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 Power Products, Power Systems, Discrete Automation and Motion, Low Voltage Products and Process Automation. 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:

  • Power Products: manufactures and sells high- and medium-voltage switchgear and apparatus, circuit breakers for all current and voltage levels, power and distribution transformers and sensors for electric, gas and water utilities and for industrial and commercial customers.
  • Power Systems: designs, installs and upgrades high-efficiency transmission and distribution systems and power plant automation and electrification solutions, including monitoring and control products, software and services and incorporating components manufactured by both the Company and by third parties.
  • Discrete Automation and Motion: manufactures and sells motors, generators, variable speed drives, rectifiers, excitation systems, robotics, programmable logic controllers, and related services for a wide range of applications in factory automation, process industries, and utilities.
  • Low Voltage Products: manufactures products and systems that provide protection, control and measurement for electrical installations, as well as enclosures, switchboards, electronics and electromechanical devices for industrial machines, plants and related service. In addition the segment manufactures products for wiring and cable management, cable protection systems, power connection and safety. The segment also makes intelligent building control systems for home and building automation to improve comfort, energy efficiency and security.
  • 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.
  • Corporate and Other: includes headquarters, central research and development, the Company’s real estate activities, Group treasury operations and other minor activities.

The Company evaluates the performance of its segments based on operational earnings before interest, taxes, depreciation and amortization (Operational EBITDA) and Operational EBITDA margin (being Operational EBITDA as a percentage of Operational revenues).

Operational EBITDA represents earnings before interest and taxes (EBIT) excluding depreciation and amortization, restructuring and restructuring-related expenses, adjusted for the following: (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, (iii) unrealized foreign exchange movements on receivables/payables (and related assets/liabilities), (iv) acquisition-related expenses and (v) certain non-recurring items.

Operational revenues are total revenues adjusted for the following: (i) unrealized gains and losses on derivatives, (ii) realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized, and (iii) unrealized foreign exchange movements on receivables (and related assets).

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.

The following tables present segment revenues, depreciation and amortization, Operational EBITDA, Operational EBITDA margin, as well as reconciliations of Operational EBITDA to EBIT and Operational revenues to Total revenues, capital expenditure and total assets. Intersegment sales and transfers for 2012, 2011 and 2010, are accounted for as if the sales and transfers were to third parties, at current market prices.

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2012 ($ in millions)

Third-party
revenues

Intersegment
revenues

Total
revenues

Depreciation
and amortization

Operational
revenues

Operational
EBITDA(1)

Operational
EBITDA
margin (%)

(1)

Operational EBITDA by segment is presented before the elimination of intersegment profits made on inventory sales.

Power Products

8,987

1,730

10,717

209

10,702

1,585

14.8%

Power Systems

7,575

277

7,852

174

7,812

290

3.7%

Discrete Automation and Motion

8,480

925

9,405

263

9,405

1,735

18.4%

Low Voltage Products

6,276

362

6,638

250

6,626

1,219

18.4%

Process Automation

7,946

210

8,156

82

8,134

1,003

12.3%

Corporate and Other

72

1,505

1,577

204

1,576

(279)

Intersegment elimination

(5,009)

(5,009)

(5,009)

2

Consolidated

39,336

39,336

1,182

39,246

5,555

14.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2011 ($ in millions)

Third-party
revenues

Intersegment
revenues

Total
revenues

Depreciation
and amortization

Operational
revenues

Operational
EBITDA(1)

Operational
EBITDA
margin (%)

Power Products

9,028

1,841

10,869

200

10,901

1,782

16.3%

Power Systems

7,833

268

8,101

144

8,128

743

9.1%

Discrete Automation and Motion

8,047

759

8,806

251

8,817

1,664

18.9%

Low Voltage Products

4,953

351

5,304

116

5,315

1,059

19.9%

Process Automation

8,078

222

8,300

83

8,318

1,028

12.4%

Corporate and Other

51

1,508

1,559

201

1,558

(282)

