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ITW Illinois Tool Works

Cover Page

Cover Page3 Months Ended
Mar. 31, 2021shares
Entity Information [Line Items]
Document Type10-Q
Document Quarterly Reporttrue
Document Period End DateMar. 31,
2021
Document Transition Reportfalse
Entity File Number1-4797
Entity Registrant NameILLINOIS TOOL WORKS INC
Entity Incorporation, State or Country CodeDE
Entity Tax Identification Number36-1258310
Entity Address, Address Line One155 Harlem Avenue
Entity Address, City or TownGlenview
Entity Address, State or ProvinceIL
Entity Address, Postal Zip Code60025
City Area Code847
Local Phone Number724-7500
Entity Current Reporting StatusYes
Entity Interactive Data CurrentYes
Entity Filer CategoryLarge Accelerated Filer
Entity Small Businessfalse
Entity Emerging Growth Companyfalse
Entity Shell Companyfalse
Entity Common Stock, Shares Outstanding315,882,732
Entity Central Index Key0000049826
Current Fiscal Year End Date--12-31
Document Fiscal Year Focus2021
Document Fiscal Period FocusQ1
Amendment Flagfalse
NEW YORK STOCK EXCHANGE, INC. | Common Stock
Entity Information [Line Items]
Title of 12(b) SecurityCommon Stock
Trading SymbolITW
Security Exchange NameNYSE
NEW YORK STOCK EXCHANGE, INC. | 1.75% Euro Notes due 2022
Entity Information [Line Items]
Title of 12(b) Security1.75% Euro Notes due 2022
Trading SymbolITW22
Security Exchange NameNYSE
NEW YORK STOCK EXCHANGE, INC. | 1.25% Euro Notes due 2023
Entity Information [Line Items]
Title of 12(b) Security1.25% Euro Notes due 2023
Trading SymbolITW23
Security Exchange NameNYSE
NEW YORK STOCK EXCHANGE, INC. | 0.250% Euro Notes due 2024
Entity Information [Line Items]
Title of 12(b) Security0.250% Euro Notes due 2024
Trading SymbolITW24A
Security Exchange NameNYSE
NEW YORK STOCK EXCHANGE, INC. | 0.625% Euro Notes due 2027
Entity Information [Line Items]
Title of 12(b) Security0.625% Euro Notes due 2027
Trading SymbolITW27
Security Exchange NameNYSE
NEW YORK STOCK EXCHANGE, INC. | 2.125% Euro Notes due 2030
Entity Information [Line Items]
Title of 12(b) Security2.125% Euro Notes due 2030
Trading SymbolITW30
Security Exchange NameNYSE
NEW YORK STOCK EXCHANGE, INC. | 1.00% Euro Notes due 2031
Entity Information [Line Items]
Title of 12(b) Security1.00% Euro Notes due 2031
Trading SymbolITW31
Security Exchange NameNYSE
NEW YORK STOCK EXCHANGE, INC. | 3.00% Euro Notes due 2034
Entity Information [Line Items]
Title of 12(b) Security3.00% Euro Notes due 2034
Trading SymbolITW34
Security Exchange NameNYSE

Statement of Income (Unaudited)

Statement of Income (Unaudited) - USD ($) shares in Millions, $ in Millions3 Months Ended
Mar. 31, 2021Mar. 31, 2020
Income Statement [Abstract]
Operating Revenue $ 3,544 $ 3,228
Cost of revenue2,039 1,871
Selling, administrative, and research and development expenses566 560
Amortization and impairment of intangible assets34 36
Operating Income905 761
Interest expense(52)(51)
Other income (expense)12 25
Income Before Taxes865 735
Income Taxes194 169
Net Income $ 671 $ 566
Net Income Per Share:
Basic (in dollars per share) $ 2.12 $ 1.78
Diluted (in dollars per share) $ 2.11 $ 1.77
Shares of Common Stock Outstanding During the Period:
Average (in shares)316.6 318.3
Average assuming dilution (in shares)317.9 319.7

Statement of Comprehensive Inco

Statement of Comprehensive Income (Unaudited) - USD ($) $ in Millions3 Months Ended
Mar. 31, 2021Mar. 31, 2020
Statement of Comprehensive Income [Abstract]
Net Income $ 671 $ 566
Other comprehensive income (loss)
Foreign currency translation adjustments, net of tax(7)(287)
Pension and other postretirement benefit adjustments, net of tax11 9
Other comprehensive income (loss)4 (278)
Comprehensive Income $ 675 $ 288

Statement of Financial Position

Statement of Financial Position (Unaudited) - USD ($) $ in MillionsMar. 31, 2021Dec. 31, 2020
Current Assets:
Cash and equivalents $ 2,484 $ 2,564
Trade receivables2,662 2,506
Inventories1,292 1,189
Prepaid expenses and other current assets266 264
Total current assets6,704 6,523
Net plant and equipment1,746 1,777
Goodwill4,632 4,690
Intangible assets747 781
Deferred income taxes519 533
Other assets1,315 1,308
Total assets15,663 15,612
Current Liabilities:
Short-term debt350 350
Accounts payable589 534
Accrued expenses1,261 1,284
Cash dividends payable360 361
Income taxes payable120 60
Total current liabilities2,680 2,589
Noncurrent Liabilities:
Long-term debt7,599 7,772
Deferred income taxes637 588
Noncurrent income taxes payable413 413
Other liabilities1,058 1,068
Total noncurrent liabilities9,707 9,841
Stockholders' Equity:
Common stock6 6
Additional paid-in-capital1,378 1,362
Retained earnings23,425 23,114
Common stock held in treasury(19,897)(19,659)
Accumulated other comprehensive income (loss)(1,638)(1,642)
Noncontrolling interest2 1
Total stockholders' equity3,276 3,182
Total liabilities and stockholders' equity $ 15,663 $ 15,612

