Supplemental financial information September 30, 2013

Supplemental financial information
September 30, 2013
ABB presents the following financial measures to supplement its Interim Consolidated Financial Information
(unaudited) which is prepared in accordance with United States generally accepted accounting principles
(U.S. GAAP). These supplemental financial measures are, or may be, considered non-GAAP financial
measures as defined in the rules of the U.S. Securities and Exchange Commission (SEC).
While ABB’s management believes that the non-GAAP financial measures herein are useful in evaluating
ABB’s operating results, this information should be considered as supplemental in nature and not as a
substitute for the related financial information prepared in accordance with U.S. GAAP. Therefore these
measures should not be viewed in isolation but considered together with the Interim Consolidated Financial
Information (unaudited) prepared in accordance with U.S. GAAP as of and for the nine and three months
ended September 30, 2013.
Operational EBITDA margin
Definition
Operational EBITDA
Operational EBITDA represents income from operations excluding depreciation and amortization,
restructuring and restructuring-related expenses, and acquisition-related expenses and certain nonoperational 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).
Operational revenues
Operational revenues are total revenues adjusted for foreign exchange/commodity timing differences in total
revenues of: (i) unrealized gains and losses on 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 (and related assets).
Operational EBITDA margin
Operational EBITDA margin is Operational EBITDA as a percentage of Operational revenues.
Page 1 of 10
Supplemental financial information
September 30, 2013
Reconciliation
Nine months ended September 30, 2013
Corporate
and Other
and
Intersegment
elimination Consolidated
Discrete
Automation
and Motion
Low Voltage
Products
Process
Automation
Total revenues
Foreign exchange/commodity
timing differences in total
revenues
Unrealized gains and losses
on derivatives
Realized gains and losses on
derivatives where the
underlying hedged
transaction has not yet
been realized
Unrealized foreign exchange
movements on receivables
(and related assets)
7,228
5,707
6,236
7,962
6,075
(9)
4
6
3
(7)
-
(3)
-
-
9
5
(4)
-
10
1
(2)
(4)
(16)
6
-
(15)
Operational revenues
7,220
5,709
6,247
7,954
6,070
(2,733)
30,467
Income from operations
1,101
809
727
975
340
(388)
3,564
204
241
65
163
135
158
966
7
17
14
38
16
2
94
19
9
2
10
1
51
92
(15)
7
(12)
(12)
(28)
(7)
(67)
1
-
4
4
(3)
-
6
3
(1)
-
(8)
8
-
2
Operational EBITDA
1,320
1,082
800
1,170
469
(184)
4,657
Operational EBITDA
margin (%)
18.3%
19.0%
12.8%
14.7%
7.7%
-
15.3%
($ in millions, except Operational
EBITDA margin in %)
Depreciation and amortization
Restructuring and
restructuringrelated expenses
Acquisition-related expenses
and certain nonoperational items
Foreign exchange/commodity
timing differences in
income from operations
Unrealized gains and losses
on derivatives (foreign
exchange, commodities,
embedded derivatives)
Realized gains and losses on
derivatives where the
underlying hedged
transaction has not yet
been realized
Unrealized foreign exchange
movements on
receivables/payables (and
related assets/liabilities)
Page 2 of 10
Power
Products
Power
Systems
(2,733)
30,475
Supplemental financial information
September 30, 2013
Nine months ended September 30, 2012
Corporate
and Other
and
Intersegment
elimination Consolidated
Discrete
Automation
and Motion
Low Voltage
Products
Process
Automation
Total revenues
Foreign exchange/commodity
