Notes to the Interim Consolidated Financial Information (unaudited)
Note 1. The Company and basis of presentation
ABB Ltd and its subsidiaries (collectively, the Company) together form a leading global company in power and automation technologies that enable utility and industry customers to improve their performance while lowering environmental impact. The Company works with customers to engineer and install networks, facilities and plants with particular emphasis on enhancing efficiency, reliability and productivity for customers who generate, convert, transmit, distribute and consume energy.
The Companys Interim Consolidated Financial Information is prepared in accordance with United States of America generally accepted accounting principles (U.S. GAAP) for interim financial reporting. As such, the Interim Consolidated Financial Information does not include all the information and notes required under U.S. GAAP for annual consolidated financial statements. Therefore, such financial information should be read in conjunction with the audited consolidated financial statements in the Companys Annual Report for the year ended December 31, 2013.
The preparation of financial information in conformity with U.S. GAAP requires management to make assumptions and estimates that directly affect the amounts reported in the Interim Consolidated Financial Information. The most significant, difficult and subjective of such accounting assumptions and estimates include:
·
assumptions and projections, principally related to future material, labor and project-related overhead costs, used in determining the percentage-of-completion on projects,
·
estimates of loss contingencies associated with litigation or threatened litigation and other claims and inquiries, environmental damages, product warranties, regulatory and other proceedings,
·
assumptions used in the calculation of pension and postretirement benefits and the fair value of pension plan assets,
·
recognition and measurement of current and deferred income tax assets and liabilities (including the measurement of uncertain tax positions),
·
growth rates, discount rates and other assumptions used in testing goodwill for impairment,
·
assumptions used in determining inventory obsolescence and net realizable value,
·
estimates and assumptions used in determining the fair values of assets and liabilities assumed in business combinations,
·
growth rates, discount rates and other assumptions used to determine impairment of long-lived assets, and
·
assessment of the allowance for doubtful accounts.
The actual results and outcomes may differ from the Companys estimates and assumptions.
A portion of the Companys activities (primarily long-term construction activities) has an operating cycle that exceeds one year. For classification of current assets and liabilities related to such activities, the Company elected to use the duration of the individual contracts as its operating cycle. Accordingly, there are accounts receivable, inventories and provisions related to these contracts which will not be realized within one year that have been classified as current.
In the opinion of management, the unaudited Interim Consolidated Financial Information contains all necessary adjustments to present fairly the financial position, results of operations and cash flows for the reported interim periods. Management considers all such adjustments to be of a normal recurring nature.
The Interim Consolidated Financial Information is presented in United States dollars ($) unless otherwise stated.
16
Notes to the Interim Consolidated Financial Information (unaudited)
Note 2. Recent accounting pronouncements
Applicable in current period
Parents accounting for the cumulative translation adjustment upon derecognition of certain subsidiaries or groups of assets within a foreign entity or of an investment in a foreign entity
As of January 2014, the Company adopted an accounting standard update regarding the release of cumulative translation adjustments of a parent when it ceases to have a controlling financial interest in a subsidiary or group of assets that is a business within a foreign entity (for the Company, a foreign entity is an entity having a functional currency other than U.S. dollars). Under the update, the Company is required to release into net income the entire amount of a cumulative translation adjustment related to its investment in a foreign entity when a parent no longer has control as a result of selling a part or all of its investment in the foreign entity or otherwise no longer holds a controlling financial interest in a subsidiary or group of assets within the foreign entity. For foreign equity-accounted companies, a pro rata portion of the cumulative translation adjustment is required to be recognized in net income upon a partial sale of the equity-accounted company. This update did not have a material impact on the consolidated financial statements.
Presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists
As of January 2014, the Company adopted an accounting standard update regarding the presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. Under the update, the Company is required to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except in certain defined circumstances. This update did not have a material impact on the consolidated financial statements.
Reporting discontinued operations and disclosures of disposals of components of an entity
In April 2014, an accounting standard update was issued which changes the criteria for reporting discontinued operations and modifies the related disclosure requirements. Under the update, the Company would report a disposal, or planned disposal, of a component or group of components, as a discontinued operation if the disposal represents a strategic shift that has (or will have) a major effect on the Companys operations and financial results. A strategic shift could include a disposal of a major geographical area, a major line of business, a major equity-method investment, or other major parts of the Company. A component may be a reportable segment or an operating segment, a reporting unit, a subsidiary, or an asset group. In addition to expanding the existing disclosures for discontinued operations, the update requires new disclosures relating to (i) individually significant disposals that do not qualify for discontinued operations presentation, (ii) continuing involvement with a discontinued operation following the date of disposal and (iii) retained equity-method investments in a discontinued operation. The Company has elected to early adopt this update in the first quarter of 2014 and this update did not have a material impact on the consolidated financial statements.
Revenue from contracts with customers
In May 2014, an accounting standard update was issued to clarify the principles for recognizing revenues from contracts with customers. The update, which supersedes the majority of existing guidance, provides a single comprehensive model for recognizing revenues on the transfer of promised goods or services to customers in an amount that reflects the consideration that is expected to be received for those goods or services. Under the standard it is possible that more judgments and estimates would be required than under existing standards, including identifying the separate performance obligations in a contract, estimating any variable consideration elements, and allocating the transaction price to each separate performance obligation. The update also requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.
The update is effective for the Company for annual and interim periods beginning January 1, 2017, and is applicable either (i) retrospectively to each prior reporting period presented, with the option to elect certain defined practical expedients, or (ii) retrospectively with the cumulative effect of initially applying the update recognized at the date of adoption in retained earnings (with additional disclosure as to the
17
Notes to the Interim Consolidated Financial Information (unaudited)
impact on individual financial statement lines affected). The Company is currently evaluating the impact of this update on the consolidated financial statements.
Note 3. Business divestments
For both the six and three months ended June 30, 2014, the Company recorded net gains of $130 million in Other income (expense), net and tax expense of $69 million in Provision for taxes, relating to the divestment of consolidated businesses. There were no significant amounts recognized in the six and three months ended June 30, 2013.
Note 4. Cash and equivalents, marketable securities and short-term investments
Current assets
Cash and equivalents, marketable securities and short-term investments consisted of the following:
|
|
June 30, 2014
|
|
($ in millions)
|
|
Cost basis
|
|
Gross
unrealized
gains
|
|
Gross
unrealized
losses
|
|
Fair value
|
|
Cash and
equivalents
|
|
Marketable
securities
and
short-term
investments
|
|
Cash
|
|
2,282
|
|
|
|
|
|
2,282
|
|
2,282
|
|
|
|
Time deposits
|
|
2,560
|
|
|
|
|
|
2,560
|
|
2,558
|
|
2
|
|
Other short-term investments
|
|
282
|
|
|
|
|
|
282
|
|
|
|
282
|
|
Debt securities available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government obligations
|
|
102
|
|
2
|
|
(1
|
)
|
103
|
|
|
|
103
|
|
Other government obligations
|
|
3
|
|
|
|
|
|
3
|
|
|
|
3
|
|
Corporate
|
|
515
|
|
4
|
|
(2
|
)
|
517
|
|
109
|
|
408
|
|
Equity securities available-for-sale
|
|
155
|
|
10
|
|
|
|
165
|
|
|
|
165
|
|
Total
|
|
5,899
|
|
16
|
|
(3
|
)
|
5,912
|
|
4,949
|
|
963
|
|
|
|
December 31, 2013
|
|
($ in millions)
|
|
Cost basis
|
|
Gross
unrealized
gains
|
|
Gross
unrealized
losses
|
|
Fair value
|
|
Cash and
equivalents
|
|
Marketable
securities
and
short-term
investments
|
|
Cash
|
|
2,414
|
|
|
|
|
|
2,414
|
|
2,414
|
|
|
|
Time deposits
|
|
3,556
|
|
|
|
|
|
3,556
|
|
3,538
|
|
18
|
|
Other short-term investments
|
|
9
|
|
|
|
|
|
9
|
|
|
|
9
|
|
Debt securities available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government obligations
|
|
103
|
|
2
|
|
(1
|
)
|
104
|
|
|
|
104
|
|
European government obligations
|
|
24
|
|
1
|
|
|
|
25
|
|
|
|
25
|
|
Other government obligations
|
|
3
|
|
|
|
|
|
3
|
|
|
|
3
|
|
Corporate
|
|
212
|
|
4
|
|
(1
|
)
|
215
|
|
69
|
|
146
|
|
Equity securities available-for-sale
|
|
154
|
|
9
|
|
(4
|
)
|
159
|
|
|
|
159
|
|
Total
|
|
6,475
|
|
16
|
|
(6
|
)
|
6,485
|
|
6,021
|
|
464
|
|
18
Notes to the Interim Consolidated Financial Information (unaudited)
Included in Other short-term investments at June 30, 2014, are receivables of $273 million representing reverse repurchase agreements. These collateralized lendings, made to a financial institution, have maturity dates of less than one year.
Non-current assets
Included in Other non-current assets are certain held-to-maturity marketable securities. At June 30, 2014, the amortized cost, gross unrecognized gain and fair value (based on quoted market prices) of these securities were $92 million, $19 million and $111 million, respectively. At December 31, 2013, the amortized cost, gross unrecognized gain and fair value (based on quoted market prices) of these securities were $104 million, $17 million and $121 million, respectively. These securities are pledged as security for certain outstanding deposit liabilities and the funds received at the respective maturity dates of the securities will only be available to the Company for repayment of these obligations.