Statement of Financial Positi_2

Statement of Financial Position (Unaudited) - Parenthetical - $ / shares shares in MillionsMar. 31, 2021Dec. 31, 2020
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, issued (in shares)550 550
Common stock, outstanding (in shares)315.9 316.7

Statement of Changes in Stockho

Statement of Changes in Stockholders' Equity (Unaudited) - USD ($) $ in MillionsTotalCommon StockAdditional Paid-in CapitalRetained EarningsCommon Stock Held in TreasuryAccumulated Other Comprehensive Income (Loss)Non-controlling Interest
Beginning balance at Dec. 31, 2019 $ 3,030 $ 6 $ 1,304 $ 22,403 $ (18,982) $ (1,705) $ 4
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income566 566
Common stock issued for stock-based compensation5 (3)8
Stock-based compensation expense9 9
Repurchases of common stock(706)(706)
Dividends declared(338)(338)
Other comprehensive income (loss)(278)(278)
Noncontrolling interest(4)(1)(3)
Ending balance at Mar. 31, 20202,284 6 1,309 22,631 (19,680)(1,983)1
Beginning balance at Dec. 31, 20203,182 6 1,362 23,114 (19,659)(1,642)1
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income671 671
Common stock issued for stock-based compensation17 5 12
Stock-based compensation expense11 11
Repurchases of common stock(250)(250)
Dividends declared(360)(360)
Other comprehensive income (loss)4 4
Noncontrolling interest1 1
Ending balance at Mar. 31, 2021 $ 3,276 $ 6 $ 1,378 $ 23,425 $ (19,897) $ (1,638) $ 2

Statement of Changes in Stock_2

Statement of Changes in Stockholders' Equity (Unaudited) - Parenthetical - $ / shares3 Months Ended
Mar. 31, 2021Mar. 31, 2020
Statement of Stockholders' Equity [Abstract]
Dividends declared (in dollars per share) $ 1.14 $ 1.07

Statement of Cash Flows (Unaudi

Statement of Cash Flows (Unaudited) - USD ($) $ in Millions3 Months Ended
Mar. 31, 2021Mar. 31, 2020
Cash Provided by (Used for) Operating Activities:
Net Income $ 671 $ 566
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation66 68
Amortization and impairment of intangible assets34 36
Change in deferred income taxes21 17
Provision for uncollectible accounts0 2
(Income) loss from investments(1)(3)
(Gain) loss on sale of operations and affiliates0 (1)
Stock-based compensation expense11 9
Other non-cash items, net3 2
(Increase) decrease in-
Trade receivables(192)10
Inventories(122)(48)
Prepaid expenses and other assets(21)(10)
Increase (decrease) in-
Accounts payable65 17
Accrued expenses and other liabilities(13)(93)
Income taxes88 46
Other, net(1)(4)
Net cash provided by operating activities609 614
Cash Provided by (Used for) Investing Activities:
Additions to plant and equipment(68)(60)
Proceeds from investments1 7
Proceeds from sale of plant and equipment2 3
Other, net0 (3)
Net cash provided by (used for) investing activities(65)(53)
Cash Provided by (Used for) Financing Activities:
Cash dividends paid(361)(342)
Issuance of common stock26 17
Repurchases of common stock(250)(706)
Other, net(9)(16)
Net cash provided by (used for) financing activities(594)(1,047)
Effect of Exchange Rate Changes on Cash and Equivalents(30)(65)
Cash and Equivalents:
Increase (decrease) during the period(80)(551)
Beginning of period2,564 1,981
End of period2,484 1,430
Supplementary Cash Flow Information:
Cash Paid During the Period for Interest56 56
Cash Paid During the Period for Income Taxes, Net of Refunds $ 86 $ 106

Significant Accounting Policies

Significant Accounting Policies3 Months Ended
Mar. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Significant Accounting PoliciesSignificant Accounting Policies Financial Statements — The unaudited financial statements included herein have been prepared by Illinois Tool Works Inc. and Subsidiaries (the "Company"). In the opinion of management, the interim financial statements reflect all adjustments of a normal recurring nature necessary for a fair statement of the results for interim periods. It is suggested that these financial statements be read in conjunction with the financial statements and notes to financial statements included in the Company's 2020 Annual Report on Form 10-K. Certain reclassifications of prior year data have been made to conform with current year reporting.

