Document_and_Entity_Informatio
Document and Entity Information | 12 Months Ended |
Dec. 31, 2014 | |
Document and Entity Information | |
Entity Registrant Name | ABB LTD |
Entity Central Index Key | 1091587 |
Document Type | 20-F |
Document Period End Date | 31-Dec-14 |
Amendment Flag | FALSE |
Current Fiscal Year End Date | -19 |
Entity Well-known Seasoned Issuer | Yes |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 2,314,743,264 |
Document Fiscal Year Focus | 2014 |
Document Fiscal Period Focus | FY |
Consolidated_Income_Statements
Consolidated Income Statements (USD $) | 12 Months Ended | ||
In Millions, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Consolidated Income Statements | |||
Sales of products | $33,279 | $35,282 | $32,979 |
Sales of services | 6,551 | 6,566 | 6,357 |
Total revenues | 39,830 | 41,848 | 39,336 |
Cost of products | -24,506 | -25,728 | -23,838 |
Cost of services | -4,109 | -4,128 | -4,120 |
Total cost of sales | -28,615 | -29,856 | -27,958 |
Gross profit | 11,215 | 11,992 | 11,378 |
Selling, general and administrative expenses | -6,067 | -6,094 | -5,756 |
Non-order related research and development expenses | -1,499 | -1,470 | -1,464 |
Other income (expense), net | 529 | -41 | -100 |
Income from operations | 4,178 | 4,387 | 4,058 |
Interest and dividend income | 80 | 69 | 73 |
Interest and other finance expense | -362 | -390 | -293 |
Income from continuing operations before taxes | 3,896 | 4,066 | 3,838 |
Provision for taxes | -1,202 | -1,122 | -1,030 |
Income from continuing operations, net of tax | 2,694 | 2,944 | 2,808 |
Income (loss) from discontinued operations, net of tax | 24 | -37 | 4 |
Net income | 2,718 | 2,907 | 2,812 |
Net income attributable to noncontrolling interests | -124 | -120 | -108 |
Net income attributable to ABB | 2,594 | 2,787 | 2,704 |
Amounts attributable to ABB shareholders: | |||
Income from continuing operations, net of tax | 2,570 | 2,824 | 2,700 |
Net income | $2,594 | $2,787 | $2,704 |
Basic earnings per share attributable to ABB shareholders: | |||
Income from continuing operations, net of tax (in dollars per share) | $1.12 | $1.23 | $1.18 |
Net income (in dollars per share) | $1.13 | $1.21 | $1.18 |
Diluted earnings per share attributable to ABB shareholders: | |||
Income from continuing operations, net of tax (in dollars per share) | $1.12 | $1.23 | $1.18 |
Net income (in dollars per share) | $1.13 | $1.21 | $1.18 |
Weighted-average number of shares outstanding (in millions) used to compute: | |||
Basic earnings per share attributable to ABB shareholders (in shares) | 2,288 | 2,297 | 2,293 |
Diluted earnings per share attributable to ABB shareholders (in shares) | 2,295 | 2,305 | 2,295 |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Income (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Consolidated Statements of Comprehensive Income | |||
Net income | $2,718 | $2,907 | $2,812 |
Other comprehensive income (loss), net of tax: | |||
Foreign currency translation adjustments | -1,680 | 141 | 383 |
Available-for-sale securities: | |||
Net unrealized gains (losses) arising during the year | -9 | -4 | 3 |
Reclassification adjustments for net (gains) losses included in net income | 15 | -13 | 1 |
Unrealized gains (losses) on available-for-sale securities | 6 | -17 | 4 |
Pension and other postretirement plans: | |||
Prior service costs arising during the year | -3 | -16 | -36 |
Net actuarial gains (losses) arising during the year | -614 | 291 | -601 |
Amortization of prior service cost included in net income | 17 | 23 | 30 |
Amortization of net actuarial loss included in net income | 79 | 99 | 70 |
Pension and other postretirement plan adjustments | -521 | 397 | -537 |
Cash flow hedge derivatives: | |||
Net unrealized gains (losses) arising during the year | -52 | 28 | 53 |
Reclassification adjustments for net (gains) losses included in net income | 9 | -43 | -28 |
Unrealized gains (losses) of cash flow hedge derivatives | -43 | -15 | 25 |
Other Comprehensive Income (Loss), Net of Tax | -2,238 | 506 | -125 |
Total comprehensive income, net of tax | 480 | 3,413 | 2,687 |
Comprehensive income attributable to noncontrolling interests, net of tax | -115 | -115 | -98 |
Total comprehensive income, net of tax, attributable to ABB | $365 | $3,298 | $2,589 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Consolidated Balance Sheets | ||
Cash and equivalents | $5,443 | $6,021 |
Marketable securities and short-term investments | 1,325 | 464 |
Receivables, net | 11,078 | 12,146 |
Inventories, net | 5,376 | 6,004 |
Prepaid expenses | 218 | 252 |
Deferred taxes | 902 | 832 |
Other current assets | 644 | 706 |
Total current assets | 24,986 | 26,425 |
Property, plant and equipment, net | 5,652 | 6,254 |
Goodwill | 10,053 | 10,670 |
Other intangible assets, net | 2,702 | 3,297 |
Prepaid pension and other employee benefits | 70 | 93 |
Investments in equity-accounted companies | 177 | 197 |
Deferred taxes | 511 | 370 |
Other non-current assets | 727 | 758 |
Total assets | 44,878 | 48,064 |
Accounts payable, trade | 4,765 | 5,112 |
Billings in excess of sales | 1,455 | 1,714 |
Short-term debt and current maturities of long-term debt | 353 | 453 |
Advances from customers | 1,624 | 1,726 |
Deferred taxes | 289 | 259 |
Provisions for warranties | 1,148 | 1,362 |
Other provisions | 1,689 | 1,807 |
Other current liabilities | 4,257 | 4,242 |
Total current liabilities | 15,580 | 16,675 |
Long-term debt | 7,338 | 7,570 |
Pension and other employee benefits | 2,394 | 1,639 |
Deferred taxes | 1,165 | 1,265 |
Other non-current liabilities | 1,586 | 1,707 |
Total liabilities | 28,063 | 28,856 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Capital stock and additional paid-in capital (2,314,743,264 issued shares at December 31, 2014 and 2013) | 1,777 | 1,750 |
Retained earnings | 19,939 | 19,186 |
Accumulated other comprehensive loss | -4,241 | -2,012 |
Treasury stock, at cost (55,843,63 and 14,093,960 shares at December 31, 2014 and 2013, respectively) | -1,206 | -246 |
Total ABB stockholders' equity | 16,269 | 18,678 |
Noncontrolling interests | 546 | 530 |
Total stockholders' equity | 16,815 | 19,208 |
Total liabilities and stockholders' equity | $44,878 | $48,064 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) | Dec. 31, 2014 | Dec. 31, 2013 |
Consolidated Balance Sheets | ||
Capital stock and additional paid-in capital, issued shares | 2,314,743,264 | 2,314,743,264 |
Treasury stock, shares | 55,843,639 | 14,093,960 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Operating activities: | |||
Net income | $2,718 | $2,907 | $2,812 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 1,305 | 1,318 | 1,182 |
Pension and other employee benefits | 16 | 6 | -13 |
Deferred taxes | 65 | -137 | 64 |
Net gain from sale of property, plant and equipment | -17 | -18 | -26 |
Net (gain) loss from sale of businesses | -543 | 16 | 2 |
Other | 112 | 79 | 169 |
Changes in operating assets and liabilities: | |||
Trade receivables, net | -12 | -571 | -310 |
Inventories, net | -176 | 324 | 61 |
Trade payables | 257 | -43 | -57 |
Accrued liabilities. | 9 | 71 | 162 |
Billings in excess of sales | -118 | -168 | 152 |
Provisions, net | -127 | 199 | -109 |
Advances from customers | 39 | -145 | 181 |
Income taxes payable and receivable | -13 | -18 | -261 |
Other assets and liabilities, net | 330 | -167 | -230 |
Net cash provided by operating activities | 3,845 | 3,653 | 3,779 |
Investing activities: | |||
Purchases of marketable securities (available-for-sale) | -1,430 | -526 | -2,288 |
Purchases of short-term investments | -1,465 | -30 | -67 |
Purchases of property, plant and equipment and intangible assets | -1,026 | -1,106 | -1,293 |
Acquisition of businesses (net of cash acquired) and increases in cost and equity-accounted companies | -70 | -914 | -3,694 |
Proceeds from sales of marketable securities (available-for-sale) | 361 | 1,367 | 1,655 |
Proceeds from maturity of marketable securities (available-for-sale) | 523 | 118 | |
Proceeds from short-term investments | 1,011 | 47 | 27 |
Proceeds from sales of property, plant and equipment | 33 | 80 | 40 |
Proceeds from sales of businesses (net of transaction costs and cash disposed) and cost and equity-accounted companies | 1,110 | 62 | 16 |
Other investing activities | -168 | 185 | 29 |
Net cash used in investing activities | -1,121 | -717 | -5,575 |
Financing activities: | |||
Net changes in debt with maturities of 90 days or less | -103 | -697 | 570 |
Increase in debt | 150 | 492 | 5,986 |
Repayment of debt | -90 | -1,893 | -1,104 |
Delivery of shares | 38 | 74 | 90 |
Purchases of treasury stock | -1,003 | ||
Dividends paid | -1,841 | -1,667 | -1,626 |
Dividends paid to noncontrolling shareholders | -132 | -149 | -121 |
Other financing activities | -43 | -16 | -33 |
Net cash provided by (used in) financing activities | -3,024 | -3,856 | 3,762 |
Effects of exchange rate changes on cash and equivalents | -278 | 66 | 90 |
Net change in cash and equivalents-continuing operations | -578 | -854 | 2,056 |
Cash and equivalents, beginning of period | 6,021 | 6,875 | 4,819 |
Cash and equivalents, end of period | 5,443 | 6,021 | 6,875 |
Supplementary disclosure of cash flow information: | |||
Interest paid | 259 | 287 | 189 |
Taxes paid | $1,155 | $1,278 | $1,211 |
Consolidated_Statements_of_Cha
Consolidated Statements of Changes in Stockholders' Equity (USD $) | Total ABB stockholders' equity | Capital stock and additional paid-in capital | Retained earnings | Total accumulated other comprehensive loss | Foreign currency translation adjustment | Unrealized gains (losses) on available-for-sale securities | Pension and other post-retirement plan adjustments | Unrealized gains (losses) of cash flow hedge derivatives | Treasury stock | Non-controlling interests | Total |
In Millions, unless otherwise specified | |||||||||||
Balance at Dec. 31, 2011 | $15,777 | $1,621 | $16,988 | ($2,408) | ($968) | $20 | ($1,472) | $12 | ($424) | $559 | $16,336 |
Comprehensive income: | |||||||||||
Net income | 2,704 | 2,704 | 108 | 2,812 | |||||||
Foreign currency translation adjustments, net of tax | 388 | 388 | 388 | -5 | 383 | ||||||
Effect of change in fair value of available-for-sale securities, net of tax | 4 | 4 | 4 | 4 | |||||||
Unrecognized income (expense) related to pensions and other postretirement plans, net of tax | -532 | -532 | -532 | -5 | -537 | ||||||
Change in derivatives qualifying as cash flow hedges, net of tax | 25 | 25 | 25 | 25 | |||||||
Total comprehensive income, net of tax | 2,589 | 98 | 2,687 | ||||||||
Changes in noncontrolling interests | 6 | 6 | |||||||||
Dividends paid to noncontrolling shareholders | -123 | -123 | |||||||||
Dividends paid | -1,626 | -1,626 | -1,626 | ||||||||
Share-based payment arrangements | 60 | 60 | 60 | ||||||||
Delivery of shares | 90 | -6 | 96 | 90 | |||||||
Call options | 10 | 10 | 10 | ||||||||
Replacement options issued in connection with acquisition | 5 | 5 | 5 | ||||||||
Other | 1 | 1 | 1 | ||||||||
Balance at Dec. 31, 2012 | 16,906 | 1,691 | 18,066 | -2,523 | -580 | 24 | -2,004 | 37 | -328 | 540 | 17,446 |
Comprehensive income: | |||||||||||
Net income | 2,787 | 2,787 | 120 | 2,907 | |||||||
Foreign currency translation adjustments, net of tax | 149 | 149 | 149 | -8 | 141 | ||||||
Effect of change in fair value of available-for-sale securities, net of tax | -17 | -17 | -17 | -17 | |||||||
Unrecognized income (expense) related to pensions and other postretirement plans, net of tax | 394 | 394 | 394 | 3 | 397 | ||||||
Change in derivatives qualifying as cash flow hedges, net of tax | -15 | -15 | -15 | -15 | |||||||
Total comprehensive income, net of tax | 3,298 | 115 | 3,413 | ||||||||
Changes in noncontrolling interests | -17 | -17 | 25 | 8 | |||||||
Dividends paid to noncontrolling shareholders | -150 | -150 | |||||||||
Dividends paid | -1,667 | -1,667 | -1,667 | ||||||||
Share-based payment arrangements | 71 | 71 | 71 | ||||||||
Delivery of shares | 74 | -8 | 82 | 74 | |||||||
Call options | 13 | 13 | 13 | ||||||||
Replacement options issued in connection with acquisition | 2 | 2 | 2 | ||||||||
Other | -2 | -2 | -2 | ||||||||
Balance at Dec. 31, 2013 | 18,678 | 1,750 | 19,186 | -2,012 | -431 | 7 | -1,610 | 22 | -246 | 530 | 19,208 |
Comprehensive income: | |||||||||||
Net income | 2,594 | 2,594 | 124 | 2,718 | |||||||
Foreign currency translation adjustments, net of tax | -1,671 | -1,671 | -1,671 | -9 | -1,680 | ||||||
Effect of change in fair value of available-for-sale securities, net of tax | 6 | 6 | 6 | 6 | |||||||
Unrecognized income (expense) related to pensions and other postretirement plans, net of tax | -521 | -521 | -521 | -521 | |||||||
Change in derivatives qualifying as cash flow hedges, net of tax | -43 | -43 | -43 | -43 | |||||||
Total comprehensive income, net of tax | 365 | 115 | 480 | ||||||||
Changes in noncontrolling interests | -34 | -34 | 33 | -1 | |||||||
Dividends paid to noncontrolling shareholders | -132 | -132 | |||||||||
Dividends paid | -1,841 | -1,841 | -1,841 | ||||||||
Share-based payment arrangements | 73 | 73 | 73 | ||||||||
Purchases of treasury stock | -1,015 | -1,015 | -1,015 | ||||||||
Delivery of shares | 38 | -17 | 55 | 38 | |||||||
Call options | 5 | 5 | 5 | ||||||||
Balance at Dec. 31, 2014 | $16,269 | $1,777 | $19,939 | ($4,241) | ($2,102) | $13 | ($2,131) | ($21) | ($1,206) | $546 | $16,815 |
The_Company
The Company | 12 Months Ended |
Dec. 31, 2014 | |
The Company | |
The Company | |
Note 1—The Company | |
ABB Ltd and its subsidiaries (collectively, the Company) together form a leading global company in power and automation technologies that enable utility and industry customers to improve their performance while lowering environmental impact. The Company works with customers to engineer and install networks, facilities and plants with particular emphasis on enhancing efficiency, reliability and productivity for customers who generate, convert, transmit, distribute and consume energy. | |
Significant_accounting_policie
Significant accounting policies | 12 Months Ended | ||
Dec. 31, 2014 | |||
Significant accounting policies | |||
Significant accounting policies | |||
Note 2—Significant accounting policies | |||
The following is a summary of significant accounting policies followed in the preparation of these Consolidated Financial Statements. | |||
Basis of presentation | |||
The Consolidated Financial Statements are prepared in accordance with United States of America (United States or U.S.) generally accepted accounting principles (U.S. GAAP) and are presented in United States dollars ($ or USD) unless otherwise stated. The par value of capital stock is denominated in Swiss francs. | |||
Scope of consolidation | |||
The Consolidated Financial Statements include the accounts of ABB Ltd and companies which are directly or indirectly controlled by ABB Ltd. Additionally, the Company consolidates variable interest entities if it has determined that it is the primary beneficiary. Intercompany accounts and transactions are eliminated. Investments in joint ventures and affiliated companies in which the Company has the ability to exercise significant influence over operating and financial policies (generally through direct or indirect ownership of 20 percent to 50 percent of the voting rights), are recorded in the Consolidated Financial Statements using the equity method of accounting. | |||
Operating cycle | |||
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. | |||
Use of estimates | |||
The preparation of financial statements in conformity with U.S. GAAP requires management to make assumptions and estimates that directly affect the amounts reported in the Consolidated Financial Statements and the accompanying Notes. The most significant, difficult and subjective of such accounting assumptions and estimates include: | |||
• | assumptions and projections, principally related to future material, labor and project-related overhead costs, used in determining the percentage-of-completion on projects, | ||
• | estimates of loss contingencies associated with litigation or threatened litigation and other claims and inquiries, environmental damages, product warranties, regulatory and other proceedings, | ||
• | assumptions used in the calculation of pension and postretirement benefits and the fair value of pension plan assets, | ||
• | recognition and measurement of current and deferred income tax assets and liabilities (including the measurement of uncertain tax positions), | ||
• | growth rates, discount rates and other assumptions used in testing goodwill for impairment, | ||
• | assumptions used in determining inventory obsolescence and net realizable value, | ||
• | estimates and assumptions used in determining the fair values of assets and liabilities assumed in business combinations, | ||
• | growth rates, discount rates and other assumptions used to determine impairment of long-lived assets, and | ||
• | assessment of the allowance for doubtful accounts. | ||
The actual results and outcomes may differ from the Company's estimates and assumptions. | |||
Cash and equivalents | |||
Cash and equivalents include highly liquid investments with maturities of three months or less at the date of acquisition. | |||
Currency and other local regulatory limitations related to the transfer of funds exist in a number of countries where the Company operates. Funds, other than regular dividends, fees or loan repayments, cannot be readily transferred abroad from these countries and are therefore deposited and used for working capital needs locally. These funds are included in cash and equivalents as they are not considered restricted. | |||
Marketable securities and short-term investments | |||
Management determines the appropriate classification of held-to-maturity and available-for-sale securities at the time of purchase. At each reporting date, the appropriateness of the classification of the Company's investments in debt and equity securities is reassessed. Debt securities are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are stated at amortized cost, adjusted for accretion of discounts or amortization of premiums to maturity computed under the effective interest method. Such accretion or amortization is included in "Interest and dividend income". Marketable debt securities not classified as held-to-maturity and equity securities that have readily determinable fair values are classified as available-for-sale and reported at fair value. | |||
Unrealized gains and losses on available-for-sale securities are excluded from the determination of earnings and are instead recognized in the "Accumulated other comprehensive loss" component of stockholders' equity, net of tax, until realized. Realized gains and losses on available-for-sale securities are computed based upon the historical cost of these securities, using the specific identification method. | |||
Marketable debt securities are generally classified as either "Cash and equivalents" or "Marketable securities and short-term investments" according to their maturity at the time of acquisition. | |||
Marketable equity securities are generally classified as "Marketable securities and short-term investments", however any marketable securities held as a long-term investment rather than as an investment of excess liquidity, are classified as "Other non-current assets". | |||
The Company performs a periodic review of its debt and equity securities to determine whether an other-than-temporary impairment has occurred. Generally, when an individual security has been in an unrealized loss position for an extended period of time, the Company evaluates whether an impairment has occurred. The evaluation is based on specific facts and circumstances at the time of assessment, which include general market conditions, and the duration and extent to which the fair value is below cost. | |||
If the fair value of a debt security is less than its amortized cost, then an other-than-temporary impairment for the difference is recognized if (i) the Company has the intent to sell the security, (ii) it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost base or (iii) a credit loss exists insofar as the Company does not expect to recover the entire recognized amortized cost of the security. Such impairment charges are generally recognized in "Interest and other finance expense". If the impairment is due to factors other than credit losses, and the Company does not intend to sell the security and it is not more likely than not that it will be required to sell the security before recovery of the security's amortized cost, such impairment charges are recorded in "Accumulated other comprehensive loss". | |||
In addition, for equity securities, the Company assesses whether the cost value will recover within the near-term and whether the Company has the intent and ability to hold that equity security until such recovery occurs. If an other-than-temporary impairment is identified, the security is written down to its fair value and the related losses are recognized in "Interest and other finance expense", unless the impairment relates to equity securities classified as "Other non-current assets", in which case the impairment is reported in "Other income (expense), net". | |||
Accounts receivable and allowance for doubtful accounts | |||
Accounts receivable are recorded at the invoiced amount. The Company has a group-wide policy on the management of credit risk. The policy includes a credit assessment methodology to assess the creditworthiness of customers and assign to those customers a risk category. Third-party agencies' ratings are considered, if available. For customers where agency ratings are not available, the customer's most recent financial statements, payment history and other relevant information are considered in the assignment to a risk category. Customers are assessed at least annually or more frequently when information on significant changes in the customers' financial position becomes known. In addition to the assignment to a risk category, a credit limit per customer is set. | |||
The allowance for doubtful accounts is the Company's best estimate of the amount of probable credit losses in existing accounts receivable. The Company determines the allowance based on historical write-off experience and customer specific data. If an amount has not been settled within its contractual payment term then it is considered past due. The Company reviews the allowance for doubtful accounts regularly and past due balances are reviewed for collectability. Account balances are charged off against the related allowance when the Company believes that the amount will not be recovered. | |||
The Company, in its normal course of business, transfers receivables to third parties, generally without recourse. The transfer is accounted for as a sale when the Company has surrendered control over the receivables. Control is deemed to have been surrendered when (i) the transferred receivables have been put presumptively beyond the reach of the Company and its creditors, even in bankruptcy or other receivership, (ii) the third-party transferees have the right to pledge or exchange the transferred receivables, and (iii) the Company has relinquished effective control over the transferred receivables and does not retain the ability or obligation to repurchase or redeem the transferred receivables. At the time of sale, the sold receivables are removed from the Consolidated Balance Sheets and the related cash inflows are classified as operating activities in the Consolidated Statements of Cash Flows. Costs associated with the sale of receivables, including the related gains and losses from the sales, are included in "Interest and other finance expense". Transfers of receivables that do not meet the requirements for treatment as sales are accounted for as secured borrowings and the related cash flows are classified as financing activities in the Consolidated Statements of Cash Flows. | |||
Concentrations of credit risk | |||
The Company sells a broad range of products, systems and services to a wide range of industrial, commercial and utility customers as well as various government agencies and quasi-governmental agencies throughout the world. Concentrations of credit risk with respect to accounts receivable are limited, as the Company's customer base is comprised of a large number of individual customers. Ongoing credit evaluations of customers' financial positions are performed to determine whether the use of credit support instruments such as guarantees, letters of credit or credit insurance are necessary; collateral is not generally required. The Company maintains reserves for potential credit losses as discussed above in "Accounts receivable and allowance for doubtful accounts". Such losses, in the aggregate, are in line with the Company's expectations. | |||
It is the Company's policy to invest cash in deposits with banks throughout the world with certain minimum credit ratings and in high quality, low risk, liquid investments. The Company actively manages its credit risk by routinely reviewing the creditworthiness of the banks and the investments held. The Company has not incurred significant credit losses related to such investments. | |||
The Company's exposure to credit risk on derivative financial instruments is the risk that the counterparty will fail to meet its obligations. To reduce this risk, the Company has credit policies that require the establishment and periodic review of credit limits for individual counterparties. In addition, the Company has entered into close-out netting agreements with most derivative counterparties. 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. In the Consolidated Financial Statements derivative transactions are presented on a gross basis. | |||
Revenue recognition | |||
The Company generally recognizes revenues for the sale of goods when persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable and collectability is reasonably assured. With regards to the sale of products, delivery is not considered to have occurred, and therefore no revenues are recognized, until the customer has taken title to the products and assumed the risks and rewards of ownership of the products specified in the purchase order or sales agreement. Generally, the transfer of title and risks and rewards of ownership are governed by the contractually-defined shipping terms. The Company uses various International Commercial shipping terms (as promulgated by the International Chamber of Commerce) in its sales of products to third-party customers, such as Ex Works (EXW), Free Carrier (FCA) and Delivered Duty Paid (DDP). Subsequent to delivery of the products, the Company generally has no further contractual performance obligations that would preclude revenue recognition. | |||
Revenues under long-term construction-type contracts are generally recognized using the percentage-of-completion method of accounting. The Company principally uses the cost-to-cost method to measure progress towards completion on contracts. Under this method, progress of contracts is measured by actual costs incurred in relation to the Company's best estimate of total estimated costs, which are reviewed and updated routinely for contracts in progress. The cumulative effect of any change in estimate is recorded in the period when the change in estimate is determined. | |||
Short-term construction-type contracts, or long-term construction-type contracts for which reasonably dependable estimates cannot be made or for which inherent hazards make estimates difficult, are accounted for under the completed-contract method. Revenues under the completed-contract method are recognized upon substantial completion—that is: acceptance by the customer, compliance with performance specifications demonstrated in a factory acceptance test or similar event. | |||
For non construction-type contracts that contain customer acceptance provisions, revenue is deferred until customer acceptance occurs or the Company has demonstrated the customer-specified objective criteria have been met or the contractual acceptance period has lapsed. | |||
Revenues from service transactions are recognized as services are performed. For long-term service contracts, revenues are recognized on a straight-line basis over the term of the contract or, if the performance pattern is other than straight-line, as the services are provided. Service revenues reflect revenues earned from the Company's activities in providing services to customers primarily subsequent to the sale and delivery of a product or complete system. Such revenues consist of maintenance-type contracts, field service activities that include personnel and accompanying spare parts, and installation and commissioning of products as a stand-alone service or as part of a service contract. | |||
Revenues for software license fees are recognized when persuasive evidence of a non-cancelable license agreement exists, delivery has occurred, the license fee is fixed or determinable, and collection is probable. In software arrangements that include rights to multiple software products and/or services, the total arrangement fee is allocated using the residual method. Under this method, revenue is allocated to the undelivered elements based on vendor-specific objective evidence (VSOE) of the fair value of such undelivered elements and the residual amounts of revenue are allocated to the delivered elements. Elements included in multiple element arrangements may consist of software licences, maintenance (which includes customer support services and unspecified upgrades), hosting, and consulting services. VSOE is based on the price generally charged when an element is sold separately or, in the case of an element not yet sold separately, the price established by management, if it is probable that the price, once established, will not change once the element is sold separately. If VSOE does not exist for an undelivered element, the total arrangement fee will be recognized as revenue over the life of the contract or upon delivery of the undelivered element. | |||
The Company offers multiple element arrangements to meet its customers' needs. These arrangements may involve the delivery of multiple products and/or performance of services (such as installation and training) and the delivery and/or performance may occur at different points in time or over different periods of time. Deliverables of such multiple element arrangements are evaluated to determine the unit of accounting and if certain criteria are met, the Company allocates revenues to each unit of accounting based on its relative selling price. A hierarchy of selling prices is used to determine the selling price of each specific deliverable that includes VSOE (if available), third-party evidence (if VSOE is not available), or estimated selling price if neither of the first two is available. The estimated selling price reflects the Company's best estimate of what the selling prices of elements would be if the elements were sold on a stand-alone basis. Revenue is allocated between the elements of an arrangement at the inception of the arrangement. Such arrangements generally include industry-specific performance and termination provisions, such as in the event of substantial delays or non-delivery. | |||
Revenues are reported net of customer rebates and similar incentives. Taxes assessed by a governmental authority that are directly imposed on revenue-producing transactions between the Company and its customers, such as sales, use, value-added and some excise taxes, are excluded from revenues. | |||
Contract loss provisions | |||
Losses on contracts are recognized in the period when they are identified and are based upon the anticipated excess of contract costs over the related contract revenues. | |||
Shipping and handling costs | |||
Shipping and handling costs are recorded as a component of cost of sales. | |||
Inventories | |||
Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out method, the weighted-average cost method, or in certain circumstances (for example, where the completed-contract method of revenue recognition is used) the specific identification method. Inventoried costs are stated at acquisition cost or actual production cost, including direct material and labor and applicable manufacturing overheads. Adjustments to reduce the cost of inventory to its net market value are made, if required, for decreases in sales prices, obsolescence or similar reductions in the estimated net realizable value. | |||
Impairment of long-lived assets | |||
Long-lived assets that are held and used are assessed for impairment when events or circumstances indicate that the carrying amount of the asset may not be recoverable. If the asset's net carrying value exceeds the asset's net undiscounted cash flows expected to be generated over its remaining useful life including net proceeds expected from disposition of the asset, if any, the carrying amount of the asset is reduced to its estimated fair value. The estimated fair value is determined using a market, income and/or cost approach. | |||
Property, plant and equipment | |||
Property, plant and equipment is stated at cost, less accumulated depreciation and is depreciated using the straight-line method. The estimated useful lives of the assets are generally as follows: | |||
• | factories and office buildings: 30 to 40 years, | ||
• | other facilities: 15 years, | ||
• | machinery and equipment: 3 to 15 years, | ||
• | furniture and office equipment: 3 to 8 years, | ||
• | leasehold improvements are depreciated over their estimated useful life or, for operating leases, over the lease term, if shorter. | ||
Goodwill and other intangible assets | |||
Goodwill is reviewed for impairment annually as of October 1, or more frequently if events or circumstances indicate that the carrying value may not be recoverable. | |||
Goodwill is evaluated for impairment at the reporting unit level. A reporting unit is an operating segment or one level below an operating segment. For the annual impairment review in 2014, the reporting units were the same as the operating segments for Discrete Automation and Motion, Low Voltage Products, Power Products and Power Systems, while for the Process Automation operating segment, the reporting units were determined to be one level below the operating segment. | |||
When evaluating goodwill for impairment, the Company uses either a qualitative or quantitative assessment method for each reporting unit. The qualitative assessment involves determining, based on an evaluation of qualitative factors, if it is more likely than not that the fair value of a reporting unit is less than its carrying value. If, based on this qualitative assessment, it is determined to be more likely than not that the reporting unit's fair value is less than its carrying value, the two-step quantitative impairment test (described below) is performed, otherwise no further analysis is required. If the Company elects not to perform the qualitative assessment for a reporting unit, the two-step quantitative impairment test is performed. | |||
The two-step quantitative impairment test calculates the fair value of a reporting unit (based on the income approach whereby the fair value of a reporting unit is calculated based on the present value of future cash flows) and compares it to the reporting unit's carrying value. If the carrying value of the net assets of a reporting unit exceeds the fair value of the reporting unit then the Company performs the second step of the impairment test to determine the implied fair value of the reporting unit's goodwill. If the carrying value of the reporting unit's goodwill exceeds its implied fair value, the Company records an impairment charge equal to the difference. | |||
The cost of acquired intangible assets with a finite life is amortized using a method of amortization that reflects the pattern of intangible assets' expected contributions to future cash flows. If that pattern cannot be reliably determined, the straight-line method is used. The amortization periods range from 3 to 5 years for software and from 5 to 20 years for customer-, technology- and marketing-related intangibles. Intangible assets with a finite life are tested for impairment upon the occurrence of certain triggering events. | |||
Capitalized software costs | |||
Software for internal use | |||
Costs incurred in the application development stage until the software is substantially complete are capitalized and are amortized on a straight-line basis over the estimated useful life of the software, typically ranging from 3 to 5 years. | |||
Software for sale | |||
Costs incurred after the software has demonstrated its technological feasibility until the product is available for general release to the customers are capitalized and amortized on a straight-line basis over the estimated life of the product. The Company periodically performs an evaluation to determine that the unamortized cost of software to be sold does not exceed the net realizable value. If the unamortized cost of software to be sold exceeds its net realizable value, the Company records an impairment charge equal to the difference. | |||
Derivative financial instruments and hedging activities | |||
The Company uses derivative financial instruments to manage currency, commodity, interest rate and equity exposures, arising from its global operating, financing and investing activities (see Note 5). | |||
The Company recognizes all derivatives, other than certain derivatives indexed to the Company's own stock, at fair value in the Consolidated Balance Sheets. Derivatives that are not designated as hedging instruments are reported at fair value with derivative gains and losses reported through earnings and classified consistent with the nature of the underlying transaction. | |||
If the derivatives are designated as a hedge, depending on the nature of the hedge, changes in the fair value of the derivatives will either be offset against the change in fair value of the hedged item attributable to the risk being hedged through earnings (in the case of a fair value hedge) or recognized in "Accumulated other comprehensive loss" until the hedged item is recognized in earnings (in the case of a cash flow hedge). The ineffective portion of a derivative's change in fair value is immediately recognized in earnings consistent with the classification of the hedged item. Where derivative financial instruments have been designated as cash flow hedges of forecasted transactions and such forecasted transactions are no longer probable of occurring, hedge accounting is discontinued and any derivative gain or loss previously included in "Accumulated other comprehensive loss" is reclassified into earnings consistent with the nature of the original forecasted transaction. Gains or losses from derivatives designated as hedging instruments in a fair value hedge are reported through earnings and classified consistent with the nature of the underlying hedged transaction. | |||
Certain commercial contracts may grant rights to the Company or the counterparties, or contain other provisions that are considered to be derivatives. Such embedded derivatives are assessed at inception of the contract and depending on their characteristics, accounted for as separate derivative instruments and shown at their fair value in the balance sheet with changes in their fair value reported in earnings consistent with the nature of the commercial contract to which they relate. | |||
Derivatives are classified in the Consolidated Statements of Cash Flows in the same section as the underlying item. Cash flows from the settlement of undesignated derivatives used to manage the risks of different underlying items on a net basis, are classified within "Net cash provided by operating activities", as the underlying items are primarily operational in nature. Other cash flows on the settlement of derivatives are recorded within "Net cash used in investing activities". | |||
Leases | |||
The Company leases primarily real estate and office equipment. Rental expense for operating leases is recorded on a straight-line basis over the life of the lease term. Lease transactions where substantially all risks and rewards incident to ownership are transferred from the lessor to the lessee are accounted for as capital leases. All other leases are accounted for as operating leases. Amounts due under capital leases are recorded as a liability. The interest in assets acquired under capital leases is recorded as property, plant and equipment. Depreciation and amortization of assets recorded under capital leases is included in depreciation and amortization expense. | |||
Translation of foreign currencies and foreign exchange transactions | |||
The functional currency for most of the Company's subsidiaries is the applicable local currency. The translation from the applicable functional currencies into the Company's reporting currency is performed for balance sheet accounts using exchange rates in effect at the balance sheet date and for income statement accounts using average exchange rates prevailing during the year. The resulting translation adjustments are excluded from the determination of earnings and are recognized in "Accumulated other comprehensive loss" until the subsidiary is sold, substantially liquidated or evaluated for impairment in anticipation of disposal. | |||
Foreign currency exchange gains and losses, such as those resulting from foreign currency denominated receivables or payables, are included in the determination of earnings, except as they relate to intercompany loans that are equity-like in nature with no reasonable expectation of repayment, which are recognized in "Accumulated other comprehensive loss". Exchange gains and losses recognized in earnings are included in "Total revenues", "Total cost of sales", "Selling, general and administrative expenses" or "Interest and other finance expense" consistent with the nature of the underlying item. | |||
Income taxes | |||
The Company uses the asset and liability method to account for deferred taxes. Under this method, deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and the tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. The Company records a deferred tax asset when it determines that it is more likely than not that the deduction will be sustained based upon the deduction's technical merit. Deferred tax assets and liabilities that can be offset against each other are reported on a net basis. A valuation allowance is recorded to reduce deferred tax assets to the amount that is more likely than not to be realized. | |||
Deferred taxes are provided on unredeemed retained earnings of the Company's subsidiaries. However, deferred taxes are not provided on such unredeemed retained earnings to the extent it is expected that the earnings are permanently reinvested. Such earnings may become taxable upon the sale or liquidation of these subsidiaries or upon the remittance of dividends. | |||
The Company operates in numerous tax jurisdictions and, as a result, is regularly subject to audit by tax authorities. The Company provides for tax contingencies whenever it is deemed more likely than not that a tax asset has been impaired or a tax liability has been incurred for events such as tax claims or changes in tax laws. Contingency provisions are recorded based on the technical merits of the Company's filing position, considering the applicable tax laws and Organisation for Economic Co-operation and Development (OECD) guidelines and are based on its evaluations of the facts and circumstances as of the end of each reporting period. | |||
The Company applies a two-step approach to recognize and measure uncertainty in income taxes. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50 percent likely of being realized upon ultimate settlement. Uncertain tax positions that could be settled against existing loss carryforwards or income tax credits are reported net. | |||
The expense related to tax penalties is classified in the Consolidated Income Statements as "Provision for taxes", while interest thereon is classified as "Interest and other finance expense". | |||
Research and development | |||
Research and development costs not related to specific customer orders are generally expensed as incurred. | |||
Earnings per share | |||
Basic earnings per share is calculated by dividing income by the weighted-average number of shares outstanding during the year. Diluted earnings per share is calculated by dividing income by the weighted-average number of shares outstanding during the year, assuming that all potentially dilutive securities were exercised, if dilutive. Potentially dilutive securities comprise: outstanding written call options, outstanding options and shares granted subject to certain conditions under the Company's share-based payment arrangements. See further discussion related to earnings per share in Note 20 and of potentially dilutive securities in Note 18. | |||
Share-based payment arrangements | |||
The Company has various share-based payment arrangements for its employees, which are described more fully in Note 18. Such arrangements are accounted for under the fair value method. For awards that are equity-settled, total compensation is measured at grant date, based on the fair value of the award at that date, and recorded in earnings over the period the employees are required to render service. For awards that are cash-settled, compensation is initially measured at grant date and subsequently remeasured at each reporting period, based on the fair value and vesting percentage of the award at each of those dates, with changes in the liability recorded in earnings. | |||
Fair value measures | |||
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 exchange-traded equity securities, listed derivatives which are actively traded such as commodity futures, interest rate futures and 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, as well as financing receivables and debt. | ||
Level 3: | Valuation inputs are based on the Company's assumptions of relevant market data (unobservable input). The impairments of certain equity-method investments were calculated using Level 3 inputs. | ||
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 (MIP), bid prices are used. | |||
When determining fair values based on quoted prices in an active market, the Company considers if the level of transaction activity for the financial instrument has significantly decreased, or would not be considered orderly. In such cases, the resulting changes in valuation techniques would be disclosed. If the market is considered disorderly or if quoted prices are not available, the Company is required to use another valuation technique, such as an income approach. | |||
Disclosures about the Company's fair value measurements of assets and liabilities are included in Note 6. | |||
Contingencies | |||
The Company is subject to proceedings, litigation or threatened litigation and other claims and inquiries, related to environmental, labor, product, regulatory, tax (other than income tax) and other matters, and is required to assess the likelihood of any adverse judgments or outcomes to these matters, as well as potential ranges of probable losses. A determination of the provision required, if any, for these contingencies is made after analysis of each individual issue, often with assistance from both internal and external legal counsel and technical experts. The required amount of a provision for a contingency of any type may change in the future due to new developments in the particular matter, including changes in the approach to its resolution. | |||
The Company records a provision for its contingent obligations when it is probable that a loss will be incurred and the amount can be reasonably estimated. Any such provision is generally recognized on an undiscounted basis using the Company's best estimate of the amount of loss incurred or at the lower end of an estimated range when a single best estimate is not determinable. In some cases, the Company may be able to recover a portion of the costs relating to these obligations from insurers or other third parties; however, the Company records such amounts only when it is probable that they will be collected. | |||
The Company provides for anticipated costs for warranties when it recognizes revenues on the related products or contracts. Warranty costs include calculated costs arising from imperfections in design, material and workmanship in the Company's products. The Company makes individual assessments on contracts with risks resulting from order-specific conditions or guarantees and assessments on an overall, statistical basis for similar products sold in larger quantities. | |||
The Company may have legal obligations to perform environmental clean-up activities related to land and buildings as a result of the normal operations of its business. In some cases, the timing or the method of settlement, or both, are conditional upon a future event that may or may not be within the control of the Company, but the underlying obligation itself is unconditional and certain. The Company recognizes a provision for these obligations when it is probable that a liability for the clean-up activity has been incurred and a reasonable estimate of its fair value can be made. In some cases, a portion of the costs expected to be incurred to settle these matters may be recoverable. An asset is recorded when it is probable that such amounts are recoverable. Provisions for environmental obligations are not discounted to their present value when the timing of payments cannot be reasonably estimated. | |||
Pensions and other postretirement benefits | |||
The Company has a number of defined benefit pension and other postretirement plans. The Company recognizes an asset for such a plan's overfunded status or a liability for such a plan's underfunded status in its Consolidated Balance Sheets. Additionally, the Company measures such a plan's assets and obligations that determine its funded status as of the end of the year and recognizes the changes in the funded status in the year in which the changes occur. Those changes are reported in "Accumulated other comprehensive loss". | |||
The Company uses actuarial valuations to determine its pension and postretirement benefit costs and credits. The amounts calculated depend on a variety of key assumptions, including discount rates and expected return on plan assets. Current market conditions are considered in selecting these assumptions. | |||
The Company's various pension plan assets are assigned to their respective levels in the fair value hierarchy in accordance with the valuation principles described in the "Fair value measures" section above. | |||
See Note 17 for further discussion of the Company's employee benefit plans. | |||
Business combinations | |||
The Company accounts for assets acquired and liabilities assumed in business combinations using the acquisition method and records these at their respective fair values. Contingent consideration is recorded at fair value as an element of purchase price with subsequent adjustments recognized in income. | |||
Identifiable intangibles consist of intellectual property such as trademarks and trade names, customer relationships, patented and unpatented technology, in-process research and development, order backlog and capitalized software; these are amortized over their estimated useful lives. Such intangibles are subsequently subject to evaluation for potential impairment if events or circumstances indicate the carrying amount may not be recoverable. See "Goodwill and other intangible assets" above. Acquisition-related costs are recognized separately from the acquisition and expensed as incurred. Upon gaining control of an entity in which an equity method or cost basis investment was held by the Company, the carrying value of that investment is adjusted to fair value with the related gain or loss recorded in income. | |||
Deferred tax assets and liabilities based on temporary differences between the financial reporting and the tax base of assets and liabilities as well as uncertain tax positions and valuation allowances on acquired deferred tax assets assumed in connection with a business combination are initially estimated as of the acquisition date based on facts and circumstances that existed at the acquisition date. These estimates are subject to change within the measurement period (a period of up to 12 months after the acquisition date during which the acquirer may adjust the provisional acquisition amounts) with any adjustments to the preliminary estimates being recorded to goodwill. Changes in deferred taxes, uncertain tax positions and valuation allowances on acquired deferred tax assets that occur after the measurement period are recognized in income. | |||
New accounting pronouncements | |||
Applicable in current period | |||
Parent's accounting for the cumulative translation adjustment upon derecognition of certain subsidiaries or groups of assets within a foreign entity or of an investment in a foreign entity | |||
As of January 2014, the Company adopted an accounting standard update regarding the release of cumulative translation adjustments of a parent when it ceases to have a controlling financial interest in a subsidiary or group of assets that is a business within a foreign entity (for the Company, a foreign entity is an entity having a functional currency other than U.S. dollars). Under the update, the Company is required to release into net income the entire amount of a cumulative translation adjustment related to its investment in a foreign entity when a parent no longer has control as a result of selling a part or all of its investment in the foreign entity or otherwise no longer holds a controlling financial interest in a subsidiary or group of assets within the foreign entity. For foreign equity-accounted companies, a pro rata portion of the cumulative translation adjustment is required to be recognized in net income upon a partial sale of the equity-accounted company. This update did not have a material impact on the consolidated financial statements. | |||
Presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists | |||
As of January 2014, the Company adopted an accounting standard update regarding the presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. Under the update, the Company is required to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except in certain defined circumstances. This update did not have a material impact on the consolidated financial statements. | |||
Reporting discontinued operations and disclosures of disposals of components of an entity | |||
In April 2014, an accounting standard update was issued which changes the criteria for reporting discontinued operations and modifies the related disclosure requirements. Under the update, the Company would report a disposal, or planned disposal, of a component or group of components, as a discontinued operation if the disposal represents a strategic shift that has (or will have) a major effect on the Company's operations and financial results. A strategic shift could include a disposal of a major geographical area, a major line of business, a major equity-method investment, or other major parts of the Company. A component may be a reportable segment or an operating segment, a reporting unit, a subsidiary, or an asset group. In addition to expanding the existing disclosures for discontinued operations, the update requires new disclosures relating to (i) individually significant disposals that do not qualify for discontinued operations presentation, (ii) continuing involvement with a discontinued operation following the date of disposal and (iii) retained equity-method investments in a discontinued operation. The Company elected to early adopt this update in the first quarter of 2014 and this update did not have a material impact on the consolidated financial statements. | |||
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. | |||
The update is effective for the Company for annual and interim periods beginning January 1, 2017, 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). The Company is currently evaluating the impact of this update on the consolidated financial statements. | |||
Acquisitions_and_business_dive
Acquisitions and business divestments | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Acquisitions and business divestments | |||||||||||
Acquisitions | |||||||||||
Note 3—Acquisitions and business divestments | |||||||||||
Acquisitions | |||||||||||
Acquisitions were as follows: | |||||||||||
($ in millions, except number of acquired businesses) | 2014 | 2013 | 2012 | ||||||||
Acquisitions (net of cash acquired)(1) | 58 | 897 | 3,643 | ||||||||
Aggregate excess of purchase price over fair value of net assets acquired(2) | 9 | 525 | 2,895 | ||||||||
Number of acquired businesses | 6 | 7 | 9 | ||||||||
-1 | Excluding changes in cost- and equity-accounted companies but including $2 million in 2013 and $5 million in 2012, representing the fair value of replacement vested stock options issued to Power-One and Thomas & Betts employees, respectively, at the corresponding acquisition dates. | ||||||||||
-2 | Recorded as goodwill (see Note 11). Includes adjustments of $42 million in 2014 and $63 million in 2013 arising during the measurement period of acquisitions, primarily reflecting a reduction in certain deferred tax liabilities related to Power-One and Thomas & Betts, respectively. | ||||||||||
In the table above, the amount for "Acquisitions" and "Aggregate excess of purchase price over fair value of net assets acquired" in 2013 relates primarily to the acquisition of Power-One Inc. (Power-One), while for 2012, the amount relates primarily to the acquisition of Thomas & Betts Corporation (Thomas & Betts). | |||||||||||
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 25, 2013, the Company acquired all outstanding shares of Power-One for $6.35 per share in cash. The resulting cash outflows for the Company amounted to $737 million, representing $705 million for the purchase of the shares (net of cash acquired) and $32 million related to the cash settlement of Power-One stock options held at the acquisition date. Power-One is a provider of renewable energy solutions and a designer and manufacturer of photovoltaic inverters. During 2014, the Company disposed of the Power Solutions business of Power-One, which provided energy-efficient power conversion and power management solutions. | |||||||||||
