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 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 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.
  • 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, and 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 2013, 2012 and 2011, as well as total assets at December 31, 2013, 2012 and 2011.

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2013 ($ in millions)

Third-party revenues

Intersegment revenues

Total 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 revenues

Intersegment revenues

Total 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

 

 

 

 

 

 

 

 

2011 ($ in millions)

Third-party revenues

Intersegment revenues

Total revenues

Discrete Automation and Motion

8,047

759

8,806

Low Voltage Products

4,953

351

5,304

Process Automation

8,078

222

8,300

Power Products

9,028

1,841

10,869

Power Systems

7,833

268

8,101

Corporate and Other

51

1,508

1,559

Intersegment elimination

(4,949)

(4,949)

Consolidated

37,990

37,990

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($ in millions)

2013

2012

2011

Operational EBITDA:

 

 

 

Discrete Automation and Motion

1,783

1,735

1,664

Low Voltage Products

1,468

1,219

1,059

Process Automation

1,096

1,003

1,028

Power Products

1,637

1,585

1,782

Power Systems

419

290

743

Corporate and Other and Intersegment elimination

(328)

(277)

(262)

Consolidated Operational EBITDA

6,075

5,555

6,014

 

 

 

 

Depreciation and amortization

(1,318)

(1,182)

(995)

Restructuring and restructuring-related expenses

(252)

(180)

(164)

Acquisition-related expenses and certain non-operational items

(181)

(199)

(107)

Foreign exchange/commodity timing differences in income from operations:

 

 

 

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

60

135

(158)

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

14

(28)

(32)

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

(11)

(43)

109

Income from operations

4,387

4,058

4,667

 

 

 

 

Interest and dividend income

69

73

90

Interest and other finance expense

(390)

(293)

(207)

Income from continuing operations before taxes

4,066

3,838

4,550

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Depreciation and amortization

Capital expenditure(1)

Total assets(1)
at December 31,

($ in millions)

2013

2012

2011

2013

2012

2011

2013

2012

2011

(1)

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

Discrete Automation and Motion

285

263

251

214

197

202

10,931

9,416

9,195

Low Voltage Products

323

250

116

204

208

149

9,389

9,534

3,333

Process Automation

87

82

83

68

91

72

4,537

4,847

4,777

Power Products

223

209

200

252

259

192

7,669

7,701

7,355

Power Systems

183

174

144

101

194

136

7,905

8,083

7,469

Corporate and Other

217

204

201

267

344

270

7,633

9,489

7,519

Consolidated

1,318

1,182

995

1,106

1,293

1,021

48,064

49,070

39,648

Geographic information

Geographic information for revenues and long-lived assets was as follows:

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Revenues

Long-lived assets
at December 31,

($ in millions)

2013

2012

2011

2013

2012

Europe

14,385

14,073

14,657

3,798

3,543

The Americas

12,115

10,699

9,043

1,450

1,347

Asia

11,230

10,750

10,136

850

883

Middle East and Africa

4,118

3,814

4,154

156

174

 

41,848

39,336

37,990

6,254

5,947

Revenues by geography reflect the location of the customer. Approximately 18 percent, 17 percent and 14 percent of the Company’s total revenues in 2013, 2012 and 2011, respectively, came from customers in the United States. Approximately 12 percent, 12 percent, and 13 percent of the Company’s total revenues in 2013, 2012, and 2011, respectively, were generated from customers in China. In 2013, 2012 and 2011, 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, 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. At December 31, 2012, approximately 17 percent, 17 percent and 14 percent 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.