þ
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2016
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or
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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ITEM
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PAGE
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PART I
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1
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1A.
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1B.
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||
2
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||
3
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||
4
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*
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PART II
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5
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6
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7
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7A.
|
||
8
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||
9
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9A.
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||
9B.
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||
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PART III
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10
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11
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||
12
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13
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14
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16
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PART IV
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15
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*
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Included pursuant to Instruction 3 of Item 401(b) of Regulation S-K.
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•
|
Fortress brands with leading market positions, some of which have been operating for more than 100 years
|
•
|
Far-reaching global distribution networks consisting of direct sales forces and independent channel partners that collectively serve a diverse customer base in more than 150 countries
|
•
|
A substantial installed base that provides for steady recurring revenue
|
•
|
A strong financial position and cash generation profile that enable us to fund strategic organic and inorganic growth initiatives, and consistently return capital to shareholders
|
•
|
Accelerate Profitable Growth. To accelerate growth, we are focusing on several priorities:
|
•
|
Emerging Markets - We seek to accelerate our growth in priority emerging markets through increased focus on product localization and channel development.
|
▪
|
Innovation & Technology - We seek to enhance the Company’s innovation efforts with increased focus on technologies and innovation that can significantly improve customers’ productivity, quality and resilience.
|
•
|
Commercial Leadership - We are strengthening our capabilities by simplifying our commercial processes and supporting information technology systems.
|
•
|
Mergers and Acquisitions - We continue to evaluate and, where appropriate, will act upon attractive acquisition candidates to accelerate our growth, including into adjacent markets.
|
•
|
Drive Continuous Improvement. We seek to embed continuous improvement into our culture and simplify our organization to make the Company more agile, more profitable and create room to reinvest in growth. To accomplish this, we will continue to strengthen our lean six sigma and global procurement capabilities and continue to optimize our cost structure through business simplification, eliminating structural, process and product complexity.
|
•
|
Leadership and Talent Development. We seek to continue to invest in attracting, developing and retaining world-class talent with an increased focus on leadership and talent development programs. We will continue to align individual performance with the objectives of the Company and its shareholders.
|
•
|
Focus on Execution and Accountability. We seek to ensure the impact of these strategic focus areas by holding our people accountable and streamlining our performance management and goal deployment systems.
|
|
Revenue
|
|||||||||||||||||||
(in millions)
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||
|
$ Amount
|
|
% of Total
|
|
$ Amount
|
|
% of Total
|
|
$ Amount
|
|
% of Total
|
|||||||||
United States
|
$
|
1,574
|
|
|
42
|
%
|
|
$
|
1,490
|
|
|
41
|
%
|
|
$
|
1,477
|
|
|
38
|
%
|
Europe
|
1,195
|
|
|
31
|
%
|
|
1,179
|
|
|
32
|
%
|
|
1,379
|
|
|
35
|
%
|
|||
Asia Pacific
|
518
|
|
|
14
|
%
|
|
482
|
|
|
13
|
%
|
|
478
|
|
|
12
|
%
|
|||
Other
|
484
|
|
|
13
|
%
|
|
502
|
|
|
14
|
%
|
|
582
|
|
|
15
|
%
|
|||
Total
|
$
|
3,771
|
|
|
|
|
$
|
3,653
|
|
|
|
|
$
|
3,916
|
|
|
|
|
Property, Plant & Equipment
|
|||||||||||||||||||
(in millions)
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||
|
$ Amount
|
|
% of Total
|
|
$ Amount
|
|
% of Total
|
|
$ Amount
|
|
% of Total
|
|||||||||
United States
|
$
|
255
|
|
|
41
|
%
|
|
$
|
168
|
|
|
38
|
%
|
|
$
|
180
|
|
|
39
|
%
|
Europe
|
237
|
|
|
39
|
%
|
|
189
|
|
|
43
|
%
|
|
206
|
|
|
45
|
%
|
|||
Asia Pacific
|
87
|
|
|
14
|
%
|
|
56
|
|
|
13
|
%
|
|
53
|
|
|
11
|
%
|
|||
Other
|
37
|
|
|
6
|
%
|
|
26
|
|
|
6
|
%
|
|
22
|
|
|
5
|
%
|
|||
Total
|
$
|
616
|
|
|
|
|
$
|
439
|
|
|
|
|
$
|
461
|
|
|
|
•
|
changes in trade protection measures, including tariff and trade barriers and import and export licensing requirements;
|
•
|
potential negative consequences from changes to taxation policies;
|
•
|
unanticipated changes in other laws and regulations or in how such provisions are interpreted or administered;
|
•
|
potential disruptions in our global supply chain;
|
•
|
possibility of unfavorable circumstances arising from host country laws or regulations;
|
•
|
currency exchange rate fluctuations and restrictions on currency repatriation;
|
•
|
disruption of operations from labor and political disturbances;
|
•
|
regional safety and security considerations;
|
•
|
increased costs and risks of developing, staffing and simultaneously managing a number of global operations as a result of distance as well as language and cultural differences; and
|
•
|
insurrection, armed conflict, terrorism or war.
|
•
|
our decision to repatriate non-U.S. earnings for which we have not previously provided for U.S. taxes;
|
•
|
the jurisdictions in which profits are determined to be earned and taxed;
|
•
|
sustainability of historical income tax rates in the jurisdictions in which we conduct business;
|
•
|
the resolution of issues arising from tax audits with various tax authorities; and
|
•
|
changes in the valuation of our deferred tax assets and liabilities, and changes in deferred tax valuation allowances.
|
•
|
increase our vulnerability to general adverse economic and industry conditions;
|
•
|
limit our ability to obtain additional financing or borrow additional funds;
|
•
|
limit our ability to pay future dividends;
|
•
|
limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
|
•
|
require that a substantial portion of our cash flow from operations be used for the payment of interest on our indebtedness instead of funding working capital, capital expenditures, acquisitions or other general corporate purposes; and
|
•
|
increase the amount of interest expense that we must pay because some of our borrowings are at variable interest rates, which, as interest rates increase, would result in higher interest expense.
|
•
|
actual or anticipated fluctuations in our operating results due to factors related to our business;
|
•
|
success or failure of our business strategy;
|
•
|
our quarterly or annual earnings, or those of other companies in our industry;
|
•
|
our ability to obtain financing as needed;
|
•
|
stock repurchases;
|
•
|
acquisitions and divestitures;
|
•
|
announcements by us or our competitors of significant new business awards;
|
•
|
announcements by us or our competitors of significant acquisitions or dispositions;
|
•
|
changes in accounting standards, policies, guidance, interpretations or principles;
|
•
|
changes in earnings estimates by securities analysts or our ability to meet those estimates;
|
•
|
our ability to execute restructuring and realignment actions;
|
•
|
the operating and stock price performance of other comparable companies;
|
•
|
natural or environmental disasters that investors believe may affect us;
|
•
|
overall market fluctuations;
|
•
|
fluctuations in the budgets of federal, state and local governmental entities around the world;
|
•
|
results from any material litigation or government investigation;
|
•
|
changes in laws and regulations affecting our business; and
|
•
|
general economic conditions and other external factors.
|
Location
|
|
State or
Country
|
|
Principal Business Activity
|
|
Approx.
Square
Feet
|
|
Owned or
Expiration
Date
of Lease
|
|
Water Infrastructure
|
|||||||||
Emmaboda
|
|
Sweden
|
|
Administration and Manufacturing
|
|
1,197,000
|
|
|
Owned
|
Stockholm
|
|
Sweden
|
|
Administration and Research & Development
|
|
172,000
|
|
|
Leased
|
Shenyang
|
|
China
|
|
Manufacturing
|
|
125,000
|
|
|
Owned
|
Bridgeport
|
|
NJ
|
|
Administration and Manufacturing
|
|
136,000
|
|
|
Leased
|
Yellow Springs
|
|
OH
|
|
Administration and Manufacturing
|
|
112,000
|
|
|
Owned
|
Quenington
|
|
UK
|
|
Manufacturing
|
|
86,000
|
|
|
Leased
|
Applied Water
|
|||||||||
Morton Grove
|
|
IL
|
|
Administration and Manufacturing
|
|
530,000
|
|
|
Owned
|
Montecchio
|
|
Italy
|
|
Administration and Manufacturing
|
|
379,000
|
|
|
Owned
|
Nanjing
|
|
China
|
|
Manufacturing
|
|
363,000
|
|
|
Owned
|
Auburn
|
|
NY
|
|
Manufacturing
|
|
273,000
|
|
|
Owned
|
Lubbock
|
|
TX
|
|
Manufacturing
|
|
229,000
|
|
|
Owned
|
Cheektowaga
|
|
NY
|
|
Manufacturing
|
|
147,000
|
|
|
Owned
|
Sensus
|
|||||||||
Ludwigshafen
|
|
Germany
|
|
Manufacturing
|
|
318,000
|
|
|
Owned
|
Jiangdu City
|
|
China
|
|
Manufacturing
|
|
316,000
|
|
|
Owned
|
Texarkana
|
|
AR
|
|
Manufacturing
|
|
254,000
|
|
|
Owned
|
Uniontown
|
|
PA
|
|
Manufacturing
|
|
240,000
|
|
|
Leased
|
DuBois
|
|
PA
|
|
Manufacturing
|
|
197,000
|
|
|
Owned
|
DuBois
|
|
PA
|
|
Manufacturing
|
|
137,000
|
|
|
Leased
|
Regional Selling Locations
|
|||||||||
Dubai
|
|
United Arab Emirates
|
|
Manufacturing
|
|
144,000
|
|
|
Owned
|
Nottinghamshire
|
|
United Kingdom
|
|
Sales Office
|
|
139,000
|
|
|
Leased
|
Nanterre
|
|
France
|
|
Sales Office
|
|
139,000
|
|
|
Leased
|
Langenhagen
|
|
Germany
|
|
Sales Office
|
|
134,000
|
|
|
Leased
|
Corporate Headquarters
|
|||||||||
Rye Brook
|
|
NY
|
|
Administration
|
|
67,000
|
|
|
Leased
|
NAME
|
|
AGE
|
|
CURRENT TITLE
|
|
OTHER BUSINESS EXPERIENCE DURING PAST 5 YEARS
|
Patrick K. Decker
|
|
52
|
|
President and Chief Executive Officer (2014)
|
|
• President and Chief Executive Officer, Harsco Corp. (diversified, worldwide industrial company) (2012)
• President, Flow Control Segment, Tyco International Ltd. (industrial products and services company) (2003)
|
|
|
|
|
|
|
|
E. Mark Rajkowski
|
|
58
|
|
Senior VP and Chief Financial Office (2016)
|
|
• Senior VP and Chief Financial Officer, MeadWestvaco Corp. (worldwide packaging company) (2004)
|
|
|
|
|
|
|
|
D. Randall Bays
|
|
61
|
|
Senior VP and President, Sensus (2016)
|
|
• President, Sensus (worldwide smart meter company) (2013)
• President and Chief Executive Officer, Kinetek Inc. (diversified, worldwide industrial company) (2004)
|
|
|
|
|
|
|
|
Tomas Brannemo
|
|
45
|
|
Senior VP and President, Transport (2014)
|
|
• VP, Transport (2013)
• VP and Director of Business Unit Aftermarket and Service (2010)
|
|
|
|
|
|
|
|
David Flinton
|
|
46
|
|
Senior VP and President, Dewatering (2015)
|
|
• VP, Engineering and Marketing, Applied Water Systems (2013)
• VP, Global Product Management, Applied Water Systems (2012)
• VP, Strategy and Integrated Management System (former Water Solutions division) (2010)
|
|
|
|
|
|
|
|
Pak Steven Leung
|
|
60
|
|
Senior VP and President, Emerging Markets (2015)
|
|
•
VP, Global Sales, Valves and Controls, Pentair Plc (diversified, worldwide industrial manufacturing company) (2013)
•
VP and General Manager, Global Process, Tyco International Ltd. (industrial products and services company) (2010)
|
|
|
|
|
|
|
|
Kenneth Napolitano
|
|
54
|
|
Senior VP and President, Applied Water Systems (2012)
|
|
• Senior VP and President, Residential and Commercial Water (2011)
|
|
|
|
|
|
|
|
Colin R. Sabol
|
|
49
|
|
Senior VP and President, Analytics and Treatment (2015)
|
|
• Senior VP and President, Dewatering (2013)
• Senior VP and Chief Strategy and Growth Officer (2011)
|
|
|
|
|
|
|
|
NAME
|
|
AGE
|
|
CURRENT TITLE
|
|
OTHER BUSINESS EXPERIENCE DURING PAST 5 YEARS
|
Kairus Tarapore
|
|
55
|
|
Senior VP and Chief Human Resources Officer (2015)
|
|
• Senior VP and Chief Administrative Officer, Babcock & Wilcox Company (energy and environmental technologies and services) (2013)
• Executive VP, Human Resources, Ceridian Corporation (2006)
|
|
|
|
|
|
|
|
Claudia S. Toussaint
|
|
53
|
|
Senior VP, General Counsel and Corporate Secretary (2014)
|
|
• Senior VP, General Counsel and Secretary, Barnes Group Inc. (international industrial and aerospace manufacturing) (2012)
• General Counsel, Flow Control Segment, Tyco International Ltd. (industrial products and services company) (2012)
• Senior VP, General Counsel and Secretary, Barnes Group Inc. (international industrial and aerospace manufacturing) (2010)
|
NAME
|
|
TITLE
|
Markos I. Tambakeras
|
|
Chairman, Xylem Inc., Former Chairman, President and Chief Executive Officer, Kennametal, Inc.
|
|
|
|
Curtis J. Crawford, Ph.D.
|
|
President and Chief Executive Officer, XCEO, Inc.
|
|
|
|
Patrick K. Decker
|
|
President and Chief Executive Officer, Xylem Inc.
|
|
|
|
Robert F. Friel
|
|
Chairman, President and Chief Executive Officer, PerkinElmer, Inc.
|
|
|
|
Victoria D. Harker
|
|
Chief Financial Officer, TEGNA Inc.
|
|
|
|
Sten E. Jakobsson
|
|
Former President and Chief Executive Officer, ABB AB
|
|
|
|
Steven R. Loranger
|
|
Former Chairman, President and Chief Executive Officer, ITT Corporation
|
|
|
|
Edward J. Ludwig
|
|
Former Chairman, President and Chief Executive Officer, Becton, Dickinson and Company
|
|
|
|
Surya N. Mohapatra, Ph.D.
|
|
Former Chairman, President and Chief Executive Officer, Quest Diagnostics Incorporated
|
|
|
|
Jerome A. Peribere
|
|
President and Chief Executive Officer, Sealed Air Corporation
|
|
High
|
|
Low
|
|
Dividend
|
||||||
Fiscal Year ended December 31, 2016
|
|
|
|
|
|
||||||
First Quarter
|
$
|
41.33
|
|
|
$
|
31.67
|
|
|
$
|
0.1549
|
|
Second Quarter
|
46.67
|
|
|
40.54
|
|
|
0.1549
|
|
|||
Third Quarter
|
52.71
|
|
|
44.44
|
|
|
0.1549
|
|
|||
Fourth Quarter
|
54.99
|
|
|
45.60
|
|
|
0.1549
|
|
|||
|
|
|
|
|
|
||||||
Fiscal Year ended December 31, 2015
|
|
|
|
|
|
||||||
First Quarter
|
$
|
38.59
|
|
|
$
|
33.54
|
|
|
$
|
0.1408
|
|
Second Quarter
|
37.70
|
|
|
34.80
|
|
|
0.1408
|
|
|||
Third Quarter
|
37.32
|
|
|
29.90
|
|
|
0.1408
|
|
|||
Fourth Quarter
|
38.00
|
|
|
32.16
|
|
|
0.1408
|
|
(a)
|
Average price paid per share is calculated on a settlement basis.
|
(b)
|
On August 24, 2015, our Board of Directors authorized the repurchase of up to $500 million in shares with no expiration date. The program's objective is to deploy our capital in a manner that benefits our shareholders and maintains our focus on growth. There were no shares repurchased under this program during the three months ended December 31, 2016. There are up to $420 million in shares that may still be purchased under this plan as of December 31, 2016.
|
|
XYL
|
|
S&P 500
|
|
S&P 500
Industrials
Index
|
|||
December 31, 2011
|
106
|
|
|
105
|
|
|
108
|
|
December 31, 2012
|
114
|
|
|
121
|
|
|
124
|
|
December 31, 2013
|
148
|
|
|
161
|
|
|
175
|
|
December 31, 2014
|
165
|
|
|
183
|
|
|
192
|
|
December 31, 2015
|
161
|
|
|
186
|
|
|
187
|
|
December 31, 2016
|
221
|
|
|
208
|
|
|
222
|
|
|
Year Ended
December 31,
|
||||||||||||||||||
(in millions, except per share data)
|
2016 (a)
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Results of Operations Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue
|
$
|
3,771
|
|
|
$
|
3,653
|
|
|
$
|
3,916
|
|
|
$
|
3,837
|
|
|
$
|
3,791
|
|
Gross profit
|
1,461
|
|
|
1,404
|
|
|
1,513
|
|
|
1,499
|
|
|
1,502
|
|
|||||
Gross margin
|
38.7
|
%
|
|
38.4
|
%
|
|
38.6
|
%
|
|
39.1
|
%
|
|
39.6
|
%
|
|||||
Operating income
|
406
|
|
|
449
|
|
|
463
|
|
|
363
|
|
|
443
|
|
|||||
Operating margin
|
10.8
|
%
|
|
12.3
|
%
|
|
11.8
|
%
|
|
9.5
|
%
|
|
11.7
|
%
|
|||||
Net income
|
260
|
|
|
340
|
|
|
337
|
|
|
228
|
|
|
297
|
|
|||||
Per Share Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings per share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
1.45
|
|
|
$
|
1.88
|
|
|
$
|
1.84
|
|
|
$
|
1.23
|
|
|
$
|
1.60
|
|
Diluted
|
1.45
|
|
|
1.87
|
|
|
1.83
|
|
|
1.22
|
|
|
1.59
|
|
|||||
Basic shares outstanding
|
179.1
|
|
|
180.9
|
|
|
183.1
|
|
|
185.2
|
|
|
185.8
|
|
|||||
Diluted shares outstanding
|
180.0
|
|
|
181.7
|
|
|
184.2
|
|
|
186.0
|
|
|
186.2
|
|
|||||
Cash dividends per share
|
$
|
0.6196
|
|
|
$
|
0.5632
|
|
|
$
|
0.5120
|
|
|
$
|
0.4656
|
|
|
$
|
0.4048
|
|
Balance Sheet Data (at period end):
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
308
|
|
|
$
|
680
|
|
|
$
|
663
|
|
|
$
|
533
|
|
|
$
|
504
|
|
Working capital*
|
878
|
|
|
810
|
|
|
882
|
|
|
930
|
|
|
859
|
|
|||||
Total assets
|
6,474
|
|
|
4,657
|
|
|
4,833
|
|
|
4,857
|
|
|
4,639
|
|
|||||
Total debt
|
2,368
|
|
|
1,274
|
|
|
1,284
|
|
|
1,235
|
|
|
1,197
|
|
*
|
The Company calculates Working capital as follows: net accounts receivable + inventories - accounts payable - customer advances.
|
(a)
|
The amounts for the year ended December 31, 2016 reflect the acquisition of Sensus. Refer to Notes 3 and 20 to Consolidated Financial Statements for further information regarding Sensus.
|
•
|
Water Infrastructure serves the water infrastructure sector with pump systems that transport water from aquifers, lakes, rivers and seas; with filtration, ultraviolet and ozone systems that provide treatment, making the water fit to use; and pumping solutions that move the wastewater to treatment facilities where our mixers, biological treatment, monitoring and control systems provide the primary functions in the treatment process. We provide analytical instrumentation used to measure water quality, flow and level in wastewater, surface water and coastal environments. In the Water Infrastructure segment, we provide the majority of our sales directly to customers with strong application expertise, while the remaining amount is through distribution partners.
|
•
|
Applied Water serves the usage applications sector with water pressure boosting systems for heating, ventilation and air conditioning and for fire protection systems to the residential and commercial building services markets. In addition, our pumps, heat exchangers, valves and controls provide cooling to power plants and manufacturing facilities, as well as circulation for food and beverage processing. We also provide boosting systems for farming irrigation, pumps for dairy operations and rainwater reuse systems for small scale crop and turf irrigation. In the Applied Water segment, we provide the majority of our sales through long-standing relationships with many of the leading independent distributors in the markets we serve, with the remainder going directly to customers.
|
•
|
Sensus, which we acquired on October 31, 2016, serves the utility infrastructure solutions and services sector by delivering communications, smart metering, measurement and control technologies and services that allow customers to more effectively use their distribution networks for the delivery of critical resources such as water, electricity and natural gas. Additionally, we sell software and services including cloud-based analytics, remote monitoring and data management, and also sell smart lighting products and solutions that improve efficiency and public safety efforts across communities. In the Sensus segment we generate the majority of our sales in the U.S. through long-standing relationships with leading distributors and dedicated channel partners, while we use a combination of direct sales and distribution channels internationally, depending on the regional availability of distribution channels. The Sensus segment has approximately 3,300 employees across 28 locations on six continents.
|
•
|
"organic revenue" and "organic orders" defined as revenue and orders, respectively, excluding the impact of fluctuations in foreign currency translation and contributions from acquisitions and divestitures. Divestitures include sales of insignificant portions of our business that did not meet the criteria for classification as a discontinued operation. The period-over-period change resulting from foreign currency translation impacts is determined by translating current period and prior period activity using the same currency conversion rate.
|
•
|
"constant currency" defined as financial results adjusted for foreign currency translation impacts by translating current period and prior period activity using the same currency conversion rate. This approach is used for countries whose functional currency is not the U.S. Dollar.
|
•
|
"adjusted net income" and "adjusted earnings per share" defined as net income and earnings per share, respectively, adjusted to exclude restructuring and realignment costs, Sensus acquisition related costs, special charges, gain from sale of business and tax-related special items, as applicable. A reconciliation of adjusted net income is provided below.
