OPERATING SEGMENTS

9 Months Ended

Sep. 30, 2017

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 operating segments follow its commercial and product-based activities and are based on engagement in business activities, availability of discrete financial information and review of operating results by the Chief Operating Decision Maker at the identified operating segment level.

The Company’s operating segments that share similar economic characteristics and future prospects, nature of the products and production processes, end-use markets, channels of distribution and regulatory environment have been aggregated into three reportable segments: Global Industrial, Global Institutional and Global Energy. The Company’s operating segments that do not meet the quantitative criteria to be separately reported have been combined into the Other segment. The Company provides similar information for the Other segment as the Company considers the information regarding its underlying operating segments as useful in understanding its consolidated results.

Comparability of Reportable Segments

The Company evaluates the performance of its non-U.S. dollar functional currency international operations based on fixed currency exchange rates, which eliminate the impact of exchange rate fluctuations on its international operations. Fixed currency amounts are updated annually at the beginning of each year based on translation into U.S. dollars at foreign currency exchange rates established by management, with all periods presented using such rates. Fixed currency rates are generally based on existing market rates at the time they are established. The “Fixed Currency Rate Change” column shown in the following table reflects the impact on previously reported values related to fixed currency exchange rates established by management at the beginning of 2017.

Effective in the first quarter of 2017, the Company established the Life Sciences operating segment, to align with the strategy for growth in the pharmaceutical and personal care manufacturing operations. Life Sciences is comprised of operations previously recorded in the Food & Beverage and Healthcare operating segments and has been aggregated into the Global Industrial reportable segment.  The Company also made immaterial changes to its reportable segments, including the movement of certain customers and cost allocations between reportable segments. These changes are presented in "Segment Change" column of the table below.

The impact of the preceding changes on previously reported full year 2016 reportable segment net sales and operating income is summarized as follows:

	December 31, 2016
			Fixed
	Values at		Currency		Segment	Values at
(millions)	2016 Rates		Rate Change		Change	2017 Rates
Net Sales
Global Industrial		$ 4,617.1		$ 6.9	$ 63.2	$ 4,687.2
Global Institutional		4,495.6		7.7	(63.2)	4,440.1
Global Energy		3,035.8		40.0	-	3,075.8
Other		806.5		(4.8)	-	801.7
Subtotal at fixed currency rates		12,955.0		49.8	-	13,004.8
Effect of foreign currency translation		197.8		(49.8)	-	148.0
Consolidated reported GAAP net sales		$ 13,152.8		$ -	$ -	$ 13,152.8
Operating Income
Global Industrial		$ 703.0		$ (0.9)	$ 17.9	$ 720.0
Global Institutional		966.7		3.0	(19.2)	950.5
Global Energy		337.1		7.9	1.7	346.7
Other		148.1		(2.5)	(0.4)	145.2
Corporate		(272.1)		(0.5)	-	(272.6)
Subtotal at fixed currency rates		1,882.8		7.0	-	1,889.8
Effect of foreign currency translation		32.2		(7.0)	-	25.2
Consolidated reported GAAP operating income		$ 1,915.0		$ -	$ -	$ 1,915.0

Reportable Segment Information

Financial information for each of the Company’s reportable segments, including the impact of all preceding segment structure changes, is as follows:

	Third Quarter Ended				Nine Months Ended
	September 30				September 30
(millions)	2017		2016		2017		2016
Net Sales
Global Industrial		$1,248.1		$1,202.1		$3,586.5		$3,468.4
Global Institutional		1,225.1		1,149.2		3,524.3		3,315.0
Global Energy		796.7		771.2		2,346.1		2,305.6
Other		221.7		209.2		633.8		598.1
Subtotal at fixed currency rates		3,491.6		3,331.7		10,090.7		9,687.1
Effect of foreign currency translation		71.7		54.4		96.9		113.6
Consolidated reported GAAP net sales		$3,563.3		$3,386.1		$10,187.6		$9,800.7
Operating Income
Global Industrial		$207.4		$204.1		$501.9		$510.1
Global Institutional		274.2		262.1		726.1		697.8
Global Energy		89.7		102.6		236.1		244.9
Other		44.0		40.4		110.9		108.2
Corporate		(46.9)		(45.0)		(198.9)		(222.9)
Subtotal at fixed currency rates		568.4		564.2		1,376.1		1,338.1
Effect of foreign currency translation		11.4		9.9		16.0		20.0
Consolidated reported GAAP operating income		$579.8		$574.1		$1,392.1		$1,358.1

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

Consistent with the Company’s internal management reporting, Corporate amounts in the table above include amortization specifically from the Nalco merger and special (gains) and charges, as discussed in Note 2, that are not allocated to the Company’s reportable segments.