INGERSOLL-RAND PLC, 10-Q filed on 8/5/2019
Quarterly Report
v3.19.2
Cover Cover - shares
6 Months Ended
Jun. 30, 2019
Jul. 19, 2019
Document and Entity Information [Abstract]    
Entity File Number 001-34400  
Entity Interactive Data Current Yes  
Title of 12(b) Security Ordinary Shares, Par Value $1.00 per Share  
Entity Address, Address Line One 170/175 Lakeview Dr.  
Entity Incorporation, State or Country Code L2  
Document Transition Report false  
Document Quarterly Report true  
Entity Registrant Name Ingersoll-Rand plc  
Entity Central Index Key 0001466258  
Current Fiscal Year End Date --12-31  
Entity Filer Category Large Accelerated Filer  
Document Type 10-Q  
Document Period End Date Jun. 30, 2019  
Document Fiscal Year Focus 2019  
Document Fiscal Period Focus Q2  
Amendment Flag false  
Entity Common Stock, Shares Outstanding   241,576,691
Entity Current Reporting Status Yes  
Entity Small Business false  
Entity Shell Company false  
Entity Emerging Growth Company false  
Entity Tax Identification Number 98-0626632  
Entity Address, Address Line Two Airside Business Park  
Entity Address, City or Town Swords Co. Dublin  
Entity Address, Country IE  
City Area Code 353  
Local Phone Number 18707400  
Trading Symbol IR  
Security Exchange Name NYSE  
Entity Address, Postal Zip Code 00000  
v3.19.2
Condensed Consolidated Statements of Comprehensive Income - USD ($)
shares in Millions, $ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Net revenues $ 4,527.8 $ 4,357.7 $ 8,103.7 $ 7,742.2
Cost of goods sold (3,094.1) (2,964.1) (5,611.4) (5,384.3)
Selling and administrative expenses (783.2) (753.3) (1,523.3) (1,474.2)
Operating income 650.5 640.3 969.0 883.7
Interest expense (64.7) (50.3) (115.6) (123.2)
Other income/(expense), net 3.4 (3.5) (15.4) (7.5)
Earnings before income taxes 589.2 586.5 838.0 753.0
Provision for income taxes (123.3) (128.0) 166.3 (161.0)
Earnings from continuing operations 465.9 458.5 671.7 592.0
Discontinued operations, net of tax (5.6) (5.9) (7.7) (15.3)
Net earnings 460.3 452.6 664.0 576.7
Less: Net earnings attributable to noncontrolling interests (4.2) (4.5) (8.0) (8.2)
Net earnings attributable to Ingersoll-Rand plc 456.1 448.1 656.0 568.5
Amounts attributable to Ingersoll-Rand plc ordinary shareholders:        
Continuing operations 461.7 454.0 663.7 583.8
Discontinued operations (5.6) (5.9) (7.7) (15.3)
Net earnings attributable to Ingersoll-Rand plc $ 456.1 $ 448.1 $ 656.0 $ 568.5
Basic:        
Continuing operations $ 1.91 $ 1.83 $ 2.74 $ 2.35
Discontinued operations (0.03) (0.02) (0.03) (0.07)
Net earnings 1.88 1.81 2.71 2.28
Diluted:        
Continuing operations 1.88 1.82 2.71 2.32
Discontinued operations (0.02) (0.03) (0.03) (0.06)
Net earnings $ 1.86 $ 1.79 $ 2.68 $ 2.26
Weighted-average shares outstanding        
Basic 242.1 247.5 242.3 248.9
Diluted 244.9 250.1 245.0 251.6
Total comprehensive income $ 480.9 $ 171.6 $ 690.5 $ 448.2
Less: Total comprehensive income attributable to noncontrolling interests (5.4) (1.4) (9.6) (5.5)
Total comprehensive income attributable to Ingersoll-Rand plc $ 475.5 $ 170.2 $ 680.9 $ 442.7
v3.19.2
Condensed Consolidated Balance Sheets - USD ($)
$ in Millions
Jun. 30, 2019
Dec. 31, 2018
ASSETS    
Cash and cash equivalents $ 875.6 $ 903.4
Accounts and notes receivable, net 3,108.3 2,679.2
Inventories, net 1,950.5 1,677.8
Other current assets 417.1 471.6
Total current assets 6,351.5 5,732.0
Property, plant and equipment, net 1,794.1 1,730.8
Goodwill 6,859.6 5,959.5
Intangible assets, net 4,230.3 3,634.7
Other noncurrent assets 1,432.1 857.9
Total assets 20,667.6 17,914.9
LIABILITIES AND EQUITY    
Accounts payable 1,889.9 1,705.3
Accrued compensation and benefits 432.3 531.6
Accrued expenses and other current liabilities 2,028.8 1,728.2
Short-term borrowings and current maturities of long-term debt 829.2 350.6
Total current liabilities 5,180.2 4,315.7
Long-term debt 4,920.6 3,740.7
Postemployment and other benefit liabilities 1,196.9 1,192.9
Deferred and noncurrent income taxes 725.1 538.4
Other noncurrent liabilities 1,471.9 1,062.4
Total liabilities 13,494.7 10,850.1
Equity:    
Ordinary shares 265.9 266.4
Treasury Stock, Value (1,719.4) (1,719.4)
Capital in excess of par value 26.0 0.0
Retained earnings 9,497.2 9,439.8
Accumulated other comprehensive income (loss) (939.2) (964.1)
Total Ingersoll-Rand plc shareholders’ equity 7,130.5 7,022.7
Noncontrolling interests 42.4 42.1
Total equity 7,172.9 7,064.8
Total liabilities and equity $ 20,667.6 $ 17,914.9
v3.19.2
Condensed Consolidated Statements of Stockholders' Equity - USD ($)
shares in Millions, $ in Millions
Total
Ordinary shares
Ordinary shares held in treasury, at cost
Capital in excess of par value
Retained earnings
Accumulated other comprehensive income (loss)
Noncontrolling Interests
Beginning balance at Dec. 31, 2017 $ 7,206.9 $ 274.0 $ (1,719.4) $ 461.3 $ 8,903.2 $ (778.8) $ 66.6
Beginning balance (shares) at Dec. 31, 2017   274.0          
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Net earnings 124.1       120.4   3.7
Other comprehensive income (loss) 152.5         152.1 0.4
Shares issued under incentive stock plans 6.6 $ 1.3   5.3      
Shares issued under incentive stock plans (shares)   1.3          
Repurchase of ordinary shares (250.0) $ (2.8)   (247.2)      
Repurchase of ordinary shares (shares)   (2.8)          
Share-based compensation 30.0     30.5 (0.5)    
Dividends declared to noncontrolling interest (11.0)           (11.0)
Cash dividends declared (112.0)       (112.0)    
Ending balance (shares) at Mar. 31, 2018   272.5          
Ending balance at Mar. 31, 2018 7,140.4 $ 272.5 (1,719.4) 249.9 8,904.4 (626.7) 59.7
Beginning balance at Dec. 31, 2017 7,206.9 $ 274.0 (1,719.4) 461.3 8,903.2 (778.8) 66.6
Beginning balance (shares) at Dec. 31, 2017   274.0          
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Net earnings 576.7            
Other comprehensive income (loss)           (125.8)  
Ending balance (shares) at Jun. 30, 2018   269.8          
Ending balance at Jun. 30, 2018 6,823.7 $ 269.8 (1,719.4) 31.4 9,109.9 (904.6) 36.6
Beginning balance at Mar. 31, 2018 7,140.4 $ 272.5 (1,719.4) 249.9 8,904.4 (626.7) 59.7
Beginning balance (shares) at Mar. 31, 2018   272.5          
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Net earnings 452.6       448.1   4.5
Other comprehensive income (loss) (281.0)         (277.9) (3.1)
Shares issued under incentive stock plans 7.2 $ 0.2   7.0      
Shares issued under incentive stock plans (shares)   0.2          
Repurchase of ordinary shares (250.1) $ (2.8)   (247.3) 0.0    
Repurchase of ordinary shares (shares)   (2.8)          
Share-based compensation 19.6     21.8 (2.2)    
Dividends declared to noncontrolling interest (24.5)           (24.5)
Cash dividends declared (240.4)       (240.4)    
Other 0.1 $ (0.1)          
Stockholders' Equity, Other Shares   0.1          
Ending balance (shares) at Jun. 30, 2018   269.8          
Ending balance at Jun. 30, 2018 6,823.7 $ 269.8 (1,719.4) 31.4 9,109.9 (904.6) 36.6
Beginning balance at Dec. 31, 2018 7,064.8 $ 266.4 $ (1,719.4) 0.0 9,439.8 (964.1) 42.1
Beginning balance (shares) at Dec. 31, 2018   266.4 24.5        
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Net earnings 203.7       199.9   3.8
Other comprehensive income (loss) 5.9         5.5 0.4
Shares issued under incentive stock plans 6.3 $ 1.5   4.8      
Shares issued under incentive stock plans (shares)   1.5          
Repurchase of ordinary shares (250.0) $ (2.4)   (34.6) (213.0)    
Repurchase of ordinary shares (shares)   (2.4)          
Share-based compensation 29.0     29.7 (0.7)    
Dividends declared to noncontrolling interest (9.3)           (9.3)
Cash dividends declared (127.7)       (127.7)    
Other 0.1     0.1      
Ending balance (shares) at Mar. 31, 2019   265.5          
Ending balance at Mar. 31, 2019 6,922.8 $ 265.5 $ (1,719.4) 0.0 9,298.3 (958.6) 37.0
Beginning balance at Dec. 31, 2018 7,064.8 $ 266.4 $ (1,719.4) 0.0 9,439.8 (964.1) 42.1
Beginning balance (shares) at Dec. 31, 2018   266.4 24.5        
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Net earnings 664.0            
Other comprehensive income (loss)           24.9  
Repurchase of ordinary shares $ (250.0)            
Repurchase of ordinary shares (shares) 0.0 (2.4)          
Ending balance (shares) at Jun. 30, 2019   265.9 24.5        
Ending balance at Jun. 30, 2019 $ 7,172.9 $ 265.9 $ (1,719.4) 26.0 9,497.2 (939.2) 42.4
Beginning balance at Mar. 31, 2019 6,922.8 $ 265.5 $ (1,719.4) 0.0 9,298.3 (958.6) 37.0
Beginning balance (shares) at Mar. 31, 2019   265.5          
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Net earnings 460.3       456.1   4.2
Other comprehensive income (loss) 20.6         19.4 1.2
Shares issued under incentive stock plans 14.9 $ 0.4   14.5      
Shares issued under incentive stock plans (shares)   0.4          
Share-based compensation 10.2     11.5 (1.3)    
Cash dividends declared (255.9)       (255.9)    
