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ABB 6-K 2009

Documents found in this filing:

  1. 6-K
  2. Graphic
  3. Graphic

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

Form 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE
SECURITIES EXCHANGE ACT OF 1934

 

For the month of February 2009

 

Commission File Number 001-16429

 

ABB Ltd

(Translation of registrant’s name into English)

 

P.O. Box 1831, Affolternstrasse 44, CH-8050, Zurich, Switzerland

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F  x

 

Form 40-F  o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):   o

 

Note:

Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

 

Indication by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):   o

 

Note:

Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

 

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

Yes  o

No  x

 

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-          .

 

 

 



 

This Form 6-K consists of the following:

 

1.    Press release issued by ABB Ltd dated February 12, 2009.

2.    Announcements regarding transactions in ABB Ltd’s securities made by the directors or members of the Executive Committee.

 

The information provided by Item 1 above is deemed filed for all purposes under the Securities Exchange Act of 1934, including by reference in the Registration Statement on Form S-8 (Registration No. 333-129271).

 

2



 

Press Release

 

 

Solid operational results in a demanding market

 

·                  Record revenues, EBIT and cash from operations for the full year 2008

·                  Q4 EBIT and net income substantially lower on previously announced provisions

·                  Q4 orders down mainly on fewer large projects

·                  Cost take-out program to achieve $1.3 billion in savings by 2010

·                  Board proposes an unchanged dividend of Sfr. 0.48 per share

 

Zurich, Switzerland, February 12, 2009 – ABB reported solid operational results in the fourth quarter on strong revenue growth and steady cash flow, despite a difficult global market that impacted orders. Earnings before interest and taxes (EBIT) and net income in the quarter were reduced by previously-announced provisions, but full-year EBIT nevertheless reached a record $4.6 billion.

 

Orders decreased 19 percent in the fourth quarter (local currencies: 11 percent) to $7.2 billion, mainly the result of lower orders for large new power infrastructure projects, especially in emerging markets, and reduced investments in new industrial capacity. Orders to upgrade power grids and replace equipment continued to grow in mature markets. Demand for energy efficient technologies also increased.

 

Revenues rose 5 percent (local currencies: 15 percent) to $9.1 billion as the company continued to successfully execute the order backlog, which included no significant order cancellations.

 

EBIT in the quarter was $459 million, a decrease of 60 percent versus the same quarter a year earlier. Included in EBIT are provisions of approximately $870 million related to ongoing compliance investigations, a value-added tax (VAT) charge and restructuring-related charges. Fourth-quarter net income amounted to $213 million. Full-year net income was $3.1 billion.

 

Cash flow from operations was $1.4 billion in the quarter and reached a record $4 billion for the full year, while free cash flow for the full year amounted to $2.9 billion.

 

“Our solid revenue growth and cash flow in the quarter show the underlying operational strength of the company,” said Joe Hogan, ABB’s Chief Executive Officer. “Orders were down as customers delayed projects or cut capital expenditures. But the long-term drivers of our business – to increase energy efficiency, secure reliable power and improve industrial productivity – have not changed.

 

“The outlook for 2009 remains uncertain,” Hogan said. “We are taking steps now to ensure that we remain competitive, no matter how the market develops. With our leading market positions and technology, combined with a flexible global production base, we aim to come out of this downturn in a stronger competitive position and we confirm our 2011 targets.”

 

2008 Q4 and full-year key figures

 

 

 

 

 

 

 

Change

 

 

 

 

 

Change

 

US$ millions unless otherwise indicated

 

Q4 08

 

Q4 07

 

US$

 

Local

 

2008

 

2007

 

US$

 

Local

 

Orders

 

7,183

 

8,868

 

-19

%

-11

%

38,282

 

34,348

 

11

%

7

%

Order backlog (end Dec.)