Intersegment elimination

(4,949)

(4,949)

(4,949)

20

Consolidated

37,990

37,990

995

38,088

6,014

15.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2010 ($ in millions)

Third-party
revenues

Intersegment
revenues

Total
revenues

Depreciation
and amortization

Operational
revenues

Operational
EBITDA(1)

Operational
EBITDA
margin (%)

Power Products

8,486

1,713

10,199

177

10,202

1,861

18.2%

Power Systems

6,590

196

6,786

84

6,783

304

4.5%

Discrete Automation and Motion

4,978

639

5,617

78

5,613

1,026

18.3%

Low Voltage Products

4,263

291

4,554

105

4,554

926

20.3%

Process Automation

7,209

223

7,432

76

7,427

925

12.5%

Corporate and Other

63

1,468

1,531

182

1,532

(230)

Intersegment elimination

(4,530)

(4,530)

(4,530)

12

Consolidated

31,589

31,589

702

31,581

4,824

15.3%

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2012 ($ in millions, except
Operational EBITDA margin in %)

Power
Products

Power
Systems

Discrete
Automation
and Motion

Low Voltage
Products

Process
Automation

Corporate and Other and Intersegment elimination

Consoli-
idated

Operational revenues

10,702

7,812

9,405

6,626

8,134

(3,433)

39,246

Unrealized gains and losses on derivatives

30

68

(3)

17

18

1

131

Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized

(2)

(23)

4

(21)

Unrealized foreign exchange movements on receivables (and related assets)

(13)

(5)

3

(5)

(20)

Total revenues

10,717

7,852

9,405

6,638

8,156

(3,432)

39,336

 

 

 

 

 

 

 

 

Operational EBITDA

1,585

290

1,735

1,219

1,003

(277)

5,555

Depreciation and amortization

(209)

(174)

(263)

(250)

(82)

(204)

(1,182)

Acquisition-related expenses and certain non-operational items

(1)

(70)

(8)

(106)

(2)

(12)

(199)

Unrealized gains and losses on derivatives (foreign exchange, commodities, embedded derivatives)

43

44

2

21

27

(2)

135

Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized

(6)

(21)

1

(2)

(28)

Unrealized foreign exchange movements on receivables/payables (and related assets/liabilities)

(19)

(10)

(2)

(5)

(4)

(3)

(43)

Restructuring and restructuring-related expenses

(65)

(52)

4

(23)

(28)

(16)

(180)

EBIT

1,328

7

1,469

856

912

(514)

4,058

 

 

 

 

 

 

 

 

Operational EBITDA margin (%)

14.8%

3.7%

18.4%

18.4%

12.3%

14.2%

2011 ($ in millions, except
Operational EBITDA margin in %)

Power
Products

Power
Systems

Discrete
Automation
and Motion

Low Voltage
Products

Process
Automation

Corporate and Other and Intersegment elimination

Consoli-
idated

Operational revenues

10,901

8,128

8,817

5,315

8,318

(3,391)

38,088

Unrealized gains and losses on derivatives

(49)

(56)

(29)

(16)

(39)

1

(188)

Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized

(17)

(19)

1

2

(33)

Unrealized foreign exchange movements on receivables (and related assets)

34

48

17

5

19

123

Total revenues

10,869

8,101

8,806

5,304

8,300

(3,390)

37,990

 

 

 

 

 

 

 

 

Operational EBITDA

1,782

743

1,664

1,059

1,028

(262)

6,014

Depreciation and amortization

(200)

(144)

(251)

(116)

(83)

(201)

(995)

Acquisition-related expenses and certain non-operational items

(90)

(17)

(107)

Unrealized gains and losses on derivatives (foreign exchange, commodities, embedded derivatives)

(58)

(16)

(29)

(21)

4

(38)

(158)

Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized

(14)

(19)

(2)

2

1

(32)