Ending balance (shares) at Jun. 30, 2019   265.9 24.5        
Ending balance at Jun. 30, 2019 $ 7,172.9 $ 265.9 $ (1,719.4) $ 26.0 $ 9,497.2 $ (939.2) $ 42.4
v3.19.2
Condensed Consolidated Statements of Cash Flows - USD ($)
$ in Millions
6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Cash flows from operating activities:    
Net earnings $ 664.0 $ 576.7
Discontinued operations, net of tax 7.7 15.3
Adjustments for non-cash transactions:    
Depreciation and amortization 186.9 187.8
Changes in assets and liabilities, net (547.7) (466.4)
Other non-cash items, net 110.7 101.1
Net cash provided by (used in) continuing operating activities 421.6 414.5
Net cash provided by (used in) discontinued operating activities (27.9) (36.8)
Net cash provided by (used in) operating activities 393.7 377.7
Cash flows from investing activities:    
Capital expenditures (116.7) (163.4)
Acquisitions and equity method investments, net of cash acquired (1,477.6) (281.5)
Proceeds from sale of property, plant and equipment   0.0
Other investing activities, net 7.0 0.0
Net cash provided by (used in) continuing investing activities (1,587.3) (444.9)
Cash flows from financing activities:    
Short-term borrowings (payments), net 179.0 242.6
Proceeds from long-term debt 1,497.9 1,147.0
Payments of long-term debt (7.5) (1,122.9)
Net proceeds from (payments of) debt 1,669.4 266.7
Dividends paid to ordinary shareholders (259.4) (221.8)
Dividends paid to noncontrolling interests (9.3) (35.5)
Repurchase of ordinary shares (250.0) (500.1)
Other financing, net 20.5 10.9
Net cash provided by (used in) continuing financing activities 1,159.3 (491.4)
Effect of exchange rate changes on cash and cash equivalents 6.5 (21.3)
Net increase (decrease) in cash and cash equivalents (27.8) (579.9)
Cash and cash equivalents - beginning of period 903.4 1,549.4
Cash and cash equivalents - end of period $ 875.6 $ 969.5
v3.19.2
Basis of Presentation
6 Months Ended
Jun. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation Basis of Presentation
The accompanying unaudited Condensed Consolidated Financial Statements of Ingersoll-Rand plc (Plc or Parent Company), a public limited company incorporated in Ireland in 2009, and its consolidated subsidiaries (collectively, the Company), reflect the consolidated operations of the Company and have been prepared in accordance with United States Securities and Exchange Commission (SEC) interim reporting requirements. Accordingly, the accompanying Condensed Consolidated Financial Statements do not include all disclosures required by accounting principles generally accepted in the United States of America (GAAP) for full financial statements and should be read in conjunction with the consolidated financial statements included in the Ingersoll-Rand plc Annual Report on Form 10-K for the year ended December 31, 2018. In the opinion of management, the accompanying Condensed Consolidated Financial Statements contain all adjustments, which include only normal recurring adjustments, necessary to fairly state the condensed consolidated results for the interim periods presented.
v3.19.2
Proposed Reverse Morris Trust Transaction (Notes)
6 Months Ended
Jun. 30, 2019
Trust Transaction [Abstract]  
Proposed Reverse Morris Trust Transaction Proposed Reverse Morris Trust Transaction
In April 2019, the Company and Gardner Denver Holdings, Inc. (GDI) announced that they had entered into definitive agreements pursuant to which the Company will separate its Industrial segment businesses (IR Industrial) by way of spin-off to the Company’s shareholders and then combine it with GDI to create a new company focused on flow creation and industrial technologies (IndustrialCo). The Company’s remaining HVAC and transport refrigeration businesses, reported under the Climate segment, will focus on climate control solutions for buildings, homes and transportation (ClimateCo). The transaction is expected to close by early 2020, subject to approval by GDI’s shareholders, regulatory approvals and customary closing conditions.
The transaction will be effected through a “Reverse Morris Trust” transaction, pursuant to which IR Industrial is expected to be spun-off to the Company’s shareholders and simultaneously merged with and surviving as a wholly-owned subsidiary of GDI. At the time of close, ClimateCo will receive $1.9 billion in cash from IR Industrial that will be funded by newly-issued debt and assumed by GDI in the merger. Upon close of the transaction, existing shareholders of the Company will receive 50.1% of the shares of IndustrialCo on a fully diluted basis. Existing GDI shareholders will receive 49.9% of the shares of IndustrialCo on a fully diluted basis. The transaction is expected to be tax-free to both the Company’s and GDI’s respective shareholders for U.S. federal income tax purposes.
v3.19.2
Recent Accounting Pronouncements
6 Months Ended
Jun. 30, 2019
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]  
Recently Accounting Pronouncements Recent Accounting Pronouncements
The Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) is the sole source of authoritative GAAP other than SEC issued rules and regulations that apply only to SEC registrants. The FASB issues an Accounting Standards Update (ASU) to communicate changes to the codification. The Company considers the applicability and impact of all ASU's. ASU's not listed below were assessed and determined to be either not applicable or are not expected to have a material impact on the consolidated financial statements.
Recently Adopted Accounting Pronouncements
In February 2018, the FASB issued ASU 2018-02, "Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income" (ASU 2018-02), which allows companies to reclassify stranded tax effects in Accumulated other comprehensive income (loss) that have been caused by the Tax Cuts and Jobs Act of 2017 (the Act) to Retained earnings for each period in which the effect of the change in the U.S. federal corporate income tax rate is recorded. ASU 2018-02 is effective for annual reporting periods beginning after December 15, 2018, however, the FASB made the reclassification optional. As a result, the Company assessed the impact of the ASU on its financial statements and did not exercise the option to reclassify the stranded tax effects caused by the Act.
In February 2016, the FASB issued ASU 2016-02, “Leases” (ASC 842), which requires the lease rights and obligations arising from lease contracts, including existing and new arrangements, to be recognized as assets and liabilities on the balance sheet. The Company adopted this standard using a modified-retrospective approach as of January 1, 2019. Under this approach, the Company recognized and recorded a right-of-use (ROU) asset and related lease liability on the Condensed Consolidated Balance Sheet of $521 million with no impact to Retained earnings. Reporting periods prior to January 1, 2019 continue to be presented in accordance with previous lease accounting guidance under GAAP. As part of the adoption, the Company elected the package of practical expedients permitted under the transition guidance which includes the ability to carry forward historical lease classification. Refer to Note 10, “Leases,” for a further discussion on the adoption of ASC 842.
Recently Issued Accounting Pronouncements
In August 2018, the FASB issued ASU 2018-15, "Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract" (ASU 2018-15), which aligns the requirements for capitalizing implementation costs in a cloud-computing arrangement service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. In addition, the guidance also clarifies the presentation requirements for reporting such costs in the financial statements. ASU 2018-15 is effective for annual reporting periods beginning after December 15, 2019 with early adoption permitted. Upon adoption, the Company will apply the ASU on a prospective basis and does not expect it to have a material impact on its financial statements.
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses” (ASU 2016-13) which changes the impairment model for most financial assets and certain other instruments from an incurred loss model to an expected loss model.  In addition, the guidance also requires incremental disclosures regarding allowances and credit quality indicators. ASU 2016-13 is required to be adopted using the modified-retrospective approach and will be effective in fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. The Company is currently assessing the impact of the ASU on its financial statements.
v3.19.2
Inventories
6 Months Ended
Jun. 30, 2019
Inventory, Net [Abstract]  
Inventories Inventories
Depending on the business, U.S. inventories are stated at the lower of cost or market using the last-in, first-out (LIFO) method or the lower of cost or market using the first-in, first-out (FIFO) method. Non-U.S. inventories are primarily stated at the lower of cost or market using the FIFO method.
The major classes of inventory were as follows:
In millions
June 30,
2019
 
