Document and Entity Information
Document and Entity Information | 9 Months Ended |
Sep. 30, 2018shares | |
Document and Entity Information | |
Entity Registrant Name | ECOLAB INC. |
Entity Central Index Key | 31,462 |
Document Type | 10-Q |
Document Period End Date | Sep. 30, 2018 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Entity Current Reporting Status | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 288,873,052 |
Document Fiscal Year Focus | 2,018 |
Document Fiscal Period Focus | Q3 |
CONSOLIDATED STATEMENT OF INCOM
CONSOLIDATED STATEMENT OF INCOME - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Net sales | $ 3,747.2 | $ 3,564.5 | $ 10,907.7 | $ 10,186.9 | $ 13,835.9 | |
Cost of sales (including special charges of (a)) | 2,200.2 | 2,064.6 | 6,438.4 | 5,961.8 | ||
Selling, general and administrative expenses | 955.2 | 930.9 | 2,990.5 | 2,836.3 | ||
Special (gains) and charges | 75.6 | 4.9 | 113.7 | 47.9 | ||
Operating income | 516.2 | 564.1 | 1,365.1 | 1,340.9 | 1,950.1 | |
Other (income)/expense | (21) | (16.9) | (60) | (50.5) | ||
Interest expense, net | 55.7 | 55.1 | 168.4 | 177.2 | ||
Income before income taxes | 481.5 | 525.9 | 1,256.7 | 1,214.2 | ||
Provision for income taxes | 43.2 | 129.3 | 216.6 | 264 | ||
Net income including noncontrolling interest | 438.3 | 396.6 | 1,040.1 | 950.2 | $ 1,518.6 | $ 1,246.5 |
Net income attributable to noncontrolling interest | 2.9 | 3.4 | 6.1 | 8.2 | ||
Net income attributable to Ecolab | $ 435.4 | $ 393.2 | $ 1,034 | $ 942 | ||
Earnings attributable to Ecolab per common share | ||||||
Basic (in dollars per share) | $ 1.51 | $ 1.36 | $ 3.58 | $ 3.25 | ||
Diluted (in dollars per share) | 1.48 | 1.34 | 3.53 | 3.20 | ||
Dividends declared per common share (in dollars per share) | $ 0.410 | $ 0.370 | $ 1.230 | $ 1.110 | ||
Weighted-average common shares outstanding | ||||||
Basic (in shares) | 288.8 | 289 | 288.8 | 289.8 | ||
Diluted (in shares) | 293.4 | 293.4 | 293.1 | 294.2 | ||
Product and equipment | ||||||
Net sales | $ 3,090.3 | $ 2,931.9 | $ 8,985.7 | $ 8,376.9 | ||
Cost of sales (including special charges of (a)) | 1,811.4 | 1,676.9 | 5,259.9 | 4,834.2 | ||
Service and lease | ||||||
Net sales | 656.9 | 632.6 | 1,922 | 1,810 | ||
Cost of sales (including special charges of (a)) | $ 388.8 | $ 387.7 | $ 1,178.5 | $ 1,127.6 |
CONSOLIDATED STATEMENT OF INC_2
CONSOLIDATED STATEMENT OF INCOME (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Special charges | $ 75.6 | $ 4.9 | $ 113.7 | $ 47.9 |
Cost of sales | ||||
Special charges | 3.6 | 0.3 | 3.5 | 26.2 |
Product and equipment | Cost of sales | ||||
Special charges | $ 3.6 | $ 0.3 | $ 3.5 | $ 26.2 |
CONSOLIDATED STATEMENT OF COMPR
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | ||||
Net income including noncontrolling interest | $ 438.3 | $ 396.6 | $ 1,040.1 | $ 950.2 |
Foreign currency translation adjustments | ||||
Foreign currency translation | (201.8) | 150 | (218.9) | 274.6 |
Gain (loss) on net investment hedges | 9.1 | (50.9) | 31.9 | (103.7) |
Total foreign currency translation adjustments | (192.7) | 99.1 | (187) | 170.9 |
Derivatives and hedging instruments | 11 | (20.8) | 26.3 | (29.1) |
Pension and postretirement benefits | ||||
Amortization of net actuarial loss and prior service cost included in net periodic pension and postretirement costs | 7.8 | 1.3 | 24.1 | 8.2 |
Postretirement benefits changes | 14.4 | |||
Total pension and postretirement benefits | 7.8 | 1.3 | 38.5 | 8.2 |
Subtotal | (173.9) | 79.6 | (122.2) | 150 |
Total comprehensive income, including noncontrolling interest | 264.4 | 476.2 | 917.9 | 1,100.2 |
Comprehensive income attributable to noncontrolling interest | 1.7 | 4 | 5.9 | 10.8 |
Comprehensive income attributable to Ecolab | $ 262.7 | $ 472.2 | $ 912 | $ 1,089.4 |
CONSOLIDATED BALANCE SHEET
CONSOLIDATED BALANCE SHEET - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets | ||
Cash and cash equivalents | $ 203.6 | $ 211.4 |
Accounts receivable, net | 2,652.7 | 2,571.4 |
Inventories | 1,587.9 | 1,446.5 |
Other current assets | 378.1 | 365 |
Total current assets | 4,822.3 | 4,594.3 |
Property, plant and equipment, net | 3,778 | 3,707.1 |
Goodwill | 7,078.4 | 7,167.1 |
Other intangible assets, net | 3,820.4 | 4,017.6 |
Other assets | 463.5 | 477.4 |
Total assets | 19,962.6 | 19,963.5 |
Current liabilities | ||
Short-term debt | 769.4 | 564.4 |
Accounts payable | 1,195.3 | 1,177.1 |
Compensation and benefits | 528.2 | 549.4 |
Income taxes | 50.3 | 183.6 |
Other current liabilities | 1,046.6 | 1,000.7 |
Total current liabilities | 3,589.8 | 3,475.2 |
Long-term debt | 6,334.8 | 6,758.3 |
Postretirement health care and pension benefits | 966.9 | 1,025.5 |
Deferred income taxes | 711.8 | 635.4 |
Other liabilities | 376.3 | 415.3 |
Total liabilities | 11,979.6 | 12,309.7 |
Equity | ||
Common stock | 356.5 | 354.7 |
Additional paid-in capital | 5,586 | 5,435.7 |
Retained earnings | 8,646.9 | 8,011.6 |
Accumulated other comprehensive loss | (1,765.4) | (1,643.4) |
Treasury stock | (4,894.6) | (4,575) |
Total Ecolab shareholders' equity | 7,929.4 | 7,583.6 |
Noncontrolling interest | 53.6 | 70.2 |
Total equity | 7,983 | 7,653.8 |
Total liabilities and equity | $ 19,962.6 | $ 19,963.5 |
CONSOLIDATED BALANCE SHEET (Par
CONSOLIDATED BALANCE SHEET (Parenthetical) - $ / shares shares in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
CONSOLIDATED BALANCE SHEET | ||
Common stock, shares authorized | 800 | 800 |
Common stock, par value per share (in dollars per share) | $ 1 | $ 1 |
Common stock, shares outstanding | 288.9 | 289.3 |
CONSOLIDATED STATEMENT OF CASH
CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
OPERATING ACTIVITIES | ||
Net income including noncontrolling interest | $ 1,040.1 | $ 950.2 |
Adjustments to reconcile net income to cash provided by operating activities: | ||
Depreciation | 461.5 | 437 |
Amortization | 238.9 | 228.5 |
Deferred income taxes | 56.6 | 9.8 |
Share-based compensation expense | 75.5 | 71.8 |
Pension and postretirement plan contributions | (46) | (131) |
Pension and postretirement plan expense | 23.4 | 26.5 |
Restructuring charges, net of cash paid | 57.4 | 13.3 |
Other, net | 20 | 19.9 |
Changes in operating assets and liabilities, net of effect of acquisitions: | ||
Accounts receivable | (161.3) | (23.2) |
Inventories | (171.2) | (116.9) |
Other assets | (22.9) | 8.4 |
Accounts payable | 52.2 | 57 |
Other liabilities | (173.8) | (106.4) |
Cash provided by operating activities | 1,450.4 | 1,444.9 |
INVESTING ACTIVITIES | ||
Capital expenditures | (634.1) | (594) |
Property and other assets sold | 29.5 | 4.1 |
Acquisitions and investments in affiliates, net of cash acquired | (77.6) | (831.2) |
Divestiture of businesses | 9.2 | |
Settlement of net investment hedges | 14.1 | |
Other, net | 10 | (0.8) |
Cash used for investing activities | (648.9) | (1,421.9) |
FINANCING ACTIVITIES | ||
Net issuances of commercial paper and notes payable | 115.7 | 187.8 |
Long-term debt borrowings | 495 | |
Long-term debt repayments | (301.8) | (20.1) |
Reacquired shares | (321.4) | (587.7) |
Dividends paid | (370.8) | (330.3) |
Exercise of employee stock options | 85.8 | 63 |
Acquisition related liabilities and contingent consideration | (10.2) | (8.2) |
Acquisition of noncontrolling interest | (13.1) | |
Other, net | (3.7) | |
Cash used for financing activities | (819.5) | (200.5) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 10.2 | 6.2 |
Decrease in cash, cash equivalents and restricted cash | (7.8) | (171.3) |
Cash, cash equivalents and restricted cash, beginning of period | 211.4 | 380.4 |
Cash, cash equivalents and restricted cash, end of period | $ 203.6 | $ 209.1 |
CONSOLIDATED STATEMENT OF CAS_2
CONSOLIDATED STATEMENT OF CASH FLOWS (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 |
Other assets | $ 463.5 | $ 477.4 | |
Restricted Cash | $ 0 | $ 0 | $ 0 |
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, 2015 | $ 6,909.9 | $ 350.3 | $ 5,086.1 | $ 6,160.3 | $ (1,423.3) | $ (3,263.5) | $ 70.5 | $ 6,980.4 |
Increase (Decrease) in Stockholders' Equity | ||||||||
New accounting guidance adoption | (29.3) | (29.3) | (29.3) | |||||
Net income | 1,229 | 1,229 | 17.5 | 1,246.5 | ||||
Comprehensive income (loss) activity | (289.6) | (289.6) | (1.3) | (290.9) | ||||
Cash dividends declared | (414.9) | (414.9) | (16.9) | (431.8) | ||||
Stock options and awards | 205.7 | 2.3 | 200.2 | 3.2 | 205.7 | |||
Reacquired shares | (739.6) | (15.5) | (724.1) | (739.6) | ||||
Balance at Dec. 31, 2016 | 6,871.2 | 352.6 | 5,270.8 | 6,945.1 | (1,712.9) | (3,984.4) | 69.8 | 6,941 |
Increase (Decrease) in Stockholders' Equity | ||||||||
New accounting guidance adoption | 1.9 | 1.9 | 1.9 | |||||
Net income | 1,504.6 | 1,504.6 | 14 | 1,518.6 | ||||
Comprehensive income (loss) activity | 69.5 | 69.5 | 1.7 | 71.2 | ||||
Cash dividends declared | (440) | (440) | (19.3) | (459.3) | ||||
Acquisition of noncontrolling interests | 4 | 4 | ||||||
Stock options and awards | 176.7 | 2.1 | 170.3 | 4.3 | 176.7 | |||
Reacquired shares | (600.3) | (5.4) | (594.9) | (600.3) | ||||
Balance at Dec. 31, 2017 | 7,583.6 | 354.7 | 5,435.7 | 8,011.6 | (1,643.4) | (4,575) | 70.2 | 7,653.8 |
Increase (Decrease) in Stockholders' Equity | ||||||||
New accounting guidance adoption | (43.6) | (43.6) | (43.6) | |||||
Net income | 1,034 | 1,034 | 6.1 | 1,040.1 | ||||
Comprehensive income (loss) activity | (122) | (122) | (0.2) | (122.2) | ||||
Cash dividends declared | (355.1) | (355.1) | (15.4) | (370.5) | ||||
Acquisition of noncontrolling interests | (7.7) | (7.7) | (7.1) | (14.8) | ||||
Stock options and awards | 161.6 | 1.8 | 158 | 1.8 | 161.6 | |||
Reacquired shares | (321.4) | (321.4) | (321.4) | |||||
Balance at Sep. 30, 2018 | $ 7,929.4 | $ 356.5 | $ 5,586 | $ 8,646.9 | $ (1,765.4) | $ (4,894.6) | $ 53.6 | $ 7,983 |
CONSOLIDATED FINANCIAL INFORMAT
CONSOLIDATED FINANCIAL INFORMATION | 9 Months Ended |
Sep. 30, 2018 | |
CONSOLIDATED FINANCIAL INFORMATION | |
CONSOLIDATED FINANCIAL INFORMATION | 1. CONSOLIDATED FINANCIAL INFORMATION The unaudited consolidated financial information for the third quarter and nine months ended September 30, 2018 and 2017 reflect, in the opinion of company 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, 2017 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, 2017. Certain amounts in prior periods have been reclassified to conform to the current period presentation. The reclassifications are primarily related to the adoption of new accounting standards as described further in Note 17. Except for the changes due to the 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 third quarter and nine months ended September 30, 2018 and 2017 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 November 1, 2018 appearing herein states that they did not audit and they do not express an opinion on that unaudited financial information. Accordingly, the degree of reliance on their report on such information should be restricted in light of the limited nature of the review procedures applied. PricewaterhouseCoopers LLP is not subject to the liability provisions of Section 11 of the Securities Act of 1933, as amended (the "Act"), for their report on the unaudited financial information because that report is not a "report" or a "part" of a registration statement prepared or certified by PricewaterhouseCoopers LLP within the meaning of Sections 7 and 11 of the Act. |
SPECIAL (GAINS) AND CHARGES
SPECIAL (GAINS) AND CHARGES | 9 Months Ended |
Sep. 30, 2018 | |
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: Third Quarter Ended Nine Months Ended September 30 September 30 (millions) 2018 2017 2018 2017 Cost of sales Restructuring activities $5.9 $- $6.3 $2.2 Acquisition and integration activities (0.1) 0.3 (0.6) 12.9 Other (2.2) - (2.2) 11.1 Subtotal 3.6 0.3 3.5 26.2 Special (gains) and charges Restructuring activities 73.1 4.1 82.3 34.6 Acquisition and integration activities 2.4 1.8 4.7 12.7 Venezuela related gain - (3.2) - (8.5) Other 0.1 2.2 26.7 9.1 Subtotal 75.6 4.9 113.7 47.9 Total special (gains) and charges $79.2 $5.2 $117.2 $74.1 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 comprised of actions taken in 2018 related to Accelerate 2020 (described below) and other actions taken in years prior to 2018. These activities have been included as a component of special (gains) and charges on the Consolidated Statement of Income. Restructuring liabilities have been classified as a component of both other current and other noncurrent liabilities on the Consolidated Balance Sheet. Accelerate 2020 During the third quarter of 2018, the Company formally commenced a restructuring plan Accelerate 2020 (“the Plan”), to leverage technology and systems investments and organizational changes. The Company expects that the restructuring activities will be completed by the end of 2020, with total anticipated costs of $170 million ($130 million after tax) over the next three years. 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 $79.4 million ($60.5 million after tax) and $89.5 million ($68.1 million after tax) in the third quarter and first nine months of 2018, respectively. The liability related to this Plan was $75.8 million as of the end of the third quarter. Restructuring activity related to the Plan since inception of the underlying actions includes the following: Employee Termination Asset (millions) Costs Disposals Other Total 2018 Activity Recorded expense 88.7 - 0.8 89.5 Net cash payments (13.3) - (0.2) (13.5) Non-cash charges - - - - Effect of foreign currency translation (0.2) - - (0.2) Restructuring liability, September 30, 2018 $ 75.2 $ - $ 0.6 $ 75.8 Other Restructuring Activities Prior to 2018, the Company engaged in a number of restructuring plans. During the second quarter of 2017, the Company commenced restructuring and other cost-saving actions in order to streamline operations. These actions include a reduction of the Company’s global workforce, as well as asset disposals and lease terminations. Actions were substantially completed in 2017. The Company also has restructuring plans that commenced prior to 2015. During the third quarter and first nine months of 2018, net restructuring gains related to the prior year plans were $0.4 million ($0.3 million after tax) and $0.9 million ($0.6 million after tax), respectively. During the third quarter and first nine months of 2017, the Company recorded restructuring charges of $4.1 million ($1.7 million after tax) and $36.8 million ($25.9 million after tax), respectively, related primarily to employee termination costs. The restructuring liability balance for all plans commencing prior to 2018 was $22.5 million and $41.5 million as of September 30, 2018 and December 31, 2017, respectively. The reduction in liability was driven primarily by severance and other cash payments. The majority of pretax charges represent net cash expenditures which are 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 2018 related to restructuring plans commencing prior to 2018 were $17.8 million. Acquisition and integration related costs Acquisition and integration costs reported in special (gains) and charges on the Consolidated Statement of Income include $2. 4 million ($1.6 million after tax) and $4.7 million ($3.3 million after tax) in the third quarter and first nine months of 2018, respectively. Charges are related to Laboratoires Anios (“Anios”) integration costs, advisory and legal fees. Acquisition and integration gain reported in product and equipment cost of sales on the Consolidated Statement of Income in the third quarter and first nine months of 2018 relate to changes in estimates related to an early lease exit. Acquisition and integration costs reported in cost of sales on the Consolidated Statement of Income include $0.3 million ($0.2 million after tax) and $12.9 million ($8.2 million after tax) during the third quarter and first nine months of 2017, respectively, related primarily to recognition of accelerated rent expense upon the closure of Swisher plants and disposal of excess inventory. The first nine months of 2017 also include amounts related to recognition of fair value step-up in the Anios inventory. Acquisition and integration costs reported in special (gains) and charges on the Consolidated Statement of Income include $1.8 million ($1.2 million after tax) and $12.7 million ($8.5 million after tax) of acquisition costs, advisory and legal fees, and integration charges for the Anios and Swisher acquisitions during the third quarter and first nine months of 2017, respectively. Further information related to the Company’s acquisitions is included in Note 3. Venezuela related gain Effective as of the end of the fourth quarter of 2015, the Company deconsolidated its Venezuelan subsidiaries. During the third quarter and first nine months of 2017, the Company recorded gains of $3.2 million ($2.0 million after tax) and $8.5 million ($5.3 million after tax), respectively, resulting from U.S. dollar cash recoveries of intercompany receivables written off at the time of deconsolidation. No such gains occurred in 2018. Other During the third quarter and first nine months of 2018, the Company recorded other special charges of $0.1 million ($0.1 million net of tax) and $26.7 million ($20.6 million net of tax) in special (gains) and charges, respectively, which primarily consisted of a $25.0 million ($18.9 million after tax) commitment to the Ecolab Foundation in response to the new U.S. tax law. Other charges were minimal in both the third quarter and first nine months of 2018. Other special gains reported in product and equipment cost of sales on the Consolidated Statement of Income in the third quarter of 2018 of $2.2 million ($1.7 million net of tax) relate to changes in estimates for an inventory LIFO reserve. During the third quarter of 2017, the Company recorded charges of $2.2 million ($1.4 million after tax) related to litigation. During the first nine months of 2017, the Company recorded charges of $20.2 million ($15.9 million after tax) related to litigation and a Global Energy vendor contract termination. These charges have been included as a component of both cost of sales and special (gains) and charges on the Consolidated Statement of Income. |
ACQUISITIONS AND DISPOSITIONS
ACQUISITIONS AND DISPOSITIONS | 9 Months Ended |
Sep. 30, 2018 | |
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 have been recorded as of the acquisition date, at their respective fair values, and are included in the Consolidated Balance Sheet. The purchase price allocation is based on estimates of the fair value of assets acquired and liabilities assumed. The aggregate purchase price of acquisitions has been reduced for any cash or cash equivalents acquired with the acquisition. Acquisitions during the first nine months of 2018 and 2017 were not significant to the Company’s consolidated financial statements; therefore, pro forma financial information is not presented. Anios Acquisition On February 1, 2017, the Company acquired Anios for total consideration of $798.3 million, including satisfaction of outstanding debt. Anios had annualized pre-acquisition sales of approximately $245 million and is a leading European manufacturer and marketer of hygiene and disinfection products for the healthcare, food service, and food and beverage processing industries. Anios provides an innovative product line that expands the solutions the Company is able to offer, while also providing a complementary geographic footprint within the healthcare market. During 2016, the Company deposited €50 million in an escrow account that was released to the Company upon closing of the transaction in February 2017. The Company incurred certain acquisition and integration costs associated with the transaction that were expensed and are reflected in the Consolidated Statement of Income. See Note 2 for additional information related to the Company’s special (gains) and charges related to such activities. The components of the cash paid for Anios are shown in the following table. (millions) 2017 Tangible assets $139.8 Identifiable intangible assets Customer relationships 252.0 Trademarks 65.7 Other technology 16.1 Total assets acquired 473.6 Goodwill 511.7 Total liabilities 187.0 Total consideration transferred 798.3 Long-term debt repaid upon close 192.8 Net consideration transferred to sellers $605.5 Tangible assets are primarily comprised of accounts receivable of $64.8 million, property, plant and equipment of $24.7 million and inventory of $29.1 million. Liabilities primarily consist of deferred tax liabilities of $102.3 million and current liabilities of $62.5 million. Customer relationships, trademarks, and other technology are being amortized over weighted average lives of 20, 17, and 11 years, respectively. Goodwill of $511.7 million arising from the acquisition consists largely of the synergies and economies of scale expected through adding complementary geographies and innovative products to the Company’s healthcare portfolio. The goodwill was allocated to the Institutional, Healthcare, and Specialty operating segments within the Global Institutional reportable segment and the Food & Beverage and Life Sciences operating segments within the Global Industrial reportable segment. None of the goodwill recognized is expected to be deductible for income tax purposes. The purchase price allocation was completed during the fourth quarter of 2017. Other Acquisitions During the first nine months of 2018, the Company paid $77.6 million for business acquisitions, of which $45.9 million was attributed to certain identifiable intangible assets and $30.5 million to goodwill. The weighted average useful life of these identifiable intangible assets acquired was 11 years. There were insignificant purchase price adjustments related to prior year acquisitions. Excluding the Anios acquisition, during the first nine months of 2017, the Company paid $32.6 million for business acquisitions, of which $18.4 million was attributed to certain identifiable intangible assets. The weighted average useful life of these identifiable intangible assets acquired was 12 years. Additionally, there were insignificant purchase price adjustments related to prior year acquisitions. Dispositions There were no significant business dispositions during the first nine months of 2018, and there were no business dispositions in the first nine months of 2017. In November 2017, the Company completed the sale of its Equipment Care business to a third party. Annualized Equipment Care sales were approximately $180 million and were included in the Other segment. |
BALANCE SHEET INFORMATION
BALANCE SHEET INFORMATION | 9 Months Ended |
Sep. 30, 2018 | |
BALANCE SHEET INFORMATION | |
