UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT
TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of October 2017
Commission File Number 001-16429
ABB Ltd
(Translation of registrant’s name into English)
P.O. Box 1831,
Affolternstrasse 44, CH-8050, Zurich, Switzerland
(Address of principal executive office)
Indicate
by check mark whether the registrant files or will file annual reports under
cover of Form 20-F or Form 40-F.
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1):
⬜
Note:
Regulation S-T
Rule 101(b)(1) only permits the submission in paper of a Form 6-K if
submitted solely to provide an attached annual report to security holders.
Indication
by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7):
⬜
Note:
Regulation S-T
Rule 101(b)(7) only permits the submission in paper of a
Form 6-K if submitted to furnish a report or other document that the
registrant foreign private issuer must furnish and make public under the laws
of the jurisdiction in which the registrant is incorporated, domiciled or
legally organized (the registrant’s “home country”), or under the rules of
the home country exchange on which the registrant’s securities are traded, as
long as the report or other document is not a press release, is not required to
be and has not been distributed to the registrant’s security holders, and, if
discussing a material event, has already been the subject of a Form 6-K
submission or other Commission filing on EDGAR.
Indicate
by check mark whether the registrant by furnishing the information contained in
this Form is also thereby furnishing the information to the Commission
pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
If
“Yes” is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82-
This
Form 6-K consists of the following:
1.
Press
release issued by ABB Ltd dated October 26, 2017 titled “ABB: Continuing
growth”.
2.
Q3
2017 Financial Information.
3. Announcements
regarding transactions in ABB Ltd’s Securities made by the directors or the
members of the Executive Committee.
The
information provided by Item 2 above is incorporated by reference into ABB
Ltd's registration statement on Form F-3 (File No. 333-180922) and registration
statements on Form S-8 (File Nos. 333-190180, 333-181583, 333-179472,
333-171971 and 333-129271) each of which was previously filed with the
Securities and Exchange Commission.
2
Zurich,
Switzerland, October 26, 2017: third quarter highlights
ABB:
Continuing growth
−
Total orders up 5%
1
;
base orders up 6%; higher in all regions
−
Services and
software orders up 11%; ABB Ability
TM
driving momentum
−
Revenues up 3%
−
Operational EBITA
margin
2
up to 12.9%
−
Net income $571
million; operational EPS +7%
3
−
Cash flow from operating
activities $954 million
−
Net
working capital as a percentage of revenues stable, impacted by B&R
acquisition and HV cables divestiture
−
B&R acquisition
closed July 6; integration on track
−
Leadership position
in electrification to be strengthened by GE Industrial Solutions acquisition
“We continue to build growth momentum across all regions,
with total orders growing 5 percent and revenues up 3 percent in Q3, while
continuing with the business model transformation in Power Grids,” said ABB CEO
Ulrich Spiesshofer. “The combination of a stronger market orientation and a
focus on high-growth segments, such as electric vehicle charging, robotics and
food and beverage, is paying off.”
“The Electrification Products and Robotics and Motion
divisions improved margins sequentially, and Industrial Automation and Power
Grids delivered solid operational performance in the quarter,” he said. “The
integration of B&R is progressing well and, with the recently announced
acquisition of GE Industrial Solutions, we are firming up our number 2 position
globally in electrification and have a clear plan to execute our value creation
ambition.”
“Going forward, we will maintain our primary focus on
profitable organic growth. We will continue to do our homework and take the
appropriate actions to successfully complete our transition year of 2017,” he
added. “We are further de-risking our portfolio and continuing to shift our
center of gravity to higher growth segments and enhanced competitiveness.”
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KEY
FIGURES
|
|
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CHANGE
|
|
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CHANGE
|
($ in millions, unless
otherwise indicated)
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Q3 2017
|
Q3 2016
|
US$
|
Comparable
1
|
9M 2017
|
9M 2016
|
US$
|
Comparable
1
|
Orders
|
8,157
|
7,533
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+8%
|
+5%
|
24,909
|
25,102
|
-1%
|
+1%
|
Revenues
|
8,724
|
8,255
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+6%
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+3%
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25,032
|
24,835
|
+1%
|
+2%
|
Operational
EBITA
2
|
1,124
|
1,063
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+6%
|
+3%
4
|
3,109
|
3,134
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-1%
|
0%
4
|
as
% of operational revenues
|
12.9%
|
12.8%
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+0.1pts
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12.5%
|
12.6%
|
-0.1pts
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Net
income
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571
|
568
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+1%
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1,820
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1,474
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+23%
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Basic
EPS ($)
|
0.27
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0.27
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+1%
3
|
|
0.85
|
0.68
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+24%
3
|
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Operational
EPS
2
($)
|
0.34
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0.33
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+4%
3
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+7%
3
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0.92
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0.96
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-4%
3
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-2%
3
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Cash
flow from operating activities
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954
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1,081
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-12%
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1,930
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2,415
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-20%
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Short-term outlook
While
uncertainties prevail, macroeconomic signs are trending positively in Europe
and the United States, with growth expected to continue in China. The overall
global market shows modest growth and is impacted by geopolitical tensions in
various parts of the world. Oil prices and foreign exchange translation effects
are expected to continue to influence the company’s results. 2017 remains a
transition year for ABB.
______
1
Growth
rates for orders, base orders, revenues and order backlog are on a comparable
basis (local currency adjusted for acquisitions and divestitures). US$ growth
rates are presented in Key Figures table.
2
For a
reconciliation of non-GAAP measures, see “Supplemental Reconciliations and
Definitions” in the attached Q3 2017 Financial Information.
3
EPS
growth rates are computed using unrounded amounts. Comparable operational
earnings per share is in constant currency (2014 exchange rates and not
adjusted for changes in the business portfolio).
4
Constant
currency (not
adjusted for
portfolio
changes).
Q3
2017
G
roup results
Orders
Total
orders were up 5 percent (8 percent in US dollars) compared with the third
quarter a year ago, reflecting solid base order development across all
divisions and regions. Base orders (classified as orders below $15 million)
increased 6 percent (10 percent in US dollars). Large orders were 5 percent
lower (4 percent in US dollars) and represented 9 percent of total orders,
compared with 11 percent a year earlier, reflecting the continued change in
ABB’s business model. The
US dollar versus the prior-year period resulted in a flat translation impact on
reported total orders of 0 percent. Changes in the business portfolio related
to the acquisition of B&R and the divestiture of HV cables as well as
business model changes had a net positive 3 percent impact on total reported
orders.
Total
services and software orders rose 11 percent (12 percent in US dollars) and
were 18 percent of total orders, compared to 17 percent a year ago.
The
order backlog at the end of September 2017 amounted to $23,424 million, 1
percent lower (5 percent in US dollars) compared with the end of September
2016. The book-to-bill
2
ratio in the third quarter was 0.94x,
compared with 0.91x in the third quarter of 2016.
Market
overview
Demand
patterns in all of ABB’s
regions were
positive in the quarter:
•
Europe
benefited from positive market
developments in industry, transport & infrastructure and the timing of
large capital investments. Total orders improved 8 percent (18 percent in US
dollars), with positive contributions from the United Kingdom, France and Norway
more than offsetting declines in Germany and Sweden. In the UK, a $130 million
order was won to provide power transmission infrastructure for the new Hinkley
Point C power plant, along with a $60 million order to reinforce the power
network connecting the station to the national grid. Base orders improved 2
percent (13 percent in US dollars), with Spain, France, Norway and Turkey as
the main contributors.
•
The Americas
was positive, driven by increased demand for automation in general and the need
for energy-efficient solutions for industry and transport & infrastructure.
Total orders grew 4 percent in the quarter (6 percent in US dollars), with base
orders improving 3 percent (5 percent in US dollars), primarily on higher
demand in the United States, Brazil and Canada. The United States grew total
and base orders 3 percent (4 percent in US dollars).
•
Asia, Middle
East and Africa (AMEA) total orders grew 2
percent (2 percent in US dollars), driven primarily by substantial growth in
UAE, South Africa and Australia, while Saudi Arabia was down. Total orders in
China declined slightly, as 10 percent base order growth (12 percent in US
dollars) could not make up for lower large order awards. Underlying drivers in
India remained positive; however, they were offset by the effects of the new
nationwide goods and services tax implementation. Base
orders for AMEA increased 12 percent (11 percent in US dollars),
with positive contributions from China, Australia and UAE.
Demand
patterns in ABB’s three major customer sectors were positive:
•
Utilities
continued their selective investments, adding new capacity in emerging markets,
upgrading the aging power infrastructure in mature markets and integrating
renewable energy globally. They are also investing in automation and control
solutions to enhance the stability of the grid.
•
In industry,
investments in robotics and machinery automation solutions
for the automotive sector and general
industry remained positive. Process industries, especially oil and gas,
remained subdued overall, with selective investments primarily in service and
productivity improvements.
•
Transport &
infrastructure
demand
has been mixed. Demand for
building automation solutions
as well as
solutions involving energy efficiency remained strong, while the marine sector,
except for cruise ships, suffered due to the subdued container vessel and oil
and gas sector. Data centers and electric vehicle charging remained a highlight
in the quarter.
ABB:
CONTINUING GROWTH
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2/6
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Revenues
Revenues
increased 3 percent (6 percent in US dollars) in the third quarter and were
higher in Electrification Products, Robotics and Motion and Industrial
Automation, with Power Grids slightly lower year-on-year. Total services and
software revenues were 2 percent higher (2 percent in US dollars) and
represented 17 percent of total revenues, compared with 18 percent a year ago.
A weaker US dollar versus the prior-year period resulted in a positive
translation impact on reported revenues of 2 percent. Changes in the business portfolio
related to the acquisition of B&R and the divestiture of HV cables as well
as business model changes had a net positive 1 percent impact on reported revenues.
Operational
EBITA
Operational
EBITA
was $1,124 million, 3 percent higher in constant currency terms (6 percent in
US dollars). Operational EBITA margin was 12.9 percent, 0.1 percent higher
compared with the same period a year ago.
Operational EBITA margin improved in Industrial Automation and Power Grids year
on year but decreased slightly in the Electrification Products and Robotics and
Motion divisions, while being sequentially up compared to Q2 2017. Operational
EBITA was impacted by the positive net savings effect and positive volume
contribution, which more than offset commodity price increases and investments
in growth and business transformation.
A weaker US dollar versus the prior year period
resulted in a positive translation impact; additionally, the acquisition of
B&R and the divestiture of high-voltage cables had a positive operational
EBITA effect.
Net income,
basic and operational
earnings per
share
Net
income increased to $571 million from $568 million, and basic earnings per
share was unchanged at $0.27 compared to the same quarter a year ago.
Operational EPS was $0.34, compared to $0.33 for the same quarter of 2016, an
increase of 7 percent in constant currency terms.
3
Net income was
aided by a positive operational contribution, partially offset by higher
restructuring and restructuring-related expenses, more acquisition-related
expenses and certain non-operational items, compared with the same period a
year ago.
Cash
flow from operating
activities
Cash
flow
from operating activities was
$954 million, compared with $1,081 million in the same quarter a year ago. It
was primarily impacted by an increase in current trade receivables related to
additional revenue that was billed in the quarter and the buildup of inventory
to serve growth.
ABB:
CONTINUING GROWTH
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3/6
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Q3
divisional
performance
($ in millions, unless
otherwise indicated)
|
Orders
|
Change
|
3
rd
party base orders
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Change
|
Revenues
|
Change
|
Op
EBITA
%
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CHANGE
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US$
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Comparable
1
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US$
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Comparable
1
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US$
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Comparable
1
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Electrification Products
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2,547
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+7%
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+7%
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2,407
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+8%
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+8%
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2,596
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+5%
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+5%
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16.1%
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-0.1pts
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Robotics and Motion
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2,032
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+5%
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+4%
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1,858
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+8%
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+7%
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2,201
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+10%
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+8%
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16.1%
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-0.3pts
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Industrial Automation
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1,654
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+33%
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+14%
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1,443
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+23%
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+4%
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1,804
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+15%
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+1%
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12.6%
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+0.3pts
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Power Grids
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2,244
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-6%
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-6%
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1,668
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+6%
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+5%
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2,533
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0%
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-2%
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9.8%
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+0.2pts
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Corporate & other (incl.
inter-division elimination)
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-320
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8
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-410
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ABB Group
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8,157
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+8%
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+5%
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7,384
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+10%
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+6%
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8,724
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+6%
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+3%
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12.9%
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+0.1pts
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Electrification
Products
Total
orders were 7 percent higher (7 percent in US dollars), as construction and
utility demand remained positive, particularly in the AMEA region. Revenues
grew 5 percent in the quarter (5 percent in US dollars). Operational EBITA
margin improved sequentially by 110 basis points but was slightly lower in the
quarter versus a year ago, due to higher material costs, which could not be
fully offset by productivity and cost savings.
Robotics
and
Motion
Total orders improved 4 percent (5 percent in US dollars) on
continued demand for robotics and energy-efficient solutions in the automotive
and general industry sectors. Demand for the process end markets was slightly
positive to stable in the quarter. Third-party base orders continued to grow at
7 percent (8 percent in US dollars), while large orders were weak in the
quarter. Revenues improved 8 percent (10 percent in US dollars). Operational
EBITA margin improved sequentially by 120 basis points but was lower in the
quarter versus a year ago, due to higher material costs, which more than offset
the positive cost-out measures.
Industrial
Automation
Total orders excluding B&R and currency effects grew
14 percent; third-party base orders continued to be positive at 4 percent, due
to selective capital expenditure investments in mining as well as cruise and
specialty vessels. Including B&R and currency effects, the total reported
order growth was 33 percent, and third-party base order growth was 23 percent
in US dollars. Revenues excluding B&R and currency effects grew
1 percent, reflecting the strong
book and bill business within the quarter. I
ncluding
B&R and currency effects, the reported revenue growth was 15 percent in US
dollars
. Operational EBITA margin increased to 12.6 percent, reflecting
improved project execution, positive mix and solid cost and productivity
savings.
Power Grids
Total
orders were impacted by the delayed timing of large order awards and continued
selectivity driven by change in business model. Third-party base orders grew 5
percent (6 percent in US dollars), underpinned by investments in emerging
markets. The division continues to leverage and expand its ABB Ability offering
with several successes around the world, supporting the digitalization of the
grid and reinforcing ABB’s leadership position as a partner of choice. Revenues
were 2 percent lower (steady in US dollars) on timing of order backlog
execution and resulting from a lower backlog due to the business model change.
Operational EBITA margin increased 0.2 percentage points to 9.8 percent,
reflecting improved productivity and cost savings, solid execution and shift in
portfolio mix which more than offset investments for growth. The division’s
‘Power Up’ program, driving its transformation and value creation, is underway,
and the company will continue to invest in this initiative in the coming
quarters.
ABB:
CONTINUING GROWTH
|
4/6
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Next
Level
strategy – Stage 3
ABB
is executing its Next Level strategy along its three focus areas of profitable
growth, relentless execution and business-led collaboration. During the
quarter, ABB continued to implement its Next Level strategy by further shifting
its center of gravity to higher-growth segments, strengthening its
competitiveness and de-risking the portfolio.
ABB
strengthened its position as the #2 industrial automation player globally by
closing the acquisition of B&R on July 6. B&R is the largest
independent provider of product- and software-based, open-architecture
solutions for machine and factory automation worldwide, with a unique business
model and sustainable long-term growth momentum. With this acquisition, ABB
closed its historic gap in machine and factory automation and created a
uniquely comprehensive automation portfolio for customers globally. The
integration of B&R is well underway and fully on track.
On
September 25, ABB announced an agreement to acquire GE Industrial Solutions (GE
IS), General Electric’s global electrification solutions business, for $2.6
billion. GE IS has deep customer relationships in more than 100 countries and
an established installed base with strong roots in North America, ABB’s biggest
market. In 2016, GE IS had revenues of approximately $2.7 billion and an
operational EBITA margin of approximately 6 percent. The transaction is
expected to be operational EPS accretive in year one. ABB expects to realize
approximately $200 million of annual cost synergies in year five, which will be
key in bringing GE IS to peer performance. As part of the transaction and
overall value creation, ABB and GE have agreed to establish a long-term,
strategic supply relationship for GE IS products and ABB products that GE
sources today. Through this purchase, ABB will strengthen its #2 position in
electrification globally and expand its access to the attractive North American
market. Given the GE IS transaction, ABB has decided to put its previously
announced planned share buyback program on hold. The transaction is expected to
close in the first half of 2018.
ABB
successfully introduced ABB Ability at many customer events over the last
quarters and continued to win orders through its solution-based business model
for industrial digitalization. ABB showcased more than 180 solutions, across
all customer segments. At ABB’s Innovation & Technology Day at the North
American robotics plant in Auburn Hills, Michigan, ABB showed its stakeholders
the scale and quality of its digital offering as well as the size of its business
in this area.
ABB’s
standing as a pioneer in electric vehicle infrastructure developments was
advanced over the quarter. Customer demand is high for the integrated,
cloud-based charging solutions powered by ABB Ability, which enable improved
management of electricity, information and fund flows leading to a reduction in
operating costs and increased uptime, among other benefits. On September 20,
ABB announced a major order from a German energy supplier for an additional 117
fast-charging stations on German highways, adding to its initial order of 68
stations.
The
company’s White Collar Productivity savings program has exceeded expectations
since its launch in 2015. ABB is on track to achieve the program’s raised cost
reduction target of $1.3 billion within the initially announced timeframe and
with approximately $240 million lower combined restructuring and implementation
costs than initially announced.
ABB
is continuing its regular cost-savings program, leveraging operational
excellence and world-class supply chain management to achieve savings
equivalent to 3-5 percent of cost of sales each year.
ABB
continues its Net Working Capital program to free up approximately $2 billion
by the end of 2017. In the past 12 months, ABB generated cash of $260 million
by reducing working capital. Actions are in place to drive the performance
improvement that will be required in Q4 to achieve this target.
Short- and
long-term outlook
While
uncertainties prevail, macroeconomic signs are trending positively in Europe and
the United States, with growth expected to continue in China. The overall
global market shows modest growth and is impacted by geopolitical tensions in
various parts of the world. Oil prices and foreign exchange translation effects
are expected to continue to influence the company’s results. 2017 remains a
transition year for ABB.
The
attractive
long-term
demand
outlook
in ABB’s three
major
customer
sectors
–
utilities, industry and transport &
infrastructure
–
is
driven by the
Energy and
Fourth Industrial Revolutions.
ABB
is well-positioned to tap into these opportunities for long-term profitable
growth with its strong market presence, broad geographic and business scope,
technology leadership and financial strength.
ABB:
CONTINUING GROWTH
|
5/6
|
More
information
The
Q3 2017 results press release
and presentation slides
are
available
on the
ABB
News
Center
at www.abb.com/news and on
the
Investor
Relations homepage
at www.abb.com/investorrelations.
ABB
will host a press conference
today
starting at 10:00 a.m. Central European Time
(CET) (9:00 a.m. BST, 4:00 a.m. EDT). The
event will be
accessible
by conference call. Callers from the
UK should dial +44 203 059 58
62.
From
Sweden,
the
number to dial is +46 85 051
00
31, and from
the
rest
of
Europe,
+41
58
310 50 00. Callers
from the
US and Canada should
dial +1
866 291
41
66 (toll-free) or
+1
631
570 56 13 (long-distance
charges). Lines will be open 10-15 minutes
before
the start of the
call.
A
conference
call
and webcast
for
analysts and investors is scheduled
to begin
today at 2:00
p.m. CET
(1:00 p.m. BST, 8:00 a.m.
EDT). Callers from the
UK should dial
+44 203 059 58 62
.
From Sweden,
the
number to dial is
+46 85 051 00 31
, and from
the
rest
of Europe,
+41 58 310 50 00
.
Callers from the
US and Canada should
dial +1
866 291
41
66 (toll-free) or
+1
631
570 56 13 (long-distance
charges). Callers are
requested to phone
in 10 minutes before
the
start of the
call.
The
call
will
also be
accessible
on
the
ABB
website
and a recorded session will
be
available
as a podcast one
hour
after
the
end of the
conference
call and
can be
downloaded
from our
website. www.abb.com/investorrelations
ABB
(ABBN: SIX Swiss
Ex) is a pioneering technology leader in electrification products, robotics and
motion, industrial automation and power grids, serving customers in utilities,
industry and transport & infrastructure globally. Continuing more than a
125-year history of innovation, ABB today is writing the future of industrial
digitalization and driving the Energy and Fourth Industrial Revolutions. ABB
operates in more than 100 countries with about 136,000 employees. www.abb.com
|
Investor
calendar 2018
|
Fourth
quarter and full year 2017 results
|
February
8, 2018
|
Annual
General Meeting
|
March
29, 2018
|
First
quarter 2018 results
|
April
19, 2018
|
Second
quarter 2018 results
|
July
19, 2018
|
Third
quarter 2018 results
|
October
25, 2018
|
Important
notice about
forward-looking
information
This
press release
includes
forward-looking information
and
statements as well as other
statements
concerning the
outlook
for
our
business,
including those
in the
sections of this release
titled “Short-term outlook”, “Outlook”,
and “Next Level strategy – Stage
3”.
These statements are
based
on
current expectations, estimates and projections about the
factors that may affect our future
performance, including global
economic conditions, the
economic conditions
of
the
regions
and industries that are
major
markets for
ABB Ltd. These
expectations,
estimates and
projections
are
generally identifiable
by
statements
containing words such as “expects,” “believes,” “estimates,”
“targets,”
“plans,” “is likely”, “intends”
or
similar
expressions. However, there
are
many
risks and uncertainties, many of which
are
beyond our
control, that could
cause
our
actual
results to differ
materially from the
forward-looking information and statements
made
in this press release
and which
could affect our
ability to
achieve
any or
all of our
stated
targets. The
important factors that could
cause
such differences include, among
others, business risks associated with the
volatile global
economic environment and political conditions, costs associated
with compliance
activities, market
acceptance
of
new
products
and services,
changes in governmental regulations and
currency
exchange
rates and
such other
factors as may be
discussed from
time
to
time
in
ABB Ltd’s filings with the
U.S.
Securities and Exchange
Commission,
including its Annual Reports
on
Form
20-F. Although ABB Ltd
believes that
its expectations reflected in any
such
forward-looking statement are
based
upon
reasonable
assumptions, it
can give
no assurance
that those
expectations will be
achieved.