Novel Coronavirus (COVID-19)

Novel Coronavirus (COVID-19)3 Months Ended
Mar. 31, 2021
Unusual or Infrequent Items, or Both [Abstract]
Novel Coronavirus (COVID-19)Novel Coronavirus (COVID-19)In early 2020, an outbreak of a novel strain of coronavirus (COVID-19) occurred in China and other jurisdictions. The COVID-19 outbreak was subsequently declared a global pandemic by the World Health Organization on March 11, 2020. In response to the outbreak, governments around the globe have taken various actions to reduce its spread, including travel restrictions, shutdowns of businesses deemed nonessential, and stay-at-home or similar orders. The COVID-19 pandemic and the measures taken globally to reduce its spread have negatively impacted the global economy, causing significant disruptions in the Company's global operations starting primarily in the latter part of the first quarter of 2020 as COVID-19 continued to spread and impact the countries in which the Company operates and the markets the Company serves. In the first quarter of 2021, the Company experienced solid recovery progress in many of its end markets; however, the disruptions caused by the COVID-19 pandemic continue to have an adverse impact on the Company's global operations. The full extent of the COVID-19 outbreak and its impact on the markets served by the Company and on the Company's operations continues to be highly uncertain. A prolonged outbreak will continue to interrupt the operations of the Company and its customers and suppliers.

Operating Revenue

Operating Revenue3 Months Ended
Mar. 31, 2021
Revenue from Contract with Customer [Abstract]
Operating RevenueOperating Revenue The Company's 83 diversified operating divisions are organized and managed based on similar product offerings and end markets, and are reported to senior management as the following seven segments: Automotive OEM; Food Equipment; Test & Measurement and Electronics; Welding; Polymers & Fluids; Construction Products; and Specialty Products. Operating revenue by product category, which is consistent with the Company's segment presentation, for the three months ended March 31, 2021 and 2020 was as follows: Three Months Ended March 31, In millions 2021 2020 Automotive OEM $ 783 $ 696 Food Equipment 451 483 Test & Measurement and Electronics 552 485 Welding 401 372 Polymers & Fluids 435 393 Construction Products 469 390 Specialty Products 457 414 Intersegment revenue (4) (5) Total operating revenue $ 3,544 $ 3,228 The following is a description of the product offerings, end markets and typical revenue transactions for each of the Company's seven segments: Automotive OEM — This segment is a global, niche supplier to top tier OEMs, providing unique innovation to address pain points for sophisticated customers with complex problems. Businesses in this segment produce components and fasteners for automotive-related applications. This segment primarily serves the automotive original equipment manufacturers and tiers market. Products in this segment include: • plastic and metal components, fasteners and assemblies for automobiles, light trucks and other industrial uses. Products sold in this segment are primarily manufactured to the customer's specifications and are sold under long-term supply agreements with OEM auto manufacturers and other top tier auto parts suppliers. The Company typically recognizes revenue for products in this segment at the time of shipment. Certain products may be produced utilizing tooling that is owned by the customer that the Company developed and is reimbursed by the customer for the associated cost. In these arrangements, the Company typically retains a contractual right to use the customer-owned tooling for the purpose of fulfilling its obligations under the supply agreement. The Company records reimbursements for the cost of customer-owned tooling as a cost offset rather than operating revenue as tooling is not considered a product offering central to the Company's operations. Food Equipment — This segment is a highly focused and branded industry leader in commercial food equipment differentiated by innovation and integrated service offerings. This segment primarily serves the food service, food retail and food institutional/restaurant markets. Products in this segment include: • warewashing equipment; • cooking equipment, including ovens, ranges and broilers; • refrigeration equipment, including refrigerators, freezers and prep tables; • food processing equipment, including slicers, mixers and scales; • kitchen exhaust, ventilation and pollution control systems; and • food equipment service, maintenance and repair. Revenue for equipment sold in this segment is typically recognized at the time of product shipment. In limited circumstances involving installation of equipment and customer acceptance, the Company may recognize revenue upon completion of installation and acceptance by the customer. Annual service contracts are typically sold separate from equipment and the related revenue is recognized on a straight-line basis over the annual service period. Operating revenue for on-demand service repairs and parts is recorded upon completion and customer acceptance of the work performed. Test & Measurement and Electronics — This segment is a branded and innovative producer of test and measurement and electronic manufacturing and maintenance, repair, and operations, or "MRO" solutions that improve efficiency and quality for customers in diverse end markets. Businesses in this segment produce equipment, consumables, and related software for testing and measuring of materials and structures, as well as equipment and consumables used in the production of electronic subassemblies and microelectronics. This segment primarily serves the electronics, general industrial, industrial capital goods, automotive original equipment manufacturers and tiers, energy and consumer durables markets. Products in this segment include: • equipment, consumables, and related software for testing and measuring of materials, structures, gases and fluids; • electronic assembly equipment; • electronic components and component packaging; • static control equipment and consumables used for contamination control in clean room environments; and • pressure sensitive adhesives and components for electronics, medical, transportation and telecommunications applications. Revenue for products sold in this segment is typically recognized at the time of shipment. In limited circumstances where significant obligations to the customer are unfulfilled at the time of shipment, typically involving installation of equipment and customer acceptance, revenue recognition is deferred until such obligations have been completed. Welding — This segment is a branded value-added equipment and specialty consumable manufacturer with innovative and leading technology. Businesses in this segment produce arc welding equipment, consumables and accessories for a wide array of industrial and commercial applications. This segment primarily serves the general industrial market, which includes fabrication, shipbuilding and other general industrial markets, and energy, construction, MRO, automotive original equipment manufacturers and tiers, and industrial capital goods markets. Products in this segment include: • arc welding equipment; and • metal arc welding consumables and related accessories. Products in this segment are primarily manufactured to meet anticipated customer demand. The Company typically recognizes revenue for these products at the time of product shipment. Polymers & Fluids — This segment is a branded supplier to niche markets that require value-added, differentiated products. Businesses in this segment produce engineered adhesives, sealants, lubrication and cutting fluids, and fluids and polymers for auto aftermarket maintenance and appearance. This segment primarily serves the automotive aftermarket, general industrial, MRO and construction markets. Products in this segment include: • adhesives for industrial, construction and consumer purposes; • chemical fluids which clean or add lubrication to machines; • epoxy and resin-based coating products for industrial applications; • hand wipes and cleaners for industrial applications; • fluids, polymers and other supplies for auto aftermarket maintenance and appearance; • fillers and putties for auto body repair; and • polyester coatings and patch and repair products for the marine industry. Products in this segment are primarily manufactured to meet anticipated customer demand. The Company typically recognizes revenue for these products at the time of product shipment. Construction Products — This segment is a branded supplier of innovative engineered fastening systems and solutions. This segment primarily serves the residential construction, renovation/remodel and commercial construction markets. Products in this segment include: • fasteners and related fastening tools for wood and metal applications; • anchors, fasteners and related tools for concrete applications; • metal plate truss components and related equipment and software; and • packaged hardware, fasteners, anchors and other products for retail. Products in this segment are primarily manufactured to meet anticipated customer demand. The Company typically recognizes revenue for these products at the time of product shipment. Specialty Products — This segment is focused on diversified niche market opportunities with substantial patent protection producing beverage packaging equipment and consumables, product coding and marking equipment and consumables, and appliance components and fasteners. This segment primarily serves the food and beverage, consumer durables, general industrial, industrial capital goods and printing and publishing markets. Products in this segment include: • line integration, conveyor systems and line automation for the food and beverage industries; • plastic consumables that multi-pack cans and bottles and related equipment; • foil, film and related equipment used to decorate consumer products; • product coding and marking equipment and related consumables; • plastic and metal closures and components for appliances; • airport ground support equipment; and • components for medical devices. Products in this segment are primarily manufactured to meet anticipated customer demand. The Company typically recognizes revenue for these products at the time of product shipment. In limited circumstances where significant obligations to the customer are unfulfilled at the time of shipment, typically involving installation of equipment and customer acceptance, revenue is recognized when such obligations have been completed.