|
(in millions, except per share data)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net income
|
|
$
|
260
|
|
|
$
|
340
|
|
|
$
|
337
|
|
Restructuring and realignment, net of tax benefit of $13, $5 and $12, respectively
|
|
34
|
|
|
15
|
|
|
31
|
|
|||
Sensus acquisition related costs, net of tax benefit of $15
|
|
38
|
|
|
—
|
|
|
—
|
|
|||
Special charges, net of tax benefit of $7 and $0, respectively
|
|
11
|
|
|
5
|
|
|
—
|
|
|||
Tax-related special items
|
|
21
|
|
|
(15
|
)
|
|
5
|
|
|||
Gain from sale of business, net of $0 tax in both years
|
|
—
|
|
|
(9
|
)
|
|
(11
|
)
|
|||
Adjusted net income
|
|
$
|
364
|
|
|
$
|
336
|
|
|
$
|
362
|
|
Weighted average number of shares - Diluted
|
|
180.0
|
|
|
181.7
|
|
|
184.2
|
|
|||
Earnings per share
|
|
$
|
1.45
|
|
|
$
|
1.87
|
|
|
$
|
1.83
|
|
Adjusted earnings per share
|
|
$
|
2.03
|
|
|
$
|
1.85
|
|
|
$
|
1.97
|
|
•
|
"operating expenses excluding restructuring and realignment costs, Sensus acquisition related costs and special charges" defined as operating expenses, adjusted to exclude restructuring and realignment costs, Sensus acquisition related costs and special charges.
|
•
|
"adjusted operating income (loss)" defined as operating income (loss), adjusted to exclude restructuring and realignment costs, Sensus acquisition related costs and special charges, and "adjusted operating margin" defined as adjusted operating income divided by total revenue.
|
•
|
“realignment costs” defined as costs not included in restructuring costs that are incurred as part of actions taken to reposition our business, including items such as professional fees, severance, relocation, travel, facility set-up and other costs.
|
•
|
"Sensus acquisition related costs" defined as costs incurred by the Company associated with the acquisition of Sensus that are being reported within operating income. These costs include transaction costs, integration costs, costs related to the recognition of inventory step-up and amortization of the backlog intangible asset recorded in purchase accounting.
|
•
|
“special charges" defined as costs incurred by the Company, such as interest expense related to the early extinguishment of debt during Q2 2016, financing costs related to the bridge loan entered into in Q3 2016 for the Sensus acquisition, initial acquisition costs not related to Sensus, costs incurred for the contractual indemnification of tax obligations to ITT and other special non-operating items.
|
•
|
"tax-related special items" defined as tax items, such as tax return versus tax provision adjustments, tax exam impacts, tax law change impacts, significant reserves for cash repatriation, excess tax benefits/losses and other discrete tax adjustments.
|
•
|
"free cash flow" defined as net cash from operating activities, as reported in the statement of cash flow, less capital expenditures, as well as adjustments for other significant items that impact current results which management believes are not related to our ongoing operations and performance. Our definition of free cash
|
(in millions)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net cash provided by operating activities
|
|
$
|
497
|
|
|
$
|
464
|
|
|
$
|
416
|
|
Capital expenditures
|
|
(124
|
)
|
|
(117
|
)
|
|
(119
|
)
|
|||
Free cash flow
|
|
$
|
373
|
|
|
$
|
347
|
|
|
$
|
297
|
|
Cash paid for Sensus related acquisition costs
|
|
13
|
|
|
—
|
|
|
—
|
|
|||
Free cash flow, excluding Sensus acquisition related costs
|
|
$
|
386
|
|
|
$
|
347
|
|
|
$
|
297
|
|
•
|
“EBITDA” defined as earnings before interest, taxes, depreciation, amortization expense, and share-based compensation and “Adjusted EBITDA” reflects the adjustment to EBITDA to exclude restructuring and realignment costs, Sensus acquisition related costs, gain from sale of business and special charges.
|
(in millions)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net Income
|
|
$
|
260
|
|
|
$
|
340
|
|
|
$
|
337
|
|
Income tax expense
|
|
80
|
|
|
63
|
|
|
84
|
|
|||
Interest expense (Income), net
|
|
68
|
|
|
53
|
|
|
52
|
|
|||
Depreciation
|
|
87
|
|
|
88
|
|
|
95
|
|
|||
Amortization
|
|
64
|
|
|
45
|
|
|
47
|
|
|||
Stock compensation
|
|
18
|
|
|
15
|
|
|
18
|
|
|||
EBITDA
|
|
$
|
577
|
|
|
$
|
604
|
|
|
$
|
633
|
|
Restructuring and realignment
|
|
47
|
|
|
20
|
|
|
43
|
|
|||
Sensus acquisition related costs
|
|
46
|
|
|
—
|
|
|
—
|
|
|||
Special charges
|
|
5
|
|
|
5
|
|
|
—
|
|
|||
Gain from sale of business
|
|
—
|
|
|
(9
|
)
|
|
(11
|
)
|
|||
Adjusted EBITDA
|
|
$
|
675
|
|
|
$
|
620
|
|
|
$
|
665
|
|
•
|
Net income of $260 million, or $1.45 per diluted share ($364 million or $2.03 per diluted share on an adjusted basis)
|
•
|
Cash from operating activities of $497 million, and free cash flow, excluding Sensus acquisition related costs, of $386 million
|
•
|
Orders of $3,824 million, up 3.0% from $3,711 million in 2015 (up 0.3% on an organic basis)
|
•
|
Dividends paid to shareholders increased 10% in 2016.
|
•
|
Industrial was down 4% for 2016, including agriculture which will be included within industrial going forward, as general industrial strength was more than offset by oil and gas declines in Canada and the United States. For 2017, we expect growth to be flat to up in the low-single-digits. We believe the soft market conditions in general industrial that occurred in the U.S. during 2016 will carry into at least the first half of 2017, with modest growth returning over the second half. We continue to expect that the oil and gas markets will be down year-over-year, despite some pockets of higher activity. We expect Emerging Market performance to continue to be mixed with some strength in China and Latin America, offset by continued weakness in the Middle East.
|
•
|
Public utilities increased 8% for 2016 driven by the United States recovery and continued emerging markets investments. We expect growth to be moderate but still increase low to mid-single-digits. In the U.S., which represents approximately one-quarter of our public utility base, we anticipate solid repair and replacement, or opex, activity coupled with some acceleration of project activity later in the year. In Emerging Markets, we expect large project activities to drive growth particularly in China and India. We also anticipate continued growth in Europe, particularly in the United Kingdom with the third year of positive impacts from the AMP 6 cycle. Additionally, we anticipate Sensus public utility revenue to continue to grow at mid-to-high single digits over their historical performance driven by expected growth in the United States within smart metering applications.
|
•
|
Commercial experienced growth of 2% for 2016 driven by strength in the European market which was partially offset by weakness in the United States. We expect continued growth in the low-single-digit range for 2017. Market data suggests a low-growth environment in the U.S. where we have a leading market position and more than half of our total Commercial exposure. Beyond the U.S., the global outlook is mixed. We believe Europe will be closer to flat with lower construction activity and funding uncertainty in certain countries. Also, our business in Europe will face a tough prior year comparison to this year's 10% growth. China appears to be stabilizing and we expect the market to grow over a weak 2016 performance.
|
•
|
Residential markets were down 3% in 2016 with weakness across most regions. For 2017 we expect low- single-digit growth. In the U.S. we expect relatively flat year over year volumes given the competitive landscape and replacement nature of the sector we serve. The European market looks to be modestly stronger as residential building permitting, which is an indicator of sales, increased during the fourth quarter.
|
(in millions)
|
|
2016
|
|
2015
|
|
2014
|
|
2016 v. 2015
|
|
2015 v. 2014
|
||||||||
Revenue
|
|
$
|
3,771
|
|
|
$
|
3,653
|
|
|
$
|
3,916
|
|
|
3.2
|
%
|
|
(6.7
|
)%
|
Gross profit
|
|
1,461
|
|
|
1,404
|
|
|
1,513
|
|
|
4.1
|
%
|
|
(7.2
|
)%
|
|||
Gross margin
|
|
38.7
|
%
|
|
38.4
|
%
|
|
38.6
|
%
|
|
30
|
bp
|
|
(20
|
)bp
|
|||
Operating expenses excluding restructuring and realignment costs, Sensus acquisition related costs and special charges
|
|
950
|
|
|
930
|
|
|
1,007
|
|
|
2.2
|
%
|
|
(7.6
|
)%
|
|||
Expense to revenue ratio
|
|
25.2
|
%
|
|
25.5
|
%
|
|
25.7
|
%
|
|
(30
|
)bp
|
|
(20
|
)bp
|
|||
Restructuring and realignment costs
|
|
47
|
|
|
20
|
|
|
43
|
|
|
135.0
|
%
|
|
(53.5
|
)%
|
|||
Sensus acquisition related charges
|
|
53
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|||||
Special charges
|
|
5
|
|
|
5
|
|
|
—
|
|
|
NM
|
|
|
NM
|
|
|||
Total operating expenses
|
|
1,055
|
|
|
955
|
|
|
1,050
|
|
|
10.5
|
%
|
|
(9.0
|
)%
|
|||
Expense to revenue ratio
|
|
28.0
|
%
|
|
26.1
|
%
|
|
26.8
|
%
|
|
190
|
bp
|
|
(70
|
)bp
|
|||
Operating income
|
|
406
|
|
|
449
|
|
|
463
|
|
|
(9.6
|
)%
|
|
(3.0
|
)%
|
|||
Operating margin
|
|
10.8
|
%
|
|
12.3
|
%
|
|
11.8
|
%
|
|
(150
|
)bp
|
|
50
|
bp
|
|||
Interest and other non-operating expense (income), net
|
|
66
|
|
|
55
|
|
|
53
|
|
|
20.0
|
%
|
|
3.8
|
%
|
|||
Gain from sale of business
|
|
—
|
|
|
9
|
|
|
11
|
|
|
(100.0
|
)%
|
|
(18.2
|
)%
|
|||
Income tax expense
|
|
80
|
|
|
63
|
|
|
84
|
|
|
27.0
|
%
|
|
(25.0
|
)%
|
|||
Tax rate
|
|
23.5
|
%
|
|
15.6
|
%
|
|
19.8
|
%
|
|
790
|
bp
|
|
(420
|
)bp
|
|||
Net income
|
|
$
|
260
|
|
|
$
|
340
|
|
|
$
|
337
|
|
|
(23.5
|
)%
|
|
0.9
|
%
|
|
Water Infrastructure
|
|
Applied Water
|
|
Sensus
|
|
Total Xylem
|
||||||||||||||||
(in millions)
|
$ Change
|
% Change
|
|
$ Change
|
% Change
|
|
$ Change
|
% Change
|
|
$ Change
|
% Change
|
||||||||||||
2015 Revenue
|
$
|
2,231
|
|
|
|
$
|
1,422
|
|
|
|
$
|
—
|
|
|
|
$
|
3,653
|
|
|
||||
Organic Growth
|
38
|
|
1.7
|
%
|
|
(9
|
)
|
(0.6
|
)%
|
|
—
|
|
—
|
%
|
|
29
|
|
0.8
|
%
|
||||
Acquisitions
|
32
|
|
1.4
|
%
|
|
—
|
|
—
|
%
|
|
131
|
|
—
|
%
|
|
163
|
|
4.5
|
%
|
||||
Constant Currency
|
70
|
|
3.1
|
%
|
|
(9
|
)
|
(0.6
|
)%
|
|
131
|
|
—
|
%
|
|
192
|
|
5.3
|
%
|
||||
Foreign currency translation (a)
|
(55
|
)
|
(2.5
|
)%
|
|
(20
|
)
|
(1.4
|
)%
|
|
1
|
|
—
|
%
|
|
(74
|
)
|
(2.0
|
)%
|
||||
Total change in revenue
|
15
|
|
0.7
|
%
|
|
(29
|
)
|
(2.0
|
)%
|
|
132
|
|
—
|
%
|
|
118
|
|
3.2
|
%
|
||||
2016 Revenue
|
$
|
2,246
|
|
|
|
$
|
1,393
|
|
|
|
$
|
132
|
|
|
|
$
|
3,771
|
|
|
(a)
|
Foreign currency translation impact primarily due to fluctuations in the value of the British Pound, Chinese Yuan, Argentinian Peso and other various currencies against the U.S. Dollar.
|
(in millions)
|
2016
|
|
2015
|
|
Change
|
|||||
Selling, general and administrative expenses ("SG&A")
|
$
|
915
|
|
|
$
|
854
|
|
|
7.1
|
%
|
SG&A as a % of revenue
|
24.3
|
%
|
|
23.4
|
%
|
|
90
|
bp
|
||
Research and development expenses ("R&D")
|
110
|
|
|
95
|
|
|
15.8
|
%
|
||
R&D as a % of revenue
|
2.9
|
%
|
|
2.6
|
%
|
|
30
|
bp
|
||
Restructuring charges
|
30
|
|
|
6
|
|
|
400.0
|
%
|
||
Operating expenses
|
$
|
1,055
|
|
|
$
|
955
|
|
|
10.5
|
%
|
Expense to revenue ratio
|
28.0
|
%
|
|
26.1
|
%
|
|
190
|
bp
|
(In millions)
|
2016
|
|
2015
|
|
Change
|
||||||
Water Infrastructure
|
|
|
|
|
|
|
|||||
Operating income
|
$
|
308
|
|
|
$
|
303
|
|
|
1.7
|
|
%
|
Operating margin
|
13.7
|
%
|
|
13.6
|
%
|
|
10
|
|
bp
|
||
Restructuring and realignment costs
|
28
|
|
|
13
|
|
|
115.4
|
|
%
|
||
Special charges
|
5
|
|
|
1
|
|
|
400.0
|
|
%
|
||
Adjusted operating income
|
$
|
341
|
|
|
$
|
317
|
|
|
7.6
|
|
%
|
Adjusted operating margin
|
15.2
|
%
|
|
14.2
|
%
|
|
100
|
|
bp
|
||
Applied Water
|
|
|
|
|
|
|
|||||
Operating income
|
$
|
188
|
|
|
$
|
190
|
|
|
(1.1
|
)
|
%
|
Operating margin
|
13.5
|
%
|
|
13.4
|
%
|
|
10
|
|
bp
|
||
Restructuring and realignment costs
|
16
|
|
|
7
|
|
|
128.6
|
|
%
|
||
Adjusted operating income
|
$
|
204
|
|
|
$
|
197
|
|
|
3.6
|
|
%
|
Adjusted operating margin
|
14.6
|
%
|
|
13.9
|
%
|
|
70
|
|
bp
|
||
Sensus
|
|
|
|
|
|
|
|||||
Operating loss
|
$
|
(17
|
)
|
|
$
|
—
|
|
|
100.0
|
|
%
|
Operating margin
|
(12.9
|
)%
|
|
—
|
%
|
|
NM
|
|
bp
|
||
Sensus acquisition related costs
|
25
|
|
|
—
|
|
|
100.0
|
|
%
|
||
Restructuring and realignment costs
|
1
|
|
|
—
|
|
|
100.0
|
|
%
|
||
Adjusted operating income
|
$
|
9
|
|
|
$
|
—
|
|
|
100.0
|
|
%
|
Adjusted operating margin
|
6.8
|
%
|
|
—
|
%
|
|
NM
|
|
bp
|
||
Corporate and other
|
|
|
|
|
|
|
|||||
Operating loss
|
$
|
(73
|
)
|
|
$
|
(44
|
)
|
|
65.9
|
|
%
|
Restructuring and realignment costs
|
2
|
|
|
—
|
|
|
NM
|
|
|
||
Sensus acquisition related costs
|
28
|
|
|
—
|
|
|
NM
|
|
|
||
Adjusted operating loss
|
$
|
(43
|
)
|
|
$
|
(44
|
)
|
|
(2.3
|
)
|
%
|
Total Xylem
|
|
|
|
|
|
|
|||||
Operating income
|
$
|
406
|
|
|
$
|
449
|
|
|
(9.6
|
)
|
%
|
Operating margin
|
10.8
|
%
|
|
12.3
|
%
|
|
(150
|
)
|
bp
|
||
Restructuring and realignment costs
|
47
|
|
|
20
|
|
|
135.0
|
|
%
|
||
Sensus acquisition related costs
|
53
|
|
|
—
|
|
|
100.0
|
|
%
|
||
Special charges
|
5
|
|
|
1
|
|
|
NM
|
|
|
||
Adjusted operating income
|
$
|
511
|
|
|
$
|
470
|
|
|
8.7
|
|
%
|
Adjusted operating margin
|
13.6
|
%
|
|
12.9
|
%
|
|
70
|
|
bp
|
|
Water Infrastructure
|
|
Applied Water
|
|
Total Xylem
|
||||||||||||
(in millions)
|
$ Change
|
% Change
|
|
$ Change
|
% Change
|
|
$ Change
|
% Change
|
|||||||||
2014 Revenue
|
$
|
2,442
|
|
|
|
$
|
1,474
|
|
|
|
$
|
3,916
|
|
|
|||
Organic Growth
|
22
|
|
0.9
|
%
|
|
38
|
|
2.6
|
%
|
|
60
|
|
1.5
|
%
|
|||
Acquisitions
|
1
|
|
—
|
%
|
|
(11
|
)
|
(0.7
|
)%
|
|
(10
|
)
|
(0.3
|
)%
|
|||
Constant Currency
|
23
|
|
0.9
|
%
|
|
27
|
|
1.8
|
%
|
|
50
|
|
1.3
|
%
|
|||
Foreign currency translation (a)
|
(234
|
)
|
(9.6
|
)%
|
|
(79
|
)
|
(5.4
|
)%
|
|
(313
|
)
|
(8.0
|
)%
|
|||
Total change in revenue
|
(211
|
)
|
(8.6
|
)%
|
|
(52
|
)
|
(3.5
|
)%
|
|
(263
|
)
|
(6.7
|
)%
|
|||
2015 Revenue
|
$
|
2,231
|
|
|
|
$
|
1,422
|
|
|
|
$
|
3,653
|
|
|
(a)
|
Foreign currency translation impact primarily due to fluctuations in the value of the Euro, Swedish Krona, Australian Dollar, British Pound, Canadian Dollar and Norwegian Krone against the U.S. Dollar.
|
(in millions)
|
2015
|
|
2014
|
|
Change
|
|||||
Selling, general and administrative expenses
|
$
|
854
|
|
|
$
|
920
|
|
|
(7.2
|
)%
|
SG&A as a % of revenue
|
23.4
|
%
|
|
23.5
|
%
|
|
(10
|
)bp
|
||
Research and development expenses
|
95
|
|
|
104
|
|
|
(8.7
|
)%
|
||
R&D as a % of revenue
|
2.6
|
%
|
|
2.7
|
%
|
|
(10
|
)bp
|
||
Restructuring charges
|
6
|
|
|
26
|
|
|
(76.9
|
)%
|
||
Operating expenses
|
$
|
955
|
|
|
$
|
1,050
|
|
|
(9.0
|
)%
|
Expense to revenue ratio
|
26.1
|
%
|
|
26.8
|
%
|
|
(70
|
)bp
|
(in millions)
|
2015
|
|
2014
|
|
Change
|
|||||
Water Infrastructure
|
$
|
303
|
|
|
$
|
321
|
|
|
(5.6
|
)%
|
Applied Water
|
190
|
|
|
193
|
|
|
(1.6
|
)%
|
||
Segment operating income
|
493
|
|
|
514
|
|
|
(4.1
|
)%
|
||
Corporate and other
|
(44
|
)
|
|
(51
|
)
|
|
(13.7
|
)%
|
||
Total operating income
|
$
|
449
|
|
|
$
|
463
|
|
|
(3.0
|
)%
|
Operating margin
|
|
|
|
|
|
|||||
Water Infrastructure
|
13.6
|
%
|
|
13.1
|
%
|
|
50
|
bp
|
||
Applied Water
|
13.4
|
%
|
|
13.1
|
%
|
|
30
|
bp
|
||
Total Xylem
|
12.3
|
%
|
|
11.8
|
%
|
|
50
|
bp
|
(in millions)
|
2015
|
|
2014
|
|
Change
|
|||||
Water Infrastructure
|
|
|
|
|
|
|||||
Operating income
|
$
|
303
|
|
|
$
|
321
|
|
|
(5.6
|
)%
|
Restructuring and realignment costs
|
13
|
|
|
29
|
|
|
(55.2
|
)%
|
||
Special charges
|
1
|
|
|
—
|
|
|
NM
|
|
||
Adjusted operating income
|
$
|
317
|
|
|
$
|
350
|
|
|
(9.4
|
)%
|
Adjusted operating margin
|
14.2
|
%
|
|
14.3
|
%
|
|
(10
|
)bp
|
||
Applied Water
|
|
|
|
|
|
|||||
Operating income
|
$
|
190
|
|
|
$
|
193
|
|
|
(1.6
|
)%
|
Restructuring and realignment costs
|
7
|
|
|
13
|
|
|
(46.2
|
)%
|
||
Adjusted operating income
|
$
|
197
|
|
|
$
|
206
|
|
|
(4.4
|
)%
|
Adjusted operating margin
|
13.9
|
%
|
|
14.0
|
%
|
|
(10
|
)bp
|
||
Corporate and other
|
|
|
|
|
|
|||||
Operating loss
|
$
|
(44
|
)
|
|
$
|
(51
|
)
|
|
(13.7
|
)%
|
Restructuring and realignment costs
|
—
|
|
|
1
|
|
|
(100.0
|
)%
|
||
Adjusted operating loss
|
$
|
(44
|
)
|
|
$
|
(50
|
)
|
|
(12.0
|
)%
|
Total Xylem
|
|
|
|
|
|
|||||
Operating income
|
$
|
449
|
|
|
$
|
463
|
|
|
(3.0
|
)%
|
Restructuring and realignment costs
|
20
|
|
|
43
|
|
|
(53.5
|
)%
|
||
Special charges
|
1
|
|
|
—
|
|
|
NM
|
|
||
Adjusted operating income
|
$
|
470
|
|
|
$
|
506
|
|
|
(7.1
|
)%
|
Adjusted operating margin
|
12.9
|
%
|
|
12.9
|
%
|
|
—
|
bp
|
|
Year Ended December 31,
|
||||||||||
(in millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Operating activities
|
$
|
497
|
|
|
$
|
464
|
|
|
$
|
416
|
|
Investing activities
|
(1,886
|
)
|
|
(132
|
)
|
|
(86
|
)
|
|||
Financing activities
|
1,034
|
|
|
(262
|
)
|
|
(147
|
)
|
|||
Foreign exchange (a)
|
(17
|
)
|
|
(53
|
)
|
|
(53
|
)
|
|||
Total
|
$
|
(372
|
)
|
|
$
|
17
|
|
|
$
|
130
|
|
(a)
|
2016 impact is primarily due to the weakness of the Euro and the Chinese Yuan against the U.S. Dollar. 2015 and 2014 impact is primarily due to the weakness of the Euro against the U.S. Dollar.