Zurich,
October 26, 2017
Ulrich
Spiesshofer, CEO
—
For more information, please contact:
|
Media Relations
Phone: +41 43 317 65 68
E-mail: media.relations@ch.abb.com
|
Investor
Relations
Phone: +41 43 317 71 11
E-mail: investor.relations@ch.abb.com
|
ABB Ltd
Affolternstrasse 44
8050 Zurich
Switzerland
|
ABB:
CONTINUING GROWTH
|
6/6
|
1
Q3
2017 Financial Information
2
Q3
2017 Financial Information
—
Key Figures
|
|
|
|
|
CHANGE
|
|
($ in millions, unless otherwise indicated)
|
Q3 2017
|
Q3 2016
|
US$
|
Comparable
(1)
|
|
Orders
|
8,157
|
7,533
|
8%
|
5%
|
|
Order backlog (end September)
|
23,424
|
24,554
|
-5%
|
-1%
|
|
Revenues
|
8,724
|
8,255
|
6%
|
3%
|
|
Operational EBITA
(1)
|
1,124
|
1,063
|
6%
|
3%
(2)
|
|
|
as % of operational revenues
(1)
|
12.9%
|
12.8%
|
+0.1 pts
|
|
|
Net income
|
571
|
568
|
1%
|
|
|
Basic earnings per share ($)
|
0.27
|
0.27
|
1%
(3)
|
|
|
Operational earnings per share
(1)
($)
|
0.34
|
0.33
|
4%
(3)
|
7%
(3)
|
|
Cash flow from operating activities
|
954
|
1,081
|
-12%
|
|
|
|
|
|
|
CHANGE
|
|
($ in millions, unless otherwise indicated)
|
9M 2017
|
9M 2016
|
US$
|
Comparable
(1)
|
|
Orders
|
24,909
|
25,102
|
-1%
|
1%
|
|
Revenues
|
25,032
|
24,835
|
1%
|
2%
|
|
Operational EBITA
(1)
|
3,109
|
3,134
|
-1%
|
0%
(2)
|
|
|
as % of operational revenues
(1)
|
12.5%
|
12.6%
|
-0.1 pts
|
|
|
Net income
|
1,820
|
1,474
|
23%
|
|
|
Basic earnings per share ($)
|
0.85
|
0.68
|
24%
(3)
|
|
|
Operational earnings per share
(1)
($)
|
0.92
|
0.96
|
-4%
(3)
|
-2%
(3)
|
|
Cash flow from operating activities
|
1,930
|
2,415
|
-20%
|
|
(1) For
a reconciliation of non-GAAP measures see “
Supplemental Reconciliations and
Definitions
” on
page 34.
(2) Constant
currency (not adjusted for portfolio changes).
(3) Earnings
per share growth rates are computed using unrounded amounts. Comparable Operational
earnings per share growth is in constant currency (2014 foreign exchange rates
and not adjusted for changes in the business portfolio).
3
Q3
2017 Financial Information
|
|
|
|
CHANGE
|
|
($ in millions, unless otherwise indicated)
|
Q3 2017
|
Q3 2016
|
US$
|
Local
|
Comparable
|
|
Orders
|
ABB Group
|
8,157
|
7,533
|
8%
|
8%
|
5%
|
|
|
Electrification Products
|
2,547
|
2,374
|
7%
|
7%
|
7%
|
|
|
Robotics and Motion
|
2,032
|
1,936
|
5%
|
4%
|
4%
|
|
|
Industrial Automation
|
1,654
|
1,240
|
33%
|
31%
|
14%
|
|
|
Power Grids
|
2,244
|
2,379
|
-6%
|
-6%
|
-6%
|
|
|
Corporate and Other
|
|
|
|
|
|
|
|
(incl. inter-division eliminations)
|
(320)
|
(396)
|
|
|
|
|
Third-party base orders
|
ABB Group
|
7,384
|
6,727
|
10%
|
9%
|
6%
|
|
|
Electrification Products
|
2,407
|
2,227
|
8%
|
8%
|
8%
|
|
|
Robotics and Motion
|
1,858
|
1,724
|
8%
|
7%
|
7%
|
|
|
Industrial Automation
|
1,443
|
1,169
|
23%
|
22%
|
4%
|
|
|
Power Grids
|
1,668
|
1,581
|
6%
|
5%
|
5%
|
|
|
Corporate and Other
|
8
|
26
|
|
|
|
|
Order backlog (end September)
|
ABB Group
|
23,424
|
24,554
|
-5%
|
-6%
|
-1%
|
|
|
Electrification Products
|
3,228
|
3,378
|
-4%
|
-4%
|
-4%
|
|
|
Robotics and Motion
|
4,086
|
3,958
|
3%
|
2%
|
2%
|
|
|
Industrial Automation
|
5,766
|
5,854
|
-2%
|
-3%
|
-5%
|
|
|
Power Grids
|
11,752
|
12,139
|
-3%
|
-5%
|
-4%
|
|
|
Corporate and Other
|
|
|
|
|
|
|
|
(incl. inter-division eliminations)
|
(1,408)
|
(775)
|
|
|
|
|
Revenues
|
ABB Group
|
8,724
|
8,255
|
6%
|
4%
|
3%
|
|
|
Electrification Products
|
2,596
|
2,462
|
5%
|
5%
|
5%
|
|
|
Robotics and Motion
|
2,201
|
2,007
|
10%
|
8%
|
8%
|
|
|
Industrial Automation
|
1,804
|
1,570
|
15%
|
13%
|
1%
|
|
|
Power Grids
|
2,533
|
2,538
|
0%
|
-2%
|
-2%
|
|
|
Corporate and Other
|
|
|
|
|
|
|
|
(incl. inter-division eliminations)
|
(410)
|
(322)
|
|
|
|
|
Operational EBITA
|
ABB Group
|
1,124
|
1,063
|
6%
|
3%
|
|
|
|
Electrification Products
|
417
|
401
|
4%
|
2%
|
|
|
|
Robotics and Motion
|
356
|
330
|
8%
|
6%
|
|
|
|
Industrial Automation
|
226
|
195
|
16%
|
13%
|
|
|
|
Power Grids
|
248
|
244
|
2%
|
-2%
|
|
|
|
Corporate and Other
|
|
|
|
|
|
|
|
(incl. inter-division eliminations)
|
(123)
|
(107)
|
|
|
|
|
Operational EBITA %
|
ABB Group
|
12.9%
|
12.8%
|
|
|
|
|
|
Electrification Products
|
16.1%
|
16.2%
|
|
|
|
|
|
Robotics and Motion
|
16.1%
|
16.4%
|
|
|
|
|
|
Industrial Automation
|
12.6%
|
12.3%
|
|
|
|
|
|
Power Grids
|
9.8%
|
9.6%
|
|
|
|
|
Income from operations
|
ABB Group
|
908
|
878
|
|
|
|
|
|
Electrification Products
|
392
|
352
|
|
|
|
|
|
Robotics and Motion
|
327
|
306
|
|
|
|
|
|
Industrial Automation
|
151
|
178
|
|
|
|
|
|
Power Grids
|
201
|
214
|
|
|
|
|
|
Corporate and Other
|
|
|
|
|
|
|
|
(incl. inter-division eliminations)
|
(163)
|
(172)
|
|
|
|
|
Income from operations %
|
ABB Group
|
10.4%
|
10.6%
|
|
|
|
|
|
Electrification Products
|
15.1%
|
14.3%
|
|
|
|
|
|
Robotics and Motion
|
14.9%
|
15.2%
|
|
|
|
|
|
Industrial Automation
|
8.4%
|
11.3%
|
|
|
|
|
|
Power Grids
|
7.9%
|
8.4%
|
|
|
|
|
Cash flow from operating activities
|
ABB Group
|
954
|
1,081
|
|
|
|
|
|
Electrification Products
|
304
|
352
|
|
|
|
|
|
Robotics and Motion
|
242
|
333
|
|
|
|
|
|
Industrial Automation
|
227
|
242
|
|
|
|
|
|
Power Grids
|
157
|
149
|
|
|
|
|
|
Corporate and Other
|
24
|
5
|
|
|
|
4
Q3
2017 Financial Information
|
|
|
|
CHANGE
|
|
($ in millions, unless otherwise indicated)
|
9M 2017
|
9M 2016
|
US$
|
Local
|
Comparable
|
|
Orders
|
ABB Group
|
24,909
|
25,102
|
-1%
|
0%
|
1%
|
|
|
Electrification Products
|
7,587
|
7,504
|
1%
|
3%
|
3%
|
|
|
Robotics and Motion
|
6,428
|
6,002
|
7%
|
8%
|
8%
|
|
|
Industrial Automation
|
4,835
|
4,497
|
8%
|
9%
|
4%
|
|
|
Power Grids
|
7,107
|
7,976
|
-11%
|
-9%
|
-9%
|
|
|
Corporate and Other
|
|
|
|
|
|
|
|
(incl. inter-division eliminations)
|
(1,048)
|
(877)
|
|
|
|
|
Third-party base orders
|
ABB Group
|
22,663
|
22,027
|
3%
|
4%
|
3%
|
|
|
Electrification Products
|
7,165
|
7,072
|
1%
|
3%
|
3%
|
|
|
Robotics and Motion
|
5,816
|
5,353
|
9%
|
10%
|
10%
|
|
|
Industrial Automation
|
4,215
|
3,946
|
7%
|
8%
|
3%
|
|
|
Power Grids
|
5,427
|
5,577
|
-3%
|
-1%
|
-1%
|
|
|
Corporate and Other
|
40
|
79
|
|
|
|
|
Order backlog (end September)
|
ABB Group
|
23,424
|
24,554
|
-5%
|
-6%
|
-1%
|
|
|
Electrification Products
|
3,228
|
3,378
|
-4%
|
-4%
|
-4%
|
|
|
Robotics and Motion
|
4,086
|
3,958
|
3%
|
2%
|
2%
|
|
|
Industrial Automation
|
5,766
|
5,854
|
-2%
|
-3%
|
-5%
|
|
|
Power Grids
|
11,752
|
12,139
|
-3%
|
-5%
|
-4%
|
|
|
Corporate and Other
|
|
|
|
|
|
|
|
(incl. inter-division eliminations)
|
(1,408)
|
(775)
|
|
|
|
|
Revenues
|
ABB Group
|
25,032
|
24,835
|
1%
|
2%
|
2%
|
|
|
Electrification Products
|
7,398
|
7,287
|
2%
|
3%
|
3%
|
|
|
Robotics and Motion
|
6,214
|
5,913
|
5%
|
6%
|
6%
|
|
|
Industrial Automation
|
4,961
|
5,004
|
-1%
|
0%
|
-4%
|
|
|
Power Grids
|
7,585
|
7,708
|
-2%
|
0%
|
1%
|
|
|
Corporate and Other
|
|
|
|
|
|
|
|
(incl. inter-division eliminations)
|
(1,126)
|
(1,077)
|
|
|
|
|
Operational EBITA
|
ABB Group
|
3,109
|
3,134
|
-1%
|
0%
|
|
|
|
Electrification Products
|
1,112
|
1,108
|
0%
|
1%
|
|
|
|
Robotics and Motion
|
942
|
945
|
0%
|
1%
|
|
|
|
Industrial Automation
|
635
|
617
|
3%
|
3%
|
|
|
|
Power Grids
|
750
|
681
|
10%
|
11%
|
|
|
|
Corporate and Other
|
|
|
|
|
|
|
|
(incl. inter-division eliminations)
|
(330)
|
(217)
|
|
|
|
|
Operational EBITA %
|
ABB Group
|
12.5%
|
12.6%
|
|
|
|
|
|
Electrification Products
|
15.1%
|
15.2%
|
|
|
|
|
|
Robotics and Motion
|
15.2%
|
16.0%
|
|
|
|
|
|
Industrial Automation
|
12.9%
|
12.3%
|
|
|
|
|
|
Power Grids
|
9.9%
|
8.8%
|
|
|
|
|
Income from operations
|
ABB Group
|
2,822
|
2,309
|
|
|
|
|
|
Electrification Products
|
1,032
|
917
|
|
|
|
|
|
Robotics and Motion
|
859
|
812
|
|
|
|
|
|
Industrial Automation
|
560
|
478
|
|
|
|
|
|
Power Grids
|
654
|
536
|
|
|
|
|
|
Corporate and Other
|
|
|
|
|
|
|
|
(incl. inter-division eliminations)
|
(283)
|
(434)
|
|
|
|
|
Income from operations %
|
ABB Group
|
11.3%
|
9.3%
|
|
|
|
|
|
Electrification Products
|
13.9%
|
12.6%
|
|
|
|
|
|
Robotics and Motion
|
13.8%
|
13.7%
|
|
|
|
|
|
Industrial Automation
|
11.3%
|
9.6%
|
|
|
|
|
|
Power Grids
|
8.6%
|
7.0%
|
|
|
|
|
Cash flow from operating activities
|
ABB Group
|
1,930
|
2,415
|
|
|
|
|
|
Electrification Products
|
768
|
701
|
|
|
|
|
|
Robotics and Motion
|
709
|
740
|
|
|
|
|
|
Industrial Automation
|
480
|
564
|
|
|
|
|
|
Power Grids
|
386
|
416
|
|
|
|
|
|
Corporate and Other
|
(413)
|
(6)
|
|
|
|
5
Q3
2017 Financial Information
Operational EBITA
|
|
|
Electrification
|
Robotics
|
Industrial
|
Power
|
|
($ in millions, unless otherwise indicated)
|
ABB
|
Products
|
and Motion
|
Automation
|
Grids
|
|
|
Q3 17
|
Q3 16
|
Q3 17
|
Q3 16
|
Q3 17
|
Q3 16
|
Q3 17
|
Q3 16
|
Q3 17
|
Q3 16
|
|
Revenues
|
8,724
|
8,255
|
2,596
|
2,462
|
2,201
|
2,007
|
1,804
|
1,570
|
2,533
|
2,538
|
|
FX/commodity timing
|
|
|
|
|
|
|
|
|
|
|
|
differences in total revenues
|
(3)
|
43
|
–
|
6
|
9
|
4
|
(13)
|
10
|
1
|
16
|
|
Operational revenues
|
8,721
|
8,298
|
2,596
|
2,468
|
2,210
|
2,011
|
1,791
|
1,580
|
2,534
|
2,554
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations
|
908
|
878
|
392
|
352
|
327
|
306
|
151
|
178
|
201
|
214
|
|
Acquisition-related amortization
|
74
|
70
|
24
|
30
|
16
|
24
|
21
|
3
|
8
|
9
|
|
Restructuring and
|
|
|
|
|
|
|
|
|
|
|
|
restructuring-related expenses
(1)
|
92
|
39
|
(2)
|
(5)
|
2
|
(6)
|
41
|
7
|
28
|
12
|
|
Non-operational pension cost
|
(20)
|
–
|
1
|
1
|
2
|
–
|
3
|
–
|
2
|
(1)
|
|
Changes in retained obligations of
|
|
|
|
|
|
|
|
|
|
|
|
divested businesses
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
|
Changes in pre-acquisition estimates
|
–
|
17
|
–
|
17
|
–
|
–
|
–
|
–
|
–
|
–
|
|
Gains and losses from sale of businesses
|
1
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
|
Acquisition-related expenses and certain
|
|
|
|
|
|
|
|
|
|
|
|
non-operational items
|
68
|
35
|
6
|
1
|
(1)
|
4
|
19
|
–
|
9
|
2
|
|
FX/commodity timing
|
|
|
|
|
|
|
|
|
|
|
|
differences in income from operations
|
1
|
24
|
(4)
|
5
|
10
|
2
|
(9)
|
7
|
–
|
8
|
|
Operational EBITA
|
1,124
|
1,063
|
417
|
401
|
356
|
330
|
226
|
195
|
248
|
244
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operational EBITA margin (%)
|
12.9%
|
12.8%
|
16.1%
|
16.2%
|
16.1%
|
16.4%
|
12.6%
|
12.3%
|
9.8%
|
9.6%
|
|
|
|
Electrification
|
Robotics
|
Industrial
|
Power
|
|
($ in millions, unless otherwise indicated)
|
ABB
|
Products
|
and Motion
|
Automation
|
Grids
|
|
|
9M 17
|
9M 16
|
9M 17
|
9M 16
|
9M 17
|
9M 16
|
9M 17
|
9M 16
|
9M 17
|
9M 16
|
|
Revenues
|
25,032
|
24,835
|
7,398
|
7,287
|
6,214
|
5,913
|
4,961
|
5,004
|
7,585
|
7,708
|
|
FX/commodity timing
|
|
|
|
|
|
|
|
|
|
|
|
differences in total revenues
|
(108)
|
61
|
(27)
|
(1)
|
2
|
2
|
(25)
|
31
|
(37)
|
13
|
|
Operational revenues
|
24,924
|
24,896
|
7,371
|
7,286
|
6,216
|
5,915
|
4,936
|
5,035
|
7,548
|
7,721
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations
|
2,822
|
2,309
|
1,032
|
917
|
859
|
812
|
560
|
478
|
654
|
536
|
|
Acquisition-related amortization
|
189
|
212
|
76
|
92
|
50
|
71
|
25
|
9
|
25
|
27
|
|
Restructuring and
|
|
|
|
|
|
|
|
|
|
|
|
restructuring-related expenses
(1)
|
224
|
475
|
11
|
52
|
29
|
53
|
50
|
100
|
49
|
106
|
|
Non-operational pension cost
|
(34)
|
–
|
2
|
3
|
1
|
–
|
4
|
–
|
–
|
(3)
|
|
Changes in retained obligations of
|
|
|
|
|
|
|
|
|
|
|
|
divested businesses
|
94
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
|
Changes in pre-acquisition estimates
|
–
|
39
|
–
|
39
|
–
|
–
|
–
|
–
|
–
|
–
|
|
Gains and losses from sale of businesses
|
(330)
|
–
|
–
|
–
|
–
|
–
|
(2)
|
–
|
–
|
–
|
|
Acquisition-related expenses and certain
|
|
|
|
|
|
|
|
|
|
|
|
non-operational items
|
234
|
46
|
24
|
1
|
(1)
|
4
|
26
|
–
|
61
|
6
|
|
FX/commodity timing
|
|
|
|
|
|
|
|
|
|
|
|
differences in income from operations
|
(90)
|
53
|
(33)
|
4
|
4
|
5
|
(28)
|
30
|
(39)
|
9
|
|
Operational EBITA
|
3,109
|
3,134
|
1,112
|
1,108
|
942
|
945
|
635
|
617
|
750
|
681
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operational EBITA margin (%)
|
12.5%
|
12.6%
|
15.1%
|
15.2%
|
15.2%
|
16.0%
|
12.9%
|
12.3%
|
9.9%
|
8.8%
|
(1)
Amounts also include the incremental implementation costs in relation to the
White Collar Productivity program.
