Sales

12 Months Ended

Dec. 31, 2019

Revenue from Contract with Customer [Abstract]

NOTE 13. SALES

On January 1, 2018, we adopted ASU 2014-09, Revenue from Contracts with Customers (“Topic 606”), using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting policy under ASC Topic 605, Revenue Recognition. We recorded an immaterial transition adjustment to opening retained earnings as of January 1, 2018 due to the cumulative impact of adopting Topic 606. The impact to sales as a result of applying Topic 606 was immaterial for the year ended December 31, 2018.

Revenue is recognized when control of promised products or services is transferred to customers in an amount that reflects the consideration we expect to be entitled to in exchange for those products or services.

Contract Assets — In certain circumstances, we record contract assets which include unbilled amounts typically resulting from sales under contracts when revenue recognized exceeds the amount billed to the customer, and right to payment is not only subject to the passage of time. Contract assets were $79 million as of December 31, 2019 and $32 million as of December 31, 2018.

Contract Costs — We incur direct incremental costs to obtain certain contracts, typically sales-related commissions and costs associated with assets used by our customers in certain service arrangements. Deferred sales-related commissions are generally not capitalized as the amortization period is one year or less, and we elected to use the practical expedient to expense these sales commissions as incurred. As of December 31, 2019, we had $147 million in net revenue-related contract assets primarily related to certain software contracts recorded in Prepaid expenses and other current assets and Other assets in our Consolidated Balance Sheet. Our revenue-related contract assets at December 31, 2018 were $144 million, the majority of which were recorded in Property, plant and equipment, net in the Consolidated Balance Sheet. These assets have estimated useful lives between 3 and 8 years.

Impairment losses recognized on our contract-related assets were immaterial during both the years ended December 31, 2019 and December 31, 2018.

Contract Liabilities — Our contract liabilities consist of deferred revenue generally related to post contract support (“PCS”) and extended warranty sales, where in most cases we receive up-front payment and recognize revenue over the support term. We classify deferred revenue as current or noncurrent based on the timing of when we expect to recognize revenue. The noncurrent portion of deferred revenue is included in Other long-term liabilities in the Consolidated Balance Sheets.

Our contract liabilities as of December 31 consisted of the following ($ in millions):



	2019		2018
Deferred revenue - current	$	410.1	$	288.1
Deferred revenue - noncurrent	99.2		92.6
Total contract liabilities	$	509.3	$	380.7

Acquisitions that closed in 2019 added $92 million of additional contract liabilities as of December 31, 2019. In the year ended December 31, 2019, we recognized $226 million of revenue related to our contract liabilities at January 1, 2019. The change in our contract liabilities from December 31, 2018 to December 31, 2019 was primarily due to the timing of cash receipts and sales of PCS and extended warranty services.

Remaining Performance Obligations — Our remaining performance obligations represent the transaction price of firm, noncancelable orders and the average contract value for software contracts, with expected delivery dates to customers greater than one year from December 31, 2019, for which work has not been performed. We have excluded performance obligations with an original expected duration of one year or less from the amounts below.

The aggregate performance obligations attributable to each of our segments as of December 31, 2019 is as follows ($ in millions):



	2019
Professional Instrumentation	$	136.1
Industrial Technologies	419.1
Total remaining performance obligations	$	555.2

The majority of remaining performance obligations are related to service and support contracts, which we expect to fulfill approximately 40 percent within the next two years, approximately 70 percent within the next three years, and substantially all within four years.

Disaggregation of Revenue

We disaggregate revenue from contracts with customers by sales of product and services, geographic location, major product group, and end market for each of our segments, as we believe it best depicts how the nature, amount, timing, and uncertainty of our revenue and cash flows are affected by economic factors.

Disaggregation of revenue for the year ended December 31, 2019 is presented as follows ($ in millions):



	Total		Professional Instrumentation		Industrial Technologies
Sales:
Sales of products	$	6,396.9	$	3,792.8	$	2,604.1
Sales of services	923.1		635.0		288.1
Total	$	7,320.0	$	4,427.8	$	2,892.2

Geographic:
United States	$	4,206.5	$	2,354.9	$	1,851.6
China	592.0		487.3		104.7
All other (each country individually less than 5% of total sales)	2,521.5		1,585.6		935.9
Total	$	7,320.0	$	4,427.8	$	2,892.2

Major Products Group:
Professional tools and equipment	$	5,014.7	$	2,880.8	$	2,133.9
Industrial automation, controls and sensors	484.1		370.5		113.6
Franchise distribution	637.9		—		637.9
Medical technologies	934.2		927.4		6.8
All other	249.1		249.1		—
Total	$	7,320.0	$	4,427.8	$	2,892.2