The final aggregate allocation of the purchase consideration for business acquisitions in 2013, was as follows: | |||||||||||
($ in millions) | Allocated amounts(1) | Weighted-average | |||||||||
useful life | |||||||||||
Intangible assets | 208 | 7 years | |||||||||
Fixed assets | 124 | ||||||||||
Deferred tax liabilities | (74 | ) | |||||||||
Other assets and liabilities, net | 93 | ||||||||||
Goodwill(2) | 546 | ||||||||||
| | | | | | ||||||
Total consideration (net of cash acquired) | 897 | ||||||||||
| | | | | | ||||||
| | | | | | ||||||
-1 | Excludes measurement period adjustments related to prior year acquisitions. | ||||||||||
-2 | Goodwill recognized is not deductible for income tax purposes. | ||||||||||
On May 16, 2012, the Company acquired all outstanding shares of Thomas & Betts for $72 per share in cash. The resulting cash outflows for the Company amounted to $3,700 million, representing $3,282 million for the purchase of the shares (net of cash acquired of $521 million), $94 million related to cash settlement of Thomas & Betts stock options held at acquisition date and $324 million for the repayment of debt assumed upon acquisition. Thomas & Betts designs, manufactures and markets components used to manage the connection, distribution, transmission and reliability of electrical power in industrial, construction and utility applications. The acquisition of Thomas & Betts supports the Company's strategy of expanding its Low Voltage Products operating segment into new geographies, sectors and products, and consequently the goodwill acquired represents the future benefits associated with the expansion of market access and product scope. | |||||||||||
The final allocation of the purchase consideration for the Thomas & Betts acquisition in 2012 was as follows: | |||||||||||
($ in millions) | Allocated amounts | Weighted- | |||||||||
average useful life | |||||||||||
Customer relationships | 1,169 | 18 years | |||||||||
Technology | 179 | 5 years | |||||||||
Trade names | 155 | 10 years | |||||||||
Order backlog | 12 | 7.5 months | |||||||||
| | | | | | ||||||
Intangible assets | 1,515 | 15 years | |||||||||
Fixed assets | 458 | ||||||||||
Debt acquired | (619 | ) | |||||||||
Deferred tax liabilities | (971 | ) | |||||||||
Inventories | 300 | ||||||||||
Other assets and liabilities, net(1) | 49 | ||||||||||
Goodwill(2) | 2,649 | ||||||||||
| | | | | | ||||||
Total consideration (net of cash acquired)(3) | 3,381 | ||||||||||
| | | | | | ||||||
| | | | | | ||||||
-1 | Gross receivables from the acquisition totaled $387 million; the fair value of which was $344 million after rebates and allowance for estimated uncollectable receivables. | ||||||||||
-2 | Goodwill recognized is not deductible for income tax purposes. | ||||||||||
-3 | Cash acquired in the acquisition totaled $521 million. Additional consideration for the acquisition included $94 million related to the cash settlement of stock options held by Thomas & Betts employees at the acquisition date and $5 million representing the fair value of replacement vested stock options issued to Thomas & Betts employees at the acquisition date. The fair value of these stock options was estimated using a Black-Scholes model. | ||||||||||
The Company's Consolidated Income Statement for 2012 includes total revenues of $1,541 million and a net loss (including acquisition-related charges) of $10 million in respect of Thomas & Betts since the date of acquisition. | |||||||||||
The unaudited pro forma financial information in the table below summarizes the combined pro forma results of the Company and Thomas & Betts for 2012, as if Thomas & Betts had been acquired on January 1, 2011. | |||||||||||
($ in millions) | 2012 | ||||||||||
Total revenues | 40,251 | ||||||||||
Income from continuing operations, net of tax | 2,924 | ||||||||||
The unaudited pro forma results above include certain adjustments related to the Thomas & Betts acquisition. The table below summarizes the adjustments necessary to present the pro forma financial information of the Company and Thomas & Betts combined, as if Thomas & Betts had been acquired on January 1, 2011. | |||||||||||
Adjustments | |||||||||||
($ in millions) | 2012 | ||||||||||
Impact on cost of sales from additional amortization of intangible assets (excluding order backlog capitalized upon acquisition) | (26 | ) | |||||||||
Impact on cost of sales from amortization of order backlog capitalized upon acquisition | 11 | ||||||||||
Impact on cost of sales from fair valuing acquired inventory | 31 | ||||||||||
Impact on cost of sales from additional depreciation of fixed assets | (12 | ) | |||||||||
Interest expense on Thomas & Betts debt | 5 | ||||||||||
Impact on selling, general and administrative expenses from Thomas & Betts stock-option plans adjustments | 16 | ||||||||||
Impact on selling, general and administrative expenses from acquisition-related costs | 56 | ||||||||||
Impact on interest and other finance expense from bridging facility costs | 13 | ||||||||||
Other | (5 | ) | |||||||||
Income taxes | (7 | ) | |||||||||
| | | | | |||||||
Total pro forma adjustments | 82 | ||||||||||
| | | | | |||||||
| | | | | |||||||
The pro forma results are for information purposes only and do not include any anticipated cost synergies or other effects of the planned integration of Thomas & Betts. Accordingly, such pro forma amounts are not necessarily indicative of the results that would have occurred had the acquisition been completed on the date indicated, nor are they indicative of the future operating results of the combined company. | |||||||||||
The aggregate allocation of the purchase consideration for other business acquisitions in 2012, excluding Thomas & Betts, was as follows: | |||||||||||
($ in millions) | Allocated | ||||||||||
amounts | |||||||||||
Intangible assets | 68 | ||||||||||
Fixed assets | 25 | ||||||||||
Deferred tax liabilities | (24 | ) | |||||||||
Other assets and liabilities, net | 21 | ||||||||||
Goodwill | 172 | ||||||||||
| | | | | |||||||
Total consideration (net of cash acquired) | 262 | ||||||||||
| | | | | |||||||
| | | | | |||||||
Business divestments | |||||||||||
In 2014, the Company received proceeds of $1,090 million (net of transaction costs and cash disposed) relating to divestments of consolidated businesses and recorded net gains of $543 million in "Other income (expense), net". In 2013 and 2012, there were no significant amounts recognized from divestments of consolidated businesses. | |||||||||||
Cash_and_equivalents_marketabl
Cash and equivalents, marketable securities and short-term investments | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Cash and equivalents, marketable securities and short-term investments | ||||||||||||||||||||
Cash and equivalents and marketable securities and short-term investments | ||||||||||||||||||||
Note 4—Cash and equivalents, marketable securities and short-term investments | ||||||||||||||||||||
Current assets | ||||||||||||||||||||
Cash and equivalents and marketable securities and short-term investments consisted of the following: | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
($ in millions) | Cost basis | Gross | Gross | Fair value | Cash and | Marketable | ||||||||||||||
unrealized | unrealized | equivalents | securities | |||||||||||||||||
gains | losses | and | ||||||||||||||||||
short-term | ||||||||||||||||||||
investments | ||||||||||||||||||||
Cash | 2,218 | 2,218 | 2,218 | |||||||||||||||||
Time deposits | 3,340 | 3,340 | 3,140 | 200 | ||||||||||||||||
Other short-term investments | 225 | 225 | 225 | |||||||||||||||||
Debt securities available-for-sale: | ||||||||||||||||||||
—U.S. government obligations | 135 | 2 | (1 | ) | 136 | — | 136 | |||||||||||||
—Other government obligations | 2 | — | — | 2 | — | 2 | ||||||||||||||
—Corporate | 734 | 4 | (1 | ) | 737 | 85 | 652 | |||||||||||||
Equity securities available-for-sale | 98 | 12 | — | 110 | — | 110 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total | 6,752 | 18 | (2 | ) | 6,768 | 5,443 | 1,325 | |||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
December 31, 2013 | ||||||||||||||||||||
($ in millions) | Cost basis | Gross | Gross | Fair value | Cash and | Marketable | ||||||||||||||
unrealized | unrealized | equivalents | securities | |||||||||||||||||
gains | losses | and | ||||||||||||||||||
short-term | ||||||||||||||||||||
investments | ||||||||||||||||||||
Cash | 2,414 | 2,414 | 2,414 | |||||||||||||||||
Time deposits | 3,556 | 3,556 | 3,538 | 18 | ||||||||||||||||
Other short-term investments | 9 | 9 | 9 | |||||||||||||||||
Debt securities available-for-sale: | ||||||||||||||||||||
—U.S. government obligations | 103 | 2 | (1 | ) | 104 | — | 104 | |||||||||||||
—European government obligations | 24 | 1 | — | 25 | — | 25 | ||||||||||||||
—Other government obligations | 3 | — | — | 3 | — | 3 | ||||||||||||||
—Corporate | 212 | 4 | (1 | ) | 215 | 69 | 146 | |||||||||||||
Equity securities available-for-sale | 154 | 9 | (4 | ) | 159 | — | 159 | |||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total | 6,475 | 16 | (6 | ) | 6,485 | 6,021 | 464 | |||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Included in Other short-term investments at December 31, 2014, are receivables of $219 million representing reverse repurchase agreements. These collateralized lendings, made to a financial institution, have maturity dates of less than one year. | ||||||||||||||||||||
Non-current assets | ||||||||||||||||||||
Included in "Other non-current assets" are certain held-to-maturity marketable securities. At December 31, 2014, the amortized cost, gross unrecognized gain and fair value (based on quoted market prices) of these securities were $95 million, $14 million and $109 million, respectively. At December 31, 2013, the amortized cost, gross unrecognized gain and fair value (based on quoted market prices) of these securities were $104 million, $17 million and $121 million, respectively. These securities are pledged as security for certain outstanding deposit liabilities and the funds received at the respective maturity dates of the securities will only be available to the Company for repayment of these obligations. | ||||||||||||||||||||
Gains, losses and contractual maturities | ||||||||||||||||||||
Gross realized gains (reclassified from accumulated other comprehensive loss to income) on available-for-sale securities totaled $2 million, $10 million and $3 million in 2014, 2013 and 2012, respectively. Gross realized losses (reclassified from accumulated other comprehensive loss to income) on available-for-sale securities totaled $23 million in 2014 and were not significant in 2013 and 2012. Such gains and losses were included in "Interest and other finance expense". | ||||||||||||||||||||
In 2014, 2013 and 2012, other-than-temporary impairments recognized on available-for-sale equity securities were not significant. | ||||||||||||||||||||
At December 31, 2014, 2013 and 2012, gross unrealized losses on available-for-sale securities that have been in a continuous unrealized loss position were not significant and the Company does not intend and does not expect to be required to sell these securities before the recovery of their amortized cost. | ||||||||||||||||||||
There were no sales of held-to-maturity securities in 2014, 2013 and 2012. | ||||||||||||||||||||
Contractual maturities of debt securities consisted of the following: | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
Available-for-sale | Held-to-maturity | |||||||||||||||||||
($ in millions) | Cost basis | Fair value | Cost basis | Fair value | ||||||||||||||||
Less than one year | 637 | 637 | — | — | ||||||||||||||||
One to five years | 178 | 181 | 75 | 85 | ||||||||||||||||
Six to ten years | 56 | 57 | 20 | 24 | ||||||||||||||||
| | | | | | | | | | | | | | |||||||
Total | 871 | 875 | 95 | 109 | ||||||||||||||||
| | | | | | | | | | | | | | |||||||
| | | | | | | | | | | | | | |||||||
At December 31, 2014 and 2013, the Company pledged $95 million and $97 million, respectively, of available-for-sale marketable securities as collateral for issued letters of credit and other security arrangements. | ||||||||||||||||||||
Derivative_financial_instrumen
Derivative financial instruments | 12 Months Ended | ||||||||||||||
Dec. 31, 2014 | |||||||||||||||
Financial instruments | |||||||||||||||
Financial instruments | |||||||||||||||
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 other than electricity, 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. As of 2014, the Company no longer enters into electricity futures contracts to manage the price risk on its forecasted electricity needs in certain locations. | |||||||||||||||
Interest rate risk | |||||||||||||||
The Company has issued bonds at fixed rates. Interest rate swaps are used to manage the interest rate risk associated with certain debt and generally such swaps are designated as fair value hedges. In addition, from time to time, the Company uses instruments such as interest rate swaps, interest rate futures, bond futures or forward rate agreements to manage interest rate risk arising from the 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 MIP. A WAR gives its holder the right to receive cash equal to the market price of an equivalent listed warrant on the date of exercise. To eliminate such risk, the Company has purchased cash-settled call options which entitle the Company to receive amounts equivalent to its obligations under the outstanding WARs. | |||||||||||||||
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: | |||||||||||||||
Total notional amounts at | |||||||||||||||
December 31, | |||||||||||||||
Type of derivative | 2014 | 2013 | 2012 | ||||||||||||
($ in millions) | |||||||||||||||
Foreign exchange contracts | 18,564 | 19,351 | 19,724 | ||||||||||||
Embedded foreign exchange derivatives | 3,013 | 3,049 | 3,572 | ||||||||||||
Interest rate contracts | 2,242 | 4,693 | 3,983 | ||||||||||||
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: | |||||||||||||||
Total notional amounts at | |||||||||||||||
December 31, | |||||||||||||||
Type of derivative | Unit | 2014 | 2013 | 2012 | |||||||||||
Copper swaps | metric tonnes | 46,520 | 42,866 | 45,222 | |||||||||||
Aluminum swaps | metric tonnes | 3,846 | 3,525 | 5,495 | |||||||||||
Nickel swaps | metric tonnes | — | 18 | 21 | |||||||||||
Lead swaps | metric tonnes | 6,550 | 7,100 | 13,025 | |||||||||||
Zinc swaps | metric tonnes | 200 | 300 | 225 | |||||||||||
Silver swaps | ounces | 1,996,845 | 1,936,581 | 1,415,322 | |||||||||||
Electricity futures | megawatt hours | — | 279,995 | 334,445 | |||||||||||
Crude oil swaps | barrels | 128,000 | 113,000 | 135,471 | |||||||||||
Equity derivatives | |||||||||||||||
At December 31, 2014, 2013 and 2012, the Company held 61 million, 67 million and 67 million cash-settled call options indexed to ABB Ltd shares (conversion ratio 5:1) with a total fair value of $33 million, $56 million and $26 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 December 31, 2014, 2013 and 2012, "Accumulated other comprehensive loss" included net unrealized losses of $21 million and net unrealized gains of $22 million and $37 million, respectively, net of tax, on derivatives designated as cash flow hedges. Of the amount at December 31, 2014, net losses of $12 million are expected to be reclassified to earnings in 2015. At December 31, 2014, the longest maturity of a derivative classified as a cash flow hedge was 57 months. | |||||||||||||||
In 2014, 2013 and 2012, the amounts of gains or losses, net of tax, reclassified into earnings due to the discontinuance of cash flow hedge accounting and recognized in earnings due to ineffectiveness in cash flow hedge relationships were not significant. | |||||||||||||||
The pre-tax effects of derivative instruments, designated and qualifying as cash flow hedges, on "Accumulated other comprehensive loss" (OCI) and the Consolidated Income Statements were as follows: | |||||||||||||||
2014 | |||||||||||||||
Gains (losses) | |||||||||||||||
recognized in | |||||||||||||||
OCI on | |||||||||||||||
derivatives | Gains (losses) reclassified from | Gains (losses) recognized in income | |||||||||||||
(effective | OCI into income (effective portion) | (ineffective portion and amount | |||||||||||||
Type of derivative designated | portion) | excluded from effectiveness testing) | |||||||||||||
as a cash flow hedge | ($ in millions) | ($ in millions) | |||||||||||||
($ in millions) | Location | Location | |||||||||||||
Foreign exchange contracts | (42 | ) | Total revenues | (9 | ) | Total revenues | — | ||||||||
Total cost of sales | 8 | Total cost of sales | — | ||||||||||||
Commodity contracts | (7 | ) | Total cost of sales | (3 | ) | Total cost of sales | — | ||||||||
Cash-settled call options | (16 | ) | SG&A expenses(1) | (6 | ) | SG&A expenses(1) | — | ||||||||
| | | | | | | | | | | | | | | |
Total | (65 | ) | (10 | ) | — | ||||||||||
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
2013 | |||||||||||||||
Gains (losses) | |||||||||||||||
recognized in | |||||||||||||||
OCI on | |||||||||||||||
derivatives | Gains (losses) reclassified from | Gains (losses) recognized in income | |||||||||||||
(effective | OCI into income (effective portion) | (ineffective portion and amount | |||||||||||||
Type of derivative designated | portion) | excluded from effectiveness testing) | |||||||||||||
as a cash flow hedge | ($ in millions) | ($ in millions) | |||||||||||||
($ in millions) | Location | Location | |||||||||||||
Foreign exchange contracts | 22 | Total revenues | 52 | Total revenues | — | ||||||||||
Total cost of sales | (1 | ) | Total cost of sales | — | |||||||||||
Commodity contracts | (5 | ) | Total cost of sales | (5 | ) | Total cost of sales | — | ||||||||
Cash-settled call options | 16 | SG&A expenses(1) | 8 | SG&A expenses(1) | — | ||||||||||
| | | | | | | | | | | | | | | |
Total | 33 | 54 | — | ||||||||||||
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
2012 | |||||||||||||||
Gains (losses) | |||||||||||||||
recognized in | |||||||||||||||
OCI on | |||||||||||||||
derivatives | Gains (losses) reclassified from | Gains (losses) recognized in income | |||||||||||||
(effective | OCI into income (effective portion) | (ineffective portion and amount | |||||||||||||
Type of derivative designated | portion) | excluded from effectiveness testing) | |||||||||||||
as a cash flow hedge | ($ in millions) | ($ in millions) | |||||||||||||
($ in millions) | Location | Location | |||||||||||||
Foreign exchange contracts | 74 | Total revenues | 69 | Total revenues | — | ||||||||||
Total cost of sales | (12 | ) | Total cost of sales | — | |||||||||||
Commodity contracts | 4 | Total cost of sales | (4 | ) | Total cost of sales | — | |||||||||
Cash-settled call options | (4 | ) | SG&A expenses(1) | (11 | ) | SG&A expenses(1) | — | ||||||||
| | | | | | | | | | | | | | | |
Total | 74 | 42 | — | ||||||||||||
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
-1 | SG&A expenses represent "Selling, general and administrative expenses". | ||||||||||||||
Net derivative losses of $9 million and net derivative gains of $43 million and $28 million, net of tax, were reclassified from "Accumulated other comprehensive loss" to earnings during 2014, 2013 and 2012, respectively. | |||||||||||||||
Fair value hedges | |||||||||||||||
To reduce its interest rate exposure arising primarily from its debt issuance activities, the Company uses interest rate swaps. Where such instruments are designated as fair value hedges, the changes in the fair value of these instruments, as well as the changes in fair value of the risk component of the underlying debt being hedged, are recorded as offsetting gains and losses in "Interest and other finance expense". Hedge ineffectiveness of instruments designated as fair value hedges in 2014, 2013 and 2012, was not significant. | |||||||||||||||
The effect of derivative instruments, designated and qualifying as fair value hedges, on the Consolidated Income Statements was as follows: | |||||||||||||||
2014 | |||||||||||||||
Gains (losses) recognized in income on derivatives | Gains (losses) recognized in income on hedged item | ||||||||||||||
Type of derivative | designated as fair value hedges | ||||||||||||||
designated as a fair | |||||||||||||||
value hedge | ($ in millions) | ($ in millions) | |||||||||||||
Location | Location | ||||||||||||||
Interest rate contracts | Interest and other finance expense | 84 | Interest and other finance expense | (83 | ) | ||||||||||
| | | | | | | | | | | | ||||
| | | | | | | | | | | | ||||
2013 | |||||||||||||||
Gains (losses) recognized in income on derivatives | Gains (losses) recognized in income on hedged item | ||||||||||||||
Type of derivative | designated as fair value hedges | ||||||||||||||
designated as a fair | |||||||||||||||
value hedge | ($ in millions) | ($ in millions) | |||||||||||||
Location | Location | ||||||||||||||
Interest rate contracts | Interest and other finance expense | (34 | ) | Interest and other finance expense | 35 | ||||||||||
| | | | | | | | | | | | ||||
| | | | | | | | | | | | ||||
2012 | |||||||||||||||
Gains (losses) recognized in income on derivatives | Gains (losses) recognized in income on hedged item | ||||||||||||||
Type of derivative | designated as fair value hedges | ||||||||||||||
designated as a fair | |||||||||||||||
value hedge | ($ in millions) | ($ in millions) | |||||||||||||
Location | Location | ||||||||||||||
Interest rate contracts | Interest and other finance expense | 6 | Interest and other finance expense | (6 | ) | ||||||||||
| | | | | | | | | | | | ||||
| | | | | | | | | | | | ||||
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: | |||||||||||||||
Gains (losses) recognized in income | |||||||||||||||
($ in millions) | Location | 2014 | 2013 | 2012 | |||||||||||
Type of derivative not designated as a hedge | |||||||||||||||
Foreign exchange contracts | Total revenues | (533 | ) | (95 | ) | 318 | |||||||||
Total cost of sales | 19 | 80 | (193 | ) | |||||||||||
SG&A expenses(1) | 2 | (1 | ) | (3 | ) | ||||||||||
Interest and other finance expense | (260 | ) | 223 | 68 | |||||||||||
Embedded foreign exchange contracts | Total revenues | 149 | 101 | (148 | ) | ||||||||||
Total cost of sales | (27 | ) | (10 | ) | 28 | ||||||||||
Commodity contracts | Total cost of sales | (28 | ) | (50 | ) | 10 | |||||||||
Interest and other finance expense | 1 | 1 | 1 | ||||||||||||
Interest rate contracts | Interest and other finance expense | (1 | ) | (3 | ) | (1 | ) | ||||||||
Cash-settled call options | Interest and other finance expense | (1 | ) | — | — | ||||||||||
| | | | | | | | | | | | | |||
Total | (679 | ) | 246 | 80 | |||||||||||
| | | | | | | | | | | | | |||
| | | | | | | | | | | | | |||
-1 | SG&A expenses represent "Selling, general and administrative expenses". | ||||||||||||||
The fair values of derivatives included in the Consolidated Balance Sheets were as follows: | |||||||||||||||
December 31, 2014 | |||||||||||||||
Derivative assets | Derivative liabilities | ||||||||||||||
($ in millions) | Current in | Non-current | Current in | Non-current | |||||||||||
"Other current | in "Other | "Other current | in "Other | ||||||||||||
assets" | non-current | liabilities" | non-current | ||||||||||||
assets" | liabilities" | ||||||||||||||
Derivatives designated as hedging instruments: | |||||||||||||||
Foreign exchange contracts | 9 | 9 | 20 | 16 | |||||||||||
Commodity contracts | — | — | 3 | — | |||||||||||
Interest rate contracts | — | 85 | — | — | |||||||||||
Cash-settled call options | 21 | 11 | — | — | |||||||||||
| | | | | | | | | | | | | | ||
Total | 30 | 105 | 23 | 16 | |||||||||||
| | | | | | | | | | | | | | ||
Derivatives not designated as hedging instruments: | |||||||||||||||
Foreign exchange contracts | 156 | 25 | 369 | 72 | |||||||||||
Commodity contracts | 4 | — | 19 | 3 | |||||||||||
Cash-settled call options | 1 | 1 | — | — | |||||||||||
Embedded foreign exchange derivatives | 98 | 58 | 27 | 17 | |||||||||||
| | | | | | | | | | | | | | ||
Total | 259 | 84 | 415 | 92 | |||||||||||
| | | | | | | | | | | | | | ||
Total fair value | 289 | 189 | 438 | 108 | |||||||||||
| | | | | | | | | | | | | | ||
| | | | | | | | | | | | | | ||
Thereof, subject to close-out netting agreements | 164 | 119 | 399 | 90 | |||||||||||
| | | | | | | | | | | | | | ||
| | | | | | | | | | | | | | ||
December 31, 2013 | |||||||||||||||
Derivative assets | Derivative liabilities | ||||||||||||||
($ in millions) | Current in | Non-current | Current in | Non-current | |||||||||||
"Other current | in "Other | "Other current | in "Other | ||||||||||||
assets" | non-current | liabilities" | non-current | ||||||||||||
assets" | liabilities" | ||||||||||||||
Derivatives designated as hedging instruments: | |||||||||||||||
Foreign exchange contracts | 21 | 8 | 10 | 3 | |||||||||||
Commodity contracts | 2 | — | 1 | — | |||||||||||
Interest rate contracts | — | 14 | — | 7 | |||||||||||
Cash-settled call options | 14 | 40 | — | — | |||||||||||
| | | | | | | | | | | | | | ||
Total | 37 | 62 | 11 | 10 | |||||||||||
| | | | | | | | | | | | | | ||
Derivatives not designated as hedging instruments: | |||||||||||||||
Foreign exchange contracts | 272 | 42 | 121 | 30 | |||||||||||
Commodity contracts | 6 | 1 | 15 | 1 | |||||||||||
Cash-settled call options | — | 2 | — | — | |||||||||||
Embedded foreign exchange derivatives | 57 | 21 | 55 | 11 | |||||||||||
| | | | | | | | | | | | | | ||
Total | 335 | 66 | 191 | 42 | |||||||||||
| | | | | | | | | | | | | | ||
Total fair value | 372 | 128 | 202 | 52 | |||||||||||
| | | | | | | | | | | | | | ||
| | | | | | | | | | | | | | ||
Thereof, subject to close-out netting agreements | 284 | 63 | 130 | 40 | |||||||||||
| | | | | | | | | | | | | | ||
| | | | | | | | | | | | | | ||
Close-out netting agreements provide for the termination, valuation and net settlement of some or all outstanding transactions between two counterparties on the occurrence of one or more pre-defined trigger events. | |||||||||||||||
Although the Company is party to close-out netting agreements with most derivative counterparties, the fair values in the tables above and in the Consolidated Balance Sheets at December 31, 2014 and 2013, have been presented on a gross basis. | |||||||||||||||
Fair_values
Fair values | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Fair values | |||||||||||||||||
Fair values | |||||||||||||||||
Note 6—Fair values | |||||||||||||||||
Recurring fair value measures | |||||||||||||||||
The fair values of financial assets and liabilities measured at fair value on a recurring basis were as follows: | |||||||||||||||||
December 31, 2014 | |||||||||||||||||
($ in millions) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
fair value | |||||||||||||||||
Assets | |||||||||||||||||
Available-for-sale securities in "Cash and equivalents": | |||||||||||||||||
Debt securities—Corporate | — | 85 | — | 85 | |||||||||||||
Available-for-sale securities in "Marketable securities and short-term investments": | |||||||||||||||||
Equity securities | — | 110 | — | 110 | |||||||||||||
Debt securities—U.S. government obligations | 136 | — | — | 136 | |||||||||||||
Debt securities—Other government obligations | — | 2 | — | 2 | |||||||||||||
Debt securities—Corporate | — | 652 | — | 652 | |||||||||||||
Derivative assets—current in "Other current assets" | — | 289 | — | 289 | |||||||||||||
Derivative assets—non-current in "Other non-current assets" | — | 189 | — | 189 | |||||||||||||
| | | | | | | | | | | | | | ||||
Total | 136 | 1,327 | — | 1,463 | |||||||||||||
| | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | ||||
Liabilities | |||||||||||||||||
Derivative liabilities—current in "Other current liabilities" | — | 438 | — | 438 | |||||||||||||
Derivative liabilities—non-current in "Other non-current liabilities" | — | 108 | — | 108 | |||||||||||||
| | | | | | | | | | | | | | ||||
Total | — | 546 | — | 546 | |||||||||||||
| | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | ||||
December 31, 2013 | |||||||||||||||||
($ in millions) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
fair value | |||||||||||||||||
Assets | |||||||||||||||||
Available-for-sale securities in "Cash and equivalents": | |||||||||||||||||
Debt securities—Corporate | — | 69 | — | 69 | |||||||||||||
Available-for-sale securities in "Marketable securities and short-term investments": | |||||||||||||||||
Equity securities | — | 159 | — | 159 | |||||||||||||
Debt securities—U.S. government obligations | 104 | — | — | 104 | |||||||||||||
Debt securities—European government obligations | 25 | — | — | 25 | |||||||||||||
Debt securities—Other government obligations | — | 3 | — | 3 | |||||||||||||
Debt securities—Corporate | — | 146 | — | 146 | |||||||||||||
Derivative assets—current in "Other current assets" | — | 372 | — | 372 | |||||||||||||
Derivative assets—non-current in "Other non-current assets" | — | 128 | — | 128 | |||||||||||||
| | | | | | | | | | | | | | ||||
Total | 129 | 877 | — | 1,006 | |||||||||||||
| | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | ||||
Liabilities | |||||||||||||||||
Derivative liabilities—current in "Other current liabilities" | 3 | 199 | — | 202 | |||||||||||||
Derivative liabilities—non-current in "Other non-current liabilities" | — | 52 | — | 52 | |||||||||||||
| | | | | | | | | | | | | | ||||
Total | 3 | 251 | — | 254 | |||||||||||||
| | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | ||||
The Company uses the following methods and assumptions in estimating fair values of financial assets and liabilities measured at fair value on a recurring basis: | |||||||||||||||||
• | Available-for-sale securities in "Cash and equivalents", "Marketable securities and short-term investments" and "Other non-current assets": 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 2014 and 2013. | |||||||||||||||||
Disclosure about financial instruments carried on a cost basis | |||||||||||||||||
The fair values of financial instruments carried on a cost basis were as follows: | |||||||||||||||||
December 31, 2014 | |||||||||||||||||
($ in millions) | Carrying | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
value | fair value | ||||||||||||||||
Assets | |||||||||||||||||
Cash and equivalents (excluding available-for-sale securities with original maturities up to 3 months): | |||||||||||||||||
Cash | 2,218 | 2,218 | — | — | 2,218 | ||||||||||||
Time deposits | 3,140 | — | 3,140 | — | 3,140 | ||||||||||||
Marketable securities and short-term investments (excluding available-for-sale securities): | |||||||||||||||||
Time deposits | 200 | — | 200 | — | 200 | ||||||||||||
Receivables under reverse repurchase agreements | 219 | — | 219 | — | 219 | ||||||||||||
Other short-term investments | 6 | 6 | — | — | 6 | ||||||||||||
Other non-current assets: | |||||||||||||||||
Loans granted | 41 | — | 44 | — | 44 | ||||||||||||
Held-to-maturity securities | 95 | — | 109 | — | 109 | ||||||||||||
Restricted cash and cash deposits | 198 | 64 | 161 | — | 225 | ||||||||||||
Liabilities | |||||||||||||||||
Short-term debt and current maturities of long-term debt (excluding capital lease obligations) | 324 | 115 | 209 | — | 324 | ||||||||||||
Long-term debt (excluding capital lease obligations) | 7,224 | 6,148 | 1,404 | — | 7,552 | ||||||||||||
Non-current deposit liabilities in "Other non-current liabilities" | 222 | — | 267 | — | 267 | ||||||||||||
December 31, 2013 | |||||||||||||||||
($ in millions) | Carrying | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
value | fair value | ||||||||||||||||
Assets | |||||||||||||||||
Cash and equivalents (excluding available-for-sale securities with original maturities up to 3 months): | |||||||||||||||||
Cash | 2,414 | 2,414 | — | — | 2,414 | ||||||||||||
Time deposits | 3,538 | — | 3,538 | — | 3,538 | ||||||||||||
Marketable securities and short-term investments (excluding available-for-sale securities): | |||||||||||||||||
Time deposits | 18 | — | 18 | — | 18 | ||||||||||||
Other short-term investments | 9 | 9 | — | — | 9 | ||||||||||||
Other non-current assets: | |||||||||||||||||
Loans granted | 54 | — | 52 | — | 52 | ||||||||||||
Held-to-maturity securities | 104 | — | 121 | — | 121 | ||||||||||||
Restricted cash and cash deposits | 276 | 95 | 219 | — | 314 | ||||||||||||
Liabilities | |||||||||||||||||
Short-term debt and current maturities of long-term debt (excluding capital lease obligations) | 424 | 107 | 317 | — | 424 | ||||||||||||
Long-term debt (excluding capital lease obligations) | 7,475 | 6,241 | 1,333 | — | 7,574 | ||||||||||||
Non-current deposit liabilities in "Other non-current liabilities" | 279 | — | 338 | — | 338 | ||||||||||||
In the above table, certain amounts, included in Long-term debt, previously disclosed at Level 1 at December 31, 2013, have been presented as Level 2. | |||||||||||||||||
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), (ii) held-to-maturity securities (see Note 4) whose fair values are based on quoted market prices in inactive markets (Level 2 inputs), (iii) restricted cash whose fair values approximate the carrying amounts (Level 1) and (iv) cash deposits pledged in respect of certain non-current deposit liabilities whose fair values are determined using a discounted cash flow methodology based on current market interest rates (Level 2 inputs). | ||||||||||||||||
• | Short-term debt and current maturities of long-term debt (excluding capital lease obligations): 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 outstanding bonds are determined using quoted market prices (Level 1 inputs), if available. For other bonds 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). | ||||||||||||||||
• | Non-current deposit liabilities in "Other non-current liabilities": The fair values of non-current deposit liabilities are determined using a discounted cash flow methodology based on risk-adjusted interest rates (Level 2 inputs). | ||||||||||||||||
Receivables_net
Receivables, net | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Receivables, net | |||||||||||
Receivables, net | |||||||||||
Note 7—Receivables, net | |||||||||||
"Receivables, net" consisted of the following: | |||||||||||
December 31, | |||||||||||
($ in millions) | 2014 | 2013 | |||||||||
Trade receivables | 7,715 | 8,360 | |||||||||
Other receivables | 701 | 802 | |||||||||
Allowance | (279 | ) | (317 | ) | |||||||
| | | | | | | | ||||
8,137 | 8,845 | ||||||||||
Unbilled receivables, net: | |||||||||||
Costs and estimated profits in excess of billings | 4,087 | 4,552 | |||||||||
Advance payments consumed | (1,146 | ) | (1,251 | ) | |||||||
| | | | | | | | ||||
2,941 | 3,301 | ||||||||||
| | | | | | | | ||||
Total | 11,078 | 12,146 | |||||||||
| | | | | | | | ||||
| | | | | | | | ||||
"Trade receivables" in the table above includes contractual retention amounts billed to customers of $489 million and $552 million at December 31, 2014 and 2013, respectively. Management expects that the substantial majority of related contracts will be completed and the substantial majority of the billed amounts retained by the customer will be collected. Of the retention amounts outstanding at December 31, 2014, 65 percent and 29 percent are expected to be collected in 2015 and 2016, respectively. | |||||||||||
"Other receivables" in the table above consists of value added tax, claims, rental deposits and other non-trade receivables. | |||||||||||
"Costs and estimated profits in excess of billings" in the table above represents revenues earned and recognized for contracts under the percentage-of-completion or completed-contract method of accounting. Management expects that the majority of the amounts will be collected within one year of the respective balance sheet date. | |||||||||||
The reconciliation of changes in the allowance for doubtful accounts is as follows: | |||||||||||
($ in millions) | 2014 | 2013 | 2012 | ||||||||
Balance at January 1, | 317 | 271 | 227 | ||||||||
Additions | 103 | 147 | 155 | ||||||||
Deductions | (118 | ) | (92 | ) | (113 | ) | |||||
Exchange rate differences | (23 | ) | (9 | ) | 2 | ||||||
| | | | | | | | | | | |
Balance at December 31, | 279 | 317 | 271 | ||||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Inventories_net
Inventories, net | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Inventories, net | ||||||||
Inventories, net | ||||||||
Note 8—Inventories, net | ||||||||
"Inventories, net" consisted of the following: | ||||||||
December 31, | ||||||||
($ in millions) | 2014 | 2013 | ||||||
Raw materials | 2,105 | 2,403 | ||||||
Work in process | 1,761 | 1,893 | ||||||
Finished goods | 1,572 | 1,834 | ||||||
Advances to suppliers | 253 | 246 | ||||||
| | | | | | | | |
5,691 | 6,376 | |||||||
Advance payments consumed | (315 | ) | (372 | ) | ||||
| | | | | | | | |
Total | 5,376 | 6,004 | ||||||
| | | | | | | | |
| | | | | | | | |
"Work in process" in the table above contains inventoried costs relating to long-term contracts of $338 million and $358 million at December 31, 2014 and 2013, respectively. "Advance payments consumed" in the table above relates to contractual advances received from customers on work in process. | ||||||||
Other_noncurrent_assets
Other non-current assets | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Other non-current assets | ||||||||
Other non-current assets | ||||||||
Note 9—Other non-current assets | ||||||||
"Other non-current assets" consisted of the following: | ||||||||
December 31, | ||||||||
($ in millions) | 2014 | 2013 | ||||||
Pledged financial assets | 229 | 285 | ||||||
Derivatives (including embedded derivatives) (see Note 5) | 189 | 128 | ||||||
Investments | 65 | 72 | ||||||
Restricted cash | 64 | 95 | ||||||
Loans granted (see Note 6) | 41 | 54 | ||||||
Other | 139 | 124 | ||||||
| | | | | | | | |
Total | 727 | 758 | ||||||
| | | | | | | | |
| | | | | | | | |
The Company entered into structured leasing transactions with U.S. investors prior to 1999. Certain amounts were transacted at the inception of the leasing arrangements and are included above as "Pledged financial assets". These assets are pledged as security for certain outstanding deposit liabilities included in "Other non-current liabilities" (see Note 13) and the funds received upon maturity of the respective pledged financial assets will only be available to the Company for repayment of these obligations. | ||||||||
"Investments" represents shares and other equity investments carried at cost. | ||||||||
"Loans granted" is reported in the balance sheet at outstanding principal amount less any write-offs or allowance for uncollectible loans and primarily represents financing arrangements provided to customers (relating to products manufactured by the Company). | ||||||||
Property_plant_and_equipment_n
Property, plant and equipment, net | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Property, plant and equipment, net. | ||||||||
Property, plant and equipment, net | ||||||||
Note 10—Property, plant and equipment, net | ||||||||
"Property, plant and equipment, net" consisted of the following: | ||||||||
December 31, | ||||||||
($ in millions) | 2014 | 2013 | ||||||
Land and buildings | 4,142 | 4,478 | ||||||
Machinery and equipment | 7,762 | 8,258 | ||||||
Construction in progress | 653 | 645 | ||||||
| | | | | | | | |
12,557 | 13,381 | |||||||
Accumulated depreciation | (6,905 | ) | (7,127 | ) | ||||
| | | | | | | | |
Total | 5,652 | 6,254 | ||||||
| | | | | | | | |
| | | | | | | | |
Assets under capital leases included in "Property, plant and equipment, net" were as follows: | ||||||||
December 31, | ||||||||
($ in millions) | 2014 | 2013 | ||||||
Land and buildings | 192 | 112 | ||||||
Machinery and equipment | 88 | 98 | ||||||
| | | | | | | | |
280 | 210 | |||||||
Accumulated depreciation | (163 | ) | (115 | ) | ||||
| | | | | | | | |
Total | 117 | 95 | ||||||
| | | | | | | | |
| | | | | | | | |
In 2014, 2013 and 2012, depreciation, including depreciation of assets under capital leases, was $851 million, $842 million and $733 million, respectively. | ||||||||
Goodwill_and_other_intangible_
Goodwill and other intangible assets | 12 Months Ended | ||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||
Goodwill and other intangible assets | |||||||||||||||||||||||
Goodwill and other intangible assets | |||||||||||||||||||||||
Note 11—Goodwill and other intangible assets | |||||||||||||||||||||||
Changes in "Goodwill" were as follows: | |||||||||||||||||||||||
($ in millions) | Discrete | Low | Process | Power | Power | Corporate | Total | ||||||||||||||||
Automation | Voltage | Automation | Products | Systems | and Other | ||||||||||||||||||
and Motion | Products | ||||||||||||||||||||||
Cost at January 1, 2013 | 3,420 | 3,147 | 1,140 | 734 | 1,762 | 41 | 10,244 | ||||||||||||||||
Accumulated impairment charges | — | — | — | — | — | (18 | ) | (18 | ) | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
Balance at January 1, 2013 | 3,420 | 3,147 | 1,140 | 734 | 1,762 | 23 | 10,226 | ||||||||||||||||
Goodwill acquired during the year(1) | 485 | (45 | ) | 85 | — | — | — | 525 | |||||||||||||||
Goodwill allocated to disposals | (9 | ) | — | (2 | ) | — | — | — | (11 | ) | |||||||||||||
Exchange rate differences | 18 | (43 | ) | 6 | 2 | (53 | ) | — | (70 | ) | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
Balance at December 31, 2013 | 3,914 | 3,059 | 1,229 | 736 | 1,709 | 23 | 10,670 | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
Goodwill acquired during the year(1) | (52 | ) | 1 | 24 | 9 | — | 27 | 9 | |||||||||||||||
Goodwill allocated to disposals | — | (181 | ) | (19 | ) | — | (7 | ) | (27 | ) | (234 | ) | |||||||||||
Exchange rate differences and other | (92 | ) | (172 | ) | (60 | ) | (25 | ) | (42 | ) | (1 | ) | (392 | ) | |||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
Balance at December 31, 2014 | 3,770 | 2,707 | 1,174 | 720 | 1,660 | 22 | 10,053 | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
-1 | Amounts include adjustments arising during the twelve-month measurement period subsequent to the respective acquisition date. | ||||||||||||||||||||||
In 2014, goodwill allocated to disposals primarily related to the divestments of the Meyer Steel Structures and heating, ventilation and air conditioning (HVAC) businesses of Thomas & Betts included in the Low Voltage Products division. | |||||||||||||||||||||||
In 2013, goodwill acquired primarily related to Power-One, acquired in July 2013, which was allocated to the Discrete Automation and Motion operating segment. | |||||||||||||||||||||||
Intangible assets other than goodwill consisted of the following: | |||||||||||||||||||||||
December 31, | |||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||
($ in millions) | Gross | Accumulated | Net | Gross | Accumulated | Net | |||||||||||||||||
carrying | amortization | carrying | carrying | amortization | carrying | ||||||||||||||||||
amount | amount | amount | amount | ||||||||||||||||||||
Capitalized software for internal use | 719 | (599 | ) | 120 | 767 | (618 | ) | 149 | |||||||||||||||
Capitalized software for sale | 405 | (354 | ) | 51 | 432 | (384 | ) | 48 | |||||||||||||||
Intangibles other than software: | |||||||||||||||||||||||
Customer-related | 2,618 | (623 | ) | 1,995 | 2,773 | (481 | ) | 2,292 | |||||||||||||||
Technology-related | 607 | (304 | ) | 303 | 867 | (374 | ) | 493 | |||||||||||||||
Marketing-related | 314 | (120 | ) | 194 | 400 | (99 | ) | 301 | |||||||||||||||
Other | 72 | (33 | ) | 39 | 63 | (49 | ) | 14 | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | ||||
Total | 4,735 | (2,033 | ) | 2,702 | 5,302 | (2,005 | ) | 3,297 | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | | | | | | | ||||
Additions to intangible assets other than goodwill consisted of the following: | |||||||||||||||||||||||
($ in millions) | 2014 | 2013 | |||||||||||||||||||||
Capitalized software for internal use | 52 | 66 | |||||||||||||||||||||
Capitalized software for sale | 28 | 26 | |||||||||||||||||||||
Intangibles other than software: | |||||||||||||||||||||||
Customer-related | — | 82 | |||||||||||||||||||||
Technology-related | — | 110 | |||||||||||||||||||||
Marketing-related | — | 16 | |||||||||||||||||||||
Other | 16 | — | |||||||||||||||||||||
| | | | | | | | ||||||||||||||||
Total | 96 | 300 | |||||||||||||||||||||
| | | | | | | | ||||||||||||||||
| | | | | | | | ||||||||||||||||
Intangible assets from business combinations in 2014 were not significant. Included in the additions of $300 million in 2013 were the following intangible assets other than goodwill related to business combinations: | |||||||||||||||||||||||
2013 | |||||||||||||||||||||||
($ in millions) | Amount acquired | Weighted-average | |||||||||||||||||||||
useful life | |||||||||||||||||||||||
Customer-related(1) | 82 | 11 years | |||||||||||||||||||||
Technology-related | 108 | 4 years | |||||||||||||||||||||
Marketing-related | 16 | 10 years | |||||||||||||||||||||
| | | | | | ||||||||||||||||||
Total | 206 | 7 years | |||||||||||||||||||||
| | | | | | ||||||||||||||||||
| | | | | | ||||||||||||||||||
-1 | Includes the fair value of order backlog acquired in business combinations. | ||||||||||||||||||||||
Amortization expense of intangible assets other than goodwill consisted of the following: | |||||||||||||||||||||||
($ in millions) | 2014 | 2013 | 2012 | ||||||||||||||||||||
Capitalized software for internal use | 72 | 81 | 79 | ||||||||||||||||||||
Capitalized software for sale | 20 | 34 | 38 | ||||||||||||||||||||
Intangibles other than software | 362 | 361 | 332 | ||||||||||||||||||||
| | | | | | | | | | | |||||||||||||
Total | 454 | 476 | 449 | ||||||||||||||||||||
| | | | | | | | | | | |||||||||||||
| | | | | | | | | | | |||||||||||||
In 2014, 2013 and 2012, impairment charges on intangible assets other than goodwill were not significant. | |||||||||||||||||||||||
At December 31, 2014, future amortization expense of intangible assets other than goodwill is estimated to be: | |||||||||||||||||||||||
($ in millions) | |||||||||||||||||||||||
2015 | 404 | ||||||||||||||||||||||
2016 | 362 | ||||||||||||||||||||||
2017 | 275 | ||||||||||||||||||||||
2018 | 191 | ||||||||||||||||||||||
2019 | 165 | ||||||||||||||||||||||
Thereafter | 1,305 | ||||||||||||||||||||||
| | | | | |||||||||||||||||||
Total | 2,702 | ||||||||||||||||||||||
| | | | | |||||||||||||||||||
| | | | | |||||||||||||||||||
Debt
Debt | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Debt | ||||||||||||||||||||
Debt | ||||||||||||||||||||
Note 12—Debt | ||||||||||||||||||||
The Company's total debt at December 31, 2014 and 2013, amounted to $7,691 million and $8,023 million, respectively. | ||||||||||||||||||||
Short-term debt and current maturities of long-term debt | ||||||||||||||||||||
The Company's "Short-term debt and current maturities of long-term debt" consisted of the following: | ||||||||||||||||||||
December 31, | ||||||||||||||||||||
($ in millions) | 2014 | 2013 | ||||||||||||||||||
Short-term debt (weighted-average interest rate of 5.8% and 6.9%, respectively) | 299 | 423 | ||||||||||||||||||
Current maturities of long-term debt (weighted-average nominal interest rate of 5.9% and 3.6%, respectively) | 54 | 30 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Total | 353 | 453 | ||||||||||||||||||
| | | | | | | | |||||||||||||
| | | | | | | | |||||||||||||
Short-term debt primarily represented short-term loans from various banks and issued commercial paper. | ||||||||||||||||||||
At December 31, 2014, the Company had in place two commercial paper programs: a $2 billion Euro-commercial paper program for the issuance of commercial paper in a variety of currencies (which replaced the previous $1 billion Euro-commercial paper program in February 2014), and a $2 billion commercial paper program for the private placement of U.S. dollar denominated commercial paper in the United States. During 2014, the Company terminated its 5 billion Swedish krona commercial paper program which provided for the issuance of Swedish krona and euro-denominated commercial paper. At December 31, 2014 and 2013, $120 million and $100 million, respectively, was outstanding under the $2 billion program in the United States. | ||||||||||||||||||||
In addition, during 2014, the Company replaced its $2 billion multicurrency revolving credit facility, maturing 2015, with a new 5-year multicurrency credit facility. The new credit facility matures in 2019 but the Company has the option in 2015 and 2016 to extend the maturity to 2020 and 2021, respectively. The facility is for general corporate purposes. Interest costs on drawings under the facility are LIBOR or EURIBOR (depending on the currency of the drawings) plus a margin of 0.20 percent, while commitment fees (payable on the unused portion of the facility) amount to 35 percent of the margin, which represents commitment fees of 0.07 percent per annum. Utilization fees, payable on drawings, amount to 0.075 percent per annum on drawings up to one-third of the facility, 0.15 percent per annum on drawings in excess of one-third but less than or equal to two-thirds of the facility, or 0.30 percent per annum on drawings over two-thirds of the facility. No amount was drawn at December 31, 2014 and 2013, under either of the facilities. The new facility contains cross-default clauses whereby an event of default would occur if the Company were to default on indebtedness as defined in the facility, at or above a specified threshold. | ||||||||||||||||||||
Long-term debt | ||||||||||||||||||||
The Company utilizes derivative instruments to modify the interest characteristics of its long-term debt. In particular, the Company uses interest rate swaps to effectively convert certain fixed-rate long-term debt into floating rate obligations. The carrying value of debt, designated as being hedged by fair value hedges, is adjusted for changes in the fair value of the risk component of the debt being hedged. | ||||||||||||||||||||
The following table summarizes the Company's long-term debt considering the effect of interest rate swaps. Consequently, a fixed-rate debt subject to a fixed-to-floating interest rate swap is included as a floating rate debt in the table below: | ||||||||||||||||||||
December 31, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
($ in millions, except % data) | Balance | Nominal | Effective | Balance | Nominal | Effective | ||||||||||||||
rate | rate | rate | rate | |||||||||||||||||
Floating rate | 2,318 | 2.7 | % | 1.1 | % | 2,211 | 2.7 | % | 1.2 | % | ||||||||||
Fixed rate | 5,074 | 3.2 | % | 3.2 | % | 5,389 | 3.1 | % | 3.1 | % | ||||||||||
| | | | | | | | | | | | | | | | | | | | |
7,392 | 7,600 | |||||||||||||||||||
Current portion of long-term debt | (54 | ) | 5.9 | % | 5.9 | % | (30 | ) | 3.6 | % | 3.6 | % | ||||||||
| | | | | | | | | | | | | | | | | | | | |
Total | 7,338 | 7,570 | ||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
At December 31, 2014, the principal amounts of long-term debt repayable (excluding capital lease obligations) at maturity were as follows: | ||||||||||||||||||||
($ in millions) | ||||||||||||||||||||
2015 | 25 | |||||||||||||||||||
2016 | 1,140 | |||||||||||||||||||
2017 | 869 | |||||||||||||||||||
2018 | 354 | |||||||||||||||||||
2019 | 1,523 | |||||||||||||||||||
Thereafter | 3,273 | |||||||||||||||||||
| | | | | ||||||||||||||||
Total | 7,184 | |||||||||||||||||||
| | | | | ||||||||||||||||
| | | | | ||||||||||||||||
Details of the Company's outstanding bonds were as follows: | ||||||||||||||||||||
December 31, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Nominal | Carrying | Nominal | Carrying | |||||||||||||||||
outstanding | value(1) | outstanding | value(1) | |||||||||||||||||
(in millions) | (in millions) | |||||||||||||||||||
Bonds: | ||||||||||||||||||||
2.5% USD Notes, due 2016 | USD | 600 | $ | 599 | USD | 600 | $ | 598 | ||||||||||||
1.25% CHF Bonds, due 2016 | CHF | 500 | $ | 512 | CHF | 500 | $ | 568 | ||||||||||||
1.625% USD Notes, due 2017 | USD | 500 | $ | 498 | USD | 500 | $ | 498 | ||||||||||||
4.25% AUD Notes, due 2017 | AUD | 400 | $ | 335 | AUD | 400 | $ | 353 | ||||||||||||
1.50% CHF Bonds, due 2018 | CHF | 350 | $ | 354 | CHF | 350 | $ | 393 | ||||||||||||
2.625% EUR Instruments, due 2019 | EUR | 1,250 | $ | 1,518 | EUR | 1,250 | $ | 1,722 | ||||||||||||
4.0% USD Notes, due 2021 | USD | 650 | $ | 643 | USD | 650 | $ | 642 | ||||||||||||
2.25% CHF Bonds, due 2021 | CHF | 350 | $ | 381 | CHF | 350 | $ | 396 | ||||||||||||
5.625% USD Notes, due 2021 | USD | 250 | $ | 283 | USD | 250 | $ | 287 | ||||||||||||
2.875% USD Notes, due 2022 | USD | 1,250 | $ | 1,275 | USD | 1,250 | $ | 1,230 | ||||||||||||
4.375% USD Notes, due 2042 | USD | 750 | $ | 728 | USD | 750 | $ | 727 | ||||||||||||
| | | | | | | | | | | | | | | | | | |||
Total | $ | 7,126 | $ | 7,414 | ||||||||||||||||
| | | | | | | | | | | | | | | | | | |||
| | | | | | | | | | | | | | | | | | |||
-1 | USD carrying values include bond discounts or premiums, as well as adjustments for fair value hedge accounting, where appropriate. | |||||||||||||||||||
The 2.5% USD Notes, due 2016, and the 4.0% USD Notes, due 2021, pay interest semi-annually in arrears, at fixed annual rates of 2.5 percent and 4.0 percent, respectively. The Company may redeem these notes prior to maturity, in whole or in part, at the greater of (i) 100 percent of the principal amount of the notes to be redeemed and (ii) the sum of the present values of remaining scheduled payments of principal and interest (excluding interest accrued to the redemption date) discounted to the redemption date at a rate defined in the note terms, plus interest accrued at the redemption date. | ||||||||||||||||||||
The 1.25% CHF Bonds, due 2016, and the 2.25% Bonds, due 2021, pay interest annually in arrears, at fixed annual rates of 1.25 percent and 2.25 percent, respectively. The Company has the option to redeem the bonds prior to maturity, in whole, at par plus accrued interest, if 85 percent of the aggregate principal amount of the bonds has been redeemed or purchased and cancelled. The Company entered into interest rate swaps to hedge its interest obligations on these bonds. After considering the impact of such swaps, these bonds effectively became floating rate Swiss franc obligations and consequently have been shown as floating rate debt in the table of long-term debt above. | ||||||||||||||||||||
The 1.50% CHF Bonds, due 2018, were issued in January 2012, and the Company recorded net proceeds of CHF 346 million (equivalent to approximately $370 million on date of issuance). The bonds have an aggregate principal of CHF 350 million and pay interest annually in arrears at a fixed annual rate of 1.5 percent. The Company has the option to redeem the bonds prior to maturity, in whole, at par plus accrued interest, if 85 percent of the aggregate principal amount of the bonds has been redeemed or purchased and cancelled. | ||||||||||||||||||||
The 2.625% EUR Instruments, due 2019, were issued in March 2012, and the Company recorded proceeds (net of fees) of EUR 1,245 million (equivalent to approximately $1,648 million on date of issuance). The instruments have an aggregate principal of EUR 1,250 million and pay interest annually in arrears at a fixed rate of 2.625 percent per annum. | ||||||||||||||||||||
In May 2012, the Company issued the following notes (i) $500 million of 1.625% USD Notes, due 2017, paying interest semi-annually in arrears at a fixed annual rate of 1.625 percent, (ii) $1,250 million of 2.875% USD Notes, due 2022, paying interest semi-annually in arrears at a fixed annual rate of 2.875 percent, and (iii) $750 million of 4.375% USD Notes, due 2042, paying interest semi-annually in arrears at a fixed annual rate of 4.375 percent. The Company may redeem these notes prior to maturity, in whole or in part, at the greater of (i) 100 percent of the principal amount of the notes to be redeemed and (ii) the sum of the present values of remaining scheduled payments of principal and interest (excluding interest accrued to the redemption date) discounted to the redemption date at a rate defined in the note terms, plus interest accrued at the redemption date. The aggregate net proceeds of these bond issues, after underwriting discount and other fees, amounted to $2,431 million. These notes, registered with the U.S. Securities and Exchange Commission, were issued by ABB Finance (USA) Inc., a 100 percent owned finance subsidiary, and were fully and unconditionally guaranteed by ABB Ltd. There are no significant restrictions on the ability of the parent company to obtain funds from its subsidiaries by dividend or loan. In reliance on Rule 3-10 of Regulation S-X, the separate financial statements of ABB Finance (USA) Inc. are not provided. | ||||||||||||||||||||
During the third quarter of 2013, the Company entered into interest rate swaps to hedge obligations on an aggregate principal of $850 million of the 2.875% USD Notes, due 2022. During the second quarter of 2014, the Company entered into an additional interest rate swap to hedge a further $200 million of the aggregate principal amount. After considering the impact of such swaps, portions of the outstanding principal became floating rate obligations and consequently $1,050 million and $850 million are shown as floating rate debt at December 31, 2014 and 2013, respectively, in the table of long-term debt above. | ||||||||||||||||||||
The 5.625% USD Notes, due 2021, were assumed in May 2012, upon the acquisition of Thomas & Betts and pay interest semi-annually in arrears at a fixed annual rate of 5.625 percent. These notes, with an aggregate principal of $250 million, were recorded at their fair value on the date the Company acquired Thomas & Betts and are being amortized to par over the period to maturity. The Company has the option to redeem the notes prior to maturity at the greater of (i) 100 percent of the principal amount of the notes to be redeemed, and (ii) the sum of the present values of remaining scheduled payments of principal and interest (excluding interest accrued to the redemption date) discounted to the redemption date at a rate defined in the note terms, plus interest accrued at the redemption date. | ||||||||||||||||||||