|
(in millions)
|
2017
|
|
2018 - 2019
|
|
2020 - 2021
|
|
Thereafter
|
|
Total
|
||||||||||
Debt and capital lease obligations (1)
|
$
|
261
|
|
|
$
|
—
|
|
|
$
|
600
|
|
|
$
|
1,532
|
|
|
$
|
2,393
|
|
Interest payments (1) (2)
|
76
|
|
|
150
|
|
|
150
|
|
|
544
|
|
|
920
|
|
|||||
Operating lease obligations
|
65
|
|
|
90
|
|
|
45
|
|
|
23
|
|
|
223
|
|
|||||
Purchase obligations (3)
|
72
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
83
|
|
|||||
Other long-term obligations reflected on the balance sheet
|
1
|
|
|
4
|
|
|
2
|
|
|
6
|
|
|
13
|
|
|||||
Total commitments
|
$
|
475
|
|
|
$
|
255
|
|
|
$
|
797
|
|
|
$
|
2,105
|
|
|
$
|
3,632
|
|
(1)
|
Refer to Note 13, “Credit Facilities and Long-Term Debt,” of the consolidated financial statements for discussion of the use and availability of debt and revolving credit agreements. Amounts represent principal payments of short-term and long-term debt including current maturities and exclude unamortized discounts.
|
(2)
|
Amounts represent estimates of future interest payments on short-term and long-term debt outstanding as of December 31, 2016.
|
(3)
|
Represents unconditional purchase agreements that are enforceable and legally binding and that specify all significant terms to purchase goods or services, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Purchase agreements that are able to cancel without penalty have been excluded.
|
NM
|
Not meaningful. The pension benefits for future service for all the U.S. pension plans are based on years of service and not impacted by future compensation increases.
|
|
2016
|
|
2015
|
|
2014
|
|||
Expected long-term rate of return on plan assets
|
7.32
|
%
|
|
7.38
|
%
|
|
7.38
|
%
|
Actual rate of return on plan assets
|
12.20
|
%
|
|
3.51
|
%
|
|
18.13
|
%
|
|
Page No.
|
Audited Consolidated Financial Statements:
|
|
Notes to Consolidated Financial Statements:
|
|
Year Ended December 31,
|
2016
|
|
2015
|
|
2014
|
||||||
Revenue
|
$
|
3,771
|
|
|
$
|
3,653
|
|
|
$
|
3,916
|
|
Cost of revenue
|
2,310
|
|
|
2,249
|
|
|
2,403
|
|
|||
Gross profit
|
1,461
|
|
|
1,404
|
|
|
1,513
|
|
|||
Selling, general and administrative expenses
|
915
|
|
|
854
|
|
|
920
|
|
|||
Research and development expenses
|
110
|
|
|
95
|
|
|
104
|
|
|||
Restructuring charges
|
30
|
|
|
6
|
|
|
26
|
|
|||
Operating income
|
406
|
|
|
449
|
|
|
463
|
|
|||
Interest expense
|
70
|
|
|
55
|
|
|
54
|
|
|||
Other non-operating income, net
|
4
|
|
|
—
|
|
|
1
|
|
|||
Gain from sale of business
|
—
|
|
|
9
|
|
|
11
|
|
|||
Income before taxes
|
340
|
|
|
403
|
|
|
421
|
|
|||
Income tax expense
|
80
|
|
|
63
|
|
|
84
|
|
|||
Net income
|
$
|
260
|
|
|
$
|
340
|
|
|
$
|
337
|
|
Earnings per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
1.45
|
|
|
$
|
1.88
|
|
|
$
|
1.84
|
|
Diluted
|
$
|
1.45
|
|
|
$
|
1.87
|
|
|
$
|
1.83
|
|
Weighted average number of shares:
|
|
|
|
|
|
||||||
Basic
|
179.1
|
|
|
180.9
|
|
|
183.1
|
|
|||
Diluted
|
180.0
|
|
|
181.7
|
|
|
184.2
|
|
|||
Dividends declared per share
|
$
|
0.6196
|
|
|
$
|
0.5632
|
|
|
$
|
0.5120
|
|
Year Ended December 31,
|
2016
|
|
2015
|
|
2014
|
||||||
Net income
|
$
|
260
|
|
|
$
|
340
|
|
|
$
|
337
|
|
Other comprehensive loss, before tax:
|
|
|
|
|
|
||||||
Foreign currency translation adjustment
|
(65
|
)
|
|
(180
|
)
|
|
(206
|
)
|
|||
Foreign currency gain reclassified into net income
|
—
|
|
|
(8
|
)
|
|
—
|
|
|||
Net change in derivative hedge agreements:
|
|
|
|
|
|
||||||
Unrealized losses
|
—
|
|
|
(22
|
)
|
|
(22
|
)
|
|||
Amount of (gain) loss reclassified into net income
|
(2
|
)
|
|
20
|
|
|
6
|
|
|||
Net change in postretirement benefit plans:
|
|
|
|
|
|
||||||
Net (loss) gain
|
(20
|
)
|
|
23
|
|
|
(110
|
)
|
|||
Prior service credit
|
1
|
|
|
1
|
|
|
17
|
|
|||
Amortization of prior service credit cost
|
(3
|
)
|
|
(3
|
)
|
|
(1
|
)
|
|||
Amortization of net actuarial loss into net income
|
13
|
|
|
18
|
|
|
11
|
|
|||
Settlement
|
—
|
|
|
—
|
|
|
1
|
|
|||
Foreign currency translation adjustment
|
19
|
|
|
21
|
|
|
20
|
|
|||
Other comprehensive loss, before tax
|
(57
|
)
|
|
(130
|
)
|
|
(284
|
)
|
|||
Income tax expense (benefits) related to other comprehensive loss
|
23
|
|
|
9
|
|
|
(18
|
)
|
|||
Other comprehensive loss, net of tax
|
(80
|
)
|
|
(139
|
)
|
|
(266
|
)
|
|||
Comprehensive income
|
$
|
180
|
|
|
$
|
201
|
|
|
$
|
71
|
|
December 31,
|
2016
|
|
2015
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
308
|
|
|
$
|
680
|
|
Receivables, less allowances for discounts, returns and doubtful accounts of $30 and $33 in 2016 and 2015, respectively
|
843
|
|
|
749
|
|
||
Inventories
|
522
|
|
|
433
|
|
||
Prepaid and other current assets
|
166
|
|
|
143
|
|
||
Total current assets
|
1,839
|
|
|
2,005
|
|
||
Property, plant and equipment, net
|
616
|
|
|
439
|
|
||
Goodwill
|
2,632
|
|
|
1,584
|
|
||
Other intangible assets, net
|
1,201
|
|
|
435
|
|
||
Other non-current assets
|
186
|
|
|
194
|
|
||
Total assets
|
$
|
6,474
|
|
|
$
|
4,657
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
457
|
|
|
$
|
338
|
|
Accrued and other current liabilities
|
521
|
|
|
407
|
|
||
Short-term borrowings and current maturities of long-term debt
|
260
|
|
|
78
|
|
||
Total current liabilities
|
1,238
|
|
|
823
|
|
||
Long-term debt, net
|
2,108
|
|
|
1,196
|
|
||
Accrued postretirement benefits
|
408
|
|
|
335
|
|
||
Deferred income tax liabilities
|
352
|
|
|
118
|
|
||
Other non-current accrued liabilities
|
161
|
|
|
101
|
|
||
Total liabilities
|
4,267
|
|
|
2,573
|
|
||
Commitment and Contingencies (Note 18)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Common stock — par value $0.01 per share:
|
|
|
|
||||
Authorized 750.0 shares, issued 191.4 and 190.2 shares in 2016 and 2015, respectively
|
2
|
|
|
2
|
|
||
Capital in excess of par value
|
1,876
|
|
|
1,834
|
|
||
Retained earnings
|
1,033
|
|
|
885
|
|
||
Treasury stock – at cost 11.9 shares and 11.8 shares in 2016 and 2015, respectively
|
(403
|
)
|
|
(399
|
)
|
||
Accumulated other comprehensive loss
|
(318
|
)
|
|
(238
|
)
|
||
Total stockholders’ equity
|
2,190
|
|
|
2,084
|
|
||
Non-controlling interest
|
17
|
|
|
—
|
|
||
Total equity
|
2,207
|
|
|
2,084
|
|
||
Total liabilities and stockholders’ equity
|
$
|
6,474
|
|
|
$
|
4,657
|
|
Year Ended December 31,
|
2016
|
|
2015
|
|
2014
|
||||||
Operating Activities
|
|
|
|
|
|
||||||
Net income
|
$
|
260
|
|
|
$
|
340
|
|
|
$
|
337
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation
|
87
|
|
|
88
|
|
|
95
|
|
|||
Amortization
|
64
|
|
|
45
|
|
|
47
|
|
|||
Deferred income taxes
|
14
|
|
|
(9
|
)
|
|
(29
|
)
|
|||
Share-based compensation
|
18
|
|
|
15
|
|
|
18
|
|
|||
Restructuring charges, net
|
30
|
|
|
6
|
|
|
26
|
|
|||
Gain from sale of businesses
|
—
|
|
|
(9
|
)
|
|
(11
|
)
|
|||
Other, net
|
6
|
|
|
12
|
|
|
2
|
|
|||
Payments for restructuring
|
(16
|
)
|
|
(14
|
)
|
|
(26
|
)
|
|||
Contributions to postretirement benefit plans
|
(27
|
)
|
|
(25
|
)
|
|
(35
|
)
|
|||
Changes in assets and liabilities (net of acquisitions):
|
|
|
|
|
|
||||||
Changes in receivables
|
(6
|
)
|
|
(24
|
)
|
|
(37
|
)
|
|||
Changes in inventories
|
(15
|
)
|
|
23
|
|
|
(49
|
)
|
|||
Changes in accounts payable
|
61
|
|
|
20
|
|
|
17
|
|
|||
Changes in accrued liabilities
|
13
|
|
|
(11
|
)
|
|
3
|
|
|||
Changes in accrued taxes
|
(13
|
)
|
|
(3
|
)
|
|
25
|
|
|||
Net changes in other assets and liabilities
|
21
|
|
|
10
|
|
|
33
|
|
|||
Net Cash — Operating activities
|
497
|
|
|
464
|
|
|
416
|
|
|||
Investing Activities
|
|
|
|
|
|
||||||
Capital expenditures
|
(124
|
)
|
|
(117
|
)
|
|
(119
|
)
|
|||
Proceeds from the sale of property, plant and equipment
|
1
|
|
|
—
|
|
|
2
|
|
|||
Acquisitions of businesses and assets, net of cash acquired
|
(1,782
|
)
|
|
(18
|
)
|
|
—
|
|
|||
Proceeds from sale of business
|
—
|
|
|
1
|
|
|
30
|
|
|||
Other, net
|
19
|
|
|
2
|
|
|
1
|
|
|||
Net Cash — Investing activities
|
(1,886
|
)
|
|
(132
|
)
|
|
(86
|
)
|
|||
Financing Activities
|
|
|
|
|
|
||||||
Short-term debt issued
|
274
|
|
|
—
|
|
|
52
|
|
|||
Short-term debt repaid
|
(80
|
)
|
|
(3
|
)
|
|
—
|
|
|||
Long-term debt issued, net
|
1,540
|
|
|
—
|
|
|
—
|
|
|||
Long-term debt repaid
|
(608
|
)
|
|
—
|
|
|
—
|
|
|||
Repurchase of common stock
|
(4
|
)
|
|
(179
|
)
|
|
(134
|
)
|
|||
Proceeds from exercise of employee stock options
|
24
|
|
|
21
|
|
|
26
|
|
|||
Excess tax benefit from share based compensation
|
—
|
|
|
2
|
|
|
2
|
|
|||
Dividends paid
|
(112
|
)
|
|
(102
|
)
|
|
(94
|
)
|
|||
Other, net
|
—
|
|
|
(1
|
)
|
|
1
|
|
|||
Net Cash — Financing activities
|
1,034
|
|
|
(262
|
)
|
|
(147
|
)
|
|||
Effect of exchange rate changes on cash
|
(17
|
)
|
|
(53
|
)
|
|
(53
|
)
|
|||
Net change in cash and cash equivalents
|
(372
|
)
|
|
17
|
|
|
130
|
|
|||
Cash and cash equivalents at beginning of year
|
680
|
|
|
663
|
|
|
533
|
|
|||
Cash and cash equivalents at end of year
|
$
|
308
|
|
|
$
|
680
|
|
|
$
|
663
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||||||
Cash paid during the year for:
|
|
|
|
|
|
||||||
Interest
|
$
|
49
|
|
|
$
|
52
|
|
|
$
|
51
|
|
Income taxes (net of refunds received)
|
$
|
78
|
|
|
$
|
75
|
|
|
$
|
81
|
|
|
Common
Stock |
|
Capital in Excess of Par Value |
|
Retained
Earnings |
|
Accumulated Other
Comprehensive Income (Loss) |
|
Treasury Stock
|
|
Non-Controlling Interest
|
|
Total
|
||||||||||||||
Balance at December 31, 2013
|
$
|
2
|
|
|
$
|
1,753
|
|
|
$
|
405
|
|
|
$
|
167
|
|
|
$
|
(86
|
)
|
|
$
|
—
|
|
|
$
|
2,241
|
|
Net income
|
|
|
|
|
337
|
|
|
|
|
|
|
|
|
337
|
|
||||||||||||
Other comprehensive loss, net
|
|
|
|
|
|
|
(266
|
)
|
|
|
|
|
|
(266
|
)
|
||||||||||||
Dividends declared ($0.5120 per share)
|
|
|
|
|
(94
|
)
|
|
|
|
|
|
|
|
(94
|
)
|
||||||||||||
Stock incentive plan activity
|
|
|
43
|
|
|
|
|
|
|
|
|
|
|
43
|
|
||||||||||||
Repurchase of common stock
|
|
|
|
|
|
|
|
|
(134
|
)
|
|
|
|
(134
|
)
|
||||||||||||
Balance at December 31, 2014
|
$
|
2
|
|
|
$
|
1,796
|
|
|
$
|
648
|
|
|
$
|
(99
|
)
|
|
$
|
(220
|
)
|
|
$
|
—
|
|
|
$
|
2,127
|
|
Net income
|
|
|
|
|
340
|
|
|
|
|
|
|
|
|
340
|
|
||||||||||||
Other comprehensive loss, net
|
|
|
|
|
|
|
(139
|
)
|
|
|
|
|
|
(139
|
)
|
||||||||||||
Dividends declared ($0.5632 per share)
|
|
|
|
|
(103
|
)
|
|
|
|
|
|
|
|
(103
|
)
|
||||||||||||
Stock incentive plan activity
|
|
|
38
|
|
|
|
|
|
|
|
|
|
|
38
|
|
||||||||||||
Repurchase of common stock
|
|
|
|
|
|
|
|
|
(179
|
)
|
|
|
|
(179
|
)
|
||||||||||||
Balance at December 31, 2015
|
$
|
2
|
|
|
$
|
1,834
|
|
|
$
|
885
|
|
|
$
|
(238
|
)
|
|
$
|
(399
|
)
|
|
$
|
—
|
|
|
$
|
2,084
|
|
Net income
|
|
|
|
|
260
|
|
|
|
|
|
|
|
|
260
|
|
||||||||||||
Other comprehensive loss, net
|
|
|
|
|
|
|
(80
|
)
|
|
|
|
|
|
(80
|
)
|
||||||||||||
Dividends declared ($0.6196 per share)
|
|
|
|
|
(112
|
)
|
|
|
|
|
|
|
|
(112
|
)
|
||||||||||||
Stock incentive plan activity
|
|
|
42
|
|
|
|
|
|
|
|
|
|
|
42
|
|
||||||||||||
Repurchase of common stock
|
|
|
|
|
|
|
|
|
(4
|
)
|
|
|
|
(4
|
)
|
||||||||||||
Acquisition activity
|
|
|
|
|
|
|
|
|
|
|
17
|
|
|
17
|
|
||||||||||||
Balance at December 31, 2016
|
$
|
2
|
|
|
$
|
1,876
|
|
|
$
|
1,033
|
|
|
$
|
(318
|
)
|
|
$
|
(403
|
)
|
|
$
|
17
|
|
|
$
|
2,207
|
|
|
Estimated Life
|
Buildings and improvements
|
5 to 40 years
|
Machinery and equipment
|
2 to 10 years
|
Furniture and fixtures
|
3 to 7 years
|
Equipment held for lease or rental
|
2 to 10 years
|
•
|
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.
|
•
|
Level 2 inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices (in non-active markets or in active markets for similar assets or liabilities), inputs other than quoted prices that are observable, and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
|
•
|
Level 3 inputs are unobservable inputs for the assets or liabilities.
|
•
|
The Company recorded tax benefits of $3 million within income tax expense for the year ended December 31, 2016 related to the excess tax benefit on share-based awards. Prior to adoption this amount would have been recorded as an increase of capital in excess of par value. This change could create volatility in the Company's effective tax rate.
|
•
|
The Company no longer reflects the cash received from the excess tax benefit within cash flows from financing activities but instead now reflects this benefit within cash flows from operating activities in the Consolidated Statements of Cash Flows. The Company elected to apply this change in presentation prospectively and thus prior periods have not been adjusted.
|
•
|
The Company elected not to change its policy on accounting for forfeitures and continues to estimate the total number of awards for which the requisite service period will not be rendered.
|
•
|
At this time, the Company has not changed its policy on statutory withholding requirements and will continue to allow the employee to withhold up to the Company's minimum statutory withholding requirements.
|
•
|
The Company excluded the excess tax benefits from the assumed proceeds available to repurchase shares in the computation of our diluted earnings per share for the year ended December 31, 2016. This increased diluted weighted average common shares outstanding by less than 300,000 shares for the aforementioned period.
|
(in millions)
|
Amount
|
||
Cash
|
$
|
56
|
|
Receivables
|
105
|
|
|
Inventories
|
79
|
|
|
Prepaid and other current assets
|
20
|
|
|
Property, plant and equipment
|
181
|
|
|
Intangible assets
|
787
|
|
|
Other long-term assets
|
4
|
|
|
Accounts payable
|
(69
|
)
|
|
Accrued and other current liabilities
|
(91
|
)
|
|
Deferred income tax liabilities
|
(209
|
)
|
|
Accrued post retirement benefits
|
(84
|
)
|
|
Other non-current accrued liabilities
|
(58
|
)
|
|
Total identifiable net assets
|
721
|
|
|
|
|
||
Goodwill
|
1,062
|
|
|
Non-controlling interest
|
(17
|
)
|
|
Total consideration (a)
|
$
|
1,766
|
|
(a)
|
Total consideration includes $1,760 million paid at closing and $6 million payable to former owners.
|
Category
|
|
Life
|
|
Amount (in millions)
|
||
Customer and Distributor Relationships
|
|
4 - 18 years
|
|
$
|
558
|
|
Tradenames
|
|
10 - 25 years
|
|
98
|
|
|
Internally Developed Network Software
|
|
7 years
|
|
50
|
|
|
FCC Licenses
|
|
Indefinite lived
|
|
24
|
|
|
Technology
|
|
5 - 12 years
|
|
38
|
|
|
Other
|
|
1 - 16 years
|
|
19
|
|
|
Total
|
|
|
|
$
|
787
|
|
•
|
Adjustments to revenue resulting from the valuation of the acquired deferred revenue balance to fair value as part of purchase accounting
|
•
|
Amortization expense of acquired intangibles
|
•
|
Amortization of the fair value step-up in inventory
|
•
|
Adjustments to the depreciation of property, plant and equipment reflecting the impact of the calculated fair value of those assets in accordance with purchase accounting
|
•
|
Amortization of the fair value adjustment for warranty liabilities
|
•
|
Adjustments to interest expense to remove historical Sensus interest costs and reflect Xylem's current debt profile
|
•
|
The related tax impact of the above referenced adjustments
|
|
|
Year Ended December 31,
|
||||||||||
(in millions)
|
|
2016
|
|
2015
|
|
2014
|
||||||
By component:
|
|
|
|
|
|
|
||||||
Severance and other charges
|
|
$
|
28
|
|
|
$
|
7
|
|
|
$
|
26
|
|
Lease related charges
|
|
2
|
|
|
—
|
|
|
1
|
|
|||
Fixed asset write-offs
|
|
1
|
|
|
—
|
|
|
—
|
|
|||
Reversal of restructuring accruals
|
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|||
Total restructuring charges
|
|
30
|
|
|
6
|
|
|
26
|
|
|||
|
|
|
|
|
|
|
||||||
By segment:
|
|
|
|
|
|
|
||||||
Water Infrastructure
|
|
$
|
17
|
|
|
$
|
5
|
|
|
$
|
19
|
|
Applied Water
|
|
10
|
|
|
1
|
|
|
6
|
|
|||
Sensus
|
|
1
|
|
|
—
|
|
|
—
|
|
|||
Corporate and other
|
|
2
|
|
|
—
|
|
|
1
|
|
(in millions)
|
|
2016
|
|
2015
|
||||
Restructuring accruals - January 1
|
|
$
|
3
|
|
|
$
|
12
|
|
Restructuring charges
|
|
30
|
|
|
6
|
|
||
Cash payments
|
|
(16
|
)
|
|
(14
|
)
|
||
Foreign currency and other
|
|
(2
|
)
|
|
(1
|
)
|
||
Restructuring accruals - December 31
|
|
$
|
15
|
|
|
$
|
3
|
|
|
|
|
|
|
||||
By segment:
|
|
|
|
|
||||
Water Infrastructure
|
|
$
|
5
|
|
|
$
|
1
|
|
Applied Water
|
|
5
|
|
|
1
|
|
||
Sensus
|
|
1
|
|
|
—
|
|
||
Regional selling locations (a)
|
|
2
|
|
|
1
|
|
||
Corporate and other
|
|
2
|
|
|
—
|
|
(a)
|
Regional selling locations consist primarily of selling and marketing organizations that incurred restructuring expense which was allocated to the segments. The liabilities associated with restructuring expense were not allocated to the segments.