Note 5. Derivative financial instruments
The Company is exposed to certain currency, commodity, interest rate and equity risks arising from its global operating, financing and investing activities. The Company uses derivative instruments to reduce and manage the economic impact of these exposures.
Currency risk
Due to the global nature of the Companys operations, many of its subsidiaries are exposed to currency risk in their operating activities from entering into transactions in currencies other than their functional currency. To manage such currency risks, the Companys policies require the subsidiaries to hedge their foreign currency exposures from binding sales and purchase contracts denominated in foreign currencies. For forecasted foreign currency denominated sales of standard products and the related foreign currency denominated purchases, the Companys policy is to hedge up to a maximum of 100 percent of the forecasted foreign currency denominated exposures, depending on the length of the forecasted exposures. Forecasted exposures greater than 12 months are generally not hedged. Forward foreign exchange contracts are the main instrument used to protect the Company against the volatility of future cash flows (caused by changes in exchange rates) of contracted and forecasted sales and purchases denominated in foreign currencies. In addition, within its treasury operations, the Company primarily uses foreign exchange swaps and forward foreign exchange contracts to manage the currency and timing mismatches arising in its liquidity management activities.
Commodity risk
Various commodity products are used in the Companys manufacturing activities. Consequently it is exposed to volatility in future cash flows arising from changes in commodity prices. To manage the price risk of commodities other than electricity, the Companys policies require that the subsidiaries hedge the commodity price risk exposures from binding contracts, as well as at least 50 percent (up to a maximum of 100 percent) of the forecasted commodity exposure over the next 12 months or longer (up to a maximum of 18 months). Primarily swap contracts are used to manage the associated price risks of commodities. As of 2014, the Company no longer enters into electricity futures contracts to manage the price risk on its forecasted electricity needs in certain locations.
Interest rate risk
The Company has issued bonds at fixed rates. Interest rate swaps are used to manage the interest rate risk associated with certain debt and generally such swaps are designated as fair value hedges. In addition, from time to time, the Company uses instruments such as interest rate swaps, interest rate futures, bond futures or forward rate agreements to manage interest rate risk arising from the Companys balance sheet structure but does not designate such instruments as hedges.
Equity risk
The Company is exposed to fluctuations in the fair value of its warrant appreciation rights (WARs) issued under its management incentive plan. A WAR gives its holder the right to receive cash equal to the market price of an equivalent listed warrant on the date of exercise. To eliminate such risk, the Company has purchased cash-settled call options which entitle the Company to receive amounts equivalent to its obligations under the outstanding WARs.
19
Notes to the Interim Consolidated Financial Information (unaudited)
Volume of derivative activity
In general, while the Companys primary objective in its use of derivatives is to minimize exposures arising from its business, certain derivatives are designated and qualify for hedge accounting treatment while others either are not designated or do not qualify for hedge accounting.
Foreign exchange and interest rate derivatives:
The gross notional amounts of outstanding foreign exchange and interest rate derivatives (whether designated as hedges or not) were as follows:
Type of derivative
|
|
Total notional amounts
|
|
($ in millions)
|
|
June 30, 2014
|
|
December 31, 2013
|
|
June 30, 2013
|
|
Foreign exchange contracts
|
|
20,613
|
|
19,351
|
|
18,814
|
|
Embedded foreign exchange derivatives
|
|
2,887
|
|
3,049
|
|
3,414
|
|
Interest rate contracts
|
|
3,540
|
|
4,693
|
|
1,289
|
|
Derivative commodity contracts:
The following table shows the notional amounts of outstanding commodity derivatives (whether designated as hedges or not), on a net basis, to reflect the Companys requirements in the various commodities:
|
|
|
|
Total notional amounts
|
|
Type of derivative
|
|
Unit
|
|
June 30, 2014
|
|
December 31, 2013
|
|
June 30, 2013
|
|
Copper swaps
|
|
metric tonnes
|
|
42,080
|
|
42,866
|
|
46,222
|
|
Aluminum swaps
|
|
metric tonnes
|
|
3,646
|
|
3,525
|
|
5,886
|
|
Nickel swaps
|
|
metric tonnes
|
|
6
|
|
18
|
|
12
|
|
Lead swaps
|
|
metric tonnes
|
|
4,725
|
|
7,100
|
|
9,900
|
|
Zinc swaps
|
|
metric tonnes
|
|
150
|
|
300
|
|
325
|
|
Silver swaps
|
|
ounces
|
|
1,958,563
|
|
1,936,581
|
|
2,037,511
|
|
Electricity futures
|
|
megawatt hours
|
|
|
|
279,995
|
|
380,898
|
|
Crude oil swaps
|
|
barrels
|
|
113,000
|
|
113,000
|
|
119,450
|
|
Equity derivatives:
At June 30, 2014, December 31, 2013, and June 30, 2013, the Company held 54 million, 67 million and 75 million cash-settled call options indexed to ABB Ltd shares (conversion ratio 5:1) with a total fair value of $29 million, $56 million and $42 million, respectively.
Cash flow hedges
As noted above, the Company mainly uses forward foreign exchange contracts to manage the foreign exchange risk of its operations, commodity swaps to manage its commodity risks and cash-settled call options to hedge its WAR liabilities. Where such instruments are designated and qualify as cash flow hedges, the effective portion of the changes in their fair value is recorded in Accumulated other comprehensive loss and subsequently reclassified into earnings in the same line item and in the same period as the underlying hedged transaction affects earnings. Any ineffectiveness in the hedge relationship, or hedge component excluded from the assessment of effectiveness, is recognized in earnings during the current period.
At June 30, 2014, and December 31, 2013, Accumulated other comprehensive loss included net unrealized losses of $6 million, net of tax, and net unrealized gains of $22 million, net of tax, respectively, on derivatives designated as cash flow hedges. Of the amount at June 30, 2014, net gains of $4 million are expected to be reclassified to earnings in the following 12 months. At June 30, 2014, the longest maturity of a derivative classified as a cash flow hedge was
63
months.
The amount of gains or losses, net of tax, reclassified into earnings due to the discontinuance of cash flow hedge accounting and the amount of ineffectiveness in cash flow hedge relationships directly recognized in earnings were not significant in the six and three months ended June 30, 2014 and 2013.
20
Notes to the Interim Consolidated Financial Information (unaudited)
The pre-tax effects of derivative instruments, designated and qualifying as cash flow hedges, on Accumulated other comprehensive loss (OCI) and the Consolidated Income Statements were as follows:
Six months ended June 30, 2014
|
|
Type of derivative
designated as
a cash flow hedge
|
|
Gains (losses)
recognized in
OCI on derivatives
(effective portion)
|
|
Gains (losses) reclassified
from OCI into income
(effective portion)
|
|
Gains (losses) recognized in income
(ineffective portion and amount
excluded from effectiveness testing)
|
|
|
|
($ in millions)
|
|
Location
|
|
($ in millions)
|
|
Location
|
|
($ in millions)
|
|
Foreign exchange contracts
|
|
(18
|
)
|
Total revenues
|
|
|
|
Total revenues
|
|
|
|
|
|
|
|
Total cost of sales
|
|
5
|
|
Total cost of sales
|
|
|
|
Commodity contracts
|
|
(2
|
)
|
Total cost of sales
|
|
(2
|
)
|
Total cost of sales
|
|
|
|
Cash-settled call options
|
|
(18
|
)
|
SG&A expenses
(1)
|
|
(8
|
)
|
SG&A expenses
(1)
|
|
|
|
Total
|
|
(38
|
)
|
|
|
(5
|
)
|
|
|
|
|
Six months ended June 30, 2013
|
|
Type of derivative
designated as
a cash flow hedge
|
|
Gains (losses)
recognized in
OCI on derivatives
(effective portion)
|
|
Gains (losses) reclassified
from OCI into income
(effective portion)
|
|
Gains (losses) recognized in income
(ineffective portion and amount
excluded from effectiveness testing)
|
|
|
|
($ in millions)
|
|
Location
|
|
($ in millions)
|
|
Location
|
|
($ in millions)
|
|
Foreign exchange contracts
|
|
|
|
Total revenues
|
|
24
|
|
Total revenues
|
|
|
|
|
|
|
|
Total cost of sales
|
|
(6
|
)
|
Total cost of sales
|
|
|
|
Commodity contracts
|
|
(13
|
)
|
Total cost of sales
|
|
(1
|
)
|
Total cost of sales
|
|
|
|
Cash-settled call options
|
|
7
|
|
SG&A expenses
(1)
|
|
2
|
|
SG&A expenses
(1)
|
|
|
|
Total
|
|
(6
|
)
|
|
|
19
|
|
|
|
|
|
Three months ended June 30, 2014
|
|
Type of derivative
designated as
a cash flow hedge
|
|
Gains (losses)
recognized in
OCI on derivatives
(effective portion)
|
|
Gains (losses) reclassified
from OCI into income
(effective portion)
|
|
Gains (losses) recognized in income
(ineffective portion and amount
excluded from effectiveness testing)
|
|
|
|
($ in millions)
|
|
Location
|
|
($ in millions)
|
|
Location
|
|
($ in millions)
|
|
Foreign exchange contracts
|
|
(12
|
)
|
Total revenues
|
|
(1
|
)
|
Total revenues
|
|
|
|
|
|
|
|
Total cost of sales
|
|
2
|
|
Total cost of sales
|
|
|
|
Commodity contracts
|
|
2
|
|
Total cost of sales
|
|
(1
|
)
|
Total cost of sales
|
|
|
|
Cash-settled call options
|
|
(14
|
)
|
SG&A expenses
(1)
|
|
(7
|
)
|
SG&A expenses
(1)
|
|
|
|
Total
|
|
(24
|
)
|
|
|
(7
|
)
|
|
|
|
|
Three months ended June 30, 2013
|
|
Type of derivative
designated as
a cash flow hedge
|
|
Gains (losses)
recognized in
OCI on derivatives
(effective portion)
|
|
Gains (losses) reclassified
from OCI into income
(effective portion)
|
|
Gains (losses) recognized in income
(ineffective portion and amount
excluded from effectiveness testing)
|
|
|
|
($ in millions)
|
|
Location
|
|
($ in millions)
|
|
Location
|
|
($ in millions)
|
|
Foreign exchange contracts
|
|
(17
|
)
|
Total revenues
|
|
13
|
|
Total revenues
|
|
|
|
|
|
|
|
Total cost of sales
|
|
(2
|
)
|
Total cost of sales
|
|
|
|
Commodity contracts
|
|
(11
|
)
|
Total cost of sales
|
|
(2
|
)
|
Total cost of sales
|
|
|
|
Cash-settled call options
|
|
|
|
SG&A expenses
(1)
|
|
|
|
SG&A expenses
(1)
|
|
|
|
Total
|
|
(28
|
)
|
|
|
9
|
|
|
|
|
|
(1) SG&A expenses represent Selling, general and administrative expenses.