BALANCE SHEET INFORMATION | 4. BALANCE SHEET INFORMATION September 30 December 31 (millions) 2018 2017 Accounts receivable, net Accounts receivable $2,721.7 $2,642.9 Allowance for doubtful accounts (69.0) (71.5) Total $2,652.7 $2,571.4 Inventories Finished goods $1,061.8 $974.9 Raw materials and parts 513.9 438.7 Inventories at FIFO cost 1,575.7 1,413.6 FIFO cost to LIFO cost difference 12.2 32.9 Total $1,587.9 $1,446.5 Other current assets Prepaid assets $133.2 $153.5 Taxes receivable 174.5 129.2 Derivative assets 33.2 28.8 Other 37.2 53.5 Total $378.1 $365.0 Property, plant and equipment, net Land $214.7 $224.1 Buildings and leasehold improvements 1,249.0 1,207.4 Machinery and equipment 2,345.9 2,280.9 Merchandising and customer equipment 2,550.3 2,399.4 Capitalized software 653.1 585.8 Construction in progress 443.6 438.7 7,456.6 7,136.3 Accumulated depreciation (3,678.6) (3,429.2) Total $3,778.0 $3,707.1 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 3,620.3 3,620.3 Trademarks 382.0 380.6 Patents 467.7 462.7 Other technology 236.7 232.6 4,706.7 4,696.2 Accumulated amortization Customer relationships (1,560.2) (1,403.8) Trademarks (168.6) (147.6) Patents (201.1) (187.9) Other technology (186.4) (169.3) (2,116.3) (1,908.6) Net intangible assets subject to amortization 2,590.4 2,787.6 Total $3,820.4 $4,017.6 Other assets Deferred income taxes $98.5 $105.4 Pension 48.6 41.7 Other 316.4 330.3 Total $463.5 $477.4 September 30 December 31 (millions) 2018 2017 Other current liabilities Discounts and rebates $292.0 $267.2 Dividends payable 118.4 118.6 Interest payable 71.4 50.7 Taxes payable, other than income 102.4 129.9 Derivative liabilities 23.7 62.2 Restructuring 93.2 36.0 Contract liability 81.9 79.0 Other 263.6 257.1 Total $1,046.6 $1,000.7 Accumulated other comprehensive loss Unrealized loss on derivative financial instruments, net of tax $(0.1) $(26.4) Unrecognized pension and postretirement benefit expense, net of tax (517.2) (555.8) Cumulative translation, net of tax (1,248.1) (1,061.2) Total $(1,765.4) $(1,643.4) |
DEBT AND INTEREST
DEBT AND INTEREST | 9 Months Ended |
Sep. 30, 2018 | |
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 September 30, 2018 and December 31, 2017. September 30 December 31 (millions) 2018 2017 Short-term debt Commercial paper $81.2 $- Notes payable 38.5 14.7 Long-term debt, current maturities 649.7 549.7 Total $769.4 $564.4 Line of Credit As of September 30, 2018, the Company had in place 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 September 30, 2018 or December 31, 2017. Commercial Paper The Company’s commercial paper program is used as a potential source of liquidity and consists of a $2.0 billion U.S. commercial paper program and a $2.0 billion Euro commercial paper program. The maximum aggregate amount of commercial paper that may be issued by the Company under its commercial paper programs may not exceed $2.0 billion. As of September 30, 2018, the Company had $81.2 million (€70.0 million) of commercial paper outstanding under its Euro program and no commercial paper outstanding under its U.S. program. As of December 31, 2017, the Company had no commercial paper outstanding under either program. Long-term Debt The following table provides the components of the Company’s long-term debt obligations, including current maturities, as of September 30, 2018 and December 31, 2017. Maturity September 30 December 31 (millions) by Year 2018 2017 Long-term debt Public and 144A notes (2018 principal amount) Three year 2015 senior notes ($0 million) 2018 $- $299.9 Three year 2016 senior notes ($400 million) 2019 398.2 396.1 Five year 2015 senior notes ($300 million) 2020 299.4 299.1 Ten year 2011 senior notes ($1.02 billion) 2021 1,017.2 1,016.6 Five year 2017 senior notes ($500 million) 2022 496.7 496.3 Seven year 2016 senior notes ($400 million) 2023 397.9 397.5 Seven year 2016 senior notes (€575 million) 2024 660.7 676.6 Ten year 2015 senior notes (€575 million) 2025 663.0 679.4 Ten year 2016 senior notes ($750 million) 2026 743.5 742.8 Ten year 2017 144A notes ($500 million) 2027 - 494.7 Ten year 2017 senior notes ($500 million) 2027 494.9 - Thirty year 2011 senior notes ($458 million) 2041 451.5 451.3 Thirty year 2016 senior notes ($250 million) 2046 246.1 246.0 Thirty year 2017 144A notes ($700 million) 2047 - 607.8 Thirty year 2017 senior notes ($700 million) 2047 608.5 - Private notes (2018 principal amount) Series A private placement senior notes ($250 million) 2018 249.6 248.5 Series B private placement senior notes ($250 million) 2023 249.4 249.3 Capital lease obligations 7.0 4.6 Other 0.9 1.5 Total debt 6,984.5 7,308.0 Long-term debt, current maturities (649.7) (549.7) Total long-term debt $6,334.8 $6,758.3 Public and 144A Notes During the first quarter of 2018, pursuant to a registration rights agreement pertaining to the 144A Notes, the Company filed a registration statement regarding an offer to exchange each series of the 144A Notes for new issues of notes registered under the U.S. Securities Act of 1933, as amended. The registration statement was declared effective, and the Company commenced the exchange offer, on March 20, 2018. The exchange offer expired on April 17, 2018, with all of the 144A Notes being exchanged for new notes. The terms of each series of the new notes are substantially identical to the terms of the applicable series of 144A Notes, except that the new notes are registered as mentioned above and the transfer restrictions and registration rights and related special interest provisions applicable to the 144A Notes do not apply to the new notes. The Company’s public notes may be redeemed by the Company at its option at redemption prices that include accrued and unpaid interest and a make-whole premium. Upon the occurrence of a change of control accompanied by a downgrade of the public notes below investment grade rating, within a specified time period, the Company would be required to offer to repurchase the public notes at a price equal to 101% of the aggregate principal amount thereof, plus any accrued and unpaid interest to the date of repurchase. The public notes are senior unsecured and unsubordinated obligations of the Company and rank equally with all other senior and unsubordinated indebtedness of the Company. Private Notes The Company’s private notes may be redeemed by the Company at its option at redemption prices that include accrued and unpaid interest and a make-whole premium. Upon the occurrence of specified changes of control involving the Company, the Company would be required to offer to repurchase the private notes at a price equal to 100% of the aggregate principal amount thereof, plus any accrued and unpaid interest to the date of repurchase. Additionally, the Company would be required to make a similar offer to repurchase the private notes upon the occurrence of specified merger events or asset sales involving the Company, when accompanied by a downgrade of the private notes below investment grade rating, within a specified time period. The private notes are unsecured senior obligations of the Company and rank equal in right of payment with all other senior indebtedness of the Company. The private notes shall be unconditionally guaranteed by subsidiaries of the Company in certain circumstances, as described in the note purchase agreement as amended. Covenants The Company is in compliance with its debt covenants as of September 30, 2018. Net Interest Expense Interest expense and interest income recognized during the third quarter and first nine months of 2018 and 2017 were as follows: Third Quarter Ended Nine Months Ended September 30 September 30 (millions) 2018 2017 2018 2017 Interest expense $58.3 $60.7 $179.5 $191.0 Interest income (2.6) (5.6) (11.1) (13.8) Interest expense, net $55.7 $55.1 $168.4 $177.2 |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2018 | |
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. During the second quarter of 2018, the Company completed its annual assessment for goodwill impairment across its eleven reporting units through a quantitative analysis, utilizing a discounted cash flow approach, which incorporates assumptions regarding future growth rates, terminal values, and discount rates. The two-step quantitative process involved comparing the estimated fair value of each reporting unit to the reporting unit’s carrying value, including goodwill. If the fair value of a reporting unit exceeds its carrying value, goodwill of the reporting unit is considered not to be impaired, and the second step of the impairment test is unnecessary. If the carrying amount of the reporting unit exceeds its fair value, the second step of the goodwill impairment test would be performed to measure the amount of impairment loss to be recorded, if any. The Company’s goodwill impairment assessment for 2018 indicated the estimated fair value of each of its reporting units exceeded its carrying amount by a significant margin. If circumstances change significantly, the Company would also test a reporting unit’s goodwill for impairment during interim periods between its annual tests. There has been no impairment of goodwill in any of the years presented. The changes in the carrying amount of goodwill for each of the Company's reportable segments during the nine months ended September 30, 2018 were as follows: Global Global Global (millions) Industrial Institutional Energy Other Total December 31, 2017 $2,797.0 $1,027.0 $3,203.7 $139.4 $7,167.1 Segment change (a) (71.7) - - 71.7 - December 31, 2017 revised $2,725.3 $1,027.0 $3,203.7 $211.1 $7,167.1 Current year business combinations (b) 18.8 11.7 - - 30.5 Dispositions - - (2.9) - (2.9) Effect of foreign currency translation (44.3) (16.8) (51.8) (3.4) (116.3) September 30, 2018 $2,699.8 $1,021.9 $3,149.0 $207.7 $7,078.4 (a) Relates to establishment of the Colloidal Technologies Group (“CTG”) operating segment, which is also a reporting unit. Goodwill was allocated to CTG based on a fair value allocation. The CTG operating segment is included in Other. CTG was previously reported in the Water reporting unit, which is aggregated and reported in the Global Industrial reportable segment. See Note 15 for further information. (b) Represents goodwill associated with current year acquisitions. The Company does not expect any of the goodwill related to businesses acquired to be tax deductible. Other Intangible Assets The Nalco trade name is the Company’s principal indefinite life intangible asset. During the second quarter of 2018, the Company completed its annual test for indefinite life intangible asset impairment using a relief from royalty method of assessment, which incorporates assumptions regarding future sales projections and discount rates. Based on this testing, the estimated fair value of the asset exceeded its carrying value by a significant margin; therefore, no adjustment to the $1.2 billion carrying value of this asset was necessary. 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 third quarter of 2018 and 2017 was $78.6 million and $77.6 million, respectively. Total amortization expense related to other intangible assets during the first nine months of 2018 and 2017 was $238.9 million and $228.5 million, respectively. Estimated amortization for the remaining three month period of 2018 related to other amortizable intangible assets is expected to be approximately $78.1 million. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2018 | |
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: September 30, 2018 (millions) Carrying Fair Value Measurements Amount Level 1 Level 2 Level 3 Assets Foreign currency forward contracts $40.8 $- $40.8 $- Liabilities Foreign currency forward contracts 53.6 - 53.6 - Interest rate swap agreements 1.9 - 1.9 - December 31, 2017 (millions) Carrying Fair Value Measurements Amount Level 1 Level 2 Level 3 Assets Foreign currency forward contracts $45.8 $- $45.8 $- Liabilities Foreign currency forward contracts 153.1 - 153.1 - Interest rate swap agreements 4.2 - - The carrying value of foreign currency forward contracts is at fair value, which is determined based on foreign currency exchange rates as of the balance sheet date, and is classified within Level 2. The carrying value of interest rate swap contracts is at fair value, which is determined based on current interest rates and forward interest rates as of the balance sheet date and is classified within Level 2. For purposes of fair value disclosure above, derivative values are presented gross. See further discussion of gross versus net presentation of the Company's derivatives within Note 8. The carrying values of accounts receivable, accounts payable, cash and cash equivalents, restricted cash, commercial paper and notes payable approximate fair value because of their short maturities, and as such are classified within Level 1. The fair value of long-term debt is based on quoted market prices for the same or similar debt instruments (classified as Level 2). The carrying amount and the estimated fair value of long-term debt, including current maturities, held by the Company were: September 30, 2018 December 31, 2017 Carrying Fair Carrying Fair Amount Value Amount Value Long-term debt, including current maturities $6,984.5 $7,126.7 $7,308.0 $7,716.0 |
DERIVATIVES AND HEDGING TRANSAC
DERIVATIVES AND HEDGING TRANSACTIONS | 9 Months Ended |
Sep. 30, 2018 | |
DERIVATIVES AND HEDGING TRANSACTIONS | |
DERIVATIVES AND HEDGING TRANSACTIONS | 8. DERIVATIVES AND HEDGING TRANSACTIONS The Company uses foreign currency forward contracts, interest rate swap agreements and foreign currency debt to manage risks associated with foreign currency exchange rates, interest rates and net investments in foreign operations. The Company does not hold derivative financial instruments of a speculative nature or for trading purposes. The Company records derivatives as assets and liabilities on the balance sheet at fair value. Changes in fair value are recognized immediately in earnings unless the derivative qualifies and is designated as a hedge. Cash flows from derivatives are classified in the statement of cash flows in the same category as the cash flows from the items subject to designated hedge or undesignated (economic) hedge relationships. The Company evaluates hedge effectiveness at inception and on an ongoing basis. If a derivative is no longer expected to be effective, hedge accounting is discontinued. Hedge ineffectiveness, if any, is recorded in earnings. The Company is exposed to credit risk in the event of nonperformance of counterparties for foreign currency forward exchange contracts and interest rate swap agreements. The Company monitors its exposure to credit risk by using credit approvals and credit limits and by selecting major global banks and financial institutions as counterparties. The Company does not anticipate nonperformance by any of these counterparties, and therefore, recording a valuation allowance against the Company’s derivative balance is not considered necessary. Derivative Positions Summary Certain of the Company’s derivative transactions are subject to master netting arrangements that allow the Company to net settle contracts with the same counterparties. These arrangements generally do not call for collateral and as of the applicable dates presented in the following table, no cash collateral had been received or pledged related to the underlying derivatives. The respective net amounts are included in other current assets, other 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. Asset Derivatives Liability Derivatives September 30 December 31 September 30 December 31 (millions) 2018 2017 2018 2017 Derivatives designated as hedging instruments Foreign currency forward contracts $19.8 $19.6 $36.8 $125.2 Interest rate swap agreements - - 1.9 4.2 Derivatives not designated as hedging instruments Foreign currency forward contracts 21.0 26.2 16.8 27.9 Gross value of derivatives 40.8 45.8 55.5 157.3 Gross amounts offset in the Consolidated Balance Sheet (7.6) (17.0) (7.6) (17.0) Net value of derivatives $33.2 $28.8 $47.9 $140.3 The following table summarizes the notional values of the Company’s outstanding derivatives. Notional Values September 30 December 31 (millions) 2018 2017 Foreign currency forward contracts $ 4,311 $ 5,593 Interest rate agreements 650 950 Cash Flow Hedges The Company utilizes foreign currency forward contracts to hedge the effect of foreign currency exchange rate fluctuations on forecasted foreign currency transactions, including inventory purchases and intercompany royalty, management fee and other payments. These forward contracts are designated as cash flow hedges. The effective portions of the changes in fair value of these contracts are recorded in accumulated other comprehensive income (“AOCI”) until the hedged items affect earnings, at which time the gain or loss is reclassified into the same line item in the Consolidated Statement of Income as the underlying exposure being hedged. Cash flow hedged transactions impacting AOCI are forecasted to occur within the next five years. The Company occasionally enters into treasury lock and forward starting interest rate swap agreements to manage interest rate exposure. During 2016 and 2015, the Company entered into and subsequently closed a series of treasury lock and forward starting interest rate swap agreements, in conjunction with its public debt issuances. The agreements were designated and effective as cash flow hedges of the expected interest payments related to the anticipated future debt issuances. Amounts recorded in AOCI are recognized as part of interest expense over the remaining life of the notes as the forecasted interest transactions occur. The effective portion of gains and losses recognized into AOCI and earnings from derivative contracts that qualified as cash flow hedges was as follows: Third Quarter Ended Nine Months Ended September 30 September 30 (millions) 2018 2017 2018 2017 Unrealized gain (loss) recognized into AOCI Foreign currency forward contracts AOCI (equity) $32.9 $(118.8) $85.6 $(192.4) Interest rate swap agreements AOCI (equity) - - - - Total $32.9 $(118.8) $85.6 $(192.4) Gain (loss) recognized in income Foreign currency forward contracts Cost of sales $(2.0) $(0.9) $(8.7) $(11.7) SG&A 12.4 (99.5) 39.3 (157.3) Interest expense, net 10.4 7.4 27.2 16.1 Subtotal 20.8 (93.0) 57.8 (152.9) Interest rate swap agreements Interest expense, net (1.3) (1.8) (4.7) (5.4) Total $19.5 $(94.8) $53.1 $(158.3) Gains and losses recognized in income related to the ineffective portion of the Company’s cash flow hedges were insignificant during the first nine months of 2018 and 2017. The amounts recognized in interest expense above represent the difference between the spot and forward rates of the hedges as a result of interest rate differentials. Fair Value Hedges The Company manages interest expense using a mix of fixed and floating rate debt. To help manage exposure to interest rate movements and to reduce borrowing costs, the Company may enter into interest rate swaps under which the Company agrees to exchange, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed upon notional principal amount. The mark-to-market of these fair value hedges is recorded as gains or losses in interest expense and is offset by the gain or loss of the underlying debt instrument, which also is recorded in interest expense. These fair value hedges are highly effective and thus, there is no impact on earnings due to hedge ineffectiveness. In January 2016, the Company entered into an interest rate swap agreement that converted its $400 million 2.00% debt from a fixed interest rate to a floating interest rate. In January 2015, the Company entered into interest rate swap agreements that converted its $300 million 1.55% debt and its $250 million 3.69% debt from fixed interest rates to floating interest rates. In May 2014, the Company entered into an interest rate swap agreement that converted its $500 million 1.45% debt from a fixed rate to a floating interest rate. The interest rate swap agreements tied to the Company’s $500 million 1.45% and $300 million 1.55% debt expired in December 2017 and January 2018, respectively, upon repayment of the underlying debt. The interest rate swaps referenced above were designated as fair value hedges. The impact on earnings from derivative contracts that qualified as fair value hedges was as follows: Third Quarter Ended Nine Months Ended September 30 September 30 (millions) 2018 2017 2018 2017 Gain (loss) on derivative recognized income Interest rate swap Interest expense, net $2.0 $0.3 $2.3 $(0.1) Gain (loss) on hedged item recognized income Interest rate swap Interest expense, net $(2.0) $(0.3) $(2.3) $0.1 Net Investment Hedges The Company designates its outstanding $1,324 million (€1,150 million at the end of the third quarter of 2018) 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. Certain Euro commercial paper was also designated as a hedge of existing foreign currency exposures and matured in the third quarter ended September 2018. The revaluation gains and losses on the euronotes and Euro commercial paper, which are designated and effective as hedges of the Company’s net investments, have been included as a component of the cumulative translation adjustment account, and were as follows: Third Quarter Ended Nine Months Ended September 30 September 30 (millions) 2018 2017 2018 2017 Revaluation gains (losses), net of tax $9.1 $(50.9) $31.9 $(103.7) Derivatives Not Designated as Hedging Instruments The Company also uses foreign currency forward contracts to offset its exposure to the change in value of certain foreign currency denominated assets and liabilities held at foreign subsidiaries, primarily receivables and payables, which are remeasured at the end of each period. Although the contracts are effective economic hedges, they are not designated as accounting hedges. Therefore, changes in the value of these derivatives are recognized immediately in earnings, thereby offsetting the current earnings effect of the related foreign currency denominated assets and liabilities. The impact on earnings from derivative contracts that are not designated as hedging instruments was as follows: Third Quarter Ended Nine Months Ended September 30 September 30 (millions) 2018 2017 2018 2017 Gain (loss) recognized in income Foreign currency forward contracts SG&A $7.1 $(29.4) $5.0 $(38.1) Interest expense, net 0.8 (0.2) 4.5 (3.5) Total $7.9 $(29.6) $9.5 $(41.6) The amounts recognized in SG&A above offset the earnings impact of the related foreign currency denominated assets and liabilities. The amounts recognized in interest expense above represent the difference between the spot and forward rates of the hedges as a result of interest rate differentials. |
OTHER COMPREHENSIVE INCOME (LOS
OTHER COMPREHENSIVE INCOME (LOSS) INFORMATION | 9 Months Ended |
Sep. 30, 2018 | |
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. See Note 8 for additional information related to the Company’s derivatives and hedging transactions. See Note 13 for additional information related to the Company’s pension and postretirement benefits activity. Third Quarter Ended Nine Months Ended September 30 September 30 (millions) 2018 2017 2018 2017 Derivative and Hedging Instruments Unrealized gains (losses) on derivative & hedging instruments Amount recognized in AOCI $32.9 $(118.8) $85.6 $(192.4) (Gains) losses reclassified from AOCI into income Cost of sales 2.0 0.9 8.7 11.7 SG&A (12.4) 99.5 (39.3) 157.3 Interest (income) expense, net (9.1) (5.6) (22.5) (10.7) (19.5) 94.8 (53.1) 158.3 Other activity 0.1 (0.6) - (0.1) Tax impact (2.5) 3.8 (6.2) 5.1 Net of tax $11.0 $(20.8) $26.3 $(29.1) Pension and Postretirement Benefits Amount reclassified from AOCI into income Amortization of net actuarial loss and prior service costs 6.0 5.2 21.4 15.2 Postretirement benefits changes - - 18.9 - 6.0 5.2 40.3 15.2 Other activity 3.3 - 7.9 - Tax impact (1.5) (3.9) (9.7) (7.0) Net of tax $7.8 $1.3 $38.5 $8.2 The following table summarizes the derivative and pension and postretirement benefit amounts reclassified from AOCI into income. Third Quarter Ended Nine Months Ended September 30 September 30 2018 2017 2018 2017 (millions) Derivative (gains) losses reclassified from AOCI into income, net of tax $(16.0) $72.7 $(42.3) $120.3 Pension and postretirement benefits net actuarial losses and prior services costs reclassified from AOCI into income, net of tax $4.5 $1.3 $16.2 $8.2 |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2018 | |
