Sales

6 Months Ended

Jun. 26, 2020

Revenue from Contract with Customer [Abstract]

Sales

NOTE 6. SALES

We derive revenues primarily from the sale of Professional Instrumentation and Industrial Technologies products and software and services. Revenue is recognized when control of promised products and software or services is transferred to customers in an amount that reflects the consideration we expect to be entitled to in exchange for those products and software or services. 

Sales of products and software includes revenues from the sale of products and equipment, software product offerings, and equipment rentals.

Sales of services includes revenues from extended warranties, post-contract customer support (“PCS”), maintenance contracts or services, contract labor to perform ongoing service at a customer location, and services related to previously sold products.

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 $73 million as of June 26, 2020 and $79 million as of December 31, 2019.

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 software 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 June 26, 2020 and December 31, 2019, we had $114 million and $147 million,

respectively, in net revenue-related contract assets primarily related to certain software contracts. Revenue-related contract assets are recorded in the Prepaid expenses and other current assets and Other assets line items in our Condensed Consolidated Balance Sheets. These assets have estimated useful lives between 3 and 8 years.

Impairment losses recognized on our revenue-related contract assets were immaterial during the three and six month periods ended June 26, 2020.

Contract Liabilities — Our contract liabilities consist of deferred revenue generally related to 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 accompanying Consolidated Condensed Balance Sheets.

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

	June 26, 2020		December 31, 2019
Deferred revenue - current	$	439.2	$	410.1
Deferred revenue - noncurrent	91.9		99.2
Total contract liabilities	$	531.1	$	509.3

During the three and six month periods ended June 26, 2020, we recognized revenue related to our contract liabilities at December 31, 2019 of $83 million and $209 million, respectively. The change in our contract liabilities from December 31, 2019 to June 26, 2020 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, with expected delivery dates to customers greater than one year from June 26, 2020, 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 is as follows ($ in millions):

	June 26, 2020
Professional Instrumentation	$	144.6
Industrial Technologies	382.3
Total remaining performance obligations	$	526.9

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 products and software 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 three month period ended June 26, 2020 is presented as follows ($ in millions):

	Total		Professional Instrumentation		Industrial Technologies
Sales:
Sales of products and software	$	1,367.7	$	887.3	$	480.4
Sales of services	203.5		150.2		53.3
Total	$	1,571.2	$	1,037.5	$	533.7
Geographic:
United States	$	908.0	$	549.3	$	358.7
China	145.4		131.6		13.8
All other (each country individually less than 5% of total sales)	517.8		356.6		161.2
Total	$	1,571.2	$	1,037.5	$	533.7
Major Products Group:
Professional tools and equipment	$	1,003.9	$	589.9	$	414.0
Industrial automation, controls and sensors	107.4		107.4		—
Franchise distribution	119.7		—		119.7
Medical technologies	284.4		284.4		—
All other	55.8		55.8		—
Total	$	1,571.2	$	1,037.5	$	533.7
End markets:
Direct sales:
Retail fueling (a)	$	365.7	$	—	$	365.7
Industrial & Manufacturing	102.8		102.8		—
Vehicle repair (a)	103.2		—		103.2
Utilities & Power	38.8		38.8		—
Medical (a)	284.4		284.4		—
Other	373.4		312.1		61.3
Total direct sales	1,268.3		738.1		530.2
Distributors(a)	302.9		299.4		3.5
Total	$	1,571.2	$	1,037.5	$	533.7
(a) Retail fueling, vehicle repair, and medical include sales to these end markets made through third-party distributors. Total distributor sales for the three month period ended June 26, 2020 was $597.0 million.

Disaggregation of revenue for the three month period ended June 28, 2019 is presented as follows ($ in millions):