Income Taxes

Income Taxes3 Months Ended
Mar. 31, 2021
Income Tax Disclosure [Abstract]
Income TaxesIncome Taxes The Company's effective tax rate for the three months ended March 31, 2021 and 2020 was 22.4% and 23.0%, respectively. The effective tax rate for the three months ended March 31, 2021 and 2020 benefited from discrete income tax benefits of $9 million and $7 million, respectively, related to excess tax benefits from stock-based compensation. The Company and its subsidiaries file tax returns in the U.S. and various state, local and foreign jurisdictions. These tax returns are routinely audited by the tax authorities in these jurisdictions, including the Internal Revenue Service ("IRS"), Her Majesty's Revenue and Customs, German Fiscal Authority, French Fiscal Authority, and Australian Tax Office, and a number of these audits are currently ongoing, which may increase the amount of the unrecognized tax benefits in future periods. Due to the ongoing audits, the Company believes it is reasonably possible that within the next twelve months the amount of the Company's unrecognized tax benefits may be decreased by approximately $99 million related predominantly to various intercompany transactions. The Company has recorded its best estimate of the potential exposure for these issues.

Inventories

Inventories3 Months Ended
Mar. 31, 2021
Inventory Disclosure [Abstract]
InventoriesInventories Inventories as of March 31, 2021 and December 31, 2020 were as follows: In millions March 31, 2021 December 31, 2020 Raw material $ 495 $ 454 Work-in-process 159 136 Finished goods 722 681 LIFO reserve (84) (82) Total inventories $ 1,292 $ 1,189

Pension and Other Postretiremen

Pension and Other Postretirement Benefits3 Months Ended
Mar. 31, 2021
Retirement Benefits [Abstract]
Pension and Other Postretirement BenefitsPension and Other Postretirement Benefits Pension and other postretirement benefit costs for the three months ended March 31, 2021 and 2020 were as follows: Three Months Ended March 31, Pension Other Postretirement Benefits In millions 2021 2020 2021 2020 Components of net periodic benefit cost: Service cost $ 13 $ 14 $ 2 $ 2 Interest cost 10 15 3 4 Expected return on plan assets (25) (28) (7) (6) Amortization of actuarial loss (gain) 13 12 — — Total net periodic benefit cost $ 11 $ 13 $ (2) $ — The service cost component of net periodic benefit cost is presented within Cost of revenue and Selling, administrative, and research and development expenses in the Statement of Income while the other components of net periodic benefit cost are presented within Other income (expense). The Company expects to contribute approximately $28 million to its pension plans and $4 million to its other postretirement benefit plans in 2021. As of March 31, 2021, contributions of $14 million to pension plans and $2 million to other postretirement benefit plans have been made.