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 September 30, 2018, 10,228,727 shares remained to be repurchased under the Company’s repurchase authorization. The Company intends to repurchase all shares under its authorization, for which no expiration date has been established, in open market or privately negotiated transactions, subject to market conditions. Accelerated Stock Repurchase (“ASR”) Agreements In February 2017, the Company entered into an ASR agreement to repurchase $300 million of its common stock and received 2,077,224 shares of its common stock, which was approximately 85% of the total number of shares the Company expected to be repurchased under the ASR, based on the price of the Company’s common stock at that time. In connection with the final settlement of the ASR agreement in June 2017, the Company received an additional 286,620 shares of common stock. The final per share purchase price and the total number of shares to be repurchased was based on the volume-weighted average price of the Company’s common stock during the term of the agreements and all shares acquired were recorded as treasury stock. During the open periods in 2017, the ASR was not dilutive to the Company’s earnings per share calculations, nor did it trigger the two-class earnings per share methodology. Additionally, the unsettled portion of ASR during the open periods met the criteria to be accounted for as a forward contract indexed to the Company’s stock and qualified as equity transactions. The initial delivery of shares, as well as the additional receipt of shares at settlement resulted in a reduction to the Company’s common stock outstanding used to calculate earnings per share. Share Repurchases During the first nine months of 2018, the Company reacquired 2,315,345 shares of its common stock, of which 2,129,383 related to share repurchases through open market or private purchases, and 185,962 related to shares withheld for taxes on the exercise of stock options and the vesting of stock awards and units. During all of 2017, the Company reacquired 4,707,629 shares of its common stock, of which 4,414,416 related to share repurchases through open market or private purchases, including the February 2017 ASR discussed above, and 293,213 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") | 9 Months Ended |
Sep. 30, 2018 | |
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: Third Quarter Ended Nine Months Ended September 30 September 30 (millions, except per share) 2018 2017 2018 2017 Net income attributable to Ecolab $435.4 $393.2 $1,034.0 $942.0 Weighted-average common shares outstanding Basic 288.8 289.0 288.8 289.8 Effect of dilutive stock options and units 4.6 4.4 4.3 4.4 Diluted 293.4 293.4 293.1 294.2 Basic EPS $ 1.51 $ 1.36 $ 3.58 $ 3.25 Diluted EPS $ 1.48 $ 1.34 $ 3.53 $ 3.20 Anti-dilutive securities excluded from the computation of diluted EPS 1.4 0.1 1.4 1.7 |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2018 | |
INCOME TAXES | |
INCOME TAXES | 12. INCOME TAXES The Company’s tax rate was 9.0% and 24.6% for the third quarter of 2018 and 2017, respectively and 17.2% and 21.7% for the first nine months of 2018 and 2017, respectively. The change in the Company’s tax rate for the third quarter and first nine months of 2018 compared to the third quarter and first nine months of 2017 was driven primarily by discrete tax items, tax planning, and a lower U.S. corporate tax rate. The Company recognized total net benefits related to discrete tax items of $47.2 million during the third quarter and $35.2 million during the first nine months of 2018. On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was enacted, which reduced the U.S. federal corporate tax rate from 35% to 21%, required companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and created new taxes on certain foreign sourced earnings. The Tax Act added many new provisions including changes to bonus depreciation, the deduction for executive compensation and interest expense, a tax on global intangible low taxed income (“GILTI”), the base erosion anti abuse tax (“BEAT”) and a deduction for foreign derived intangible income (“FDII”). The SEC staff issued Staff Accounting Bulletin (“SAB 118”), which provides a measurement period of up to one year from the Tax Act’s enactment date to complete the accounting for the effects of the Tax Act. The Company continues to assess the impact of the provisions of the Act, and has not yet elected an accounting policy related to GILTI. The Company initially recorded an estimate of the one-time transition tax in the fourth quarter of 2017. In the third quarter and first nine months of 2018 the Company recorded additional discrete expense of $4.8 million and $34.2 million, respectively, primarily due to the issuance of technical guidance during the respective quarters and finalization of certain estimates as a result of filing the 2017 U.S. federal tax return. The one-time transition tax remains subject to finalization of estimates of assets and liabilities at future dates, the calculation of deemed repatriation of foreign income and the state tax effect of adjustments made to federal temporary differences. The Company’s estimates are subject to continued technical guidance which may change the provisional amounts recorded in the financial statements, and will be evaluated throughout the measurement period, as permitted by SAB 118. The Company recognized net expenses related to discrete tax items of $8.3 million and net tax benefits related to discrete tax items of $24.2 million during the third quarter and first nine months of 2017, respectively. The third quarter net expenses were driven primarily by recognizing adjustments from filing the Company’s 2016 U.S. federal income tax return and international adjustments due to changes in estimates, partially offset by the release of reserves for uncertain tax positions due to the expiration of statute of limitations in state tax matters. Net benefits for the first nine months of 2017 was also impacted by the recognition of $29.2 million of share-based compensation excess tax benefits. |
PENSION AND POSTRETIREMENT PLAN
PENSION AND POSTRETIREMENT PLANS | 9 Months Ended |
Sep. 30, 2018 | |
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 third quarter ended September 30 are as follows: U.S. International U.S. Postretirement Pension Pension Health Care (millions) 2018 2017 2018 2017 2018 2017 Service cost $18.6 $17.5 $8.4 $7.7 $0.5 $0.7 Interest cost on benefit obligation 20.8 20.9 7.5 7.0 1.3 1.5 Expected return on plan assets (40.5) (37.4) (16.1) (13.9) (0.1) (0.1) Recognition of net actuarial (gain) loss 9.8 7.2 4.4 4.5 (0.5) (0.6) Amortization of prior service cost (benefit) (1.7) (1.7) (0.2) (0.2) (5.8) (4.2) Total expense (benefit) $7.0 $6.5 $4.0 $5.1 $(4.6) $(2.7) The components of net periodic pension and postretirement health care benefit costs for the nine months ended September 30 are as follows: U.S. International U.S. Postretirement Pension Pension Health Care (millions) 2018 2017 2018 2017 2018 2017 Service cost $55.8 $52.6 $25.4 $23.0 $2.3 $2.0 Interest cost on benefit obligation 62.4 62.6 22.4 21.1 4.3 4.4 Expected return on plan assets (121.5) (112.3) (48.8) (41.7) (0.3) (0.4) Recognition of net actuarial (gain) loss 29.4 21.5 13.2 13.6 (1.5) (1.8) Amortization of prior service cost (benefit) (5.1) (5.1) (0.6) (0.5) (14.0) (12.5) Total expense (benefit) $21.0 $19.3 $11.6 $15.5 $(9.2) $(8.3) Service cost is included with employee compensation cost in cost of sales and selling, general and administrative expenses in the Consolidated Statement of Income while all other components are included in other (income) expense in the Consolidated Statement of Income. For more information about the adoption of the pension standard relating to the classification of components of pension expense, refer to Note 17. As of September 30, 2018, the Company is in compliance with all funding requirements of its U.S. pension and postretirement health care plans. During the first nine months of 2018, the Company made payments of $5 million to its U.S. non-contributory non-qualified defined benefit plans and estimates it will make additional payments of approximately $1 million to such plans during the remainder of 2018. The Company contributed $33 million to its international pension benefit plans during the first nine months of 2018. The Company estimates it will contribute approximately an additional $10 million to such plans during the remainder of 2018. During the first nine months of 2018, the Company made payments of $8 million to its U.S. postretirement health care benefit plans and estimates it will make additional payments of approximately $3 million to such plans during the remainder of 2018. During the second quarter ended June 30, 2018, an amendment to eligibility requirements of the U.S. retiree death benefit plan was approved and communicated to all eligible participants. As a result of the approval and communication to the beneficiaries, the plan was re-measured, resulting in an $18.9 million ($14.4 million after tax), reduction of postretirement benefit obligations, with a corresponding impact to accumulated other comprehensive income (AOCI). The re-measurement was completed using a discount rate of 4.36%. As a result of this action, the Company’s U.S. postretirement healthcare costs decreased by $2.3 million in the third quarter of 2018. |
REVENUES
REVENUES | 9 Months Ended |
Sep. 30, 2018 | |
REVENUES | |
REVENUES | 14. REVENUES Revenue from product and sold equipment is recognized when obligations under the terms of a contract with the customer are satisfied, which generally occurs when the transfer of the product or equipment occurs, which is upon delivery. Revenue from service and leased equipment is recognized when the services are provided, or the customer receives the benefit from the leased equipment, which is over time. Revenue is measured as the amount of consideration expected to be received in exchange for transferring goods or providing service. Concurrent with the adoption of the new revenue standard, the Company reclassified certain costs from selling, general and administrative expenses to cost of sales, to align the costs of providing the service with the recognition of service revenue. Contracts with customers may include multiple performance obligations. For contracts with multiple performance obligations, the consideration is allocated between products and services based on their stand-alone selling prices. Stand-alone selling prices are generally based on the prices charged to customers or using an expected cost plus margin. Judgment was used in determining the amount of service that is embedded within the contracts, which is based on the amount of time spent on the performance obligation activities. The level of effort, including the estimated margin that would be charged, is used to determine the amount of service revenue. Depending on the terms of the contract, the Company may defer the recognition of revenue when a future performance obligation has not yet occurred. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue. Shipping and handling costs associated with outbound freight are recognized in cost of sales when control over the product has transferred to the customer. Other estimates used in recognizing revenue include allocating variable consideration to customer programs and incentive offerings, including pricing arrangements, promotions and other volume-based incentives at the time the sale is recorded. These estimates are based primarily on historical experience and anticipated performance over the contract period. Based on the certainty in estimating these amounts, they are included in the transaction price of the contracts and the associated remaining performance obligations. The Company recognizes revenue when collection of the consideration expected to be received in exchange for transferring goods or providing services is probable. Practical Expedients and Exemptions The Company elected to apply the portfolio approach primarily within each operating segment by geographical region. The new revenue standard can be applied to a portfolio of contracts with similar characteristics if it is reasonable that the effects of applying the standard at the portfolio would not be significantly different than applying the standard at the individual contract level. Application of the portfolio approach was focused on those characteristics that have the most significant accounting consequences in terms of their effect on the timing of revenue recognition or the amount of revenue recognized. The Company determined the key criteria to assess with respect to the portfolio approach, including the related deliverables, the characteristics of the customers and the timing and transfer of goods and services, which most closely aligned within the operating segments. In addition, the accountability for the business operations, as well as the operational decisions on how to go to market and the product offerings, are performed at the operating segment level. Revenue Recognition Product and Sold Equipment Product revenue is generated from cleaning, sanitizing, water and energy products provided to customers in the Global Industrial, Global Institutional and Global Energy segments. 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 the Other segment include Pest Elimination and, prior to the Equipment Care sale in 2017, kitchen equipment repair and maintenance. Global Energy services include process and water treatment offerings to the global petroleum and petrochemical industries, while services in the Global Industrial segment are associated with water treatment and paper process applications. Global Institutional services include water treatment programs and process applications, and wash process solutions. Revenue recognized from leased equipment primarily relates to warewashing equipment. Service and leased equipment revenue is recognized over time and aligns with when the services are provided or when the customer receives the benefit of the leased 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 840 Leases and recognized on a straight-line basis over the length of the lease contract. The following table shows principal activities, separated by reportable segments, from which the Company generates its revenue. For more information about the Company’s reportable segments, refer to Note 15. Net sales at public exchange rates by reportable segment for the third quarter and nine months ended September 30 are as follows: Third Quarter Ended Nine Months Ended September 30 September 30 (millions) 2018 2017 2018 2017 Global Industrial Product and sold equipment $1,176.8 $1,101.8 $3,380.9 $3,110.6 Service and lease equipment 175.4 171.0 524.5 485.2 Global Institutional Product and sold equipment 1,130.8 1,075.6 3,297.8 3,060.2 Service and lease equipment 174.3 165.9 510.2 473.5 Global Energy Product and sold equipment 761.7 712.6 2,246.6 2,079.7 Service and lease equipment 100.5 93.9 303.7 282.1 Other Product and sold equipment 21.0 41.9 60.4 126.4 Service and lease equipment 206.7 201.8 583.6 569.2 Total Total product and sold equipment $3,090.3 $2,931.9 $8,985.7 $8,376.9 Total service and lease equipment 656.9 632.6 1,922.0 1,810.0 Net sales at public exchange rates by geographic region for the third quarter ended September 30 are as follows: Global Global Global Industrial Institutional Energy Other (millions) 2018 2017 2018 2017 2018 2017 2018 2017 North America $628.0 $573.7 $898.1 $845.9 $502.1 $445.4 $156.9 $178.1 Europe 326.0 314.2 260.2 250.0 96.7 102.5 33.2 31.0 Asia Pacific 171.4 168.9 62.3 60.2 65.7 68.8 10.5 8.8 Latin America 121.6 113.7 40.9 41.7 55.5 62.1 11.5 11.4 Middle East and Africa 34.4 32.7 15.3 17.5 123.5 109.9 2.8 2.8 Greater China 70.9 69.7 28.3 26.3 18.7 17.9 12.7 11.3 Total $1,352.3 $1,272.9 $1,305.1 $1,241.6 $862.2 $806.6 $227.6 $243.4 Net sales at public exchange rates by geographic region for the nine months ended September 30 are as follows: Global Global Global Industrial Institutional Energy Other (millions) 2018 2017 2018 2017 2018 2017 2018 2017 North America $1,780.7 $1,643.7 $2,592.4 $2,450.2 $1,474.8 $1,323.6 $436.3 $512.3 Europe 959.5 852.3 774.9 666.5 302.5 287.0 97.0 84.2 Asia Pacific 503.7 483.1 186.8 174.7 200.1 190.6 29.4 24.7 Latin America 350.8 326.5 124.5 122.8 163.7 183.2 35.2 33.4 Middle East and Africa 99.0 93.3 44.5 44.7 354.1 326.8 8.5 8.4 Greater China 211.8 196.8 84.9 74.9 55.1 50.7 37.5 32.5 Total $3,905.5 $3,595.7 $3,808.0 $3,533.8 $2,550.3 $2,361.9 $643.9 $695.5 Net sales by geographic region were determined based on origin of sale. 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. September 30 September 30 (millions) 2018 2017 Contract liability as of beginning of period $79.0 $68.6 Revenue recognized in the period from: Amounts included in the contract liability at the beginning of the period (79.0) (68.6) Increases due to billings excluding amounts recognized as revenue during the period 81.7 82.5 Business combination 0.2 2.2 Contract liability as of end of period $81.9 $84.7 |
OPERATING SEGMENTS
OPERATING SEGMENTS | 9 Months Ended |
Sep. 30, 2018 | |
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 three reportable segments: Global Industrial, Global Institutional and Global Energy. The Company’s operating segments that do not meet the quantitative criteria to be separately reported have been combined into the Other segment. The Company provides similar information for the Other segment as the Company considers the information regarding its underlying operating segments as useful in understanding its consolidated results. Comparability of Reportable Segments Refer to Note 17 for additional information regarding adoption of new accounting standards for the changes presented in the “Revenue Standard Adoption” and “Pension Standard Adoption” columns in the table below. Effective in the first quarter of 2018, the Company established the Colloidal Technologies Group (“CTG”) operating segment. The CTG operating segment has not been aggregated, based on qualitative criteria, and is included in Other. CTG produces and sells colloidal silica, which is comprised of nano-sized particles of silica in water; these products and associated programs are used primarily for binding and polishing applications. CTG was previously recorded in the Water operating segment which is aggregated into the Global Industrial reportable segment. The Company also made insignificant changes to its reportable segments, including the movement of certain customers and cost allocations between reportable segments. These changes are presented in "Segment Change" column of the table below. The 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. Fixed currency rates are generally based on existing market rates at the time they are established. The “Fixed Currency Rate Change” column shown in the following table reflects the impact on previously reported values related to fixed currency exchange rates established by management at the beginning of 2018. The impact of the preceding changes on previously reported full year 2017 reportable segment net sales and operating income is summarized as follows: December 31, 2017 2017 Reported Revenue Pension Fixed 2017 Revised Valued at 2017 Standard Standard Segment Currency Valued at 2018 (millions) Management Rates Adoption Adoption Change Rate Change Management Rates Net Sales Global Industrial $4,878.5 $(0.8) $- $(56.9) $286.0 $5,106.8 Global Institutional 4,744.9 (1.4) - (23.7) 190.2 4,910.0 Global Energy 3,199.3 - - 0.7 81.7 3,281.7 Other 823.5 - - 79.9 28.1 931.5 Subtotal at fixed currency rates 13,646.2 (2.2) - - 586.0 14,230.0 Effect of foreign currency translation 192.1 (0.2) - - (586.0) (394.1) Consolidated reported GAAP net sales $13,838.3 $(2.4) $- $- $- $13,835.9 Operating Income Global Industrial $722.0 $(0.8) $(12.8) $2.6 $47.5 $758.5 Global Institutional 985.7 (1.4) (13.1) (14.9) 23.5 979.8 Global Energy 338.5 - (16.7) (0.7) 15.0 336.1 Other 149.3 - (24.5) 13.0 4.7 142.5 Corporate (208.6) - - - (5.3) (213.9) Subtotal at fixed currency rates 1,986.9 (2.2) (67.1) - 85.4 2,003.0 Effect of foreign currency translation 32.9 (0.2) (0.2) - (85.4) (52.9) Consolidated reported GAAP operating income $2,019.8 $(2.4) $(67.3) $- $- $1,950.1 Reportable Segment Information Financial information for each of the Company’s reportable segments, including the impact of all preceding segment structure changes, is as follows: Third Quarter Ended Nine Months Ended September 30 September 30 (millions) 2018 2017 2018 2017 Net Sales Global Industrial $1,411.6 $1,309.4 $4,001.4 $3,754.7 Global Institutional 1,340.8 1,268.9 3,870.5 3,646.3 Global Energy 889.6 817.5 2,590.7 2,406.6 Other 232.9 247.6 652.6 711.6 Subtotal at fixed currency rates 3,874.9 3,643.4 11,115.2 10,519.2 Effect of foreign currency translation (127.7) (78.9) (207.5) (332.3) Consolidated reported GAAP net sales $3,747.2 $3,564.5 $10,907.7 $10,186.9 Operating Income Global Industrial $224.9 $217.4 $527.9 $529.4 Global Institutional 292.5 276.1 743.2 720.0 Global Energy 94.1 89.8 256.4 232.8 Other 48.3 41.4 114.7 102.7 Corporate (122.1) (48.2) (246.1) (202.9) Subtotal at fixed currency rates 537.7 576.5 1,396.1 1,382.0 Effect of foreign currency translation (21.5) (12.4) (31.0) (41.1) Consolidated reported GAAP operating income $516.2 $564.1 $1,365.1 $1,340.9 The profitability of the Company’s operating segments is evaluated by management based on operating income. The Company has no intersegment revenues. Consistent with the Company’s internal management reporting, Corporate amounts in the table above include amortization specifically from the Nalco merger and special (gains) and charges, as discussed in Note 2, that are not allocated to the Company’s reportable segments. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2018 | |