December 31,
2018
Raw materials
$
629.0

 
$
550.5

Work-in-process
244.1

 
182.0

Finished goods
1,162.7

 
1,028.8

 
2,035.8

 
1,761.3

LIFO reserve
(85.3
)
 
(83.5
)
Total
$
1,950.5

 
$
1,677.8


The Company performs periodic assessments to determine the existence of obsolete, slow-moving and non-saleable inventories and records necessary provisions to reduce such inventories to net realizable value. Reserve balances, primarily related to obsolete and slow-moving inventories, were $127.8 million and $119.9 million at June 30, 2019 and December 31, 2018, respectively.
v3.19.2
Goodwill
6 Months Ended
Jun. 30, 2019
Goodwill Abstract  
Goodwill Goodwill
The Company records as goodwill the excess of the purchase price over the fair value of the net assets acquired in a business combination. Measurement period adjustments may be recorded once a final valuation has been performed. Goodwill is tested and reviewed annually for impairment during the fourth quarter or whenever there is a significant change in events or circumstances that indicate that the fair value of the asset may be less than the carrying amount of the asset.
The changes in the carrying amount of goodwill for the six months ended June 30, 2019 were as follows:
In millions
Climate
 
Industrial
 
Total
Net balance as of December 31, 2018
$
5,099.2

 
$
860.3

 
$
5,959.5

Acquisitions (1)
15.6

 
888.0

 
903.6

Currency translation
(1.7
)
 
(1.8
)
 
(3.5
)
Net balance as of June 30, 2019
$
5,113.1

 
$
1,746.5

 
$
6,859.6

(1) Refer to Note 18, "Acquisitions and Divestitures" for more information regarding recent acquisitions.
The net goodwill balances at June 30, 2019 and December 31, 2018 include $2,496.0 million of accumulated impairment. The accumulated impairment relates entirely to a charge in the fourth quarter of 2008 associated with the Climate segment.
v3.19.2
Intangible Assets
6 Months Ended
Jun. 30, 2019
Intangible Assets Abstract  
Intangible Assets Intangible Assets
Indefinite-lived intangible assets are tested and reviewed annually for impairment during the fourth quarter or whenever there is a significant change in events or circumstances that indicate that the fair value of the asset may be less than the carrying amount of the asset. All other intangible assets with finite useful lives are amortized on a straight-line basis over their estimated useful lives.
The gross amount of the Company’s intangible assets and related accumulated amortization were as follows:
 
