Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Jan. 31, 2019 | Jun. 29, 2018 | |
Document and Entity Information | |||
Entity Registrant Name | ECOLAB INC. | ||
Entity Central Index Key | 31,462 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 40,354,321,454 | ||
Entity Common Stock, Shares Outstanding | 287,853,232 | ||
Entity Shell Company | false | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED STATEMENT OF INCOM
CONSOLIDATED STATEMENT OF INCOME - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Net sales | $ 3,760.5 | $ 3,747.2 | $ 3,689.6 | $ 3,470.9 | $ 3,649 | $ 3,564.5 | $ 3,460 | $ 3,162.4 | $ 14,668.2 | $ 13,835.9 | $ 13,151.8 |
Cost of sales (including special charges of (a)) | 2,216.8 | 2,190.7 | 2,146.1 | 2,072.3 | 2,129 | 2,055.7 | 2,036.6 | 1,842.9 | 8,625.9 | 8,064.2 | 7,533.9 |
Selling, general and administrative expenses | 948.8 | 964.7 | 1,036.8 | 1,018.3 | 962.4 | 939.8 | 967 | 956.1 | 3,968.6 | 3,825.3 | 3,708.2 |
Special (gains) and charges | 13 | 75.6 | 12.1 | 26 | (51.6) | 4.9 | 36.8 | 6.2 | 126.7 | (3.7) | 39.5 |
Operating income | 581.9 | 516.2 | 494.6 | 354.3 | 609.2 | 564.1 | 419.6 | 357.2 | 1,947 | 1,950.1 | 1,870.2 |
Other (income) expense | (19.9) | (21) | (19.6) | (19.4) | (16.8) | (16.9) | (16.8) | (16.8) | (79.9) | (67.3) | (43.8) |
Interest expense, net | 53.9 | 55.7 | 56.3 | 56.4 | 77.8 | 55.1 | 59.6 | 62.5 | 222.3 | 255 | 264.6 |
Income before income taxes | 547.9 | 481.5 | 457.9 | 317.3 | 548.2 | 525.9 | 376.8 | 311.5 | 1,804.6 | 1,762.4 | 1,649.4 |
Provision for income taxes | 147.7 | 43.2 | 104.3 | 69.1 | (20.2) | 129.3 | 80.5 | 54.2 | 364.3 | 243.8 | 402.9 |
Net income including noncontrolling interest | 400.2 | 438.3 | 353.6 | 248.2 | 568.4 | 396.6 | 296.3 | 257.3 | 1,440.3 | 1,518.6 | 1,246.5 |
Net income attributable to noncontrolling interest | 5.1 | 2.9 | 2.3 | 0.9 | 5.8 | 3.4 | 1.5 | 3.3 | 11.2 | 14 | 17.5 |
Net income attributable to Ecolab | $ 395.1 | $ 435.4 | $ 351.3 | $ 247.3 | $ 562.6 | $ 393.2 | $ 294.8 | $ 254 | $ 1,429.1 | $ 1,504.6 | $ 1,229 |
Earnings attributable to Ecolab per common share | |||||||||||
Basic (in dollars per share) | $ 1.37 | $ 1.51 | $ 1.22 | $ 0.86 | $ 1.95 | $ 1.36 | $ 1.02 | $ 0.87 | $ 4.95 | $ 5.20 | $ 4.20 |
Diluted (in dollars per share) | $ 1.35 | $ 1.48 | $ 1.20 | $ 0.84 | $ 1.92 | $ 1.34 | $ 1 | $ 0.86 | $ 4.88 | $ 5.12 | $ 4.14 |
Weighted-average common shares outstanding | |||||||||||
Basic (in shares) | 288 | 288.8 | 288.8 | 288.6 | 289.1 | 289 | 289.8 | 290.6 | 288.6 | 289.6 | 292.5 |
Diluted (in shares) | 292.2 | 293.4 | 293.3 | 292.7 | 293.6 | 293.4 | 294.1 | 295 | 292.8 | 294 | 296.7 |
Product and sold equipment | |||||||||||
Net sales | $ 12,128.6 | $ 11,431.8 | $ 10,904.1 | ||||||||
Cost of sales (including special charges of (a)) | 7,078.5 | 6,576.9 | 6,153.3 | ||||||||
Service and lease equipment | |||||||||||
Net sales | 2,539.6 | 2,404.1 | 2,247.7 | ||||||||
Cost of sales (including special charges of (a)) | $ 1,547.4 | $ 1,487.3 | $ 1,380.6 |
CONSOLIDATED STATEMENT OF INC_2
CONSOLIDATED STATEMENT OF INCOME (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Special charges | $ 13 | $ 75.6 | $ 12.1 | $ 26 | $ (51.6) | $ 4.9 | $ 36.8 | $ 6.2 | $ 126.7 | $ (3.7) | $ 39.5 |
Cost of sales | |||||||||||
Special charges | 5.8 | $ 3.6 | $ (0.1) | 17.8 | $ 0.3 | $ 24.4 | $ 1.5 | 9.3 | 44 | 66 | |
Interest expense | |||||||||||
Special charges | $ 0.3 | $ 21.9 | 0.3 | 21.9 | |||||||
Product and sold equipment | Cost of sales | |||||||||||
Special charges | $ 9.3 | $ 44 | $ 66 |
CONSOLIDATED STATEMENT OF COMPR
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | |||
Net income including noncontrolling interest | $ 1,440.3 | $ 1,518.6 | $ 1,246.5 |
Foreign currency translation adjustments | |||
Foreign currency translation | (223.3) | 208 | (230.4) |
Gain (loss) on net investment hedges | 57.5 | (109.7) | (2.5) |
Total foreign currency translation adjustments | (165.8) | 98.3 | (232.9) |
Derivatives and hedging instruments | 28.4 | (17.9) | (17.5) |
Pension and postretirement benefits | |||
Current period net actuarial loss | (37.8) | (33.4) | (102.3) |
Pension and postretirement prior period service costs and benefits | (2.3) | (0.5) | 7.7 |
Amortization of net actuarial loss and prior service cost included in net periodic pension and postretirement costs | 13.2 | 24.7 | 20.2 |
Pension and postretirement benefits changes | 44.9 | 33.9 | |
Total pension and postretirement benefits | 18 | (9.2) | (40.5) |
Subtotal | (119.4) | 71.2 | (290.9) |
Total comprehensive income, including noncontrolling interest | 1,320.9 | 1,589.8 | 955.6 |
Comprehensive income attributable to noncontrolling interest | 10.1 | 15.7 | 16.2 |
Comprehensive income attributable to Ecolab | $ 1,310.8 | $ 1,574.1 | $ 939.4 |
CONSOLIDATED BALANCE SHEET
CONSOLIDATED BALANCE SHEET - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | |
Current assets | |||
Cash and cash equivalents | $ 114.7 | $ 211.4 | |
Accounts receivable, net | 2,662.5 | 2,571.4 | |
Inventories | 1,546.4 | 1,446.5 | |
Other current assets | 354.1 | 365 | |
Total current assets | 4,677.7 | 4,594.3 | |
Property, plant and equipment, net | 3,836 | 3,707.1 | |
Goodwill | 7,078 | 7,167.1 | |
Other intangible assets, net | 3,797.7 | 4,017.6 | |
Other assets | 685.1 | 477.4 | |
Total assets | 20,074.5 | 19,963.5 | |
Current liabilities | |||
Short-term debt | 743.6 | 564.4 | |
Accounts payable | 1,255.6 | 1,177.1 | |
Compensation and benefits | 579.7 | 549.4 | |
Income taxes | 100.6 | 183.6 | |
Other current liabilities | 1,006.1 | 1,000.7 | |
Total current liabilities | 3,685.6 | 3,475.2 | |
Long-term debt | 6,301.6 | 6,758.3 | |
Postretirement health care and pension benefits | 944.3 | 1,025.5 | |
Deferred income taxes | 764.6 | 635.4 | |
Other liabilities | 324.8 | 415.3 | |
Total liabilities | 12,020.9 | 12,309.7 | |
Commitments and contingencies (Note 15) | |||
Equity | |||
Common stock | [1] | 357 | 354.7 |
Additional paid-in capital | 5,633.2 | 5,435.7 | |
Retained earnings | 8,909.5 | 8,011.6 | |
Accumulated other comprehensive loss | (1,761.7) | (1,643.4) | |
Treasury stock | (5,134.8) | (4,575) | |
Total Ecolab shareholders' equity | 8,003.2 | 7,583.6 | |
Noncontrolling interest | 50.4 | 70.2 | |
Total equity | 8,053.6 | 7,653.8 | |
Total liabilities and equity | $ 20,074.5 | $ 19,963.5 | |
[1] | Common stock, 800.0 shares authorized, $1.00 par value, 287.7 shares outstanding at December 31, 2018 and 289.3 shares outstanding at December 31, 2017. Shares outstanding are net of treasury stock. |
CONSOLIDATED BALANCE SHEET (Par
CONSOLIDATED BALANCE SHEET (Parenthetical) - $ / shares shares in Millions | Dec. 31, 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 | 287.7 | 289.3 |
CONSOLIDATED STATEMENT OF CASH
CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
OPERATING ACTIVITIES | |||
Net income including noncontrolling interest | $ 1,440.3 | $ 1,518.6 | $ 1,246.5 |
Adjustments to reconcile net income to cash provided by operating activities: | |||
Depreciation | 621.3 | 585.7 | 561 |
Amortization | 317 | 307.6 | 289.7 |
Deferred income taxes | 85.1 | (353.5) | (90.6) |
Share-based compensation expense | 94.4 | 90.5 | 85.7 |
Excess tax benefits from share-based payment arrangements | (43.6) | ||
Pension and postretirement plan contributions | (60) | (144.1) | (211.8) |
Pension and postretirement plan expense | 31.9 | 36.9 | 54.1 |
Restructuring charges, net of cash paid | 43.5 | 5.2 | (60.5) |
Gain on sale of businesses | (50.6) | (0.5) | |
Other, net | 24 | 37.4 | 14.2 |
Asset charges and write-downs | 15.1 | 65.9 | |
Changes in operating assets and liabilities, net of effect of acquisitions: | |||
Accounts receivable | (164.1) | (91.5) | 0.9 |
Inventories | (141.1) | (85.5) | 18.8 |
Other assets | (80.7) | (48.9) | (34.9) |
Accounts payable | 113.5 | 121.1 | (55.1) |
Other liabilities | (47.4) | 147.3 | 99.9 |
Cash provided by operating activities | 2,277.7 | 2,091.3 | 1,939.7 |
INVESTING ACTIVITIES | |||
Capital expenditures | (847.1) | (868.6) | (756.8) |
Property and other assets sold | 30 | 10.7 | 30.5 |
Acquisitions and investments in affiliates, net of cash acquired | (229.8) | (989.2) | (49.5) |
Divestiture of businesses | 9.2 | 118.8 | 0.9 |
Settlement of net investment hedges | 14.1 | 2.1 | 1.3 |
Other, net | (6.4) | (0.8) | |
Cash used for investing activities | (1,030) | (1,727) | (773.6) |
FINANCING ACTIVITIES | |||
Net issuances of commercial paper and notes payable | 341.8 | (43.7) | (606.4) |
Long-term debt borrowings | 1,309.4 | 2,390 | |
Long-term debt repayments | (551.6) | (799) | (1,569.6) |
Reacquired shares | (562.4) | (600.3) | (739.6) |
Dividends paid | (496.5) | (448.7) | (427.5) |
Exercise of employee stock options | 114.5 | 83.8 | 76.8 |
Excess tax benefits from share-based payment arrangements | 43.6 | ||
Acquisition related liabilities and contingent consideration | (10.1) | (8.5) | (35.5) |
Other, net | (8.4) | (15.7) | |
Cash used for financing activities | (1,172.7) | (522.7) | (868.2) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 7.6 | (10.6) | (10.3) |
Increase (decrease) in cash, cash equivalents and restricted cash | 82.6 | (169) | 287.6 |
Cash, cash equivalents and restricted cash, beginning of period | 211.4 | 380.4 | 92.8 |
Cash, cash equivalents and restricted cash, end of period | 294 | 211.4 | 380.4 |
SUPPLEMENTAL CASH FLOW INFORMATION | |||
Income taxes paid | 395.2 | 402.8 | 359.1 |
Interest paid | $ 206.4 | $ 239.3 | $ 267 |
CONSOLIDATED STATEMENT OF CAS_2
CONSOLIDATED STATEMENT OF CASH FLOWS (Parenthetical) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Other Assets | ||||
Restricted Cash | $ 179.3 | $ 0 | $ 53 | $ 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 |
Balance (in shares) at Dec. 31, 2015 | 350,339,820 | (54,372,729) | ||||||
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 | |||
Stock options (in shares) | 1,778,821 | 58,969 | ||||||
Stock awards (in shares) | 489,100 | 14,291 | ||||||
Reacquired shares | (739.6) | (15.5) | $ (724.1) | (739.6) | ||||
Treasury Stock, Shares, Acquired | (6,483,198) | |||||||
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 |
Balance (in shares) at Dec. 31, 2016 | 352,607,741 | (60,782,667) | ||||||
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 | |||
Stock options (in shares) | 1,714,214 | 41,767 | ||||||
Stock awards (in shares) | 393,941 | 55,431 | ||||||
Reacquired shares | (600.3) | (5.4) | $ (594.9) | (600.3) | ||||
Treasury Stock, Shares, Acquired | (4,707,629) | |||||||
Balance at Dec. 31, 2017 | 7,583.6 | $ 354.7 | 5,435.7 | 8,011.6 | (1,643.4) | $ (4,575) | 70.2 | $ 7,653.8 |
Balance (in shares) at Dec. 31, 2017 | 354,715,896 | (65,393,098) | 289,300,000 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||||
New accounting guidance adoption | (43.6) | (43.6) | $ (43.6) | |||||
Net income | 1,429.1 | 1,429.1 | 11.2 | 1,440.3 | ||||
Comprehensive income (loss) activity | (118.3) | (118.3) | (1.1) | (119.4) | ||||
Cash dividends declared | (487.6) | (487.6) | (22.7) | (510.3) | ||||
Acquisition of noncontrolling interests | (7.7) | (7.7) | (7.2) | (14.9) | ||||
Stock options and awards | 210 | $ 2.3 | 205.2 | $ 2.5 | 210 | |||
Stock options (in shares) | 1,833,004 | 38,679 | ||||||
Stock awards (in shares) | 409,200 | 18,481 | ||||||
Reacquired shares | (562.3) | $ (562.3) | (562.3) | |||||
Treasury Stock, Shares, Acquired | (3,908,041) | |||||||
Balance at Dec. 31, 2018 | $ 8,003.2 | $ 357 | $ 5,633.2 | $ 8,909.5 | $ (1,761.7) | $ (5,134.8) | $ 50.4 | $ 8,053.6 |
Balance (in shares) at Dec. 31, 2018 | 356,958,100 | (69,243,979) | 287,700,000 |
CONSOLIDATED STATEMENT OF EQU_2
CONSOLIDATED STATEMENT OF EQUITY (Parenthetical) - $ / shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
CONSOLIDATED STATEMENT OF EQUITY | |||
Dividends declared per common share (in dollars per share) | $ 1.690 | $ 1.520 | $ 1.420 |
NATURE OF BUSINESS
NATURE OF BUSINESS | 12 Months Ended |
Dec. 31, 2018 | |
NATURE OF BUSINESS | |
NATURE OF BUSINESS | 1. NATURE OF BUSINESS Ecolab is the global leader in water, hygiene and energy technologies and services that protect people and vital resources. The Company delivers comprehensive solutions and on-site service to promote safe food, maintain clean environments, optimize water and energy use and improve operational efficiencies for customers in the food, healthcare, energy, hospitality and industrial markets in more than 170 countries. The Company’s cleaning and sanitizing programs and products and pest elimination services support customers in the foodservice, food and beverage processing, hospitality, healthcare, government and education, retail, textile care and commercial facilities management sectors. The Company’s products and technologies are also used in water treatment, pollution control, energy conservation, oil production and refining, steelmaking, papermaking, mining and other industrial processes. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2018 | |
SIGNIFICANT ACCOUNTING POLICIES | |
SIGNIFICANT ACCOUNTING POLICIES | 2. SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The consolidated financial statements include the accounts of the Company and all subsidiaries in which the Company has a controlling financial interest. Investments in companies, joint ventures or partnerships in which the Company does not have control but has the ability to exercise significant influence over operating and financial policies, are reported using the equity method of accounting. The cost method of accounting is used in circumstances where the Company has no substantial influence over the investee, and the investment has no easily determinable fair value. International subsidiaries are included in the financial statements on the basis of their U.S. GAAP November 30 fiscal year-ends to facilitate the timely inclusion of such entities in the Company’s consolidated financial reporting. All intercompany transactions and profits are eliminated in consolidation. Use of Estimates The preparation of the Company’s financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates. The Company’s critical accounting estimates include revenue recognition, valuation allowances and accrued liabilities, actuarially determined liabilities, restructuring, income taxes and long-lived assets, intangible assets and goodwill. Foreign Currency Translation Financial position and reported results of operations of the Company’s non-U.S. dollar functional international subsidiaries are measured using local currencies as the functional currency. Assets and liabilities of these operations are translated at the exchange rates in effect at each fiscal year end. The translation adjustments related to assets and liabilities that arise from the use of differing exchange rates from period to period are included in accumulated other comprehensive loss in shareholders’ equity. Income statement accounts are translated at average rates of exchange prevailing during the year. As discussed in Note 18 Operating Segments and Geographic Information, the Company evaluates its international operations based on fixed rates of exchange; however, the different exchange rates from period to period impact the amount of reported income from consolidated operations. Concentration of Credit Risk Credit risk represents the accounting loss that would be recognized at the reporting date if counterparties failed to perform as contracted. The Company believes the likelihood of incurring material losses due to concentration of credit risk is minimal. The principal financial instruments subject to credit risk are as follows: Cash and Cash Equivalents - The Company maintains cash deposits with major banks, which from time to time may exceed insured limits. The possibility of loss related to financial condition of major banks has been deemed minimal. Additionally, the Company’s investment policy limits exposure to concentrations of credit risk and changes in market conditions. Accounts Receivable - A large number of customers in diverse industries and geographies, as well as the practice of establishing reasonable credit lines, limits credit risk. Based on historical trends and experiences, the allowance for doubtful accounts is adequate to cover potential credit risk losses. Foreign Currency and Interest Rate Contracts and Derivatives - Exposure to credit risk is limited by internal policies and active monitoring of counterparty risks. In addition, the Company uses a diversified group of major international banks and financial institutions as counterparties. The Company does not anticipate nonperformance by any of these counterparties. Cash and Cash Equivalents Cash equivalents include highly-liquid investments with a maturity of three months or less when purchased. Restricted Cash Cash and cash equivalents that are restricted as to withdrawal or use under the terms of certain contractual agreements are recorded in Other assets on the Consolidated Balance Sheet and primarily relate to acquisition activities. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are carried at the invoiced amounts, less an allowance for doubtful accounts, and generally do not bear interest. The Company estimates the balance of allowance for doubtful accounts by analyzing accounts receivable balances by age and applying historical write-off and collection trend rates. The Company’s estimates include separately providing for customer receivables based on specific circumstances and credit conditions, and when it is deemed probable that the balance is uncollectible. Account balances are written off against the allowance when it is determined the receivable will not be recovered. The Company’s allowance for doubtful accounts balance also includes an allowance for the expected return of products shipped and credits related to pricing or quantities shipped of $17 million, $15 million and $14 million as of December 31, 2018, 2017, and 2016, respectively. Returns and credit activity is recorded directly to sales as a reduction. The following table summarizes the activity in the allowance for doubtful accounts: (millions) 2018 2017 2016 Beginning balance $71.5 $67.6 $75.3 Bad debt expense 15.7 17.1 20.1 Write-offs (23.6) (15.7) (24.6) Other (a) (3.0) 2.5 (3.2) Ending balance $60.6 $71.5 $67.6 (a) Other amounts are primarily the effects of changes in currency translations and the impact of allowance for returns and credits. Inventory Valuations Inventories are valued at the lower of cost or net realizable value. Certain U.S. inventory costs are determined on a last-in, first-out (“LIFO”) basis. LIFO inventories represented 37% and 39% of consolidated inventories as of December 31, 2018 and 2017, respectively. All other inventory costs are determined using either the average cost or first-in, first-out (“FIFO”) methods. Inventory values at FIFO, as shown in Note 5, approximate replacement cost. Property, Plant and Equipment Property, plant and equipment assets are stated at cost. Merchandising and customer equipment consists principally of various dispensing systems for the Company’s cleaning and sanitizing products, dishwashing machines and process control and monitoring equipment. Certain dispensing systems capitalized by the Company are accounted for on a mass asset basis, whereby equipment is capitalized and depreciated as a group and written off when fully depreciated. The Company capitalizes both internal and external costs of development or purchase of computer software for internal use. Costs incurred for data conversion, training and maintenance associated with capitalized software are expensed as incurred. Expenditures for major renewals and improvements, which significantly extend the useful lives of existing plant and equipment, are capitalized and depreciated. Expenditures for repairs and maintenance are charged to expense as incurred. Upon retirement or disposition of plant and equipment, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in income. Depreciation is charged to operations using the straight-line method over the assets’ estimated useful lives ranging from 5 to 40 years for buildings and leasehold improvements, 3 to 20 years for machinery and equipment, 3 to 15 years for merchandising and customer equipment and 3 to 7 years for capitalized software. The straight-line method of depreciation reflects an appropriate allocation of the cost of the assets to earnings in proportion to the amount of economic benefits obtained by the Company in each reporting period. Depreciation expense was $621 million, $586 million and $561 million for 2018, 2017 and 2016, respectively. During 2018, the Company impaired certain assets related to Accelerate 2020. During 2017, the Company impaired certain assets related to a portion of one of its businesses. During 2016, the Company impaired certain assets related to a product line within one of its U.S. plants. See Note 3 for additional information regarding these asset impairments. Goodwill and Other Intangible Assets Goodwill Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in a business combination. The Company’s reporting units are its operating segments. During the second quarter of 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. Additionally, no events occurred during the second half of 2018 that indicated a need to update the Company’s conclusions reached during the second quarter of 2018. 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 are as follows: Global Global Global (millions) Industrial Institutional Energy Other Total December 31, 2016 $2,585.0 $590.7 $3,093.6 $113.7 $6,383.0 Segment change (a) (71.7) - - 71.7 - December 31, 2016 revised $2,513.3 $590.7 $3,093.6 $185.4 $6,383.0 Current year business combinations (b) 123.4 403.7 8.1 63.9 599.1 Prior year business combinations (c) (0.2) - 0.3 - 0.1 Dispositions - - - (42.6) (42.6) Effect of foreign currency translation 88.8 4.4 227.5 December 31, 2017 $2,725.3 $1,027.0 $3,203.7 $211.1 $7,167.1 Current year business combinations (b) 71.6 12.4 - - 84.0 Prior year business combinations (c) (1.2) - - (0.9) (2.1) Dispositions (0.5) - (2.9) - (3.4) Effect of foreign currency translation (64.4) (24.1) (74.2) (4.9) (167.6) December 31, 2018 $2,730.8 $1,015.3 $3,126.6 $205.3 $7,078.0 (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 18 for further information. (b) For 2018, the Company does not expect any of the goodwill related to businesses acquired to be tax deductible. For 2017, $79.2 million of the goodwill related to businesses acquired is expected to be tax deductible. (c) Represents purchase price allocation adjustments for acquisitions deemed preliminary as of the end of the prior year. Other Intangible Assets The Nalco trade name is the Company’s principal indefinite life intangible asset. During the second quarter of 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, royalty rates and discount rates. Based on this testing, the estimated fair value of the asset exceeded its carrying value by a significant margin, therefore, no adjustment to the $1.2 billion carrying value of this asset was necessary. Additionally, no events during the second half of 2018 indicated a need to update the Company’s conclusions reached during the second quarter of 2018. There has been no impairment of the Nalco trade name intangible asset since it was acquired. The Company’s intangible assets subject to amortization primarily include customer relationships, trademarks, patents and other technology. The fair value of identifiable intangible assets is estimated based upon discounted future cash flow projections and other acceptable valuation methods. Other intangible assets are amortized on a straight-line basis over their estimated economic lives. The weighted-average useful life of amortizable intangible assets was 14 years as of both December 31, 2018 and 2017. The weighted-average useful life by type of amortizable asset at December 31, 2018 is as follows: (years) Customer relationships 14 Trademarks 14 Patents 14 Other technology 5 The straight-line method of amortization reflects an appropriate allocation of the cost of the intangible assets to earnings in proportion to the amount of economic benefits obtained by the Company in each reporting period. The Company evaluates the remaining useful life of its intangible assets that are being amortized each reporting period to determine whether events and circumstances warrant a change to the remaining period of amortization. If the estimate of an intangible asset’s remaining useful life is changed, the remaining carrying amount of the intangible asset will be amortized prospectively over that revised remaining useful life. Total amortization expense related to other intangible assets during the last three years and future estimated amortization is as follows: (millions) 2016 $ 290 2017 308 2018 317 2019 310 2020 303 2021 298 2022 292 2023 284 Long-Lived Assets The Company periodically reviews its long-lived and amortizable intangible assets for impairment and assesses whether significant events or changes in business circumstances indicate that the carrying value of the assets may not be recoverable. Such circumstances may include a significant decrease in the market price of an asset, a significant adverse change in the manner in which the asset is being used or in its physical condition or history of operating or cash flow losses associated with the use of an asset. An impairment loss may be recognized when the carrying amount of an asset exceeds the anticipated future undiscounted cash flows expected to result from the use of the asset and its eventual disposition. The amount of the impairment loss to be recorded, if any, is calculated by the excess of the asset’s carrying value over its fair value. In addition, the Company periodically reassesses the estimated remaining useful lives of its long-lived assets. Changes to estimated useful lives would impact the amount of depreciation and amortization recorded in earnings. The Company has not experienced significant changes in the carrying value or estimated remaining useful lives of its long-lived or amortizable intangible assets. Income Taxes Income taxes are recognized during the period in which transactions enter into the determination of financial statement income, with deferred income taxes provided for the tax effect of temporary differences between the carrying amount of assets and liabilities and their tax bases. The Company records a valuation allowance to reduce its deferred tax assets when uncertainty regarding their realizability exists. The Company records liabilities for income tax uncertainties in accordance with the U.S. GAAP recognition and measurement criteria guidance. On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was enacted, which reduced the U.S. federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxes on certain foreign sourced earnings. The Tax Act added many new provisions including changes to bonus depreciation, the deduction for executive compensation and interest expense, a tax on global intangible low taxed income (GILTI), the base erosion anti abuse tax (BEAT) and a deduction for foreign derived intangible income (FDII). In January 2018, the Financial Accounting Standards Board (FASB) issued guidance stating that a company must make an accounting policy election to either treat taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the "period cost method") or factor such amounts into a company’s measurement of its deferred taxes (the "deferred method"). Ecolab has elected the period cost method and considered the estimated 2018 GILTI impact in its 2018 tax expense. See Note 12 for additional information regarding income taxes. Share-Based Compensation The Company measures compensation expense for share-based awards at fair value at the date of grant and recognizes compensation expense over the service period for awards expected to vest. The majority of grants to retirement eligible recipients (age 55 with required years of service) are attributed to expense using the non-substantive vesting method and are fully expensed over a six month period following the date of grant. In addition, the Company includes a forfeiture estimate in the amount of compensation expense being recognized based on an estimate of the number of outstanding awards expected to vest. During the first quarter of 2017, the Company adopted the accounting guidance issued in March 2016 that amends certain aspects of share-based compensation for employees, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classifications on the Consolidated Statement of Cash Flows. Under the new guidance, all excess tax benefits or deficiencies are to be recognized prospectively as discrete income tax items on the Consolidated Statement of Income, while previous guidance required realized excess tax benefits or deficiencies to be recognized in additional paid-in capital. The Company recorded $28.1 million and $39.7 million of excess tax benefits during 2018 and 2017, respectively. The extent of excess tax benefits is subject to variation in stock price and stock option exercises. Adoption of the accounting standard also eliminated the requirement that excess tax benefits be realized before they can be recognized, and as a result, the Company recorded a $1.9 million cumulative-effect adjustment for previously unrecognized excess tax benefits. The Company’s adoption also resulted in associated excess tax benefits being classified as an operating activity in the statement of cash flows prospectively beginning January 1, 2017 with no changes to the prior year. Based on the adoption methodology applied, employee taxes paid remain classified as a financing activity on the statement of cash flows, and the statement of cash flows classification of prior periods has not changed. See Note 11 for additional information regarding equity compensation plans. Restructuring Activities The Company’s restructuring activities are associated with plans to enhance its efficiency, effectiveness and sharpen its competitiveness. These restructuring plans include net costs associated with significant actions involving employee-related severance charges, contract termination costs and asset write-downs and disposals. Employee termination costs are largely based on policies and severance plans, and include personnel reductions and related costs for severance, benefits and outplacement services. These charges are reflected in the quarter in which the actions are probable and the amounts are estimable, which typically is when management approves the associated actions. Contract termination costs include charges to terminate leases prior to the end of their respective terms and other contract termination costs. Asset write-downs and disposals include leasehold improvement write-downs, other asset write-downs associated with combining operations and disposal of assets. See Note 3 for additional information regarding restructuring. Revenue Recognition Revenue is measured as the amount of consideration expected to be received in exchange for transferring goods or providing service. Product and Sold Equipment Revenue from product and sold equipment is recognized when obligations under the terms of a contract with the customer are satisfied, which generally occurs with the transfer of the product or delivery of the equipment. Service and Lease Equipment Revenue from service and leased equipment is recognized when the services are provided, or the customer receives the benefit from the leased equipment, which is over time. Service revenue is recognized over time utilizing an input method and aligns with when the services are provided. Typically, revenue is recognized 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. Other Considerations Contracts with customers may include multiple performance obligations. For contracts with multiple performance obligations, the consideration is allocated between products and services based on their stand-alone selling prices. Stand-alone selling prices are generally based on the prices charged to customers or using an expected cost plus margin. Judgment is used in determining the amount of service that is embedded within the contracts, which is based on the amount of time spent on the performance obligation activities. The level of effort, including the estimated margin that would be charged, is used to determine the amount of service revenue. Depending on the terms of the contract, the Company may defer the recognition of revenue when a future performance obligation has not yet occurred. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, 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. The Company’s sales policies do not provide for general rights of return. Estimates used in recognizing revenue include the delay between the time that products are shipped and when they are received by customers, when title transfers and the amount of credit memos issued in subsequent periods. The Company records estimated reductions to revenue for customer programs and incentive offerings, including pricing arrangements, promotions and other volume-based incentives at the time the sale is recorded. Depending on market conditions, the Company may increase customer incentive offerings, which could reduce gross profit margins over the term of the incentive. Earnings Per Common Share The difference in the weighted average common shares outstanding for calculating basic and diluted earnings attributable to Ecolab per common share is a result of the dilution associated with the Company’s equity compensation plans. As noted in the table below, certain stock options and units outstanding under these equity compensation plans were not included in the computation of diluted earnings attributable to Ecolab per common share because they would not have had a dilutive effect. The computations of the basic and diluted earnings attributable to Ecolab per share amounts were as follows: (millions, except per share) 2018 2017 2016 Net income attributable to Ecolab $1,429.1 $1,504.6 $1,229.0 Weighted-average common shares outstanding Basic 288.6 289.6 292.5 Effect of dilutive stock options and units 4.2 4.4 4.2 Diluted 292.8 294.0 296.7 Basic EPS $ 4.95 $ 5.20 $ 4.20 Diluted EPS $ 4.88 $ 5.12 $ 4.14 Anti-dilutive securities excluded from the computation of diluted EPS 2.9 3.4 3.6 Other Significant Accounting Policies The following table includes a reference to additional significant accounting policies that are described in other notes to the financial statements, including the note number: Policy Note Fair value measurements 7 Derivatives and hedging transactions 8 Share-based compensation 11 Research and development expenditures 14 Legal contingencies 15 Pension and post-retirement benefit plans 16 Reportable segments 18 New Accounting Pronouncements Standards that are not yet adopted: Required Date of Date of Effect on the Standard Issuance Description Adoption Financial Statements ASU 2018-15 - Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force) August 2018 Aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The amendments require an entity (customer) in a hosting arrangement that is a service contract to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. January 1, 2020 The 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 2018-02 - Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income February 2018 Allows entities to reclassify stranded tax effects resulting from the Tax Cut and Jobs Act (“the Act”) from accumulated other comprehensive income to retained earnings. Tax effects stranded in other comprehensive income for reasons other than the impact of the Act cannot be reclassified. January 1, 2019 The Company is currently evaluating the impact of adoption and accounting policy elections required to be made. 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. Credit Losses ASUs: Various Addresses the recognition, measurement, presentation and disclosure of credit losses on trade and reinsurance receivables, loans, debt securities, net investments in leases, off-balance-sheet credit exposures and certain other instruments. Amends guidance on reporting credit losses from an incurred model to an expected model for assets held at amortized cost, such as accounts receivable, loans and held-to-maturity debt securities. Additional disclosures will also be required. January 1, 2020 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. Derivatives and Hedging ASUs: Various Amends the hedge accounting recognition and presentation requirements. Simplifies the application of hedge accounting and the requirements for hedge documentation and effectiveness testing. Requires presentation of all items that affect earnings in the same income statement line as the hedged item. Expands the benchmark interest rates that can be used for hedge accounting. January 1, 2019 Adoption of the ASU is not expected to have a material impact on the Company's financial statements. Required Date of Date of Effect on the Standard Issuance Description Adoption Financial Statements 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) 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. This adjustment to retained earnings is not expected to be material. 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, for certain asset classes, the lessor practical expedient to not separate nonlease and lease components and account for those components as a single component. These asset classes are not expected to be material. Standards that were adopted: Date of Date of Effect on the Standard Issuance Description Adoption Financial Statements 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" was too broad, resulting in diverse interpretations of what was 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 sal |
SPECIAL (GAINS) AND CHARGES
SPECIAL (GAINS) AND CHARGES | 12 Months Ended |
Dec. 31, 2018 | |
SPECIAL (GAINS) AND CHARGES | |