The 4.25% AUD Notes, due 2017, were issued in November 2012. Net issuance proceeds (after underwriting fees) totaled AUD 398 million (equivalent to approximately $412 million on date of issuance). The notes, with an aggregate principal of AUD 400 million, pay fixed interest of 4.25 percent semi-annually in arrears. The Company entered into interest rate swaps to hedge its interest obligations on these bonds. After considering the impact of such swaps, these bonds effectively became floating rate Australian dollar obligations and consequently have been shown as floating rate debt in the table of long-term debt above. | ||||||||||||||||||||
The Company's bonds contain cross-default clauses which would allow the bondholders to demand repayment if the Company were to default on any borrowing at or above a specified threshold. Furthermore, all such bonds constitute unsecured obligations of the Company and rank pari passu with other debt obligations. | ||||||||||||||||||||
In addition to the bonds described above, included in long-term debt at December 31, 2014 and 2013, are capital lease obligations, bank borrowings of subsidiaries and other long-term debt, none of which is individually significant. | ||||||||||||||||||||
Other_provisions_other_current
Other provisions, other current liabilities and other non-current liabilities | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Other provisions, other current liabilities and other non-current liabilities | ||||||||
Other provisions, other current liabilities and other non-current liabilities | ||||||||
Note 13—Other provisions, other current liabilities and other non-current liabilities | ||||||||
"Other Provisions" consisted of the following: | ||||||||
December 31, | ||||||||
($ in millions) | 2014 | 2013 | ||||||
Contract-related provisions | 749 | 762 | ||||||
Provision for insurance-related reserves | 239 | 232 | ||||||
Provisions for contractual penalties and compliance and litigation matters | 237 | 327 | ||||||
Restructuring and restructuring-related provisions | 225 | 247 | ||||||
Other | 239 | 239 | ||||||
| | | | | | | | |
Total | 1,689 | 1,807 | ||||||
| | | | | | | | |
| | | | | | | | |
"Other current liabilities" consisted of the following: | ||||||||
December 31, | ||||||||
($ in millions) | 2014 | 2013 | ||||||
Employee-related liabilities | 1,746 | 1,854 | ||||||
Accrued expenses | 545 | 694 | ||||||
Derivative liabilities (see Note 5) | 438 | 202 | ||||||
Non-trade payables | 312 | 328 | ||||||
Income taxes payable | 293 | 357 | ||||||
Other tax liabilities | 271 | 269 | ||||||
Deferred income | 169 | 155 | ||||||
Accrued customer rebates | 165 | 162 | ||||||
Accrued interest | 76 | 79 | ||||||
Pension and other employee benefits (see Note 17) | 75 | 82 | ||||||
Other | 167 | 60 | ||||||
| | | | | | | | |
Total | 4,257 | 4,242 | ||||||
| | | | | | | | |
| | | | | | | | |
"Other non-current liabilities" consisted of the following: | ||||||||
December 31, | ||||||||
($ in millions) | 2014 | 2013 | ||||||
Income tax related liabilities | 760 | 830 | ||||||
Non-current deposit liabilities (see Note 9) | 222 | 279 | ||||||
Environmental provisions (see Note 15) | 109 | 116 | ||||||
Derivative liabilities (see Note 5) | 108 | 52 | ||||||
Deferred income | 89 | 57 | ||||||
Employee-related liabilities | 52 | 68 | ||||||
Provisions for contractual penalties and compliance and litigation matters | 41 | 71 | ||||||
Other | 205 | 234 | ||||||
| | | | | | | | |
Total | 1,586 | 1,707 | ||||||
| | | | | | | | |
| | | | | | | | |
Leases
Leases | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Leases | |||||
Leases | |||||
Note 14—Leases | |||||
The Company's lease obligations primarily relate to real estate and office equipment. Rent expense was $558 million, $602 million and $610 million in 2014, 2013 and 2012, respectively. Sublease income received by the Company on leased assets was $17 million, $22 million and $25 million in 2014, 2013 and 2012, respectively. | |||||
At December 31, 2014, future net minimum lease payments for operating leases, having initial or remaining non-cancelable lease terms in excess of one year, consisted of the following: | |||||
($ in millions) | |||||
2015 | 432 | ||||
2016 | 361 | ||||
2017 | 300 | ||||
2018 | 210 | ||||
2019 | 170 | ||||
Thereafter | 230 | ||||
| | | | | |
1,703 | |||||
Sublease income | (27 | ) | |||
| | | | | |
Total | 1,676 | ||||
| | | | | |
| | | | | |
At December 31, 2014, the future net minimum lease payments for capital leases and the present value of the net minimum lease payments consisted of the following: | |||||
($ in millions) | |||||
2015 | 41 | ||||
2016 | 35 | ||||
2017 | 24 | ||||
2018 | 19 | ||||
2019 | 16 | ||||
Thereafter | 99 | ||||
| | | | | |
Total minimum lease payments | 234 | ||||
Less amount representing estimated executory costs included in total minimum lease payments | (2 | ) | |||
| | | | | |
Net minimum lease payments | 232 | ||||
Less amount representing interest | (88 | ) | |||
| | | | | |
Present value of minimum lease payments | 144 | ||||
| | | | | |
| | | | | |
Minimum lease payments have not been reduced by minimum sublease rentals due in the future under non-cancelable subleases. Such minimum sublease rentals were not significant. The present value of minimum lease payments is included in "Short-term debt and current maturities of long-term debt" or "Long-term debt" in the Consolidated Balance Sheets. | |||||
Commitments_and_contingencies
Commitments and contingencies | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Commitments and contingencies | ||||||||
Commitments and contingencies | ||||||||
Note 15—Commitments and contingencies | ||||||||
Contingencies—Environmental | ||||||||
The Company is engaged in environmental clean-up activities at certain sites arising under various United States and other environmental protection laws and under certain agreements with third parties. In some cases, these environmental remediation actions are subject to legal proceedings, investigations or claims, and it is uncertain to what extent the Company is actually obligated to perform. Provisions for these unresolved matters have been set up if it is probable that the Company has incurred a liability and the amount of loss can be reasonably estimated. The lower end of an estimated range is accrued when a single best estimate is not determinable. The required amounts of the provisions may change in the future as developments occur. | ||||||||
If a provision has been recognized for any of these matters, the Company records an asset when it is probable that it will recover a portion of the costs expected to be incurred to settle them. Management is of the opinion, based upon information presently available, that the resolution of any such obligation and non-collection of recoverable costs would not have a further material adverse effect on the Company's Consolidated Financial Statements. | ||||||||
The Company is involved in the remediation of environmental contamination at present or former facilities, primarily in the United States. The clean-up of these sites involves primarily soil and groundwater contamination. A significant portion of the provisions in respect of these contingencies reflects the provisions of acquired companies. A portion of one of the acquired companies' remediation liability is indemnified by a prior owner. Accordingly, an asset equal to that portion of the remediation liability is included in "Other non-current assets". | ||||||||
The impact of environmental obligations on "Income from continuing operations, net of tax" was not significant in 2014, 2013 and 2012. The impact on "Income (loss) from discontinued operations, net of tax" was a charge of $41 million in 2013 and was not significant in 2014 and 2012. | ||||||||
The effect of environmental obligations on the Company's Consolidated Statements of Cash Flows was not significant in 2014, 2013 and 2012. | ||||||||
Environmental provisions included in the Company's Consolidated Balance Sheets were as follows: | ||||||||
December 31, | ||||||||
($ in millions) | 2014 | 2013 | ||||||
Other provisions | 37 | 37 | ||||||
Other non-current liabilities | 109 | 116 | ||||||
| | | | | | | | |
Total | 146 | 153 | ||||||
| | | | | | | | |
| | | | | | | | |
Provisions for the above estimated losses have not been discounted as the timing of payments cannot be reasonably estimated. | ||||||||
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). The Company's cables business remains under investigation for alleged anticompetitive practices in certain other jurisdictions. An informed judgment about the outcome of these remaining investigations or the amount of potential loss or range of loss for the Company, if any, relating to these remaining investigations cannot be made at this stage. | ||||||||
In Brazil, the 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. An informed judgment about the outcome of these investigations or the amount of potential loss or range of loss for the Company, if any, relating to these investigations cannot be made at this stage. | ||||||||
In Italy, one of the Company's recently acquired subsidiaries was raided in October 2013 by the Italian Antitrust Agency for alleged anticompetitive practices. In July 2014, the Company received the decision of the Italian Antitrust Agency regarding this matter. The agency closed its investigation without imposing a fine and accepted the non-financial commitments offered by the Company. | ||||||||
With respect to those aforementioned matters which are still ongoing, management is cooperating fully with the antitrust authorities. | ||||||||
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 December 31, 2014 and 2013, the Company had aggregate liabilities of $147 million and $245 million, respectively, included in "Other provisions" and "Other non-current liabilities", for the above regulatory, compliance and legal contingencies, and none of the individual liabilities recognized was significant. As it is not possible to make an informed judgment on the outcome of certain matters and as it is not possible, based on information currently available to management, to estimate the maximum potential liability on other matters, there could be material adverse outcomes beyond the amounts accrued. | ||||||||
Guarantees | ||||||||
General | ||||||||
The following table provides quantitative data regarding the Company's third-party guarantees. The maximum potential payments represent a "worst-case scenario", and do not reflect management's expected outcomes. | ||||||||
December 31, | ||||||||
2014 | 2013 | |||||||
($ in millions) | Maximum potential | |||||||
payments | ||||||||
Performance guarantees | 232 | 149 | ||||||
Financial guarantees | 72 | 77 | ||||||
Indemnification guarantees | 50 | 50 | ||||||
| | | | | | | | |
Total | 354 | 276 | ||||||
| | | | | | | | |
| | | | | | | | |
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 December 31, 2014 and 2013, were not significant. | ||||||||
Performance guarantees | ||||||||
Performance guarantees represent obligations where the Company guarantees the performance of a third party's product or service according to the terms of a contract. Such guarantees may include guarantees that a project will be completed within a specified time. If the third party does not fulfill the obligation, the Company will compensate the guaranteed party in cash or in kind. Performance guarantees include surety bonds, advance payment guarantees and standby letters of credit. The significant performance guarantees are described below. | ||||||||
The Company retained obligations for guarantees related to the Power Generation business contributed in mid-1999 to the former ABB Alstom Power NV joint venture (Alstom Power NV). The guarantees primarily consist of performance guarantees and other miscellaneous guarantees under certain contracts such as indemnification for personal injuries and property damages, taxes and compliance with labor laws, environmental laws and patents. These guarantees have no fixed expiration date. In May 2000, the Company sold its interest in Alstom Power NV to Alstom SA (Alstom). As a result, Alstom and its subsidiaries have primary responsibility for performing the obligations that are the subject of the guarantees. Further, Alstom, the parent company and Alstom Power NV, have undertaken jointly and severally to fully indemnify and hold harmless the Company against any claims arising under such guarantees. Management's best estimate of the total maximum potential amount payable of quantifiable guarantees issued by the Company on behalf of its former Power Generation business was $65 million at both December 31, 2014 and 2013. The Company has not experienced any losses related to guarantees issued on behalf of the former Power Generation business. | ||||||||
The Company is engaged in executing a number of projects as a member of consortia that include third parties. In certain of these cases, the Company guarantees not only its own performance but also the work of third parties. The original maturity dates of these guarantees range from one to six years. At December 31, 2014 and 2013, the maximum potential amount payable under these guarantees as a result of third-party non-performance was $156 million and $70 million, respectively. | ||||||||
Financial guarantees and commercial commitments | ||||||||
Financial guarantees represent irrevocable assurances that the Company will make payment to a beneficiary in the event that a third party fails to fulfill its financial obligations and the beneficiary under the guarantee incurs a loss due to that failure. | ||||||||
At December 31, 2014 and 2013, the Company had a maximum potential amount payable of $72 million and $77 million, respectively, under financial guarantees outstanding. Of these amounts, $12 million and $15 million at December 31, 2014 and 2013, respectively, was in respect of guarantees issued on behalf of companies in which the Company formerly had or has an equity interest. The guarantees outstanding have various maturity dates up to 2020. | ||||||||
In addition, in the normal course of bidding for and executing certain projects, the Company has entered into standby letters of credit, bid/performance bonds and surety bonds (collectively "performance bonds") with various financial institutions. Customers can draw on such performance bonds in the event that the Company does not fulfill its contractual obligations. The Company would then have an obligation to reimburse the financial institution for amounts paid under the performance bonds. There have been no significant amounts reimbursed to financial institutions under these types of arrangements in 2014, 2013 and 2012. | ||||||||
Indemnification guarantees | ||||||||
The Company has indemnified certain purchasers of divested businesses for potential claims arising from the operations of the divested businesses. To the extent the maximum potential loss related to such indemnifications could not be calculated, no amounts have been included under maximum potential payments in the table above. Indemnifications for which maximum potential losses could not be calculated include indemnifications for legal claims. The significant indemnification guarantees for which maximum potential losses could be calculated are described below. | ||||||||
The Company issued to the purchasers of Lummus Global guarantees related to assets and liabilities divested in 2007. The maximum potential amount payable relating to this business, pursuant to the sales agreement, at each of December 31, 2014 and 2013, was $50 million. | ||||||||
Product and order-related contingencies | ||||||||
The Company calculates its provision for product warranties based on historical claims experience and specific review of certain contracts. | ||||||||
The reconciliation of the "Provisions for warranties", including guarantees of product performance, was as follows: | ||||||||
($ in millions) | 2014 | 2013 | ||||||
Balance at January 1, | 1,362 | 1,291 | ||||||
Net change in warranties due to acquisitions and divestments | 11 | 111 | ||||||
Claims paid in cash or in kind | (319 | ) | (294 | ) | ||||
Net increase in provision for changes in estimates, warranties issued and warranties expired | 224 | 245 | ||||||
Exchange rate differences | (130 | ) | 9 | |||||
| | | | | | | | |
Balance at December 31, | 1,148 | 1,362 | ||||||
| | | | | | | | |
| | | | | | | | |
Related party transactions | ||||||||
The Company conducts business with certain companies where members of the Company's Board of Directors or Executive Committee act, or in recent years have acted, as directors or senior executives. The Company's Board of Directors has determined that the Company's business relationships with those companies do not constitute material business relationships. This determination was made in accordance with the Company's related party transaction policy which was prepared based on the Swiss Code of Best Practice and the independence criteria set forth in the corporate governance rules of the New York Stock Exchange. | ||||||||
Taxes
Taxes | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Taxes | |||||||||||
Taxes | |||||||||||
Note 16—Taxes | |||||||||||
"Provision for taxes" consisted of the following: | |||||||||||
($ in millions) | 2014 | 2013 | 2012 | ||||||||
Current taxes | 1,130 | 1,258 | 967 | ||||||||
Deferred taxes | 72 | (136 | ) | 63 | |||||||
| | | | | | | | | | | |
Tax expense from continuing operations | 1,202 | 1,122 | 1,030 | ||||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Tax expense (benefit) from discontinued operations | 1 | (8 | ) | — | |||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Tax expense from continuing operations is reconciled below from the Company's weighted-average global tax rate (rather than from the Swiss domestic statutory tax rate) as the parent company of the ABB Group, ABB Ltd, is domiciled in Switzerland and income generated in jurisdictions outside of Switzerland (hereafter "foreign jurisdictions") which has already been subject to corporate income tax in those foreign jurisdictions is, to a large extent, tax exempt in Switzerland. There is no requirement in Switzerland for any parent company of a group to file a tax return of the consolidated group determining domestic and foreign pre-tax income. As the Company's consolidated income from continuing operations is predominantly earned outside of Switzerland, corporate income tax in foreign jurisdictions largely determines the weighted-average global tax rate of the Company. | |||||||||||
The reconciliation of "Tax expense from continuing operations" at the weighted-average tax rate to the effective tax rate is as follows: | |||||||||||
($ in millions, except % data) | 2014 | 2013 | 2012 | ||||||||
Income from continuing operations before taxes | 3,896 | 4,066 | 3,838 | ||||||||
Weighted-average global tax rate | 23.8 | % | 22.7 | % | 23.6 | % | |||||
Income taxes at weighted-average tax rate | 929 | 922 | 906 | ||||||||
Items taxed at rates other than the weighted-average tax rate | 146 | 110 | 60 | ||||||||
Impact of non-deductible goodwill allocated to divested businesses | 77 | — | — | ||||||||
Changes in valuation allowance, net | 52 | 31 | 44 | ||||||||
Effects of changes in tax laws and enacted tax rates | (52 | ) | 1 | (27 | ) | ||||||
Other, net | 50 | 58 | 47 | ||||||||
| | | | | | | | | | | |
Tax expense from continuing operations | 1,202 | 1,122 | 1,030 | ||||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Effective tax rate for the year | 30.9 | % | 27.6 | % | 26.8 | % | |||||
In 2014, 2013 and 2012, the "Items taxed at rates other than the weighted-average tax rate" predominantly related to tax credits arising in foreign jurisdictions for which the technical merits did not allow a benefit to be taken. | |||||||||||
In 2014, 2013 and 2012, "Changes in valuation allowance, net" included reductions in valuation allowances recorded in certain jurisdictions where the Company determined that it was more likely than not that such deferred tax assets (recognized for net operating losses and temporary differences in those jurisdictions) would be realized, as well as increases in the valuation allowance in certain other jurisdictions. In 2014, the "Changes in valuation allowance, net" included an expense of $31 million related to certain of the Company's operations in South America. In 2013, the "Changes in valuation allowance, net" included an expense of $104 million related to certain of the Company's operations in Central Europe and South America. It also included a benefit of $42 million related to certain of the Company's operations in Central Europe and in 2012, the "Changes in valuation allowance, net" included an expense of $36 million related to certain of the Company's operations in Central Europe. | |||||||||||
In 2014, the "Effects of change in tax laws and enacted tax rates" included a benefit of $62 million related to enacted changes in double tax treaties. | |||||||||||
In 2014, 2013 and 2012, "Other, net" of $50 million, $58 million and $47 million, respectively, included expenses of $45 million, $71 million and $94 million, respectively, in relation to items that were deducted for financial accounting purposes, but were not tax deductible, such as interest expense, local taxes on productive activities, disallowed meals and entertainment expenses and other similar items. | |||||||||||
In 2014, "Provision for taxes" included $279 million relating to income taxes recorded on $543 million of net gains from sale of businesses. This expense is primarily included in "Weighted-average global tax rate" and "Impact of non-deductible goodwill allocated to divested businesses". | |||||||||||
Deferred income tax assets and liabilities consisted of the following: | |||||||||||
December 31, | |||||||||||
($ in millions) | 2014 | 2013 | |||||||||
Deferred tax assets: | |||||||||||
Unused tax losses and credits | 644 | 1,000 | |||||||||
Provisions and other accrued liabilities | 825 | 858 | |||||||||
Pension | 671 | 477 | |||||||||
Inventories | 297 | 302 | |||||||||
Property, plant and equipment and other non-current assets | 265 | 83 | |||||||||
Other | 112 | 140 | |||||||||
| | | | | | | | ||||
Total gross deferred tax asset | 2,814 | 2,860 | |||||||||
Valuation allowance | (600 | ) | (589 | ) | |||||||
| | | | | | | | ||||
Total gross deferred tax asset, net of valuation allowance | 2,214 | 2,271 | |||||||||
Deferred tax liabilities: | |||||||||||
Property, plant and equipment | (343 | ) | (323 | ) | |||||||
Intangibles and other non-current assets | (766 | ) | (1,110 | ) | |||||||
Pension and other accrued liabilities | (191 | ) | (206 | ) | |||||||
Inventories | (118 | ) | (135 | ) | |||||||
Other current assets | (149 | ) | (161 | ) | |||||||
Unremitted earnings | (612 | ) | (598 | ) | |||||||
Other | (76 | ) | (60 | ) | |||||||
| | | | | | | | ||||
Total gross deferred tax liability | (2,255 | ) | (2,593 | ) | |||||||
| | | | | | | | ||||
Net deferred tax liability | (41 | ) | (322 | ) | |||||||
| | | | | | | | ||||
| | | | | | | | ||||
Included in: | |||||||||||
"Deferred taxes"—current assets | 902 | 832 | |||||||||
"Deferred taxes"—non-current assets | 511 | 370 | |||||||||
"Deferred taxes"—current liabilities | (289 | ) | (259 | ) | |||||||
"Deferred taxes"—non-current liabilities | (1,165 | ) | (1,265 | ) | |||||||
| | | | | | | | ||||
Net deferred tax liability | (41 | ) | (322 | ) | |||||||
| | | | | | | | ||||
| | | | | | | | ||||
Certain entities have deferred tax assets related to net operating loss carry-forwards and other items. As recognition of these assets in certain entities did not meet the more likely than not criterion, valuation allowances have been recorded and amount to $600 million and $589 million, at December 31, 2014 and 2013, respectively. "Unused tax losses and credits" at December 31, 2014 and 2013, in the table above, included $151 million and $172 million, respectively, for which the Company has established a full valuation allowance as, due to limitations imposed by the relevant tax law, the Company determined that, more likely than not, such deferred tax assets would not be realized. | |||||||||||
At December 31, 2014 and 2013, deferred tax liabilities totaling $612 million and $598 million, respectively, have been provided for primarily in respect of withholding taxes, dividend distribution taxes or additional corporate income taxes (hereafter "withholding taxes") on unremitted earnings which will be payable in foreign jurisdictions on the repatriation of earnings to Switzerland. Income which has been generated outside of Switzerland and has already been subject to corporate income tax in such foreign jurisdictions is, to a large extent, tax exempt in Switzerland. Therefore, generally no or only limited Swiss income tax has to be provided for on the repatriated earnings of foreign subsidiaries. | |||||||||||
Certain countries levy withholding taxes on dividend distributions. Such taxes cannot always be fully reclaimed by the shareholder, although they have to be declared and withheld by the subsidiary. In 2014 and 2013, certain taxes arose in certain foreign jurisdictions for which the technical merits do not allow utilization of benefits. At December 31, 2014 and 2013, foreign subsidiary retained earnings subject to withholding taxes upon distribution of approximately $100 million and $200 million, respectively, were considered as permanently reinvested, as these funds are used for financing current operations as well as business growth through working capital and capital expenditure in those countries and, consequently, no deferred tax liability was recorded. | |||||||||||
At December 31, 2014, net operating loss carry-forwards of $2,200 million and tax credits of $67 million were available to reduce future taxes of certain subsidiaries. Of these amounts, $1,232 million of loss carry-forwards and $48 million of tax credits will expire in varying amounts through 2034. The largest amount of these carry-forwards related to the Company's Central Europe operations. | |||||||||||
Unrecognized tax benefits consisted of the following: | |||||||||||
($ in millions) | Unrecognized | Penalties and | Total | ||||||||
tax benefits | interest | ||||||||||
related to | |||||||||||
unrecognized | |||||||||||
tax benefits | |||||||||||
Classification as unrecognized tax items on January 1, 2012 | 653 | 169 | 822 | ||||||||
Net change due to acquisitions and divestments | 10 | — | 10 | ||||||||
Increase relating to prior year tax positions | 51 | 26 | 77 | ||||||||
Decrease relating to prior year tax positions | (73 | ) | (56 | ) | (129 | ) | |||||
Increase relating to current year tax positions | 141 | 1 | 142 | ||||||||
Decrease relating to current year tax positions | (3 | ) | — | (3 | ) | ||||||
Decrease due to settlements with tax authorities | (89 | ) | (11 | ) | (100 | ) | |||||
Decrease as a result of the applicable statute of limitations | (29 | ) | (7 | ) | (36 | ) | |||||
Exchange rate differences | 8 | 5 | 13 | ||||||||
| | | | | | | | | | | |
Balance at December 31, 2012, which would, if recognized, affect the effective tax rate | 669 | 127 | 796 | ||||||||
Net change due to acquisitions and divestments | 17 | 2 | 19 | ||||||||
Increase relating to prior year tax positions | 43 | 36 | 79 | ||||||||
Decrease relating to prior year tax positions | (30 | ) | — | (30 | ) | ||||||
Increase relating to current year tax positions | 90 | 4 | 94 | ||||||||
Decrease relating to current year tax positions | (1 | ) | — | (1 | ) | ||||||
Decrease due to settlements with tax authorities | (18 | ) | (5 | ) | (23 | ) | |||||
Decrease as a result of the applicable statute of limitations | (46 | ) | (13 | ) | (59 | ) | |||||
Exchange rate differences | 9 | 3 | 12 | ||||||||
| | | | | | | | | | | |
Balance at December 31, 2013, which would, if recognized, affect the effective tax rate | 733 | 154 | 887 | ||||||||
Net change due to acquisitions and divestments | (3 | ) | 1 | (2 | ) | ||||||
Increase relating to prior year tax positions | 25 | 39 | 64 | ||||||||
Decrease relating to prior year tax positions | (24 | ) | (7 | ) | (31 | ) | |||||
Increase relating to current year tax positions | 85 | — | 85 | ||||||||
Decrease relating to current year tax positions | (1 | ) | — | (1 | ) | ||||||
Decrease due to settlements with tax authorities | (19 | ) | (10 | ) | (29 | ) | |||||
Decrease as a result of the applicable statute of limitations | (36 | ) | (19 | ) | (55 | ) | |||||
Exchange rate differences | (55 | ) | (12 | ) | (67 | ) | |||||
| | | | | | | | | | | |
Balance at December 31, 2014, which would, if recognized, affect the effective tax rate | 705 | 146 | 851 | ||||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
In 2014 and 2013, the "Increase relating to current year tax positions" included a total of $56 million and $62 million, respectively, in taxes related to the interpretation of tax law and double tax treaty agreements by competent tax authorities. | |||||||||||
In 2012, the "Decrease relating to prior year tax positions" included a total of $87 million relating to the release of provisions due to favorable resolution of a tax dispute in Northern Europe. In 2012, the "Increase relating to current year tax positions" included a total of $108 million in taxes related to the interpretation of tax law and double tax treaty agreements by competent tax authorities. In 2012, the "Decrease due to settlements with tax authorities" included a total of $47 million relating to the interpretation of tax law and double tax treaty agreements by competent tax authorities. | |||||||||||
At December 31, 2014, the Company expected the resolution, within the next twelve months, of uncertain tax positions related to pending court cases amounting to $69 million for taxes, penalties and interest. Otherwise, the Company had not identified any other significant changes which were considered reasonably possible to occur within the next twelve months. | |||||||||||
At December 31, 2014, the earliest significant open tax years that remained subject to examination were the following: | |||||||||||
Region | Year | ||||||||||
Europe | 2007 | ||||||||||
The Americas | 2010 | ||||||||||
Asia | 2005 | ||||||||||
Middle East & Africa | 2004 | ||||||||||
Employee_benefits
Employee benefits | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Employee benefits | ||||||||||||||||||||
Employee benefits | ||||||||||||||||||||
Note 17—Employee benefits | ||||||||||||||||||||
The Company operates defined benefit and defined contribution pension plans and termination indemnity plans, in accordance with local regulations and practices. These plans cover a large portion of the 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 and several of the plans are not required to be funded according to local government and tax requirements. | ||||||||||||||||||||
The Company recognizes in its Consolidated Balance Sheets the funded status of its defined benefit pension plans, postretirement plans, and other employee-related benefits measured as the difference between the fair value of the plan assets and the benefit obligation. | ||||||||||||||||||||
Obligations and funded status of the plans | ||||||||||||||||||||
The change in benefit obligation, change in fair value of plan assets, and funded status recognized in the Consolidated Balance Sheets were as follows: | ||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||
($ in millions) | Defined pension | Other postretirement | ||||||||||||||||||
benefits | benefits | |||||||||||||||||||
Benefit obligation at January 1, | 12,063 | 12,063 | 236 | 281 | ||||||||||||||||
Service cost | 243 | 249 | 1 | 1 | ||||||||||||||||
Interest cost | 409 | 373 | 10 | 9 | ||||||||||||||||
Contributions by plan participants | 81 | 81 | — | — | ||||||||||||||||
Benefit payments | (632 | ) | (612 | ) | (14 | ) | (15 | ) | ||||||||||||
Benefit obligations of businesses acquired (divested) | (27 | ) | 7 | — | — | |||||||||||||||
Actuarial (gain) loss | 1,536 | (273 | ) | 14 | (41 | ) | ||||||||||||||
Plan amendments and other | (64 | ) | (50 | ) | — | 2 | ||||||||||||||
Exchange rate differences | (1,254 | ) | 225 | (2 | ) | (1 | ) | |||||||||||||
| | | | | | | | | | | | | | |||||||
Benefit obligation at December 31, | 12,355 | 12,063 | 245 | 236 | ||||||||||||||||
| | | | | | | | | | | | | | |||||||
Fair value of plan assets at January 1, | 10,930 | 10,282 | — | — | ||||||||||||||||
Actual return on plan assets | 918 | 621 | — | — | ||||||||||||||||
Contributions by employer | 308 | 403 | 14 | 15 | ||||||||||||||||
Contributions by plan participants | 81 | 81 | — | — | ||||||||||||||||
Benefit payments | (632 | ) | (612 | ) | (14 | ) | (15 | ) | ||||||||||||
Plan assets of businesses acquired (divested) | (25 | ) | — | — | — | |||||||||||||||
Plan amendments and other | (68 | ) | (57 | ) | — | — | ||||||||||||||
Exchange rate differences | (1,047 | ) | 212 | — | — | |||||||||||||||
| | | | | | | | | | | | | | |||||||
Fair value of plan assets at December 31, | 10,465 | 10,930 | — | — | ||||||||||||||||
| | | | | | | | | | | | | | |||||||
Funded status—underfunded | 1,890 | 1,133 | 245 | 236 | ||||||||||||||||
| | | | | | | | | | | | | | |||||||
| | | | | | | | | | | | | | |||||||
The amounts recognized in "Accumulated other comprehensive loss" and "Noncontrolling interests" were: | ||||||||||||||||||||
December 31, | ||||||||||||||||||||
2014 | 2013 | 2012 | 2014 | 2013 | 2012 | |||||||||||||||
($ in millions) | Defined pension | Other postretirement | ||||||||||||||||||
benefits | benefits | |||||||||||||||||||
Net actuarial loss | (2,765 | ) | (2,050 | ) | (2,574 | ) | (39 | ) | (25 | ) | (69 | ) | ||||||||
Prior service (cost) credit | 2 | (21 | ) | (32 | ) | 16 | 24 | 33 | ||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Amount recognized in OCI(1) and NCI(2) | (2,763 | ) | (2,071 | ) | (2,606 | ) | (23 | ) | (1 | ) | (36 | ) | ||||||||
Taxes associated with amount recognized in OCI(1) and NCI(2) | 652 | 459 | 631 | — | — | — | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Amount recognized in OCI(1) and NCI(2), net of tax(3) | (2,111 | ) | (1,612 | ) | (1,975 | ) | (23 | ) | (1 | ) | (36 | ) | ||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
-1 | OCI represents "Accumulated other comprehensive loss". | |||||||||||||||||||
-2 | NCI represents "Noncontrolling interests". | |||||||||||||||||||
-3 | NCI, net of tax, amounted to $(3) million, $(3) million and $(7) million at December 31, 2014, 2013 and 2012, respectively. | |||||||||||||||||||
In addition, the following amounts were recognized in the Company's Consolidated Balance Sheets: | ||||||||||||||||||||
December 31, | ||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||
($ in millions) | Defined pension | Other postretirement | ||||||||||||||||||
benefits | benefits | |||||||||||||||||||
Overfunded plans | (42 | ) | (66 | ) | — | — | ||||||||||||||
Underfunded plans—current | 19 | 20 | 16 | 18 | ||||||||||||||||
Underfunded plans—non-current | 1,913 | 1,179 | 229 | 218 | ||||||||||||||||
| | | | | | | | | | | | | | |||||||
Funded status—underfunded | 1,890 | 1,133 | 245 | 236 | ||||||||||||||||
| | | | | | | | | | | | | | |||||||
| | | | | | | | | | | | | | |||||||
December 31, | ||||||||||||||||||||
($ in millions) | 2014 | 2013 | ||||||||||||||||||
Non-current assets | ||||||||||||||||||||
Overfunded pension plans | (42 | ) | (66 | ) | ||||||||||||||||
Other employee-related benefits | (28 | ) | (27 | ) | ||||||||||||||||
| | | | | | | | |||||||||||||
Prepaid pension and other employee benefits | (70 | ) | (93 | ) | ||||||||||||||||
| | | | | | | | |||||||||||||
| | | | | | | | |||||||||||||
December 31, | ||||||||||||||||||||
($ in millions) | 2014 | 2013 | ||||||||||||||||||
Current liabilities | ||||||||||||||||||||
Underfunded pension plans | 19 | 20 | ||||||||||||||||||
Underfunded other postretirement benefit plans | 16 | 18 | ||||||||||||||||||
Other employee-related benefits | 40 | 44 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Pension and other employee benefits (see Note 13) | 75 | 82 | ||||||||||||||||||
| | | | | | | | |||||||||||||
| | | | | | | | |||||||||||||
December 31, | ||||||||||||||||||||
($ in millions) | 2014 | 2013 | ||||||||||||||||||
Non-current liabilities | ||||||||||||||||||||
Underfunded pension plans | 1,913 | 1,179 | ||||||||||||||||||
Underfunded other postretirement benefit plans | 229 | 218 | ||||||||||||||||||
Other employee-related benefits | 252 | 242 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Pension and other employee benefits | 2,394 | 1,639 | ||||||||||||||||||
| | | | | | | | |||||||||||||
| | | | | | | | |||||||||||||
The funded status, calculated using the projected benefit obligation (PBO) and fair value of plan assets, for pension plans with a PBO in excess of fair value of plan assets (underfunded) or fair value of plan assets in excess of PBO (overfunded), respectively, was: | ||||||||||||||||||||
December 31, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
($ in millions) | PBO | Assets | Difference | PBO | Assets | Difference | ||||||||||||||
PBO exceeds assets | 11,576 | 9,644 | 1,932 | 11,054 | 9,855 | 1,199 | ||||||||||||||
Assets exceed PBO | 779 | 821 | (42 | ) | 1,009 | 1,075 | (66 | ) | ||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total | 12,355 | 10,465 | 1,890 | 12,063 | 10,930 | 1,133 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
The accumulated benefit obligation (ABO) for all defined benefit pension plans was $11,869 million and $11,594 million at December 31, 2014 and 2013, respectively. The funded status, calculated using the ABO and fair value of plan assets for pension plans with ABO in excess of fair value of plan assets (underfunded) or fair value of plan assets in excess of ABO (overfunded), respectively, was: | ||||||||||||||||||||
December 31, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
($ in millions) | ABO | Assets | Difference | ABO | Assets | Difference | ||||||||||||||
ABO exceeds assets | 9,921 | 8,091 | 1,830 | 9,112 | 8,161 | 951 | ||||||||||||||
Assets exceed ABO | 1,948 | 2,374 | (426 | ) | 2,482 | 2,769 | (287 | ) | ||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total | 11,869 | 10,465 | 1,404 | 11,594 | 10,930 | 664 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
All of the Company's other postretirement benefit plans are unfunded. | ||||||||||||||||||||
Components of net periodic benefit cost | ||||||||||||||||||||
Net periodic benefit cost consisted of the following: | ||||||||||||||||||||
2014 | 2013 | 2012 | 2014 | 2013 | 2012 | |||||||||||||||
($ in millions) | Defined pension | Other postretirement | ||||||||||||||||||
benefits | benefits | |||||||||||||||||||
Service cost | 243 | 249 | 221 | 1 | 1 | 1 | ||||||||||||||
Interest cost | 409 | 373 | 396 | 10 | 9 | 11 | ||||||||||||||
Expected return on plan assets | (481 | ) | (479 | ) | (494 | ) | — | — | — | |||||||||||
Amortization of prior service cost (credit) | 27 | 34 | 42 | (9 | ) | (9 | ) | (9 | ) | |||||||||||
Amortization of net actuarial loss | 99 | 136 | 98 | — | 4 | 4 | ||||||||||||||
Curtailments, settlements and special termination benefits | 4 | 1 | 2 | — | 2 | — | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Net periodic benefit cost | 301 | 314 | 265 | 2 | 7 | 7 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
The net actuarial loss and prior service cost for defined pension benefits estimated to be amortized from "Accumulated other comprehensive loss" into net periodic benefit cost in 2015 is $132 million and $37 million, respectively. | ||||||||||||||||||||
The net actuarial loss and prior service (credit) for other postretirement benefits estimated to be amortized from "Accumulated other comprehensive loss" into net periodic benefit cost in 2015 is $2 million and $(8) million, respectively. | ||||||||||||||||||||
Assumptions | ||||||||||||||||||||
The following weighted-average assumptions were used to determine benefit obligations: | ||||||||||||||||||||
December 31, | ||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||
(in %) | Defined pension | Other postretirement | ||||||||||||||||||
benefits | benefits | |||||||||||||||||||
Discount rate | 2.61 | 3.58 | 3.49 | 4.17 | ||||||||||||||||
Rate of compensation increase | 1.65 | 1.81 | — | — | ||||||||||||||||
Rate of pension increase | 1.04 | 1.14 | — | — | ||||||||||||||||
The discount rate assumptions are based upon AA-rated corporate bonds. In those countries with sufficient liquidity in corporate bonds, the Company used the current market long-term corporate bond rates and matched the bond duration with the average duration of the pension liabilities. In those countries where the liquidity of the AA-rated corporate bonds was deemed to be insufficient, the Company determined the discount rate by adding the credit spread derived from an AA corporate bond index in another relevant liquid market, as adjusted for interest rate differentials, to the domestic government bond curve or interest rate swap curve. | ||||||||||||||||||||
The following weighted-average assumptions were used to determine the "Net periodic benefit cost": | ||||||||||||||||||||
2014 | 2013 | 2012 | 2014 | 2013 | 2012 | |||||||||||||||
(in %) | Defined pension | Other postretirement | ||||||||||||||||||
benefits | benefits | |||||||||||||||||||
Discount rate | 3.58 | 3.22 | 3.91 | 4.17 | 3.35 | 4.07 | ||||||||||||||
Expected long-term rate of return on plan assets | 4.60 | 4.79 | 5.38 | — | — | — | ||||||||||||||
Rate of compensation increase | 1.81 | 1.71 | 1.62 | — | — | — | ||||||||||||||
The "Expected long-term rate of return on plan assets" is derived for each benefit plan by considering the expected future long-term return assumption for each individual asset class. A single long-term return assumption is then derived for each plan based upon the plan's target asset allocation. | ||||||||||||||||||||
The Company maintains other postretirement benefit plans, which are generally contributory with participants' contributions adjusted annually. The assumptions used were: | ||||||||||||||||||||
December 31, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Health care cost trend rate assumed for next year | 8.00 | % | 8.15 | % | ||||||||||||||||
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) | 5.00 | % | 5.00 | % | ||||||||||||||||
Year that the rate reaches the ultimate trend rate | 2028 | 2028 | ||||||||||||||||||
A one-percentage-point change in assumed health care cost trend rates would have the following effects at December 31, 2014: | ||||||||||||||||||||
1-percentage-point | ||||||||||||||||||||
($ in millions) | Increase | Decrease | ||||||||||||||||||
Effect on total of service and interest cost | 1 | (1 | ) | |||||||||||||||||
Effect on postretirement benefit obligation | 22 | (19 | ) | |||||||||||||||||
Plan assets | ||||||||||||||||||||
The Company has pension plans in various countries with the majority of the Company's pension liabilities deriving from a limited number of these countries. The pension plans' structures reflect local regulatory environments and market practices. | ||||||||||||||||||||
The pension plans are typically funded by regular contributions from employees and the Company. These plans are typically administered by boards of trustees (which include Company representatives) whose primary responsibilities include ensuring that the plans meet their liabilities through contributions and investment returns. The boards of trustees have the responsibility for making key investment strategy decisions within a risk-controlled framework. | ||||||||||||||||||||
The accumulated contributions are invested in a diversified range of assets that are managed by third-party asset managers, in accordance with local statutory regulations, pension plan rules and the respective plans' investment guidelines, as approved by the boards of trustees. | ||||||||||||||||||||
Plan assets are generally segregated from those of the Company and invested with the aim of meeting the respective plans' projected future pension liabilities. Plan assets are measured at fair value at the balance sheet date. | ||||||||||||||||||||
The boards of trustees manage the assets of the pension plans in a risk-controlled manner and assess the risks embedded in the pension plans through asset/liability management studies. Asset/liability management studies typically take place every three years. However, the risks of the plans are monitored on an ongoing basis. | ||||||||||||||||||||
The board of trustees' investment goal is to maximize the long-term returns of plan assets within specified risk parameters, while considering the future liabilities and liquidity needs of the individual plans. Risk measures taken into account include the funding ratio of the plan, the likelihood of extraordinary cash contributions being required, the risk embedded in each individual asset class, and the plan asset portfolio as a whole. | ||||||||||||||||||||
The Company's global pension asset allocation is the result of the asset allocations of the individual plans, which are set by the respective boards of trustees. The target asset allocation of the Company's plans on a weighted-average basis is as follows: | ||||||||||||||||||||
Target | ||||||||||||||||||||
percentage | ||||||||||||||||||||
Asset class | ||||||||||||||||||||
Equity | 23 | |||||||||||||||||||
Fixed income | 57 | |||||||||||||||||||
Real estate | 11 | |||||||||||||||||||
Other | 9 | |||||||||||||||||||
| | | | | ||||||||||||||||
100 | ||||||||||||||||||||
| | | | | ||||||||||||||||
| | | | | ||||||||||||||||
The actual asset allocations of the plans are in line with the target asset allocations. | ||||||||||||||||||||
Fixed income assets primarily include corporate bonds of companies from diverse industries and government bonds. Equity assets primarily include investments in large-cap and mid-cap listed companies. Both fixed income and equity assets are invested either via funds or directly in segregated investment mandates, and include an allocation to emerging markets. Real estate consists primarily of direct investments in real estate in Switzerland held in the Swiss plans. The "Other" asset class includes investments in private equity, hedge funds, commodities, and cash and reflects a variety of investment strategies. | ||||||||||||||||||||
Based on the above global asset allocation and the fair values of the plan assets, the expected long-term return on assets at December 31, 2014, is 4.58 percent. The Company and the local boards of trustees regularly review the investment performance of the asset classes and individual asset managers. Due to the diversified nature of the investments, the Company is of the opinion that no significant concentration of risks exists in its pension fund assets. | ||||||||||||||||||||
The Company does not expect any plan assets to be returned to the employer during 2015. | ||||||||||||||||||||
At December 31, 2014 and 2013, plan assets include ABB Ltd's shares (as well as an insignificant amount of the Company's debt instruments) with a total value of $15 million and $18 million, respectively. | ||||||||||||||||||||
The fair values of the Company's pension plan assets by asset class are presented below. For further information on the fair value hierarchy and an overview of the Company's valuation techniques applied, see the "Fair value measures" section of Note 2. | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
($ in millions) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
fair value | ||||||||||||||||||||
Asset class | ||||||||||||||||||||
Equity | ||||||||||||||||||||
Equity securities | 433 | — | — | 433 | ||||||||||||||||
Mutual funds/commingled funds | — | 1,821 | — | 1,821 | ||||||||||||||||
Emerging market mutual funds/commingled funds | — | 487 | — | 487 | ||||||||||||||||
Fixed income | ||||||||||||||||||||
Government and corporate securities | 638 | 1,211 | — | 1,849 | ||||||||||||||||
Government and corporate—mutual funds/commingled funds | — | 3,521 | — | 3,521 | ||||||||||||||||
Emerging market bonds—mutual funds/commingled funds | — | 671 | — | 671 | ||||||||||||||||
Insurance contracts | — | 126 | — | 126 | ||||||||||||||||
Cash and short-term investments | 274 | 56 | — | 330 | ||||||||||||||||
Private equity | — | — | 136 | 136 | ||||||||||||||||
Hedge funds | — | — | 93 | 93 | ||||||||||||||||
Real estate | — | 94 | 842 | 936 | ||||||||||||||||
Commodities | — | 62 | — | 62 | ||||||||||||||||
| | | | | | | | | | | | | | |||||||
Total | 1,345 | 8,049 | 1,071 | 10,465 | ||||||||||||||||
| | | | | | | | | | | | | | |||||||
| | | | | | | | | | | | | | |||||||
December 31, 2013 | ||||||||||||||||||||
($ in millions) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
fair value | ||||||||||||||||||||
Asset class | ||||||||||||||||||||
Equity | ||||||||||||||||||||
Equity securities | 387 | — | — | 387 | ||||||||||||||||
Mutual funds/commingled funds | — | 2,287 | — | 2,287 | ||||||||||||||||
Emerging market mutual funds/commingled funds | — | 515 | — | 515 | ||||||||||||||||
Fixed income | ||||||||||||||||||||
Government and corporate securities | 586 | 1,011 | — | 1,597 | ||||||||||||||||
Government and corporate—mutual funds/commingled funds | — | 3,442 | — | 3,442 | ||||||||||||||||
Emerging market bonds—mutual funds/commingled funds | — | 645 | — | 645 | ||||||||||||||||
Insurance contracts | — | 69 | — | 69 | ||||||||||||||||
Cash and short-term investments | 143 | 505 | — | 648 | ||||||||||||||||
Private equity | — | — | 155 | 155 | ||||||||||||||||
Hedge funds | — | — | 158 | 158 | ||||||||||||||||
Real estate | — | 82 | 866 | 948 | ||||||||||||||||
Commodities | — | 47 | 32 | 79 | ||||||||||||||||
| | | | | | | | | | | | | | |||||||
Total | 1,116 | 8,603 | 1,211 | 10,930 | ||||||||||||||||
| | | | | | | | | | | | | | |||||||
| | | | | | | | | | | | | | |||||||
The following table represents the movements of those asset categories whose fair values use significant unobservable inputs (Level 3): | ||||||||||||||||||||
($ in millions) | Private | Hedge | Real | Commodities | Total | |||||||||||||||
equity | funds | estate | Level 3 | |||||||||||||||||
Balance at January 1, 2013 | 164 | 153 | 830 | 35 | 1,182 | |||||||||||||||
Return on plan assets | ||||||||||||||||||||
Assets still held at December 31, 2013 | 6 | 28 | 10 | (3 | ) | 41 | ||||||||||||||
Assets sold during the year | 8 | (7 | ) | — | — | 1 | ||||||||||||||
Purchases (sales) | (24 | ) | (19 | ) | 4 | — | (39 | ) | ||||||||||||
Transfers into Level 3 | — | — | 8 | — | 8 | |||||||||||||||
Exchange rate differences | 1 | 3 | 14 | — | 18 | |||||||||||||||
| | | | | | | | | | | | | | | | | ||||
Balance at December 31, 2013 | 155 | 158 | 866 | 32 | 1,211 | |||||||||||||||
| | | | | | | | | | | | | | | | | ||||
Return on plan assets | ||||||||||||||||||||
Assets still held at December 31, 2014 | 21 | (3 | ) | 43 | (5 | ) | 56 | |||||||||||||
Assets sold during the year | 3 | 8 | — | — | 11 | |||||||||||||||
Purchases (sales) | (39 | ) | (59 | ) | 30 | — | (68 | ) | ||||||||||||
Transfers into Level 3 | — | — | — | (27 | ) | (27 | ) | |||||||||||||
Exchange rate differences | (4 | ) | (11 | ) | (97 | ) | — | (112 | ) | |||||||||||
| | | | | | | | | | | | | | | | | ||||
Balance at December 31, 2014 | 136 | 93 | 842 | — | 1,071 | |||||||||||||||
| | | | | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | | | | ||||
Real estate properties, which are primarily located in Switzerland, are valued under the income approach using the discounted cash flow method, by which the market value of a property is determined as the total of all projected future earnings discounted to the valuation date. The discount rates are determined for each property individually according to the property's location and specific use, and by considering initial yields of comparable market transactions. | ||||||||||||||||||||
Private equity investments include investments in partnerships and related funds. Such investments consist of both publicly-traded and privately-held securities. Publicly-traded securities that are quoted in inactive markets are valued using available quotes and adjusted for liquidity restrictions. Privately-held securities are valued taking into account various factors, such as the most recent financing involving unrelated new investors, earnings multiple analyses using comparable companies and discounted cash flow analyses. | ||||||||||||||||||||
Hedge funds are normally not exchange-traded and the shares of the funds are not redeemed daily. Depending on the fund structure, the fair values are derived through modeling techniques based on the values of the underlying assets adjusted to reflect liquidity and transferability restrictions. | ||||||||||||||||||||
Contributions | ||||||||||||||||||||
Employer contributions were as follows: | ||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||
($ in millions) | Defined pension benefits | Other postretirement benefits | ||||||||||||||||||
Total contributions to defined benefit pension and other postretirement benefit plans | 308 | 403 | 14 | 15 | ||||||||||||||||
Of which, discretionary contributions to defined benefit pension plans | 75 | 164 | — | — | ||||||||||||||||
In 2014, the discretionary contributions included non-cash contributions totaling $25 million of available-for-sale debt securities to certain of the Company's pension plans in the United Kingdom. In 2013, the discretionary contributions included non-cash contributions totaling $160 million of available-for-sale debt securities to certain of the Company's pension plans in Germany and the United Kingdom. | ||||||||||||||||||||
The Company expects to contribute approximately $233 million, including $23 million of discretionary contributions, to its defined benefit pension plans in 2015. These discretionary contributions are expected to be non-cash contributions. The Company expects to contribute approximately $17 million to its other postretirement benefit plans in 2015. | ||||||||||||||||||||
The Company also contributes to a number of defined contribution plans. The aggregate expense for these plans was $236 million, $243 million and $220 million in 2014, 2013 and 2012, respectively. Contributions to multi-employer plans were not significant in 2014, 2013 and 2012. | ||||||||||||||||||||
Estimated future benefit payments | ||||||||||||||||||||
The expected future cash flows to be paid by the Company's plans in respect of pension and other postretirement benefit plans (net of Medicare subsidies) at December 31, 2014, are as follows: | ||||||||||||||||||||
($ in millions) | Defined | Other | ||||||||||||||||||
pension | postretirement | |||||||||||||||||||
benefits | benefits | |||||||||||||||||||
2015 | 644 | 17 | ||||||||||||||||||
2016 | 668 | 17 | ||||||||||||||||||
2017 | 633 | 17 | ||||||||||||||||||
2018 | 627 | 17 | ||||||||||||||||||
2019 | 627 | 17 | ||||||||||||||||||
Years 2020 - 2024 | 3,002 | 83 | ||||||||||||||||||
Sharebased_payment_arrangement
Share-based payment arrangements | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Share-based payment arrangements | |||||||||||||||||
Share-based payment arrangements | |||||||||||||||||
Note 18—Share-based payment arrangements | |||||||||||||||||
The Company has three principal share-based payment plans, as more fully described in the respective sections below. Compensation cost for equity-settled awards is recorded in "Total cost of sales" and in "Selling, general and administrative expenses" and totaled $73 million, $71 million and $60 million in 2014, 2013 and 2012, respectively. Compensation cost for cash-settled awards is recorded in "Selling, general and administrative expenses" and is disclosed in the "WARs", "LTIP" and "Other share-based payments" sections of this note. The total tax benefit recognized in 2014, 2013 and 2012, was not significant. | |||||||||||||||||
At December 31, 2014, the Company had the ability to issue up to 94 million new shares out of contingent capital in connection with share-based payment arrangements. In addition, 30 million shares (of the 56 million shares held by the Company in treasury stock at December 31, 2014), could be used to settle share-based payment arrangements (the remaining shares of treasury stock are held for cancellation—see Note 19). | |||||||||||||||||
As the primary trading market for the shares of ABB Ltd is the SIX Swiss Exchange, on which the shares are traded in Swiss francs, certain data disclosed below related to the instruments granted under share-based payment arrangements are presented in Swiss francs. | |||||||||||||||||
MIP | |||||||||||||||||
Under the MIP, the Company offers options and cash-settled WARs (and prior to the 2010 launch offered also physically-settled warrants) to key employees for no consideration. | |||||||||||||||||
The warrants and options granted under the MIP allow participants to purchase shares of ABB Ltd at predetermined prices. Participants may sell the warrants and options rather than exercise the right to purchase shares. Equivalent warrants are listed by a third-party bank on the SIX Swiss Exchange, which facilitates pricing and transferability of instruments granted under this plan. The options entitle the holder to request that the third-party bank purchase such options at the market price of equivalent listed warrants related to that MIP launch. If the participant elects to sell the warrants or options, the instruments will thereafter be held by a third party and, consequently, the Company's obligation to deliver shares will be toward this third party. Each WAR gives the participant the right to receive, in cash, the market price of an equivalent listed warrant on the date of exercise of the WAR. The WARs are non-transferable. | |||||||||||||||||
Participants may exercise or sell warrants and options and exercise WARs after the vesting period, which is three years from the date of grant. Vesting restrictions can be waived in certain circumstances such as death or disability. All warrants, options and WARs expire six years from the date of grant. | |||||||||||||||||
Warrants and options | |||||||||||||||||
