Operating Segments

3 Months Ended

Mar. 31, 2015

Operating Segments

Operating Segments

14.Operating Segments

The company’s organizational structure consists of global business unit and global regional leadership teams. The company’s ten operating units, which are also operating segments, follow its commercial and product-based activities and are based on engagement in business activities, availability of discrete financial information and review of operating results by the Chief Operating Decision Maker at the identified operating unit level.

Eight of the company’s ten operating units have been aggregated into three reportable segments based on similar economic characteristics and future prospects, nature of the products and production processes, end-use markets, channels of distribution and regulatory environment. The company’s reportable segments are Global Industrial, Global Institutional and Global Energy. The company’s two operating units that are primarily fee-for-service businesses have been combined into the Other segment and do not meet the quantitative criteria to be separately reported. The company provides similar information for the Other segment as compared to its three reportable segments as the company considers the information regarding its two underlying operating units as useful in understanding its consolidated results.

The company evaluates the performance of its international operations based on fixed currency exchange rates which eliminate the impact of exchange rate fluctuations on its international operations. The international amounts included within each of the company’s reportable segments are based on translation into U.S. dollars at the fixed currency exchange rates used by management for 2015. The difference between the fixed currency exchange rates and the actual currency exchange rates is reported as “Effect of foreign currency translation” in the following tables.

Financial information for each of the company’s reportable segments is as follows:

	First Quarter Ended
	March 31
(millions)	2015			2014
Net Sales
Global Industrial	$	1,129.7		$	1,077.2
Global Institutional	1,018.0			956.7
Global Energy	981.9			973.7
Other	178.1			168.5
Subtotal at fixed currency rates	3,307.7			3,176.1
Effect of foreign currency translation	(10.1		)	160.5
Consolidated	$	3,297.6		$	3,336.6
Operating Income
Global Industrial	$	119.2		$	113.6
Global Institutional	169.5			152.0
Global Energy	128.7			127.6
Other	23.4			21.4
Corporate	(52.2		)	(79.7		)
Subtotal at fixed currency rates	388.6			334.9
Effect of foreign currency translation	(0.9		)	16.0
Consolidated	$	387.7		$	350.9

The profitability of the company’s operating units is evaluated by management based on operating income. The company has no intersegment revenues.

Consistent with the company’s internal management reporting, the Corporate segment includes amortization specifically from the Nalco merger. The Corporate segment also includes special (gains) and charges, as discussed in Note 2, reported within the Consolidated Statement of Income.