6
Q3
2017 Financial Information
Depreciation and Amortization
|
|
|
Electrification
|
Robotics
|
Industrial
|
Power
|
|
($ in millions)
|
ABB
|
Products
|
and Motion
|
Automation
|
Grids
|
|
|
Q3 17
|
Q3 16
|
Q3 17
|
Q3 16
|
Q3 17
|
Q3 16
|
Q3 17
|
Q3 16
|
Q3 17
|
Q3 16
|
|
Depreciation
|
191
|
195
|
52
|
54
|
35
|
36
|
18
|
15
|
45
|
45
|
|
Amortization
|
96
|
91
|
27
|
34
|
19
|
27
|
23
|
5
|
16
|
17
|
|
including total acquisition-related amortization of:
|
74
|
70
|
24
|
30
|
16
|
24
|
21
|
3
|
8
|
9
|
|
|
|
Electrification
|
Robotics
|
Industrial
|
Power
|
|
($ in millions)
|
ABB
|
Products
|
and Motion
|
Automation
|
Grids
|
|
|
9M 17
|
9M 16
|
9M 17
|
9M 16
|
9M 17
|
9M 16
|
9M 17
|
9M 16
|
9M 17
|
9M 16
|
|
Depreciation
|
555
|
576
|
152
|
161
|
103
|
106
|
43
|
44
|
131
|
134
|
|
Amortization
|
253
|
277
|
85
|
102
|
59
|
81
|
29
|
14
|
46
|
49
|
|
including total acquisition-related amortization of:
|
189
|
212
|
76
|
92
|
50
|
71
|
25
|
9
|
25
|
27
|
Orders received and revenues by
region
|
($ in millions, unless otherwise indicated)
|
Orders received
|
CHANGE
|
Revenues
|
CHANGE
|
|
|
|
|
|
|
Com-
|
|
|
|
|
Com-
|
|
|
Q3 17
|
Q3 16
|
US$
|
Local
|
parable
|
Q3 17
|
Q3 16
|
US$
|
Local
|
parable
|
|
Europe
|
2,760
|
2,336
|
18%
|
14%
|
8%
|
3,058
|
2,733
|
12%
|
8%
|
6%
|
|
The Americas
|
2,339
|
2,208
|
6%
|
5%
|
4%
|
2,400
|
2,456
|
-2%
|
-3%
|
-4%
|
|
Asia, Middle East and Africa
|
3,058
|
2,989
|
2%
|
3%
|
2%
|
3,266
|
3,066
|
7%
|
7%
|
6%
|
|
ABB Group
|
8,157
|
7,533
|
8%
|
8%
|
5%
|
8,724
|
8,255
|
6%
|
4%
|
3%
|
|
($ in millions, unless otherwise indicated)
|
Orders received
|
CHANGE
|
Revenues
|
CHANGE
|
|
|
|
|
|
|
Com-
|
|
|
|
|
Com-
|
|
|
9M 17
|
9M 16
|
US$
|
Local
|
parable
|
9M 17
|
9M 16
|
US$
|
Local
|
parable
|
|
Europe
|
8,730
|
8,684
|
1%
|
2%
|
5%
|
8,565
|
8,299
|
3%
|
5%
|
6%
|
|
The Americas
|
7,142
|
6,864
|
4%
|
3%
|
3%
|
7,204
|
7,272
|
-1%
|
-1%
|
-1%
|
|
Asia, Middle East and Africa
|
9,037
|
9,554
|
-5%
|
-3%
|
-3%
|
9,263
|
9,264
|
0%
|
2%
|
2%
|
|
ABB Group
|
24,909
|
25,102
|
-1%
|
0%
|
1%
|
25,032
|
24,835
|
1%
|
2%
|
2%
|
7
Q3
2017 Financial Information
—
Interim Consolidated Financial Information
|
ABB
Ltd Interim Consolidated Income Statements (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended
|
Three months ended
|
|
($ in millions, except per share data in $)
|
Sep. 30, 2017
|
Sep. 30, 2016
|
Sep. 30, 2017
|
Sep. 30, 2016
|
|
Sales of products
|
20,686
|
20,477
|
7,235
|
6,802
|
|
Sales of services and software
|
4,346
|
4,358
|
1,489
|
1,453
|
|
Total revenues
|
25,032
|
24,835
|
8,724
|
8,255
|
|
Cost of sales of products
|
(14,788)
|
(14,980)
|
(5,145)
|
(4,911)
|
|
Cost of services and software
|
(2,603)
|
(2,623)
|
(910)
|
(885)
|
|
Total cost of sales
|
(17,391)
|
(17,603)
|
(6,055)
|
(5,796)
|
|
Gross profit
|
7,641
|
7,232
|
2,669
|
2,459
|
|
Selling, general and administrative expenses
|
(4,074)
|
(3,955)
|
(1,396)
|
(1,280)
|
|
Non-order related research and development expenses
|
(967)
|
(951)
|
(357)
|
(303)
|
|
Other income (expense), net
|
222
|
(17)
|
(8)
|
2
|
|
Income from operations
|
2,822
|
2,309
|
908
|
878
|
|
Interest and dividend income
|
55
|
54
|
20
|
16
|
|
Interest and other finance expense
|
(227)
|
(230)
|
(74)
|
(84)
|
|
Income from continuing operations before taxes
|
2,650
|
2,133
|
854
|
810
|
|
Provision for taxes
|
(702)
|
(587)
|
(246)
|
(237)
|
|
Income from continuing operations, net of tax
|
1,948
|
1,546
|
608
|
573
|
|
Income (loss) from discontinued operations, net of tax
|
(6)
|
14
|
(5)
|
16
|
|
Net income
|
1,942
|
1,560
|
603
|
589
|
|
Net income attributable to noncontrolling interests
|
(122)
|
(86)
|
(32)
|
(21)
|
|
Net income attributable to ABB
|
1,820
|
1,474
|
571
|
568
|
|
|
|
|
|
|
|
Amounts attributable to ABB shareholders:
|
|
|
|
|
|
Income from continuing operations, net of tax
|
1,826
|
1,460
|
576
|
552
|
|
Net income
|
1,820
|
1,474
|
571
|
568
|
|
|
|
|
|
|
|
Basic earnings per share attributable to ABB shareholders:
|
|
|
|
|
|
Income from continuing operations, net of tax
|
0.85
|
0.68
|
0.27
|
0.26
|
|
Net income
|
0.85
|
0.68
|
0.27
|
0.27
|
|
|
|
|
|
|
|
Diluted earnings per share attributable to ABB
shareholders:
|
|
|
|
|
|
Income from continuing operations, net of tax
|
0.85
|
0.68
|
0.27
|
0.26
|
|
Net income
|
0.85
|
0.68
|
0.27
|
0.27
|
|
|
|
|
|
|
|
Weighted-average number of shares outstanding (in
millions) used to compute:
|
|
|
|
|
|
Basic earnings per share attributable to ABB shareholders
|
2,138
|
2,155
|
2,134
|
2,135
|
|
Diluted earnings per share attributable to ABB shareholders
|
2,147
|
2,159
|
2,142
|
2,139
|
|
Due to rounding, numbers presented may not add to the totals
provided.
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to the Interim Consolidated Financial Information
|
|
|
|
|
8
Q3
2017 Financial Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
ABB
Ltd Interim Condensed Consolidated Statements of Comprehensive
|
|
Income
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended
|
Three months ended
|
|
($ in millions)
|
Sep. 30, 2017
|
Sep. 30, 2016
|
Sep. 30, 2017
|
Sep. 30, 2016
|
|
Total comprehensive income, net of tax
|
2,727
|
1,767
|
855
|
592
|
|
Total comprehensive income attributable to noncontrolling
interests, net of tax
|
(139)
|
(87)
|
(36)
|
(22)
|
|
Total comprehensive income attributable to ABB
shareholders, net of tax
|
2,588
|
1,680
|
819
|
570
|
|
Due to rounding, numbers presented may not add to the totals
provided.
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to the Interim Consolidated Financial Information
|
|
|
|
|
9
Q3
2017 Financial Information
|
—
|
|
|
|
ABB
Ltd Interim Consolidated Balance Sheets (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions, except share data)
|
Sep. 30, 2017
|
Dec. 31, 2016
|
|
Cash and equivalents
|
3,649
|
3,644
|
|
Marketable securities and short-term investments
|
998
|
1,953
|
|
Receivables, net
|
10,738
|
9,696
|
|
Inventories, net
|
5,306
|
4,347
|
|
Prepaid expenses
|
276
|
176
|
|
Other current assets
|
628
|
688
|
|
Assets held for sale
|
–
|
548
|
|
Total current assets
|
21,595
|
21,052
|
|
|
|
|
|
Property, plant and equipment, net
|
5,180
|
4,743
|
|
Goodwill
|
11,180
|
9,501
|
|
Other intangible assets, net
|
2,649
|
1,996
|
|
Prepaid pension and other employee benefits
|
102
|
90
|
|
Investments in equity-accounted companies
|
164
|
170
|
|
Deferred taxes
|
1,022
|
1,118
|
|
Other non-current assets
|
515
|
532
|
|
Total assets
|
42,407
|
39,202
|
|
|
|
|
|
Accounts payable, trade
|
5,081
|
4,446
|
|
Billings in excess of sales
|
1,309
|
1,241
|
|
Short-term debt and current maturities of long-term debt
|
831
|
1,003
|
|
Advances from customers
|
1,428
|
1,398
|
|
Provisions for warranties
|
1,200
|
1,142
|
|
Other provisions
|
1,789
|
1,765
|
|
Other current liabilities
|
4,167
|
3,936
|
|
Liabilities held for sale
|
–
|
218
|
|
Total current liabilities
|
15,805
|
15,149
|
|
|
|
|
|
Long-term debt
|
7,061
|
5,800
|
|
Pension and other employee benefits
|
1,920
|
1,834
|
|
Deferred taxes
|
1,067
|
918
|
|
Other non-current liabilities
|
1,801
|
1,604
|
|
Total liabilities
|
27,654
|
25,305
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
Stockholders’ equity:
|
|
|
|
Capital stock
|
|
|
|
(2,168,148,264 and 2,214,743,264 issued shares at September 30,
2017, and December 31, 2016, respectively)
|
188
|
192
|
|
Additional paid-in capital
|
11
|
24
|
|
Retained earnings
|
19,201
|
19,925
|
|
Accumulated other comprehensive loss
|
(4,418)
|
(5,187)
|
|
Treasury stock, at cost
|
|
|
|
(33,696,701 and 76,036,429 shares at September 30, 2017, and
December 31, 2016, respectively)
|
(738)
|
(1,559)
|
|
Total ABB stockholders’ equity
|
14,244
|
13,395
|
|
Noncontrolling interests
|
509
|
502
|
|
Total stockholders’ equity
|
14,753
|
13,897
|
|
Total liabilities and stockholders’ equity
|
42,407
|
39,202
|
|
Due to rounding, numbers presented may not add to the totals provided.
|
|
|
|
|
|
|
|
See Notes to the Interim Consolidated Financial Information
|
|
|
10
Q3
2017 Financial Information
|
—
|
|
|
|
|
|
ABB
Ltd Interim Consolidated Statements of Cash Flows (unaudited)
|
|
|
|
|
|
|
|
|
Nine months ended
|
Three months ended
|
|
($ in millions)
|
Sep. 30, 2017
|
Sep. 30, 2016
|
Sep. 30, 2017
|
Sep. 30, 2016
|
|
Operating activities:
|
|
|
|
|
|
Net income
|
1,942
|
1,560
|
603
|
589
|
|
Adjustments to reconcile net income to net cash provided
by operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
808
|
853
|
287
|
286
|
|
Deferred taxes
|
40
|
(108)
|
(3)
|
19
|
|
Net loss (gain) from derivatives and foreign exchange
|
5
|
58
|
34
|
10
|
|
Net loss (gain) from sale of property, plant and equipment
|
(22)
|
(33)
|
(12)
|
(25)
|
|
Net loss (gain) from sale of businesses
|
(330)
|
–
|
1
|
–
|
|
Share-based payment arrangements
|
41
|
37
|
14
|
10
|
|
Other
|
21
|
73
|
(16)
|
31
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
Trade receivables, net
|
(319)
|
(68)
|
(65)
|
163
|
|
Inventories, net
|
(323)
|
(261)
|
(73)
|
(57)
|
|
Trade payables
|
279
|
153
|
50
|
(14)
|
|
Accrued liabilities
|
101
|
14
|
234
|
179
|
|
Billings in excess of sales
|
4
|
4
|
72
|
(5)
|
|
Provisions, net
|
(87)
|
(5)
|
(66)
|
(112)
|
|
Advances from customers
|
(60)
|
(20)
|
(146)
|
2
|
|
Income taxes payable and receivable
|
41
|
123
|
48
|
2
|
|
Other assets and liabilities, net
|
(211)
|
35
|
(8)
|
3
|
|
Net cash provided by operating activities
|
1,930
|
2,415
|
954
|
1,081
|
|
|
|
|
|
|
|
Investing activities:
|
|
|
|
|
|
Purchases of marketable securities (available-for-sale)
|
(300)
|
(821)
|
(26)
|
(410)
|
|
Purchases of short-term investments
|
(133)
|
(2,172)
|
(59)
|
(803)
|
|
Purchases of property, plant and equipment and intangible assets
|
(620)
|
(532)
|
(203)
|
(184)
|
|
Acquisition of businesses (net of cash acquired)
|
|
|
|
|
|
and increases in cost- and equity-accounted companies
|
(2,119)
|
(24)
|
(2,101)
|
(5)
|
|
Proceeds from sales of marketable securities
(available-for-sale)
|
502
|
773
|
12
|
735
|
|
Proceeds from maturity of marketable securities
(available-for-sale)
|
100
|
539
|
–
|
–
|
|
Proceeds from short-term investments
|
899
|
1,450
|
25
|
917
|
|
Proceeds from sales of property, plant and equipment
|
50
|
52
|
20
|
24
|
|
Proceeds from sales of businesses (net of transaction costs
|
|
|
|
|
|
and cash disposed) and cost- and equity-accounted companies
|
664
|
(1)
|
(9)
|
(3)
|
|
Net cash from settlement of foreign currency derivatives
|
92
|
(34)
|
59
|
(13)
|
|
Other investing activities
|
29
|
13
|
7
|
5
|
|
Net cash provided by (used in) investing activities
|
(836)
|
(757)
|
(2,275)
|
263
|
|
|
|
|
|
|
|
Financing activities:
|
|
|
|
|
|
Net changes in debt with original maturities of 90 days or less
|
363
|
45
|
(47)
|
(246)
|
|
Increase in debt
|
901
|
854
|
11
|
2
|
|
Repayment of debt
|
(657)
|
(720)
|
(67)
|
(56)
|
|
Delivery of shares
|
86
|
143
|
–
|
142
|
|
Purchase of treasury stock
|
(251)
|
(1,299)
|
–
|
(102)
|
|
Dividends paid
|
(1,635)
|
–
|
–
|
–
|
|
Reduction in nominal value of common shares paid to shareholders
|
–
|
(1,610)
|
–
|
(1,610)
|
|
Dividends paid to noncontrolling shareholders
|
(121)
|
(121)
|
(5)
|
(14)
|
|
Other financing activities
|
(14)
|
(21)
|
1
|
(9)
|
|
Net cash used in financing activities
|
(1,328)
|
(2,729)
|
(107)
|
(1,893)
|
|
|
|
|
|
|
|
Effects of exchange rate changes on cash and equivalents
|
239
|
44
|
59
|
2
|
|
Net change in cash and equivalents – continuing operations
|
5
|
(1,027)
|
(1,369)
|
(547)
|
|
|
|
|
|
|
|
Cash and equivalents, beginning of period
|
3,644
|
4,565
|
5,018
|
4,085
|
|
Cash and equivalents, end of period
|
3,649
|
3,538
|
3,649
|
3,538
|
|
|
|
|
|
|
|
Supplementary disclosure of cash flow information:
|
|
|
|
|
|
Interest paid
|
139
|
144
|
24
|
21
|
|
Taxes paid
|
651
|
591
|
208
|
230
|
|
Due to rounding, numbers presented may not add to the totals
provided.
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to the Interim Consolidated Financial Information
|
|
|
|
|
11
Q3
2017 Financial Information
|
—
|
|
|
|
|
|
|
|
|
|
ABB
Ltd Interim Consolidated Statements of Changes in Stockholders’ Equity
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
Capital stock
|
Additional paid-in capital
|
Retained earnings
|
Total accumu-
lated other comprehensive
loss
|
Treasury stock
|
Total ABB
stockholders’ equity
|
Non-
controlling interests
|
Total stockholders’
equity
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2016
|
1,440
|
4
|
20,476
|
(4,858)
|
(2,581)
|
14,481
|
507
|
14,988
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
1,474
|
|
|
1,474
|
86
|
1,560
|
|
Foreign currency translation
|
|
|
|
|
|
|
|
|
|
adjustments, net of tax of $11
|
|
|
|
97
|
|
97
|
1
|
98
|
|
Effect of change in fair value of
|
|
|
|
|
|
|
|
|
|
available-for-sale securities,
|
|
|
|
|
|
|
|
|
|
net of tax of $1
|
|
|
|
7
|
|
7
|
|
7
|
|
Unrecognized income (expense)
|
|
|
|
|
|
|
|
|
|
related to pensions and other
|
|
|
|
|
|
|
|
|
|
postretirement plans,
|
|
|
|
|
|
|
|
|
|
net of tax of $23
|
|
|
|
89
|
|
89
|
|
89
|
|
Change in derivatives qualifying as
|
|
|
|
|
|
|
|
|
|
cash flow hedges, net of tax of $4
|
|
|
|
13
|
|
13
|
|
13
|
|
Total comprehensive income
|
|
|
|
|
|
1,680
|
87
|
1,767
|
|
Dividends to
|
|
|
|
|
|
|
|
|
|
noncontrolling shareholders
|
|
|
|
|
|
–
|
(121)
|
(121)
|
|
Reduction in nominal value of common
|
|
|
|
|
|
|
|
|
|
shares paid to shareholders
|
(1,239)
|
15
|
(402)
|
|
|
(1,626)
|
|
(1,626)
|
|
Cancellation of treasury shares
|
(9)
|
(31)
|
(2,007)
|
|
2,047
|
–
|
|
–
|
|
Purchase of treasury stock
|
|
|
|
|
(1,280)
|
(1,280)
|
|
(1,280)
|
|
Delivery of shares
|
|
(14)
|
(41)
|
|
198
|
143
|
|
143
|
|
Share-based payment arrangements
|
|
37
|
|
|
|
37
|
|
37
|
|
Call options
|
|
5
|
|
|
|
5
|
|
5
|
|
Balance at September 30, 2016
|
192
|
16
|
19,500
|
(4,652)
|
(1,616)
|
13,440
|
473
|
13,913
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2017
|
192
|
24
|
19,925
|
(5,187)
|
(1,559)
|
13,395
|
502
|
13,897
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
1,820
|
|
|
1,820
|
122
|
1,942
|
|
Foreign currency translation
|
|
|
|
|
|
|
|
|
|
adjustments, net of tax of $1
|
|
|
|
850
|
|
850
|
17
|
867
|
|
Effect of change in fair value of
|
|
|
|
|
|
|
|
|
|
available-for-sale securities,
|
|
|
|
|
|
|
|
|
|
net of tax of $1
|
|
|
|
3
|
|
3
|
|
3
|
|
Unrecognized income (expense)
|
|
|
|
|
|
|
|
|
|
related to pensions and other
|
|
|
|
|
|
|
|
|
|
postretirement plans,
|
|
|
|
|
|
|
|
|
|
net of tax of $(24)
|
|
|
|
(90)
|
|
(90)
|
|
(90)
|
|
Change in derivatives qualifying as
|
|
|
|
|
|
|
|
|
|
cash flow hedges, net of tax of $1
|
|
|
|
5
|
|
5
|
|
5
|
|
Total comprehensive income
|
|
|
|
|
|
2,588
|
139
|
2,727
|
|
Changes in noncontrolling interests
|
|
3
|
|
|
|
3
|
(4)
|
(1)
|
|
Dividends to
|
|
|
|
|
|
|
|
|
|
noncontrolling shareholders
|
|
|
|
|
|
–
|
(128)
|
(128)
|
|
Dividends paid to shareholders
|
|
|
(1,622)
|
|
|
(1,622)
|
|
(1,622)
|
|
Cancellation of treasury shares
|
(4)
|
(27)
|
(922)
|
|
953
|
–
|
|
–
|
|
Purchase of treasury stock
|
|
|
|
|
(251)
|
(251)
|
|
(251)
|
|
Delivery of shares
|
|
(33)
|
|
|
119
|
86
|
|
86
|
|
Share-based payment arrangements
|
|
41
|
|
|
|
41
|
|
41
|
|
Call options
|
|
4
|
|
|
|
4
|
|
4
|
|
Balance at September 30, 2017
|
188
|
11
|
19,201
|
(4,418)
|
(738)
|
14,244
|
509
|
14,753
|
|
Due to rounding, numbers presented may not add to the totals
provided.
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to the Interim Consolidated Financial Information
|
12
Q3
2017 Financial Information
—
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 pioneering technology
leader in electrification products, robotics and motion, industrial automation
and power grids serving customers in utilities, industry and transport &
infrastructure globally.
The Company’s 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 Company’s Annual Report for the year ended December 31, 2016.
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:
·
estimates
used to record expected costs for employee severance in connection with
restructuring programs,
·
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,
self-insurance reserves, regulatory and other proceedings,
·
assumptions
used in the calculation of pension and postretirement benefits and the fair
value of pension plan assets,
·
estimates
to determine valuation allowances for deferred tax assets and amounts recorded
for uncertain tax positions,
·
growth
rates, discount rates and other assumptions used to determine impairment of
long lived assets and 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, and
·
assessment
of the allowance for doubtful accounts.
The actual results and outcomes may
differ from the Company’s estimates and assumptions.
A portion of the Company’s 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. Due
to rounding, numbers presented in the Interim Consolidated Financial
Information may not add to the totals provided. Certain amounts reported in the
Interim Consolidated Financial Information for prior periods have been
reclassified to conform to the current year’s presentation. These changes
primarily relate to the reorganization of the Company’s operating segments (see
Note 14) and to the reclassification and netting of deferred tax assets and
liabilities, as a result of the adoption of an accounting standard update on
the classification of deferred taxes (see Note 2).
─
Note 2
Recent accounting pronouncements
Applicable for current periods
Balance
sheet classification of deferred taxes
As of January 1, 2017, the Company adopted an accounting
standard update removing the requirement to separate deferred tax liabilities
and assets into current and noncurrent amounts and instead requiring all such
amounts, as well as any related valuation allowance, to be classified as
noncurrent in the consolidated balance sheets. This update was applied retrospectively
and resulted in a decrease of $297 million in both the total deferred tax
assets and total deferred tax liabilities at December 31, 2016, due to
additional netting impacts.
Simplifying
the transition to the equity method of accounting
As of January 1, 2017, the Company adopted an accounting
standard update eliminating the retroactive adjustments to an investment upon
it qualifying for the equity method of accounting as a result of an increase in
the level of ownership interest or degree of influence by the investor. It
requires that the equity method investor add the cost of acquiring the
additional interest in the investee to the current basis of the investor’s
previously held interest and adopt the equity method of accounting as of the
date the investment qualifies for equity method accounting. This update was
applied prospectively and did not have a significant impact on the consolidated
financial statements.
Improvements
to employee share-based payment accounting
As of January 1, 2017, the Company adopted an accounting
standard update which changed the accounting for certain aspects of share-based
payment awards to employees, including the accounting for income taxes,
forfeitures, and statutory tax withholding requirements, as well as the
classification in the statement of cash flows. This update did not have a
significant impact on the consolidated financial statements.
Simplifying
the test for goodwill impairment
As of January 1, 2017, the Company early-adopted an
accounting standard update eliminating the requirement to calculate the implied
fair value of goodwill when measuring a goodwill impairment loss. Instead the
Company is now required to record an impairment loss based on the excess of a
reporting unit’s carrying amount over its fair value provided that the loss
recognized does not exceed the total amount of goodwill allocated to that
reporting unit. This update was applied prospectively and did not have a
significant impact on the consolidated financial statements.
13
Q3
2017 Financial Information
Applicable for future periods
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 substantially all existing revenue recognition
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. Further updates were issued in 2016 to clarify the guidance on
identifying performance obligations, licensing and contract costs, to enhance
the implementation guidance on principal versus agent considerations and to add
other practical expedients.
In
August 2015, the effective date for the update was deferred and the update is
now effective for the Company for annual and interim periods beginning January 1,
2018, and is to be applied 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 impact on individual financial statement
lines affected). Early adoption of the standard is permitted for annual
reporting periods beginning after December 15, 2016, including interim
reporting periods within that reporting period.
The
Company will adopt these updates as of January 1, 2018, pursuant to the
aforementioned adoption method (ii) and, apart from additional disclosures,
currently does not anticipate these updates will have a significant impact on
its consolidated financial statements. The Company’s analysis of contracts
performed in 2016 resulted in immaterial differences in the identification of
performance obligations compared to the current unit of accounting
determination. Except for a limited number of contracts where the required criteria
are not met, the analysis supports the recognition of revenue over time
following the cost-to-cost method under the new revenue recognition standard
for those contracts which are following the cost-to-cost method under the current
revenue recognition model. The Company continues to evaluate the expected
impacts of the adoption of these updates and the expected impacts are subject
to change.