timing differences in total
revenues
Unrealized gains and losses
on derivatives
Realized gains and losses on
derivatives where the
underlying hedged
transaction has not yet
been realized
Unrealized foreign exchange
movements on receivables
(and related assets)
6,916
4,668
5,926
7,649
5,580
(2,424)
28,315
5
(13)
(22)
(22)
(91)
(1)
(144)
(1)
-
(3)
2
40
1
39
(3)
6
1
21
7
1
33
Operational revenues
6,917
4,661
5,902
7,650
5,536
(2,423)
28,243
Income from operations
1,098
597
690
949
197
(336)
3,195
192
159
60
155
129
146
841
5
10
7
27
3
3
55
7
104
1
1
3
4
120
(2)
(28)
(22)
(37)
(37)
1
(125)
(1)
-
3
6
41
1
50
1
7
5
23
9
1
46
Operational EBITDA
1,300
849
744
1,124
345
(180)
4,182
Operational EBITDA
margin (%)
18.8%
18.2%
12.6%
14.7%
6.2%
-
14.8%
($ in millions, except Operational
EBITDA margin in %)
Depreciation and amortization
Restructuring and
restructuringrelated expenses
Acquisition-related expenses
and certain nonoperational items
Foreign exchange/commodity
timing differences in
income from operations
Unrealized gains and losses
on derivatives (foreign
exchange, commodities,
embedded derivatives)
Realized gains and losses on
derivatives where the
underlying hedged
transaction has not yet
been realized
Unrealized foreign exchange
movements on
receivables/payables (and
related assets/liabilities)
Page 3 of 10
Power
Products
Power
Systems
Supplemental financial information
September 30, 2013
Three months ended September 30, 2013
Corporate
and Other
and
Intersegment
elimination Consolidated
Discrete
Automation
and Motion
Low Voltage
Products
Process
Automation
Total revenues
Foreign exchange/commodity
timing differences in total
revenues
Unrealized gains and losses
on derivatives
Realized gains and losses on
derivatives where the
underlying hedged
transaction has not yet
been realized
Unrealized foreign exchange
movements on receivables
(and related assets)
2,539
2,001
2,128
2,692
2,062
(20)
(4)
(13)
(19)
(71)
-
(127)
(1)
-
5
-
(6)
-
(2)
8
4
1
(3)
28
1
39
Operational revenues
2,526
2,001
2,121
2,670
2,013
(886)
10,445
403
315
270
346
127
(137)
1,324
74
80
23
53
45
52
327
3
11
2
11
11
2
40
12
4
1
10
-
33
60
(21)
(18)
(11)
(30)
(61)
(3)
(144)
(1)
-
3
(1)
(6)
-
(5)
6
3
1
-
25
1
36
Operational EBITDA
476
395
289
389
141
(52)
1,638
Operational EBITDA
margin (%)
18.8%
19.7%
13.6%
14.6%
7.0%
-
15.7%
($ in millions, except Operational
EBITDA margin in %)
Income from operations
Depreciation and amortization
Restructuring and
restructuringrelated expenses
Acquisition-related expenses
and certain nonoperational items
Foreign exchange/commodity
timing differences in
income from operations
Unrealized gains and losses
on derivatives (foreign
exchange, commodities,
embedded derivatives)
Realized gains and losses on
derivatives where the
underlying hedged
transaction has not yet
been realized
Unrealized foreign exchange
movements on
receivables/payables (and
related assets/liabilities)
Page 4 of 10
Power
Products
Power
Systems
(887)
10,535
Supplemental financial information
September 30, 2013
Three months ended September 30, 2012
Corporate
and Other
and
Intersegment
elimination Consolidated
Discrete
Automation
and Motion
Low Voltage
Products
Process
Automation
Total revenues
Foreign exchange/commodity
timing differences in total
revenues
Unrealized gains and losses
on derivatives
Realized gains and losses on
derivatives where the
underlying hedged
transaction has not yet
been realized
Unrealized foreign exchange
movements on receivables
(and related assets)
2,306
1,880
1,904
2,526
1,901
(772)
9,745
2
(8)
(12)
(19)
(90)
1
(126)
(1)
-
(6)
2
19
1
15
1
4
3
16
17
-
41
Operational revenues
2,308
1,876