The fair value of each warrant and option is estimated on the date of grant using a lattice model that uses the weighted-average assumptions noted in the table below. Expected volatilities are based on implied volatilities from equivalent listed warrants on ABB Ltd shares. The expected term of the warrants and options granted has been assumed to be the contractual six-year life of each warrant and option, based on the fact that after the vesting period, a participant can elect to sell the warrant or option rather than exercise the right to purchase shares, thereby realizing the time value of the warrants and options. The risk-free rate is based on a six-year Swiss franc interest rate, reflecting the six-year contractual life of the warrants and options. In estimating forfeitures, the Company has used the data from previous comparable MIP launches. | |||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
Expected volatility | 18 | % | 21 | % | 27 | % | |||||||||||
Dividend yield | 2.88 | % | 2.90 | % | 3.60 | % | |||||||||||
Expected term | 6 years | 6 years | 6 years | ||||||||||||||
Risk-free interest rate | 0.24 | % | 0.57 | % | 0.30 | % | |||||||||||
Presented below is a summary of the activity related to warrants and options under the MIP: | |||||||||||||||||
Number of | Number of | Weighted- | Weighted- | Aggregate | |||||||||||||
instruments | shares | average | average | intrinsic | |||||||||||||
(in | (in millions)(1) | exercise | remaining | value | |||||||||||||
millions) | price | contractual | (in millions | ||||||||||||||
(in Swiss | term | of Swiss | |||||||||||||||
francs)(2) | (in years) | francs)(3) | |||||||||||||||
Outstanding at January 1, 2014 | 297.9 | 59.6 | 21.76 | ||||||||||||||
Granted | 79.9 | 16 | 21 | ||||||||||||||
Exercised | (5.5 | ) | (1.1 | ) | 15.75 | ||||||||||||
Forfeited | (4.5 | ) | (0.9 | ) | 19.34 | ||||||||||||
Expired | (25.1 | ) | (5.1 | ) | 36.4 | ||||||||||||
| | | | | | | | | | | | | | | | | |
Outstanding at December 31, 2014 | 342.7 | 68.5 | 20.64 | 3.6 | 88 | ||||||||||||
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Vested and expected to vest at December 31, 2014 | 327.3 | 65.5 | 20.68 | 3.6 | 83 | ||||||||||||
Exercisable at December 31, 2014 | 121.2 | 24.2 | 22.28 | 2 | 20 | ||||||||||||
-1 | Information presented reflects the number of shares of ABB Ltd that can be received upon exercise, as warrants and options have a conversion ratio of 5:1. | ||||||||||||||||
-2 | Information presented reflects the exercise price per share of ABB Ltd. | ||||||||||||||||
-3 | Computed using the closing price, in Swiss francs, of ABB Ltd shares on the SIX Swiss Exchange and the exercise price per share of ABB Ltd. | ||||||||||||||||
At December 31, 2014, there was $62 million of total unrecognized compensation cost related to non-vested options granted under the MIP. That cost is expected to be recognized over a weighted-average period of 2.0 years. The weighted-average grant-date fair value (per instrument) of options granted during 2014, 2013 and 2012 was 0.49 Swiss francs, 0.66 Swiss francs and 0.59 Swiss francs, respectively. In 2014 and 2012, the aggregate intrinsic value (on the date of exercise) of instruments exercised was not significant. There were no exercises in 2013. | |||||||||||||||||
Presented below is a summary, by launch, related to instruments outstanding at December 31, 2014: | |||||||||||||||||
Exercise price (in Swiss francs)(1) | Number of | Number of | Weighted-average | ||||||||||||||
instruments | shares | remaining | |||||||||||||||
(in | (in millions)(2) | contractual | |||||||||||||||
millions) | term (in years) | ||||||||||||||||
19 | 22.8 | 4.6 | 0.4 | ||||||||||||||
22.5 | 36.7 | 7.3 | 1.4 | ||||||||||||||
25.5 | 43.1 | 8.6 | 2.4 | ||||||||||||||
15.75 | 60.9 | 12.2 | 3.4 | ||||||||||||||
17.5 | 14.5 | 2.9 | 3.4 | ||||||||||||||
21.5 | 85.2 | 17.0 | 4.4 | ||||||||||||||
21 | 79.5 | 15.9 | 5.7 | ||||||||||||||
| | | | | | | | | | | |||||||
Total number of instruments and shares | 342.7 | 68.5 | 3.6 | ||||||||||||||
| | | | | | | | | | | |||||||
| | | | | | | | | | | |||||||
-1 | Information presented reflects the exercise price per share of ABB Ltd. | ||||||||||||||||
-2 | Information presented reflects the number of shares of ABB Ltd that can be received upon exercise. | ||||||||||||||||
WARs | |||||||||||||||||
As each WAR gives the holder the right to receive cash equal to the market price of the equivalent listed warrant on date of exercise, the Company records a liability based upon the fair value of outstanding WARs at each period end, accreted on a straight-line basis over the three-year vesting period. In "Selling, general and administrative expenses", the Company recorded an expense of $26 million in 2013 as a result of changes in both the fair value and vested portion of the outstanding WARs. The amount recorded in 2014 and 2012 was not significant. To hedge its exposure to fluctuations in the fair value of outstanding WARs, the Company purchased cash-settled call options, which entitle the Company to receive amounts equivalent to its obligations under the outstanding WARs. The cash-settled call options are recorded as derivatives measured at fair value (see Note 5), with subsequent changes in fair value recorded through earnings to the extent that they offset the change in fair value of the liability for the WARs. In 2014, the Company recorded an expense of $11 million and in 2013 an income of $16 million, in "Selling, general and administrative expenses" related to the cash-settled call options. The amount recorded in 2012 was not significant. | |||||||||||||||||
The aggregate fair value of outstanding WARs was $33 million and $56 million at December 31, 2014 and 2013, respectively. The fair value of WARs was determined based upon the trading price of equivalent warrants listed on the SIX Swiss Exchange. | |||||||||||||||||
Presented below is a summary of the activity related to WARs: | |||||||||||||||||
Number of WARs | |||||||||||||||||
(in millions) | |||||||||||||||||
Outstanding at January 1, 2014 | 67.3 | ||||||||||||||||
Granted | 10.7 | ||||||||||||||||
Exercised | (5.9 | ) | |||||||||||||||
Forfeited | (0.7 | ) | |||||||||||||||
Expired | (10.2 | ) | |||||||||||||||
| | | | | |||||||||||||
Outstanding at December 31, 2014 | 61.2 | ||||||||||||||||
| | | | | |||||||||||||
| | | | | |||||||||||||
Exercisable at December 31, 2014 | 18.8 | ||||||||||||||||
The aggregate fair value at date of grant of WARs granted in 2014, 2013 and 2012, was $6 million, $13 million and $10 million, respectively. In 2013 and 2012, share-based liabilities of $9 million and $7 million, respectively, were paid upon exercise of WARs by participants. In 2014, the amount paid was not significant. | |||||||||||||||||
ESAP | |||||||||||||||||
The employee share acquisition plan (ESAP) is an employee stock-option plan with a savings feature. Employees save over a twelve-month period, by way of regular payroll deductions. At the end of the savings period, employees choose whether to exercise their stock options using their savings plus interest to buy ABB Ltd shares (American Depositary Shares (ADS) in the case of employees in the United States and Canada—each ADS representing one registered share of the Company) at the exercise price set at the grant date, or have their savings returned with interest. The savings are accumulated in bank accounts held by a third-party trustee on behalf of the participants and earn interest. Employees can withdraw from the ESAP at any time during the savings period and will be entitled to a refund of their accumulated savings. | |||||||||||||||||
The fair value of each option is estimated on the date of grant using the same option valuation model as described under the MIP, using the assumptions noted in the table below. The expected term of the option granted has been determined to be the contractual one-year life of each option, at the end of which the options vest and the participants are required to decide whether to exercise their options or have their savings returned with interest. The risk-free rate is based on one-year Swiss franc interest rates, reflecting the one-year contractual life of the options. In estimating forfeitures, the Company has used the data from previous ESAP launches. | |||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
Expected volatility | 18 | % | 20 | % | 23 | % | |||||||||||
Dividend yield | 3.10 | % | 2.84 | % | 3.45 | % | |||||||||||
Expected term | 1 year | 1 year | 1 year | ||||||||||||||
Risk-free interest rate | 0 | % | 0 | % | 0 | % | |||||||||||
Presented below is a summary of activity under the ESAP: | |||||||||||||||||
Number of | Weighted-average | Weighted-average | Aggregate | ||||||||||||||
shares | exercise price | remaining | intrinsic value | ||||||||||||||
(in millions)(1) | (in Swiss francs)(2) | contractual | (in millions of | ||||||||||||||
term (in years) | Swiss francs)(2)(3) | ||||||||||||||||
Outstanding at January 1, 2014 | 4.7 | 20.82 | |||||||||||||||
Granted | 3.9 | 20.97 | |||||||||||||||
Forfeited | (0.2 | ) | 20.82 | ||||||||||||||
Exercised(4) | (0.6 | ) | 20.82 | ||||||||||||||
Not exercised (savings returned plus interest) | (3.9 | ) | 20.82 | ||||||||||||||
| | | | | | | | | | | | | | ||||
Outstanding at December 31, 2014 | 3.9 | 20.97 | 0.8 | 0.7 | |||||||||||||
| | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | ||||
Vested and expected to vest at December 31, 2014 | 3.7 | 20.97 | 0.8 | 0.6 | |||||||||||||
Exercisable at December 31, 2014 | — | — | — | — | |||||||||||||
-1 | Includes shares represented by ADS. | ||||||||||||||||
-2 | Information presented for ADS is based on equivalent Swiss franc denominated awards. | ||||||||||||||||
-3 | Computed using the closing price, in Swiss francs, of ABB Ltd shares on the SIX Swiss Exchange and the exercise price of each option in Swiss francs. | ||||||||||||||||
-4 | The cash received upon exercise was approximately $12 million and the corresponding tax benefit was not significant. The shares were delivered out of treasury stock. | ||||||||||||||||
The exercise prices per ABB Ltd share and per ADS of 20.97 Swiss francs and $21.81, respectively, for the 2014 grant, 22.90 Swiss francs and $25.21, respectively, for the 2013 grant, and 17.08 Swiss francs and $18.30, respectively, for the 2012 grant were determined using the closing price of the ABB Ltd share on SIX Swiss Exchange and ADS on the New York Stock Exchange on the respective grant dates. For the 2013 grant, the exercise price was effectively reduced as for every ten shares bought through exercise of the options one additional free share would be delivered; therefore the effective exercise prices per ABB Ltd share and per ADS were 20.82 Swiss francs and $22.92, respectively. The table above reflects the effective exercise price. | |||||||||||||||||
At December 31, 2014, the total unrecognized compensation cost related to non-vested options granted under the ESAP was not significant. The weighted-average grant-date fair value (per option) of options granted during 2014, 2013 and 2012, was 1.19 Swiss francs, 2.79 Swiss francs and 1.29 Swiss francs, respectively. The total intrinsic value (on the date of exercise) of options exercised in 2013 was $24 million, while in 2014 and 2012 it was not significant. | |||||||||||||||||
LTIP | |||||||||||||||||
The Company has a long-term incentive plan (LTIP) for members of its Executive Committee and selected other senior executives (Eligible Participants), as defined in the terms of the LTIP. The LTIP involves annual conditional grants of the Company's stock to such Eligible Participants that are subject to certain conditions. The 2014, 2013 and 2012 launches under the LTIP are each composed of two components: (i) a performance component (earnings per share performance) and (ii) a retention component. | |||||||||||||||||
Under the performance component, the number of shares granted is dependent upon the base salary of the Eligible Participant. For the 2014, 2013 and 2012 LTIP launches, the actual number of shares that will vest at a future date is dependent on (i) the Company's weighted cumulative earnings per share performance over three financial years, beginning with the year of launch, and (ii) the fulfillment of the service condition as defined in the terms and conditions of the LTIP. The cumulative earnings per share performance is weighted as follows: 33 percent of the first year's result, 67 percent of the second year's result and 100 percent of the third year's result. The actual number of shares that ultimately vest will vary depending on the weighted cumulative earnings per share outcome, interpolated between a lower threshold (no shares vest) and an upper threshold (the number of shares vesting is capped at 200 percent of the conditional grant). | |||||||||||||||||
Under the retention component of the 2014, 2013 and 2012 LTIP launches, each Eligible Participant was conditionally granted an individually defined maximum number of shares which fully vest at the end of the respective vesting periods (if the participant remains an Eligible Participant until the end of such period). | |||||||||||||||||
For the 2014, 2013 and 2012 LTIP launches, under the performance component, an Eligible Participant receives, in cash, 100 percent of the value of the shares that have vested. Under the retention component, an Eligible Participant receives 70 percent of the shares that have vested in the form of shares and 30 percent of the value of the shares that have vested in cash, with the possibility to elect to receive the 30 percent portion also in shares rather than in cash. | |||||||||||||||||
Presented below is a summary of activity under the LTIP: | |||||||||||||||||
Number of shares | |||||||||||||||||
Equity & | Only Cash | Total | Weighted-average | ||||||||||||||
Cash or | Settlement(2) | (in millions) | grant-date | ||||||||||||||
choice of | (in millions) | fair value | |||||||||||||||
100% Equity | per share | ||||||||||||||||
Settlement(1) | (Swiss francs) | ||||||||||||||||
(in millions) | |||||||||||||||||
Nonvested at January 1, 2014 | 1.7 | 1.1 | 2.8 | 17.65 | |||||||||||||
Granted | 0.6 | 0.4 | 1 | 20.35 | |||||||||||||
Vested | (0.5 | ) | (0.1 | ) | (0.6 | ) | 20.85 | ||||||||||
Expired(3) | — | (0.3 | ) | (0.3 | ) | 8.76 | |||||||||||
Forfeited | (0.1 | ) | (0.1 | ) | (0.2 | ) | 15.71 | ||||||||||
| | | | | | | | | | | | | | ||||
Nonvested at December 31, 2014 | 1.7 | 1 | 2.7 | 18.85 | |||||||||||||
| | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | ||||
-1 | Shares that, subject to vesting, the Eligible Participant can elect to receive 100 percent in the form of shares. | ||||||||||||||||
-2 | Shares that, subject to vesting, the Eligible Participant can only receive in cash. | ||||||||||||||||
-3 | Expired as the criteria for the Company's performance condition were not satisfied. | ||||||||||||||||
Equity-settled awards are recorded in the "Capital stock and additional paid-in capital" component of stockholders' equity, with compensation cost recorded in "Selling, general and administrative expenses" over the vesting period (which is from grant date to the end of the vesting period) based on the grant-date fair value of the shares. Cash-settled awards are recorded as a liability, remeasured at fair value at each reporting date for the percentage vested, with changes in the liability recorded in "Selling, general and administrative expenses". | |||||||||||||||||
At December 31, 2014, there was $12 million of total unrecognized compensation cost related to equity-settled awards under the LTIP. That cost is expected to be recognized over a weighted-average period of 2.1 years. The compensation cost recorded in 2014, 2013 and 2012, for cash-settled awards was not significant. | |||||||||||||||||
The aggregate fair value, at the dates of grant, of shares granted in 2014, 2013 and 2012, was approximately $22 million, $22 million and $22 million, respectively. The total grant-date fair value of shares that vested during 2014 was $15 million, while in 2013 and 2012 it was not significant. The weighted-average grant-date fair value (per share) of shares granted during 2014, 2013 and 2012, was 20.35 Swiss francs, 20.92 Swiss francs and 15.21 Swiss francs, respectively. | |||||||||||||||||
For the earnings per share performance component of the 2014, 2013 and 2012 LTIP launches, the aggregate fair value of the conditionally granted shares is based on the market price of the ABB Ltd share at each reporting date and the probable outcome of the earnings per share achievement that would result in the vesting of the highest number of shares, as computed using a Monte Carlo simulation model. The main inputs to this model are the Company's and financial analysts' revenue growth rates and Operational EBITDA margin expectations. For the retention component under the 2014, 2013 and 2012 LTIP launches, the fair value of granted shares for equity-settled awards is the market price of the ABB Ltd share on grant date and the fair value of granted shares for cash-settled awards is the market price of the ABB Ltd share at each reporting date. | |||||||||||||||||
Other share-based payments | |||||||||||||||||
The Company has other minor share-based payment arrangements with certain employees. The compensation cost related to these arrangements in 2014, 2013 and 2012, was not significant. | |||||||||||||||||
Stockholders_equity
Stockholders' equity | 12 Months Ended | |
Dec. 31, 2014 | ||
Stockholders' equity | ||
Stockholders' equity | ||
Note 19—Stockholders' equity | ||
At both December 31, 2014 and 2013, the Company had 2,819 million authorized shares, of which 2,315 million were registered and issued. | ||
At the Annual General Meeting of Shareholders (AGM) held in April 2014, at the AGM held in April 2013 and at the AGM held in April 2012, shareholders approved the payment of a dividend of 0.70 Swiss francs per share, 0.68 Swiss francs per share and 0.65 Swiss francs per share, respectively, out of the capital contribution reserve in stockholders' equity of the unconsolidated statutory financial statements of ABB Ltd, prepared in accordance with Swiss law. The dividends were paid in May 2014 (amounting to $1,841 million), May 2013 (amounting to $1,667 million) and May 2012 (amounting to $1,626 million), respectively. | ||
In the second quarter of 2014, the Company purchased on the open market an aggregate of 12.0 million of its own shares to be available for delivery under its employee share programs. These transactions resulted in an increase in "Treasury stock" of $282 million. | ||
Furthermore, in September 2014, the Company announced a share buyback program for the purchase of up to $4 billion of its own shares over a period ending no later than September 2016. The Company intends that approximately three quarters of the shares to be purchased will be held for cancellation (after approval from shareholders) and the remainder will be purchased to be available for its employee share programs. Shares acquired for cancellation are acquired through a separate trading line on the SIX Swiss Exchange (on which only the Company can purchase shares), while shares acquired for delivery under employee share programs are acquired through the ordinary trading line. As of December 31, 2014, under the announced share buyback program, the Company had purchased 26.0 million shares for cancellation and 6.8 million shares to support its employee share programs. These transactions resulted in an increase in "Treasury stock" of $733 million. Subsequent to December 31, 2014, and up to February 28, 2015, the Company purchased, under the announced share buyback program, an additional 11.8 million shares, for approximately $250 million. | ||
Upon and in connection with each launch of the Company's MIP, the Company sold call options to a bank at fair value, giving the bank the right to acquire shares equivalent to the number of shares represented by the MIP warrant and WAR awards to participants. Under the terms of the agreement with the bank, the call options can only be exercised by the bank to the extent that MIP participants have either sold or exercised their warrants or exercised their WARs. In 2014 and 2012, the bank exercised certain of the call options it held. As a consequence, in 2014 and 2012, the Company delivered 1.3 million and 2.7 million shares, respectively, out of treasury stock. No call options were exercised by the bank in 2013. At December 31, 2014, such call options representing 9.1 million shares and with strike prices ranging from 15.75 to 21.50 Swiss francs (weighted-average strike price of 19.34 Swiss francs) were held by the bank. The call options expire in periods ranging from May 2015 to August 2020. However, only 0.5 million of these instruments, with strike prices ranging from 15.75 to 21.50 Swiss francs (weighted-average strike price of 19.72 Swiss francs), could be exercised at December 31, 2014, under the terms of the agreement with the bank. | ||
In addition to the above, at December 31, 2014, the Company had further outstanding obligations to deliver: | ||
• | up to 4.5 million shares relating to the options granted under the 2009 launch of the MIP, with a strike price of 19.00 Swiss francs, vested in May 2012 and expiring in May 2015, | |
• | up to 7.3 million shares relating to the options granted under the 2010 launch of the MIP, with a strike price of 22.50 Swiss francs, vested in May 2013 and expiring in May 2016, | |
• | up to 8.6 million shares relating to the options granted under the 2011 launch of the MIP, with a strike price of 25.50 Swiss francs, vesting in May 2014 and expiring in May 2017, | |
• | up to 15.1 million shares relating to the options granted under the 2012 launches of the MIP, with a weighted-average strike price of 16.09 Swiss francs, vesting in May 2015 and expiring in May 2018, | |
• | up to 17.0 million shares relating to the options granted under the 2013 launch of the MIP, with a strike price of 21.50 Swiss francs, vesting in May 2016 and expiring in May 2019, | |
• | up to 15.9 million shares relating to the options granted under the 2014 launch of the MIP, with a strike price of 21.00 Swiss francs, vesting in August 2017 and expiring in August 2020, | |
• | up to 3.9 million shares relating to the ESAP, vesting and expiring in November 2015, | |
• | up to 1.7 million shares to Eligible Participants under the 2014, 2013 and 2012, launches of the LTIP, vesting and expiring in August 2017, June 2016 and May 2015, respectively, and | |
• | up to 1.1 million shares in connection with certain other share-based payment arrangements with employees. | |
See Note 18 for a description of the above share-based payment arrangements. | ||
In November 2014, 2013 and 2012, the Company delivered 0.6 million, 3.7 million and 2.3 million shares, respectively, from treasury stock, under the ESAP. | ||
Amounts available to be distributed as dividends to the stockholders of ABB Ltd are based on the requirements of Swiss law and ABB Ltd's Articles of Incorporation, and are determined based on amounts presented in the unconsolidated financial statements of ABB Ltd, prepared in accordance with Swiss law. At December 31, 2014, the total unconsolidated stockholders' equity of ABB Ltd was 9,651 million Swiss francs ($9,752 million), including 2,384 million Swiss francs ($2,409 million) representing share capital, 8,446 million Swiss francs ($8,535 million) representing reserves and 1,179 million Swiss francs ($1,192 million) representing a reduction of equity for own shares (treasury stock). Of the reserves, 1,179 million Swiss francs ($1,192 million) relating to own shares and 477 million Swiss francs ($482 million) representing 20 percent of share capital, are restricted and not available for distribution. | ||
In February 2015, the Company announced that a proposal will be put to the 2015 AGM for approval by the shareholders to distribute 0.72 Swiss francs per share to shareholders, comprising of a dividend of 0.55 Swiss francs paid out of ABB Ltd's capital contribution reserves and a distribution of 0.17 Swiss francs by way of a nominal value reduction (reduction in the par value of each share by 0.17 Swiss francs from 1.03 Swiss francs to 0.86 Swiss francs). | ||
Earnings_per_share
Earnings per share | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Earnings per share | |||||||||||
Earnings per share | |||||||||||
Note 20—Earnings per share | |||||||||||
Basic earnings per share is calculated by dividing income by the weighted-average number of shares outstanding during the year. Diluted earnings per share is calculated by dividing income by the weighted-average number of shares outstanding during the year, assuming that all potentially dilutive securities were exercised, if dilutive. Potentially dilutive securities comprise outstanding written call options and outstanding options and shares granted subject to certain conditions under the Company's share-based payment arrangements. In 2014, 2013 and 2012, outstanding securities representing a maximum of 59 million, 47 million and 56 million shares, respectively, were excluded from the calculation of diluted earnings per share as their inclusion would have been anti-dilutive. | |||||||||||
Basic earnings per share: | |||||||||||
($ in millions, except per share data in $) | 2014 | 2013 | 2012 | ||||||||
Amounts attributable to ABB shareholders: | |||||||||||
Income from continuing operations, net of tax | 2,570 | 2,824 | 2,700 | ||||||||
Income (loss) from discontinued operations, net of tax | 24 | (37 | ) | 4 | |||||||
| | | | | | | | | | | |
Net income | 2,594 | 2,787 | 2,704 | ||||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Weighted-average number of shares outstanding (in millions) | 2,288 | 2,297 | 2,293 | ||||||||
Basic earnings per share attributable to ABB shareholders: | |||||||||||
Income from continuing operations, net of tax | 1.12 | 1.23 | 1.18 | ||||||||
Income (loss) from discontinued operations, net of tax | 0.01 | (0.02 | ) | — | |||||||
| | | | | | | | | | | |
Net income | 1.13 | 1.21 | 1.18 | ||||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Diluted earnings per share: | |||||||||||
($ in millions, except per share data in $) | 2014 | 2013 | 2012 | ||||||||
Amounts attributable to ABB shareholders: | |||||||||||
Income from continuing operations, net of tax | 2,570 | 2,824 | 2,700 | ||||||||
Income (loss) from discontinued operations, net of tax | 24 | (37 | ) | 4 | |||||||
| | | | | | | | | | | |
Net income | 2,594 | 2,787 | 2,704 | ||||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Weighted-average number of shares outstanding (in millions) | 2,288 | 2,297 | 2,293 | ||||||||
Effect of dilutive securities: | |||||||||||
Call options and shares | 7 | 8 | 2 | ||||||||
| | | | | | | | | | | |
Dilutive weighted-average number of shares outstanding | 2,295 | 2,305 | 2,295 | ||||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Diluted earnings per share attributable to ABB shareholders: | |||||||||||
Income from continuing operations, net of tax | 1.12 | 1.23 | 1.18 | ||||||||
Income (loss) from discontinued operations, net of tax | 0.01 | (0.02 | ) | — | |||||||
| | | | | | | | | | | |
Net income | 1.13 | 1.21 | 1.18 | ||||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Other_comprehensive_income
Other comprehensive income | 12 Months Ended | ||||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||||
Other comprehensive income | |||||||||||||||||||||||||||||
Other comprehensive income | |||||||||||||||||||||||||||||
Note 21—Other comprehensive income | |||||||||||||||||||||||||||||
The following table includes amounts recorded within "Total other comprehensive income (loss)" including the related income tax effects. | |||||||||||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||||||||||
($ in millions) | Before | Tax | Net of | Before | Tax | Net of | Before | Tax | Net of | ||||||||||||||||||||
tax | effect | tax | tax | effect | tax | tax | effect | tax | |||||||||||||||||||||
Foreign currency translation adjustments: | |||||||||||||||||||||||||||||
Net change during the year | (1,691 | ) | 11 | (1,680 | ) | 133 | 8 | 141 | 389 | (6 | ) | 383 | |||||||||||||||||
Available-for-sale securities: | |||||||||||||||||||||||||||||
Net unrealized gains (losses) arising during the year | (14 | ) | 5 | (9 | ) | (4 | ) | — | (4 | ) | 5 | (2 | ) | 3 | |||||||||||||||
Reclassification adjustments for net (gains) losses included in net income | 21 | (6 | ) | 15 | (14 | ) | 1 | (13 | ) | 1 | — | 1 | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net change during the year | 7 | (1 | ) | 6 | (18 | ) | 1 | (17 | ) | 6 | (2 | ) | 4 | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Pension and other postretirement plans: | |||||||||||||||||||||||||||||
Prior service (costs) credits arising during the year | (5 | ) | 2 | (3 | ) | (20 | ) | 4 | (16 | ) | (42 | ) | 6 | (36 | ) | ||||||||||||||
Net actuarial gains (losses) arising during the year | (826 | ) | 212 | (614 | ) | 423 | (132 | ) | 291 | (846 | ) | 245 | (601 | ) | |||||||||||||||
Amortization of prior service cost included in net income | 18 | (1 | ) | 17 | 25 | (2 | ) | 23 | 33 | (3 | ) | 30 | |||||||||||||||||
Amortization of net actuarial loss included in net income | 99 | (20 | ) | 79 | 140 | (41 | ) | 99 | 102 | (32 | ) | 70 | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net change during the year | (714 | ) | 193 | (521 | ) | 568 | (171 | ) | 397 | (753 | ) | 216 | (537 | ) | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash flow hedge derivatives: | |||||||||||||||||||||||||||||
Net gains (losses) arising during the year | (65 | ) | 13 | (52 | ) | 33 | (5 | ) | 28 | 74 | (21 | ) | 53 | ||||||||||||||||
Reclassification adjustments for net (gains) losses included in net income | 10 | (1 | ) | 9 | (54 | ) | 11 | (43 | ) | (42 | ) | 14 | (28 | ) | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net change during the year | (55 | ) | 12 | (43 | ) | (21 | ) | 6 | (15 | ) | 32 | (7 | ) | 25 | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total other comprehensive income (loss) | (2,453 | ) | 215 | (2,238 | ) | 662 | (156 | ) | 506 | (326 | ) | 201 | (125 | ) | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The following table shows changes in "Accumulated other comprehensive loss" (OCI) attributable to ABB, by component, net of tax: | |||||||||||||||||||||||||||||
($ in millions) | Foreign currency | Unrealized gains | Pension and other | Unrealized gains | Total OCI | ||||||||||||||||||||||||
translation | (losses) on | postretirement | (losses) of cash | ||||||||||||||||||||||||||
adjustments | available-for-sale | plan adjustments | flow hedge | ||||||||||||||||||||||||||
securities | derivatives | ||||||||||||||||||||||||||||
Balance at January 1, 2013 | (580 | ) | 24 | (2,004 | ) | 37 | (2,523 | ) | |||||||||||||||||||||
Other comprehensive (loss) income before reclassifications | 141 | (4 | ) | 275 | 28 | 440 | |||||||||||||||||||||||
Amounts reclassified from OCI | — | (13 | ) | 122 | (43 | ) | 66 | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | |||||||||||||
Total other comprehensive (loss) income | 141 | (17 | ) | 397 | (15 | ) | 506 | ||||||||||||||||||||||
Less: | |||||||||||||||||||||||||||||
Amounts attributable to noncontrolling interests | (8 | ) | — | 3 | — | (5 | ) | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | |||||||||||||
Balance at December 31, 2013 | (431 | ) | 7 | (1,610 | ) | 22 | (2,012 | ) | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | |||||||||||||
Other comprehensive (loss) income before reclassifications | (1,680 | ) | (9 | ) | (617 | ) | (52 | ) | (2,358 | ) | |||||||||||||||||||
Amounts reclassified from OCI | — | 15 | 96 | 9 | 120 | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | |||||||||||||
Total other comprehensive (loss) income | (1,680 | ) | 6 | (521 | ) | (43 | ) | (2,238 | ) | ||||||||||||||||||||
Less: | |||||||||||||||||||||||||||||
Amounts attributable to noncontrolling interests | (9 | ) | — | — | — | (9 | ) | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | |||||||||||||
Balance at December 31, 2014 | (2,102 | ) | 13 | (2,131 | ) | (21 | ) | (4,241 | ) | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | |||||||||||||
| | | | | | | | | | | | | | | | | |||||||||||||
The following table reflects amounts reclassified out of OCI in respect of Pension and other postretirement plan adjustments and Unrealized gains (losses) of cash flow hedge derivatives: | |||||||||||||||||||||||||||||
($ in millions) | Location of (gains) losses reclassified from OCI | 2014 | 2013 | ||||||||||||||||||||||||||
Details about OCI components | |||||||||||||||||||||||||||||
Pension and other postretirement plan adjustments: | |||||||||||||||||||||||||||||
Amortization of prior service cost | Net periodic benefit cost(1) | 18 | 25 | ||||||||||||||||||||||||||
Amortization of net actuarial losses | Net periodic benefit cost(1) | 99 | 140 | ||||||||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
Total before tax | 117 | 165 | |||||||||||||||||||||||||||
Tax | Provision for taxes | (21 | ) | (43 | ) | ||||||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
Amounts reclassified from OCI | 96 | 122 | |||||||||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
Unrealized gains (losses) of cash flow hedge derivatives: | |||||||||||||||||||||||||||||
Foreign exchange contracts | Total revenues | 9 | (52 | ) | |||||||||||||||||||||||||
Total cost of sales | (8 | ) | 1 | ||||||||||||||||||||||||||
Commodity contracts | Total cost of sales | 3 | 5 | ||||||||||||||||||||||||||
Cash-settled call options | SG&A expenses(2) | 6 | (8 | ) | |||||||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
Total before tax | 10 | (54 | ) | ||||||||||||||||||||||||||
Tax | Provision for taxes | (1 | ) | 11 | |||||||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
Amounts reclassified from OCI | 9 | (43 | ) | ||||||||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
-1 | These components are included in the computation of net periodic benefit cost (see Note 17). | ||||||||||||||||||||||||||||
-2 | SG&A expenses represent "Selling, general and administrative expenses". | ||||||||||||||||||||||||||||
The amounts reclassified out of OCI in respect of Unrealized gains (losses) on available-for-sale securities were not significant in 2014 and 2013. | |||||||||||||||||||||||||||||
Restructuring_and_related_expe
Restructuring and related expenses | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Restructuring and related expenses | |||||||||||
Restructuring and related expenses | |||||||||||
Note 22—Restructuring and related expenses | |||||||||||
Restructuring-related activities | |||||||||||
In 2014, 2013 and 2012, the Company executed minor restructuring-related activities and incurred charges of $235 million, $252 million, and $180 million, respectively, which were mainly recorded in "Total cost of sales". | |||||||||||
($ in millions) | 2014 | 2013 | 2012 | ||||||||
Employee severance costs | 177 | 154 | 92 | ||||||||
Estimated contract settlement, loss order and other costs | 31 | 78 | 72 | ||||||||
Inventory and long-lived asset impairments | 27 | 20 | 16 | ||||||||
| | | | | | | | | | | |
Total | 235 | 252 | 180 | ||||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
At December 31, 2014 and 2013, the balance of restructuring and related liabilities is primarily included in "Other provisions". | |||||||||||
Operating_segment_and_geograph
Operating segment and geographic data | 12 Months Ended | ||||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||||
Operating segment and geographic data | |||||||||||||||||||||||||||||
Operating segment and geographic data | |||||||||||||||||||||||||||||
Note 23—Operating segment and geographic data | |||||||||||||||||||||||||||||
The Chief Operating Decision Maker (CODM) is the Company's Executive Committee. 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 Discrete Automation and Motion, Low Voltage Products, Process Automation, Power Products and Power Systems. The remaining operations of the Company are included in Corporate and Other. | |||||||||||||||||||||||||||||
A description of the types of products and services provided by each reportable segment is as follows: | |||||||||||||||||||||||||||||
• | Discrete Automation and Motion: manufactures and sells motors, generators, variable speed drives, programmable logic controllers, robots and robotics, solar inverters, wind converters, rectifiers, excitation systems, power quality and protection solutions, electric vehicle fast charging infrastructure, components and subsystems for railways, and related services for a wide range of applications in discrete automation, process industries, transportation and utilities. | ||||||||||||||||||||||||||||
• | Low Voltage Products: manufactures and sells products and systems that provide protection, control and measurement for electrical installations, as well as enclosures, switchboards, electronics and electromechanical devices for industrial machines, plants and related service. In addition the segment manufactures products for wiring and cable management, cable protection systems, power connection and safety. The segment also makes intelligent building control systems for home and building automation. | ||||||||||||||||||||||||||||
• | Process Automation: develops and sells control and plant optimization systems, automation products and solutions, including instrumentation, as well as industry-specific application knowledge and services for the oil, gas and petrochemicals, metals and minerals, marine and turbocharging, pulp and paper, chemical and pharmaceuticals, and power industries. | ||||||||||||||||||||||||||||
• | Power Products: manufactures and sells a wide range of products across voltage levels, including circuit breakers, switchgear, capacitors, instrument transformers, power, distribution and traction transformers for electrical and other infrastructure utilities, as well as industrial and commercial customers. | ||||||||||||||||||||||||||||
• | Power Systems: designs, installs and upgrades high-efficiency transmission and distribution systems and power plant automation and electrification solutions, including monitoring and control products, software and services and incorporating components manufactured by both the Company and by third parties, for power generation, transmission and distribution utilities, other infrastructure utilities, as well as other industrial and commercial enterprises. | ||||||||||||||||||||||||||||
• | Corporate and Other: includes headquarters, central research and development, the Company's real estate activities, Group treasury operations and other minor business activities. | ||||||||||||||||||||||||||||
The Company evaluates the profitability of its segments based on Operational EBITDA, which represents income from operations excluding depreciation and amortization, restructuring and restructuring-related expenses, gains and losses on sale of businesses, acquisition-related expenses and certain non-operational items, as well as foreign exchange/commodity timing differences in income from operations consisting of: (i) unrealized gains and losses on derivatives (foreign exchange, commodities, embedded derivatives), (ii) realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized, and (iii) unrealized foreign exchange movements on receivables/payables (and related assets/liabilities). | |||||||||||||||||||||||||||||
The CODM primarily reviews the results of each segment on a basis that is before the elimination of profits made on inventory sales between segments. Segment results below are presented before these eliminations, with a total deduction for intersegment profits to arrive at the Company's consolidated Operational EBITDA. Intersegment sales and transfers are accounted for as if the sales and transfers were to third parties, at current market prices. | |||||||||||||||||||||||||||||
The following tables present segment revenues, Operational EBITDA, the reconciliations of consolidated Operational EBITDA to income from continuing operations before taxes, as well as depreciation and amortization, and capital expenditures for 2014, 2013 and 2012, as well as total assets at December 31, 2014, 2013 and 2012. | |||||||||||||||||||||||||||||
2014 | |||||||||||||||||||||||||||||
($ in millions) | Third-party | Intersegment | Total | ||||||||||||||||||||||||||
revenues | revenues | revenues | |||||||||||||||||||||||||||
Discrete Automation and Motion | 9,296 | 846 | 10,142 | ||||||||||||||||||||||||||
Low Voltage Products | 7,117 | 415 | 7,532 | ||||||||||||||||||||||||||
Process Automation | 7,745 | 203 | 7,948 | ||||||||||||||||||||||||||
Power Products | 8,782 | 1,551 | 10,333 | ||||||||||||||||||||||||||
Power Systems | 6,686 | 334 | 7,020 | ||||||||||||||||||||||||||
Corporate and Other | 204 | 1,592 | 1,796 | ||||||||||||||||||||||||||
Intersegment elimination | — | (4,941 | ) | (4,941 | ) | ||||||||||||||||||||||||
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Consolidated | 39,830 | — | 39,830 | ||||||||||||||||||||||||||
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2013 | |||||||||||||||||||||||||||||
($ in millions) | Third-party | Intersegment | Total | ||||||||||||||||||||||||||
revenues | revenues | revenues | |||||||||||||||||||||||||||
Discrete Automation and Motion | 8,909 | 1,006 | 9,915 | ||||||||||||||||||||||||||
Low Voltage Products | 7,338 | 391 | 7,729 | ||||||||||||||||||||||||||
Process Automation | 8,287 | 210 | 8,497 | ||||||||||||||||||||||||||
Power Products | 9,096 | 1,936 | 11,032 | ||||||||||||||||||||||||||
Power Systems | 8,025 | 350 | 8,375 | ||||||||||||||||||||||||||
Corporate and Other | 193 | 1,583 | 1,776 | ||||||||||||||||||||||||||
Intersegment elimination | — | (5,476 | ) | (5,476 | ) | ||||||||||||||||||||||||
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Consolidated | 41,848 | — | 41,848 | ||||||||||||||||||||||||||
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2012 | |||||||||||||||||||||||||||||
($ in millions) | Third-party | Intersegment | Total | ||||||||||||||||||||||||||
revenues | revenues | revenues | |||||||||||||||||||||||||||
Discrete Automation and Motion | 8,480 | 925 | 9,405 | ||||||||||||||||||||||||||
Low Voltage Products | 6,276 | 362 | 6,638 | ||||||||||||||||||||||||||
Process Automation | 7,946 | 210 | 8,156 | ||||||||||||||||||||||||||
Power Products | 8,987 | 1,730 | 10,717 | ||||||||||||||||||||||||||
Power Systems | 7,575 | 277 | 7,852 | ||||||||||||||||||||||||||
Corporate and Other | 72 | 1,505 | 1,577 | ||||||||||||||||||||||||||
Intersegment elimination | — | (5,009 | ) | (5,009 | ) | ||||||||||||||||||||||||
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Consolidated | 39,336 | — | 39,336 | ||||||||||||||||||||||||||
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($ in millions) | 2014 | 2013 | 2012 | ||||||||||||||||||||||||||
Operational EBITDA: | |||||||||||||||||||||||||||||
Discrete Automation and Motion | 1,760 | 1,783 | 1,735 | ||||||||||||||||||||||||||
Low Voltage Products | 1,429 | 1,468 | 1,219 | ||||||||||||||||||||||||||
Process Automation | 1,029 | 1,096 | 1,003 | ||||||||||||||||||||||||||
Power Products | 1,519 | 1,637 | 1,585 | ||||||||||||||||||||||||||
Power Systems | 5 | 419 | 290 | ||||||||||||||||||||||||||
Corporate and Other and Intersegment elimination | (342 | ) | (328 | ) | (277 | ) | |||||||||||||||||||||||
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Consolidated Operational EBITDA | 5,400 | 6,075 | 5,555 | ||||||||||||||||||||||||||
Depreciation and amortization | (1,305 | ) | (1,318 | ) | (1,182 | ) | |||||||||||||||||||||||
Restructuring and restructuring-related expenses | (235 | ) | (252 | ) | (180 | ) | |||||||||||||||||||||||
Gains and losses on sale of businesses, acquisition-related expenses and certain non-operational items | 482 | (181 | ) | (199 | ) | ||||||||||||||||||||||||
Foreign exchange/commodity timing differences in income from operations: | |||||||||||||||||||||||||||||
Unrealized gains and losses on derivatives (foreign exchange, commodities, embedded derivatives) | (223 | ) | 60 | 135 | |||||||||||||||||||||||||
Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized | (42 | ) | 14 | (28 | ) | ||||||||||||||||||||||||
Unrealized foreign exchange movements on receivables/payables (and related assets/liabilities) | 101 | (11 | ) | (43 | ) | ||||||||||||||||||||||||
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Income from operations | 4,178 | 4,387 | 4,058 | ||||||||||||||||||||||||||
Interest and dividend income | 80 | 69 | 73 | ||||||||||||||||||||||||||
Interest and other finance expense | (362 | ) | (390 | ) | (293 | ) | |||||||||||||||||||||||
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Income from continuing operations before taxes | 3,896 | 4,066 | 3,838 | ||||||||||||||||||||||||||
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Depreciation and | Capital expenditure(1) | Total assets(1) at | |||||||||||||||||||||||||||
amortization | December 31, | ||||||||||||||||||||||||||||
($ in millions) | 2014 | 2013 | 2012 | 2014 | 2013 | 2012 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Discrete Automation and Motion | 309 | 285 | 263 | 192 | 214 | 197 | 10,123 | 10,931 | 9,416 | ||||||||||||||||||||
Low Voltage Products | 301 | 323 | 250 | 184 | 204 | 208 | 7,978 | 9,389 | 9,534 | ||||||||||||||||||||
Process Automation | 88 | 87 | 82 | 49 | 68 | 91 | 4,268 | 4,537 | 4,847 | ||||||||||||||||||||
Power Products | 217 | 223 | 209 | 220 | 252 | 259 | 7,396 | 7,669 | 7,701 | ||||||||||||||||||||
Power Systems | 175 | 183 | 174 | 92 | 101 | 194 | 6,855 | 7,905 | 8,083 | ||||||||||||||||||||
Corporate and Other | 215 | 217 | 204 | 289 | 267 | 344 | 8,258 | 7,633 | 9,489 | ||||||||||||||||||||
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Consolidated | 1,305 | 1,318 | 1,182 | 1,026 | 1,106 | 1,293 | 44,878 | 48,064 | 49,070 | ||||||||||||||||||||
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-1 | Capital expenditure and Total assets are after intersegment eliminations and therefore reflect third-party activities only. | ||||||||||||||||||||||||||||
Geographic information | |||||||||||||||||||||||||||||
Geographic information for revenues and long-lived assets was as follows: | |||||||||||||||||||||||||||||
Revenues | Long-lived | ||||||||||||||||||||||||||||
assets at | |||||||||||||||||||||||||||||
December 31, | |||||||||||||||||||||||||||||
($ in millions) | 2014 | 2013 | 2012 | 2014 | 2013 | ||||||||||||||||||||||||
Europe | 13,674 | 14,385 | 14,073 | 3,460 | 3,798 | ||||||||||||||||||||||||
The Americas | 11,482 | 12,115 | 10,699 | 1,215 | 1,450 | ||||||||||||||||||||||||
Asia | 10,874 | 11,230 | 10,750 | 789 | 850 | ||||||||||||||||||||||||
Middle East and Africa | 3,800 | 4,118 | 3,814 | 188 | 156 | ||||||||||||||||||||||||
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39,830 | 41,848 | 39,336 | 5,652 | 6,254 | |||||||||||||||||||||||||
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Revenues by geography reflect the location of the customer. Approximately 19 percent, 18 percent and 17 percent of the Company's total revenues in 2014, 2013 and 2012, respectively, came from customers in the United States. Approximately 13 percent, 12 percent and 12 percent of the Company's total revenues in 2014, 2013 and 2012, respectively, were generated from customers in China. In 2014, 2013 and 2012, more than 98 percent of the Company's total revenues were generated from customers outside Switzerland. | |||||||||||||||||||||||||||||
Long-lived assets represent "Property, plant and equipment, net" and are shown by location of the assets. At December 31, 2014, approximately 16 percent, 16 percent and 15 percent were located in Switzerland, the U.S. and Sweden, respectively. At December 31, 2013, approximately 17 percent, 17 percent and 15 percent of the Company's long-lived assets were located in Switzerland, the U.S. and Sweden, respectively. | |||||||||||||||||||||||||||||
The Company does not segregate revenues derived from transactions with external customers for each type or group of products and services. Accordingly, it is not practicable for the Company to present revenues from external customers by product and service type. | |||||||||||||||||||||||||||||
Significant_accounting_policie1
Significant accounting policies (Policies) | 12 Months Ended | ||
Dec. 31, 2014 | |||
Significant accounting policies | |||
Basis of presentation | |||
Basis of presentation | |||
The Consolidated Financial Statements are prepared in accordance with United States of America (United States or U.S.) generally accepted accounting principles (U.S. GAAP) and are presented in United States dollars ($ or USD) unless otherwise stated. The par value of capital stock is denominated in Swiss francs. | |||
Scope of consolidation | |||
Scope of consolidation | |||
The Consolidated Financial Statements include the accounts of ABB Ltd and companies which are directly or indirectly controlled by ABB Ltd. Additionally, the Company consolidates variable interest entities if it has determined that it is the primary beneficiary. Intercompany accounts and transactions are eliminated. Investments in joint ventures and affiliated companies in which the Company has the ability to exercise significant influence over operating and financial policies (generally through direct or indirect ownership of 20 percent to 50 percent of the voting rights), are recorded in the Consolidated Financial Statements using the equity method of accounting. | |||
Operating cycle | |||
Operating cycle | |||
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. | |||
Use of estimates | |||
Use of estimates | |||
The preparation of financial statements in conformity with U.S. GAAP requires management to make assumptions and estimates that directly affect the amounts reported in the Consolidated Financial Statements and the accompanying Notes. The most significant, difficult and subjective of such accounting assumptions and estimates include: | |||
• | assumptions and projections, principally related to future material, labor and project-related overhead costs, used in determining the percentage-of-completion on projects, | ||
• | estimates of loss contingencies associated with litigation or threatened litigation and other claims and inquiries, environmental damages, product warranties, regulatory and other proceedings, | ||
• | assumptions used in the calculation of pension and postretirement benefits and the fair value of pension plan assets, | ||
• | recognition and measurement of current and deferred income tax assets and liabilities (including the measurement of uncertain tax positions), | ||
• | growth rates, discount rates and other assumptions used in testing goodwill for impairment, | ||
• | assumptions used in determining inventory obsolescence and net realizable value, | ||
• | estimates and assumptions used in determining the fair values of assets and liabilities assumed in business combinations, | ||
• | growth rates, discount rates and other assumptions used to determine impairment of long-lived assets, and | ||
• | assessment of the allowance for doubtful accounts. | ||
The actual results and outcomes may differ from the Company's estimates and assumptions. | |||
Cash and equivalents | |||
Cash and equivalents | |||
Cash and equivalents include highly liquid investments with maturities of three months or less at the date of acquisition. | |||
Currency and other local regulatory limitations related to the transfer of funds exist in a number of countries where the Company operates. Funds, other than regular dividends, fees or loan repayments, cannot be readily transferred abroad from these countries and are therefore deposited and used for working capital needs locally. These funds are included in cash and equivalents as they are not considered restricted. | |||
Marketable securities and short-term investments | |||
Marketable securities and short-term investments | |||
Management determines the appropriate classification of held-to-maturity and available-for-sale securities at the time of purchase. At each reporting date, the appropriateness of the classification of the Company's investments in debt and equity securities is reassessed. Debt securities are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are stated at amortized cost, adjusted for accretion of discounts or amortization of premiums to maturity computed under the effective interest method. Such accretion or amortization is included in "Interest and dividend income". Marketable debt securities not classified as held-to-maturity and equity securities that have readily determinable fair values are classified as available-for-sale and reported at fair value. | |||
Unrealized gains and losses on available-for-sale securities are excluded from the determination of earnings and are instead recognized in the "Accumulated other comprehensive loss" component of stockholders' equity, net of tax, until realized. Realized gains and losses on available-for-sale securities are computed based upon the historical cost of these securities, using the specific identification method. | |||
Marketable debt securities are generally classified as either "Cash and equivalents" or "Marketable securities and short-term investments" according to their maturity at the time of acquisition. | |||
Marketable equity securities are generally classified as "Marketable securities and short-term investments", however any marketable securities held as a long-term investment rather than as an investment of excess liquidity, are classified as "Other non-current assets". | |||
The Company performs a periodic review of its debt and equity securities to determine whether an other-than-temporary impairment has occurred. Generally, when an individual security has been in an unrealized loss position for an extended period of time, the Company evaluates whether an impairment has occurred. The evaluation is based on specific facts and circumstances at the time of assessment, which include general market conditions, and the duration and extent to which the fair value is below cost. | |||
If the fair value of a debt security is less than its amortized cost, then an other-than-temporary impairment for the difference is recognized if (i) the Company has the intent to sell the security, (ii) it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost base or (iii) a credit loss exists insofar as the Company does not expect to recover the entire recognized amortized cost of the security. Such impairment charges are generally recognized in "Interest and other finance expense". If the impairment is due to factors other than credit losses, and the Company does not intend to sell the security and it is not more likely than not that it will be required to sell the security before recovery of the security's amortized cost, such impairment charges are recorded in "Accumulated other comprehensive loss". | |||
In addition, for equity securities, the Company assesses whether the cost value will recover within the near-term and whether the Company has the intent and ability to hold that equity security until such recovery occurs. If an other-than-temporary impairment is identified, the security is written down to its fair value and the related losses are recognized in "Interest and other finance expense", unless the impairment relates to equity securities classified as "Other non-current assets", in which case the impairment is reported in "Other income (expense), net". | |||
Accounts receivable and allowance for doubtful accounts | |||
Accounts receivable and allowance for doubtful accounts | |||
Accounts receivable are recorded at the invoiced amount. The Company has a group-wide policy on the management of credit risk. The policy includes a credit assessment methodology to assess the creditworthiness of customers and assign to those customers a risk category. Third-party agencies' ratings are considered, if available. For customers where agency ratings are not available, the customer's most recent financial statements, payment history and other relevant information are considered in the assignment to a risk category. Customers are assessed at least annually or more frequently when information on significant changes in the customers' financial position becomes known. In addition to the assignment to a risk category, a credit limit per customer is set. | |||
The allowance for doubtful accounts is the Company's best estimate of the amount of probable credit losses in existing accounts receivable. The Company determines the allowance based on historical write-off experience and customer specific data. If an amount has not been settled within its contractual payment term then it is considered past due. The Company reviews the allowance for doubtful accounts regularly and past due balances are reviewed for collectability. Account balances are charged off against the related allowance when the Company believes that the amount will not be recovered. | |||
The Company, in its normal course of business, transfers receivables to third parties, generally without recourse. The transfer is accounted for as a sale when the Company has surrendered control over the receivables. Control is deemed to have been surrendered when (i) the transferred receivables have been put presumptively beyond the reach of the Company and its creditors, even in bankruptcy or other receivership, (ii) the third-party transferees have the right to pledge or exchange the transferred receivables, and (iii) the Company has relinquished effective control over the transferred receivables and does not retain the ability or obligation to repurchase or redeem the transferred receivables. At the time of sale, the sold receivables are removed from the Consolidated Balance Sheets and the related cash inflows are classified as operating activities in the Consolidated Statements of Cash Flows. Costs associated with the sale of receivables, including the related gains and losses from the sales, are included in "Interest and other finance expense". Transfers of receivables that do not meet the requirements for treatment as sales are accounted for as secured borrowings and the related cash flows are classified as financing activities in the Consolidated Statements of Cash Flows. | |||
Concentrations of credit risk | |||
Concentrations of credit risk | |||