Recognition
and measurement of financial assets and financial liabilities
In January 2016, an accounting standard update was issued to
enhance the reporting model for financial instruments, which includes
amendments to address aspects of recognition, measurement, presentation and
disclosure. For example, the Company would be required to measure equity
investments (except those accounted for under the equity method) at fair value
with changes in fair value recognized in net income and to present separately
financial assets and financial liabilities by measurement category and form of
financial asset. This update is effective for the Company for annual and
interim periods beginning January 1, 2018, with early adoption permitted
for certain provisions. The Company is currently evaluating the impact of this
update on its consolidated financial statements.
Leases
In February 2016, an accounting standard update was issued that requires
lessees to recognize lease assets and corresponding lease liabilities on the
balance sheet for all leases with terms of more than 12 months. The update,
which supersedes existing lease guidance, will continue to classify leases as
either finance or operating, with the classification determining the pattern of
expense recognition in the income statement. This update is effective for the
Company for annual and interim periods beginning January 1, 2019, with
early adoption permitted, and is applicable on a modified retrospective basis
with various optional practical expedients. The Company is currently evaluating
the impact of this update on its consolidated financial statements.
Measurement
of credit losses on financial instruments
In June 2016, an accounting standard update was issued which
replaces the existing incurred loss impairment methodology for most financial
assets with a new “current expected credit loss” model. The new model will
result in the immediate recognition of the estimated credit losses expected to
occur over the remaining life of financial assets such as trade and other
receivables, held-to-maturity debt securities, loans and other instruments.
Credit losses relating to available-for-sale debt securities will be measured
in a manner similar to current GAAP, except that the losses will be recorded
through an allowance for credit losses rather than as a direct write-down of
the security.
This
update is effective for the Company for annual and interim periods beginning January 1,
2020, with early adoption permitted for annual and interim periods beginning January 1,
2019. The Company is currently evaluating the impact of this update on its
consolidated financial statements.
Classification
of certain cash receipts and cash payments in the statement of cash flows
In August 2016, an accounting standard update was issued which
clarifies how certain cash receipts and cash payments, including debt
prepayment or extinguishment costs, the settlement of zero coupon debt
instruments, contingent consideration paid after a business combination,
proceeds from insurance settlements, distributions from certain equity method
investees and beneficial interests obtained in a financial asset
securitization, should be presented and classified in the statement of cash
flows. This update is effective for the Company for annual and interim periods
beginning January 1, 2018 on a retrospective basis, with early adoption
permitted. The Company does not believe that this update will have a
significant impact on its consolidated financial statements.
Income taxes
– Intra-entity transfers of assets other than inventory
In October 2016, an accounting standard update was issued that
requires the Company to recognize the income tax consequences of an
intra-entity transfer of an asset other than inventory when the transfer occurs
instead of when the asset has been sold to an outside party. This update is
effective for the Company for annual and interim periods beginning
January 1, 2018, with early adoption permitted, and is applicable on a
modified retrospective basis through a cumulative-effect adjustment directly to
retained earnings as of the beginning of the period of adoption. The Company is
currently evaluating the impact of this update on its consolidated financial
statements.
Statement of
cash flows - Restricted cash
In November 2016, an accounting standard update was issued which
clarifies the classification and presentation of changes in restricted cash on
the statement of cash flows. It requires the inclusion of cash and cash
equivalents that have restrictions on withdrawal or use in total cash and cash
equivalents on the statement of cash flows. This update is effective for the
Company for annual and interim periods beginning January 1, 2018 on a
retrospective basis, with early adoption permitted. The Company does not
believe that this update will have a significant impact on its consolidated
financial statements.
<R>
</R>
<R>
</R>
14
Q3
2017 Financial Information
Clarifying the definition of a business
In January 2017, an accounting standard update was issued which narrows
the definition of a business. It also provides a framework for determining
whether a set of transferred assets and activities involves a business. This
update is effective for the Company for annual and interim periods beginning January 1,
2018 on a prospective basis, with early adoption permitted. The Company does
not believe that this update will have a significant impact on its consolidated
financial statements.
Clarifying
the scope of asset derecognition guidance and accounting for partial sales of
nonfinancial assets
In February 2017, an accounting standard update was issued which
clarifies the scope of asset derecognition guidance, adds guidance for partial
sales of nonfinancial assets and clarifies recognizing gains and losses from
the transfer of nonfinancial assets in contracts with noncustomers. The Company
plans to adopt this update retrospectively as of January 1, 2018, with the
cumulative effect of initially applying the update recognized at the date of
adoption in retained earnings. The Company does not believe that this update
will have a significant impact on its consolidated financial statements.
Improving
the presentation of net periodic pension cost and net periodic postretirement benefit
cost
In March 2017, an accounting standard update was issued which
changes how employers that sponsor defined benefit pension plans and other
postretirement plans present the net periodic benefit cost in the income
statement. Under this standard, the Company will be required to report the
service cost component in the same line item or items as other compensation
costs arising from services rendered by the pertinent employees during the
period. Other components of net benefit will be required to be presented in the
income statement separately from the service cost component and outside the
subtotal of income from operations. Under the amendment only the service cost
component is allowed to be capitalized. This update is effective for the
Company for annual and interim periods beginning January 1, 2018 on a
retrospective basis for the presentation requirements and on a prospective
basis for the capitalization of the service cost component requirements. The
Company will adopt this update as of January 1, 2018, and does not believe
that this update will have a significant impact on its consolidated financial
statements.
Compensation—Stock
Compensation
In May 2017, an accounting standard update was
issued which clarifies when to account for a change to the terms or conditions
of a share‑based payment award as a modification. Under this update,
modification accounting is required only if the fair value, the vesting
conditions, or the classification of the award (as equity or liability) changes
as a result of the change in terms or conditions. This update is effective
prospectively and will apply to awards modified on or after January 1,
2018. The Company does not believe that this update will have a significant
impact on its consolidated financial statements.
Derivatives
and Hedging—Targeted Improvements to Accounting for Hedging Activities
In August 2017, an accounting standard update was
issued which expands and refines hedge accounting for both financial and
non-financial risk components, aligns the recognition and presentation of the
effects of hedging instruments and hedge items in the financial statements, and
includes certain targeted improvements to ease the application of current
guidance related to the assessment of hedge effectiveness. This update is
effective for the Company for annual and interim periods beginning January 1,
2019. For cash flow and net investment hedges as of the adoption date, the
guidance requires a modified retrospective approach. The amended presentation
and disclosure guidance is required only prospectively. The Company will adopt
this update as of January 1, 2019, and is currently evaluating the impact of
this update on its consolidated financial statements.
─
Note 3
Acquisitions and Divestments
Acquisitions
Acquisitions were as follows:
|
|
Nine months ended
|
|
Three months ended
|
|
($ in millions, except number of acquired businesses)
|
September 30, 2017
|
|
September 30, 2017
|
|
Acquisitions (net of cash acquired)
(1)
|
2,108
|
|
2,099
|
|
Aggregate excess of purchase price over fair value of net assets
acquired
(2)
|
1,338
|
|
1,334
|
|
Number of acquired businesses
|
4
|
|
2
|
(1)
Excluding changes
in cost and equity accounted companies.
(2) Recorded as
goodwill.
In
the table
above, the “Acquisitions” and “Aggregate excess of purchase price over fair
value of net assets acquired” amounts for the nine and three months ended
September 30, 2017, relate primarily to the acquisition of Bernecker + Rainer
Industrie-Elektronik GmbH (B&R). Acquisitions for the nine and three months
ended September 30, 2016, were not significant
.
Acquisitions
of controlling interests have been accounted for under the acquisition method
and have been included in the Company’s Consolidated Financial Statements since
the date of acquisition.
While
the Company uses its best estimates and assumptions as part of the purchase
price allocation process to value assets acquired and liabilities assumed at
the acquisition date, the purchase price allocation for acquisitions is
preliminary for up to 12 months after the acquisition date and is subject to
refinement as more detailed analyses are completed and additional information
about the fair values of the assets and liabilities becomes available.
On
July 6, 2017, the Company acquired the shares of B&R. B&R is a
worldwide provider of product- and software-based, open-architecture solutions
for machine and factory automation. This acquisition closes a gap in the
Company’s industrial automation portfolio and consequently the goodwill
acquired represents the future benefits associated with product portfolio
expansion.
15
Q3
2017 Financial Information
The aggregate preliminary allocation of the
purchase consideration for business acquisitions in 2017, was as follows:
|
($ in millions)
|
Allocated amounts
(1)
|
Weighted-average
|
|
|
|
useful life
|
|
Technology
|
412
|
7 years
|
|
Customer relationships
|
267
|
19 years
|
|
Trade names
|
85
|
10 years
|
|
Order backlog
|
1
|
3 months
|
|
Intangible assets
|
765
|
|
|
Fixed assets
|
131
|
|
|
Debt acquired
|
(50)
|
|
|
Deferred tax liabilities
|
(221)
|
|
|
Inventories
|
168
|
|
|
Other assets and liabilities, net
|
(23)
|
|
|
Goodwill
(2)
|
1,338
|
|
|
Total consideration (net of cash acquired)
(3)
|
2,108
|
|
(1)
Excludes
measurement period adjustments related to prior year acquisitions.
(2) The Company
does not expect the goodwill recognized to be deductible for income tax
purposes.
(3) Primarily
relates to the acquisition of B&R.
Divestment of the high-voltage cable system business
For
the nine and three months ended September 30, 2017, the Company recorded net
gains (including transaction costs) of $330 million and net losses
(including transaction costs) of $1 million, respectively, in “Other
income (expense), net”. For the nine months ended September 30, 2017, an
associated tax expense of $28 million relating to the divestment of
consolidated businesses was recorded in “Provision for taxes”. These are
primarily due to the divestment in March 2017, of the Company’s high-voltage
cable system business (the Cables business).
The Company has retained certain obligations of the Cables
business and thus the Company remains directly or indirectly liable for these
liabilities which existed at the date of the divestment. Subsequent to the
divestment, the Company recorded a loss of $94 million for changes in the
amounts recorded for these obligations. In addition, the Company has provided
certain performance guarantees to third parties which guarantee the performance
of the buyer under existing contracts with customers as well as for certain
capital expenditures of the divested business (see Note 7).
There were no significant gains or losses recognized relating to
divestments in the nine and three months ended September 30, 2016.
Changes in total goodwill were as follows:
|
($ in millions)
|
|
|
|
Total Goodwill
|
|
Balance at December 31, 2016
|
|
|
|
9,501
|
|
Goodwill acquired during the year
(1)
|
|
|
|
1,338
|
|
Goodwill allocated to disposals
|
|
|
|
(2)
|
|
Exchange rate differences and other
|
|
|
|
343
|
|
Balance at September 31, 2017
|
|
|
|
11,180
|
(1) Includes
primarily goodwill in respect of B&R, acquired in July 2017, which has been
allocated to the Industrial Automation operating segment.
Acquisition of GE Industrial Solutions
On September 25, 2017, the Company announced that it had reached
an agreement to acquire GE Industrial Solutions, GE’s global electrification
solutions business, for $2.6 billion. The acquisition will strengthen the
Company’s global position in electrification and expand its access to the North
American market through strong customer relationships, large installed base and
extensive distribution networks, and has significant value creation potential.
GE Industrial Solutions is headquartered in Atlanta, Georgia. The Company
expects to complete the acquisition of GE Industrial Solutions in the first
half of 2018 following the receipt of customary regulatory approvals.
16
Q3
2017 Financial Information
─
Note 4
Cash and equivalents, marketable securities and
short-term investments
Cash and equivalents, marketable securities and short-term
investments consisted of the following:
|
|
|
September 30, 2017
|
|
|
|
|
|
|
|
|
Marketable
|
|
|
|
|
Gross
|
Gross
|
|
|
securities
|
|
|
|
|
unrealized
|
unrealized
|
|
Cash and
|
and short-term
|
|
($ in millions)
|
Cost basis
|
gains
|
losses
|
Fair value
|
equivalents
|
investments
|
|
Cash
|
1,648
|
|
|
1,648
|
1,648
|
–
|
|
Time deposits
|
2,078
|
|
|
2,078
|
2,001
|
77
|
|
Other short-term investments
|
304
|
|
|
304
|
–
|
304
|
|
Debt securities available-for-sale:
|
|
|
|
|
|
|
|
|
U.S. government obligations
|
207
|
1
|
(2)
|
206
|
–
|
206
|
|
|
European government obligations
|
34
|
–
|
–
|
34
|
–
|
34
|
|
|
Other government obligations
|
2
|
–
|
–
|
2
|
–
|
2
|
|
|
Corporate
|
212
|
2
|
(1)
|
213
|
–
|
213
|
|
Equity securities available-for-sale
|
150
|
12
|
–
|
162
|
–
|
162
|
|
Total
|
4,635
|
15
|
(3)
|
4,647
|
3,649
|
998
|
|
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
Marketable
|
|
|
|
|
Gross
|
Gross
|
|
|
securities
|
|
|
|
|
unrealized
|
unrealized
|
|
Cash and
|
and short-term
|
|
($ in millions)
|
Cost basis
|
gains
|
losses
|
Fair value
|
equivalents
|
investments
|
|
Cash
|
1,704
|
|
|
1,704
|
1,704
|
–
|
|
Time deposits
|
2,764
|
|
|
2,764
|
1,940
|
824
|
|
Other short-term investments
|
271
|
|
|
271
|
–
|
271
|
|
Debt securities available-for-sale:
|
|
|
|
|
|
|
|
|
U.S. government obligations
|
221
|
1
|
(2)
|
220
|
–
|
220
|
|
|
Other government obligations
|
2
|
–
|
–
|
2
|
–
|
2
|
|
|
Corporate
|
95
|
1
|
(1)
|
95
|
–
|
95
|
|
Equity securities available-for-sale
|
530
|
11
|
–
|
541
|
–
|
541
|
|
Total
|
5,587
|
13
|
(3)
|
5,597
|
3,644
|
1,953
|
Included in Other short-term investments at September 30, 2017,
and December 31, 2016, are receivables of $301 million and $268 million,
respectively, representing reverse repurchase agreements. These collateralized
lendings, made to a financial institution, have maturity dates of less than one
year.
─
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 Company’s 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 Company’s 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 Company’s 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 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 Company’s 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, the Company’s 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.
17
Q3
2017 Financial Information
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 Company’s 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, indexed to the shares of
the Company, which entitle the Company to receive amounts equivalent to its
obligations under the outstanding WARs.
Volume of derivative activity
In general, while the Company’s 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 at
|
|
($ in millions)
|
September 30, 2017
|
December 31, 2016
|
September 30, 2016
|
|
Foreign exchange contracts
|
16,562
|
15,353
|
16,381
|
|
Embedded foreign exchange derivatives
|
1,845
|
2,162
|
2,919
|
|
Interest rate contracts
|
5,310
|
3,021
|
3,348
|
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 Company’s requirements in the various commodities:
|
Type of derivative
|
Unit
|
Total notional amounts at
|
|
|
|
September 30, 2017
|
December 31, 2016
|
September 30, 2016
|
|
Copper swaps
|
metric tonnes
|
44,013
|
47,425
|
54,321
|
|
Aluminum swaps
|
metric tonnes
|
5,300
|
4,650
|
4,950
|
|
Nickel swaps
|
metric tonnes
|
12
|
–
|
–
|
|
Lead swaps
|
metric tonnes
|
125
|
15,100
|
18,025
|
|
Zinc swaps
|
metric tonnes
|
250
|
150
|
150
|
|
Silver swaps
|
ounces
|
2,074,213
|
1,586,395
|
1,885,370
|
|
Crude oil swaps
|
barrels
|
173,398
|
121,000
|
122,000
|
Equity
derivatives
At September 30, 2017, December 31, 2016, and September 30, 2016,
the Company held 43 million, 47 million and 49 million
cash-settled call options indexed to ABB Ltd shares (conversion ratio 5:1) with
a total fair value of $35 million, $23 million and $28 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 September 30, 2017, and December 31, 2016, “Accumulated other
comprehensive loss” included net unrealized gains of $4 million and net
unrealized losses of $1 million, respectively, net of tax, on derivatives
designated as cash flow hedges. Of the amount at September 30, 2017, net gains
of $6 million are expected to be reclassified to earnings in the following
12 months. At September 30, 2017, the longest maturity of a derivative
classified as a cash flow hedge was 30
months.
The amount of gains or losses, net of tax, reclassified into
earnings due to the discontinuance of cash flow hedge accounting and the amount
of ineffectiveness in cash flow hedge relationships directly recognized in
earnings were not significant in the nine and three months ended September 30,
2017 and 2016.
The pre-tax effects of derivative instruments, designated and
qualifying as cash flow hedges, on “Accumulated other comprehensive loss” (OCI)
and the Consolidated Income Statements were as follows:
|
|
Gains (losses) recognized
in OCI
|
|
|
Gains (losses)
reclassified from OCI
|
|
($ in millions)
|
on derivatives (effective
portion)
|
|
|
into income (effective
portion)
|
|
Nine months ended September 30,
|
2017
|
2016
|
|
|
2017
|
2016
|
|
Type of derivative
|
|
|
|
Location
|
|
|
|
Foreign exchange contracts
|
8
|
8
|
|
Total revenues
|
(2)
|
(9)
|
|
|
|
|
|
Total cost of sales
|
3
|
9
|
|
Commodity contracts
|
6
|
1
|
|
Total cost of sales
|
5
|
(2)
|
|
Cash-settled call options
|
11
|
18
|
|
SG&A expenses
(1)
|
9
|
12
|
|
Total
|
25
|
27
|
|
|
15
|
10
|
18
Q3
2017 Financial Information
|
|
Gains (losses) recognized
in OCI
|
|
|
Gains (losses)
reclassified from OCI
|
|
($ in millions)
|
on derivatives (effective
portion)
|
|
|
into income (effective
portion)
|
|
Three months ended September 30,
|
2017
|
2016
|
|
|
2017
|
2016
|
|
Type of derivative
|
|
|
|
Location
|
|
|
|
Foreign exchange contracts
|
(2)
|
8
|
|
Total revenues
|
1
|
(3)
|
|
|
|
|
|
Total cost of sales
|
–
|
2
|
|
Commodity contracts
|
4
|
–
|
|
Total cost of sales
|
1
|
1
|
|
Cash-settled call options
|
(1)
|
15
|
|
SG&A expenses
(1)
|
–
|
11
|
|
Total
|
1
|
23
|
|
|
2
|
11
|
(1) SG&A
expenses
represent
“Selling,
general
and
administrative
expenses”.
The
amounts in respect of gains (losses) recognized in income for hedge
ineffectiveness and amounts excluded from effectiveness testing were not
significant for the nine and three months ended September 30, 2017 and 2016.
Net
derivative gains of $11 million and $9 million, both net of tax, were
reclassified from “Accumulated other comprehensive loss” to earnings during the
nine months ended September 30, 2017 and 2016. During the three months ended
September 30, 2017 and 2016, net derivative gains of $1 million and $9
million,
both net of tax, respectively, were reclassified from “Accumulated other
comprehensive loss” to earnings.
Fair value hedges
To reduce its interest rate exposure arising primarily from its
debt issuance activities, the Company uses interest rate swaps. Where such
instruments are designated as fair value hedges, the changes in the fair value
of these instruments, as well as the changes in the fair value of the risk
component of the underlying debt being hedged, are recorded as offsetting gains
and losses in “Interest and other finance expense”. Hedge ineffectiveness of
instruments designated as fair value hedges for the nine and three months ended
September 30, 2017 and 2016, was not significant.
The effect of interest rate contracts, designated and qualifying
as fair value hedges, on the Consolidated Income Statements was as follows:
|
|
Nine months ended
September 30,
|
Three months ended
September 30,
|
|
($ in millions)
|
2017
|
2016
|
2017
|
2016
|
|
Gains (losses) recognized in Interest and other finance expense:
|
|
|
|
|
|
- on derivatives designated as fair value hedges
|
(3)
|
32
|
(3)
|
(16)
|
|
- on hedged item
|
5
|
(30)
|
2
|
17
|
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.
The gains (losses) recognized in the Consolidated Income
Statements on derivatives not designated in hedging relationships were as
follows:
|
Type of derivative not
|
Gains (losses) recognized
in income
|
|
designated as a hedge
|
|
Nine months ended
September 30,
|
Three months ended
September 30,
|
|
($ in millions)
|
Location
|
2017
|
2016
|
2017
|
2016
|
|
Foreign exchange contracts
|
Total revenues
|
203
|
(19)
|
36
|
(42)
|
|
|
Total cost of sales
|
(40)
|
(69)
|
(14)
|
(10)
|
|
|
SG&A expenses
(1)
|
(19)
|
(5)
|
(9)
|
–
|
|
|
Non-order related research
|
|
|
|
|
|
|
and development
|
–
|
(1)
|
–
|
–
|
|
|
Other income (expense), net
|
(1)
|
–
|
–
|
–
|
|
|
Interest and other finance expense
|
42
|
(45)
|
29
|
3
|
|
Embedded foreign exchange
|
Total revenues
|
(30)
|
(41)
|
(7)
|
8
|
|
contracts
|
Total cost of sales
|
1
|
7
|
1
|
1
|
|
|
SG&A expenses
(1)
|
5
|
1
|
–
|
–
|
|
Commodity contracts
|
Total cost of sales
|
31
|
15
|
13
|
5
|
|
Other
|
Interest and other finance expense
|
(2)
|
2
|
1
|
3
|
|
Total
|
|
190
|
(155)
|
50
|
(32)
|
(1)
SG&A
expenses
represent
“Selling,
general
and
administrative
expenses”.