Debt

Debt3 Months Ended
Mar. 31, 2021
Debt Disclosure [Abstract]
DebtDebtThere was no commercial paper outstanding as of March 31, 2021 and December 31, 2020. Short-term debt as of March 31, 2021 and December 31, 2020 included $350 million related to the 3.375% notes due September 15, 2021. The Company has a $2.5 billion revolving credit facility with a termination date of September 27, 2024, which is available to provide additional liquidity, including to support the potential issuances of commercial paper. No amounts were outstanding under the $2.5 billion revolving credit facility as of March 31, 2021 or December 31, 2020. The approximate fair value and related carrying value of the Company's total long-term debt, including current maturities of long-term debt presented as short-term debt, as of March 31, 2021 and December 31, 2020 were as follows: In millions March 31, 2021 December 31, 2020 Fair value $ 8,880 $ 9,412 Carrying value 7,949 8,122 The approximate fair values of the Company's long-term debt, including current maturities, were based on a valuation model using Level 2 observable inputs which included market rates for comparable instruments for the respective periods.

Accumulated Other Comprehensive

Accumulated Other Comprehensive Income (Loss)3 Months Ended
Mar. 31, 2021
Equity [Abstract]
Accumulated Other Comprehensive Income (Loss)Accumulated Other Comprehensive Income (Loss) The following table summarizes changes in Accumulated other comprehensive income (loss) for the three months ended March 31, 2021 and 2020: Three Months Ended March 31, In millions 2021 2020 Beginning balance $ (1,642) $ (1,705) Foreign currency translation adjustments during the period 33 (272) Foreign currency translation adjustments reclassified to income 2 — Income taxes (42) (15) Total foreign currency translation adjustments, net of tax (7) (287) Pension and other postretirement benefit adjustments reclassified to income 13 12 Income taxes (2) (3) Total pension and other postretirement benefit adjustments, net of tax 11 9 Ending balance $ (1,638) $ (1,983) Foreign currency translation adjustments reclassified to income related to an immaterial divestiture. Pension and other postretirement benefit adjustments reclassified to income represent the amortization of actuarial losses. Refer to Note 6. Pension and Other Postretirement Benefits for additional information. The Company designated the €1.0 billion of Euro notes issued in May 2014, the €1.0 billion of Euro notes issued in May 2015 and the €1.6 billion of Euro notes issued in June 2019 as hedges of a portion of its net investment in Euro-denominated foreign operations to reduce foreign currency risk associated with the investment in these operations. Changes in the value of this debt resulting from fluctuations in the Euro to U.S. Dollar exchange rate have been recorded as foreign currency translation adjustments within Accumulated other comprehensive income (loss). The carrying values of the 2019, 2015 and 2014 Euro notes were $1.9 billion, $1.2 billion and $1.2 billion, respectively, as of March 31, 2021. The cumulative unrealized pre-tax gain (loss) recorded in Accumulated other comprehensive income (loss) related to the net investment hedge was a gain of $54 million as of March 31, 2021 and a loss of $120 million as of December 31, 2020. As of March 31, 2021 and 2020, the ending balance of Accumulated other comprehensive income (loss) consisted of after-tax cumulative translation adjustment losses of $1.3 billion and $1.6 billion, respectively, and after-tax unrecognized pension and other postretirement benefits cost of $320 million and $381 million, respectively.

Segment Information

Segment Information3 Months Ended
Mar. 31, 2021
Segment Reporting [Abstract]
Segment InformationSegment InformationThe Company's operations are organized and managed based on similar product offerings and end markets, and are reported to senior management as the following seven segments: Automotive OEM; Food Equipment; Test & Measurement and Electronics; Welding; Polymers & Fluids; Construction Products; and Specialty Products. Refer to Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations for information regarding operating revenue and operating income for the Company's segments.

Acquisition Agreement

Acquisition Agreement3 Months Ended
Mar. 31, 2021
Business Combinations [Abstract]
Acquisition AgreementAcquisition AgreementThe Company has entered into an agreement with Amphenol Corporation ("Amphenol"), whereby the Company intends to acquire the Test & Simulation business of MTS Systems Corporation (“MTS”) from Amphenol for $750 million, subject to certain post-closing adjustments and excluding transaction-related expenses. The acquisition of the Test & Simulation business of MTS from Amphenol is expected to close following the receipt of all required regulatory approvals and the satisfaction of other customary closing conditions. Upon completion of this acquisition, the Test & Simulation business of MTS will be reported within the Company's Test & Measurement and Electronics segment.