Net derivative losses of $5 million and net derivative gains of $16 million, both net of tax, were reclassified from Accumulated other comprehensive loss to earnings during the six months ended June 30, 2014 and 2013, respectively. During the three months ended June 30, 2014 and 2013, net derivative losses of $6 million and net derivative gains of $7 million, both net of tax, were reclassified from Accumulated other comprehensive loss to earnings respectively.
21
Notes to the Interim Consolidated Financial Information (unaudited)
Fair value hedges
To reduce its interest rate exposure arising primarily from its debt issuance activities, the Company uses interest rate swaps. Where such instruments are designated as fair value hedges, the changes in the fair value of these instruments, as well as the changes in fair value of the risk component of the underlying debt being hedged, are recorded as offsetting gains and losses in Interest and other finance expense. Hedge ineffectiveness of instruments designated as fair value hedges for the six and three months ended June 30, 2014 and 2013, was not significant.
The effect of derivative instruments, designated and qualifying as fair value hedges, on the Consolidated Income Statements was as follows:
Six months ended June 30, 2014
|
|
Type of derivative
designated as a
fair value hedge
|
|
Gains (losses) recognized in income
on derivatives designated as
fair value hedges
|
|
Gains (losses) recognized in
income on hedged item
|
|
|
|
Location
|
|
($ in millions)
|
|
Location
|
|
($ in millions)
|
|
Interest rate contracts
|
|
Interest and other finance expense
|
|
53
|
|
Interest and other finance expense
|
|
(52
|
)
|
Six months ended June 30, 2013
|
|
Type of derivative
designated as a
fair value hedge
|
|
Gains (losses) recognized in income
on derivatives designated as
fair value hedges
|
|
Gains (losses) recognized in
income on hedged item
|
|
|
|
Location
|
|
($ in millions)
|
|
Location
|
|
($ in millions)
|
|
Interest rate contracts
|
|
Interest and other finance expense
|
|
(40
|
)
|
Interest and other finance expense
|
|
40
|
|
Three months ended June 30, 2014
|
|
Type of derivative
designated as a
fair value hedge
|
|
Gains (losses) recognized in income
on derivatives designated as
fair value hedges
|
|
Gains (losses) recognized in
income on hedged item
|
|
|
|
Location
|
|
($ in millions)
|
|
Location
|
|
($ in millions)
|
|
Interest rate contracts
|
|
Interest and other finance expense
|
|
31
|
|
Interest and other finance expense
|
|
(30
|
)
|
Three months ended June 30, 2013
|
|
Type of derivative
designated as a
fair value hedge
|
|
Gains (losses) recognized in income
on derivatives designated as
fair value hedges
|
|
Gains (losses) recognized in
income on hedged item
|
|
|
|
Location
|
|
($ in millions)
|
|
Location
|
|
($ in millions)
|
|
Interest rate contracts
|
|
Interest and other finance expense
|
|
(22
|
)
|
Interest and other finance expense
|
|
23
|
|
Derivatives not designated in hedge relationships
Derivative instruments that are not designated as hedges or do not qualify as either cash flow or fair value hedges are economic hedges used for risk management purposes. Gains and losses from changes in the fair values of such derivatives are recognized in the same line in the income statement as the economically hedged transaction.
Furthermore, under certain circumstances, the Company is required to split and account separately for foreign currency derivatives that are embedded within certain binding sales or purchase contracts denominated in a currency other than the functional currency of the subsidiary and the counterparty.
22
Notes to the Interim Consolidated Financial Information (unaudited)
The gains (losses) recognized in the Consolidated Income Statements on derivatives not designated in hedging relationships were as follows:
($ in millions)
|
|
Gains (losses) recognized in income
|
|
Type of derivative
|
|
|
|
Six months ended
June 30,
|
|
Three months
ended June 30,
|
|
not designated as a hedge
|
|
Location
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
Foreign exchange contracts
|
|
Total revenues
|
|
(97
|
)
|
(206
|
)
|
(74
|
)
|
(214
|
)
|
|
|
Total cost of sales
|
|
(30
|
)
|
70
|
|
(20
|
)
|
152
|
|
|
|
SG&A expenses
(1)
|
|
1
|
|
(2
|
)
|
|
|
1
|
|
|
|
Interest and other finance expense
|
|
(27
|
)
|
(37
|
)
|
(31
|
)
|
106
|
|
Embedded foreign exchange contracts
|
|
Total revenues
|
|
8
|
|
73
|
|
(2
|
)
|
86
|
|
|
|
Total cost of sales
|
|
(1
|
)
|
(9
|
)
|
(1
|
)
|
(11
|
)
|
Commodity contracts
|
|
Total cost of sales
|
|
(6
|
)
|
(67
|
)
|
16
|
|
(54
|
)
|
|
|
Interest and other finance expense
|
|
|
|
1
|
|
|
|
1
|
|
Total
|
|
|
|
(152
|
)
|
(177
|
)
|
(112
|
)
|
67
|
|
(1) SG&A expenses represent Selling, general and administrative expenses.
The fair values of derivatives included in the Consolidated Balance Sheets were as follows:
|
|
June 30, 2014
|
|
|
|
Derivative assets
|
|
Derivative liabilities
|
|
($ in millions)
|
|
Current in
Other current
assets
|
|
Non-current
in Other
non-current
assets
|
|
Current in
Other current
liabilities
|
|
Non-current
in Other
non-current
liabilities
|
|
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts
|
|
10
|
|
1
|
|
9
|
|
5
|
|
Commodity contracts
|
|
1
|
|
|
|
1
|
|
|
|
Interest rate contracts
|
|
|
|
58
|
|
|
|
|
|
Cash-settled call options
|
|
21
|
|
7
|
|
|
|
|
|
Total
|
|
32
|
|
66
|
|
10
|
|
5
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts
|
|
105
|
|
17
|
|
146
|
|
23
|
|
Commodity contracts
|
|
7
|
|
|
|
7
|
|
1
|
|
Cash-settled call options
|
|
1
|
|
|
|
|
|
|
|
Embedded foreign exchange derivatives
|
|
36
|
|
24
|
|
38
|
|
5
|
|
Total
|
|
149
|
|
41
|
|
191
|
|
29
|
|
Total fair value
|
|
181
|
|
107
|
|
201
|
|
34
|
|
|
|
|
|
|
|
|
|
|
|
Thereof, subject to close-out netting agreements
|
|
115
|
|
76
|
|
153
|
|
29
|
|
23
Notes to the Interim Consolidated Financial Information (unaudited)
|
|
December 31, 2013
|
|
|
|
Derivative assets
|
|
Derivative liabilities
|
|
($ in millions)
|
|
Current in
Other current
assets
|
|
Non-current
in Other
non-current
assets
|
|
Current in
Other current
liabilities
|
|
Non-current
in Other
non-current
liabilities
|
|
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts
|
|
21
|
|
8
|
|
10
|
|
3
|
|
Commodity contracts
|
|
2
|
|
|
|
1
|
|
|
|
Interest rate contracts
|
|
|
|
14
|
|
|
|
7
|
|
Cash-settled call options
|
|
14
|
|
40
|
|
|
|
|
|
Total
|
|
37
|
|
62
|
|
11
|
|
10
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts
|
|
272
|
|
42
|
|
121
|
|
30
|
|
Commodity contracts
|
|
6
|
|
1
|
|
15
|
|
1
|
|
Cash-settled call options
|
|
|
|
2
|
|
|
|
|
|
Embedded foreign exchange derivatives
|
|
57
|
|
21
|
|
55
|
|
11
|
|
Total
|
|
335
|
|
66
|
|
191
|
|
42
|
|
Total fair value
|
|
372
|
|
128
|
|
202
|
|
52
|
|
|
|
|
|
|
|
|
|
|
|
Thereof, subject to close-out netting agreements
|
|
284
|
|
63
|
|
130
|
|
40
|
|
Close-out netting agreements provide for the termination, valuation and net settlement of some or all outstanding transactions between two counterparties on the occurrence of one or more pre-defined trigger events.