 

23,837

 

22,715

 

5

%

14

%

 

 

 

 

 

 

 

 

Revenues

 

9,140

 

8,713

 

5

%

15

%

34,912

 

29,183

 

20

%

16

%

EBIT

 

459

 

1,145

 

-60

%

 

 

4,552

 

4,023

 

13

%

 

 

as % of revenues

 

5.0

%

13.1

%

 

 

 

 

13.0

%

13.8

%

 

 

 

 

Net income

 

213

 

1,753

 

 

 

 

 

3,118

 

3,757

 

 

 

 

 

Basic earnings per share ($)

 

0.09

 

0.76

 

 

 

 

 

1.36

 

1.66

 

 

 

 

 

Dividend per share (CHF)(1)

 

 

 

 

 

 

 

 

 

0.48

 

0.48

 

 

 

 

 

Cash flow from operations

 

1,395

 

1,469

 

 

 

 

 

3,958

 

3,054

 

 

 

 

 

Free cash flow

 

 

 

 

 

 

 

 

 

2,888

 

2,429

 

 

 

 

 

as % of net income

 

 

 

 

 

 

 

 

 

93

%

65

%

 

 

 

 

Return on capital employed

 

 

 

 

 

 

 

 

 

30.8

%

35.3

%

 

 

 

 

 


(1) Proposed by the Board of Directors

 

3



 

Dividend and share buy-back

 

ABB’s Board of Directors proposes an unchanged dividend for 2008 of Sfr. 0.48 per share. The Board also proposes that the dividend takes the form of a reduction in the nominal (par) value of the shares from Sfr. 2.02 to Sfr. 1.54. The proposal is subject to approval by shareholders at the company’s annual general meeting on May 5, 2009. If approved, the ex-dividend and payout date in Switzerland is expected to be at the end of July, 2009.

 

Given the current market uncertainty, ABB is not actively pursuing new purchases under the Sfr. 2.2-billion share buyback program announced last year. The company has so far spent approximately Sfr 650 million on the program, which has not been active since September 2008.

 

Compliance

 

As has been previously announced, ABB has disclosed to the U.S. Department of Justice and the U.S. Securities and Exchange Commission various suspect payments. In addition, ABB has continued to cooperate with various anti-trust authorities, including the European Commission, regarding certain allegedly anti-competitive practices in the power transformer business. With regard to one of the anti-trust matters, ABB received in December 2008 from the European Commission a Statement of Objections, which is a preliminary assessment of alleged anti-competitive practices.

 

In addition, ABB’s cables business is under investigation for alleged anti-competitive practices.

 

With respect to these matters, there could be adverse outcomes beyond our provisions.

 

Cost reductions

 

ABB announced in December 2008 a cost take-out plan to adjust the company’s cost base to rapidly changing market conditions and protect its profitability. The program aims to sustainably reduce ABB’s costs – comprising both cost of sales as well as general and administrative expenses – from 2008 levels by a total of $1.3 billion by the end of 2010. The savings are expected through ongoing initiatives, such as internal process improvements, low-cost sourcing, and further measures to adjust ABB’s global manufacturing and engineering footprint to shifts in customer demand.

 

The total cost of the program is estimated in excess of $600 million, of which more than $100 million was recorded in 2008. About $300 million is expected to be taken in 2009 and the remainder in 2010.

 

Summary of Q4 and full-year 2008 results

 

Orders received and revenues

 

ABB’s markets were strong through most of 2008 but demand began to weaken following the global financial crisis that developed during the third quarter. In the fourth quarter, this trend was reflected primarily by lower large orders (above $15 million) for major infrastructure and industrial developments compared to the same quarter in 2007. Base orders (below $15 million) were steady in the quarter.

 

In the power divisions, utilities in mature markets continued to invest in grid upgrades and equipment replacement to improve reliability. This improvement was offset by lower investments by both utilities and industrial customers, mainly in emerging markets, for new power infrastructure in response to the rapid decline in economic growth.

 

Orders for industrial automation products and systems decreased more quickly than for power-related technologies in the fourth quarter after a very strong first half of 2008. Orders for products used to increase efficiency, such as low-voltage drives, or for renewable energy applications were higher. However, reduced investments for new capacity in the commodities and marine sectors resulted in lower large orders. Continued weakness in the construction

 

4



 

industry, as well as the rapid downturn in consumer-related sectors, such as automotive, further reduced automation-related orders.

 

Regionally, orders increased in the Americas in local currencies (unchanged in U.S. dollars) as continued investments in power grid improvements more than made up for flat to lower orders in automation. Orders were down in Europe as lower industrial and construction demand offset order increases related mainly to power generation. Orders in Asia were down in all divisions on a combination of lower industrial activity, project delays in power infrastructure and the comparison with the very high growth levels seen last year, especially in China and India. In the Middle East and Africa, orders were down in a mixed environment, with lower orders for large power infrastructure projects only partly offset by increases driven mainly by industrial investments.