1,889
2,525
1,847
(770)
9,675
362
278
224
324
72
(114)
1,146
66
78
20
51
45
47
307
9
5
(1)
8
(1)
1
21
2
20
1
1
-
25
49
(3)
(17)
(14)
(28)
(49)
2
(109)
-
(1)
(1)
3
20
3
24
1
3
4
15
22
-
45
Operational EBITDA
437
366
233
374
109
(36)
1,483
Operational EBITDA
margin (%)
18.9%
19.5%
12.3%
14.8%
5.9%
-
15.3%
($ in millions, except Operational
EBITDA margin in %)
Income from operations
Depreciation and amortization
Restructuring and
restructuringrelated expenses
Acquisition-related expenses
and certain nonoperational items
Foreign exchange/commodity
timing differences in
income from operations
Unrealized gains and losses
on derivatives (foreign
exchange, commodities,
embedded derivatives)
Realized gains and losses on
derivatives where the
underlying hedged
transaction has not yet
been realized
Unrealized foreign exchange
movements on
receivables/payables (and
related assets/liabilities)
Page 5 of 10
Power
Products
Power
Systems
Supplemental financial information
September 30, 2013
Operational EPS
Definition
Operational net income
Operational net income is calculated as Net income attributable to ABB adjusted for the net-of-tax impact
(using the Group’s effective tax rate) of:
i) restructuring and restructuring-related expenses,
ii) acquisition-related expenses and certain non-operational items,
iii) foreign exchange/commodity timing differences in Income from operations consisting of: (a) unrealized
gains and losses on derivatives (foreign exchange, commodities, embedded derivatives), (b) realized
gains and losses on derivatives where the underlying hedged transaction has not yet been realized,
and (c) unrealized foreign exchange movements on receivables/payables (and related
assets/liabilities), and
iv) amortization related to acquisitions.
Amortization related to acquisitions
Amortization expense on intangibles arising upon acquisitions.
Operational EPS
Operational EPS is calculated as Operational net income divided by the weighted-average number of shares
used in determining Basic EPS.
Reconciliation
($ in millions, except per share data in $)
Net income (attributable to ABB)
(2)
Restructuring and restructuring-related expenses
Acquisition-related expenses and certain non-operational items(2)
FX/commodity timing differences in Income from operations(2)
(2)
Amortization related to acquisitions
Operational net income
($ in millions, except per share data in $)
Net income (attributable to ABB)
Restructuring and restructuring-related expenses (2)
Acquisition-related expenses and certain non-operational items(2)
(2)
FX/commodity timing differences in Income from operations
(2)
Amortization related to acquisitions
Operational net income
Nine months ended
September 30, 2013 September 30, 2012
(1)
(1)
EPS
EPS
2,262
0.99
2,100
0.92
67
0.03
40
0.02
66
0.03
87
0.04
(42)
(0.02)
(21)
(0.01)
205
0.09
183
0.08
2,558
1.11
2,389
1.04
Three months ended
September 30, 2013 September 30, 2012
(1)
(1)
EPS
EPS
835
0.36
759
0.33
29
0.01
16
0.01
43
0.02
36
0.02
(82)
(0.04)
(30)
(0.01)
72
0.03
77
0.03
897
0.39
858
0.37
(1) EPS amounts are computed separately, therefore the sum of the per share amounts shown may not equal to the total.
(2) Net of tax at Group effective tax rate.
Page 6 of 10
Supplemental financial information
September 30, 2013
Net debt
Definition
Net debt
Net debt is defined as Total debt less Cash and marketable securities.
Total debt
Total debt is the sum of Short-term debt and current maturities of long-term debt, and Long-term debt.
Cash and marketable securities
Cash and marketable securities is the sum of Cash and equivalents and Marketable securities and shortterm investments.