 
June 30, 2019
 
December 31, 2018
In millions
 
Gross carrying amount
 
Accumulated amortization
 
Net carrying amount
 
Gross carrying amount
 
Accumulated amortization
 
Net carrying amount
Customer relationships
 
$
2,552.7

 
$
(1,243.6
)
 
$
1,309.1

 
$
2,086.8

 
$
(1,176.3
)
 
$
910.5

Completed technologies/patents
 
208.0

 
(185.0
)
 
23.0

 
206.6

 
(182.0
)
 
24.6

Other
 
121.0

 
(60.3
)
 
60.7

 
84.5

 
(54.4
)
 
30.1

Total finite-lived intangible assets
 
2,881.7

 
(1,488.9
)
 
1,392.8

 
2,377.9

 
(1,412.7
)
 
965.2

Trademarks (indefinite-lived)
 
2,837.5

 

 
2,837.5

 
2,669.5

 

 
2,669.5

Total
 
$
5,719.2

 
$
(1,488.9
)
 
$
4,230.3

 
$
5,047.4

 
$
(1,412.7
)
 
$
3,634.7


Intangible asset amortization expense was $41.2 million and $35.2 million for the three months ended June 30, 2019 and 2018, respectively. Intangible asset amortization expense was $75.9 million and $70.4 million for the six months ended June 30, 2019 and 2018, respectively.
v3.19.2
Debt and Credit Facilities
6 Months Ended
Jun. 30, 2019
Debt Credit Facilities  
Debt and Credit Facilities Debt and Credit Facilities
Short-term borrowings and current maturities of long-term debt consisted of the following:
In millions
June 30,
2019
 
December 31,
2018
Debentures with put feature
$
343.0

 
$
343.0

2.625% Senior notes due 2020 (1)
299.6



Commercial Paper
179.0



Other current maturities of long-term debt
7.6

 
7.6

Total
$
829.2

 
$
350.6


(1) During the second quarter of 2019, the Company reclassified its 2.625% Senior notes due May 2020 from noncurrent to current.
Commercial Paper Program
The Company uses borrowings under its commercial paper program for general corporate purposes. The maximum aggregate amount of unsecured commercial paper notes available to be issued, on a private placement basis, under the commercial paper program is $2.0 billion. The Company had an outstanding balance of $179.0 million under its commercial paper program as of June 30, 2019. No amounts were outstanding at December 31, 2018.
Debentures with Put Feature
At June 30, 2019 and December 31, 2018, the Company had $343.0 million of fixed rate debentures outstanding which contain a put feature that the holders may exercise on each anniversary of the issuance date.  If exercised, the Company is obligated to repay in whole or in part, at the holder’s option, the outstanding principal amount of the debentures plus accrued interest. If these options are not exercised, the final contractual maturity dates would range between 2027 and 2028. Holders of these debentures had the option to exercise the put feature on $37.2 million of the outstanding debentures in February 2019, subject to the notice requirement. No material exercises were made.
Long-term debt, excluding current maturities, consisted of the following:
In millions
June 30,
2019
 
December 31,
2018
2.625% Senior notes due 2020 (1)
$

 
$
299.4

2.900% Senior notes due 2021
298.7

 
298.3

9.000% Debentures due 2021
124.9

 
124.9

4.250% Senior notes due 2023
697.5

 
697.1

7.200% Debentures due 2020-2025
37.3

 
44.8

3.550% Senior notes due 2024
496.3

 
495.9

6.480% Debentures due 2025
149.7

 
149.7

3.500% Senior notes due 2026
396.5

 

3.750% Senior notes due 2028
544.8

 
544.5

3.800% Senior notes due 2029
743.2

 

5.750% Senior notes due 2043
494.4

 
494.3

4.650% Senior notes due 2044
295.8

 
295.8

4.300% Senior notes due 2048
295.9

 
295.9

4.500% Senior notes due 2049
345.4

 

Other loans and notes
0.2

 
0.1

Total
$
4,920.6

 
$
3,740.7


(1) During the second quarter of 2019, the Company reclassified its 2.625% Senior notes due May 2020 from noncurrent to current.
Issuance of Senior Notes
In March 2019, the Company issued $1.5 billion principal amount of senior notes in three tranches through Ingersoll-Rand Luxembourg Finance S.A., an indirect, wholly-owned subsidiary. The tranches consist of $400 million aggregate principal amount of 3.500% senior notes due 2026, $750 million aggregate principal amount of 3.800% senior notes due 2029 and $350 million aggregate principal amount of 4.500% senior notes due 2049. The notes are fully and unconditionally guaranteed by each of Ingersoll Rand plc, Ingersoll-Rand Global Holding Company Limited, Ingersoll-Rand Lux International Holding Company S.à.r.l, Ingersoll-Rand Irish Holdings Unlimited Company, and Ingersoll-Rand Company. The Company has the option to redeem the notes in whole or in part at any time, prior to their stated maturity date at redemption prices set forth in the indenture agreement. The notes are subject to certain customary covenants, however, none of these covenants are considered restrictive to the Company’s operations. The Company used the net proceeds to finance the acquisition of Precision Flow Systems and for general corporate purposes. During the three months ended March 31, 2019, the Company capitalized $13.1 million of debt issuance costs which will be amortized over the remaining life of the debt.
Other Credit Facilities
The Company maintains two 5-year, $1.0 billion revolving credit facilities (the Facilities) through its wholly-owned subsidiaries, Ingersoll-Rand Global Holding Company Limited and Ingersoll-Rand Luxembourg Finance S.A. (collectively, the Borrowers). Each senior unsecured credit facility, one of which matures in March 2021 and the other in April 2023, provides support for the Company's commercial paper program and can be used for working capital and other general corporate purposes. Ingersoll-Rand plc, Ingersoll-Rand Irish Holdings Unlimited Company, Ingersoll-Rand Lux International Holding Company S.à.r.l. and Ingersoll-Rand Company each provide irrevocable and unconditional guarantees for these Facilities. In addition, each Borrower will guarantee the obligations under the Facilities of the other Borrower. Total commitments of $2.0 billion were unused at June 30, 2019 and December 31, 2018.
Fair Value of Debt
The carrying value of the Company's short-term borrowings is a reasonable estimate of fair value due to the short-term nature of the instruments. The fair value of the Company's debt instruments at June 30, 2019 and December 31, 2018 was $6.2 billion and $4.2 billion, respectively. The Company measures the fair value of its long-term debt instruments for disclosure purposes based upon observable market prices quoted on public exchanges for similar assets. These fair value inputs are considered Level 2 within the fair value hierarchy. The methodologies used by the Company to determine the fair value of its long-term debt instruments at June 30, 2019 are the same as those used at December 31, 2018.
v3.19.2
Financial Instruments
6 Months Ended
Jun. 30, 2019
Financial Instruments Abstract  
Financial Instruments Financial Instruments
In the normal course of business, the Company is exposed to certain risks arising from business operations and economic factors. These fluctuations can increase the cost of financing, investing and operating the business. The Company may use various financial instruments, including derivative instruments, to manage the risks associated with interest rate, commodity price and foreign currency exposures. These financial instruments are not used for trading or speculative purposes. The Company recognizes all derivatives on the Consolidated Balance Sheet at their fair value as either assets or liabilities.
On the date a derivative contract is entered into, the Company designates the derivative instrument as a cash flow hedge of a forecasted transaction or as an undesignated derivative. The Company formally documents its hedge relationships, including identification of the derivative instruments and the hedged items, as well as its risk management objectives and strategies for undertaking the hedge transaction. This process includes linking derivative instruments that are designated as hedges to specific assets, liabilities or forecasted transactions.
The Company assesses at inception and at least quarterly thereafter, whether the derivatives used in cash flow hedging transactions are highly effective in offsetting the changes in the cash flows of the hedged item. To the extent the derivative is deemed to be a highly effective hedge, the fair market value changes of the instrument are recorded to Accumulated other comprehensive income (AOCI). If the hedging relationship ceases to be highly effective, or it becomes probable that a forecasted transaction is no longer expected to occur, the hedging relationship will be undesignated and any future gains and losses on the derivative instrument will be recorded in Net earnings.
The fair values of derivative instruments included within the Condensed Consolidated Balance Sheets were as follows:
 