|
|
|
2016
|
|
2015
|
||
Planned reductions - January 1
|
|
82
|
|
|
133
|
|
Additional planned reductions
|
|
612
|
|
|
87
|
|
Actual reductions and reversals
|
|
(506
|
)
|
|
(138
|
)
|
Planned reductions - December 31
|
|
188
|
|
|
82
|
|
|
Year Ended December 31,
|
||||||||||
(in millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Interest income
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
2
|
|
Income from joint ventures
|
3
|
|
|
3
|
|
|
2
|
|
|||
Other expense – net
|
(1
|
)
|
|
(5
|
)
|
|
(3
|
)
|
|||
Total other non-operating income, net
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
Year Ended December 31,
|
||||||||||
(in millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Income components:
|
|
|
|
|
|
||||||
Domestic
|
$
|
80
|
|
|
$
|
116
|
|
|
$
|
118
|
|
Foreign
|
260
|
|
|
287
|
|
|
303
|
|
|||
Total pre-tax income
|
$
|
340
|
|
|
$
|
403
|
|
|
$
|
421
|
|
Income tax expense components:
|
|
|
|
|
|
||||||
Current:
|
|
|
|
|
|
||||||
Domestic – federal
|
$
|
19
|
|
|
$
|
32
|
|
|
$
|
44
|
|
Domestic – state and local
|
5
|
|
|
6
|
|
|
7
|
|
|||
Foreign
|
42
|
|
|
34
|
|
|
62
|
|
|||
Total Current
|
66
|
|
|
72
|
|
|
113
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Domestic – federal
|
$
|
19
|
|
|
$
|
1
|
|
|
$
|
(14
|
)
|
Domestic – state and local
|
1
|
|
|
1
|
|
|
—
|
|
|||
Foreign
|
(6
|
)
|
|
(11
|
)
|
|
(15
|
)
|
|||
Total Deferred
|
14
|
|
|
(9
|
)
|
|
(29
|
)
|
|||
Total income tax provision
|
$
|
80
|
|
|
$
|
63
|
|
|
$
|
84
|
|
Effective income tax rate
|
23.5
|
%
|
|
15.6
|
%
|
|
19.8
|
%
|
|
Year Ended December 31,
|
|||||||
|
2016
|
|
2015
|
|
2014
|
|||
Tax provision at U.S. statutory rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
Increase (decrease) in tax rate resulting from:
|
|
|
|
|
|
|||
State income taxes
|
0.8
|
|
|
1.0
|
|
|
1.0
|
|
Settlements of tax examinations
|
(6.4
|
)
|
|
0.5
|
|
|
0.4
|
|
Valuation allowance
|
18.5
|
|
|
8.6
|
|
|
22.9
|
|
Tax exempt interest
|
(14.3
|
)
|
|
(13.1
|
)
|
|
(26.3
|
)
|
Foreign tax rate differential
|
(7.9
|
)
|
|
(7.2
|
)
|
|
(4.2
|
)
|
Repatriation of foreign earnings, net of foreign tax credits
|
5.9
|
|
|
0.2
|
|
|
(1.7
|
)
|
Tax incentives
|
(8.9
|
)
|
|
(7.8
|
)
|
|
(6.2
|
)
|
Other – net
|
0.8
|
|
|
(1.6
|
)
|
|
(1.1
|
)
|
Effective income tax rate
|
23.5
|
%
|
|
15.6
|
%
|
|
19.8
|
%
|
|
December 31,
|
||||||
(in millions)
|
2016
|
|
2015
|
||||
Deferred tax assets:
|
|
|
|
||||
Employee benefits
|
$
|
126
|
|
|
$
|
106
|
|
Accrued expenses
|
53
|
|
|
24
|
|
||
Loss and other tax credit carryforwards
|
387
|
|
|
285
|
|
||
Inventory
|
6
|
|
|
7
|
|
||
Other
|
—
|
|
|
3
|
|
||
|
572
|
|
|
425
|
|
||
Valuation allowance
|
(311
|
)
|
|
(248
|
)
|
||
Net deferred tax asset
|
$
|
261
|
|
|
$
|
177
|
|
Deferred tax liabilities:
|
|
|
|
||||
Intangibles
|
$
|
434
|
|
|
$
|
168
|
|
Investment in foreign subsidiaries
|
4
|
|
|
4
|
|
||
Property, plant, and equipment
|
61
|
|
|
17
|
|
||
Other
|
48
|
|
|
35
|
|
||
Total deferred tax liabilities
|
$
|
547
|
|
|
$
|
224
|
|
(in millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Valuation allowance — January 1
|
$
|
248
|
|
|
$
|
427
|
|
|
$
|
349
|
|
Change in assessment (a)
|
17
|
|
|
(5
|
)
|
|
(4
|
)
|
|||
Current year operations
|
38
|
|
|
39
|
|
|
100
|
|
|||
Foreign currency and other (b)
|
(32
|
)
|
|
(213
|
)
|
|
(18
|
)
|
|||
Acquisitions
|
40
|
|
|
—
|
|
|
—
|
|
|||
Valuation allowance — December 31
|
$
|
311
|
|
|
$
|
248
|
|
|
$
|
427
|
|
|
December 31,
|
||||||
(in millions)
|
2016
|
|
2015
|
||||
Non-current assets
|
$
|
66
|
|
|
$
|
71
|
|
Non-current liabilities
|
(352
|
)
|
|
(118
|
)
|
||
Total net deferred tax liabilities
|
$
|
(286
|
)
|
|
$
|
(47
|
)
|
(in millions)
|
December 31, 2016
|
|
First Year of Expiration
|
||
U.S. net operating loss
|
$
|
54
|
|
|
December 31, 2024
|
State net operating loss
|
175
|
|
|
December 31, 2017
|
|
U.S. tax credits
|
52
|
|
|
December 31, 2020
|
|
State tax credits
|
1
|
|
|
Indefinitely
|
|
Foreign net operating loss
|
1,270
|
|
|
December 31, 2018
|
(in millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Unrecognized tax benefits — January 1
|
$
|
47
|
|
|
$
|
44
|
|
|
$
|
30
|
|
Current year tax positions
|
12
|
|
|
4
|
|
|
9
|
|
|||
Prior year tax positions
|
(22
|
)
|
|
1
|
|
|
7
|
|
|||
Acquisitions
|
30
|
|
|
—
|
|
|
—
|
|
|||
Settlements
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
|||
Unrecognized tax benefits — December 31
|
$
|
67
|
|
|
$
|
47
|
|
|
$
|
44
|
|
Jurisdiction
|
|
Earliest Open Year
|
Italy
|
|
2011
|
Luxembourg
|
|
2013
|
Sweden
|
|
2011
|
Germany
|
|
2010
|
United Kingdom
|
|
2009
|
United States
|
|
2014
|
Switzerland
|
|
2011
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Net Income (in millions)
|
$
|
260
|
|
|
$
|
340
|
|
|
$
|
337
|
|
Shares (in thousands):
|
|
|
|
|
|
||||||
Weighted average common shares outstanding
|
179,069
|
|
|
180,854
|
|
|
183,030
|
|
|||
Add: Participating securities (a)
|
37
|
|
|
39
|
|
|
47
|
|
|||
Weighted average common shares outstanding — Basic
|
179,106
|
|
|
180,893
|
|
|
183,077
|
|
|||
Plus incremental shares from assumed conversions: (b)
|
|
|
|
|
|
||||||
Dilutive effect of stock options
|
499
|
|
|
465
|
|
|
643
|
|
|||
Dilutive effect of restricted stock units and performance share units
|
433
|
|
|
379
|
|
|
529
|
|
|||
Weighted average common shares outstanding — Diluted
|
180,038
|
|
|
181,737
|
|
|
184,249
|
|
|||
Basic earnings per share
|
$
|
1.45
|
|
|
$
|
1.88
|
|
|
$
|
1.84
|
|
Diluted earnings per share
|
$
|
1.45
|
|
|
$
|
1.87
|
|
|
$
|
1.83
|
|
(a)
|
Restricted stock awards containing rights to non-forfeitable dividends that participate in undistributed earnings with common shareholders are considered participating securities for purposes of computing earnings per share.
|
|
Year Ended December 31,
|
|||||||
(in thousands)
|
2016
|
|
2015
|
|
2014
|
|||
Stock options
|
1,892
|
|
|
2,616
|
|
|
2,720
|
|
Restricted stock units
|
514
|
|
|
723
|
|
|
525
|
|
Performance share units
|
373
|
|
|
181
|
|
|
119
|
|
|
December 31,
|
||||||
(in millions)
|
2016
|
|
2015
|
||||
Finished goods
|
$
|
220
|
|
|
$
|
188
|
|
Work in process
|
42
|
|
|
32
|
|
||
Raw materials
|
260
|
|
|
213
|
|
||
Total inventories
|
$
|
522
|
|
|
$
|
433
|
|
|
December 31,
|
||||||
(in millions)
|
2016
|
|
2015
|
||||
Land, buildings and improvements
|
$
|
299
|
|
|
$
|
240
|
|
Machinery and equipment
|
731
|
|
|
650
|
|
||
Equipment held for lease or rental
|
218
|
|
|
205
|
|
||
Furniture and fixtures
|
95
|
|
|
79
|
|
||
Construction work in progress
|
76
|
|
|
46
|
|
||
Other
|
19
|
|
|
19
|
|
||
Total property, plant and equipment, gross
|
1,438
|
|
|
1,239
|
|
||
Less accumulated depreciation
|
822
|
|
|
800
|
|
||
Total property, plant and equipment, net
|
$
|
616
|
|
|
$
|
439
|
|
(in millions)
|
Water
Infrastructure |
|
Applied Water
|
|
Sensus
|
|
Total
|
||||||||
Balance as of December 31, 2014
|
$
|
1,098
|
|
|
$
|
537
|
|
|
$
|
—
|
|
|
$
|
1,635
|
|
Activity in 2015
|
|
|
|
|
|
|
|
||||||||
Acquired (a)
|
10
|
|
|
—
|
|
|
—
|
|
|
10
|
|
||||
Foreign currency and other
|
(42
|
)
|
|
(19
|
)
|
|
—
|
|
|
(61
|
)
|
||||
Balance as of December 31, 2015
|
$
|
1,066
|
|
|
$
|
518
|
|
|
$
|
—
|
|
|
$
|
1,584
|
|
Activity in 2016
|
|
|
|
|
|
|
|
||||||||
Acquired (b)
|
38
|
|
|
—
|
|
|
1,068
|
|
|
1,106
|
|
||||
Foreign currency and other
|
(30
|
)
|
|
(13
|
)
|
|
(15
|
)
|
|
(58
|
)
|
||||
Balance as of December 31, 2016
|
$
|
1,074
|
|
|
$
|
505
|
|
|
$
|
1,053
|
|
|
$
|
2,632
|
|
(a)
|
On October 22, 2015, we acquired substantially all of the assets of Hypack, Inc. and recorded $10 million of goodwill. Refer to Note 3, "Acquisitions and Divestitures" for additional information.
|
(b)
|
On February 1, 2016, we acquired Tideland and recorded $38 million of goodwill. On October 18, 2016, we acquired Visenti and recorded $6 million of goodwill. On October 31, 2016, we acquired Sensus and recorded $1,062 million of goodwill. Refer to Note 3, "Acquisitions and Divestitures" for additional information.
|
(in millions)
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||||||||||
|
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Intangibles
|
|
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Intangibles
|
||||||||||||
Customer and distributor relationships
|
$
|
891
|
|
|
$
|
(168
|
)
|
|
$
|
723
|
|
|
$
|
320
|
|
|
$
|
(140
|
)
|
|
$
|
180
|
|
Proprietary technology and patents
|
156
|
|
|
(61
|
)
|
|
95
|
|
|
116
|
|
|
(54
|
)
|
|
62
|
|
||||||
Trademarks
|
139
|
|
|
(23
|
)
|
|
116
|
|
|
35
|
|
|
(19
|
)
|
|
16
|
|
||||||
Software
|
218
|
|
|
(118
|
)
|
|
100
|
|
|
155
|
|
|
(110
|
)
|
|
45
|
|
||||||
Other
|
26
|
|
|
(13
|
)
|
|
13
|
|
|
8
|
|
|
(8
|
)
|
|
—
|
|
||||||
Indefinite-lived intangibles
|
154
|
|
|
—
|
|
|
154
|
|
|
132
|
|
|
—
|
|
|
132
|
|
||||||
Other intangibles
|
$
|
1,584
|
|
|
$
|
(383
|
)
|
|
$
|
1,201
|
|
|
$
|
766
|
|
|
$
|
(331
|
)
|
|
$
|
435
|
|
|
|
Year Ended December 31,
|
||||||||||
(in millions)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Derivatives in Cash Flow Hedges
|
|
|
|
|
|
|
||||||
Foreign Exchange Contracts
|
|
|
|
|
|
|
||||||
Amount of (loss) gain recognized in OCI (a)
|
|
$
|
—
|
|
|
$
|
(5
|
)
|
|
$
|
(22
|
)
|
Amount of (gain) loss reclassified from OCI into revenue (a)
|
|
(2
|
)
|
|
19
|
|
|
5
|
|
|||
Amount of loss reclassified from OCI into cost of revenue (a)
|
|
—
|
|
|
1
|
|
|
1
|
|
|||
|
|
|
|
|
|
|
||||||
Derivatives in Net Investment Hedges
|
|
|
|
|
|
|
||||||
Cross Currency Swaps
|
|
|
|
|
|
|
||||||
Amount of gain (loss) recognized in OCI (a)
|
|
$
|
19
|
|
|
$
|
(17
|
)
|
|
$
|
—
|
|
Foreign Currency Denominated Debt
|
|
|
|
|
|
|
||||||
Amount of gain recognized in OCI (a)
|
|
$
|
28
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Forward Contracts
|
|
|
|
|
|
|
||||||
Amount of gain recognized in OCI (a)
|
|
$
|
9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(a)
|
Effective portion
|
|
December 31,
|
||||||
(in millions)
|
2016
|
|
2015
|
||||
Derivatives designated as hedging instruments
|
|
|
|
||||
Assets
|
|
|
|
||||
Cash Flow Hedges
|
|
|
|
||||
Other current assets
|
$
|
—
|
|
|
$
|
2
|
|
Liabilities
|
|
|
|
||||
Net Investment Hedges
|
|
|
|
||||
Other non-current liabilities
|
(6
|
)
|
|
(18
|
)
|
|
December 31,
|
||||||
(in millions)
|
2016
|
|
2015
|
||||
Compensation and other employee-benefits
|
$
|
182
|
|
|
$
|
156
|
|
Customer-related liabilities
|
80
|
|
|
64
|
|
||
Accrued warranty costs
|
64
|
|
|
33
|
|
||
Accrued taxes
|
63
|
|
|
64
|
|
||
Other accrued liabilities
|
132
|
|
|
90
|
|
||
Total accrued and other current liabilities
|
$
|
521
|
|
|
$
|
407
|
|
|
December 31,
|
||||||
(in millions)
|
2016
|
|
2015
|
||||
3.550% Senior Notes due 2016
|
$
|
—
|
|
|
$
|
600
|
|
4.875% Senior Notes due 2021 (a)
|
600
|
|
|
600
|
|
||
2.250% Senior Notes due 2023 (a)
|
522
|
|
|
—
|
|
||
3.250% Senior Notes due 2026 (a)
|
500
|
|
|
—
|
|
||
4.375% Senior Notes due 2046 (a)
|
400
|
|
|
—
|
|
||
Commercial paper
|
65
|
|
|
—
|
|
||
Research and development facility agreement
|
38
|
|
|
76
|
|
||
Research and development finance contract
|
110
|
|
|
—
|
|
||
Term loan
|
157
|
|
|
—
|
|
||
Other
|
—
|
|
|
2
|
|
||
Debt issuance costs and unamortized discount (b)
|
(24
|
)
|
|
(4
|
)
|
||
Total debt
|
2,368
|
|
|
1,274
|
|
||
Less: short-term borrowings and current maturities of long-term debt
|
260
|
|
|
78
|
|
||
Total long-term debt
|
$
|
2,108
|
|
|
$
|
1,196
|
|
(a)
|
The fair value of our Senior Notes (as defined below) was determined using quoted prices in active markets for identical securities, which are considered Level 1 inputs. The fair value of our Senior Notes due 2016 (as defined below) was $607 million as of December 31, 2015. The fair value of our Senior Notes due 2021 (as defined below) was $651 million and $640 million as of December 31, 2016 and 2015, respectively. The fair value of our Senior Notes due 2023 (as defined below) was $555 million as of December 31, 2016. The fair value of our Senior Notes due 2026 (as defined below) was $487 million as of December 31, 2016.The fair value of our Senior Notes due 2046 (as defined below) was $397 million as of December 31, 2016.
|
(b)
|
The debt issuance costs and unamortized discount is recognized as a reduction in the carrying value of the Senior Notes in the Consolidated Balance Sheets and is being amortized to interest expense in our Consolidated Income Statements over the expected remaining terms of the Senior Notes.
