ABB Annual Report 2012 PDF - ABB Group Annual Report 2012

Note 7Contingent liabilitiesThe Company has issued a support letter to a surety institution for the issuance of surety bonds on behalf of groupcompanies. The amount issued under this letter was CHF 274,515 thousand as of December 31, 2012 (CHF 282,345thousand as of December 31, 2011).Furthermore, the Company has Keep-well agreements with certain group companies. A Keep-well agreement is ashareholder agreement between the Company and a group company. These agreements provide for maintenance of aminimum net worth in the group company and the maintenance of 100 percent direct or indirect ownership by theCompany.The Keep-well agreements additionally provide that if at any time the group company has insufficient liquid assets tomeet any payment obligation on its debt (as defined in the agreements) and has insufficient unused commitments underits credit facilities with its lenders, the Company will make available to the group company sufficient funds to enableit to fulfill such payment obligation as it falls due. A Keep-well agreement is not a guarantee by the Company for paymentof the indebtedness, or any other obligation, of a group company. No party external to the ABB Group is a party to anyof these Keep-well agreements.In addition, the Company has provided certain guarantees securing the performance of Group companies in connectionwith commercial paper programs, indentures or other debt instruments to enable them to fulfill the payment obligationunder such instruments as they fall due. The amount guaranteed under these instruments was CHF 6,481,807 thousandas of December 31, 2012.Furthermore, the Company is the guarantor in the Group’s $2 billion multicurrency revolving credit facility, maturing in2015 but no amounts were outstanding at December 31, 2012 and 2011.The Company through certain of its direct and indirect subsidiaries is involved in various regulatory and legal matters.The Company’s direct and indirect subsidiaries have made certain related accruals as further described in note 15of the Consolidated Financial Statements of ABB Ltd. There could be material adverse outcomes beyond the accruedliabilities.The Company is part of a value added tax group and therefore is jointly liable to the Swiss Federal Tax Department forthe value added tax liabilities of the other members.Note 8BondsDecember 31 (CHF in thousands) 2012 2011Bond 2011–2016 1.25% coupon 498,937 498,664Bond 2011–2021 2.25% coupon 350,000 350,000Bond 2012–2018 1.5% coupon 350,103 –Total 1,199,040 848,664The 1.25% CHF Bonds, due 2016, the 2.25% Bonds, due 2021 and the 1.5% Bonds, due 2018, pay interest annuallyin arrears, at fixed annual rates of 1.25 percent, 2.25 percent and 1.5 percent, respectively. The Company recorded netproceeds of CHF 346 million in 2012.The bonds are stated at their nominal value less any discount or plus any on issuance. Bonds are accreted to par overthe period to maturity.The Company has, through Group Treasury Operations, entered into interest rate swaps with banks to effectivelyconvert the bonds maturing 2016 and 2021 into floating rate obligations.Note 9Significant shareholdersInvestor AB, Sweden, held 182,030,142 and 179,030,142 ABB Ltd shares as of December 31, 2012 and 2011, respectively.These holdings represent 7.9 percent and 7.7 percent of ABB Ltd’s total share capital and voting rights as registeredin the Commercial Register on December 31, 2012 and 2011, respectively.Pursuant to its disclosure notice, BlackRock, Inc., USA, disclosed that, as per July 25, 2011, it, together with its directand indirect subsidiaries, held 69,702,100 ABB Ltd shares. These holdings correspond to 3.0 percent of ABB Ltd’s totalshare capital and voting rights as registered in the Commercial Register on December 31, 2012 and 2011, respectively.To the best of the Company’s knowledge, no other shareholder holds 3 percent or more of the total share capital andvoting rights on December 31, 2012 and 2011, respectively.Note 10Board of Directors compensationThe compensation levels of members of the Board of directors were as follows:Board term2012/2013Board term2011/2012Function (CHF) (CHF)Chairman of the Board 1,200,000 1,200,000Member of the Board and Committee chairman 400,000 400,000Member of the Board 300,000 300,000ABB Annual Report 2012 | Financial review 141