Significant Accounting Polici_2

Significant Accounting Policies (Policies)3 Months Ended
Mar. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
RevenueAutomotive OEM — This segment is a global, niche supplier to top tier OEMs, providing unique innovation to address pain points for sophisticated customers with complex problems. Businesses in this segment produce components and fasteners for automotive-related applications. This segment primarily serves the automotive original equipment manufacturers and tiers market. Products in this segment include: • plastic and metal components, fasteners and assemblies for automobiles, light trucks and other industrial uses. Products sold in this segment are primarily manufactured to the customer's specifications and are sold under long-term supply agreements with OEM auto manufacturers and other top tier auto parts suppliers. The Company typically recognizes revenue for products in this segment at the time of shipment. Certain products may be produced utilizing tooling that is owned by the customer that the Company developed and is reimbursed by the customer for the associated cost. In these arrangements, the Company typically retains a contractual right to use the customer-owned tooling for the purpose of fulfilling its obligations under the supply agreement. The Company records reimbursements for the cost of customer-owned tooling as a cost offset rather than operating revenue as tooling is not considered a product offering central to the Company's operations. Food Equipment — This segment is a highly focused and branded industry leader in commercial food equipment differentiated by innovation and integrated service offerings. This segment primarily serves the food service, food retail and food institutional/restaurant markets. Products in this segment include: • warewashing equipment; • cooking equipment, including ovens, ranges and broilers; • refrigeration equipment, including refrigerators, freezers and prep tables; • food processing equipment, including slicers, mixers and scales; • kitchen exhaust, ventilation and pollution control systems; and • food equipment service, maintenance and repair. Revenue for equipment sold in this segment is typically recognized at the time of product shipment. In limited circumstances involving installation of equipment and customer acceptance, the Company may recognize revenue upon completion of installation and acceptance by the customer. Annual service contracts are typically sold separate from equipment and the related revenue is recognized on a straight-line basis over the annual service period. Operating revenue for on-demand service repairs and parts is recorded upon completion and customer acceptance of the work performed. Test & Measurement and Electronics — This segment is a branded and innovative producer of test and measurement and electronic manufacturing and maintenance, repair, and operations, or "MRO" solutions that improve efficiency and quality for customers in diverse end markets. Businesses in this segment produce equipment, consumables, and related software for testing and measuring of materials and structures, as well as equipment and consumables used in the production of electronic subassemblies and microelectronics. This segment primarily serves the electronics, general industrial, industrial capital goods, automotive original equipment manufacturers and tiers, energy and consumer durables markets. Products in this segment include: • equipment, consumables, and related software for testing and measuring of materials, structures, gases and fluids; • electronic assembly equipment; • electronic components and component packaging; • static control equipment and consumables used for contamination control in clean room environments; and • pressure sensitive adhesives and components for electronics, medical, transportation and telecommunications applications. Revenue for products sold in this segment is typically recognized at the time of shipment. In limited circumstances where significant obligations to the customer are unfulfilled at the time of shipment, typically involving installation of equipment and customer acceptance, revenue recognition is deferred until such obligations have been completed. Welding — This segment is a branded value-added equipment and specialty consumable manufacturer with innovative and leading technology. Businesses in this segment produce arc welding equipment, consumables and accessories for a wide array of industrial and commercial applications. This segment primarily serves the general industrial market, which includes fabrication, shipbuilding and other general industrial markets, and energy, construction, MRO, automotive original equipment manufacturers and tiers, and industrial capital goods markets. Products in this segment include: • arc welding equipment; and • metal arc welding consumables and related accessories. Products in this segment are primarily manufactured to meet anticipated customer demand. The Company typically recognizes revenue for these products at the time of product shipment. Polymers & Fluids — This segment is a branded supplier to niche markets that require value-added, differentiated products. Businesses in this segment produce engineered adhesives, sealants, lubrication and cutting fluids, and fluids and polymers for auto aftermarket maintenance and appearance. This segment primarily serves the automotive aftermarket, general industrial, MRO and construction markets. Products in this segment include: • adhesives for industrial, construction and consumer purposes; • chemical fluids which clean or add lubrication to machines; • epoxy and resin-based coating products for industrial applications; • hand wipes and cleaners for industrial applications; • fluids, polymers and other supplies for auto aftermarket maintenance and appearance; • fillers and putties for auto body repair; and • polyester coatings and patch and repair products for the marine industry. Products in this segment are primarily manufactured to meet anticipated customer demand. The Company typically recognizes revenue for these products at the time of product shipment. Construction Products — This segment is a branded supplier of innovative engineered fastening systems and solutions. This segment primarily serves the residential construction, renovation/remodel and commercial construction markets. Products in this segment include: • fasteners and related fastening tools for wood and metal applications; • anchors, fasteners and related tools for concrete applications; • metal plate truss components and related equipment and software; and • packaged hardware, fasteners, anchors and other products for retail. Products in this segment are primarily manufactured to meet anticipated customer demand. The Company typically recognizes revenue for these products at the time of product shipment. Specialty Products — This segment is focused on diversified niche market opportunities with substantial patent protection producing beverage packaging equipment and consumables, product coding and marking equipment and consumables, and appliance components and fasteners. This segment primarily serves the food and beverage, consumer durables, general industrial, industrial capital goods and printing and publishing markets. Products in this segment include: • line integration, conveyor systems and line automation for the food and beverage industries; • plastic consumables that multi-pack cans and bottles and related equipment; • foil, film and related equipment used to decorate consumer products; • product coding and marking equipment and related consumables; • plastic and metal closures and components for appliances; • airport ground support equipment; and • components for medical devices. Products in this segment are primarily manufactured to meet anticipated customer demand. The Company typically recognizes revenue for these products at the time of product shipment. In limited circumstances where significant obligations to the customer are unfulfilled at the time of shipment, typically involving installation of equipment and customer acceptance, revenue is recognized when such obligations have been completed.