End markets:
Direct sales:
Retail fueling^(a)	$	1,903.6	$	—	$	1,903.6
Industrial & Manufacturing	448.1		390.8		57.3
Vehicle repair^(a)	574.7		—		574.7
Utilities & Power	199.6		199.6		—
Medical ^(a)	934.2		927.4		6.8
Other	1,586.9		1,312.5		274.4
Total direct sales	5,647.1		2,830.3		2,816.8
Distributors^(a)	1,672.9		1,597.5		75.4
Total	$	7,320.0	$	4,427.8	$	2,892.2

(a) Retail fueling, Vehicle repair, and Medical include sales to these end markets made through third-party distributors. Total distributor sales for the year ended December 31, 2019 was $3,158.4 million.

Disaggregation of revenue for the year ended December 31, 2018 is presented as follows ($ in millions):



	Total		Professional Instrumentation		Industrial Technologies
Sales:
Sales of products	$	5,755.0	$	3,215.2	$	2,539.8
Sales of services	697.7		439.9		257.8
Total	$	6,452.7	$	3,655.1	$	2,797.6

Geographic:
United States	$	3,539.6	$	1,829.6	$	1,710.0
China	569.0		459.5		109.5
All other (each country individually less than 5% of total sales)	2,344.1		1,366.0		978.1
Total	$	6,452.7	$	3,655.1	$	2,797.6

Major Products Group:
Professional tools and equipment	$	4,690.7	$	2,663.1	$	2,027.6
Industrial automation, controls and sensors	504.0		381.4		122.6
Franchise distribution	640.0		—		640.0
Medical technologies ^(c)	393.7		386.3		7.4
All other	224.3		224.3		—
Total	$	6,452.7	$	3,655.1	$	2,797.6

End markets:
Direct sales:
Retail fueling^(a)	$	1,777.5	$	—	$	1,777.5
Industrial & Manufacturing	445.1		384.5		60.6
Vehicle repair^(a)	581.5		—		581.5
Utilities & Power	172.3		171.0		1.3
Medical ^(b)	393.7		386.3		7.4
Other	1,379.3		1,074.9		304.4
Total direct sales	4,749.4		2,016.7		2,732.7
Distributors^(a)	1,703.3		1,638.4		64.9
Total	$	6,452.7	$	3,655.1	$	2,797.6

(a) Retail fueling and Vehicle repair include sales to these end markets made through third-party distributors. Total distributor sales for the year ended December 31, 2018 was $3,136.8 million.
(b) Sales were previously disclosed in Other.
(c) Sales were previously disclosed in Professional tools and equipment, Industrial automation, controls and sensors, and All other.

Disaggregation of revenue for the year ended December 31, 2017 is presented as follows ($ in millions):



	Total		Professional Instrumentation		Industrial Technologies
Sales:
Sales of products	$	5,173.3	$	2,813.2	$	2,360.1
Sales of services	582.8		325.9		256.9
Total	$	5,756.1	$	3,139.1	$	2,617.0

Geographic:
United States	$	3,148.7	$	1,486.0	$	1,662.7
China	498.4		416.7		81.7
All other (each country individually less than 5% of total sales)	2,109.0		1,236.4		872.6
Total	$	5,756.1	$	3,139.1	$	2,617.0

Major Products Group:
Professional tools and equipment	$	4,211.3	$	2,338.7	$	1,872.6
Industrial automation, controls and sensors	481.5		368.3		113.2
Franchise distribution	626.2		—		626.2
Medical technologies ^(c)	233.9		228.9		5.0
All other	203.2		203.2		—
Total	$	5,756.1	$	3,139.1	$	2,617.0

End markets:
Direct sales:
Retail fueling ^(a)	$	1,637.8	$	—	$	1,637.8
Industrial & Manufacturing	314.9		265.8		49.1
Vehicle repair ^(a)	569.3		—		569.3
Utilities & Power	228.2		227.3		0.9
Medical ^(b)	233.9		228.9		5.0
Other	1,261.3		965.3		296.0
Total direct sales	4,245.4		1,687.3		2,558.1
Distributors ^(a)	1,510.7		1,451.8		58.9
Total	$	5,756.1	$	3,139.1	$	2,617.0

(a) Retail fueling and Vehicle repair include sales to these end markets made through third-party distributors. Total distributor sales for the year ended December 31, 2017 was $2,877.8 million.
(b) Sales were previously disclosed in Other
(c) Sales were previously disclosed in Professional tools and equipment, Industrial automation, controls and sensors, and All other