Financial position

Balance sheets

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Current assets

 

 

December 31, ($ in millions)

2012

2011

Cash and equivalents

6,875

4,819

Marketable securities and short-term investments

1,606

948

Receivables, net

11,575

10,773

Inventories, net

6,182

5,737

Prepaid expenses

311

227

Deferred taxes

869

932

Other current assets

584

351

Total current assets

28,002

23,787

For a discussion on cash and equivalents and marketable securities and short-term investments, see “Liquidity and capital resources – Principal sources of funding” for further details.

Receivables increased 7.4 percent (6.2 percent in local currencies) compared to 2011, primarily due to Thomas & Betts, and an increase in trade receivables due to certain delayed customer payments. Inventories increased 7.8 percent (5.0 percent in local currencies) compared to 2011, driven by an increasing order backlog and Thomas & Betts. Prepaid expenses increased $84 million compared to the prior year also due to Thomas & Betts and prepayments for projects in South America and Northern Europe. For a discussion of deferred taxes see “Note 16 Taxes” to our Consolidated Financial Statements. The increase in other current assets primarily reflects higher income tax receivables.

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Current liabilities

 

 

December 31, ($ in millions)

2012

2011

Accounts payable, trade

4,992

4,789

Billings in excess of sales

2,035

1,819

Employee and other payables

1,449

1,361

Short-term debt and current maturities of long-term debt

2,537

765

Advances from customers

1,937

1,757

Deferred taxes

270

305

Provisions for warranties

1,291

1,324

Provisions and other current liabilities

2,367

2,619

Accrued expenses

2,096

1,822

Total current liabilities

18,974

16,561

Total current liabilities at December 31, 2012, increased primarily due to bonds maturing in June 2013 which were reclassified to short-term debt, as well as an increase in commercial paper outstanding.

Accounts payable increased 4.2 percent (1.8 percent in local currencies) compared to 2011, mainly due to Thomas & Betts. Billings in excess of sales increased 11.9 percent (8.5 percent in local currencies) compared to 2011 due to the timing of billings and collections for contracts under the percentage-of-completion or completed-contract method of accounting. Employee and other payables increased 6.5 percent (4.4 percent in local currencies) on increases in employee-related liabilities such as payroll, vacation, bonus, as well as on increases in value-added tax (VAT), sales and similar taxes. Advances from customers increased 10.2 percent (10.3 percent in local currencies) compared to the prior year, with the largest increases in the Power Systems division. Provisions for warranties decreased 2.5 percent (4.8 percent in local currencies) compared to 2011, primarily due to revised risk assessments and the completion of various projects. Provisions and other current liabilities decreased 9.6 percent (11.9 percent in local currencies) primarily driven by a decrease in the market value of derivative liabilities, as well as due to a reduction in certain compliance provisions. Accrued expenses increased 15.0 percent (12.3 percent in local currencies) primarily due to Thomas & Betts, higher accrued interest as a result of bonds issued in 2012 and increases in certain employee-related accruals.

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Non-current assets

 

 

December 31, ($ in millions)

2012

2011

Property, plant and equipment, net

5,947

4,922

Goodwill

10,226

7,269

Other intangible assets, net

3,501

2,253

Prepaid pension and other employee benefits

71

139

Investments in equity-accounted companies

213

156

Deferred taxes

334

318

Other non-current assets

776

804

Total non-current assets

21,068

15,861

Property, plant and equipment increased 20.8 percent (17.6 percent in local currencies), primarily due to Thomas & Betts, and increased investment across all divisions and most regions. The investments in new manufacturing facilities and upgrades to existing facilities helps to secure our technological competitiveness in the growth markets we serve and increases our capacity to meet our customers’ delivery requirements.

The increase in goodwill and other intangible assets was mainly due to Thomas & Betts (see “Note 11 Goodwill and other intangible assets” to our Consolidated Financial Statements). The decrease in prepaid pension and other employee benefits reflects the change in the funded status of our overfunded pension plans (see “Note 17 Employee benefits” to our Consolidated Financial Statements).

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Non-current liabilities

 

 

December 31, ($ in millions)

2012

2011

Long-term debt

7,534

3,231

Pension and other employee benefits

2,290

1,487

Deferred taxes

1,260

537

Other non-current liabilities

1,566

1,496

Total non-current liabilities

12,650

6,751

The increase in our long-term debt was largely due to new bond issuances. See “Liquidity and capital resources – Debt and interest rates” for further explanation of the increase in our long-term debt.

The increase in pension and other employee benefits was due to increases in the underfunded status of our defined benefit pension plans, mainly as a result of changes in actuarial assumptions affecting estimated projected benefit obligations (see “Note 17 Employee benefits” to our Consolidated Financial Statements). The increase in deferred taxes was mostly related to Thomas & Betts (see “Note 3 Acquisitions and increases in controlling interests”). For further explanation regarding deferred taxes, refer to “Note 16 Taxes” to our Consolidated Financial Statements.