	Total		Professional Instrumentation (a)		Industrial Technologies (a)
Sales:
Sales of products and software	$	1,623.0	$	998.8	$	624.2
Sales of services	241.7		166.8		74.9
Total	$	1,864.7	$	1,165.6	$	699.1
Geographic:
United States	$	1,077.7	$	625.5	$	452.2
China	154.3		130.4		23.9
All other (each country individually less than 5% of total sales)	632.7		409.7		223.0
Total	$	1,864.7	$	1,165.6	$	699.1
Major Products Group:
Professional tools and equipment	$	1,256.1	$	711.2	$	544.9
Industrial automation, controls and sensors	127.2		127.2		—
Franchise distribution	154.2		—		154.2
Medical technologies	265.3		265.3		—
All other	61.9		61.9		—
Total	$	1,864.7	$	1,165.6	$	699.1
End markets:
Direct sales:
Retail fueling (b)	$	486.3	$	—	$	486.3
Industrial & Manufacturing	114.1		114.1		—
Vehicle repair (b)	139.5		—		139.5
Utilities & Power	49.1		49.1		—
Medical (b)	265.3		265.3		—
Other	391.5		324.5		67.0
Total direct sales	1,445.8		753.0		692.8
Distributors(b)	418.9		412.6		6.3
Total	$	1,864.7	$	1,165.6	$	699.1
(a) Beginning January 1, 2020, our Hengstler and Dynapar businesses are reported within our Professional Instrumentation segment. Previously, these businesses were reported within our Industrial Technologies segment. Prior year balances have been reclassified to reflect current year presentation.
(b) Retail fueling, vehicle repair, and medical include sales to these end markets made through third-party distributors. Total distributor sales for the three month period ended June 28, 2019 was $773.1 million.

Disaggregation of revenue for the six month period ended June 26, 2020 is presented as follows ($ in millions):

	Total		Professional Instrumentation		Industrial Technologies
Sales:
Sales of products and software	$	2,855.5	$	1,827.8	$	1,027.7
Sales of services	429.2		314.1		115.1
Total	$	3,284.7	$	2,141.9	$	1,142.8
Geographic:
United States	$	1,927.8	$	1,144.2	$	783.6
China	272.9		250.6		22.3
All other (each country individually less than 5% of total sales)	1,084.0		747.1		336.9
Total	$	3,284.7	$	2,141.9	$	1,142.8
Major Products Group:
Professional tools and equipment	$	2,111.2	$	1,248.5	$	862.7
Industrial automation, controls and sensors	217.0		217.0		—
Franchise distribution	280.1		—		280.1
Medical technologies	564.4		564.4		—
All other	112.0		112.0		—
Total	$	3,284.7	$	2,141.9	$	1,142.8
End markets:
Direct sales:
Retail fueling (a)	$	762.2	$	—	$	762.2
Industrial & Manufacturing	211.8		211.8		—
Vehicle repair (a)	246.4		—		246.4
Utilities & Power	82.7		82.7		—
Medical (a)	564.4		564.4		—
Other	729.2		602.9		126.3
Total direct sales	2,596.7		1,461.8		1,134.9
Distributors(a)	688.0		680.1		7.9
Total	$	3,284.7	$	2,141.9	$	1,142.8
(a) Retail fueling, vehicle repair, and medical include sales to these end markets made through third-party distributors. Total distributor sales for the six month period ended June 26, 2020 was $1,336.2 million.

Disaggregation of revenue for the six month period ended June 28, 2019 is presented as follows ($ in millions):

	Total		Professional Instrumentation (a)		Industrial Technologies (a)
Sales:
Sales of products and software	$	3,028.1	$	1,855.0	$	1,173.1
Sales of services	429.5		288.3		141.2
Total	$	3,457.6	$	2,143.3	$	1,314.3
Geographic:
United States	$	1,965.3	$	1,121.6	$	843.7
China	304.3		261.6		42.7
All other (each country individually less than 5% of total sales)	1,188.0		760.1		427.9
Total	$	3,457.6	$	2,143.3	$	1,314.3
Major Products Group:
Professional tools and equipment	$	2,407.9	$	1,416.8	$	991.1
Industrial automation, controls and sensors	247.3		247.3		—
Franchise distribution	323.2		—		323.2
Medical technologies	364.3		364.3		—
All other	114.9		114.9		—
Total	$	3,457.6	$	2,143.3	$	1,314.3
End markets:
Direct sales:
Retail fueling (b)	$	874.5	$	—	$	874.5
Industrial & Manufacturing	223.7		223.7		—
Vehicle repair (b)	293.3		—		293.3
Utilities & Power	98.7		98.7		—
Medical (b)	364.3		364.3		—
Other	769.2		634.4		134.8
Total direct sales	2,623.7		1,321.1		1,302.6
Distributors(b)	833.9		822.2		11.7
Total	$	3,457.6	$	2,143.3	$	1,314.3
(a) Beginning January 1, 2020, our Hengstler and Dynapar businesses are reported within our Professional Instrumentation segment. Previously, these businesses were reported within our Industrial Technologies segment. Prior year balances have been reclassified to reflect current year presentation.
(b) Retail fueling, vehicle repair, and medical include sales to these end markets made through third-party distributors. Total distributor sales for the six month period ended June 28, 2019 was $1,518.3 million.