The Company sells a broad range of products, systems and services to a wide range of industrial, commercial and utility customers as well as various government agencies and quasi-governmental agencies throughout the world. Concentrations of credit risk with respect to accounts receivable are limited, as the Company's customer base is comprised of a large number of individual customers. Ongoing credit evaluations of customers' financial positions are performed to determine whether the use of credit support instruments such as guarantees, letters of credit or credit insurance are necessary; collateral is not generally required. The Company maintains reserves for potential credit losses as discussed above in "Accounts receivable and allowance for doubtful accounts". Such losses, in the aggregate, are in line with the Company's expectations. | |||
It is the Company's policy to invest cash in deposits with banks throughout the world with certain minimum credit ratings and in high quality, low risk, liquid investments. The Company actively manages its credit risk by routinely reviewing the creditworthiness of the banks and the investments held. The Company has not incurred significant credit losses related to such investments. | |||
The Company's exposure to credit risk on derivative financial instruments is the risk that the counterparty will fail to meet its obligations. To reduce this risk, the Company has credit policies that require the establishment and periodic review of credit limits for individual counterparties. In addition, the Company has entered into close-out netting agreements with most derivative counterparties. 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. In the Consolidated Financial Statements derivative transactions are presented on a gross basis. | |||
Revenue recognition | |||
Revenue recognition | |||
The Company generally recognizes revenues for the sale of goods when persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable and collectability is reasonably assured. With regards to the sale of products, delivery is not considered to have occurred, and therefore no revenues are recognized, until the customer has taken title to the products and assumed the risks and rewards of ownership of the products specified in the purchase order or sales agreement. Generally, the transfer of title and risks and rewards of ownership are governed by the contractually-defined shipping terms. The Company uses various International Commercial shipping terms (as promulgated by the International Chamber of Commerce) in its sales of products to third-party customers, such as Ex Works (EXW), Free Carrier (FCA) and Delivered Duty Paid (DDP). Subsequent to delivery of the products, the Company generally has no further contractual performance obligations that would preclude revenue recognition. | |||
Revenues under long-term construction-type contracts are generally recognized using the percentage-of-completion method of accounting. The Company principally uses the cost-to-cost method to measure progress towards completion on contracts. Under this method, progress of contracts is measured by actual costs incurred in relation to the Company's best estimate of total estimated costs, which are reviewed and updated routinely for contracts in progress. The cumulative effect of any change in estimate is recorded in the period when the change in estimate is determined. | |||
Short-term construction-type contracts, or long-term construction-type contracts for which reasonably dependable estimates cannot be made or for which inherent hazards make estimates difficult, are accounted for under the completed-contract method. Revenues under the completed-contract method are recognized upon substantial completion—that is: acceptance by the customer, compliance with performance specifications demonstrated in a factory acceptance test or similar event. | |||
For non construction-type contracts that contain customer acceptance provisions, revenue is deferred until customer acceptance occurs or the Company has demonstrated the customer-specified objective criteria have been met or the contractual acceptance period has lapsed. | |||
Revenues from service transactions are recognized as services are performed. For long-term service contracts, revenues are recognized on a straight-line basis over the term of the contract or, if the performance pattern is other than straight-line, as the services are provided. Service revenues reflect revenues earned from the Company's activities in providing services to customers primarily subsequent to the sale and delivery of a product or complete system. Such revenues consist of maintenance-type contracts, field service activities that include personnel and accompanying spare parts, and installation and commissioning of products as a stand-alone service or as part of a service contract. | |||
Revenues for software license fees are recognized when persuasive evidence of a non-cancelable license agreement exists, delivery has occurred, the license fee is fixed or determinable, and collection is probable. In software arrangements that include rights to multiple software products and/or services, the total arrangement fee is allocated using the residual method. Under this method, revenue is allocated to the undelivered elements based on vendor-specific objective evidence (VSOE) of the fair value of such undelivered elements and the residual amounts of revenue are allocated to the delivered elements. Elements included in multiple element arrangements may consist of software licences, maintenance (which includes customer support services and unspecified upgrades), hosting, and consulting services. VSOE is based on the price generally charged when an element is sold separately or, in the case of an element not yet sold separately, the price established by management, if it is probable that the price, once established, will not change once the element is sold separately. If VSOE does not exist for an undelivered element, the total arrangement fee will be recognized as revenue over the life of the contract or upon delivery of the undelivered element. | |||
The Company offers multiple element arrangements to meet its customers' needs. These arrangements may involve the delivery of multiple products and/or performance of services (such as installation and training) and the delivery and/or performance may occur at different points in time or over different periods of time. Deliverables of such multiple element arrangements are evaluated to determine the unit of accounting and if certain criteria are met, the Company allocates revenues to each unit of accounting based on its relative selling price. A hierarchy of selling prices is used to determine the selling price of each specific deliverable that includes VSOE (if available), third-party evidence (if VSOE is not available), or estimated selling price if neither of the first two is available. The estimated selling price reflects the Company's best estimate of what the selling prices of elements would be if the elements were sold on a stand-alone basis. Revenue is allocated between the elements of an arrangement at the inception of the arrangement. Such arrangements generally include industry-specific performance and termination provisions, such as in the event of substantial delays or non-delivery. | |||
Revenues are reported net of customer rebates and similar incentives. Taxes assessed by a governmental authority that are directly imposed on revenue-producing transactions between the Company and its customers, such as sales, use, value-added and some excise taxes, are excluded from revenues. | |||
Contract loss provisions | |||
Contract loss provisions | |||
Losses on contracts are recognized in the period when they are identified and are based upon the anticipated excess of contract costs over the related contract revenues. | |||
Shipping and handling costs | |||
Shipping and handling costs | |||
Shipping and handling costs are recorded as a component of cost of sales. | |||
Inventories | |||
Inventories | |||
Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out method, the weighted-average cost method, or in certain circumstances (for example, where the completed-contract method of revenue recognition is used) the specific identification method. Inventoried costs are stated at acquisition cost or actual production cost, including direct material and labor and applicable manufacturing overheads. Adjustments to reduce the cost of inventory to its net market value are made, if required, for decreases in sales prices, obsolescence or similar reductions in the estimated net realizable value. | |||
Impairment of long-lived assets | |||
Impairment of long-lived assets | |||
Long-lived assets that are held and used are assessed for impairment when events or circumstances indicate that the carrying amount of the asset may not be recoverable. If the asset's net carrying value exceeds the asset's net undiscounted cash flows expected to be generated over its remaining useful life including net proceeds expected from disposition of the asset, if any, the carrying amount of the asset is reduced to its estimated fair value. The estimated fair value is determined using a market, income and/or cost approach. | |||
Property, plant and equipment | |||
Property, plant and equipment | |||
Property, plant and equipment is stated at cost, less accumulated depreciation and is depreciated using the straight-line method. The estimated useful lives of the assets are generally as follows: | |||
• | factories and office buildings: 30 to 40 years, | ||
• | other facilities: 15 years, | ||
• | machinery and equipment: 3 to 15 years, | ||
• | furniture and office equipment: 3 to 8 years, | ||
• | leasehold improvements are depreciated over their estimated useful life or, for operating leases, over the lease term, if shorter. | ||
Goodwill and other intangible assets | |||
Goodwill and other intangible assets | |||
Goodwill is reviewed for impairment annually as of October 1, or more frequently if events or circumstances indicate that the carrying value may not be recoverable. | |||
Goodwill is evaluated for impairment at the reporting unit level. A reporting unit is an operating segment or one level below an operating segment. For the annual impairment review in 2014, the reporting units were the same as the operating segments for Discrete Automation and Motion, Low Voltage Products, Power Products and Power Systems, while for the Process Automation operating segment, the reporting units were determined to be one level below the operating segment. | |||
When evaluating goodwill for impairment, the Company uses either a qualitative or quantitative assessment method for each reporting unit. The qualitative assessment involves determining, based on an evaluation of qualitative factors, if it is more likely than not that the fair value of a reporting unit is less than its carrying value. If, based on this qualitative assessment, it is determined to be more likely than not that the reporting unit's fair value is less than its carrying value, the two-step quantitative impairment test (described below) is performed, otherwise no further analysis is required. If the Company elects not to perform the qualitative assessment for a reporting unit, the two-step quantitative impairment test is performed. | |||
The two-step quantitative impairment test calculates the fair value of a reporting unit (based on the income approach whereby the fair value of a reporting unit is calculated based on the present value of future cash flows) and compares it to the reporting unit's carrying value. If the carrying value of the net assets of a reporting unit exceeds the fair value of the reporting unit then the Company performs the second step of the impairment test to determine the implied fair value of the reporting unit's goodwill. If the carrying value of the reporting unit's goodwill exceeds its implied fair value, the Company records an impairment charge equal to the difference. | |||
The cost of acquired intangible assets with a finite life is amortized using a method of amortization that reflects the pattern of intangible assets' expected contributions to future cash flows. If that pattern cannot be reliably determined, the straight-line method is used. The amortization periods range from 3 to 5 years for software and from 5 to 20 years for customer-, technology- and marketing-related intangibles. Intangible assets with a finite life are tested for impairment upon the occurrence of certain triggering events. | |||
Capitalized software costs | |||
Capitalized software costs | |||
Software for internal use | |||
Costs incurred in the application development stage until the software is substantially complete are capitalized and are amortized on a straight-line basis over the estimated useful life of the software, typically ranging from 3 to 5 years. | |||
Software for sale | |||
Costs incurred after the software has demonstrated its technological feasibility until the product is available for general release to the customers are capitalized and amortized on a straight-line basis over the estimated life of the product. The Company periodically performs an evaluation to determine that the unamortized cost of software to be sold does not exceed the net realizable value. If the unamortized cost of software to be sold exceeds its net realizable value, the Company records an impairment charge equal to the difference. | |||
Derivative financial instruments and hedging activities | |||
Derivative financial instruments and hedging activities | |||
The Company uses derivative financial instruments to manage currency, commodity, interest rate and equity exposures, arising from its global operating, financing and investing activities (see Note 5). | |||
The Company recognizes all derivatives, other than certain derivatives indexed to the Company's own stock, at fair value in the Consolidated Balance Sheets. Derivatives that are not designated as hedging instruments are reported at fair value with derivative gains and losses reported through earnings and classified consistent with the nature of the underlying transaction. | |||
If the derivatives are designated as a hedge, depending on the nature of the hedge, changes in the fair value of the derivatives will either be offset against the change in fair value of the hedged item attributable to the risk being hedged through earnings (in the case of a fair value hedge) or recognized in "Accumulated other comprehensive loss" until the hedged item is recognized in earnings (in the case of a cash flow hedge). The ineffective portion of a derivative's change in fair value is immediately recognized in earnings consistent with the classification of the hedged item. Where derivative financial instruments have been designated as cash flow hedges of forecasted transactions and such forecasted transactions are no longer probable of occurring, hedge accounting is discontinued and any derivative gain or loss previously included in "Accumulated other comprehensive loss" is reclassified into earnings consistent with the nature of the original forecasted transaction. Gains or losses from derivatives designated as hedging instruments in a fair value hedge are reported through earnings and classified consistent with the nature of the underlying hedged transaction. | |||
Certain commercial contracts may grant rights to the Company or the counterparties, or contain other provisions that are considered to be derivatives. Such embedded derivatives are assessed at inception of the contract and depending on their characteristics, accounted for as separate derivative instruments and shown at their fair value in the balance sheet with changes in their fair value reported in earnings consistent with the nature of the commercial contract to which they relate. | |||
Derivatives are classified in the Consolidated Statements of Cash Flows in the same section as the underlying item. Cash flows from the settlement of undesignated derivatives used to manage the risks of different underlying items on a net basis, are classified within "Net cash provided by operating activities", as the underlying items are primarily operational in nature. Other cash flows on the settlement of derivatives are recorded within "Net cash used in investing activities". | |||
Leases | |||
Leases | |||
The Company leases primarily real estate and office equipment. Rental expense for operating leases is recorded on a straight-line basis over the life of the lease term. Lease transactions where substantially all risks and rewards incident to ownership are transferred from the lessor to the lessee are accounted for as capital leases. All other leases are accounted for as operating leases. Amounts due under capital leases are recorded as a liability. The interest in assets acquired under capital leases is recorded as property, plant and equipment. Depreciation and amortization of assets recorded under capital leases is included in depreciation and amortization expense. | |||
Translation of foreign currencies and foreign exchange transactions | |||
Translation of foreign currencies and foreign exchange transactions | |||
The functional currency for most of the Company's subsidiaries is the applicable local currency. The translation from the applicable functional currencies into the Company's reporting currency is performed for balance sheet accounts using exchange rates in effect at the balance sheet date and for income statement accounts using average exchange rates prevailing during the year. The resulting translation adjustments are excluded from the determination of earnings and are recognized in "Accumulated other comprehensive loss" until the subsidiary is sold, substantially liquidated or evaluated for impairment in anticipation of disposal. | |||
Foreign currency exchange gains and losses, such as those resulting from foreign currency denominated receivables or payables, are included in the determination of earnings, except as they relate to intercompany loans that are equity-like in nature with no reasonable expectation of repayment, which are recognized in "Accumulated other comprehensive loss". Exchange gains and losses recognized in earnings are included in "Total revenues", "Total cost of sales", "Selling, general and administrative expenses" or "Interest and other finance expense" consistent with the nature of the underlying item. | |||
Income taxes | |||
Income taxes | |||
The Company uses the asset and liability method to account for deferred taxes. Under this method, deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and the tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. The Company records a deferred tax asset when it determines that it is more likely than not that the deduction will be sustained based upon the deduction's technical merit. Deferred tax assets and liabilities that can be offset against each other are reported on a net basis. A valuation allowance is recorded to reduce deferred tax assets to the amount that is more likely than not to be realized. | |||
Deferred taxes are provided on unredeemed retained earnings of the Company's subsidiaries. However, deferred taxes are not provided on such unredeemed retained earnings to the extent it is expected that the earnings are permanently reinvested. Such earnings may become taxable upon the sale or liquidation of these subsidiaries or upon the remittance of dividends. | |||
The Company operates in numerous tax jurisdictions and, as a result, is regularly subject to audit by tax authorities. The Company provides for tax contingencies whenever it is deemed more likely than not that a tax asset has been impaired or a tax liability has been incurred for events such as tax claims or changes in tax laws. Contingency provisions are recorded based on the technical merits of the Company's filing position, considering the applicable tax laws and Organisation for Economic Co-operation and Development (OECD) guidelines and are based on its evaluations of the facts and circumstances as of the end of each reporting period. | |||
The Company applies a two-step approach to recognize and measure uncertainty in income taxes. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50 percent likely of being realized upon ultimate settlement. Uncertain tax positions that could be settled against existing loss carryforwards or income tax credits are reported net. | |||
The expense related to tax penalties is classified in the Consolidated Income Statements as "Provision for taxes", while interest thereon is classified as "Interest and other finance expense". | |||
Research and development | |||
Research and development | |||
Research and development costs not related to specific customer orders are generally expensed as incurred. | |||
Earnings per share | |||
Earnings per share | |||
Basic earnings per share is calculated by dividing income by the weighted-average number of shares outstanding during the year. Diluted earnings per share is calculated by dividing income by the weighted-average number of shares outstanding during the year, assuming that all potentially dilutive securities were exercised, if dilutive. Potentially dilutive securities comprise: outstanding written call options, outstanding options and shares granted subject to certain conditions under the Company's share-based payment arrangements. See further discussion related to earnings per share in Note 20 and of potentially dilutive securities in Note 18. | |||
Share-based payment arrangements | |||
Share-based payment arrangements | |||
The Company has various share-based payment arrangements for its employees, which are described more fully in Note 18. Such arrangements are accounted for under the fair value method. For awards that are equity-settled, total compensation is measured at grant date, based on the fair value of the award at that date, and recorded in earnings over the period the employees are required to render service. For awards that are cash-settled, compensation is initially measured at grant date and subsequently remeasured at each reporting period, based on the fair value and vesting percentage of the award at each of those dates, with changes in the liability recorded in earnings. | |||
Fair value measures | |||
Fair value measures | |||
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 exchange-traded equity securities, listed derivatives which are actively traded such as commodity futures, interest rate futures and 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, as well as financing receivables and debt. | ||
Level 3: | Valuation inputs are based on the Company's assumptions of relevant market data (unobservable input). The impairments of certain equity-method investments were calculated using Level 3 inputs. | ||
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 (MIP), bid prices are used. | |||
When determining fair values based on quoted prices in an active market, the Company considers if the level of transaction activity for the financial instrument has significantly decreased, or would not be considered orderly. In such cases, the resulting changes in valuation techniques would be disclosed. If the market is considered disorderly or if quoted prices are not available, the Company is required to use another valuation technique, such as an income approach. | |||
Disclosures about the Company's fair value measurements of assets and liabilities are included in Note 6. | |||
Contingencies | |||
Contingencies | |||
The Company is subject to proceedings, litigation or threatened litigation and other claims and inquiries, related to environmental, labor, product, regulatory, tax (other than income tax) and other matters, and is required to assess the likelihood of any adverse judgments or outcomes to these matters, as well as potential ranges of probable losses. A determination of the provision required, if any, for these contingencies is made after analysis of each individual issue, often with assistance from both internal and external legal counsel and technical experts. The required amount of a provision for a contingency of any type may change in the future due to new developments in the particular matter, including changes in the approach to its resolution. | |||
The Company records a provision for its contingent obligations when it is probable that a loss will be incurred and the amount can be reasonably estimated. Any such provision is generally recognized on an undiscounted basis using the Company's best estimate of the amount of loss incurred or at the lower end of an estimated range when a single best estimate is not determinable. In some cases, the Company may be able to recover a portion of the costs relating to these obligations from insurers or other third parties; however, the Company records such amounts only when it is probable that they will be collected. | |||
The Company provides for anticipated costs for warranties when it recognizes revenues on the related products or contracts. Warranty costs include calculated costs arising from imperfections in design, material and workmanship in the Company's products. The Company makes individual assessments on contracts with risks resulting from order-specific conditions or guarantees and assessments on an overall, statistical basis for similar products sold in larger quantities. | |||
The Company may have legal obligations to perform environmental clean-up activities related to land and buildings as a result of the normal operations of its business. In some cases, the timing or the method of settlement, or both, are conditional upon a future event that may or may not be within the control of the Company, but the underlying obligation itself is unconditional and certain. The Company recognizes a provision for these obligations when it is probable that a liability for the clean-up activity has been incurred and a reasonable estimate of its fair value can be made. In some cases, a portion of the costs expected to be incurred to settle these matters may be recoverable. An asset is recorded when it is probable that such amounts are recoverable. Provisions for environmental obligations are not discounted to their present value when the timing of payments cannot be reasonably estimated. | |||
Pensions and other postretirement benefits | |||
Pensions and other postretirement benefits | |||
The Company has a number of defined benefit pension and other postretirement plans. The Company recognizes an asset for such a plan's overfunded status or a liability for such a plan's underfunded status in its Consolidated Balance Sheets. Additionally, the Company measures such a plan's assets and obligations that determine its funded status as of the end of the year and recognizes the changes in the funded status in the year in which the changes occur. Those changes are reported in "Accumulated other comprehensive loss". | |||
The Company uses actuarial valuations to determine its pension and postretirement benefit costs and credits. The amounts calculated depend on a variety of key assumptions, including discount rates and expected return on plan assets. Current market conditions are considered in selecting these assumptions. | |||
The Company's various pension plan assets are assigned to their respective levels in the fair value hierarchy in accordance with the valuation principles described in the "Fair value measures" section above. | |||
See Note 17 for further discussion of the Company's employee benefit plans. | |||
Business combinations | |||
Business combinations | |||
The Company accounts for assets acquired and liabilities assumed in business combinations using the acquisition method and records these at their respective fair values. Contingent consideration is recorded at fair value as an element of purchase price with subsequent adjustments recognized in income. | |||
Identifiable intangibles consist of intellectual property such as trademarks and trade names, customer relationships, patented and unpatented technology, in-process research and development, order backlog and capitalized software; these are amortized over their estimated useful lives. Such intangibles are subsequently subject to evaluation for potential impairment if events or circumstances indicate the carrying amount may not be recoverable. See "Goodwill and other intangible assets" above. Acquisition-related costs are recognized separately from the acquisition and expensed as incurred. Upon gaining control of an entity in which an equity method or cost basis investment was held by the Company, the carrying value of that investment is adjusted to fair value with the related gain or loss recorded in income. | |||
Deferred tax assets and liabilities based on temporary differences between the financial reporting and the tax base of assets and liabilities as well as uncertain tax positions and valuation allowances on acquired deferred tax assets assumed in connection with a business combination are initially estimated as of the acquisition date based on facts and circumstances that existed at the acquisition date. These estimates are subject to change within the measurement period (a period of up to 12 months after the acquisition date during which the acquirer may adjust the provisional acquisition amounts) with any adjustments to the preliminary estimates being recorded to goodwill. Changes in deferred taxes, uncertain tax positions and valuation allowances on acquired deferred tax assets that occur after the measurement period are recognized in income. | |||
New accounting pronouncements | |||
New accounting pronouncements | |||
Applicable in current period | |||
Parent's accounting for the cumulative translation adjustment upon derecognition of certain subsidiaries or groups of assets within a foreign entity or of an investment in a foreign entity | |||
As of January 2014, the Company adopted an accounting standard update regarding the release of cumulative translation adjustments of a parent when it ceases to have a controlling financial interest in a subsidiary or group of assets that is a business within a foreign entity (for the Company, a foreign entity is an entity having a functional currency other than U.S. dollars). Under the update, the Company is required to release into net income the entire amount of a cumulative translation adjustment related to its investment in a foreign entity when a parent no longer has control as a result of selling a part or all of its investment in the foreign entity or otherwise no longer holds a controlling financial interest in a subsidiary or group of assets within the foreign entity. For foreign equity-accounted companies, a pro rata portion of the cumulative translation adjustment is required to be recognized in net income upon a partial sale of the equity-accounted company. This update did not have a material impact on the consolidated financial statements. | |||
Presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists | |||
As of January 2014, the Company adopted an accounting standard update regarding the presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. Under the update, the Company is required to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except in certain defined circumstances. This update did not have a material impact on the consolidated financial statements. | |||
Reporting discontinued operations and disclosures of disposals of components of an entity | |||
In April 2014, an accounting standard update was issued which changes the criteria for reporting discontinued operations and modifies the related disclosure requirements. Under the update, the Company would report a disposal, or planned disposal, of a component or group of components, as a discontinued operation if the disposal represents a strategic shift that has (or will have) a major effect on the Company's operations and financial results. A strategic shift could include a disposal of a major geographical area, a major line of business, a major equity-method investment, or other major parts of the Company. A component may be a reportable segment or an operating segment, a reporting unit, a subsidiary, or an asset group. In addition to expanding the existing disclosures for discontinued operations, the update requires new disclosures relating to (i) individually significant disposals that do not qualify for discontinued operations presentation, (ii) continuing involvement with a discontinued operation following the date of disposal and (iii) retained equity-method investments in a discontinued operation. The Company elected to early adopt this update in the first quarter of 2014 and this update did not have a material impact on the consolidated financial statements. | |||
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. | |||
The update is effective for the Company for annual and interim periods beginning January 1, 2017, 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). The Company is currently evaluating the impact of this update on the consolidated financial statements. | |||
Acquisitions_and_business_dive1
Acquisitions and business divestments (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Acquisitions | |||||||||||
Acquisitions | |||||||||||
($ in millions, except number of acquired businesses) | 2014 | 2013 | 2012 | ||||||||
Acquisitions (net of cash acquired)(1) | 58 | 897 | 3,643 | ||||||||
Aggregate excess of purchase price over fair value of net assets acquired(2) | 9 | 525 | 2,895 | ||||||||
Number of acquired businesses | 6 | 7 | 9 | ||||||||
-1 | Excluding changes in cost- and equity-accounted companies but including $2 million in 2013 and $5 million in 2012, representing the fair value of replacement vested stock options issued to Power-One and Thomas & Betts employees, respectively, at the corresponding acquisition dates. | ||||||||||
-2 | Recorded as goodwill (see Note 11). Includes adjustments of $42 million in 2014 and $63 million in 2013 arising during the measurement period of acquisitions, primarily reflecting a reduction in certain deferred tax liabilities related to Power-One and Thomas & Betts, respectively. | ||||||||||
Business acquisitions in 2013 | |||||||||||
Acquisitions | |||||||||||
Allocation of the purchase consideration for business acquisition | |||||||||||
($ in millions) | Allocated amounts(1) | Weighted-average | |||||||||
useful life | |||||||||||
Intangible assets | 208 | 7 years | |||||||||
Fixed assets | 124 | ||||||||||
Deferred tax liabilities | (74 | ) | |||||||||
Other assets and liabilities, net | 93 | ||||||||||
Goodwill(2) | 546 | ||||||||||
| | | | | | ||||||
Total consideration (net of cash acquired) | 897 | ||||||||||
| | | | | | ||||||
| | | | | | ||||||
-1 | Excludes measurement period adjustments related to prior year acquisitions. | ||||||||||
-2 | Goodwill recognized is not deductible for income tax purposes. | ||||||||||
Thomas & Betts | |||||||||||
Acquisitions | |||||||||||
Allocation of the purchase consideration for business acquisition | The final allocation of the purchase consideration for the Thomas & Betts acquisition in 2012 was as follows: | ||||||||||
($ in millions) | Allocated amounts | Weighted- | |||||||||
average useful life | |||||||||||
Customer relationships | 1,169 | 18 years | |||||||||
Technology | 179 | 5 years | |||||||||
Trade names | 155 | 10 years | |||||||||
Order backlog | 12 | 7.5 months | |||||||||
| | | | | | ||||||
Intangible assets | 1,515 | 15 years | |||||||||
Fixed assets | 458 | ||||||||||
Debt acquired | (619 | ) | |||||||||
Deferred tax liabilities | (971 | ) | |||||||||
Inventories | 300 | ||||||||||
Other assets and liabilities, net(1) | 49 | ||||||||||
Goodwill(2) | 2,649 | ||||||||||
| | | | | | ||||||
Total consideration (net of cash acquired)(3) | 3,381 | ||||||||||
| | | | | | ||||||
| | | | | | ||||||
-1 | Gross receivables from the acquisition totaled $387 million; the fair value of which was $344 million after rebates and allowance for estimated uncollectable receivables. | ||||||||||
-2 | Goodwill recognized is not deductible for income tax purposes. | ||||||||||
-3 | Cash acquired in the acquisition totaled $521 million. Additional consideration for the acquisition included $94 million related to the cash settlement of stock options held by Thomas & Betts employees at the acquisition date and $5 million representing the fair value of replacement vested stock options issued to Thomas & Betts employees at the acquisition date. The fair value of these stock options was estimated using a Black-Scholes model. | ||||||||||
Unaudited pro forma financial information | |||||||||||
($ in millions) | 2012 | ||||||||||
Total revenues | 40,251 | ||||||||||
Income from continuing operations, net of tax | 2,924 | ||||||||||
Adjustments included in pro forma results of related acquisition | |||||||||||
Adjustments | |||||||||||
($ in millions) | 2012 | ||||||||||
Impact on cost of sales from additional amortization of intangible assets (excluding order backlog capitalized upon acquisition) | (26 | ) | |||||||||
Impact on cost of sales from amortization of order backlog capitalized upon acquisition | 11 | ||||||||||
Impact on cost of sales from fair valuing acquired inventory | 31 | ||||||||||
Impact on cost of sales from additional depreciation of fixed assets | (12 | ) | |||||||||
Interest expense on Thomas & Betts debt | 5 | ||||||||||
Impact on selling, general and administrative expenses from Thomas & Betts stock-option plans adjustments | 16 | ||||||||||
Impact on selling, general and administrative expenses from acquisition-related costs | 56 | ||||||||||
Impact on interest and other finance expense from bridging facility costs | 13 | ||||||||||
Other | (5 | ) | |||||||||
Income taxes | (7 | ) | |||||||||
| | | | | |||||||
Total pro forma adjustments | 82 | ||||||||||
| | | | | |||||||
| | | | | |||||||
Business acquisitions in 2012, excluding Thomas & Betts | |||||||||||
Acquisitions | |||||||||||
Allocation of the purchase consideration for business acquisition | The aggregate allocation of the purchase consideration for other business acquisitions in 2012, excluding Thomas & Betts, was as follows: | ||||||||||
($ in millions) | Allocated | ||||||||||
amounts | |||||||||||
Intangible assets | 68 | ||||||||||
Fixed assets | 25 | ||||||||||
Deferred tax liabilities | (24 | ) | |||||||||
Other assets and liabilities, net | 21 | ||||||||||
Goodwill | 172 | ||||||||||
| | | | | |||||||
Total consideration (net of cash acquired) | 262 | ||||||||||
| | | | | |||||||
| | | | | |||||||
Cash_and_equivalents_marketabl1
Cash and equivalents, marketable securities and short-term investments | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Cash and equivalents, marketable securities and short-term investments | ||||||||||||||||||||
Cash, cash equivalents, and short-term investments | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
($ in millions) | Cost basis | Gross | Gross | Fair value | Cash and | Marketable | ||||||||||||||
unrealized | unrealized | equivalents | securities | |||||||||||||||||
gains | losses | and | ||||||||||||||||||
short-term | ||||||||||||||||||||
investments | ||||||||||||||||||||
Cash | 2,218 | 2,218 | 2,218 | |||||||||||||||||
Time deposits | 3,340 | 3,340 | 3,140 | 200 | ||||||||||||||||
Other short-term investments | 225 | 225 | 225 | |||||||||||||||||
Debt securities available-for-sale: | ||||||||||||||||||||
—U.S. government obligations | 135 | 2 | (1 | ) | 136 | — | 136 | |||||||||||||
—Other government obligations | 2 | — | — | 2 | — | 2 | ||||||||||||||
—Corporate | 734 | 4 | (1 | ) | 737 | 85 | 652 | |||||||||||||
Equity securities available-for-sale | 98 | 12 | — | 110 | — | 110 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total | 6,752 | 18 | (2 | ) | 6,768 | 5,443 | 1,325 | |||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
December 31, 2013 | ||||||||||||||||||||
($ in millions) | Cost basis | Gross | Gross | Fair value | Cash and | Marketable | ||||||||||||||
unrealized | unrealized | equivalents | securities | |||||||||||||||||
gains | losses | and | ||||||||||||||||||
short-term | ||||||||||||||||||||
investments | ||||||||||||||||||||
Cash | 2,414 | 2,414 | 2,414 | |||||||||||||||||
Time deposits | 3,556 | 3,556 | 3,538 | 18 | ||||||||||||||||
Other short-term investments | 9 | 9 | 9 | |||||||||||||||||
Debt securities available-for-sale: | ||||||||||||||||||||
—U.S. government obligations | 103 | 2 | (1 | ) | 104 | — | 104 | |||||||||||||
—European government obligations | 24 | 1 | — | 25 | — | 25 | ||||||||||||||
—Other government obligations | 3 | — | — | 3 | — | 3 | ||||||||||||||
—Corporate | 212 | 4 | (1 | ) | 215 | 69 | 146 | |||||||||||||
Equity securities available-for-sale | 154 | 9 | (4 | ) | 159 | — | 159 | |||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total | 6,475 | 16 | (6 | ) | 6,485 | 6,021 | 464 | |||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Contractual maturities of debt securities classified as available-for-sale and held-to-maturity | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
Available-for-sale | Held-to-maturity | |||||||||||||||||||
($ in millions) | Cost basis | Fair value | Cost basis | Fair value | ||||||||||||||||
Less than one year | 637 | 637 | — | — | ||||||||||||||||
One to five years | 178 | 181 | 75 | 85 | ||||||||||||||||
Six to ten years | 56 | 57 | 20 | 24 | ||||||||||||||||
| | | | | | | | | | | | | | |||||||
Total | 871 | 875 | 95 | 109 | ||||||||||||||||
| | | | | | | | | | | | | | |||||||
| | | | | | | | | | | | | | |||||||
Derivative_financial_instrumen1
Derivative financial instruments (Tables) | 12 Months Ended | ||||||||||||||
Dec. 31, 2014 | |||||||||||||||
Financial instruments | |||||||||||||||
Notional amount of outstanding derivatives | |||||||||||||||
Total notional amounts at | |||||||||||||||
December 31, | |||||||||||||||
Type of derivative | 2014 | 2013 | 2012 | ||||||||||||
($ in millions) | |||||||||||||||
Foreign exchange contracts | 18,564 | 19,351 | 19,724 | ||||||||||||
Embedded foreign exchange derivatives | 3,013 | 3,049 | 3,572 | ||||||||||||
Interest rate contracts | 2,242 | 4,693 | 3,983 | ||||||||||||
Total notional amounts at | |||||||||||||||
December 31, | |||||||||||||||
Type of derivative | Unit | 2014 | 2013 | 2012 | |||||||||||
Copper swaps | metric tonnes | 46,520 | 42,866 | 45,222 | |||||||||||
Aluminum swaps | metric tonnes | 3,846 | 3,525 | 5,495 | |||||||||||
Nickel swaps | metric tonnes | — | 18 | 21 | |||||||||||
Lead swaps | metric tonnes | 6,550 | 7,100 | 13,025 | |||||||||||
Zinc swaps | metric tonnes | 200 | 300 | 225 | |||||||||||
Silver swaps | ounces | 1,996,845 | 1,936,581 | 1,415,322 | |||||||||||
Electricity futures | megawatt hours | — | 279,995 | 334,445 | |||||||||||
Crude oil swaps | barrels | 128,000 | 113,000 | 135,471 | |||||||||||
Gain (loss) on cash flow hedges | |||||||||||||||
2014 | |||||||||||||||
Gains (losses) | |||||||||||||||
recognized in | |||||||||||||||
OCI on | |||||||||||||||
derivatives | Gains (losses) reclassified from | Gains (losses) recognized in income | |||||||||||||
(effective | OCI into income (effective portion) | (ineffective portion and amount | |||||||||||||
Type of derivative designated | portion) | excluded from effectiveness testing) | |||||||||||||
as a cash flow hedge | ($ in millions) | ($ in millions) | |||||||||||||
($ in millions) | Location | Location | |||||||||||||
Foreign exchange contracts | (42 | ) | Total revenues | (9 | ) | Total revenues | — | ||||||||
Total cost of sales | 8 | Total cost of sales | — | ||||||||||||
Commodity contracts | (7 | ) | Total cost of sales | (3 | ) | Total cost of sales | — | ||||||||
Cash-settled call options | (16 | ) | SG&A expenses(1) | (6 | ) | SG&A expenses(1) | — | ||||||||
| | | | | | | | | | | | | | | |
Total | (65 | ) | (10 | ) | — | ||||||||||
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
2013 | |||||||||||||||
Gains (losses) | |||||||||||||||
recognized in | |||||||||||||||
OCI on | |||||||||||||||
derivatives | Gains (losses) reclassified from | Gains (losses) recognized in income | |||||||||||||
(effective | OCI into income (effective portion) | (ineffective portion and amount | |||||||||||||
Type of derivative designated | portion) | excluded from effectiveness testing) | |||||||||||||
as a cash flow hedge | ($ in millions) | ($ in millions) | |||||||||||||
($ in millions) | Location | Location | |||||||||||||
Foreign exchange contracts | 22 | Total revenues | 52 | Total revenues | — | ||||||||||
Total cost of sales | (1 | ) | Total cost of sales | — | |||||||||||
Commodity contracts | (5 | ) | Total cost of sales | (5 | ) | Total cost of sales | — | ||||||||
Cash-settled call options | 16 | SG&A expenses(1) | 8 | SG&A expenses(1) | — | ||||||||||
| | | | | | | | | | | | | | | |
Total | 33 | 54 | — | ||||||||||||
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
2012 | |||||||||||||||
Gains (losses) | |||||||||||||||
recognized in | |||||||||||||||
OCI on | |||||||||||||||
derivatives | Gains (losses) reclassified from | Gains (losses) recognized in income | |||||||||||||
(effective | OCI into income (effective portion) | (ineffective portion and amount | |||||||||||||
Type of derivative designated | portion) | excluded from effectiveness testing) | |||||||||||||
as a cash flow hedge | ($ in millions) | ($ in millions) | |||||||||||||
($ in millions) | Location | Location | |||||||||||||
Foreign exchange contracts | 74 | Total revenues | 69 | Total revenues | — | ||||||||||
Total cost of sales | (12 | ) | Total cost of sales | — | |||||||||||
Commodity contracts | 4 | Total cost of sales | (4 | ) | Total cost of sales | — | |||||||||
Cash-settled call options | (4 | ) | SG&A expenses(1) | (11 | ) | SG&A expenses(1) | — | ||||||||
| | | | | | | | | | | | | | | |
Total | 74 | 42 | — | ||||||||||||
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
-1 | SG&A expenses represent "Selling, general and administrative expenses". | ||||||||||||||
Gain (loss) on fair value hedges | |||||||||||||||
2014 | |||||||||||||||
Gains (losses) recognized in income on derivatives | Gains (losses) recognized in income on hedged item | ||||||||||||||
Type of derivative | designated as fair value hedges | ||||||||||||||
designated as a fair | |||||||||||||||
value hedge | ($ in millions) | ($ in millions) | |||||||||||||
Location | Location | ||||||||||||||
Interest rate contracts | Interest and other finance expense | 84 | Interest and other finance expense | (83 | ) | ||||||||||
| | | | | | | | | | | | ||||
| | | | | | | | | | | | ||||
2013 | |||||||||||||||
Gains (losses) recognized in income on derivatives | Gains (losses) recognized in income on hedged item | ||||||||||||||
Type of derivative | designated as fair value hedges | ||||||||||||||
designated as a fair | |||||||||||||||
value hedge | ($ in millions) | ($ in millions) | |||||||||||||
Location | Location | ||||||||||||||
Interest rate contracts | Interest and other finance expense | (34 | ) | Interest and other finance expense | 35 | ||||||||||
| | | | | | | | | | | | ||||
| | | | | | | | | | | | ||||
2012 | |||||||||||||||
Gains (losses) recognized in income on derivatives | Gains (losses) recognized in income on hedged item | ||||||||||||||
Type of derivative | designated as fair value hedges | ||||||||||||||
designated as a fair | |||||||||||||||
value hedge | ($ in millions) | ($ in millions) | |||||||||||||
Location | Location | ||||||||||||||
Interest rate contracts | Interest and other finance expense | 6 | Interest and other finance expense | (6 | ) | ||||||||||
| | | | | | | | | | | | ||||
| | | | | | | | | | | | ||||
Gain (loss) on derivatives not designated in hedge relationships | |||||||||||||||
Gains (losses) recognized in income | |||||||||||||||
($ in millions) | Location | 2014 | 2013 | 2012 | |||||||||||
Type of derivative not designated as a hedge | |||||||||||||||
Foreign exchange contracts | Total revenues | (533 | ) | (95 | ) | 318 | |||||||||
Total cost of sales | 19 | 80 | (193 | ) | |||||||||||
SG&A expenses(1) | 2 | (1 | ) | (3 | ) | ||||||||||
Interest and other finance expense | (260 | ) | 223 | 68 | |||||||||||
Embedded foreign exchange contracts | Total revenues | 149 | 101 | (148 | ) | ||||||||||
Total cost of sales | (27 | ) | (10 | ) | 28 | ||||||||||
Commodity contracts | Total cost of sales | (28 | ) | (50 | ) | 10 | |||||||||
Interest and other finance expense | 1 | 1 | 1 | ||||||||||||
Interest rate contracts | Interest and other finance expense | (1 | ) | (3 | ) | (1 | ) | ||||||||
Cash-settled call options | Interest and other finance expense | (1 | ) | — | — | ||||||||||
| | | | | | | | | | | | | |||
Total | (679 | ) | 246 | 80 | |||||||||||
| | | | | | | | | | | | | |||
| | | | | | | | | | | | | |||
-1 | SG&A expenses represent "Selling, general and administrative expenses". | ||||||||||||||
Fair value of derivatives | |||||||||||||||
December 31, 2014 | |||||||||||||||
Derivative assets | Derivative liabilities | ||||||||||||||
($ in millions) | Current in | Non-current | Current in | Non-current | |||||||||||
"Other current | in "Other | "Other current | in "Other | ||||||||||||
assets" | non-current | liabilities" | non-current | ||||||||||||
assets" | liabilities" | ||||||||||||||
Derivatives designated as hedging instruments: | |||||||||||||||
Foreign exchange contracts | 9 | 9 | 20 | 16 | |||||||||||
Commodity contracts | — | — | 3 | — | |||||||||||
Interest rate contracts | — | 85 | — | — | |||||||||||
Cash-settled call options | 21 | 11 | — | — | |||||||||||
| | | | | | | | | | | | | | ||
Total | 30 | 105 | 23 | 16 | |||||||||||
| | | | | | | | | | | | | | ||
Derivatives not designated as hedging instruments: | |||||||||||||||
Foreign exchange contracts | 156 | 25 | 369 | 72 | |||||||||||
Commodity contracts | 4 | — | 19 | 3 | |||||||||||
Cash-settled call options | 1 | 1 | — | — | |||||||||||
Embedded foreign exchange derivatives | 98 | 58 | 27 | 17 | |||||||||||
| | | | | | | | | | | | | | ||
Total | 259 | 84 | 415 | 92 | |||||||||||
| | | | | | | | | | | | | | ||
Total fair value | 289 | 189 | 438 | 108 | |||||||||||
| | | | | | | | | | | | | | ||
| | | | | | | | | | | | | | ||
Thereof, subject to close-out netting agreements | 164 | 119 | 399 | 90 | |||||||||||
| | | | | | | | | | | | | | ||
| | | | | | | | | | | | | | ||
December 31, 2013 | |||||||||||||||
Derivative assets | Derivative liabilities | ||||||||||||||
($ in millions) | Current in | Non-current | Current in | Non-current | |||||||||||
"Other current | in "Other | "Other current | in "Other | ||||||||||||
assets" | non-current | liabilities" | non-current | ||||||||||||
assets" | liabilities" | ||||||||||||||
Derivatives designated as hedging instruments: | |||||||||||||||
Foreign exchange contracts | 21 | 8 | 10 | 3 | |||||||||||
Commodity contracts | 2 | — | 1 | — | |||||||||||
Interest rate contracts | — | 14 | — | 7 | |||||||||||
Cash-settled call options | 14 | 40 | — | — | |||||||||||
| | | | | | | | | | | | | | ||
Total | 37 | 62 | 11 | 10 | |||||||||||
| | | | | | | | | | | | | | ||
Derivatives not designated as hedging instruments: | |||||||||||||||
Foreign exchange contracts | 272 | 42 | 121 | 30 | |||||||||||
Commodity contracts | 6 | 1 | 15 | 1 | |||||||||||
Cash-settled call options | — | 2 | — | — | |||||||||||
Embedded foreign exchange derivatives | 57 | 21 | 55 | 11 | |||||||||||
| | | | | | | | | | | | | | ||
Total | 335 | 66 | 191 | 42 | |||||||||||
| | | | | | | | | | | | | | ||
Total fair value | 372 | 128 | 202 | 52 | |||||||||||
| | | | | | | | | | | | | | ||
| | | | | | | | | | | | | | ||
Thereof, subject to close-out netting agreements | 284 | 63 | 130 | 40 | |||||||||||
| | | | | | | | | | | | | | ||
| | | | | | | | | | | | | | ||
Fair_values_Tables
Fair values (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Fair values | |||||||||||||||||
Fair value of financial assets and liabilities measured at fair value on a recurring basis | |||||||||||||||||
December 31, 2014 | |||||||||||||||||
($ in millions) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
fair value | |||||||||||||||||
Assets | |||||||||||||||||
Available-for-sale securities in "Cash and equivalents": | |||||||||||||||||
Debt securities—Corporate | — | 85 | — | 85 | |||||||||||||
Available-for-sale securities in "Marketable securities and short-term investments": | |||||||||||||||||
Equity securities | — | 110 | — | 110 | |||||||||||||
Debt securities—U.S. government obligations | 136 | — | — | 136 | |||||||||||||
Debt securities—Other government obligations | — | 2 | — | 2 | |||||||||||||
Debt securities—Corporate | — | 652 | — | 652 | |||||||||||||
Derivative assets—current in "Other current assets" | — | 289 | — | 289 | |||||||||||||
Derivative assets—non-current in "Other non-current assets" | — | 189 | — | 189 | |||||||||||||
| | | | | | | | | | | | | | ||||
Total | 136 | 1,327 | — | 1,463 | |||||||||||||
| | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | ||||
Liabilities | |||||||||||||||||
Derivative liabilities—current in "Other current liabilities" | — | 438 | — | 438 | |||||||||||||
Derivative liabilities—non-current in "Other non-current liabilities" | — | 108 | — | 108 | |||||||||||||
| | | | | | | | | | | | | | ||||
Total | — | 546 | — | 546 | |||||||||||||
| | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | ||||
December 31, 2013 | |||||||||||||||||
($ in millions) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
fair value | |||||||||||||||||
Assets | |||||||||||||||||
Available-for-sale securities in "Cash and equivalents": | |||||||||||||||||
Debt securities—Corporate | — | 69 | — | 69 | |||||||||||||
Available-for-sale securities in "Marketable securities and short-term investments": | |||||||||||||||||
Equity securities | — | 159 | — | 159 | |||||||||||||
Debt securities—U.S. government obligations | 104 | — | — | 104 | |||||||||||||
Debt securities—European government obligations | 25 | — | — | 25 | |||||||||||||
Debt securities—Other government obligations | — | 3 | — | 3 | |||||||||||||
Debt securities—Corporate | — | 146 | — | 146 | |||||||||||||
Derivative assets—current in "Other current assets" | — | 372 | — | 372 | |||||||||||||
Derivative assets—non-current in "Other non-current assets" | — | 128 | — | 128 | |||||||||||||
| | | | | | | | | | | | | | ||||
Total | 129 | 877 | — | 1,006 | |||||||||||||
| | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | ||||
Liabilities | |||||||||||||||||
Derivative liabilities—current in "Other current liabilities" | 3 | 199 | — | 202 | |||||||||||||
Derivative liabilities—non-current in "Other non-current liabilities" | — | 52 | — | 52 | |||||||||||||
| | | | | | | | | | | | | | ||||
Total | 3 | 251 | — | 254 | |||||||||||||
| | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | ||||
Schedule of fair values of financial instruments carried on a cost basis | |||||||||||||||||
December 31, 2014 | |||||||||||||||||
($ in millions) | Carrying | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
value | fair value | ||||||||||||||||
Assets | |||||||||||||||||
Cash and equivalents (excluding available-for-sale securities with original maturities up to 3 months): | |||||||||||||||||
Cash | 2,218 | 2,218 | — | — | 2,218 | ||||||||||||
Time deposits | 3,140 | — | 3,140 | — | 3,140 | ||||||||||||
Marketable securities and short-term investments (excluding available-for-sale securities): | |||||||||||||||||
Time deposits | 200 | — | 200 | — | 200 | ||||||||||||
Receivables under reverse repurchase agreements | 219 | — | 219 | — | 219 | ||||||||||||
Other short-term investments | 6 | 6 | — | — | 6 | ||||||||||||
Other non-current assets: | |||||||||||||||||
Loans granted | 41 | — | 44 | — | 44 | ||||||||||||
Held-to-maturity securities | 95 | — | 109 | — | 109 | ||||||||||||
Restricted cash and cash deposits | 198 | 64 | 161 | — | 225 | ||||||||||||
Liabilities | |||||||||||||||||
Short-term debt and current maturities of long-term debt (excluding capital lease obligations) | 324 | 115 | 209 | — | 324 | ||||||||||||
Long-term debt (excluding capital lease obligations) | 7,224 | 6,148 | 1,404 | — | 7,552 | ||||||||||||
Non-current deposit liabilities in "Other non-current liabilities" | 222 | — | 267 | — | 267 | ||||||||||||
December 31, 2013 | |||||||||||||||||
($ in millions) | Carrying | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
value | fair value | ||||||||||||||||
Assets | |||||||||||||||||
Cash and equivalents (excluding available-for-sale securities with original maturities up to 3 months): | |||||||||||||||||
Cash | 2,414 | 2,414 | — | — | 2,414 | ||||||||||||
Time deposits | 3,538 | — | 3,538 | — | 3,538 | ||||||||||||
Marketable securities and short-term investments (excluding available-for-sale securities): | |||||||||||||||||
Time deposits | 18 | — | 18 | — | 18 | ||||||||||||
Other short-term investments | 9 | 9 | — | — | 9 | ||||||||||||
Other non-current assets: | |||||||||||||||||
Loans granted | 54 | — | 52 | — | 52 | ||||||||||||
Held-to-maturity securities | 104 | — | 121 | — | 121 | ||||||||||||
Restricted cash and cash deposits | 276 | 95 | 219 | — | 314 | ||||||||||||
Liabilities | |||||||||||||||||
Short-term debt and current maturities of long-term debt (excluding capital lease obligations) | 424 | 107 | 317 | — | 424 | ||||||||||||
Long-term debt (excluding capital lease obligations) | 7,475 | 6,241 | 1,333 | — | 7,574 | ||||||||||||
Non-current deposit liabilities in "Other non-current liabilities" | 279 | — | 338 | — | 338 | ||||||||||||
Receivables_net_Tables
Receivables, net (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Receivables, net | |||||||||||
Receivables, net | |||||||||||
December 31, | |||||||||||
($ in millions) | 2014 | 2013 | |||||||||
Trade receivables | 7,715 | 8,360 | |||||||||
Other receivables | 701 | 802 | |||||||||
Allowance | (279 | ) | (317 | ) | |||||||
| | | | | | | | ||||
8,137 | 8,845 | ||||||||||
Unbilled receivables, net: | |||||||||||
Costs and estimated profits in excess of billings | 4,087 | 4,552 | |||||||||
Advance payments consumed | (1,146 | ) | (1,251 | ) | |||||||
| | | | | | | | ||||
2,941 | 3,301 | ||||||||||
| | | | | | | | ||||
Total | 11,078 | 12,146 | |||||||||
| | | | | | | | ||||
| | | | | | | | ||||
Reconciliation of changes in allowance for doubtful accounts | |||||||||||
($ in millions) | 2014 | 2013 | 2012 | ||||||||
Balance at January 1, | 317 | 271 | 227 | ||||||||
Additions | 103 | 147 | 155 | ||||||||
Deductions | (118 | ) | (92 | ) | (113 | ) | |||||
Exchange rate differences | (23 | ) | (9 | ) | 2 | ||||||
| | | | | | | | | | | |
Balance at December 31, | 279 | 317 | 271 | ||||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Inventories_net_Tables