19
Q3
2017 Financial Information
The fair values of derivatives included in the
Consolidated Balance Sheets were as follows:
|
|
September 30, 2017
|
|
|
Derivative assets
|
|
Derivative liabilities
|
|
|
Current in
|
Non-current in
|
|
Current in
|
Non-current in
|
|
|
“Other current
|
“Other non-current
|
|
“Other current
|
“Other non-current
|
|
($ in millions)
|
assets”
|
assets”
|
|
liabilities”
|
liabilities”
|
|
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
Foreign exchange contracts
|
4
|
–
|
|
4
|
1
|
|
Commodity contracts
|
3
|
–
|
|
1
|
–
|
|
Interest rate contracts
|
1
|
60
|
|
–
|
–
|
|
Cash-settled call options
|
22
|
11
|
|
–
|
–
|
|
Total
|
30
|
71
|
|
5
|
1
|
|
|
|
|
|
|
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
Foreign exchange contracts
|
143
|
28
|
|
165
|
56
|
|
Commodity contracts
|
30
|
1
|
|
7
|
–
|
|
Cash-settled call options
|
1
|
1
|
|
–
|
–
|
|
Embedded foreign exchange derivatives
|
27
|
14
|
|
32
|
6
|
|
Total
|
201
|
44
|
|
204
|
62
|
|
Total fair value
|
231
|
115
|
|
209
|
63
|
|
|
December 31, 2016
|
|
|
Derivative assets
|
|
Derivative liabilities
|
|
|
Current in
|
Non-current in
|
|
Current in
|
Non-current in
|
|
|
“Other current
|
“Other non-current
|
|
“Other current
|
“Other non-current
|
|
($ in millions)
|
assets”
|
assets”
|
|
liabilities”
|
liabilities”
|
|
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
Foreign exchange contracts
|
5
|
–
|
|
6
|
5
|
|
Commodity contracts
|
2
|
–
|
|
–
|
–
|
|
Interest rate contracts
|
2
|
62
|
|
–
|
–
|
|
Cash-settled call options
|
13
|
9
|
|
–
|
–
|
|
Total
|
22
|
71
|
|
6
|
5
|
|
|
|
|
|
|
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
Foreign exchange contracts
|
169
|
29
|
|
257
|
77
|
|
Commodity contracts
|
29
|
2
|
|
6
|
1
|
|
Cross-currency interest rate swaps
|
–
|
2
|
|
–
|
–
|
|
Cash-settled call options
|
–
|
1
|
|
–
|
–
|
|
Embedded foreign exchange derivatives
|
58
|
21
|
|
35
|
18
|
|
Total
|
256
|
55
|
|
298
|
96
|
|
Total fair value
|
278
|
126
|
|
304
|
101
|
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 September 30, 2017, and December 31, 2016, have been
presented on a gross basis.
20
Q3
2017 Financial Information
The Company’s netting agreements and other
similar arrangements allow net settlements under certain conditions. At
September 30, 2017, and December 31, 2016, information related to these
offsetting arrangements was as follows:
|
($ in millions)
|
September 30, 2017
|
|
|
Gross amount
|
Derivative liabilities
|
Cash
|
Non-cash
|
|
|
Type of agreement or
|
of recognized
|
eligible for set-off
|
collateral
|
collateral
|
Net asset
|
|
similar arrangement
|
assets
|
in case of default
|
received
|
received
|
exposure
|
|
Derivatives
|
305
|
(170)
|
–
|
–
|
135
|
|
Reverse repurchase agreements
|
301
|
–
|
–
|
(301)
|
–
|
|
Total
|
606
|
(170)
|
–
|
(301)
|
135
|
|
|
|
|
|
|
|
|
($ in millions)
|
September 30, 2017
|
|
|
Gross amount
|
Derivative liabilities
|
Cash
|
Non-cash
|
|
|
Type of agreement or
|
of recognized
|
eligible for set-off
|
collateral
|
collateral
|
Net liability
|
|
similar arrangement
|
liabilities
|
in case of default
|
pledged
|
pledged
|
exposure
|
|
Derivatives
|
234
|
(170)
|
–
|
–
|
64
|
|
Total
|
234
|
(170)
|
–
|
–
|
64
|
|
($ in millions)
|
December 31, 2016
|
|
|
Gross amount
|
Derivative liabilities
|
Cash
|
Non-cash
|
|
|
Type of agreement or
|
of recognized
|
eligible for set-off
|
collateral
|
collateral
|
Net asset
|
|
similar arrangement
|
assets
|
in case of default
|
received
|
received
|
exposure
|
|
Derivatives
|
325
|
(190)
|
–
|
–
|
135
|
|
Reverse repurchase agreements
|
268
|
–
|
–
|
(268)
|
–
|
|
Total
|
593
|
(190)
|
–
|
(268)
|
135
|
|
|
|
|
|
|
|
|
($ in millions)
|
December 31, 2016
|
|
|
Gross amount
|
Derivative liabilities
|
Cash
|
Non-cash
|
|
|
Type of agreement or
|
of recognized
|
eligible for set-off
|
collateral
|
collateral
|
Net liability
|
|
similar arrangement
|
liabilities
|
in case of default
|
pledged
|
pledged
|
exposure
|
|
Derivatives
|
352
|
(190)
|
–
|
–
|
162
|
|
Total
|
352
|
(190)
|
–
|
–
|
162
|
─
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 Company’s 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 certain actively traded debt securities.
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, reverse repurchase
agreements, 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 Company’s 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 Company’s 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
21
Q3
2017 Financial Information
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:
|
|
September 30, 2017
|
|
($ in millions)
|
Level 1
|
Level 2
|
Level 3
|
Total fair value
|
|
Assets
|
|
|
|
|
|
Available-for-sale securities in “Marketable securities and
short-term investments”:
|
|
|
|
|
|
Equity securities
|
–
|
162
|
–
|
162
|
|
Debt securities—U.S. government obligations
|
206
|
–
|
–
|
206
|
|
Debt securities—European government obligations
|
34
|
–
|
–
|
34
|
|
Debt securities—Other government obligations
|
–
|
2
|
–
|
2
|
|
Debt securities—Corporate
|
–
|
213
|
–
|
213
|
|
Derivative assets—current in “Other current assets”
|
–
|
231
|
–
|
231
|
|
Derivative assets—non-current in “Other non-current assets”
|
–
|
115
|
–
|
115
|
|
Total
|
240
|
723
|
–
|
963
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Derivative liabilities—current in “Other current liabilities”
|
–
|
209
|
–
|
209
|
|
Derivative liabilities—non-current in “Other non-current
liabilities”
|
–
|
63
|
–
|
63
|
|
Total
|
–
|
272
|
–
|
272
|
|
|
December 31, 2016
|
|
($ in millions)
|
Level 1
|
Level 2
|
Level 3
|
Total fair value
|
|
Assets
|
|
|
|
|
|
Available-for-sale securities in “Marketable securities and
short-term investments”:
|
|
|
|
|
|
Equity securities
|
–
|
541
|
–
|
541
|
|
Debt securities—U.S. government obligations
|
220
|
–
|
–
|
220
|
|
Debt securities—Other government obligations
|
–
|
2
|
–
|
2
|
|
Debt securities—Corporate
|
–
|
95
|
–
|
95
|
|
Derivative assets—current in “Other current assets”
|
–
|
278
|
–
|
278
|
|
Derivative assets—non-current in “Other non-current assets”
|
–
|
126
|
–
|
126
|
|
Total
|
220
|
1,042
|
–
|
1,262
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Derivative liabilities—current in “Other current liabilities”
|
–
|
304
|
–
|
304
|
|
Derivative liabilities—non-current in “Other non-current
liabilities”
|
–
|
101
|
–
|
101
|
|
Total
|
–
|
405
|
–
|
405
|
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 “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 Company’s 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 nine and three months ended September 30, 2017
and 2016.
22
Q3
2017 Financial Information
Disclosure
about financial instruments carried on a cost basis
The fair values of financial instruments
carried on a cost basis were as follows:
|
|
September 30, 2017
|
|
($ 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
|
1,648
|
|
1,648
|
–
|
–
|
1,648
|
|
Time deposits
|
2,001
|
|
–
|
2,001
|
–
|
2,001
|
|
Marketable securities and short-term investments
|
|
|
|
|
|
|
|
(excluding available-for-sale securities):
|
|
|
|
|
|
|
|
Time deposits
|
77
|
|
–
|
77
|
–
|
77
|
|
Receivables under reverse repurchase agreements
|
301
|
|
–
|
301
|
–
|
301
|
|
Other short-term investments
|
3
|
|
3
|
–
|
–
|
3
|
|
Other non-current assets:
|
|
|
|
|
|
|
|
Loans granted
|
32
|
|
–
|
34
|
–
|
34
|
|
Restricted cash deposits
|
43
|
|
43
|
–
|
–
|
43
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Short-term debt and current maturities of long-term debt
|
|
|
|
|
|
|
|
(excluding capital lease obligations)
|
810
|
|
359
|
451
|
–
|
810
|
|
Long-term debt (excluding capital lease obligations)
|
6,928
|
|
6,390
|
797
|
–
|
7,187
|
|
|
December 31, 2016
|
|
($ 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
|
1,704
|
|
1,704
|
–
|
–
|
1,704
|
|
Time deposits
|
1,940
|
|
–
|
1,940
|
–
|
1,940
|
|
Marketable securities and short-term investments
|
|
|
|
|
|
|
|
(excluding available-for-sale securities):
|
|
|
|
|
|
|
|
Time deposits
|
824
|
|
–
|
824
|
–
|
824
|
|
Receivables under reverse repurchase agreements
|
268
|
|
–
|
268
|
–
|
268
|
|
Other short-term investments
|
3
|
|
3
|
–
|
–
|
3
|
|
Other non-current assets:
|
|
|
|
|
|
|
|
Loans granted
|
30
|
|
–
|
31
|
–
|
31
|
|
Restricted cash deposits
|
59
|
|
59
|
–
|
–
|
59
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Short-term debt and current maturities of long-term debt
|
|
|
|
|
|
|
|
(excluding capital lease obligations)
|
980
|
|
856
|
124
|
–
|
980
|
|
Long-term debt (excluding capital lease obligations)
|
5,709
|
|
5,208
|
784
|
–
|
5,992
|
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 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),
and (ii) restricted cash whose fair values approximate the carrying amounts
(Level 1 inputs).
·
Short-term
debt and current maturities of long-term debt (excluding capital lease
obligations)
:
Short-term debt includes commercial paper, bank borrowings and overdrafts. The
carrying amounts of short-term debt and current maturities of long-term debt,
excluding capital lease obligations, approximate their fair values.
·
Long-term
debt (excluding capital lease obligations)
: Fair values of bonds are determined using quoted market
prices (Level 1 inputs), if available. For bonds without available quoted
market prices and other long-term debt, the fair values 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).
23
Q3
2017 Financial Information
─
Note 7
Commitments and contingencies
Contingencies—Regulatory, 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
Commission’s leniency program. In December 2013, the Company agreed with the
Brazilian Antitrust Authority (CADE) to settle its ongoing investigation into
the Company’s 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).
In
Brazil, the Company’s 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. With respect to these matters, management is cooperating fully
with the authorities. 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.
Suspect
payments
As a result of an internal investigation, the Company
self-reported to the Securities and Exchange Commission (SEC) and the
Department of Justice (DoJ) in the United States as well as to the Serious
Fraud Office (SFO) in the United Kingdom concerning certain of its past
dealings with Unaoil and its subsidiaries, including alleged improper payments
made by these entities to third parties. The SFO has commenced an investigation
into this matter. The Company is cooperating fully with the authorities. At
this time, it is not possible for the Company to make an informed judgment
about the outcome of 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 September 30, 2017, and December 31, 2016, the Company had
aggregate liabilities of $220 million and $150 million, included in
“Other provisions” and “Other non-current liabilities”, for the above
regulatory, compliance and legal contingencies, and none of the individual
liabilities recognized was significant. As it is not possible to make an
informed judgment on the outcome of certain matters and as it is not possible,
based on information currently available to management, to estimate the maximum
potential liability on other matters, there could be material adverse outcomes
beyond the amounts accrued.
Guarantees
General
The following table provides quantitative data regarding the
Company’s third-party guarantees. The maximum potential payments represent a
“worst‑case scenario”, and do not reflect management’s expected outcomes.
|
Maximum potential payments
($ in millions)
|
September 30, 2017
|
December 31, 2016
|
|
Performance guarantees
|
1,477
|
193
|
|
Financial guarantees
|
18
|
69
|
|
Indemnification guarantees
|
74
|
71
|
|
Total
|
1,569
|
333
|
The carrying amount of liabilities recorded in the Consolidated
Balance Sheets reflects the Company’s best estimate of future payments, which
it may incur as part of fulfilling its guarantee obligations. In respect of the
above guarantees, the carrying amounts of liabilities at September 30, 2017,
and December 31, 2016, were not significant.
The Company is party to various guarantees providing financial or
performance assurances to certain third parties. These guarantees, which have
various maturities up to 2027, mainly consist of performance guarantees whereby
(i) the Company guarantees the performance of a third party’s product or
service according to the terms of a contract and (ii) as member of a
consortium that includes third parties, the Company guarantees not only its own
performance but also the work of third parties. 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. The original maturity dates for the
majority of these performance guarantees range from one to eight years.
In conjunction with the divestment of the high-voltage cable system
business, the Company has entered into various performance guarantees with
other parties with respect to certain liabilities of the divested business. At
September 30, 2017, the maximum potential payable under these guarantees
amounts to $922 million and these guarantees have various maturities
ranging from one to ten years.
Commercial
commitments
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. At September 30, 2017, and
December 31, 2016, the total outstanding performance bonds aggregated to $8.1
billion
and $7.9 billion, respectively. There have been no significant amounts
reimbursed to financial institutions under these types of arrangements in the
nine and three months ended September 30, 2017 and 2016.
24
Q3
2017 Financial Information
Product and order-related contingencies
The Company calculates its provision for product warranties based
on historical claims experience and specific review of certain contracts.
The reconciliation of the “Provisions for warranties”, including
guarantees of product performance, was as follows:
|
($ in millions)
|
2017
|
2016
|
|
Balance at January 1,
|
1,142
|
1,089
|
|
Net change in warranties due to acquisitions and divestments
|
30
|
–
|
|
Claims paid in cash or in kind
|
(247)
|
(238)
|
|
Net increase in provision for changes in estimates, warranties
issued and warranties expired
|
184
|
240
|
|
Exchange rate differences
|
91
|
13
|
|
Balance at September 30,
|
1,200
|
1,104
|
During 2016, the Company determined that the provision for product
warranties in its solar business, acquired in 2013 as part of the purchase of
Power-One, was no longer sufficient to cover expected warranty costs in the
remaining warranty period. Due to higher than originally expected product
failure rates for certain solar inverters designed and manufactured by
Power-One, a substantial portion of which relates to products which were
delivered to customers prior to the acquisition date, the previously estimated
product warranty provision was increased during the nine and three months ended
September 30, 2016, by $41 million and $18 million, respectively.
The corresponding increases were included in Cost of sales of products and
resulted in a decrease in both basic and diluted earnings per share of $0.02
for the nine months ended September 30, 2016, and a decrease of $0.01 (basic)
for the three months ended September 30, 2016. As $39 million and
$17 million of these warranty costs for the nine and three months ended
September 30, 2016, respectively, relate to products which were sold prior
to the acquisition date, these costs have been excluded from the Company’s
primary measure of segment performance, Operational EBITA (See Note 14).
The information for 2016 contained in the table above has been
adjusted to correct a classification difference between Claims paid in cash and
kind and Net effect of changes in estimates, warranties issued and warranties
expired.
─
Note 8
Debt
The Company’s total debt at September 30, 2017, and December 31,
2016, amounted to $7,892 million and $6,803 million, respectively.
Short-term debt and current maturities of long-term debt
The Company’s “Short-term debt and current maturities of long-term
debt” consisted of the following:
|
($ in millions)
|
September 30, 2017
|
December 31, 2016
|
|
Short-term debt
|
483
|
135
|
|
Current maturities of long-term debt
|
348
|
868
|
|
Total
|
831
|
1,003
|
Short-term
debt primarily represented issued commercial paper and short-term loans from
various banks. At September 30, 2017, and December 31, 2016, $406 million
and $57 million, respectively, was outstanding under the $2 billion
commercial paper program in the United States.
In May
2017, the Company repaid at maturity the USD 500 million 1.625%
Notes.
Long-term debt
The Company’s long-term debt at September 30, 2017, and December
31, 2016, amounted to $7,061 million and $5,800 million,
respectively.
Outstanding bonds (including maturities within the next 12 months)
were as follows:
|
|
September 30, 2017
|
December 31, 2016
|
|
(in millions)
|
Nominal outstanding
|
Carrying value
(1)
|
Nominal outstanding
|
Carrying value
(1)
|
|
Bonds:
|
|
|
|
|
|
|
|
|
|
1.625% USD Notes, due 2017
|
|
|
|
–
|
USD
|
500
|
$
|
500
|
|
4.25% AUD Notes, due 2017
|
AUD
|
400
|
$
|
314
|
AUD
|
400
|
$
|
291
|
|
1.50% CHF Bonds, due 2018
|
CHF
|
350
|
$
|
360
|
CHF
|
350
|
$
|
342
|
|
2.625% EUR Instruments, due 2019
|
EUR
|
1,250
|
$
|
1,475
|
EUR
|
1,250
|
$
|
1,311
|
|
4.0% USD Notes, due 2021
|
USD
|
650
|
$
|
644
|
USD
|
650
|
$
|
643
|
|
2.25% CHF Bonds, due 2021
|
CHF
|
350
|
$
|
384
|
CHF
|
350
|
$
|
368
|
|
5.625% USD Notes, due 2021
|
USD
|
250
|
$
|
271
|
USD
|
250
|
$
|
274
|
|
2.875% USD Notes, due 2022
|
USD
|
1,250
|
$
|
1,260
|
USD
|
1,250
|
$
|
1,261
|
|
0.625% EUR Notes, due 2023
|
EUR
|
700
|
$
|
827
|
EUR
|
700
|
$
|
732
|
|
0.75% EUR Notes, due 2024
|
EUR
|
750
|
$
|
881
|
|
|
|
–
|
|
4.375% USD Notes, due 2042
|
USD
|
750
|
$
|
723
|
USD
|
750
|
$
|
722
|
|
Total
|
|
|
$
|
7,139
|
|
|
$
|
6,444
|
(1)
USD
carrying values include unamortized debt issuance costs, bond discounts or
premiums, as well as adjustments for fair value hedge accounting, where
appropriate.
25
Q3
2017 Financial Information
In May 2017, the
Company issued notes with an aggregate principal of EUR 750 million, due 2024.
The notes pay interest annually in arrears at a fixed rate of 0.75 percent per
annum. The Company recorded net proceeds (after underwriting fees) of EUR
745 million (equivalent to approximately $824 million on date of
issuance).
─
Note 9
Employee benefits
The Company operates defined benefit pension plans, defined
contribution pension plans, and termination indemnity plans, in accordance with
local regulations and practices. These plans cover a large portion of the
Company’s employees and provide benefits to employees in the event of death,
disability, retirement, or termination of employment. Certain of these plans
are multi-employer plans. The Company also operates other postretirement
benefit plans including postretirement health care benefits, and other employee-related
benefits for active employees including long-service award plans. The
measurement date used for the Company’s employee benefit plans is December 31.
The funding policies of the Company’s plans are consistent with the local
government and tax requirements.
Net periodic benefit cost of the Company’s defined benefit pension
and other postretirement benefit plans consisted of the following:
|
($ in millions)
|
Defined pension benefits
|
Other postretirement
benefits
|
|
Nine months ended September 30,
|
2017
|
2016
|
2017
|
2016
|
|
Service cost
|
178
|
191
|
1
|
1
|
|
Interest cost
|
193
|
213
|
3
|
4
|
|
Expected return on plan assets
|
(311)
|
(306)
|
–
|
–
|
|
Amortization of prior service cost (credit)
|
14
|
30
|
(3)
|
(8)
|
|
Amortization of net actuarial loss
|
69
|
65
|
(1)
|
–
|
|
Curtailments, settlements and special termination benefits
|
2
|
2
|
–
|
–
|
|
Net periodic benefit cost
|
145
|
195
|
–
|
(3)
|
|
($ in millions)
|
Defined pension benefits
|
Other postretirement
benefits
|
|
Three months ended September 30,
|
2017
|
2016
|
2017
|
2016
|
|
Service cost
|
56
|
65
|
1
|
1
|
|
Interest cost
|
68
|
71
|
1
|
1
|
|
Expected return on plan assets
|
(109)
|
(102)
|
–
|
–
|
|
Amortization of prior service cost (credit)
|
(4)
|
9
|
(1)
|
(2)
|
|
Amortization of net actuarial loss
|
25
|
22
|
(1)
|
–
|
|
Curtailments, settlements and special termination benefits
|
1
|
1
|
–
|
–
|
|
Net periodic benefit cost
|
37
|
66
|
–
|
–
|
Employer contributions were as follows:
|
($ in millions)
|
Defined pension benefits
|
Other postretirement
benefits
|
|
Nine months ended September 30,
|
2017
|
2016
|
2017
|
2016
|
|
Total contributions to defined benefit pension and
|
|
|
|
|
|
other postretirement benefit plans
|
145
|
184
|
7
|
9
|
|
($ in millions)
|
Defined pension benefits
|
Other postretirement
benefits
|
|
Three months ended September 30,
|
2017
|
2016
|
2017
|
2016
|
|
Total contributions to defined benefit pension and
|
|
|
|
|
|
other postretirement benefit plans
|
50
|
44
|
3
|
3
|
During
the nine months ended September 30, 2016, total contributions included
available-for-sale debt securities, having a fair value at the contribution
date of $40 million, contributed to certain of the Company’s pension plans in
Germany.
The
Company expects to make contributions totaling approximately $226 million
and $13 million to its defined benefit pension plans and other
postretirement benefit plans, respectively, for the full year 2017.
26
Q3
2017 Financial Information
─
Note 10
Stockholders’ equity
Between September 2014 and September 2016, the Company executed a
share buyback program for the purchase of up to $4 billion of its own
shares and on September 30, 2016, announced that it had completed this program.
Over the period of the share buyback, the Company purchased a total of
146.595 million shares (for approximately $3 billion) for
cancellation and 24.740 million shares (for approximately
$0.5 billion) to support its employee share programs.
In the second quarter of 2017, the Company purchased on the open
market an aggregate of 10 million of its own shares. These shares were
purchased outside of any share buyback program and are for use in connection
with employee share programs. These transactions resulted in an increase in
Treasury stock of $251 million.
In the nine months ended September 30, 2017, the Company
delivered, out of treasury stock, 5.1 million shares for options exercised in
connection with its Management Incentive Plan.
At the Annual General Meeting of Shareholders on April 13, 2017,
shareholders approved the proposal of the Board of Directors to distribute
0.76 Swiss francs per share to shareholders. The declared dividend
amounted to $1,622 million and was paid in the second quarter of 2017. At
the meeting, the shareholders also approved the proposal of the Board of
Directors to reduce the share capital of the Company by cancelling 46,595,000
shares which were previously bought back under the share buyback program
announced in September 2014. The cancellation was completed in July 2017,
resulting in a decrease in Treasury stock of $953 million and a corresponding
total decrease in Capital stock, Additional paid-in capital and Retained
earnings.