Although the Company is party to close-out netting agreements with most derivative counterparties, the fair values in the tables above and in the Consolidated Balance Sheets at June 30, 2014, and December 31, 2013, have been presented on a gross basis.
Note 6. Fair values
The Company uses fair value measurement principles to record certain financial assets and liabilities on a recurring basis and, when necessary, to record certain non-financial assets at fair value on a non-recurring basis, as well as to determine fair value disclosures for certain financial instruments carried at amortized cost in the financial statements. Financial assets and liabilities recorded at fair value on a recurring basis include foreign currency, commodity and interest rate derivatives, as well as cash-settled call options and available-for-sale securities. Non-financial assets recorded at fair value on a non-recurring basis include long-lived assets that are reduced to their estimated fair value due to impairments.
Fair value is the price that would be received when selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various valuation techniques including the market approach (using observable market data for identical or similar assets and liabilities), the income approach (discounted cash flow models) and the cost approach (using costs a market participant would incur to develop a comparable asset). Inputs used to determine the fair value of assets and liabilities are defined by a three-level hierarchy, depending on the reliability of those inputs. The Company has categorized its financial assets and liabilities and non-financial assets measured at fair value within this hierarchy based on whether the inputs to the valuation technique are observable or unobservable. An observable input is based on market data obtained from independent sources, while an unobservable input reflects the Companys assumptions about market data.
The levels of the fair value hierarchy are as follows:
Level 1:
Valuation inputs consist of quoted prices in an active market for identical assets or liabilities (observable quoted prices). Assets and liabilities valued using Level 1 inputs include listed derivatives which are actively traded such as commodity futures, interest rate futures and certain actively-traded debt securities.
24
Notes to the Interim Consolidated Financial Information (unaudited)
Level 2:
Valuation inputs consist of observable inputs (other than Level 1 inputs) such as actively-quoted prices for similar assets, quoted prices in inactive markets and inputs other than quoted prices such as interest rate yield curves, credit spreads, or inputs derived from other observable data by interpolation, correlation, regression or other means. The adjustments applied to quoted prices or the inputs used in valuation models may be both observable and unobservable. In these cases, the fair value measurement is classified as Level 2 unless the unobservable portion of the adjustment or the unobservable input to the valuation model is significant, in which case the fair value measurement would be classified as Level 3. Assets and liabilities valued or disclosed using Level 2 inputs include investments in certain funds, certain debt securities that are not actively traded, interest rate swaps, commodity swaps, cash-settled call options, forward foreign exchange contracts, foreign exchange swaps and forward rate agreements, time deposits, as well as financing receivables and debt.
Level 3:
Valuation inputs are based on the Companys assumptions of relevant market data (unobservable input).
Whenever quoted prices involve bid-ask spreads, the Company ordinarily determines fair values based on mid-market quotes. However, for the purpose of determining the fair value of cash-settled call options serving as hedges of the Companys management incentive plan, bid prices are used.
When determining fair values based on quoted prices in an active market, the Company considers if the level of transaction activity for the financial instrument has significantly decreased, or would not be considered orderly. In such cases, the resulting changes in valuation techniques would be disclosed. If the market is considered disorderly or if quoted prices are not available, the Company is required to use another valuation technique, such as an income approach.
Recurring fair value measures
The fair values of financial assets and liabilities measured at fair value on a recurring basis were as follows:
|
|
June 30, 2014
|
|
($ in millions)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total fair
value
|
|
Assets
|
|
|
|
|
|
|
|
|
|
Available-for-sale securities in Cash and equivalents:
|
|
|
|
|
|
|
|
|
|
Debt securitiesCorporate
|
|
|
|
109
|
|
|
|
109
|
|
Available-for-sale securities in Marketable securities and short-term investments:
|
|
|
|
|
|
|
|
|
|
Equity securities
|
|
|
|
165
|
|
|
|
165
|
|
Debt securitiesU.S. government obligations
|
|
103
|
|
|
|
|
|
103
|
|
Debt securitiesOther government obligations
|
|
|
|
3
|
|
|
|
3
|
|
Debt securitiesCorporate
|
|
|
|
408
|
|
|
|
408
|
|
Derivative assetscurrent in Other current assets
|
|
|
|
181
|
|
|
|
181
|
|
Derivative assetsnon-current in Other non-current assets
|
|
|
|
107
|
|
|
|
107
|
|
Total
|
|
103
|
|
973
|
|
|
|
1,076
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
Derivative liabilitiescurrent in Other current liabilities
|
|
|
|
201
|
|
|
|
201
|
|
Derivative liabilitiesnon-current in Other non-current liabilities
|
|
|
|
34
|
|
|
|
34
|
|
Total
|
|
|
|
235
|
|
|
|
235
|
|
25
Notes to the Interim Consolidated Financial Information (unaudited)
|
|
December 31, 2013
|
|
($ in millions)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total fair
value
|
|
Assets
|
|
|
|
|
|
|
|
|
|
Available-for-sale securities in Cash and equivalents:
|
|
|
|
|
|
|
|
|
|
Debt securitiesCorporate
|
|
|
|
69
|
|
|
|
69
|
|
Available-for-sale securities in Marketable securities and short-term investments:
|
|
|
|
|
|
|
|
|
|
Equity securities
|
|
|
|
159
|
|
|
|
159
|
|
Debt securitiesU.S. government obligations
|
|
104
|
|
|
|
|
|
104
|
|
Debt securitiesEuropean government obligations
|
|
25
|
|
|
|
|
|
25
|
|
Debt securitiesOther government obligations
|
|
|
|
3
|
|
|
|
3
|
|
Debt securitiesCorporate
|
|
|
|
146
|
|
|
|
146
|
|
Derivative assetscurrent in Other current assets
|
|
|
|
372
|
|
|
|
372
|
|
Derivative assetsnon-current in Other non-current assets
|
|
|
|
128
|
|
|
|
128
|
|
Total
|
|
129
|
|
877
|
|
|
|
1,006
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
Derivative liabilitiescurrent in Other current liabilities
|
|
3
|
|
199
|
|
|
|
202
|
|
Derivative liabilitiesnon-current in Other non-current liabilities
|
|
|
|
52
|
|
|
|
52
|
|
Total
|
|
3
|
|
251
|
|
|
|
254
|
|
The Company uses the following methods and assumptions in estimating fair values of financial assets and liabilities measured at fair value on a recurring basis:
·
Available-for-sale securities in Cash and equivalents and Marketable securities and short-term investments:
If quoted market prices in active markets for identical assets are available, these are considered Level 1 inputs; however, when markets are not active, these inputs are considered Level 2. If such quoted market prices are not available, fair value is determined using market prices for similar assets or present value techniques, applying an appropriate risk-free interest rate adjusted for nonperformance risk. The inputs used in present value techniques are observable and fall into the Level 2 category.
·
Derivatives:
The fair values of derivative instruments are determined using quoted prices of identical instruments from an active market, if available (Level 1). If quoted prices are not available, price quotes for similar instruments, appropriately adjusted, or present value techniques, based on available market data, or option pricing models are used. Cash-settled call options hedging the Companys WAR liability are valued based on bid prices of the equivalent listed warrant. The fair values obtained using price quotes for similar instruments or valuation techniques represent a Level 2 input unless significant unobservable inputs are used.
Non-recurring fair value measures
There were no significant non-recurring fair value measurements during the six and three months ended June 30, 2014 and 2013.
26
Notes to the Interim Consolidated Financial Information (unaudited)
Disclosure about financial instruments carried on a cost basis
The fair values of financial instruments carried on a cost basis were as follows:
|
|
June 30, 2014
|
|
($ in millions)
|
|
Carrying
value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total fair
value
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
Cash and equivalents (excluding available-for-sale securities with original maturities up to 3 months):
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
2,282
|
|
2,282
|
|
|
|
|
|
2,282
|
|
Time deposits
|
|
2,558
|
|
|
|
2,558
|
|
|
|
2,558
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketable securities and short-term investments (excluding available-for-sale securities):
|
|
|
|
|
|
|
|
|
|
|
|
Time deposits
|
|
2
|
|
|
|
2
|
|
|
|
2
|
|
Receivables under reverse repurchase agreements
|
|
273
|
|
|
|
273
|
|
|
|
273
|
|
Other short-term investments
|
|
9
|
|
9
|
|
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other non-current assets:
|
|
|
|
|
|
|
|
|
|
|
|
Loans granted
|
|
47
|
|
|
|
50
|
|
|
|
50
|
|
Held-to-maturity securities
|
|
92
|
|
|
|
111
|
|
|
|
111
|
|
Restricted cash and cash deposits
|
|
193
|
|
76
|
|
155
|
|
|
|
231
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
Short-term debt and current maturities of long-term debt (excluding finance lease liabilities)
|
|
1,215
|
|
137
|
|
1,078
|
|
|
|
1,215
|
|
Long-term debt (excluding finance lease liabilities)
|
|
7,497
|
|
7,743
|
|
28
|
|
|
|
7,771
|
|
Non-current deposit liabilities in Other non-current liabilities
|
|
206
|
|
|
|
266
|
|
|
|
266
|
|
|
|
December 31, 2013
|
|
($ in millions)
|
|
Carrying
value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total fair
value
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
Cash and equivalents (excluding available-for-sale securities with original maturities up to 3 months):
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
2,414
|
|
2,414
|
|
|
|
|
|
2,414
|
|
Time deposits
|
|
3,538
|
|
|
|
3,538
|
|
|
|
3,538
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketable securities and short-term investments (excluding available-for-sale securities):
|
|
|
|
|
|
|
|
|
|
|
|
Time deposits
|
|
18
|
|
|
|
18
|
|
|
|
18
|
|
Other short-term investments
|
|
9
|
|
9
|
|
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other non-current assets:
|
|
|
|
|
|
|
|
|
|
|
|
Loans granted
|
|
54
|
|
|
|
52
|
|
|
|
52
|
|
Held-to-maturity securities
|
|
104
|
|
|
|
121
|
|
|
|
121
|
|
Restricted cash and cash deposits
|
|
276
|
|
95
|
|
219
|
|
|
|
314
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
Short-term debt and current maturities of long-term debt (excluding finance lease liabilities)
|
|
424
|
|
107
|
|
317
|
|
|
|
424
|
|
Long-term debt (excluding finance lease liabilities)
|
|
7,475
|
|
7,540
|
|
34
|
|
|
|
7,574
|
|
Non-current deposit liabilities in Other non-current liabilities
|
|
279
|
|
|
|
338
|
|
|
|
338
|
|
27
Notes to the Interim Consolidated Financial Information (unaudited)
The Company uses the following methods and assumptions in estimating fair values of financial instruments carried on a cost basis:
·
Cash and equivalents (excluding available-for-sale debt securities with original maturities up to 3 months), and Marketable securities and short-term investments (excluding available-for-sale securities):
The carrying amounts approximate the fair values as the items are short-term in nature.