Derivative assets
 
Derivative liabilities
In millions
June 30,
2019
 
December 31,
2018
 
June 30,
2019
 
December 31,
2018
Derivatives designated as hedges:
 
 
 
 
 
 
 
Currency derivatives
$
1.3

 
$
1.3

 
$
1.3

 
$
0.7

Derivatives not designated as hedges:
 
 
 
 
 
 
 
Currency derivatives
0.5

 
0.9

 
0.5

 
0.6

Total derivatives
$
1.8

 
$
2.2

 
$
1.8

 
$
1.3

Asset and liability derivatives included in the table above are recorded within Other current assets and Accrued expenses and other current liabilities, respectively.
Currency Derivative Instruments
The notional amount of the Company’s currency derivatives was $0.4 billion and $0.6 billion at June 30, 2019 and December 31, 2018, respectively. At June 30, 2019 and December 31, 2018, a net gain of $0.1 million and $0.5 million, net of tax, respectively, was included in AOCI related to the fair value of the Company’s currency derivatives designated as accounting hedges. The amount expected to be reclassified into Net earnings over the next twelve months is a gain of $0.1 million. The actual amounts that will be reclassified to Net earnings may vary from this amount as a result of changes in market conditions. Gains and losses associated with the Company’s currency derivatives not designated as hedges are recorded in Net earnings as changes in fair value occur. At June 30, 2019, the maximum term of the Company’s currency derivatives was approximately 12 months, except for currency derivatives in place related to a certain long-term contract.
Other Derivative Instruments
Prior to 2015, the Company utilized forward-starting interest rate swaps and interest rate locks to manage interest rate exposure in periods prior to the anticipated issuance of certain fixed-rate debt. These instruments were designated as cash flow hedges and had a notional amount of $1.3 billion. Consequently, when the contracts were settled upon the issuance of the underlying debt, any realized gains or losses in the fair values of the instruments were deferred into AOCI. These deferred gains or losses are subsequently recognized in Interest expense over the term of the related notes. The net unrecognized gain in AOCI was $6.3 million at June 30, 2019 and $6.7 million at December 31, 2018. The net deferred gain at June 30, 2019 will continue to be amortized over the term of notes with maturities ranging from 2023 to 2044. The amount expected to be amortized over the next twelve months is a net gain of $0.7 million. The Company has no forward-starting interest rate swaps or interest rate lock contracts outstanding at June 30, 2019 or December 31, 2018.
The following table represents the amounts associated with derivatives designated as hedges affecting Net earnings and AOCI for the three months ended June 30:
  
Amount of gain (loss)
recognized in AOCI
 
Location of gain (loss) reclassified from
AOCI and recognized
into Net earnings
 
Amount of gain (loss)
reclassified from AOCI and
recognized into Net earnings
In millions
2019
 
2018
 
 
2019
 
2018
Currency derivatives designated as hedges
$
1.1

 
$
(0.7
)
 
Cost of goods sold
 
$
(0.9
)
 
$
0.1

Interest rate swaps & locks

 

 
Interest expense
 
0.1

 
0.2

Total
$
1.1

 
$
(0.7
)
 
 
 
$
(0.8
)
 
$
0.3


The following table represents the amounts associated with derivatives not designated as hedges affecting Other income/(expense), net for the three months ended June 30:
  
 
Amount of gain (loss)         
recognized in Net earnings
In millions
2019
 
2018
Currency derivatives not designated as hedges
 
$
(1.1
)
 
$
(29.6
)
Total
 
$
(1.1
)
 
$
(29.6
)

The following table represents the amounts associated with derivatives designated as hedges affecting Net earnings and AOCI for the six months ended June 30:
  
Amount of gain (loss)
recognized in AOCI
 
Location of gain (loss) reclassified from
AOCI and recognized
into Net earnings
 
Amount of gain (loss)
reclassified from AOCI and
recognized into Net earnings
In millions
2019
 
2018
 
 
2019
 
2018
Currency derivatives designated as hedges
$
(0.4
)
 
$
1.4

 
Cost of goods sold
 
$
(1.2
)
 
$
(0.3
)
Interest rate swaps & locks

 

 
Interest expense
 
0.3

 
(0.4
)
Total
$
(0.4
)
 
$
1.4

 

 
$
(0.9
)
 
$
(0.7
)

The following table represents the amounts associated with derivatives not designated as hedges affecting Other income/(expense), net for the six months ended June 30:
  
 
Amount of gain (loss)
recognized in Net earnings
In millions
2019
 
2018
Currency derivatives not designated as hedges
 
$
(4.2
)
 
$
(23.1
)
Total
 
$
(4.2
)
 
$
(23.1
)

The gains and losses associated with the Company’s undesignated currency derivatives are materially offset in Other income/(expense), net by changes in the fair value of the underlying transactions.
The following table presents the effects of the Company's designated financial instruments on the associated financial statement line item within the Consolidated Statement of Comprehensive Income where the financial instruments are recorded for the three months ended June 30:
 
 
Classification and amount of gain (loss) recognized in income on cash flow hedging relationships
 
 
2019
 
2018
In millions
 
Cost of goods sold
 
Interest expense
 
Cost of goods sold
 
Interest expense
Total amounts presented in the Consolidated Statements of Comprehensive Income
 
$
(3,094.1
)
 
$
(64.7
)
 
$
(2,964.1
)
 
$
(50.3
)
Gain (loss) on cash flow hedging relationships
 
 
 