─
Note 11
Earnings per share
Basic earnings per share is calculated by dividing income by the
weighted-average number of shares outstanding during the period. Diluted
earnings per share is calculated by dividing income by the weighted-average
number of shares outstanding during the period, assuming that all potentially
dilutive securities were exercised, if dilutive. Potentially dilutive
securities comprise outstanding written call options, and outstanding options
and shares granted subject to certain conditions under the Company’s
share-based payment arrangements.
|
Basic earnings per share
|
|
|
|
|
Nine months ended
September 30,
|
Three months ended
September 30,
|
|
($ in millions, except per share data in $)
|
2017
|
2016
|
2017
|
2016
|
|
Amounts attributable to ABB shareholders:
|
|
|
|
|
|
Income from continuing operations, net of tax
|
1,826
|
1,460
|
576
|
552
|
|
Income (loss) from discontinued operations, net of tax
|
(6)
|
14
|
(5)
|
16
|
|
Net income
|
1,820
|
1,474
|
571
|
568
|
|
|
|
|
|
|
|
Weighted-average number of shares outstanding (in
millions)
|
2,138
|
2,155
|
2,134
|
2,135
|
|
|
|
|
|
|
|
Basic earnings per share attributable to ABB shareholders:
|
|
|
|
|
|
Income from continuing operations, net of tax
|
0.85
|
0.68
|
0.27
|
0.26
|
|
Income (loss) from discontinued operations, net of tax
|
–
|
–
|
–
|
0.01
|
|
Net income
|
0.85
|
0.68
|
0.27
|
0.27
|
|
|
|
|
|
|
|
Diluted earnings per share
|
|
|
|
|
Nine months ended
September 30,
|
Three months ended
September 30,
|
|
($ in millions, except per share data in $)
|
2017
|
2016
|
2017
|
2016
|
|
Amounts attributable to ABB shareholders:
|
|
|
|
|
|
Income from continuing operations, net of tax
|
1,826
|
1,460
|
576
|
552
|
|
Income (loss) from discontinued operations, net of tax
|
(6)
|
14
|
(5)
|
16
|
|
Net income
|
1,820
|
1,474
|
571
|
568
|
|
|
|
|
|
|
|
Weighted-average number of shares outstanding (in millions)
|
2,138
|
2,155
|
2,134
|
2,135
|
|
Effect of dilutive securities:
|
|
|
|
|
|
Call options and shares
|
9
|
4
|
8
|
4
|
|
Adjusted weighted-average number of shares outstanding (in
millions)
|
2,147
|
2,159
|
2,142
|
2,139
|
|
|
|
|
|
|
|
Diluted earnings per share attributable to ABB shareholders:
|
|
|
|
|
|
Income from continuing operations, net of tax
|
0.85
|
0.68
|
0.27
|
0.26
|
|
Income (loss) from discontinued operations, net of tax
|
–
|
–
|
–
|
0.01
|
|
Net income
|
0.85
|
0.68
|
0.27
|
0.27
|
27
Q3
2017 Financial Information
─
Note 12
Reclassifications out of accumulated other
comprehensive loss
The following table shows changes in “Accumulated other
comprehensive loss” (OCI) attributable to ABB, by component, net of tax:
|
|
|
Unrealized gains
|
Pension and
|
Unrealized gains
|
|
|
|
Foreign currency
|
(losses) on
|
other
|
(losses) of cash
|
|
|
|
translation
|
available-for-sale
|
postretirement
|
flow hedge
|
|
|
($ in millions)
|
adjustments
|
securities
|
plan adjustments
|
derivatives
|
Total OCI
|
|
Balance at January 1, 2016
|
(3,135)
|
7
|
(1,719)
|
(11)
|
(4,858)
|
|
Other comprehensive (loss) income
|
|
|
|
|
|
|
before reclassifications
|
105
|
8
|
22
|
22
|
157
|
|
Amounts reclassified from OCI
|
–
|
(1)
|
67
|
(9)
|
57
|
|
Changes attributable to divestments
|
(7)
|
–
|
–
|
–
|
(7)
|
|
Total other comprehensive (loss) income
|
98
|
7
|
89
|
13
|
207
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
Amounts attributable to
|
|
|
|
|
|
|
noncontrolling interests
|
1
|
–
|
–
|
–
|
1
|
|
Balance at September 30, 2016
|
(3,038)
|
14
|
(1,630)
|
2
|
(4,652)
|
|
|
|
Unrealized gains
|
Pension and
|
Unrealized gains
|
|
|
|
Foreign currency
|
(losses) on
|
other
|
(losses) of cash
|
|
|
|
translation
|
available-for-sale
|
postretirement
|
flow hedge
|
|
|
($ in millions)
|
adjustments
|
securities
|
plan adjustments
|
derivatives
|
Total OCI
|
|
Balance at January 1, 2017
|
(3,592)
|
7
|
(1,601)
|
(1)
|
(5,187)
|
|
Other comprehensive (loss) income
|
|
|
|
|
|
|
before reclassifications
|
872
|
3
|
(156)
|
19
|
738
|
|
Amounts reclassified from OCI
|
–
|
–
|
60
|
(11)
|
49
|
|
Changes attributable to divestments
(1)
|
(5)
|
–
|
6
|
(3)
|
(2)
|
|
Total other comprehensive (loss) income
|
867
|
3
|
(90)
|
5
|
785
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
Amounts attributable to
|
|
|
|
|
|
|
noncontrolling interests
|
17
|
–
|
–
|
–
|
17
|
|
Balance at September 30, 2017
(2)
|
(2,741)
|
10
|
(1,691)
|
4
|
(4,418)
|
(1)
Amounts relate to the divestment of the high-voltage cable system business and are
included in the net gain from sale of the business (
see
Note
3).
(2)
Due to rounding, numbers presented may not add to the totals provided.
The following table reflects
amounts reclassified out of OCI in respect of pension and other postretirement
plan:
|
|
|
Nine months ended
|
Three months ended
|
|
($ in millions)
|
Location of (gains) losses
|
September 30,
|
September 30,
|
|
Details about OCI components
|
reclassified from OCI
|
2017
|
2016
|
2017
|
2016
|
|
|
|
|
|
|
|
|
Pension and other postretirement plan adjustments:
|
|
|
|
|
|
|
Amortization of prior service cost (credit)
|
Net periodic benefit cost
(1)
|
11
|
22
|
(5)
|
7
|
|
Amortization of net actuarial loss
|
Net periodic benefit cost
(1)
|
68
|
65
|
24
|
22
|
|
Total before tax
|
|
79
|
87
|
19
|
29
|
|
Tax
|
Provision for taxes
|
(19)
|
(20)
|
(5)
|
(7)
|
|
Amounts reclassified from OCI
|
|
60
|
67
|
14
|
22
|
(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 nine and three months ended September 30, 2017 and
2016.
28
Q3
2017 Financial Information
─
Note 13
Restructuring and related expenses
White Collar Productivity program
In September 2015, the Company announced a two-year program aimed
at making the Company leaner, faster and more customer-focused. Productivity
improvements include the rapid expansion and use of regional shared service
centers as well as the streamlining of global operations and head office
functions, with business units moving closer to their respective key markets.
In the course of this program, the Company is implementing and executing
various restructuring initiatives across all operating segments and regions.
Total
expected program costs were originally estimated to be $852 million. During
2016 and the nine months ended September 30, 2017, the total expected program
costs were reduced by $332 million and $89 million, respectively, to
$431 million. This was primarily due to the realization of significantly
higher than originally expected attrition and internal re-deployment rates. The
reductions were made across all operating segments as well as for corporate
functions.
Liabilities associated with the White Collar
Productivity program are primarily included in “Other provisions”. The
following table shows the activity from the beginning of the program to
September 30, 2017, by expense type.
|
|
Employee
|
Contract settlement,
|
|
|
($ in millions)
|
severance costs
|
loss order and other costs
|
Total
|
|
Liability at January 1, 2015
|
–
|
–
|
–
|
|
Expenses
|
364
|
5
|
369
|
|
Cash payments
|
(34)
|
(1)
|
(35)
|
|
Liability at December 31, 2015
|
330
|
4
|
334
|
|
Expenses
|
232
|
3
|
235
|
|
Cash payments
|
(106)
|
(3)
|
(109)
|
|
Change in estimates
|
(102)
|
(1)
|
(103)
|
|
Exchange rate differences
|
(23)
|
–
|
(23)
|
|
Liability at December 31, 2016
|
331
|
3
|
334
|
|
Expenses
|
24
|
1
|
25
|
|
Cash payments
|
(79)
|
(3)
|
(82)
|
|
Change in estimates
|
(118)
|
–
|
(118)
|
|
Exchange rate differences
|
26
|
–
|
26
|
|
Liability at September 30, 2017
|
184
|
1
|
185
|
The change in estimates during 2016 of $103 million is due to
significantly higher than expected rates of attrition and internal
re-deployment and a lower than expected severance cost per employee for the
employee groups affected by the first phase of restructuring initiated in 2015.
During the nine months ended September 30, 2016, the change in estimates related
to restructurings initiated in 2015 of $72 million was recorded in income
from operations, primarily as reductions in Cost of sales of $34 million
and in Selling, general and administrative expenses of $27 million. During
the three months ended September 30, 2016, the change in estimates of $44 million,
related to restructurings initiated in 2015, was recorded primarily as reductions
in Cost of sales of $21 million and in Selling, general and administrative
expenses of $15 million.
The change in estimates for both the nine months and three months
ended September 30, 2016, of $72 million and $44 million,
respectively, resulted in an increase in earnings per share (basic and diluted)
of $0.02 and $0.01 in the respective periods.
The change in estimates during the nine months ended September 30,
2017, of $118 million, is mainly due to higher than expected rates of
attrition and internal re‑deployment. The decrease in the liability was
recorded in income from operations, primarily as reductions in Cost of sales of
$65 million and in Selling, general and administrative expenses of $44 million
for the nine months ended September 30, 2017. During the three months ended September
30, 2017, the change in estimates of $58 million, related to
restructurings initiated in both 2015 and 2016, was recorded primarily as
reductions in Cost of sales of $36 million and in Selling, general and
administrative expenses of $20 million.
The change in estimates for the nine months and three months ended
September 30, 2017, of $118 million and $58 million, respectively,
resulted in an increase in earnings per share (basic and diluted) of $0.04 and
$0.02, in the respective periods.
The following table outlines the net costs incurred in the nine
and three months ended September 30, 2017 and 2016, the cumulative net costs
incurred to date and the total amount of costs expected to be incurred under
the program per operating segment:
|
|
Net costs incurred
(1)
|
Cumulative net
|
Total
|
|
|
Nine months ended
September 30,
|
Three months ended
September 30,
|
cost incurred up to
|
expected
|
|
($ in millions)
|
2017
|
2016
|
2017
|
2016
|
September 30, 2017
(1)
|
costs
(1)
|
|
Electrification Products
|
(11)
|
26
|
(5)
|
(7)
|
78
|
79
|
|
Robotics and Motion
|
(10)
|
32
|
(7)
|
(10)
|
60
|
67
|
|
Industrial Automation
|
(19)
|
73
|
(11)
|
(9)
|
113
|
115
|
|
Power Grids
|
(25)
|
50
|
(14)
|
(10)
|
78
|
79
|
|
Corporate and Other
|
(27)
|
49
|
(10)
|
(3)
|
89
|
91
|
|
Total
|
(92)
|
230
|
(47)
|
(39)
|
418
|
431
|
(1)
Net costs incurred in 2016, Cumulative net costs incurred up to September 30,
2017 and Total expected costs have been recast to reflect the reorganization of
the Company’s operating segments as outlined in Note 14.
29
Q3
2017 Financial Information
The Company recorded the following expenses, net
of changes in estimates, under this program:
|
|
Nine months ended
|
Three months ended
|
Cumulative costs
|
|
|
September 30,
|
September 30,
|
incurred up to
|
|
($ in millions)
|
2017
|
2016
|
2017
|
2016
|
September 30, 2017
|
|
Employee severance costs
|
(94)
|
229
|
(48)
|
(39)
|
400
|
|
Estimated contract settlement, loss order and other costs
|
1
|
1
|
–
|
–
|
8
|
|
Inventory and long-lived asset impairments
|
1
|
–
|
1
|
–
|
10
|
|
Total
|
(92)
|
230
|
(47)
|
(39)
|
418
|
Expenses, net of change in estimates, associated with this program
are recorded in the following line items in the Consolidated Income Statements:
|
|
Nine months ended
September 30,
|
Three months ended
September 30,
|
|
($ in millions)
|
2017
|
2016
|
2017
|
2016
|
|
Total cost of sales
|
(55)
|
139
|
(32)
|
(20)
|
|
Selling, general and administrative expenses
|
(32)
|
77
|
(15)
|
(13)
|
|
Non-order related research and development expenses
|
(6)
|
7
|
(2)
|
(3)
|
|
Other income (expense), net
|
1
|
7
|
2
|
(3)
|
|
Total
|
(92)
|
230
|
(47)
|
(39)
|
Other restructuring-related
activities
In the nine months ended
September 30, 2017 and 2016, the Company executed various other restructuring‑related
activities and incurred expenses of $140 million and $91 million,
respectively. In the three months ended September 30, 2017 and 2016, these
expenses amounted to $82 million and $24 million, respectively.
These expenses mainly relate to employee severance
costs and were primarily recorded in “Total cost of sales”.
─
Note
14
Operating
segment data
The Chief
Operating Decision Maker (CODM) is the Chief Executive Officer. The CODM
allocates resources to and assesses the performance of each operating segment
using the information outlined below. The Company’s operating segments consist
of Electrification Products, Robotics and Motion, Industrial Automation and
Power Grids. The remaining operations of the Company are included in Corporate
and Other.
Effective January
1, 2017, the Company re-allocated the management responsibilities for certain
businesses among the
four reported operating segments
. The primary change was the transfer
to
the
Electrification Products segment of the electric vehicle charging, solar, and
power quality businesses from the Discrete Automation and Motion segment
.
In addition, the
Discrete Automation and Motion segment was renamed the Robotics and Motion
segment while the Process Automation segment was renamed the Industrial
Automation segment
.
The segment
information for the nine and three months ended September 30, 2016 and at
December 31, 2016, has been recast to reflect these organizational changes. In
addition, total assets at December 31, 2016, has been adjusted to reflect the additional
netting of deferred tax assets and liabilities which resulted from the adoption
of an accounting standard update on the classification of deferred taxes.
Furthermore, the
results for the Company’s high-voltage cable system business which, prior to
its divestment in March, were included with the Power Grids operating segment,
have been reclassified within Corporate and Other for all periods presented.
A description of
the types of products and services provided by each reportable segment is as
follows:
·
Electrification
Products
:
manufactures and sells products and services including electric vehicle
charging, solar inverters, modular substation packages, switchgear, UPS
solutions, circuit breakers, control products, wiring accessories, enclosures
and cabling systems, and intelligent home and building solutions designed to
integrate and automate the lighting, heating and ventilation, and security and
data communication networks.
·
Robotics
and Motion
:
manufactures and sells robotics, motors, generators, drives, wind converters,
components and systems for railways and related services and digital solutions
for a wide range of applications in industry, transportation and
infrastructure, and utilities.
·
Industrial
Automation
:
develops and sells integrated automation and electrification systems and solutions,
a comprehensive range of services ranging from repair to advanced services such
as remote monitoring and preventive maintenance and cybersecurity services,
process and discrete control solutions, advanced process control software and
manufacturing execution systems, sensing, measurement and analytics, electric
ship propulsion systems and large turbochargers, as well as solutions for
modern machine and factory automation.
·
Power
Grids
:
offers a range of products, systems, service and software solutions across the
power value chain of generation, transmission and distribution, to utility,
industry, transportation and infrastructure customers. These offerings address
existing and evolving grid needs such as the integration of renewables, network
control, digital substations, microgrids and asset management. The division
portfolio includes turnkey grid integration, transmission systems and
substation solutions as well as a wide range of power, distribution and
traction transformers, and an array of high-voltage products, such as circuit
breakers, switchgear, capacitors.
·
Corporate
and Other
:
includes headquarters, central research and development, the Company’s real
estate activities, Group Treasury Operations, historical operating activities
of certain divested businesses, and other minor business activities.
The Company
evaluates the profitability of its segments based on Operational EBITA, which represents
income from operations excluding:
·
amortization
expense on intangibles arising upon acquisitions (acquisition-related
amortization),
·
restructuring
and restructuring-related expenses,
·
non-operational
pension cost comprising: (a) interest cost, (b) expected return on
plan assets, (c) amortization of prior service cost (credit), (d) amortization
of net actuarial loss, and (e) curtailments, settlements and special
termination benefits,
·
changes
in the amount recorded for retained obligations of divested businesses
occurring after the divestment date (changes in retained obligations of
30
Q3
2017 Financial Information
divested businesses),
·
changes
in estimates relating to opening balance sheets of acquired businesses (changes
in pre-acquisition estimates),
·
gains
and losses from 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: (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).
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 Company’s consolidated Operational EBITA. 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 EBITA, and the reconciliations of
consolidated Operational EBITA to Income from continuing operations before taxes
for the nine and three months ended September 30, 2017 and 2016, as well as
total assets at September 30, 2017, and December 31, 2016.
|
|
Nine months ended
September 30, 2017
|
Nine months ended
September 30, 2016
|
|
|
Third-party
|
Intersegment
|
Total
|
Third-party
|
Intersegment
|
Total
|
|
($ in millions)
|
revenues
|
revenues
|
revenues
|
revenues
|
revenues
|
revenues
|
|
Electrification Products
|
7,045
|
353
|
7,398
|
6,860
|
427
|
7,287
|
|
Robotics and Motion
|
5,825
|
389
|
6,214
|
5,528
|
385
|
5,913
|
|
Industrial Automation
|
4,850
|
111
|
4,961
|
4,877
|
127
|
5,004
|
|
Power Grids
|
7,220
|
365
|
7,585
|
7,309
|
399
|
7,708
|
|
Corporate and Other
|
92
|
1,112
|
1,204
|
261
|
1,316
|
1,577
|
|
Intersegment elimination
|
–
|
(2,330)
|
(2,330)
|
–
|
(2,654)
|
(2,654)
|
|
Consolidated
|
25,032
|
–
|
25,032
|
24,835
|
–
|
24,835
|
|
|
Three months ended September
30, 2017
|
Three months ended
September 30, 2016
|
|
|
Third-party
|
Intersegment
|
Total
|
Third-party
|
Intersegment
|
Total
|
|
($ in millions)
|
revenues
|
revenues
|
revenues
|
revenues
|
revenues
|
revenues
|
|
Electrification Products
|
2,478
|
118
|
2,596
|
2,321
|
141
|
2,462
|
|
Robotics and Motion
|
2,056
|
145
|
2,201
|
1,889
|
118
|
2,007
|
|
Industrial Automation
|
1,766
|
38
|
1,804
|
1,533
|
37
|
1,570
|
|
Power Grids
|
2,413
|
120
|
2,533
|
2,403
|
135
|
2,538
|
|
Corporate and Other
|
11
|
399
|
410
|
109
|
412
|
521
|
|
Intersegment elimination
|
–
|
(820)
|
(820)
|
–
|
(843)
|
(843)
|
|
Consolidated
|
8,724
|
–
|
8,724
|
8,255
|
–
|
8,255
|
|
|
Nine months ended
|
Three months ended
|
|
|
September 30,
|
September 30,
|
|
($ in millions)
|
2017
|
2016
|
2017
|
2016
|
|
Operational EBITA:
|
|
|
|
|
|
Electrification Products
|
1,112
|
1,108
|
417
|
401
|
|
Robotics and Motion
|
942
|
945
|
356
|
330
|
|
Industrial Automation
|
635
|
617
|
226
|
195
|
|
Power Grids
|
750
|
681
|
248
|
244
|
|
Corporate and Other and Intersegment elimination
|
(330)
|
(217)
|
(123)
|
(107)
|
|
Consolidated Operational EBITA
|
3,109
|
3,134
|
1,124
|
1,063
|
|
Acquisition-related amortization
|
(189)
|
(212)
|
(74)
|
(70)
|
|
Restructuring and restructuring-related expenses
(1)
|
(224)
|
(475)
|
(92)
|
(39)
|
|
Non-operational pension cost
|
34
|
–
|
20
|
–
|
|
Changes in retained obligations of divested businesses
|
(94)
|
–
|
–
|
–
|
|
Changes in pre-acquisition estimates
|
–
|
(39)
|
–
|
(17)
|
|
Gains and losses from sale of businesses
|
330
|
–
|
(1)
|
–
|
|
Acquisition-related expenses and certain non-operational items
|
(234)
|
(46)
|
(68)
|
(35)
|
|
Foreign exchange/commodity timing differences in income from
operations:
|
|
|
|
|
|
Unrealized gains and losses on derivatives (foreign exchange,
|
|
|
|
|
|
commodities, embedded derivatives)
|
138
|
(43)
|
(31)
|
(8)
|
|
Realized gains and losses on derivatives where the underlying
hedged
|
|
|
|
|
|
transaction has not yet been realized
|
40
|
11
|
22
|
(3)
|
|
Unrealized foreign exchange movements on receivables/payables
(and
|
|
|
|
|
|
related assets/liabilities)
|
(88)
|
(21)
|
8
|
(13)
|
|
Income from operations
|
2,822
|
2,309
|
908
|
878
|
|
Interest and dividend income
|
55
|
54
|
20
|
16
|
|
Interest and other finance expense
|
(227)
|
(230)
|
(74)
|
(84)
|
|
Income from continuing operations before taxes
|
2,650
|
2,133
|
854
|
810
|
(1)
Amounts also include the incremental implementation costs in relation to the
White Collar Productivity program.
31
Q3
2017 Financial Information
|
|
Total assets
(1)
|
|
($ in millions)
|
September 30, 2017
|
December 31, 2016
|
|
Electrification Products
|
11,294
|
9,881
|
|
Robotics and Motion
|
8,415
|
7,943
|
|
Industrial Automation
|
6,884
|
4,310
|
|
Power Grids
|
8,639
|
8,728
|
|
Corporate and Other
|
7,175
|
8,340
|
|
Consolidated
|
42,407
|
39,202
|
(1)
Total assets are after intersegment eliminations and therefore reflect
third-party assets only.
