ABB Annual Report 2012 PDF - ABB Group Annual Report 2012

Note 6Stockholders’ equitySharecapital Legal reserves Free reserves Total 2012Capital(CHF in thousands)OrdinaryreservescontributionreserveReserve forown sharesOtherreservesRetainedearnings Net incomeOpening balance as of January 1 2,384,186 1,000,000 5,268,717 511,752 20,723 2,203,511 1,094,007 12,482,896Allocation to retained earnings 1,094,007 (1,094,007) –Allocation to other reserves (921) 921 –Release to other reserves (1,298,921) 1,298,921 –Release to other reserves (116,478) 116,478 –Dividend payment (1,298,921) (1,298,921)Net income for the year 1,173,180 1,173,180Closing balance as of December 31 2,384,186 1,000,000 3,968,875 395,274 138,122 3,297,518 1,173,180 12,357,155Share capital as of December 31, 2012Number ofregistered sharesPar value(CHF)Total(CHF in thousands)Issued shares 2,314,743,264 1.03 2,384,186Contingent shares 304,038,800 1.03 313,160Authorized shares 200,000,000 1.03 206,000Share capital as of December 31, 2011Number ofregistered sharesPar value(CHF)Total(CHF in thousands)Issued shares 2,314,743,264 1.03 2,384,186Contingent shares 304,038,800 1.03 313,160Authorized shares 200,000,000 1.03 206,000During 2012, a bank holding call options related to ABB Group’s management incentive plan (MIP), exercised a portionof the options. Such options had been issued by the group company that facilitates the MIP (related to MIP launchesduring 2006) at fair value and with a strike price of CHF 15.30. At issuance, the group company had entered into anintercompany option agreement with the same terms and conditions to enable it to meet its future obligations. As aresult of the exercise by the bank, the Company issued 2,726,800 shares at CHF 15.30 out of own shares.The ABB Group has an employee share acquisition plan (ESAP). To enable the group company that facilitates the ESAPto deliver shares to employees who have exercised their stock options, the group company entered into an agreementwith the Company to acquire the required number of shares at their then market value from the Company. Consequentlyin November 2012 and 2011, the Company issued, out of own shares, to the group company, 2,344,733 and 20,366shares at CHF 17.23 and CHF 16.75, respectively.In 2012 and 2011, the Company transferred 466,622 and 964,943 own shares at an average price per share of CHF 21.03in both cases to fulfill its obligations under other share-based arrangements.The average acquisition price of the own shares at both December 31, 2012 and 2011, was CHF 21.03.The movement in the number of own shares during the year was as follows:2012 2011Opening balance as of January 1 24,332,144 25,317,453Cancellation – –Purchases – –Transfers (5,538,155) (985,309)Closing balance as of December 31 18,793,989 24,332,144The own shares are stated at the lower of cost or fair value. As a consequence of the increase in the fair value, theown shares were revalued at December 31, 2012 to CHF 18.75 from CHF 17.68 per share, resulting in a write-up ofCHF 38,674 thousand in 2012.As a result of the Swiss corporate tax reform II that became effective on January 1, 2011, qualifying contributions fromthe shareholders exceeding the nominal share capital can be distributed without deduction of Swiss withholding tax.According to the corresponding guidelines, such contributions have been recorded in a specific account (Capital contributionreserve) within the legal reserves in order to benefit from the favorable tax treatment.140 Financial review | ABB Annual Report 2012