 
 
 
 
 
Currency derivatives:
 
 
 
 
 
 
 
 
Amount of gain (loss) reclassified from AOCI and recognized into Net earnings
 
$
(0.9
)
 
$

 
$
0.1

 
$

Amount excluded from effectiveness testing recognized in net earnings based on changes in fair value and amortization
 
$
(0.9
)
 
$

 
$

 
$

Interest rate swaps & locks:
 
 
 
 
 
 
 
 
Amount of gain (loss) reclassified from AOCI and recognized into Net earnings
 
$

 
$
0.1

 
$

 
$
0.2

The following table presents the effects of the Company's designated financial instruments on the associated financial statement line item within the Consolidated Statement of Comprehensive Income where the financial instruments are recorded for the six months ended June 30:
 
 
Classification and amount of gain (loss) recognized in income on cash flow hedging relationships
 
 
2019
 
2018
In millions
 
Cost of goods sold
 
Interest expense
 
Cost of goods sold
 
Interest expense
Total amounts presented in the Consolidated Statements of Comprehensive Income
 
$
(5,611.4
)
 
$
(115.6
)
 
$
(5,384.3
)
 
$
(123.2
)
Gain (loss) on cash flow hedging relationships
 
 
 
 
 
 
 
 
Currency derivatives:
 
 
 
 
 
 
 
 
Amount of gain (loss) reclassified from AOCI and recognized into Net earnings
 
$
(1.2
)
 
$

 
$
(0.3
)
 
$

Amount excluded from effectiveness testing recognized in net earnings based on changes in fair value and amortization
 
$
(1.5
)
 
$

 
$

 
$

Interest rate swaps & locks:
 
 
 
 
 
 
 
 
Amount of gain (loss) reclassified from AOCI and recognized into Net earnings
 
$

 
$
0.3

 
$

 
$
(0.4
)

Concentration of Credit Risk
The counterparties to the Company’s forward contracts consist of a number of investment grade major international financial institutions. The Company could be exposed to losses in the event of nonperformance by the counterparties. However, the credit ratings and the concentration of risk in these financial institutions are monitored on a continuous basis and present no significant credit risk to the Company.
v3.19.2
Fair Value Measurements
6 Months Ended
Jun. 30, 2019
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]  
Fair Value Disclosures [Text Block] Fair Value Measurements
ASC 820, "Fair Value Measurement," (ASC 820) defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a three-level fair value hierarchy that prioritizes information used in developing assumptions when pricing an asset or liability as follows:
Level 1: Observable inputs such as quoted prices in active markets;
Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
Level 3: Unobservable inputs where there is little or no market data, which requires the reporting entity to develop its own assumptions.
ASC 820 requires the use of observable market data, when available, in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement.
The following table presents the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of June 30, 2019:
In millions
Fair Value
 
Fair value measurements
 
Level 1
 
Level 2
 
Level 3
Assets:
 
 
 
 
 
 
 
Derivative instruments
$
1.8

 
$

 
$
1.8

 
$

Liabilities:
 
 
 
 
 
 
 
Derivative instruments
$
1.8

 
$

 
$
1.8

 
$


The following table presents the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of December 31, 2018:
In millions
Fair Value
 
Fair value measurements
 
Level 1
 
Level 2
 
Level 3
Assets:
 
 
 
 
 
 
 
Derivative instruments
$
2.2

 
$

 
$
2.2

 
$

Liabilities:
 
 
 
 
 
 
 
Derivative instruments
$
1.3

 
$

 
$
1.3

 
$


Derivative instruments include forward foreign currency contracts and instruments related to non-functional currency balance sheet exposures. The fair value of the derivative instruments are determined based on a pricing model that uses spot rates and forward prices from actively quoted currency markets that are readily accessible and observable.
The carrying values of cash and cash equivalents, accounts receivable, and accounts payable are a reasonable estimate of their fair value due to the short-term nature of these instruments. These methodologies used by the Company to determine the fair value of its financial assets and liabilities at June 30, 2019 are the same as those used at December 31, 2018. There have been no transfers between levels of the fair value hierarchy.
v3.19.2
Leases
6 Months Ended
Jun. 30, 2019
Leases [Abstract]  
Leases Leases
The Company’s lease portfolio includes various contracts for real estate, vehicles, information technology and other equipment. At contract inception, the Company determines a lease exists if the contract conveys the right to control an identified asset for a period of time in exchange for consideration. Control is considered to exist when the lessee has the right to obtain substantially all of the economic benefits from the use of an identified asset as well as the right to direct the use of that asset. If a contract is considered to be a lease, the Company recognizes a lease liability based on the present value of the future lease payments, with an offsetting entry to recognize a right-of-use asset. Options to extend or terminate a lease are included when it is reasonably certain an option will be exercised. As a majority of the Company’s leases do not provide an implicit rate within the lease, an incremental borrowing rate is used which is based on information available at the commencement date.
The following table includes a summary of the Company's lease portfolio and Balance Sheet classification:
In millions
Classification
 
June 30,
2019
 
January 1,
2019
Assets
 
 
 
 
 
Operating lease right-of-use assets (1)
Other noncurrent assets
 
$
561.2

 
$
517.1

Liabilities
 
 
 
 
 
Operating lease current
Other current liabilities
 
171.1

 
160.3

Operating lease noncurrent
Other noncurrent liabilities
 
394.7

 
360.5

(1) Per ASC 842, prepaid lease payments and lease incentives are recorded as part of the right-of-use asset. The net impact was $4.6 million and $3.7 million at June 30, 2019 and January 1, 2019, respectively.
The Company elected the practical expedient as an accounting policy election by class of underlying asset to account for each separate lease component of a contract and its associated non-lease component as a single lease component. This practical expedient was applied to all underlying asset classes. In addition, the Company elected the practical expedient to utilize a portfolio approach for the vehicle, information technology and equipment asset classes as the application of the lease model to the portfolio would not differ materially from the application of the lease model to the individual leases within the portfolio.
The following table includes lease costs and related cash flow information for the three and six months ended June 30, 2019:
In millions
Three months ended
 
Six months ended
Operating lease expense
$
50.6

 
$
100.3

Variable lease expense
7.0

 
14.4

Cash paid for amounts included in the measurement of lease liabilities:
 
 
 
Operating cash flows from operating leases
50.2

 
99.6

Right-of-use assets obtained in exchange for new operating lease liabilities
43.8

 
101.6


Operating lease expense is recognized on a straight-line basis over the lease term. In addition, the Company has certain leases that contain variable lease payments which are based on an index, a rate referenced in the lease or on the actual usage of the leased asset. These payments are not included in the right-to-use asset or lease liability and are expensed as incurred as variable lease expense. The Company elected the practical expedient as an accounting policy election by class of underlying asset to not apply the balance sheet recognition criteria required in ASC 842 to leases with an initial lease term of twelve months or less. Payments for these leases are recognized on a straight-line basis over the lease term.
Maturities of lease obligations were as follows:
In millions
June 30,
2019
Operating leases
 
