Operating Segments

9 Months Ended

Sep. 30, 2013

Operating Segments

Operating Segments

13. Operating Segments

Effective in the first quarter of 2013, the company changed its reportable segments due to a change in its underlying organizational model designed to support the business following the Nalco merger and to facilitate global growth. The company did not operate under the realigned reportable segment structure prior to 2013. The company’s new segment structure focuses on global businesses, with its ten operating units, which are also operating segments, aggregated into four reportable segments as follows:

· Global Industrial consists of the Global Water, Global Food & Beverage, Global Paper and Global Textile Care operating units.

· Global Institutional consists of the Global Institutional, Global Specialty and Global Healthcare operating units.

· Global Energy consists of the Global Energy operating unit.

· Other consists of the Global Pest Elimination and Equipment Care operating units.

For periods prior to its disposition in December 2012, the Vehicle Care operating unit was included within the Other reportable segment within the realigned reportable segment structure.

During the third quarter of 2013, the company’s management made a change to the way it measures and reports certain segments’ operating income, with intangible asset amortization specific to the Champion transaction moving to the Global Energy reportable segment from the Corporate segment. To provide meaningful comparisons, this change was made retroactively, resulting in $14.0 million of amortization expense moving to the Global Energy reportable segment from the Corporate segment for the second quarter of 2013. No other segments were impacted by this change.

Consistent with the company’s internal management reporting, and including the change discussed in the preceding paragraph, the Corporate segment includes amortization specifically from the Nalco merger and certain integration costs for both the Nalco and Champion transactions. The Corporate segment also includes special (gains) and charges reported on the Consolidated Statement of Income.

The profitability of the company’s operating units is evaluated by management based on operating income. The company has no intersegment revenues. The international amounts included within each of the company’s four reportable segments are based on translation into U.S. dollars at the fixed currency exchange rates used by management for 2013.

The following tables present net sales and operating income (loss) by reportable segment, reflecting the impact of the segment structure changes discussed above, with the 2012 periods recast under the same structure utilized for the 2013 periods. The nine month ended September 30, 2013 amounts also reflect the segment measurement change impacting Global Energy and Corporate discussed above.

	Third Quarter Ended						Nine Months Ended
	September 30						September 30
(millions)	2013			2012			2013			2012
Net Sales
Global Industrial	$	1,261.1		$	1,225.3		$	3,622.0		$	3,533.9
Global Institutional	1,099.2			1,047.7			3,128.8			3,027.5
Global Energy	990.6			588.2			2,470.7			1,677.2
Other	185.0			190.4			532.5			554.8
Subtotal at fixed currency rates	3,535.9			3,051.6			9,754.0			8,793.4
Effect of foreign currency translation	(51.9		)	(28.3		)	(60.1		)	(0.5		)
Consolidated	$	3,484.0		$	3,023.3		$	9,693.9		$	8,792.9
Operating Income
Global Industrial	$	181.3		$	164.1		$	455.7		$	396.3
Global Institutional	224.9			197.1			563.8			510.6
Global Energy	135.5			95.4			331.4			256.6
Other	26.9			30.0			73.7			77.3
Corporate	(82.8		)	(82.3		)	(322.3		)	(344.8		)
Subtotal at fixed currency rates	485.8			404.3			1,102.3			896.0
Effect of foreign currency translation	(9.8		)	(3.1		)	(12.3		)	(2.5		)
Consolidated	$	476.0		$	401.2		$	1,090.0		$	893.5