SPECIAL (GAINS) AND CHARGES | 3. SPECIAL (GAINS) AND CHARGES Special (gains) and charges reported on the Consolidated Statement of Income included the following: (millions) 2018 2017 2016 Cost of sales Restructuring activities $12.1 $4.6 $(0.4) Acquisition and integration activities (0.6) 13.2 - Energy related charges - - 62.6 Other (2.2) 26.2 3.8 Subtotal 9.3 44.0 66.0 Special (gains) and charges Restructuring activities 89.4 39.9 (8.7) Acquisition and integration activities 8.8 15.4 8.6 Gain on sale of business - (46.1) - Energy related charges - - 14.2 Venezuela related gain - (11.5) (7.8) Other 28.5 (1.4) 33.2 Subtotal 126.7 (3.7) 39.5 Operating income subtotal 136.0 40.3 105.5 Interest expense, net 0.3 21.9 - Total special (gains) and charges $136.3 $62.2 $105.5 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 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. Subsequent to year-end, the Company raised its goals for the Plan to simplify and automate processes and tasks, reduce complexity and management layers, consolidate facilities and focus on key long-term growth areas by leveraging technology and structural improvements. The Company now expects the restructuring activities will be completed by the end of 2020, with anticipated costs of $260 million ($190 million after tax) over this period of time. Costs are expected to be primarily cash expenditures for severance costs and some facility closure costs relating to team reorganizations. Actual costs may vary from these estimates depending on actions taken. The Company recorded restructuring charges of $104.6 million ($79.6 million after tax) in 2018. The liability related to this Plan was $63.9 million as of the end of the year. Restructuring activity related to the Plan since inception of the underlying actions includes the following: Employee Termination Asset (millions) Costs Disposals Other Total 2018 Activity Recorded expense $ 94.1 $ 5.0 $ 5.5 $ 104.6 Net cash payments (32.8) - (2.4) (35.2) Non-cash charges - (5.0) - (5.0) Effect of foreign currency translation (0.5) - - (0.5) Restructuring liability, December 31, 2018 $ 60.8 $ - $ 3.1 $ 63.9 Other Restructuring Activities Prior to 2018, the Company engaged in a number of restructuring plans. During 2017, the Company commenced restructuring and other cost-saving actions in order to streamline operations. These actions include a reduction of the Company’s global workforce, as well as asset disposals and lease terminations. Actions were substantially completed in 2017. The Company also has restructuring plans that commenced prior to 2016. During 2018, net restructuring gains related to prior year plans were $3.1 million ($2.4 million after tax). During 2017, the Company recorded restructuring charges of $44.5 million ($32.3 million after tax). During 2016, the Company recorded restructuring gains of $9.1 million ($10.8 million after tax). The restructuring liability balance for all plans commencing prior to 2018 was $14.9 million and $41.5 million as of December 31, 2018 and 2017, respectively. The reduction in liability was driven primarily by severance 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 $22.7 million. Acquisition and integration related costs Acquisition and integration costs reported in special (gains) and charges on the Consolidated Statement of Income in 2018 include $8 . 8 million ($6.1 million after tax). Charges are primarily 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 2018 relate to changes in estimates related to an early lease exit. In conjunction with its acquisitions, the Company incurred $0.3 million ($0.2 million after tax) of interest expense in 2018. During 2017, acquisition and integration costs reported in special (gains) and charges on the Consolidated Statement of Income included $15.4 million ($9.9 million after tax) of acquisition costs, advisory and legal fees, and integration charges for the Anios and Swisher acquisitions. Acquisition and integration costs reported in cost of sales on the Consolidated Statement of Income in 2017 included $13.2 million ($8.6 million after tax) related primarily to disposal of excess inventory upon the closure of Swisher plants, accelerated rent expense, and amounts related to recognition of fair value step up in the Anios inventory. During 2016, the Company incurred acquisition and integration charges of $8.6 million ($5.4 million after tax) primarily related to the Swisher acquisition. Further information related to the Company’s acquisitions is included in Note 4. Gain on sale of business During 2017, the Company disposed of the Equipment Care business and recorded a gain of $46.1 million ($12.4 million after tax primarily due to non-deductible goodwill) net of working capital adjustments, costs to sell and other transaction expenses. The gain has been included as a component of special (gains) and charges on the Consolidated Statement of Income. Energy related charges In 2016, excess oil supply pressure negatively impacted exploration and production investments in the energy industry, which directly impacted the Company’s operations and business outlook. Energy related charges reported in product and equipment cost of sales on the Consolidated Statement of Income in 2016 include $62.6 million ($40.7 million after tax), comprised of inventory write-downs due to decline in activity and replacement costs, and fixed asset charges due to a reduction of certain operations and abandonment of certain projects under construction. Energy related charges reported in special (gains) and charges on the Consolidated Statement of Income in 2016 include $14.2 million ($9.3 million after tax) related to headcount reductions and other charges. No such charges occurred in 2017 or 2018. Venezuela related activities Effective as of the end of the fourth quarter of 2015, the Company deconsolidated its Venezuelan subsidiaries. The Company recorded gains due to U.S. dollar cash recoveries of intercompany receivables written off at the time of deconsolidation of $11.5 million ($7.2 million after tax) and $7.8 million ($4.9 million after tax) in 2017 and 2016, respectively. No such gains occurred in 2018. Other During 2018, the Company recorded other special charges of $28.5 million ($21.5 million after tax) which primarily consisted of a $25.0 million ($18.9 million after tax) commitment to the Ecolab Foundation. Other charges, primarily litigation related charges, were minimal and have been included as a component of special (gains) and charges on the Consolidated Statement of Income. Other special gains reported in product and equipment cost of sales on the Consolidated Statement of Income in 2018 of $2.2 million ($1.7 million after tax) relate to changes in estimates for an inventory LIFO reserve. During 2017, the Company recorded other charges of $24.8 million ($19.0 million after tax), primarily related to fixed asset impairments, a Global Energy vendor contract termination and litigation related charges. These charges have been included as a component of both cost of sales and special (gains) and charges on the Consolidated Statement of Income. During 2016, the Company recorded other charges of $37.0 million ($22.7 million after tax), primarily related to fixed asset impairments and litigation related charges and settlements. These charges have been included as a component of both cost of sales and special (gains) and charges on the Consolidated Statement of Income. Interest Expense, net During 2017, in anticipation of U.S. tax reform and a potential limit on interest deductibility in future years , the Company entered into transactions to exchange or retire certain long-term debt, and incurred debt exchange and extinguishment charges of $21.9 million ($13.6 million after tax). This charge has been included as a component of interest expense, net on the Consolidated Statement of Income. |
ACQUISITIONS AND DISPOSITIONS
ACQUISITIONS AND DISPOSITIONS | 12 Months Ended |
Dec. 31, 2018 | |
ACQUISITIONS AND DISPOSITIONS | |
ACQUISITIONS AND DISPOSITIONS | 4. ACQUISITIONS AND DISPOSITIONS Acquisitions The Company makes acquisitions that align with its strategic business objectives. The assets and liabilities of the acquired entities have been recorded as of the acquisition date, at their respective fair values, and are included in the Consolidated Balance Sheet. 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 2018, 2017 and 2016 were not significant to the Company’s consolidated financial statements; therefore, pro forma financial information is not presented. Other Acquisitions The components of the cash paid for other acquisitions, excluding the Anios transaction (as further disclosed below), for transactions during 2018, 2017 and 2016, are shown in the following table. (millions) 2018 2017 2016 Net tangible assets acquired and equity method investments $30.1 $29.8 $46.9 Identifiable intangible assets Customer relationships 101.5 67.0 2.6 Trademarks 3.9 2.5 - Non-compete agreements 2.6 0.2 - Other technology 6.5 7.6 1.1 Total intangible assets 114.5 77.3 3.7 Goodwill 81.9 87.4 7.3 Total aggregate purchase price 226.5 194.5 57.9 Acquisition related liabilities and contingent consideration (1.5) 5.6 27.1 Net cash paid for acquisitions, including acquisition related liabilities and contingent consideration $225.0 $200.1 $85.0 The 2018 acquisition related liability is related to holdback liabilities and contingent considerations. 2017 and 2016 acquisition related liabilities are related primarily to payments of settled liabilities from previous transactions. The weighted average useful lives of identifiable intangible assets acquired, excluding the Anios transaction, 13,12, and 4 years as of December 31, 2018, 2017 and 2016, respectively. 2018 Activity In November 2018, the Company acquired a food and beverage business which provides a range of cleaning and disinfection products for the food processing, food service and beverage sectors, as well as for the institutional and hospitality sectors. Also, during 2018, the Company acquired a water business which provides a range of services to Nalco Water institutional customers. These acquired businesses became part of the Company’s Global Industrial reportable segment. These acquisitions have been accounted for using the acquisition method of accounting, which requires, among other things, that assets acquired and liabilities assumed be recognized at fair value as of the acquisition date. Certain estimated values are not yet finalized and are subject to change. 2017 Activity In 2017, the Company acquired a business which provides water solutions to automotive customers and a paper chemicals business. These businesses became part of the Company’s Global Industrial reportable segment. Also in 2017, the Company acquired U.S. based pest elimination businesses that provide specialized capabilities in food storage. These businesses became part of the Company’s Other reportable segment. Additional acquisitions were made during the year which became part of the Company’s Global Energy and Global Industrial reportable segments. Annualized pre-acquisition sales of the businesses acquired were approximately $135 million. 2016 Activity In 2016, the Company made an equity method investment in a global leader in the design and engineering of complex and comprehensive water treatment solutions that improve water quality and reduce net water usage which became part of the Company’s Global Industrial reportable segment. The Company also acquired certain assets of an oilfield chemical distributor which became part of the Company’s Global Energy reportable segment. Anios Acquisition On February 1, 2017, the Company acquired Anios for total consideration of $798.3 million, including satisfaction of outstanding debt. Anios had annualized pre-acquisition sales of approximately $245 million and is a leading European manufacturer and marketer of hygiene and disinfection products for the healthcare, food service, and food and beverage processing industries. Anios provides an innovative product line that expands the solutions the Company is able to offer, while also providing a complementary geographic footprint within the healthcare market. During 2016, the Company deposited €50 million in an escrow account that was released back to the Company upon closing of the transaction in February 2017. This was recorded as restricted cash within other assets on the Consolidated Balance Sheet as of December 31, 2016. The Company incurred certain acquisition and integration costs associated with the transaction that were expensed and are reflected in the Consolidated Statement of Income. See Note 3 for additional information related to the Company’s special (gains) and charges related to such activities. The components of the cash paid for Anios are shown in the following table. (millions) 2017 Tangible assets $139.8 Identifiable intangible assets Customer relationships 252.0 Trademarks 65.7 Other technology 16.1 Total assets acquired 473.6 Goodwill 511.7 Total liabilities 187.0 Total consideration transferred 798.3 Long-term debt repaid upon close 192.8 Net consideration transferred to sellers $605.5 Tangible assets are primarily comprised of accounts receivable of $64.8 million, property, plant and equipment of $24.7 million and inventory of $29.1 million. Liabilities primarily consist of deferred tax liabilities of $102.3 million and current liabilities of $62.5 million. Customer relationships, trademarks and other technology are being amortized over weighted average lives of 20, 17, and 11 years, respectively. Goodwill of $511.7 million arising from the acquisition consists largely of the synergies and economies of scale expected through adding complementary geographies and innovative products to the Company’s healthcare portfolio. The goodwill was allocated to the Institutional, Healthcare, and Specialty operating segments within the Global Institutional reportable segment and the Food & Beverage and Life Sciences operating segments within the Global Industrial reportable segment. None of the goodwill recognized is expected to be deductible for income tax purposes. Dispositions In November 2017, the Company completed the sale of its Equipment Care business to a third party for $132.6 million, net of working capital adjustments, costs to sell and other transaction expenses. Prior to its sale, Equipment Care provided equipment repair, maintenance, and preventative maintenance services for the commercial food service industry. Consideration received consisted of $118.8 million of cash, a note receivable of $15.0 million and a $5.0 million equity interest in the acquiring entity. The Company recognized a gain of $46.1 million ($12.4 million after tax, primarily due to non-deductible goodwill), which is recorded in special (gains) and charges in the Consolidated Statement of Income. Equipment Care sales were approximately $180 million in 2016 and were included in Other. No dispositions were significant to the Company’s consolidated financial statements for 2018, 2017 or 2016. Subsequent Event Activity Subsequent to year-end, the Company closed on the acquisition of Bioquell PLC, a leading provider of hydrogen peroxide vapor bio-decontamination systems and services for the life sciences and healthcare industries and acquired Lobster Ink, a leading provider of end-to-end online customer training solutions. The Company entered into various purchase and sale agreements which are expected to close in the first quarter of 2019. None of the agreements are significant to the consolidated financial statements, individually or in the aggregate. Subsequent to year-end, the Company announced its intent to pursue a plan to separate and spin-off the Upstream group of the Global Energy segment (the Upstream Business) through a series of tax-efficient transactions (collectively, the Spin-off). Under the plan, if effectuated, shareholders would own 100% of the common stock of a new corporation that owns the Upstream Business. The Spin-off is expected to be completed in 2020 and is intended to qualify as a tax-free distribution to Ecolab shareholders for U.S. federal income tax purposes. |
BALANCE SHEET INFORMATION
BALANCE SHEET INFORMATION | 12 Months Ended |
Dec. 31, 2018 | |
BALANCE SHEET INFORMATION | |
BALANCE SHEET INFORMATION | 5. BALANCE SHEET INFORMATION December 31 December 31 (millions) 2018 2017 Accounts receivable, net Accounts receivable $2,723.1 $2,642.9 Allowance for doubtful accounts (60.6) (71.5) Total $2,662.5 $2,571.4 Inventories Finished goods $1,016.9 $974.9 Raw materials and parts 525.6 438.7 Inventories at FIFO cost 1,542.5 1,413.6 FIFO cost to LIFO cost difference 3.9 32.9 Total $1,546.4 $1,446.5 Other current assets Prepaid assets $132.1 $153.5 Taxes receivable 144.2 129.2 Derivative assets 42.8 28.8 Other 35.0 53.5 Total $354.1 $365.0 Property, plant and equipment, net Land $214.5 $224.1 Buildings and leasehold improvements 1,279.4 1,207.4 Machinery and equipment 2,313.7 2,280.9 Merchandising and customer equipment 2,565.5 2,399.4 Capitalized software 666.2 585.8 Construction in progress 400.2 438.7 7,439.5 7,136.3 Accumulated depreciation (3,603.5) (3,429.2) Total $3,836.0 $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 3,649.3 3,620.3 Trademarks 384.9 380.6 Patents 470.2 462.7 Other technology 242.8 232.6 4,747.2 4,696.2 Accumulated amortization Customer relationships (1,604.0) (1,403.8) Trademarks (175.2) (147.6) Patents (207.3) (187.9) Other technology (193.0) (169.3) (2,179.5) (1,908.6) Net intangible assets subject to amortization 2,567.7 2,787.6 Total $3,797.7 $4,017.6 Other assets Deferred income taxes $105.1 $105.4 Pension 39.0 41.7 Derivative asset 11.8 - Restricted cash 179.3 - Other 349.9 330.3 Total $685.1 $477.4 December 31 December 31 (millions) 2018 2017 Other current liabilities Discounts and rebates $291.3 $267.2 Dividends payable 132.4 118.6 Interest payable 44.5 50.7 Taxes payable, other than income 116.9 129.9 Derivative liabilities 20.1 62.2 Restructuring 73.7 36.0 Contract liability 75.8 79.0 Other 251.4 257.1 Total $1,006.1 $1,000.7 Accumulated other comprehensive loss Unrealized gain (loss) on derivative financial instruments, net of tax $2.0 $(26.4) Unrecognized pension and postretirement benefit expense, net of tax (518.9) (555.8) Cumulative translation, net of tax (1,244.8) (1,061.2) Total $(1,761.7) $(1,643.4) |
DEBT AND INTEREST
DEBT AND INTEREST | 12 Months Ended |
Dec. 31, 2018 | |
DEBT AND INTEREST | |
DEBT AND INTEREST | 6. DEBT AND INTEREST Short-term Debt The following table provides the components of the Company’s short-term debt obligations, along with applicable interest rates as of December 31, 2018 and 2017: 2018 2017 Average Average Carrying Interest Carrying Interest (millions) Value Rate Value Rate Short-term debt Commercial paper $165.4 0.18 % $- - % Notes payable 176.8 1.47 % 14.7 2.77 % Long-term debt, current maturities 401.4 549.7 Total $743.6 $564.4 Line of Credit As of December 31, 2018, the Company had in place a $2.0 billion multi-currency revolving credit facility which matures in November 2022. The credit facility has been established with a diverse syndicate of banks and supports the Company’s U.S. and Euro commercial paper programs. There were no borrowings under the Company’s credit facility as of December 31, 2018 and 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 December 31, 2018, the Company had $141.4 million (€125.0 million) of commercial paper outstanding under its Euro program and $24.0 million outstanding under its U.S. program. As of December 31, 2017, the Company had no commercial paper outstanding under either program. As of December 31, 2018, the Company’s short-term borrowing program was rated A-2 by Standard & Poor’s, P-2 by Moody’s and F-2 by Fitch. Notes Payable The Company’s notes payable consists of uncommitted credit lines with major international banks and financial institutions, primarily to support global cash pooling structures. As of December 31, 2018 and 2017, the Company had $176.8 million and $14.7 million, respectively, outstanding under these credit lines. Approximately $575 million and $643 million of these credit lines were available for use as of December 31, 2018 and 2017, respectively. Long-term Debt The following table provides the components of the Company’s long-term debt obligations, along with applicable interest rates as of December 31, 2018 and 2017: 2018 2017 Stated Effective Stated Effective Maturity Carrying Interest Interest Carrying Interest Interest (millions) by Year Value Rate Rate Value Rate Rate Long-term debt Public and 144A notes (2018 principal amount) Three year 2015 senior notes ($0 million) 2018 $- - % - % $299.9 1.55 % 1.94 % Three year 2016 senior notes ($400 million) 2019 399.7 2.00 % 3.24 % 396.1 2.00 % 2.26 % Five year 2015 senior notes ($300 million) 2020 299.5 2.25 % 2.79 % 299.1 2.25 % 2.79 % Ten year 2011 senior notes ($1.02 billion) 2021 1,017.6 4.35 % 4.43 % 1,016.6 4.35 % 4.45 % Five year 2017 senior notes ($500 million) 2022 496.9 2.38 % 2.55 % 496.3 2.38 % 2.55 % Seven year 2016 senior notes ($400 million) 2023 398.0 3.25 % 3.49 % 397.5 3.25 % 3.49 % Seven year 2016 senior notes (€575 million) 2024 644.1 1.00 % 1.09 % 676.6 1.00 % 1.17 % Ten year 2015 senior notes (€575 million) 2025 646.3 2.63 % 2.94 % 679.4 2.63 % 2.85 % Ten year 2016 senior notes ($750 million) 2026 743.8 2.70 % 2.93 % 742.8 2.70 % 2.93 % Ten year 2017 144A notes ($500 million) 2027 - - % - % 494.7 3.25 % 3.36 % Ten year 2017 senior notes ($500 million) 2027 494.8 3.25 % 3.37 % - - % - % Thirty year 2011 senior notes ($458 million) 2041 451.6 5.50 % 5.56 % 451.3 5.50 % 5.60 % Thirty year 2016 senior notes ($250 million) 2046 246.1 3.70 % 3.76 % 246.0 3.70 % 3.76 % Thirty year 2017 144A notes ($700 million) 2047 - - % - % 607.8 3.95 % 4.14 % Thirty year 2017 senior notes ($700 million) 2047 609.0 3.95 % 4.14 % - - % - % Private notes (2018 principal amount) Series A private placement senior notes ($250 million) 2018 - - % - % 248.5 3.69 % 5.16 % Series B private placement senior notes ($250 million) 2023 249.4 4.32 % 4.36 % 249.3 4.32 % 4.36 % Capital lease obligations and other 6.2 6.1 Total debt 6,703.0 7,308.0 Long-term debt, current maturities (401.4) (549.7) Total long-term debt $6,301.6 $6,758.3 Public and 144A Notes In 2017, the Company completed a private offering of $825 million of debt securities consisting of a $500 million aggregate principal ten year fixed rate note with a coupon rate of 3.25% (“New 10-year Notes”) and a $325 million aggregate principal thirty year fixed rate note with a coupon rate of 3.95% (“New 30-year Notes” and, together with the New 10-year Notes, “144A Notes”). Immediately following the offering, the Company completed a private offering to exchange a portion of the outstanding senior notes due 2041 (“Old 30-year Notes”), for $375 million of the New 30-year Notes. In connection with the exchange offering, $292 million of Old 30-year Notes were validly tendered and subsequently cancelled. 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 and all of the 144A Notes were 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 New 30-year Notes bear a lower fixed coupon rate while requiring a higher principal repayment on an extended maturity date, compared with the Old 30-year Notes that were exchanged. There were no other significant changes to the terms between the Old 30-year Notes and the New 30-year Notes. The exchange was accounted for as a debt modification, and there were no cash payments to or cash receipts from the note holders as a result of the exchange. Existing deferred financing costs associated with the Old Notes, as well as discounts associated with the New Notes aggregating $87 million, are being accreted over the term of the New Notes and recorded as interest expense. In December 2017, the Company completed a partial retirement on $230 million of the 4.35% senior note due 2021 which was accounted for as a debt extinguishment. The payout premium of $15.7 million was expensed immediately and is reflected as a financing cash flow activity. In August 2017, the Company issued a $500 million aggregate principal five year fixed rate note with a coupon rate of 2.375%. The proceeds were used to repay a portion of the Company’s outstanding commercial paper and for general corporate purposes. The Company’s public notes may be redeemed by the Company at its option at redemption prices that include accrued and unpaid interest and a make-whole premium. Upon the occurrence of a change of control accompanied by a downgrade of the notes below investment grade rating, within a specified time period, the Company would be required to offer to repurchase the public notes at a price equal to 101% of the aggregate principal amount thereof, plus any accrued and unpaid interest to the date of repurchase. The public notes are senior unsecured and unsubordinated obligations of the Company and rank equally with all other senior and unsubordinated indebtedness of the Company. Private Note The Company’s private note may be redeemed by the Company at its option at a redemption price that includes accrued and unpaid interest and a make-whole premium. Upon the occurrence of specified changes of control involving the Company, the Company would be required to offer to repurchase the private note at a price equal to 100% of the aggregate principal amount thereof, plus any accrued and unpaid interest to the date of repurchase. Additionally, the Company would be required to make a similar offer to repurchase the private note upon the occurrence of specified merger events or asset sales involving the Company, when accompanied by a downgrade of the private note below investment grade rating, within a specified time period. The private note is an unsecured senior obligation of the Company and ranks equal in right of payment with all other senior indebtedness of the Company. The private note shall be unconditionally guaranteed by subsidiaries of the Company in certain circumstances, as described in the note purchase agreement as amended. Covenants and Future Maturities The Company is in compliance with all covenants under the Company’s outstanding indebtedness at December 31, 2018. As of December 31, 2018, the aggregate annual maturities of long-term debt for the next five years were: (millions) 2019 $ 401 2020 301 2021 1,018 2022 497 2023 648 Net Interest Expense Interest expense and interest income incurred during 2018, 2017 and 2016 were as follows: (millions) 2018 2017 2016 Interest expense $237.2 $274.6 $285.4 Interest income (14.9) (19.6) (20.8) Interest expense, net $222.3 $255.0 $264.6 Interest expense generally includes the expense associated with the interest on the Company’s outstanding borrowings. Interest expense also includes the amortization of debt issuance costs and debt discounts, which are both recognized over the term of the related debt. During 2017, in anticipation of U.S. tax reform and a potential limit on interest deductibility in future years, the Company entered into transactions to exchange or retire certain long-term debt, and incurred debt exchange and extinguishment charges of $21.9 million ($13.6 million after tax), which are included as a component of interest expense, net on the Consolidated Statement of Income. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 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: December 31, 2018 (millions) Carrying Fair Value Measurements Amount Level 1 Level 2 Level 3 Assets Foreign currency forward contracts $72.3 $- $72.3 $- Liabilities Foreign currency forward contracts 41.1 - 41.1 - Interest rate swap agreements 0.2 - 0.2 - 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 classified within level 2. The carrying value of interest rate swap contracts is at fair value, which is determined based on current interest rates and forward interest rates as of the balance sheet date and is classified within level 2. For purposes of fair value disclosure above, derivative values are presented gross. See further discussion of gross versus net presentation of the Company's derivatives within Note 8. Contingent consideration obligations are recognized and measured at fair value at the acquisition date and thereafter until settlement. Contingent consideration is classified within level 3 as the underlying fair value is measured based on the probability-weighted present value of the consideration expected to be transferred. The consideration expected to be transferred is based on the Company’s expectations of various financial measures. The ultimate payment of contingent consideration could deviate from current estimates based on the actual results of these financial measures. Contingent consideration activities during 2018 were not significant to the Company’s consolidated financial statements. There were no contingent consideration activities during 2017. The carrying values of accounts receivable, accounts payable, cash and cash equivalents, restricted cash, commercial paper and notes payable approximate fair value because of their short maturities, and as such are classified within level 1. The fair value of long-term debt is based on quoted market prices for the same or similar debt instruments (classified as level 2). The carrying amount and the estimated fair value of long-term debt, including current maturities, held by the Company were: December 31, 2018 December 31, 2017 Carrying Fair Carrying Fair Amount Value Amount Value Long-term debt, including current maturities $6,703.0 $6,844.7 $7,308.0 $7,716.0 |
DERIVATIVES AND HEDGING TRANSAC
DERIVATIVES AND HEDGING TRANSACTIONS | 12 Months Ended |
Dec. 31, 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 international banks and financial institutions as counterparties. The Company does not anticipate nonperformance by any of these counterparties, and therefore, recording a valuation allowance against the Company’s derivative balance is not considered necessary. Derivative Positions Summary Certain of the Company’s derivative transactions are subject to master netting arrangements that allow the Company to net settle contracts with the same counterparties. These arrangements generally do not call for collateral and as of the applicable dates presented below, no cash collateral had been received or pledged related to the underlying derivatives. The respective net amounts are included in other current assets, other assets, other current liabilities and other liabilities on the Consolidated Balance Sheet. The following table summarizes the gross fair value of the Company’s outstanding derivatives. (millions) Asset Derivatives Liability Derivatives December 31 December 31 December 31 December 31 (millions) 2018 2017 2018 2017 Derivatives designated as hedging instruments Foreign currency forward contracts $40.4 $19.6 $10.2 $125.2 Interest rate swap agreements - - 0.2 4.2 Derivatives not designated as hedging instruments Foreign currency forward contracts 31.9 26.2 30.9 27.9 Gross value of derivatives 72.3 45.8 41.3 157.3 Gross amounts offset in the Consolidated Balance Sheet (17.7) (17.0) (17.7) (17.0) Net value of derivatives $54.6 $28.8 $23.6 $140.3 The following table summarizes the notional values of the Company’s outstanding derivatives. Notional Values December 31 December 31 (millions) 2018 2017 Foreign currency forward contracts $ 6,226 $ 5,593 Interest rate agreements 400 950 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 four 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 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: (millions) 2018 2017 2016 Unrealized gain (loss) recognized into AOCI Foreign currency forward contracts AOCI (equity) $144.4 $(173.4) $7.0 Interest rate swap agreements AOCI (equity) - - (9.3) Total 144.4 (173.4) (2.3) Gain (loss) recognized in income Foreign currency forward contracts Cost of sales (7.7) (13.7) 23.0 SG&A 84.1 (157.2) (0.1) Interest expense, net 37.4 24.5 5.8 Subtotal 113.8 (146.4) 28.7 Interest rate swap agreements Interest expense, net (5.5) (7.2) (6.6) Total $108.3 $(153.6) $22.1 Gains and losses recognized in income related to the ineffective portion of the Company’s cash flow hedges were insignificant during 2018, 2017 and 2016. Fair Value Hedges The Company manages interest expense using a mix of fixed and floating rate debt. To help manage exposure to interest rate movements and to reduce borrowing costs, the Company may enter into interest rate swaps under which the Company agrees to exchange, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed upon notional principal amount. The mark-to-market of these fair value hedges is recorded as gains or losses in interest expense and is offset by the gain or loss of the underlying debt instrument, which also is recorded in interest expense. These fair value hedges are highly effective and thus, there is no impact on earnings due to hedge ineffectiveness. In January 2016, the Company entered into an interest rate swap agreement that converted its $400 million 2.00% debt from a fixed rate to a floating rate. In January 2015, the Company entered into interest rate swap agreements that converted its $300 million 1.55% debt and its $250 million 3.69% debt from fixed rates to floating interest rates. In May 2014, the Company entered into an interest rate swap agreement that converted its $500 million 1.45% debt from a fixed rate to a floating interest rate. The interest rate swap agreement tied to the Company’s $500 million 1.45% debt, $300 million 1.55% debt and $250 million 3.69% debt expired in December 2017, January 2018 and November 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: (millions) 2018 2017 2016 Gain (loss) on derivative recognized income Interest rate swap Interest expense, net $4.0 $(0.7) $(1.4) Gain (loss) on hedged item recognized income Interest rate swap Interest expense, net $(4.0) $0.7 $1.4 Net Investment Hedges The Company designates its outstanding $1,290.4 million (€1,150 million as of year-end 2018) senior notes (“euronotes”) and related accrued interest as a hedge of existing foreign currency exposures related to investments the Company has in certain euro denominated functional currency subsidiaries. Certain Euro commercial paper was also designated as a hedge of existing foreign currency exposures and matured in the third quarter of 2018 and the fourth quarter of 2017. The revaluation gains and losses on the euronotes and Euro commercial paper, which are designated and effective as hedges of the Company’s net investments, have been included as a component of the cumulative translation adjustment account, and were as follows: (millions) 2018 2017 2016 Revaluation gains (losses), net of tax $57.5 $(109.7) $(2.5) 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: (millions) 2018 2017 2016 Gain (loss) recognized in income Foreign currency forward contracts SG&A $25.1 $(38.2) $(6.0) Interest expense, net 5.3 (3.0) (8.4) Total $30.4 $(41.2) $(14.4) The amounts recognized in SG&A above offset the earnings impact of the related foreign currency denominated assets and liabilities. The amounts recognized in interest expense above represent the component of the hedging gains (losses) attributable to the difference between the spot and forward rates of the hedges as a result of interest rate differentials. |
OTHER COMPREHENSIVE INCOME (LOS
OTHER COMPREHENSIVE INCOME (LOSS) INFORMATION | 12 Months Ended |
Dec. 31, 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 table provides other comprehensive income (loss) information related to the Company’s derivatives and hedging instruments and pension and postretirement benefits. See Note 8 for additional information related to the Company’s derivatives and hedging transactions. See Note 16 for additional information related to the Company’s pension and postretirement benefits activity. (millions) 2018 2017 2016 Derivative and Hedging Instruments Unrealized gains (losses) on derivative & hedging instruments Amount recognized in AOCI $144.4 $(173.4) $(2.3) (Gains) losses reclassified from AOCI into income Cost of sales 7.7 13.7 (23.0) SG&A (84.1) 157.2 0.1 Interest (income) expense, net (31.9) (17.3) 0.8 (108.3) 153.6 (22.1) Other activity - 0.2 (0.2) Tax impact (7.7) 1.7 7.1 Net of tax $28.4 $(17.9) $(17.5) Pension and Postretirement Benefits Amount recognized in AOCI Current period net actuarial income (loss) and prior service costs $(56.5) $(46.9) $(136.0) Amount reclassified from AOCI into income Amortization of net actuarial loss and prior service costs and benefits 28.4 21.5 32.2 Pension and postretirement benefits changes 59.3 - 54.0 31.2 (25.4) (49.8) Tax impact (13.2) 16.2 9.3 Net of tax $18.0 $(9.2) $(40.5) |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2018 | |
SHAREHOLDERS' EQUITY | |
SHAREHOLDERS' EQUITY | 10. SHAREHOLDERS’ EQUITY Authorized common stock, par value $1.00 per share, was 800 million shares at December 31, 2018, 2017 and 2016. Treasury stock is stated at cost. Dividends declared per share of common stock were $1.690 for 2018, $1.520 for 2017 and $1.420 for 2016. The Company has 15 million shares, without par value, of authorized but unissued and undesignated preferred stock. Share Repurchase Authorization In February 2015, the Company’s Board of Directors authorized the repurchase of up to 20 million additional shares of its common stock, including shares to be repurchased under Rule 10b5-1. As of December 31, 2018, 8,651,394 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 2018, the Company reacquired 3,908,041 shares of its common stock, of which 3,706,716 related to share repurchases through open market or private purchases, and 201,325 related to shares withheld for taxes on exercise of stock options and the vesting of stock awards and units. During 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 exercise of stock options and the vesting of stock awards and units. |
EQUITY COMPENSATION PLANS
EQUITY COMPENSATION PLANS | 12 Months Ended |
Dec. 31, 2018 | |
EQUITY COMPENSATION PLANS | |
EQUITY COMPENSATION PLANS | 11. EQUITY COMPENSATION PLANS The Company’s equity compensation plans provide for grants of stock options, performance-based restricted stock units (“PBRSUs”) and non-performance-based restricted stock units (“RSUs”) and restricted stock awards (“RSAs”). Common shares available for grant as of December 31, 2018, 2017 and 2016 were 10,152,863, 11,685,090 and 13,649,667, respectively. The Company generally issues authorized but previously unissued shares to satisfy stock option exercises and stock award vestings. The Company’s annual long-term incentive share-based compensation program is made up of 50% stock options and 50% PBRSUs. The Company also periodically grants RSUs. Total compensation expense related to all share-based compensation plans was $94 million ($78 million net of tax benefit), $90 million ($62 million net of tax benefit) and $86 million ($59 million net of tax benefit) for 2018, 2017 and 2016, respectively. As of December 31, 2018, there was $140 million of total measured but unrecognized compensation expense related to non-vested share-based compensation arrangements granted under all of the Company’s plans. That cost is expected to be recognized over a weighted-average period of 2.2 years. Stock Options Stock options are granted to purchase shares of the Company’s stock at the average daily share price on the date of grant. These options generally expire within ten years from the grant date. The Company generally recognizes compensation expense for these awards on a straight-line basis over the three year vesting period. Stock option grants to retirement eligible recipients are attributed to expense using the non-substantive vesting method. A summary of stock option activity and average exercise prices is as follows: 2018 2017 2016 Number of Exercise Number of Exercise Number of Exercise Options Price (a) Options Price (a) Options Price (a) Outstanding, beginning of year 11,380,013 $ 95.76 11,910,501 $ 84.22 12,378,372 $ 74.23 Granted 1,202,314 158.23 1,491,893 136.87 1,679,941 117.60 Exercised (1,942,192) 64.63 (1,951,920) 56.00 (2,061,553) 50.33 Canceled (123,502) 127.02 (70,461) 116.44 (86,259) 111.08 Outstanding, end of year 10,516,633 $ 108.28 11,380,013 $ 95.76 11,910,501 $ 84.22 Exercisable, end of year 7,993,297 $ 97.13 8,371,809 $ 84.40 8,720,943 $ 72.35 Vested and expected to vest, end of year 10,365,162 $ 107.77 (a) Represents weighted average price per share. The total aggregate intrinsic value of options (the amount by which the stock price exceeded the exercise price of the option on the date of exercise) that were exercised during 2018, 2017 and 2016 was $161 million, $142 million and $140 million, respectively. The total aggregate intrinsic value of options outstanding as of December 31, 2018 was $397 million, with a corresponding weighted-average remaining contractual life of 6.4 years. The total aggregate intrinsic value of options exercisable as of December 31, 2018 was $391 million, with a corresponding weighted-average remaining contractual life of 5.5 years. The total aggregate intrinsic value of options vested and expected to vest as of December 31, 2018 was $397 million, with a corresponding weighted-average remaining contractual life of 6.4 years. The lattice (binomial) option-pricing model is used to estimate the fair value of options at grant date. The Company’s primary employee option grant occurs during the fourth quarter. The weighted-average grant-date fair value of options granted and the significant assumptions used in determining the underlying fair value of each option grant, on the date of grant were as follows: 2018 2017 2016 Weighted-average grant-date fair value of options granted at market prices $ 37.34 $ 30.34 $ 25.59 Assumptions Risk-free rate of return 2.8 % 2.2 % 2.0 % Expected life 6 years 6 years 6 years Expected volatility 22.5 % 22.7 % 22.9 % Expected dividend yield 1.2 % 1.2 % 1.3 % The risk-free rate of return is determined based on a yield curve of U.S. treasury rates from one month to ten years and a period commensurate with the expected life of the options granted. Expected volatility is established based on historical volatility of the Company’s stock price. The expected dividend yield is determined based on the Company’s annual dividend amount as a percentage of the average stock price at the time of the grant. PBRSUs, RSUs and RSAs The expense associated with PBRSUs is based on the average of the high and low share price of the Company’s common stock on the date of grant, adjusted for the absence of future dividends. The awards vest based on the Company achieving a defined performance target and with continued service for a three year period. Upon vesting, the Company issues shares of its common stock such that one award unit equals one share of common stock. The Company assesses the probability of achieving the performance target and recognizes expense over the three year vesting period when it is probable the performance target will be met. PBRSU awards granted to retirement eligible recipients are attributed to expense using the non-substantive vesting method. The awards are generally subject to forfeiture in the event of termination of employment. The expense associated with shares of non-performance based RSUs and RSAs is based on the average of the high and low share price of the Company’s common stock on the date of grant, adjusted for the absence of future dividends and is amortized on a straight-line basis over the periods during which the restrictions lapse. The Company currently has RSUs that vest over periods between 12 and 84 months. The awards are generally subject to forfeiture in the event of termination of employment. A summary of non-vested PBRSUs and restricted stock activity is as follows: PBRSU Grant Date RSAs and Grant Date Awards Fair Value (a) RSUs Fair Value (a) December 31, 2015 1,444,189 $ 95.59 273,235 $ 102.49 Granted 371,859 112.29 88,437 109.27 Vested / Earned (402,509) 68.64 (96,874) 94.06 Canceled (26,852) 105.09 (10,411) 105.07 December 31, 2016 1,386,687 $ 107.70 254,387 $ 107.95 Granted 323,750 131.71 96,980 125.34 Vested / Earned (312,745) 99.65 (86,622) 102.02 Canceled (34,856) 108.16 (15,343) 109.72 December 31, 2017 1,362,836 $ 115.24 249,402 $ 116.66 Granted 284,104 152.59 109,074 138.69 Vested / Earned (324,561) 103.15 (92,032) 113.03 Canceled (55,026) 114.25 (19,975) 115.05 December 31, 2018 1,267,353 $ 126.75 246,469 $ 127.09 (a) Represents weighted average price per share. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2018 | |