·
Other non-current assets:
Includes (i) loans granted whose fair values are based on the carrying amount adjusted using a present value technique to reflect a premium or discount based on current market interest rates (Level
2 inputs), (ii) held-to-maturity securities (see Note 4) whose fair values are based on quoted market prices in inactive markets (Level 2 inputs), (iii) restricted cash whose fair values approximate the carrying amounts (Level 1) and (iv) cash deposits pledged in respect of certain non-current deposit liabilities whose fair values are determined using a discounted cash flow methodology based on current market interest rates (Level 2 inputs).
·
Short-term debt and current maturities of long-term debt (excluding finance lease liabilities):
Includes commercial paper, bank borrowings and overdrafts. The carrying amounts of short-term debt and current maturities of long-term debt, excluding finance lease liabilities, approximate their fair values.
·
Long-term debt (excluding finance lease liabilities):
Fair values of outstanding bonds are determined using quoted market prices (Level
1 inputs). The fair values of other debt are determined using a discounted cash flow methodology based upon borrowing rates of similar debt instruments and reflecting appropriate adjustments for non-performance risk (Level 2 inputs).
·
Non-current deposit liabilities in Other non-current liabilities:
The fair values of non-current deposit liabilities are determined using a discounted cash flow methodology based on risk-adjusted interest rates (Level
2 inputs).
Note 7. Debt
The Companys total debt at June 30, 2014, and December 31, 2013, amounted to $8,827 million and $8,023 million, respectively.
Short-term debt and current maturities of long-term debt
The Companys Short-term debt and current maturities of long-term debt consisted of the following:
($ in millions)
|
|
June 30, 2014
|
|
December 31, 2013
|
|
Short-term debt
|
|
1,185
|
|
423
|
|
Current maturities of long-term debt
|
|
57
|
|
30
|
|
Total
|
|
1,242
|
|
453
|
|
Short-term debt primarily represents issued commercial paper and short-term loans from various banks. At June 30, 2014, and December 31, 2013, the principal amount outstanding under the United States commercial paper program was $845 million and $100 million, respectively.
Long-term debt
The Companys long-term debt at June 30, 2014, and December 31, 2013, amounted to $7,585 million and $7,570 million, respectively.
28
Notes to the Interim Consolidated Financial Information (unaudited)
Note 8. Commitments and contingencies
ContingenciesEnvironmental
The Company is engaged in environmental clean-up activities at certain sites arising under various United States and other environmental protection laws and under certain agreements with third parties. In some cases, these environmental remediation actions are subject to legal proceedings, investigations or claims, and it is uncertain to what extent the Company is actually obligated to perform. Provisions for these unresolved matters have been set up if it is probable that the Company has incurred a liability and the amount of loss can be reasonably estimated. The lower end of an estimated range is accrued when a single best estimate is not determinable. The required amounts of the provisions may change in the future as developments occur.
If a provision has been recognized for any of these matters, the Company records an asset when it is probable that it will recover a portion of the costs expected to be incurred to settle them. Management is of the opinion, based upon information presently available, that the resolution of any such obligation and non-collection of recoverable costs would not have a further material adverse effect on the Companys consolidated financial statements.
The Company is involved in the remediation of environmental contamination at present or former facilities, primarily in the United States. The clean-up of these sites involves primarily soil and groundwater contamination. A significant portion of the provisions in respect of these contingencies reflects the provisions of acquired companies. A portion of one of the acquired entities remediation liability is indemnified by a prior owner. Accordingly, an asset equal to that portion of the remediation liability is included in Other non-current assets.
Environmental provisions included in the Companys Consolidated Balance Sheets were as follows:
($ in millions)
|
|
June 30, 2014
|
|
December 31, 2013
|
|
Other provisions
|
|
33
|
|
37
|
|
Other non-current liabilities
|
|
111
|
|
116
|
|
Total environmental provisions
|
|
144
|
|
153
|
|
Provisions for the above estimated losses have not been discounted as the timing of payments cannot be reasonably estimated.
ContingenciesRegulatory, Compliance and Legal
Antitrust
In April 2014, the European Commission announced its decision regarding its investigation of anticompetitive practices in the cables industry and granted the Company full immunity from fines under the European Commissions leniency program. In December 2013, the Company agreed with the Brazilian Antitrust Authority (CADE) to settle its ongoing investigation into the Companys involvement in anticompetitive practices in the cables industry and the Company agreed to pay a fine of approximately 1.5 million Brazilian reals (equivalent to approximately $1 million on date of payment). The Companys cables business remains under investigation for alleged anticompetitive practices in certain other jurisdictions. An informed judgment about the outcome of these remaining investigations or the amount of potential loss or range of loss for the Company, if any, relating to these remaining investigations cannot be made at this stage.
In Brazil, the Companys Gas Insulated Switchgear business is under investigation by the CADE for alleged anticompetitive practices. In addition, the CADE has opened an investigation into certain other power businesses of the Company, including flexible alternating current transmission systems (FACTS) and power transformers. An informed judgment about the outcome of these investigations or the amount of potential loss or range of loss for the Company, if any, relating to these investigations cannot be made at this stage.
In Italy, one of the Companys recently acquired subsidiaries was raided in October 2013 by the Italian Antitrust Agency for alleged anticompetitive practices. In July 2014, the Company received the decision of
29
Notes to the Interim Consolidated Financial Information (unaudited)
the Italian Antitrust Agency regarding this matter. The agency closed its investigation without imposing a fine and accepted the non-financial commitments offered by the Company.
With respect to those aforementioned matters which are still ongoing, management is cooperating fully with the antitrust authorities.
Suspect payments
In April 2005, the Company voluntarily disclosed to the United States Department of Justice (DoJ) and the United States Securities and Exchange Commission (SEC) certain suspect payments in its network management unit in the United States. Subsequently, the Company made additional voluntary disclosures to the DoJ and the SEC regarding suspect payments made by other Company subsidiaries in a number of countries in the Middle East, Asia, South America and Europe (including to an employee of an Italian power generation company) as well as by its former Lummus business. These payments were discovered by the Company as a result of the Companys internal audit program and compliance reviews.
In September 2010, the Company reached settlements with the DoJ and the SEC regarding their investigations into these matters and into suspect payments involving certain of the Companys subsidiaries in the United Nations Oil-for-Food Program. In connection with these settlements, the Company agreed to make payments to the DoJ and SEC totaling $58 million, which were settled in the fourth quarter of 2010. One subsidiary of the Company pled guilty to one count of conspiracy to violate the anti-bribery provisions of the U.S. Foreign Corrupt Practices Act and one count of violating those provisions. The Company entered into a deferred prosecution agreement and settled civil charges brought by the SEC. These settlements resolved the foregoing investigations. In lieu of an external compliance monitor, the DoJ and SEC agreed to allow the Company to report on its continuing compliance efforts and the results of the review of its internal processes through September 2013. Further to the Fraud Section of the DoJ determining that the Company had fully complied with all its obligations under the deferred prosecution agreement, on October 1, 2013, the competent court in the U.S. agreed to dismiss all criminal charges against the Company in relation to these matters.
General
In addition, the Company is aware of proceedings, or the threat of proceedings, against it and others in respect of private claims by customers and other third parties with regard to certain actual or alleged anticompetitive practices. Also, the Company is subject to other various legal proceedings, investigations, and claims that have not yet been resolved. With respect to the above-mentioned regulatory matters and commercial litigation contingencies, the Company will bear the costs of the continuing investigations and any related legal proceedings.
Liabilities recognized
At June 30, 2014, and December 31, 2013, the Company had aggregate liabilities of $193 million and $245 million, respectively, included in Other provisions and Other non-current liabilities, for the above regulatory, compliance and legal contingencies, and none of the individual liabilities recognized was significant. As it is not possible to make an informed judgment on the outcome of certain matters and as it is not possible, based on information currently available to management, to estimate the maximum potential liability on other matters, there could be material adverse outcomes beyond the amounts accrued.