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 also has contractual obligations related to lease commitments. Insurance Globally, the Company has insurance policies with varying deductible levels for property and casualty losses. The Company is insured for losses in excess of these deductibles, subject to policy terms and conditions and has recorded both a liability and an offsetting receivable for amounts in excess of these deductibles. The Company is self-insured for health care claims for eligible participating employees, subject to certain deductibles and limitations. The Company determines its liabilities for claims on an actuarial basis. Litigation and Environmental Matters The Company and certain subsidiaries are party to various lawsuits, claims and environmental actions that have arisen in the ordinary course of business. These include from time to time antitrust, commercial, patent infringement, product liability and wage hour lawsuits, as well as possible obligations to investigate and mitigate the effects on the environment of the disposal or release of certain chemical substances at various sites, such as Superfund sites and other operating or closed facilities. The Company has established accruals for certain lawsuits, claims and environmental matters. The Company currently believes that there is not a reasonably possible risk of material loss in excess of the amounts accrued related to these legal matters. Because litigation is inherently uncertain, and unfavorable rulings or developments could occur, there can be no certainty that the Company may not ultimately incur charges in excess of recorded liabilities. A future adverse ruling, settlement or unfavorable development could result in future charges that could have a material adverse effect on the Company’s results of operations or cash flows in the period in which they are recorded. The Company currently believes that such future charges related to suits and legal claims, if any, would not have a material adverse effect on the Company’s consolidated financial position. Environmental Matters The Company is currently participating in environmental assessments and remediation at approximately 40 locations, 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 Nalco Company, now an indirect subsidiary of Ecolab, to supply large quantities of COREXIT® 9500, a Nalco oil dispersant product listed on the U.S. EPA National Contingency Plan Product Schedule. Nalco Company responded immediately by providing available COREXIT and increasing production to supply the product to BP’s subsidiaries for use, as authorized and directed by agencies of the federal government throughout the incident. Prior to the incident, Nalco and its subsidiaries had not provided products or services or otherwise had any involvement with the Deepwater Horizon platform. On July 15, 2010, BP announced that it had capped the leaking well, and the application of dispersants by the responding parties ceased shortly thereafter. On May 1, 2010, the President appointed retired U.S. Coast Guard Commandant Admiral Thad Allen to serve as the National Incident Commander in charge of the coordination of the response to the incident at the national level. The EPA directed numerous tests of all the dispersants on the National Contingency Plan Product Schedule, including those provided by Nalco Company, “to ensure decisions about ongoing dispersant use in the Gulf of Mexico are grounded in the best available science.” Nalco Company cooperated with this testing process and continued to supply COREXIT, as requested by BP and government authorities. The use of dispersants by the responding parties was one tool used by the government and BP to avoid and reduce damage to the Gulf area from the spill. In connection with its provision of COREXIT, Nalco Company has been named in several lawsuits as described below. Cases arising out of the Deepwater Horizon accident were administratively transferred for pre-trial purposes to a judge in the United States District Court for the Eastern District of Louisiana with other related cases under In Re: Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, on April 20, 2010, Case No. 10-md-02179 (E.D. La.) (“MDL 2179”). Nalco Company was named, along with other unaffiliated defendants, in six putative class action complaints related to the Deepwater Horizon oil spill and 21 complaints filed by individuals. Those complaints were consolidated in MDL 2179. The complaints generally allege, among other things, strict liability and negligence relating to the use of our Corexit dispersant in connection with the Deepwater Horizon oil spill. Pursuant to orders issued by the Court in MDL 2179, the claims were consolidated in several master complaints, including one naming Nalco Company and others who responded to the Gulf Oil Spill (known as the “B3 Master Complaint”). On May 18, 2012, Nalco filed a motion for summary judgment against the claims in the “B3” Master Complaint, on the grounds that: (i) Plaintiffs’ claims are preempted by the comprehensive oil spill response scheme set forth in the Clean Water Act and National Contingency Plan; and (ii) Nalco is entitled to derivative immunity from suit. On November 28, 2012, the Court granted Nalco’s motion and dismissed with prejudice the claims in the “B3” Master Complaint asserted against Nalco. The Court held that such claims were preempted by the Clean Water Act and National Contingency Plan. Because claims in the “B3” Master Complaint remained pending against other defendants, the Court’s decision was not a “final judgment” for purposes of appeal. Under Federal Rule of Appellate Procedure 4(a), plaintiffs will have 30 days after entry of final judgment to appeal the Court’s decision. In December 2012 and January 2013, the MDL 2179 court issued final orders approving two settlements between BP and Plaintiffs’ Class Counsel: (1) a proposed Medical Benefits Class Action Settlement; and (2) a proposed Economic and Property Damages Class Action Settlement. Pursuant to the proposed settlements, class members agree to release claims against BP and other released parties, including Nalco Company and its related entities. Nalco Company, the incident defendants and the other responder defendants have been named as first party defendants by Transocean Deepwater Drilling, Inc. and its affiliates (the “Transocean Entities”) (In re the Complaint and Petition of Triton Asset Leasing GmbH, et al, MDL No. 2179, Civil Action 10-2771). In April and May 2011, the Transocean Entities, Cameron International Corporation, Halliburton Energy Services, Inc., M-I L.L.C., Weatherford U.S., L.P. and Weatherford International, Inc. (collectively, the “Cross Claimants”) filed cross claims in MDL 2179 against Nalco Company and other unaffiliated cross defendants. The Cross Claimants generally allege, among other things, that if they are found liable for damages resulting from the Deepwater Horizon explosion, oil spill and/or spill response, they are entitled to indemnity or contribution from the cross defendants. In April and June 2011, in support of its defense of the claims against it, Nalco Company filed counterclaims against the Cross Claimants. In its counterclaims, Nalco Company generally alleges that if it is found liable for damages resulting from the Deepwater Horizon explosion, oil spill and/or spill response, it is entitled to contribution or indemnity from the Cross Claimants. In May 2016, Nalco was named in nine additional complaints filed by individuals alleging, among other things, business and economic loss resulting from the Deepwater Horizon oil spill (“B1” claims). In April 2017, Nalco was named in two additional complaints filed by individuals seeking, among other things, business and economic loss resulting from the Deepwater Horizon oil spill. The plaintiffs in these lawsuits are generally seeking awards of unspecified compensatory and punitive damages, and attorneys’ fees and costs. These actions have been consolidated in the MDL and the Company expects they will be dismissed pursuant to the Court’s November 28, 2012 order granting Nalco’s motion for summary judgment. On February 22, 2017, the Court dismissed the “B3” Master Complaint and ordered that Plaintiffs who had previously filed a claim that fell within the scope of the “B3” Master Complaint and who had “opted out” of and not released their claims under the Medical Benefits Class Action Settlement either: (1) complete a sworn statement indicating, among other things, that they opted out of the Medical Benefits Class Action Settlement (to be completed by Plaintiffs who previously filed an individual complaint); or (2) file an individual lawsuit attaching the sworn statement as an exhibit, by a deadline date set by the Court. On April 9, 2018, the Court entered an order requiring the remaining “B3” Plaintiffs to serve sworn, particularized statements of their claims no later than July 9, 2018, pursuant to which the Court will then determine which “B3” Plaintiffs are entitled to further pursue their claims. On July 10, 2018, the Court entered an order dismissing the remaining “B1” claims against Nalco. There currently remain eight cases pending against Nalco, all of which are expected to ultimately be dismissed pursuant to the Court’s November 28, 2012 order granting Nalco’s motion for summary judgment. The Company believes the claims asserted against Nalco Company are without merit and intends to defend these lawsuits vigorously. The Company also believes that it has rights to contribution and/or indemnification (including legal expenses) from third parties. However, the Company cannot predict the outcome of these lawsuits, the involvement it might have in these matters in the future, or the potential for future litigation. |
NEW ACCOUNTING PRONOUNCEMENTS
NEW ACCOUNTING PRONOUNCEMENTS | 9 Months Ended |
Sep. 30, 2018 | |
NEW ACCOUNTING PRONOUNCEMENTS | |
NEW ACCOUNTING PRONOUNCEMENTS | 17. NEW ACCOUNTING PRONOUNCMENTS 17. NEW ACCOUNTING PRONOUNCEMENTS Required Date of Date of Effect on the Standard Issuance Description Adoption Financial Statements Standards that are not yet adopted: 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 in this Update require an entity (customer) in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. January 1, 2020 The ASU should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is currently evaluating the impact of adoption. 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 Entities are required to apply the disclosure amendments on a retrospective basis to all periods presented. The Company is currently evaluating the impact of adoption. ASU 2018-07 - Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting June 2018 The amendments in this update expand the scope of Topic 718 to include share-based payment awards issued to nonemployees. Prior to this ASU, the accounting guidance for nonemployee share-based payments differed from that governing employee awards, particularly regarding measurement date and the impact of any performance conditions. January 1, 2019 Adoption of the ASU is not expected to have a material impact on the Company’s financial statements. ASU 2018-02 - Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income February 2018 Amends ASC 220 to allow entities to reclassify stranded tax effects resulting from the Tax Cut and Jobs Act (“the Act”) from accumulated OCI to retained earnings. Tax effects stranded in OCI for reasons other than the impact of the Act cannot be reclassified. January 1, 2019 The Company is currently evaluating the impact of adoption and accounting policy elections required to be made. ASU 2017-12 - Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities August 2017 Amends the hedge accounting recognition and presentation requirements in ASC 815. Simplifies the guidance on the application of hedge accounting and the requirements for hedge documentation and effectiveness testing. Requires presentation of all items that affect earnings in the same income statement line as the hedged item. January 1, 2019 The Company is currently evaluating certain transition elections provided for by the ASU. Adoption of the ASU is not expected to have a material impact on the Company's financial statements. ASU 2017-04 - Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment January 2017 Simplifies subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. January 1, 2020 The ASU must be applied on a prospective basis upon adoption. Adoption of the ASU is not expected to have a material impact on the Company's financial statements. ASU 2016-13 - Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments June 2016 Addresses the recognition, measurement, presentation and disclosure of credit losses on trade and reinsurance receivables, loans, debt securities, net investments in leases, off-balance-sheet credit exposures and certain other instruments. Amends guidance on reporting credit losses from an incurred model to an expected model for assets held at amortized cost, such as accounts receivable, loans and held-to-maturity debt securities. Additional disclosures will also be required. January 1, 2020 Adoption of the standard may change how the allowance for trade and other receivables is calculated. The Company is currently evaluating the impact of adoption. Lease ASUs: Various Introduces the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous guidance. January 1, 2019 See additional information regarding the impact of this guidance on the Company's financial statements at the bottom of this table in note (a). (a) As part of adopting the new lease standard, the Company has implemented a global lease accounting software, which is designed to facilitate adoption and reporting in accordance with the new standard. The Company is in the final stages of accumulating leases within the software and designing future processes for adherence to ongoing reporting requirements. The Company expects most of its operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon adoption which is expected to be material. Adoption of the standard is not expected to have a material impact on consolidated net earnings. The Company will elect the prospective transition method with the effects of initially applying the new standard to be recognized as a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. Prior reporting periods will be recorded in accordance with the guidance in place at that time. The Company will also elect the package of three practical expedients permitted under the transition guidance within the new standard, which among other things, allows the Company to carryforward the historical lease classification. The Company will also elect the hindsight and land easement practical expedients. The Company will make an accounting policy election to not apply the recognition requirements of the new standard to leases with terms of 12 months or less and which do not include an option to purchase the underlying assets which is reasonably certain of exercise. Those lease payments will continue to be recognized in the Consolidated Statement of Income on a straight-line basis over the lease term. Lastly, the Company will elect, by asset class, the lessor practical expedient to not separate nonlease and lease components and account for those components as a single component. Date of Date of Effect on the Standard Issuance Description Adoption Financial Statements Standards that were adopted: ASU 2017-09 - Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting May 2017 Clarifies the definition of what's considered a substantive modification related to a change in terms or conditions of a share-based payment award and when it's appropriate to apply modification accounting. The current definition of "modification" is too broad, resulting in diverse interpretations of what's considered a substantive modification. January 1, 2018 Adoption of the guidance did not have a material impact on the Company's financial statements. ASU 2017-05 - Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Topic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets February 2017 Clarifies the scope of guidance on nonfinancial asset derecognition (ASC 610-20) including the accounting for partial sales of nonfinancial assets. The ASU defines "in-substance nonfinancial asset". Also clarifies the derecognition of all businesses should be accounted for in accordance with derecognition and deconsolidation guidance in 810-10. January 1, 2018 Adoption of the guidance did not have a material impact on the Company's financial statements. ASU 2017-01 - Business Combinations (Topic 805): Clarifying the Definition of a Business January 2017 Clarifies the definition of a business and provides guidance on whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. January 1, 2018 Adoption of the guidance did not have a material impact on the Company's financial statements. ASU 2016-16 - Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory October 2016 Simplifies the guidance on the accounting for the income tax consequences of intra-entity transfers of assets other than inventory (e.g. intellectual property). January 1, 2018 During the first quarter of 2018, the Company adopted the accounting guidance issued in October 2016 that requires recognition of the income tax effects of intercompany sales and transfers of assets, other than inventory, in the period in which the transfer occurs. Under previous guidance the income tax effects of intercompany transfers of assets were deferred until the asset had been sold to an outside party or otherwise recognized (e.g., depreciated, amortized, impaired). Upon adoption of the standard, only the income tax effects of intercompany transfers of inventory are deferred. The standard was adopted using the modified retrospective approach with a cumulative-effective adjustment of $43.6 million to opening retained earnings on the date of adoption. Income tax effects of intra-entity inventory transfers will continue to be deferred until the inventory is sold. ASU 2016-15 - Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments August 2016 The guidance's objective is to reduce diversity in practice of how certain cash receipts and cash payments are presented and classified in the statement of cash flow. January 1, 2018 Adoption of the guidance did not have a material impact on the Company's financial statements and elected to account for distributions received from equity method investees using the nature of distribution approach accounting policy election. ASU 2014-09 – Revenue from Contracts with Customers On January 1, 2018, the Company retrospectively adopted Accounting Standards Codification Topic 606 Revenue from Contracts with Customers and the related amendments (“the new revenue standard”). The new revenue standard was applied to all periods presented and the cumulative effect of applying the standard is recognized at the beginning of the earliest year presented. The Company identified additional performance obligations primarily related to performing service activities, which were explicitly or implicitly included in contracts with customers. These performance obligations, when aggregated with service revenue currently reported, represent more than 10% of sales. Upon adoption of the new standard, service and lease revenue are reported separately from product and sold equipment revenue. Concurrent with the adoption of the new revenue standard, the Company reclassified certain costs to cost of sales from selling, general and administrative expenses, to align providing the service with the recognition of service revenue. The Company recorded a reduction to opening retained earnings of $29.3 million, net of tax, as of January 1, 2016 due to the impact of adopting the new revenue standard, with the impact primarily related to deferring service revenue. Further information related to the Company’s adoption of the new revenue standard is included in Note 14. ASU 2017-07 – Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and the Net Periodic Postretirement Benefit Cost On January 1, 2018, the Company retrospectively adopted guidance relating to the presentation of the components of net periodic benefit costs for pension and other post-retirement benefits within the Consolidated Statement of Income. Under the new guidance, the non-service cost components of net periodic benefit cost are presented in other (income) expense, while the service cost component will continue to be recorded with compensation cost in cost of sales and selling, general and administrative expenses. The Company elected to use the practical expedient that allows entities to estimate the amount for comparative periods using the information previously disclosed in the pension and postretirement health care benefits footnote. As a result, the Company has changed its accounting principle, and revised prior period presentation related to the presentation of the non-service cost components. The following table presents the effect of the adoptions of the revenue recognition and pension standards on the Company’s Consolidated Statement of Income for the third quarter ended September 30: (millions, except per share amounts) Third Quarter Ended September 30 2017 Revenue Standard Adoption Pension Standard Adoption 2017 Revised Net sales $3,563.3 $(3,563.3) $- $- Product and equipment sales - 2,931.9 - 2,931.9 Service and lease sales - 632.6 - 632.6 Total net sales 3,563.3 1.2 - 3,564.5 Cost of sales 1,891.3 (1,891.3) - - Product and equipment cost of sales - 1,675.8 1.1 1,676.9 Service and lease cost of sales - 387.5 0.2 387.7 Total cost of sales (including special charges) 1,891.3 172.0 1.3 2,064.6 Selling, general and administrative expenses 1,087.3 (172.0) 15.6 930.9 Special (gains) and charges 4.9 - - 4.9 Operating income 579.8 1.2 (16.9) 564.1 Other (income) expense - - (16.9) (16.9) Interest expense, net 55.1 - - 55.1 Income before income taxes 524.7 1.2 - 525.9 Provision for income taxes 128.9 0.4 - 129.3 Net income including noncontrolling interest 395.8 0.8 - 396.6 Net income attributable to noncontrolling interest 3.4 - - 3.4 Net income attributable to Ecolab $392.4 $0.8 $- $393.2 Earnings attributable to Ecolab per common share Basic $ 1.36 $ - $ - $ 1.36 Diluted $ 1.34 $ - $ - $ 1.34 The following table presents the effect of the adoptions of the revenue recognition and pension standards on the Company’s Consolidated Statement of Income for the nine months ended September 30: (millions, except per share amounts) Nine Months Ended September 30 2017 Revenue Standard Adoption Pension Standard Adoption 2017 Revised Net sales $10,187.6 $(10,187.6) $- $- Product and equipment sales - 8,376.9 - 8,376.9 Service and lease sales - 1,810.0 - 1,810.0 Total net sales 10,187.6 (0.7) - 10,186.9 Cost of sales 5,454.4 (5,454.4) - - Product and equipment cost of sales - 4,831.1 3.1 4,834.2 Service and lease cost of sales - 1,127.0 0.6 1,127.6 Total cost of sales (including special charges (a)) 5,454.4 503.7 3.7 5,961.8 Selling, general and administrative expenses 3,293.2 (503.7) 46.8 2,836.3 Special (gains) and charges 47.9 - - 47.9 Operating income 1,392.1 (0.7) (50.5) 1,340.9 Other (income) expense - - (50.5) (50.5) Interest expense, net 177.2 - - 177.2 Income before income taxes 1,214.9 (0.7) - 1,214.2 Provision for income taxes 264.2 (0.2) - 264.0 Net income including noncontrolling interest 950.7 (0.5) - 950.2 Net income attributable to noncontrolling interest 8.2 - - 8.2 Net income attributable to Ecolab $942.5 $(0.5) $- $942.0 Earnings attributable to Ecolab per common share Basic $ 3.25 $ - $ - $ 3.25 Diluted $ 3.20 $ - $ - $ 3.20 The following table presents the effect of the adoption of the new revenue standard on the selected accounts which were impacted in the Consolidated Balance Sheet: (millions) Year ended December 31 2017 Revenue Standard Adoption 2017 ASSETS Current assets Accounts receivable, net $2,574.1 $(2.7) $2,571.4 Inventories 1,445.9 0.6 1,446.5 Total current assets 4,596.4 (2.1) 4,594.3 Other assets 474.2 3.2 477.4 Total assets 19,962.4 1.1 19,963.5 LIABILITIES AND EQUITY Current liabilities Other current liabilities 957.3 43.4 1,000.7 Total current liabilities 3,431.8 43.4 3,475.2 Deferred income taxes 642.8 (7.4) 635.4 Total liabilities 12,273.7 36.0 12,309.7 Equity Retained earnings 8,045.4 (33.8) 8,011.6 Accumulated other comprehensive loss (a) (1,642.3) (1.1) (1,643.4) Total Ecolab shareholders’ equity 7,618.5 (34.9) 7,583.6 Total equity 7,688.7 (34.9) 7,653.8 Total liabilities and equity $19,962.4 $1.1 $19,963.5 (a) On a quarterly basis throughout 2017, revenue recognition adjustments had a nominal impact on foreign currency translation within accumulated other comprehensive loss. These revisions have been reflected within the Statement of Comprehensive Income. ASU 2016-18 – Statement of Cash Flows (Topic 230): Restricted Cash During the first quarter of 2018, the Company adopted the accounting guidance issued in 2016 that requires companies to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. The Company’s restricted cash is primarily associated with acquisitions, and the escrow payment associated with the proposed acquisition. As a result of the new guidance, the Company has updated the policy so restricted cash will no longer be shown as a transfer on the statement of cash flows, and a reconciliation of restricted cash will be added to the statement of cash flows. The following table presents the effect of the adoptions of the restricted cash and revenue recognition standards on selected accounts in the Consolidated Statement of Cash Flows: (millions) Nine Months Ended September 30 2017 Restricted Cash Standard Adoption Revenue Standard Adoption 2017 Revised OPERATING ACTIVITIES Net income including noncontrolling interest $950.7 $- $(0.5) $950.2 Adjustments to reconcile net income to cash provided by operating activities: Deferred income taxes 10.4 - (0.6) 9.8 Changes in operating assets and liabilities, net of effect of acquisitions: Accounts receivable (23.5) - 0.3 (23.2) Other liabilities (107.2) - 0.8 (106.4) Cash provided by operating activities 1,444.9 - - 1,444.9 INVESTING ACTIVITIES Restricted cash activity 53.8 (53.8) - - Cash used for investing activities (1,368.1) (53.8) - (1,421.9) Effect of exchange rate changes on cash, cash equivalents and restricted cash 5.4 0.8 - 6.2 (Decrease) increase in cash, cash equivalents and restricted cash (118.3) (53.0) - (171.3) Cash, cash equivalents and restricted cash, beginning of period 327.4 53.0 - 380.4 Cash, cash equivalents and restricted cash, end of period $209.1 $- $- $209.1 |