INCOME TAXES | |
INCOME TAXES | 12. INCOME TAXES Income before income taxes consisted of: (millions) 2018 2017 2016 United States $728.3 $847.3 $655.7 International 1,076.3 915.1 993.7 Total $1,804.6 $1,762.4 $1,649.4 The provision (benefit) for income taxes consisted of: (millions) 2018 2017 2016 Federal and state $103.5 $241.8 $224.2 International 175.7 355.1 269.7 Total current 279.2 596.9 493.9 Federal and state 51.8 (331.4) (49.6) International 33.3 (21.7) (41.4) Total deferred 85.1 (353.1) (91.0) Provision for income taxes $364.3 $243.8 $402.9 The Company’s overall net deferred tax assets and deferred tax liabilities were comprised of the following: December 31 (millions) 2018 2017 Deferred tax assets Other accrued liabilities $130.9 $122.8 Loss carryforwards 217.2 67.3 Share-based compensation 60.5 58.9 Pension and other comprehensive income 145.8 195.2 Other, net 68.5 132.7 Valuation allowance (184.4) (21.3) Total 438.5 555.6 Deferred tax liabilities Property, plant and equipment basis differences (268.5) (178.4) Intangible assets (783.3) (844.0) Other, net (46.2) (63.2) Total (1,098.0) (1,085.6) Net deferred tax liabilities balance $(659.5) $(530.0) Deferred tax assets and liabilities are recorded based on the rates at which they are expected to reverse in the future. At December 31, 2018 and 2017, U.S. deferred tax assets and liabilities were recorded at the U.S. federal tax rate of 21%. In response to the enactment of the Tax Cuts and Jobs Act on December 22, 2017, which reduced the U.S. federal tax rate from 35% to 21%, the Company recorded a provisional income tax benefit of $319.0 million as a result of recording U.S. deferred tax assets and liabilities at the enacted tax rate, which is a discrete tax item within income tax expense in 2017. As of December 31, 2018, the Company has tax effected federal, state and international net operating loss carryforwards of $0.2 million, $21.7 million and $195.3 million, respectively, which will be available to offset future taxable income. The state loss carryforwards expire from 2019 to 2039. For the international loss carryforwards, $172.0 million expire from 2019 to 2039 and $23.3 million have no expiration. The Company has valuation allowances on certain deferred tax assets of $184.4 million and $21.3 million at December 31, 2018 and 2017, respectively. The increase in valuation allowance from year end 2017 to year end 2018 was driven by changes in entity structure as part of an internal entity reorganization, which created net operating losses which are not expected to be realized and therefore a valuation allowance was recorded. Current year losses and foreign currency translation also increased the valuation allowance. In 2018, the Company obtained tax benefits from tax holidays in two foreign jurisdictions, the Dominican Republic and Singapore. The Company received a permit of operation, which expires in July 2021, from the National Council of Free Zones of Exportation for the Dominican Republic. Companies operating under the Free Zones are not subject to income tax in the Dominican Republic on export income. The Company has two tax incentives awarded by the Singapore Economic Development Board which expire in January 2021. These incentives provide for a preferential 10% tax rate on certain headquarter income and a 0% tax rate on manufacturing profits generated at the Company’s facility located on Jurong Island. In 2016 one of the Company’s legal entities in China was entitled to the benefit of incentives provided by the Chinese government to technology companies in order to encourage development of the high-tech industry, including reduced tax rates and other measures. As a result, the Company was entitled to a preferential enterprise income tax rate of 15%. The Company did not recognize a benefit related to this China tax incentive in 2018 or 2017. The tax reduction as the result of the tax holidays for 2018 was $25.6 million ($0.09 per diluted share), 2017 was $16.9 million ($0.06 per diluted share) and 2016 was $6.4 million ($0.02 per diluted share). A reconciliation of the statutory U.S. federal income tax rate to the Company’s effective income tax rate is as follows: 2018 2017 2016 Statutory U.S. rate 21.0 % 35.0 % 35.0 % One-time transition tax 3.7 9.1 - State income taxes, net of federal benefit 1.2 0.4 0.9 Foreign operations (13.5) (7.4) (8.0) Domestic manufacturing deduction - (2.2) (2.0) R&D credit (1.0) (1.0) (1.1) Change in valuation allowance 9.1 0.2 (0.7) Audit settlements and refunds (0.8) (0.1) (0.2) Excess stock benefits (1.6) (2.3) - Change in federal tax rate (deferred taxes) (0.6) (18.2) - Prior year adjustments 2.5 - - Worthless stock deduction - - 0.4 Other, net 0.2 0.3 0.1 Effective income tax rate 20.2 % 13.8 % 24.4 % Prior to enactment of the Tax Act, the Company did not recognize a deferred tax liability related to unremitted foreign earnings because it overcame the presumption of the repatriation of foreign earnings. In 2017, the Company recorded a provisional amount for the income tax effects related to the one-time transition tax of $160.1 million which is subject to payment over eight years. The one-time transition tax was based on certain foreign earnings and profits for which earnings had been previously indefinitely reinvested, as well as estimates of assets and liabilities at future dates. The transition tax was based in part on the amount of those earnings held in cash and other specified assets. No additional income taxes have been provided for any remaining undistributed foreign earnings not subject to the transition tax and any additional outside basis differences inherent in these entities as these amounts continue to be indefinitely reinvested in foreign operations. The Company continues to assert permanent reinvestment of the undistributed earnings of international affiliates, and, if there are policy changes, the Company would record the applicable taxes. In 2018, the Company recorded additional discrete expense of $66.0 million, primarily due to the issuance of technical guidance, finalization of certain estimates as a result of filing the 2017 U.S. federal tax return and final balance sheet positions used in the calculation of the transition tax. As of December 31, 2018, we completed our accounting for the effects of the Tax Act as they relate to the repricing of deferred tax balances and the one-time transition tax. The Company files U.S. federal income tax returns and income tax returns in various U.S. state and non- U.S. jurisdictions. With few exceptions, the Company is no longer subject to state and foreign income tax examinations by tax authorities for years before 2014. The IRS has completed examinations of the Company’s U.S. federal income tax returns (Ecolab and Nalco) through 2014, and the years 2015 and 2016 are currently under audit. In addition to the U.S. federal examination, there is ongoing audit activity in several U.S. state and foreign jurisdictions. The Company anticipates changes to its uncertain tax positions due to closing of various audit years mentioned above. The Company does not believe these changes will result in a material impact during the next twelve months. Decreases in the Company’s gross liability could result in offsets to other balance sheet accounts, cash payments, and/or adjustments to tax expense. The occurrence of these events and/or other events not included above within the next twelve months could change depending on a variety of factors and result in amounts different from above. The Company’s 2018 reported tax rate includes $66.0 million of net tax expense associated with the Tax Act, $33.5 million of net tax benefits on special (gains) and charges, and net tax benefits of $61.3 million associated with discrete tax items. During 2018, the Company recorded a discrete tax benefit of $28.1 million related to excess tax benefits resulting from the adoption of accounting changes regarding the treatment of tax benefits on share-based compensation. The extent of excess tax benefits is subject to variation in stock price and stock option exercises. In addition, the Company recorded net discrete benefit of $39.9 million related to adjustments from filing the 2017 U.S. federal income tax return and IRS approved method change. Included within the 2018 provision for income taxes is $44.2 million of discrete charges recorded in the fourth quarter to correct immaterial errors in prior years. The remaining discrete expense was primarily related to changes in reserves, audit settlements, international and U.S. changes in estimates, and accounting for internal entity reorganization. The Company’s 2017 reported tax rate includes $158.9 million of net tax benefits associated with the Tax Act, $6.2 million of net tax benefits on special (gains) and charges, and net tax benefits of $25.3 million associated with discrete tax items. In connection with the Company’s initial analysis of the impact of the Tax Act, as noted above, a provisional net discrete tax benefit of $158.9 million was recorded in the period ended December 31, 2017, which includes $319.0 million tax benefit for recording deferred tax assets and liabilities at the U.S. enacted tax rate, and a net expense for the one-time transition tax of $160.1 million. Special (gains) and charges represent the tax impact of special (gains) and charges, as well as additional tax benefits utilized in anticipation of U.S. tax reform of $7.8 million. During 2017, the Company recorded a discrete tax benefit of $39.7 million related to excess tax benefits, resulting from the adoption of accounting changes regarding the treatment of tax benefits on share-based compensation. The extent of excess tax benefits is subject to variation in stock price and stock option exercises. In addition, the Company recorded net discrete expenses of $14.4 million related to recognizing adjustments from filing the 2016 U.S. federal income tax return and international adjustments due to changes in estimates, partially offset by the release of reserves for uncertain tax positions due to the expiration of statute of limitations in state tax matters. During 2016, the Company recognized net expense related to discrete tax items of $3.9 million. The net expenses were driven primarily by recognizing adjustments from filing the Company’s 2015 U.S. federal income tax return, partially offset by settlement of international tax matters and remeasurement of certain deferred tax assets and liabilities resulting from the application of updated tax rates in international jurisdictions. Net expense was also impacted by adjustments to deferred tax asset and liability positions and the release of reserves for uncertain tax positions due to the expiration of statute of limitations in non-U.S. jurisdictions. A reconciliation of the beginning and ending amount of gross liability for unrecognized tax benefits is as follows: (millions) 2018 2017 2016 Balance at beginning of year $61.5 $75.9 $74.6 Additions based on tax positions related to the current year 3.0 3.2 8.8 Additions for tax positions of prior years 2.0 - 2.1 Reductions for tax positions of prior years (8.7) (4.9) (1.0) Reductions for tax positions due to statute of limitations (5.8) (14.0) (5.5) Settlements (0.8) (10.8) (2.0) Assumed in connection with acquisitions - 10.0 - Foreign currency translation (1.5) 2.1 (1.1) Balance at end of year $49.7 $61.5 $75.9 The total amount of unrecognized tax benefits, if recognized would have affected the effective tax rate by $36.4 million as of December 31, 2018, $47.1 million as of December 31, 2017 and $57.5 million as of December 31, 2016. The Company recognizes interest and penalties related to unrecognized tax benefits in its provision for income taxes. During 2018, 2017 and 2016 the Company released $1.2 million, $0.9 million and $2.9 million related to interest and penalties, respectively. The Company had $8.1 million, $9.3 million and $10.2 million of accrued interest, including minor amounts for penalties, at December 31, 2018, 2017, and 2016, respectively. |
RENTALS AND LEASES
RENTALS AND LEASES | 12 Months Ended |
Dec. 31, 2018 | |
RENTALS AND LEASES | |
RENTALS AND LEASES | 13. RENTALS AND LEASES The Company leases sales and administrative office facilities, distribution centers, research and manufacturing facilities, as well as vehicles and other equipment under operating leases. Total rental expense under the Company’s operating leases was $210 million in 2018, $239 million in 2017 and $221 million in 2016. As of December 31, 2018, identifiable future minimum payments with non-cancelable terms in excess of one year were: (millions) 2019 $ 172 2020 141 2021 108 2022 72 2023 37 Thereafter 104 Total $ 634 The Company enters into operating leases for vehicles whose non-cancelable terms are one year or less in duration with reasonably assured month-to-month renewal options. These leases are included in the table above. These vehicle leases have residual value requirements that have historically been satisfied by the proceeds on the sale of the vehicles. |
RESEARCH AND DEVELOPMENT EXPEND
RESEARCH AND DEVELOPMENT EXPENDITURES | 12 Months Ended |
Dec. 31, 2018 | |
RESEARCH AND DEVELOPMENT EXPENDITURES | |
RESEARCH AND DEVELOPMENT EXPENDITURES | 14. RESEARCH AND DEVELOPMENT EXPENDITURES Research expenditures that relate to the development of new products and processes, including significant improvements and refinements to existing products, are expensed as incurred. Such costs were $216 million in 2018, $201 million in 2017 and $189 million in 2016. The Company did not participate in any material customer sponsored research during 2018, 2017 or 2016. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2018 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 15. COMMITMENTS AND CONTINGENCIES The Company is subject to various claims and contingencies related to, among other things, workers’ compensation, labor and employment, general liability (including product liability), automobile claims, health care claims, environmental matters and lawsuits. The Company is also subject to various claims and contingencies related to income taxes, which are discussed in Note 12. The Company also has contractual obligations including lease commitments, which are discussed in Note 13. The Company records liabilities where a contingent loss is probable and can be reasonably estimated. If the reasonable estimate of a probable loss is a range, the Company records the most probable estimate of the loss or the minimum amount when no amount within the range is a better estimate than any other amount. The Company discloses a contingent liability even if the liability is not probable or the amount is not estimable, or both, if there is a reasonable possibility that a material loss may have been incurred. Insurance Globally, the Company has insurance policies with varying deductible levels for property and casualty losses. The Company is insured for losses in excess of these deductibles, subject to policy terms and conditions and has recorded both a liability and an offsetting receivable for amounts in excess of these deductibles. The Company is self-insured for health care claims for eligible participating employees, subject to certain deductibles and limitations. The Company determines its liabilities for claims on an actuarial basis. Litigation and Environmental Matters The Company and certain subsidiaries are party to various lawsuits, claims and environmental actions that have arisen in the ordinary course of business. These include from time to time antitrust, commercial, patent infringement, product liability and wage hour lawsuits, as well as possible obligations to investigate and mitigate the effects on the environment of the disposal or release of certain chemical substances at various sites, such as Superfund sites and other operating or closed facilities. The Company has established accruals for certain lawsuits, claims and environmental matters. The Company currently believes that there is not a reasonably possible risk of material loss in excess of the amounts accrued related to these legal matters. Because litigation is inherently uncertain, and unfavorable rulings or developments could occur, there can be no certainty that the Company may not ultimately incur charges in excess of recorded liabilities. A future adverse ruling, settlement or unfavorable development could result in future charges that could have a material adverse effect on the Company’s results of operations or cash flows in the period in which they are recorded. The Company currently believes that such future charges related to suits and legal claims, if any, would not have a material adverse effect on the Company’s consolidated financial position. Environmental Matters The Company is currently participating in environmental assessments and remediation at approximately 40 locations, the majority of which are in the U.S., and environmental liabilities have been accrued reflecting management’s best estimate of future costs. Potential insurance reimbursements are not anticipated in the Company’s accruals for environmental liabilities. Matters Related to Deepwater Horizon Incident Response On April 22, 2010, the deep water 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 e xplosion, 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 generally sought awards of unspecified compensatory and punitive damages, and attorneys’ fees and costs. These actions were 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 July 10, 2018, the Court entered an order dismissing the “B1” claims against Nalco. In light of the Court’s orders dismissing various “B3” and “B1” claims in their entirety, for most plaintiffs the Court’s November 28, 2012 grant of summary judgment for Nalco is now final and the deadline to appeal has passed. On October 23, 2018, a plaintiff filed a new “B3” complaint against Nalco and other unaffiliated defendants generally alleging, among other things, negligence and gross negligence related to the use of Corexit dispersant in connection with the Deepwater Horizon oil spill. The complaint was consolidated in the MDL. There currently remain nine 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. Ho wever, 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. |
RETIREMENT PLANS
RETIREMENT PLANS | 12 Months Ended |
Dec. 31, 2018 | |
PENSION AND POSTRETIREMENT PLANS | |
PENSION AND POSTRETIREMENT PLANS | 16. RETIREMENT PLANS Pension and Postretirement Health Care Benefits Plans The Company has a non-contributory qualified defined benefit pension plan covering the majority of its U.S. employees. The Company also has non-contributory non-qualified defined benefit plans, which provide for benefits to employees in excess of limits permitted under its U.S. pension plans. Various international subsidiaries have defined benefit pension plans. The Company provides postretirement health care benefits to certain U.S. employees and retirees. The non-qualified plans are not funded and the recorded benefit obligation for the non-qualified plans was $119 million and $124 million at December 31, 2018 and 2017, respectively. The measurement date used for determining the U.S. pension plan assets and obligations is December 31. International plans are funded based on local country requirements. The measurement date used for determining the international pension plan assets and obligations is November 30, the fiscal year-end of the Company’s international affiliates. The U.S. postretirement health care plans are contributory based on years of service and choice of coverage (family or single), with retiree contributions adjusted annually. The measurement date used to determine the U.S. postretirement health care plan assets and obligations is December 31. Certain employees outside the U.S. are covered under government-sponsored programs, which are not required to be fully funded. The expense and obligation for providing international postretirement health care benefits are not significant. The following table sets forth financial information related to the Company’s pension and postretirement health care plans: U.S. International U.S. Postretirement Pension (a) Pension Health Care (millions) 2018 2017 2018 2017 2018 2017 Accumulated Benefit Obligation, end of year $2,189.0 $2,399.5 $1,349.9 $1,434.5 $147.3 $181.3 Projected Benefit Obligation Projected benefit obligation, beginning of year $2,485.1 $2,267.9 $1,537.9 $1,335.6 $181.3 $173.5 Service cost 74.5 70.2 33.2 31.4 2.7 2.6 Interest 83.1 83.4 29.1 28.4 5.6 5.8 Participant contributions - - 3.5 3.5 3.5 8.3 Medicare subsidies received - - - - - 0.5 Curtailments and settlements - 0.1 (22.8) (10.7) - - Plan amendments (40.4) - - - (13.7) 1.8 Actuarial (gain) loss (181.3) 183.1 (42.7) 31.9 (18.4) 9.2 Assumed through acquisitions - - 11.4 24.1 - - Benefits paid (180.0) (119.6) (38.7) (35.8) (13.7) (20.4) Foreign currency translation - - (74.2) 129.5 - - Projected benefit obligation, end of year $2,241.0 $2,485.1 $1,436.7 $1,537.9 $147.3 $181.3 Plan Assets Fair value of plan assets, beginning of year $2,226.4 $1,950.1 $981.1 $821.9 $7.6 $9.6 Actual returns on plan assets (70.7) 310.2 2.6 76.1 (0.2) 1.2 Company contributions 5.7 85.9 42.0 41.0 12.3 17.2 Participant contributions - - 3.5 3.5 - - Acquisitions - - 6.4 12.5 - - Settlements - (0.2) (22.8) (10.7) - - Benefits paid (180.0) (119.6) (38.7) (35.8) (13.7) (20.4) Foreign currency translation - - (48.5) 72.6 - - Fair value of plan assets, end of year $1,981.4 $2,226.4 $925.6 $981.1 $6.0 $7.6 Funded Status, end of year $(259.6) $(258.7) $(511.1) $(556.8) $(141.3) $(173.7) Amounts recognized in Consolidated Balance Sheet: Other assets $- $- $39.0 $41.7 $- $- Other current liabilities (5.9) (5.6) (24.4) (23.0) (5.0) (3.5) Postretirement healthcare and pension benefits (253.7) (253.1) (525.7) (575.5) (136.3) (170.2) Net liability $(259.6) $(258.7) $(511.1) $(556.8) $(141.3) $(173.7) Amounts recognized in Accumulated Other Comprehensive Loss (Income): Unrecognized net actuarial loss (gain) $539.2 $526.9 $368.0 $388.2 $(36.0) $(20.1) Unrecognized net prior service benefits (52.3) (18.7) (6.0) (7.0) (34.4) (40.4) Tax expense (benefit) (194.4) (199.5) (92.7) (98.4) 27.6 25.2 Accumulated other comprehensive loss (income), net of tax $292.5 $308.7 $269.3 $282.8 $(42.8) $(35.3) Change in Accumulated Other Comprehensive Loss (Income): Amortization of net actuarial (gain) loss $(38.9) $(28.7) $(16.5) $(18.5) $1.9 $2.4 Amortization of prior service costs 6.8 6.8 0.9 0.7 19.7 16.7 Current period net actuarial loss (gain) 51.2 22.6 17.9 14.0 (17.8) 8.5 Current period prior service costs - - - - 5.2 1.8 Settlement - - (2.3) (0.9) - - Tax expense (benefit) 5.1 (0.3) 5.7 (9.0) 2.4 (6.9) Pension and Postretirement benefits changes (40.4) - - - (18.9) - Foreign currency translation - - (19.2) 35.6 - - Other comprehensive loss (income) $(16.2) $0.4 $(13.5) $21.9 $(7.5) $22.5 (a) Includes qualified and non-qualified plans Estimated amounts in accumulated other comprehensive loss expected to be reclassified to net period cost during 2019 are as follows: U.S. Post- U.S. International Retirement (millions) Pension (a) Pension Health Care Net actuarial loss (gain) $23.6 $16.4 $(4.0) Net prior service costs (benefits) (11.5) (0.9) (23.2) Total $12.1 $15.5 $(27.2) (a) Includes qualified and non-qualified plans Service cost is included with employee compensation cost in cost of sales and selling, general and administrative expenses in the Consolidated Statement of Income while all other components are included in other (income) expense in the Consolidated Statement of Income. The aggregate projected benefit obligation, accumulated benefit obligation and fair value of pension plan assets for plans with accumulated benefit obligations in excess of plan assets were as follows: December 31, (millions) 2018 2017 Aggregate projected benefit obligation $3,427.1 $3,636.2 Accumulated benefit obligation 3,308.4 3,476.1 Fair value of plan assets 2,624.3 2,794.0 These plans include the U.S. non-qualified pension plans which are not funded as well as the U.S. qualified pension plan. These plans also include various international pension plans which are funded consistent with local practices and requirements. Net Periodic Benefit Costs and Plan Assumptions Pension and postretirement health care benefits expense for the Company’s operations are as follows: U.S. International U.S. Postretirement Pension (a) Pension Health Care (millions) 2018 2017 2016 2018 2017 2016 2018 2017 2016 Service cost $74.5 $70.2 $67.1 $33.2 $31.4 $27.8 $2.7 $2.6 $3.0 Interest cost on benefit obligation 83.1 83.4 81.5 29.1 28.4 31.9 5.6 5.8 7.4 Expected return on plan assets (161.9) (149.9) (143.6) (63.2) (56.3) (52.5) (0.4) (0.5) (0.7) Recognition of net actuarial (gain) loss 39.0 28.7 30.7 17.2 18.5 12.8 (1.9) (2.4) (1.6) Amortization of prior service cost (benefit) (6.8) (6.8) (6.9) (0.9) (0.7) (0.8) (19.7) (16.7) (4.3) Settlements/Curtailments - 0.3 0.5 2.3 0.9 1.8 - - - Total expense (benefit) $27.9 $25.9 $29.3 $17.7 $22.2 $21.0 $(13.7) $(11.2) $3.8 (a) Includes qualified and non-qualified plans Plan Assumptions U.S. International U.S. Postretirement Pension (a) Pension Health Care (percent) 2018 2017 2016 2018 2017 2016 2018 2017 2016 Weighted-average actuarial assumptions used to determine benefit obligations as of year end: Discount rate 4.34 % 3.70 % 4.27 % 2.49 % 2.17 % 2.33 % 4.29 % 3.66 % 4.14 % Projected salary increase 4.03 4.03 4.03 2.46 2.46 2.52 Weighted-average actuarial assumptions used to determine net cost: Discount rate 3.70 4.27 4.51 2.29 2.32 2.68 3.66 4.14 4.38 Expected return on plan assets 7.75 7.75 7.75 6.67 6.67 6.71 7.75 7.75 7.75 Projected salary increase 4.03 4.03 4.32 2.67 2.83 2.75 (a) Includes qualified and non-qualified plans The discount rate assumptions for the U.S. plans are developed using a bond yield curve constructed from a population of high-quality, non-callable, corporate bond issues with maturities ranging from six months to thirty years. A discount rate is estimated for the U.S. plans and is based on the durations of the underlying plans. The Company measures service and interest costs by applying the specific spot rates along that yield curve to the plans’ liability cash flows. The Company believes this approach provides a more precise measurement of service and interest costs by aligning the timing of the plans’ liability cash flows to the corresponding spot rates on the yield curve. The expected long-term rate of return used for the U.S. plans is based on the pension plan’s asset mix. The Company considers expected long-term real returns on asset categories, expectations for inflation, and estimates of the impact of active management of the assets in determining the final rate to use. The Company also considers actual historical returns. The expected long-term rate of return used for the Company’s international plans is determined in each local jurisdiction and is based on the assets held in that jurisdiction, the expected rate of returns for the type of assets held and any guaranteed rate of return provided by the investment. The other assumptions used to measure the international pension obligations, including discount rate, vary by country based on specific local requirements and information. As previously noted, the measurement date for these plans is November 30. The Company uses most recently available mortality tables as of the respective U.S. and international measurement dates. For postretirement benefit measurement purposes as of December 31, 2018, the annual rates of increase in the per capita cost of covered health care were assumed to be 8.25% for pre-65 costs and 11.50% for post-65 costs. The rates are assumed to decrease each year until they reach 5% in 2028 and remain at those levels thereafter. Health care costs for certain employees which are eligible for subsidy by the Company are limited by a cap on the subsidy. During the second quarter of 2018, an amendment to eligibility requirements of the U.S. retiree death benefit plan was approved and communicated to all eligible participants. As a result of the approval and communication to the beneficiaries, the plan was remeasured, resulting in an $18.9 million ($14.4 million after tax), reduction of postretirement benefit obligations, with a corresponding impact to accumulated other comprehensive income (AOCI). The re-measurement was completed using a discount rate of 4.36%. As a result of this action, the Company’s U.S. postretirement healthcare costs decreased by $4.5 million in 2018. During the fourth quarter of 2018, the qualified U.S. pension plan was amended to allow unlimited lump sums for participants with the Final Average Pay benefit formula, effective with payments starting on or after June 1, 2019. This amendment allows participants to receive a lump sum benefit based on the present value of the accrued benefit at normal retirement age based on IRC 417(e) interest and mortality rates. As a result of this action, the U.S pension plan benefit obligation was reduced by $40.4 million with a corresponding impact to accumulated other comprehensive income (AOCI). During the third quarter of 2016, the Compensation Committee of the Company’s Board of Directors approved moving the U.S. postretirement healthcare plans to a Retiree Exchange approach, rather than the Employee Group Waiver Plan plus Wrap program, for post-65 retiree medical coverage beginning in 2018, and the Company informed all eligible legacy Ecolab and legacy Nalco retirees of the change. As a result of the approval and communication to the beneficiaries, the Ecolab and Nalco plans were re-measured, resulting in a $50 million reduction of postretirement benefit obligations, with a corresponding impact to AOCI of $31 million, net of tax. The remeasurement was completed using discount rates of 3.29% and 3.60%, respectively. Additionally, at the time of this remeasurement, the Nalco U.S. postretirement health care plan was merged with the Ecolab U.S. postretirement health care plan. As a result of these actions, the Company’s U.S. postretirement health care costs decreased by $5 million in 2016. Assumed health care cost trend rates have an effect on the amounts reported for the Company’s U.S. postretirement health care benefits plan. A one-percentage point change in the assumed health care cost trend rates would have an immaterial impact on total service and interest costs as well as total postretirement benefit obligation. Plan Asset Management The Company’s U.S. investment strategy and policies are designed to maximize the possibility of having sufficient funds to meet the long-term liabilities of the pension fund, while achieving a balance between the goals of asset growth of the plan and keeping risk at a reasonable level. Current income is not a key goal of the policy. The asset allocation position reflects the Company’s ability and willingness to accept relatively more short-term variability in the performance of the pension plan portfolio in exchange for the expectation of better long-term returns, lower pension costs and better funded status in the long run. The pension fund is diversified across a number of asset classes and securities. Selected individual portfolios within the asset classes may be undiversified while maintaining the diversified nature of total plan assets. The Company has no significant concentration of risk in its U.S. plan assets. Assets of funded retirement plans outside the U.S. are managed in each local jurisdiction and asset allocation strategy is set in accordance with local rules, regulations and practice. Therefore, no overall target asset allocation is presented. Although non-U.S. equity securities are all considered international for the Company, some equity securities are considered domestic for the local plan. The funds are invested in a variety of equities, bonds and real estate investments and, in some cases, the assets are managed by insurance companies which may offer a guaranteed rate of return. The Company has no significant concentration of risk in its international plan assets. The fair value hierarchy is used to categorize investments measured at fair value in one of three levels in the fair value hierarchy. This categorization is based on the observability of the inputs used in valuing the investments. See Note 7 for definitions of these levels. The fair value of the Company’s U.S. plan assets for its defined benefit pension and postretirement health care benefit plans are as follows: Fair Value as of Fair Value as of (millions) December 31, 2018 December 31, 2017 Level 1 Level 2 Total Level 1 Level 2 Total Cash $7.1 $- $7.1 $8.0 $- $8.0 Equity securities: Large cap equity 683.5 - 683.5 869.8 - 869.8 Small cap equity 168.6 - 168.6 198.4 - 198.4 International equity 285.0 - 285.0 340.2 - 340.2 Fixed income: Core fixed income 358.3 - 358.3 390.0 - 390.0 High-yield bonds 107.6 - 107.6 109.9 - 109.9 Emerging markets 39.4 - 39.4 42.9 - 42.9 Insurance company accounts - 0.3 0.3 - 0.3 0.3 Total investments at fair value 1,649.5 0.3 1,649.8 1,959.2 0.3 1,959.5 Investments measured at NAV 337.6 274.5 Total $1,649.5 $0.3 $1,987.4 $1,959.2 $0.3 $2,234.0 The Company had no level 3 assets as part of its U.S. plan assets as of December 31, 2018 or 2017. The allocation of the Company’s U.S. plan assets for its defined benefit pension and postretirement health care benefit plans are as follows: Target Asset Asset Category Allocation Percentage Percentage of Plan Assets December 31 (%) 2018 2017 2018 2017 Cash - % - % - % - % Equity securities: Large cap equity 34 34 34 39 Small cap equity 9 9 9 9 International equity 15 15 14 15 Fixed income: Core fixed income 18 18 19 18 High-yield bonds 5 5 5 5 Emerging markets 2 2 2 2 Other: Real estate 6 6 8 7 Private equity 8 8 7 5 Distressed debt 3 3 2 - Total 100 % 100 % 100 % 100 % The fair value of the Company’s international plan assets for its defined benefit pension plans are as follows: Fair Value as of Fair Value as of (millions) December 31, 2018 December 31, 2017 Level 1 Level 2 Total Level 1 Level 2 Total Cash $7.1 $- $7.1 $8.7 $- $8.7 Equity securities: International equity - 412.1 412.1 - 442.2 442.2 Fixed income: Corporate bonds 7.9 162.1 170.0 8.2 173.0 181.2 Government bonds 12.3 169.2 181.5 12.4 177.6 190.0 Insurance company accounts - 140.5 140.5 - 144.1 144.1 Total investments at fair value 27.3 883.9 911.2 29.3 936.9 966.2 Investments measured at NAV 14.4 14.9 Total $27.3 $883.9 $925.6 $29.3 $936.9 $981.1 The Company had no level 3 assets as part of its international plan assets as of December 31, 2018 or 2017. The allocation of plan assets of the Company’s international plan assets for its defined benefit pension plans are as follows: Percentage Asset Category of Plan Assets December 31 (%) 2018 2017 Cash 1 % 1 % Equity securities: International equity 45 45 Fixed income: Corporate bonds 18 19 Government bonds 20 19 Total fixed income 38 38 Other: Insurance contracts 15 15 Real estate 1 1 Total 100 % 100 % Cash Flows As of year-end 2018, the Company’s estimate of benefits expected to be paid in each of the next five fiscal years and in the aggregate for the five fiscal years thereafter for the Company’s pension and postretirement health care benefit plans are as follows: (millions) All Plans 2019 $ 203 2020 223 2021 234 2022 243 2023 238 2024 - 2028 1,233 Depending on plan funding levels, the U.S. defined benefit qualified pension plan provides certain terminating participants with an option to receive their pension benefits in the form of lump sum payments. The Company is currently in compliance with all funding requirements of its U.S. pension and postretirement health care plans. In September 2017, the Company made an $80 million voluntary contribution to its non-contributory qualified U.S. pension plan and expects to make an $120 million voluntary contribution in 2019. The Company is required to fund certain international pension benefit plans in accordance with local legal requirements. The Company estimates contributions to be made to its international plans will approximate $48 million in 2019. The Company seeks to maintain an asset balance that meets the long-term funding requirements identified by the projections of the pension plan’s actuaries while simultaneously satisfying the fiduciary responsibilities prescribed in ERISA. The Company also takes into consideration the tax deductibility of contributions to the benefit plans. The Company is not aware of any expected refunds of plan assets within the next twelve months from any of its existing U.S. or international pension or postretirement benefit plans. Savings Plan and ESOP The Company provides a 401(k) savings plan for the majority of its U.S. employees under the Company’s two main 401(k) savings plans, the Ecolab Savings Plan and ESOP for Traditional Benefit Employees (the “Traditional Plan”) and the Ecolab Savings Plan and ESOP (the “Ecolab Plan”). Employees under the Traditional Plan are limited to active employees accruing a final average pay or 5% cash balance benefits in the Ecolab Pension Plan. Employee before-tax contributions made under the Traditional Plan of up to 3% of eligible compensation are matched 100% by the Company and employee before-tax contributions over 3% and up to 5% of eligible compensation are matched 50% by the Company. Employees under the Ecolab Plan are limited to active employees accruing benefits under the 3% cash balance formula of the Ecolab Pension Plan and employees of Nalco eligible for certain legacy final average pay benefits. Employee before-tax contributions made under the Ecolab Plan of up to 4% of eligible compensation are matched 100% by the Company and employee before-tax contributions over 4% and up to 8% of eligible compensation are matched 50% by the Company. The Company’s matching contributions are 100% vested immediately. The Company’s matching contribution expense was $83 million, $82 million and $74 million in 2018, 2017 and 2016, respectively. |
REVENUES
REVENUES | 12 Months Ended |
Dec. 31, 2018 | |
REVENUES | |