|
(in millions)
|
Defined Contribution
|
||
2016
|
$
|
35
|
|
2015
|
32
|
|
|
2014
|
36
|
|
(in millions)
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||||||||||
|
Pension
|
|
Other
|
|
Total
|
|
Pension
|
|
Other
|
|
Total
|
||||||||||||
Fair value of plan assets
|
$
|
562
|
|
|
$
|
—
|
|
|
$
|
562
|
|
|
$
|
559
|
|
|
$
|
—
|
|
|
$
|
559
|
|
Projected benefit obligation
|
(854
|
)
|
|
(64
|
)
|
|
(918
|
)
|
|
(779
|
)
|
|
(61
|
)
|
|
(840
|
)
|
||||||
Funded status
|
$
|
(292
|
)
|
|
$
|
(64
|
)
|
|
$
|
(356
|
)
|
|
$
|
(220
|
)
|
|
$
|
(61
|
)
|
|
$
|
(281
|
)
|
Amounts recognized in the balance sheet
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other non-current assets
|
$
|
67
|
|
|
$
|
—
|
|
|
$
|
67
|
|
|
$
|
68
|
|
|
$
|
—
|
|
|
$
|
68
|
|
Accrued and other current liabilities
|
(11
|
)
|
|
(4
|
)
|
|
(15
|
)
|
|
(10
|
)
|
|
(4
|
)
|
|
(14
|
)
|
||||||
Accrued postretirement benefits
|
(348
|
)
|
|
(60
|
)
|
|
(408
|
)
|
|
(278
|
)
|
|
(57
|
)
|
|
(335
|
)
|
||||||
Net amount recognized
|
$
|
(292
|
)
|
|
$
|
(64
|
)
|
|
$
|
(356
|
)
|
|
$
|
(220
|
)
|
|
$
|
(61
|
)
|
|
$
|
(281
|
)
|
Accumulated other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net actuarial losses
|
$
|
(220
|
)
|
|
$
|
(32
|
)
|
|
$
|
(252
|
)
|
|
$
|
(234
|
)
|
|
$
|
(31
|
)
|
|
$
|
(265
|
)
|
Prior service credit
|
1
|
|
|
12
|
|
|
13
|
|
|
—
|
|
|
15
|
|
|
15
|
|
||||||
Total
|
$
|
(219
|
)
|
|
$
|
(20
|
)
|
|
$
|
(239
|
)
|
|
$
|
(234
|
)
|
|
$
|
(16
|
)
|
|
$
|
(250
|
)
|
|
Domestic Plans
|
|
International Plans
|
||||||||||||
|
December 31,
|
|
December 31,
|
||||||||||||
(in millions)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Change in benefit obligation:
|
|
|
|
|
|
|
|
||||||||
Benefit obligation at beginning of year
|
$
|
86
|
|
|
$
|
88
|
|
|
$
|
693
|
|
|
$
|
784
|
|
Service cost
|
3
|
|
|
3
|
|
|
10
|
|
|
12
|
|
||||
Interest cost
|
4
|
|
|
4
|
|
|
21
|
|
|
22
|
|
||||
Benefits paid
|
(4
|
)
|
|
(4
|
)
|
|
(26
|
)
|
|
(29
|
)
|
||||
Actuarial loss (gain)
|
(2
|
)
|
|
(5
|
)
|
|
52
|
|
|
(39
|
)
|
||||
Plan amendments, settlements and curtailments
|
(1
|
)
|
|
1
|
|
|
(1
|
)
|
|
(1
|
)
|
||||
Acquisitions
|
13
|
|
|
—
|
|
|
83
|
|
|
—
|
|
||||
Foreign currency translation/Other
|
1
|
|
|
(1
|
)
|
|
(78
|
)
|
|
(56
|
)
|
||||
Benefit obligation at end of year
|
$
|
100
|
|
|
$
|
86
|
|
|
$
|
754
|
|
|
$
|
693
|
|
Change in plan assets:
|
|
|
|
|
|
|
|
||||||||
Fair value of plan assets at beginning of year
|
$
|
57
|
|
|
60
|
|
|
$
|
502
|
|
|
$
|
524
|
|
|
Employer contributions
|
4
|
|
|
3
|
|
|
20
|
|
|
19
|
|
||||
Actual return on plan assets
|
4
|
|
|
(2
|
)
|
|
64
|
|
|
22
|
|
||||
Benefits paid
|
(4
|
)
|
|
(4
|
)
|
|
(26
|
)
|
|
(29
|
)
|
||||
Acquisitions
|
9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Foreign currency translation/Other
|
(1
|
)
|
|
—
|
|
|
(67
|
)
|
|
(34
|
)
|
||||
Fair value of plan assets at end of year
|
$
|
69
|
|
|
$
|
57
|
|
|
$
|
493
|
|
|
$
|
502
|
|
Unfunded status of the plans
|
$
|
(31
|
)
|
|
$
|
(29
|
)
|
|
$
|
(261
|
)
|
|
$
|
(191
|
)
|
(in millions)
|
2016
|
|
2015
|
||||
Change in benefit obligation:
|
|
|
|
||||
Benefit obligation at beginning of year
|
$
|
61
|
|
|
$
|
58
|
|
Service cost
|
1
|
|
|
1
|
|
||
Interest cost
|
3
|
|
|
2
|
|
||
Benefits paid
|
(4
|
)
|
|
(3
|
)
|
||
Actuarial loss
|
3
|
|
|
4
|
|
||
Plan amendment
|
—
|
|
|
(1
|
)
|
||
Benefit obligation at the end of year
|
$
|
64
|
|
|
$
|
61
|
|
|
December 31,
|
||||||
(in millions)
|
2016
|
|
2015
|
||||
Projected benefit obligation
|
$
|
474
|
|
|
$
|
392
|
|
Accumulated benefit obligation
|
453
|
|
|
365
|
|
||
Fair value of plan assets
|
116
|
|
|
106
|
|
|
Year Ended December 31,
|
||||||||||
(in millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Domestic defined benefit pension plans:
|
|
|
|
|
|
||||||
Service cost
|
$
|
3
|
|
|
$
|
3
|
|
|
$
|
2
|
|
Interest cost
|
4
|
|
|
4
|
|
|
3
|
|
|||
Expected return on plan assets
|
(5
|
)
|
|
(5
|
)
|
|
(4
|
)
|
|||
Amortization of net actuarial loss
|
2
|
|
|
2
|
|
|
2
|
|
|||
Net periodic benefit cost
|
$
|
4
|
|
|
$
|
4
|
|
|
$
|
3
|
|
International defined benefit pension plans:
|
|
|
|
|
|
||||||
Service cost
|
$
|
10
|
|
|
$
|
12
|
|
|
$
|
12
|
|
Interest cost
|
21
|
|
|
22
|
|
|
27
|
|
|||
Expected return on plan assets
|
(30
|
)
|
|
(32
|
)
|
|
(32
|
)
|
|||
Amortization of net actuarial loss
|
8
|
|
|
13
|
|
|
7
|
|
|||
Settlement
|
—
|
|
|
—
|
|
|
1
|
|
|||
Net periodic benefit cost
|
$
|
9
|
|
|
$
|
15
|
|
|
$
|
15
|
|
Total net periodic benefit cost
|
$
|
13
|
|
|
$
|
19
|
|
|
$
|
18
|
|
|
Year Ended December 31,
|
||||||||||
(in millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Domestic defined benefit pension plans:
|
|
|
|
|
|
||||||
Net (gain) loss
|
$
|
(1
|
)
|
|
$
|
2
|
|
|
$
|
14
|
|
Prior service cost
|
—
|
|
|
—
|
|
|
1
|
|
|||
Amortization of net actuarial loss
|
(2
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|||
(Gains) losses recognized in other comprehensive loss
|
$
|
(3
|
)
|
|
$
|
—
|
|
|
$
|
13
|
|
International defined benefit pension plans:
|
|
|
|
|
|
||||||
Net (gain) loss
|
$
|
18
|
|
|
$
|
(29
|
)
|
|
$
|
84
|
|
Prior service credit
|
(1
|
)
|
|
—
|
|
|
—
|
|
|||
Amortization of net actuarial loss
|
(8
|
)
|
|
(13
|
)
|
|
(7
|
)
|
|||
Settlement
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||
Foreign Exchange
|
(20
|
)
|
|
(21
|
)
|
|
(20
|
)
|
|||
(Gains) losses recognized in other comprehensive loss
|
$
|
(11
|
)
|
|
$
|
(63
|
)
|
|
$
|
56
|
|
Total (gains) losses recognized in other comprehensive loss
|
$
|
(14
|
)
|
|
$
|
(63
|
)
|
|
$
|
69
|
|
Total (gains) losses recognized in comprehensive income
|
$
|
(1
|
)
|
|
$
|
(44
|
)
|
|
$
|
87
|
|
|
Year Ended December 31,
|
||||||||||
(in millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Service cost
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Interest cost
|
3
|
|
|
2
|
|
|
3
|
|
|||
Amortization of prior service credit
|
(3
|
)
|
|
(3
|
)
|
|
(1
|
)
|
|||
Amortization of net actuarial loss
|
3
|
|
|
3
|
|
|
2
|
|
|||
Net periodic benefit cost
|
$
|
4
|
|
|
$
|
3
|
|
|
$
|
5
|
|
|
Year Ended December 31,
|
||||||||||
(in millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Net loss (gain)
|
$
|
3
|
|
|
$
|
4
|
|
|
$
|
12
|
|
Prior service credit
|
—
|
|
|
(1
|
)
|
|
(18
|
)
|
|||
Amortization of prior service credit
|
3
|
|
|
3
|
|
|
1
|
|
|||
Amortization of net actuarial loss
|
(3
|
)
|
|
(3
|
)
|
|
(2
|
)
|
|||
Foreign Exchange/Other
|
1
|
|
|
—
|
|
|
—
|
|
|||
Losses (gains) recognized in other comprehensive loss
|
$
|
4
|
|
|
$
|
3
|
|
|
$
|
(7
|
)
|
Total losses (gains) recognized in comprehensive income
|
$
|
8
|
|
|
$
|
6
|
|
|
$
|
(2
|
)
|
|
2016
|
|
2015
|
|
2014
|
||||||||||||
|
U.S.
|
|
Int’l
|
|
U.S.
|
|
Int’l
|
|
U.S.
|
|
Int’l
|
||||||
Benefit Obligation Assumptions
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Discount rate
|
4.25
|
%
|
|
2.63
|
%
|
|
4.27
|
%
|
|
3.44
|
%
|
|
4.01
|
%
|
|
3.14
|
%
|
Rate of future compensation increase
|
NM
|
|
|
2.76
|
%
|
|
NM
|
|
|
3.29
|
%
|
|
NM
|
|
|
3.34
|
%
|
Net Periodic Benefit Cost Assumptions
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Discount rate
|
4.27
|
%
|
|
3.44
|
%
|
|
4.01
|
%
|
|
3.14
|
%
|
|
4.79
|
%
|
|
4.23
|
%
|
Expected long-term return on plan assets
|
8.00
|
%
|
|
7.25
|
%
|
|
8.00
|
%
|
|
7.31
|
%
|
|
8.00
|
%
|
|
7.30
|
%
|
Rate of future compensation increase
|
NM
|
|
|
3.29
|
%
|
|
NM
|
|
|
3.34
|
%
|
|
NM
|
|
|
3.48
|
%
|
NM
|
Not meaningful. The pension benefits for future service for all the U.S. pension plans are based on years of service and not impacted by future compensation increases.
|
|
2016
|
|
2015
|
|
2014
|
|||
Expected long-term rate of return on plan assets
|
7.32
|
%
|
|
7.38
|
%
|
|
7.38
|
%
|
Actual rate of return on plan assets
|
12.20
|
%
|
|
3.51
|
%
|
|
18.13
|
%
|
|
2016
|
|
2015
|
|
Target
Allocation
Ranges
|
||
Equity securities
|
24.2
|
%
|
|
22.5
|
%
|
|
20-50%
|
Fixed income
|
32.7
|
%
|
|
31.5
|
%
|
|
10-40%
|
Hedge funds
|
31.7
|
%
|
|
34.0
|
%
|
|
0-40%
|
Private equity
|
2.4
|
%
|
|
3.1
|
%
|
|
0-30%
|
Insurance contracts and other
|
9.0
|
%
|
|
8.9
|
%
|
|
0-30%
|
•
|
Equity securities — Equities (including common and preferred shares, domestic listed and foreign listed, closed end mutual funds and exchange traded funds) are generally valued at the closing price reported on the major market on which the individual securities are traded at the measurement date. Equity securities held by the Company that are publicly traded in active markets are classified within Level 1 of the fair value hierarchy. Those equities that are held in proprietary funds pooled with other investor accounts measured at fair value using the NAV per share practical expedient are not classified in the fair value hierarchy.
|
•
|
Fixed income — United States government securities are generally valued using quoted prices of securities with similar characteristics. Corporate bonds and notes are generally valued by using pricing models (e.g. discounted cash flows), quoted prices of securities with similar characteristics or broker quotes. Fixed income securities listed on active markets are classified in Level 1. Fixed income held in proprietary funds pooled with other investor accounts measured at fair value using the NAV per share practical expedient are not classified in the fair value hierarchy. Hedging Instruments are collateralized daily with either cash or government bonds, have daily liquidity and pricing based on observable inputs from over-the-counter markets, and are classified as Level 2. We have broken out hedging instruments as a separate line in the table below beginning in 2016.
|
•
|
Hedge funds — Hedge funds are pooled funds that employ a range of investment strategies including equity and fixed income, credit driven, macro and multi oriented strategies. The valuation of limited partnership interests in hedge funds may require significant management judgment. Generally, hedge funds are valued using the NAV reported by the asset manager, and are adjusted when it is determined that NAV is not representative of fair value. In making such an assessment, a variety of factors is reviewed, including, but not limited to, the timeliness of NAV as reported by the asset manager and changes in general economic and market conditions subsequent to the last NAV reported by the asset manager. $109 million (61%) of the hedge funds have no lockup or gate, and a redemption period of 90 days or less. Hedge funds have unfunded commitments of $5 million and $6 million at December 31, 2016 and 2015, respectively.
|
•
|
Private equity — Private equity includes a diversified range of strategies, including buyout funds, distressed funds, venture and growth equity funds and mezzanine funds with long-term commitments, and redemptions beginning no earlier than 2018. The valuation of limited partnership interests in private equity funds may require significant management judgment. Generally, private equity is valued using the NAV reported by the asset manager, and is adjusted when it is determined that NAV is not representative of fair value. In making such an assessment, a variety of factors is reviewed, including, but not limited to, the timeliness of NAV as reported by the asset manager and changes in general economic and market conditions subsequent to the last NAV reported by the asset manager. Private equity is not liquid and has unfunded commitments of $7 million and $4 million at December 31, 2016 and 2015, respectively.
|
•
|
Insurance contracts and other — Primarily comprised of insurance contracts and cash. Insurance contracts are valued at contract value, which approximates fair value, and is calculated using the prior year balance adjusted for investment returns and cash flows and are generally classified as Level 3. Insurance contracts are held by certain foreign pension plans. Cash and cash equivalents are held in accounts with brokers or custodians for liquidity and investment collateral and are classified as Level 1.
|
|
2016
|
|
2015
|
||||||||||||||||||||||||||||
(in millions)
|
Level 1
|
Level 2
|
Level 3
|
NAV Practical Expedient
|
Total
|
|
Level 1
|
Level 2
|
Level 3
|
NAV Practical Expedient
|
Total
|
||||||||||||||||||||
Equity securities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Global stock funds/securities
|
$
|
87
|
|
$
|
—
|
|
$
|
—
|
|
$
|
6
|
|
$
|
93
|
|
|
$
|
79
|
|
$
|
—
|
|
$
|
—
|
|
$
|
4
|
|
$
|
83
|
|
Index funds
|
4
|
|
—
|
|
—
|
|
36
|
|
40
|
|
|
6
|
|
—
|
|
—
|
|
34
|
|
40
|
|
||||||||||
Emerging market funds
|
4
|
|
—
|
|
—
|
|
—
|
|
4
|
|
|
3
|
|
—
|
|
—
|
|
—
|
|
3
|
|
||||||||||
Fixed income
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Corporate bonds
|
22
|
|
—
|
|
—
|
|
18
|
|
40
|
|
|
34
|
|
4
|
|
—
|
|
11
|
|
49
|
|
||||||||||
Government bonds
|
88
|
|
—
|
|
—
|
|
11
|
|
99
|
|
|
99
|
|
18
|
|
—
|
|
10
|
|
127
|
|
||||||||||
Hedging Instruments
|
—
|
|
45
|
|
—
|
|
—
|
|
45
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||||
Hedge funds
|
—
|
|
—
|
|
—
|
|
178
|
|
178
|
|
|
9
|
|
—
|
|
—
|
|
181
|
|
190
|
|
||||||||||
Private equity
|
—
|
|
—
|
|
—
|
|
13
|
|
13
|
|
|
—
|
|
—
|
|
—
|
|
17
|
|
17
|
|
||||||||||
Insurance contracts and other
|
26
|
|
—
|
|
24
|
|
—
|
|
50
|
|
|
25
|
|
—
|
|
25
|
|
—
|
|
50
|
|
||||||||||
Total plan assets subject to leveling
|
$
|
231
|
|
$
|
45
|
|
$
|
24
|
|
$
|
262
|
|
$
|
562
|
|
|
$
|
255
|
|
$
|
22
|
|
$
|
25
|
|
$
|
257
|
|
$
|
559
|
|
(in millions)
|
|
Insurance Contracts and Other
|
||
Balance, December 31, 2014
|
|
$
|
17
|
|
Purchases, sales, settlements
|
|
2
|
|
|
Net transfers
|
|
7
|
|
|
Currency impact
|
|
(1
|
)
|
|
Balance, December 31, 2015
|
|
$
|
25
|
|
Purchases, sales, settlements
|
|
1
|
|
|
Currency impact
|
|
(2
|
)
|
|
Balance, December 31, 2016
|
|
$
|
24
|
|
(in millions)
|
Pension
|
|
Other Benefits
|
||||
2017
|
$
|
33
|
|
|
$
|
4
|
|
2018
|
33
|
|
|
4
|
|
||
2019
|
34
|
|
|
4
|
|
||
2020
|
36
|
|
|
4
|
|
||
2021
|
36
|
|
|
5
|
|
||
Years 2022 - 2026
|
195
|
|
|
22
|
|
|
Share units (in thousands)
|
|
Weighted
Average
Exercise
Price / Share
|
|
Weighted Average
Remaining
Contractual
Term (Years)
|
|
Aggregate Intrinsic Value (in millions)
|
|||||
Outstanding at January 1, 2016
|
2,561
|
|
|
$
|
31.16
|
|
|
6.8
|
|
|
||
Granted
|
463
|
|
|
$
|
37.90
|
|
|
|
|
|
||
Exercised
|
(841
|
)
|
|
$
|
28.11
|
|
|
|
|
|
||
Forfeited and expired
|
(57
|
)
|
|
$
|
35.87
|
|
|
|
|
|
||
Outstanding at December 31, 2016
|
2,126
|
|
|
$
|
33.71
|
|
|
6.9
|
|
$
|
34
|
|
Options exercisable at December 31, 2016
|
1,183
|
|
|
$
|
31.01
|
|
|
5.7
|
|
$
|
22
|
|
Vested and non-vested expected to vest as of December 31, 2016
|
2,060
|
|
|
$
|
33.59
|
|
|
6.9
|
|
$
|
33
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
Dividend yield
|
1.63
|
%
|
|
1.57
|
%
|
|
1.34
|
%
|
|||
Volatility
|
28.87
|
%
|
|
27.77
|
%
|
|
28.49
|
%
|
|||
Risk-free interest rate
|
1.41
|
%
|
|
1.64
|
%
|
|
1.82
|
%
|
|||
Expected term (in years)
|
5.60
|
|
|
5.58
|
|
|
5.60
|
|
|||
Weighted-average fair value per share
|
$
|
9.05
|
|
|
$
|
8.49
|
|
|
$
|
9.71
|
|
|
Share Units (in thousands)
|
|
Weighted Average
Grant Date Fair
Value / Share
|
|||
Outstanding at January 1, 2016
|
1,013
|
|
|
$
|
34.52
|
|
Granted
|
314
|
|
|
39.63
|
|
|
Vested
|
(344
|
)
|
|
30.63
|
|
|
Forfeited
|
(84
|
)
|
|
36.81
|
|
|
Outstanding at December 31, 2016
|
899
|
|
|
37.67
|
|
|
Share units (in thousands)
|
|
Weighted Average
Grant Date Fair
Value / Share
|
|||
Outstanding at January 1, 2016
|
160
|
|
|
$
|
35.48
|
|
Granted
|
111
|
|
|
37.87
|
|
|
Forfeited
|
(21
|
)
|
|
28.82
|
|
|
Outstanding at December 31, 2016
|
250
|
|
|
37.11
|
|
|
Share units (in thousands)
|
|
Weighted
Average
Grant Date
Fair Value /Share
|
|||
Outstanding at January 1, 2016
|
—
|
|
|
$
|
—
|
|
Granted
|
111
|
|
|
46.13
|
|
|
Forfeited
|
(3
|
)
|
|
45.34
|
|
|
Outstanding at December 31, 2016
|
108
|
|
|
46.15
|
|
Volatility
|
31.7
|
%
|
Risk-free interest rate
|
0.88
|
%
|
Dividend yield
|
1.64
|
%
|
(in thousands of shares)
|
2016
|
|
2015
|
|
2014
|
|||
Beginning Balance, January 1
|
178,377
|
|
|
182,300
|
|
|
184,557
|
|
Stock incentive plan net activity
|
1,085
|
|
|
1,280
|
|
|
1,226
|
|
Repurchase of common stock
|
(95
|
)
|
|
(5,203
|
)
|
|
(3,483
|
)
|
Ending Balance, December 31
|
179,367
|
|
|
178,377
|
|
|
182,300
|
|
(in millions)
|
Foreign Currency Translation
|
|
Postretirement Benefit Plans
|
|
Derivative Instruments
|
|
Total
|
||||||||
Balance at January 1, 2014
|
$
|
351
|
|
|
$
|
(186
|
)
|
|
$
|
2
|
|
|
$
|
167
|
|
Foreign currency translation adjustment
|
(206
|
)
|
|
|
|
|
|
(206
|
)
|
||||||
Changes in postretirement benefit plans
|
|
|
(92
|
)
|
|
|
|
(92
|
)
|
||||||
Income tax expense on changes in postretirement benefit plans
|
|
|
20
|
|
|
|
|
20
|
|
||||||
Foreign currency translation adjustment for postretirement benefit plans
|
|
|
20
|
|
|
|
|
20
|
|
||||||
Amortization of prior service cost and net actuarial loss on postretirement benefit plans into:
|
|
|
|
|
|
|
|
||||||||
Cost of revenue
|
|
|
4
|
|
|
|
|
4
|
|
||||||
Selling, general and administrative expenses
|
|
|
5
|
|
|
|
|
5
|
|
||||||
Other non-operating income, net
|
|
|
1
|
|
|
|
|
1
|
|
||||||
Income tax impact on amortization of postretirement benefit plan items
|
|
|
(3
|
)
|
|
|
|
(3
|
)
|
||||||
Unrealized loss on derivative hedge agreements
|
|
|
|
|
(22
|
)
|
|
(22
|
)
|
||||||
Income tax benefit on unrealized loss on derivative hedge agreements
|
|
|
|
|
1
|
|
|
1
|
|
||||||
Reclassification of unrealized loss on derivative hedge agreements into revenue
|
|
|
|
|
5
|
|
|
5
|
|
||||||
Reclassification of unrealized loss on derivative hedge agreements into cost of revenue
|
|
|
|
|
1
|
|
|
1
|
|
||||||
Balance at December 31, 2014
|
$
|
145
|
|
|
$
|
(231
|
)
|
|
$
|
(13
|
)
|
|
$
|
(99
|
)
|
Foreign currency translation adjustment
|
(180
|
)
|
|
|
|
|
|
(180
|
)
|
||||||
Foreign currency gain reclassified into gain on sale of businesses
|
(8
|
)
|
|
|
|
|
|
(8
|
)
|
||||||
Changes in postretirement benefit plans
|
|
|
24
|
|
|
|
|
24
|
|
||||||
Income tax expense on changes in postretirement benefit plans
|
|
|
(10
|
)
|
|
|
|
(10
|
)
|
||||||
Foreign currency translation adjustment for postretirement benefit plans
|
|
|
21
|
|
|
|
|
21
|
|
||||||
Amortization of prior service cost and net actuarial loss on postretirement benefit plans into:
|
|
|
|
|
|
|
|
||||||||
Cost of revenue
|
|
|
4
|
|
|
|
|
4
|
|
||||||
Selling, general and administrative expenses
|
|
|
9
|
|
|
|
|
9
|
|
||||||
Research and development expenses
|
|
|
1
|
|
|
|
|
1
|
|
||||||
Other non-operating income, net
|
|
|
1
|
|
|
|
|
1
|
|
||||||
Income tax impact on amortization of postretirement benefit plan items
|
|
|
(4
|
)
|
|
|
|
(4
|
)
|
||||||
Unrealized loss on derivative hedge agreements
|
|
|
|
|
(22
|
)
|
|
(22
|
)
|
||||||
Income tax benefit on unrealized loss on derivative hedge agreements
|
|
|
|
|
6
|
|
|
6
|
|
||||||
Reclassification of unrealized loss on derivative hedge agreements into revenue
|
|
|
|
|
19
|
|
|
19
|
|
(in millions)
|
Foreign Currency Translation
|
|
Postretirement Benefit Plans
|
|
Derivative Instruments
|
|
Total
|
||||||||
Reclassification of unrealized loss on derivative hedge agreements into cost of revenue
|
|
|
|
|
1
|
|
|
1
|
|
||||||
Income tax benefit on reclassification of unrealized loss on derivative hedge agreements
|
|
|
|
|
(1
|
)
|
|
(1
|
)
|
||||||
Balance at December 31, 2015
|
$
|
(43
|
)
|
|
$
|
(185
|
)
|
|
$
|
(10
|
)
|
|
$
|
(238
|
)
|
Foreign currency translation adjustment
|
(65
|
)
|
|
|
|
|
|
(65
|
)
|
||||||
Income tax impact on foreign currency translation adjustment
|
(21
|
)
|
|
|
|
|
|
(21
|
)
|
||||||
Changes in postretirement benefit plans
|
|
|
(19
|
)
|
|
|
|
(19
|
)
|
||||||
Foreign currency translation adjustment for postretirement benefit plans
|
|
|
19
|
|
|
|
|
19
|
|
||||||
Income tax expense on changes in postretirement benefit plans
|
|
|
3
|
|
|
|
|
3
|
|
||||||
Amortization of prior service cost and net actuarial loss on postretirement benefit plans into:
|
|
|
|
|
|
|
|
||||||||
Cost of revenue
|
|
|
3
|
|
|
|
|
3
|
|
||||||
Selling, general and administrative expenses
|
|
|
6
|
|
|
|
|
6
|
|
||||||
Other non-operating income, net
|
|
|
1
|
|
|
|
|
1
|
|
||||||
Income tax impact on amortization of postretirement benefit plan items
|
|
|
(5
|
)
|
|
|
|
(5
|
)
|
||||||
Reclassification of unrealized gain on derivative hedge agreements into revenue
|
|
|
|
|
(2
|
)
|
|
(2
|
)
|
||||||
Reclassification of unrealized loss on net investment hedge, net of tax
|
(11
|
)
|
|
|
|
11
|
|
|
—
|
|
|||||
Balance at December 31, 2016
|
$
|
(140
|
)
|
|
$
|
(177
|
)
|
|
$
|
(1
|
)
|
|
$
|
(318
|
)
|
(in millions)
|
Total
|
|
2016
|
63
|
|
2015
|
59
|
|
2014
|
73
|
|
(in millions)
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
Thereafter
|
||||||||||||
Minimum rental payments
|
$
|
65
|
|
|
$
|
52
|
|
|
$
|
38
|
|
|
$
|
27
|
|
|
$
|
18
|
|
|
$
|
23
|
|
(in millions)
|
2016
|
|
2015
|
||||
Warranty accrual – January 1
|
$
|
33
|
|
|
$
|
31
|
|
Net charges for product warranties in the period
|
32
|
|
|
32
|
|
||
Settlement of warranty claims
|
(31
|
)
|
|
(29
|
)
|
||
Warranty accrual acquired
|
66
|
|
|
—
|
|
||
Foreign currency and other
|
(1
|
)
|
|
(1
|
)
|
||
Warranty accrual – December 31
|
$
|
99
|
|
|
$
|
33
|
|
(in millions)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Sales to unconsolidated affiliates
|
|
$
|
11
|
|
|
$
|
11
|
|
|
$
|
16
|
|
Purchases from unconsolidated affiliates
|
|
22
|
|
|
19
|
|
|
18
|
|
|
Year Ended December 31,
|
||||||||||
(in millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Revenue:
|
|
|
|
|
|
||||||
Water Infrastructure
|
$
|
2,246
|
|
|
$
|
2,231
|
|
|
$
|
2,442
|
|
Applied Water
|
1,393
|
|
|
1,422
|
|
|
1,474
|
|
|||
Sensus
|
132
|
|
|
—
|
|
|
—
|
|
|||
Total
|
$
|
3,771
|
|
|
$
|
3,653
|
|
|
$
|
3,916
|
|
Operating income:
|
|
|
|
|
|
||||||
Water Infrastructure
|
$
|
308
|
|
|
$
|
303
|
|
|
$
|
321
|
|
Applied Water
|
188
|
|
|
190
|
|
|
193
|
|
|||
Sensus
|
(17
|
)
|
|
—
|
|
|
—
|
|
|||
Corporate and other
|
(73
|
)
|
|
(44
|
)
|
|
(51
|
)
|
|||
Total operating income
|
406
|
|
|
449
|
|
|
463
|
|
|||
Interest expense
|
70
|
|
|
55
|
|
|
54
|
|
|||
Other non-operating income (expense)
|
4
|
|
|
—
|
|
|
1
|
|
|||
Gain from sale of businesses
|
—
|
|
|
9
|
|
|
11
|
|
|||
Income before taxes
|
$
|
340
|
|
|
$
|
403
|
|
|
$
|
421
|
|
Depreciation and amortization:
|
|
|
|
|
|
||||||
Water Infrastructure
|
$
|
86
|
|
|
$
|
88
|
|
|
$
|
100
|
|
Applied Water
|
24
|
|
|
26
|
|
|
25
|
|
|||
Sensus
|
21
|
|
|
—
|
|
|
—
|
|
|||
Regional selling locations (a)
|
12
|
|
|
12
|
|
|
12
|
|
|||
Corporate and other
|
8
|
|
|
7
|
|
|
5
|
|
|||
Total
|
$
|
151
|
|
|
$
|
133
|
|
|
$
|
142
|
|
Capital expenditures:
|
|
|
|
|
|
||||||
Water Infrastructure
|
$
|
67
|
|
|
$
|
67
|
|
|
$
|
73
|
|
Applied Water
|
21
|
|
|
22
|
|
|
28
|
|
|||
Sensus
|
7
|
|
|
—
|
|
|
—
|
|
|||
Regional selling locations (b)
|
25
|
|
|
23
|
|
|
10
|
|
|||
Corporate and other
|
4
|
|
|
5
|
|
|
8
|
|
|||
Total
|
$
|
124
|
|
|
$
|
117
|
|
|
$
|
119
|
|
(a)
|
Depreciation and amortization expense incurred by the Regional selling locations was included in an overall allocation of Regional selling location costs to the segments; however, a certain portion of that expense was not specifically identified to a segment. That is the expense captured in this Regional selling location line.