SPECIAL (GAINS) AND CHARGES (Ta
SPECIAL (GAINS) AND CHARGES (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
SPECIAL (GAINS) AND CHARGES | |
Special (gains) and charges | Third Quarter Ended Nine Months Ended September 30 September 30 (millions) 2018 2017 2018 2017 Cost of sales Restructuring activities $5.9 $- $6.3 $2.2 Acquisition and integration activities (0.1) 0.3 (0.6) 12.9 Other (2.2) - (2.2) 11.1 Subtotal 3.6 0.3 3.5 26.2 Special (gains) and charges Restructuring activities 73.1 4.1 82.3 34.6 Acquisition and integration activities 2.4 1.8 4.7 12.7 Venezuela related gain - (3.2) - (8.5) Other 0.1 2.2 26.7 9.1 Subtotal 75.6 4.9 113.7 47.9 Total special (gains) and charges $79.2 $5.2 $117.2 $74.1 |
Restructuring activity | Employee Termination Asset (millions) Costs Disposals Other Total 2018 Activity Recorded expense 88.7 - 0.8 89.5 Net cash payments (13.3) - (0.2) (13.5) Non-cash charges - - - - Effect of foreign currency translation (0.2) - - (0.2) Restructuring liability, September 30, 2018 $ 75.2 $ - $ 0.6 $ 75.8 |
ACQUISITIONS AND DISPOSITIONS (
ACQUISITIONS AND DISPOSITIONS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Anios | |
Business acquisitions | |
Schedule of assets acquired and liabilities assumed | (millions) 2017 Tangible assets $139.8 Identifiable intangible assets Customer relationships 252.0 Trademarks 65.7 Other technology 16.1 Total assets acquired 473.6 Goodwill 511.7 Total liabilities 187.0 Total consideration transferred 798.3 Long-term debt repaid upon close 192.8 Net consideration transferred to sellers $605.5 |
BALANCE SHEET INFORMATION (Tabl
BALANCE SHEET INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
BALANCE SHEET INFORMATION | |
Balance Sheet Information | September 30 December 31 (millions) 2018 2017 Accounts receivable, net Accounts receivable $2,721.7 $2,642.9 Allowance for doubtful accounts (69.0) (71.5) Total $2,652.7 $2,571.4 Inventories Finished goods $1,061.8 $974.9 Raw materials and parts 513.9 438.7 Inventories at FIFO cost 1,575.7 1,413.6 FIFO cost to LIFO cost difference 12.2 32.9 Total $1,587.9 $1,446.5 Other current assets Prepaid assets $133.2 $153.5 Taxes receivable 174.5 129.2 Derivative assets 33.2 28.8 Other 37.2 53.5 Total $378.1 $365.0 Property, plant and equipment, net Land $214.7 $224.1 Buildings and leasehold improvements 1,249.0 1,207.4 Machinery and equipment 2,345.9 2,280.9 Merchandising and customer equipment 2,550.3 2,399.4 Capitalized software 653.1 585.8 Construction in progress 443.6 438.7 7,456.6 7,136.3 Accumulated depreciation (3,678.6) (3,429.2) Total $3,778.0 $3,707.1 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 3,620.3 3,620.3 Trademarks 382.0 380.6 Patents 467.7 462.7 Other technology 236.7 232.6 4,706.7 4,696.2 Accumulated amortization Customer relationships (1,560.2) (1,403.8) Trademarks (168.6) (147.6) Patents (201.1) (187.9) Other technology (186.4) (169.3) (2,116.3) (1,908.6) Net intangible assets subject to amortization 2,590.4 2,787.6 Total $3,820.4 $4,017.6 Other assets Deferred income taxes $98.5 $105.4 Pension 48.6 41.7 Other 316.4 330.3 Total $463.5 $477.4 September 30 December 31 (millions) 2018 2017 Other current liabilities Discounts and rebates $292.0 $267.2 Dividends payable 118.4 118.6 Interest payable 71.4 50.7 Taxes payable, other than income 102.4 129.9 Derivative liabilities 23.7 62.2 Restructuring 93.2 36.0 Contract liability 81.9 79.0 Other 263.6 257.1 Total $1,046.6 $1,000.7 Accumulated other comprehensive loss Unrealized loss on derivative financial instruments, net of tax $(0.1) $(26.4) Unrecognized pension and postretirement benefit expense, net of tax (517.2) (555.8) Cumulative translation, net of tax (1,248.1) (1,061.2) Total $(1,765.4) $(1,643.4) |
DEBT AND INTEREST (Tables)
DEBT AND INTEREST (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
DEBT AND INTEREST | |
Schedule of short-term debt obligations | September 30 December 31 (millions) 2018 2017 Short-term debt Commercial paper $81.2 $- Notes payable 38.5 14.7 Long-term debt, current maturities 649.7 549.7 Total $769.4 $564.4 |
Schedule of long-term debt obligations including current maturities | Maturity September 30 December 31 (millions) by Year 2018 2017 Long-term debt Public and 144A notes (2018 principal amount) Three year 2015 senior notes ($0 million) 2018 $- $299.9 Three year 2016 senior notes ($400 million) 2019 398.2 396.1 Five year 2015 senior notes ($300 million) 2020 299.4 299.1 Ten year 2011 senior notes ($1.02 billion) 2021 1,017.2 1,016.6 Five year 2017 senior notes ($500 million) 2022 496.7 496.3 Seven year 2016 senior notes ($400 million) 2023 397.9 397.5 Seven year 2016 senior notes (€575 million) 2024 660.7 676.6 Ten year 2015 senior notes (€575 million) 2025 663.0 679.4 Ten year 2016 senior notes ($750 million) 2026 743.5 742.8 Ten year 2017 144A notes ($500 million) 2027 - 494.7 Ten year 2017 senior notes ($500 million) 2027 494.9 - Thirty year 2011 senior notes ($458 million) 2041 451.5 451.3 Thirty year 2016 senior notes ($250 million) 2046 246.1 246.0 Thirty year 2017 144A notes ($700 million) 2047 - 607.8 Thirty year 2017 senior notes ($700 million) 2047 608.5 - Private notes (2018 principal amount) Series A private placement senior notes ($250 million) 2018 249.6 248.5 Series B private placement senior notes ($250 million) 2023 249.4 249.3 Capital lease obligations 7.0 4.6 Other 0.9 1.5 Total debt 6,984.5 7,308.0 Long-term debt, current maturities (649.7) (549.7) Total long-term debt $6,334.8 $6,758.3 |
Schedule of interest expense and interest income | Third Quarter Ended Nine Months Ended September 30 September 30 (millions) 2018 2017 2018 2017 Interest expense $58.3 $60.7 $179.5 $191.0 Interest income (2.6) (5.6) (11.1) (13.8) Interest expense, net $55.7 $55.1 $168.4 $177.2 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
Changes in the carrying amount of goodwill | Global Global Global (millions) Industrial Institutional Energy Other Total December 31, 2017 $2,797.0 $1,027.0 $3,203.7 $139.4 $7,167.1 Segment change (a) (71.7) - - 71.7 - December 31, 2017 revised $2,725.3 $1,027.0 $3,203.7 $211.1 $7,167.1 Current year business combinations (b) 18.8 11.7 - - 30.5 Dispositions - - (2.9) - (2.9) Effect of foreign currency translation (44.3) (16.8) (51.8) (3.4) (116.3) September 30, 2018 $2,699.8 $1,021.9 $3,149.0 $207.7 $7,078.4 (a) Relates to establishment of the Colloidal Technologies Group (“CTG”) operating segment, which is also a reporting unit. Goodwill was allocated to CTG based on a fair value allocation. The CTG operating segment is included in Other. CTG was previously reported in the Water reporting unit, which is aggregated and reported in the Global Industrial reportable segment. See Note 15 for further information. (b) Represents goodwill associated with current year acquisitions. The Company does not expect any of the goodwill related to businesses acquired to be tax deductible. |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
FAIR VALUE MEASUREMENTS | |
Schedule of the carrying amount and estimated fair value of assets and liabilities measured on recurring basis | September 30, 2018 (millions) Carrying Fair Value Measurements Amount Level 1 Level 2 Level 3 Assets Foreign currency forward contracts $40.8 $- $40.8 $- Liabilities Foreign currency forward contracts 53.6 - 53.6 - Interest rate swap agreements 1.9 - 1.9 - December 31, 2017 (millions) Carrying Fair Value Measurements Amount Level 1 Level 2 Level 3 Assets Foreign currency forward contracts $45.8 $- $45.8 $- Liabilities Foreign currency forward contracts 153.1 - 153.1 - Interest rate swap agreements 4.2 - - |
Schedule of carrying amount and estimated fair value of long-term debt | September 30, 2018 December 31, 2017 Carrying Fair Carrying Fair Amount Value Amount Value Long-term debt, including current maturities $6,984.5 $7,126.7 $7,308.0 $7,716.0 |
DERIVATIVES AND HEDGING TRANS_2
DERIVATIVES AND HEDGING TRANSACTIONS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
DERIVATIVES AND HEDGING TRANSACTIONS | |
Gross fair value of the company's outstanding derivative assets and liabilities | Asset Derivatives Liability Derivatives September 30 December 31 September 30 December 31 (millions) 2018 2017 2018 2017 Derivatives designated as hedging instruments Foreign currency forward contracts $19.8 $19.6 $36.8 $125.2 Interest rate swap agreements - - 1.9 4.2 Derivatives not designated as hedging instruments Foreign currency forward contracts 21.0 26.2 16.8 27.9 Gross value of derivatives 40.8 45.8 55.5 157.3 Gross amounts offset in the Consolidated Balance Sheet (7.6) (17.0) (7.6) (17.0) Net value of derivatives $33.2 $28.8 $47.9 $140.3 |
Summary of notional values of outstanding derivatives | Notional Values September 30 December 31 (millions) 2018 2017 Foreign currency forward contracts $ 4,311 $ 5,593 Interest rate agreements 650 950 |
Impact on AOCI and earnings from derivative contracts qualified as cash flow hedges | Third Quarter Ended Nine Months Ended September 30 September 30 (millions) 2018 2017 2018 2017 Unrealized gain (loss) recognized into AOCI Foreign currency forward contracts AOCI (equity) $32.9 $(118.8) $85.6 $(192.4) Interest rate swap agreements AOCI (equity) - - - - Total $32.9 $(118.8) $85.6 $(192.4) Gain (loss) recognized in income Foreign currency forward contracts Cost of sales $(2.0) $(0.9) $(8.7) $(11.7) SG&A 12.4 (99.5) 39.3 (157.3) Interest expense, net 10.4 7.4 27.2 16.1 Subtotal 20.8 (93.0) 57.8 (152.9) Interest rate swap agreements Interest expense, net (1.3) (1.8) (4.7) (5.4) Total $19.5 $(94.8) $53.1 $(158.3) |
Impact on earnings from derivative contracts that qualified as fair value hedges | Third Quarter Ended Nine Months Ended September 30 September 30 (millions) 2018 2017 2018 2017 Gain (loss) on derivative recognized income Interest rate swap Interest expense, net $2.0 $0.3 $2.3 $(0.1) Gain (loss) on hedged item recognized income Interest rate swap Interest expense, net $(2.0) $(0.3) $(2.3) $0.1 |
Revaluation gains and losses on euronotes and forward contracts | Third Quarter Ended Nine Months Ended September 30 September 30 (millions) 2018 2017 2018 2017 Revaluation gains (losses), net of tax $9.1 $(50.9) $31.9 $(103.7) |
Impact on earnings from derivative contracts not designated as hedging instruments | Third Quarter Ended Nine Months Ended September 30 September 30 (millions) 2018 2017 2018 2017 Gain (loss) recognized in income Foreign currency forward contracts SG&A $7.1 $(29.4) $5.0 $(38.1) Interest expense, net 0.8 (0.2) 4.5 (3.5) Total $7.9 $(29.6) $9.5 $(41.6) |
OTHER COMPREHENSIVE INCOME (L_2
OTHER COMPREHENSIVE INCOME (LOSS) INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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 | Third Quarter Ended Nine Months Ended September 30 September 30 (millions) 2018 2017 2018 2017 Derivative and Hedging Instruments Unrealized gains (losses) on derivative & hedging instruments Amount recognized in AOCI $32.9 $(118.8) $85.6 $(192.4) (Gains) losses reclassified from AOCI into income Cost of sales 2.0 0.9 8.7 11.7 SG&A (12.4) 99.5 (39.3) 157.3 Interest (income) expense, net (9.1) (5.6) (22.5) (10.7) (19.5) 94.8 (53.1) 158.3 Other activity 0.1 (0.6) - (0.1) Tax impact (2.5) 3.8 (6.2) 5.1 Net of tax $11.0 $(20.8) $26.3 $(29.1) Pension and Postretirement Benefits Amount reclassified from AOCI into income Amortization of net actuarial loss and prior service costs 6.0 5.2 21.4 15.2 Postretirement benefits changes - - 18.9 - 6.0 5.2 40.3 15.2 Other activity 3.3 - 7.9 - Tax impact (1.5) (3.9) (9.7) (7.0) Net of tax $7.8 $1.3 $38.5 $8.2 |
Summary of the net of tax derivative and pension and postretirement benefit amounts reclassified from AOCI into income | Third Quarter Ended Nine Months Ended September 30 September 30 2018 2017 2018 2017 (millions) Derivative (gains) losses reclassified from AOCI into income, net of tax $(16.0) $72.7 $(42.3) $120.3 Pension and postretirement benefits net actuarial losses and prior services costs reclassified from AOCI into income, net of tax $4.5 $1.3 $16.2 $8.2 |
EARNINGS ATTRIBUTABLE TO ECOL_2
EARNINGS ATTRIBUTABLE TO ECOLAB PER COMMON SHARE ("EPS") (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
EARNINGS ATTRIBUTABLE TO ECOLAB PER COMMON SHARE ("EPS") | |
Computations of the basic and diluted EPS | Third Quarter Ended Nine Months Ended September 30 September 30 (millions, except per share) 2018 2017 2018 2017 Net income attributable to Ecolab $435.4 $393.2 $1,034.0 $942.0 Weighted-average common shares outstanding Basic 288.8 289.0 288.8 289.8 Effect of dilutive stock options and units 4.6 4.4 4.3 4.4 Diluted 293.4 293.4 293.1 294.2 Basic EPS $ 1.51 $ 1.36 $ 3.58 $ 3.25 Diluted EPS $ 1.48 $ 1.34 $ 3.53 $ 3.20 Anti-dilutive securities excluded from the computation of diluted EPS 1.4 0.1 1.4 1.7 |
PENSION AND POSTRETIREMENT PL_2
PENSION AND POSTRETIREMENT PLANS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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 third quarter ended September 30 are as follows: U.S. International U.S. Postretirement Pension Pension Health Care (millions) 2018 2017 2018 2017 2018 2017 Service cost $18.6 $17.5 $8.4 $7.7 $0.5 $0.7 Interest cost on benefit obligation 20.8 20.9 7.5 7.0 1.3 1.5 Expected return on plan assets (40.5) (37.4) (16.1) (13.9) (0.1) (0.1) Recognition of net actuarial (gain) loss 9.8 7.2 4.4 4.5 (0.5) (0.6) Amortization of prior service cost (benefit) (1.7) (1.7) (0.2) (0.2) (5.8) (4.2) Total expense (benefit) $7.0 $6.5 $4.0 $5.1 $(4.6) $(2.7) The components of net periodic pension and postretirement health care benefit costs for the nine months ended September 30 are as follows: U.S. International U.S. Postretirement Pension Pension Health Care (millions) 2018 2017 2018 2017 2018 2017 Service cost $55.8 $52.6 $25.4 $23.0 $2.3 $2.0 Interest cost on benefit obligation 62.4 62.6 22.4 21.1 4.3 4.4 Expected return on plan assets (121.5) (112.3) (48.8) (41.7) (0.3) (0.4) Recognition of net actuarial (gain) loss 29.4 21.5 13.2 13.6 (1.5) (1.8) Amortization of prior service cost (benefit) (5.1) (5.1) (0.6) (0.5) (14.0) (12.5) Total expense (benefit) $21.0 $19.3 $11.6 $15.5 $(9.2) $(8.3) |
REVENUES (Tables)
REVENUES (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
REVENUES | |
Schedule of principal activities, separated by reportable segments | Net sales at public exchange rates by reportable segment for the third quarter and nine months ended September 30 are as follows: Third Quarter Ended Nine Months Ended September 30 September 30 (millions) 2018 2017 2018 2017 Global Industrial Product and sold equipment $1,176.8 $1,101.8 $3,380.9 $3,110.6 Service and lease equipment 175.4 171.0 524.5 485.2 Global Institutional Product and sold equipment 1,130.8 1,075.6 3,297.8 3,060.2 Service and lease equipment 174.3 165.9 510.2 473.5 Global Energy Product and sold equipment 761.7 712.6 2,246.6 2,079.7 Service and lease equipment 100.5 93.9 303.7 282.1 Other Product and sold equipment 21.0 41.9 60.4 126.4 Service and lease equipment 206.7 201.8 583.6 569.2 Total Total product and sold equipment $3,090.3 $2,931.9 $8,985.7 $8,376.9 Total service and lease equipment 656.9 632.6 1,922.0 1,810.0 Net sales at public exchange rates by geographic region for the third quarter ended September 30 are as follows: Global Global Global Industrial Institutional Energy Other (millions) 2018 2017 2018 2017 2018 2017 2018 2017 North America $628.0 $573.7 $898.1 $845.9 $502.1 $445.4 $156.9 $178.1 Europe 326.0 314.2 260.2 250.0 96.7 102.5 33.2 31.0 Asia Pacific 171.4 168.9 62.3 60.2 65.7 68.8 10.5 8.8 Latin America 121.6 113.7 40.9 41.7 55.5 62.1 11.5 11.4 Middle East and Africa 34.4 32.7 15.3 17.5 123.5 109.9 2.8 2.8 Greater China 70.9 69.7 28.3 26.3 18.7 17.9 12.7 11.3 Total $1,352.3 $1,272.9 $1,305.1 $1,241.6 $862.2 $806.6 $227.6 $243.4 Net sales at public exchange rates by geographic region for the nine months ended September 30 are as follows: Global Global Global Industrial Institutional Energy Other (millions) 2018 2017 2018 2017 2018 2017 2018 2017 North America $1,780.7 $1,643.7 $2,592.4 $2,450.2 $1,474.8 $1,323.6 $436.3 $512.3 Europe 959.5 852.3 774.9 666.5 302.5 287.0 97.0 84.2 Asia Pacific 503.7 483.1 186.8 174.7 200.1 190.6 29.4 24.7 Latin America 350.8 326.5 124.5 122.8 163.7 183.2 35.2 33.4 Middle East and Africa 99.0 93.3 44.5 44.7 354.1 326.8 8.5 8.4 Greater China 211.8 196.8 84.9 74.9 55.1 50.7 37.5 32.5 Total $3,905.5 $3,595.7 $3,808.0 $3,533.8 $2,550.3 $2,361.9 $643.9 $695.5 Net sales by geographic region were determined based on origin of sale. |
Schedule of contract liability | September 30 September 30 (millions) 2018 2017 Contract liability as of beginning of period $79.0 $68.6 Revenue recognized in the period from: Amounts included in the contract liability at the beginning of the period (79.0) (68.6) Increases due to billings excluding amounts recognized as revenue during the period 81.7 82.5 Business combination 0.2 2.2 Contract liability as of end of period $81.9 $84.7 |
OPERATING SEGMENTS (Tables)
OPERATING SEGMENTS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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 2017 net sales and oeprating income | December 31, 2017 2017 Reported Revenue Pension Fixed 2017 Revised Valued at 2017 Standard Standard Segment Currency Valued at 2018 (millions) Management Rates Adoption Adoption Change Rate Change Management Rates Net Sales Global Industrial $4,878.5 $(0.8) $- $(56.9) $286.0 $5,106.8 Global Institutional 4,744.9 (1.4) - (23.7) 190.2 4,910.0 Global Energy 3,199.3 - - 0.7 81.7 3,281.7 Other 823.5 - - 79.9 28.1 931.5 Subtotal at fixed currency rates 13,646.2 (2.2) - - 586.0 14,230.0 Effect of foreign currency translation 192.1 (0.2) - - (586.0) (394.1) Consolidated reported GAAP net sales $13,838.3 $(2.4) $- $- $- $13,835.9 Operating Income Global Industrial $722.0 $(0.8) $(12.8) $2.6 $47.5 $758.5 Global Institutional 985.7 (1.4) (13.1) (14.9) 23.5 979.8 Global Energy 338.5 - (16.7) (0.7) 15.0 336.1 Other 149.3 - (24.5) 13.0 4.7 142.5 Corporate (208.6) - - - (5.3) (213.9) Subtotal at fixed currency rates 1,986.9 (2.2) (67.1) - 85.4 2,003.0 Effect of foreign currency translation 32.9 (0.2) (0.2) - (85.4) (52.9) Consolidated reported GAAP operating income $2,019.8 $(2.4) $(67.3) $- $- $1,950.1 |
Schedule of financial information for each of the entity's reportable segments | Third Quarter Ended Nine Months Ended September 30 September 30 (millions) 2018 2017 2018 2017 Net Sales Global Industrial $1,411.6 $1,309.4 $4,001.4 $3,754.7 Global Institutional 1,340.8 1,268.9 3,870.5 3,646.3 Global Energy 889.6 817.5 2,590.7 2,406.6 Other 232.9 247.6 652.6 711.6 Subtotal at fixed currency rates 3,874.9 3,643.4 11,115.2 10,519.2 Effect of foreign currency translation (127.7) (78.9) (207.5) (332.3) Consolidated reported GAAP net sales $3,747.2 $3,564.5 $10,907.7 $10,186.9 Operating Income Global Industrial $224.9 $217.4 $527.9 $529.4 Global Institutional 292.5 276.1 743.2 720.0 Global Energy 94.1 89.8 256.4 232.8 Other 48.3 41.4 114.7 102.7 Corporate (122.1) (48.2) (246.1) (202.9) Subtotal at fixed currency rates 537.7 576.5 1,396.1 1,382.0 Effect of foreign currency translation (21.5) (12.4) (31.0) (41.1) Consolidated reported GAAP operating income $516.2 $564.1 $1,365.1 $1,340.9 |
NEW ACCOUNTING PRONOUNCEMENTS (
NEW ACCOUNTING PRONOUNCEMENTS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
NEW ACCOUNTING PRONOUNCEMENTS | |