32
Q3
2017 Financial Information
33
Q3 2017
Financial Information
—
Supplemental Reconciliations and Definitions
The following reconciliations and definitions include measures
which ABB uses to supplement its Interim Consolidated Financial Information
(unaudited) which is prepared in accordance with United States generally
accepted accounting principles (U.S. GAAP). Certain of these 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, 2017.
Comparable growth rates
Growth rates for certain key figures may be presented and
discussed on a “comparable” basis. The comparable growth rate measures growth
on a constant currency basis. Since we are a global company, the comparability
of our operating results reported in U.S. dollars is affected by foreign
currency exchange rate fluctuations. We calculate the impacts from foreign
currency fluctuations by translating the current-year periods’ reported key
figures into U.S. dollar amounts using the exchange rates in effect for the
comparable periods in the previous year.
Comparable growth rates are also adjusted for changes in our
business portfolio. Adjustments to our business portfolio occur due to acquisitions,
divestments, or by exiting specific business activities or customer markets.
The adjustment for portfolio changes is calculated as follows: where the
results of any business acquired or divested have not been consolidated and
reported for the entire duration of both the current and comparable periods,
the reported key figures of such business are adjusted to exclude the relevant
key figures of any corresponding quarters which are not comparable when
computing the comparable growth rate. Certain portfolio changes which do not
qualify as divestments under U.S. GAAP have been treated in a similar manner to
divestments. Changes in our portfolio where we have exited certain business
activities or customer markets are adjusted as if the relevant business was
divested in the period when the decision to cease business activities was
taken. We do not adjust for portfolio changes where the relevant business has
annualized revenues of less than $50 million.
The following tables provide reconciliations of reported growth
rates of certain key figures to their respective comparable growth rate.
Divisional comparable growth rate reconciliation
|
|
Q3 2017 compared to Q3
2016
|
|
|
Order growth rate
|
|
Revenue growth rate
|
|
|
US$
|
Foreign
|
|
|
|
US$
|
Foreign
|
|
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
Division
|
reported)
|
impact
|
changes
|
Comparable
|
|
reported)
|
impact
|
changes
|
Comparable
|
|
Electrification Products
|
7%
|
0%
|
0%
|
7%
|
|
5%
|
0%
|
0%
|
5%
|
|
Robotics and Motion
|
5%
|
-1%
|
0%
|
4%
|
|
10%
|
-2%
|
0%
|
8%
|
|
Industrial Automation
|
33%
|
-2%
|
-17%
|
14%
|
|
15%
|
-2%
|
-12%
|
1%
|
|
Power Grids
|
-6%
|
0%
|
0%
|
-6%
|
|
0%
|
-2%
|
0%
|
-2%
|
|
ABB Group
|
8%
|
0%
|
-3%
|
5%
|
|
6%
|
-2%
|
-1%
|
3%
|
|
|
9M 2017 compared to 9M
2016
|
|
|
Order growth rate
|
|
Revenue growth rate
|
|
|
US$
|
Foreign
|
|
|
|
US$
|
Foreign
|
|
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
Division
|
reported)
|
impact
|
changes
|
Comparable
|
|
reported)
|
impact
|
changes
|
Comparable
|
|
Electrification Products
|
1%
|
2%
|
0%
|
3%
|
|
2%
|
1%
|
0%
|
3%
|
|
Robotics and Motion
|
7%
|
1%
|
0%
|
8%
|
|
5%
|
1%
|
0%
|
6%
|
|
Industrial Automation
|
8%
|
1%
|
-5%
|
4%
|
|
-1%
|
1%
|
-4%
|
-4%
|
|
Power Grids
|
-11%
|
2%
|
0%
|
-9%
|
|
-2%
|
2%
|
1%
|
1%
|
|
ABB Group
|
-1%
|
1%
|
1%
|
1%
|
|
1%
|
1%
|
0%
|
2%
|
34
Q3 2017
Financial Information
Regional comparable growth rate reconciliation
|
|
Q3 2017 compared to Q3 2016
|
|
|
Order growth rate
|
|
Revenue growth rate
|
|
|
US$
|
Foreign
|
|
|
|
US$
|
Foreign
|
|
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
Region
|
reported)
|
impact
|
changes
|
Comparable
|
|
reported)
|
impact
|
changes
|
Comparable
|
|
Europe
|
18%
|
-4%
|
-6%
|
8%
|
|
12%
|
-4%
|
-2%
|
6%
|
|
The Americas
|
6%
|
-1%
|
-1%
|
4%
|
|
-2%
|
-1%
|
-1%
|
-4%
|
|
Asia, Middle East and Africa
|
2%
|
1%
|
-1%
|
2%
|
|
7%
|
0%
|
-1%
|
6%
|
|
ABB Group
|
8%
|
0%
|
-3%
|
5%
|
|
6%
|
-2%
|
-1%
|
3%
|
|
|
9M 2017 compared to 9M
2016
|
|
|
Order growth rate
|
|
Revenue growth rate
|
|
|
US$
|
Foreign
|
|
|
|
US$
|
Foreign
|
|
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
Region
|
reported)
|
impact
|
changes
|
Comparable
|
|
reported)
|
impact
|
changes
|
Comparable
|
|
Europe
|
1%
|
1%
|
3%
|
5%
|
|
3%
|
2%
|
1%
|
6%
|
|
The Americas
|
4%
|
-1%
|
0%
|
3%
|
|
-1%
|
0%
|
0%
|
-1%
|
|
Asia, Middle East and Africa
|
-5%
|
2%
|
0%
|
-3%
|
|
0%
|
2%
|
0%
|
2%
|
|
ABB Group
|
-1%
|
1%
|
1%
|
1%
|
|
1%
|
1%
|
0%
|
2%
|
Order backlog growth rate reconciliation
|
|
September 30, 2017
compared to September 30, 2016
|
|
|
|
US$
|
Foreign
|
|
|
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
|
Division
|
reported)
|
impact
|
changes
|
Comparable
|
|
|
Electrification Products
|
-4%
|
0%
|
0%
|
-4%
|
|
|
Robotics and Motion
|
3%
|
-1%
|
0%
|
2%
|
|
|
Industrial Automation
|
-2%
|
-1%
|
-2%
|
-5%
|
|
|
Power Grids
|
-3%
|
-2%
|
1%
|
-4%
|
|
|
ABB Group
|
-5%
|
-1%
|
5%
|
-1%
|
|
Other growth rate reconciliations
|
|
Q3 2017 compared to Q3 2016
|
|
9M 2017 compared to 9M
2016
|
|
|
US$
|
Foreign
|
|
|
|
US$
|
Foreign
|
|
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
|
reported)
|
impact
|
changes
|
Comparable
|
|
reported)
|
impact
|
changes
|
Comparable
|
|
Large orders
|
-4%
|
-1%
|
0%
|
-5%
|
|
-27%
|
2%
|
9%
|
-16%
|
|
Base orders
|
10%
|
-1%
|
-3%
|
6%
|
|
3%
|
1%
|
-1%
|
3%
|
|
Services and software orders
|
12%
|
-2%
|
1%
|
11%
|
|
7%
|
1%
|
0%
|
8%
|
|
Services and software revenues
|
2%
|
-1%
|
1%
|
2%
|
|
0%
|
0%
|
1%
|
1%
|
35
Q3 2017
Financial Information
Division realignment
Effective January 1,
2017, we
changed the composition of the business portfolio of our four
divisions
.
The
scope of the Electrification Products division was expanded to
include the electric vehicle charging, solar, and power quality businesses from
the Discrete Automation and Motion division
. In
addition, the Discrete Automation and Motion division
was renamed the Robotics and Motion division while the Process Automation
division was renamed the Industrial Automation division
. Furthermore
the
operations of certain divested businesses have been excluded from the results
of the Power Grids division (but are included in the total ABB Group as part of
Corporate and other) for the periods prior to their respective divestment. See
Note 14 to the Interim Consolidated Financial Information (unaudited) for
further details on the realignment.
The following information presents a reconciliation
of growth rates of orders and revenues for 2016 compared with 2015 to reflect
these organizational changes:
Divisional comparable growth rate reconciliation
|
|
Q3 2016 compared to Q3
2015
|
|
|
Order growth rate
|
|
Revenue growth rate
|
|
|
US$
|
Foreign
|
|
|
|
US$
|
Foreign
|
|
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
Division
|
reported)
|
impact
|
changes
|
Comparable
|
|
reported)
|
impact
|
changes
|
Comparable
|
|
Electrification Products
|
-8%
|
1%
|
0%
|
-7%
|
|
-2%
|
2%
|
0%
|
0%
|
|
Robotics and Motion
|
-2%
|
1%
|
0%
|
-1%
|
|
0%
|
1%
|
0%
|
1%
|
|
Industrial Automation
|
-21%
|
1%
|
0%
|
-20%
|
|
-8%
|
1%
|
0%
|
-7%
|
|
Power Grids
|
-20%
|
1%
|
0%
|
-19%
|
|
-6%
|
1%
|
5%
|
0%
|
|
ABB Group
|
-14%
|
1%
|
0%
|
-13%
|
|
-3%
|
1%
|
2%
|
0%
|
|
|
9M 2016 compared to 9M
2015
|
|
|
Order growth rate
|
|
Revenue growth rate
|
|
|
US$
|
Foreign
|
|
|
|
US$
|
Foreign
|
|
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
(as
|
exchange
|
Portfolio
|
|
|
Division
|
reported)
|
impact
|
changes
|
Comparable
|
|
reported)
|
impact
|
changes
|
Comparable
|
|
Electrification Products
|
-7%
|
3%
|
0%
|
-4%
|
|
-4%
|
3%
|
0%
|
-1%
|
|
Robotics and Motion
|
-8%
|
3%
|
0%
|
-5%
|
|
-4%
|
2%
|
0%
|
-2%
|
|
Industrial Automation
|
-21%
|
3%
|
0%
|
-18%
|
|
-8%
|
3%
|
0%
|
-5%
|
|
Power Grids
|
-9%
|
2%
|
1%
|
-6%
|
|
-6%
|
2%
|
4%
|
0%
|
|
ABB Group
|
-11%
|
3%
|
0%
|
-8%
|
|
-5%
|
3%
|
1%
|
-1%
|
36
Q3 2017
Financial Information
Operational EBITA
margin
Definition
Operational EBITA margin
Operational EBITA
margin is Operational EBITA as a percentage of Operational revenues.
Operational EBITA
Operational earnings before interest,
taxes and acquisition-related amortization (Operational EBITA) represents
Income from operations excluding:
·
acquisition-related
amortization (as defined below),
·
restructuring
and restructuring-related expenses,
·
non-operational
pension cost (as defined below),
·
changes
in the amount recorded for retained obligations of divested businesses
occurring after the divestment date (changes in retained obligations of
divested businesses),
·
changes in pre-acquisition estimates,
·
gains
and losses from 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:
(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).
Amounts relating to changes in
retained obligations of divested businesses (as defined above), were previously
included within acquisition-related expenses and certain non-operational items.
In periods prior to 2017, there were no significant amounts to warrant separate
presentation.
Operational EBITA
is our measure of segment profit but is also used by management to evaluate the
profitability of the Company as a whole.
Acquisition-related amortization
Amortization
expense on intangibles arising upon acquisitions.
Operational revenues
The Company
presents Operational revenues solely for the purpose of allowing the
computation of Operational EBITA margin. 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 revenues are not intended to be
an alternative measure to Total Revenues, which represent our revenues measured
in accordance with U.S. GAAP.
Non-operational pension cost
Non-operational
pension cost comprises the total net periodic benefit cost of defined pension
benefits and other postretirement benefits but excludes the current service
cost of both components. A breakdown of the components of non-operational
pension cost is provided below.
Reconciliation
The following
tables provide reconciliations of consolidated Operational EBITA to Net Income
and Operational EBITA Margin by division.
Reconciliation of
consolidated Operational EBITA to Net Income
|
|
Nine months ended
September 30,
|
Three months ended
September 30,
|
|
($ in millions)
|
2017
|
2016
|
2017
|
2016
|
|
Operational EBITA
|
3,109
|
3,134
|
1,124
|
1,063
|
|
Acquisition-related amortization
|
(189)
|
(212)
|
(74)
|
(70)
|
|
Restructuring and restructuring-related expenses
(1)
|
(224)
|
(475)
|
(92)
|
(39)
|
|
Non-operational pension cost
|
34
|
–
|
20
|
–
|
|
Changes in retained obligations of divested businesses
|
(94)
|
–
|
–
|
–
|
|
Changes in pre-acquisition estimates
|
–
|
(39)
|
–
|
(17)
|
|
Gains and losses from sale of businesses
|
330
|
–
|
(1)
|
–
|
|
Acquisition-related expenses and certain non-operational items
|
(234)
|
(46)
|
(68)
|
(35)
|
|
Foreign exchange/commodity timing differences in income from
operations:
|
|
|
|
|
|
Unrealized gains and losses on derivatives (foreign exchange,
|
|
|
|
|
|
commodities, embedded derivatives)
|
138
|
(43)
|
(31)
|
(8)
|
|
Realized gains and losses on derivatives where the underlying
hedged
|
|
|
|
|
|
transaction has not yet been realized
|
40
|
11
|
22
|
(3)
|
|
Unrealized foreign exchange movements on receivables/payables
(and
|
|
|
|
|
|
related assets/liabilities)
|
(88)
|
(21)
|
8
|
(13)
|
|
Income from operations
|
2,822
|
2,309
|
908
|
878
|
|
Interest and dividend income
|
55
|
54
|
20
|
16
|
|
Interest and other finance expense
|
(227)
|
(230)
|
(74)
|
(84)
|
|
Income from continuing operations before taxes
|
2,650
|
2,133
|
854
|
810
|
|
Provision for taxes
|
(702)
|
(587)
|
(246)
|
(237)
|
|
Income from continuing operations, net of tax
|
1,948
|
1,546
|
608
|
573
|
|
Income (loss) from discontinued operations, net of tax
|
(6)
|
14
|
(5)
|
16
|
|
Net income
|
1,942
|
1,560
|
603
|
589
|
(1)
Amounts also include the incremental implementation costs in relation to the White
Collar Productivity program.
37
Q3 2017
Financial Information
Reconciliation
of Operational EBITA margin by division
|
|
Nine months ended
September 30, 2017
|
|
|
|
|
|
|
Corporate and
|
|
|
|
|
|
|
|
Other and
|
|
|
|
Electrification
|
Robotics
|
Industrial
|
Power
|
Intersegment
|
|
|
($ in millions, unless otherwise indicated)
|
Products
|
and Motion
|
Automation
|
Grids
|
elimination
|
Consolidated
|
|
Total revenues
|
7,398
|
6,214
|
4,961
|
7,585
|
(1,126)
|
25,032
|
|
Foreign exchange/commodity timing
|
|
|
|
|
|
|
|
differences in total revenues:
|
|
|
|
|
|
|
|
Unrealized gains and losses
|
|
|
|
|
|
|
|
on derivatives
|
(36)
|
(1)
|
(30)
|
(61)
|
(21)
|
(149)
|
|
Realized gains and losses on derivatives
|
|
|
|
|
|
|
|
where the underlying hedged
|
|
|
|
|
|
|
|
transaction has not yet been realized
|
–
|
2
|
(11)
|
(30)
|
–
|
(39)
|
|
Unrealized foreign exchange movements
|
|
|
|
|
|
|
|
on receivables (and related assets)
|
9
|
1
|
16
|
54
|
–
|
80
|
|
Operational revenues
|
7,371
|
6,216
|
4,936
|
7,548
|
(1,147)
|
24,924
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations
|
1,032
|
859
|
560
|
654
|
(283)
|
2,822
|
|
Acquisition-related amortization
|
76
|
50
|
25
|
25
|
13
|
189
|
|
Restructuring and
|
|
|
|
|
|
|
|
restructuring-related expenses
(1)
|
11
|
29
|
50
|
49
|
85
|
224
|
|
Non-operational pension cost
|
2
|
1
|
4
|
–
|
(41)
|
(34)
|
|
Changes in retained obligations of
|
|
|
|
|
|
|
|
divested businesses
|
–
|
–
|
–
|
–
|
94
|
94
|
|
Changes in pre-acquisition estimates
|
–
|
–
|
–
|
–
|
–
|
–
|
|
Gains and losses from sale of businesses
|
–
|
–
|
(2)
|
–
|
(328)
|
(330)
|
|
Acquisition-related expenses and certain
|
|
|
|
|
|
|
|
non-operational items
|
24
|
(1)
|
26
|
61
|
124
|
234
|
|
Foreign exchange/commodity timing
|
|
|
|
|
|
|
|
differences in income from operations:
|
|
|
|
|
|
|
|
Unrealized gains and losses on derivatives
|
|
|
|
|
|
|
|
(foreign exchange, commodities,
|
|
|
|
|
|
|
|
embedded derivatives)
|
(36)
|
(5)
|
(36)
|
(74)
|
13
|
(138)
|
|
Realized gains and losses on derivatives
|
|
|
|
|
|
|
|
where the underlying hedged
|
|
|
|
|
|
|
|
transaction has not yet been realized
|
–
|
2
|
(7)
|
(32)
|
(3)
|
(40)
|
|
Unrealized foreign exchange movements
|
|
|
|
|
|
|
|
on receivables/payables
|
|
|
|
|
|
|
|
(and related assets/liabilities)
|
3
|
7
|
15
|
67
|
(4)
|
88
|
|
Operational EBITA
|
1,112
|
942
|
635
|
750
|
(330)
|
3,109
|
|
|
|
|
|
|
|
|
|
Operational EBITA margin (%)
|
15.1%
|
15.2%
|
12.9%
|
9.9%
|
n.a.
|
12.5%
|
(1)
Amounts also include the incremental implementation costs in relation to the White
Collar Productivity program.
38
Q3 2017
Financial Information
|
|
Nine months ended
September 30, 2016
|
|
|
|
|
|
|
Corporate and
|
|
|
|
|
|
|
|
Other and
|
|
|
|
Electrification
|
Robotics
|
Industrial
|
Power
|
Intersegment
|
|
|
($ in millions, unless otherwise indicated)
|
Products
|
and Motion
|
Automation
|
Grids
|
elimination
|
Consolidated
|
|
Total revenues
|
7,287
|
5,913
|
5,004
|
7,708
|
(1,077)
|
24,835
|
|
Foreign exchange/commodity timing
|
|
|
|
|
|
|
|
differences in total revenues:
|
|
|
|
|
|
|
|
Unrealized gains and losses
|
|
|
|
|
|
|
|
on derivatives
|
1
|
(1)
|
10
|
16
|
16
|
42
|
|
Realized gains and losses on derivatives
|
|
|
|
|
|
|
|
where the underlying hedged
|
|
|
|
|
|
|
|
transaction has not yet been realized
|
(5)
|
1
|
7
|
(5)
|
–
|
(2)
|
|
Unrealized foreign exchange movements
|
|
|
|
|
|
|
|
on receivables (and related assets)
|
3
|
2
|
14
|
2
|
–
|
21
|
|
Operational revenues
|
7,286
|
5,915
|
5,035
|
7,721
|
(1,061)
|
24,896
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations
|
917
|
812
|
478
|
536
|
(434)
|
2,309
|
|
Acquisition-related amortization
|
92
|
71
|
9
|
27
|
13
|
212
|
|
Restructuring and
|
|
|
|
|
|
|
|
restructuring-related expenses
(1)
|
52
|
53
|
100
|
106
|
164
|
475
|
|
Non-operational pension cost
|
3
|
–
|
–
|
(3)
|
–
|
–
|
|
Changes in retained obligations of
|
|
|
|
|
|
|
|
divested businesses
|
–
|
–
|
–
|
–
|
–
|
–
|
|
Changes in pre-acquisition estimates
|
39
|
–
|
–
|
–
|
–
|
39
|
|
Gains and losses from sale of businesses
|
–
|
–
|
–
|
–
|
–
|
–
|
|
Acquisition-related expenses and certain
|
|
|
|
|
|
|
|
non-operational items
|
1
|
4
|
–
|
6
|
35
|
46
|
|
Foreign exchange/commodity timing
|
|
|
|
|
|
|
|
differences in income from operations:
|
|
|
|
|
|
|
|
Unrealized gains and losses on derivatives
|
|
|
|
|
|
|
|
(foreign exchange, commodities,
|
|
|
|
|
|
|
|
embedded derivatives)
|
9
|
2
|
15
|
14
|
3
|
43
|
|
Realized gains and losses on derivatives
|
|
|
|
|
|
|
|
where the underlying hedged
|
|
|
|
|
|
|
|
transaction has not yet been realized
|
(3)
|
1
|
–
|
(10)
|
1
|
(11)
|
|
Unrealized foreign exchange movements
|
|
|
|
|
|
|
|
on receivables/payables
|
|
|
|
|
|
|
|
(and related assets/liabilities)
|
(2)
|
2
|
15
|
5
|
1
|
21
|
|
Operational EBITA
|
1,108
|
945
|
617
|
681
|
(217)
|
3,134
|
|
|
|
|
|
|
|
|
|
Operational EBITA margin (%)
|
15.2%
|
16.0%
|
12.3%
|
8.8%
|
n.a.
|
12.6%
|
(1)
Amounts also include the incremental implementation costs in relation to the
White Collar Productivity program.