Inventories, net (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Inventories, net | ||||||||
Inventories, net | ||||||||
December 31, | ||||||||
($ in millions) | 2014 | 2013 | ||||||
Raw materials | 2,105 | 2,403 | ||||||
Work in process | 1,761 | 1,893 | ||||||
Finished goods | 1,572 | 1,834 | ||||||
Advances to suppliers | 253 | 246 | ||||||
| | | | | | | | |
5,691 | 6,376 | |||||||
Advance payments consumed | (315 | ) | (372 | ) | ||||
| | | | | | | | |
Total | 5,376 | 6,004 | ||||||
| | | | | | | | |
| | | | | | | | |
Other_noncurrent_assets_Tables
Other non-current assets (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Other non-current assets | ||||||||
Other non-current assets | ||||||||
December 31, | ||||||||
($ in millions) | 2014 | 2013 | ||||||
Pledged financial assets | 229 | 285 | ||||||
Derivatives (including embedded derivatives) (see Note 5) | 189 | 128 | ||||||
Investments | 65 | 72 | ||||||
Restricted cash | 64 | 95 | ||||||
Loans granted (see Note 6) | 41 | 54 | ||||||
Other | 139 | 124 | ||||||
| | | | | | | | |
Total | 727 | 758 | ||||||
| | | | | | | | |
| | | | | | | | |
Property_plant_and_equipment_n1
Property, plant and equipment, net (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Property, plant and equipment, net. | ||||||||
Property, plant and equipment, net | ||||||||
December 31, | ||||||||
($ in millions) | 2014 | 2013 | ||||||
Land and buildings | 4,142 | 4,478 | ||||||
Machinery and equipment | 7,762 | 8,258 | ||||||
Construction in progress | 653 | 645 | ||||||
| | | | | | | | |
12,557 | 13,381 | |||||||
Accumulated depreciation | (6,905 | ) | (7,127 | ) | ||||
| | | | | | | | |
Total | 5,652 | 6,254 | ||||||
| | | | | | | | |
| | | | | | | | |
Schedule of assets under capital leases included in property, plant and equipment, net | ||||||||
December 31, | ||||||||
($ in millions) | 2014 | 2013 | ||||||
Land and buildings | 192 | 112 | ||||||
Machinery and equipment | 88 | 98 | ||||||
| | | | | | | | |
280 | 210 | |||||||
Accumulated depreciation | (163 | ) | (115 | ) | ||||
| | | | | | | | |
Total | 117 | 95 | ||||||
| | | | | | | | |
| | | | | | | | |
Goodwill_and_other_intangible_1
Goodwill and other intangible assets (Tables) | 12 Months Ended | ||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||
Goodwill and other intangible assets | |||||||||||||||||||||||
Changes in Goodwill | |||||||||||||||||||||||
($ in millions) | Discrete | Low | Process | Power | Power | Corporate | Total | ||||||||||||||||
Automation | Voltage | Automation | Products | Systems | and Other | ||||||||||||||||||
and Motion | Products | ||||||||||||||||||||||
Cost at January 1, 2013 | 3,420 | 3,147 | 1,140 | 734 | 1,762 | 41 | 10,244 | ||||||||||||||||
Accumulated impairment charges | — | — | — | — | — | (18 | ) | (18 | ) | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
Balance at January 1, 2013 | 3,420 | 3,147 | 1,140 | 734 | 1,762 | 23 | 10,226 | ||||||||||||||||
Goodwill acquired during the year(1) | 485 | (45 | ) | 85 | — | — | — | 525 | |||||||||||||||
Goodwill allocated to disposals | (9 | ) | — | (2 | ) | — | — | — | (11 | ) | |||||||||||||
Exchange rate differences | 18 | (43 | ) | 6 | 2 | (53 | ) | — | (70 | ) | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
Balance at December 31, 2013 | 3,914 | 3,059 | 1,229 | 736 | 1,709 | 23 | 10,670 | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
Goodwill acquired during the year(1) | (52 | ) | 1 | 24 | 9 | — | 27 | 9 | |||||||||||||||
Goodwill allocated to disposals | — | (181 | ) | (19 | ) | — | (7 | ) | (27 | ) | (234 | ) | |||||||||||
Exchange rate differences and other | (92 | ) | (172 | ) | (60 | ) | (25 | ) | (42 | ) | (1 | ) | (392 | ) | |||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
Balance at December 31, 2014 | 3,770 | 2,707 | 1,174 | 720 | 1,660 | 22 | 10,053 | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
-1 | Amounts include adjustments arising during the twelve-month measurement period subsequent to the respective acquisition date. | ||||||||||||||||||||||
Intangible assets other than goodwill | |||||||||||||||||||||||
December 31, | |||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||
($ in millions) | Gross | Accumulated | Net | Gross | Accumulated | Net | |||||||||||||||||
carrying | amortization | carrying | carrying | amortization | carrying | ||||||||||||||||||
amount | amount | amount | amount | ||||||||||||||||||||
Capitalized software for internal use | 719 | (599 | ) | 120 | 767 | (618 | ) | 149 | |||||||||||||||
Capitalized software for sale | 405 | (354 | ) | 51 | 432 | (384 | ) | 48 | |||||||||||||||
Intangibles other than software: | |||||||||||||||||||||||
Customer-related | 2,618 | (623 | ) | 1,995 | 2,773 | (481 | ) | 2,292 | |||||||||||||||
Technology-related | 607 | (304 | ) | 303 | 867 | (374 | ) | 493 | |||||||||||||||
Marketing-related | 314 | (120 | ) | 194 | 400 | (99 | ) | 301 | |||||||||||||||
Other | 72 | (33 | ) | 39 | 63 | (49 | ) | 14 | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | ||||
Total | 4,735 | (2,033 | ) | 2,702 | 5,302 | (2,005 | ) | 3,297 | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | | | | | | | ||||
Schedule of additions to intangible assets other than goodwill | |||||||||||||||||||||||
($ in millions) | 2014 | 2013 | |||||||||||||||||||||
Capitalized software for internal use | 52 | 66 | |||||||||||||||||||||
Capitalized software for sale | 28 | 26 | |||||||||||||||||||||
Intangibles other than software: | |||||||||||||||||||||||
Customer-related | — | 82 | |||||||||||||||||||||
Technology-related | — | 110 | |||||||||||||||||||||
Marketing-related | — | 16 | |||||||||||||||||||||
Other | 16 | — | |||||||||||||||||||||
| | | | | | | | ||||||||||||||||
Total | 96 | 300 | |||||||||||||||||||||
| | | | | | | | ||||||||||||||||
| | | | | | | | ||||||||||||||||
Schedule of additions to intangible assets other than goodwill related to business combinations | |||||||||||||||||||||||
2013 | |||||||||||||||||||||||
($ in millions) | Amount acquired | Weighted-average | |||||||||||||||||||||
useful life | |||||||||||||||||||||||
Customer-related(1) | 82 | 11 years | |||||||||||||||||||||
Technology-related | 108 | 4 years | |||||||||||||||||||||
Marketing-related | 16 | 10 years | |||||||||||||||||||||
| | | | | | ||||||||||||||||||
Total | 206 | 7 years | |||||||||||||||||||||
| | | | | | ||||||||||||||||||
| | | | | | ||||||||||||||||||
-1 | Includes the fair value of order backlog acquired in business combinations. | ||||||||||||||||||||||
Amortization expense of intangible assets other than goodwill | |||||||||||||||||||||||
($ in millions) | 2014 | 2013 | 2012 | ||||||||||||||||||||
Capitalized software for internal use | 72 | 81 | 79 | ||||||||||||||||||||
Capitalized software for sale | 20 | 34 | 38 | ||||||||||||||||||||
Intangibles other than software | 362 | 361 | 332 | ||||||||||||||||||||
| | | | | | | | | | | |||||||||||||
Total | 454 | 476 | 449 | ||||||||||||||||||||
| | | | | | | | | | | |||||||||||||
| | | | | | | | | | | |||||||||||||
Future amortization expense of intangible assets other than goodwill | At December 31, 2014, future amortization expense of intangible assets other than goodwill is estimated to be: | ||||||||||||||||||||||
($ in millions) | |||||||||||||||||||||||
2015 | 404 | ||||||||||||||||||||||
2016 | 362 | ||||||||||||||||||||||
2017 | 275 | ||||||||||||||||||||||
2018 | 191 | ||||||||||||||||||||||
2019 | 165 | ||||||||||||||||||||||
Thereafter | 1,305 | ||||||||||||||||||||||
| | | | | |||||||||||||||||||
Total | 2,702 | ||||||||||||||||||||||
| | | | | |||||||||||||||||||
| | | | | |||||||||||||||||||
Debt_Tables
Debt (Tables) | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Debt | ||||||||||||||||||||
Schedule of short-term debt | ||||||||||||||||||||
December 31, | ||||||||||||||||||||
($ in millions) | 2014 | 2013 | ||||||||||||||||||
Short-term debt (weighted-average interest rate of 5.8% and 6.9%, respectively) | 299 | 423 | ||||||||||||||||||
Current maturities of long-term debt (weighted-average nominal interest rate of 5.9% and 3.6%, respectively) | 54 | 30 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Total | 353 | 453 | ||||||||||||||||||
| | | | | | | | |||||||||||||
| | | | | | | | |||||||||||||
Schedule of long-term debt | ||||||||||||||||||||
December 31, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
($ in millions, except % data) | Balance | Nominal | Effective | Balance | Nominal | Effective | ||||||||||||||
rate | rate | rate | rate | |||||||||||||||||
Floating rate | 2,318 | 2.7 | % | 1.1 | % | 2,211 | 2.7 | % | 1.2 | % | ||||||||||
Fixed rate | 5,074 | 3.2 | % | 3.2 | % | 5,389 | 3.1 | % | 3.1 | % | ||||||||||
| | | | | | | | | | | | | | | | | | | | |
7,392 | 7,600 | |||||||||||||||||||
Current portion of long-term debt | (54 | ) | 5.9 | % | 5.9 | % | (30 | ) | 3.6 | % | 3.6 | % | ||||||||
| | | | | | | | | | | | | | | | | | | | |
Total | 7,338 | 7,570 | ||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Schedule of principal amounts of long-term debt repayable at maturity | At December 31, 2014, the principal amounts of long-term debt repayable (excluding capital lease obligations) at maturity were as follows: | |||||||||||||||||||
($ in millions) | ||||||||||||||||||||
2015 | 25 | |||||||||||||||||||
2016 | 1,140 | |||||||||||||||||||
2017 | 869 | |||||||||||||||||||
2018 | 354 | |||||||||||||||||||
2019 | 1,523 | |||||||||||||||||||
Thereafter | 3,273 | |||||||||||||||||||
| | | | | ||||||||||||||||
Total | 7,184 | |||||||||||||||||||
| | | | | ||||||||||||||||
| | | | | ||||||||||||||||
Schedule of outstanding bonds | ||||||||||||||||||||
December 31, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Nominal | Carrying | Nominal | Carrying | |||||||||||||||||
outstanding | value(1) | outstanding | value(1) | |||||||||||||||||
(in millions) | (in millions) | |||||||||||||||||||
Bonds: | ||||||||||||||||||||
2.5% USD Notes, due 2016 | USD | 600 | $ | 599 | USD | 600 | $ | 598 | ||||||||||||
1.25% CHF Bonds, due 2016 | CHF | 500 | $ | 512 | CHF | 500 | $ | 568 | ||||||||||||
1.625% USD Notes, due 2017 | USD | 500 | $ | 498 | USD | 500 | $ | 498 | ||||||||||||
4.25% AUD Notes, due 2017 | AUD | 400 | $ | 335 | AUD | 400 | $ | 353 | ||||||||||||
1.50% CHF Bonds, due 2018 | CHF | 350 | $ | 354 | CHF | 350 | $ | 393 | ||||||||||||
2.625% EUR Instruments, due 2019 | EUR | 1,250 | $ | 1,518 | EUR | 1,250 | $ | 1,722 | ||||||||||||
4.0% USD Notes, due 2021 | USD | 650 | $ | 643 | USD | 650 | $ | 642 | ||||||||||||
2.25% CHF Bonds, due 2021 | CHF | 350 | $ | 381 | CHF | 350 | $ | 396 | ||||||||||||
5.625% USD Notes, due 2021 | USD | 250 | $ | 283 | USD | 250 | $ | 287 | ||||||||||||
2.875% USD Notes, due 2022 | USD | 1,250 | $ | 1,275 | USD | 1,250 | $ | 1,230 | ||||||||||||
4.375% USD Notes, due 2042 | USD | 750 | $ | 728 | USD | 750 | $ | 727 | ||||||||||||
| | | | | | | | | | | | | | | | | | |||
Total | $ | 7,126 | $ | 7,414 | ||||||||||||||||
| | | | | | | | | | | | | | | | | | |||
| | | | | | | | | | | | | | | | | | |||
-1 | USD carrying values include bond discounts or premiums, as well as adjustments for fair value hedge accounting, where appropriate. | |||||||||||||||||||
Other_provisions_other_current1
Other provisions, other current liabilities and other non-current liabilities (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Other provisions, other current liabilities and other non-current liabilities | ||||||||
Schedule of Other provisions | ||||||||
December 31, | ||||||||
($ in millions) | 2014 | 2013 | ||||||
Contract-related provisions | 749 | 762 | ||||||
Provision for insurance-related reserves | 239 | 232 | ||||||
Provisions for contractual penalties and compliance and litigation matters | 237 | 327 | ||||||
Restructuring and restructuring-related provisions | 225 | 247 | ||||||
Other | 239 | 239 | ||||||
| | | | | | | | |
Total | 1,689 | 1,807 | ||||||
| | | | | | | | |
| | | | | | | | |
Schedule of Other current liabilities | ||||||||
December 31, | ||||||||
($ in millions) | 2014 | 2013 | ||||||
Employee-related liabilities | 1,746 | 1,854 | ||||||
Accrued expenses | 545 | 694 | ||||||
Derivative liabilities (see Note 5) | 438 | 202 | ||||||
Non-trade payables | 312 | 328 | ||||||
Income taxes payable | 293 | 357 | ||||||
Other tax liabilities | 271 | 269 | ||||||
Deferred income | 169 | 155 | ||||||
Accrued customer rebates | 165 | 162 | ||||||
Accrued interest | 76 | 79 | ||||||
Pension and other employee benefits (see Note 17) | 75 | 82 | ||||||
Other | 167 | 60 | ||||||
| | | | | | | | |
Total | 4,257 | 4,242 | ||||||
| | | | | | | | |
| | | | | | | | |
Other non-current liabilities | ||||||||
December 31, | ||||||||
($ in millions) | 2014 | 2013 | ||||||
Income tax related liabilities | 760 | 830 | ||||||
Non-current deposit liabilities (see Note 9) | 222 | 279 | ||||||
Environmental provisions (see Note 15) | 109 | 116 | ||||||
Derivative liabilities (see Note 5) | 108 | 52 | ||||||
Deferred income | 89 | 57 | ||||||
Employee-related liabilities | 52 | 68 | ||||||
Provisions for contractual penalties and compliance and litigation matters | 41 | 71 | ||||||
Other | 205 | 234 | ||||||
| | | | | | | | |
Total | 1,586 | 1,707 | ||||||
| | | | | | | | |
| | | | | | | | |
Leases_Tables
Leases (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Leases | |||||
Future net minimum lease payments for operating leases | At December 31, 2014, future net minimum lease payments for operating leases, having initial or remaining non-cancelable lease terms in excess of one year, consisted of the following: | ||||
($ in millions) | |||||
2015 | 432 | ||||
2016 | 361 | ||||
2017 | 300 | ||||
2018 | 210 | ||||
2019 | 170 | ||||
Thereafter | 230 | ||||
| | | | | |
1,703 | |||||
Sublease income | (27 | ) | |||
| | | | | |
Total | 1,676 | ||||
| | | | | |
| | | | | |
Future net minimum lease payments for capital leases and the present value of the net minimum lease payments | At December 31, 2014, the future net minimum lease payments for capital leases and the present value of the net minimum lease payments consisted of the following: | ||||
($ in millions) | |||||
2015 | 41 | ||||
2016 | 35 | ||||
2017 | 24 | ||||
2018 | 19 | ||||
2019 | 16 | ||||
Thereafter | 99 | ||||
| | | | | |
Total minimum lease payments | 234 | ||||
Less amount representing estimated executory costs included in total minimum lease payments | (2 | ) | |||
| | | | | |
Net minimum lease payments | 232 | ||||
Less amount representing interest | (88 | ) | |||
| | | | | |
Present value of minimum lease payments | 144 | ||||
| | | | | |
| | | | | |
Commitments_and_contingencies_
Commitments and contingencies (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Commitments and contingencies | ||||||||
Schedule of environmental obligations included in other current provisions and other noncurrent provisions | ||||||||
December 31, | ||||||||
($ in millions) | 2014 | 2013 | ||||||
Other provisions | 37 | 37 | ||||||
Other non-current liabilities | 109 | 116 | ||||||
| | | | | | | | |
Total | 146 | 153 | ||||||
| | | | | | | | |
| | | | | | | | |
Best estimate of future payments for guarantee obligations | ||||||||
December 31, | ||||||||
2014 | 2013 | |||||||
($ in millions) | Maximum potential | |||||||
payments | ||||||||
Performance guarantees | 232 | 149 | ||||||
Financial guarantees | 72 | 77 | ||||||
Indemnification guarantees | 50 | 50 | ||||||
| | | | | | | | |
Total | 354 | 276 | ||||||
| | | | | | | | |
| | | | | | | | |
Provisions for warranties | ||||||||
($ in millions) | 2014 | 2013 | ||||||
Balance at January 1, | 1,362 | 1,291 | ||||||
Net change in warranties due to acquisitions and divestments | 11 | 111 | ||||||
Claims paid in cash or in kind | (319 | ) | (294 | ) | ||||
Net increase in provision for changes in estimates, warranties issued and warranties expired | 224 | 245 | ||||||
Exchange rate differences | (130 | ) | 9 | |||||
| | | | | | | | |
Balance at December 31, | 1,148 | 1,362 | ||||||
| | | | | | | | |
| | | | | | | | |
Taxes_Tables
Taxes (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Taxes | |||||||||||
Schedule of income tax expense | |||||||||||
($ in millions) | 2014 | 2013 | 2012 | ||||||||
Current taxes | 1,130 | 1,258 | 967 | ||||||||
Deferred taxes | 72 | (136 | ) | 63 | |||||||
| | | | | | | | | | | |
Tax expense from continuing operations | 1,202 | 1,122 | 1,030 | ||||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Tax expense (benefit) from discontinued operations | 1 | (8 | ) | — | |||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Effective tax rate for the year | |||||||||||
($ in millions, except % data) | 2014 | 2013 | 2012 | ||||||||
Income from continuing operations before taxes | 3,896 | 4,066 | 3,838 | ||||||||
Weighted-average global tax rate | 23.8 | % | 22.7 | % | 23.6 | % | |||||
Income taxes at weighted-average tax rate | 929 | 922 | 906 | ||||||||
Items taxed at rates other than the weighted-average tax rate | 146 | 110 | 60 | ||||||||
Impact of non-deductible goodwill allocated to divested businesses | 77 | — | — | ||||||||
Changes in valuation allowance, net | 52 | 31 | 44 | ||||||||
Effects of changes in tax laws and enacted tax rates | (52 | ) | 1 | (27 | ) | ||||||
Other, net | 50 | 58 | 47 | ||||||||
| | | | | | | | | | | |
Tax expense from continuing operations | 1,202 | 1,122 | 1,030 | ||||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Effective tax rate for the year | 30.9 | % | 27.6 | % | 26.8 | % | |||||
Components of deferred income tax assets and liabilities | |||||||||||
December 31, | |||||||||||
($ in millions) | 2014 | 2013 | |||||||||
Deferred tax assets: | |||||||||||
Unused tax losses and credits | 644 | 1,000 | |||||||||
Provisions and other accrued liabilities | 825 | 858 | |||||||||
Pension | 671 | 477 | |||||||||
Inventories | 297 | 302 | |||||||||
Property, plant and equipment and other non-current assets | 265 | 83 | |||||||||
Other | 112 | 140 | |||||||||
| | | | | | | | ||||
Total gross deferred tax asset | 2,814 | 2,860 | |||||||||
Valuation allowance | (600 | ) | (589 | ) | |||||||
| | | | | | | | ||||
Total gross deferred tax asset, net of valuation allowance | 2,214 | 2,271 | |||||||||
Deferred tax liabilities: | |||||||||||
Property, plant and equipment | (343 | ) | (323 | ) | |||||||
Intangibles and other non-current assets | (766 | ) | (1,110 | ) | |||||||
Pension and other accrued liabilities | (191 | ) | (206 | ) | |||||||
Inventories | (118 | ) | (135 | ) | |||||||
Other current assets | (149 | ) | (161 | ) | |||||||
Unremitted earnings | (612 | ) | (598 | ) | |||||||
Other | (76 | ) | (60 | ) | |||||||
| | | | | | | | ||||
Total gross deferred tax liability | (2,255 | ) | (2,593 | ) | |||||||
| | | | | | | | ||||
Net deferred tax liability | (41 | ) | (322 | ) | |||||||
| | | | | | | | ||||
| | | | | | | | ||||
Included in: | |||||||||||
"Deferred taxes"—current assets | 902 | 832 | |||||||||
"Deferred taxes"—non-current assets | 511 | 370 | |||||||||
"Deferred taxes"—current liabilities | (289 | ) | (259 | ) | |||||||
"Deferred taxes"—non-current liabilities | (1,165 | ) | (1,265 | ) | |||||||
| | | | | | | | ||||
Net deferred tax liability | (41 | ) | (322 | ) | |||||||
| | | | | | | | ||||
| | | | | | | | ||||
Unrecognized tax benefits | |||||||||||
($ in millions) | Unrecognized | Penalties and | Total | ||||||||
tax benefits | interest | ||||||||||
related to | |||||||||||
unrecognized | |||||||||||
tax benefits | |||||||||||
Classification as unrecognized tax items on January 1, 2012 | 653 | 169 | 822 | ||||||||
Net change due to acquisitions and divestments | 10 | — | 10 | ||||||||
Increase relating to prior year tax positions | 51 | 26 | 77 | ||||||||
Decrease relating to prior year tax positions | (73 | ) | (56 | ) | (129 | ) | |||||
Increase relating to current year tax positions | 141 | 1 | 142 | ||||||||
Decrease relating to current year tax positions | (3 | ) | — | (3 | ) | ||||||
Decrease due to settlements with tax authorities | (89 | ) | (11 | ) | (100 | ) | |||||
Decrease as a result of the applicable statute of limitations | (29 | ) | (7 | ) | (36 | ) | |||||
Exchange rate differences | 8 | 5 | 13 | ||||||||
| | | | | | | | | | | |
Balance at December 31, 2012, which would, if recognized, affect the effective tax rate | 669 | 127 | 796 | ||||||||
Net change due to acquisitions and divestments | 17 | 2 | 19 | ||||||||
Increase relating to prior year tax positions | 43 | 36 | 79 | ||||||||
Decrease relating to prior year tax positions | (30 | ) | — | (30 | ) | ||||||
Increase relating to current year tax positions | 90 | 4 | 94 | ||||||||
Decrease relating to current year tax positions | (1 | ) | — | (1 | ) | ||||||
Decrease due to settlements with tax authorities | (18 | ) | (5 | ) | (23 | ) | |||||
Decrease as a result of the applicable statute of limitations | (46 | ) | (13 | ) | (59 | ) | |||||
Exchange rate differences | 9 | 3 | 12 | ||||||||
| | | | | | | | | | | |
Balance at December 31, 2013, which would, if recognized, affect the effective tax rate | 733 | 154 | 887 | ||||||||
Net change due to acquisitions and divestments | (3 | ) | 1 | (2 | ) | ||||||
Increase relating to prior year tax positions | 25 | 39 | 64 | ||||||||
Decrease relating to prior year tax positions | (24 | ) | (7 | ) | (31 | ) | |||||
Increase relating to current year tax positions | 85 | — | 85 | ||||||||
Decrease relating to current year tax positions | (1 | ) | — | (1 | ) | ||||||
Decrease due to settlements with tax authorities | (19 | ) | (10 | ) | (29 | ) | |||||
Decrease as a result of the applicable statute of limitations | (36 | ) | (19 | ) | (55 | ) | |||||
Exchange rate differences | (55 | ) | (12 | ) | (67 | ) | |||||
| | | | | | | | | | | |
Balance at December 31, 2014, which would, if recognized, affect the effective tax rate | 705 | 146 | 851 | ||||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Open tax years subject to examination | At December 31, 2014, the earliest significant open tax years that remained subject to examination were the following: | ||||||||||
Region | Year | ||||||||||
Europe | 2007 | ||||||||||
The Americas | 2010 | ||||||||||
Asia | 2005 | ||||||||||
Middle East & Africa | 2004 | ||||||||||
Employee_benefits_Tables
Employee benefits (Tables) | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Employee benefits | ||||||||||||||||||||
Change in benefit obligations, plan assets and funded status recognized in balance sheet | ||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||
($ in millions) | Defined pension | Other postretirement | ||||||||||||||||||
benefits | benefits | |||||||||||||||||||
Benefit obligation at January 1, | 12,063 | 12,063 | 236 | 281 | ||||||||||||||||
Service cost | 243 | 249 | 1 | 1 | ||||||||||||||||
Interest cost | 409 | 373 | 10 | 9 | ||||||||||||||||
Contributions by plan participants | 81 | 81 | — | — | ||||||||||||||||
Benefit payments | (632 | ) | (612 | ) | (14 | ) | (15 | ) | ||||||||||||
Benefit obligations of businesses acquired (divested) | (27 | ) | 7 | — | — | |||||||||||||||
Actuarial (gain) loss | 1,536 | (273 | ) | 14 | (41 | ) | ||||||||||||||
Plan amendments and other | (64 | ) | (50 | ) | — | 2 | ||||||||||||||
Exchange rate differences | (1,254 | ) | 225 | (2 | ) | (1 | ) | |||||||||||||
| | | | | | | | | | | | | | |||||||
Benefit obligation at December 31, | 12,355 | 12,063 | 245 | 236 | ||||||||||||||||
| | | | | | | | | | | | | | |||||||
Fair value of plan assets at January 1, | 10,930 | 10,282 | — | — | ||||||||||||||||
Actual return on plan assets | 918 | 621 | — | — | ||||||||||||||||
Contributions by employer | 308 | 403 | 14 | 15 | ||||||||||||||||
Contributions by plan participants | 81 | 81 | — | — | ||||||||||||||||
Benefit payments | (632 | ) | (612 | ) | (14 | ) | (15 | ) | ||||||||||||
Plan assets of businesses acquired (divested) | (25 | ) | — | — | — | |||||||||||||||
Plan amendments and other | (68 | ) | (57 | ) | — | — | ||||||||||||||
Exchange rate differences | (1,047 | ) | 212 | — | — | |||||||||||||||
| | | | | | | | | | | | | | |||||||
Fair value of plan assets at December 31, | 10,465 | 10,930 | — | — | ||||||||||||||||
| | | | | | | | | | | | | | |||||||
Funded status—underfunded | 1,890 | 1,133 | 245 | 236 | ||||||||||||||||
| | | | | | | | | | | | | | |||||||
| | | | | | | | | | | | | | |||||||
Amount recognized in Accumulated other comprehensive loss | ||||||||||||||||||||
December 31, | ||||||||||||||||||||
2014 | 2013 | 2012 | 2014 | 2013 | 2012 | |||||||||||||||
($ in millions) | Defined pension | Other postretirement | ||||||||||||||||||
benefits | benefits | |||||||||||||||||||
Net actuarial loss | (2,765 | ) | (2,050 | ) | (2,574 | ) | (39 | ) | (25 | ) | (69 | ) | ||||||||
Prior service (cost) credit | 2 | (21 | ) | (32 | ) | 16 | 24 | 33 | ||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Amount recognized in OCI(1) and NCI(2) | (2,763 | ) | (2,071 | ) | (2,606 | ) | (23 | ) | (1 | ) | (36 | ) | ||||||||
Taxes associated with amount recognized in OCI(1) and NCI(2) | 652 | 459 | 631 | — | — | — | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Amount recognized in OCI(1) and NCI(2), net of tax(3) | (2,111 | ) | (1,612 | ) | (1,975 | ) | (23 | ) | (1 | ) | (36 | ) | ||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
-1 | OCI represents "Accumulated other comprehensive loss". | |||||||||||||||||||
-2 | NCI represents "Noncontrolling interests". | |||||||||||||||||||
-3 | NCI, net of tax, amounted to $(3) million, $(3) million and $(7) million at December 31, 2014, 2013 and 2012, respectively. | |||||||||||||||||||
Schedule of amounts recognized in balance sheet | ||||||||||||||||||||
December 31, | ||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||
($ in millions) | Defined pension | Other postretirement | ||||||||||||||||||
benefits | benefits | |||||||||||||||||||
Overfunded plans | (42 | ) | (66 | ) | — | — | ||||||||||||||
Underfunded plans—current | 19 | 20 | 16 | 18 | ||||||||||||||||
Underfunded plans—non-current | 1,913 | 1,179 | 229 | 218 | ||||||||||||||||
| | | | | | | | | | | | | | |||||||
Funded status—underfunded | 1,890 | 1,133 | 245 | 236 | ||||||||||||||||
| | | | | | | | | | | | | | |||||||
| | | | | | | | | | | | | | |||||||
December 31, | ||||||||||||||||||||
($ in millions) | 2014 | 2013 | ||||||||||||||||||
Non-current assets | ||||||||||||||||||||
Overfunded pension plans | (42 | ) | (66 | ) | ||||||||||||||||
Other employee-related benefits | (28 | ) | (27 | ) | ||||||||||||||||
| | | | | | | | |||||||||||||
Prepaid pension and other employee benefits | (70 | ) | (93 | ) | ||||||||||||||||
| | | | | | | | |||||||||||||
| | | | | | | | |||||||||||||
December 31, | ||||||||||||||||||||
($ in millions) | 2014 | 2013 | ||||||||||||||||||
Current liabilities | ||||||||||||||||||||
Underfunded pension plans | 19 | 20 | ||||||||||||||||||
Underfunded other postretirement benefit plans | 16 | 18 | ||||||||||||||||||
Other employee-related benefits | 40 | 44 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Pension and other employee benefits (see Note 13) | 75 | 82 | ||||||||||||||||||
| | | | | | | | |||||||||||||
| | | | | | | | |||||||||||||
December 31, | ||||||||||||||||||||
($ in millions) | 2014 | 2013 | ||||||||||||||||||
Non-current liabilities | ||||||||||||||||||||
Underfunded pension plans | 1,913 | 1,179 | ||||||||||||||||||
Underfunded other postretirement benefit plans | 229 | 218 | ||||||||||||||||||
Other employee-related benefits | 252 | 242 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Pension and other employee benefits | 2,394 | 1,639 | ||||||||||||||||||
| | | | | | | | |||||||||||||
| | | | | | | | |||||||||||||
Difference of PBO and fair value of plan assets | ||||||||||||||||||||
December 31, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
($ in millions) | PBO | Assets | Difference | PBO | Assets | Difference | ||||||||||||||
PBO exceeds assets | 11,576 | 9,644 | 1,932 | 11,054 | 9,855 | 1,199 | ||||||||||||||
Assets exceed PBO | 779 | 821 | (42 | ) | 1,009 | 1,075 | (66 | ) | ||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total | 12,355 | 10,465 | 1,890 | 12,063 | 10,930 | 1,133 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Difference of ABO and fair value of plan assets | ||||||||||||||||||||
December 31, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
($ in millions) | ABO | Assets | Difference | ABO | Assets | Difference | ||||||||||||||
ABO exceeds assets | 9,921 | 8,091 | 1,830 | 9,112 | 8,161 | 951 | ||||||||||||||
Assets exceed ABO | 1,948 | 2,374 | (426 | ) | 2,482 | 2,769 | (287 | ) | ||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total | 11,869 | 10,465 | 1,404 | 11,594 | 10,930 | 664 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Component of net periodic benefit cost | ||||||||||||||||||||
2014 | 2013 | 2012 | 2014 | 2013 | 2012 | |||||||||||||||
($ in millions) | Defined pension | Other postretirement | ||||||||||||||||||
benefits | benefits | |||||||||||||||||||
Service cost | 243 | 249 | 221 | 1 | 1 | 1 | ||||||||||||||
Interest cost | 409 | 373 | 396 | 10 | 9 | 11 | ||||||||||||||
Expected return on plan assets | (481 | ) | (479 | ) | (494 | ) | — | — | — | |||||||||||
Amortization of prior service cost (credit) | 27 | 34 | 42 | (9 | ) | (9 | ) | (9 | ) | |||||||||||
Amortization of net actuarial loss | 99 | 136 | 98 | — | 4 | 4 | ||||||||||||||
Curtailments, settlements and special termination benefits | 4 | 1 | 2 | — | 2 | — | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Net periodic benefit cost | 301 | 314 | 265 | 2 | 7 | 7 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Weighted-average assumptions, Benefit obligation | ||||||||||||||||||||
December 31, | ||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||
(in %) | Defined pension | Other postretirement | ||||||||||||||||||
benefits | benefits | |||||||||||||||||||
Discount rate | 2.61 | 3.58 | 3.49 | 4.17 | ||||||||||||||||
Rate of compensation increase | 1.65 | 1.81 | — | — | ||||||||||||||||
Rate of pension increase | 1.04 | 1.14 | — | — | ||||||||||||||||
Weighted-average assumptions, Net periodic benefit cost | ||||||||||||||||||||
2014 | 2013 | 2012 | 2014 | 2013 | 2012 | |||||||||||||||
(in %) | Defined pension | Other postretirement | ||||||||||||||||||
benefits | benefits | |||||||||||||||||||
Discount rate | 3.58 | 3.22 | 3.91 | 4.17 | 3.35 | 4.07 | ||||||||||||||
Expected long-term rate of return on plan assets | 4.60 | 4.79 | 5.38 | — | — | — | ||||||||||||||
Rate of compensation increase | 1.81 | 1.71 | 1.62 | — | — | — | ||||||||||||||
Health care cost trend assumptions | ||||||||||||||||||||
December 31, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Health care cost trend rate assumed for next year | 8.00 | % | 8.15 | % | ||||||||||||||||
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) | 5.00 | % | 5.00 | % | ||||||||||||||||
Year that the rate reaches the ultimate trend rate | 2028 | 2028 | ||||||||||||||||||
One-percentage-point change in assumed health care cost trend rates | A one-percentage-point change in assumed health care cost trend rates would have the following effects at December 31, 2014: | |||||||||||||||||||
1-percentage-point | ||||||||||||||||||||
($ in millions) | Increase | Decrease | ||||||||||||||||||
Effect on total of service and interest cost | 1 | (1 | ) | |||||||||||||||||
Effect on postretirement benefit obligation | 22 | (19 | ) | |||||||||||||||||
Target asset allocation on weighted-average basis | ||||||||||||||||||||
Target | ||||||||||||||||||||
percentage | ||||||||||||||||||||
Asset class | ||||||||||||||||||||
Equity | 23 | |||||||||||||||||||
Fixed income | 57 | |||||||||||||||||||
Real estate | 11 | |||||||||||||||||||
Other | 9 | |||||||||||||||||||
| | | | | ||||||||||||||||
100 | ||||||||||||||||||||
| | | | | ||||||||||||||||
| | | | | ||||||||||||||||
Fair value of pension plan assets by asset category | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
($ in millions) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
fair value | ||||||||||||||||||||
Asset class | ||||||||||||||||||||
Equity | ||||||||||||||||||||
Equity securities | 433 | — | — | 433 | ||||||||||||||||
Mutual funds/commingled funds | — | 1,821 | — | 1,821 | ||||||||||||||||
Emerging market mutual funds/commingled funds | — | 487 | — | 487 | ||||||||||||||||
Fixed income | ||||||||||||||||||||
Government and corporate securities | 638 | 1,211 | — | 1,849 | ||||||||||||||||
Government and corporate—mutual funds/commingled funds | — | 3,521 | — | 3,521 | ||||||||||||||||
Emerging market bonds—mutual funds/commingled funds | — | 671 | — | 671 | ||||||||||||||||
Insurance contracts | — | 126 | — | 126 | ||||||||||||||||
Cash and short-term investments | 274 | 56 | — | 330 | ||||||||||||||||
Private equity | — | — | 136 | 136 | ||||||||||||||||
Hedge funds | — | — | 93 | 93 | ||||||||||||||||
Real estate | — | 94 | 842 | 936 | ||||||||||||||||
Commodities | — | 62 | — | 62 | ||||||||||||||||
| | | | | | | | | | | | | | |||||||
Total | 1,345 | 8,049 | 1,071 | 10,465 | ||||||||||||||||
| | | | | | | | | | | | | | |||||||
| | | | | | | | | | | | | | |||||||
December 31, 2013 | ||||||||||||||||||||
($ in millions) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
fair value | ||||||||||||||||||||
Asset class | ||||||||||||||||||||
Equity | ||||||||||||||||||||
Equity securities | 387 | — | — | 387 | ||||||||||||||||
Mutual funds/commingled funds | — | 2,287 | — | 2,287 | ||||||||||||||||
Emerging market mutual funds/commingled funds | — | 515 | — | 515 | ||||||||||||||||
Fixed income | ||||||||||||||||||||
Government and corporate securities | 586 | 1,011 | — | 1,597 | ||||||||||||||||
Government and corporate—mutual funds/commingled funds | — | 3,442 | — | 3,442 | ||||||||||||||||
Emerging market bonds—mutual funds/commingled funds | — | 645 | — | 645 | ||||||||||||||||
Insurance contracts | — | 69 | — | 69 | ||||||||||||||||
Cash and short-term investments | 143 | 505 | — | 648 | ||||||||||||||||
Private equity | — | — | 155 | 155 | ||||||||||||||||
Hedge funds | — | — | 158 | 158 | ||||||||||||||||
Real estate | — | 82 | 866 | 948 | ||||||||||||||||
Commodities | — | 47 | 32 | 79 | ||||||||||||||||
| | | | | | | | | | | | | | |||||||
Total | 1,116 | 8,603 | 1,211 | 10,930 | ||||||||||||||||
| | | | | | | | | | | | | | |||||||
| | | | | | | | | | | | | | |||||||
Reconciliation of assets fair value using significant unobservable inputs (Level 3) | ||||||||||||||||||||
($ in millions) | Private | Hedge | Real | Commodities | Total | |||||||||||||||
equity | funds | estate | Level 3 | |||||||||||||||||
Balance at January 1, 2013 | 164 | 153 | 830 | 35 | 1,182 | |||||||||||||||
Return on plan assets | ||||||||||||||||||||
Assets still held at December 31, 2013 | 6 | 28 | 10 | (3 | ) | 41 | ||||||||||||||
Assets sold during the year | 8 | (7 | ) | — | — | 1 | ||||||||||||||
Purchases (sales) | (24 | ) | (19 | ) | 4 | — | (39 | ) | ||||||||||||
Transfers into Level 3 | — | — | 8 | — | 8 | |||||||||||||||
Exchange rate differences | 1 | 3 | 14 | — | 18 | |||||||||||||||
| | | | | | | | | | | | | | | | | ||||
Balance at December 31, 2013 | 155 | 158 | 866 | 32 | 1,211 | |||||||||||||||
| | | | | | | | | | | | | | | | | ||||
Return on plan assets | ||||||||||||||||||||
Assets still held at December 31, 2014 | 21 | (3 | ) | 43 | (5 | ) | 56 | |||||||||||||
Assets sold during the year | 3 | 8 | — | — | 11 | |||||||||||||||
Purchases (sales) | (39 | ) | (59 | ) | 30 | — | (68 | ) | ||||||||||||
Transfers into Level 3 | — | — | — | (27 | ) | (27 | ) | |||||||||||||
Exchange rate differences | (4 | ) | (11 | ) | (97 | ) | — | (112 | ) | |||||||||||
| | | | | | | | | | | | | | | | | ||||
Balance at December 31, 2014 | 136 | 93 | 842 | — | 1,071 | |||||||||||||||
| | | | | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | | | | ||||
Schedule of employer contributions to pension and other postretirement benefit plans | ||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||
($ in millions) | Defined pension benefits | Other postretirement benefits | ||||||||||||||||||
Total contributions to defined benefit pension and other postretirement benefit plans | 308 | 403 | 14 | 15 | ||||||||||||||||
Of which, discretionary contributions to defined benefit pension plans | 75 | 164 | — | — | ||||||||||||||||
Expected future cash flows of pension and postretirement benefit plans (net of Medicare subsidies) | The expected future cash flows to be paid by the Company's plans in respect of pension and other postretirement benefit plans (net of Medicare subsidies) at December 31, 2014, are as follows: | |||||||||||||||||||
($ in millions) | Defined | Other | ||||||||||||||||||
pension | postretirement | |||||||||||||||||||
benefits | benefits | |||||||||||||||||||
2015 | 644 | 17 | ||||||||||||||||||
2016 | 668 | 17 | ||||||||||||||||||
2017 | 633 | 17 | ||||||||||||||||||
2018 | 627 | 17 | ||||||||||||||||||
2019 | 627 | 17 | ||||||||||||||||||
Years 2020 - 2024 | 3,002 | 83 | ||||||||||||||||||
Sharebased_payment_arrangement1
Share-based payment arrangements (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Share-based payment arrangements | |||||||||||||||||
Assumptions used in valuation of warrants and options | |||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
Expected volatility | 18 | % | 21 | % | 27 | % | |||||||||||
Dividend yield | 2.88 | % | 2.90 | % | 3.60 | % | |||||||||||
Expected term | 6 years | 6 years | 6 years | ||||||||||||||
Risk-free interest rate | 0.24 | % | 0.57 | % | 0.30 | % | |||||||||||
Summary of activity, warrants and options | |||||||||||||||||
Number of | Number of | Weighted- | Weighted- | Aggregate | |||||||||||||
instruments | shares | average | average | intrinsic | |||||||||||||
(in | (in millions)(1) | exercise | remaining | value | |||||||||||||
millions) | price | contractual | (in millions | ||||||||||||||
(in Swiss | term | of Swiss | |||||||||||||||
francs)(2) | (in years) | francs)(3) | |||||||||||||||
Outstanding at January 1, 2014 | 297.9 | 59.6 | 21.76 | ||||||||||||||
Granted | 79.9 | 16 | 21 | ||||||||||||||
Exercised | (5.5 | ) | (1.1 | ) | 15.75 | ||||||||||||
Forfeited | (4.5 | ) | (0.9 | ) | 19.34 | ||||||||||||
Expired | (25.1 | ) | (5.1 | ) | 36.4 | ||||||||||||
| | | | | | | | | | | | | | | | | |
Outstanding at December 31, 2014 | 342.7 | 68.5 | 20.64 | 3.6 | 88 | ||||||||||||
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Vested and expected to vest at December 31, 2014 | 327.3 | 65.5 | 20.68 | 3.6 | 83 | ||||||||||||
Exercisable at December 31, 2014 | 121.2 | 24.2 | 22.28 | 2 | 20 | ||||||||||||
-1 | Information presented reflects the number of shares of ABB Ltd that can be received upon exercise, as warrants and options have a conversion ratio of 5:1. | ||||||||||||||||
-2 | Information presented reflects the exercise price per share of ABB Ltd. | ||||||||||||||||
-3 | Computed using the closing price, in Swiss francs, of ABB Ltd shares on the SIX Swiss Exchange and the exercise price per share of ABB Ltd. | ||||||||||||||||
Summary of warrants and options, by exercise price | Presented below is a summary, by launch, related to instruments outstanding at December 31, 2014: | ||||||||||||||||
Exercise price (in Swiss francs)(1) | Number of | Number of | Weighted-average | ||||||||||||||
instruments | shares | remaining | |||||||||||||||
(in | (in millions)(2) | contractual | |||||||||||||||
millions) | term (in years) | ||||||||||||||||
19 | 22.8 | 4.6 | 0.4 | ||||||||||||||
22.5 | 36.7 | 7.3 | 1.4 | ||||||||||||||
25.5 | 43.1 | 8.6 | 2.4 | ||||||||||||||
15.75 | 60.9 | 12.2 | 3.4 | ||||||||||||||
17.5 | 14.5 | 2.9 | 3.4 | ||||||||||||||
21.5 | 85.2 | 17.0 | 4.4 | ||||||||||||||
21 | 79.5 | 15.9 | 5.7 | ||||||||||||||
| | | | | | | | | | | |||||||
Total number of instruments and shares | 342.7 | 68.5 | 3.6 | ||||||||||||||
| | | | | | | | | | | |||||||
| | | | | | | | | | | |||||||
-1 | Information presented reflects the exercise price per share of ABB Ltd. | ||||||||||||||||
-2 | Information presented reflects the number of shares of ABB Ltd that can be received upon exercise. | ||||||||||||||||
Summary of activity, WARs | |||||||||||||||||
Number of WARs | |||||||||||||||||
(in millions) | |||||||||||||||||
Outstanding at January 1, 2014 | 67.3 | ||||||||||||||||
Granted | 10.7 | ||||||||||||||||
Exercised | (5.9 | ) | |||||||||||||||
Forfeited | (0.7 | ) | |||||||||||||||
Expired | (10.2 | ) | |||||||||||||||
| | | | | |||||||||||||
Outstanding at December 31, 2014 | 61.2 | ||||||||||||||||
| | | | | |||||||||||||
| | | | | |||||||||||||
Exercisable at December 31, 2014 | 18.8 | ||||||||||||||||
Assumptions used for ESAP fair value calculation | |||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
Expected volatility | 18 | % | 20 | % | 23 | % | |||||||||||
Dividend yield | 3.10 | % | 2.84 | % | 3.45 | % | |||||||||||
Expected term | 1 year | 1 year | 1 year | ||||||||||||||
Risk-free interest rate | 0 | % | 0 | % | 0 | % | |||||||||||
Summary of activity, ESAP | |||||||||||||||||
Number of | Weighted-average | Weighted-average | Aggregate | ||||||||||||||
shares | exercise price | remaining | intrinsic value | ||||||||||||||
(in millions)(1) | (in Swiss francs)(2) | contractual | (in millions of | ||||||||||||||
term (in years) | Swiss francs)(2)(3) | ||||||||||||||||
Outstanding at January 1, 2014 | 4.7 | 20.82 | |||||||||||||||
Granted | 3.9 | 20.97 | |||||||||||||||
Forfeited | (0.2 | ) | 20.82 | ||||||||||||||
Exercised(4) | (0.6 | ) | 20.82 | ||||||||||||||
Not exercised (savings returned plus interest) | (3.9 | ) | 20.82 | ||||||||||||||
| | | | | | | | | | | | | | ||||
Outstanding at December 31, 2014 | 3.9 | 20.97 | 0.8 | 0.7 | |||||||||||||
| | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | ||||
Vested and expected to vest at December 31, 2014 | 3.7 | 20.97 | 0.8 | 0.6 | |||||||||||||
Exercisable at December 31, 2014 | — | — | — | — | |||||||||||||
-1 | Includes shares represented by ADS. | ||||||||||||||||
-2 | Information presented for ADS is based on equivalent Swiss franc denominated awards. | ||||||||||||||||
-3 | Computed using the closing price, in Swiss francs, of ABB Ltd shares on the SIX Swiss Exchange and the exercise price of each option in Swiss francs. | ||||||||||||||||
-4 | The cash received upon exercise was approximately $12 million and the corresponding tax benefit was not significant. The shares were delivered out of treasury stock. | ||||||||||||||||
Summary of activity, LTIP | |||||||||||||||||
Number of shares | |||||||||||||||||
Equity & | Only Cash | Total | Weighted-average | ||||||||||||||
Cash or | Settlement(2) | (in millions) | grant-date | ||||||||||||||
choice of | (in millions) | fair value | |||||||||||||||
100% Equity | per share | ||||||||||||||||
Settlement(1) | (Swiss francs) | ||||||||||||||||
(in millions) | |||||||||||||||||
Nonvested at January 1, 2014 | 1.7 | 1.1 | 2.8 | 17.65 | |||||||||||||
Granted | 0.6 | 0.4 | 1 | 20.35 | |||||||||||||
Vested | (0.5 | ) | (0.1 | ) | (0.6 | ) | 20.85 | ||||||||||
Expired(3) | — | (0.3 | ) | (0.3 | ) | 8.76 | |||||||||||
Forfeited | (0.1 | ) | (0.1 | ) | (0.2 | ) | 15.71 | ||||||||||
| | | | | | | | | | | | | | ||||
Nonvested at December 31, 2014 | 1.7 | 1 | 2.7 | 18.85 | |||||||||||||
| | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | ||||
-1 | Shares that, subject to vesting, the Eligible Participant can elect to receive 100 percent in the form of shares. | ||||||||||||||||
-2 | Shares that, subject to vesting, the Eligible Participant can only receive in cash. | ||||||||||||||||
-3 | Expired as the criteria for the Company's performance condition were not satisfied. | ||||||||||||||||
Earnings_per_share_Tables
Earnings per share (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Earnings per share | |||||||||||
Basic earnings per share | |||||||||||
($ in millions, except per share data in $) | 2014 | 2013 | 2012 | ||||||||
Amounts attributable to ABB shareholders: | |||||||||||
Income from continuing operations, net of tax | 2,570 | 2,824 | 2,700 | ||||||||
Income (loss) from discontinued operations, net of tax | 24 | (37 | ) | 4 | |||||||
| | | | | | | | | | | |
Net income | 2,594 | 2,787 | 2,704 | ||||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Weighted-average number of shares outstanding (in millions) | 2,288 | 2,297 | 2,293 | ||||||||
Basic earnings per share attributable to ABB shareholders: | |||||||||||
Income from continuing operations, net of tax | 1.12 | 1.23 | 1.18 | ||||||||
Income (loss) from discontinued operations, net of tax | 0.01 | (0.02 | ) | — | |||||||
| | | | | | | | | | | |
Net income | 1.13 | 1.21 | 1.18 | ||||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Diluted earnings per share | |||||||||||
($ in millions, except per share data in $) | 2014 | 2013 | 2012 | ||||||||
Amounts attributable to ABB shareholders: | |||||||||||
Income from continuing operations, net of tax | 2,570 | 2,824 | 2,700 | ||||||||
Income (loss) from discontinued operations, net of tax | 24 | (37 | ) | 4 | |||||||
| | | | | | | | | | | |
Net income | 2,594 | 2,787 | 2,704 | ||||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Weighted-average number of shares outstanding (in millions) | 2,288 | 2,297 | 2,293 | ||||||||
Effect of dilutive securities: | |||||||||||
Call options and shares | 7 | 8 | 2 | ||||||||
| | | | | | | | | | | |
Dilutive weighted-average number of shares outstanding | 2,295 | 2,305 | 2,295 | ||||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Diluted earnings per share attributable to ABB shareholders: | |||||||||||
Income from continuing operations, net of tax | 1.12 | 1.23 | 1.18 | ||||||||
Income (loss) from discontinued operations, net of tax | 0.01 | (0.02 | ) | — | |||||||
| | | | | | | | | | | |
Net income | 1.13 | 1.21 | 1.18 | ||||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Other_comprehensive_income_Tab
Other comprehensive income (Tables) | 12 Months Ended | ||||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||||
Other comprehensive income | |||||||||||||||||||||||||||||
Schedule of tax effects allocated to each component of total other comprehensive income (loss) | |||||||||||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||||||||||
($ in millions) | Before | Tax | Net of | Before | Tax | Net of | Before | Tax | Net of | ||||||||||||||||||||
tax | effect | tax | tax | effect | tax | tax | effect | tax | |||||||||||||||||||||
Foreign currency translation adjustments: | |||||||||||||||||||||||||||||
Net change during the year | (1,691 | ) | 11 | (1,680 | ) | 133 | 8 | 141 | 389 | (6 | ) | 383 | |||||||||||||||||
Available-for-sale securities: | |||||||||||||||||||||||||||||
Net unrealized gains (losses) arising during the year | (14 | ) | 5 | (9 | ) | (4 | ) | — | (4 | ) | 5 | (2 | ) | 3 | |||||||||||||||
Reclassification adjustments for net (gains) losses included in net income | 21 | (6 | ) | 15 | (14 | ) | 1 | (13 | ) | 1 | — | 1 | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net change during the year | 7 | (1 | ) | 6 | (18 | ) | 1 | (17 | ) | 6 | (2 | ) | 4 | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Pension and other postretirement plans: | |||||||||||||||||||||||||||||
Prior service (costs) credits arising during the year | (5 | ) | 2 | (3 | ) | (20 | ) | 4 | (16 | ) | (42 | ) | 6 | (36 | ) | ||||||||||||||
Net actuarial gains (losses) arising during the year | (826 | ) | 212 | (614 | ) | 423 | (132 | ) | 291 | (846 | ) | 245 | (601 | ) | |||||||||||||||
Amortization of prior service cost included in net income | 18 | (1 | ) | 17 | 25 | (2 | ) | 23 | 33 | (3 | ) | 30 | |||||||||||||||||
Amortization of net actuarial loss included in net income | 99 | (20 | ) | 79 | 140 | (41 | ) | 99 | 102 | (32 | ) | 70 | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net change during the year | (714 | ) | 193 | (521 | ) | 568 | (171 | ) | 397 | (753 | ) | 216 | (537 | ) | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash flow hedge derivatives: | |||||||||||||||||||||||||||||
Net gains (losses) arising during the year | (65 | ) | 13 | (52 | ) | 33 | (5 | ) | 28 | 74 | (21 | ) | 53 | ||||||||||||||||
Reclassification adjustments for net (gains) losses included in net income | 10 | (1 | ) | 9 | (54 | ) | 11 | (43 | ) | (42 | ) | 14 | (28 | ) | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net change during the year | (55 | ) | 12 | (43 | ) | (21 | ) | 6 | (15 | ) | 32 | (7 | ) | 25 | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total other comprehensive income (loss) | (2,453 | ) | 215 | (2,238 | ) | 662 | (156 | ) | 506 | (326 | ) | 201 | (125 | ) | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Schedule of changes in component of accumulated other comprehensive loss (OCI), net of tax | |||||||||||||||||||||||||||||
($ in millions) | Foreign currency | Unrealized gains | Pension and other | Unrealized gains | Total OCI | ||||||||||||||||||||||||
translation | (losses) on | postretirement | (losses) of cash | ||||||||||||||||||||||||||
adjustments | available-for-sale | plan adjustments | flow hedge | ||||||||||||||||||||||||||
securities | derivatives | ||||||||||||||||||||||||||||
Balance at January 1, 2013 | (580 | ) | 24 | (2,004 | ) | 37 | (2,523 | ) | |||||||||||||||||||||
Other comprehensive (loss) income before reclassifications | 141 | (4 | ) | 275 | 28 | 440 | |||||||||||||||||||||||
Amounts reclassified from OCI | — | (13 | ) | 122 | (43 | ) | 66 | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | |||||||||||||
Total other comprehensive (loss) income | 141 | (17 | ) | 397 | (15 | ) | 506 | ||||||||||||||||||||||
Less: | |||||||||||||||||||||||||||||
Amounts attributable to noncontrolling interests | (8 | ) | — | 3 | — | (5 | ) | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | |||||||||||||
Balance at December 31, 2013 | (431 | ) | 7 | (1,610 | ) | 22 | (2,012 | ) | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | |||||||||||||
Other comprehensive (loss) income before reclassifications | (1,680 | ) | (9 | ) | (617 | ) | (52 | ) | (2,358 | ) | |||||||||||||||||||
Amounts reclassified from OCI | — | 15 | 96 | 9 | 120 | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | |||||||||||||
Total other comprehensive (loss) income | (1,680 | ) | 6 | (521 | ) | (43 | ) | (2,238 | ) | ||||||||||||||||||||
Less: | |||||||||||||||||||||||||||||
Amounts attributable to noncontrolling interests | (9 | ) | — | — | — | (9 | ) | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | |||||||||||||
Balance at December 31, 2014 | (2,102 | ) | 13 | (2,131 | ) | (21 | ) | (4,241 | ) | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | |||||||||||||
| | | | | | | | | | | | | | | | | |||||||||||||
Schedule of amounts reclassified out of OCI in respect of Pension and other postretirement plan adjustments and Unrealized gains (losses) of cash flow hedge derivatives | |||||||||||||||||||||||||||||
($ in millions) | Location of (gains) losses reclassified from OCI | 2014 | 2013 | ||||||||||||||||||||||||||
Details about OCI components | |||||||||||||||||||||||||||||
Pension and other postretirement plan adjustments: | |||||||||||||||||||||||||||||
Amortization of prior service cost | Net periodic benefit cost(1) | 18 | 25 | ||||||||||||||||||||||||||
Amortization of net actuarial losses | Net periodic benefit cost(1) | 99 | 140 | ||||||||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
Total before tax | 117 | 165 | |||||||||||||||||||||||||||
Tax | Provision for taxes | (21 | ) | (43 | ) | ||||||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
Amounts reclassified from OCI | 96 | 122 | |||||||||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
Unrealized gains (losses) of cash flow hedge derivatives: | |||||||||||||||||||||||||||||
Foreign exchange contracts | Total revenues | 9 | (52 | ) | |||||||||||||||||||||||||
Total cost of sales | (8 | ) | 1 | ||||||||||||||||||||||||||
Commodity contracts | Total cost of sales | 3 | 5 | ||||||||||||||||||||||||||
Cash-settled call options | SG&A expenses(2) | 6 | (8 | ) | |||||||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
Total before tax | 10 | (54 | ) | ||||||||||||||||||||||||||
Tax | Provision for taxes | (1 | ) | 11 | |||||||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
Amounts reclassified from OCI | 9 | (43 | ) | ||||||||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
-1 | These components are included in the computation of net periodic benefit cost (see Note 17). | ||||||||||||||||||||||||||||
-2 | SG&A expenses represent "Selling, general and administrative expenses". | ||||||||||||||||||||||||||||
Restructuring_and_related_expe1
Restructuring and related expenses (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Restructuring and related expenses | |||||||||||
Schedule of restructuring cost by type | |||||||||||
($ in millions) | 2014 | 2013 | 2012 | ||||||||
Employee severance costs | 177 | 154 | 92 | ||||||||
Estimated contract settlement, loss order and other costs | 31 | 78 | 72 | ||||||||
Inventory and long-lived asset impairments | 27 | 20 | 16 | ||||||||
| | | | | | | | | | | |
Total | 235 | 252 | 180 | ||||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Operating_segment_and_geograph1
Operating segment and geographic data (Tables) | 12 Months Ended | ||||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||||
Operating segment and geographic data | |||||||||||||||||||||||||||||
Schedule of revenues by operating segment | |||||||||||||||||||||||||||||
2014 | |||||||||||||||||||||||||||||
($ in millions) | Third-party | Intersegment | Total | ||||||||||||||||||||||||||
revenues | revenues | revenues | |||||||||||||||||||||||||||
Discrete Automation and Motion | 9,296 | 846 | 10,142 | ||||||||||||||||||||||||||
Low Voltage Products | 7,117 | 415 | 7,532 | ||||||||||||||||||||||||||
Process Automation | 7,745 | 203 | 7,948 | ||||||||||||||||||||||||||
Power Products | 8,782 | 1,551 | 10,333 | ||||||||||||||||||||||||||
Power Systems | 6,686 | 334 | 7,020 | ||||||||||||||||||||||||||
Corporate and Other | 204 | 1,592 | 1,796 | ||||||||||||||||||||||||||
Intersegment elimination | — | (4,941 | ) | (4,941 | ) | ||||||||||||||||||||||||
| | | | | | | | | | | |||||||||||||||||||
Consolidated | 39,830 | — | 39,830 | ||||||||||||||||||||||||||
| | | | | | | | | | | |||||||||||||||||||
| | | | | | | | | | | |||||||||||||||||||
2013 | |||||||||||||||||||||||||||||
($ in millions) | Third-party | Intersegment | Total | ||||||||||||||||||||||||||
revenues | revenues | revenues | |||||||||||||||||||||||||||
Discrete Automation and Motion | 8,909 | 1,006 | 9,915 | ||||||||||||||||||||||||||
Low Voltage Products | 7,338 | 391 | 7,729 | ||||||||||||||||||||||||||
Process Automation | 8,287 | 210 | 8,497 | ||||||||||||||||||||||||||
Power Products | 9,096 | 1,936 | 11,032 | ||||||||||||||||||||||||||
Power Systems | 8,025 | 350 | 8,375 | ||||||||||||||||||||||||||
Corporate and Other | 193 | 1,583 | 1,776 | ||||||||||||||||||||||||||
Intersegment elimination | — | (5,476 | ) | (5,476 | ) | ||||||||||||||||||||||||
| | | | | | | | | | | |||||||||||||||||||
Consolidated | 41,848 | — | 41,848 | ||||||||||||||||||||||||||
| | | | | | | | | | | |||||||||||||||||||
| | | | | | | | | | | |||||||||||||||||||
2012 | |||||||||||||||||||||||||||||
($ in millions) | Third-party | Intersegment | Total | ||||||||||||||||||||||||||
revenues | revenues | revenues | |||||||||||||||||||||||||||
Discrete Automation and Motion | 8,480 | 925 | 9,405 | ||||||||||||||||||||||||||
Low Voltage Products | 6,276 | 362 | 6,638 | ||||||||||||||||||||||||||
Process Automation | 7,946 | 210 | 8,156 | ||||||||||||||||||||||||||
Power Products | 8,987 | 1,730 | 10,717 | ||||||||||||||||||||||||||
Power Systems | 7,575 | 277 | 7,852 | ||||||||||||||||||||||||||
Corporate and Other | 72 | 1,505 | 1,577 | ||||||||||||||||||||||||||
Intersegment elimination | — | (5,009 | ) | (5,009 | ) | ||||||||||||||||||||||||
| | | | | | | | | | | |||||||||||||||||||
Consolidated | 39,336 | — | 39,336 | ||||||||||||||||||||||||||
| | | | | | | | | | | |||||||||||||||||||
| | | | | | | | | | | |||||||||||||||||||
Schedule of segment profit by operating segment | |||||||||||||||||||||||||||||
($ in millions) | 2014 | 2013 | 2012 | ||||||||||||||||||||||||||
Operational EBITDA: | |||||||||||||||||||||||||||||
Discrete Automation and Motion | 1,760 | 1,783 | 1,735 | ||||||||||||||||||||||||||
Low Voltage Products | 1,429 | 1,468 | 1,219 | ||||||||||||||||||||||||||
Process Automation | 1,029 | 1,096 | 1,003 | ||||||||||||||||||||||||||
Power Products | 1,519 | 1,637 | 1,585 | ||||||||||||||||||||||||||
Power Systems | 5 | 419 | 290 | ||||||||||||||||||||||||||
Corporate and Other and Intersegment elimination | (342 | ) | (328 | ) | (277 | ) | |||||||||||||||||||||||
| | | | | | | | | | | |||||||||||||||||||
Consolidated Operational EBITDA | 5,400 | 6,075 | 5,555 | ||||||||||||||||||||||||||
Depreciation and amortization | (1,305 | ) | (1,318 | ) | (1,182 | ) | |||||||||||||||||||||||
Restructuring and restructuring-related expenses | (235 | ) | (252 | ) | (180 | ) | |||||||||||||||||||||||
Gains and losses on sale of businesses, acquisition-related expenses and certain non-operational items | 482 | (181 | ) | (199 | ) | ||||||||||||||||||||||||
Foreign exchange/commodity timing differences in income from operations: | |||||||||||||||||||||||||||||
Unrealized gains and losses on derivatives (foreign exchange, commodities, embedded derivatives) | (223 | ) | 60 | 135 | |||||||||||||||||||||||||
Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized | (42 | ) | 14 | (28 | ) | ||||||||||||||||||||||||
Unrealized foreign exchange movements on receivables/payables (and related assets/liabilities) | 101 | (11 | ) | (43 | ) | ||||||||||||||||||||||||
| | | | | | | | | | | |||||||||||||||||||
Income from operations | 4,178 | 4,387 | 4,058 | ||||||||||||||||||||||||||
Interest and dividend income | 80 | 69 | 73 | ||||||||||||||||||||||||||
Interest and other finance expense | (362 | ) | (390 | ) | (293 | ) | |||||||||||||||||||||||
| | | | | | | | | | | |||||||||||||||||||
Income from continuing operations before taxes | 3,896 | 4,066 | 3,838 | ||||||||||||||||||||||||||
| | | | | | | | | | | |||||||||||||||||||
| | | | | | | | | | | |||||||||||||||||||
Schedule of depreciation and amortization, capital expenditure and total assets after intersegment eliminations | |||||||||||||||||||||||||||||
Depreciation and | Capital expenditure(1) | Total assets(1) at | |||||||||||||||||||||||||||