Schedule of new accounting pronouncements | 17. NEW ACCOUNTING PRONOUNCEMENTS Required Date of Date of Effect on the Standard Issuance Description Adoption Financial Statements Standards that are not yet adopted: 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 in this Update require an entity (customer) in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. January 1, 2020 The ASU should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is currently evaluating the impact of adoption. 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 Entities are required to apply the disclosure amendments on a retrospective basis to all periods presented. The Company is currently evaluating the impact of adoption. ASU 2018-07 - Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting June 2018 The amendments in this update expand the scope of Topic 718 to include share-based payment awards issued to nonemployees. Prior to this ASU, the accounting guidance for nonemployee share-based payments differed from that governing employee awards, particularly regarding measurement date and the impact of any performance conditions. January 1, 2019 Adoption of the ASU is not expected to have a material impact on the Company’s financial statements. ASU 2018-02 - Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income February 2018 Amends ASC 220 to allow entities to reclassify stranded tax effects resulting from the Tax Cut and Jobs Act (“the Act”) from accumulated OCI to retained earnings. Tax effects stranded in OCI for reasons other than the impact of the Act cannot be reclassified. January 1, 2019 The Company is currently evaluating the impact of adoption and accounting policy elections required to be made. ASU 2017-12 - Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities August 2017 Amends the hedge accounting recognition and presentation requirements in ASC 815. Simplifies the guidance on the application of hedge accounting and the requirements for hedge documentation and effectiveness testing. Requires presentation of all items that affect earnings in the same income statement line as the hedged item. January 1, 2019 The Company is currently evaluating certain transition elections provided for by the ASU. Adoption of the ASU is not expected to have a material impact on the Company's financial statements. ASU 2017-04 - Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment January 2017 Simplifies subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. January 1, 2020 The ASU must be applied on a prospective basis upon adoption. Adoption of the ASU is not expected to have a material impact on the Company's financial statements. ASU 2016-13 - Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments June 2016 Addresses the recognition, measurement, presentation and disclosure of credit losses on trade and reinsurance receivables, loans, debt securities, net investments in leases, off-balance-sheet credit exposures and certain other instruments. Amends guidance on reporting credit losses from an incurred model to an expected model for assets held at amortized cost, such as accounts receivable, loans and held-to-maturity debt securities. Additional disclosures will also be required. January 1, 2020 Adoption of the standard may change how the allowance for trade and other receivables is calculated. The Company is currently evaluating the impact of adoption. Lease ASUs: Various Introduces the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous guidance. January 1, 2019 See additional information regarding the impact of this guidance on the Company's financial statements at the bottom of this table in note (a). (a) As part of adopting the new lease standard, the Company has implemented a global lease accounting software, which is designed to facilitate adoption and reporting in accordance with the new standard. The Company is in the final stages of accumulating leases within the software and designing future processes for adherence to ongoing reporting requirements. The Company expects most of its operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon adoption which is expected to be material. Adoption of the standard is not expected to have a material impact on consolidated net earnings. The Company will elect the prospective transition method with the effects of initially applying the new standard to be recognized as a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. Prior reporting periods will be recorded in accordance with the guidance in place at that time. The Company will also elect the package of three practical expedients permitted under the transition guidance within the new standard, which among other things, allows the Company to carryforward the historical lease classification. The Company will also elect the hindsight and land easement practical expedients. The Company will make an accounting policy election to not apply the recognition requirements of the new standard to leases with terms of 12 months or less and which do not include an option to purchase the underlying assets which is reasonably certain of exercise. Those lease payments will continue to be recognized in the Consolidated Statement of Income on a straight-line basis over the lease term. Lastly, the Company will elect, by asset class, the lessor practical expedient to not separate nonlease and lease components and account for those components as a single component. Date of Date of Effect on the Standard Issuance Description Adoption Financial Statements Standards that were adopted: ASU 2017-09 - Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting May 2017 Clarifies the definition of what's considered a substantive modification related to a change in terms or conditions of a share-based payment award and when it's appropriate to apply modification accounting. The current definition of "modification" is too broad, resulting in diverse interpretations of what's considered a substantive modification. January 1, 2018 Adoption of the guidance did not have a material impact on the Company's financial statements. ASU 2017-05 - Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Topic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets February 2017 Clarifies the scope of guidance on nonfinancial asset derecognition (ASC 610-20) including the accounting for partial sales of nonfinancial assets. The ASU defines "in-substance nonfinancial asset". Also clarifies the derecognition of all businesses should be accounted for in accordance with derecognition and deconsolidation guidance in 810-10. January 1, 2018 Adoption of the guidance did not have a material impact on the Company's financial statements. ASU 2017-01 - Business Combinations (Topic 805): Clarifying the Definition of a Business January 2017 Clarifies the definition of a business and provides guidance on whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. January 1, 2018 Adoption of the guidance did not have a material impact on the Company's financial statements. ASU 2016-16 - Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory October 2016 Simplifies the guidance on the accounting for the income tax consequences of intra-entity transfers of assets other than inventory (e.g. intellectual property). January 1, 2018 During the first quarter of 2018, the Company adopted the accounting guidance issued in October 2016 that requires recognition of the income tax effects of intercompany sales and transfers of assets, other than inventory, in the period in which the transfer occurs. Under previous guidance the income tax effects of intercompany transfers of assets were deferred until the asset had been sold to an outside party or otherwise recognized (e.g., depreciated, amortized, impaired). Upon adoption of the standard, only the income tax effects of intercompany transfers of inventory are deferred. The standard was adopted using the modified retrospective approach with a cumulative-effective adjustment of $43.6 million to opening retained earnings on the date of adoption. Income tax effects of intra-entity inventory transfers will continue to be deferred until the inventory is sold. ASU 2016-15 - Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments August 2016 The guidance's objective is to reduce diversity in practice of how certain cash receipts and cash payments are presented and classified in the statement of cash flow. January 1, 2018 Adoption of the guidance did not have a material impact on the Company's financial statements and elected to account for distributions received from equity method investees using the nature of distribution approach accounting policy election. |
Schedule of new accounting pronouncements, income statement impact | The following table presents the effect of the adoptions of the revenue recognition and pension standards on the Company’s Consolidated Statement of Income for the third quarter ended September 30: (millions, except per share amounts) Third Quarter Ended September 30 2017 Revenue Standard Adoption Pension Standard Adoption 2017 Revised Net sales $3,563.3 $(3,563.3) $- $- Product and equipment sales - 2,931.9 - 2,931.9 Service and lease sales - 632.6 - 632.6 Total net sales 3,563.3 1.2 - 3,564.5 Cost of sales 1,891.3 (1,891.3) - - Product and equipment cost of sales - 1,675.8 1.1 1,676.9 Service and lease cost of sales - 387.5 0.2 387.7 Total cost of sales (including special charges) 1,891.3 172.0 1.3 2,064.6 Selling, general and administrative expenses 1,087.3 (172.0) 15.6 930.9 Special (gains) and charges 4.9 - - 4.9 Operating income 579.8 1.2 (16.9) 564.1 Other (income) expense - - (16.9) (16.9) Interest expense, net 55.1 - - 55.1 Income before income taxes 524.7 1.2 - 525.9 Provision for income taxes 128.9 0.4 - 129.3 Net income including noncontrolling interest 395.8 0.8 - 396.6 Net income attributable to noncontrolling interest 3.4 - - 3.4 Net income attributable to Ecolab $392.4 $0.8 $- $393.2 Earnings attributable to Ecolab per common share Basic $ 1.36 $ - $ - $ 1.36 Diluted $ 1.34 $ - $ - $ 1.34 The following table presents the effect of the adoptions of the revenue recognition and pension standards on the Company’s Consolidated Statement of Income for the nine months ended September 30: (millions, except per share amounts) Nine Months Ended September 30 2017 Revenue Standard Adoption Pension Standard Adoption 2017 Revised Net sales $10,187.6 $(10,187.6) $- $- Product and equipment sales - 8,376.9 - 8,376.9 Service and lease sales - 1,810.0 - 1,810.0 Total net sales 10,187.6 (0.7) - 10,186.9 Cost of sales 5,454.4 (5,454.4) - - Product and equipment cost of sales - 4,831.1 3.1 4,834.2 Service and lease cost of sales - 1,127.0 0.6 1,127.6 Total cost of sales (including special charges (a)) 5,454.4 503.7 3.7 5,961.8 Selling, general and administrative expenses 3,293.2 (503.7) 46.8 2,836.3 Special (gains) and charges 47.9 - - 47.9 Operating income 1,392.1 (0.7) (50.5) 1,340.9 Other (income) expense - - (50.5) (50.5) Interest expense, net 177.2 - - 177.2 Income before income taxes 1,214.9 (0.7) - 1,214.2 Provision for income taxes 264.2 (0.2) - 264.0 Net income including noncontrolling interest 950.7 (0.5) - 950.2 Net income attributable to noncontrolling interest 8.2 - - 8.2 Net income attributable to Ecolab $942.5 $(0.5) $- $942.0 Earnings attributable to Ecolab per common share Basic $ 3.25 $ - $ - $ 3.25 Diluted $ 3.20 $ - $ - $ 3.20 |
Schedule of new accounting pronouncements, balance sheet impact | (millions) Year ended December 31 2017 Revenue Standard Adoption 2017 ASSETS Current assets Accounts receivable, net $2,574.1 $(2.7) $2,571.4 Inventories 1,445.9 0.6 1,446.5 Total current assets 4,596.4 (2.1) 4,594.3 Other assets 474.2 3.2 477.4 Total assets 19,962.4 1.1 19,963.5 LIABILITIES AND EQUITY Current liabilities Other current liabilities 957.3 43.4 1,000.7 Total current liabilities 3,431.8 43.4 3,475.2 Deferred income taxes 642.8 (7.4) 635.4 Total liabilities 12,273.7 36.0 12,309.7 Equity Retained earnings 8,045.4 (33.8) 8,011.6 Accumulated other comprehensive loss (a) (1,642.3) (1.1) (1,643.4) Total Ecolab shareholders’ equity 7,618.5 (34.9) 7,583.6 Total equity 7,688.7 (34.9) 7,653.8 Total liabilities and equity $19,962.4 $1.1 $19,963.5 On a quarterly basis throughout 2017, revenue recognition adjustments had a nominal impact on foreign currency translation within accumulated other comprehensive loss. These revisions have been reflected within the Statement of Comprehensive Income. |
Schedule of new accounting pronouncements, cash flow impact | (millions) Nine Months Ended September 30 2017 Restricted Cash Standard Adoption Revenue Standard Adoption 2017 Revised OPERATING ACTIVITIES Net income including noncontrolling interest $950.7 $- $(0.5) $950.2 Adjustments to reconcile net income to cash provided by operating activities: Deferred income taxes 10.4 - (0.6) 9.8 Changes in operating assets and liabilities, net of effect of acquisitions: Accounts receivable (23.5) - 0.3 (23.2) Other liabilities (107.2) - 0.8 (106.4) Cash provided by operating activities 1,444.9 - - 1,444.9 INVESTING ACTIVITIES Restricted cash activity 53.8 (53.8) - - Cash used for investing activities (1,368.1) (53.8) - (1,421.9) Effect of exchange rate changes on cash, cash equivalents and restricted cash 5.4 0.8 - 6.2 (Decrease) increase in cash, cash equivalents and restricted cash (118.3) (53.0) - (171.3) Cash, cash equivalents and restricted cash, beginning of period 327.4 53.0 - 380.4 Cash, cash equivalents and restricted cash, end of period $209.1 $- $- $209.1 |
SPECIAL (GAINS) AND CHARGES - C
SPECIAL (GAINS) AND CHARGES - Charges Reported on Statement of Income (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Special (gains) and charges | ||||
Subtotal | $ 75.6 | $ 4.9 | $ 113.7 | $ 47.9 |
Total special (gains) and charges | 79.2 | 5.2 | 117.2 | 74.1 |
Cost of sales | ||||
Special (gains) and charges | ||||
Restructuring activities | 5.9 | 6.3 | 2.2 | |
Acquisition and integration costs | (0.1) | 0.3 | (0.6) | 12.9 |
Other special gains and charges | (2.2) | (2.2) | 11.1 | |
Subtotal | 3.6 | 0.3 | 3.5 | 26.2 |
Special (gains) and charges | ||||
Special (gains) and charges | ||||
Restructuring activities | 73.1 | 4.1 | 82.3 | 34.6 |
Acquisition and integration costs | 2.4 | 1.8 | 4.7 | 12.7 |
Venezuela related gain | (3.2) | (8.5) | ||
Other special gains and charges | 0.1 | 2.2 | 26.7 | 9.1 |
Subtotal | $ 75.6 | $ 4.9 | $ 113.7 | $ 47.9 |
SPECIAL (GAINS) AND CHARGES - R
SPECIAL (GAINS) AND CHARGES - Restructuring and Non-Restructuring Activity (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Restructuring | |||||
Recorded expense (income) and accrual | $ 89.5 | ||||
Cash payments | (17.8) | ||||
Net cash payments | (13.5) | ||||
Effect of foreign currency translation | (0.2) | ||||
Restructuring liability | $ 75.8 | 75.8 | |||
Non-restructuring Special (Gains) and Charges | |||||
Property, Plant and Equipment, Net | 3,778 | 3,778 | $ 3,707.1 | ||
VENEZUELA | |||||
Non-restructuring Special (Gains) and Charges | |||||
Foreign currency translation (charges) recovery associated with remeasurement and deconsolidation, before tax | $ 3.2 | $ 8.5 | |||
Foreign currency translation (charges) recovery associated with remeasurement and deconsolidation, after tax | 2 | 5.3 | |||
Special (gains) and charges | |||||
Other restructuring information | |||||
Restructuring charges incurred, pre-tax | 73.1 | 4.1 | 82.3 | 34.6 | |
Non-restructuring Special (Gains) and Charges | |||||
Foreign currency translation (charges) recovery associated with remeasurement and deconsolidation, before tax | 3.2 | 8.5 | |||
Business combination advisory and legal fees, after tax | 1.6 | 3.3 | |||
Employee termination costs | |||||
Restructuring | |||||
Recorded expense (income) and accrual | 88.7 | ||||
Net cash payments | (13.3) | ||||
Effect of foreign currency translation | (0.2) | ||||
Restructuring liability | 75.2 | 75.2 | |||
Other | |||||
Restructuring | |||||
Recorded expense (income) and accrual | 0.8 | ||||
Net cash payments | (0.2) | ||||
Restructuring liability | 0.6 | 0.6 | |||
2018 Restructuring Plan | |||||
Other restructuring information | |||||
Restructuring charge expected to be incurred, after tax | 130 | 130 | |||
Restructuring charge expected to be incurred, pre-tax | 170 | $ 170 | |||
Period over which the entity expects to incur the restructuring charge | 3 years | ||||
2018 Restructuring Plan | Special (gains) and charges | |||||
Restructuring | |||||
Restructuring liability | 75.8 | $ 75.8 | |||
Other restructuring information | |||||
Restructuring charges incurred, pre-tax | 79.4 | 89.5 | |||
Restructuring charges incurred, after tax | 60.5 | 68.1 | |||
Prior Year Plans | |||||
Restructuring | |||||
Restructuring liability | $ 22.5 | $ 22.5 | $ 41.5 | ||
Prior Year Plans | Special (gains) and charges | |||||
Other restructuring information | |||||
Restructuring charges incurred, pre-tax | 4.1 | 36.8 | |||
Restructuring charges incurred, after tax | $ 1.7 | $ 25.9 |
SPECIAL (GAINS) AND CHARGES -_2
SPECIAL (GAINS) AND CHARGES - Restructuring Activities, Acquisition and Integration Related Costs (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Restructuring | |||||
Restructuring liability | $ 75.8 | $ 75.8 | |||
Cash payments | 17.8 | ||||
Acquisition, integrated and other related costs | |||||
Property, Plant and Equipment, Net | 3,778 | 3,778 | $ 3,707.1 | ||
Special (gains) and charges | |||||
Restructuring | |||||
Restructuring charges incurred, pre-tax | 73.1 | $ 4.1 | 82.3 | $ 34.6 | |
Acquisition, integrated and other related costs | |||||
Acquisition and integration costs | 2.4 | 1.8 | 4.7 | 12.7 | |
Acquisition and integration costs, after tax | 1.6 | 3.3 | |||
Other special gains and charges | 0.1 | 2.2 | 26.7 | 9.1 | |
Other special gains and charges, after-tax | 0.1 | 20.6 | |||
Other, Ecolab Foundation, pre-tax | 25 | ||||
Other, Ecolab Foundation, after tax | 18.9 | ||||
Foreign currency translation (charges) recovery associated with remeasurement and deconsolidation, before tax | 3.2 | 8.5 | |||
Special (gains) and charges | Anios and Swisher | |||||
Acquisition, integrated and other related costs | |||||
Acquisition and integration costs | 1.8 | 12.7 | |||
Acquisition and integration costs, after tax | 1.2 | 8.5 | |||
Cost of sales | |||||
Restructuring | |||||
Restructuring charges incurred, pre-tax | 5.9 | 6.3 | 2.2 | ||
Acquisition, integrated and other related costs | |||||
Acquisition and integration costs | (0.1) | 0.3 | (0.6) | 12.9 | |
Acquisition and integration costs, after tax | 0.2 | 8.2 | |||
Other special gains and charges | (2.2) | (2.2) | 11.1 | ||
Global Energy | |||||
Acquisition, integrated and other related costs | |||||
Contract termination and litigation related charges, before tax | 2.2 | 20.2 | |||
Contract termination and litigation related charges, after tax | 1.4 | 15.9 | |||
VENEZUELA | |||||
Acquisition, integrated and other related costs | |||||
Foreign currency translation (charges) recovery associated with remeasurement and deconsolidation, before tax | 3.2 | 8.5 | |||
Foreign currency translation (charges) recovery associated with remeasurement and deconsolidation, after tax | 2 | 5.3 | |||
Product and equipment | |||||
Acquisition, integrated and other related costs | |||||
Other special gains and charges | 2.2 | ||||
Other special gains and charges, after-tax | 1.7 | ||||
2018 Restructuring Plan | |||||
Restructuring | |||||
Restructuring charge expected to be incurred, pre-tax | 170 | 170 | |||
Restructuring charge expected to be incurred, after tax | 130 | 130 | |||
2018 Restructuring Plan | Special (gains) and charges | |||||
Restructuring | |||||
Restructuring charges incurred, pre-tax | 79.4 | 89.5 | |||
Restructuring charges incurred, after tax | 60.5 | 68.1 | |||
Restructuring liability | 75.8 | 75.8 | |||
Prior Year Plans | |||||
Restructuring | |||||
Restructuring liability | 22.5 | 22.5 | $ 41.5 | ||
Prior Year Plans | Special (gains) and charges | |||||
Restructuring | |||||
Restructuring charges incurred, pre-tax | 4.1 | 36.8 | |||
Restructuring charges incurred, after tax | $ 1.7 | $ 25.9 | |||
Restructuring net gain | 0.4 | 0.9 | |||
Restructuring net gain, net of tax | $ 0.3 | $ 0.6 |
ACQUISITIONS AND DISPOSITIONS -
ACQUISITIONS AND DISPOSITIONS - Acquisition Summary (Details) € in Millions, $ in Millions | Feb. 01, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)item | Sep. 30, 2017USD ($) | Dec. 31, 2016EUR (€) | Dec. 31, 2016USD ($) |
Acquisitions and Dispositions | |||||||
Total consideration transferred | $ 798.3 | ||||||
Number of business disposals | item | 0 | ||||||
Components of the aggregate purchase prices of the completed acquisitions | |||||||
Tangible Assets | 139.8 | ||||||
Identifiable intangible assets | |||||||
Customer relationships | 252 | ||||||
Trademarks | 65.7 | ||||||
Other technology | 16.1 | ||||||
Total assets acquired | 473.6 | ||||||
Total liabilities assumed | 187 | ||||||
Goodwill | 511.7 | ||||||
Total consideration transferred | 798.3 | ||||||
Long-term debt repaid upon close | 192.8 | ||||||
Net consideration transferred to sellers | 605.5 | ||||||
Cost of sales | |||||||
Acquisitions and Dispositions | |||||||
Acquisition and integration costs | $ (0.1) | $ 0.3 | $ (0.6) | $ 12.9 | |||
Acquisition and integration costs, after tax | $ 0.2 | 8.2 | |||||
Anios | |||||||
Acquisitions and Dispositions | |||||||
Total consideration transferred | 798.3 | ||||||
Pre-acquisition annual sales | $ 245 | ||||||
Increase (decrease) in restricted cash | € | € 50 | ||||||
Identifiable intangible assets | |||||||
Total consideration transferred | 798.3 | ||||||
Accounts receivable | 64.8 | ||||||
Property, plant and equipment | 24.7 | ||||||
Inventory | 29.1 | ||||||
Deferred tax liabilities | 102.3 | ||||||
Current liabilities | 62.5 | ||||||
Goodwill expected to be tax deductible | $ 0 | ||||||
Other Acquisitions | |||||||
Acquisitions and Dispositions | |||||||
Total consideration transferred | 77.6 | 32.6 | |||||
Identifiable intangible assets | |||||||
Intangible assets | 45.9 | 18.4 | |||||
Goodwill | 30.5 | ||||||
Total consideration transferred | $ 77.6 | $ 32.6 | |||||
Weighted average useful lives of identifiable intangible assets acquired | 11 years | 12 years | |||||
Customer relationships | Anios | |||||||
Identifiable intangible assets | |||||||
Weighted average useful lives of identifiable intangible assets acquired | 20 years | ||||||
Other technology | Anios | |||||||
Identifiable intangible assets | |||||||
Weighted average useful lives of identifiable intangible assets acquired | 11 years | ||||||
Trademarks | Anios | |||||||
Identifiable intangible assets | |||||||
Weighted average useful lives of identifiable intangible assets acquired | 17 years |
ACQUISITIONS AND DISPOSITIONS_2
ACQUISITIONS AND DISPOSITIONS - Dispositions (Details) $ in Millions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017item | Dec. 31, 2016USD ($) | |
Dispositions | ||
Number of business dispositions | item | 0 | |
Equipment Care Business | Disposal Group, Disposed of by Sale, Not Discontinued Operations | ||
Dispositions | ||
Net sales | $ | $ 180 |
BALANCE SHEET INFORMATION (Deta
BALANCE SHEET INFORMATION (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Accounts receivable, net | ||
Accounts receivable | $ 2,721.7 | $ 2,642.9 |
Allowance for doubtful accounts | (69) | (71.5) |
Total | 2,652.7 | 2,571.4 |
Inventories | ||
Finished goods | 1,061.8 | 974.9 |
Raw materials and parts | 513.9 | 438.7 |
Inventories at FIFO cost | 1,575.7 | 1,413.6 |
FIFO cost to LIFO cost difference | 12.2 | 32.9 |
Total | 1,587.9 | 1,446.5 |
Other current assets | ||
Prepaid assets | 133.2 | 153.5 |
Taxes receivable | 174.5 | 129.2 |
Derivative assets | 33.2 | 28.8 |
Other current assets | 37.2 | 53.5 |
Total | 378.1 | 365 |
Property, plant and equipment, net | ||
Land | 214.7 | 224.1 |
Buildings and leasehold improvements | 1,249 | 1,207.4 |
Machinery and equipment | 2,345.9 | 2,280.9 |
Merchandising and customer equipment | 2,550.3 | 2,399.4 |
Capitalized software | 653.1 | 585.8 |
Construction in progress | 443.6 | 438.7 |
Property, plant and equipment, gross | 7,456.6 | 7,136.3 |
Accumulated depreciation | (3,678.6) | (3,429.2) |
Total | 3,778 | 3,707.1 |
Intangible assets subject to amortization: | ||
Other intangible assets, gross | 4,706.7 | 4,696.2 |
Accumulated amortization | (2,116.3) | (1,908.6) |
Net intangible assets subject to amortization | 2,590.4 | 2,787.6 |
Total | 3,820.4 | 4,017.6 |
Other assets | ||
Deferred income taxes | 98.5 | 105.4 |
Pension | 48.6 | 41.7 |
Other | 316.4 | 330.3 |
Total | 463.5 | 477.4 |
Other current liabilities | ||
Discounts and rebates | 292 | 267.2 |
Dividends payable | 118.4 | 118.6 |
Interest payable | 71.4 | 50.7 |
Taxes payable, other than income | 102.4 | 129.9 |
Derivative liabilities | 23.7 | 62.2 |
Restructuring | 93.2 | 36 |
Contract liability | 81.9 | 79 |
Other | 263.6 | 257.1 |
Total | 1,046.6 | 1,000.7 |
Accumulated other comprehensive loss | ||
Unrealized gain (loss) on derivative financial instruments, net of tax | (0.1) | (26.4) |
Unrecognized pension and postretirement benefit expense, net of tax | (517.2) | (555.8) |
Cumulative translation, net of tax | (1,248.1) | (1,061.2) |
Total | (1,765.4) | (1,643.4) |
Customer relationships | ||
Intangible assets subject to amortization: | ||
Other intangible assets, gross | 3,620.3 | 3,620.3 |
Accumulated amortization | (1,560.2) | (1,403.8) |
Trademarks | ||
Intangible assets subject to amortization: | ||
Other intangible assets, gross | 382 | 380.6 |
Accumulated amortization | (168.6) | (147.6) |
Patents | ||
Intangible assets subject to amortization: | ||
Other intangible assets, gross | 467.7 | 462.7 |
Accumulated amortization | (201.1) | (187.9) |
Other technology | ||
Intangible assets subject to amortization: | ||
Other intangible assets, gross | 236.7 | 232.6 |
Accumulated amortization | (186.4) | (169.3) |
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 | Sep. 30, 2018EUR (€) | Sep. 30, 2018USD ($) | Dec. 31, 2017USD ($) |
Components of the company's debt obligations | |||
Long-term debt, current maturities | $ 649.7 | $ 549.7 | |
Short-term debt including current maturities of long-term debt | 769.4 | 564.4 | |
Commercial paper. | |||
Components of the company's debt obligations | |||
Short-term debt | 81.2 | ||
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 | 0 | 0 | |
European commercial paper | |||
Components of the company's debt obligations | |||
Maximum borrowing capacity, commercial paper | 2,000 | ||