|
(b)
|
Represents capital expenditures incurred by the Regional selling locations not allocated to the segments.
|
|
Year Ended December 31,
|
||||||||||
(in millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Pumps, accessories, parts and service
|
$
|
2,888
|
|
|
$
|
2,917
|
|
|
$
|
3,094
|
|
Other (a)
|
883
|
|
|
736
|
|
|
822
|
|
|||
Total
|
$
|
3,771
|
|
|
$
|
3,653
|
|
|
$
|
3,916
|
|
(a)
|
Other includes treatment equipment, analytical instrumentation, heat exchangers, valves, controls and smart meters.
|
|
Total Assets
|
||||||||||
(in millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Water Infrastructure
|
$
|
1,997
|
|
|
$
|
2,024
|
|
|
$
|
2,128
|
|
Applied Water
|
990
|
|
|
1,054
|
|
|
1,114
|
|
|||
Sensus
|
2,284
|
|
|
—
|
|
|
—
|
|
|||
Regional selling locations (a)
|
965
|
|
|
905
|
|
|
961
|
|
|||
Corporate and other (b)
|
238
|
|
|
674
|
|
|
630
|
|
|||
Total
|
$
|
6,474
|
|
|
$
|
4,657
|
|
|
$
|
4,833
|
|
(a)
|
The Regional selling locations have assets that consist primarily of cash, accounts receivable and inventory which are not allocated to the segments.
|
(b)
|
Corporate and other consists of items pertaining to our corporate headquarters function, which principally consist of cash, deferred tax assets, pension assets and certain plant and equipment.
|
|
Revenue
|
||||||||||
|
Year Ended December 31,
|
||||||||||
(in millions)
|
2016
|
|
2015
|
|
2014
|
||||||
United States
|
$
|
1,574
|
|
|
$
|
1,490
|
|
|
$
|
1,477
|
|
Europe
|
1,195
|
|
|
1,179
|
|
|
1,379
|
|
|||
Asia Pacific
|
518
|
|
|
482
|
|
|
478
|
|
|||
Other
|
484
|
|
|
502
|
|
|
582
|
|
|||
Total
|
$
|
3,771
|
|
|
$
|
3,653
|
|
|
$
|
3,916
|
|
|
Property, Plant & Equipment
|
||||||||||
|
December 31,
|
||||||||||
(in millions)
|
2016
|
|
2015
|
|
2014
|
||||||
United States
|
$
|
255
|
|
|
$
|
168
|
|
|
$
|
180
|
|
Europe
|
237
|
|
|
189
|
|
|
206
|
|
|||
Asia Pacific
|
87
|
|
|
56
|
|
|
53
|
|
|||
Other
|
37
|
|
|
26
|
|
|
22
|
|
|||
Total
|
$
|
616
|
|
|
$
|
439
|
|
|
$
|
461
|
|
(in millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Balance at beginning of year
|
$
|
22
|
|
|
$
|
24
|
|
|
$
|
22
|
|
Additions charged to expense
|
4
|
|
|
4
|
|
|
9
|
|
|||
Deductions/other
|
(5
|
)
|
|
(6
|
)
|
|
(7
|
)
|
|||
Balance at end of year
|
$
|
21
|
|
|
$
|
22
|
|
|
$
|
24
|
|
|
|
2016 Quarter Ended
|
||||||||||||||
(in millions, except per share amounts)
|
|
Dec. 31
|
|
Sept. 30
|
|
June 30
|
|
Mar. 31
|
||||||||
Revenue
|
|
$
|
1,095
|
|
|
$
|
897
|
|
|
$
|
932
|
|
|
$
|
847
|
|
Gross profit
|
|
406
|
|
|
357
|
|
|
369
|
|
|
329
|
|
||||
Operating income
|
|
109
|
|
|
109
|
|
|
109
|
|
|
79
|
|
||||
Net income
|
|
$
|
50
|
|
|
$
|
73
|
|
|
$
|
71
|
|
|
$
|
66
|
|
Earnings per share:
|
||||||||||||||||
Basic
|
|
$
|
0.28
|
|
|
$
|
0.41
|
|
|
$
|
0.39
|
|
|
$
|
0.37
|
|
Diluted
|
|
$
|
0.28
|
|
|
$
|
0.41
|
|
|
$
|
0.39
|
|
|
$
|
0.37
|
|
|
|
2015 Quarter Ended
|
||||||||||||||
(in millions, except per share amounts)
|
|
Dec. 31
|
|
Sept. 30
|
|
June 30
|
|
Mar. 31
|
||||||||
Revenue
|
|
$
|
994
|
|
|
$
|
902
|
|
|
$
|
920
|
|
|
$
|
837
|
|
Gross profit
|
|
390
|
|
|
351
|
|
|
348
|
|
|
315
|
|
||||
Operating income
|
|
142
|
|
|
120
|
|
|
104
|
|
|
83
|
|
||||
Net income
|
|
$
|
114
|
|
|
$
|
88
|
|
|
$
|
74
|
|
|
$
|
64
|
|
Earnings per share:
|
||||||||||||||||
Basic
|
|
$
|
0.64
|
|
|
$
|
0.48
|
|
|
$
|
0.41
|
|
|
$
|
0.35
|
|
Diluted
|
|
$
|
0.63
|
|
|
$
|
0.48
|
|
|
$
|
0.41
|
|
|
$
|
0.35
|
|
(a)
|
(1)
|
The Index to Consolidated Financial Statements of the Registrant under Item 8 of this Report is incorporated herein by reference as the list of Financial Statements required as part of this Report.
|
|
(2)
|
Financial Statement Schedules — All financial statement schedules have been omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.
|
|
(3)
|
Exhibits — The exhibit list in the Exhibit Index is incorporated by reference as the list of exhibits required as part of this Report.
|
|
XYLEM INC.
|
|
(Registrant)
|
|
|
|
/s/ E. Mark Rajkowski
|
|
E. Mark Rajkowski
|
|
Senior Vice President and Chief Financial Officer
|
February 23, 2017
|
|
/s/ Patrick K. Decker
|
|
|
Patrick K. Decker
|
|
|
President and Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
|
|
February 23, 2017
|
|
/s/ Markos I. Tambakeras
|
|
|
Markos I. Tambakeras, Chairman
|
|
|
|
February 23, 2017
|
|
/s/ Curtis J. Crawford
|
|
|
Curtis J. Crawford, Director
|
|
|
|
February 23, 2017
|
|
/s/ Robert F. Friel
|
|
|
Robert F. Friel, Director
|
|
|
|
February 23, 2017
|
|
/s/ Victoria D. Harker
|
|
|
Victoria D. Harker, Director
|
|
|
|
February 23, 2017
|
|
/s/ Sten E. Jakobsson
|
|
|
Sten E. Jakobsson, Director
|
|
|
|
February 23, 2017
|
|
/s/ Steven R. Loranger
|
|
|
Steven R. Loranger, Director
|
|
|
|
February 23, 2017
|
|
/s/ Edward J. Ludwig
|
|
|
Edward J. Ludwig, Director
|
|
|
|
February 23, 2017
|
|
/s/ Surya N. Mohapatra
|
|
|
Surya N. Mohapatra, Director
|
|
|
|
February 23, 2017
|
|
/s/ Jerome A. Peribere
|
|
|
Jerome A. Peribere, Director
|
Exhibit
Number
|
Description
|
Location
|
|
|
|
(2.1)
|
Distribution Agreement, dated as of October 25, 2011, among ITT Corporation, Exelis Inc. and Xylem Inc.
|
Incorporated by reference to Exhibit 10.1 of ITT Corporation’s Form 10-Q Quarterly Report filed on October 28, 2011 (CIK No. 216228, File No. 1-5672).
|
|
|
|
(2.2)
|
Share Purchase Agreement, dated as of August 15, 2016, by and among Xylem Inc., Xylem Luxembourg S.à r.l., Sensus Worldwide Limited, Sensus Industries Limited, and Sensus USA Inc.
|
Incorporated by reference to Exhibit 2.1 to Xylem Inc.’s Current Report on Form 8-K filed on August 15, 2016 (CIK No. 1524472, File No. 1-35229).
|
|
|
|
(2.3)
|
First Amendment to Share Purchase Agreement, dated as of October 31, 2016, by and among Xylem Inc., Xylem Luxembourg S.à r.l., Sensus Worldwide Limited, Sensus Industries Limited, and Sensus USA Inc.
|
Incorporated by reference to Exhibit 2.2 to Xylem Inc.’s Current Report on Form 8-K filed on October 31, 2016 (CIK No. 1524472, File No. 1-35229).
|
|
|
|
(3.1)
|
Third Amended and Restated Articles of Incorporation of Xylem Inc.
|
Incorporated by reference to Exhibit 3.1 of Xylem Inc.’s Form 10-Q filed on July 29, 2014 (CIK No. 131190969, File No. 1-35229).
|
|
|
|
(3.2)
|
Amended and Restated By-laws of Xylem Inc.
|
Incorporated by reference to Exhibit 3.1 of Xylem Inc.’s Form 8-K filed on February 25, 2016 (CIK No. 1524472, File No. 1-35229).
|
|
|
|
(4.1)
|
Indenture, dated as of September 20, 2011, between Xylem Inc., ITT Corporation, as initial guarantor, and Union Bank, N.A., as trustee.
|
Incorporated by reference to Exhibit 4.2 of ITT Corporation’s Form 8-K Current Report filed on September 21, 2011 (CIK No. 216228, File No. 1-5672).
|
|
|
|
(4.2)
|
Senior Indenture, dated March 11, 2016, by and between the Company and Deutsche Bank Trust Company Americas, as trustee.
|
Incorporated by reference to Exhibit 4.1 of Xylem Inc.’s Form 8-K filed on March 11, 2016 (CIK No. 1524472, File No. 1-35229).
|
|
|
|
(4.3)
|
First Supplemental Indenture, dated March 11, 2016, by and between the Company and Deutsche Bank Trust Company Americas, as trustee.
|
Incorporated by reference to Exhibit 4.1 of Xylem Inc.’s Form 8-K filed on March 11, 2016 (CIK No. 1524472, File No. 1-35229)
|
|
|
|
(4.4)
|
Second Supplemental Indenture, dated March 11, 2016, by and between the Company and Deutsche Bank Trust Company Americas, as trustee.
|
Incorporated by reference to Exhibit 4.1 of Xylem Inc.’s Form 8-K filed on March 11, 2016 (CIK No. 1524472, File No. 1-35229).
|
|
|
|
(4.5)
|
Third Supplemental Indenture, dated October 11, 2016, by and between the Company and Deutsche Bank Trust Company Americas, as trustee.
|
Incorporated by reference to Exhibit 4.1 of Xylem Inc.’s Form 8-K filed on October 11, 2016 (CIK No. 1524472, File No. 1-35229).
|
|
|
|
(4.6)
|
Form of Xylem Inc. 4.875% Senior Notes due 2021.
|
Incorporated by reference to Exhibit 4.6 of Xylem Inc.'s Form S-4 Registration Statement filed on May 24, 2012 (CIK No. 1524472, File No. 333-181643).
|
|
|
|
(4.7)
|
Form of Xylem Inc. 2.250% Senior Notes due 2023.
|
Incorporated by reference to Exhibit 4.3 of Xylem Inc.’s Current Report on Form 8-K dated March 11, 2016 (CIK No. 1524472, File No. 1-35229).
|
|
|
|
(4.8)
|
Form of Xylem Inc. 3.250% Senior Notes due 2026.
|
Incorporated by reference to Exhibit 4.1 of Xylem Inc.’s Form 8-K filed on October 11, 2016 (CIK No. 1524472, File No. 1-35229).
|
|
|
|
Exhibit
Number
|
Description
|
Location
|
(101)
|
The following materials from Xylem Inc.’s Annual Report on Form 10-K for the year ended December 31, 2016, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Income Statements, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Cash Flows, (v) Consolidated Statement of Stockholder's Equity
and (vi) Notes to Consolidated Financial Statements.
|
The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.
|
TABLE OF CONTENTS
|
|
|
|
|
Page
|
ARTICLE 1 — DEFINITIONS
|
1
|
|
1.01
|
Acceleration Event
|
1
|
1.02
|
Administrative Committee
|
1
|
1.03
|
Associated Company
|
1
|
1.04
|
Base Salary
|
1
|
1.05
|
Beneficiary
|
1
|
1.06
|
Bonus
|
1
|
1.07
|
Board of Directors
|
2
|
1.08
|
Change in Control
|
2
|
1.09
|
Code
|
2
|
1.10
|
Company
|
2
|
1.11
|
Company Contribution Account
|
2
|
1.12
|
Company Core Contribution Rate
|
2
|
1.13
|
Company Transition Credit Contribution Rate
|
2
|
1.14
|
Corporation
|
2
|
1.15
|
Deferral Account
|
2
|
1.16
|
Deferral Agreement
|
3
|
1.17
|
Deferrals
|
3
|
1.18
|
Effective Date
|
3
|
1.19
|
Eligible Executive
|
3
|
1.20
|
Employee
|
3
|
1.21
|
Executive
|
3
|
1.22
|
ERISA
|
4
|
1.23
|
Grandfathered Deferral Account
|
4
|
1.24
|
Leadership Development and Compensation Committee
|
4
|
1.25
|
Participant
|
4
|
1.26
|
Performance Based Compensation
|
4
|
1.27
|
Performance Period
|
4
|
1.28
|
Plan
|
4
|
1.29
|
Plan Committee
|
5
|
1.30
|
Plan Year
|
5
|
1.31
|
Predecessor Corporation
|
5
|
1.32
|
Predecessor Plan
|
5
|
1.33
|
Prior Deferrals
|
5
|
1.34
|
Reporting Date
|
5
|
1.35
|
Retirement
|
5
|
1.37
|
Savings Plan
|
6
|
1.38
|
Special Purpose Subaccount(s)
|
6
|
1.39
|
Specified Distribution Date
|
6
|
1.40
|
Specified Employee
|
6
|
1.41
|
Termination of Employment
|
7
|
1.41
|
Termination Subaccount
|
7
|
1.42
|
Xylem Employee
|
7
|
|
|
|
ARTICLE 2 — PARTICIPATION
|
8
|
|
2.01
|
Eligibility
|
8
|
2.02
|
In General
|
8
|
2.03
|
Termination of Participation
|
9
|
|
|
|
ARTICLE 3 — DEFERRALS
|
10
|
|
3.01
|
Filing Requirements
|
10
|
3.02
|
Amount of Deferral
|
11
|
3.03
|
Crediting to Deferral Account
|
12
|
3.04
|
Excess Company Contributions
|
12
|
3.05
|
Crediting to Company Contribution Account
|
13
|
3.06
|
Vesting
|
13
|
3.07
|
Unforeseeable Emergency
|
13
|
|
|
|
ARTICLE 4 — MAINTENANCE OF ACCOUNTS
|
15
|
|
4.01
|
Adjustment of Deferral and Grandfathered Deferral Accounts
|
15
|
4.02
|
Investment Performance Elections
|
15
|
4.03
|
Changing Investment Elections
|
16
|
4.04
|
Adjustment of the Company Contribution Account
|
17
|
4.05
|
Individual Accounts
|
17
|
4.06
|
Valuation of Accounts
|
18
|
4.07
|
Compliance with Securities Laws and Trading Policies and Procedures
|
18
|
|
|
|
ARTICLE 5 — PAYMENT OF BENEFITS
|
20
|
|
5.01
|
Commencement of Payment
|
20
|
5.02
|
Method of Payment
|
23
|
5.03
|
Change of Distribution Election
|
26
|
5.04
|
Death
|
28
|
5.05
|
Hardship
|
28
|
5.06
|
Payment upon the Occurrence of a Change in Control
|
29
|
5.07
|
Acceleration of or Delay in Payments
|
29
|
5.08
|
Designation of Beneficiary
|
30
|
5.09
|
Debiting Accounts
|
30
|
|
|
|
ARTICLE 6 — AMENDMENT OR TERMINATION
|
31
|
|
6.01
|
Right to Terminate
|
31
|
6.02
|
Right to Amend
|
31
|
|
|
|
ARTICLE 7 — GENERAL PROVISIONS
|
32
|
|
7.01
|
Funding
|
32
|
7.02
|
No Contract of Employment
|
32
|
7.03
|
Unsecured Interest
|
32
|
7.04
|
Facility of Payment
|
33
|
7.05
|
Withholding Taxes
|
33
|
7.06
|
Nonalienation
|
33
|
7.07
|
Transfers
|
33
|
7.08
|
Claims Procedure
|
34
|
7.09
|
Payment of Expenses
|
36
|
7.10
|
Discharge of Corporation’s Obligation
|
36
|
7.11
|
Successors
|
36
|
7.12
|
Construction
|
36
|
|
|
|
ARTICLE 8 — ADMINISTRATION
|
38
|
|
8.01
|
Administration
|
38
|
|
|
|
APPENDIX A
|
40
|
|
APPENDIX B
|
43
|
|
APPENDIX C
|
45
|
1.01
|
“Acceleration Event” shall mean an “Acceleration Event” as such term is defined under the provisions of the Predecessor Plan as effective on October 2, 2004.
