 19 Total foreign currency translation adjustments, net of tax 117 (144 ) 271 20 Pension and other postretirement benefit adjustments during the period — — — 1 Pension and other postretirement benefit adjustments reclassified to income 13 9 27 20 Income taxes (3 ) (3 ) (7 ) (7 ) Total pension and other postretirement benefit adjustments, net of tax 10 6 20 14 Ending balance $ (1,516 ) $ (1,470 ) $ (1,516 ) $ (1,470 )

Significant Accounting Polici21

Significant Accounting Policies (Details) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2017	Jun. 30, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Excess tax benefits recognized in equity			$ 19
Excess tax benefits included in income taxes in the statement of income	$ 13	$ 26

Acquisition (Details)

Acquisition (Details) - USD ($) $ in Millions	Jul. 01, 2016	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Business Acquisition [Line Items]
Operating revenue		$ 3,599	$ 3,431	$ 7,070	$ 6,705
Goodwill		$ 4,675		4,675		$ 4,558
Engineered Fasteners and Components
Business Acquisition [Line Items]
Business acquisition, purchase price	$ 450
Operating revenue				$ 256
Goodwill	185
Intangible assets	$ 134
Finite-lived intangible assets, weighted average amortization period	16 years
Minimum | Engineered Fasteners and Components
Business Acquisition [Line Items]
Finite-lived intangible assets, estimated useful life	4 years
Maximum | Engineered Fasteners and Components
Business Acquisition [Line Items]
Finite-lived intangible assets, estimated useful life	17 years

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Millions	Feb. 18, 2014	Jun. 30, 2017
Income Tax Examination [Line Items]
Potential decrease in unrecognized tax benefits		$ 58
Internal Revenue Service (IRS) | Tax Year 2006
Income Tax Examination [Line Items]
IRS Notice of Deficiency tax assessment	$ 70

Inventories (Details)

Inventories (Details) - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
Inventory Disclosure [Abstract]
Raw material	$ 452	$ 407
Work-in-process	139	126
Finished goods	692	629
LIFO reserve	(84)	(86)
Total inventories	$ 1,199	$ 1,076

Pension and Other Postretirem25

Pension and Other Postretirement Benefits (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Pension
Components of net periodic benefit cost:
Service cost	$ 16	$ 16	$ 32	$ 32
Interest cost	18	24	36	47
Expected return on plan assets	(33)	(36)	(66)	(73)
Amortization of actuarial loss	14	10	28	21
Amortization of prior service income	0	0	0	0
Total net periodic benefit cost	15	14	30	27
Other Postretirement Benefits
Components of net periodic benefit cost:
Service cost	2	3	4	5
Interest cost	5	6	10	12
Expected return on plan assets	(5)	(5)	(11)	(11)
Amortization of actuarial loss	(1)	0	(1)	0
Amortization of prior service income	0	(1)	0	(1)
Total net periodic benefit cost	$ 1	$ 3	$ 2	$ 5

Pension and Other Postretirem26

Pension and Other Postretirement Benefits - Narrative (Details) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2017USD ($)	Jun. 30, 2017USD ($)
Defined Benefit Plan Disclosure [Line Items]
Contributions	$ 115
Pension
Defined Benefit Plan Disclosure [Line Items]
Expected current year company contributions	179	$ 179
Contributions		170
Other Postretirement Benefits
Defined Benefit Plan Disclosure [Line Items]
Expected current year company contributions	$ 5	5
Contributions		$ 3

Debt - Narrative (Details)

Debt - Narrative (Details) - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
Debt Instrument [Line Items]
Commercial paper	$ 688
Notes Payable | 0.90% Notes Due February 25, 2017
Debt Instrument [Line Items]
Notes, due within one year		$ 650
Stated interest rate		0.90%

Debt - Fair Value and Related C

Debt - Fair Value and Related Carrying Values (Details) - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
Debt Disclosure [Abstract]
Fair value	$ 7,898	$ 8,281
Carrying value	$ 7,360	$ 7,827

Legal Settlement (Details)

Legal Settlement (Details) - Settled Litigation $ in Millions	3 Months Ended
	Jun. 30, 2017USD ($)
Loss Contingencies [Line Items]
Litigation settlement, amount awarded	$ 95
Litigation settlement, payment period	120 days
Gain from litigation settlement	$ 15

Accumulated Other Comprehensi30

Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Changes in Accumulated Other Comprehensive Income [Roll Forward]
Beginning balance			$ 4,259
Ending balance	$ 4,774		4,774
AOCI
Changes in Accumulated Other Comprehensive Income [Roll Forward]
Beginning balance	(1,643)	$ (1,332)	(1,807)	$ (1,504)
Ending balance	(1,516)	(1,470)	(1,516)	(1,470)
Accumulated Foreign Currency Translation Adjustment
Changes in Accumulated Other Comprehensive Income [Roll Forward]
Other comprehensive income (loss), adjustments during the period	60	(124)	204	0
Other comprehensive income (loss), adjustments reclassified to income	0	0	0	1
Income taxes	57	(20)	67	19
Other comprehensive income (loss), net of tax	117	(144)	271	20
Accumulated Pension and Other Postretirement Benefit Adjustments
Changes in Accumulated Other Comprehensive Income [Roll Forward]
Other comprehensive income (loss), adjustments during the period	0	0	0	1
Other comprehensive income (loss), adjustments reclassified to income	13	9	27	20
Income taxes	(3)	(3)	(7)	(7)
Other comprehensive income (loss), net of tax	$ 10	$ 6	$ 20	$ 14

Accumulated Other Comprehensi31

Accumulated Other Comprehensive Income (Loss) - Narrative (Details) $ in Millions	Jun. 30, 2017USD ($)	Dec. 31, 2016USD ($)	Jun. 30, 2016USD ($)	May 31, 2015EUR (€)	May 31, 2014EUR (€)
Accumulated Other Comprehensive Income (Loss) [Line Items]
Cumulative translation adjustment losses, net of tax	$ 1,100		$ 1,100
Unrecognized pension and other postretirement benefits costs, net of tax	385		$ 365
Net Investment Hedging | Euro Notes
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive income related to net investment hedge unrealized gain	195	$ 375
Euro Notes Issued May 2015 | Net Investment Hedging | Euro Notes
Accumulated Other Comprehensive Income (Loss) [Line Items]
Face value of notes | €				€ 1,000,000,000
Long-term debt	1,100
Euro Notes Issued May 2014 | Net Investment Hedging | Euro Notes
Accumulated Other Comprehensive Income (Loss) [Line Items]
Face value of notes | €					€ 1,000,000,000
Long-term debt	$ 1,100

Segment Information (Details)

Segment Information (Details)	6 Months Ended
	Jun. 30, 2017Segment
Segment Reporting [Abstract]
Number of reportable segments	7