Outstanding commercial paper | € 70 | 81.2 | 0 |
Notes payable | |||
Components of the company's debt obligations | |||
Short-term debt | 38.5 | 14.7 | |
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 | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018EUR (€) | Sep. 30, 2018USD ($) | Dec. 31, 2017EUR (€) | Dec. 31, 2017USD ($) | |
Debt instrument | ||||||||
CARRYING VALUE | $ 6,984.5 | $ 7,308 | ||||||
Long-term debt, current maturities | (649.7) | (549.7) | ||||||
Long-term debt | 6,334.8 | 6,758.3 | ||||||
Interest | ||||||||
Interest expense | $ 58.3 | $ 60.7 | $ 179.5 | $ 191 | ||||
Interest income | (2.6) | (5.6) | (11.1) | (13.8) | ||||
Interest expense, net | $ 55.7 | $ 55.1 | $ 168.4 | $ 177.2 | ||||
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 | 1,017.2 | 1,016.6 | ||||||
Aggregate principal amount | 1,020 | 1,020 | ||||||
Debt instrument, term | 10 years | |||||||
Thirty year 2011 senior notes | ||||||||
Debt instrument | ||||||||
CARRYING VALUE | 451.5 | 451.3 | ||||||
Aggregate principal amount | 458 | 458 | ||||||
Debt instrument, term | 30 years | |||||||
Five year 2017 senior notes | ||||||||
Debt instrument | ||||||||
CARRYING VALUE | 496.7 | 496.3 | ||||||
Aggregate principal amount | 500 | 500 | ||||||
Debt instrument, term | 5 years | |||||||
Ten year 2017 senior notes | ||||||||
Debt instrument | ||||||||
CARRYING VALUE | 494.9 | |||||||
Aggregate principal amount | 500 | |||||||
Debt instrument, term | 10 years | |||||||
Thirty year 2017 senior notes | ||||||||
Debt instrument | ||||||||
CARRYING VALUE | 608.5 | |||||||
Aggregate principal amount | 700 | |||||||
Debt instrument, term | 30 years | |||||||
Ten Year 2017 144A notes | ||||||||
Debt instrument | ||||||||
CARRYING VALUE | 494.7 | |||||||
Aggregate principal amount | 500 | 500 | ||||||
Debt instrument, term | 10 years | |||||||
Thirty Year 2017 144A notes | ||||||||
Debt instrument | ||||||||
CARRYING VALUE | 607.8 | |||||||
Aggregate principal amount | 700 | 700 | ||||||
Debt instrument, term | 30 years | |||||||
Three year 2016 senior notes | ||||||||
Debt instrument | ||||||||
CARRYING VALUE | 398.2 | 396.1 | ||||||
Aggregate principal amount | 400 | 400 | ||||||
Debt instrument, term | 3 years | |||||||
Seven year 2016 senior Notes | ||||||||
Debt instrument | ||||||||
CARRYING VALUE | 397.9 | 397.5 | ||||||
Aggregate principal amount | 400 | 400 | ||||||
Debt instrument, term | 7 years | |||||||
Seven year 2016 senior euro notes | ||||||||
Debt instrument | ||||||||
CARRYING VALUE | 660.7 | 676.6 | ||||||
Aggregate principal amount | € | € 575 | € 575 | ||||||
Debt instrument, term | 7 years | |||||||
Ten year 2016 senior notes | ||||||||
Debt instrument | ||||||||
CARRYING VALUE | 743.5 | 742.8 | ||||||
Aggregate principal amount | 750 | 750 | ||||||
Debt instrument, term | 10 years | |||||||
Thirty year 2016 senior notes | ||||||||
Debt instrument | ||||||||
CARRYING VALUE | 246.1 | 246 | ||||||
Aggregate principal amount | 250 | 250 | ||||||
Debt instrument, term | 30 years | |||||||
Three year 2015 senior notes | ||||||||
Debt instrument | ||||||||
CARRYING VALUE | 299.9 | |||||||
Aggregate principal amount | 0 | |||||||
Debt instrument, term | 3 years | |||||||
Five year 2015 senior notes | ||||||||
Debt instrument | ||||||||
CARRYING VALUE | 299.4 | 299.1 | ||||||
Aggregate principal amount | 300 | 300 | ||||||
Debt instrument, term | 5 years | |||||||
Ten Year 2015 senior euro notes | ||||||||
Debt instrument | ||||||||
CARRYING VALUE | 663 | 679.4 | ||||||
Aggregate principal amount | € | € 575 | € 575 | ||||||
Debt instrument, term | 10 years | |||||||
Series A private placement senior notes due 2018 | ||||||||
Debt instrument | ||||||||
CARRYING VALUE | 249.6 | 248.5 | ||||||
Aggregate principal amount | 250 | 250 | ||||||
Series B private placement senior notes due 2023 | ||||||||
Debt instrument | ||||||||
CARRYING VALUE | 249.4 | 249.3 | ||||||
Aggregate principal amount | 250 | 250 | ||||||
Capital lease obligations | ||||||||
Debt instrument | ||||||||
CARRYING VALUE | 7 | 4.6 | ||||||
Other | ||||||||
Debt instrument | ||||||||
CARRYING VALUE | $ 0.9 | $ 1.5 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS (Details) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018USD ($) | Jun. 30, 2018item | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) | |
Changes in the carrying amount of goodwill | ||||||
Beginning goodwill | $ 7,167.1 | |||||
Current year business combinations | 30.5 | |||||
Dispositions | (2.9) | |||||
Effect of foreign currency translation | 116.3 | |||||
Ending goodwill | $ 7,078.4 | 7,078.4 | $ 7,167.1 | |||
Number of operating units | item | 11 | |||||
Impairment of goodwill | 0 | 0 | ||||
Future estimated amortization expense related to amortizable other identifiable intangible assets | ||||||
Estimated expense remaining for the year | 78.1 | 78.1 | ||||
Total amortization expense related to other intangible assets | 78.6 | $ 77.6 | 238.9 | $ 228.5 | ||
Previously Reported | ||||||
Changes in the carrying amount of goodwill | ||||||
Beginning goodwill | 7,167.1 | |||||
Ending goodwill | 7,167.1 | |||||
Nalco | Trademarks | ||||||
Changes in the carrying amount of goodwill | ||||||
Carrying value of asset subject to impairment testing | 1.2 | 1.2 | ||||
Impairment of indefinite life intangible asset | 0 | |||||
Global Industrial | ||||||
Changes in the carrying amount of goodwill | ||||||
Beginning goodwill | 2,725.3 | |||||
Segment change | (71.7) | |||||
Current year business combinations | 18.8 | |||||
Effect of foreign currency translation | 44.3 | |||||
Ending goodwill | 2,699.8 | 2,699.8 | 2,725.3 | |||
Global Industrial | Previously Reported | ||||||
Changes in the carrying amount of goodwill | ||||||
Beginning goodwill | 2,797 | |||||
Ending goodwill | 2,797 | |||||
Global Institutional | ||||||
Changes in the carrying amount of goodwill | ||||||
Beginning goodwill | 1,027 | |||||
Current year business combinations | 11.7 | |||||
Effect of foreign currency translation | 16.8 | |||||
Ending goodwill | 1,021.9 | 1,021.9 | 1,027 | |||
Global Institutional | Previously Reported | ||||||
Changes in the carrying amount of goodwill | ||||||
Beginning goodwill | 1,027 | |||||
Ending goodwill | 1,027 | |||||
Global Energy | ||||||
Changes in the carrying amount of goodwill | ||||||
Beginning goodwill | 3,203.7 | |||||
Dispositions | (2.9) | |||||
Effect of foreign currency translation | 51.8 | |||||
Ending goodwill | 3,149 | 3,149 | 3,203.7 | |||
Global Energy | Previously Reported | ||||||
Changes in the carrying amount of goodwill | ||||||
Beginning goodwill | 3,203.7 | |||||
Ending goodwill | 3,203.7 | |||||
Other | ||||||
Changes in the carrying amount of goodwill | ||||||
Beginning goodwill | 211.1 | |||||
Segment change | 71.7 | |||||
Effect of foreign currency translation | 3.4 | |||||
Ending goodwill | $ 207.7 | 207.7 | 211.1 | |||
Other | Previously Reported | ||||||
Changes in the carrying amount of goodwill | ||||||
Beginning goodwill | $ 139.4 | |||||
Ending goodwill | $ 139.4 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - Recurring - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Carrying Amount | ||
Assets: | ||
Foreign currency forward contracts | $ 40.8 | $ 45.8 |
Liabilities: | ||
Foreign currency forward contracts | 53.6 | 153.1 |
Interest rate swap contracts | 1.9 | 4.2 |
Level 2 | ||
Assets: | ||
Foreign currency forward contracts | 40.8 | 45.8 |
Liabilities: | ||
Foreign currency forward contracts | 53.6 | 153.1 |
Interest rate swap contracts | $ 1.9 | $ 4.2 |
FAIR VALUE MEASUREMENTS - Long-
FAIR VALUE MEASUREMENTS - Long-term Debt (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Carrying Amount | ||
Carrying amount and fair value of financial instruments | ||
Long-term debt (including current maturities) | $ 6,984.5 | $ 7,308 |
Fair Value | Level 2 | ||
Carrying amount and fair value of financial instruments | ||
Long-term debt (including current maturities) | $ 7,126.7 | $ 7,716 |
DERIVATIVES AND HEDGING TRANS_3
DERIVATIVES AND HEDGING TRANSACTIONS - Derivative Positions Summary (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Asset Derivatives | ||
Gross value of derivatives | $ 40.8 | $ 45.8 |
Gross amounts offset in the Consolidated Balance Sheet | (7.6) | (17) |
Net value of derivatives presented in the Consolidated Balance Sheet | 33.2 | 28.8 |
Liability Derivatives | ||
Gross value of derivatives | 55.5 | 157.3 |
Gross amounts offset in the Consolidated Balance Sheet | (7.6) | (17) |
Net value of derivatives presented in the Consolidated Balance Sheet | 47.9 | 140.3 |
Foreign currency forward contracts. | ||
Liability Derivatives | ||
Notional values | 4,311 | 5,593 |
Interest rate swaps | ||
Liability Derivatives | ||
Notional values | 650 | 950 |
Derivatives designated as hedging instruments | Foreign currency forward contracts. | ||
Asset Derivatives | ||
Gross value of derivatives | 19.8 | 19.6 |
Liability Derivatives | ||
Gross value of derivatives | 36.8 | 125.2 |
Derivatives designated as hedging instruments | Interest rate swaps | ||
Liability Derivatives | ||
Gross value of derivatives | 1.9 | 4.2 |
Derivatives not designated as hedging instruments | Foreign currency forward contracts. | ||
Asset Derivatives | ||
Gross value of derivatives | 21 | 26.2 |
Liability Derivatives | ||
Gross value of derivatives | $ 16.8 | $ 27.9 |
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 | 9 Months Ended | |||||||||
Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018EUR (€) | Sep. 30, 2018USD ($) | Dec. 31, 2017EUR (€) | Dec. 31, 2017USD ($) | Jan. 31, 2016USD ($) | Jan. 31, 2015USD ($) | May 31, 2014USD ($) | |
Net Investment Hedge: | |||||||||||
Revaluation gain (loss), net of tax | $ 9.1 | $ (50.9) | $ 31.9 | $ (103.7) | |||||||
Derivative Summary | |||||||||||
Maximum period for hedged transactions | 5 years | ||||||||||
Three year 2016 senior notes | |||||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||||
Aggregate principal amount | $ 400 | $ 400 | |||||||||
Three year 2015 senior notes | |||||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||||
Aggregate principal amount | 0 | ||||||||||
Series A private placement senior notes due 2018 | |||||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||||
Aggregate principal amount | 250 | 250 | |||||||||
Ten year 2011 senior notes | |||||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||||
Aggregate principal amount | 1,020 | 1,020 | |||||||||
Ten Year 2015 senior euro notes | |||||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||||
Aggregate principal amount | € | € 575 | € 575 | |||||||||
Foreign currency forward contracts. | |||||||||||
Net Investment Hedge: | |||||||||||
Notional values | 4,311 | 5,593 | |||||||||
Interest rate swaps | |||||||||||
Net Investment Hedge: | |||||||||||
Notional values | 650 | $ 950 | |||||||||
Cash Flow Hedges | Derivatives designated as hedging instruments | |||||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||||
Unrealized gain (loss) recognized into AOCI (effective portion) | 32.9 | (118.8) | $ 85.6 | (192.4) | |||||||
Gain (loss) reclassified from AOCI into income (effective portion) | 19.5 | (94.8) | 53.1 | (158.3) | |||||||
Cash Flow Hedges | Foreign currency forward contracts. | Derivatives designated as hedging instruments | |||||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||||
Gain (loss) reclassified from AOCI into income (effective portion) | 20.8 | (93) | 57.8 | (152.9) | |||||||
Cash Flow Hedges | Foreign currency forward contracts. | Derivatives designated as hedging instruments | AOCI (equity) | |||||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||||
Unrealized gain (loss) recognized into AOCI (effective portion) | 32.9 | (118.8) | 85.6 | (192.4) | |||||||
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) | (0.9) | (8.7) | (11.7) | |||||||
Cash Flow Hedges | Foreign currency forward contracts. | Derivatives designated as hedging instruments | Selling, general and administrative expenses | |||||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||||
Gain (loss) reclassified from AOCI into income (effective portion) | 12.4 | (99.5) | 39.3 | (157.3) | |||||||
Cash Flow Hedges | Foreign currency forward contracts. | Derivatives designated as hedging instruments | Interest expense, net | |||||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||||
Gain (loss) reclassified from AOCI into income (effective portion) | 10.4 | 7.4 | 27.2 | 16.1 | |||||||
Cash Flow Hedges | Foreign currency forward contracts. | Derivatives not designated as hedging instruments | |||||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||||
Gain (loss) on derivative recognized in income | 7.9 | (29.6) | 9.5 | (41.6) | |||||||
Cash Flow Hedges | Foreign currency forward contracts. | Derivatives not designated as hedging instruments | Selling, general and administrative expenses | |||||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||||
Gain (loss) on derivative recognized in income | 7.1 | (29.4) | 5 | (38.1) | |||||||
Cash Flow Hedges | Foreign currency forward contracts. | Derivatives not designated as hedging instruments | Interest expense, net | |||||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||||
Gain (loss) on derivative recognized in income | 0.8 | (0.2) | 4.5 | (3.5) | |||||||
Cash Flow Hedges | Interest rate swaps | Derivatives designated as hedging instruments | Interest expense, net | |||||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||||
Gain (loss) reclassified from AOCI into income (effective portion) | (1.3) | (1.8) | (4.7) | (5.4) | |||||||
Fair Value Hedges | Interest rate swaps | Three year 2016 senior notes | |||||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||||
Aggregate principal amount | $ 400 | ||||||||||
Interest rate (as a percent) | 2.00% | ||||||||||
Fair Value Hedges | Interest rate swaps | Three year 2015 senior notes | |||||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||||
Aggregate principal amount | $ 300 | ||||||||||
Interest rate (as a percent) | 1.55% | ||||||||||
Fair Value Hedges | Interest rate swaps | Series A private placement senior notes due 2018 | |||||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||||
Aggregate principal amount | $ 250 | ||||||||||
Interest rate (as a percent) | 3.69% | ||||||||||
Fair Value Hedges | Interest rate swaps | Five year 2012 senior notes | |||||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||||
Aggregate principal amount | $ 500 | ||||||||||
Interest rate (as a percent) | 1.45% | ||||||||||
Fair Value Hedges | Interest rate swaps | Interest expense, net | |||||||||||
Impact on AOCI and earnings from derivative contracts | |||||||||||
Gain (loss) on derivative recognized in income | 2 | 0.3 | 2.3 | (0.1) | |||||||
Gain (loss) on hedged item recognized in income | (2) | (0.3) | (2.3) | 0.1 | |||||||
Net Investment Hedges | |||||||||||
Net Investment Hedge: | |||||||||||
Revaluation gain (loss), net of tax | $ 9.1 | $ (50.9) | $ 31.9 | $ (103.7) | |||||||
Net Investment Hedges | Senior euro notes | |||||||||||
Net Investment Hedge: | |||||||||||
Notional values | € 1,150 | $ 1,324 |
OTHER COMPREHENSIVE INCOME (L_3
OTHER COMPREHENSIVE INCOME (LOSS) INFORMATION (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Reclassification adjustments | ||||||
Cost of sales | $ (2,200.2) | $ (2,064.6) | $ (6,438.4) | $ (5,961.8) | ||
SG&A | (955.2) | (930.9) | (2,990.5) | (2,836.3) | ||
Interest expense, net | (55.7) | (55.1) | (168.4) | (177.2) | ||
Subtotal | (173.9) | 79.6 | (122.2) | 150 | $ 71.2 | $ (290.9) |
Derivative gains reclassified from AOCI into income, net of tax | (16) | 72.7 | (42.3) | 120.3 | ||
Pension and postretirement net actuarial losses and prior service cost reclassified from AOCI into income, net of tax | 4.5 | 1.3 | 16.2 | 8.2 | ||
Derivative & Hedging Instruments. | ||||||
Reclassification adjustments | ||||||
Amount recognized in AOCI | 32.9 | (118.8) | 85.6 | (192.4) | ||
Other activity | 0.1 | (0.6) | (0.1) | |||
Tax impact | (2.5) | 3.8 | (6.2) | 5.1 | ||
Subtotal | 11 | (20.8) | 26.3 | (29.1) | ||
Derivative & Hedging Instruments. | Amount reclassified from AOCI | ||||||
Reclassification adjustments | ||||||
Cost of sales | 2 | 0.9 | 8.7 | 11.7 | ||
SG&A | (12.4) | 99.5 | (39.3) | 157.3 | ||
Interest expense, net | (9.1) | (5.6) | (22.5) | (10.7) | ||
(Gains) losses reclassified from AOCI into income | (19.5) | 94.8 | (53.1) | 158.3 | ||
Pension & Postretirement Benefits. | ||||||
Reclassification adjustments | ||||||
(Gains) losses reclassified from AOCI into income | 6 | 5.2 | 40.3 | 15.2 | ||
Other activity | 3.3 | 7.9 | ||||
Tax impact | (1.5) | (3.9) | (9.7) | (7) | ||
Subtotal | 7.8 | 1.3 | 38.5 | 8.2 | ||
Pension & Postretirement Benefits. | Amount reclassified from AOCI | ||||||
Reclassification adjustments | ||||||
(Gains) losses reclassified from AOCI into income | $ 6 | $ 5.2 | 21.4 | $ 15.2 | ||
Postretirement benefits changes | ||||||
Reclassification adjustments | ||||||
Amount recognized in AOCI | $ 18.9 |
SHAREHOLDERS' EQUITY (Details)
SHAREHOLDERS' EQUITY (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Jun. 30, 2017 | Feb. 28, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Feb. 28, 2015 | |
Shareholder's Equity | ||||||||
Common stock, par value per share (in dollars per share) | $ 1 | $ 1 | $ 1 | |||||
Common stock, shares authorized | 800,000,000 | 800,000,000 | 800,000,000 | |||||
Dividends declared per common share (in dollars per share) | $ 0.410 | $ 0.370 | $ 1.230 | $ 1.110 | ||||
Common Stock | ||||||||
Shareholder's Equity | ||||||||
Common stock, shares authorized to be repurchased | 20,000,000 | |||||||
Remaining shares authorized to be repurchased | 10,228,727 | 10,228,727 | ||||||
Amount of common stock to be repurchased under ASR agreement | $ 300 | |||||||
Shares received under ASR agreement | 286,620 | 2,077,224 | ||||||
Shares received under the ASR agreement compared to the shares the company expected to receive (as a percent) | 85.00% | |||||||
Reacquired shares | 2,315,345 | 4,707,629 | ||||||
Number of shares reacquired through the open market or private purchases | 2,129,383 | 4,414,416 | ||||||
Number of shares that have been repurchased through the exercise of stock options and vesting of stock awards | 185,962 | 293,213 |
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 | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Computations of the basic and diluted earnings attributable to Ecolab per share amounts | ||||
Net income attributable to Ecolab | $ 435.4 | $ 393.2 | $ 1,034 | $ 942 |
Weighted-average common shares outstanding | ||||
Basic (in shares) | 288.8 | 289 | 288.8 | 289.8 |
Effect of dilutive stock options and units (in shares) | 4.6 | 4.4 | 4.3 | 4.4 |
Diluted (in shares) | 293.4 | 293.4 | 293.1 | 294.2 |
Earnings attributable to Ecolab per common share | ||||
Basic (in dollars per share) | $ 1.51 | $ 1.36 | $ 3.58 | $ 3.25 |
Diluted (in dollars per share) | $ 1.48 | $ 1.34 | $ 3.53 | $ 3.20 |
Anti-dilutive securities excluded from the computation of EPS | 1.4 | 0.1 | 1.4 | 1.7 |
INCOME TAXES (Details)
INCOME TAXES (Details) € in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018EUR (€) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2017 | |
INCOME TAXES | ||||||
Effective income tax rate (as a percent) | 9.00% | 9.00% | 24.60% | 17.20% | 21.70% | |
Statutory U.S. rate (as a percent) | 21.00% | 35.00% | ||||
Estimated one-time transition tax | € 4.8 | $ 34.2 | ||||
Excess tax benefits, share-based compensation | $ 10.7 | 23.5 | $ 29.2 | |||
Recognized discrete tax expense (benefit) | (47.2) | $ 8.3 | $ (35.2) | $ (24.2) | ||
Net discrete benefit, prior year returns | $ (39.9) |
PENSION AND POSTRETIREMENT PL_3
PENSION AND POSTRETIREMENT PLANS (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Pension | U.S. | ||||
Net periodic benefit costs | ||||
Service cost | $ 18.6 | $ 17.5 | $ 55.8 | $ 52.6 |
Interest cost on benefit obligation | 20.8 | 20.9 | 62.4 | 62.6 |
Expected return on plan assets | (40.5) | (37.4) | (121.5) | (112.3) |
Recognition of net actuarial (gain) loss | 9.8 | 7.2 | 29.4 | 21.5 |
Amortization of prior service cost (benefit) | (1.7) | (1.7) | (5.1) | (5.1) |
Total expense (benefit) | 7 | 6.5 | 21 | 19.3 |
Pension | International | ||||
Net periodic benefit costs | ||||
Service cost | 8.4 | 7.7 | 25.4 | 23 |
Interest cost on benefit obligation | 7.5 | 7 | 22.4 | 21.1 |
Expected return on plan assets | (16.1) | (13.9) | (48.8) | (41.7) |
Recognition of net actuarial (gain) loss | 4.4 | 4.5 | 13.2 | 13.6 |
Amortization of prior service cost (benefit) | (0.2) | (0.2) | (0.6) | (0.5) |
Total expense (benefit) | 4 | 5.1 | 11.6 | 15.5 |
Other Pension Plan Information | ||||
Contributions to plan | 33 | |||
Contributions anticipated to be made during the remainder of 2018 | 10 | 10 | ||
Pension | Non-qualified plan | U.S. | ||||
Other Pension Plan Information | ||||
Contributions to plan | 5 | |||
Contributions anticipated to be made during the remainder of 2018 | 1 | 1 | ||
Postretirement Health Care | U.S. | ||||
Net periodic benefit costs | ||||
Service cost | 0.5 | 0.7 | 2.3 | 2 |
Interest cost on benefit obligation | 1.3 | 1.5 | 4.3 | 4.4 |
Expected return on plan assets | (0.1) | (0.1) | (0.3) | (0.4) |
Recognition of net actuarial (gain) loss | (0.5) | (0.6) | (1.5) | (1.8) |
Amortization of prior service cost (benefit) | (5.8) | (4.2) | (14) | (12.5) |
Total expense (benefit) | (4.6) | $ (2.7) | (9.2) | $ (8.3) |
Other Pension Plan Information | ||||
Contributions to plan | 8 | |||
Contributions anticipated to be made during the remainder of 2018 | 3 | $ 3 | ||
Plan amendments, decrease in benefit obligation | 18.9 | |||
Plan amendments, decrease in benefit obligation, net of tax | $ 14.4 | |||
Discount rate (as a percent) | 4.36% | 4.36% | ||
Decrease in defined benefit cost due to re-measurement of benefit plans | $ 2.3 |
REVENUES (Details)
REVENUES (Details) € in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
Sep. 30, 2018EUR (€) | Sep. 30, 2018USD ($) | Sep. 30, 2017EUR (€) | Sep. 30, 2017USD ($) | Sep. 30, 2018EUR (€) | Sep. 30, 2018USD ($) | Sep. 30, 2017EUR (€) | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) | |
Disaggregation of revenue | |||||||||
Net sales | $ | $ 3,747.2 | $ 3,564.5 | $ 10,907.7 | $ 10,186.9 | $ 13,835.9 | ||||
Global Industrial | |||||||||
Disaggregation of revenue | |||||||||
Net sales | € 1,352.3 | € 1,272.9 | € 3,905.5 | € 3,595.7 | |||||
Global Institutional | |||||||||
Disaggregation of revenue | |||||||||
Net sales | 1,305.1 | 1,241.6 | 3,808 | 3,533.8 | |||||
Global Energy | |||||||||
Disaggregation of revenue | |||||||||
Net sales | 862.2 | 806.6 | 2,550.3 | 2,361.9 | |||||
Other | |||||||||
Disaggregation of revenue | |||||||||
Net sales | 227.6 | 243.4 | 643.9 | 695.5 | |||||
Product and equipment | |||||||||
Disaggregation of revenue | |||||||||
Net sales | $ | 3,090.3 | 2,931.9 | 8,985.7 | 8,376.9 | |||||
Product and equipment | Global Industrial | |||||||||
Disaggregation of revenue | |||||||||
Net sales | $ | 1,176.8 | 1,101.8 | 3,380.9 | 3,110.6 | |||||
Product and equipment | Global Institutional | |||||||||
Disaggregation of revenue | |||||||||
Net sales | $ | 1,130.8 | 1,075.6 | 3,297.8 | 3,060.2 | |||||
Product and equipment | Global Energy | |||||||||
Disaggregation of revenue | |||||||||
Net sales | $ | 761.7 | 712.6 | 2,246.6 | 2,079.7 | |||||
Product and equipment | Other | |||||||||
Disaggregation of revenue | |||||||||
Net sales | $ | 21 | 41.9 | 60.4 | 126.4 | |||||
Service and lease | |||||||||
Disaggregation of revenue | |||||||||
Net sales | $ | 656.9 | 632.6 | 1,922 | 1,810 | |||||