 

Overall, large orders declined by 55 percent in the fourth quarter (local currencies: 49 percent) and represented 11 percent of total orders received compared to 19 percent in the same quarter of 2007. Base orders were slightly lower (down 10 percent in U.S. dollars and 2 percent in local currencies).

 

For the full year ending Dec. 31, 2008, orders rose 11 percent (local currencies: 7 percent) to $38.3 billion and were up in all divisions except Power Systems.

 

Local-currency revenues were higher in all divisions for the fourth quarter and full year. Revenues were supported in the fourth quarter by the strong order backlog, which ended the year at $23.8 billion, up 5 percent (local currencies: 14 percent) compared to the end of 2007. The order backlog decreased 12 percent in both U.S. dollar and local currency terms versus the end of the third quarter.

 

Earnings before interest and taxes

 

EBIT and EBIT margin in the fourth quarter were negatively impacted by previously-announced provisions of approximately $870 million. Of these, about $140 million were related to restructuring measures needed to adapt operations to weakening demand. The majority of the restructuring-related charges were recorded in the Robotics and Power Products divisions. The provisions also included approximately $100 million associated with an adjusted VAT payment and write-downs.

 

The negative impact on EBIT expected in the fourth quarter from the mark-to-market accounting treatment of hedging transactions was not material.

 

Finance expense, taxes and discontinued operations

 

Below the EBIT line, finance net in the fourth quarter was negatively affected by the accounting treatment of fair value movements on certain securities held at the end of the year. This temporary effect amounted to approximately $100 million, and will be fully reversed when the securities mature in the first quarter of 2009.

 

The benefit from recognition of deferred tax assets in the fourth quarter was partly offset by income tax provisions related to a pending tax dispute. The full year tax rate was 25 percent.

 

Discontinued operations results reflect the net accrual of the last two asbestos payments of $25 million each, which are due in 2010 and 2011 as ABB expects its EBIT margin to exceed 9 percent in 2009 and 9.5 percent in 2010.

 

Cash flow

 

Cash flow from operations in the fourth quarter amounted to $1.4 billion, roughly the same as a year earlier. Significant contributors to the development of cash flow in the quarter were the timing of customer payments on large projects, higher inventories in some short-cycle businesses, and the reduction in large orders with a subsequent decrease in customer advance payments. Included in fourth-quarter cash from operations is an outflow of $25 million paid as part of ABB’s asbestos agreement. For the full year, cash flow from operations increased to

 

5



 

$4 billion, reflecting higher earnings and improved net working capital management. Full-year cash flow from operations included asbestos-related payments of $100 million.

 

Free cash flow for the full year amounted to $2.9 billion compared to $2.4 billion in 2007. Free cash flow as a share of net income amounted to 93 percent, including the impact of provisions and tax costs. Free cash flow in 2008 also reflected a 59-percent increase in capital expenditures to $1.2 billion, supporting the strong backlog and the company’s global footprint initiatives. The share of capital expenditures in emerging economies increased to 43 percent in 2008 from 37 percent the year before.

 

Balance sheet

 

Net cash was $5.4 billion at the end of 2008, compared to net cash of $4.8 billion at the end of the third quarter and $5.4 billion at the end of 2007. The fourth-quarter increase mainly reflects the growth in cash from operating activities. Net cash compared to the end of the previous year was impacted by a shareholder dividend payment of about $1 billion, expenditures of approximately $650 million for acquisitions, and cash payments of about $620 million related to the ABB share repurchase program.

 

Gearing remained at low levels, decreasing to 17 percent at the end of December 2008 versus 19 percent a year earlier.

 

Acquisitions

 

ABB continued to focus its growth efforts primarily on organic opportunities in its existing markets, while making small acquisitions to close product or geographic gaps in its business portfolio. In the fourth quarter of 2008, ABB acquired Ber-Mac Electrical and Instrumentation Ltd, a Canadian supplier of industrial automation and field services to the oil and gas sector. The acquisition had no material impact on ABB’s fourth-quarter results.