Operating Revenue (Tables)

Operating Revenue (Tables)3 Months Ended
Mar. 31, 2021
Revenue from Contract with Customer [Abstract]
Disaggregation of RevenueOperating revenue by product category, which is consistent with the Company's segment presentation, for the three months ended March 31, 2021 and 2020 was as follows: Three Months Ended March 31, In millions 2021 2020 Automotive OEM $ 783 $ 696 Food Equipment 451 483 Test & Measurement and Electronics 552 485 Welding 401 372 Polymers & Fluids 435 393 Construction Products 469 390 Specialty Products 457 414 Intersegment revenue (4) (5) Total operating revenue $ 3,544 $ 3,228

Inventories (Tables)

Inventories (Tables)3 Months Ended
Mar. 31, 2021
Inventory Disclosure [Abstract]
Schedule of InventoriesInventories as of March 31, 2021 and December 31, 2020 were as follows: In millions March 31, 2021 December 31, 2020 Raw material $ 495 $ 454 Work-in-process 159 136 Finished goods 722 681 LIFO reserve (84) (82) Total inventories $ 1,292 $ 1,189

Pension and Other Postretirem_2

Pension and Other Postretirement Benefits (Tables)3 Months Ended
Mar. 31, 2021
Retirement Benefits [Abstract]
Pension and Other Postretirement Benefit CostsPension and other postretirement benefit costs for the three months ended March 31, 2021 and 2020 were as follows: Three Months Ended March 31, Pension Other Postretirement Benefits In millions 2021 2020 2021 2020 Components of net periodic benefit cost: Service cost $ 13 $ 14 $ 2 $ 2 Interest cost 10 15 3 4 Expected return on plan assets (25) (28) (7) (6) Amortization of actuarial loss (gain) 13 12 — — Total net periodic benefit cost $ 11 $ 13 $ (2) $ —

Debt (Tables)

Debt (Tables)3 Months Ended
Mar. 31, 2021
Debt Disclosure [Abstract]
Approximate Fair Value and Related Carrying Value of Long-term Debt, Including Current MaturitiesThe approximate fair value and related carrying value of the Company's total long-term debt, including current maturities of long-term debt presented as short-term debt, as of March 31, 2021 and December 31, 2020 were as follows: In millions March 31, 2021 December 31, 2020 Fair value $ 8,880 $ 9,412 Carrying value 7,949 8,122

Accumulated Other Comprehensi_2

Accumulated Other Comprehensive Income (Loss) (Tables)3 Months Ended
Mar. 31, 2021
Equity [Abstract]
Schedule of Accumulated Other Comprehensive Income (Loss)The following table summarizes changes in Accumulated other comprehensive income (loss) for the three months ended March 31, 2021 and 2020: Three Months Ended March 31, In millions 2021 2020 Beginning balance $ (1,642) $ (1,705) Foreign currency translation adjustments during the period 33 (272) Foreign currency translation adjustments reclassified to income 2 — Income taxes (42) (15) Total foreign currency translation adjustments, net of tax (7) (287) Pension and other postretirement benefit adjustments reclassified to income 13 12 Income taxes (2) (3) Total pension and other postretirement benefit adjustments, net of tax 11 9 Ending balance $ (1,638) $ (1,983)

Operating Revenue (Details)

Operating Revenue (Details)3 Months Ended
Mar. 31, 2021segmentdivision
Revenue from Contract with Customer [Abstract]
Number of company divisions | division83
Number of reportable segments | segment7

Operating Revenue - Segment Rev

Operating Revenue - Segment Revenue (Details) - USD ($) $ in Millions3 Months Ended
Mar. 31, 2021Mar. 31, 2020
Disaggregation of Revenue [Line Items]
Revenue $ 3,544 $ 3,228
Operating segments | Automotive OEM
Disaggregation of Revenue [Line Items]
Revenue783 696
Operating segments | Food Equipment
Disaggregation of Revenue [Line Items]
Revenue451 483
Operating segments | Test & Measurement and Electronics
Disaggregation of Revenue [Line Items]
Revenue552 485
Operating segments | Welding
Disaggregation of Revenue [Line Items]
Revenue401 372
Operating segments | Polymers & Fluids
Disaggregation of Revenue [Line Items]
Revenue435 393
Operating segments | Construction Products
Disaggregation of Revenue [Line Items]
Revenue469 390
Operating segments | Specialty Products
Disaggregation of Revenue [Line Items]
Revenue457 414
Intersegment revenue
Disaggregation of Revenue [Line Items]
Revenue $ (4) $ (5)

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Millions3 Months Ended
Mar. 31, 2021Mar. 31, 2020
Income Tax Disclosure [Abstract]
Effective income tax rate reconciliation, percent22.40%23.00%
Discrete tax benefit related to excess tax benefits from stock based compensation $ 9 $ 7
Potential decrease in unrecognized tax benefits $ 99

Inventories (Details)