Service and lease | Global Industrial | |||||||||
Disaggregation of revenue | |||||||||
Net sales | $ | 175.4 | 171 | 524.5 | 485.2 | |||||
Service and lease | Global Institutional | |||||||||
Disaggregation of revenue | |||||||||
Net sales | $ | 174.3 | 165.9 | 510.2 | 473.5 | |||||
Service and lease | Global Energy | |||||||||
Disaggregation of revenue | |||||||||
Net sales | $ | 100.5 | 93.9 | 303.7 | 282.1 | |||||
Service and lease | Other | |||||||||
Disaggregation of revenue | |||||||||
Net sales | $ | $ 206.7 | $ 201.8 | $ 583.6 | $ 569.2 | |||||
North America | Global Industrial | |||||||||
Disaggregation of revenue | |||||||||
Net sales | 628 | 573.7 | 1,780.7 | 1,643.7 | |||||
North America | Global Institutional | |||||||||
Disaggregation of revenue | |||||||||
Net sales | 898.1 | 845.9 | 2,592.4 | 2,450.2 | |||||
North America | Global Energy | |||||||||
Disaggregation of revenue | |||||||||
Net sales | 502.1 | 445.4 | 1,474.8 | 1,323.6 | |||||
North America | Other | |||||||||
Disaggregation of revenue | |||||||||
Net sales | 156.9 | 178.1 | 436.3 | 512.3 | |||||
Europe | Global Industrial | |||||||||
Disaggregation of revenue | |||||||||
Net sales | 326 | 314.2 | 959.5 | 852.3 | |||||
Europe | Global Institutional | |||||||||
Disaggregation of revenue | |||||||||
Net sales | 260.2 | 250 | 774.9 | 666.5 | |||||
Europe | Global Energy | |||||||||
Disaggregation of revenue | |||||||||
Net sales | 96.7 | 102.5 | 302.5 | 287 | |||||
Europe | Other | |||||||||
Disaggregation of revenue | |||||||||
Net sales | 33.2 | 31 | 97 | 84.2 | |||||
Asia Pacific | Global Industrial | |||||||||
Disaggregation of revenue | |||||||||
Net sales | 171.4 | 168.9 | 503.7 | 483.1 | |||||
Asia Pacific | Global Institutional | |||||||||
Disaggregation of revenue | |||||||||
Net sales | 62.3 | 60.2 | 186.8 | 174.7 | |||||
Asia Pacific | Global Energy | |||||||||
Disaggregation of revenue | |||||||||
Net sales | 65.7 | 68.8 | 200.1 | 190.6 | |||||
Asia Pacific | Other | |||||||||
Disaggregation of revenue | |||||||||
Net sales | 10.5 | 8.8 | 29.4 | 24.7 | |||||
Latin America | Global Industrial | |||||||||
Disaggregation of revenue | |||||||||
Net sales | 121.6 | 113.7 | 350.8 | 326.5 | |||||
Latin America | Global Institutional | |||||||||
Disaggregation of revenue | |||||||||
Net sales | 40.9 | 41.7 | 124.5 | 122.8 | |||||
Latin America | Global Energy | |||||||||
Disaggregation of revenue | |||||||||
Net sales | 55.5 | 62.1 | 163.7 | 183.2 | |||||
Latin America | Other | |||||||||
Disaggregation of revenue | |||||||||
Net sales | 11.5 | 11.4 | 35.2 | 33.4 | |||||
Middle East and Africa | Global Industrial | |||||||||
Disaggregation of revenue | |||||||||
Net sales | 34.4 | 32.7 | 99 | 93.3 | |||||
Middle East and Africa | Global Institutional | |||||||||
Disaggregation of revenue | |||||||||
Net sales | 15.3 | 17.5 | 44.5 | 44.7 | |||||
Middle East and Africa | Global Energy | |||||||||
Disaggregation of revenue | |||||||||
Net sales | 123.5 | 109.9 | 354.1 | 326.8 | |||||
Middle East and Africa | Other | |||||||||
Disaggregation of revenue | |||||||||
Net sales | 2.8 | 2.8 | 8.5 | 8.4 | |||||
Greater China | Global Industrial | |||||||||
Disaggregation of revenue | |||||||||
Net sales | 70.9 | 69.7 | 211.8 | 196.8 | |||||
Greater China | Global Institutional | |||||||||
Disaggregation of revenue | |||||||||
Net sales | 28.3 | 26.3 | 84.9 | 74.9 | |||||
Greater China | Global Energy | |||||||||
Disaggregation of revenue | |||||||||
Net sales | 18.7 | 17.9 | 55.1 | 50.7 | |||||
Greater China | Other | |||||||||
Disaggregation of revenue | |||||||||
Net sales | € 12.7 | € 11.3 | € 37.5 | € 32.5 |
REVENUES - Contract Liability (
REVENUES - Contract Liability (Details) - USD ($) $ in Millions | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Change in contract liability | ||||
Contract liability | $ 81.9 | $ 84.7 | $ 79 | $ 68.6 |
Revenue recognized: Amounts included in the contract liability at the beginning of the period | (79) | (68.6) | ||
Revenue, Remaining Performance Obligation | 81.9 | $ 79 | ||
Increases due to invoices issued, excluding amounts recognized as revenues during the period | 81.7 | 82.5 | ||
Business combination | $ 0.2 | $ 2.2 |
OPERATING SEGMENTS (Details)
OPERATING SEGMENTS (Details) € in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||
Sep. 30, 2018EUR (€) | Sep. 30, 2018USD ($) | Jun. 30, 2018item | Sep. 30, 2017EUR (€) | Sep. 30, 2017USD ($) | Sep. 30, 2018EUR (€)item | Sep. 30, 2018USD ($)item | Sep. 30, 2017EUR (€) | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) | |
Financial information of reportable segments | ||||||||||
Number of operating units | item | 11 | |||||||||
Number of reportable segments | item | 3 | 3 | ||||||||
Net sales | $ 3,747.2 | $ 3,564.5 | $ 10,907.7 | $ 10,186.9 | $ 13,835.9 | |||||
Operating Income (Loss) | 516.2 | 564.1 | 1,365.1 | 1,340.9 | 1,950.1 | |||||
Previously Reported | ||||||||||
Financial information of reportable segments | ||||||||||
Net sales | 3,563.3 | 10,187.6 | 13,838.3 | |||||||
Operating Income (Loss) | 579.8 | 1,392.1 | 2,019.8 | |||||||
Global Industrial | ||||||||||
Financial information of reportable segments | ||||||||||
Net sales | € | € 1,352.3 | € 1,272.9 | € 3,905.5 | € 3,595.7 | ||||||
Global Institutional | ||||||||||
Financial information of reportable segments | ||||||||||
Net sales | € | 1,305.1 | 1,241.6 | 3,808 | 3,533.8 | ||||||
Global Energy | ||||||||||
Financial information of reportable segments | ||||||||||
Net sales | € | 862.2 | 806.6 | 2,550.3 | 2,361.9 | ||||||
Other | ||||||||||
Financial information of reportable segments | ||||||||||
Net sales | € | € 227.6 | € 243.4 | € 643.9 | € 695.5 | ||||||
Operating segment | ||||||||||
Financial information of reportable segments | ||||||||||
Net sales | 3,874.9 | 3,643.4 | 11,115.2 | 10,519.2 | 14,230 | |||||
Operating Income (Loss) | 537.7 | 576.5 | 1,396.1 | 1,382 | 2,003 | |||||
Operating segment | Previously Reported | ||||||||||
Financial information of reportable segments | ||||||||||
Net sales | 13,646.2 | |||||||||
Operating Income (Loss) | 1,986.9 | |||||||||
Operating segment | Adjustment | Fixed Currency Rate Change | ||||||||||
Financial information of reportable segments | ||||||||||
Net sales | 586 | |||||||||
Operating Income (Loss) | 85.4 | |||||||||
Operating segment | Global Industrial | ||||||||||
Financial information of reportable segments | ||||||||||
Net sales | 1,411.6 | 1,309.4 | 4,001.4 | 3,754.7 | 5,106.8 | |||||
Operating Income (Loss) | 224.9 | 217.4 | 527.9 | 529.4 | 758.5 | |||||
Operating segment | Global Industrial | Previously Reported | ||||||||||
Financial information of reportable segments | ||||||||||
Net sales | 4,878.5 | |||||||||
Operating Income (Loss) | 722 | |||||||||
Operating segment | Global Industrial | Adjustment | Segment Change | ||||||||||
Financial information of reportable segments | ||||||||||
Net sales | (56.9) | |||||||||
Operating Income (Loss) | 2.6 | |||||||||
Operating segment | Global Industrial | Adjustment | Fixed Currency Rate Change | ||||||||||
Financial information of reportable segments | ||||||||||
Net sales | 286 | |||||||||
Operating Income (Loss) | 47.5 | |||||||||
Operating segment | Global Institutional | ||||||||||
Financial information of reportable segments | ||||||||||
Net sales | 1,340.8 | 1,268.9 | 3,870.5 | 3,646.3 | 4,910 | |||||
Operating Income (Loss) | 292.5 | 276.1 | 743.2 | 720 | 979.8 | |||||
Operating segment | Global Institutional | Previously Reported | ||||||||||
Financial information of reportable segments | ||||||||||
Net sales | 4,744.9 | |||||||||
Operating Income (Loss) | 985.7 | |||||||||
Operating segment | Global Institutional | Adjustment | Segment Change | ||||||||||
Financial information of reportable segments | ||||||||||
Net sales | (23.7) | |||||||||
Operating Income (Loss) | (14.9) | |||||||||
Operating segment | Global Institutional | Adjustment | Fixed Currency Rate Change | ||||||||||
Financial information of reportable segments | ||||||||||
Net sales | 190.2 | |||||||||
Operating Income (Loss) | 23.5 | |||||||||
Operating segment | Global Energy | ||||||||||
Financial information of reportable segments | ||||||||||
Net sales | 889.6 | 817.5 | 2,590.7 | 2,406.6 | 3,281.7 | |||||
Operating Income (Loss) | 94.1 | 89.8 | 256.4 | 232.8 | 336.1 | |||||
Operating segment | Global Energy | Previously Reported | ||||||||||
Financial information of reportable segments | ||||||||||
Net sales | 3,199.3 | |||||||||
Operating Income (Loss) | 338.5 | |||||||||
Operating segment | Global Energy | Adjustment | Segment Change | ||||||||||
Financial information of reportable segments | ||||||||||
Net sales | 0.7 | |||||||||
Operating Income (Loss) | (0.7) | |||||||||
Operating segment | Global Energy | Adjustment | Fixed Currency Rate Change | ||||||||||
Financial information of reportable segments | ||||||||||
Net sales | 81.7 | |||||||||
Operating Income (Loss) | 15 | |||||||||
Operating segment | Other | ||||||||||
Financial information of reportable segments | ||||||||||
Net sales | 232.9 | 247.6 | 652.6 | 711.6 | 931.5 | |||||
Operating Income (Loss) | 48.3 | 41.4 | 114.7 | 102.7 | 142.5 | |||||
Operating segment | Other | Previously Reported | ||||||||||
Financial information of reportable segments | ||||||||||
Net sales | 823.5 | |||||||||
Operating Income (Loss) | 149.3 | |||||||||
Operating segment | Other | Adjustment | Segment Change | ||||||||||
Financial information of reportable segments | ||||||||||
Net sales | 79.9 | |||||||||
Operating Income (Loss) | 13 | |||||||||
Operating segment | Other | Adjustment | Fixed Currency Rate Change | ||||||||||
Financial information of reportable segments | ||||||||||
Net sales | 28.1 | |||||||||
Operating Income (Loss) | 4.7 | |||||||||
Currency Impact | ||||||||||
Financial information of reportable segments | ||||||||||
Net sales | (127.7) | (78.9) | (207.5) | (332.3) | (394.1) | |||||
Operating Income (Loss) | (21.5) | (12.4) | (31) | (41.1) | (52.9) | |||||
Currency Impact | Previously Reported | ||||||||||
Financial information of reportable segments | ||||||||||
Net sales | 192.1 | |||||||||
Operating Income (Loss) | 32.9 | |||||||||
Currency Impact | Adjustment | Fixed Currency Rate Change | ||||||||||
Financial information of reportable segments | ||||||||||
Net sales | (586) | |||||||||
Operating Income (Loss) | (85.4) | |||||||||
Corporate | ||||||||||
Financial information of reportable segments | ||||||||||
Operating Income (Loss) | $ (122.1) | (48.2) | (246.1) | (202.9) | (213.9) | |||||
Corporate | Previously Reported | ||||||||||
Financial information of reportable segments | ||||||||||
Operating Income (Loss) | (208.6) | |||||||||
Corporate | Adjustment | Fixed Currency Rate Change | ||||||||||
Financial information of reportable segments | ||||||||||
Operating Income (Loss) | (5.3) | |||||||||
Intersegment | ||||||||||
Financial information of reportable segments | ||||||||||
Net sales | $ 0 | |||||||||
Revenue Standard Adoption | Adjustment | ||||||||||
Financial information of reportable segments | ||||||||||
Net sales | 1.2 | (0.7) | (2.4) | |||||||
Operating Income (Loss) | 1.2 | (0.7) | (2.4) | |||||||
Revenue Standard Adoption | Operating segment | Adjustment | ||||||||||
Financial information of reportable segments | ||||||||||
Net sales | (2.2) | |||||||||
Operating Income (Loss) | (2.2) | |||||||||
Revenue Standard Adoption | Operating segment | Global Industrial | Adjustment | ||||||||||
Financial information of reportable segments | ||||||||||
Net sales | (0.8) | |||||||||
Operating Income (Loss) | (0.8) | |||||||||
Revenue Standard Adoption | Operating segment | Global Institutional | Adjustment | ||||||||||
Financial information of reportable segments | ||||||||||
Net sales | (1.4) | |||||||||
Operating Income (Loss) | (1.4) | |||||||||
Revenue Standard Adoption | Currency Impact | Adjustment | ||||||||||
Financial information of reportable segments | ||||||||||
Net sales | (0.2) | |||||||||
Operating Income (Loss) | (0.2) | |||||||||
Pension Standard Adoption | Adjustment | ||||||||||
Financial information of reportable segments | ||||||||||
Operating Income (Loss) | $ (16.9) | $ (50.5) | (67.3) | |||||||
Pension Standard Adoption | Operating segment | Adjustment | ||||||||||
Financial information of reportable segments | ||||||||||
Operating Income (Loss) | (67.1) | |||||||||
Pension Standard Adoption | Operating segment | Global Industrial | Adjustment | ||||||||||
Financial information of reportable segments | ||||||||||
Operating Income (Loss) | (12.8) | |||||||||
Pension Standard Adoption | Operating segment | Global Institutional | Adjustment | ||||||||||
Financial information of reportable segments | ||||||||||
Operating Income (Loss) | (13.1) | |||||||||
Pension Standard Adoption | Operating segment | Global Energy | Adjustment | ||||||||||
Financial information of reportable segments | ||||||||||
Operating Income (Loss) | (16.7) | |||||||||
Pension Standard Adoption | Operating segment | Other | Adjustment | ||||||||||
Financial information of reportable segments | ||||||||||
Operating Income (Loss) | (24.5) | |||||||||
Pension Standard Adoption | Currency Impact | Adjustment | ||||||||||
Financial information of reportable segments | ||||||||||
Operating Income (Loss) | $ (0.2) |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | Apr. 09, 2018item | Apr. 30, 2017complaint | May 31, 2016complaint | Sep. 30, 2018locationitemcomplaint |
Loss contingencies | ||||
Number of complaints filed by individuals | item | 8 | |||
Period to appeal court's decision after entry of final judgment under Federal Rule of Appellate Procedure | 30 days | |||
Environmental matters | ||||
Number of locations for environmental assessments and remediation | location | 40 | |||
Deepwater Horizon Incident | ||||
Loss contingencies | ||||
Number of putative class action complaints filed | 6 | |||
Number of complaints filed by individuals | 21 | |||
Deepwater Horizon Incident | Nalco | ||||
Loss contingencies | ||||
Number of complaints filed by individuals | 9 | |||
Number of complaints filed by individuals claiming economic loss | 2 | |||
Number of master complaints naming Nalco and others who responded to the oil spill (known as the "B3 Bundle") | 1 | |||
Number of proposed class action settlements | item | 2 |
NEW ACCOUNTING PRONOUNCEMENTS_2
NEW ACCOUNTING PRONOUNCEMENTS (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Jan. 31, 2016 | Mar. 31, 2018 | Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
New accounting guidance, cumulative effect | $ (43.6) | $ 1.9 | $ (29.3) | ||
Accounting Standards Update 2016-16 | |||||
New accounting guidance, cumulative effect | $ (43.6) | ||||
Revenue Standard Adoption | |||||
New accounting guidance, cumulative effect | $ (29.3) |
NEW ACCOUNTING PRONOUNCEMENTS -
NEW ACCOUNTING PRONOUNCEMENTS - Revenue Recognition and Pension Standards (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Net sales | $ 3,747.2 | $ 3,564.5 | $ 10,907.7 | $ 10,186.9 | $ 13,835.9 | |
Cost of sales (including special charges) | 2,200.2 | 2,064.6 | 6,438.4 | 5,961.8 | ||
Selling, general and administrative expenses | 955.2 | 930.9 | 2,990.5 | 2,836.3 | ||
Special (gains) and charges | 75.6 | 4.9 | 113.7 | 47.9 | ||
Operating income | 516.2 | 564.1 | 1,365.1 | 1,340.9 | 1,950.1 | |
Other (income)/expense | (21) | (16.9) | (60) | (50.5) | ||
Interest expense, net | 55.7 | 55.1 | 168.4 | 177.2 | ||
Income before income taxes | 481.5 | 525.9 | 1,256.7 | 1,214.2 | ||
Provision for income taxes | 43.2 | 129.3 | 216.6 | 264 | ||
Net income including noncontrolling interest | 438.3 | 396.6 | 1,040.1 | 950.2 | 1,518.6 | $ 1,246.5 |
Net income attributable to noncontrolling interest | 2.9 | 3.4 | 6.1 | 8.2 | ||
Net income attributable to Ecolab | $ 435.4 | $ 393.2 | $ 1,034 | $ 942 | ||
Earnings attributable to Ecolab per common share | ||||||
Basic (in dollars per share) | $ 1.51 | $ 1.36 | $ 3.58 | $ 3.25 | ||
Diluted (in dollars per share) | $ 1.48 | $ 1.34 | $ 3.53 | $ 3.20 | ||
Previously Reported | ||||||
Net sales | $ 3,563.3 | $ 10,187.6 | ||||
Net sales | 3,563.3 | 10,187.6 | 13,838.3 | |||
Cost of sales (including special charges) | 1,891.3 | 5,454.4 | ||||
Cost of sales (including special charges) | 1,891.3 | 5,454.4 | ||||
Selling, general and administrative expenses | 1,087.3 | 3,293.2 | ||||
Special (gains) and charges | 4.9 | 47.9 | ||||
Operating income | 579.8 | 1,392.1 | 2,019.8 | |||
Interest expense, net | 55.1 | 177.2 | ||||
Income before income taxes | 524.7 | 1,214.9 | ||||
Provision for income taxes | 128.9 | 264.2 | ||||
Net income including noncontrolling interest | 395.8 | 950.7 | ||||
Net income attributable to noncontrolling interest | 3.4 | 8.2 | ||||
Net income attributable to Ecolab | $ 392.4 | $ 942.5 | ||||
Earnings attributable to Ecolab per common share | ||||||
Basic (in dollars per share) | $ 1.36 | $ 3.25 | ||||
Diluted (in dollars per share) | $ 1.34 | $ 3.20 | ||||
Adjustment | Revenue Standard Adoption | ||||||
Net sales | $ (3,563.3) | $ (10,187.6) | ||||
Net sales | 1.2 | (0.7) | (2.4) | |||
Cost of sales (including special charges) | (1,891.3) | (5,454.4) | ||||
Cost of sales (including special charges) | 172 | 503.7 | ||||
Selling, general and administrative expenses | (172) | (503.7) | ||||
Operating income | 1.2 | (0.7) | (2.4) | |||
Income before income taxes | 1.2 | (0.7) | ||||
Provision for income taxes | 0.4 | (0.2) | ||||
Net income including noncontrolling interest | 0.8 | (0.5) | ||||
Net income attributable to Ecolab | 0.8 | (0.5) | ||||
Adjustment | Pension Standard Adoption | ||||||
Cost of sales (including special charges) | 1.3 | 3.7 | ||||
Selling, general and administrative expenses | 15.6 | 46.8 | ||||
Operating income | (16.9) | (50.5) | $ (67.3) | |||
Other (income)/expense | (16.9) | (50.5) | ||||
Product and equipment | ||||||
Net sales | $ 3,090.3 | 2,931.9 | $ 8,985.7 | 8,376.9 | ||
Cost of sales (including special charges) | 1,811.4 | 1,676.9 | 5,259.9 | 4,834.2 | ||
Product and equipment | Adjustment | Revenue Standard Adoption | ||||||
Net sales | 2,931.9 | 8,376.9 | ||||
Cost of sales (including special charges) | 1,675.8 | 4,831.1 | ||||
Product and equipment | Adjustment | Pension Standard Adoption | ||||||
Cost of sales (including special charges) | 1.1 | 3.1 | ||||
Service and lease | ||||||
Net sales | 656.9 | 632.6 | 1,922 | 1,810 | ||
Cost of sales (including special charges) | $ 388.8 | 387.7 | $ 1,178.5 | 1,127.6 | ||
Service and lease | Adjustment | Revenue Standard Adoption | ||||||
Net sales | 632.6 | 1,810 | ||||
Cost of sales (including special charges) | 387.5 | 1,127 | ||||
Service and lease | Adjustment | Pension Standard Adoption | ||||||
Cost of sales (including special charges) | $ 0.2 | $ 0.6 |
NEW ACCOUNTING PRONOUNCEMENTS_3
NEW ACCOUNTING PRONOUNCEMENTS - Revenue Standard Impact on Balance Sheet (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets | ||||
Accounts receivable, net | $ 2,652.7 | $ 2,571.4 | ||
Inventories | 1,587.9 | 1,446.5 | ||
Total current assets | 4,822.3 | 4,594.3 | ||
Other assets | 463.5 | 477.4 | ||
Total assets | 19,962.6 | 19,963.5 | ||
Current liabilities | ||||
Other current liabilities | 1,046.6 | 1,000.7 | ||
Total current liabilities | 3,589.8 | 3,475.2 | ||
Deferred income taxes | 711.8 | 635.4 | ||
Total liabilities | 11,979.6 | 12,309.7 | ||
Equity | ||||
Retained earnings | 8,646.9 | 8,011.6 | ||
Accumulated other comprehensive loss | (1,765.4) | (1,643.4) | ||
Total Ecolab shareholders' equity | 7,929.4 | 7,583.6 | ||
Total equity | 7,983 | 7,653.8 | $ 6,941 | $ 6,980.4 |
Total liabilities and equity | $ 19,962.6 | 19,963.5 | ||
Previously Reported | ||||
Current assets | ||||
Accounts receivable, net | 2,574.1 | |||
Inventories | 1,445.9 | |||
Total current assets | 4,596.4 | |||
Other assets | 474.2 | |||
Total assets | 19,962.4 | |||
Current liabilities | ||||
Other current liabilities | 957.3 | |||
Total current liabilities | 3,431.8 | |||
Deferred income taxes | 642.8 | |||
Total liabilities | 12,273.7 | |||
Equity | ||||
Retained earnings | 8,045.4 | |||
Accumulated other comprehensive loss | (1,642.3) | |||
Total Ecolab shareholders' equity | 7,618.5 | |||
Total equity | 7,688.7 | |||
Total liabilities and equity | 19,962.4 | |||
Adjustment | Revenue Standard Adoption | ||||
Current assets | ||||
Accounts receivable, net | (2.7) | |||
Inventories | 0.6 | |||
Total current assets | (2.1) | |||
Other assets | 3.2 | |||
Total assets | 1.1 | |||
Current liabilities | ||||
Other current liabilities | 43.4 | |||
Total current liabilities | 43.4 | |||
Deferred income taxes | (7.4) | |||
Total liabilities | 36 | |||
Equity | ||||
Retained earnings | (33.8) | |||
Accumulated other comprehensive loss | (1.1) | |||
Total Ecolab shareholders' equity | (34.9) | |||
Total equity | (34.9) | |||
Total liabilities and equity | $ 1.1 |
NEW ACCOUNTING PRONOUNCEMENTS_4
NEW ACCOUNTING PRONOUNCEMENTS - Revenue and Restricted Cash Standards Impact on Cash Flows (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
OPERATING ACTIVITIES | ||||||
Net income including noncontrolling interest | $ 438.3 | $ 396.6 | $ 1,040.1 | $ 950.2 | $ 1,518.6 | $ 1,246.5 |
Adjustments to reconcile net income to cash provided by operating activities: | ||||||
Deferred income taxes | 56.6 | 9.8 | ||||
Increase (Decrease) in Operating Capital [Abstract] | ||||||
Accounts receivable | (161.3) | (23.2) | ||||
Other liabilities | (173.8) | (106.4) | ||||
Cash provided by operating activities | 1,450.4 | 1,444.9 | ||||
INVESTING ACTIVITIES | ||||||
Cash used for investing activities | (648.9) | (1,421.9) | ||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 10.2 | 6.2 | ||||
Decrease in cash, cash equivalents and restricted cash | (7.8) | (171.3) | ||||
Cash, cash equivalents and restricted cash, beginning of period | 211.4 | 380.4 | 380.4 | |||
Cash, cash equivalents and restricted cash, end of period | $ 203.6 | 209.1 | $ 203.6 | 209.1 | 211.4 | 380.4 |
Previously Reported | ||||||
OPERATING ACTIVITIES | ||||||
Net income including noncontrolling interest | 395.8 | 950.7 | ||||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||
Deferred income taxes | 10.4 | |||||
Increase (Decrease) in Operating Capital [Abstract] | ||||||
Accounts receivable | (23.5) | |||||
Other liabilities | (107.2) | |||||
Cash provided by operating activities | 1,444.9 | |||||
INVESTING ACTIVITIES | ||||||
Restricted cash activity | 53.8 | |||||
Cash used for investing activities | (1,368.1) | |||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 5.4 | |||||
Decrease in cash, cash equivalents and restricted cash | (118.3) | |||||
Cash, cash equivalents and restricted cash, beginning of period | 327.4 | 327.4 | ||||
Cash, cash equivalents and restricted cash, end of period | 209.1 | 209.1 | 327.4 | |||
Adjustment | Restricted Cash Standard Adoption | ||||||
INVESTING ACTIVITIES | ||||||
Restricted cash activity | (53.8) | |||||
Cash used for investing activities | (53.8) | |||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 0.8 | |||||
Decrease in cash, cash equivalents and restricted cash | (53) | |||||
Cash, cash equivalents and restricted cash, beginning of period | 53 | $ 53 | ||||
Cash, cash equivalents and restricted cash, end of period | $ 53 | |||||
Adjustment | Revenue Standard Adoption | ||||||
OPERATING ACTIVITIES | ||||||
Net income including noncontrolling interest | $ 0.8 | (0.5) | ||||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||
Deferred income taxes | (0.6) | |||||
Increase (Decrease) in Operating Capital [Abstract] | ||||||
Accounts receivable | 0.3 | |||||
Other liabilities | $ 0.8 |