amortization | December 31, | ||||||||||||||||||||||||||||
($ in millions) | 2014 | 2013 | 2012 | 2014 | 2013 | 2012 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Discrete Automation and Motion | 309 | 285 | 263 | 192 | 214 | 197 | 10,123 | 10,931 | 9,416 | ||||||||||||||||||||
Low Voltage Products | 301 | 323 | 250 | 184 | 204 | 208 | 7,978 | 9,389 | 9,534 | ||||||||||||||||||||
Process Automation | 88 | 87 | 82 | 49 | 68 | 91 | 4,268 | 4,537 | 4,847 | ||||||||||||||||||||
Power Products | 217 | 223 | 209 | 220 | 252 | 259 | 7,396 | 7,669 | 7,701 | ||||||||||||||||||||
Power Systems | 175 | 183 | 174 | 92 | 101 | 194 | 6,855 | 7,905 | 8,083 | ||||||||||||||||||||
Corporate and Other | 215 | 217 | 204 | 289 | 267 | 344 | 8,258 | 7,633 | 9,489 | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Consolidated | 1,305 | 1,318 | 1,182 | 1,026 | 1,106 | 1,293 | 44,878 | 48,064 | 49,070 | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
-1 | Capital expenditure and Total assets are after intersegment eliminations and therefore reflect third-party activities only. | ||||||||||||||||||||||||||||
Schedule of geographic information for revenues and long-lived assets | |||||||||||||||||||||||||||||
Revenues | Long-lived | ||||||||||||||||||||||||||||
assets at | |||||||||||||||||||||||||||||
December 31, | |||||||||||||||||||||||||||||
($ in millions) | 2014 | 2013 | 2012 | 2014 | 2013 | ||||||||||||||||||||||||
Europe | 13,674 | 14,385 | 14,073 | 3,460 | 3,798 | ||||||||||||||||||||||||
The Americas | 11,482 | 12,115 | 10,699 | 1,215 | 1,450 | ||||||||||||||||||||||||
Asia | 10,874 | 11,230 | 10,750 | 789 | 850 | ||||||||||||||||||||||||
Middle East and Africa | 3,800 | 4,118 | 3,814 | 188 | 156 | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | |||||||||||||
39,830 | 41,848 | 39,336 | 5,652 | 6,254 | |||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | |||||||||||||
| | | | | | | | | | | | | | | | | |||||||||||||
Significant_accounting_policie2
Significant accounting policies (Details) | 12 Months Ended |
Dec. 31, 2014 | |
Significant accounting policies | |
Operating cycle of a portion of the Company's activities | 1 year |
Minimum | |
Voting rights in joint ventures and affiliated companies | |
Percentage of voting rights in joint ventures and affiliated companies required for using the equity method of accounting | 20.00% |
Maximum | |
Voting rights in joint ventures and affiliated companies | |
Percentage of voting rights in joint ventures and affiliated companies required for using the equity method of accounting | 50.00% |
Factories and office buildings | Minimum | |
Property, Plant and Equipment | |
Estimated useful lives of property, plant and equipment, average | 30 years |
Factories and office buildings | Maximum | |
Property, Plant and Equipment | |
Estimated useful lives of property, plant and equipment, average | 40 years |
Other facilities | |
Property, Plant and Equipment | |
Estimated useful lives of property, plant and equipment, average | 15 years |
Machinery and equipment | Minimum | |
Property, Plant and Equipment | |
Estimated useful lives of property, plant and equipment, average | 3 years |
Machinery and equipment | Maximum | |
Property, Plant and Equipment | |
Estimated useful lives of property, plant and equipment, average | 15 years |
Furniture and office equipment | Minimum | |
Property, Plant and Equipment | |
Estimated useful lives of property, plant and equipment, average | 3 years |
Furniture and office equipment | Maximum | |
Property, Plant and Equipment | |
Estimated useful lives of property, plant and equipment, average | 8 years |
Significant_accounting_policie3
Significant accounting policies (Details 2) | 12 Months Ended |
Dec. 31, 2014 | |
Software for internal use | Minimum | |
Finite-lived intangible assets | |
Useful life | 3 years |
Software for internal use | Maximum | |
Finite-lived intangible assets | |
Useful life | 5 years |
Customer-, Technology- and Marketing-related intangibles | Minimum | |
Finite-lived intangible assets | |
Useful life | 5 years |
Customer-, Technology- and Marketing-related intangibles | Maximum | |
Finite-lived intangible assets | |
Useful life | 20 years |
Acquisitions_and_business_dive2
Acquisitions and business divestments (Details) (USD $) | 12 Months Ended | 0 Months Ended | |||
In Millions, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Jul. 25, 2013 | 16-May-12 |
entity | entity | entity | |||
Acquisitions | |||||
Aggregate excess of purchase price over fair value of net assets acquired | $9 | $525 | $2,895 | ||
Number of acquired businesses | 6 | 7 | 9 | ||
Fair value of replacement vested stock options issued | 2 | 5 | |||
Adjustment included in aggregate excess of purchase price over fair value of net assets acquired reflecting reduction in certain deferred tax liabilities | 42 | 63 | |||
Allocation of the purchase consideration for business acquisitions | |||||
Weighted-average useful life of acquired intangible assets | 7 years | ||||
Allocated amount, Goodwill | 10,053 | 10,670 | 10,226 | ||
Total consideration (net of cash acquired) | 58 | 897 | 3,643 | ||
Intangibles other than software: Customer-related | |||||
Allocation of the purchase consideration for business acquisitions | |||||
Weighted-average useful life of acquired intangible assets | 11 years | ||||
Business acquisitions in 2013 | |||||
Acquisitions | |||||
Fair value of replacement vested stock options issued | 2 | ||||
Purchase price per share of acquisition (in dollars per share) | $6.35 | ||||
Aggregate cash outflows related to acquisition | 737 | ||||
Cash outflows for purchase of shares | 705 | ||||
Cash settlement of acquired entity's options held at acquisition date | 32 | ||||
Allocation of the purchase consideration for business acquisitions | |||||
Intangible assets | 208 | ||||
Weighted-average useful life of acquired intangible assets | 7 years | ||||
Allocated amount, fixed assets | 124 | ||||
Allocated amount, deferred tax liabilities | -74 | ||||
Allocated amount, Other assets and liabilities, net | 93 | ||||
Allocated amount, Goodwill | 546 | ||||
Total consideration (net of cash acquired) | 897 | ||||
Thomas & Betts | |||||
Acquisitions | |||||
Fair value of replacement vested stock options issued | 5 | ||||
Purchase price per share of acquisition (in dollars per share) | $72 | ||||
Aggregate cash outflows related to acquisition | 3,700 | ||||
Cash outflows for purchase of shares | 3,282 | ||||
Cash settlement of acquired entity's options held at acquisition date | 94 | ||||
Cash outflows to repay debt assumed upon acquisition | 324 | ||||
Allocation of the purchase consideration for business acquisitions | |||||
Intangible assets | 1,515 | ||||
Weighted-average useful life of acquired intangible assets | 15 years | ||||
Allocated amount, fixed assets | 458 | ||||
Allocated amount, debt acquired | -619 | ||||
Allocated amount, deferred tax liabilities | -971 | ||||
Allocated amount, inventories | 300 | ||||
Allocated amount, Other assets and liabilities, net | 49 | ||||
Allocated amount, Goodwill | 2,649 | ||||
Total consideration (net of cash acquired) | 3,381 | ||||
Gross receivables | 387 | ||||
Receivables, net of allowance for estimated uncollectable receivables | 344 | ||||
Cash acquired | 521 | ||||
Total revenues | 1,541 | ||||
Net loss (including acquisition charges) | 10 | ||||
Unaudited pro forma financial information | |||||
Total revenues | 40,251 | ||||
Income from continuing operation, net of tax | 2,924 | ||||
Impact on cost of sales from additional amortization of intangible assets (excluding order backlog capitalized upon acquisition) | -26 | ||||
Impact on cost of sales from amortization of order backlog capitalized upon acquisition | 11 | ||||
Impact on cost of sales from fair valuing acquired inventory | 31 | ||||
Impact on cost of sales from additional depreciation of fixed assets | -12 | ||||
Interest expenses on debt | 5 | ||||
Impact on selling, general and administrative expenses from Thomas & Betts stock-option plans adjustments | 16 | ||||
Impact on selling, general and administrative expenses from acquisition related costs | 56 | ||||
Impact on interest and other finance expense from bridging facility costs | 13 | ||||
Other | -5 | ||||
Income taxes | -7 | ||||
Total pro forma adjustments | 82 | ||||
Thomas & Betts | Intangibles other than software: Customer-related | |||||
Allocation of the purchase consideration for business acquisitions | |||||
Intangible assets | 1,169 | ||||
Weighted-average useful life of acquired intangible assets | 18 years | ||||
Thomas & Betts | Technology | |||||
Allocation of the purchase consideration for business acquisitions | |||||
Intangible assets | 179 | ||||
Weighted-average useful life of acquired intangible assets | 5 years | ||||
Thomas & Betts | Trade name(s) | |||||
Allocation of the purchase consideration for business acquisitions | |||||
Intangible assets | 155 | ||||
Weighted-average useful life of acquired intangible assets | 10 years | ||||
Thomas & Betts | Order backlog | |||||
Allocation of the purchase consideration for business acquisitions | |||||
Intangible assets | 12 | ||||
Weighted-average useful life of acquired intangible assets | 7 months 15 days | ||||
Business acquisitions in 2012, excluding Thomas & Betts | |||||
Allocation of the purchase consideration for business acquisitions | |||||
Intangible assets | 68 | ||||
Allocated amount, fixed assets | 25 | ||||
Allocated amount, deferred tax liabilities | -24 | ||||
Allocated amount, Other assets and liabilities, net | 21 | ||||
Allocated amount, Goodwill | 172 | ||||
Total consideration (net of cash acquired) | $262 |
Acquisitions_and_business_dive3
Acquisitions and business divestments (Details 2) (USD $) | 12 Months Ended |
In Millions, unless otherwise specified | Dec. 31, 2014 |
Acquisitions and business divestments | |
Proceeds from divestments of consolidated businesses, net of transaction costs | $1,090 |
Net gains relating to divestments of consolidated businesses, net of transaction costs | $543 |
Cash_and_equivalents_marketabl2
Cash and equivalents, marketable securities and short-term investments (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Cash and equivalents, marketable securities and short-term investments | |||
Cost basis | $6,752 | $6,475 | |
Gross unrealized gains | 18 | 16 | |
Gross unrealized losses | -2 | -6 | |
Fair value | 6,768 | 6,485 | |
Cash and equivalents | 5,443 | 6,021 | |
Marketable securities and short-term investments | 1,325 | 464 | |
Securities for Reverse Repurchase Agreements | 219 | ||
Gross realized gains (reclassified from accumulated other comprehensive loss to income) on available-for-sale securities | 2 | 10 | 3 |
Sales of held-to-maturity securities | 0 | 0 | 0 |
Gross realized losses (reclassified from accumulated other comprehensive loss to income) on available-for-sale securities | 23 | ||
Securities held-to-maturity | |||
Cash and equivalents, marketable securities and short-term investments | |||
Cost basis | 95 | 104 | |
Gross unrealized gains | 14 | 17 | |
Fair value | 109 | 121 | |
Cash | |||
Cash and equivalents, marketable securities and short-term investments | |||
Cost basis | 2,218 | 2,414 | |
Fair value | 2,218 | 2,414 | |
Cash and equivalents | 2,218 | 2,414 | |
Time deposits | |||
Cash and equivalents, marketable securities and short-term investments | |||
Cost basis | 3,340 | 3,556 | |
Fair value | 3,340 | 3,556 | |
Cash and equivalents | 3,140 | 3,538 | |
Marketable securities and short-term investments | 200 | 18 | |
Other short-term investments | |||
Cash and equivalents, marketable securities and short-term investments | |||
Cost basis | 225 | 9 | |
Fair value | 225 | 9 | |
Marketable securities and short-term investments | 225 | 9 | |
Debt securities - U.S. government obligations | Available-for-sale securities | |||
Cash and equivalents, marketable securities and short-term investments | |||
Cost basis | 135 | 103 | |
Gross unrealized gains | 2 | 2 | |
Gross unrealized losses | -1 | -1 | |
Fair value | 136 | 104 | |
Marketable securities and short-term investments | 136 | 104 | |
Debt securities - European government obligations | Available-for-sale securities | |||
Cash and equivalents, marketable securities and short-term investments | |||
Cost basis | 24 | ||
Gross unrealized gains | 1 | ||
Fair value | 25 | ||
Marketable securities and short-term investments | 25 | ||
Debt securities - Other government obligations | Available-for-sale securities | |||
Cash and equivalents, marketable securities and short-term investments | |||
Cost basis | 2 | 3 | |
Fair value | 2 | 3 | |
Marketable securities and short-term investments | 2 | 3 | |
Debt securities - Corporate | Available-for-sale securities | |||
Cash and equivalents, marketable securities and short-term investments | |||
Cost basis | 734 | 212 | |
Gross unrealized gains | 4 | 4 | |
Gross unrealized losses | -1 | -1 | |
Fair value | 737 | 215 | |
Cash and equivalents | 85 | 69 | |
Marketable securities and short-term investments | 652 | 146 | |
Equity securities | Available-for-sale securities | |||
Cash and equivalents, marketable securities and short-term investments | |||
Cost basis | 98 | 154 | |
Gross unrealized gains | 12 | 9 | |
Gross unrealized losses | -4 | ||
Fair value | 110 | 159 | |
Marketable securities and short-term investments | $110 | $159 |
Cash_and_equivalents_marketabl3
Cash and equivalents, marketable securities and short-term investments (Details 2) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Held-to-maturity and available-for-sale securities | ||
Available-for-sale securities, Less than one year, Cost basis | $637 | |
Available-for-sale securities, One to five years, Cost basis | 178 | |
Available-for-sale securities, Six to ten years, Cost basis | 56 | |
Available-for-sale securities, Total Cost basis | 871 | |
Available-for-sale securities, Less than one year, Fair value | 637 | |
Available-for-sale securities, One to five years, Fair value | 181 | |
Available-for-sale securities, Six to ten years, Fair value | 57 | |
Available-for-sale securities, Total Fair value | 875 | |
Held-to-maturity Securities, One to five years, Cost basis | 75 | |
Held-to-maturity Securities, Six to ten years, Cost basis | 20 | |
Held-to-maturity Securities, Total Cost basis | 95 | |
Held-to-maturity Securities, One to five years, Fair value | 85 | |
Held-to-maturity Securities, Six to ten years, Fair value | 24 | |
Held-to-maturity Securities, Total Fair value | 109 | |
Marketable securities pledged as collateral | $95 | $97 |
Derivative_financial_instrumen2
Derivative financial instruments (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Financial instruments | |||
Company policy, maximum level of hedging of foreign currency risk exposure as percentage of anticipated sales and purchases over the next 12 months (as a percent) | 100.00% | ||
Maximum number of months for which forecasted foreign currency exposures are hedged | 12 months | ||
Financial Instruments: | |||
Unrealized (losses) gains in OCI, net of tax, on derivatives designated as cash flow hedges | ($21) | $22 | $37 |
Expected losses on derivatives designated as cash flow hedges to be reclassified from OCI to earnings in the next fiscal year | 12 | ||
Longest maturity of a derivative classified as a cash flow hedge | 57 months | ||
Gains (losses) recognized in OCI on derivatives (effective portion) | -65 | 33 | 74 |
Gains (losses) reclassified from OCI into income (effective portion) | -10 | 54 | 42 |
Gains (losses), net of tax, reclassified from accumulated other comprehensive income (loss) to earnings | -9 | 43 | 28 |
Gains (losses) recognized in income, derivatives not designated in hedge relationships | -679 | 246 | 80 |
Minimum | |||
Financial Instruments: | |||
Percentage of commodity hedging on anticipated commodity exposure | 50.00% | ||
Commodity hedging on anticipated commodity exposure period | 12 months | ||
Maximum | |||
Financial Instruments: | |||
Percentage of commodity hedging on anticipated commodity exposure | 100.00% | ||
Commodity hedging on anticipated commodity exposure period | 18 months | ||
Copper swaps (in metric tonnes) | |||
Financial Instruments: | |||
Notional amounts of outstanding commodity derivatives | 46,520 | 42,866 | 45,222 |
Aluminum swaps (in metric tonnes) | |||
Financial Instruments: | |||
Notional amounts of outstanding commodity derivatives | 3,846 | 3,525 | 5,495 |
Nickel swaps (in metric tonnes) | |||
Financial Instruments: | |||
Notional amounts of outstanding commodity derivatives | 18 | 21 | |
Lead swaps (in metric tonnes) | |||
Financial Instruments: | |||
Notional amounts of outstanding commodity derivatives | 6,550 | 7,100 | 13,025 |
Zinc swaps (in metric tonnes) | |||
Financial Instruments: | |||
Notional amounts of outstanding commodity derivatives | 200 | 300 | 225 |
Silver swaps (in ounces) | |||
Financial Instruments: | |||
Notional amounts of outstanding commodity derivatives | 1,996,845 | 1,936,581 | 1,415,322 |
Electricity futures (in megawatt hours) | |||
Financial Instruments: | |||
Notional amounts of outstanding commodity derivatives | 279,995 | 334,445 | |
Crude oil swaps (in barrels) | |||
Financial Instruments: | |||
Notional amounts of outstanding commodity derivatives | 128,000 | 113,000 | 135,471 |
Foreign exchange contracts | |||
Financial Instruments: | |||
Notional amount of derivative | 18,564 | 19,351 | 19,724 |
Gains (losses) recognized in OCI on derivatives (effective portion) | -42 | 22 | 74 |
Foreign exchange contracts | Total revenues | |||
Financial Instruments: | |||
Gains (losses) reclassified from OCI into income (effective portion) | -9 | 52 | 69 |
Gains (losses) recognized in income, derivatives not designated in hedge relationships | -533 | -95 | 318 |
Foreign exchange contracts | Total cost of sales | |||
Financial Instruments: | |||
Gains (losses) reclassified from OCI into income (effective portion) | 8 | -1 | -12 |
Gains (losses) recognized in income, derivatives not designated in hedge relationships | 19 | 80 | -193 |
Foreign exchange contracts | Selling, general and administrative expenses; | |||
Financial Instruments: | |||
Gains (losses) recognized in income, derivatives not designated in hedge relationships | 2 | -1 | -3 |
Foreign exchange contracts | Interest and other finance expense | |||
Financial Instruments: | |||
Gains (losses) recognized in income, derivatives not designated in hedge relationships | -260 | 223 | 68 |
Embedded foreign exchange derivatives | |||
Financial Instruments: | |||
Notional amount of derivative | 3,013 | 3,049 | 3,572 |
Embedded foreign exchange derivatives | Total revenues | |||
Financial Instruments: | |||
Gains (losses) recognized in income, derivatives not designated in hedge relationships | 149 | 101 | -148 |
Embedded foreign exchange derivatives | Total cost of sales | |||
Financial Instruments: | |||
Gains (losses) recognized in income, derivatives not designated in hedge relationships | -27 | -10 | 28 |
Interest rate contracts | |||
Financial Instruments: | |||
Notional amount of derivative | 2,242 | 4,693 | 3,983 |
Interest rate contracts | Interest and other finance expense | |||
Financial Instruments: | |||
Gains (losses) recognized in income on derivatives designated as fair value hedges | 84 | -34 | 6 |
Gains (losses) recognized in income on hedged item | -83 | 35 | -6 |
Gains (losses) recognized in income, derivatives not designated in hedge relationships | -1 | -3 | -1 |
Commodities | |||
Financial Instruments: | |||
Gains (losses) recognized in OCI on derivatives (effective portion) | -7 | -5 | 4 |
Commodities | Total cost of sales | |||
Financial Instruments: | |||
Gains (losses) reclassified from OCI into income (effective portion) | -3 | -5 | -4 |
Gains (losses) recognized in income, derivatives not designated in hedge relationships | -28 | -50 | 10 |
Commodities | Interest and other finance expense | |||
Financial Instruments: | |||
Gains (losses) recognized in income, derivatives not designated in hedge relationships | 1 | 1 | 1 |
Cash-settled call options | |||
Financial Instruments: | |||
Gains (losses) recognized in OCI on derivatives (effective portion) | -16 | 16 | -4 |
Cash-settled call options | Selling, general and administrative expenses; | |||
Financial Instruments: | |||
Gains (losses) reclassified from OCI into income (effective portion) | -6 | 8 | -11 |
Cash-settled call options | Interest and other finance expense | |||
Financial Instruments: | |||
Gains (losses) recognized in income, derivatives not designated in hedge relationships | -1 | ||
Equity derivatives | |||
Financial Instruments: | |||
Cash-settled call options held on ABB Ltd shares | 61,000,000 | 67,000,000 | 67,000,000 |
Conversion ratio | 5 | ||
Total fair value of cash settled call options on ABB Ltd shares | $33 | $56 | $26 |
Derivative_financial_instrumen3
Derivative financial instruments (Details 2) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Current in "Other current assets" | ||
Fair values of derivatives | ||
Derivative assets | $289 | $372 |
Derivative assets subject to close-out netting agreements | 164 | 284 |
Current in "Other current assets" | Derivatives designated as hedging instruments | ||
Fair values of derivatives | ||
Derivative assets | 30 | 37 |
Current in "Other current assets" | Derivatives not designated as hedging instruments | ||
Fair values of derivatives | ||
Derivative assets | 259 | 335 |
Current in "Other current assets" | Foreign exchange contracts | Derivatives designated as hedging instruments | ||
Fair values of derivatives | ||
Derivative assets | 9 | 21 |
Current in "Other current assets" | Foreign exchange contracts | Derivatives not designated as hedging instruments | ||
Fair values of derivatives | ||
Derivative assets | 156 | 272 |
Current in "Other current assets" | Commodities | Derivatives designated as hedging instruments | ||
Fair values of derivatives | ||
Derivative assets | 2 | |
Current in "Other current assets" | Commodities | Derivatives not designated as hedging instruments | ||
Fair values of derivatives | ||
Derivative assets | 4 | 6 |
Current in "Other current assets" | Cash-settled call options | Derivatives designated as hedging instruments | ||
Fair values of derivatives | ||
Derivative assets | 21 | 14 |
Current in "Other current assets" | Cash-settled call options | Derivatives not designated as hedging instruments | ||
Fair values of derivatives | ||
Derivative assets | 1 | |
Current in "Other current assets" | Embedded foreign exchange derivatives | Derivatives not designated as hedging instruments | ||
Fair values of derivatives | ||
Derivative assets | 98 | 57 |
Non-current in "Other non-current assets" | ||
Fair values of derivatives | ||
Derivative assets | 189 | 128 |
Derivative assets subject to close-out netting agreements | 119 | 63 |
Non-current in "Other non-current assets" | Derivatives designated as hedging instruments | ||
Fair values of derivatives | ||
Derivative assets | 105 | 62 |
Non-current in "Other non-current assets" | Derivatives not designated as hedging instruments | ||
Fair values of derivatives | ||
Derivative assets | 84 | 66 |
Non-current in "Other non-current assets" | Foreign exchange contracts | Derivatives designated as hedging instruments | ||
Fair values of derivatives | ||
Derivative assets | 9 | 8 |
Non-current in "Other non-current assets" | Foreign exchange contracts | Derivatives not designated as hedging instruments | ||
Fair values of derivatives | ||
Derivative assets | 25 | 42 |
Non-current in "Other non-current assets" | Commodities | Derivatives not designated as hedging instruments | ||
Fair values of derivatives | ||
Derivative assets | 1 | |
Non-current in "Other non-current assets" | Interest rate contracts | Derivatives designated as hedging instruments | ||
Fair values of derivatives | ||
Derivative assets | 85 | 14 |
Non-current in "Other non-current assets" | Cash-settled call options | Derivatives designated as hedging instruments | ||
Fair values of derivatives | ||
Derivative assets | 11 | 40 |
Non-current in "Other non-current assets" | Cash-settled call options | Derivatives not designated as hedging instruments | ||
Fair values of derivatives | ||
Derivative assets | 1 | 2 |
Non-current in "Other non-current assets" | Embedded foreign exchange derivatives | Derivatives not designated as hedging instruments | ||
Fair values of derivatives | ||
Derivative assets | 58 | 21 |
Current in "Other current liabilities" | ||
Fair values of derivatives | ||
Derivative liabilities | 438 | 202 |
Derivative liabilities subject to close-out netting agreements | 399 | 130 |
Current in "Other current liabilities" | Derivatives designated as hedging instruments | ||
Fair values of derivatives | ||
Derivative liabilities | 23 | 11 |
Current in "Other current liabilities" | Derivatives not designated as hedging instruments | ||
Fair values of derivatives | ||
Derivative liabilities | 415 | 191 |
Current in "Other current liabilities" | Foreign exchange contracts | Derivatives designated as hedging instruments | ||
Fair values of derivatives | ||
Derivative liabilities | 20 | 10 |
Current in "Other current liabilities" | Foreign exchange contracts | Derivatives not designated as hedging instruments | ||
Fair values of derivatives | ||
Derivative liabilities | 369 | 121 |
Current in "Other current liabilities" | Commodities | Derivatives designated as hedging instruments | ||
Fair values of derivatives | ||
Derivative liabilities | 3 | 1 |
Current in "Other current liabilities" | Commodities | Derivatives not designated as hedging instruments | ||
Fair values of derivatives | ||
Derivative liabilities | 19 | 15 |
Current in "Other current liabilities" | Embedded foreign exchange derivatives | Derivatives not designated as hedging instruments | ||
Fair values of derivatives | ||
Derivative liabilities | 27 | 55 |
Non-current in "Other non-current liabilities" | ||
Fair values of derivatives | ||
Derivative liabilities | 108 | 52 |
Derivative liabilities subject to close-out netting agreements | 90 | 40 |
Non-current in "Other non-current liabilities" | Derivatives designated as hedging instruments | ||
Fair values of derivatives | ||
Derivative liabilities | 16 | 10 |
Non-current in "Other non-current liabilities" | Derivatives not designated as hedging instruments | ||
Fair values of derivatives | ||
Derivative liabilities | 92 | 42 |
Non-current in "Other non-current liabilities" | Foreign exchange contracts | Derivatives designated as hedging instruments | ||
Fair values of derivatives | ||
Derivative liabilities | 16 | 3 |
Non-current in "Other non-current liabilities" | Foreign exchange contracts | Derivatives not designated as hedging instruments | ||
Fair values of derivatives | ||
Derivative liabilities | 72 | 30 |
Non-current in "Other non-current liabilities" | Commodities | Derivatives not designated as hedging instruments | ||
Fair values of derivatives | ||
Derivative liabilities | 3 | 1 |
Non-current in "Other non-current liabilities" | Interest rate contracts | Derivatives designated as hedging instruments | ||
Fair values of derivatives | ||
Derivative liabilities | 7 | |
Non-current in "Other non-current liabilities" | Embedded foreign exchange derivatives | Derivatives not designated as hedging instruments | ||
Fair values of derivatives | ||
Derivative liabilities | $17 | $11 |
Fair_values_Details
Fair values (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Assets. | ||
Available-for-sale securities in "Marketable securities and short-term investments" | $1,325 | $464 |
Derivative assets-non-current in "Other non-current assets" | 189 | 128 |
Liabilities | ||
Derivative liabilities-current in "Other current liabilities" | 438 | 202 |
Derivative liabilities-non-current in "Other non-current liabilities" | 108 | 52 |
Level 1 | Recurring | ||
Assets. | ||
Total financial assets, fair value | 136 | 129 |
Liabilities | ||
Derivative liabilities-current in "Other current liabilities" | 3 | |
Total financial liabilities, fair value | 3 | |
Level 1 | Debt securities - U.S. government obligations | Available-for-sale securities | Recurring | ||
Assets. | ||
Available-for-sale securities in "Marketable securities and short-term investments" | 136 | 104 |
Level 1 | Debt securities - European government obligations | Available-for-sale securities | Recurring | ||
Assets. | ||
Available-for-sale securities in "Marketable securities and short-term investments" | 25 | |
Level 2 | Recurring | ||
Assets. | ||
Derivative assets-current in "Other current assets" | 289 | 372 |
Derivative assets-non-current in "Other non-current assets" | 189 | 128 |
Total financial assets, fair value | 1,327 | 877 |
Liabilities | ||
Derivative liabilities-current in "Other current liabilities" | 438 | 199 |
Derivative liabilities-non-current in "Other non-current liabilities" | 108 | 52 |
Total financial liabilities, fair value | 546 | 251 |
Level 2 | Equity securities | Available-for-sale securities | Recurring | ||
Assets. | ||
Available-for-sale securities in "Marketable securities and short-term investments" | 110 | 159 |
Level 2 | Debt securities - Other government obligations | Available-for-sale securities | Recurring | ||
Assets. | ||
Available-for-sale securities in "Marketable securities and short-term investments" | 2 | 3 |
Level 2 | Debt securities - Corporate | Available-for-sale securities | Recurring | ||
Assets. | ||
Available-for-sale securities in "Cash and equivalents" | 85 | 69 |
Available-for-sale securities in "Marketable securities and short-term investments" | 652 | 146 |
Total fair value | Recurring | ||
Assets. | ||
Derivative assets-current in "Other current assets" | 289 | 372 |
Derivative assets-non-current in "Other non-current assets" | 189 | 128 |
Total financial assets, fair value | 1,463 | 1,006 |
Liabilities | ||
Derivative liabilities-current in "Other current liabilities" | 438 | 202 |
Derivative liabilities-non-current in "Other non-current liabilities" | 108 | 52 |
Total financial liabilities, fair value | 546 | 254 |
Total fair value | Equity securities | Available-for-sale securities | Recurring | ||
Assets. | ||
Available-for-sale securities in "Marketable securities and short-term investments" | 110 | 159 |
Total fair value | Debt securities - U.S. government obligations | Available-for-sale securities | Recurring | ||
Assets. | ||
Available-for-sale securities in "Marketable securities and short-term investments" | 136 | 104 |
Total fair value | Debt securities - European government obligations | Available-for-sale securities | Recurring | ||
Assets. | ||
Available-for-sale securities in "Marketable securities and short-term investments" | 25 | |
Total fair value | Debt securities - Other government obligations | Available-for-sale securities | Recurring | ||
Assets. | ||
Available-for-sale securities in "Marketable securities and short-term investments" | 2 | 3 |
Total fair value | Debt securities - Corporate | Available-for-sale securities | Recurring | ||
Assets. | ||
Available-for-sale securities in "Cash and equivalents" | 85 | 69 |
Available-for-sale securities in "Marketable securities and short-term investments" | $652 | $146 |
Fair_values_Details_2
Fair values (Details 2) (USD $) | 24 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Fair values of financial instruments carried on a cost basis | ||
Impairment charges recorded as an adjustment to the fair value of certain equity method investments | $0 | |
Other non-current assets | ||
Loans granted | 41 | 54 |
Level 1 | ||
Cash and equivalents (excluding available-for-sale securities with original maturities up to 3 months) | ||
Cash | 2,218 | 2,414 |
Marketable securities and short-term investments (excluding available-for-sale securities) | ||
Other short-term investments | 6 | 9 |
Other non-current assets | ||
Restricted cash and cash deposits | 64 | 95 |
Liabilities | ||
Short-term debt and current maturities of long-term debt (excluding capital lease obligations) | 115 | 107 |
Long-term debt (excluding capital lease obligations) | 6,148 | 6,241 |
Level 2 | ||
Cash and equivalents (excluding available-for-sale securities with original maturities up to 3 months) | ||
Time deposits | 3,140 | 3,538 |
Marketable securities and short-term investments (excluding available-for-sale securities) | ||
Time deposits | 200 | 18 |
Receivables under reverse repurchase agreements | 219 | |
Other non-current assets | ||
Loans granted | 44 | 52 |
Held-to-maturity securities | 109 | 121 |
Restricted cash and cash deposits | 161 | 219 |
Liabilities | ||
Short-term debt and current maturities of long-term debt (excluding capital lease obligations) | 209 | 317 |
Long-term debt (excluding capital lease obligations) | 1,404 | 1,333 |
Non-current deposit liabilities in "Other non-current liabilities" | 267 | 338 |
Carrying value | ||
Cash and equivalents (excluding available-for-sale securities with original maturities up to 3 months) | ||
Cash | 2,218 | 2,414 |
Time deposits | 3,140 | 3,538 |
Marketable securities and short-term investments (excluding available-for-sale securities) | ||
Time deposits | 200 | 18 |
Receivables under reverse repurchase agreements | 219 | |
Other short-term investments | 6 | 9 |
Other non-current assets | ||
Loans granted | 41 | 54 |
Held-to-maturity securities | 95 | 104 |
Restricted cash and cash deposits | 198 | 276 |
Liabilities | ||
Short-term debt and current maturities of long-term debt (excluding capital lease obligations) | 324 | 424 |
Long-term debt (excluding capital lease obligations) | 7,224 | 7,475 |
Non-current deposit liabilities in "Other non-current liabilities" | 222 | 279 |
Total fair value | ||
Cash and equivalents (excluding available-for-sale securities with original maturities up to 3 months) | ||
Cash | 2,218 | 2,414 |
Time deposits | 3,140 | 3,538 |
Marketable securities and short-term investments (excluding available-for-sale securities) | ||
Time deposits | 200 | 18 |
Receivables under reverse repurchase agreements | 219 | |
Other short-term investments | 6 | 9 |
Other non-current assets | ||
Loans granted | 44 | 52 |
Held-to-maturity securities | 109 | 121 |
Restricted cash and cash deposits | 225 | 314 |
Liabilities | ||
Short-term debt and current maturities of long-term debt (excluding capital lease obligations) | 324 | 424 |
Long-term debt (excluding capital lease obligations) | 7,552 | 7,574 |
Non-current deposit liabilities in "Other non-current liabilities" | $267 | $338 |
Receivables_net_Details
Receivables, net (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Receivables, net | |||
Trade receivables | $7,715 | $8,360 | |
Other receivables | 701 | 802 | |
Allowance | -279 | ||
Total billed receivables, net | 8,137 | 8,845 | |
Unbilled receivables, net: | |||
Costs and estimated profits in excess of billings | 4,087 | 4,552 | |
Advance payments consumed | -1,146 | -1,251 | |
Total unbilled receivables, net | 2,941 | 3,301 | |
Total receivables, net | 11,078 | 12,146 | |
Contractual retention amounts billed to customers | 489 | 552 | |
Percent of outstanding contractual retention amounts billed to customers expected to be collected in the year following the balance sheet date | 65.00% | ||
Percent of outstanding contractual retention amounts billed to customers expected to be collected the second year following the balance sheet date | 29.00% | ||
Allowance for Doubtful Accounts Receivable | |||
Balance at January 1 | 317 | ||
Balance at December 31 | 279 | ||
Allowance for doubtful accounts | |||
Receivables, net | |||
Allowance | -279 | -317 | -271 |
Allowance for Doubtful Accounts Receivable | |||
Balance at January 1 | 317 | 271 | 227 |
Additions | 103 | 147 | 155 |
Deductions | -118 | -92 | -113 |
Exchange rate differences | -23 | -9 | 2 |
Balance at December 31 | $279 | $317 | $271 |
Inventories_net_Details
Inventories, net (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Inventories, net | ||
Raw materials | $2,105 | $2,403 |
Work in process | 1,761 | 1,893 |
Finished goods | 1,572 | 1,834 |
Advances to suppliers | 253 | 246 |
Inventories, net before advance payments consumed | 5,691 | 6,376 |
Advance payments consumed | -315 | -372 |
Total inventory, net | 5,376 | 6,004 |
Cost of inventories relating to long-term contracts | $338 | $358 |
Other_noncurrent_assets_Detail
Other non-current assets (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Other non-current assets | ||
Pledged financial assets | $229 | $285 |
Derivatives (including embedded derivatives) | 189 | 128 |
Investments | 65 | 72 |
Restricted cash | 64 | 95 |
Loans granted | 41 | 54 |
Other | 139 | 124 |
Total Other non-current assets | $727 | $758 |
Property_plant_and_equipment_n2
Property, plant and equipment, net (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Property, plant and equipment, net | |||
Property, plant and equipment, gross | $12,557 | $13,381 | |
Accumulated depreciation | -6,905 | -7,127 | |
Total property, plant and equipment, net | 5,652 | 6,254 | |
Assets under capital leases included in property, plant and equipment, net | |||
Capital lease assets, gross | 280 | 210 | |
Accumulated depreciation | -163 | -115 | |
Total capital lease assets, net | 117 | 95 | |
Depreciation expense | |||
Depreciation expense including depreciation of assets under capital leases | 851 | 842 | 733 |
Land and buildings | |||
Property, plant and equipment, net | |||
Property, plant and equipment, gross | 4,142 | 4,478 | |
Assets under capital leases included in property, plant and equipment, net | |||
Capital lease assets, gross | 192 | 112 | |
Machinery and equipment | |||
Property, plant and equipment, net | |||
Property, plant and equipment, gross | 7,762 | 8,258 | |
Assets under capital leases included in property, plant and equipment, net | |||
Capital lease assets, gross | 88 | 98 | |
Construction in progress | |||
Property, plant and equipment, net | |||
Property, plant and equipment, gross | $653 | $645 |
Goodwill_and_other_intangible_2
Goodwill and other intangible assets (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Goodwill. | |||
Goodwill, at cost, beginning balance | $10,244 | ||
Accumulated impairment charges, beginning balance | -18 | ||
Goodwill at the opening balance | 10,670 | 10,226 | |
Goodwill acquired during the year | 9 | 525 | 2,895 |
Goodwill allocated to disposals | -234 | -11 | |
Exchange rate differences | -392 | -70 | |
Goodwill at the closing balance | 10,053 | 10,670 | 10,226 |
Goodwill, at cost, ending balance | 10,244 | ||
Thomas & Betts | |||
Goodwill. | |||
Goodwill at the closing balance | 2,649 | ||
Discrete Automation and Motion | |||
Goodwill. | |||
Goodwill, at cost, beginning balance | 3,420 | ||
Goodwill at the opening balance | 3,914 | 3,420 | |
Goodwill acquired during the year | -52 | 485 | |
Goodwill allocated to disposals | -9 | ||
Exchange rate differences | 18 | ||
Exchange rate differences and other | -92 | ||
Goodwill at the closing balance | 3,770 | 3,914 | |
Low Voltage Products | |||
Goodwill. | |||
Goodwill, at cost, beginning balance | 3,147 | ||
Goodwill at the opening balance | 3,059 | 3,147 | |
Goodwill acquired during the year | 1 | -45 | |
Goodwill allocated to disposals | -181 | ||
Exchange rate differences | -43 | ||
Exchange rate differences and other | -172 | ||
Goodwill at the closing balance | 2,707 | 3,059 | |
Process Automation | |||
Goodwill. | |||
Goodwill, at cost, beginning balance | 1,140 | ||
Goodwill at the opening balance | 1,229 | 1,140 | |
Goodwill acquired during the year | 24 | 85 | |
Goodwill allocated to disposals | -19 | -2 | |
Exchange rate differences | 6 | ||
Exchange rate differences and other | -60 | ||
Goodwill at the closing balance | 1,174 | 1,229 | |
Power Products | |||
Goodwill. | |||
Goodwill, at cost, beginning balance | 734 | ||
Goodwill at the opening balance | 736 | 734 | |
Goodwill acquired during the year | 9 | ||
Exchange rate differences | 2 | ||
Exchange rate differences and other | -25 | ||
Goodwill at the closing balance | 720 | 736 | |
Power Systems | |||
Goodwill. | |||
Goodwill, at cost, beginning balance | 1,762 | ||
Goodwill at the opening balance | 1,709 | 1,762 | |
Goodwill allocated to disposals | -7 | ||
Exchange rate differences | -53 | ||
Exchange rate differences and other | -42 | ||
Goodwill at the closing balance | 1,660 | 1,709 | |
Corporate and Other | |||
Goodwill. | |||
Accumulated impairment charges, beginning balance | -18 | ||
Goodwill at the opening balance | 23 | ||
Goodwill acquired during the year | 27 | ||
Goodwill allocated to disposals | -27 | ||
Exchange rate differences and other | -1 | ||
Goodwill at the closing balance | 22 | 23 | |
Goodwill, at cost, ending balance | $41 |
Goodwill_and_other_intangible_3
Goodwill and other intangible assets (Details 2) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Finite Lived Intangible Assets | |||
Gross carrying amount | $4,735 | $5,302 | |
Accumulated amortization | -2,033 | -2,005 | |
Net carrying amount | 2,702 | 3,297 | |
Additions to intangible assets other than goodwill | 96 | 300 | |
Intangible assets other than goodwill related to business combinations | |||
Amount acquired | 206 | ||
Weighted-average useful life | 7 years | ||
Amortization expense | |||
Amortization expense of intangible assets other than goodwill | 454 | 476 | 449 |
Future amortization expense of intangible assets | |||
2014 | 404 | ||
2015 | 362 | ||
2016 | 275 | ||
2017 | 191 | ||
2018 | 165 | ||
Thereafter | 1,305 | ||
Total | 2,702 | ||
Capitalized software for internal use | |||
Finite Lived Intangible Assets | |||
Gross carrying amount | 719 | 767 | |
Accumulated amortization | -599 | -618 | |
Net carrying amount | 120 | 149 | |
Additions to intangible assets other than goodwill | 52 | 66 | |
Amortization expense | |||
Amortization expense of intangible assets other than goodwill | 72 | 81 | 79 |
Capitalized software for sale | |||
Finite Lived Intangible Assets | |||
Gross carrying amount | 405 | 432 | |
Accumulated amortization | -354 | -384 | |
Net carrying amount | 51 | 48 | |
Additions to intangible assets other than goodwill | 28 | 26 | |
Amortization expense | |||
Amortization expense of intangible assets other than goodwill | 20 | 34 | 38 |
Intangibles other than software: | |||
Amortization expense | |||
Amortization expense of intangible assets other than goodwill | 362 | 361 | 332 |
Intangibles other than software: Customer-related | |||
Finite Lived Intangible Assets | |||
Gross carrying amount | 2,618 | 2,773 | |
Accumulated amortization | -623 | -481 | |
Net carrying amount | 1,995 | 2,292 | |
Additions to intangible assets other than goodwill | 82 | ||
Intangible assets other than goodwill related to business combinations | |||
Amount acquired | 82 | ||
Weighted-average useful life | 11 years | ||
Intangibles other than software: Technology-related | |||
Finite Lived Intangible Assets | |||
Gross carrying amount | 607 | 867 | |
Accumulated amortization | -304 | -374 | |
Net carrying amount | 303 | 493 | |
Additions to intangible assets other than goodwill | 110 | ||
Intangible assets other than goodwill related to business combinations | |||
Amount acquired | 108 | ||
Weighted-average useful life | 4 years | ||
Intangibles other than software: Marketing-related | |||
Finite Lived Intangible Assets | |||
Gross carrying amount | 314 | 400 | |
Accumulated amortization | -120 | -99 | |
Net carrying amount | 194 | 301 | |
Additions to intangible assets other than goodwill | 16 | ||
Intangible assets other than goodwill related to business combinations | |||
Amount acquired | 16 | ||
Weighted-average useful life | 10 years | ||
Intangibles other than software: Other | |||
Finite Lived Intangible Assets | |||
Gross carrying amount | 72 | 63 | |
Accumulated amortization | -33 | -49 | |
Net carrying amount | 39 | 14 | |
Additions to intangible assets other than goodwill | $16 |
Debt_Details
Debt (Details) | Dec. 31, 2014 | Dec. 31, 2013 | 31-May-12 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | 31-May-12 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2014 | 31-May-12 | Nov. 30, 2012 | Nov. 30, 2012 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Jan. 31, 2012 | Jan. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Mar. 31, 2012 | Mar. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | 31-May-12 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | 31-May-12 | Dec. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | 31-May-12 | Dec. 31, 2014 | Dec. 31, 2013 | Jan. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 |
USD ($) | USD ($) | ABB Finance (USA) Inc | Floating rate | Floating rate | Fixed rate | Fixed rate | Current portion of long-term debt | Current portion of long-term debt | Bonds | Bonds | Bonds | 2.5% USD Notes, due 2016 | 2.5% USD Notes, due 2016 | 1.25% CHF Bonds, due 2016 | 1.25% CHF Bonds, due 2016 | 1.25% CHF Bonds, due 2016 | 1.25% CHF Bonds, due 2016 | 1.625% USD Notes, due 2017 | 1.625% USD Notes, due 2017 | 1.625% USD Notes, due 2017 | 4.25% AUD Bonds, due 2017 | 4.25% AUD Bonds, due 2017 | 4.25% AUD Bonds, due 2017 | 4.25% AUD Bonds, due 2017 | 4.25% AUD Bonds, due 2017 | 4.25% AUD Bonds, due 2017 | 1.5% CHF Bonds, due 2018 | 1.5% CHF Bonds, due 2018 | 1.5% CHF Bonds, due 2018 | 1.5% CHF Bonds, due 2018 | 1.5% CHF Bonds, due 2018 | 1.5% CHF Bonds, due 2018 | 2.625% EUR Instruments, due 2019 | 2.625% EUR Instruments, due 2019 | 2.625% EUR Instruments, due 2019 | 2.625% EUR Instruments, due 2019 | 2.625% EUR Instruments, due 2019 | 2.625% EUR Instruments, due 2019 | 4.0% USD Notes, due 2021 | 4.0% USD Notes, due 2021 | 2.25% CHF Bonds, due 2021 | 2.25% CHF Bonds, due 2021 | 2.25% CHF Bonds, due 2021 | 2.25% CHF Bonds, due 2021 | 5.625% USD Notes, due 2021 | 5.625% USD Notes, due 2021 | 5.625% USD Notes, due 2021 | 2.875% USD Notes, due 2022 | 2.875% USD Notes, due 2022 | 2.875% USD Notes, due 2022 | 2.875% USD Notes, due 2022 | 2.875% USD Notes, due 2022 | 2.875% USD Notes, due 2022 | 2.875% USD Notes, due 2022 | 4.375% USD Notes, due 2042 | 4.375% USD Notes, due 2042 | 4.375% USD Notes, due 2042 | U.S. dollar-denominated commercial paper | U.S. dollar-denominated commercial paper | Euro-commercial paper | Euro-commercial paper | Swedish krona commercial paper | Line of credit | Line of credit | Line of credit | Line of credit | Line of credit | Line of credit | |
Program | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | CHF | USD ($) | CHF | USD ($) | USD ($) | USD ($) | USD ($) | AUD | USD ($) | AUD | USD ($) | AUD | USD ($) | CHF | USD ($) | CHF | USD ($) | CHF | USD ($) | EUR (€) | USD ($) | EUR (€) | USD ($) | EUR (€) | USD ($) | USD ($) | USD ($) | CHF | USD ($) | CHF | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | Interest rate swaps | Interest rate swaps | Interest rate swap entered into during third quarter of 2013 | Interest rate swap entered into during second quarter of 2014 | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | SEK | USD ($) | USD ($) | Multicurrency credit facility maturing 2019 | Multicurrency credit facility maturing 2019 | Multicurrency credit facility maturing 2019 | Multicurrency revolving credit facility maturing 2015 | |||||
USD ($) | USD ($) | USD ($) | USD ($) | LIBOR | EURIBOR | USD ($) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total debt | $7,691,000,000 | $8,023,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-term debt (weighted-average interest rate of 5.8% and 6.9%, respectively) | 299,000,000 | 423,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Current maturities of long-term debt (weighted average nominal interest rate of 5.9% and 3.6%, respectively) | 54,000,000 | 30,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-term debt and current maturities of long-term debt | 353,000,000 | 453,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-term debt, weighted average interest rate (as a percent) | 5.80% | 6.90% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Current maturities of long-term debt, weighted average nominal interest rate (as a percent) | 5.90% | 3.60% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Number of commercial paper programs | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, face amount | 600,000,000 | 600,000,000 | 500,000,000 | 500,000,000 | 500,000,000 | 500,000,000 | 500,000,000 | 400,000,000 | 400,000,000 | 400,000,000 | 350,000,000 | 350,000,000 | 350,000,000 | 1,250,000,000 | 1,250,000,000 | 1,250,000,000 | 650,000,000 | 650,000,000 | 350,000,000 | 350,000,000 | 250,000,000 | 250,000,000 | 1,250,000,000 | 1,250,000,000 | 1,250,000,000 | 750,000,000 | 750,000,000 | 750,000,000 | |||||||||||||||||||||||||||||||||||||||||
Commercial paper program, capacity | 2,000,000,000 | 2,000,000,000 | 5,000,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial paper program terminated, capacity | 1,000,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial paper, amount outstanding | 120,000,000 | 100,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Credit agreement, capacity | 2,000,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Term of agreement | 5 years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest cost above variable interest rate on facility (as a percent) | 0.20% | 0.20% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitment fee as a proportion of the margin (as a percent) | 35.00% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitment fee on credit facility (as a percent) | 0.07% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Utilization fee on credit facility on drawings representing one-third or less of the total facility (as a percent) | 0.08% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Utilization fee on credit facility on drawings representing between one-third and two-thirds of the total facility (as a percent) | 0.15% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Utilization fee on credit facility over two-thirds of the facility, percentage | 0.30% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amount drawn | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term debt: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term debt | 7,392,000,000 | 7,600,000,000 | 2,318,000,000 | 2,211,000,000 | 5,074,000,000 | 5,389,000,000 | 7,126,000,000 | 7,414,000,000 | 599,000,000 | 598,000,000 | 512,000,000 | 568,000,000 | 498,000,000 | 498,000,000 | 335,000,000 | 353,000,000 | 354,000,000 | 393,000,000 | 1,518,000,000 | 1,722,000,000 | 643,000,000 | 642,000,000 | 381,000,000 | 396,000,000 | 283,000,000 | 287,000,000 | 1,275,000,000 | 1,230,000,000 | 728,000,000 | 727,000,000 | |||||||||||||||||||||||||||||||||||||||
Current maturities of long-term debt | -54,000,000 | -30,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term debt, total | 7,338,000,000 | 7,570,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt nominal interest rate (as a percent) | 2.70% | 2.70% | 3.20% | 3.10% | 5.90% | 3.60% | 2.50% | 2.50% | 1.25% | 1.25% | 1.25% | 1.25% | 1.63% | 1.63% | 1.63% | 4.25% | 4.25% | 4.25% | 4.25% | 4.25% | 4.25% | 1.50% | 1.50% | 1.50% | 1.50% | 1.50% | 1.50% | 2.63% | 2.63% | 2.63% | 2.63% | 2.63% | 2.63% | 4.00% | 4.00% | 2.25% | 2.25% | 2.25% | 2.25% | 5.63% | 5.63% | 5.63% | 2.88% | 2.88% | 2.88% | 4.38% | 4.38% | 4.38% | |||||||||||||||||||||
Ownership interest (as a percent) | 100.00% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds from issuance of bonds | 2,431,000,000 | 412,000,000 | 398,000,000 | 370,000,000 | 346,000,000 | 1,648,000,000 | 1,245,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate principal of hedge obligations | 1,050,000,000 | 850,000,000 | 850,000,000 | 200,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt effective interest rate (as a percent) | 3.20% | 3.10% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt effective interest rate (as a percent) | 1.10% | 1.20% | 5.90% | 3.60% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maturities of long-term debt | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2015 | 25,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | 1,140,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | 869,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 354,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | 1,523,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Thereafter | 3,273,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | 7,184,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchase terms | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Percentage of principal amount of bonds used in redemption calculation | 100.00% | 100.00% | 100.00% | 100.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Minimum threshold for early redemption by the entity | 85.00% | 85.00% | 85.00% | 85.00% | 85.00% | 85.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principal amount of debt assumed | $250,000,000 |
Other_provisions_other_current2
Other provisions, other current liabilities and other non-current liabilities (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Other Provisions | ||
Contract-related provisions | $749 | $762 |
Provision for insurance-related reserves | 239 | 232 |
Provisions for contractual penalties and compliance and litigation matters | 237 | 327 |
Restructuring and restructuring- related provisions | 225 | 247 |
Other | 239 | 239 |
Total | 1,689 | 1,807 |
Other current liabilities | ||
Employee-related liabilities | 1,746 | 1,854 |
Accrued expenses | 545 | 694 |
Derivative liabilities (see Note 5) | 438 | 202 |
Non-trade payables | 312 | 328 |
Income taxes payable | 293 | 357 |
Other tax liabilities | 271 | 269 |
Deferred income | 169 | 155 |
Accrued customer rebates | 165 | 162 |
Accrued interest | 76 | 79 |
Pension and other employee benefits (see Note 17) | 75 | 82 |
Other | 167 | 60 |
Total | 4,257 | 4,242 |
Other non-current liabilities: | ||
Income tax related liabilities | 760 | 830 |
Non-current deposit liabilities (see Note 9) | 222 | 279 |
Environmental provisions (see Note 15) | 109 | 116 |
Derivative liabilities (see Note 5) | 108 | 52 |
Deferred income | 89 | 57 |
Employee-related liabilities | 52 | 68 |
Provisions for contractual penalties and compliance and litigation matters | 41 | 71 |
Other | 205 | 234 |
Total | $1,586 | $1,707 |
Leases_Details
Leases (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Leases | |||
Rent expense | $558 | $602 | $610 |
Sublease income received on leased assets | 17 | 22 | 25 |
Future net minimum lease payments for operating leases | |||
2015 | 432 | ||
2016 | 361 | ||
2017 | 300 | ||
2018 | 210 | ||
2019 | 170 | ||
Thereafter | 230 | ||
Total operating leases, excluding sublease rentals | 1,703 | ||
Sublease income | -27 | ||
Total operating lease | 1,676 | ||
Future net minimum lease payments for capital leases | |||
2015 | 41 | ||
2016 | 35 | ||
2017 | 24 | ||
2018 | 19 | ||
2019 | 16 | ||
Thereafter | 99 | ||
Total minimum lease payments | 234 | ||
Less: amount representing estimated executory costs included in total minimum lease payments | -2 | ||
Net minimum lease payments | 232 | ||
Less: amount representing interest | -88 | ||
Present value of minimum lease payments | $144 |
Commitments_and_contingencies_1
Commitments and contingencies (Details) | 12 Months Ended | 12 Months Ended | ||||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 |
USD ($) | USD ($) | Cables Business | Cables Business | Contingencies for regulatory, compliance and legal matters | Contingencies for regulatory, compliance and legal matters | |
USD ($) | BRL | USD ($) | USD ($) | |||
Contingencies - Environmental | ||||||
Impact of environmental obligations on income(loss) from discontinued operations, net of tax | $41 | |||||
Other provisions | 37 | 37 | ||||
Other non-current liabilities | 116 | 109 | ||||
Total | 153 | 146 | ||||
Contingencies - Regulatory, Compliance and Legal | ||||||
Litigation settlement amount | 1 | 1.5 | ||||
Accrued loss contingency related to regulatory compliance and legal contingencies | $147 | $245 |
Commitments_and_contingencies_2
Commitments and contingencies (Details 2) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Guarantees - general | ||
Maximum potential payments | $354 | $276 |
Reconciliation of Provisions for warranties including guarantees of product performance | ||
Product warranties at beginning of period | 1,362 | 1,291 |
Net change in warranties due to acquisitions and divestments | 11 | 111 |
Claims paid in cash or in kind | -319 | -294 |
Net increase to provision for changes in estimates, warranties issued and warranties expired | 224 | 245 |
Exchange rate differences | -130 | 9 |
Product warranties at end of period | 1,148 | 1,362 |
Performance guarantees | ||
Guarantees - general | ||
Maximum potential payments | 232 | 149 |
Performance guarantees | Power Generation business, Alstom SA | ||
Guarantees - general | ||
Maximum potential payments | 65 | 65 |
Performance guarantees | Projects executed as a member of consortia | Minimum | ||
Guarantees - general | ||
Original maturity of performance guarantees | 1 year | |
Performance guarantees | Projects executed as a member of consortia | Maximum | ||
Guarantees - general | ||
Maximum potential payments | 156 | 70 |
Original maturity of performance guarantees | 6 years | |
Financial guarantees | ||
Guarantees - general | ||
Maximum potential payments | 72 | 77 |
Guarantee obligations, companies with current or former equity interest held by ABB | 12 | 15 |
Indemnification guarantees | ||
Guarantees - general | ||
Maximum potential payments | 50 | 50 |
Indemnification guarantees | Lummus guarantees | ||
Guarantees - general | ||
Maximum potential payments | $50 | $50 |
Taxes_Details
Taxes (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Provisions for taxes | |||
Current taxes | $1,130 | $1,258 | $967 |
Deferred taxes | 72 | -136 | 63 |
Tax expense from continuing operations | 1,202 | 1,122 | 1,030 |
Tax expense (benefit) from discontinued operations | 1 | -8 | |
Reconciliation of taxes: | |||
Income from continuing operations before taxes | 3,896 | 4,066 | 3,838 |
Weighted-average global tax rate (as a percent) | 23.80% | 22.70% | 23.60% |
Income taxes at weighted average tax rate | 929 | 922 | 906 |
Items taxed at rates other than the weighted-average tax rate | 146 | 110 | 60 |
Impact of non-deductible goodwill allocated to divested businesses | 77 | ||
Changes in valuation allowance, net | 52 | 31 | 44 |
Effects of changes in tax laws and enacted tax rates | -52 | 1 | -27 |
Other, net | 50 | 58 | 47 |