Reconciliation
September 30, 2013
567
7,553
8,120
December 31, 2012
2,537
7,534
10,071
Cash and equivalents
Marketable securities and short-term investments
Cash and marketable securities
4,296
380
4,676
6,875
1,606
8,481
Net debt
3,444
1,590
($ in millions)
Short-term debt and current maturities of long-term debt
Long-term debt
Total debt
Page 7 of 10
Supplemental financial information
September 30, 2013
Net debt to EBITDA
Definition
Net debt to EBITDA is calculated as Net debt divided by Income from operations adjusted to exclude
depreciation and amortization for the trailing twelve months.
Reconciliation
September 30, 2013
($ in millions)
Net debt (as defined above)
EBITDA
Income from operations for the three months ended:
September 30, 2013
June 30, 2013
March 31, 2013
December 31, 2012
September 30, 2012
June 30, 2012
March 31, 2012
Depreciation and amortization for the three months ended:
September 30, 2013
June 30, 2013
March 31, 2013
December 31, 2012
September 30, 2012
June 30, 2012
March 31, 2012
Total EBITDA for the trailing twelve months
Net debt to EBITDA
Page 8 of 10
December 31, 2012
3,444
1,590
1,324
1,188
1,052
863
-
863
1,146
1,001
1,048
327
318
321
341
5,734
341
307
281
253
5,240
0.6
0.3
Supplemental financial information
September 30, 2013
Net working capital as a percentage of revenues
Definition
Net working capital
Net working capital is the sum of i) receivables, net, ii) inventories, net, and iii) prepaid expenses; less iv)
accounts payable, trade, v) billings in excess of sales, vi) advances from customers, vii) non-trade payables,
and viii) accrued expenses and deferred income.
Adjusted revenues for the trailing twelve months
Adjusted revenues for the trailing twelve months includes total revenues recorded by ABB in the twelve
months preceding the relevant balance sheet date adjusted to estimate the impact of annualizing revenues
of certain acquisitions which were completed in the same trailing twelve month period.
Net working capital as a percentage of revenues
Net working capital as a percentage of revenues is calculated as Net working capital divided by Adjusted
revenues for the trailing twelve months.
Reconciliation
September 30,
2013
2012
($ in millions)
Net working capital:
Receivables, net
Inventories, net
Prepaid expenses
Accounts payable, trade
Billings in excess of sales
Advances from customers
(1)
Non-trade payables
(1)
Accrued expenses and deferred income
Net working capital
12,632
6,634
330
(5,103)
(1,746)
(1,770)
(1,371)
(2,228)
7,378
11,626
6,659
322
(4,697)
(1,924)
(1,795)
(1,390)
(2,098)
6,703
Total revenues for the three months ended:
September 30, 2013 / 2012
June 30, 2013 / 2012
March 31, 2013 / 2012
December 31, 2012 / 2011
(2)
Adjustment to annualize revenues of certain acquisitions
Adjusted revenues for the trailing twelve months
10,535
10,225
9,715
11,021
41,496
9,745
9,663
8,907
10,571
1,519
40,405
Net working capital as a percentage of revenues
17.8%
16.6%
(1) Amount is included within Other current liabilities at September 30, 2013.
(2) Thomas & Betts, acquired in May 2012.
Page 9 of 10
Supplemental financial information
September 30, 2013
Finance net
Definition
Finance net is calculated as Interest and dividend income less Interest and other finance expense.
Reconciliation
Nine months ended September 30,
2013
2012
50
55
(299)
(238)
(249)
(183)
($ in millions)
Interest and dividend income
Interest and other finance expense
Finance net
Three months ended September 30,
2013
2012
15
17
(122)
(94)
(107)
(77)
($ in millions)
Interest and dividend income
Interest and other finance expense
Finance net
Book-to-bill ratio
Definition
Book-to-bill ratio is calculated as Orders received divided by Total revenues.
Reconciliation
Nine months ended
September 30, 2013
28,893
30,475
($ in millions)
Orders received
Total revenues
Book-to-bill ratio
0.95
Page 10 of 10