REVENUES | 17. REVENUES 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 Other include Pest Elimination and, prior to the Equipment Care disposal 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. Revenue from service and leased equipment is recognized when the services are provided, or the customer receives the benefit from the leased equipment, which is over time. Service revenue is recognized over time utilizing an input method and aligns with when the services are provided. Typically, revenue is recognized 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. Practical Expedients and Exemptions The Company elected to apply the portfolio approach primarily within each operating segment by geographical region. The revenue standard can be applied to a portfolio of contracts with similar characteristics if it is reasonable that the effects of applying the standard at the portfolio would not be significantly different than applying the standard at the individual contract level. Application of the portfolio approach was focused on those characteristics that have the most significant accounting consequences in terms of their effect on the timing of revenue recognition or the amount of revenue recognized. The Company determined the key criteria to assess with respect to the portfolio approach, including the related deliverables, the characteristics of the customers and the timing and transfer of goods and services, which most closely aligned within the operating segments. In addition, the accountability for the business operations, as well as the operational decisions on how to go to market and the product offerings, are performed at the operating segment level. The following table shows principal activities, separated by reportable segments, from which the Company generates its revenue. For more information about the Company’s reportable segments, refer to Note 18. Net sales at public exchange rates by reportable segment are as follows: (millions) 2018 2017 2016 Global Industrial Product and sold equipment $4,626.2 $4,305.3 $4,137.7 Service and lease equipment 660.3 612.7 557.5 Global Institutional Product and sold equipment 4,415.4 4,136.2 3,902.5 Service and lease equipment 683.1 640.0 580.4 Global Energy Product and sold equipment 3,004.4 2,837.5 2,703.2 Service and lease equipment 416.7 392.5 389.7 Other Product and sold equipment 82.6 152.8 160.7 Service and lease equipment 779.5 758.9 720.1 Total Total product and sold equipment $12,128.6 $11,431.8 $10,904.1 Total service and lease equipment 2,539.6 2,404.1 2,247.7 Net sales at public exchange rates by geographic region are as follows: Global Industrial Global Institutional (millions) 2018 2017 2016 2018 2017 2016 United States $2,269.7 $2,087.8 $1,978.1 $3,279.2 $3,107.2 $3,051.0 Europe 1,288.4 1,183.0 1,110.2 1,038.4 928.8 740.9 Asia Pacific 685.8 661.4 635.5 250.4 237.1 233.2 Latin America 474.3 448.0 411.6 165.6 163.6 151.6 Greater China 278.4 267.0 296.1 113.8 102.1 93.1 Canada 148.9 137.4 130.8 191.6 175.3 158.7 Middle East and Africa ("MEA") 141.0 133.4 132.9 59.5 62.1 54.4 Total $5,286.5 $4,918.0 $4,695.2 $5,098.5 $4,776.2 $4,482.9 Global Energy Other (millions) 2018 2017 2016 2018 2017 2016 United States $1,630.1 $1,481.1 $1,373.9 $569.2 $648.2 $631.8 Europe 398.4 404.4 389.3 133.1 119.5 116.6 Asia Pacific 262.7 253.1 257.1 40.2 33.6 33.1 Latin America 219.7 239.3 247.5 46.7 44.8 42.1 Greater China 76.5 70.5 71.6 50.5 45.0 39.0 Canada 335.6 322.3 278.9 11.5 9.4 8.4 MEA 498.1 459.3 474.6 10.9 11.2 9.8 Total $3,421.1 $3,230.0 $3,092.9 $862.1 $911.7 $880.8 Net sales by geographic region were determined based on origin of sale. There were no sales from a single foreign country or individual customer that were material to the Company’s consolidated net sales. Sales of warewashing products were approximately 11% of consolidated net sales in 2018, 2017 and 2016. Contract Liability Payments received from customers are based on invoices or billing schedules as established in contracts with customers. Accounts receivable are recorded when the right to consideration becomes unconditional. The contract liability relates to billings in advance of performance (primarily service obligations) under the contract. Contract liabilities are recognized as revenue when the performance obligation has been performed, which primarily occurs during the subsequent quarter. December 31 December 31 (millions) 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 74.3 76.8 Business combination 1.5 2.2 Contract liability as of end of period $75.8 $79.0 |
OPERATING SEGMENTS AND GEOGRAPH
OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION | 12 Months Ended |
Dec. 31, 2018 | |
OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION | |
OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION | 18. OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION The Company’s organizational structure consists of global business unit and global regional leadership teams. The Company’s eleven operating segments follow its commercial and product-based activities and are based on engagement in business activities, availability of discrete financial information and review of operating results by the Chief Operating Decision Maker at the identified operating segment level. Nine of the Company’s eleven operating segments have been aggregated into three reportable segments based on similar economic characteristics and future prospects, nature of the products and production processes, end-use markets, channels of distribution and regulatory environment. The Company’s reportable segments are Global Industrial, Global Institutional and Global Energy. Operating segments that do not meet the quantitative criteria to be separately reported have been combined into Other. The Company provides similar information for Other as compared to its three reportable segments as the Company considers the information regarding its two underlying operating segments as useful in understanding its consolidated results. The Company’s eleven operating segments are aggregated as follows: Global Industrial Includes the Water, Food & Beverage, Paper, Life Sciences and Textile Care operating segments. It provides water treatment and process applications, and cleaning and sanitizing solutions primarily to large industrial customers within the manufacturing, food and beverage processing, chemical, mining and primary metals, power generation, pulp and paper, and commercial laundry industries. The underlying operating segments exhibit similar manufacturing processes, distribution methods and economic characteristics. Global Institutional Includes the Institutional, Specialty and Healthcare operating segments. It provides specialized cleaning and sanitizing products to the foodservice, hospitality, lodging, healthcare, government and education and retail industries. The underlying operating segments exhibit similar manufacturing processes, distribution methods and economic characteristics. Global Energy Includes the Energy operating segment. It serves the process chemicals and water treatment needs of the global petroleum and petrochemical industries in both upstream and downstream applications. Other Includes the Pest Elimination operating segment which provides services to detect, eliminate and prevent pests, such as rodents and insects and the CTG operating segment which produces and sells colloidal silica, which is comprised of nano-sized particles of silica in water used primarily for binding and polishing applications. Comparability of Reportable Segments The Company evaluates the performance of its non-U.S. dollar functional currency international operations based on fixed currency exchange rates, which eliminate the impact of exchange rate fluctuations on its international operations. Fixed currency amounts are updated annually at the beginning of each year based on translation into U.S. dollars at foreign currency exchange rates established by management, with all periods presented using such rates. Fixed currency rates are generally based on existing market rates at the time they are established. The “Fixed Currency Rate Change” column shown in the following table reflects the impact on previously reported values related to fixed currency exchange rates established by management at the beginning of 2018. Fixed currency amounts during 2018 for Argentina operations are reflected at the Argentine Peso rate established by management at the beginning of the year. Effective in the first quarter of 2018, the Company established the CTG operating segment. CTG was previously recorded in the Water operating segment which is aggregated into the Global Industrial reportable segment. Prior to the sale in November 2017, the Equipment Care operating segment was also included, which provided kitchen repair and maintenance. 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 on the following page. The impact of the preceding changes on previously reported full year 2017 and 2016 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 December 31, 2016 2016 Reported Revenue Pension Fixed 2016 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 $4,687.2 $(0.4) $- $(70.3) $274.6 $4,891.1 Global Institutional 4,440.1 (0.5) - - 158.6 4,598.2 Global Energy 3,075.8 - - - 80.0 3,155.8 Other 801.7 - - 70.3 26.4 898.4 Subtotal at fixed currency rates 13,004.8 (0.9) - - 539.6 13,543.5 Effect of foreign currency translation 148.0 (0.1) - - (539.6) (391.7) Consolidated reported GAAP net sales $13,152.8 $(1.0) $- $- $- $13,151.8 Operating Income Global Industrial $720.0 $(0.4) $(4.2) $(0.8) $43.7 $758.3 Global Institutional 950.5 (0.5) (10.2) (9.8) 19.5 949.5 Global Energy 346.7 - (8.0) (1.5) 12.7 349.9 Other 145.2 - (20.4) 12.1 4.7 141.6 Corporate (272.6) - - - (5.2) (277.8) Subtotal at fixed currency rates 1,889.8 (0.9) (42.8) - 75.4 1,921.5 Effect of foreign currency translation 25.2 (0.1) (1.0) - (75.4) (51.3) Consolidated reported GAAP operating income $1,915.0 $(1.0) $(43.8) $- $- $1,870.2 Reportable Segment Information Financial information for each of the Company’s reportable segments is as follows: Net Sales Operating Income (Loss) (millions) 2018 2017 2016 2018 2017 2016 Global Industrial $5,462.4 $5,106.8 $4,891.1 $768.1 $758.5 $758.3 Global Institutional 5,204.5 4,910.0 4,598.2 1,026.9 979.8 949.5 Global Energy 3,501.8 3,281.7 3,155.8 358.5 336.1 349.9 Other 877.6 931.5 898.4 161.3 142.5 141.6 Corporate - - - (307.1) (213.9) (277.8) Subtotal at fixed currency 15,046.3 14,230.0 13,543.5 2,007.7 2,003.0 1,921.5 Effect of foreign currency translation (378.1) (394.1) (391.7) (60.7) (52.9) (51.3) Consolidated $14,668.2 $13,835.9 $13,151.8 $1,947.0 $1,950.1 $1,870.2 The profitability of the Company’s operating segments is evaluated by management based on operating income. Consistent with the Company’s internal management reporting, Corporate amounts in the table above include intangible asset amortization specifically from the Nalco merger and special (gains) and charges, as discussed in Note 3, that are not allocated to the Company’s reportable segments. The Company has an integrated supply chain function that serves all of its reportable segments. As such, asset and capital expenditure information by reportable segment has not been provided and is not available, since the Company does not produce or utilize such information internally. In addition, although depreciation and amortization expense is a component of each reportable segment’s operating results, it is not discretely identifiable. Geographic Information Long-lived assets at public exchange rates by geographic region are as follows: Long-Lived Assets, net (millions) 2018 2017 United States $9,175.4 $8,853.7 Europe 2,538.7 2,623.8 Asia Pacific, excluding Greater China 1,003.4 1,022.5 Latin America 565.8 605.8 MEA 302.1 310.1 Canada 616.8 649.1 Greater China 1,194.6 1,301.0 Total $15,396.8 $15,366.0 Geographic data for long-lived assets is based on physical location of those assets. Refer to Note 17 for net sales by geographic region. |
QUARTERLY FINANCIAL DATA (UNAUD
QUARTERLY FINANCIAL DATA (UNAUDITED) | 12 Months Ended |
Dec. 31, 2018 | |
QUARTERLY FINANCIAL DATA (UNAUDITED) | |
QUARTERLY FINANCIAL DATA (UNAUDITED) | 19. QUARTERLY FINANCIAL DATA (UNAUDITED) First Second Third Fourth (millions, except per share) Quarter Quarter Quarter Quarter Year 2018 Net sales $3,470.9 $3,689.6 $3,747.2 $3,760.5 $14,668.2 Operating expenses Cost of sales (a) 2,072.3 2,146.1 2,190.7 2,216.8 8,625.9 Selling, general and administrative expenses 1,018.3 1,036.8 964.7 948.8 3,968.6 Special (gains) and charges 26.0 12.1 75.6 13.0 126.7 Operating income 354.3 494.6 516.2 581.9 1,947.0 Other (income) expense (19.4) (19.6) (21.0) (19.9) (79.9) Interest expense, net (a) 56.4 56.3 55.7 53.9 222.3 Income before income taxes 317.3 457.9 481.5 547.9 1,804.6 Provision for income taxes 69.1 104.3 43.2 147.7 364.3 Net income including noncontrolling interest 248.2 353.6 438.3 400.2 1,440.3 Net income attributable to noncontrolling interest 0.9 2.3 2.9 5.1 11.2 Net income attributable to Ecolab $247.3 $351.3 $435.4 $395.1 $1,429.1 Earnings attributable to Ecolab per common share Basic $ 0.86 $ 1.22 $ 1.51 $ 1.37 $ 4.95 Diluted $ 0.84 $ 1.20 $ 1.48 $ 1.35 $ 4.88 Weighted-average common shares outstanding Basic 288.6 288.8 288.8 288.0 288.6 Diluted 292.7 293.3 293.4 292.2 292.8 2017 Net sales $3,162.4 $3,460.0 $3,564.5 $3,649.0 $13,835.9 Operating expenses Cost of sales (a) 1,842.9 2,036.6 2,055.7 2,129.0 8,064.2 Selling, general and administrative expenses 956.1 967.0 939.8 962.4 3,825.3 Special (gains) and charges 6.2 36.8 4.9 (51.6) (3.7) Operating income 357.2 419.6 564.1 609.2 1,950.1 Other (income) expense (16.8) (16.8) (16.9) (16.8) (67.3) Interest expense, net (a) 62.5 59.6 55.1 77.8 255.0 Income before income taxes 311.5 376.8 525.9 548.2 1,762.4 Provision for income taxes 54.2 80.5 129.3 (20.2) 243.8 Net income including noncontrolling interest 257.3 296.3 396.6 568.4 1,518.6 Net income attributable to noncontrolling interest 3.3 1.5 3.4 5.8 14.0 Net income attributable to Ecolab $254.0 $294.8 $393.2 $562.6 $1,504.6 Earnings attributable to Ecolab per common share Basic $ 0.87 $ 1.02 $ 1.36 $ 1.95 $ 5.20 Diluted $ 0.86 $ 1.00 $ 1.34 $ 1.92 $ 5.12 Weighted-average common shares outstanding Basic 290.6 289.8 289.0 289.1 289.6 Diluted 295.0 294.1 293.4 293.6 294.0 Per share amounts do not necessarily sum due to changes in the calculation of shares outstanding for each discrete period and rounding. Gross profit is calculated as net sales minus cost of sales. The Company has conformed prior quarters with current accounting policies. There was no impact to net sales or operating income. (a) Cost of sales includes special charges of $(0.1), $3.6 and $5.8 million in Q2, Q3 and Q4 of 2018, respectively and $1.5, $24.4, $0.3, and $17.8 million in Q1, Q2, Q3 and Q4 of 2017, respectively. Net interest expense includes special charges of $0.3 million in Q4 of 2018 and $21.9 million in Q4 of 2017. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and all subsidiaries in which the Company has a controlling financial interest. Investments in companies, joint ventures or partnerships in which the Company does not have control but has the ability to exercise significant influence over operating and financial policies, are reported using the equity method of accounting. The cost method of accounting is used in circumstances where the Company has no substantial influence over the investee, and the investment has no easily determinable fair value. International subsidiaries are included in the financial statements on the basis of their U.S. GAAP November 30 fiscal year-ends to facilitate the timely inclusion of such entities in the Company’s consolidated financial reporting. All intercompany transactions and profits are eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of the Company’s financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates. The Company’s critical accounting estimates include revenue recognition, valuation allowances and accrued liabilities, actuarially determined liabilities, restructuring, income taxes and long-lived assets, intangible assets and goodwill. |
Foreign Currency Translation | Foreign Currency Translation Financial position and reported results of operations of the Company’s non-U.S. dollar functional international subsidiaries are measured using local currencies as the functional currency. Assets and liabilities of these operations are translated at the exchange rates in effect at each fiscal year end. The translation adjustments related to assets and liabilities that arise from the use of differing exchange rates from period to period are included in accumulated other comprehensive loss in shareholders’ equity. Income statement accounts are translated at average rates of exchange prevailing during the year. As discussed in Note 18 Operating Segments and Geographic Information, the Company evaluates its international operations based on fixed rates of exchange; however, the different exchange rates from period to period impact the amount of reported income from consolidated operations. |
Concentration of Credit Risk | Concentration of Credit Risk Credit risk represents the accounting loss that would be recognized at the reporting date if counterparties failed to perform as contracted. The Company believes the likelihood of incurring material losses due to concentration of credit risk is minimal. The principal financial instruments subject to credit risk are as follows: Cash and Cash Equivalents - The Company maintains cash deposits with major banks, which from time to time may exceed insured limits. The possibility of loss related to financial condition of major banks has been deemed minimal. Additionally, the Company’s investment policy limits exposure to concentrations of credit risk and changes in market conditions. Accounts Receivable - A large number of customers in diverse industries and geographies, as well as the practice of establishing reasonable credit lines, limits credit risk. Based on historical trends and experiences, the allowance for doubtful accounts is adequate to cover potential credit risk losses. Foreign Currency and Interest Rate Contracts and Derivatives - Exposure to credit risk is limited by internal policies and active monitoring of counterparty risks. In addition, the Company uses a diversified group of major international banks and financial institutions as counterparties. The Company does not anticipate nonperformance by any of these counterparties. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash equivalents include highly-liquid investments with a maturity of three months or less when purchased. |
Restricted Cash | Restricted Cash Cash and cash equivalents that are restricted as to withdrawal or use under the terms of certain contractual agreements are recorded in Other assets on the Consolidated Balance Sheet and primarily relate to acquisition activities. |
Accounts Receivable and Allowance For Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are carried at the invoiced amounts, less an allowance for doubtful accounts, and generally do not bear interest. The Company estimates the balance of allowance for doubtful accounts by analyzing accounts receivable balances by age and applying historical write-off and collection trend rates. The Company’s estimates include separately providing for customer receivables based on specific circumstances and credit conditions, and when it is deemed probable that the balance is uncollectible. Account balances are written off against the allowance when it is determined the receivable will not be recovered. The Company’s allowance for doubtful accounts balance also includes an allowance for the expected return of products shipped and credits related to pricing or quantities shipped of $17 million, $15 million and $14 million as of December 31, 2018, 2017, and 2016, respectively. Returns and credit activity is recorded directly to sales as a reduction. The following table summarizes the activity in the allowance for doubtful accounts: (millions) 2018 2017 2016 Beginning balance $71.5 $67.6 $75.3 Bad debt expense 15.7 17.1 20.1 Write-offs (23.6) (15.7) (24.6) Other (a) (3.0) 2.5 (3.2) Ending balance $60.6 $71.5 $67.6 (a) Other amounts are primarily the effects of changes in currency translations and the impact of allowance for returns and credits. |
Inventory Valuations | Inventory Valuations Inventories are valued at the lower of cost or net realizable value. Certain U.S. inventory costs are determined on a last-in, first-out (“LIFO”) basis. LIFO inventories represented 37% and 39% of consolidated inventories as of December 31, 2018 and 2017, respectively. All other inventory costs are determined using either the average cost or first-in, first-out (“FIFO”) methods. Inventory values at FIFO, as shown in Note 5, approximate replacement cost. |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment assets are stated at cost. Merchandising and customer equipment consists principally of various dispensing systems for the Company’s cleaning and sanitizing products, dishwashing machines and process control and monitoring equipment. Certain dispensing systems capitalized by the Company are accounted for on a mass asset basis, whereby equipment is capitalized and depreciated as a group and written off when fully depreciated. The Company capitalizes both internal and external costs of development or purchase of computer software for internal use. Costs incurred for data conversion, training and maintenance associated with capitalized software are expensed as incurred. Expenditures for major renewals and improvements, which significantly extend the useful lives of existing plant and equipment, are capitalized and depreciated. Expenditures for repairs and maintenance are charged to expense as incurred. Upon retirement or disposition of plant and equipment, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in income. Depreciation is charged to operations using the straight-line method over the assets’ estimated useful lives ranging from 5 to 40 years for buildings and leasehold improvements, 3 to 20 years for machinery and equipment, 3 to 15 years for merchandising and customer equipment and 3 to 7 years for capitalized software. The straight-line method of depreciation reflects an appropriate allocation of the cost of the assets to earnings in proportion to the amount of economic benefits obtained by the Company in each reporting period. Depreciation expense was $621 million, $586 million and $561 million for 2018, 2017 and 2016, respectively. During 2018, the Company impaired certain assets related to Accelerate 2020. During 2017, the Company impaired certain assets related to a portion of one of its businesses. During 2016, the Company impaired certain assets related to a product line within one of its U.S. plants. See Note 3 for additional information regarding these asset impairments. |
Goodwill | Goodwill Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in a business combination. The Company’s reporting units are its operating segments. During the second quarter of 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. Additionally, no events occurred during the second half of 2018 that indicated a need to update the Company’s conclusions reached during the second quarter of 2018. 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 are as follows: Global Global Global (millions) Industrial Institutional Energy Other Total December 31, 2016 $2,585.0 $590.7 $3,093.6 $113.7 $6,383.0 Segment change (a) (71.7) - - 71.7 - December 31, 2016 revised $2,513.3 $590.7 $3,093.6 $185.4 $6,383.0 Current year business combinations (b) 123.4 403.7 8.1 63.9 599.1 Prior year business combinations (c) (0.2) - 0.3 - 0.1 Dispositions - - - (42.6) (42.6) Effect of foreign currency translation 88.8 4.4 227.5 December 31, 2017 $2,725.3 $1,027.0 $3,203.7 $211.1 $7,167.1 Current year business combinations (b) 71.6 12.4 - - 84.0 Prior year business combinations (c) (1.2) - - (0.9) (2.1) Dispositions (0.5) - (2.9) - (3.4) Effect of foreign currency translation (64.4) (24.1) (74.2) (4.9) (167.6) December 31, 2018 $2,730.8 $1,015.3 $3,126.6 $205.3 $7,078.0 (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 18 for further information. (b) For 2018, the Company does not expect any of the goodwill related to businesses acquired to be tax deductible. For 2017, $79.2 million of the goodwill related to businesses acquired is expected to be tax deductible. (c) Represents purchase price allocation adjustments for acquisitions deemed preliminary as of the end of the prior year. |
Other Intangible Assets | Other Intangible Assets The Nalco trade name is the Company’s principal indefinite life intangible asset. During the second quarter of 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, royalty rates and discount rates. Based on this testing, the estimated fair value of the asset exceeded its carrying value by a significant margin, therefore, no adjustment to the $1.2 billion carrying value of this asset was necessary. Additionally, no events during the second half of 2018 indicated a need to update the Company’s conclusions reached during the second quarter of 2018. There has been no impairment of the Nalco trade name intangible asset since it was acquired. The Company’s intangible assets subject to amortization primarily include customer relationships, trademarks, patents and other technology. The fair value of identifiable intangible assets is estimated based upon discounted future cash flow projections and other acceptable valuation methods. Other intangible assets are amortized on a straight-line basis over their estimated economic lives. The weighted-average useful life of amortizable intangible assets was 14 years as of both December 31, 2018 and 2017. The weighted-average useful life by type of amortizable asset at December 31, 2018 is as follows: (years) Customer relationships 14 Trademarks 14 Patents 14 Other technology 5 The straight-line method of amortization reflects an appropriate allocation of the cost of the intangible assets to earnings in proportion to the amount of economic benefits obtained by the Company in each reporting period. The Company evaluates the remaining useful life of its intangible assets that are being amortized each reporting period to determine whether events and circumstances warrant a change to the remaining period of amortization. If the estimate of an intangible asset’s remaining useful life is changed, the remaining carrying amount of the intangible asset will be amortized prospectively over that revised remaining useful life. Total amortization expense related to other intangible assets during the last three years and future estimated amortization is as follows: (millions) 2016 $ 290 2017 308 2018 317 2019 310 2020 303 2021 298 2022 292 2023 284 |
Long-Lived Assets | Long-Lived Assets The Company periodically reviews its long-lived and amortizable intangible assets for impairment and assesses whether significant events or changes in business circumstances indicate that the carrying value of the assets may not be recoverable. Such circumstances may include a significant decrease in the market price of an asset, a significant adverse change in the manner in which the asset is being used or in its physical condition or history of operating or cash flow losses associated with the use of an asset. An impairment loss may be recognized when the carrying amount of an asset exceeds the anticipated future undiscounted cash flows expected to result from the use of the asset and its eventual disposition. The amount of the impairment loss to be recorded, if any, is calculated by the excess of the asset’s carrying value over its fair value. In addition, the Company periodically reassesses the estimated remaining useful lives of its long-lived assets. Changes to estimated useful lives would impact the amount of depreciation and amortization recorded in earnings. The Company has not experienced significant changes in the carrying value or estimated remaining useful lives of its long-lived or amortizable intangible assets. |
Income Taxes | Income Taxes Income taxes are recognized during the period in which transactions enter into the determination of financial statement income, with deferred income taxes provided for the tax effect of temporary differences between the carrying amount of assets and liabilities and their tax bases. The Company records a valuation allowance to reduce its deferred tax assets when uncertainty regarding their realizability exists. The Company records liabilities for income tax uncertainties in accordance with the U.S. GAAP recognition and measurement criteria guidance. On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was enacted, which reduced the U.S. federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxes on certain foreign sourced earnings. The Tax Act added many new provisions including changes to bonus depreciation, the deduction for executive compensation and interest expense, a tax on global intangible low taxed income (GILTI), the base erosion anti abuse tax (BEAT) and a deduction for foreign derived intangible income (FDII). In January 2018, the Financial Accounting Standards Board (FASB) issued guidance stating that a company must make an accounting policy election to either treat taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the "period cost method") or factor such amounts into a company’s measurement of its deferred taxes (the "deferred method"). Ecolab has elected the period cost method and considered the estimated 2018 GILTI impact in its 2018 tax expense. See Note 12 for additional information regarding income taxes. |
Share-based compensation | Share-Based Compensation The Company measures compensation expense for share-based awards at fair value at the date of grant and recognizes compensation expense over the service period for awards expected to vest. The majority of grants to retirement eligible recipients (age 55 with required years of service) are attributed to expense using the non-substantive vesting method and are fully expensed over a six month period following the date of grant. In addition, the Company includes a forfeiture estimate in the amount of compensation expense being recognized based on an estimate of the number of outstanding awards expected to vest. During the first quarter of 2017, the Company adopted the accounting guidance issued in March 2016 that amends certain aspects of share-based compensation for employees, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classifications on the Consolidated Statement of Cash Flows. Under the new guidance, all excess tax benefits or deficiencies are to be recognized prospectively as discrete income tax items on the Consolidated Statement of Income, while previous guidance required realized excess tax benefits or deficiencies to be recognized in additional paid-in capital. The Company recorded $28.1 million and $39.7 million of excess tax benefits during 2018 and 2017, respectively. The extent of excess tax benefits is subject to variation in stock price and stock option exercises. Adoption of the accounting standard also eliminated the requirement that excess tax benefits be realized before they can be recognized, and as a result, the Company recorded a $1.9 million cumulative-effect adjustment for previously unrecognized excess tax benefits. The Company’s adoption also resulted in associated excess tax benefits being classified as an operating activity in the statement of cash flows prospectively beginning January 1, 2017 with no changes to the prior year. Based on the adoption methodology applied, employee taxes paid remain classified as a financing activity on the statement of cash flows, and the statement of cash flows classification of prior periods has not changed. See Note 11 for additional information regarding equity compensation plans. |
Restructuring Activities | Restructuring Activities The Company’s restructuring activities are associated with plans to enhance its efficiency, effectiveness and sharpen its competitiveness. These restructuring plans include net costs associated with significant actions involving employee-related severance charges, contract termination costs and asset write-downs and disposals. Employee termination costs are largely based on policies and severance plans, and include personnel reductions and related costs for severance, benefits and outplacement services. These charges are reflected in the quarter in which the actions are probable and the amounts are estimable, which typically is when management approves the associated actions. Contract termination costs include charges to terminate leases prior to the end of their respective terms and other contract termination costs. Asset write-downs and disposals include leasehold improvement write-downs, other asset write-downs associated with combining operations and disposal of assets. See Note 3 for additional information regarding restructuring. |
Revenue Recognition | Revenue Recognition Revenue is measured as the amount of consideration expected to be received in exchange for transferring goods or providing service. Product and Sold Equipment Revenue from product and sold equipment is recognized when obligations under the terms of a contract with the customer are satisfied, which generally occurs with the transfer of the product or delivery of the equipment. Service and Lease Equipment Revenue from service and leased equipment is recognized when the services are provided, or the customer receives the benefit from the leased equipment, which is over time. Service revenue is recognized over time utilizing an input method and aligns with when the services are provided. Typically, revenue is recognized 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. Other Considerations Contracts with customers may include multiple performance obligations. For contracts with multiple performance obligations, the consideration is allocated between products and services based on their stand-alone selling prices. Stand-alone selling prices are generally based on the prices charged to customers or using an expected cost plus margin. Judgment is used in determining the amount of service that is embedded within the contracts, which is based on the amount of time spent on the performance obligation activities. The level of effort, including the estimated margin that would be charged, is used to determine the amount of service revenue. Depending on the terms of the contract, the Company may defer the recognition of revenue when a future performance obligation has not yet occurred. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, 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. The Company’s sales policies do not provide for general rights of return. Estimates used in recognizing revenue include the delay between the time that products are shipped and when they are received by customers, when title transfers and the amount of credit memos issued in subsequent periods. The Company records estimated reductions to revenue for customer programs and incentive offerings, including pricing arrangements, promotions and other volume-based incentives at the time the sale is recorded. Depending on market conditions, the Company may increase customer incentive offerings, which could reduce gross profit margins over the term of the incentive. |
Earnings Per Common Share | Earnings Per Common Share The difference in the weighted average common shares outstanding for calculating basic and diluted earnings attributable to Ecolab per common share is a result of the dilution associated with the Company’s equity compensation plans. As noted in the table below, certain stock options and units outstanding under these equity compensation plans were not included in the computation of diluted earnings attributable to Ecolab per common share because they would not have had a dilutive effect. The computations of the basic and diluted earnings attributable to Ecolab per share amounts were as follows: (millions, except per share) 2018 2017 2016 Net income attributable to Ecolab $1,429.1 $1,504.6 $1,229.0 Weighted-average common shares outstanding Basic 288.6 289.6 292.5 Effect of dilutive stock options and units 4.2 4.4 4.2 Diluted 292.8 294.0 296.7 Basic EPS $ 4.95 $ 5.20 $ 4.20 Diluted EPS $ 4.88 $ 5.12 $ 4.14 Anti-dilutive securities excluded from the computation of diluted EPS 2.9 3.4 3.6 |
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. |
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 international banks and financial institutions as counterparties. The Company does not anticipate nonperformance by any of these counterparties, and therefore, recording a valuation allowance against the Company’s derivative balance is not considered necessary. |
Research and development expenditures | Research expenditures that relate to the development of new products and processes, including significant improvements and refinements to existing products, are expensed as incurred. |
Legal contingencies | The Company is subject to various claims and contingencies related to, among other things, workers’ compensation, labor and employment, general liability (including product liability), automobile claims, health care claims, environmental matters and lawsuits. The Company is also subject to various claims and contingencies related to income taxes, which are discussed in Note 12. The Company also has contractual obligations including lease commitments, which are discussed in Note 13. The Company records liabilities where a contingent loss is probable and can be reasonably estimated. If the reasonable estimate of a probable loss is a range, the Company records the most probable estimate of the loss or the minimum amount when no amount within the range is a better estimate than any other amount. The Company discloses a contingent liability even if the liability is not probable or the amount is not estimable, or both, if there is a reasonable possibility that a material loss may have been incurred. Insurance Globally, the Company has insurance policies with varying deductible levels for property and casualty losses. The Company is insured for losses in excess of these deductibles, subject to policy terms and conditions and has recorded both a liability and an offsetting receivable for amounts in excess of these deductibles. The Company is self-insured for health care claims for eligible participating employees, subject to certain deductibles and limitations. The Company determines its liabilities for claims on an actuarial basis. Litigation and Environmental Matters The Company and certain subsidiaries are party to various lawsuits, claims and environmental actions that have arisen in the ordinary course of business. These include from time to time antitrust, commercial, patent infringement, product liability and wage hour lawsuits, as well as possible obligations to investigate and mitigate the effects on the environment of the disposal or release of certain chemical substances at various sites, such as Superfund sites and other operating or closed facilities. The Company has established accruals for certain lawsuits, claims and environmental matters. The Company currently believes that there is not a reasonably possible risk of material loss in excess of the amounts accrued related to these legal matters. Because litigation is inherently uncertain, and unfavorable rulings or developments could occur, there can be no certainty that the Company may not ultimately incur charges in excess of recorded liabilities. A future adverse ruling, settlement or unfavorable development could result in future charges that could have a material adverse effect on the Company’s results of operations or cash flows in the period in which they are recorded. The Company currently believes that such future charges related to suits and legal claims, if any, would not have a material adverse effect on the Company’s consolidated financial position. |