Remaining six months of 2019
$
100.2

2020
171.1

2021
131.3

2022
84.0

2023
55.4

After 2023
85.9

Total lease payments
$
627.9

Less: Interest
(62.1
)
Present value of lease liabilities
$
565.8


At June 30, 2019, the weighted average remaining lease term was 4.7 years years with a weighted average discount rate of 3.8%.
Prior Period Disclosures
As a result of adopting ASC 842 on January 1, 2019, the Company is required to present future minimum lease commitments for operating leases having initial or noncancellable lease terms in excess of one year that were previously disclosed in our 2018 Annual Report on Form 10-K and accounted for under previous lease guidance. Commitments as of December 31, 2018 were as follows:
In millions
December 31,
2018
Operating leases
 
2019
$
197.1

2020
152.0

2021
107.4

2022
68.4

2023
42.2

After 2023
42.7

Total
$
609.8


v3.19.2
Pensions and Postretirement Benefits Other than Pensions
6 Months Ended
Jun. 30, 2019
Retirement Benefits, Description [Abstract]  
Pensions and Postretirement Benefits Other than Pensions Pensions and Postretirement Benefits Other than Pensions
The Company sponsors several U.S. defined benefit and defined contribution plans covering substantially all of the Company's U.S. employees. Additionally, the Company has many non-U.S. defined benefit and defined contribution plans covering eligible non-U.S. employees. Postretirement benefits other than pensions (OPEB) provide healthcare benefits, and in some instances, life insurance benefits for certain eligible employees.
Pension Plans
The noncontributory defined benefit pension plans covering non-collectively bargained U.S. employees provide benefits on a final average pay formula while plans for most collectively bargained U.S. employees provide benefits on a flat dollar benefit formula or a percentage of pay formula. The non-U.S. pension plans generally provide benefits based on earnings and years of service. The Company also maintains additional other supplemental plans for officers and other key or highly compensated employees.
The components of the Company’s net periodic pension benefit cost for the three and six months ended June 30 were as follows:
 
Three months ended
 
Six months ended
In millions
2019
 
2018
 
2019
 
2018
Service cost
$
18.1

 
$
17.9

 
$
36.2

 
$
35.8

Interest cost
29.8

 
26.9

 
59.6

 
53.9

Expected return on plan assets
(34.6
)
 
(36.7
)
 
(69.2
)
 
(73.6
)
Net amortization of:
 
 
 
 
 
 
 
Prior service costs
1.2

 
1.0

 
2.4

 
2.1

Net actuarial (gains) losses
13.3

 
12.5

 
26.7

 
25.0

Net periodic pension benefit cost
$
27.8

 
$
21.6

 
$
55.7

 
$
43.2

Net curtailment and settlement (gains) losses

 
1.2

 
1.6

 
1.2

Net periodic pension benefit cost after net curtailment and settlement (gains) losses
$
27.8

 
$
22.8

 
$
57.3

 
$
44.4

Amounts recorded in continuing operations:


 


 


 


      Operating income
$
17.1

 
$
16.9

 
$
34.2

 
$
34.5

      Other income/(expense), net
7.7

 
3.8

 
17.1

 
5.7

Amounts recorded in discontinued operations
3.0

 
2.1

 
6.0

 
4.2

Total
$
27.8

 
$
22.8

 
$
57.3

 
$
44.4


The Company made contributions to its defined benefit pension plans of $37.1 million and $30.0 million during the six months ended June 30, 2019 and 2018, respectively. The Company currently projects that it will contribute approximately $104 million to its plans worldwide in 2019.
Postretirement Benefits Other Than Pensions
The Company sponsors several postretirement plans that provide for healthcare benefits, and in some instances, life insurance benefits that cover certain eligible employees. These plans are unfunded and have no plan assets, but are instead funded by the Company on a pay-as-you-go basis in the form of direct benefit payments. Generally, postretirement health benefits are contributory with contributions adjusted annually. Life insurance plans for retirees are primarily noncontributory.
The components of net periodic postretirement benefit cost for the three and six months ended June 30 were as follows:
 
Three months ended
 
Six months ended
In millions
2019
 
2018
 
2019
 
2018
Service cost
$
0.6

 
$
0.7

 
$
1.2

 
$
1.4

Interest cost
3.9

 
3.8

 
7.8

 
7.6

Net amortization of:
 
 
 
 
 
 
 
Prior service gains
(0.1
)
 
(1.0
)
 
(0.2
)
 
(2.0
)
Net actuarial (gains) losses
(1.6
)
 

 
(3.2
)
 

Net periodic postretirement benefit cost
$
2.8

 
$
3.5

 
$
5.6

 
$
7.0

Amounts recorded in continuing operations:


 


 


 


     Operating income
$
0.6

 
$
0.7

 
$
1.2

 
$
1.4

     Other income/(expense), net
1.6

 
2.0

 
3.3

 
4.0

Amounts recorded in discontinued operations
0.6

 
0.8

 
1.1

 
1.6

Total
$
2.8

 
$
3.5

 
$
5.6

 
$
7.0


v3.19.2
Equity
6 Months Ended
Jun. 30, 2019
Stockholders' Equity Note [Abstract]  
Equity Equity
The authorized share capital of Ingersoll-Rand plc is 1,185,040,000 shares, consisting of (1) 1,175,000,000 ordinary shares, par value $1.00 per share, (2) 40,000 ordinary shares, par value EUR 1.00 and (3) 10,000,000 preference shares, par value $0.001 per share. There were no Euro-denominated ordinary shares or preference shares outstanding at June 30, 2019 or December 31, 2018.
Changes in ordinary shares and treasury shares for the six months ended June 30, 2019 were as follows:
In millions
Ordinary shares issued
 
Ordinary shares held in treasury
December 31, 2018
266.4

 
24.5

Shares issued under incentive plans, net
1.9

 

Repurchase of ordinary shares
(2.4
)
 

June 30, 2019
265.9

 
24.5


Share repurchases are made from time to time in accordance with management's capital allocation strategy, subject to market conditions and regulatory requirements. Shares acquired and canceled upon repurchase are accounted for as a reduction of Ordinary Shares and Capital in excess of par value, or Retained earnings to the extent Capital in excess of par value is exhausted. Shares acquired and held in treasury are presented separately on the balance sheet as a reduction to Equity and recognized at cost. In October 2018, the Company's Board of Directors authorized the repurchase of up to $1.5 billion of its ordinary shares under a share repurchase program (2018 Authorization) upon completion of the prior authorized share repurchase program. During the six months ended June 30, 2019, the Company repurchased and canceled approximately $250 million of its ordinary shares leaving approximately $1.25 billion remaining under the 2018 Authorization.
Accumulated Other Comprehensive Income (Loss)
The changes in Accumulated other comprehensive income (loss) for the six months ended June 30, 2019 was as follows:
In millions
 