Tax expense from continuing operations | 1,202 | 1,122 | 1,030 |
Effective tax rate for the year (as a percent) | 30.90% | 27.60% | 26.80% |
Deferred tax assets: | |||
Unused tax losses and credits | 644 | 1,000 | |
Provisions and other accrued liabilities | 825 | 858 | |
Pension | 671 | 477 | |
Inventories | 297 | 302 | |
Property, plant and equipment and other non-current assets | 265 | 83 | |
Other | 112 | 140 | |
Total gross deferred tax asset | 2,814 | 2,860 | |
Valuation allowance | -600 | -589 | |
Total gross deferred tax asset, net of valuation allowance | 2,214 | 2,271 | |
Deferred tax liabilities: | |||
Property, plant and equipment | -343 | -323 | |
Intangibles and other non-current assets | -766 | -1,110 | |
Pension and other accrued liabilities | -191 | -206 | |
Inventories | -118 | -135 | |
Other current assets | -149 | -161 | |
Unremitted earnings | -612 | -598 | |
Other | -76 | -60 | |
Total gross deferred tax liability | -2,255 | -2,593 | |
Net deferred tax liability | -41 | -322 | |
Included in: | |||
"Deferred taxes"-current assets | 902 | 832 | |
"Deferred taxes"-non-current assets | 511 | 370 | |
"Deferred taxes"-current liabilities | -289 | -259 | |
"Deferred taxes"-non-current liabilities | -1,165 | -1,265 | |
Net deferred tax liability | -41 | -322 | |
Foreign subsidiary retained earnings permanently reinvested | 100 | 200 | |
Unused tax losses and credits, valuation allowance | 151 | 172 | |
Net operating loss carry-forwards, available to certain subsidiaries | 2,200 | ||
Tax credits, available to certain subsidiaries | 67 | ||
Unrecognized tax benefits | |||
Unrecognized tax benefits, balance at beginning of period | 733 | 669 | 653 |
Net change due to acquisitions and divestments, Unrecognized tax benefits | -3 | 17 | 10 |
Increase relating to prior year tax positions, Unrecognized tax benefits | 25 | 43 | 51 |
Decrease relating to prior year tax positions, Unrecognized tax benefits | -24 | -30 | -73 |
Increase relating to current year tax positions, Unrecognized tax benefits | 85 | 90 | 141 |
Decrease related to current year tax positions, Unrecognized tax benefits | -1 | -1 | -3 |
Decrease due to settlements with tax authorities, Unrecognized tax benefits | -19 | -18 | -89 |
Decrease as a result of the applicable statute of limitations, Unrecognized tax benefits | -36 | -46 | -29 |
Exchange rate differences, Unrecognized tax benefits | -55 | 9 | 8 |
Unrecognized tax benefits, balance at end of period | 705 | 733 | 669 |
Increase relating to current year tax positions, Unrecognized tax benefits, interpretation of tax law and double tax treaty | 56 | 62 | 108 |
Penalties and interest related to unrecognized tax benefits: | |||
Beginning balance of penalties and interest related to unrecognized tax benefits | 154 | 127 | 169 |
Net change due to acquisitions and divestments, penalties and interest | 1 | 2 | |
Increase relating to prior year tax positions, penalties and interest | 39 | 36 | 26 |
Decrease relating to prior year tax positions, penalties and interest | -7 | -56 | |
Increase relating to current year tax positions, penalties and interest | 4 | 1 | |
Decrease due to settlements with tax authorities, penalties and interest | -10 | -5 | -11 |
Decrease as a result of the applicable statute of limitations, penalties and interest | -19 | -13 | -7 |
Exchange rate differences, penalties and interest | -12 | 3 | 5 |
Ending balance of penalties and interest related to unrecognized tax benefits | 146 | 154 | 127 |
Total unrecognized tax benefits, including penalties and interest: | |||
Classification as unrecognized tax items at beginning | 887 | 796 | 822 |
Net change due to acquisitions and divestments | -2 | 19 | 10 |
Increase relating to prior year tax positions | 64 | 79 | 77 |
Decrease relating to prior year tax positions | -31 | -30 | -129 |
Increase relating to current year tax positions | 85 | 94 | 142 |
Decrease related to current year tax positions | -1 | -1 | -3 |
Decrease due to settlements with tax authorities | -29 | -23 | -100 |
Decrease as a result of the applicable statute of limitations | -55 | -59 | -36 |
Exchange rate differences | -67 | 12 | 13 |
Balance at end, which would, if recognized, affect the effective tax rate | 851 | 887 | 796 |
Expiring through 2034 | |||
Included in: | |||
Net operating loss carry-forwards, available to certain subsidiaries | 1,232 | ||
Tax credits, available to certain subsidiaries | $48 |
Taxes_Details_2
Taxes (Details 2) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Taxes | |||
Changes in valuation allowance, net | $52 | $31 | $44 |
Decrease due to settlements with tax authorities, penalties and interest | 10 | 5 | 11 |
Decrease relating to prior year tax positions | -31 | -30 | -129 |
Decrease due to settlements with tax authorities, Unrecognized tax benefits, interpretation of tax law and double tax treaty | 47 | ||
Income tax reconciliation changes enacted in double tax treaties | 62 | ||
Reconciliation of taxes, non deductible expenses | 45 | 71 | 94 |
Gain on sale of businesses applicable income taxes | 279 | ||
Net (gain) loss from sale of businesses | 543 | -16 | -2 |
Expected resolution of uncertain tax positions, pending cases | 69 | ||
Northern Europe | |||
Taxes | |||
Decrease relating to prior year tax positions | 87 | ||
Central Europe | |||
Taxes | |||
Changes in valuation allowance, net | 42 | 36 | |
Central Europe and South America | |||
Taxes | |||
Changes in valuation allowance, net | 104 | ||
South America | |||
Taxes | |||
Changes in valuation allowance, net | $31 |
Employee_benefits_Details
Employee benefits (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Amounts recognized in accumulated other comprehensive loss | |||
Amounts recognized in AOCI attributable to Noncontrolling interests | ($3) | ($3) | ($7) |
Defined pension benefits | |||
Defined Benefit Plan, Change in Benefit Obligation | |||
Benefit obligation at January 1 | 12,063 | 12,063 | |
Service cost | 243 | 249 | 221 |
Interest cost | 409 | 373 | 396 |
Contributions by plan participants | 81 | 81 | |
Benefit payments | -632 | -612 | |
Benefit obligations of businesses acquired (divested) | -27 | 7 | |
Actuarial (gain) loss | 1,536 | -273 | |
Plan amendments and other | -64 | -50 | |
Exchange rate differences | -1,254 | 225 | |
Benefit obligation at December 31 | 12,355 | 12,063 | 12,063 |
Defined Benefit Plan, Change in Fair Value of Plan Assets | |||
Fair value of plan assets at January 1 | 10,930 | 10,282 | |
Actual return on plan assets | 918 | 621 | |
Contributions by employer | 308 | 403 | |
Contributions by plan participants | 81 | 81 | |
Benefit payments | -632 | -612 | |
Plan assets of businesses acquired (divested) | -25 | ||
Plan amendments and other | -68 | -57 | |
Exchange rate differences | -1,047 | 212 | |
Fair value of plan assets at December 31 | 10,465 | 10,930 | 10,282 |
Funded status-underfunded | 1,890 | 1,133 | |
Amounts recognized in accumulated other comprehensive loss | |||
Net actuarial loss | -2,765 | -2,050 | -2,574 |
Prior service (cost) credit | 2 | -21 | -32 |
Amount recognized in OCI and NCI | -2,763 | -2,071 | -2,606 |
Taxes associated with amount recognized in OCI and NCI | 652 | 459 | 631 |
Amount recognized in OCI and NCI, net of tax | -2,111 | -1,612 | -1,975 |
Other postretirement benefits | |||
Defined Benefit Plan, Change in Benefit Obligation | |||
Benefit obligation at January 1 | 236 | 281 | |
Service cost | 1 | 1 | 1 |
Interest cost | 10 | 9 | 11 |
Benefit payments | -14 | -15 | |
Actuarial (gain) loss | 14 | -41 | |
Plan amendments and other | 2 | ||
Exchange rate differences | -2 | -1 | |
Benefit obligation at December 31 | 245 | 236 | 281 |
Defined Benefit Plan, Change in Fair Value of Plan Assets | |||
Contributions by employer | 14 | 15 | |
Benefit payments | -14 | -15 | |
Funded status-underfunded | 245 | 236 | |
Amounts recognized in accumulated other comprehensive loss | |||
Net actuarial loss | -39 | -25 | -69 |
Prior service (cost) credit | 16 | 24 | 33 |
Amount recognized in OCI and NCI | -23 | -1 | -36 |
Amount recognized in OCI and NCI, net of tax | ($23) | ($1) | ($36) |
Employee_benefits_Details_2
Employee benefits (Details 2) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | |||
Non-current assets | |||
Other employee-related benefits | ($28) | ($27) | |
Prepaid pension and other employee benefits | -70 | -93 | |
Current liabilities. | |||
Other employee-related benefits, Current | 40 | 44 | |
Pension and other employee benefits, Current | 75 | 82 | |
Non-current liabilities | |||
Other employee-related benefits, Noncurrent | 252 | 242 | |
Pension and other employee benefits, Noncurrent | 2,394 | 1,639 | |
PBO exceeds assets | |||
Defined Benefit Plan Amounts Recognized in Balance Sheet | |||
Funded status-underfunded | 1,932 | 1,199 | |
Funded status, difference of benefit obligation and plan assets | |||
PBO | 11,576 | 11,054 | |
Assets | 9,644 | 9,855 | |
Funded status-underfunded | 1,932 | 1,199 | |
Assets. | 9,644 | 9,855 | |
Assets exceed PBO | |||
Defined Benefit Plan Amounts Recognized in Balance Sheet | |||
Funded status-underfunded | -42 | -66 | |
Funded status, difference of benefit obligation and plan assets | |||
PBO | 779 | 1,009 | |
Assets | 821 | 1,075 | |
Funded status-underfunded | -42 | -66 | |
Assets. | 821 | 1,075 | |
ABO exceeds assets | |||
Funded status, difference of benefit obligation and plan assets | |||
Assets | 8,091 | 8,161 | |
ABO | 9,921 | 9,112 | |
Assets. | 8,091 | 8,161 | |
Funded status | 1,830 | 951 | |
Assets exceed ABO | |||
Funded status, difference of benefit obligation and plan assets | |||
Assets | 2,374 | 2,769 | |
ABO | 1,948 | 2,482 | |
Assets. | 2,374 | 2,769 | |
Funded status | -426 | -287 | |
Defined pension benefits | |||
Defined Benefit Plan Amounts Recognized in Balance Sheet | |||
Overfunded plans | -42 | -66 | |
Underfunded plans-Current | 19 | 20 | |
Underfunded plans-Noncurrent | 1,913 | 1,179 | |
Funded status-underfunded | 1,890 | 1,133 | |
Non-current assets | |||
Overfunded plans | -42 | -66 | |
Current liabilities. | |||
Underfunded plans-Current | 19 | 20 | |
Non-current liabilities | |||
Underfunded plans-Noncurrent | 1,913 | 1,179 | |
Funded status, difference of benefit obligation and plan assets | |||
PBO | 12,355 | 12,063 | 12,063 |
Assets | 10,465 | 10,930 | 10,282 |
Funded status-underfunded | 1,890 | 1,133 | |
ABO | 11,869 | 11,594 | |
Assets. | 10,465 | 10,930 | 10,282 |
Funded status | 1,404 | 664 | |
Other postretirement benefits | |||
Defined Benefit Plan Amounts Recognized in Balance Sheet | |||
Underfunded plans-Current | 16 | 18 | |
Underfunded plans-Noncurrent | 229 | 218 | |
Funded status-underfunded | 245 | 236 | |
Current liabilities. | |||
Underfunded plans-Current | 16 | 18 | |
Non-current liabilities | |||
Underfunded plans-Noncurrent | 229 | 218 | |
Funded status, difference of benefit obligation and plan assets | |||
PBO | 245 | 236 | 281 |
Funded status-underfunded | $245 | $236 |
Employee_benefits_Details_3
Employee benefits (Details 3) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
One-percentage-point change in assumed health care cost trend rates | |||
1-percentage-point increase in total of service and interest cost | $1 | ||
1-percentage-point decrease in total of service and interest cost | -1 | ||
1-percentage-point increase in postretirement benefit obligation | 22 | ||
1-percentage-point decrease in postretirement benefit obligation | -19 | ||
Defined pension benefits | |||
Net periodic benefit cost: | |||
Service cost | 243 | 249 | 221 |
Interest cost | 409 | 373 | 396 |
Expected return on plan assets | -481 | -479 | -494 |
Amortization of prior service cost (credit) | 27 | 34 | 42 |
Amortization of net actuarial loss | 99 | 136 | 98 |
Curtailments, settlements and special termination benefits | 4 | 1 | 2 |
Net periodic benefit cost | 301 | 314 | 265 |
Estimated net actuarial loss that will be amortized from accumulated other comprehensive income into net periodic benefit cost during the next fiscal year | 132 | ||
Estimated net prior service cost (credit) benefit that will be amortized from accumulated other comprehensive income into net periodic benefit cost during the next fiscal year | 37 | ||
Weighted-average assumptions to determine benefit obligations | |||
Discount rate (as a percent) | 2.61% | 3.58% | |
Rate of compensation increase (as a percent) | 1.65% | 1.81% | |
Pension increase assumption (as a percent) | 1.04% | 1.14% | |
Weighted-average assumptions to determine the Net periodic benefit cost | |||
Discount rate (as a percent) | 3.58% | 3.22% | 3.91% |
Expected long-term rate of return on plan assets (as a percent) | 4.60% | 4.79% | 5.38% |
Rate of compensation increase (as a percent) | 1.81% | 1.71% | 1.62% |
Other postretirement benefits | |||
Net periodic benefit cost: | |||
Service cost | 1 | 1 | 1 |
Interest cost | 10 | 9 | 11 |
Amortization of prior service cost (credit) | -9 | -9 | -9 |
Amortization of net actuarial loss | 4 | 4 | |
Curtailments, settlements and special termination benefits | 2 | ||
Net periodic benefit cost | 2 | 7 | 7 |
Estimated net actuarial loss that will be amortized from accumulated other comprehensive income into net periodic benefit cost during the next fiscal year | 2 | ||
Estimated net prior service cost (credit) benefit that will be amortized from accumulated other comprehensive income into net periodic benefit cost during the next fiscal year | ($8) | ||
Weighted-average assumptions to determine benefit obligations | |||
Discount rate (as a percent) | 3.49% | 4.17% | |
Weighted-average assumptions to determine the Net periodic benefit cost | |||
Discount rate (as a percent) | 4.17% | 3.35% | 4.07% |
Non-pension postretirement benefit plans, participant contributions | |||
Health care cost trend rate assumed for next year (as a percent) | 8.00% | 8.15% | |
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate), (as a percent) | 5.00% | 5.00% | |
Year that the rate reaches the ultimate trend rate | 2028 | 2028 |
Employee_benefits_Details_4
Employee benefits (Details 4) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Employee benefits | ||
Company's capital stock and debit instruments included in plan assets | $15 | $18 |
Defined Benefit Plan Disclosure | ||
Target asset allocation (as a percent) | 100.00% | |
Expected long-term return on global asset allocation (as a percent) | 4.58% | |
Equity securities | ||
Defined Benefit Plan Disclosure | ||
Target asset allocation (as a percent) | 23.00% | |
Fixed income | ||
Defined Benefit Plan Disclosure | ||
Target asset allocation (as a percent) | 57.00% | |
Real estate | ||
Defined Benefit Plan Disclosure | ||
Target asset allocation (as a percent) | 11.00% | |
Other | ||
Defined Benefit Plan Disclosure | ||
Target asset allocation (as a percent) | 9.00% |
Employee_benefits_Details_5
Employee benefits (Details 5) (Defined pension benefits, USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | |||
Defined Benefit Plan, Fair Value of Pension Plan Assets | |||
Assets | $10,465 | $10,930 | $10,282 |
Level 1 | |||
Defined Benefit Plan, Fair Value of Pension Plan Assets | |||
Assets | 1,345 | 1,116 | |
Level 1 | Equity securities | |||
Defined Benefit Plan, Fair Value of Pension Plan Assets | |||
Assets | 433 | 387 | |
Level 1 | Government and corporate securities | |||
Defined Benefit Plan, Fair Value of Pension Plan Assets | |||
Assets | 638 | 586 | |
Level 1 | Cash and short-term investments | |||
Defined Benefit Plan, Fair Value of Pension Plan Assets | |||
Assets | 274 | 143 | |
Level 2 | |||
Defined Benefit Plan, Fair Value of Pension Plan Assets | |||
Assets | 8,049 | 8,603 | |
Level 2 | Mutual funds/commingled funds | |||
Defined Benefit Plan, Fair Value of Pension Plan Assets | |||
Assets | 1,821 | 2,287 | |
Level 2 | Emerging market mutual funds/commingled funds | |||
Defined Benefit Plan, Fair Value of Pension Plan Assets | |||
Assets | 487 | 515 | |
Level 2 | Government and corporate securities | |||
Defined Benefit Plan, Fair Value of Pension Plan Assets | |||
Assets | 1,211 | 1,011 | |
Level 2 | Government and corporate mutual funds/commingled funds | |||
Defined Benefit Plan, Fair Value of Pension Plan Assets | |||
Assets | 3,521 | 3,442 | |
Level 2 | Emerging market bonds - mutual funds/commingled funds | |||
Defined Benefit Plan, Fair Value of Pension Plan Assets | |||
Assets | 671 | 645 | |
Level 2 | Insurance contracts | |||
Defined Benefit Plan, Fair Value of Pension Plan Assets | |||
Assets | 126 | 69 | |
Level 2 | Cash and short-term investments | |||
Defined Benefit Plan, Fair Value of Pension Plan Assets | |||
Assets | 56 | 505 | |
Level 2 | Real estate | |||
Defined Benefit Plan, Fair Value of Pension Plan Assets | |||
Assets | 94 | 82 | |
Level 2 | Commodities | |||
Defined Benefit Plan, Fair Value of Pension Plan Assets | |||
Assets | 62 | 47 | |
Level 3 | |||
Defined Benefit Plan, Fair Value of Pension Plan Assets | |||
Assets | 1,071 | 1,211 | 1,182 |
Level 3 | Private equity | |||
Defined Benefit Plan, Fair Value of Pension Plan Assets | |||
Assets | 136 | 155 | 164 |
Level 3 | Hedge funds | |||
Defined Benefit Plan, Fair Value of Pension Plan Assets | |||
Assets | 93 | 158 | 153 |
Level 3 | Real estate | |||
Defined Benefit Plan, Fair Value of Pension Plan Assets | |||
Assets | 842 | 866 | 830 |
Level 3 | Commodities | |||
Defined Benefit Plan, Fair Value of Pension Plan Assets | |||
Assets | 32 | 35 | |
Total fair value | |||
Defined Benefit Plan, Fair Value of Pension Plan Assets | |||
Assets | 10,465 | 10,930 | |
Total fair value | Equity securities | |||
Defined Benefit Plan, Fair Value of Pension Plan Assets | |||
Assets | 433 | 387 | |
Total fair value | Mutual funds/commingled funds | |||
Defined Benefit Plan, Fair Value of Pension Plan Assets | |||
Assets | 1,821 | 2,287 | |
Total fair value | Emerging market mutual funds/commingled funds | |||
Defined Benefit Plan, Fair Value of Pension Plan Assets | |||
Assets | 487 | 515 | |
Total fair value | Government and corporate securities | |||
Defined Benefit Plan, Fair Value of Pension Plan Assets | |||
Assets | 1,849 | 1,597 | |
Total fair value | Government and corporate mutual funds/commingled funds | |||
Defined Benefit Plan, Fair Value of Pension Plan Assets | |||
Assets | 3,521 | 3,442 | |
Total fair value | Emerging market bonds - mutual funds/commingled funds | |||
Defined Benefit Plan, Fair Value of Pension Plan Assets | |||
Assets | 671 | 645 | |
Total fair value | Insurance contracts | |||
Defined Benefit Plan, Fair Value of Pension Plan Assets | |||
Assets | 126 | 69 | |
Total fair value | Cash and short-term investments | |||
Defined Benefit Plan, Fair Value of Pension Plan Assets | |||
Assets | 330 | 648 | |
Total fair value | Private equity | |||
Defined Benefit Plan, Fair Value of Pension Plan Assets | |||
Assets | 136 | 155 | |
Total fair value | Hedge funds | |||
Defined Benefit Plan, Fair Value of Pension Plan Assets | |||
Assets | 93 | 158 | |
Total fair value | Real estate | |||
Defined Benefit Plan, Fair Value of Pension Plan Assets | |||
Assets | 936 | 948 | |
Total fair value | Commodities | |||
Defined Benefit Plan, Fair Value of Pension Plan Assets | |||
Assets | $62 | $79 |
Employee_benefits_Details_6
Employee benefits (Details 6) (Defined pension benefits, USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Change in Level 3 fair value measurement rollforward, plan assets | ||
Fair value of plan assets at January 1 | $10,930 | $10,282 |
Return on plan assets: | ||
Exchange rate differences | -1,047 | 212 |
Fair value of plan assets at December 31 | 10,465 | 10,930 |
Level 3 | ||
Change in Level 3 fair value measurement rollforward, plan assets | ||
Fair value of plan assets at January 1 | 1,211 | 1,182 |
Return on plan assets: | ||
Assets still held at December 31 | 56 | 41 |
Assets sold during the year | 11 | 1 |
Purchases (sales) | -68 | -39 |
Transfers into Level 3 | -27 | 8 |
Exchange rate differences | -112 | 18 |
Fair value of plan assets at December 31 | 1,071 | 1,211 |
Private equity | Level 3 | ||
Change in Level 3 fair value measurement rollforward, plan assets | ||
Fair value of plan assets at January 1 | 155 | 164 |
Return on plan assets: | ||
Assets still held at December 31 | 21 | 6 |
Assets sold during the year | 3 | 8 |
Purchases (sales) | -39 | -24 |
Exchange rate differences | -4 | 1 |
Fair value of plan assets at December 31 | 136 | 155 |
Hedge funds | Level 3 | ||
Change in Level 3 fair value measurement rollforward, plan assets | ||
Fair value of plan assets at January 1 | 158 | 153 |
Return on plan assets: | ||
Assets still held at December 31 | -3 | 28 |
Assets sold during the year | 8 | -7 |
Purchases (sales) | -59 | -19 |
Exchange rate differences | -11 | 3 |
Fair value of plan assets at December 31 | 93 | 158 |
Real estate | Level 3 | ||
Change in Level 3 fair value measurement rollforward, plan assets | ||
Fair value of plan assets at January 1 | 866 | 830 |
Return on plan assets: | ||
Assets still held at December 31 | 43 | 10 |
Purchases (sales) | 30 | 4 |
Transfers into Level 3 | 8 | |
Exchange rate differences | -97 | 14 |
Fair value of plan assets at December 31 | 842 | 866 |
Commodities | Level 3 | ||
Change in Level 3 fair value measurement rollforward, plan assets | ||
Fair value of plan assets at January 1 | 32 | 35 |
Return on plan assets: | ||
Assets still held at December 31 | -5 | -3 |
Transfers into Level 3 | -27 | |
Fair value of plan assets at December 31 | $32 |
Employee_benefits_Details_7
Employee benefits (Details 7) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Contributions | |||
Expense of defined contribution plans | $236 | $243 | $220 |
Defined pension benefits | |||
Contributions | |||
Total contributions to defined benefit pension and other postretirement benefit plans | 308 | 403 | |
Of which, discretionary contributions to defined benefit pension plans | 75 | 164 | |
Contributions by employer, noncash | 25 | 160 | |
Estimated contribution by employer, next fiscal year | 233 | ||
Estimated discretionary contributions by employer, next fiscal year | 23 | ||
Expected future cash flows in respect of pension and other postretirement benefit plans | |||
2015 | 644 | ||
2016 | 668 | ||
2017 | 633 | ||
2018 | 627 | ||
2019 | 627 | ||
Years 2020-2024 | 3,002 | ||
Other postretirement benefits | |||
Contributions | |||
Total contributions to defined benefit pension and other postretirement benefit plans | 14 | 15 | |
Estimated discretionary contributions by employer, next fiscal year | 17 | ||
Expected future cash flows in respect of pension and other postretirement benefit plans | |||
2015 | 17 | ||
2016 | 17 | ||
2017 | 17 | ||
2018 | 17 | ||
2019 | 17 | ||
Years 2020-2024 | $83 |
Sharebased_payment_arrangement2
Share-based payment arrangements (Details) | 12 Months Ended | 12 Months Ended | ||||||||||||
In Millions, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 |
USD ($) | USD ($) | USD ($) | Warrants and options | Warrants and options | Warrants and options | Warrants and options | Exercise price of 19.00 | Exercise price of 22.50 | Exercise Price 25.50 | Exercise price 15.75 | Exercise price 17.50 | Exercise price of 21.50 | Exercise price of 21.00 | |
plan | CHF | CHF | CHF | USD ($) | Warrants and options | Warrants and options | Warrants and options | Warrants and options | Warrants and options | Warrants and options | Warrants and options | |||
instrument | instrument | instrument | CHF | CHF | CHF | CHF | CHF | CHF | CHF | |||||
instrument | instrument | instrument | instrument | instrument | instrument | instrument | ||||||||
Share-based payment arrangements | ||||||||||||||
Number of share-based payment plans | 3 | |||||||||||||
Compensation cost for equity-settled stock based arrangements | $73 | $71 | $60 | |||||||||||
Shares that could be issued out of contingent capital for share-based payment arrangements (in shares) | 94,000,000 | |||||||||||||
Numbers of shares held in treasury stock | 55,843,639 | 14,093,960 | ||||||||||||
Treasury stock that could be used to settle share-based payment arrangements (in shares) | 30,000,000 | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||||||
Share-based compensation, vesting period | 3 years | |||||||||||||
Expiration period after date of grant | 6 years | |||||||||||||
Time period of interest rate used as the basis for the risk-free rate | 6 years | |||||||||||||
Assumptions used for calculations of fair value, warrants and options | ||||||||||||||
Expected volatility (as a percent) | 18.00% | 21.00% | 27.00% | |||||||||||
Dividend yield (as a percent) | 2.88% | 2.90% | 3.60% | |||||||||||
Expected term | 6 years | 6 years | 6 years | |||||||||||
Risk-free interest rate (as a percent) | 0.24% | 0.57% | 0.30% | |||||||||||
Summary of the activity related to share-based compensation arrangement | ||||||||||||||
Number of instruments outstanding at beginning of period | 297,900,000 | 342,700,000 | ||||||||||||
Number of instruments Granted | 79,900,000 | |||||||||||||
Number of instruments Exercised | -5,500,000 | 0 | ||||||||||||
Number of instruments Forfeited | -4,500,000 | |||||||||||||
Number of instruments, Expired | -25,100,000 | |||||||||||||
Number of instruments outstanding at end of period | 297,900,000 | 342,700,000 | 22,800,000 | 36,700,000 | 43,100,000 | 60,900,000 | 14,500,000 | 85,200,000 | 79,500,000 | |||||
Number of instruments Vested and expected to vest at end of period | 327,300,000 | |||||||||||||
Number of instruments Exercisable at end of period | 121,200,000 | |||||||||||||
Number of shares outstanding at beginning of period (in shares) | 59,600,000 | 68,500,000 | ||||||||||||
Share-equivalent of instruments granted (in shares) | 16,000,000 | |||||||||||||
Share-equivalent of instruments exercised (in shares) | -1,100,000 | |||||||||||||
Share-equivalent of instruments forfeited (in shares) | -900,000 | |||||||||||||
Share-equivalent of instruments expired (in shares) | -5,100,000 | |||||||||||||
Number of shares outstanding at end of period (in shares) | 59,600,000 | 68,500,000 | 4,600,000 | 7,300,000 | 8,600,000 | 12,200,000 | 2,900,000 | 17,000,000 | 15,900,000 | |||||
Share-equivalent of instruments of shares Vested and expected to vest at end of period (in shares) | 65,500,000 | |||||||||||||
Share-equivalent of instruments exercisable at end of period (in shares) | 24,200,000 | |||||||||||||
Weighted-average exercise price, Outstanding at beginning of period (in Swiss francs per share) | 21.76 | |||||||||||||
Weighted-average exercise price, Granted (in Swiss francs per share) | 21 | |||||||||||||
Weighted-average exercise prise, Exercised (in Swiss francs per share) | 15.75 | |||||||||||||
Weighted-average exercise price, Forfeited (in Swiss francs per share) | 19.34 | |||||||||||||
Weighted-average exercise price, Expired (in Swiss francs per share) | 36.4 | |||||||||||||
Weighted-average exercise price, Outstanding at end of period (in Swiss francs per share) | 20.64 | 21.76 | ||||||||||||
Weighted-average exercise price, Vested and expected to vest (in Swiss francs per share) | 20.68 | |||||||||||||
Weighted-average exercise price, Exercisable (in Swiss francs per share) | 22.28 | |||||||||||||
Weighted-average remaining contractual term, Outstanding | 3 years 7 months 6 days | 4 months 24 days | 1 year 4 months 24 days | 2 years 4 months 24 days | 3 years 4 months 24 days | 3 years 4 months 24 days | 4 years 4 months 24 days | 5 years 8 months 12 days | ||||||
Weighted-average remaining contractual term, Vested and expected to vest | 3 years 7 months 6 days | |||||||||||||
Weighted-average remaining contractual term, Exercisable | 2 years | |||||||||||||
Exercise price (in Swiss francs) | 19 | 22.5 | 25.5 | 15.75 | 17.5 | 21.5 | 21 | |||||||
Aggregate intrinsic value, Outstanding | 88 | |||||||||||||
Aggregate intrinsic value, Vested and expected to vest | 83 | |||||||||||||
Aggregate intrinsic value, Exercisable | 20 | |||||||||||||
Conversion ratio | 5 | |||||||||||||
Unrecognized compensation cost, non-vested warrants and option | $62 | |||||||||||||
Weighted average period over which unrecognized share-based compensation costs are expected to be reported | 2 years | |||||||||||||
Weighted-average grant-date fair value of warrants and options (per instrument) | 0.49 | 0.66 | 0.59 |
Sharebased_payment_arrangement3
Share-based payment arrangements (Details 2) (WARs, USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
WARs | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Vesting period | 3 years | ||
Compensation cost for cash-settled WARs | $26 | ||
Income (expense) related to the cash-settled call options | -11 | 16 | |
Aggregate fair value of outstanding WARs | 33 | 56 | |
Summary of the activity related to share-based compensation arrangements. | |||
Beginning of period (in number of shares) | 67.3 | ||
Granted (in number of WARs) | 10.7 | ||
Exercised (in number of WARs) | -5.9 | ||
Forfeited (in number of WARs) | -0.7 | ||
Expired (in number of WARs) | -10.2 | ||
End of period (in number of shares) | 61.2 | 67.3 | |
Exercisable (in number of WARs) | 18.8 | ||
Aggregate fair value at date of grant of WARs | 6 | 13 | 10 |
Share-based liabilities paid upon exercise of WARs | $9 | $7 |
Sharebased_payment_arrangement4
Share-based payment arrangements (Details 3) (ESAP.) | 12 Months Ended | |||||
In Millions, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2012 |
USD ($) | CHF | USD ($) | CHF | USD ($) | CHF | |
Share-based Compensation Arrangement by Share-based Payment Award | ||||||
Length of each savings period under the employee share acquisition plan (ESAP) | 12 months | 12 months | ||||
Number of ABB Ltd shares representing each ADS in the United States | $1 | |||||
Contractual term | 1 year | 1 year | ||||
Time period of interest rate used as the basis for the risk-free rate | 1 year | 1 year | ||||
Expected volatility (as a percent) | 18.00% | 18.00% | 20.00% | 20.00% | 23.00% | 23.00% |
Dividend yield (as a percent) | 3.10% | 3.10% | 2.84% | 2.84% | 3.45% | 3.45% |
Expected term | 1 year | 1 year | 1 year | 1 year | 1 year | 1 year |
Risk-free interest rate (as a percent) | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
Summary of the activity related to share-based compensation arrangement | ||||||
Number of shares outstanding at beginning | 4,700,000 | 4,700,000 | ||||
Number of shares Granted | 3,900,000 | 3,900,000 | ||||
Number of shares Forfeited | -200,000 | -200,000 | ||||
Number of shares Exercised | -600,000 | -600,000 | ||||
Number of shares not exercised (savings returned plus interest) | -3,900,000 | -3,900,000 | ||||
Number of shares outstanding at end | 3,900,000 | 3,900,000 | 4,700,000 | 4,700,000 | ||
Number of shares vested and expected to vest | 3,700,000 | 3,700,000 | ||||
Weighted-average exercise price at beginning of period (in Swiss francs per share) | 20.82 | |||||
Exercise prices per ADS (in Swiss francs or USD per share) | $21.81 | 20.97 | $22.92 | 20.82 | $18.30 | 17.08 |
Stated exercise prices per ADS (in Swiss francs or USD per share) | $25.21 | 22.9 | ||||
Number of ABB Ltd shares the exercise price of which has been reduced | 10 | 10 | ||||
Number of ABB Ltd shares delivered on every ten shares bought through exercise of the options | 1 | 1 | ||||
Weighted average exercise price, Forfeited (in Swiss francs per share) | 20.82 | |||||
Weighted-average exercise price, Exercised (in Swiss francs per share) | 20.82 | |||||
Weighted-average exercise price, Not exercised (savings returned plus interest) (in Swiss francs per share) | 20.82 | |||||
Weighted-average exercise price at end of period (in Swiss francs per share) | 20.97 | 20.82 | ||||
Weighted-average exercise price of shares Vested and expected to vest at end of period (in Swiss francs per share) | 20.97 | |||||
Weighted-average remaining contractual term of ESAP | 9 months 18 days | 9 months 18 days | ||||
Weighted-average remaining contractual term of ESAP, Vested and expected to vest | 9 months 18 days | 9 months 18 days | ||||
Aggregate intrinsic value of ESAP | 0.7 | $24 | ||||
Aggregate intrinsic value of ESAP, Vested and expected to vest | 0.6 | |||||
Cash received upon exercise of ESAP options | $12 | |||||
Weighted-average grant-date fair value (per option) | 1.19 | 2.79 | 1.29 |
Sharebased_payment_arrangement5
Share-based payment arrangements (Details 4) | 12 Months Ended | ||||||||||
In Millions, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
LTIP | LTIP | LTIP | LTIP | LTIP | LTIP | LTIP | LTIP | LTIP 2014, 2013 and 2012 Launches | LTIP 2014, 2013 and 2012 Launches | LTIP 2014, 2013 and 2012 Launches | |
USD ($) | CHF | USD ($) | CHF | USD ($) | CHF | Equity-Settled Awards | Cash-Settled Awards | ||||
component | component | component | USD ($) | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||
Number of components under long-term incentive plan (LTIP) | 2 | 2 | 2 | 2 | 2 | 2 | |||||
Period of weighted cumulative earnings per share performance | 3 years | 3 years | 3 years | ||||||||
Percentage of cumulative earnings per share performance of the first year's result | 33.00% | 33.00% | 33.00% | ||||||||
Percentage of cumulative earnings per share performance of the second year's result | 67.00% | 67.00% | 67.00% | ||||||||
Percentage of cumulative earnings per share performance of the third year's result | 100.00% | 100.00% | 100.00% | ||||||||
Limit on the actual number of shares received after the evaluation period, as a percentage of the conditional grant | 200.00% | 200.00% | 200.00% | ||||||||
Percentage of the value of shares that can be received in cash under the share price performance component (as a percent) | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | |||||
Percentage of the value of shares that can only be received in shares under the retention component (as a percent) | 70.00% | ||||||||||
Percentage of the value of shares that the participant contractually receives in cash (as a percent) | 30.00% | ||||||||||
Summary of the activity related to share-based compensation arrangements. | |||||||||||
Beginning of period (in number of shares) | 2.8 | 2.8 | 1.7 | 1.1 | |||||||
Granted (in number of shares) | 1 | 1 | 0.6 | 0.4 | |||||||
Vested (in number of shares) | -0.6 | -0.6 | -0.5 | -0.1 | |||||||
Expired (in number of shares) | -0.3 | -0.3 | -0.3 | ||||||||
Forfeited (in number of shares) | -0.2 | -0.2 | -0.1 | -0.1 | |||||||
End of period (in number of shares) | 2.7 | 2.7 | 2.8 | 2.8 | 1.7 | 1 | |||||
Weighted-average grant-date fair value of shares Nonvested at beginning of period (in Swiss francs per share) | 17.65 | ||||||||||
Weighted-average grant-date fair value of shares Granted (in Swiss francs per share) | 20.35 | 20.92 | 15.21 | ||||||||
Weighted-average grant-date fair value of shares Vested (in Swiss francs per share) | 20.85 | ||||||||||
Weighted-average grant-date fair value of shares Expired (in Swiss francs per share) | 8.76 | ||||||||||
Weighted-average grant-date fair value of shares Forfeited (in Swiss francs per share) | 15.71 | ||||||||||
Weighted-average grant-date fair value of shares Nonvested at end of period (in Swiss francs per share) | 18.85 | 17.65 | |||||||||
Unrecognized compensation cost at end of period | $12 | ||||||||||
Weighted average period over which unrecognized share-based compensation costs are expected to be reported | 2 years 1 month 6 days | ||||||||||
Aggregate fair value of shares, at the dates of grant | 22 | 22 | 22 | ||||||||
Grant-date fair value of shares vested | $15 |
Stockholders_equity_Details
Stockholders' equity (Details) | 1 Months Ended | 12 Months Ended | 3 Months Ended | 2 Months Ended | 12 Months Ended | ||||||||
31-May-14 | Apr. 30, 2014 | 31-May-13 | Apr. 30, 2013 | 31-May-12 | Apr. 30, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Jun. 30, 2014 | Feb. 28, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | |
USD ($) | CHF | USD ($) | CHF | USD ($) | CHF | USD ($) | USD ($) | USD ($) | Open market stock repurchases | Share repurchase program ending no later than September 2016 | Share repurchase program ending no later than September 2016 | Share repurchase program ending no later than September 2016 | |
USD ($) | USD ($) | USD ($) | USD ($) | ||||||||||
Stockholders' equity | |||||||||||||
Company's authorized shares | 2,819,000,000 | 2,819,000,000 | |||||||||||
Company's registered and issued shares | 2,314,743,264 | 2,314,743,264 | |||||||||||
Distribution declared to ABB Ltd's shareholders (in Swiss francs per share) | 0.7 | 0.68 | 0.65 | ||||||||||
Distribution to ABB Ltd's shareholders | $1,841,000,000 | $1,667,000,000 | $1,626,000,000 | $1,841,000,000 | $1,667,000,000 | $1,626,000,000 | |||||||
Treasury stock activity | |||||||||||||
Shares repurchased | 12,000,000 | 11,800,000 | |||||||||||
Value of shares repurchased | 1,015,000,000 | 282,000,000 | 733,000,000 | ||||||||||
Treasury shares held for cancellation under the buyback program | 26,000,000 | ||||||||||||
Treasury shares repurchase to supports its employee share programs | 6,800,000 | ||||||||||||
Purchases of treasury stock | 1,003,000,000 | 250,000,000 | |||||||||||
Authorized amount of share buyback program | $4,000,000,000 | ||||||||||||
Estimated percentage of shares repurchased to be held for cancellation | 75.00% |
Stockholders_equity_Details_2
Stockholders' equity (Details 2) | 1 Months Ended | 12 Months Ended | 12 Months Ended | |||||||||||||||||||||||
In Millions, except Per Share data, unless otherwise specified | Feb. 28, 2015 | Dec. 31, 2014 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 |
CHF | CHF | Minimum | Maximum | ABB Ltd (unconsolidated) | ABB Ltd (unconsolidated) | Options under 2009 launch of the MIP | Options under 2009 launch of the MIP | Options under 2010 launch of the MIP | Options under 2010 launch of the MIP | Options under 2011 launch of the MIP | Options under 2011 launch of the MIP | Options under 2012 launch of the MIP | Options under 2012 launch of the MIP | Options under 2013 launch of the MIP | Options under 2013 launch of the MIP | Options under 2014 launch of MIP | Options under 2014 launch of MIP | ESAP | ESAP | ESAP | ESAP | Other share-based payment arrangements | 2014, 2013 and 2012 launches of the LTIP | |||
CHF | CHF | USD ($) | CHF | CHF | Maximum | CHF | Maximum | CHF | Maximum | CHF | Maximum | CHF | Maximum | CHF | Maximum | Maximum | Maximum | |||||||||
Details of Stockholder's equity | ||||||||||||||||||||||||||
Shares issued relating to call options (in shares) | 1.3 | 2.7 | ||||||||||||||||||||||||
Call options exercised | 0 | |||||||||||||||||||||||||
Call options held by bank (in shares) | 9.1 | |||||||||||||||||||||||||
Call options held by the bank, weighted-average strike price (in Swiss francs per share) | 19.34 | |||||||||||||||||||||||||
Call options held by the bank, exercisable, weighted-average strike price (in Swiss francs per share) | 19.72 | |||||||||||||||||||||||||
Call options held by the bank, strike price (in Swiss francs per share) | 15.75 | 21.5 | ||||||||||||||||||||||||
Call options held by bank, exercisable (in shares) | 0.5 | |||||||||||||||||||||||||
Call options held by the bank, exercisable, strike price (in Swiss francs per share) | 15.75 | 21.5 | ||||||||||||||||||||||||
Outstanding obligation of options granted (in shares) | 4.5 | 7.3 | 8.6 | 15.1 | 17 | 15.9 | 3.9 | |||||||||||||||||||
Outstanding obligation of options and shares granted (in shares) | 1.1 | |||||||||||||||||||||||||
Outstanding obligation of shares granted (in shares) | 1.7 | |||||||||||||||||||||||||
Shares issued from treasury stock (in shares) | 0.6 | 3.7 | 2.3 | |||||||||||||||||||||||
Strike price of options granted (in Swiss francs per share) | 19 | 22.5 | 25.5 | 16.09 | 21.5 | 21 | ||||||||||||||||||||
Total statutory stockholders' equity | $9,752 | 9,651 | ||||||||||||||||||||||||
Share capital of ABB Ltd, Zurich | 2,409 | 2,384 | ||||||||||||||||||||||||
Reserves of ABB Ltd, Zurich | 8,535 | 8,446 | ||||||||||||||||||||||||
Restricted legal reserves for own shares of ABB Ltd, Zurich | 1,192 | 1,179 | ||||||||||||||||||||||||
Share capital restricted and not available for distribution | $482 | 477 | ||||||||||||||||||||||||
Percentage of share capital restricted | 20.00% | 20.00% | ||||||||||||||||||||||||
Proposed distribution (in Swiss francs per share) | 0.72 | |||||||||||||||||||||||||
Distribution by way of a nominal value reduction (in Swiss francs per share) | 0.17 | |||||||||||||||||||||||||
Dividend proposed to be paid out of capital contribution reserves of Abb Ltd (in Swiss francs per share) | 0.55 | |||||||||||||||||||||||||
Nominal value of ABB Ltd share before nominal value reduction (in Swiss francs per share) | 1.03 | |||||||||||||||||||||||||
Nominal value of ABB Ltd share after nominal value reduction (in Swiss francs per share) | 0.86 |
Earnings_per_share_Details
Earnings per share (Details) (USD $) | 12 Months Ended | ||
In Millions, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Earnings per share | |||
Shares excluded from the calculation of diluted earnings (loss) per share | 59 | 47 | 56 |
Amounts attributable to ABB shareholders | |||
Income from continuing operations, net of tax | $2,570 | $2,824 | $2,700 |
Income (loss) from discontinued operations, net of tax | 24 | -37 | 4 |
Net income attributable to ABB | 2,594 | 2,787 | 2,704 |
Weighted-average number of shares outstanding (in shares) | 2,288 | 2,297 | 2,293 |
Income from continuing operations (in dollars per share) | $1.12 | $1.23 | $1.18 |
Income (loss) from discontinued operations, net of tax (in dollars per share) | $0.01 | ($0.02) | |
Net income (in dollars per share) | $1.13 | $1.21 | $1.18 |
Amounts attributable to ABB shareholders: | |||
Income from continuing operations, net of tax | 2,570 | 2,824 | 2,700 |
Income (loss) from discontinued operations, net of tax | 24 | -37 | 4 |
Net income attributable to ABB | $2,594 | $2,787 | $2,704 |
Weighted-average number of shares outstanding (in shares) | 2,288 | 2,297 | 2,293 |
Effect of dilutive securities: | |||
Call options and shares | 7 | 8 | 2 |
Diluted weighted-average number of shares outstanding (in shares) | 2,295 | 2,305 | 2,295 |
Income from continuing operations (in dollars per share) | $1.12 | $1.23 | $1.18 |
Income (loss) from discontinued operations, net of tax (in dollars per share) | $0.01 | ($0.02) | |
Net income (in dollars per share) | $1.13 | $1.21 | $1.18 |
Other_comprehensive_income_Det
Other comprehensive income (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Foreign currency translation adjustments, before tax: | |||
Net change during the year | ($1,691) | $133 | $389 |
Available-for-sale securities, before tax | |||
Net unrealized gains (losses) arising during the year, before tax | -14 | -4 | 5 |
Reclassification adjustments for net (gains) losses included in net income, before tax | 21 | -14 | 1 |
Net change during the year | 7 | -18 | 6 |
Pension and other postretirement plans: | |||
Prior service (costs) credits arising during the year, before tax | -5 | -20 | -42 |
Net actuarial gains (losses) arising during the year, before tax | -826 | 423 | -846 |
Amortization of prior service cost included in net income, before tax | 18 | 25 | 33 |
Amortization of net actuarial loss included in net income, before tax | 99 | 140 | 102 |
Net change during the year | -714 | 568 | -753 |
Cash flow hedge derivatives, before tax | |||
Net gains (losses) arising during the year, before tax | -65 | 33 | 74 |
Reclassification adjustments for net (gains) losses included in net income, before tax | 10 | -54 | -42 |
Net change during the year | -55 | -21 | 32 |
Total other comprehensive income (loss), before tax | -2,453 | 662 | -326 |
Foreign currency translation adjustments, tax effect | |||
Foreign currency translation adjustments, tax effect | 11 | 8 | -6 |
Available-for-sale securities, tax effect | |||
Net unrealized gains (losses) arising during the year, tax effect | 5 | -2 | |
Reclassification adjustments for net (gains) losses included in net income, tax effect | -6 | 1 | |
Unrealized gains (losses) on available-for-sale securities, tax effect | -1 | 1 | -2 |
Pension and other postretirement plans, tax effect | |||
Prior service (costs) credits arising during the year, tax effect | 2 | 4 | 6 |
Net actuarial gains (losses) arising during the year, tax effect | 212 | -132 | 245 |
Amortization of prior service cost included in net income, tax effect | -1 | -2 | -3 |
Amortization of net actuarial loss included in net income, tax effect | -20 | -41 | -32 |
Net change, tax effect | 193 | -171 | 216 |
Cash flow hedge derivatives, tax effect | |||
Net gains (losses) arising during the year, tax effect | 13 | -5 | -21 |
Reclassification adjustments for net (gains) losses included in net income, tax effect | -1 | 11 | 14 |
Unrealized gains (losses) of cash flow hedge derivatives, tax effect | 12 | 6 | -7 |
Total other comprehensive income (loss), tax effect | 215 | -156 | 201 |
Foreign currency translation adjustments, net of tax | |||
Foreign currency translation adjustments, net of tax | -1,680 | 141 | 383 |
Available-for-sale securities, net of tax | |||
Net unrealized gains (losses) arising during the year, net of tax | -9 | -4 | 3 |
Reclassification adjustments for net (gains) losses included in net income, net of tax | 15 | -13 | 1 |
Unrealized gains (losses) on available-for-sale securities | 6 | -17 | 4 |
Pension and other postretirement plans, net of tax | |||
Prior service (costs) credits arising during the year, net of tax | -3 | -16 | -36 |
Net actuarial gains (losses) arising during the year, net of tax | -614 | 291 | -601 |
Amortization of prior service cost included in net income, net of tax | 17 | 23 | 30 |
Amortization of net actuarial loss included in net income, net of tax | 79 | 99 | 70 |
Net change, net of tax | -521 | 397 | -537 |
Cash flow hedge derivatives, net of tax | |||
Net gains (losses) arising during the year | -52 | 28 | 53 |
Reclassification adjustments for net (gains) losses included in net income, net of tax | 9 | -43 | -28 |
Unrealized gains (losses) of cash flow hedge derivatives | -43 | -15 | 25 |
Other Comprehensive Income (Loss), Net of Tax | ($2,238) | $506 | ($125) |
Other_comprehensive_income_Det1
Other comprehensive income (Details 2) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Changes in component of accumulated other comprehensive income (loss), net of tax | |||
Balance at the beginning of the period | ($2,012) | ($2,523) | |
Other comprehensive (loss) income before reclassifications | -2,358 | 440 | |
Amounts reclassified from OCI | 120 | 66 | |
Total other comprehensive income (loss), net of tax | -2,238 | 506 | -125 |
Less: Amounts attributable to noncontrolling interests | -9 | -5 | |
Balance at the end of the period | -4,241 | -2,012 | -2,523 |
Foreign currency translation adjustment | |||
Changes in component of accumulated other comprehensive income (loss), net of tax | |||
Balance at the beginning of the period | -431 | -580 | |
Other comprehensive (loss) income before reclassifications | -1,680 | 141 | |
Total other comprehensive income (loss), net of tax | -1,680 | 141 | |
Less: Amounts attributable to noncontrolling interests | -9 | -8 | |
Balance at the end of the period | -2,102 | -431 | |
Unrealized gains (losses) on available-for-sale securities | |||
Changes in component of accumulated other comprehensive income (loss), net of tax | |||
Balance at the beginning of the period | 7 | 24 | |
Other comprehensive (loss) income before reclassifications | -9 | -4 | |
Amounts reclassified from OCI | 15 | -13 | |
Total other comprehensive income (loss), net of tax | 6 | -17 | |
Balance at the end of the period | 13 | 7 | |
Pension and other post-retirement plan adjustments | |||
Changes in component of accumulated other comprehensive income (loss), net of tax | |||
Balance at the beginning of the period | -1,610 | -2,004 | |
Other comprehensive (loss) income before reclassifications | -617 | 275 | |
Amounts reclassified from OCI | 96 | 122 | |
Total other comprehensive income (loss), net of tax | -521 | 397 | |
Less: Amounts attributable to noncontrolling interests | 3 | ||
Balance at the end of the period | -2,131 | -1,610 | |
Unrealized gains (losses) of cash flow hedge derivatives | |||
Changes in component of accumulated other comprehensive income (loss), net of tax | |||
Balance at the beginning of the period | 22 | 37 | |
Other comprehensive (loss) income before reclassifications | -52 | 28 | |
Amounts reclassified from OCI | 9 | -43 | |
Total other comprehensive income (loss), net of tax | -43 | -15 | |
Balance at the end of the period | ($21) | $22 |
Other_comprehensive_income_Det2
Other comprehensive income (Details 3) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Amounts reclassified out of OCI | |||
Total revenues | $39,830 | $41,848 | $39,336 |
Total cost of sales | 24,506 | 25,728 | 23,838 |
SG&A expenses | 6,067 | 6,094 | 5,756 |
Income from continuing operations before taxes | 3,896 | 4,066 | 3,838 |
Tax | -1,202 | -1,122 | -1,030 |
Net income | 2,718 | 2,907 | 2,812 |
Pension and other post-retirement plan adjustments | Amounts reclassified out of "Accumulated other comprehensive loss" | |||
Amounts reclassified out of OCI | |||
Income from continuing operations before taxes | 117 | 165 | |
Tax | -21 | -43 | |
Net income | 96 | 122 | |
Amortization of prior service cost | Amounts reclassified out of "Accumulated other comprehensive loss" | |||
Amounts reclassified out of OCI | |||
Net periodic benefit cost | 18 | 25 | |
Amortization of net actuarial losses | Amounts reclassified out of "Accumulated other comprehensive loss" | |||
Amounts reclassified out of OCI | |||
Net periodic benefit cost | 99 | 140 | |
Unrealized gains (losses) of cash flow hedge derivatives | Amounts reclassified out of "Accumulated other comprehensive loss" | |||
Amounts reclassified out of OCI | |||
Income from continuing operations before taxes | 10 | -54 | |
Tax | -1 | 11 | |
Net income | 9 | -43 | |
Unrealized gains (losses) of cash flow hedge derivatives | Amounts reclassified out of "Accumulated other comprehensive loss" | Foreign exchange contracts | |||
Amounts reclassified out of OCI | |||
Total revenues | 9 | -52 | |
Total cost of sales | -8 | 1 | |
Unrealized gains (losses) of cash flow hedge derivatives | Amounts reclassified out of "Accumulated other comprehensive loss" | Commodities | |||
Amounts reclassified out of OCI | |||
Total cost of sales | 3 | 5 | |
Unrealized gains (losses) of cash flow hedge derivatives | Amounts reclassified out of "Accumulated other comprehensive loss" | Cash-settled call options | |||
Amounts reclassified out of OCI | |||
SG&A expenses | $6 | ($8) |
Restructuring_and_related_expe2
Restructuring and related expenses (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Restructuring and Related Cost | |||
Costs incurred | $235 | $252 | $180 |
Employee severance costs | |||
Restructuring and Related Cost | |||
Costs incurred | 177 | 154 | 92 |
Estimated contract settlement, loss order and other costs | |||
Restructuring and Related Cost | |||
Costs incurred | 31 | 78 | 72 |
Inventory and long-lived asset impairments | |||
Restructuring and Related Cost | |||
Costs incurred | $27 | $20 | $16 |
Operating_segment_and_geograph2
Operating segment and geographic data (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Operating segment and geographic data | |||
Revenues | $39,830 | $41,848 | $39,336 |
Operational EBITDA | 5,400 | 6,075 | 5,555 |
Depreciation and amortization | -1,305 | -1,318 | -1,182 |
Restructuring and restructuring-related expenses | -235 | -252 | -180 |
Gains and losses on sale of businesses, acquisition-related expenses and certain non-operational items | 482 | -181 | -199 |
Foreign exchange/commodity timing differences in income from operations, unrealized gains and losses on derivatives (foreign exchange, commodities, embedded derivatives) | -223 | 60 | 135 |
Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized | -42 | 14 | -28 |
Unrealized foreign exchange movements on receivables/payables (and related assets/liabilities) | 101 | -11 | -43 |
Income from operations | 4,178 | 4,387 | 4,058 |
Interest and dividend income | 80 | 69 | 73 |
Interest and other finance expense | -362 | -390 | -293 |
Income from continuing operations before taxes | 3,896 | 4,066 | 3,838 |
Discrete Automation and Motion | |||
Operating segment and geographic data | |||
Revenues | 9,296 | 8,909 | 8,480 |
Depreciation and amortization | -309 | -285 | -263 |
Low Voltage Products | |||
Operating segment and geographic data | |||
Revenues | 7,117 | 7,338 | 6,276 |
Depreciation and amortization | -301 | -323 | -250 |
Process Automation | |||
Operating segment and geographic data | |||
Revenues | 7,745 | 8,287 | 7,946 |
Depreciation and amortization | -88 | -87 | -82 |
Power Products | |||
Operating segment and geographic data | |||
Revenues | 8,782 | 9,096 | 8,987 |
Depreciation and amortization | -217 | -223 | -209 |
Power Systems | |||
Operating segment and geographic data | |||
Revenues | 6,686 | 8,025 | 7,575 |
Depreciation and amortization | -175 | -183 | -174 |
Corporate and Other | |||
Operating segment and geographic data | |||
Revenues | 204 | 193 | 72 |
Depreciation and amortization | -215 | -217 | -204 |
Corporate and Other and Intersegment elimination | |||
Operating segment and geographic data | |||
Operational EBITDA | -342 | -328 | -277 |
Intersegment elimination | |||
Operating segment and geographic data | |||
Revenues | -4,941 | -5,476 | -5,009 |
Intersegment elimination | Discrete Automation and Motion | |||
Operating segment and geographic data | |||
Revenues | 846 | 1,006 | 925 |
Intersegment elimination | Low Voltage Products | |||
Operating segment and geographic data | |||
Revenues | 415 | 391 | 362 |
Intersegment elimination | Process Automation | |||
Operating segment and geographic data | |||
Revenues | 203 | 210 | 210 |
Intersegment elimination | Power Products | |||
Operating segment and geographic data | |||
Revenues | 1,551 | 1,936 | 1,730 |
Intersegment elimination | Power Systems | |||
Operating segment and geographic data | |||
Revenues | 334 | 350 | 277 |
Intersegment elimination | Corporate and Other | |||
Operating segment and geographic data | |||
Revenues | 1,592 | 1,583 | 1,505 |
Operating | |||
Operating segment and geographic data | |||
Revenues | 39,830 | 41,848 | 39,336 |
Operating | Discrete Automation and Motion | |||
Operating segment and geographic data | |||
Revenues | 10,142 | 9,915 | 9,405 |
Operational EBITDA | 1,760 | 1,783 | 1,735 |
Operating | Low Voltage Products | |||
Operating segment and geographic data | |||
Revenues | 7,532 | 7,729 | 6,638 |
Operational EBITDA | 1,429 | 1,468 | 1,219 |
Operating | Process Automation | |||
Operating segment and geographic data | |||
Revenues | 7,948 | 8,497 | 8,156 |
Operational EBITDA | 1,029 | 1,096 | 1,003 |
Operating | Power Products | |||
Operating segment and geographic data | |||
Revenues | 10,333 | 11,032 | 10,717 |
Operational EBITDA | 1,519 | 1,637 | 1,585 |
Operating | Power Systems | |||
Operating segment and geographic data | |||
Revenues | 7,020 | 8,375 | 7,852 |
Operational EBITDA | 5 | 419 | 290 |
Operating | Corporate and Other | |||
Operating segment and geographic data | |||
Revenues | $1,796 | $1,776 | $1,577 |
Operating_segment_and_geograph3
Operating segment and geographic data (Details 2) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Operating segment and geographic data | |||
Depreciation and amortization | $1,305 | $1,318 | $1,182 |
Capital expenditure | 1,026 | 1,106 | 1,293 |
Total assets | 44,878 | 48,064 | 49,070 |
Discrete Automation and Motion | |||
Operating segment and geographic data | |||
Depreciation and amortization | 309 | 285 | 263 |
Capital expenditure | 192 | 214 | 197 |
Total assets | 10,123 | 10,931 | 9,416 |
Low Voltage Products | |||
Operating segment and geographic data | |||
Depreciation and amortization | 301 | 323 | 250 |
Capital expenditure | 184 | 204 | 208 |
Total assets | 7,978 | 9,389 | 9,534 |
Process Automation | |||
Operating segment and geographic data | |||
Depreciation and amortization | 88 | 87 | 82 |
Capital expenditure | 49 | 68 | 91 |
Total assets | 4,268 | 4,537 | 4,847 |
Power Products | |||
Operating segment and geographic data | |||
Depreciation and amortization | 217 | 223 | 209 |
Capital expenditure | 220 | 252 | 259 |
Total assets | 7,396 | 7,669 | 7,701 |
Power Systems | |||
Operating segment and geographic data | |||
Depreciation and amortization | 175 | 183 | 174 |
Capital expenditure | 92 | 101 | 194 |
Total assets | 6,855 | 7,905 | 8,083 |
Corporate and Other | |||
Operating segment and geographic data | |||
Depreciation and amortization | 215 | 217 | 204 |
Capital expenditure | 289 | 267 | 344 |
Total assets | $8,258 | $7,633 | $9,489 |
Operating_segment_and_geograph4
Operating segment and geographic data (Details 3) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Segment Reporting Information | |||
Revenues | $39,830 | $41,848 | $39,336 |
Long-lived assets at December 31 | 5,652 | 6,254 | |
Europe | |||
Segment Reporting Information | |||
Revenues | 13,674 | 14,385 | 14,073 |
Long-lived assets at December 31 | 3,460 | 3,798 | |
AmericaMember | |||
Segment Reporting Information | |||
Revenues | 11,482 | 12,115 | 10,699 |
Long-lived assets at December 31 | 1,215 | 1,450 | |
Asia | |||
Segment Reporting Information | |||
Revenues | 10,874 | 11,230 | 10,750 |
Long-lived assets at December 31 | 789 | 850 | |
Middle East and Africa | |||
Segment Reporting Information | |||
Revenues | 3,800 | 4,118 | 3,814 |
Long-lived assets at December 31 | $188 | $156 |
Operating_segment_and_geograph5
Operating segment and geographic data (Details 4) (Geographic concentration) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Revenue | United States | |||
Concentration risk | |||
Concentration risk (as a percent) | 19.00% | 18.00% | 17.00% |
Revenue | China | |||
Concentration risk | |||
Concentration risk (as a percent) | 13.00% | 12.00% | 12.00% |
Revenue | Outside Switzerland | Minimum | |||
Concentration risk | |||
Concentration risk (as a percent) | 98.00% | 98.00% | 98.00% |
Property, plant and equipment, net | United States | |||
Concentration risk | |||
Concentration risk (as a percent) | 16.00% | 17.00% | |
Property, plant and equipment, net | Switzerland | |||
Concentration risk | |||
Concentration risk (as a percent) | 16.00% | 17.00% | |
Property, plant and equipment, net | Sweden | |||
Concentration risk | |||
Concentration risk (as a percent) | 15.00% | 15.00% |