Guarantees
General
The following table provides quantitative data regarding the Companys third-party guarantees. The maximum potential payments represent a worst-case scenario, and do not reflect managements expected results. The carrying amount of liabilities recorded in the Consolidated Balance Sheets reflects the Companys best estimate of future payments, which it may incur as part of fulfilling its guarantee obligations.
|
|
Maximum potential payments
|
|
($ in millions)
|
|
June 30, 2014
|
|
December 31, 2013
|
|
Performance guarantees
|
|
146
|
|
149
|
|
Financial guarantees
|
|
73
|
|
77
|
|
Indemnification guarantees
|
|
50
|
|
50
|
|
Total
|
|
269
|
|
276
|
|
30
Notes to the Interim Consolidated Financial Information (unaudited)
In respect of the above guarantees, the carrying amounts of liabilities at June 30, 2014, and December 31, 2013, were not significant.
Performance guarantees
Performance guarantees represent obligations where the Company guarantees the performance of a third partys product or service according to the terms of a contract. Such guarantees may include guarantees that a project will be completed within a specified time. If the third party does not fulfill the obligation, the Company will compensate the guaranteed party in cash or in kind. Performance guarantees include surety bonds, advance payment guarantees and standby letters of credit. The significant performance guarantees are described below.
The Company retained obligations for guarantees related to the Power Generation business contributed in mid-1999 to the former ABB Alstom Power NV joint venture (Alstom Power NV). The guarantees primarily consist of performance guarantees and other miscellaneous guarantees under certain contracts such as indemnification for personal injuries and property damages, taxes and compliance with labor laws, environmental laws and patents. These guarantees have no fixed expiration date. In May 2000, the Company sold its interest in Alstom Power NV to Alstom SA (Alstom). As a result, Alstom and its subsidiaries have primary responsibility for performing the obligations that are the subject of the guarantees. Further, Alstom, the parent company and Alstom Power NV, have undertaken jointly and severally to fully indemnify and hold harmless the Company against any claims arising under such guarantees. Managements best estimate of the total maximum potential amount payable of quantifiable guarantees issued by the Company on behalf of its former Power Generation business was $65 million at both June 30, 2014, and December 31, 2013, and is subject to foreign exchange fluctuations. The Company has not experienced any losses related to guarantees issued on behalf of the former Power Generation business.
The Company is engaged in executing a number of projects as a member of consortia that include third parties. In certain of these cases, the Company guarantees not only its own performance but also the work of third parties. The original maturity dates of these guarantees range from one to six years. At June 30, 2014, and December 31, 2013, the maximum potential amount payable under these guarantees as a result of third-party non-performance was $68 million and $70 million, respectively.
Financial guarantees and commercial commitments
Financial guarantees represent irrevocable assurances that the Company will make payment to a beneficiary in the event that a third party fails to fulfill its financial obligations and the beneficiary under the guarantee incurs a loss due to that failure.
At June 30, 2014, and December 31, 2013, the Company had a maximum potential amount payable of $73 million and $77 million, respectively, under financial guarantees outstanding. Of these amounts, $12 million and $15 million, respectively, was in respect of guarantees issued on behalf of companies in which the Company formerly had or has an equity interest. The guarantees outstanding have various maturity dates up to 2020.
In addition, in the normal course of bidding for and executing certain projects, the Company has entered into standby letters of credit, bid/performance bonds and surety bonds (collectively performance bonds) with various financial institutions. Customers can draw on such performance bonds in the event that the Company does not fulfill its contractual obligations. The Company would then have an obligation to reimburse the financial institution for amounts paid under the performance bonds. There have been no significant amounts reimbursed to financial institutions under these types of arrangements during the six and three months ended June 30, 2014 and 2013.
Indemnification guarantees
The Company has indemnified certain purchasers of divested businesses for potential claims arising from the operations of the divested businesses. To the extent the maximum potential loss related to such indemnifications could not be calculated, no amounts have been included under maximum potential payments in the table above. Indemnifications for which maximum potential losses could not be calculated include indemnifications for legal claims. The significant indemnification guarantees for which maximum potential losses could be calculated are described below.
The Company issued to the purchasers of Lummus Global guarantees related to assets and liabilities divested in 2007. The maximum potential amount payable relating to this business, pursuant to the sales agreement, at each of June 30, 2014, and December 31, 2013, was $50 million.
31
Notes to the Interim Consolidated Financial Information (unaudited)
Product and order-related contingencies
The Company calculates its provision for product warranties based on historical claims experience and specific review of certain contracts.
The reconciliation of the Provisions for warranties, including guarantees of product performance, was as follows:
($ in millions)
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
Balance at January 1,
|
|
1,362
|
|
1,291
|
|
Claims paid in cash or in kind
|
|
(153
|
)
|
(126
|
)
|
Net increase in provision for changes in estimates, warranties issued and warranties expired
|
|
64
|
|
87
|
|
Exchange rate differences
|
|
(17
|
)
|
(33
|
)
|
Balance at June 30,
|
|
1,256
|
|
1,219
|
|
Note 9. Employee benefits
The Company operates defined benefit and defined contribution pension plans and termination indemnity plans, in accordance with local regulations and practices. These plans cover a large portion of the Companys employees and provide benefits to employees in the event of death, disability, retirement, or termination of employment. Certain of these plans are multi-employer plans. The Company also operates other postretirement benefit plans including postretirement health care benefits, and other employee-related benefits for active employees including long-service award plans. The measurement date used for the Companys employee benefit plans is December 31. The funding policies of the Companys plans are consistent with the local government and tax requirements and several of the plans are not required to be funded according to local government and tax requirements.
Net periodic benefit cost of the Companys defined benefit pension and other postretirement benefit plans consisted of the following:
|
|
Six months ended June 30,
|
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
($ in millions)
|
|
Defined pension
benefits
|
|
Other postretirement
benefits
|
|
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
125
|
|
124
|
|
1
|
|
1
|
|
Interest cost
|
|
208
|
|
184
|
|
5
|
|
4
|
|
Expected return on plan assets
|
|
(246
|
)
|
(237
|
)
|
|
|
|
|
Amortization of prior service cost (credit)
|
|
14
|
|
16
|
|
(4
|
)
|
(4
|
)
|
Amortization of net actuarial loss
|
|
48
|
|
63
|
|
|
|
2
|
|
Curtailments, settlements and special termination benefits
|
|
1
|
|
|
|
|
|
|
|
Net periodic benefit cost
|
|
150
|
|
150
|
|
2
|
|
3
|
|
32
Notes to the Interim Consolidated Financial Information (unaudited)
|
|
Three months ended June 30,
|
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
($ in millions)
|
|
Defined pension
benefits
|
|
Other postretirement
benefits
|
|
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
61
|
|
62
|
|
1
|
|
1
|
|
Interest cost
|
|
103
|
|
92
|
|
3
|
|
2
|
|
Expected return on plan assets
|
|
(122
|
)
|
(119
|
)
|
|
|
|
|
Amortization of prior service cost (credit)
|
|
7
|
|
8
|
|
(2
|
)
|
(2
|
)
|
Amortization of net actuarial loss
|
|
22
|
|
30
|
|
|
|
1
|
|
Curtailments, settlements and special termination benefits
|
|
1
|
|
|
|
|
|
|
|
Net periodic benefit cost
|
|
72
|
|
73
|
|
2
|
|
2
|
|
Employer contributions were as follows:
|
|
Six months ended June 30,
|
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
($ in millions)
|
|
Defined pension
benefits
|
|
Other postretirement
benefits
|
|
|
|
|
|
|
|
|
|
|
|
Total contributions to defined benefit pension and other postretirement benefit plans
|
|
200
|
|
123
|
|
7
|
|
7
|
|
Of which, discretionary contributions to defined benefit pension plans
|
|
75
|
|
|
|
|
|
|
|
|
|
Three months ended June 30,
|
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
($ in millions)
|
|
Defined pension
benefits
|
|
Other postretirement
benefits
|
|
|
|
|
|
|
|
|
|
|
|
Total contributions to defined benefit pension and other postretirement benefit plans
|
|
69
|
|
63
|
|
4
|
|
3
|
|
Of which, discretionary contributions to defined benefit pension plans
|
|
|
|
|
|
|
|
|
|
During the six months ended June 30, 2014, discretionary contributions included available-for-sale debt securities, having a fair value at the contribution date of $25 million, to certain of the Companys pension plans in the United Kingdom.
The Company expects to make contributions totaling approximately $308 million and $17 million to its defined benefit pension plans and other postretirement benefit plans, respectively, for the full year 2014.
Note 10. Stockholders equity
At the Annual General Meeting of Shareholders in April 2014, shareholders approved the payment of a dividend of 0.70 Swiss francs per share. The dividend was paid in May 2014 and amounted to $1,841 million.
In the second quarter of 2014, the Company purchased on the open market an aggregate of 12 million of its own shares to be held for future delivery in connection with its employee incentive plans. These transactions resulted in an increase in Treasury stock of $282 million.
33
Notes to the Interim Consolidated Financial Information (unaudited)
Note 11. Earnings per share
Basic earnings per share is calculated by dividing income by the weighted-average number of shares outstanding during the period. Diluted earnings per share is calculated by dividing income by the weighted-average number of shares outstanding during the period, assuming that all potentially dilutive securities were exercised, if dilutive. Potentially dilutive securities comprise outstanding written call options and outstanding options and shares granted subject to certain conditions under the Companys share-based payment arrangements.