Unrealized foreign exchange movements on receivables/payables (and related assets/liabilities)

36

38

12

2

20

1

109

Restructuring and restructuring-related expenses

(70)

(54)

(10)

(20)

(8)

(2)

(164)

EBIT

1,476

548

1,294

904

963

(518)

4,667

 

 

 

 

 

 

 

 

Operational EBITDA margin (%)

16.3%

9.1%

18.9%

19.9%

12.4%

15.8%

2010 ($ in millions, except
Operational EBITDA margin in %)

Power
Products

Power
Systems

Discrete
Automation
and Motion

Low Voltage
Products

Process
Automation

Corporate and Other and Intersegment elimination

Consoli-
idated

Operational revenues

10,202

6,783

5,613

4,554

7,427

(2,998)

31,581

Unrealized gains and losses on derivatives

20

30

16

3

11

80

Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized

6

9

(1)

1

12

1

28

Unrealized foreign exchange movements on receivables (and related assets)

(29)

(36)

(11)

(4)

(18)

(2)

(100)

Total revenues

10,199

6,786

5,617

4,554

7,432

(2,999)

31,589

 

 

 

 

 

 

 

 

Operational EBITDA

1,861

304

1,026

926

925

(218)

4,824

Depreciation and amortization

(177)

(84)

(78)

(105)

(76)

(182)

(702)

Unrealized gains and losses on derivatives (foreign exchange, commodities, embedded derivatives)

10

(8)

6

4

(33)

18

(3)

Realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized

4

(15)

3

(1)

(9)

Unrealized foreign exchange movements on receivables/payables (and related assets/liabilities)

(18)

(35)

(8)

(1)

(16)

(1)

(79)

Restructuring and restructuring-related expenses

(44)

(48)

(35)

(36)

(44)

(6)

(213)

EBIT

1,636

114

911

788

759

(390)

3,818

 

 

 

 

 

 

 

 

Operational EBITDA margin (%)

18.2%

4.5%

18.3%

20.3%

12.5%

15.3%

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Capital expenditure(1)

Total assets(1)

($ in millions)

2012

2011

2010

2012

2011

2010

(1)

Capital expenditure and Total assets are after intersegment eliminations and therefore refer to third-party activities only.

Power Products

259

192

200

7,701

7,355

7,205

Power Systems

194

136

119

8,083

7,469

6,039

Discrete Automation and Motion

197

202

98

9,416

9,195

3,696

Low Voltage Products

208

149

100

9,534

3,333

2,899

Process Automation

91

72

76

4,847

4,777

4,728

Corporate and Other

344

270

247

9,489

7,519

11,728

Consolidated

1,293

1,021

840

49,070

39,648

36,295

Geographic information

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Revenues

Long-lived assets
at December 31,

($ in millions)

2012

2011

2010

2012

2011

Europe

14,073

14,657

12,378

3,543

3,067

The Americas

10,699

9,043

6,213

1,347

829

Asia

10,750

10,136

8,872

883

862

Middle East and Africa

3,814

4,154

4,126

174

164

 

39,336

37,990

31,589

5,947

4,922

Revenues by geography reflect the location of the customer. Approximately 17 percent, 14 percent and 10 percent of the Company’s total revenues in 2012, 2011 and 2010, respectively, came from customers in the United States. Approximately 12 percent, 13 percent and 14 percent of the Company’s total revenues in 2012, 2011 and 2010, respectively, were generated from customers in China. In 2012, 2011, and 2010, 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, 2012, approximately 17 percent of the Company’s long-lived assets were located in each of Switzerland and the United States. At December 31, 2011, approximately 19 percent and 13 percent of the Company’s long-lived assets were located in Switzerland 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.

At December 31, 2012, approximately 49 percent of the Company’s employees are subject to collective bargaining agreements in various countries. Approximately half of these agreements will expire in 2013. Collective bargaining agreements are subject to various regulatory requirements and are renegotiated on a regular basis in the normal course of business.