|
1.02
|
“Administrative Committee” shall mean the person or persons appointed to administer the Plan as provided in Section 8.01.
|
1.03
|
“Associated Company” shall mean any division, subsidiary or affiliated company of the Corporation which is an Associated Company as such term is defined in the Xylem Retirement Savings Plan for Salaried Employees, as amended from time to time.
|
1.04
|
“Base Salary” shall mean the annual base fixed compensation paid periodically during the calendar year, determined prior to any pre-tax contributions under a “qualified cash or deferred arrangement” (as defined under Code Section 401(k) and its applicable regulations) or under a “cafeteria plan” (as defined under Code Section 125 and its applicable regulations) or a qualified transportation fringe benefit under Section 132(f) of the Code and any deferrals under Article 3, Appendix A or another unfunded deferred compensation plan maintained by the Corporation, but excluding any overtime, bonuses, foreign service allowances or any other form of compensation, except to the extent otherwise deemed “Base Salary” for purposes of the Plan under rules as are adopted by the Leadership Development and Compensation Committee .
|
1.05
|
“Beneficiary” shall mean the person or persons designated by a Participant pursuant to the provisions of Section 5.08 in a time and manner determined by the Administrative Committee to receive the amounts, if any, payable under the Plan upon the death of the Participant.
|
1.06
|
“Bonus” shall mean the cash amount, if any, awarded to an employee of the Company under the Company’s executive bonus program, or other compensation program designated by the Leadership Development and Compensation Committee as a bonus hereunder.
|
1.07
|
“Board of Directors” or “Board” shall mean the Board of Directors of the Corporation.
|
1.08
|
“Change in Control” shall mean a “Change in Control” as such term is defined in the Xylem Supplemental Retirement Savings Plan for Salaried Employees as amended from time to time.
|
1.09
|
“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.
|
1.10
|
“Company” shall mean the Corporation and any successor thereto, with respect to its employees and Participating Corporation or Participating Division (as such terms are defined in the Savings Plan) authorized by the Leadership Development and Compensation Committee to participate in the Plan with respect to their employees; provided, however, that for purposes of deferrals made under the Predecessor Plan, Company shall mean the Predecessor Corporation as the original recorder of the deferral.
|
1.11
|
“Company Contribution Account” shall mean the bookkeeping account (or subaccount(s)) maintained for each Participant to record all amounts credited on his behalf under Section 3.04(a), (b) and (c) adjusted pursuant to Section 4.04.
|
1.12
|
“Company Core Contribution Rate” shall mean the rate of Company Core Contributions (as such term in defined under the provisions of the Savings Plan) for a particular Plan Year.
|
1.13
|
“Company Transition Credit Contribution Rate” shall mean the rate of Company Transition Credit Contributions (as such term in defined under the provisions of the Savings Plan) for a particular Plan Year.
|
1.14
|
“Corporation” shall mean Xylem Inc., an Indiana corporation, or any successor by merger, purchase, or otherwise.
|
1.15
|
“Class Year Account” shall mean the bookkeeping account maintained for each Participant to record the amount of Bonus deferred by a Participant in accordance with Article 3, adjusted pursuant to Article 4 and with respect to an individual who became a Participant on the Effective Date and who immediately prior to the Effective Date was a participant in the Predecessor Plan, the amounts deferred under Article 3 of the Predecessor Plan on or after January 1, 2017 by such Participant adjusted pursuant to Article 4. As of such date, a Class Year Account replaces in all aspects, and fulfills the same purpose as, the previous In Service Account and Retirement/Termination Account. A Class Year Account is a separate annual account for all moneys contributed by an Eligible Employee and Xylem during the period of January 1 until December 31st for the calendar year 2017 as well as Xylem contributions that are paid after the year ends but are in reference to the relevant year. The Eligible Employee may elect their allocation election to the investment options offered in the Plan.
|
1.16
|
“Deferral Agreement” shall mean the completed agreement, including any amendments, attachments and appendices thereto, in such form approved by the Administrative Committee, between an Eligible Executive and the Company, under which the Eligible Executive agrees to defer a portion of his Bonus.
|
1.17
|
“Deferrals” shall mean the amount of deferrals credited to a Participant pursuant to Section 3.02.
|
1.18
|
“Effective Date” shall mean October 31, 2011
|
1.19
|
“Eligible Executive” shall mean an Executive who is eligible to participate in the Plan as provided in Section 2.01.
|
1.20
|
“Employee” shall mean a person who is employed by the Company.
|
1.21
|
“Executive” shall mean an Employee of the Company whose Base Salary equals or exceeds $200,000 (or as adjusted from time to time by the Administrative Committee).
|
1.22
|
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.
|
1.23
|
“Grandfathered Deferral Account” shall mean the bookkeeping account maintained for each Participant to record the amount of Bonus and/or Base Salary deferred prior to January 1, 2017 by a
|
1.24
|
“Leadership, Development and Compensation Committee” shall mean the Leadership Development and Compensation Committee of the Board of Directors.
|
1.25
|
“Participant” shall mean, except as otherwise provided in Article 2, each Eligible Executive who has executed a Deferral Agreement pursuant to the requirements of Section 2.02 and is credited with an amount under Section 3.03.
|
1.26
|
“Performance Based Compensation” shall mean a bonus where the amount of, or entitlement to, the bonus is contingent on the satisfaction of pre-established organizational or individual performance criteria relating to a performance period of at least twelve (12) consecutive months. Organizational or individual performance criteria are considered pre-established if established in writing by not later than ninety (90) days after the commencement of the period of service to which the criteria relate, provided that the outcome is substantially uncertain at the time the criteria are established. The determination of whether a Bonus qualifies as “Performance-Based Compensation” will be made in accordance with Treas. Reg. Section 1.409A-1(e) and subsequent guidance.
|
1.27
|
“Performance Period” shall mean the period of a least twelve (12) months over which an individual or a company’s performance is measured for purposes of the Company’s bonus program.
|
1.28
|
“Plan” shall mean the Xylem Deferred Compensation Plan as set forth in this document and the appendices and schedules thereto, as it may be amended from time to time; provided, however, that the term “Plan” shall include the Predecessor Plan with respect to all prior service and participation by a Participant with the Predecessor Corporation and preserving all rights by Participants to the Grandfathered Deferral Accounts.
|
1.29
|
“Plan Committee” shall mean the Xylem Pension Fund Trust and Investment Committee established from time to time pursuant to the terms of the Savings Plan.
|
1.30
|
“Plan Year” shall mean the calendar year.
|
1.31
|
“Predecessor Corporation” shall mean Corporation as such terms was defined under the Predecessor Plan immediately prior to the Effective Date.
|
1.32
|
“Predecessor Plan” shall mean the ITT Deferred Compensation Plan as in effect prior to October 31, 2011.
|
1.33
|
“Prior Deferrals” shall mean the amount attributable to Deferrals initially credited to a Participant pursuant to Section 3.02 of the Predecessor Plan and not yet distributed as of the Effective Date.
|
1.34
|
“Reporting Date” shall mean each business day on which the New York Stock Exchange is open or such other business day as the Administrative Committee may determine.
|
1.35
|
“Retirement” shall mean, with respect to an Eligible Executive, any termination of employment by an Eligible Executive after the date the Eligible Executive is eligible for an early, normal or postponed retirement benefit under the ITT Salaried Retirement Plan as in effect on the day immediately preceding the Effective Date, or would have been eligible had he been a participant in such Plan. Effective as of January 1, 2012 “Retirement” shall mean with respect to an Eligible Employee who was not a member of the ITT Salaried Retirement Plan immediately prior to October 31, 2011, and who becomes a Participant on or after January 1, 2012, the termination of employment by such Eligible Employee after the date such Eligible Employee attains age 55 and completes 10 or more years of Service (as such term is defined in the Savings Plan) or attains age 65, if earlier.
|
1.36
|
“Savings Plan” shall mean, effective as of the effective date the new Xylem Retirement Savings Plan for Salaried Employees (successor plan to the ITT Salaried Investment and Savings Plan) as amended from time to time.
|
1.37
|
“Special Purpose Subaccount(s)” shall mean the bookkeeping account(s) described in Section 5.01(a) maintained to record deferrals that a Participant has elected to have paid pursuant to clause (ii) of Section 5.01(a), adjusted pursuant to Article 4.
|
1.38
|
“Specified Distribution Date” shall mean the specific date designated by a Participant pursuant to clause (ii) of Section 5.01(a).
|
1.39
|
“Specified Employee” shall mean a “specified employee” as such term is defined in the Income Tax Regulations under Section 409A as modified by the rules set forth below:
|
(a)
|
For purposes of determining whether a Participant is a Specified Employee, the compensation of the Participant shall be determined in accordance with the definition of compensation
|
(b)
|
The “Specified Employee Identification Date” means December 31, unless the Leadership Development and Compensation Committee has elected a different date through action that is legally binding with respect to all nonqualified deferred compensation plans maintained by the Company or any Associated Company.
|
(c)
|
The “Specified Employee Effective Date” means the first day of the fourth month following the Specified Employee Identification Date or such earlier date as is selected by the Leadership Development and Compensation Committee.
|
1.40
|
“Termination of Employment” shall mean “Termination of Employment” as such term is defined in the Xylem Supplemental Retirement Savings Plan for Salaried Employees, as amended from time to time.
|
1.41
|
“Termination Subaccount” shall mean the bookkeeping account described in Section 5.01(a) maintained to record deferrals that a Participant has elected to have paid pursuant to clause (i) of Section 5.01(a), adjusted pursuant to Article 4.
|
1.42
|
“Xylem Employee” shall mean an Employee who is employed by or assigned to Xylem Inc. following the spin-off of Xylem Inc. from the Predecessor Corporation including former Employees of the Predecessor Corporation or one of its subsidiaries who are determined by the Predecessor Corporation to be associated with Xylem Inc.
|
(a)
|
An individual who is determined to be an Eligible Executive with respect to a Plan Year and who desires to have deferrals credited on his behalf pursuant to Article 3 for such Plan Year must execute a Deferral Agreement with the Administrative Committee authorizing Deferrals under this Plan for such year in accordance with the provisions of Sections 3.01 and 3.02.
|
(b)
|
The Deferral Agreement shall be in writing and be properly completed in the manner approved by the Administrative Committee, which shall be the sole judge of the proper completion thereof. Such Deferral Agreement shall provide, subject to the provisions of Section 3.02, for the deferral of a portion of the Eligible Executive’s Bonus. The Deferral Agreement shall include such other provisions as the Administrative Committee deems appropriate.
|
(c)
|
An Eligible Executive shall become a Participant when Deferrals are first credited on his behalf pursuant to Article 3. However, an Employee who was a participant in the Predecessor Plan immediately prior to the Effective Date shall become a Participant of this Plan on the Effective Date.
|
(a)
|
Participation shall cease when all benefits to which a Participant is entitled to hereunder are distributed to him.
|
(b)
|
Subject to the provisions of Section 3.01, a Participant shall only be eligible to have Deferrals credited on his behalf in accordance with Article 3 for as long as he remains an Eligible Executive.
|
(c)
|
If a former Participant who has incurred a Termination of Employment and whose participation in the Plan ceased under Section 2.03(a) is reemployed as an Eligible Executive, the former Participant may again become a Participant in accordance with the provisions of Section 2.02.
|
(a)
|
Subject to the following provisions of this Section, prior to the close of an annual enrollment period established by the Administrative Committee, an Eligible Executive who is employed by the Company as of the last day of such annual enrollment period (or such other date prior to the close of the Plan Year as determined by the Administrative Committee), may elect to defer a portion of his Bonus earned in the following Plan Year, provided the Deferral Agreement is filed with the Administrative Committee (or its delegates) by the date established by the Administrative Committee, but not later than the last day of the calendar year preceding the Plan Year in which such Bonus is earned (the “Deferral Election Deadline”).
|
(b)
|
A Participant’s election to defer a portion of his Bonus for any calendar year shall become irrevocable on the last day the deferral of such Bonus may be elected under Section 3.01(a), except as otherwise provided in Section 3.02(b) or 3.07. A Participant may revoke or change his election to defer a portion of Bonus at any time prior to the date the election becomes irrevocable. Any such revocation or change shall be made in a form and manner determined by the Administrative Committee.
|
(c)
|
Subject to the provisions of Section 3.02, an Eligible Executive must file, in accordance with the provisions of Section 3.01(a), a new Deferral Agreement for each calendar year the Eligible Executive is eligible for and elects to defer a portion of his Bonus.
|
(d)
|
Notwithstanding any provision of the Plan to the contrary, an Eligible Executive’s election to defer Bonus shall only be effective if (1) the Eligible Executive files the Deferral Agreement with respect to such Bonus no later than the applicable Deferral Election Deadline (as defined in paragraph (a) above), and (2) he is an Eligible Executive as of such Deferral Election Deadline.
|
(e)
|
If a Participant ceases to be an Eligible Executive but continues to be employed by the Company or an Associated Company, he shall continue to be a Participant and his Deferral Agreement currently in effect for the Plan Year shall remain in force for the remainder of such Plan Year, but such Participant shall not be eligible to defer any portion of his Bonus earned in a subsequent Plan Year until such time as he shall once again become an Eligible Executive.
|
(f)
|
The Eligible Executive shall submit the Deferral Agreement in the manner specified by the Administrative Committee and a Deferral Agreement that is not timely filed shall be considered void and shall have no effect. The Administrative Committee shall establish procedures that govern deferral elections under the Plan.
|
(a)
|
The Administrative Committee may establish maximum or minimum limits on the amount of any Bonus which may be deferred and/or the timing of such Deferral. Eligible Executives shall be given written notice of any such limits prior to the date they take effect.
|
(b)
|
Notwithstanding anything in this Plan to the contrary, if an Eligible Executive:
|
(i)
|
receives a withdrawal of deferred cash contributions on account of hardship from any plan which is maintained by the Company or an Associated Company and which meets the requirements of Code Section 401(k) (or any successor thereto), and
|
(ii)
|
is precluded from making contributions to such 401(k) plan for at least 6 months after receipt of the hardship withdrawal
|
3.03
|
Crediting to Deferral Account
|
(a)
|
Excess Matching Contributions
|
(b)
|
Excess Core Contributions
|
(c)
|
Excess Transition Credit Contribution
|
(a)
|
As of each Reporting Date, each Deferral Account (or subaccount thereof) and/or Grandfathered Deferral Account shall be credited or debited with the amount of earnings or losses with which such Deferral Account (or subaccounts thereof) and/or Grandfathered Deferral Account would have been credited or debited, assuming it had been invested in one or more investment funds, or earned the rate of return of one or more indices of investment performance, designated by the Plan Committee and elected by the Participant pursuant to Section 4.02 for purposes of measuring the investment performance of such Accounts. Any portion of a Participant’s Deferral Account (or subaccount thereof) and/or Grandfathered Deferral Account deemed invested in a Corporation phantom stock fund shall be credited with dividend equivalents, as and when dividends are paid on the Corporation’s common stock, which shall be deemed invested in additional shares of such phantom stock.
|
(b)
|
The Plan Committee shall designate at least one investment fund or index of investment performance and may designate other investment funds or investment indices (including a Corporation phantom stock fund) to be used to measure the investment performance of a Participant’s Deferral Account and/or Grandfathered Deferral Account. The designation of any such investment funds or indices shall not require the Corporation to invest or earmark their general assets in any specific manner. The Plan Committee may change the designation of
|
(a)
|
The Administrative Committee shall maintain, or cause to be maintained on the books of the Corporation, records showing the individual balance of each Participant’s Deferral Account (or subaccount thereof) or Company Contribution Account and/or Grandfathered Deferral Account. The Participant’s Deferral Account (or subaccount thereof) shall be credited with the Deferrals made by the Participant pursuant to the provisions of Article 3 and the Participant’s Deferral Account (or subaccount thereof), and/or Grandfathered Deferral Account shall be credited and debited, as the case may be, with hypothetical investment results determined pursuant to this Article 4. Effective with respect to Plan Years commencing on and after January 1, 2012, a Participant’s Company Contribution Account shall be credited with Excess Company Contributions pursuant to the provisions of Section 3.04 and shall be credited and debited, as the case may be, with hypothetical investment results determined pursuant to Section 4.04.
|
(b)
|
Within each Participant’s Deferral Account, Company Contribution Account and/or Grandfathered Deferral Account, separate subaccounts shall be maintained to the extent necessary for the administration of the Plan.
|
(c)
|
The accounts established under this Article shall be hypothetical in nature and shall be maintained for bookkeeping purposes only so that hypothetical gains or losses on the deferrals made to the Plan can be credited or debited, as the case may be.
|
(a)
|
The Administrative Committee shall value or cause to be valued each Participant’s Deferral Account, Company Contribution Account and/or Grandfathered Deferral Account at least monthly. On each Reporting Date there shall be allocated to the Deferral Account and/or Grandfathered Deferral Account of each Participant the appropriate amount determined in accordance with Sections 4.01, 4.02 and 4.03 and with respect to his Company Contribution Account, the appropriate amount determined in accordance with Section 4.04.
|
(b)
|
Whenever an event requires a determination of the value of a Participant’s Deferral Account, Company Contribution Account and/or Grandfathered Deferral Account, the value shall be computed as of the Reporting Date immediately preceding the date of the event, except as otherwise specified in this Plan.
|
(a)
|
Subject to the limitations in Section 5.01(b) and except as otherwise provided below, each time a Participant completes a Deferral Agreement, a Participant shall designate on each applicable Deferral Agreement whether the related Deferrals, adjusted in accordance with Article 4, will be allocated to be paid upon Separation of Service or a on a Specified Date but may not have a specified portion allocated to more than one event:
|
(i)
|
Termination Subaccount
|
(ii)
|
Special Purpose Subaccount
|
(b)
|
A Participant’s ability to elect to have his deferred Bonus allocated to the Special Purpose Subaccount and the Participant’s selection of a Specified Distribution Date shall be subject to the following limitations:
|
(i)
|
deferred Bonus may only be allocated to the Participant’s Special Purpose Subaccount if the Specified Distribution Date applicable to that subaccount is at least twelve (12) months after the day of the Plan Year in which the Bonus being deferred was earned; and
|
(ii)
|
a Participant may have only five Special Purpose Subaccounts established on his behalf (and only one Specified Distribution Date applicable to each Special Purpose Subaccount) at any one time.
|
(c)
|
(i) Except as otherwise provided below, and notwithstanding the foregoing with respect to an Eligible Executive who completed a Deferral Agreement under the Predecessor Plan with respect to the Plan Year beginning as of January 1, 2005, the distribution of the Participant’s Deferral 2005 Subaccount (as defined below) shall commence, pursuant to Section 5.02, on the occurrence of the distribution event made available under procedures established from time to time by the Administrative Committee and as designated by the Participant on his 2005 Deferral Agreement (“Common Distribution Date”). For purposes of this Article a Participant Deferral 2005 Subaccount shall mean the bookkeeping account maintained for each Participant to record the amount of Bonus deferred in 2005 by a Participant in accordance with Article 3, adjusted as provided in Article 4.
|
(ii)
|
Notwithstanding the foregoing, in the event a Participant incurs a Termination of Employment for reasons other than Retirement prior to his Common Distribution Date, the distribution of his Deferral 2005 SubAccount shall commence, pursuant to Section 5.02, on the first business day of the seventh month following his Termination of
|
(iii)
|
In the event a Participant elects pursuant to the foregoing provisions of this paragraph (c) to defer to a specific calendar date in a specific calendar year, he may not elect a calendar date which occurs prior to the close of the calendar year following the calendar year in which he executed the Deferral Agreement.
|
(d)
|
A Participant shall not change his designation of the distribution event made pursuant to the foregoing provisions of this Section 5.01 which entitles him to a distribution of his Deferral Account, except as otherwise provided in Section 5.03 below.
|
(e)
|
Notwithstanding any Plan provisions to the contrary, the distribution of a Participant’s Grandfathered Deferral Account shall be made in accordance with provisions of the Predecessor Plan as in effect on October 3, 2004, as modified in Appendix B and without regard to any Plan amendments after that date which would constitute a material modification for Code Section 409A purposes.
|
(f)
|
Except as otherwise provided in Section 5.04, a Participant shall be entitled to receive payment of his Company Contribution Account upon his Termination of Employment with the Company and all Associated Companies for any reason, other than death. The distribution of his Company Contribution Account shall be made in the seventh month following the date the Participant’s Termination of Employment occurs.
|
(a)
|
Except as otherwise provided in paragraphs (b) and (c) below:
|
(i)
|
At the time a Participant makes an election of his distribution event pursuant to the provisions of Sections 5.01(a) or (c) the Participant shall elect that the portion of his Deferral Account (or any subaccount thereof) to which such distribution event is applicable
|
(1)
|
ratable annual cash installments for a period of years, not to exceed fifteen (15) years, designated by the Participant on his Deferral Agreement, or
|
(2)
|
a single lump sum cash payment.
|
(ii)
|
Notwithstanding the foregoing, at the time a Participant makes an election of a Special Effective Termination Distribution Date pursuant to the provisions of Section 5.01(c)(ii), the Participant shall elect that the portion of his Deferral Account be distributed on his Special Effective Termination Distribution Date shall be made payable under one of the following methods of payment:
|
(1)
|
ratable annual cash installments for a period of five (5) years, or
|
(2)
|
a single lump sum cash payment.
