ABB Annual Report 2012 PDF - ABB Group Annual Report 2012

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Note 21Other comprehensive incomeThe following table includes amounts recorded within “Total other comprehensive income (loss)” including the relatedincome tax effects.2012 2011 2010($ in millions)BeforetaxTaxeffectNetof taxBeforetaxTaxeffectNetof taxBeforetaxTaxeffectNetof taxForeign currency translation adjustments 389 (6) 383 (280) 5 (275) 362 8 370Available-for-sale securities:Net unrealized gains (losses) arising during the year 5 (2) 3 (2) (1) (3) 16 (3) 13Reclassification adjustments for net (gains) lossesincluded in net income 1 – 1 3 2 5 (16) 1 (15)Unrealized gains (losses) on available-for-salesecurities 6 (2) 4 1 1 2 – (2) (2)Pension and other postretirement plans:Prior service (costs) credits arising during the year (42) 6 (36) (35) 12 (23) (70) 16 (54)Amortization of prior service costs (credits)included in net income 33 (3) 30 35 (13) 22 17 (5) 12Net prior service cost arising during the year (9) 3 (6) – (1) (1) (53) 11 (42)Net actuarial gains (losses) arising during the year (846) 245 (601) (750) 157 (593) 156 (32) 124Amortization of net actuarial (gains) lossesincluded in net income 102 (32) 70 55 (11) 44 76 (14) 62Net actuarial gains (losses) arising during the year (744) 213 (531) (695) 146 (549) 232 (46) 186Amortization of transition liability included in net income – – – 1 – 1 1 – 1Pension and other postretirement plans adjustments (753) 216 (537) (694) 145 (549) 180 (35) 145Cash flow hedge derivatives:Net gains (losses) arising during the year 74 (21) 53 (21) 2 (19) 123 (32) 91Reclassification adjustments for net (gains) lossesincluded in net income (42) 14 (28) (88) 27 (61) (29) 10 (19)Unrealized gains (losses) of cash flow hedgederivatives 32 (7) 25 (109) 29 (80) 94 (22) 72Total other comprehensive income (loss) (326) 201 (125) (1'082) 180 (902) 636 (51) 585Note 22Restructuring and relatedexpensesRestructuring-related activitiesIn 2012 and 2011, the Company executed minor restructuring-related activities and incurred charges of $180 millionand $164 million, respectively, which were mainly recorded in “Total cost of sales”.($ in millions) 2012 2011Employee severance costs 92 83Estimated contract settlement, loss order and other costs 72 53Inventory and long-lived asset impairments 16 28Total 180 164At December 31, 2012 and 2011, the balance of restructuring and related liabilities is primarily included in “Provisionsand other current liabilities”.Cost take-out programIn December 2008, the Company announced a two-year cost take-out program that aimed to sustainably reducethe Company’s cost of sales and general and administrative expenses. As of December 31, 2010, the Company hadsubstantially completed the cost take-out program.128 Financial review | ABB Annual Report 2012
Note 22Restructuring and relatedexpenses, continuedThe Company recorded the following expenses under this program:($ in millions)Cumulative costs incurredup to December 31, 2010 2010Employee severance costs 536 95Estimated contract settlement, loss order and other costs 230 98Inventory and long-lived asset impairments 70 20Total 836 213These expenses were recorded as follows:($ in millions)Cumulative costs incurredup to December 31, 2010 2010Total cost of sales 475 110Selling, general and administrative expenses 143 36Other income (expense), net 218 67Total 836 213Expenses incurred under the program, per operating segment, were as follows:($ in millions)Cumulative costs incurred upto December 31, 2010 2010Power Products 122 44Power Systems 139 48Discrete Automation and Motion 256 35Low Voltage Products 114 36Process Automation 183 44Corporate and Other 22 6Total 836 213The most significant individual exit plans within this program related to the reorganization of the Company’s Roboticsbusiness, the downsizing of the former Automation Products business in France and Germany, as well as the PowerSystems business in Germany.Note 23Operating segment andgeographic dataThe Chief Operating Decision Maker (CODM) is the Company’s Executive Committee. The CODM allocates resources toand assesses the performance of each operating segment using the information outlined below. The Company’s operatingsegments consist of Power Products, Power Systems, Discrete Automation and Motion, Low Voltage Products andProcess 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 allcurrent and voltage levels, power and distribution transformers and sensors for electric, gas and water utilities andfor industrial and commercial customers.– Power Systems: designs, installs and upgrades high-efficiency transmission and distribution systems and powerplant automation and electrification solutions, including monitoring and control products, software and services andincorporating components manufactured by both the Company and by third parties.– Discrete Automation and Motion: manufactures and sells motors, generators, variable speed drives, rectifiers, excitationsystems, robotics, programmable logic controllers, and related services for a wide range of applications in factoryautomation, process industries, and utilities.– Low Voltage Products: manufactures products and systems that provide protection, control and measurement forelectrical installations, as well as enclosures, switchboards, electronics and electromechanical devices for industrialmachines, 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 controlsystems 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, andpower 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 apercentage of Operational revenues).ABB Annual Report 2012 | Financial review 129