Inventories (Details) - USD ($) $ in MillionsMar. 31, 2021Dec. 31, 2020
Inventory Disclosure [Abstract]
Raw material $ 495 $ 454
Work-in-process159 136
Finished goods722 681
LIFO reserve(84)(82)
Total inventories $ 1,292 $ 1,189

Pension and Other Postretirem_3

Pension and Other Postretirement Benefits - Periodic Benefit Cost (Details) - USD ($) $ in Millions3 Months Ended
Mar. 31, 2021Mar. 31, 2020
Pension
Components of net periodic benefit cost:
Service cost $ 13 $ 14
Interest cost10 15
Expected return on plan assets(25)(28)
Amortization of actuarial loss (gain)13 12
Total net periodic benefit cost11 13
Other Postretirement Benefits
Components of net periodic benefit cost:
Service cost2 2
Interest cost3 4
Expected return on plan assets(7)(6)
Amortization of actuarial loss (gain)0 0
Total net periodic benefit cost $ (2) $ 0

Pension and Other Postretirem_4

Pension and Other Postretirement Benefits - Narrative (Details) $ in Millions3 Months Ended
Mar. 31, 2021USD ($)
Pension
Defined Benefit Plan Disclosure [Line Items]
Expected current year company contributions $ 28
Contributions14
Other Postretirement Benefits
Defined Benefit Plan Disclosure [Line Items]
Expected current year company contributions4
Contributions $ 2

Debt - Narrative (Details)

Debt - Narrative (Details) - USD ($)Mar. 31, 2021Dec. 31, 2020
Debt Instrument [Line Items]
Commercial paper $ 0 $ 0
Short-term debt350,000,000 350,000,000
Long-term line of credit0 0
Line of Credit
Debt Instrument [Line Items]
Maximum borrowing capacity2,500,000,000 2,500,000,000
3.375% Notes
Debt Instrument [Line Items]
Short-term debt $ 350,000,000 $ 350,000,000
Stated interest rate3.375%3.375%

Debt - Fair Value and Related C

Debt - Fair Value and Related Carrying Values (Details) - USD ($) $ in MillionsMar. 31, 2021Dec. 31, 2020
Debt Disclosure [Abstract]
Fair value $ 8,880 $ 9,412
Carrying value $ 7,949 $ 8,122

Accumulated Other Comprehensi_3

Accumulated Other Comprehensive Income (Loss) - Summary of AOCI(L) (Details) - USD ($) $ in Millions3 Months Ended
Mar. 31, 2021Mar. 31, 2020
Changes in Accumulated Other Comprehensive Income [Roll Forward]
Beginning balance $ 3,182 $ 3,030
Other comprehensive income (loss)4 (278)
Ending balance3,276 2,284
Accumulated Other Comprehensive Income Attributable to Parent
Changes in Accumulated Other Comprehensive Income [Roll Forward]
Beginning balance(1,642)(1,705)
Ending balance(1,638)(1,983)
Accumulated Foreign Currency Adjustment Attributable to Parent
Changes in Accumulated Other Comprehensive Income [Roll Forward]
Other comprehensive income (loss), adjustments during the period33 (272)
Other comprehensive income (loss), adjustments reclassified to income2 0
Income taxes(42)(15)
Other comprehensive income (loss)(7)(287)
Accumulated Defined Benefit Plans Adjustment Attributable to Parent
Changes in Accumulated Other Comprehensive Income [Roll Forward]
Other comprehensive income (loss), adjustments reclassified to income13 12
Income taxes(2)(3)
Other comprehensive income (loss) $ 11 $ 9

Accumulated Other Comprehensi_4

Accumulated Other Comprehensive Income (Loss) - Narrative (Details) $ in MillionsMar. 31, 2021USD ($)Dec. 31, 2020USD ($)Mar. 31, 2020USD ($)Jun. 30, 2019EUR (€)May 31, 2015EUR (€)May 31, 2014EUR (€)
Accumulated Other Comprehensive Income (Loss) [Line Items]
Cumulative translation adjustment losses, net of tax $ 1,300 $ 1,600
Unrecognized pension and other postretirement benefits costs, net of tax320 $ 381
Net Investment Hedging | Euro Notes
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive income related to net investment hedge unrealized gain (loss), before tax54 $ (120)
Euro Notes Issued May 2014 | Net Investment Hedging | Euro Notes
Accumulated Other Comprehensive Income (Loss) [Line Items]
Face value of notes | € € 1,000,000,000
Long-term debt1,200
Euro Notes Issued May 2015 | Net Investment Hedging | Euro Notes
Accumulated Other Comprehensive Income (Loss) [Line Items]
Face value of notes | € € 1,000,000,000
Long-term debt1,200
Euro Notes Issued June 2019 | Net Investment Hedging | Euro Notes
Accumulated Other Comprehensive Income (Loss) [Line Items]
Face value of notes | € € 1,600,000,000
Long-term debt $ 1,900

Segment Information (Details)

Segment Information (Details)3 Months Ended
Mar. 31, 2021segment
Segment Reporting [Abstract]
Number of reportable segments7

Acquisition Agreement (Details)

Acquisition Agreement (Details) $ in Millions12 Months Ended
Dec. 31, 2021USD ($)
Forecast | MTS
Business Acquisition [Line Items]
Business acquisition, purchase price $ 750