Pension and post-retirement benefit plans | The Company has a non-contributory qualified defined benefit pension plan covering the majority of its U.S. employees. The Company also has non-contributory non-qualified defined benefit plans, which provide for benefits to employees in excess of limits permitted under its U.S. pension plans. Various international subsidiaries have defined benefit pension plans. The Company provides postretirement health care benefits to certain U.S. employees and retirees. The non-qualified plans are not funded and the recorded benefit obligation for the non-qualified plans was $119 million and $124 million at December 31, 2018 and 2017, respectively. The measurement date used for determining the U.S. pension plan assets and obligations is December 31. International plans are funded based on local country requirements. The measurement date used for determining the international pension plan assets and obligations is November 30, the fiscal year-end of the Company’s international affiliates. The U.S. postretirement health care plans are contributory based on years of service and choice of coverage (family or single), with retiree contributions adjusted annually. The measurement date used to determine the U.S. postretirement health care plan assets and obligations is December 31. Certain employees outside the U.S. are covered under government-sponsored programs, which are not required to be fully funded. The expense and obligation for providing international postretirement health care benefits are not significant. |
Reportable segments | The Company’s organizational structure consists of global business unit and global regional leadership teams. The Company’s eleven operating segments follow its commercial and product-based activities and are based on engagement in business activities, availability of discrete financial information and review of operating results by the Chief Operating Decision Maker at the identified operating segment level. Nine of the Company’s eleven operating segments have been aggregated into three reportable segments based on similar economic characteristics and future prospects, nature of the products and production processes, end-use markets, channels of distribution and regulatory environment. The Company’s reportable segments are Global Industrial, Global Institutional and Global Energy. Operating segments that do not meet the quantitative criteria to be separately reported have been combined into Other. The Company provides similar information for Other as compared to its three reportable segments as the Company considers the information regarding its two underlying operating segments as useful in understanding its consolidated results. |
New Accounting Pronouncements | New Accounting Pronouncements Standards that are not yet adopted: Required Date of Date of Effect on the Standard Issuance Description Adoption Financial Statements ASU 2018-15 - Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force) August 2018 Aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The amendments require an entity (customer) in a hosting arrangement that is a service contract to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. January 1, 2020 The 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 2018-02 - Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income February 2018 Allows entities to reclassify stranded tax effects resulting from the Tax Cut and Jobs Act (“the Act”) from accumulated other comprehensive income to retained earnings. Tax effects stranded in other comprehensive income for reasons other than the impact of the Act cannot be reclassified. January 1, 2019 The Company is currently evaluating the impact of adoption and accounting policy elections required to be made. 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. Credit Losses ASUs: Various Addresses the recognition, measurement, presentation and disclosure of credit losses on trade and reinsurance receivables, loans, debt securities, net investments in leases, off-balance-sheet credit exposures and certain other instruments. Amends guidance on reporting credit losses from an incurred model to an expected model for assets held at amortized cost, such as accounts receivable, loans and held-to-maturity debt securities. Additional disclosures will also be required. January 1, 2020 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. Derivatives and Hedging ASUs: Various Amends the hedge accounting recognition and presentation requirements. Simplifies the application of hedge accounting and the requirements for hedge documentation and effectiveness testing. Requires presentation of all items that affect earnings in the same income statement line as the hedged item. Expands the benchmark interest rates that can be used for hedge accounting. January 1, 2019 Adoption of the ASU is not expected to have a material impact on the Company's financial statements. Required Date of Date of Effect on the Standard Issuance Description Adoption Financial Statements 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) 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. This adjustment to retained earnings is not expected to be material. 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, for certain asset classes, the lessor practical expedient to not separate nonlease and lease components and account for those components as a single component. These asset classes are not expected to be material. Standards that were adopted: Date of Date of Effect on the Standard Issuance Description Adoption Financial Statements 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" was too broad, resulting in diverse interpretations of what was 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" and 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 guidance 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. 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 Provides guidance on 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 2016. 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 the cost of 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. 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: (millions, except per share amounts) Year ended December 31 2017 Revenue Standard Adoption Pension Standard Adoption 2017 Revised Net sales $13,838.3 $(13,838.3) $- $- Product and equipment sales - 11,431.8 - 11,431.8 Service and lease sales - 2,404.1 - 2,404.1 Total net sales 13,838.3 (2.4) - 13,835.9 Cost of sales 7,405.1 (7,405.1) - - Product and equipment cost of sales - 6,573.3 3.6 6,576.9 Service and lease cost of sales - 1,486.4 0.9 1,487.3 Total cost of sales (including special charges (a)) 7,405.1 654.6 4.5 8,064.2 Selling, general and administrative expenses 4,417.1 (654.6) 62.8 3,825.3 Special (gains) and charges (3.7) - - (3.7) Operating income 2,019.8 (2.4) (67.3) 1,950.1 Other (income) expense - - (67.3) (67.3) Interest expense, net 255.0 - - 255.0 Income before income taxes 1,764.8 (2.4) - 1,762.4 Provision for income taxes 242.4 1.4 - 243.8 Net income including noncontrolling interest 1,522.4 (3.8) - 1,518.6 Net income attributable to noncontrolling interest 14.0 - - 14.0 Net income attributable to Ecolab $1,508.4 $(3.8) $- $1,504.6 Earnings attributable to Ecolab per common share Basic $ 5.21 $ (0.01) $ - $ 5.20 Diluted $ 5.13 $ (0.01) $ - $ 5.12 (a) (millions, except per share amounts) Year ended December 31 2016 Revenue Standard Adoption Pension Standard Adoption 2016 Revised Net sales $13,152.8 $(13,152.8) $- $- Product and equipment sales - 10,904.1 - 10,904.1 Service and lease sales - 2,247.7 - 2,247.7 Total net sales 13,152.8 (1.0) - 13,151.8 Cost of sales 6,898.9 (6,898.9) - - Product and equipment cost of sales - 6,148.8 4.5 6,153.3 Service and lease cost of sales - 1,379.9 0.7 1,380.6 Total cost of sales (including special charges (a)) 6,898.9 629.8 5.2 7,533.9 Selling, general and administrative expenses 4,299.4 (629.8) 38.6 3,708.2 Special (gains) and charges 39.5 - - 39.5 Operating income 1,915.0 (1.0) (43.8) 1,870.2 Other (income) expense - - (43.8) (43.8) Interest expense, net 264.6 - - 264.6 Income before income taxes 1,650.4 (1.0) - 1,649.4 Provision for income taxes 403.3 (0.4) - 402.9 Net income including noncontrolling interest 1,247.1 (0.6) - 1,246.5 Net income attributable to noncontrolling interest 17.5 - - 17.5 Net income attributable to Ecolab $1,229.6 $(0.6) $- $1,229.0 Earnings attributable to Ecolab per common share Basic $ 4.20 $ - $ - $ 4.20 Diluted $ 4.14 $ - $ - $ 4.14 (a) 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) 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 related escrow payments. 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) Year ended December 31 2017 Restricted Cash Standard Adoption Revenue Standard Adoption 2017 Revised OPERATING ACTIVITIES Net income including noncontrolling interest $1,522.4 $- $(3.8) $1,518.6 Adjustments to reconcile net income to cash provided by operating activities: Deferred income taxes (354.5) - 1.0 (353.5) Changes in operating assets and liabilities, net of effect of acquisitions: Accounts receivable (91.8) - 0.3 (91.5) Other liabilities 144.8 - 2.5 147.3 Cash provided by operating activities 2,091.3 - - 2,091.3 INVESTING ACTIVITIES Restricted cash activity 53.8 (53.8) - - Cash used for investing activities (1,673.2) (53.8) - (1,727.0) Effect of exchange rate changes on cash, cash equivalents and restricted cash (11.4) 0.8 - (10.6) Increase (decrease) in cash, cash equivalents and restricted cash (116.0) (53.0) - (169.0) Cash, cash equivalents and restricted cash, beginning of period 327.4 53.0 - 380.4 Cash, cash equivalents and restricted cash, end of period $211.4 $- $- $211.4 (millions) Year ended December 31 2016 Restricted Cash Standard Adoption Revenue Standard Adoption 2016 Revised OPERATING ACTIVITIES Net income including noncontrolling interest $1,247.1 $- $(0.6) $1,246.5 Adjustments to reconcile net income to cash provided by operating activities: Deferred income taxes (90.6) - - (90.6) Changes in operating assets and liabilities, net of effect of acquisitions: Accounts receivable 0.9 - - 0.9 Other liabilities 99.3 - 0.6 99.9 Cash provided by operating activities 1,939.7 - - 1,939.7 INVESTING ACTIVITIES Restricted cash activity (55.9) 55.9 - - Cash used for investing activities (829.5) 55.9 - (773.6) Effect of exchange rate changes on cash, cash equivalents and restricted cash (7.4) (2.9) - (10.3) Increase (decrease) in cash, cash equivalents and restricted cash 234.6 53.0 - 287.6 Cash, cash equivalents and restricted cash, beginning of period 92.8 - - 92.8 Cash, cash equivalents and restricted cash, end of period $327.4 $53.0 $- $380.4 |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Summarized activity in the allowance for doubtful accounts | (millions) 2018 2017 2016 Beginning balance $71.5 $67.6 $75.3 Bad debt expense 15.7 17.1 20.1 Write-offs (23.6) (15.7) (24.6) Other (a) (3.0) 2.5 (3.2) Ending balance $60.6 $71.5 $67.6 (a) Other amounts are primarily the effects of changes in currency translations and the impact of allowance for returns and credits. |
Changes in the carrying amount of goodwill | Global Global Global (millions) Industrial Institutional Energy Other Total December 31, 2016 $2,585.0 $590.7 $3,093.6 $113.7 $6,383.0 Segment change (a) (71.7) - - 71.7 - December 31, 2016 revised $2,513.3 $590.7 $3,093.6 $185.4 $6,383.0 Current year business combinations (b) 123.4 403.7 8.1 63.9 599.1 Prior year business combinations (c) (0.2) - 0.3 - 0.1 Dispositions - - - (42.6) (42.6) Effect of foreign currency translation 88.8 4.4 227.5 December 31, 2017 $2,725.3 $1,027.0 $3,203.7 $211.1 $7,167.1 Current year business combinations (b) 71.6 12.4 - - 84.0 Prior year business combinations (c) (1.2) - - (0.9) (2.1) Dispositions (0.5) - (2.9) - (3.4) Effect of foreign currency translation (64.4) (24.1) (74.2) (4.9) (167.6) December 31, 2018 $2,730.8 $1,015.3 $3,126.6 $205.3 $7,078.0 (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 18 for further information. (b) For 2018, the Company does not expect any of the goodwill related to businesses acquired to be tax deductible. For 2017, $79.2 million of the goodwill related to businesses acquired is expected to be tax deductible. (c) Represents purchase price allocation adjustments for acquisitions deemed preliminary as of the end of the prior year. |
Weighted-average useful life by type of asset | The weighted-average useful life by type of amortizable asset at December 31, 2018 is as follows: (years) Customer relationships 14 Trademarks 14 Patents 14 Other technology 5 |
Future estimated amortization expenses | (millions) 2016 $ 290 2017 308 2018 317 2019 310 2020 303 2021 298 2022 292 2023 284 |
Computations of the basic and diluted EPS | (millions, except per share) 2018 2017 2016 Net income attributable to Ecolab $1,429.1 $1,504.6 $1,229.0 Weighted-average common shares outstanding Basic 288.6 289.6 292.5 Effect of dilutive stock options and units 4.2 4.4 4.2 Diluted 292.8 294.0 296.7 Basic EPS $ 4.95 $ 5.20 $ 4.20 Diluted EPS $ 4.88 $ 5.12 $ 4.14 Anti-dilutive securities excluded from the computation of diluted EPS 2.9 3.4 3.6 |
Other significant accounting policies | Policy Note Fair value measurements 7 Derivatives and hedging transactions 8 Share-based compensation 11 Research and development expenditures 14 Legal contingencies 15 Pension and post-retirement benefit plans 16 Reportable segments 18 |
Schedule of new accounting pronouncements | Standards that are not yet adopted: Required Date of Date of Effect on the Standard Issuance Description Adoption Financial Statements ASU 2018-15 - Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force) August 2018 Aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The amendments require an entity (customer) in a hosting arrangement that is a service contract to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. January 1, 2020 The 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 2018-02 - Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income February 2018 Allows entities to reclassify stranded tax effects resulting from the Tax Cut and Jobs Act (“the Act”) from accumulated other comprehensive income to retained earnings. Tax effects stranded in other comprehensive income for reasons other than the impact of the Act cannot be reclassified. January 1, 2019 The Company is currently evaluating the impact of adoption and accounting policy elections required to be made. 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. Credit Losses ASUs: Various Addresses the recognition, measurement, presentation and disclosure of credit losses on trade and reinsurance receivables, loans, debt securities, net investments in leases, off-balance-sheet credit exposures and certain other instruments. Amends guidance on reporting credit losses from an incurred model to an expected model for assets held at amortized cost, such as accounts receivable, loans and held-to-maturity debt securities. Additional disclosures will also be required. January 1, 2020 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. Derivatives and Hedging ASUs: Various Amends the hedge accounting recognition and presentation requirements. Simplifies the application of hedge accounting and the requirements for hedge documentation and effectiveness testing. Requires presentation of all items that affect earnings in the same income statement line as the hedged item. Expands the benchmark interest rates that can be used for hedge accounting. January 1, 2019 Adoption of the ASU is not expected to have a material impact on the Company's financial statements. Required Date of Date of Effect on the Standard Issuance Description Adoption Financial Statements 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) 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. This adjustment to retained earnings is not expected to be material. 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, for certain asset classes, the lessor practical expedient to not separate nonlease and lease components and account for those components as a single component. These asset classes are not expected to be material. Standards that were adopted: Date of Date of Effect on the Standard Issuance Description Adoption Financial Statements 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" was too broad, resulting in diverse interpretations of what was 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" and 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 guidance 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. 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 Provides guidance on 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 | (millions, except per share amounts) Year ended December 31 2017 Revenue Standard Adoption Pension Standard Adoption 2017 Revised Net sales $13,838.3 $(13,838.3) $- $- Product and equipment sales - 11,431.8 - 11,431.8 Service and lease sales - 2,404.1 - 2,404.1 Total net sales 13,838.3 (2.4) - 13,835.9 Cost of sales 7,405.1 (7,405.1) - - Product and equipment cost of sales - 6,573.3 3.6 6,576.9 Service and lease cost of sales - 1,486.4 0.9 1,487.3 Total cost of sales (including special charges (a)) 7,405.1 654.6 4.5 8,064.2 Selling, general and administrative expenses 4,417.1 (654.6) 62.8 3,825.3 Special (gains) and charges (3.7) - - (3.7) Operating income 2,019.8 (2.4) (67.3) 1,950.1 Other (income) expense - - (67.3) (67.3) Interest expense, net 255.0 - - 255.0 Income before income taxes 1,764.8 (2.4) - 1,762.4 Provision for income taxes 242.4 1.4 - 243.8 Net income including noncontrolling interest 1,522.4 (3.8) - 1,518.6 Net income attributable to noncontrolling interest 14.0 - - 14.0 Net income attributable to Ecolab $1,508.4 $(3.8) $- $1,504.6 Earnings attributable to Ecolab per common share Basic $ 5.21 $ (0.01) $ - $ 5.20 Diluted $ 5.13 $ (0.01) $ - $ 5.12 (a) (millions, except per share amounts) Year ended December 31 2016 Revenue Standard Adoption Pension Standard Adoption 2016 Revised Net sales $13,152.8 $(13,152.8) $- $- Product and equipment sales - 10,904.1 - 10,904.1 Service and lease sales - 2,247.7 - 2,247.7 Total net sales 13,152.8 (1.0) - 13,151.8 Cost of sales 6,898.9 (6,898.9) - - Product and equipment cost of sales - 6,148.8 4.5 6,153.3 Service and lease cost of sales - 1,379.9 0.7 1,380.6 Total cost of sales (including special charges (a)) 6,898.9 629.8 5.2 7,533.9 Selling, general and administrative expenses 4,299.4 (629.8) 38.6 3,708.2 Special (gains) and charges 39.5 - - 39.5 Operating income 1,915.0 (1.0) (43.8) 1,870.2 Other (income) expense - - (43.8) (43.8) Interest expense, net 264.6 - - 264.6 Income before income taxes 1,650.4 (1.0) - 1,649.4 Provision for income taxes 403.3 (0.4) - 402.9 Net income including noncontrolling interest 1,247.1 (0.6) - 1,246.5 Net income attributable to noncontrolling interest 17.5 - - 17.5 Net income attributable to Ecolab $1,229.6 $(0.6) $- $1,229.0 Earnings attributable to Ecolab per common share Basic $ 4.20 $ - $ - $ 4.20 Diluted $ 4.14 $ - $ - $ 4.14 |
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 (a) |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles, Cash Flow [Table Text Block] | (millions) Year ended December 31 2017 Restricted Cash Standard Adoption Revenue Standard Adoption 2017 Revised OPERATING ACTIVITIES Net income including noncontrolling interest $1,522.4 $- $(3.8) $1,518.6 Adjustments to reconcile net income to cash provided by operating activities: Deferred income taxes (354.5) - 1.0 (353.5) Changes in operating assets and liabilities, net of effect of acquisitions: Accounts receivable (91.8) - 0.3 (91.5) Other liabilities 144.8 - 2.5 147.3 Cash provided by operating activities 2,091.3 - - 2,091.3 INVESTING ACTIVITIES Restricted cash activity 53.8 (53.8) - - Cash used for investing activities (1,673.2) (53.8) - (1,727.0) Effect of exchange rate changes on cash, cash equivalents and restricted cash (11.4) 0.8 - (10.6) Increase (decrease) in cash, cash equivalents and restricted cash (116.0) (53.0) - (169.0) Cash, cash equivalents and restricted cash, beginning of period 327.4 53.0 - 380.4 Cash, cash equivalents and restricted cash, end of period $211.4 $- $- $211.4 (millions) Year ended December 31 2016 Restricted Cash Standard Adoption Revenue Standard Adoption 2016 Revised OPERATING ACTIVITIES Net income including noncontrolling interest $1,247.1 $- $(0.6) $1,246.5 Adjustments to reconcile net income to cash provided by operating activities: Deferred income taxes (90.6) - - (90.6) Changes in operating assets and liabilities, net of effect of acquisitions: Accounts receivable 0.9 - - 0.9 Other liabilities 99.3 - 0.6 99.9 Cash provided by operating activities 1,939.7 - - 1,939.7 INVESTING ACTIVITIES Restricted cash activity (55.9) 55.9 - - Cash used for investing activities (829.5) 55.9 - (773.6) Effect of exchange rate changes on cash, cash equivalents and restricted cash (7.4) (2.9) - (10.3) Increase (decrease) in cash, cash equivalents and restricted cash 234.6 53.0 - 287.6 Cash, cash equivalents and restricted cash, beginning of period 92.8 - - 92.8 Cash, cash equivalents and restricted cash, end of period $327.4 $53.0 $- $380.4 |
SPECIAL (GAINS) AND CHARGES (Ta
SPECIAL (GAINS) AND CHARGES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
SPECIAL (GAINS) AND CHARGES | |
Special (gains) and charges | (millions) 2018 2017 2016 Cost of sales Restructuring activities $12.1 $4.6 $(0.4) Acquisition and integration activities (0.6) 13.2 - Energy related charges - - 62.6 Other (2.2) 26.2 3.8 Subtotal 9.3 44.0 66.0 Special (gains) and charges Restructuring activities 89.4 39.9 (8.7) Acquisition and integration activities 8.8 15.4 8.6 Gain on sale of business - (46.1) - Energy related charges - - 14.2 Venezuela related gain - (11.5) (7.8) Other 28.5 (1.4) 33.2 Subtotal 126.7 (3.7) 39.5 Operating income subtotal 136.0 40.3 105.5 Interest expense, net 0.3 21.9 - Total special (gains) and charges $136.3 $62.2 $105.5 |
Restructuring activity | Employee Termination Asset (millions) Costs Disposals Other Total 2018 Activity Recorded expense $ 94.1 $ 5.0 $ 5.5 $ 104.6 Net cash payments (32.8) - (2.4) (35.2) Non-cash charges - (5.0) - (5.0) Effect of foreign currency translation (0.5) - - (0.5) Restructuring liability, December 31, 2018 $ 60.8 $ - $ 3.1 $ 63.9 |
ACQUISITIONS AND DISPOSITIONS (
ACQUISITIONS AND DISPOSITIONS (Tables) | 12 Months Ended |
Dec. 31, 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 |
Other Acquisitions | |
Business acquisitions | |
Schedule of assets acquired and liabilities assumed | (millions) 2018 2017 2016 Net tangible assets acquired and equity method investments $30.1 $29.8 $46.9 Identifiable intangible assets Customer relationships 101.5 67.0 2.6 Trademarks 3.9 2.5 - Non-compete agreements 2.6 0.2 - Other technology 6.5 7.6 1.1 Total intangible assets 114.5 77.3 3.7 Goodwill 81.9 87.4 7.3 Total aggregate purchase price 226.5 194.5 57.9 Acquisition related liabilities and contingent consideration (1.5) 5.6 27.1 Net cash paid for acquisitions, including acquisition related liabilities and contingent consideration $225.0 $200.1 $85.0 |
BALANCE SHEET INFORMATION (Tabl
BALANCE SHEET INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
BALANCE SHEET INFORMATION | |
Balance Sheet Information | December 31 December 31 (millions) 2018 2017 Accounts receivable, net Accounts receivable $2,723.1 $2,642.9 Allowance for doubtful accounts (60.6) (71.5) Total $2,662.5 $2,571.4 Inventories Finished goods $1,016.9 $974.9 Raw materials and parts 525.6 438.7 Inventories at FIFO cost 1,542.5 1,413.6 FIFO cost to LIFO cost difference 3.9 32.9 Total $1,546.4 $1,446.5 Other current assets Prepaid assets $132.1 $153.5 Taxes receivable 144.2 129.2 Derivative assets 42.8 28.8 Other 35.0 53.5 Total $354.1 $365.0 Property, plant and equipment, net Land $214.5 $224.1 Buildings and leasehold improvements 1,279.4 1,207.4 Machinery and equipment 2,313.7 2,280.9 Merchandising and customer equipment 2,565.5 2,399.4 Capitalized software 666.2 585.8 Construction in progress 400.2 438.7 7,439.5 7,136.3 Accumulated depreciation (3,603.5) (3,429.2) Total $3,836.0 $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 3,649.3 3,620.3 Trademarks 384.9 380.6 Patents 470.2 462.7 Other technology 242.8 232.6 4,747.2 4,696.2 Accumulated amortization Customer relationships (1,604.0) (1,403.8) Trademarks (175.2) (147.6) Patents (207.3) (187.9) Other technology (193.0) (169.3) (2,179.5) (1,908.6) Net intangible assets subject to amortization 2,567.7 2,787.6 Total $3,797.7 $4,017.6 Other assets Deferred income taxes $105.1 $105.4 Pension 39.0 41.7 Derivative asset 11.8 - Restricted cash 179.3 - Other 349.9 330.3 Total $685.1 $477.4 December 31 December 31 (millions) 2018 2017 Other current liabilities Discounts and rebates $291.3 $267.2 Dividends payable 132.4 118.6 Interest payable 44.5 50.7 Taxes payable, other than income 116.9 129.9 Derivative liabilities 20.1 62.2 Restructuring 73.7 36.0 Contract liability 75.8 79.0 Other 251.4 257.1 Total $1,006.1 $1,000.7 Accumulated other comprehensive loss Unrealized gain (loss) on derivative financial instruments, net of tax $2.0 $(26.4) Unrecognized pension and postretirement benefit expense, net of tax (518.9) (555.8) Cumulative translation, net of tax (1,244.8) (1,061.2) Total $(1,761.7) $(1,643.4) |
DEBT AND INTEREST (Tables)
DEBT AND INTEREST (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
DEBT AND INTEREST | |
Schedule of short-term debt obligations | 2018 2017 Average Average Carrying Interest Carrying Interest (millions) Value Rate Value Rate Short-term debt Commercial paper $165.4 0.18 % $- - % Notes payable 176.8 1.47 % 14.7 2.77 % Long-term debt, current maturities 401.4 549.7 Total $743.6 $564.4 |
Schedule of long-term debt obligations including current maturities | 2018 2017 Stated Effective Stated Effective Maturity Carrying Interest Interest Carrying Interest Interest (millions) by Year Value Rate Rate Value Rate Rate Long-term debt Public and 144A notes (2018 principal amount) Three year 2015 senior notes ($0 million) 2018 $- - % - % $299.9 1.55 % 1.94 % Three year 2016 senior notes ($400 million) 2019 399.7 2.00 % 3.24 % 396.1 2.00 % 2.26 % Five year 2015 senior notes ($300 million) 2020 299.5 2.25 % 2.79 % 299.1 2.25 % 2.79 % Ten year 2011 senior notes ($1.02 billion) 2021 1,017.6 4.35 % 4.43 % 1,016.6 4.35 % 4.45 % Five year 2017 senior notes ($500 million) 2022 496.9 2.38 % 2.55 % 496.3 2.38 % 2.55 % Seven year 2016 senior notes ($400 million) 2023 398.0 3.25 % 3.49 % 397.5 3.25 % 3.49 % Seven year 2016 senior notes (€575 million) 2024 644.1 1.00 % 1.09 % 676.6 1.00 % 1.17 % Ten year 2015 senior notes (€575 million) 2025 646.3 2.63 % 2.94 % 679.4 2.63 % 2.85 % Ten year 2016 senior notes ($750 million) 2026 743.8 2.70 % 2.93 % 742.8 2.70 % 2.93 % Ten year 2017 144A notes ($500 million) 2027 - - % - % 494.7 3.25 % 3.36 % Ten year 2017 senior notes ($500 million) 2027 494.8 3.25 % 3.37 % - - % - % Thirty year 2011 senior notes ($458 million) 2041 451.6 5.50 % 5.56 % 451.3 5.50 % 5.60 % Thirty year 2016 senior notes ($250 million) 2046 246.1 3.70 % 3.76 % 246.0 3.70 % 3.76 % Thirty year 2017 144A notes ($700 million) 2047 - - % - % 607.8 3.95 % 4.14 % Thirty year 2017 senior notes ($700 million) 2047 609.0 3.95 % 4.14 % - - % - % Private notes (2018 principal amount) Series A private placement senior notes ($250 million) 2018 - - % - % 248.5 3.69 % 5.16 % Series B private placement senior notes ($250 million) 2023 249.4 4.32 % 4.36 % 249.3 4.32 % 4.36 % Capital lease obligations and other 6.2 6.1 Total debt 6,703.0 7,308.0 Long-term debt, current maturities (401.4) (549.7) Total long-term debt $6,301.6 $6,758.3 |
Schedule of aggregate annual maturities of long-term debt | (millions) 2019 $ 401 2020 301 2021 1,018 2022 497 2023 648 |
Schedule of interest expense and interest income | (millions) 2018 2017 2016 Interest expense $237.2 $274.6 $285.4 Interest income (14.9) (19.6) (20.8) Interest expense, net $222.3 $255.0 $264.6 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
FAIR VALUE MEASUREMENTS | |
Schedule of the carrying amount and estimated fair value of assets and liabilities measured on recurring basis | December 31, 2018 (millions) Carrying Fair Value Measurements Amount Level 1 Level 2 Level 3 Assets Foreign currency forward contracts $72.3 $- $72.3 $- Liabilities Foreign currency forward contracts 41.1 - 41.1 - Interest rate swap agreements 0.2 - 0.2 - 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 | December 31, 2018 December 31, 2017 Carrying Fair Carrying Fair Amount Value Amount Value Long-term debt, including current maturities $6,703.0 $6,844.7 $7,308.0 $7,716.0 |
DERIVATIVES AND HEDGING TRANS_2
DERIVATIVES AND HEDGING TRANSACTIONS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
DERIVATIVES AND HEDGING TRANSACTIONS | |
Gross fair value of the company's outstanding derivative assets and liabilities | (millions) Asset Derivatives Liability Derivatives December 31 December 31 December 31 December 31 (millions) 2018 2017 2018 2017 Derivatives designated as hedging instruments Foreign currency forward contracts $40.4 $19.6 $10.2 $125.2 Interest rate swap agreements - - 0.2 4.2 Derivatives not designated as hedging instruments Foreign currency forward contracts 31.9 26.2 30.9 27.9 Gross value of derivatives 72.3 45.8 41.3 157.3 Gross amounts offset in the Consolidated Balance Sheet (17.7) (17.0) (17.7) (17.0) Net value of derivatives $54.6 $28.8 $23.6 $140.3 |
Summary of notional values of outstanding derivatives | Notional Values December 31 December 31 (millions) 2018 2017 Foreign currency forward contracts $ 6,226 $ 5,593 Interest rate agreements 400 950 |
Impact on AOCI and earnings from derivative contracts qualified as cash flow hedges | (millions) 2018 2017 2016 Unrealized gain (loss) recognized into AOCI Foreign currency forward contracts AOCI (equity) $144.4 $(173.4) $7.0 Interest rate swap agreements AOCI (equity) - - (9.3) Total 144.4 (173.4) (2.3) Gain (loss) recognized in income Foreign currency forward contracts Cost of sales (7.7) (13.7) 23.0 SG&A 84.1 (157.2) (0.1) Interest expense, net 37.4 24.5 5.8 Subtotal 113.8 (146.4) 28.7 Interest rate swap agreements Interest expense, net (5.5) (7.2) (6.6) Total $108.3 $(153.6) $22.1 |
Impact on earnings from derivative contracts that qualified as fair value hedges | (millions) 2018 2017 2016 Gain (loss) on derivative recognized income Interest rate swap Interest expense, net $4.0 $(0.7) $(1.4) Gain (loss) on hedged item recognized income Interest rate swap Interest expense, net $(4.0) $0.7 $1.4 |
Revaluation gains and losses on euronotes and forward contracts | (millions) 2018 2017 2016 Revaluation gains (losses), net of tax $57.5 $(109.7) $(2.5) |
Impact on earnings from derivative contracts not designated as hedging instruments | (millions) 2018 2017 2016 Gain (loss) recognized in income Foreign currency forward contracts SG&A $25.1 $(38.2) $(6.0) Interest expense, net 5.3 (3.0) (8.4) Total $30.4 $(41.2) $(14.4) |
OTHER COMPREHENSIVE INCOME (L_2
OTHER COMPREHENSIVE INCOME (LOSS) INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 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 | (millions) 2018 2017 2016 Derivative and Hedging Instruments Unrealized gains (losses) on derivative & hedging instruments Amount recognized in AOCI $144.4 $(173.4) $(2.3) (Gains) losses reclassified from AOCI into income Cost of sales 7.7 13.7 (23.0) SG&A (84.1) 157.2 0.1 Interest (income) expense, net (31.9) (17.3) 0.8 (108.3) 153.6 (22.1) Other activity - 0.2 (0.2) Tax impact (7.7) 1.7 7.1 Net of tax $28.4 $(17.9) $(17.5) Pension and Postretirement Benefits Amount recognized in AOCI Current period net actuarial income (loss) and prior service costs $(56.5) $(46.9) $(136.0) Amount reclassified from AOCI into income Amortization of net actuarial loss and prior service costs and benefits 28.4 21.5 32.2 Pension and postretirement benefits changes 59.3 - 54.0 31.2 (25.4) (49.8) Tax impact (13.2) 16.2 9.3 Net of tax $18.0 $(9.2) $(40.5) |
EQUITY COMPENSATION PLANS (Tabl
EQUITY COMPENSATION PLANS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
EQUITY COMPENSATION PLANS | |
Summary of stock option activity and average exercise prices | 2018 2017 2016 Number of Exercise Number of Exercise Number of Exercise Options Price (a) Options Price (a) Options Price (a) Outstanding, beginning of year 11,380,013 $ 95.76 11,910,501 $ 84.22 12,378,372 $ 74.23 Granted 1,202,314 158.23 1,491,893 136.87 1,679,941 117.60 Exercised (1,942,192) 64.63 (1,951,920) 56.00 (2,061,553) 50.33 Canceled (123,502) 127.02 (70,461) 116.44 (86,259) 111.08 Outstanding, end of year 10,516,633 $ 108.28 11,380,013 $ 95.76 11,910,501 $ 84.22 Exercisable, end of year 7,993,297 $ 97.13 8,371,809 $ 84.40 8,720,943 $ 72.35 Vested and expected to vest, end of year 10,365,162 $ 107.77 (a) Represents weighted average price per share. |
Weighted-average grant-date fair value of options granted and significant assumptions used in determining the underlying fair value of each option grant | 2018 2017 2016 Weighted-average grant-date fair value of options granted at market prices $ 37.34 $ 30.34 $ 25.59 Assumptions Risk-free rate of return 2.8 % 2.2 % 2.0 % Expected life 6 years 6 years 6 years Expected volatility 22.5 % 22.7 % 22.9 % Expected dividend yield 1.2 % 1.2 % 1.3 % |
Summary of non-vested PBRSU awards and restricted stock activity | PBRSU Grant Date RSAs and Grant Date Awards Fair Value (a) RSUs Fair Value (a) December 31, 2015 1,444,189 $ 95.59 273,235 $ 102.49 Granted 371,859 112.29 88,437 109.27 Vested / Earned (402,509) 68.64 (96,874) 94.06 Canceled (26,852) 105.09 (10,411) 105.07 December 31, 2016 1,386,687 $ 107.70 254,387 $ 107.95 Granted 323,750 131.71 96,980 125.34 Vested / Earned (312,745) 99.65 (86,622) 102.02 Canceled (34,856) 108.16 (15,343) 109.72 December 31, 2017 1,362,836 $ 115.24 249,402 $ 116.66 Granted 284,104 152.59 109,074 138.69 Vested / Earned (324,561) 103.15 (92,032) 113.03 Canceled (55,026) 114.25 (19,975) 115.05 December 31, 2018 1,267,353 $ 126.75 246,469 $ 127.09 Represents weighted average price per share. |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
INCOME TAXES | |
Income before income taxes | (millions) 2018 2017 2016 United States $728.3 $847.3 $655.7 International 1,076.3 915.1 993.7 Total $1,804.6 $1,762.4 $1,649.4 |
Provision (benefit) for income taxes | (millions) 2018 2017 2016 Federal and state $103.5 $241.8 $224.2 International 175.7 355.1 269.7 Total current 279.2 596.9 493.9 Federal and state 51.8 (331.4) (49.6) International 33.3 (21.7) (41.4) Total deferred 85.1 (353.1) (91.0) Provision for income taxes $364.3 $243.8 $402.9 |
Net deferred tax assets and deferred tax liabilities | December 31 (millions) 2018 2017 Deferred tax assets Other accrued liabilities $130.9 $122.8 Loss carryforwards 217.2 67.3 Share-based compensation 60.5 58.9 Pension and other comprehensive income 145.8 195.2 Other, net 68.5 132.7 Valuation allowance (184.4) (21.3) Total 438.5 555.6 Deferred tax liabilities Property, plant and equipment basis differences (268.5) (178.4) Intangible assets (783.3) (844.0) Other, net (46.2) (63.2) Total (1,098.0) (1,085.6) Net deferred tax liabilities balance $(659.5) $(530.0) |
Reconciliation of the statutory U.S. federal income tax rate to the company's effective income tax rate | 2018 2017 2016 Statutory U.S. rate 21.0 % 35.0 % 35.0 % One-time transition tax 3.7 9.1 - State income taxes, net of federal benefit 1.2 0.4 0.9 Foreign operations (13.5) (7.4) (8.0) Domestic manufacturing deduction - (2.2) (2.0) R&D credit (1.0) (1.0) (1.1) Change in valuation allowance 9.1 0.2 (0.7) Audit settlements and refunds (0.8) (0.1) (0.2) Excess stock benefits (1.6) (2.3) - Change in federal tax rate (deferred taxes) (0.6) (18.2) - Prior year adjustments 2.5 - - Worthless stock deduction - - 0.4 Other, net 0.2 0.3 0.1 Effective income tax rate 20.2 % 13.8 % 24.4 % |
Reconciliation of the beginning and ending amount of gross liability for unrecognized tax benefits | (millions) 2018 2017 2016 Balance at beginning of year $61.5 $75.9 $74.6 Additions based on tax positions related to the current year 3.0 3.2 8.8 Additions for tax positions of prior years 2.0 - 2.1 Reductions for tax positions of prior years (8.7) (4.9) (1.0) Reductions for tax positions due to statute of limitations (5.8) (14.0) (5.5) Settlements (0.8) (10.8) (2.0) Assumed in connection with acquisitions - 10.0 - Foreign currency translation (1.5) 2.1 (1.1) Balance at end of year $49.7 $61.5 $75.9 |
RENTALS AND LEASES (Tables)
RENTALS AND LEASES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
RENTALS AND LEASES | |
Future minimum payments under operating leases with noncancelable terms in excess of one year | As of December 31, 2018, identifiable future minimum payments with non-cancelable terms in excess of one year were: (millions) 2019 $ 172 2020 141 2021 108 2022 72 2023 37 Thereafter 104 Total $ 634 |
RETIREMENT PLANS (Tables)
RETIREMENT PLANS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Pension and Postretirement Plans | |
Financial information related to pension and postretirement health care plans | U.S. International U.S. Postretirement Pension (a) Pension Health Care (millions) 2018 2017 2018 2017 2018 2017 Accumulated Benefit Obligation, end of year $2,189.0 $2,399.5 $1,349.9 $1,434.5 $147.3 $181.3 Projected Benefit Obligation Projected benefit obligation, beginning of year $2,485.1 $2,267.9 $1,537.9 $1,335.6 $181.3 $173.5 Service cost 74.5 70.2 33.2 31.4 2.7 2.6 Interest 83.1 83.4 29.1 28.4 5.6 5.8 Participant contributions - - 3.5 3.5 3.5 8.3 Medicare subsidies received - - - - - 0.5 Curtailments and settlements - 0.1 (22.8) (10.7) - - Plan amendments (40.4) - - - (13.7) 1.8 Actuarial (gain) loss (181.3) 183.1 (42.7) 31.9 (18.4) 9.2 Assumed through acquisitions - - 11.4 24.1 - - Benefits paid (180.0) (119.6) (38.7) (35.8) (13.7) (20.4) Foreign currency translation - - (74.2) 129.5 - - Projected benefit obligation, end of year $2,241.0 $2,485.1 $1,436.7 $1,537.9 $147.3 $181.3 Plan Assets Fair value of plan assets, beginning of year $2,226.4 $1,950.1 $981.1 $821.9 $7.6 $9.6 Actual returns on plan assets (70.7) 310.2 2.6 76.1 (0.2) 1.2 Company contributions 5.7 85.9 42.0 41.0 12.3 17.2 Participant contributions - - 3.5 3.5 - - Acquisitions - - 6.4 12.5 - - Settlements - (0.2) (22.8) (10.7) - - Benefits paid (180.0) (119.6) (38.7) (35.8) (13.7) (20.4) Foreign currency translation - - (48.5) 72.6 - - Fair value of plan assets, end of year $1,981.4 $2,226.4 $925.6 $981.1 $6.0 $7.6 Funded Status, end of year $(259.6) $(258.7) $(511.1) $(556.8) $(141.3) $(173.7) Amounts recognized in Consolidated Balance Sheet: Other assets $- $- $39.0 $41.7 $- $- Other current liabilities (5.9) (5.6) (24.4) (23.0) (5.0) (3.5) Postretirement healthcare and pension benefits (253.7) (253.1) (525.7) (575.5) (136.3) (170.2) Net liability $(259.6) $(258.7) $(511.1) $(556.8) $(141.3) $(173.7) Amounts recognized in Accumulated Other Comprehensive Loss (Income): Unrecognized net actuarial loss (gain) $539.2 $526.9 $368.0 $388.2 $(36.0) $(20.1) Unrecognized net prior service benefits (52.3) (18.7) (6.0) (7.0) (34.4) (40.4) Tax expense (benefit) (194.4) (199.5) (92.7) (98.4) 27.6 25.2 Accumulated other comprehensive loss (income), net of tax $292.5 $308.7 $269.3 $282.8 $(42.8) $(35.3) Change in Accumulated Other Comprehensive Loss (Income): Amortization of net actuarial (gain) loss $(38.9) $(28.7) $(16.5) $(18.5) $1.9 $2.4 Amortization of prior service costs 6.8 6.8 0.9 0.7 19.7 16.7 Current period net actuarial loss (gain) 51.2 22.6 17.9 14.0 (17.8) 8.5 Current period prior service costs - - - - 5.2 1.8 Settlement - - (2.3) (0.9) - - Tax expense (benefit) 5.1 (0.3) 5.7 (9.0) 2.4 (6.9) Pension and Postretirement benefits changes (40.4) - - - (18.9) - Foreign currency translation - - (19.2) 35.6 - - Other comprehensive loss (income) $(16.2) $0.4 $(13.5) $21.9 $(7.5) $22.5 (a) Includes qualified and non-qualified plans |
Estimated amounts in accumulated other comprehensive loss expected to be reclassified to net period cost | Estimated amounts in accumulated other comprehensive loss expected to be reclassified to net period cost during 2019 are as follows: U.S. Post- U.S. International Retirement (millions) Pension (a) Pension Health Care Net actuarial loss (gain) $23.6 $16.4 $(4.0) Net prior service costs (benefits) (11.5) (0.9) (23.2) Total $12.1 $15.5 $(27.2) Includes qualified and non-qualified plans |
Aggregate projected benefit obligation, accumulated benefit obligation and fair value of pension plan assets for plans with accumulated benefit obligations in excess of plan assets | December 31, (millions) 2018 2017 Aggregate projected benefit obligation $3,427.1 $3,636.2 Accumulated benefit obligation 3,308.4 3,476.1 Fair value of plan assets 2,624.3 2,794.0 |