39
Q3 2017
Financial Information
|
|
Three months ended
September 30, 2017
|
|
|
|
|
|
|
Corporate and
|
|
|
|
|
|
|
|
Other and
|
|
|
|
Electrification
|
Robotics
|
Industrial
|
Power
|
Intersegment
|
|
|
($ in millions, unless otherwise indicated)
|
Products
|
and Motion
|
Automation
|
Grids
|
elimination
|
Consolidated
|
|
Total revenues
|
2,596
|
2,201
|
1,804
|
2,533
|
(410)
|
8,724
|
|
Foreign exchange/commodity timing
|
|
|
|
|
|
|
|
differences in total revenues:
|
|
|
|
|
|
|
|
Unrealized gains and losses
|
|
|
|
|
|
|
|
on derivatives
|
6
|
15
|
(6)
|
15
|
–
|
30
|
|
Realized gains and losses on derivatives
|
|
|
|
|
|
|
|
where the underlying hedged
|
|
|
|
|
|
|
|
transaction has not yet been realized
|
–
|
1
|
(9)
|
(17)
|
(1)
|
(26)
|
|
Unrealized foreign exchange movements
|
|
|
|
|
|
|
|
on receivables (and related assets)
|
(6)
|
(7)
|
2
|
3
|
1
|
(7)
|
|
Operational revenues
|
2,596
|
2,210
|
1,791
|
2,534
|
(410)
|
8,721
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations
|
392
|
327
|
151
|
201
|
(163)
|
908
|
|
Acquisition-related amortization
|
24
|
16
|
21
|
8
|
5
|
74
|
|
Restructuring and
|
|
|
|
|
|
|
|
restructuring-related expenses
(1)
|
(2)
|
2
|
41
|
28
|
23
|
92
|
|
Non-operational pension cost
|
1
|
2
|
3
|
2
|
(28)
|
(20)
|
|
Changes in retained obligations of
|
|
|
|
|
|
|
|
divested businesses
|
–
|
–
|
–
|
–
|
–
|
–
|
|
Changes in pre-acquisition estimates
|
–
|
–
|
–
|
–
|
–
|
–
|
|
Gains and losses from sale of businesses
|
–
|
–
|
–
|
–
|
1
|
1
|
|
Acquisition-related expenses and certain
|
|
|
|
|
|
|
|
non-operational items
|
6
|
(1)
|
19
|
9
|
35
|
68
|
|
Foreign exchange/commodity timing
|
|
|
|
|
|
|
|
differences in income from operations:
|
|
|
|
|
|
|
|
Unrealized gains and losses on derivatives
|
|
|
|
|
|
|
|
(foreign exchange, commodities,
|
|
|
|
|
|
|
|
embedded derivatives)
|
3
|
10
|
(2)
|
14
|
6
|
31
|
|
Realized gains and losses on derivatives
|
|
|
|
|
|
|
|
where the underlying hedged
|
|
|
|
|
|
|
|
transaction has not yet been realized
|
–
|
2
|
(5)
|
(19)
|
–
|
(22)
|
|
Unrealized foreign exchange movements
|
|
|
|
|
|
|
|
on receivables/payables
|
|
|
|
|
|
|
|
(and related assets/liabilities)
|
(7)
|
(2)
|
(2)
|
5
|
(2)
|
(8)
|
|
Operational EBITA
|
417
|
356
|
226
|
248
|
(123)
|
1,124
|
|
|
|
|
|
|
|
|
|
Operational EBITA margin (%)
|
16.1%
|
16.1%
|
12.6%
|
9.8%
|
n.a.
|
12.9%
|
(1)
Amounts also include the incremental implementation costs in relation to the
White Collar Productivity program.
40
Q3 2017
Financial Information
|
|
Three months ended
September 30, 2016
|
|
|
|
|
|
|
Corporate and
|
|
|
|
|
|
|
|
Other and
|
|
|
|
Electrification
|
Robotics
|
Industrial
|
Power
|
Intersegment
|
|
|
($ in millions, unless otherwise indicated)
|
Products
|
and Motion
|
Automation
|
Grids
|
elimination
|
Consolidated
|
|
Total revenues
|
2,462
|
2,007
|
1,570
|
2,538
|
(322)
|
8,255
|
|
Foreign exchange/commodity timing
|
|
|
|
|
|
|
|
differences in total revenues:
|
|
|
|
|
|
|
|
Unrealized gains and losses
|
|
|
|
|
|
|
|
on derivatives
|
6
|
1
|
7
|
11
|
9
|
34
|
|
Realized gains and losses on derivatives
|
|
|
|
|
|
|
|
where the underlying hedged
|
|
|
|
|
|
|
|
transaction has not yet been realized
|
(2)
|
1
|
(1)
|
6
|
(1)
|
3
|
|
Unrealized foreign exchange movements
|
|
|
|
|
|
|
|
on receivables (and related assets)
|
2
|
2
|
4
|
(1)
|
(1)
|
6
|
|
Operational revenues
|
2,468
|
2,011
|
1,580
|
2,554
|
(315)
|
8,298
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations
|
352
|
306
|
178
|
214
|
(172)
|
878
|
|
Acquisition-related amortization
|
30
|
24
|
3
|
9
|
4
|
70
|
|
Restructuring and
|
|
|
|
|
|
|
|
restructuring-related expenses
(1)
|
(5)
|
(6)
|
7
|
12
|
31
|
39
|
|
Non-operational pension cost
|
1
|
–
|
–
|
(1)
|
–
|
–
|
|
Changes in retained obligations of
|
|
|
|
|
|
|
|
divested businesses
|
–
|
–
|
–
|
–
|
–
|
–
|
|
Changes in pre-acquisition estimates
|
17
|
–
|
–
|
–
|
–
|
17
|
|
Gains and losses from sale of businesses
|
–
|
–
|
–
|
–
|
–
|
–
|
|
Acquisition-related expenses and certain
|
|
|
|
|
|
|
|
non-operational items
|
1
|
4
|
–
|
2
|
28
|
35
|
|
Foreign exchange/commodity timing
|
|
|
|
|
|
|
|
differences in income from operations:
|
|
|
|
|
|
|
|
Unrealized gains and losses on derivatives
|
|
|
|
|
|
|
|
(foreign exchange, commodities,
|
|
|
|
|
|
|
|
embedded derivatives)
|
3
|
1
|
(1)
|
5
|
–
|
8
|
|
Realized gains and losses on derivatives
|
|
|
|
|
|
|
|
where the underlying hedged
|
|
|
|
|
|
|
|
transaction has not yet been realized
|
(1)
|
1
|
3
|
–
|
–
|
3
|
|
Unrealized foreign exchange movements
|
|
|
|
|
|
|
|
on receivables/payables
|
|
|
|
|
|
|
|
(and related assets/liabilities)
|
3
|
–
|
5
|
3
|
2
|
13
|
|
Operational EBITA
|
401
|
330
|
195
|
244
|
(107)
|
1,063
|
|
|
|
|
|
|
|
|
|
Operational EBITA margin (%)
|
16.2%
|
16.4%
|
12.3%
|
9.6%
|
n.a.
|
12.8%
|
(1)
Amounts also include the incremental implementation costs in relation to the
White Collar Productivity program.
41
Q3 2017
Financial Information
Operational and non-operational pension cost
The operational pension cost reflects the ongoing service cost of
providing employee benefits to the company’s employees.
The non-operational pension cost comprises: (i) interest
cost, (ii) expected return on plan assets, (iii) amortization of
prior service cost (credit), (iv) amortization of net actuarial loss, and
(v) curtailments, settlements and special termination benefits.
The operational and non-operational pension costs together
comprise the net periodic benefit cost as disclosed in Note 9 to the Interim
Consolidated Financial Information (unaudited).
Reconciliation
|
Defined pension benefits
|
Nine months ended
September 30,
|
Three months ended
September 30,
|
|
($ in millions, unless otherwise indicated)
|
2017
|
2016
|
2017
|
2016
|
|
|
|
|
|
|
|
Service cost
|
178
|
191
|
56
|
65
|
|
Operational pension cost
|
178
|
191
|
56
|
65
|
|
Interest cost
|
193
|
213
|
68
|
71
|
|
Expected return on plan assets
|
(311)
|
(306)
|
(109)
|
(102)
|
|
Amortization of prior service cost (credit)
|
14
|
30
|
(4)
|
9
|
|
Amortization of net actuarial loss
|
69
|
65
|
25
|
22
|
|
Curtailments, settlements and special termination benefits
|
2
|
2
|
1
|
1
|
|
Non-operational pension cost
|
(33)
|
4
|
(19)
|
1
|
|
Net periodic benefit cost
|
145
|
195
|
37
|
66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other postretirement benefits
|
Nine months ended
September 30,
|
Three months ended
September 30,
|
|
($ in millions, unless otherwise indicated)
|
2017
|
2016
|
2017
|
2016
|
|
|
|
|
|
|
|
Service cost
|
1
|
1
|
1
|
1
|
|
Operational pension cost
|
1
|
1
|
1
|
1
|
|
Interest cost
|
3
|
4
|
1
|
1
|
|
Amortization of prior service cost (credit)
|
(3)
|
(8)
|
(1)
|
(2)
|
|
Amortization of net actuarial loss
|
(1)
|
–
|
(1)
|
–
|
|
Non-operational pension cost
|
(1)
|
(4)
|
(1)
|
(1)
|
|
Net periodic benefit cost
|
–
|
(3)
|
–
|
–
|
|
|
|
|
|
|
|
Total operational pension cost
|
179
|
192
|
57
|
66
|
|
Total non-operational pension cost
|
(34)
|
–
|
(20)
|
–
|
42
Q3 2017
Financial Information
Operational EPS
Definition
Operational EPS
Operational EPS is
calculated as Operational net income divided by the weighted-average number of
shares outstanding used in determining basic earnings per share.
Operational net income
Operational net
income is calculated as Net income attributable to ABB adjusted for the
following:
(i)
acquisition-related
amortization,
(ii)
restructuring and
restructuring-related expenses,
(iii)
non-operational
pension cost,
(iv)
changes in
retained obligations of divested businesses,
(v)
changes in
pre-acquisition estimates,
(vi)
gains and losses
from sale of businesses,
(vii)
acquisition-related
expenses and certain non-operational items,
(viii)
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
(ix)
The amount of
income tax on operational adjustments either estimated using the Adjusted Group
effective tax rate or in certain specific cases, computed using the actual
income tax effects of the relevant item in (i) to (vii) above.
Acquisition-related amortization
Amortization
expense on intangibles arising upon acquisitions.
Adjusted Group effective tax rate
The Adjusted Group
effective tax rate is computed by dividing an adjusted provision for taxes by
an adjusted income from continuing operations before taxes. Certain amounts
recorded in income from continuing operations before taxes and the related
provision for taxes (primarily gains and losses from sale of businesses) are
excluded from the computation.
Constant currency Operational EPS adjustment
and Operational EPS growth rate (constant currency)
In connection with
ABB’s 2015-2020 targets, Operational EPS growth is measured assuming 2014 as
the base year and uses constant exchange rates. We compute the constant
currency operational net income for all periods using the relevant monthly
exchange rates which were in effect during 2014 and any difference in computed
Operational net income is divided by the relevant weighted-average number of
shares outstanding to identify the constant currency Operational EPS
adjustment.
Reconciliation
|
|
Nine months ended
September 30,
|
|
|
($ in millions, except per share data in $)
|
2017
|
2016
|
Growth
(3)
|
|
Net income (attributable to ABB)
|
1,820
|
1,474
|
|
|
Operational adjustments:
|
|
|
|
|
Acquisition-related amortization
|
189
|
212
|
|
|
Restructuring and restructuring-related expenses
(1)
|
224
|
475
|
|
|
Non-operational pension cost
|
(34)
|
–
|
|
|
Changes in retained obligations of divested businesses
|
94
|
–
|
|
|
Changes in pre-acquisition estimates
|
–
|
39
|
|
|
Gains and losses from sale of businesses
|
(330)
|
–
|
|
|
Acquisition-related expenses and certain non-operational items
|
234
|
46
|
|
|
FX/commodity timing differences in income from operations
|
(90)
|
53
|
|
|
Tax on operational adjustments
(2)
|
(138)
|
(227)
|
|
|
Operational net income
|
1,969
|
2,072
|
-5%
|
|
|
|
|
|
|
Weighted-average number of shares outstanding (in
millions)
|
2,138
|
2,155
|
|
|
|
|
|
|
|
Operational EPS
|
0.92
|
0.96
|
-4%
|
|
Constant currency Operational EPS adjustment
|
0.12
|
0.10
|
|
|
Operational EPS (constant currency basis - 2014 exchange
rates)
|
1.04
|
1.06
|
-2%
|
43
Q3 2017
Financial Information
|
|
Three months ended
September 30,
|
|
|
($ in millions, except per share data in $)
|
2017
|
2016
|
Growth
(3)
|
|
Net income (attributable to ABB)
|
571
|
568
|
|
|
Operational adjustments:
|
|
|
|
|
Acquisition-related amortization
|
74
|
70
|
|
|
Restructuring and restructuring-related expenses
(1)
|
92
|
39
|
|
|
Non-operational pension cost
|
(20)
|
–
|
|
|
Changes in retained obligations of divested businesses
|
–
|
–
|
|
|
Changes in pre-acquisition estimates
|
–
|
17
|
|
|
Gains and losses from sale of businesses
|
1
|
–
|
|
|
Acquisition-related expenses and certain non-operational items
|
68
|
35
|
|
|
FX/commodity timing differences in income from operations
|
1
|
24
|
|
|
Tax on operational adjustments
(2)
|
(62)
|
(58)
|
|
|
Operational net income
|
725
|
695
|
4%
|
|
|
|
|
|
|
Weighted-average number of shares outstanding (in
millions)
|
2,134
|
2,135
|
|
|
|
|
|
|
|
Operational EPS
|
0.34
|
0.33
|
4%
|
|
Constant currency Operational EPS adjustment
|
0.03
|
0.02
|
|
|
Operational EPS (constant currency basis - 2014 exchange
rates)
|
0.37
|
0.35
|
7%
|
(1)
Amounts also include the incremental implementation costs in relation to the
White Collar Productivity program.
(2)
Tax amount is computed by applying the Adjusted Group effective tax rate to the
operational adjustments, except for gains and losses from sale of businesses
for which the actual provision for taxes resulting from the gain or loss has
been computed.
(3)
Growth is computed using unrounded EPS amounts.
Net debt
Definition
Net debt
Net debt is defined as Total debt less Cash and marketable
securities.
Total debt
Total debt is the sum of Short-term debt and current maturities of
long-term debt, and Long-term debt.
Cash and
marketable securities
Cash and marketable securities is the sum of Cash and equivalents,
and Marketable securities and short-term investments.
Reconciliation
|
($ in millions)
|
September 30, 2017
|
December 31, 2016
|
|
Short-term debt and current maturities of long-term debt
|
831
|
1,003
|
|
Long-term debt
|
7,061
|
5,800
|
|
Total debt
|
7,892
|
6,803
|
|
Cash and equivalents
|
3,649
|
3,644
|
|
Marketable securities and short-term investments
|
998
|
1,953
|
|
Cash and marketable securities
|
4,647
|
5,597
|
|
Net debt
|
3,245
|
1,206
|
44
Q3 2017
Financial Information
Net working capital as a percentage of revenues
Definition
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.
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, and (vii)
other current liabilities (excluding primarily: (a) income taxes payable, (b)
current derivative liabilities, (c) pension and other employee benefits, and
(d) payables under the share buyback program); and including the amounts
related to these accounts which have been presented as either assets or
liabilities held for sale.
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 eliminate revenues of divested businesses and the
estimated impact of annualizing revenues of certain acquisitions which were
completed in the same trailing twelve-month period.
Reconciliation
|
($ in millions, unless otherwise indicated)
|
September 30, 2017
|
September 30, 2016
|
|
Net working capital:
|
|
|
|
Receivables, net
|
10,738
|
10,155
|
|
Inventories, net
|
5,306
|
5,017
|
|
Prepaid expenses
|
276
|
242
|
|
Accounts payable, trade
|
(5,081)
|
(4,458)
|
|
Billings in excess of sales
|
(1,309)
|
(1,330)
|
|
Advances from customers
|
(1,428)
|
(1,591)
|
|
Other current liabilities
(1)
|
(3,545)
|
(3,153)
|
|
Net working capital in assets and liabilities held for sale
|
–
|
(46)
|
|
Net working capital
|
4,957
|
4,836
|
|
Total revenues for the three months ended:
|
|
|
|
September 30, 2017 / 2016
|
8,724
|
8,255
|
|
June 30, 2017 / 2016
|
8,454
|
8,677
|
|
March 31, 2017 / 2016
|
7,854
|
7,903
|
|
December 31, 2016 / 2015
|
8,993
|
9,242
|
|
Adjustment to annualize/eliminate revenues of certain
acquisitions/divestments
|
366
|
–
|
|
Adjusted revenues for the trailing twelve months
|
34,391
|
34,077
|
|
Net working capital as a percentage of revenues (%)
|
14.4%
|
14.2%
|
(1) Amounts
exclude $622 million and $744 million at September 30, 2017 and 2016,
respectively, related primarily to (a) income taxes payable, (b) current
derivative liabilities, and (c) pension and other employee benefits.
45
Q3 2017
Financial Information
Free cash flow conversion to net income
Definition
Free cash
flow conversion to net income
Free cash flow conversion to net income is calculated as Free cash
flow divided by Net income attributable to ABB.
Free cash
flow (FCF)
Free cash flow is calculated as net cash provided by operating
activities adjusted for: (i) purchases of property, plant and equipment and
intangible assets, (ii) proceeds from sales of property, plant and equipment,
and (iii) changes in financing and other non-current receivables, net (included
in other investing activities).
Free cash
flow for the trailing twelve months
Free cash flow for the trailing twelve months includes free cash
flow recorded by ABB in the twelve months preceding the relevant balance sheet
date.
Net income
for the trailing twelve months
Net income for the trailing twelve months includes net income
recorded by ABB in the twelve months preceding the relevant balance sheet date.
Free cash flow conversion to net income
|
|
Twelve months to
|
|
($ in millions, unless otherwise indicated)
|
September 30, 2017
|
December 31, 2016
|
|
Net cash provided by operating activities
|
3,358
|
3,843
|
|
Adjusted for the effects of:
|
|
|
|
Purchases of property, plant and equipment and intangible assets
|
(919)
|
(831)
|
|
Proceeds from sale of property, plant and equipment
|
59
|
61
|
|
Changes in financing receivables and other non-current
receivables
|
3
|
(8)
|
|
Free cash flow
|
2,501
|
3,065
|
|
Net income attributable to ABB
|
2,245
|
1,899
|
|
Free cash flow conversion to net income
|
111%
|
161%
|
Reconciliation of the trailing
twelve months to September 30, 2017
|
|
|
Purchases of
|
|
Changes in
|
|
|
|
Net cash
|
property, plant
|
Proceeds
|
financing
|
|
|
|
provided by
|
and equipment
|
from sale of
|
receivables and
|
Net income
|
|
|
operating
|
and intangible
|
property, plant
|
other non-current
|
attributable
|
|
($ in millions)
|
activities
|
assets
|
and equipment
|
receivables
|
to ABB
|
|
Q4 2016
|
1,428
|
(299)
|
9
|
(4)
|
425
|
|
Q1 2017
|
509
|
(192)
|
20
|
8
|
724
|
|
Q2 2017
|
467
|
(225)
|
10
|
(1)
|
525
|
|
Q3 2017
|
954
|
(203)
|
20
|
–
|
571
|
|
Total for the trailing twelve months
to September 30, 2017
|
3,358
|
(919)
|
59
|
3
|
2,245
|
46
Q3 2017
Financial Information
Finance net
Definition
Finance net is calculated as Interest and dividend income less
Interest and other finance expense.
Reconciliation
|
|
Nine months ended
September 30,
|
Three months ended
September 30,
|
|
($ in millions)
|
2017
|
2016
|
2017
|
2016
|
|
Interest and dividend income
|
55
|
54
|
20
|
16
|
|
Interest and other finance expense
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(227)
|
(230)
|
(74)
|
(84)
|
|
Finance net
|
(172)
|
(176)
|
(54)
|
(68)
|
Book-to-bill ratio
Definition
Book-to-bill ratio is calculated as Orders received divided by
Total revenues.
Reconciliation
|
|
Nine months ended
September 30,
|
Three months ended
September 30,
|
|
($ in millions, unless otherwise indicated)
|
2017
|
2016
|
2017
|
2016
|
|
Orders received
|
24,909
|
25,102
|
8,157
|
7,533
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|
Total revenues
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25,032
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24,835
|
8,724
|
8,255
|
|
Book-to-bill ratio
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1.00
|
1.01
|
0.94
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0.91
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47
Q3 2017
Financial Information
—
ABB
Ltd
Corporate Communications
P.O.
Box
8131
805
0
Zurich
Switzerland
Tel:
+41
(0)43
317
71
11
Fax:
+41
(0)43
317
79
58
www.abb.com
48
Q3 2017
Financial Information
July —
September 2017 — Q3
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ABB Ltd announces that the following members of the
Executive
Committee
or
Board of Directors
of ABB have purchased, sold or
been granted ABB’s registered shares, call options and warrant appreciation
rights (“WARs”), in the following amounts:
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Name
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Date
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Description
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Received *
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Purchased
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Sold
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Price
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Greg Scheu
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August 14, 2017
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Shares
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18,311
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|
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USD
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22.95
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Chunyuan Gu
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|
August 14, 2017
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Shares
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|
12,798
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|
|
|
|
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CHF
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22.29
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Tarak Mehta
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|
August 14, 2017
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Shares
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24,273
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|
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CHF
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22.29
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Frank Duggan
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August 14, 2017
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Shares
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27,548
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|
|
|
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CHF
|
22.29
|
Claudio Facchin
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|
August 14, 2017
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Shares
|
|
21,758
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|
|
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CHF
|
22.29
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Peter Terwiesch
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|
August 14, 2017
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Shares
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16,457
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|
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CHF
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22.29
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Diane de Saint Victor
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|
August 14, 2017
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Shares
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25,158
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|
|
|
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|
CHF
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22.29
|
Jean-Christophe Deslarzes
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|
August 14, 2017
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Shares
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21,384
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|
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CHF
|
22.29
|
Ulrich Spiesshofer
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|
August 14, 2017
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Shares
|
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65,692
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|
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CHF
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22.29
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Key:
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* Received instruments were delivered as part of the ABB Ltd
Director’s or Executive Committee Member’s compensation
|
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
ABB LTD
|
|
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|
|
Date: October 26, 2017.
|
By:
|
/s/ Alanna Abrahamson - Haka
|
|
|
Name:
|
Alanna Abrahamson - Haka
|
|
|
Title:
|
Group Senior Vice President
and
Head of Investor Relations
|
|
|
|
|
|
|
Date: October 26,
2017.
|
By:
|
|
|
|
Name:
|
Richard A. Brown
|
|
|
Title:
|
Group Senior Vice President
and
Chief Counsel Corporate & Finance
|
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