 

Employment

 

ABB employed approximately 120,000 people at the end of December 2008, an increase of about 8,000 compared to the end of 2007.

 

Outlook for 2009

 

Visibility in ABB’s markets in 2009 remains limited because of significant uncertainty surrounding the key demand drivers for the company’s products and systems.

 

The need for power transmission infrastructure in all regions – both equipment replacement and new transmission projects – has not changed in recent quarters. However, the cost and scarcity of project funding have delayed many power investment decisions, and ABB is unable to forecast when the various government stimulus programs will have an impact and when the availability of funding will improve.

 

Demand in ABB’s industrial end markets depends to a large extent on GDP growth and capital spending, together with commodity prices. Our customers’ need to steadily improve efficiency and productivity to meet increasing competition also drives orders, along with demand in construction and in general industry.

 

Therefore, management’s priority for 2009 will be to ensure that the company has the flexibility to respond quickly to changing market conditions, taking advantage of its global footprint, strong balance sheet and leading technologies to improve its cost competitiveness while simultaneously tapping further opportunities for profitable growth.

 

ABB also confirms its previously published targets for the period 2007 to 2011.

 

6



 

Divisional performance

 

Power Products

 

 

 

 

 

 

 

Change

 

 

 

 

 

Change

 

$ millions unless otherwise indicated

 

Q4 08

 

Q4 07

 

US$

 

Local

 

2008

 

2007

 

US$

 

Local

 

Orders

 

2,615

 

2,751

 

-5

%

2

%

13,627

 

11,320

 

20

%

15

%

Order backlog (end Dec.)

 

7,977

 

6,932

 

15

%

24

%

 

 

 

 

 

 

 

 

Revenues

 

3,208

 

2,910

 

10

%

19

%

11,890

 

9,777

 

22

%

18

%

EBIT

 

444

 

466

 

-5

%

 

 

2,100

 

1,596

 

32

%

 

 

as % of revenues

 

13.8

%

16.0

%

 

 

 

 

17.7

%

16.3

%

 

 

 

 

Cash flow from operations

 

578

 

635

 

 

 

 

 

1,575

 

1,279

 

 

 

 

 

 

Orders received remained steady in the fourth quarter versus the same period in 2007 as project delays and reductions in power utility spending in Asia and Europe were offset by increases in the Americas and the Middle East and Africa. Uncertainty in the lending environment contributed to project delays and the general global economic slowdown resulted in weakened industrial and construction-related demand. Many utilities, however, continued to invest in equipment replacement and grid upgrades. These trends were reflected in a decrease in distribution sector orders in the quarter that was offset by higher demand for transmission sector orders.

 

Regionally, orders grew in the Americas, led by North America, where orders increased by 17 percent (local currencies: 23 percent). The acquisition of Kuhlman Electric in the U.S. contributed 10 percentage points to this increase. Orders were also higher in the Middle East as investments continued in both power infrastructure and industrial development. Orders decreased in Asia, largely in response to the economic downturn, reduced industrial investments and the absence of a large order booked in China in the same period of the previous year. In Europe, project delays and some reductions in utility capital expenditures, primarily in eastern Europe, resulted in lower orders.

 

Revenues increased in all businesses in the quarter, reflecting higher volumes from the strong order backlog. Fourth-quarter EBIT was lower than a year earlier, mainly the result of the previously-announced provisions amounting to approximately $100 million associated with an adjusted VAT charge and related write-downs. EBIT also included restructuring charges of $35 million, of which $33 million was related to the transformer consolidation program announced in 2005. The total cost of the program, which has now been completed, amounted to approximately $240 million.

 

Power Systems

 

 

 

 

 

 

 

Change

 

 

 

 

 

Change

 

$ millions unless otherwise indicated

 

Q4 08

 

Q4 07

 

US$

 

Local

 

2008

 

2007

 

US$

 

Local

 

Orders

 

1,456

 

1,902

 

-23

%

-14

%

7,408

 

7,744

 

-4

%

-8

%

Order backlog (end Dec.)