|
(b)
|
Notwithstanding the foregoing, in the event payment of a Participant’s Deferral 2005 Subaccount is to be made pursuant to Section 5.01(c) to a Participant who does not have a Special Effective Termination Distribution Date election in effect as of his date of Termination of Employment, a lump sum payment of his Deferral 2005 Subaccount shall be made as of the first business day of the seventh month following the Participant’s Termination of Employment.
|
(c)
|
A Participant shall not change his method of payment, except as otherwise provided in Section 5.03.
|
(d)
|
Notwithstanding any Plan provision to the contrary, the form of distribution of a Participant’s Grandfathered Deferral Account shall be made in accordance with the provisions of the Plan as in effect on October 3, 2004, as modified in Appendix B and without regard to any Plan amendments after that date which would constitute a material modification for Code Section 409A purposes.
|
(e)
|
Notwithstanding any Plan provision to the contrary, payment of a Participant’s Company Contribution Account shall be made in a single lump sum payment.
|
(a)
|
Changes in Election
|
(i)
|
such new election must be made at least twelve (12) months prior to the Common Distribution Date, Special Effective Termination Distribution Date or Specified Distribution Date, whichever is then in effect with respect to that portion of his Deferral Account (or subaccounts thereof), and such election will not become effective until at least twelve (12) months after the date on which the new election is made, and
|
(ii)
|
the new Common Distribution Date, Special Effective Termination Distribution Date or Specified Distribution Date, whichever is applicable, shall be a date that is not less than five (5) years from the Common Distribution Date, Special Effective Termination Distribution Date or Specified Distribution Date then in effect.
|
(b)
|
In accordance with such procedures as the Administrative Committee may prescribe, a Participant may elect to change the form of payment election under Section 5.02 applicable to the portion of his Deferral Account (or subaccounts thereof) that is deferred to a Common Distribution Date, Special Effective Termination Distribution Date or Specified Distribution Date by duly completing, executing and filing with the Administrative Committee a new form of payment election, subject to the following limitations:
|
(i)
|
such new election must be made at least twelve (12) months prior to the Common Distribution Date, Special Effective Termination Distribution Date or Specified Distribution Date, whichever is then in effect with respect to that portion of his Deferral Account (or subaccounts thereof), and such election will not become effective until at least twelve (12) months after the date on which the election is made, and
|
(ii)
|
the distribution of that portion of his Deferral Account (or subaccounts thereof) shall be deferred for five (5) years from the date such amount would otherwise have been paid absent this new election.
|
(c)
|
A Participant may change the election as applicable to his Grandfathered Deferral Accounts pursuant to the provisions of the Plan as in effect on October 3, 2004, as modified in Appendix B and without regard to any Plan amendments after that date which would constitute a material modification for Code Section 409A purposes.
|
(d)
|
It is the Company’s intent that the provisions of Section 5.03(a) and Section 5.03(b) comply with the subsequent election provisions in Code Section 409A(a)(4)(C), related regulations and other applicable guidance, and this Section 5.03(a) and Section 5.03(b) shall be interpreted accordingly. The Administrative Committee may impose additional restrictions or conditions on a Participant’s ability to elect a new specified distribution year pursuant to this Section 5.03(a) and Section 5.03(b). The Participant may revoke or change his election pursuant to this Section 5.03(a) and Section 5.03(b) at any time prior to the deadline for making such election, subject to such restrictions as the Administrative Committee may establish from time to time. Any such revocation or change shall be made in a form and manner determined by the Administrative Committee. For avoidance of doubt, a Participant may not elect to change the form of payment or delay payment of amounts deferred to Retirement or Termination of
|
(a)
|
Notwithstanding any Plan provision to the contrary, in the event the Corporation (i) sells, causes the sale of, or sold the stock or assets of any employing company in the controlled group of the Corporation to a third party or (ii) distributes or distributed to the holders of shares of the Corporation’s common stock all of the outstanding shares of common stock of a subsidiary or subsidiaries of the Corporation and, as a result of such sale or distribution, such company or its employees are no longer eligible to participate hereunder, the Leadership Development and Compensation Committee , in its sole discretion, may treat such event as not constituting a Termination of Employment and direct that the liabilities with respect to the benefits accrued under this Plan for a Participant who, as a result of such sale or distribution, is no longer eligible to participate in this Plan, shall (with the approval of the new employer), be transferred to a similar plan of such new employer and become a liability thereunder, provided that no provisions
|
(b)
|
Notwithstanding any Plan provision to the contrary, at the discretion and direction of the Corporation, liabilities with respect to benefits accrued by a Participant under a plan maintained by such Participant’s former employer may be transferred to this Plan and upon such transfer become the obligation of the Corporation.
|
(a)
|
Submission of Claims
|
(b)
|
Denial of Claim
|
(i)
|
The specific reason or reasons for the denial;
|
(ii)
|
Specific reference to pertinent Plan provisions on which the denial is based;
|
(iii)
|
A description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary;
|
(iv)
|
An explanation of the Plan’s claim review procedure; and
|
(v)
|
The time limits for requesting a review under this Section.
|
(c)
|
Claim Review Procedure
|
(a)
|
The Plan is intended to constitute an unfunded deferred compensation arrangement for a select group of management or highly compensated employees and, therefore, is exempt from the requirements of parts 2, 3 and 4 of Subtitle B of Title I of ERISA (pursuant to Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA), and all rights hereunder shall be governed by ERISA. Subject to the preceding sentence, the Plan shall be construed, regulated and administered in accordance with the laws of the State of New York, subject to the provisions of applicable federal laws.
|
(c)
|
The illegality of any particular provision of this document shall not affect the other provisions, and the document shall be construed in all respects as if such invalid provision were omitted.
|
(a)
|
The Administrative Committee shall mean the Xylem Benefits Administration Committee established from time to time pursuant to the terms of the Xylem Retirement Savings Plan for Salaried Employees. The Administrative Committee shall have the exclusive responsibility and complete discretionary authority to control the operation, management and administration of the Plan, with all powers necessary to enable it properly to carry out such responsibilities, including, but not limited to, the power to interpret the Plan and any related documents, to establish procedures for making any elections called for under the Plan, to make factual determinations regarding any and all matters arising hereunder, including, but not limited to, the right to determine eligibility for benefits, the right to construe the terms of the Plan, the right to remedy possible ambiguities, inequities, inconsistencies or omissions, and the right to resolve all interpretive, equitable or other questions arising under the Plan. The decisions of the Administrative Committee or such other party as is authorized under the terms of any grantor trust on all matters shall be final, binding and conclusive on all persons to the extent permitted by law.
|
(b)
|
To the extent permitted by law, all agents and representatives of the Administrative Committee shall be indemnified by the Corporation and held harmless against any claims and the expenses of defending against such claims, resulting from any action or conduct relating to the administration of the Plan, except claims arising from gross negligence, willful neglect or willful misconduct.
|
(c)
|
With respect to benefits hereunder subject to Code Section 409A, the Plan is intended to comply with the requirements of Code Section 409A and the provisions hereof shall be interpreted in a manner that satisfies the requirements of Code Section 409A and the regulations thereunder, and the Plan shall be operated accordingly. If any provision of the Plan would otherwise frustrate or conflict with this intent, the provision will be interpreted and deemed amended so as to avoid this conflict.
|
1.01
|
“Accounts” shall mean the Deferred Account, Floor Contribution Account and the Matching Contribution Account.
|
1.02
|
“Deferred Account” shall mean the bookkeeping account maintained for each Participant covered under this Appendix A to record the portion of Base Salary deferred under this Plan which was credited as a Salary Deferral under the ITT Industries Excess Savings Plan (or any predecessor plan) prior to January 1, 1996.
|
1.03
|
“Matching Contribution Account” shall mean the bookkeeping account maintained for each Participant covered under this Appendix A to record the Excess Matching Contribution (as defined under the ITT Industries Excess Savings Plan) credited on such Participant’s behalf due to his deferral of Base Salary under this Plan.
|
1.04
|
“Floor Contribution Account” shall mean the bookkeeping account maintained for each Participant covered under this Appendix A to record the Excess Floor Contributions (as defined under the ITT Industries Excess Savings Plan) credited on such Participant’s behalf due to his deferral of Base Salary under this Plan.
|
2.01
|
A Participant shall have no choice or election with respect to the investments of his Accounts. There shall be credited or debited an amount of earnings or losses on the balance of the Participant’s Accounts which would have been credited had the Participant’s Accounts been invested in the Stable Value Fund maintained under the ITT Salaried Investment and Savings Plan.
|
3.01
|
A Participant shall be fully vested .in his Deferred Account and Floor Contribution Account. The Participant shall vest in the amounts credited to his Matching Contribution Account at the same rate and under the same conditions at which such contributions would have vested under the ITT Salaried Investment and Savings Plan had they been contributed thereunder. In the event the Participant terminates employment prior to vesting in all or any part of the amount credited on his behalf to his Matching Contribution Account, such contributions and earnings thereon shall be forfeited and shall not be restored in the event the Participant is subsequently reemployed by the Company.
|
3.02
|
Notwithstanding any provisions of this Plan or Appendix A to the contrary, upon the occurrence of an Acceleration Event, (as such term is defined in Article I of the Plan) a Participant shall become fully vested in the amounts credited to his Matching Contribution Account.
|
4.01
|
A Participant shall be entitled to receive payment of his Deferred Account, Floor Contribution Account and the vested portion of his Matching Contribution Account, as determined under Section 3.01, upon his termination of employment for any reason, other than death. The distribution of such Accounts shall be made as soon as practicable following such termination of employment.
|
4.02
|
In the event of the death of a Participant prior to the full payment of his Accounts, the unpaid portion of his Accounts shall be paid to his Beneficiary (as defined in Section 1.05 of the Plan) as soon as practicable following his date of death.
|
5.01
|
Payment of a Participant’s Deferred Account, Floor Contribution Account, and the vested portion of his Matching Contribution Account shall be made in a single lump sum payment.
|
6.01
|
Upon the occurrence of an Acceleration Event, all Participants shall automatically receive the entire balance of their Accounts in a single lump sum payment. Such lump sum payment shall be made as soon as practicable on or after the Acceleration Event. If the Participant dies after such Acceleration Event, but before receiving such payment, it shall be made to his Beneficiary.
|
1.13
|
“Deferral Account” means the Participant’s Grandfathered Deferral Account as set forth in Section 1.21 of the foregoing provisions of the Plan.
|
|
Years Ended December 31,
|
||||||||||||||||||
(In Millions Except Ratios)
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Fixed Charges:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest Expense, Including Amortization of Deferred Finance Fees
|
$
|
70
|
|
|
$
|
55
|
|
|
$
|
54
|
|
|
$
|
55
|
|
|
$
|
55
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest Portion of Rental Expense (a)
|
21
|
|
|
19
|
|
|
24
|
|
|
25
|
|
|
24
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Total Fixed Charges
|
91
|
|
|
74
|
|
|
78
|
|
|
80
|
|
|
79
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings Before Income Taxes, Discontinued Operations and Fixed Charges:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Pre-tax income (before income or loss from equity investees)
|
337
|
|
|
403
|
|
|
421
|
|
|
298
|
|
|
388
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed Charges
|
91
|
|
|
74
|
|
|
78
|
|
|
80
|
|
|
79
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Total Earnings Available For Fixed Charges
|
$
|
428
|
|
|
$
|
477
|
|
|
$
|
499
|
|
|
$
|
378
|
|
|
$
|
467
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ratio of Earnings to Fixed Charges:
|
4.7
|
|
|
6.4
|
|
|
6.4
|
|
|
4.7
|
|
|
5.9
|
|
(a)
|
Calculated as 33% of rent expense, which is a reasonable approximation of the interest factor.
|
Name
|
Jurisdiction of Organization
|
Name Under Which Doing Business
|
Aanderaa Data Instruments AS
|
Norway
|
|
Anadolu Flygt Pompa Pazarlama Ve Ticaret AS
|
Turkey
|
|
Beijing United Gas Meters Co. Ltd.
|
China
|
|
Bellingham & Stanley Ltd.
|
England & Wales
|
|
Bombas Flygt de Venezuela S.A.
|
Venezuela
|
|
CMS Research Corporation
|
Alabama
|
|
Evolutionary Concepts, Inc.
|
California
|
|
Faradyne Motors (Suzhou) Co. Ltd.
|
China
|
|
Flow Control LLC
|
Delaware
|
|
Flowtronex PSI, LLC
|
Nevada
|
|
Fluid Handling, LLC
|
Delaware
|
|
Godwin Holdings Ltd.
|
England & Wales
|
|
Goulds Water Technology Philippines, Inc
|
Philippines
|
|
Grindex AB
|
Sweden
|
|
Grindex Pumps LLC
|
Delaware
|
|
IMT B.V.
|
Netherlands
|
|
IMT Deutschland GmbH
|
Germany
|
|
IMT Far East Pte. Ltd.
|
Singapore
|
|
IMT Lighting Limited
|
England and Wales
|
|
Jabsco Marine Italia s.r.l.
|
Italy
|
|
Jabsco S. de R.L. De C.V.
|
Mexico
|
|
Lowara s.r.l.
|
Italy
|
Lowara
|
Lowara Vogel Polska SP ZOO
|
Poland
|
|
MultiTrode Inc.
|
Florida
|
|
Multitrode Pty Ltd
|
Australia
|
|
Nova Analytics Europe LLC
|
Delaware
|
|
O.I. Corporation
|
Oklahoma
|
OI Analytical
|
PCI Membrane Systems, Inc.
|
Delaware
|
|
Pension Trustee Management Ltd
|
England & Wales
|
|
Portacel Inc.
|
Pennsylvania
|
|
Safe Sea Services FZC
|
UAE
|
|
Sensus (UK Holdings) Ltd.
|
England & Wales
|
|
Sensus Australia Pty Ltd
|
Australia
|
|
Sensus Canada Inc.
|
Canada
|
|
Sensus Česká republika spol. s r.o.
|
Czech Republic
|
|
Sensus Chile SA
|
Chile
|
|
Sensus de Mexico S. de R.L. de C.V.
|
Mexico
|
|
Sensus España SA
|
Spain
|
|
Sensus France Holdings SAS
|
France
|
|
Sensus France SAS
|
France
|
|
Sensus GmbH Hannover
|
Germany
|
|
Name
|
Jurisdiction of Organization
|
Name Under Which Doing Business
|
Sensus GmbH Ludwigshafen
|
Germany
|
|
Sensus Italia SRL
|
Italy
|
|
Sensus Japan Kabushiki Kaisha
|
Japan
|
|
Sensus Manufacturing (Shanghai) Co., Ltd.
|
China
|
|
Sensus Maroc S.A..
|
Morocco
|
|
Sensus Metering Systems (Fuzhou) Co., Ltd.
|
China
|
|
Sensus Metering Systems (LuxCo 1) S.A R.L.
|
Luxembourg
|
|
Sensus Metering Systems (LuxCo 2) S.A R.L.
|
Luxembourg
|
|
Sensus Metering Systems (LuxCo 3) S.A R.L.
|
Luxembourg
|
|
Sensus Metering Systems (LuxCo 4) S.A R.L.
|
Luxembourg
|
|
Sensus Metering Systems (LuxCo 5) S.A R.L
|
Luxembourg
|
|
Sensus Metering Systems do Brasil Ltda
|
Brazil
|
|
Sensus Metering Systems IP Holdings, Inc.
|
Delaware
|
|
Sensus Polska sp. zoo
|
Poland
|
|
Sensus Precision Die Casting (Yangzhou) Co., Ltd.
|
China
|
|
Sensus Services Deutschland GmbH
|
Germany
|
|
Sensus Slovensko a.s.
|
Slovakia
|
|
Sensus South Africa (Proprietary) Ltd.
|
South Africa
|
|
Sensus SPA
|
Algeria
|
|
Sensus Spectrum LLC
|
Delaware
|
|
Sensus UK Systems Limited
|
England & Wales
|
|
Sensus USA Inc.
|
Delaware
|
|
Sentec Limited
|
England & Wales
|
|
Smith-Blair, Inc.
|
Delaware
|
|
Texas Turbine LLC
|
Delaware
|
Xylem Texas Turbine LLC
|
Tideland Signal Canada Ltd
|
Canada
|
|
Tideland Signal Coöperatief U.A.
|
Netherlands
|
|
Tideland Signal Corporation
|
Texas
|
|
Tideland Signal Limited
|
England and Wales
|
|
Tideland Signal Pte. Ltd
|
Singapore
|
|
Tideland Signal, LLC
|
Delaware
|
|
UGI Global Limited
|
England & Wales
|
|
Visenti Pte. Ltd
|
Singapore
|
|
Water Asset Management, Inc.
|
Delaware
|
|
Water Company Ltd
|
England & Wales
|
|
Water Process Limited
|
England & Wales
|
|
Xylem (China) Company Limited
|
China
|
|
Xylem (Hong Kong) Limited
|
Hong Kong
|
|
Xylem (Nanjing) Co., Ltd
|
China
|
|
Xylem Analytics Australia Pty Ltd.
|
Australia
|
|
Xylem Analytics France S.A.S.
|
France
|
|
Xylem Analytics Germany GmbH
|
Germany
|
|
Xylem Analytics Germany Sales GmbH& Co. KG
|
Germany
|
|
Xylem Analytics IP Management GmbH
|
Germany
|
|
Name
|
Jurisdiction of Organization
|
Name Under Which Doing Business
|
Xylem Analytics LLC
|
Delaware
|
|
Xylem Analytics UK LTD
|
England
|
|
Xylem Analytics (Beijing) Co., Ltd
|
China
|
|
Xylem Australia Holdings PTY LTD
|
New South Wales
|
|
Xylem Brasil Soluções para Água Ltda
|
Brazil
|
|
Xylem Canada Company
|
Nova Scotia
|
|
Xylem Delaware, Inc.
|
Delaware
|
|
Xylem Denmark Holdings ApS
|
Denmark
|
|
Xylem Dewatering Solutions UK Ltd
|
England & Wales
|
|
Xylem Dewatering Solutions, Inc.
|
New Jersey
|
Godwin Pumps of America
|
Xylem Europe GmbH
|
Switzerland
|
|
Xylem Financing S.a.r.l
|
Luxembourg
|
|
Xylem Germany GmbH
|
Frankfurt am Main
|
|
Xylem Global S.a.r.l
|
Luxembourg
|
|
Xylem Holdings S.a.r.l.
|
Luxembourg
|
|
Xylem Industriebeteiligungen GmbH
|
Germany
|
|
Xylem Industries S.a.r.l.
|
Luxembourg
|
|
Xylem International S.a.r.l.
|
Luxembourg
|
|
Xylem IP Center S.a.r.l.
|
Luxembourg
|
|
Xylem IP Holdings LLC
|
Delaware
|
|
Xylem IP Management S.a.r.l
|
Luxembourg
|
|
Xylem IP Management UK LP
|
England & Wales
|
|
Xylem IP UK S.a.r.l.
|
Luxembourg
|
|
Xylem Lowara Limited
|
England & Wales
|
|
Xylem Luxembourg S.a r.l.
|
Luxembourg
|
|
Xylem Management GmbH
|
Germany
|
|
Xylem Manufacturing Austria GmbH
|
Austria
|
|
Xylem Manufacturing Middle East Region FZCO
|
UAE
|
|
Xylem Middle East Water Equipment Trading & Rental LLC
|
UAE
|
|
Xylem PCI Membranes Polska S.P. Z.O.O.
|
Poland
|
|
Xylem Russia LLC
|
Russia
|
|
Xylem Saudi Arabia Limited
|
Saudi Arabia
|
|
Xylem Service Hungary Kft
|
Hungary
|
|
Xylem Service Italia Srl Luxemburg Branch
|
Italy
|
|
Xylem Services Austria GmbH
|
Austria
|
|
Xylem Services GmbH
|
Germany
|
|
Xylem Services Italia Srl
|
Italy
|
|
Xylem Shared Services LLC
|
Poland
|
|
Xylem Technologies & Partners S.C.S
|
Luxembourg
|
|
Xylem Technologies GmbH
|
Frankfurt am Main
|
|
Xylem Water Holdings Limited
|
England & Wales
|
|
Xylem Water Limited
|
England & Wales
|
|
Xylem Water Services Limited
|
England & Wales
|
|
Xylem Water Solutions (Hong Kong) Limited
|
Hong Kong
|
|
Name
|
Jurisdiction of Organization
|
Name Under Which Doing Business
|
Xylem Water Systems (California), Inc.
|
California
|
|
Xylem Water Systems Australia PTY ltd.
|
New South Wales
|
|
Xylem Water Systems Hungary KFT
|
Hungary
|
|
Xylem Water Systems International, Inc.
|
Delaware
|
|
Xylem Water Systems Japan Corporation
|
Japan
|
|
Xylem Water Systems Philippines Holding, Inc.
|
Delaware
|
|
Xylem Water Systems Texas Holdings LLC
|
Delaware
|
|
Xylem Water Systems U.S.A., LLC
|
Delaware
|
|
Yellow Springs Instrument LTD
|
Japan
|
|
YSI (China) Limited
|
Hong Kong
|
|
YSI (Hong Kong) Ltd.
|
Hong Kong
|
|
YSI Environmental South Asia Private Ltd.
|
India
|
|
YSI Incorporated
|
Ohio
|
|
YSI Instrumentos E Servicos Ambientais Ltda.
|
Brazil
|
|
YSI International, Inc.
|
Ohio
|
|
YSI Nanotech Limited
|
Japan
|
|
YSI Trading (Shanghai) Company, Ltd.
|
China
|
|
1.
|
I have reviewed this Annual Report on Form 10-K of Xylem Inc. for the period ended December 31, 2016;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Patrick K. Decker
|
|
Patrick K. Decker
President and Chief Executive Officer
|
1.
|
I have reviewed this Annual Report on Form 10-K of Xylem Inc. for the period ended December 31, 2016;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ E. Mark Rajkowski
|
|
E. Mark Rajkowski
Senior Vice President and Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Patrick K. Decker
|
|
Patrick K. Decker
|
|
President and Chief Executive Officer
|
|
February 23, 2017
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ E. Mark Rajkowski
|
|
E. Mark Rajkowski
|
|
Senior Vice President and Chief Financial Officer
|
|
February 23, 2017
|
|