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Building on our technology leadersh
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This is ABBABB is one of the world
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Chairman and CEO letterDear shareho
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We will also be looking at ways to
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HighlightsResilient performance thr
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As of March 1, 2013Executive Commit
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12 Corporate governance report | AB
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1. Principles1.1 General principles
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The following table sets forth, as
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3.2 Changes to the share capitalIn
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4.3 Shareholders’ dividend rights
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As at December 31, 2012, the member
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Brice Koch was appointed Executive
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10. Auditors10.1 AuditorsErnst & Yo
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28 Remuneration report | ABB Annual
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ABB’s success depends on its abil
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1.3 Board compensation in 2012Compe
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Annual base salaryThe base salary f
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Historical payout of performance co
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Base salaryShort-term variablecompe
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6.2 EC ownership of ABB sharesand o
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42 Financial review | ABB Annual Re
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Operating and financial reviewand p
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In May 2012, the Low Voltage Produc
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In a market environment in which ne
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We record provisions for our contin
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Goodwill and other intangible asset
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We also incur expenses other than c
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In 2011, orders in the Power Produc
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We determine the geographic distrib
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In 2012, “Capital gains, net” w
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Divisional analysisPower ProductsTh
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Continued pricing pressure in some
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OrdersIn 2012, orders were flat due
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The geographic distribution of orde
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In 2011, revenues increased, driven
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Throughout 2012 and 2011, the inves
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Current liabilitiesDecember 31, ($
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Total cash disbursements for the pu
Page 80 and 81: Consolidated Financial StatementsCo
Page 82 and 83: Consolidated Balance SheetsDecember
Page 84 and 85: Consolidated Statements of Changes
Page 86 and 87: Notes to theConsolidated Financial
Page 88 and 89: Note 2Significant accounting polici
Page 94 and 95: Note 3Acquisitions and increasesin
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Page 98 and 99: Note 5Financial instrumentsCurrency
Page 100 and 101: Note 5Financial instruments, contin
Page 102 and 103: Note 6Fair valuesRecurring fair val
Page 104 and 105: Note 7Receivables, net, continued
Page 106 and 107: Note 9Other non-current assets“Ot
Page 108 and 109: Note 11Goodwill and other intangibl
Page 110 and 111: Note 12Debt, continuedThe 4.625% EU
Page 112 and 113: Note 14Leases, continuedNote 15Comm
Page 114 and 115: Note 15Commitments and contingencie
Page 116 and 117: Note 16Taxes, continuedIn 2012, 201
Page 118 and 119: Note 16Taxes, continuedAt December
Page 120 and 121: Note 17Employee benefits, continued
Page 122 and 123: Note 17Employee benefits, continued
Page 124 and 125: Note 18Share-based paymentarrangeme
Page 126 and 127: Note 18Share-based paymentarrangeme
Page 128 and 129: Note 19Stockholders’ equityAt bot
Page 132 and 133: Note 23Operating segment andgeograp
Page 138 and 139: Report of the Statutory Auditor on
Page 140 and 141: Financial Statements of ABB Ltd, Zu
Page 142 and 143: Note 6Stockholders’ equityShareca
Page 144 and 145: Note 10Board of Directors compensat
Page 146 and 147: Note 11Executive Committeecompensat
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Page 150 and 151: Note 12Share ownership of ABB byBoa
Page 152 and 153: Proposed appropriation of available
Page 154 and 155: Investor informationABB Ltd share p
Page 156 and 157: Stock exchange listingsABB Ltd is l
Page 158 and 159: 2012 price trend for ABB Ltd shares
Page 160: ABB LtdCorporate Communications P.O
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