Basic earnings per share:
|
|
Six months ended
June 30,
|
|
Three months ended
June 30,
|
|
($ in millions, except per share data in $)
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
Amounts attributable to ABB shareholders:
|
|
|
|
|
|
|
|
|
|
Income from continuing operations, net of tax
|
|
1,182
|
|
1,439
|
|
637
|
|
771
|
|
Loss from discontinued operations, net of tax
|
|
(2
|
)
|
(12
|
)
|
(1
|
)
|
(8
|
)
|
Net income
|
|
1,180
|
|
1,427
|
|
636
|
|
763
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of shares outstanding (in millions)
|
|
2,298
|
|
2,296
|
|
2,295
|
|
2,297
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share attributable to ABB shareholders:
|
|
|
|
|
|
|
|
|
|
Income from continuing operations, net of tax
|
|
0.51
|
|
0.63
|
|
0.28
|
|
0.34
|
|
Loss from discontinued operations, net of tax
|
|
|
|
(0.01
|
)
|
|
|
(0.01
|
)
|
Net income
|
|
0.51
|
|
0.62
|
|
0.28
|
|
0.33
|
|
Diluted earnings per share:
|
|
Six months ended
June 30,
|
|
Three months ended
June 30,
|
|
($ in millions, except per share data in $)
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
Amounts attributable to ABB shareholders:
|
|
|
|
|
|
|
|
|
|
Income from continuing operations, net of tax
|
|
1,182
|
|
1,439
|
|
637
|
|
771
|
|
Loss from discontinued operations, net of tax
|
|
(2
|
)
|
(12
|
)
|
(1
|
)
|
(8
|
)
|
Net income
|
|
1,180
|
|
1,427
|
|
636
|
|
763
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of shares outstanding (in millions)
|
|
2,298
|
|
2,296
|
|
2,295
|
|
2,297
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
Call options and shares
|
|
8
|
|
7
|
|
7
|
|
7
|
|
Dilutive weighted-average number of shares outstanding
|
|
2,306
|
|
2,303
|
|
2,302
|
|
2,304
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share attributable to ABB shareholders:
|
|
|
|
|
|
|
|
|
|
Income from continuing operations, net of tax
|
|
0.51
|
|
0.62
|
|
0.28
|
|
0.33
|
|
Loss from discontinued operations, net of tax
|
|
|
|
|
|
|
|
|
|
Net income
|
|
0.51
|
|
0.62
|
|
0.28
|
|
0.33
|
|
34
Notes to the Interim Consolidated Financial Information (unaudited)
Note 12. Reclassifications out of accumulated other comprehensive loss
The following table shows changes in Accumulated other comprehensive loss (OCI) attributable to ABB, by component, net of tax:
($ in millions)
|
|
Foreign
currency
translation
adjustments
|
|
Unrealized
gains (losses)
on available-
for-sale
securities
|
|
Pension and
other
postretirement
plan
adjustments
|
|
Unrealized
gains (losses)
of cash flow
hedge
derivatives
|
|
Total OCI
|
|
Balance at January 1, 2013
|
|
(580
|
)
|
24
|
|
(2,004
|
)
|
37
|
|
(2,523
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive (loss) income before reclassifications
|
|
(490
|
)
|
(4
|
)
|
49
|
|
(3
|
)
|
(448
|
)
|
Amounts reclassified from OCI
|
|
|
|
(7
|
)
|
54
|
|
(16
|
)
|
31
|
|
Total other comprehensive (loss) income
|
|
(490
|
)
|
(11
|
)
|
103
|
|
(19
|
)
|
(417
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
Amounts attributable to noncontrolling interests
|
|
(8
|
)
|
|
|
1
|
|
|
|
(7
|
)
|
Balance at June 30, 2013
|
|
(1,062
|
)
|
13
|
|
(1,902
|
)
|
18
|
|
(2,933
|
)
|
($ in millions)
|
|
Foreign
currency
translation
adjustments
|
|
Unrealized
gains (losses)
on available-
for-sale
securities
|
|
Pension and
other
postretirement
plan
adjustments
|
|
Unrealized
gains (losses)
of cash flow
hedge
derivatives
|
|
Total OCI
|
|
Balance at January 1, 2014
|
|
(431
|
)
|
7
|
|
(1,610
|
)
|
22
|
|
(2,012
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive (loss) income before reclassifications
|
|
(92
|
)
|
4
|
|
(9
|
)
|
(33
|
)
|
(130
|
)
|
Amounts reclassified from OCI
|
|
|
|
(1
|
)
|
42
|
|
5
|
|
46
|
|
Total other comprehensive (loss) income
|
|
(92
|
)
|
3
|
|
33
|
|
(28
|
)
|
(84
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
Amounts attributable to noncontrolling interests
|
|
(4
|
)
|
|
|
|
|
|
|
(4
|
)
|
Balance at June 30, 2014
|
|
(519
|
)
|
10
|
|
(1,577
|
)
|
(6
|
)
|
(2,092
|
)
|
The following table reflects amounts reclassified out of OCI in respect of pension and other postretirement plan adjustments:
|
|
|
|
Six months
|
|
Three months
|
|
($ in millions)
|
|
Location of (gains) losses
|
|
ended June 30,
|
|
ended June 30,
|
|
Details about OCI components
|
|
reclassified from OCI
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension and other postretirement plan adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of prior service costs
|
|
Net periodic benefit cost
(1)
|
|
10
|
|
12
|
|
5
|
|
6
|
|
Amortization of net actuarial losses
|
|
Net periodic benefit cost
(1)
|
|
48
|
|
65
|
|
22
|
|
31
|
|
Total before tax
|
|
|
|
58
|
|
77
|
|
27
|
|
37
|
|
Tax
|
|
Provision for taxes
|
|
(16
|
)
|
(23
|
)
|
(8
|
)
|
(12
|
)
|
Amounts reclassified from OCI
|
|
|
|
42
|
|
54
|
|
19
|
|
25
|
|
(1)
These components are included in the computation of net periodic benefit cost (see Note 9).
The amounts in respect of unrealized gains (losses) on available-for-sale securities and unrealized gains (losses) of cash flow hedge derivatives were not significant for the six and three months ended June 30, 2014 and 2013.
35
Notes to the Interim Consolidated Financial Information (unaudited)
Note 13. Operating segment data
The Chief Operating Decision Maker (CODM) is the Companys Executive Committee. The CODM allocates resources to and assesses the performance of each operating segment using the information outlined below. The Companys operating segments consist of Discrete Automation and Motion, Low Voltage Products, Process Automation, Power Products and Power Systems. The remaining operations of the Company are included in Corporate and Other.
A description of the types of products and services provided by each reportable segment is as follows:
·
Discrete Automation and Motion
:
manufactures and sells motors, generators, variable speed drives, programmable logic controllers, robots and robotics, solar inverters, wind converters, rectifiers, excitation systems, power quality and protection solutions, electric vehicle fast charging infrastructure, components and subsystems for railways, and related services for a wide range of applications in discrete automation, process industries, transportation and utilities.
·
Low Voltage Products:
manufactures products and systems that provide protection, control and measurement for electrical installations, as well as enclosures, switchboards, electronics and electromechanical devices for industrial machines, plants and related service. In addition, the segment manufactures products for wiring and cable management, cable protection systems, power connection and safety. The segment also makes intelligent building control systems for home and building automation.
·
Process Automation:
develops and sells control and plant optimization systems, automation products and solutions, including instrumentation, as well as industry-specific application knowledge and services for the oil, gas and petrochemicals, metals and minerals, marine and turbocharging, pulp and paper, chemical and pharmaceuticals, and power industries.
·
Power Products:
manufactures and sells high- and medium-voltage switchgear and apparatus, circuit breakers for all current and voltage levels, power and distribution transformers and sensors for electric, gas and water utilities and for industrial and commercial customers.
·
Power Systems:
designs, installs and upgrades high-efficiency transmission and distribution systems and power plant automation and electrification solutions, including monitoring and control products, software and services and incorporating components manufactured by both the Company and by third parties.
·
Corporate and Other:
includes headquarters, central research and development, the Companys real estate activities, Group treasury operations and other minor business activities.
The Company evaluates the profitability of its segments based on Operational EBITDA, which represents income from operations excluding depreciation and amortization, restructuring and restructuring-related expenses, gains and losses on sale of businesses, acquisition-related expenses and certain non-operational items, as well as foreign exchange/commodity timing differences in income from operations consisting of: (i) unrealized gains and losses on derivatives (foreign exchange, commodities, embedded derivatives), (ii) realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized, and (iii) unrealized foreign exchange movements on receivables/payables (and related assets/liabilities).
The CODM primarily reviews the results of each segment on a basis that is before the elimination of profits made on inventory sales between segments. Segment results below are presented before these eliminations, with a total deduction for intersegment profits to arrive at the Companys consolidated Operational EBITDA. Intersegment sales and transfers are accounted for as if the sales and transfers were to third parties, at current market prices.
The following tables present segment revenues, Operational EBITDA, and the reconciliations of consolidated Operational EBITDA to income from continuing operations before taxes for the six and three months ended June 30, 2014 and 2013, as well as total assets at June 30, 2014, and December 31, 2013.