Net periodic pension and postretirement health care benefit costs | U.S. International U.S. Postretirement Pension (a) Pension Health Care (millions) 2018 2017 2016 2018 2017 2016 2018 2017 2016 Service cost $74.5 $70.2 $67.1 $33.2 $31.4 $27.8 $2.7 $2.6 $3.0 Interest cost on benefit obligation 83.1 83.4 81.5 29.1 28.4 31.9 5.6 5.8 7.4 Expected return on plan assets (161.9) (149.9) (143.6) (63.2) (56.3) (52.5) (0.4) (0.5) (0.7) Recognition of net actuarial (gain) loss 39.0 28.7 30.7 17.2 18.5 12.8 (1.9) (2.4) (1.6) Amortization of prior service cost (benefit) (6.8) (6.8) (6.9) (0.9) (0.7) (0.8) (19.7) (16.7) (4.3) Settlements/Curtailments - 0.3 0.5 2.3 0.9 1.8 - - - Total expense (benefit) $27.9 $25.9 $29.3 $17.7 $22.2 $21.0 $(13.7) $(11.2) $3.8 (a) Includes qualified and non-qualified plans |
Plan Assumptions | Plan Assumptions U.S. International U.S. Postretirement Pension (a) Pension Health Care (percent) 2018 2017 2016 2018 2017 2016 2018 2017 2016 Weighted-average actuarial assumptions used to determine benefit obligations as of year end: Discount rate 4.34 % 3.70 % 4.27 % 2.49 % 2.17 % 2.33 % 4.29 % 3.66 % 4.14 % Projected salary increase 4.03 4.03 4.03 2.46 2.46 2.52 Weighted-average actuarial assumptions used to determine net cost: Discount rate 3.70 4.27 4.51 2.29 2.32 2.68 3.66 4.14 4.38 Expected return on plan assets 7.75 7.75 7.75 6.67 6.67 6.71 7.75 7.75 7.75 Projected salary increase 4.03 4.03 4.32 2.67 2.83 2.75 (a) Includes qualified and non-qualified plans |
Estimated future benefits payments | (millions) All Plans 2019 $ 203 2020 223 2021 234 2022 243 2023 238 2024 - 2028 1,233 |
Pension and Postretirement Health Care Benefit Plans | |
Pension and Postretirement Plans | |
Allocation and fair value of plan assets for defined benefit pension and postretirement health care benefit plans | The fair value of the Company’s U.S. plan assets for its defined benefit pension and postretirement health care benefit plans are as follows: Fair Value as of Fair Value as of (millions) December 31, 2018 December 31, 2017 Level 1 Level 2 Total Level 1 Level 2 Total Cash $7.1 $- $7.1 $8.0 $- $8.0 Equity securities: Large cap equity 683.5 - 683.5 869.8 - 869.8 Small cap equity 168.6 - 168.6 198.4 - 198.4 International equity 285.0 - 285.0 340.2 - 340.2 Fixed income: Core fixed income 358.3 - 358.3 390.0 - 390.0 High-yield bonds 107.6 - 107.6 109.9 - 109.9 Emerging markets 39.4 - 39.4 42.9 - 42.9 Insurance company accounts - 0.3 0.3 - 0.3 0.3 Total investments at fair value 1,649.5 0.3 1,649.8 1,959.2 0.3 1,959.5 Investments measured at NAV 337.6 274.5 Total $1,649.5 $0.3 $1,987.4 $1,959.2 $0.3 $2,234.0 The Company had no level 3 assets as part of its U.S. plan assets as of December 31, 2018 or 2017. The allocation of the Company’s U.S. plan assets for its defined benefit pension and postretirement health care benefit plans are as follows: Target Asset Asset Category Allocation Percentage Percentage of Plan Assets December 31 (%) 2018 2017 2018 2017 Cash - % - % - % - % Equity securities: Large cap equity 34 34 34 39 Small cap equity 9 9 9 9 International equity 15 15 14 15 Fixed income: Core fixed income 18 18 19 18 High-yield bonds 5 5 5 5 Emerging markets 2 2 2 2 Other: Real estate 6 6 8 7 Private equity 8 8 7 5 Distressed debt 3 3 2 - Total 100 % 100 % 100 % 100 % |
International | |
Pension and Postretirement Plans | |
Allocation and fair value of plan assets for defined benefit pension and postretirement health care benefit plans | Fair Value as of Fair Value as of (millions) December 31, 2018 December 31, 2017 Level 1 Level 2 Total Level 1 Level 2 Total Cash $7.1 $- $7.1 $8.7 $- $8.7 Equity securities: International equity - 412.1 412.1 - 442.2 442.2 Fixed income: Corporate bonds 7.9 162.1 170.0 8.2 173.0 181.2 Government bonds 12.3 169.2 181.5 12.4 177.6 190.0 Insurance company accounts - 140.5 140.5 - 144.1 144.1 Total investments at fair value 27.3 883.9 911.2 29.3 936.9 966.2 Investments measured at NAV 14.4 14.9 Total $27.3 $883.9 $925.6 $29.3 $936.9 $981.1 The Company had no level 3 assets as part of its international plan assets as of December 31, 2018 or 2017. The allocation of plan assets of the Company’s international plan assets for its defined benefit pension plans are as follows: Percentage Asset Category of Plan Assets December 31 (%) 2018 2017 Cash 1 % 1 % Equity securities: International equity 45 45 Fixed income: Corporate bonds 18 19 Government bonds 20 19 Total fixed income 38 38 Other: Insurance contracts 15 15 Real estate 1 1 Total 100 % 100 % |
REVENUES (Tables)
REVENUES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
REVENUES | |
Schedule of principal activities, separated by reportable segments and geographic region | (millions) 2018 2017 2016 Global Industrial Product and sold equipment $4,626.2 $4,305.3 $4,137.7 Service and lease equipment 660.3 612.7 557.5 Global Institutional Product and sold equipment 4,415.4 4,136.2 3,902.5 Service and lease equipment 683.1 640.0 580.4 Global Energy Product and sold equipment 3,004.4 2,837.5 2,703.2 Service and lease equipment 416.7 392.5 389.7 Other Product and sold equipment 82.6 152.8 160.7 Service and lease equipment 779.5 758.9 720.1 Total Total product and sold equipment $12,128.6 $11,431.8 $10,904.1 Total service and lease equipment 2,539.6 2,404.1 2,247.7 Net sales at public exchange rates by geographic region are as follows: Global Industrial Global Institutional (millions) 2018 2017 2016 2018 2017 2016 United States $2,269.7 $2,087.8 $1,978.1 $3,279.2 $3,107.2 $3,051.0 Europe 1,288.4 1,183.0 1,110.2 1,038.4 928.8 740.9 Asia Pacific 685.8 661.4 635.5 250.4 237.1 233.2 Latin America 474.3 448.0 411.6 165.6 163.6 151.6 Greater China 278.4 267.0 296.1 113.8 102.1 93.1 Canada 148.9 137.4 130.8 191.6 175.3 158.7 Middle East and Africa ("MEA") 141.0 133.4 132.9 59.5 62.1 54.4 Total $5,286.5 $4,918.0 $4,695.2 $5,098.5 $4,776.2 $4,482.9 Global Energy Other (millions) 2018 2017 2016 2018 2017 2016 United States $1,630.1 $1,481.1 $1,373.9 $569.2 $648.2 $631.8 Europe 398.4 404.4 389.3 133.1 119.5 116.6 Asia Pacific 262.7 253.1 257.1 40.2 33.6 33.1 Latin America 219.7 239.3 247.5 46.7 44.8 42.1 Greater China 76.5 70.5 71.6 50.5 45.0 39.0 Canada 335.6 322.3 278.9 11.5 9.4 8.4 MEA 498.1 459.3 474.6 10.9 11.2 9.8 Total $3,421.1 $3,230.0 $3,092.9 $862.1 $911.7 $880.8 |
Schedule of contract liability | December 31 December 31 (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 74.3 76.8 Business combination 1.5 2.2 Contract liability as of end of period $75.8 $79.0 |
OPERATING SEGMENTS AND GEOGRA_2
OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION | |
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 December 31, 2016 2016 Reported Revenue Pension Fixed 2016 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 $4,687.2 $(0.4) $- $(70.3) $274.6 $4,891.1 Global Institutional 4,440.1 (0.5) - - 158.6 4,598.2 Global Energy 3,075.8 - - - 80.0 3,155.8 Other 801.7 - - 70.3 26.4 898.4 Subtotal at fixed currency rates 13,004.8 (0.9) - - 539.6 13,543.5 Effect of foreign currency translation 148.0 (0.1) - - (539.6) (391.7) Consolidated reported GAAP net sales $13,152.8 $(1.0) $- $- $- $13,151.8 Operating Income Global Industrial $720.0 $(0.4) $(4.2) $(0.8) $43.7 $758.3 Global Institutional 950.5 (0.5) (10.2) (9.8) 19.5 949.5 Global Energy 346.7 - (8.0) (1.5) 12.7 349.9 Other 145.2 - (20.4) 12.1 4.7 141.6 Corporate (272.6) - - - (5.2) (277.8) Subtotal at fixed currency rates 1,889.8 (0.9) (42.8) - 75.4 1,921.5 Effect of foreign currency translation 25.2 (0.1) (1.0) - (75.4) (51.3) Consolidated reported GAAP operating income $1,915.0 $(1.0) $(43.8) $- $- $1,870.2 |
Schedule of financial information for each of the entity's reportable segments | Net Sales Operating Income (Loss) (millions) 2018 2017 2016 2018 2017 2016 Global Industrial $5,462.4 $5,106.8 $4,891.1 $768.1 $758.5 $758.3 Global Institutional 5,204.5 4,910.0 4,598.2 1,026.9 979.8 949.5 Global Energy 3,501.8 3,281.7 3,155.8 358.5 336.1 349.9 Other 877.6 931.5 898.4 161.3 142.5 141.6 Corporate - - - (307.1) (213.9) (277.8) Subtotal at fixed currency 15,046.3 14,230.0 13,543.5 2,007.7 2,003.0 1,921.5 Effect of foreign currency translation (378.1) (394.1) (391.7) (60.7) (52.9) (51.3) Consolidated $14,668.2 $13,835.9 $13,151.8 $1,947.0 $1,950.1 $1,870.2 |
Schedule of net sales and long-lived assets at public exchange rates by geographic region | Long-Lived Assets, net (millions) 2018 2017 United States $9,175.4 $8,853.7 Europe 2,538.7 2,623.8 Asia Pacific, excluding Greater China 1,003.4 1,022.5 Latin America 565.8 605.8 MEA 302.1 310.1 Canada 616.8 649.1 Greater China 1,194.6 1,301.0 Total $15,396.8 $15,366.0 |
QUARTERLY FINANCIAL DATA (UNA_2
QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
QUARTERLY FINANCIAL DATA (UNAUDITED) | |
Quarterly financial data | First Second Third Fourth (millions, except per share) Quarter Quarter Quarter Quarter Year 2018 Net sales $3,470.9 $3,689.6 $3,747.2 $3,760.5 $14,668.2 Operating expenses Cost of sales (a) 2,072.3 2,146.1 2,190.7 2,216.8 8,625.9 Selling, general and administrative expenses 1,018.3 1,036.8 964.7 948.8 3,968.6 Special (gains) and charges 26.0 12.1 75.6 13.0 126.7 Operating income 354.3 494.6 516.2 581.9 1,947.0 Other (income) expense (19.4) (19.6) (21.0) (19.9) (79.9) Interest expense, net (a) 56.4 56.3 55.7 53.9 222.3 Income before income taxes 317.3 457.9 481.5 547.9 1,804.6 Provision for income taxes 69.1 104.3 43.2 147.7 364.3 Net income including noncontrolling interest 248.2 353.6 438.3 400.2 1,440.3 Net income attributable to noncontrolling interest 0.9 2.3 2.9 5.1 11.2 Net income attributable to Ecolab $247.3 $351.3 $435.4 $395.1 $1,429.1 Earnings attributable to Ecolab per common share Basic $ 0.86 $ 1.22 $ 1.51 $ 1.37 $ 4.95 Diluted $ 0.84 $ 1.20 $ 1.48 $ 1.35 $ 4.88 Weighted-average common shares outstanding Basic 288.6 288.8 288.8 288.0 288.6 Diluted 292.7 293.3 293.4 292.2 292.8 2017 Net sales $3,162.4 $3,460.0 $3,564.5 $3,649.0 $13,835.9 Operating expenses Cost of sales (a) 1,842.9 2,036.6 2,055.7 2,129.0 8,064.2 Selling, general and administrative expenses 956.1 967.0 939.8 962.4 3,825.3 Special (gains) and charges 6.2 36.8 4.9 (51.6) (3.7) Operating income 357.2 419.6 564.1 609.2 1,950.1 Other (income) expense (16.8) (16.8) (16.9) (16.8) (67.3) Interest expense, net (a) 62.5 59.6 55.1 77.8 255.0 Income before income taxes 311.5 376.8 525.9 548.2 1,762.4 Provision for income taxes 54.2 80.5 129.3 (20.2) 243.8 Net income including noncontrolling interest 257.3 296.3 396.6 568.4 1,518.6 Net income attributable to noncontrolling interest 3.3 1.5 3.4 5.8 14.0 Net income attributable to Ecolab $254.0 $294.8 $393.2 $562.6 $1,504.6 Earnings attributable to Ecolab per common share Basic $ 0.87 $ 1.02 $ 1.36 $ 1.95 $ 5.20 Diluted $ 0.86 $ 1.00 $ 1.34 $ 1.92 $ 5.12 Weighted-average common shares outstanding Basic 290.6 289.8 289.0 289.1 289.6 Diluted 295.0 294.1 293.4 293.6 294.0 Per share amounts do not necessarily sum due to changes in the calculation of shares outstanding for each discrete period and rounding. Gross profit is calculated as net sales minus cost of sales. The Company has conformed prior quarters with current accounting policies. There was no impact to net sales or operating income. Cost of sales includes special charges of $(0.1), $3.6 and $5.8 million in Q2, Q3 and Q4 of 2018, respectively and $1.5, $24.4, $0.3, and $17.8 million in Q1, Q2, Q3 and Q4 of 2017, respectively. Net interest expense includes special charges of $0.3 million in Q4 of 2018 and $21.9 million in Q4 of 2017. |
NATURE OF BUSINESS (Details)
NATURE OF BUSINESS (Details) | Dec. 31, 2018country |
Minimum | |
Nature of business | |
Number of countries in which company delivers comprehensive programs and services | 170 |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES - Valuation Allowance and Reserves (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Accounts Receivable and Allowance for Doubtful Accounts | |||
Allowance for doubtful accounts, returns and credits | $ 17 | $ 15 | $ 14 |
Allowance for Doubtful Accounts | |||
Activity in the allowance for doubtful accounts | |||
Allowance for doubtful accounts, beginning balance | 71.5 | 67.6 | 75.3 |
Bad debt expense | 15.7 | 17.1 | 20.1 |
Write-offs | (23.6) | (15.7) | (24.6) |
Other | (3) | 2.5 | (3.2) |
Allowance for doubtful accounts, ending balance | $ 60.6 | $ 71.5 | $ 67.6 |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES - Property, Plant and Equipement (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Inventory Valuations | |||
LIFO inventory as percentage of consolidated inventory | 37.00% | 39.00% | |
Property, Plant and Equipment | |||
Total depreciation expense | $ 621.3 | $ 585.7 | $ 561 |
Buildings and Leasehold Improvements | Minimum | |||
Property, Plant and Equipment | |||
Estimated useful life | 5 years | ||
Buildings and Leasehold Improvements | Maximum | |||
Property, Plant and Equipment | |||
Estimated useful life | 40 years | ||
Machinery and Equipment | Minimum | |||
Property, Plant and Equipment | |||
Estimated useful life | 3 years | ||
Machinery and Equipment | Maximum | |||
Property, Plant and Equipment | |||
Estimated useful life | 20 years | ||
Merchandising and Customer Equipment | Minimum | |||
Property, Plant and Equipment | |||
Estimated useful life | 3 years | ||
Merchandising and Customer Equipment | Maximum | |||
Property, Plant and Equipment | |||
Estimated useful life | 15 years | ||
Capitalized Software | Minimum | |||
Property, Plant and Equipment | |||
Estimated useful life | 3 years | ||
Capitalized Software | Maximum | |||
Property, Plant and Equipment | |||
Estimated useful life | 7 years |
SIGNIFICANT ACCOUNTING POLICI_6
SIGNIFICANT ACCOUNTING POLICIES - Goodwill and Other Intangible Assets (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Jun. 30, 2018 | |
Changes in the carrying amount of goodwill | |||
Beginning goodwill | $ 7,167.1 | $ 6,383 | |
Current year business combinations | 84 | 599.1 | |
Prior year business combinations | (2.1) | 0.1 | |
Dispositions | (3.4) | ||
Reclassifications | (42.6) | ||
Effect of foreign currency translation | (167.6) | 227.5 | |
Ending goodwill | 7,078 | 7,167.1 | |
Goodwill expected to be tax deductible | 79.2 | ||
Previously Reported | |||
Changes in the carrying amount of goodwill | |||
Beginning goodwill | 6,383 | ||
Nalco | Trademarks | |||
Changes in the carrying amount of goodwill | |||
Carrying value of asset subject to impairment testing | $ 1,200 | ||
Impairment of indefinite life intangible asset | 0 | ||
Global Industrial | |||
Changes in the carrying amount of goodwill | |||
Beginning goodwill | 2,725.3 | 2,513.3 | |
Current year business combinations | 71.6 | 123.4 | |
Prior year business combinations | (1.2) | (0.2) | |
Dispositions | (0.5) | ||
Effect of foreign currency translation | (64.4) | 88.8 | |
Ending goodwill | 2,730.8 | 2,725.3 | |
Global Industrial | Previously Reported | |||
Changes in the carrying amount of goodwill | |||
Beginning goodwill | 2,585 | ||
Global Industrial | Adjustment | |||
Changes in the carrying amount of goodwill | |||
Beginning goodwill | (71.7) | ||
Global Institutional | |||
Changes in the carrying amount of goodwill | |||
Beginning goodwill | 1,027 | 590.7 | |
Current year business combinations | 12.4 | 403.7 | |
Effect of foreign currency translation | (24.1) | 32.6 | |
Ending goodwill | 1,015.3 | 1,027 | |
Global Institutional | Previously Reported | |||
Changes in the carrying amount of goodwill | |||
Beginning goodwill | 590.7 | ||
Global Energy | |||
Changes in the carrying amount of goodwill | |||
Beginning goodwill | 3,203.7 | 3,093.6 | |
Current year business combinations | 8.1 | ||
Prior year business combinations | 0.3 | ||
Dispositions | (2.9) | ||
Effect of foreign currency translation | (74.2) | 101.7 | |
Ending goodwill | 3,126.6 | 3,203.7 | |
Global Energy | Previously Reported | |||
Changes in the carrying amount of goodwill | |||
Beginning goodwill | 3,093.6 | ||
Other | |||
Changes in the carrying amount of goodwill | |||
Beginning goodwill | 211.1 | 185.4 | |
Current year business combinations | 63.9 | ||
Prior year business combinations | (0.9) | ||
Reclassifications | (42.6) | ||
Effect of foreign currency translation | (4.9) | 4.4 | |
Ending goodwill | $ 205.3 | 211.1 | |
Other | Previously Reported | |||
Changes in the carrying amount of goodwill | |||
Beginning goodwill | 113.7 | ||
Other | Adjustment | |||
Changes in the carrying amount of goodwill | |||
Beginning goodwill | $ 71.7 |
SIGNIFICANT ACCOUNTING POLICI_7
SIGNIFICANT ACCOUNTING POLICIES - Other Intangible Assets (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Total amortization expense related to other intangible assets during the last three years and future estimated amortization | |||
Total amortization expense related to other intangible assets | $ 317 | $ 308 | $ 290 |
2,019 | 310 | ||
2,020 | 303 | ||
2,021 | 298 | ||
2,022 | 292 | ||
2,023 | $ 284 | ||
Customer relationships | |||
Other intangible assets | |||
Weighted-average useful life of other amortizable assets | 14 years | ||
Trademarks | |||
Other intangible assets | |||
Weighted-average useful life of other amortizable assets | 14 years | ||
Patents | |||
Other intangible assets | |||
Weighted-average useful life of other amortizable assets | 14 years | ||
Other technology | |||
Other intangible assets | |||
Weighted-average useful life of other amortizable assets | 5 years | ||
Other intangibles | |||
Other intangible assets | |||
Weighted-average useful life of other amortizable assets | 14 years | 14 years |
SIGNIFICANT ACCOUNTING POLICI_8
SIGNIFICANT ACCOUNTING POLICIES - Income Taxes (Details) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
SIGNIFICANT ACCOUNTING POLICIES | |||
Statutory U.S. rate (as a percent) | 21.00% | 35.00% | 35.00% |
SIGNIFICANT ACCOUNTING POLICI_9
SIGNIFICANT ACCOUNTING POLICIES - Earnings Per Common Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-Based Compensation | |||||||||||
Excess tax benefits, share-based compensation | $ 28.1 | $ 39.7 | |||||||||
New accounting guidance, cumulative effect | (43.6) | 1.9 | $ (29.3) | ||||||||
Computations of the basic and diluted earnings attributable to Ecolab per share amounts | |||||||||||
Net income attributable to Ecolab | $ 395.1 | $ 435.4 | $ 351.3 | $ 247.3 | $ 562.6 | $ 393.2 | $ 294.8 | $ 254 | $ 1,429.1 | $ 1,504.6 | $ 1,229 |
Weighted-average common shares outstanding | |||||||||||
Basic (in shares) | 288 | 288.8 | 288.8 | 288.6 | 289.1 | 289 | 289.8 | 290.6 | 288.6 | 289.6 | 292.5 |
Effect of dilutive stock options and units (in shares) | 4.2 | 4.4 | 4.2 | ||||||||
Diluted (in shares) | 292.2 | 293.4 | 293.3 | 292.7 | 293.6 | 293.4 | 294.1 | 295 | 292.8 | 294 | 296.7 |
Earnings attributable to Ecolab per common share | |||||||||||
Basic (in dollars per share) | $ 1.37 | $ 1.51 | $ 1.22 | $ 0.86 | $ 1.95 | $ 1.36 | $ 1.02 | $ 0.87 | $ 4.95 | $ 5.20 | $ 4.20 |
Diluted (in dollars per share) | $ 1.35 | $ 1.48 | $ 1.20 | $ 0.84 | $ 1.92 | $ 1.34 | $ 1 | $ 0.86 | $ 4.88 | $ 5.12 | $ 4.14 |
Anti-dilutive stock options, units and awards excluded from computation of earnings per share (in shares) | 2.9 | 3.4 | 3.6 |
SIGNIFICANT ACCOUNTING POLIC_10
SIGNIFICANT ACCOUNTING POLICIES - New Accounting Pronouncements (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
Jan. 31, 2016 | Mar. 31, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
New Accounting Pronouncements | |||||
New accounting guidance, cumulative effect | $ (43.6) | $ 1.9 | $ (29.3) | ||
Revenue Standard Adoption | |||||
New Accounting Pronouncements | |||||
New accounting guidance, cumulative effect | $ (29.3) | ||||
Accounting Standards Update 2016-16 | |||||
New Accounting Pronouncements | |||||
New accounting guidance, cumulative effect | $ (43.6) |
SIGNIFICANT ACCOUNTING POLIC_11
SIGNIFICANT ACCOUNTING POLICIES - Revenue Recognition and Pension Standards (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Net sales | $ 3,760.5 | $ 3,747.2 | $ 3,689.6 | $ 3,470.9 | $ 3,649 | $ 3,564.5 | $ 3,460 | $ 3,162.4 | $ 14,668.2 | $ 13,835.9 | $ 13,151.8 |
Cost of sales (including special charges) | 2,216.8 | 2,190.7 | 2,146.1 | 2,072.3 | 2,129 | 2,055.7 | 2,036.6 | 1,842.9 | 8,625.9 | 8,064.2 | 7,533.9 |
Selling, general and administrative expenses | 948.8 | 964.7 | 1,036.8 | 1,018.3 | 962.4 | 939.8 | 967 | 956.1 | 3,968.6 | 3,825.3 | 3,708.2 |
Special (gains) and charges | 13 | 75.6 | 12.1 | 26 | (51.6) | 4.9 | 36.8 | 6.2 | 126.7 | (3.7) | 39.5 |
Operating income | 581.9 | 516.2 | 494.6 | 354.3 | 609.2 | 564.1 | 419.6 | 357.2 | 1,947 | 1,950.1 | 1,870.2 |
Other (income) expense | (19.9) | (21) | (19.6) | (19.4) | (16.8) | (16.9) | (16.8) | (16.8) | (79.9) | (67.3) | (43.8) |
Interest expense, net | 53.9 | 55.7 | 56.3 | 56.4 | 77.8 | 55.1 | 59.6 | 62.5 | 222.3 | 255 | 264.6 |
Income before income taxes | 547.9 | 481.5 | 457.9 | 317.3 | 548.2 | 525.9 | 376.8 | 311.5 | 1,804.6 | 1,762.4 | 1,649.4 |
Provision for income taxes | 147.7 | 43.2 | 104.3 | 69.1 | (20.2) | 129.3 | 80.5 | 54.2 | 364.3 | 243.8 | 402.9 |
Net income including noncontrolling interest | 400.2 | 438.3 | 353.6 | 248.2 | 568.4 | 396.6 | 296.3 | 257.3 | 1,440.3 | 1,518.6 | 1,246.5 |
Net income attributable to noncontrolling interest | 5.1 | 2.9 | 2.3 | 0.9 | 5.8 | 3.4 | 1.5 | 3.3 | 11.2 | 14 | 17.5 |
Net income attributable to Ecolab | $ 395.1 | $ 435.4 | $ 351.3 | $ 247.3 | $ 562.6 | $ 393.2 | $ 294.8 | $ 254 | $ 1,429.1 | $ 1,504.6 | $ 1,229 |
Earnings attributable to Ecolab per common share | |||||||||||
Basic (in dollars per share) | $ 1.37 | $ 1.51 | $ 1.22 | $ 0.86 | $ 1.95 | $ 1.36 | $ 1.02 | $ 0.87 | $ 4.95 | $ 5.20 | $ 4.20 |
Diluted (in dollars per share) | $ 1.35 | $ 1.48 | $ 1.20 | $ 0.84 | $ 1.92 | $ 1.34 | $ 1 | $ 0.86 | $ 4.88 | $ 5.12 | $ 4.14 |
Cost of sales | |||||||||||
Special (gains) and charges | $ 5.8 | $ 3.6 | $ (0.1) | $ 17.8 | $ 0.3 | $ 24.4 | $ 1.5 | $ 9.3 | $ 44 | $ 66 | |
Product and sold equipment | |||||||||||
Net sales | 12,128.6 | 11,431.8 | 10,904.1 | ||||||||
Cost of sales (including special charges) | 7,078.5 | 6,576.9 | 6,153.3 | ||||||||
Product and sold equipment | Cost of sales | |||||||||||
Special (gains) and charges | 9.3 | 44 | 66 | ||||||||
Service and lease equipment | |||||||||||
Net sales | 2,539.6 | 2,404.1 | 2,247.7 | ||||||||
Cost of sales (including special charges) | $ 1,547.4 | 1,487.3 | 1,380.6 | ||||||||
Previously Reported | |||||||||||
Net sales | 13,838.3 | 13,152.8 | |||||||||
Net sales | 13,838.3 | 13,152.8 | |||||||||
Cost of sales (including special charges) | 7,405.1 | 6,898.9 | |||||||||
Selling, general and administrative expenses | 4,417.1 | 4,299.4 | |||||||||
Special (gains) and charges | (3.7) | 39.5 | |||||||||
Operating income | 2,019.8 | 1,915 | |||||||||
Interest expense, net | 255 | 264.6 | |||||||||
Income before income taxes | 1,764.8 | 1,650.4 | |||||||||
Provision for income taxes | 242.4 | 403.3 | |||||||||
Net income including noncontrolling interest | 1,522.4 | 1,247.1 | |||||||||
Net income attributable to noncontrolling interest | 14 | 17.5 | |||||||||
Net income attributable to Ecolab | $ 1,508.4 | $ 1,229.6 | |||||||||
Earnings attributable to Ecolab per common share | |||||||||||
Basic (in dollars per share) | $ 5.21 | $ 4.20 | |||||||||
Diluted (in dollars per share) | $ 5.13 | $ 4.14 | |||||||||
Revenue Standard Adoption | Adjustment | |||||||||||
Net sales | $ (2.4) | $ (1) | |||||||||
Net sales | (13,838.3) | (13,152.8) | |||||||||
Cost of sales (including special charges) | 654.6 | 629.8 | |||||||||
Cost of sales (including special charges) | (7,405.1) | (6,898.9) | |||||||||
Selling, general and administrative expenses | (654.6) | (629.8) | |||||||||
Operating income | (2.4) | (1) | |||||||||
Income before income taxes | (2.4) | (1) | |||||||||
Provision for income taxes | 1.4 | (0.4) | |||||||||
Net income including noncontrolling interest | (3.8) | (0.6) | |||||||||
Net income attributable to Ecolab | $ (3.8) | (0.6) | |||||||||
Earnings attributable to Ecolab per common share | |||||||||||
Basic (in dollars per share) | $ (0.01) | ||||||||||
Diluted (in dollars per share) | $ (0.01) | ||||||||||
Revenue Standard Adoption | Adjustment | Product and sold equipment | |||||||||||
Net sales | $ 11,431.8 | 10,904.1 | |||||||||
Cost of sales (including special charges) | 6,573.3 | 6,148.8 | |||||||||
Revenue Standard Adoption | Adjustment | Service and lease equipment | |||||||||||
Net sales | 2,404.1 | 2,247.7 | |||||||||
Cost of sales (including special charges) | 1,486.4 | 1,379.9 | |||||||||
Pension Standard Adoption | Adjustment | |||||||||||
Cost of sales (including special charges) | 4.5 | 5.2 | |||||||||
Selling, general and administrative expenses | 62.8 | 38.6 | |||||||||
Operating income | (67.3) | (43.8) | |||||||||
Other (income) expense | (67.3) | (43.8) | |||||||||
Pension Standard Adoption | Adjustment | Product and sold equipment | |||||||||||
Cost of sales (including special charges) | 3.6 | 4.5 | |||||||||
Pension Standard Adoption | Adjustment | Service and lease equipment | |||||||||||
Cost of sales (including special charges) | $ 0.9 | $ 0.7 |
SIGNIFICANT ACCOUNTING POLIC_12
SIGNIFICANT ACCOUNTING POLICIES - Revenue Standard Impact on Balance Sheet (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets | ||||
Accounts receivable, net | $ 2,662.5 | $ 2,571.4 | ||
Inventories | 1,546.4 | 1,446.5 | ||
Total current assets | 4,677.7 | 4,594.3 | ||
Other assets | 685.1 | 477.4 | ||
Total assets | 20,074.5 | 19,963.5 | ||
Current liabilities | ||||
Other current liabilities | 1,006.1 | 1,000.7 | ||
Total current liabilities | 3,685.6 | 3,475.2 | ||
Deferred income taxes | 764.6 | 635.4 | ||
Total liabilities | 12,020.9 | 12,309.7 | ||
Equity | ||||
Retained earnings | 8,909.5 | 8,011.6 | ||
Accumulated other comprehensive loss | (1,761.7) | (1,643.4) | ||
Total Ecolab shareholders' equity | 8,003.2 | 7,583.6 | ||
Total equity | 8,053.6 | 7,653.8 | $ 6,941 | $ 6,980.4 |
Total liabilities and equity | $ 20,074.5 | 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 |
SIGNIFICANT ACCOUNTING POLIC_13
SIGNIFICANT ACCOUNTING POLICIES - Revenue and Restricted Cash Standards Impact on Cash Flows (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
OPERATING ACTIVITIES | |||||||||||
Net income including noncontrolling interest | $ 400.2 | $ 438.3 | $ 353.6 | $ 248.2 | $ 568.4 | $ 396.6 | $ 296.3 | $ 257.3 | $ 1,440.3 | $ 1,518.6 | $ 1,246.5 |
Adjustments to reconcile net income to cash provided by operating activities: | |||||||||||
Deferred income taxes | 85.1 | (353.5) | (90.6) | ||||||||
Increase (Decrease) in Operating Capital [Abstract] | |||||||||||
Accounts receivable | (164.1) | (91.5) | 0.9 | ||||||||
Other liabilities | (47.4) | 147.3 | 99.9 | ||||||||
Cash provided by operating activities | 2,277.7 | 2,091.3 | 1,939.7 | ||||||||
INVESTING ACTIVITIES | |||||||||||
Cash used for investing activities | (1,030) | (1,727) | (773.6) | ||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 7.6 | (10.6) | (10.3) | ||||||||
Increase (decrease) in cash, cash equivalents and restricted cash | 82.6 | (169) | 287.6 | ||||||||
Cash, cash equivalents and restricted cash, beginning of period | 211.4 | 380.4 | 211.4 | 380.4 | 92.8 | ||||||
Cash, cash equivalents and restricted cash, end of period | $ 294 | 211.4 | 294 | 211.4 | 380.4 | ||||||
Previously Reported | |||||||||||
OPERATING ACTIVITIES | |||||||||||
Net income including noncontrolling interest | 1,522.4 | 1,247.1 | |||||||||
Adjustments to reconcile net income to cash provided by operating activities: | |||||||||||
Deferred income taxes | (354.5) | (90.6) | |||||||||
Increase (Decrease) in Operating Capital [Abstract] | |||||||||||
Accounts receivable | (91.8) | 0.9 | |||||||||
Other liabilities | 144.8 | 99.3 | |||||||||
Cash provided by operating activities | 2,091.3 | 1,939.7 | |||||||||
INVESTING ACTIVITIES | |||||||||||
Restricted cash activity | 53.8 | (55.9) | |||||||||
Cash used for investing activities | (1,673.2) | (829.5) | |||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (11.4) | (7.4) | |||||||||
Increase (decrease) in cash, cash equivalents and restricted cash | (116) | 234.6 | |||||||||
Cash, cash equivalents and restricted cash, beginning of period | $ 211.4 | 327.4 | $ 211.4 | 327.4 | 92.8 | ||||||
Cash, cash equivalents and restricted cash, end of period | $ 211.4 | 211.4 | 327.4 | ||||||||
Adjustment | Restricted Cash Standard Adoption | |||||||||||
INVESTING ACTIVITIES | |||||||||||
Restricted cash activity | (53.8) | 55.9 | |||||||||
Cash used for investing activities | (53.8) | 55.9 | |||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 0.8 | (2.9) | |||||||||
Increase (decrease) in cash, cash equivalents and restricted cash | (53) | 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 | (3.8) | (0.6) | |||||||||
Adjustments to reconcile net income to cash provided by operating activities: | |||||||||||
Deferred income taxes | 1 | ||||||||||
Increase (Decrease) in Operating Capital [Abstract] | |||||||||||
Accounts receivable | 0.3 | ||||||||||
Other liabilities | $ 2.5 | $ 0.6 |
SPECIAL (GAINS) AND CHARGES - C
SPECIAL (GAINS) AND CHARGES - Charges Reported on Statement of Income (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Special (gains) and charges | |||||||||||
Restructuring activities | $ 44.5 | ||||||||||
Gain on sale of business | (50.6) | $ (0.5) | |||||||||
Energy related charges | 0 | 62.6 | |||||||||
Subtotal | $ 13 | $ 75.6 | $ 12.1 | $ 26 | $ (51.6) | $ 4.9 | $ 36.8 | $ 6.2 | $ 126.7 | (3.7) | 39.5 |
Total special (gains) and charges | 136.3 | 62.2 | 105.5 | ||||||||
Cost of sales | |||||||||||
Special (gains) and charges | |||||||||||
Restructuring activities | 12.1 | 4.6 | (0.4) | ||||||||
Acquisition and integration activities | (0.6) | 13.2 | |||||||||
Energy related charges | (2.2) | 26.2 | 3.8 | ||||||||
Other special gains and charges | 62.6 | ||||||||||
Subtotal | 5.8 | $ 3.6 | $ (0.1) | 17.8 | $ 0.3 | $ 24.4 | $ 1.5 | 9.3 | 44 | 66 | |
Special (gains) and charges | |||||||||||
Special (gains) and charges | |||||||||||
Restructuring activities | 89.4 | 39.9 | (8.7) | ||||||||
Acquisition and integration activities | 8.8 | 15.4 | 8.6 | ||||||||
Gain on sale of business | (46.1) | ||||||||||
Energy related charges | 14.2 | ||||||||||
Venezuela related gain | (11.5) | (7.8) | |||||||||
Other special gains and charges | 28.5 | (1.4) | 33.2 | ||||||||
Inventory costs | (2.2) | ||||||||||
Subtotal | 126.7 | (3.7) | 39.5 | ||||||||
Operating income subtotal | |||||||||||
Special (gains) and charges | |||||||||||
Subtotal | 136 | 40.3 | $ 105.5 | ||||||||
Interest expense | |||||||||||
Special (gains) and charges | |||||||||||
Subtotal | $ 0.3 | $ 21.9 | $ 0.3 | $ 21.9 |
SPECIAL (GAINS) AND CHARGES - R
SPECIAL (GAINS) AND CHARGES - Restructuring and Non-Restructuring Activity (Details) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | ||
Nov. 30, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Restructuring | ||||
Recorded expense (income) and accrual | $ 104.6 | |||
Net cash payments | (35.2) | |||
Non-cash charges | (5) | |||
Effect of foreign currency translation | (0.5) | |||
Restructuring liability | 63.9 | |||
Other restructuring information | ||||
Restructuring charges incurred, pre-tax | $ 44.5 | |||
Restructuring charges incurred, after tax | 32.3 | |||
Interest expense, special charges | 0.3 | |||
Interest expense, special charges, after tax | 0.2 | |||
Non-restructuring Special (Gains) and Charges | ||||
Energy related charges, before tax | 0 | $ 62.6 | ||
Energy related charges, after tax | 40.7 | |||
Property, Plant and Equipment, Net | 3,836 | 3,707.1 | ||
Fixed asset impairment and contract termination costs, pre tax | 24.8 | |||
Fixed asset impairment and contract termination costs, after tax | 19 | |||
Fixed asset impairment and litigation related charges and settlements, pre tax | 37 | |||
Fixed asset impairment and litigation related charges and settlements, after tax | 22.7 | |||
Debt extinguishment charges | 21.9 | |||
Debt extinguishment charges, net of tax | 13.6 | |||
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Equipment Care Business | ||||
Non-restructuring Special (Gains) and Charges | ||||
Gain (loss) on sale of business, before tax | $ 46.1 | 46.1 | ||
Gain (loss) on sale of business, net of tax | $ 12.4 | 12.4 | ||
Special (gains) and charges | ||||
Other restructuring information | ||||
Restructuring charges incurred, pre-tax | 89.4 | 39.9 | (8.7) | |
Business combination advisory and legal fees, pre tax | 8.8 | 15.4 | 8.6 | |
Other special gains and charges | 28.5 | (1.4) | 33.2 | |
Other special gains and charges, after-tax | 21.5 | |||
Other, Ecolab Foundation, pre-tax | 25 | |||
Other, Ecolab Foundation, after tax | 18.9 | |||
Non-restructuring Special (Gains) and Charges | ||||
Foreign currency translation (charges) recovery associated with remeasurement and deconsolidation, before tax | 11.5 | 7.8 | ||
Energy related charges, before tax | 14.2 | |||
Inventory cost alignment, before tax | 2.2 | |||
Inventory cost alignment, after tax | 1.7 | |||
Cost of sales | ||||
Other restructuring information | ||||
Restructuring charges incurred, pre-tax | 12.1 | 4.6 | (0.4) | |
Business combination advisory and legal fees, pre tax | (0.6) | 13.2 | ||
Other special gains and charges | 62.6 | |||
Non-restructuring Special (Gains) and Charges | ||||
Energy related charges, before tax | (2.2) | 26.2 | 3.8 | |
Fixed asset impairment and related inventory charges, before tax | 13.2 | |||
Fixed asset impairment and related inventory charges, after tax | 8.6 | |||
VENEZUELA | ||||
Non-restructuring Special (Gains) and Charges | ||||
Foreign currency translation (charges) recovery associated with remeasurement and deconsolidation, before tax | 0 | 11.5 | 7.8 | |
Foreign currency translation (charges) recovery associated with remeasurement and deconsolidation, after tax | 7.2 | 4.9 | ||
Swisher | ||||
Other restructuring information | ||||
Business combination advisory and legal fees, pre tax | 8.6 | |||
Business combination advisory and legal fees, after tax | 5.4 | |||
Anios and Swisher | Special (gains) and charges | ||||
Other restructuring information | ||||
Business combination advisory and legal fees, pre tax | 8.8 | |||
Business combination advisory and legal fees, after tax | 6.1 | |||
Non-restructuring Special (Gains) and Charges | ||||
Business combination and integration related costs, pre tax | 15.4 | |||
Business combination and integration related costs, after tax | 9.9 | |||
Employee termination costs | ||||
Restructuring | ||||
Recorded expense (income) and accrual | 94.1 | |||
Net cash payments | (32.8) | |||
Effect of foreign currency translation | (0.5) | |||
Restructuring liability | 60.8 | |||
Asset disposals | ||||
Restructuring | ||||
Recorded expense (income) and accrual | 5 | |||
Non-cash charges | (5) | |||
Other | ||||
Restructuring | ||||
Recorded expense (income) and accrual | 5.5 | |||
Net cash payments | (2.4) | |||
Restructuring liability | 3.1 | |||
2018 Restructuring Plan | ||||
Restructuring | ||||
Recorded expense (income) and accrual | 104.6 | |||
Restructuring liability | 63.9 | |||
Other restructuring information | ||||
Restructuring charge expected to be incurred, pre-tax | 260 | |||
Restructuring charge expected to be incurred, after tax | 190 | |||
Restructuring charges, after tax | 79.6 | |||
Prior Year Plans | ||||
Restructuring | ||||
Cash payments | (22.7) | |||
Restructuring liability | 14.9 | $ 41.5 | ||
Other restructuring information | ||||
Restructuring net gain | 3.1 | 9.1 | ||
Restructuring net gain, net of tax | 2.4 | $ 10.8 | ||
Cash payments | $ 22.7 |
ACQUISITIONS AND DISPOSITIONS -
ACQUISITIONS AND DISPOSITIONS - Acquisition Summary (Details) € in Millions, $ in Millions | Feb. 01, 2017EUR (€) | Dec. 31, 2018EUR (€) | Dec. 31, 2018USD ($) | Dec. 31, 2017EUR (€) | Dec. 31, 2017USD ($) | Dec. 31, 2016EUR (€) | Dec. 31, 2016USD ($) | Dec. 31, 2017USD ($) |
Identifiable intangible assets | ||||||||
Goodwill expected to be tax deductible | $ | $ 79.2 | |||||||
Cost of sales | ||||||||
Acquisitions and Dispositions | ||||||||
Acquisition and integration activities | $ | $ (0.6) | $ 13.2 | ||||||
Anios | ||||||||
Acquisitions and Dispositions | ||||||||
Total consideration transferred | € 798.3 | |||||||
Pre-acquisition annual sales | € 245 | |||||||
Increase (decrease) in restricted cash | 50 | |||||||
Components of the aggregate purchase prices of the completed acquisitions | ||||||||
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 | |||||||
Accounts receivable | 64.8 | |||||||
Property, plant and equipment | 24.7 | |||||||
Inventory | 29.1 | |||||||
Deferred tax liabilities | 102.3 | |||||||
Current liabilities | € 62.5 | |||||||
Other Acquisitions | ||||||||
Acquisitions and Dispositions | ||||||||
Pre-acquisition annual sales | $ | $ 135 | |||||||
Components of the aggregate purchase prices of the completed acquisitions | ||||||||
Tangible Assets | € 30.1 | € 29.8 | 46.9 | |||||
Identifiable intangible assets | ||||||||
Customer relationships | 101.5 | 67 | 2.6 | |||||
Trademarks | 3.9 | 2.5 | ||||||
Non-compete agreements | 2.6 | 0.2 | ||||||
Other technology | 6.5 | 7.6 | 1.1 | |||||
Total assets acquired | 114.5 | 77.3 | 3.7 | |||||
Goodwill | 81.9 | 87.4 | 7.3 | |||||
Total aggregate purchase price | 226.5 | 194.5 | 57.9 | |||||
Acquisition related liabilities and contingent consideration | (1.5) | 5.6 | 27.1 | |||||
Net consideration transferred to sellers | € 225 | € 200.1 | € 85 | |||||
Weighted average useful lives of identifiable intangible assets acquired | 13 years | 13 years | 12 years | 12 years | 4 years | 4 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) - USD ($) $ in Millions | 1 Months Ended | 2 Months Ended | 3 Months Ended | 12 Months Ended | |||||||||
Nov. 30, 2017 | Feb. 21, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Dispositions | |||||||||||||
Net sales | $ 3,760.5 | $ 3,747.2 | $ 3,689.6 | $ 3,470.9 | $ 3,649 | $ 3,564.5 | $ 3,460 | $ 3,162.4 | $ 14,668.2 | $ 13,835.9 | $ 13,151.8 | ||
Equipment Care Business | Disposal Group, Disposed of by Sale, Not Discontinued Operations | |||||||||||||
Dispositions | |||||||||||||
Total consideration received | $ 132.6 | ||||||||||||
Note receivable | 15 | ||||||||||||
Equity interests | 5 | ||||||||||||
Cash received from sale of business | 118.8 | ||||||||||||
Gain (loss) on sale of investment | 46.1 | 46.1 | |||||||||||
Gain (loss) on sale of business, net of tax | $ 12.4 | $ 12.4 | |||||||||||
Net sales | $ 180 | ||||||||||||
Upstream Business | Disposal Group, Disposed of by Sale, Not Discontinued Operations | Forecast | |||||||||||||
Dispositions | |||||||||||||
Shareholder ownership percentage of stock upon completion of spin-off plan | 100.00% |
BALANCE SHEET INFORMATION (Deta
BALANCE SHEET INFORMATION (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Accounts receivable, net | ||
Accounts receivable | $ 2,723.1 | $ 2,642.9 |
Allowance for doubtful accounts | (60.6) | (71.5) |
Total | 2,662.5 | 2,571.4 |
Inventories | ||
Finished goods | 1,016.9 | 974.9 |
Raw materials and parts | 525.6 | 438.7 |
Inventories at FIFO cost | 1,542.5 | 1,413.6 |
FIFO cost to LIFO cost difference | 3.9 | 32.9 |
Total | 1,546.4 | 1,446.5 |
Other current assets | ||
Prepaid assets | 132.1 | 153.5 |
Taxes receivable | 144.2 | 129.2 |
Derivative assets | 42.8 | 28.8 |
Other current assets | 35 | 53.5 |
Total | 354.1 | 365 |
Property, plant and equipment, net | ||
Land | 214.5 | 224.1 |
Buildings and leasehold improvements | 1,279.4 | 1,207.4 |
Machinery and equipment | 2,313.7 | 2,280.9 |
Merchandising and customer equipment | 2,565.5 | 2,399.4 |
Capitalized software | 666.2 | 585.8 |
Construction in progress | 400.2 | 438.7 |
Property, plant and equipment, gross | 7,439.5 | 7,136.3 |
Accumulated depreciation | (3,603.5) | (3,429.2) |
Total | 3,836 | 3,707.1 |
Intangible assets subject to amortization: | ||
Other intangible assets, gross | 4,747.2 | 4,696.2 |
Accumulated amortization | (2,179.5) | (1,908.6) |
Net intangible assets subject to amortization | 2,567.7 | 2,787.6 |
Total | 3,797.7 | 4,017.6 |
Other assets | ||
Deferred income taxes | 105.1 | 105.4 |
Pension | 39 | 41.7 |
Derivative assets | 11.8 | |
Restricted cash | 179.3 | |
Other | 349.9 | 330.3 |
Total | 685.1 | 477.4 |
Other current liabilities | ||
Discounts and rebates | 291.3 | 267.2 |
Dividends payable | 132.4 | 118.6 |
Interest payable | 44.5 | 50.7 |