Derivative Instruments
 
Pension and OPEB
 
Foreign Currency Translation
 
Total
Balance at December 31, 2018
 
$
6.7

 
$
(454.0
)
 
$
(516.8
)
 
$
(964.1
)
Other comprehensive income (loss) before reclassifications
 
(0.4
)
 
1.8

 
2.3

 
3.7

Amounts reclassified from AOCI
 
0.9

 
25.7

 

 
26.6

Benefit from (provision for) income taxes
 
0.2

 
(5.6
)
 

 
(5.4
)
Net current period other comprehensive income (loss)
 
$
0.7

 
$
21.9

 
$
2.3

 
$
24.9

Balance at June 30, 2019
 
$
7.4

 
$
(432.1
)
 
$
(514.5
)
 
$
(939.2
)
The changes in Accumulated other comprehensive income (loss) for the six months ended June 30, 2018 was as follows:
In millions
 
Derivative Instruments
 
Pension and OPEB
 
Foreign Currency Translation
 
Total
Balance at December 31, 2017
 
$
4.7

 
$
(494.3
)
 
$
(289.2
)
 
$
(778.8
)
Other comprehensive income (loss) before reclassifications
 
1.4

 
4.8

 
(151.0
)
 
(144.8
)
Amounts reclassified from AOCI
 
0.7

 
25.1

 

 
25.8

Benefit from (provision for) income taxes
 
(0.3
)
 
(6.5
)
 

 
(6.8
)
Net current period other comprehensive income (loss)
 
$
1.8

 
$
23.4

 
$
(151.0
)
 
$
(125.8
)
Balance at June 30, 2018
 
$
6.5

 
$
(470.9
)
 
$
(440.2
)
 
$
(904.6
)

The reclassifications out of Accumulated other comprehensive income (loss) for the three and six months ended June 30 were as follows:
 
 
Three months ended
 
Six months ended
In millions
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 
Derivative Instruments
 
 
 
 
 
 
 
 
Reclassifications of deferred (gains) losses (1)
 
$
0.8

 
$
(0.3
)
 
$
0.9

 
$
0.7

Provision for (benefit from) income taxes
 
0.1

 

 
(0.2
)
 
0.2

Reclassifications, net of taxes
 
$
0.9

 
$
(0.3
)
 
$
0.7

 
$
0.9

 
 
 
 
 
 
 
 
 
Pension and Postretirement benefits
 
 
 
 
 
 
 
 
Amortization of service costs (2)
 
$
1.1

 
$

 
$
2.2

 
$
0.1

Amortization of actuarial losses (2)
 
11.7

 
12.5

 
23.5

 
25.0

Provision for (benefit from) income taxes
 
(2.1
)
 
(3.9
)
 
(5.6
)
 
(6.5
)
Reclassifications, net of taxes
 
$
10.7

 
$
8.6

 
$
20.1

 
$
18.6

 
 
 
 
 
 
 
 
 
Total reclassifications, net of taxes
 
$
11.6

 
$
8.3

 
$
20.8

 
$
19.5

(1) Reclassifications of interest rate swaps and locks are reflected within Interest expense; reclassifications of currency derivatives designated as hedges are reflected in Cost of goods sold.
(2) Reclassifications of the service cost component of pension and postretirement benefit costs are reflected within Operating income; the remaining components are included within Other income/(expense), net.
v3.19.2
Revenue (Notes)
6 Months Ended
Jun. 30, 2019
Revenue from Contract with Customer [Abstract]  
Revenue Revenue
The Company recognizes revenue when control of a good or service promised in a contract (i.e., performance obligation) is transferred to a customer. Control is obtained when a customer has the ability to direct the use of and obtain substantially all of the remaining benefits from that good or service. A majority of the Company's revenues are recognized at a point-in-time as control is transferred at a distinct point in time per the terms of a contract. However, a portion of the Company's revenues are recognized over time as the customer simultaneously receives control as the Company performs work under a contract.
Disaggregated Revenue
Net revenues by destination for the three and six months ended June 30 were as follows:
 
Three months ended
 
Six months ended
In millions
2019
 
2018
 
2019
 
2018
Climate
 
 
 
 
 
 
 
     United States
$
2,600.5

 
$
2,410.4

 
$
4,540.5

 
$
4,122.2

     Non-U.S.
1,017.1

 
1,083.4

 
1,880.8

 
1,981.4

Total Climate
$
3,617.6

 
$
3,493.8

 
$
6,421.3

 
$
6,103.6

Industrial
 
 
 
 
 
 
 
     United States
$
464.5

 
$
450.6

 
$
855.3

 
$
865.2

     Non-U.S.
445.7

 
413.3

 
827.1

 
773.4

Total Industrial
$
910.2

 
$
863.9

 
$
1,682.4

 
$
1,638.6

Net revenues by major type of good or service for the three and six months ended June 30 were as follows:
 
Three months ended
 
Six months ended
In millions
2019
 
2018
 
2019
 
2018
Climate
 
 
 
 
 
 
 
     Equipment
$
2,545.9

 
$
2,454.8

 
$
4,484.2

 
$
4,226.3

     Services and parts
1,071.7

 
1,039.0

 
1,937.1

 
1,877.3

Total Climate
$
3,617.6

 
$
3,493.8

 
$
6,421.3

 
$
6,103.6

Industrial
 
 
 
 
 
 
 
     Equipment
$
568.4

 
$
534.9

 
$
1,030.6

 
$
1,005.5

     Services and parts
341.8

 
329.0

 
651.8

 
633.1

Total Industrial
$
910.2

 
$
863.9

 
$
1,682.4

 
$
1,638.6


Revenue from goods and services transferred to customers at a point in time accounted for approximately 85% of the Company's revenue for the six months ended June 30, 2019 and 2018.
Contract Balances
The opening and closing balances of contract assets and contract liabilities arising from contracts with customers for the period ended June 30, 2019 and December 31, 2018 were as follows:
In millions
June 30,
2019
 
December 31, 2018
Contract assets
$
153.9

 
$
210.9

Contract liabilities
941.5

 
846.2


v3.19.2
Share-Based Compensation
6 Months Ended
Jun. 30, 2019
Share-based Compensation [Abstract]  
Share-Based Compensation Share-Based Compensation
The Company accounts for stock-based compensation plans in accordance with ASC 718, "Compensation - Stock Compensation" (ASC 718), which requires a fair-value based method for measuring the value of stock-based compensation. Fair value is measured once at the date of grant and is not adjusted for subsequent changes. The Company’s share-based compensation plans include programs for stock options, restricted stock units (RSUs), performance share units (PSUs) and deferred compensation.
Compensation Expense
Share-based compensation expense is related to continuing operations and is included in Selling and administrative expenses. The expense recognized for the three and six months ended June 30 was as follows:
 
Three months ended
 
Six months ended
In millions
2019
 
2018
 
2019
 
2018
Stock options
$
2.8

 
$
5.7

 
$
14.6

 
$
18.0

RSUs
5.8

 
8.7

 
18.8

 
22.0