36
Notes to the Interim Consolidated Financial Information (unaudited)
|
|
Six months ended June 30, 2014
|
|
($ in millions)
|
|
Third-party
revenues
|
|
Intersegment
revenues
|
|
Total
revenues
|
|
Discrete Automation and Motion
|
|
4,524
|
|
400
|
|
4,924
|
|
Low Voltage Products
|
|
3,611
|
|
207
|
|
3,818
|
|
Process Automation
|
|
3,853
|
|
102
|
|
3,955
|
|
Power Products
|
|
4,260
|
|
793
|
|
5,053
|
|
Power Systems
|
|
3,235
|
|
183
|
|
3,418
|
|
Corporate and Other
|
|
178
|
|
832
|
|
1,010
|
|
Intersegment elimination
|
|
|
|
(2,517
|
)
|
(2,517
|
)
|
Consolidated
|
|
19,661
|
|
|
|
19,661
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, 2013
|
|
($ in millions)
|
|
Third-party
revenues
|
|
Intersegment
revenues
|
|
Total
revenues
|
|
Discrete Automation and Motion
|
|
4,207
|
|
482
|
|
4,689
|
|
Low Voltage Products
|
|
3,518
|
|
188
|
|
3,706
|
|
Process Automation
|
|
3,998
|
|
110
|
|
4,108
|
|
Power Products
|
|
4,321
|
|
949
|
|
5,270
|
|
Power Systems
|
|
3,837
|
|
176
|
|
4,013
|
|
Corporate and Other
|
|
59
|
|
782
|
|
841
|
|
Intersegment elimination
|
|
|
|
(2,687
|
)
|
(2,687
|
)
|
Consolidated
|
|
19,940
|
|
|
|
19,940
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30, 2014
|
|
($ in millions)
|
|
Third-party
revenues
|
|
Intersegment
revenues
|
|
Total
revenues
|
|
Discrete Automation and Motion
|
|
2,330
|
|
213
|
|
2,543
|
|
Low Voltage Products
|
|
1,827
|
|
109
|
|
1,936
|
|
Process Automation
|
|
1,962
|
|
50
|
|
2,012
|
|
Power Products
|
|
2,264
|
|
398
|
|
2,662
|
|
Power Systems
|
|
1,703
|
|
107
|
|
1,810
|
|
Corporate and Other
|
|
104
|
|
421
|
|
525
|
|
Intersegment elimination
|
|
|
|
(1,298
|
)
|
(1,298
|
)
|
Consolidated
|
|
10,190
|
|
|
|
10,190
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30, 2013
|
|
($ in millions)
|
|
Third-party
revenues
|
|
Intersegment
revenues
|
|
Total
revenues
|
|
Discrete Automation and Motion
|
|
2,122
|
|
240
|
|
2,362
|
|
Low Voltage Products
|
|
1,837
|
|
92
|
|
1,929
|
|
Process Automation
|
|
2,077
|
|
53
|
|
2,130
|
|
Power Products
|
|
2,287
|
|
494
|
|
2,781
|
|
Power Systems
|
|
1,870
|
|
92
|
|
1,962
|
|
Corporate and Other
|
|
32
|
|
385
|
|
417
|
|
Intersegment elimination
|
|
|
|
(1,356
|
)
|
(1,356
|
)
|
Consolidated
|
|
10,225
|
|
|
|
10,225
|
|
37
Notes to the Interim Consolidated Financial Information (unaudited)
|
|
Six months ended
June 30,
|
|
Three months ended
June 30,
|
|
($ in millions)
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
Operational EBITDA:
|
|
|
|
|
|
|
|
|
|
Discrete Automation and Motion
|
|
838
|
|
844
|
|
443
|
|
428
|
|
Low Voltage Products
|
|
710
|
|
687
|
|
364
|
|
367
|
|
Process Automation
|
|
512
|
|
511
|
|
248
|
|
252
|
|
Power Products
|
|
747
|
|
781
|
|
393
|
|
409
|
|
Power Systems
|
|
(53
|
)
|
328
|
|
(24
|
)
|
159
|
|
Corporate and Other and Intersegment elimination
|
|
(152
|
)
|
(132
|
)
|
(93
|
)
|
(54
|
)
|
Consolidated Operational EBITDA
|
|
2,602
|
|
3,019
|
|
1,331
|
|
1,561
|
|
Depreciation and amortization
|
|
(666
|
)
|
(639
|
)
|
(333
|
)
|
(318
|
)
|
Restructuring and restructuring-related expenses
|
|
(87
|
)
|
(54
|
)
|
(40
|
)
|
(35
|
)
|
Gains and losses on sale of businesses, acquisition-related expenses and certain non-operational items
|
|
103
|
|
(32
|
)
|
114
|
|
(28
|
)
|
Foreign exchange/commodity timing differences in income from operations:
|
|
|
|
|
|
|
|
|
|
Unrealized gains and losses on derivatives (foreign exchange, commodities, embedded derivatives)
|
|
(89
|
)
|
(77
|
)
|
(34
|
)
|
12
|
|
Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized
|
|
10
|
|
(11
|
)
|
(7
|
)
|
(3
|
)
|
Unrealized foreign exchange movements on receivables/payables (and related assets/liabilities)
|
|
34
|
|
34
|
|
21
|
|
(1
|
)
|
Income from operations
|
|
1,907
|
|
2,240
|
|
1,052
|
|
1,188
|
|
Interest and dividend income
|
|
38
|
|
35
|
|
21
|
|
17
|
|
Interest and other finance expense
|
|
(172
|
)
|
(177
|
)
|
(88
|
)
|
(80
|
)
|
Income from continuing operations before taxes
|
|
1,773
|
|
2,098
|
|
985
|
|
1,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
(1)
|
|
($ in millions)
|
|
|
|
|
|
June 30, 2014
|
|
December 31, 2013
|
|
Discrete Automation and Motion
|
|
|
|
|
|
10,422
|
|
10,931
|
|
Low Voltage Products
|
|
|
|
|
|
9,192
|
|
9,389
|
|
Process Automation
|
|
|
|
|
|
4,538
|
|
4,537
|
|
Power Products
|
|
|
|
|
|
7,829
|
|
7,669
|
|
Power Systems
|
|
|
|
|
|
7,419
|
|
7,905
|
|
Corporate and Other
|
|
|
|
|
|
7,675
|
|
7,633
|
|
Consolidated
|
|
|
|
|
|
47,075
|
|
48,064
|
|
(1)
Total assets are after intersegment eliminations and therefore reflect third-party assets only.
38
April June 2014 Q2
ABB Ltd announces that the following members of the
Executive Committee
or
Board of Directors
of ABB have purchased, sold or been granted ABBs registered shares, call options and warrant appreciation rights (WARs), in the following amounts:
Name
|
|
Date
|
|
Description
|
|
Granted *
|
|
Purchased
|
|
Sold
|
|
Price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ulrich Spiesshofer
|
|
9.4.2014
|
|
Shares
|
|
21,773
|
|
|
|
|
|
CHF
|
22.86
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diane de Saint Victor
|
|
9.4.2014
|
|
Shares
|
|
26,359
|
|
|
|
|
|
CHF
|
22.86
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frank Duggan
|
|
9.4.2014
|
|
Shares
|
|
14,929
|
|
|
|
|
|
CHF
|
22.86
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tarak Mehta
|
|
9.4.2014
|
|
Shares
|
|
16,948
|
|
|
|
|
|
CHF
|
22.86
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Veli-Matti Reinikkala
|
|
9.4.2014
|
|
Shares
|
|
12,962
|
|
|
|
|
|
CHF
|
22.86
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bernhard Jucker
|
|
9.4.2014
|
|
Shares
|
|
19,428
|
|
|
|
|
|
CHF
|
22.86
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Claudio Facchin
|
|
9.4.2014
|
|
Shares
|
|
8,021
|
|
|
|
|
|
CHF
|
22.86
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hubertus von Grünberg
|
|
16.5.2014
|
|
Shares
|
|
19,563
|
|
|
|
|
|
CHF
|
22.53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roger Agnelli
|
|
16.5.2014
|
|
Shares
|
|
2,359
|
|
|
|
|
|
CHF
|
22.53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Louis R. Hughes
|
|
16.5.2014
|
|
Shares
|
|
3,172
|
|
|
|
|
|
CHF
|
22.53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michel de Rosen
|
|
16.5.2014
|
|
Shares
|
|
2,547
|
|
|
|
|
|
CHF
|
22.53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Treschow
|
|
16.5.2014
|
|
Shares
|
|
2,547
|
|
|
|
|
|
CHF
|
22.53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jacob Wallenberg
|
|
16.5.2014
|
|
Shares
|
|
2,547
|
|
|
|
|
|
CHF
|
22.53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ying Yeh
|
|
16.5.2014
|
|
Shares
|
|
2,391
|
|
|
|
|
|
CHF
|
22.53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Matti Alahuhta
|
|
20.5.2014
|
|
Shares
|
|
|
|
15,000
|
|
|
|
SEK
|
157.30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric Elzvik
|
|
26.5.2014
|
|
Call Options
|
|
221,375
|
|
|
|
|
|
CHF
|
0.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Greg Scheu
|
|
26.5.2014
|
|
Call Options
|
|
221,375
|
|
|
|
|
|
CHF
|
0.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pekka Tiitinen
|
|
26.5.2014
|
|
Call Options
|
|
221,375
|
|
|
|
|
|
CHF
|
0.17
|
|
Key:
* Granted instruments were delivered as part of the ABB Ltd Directors or Executive Committee Members compensation