Taxes payable, other than income | 116.9 | 129.9 |
Derivative liabilities | 20.1 | 62.2 |
Restructuring | 73.7 | 36 |
Contract liability | 75.8 | 79 |
Other | 251.4 | 257.1 |
Total | 1,006.1 | 1,000.7 |
Accumulated other comprehensive loss | ||
Unrealized gain (loss) on derivative financial instruments, net of tax | 2 | (26.4) |
Unrecognized pension and postretirement benefit expense, net of tax | (518.9) | (555.8) |
Cumulative translation, net of tax | (1,244.8) | (1,061.2) |
Total | (1,761.7) | (1,643.4) |
Customer relationships | ||
Intangible assets subject to amortization: | ||
Other intangible assets, gross | 3,649.3 | 3,620.3 |
Accumulated amortization | (1,604) | (1,403.8) |
Trademarks | ||
Intangible assets subject to amortization: | ||
Other intangible assets, gross | 384.9 | 380.6 |
Accumulated amortization | (175.2) | (147.6) |
Patents | ||
Intangible assets subject to amortization: | ||
Other intangible assets, gross | 470.2 | 462.7 |
Accumulated amortization | (207.3) | (187.9) |
Other technology | ||
Intangible assets subject to amortization: | ||
Other intangible assets, gross | 242.8 | 232.6 |
Accumulated amortization | (193) | (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 | Dec. 31, 2018EUR (€) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Nov. 30, 2017USD ($) |
Components of the company's debt obligations | ||||
Long-term debt, current maturities | $ 401.4 | $ 549.7 | ||
Short-term debt including current maturities of long-term debt | 743.6 | 564.4 | ||
Amount outstanding under the credit agreement | 0 | 0 | ||
Commercial paper. | ||||
Components of the company's debt obligations | ||||
Short-term debt | 165.4 | $ 0 | ||
Maximum borrowing capacity, commercial paper | $ 2,000 | |||
Average interest rate (as a percent) | 0.18% | 0.18% | 0.00% | |
U.S. commercial paper program | ||||
Components of the company's debt obligations | ||||
Maximum borrowing capacity, commercial paper | $ 2,000 | |||
Outstanding commercial paper | 24 | |||
European commercial paper | ||||
Components of the company's debt obligations | ||||
Maximum borrowing capacity, commercial paper | 2,000 | |||
Outstanding commercial paper | € 125 | 141.4 | ||
Notes payable | ||||
Components of the company's debt obligations | ||||
Short-term debt | $ 176.8 | $ 14.7 | ||
Average interest rate (as a percent) | 1.47% | 1.47% | 2.77% | |
Remaining capacity | $ 575 | $ 643 | ||
Multi-Currency Revolving Credit Facility | ||||
Components of the company's debt obligations | ||||
Maximum borrowing capacity under the credit agreement | $ 2,000 |
DEBT AND INTEREST - Other Debt
DEBT AND INTEREST - Other Debt Information (Details) € in Millions, $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2017USD ($) | Nov. 30, 2017USD ($) | Aug. 31, 2017USD ($) | Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2018EUR (€) | Dec. 31, 2018USD ($) | |
Debt instrument | ||||||||||||||||
CARRYING VALUE | $ 7,308 | $ 7,308 | $ 7,308 | $ 6,703 | ||||||||||||
Long-term debt, current maturities | (549.7) | (549.7) | (549.7) | (401.4) | ||||||||||||
Long-term debt | 6,758.3 | 6,758.3 | 6,758.3 | 6,301.6 | ||||||||||||
Aggregate annual maturities of long-term debt | ||||||||||||||||
2,019 | 401 | |||||||||||||||
2,020 | 301 | |||||||||||||||
2,021 | 1,018 | |||||||||||||||
2,022 | 497 | |||||||||||||||
2,023 | 648 | |||||||||||||||
Interest | ||||||||||||||||
Interest expense | $ 237.2 | 274.6 | $ 285.4 | |||||||||||||
Interest income | (14.9) | (19.6) | (20.8) | |||||||||||||
Interest expense, net | $ 53.9 | $ 55.7 | $ 56.3 | $ 56.4 | 77.8 | $ 55.1 | $ 59.6 | $ 62.5 | $ 222.3 | 255 | 264.6 | |||||
Debt extinguishment charges | 21.9 | |||||||||||||||
Debt extinguishment charges, after tax | 13.6 | |||||||||||||||
Private Notes | ||||||||||||||||
Debt instrument | ||||||||||||||||
Principal outstanding payable at time of prepayment of notes (as a percent) | 100.00% | |||||||||||||||
Ten year 2011 senior notes | ||||||||||||||||
Debt instrument | ||||||||||||||||
CARRYING VALUE | $ 1,016.6 | $ 1,016.6 | $ 1,016.6 | 1,017.6 | ||||||||||||
Aggregate principal amount | $ 1,020 | |||||||||||||||
AVERAGE INTEREST RATE (as a percent) | 4.35% | 4.35% | 4.35% | 4.35% | 4.35% | |||||||||||
EFFECTIVE INTEREST RATE (as a percent) | 4.45% | 4.45% | 4.45% | 4.43% | 4.43% | |||||||||||
Debt instrument, term | 10 years | |||||||||||||||
Interest rate (as a percent) | 4.35% | 4.35% | 4.35% | |||||||||||||
Debt extinguishment amount | $ 230 | |||||||||||||||
Interest | ||||||||||||||||
Debt extinguishment charges | 15.7 | |||||||||||||||
Thirty year 2011 senior notes | ||||||||||||||||
Debt instrument | ||||||||||||||||
CARRYING VALUE | $ 451.3 | $ 451.3 | $ 451.3 | $ 451.6 | ||||||||||||
Aggregate principal amount | $ 458 | |||||||||||||||
AVERAGE INTEREST RATE (as a percent) | 5.50% | 5.50% | 5.50% | 5.50% | 5.50% | |||||||||||
EFFECTIVE INTEREST RATE (as a percent) | 5.60% | 5.60% | 5.60% | 5.56% | 5.56% | |||||||||||
Debt instrument, term | 30 years | |||||||||||||||
Value of notes tendered in an exchange offering | $ 292 | |||||||||||||||
Five year 2017 senior notes | ||||||||||||||||
Debt instrument | ||||||||||||||||
CARRYING VALUE | $ 496.3 | $ 496.3 | $ 496.3 | $ 496.9 | ||||||||||||
Aggregate principal amount | $ 500 | $ 500 | ||||||||||||||
AVERAGE INTEREST RATE (as a percent) | 2.38% | 2.38% | 2.38% | 2.38% | 2.38% | |||||||||||
EFFECTIVE INTEREST RATE (as a percent) | 2.55% | 2.55% | 2.55% | 2.55% | 2.55% | |||||||||||
Debt instrument, term | 5 years | 5 years | ||||||||||||||
Interest rate (as a percent) | 2.375% | |||||||||||||||
Ten year 2017 senior notes | ||||||||||||||||
Debt instrument | ||||||||||||||||
CARRYING VALUE | $ 494.8 | |||||||||||||||
Aggregate principal amount | $ 500 | |||||||||||||||
AVERAGE INTEREST RATE (as a percent) | 3.25% | 3.25% | ||||||||||||||
EFFECTIVE INTEREST RATE (as a percent) | 3.37% | 3.37% | ||||||||||||||
Debt instrument, term | 10 years | |||||||||||||||
Thirty year 2017 senior notes | ||||||||||||||||
Debt instrument | ||||||||||||||||
CARRYING VALUE | $ 609 | |||||||||||||||
Aggregate principal amount | $ 700 | |||||||||||||||
AVERAGE INTEREST RATE (as a percent) | 3.95% | 3.95% | ||||||||||||||
EFFECTIVE INTEREST RATE (as a percent) | 4.14% | 4.14% | ||||||||||||||
Debt instrument, term | 30 years | |||||||||||||||
2017 144A notes | ||||||||||||||||
Debt instrument | ||||||||||||||||
Aggregate principal amount | 825 | |||||||||||||||
Principal outstanding payable at time of prepayment of notes (as a percent) | 101.00% | |||||||||||||||
Ten Year 2017 144A notes | ||||||||||||||||
Debt instrument | ||||||||||||||||
CARRYING VALUE | $ 494.7 | $ 494.7 | $ 494.7 | |||||||||||||
Aggregate principal amount | $ 500 | $ 500 | ||||||||||||||
AVERAGE INTEREST RATE (as a percent) | 3.25% | 3.25% | 3.25% | |||||||||||||
EFFECTIVE INTEREST RATE (as a percent) | 3.36% | 3.36% | 3.36% | |||||||||||||
Debt instrument, term | 10 years | 10 years | ||||||||||||||
Interest rate (as a percent) | 3.25% | |||||||||||||||
Thirty Year 2017 144A notes | ||||||||||||||||
Debt instrument | ||||||||||||||||
CARRYING VALUE | $ 607.8 | $ 607.8 | $ 607.8 | |||||||||||||
Aggregate principal amount | $ 325 | 700 | ||||||||||||||
AVERAGE INTEREST RATE (as a percent) | 3.95% | 3.95% | 3.95% | |||||||||||||
EFFECTIVE INTEREST RATE (as a percent) | 4.14% | 4.14% | 4.14% | |||||||||||||
Debt instrument, term | 30 years | 30 years | ||||||||||||||
Interest rate (as a percent) | 3.95% | |||||||||||||||
Debt exchanged | $ 375 | |||||||||||||||
Debt, unamortized discounts and financing costs | $ 87 | $ 87 | $ 87 | |||||||||||||
Three year 2016 senior notes | ||||||||||||||||
Debt instrument | ||||||||||||||||
CARRYING VALUE | $ 396.1 | $ 396.1 | $ 396.1 | 399.7 | ||||||||||||
Aggregate principal amount | $ 400 | |||||||||||||||
AVERAGE INTEREST RATE (as a percent) | 2.00% | 2.00% | 2.00% | 2.00% | 2.00% | |||||||||||
EFFECTIVE INTEREST RATE (as a percent) | 2.26% | 2.26% | 2.26% | 3.24% | 3.24% | |||||||||||
Debt instrument, term | 3 years | |||||||||||||||
Seven year 2016 senior Notes | ||||||||||||||||
Debt instrument | ||||||||||||||||
CARRYING VALUE | $ 397.5 | $ 397.5 | $ 397.5 | $ 398 | ||||||||||||
Aggregate principal amount | $ 400 | |||||||||||||||
AVERAGE INTEREST RATE (as a percent) | 3.25% | 3.25% | 3.25% | 3.25% | 3.25% | |||||||||||
EFFECTIVE INTEREST RATE (as a percent) | 3.49% | 3.49% | 3.49% | 3.49% | 3.49% | |||||||||||
Debt instrument, term | 7 years | |||||||||||||||
Seven year 2016 senior euro notes | ||||||||||||||||
Debt instrument | ||||||||||||||||
CARRYING VALUE | $ 676.6 | $ 676.6 | $ 676.6 | $ 644.1 | ||||||||||||
Aggregate principal amount | € | € 575 | |||||||||||||||
AVERAGE INTEREST RATE (as a percent) | 1.00% | 1.00% | 1.00% | 1.00% | 1.00% | |||||||||||
EFFECTIVE INTEREST RATE (as a percent) | 1.17% | 1.17% | 1.17% | 1.09% | 1.09% | |||||||||||
Debt instrument, term | 7 years | |||||||||||||||
Ten year 2016 senior notes | ||||||||||||||||
Debt instrument | ||||||||||||||||
CARRYING VALUE | $ 742.8 | $ 742.8 | $ 742.8 | $ 743.8 | ||||||||||||
Aggregate principal amount | $ 750 | |||||||||||||||
AVERAGE INTEREST RATE (as a percent) | 2.70% | 2.70% | 2.70% | 2.70% | 2.70% | |||||||||||
EFFECTIVE INTEREST RATE (as a percent) | 2.93% | 2.93% | 2.93% | 2.93% | 2.93% | |||||||||||
Debt instrument, term | 10 years | |||||||||||||||
Thirty year 2016 senior notes | ||||||||||||||||
Debt instrument | ||||||||||||||||
CARRYING VALUE | $ 246 | $ 246 | $ 246 | $ 246.1 | ||||||||||||
Aggregate principal amount | $ 250 | |||||||||||||||
AVERAGE INTEREST RATE (as a percent) | 3.70% | 3.70% | 3.70% | 3.70% | 3.70% | |||||||||||
EFFECTIVE INTEREST RATE (as a percent) | 3.76% | 3.76% | 3.76% | 3.76% | 3.76% | |||||||||||
Debt instrument, term | 30 years | |||||||||||||||
Three year 2015 senior notes | ||||||||||||||||
Debt instrument | ||||||||||||||||
CARRYING VALUE | $ 299.9 | $ 299.9 | $ 299.9 | |||||||||||||
Aggregate principal amount | $ 0 | |||||||||||||||
AVERAGE INTEREST RATE (as a percent) | 1.55% | 1.55% | 1.55% | |||||||||||||
EFFECTIVE INTEREST RATE (as a percent) | 1.94% | 1.94% | 1.94% | |||||||||||||
Debt instrument, term | 3 years | |||||||||||||||
Five year 2015 senior notes | ||||||||||||||||
Debt instrument | ||||||||||||||||
CARRYING VALUE | $ 299.1 | $ 299.1 | $ 299.1 | 299.5 | ||||||||||||
Aggregate principal amount | $ 300 | |||||||||||||||
AVERAGE INTEREST RATE (as a percent) | 2.25% | 2.25% | 2.25% | 2.25% | 2.25% | |||||||||||
EFFECTIVE INTEREST RATE (as a percent) | 2.79% | 2.79% | 2.79% | 2.79% | 2.79% | |||||||||||
Debt instrument, term | 5 years | |||||||||||||||
Ten Year 2015 senior euro notes | ||||||||||||||||
Debt instrument | ||||||||||||||||
CARRYING VALUE | $ 679.4 | $ 679.4 | $ 679.4 | $ 646.3 | ||||||||||||
Aggregate principal amount | € | € 575 | |||||||||||||||
AVERAGE INTEREST RATE (as a percent) | 2.63% | 2.63% | 2.63% | 2.63% | 2.63% | |||||||||||
EFFECTIVE INTEREST RATE (as a percent) | 2.85% | 2.85% | 2.85% | 2.94% | 2.94% | |||||||||||
Debt instrument, term | 10 years | |||||||||||||||
Series A private placement senior notes due 2018 | ||||||||||||||||
Debt instrument | ||||||||||||||||
CARRYING VALUE | $ 248.5 | $ 248.5 | $ 248.5 | |||||||||||||
Aggregate principal amount | $ 250 | $ 250 | $ 250 | 250 | ||||||||||||
AVERAGE INTEREST RATE (as a percent) | 3.69% | 3.69% | 3.69% | |||||||||||||
EFFECTIVE INTEREST RATE (as a percent) | 5.16% | 5.16% | 5.16% | |||||||||||||
Series B private placement senior notes due 2023 | ||||||||||||||||
Debt instrument | ||||||||||||||||
CARRYING VALUE | $ 249.3 | $ 249.3 | $ 249.3 | $ 249.4 | ||||||||||||
Aggregate principal amount | $ 250 | $ 250 | $ 250 | $ 250 | ||||||||||||
AVERAGE INTEREST RATE (as a percent) | 4.32% | 4.32% | 4.32% | 4.32% | 4.32% | |||||||||||
EFFECTIVE INTEREST RATE (as a percent) | 4.36% | 4.36% | 4.36% | 4.36% | 4.36% | |||||||||||
Other | ||||||||||||||||
Debt instrument | ||||||||||||||||
CARRYING VALUE | $ 6.1 | $ 6.1 | $ 6.1 | $ 6.2 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - Recurring - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Carrying Amount | ||
Assets: | ||
Foreign currency forward contracts | $ 72.3 | $ 45.8 |
Liabilities: | ||
Foreign currency forward contracts | 41.1 | 153.1 |
Interest rate swap contracts | 0.2 | 4.2 |
Level 2 | ||
Assets: | ||
Foreign currency forward contracts | 72.3 | 45.8 |
Liabilities: | ||
Foreign currency forward contracts | 41.1 | 153.1 |
Interest rate swap contracts | $ 0.2 | $ 4.2 |
FAIR VALUE MEASUREMENTS - Long-
FAIR VALUE MEASUREMENTS - Long-term Debt (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Carrying Amount | ||
Carrying amount and fair value of financial instruments | ||
Long-term debt (including current maturities) | $ 6,703 | $ 7,308 |
Fair Value | ||
Carrying amount and fair value of financial instruments | ||
Long-term debt (including current maturities) | $ 6,844.7 | $ 7,716 |
DERIVATIVES AND HEDGING TRANS_3
DERIVATIVES AND HEDGING TRANSACTIONS - Derivative Positions Summary (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Asset Derivatives | ||
Gross amounts offset in the Consolidated Balance Sheet | $ (17.7) | $ (17) |
Net value of derivatives presented in the Consolidated Balance Sheet | 54.6 | 28.8 |
Liability Derivatives | ||
Gross amounts offset in the Consolidated Balance Sheet | (17.7) | (17) |
Net value of derivatives presented in the Consolidated Balance Sheet | 23.6 | 140.3 |
Foreign currency forward contracts. | ||
Liability Derivatives | ||
Notional values | 6,226 | 5,593 |
Interest rate swaps | ||
Liability Derivatives | ||
Notional values | 400 | 950 |
Derivatives designated as hedging instruments | Foreign currency forward contracts. | ||
Asset Derivatives | ||
Gross value of derivatives | 40.4 | 19.6 |
Liability Derivatives | ||
Gross value of derivatives | 10.2 | 125.2 |
Derivatives designated as hedging instruments | Interest rate swaps | ||
Liability Derivatives | ||
Gross value of derivatives | 0.2 | 4.2 |
Derivatives not designated as hedging instruments | Foreign currency forward contracts. | ||
Asset Derivatives | ||
Gross value of derivatives | 31.9 | 26.2 |
Liability Derivatives | ||
Gross value of derivatives | 30.9 | 27.9 |
Derivatives not designated as hedging instruments | Interest rate swaps | ||
Asset Derivatives | ||
Gross value of derivatives | 72.3 | 45.8 |
Liability Derivatives | ||
Gross value of derivatives | $ 41.3 | $ 157.3 |
DERIVATIVES AND HEDGING TRANS_4
DERIVATIVES AND HEDGING TRANSACTIONS - Information by Type of Derivative and Hedging Activities (Details) € in Millions, $ in Millions | 12 Months Ended | |||||||
Dec. 31, 2018EUR (€) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2018USD ($) | Jan. 31, 2016USD ($) | Jan. 31, 2015USD ($) | May 31, 2014USD ($) | |
Net Investment Hedge: | ||||||||
Revaluation gain (loss), net of tax | $ 57.5 | $ (109.7) | $ (2.5) | |||||
Derivative Summary | ||||||||
Maximum period for hedged transactions | 4 years | 4 years | ||||||
Three year 2016 senior notes | ||||||||
Impact on AOCI and earnings from derivative contracts | ||||||||
Aggregate principal amount | $ 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 | |||||||
Interest rate (as a percent) | 4.35% | |||||||
Ten Year 2015 senior euro notes | ||||||||
Impact on AOCI and earnings from derivative contracts | ||||||||
Aggregate principal amount | € | € 575 | |||||||
Foreign currency forward contracts. | ||||||||
Net Investment Hedge: | ||||||||
Notional values | $ 5,593 | 6,226 | ||||||
Interest rate swaps | ||||||||
Net Investment Hedge: | ||||||||
Notional values | 950 | $ 400 | ||||||
Cash Flow Hedges | Derivatives designated as hedging instruments | ||||||||
Impact on AOCI and earnings from derivative contracts | ||||||||
Unrealized gain (loss) recognized into AOCI (effective portion) | $ 144.4 | (173.4) | (2.3) | |||||
Gain (loss) reclassified from AOCI into income (effective portion) | 108.3 | (153.6) | 22.1 | |||||
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) | 113.8 | (146.4) | 28.7 | |||||
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) | 144.4 | (173.4) | 7 | |||||
Cash Flow Hedges | Foreign currency forward contracts. | Derivatives designated as hedging instruments | Cost of sales | ||||||||
Impact on AOCI and earnings from derivative contracts | ||||||||
Gain (loss) reclassified from AOCI into income (effective portion) | (7.7) | (13.7) | 23 | |||||
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) | 84.1 | (157.2) | (0.1) | |||||
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) | 37.4 | 24.5 | 5.8 | |||||
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 | 30.4 | (41.2) | (14.4) | |||||
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 | 25.1 | (38.2) | (6) | |||||
Cash Flow Hedges | Foreign currency forward contracts. | Derivatives not designated as hedging instruments | Interest expense, net | ||||||||
Impact on AOCI and earnings from derivative contracts | ||||||||
Gain (loss) on derivative recognized in income | 5.3 | (3) | (8.4) | |||||
Cash Flow Hedges | Interest rate swaps | Derivatives designated as hedging instruments | AOCI (equity) | ||||||||
Impact on AOCI and earnings from derivative contracts | ||||||||
Unrealized gain (loss) recognized into AOCI (effective portion) | (9.3) | |||||||
Cash Flow Hedges | Interest rate swaps | Derivatives designated as hedging instruments | Interest expense, net | ||||||||
Impact on AOCI and earnings from derivative contracts | ||||||||
Gain (loss) reclassified from AOCI into income (effective portion) | (5.5) | (7.2) | (6.6) | |||||
Fair Value Hedges | Interest rate swaps | Three year 2016 senior notes | ||||||||
Impact on AOCI and earnings from derivative contracts | ||||||||
Aggregate principal amount | $ 400 | |||||||
Interest rate (as a percent) | 2.00% | |||||||
Fair Value Hedges | Interest rate swaps | Three year 2015 senior notes | ||||||||
Impact on AOCI and earnings from derivative contracts | ||||||||
Aggregate principal amount | $ 300 | |||||||
Interest rate (as a percent) | 1.55% | |||||||
Fair Value Hedges | Interest rate swaps | Series A private placement senior notes due 2018 | ||||||||
Impact on AOCI and earnings from derivative contracts | ||||||||
Aggregate principal amount | $ 250 | |||||||
Interest rate (as a percent) | 3.69% | |||||||
Fair Value Hedges | Interest rate swaps | Five year 2012 senior notes | ||||||||
Impact on AOCI and earnings from derivative contracts | ||||||||
Aggregate principal amount | $ 500 | |||||||
Interest rate (as a percent) | 1.45% | |||||||
Fair Value Hedges | Interest rate swaps | Interest expense, net | ||||||||
Impact on AOCI and earnings from derivative contracts | ||||||||
Gain (loss) on derivative recognized in income | 4 | (0.7) | (1.4) | |||||
Gain (loss) on hedged item recognized in income | (4) | 0.7 | 1.4 | |||||
Net Investment Hedges | ||||||||
Net Investment Hedge: | ||||||||
Revaluation gain (loss), net of tax | 57.5 | $ (109.7) | $ (2.5) | |||||
Net Investment Hedges | Senior euro notes | ||||||||
Net Investment Hedge: | ||||||||
Euro-denominated debt outstanding | € 1,150 | $ 1,290.4 |
DERIVATIVES AND HEDGING TRANS_5
DERIVATIVES AND HEDGING TRANSACTIONS (Details 3) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Asset Derivatives | ||
Gross amounts offset in the Consolidated Balance Sheet | $ (17.7) | $ (17) |
Net value of derivatives presented in the Consolidated Balance Sheet | 54.6 | 28.8 |
Liability Derivatives | ||
Gross amounts offset in the Consolidated Balance Sheet | (17.7) | (17) |
Net value of derivatives presented in the Consolidated Balance Sheet | $ 23.6 | $ 140.3 |
OTHER COMPREHENSIVE INCOME (L_3
OTHER COMPREHENSIVE INCOME (LOSS) INFORMATION (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Reclassification adjustments | |||||||||||
Cost of sales | $ (2,216.8) | $ (2,190.7) | $ (2,146.1) | $ (2,072.3) | $ (2,129) | $ (2,055.7) | $ (2,036.6) | $ (1,842.9) | $ (8,625.9) | $ (8,064.2) | $ (7,533.9) |
SG&A | (948.8) | (964.7) | (1,036.8) | (1,018.3) | (962.4) | (939.8) | (967) | (956.1) | (3,968.6) | (3,825.3) | (3,708.2) |
Interest expense, net | $ (53.9) | $ (55.7) | $ (56.3) | $ (56.4) | $ (77.8) | $ (55.1) | $ (59.6) | $ (62.5) | (222.3) | (255) | (264.6) |
Subtotal | (119.4) | 71.2 | (290.9) | ||||||||
Derivative & Hedging Instruments. | |||||||||||
Reclassification adjustments | |||||||||||
Amount recognized in AOCI | 144.4 | (173.4) | (2.3) | ||||||||
Other activity | 0.2 | (0.2) | |||||||||
Tax impact | (7.7) | 1.7 | 7.1 | ||||||||
Subtotal | 28.4 | (17.9) | (17.5) | ||||||||
Derivative & Hedging Instruments. | Amount reclassified from AOCI | |||||||||||
Reclassification adjustments | |||||||||||
Cost of sales | 7.7 | 13.7 | (23) | ||||||||
SG&A | (84.1) | 157.2 | 0.1 | ||||||||
Interest expense, net | (31.9) | (17.3) | 0.8 | ||||||||
(Gains) losses reclassified from AOCI into income | (108.3) | 153.6 | (22.1) | ||||||||
Pension & Postretirement Benefits. | |||||||||||
Reclassification adjustments | |||||||||||
Amount recognized in AOCI | (56.5) | (46.9) | (136) | ||||||||
Other Comprehensive Income (Loss), before Tax | 31.2 | (25.4) | (49.8) | ||||||||
Tax impact | (13.2) | 16.2 | 9.3 | ||||||||
Subtotal | 18 | (9.2) | (40.5) | ||||||||
Actuarial losses | Amount reclassified from AOCI | |||||||||||
Reclassification adjustments | |||||||||||
(Gains) losses reclassified from AOCI into income | 28.4 | $ 21.5 | 32.2 | ||||||||
Postretirement benefits changes | Amount reclassified from AOCI | |||||||||||
Reclassification adjustments | |||||||||||
Amount recognized in AOCI | $ 59.3 | $ 54 |
SHAREHOLDERS' EQUITY (Details)
SHAREHOLDERS' EQUITY (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 12 Months Ended | ||||
Jun. 30, 2017 | Feb. 28, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Feb. 28, 2015 | |
Shareholder's Equity | ||||||
Common stock, par value per share (in dollars per share) | $ 1 | $ 1 | ||||
Common stock, shares authorized | 800,000,000 | 800,000,000 | ||||
Dividends declared per common share (in dollars per share) | $ 1.690 | $ 1.520 | $ 1.420 | |||
Common Stock | ||||||
Shareholder's Equity | ||||||
Common stock, par value per share (in dollars per share) | $ 1 | $ 1 | $ 1 | |||
Common stock, shares authorized | 800,000,000 | 800,000,000 | 800,000,000 | |||
Dividends declared per common share (in dollars per share) | $ 1.690 | $ 1.520 | $ 1.420 | |||
Common stock, shares authorized to be repurchased | 20,000,000 | |||||
Remaining shares authorized to be repurchased | 8,651,394 | |||||
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 | 3,908,041 | 4,707,629 | ||||
Number of shares reacquired through the open market | 3,706,716 | 4,414,416 | ||||
Number of shares that have been repurchased through the exercise of stock options and vesting of stock awards | 201,325 | 293,213 | ||||
Undesignated preferred stock | ||||||
Shareholder's Equity | ||||||
Preferred stock, shares authorized | 15,000,000 |
EQUITY COMPENSATION PLANS (Deta
EQUITY COMPENSATION PLANS (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
EQUITY COMPENSATION PLANS | |||
Common shares available for grant (in shares) | 10,152,863 | 11,685,090 | 13,649,667 |
Value of awards granted, portion from stock options under current program (as a percent) | 50.00% | ||
Value of awards granted, portion from PBRSUs under current program (as a percent) | 50.00% | ||
Total compensation expense related to all share-based compensation plans | $ 94 | $ 90 | $ 86 |
Total compensation expense, net of tax benefit | 78 | $ 62 | $ 59 |
Total measured but unrecognized compensation expense related to non-vested share-based compensation arrangements granted under all of the company's plans | $ 140 | ||
Weighted-average period over which unrecognized compensation costs on nonvested awards expected to be recognized | 2 years 2 months 12 days |
EQUITY COMPENSATION PLANS - Sto
EQUITY COMPENSATION PLANS - Stock Options (Details) - Stock Options - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Stock incentive and option plans | |||
Stock option expiration period | 10 years | ||
Stock option vesting period | 3 years | ||
SHARES | |||
Outstanding, beginning of year (in shares) | 11,380,013 | 11,910,501 | 12,378,372 |
Granted (in shares) | 1,202,314 | 1,491,893 | 1,679,941 |
Exercised (in shares) | (1,942,192) | (1,951,920) | (2,061,553) |
Canceled (in shares) | (123,502) | (70,461) | (86,259) |
Outstanding, end of year (in shares) | 10,516,633 | 11,380,013 | 11,910,501 |
Exercisable, end of year (in shares) | 7,993,297 | 8,371,809 | 8,720,943 |
Vested and expected to vest, end of year (in shares) | 10,365,162 | ||
AVERAGE PRICE PER SHARE | |||
Outstanding, beginning of year (in dollars per share) | $ 95.76 | $ 84.22 | $ 74.23 |
Granted (in dollars per share) | 158.23 | 136.87 | 117.60 |
Exercised (in dollars per share) | 64.63 | 56 | 50.33 |
Canceled (in dollars per share) | 127.02 | 116.44 | 111.08 |
Outstanding, end of year (in dollars per share) | 108.28 | 95.76 | 84.22 |
Exercisable, end of year (in dollars per share) | 97.13 | $ 84.40 | $ 72.35 |
Vested and expected to vest, end of year (in dollars per shares) | $ 107.77 | ||
Total intrinsic value of options exercised during period | $ 161 | $ 142 | $ 140 |
Total aggregate intrinsic value of in-the-money options outstanding | $ 397 | ||
Weighted-average remaining contractual life of options outstanding | 6 years 4 months 24 days | ||
Total aggregate intrinsic value of in-the-money options exercisable | $ 391 | ||
Weighted-average remaining contractual life of options exercisable | 5 years 6 months | ||
Aggregate intrinsic value of vested and expected to vest options outstanding | $ 397 | ||
Weighted-average remaining contractual life of vested and expected to vest options outstanding | 6 years 4 months 24 days |
EQUITY COMPENSATION PLANS - Fai
EQUITY COMPENSATION PLANS - Fair Value Assumptions (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Stock Options | |||
Assumptions | |||
Weighted average grant date fair value of options granted at market prices (in dollars per share) | $ 37.34 | $ 30.34 | $ 25.59 |
Risk-free rate of return (as a percent) | 2.80% | 2.20% | 2.00% |
Expected life | 6 years | 6 years | 6 years |
Expected volatility (as a percent) | 22.50% | 22.70% | 22.90% |
Expected dividend yield (as a percent) | 1.20% | 1.20% | 1.30% |
Vesting period | 3 years | ||
Stock Options | Minimum | |||
Assumptions | |||
Yield curve of U.S. treasury rates | 1 month | ||
Stock Options | Maximum | |||
Assumptions | |||
Yield curve of U.S. treasury rates | 10 years | ||
PBRSU Awards | |||
Assumptions | |||
Period of requisite continued service | 3 years | ||
Common stock issuable for each vested stock award (in shares) | 1 | ||
Vesting period | 3 years | ||
Restricted Stock Awards and Units | Minimum | |||
Assumptions | |||
Vesting period | 12 months | ||
Restricted Stock Awards and Units | Maximum | |||
Assumptions | |||
Vesting period | 84 months |
EQUITY COMPENSATION PLANS - Oth
EQUITY COMPENSATION PLANS - Other Information (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
PBRSU Awards | |||
Summary of PBRSU awards and restricted stock activity: | |||
Stock awards outstanding, at the beginning of period (in shares) | 1,362,836 | 1,386,687 | 1,444,189 |
Stock awards granted (in shares) | 284,104 | 323,750 | 371,859 |
Stock awards vested/ earned (in shares) | (324,561) | (312,745) | (402,509) |
Stock awards cancelled (in shares) | (55,026) | (34,856) | (26,852) |
Stock awards outstanding, at the end of period (in shares) | 1,267,353 | 1,362,836 | 1,386,687 |
Weighted-average fair value at grant-date of stock awards outstanding, at the beginning of period (in dollars per share) | $ 115.24 | $ 107.70 | $ 95.59 |
Weighted-average fair value at grant-date of stock awards granted (in dollars per share) | 152.59 | 131.71 | 112.29 |
Weighted-average fair value at grant-date of stock awards vested/earned (in dollars per share) | 103.15 | 99.65 | 68.64 |
Weighted-average fair value at grant-date of stock awards cancelled (in dollars per share) | 114.25 | 108.16 | 105.09 |
Weighted-average fair value at grant-date of stock awards outstanding, at the end of period (in dollars per share) | $ 126.75 | $ 115.24 | $ 107.70 |
Restricted Stock Awards and Units | |||
Summary of PBRSU awards and restricted stock activity: | |||
Stock awards outstanding, at the beginning of period (in shares) | 249,402 | 254,387 | 273,235 |
Stock awards granted (in shares) | 109,074 | 96,980 | 88,437 |
Stock awards vested/ earned (in shares) | (92,032) | (86,622) | (96,874) |
Stock awards cancelled (in shares) | (19,975) | (15,343) | (10,411) |
Stock awards outstanding, at the end of period (in shares) | 246,469 | 249,402 | 254,387 |
Weighted-average fair value at grant-date of stock awards outstanding, at the beginning of period (in dollars per share) | $ 116.66 | $ 107.95 | $ 102.49 |
Weighted-average fair value at grant-date of stock awards granted (in dollars per share) | 138.69 | 125.34 | 109.27 |
Weighted-average fair value at grant-date of stock awards vested/earned (in dollars per share) | 113.03 | 102.02 | 94.06 |
Weighted-average fair value at grant-date of stock awards cancelled (in dollars per share) | 115.05 | 109.72 | 105.07 |
Weighted-average fair value at grant-date of stock awards outstanding, at the end of period (in dollars per share) | $ 127.09 | $ 116.66 | $ 107.95 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income before income taxes | |||||||||||
United States | $ 728.3 | $ 847.3 | $ 655.7 | ||||||||
International | 1,076.3 | 915.1 | 993.7 | ||||||||
Income before income taxes | $ 547.9 | $ 481.5 | $ 457.9 | $ 317.3 | $ 548.2 | $ 525.9 | $ 376.8 | $ 311.5 | 1,804.6 | 1,762.4 | 1,649.4 |
Current income tax expense (benefit) | |||||||||||
Federal and state | 103.5 | 241.8 | 224.2 | ||||||||
International | 175.7 | 355.1 | 269.7 | ||||||||
Total current | 279.2 | 596.9 | 493.9 | ||||||||
Deferred income tax expense (benefit) | |||||||||||
Federal and state | 51.8 | (331.4) | (49.6) | ||||||||
International | 33.3 | (21.7) | (41.4) | ||||||||
Total deferred | 85.1 | (353.5) | (90.6) | ||||||||
Provision for income taxes | $ 147.7 | $ 43.2 | $ 104.3 | $ 69.1 | $ (20.2) | $ 129.3 | $ 80.5 | $ 54.2 | $ 364.3 | $ 243.8 | $ 402.9 |
INCOME TAXES - Net Deferred Tax
INCOME TAXES - Net Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred tax assets | ||
Other accrued liabilities | $ 130.9 | $ 122.8 |
Loss carryforwards | 217.2 | 67.3 |
Share-based compensation | 60.5 | 58.9 |
Pension and other comprehensive income | 145.8 | 195.2 |
Other, net | 68.5 | 132.7 |
Valuation allowance | (184.4) | (21.3) |
Total deferred tax assets | 438.5 | 555.6 |
Deferred tax liabilities | ||
Property plant and equipment basis differences | (268.5) | (178.4) |
Intangible assets | (783.3) | (844) |
Other, net | (46.2) | (63.2) |
Total deferred tax liabilities | (1,098) | (1,085.6) |
Net deferred tax liabilities balance | $ (659.5) | $ (530) |
INCOME TAXES - Loss Carryforwar
INCOME TAXES - Loss Carryforwards (Details) | 12 Months Ended | ||
Dec. 31, 2018USD ($)$ / shares | Dec. 31, 2017USD ($)item$ / shares | Dec. 31, 2016USD ($)$ / shares | |
Operating loss carryforwards | |||
Statutory U.S. rate (as a percent) | 21.00% | 35.00% | 35.00% |
Provisional income tax benefit, Tax Act | $ (319,000,000) | ||
Net discrete expense (benefit), prior year returns | $ (39,900,000) | 14,400,000 | |
Net operating loss carryforwards | 217,200,000 | 67,300,000 | |
Valuation allowance on deferred tax asset | 184,400,000 | $ 21,300,000 | |
Number of foreign jurisdictions with a tax holiday | item | 2 | ||
Number of tax incentives awarded by foreign jurisdictions | item | 2 | ||
Federal | |||
Operating loss carryforwards | |||
Net discrete expense (benefit), prior year returns | 66,000,000 | ||
Net operating loss carryforwards | 200,000 | ||
State | |||
Operating loss carryforwards | |||
Carryforwards subject to expiration | 21,700,000 | ||
International | |||
Operating loss carryforwards | |||
Net operating loss carryforwards | 195,300,000 | ||
Carryforwards subject to expiration | 172,000,000 | ||
No expiration | 23,300,000 | ||
Preferential income tax rate, certain headquarter income | 10.00% | ||
Preferential income tax rate, manufacturing profits for a specific location | 0.00% | ||
Preferential income tax rate awarded under the Development and Expansion Incentive program | $ 15 | ||
Tax reduction due to tax holiday | $ 25,600,000 | $ 16,900,000 | $ 6,400,000 |
Tax holiday impact on diluted earnings per share (in dollars per share) | $ / shares | $ 0.09 | $ 0.06 | $ 0.02 |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of the Statutory Rate to Effective Rate (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Reconciliation of the statutory U.S. federal income tax rate to the company's effective income tax rate | ||||
Statutory U.S. rate (as a percent) | 21.00% | 35.00% | 35.00% | |
One time transition tax (as a percent) | 3.70% | 9.10% | ||
State income taxes, net of federal benefit (as a percent) | 1.20% | 0.40% | 0.90% | |
Foreign operations (as a percent) | (13.50%) | (7.40%) | (8.00%) | |
Domestic manufacturing deduction (as a percent) | (2.20%) | (2.00%) | ||
R&D credit (as a percent) | (1.00%) | (1.00%) | (1.10%) | |
Change in valuation allowance (as a percent) | 9.10% | 0.20% | (0.70%) | |
Audit settlements and refunds (as a percent) | (0.80%) | (0.10%) | (0.20%) | |
Exces stock benefits (as a percent) | (1.60%) | (2.30%) | ||
Change in federal tax rate (deferred taxes) (as a percent) | (0.60%) | (18.20%) | ||
Prior years tax return (as a percent) | 2.50% | |||
Worthless stock deduction (as a percent) | 0.40% | |||
Other, net (as a percent) | 0.20% | 0.30% | 0.10% | |
Effective income tax rate (as a percent) | 20.20% | 13.80% | 24.40% | |
Provisional income tax benefit, Tax Act | $ (319) | |||
Provision deferred tax liability, one-time transition | $ 160.1 | |||
Payment term for provisional liability | 8 years | |||
Net tax expense (benefits) associated with the Tax Act | $ 66 | $ (158.9) | ||
Net tax benefit for the one-time transition | 319 | |||
Net expense for the one-time transition | 160.1 | |||
Special gains and charges, recognized discrete tax expense (benefit), net, | (33.5) | (6.2) | ||
Recognized discrete tax expense (benefit), net | (61.3) | (25.3) | $ (3.9) | |
Excess tax benefits, share-based compensation | 28.1 | |||
Additional tax benefit related to tax reform | 7.8 | |||
Net discrete expense (benefit), prior year returns | (39.9) | 14.4 | ||
Out of period charges incurred | $ 44.2 | |||
Reconciliation of the beginning and ending amount of gross unrecognized tax benefits | ||||
Balance at beginning of year | 61.5 | 75.9 | 74.6 | |
Additions based on tax positions related to the current year | 3 | 3.2 | 8.8 | |
Additions for tax positions of prior years | 2 | 2.1 | ||
Reductions for tax positions of prior years | (8.7) | (4.9) | (1) | |
Reductions for tax positions due to statute of limitations | (5.8) | (14) | (5.5) | |
Settlements | (0.8) | (10.8) | (2) | |
Assumed in connection with acquisitions | 10 | |||
Foreign currency translation | (1.5) | 2.1 | (1.1) | |
Balance at end of year | 49.7 | 49.7 | 61.5 | 75.9 |
Unrecognized tax benefits that would affect the annual effective tax rate | 36.4 | 36.4 | 47.1 | 57.5 |
Interest and penalties on unrecognized tax benefits accrued during the period | (1.2) | (0.9) | 2.9 | |
Accrued interest, including minor amounts for penalties | $ 8.1 | $ 8.1 | 9.3 | $ 10.2 |
Accounting Standards Update 2016-09 [Member] | ||||
Reconciliation of the statutory U.S. federal income tax rate to the company's effective income tax rate | ||||
Recognized discrete tax benefits | $ 39.7 |
RENTALS AND LEASES (Details)
RENTALS AND LEASES (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
RENTALS AND LEASES | |||
Total rental expenses | $ 210 | $ 239 | $ 221 |
Maximum term for non-cancelable operating leases (in years) | 1 year | ||
Future minimum payments under operating leases with noncancelable terms in excess of one year were: | |||
2,019 | $ 172 | ||
2,020 | 141 | ||
2,021 | 108 | ||
2,022 | 72 | ||
2,023 | 37 | ||
Thereafter | 104 | ||
Total | $ 634 |
RESEARCH AND DEVELOPMENT EXPE_2
RESEARCH AND DEVELOPMENT EXPENDITURES (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
RESEARCH AND DEVELOPMENT EXPENDITURES | |||
Research expenditures related to the development of new products and processes, including significant improvements and refinements to existing products | $ 216 | $ 201 | $ 189 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | 1 Months Ended | 12 Months Ended | |
May 31, 2016complaint | Dec. 31, 2018locationcomplaint | Dec. 31, 2017item | |
Loss contingencies | |||
Period to appeal court's decision after entry of final judgment under Federal Rule of Appellate Procedure | 30 days | ||
Environmental matters | |||
Number of locations for environmental assessments and remediation | location | 40 | ||
Deepwater Horizon Incident | |||
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 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 |
RETIREMENT PLANS - Information
RETIREMENT PLANS - Information Related to Pension and Postretirement Plans (Details) € in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | ||||
Dec. 31, 2018USD ($) | Sep. 30, 2016USD ($) | Dec. 31, 2018EUR (€) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Amounts recognized in Consolidated Balance Sheet: | ||||||
Other assets | $ 39 | $ 39 | $ 41.7 | |||
Postretirement health care and pension benefits | (944.3) | (944.3) | (1,025.5) | |||
Amounts recognized in Accumulated Other Comprehensive Loss (Income): | ||||||
Accumulated other comprehensive loss (income), net of tax | 518.9 | 518.9 | 555.8 | |||
Change in Accumulated Other Comprehensive Loss (Income): | ||||||
Other comprehensive loss (income) | (18) | 9.2 | $ 40.5 | |||
Aggregate projected benefit obligation, accumulated benefit obligation and fair value of plan assets for pension plans with accumulated benefit obligations in excess of plan assets: | ||||||
Aggregate projected benefit obligation | 3,427.1 | 3,427.1 | 3,636.2 | |||
Accumulated benefit obligation | 3,308.4 | 3,308.4 | 3,476.1 | |||
Fair value of plan assets | 2,624.3 | 2,624.3 | 2,794 | |||
Non-qualified plan | ||||||
Projected Benefit Obligation | ||||||
Projected benefit obligation, beginning of year | 124 | |||||
Projected benefit obligation, end of year | 119 | 119 | 124 | |||
Postretirement Health Care | ||||||
Projected Benefit Obligation | ||||||
Plan amendments, decrease in benefit obligation | $ (50) | |||||
U.S. | Pension | ||||||
Defined Benefit Plan Disclosure | ||||||
Accumulated Benefit Obligation, end of year | 2,189 | 2,189 | 2,399.5 | |||
Projected Benefit Obligation | ||||||
Projected benefit obligation, beginning of year | 2,485.1 | 2,267.9 | ||||
Service cost | 74.5 | 70.2 | 67.1 | |||
Interest | 83.1 | 83.4 | 81.5 | |||
Curtailments and settlements | 0.1 | |||||
Plan amendments, decrease in benefit obligation | (40.4) | (40.4) | ||||
Actuarial (gain) loss | (181.3) | 183.1 | ||||
Benefits paid | (180) | (119.6) | ||||
Projected benefit obligation, end of year | 2,241 | 2,241 | 2,485.1 | 2,267.9 | ||
Plan Assets | ||||||
Fair value of plan assets, beginning of year | 2,226.4 | 1,950.1 | ||||
Actual returns on plan assets | (70.7) | 310.2 | ||||
Company contributions | 5.7 | 85.9 | ||||
Settlements | (0.2) | |||||
Benefits paid | (180) | (119.6) | ||||
Fair value of plan assets, end of year | 1,981.4 | 1,981.4 | 2,226.4 | 1,950.1 | ||
Funded Status, end of year | (259.6) | (259.6) | (258.7) | |||
Amounts recognized in Consolidated Balance Sheet: | ||||||
Other current liabilities | (5.9) | (5.9) | (5.6) | |||
Postretirement health care and pension benefits | (253.7) | (253.7) | (253.1) | |||
Net liability | (259.6) | (259.6) | (258.7) | |||
Amounts recognized in Accumulated Other Comprehensive Loss (Income): | ||||||
Unrecognized net actuarial loss | 539.2 | 539.2 | 526.9 | |||
Unrecognized net prior service benefits | (52.3) | (52.3) | (18.7) | |||
Tax benefit | (194.4) | (194.4) | (199.5) | |||
Accumulated other comprehensive loss (income), net of tax | 292.5 | 292.5 | 308.7 | |||
Change in Accumulated Other Comprehensive Loss (Income): | ||||||
Amortization of net actuarial (gain) loss | (38.9) | (28.7) | ||||
Amortization of prior service costs | 6.8 | 6.8 | ||||
Current period net actuarial loss (gain) | 51.2 | 22.6 | ||||
Tax expense (benefit) | 5.1 | (0.3) | ||||
Pension and Postretirement benefit changes | (40.4) | |||||
Other comprehensive loss (income) | (16.2) | 0.4 | ||||
Estimated amounts in accumulated other comprehensive loss expected to be reclassified to net period cost during 2014 | ||||||
Net actuarial loss (gain) | 23.6 | 23.6 | ||||
Net prior service costs (benefits) | (11.5) | (11.5) | ||||
Total | 12.1 | 12.1 | ||||
U.S. | Postretirement Health Care | ||||||
Defined Benefit Plan Disclosure | ||||||
Accumulated Benefit Obligation, end of year | 147.3 | 147.3 | 181.3 | |||
Projected Benefit Obligation | ||||||
Projected benefit obligation, beginning of year | 181.3 | 173.5 | ||||
Service cost | 2.7 | 2.6 | 3 | |||
Interest | 5.6 | 5.8 | 7.4 | |||
Participant contributions | 3.5 | 8.3 | ||||
Medicare subsidies received | 0.5 | |||||
Plan amendments, decrease in benefit obligation | € (18.9) | (13.7) | 1.8 | |||
Actuarial (gain) loss | (18.4) | 9.2 | ||||
Benefits paid | (13.7) | (20.4) | ||||
Projected benefit obligation, end of year | 147.3 | 147.3 | 181.3 | 173.5 | ||
Plan Assets | ||||||
Fair value of plan assets, beginning of year | 7.6 | 9.6 | ||||
Actual returns on plan assets | (0.2) | 1.2 | ||||
Company contributions | 12.3 | 17.2 | ||||
Benefits paid | (13.7) | (20.4) | ||||
Fair value of plan assets, end of year | 6 | 6 | 7.6 | 9.6 | ||
Funded Status, end of year | (141.3) | (141.3) | (173.7) | |||
Amounts recognized in Consolidated Balance Sheet: | ||||||
Other current liabilities | (5) | (5) | (3.5) | |||
Postretirement health care and pension benefits | (136.3) | (136.3) | (170.2) | |||
Net liability | (141.3) | (141.3) | (173.7) | |||
Amounts recognized in Accumulated Other Comprehensive Loss (Income): | ||||||
Unrecognized net actuarial loss | (36) | (36) | (20.1) | |||
Unrecognized net prior service benefits | (34.4) | (34.4) | (40.4) | |||
Tax benefit | 27.6 | 27.6 | 25.2 | |||
Accumulated other comprehensive loss (income), net of tax | (42.8) | (42.8) | (35.3) | |||
Change in Accumulated Other Comprehensive Loss (Income): | ||||||
Amortization of net actuarial (gain) loss | 1.9 | 2.4 | ||||
Amortization of prior service costs | 19.7 | 16.7 | ||||
Current period net actuarial loss (gain) | (17.8) | 8.5 | ||||
Current period prior service costs | 5.2 | 1.8 | ||||
Tax expense (benefit) | 2.4 | (6.9) | ||||
Pension and Postretirement benefit changes | (18.9) | |||||
Other comprehensive loss (income) | (7.5) | 22.5 | ||||
Estimated amounts in accumulated other comprehensive loss expected to be reclassified to net period cost during 2014 | ||||||
Net actuarial loss (gain) | (4) | (4) | ||||
Net prior service costs (benefits) | (23.2) | (23.2) | ||||
Total | (27.2) | (27.2) | ||||
International | Pension | ||||||
Defined Benefit Plan Disclosure | ||||||
Accumulated Benefit Obligation, end of year | 1,349.9 | 1,349.9 | 1,434.5 | |||
Projected Benefit Obligation | ||||||
Projected benefit obligation, beginning of year | 1,537.9 | 1,335.6 | ||||
Service cost | 33.2 | 31.4 | 27.8 | |||
Interest | 29.1 | 28.4 | 31.9 | |||
Participant contributions | 3.5 | 3.5 | ||||
Curtailments and settlements | (22.8) | (10.7) | ||||
Actuarial (gain) loss | (42.7) | 31.9 | ||||
Assumed through acquisitions | 11.4 | 24.1 | ||||
Benefits paid | (38.7) | (35.8) | ||||
Foreign currency translation | (74.2) | 129.5 | ||||
Projected benefit obligation, end of year | 1,436.7 | 1,436.7 | 1,537.9 | 1,335.6 | ||
Plan Assets | ||||||
Fair value of plan assets, beginning of year | 981.1 | 821.9 | ||||
Actual returns on plan assets | 2.6 | 76.1 | ||||
Company contributions | 42 | 41 | ||||
Participant contributions | 3.5 | 3.5 | ||||
Acquisitions | 6.4 | 12.5 | ||||
Settlements | (22.8) | (10.7) | ||||
Benefits paid | (38.7) | (35.8) | ||||
Foreign currency translation | (48.5) | 72.6 | ||||
Fair value of plan assets, end of year | 925.6 | 925.6 | 981.1 | $ 821.9 | ||
Funded Status, end of year | (511.1) | (511.1) | (556.8) | |||
Amounts recognized in Consolidated Balance Sheet: | ||||||
Other assets | 39 | 39 | 41.7 | |||
Other current liabilities | (24.4) | (24.4) | (23) | |||
Postretirement health care and pension benefits | (525.7) | (525.7) | (575.5) | |||
Net liability | (511.1) | (511.1) | (556.8) | |||
Amounts recognized in Accumulated Other Comprehensive Loss (Income): | ||||||
Unrecognized net actuarial loss | 368 | 368 | 388.2 | |||
Unrecognized net prior service benefits | (6) | (6) | (7) | |||
Tax benefit | (92.7) | (92.7) | (98.4) | |||
Accumulated other comprehensive loss (income), net of tax | 269.3 | 269.3 | 282.8 | |||
Change in Accumulated Other Comprehensive Loss (Income): | ||||||
Amortization of net actuarial (gain) loss | (16.5) | (18.5) | ||||
Amortization of prior service costs | 0.9 | 0.7 | ||||
Current period net actuarial loss (gain) | 17.9 | 14 | ||||
Settlement | (2.3) | (0.9) | ||||
Tax expense (benefit) | 5.7 | (9) | ||||
Foreign currency translation | (19.2) | 35.6 | ||||
Other comprehensive loss (income) | (13.5) | $ 21.9 | ||||
Estimated amounts in accumulated other comprehensive loss expected to be reclassified to net period cost during 2014 | ||||||
Net actuarial loss (gain) | 16.4 | 16.4 | ||||
Net prior service costs (benefits) | (0.9) | (0.9) | ||||
Total | $ 15.5 | $ 15.5 |
RETIREMENT PLANS (Details)
RETIREMENT PLANS (Details) € in Millions, $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||
Sep. 30, 2017USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Dec. 31, 2018EUR (€) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Jun. 30, 2018 | |
Pension | U.S. | |||||||||
Net periodic benefit costs | |||||||||
Service cost | $ 74.5 | $ 70.2 | $ 67.1 | ||||||
Interest cost on benefit obligation | 83.1 | 83.4 | 81.5 | ||||||
Expected return on plan assets | (161.9) | (149.9) | (143.6) | ||||||
Recognition of net actuarial (gain) loss | 39 | 28.7 | 30.7 | ||||||
Amortization of prior service cost (benefit) | (6.8) | (6.8) | (6.9) | ||||||
Settlements/curtailments | 0.3 | 0.5 | |||||||
Total expense (benefit) | 27.9 | $ 25.9 | $ 29.3 | ||||||
Other Pension Plan Information | |||||||||
Contributions to plan | $ 80 | ||||||||
Plan amendments, decrease in benefit obligation | $ 40.4 | $ 40.4 | |||||||
Discount rate (as a percent) | 4.34% | 4.27% | 4.34% | 4.34% | 3.70% | 4.27% | |||
Pension | International | |||||||||
Net periodic benefit costs | |||||||||
Service cost | $ 33.2 | $ 31.4 | $ 27.8 | ||||||
Interest cost on benefit obligation | 29.1 | 28.4 | 31.9 | ||||||
Expected return on plan assets | (63.2) | (56.3) | (52.5) | ||||||
Recognition of net actuarial (gain) loss | 17.2 | 18.5 | 12.8 | ||||||
Amortization of prior service cost (benefit) | (0.9) | (0.7) | (0.8) | ||||||
Settlements/curtailments | 2.3 | 0.9 | 1.8 | ||||||
Total expense (benefit) | $ 17.7 | $ 22.2 | $ 21 | ||||||
Other Pension Plan Information | |||||||||
Discount rate (as a percent) | 2.49% | 2.33% | 2.49% | 2.49% | 2.17% | 2.33% | |||
Postretirement Health Care | |||||||||
Other Pension Plan Information | |||||||||
Plan amendments, decrease in benefit obligation | $ 50 | ||||||||
Postretirement Health Care | U.S. | |||||||||
Net periodic benefit costs | |||||||||
Service cost | $ 2.7 | $ 2.6 | $ 3 | ||||||
Interest cost on benefit obligation | 5.6 | 5.8 | 7.4 | ||||||
Expected return on plan assets | (0.4) | (0.5) | (0.7) | ||||||
Recognition of net actuarial (gain) loss | (1.9) | (2.4) | (1.6) | ||||||
Amortization of prior service cost (benefit) | (19.7) | (16.7) | (4.3) | ||||||
Total expense (benefit) | (13.7) | (11.2) | $ 3.8 | ||||||
Other Pension Plan Information | |||||||||
Plan amendments, decrease in benefit obligation | € 18.9 | $ 13.7 | $ (1.8) | ||||||
Plan amendments, decrease in benefit obligation, net of tax | € | € (14.4) | ||||||||
Discount rate (as a percent) | 4.29% | 4.14% | 3.29% | 4.29% | 4.29% | 3.66% | 4.14% | 4.36% | |
Decrease in defined benefit cost due to re-measurement of benefit plans | $ 5 | $ 4.5 |
RETIREMENT PLANS - Assumption D
RETIREMENT PLANS - Assumption Details (Details) € in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | ||||||
Dec. 31, 2018USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Dec. 31, 2018EUR (€) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016 | Jun. 30, 2018 | |
Postretirement Health Care | ||||||||
Defined Benefit Plan Assumed Health Care Cost Trend Rates | ||||||||
Plan amendments, decrease in benefit obligation | $ (50) | |||||||
Plan amendments, after tax | $ 31 | |||||||
U.S. | Corporate bonds | Minimum | ||||||||
Weighted-average actuarial assumptions used to determine net cost: | ||||||||
Maturity period of debt securities | 6 months | 6 months | ||||||
U.S. | Corporate bonds | Maximum | ||||||||
Weighted-average actuarial assumptions used to determine net cost: | ||||||||
Maturity period of debt securities | 30 years | 30 years | ||||||
U.S. | Pension | ||||||||
Weighted-average actuarial assumptions used to determine benefit obligations as of year end: | ||||||||
Discount rate (as a percent) | 4.34% | 4.27% | 4.34% | 4.34% | 3.70% | 4.27% | ||
Projected salary increase (as a percent) | 4.03% | 4.03% | 4.03% | 4.03% | 4.03% | 4.03% | ||
Weighted-average actuarial assumptions used to determine net cost: | ||||||||
Discount rate (as a percent) | 3.70% | 3.70% | 4.27% | 4.51% | ||||
Expected return on plan assets (as a percent) | 7.75% | 7.75% | 7.75% | 7.75% | ||||
Projected salary increase (as a percent) | 4.03% | 4.03% | 4.03% | 4.32% | ||||
Defined Benefit Plan Assumed Health Care Cost Trend Rates | ||||||||
Plan amendments, decrease in benefit obligation | $ (40.4) | $ (40.4) | ||||||
U.S. | Postretirement Health Care | ||||||||
Weighted-average actuarial assumptions used to determine benefit obligations as of year end: | ||||||||
Discount rate (as a percent) | 4.29% | 4.14% | 3.29% | 4.29% | 4.29% | 3.66% | 4.14% | 4.36% |
Projected salary increase (as a percent) | 0.00% | 0.00% | 0.00% | |||||
Weighted-average actuarial assumptions used to determine net cost: | ||||||||
Discount rate (as a percent) | 3.66% | 3.66% | 4.14% | 4.38% | ||||
Expected return on plan assets (as a percent) | 7.75% | 7.75% | 7.75% | 7.75% | ||||
Projected salary increase (as a percent) | 0.00% | 0.00% | ||||||
Defined Benefit Plan Assumed Health Care Cost Trend Rates | ||||||||
Annual rates of increase in the per capita cost of covered health care for pre-age 65 retirees (as a percent) | 8.25% | 8.25% | ||||||
Annual rates of increase in the per capita cost of covered health care for post-age 65 retirees (as a percent) | 11.50% | 11.50% | ||||||
Rate of per capita cost of covered health care in 2023 (as a percent) | 5.00% | |||||||
Plan amendments, decrease in benefit obligation | € (18.9) | $ (13.7) | $ 1.8 | |||||
Defined Benefit Plan, Reduction in Benefit Cost | $ 5 | $ 4.5 | ||||||
International | Pension | ||||||||
Weighted-average actuarial assumptions used to determine benefit obligations as of year end: | ||||||||
Discount rate (as a percent) | 2.49% | 2.33% | 2.49% | 2.49% | 2.17% | 2.33% | ||
Projected salary increase (as a percent) | 2.46% | 2.52% | 2.46% | 2.46% | 2.46% | 2.52% | ||
Weighted-average actuarial assumptions used to determine net cost: | ||||||||
Discount rate (as a percent) | 2.29% | 2.29% | 2.32% | 2.68% | ||||
Expected return on plan assets (as a percent) | 6.67% | 6.67% | 6.67% | 6.71% | ||||
Projected salary increase (as a percent) | 2.67% | 2.67% | 2.83% | 2.75% | ||||
Nalco | U.S. | Postretirement Health Care | ||||||||
Weighted-average actuarial assumptions used to determine benefit obligations as of year end: | ||||||||
Discount rate (as a percent) | 3.60% |
RETIREMENT PLANS - Fair Value o
RETIREMENT PLANS - Fair Value of Plan Assets (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Pension | U.S. | |||
Defined Benefit Plan Disclosure | |||
Total | $ 1,981.4 | $ 2,226.4 | $ 1,950.1 |
Pension | International | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 911.2 | 966.2 | |
Investments measured at NAV | 14.4 | 14.9 | |
Total | 925.6 | 981.1 | $ 821.9 |
Pension | International | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 27.3 | 29.3 | |
Total | 27.3 | 29.3 | |
Pension | International | Level 2 | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 883.9 | 936.9 | |
Total | 883.9 | 936.9 | |
Pension | International | Level 3 | |||
Defined Benefit Plan Disclosure | |||
Total | 0 | 0 | |
Pension | International | Cash | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 7.1 | 8.7 | |
Pension | International | Cash | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 7.1 | 8.7 | |
Pension | International | International equity | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 412.1 | 442.2 | |
Pension | International | International equity | Level 2 | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 412.1 | 442.2 | |
Pension | International | Corporate bonds | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 170 | 181.2 | |
Pension | International | Corporate bonds | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 7.9 | 8.2 | |
Pension | International | Corporate bonds | Level 2 | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 162.1 | 173 | |
Pension | International | Government bonds | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 181.5 | 190 | |
Pension | International | Government bonds | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 12.3 | 12.4 | |
Pension | International | Government bonds | Level 2 | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 169.2 | 177.6 | |
Pension | International | Insurance company accounts | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 140.5 | 144.1 | |
Pension | International | Insurance company accounts | Level 2 | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 140.5 | 144.1 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 1,649.8 | 1,959.5 | |
Total | 1,987.4 | 2,234 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 1,649.5 | 1,959.2 | |
Total | 1,649.5 | 1,959.2 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | Level 2 | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 0.3 | 0.3 | |
Total | 0.3 | 0.3 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | Level 3 | |||
Defined Benefit Plan Disclosure | |||
Total | 0 | 0 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | Cash | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 7.1 | 8 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | Cash | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 7.1 | 8 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | Large cap equity | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 683.5 | 869.8 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | Large cap equity | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 683.5 | 869.8 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | Small cap equity | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 168.6 | 198.4 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | Small cap equity | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 168.6 | 198.4 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | International equity | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 285 | 340.2 | |
Investments measured at NAV | 337.6 | 274.5 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | International equity | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 285 | 340.2 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | Core fixed income | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 358.3 | 390 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | Core fixed income | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 358.3 | 390 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | High-yield bonds | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 107.6 | 109.9 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | High-yield bonds | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 107.6 | 109.9 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | Emerging markets | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 39.4 | 42.9 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | Emerging markets | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 39.4 | 42.9 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | Insurance company accounts | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | 0.3 | 0.3 | |
Pension and Postretirement Health Care Benefit Plans | U.S. | Insurance company accounts | Level 2 | |||
Defined Benefit Plan Disclosure | |||
Total investments at fair value | $ 0.3 | $ 0.3 |
RETIREMENT PLANS - Allocation P
RETIREMENT PLANS - Allocation Plan Assets (Details) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Pension | International | ||
Asset allocation percentages | ||
PERCENTAGE OF PLAN ASSETS | 100.00% | 100.00% |
Pension | International | Cash | ||
Asset allocation percentages | ||
PERCENTAGE OF PLAN ASSETS | 1.00% | 1.00% |
Pension | International | International equity | ||
Asset allocation percentages | ||
PERCENTAGE OF PLAN ASSETS | 45.00% | 45.00% |
Pension | International | Corporate bonds | ||
Asset allocation percentages | ||
PERCENTAGE OF PLAN ASSETS | 18.00% | 19.00% |
Pension | International | Government bonds | ||
Asset allocation percentages | ||
PERCENTAGE OF PLAN ASSETS | 20.00% | 19.00% |
Pension | International | Total fixed income | ||
Asset allocation percentages | ||
PERCENTAGE OF PLAN ASSETS | 38.00% | 38.00% |
Pension | International | Insurance company accounts | ||
Asset allocation percentages | ||
PERCENTAGE OF PLAN ASSETS | 15.00% | 15.00% |
Pension | International | Real estate | ||
Asset allocation percentages | ||
PERCENTAGE OF PLAN ASSETS | 1.00% | 1.00% |
Pension and Postretirement Health Care Benefit Plans | U.S. | ||
Asset allocation percentages | ||
TARGET ASSET ALLOCATION PERCENTAGE | 100.00% | 100.00% |
PERCENTAGE OF PLAN ASSETS | 100.00% | 100.00% |
Pension and Postretirement Health Care Benefit Plans | U.S. | Cash | ||
Asset allocation percentages | ||
TARGET ASSET ALLOCATION PERCENTAGE | 0.00% | |
PERCENTAGE OF PLAN ASSETS | 0.00% | |
Pension and Postretirement Health Care Benefit Plans | U.S. | Large cap equity | ||
Asset allocation percentages | ||
TARGET ASSET ALLOCATION PERCENTAGE | 34.00% | 34.00% |
PERCENTAGE OF PLAN ASSETS | 34.00% | 39.00% |
Pension and Postretirement Health Care Benefit Plans | U.S. | Small cap equity | ||
Asset allocation percentages | ||
TARGET ASSET ALLOCATION PERCENTAGE | 9.00% | 9.00% |
PERCENTAGE OF PLAN ASSETS | 9.00% | 9.00% |
Pension and Postretirement Health Care Benefit Plans | U.S. | International equity | ||
Asset allocation percentages | ||
TARGET ASSET ALLOCATION PERCENTAGE | 15.00% | 15.00% |
PERCENTAGE OF PLAN ASSETS | 14.00% | 15.00% |
Pension and Postretirement Health Care Benefit Plans | U.S. | Core fixed income | ||
Asset allocation percentages | ||
TARGET ASSET ALLOCATION PERCENTAGE | 18.00% | 18.00% |
PERCENTAGE OF PLAN ASSETS | 19.00% | 18.00% |
Pension and Postretirement Health Care Benefit Plans | U.S. | High-yield bonds | ||
Asset allocation percentages | ||
TARGET ASSET ALLOCATION PERCENTAGE | 5.00% | 5.00% |
PERCENTAGE OF PLAN ASSETS | 5.00% | 5.00% |
Pension and Postretirement Health Care Benefit Plans | U.S. | Emerging markets | ||
Asset allocation percentages | ||
TARGET ASSET ALLOCATION PERCENTAGE | 2.00% | 2.00% |
PERCENTAGE OF PLAN ASSETS | 2.00% | 2.00% |
Pension and Postretirement Health Care Benefit Plans | U.S. | Real estate | ||
Asset allocation percentages | ||
TARGET ASSET ALLOCATION PERCENTAGE | 6.00% | 6.00% |
PERCENTAGE OF PLAN ASSETS | 8.00% | 7.00% |
Pension and Postretirement Health Care Benefit Plans | U.S. | Private Equity | ||
Asset allocation percentages | ||
TARGET ASSET ALLOCATION PERCENTAGE | 8.00% | 8.00% |
PERCENTAGE OF PLAN ASSETS | 7.00% | 5.00% |
Pension and Postretirement Health Care Benefit Plans | U.S. | Distressed debt | ||
Asset allocation percentages | ||
TARGET ASSET ALLOCATION PERCENTAGE | 3.00% | 3.00% |
PERCENTAGE OF PLAN ASSETS | 2.00% |
RETIREMENT PLANS - Cash Flows (
RETIREMENT PLANS - Cash Flows (Details) - USD ($) $ in Millions | 1 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2018 | |
Pension | U.S. | ||
Estimate of benefits expected to be paid for company's pension and postretirement health care benefit plans: | ||
Contributions to plan | $ 80 | |
Estimated contribution to pension benefit plan during 2019 | $ 120 | |
Pension | International | ||
Estimate of benefits expected to be paid for company's pension and postretirement health care benefit plans: | ||
Estimated contribution to pension benefit plan during 2019 | 48 | |
Pension and Postretirement Health Care Benefit Plans | ||
Estimate of benefits expected to be paid for company's pension and postretirement health care benefit plans: | ||
2,019 | 203 | |
2,020 | 223 | |
2,021 | 234 | |
2,022 | 243 | |
2,023 | 238 | |
2024-2028 | $ 1,233 |
RETIREMENT PLANS - Savings Plan
RETIREMENT PLANS - Savings Plan and ESOP (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Defined Contribution Plan Disclosure [Line Items] | |||
Percentage of matching contribution by company vested immediately | 100.00% | ||
Employer matching contribution expense | $ 83 | $ 82 | $ 74 |
Traditional Plan | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Cash balance benefits percentage | 5.00% | ||
Percentage of matching contribution made by company, up to 3% eligible compensation | 100.00% | ||
Percentage of matching contribution made by company for employee contributions between 3% and 5% | 50.00% | ||
Ecolab Plan | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Cash balance benefits percentage | 3.00% | ||
Percentage of matching contribution made by company, up to 4% eligible compensation | 100.00% | ||
Percentage of matching contribution made by company for employee contributions between 4% and 8% | 50.00% | ||
Minimum | Traditional Plan | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Percentage of eligible compensation, matched 50% | 3.00% | ||
Minimum | Ecolab Plan | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Percentage of eligible compensation, matched 50% | 4.00% | ||
Maximum | Traditional Plan | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Percentage of eligible compensation, matched 100% | 3.00% | ||
Percentage of eligible compensation, matched 50% | 5.00% | ||
Maximum | Ecolab Plan | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Percentage of eligible compensation, matched 100% | 4.00% | ||
Percentage of eligible compensation, matched 50% | 8.00% |
REVENUES (Details)
REVENUES (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Disaggregation of revenue | |||||||||||
Net sales | $ 3,760.5 | $ 3,747.2 | $ 3,689.6 | $ 3,470.9 | $ 3,649 | $ 3,564.5 | $ 3,460 | $ 3,162.4 | $ 14,668.2 | $ 13,835.9 | $ 13,151.8 |
Global Industrial | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 5,286.5 | 4,918 | 4,695.2 | ||||||||
Global Institutional | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 5,098.5 | 4,776.2 | 4,482.9 | ||||||||
Global Energy | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 3,421.1 | 3,230 | 3,092.9 | ||||||||
Other | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 862.1 | 911.7 | 880.8 | ||||||||
Product and sold equipment | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 12,128.6 | 11,431.8 | 10,904.1 | ||||||||
Product and sold equipment | Global Industrial | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 4,626.2 | 4,305.3 | 4,137.7 | ||||||||
Product and sold equipment | Global Institutional | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 4,415.4 | 4,136.2 | 3,902.5 | ||||||||
Product and sold equipment | Global Energy | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 3,004.4 | 2,837.5 | 2,703.2 | ||||||||
Product and sold equipment | Other | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 82.6 | 152.8 | 160.7 | ||||||||
Service and lease equipment | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 2,539.6 | 2,404.1 | 2,247.7 | ||||||||
Service and lease equipment | Global Industrial | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 660.3 | 612.7 | 557.5 | ||||||||
Service and lease equipment | Global Institutional | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 683.1 | 640 | 580.4 | ||||||||
Service and lease equipment | Global Energy | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 416.7 | 392.5 | 389.7 | ||||||||
Service and lease equipment | Other | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | $ 779.5 | $ 758.9 | $ 720.1 | ||||||||
Warewashing Products | Product concentration | Consolidated net sales | |||||||||||
Disaggregation of revenue | |||||||||||
Percentage of consolidated sales | 11.00% | 11.00% | 11.00% | ||||||||
U.S. | Global Industrial | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | $ 2,269.7 | $ 2,087.8 | $ 1,978.1 | ||||||||
U.S. | Global Institutional | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 3,279.2 | 3,107.2 | 3,051 | ||||||||
U.S. | Global Energy | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 1,630.1 | 1,481.1 | 1,373.9 | ||||||||
U.S. | Other | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 569.2 | 648.2 | 631.8 | ||||||||
Europe | Global Industrial | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 1,288.4 | 1,183 | 1,110.2 | ||||||||
Europe | Global Institutional | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 1,038.4 | 928.8 | 740.9 | ||||||||
Europe | Global Energy | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 398.4 | 404.4 | 389.3 | ||||||||
Europe | Other | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 133.1 | 119.5 | 116.6 | ||||||||
Asia Pacific | Global Industrial | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 685.8 | 661.4 | 635.5 | ||||||||
Asia Pacific | Global Institutional | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 250.4 | 237.1 | 233.2 | ||||||||
Asia Pacific | Global Energy | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 262.7 | 253.1 | 257.1 | ||||||||
Asia Pacific | Other | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 40.2 | 33.6 | 33.1 | ||||||||
Latin America | Global Industrial | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 474.3 | 448 | 411.6 | ||||||||
Latin America | Global Institutional | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 165.6 | 163.6 | 151.6 | ||||||||
Latin America | Global Energy | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 219.7 | 239.3 | 247.5 | ||||||||
Latin America | Other | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 46.7 | 44.8 | 42.1 | ||||||||
Greater China | Global Industrial | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 278.4 | 267 | 296.1 | ||||||||
Greater China | Global Institutional | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 113.8 | 102.1 | 93.1 | ||||||||
Greater China | Global Energy | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 76.5 | 70.5 | 71.6 | ||||||||
Greater China | Other | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 50.5 | 45 | 39 | ||||||||
Canada | Global Industrial | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 148.9 | 137.4 | 130.8 | ||||||||
Canada | Global Institutional | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 191.6 | 175.3 | 158.7 | ||||||||
Canada | Global Energy | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 335.6 | 322.3 | 278.9 | ||||||||
Canada | Other | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 11.5 | 9.4 | 8.4 | ||||||||
Middle East and Africa ("MEA") | Global Industrial | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 141 | 133.4 | 132.9 | ||||||||
Middle East and Africa ("MEA") | Global Institutional | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 59.5 | 62.1 | 54.4 | ||||||||
Middle East and Africa ("MEA") | Global Energy | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | 498.1 | 459.3 | 474.6 | ||||||||
Middle East and Africa ("MEA") | Other | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales | $ 10.9 | $ 11.2 | $ 9.8 |
REVENUES - Contract Liability (
REVENUES - Contract Liability (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Change in contract liability | ||
Contract liability as of beginning of period | $ 79 | $ 68.6 |
Revenue recognized: Amounts included in the contract liability at the beginning of the period | (79) | (68.6) |
Increases due to invoices issued, excluding amounts recognized as revenues during the period | 74.3 | 76.8 |
Business combination | 1.5 | 2.2 |
Contract liability as of end of period | $ 75.8 | $ 79 |
OPERATING SEGMENTS (Details)
OPERATING SEGMENTS (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2018USD ($)segment | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Financial information of reportable segments | |||||||||||
Number of operating segments aggregated for classification as reportable segments | segment | 9 | ||||||||||
Number of operating units | segment | 11 | ||||||||||
Number of reportable segments | segment | 3 | ||||||||||
Net sales | $ 3,760.5 | $ 3,747.2 | $ 3,689.6 | $ 3,470.9 | $ 3,649 | $ 3,564.5 | $ 3,460 | $ 3,162.4 | $ 14,668.2 | $ 13,835.9 | $ 13,151.8 |
Operating Income (Loss) | $ 581.9 | $ 516.2 | $ 494.6 | $ 354.3 | $ 609.2 | $ 564.1 | $ 419.6 | $ 357.2 | 1,947 | 1,950.1 | 1,870.2 |
Previously Reported | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | 13,838.3 | 13,152.8 | |||||||||
Operating Income (Loss) | 2,019.8 | 1,915 | |||||||||
Global Industrial | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | 5,286.5 | 4,918 | 4,695.2 | ||||||||
Global Institutional | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | 5,098.5 | 4,776.2 | 4,482.9 | ||||||||
Global Energy | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | 3,421.1 | 3,230 | 3,092.9 | ||||||||
Other | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | 862.1 | 911.7 | 880.8 | ||||||||
Operating segment | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | 15,046.3 | 14,230 | 13,543.5 | ||||||||
Operating Income (Loss) | 2,007.7 | 2,003 | 1,921.5 | ||||||||
Operating segment | Previously Reported | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | 13,646.2 | 13,004.8 | |||||||||
Operating Income (Loss) | 1,986.9 | 1,889.8 | |||||||||
Operating segment | Adjustment | Fixed Currency Rate Change | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | 586 | 539.6 | |||||||||
Operating Income (Loss) | 85.4 | 75.4 | |||||||||
Operating segment | Global Industrial | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | 5,462.4 | 5,106.8 | 4,891.1 | ||||||||
Operating Income (Loss) | 768.1 | 758.5 | 758.3 | ||||||||
Operating segment | Global Industrial | Previously Reported | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | 4,878.5 | 4,687.2 | |||||||||
Operating Income (Loss) | 722 | 720 | |||||||||
Operating segment | Global Industrial | Adjustment | Segment Change | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | (56.9) | (70.3) | |||||||||
Operating Income (Loss) | 2.6 | (0.8) | |||||||||
Operating segment | Global Industrial | Adjustment | Fixed Currency Rate Change | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | 286 | 274.6 | |||||||||
Operating Income (Loss) | 47.5 | 43.7 | |||||||||
Operating segment | Global Institutional | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | 5,204.5 | 4,910 | 4,598.2 | ||||||||
Operating Income (Loss) | 1,026.9 | 979.8 | 949.5 | ||||||||
Operating segment | Global Institutional | Previously Reported | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | 4,744.9 | 4,440.1 | |||||||||
Operating Income (Loss) | 985.7 | 950.5 | |||||||||
Operating segment | Global Institutional | Adjustment | Segment Change | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | (23.7) | ||||||||||
Operating Income (Loss) | (14.9) | (9.8) | |||||||||
Operating segment | Global Institutional | Adjustment | Fixed Currency Rate Change | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | 190.2 | 158.6 | |||||||||
Operating Income (Loss) | 23.5 | 19.5 | |||||||||
Operating segment | Global Energy | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | 3,501.8 | 3,281.7 | 3,155.8 | ||||||||
Operating Income (Loss) | 358.5 | 336.1 | 349.9 | ||||||||
Operating segment | Global Energy | Previously Reported | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | 3,199.3 | 3,075.8 | |||||||||
Operating Income (Loss) | 338.5 | 346.7 | |||||||||
Operating segment | Global Energy | Adjustment | Segment Change | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | 0.7 | ||||||||||
Operating Income (Loss) | (0.7) | (1.5) | |||||||||
Operating segment | Global Energy | Adjustment | Fixed Currency Rate Change | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | 81.7 | 80 | |||||||||
Operating Income (Loss) | 15 | 12.7 | |||||||||
Operating segment | Other | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | 877.6 | 931.5 | 898.4 | ||||||||
Operating Income (Loss) | 161.3 | 142.5 | 141.6 | ||||||||
Operating segment | Other | Previously Reported | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | 823.5 | 801.7 | |||||||||
Operating Income (Loss) | 149.3 | 145.2 | |||||||||
Operating segment | Other | Adjustment | Segment Change | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | 79.9 | 70.3 | |||||||||
Operating Income (Loss) | 13 | 12.1 | |||||||||
Operating segment | Other | Adjustment | Fixed Currency Rate Change | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | 28.1 | 26.4 | |||||||||
Operating Income (Loss) | 4.7 | 4.7 | |||||||||
Currency Impact | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | (378.1) | (394.1) | (391.7) | ||||||||
Operating Income (Loss) | (60.7) | (52.9) | (51.3) | ||||||||
Currency Impact | Previously Reported | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | 192.1 | 148 | |||||||||
Operating Income (Loss) | 32.9 | 25.2 | |||||||||
Currency Impact | Adjustment | Fixed Currency Rate Change | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | (586) | (539.6) | |||||||||
Operating Income (Loss) | (85.4) | (75.4) | |||||||||
Corporate | |||||||||||
Financial information of reportable segments | |||||||||||
Operating Income (Loss) | $ (307.1) | (213.9) | (277.8) | ||||||||
Corporate | Previously Reported | |||||||||||
Financial information of reportable segments | |||||||||||
Operating Income (Loss) | (208.6) | (272.6) | |||||||||
Corporate | Adjustment | Fixed Currency Rate Change | |||||||||||
Financial information of reportable segments | |||||||||||
Operating Income (Loss) | (5.3) | (5.2) | |||||||||
Revenue Standard Adoption | Adjustment | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | (2.4) | (1) | |||||||||
Operating Income (Loss) | (2.4) | (1) | |||||||||
Revenue Standard Adoption | Operating segment | Adjustment | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | (2.2) | (0.9) | |||||||||
Operating Income (Loss) | (2.2) | (0.9) | |||||||||
Revenue Standard Adoption | Operating segment | Global Industrial | Adjustment | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | (0.8) | (0.4) | |||||||||
Operating Income (Loss) | (0.8) | (0.4) | |||||||||
Revenue Standard Adoption | Operating segment | Global Institutional | Adjustment | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | (1.4) | (0.5) | |||||||||
Operating Income (Loss) | (1.4) | (0.5) | |||||||||
Revenue Standard Adoption | Currency Impact | Adjustment | |||||||||||
Financial information of reportable segments | |||||||||||
Net sales | (0.2) | (0.1) | |||||||||
Operating Income (Loss) | (0.2) | (0.1) | |||||||||
Pension Standard Adoption | Adjustment | |||||||||||
Financial information of reportable segments | |||||||||||
Operating Income (Loss) | (67.3) | (43.8) | |||||||||
Pension Standard Adoption | Operating segment | Adjustment | |||||||||||
Financial information of reportable segments | |||||||||||
Operating Income (Loss) | (67.1) | (42.8) | |||||||||
Pension Standard Adoption | Operating segment | Global Industrial | Adjustment | |||||||||||
Financial information of reportable segments | |||||||||||
Operating Income (Loss) | (12.8) | (4.2) | |||||||||
Pension Standard Adoption | Operating segment | Global Institutional | Adjustment | |||||||||||
Financial information of reportable segments | |||||||||||
Operating Income (Loss) | (13.1) | (10.2) | |||||||||
Pension Standard Adoption | Operating segment | Global Energy | Adjustment | |||||||||||
Financial information of reportable segments | |||||||||||
Operating Income (Loss) | (16.7) | (8) | |||||||||
Pension Standard Adoption | Operating segment | Other | Adjustment | |||||||||||
Financial information of reportable segments | |||||||||||
Operating Income (Loss) | (24.5) | (20.4) | |||||||||
Pension Standard Adoption | Currency Impact | Adjustment | |||||||||||
Financial information of reportable segments | |||||||||||
Operating Income (Loss) | $ (0.2) | $ (1) |
OPERATING SEGMENTS AND GEOGRA_3
OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION - Net Sales and Long-lived Assets by Geographic Region (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Financial information of operating segments | ||
Long-Lived Assets, net | $ 15,396.8 | $ 15,366 |
U.S. | ||
Financial information of operating segments | ||
Long-Lived Assets, net | 9,175.4 | 8,853.7 |
Europe | ||
Financial information of operating segments | ||
Long-Lived Assets, net | 2,538.7 | 2,623.8 |
Asia Pacific, excluding Greater China | ||
Financial information of operating segments | ||
Long-Lived Assets, net | 1,003.4 | 1,022.5 |
Latin America | ||
Financial information of operating segments | ||
Long-Lived Assets, net | 565.8 | 605.8 |
MEA | ||
Financial information of operating segments | ||
Long-Lived Assets, net | 302.1 | 310.1 |
Canada | ||
Financial information of operating segments | ||
Long-Lived Assets, net | 616.8 | 649.1 |
Greater China | ||
Financial information of operating segments | ||
Long-Lived Assets, net | $ 1,194.6 | $ 1,301 |
QUARTERLY FINANCIAL DATA (UNA_3
QUARTERLY FINANCIAL DATA (UNAUDITED) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Net sales | $ 3,760.5 | $ 3,747.2 | $ 3,689.6 | $ 3,470.9 | $ 3,649 | $ 3,564.5 | $ 3,460 | $ 3,162.4 | $ 14,668.2 | $ 13,835.9 | $ 13,151.8 |
Cost of sales | 2,216.8 | 2,190.7 | 2,146.1 | 2,072.3 | 2,129 | 2,055.7 | 2,036.6 | 1,842.9 | 8,625.9 | 8,064.2 | 7,533.9 |
Selling, general and administrative expenses | 948.8 | 964.7 | 1,036.8 | 1,018.3 | 962.4 | 939.8 | 967 | 956.1 | 3,968.6 | 3,825.3 | 3,708.2 |
Special (gains) and charges | 13 | 75.6 | 12.1 | 26 | (51.6) | 4.9 | 36.8 | 6.2 | 126.7 | (3.7) | 39.5 |
Operating Income | 581.9 | 516.2 | 494.6 | 354.3 | 609.2 | 564.1 | 419.6 | 357.2 | 1,947 | 1,950.1 | 1,870.2 |
Other (income) expense | (19.9) | (21) | (19.6) | (19.4) | (16.8) | (16.9) | (16.8) | (16.8) | (79.9) | (67.3) | (43.8) |
Interest expense, net | 53.9 | 55.7 | 56.3 | 56.4 | 77.8 | 55.1 | 59.6 | 62.5 | 222.3 | 255 | 264.6 |
Income before income taxes | 547.9 | 481.5 | 457.9 | 317.3 | 548.2 | 525.9 | 376.8 | 311.5 | 1,804.6 | 1,762.4 | 1,649.4 |
Provision for income taxes | 147.7 | 43.2 | 104.3 | 69.1 | (20.2) | 129.3 | 80.5 | 54.2 | 364.3 | 243.8 | 402.9 |
Net income including noncontrolling interest | 400.2 | 438.3 | 353.6 | 248.2 | 568.4 | 396.6 | 296.3 | 257.3 | 1,440.3 | 1,518.6 | 1,246.5 |
Net income attributable to noncontrolling interest | 5.1 | 2.9 | 2.3 | 0.9 | 5.8 | 3.4 | 1.5 | 3.3 | 11.2 | 14 | 17.5 |
Net income attributable to Ecolab | $ 395.1 | $ 435.4 | $ 351.3 | $ 247.3 | $ 562.6 | $ 393.2 | $ 294.8 | $ 254 | $ 1,429.1 | $ 1,504.6 | $ 1,229 |
Earnings attributable to Ecolab per common share | |||||||||||
Basic (in dollars per share) | $ 1.37 | $ 1.51 | $ 1.22 | $ 0.86 | $ 1.95 | $ 1.36 | $ 1.02 | $ 0.87 | $ 4.95 | $ 5.20 | $ 4.20 |
Diluted (in dollars per share) | $ 1.35 | $ 1.48 | $ 1.20 | $ 0.84 | $ 1.92 | $ 1.34 | $ 1 | $ 0.86 | $ 4.88 | $ 5.12 | $ 4.14 |
Weighted-average common shares outstanding | |||||||||||
Basic (in shares) | 288 | 288.8 | 288.8 | 288.6 | 289.1 | 289 | 289.8 | 290.6 | 288.6 | 289.6 | 292.5 |
Diluted (in shares) | 292.2 | 293.4 | 293.3 | 292.7 | 293.6 | 293.4 | 294.1 | 295 | 292.8 | 294 | 296.7 |
Interest expense, special charges | $ 0.3 | ||||||||||
Cost of sales | |||||||||||
Special (gains) and charges | $ 5.8 | $ 3.6 | $ (0.1) | $ 17.8 | $ 0.3 | $ 24.4 | $ 1.5 | 9.3 | $ 44 | $ 66 | |
Interest expense | |||||||||||
Special (gains) and charges | $ 0.3 | $ 21.9 | $ 0.3 | $ 21.9 |