 

7,704

 

8,209

 

-6

%

4

%

 

 

 

 

 

 

 

 

Revenues

 

1,902

 

1,977

 

-4

%

7

%

6,912

 

5,832

 

19

%

16

%

EBIT

 

181

 

179

 

1

%

 

 

592

 

489

 

21

%

 

 

as % of revenues

 

9.5

%

9.1

%

 

 

 

 

8.6

%

8.4

%

 

 

 

 

Cash flow from operations

 

98

 

245

 

 

 

 

 

424

 

409

 

 

 

 

 

 

Orders declined in the fourth quarter on lower large orders, while the base business remained steady. Orders increased strongly in the U.S. as utilities continued to invest in grid upgrades. Western European utilities also increased spending in power generation-related systems, resulting in higher orders in Europe compared to the same quarter in 2007. Delays in large new infrastructure projects resulted in lower orders in Asia and the Middle East and Africa.

 

Revenues in the fourth quarter, which were down 4 percent in U.S. dollar terms but 7 percent higher in local currencies, were driven by the execution of projects in the order backlog. The EBIT margin was supported mainly by improved project execution.

 

7



 

The reduction in cash from operations reflects the timing of project payments and a lower level of customer advances as the result of fewer large orders.

 

Automation Products

 

 

 

 

 

 

 

Change

 

 

 

 

 

Change

 

$ millions unless otherwise indicated

 

Q4 08

 

Q4 07

 

US$

 

Local

 

2008

 

2007

 

US$

 

Local

 

Orders

 

2,094

 

2,360

 

-11

%

-3

%

10,872

 

9,314

 

17

%

11

%

Order backlog (end Dec.)

 

3,863

 

3,490

 

11

%

18

%

 

 

 

 

 

 

 

 

Revenues

 

2,484

 

2,396

 

4

%

13

%

10,250

 

8,644

 

19

%

13

%

EBIT

 

422

 

410

 

3

%

 

 

1,908

 

1,477

 

29

%

 

 

as % of revenues

 

17.0

%

17.1

%

 

 

 

 

18.6

%

17.1

%

 

 

 

 

Cash flow from operations

 

299

 

451

 

 

 

 

 

1,343

 

1,256

 

 

 

 

 

 

Fourth-quarter orders were down 11 percent in U.S. dollar terms and 3 percent in local currencies as demand weakened across most regions and industry segments. Orders for low-voltage drives, machines and low-voltage systems increased in the quarter, driven by energy-efficiency requirements in industry and demand from the renewable energy sector, mainly wind. Demand for standard industrial and building products declined, reflecting the general global economic downturn. Overall, orders were slightly lower in Europe and in the Middle East and Africa while the Americas increased. Orders in Asia were lower than the high levels in the fourth quarter of 2007, which included a large order in India.

 

Revenues increased in the quarter supported by higher volumes from execution of the order backlog. Service revenues grew significantly faster than total revenues. EBIT increased versus the same quarter in 2007 on the combination of higher revenues and continued operational improvements.

 

Lower cash from operations was the result of an increase in working capital, mainly due to higher inventories of standard products.

 

Process Automation

 

 

 

 

 

 

 

Change

 

 

 

 

 

Change

 

$ millions unless otherwise indicated

 

Q4 08

 

Q4 07

 

US$

 

Local

 

2008

 

2007

 

US$ 

 

Local

 

Orders

 

1,452

 

2,343

 

-38

%

-30

%

8,657

 

7,935

 

9

%

4

%

Order backlog (end. Dec.)

 

6,111

 

5,951

 

3

%

12

%

 

 

 

 

 

 

 

 

Revenues

 

2,088

 

1,939

 

8

%

20

%

7,815

 

6,420

 

22

%

18

%

EBIT

 

240

 

220

 

9

%

 

 

926

 

683

 

36

%

 

 

as % of revenues

 

11.5

%

11.3

%

 

 

 

 

11.8

%

10.6

%

 

 

 

 

Cash flow from operations

 

282

 

456

 

 

 

 

 

1,034

 

766

 

 

 

 

 

 

Orders decreased across most customer segments and regions in the fourth quarter due to a significant reduction in large orders compared to last year. Customer investments were delayed due to reduced commodity prices, limited access to project financing and increased uncertainty regarding future demand. The reduction in new investments was most pronounced in the mineral and metals sectors as customers were unable to obtain financing for their projects or commodity prices made investments in new production unattractive. Orders also declined in the marine business, reflecting uncertainty in the demand outlook related to oil prices as well as comparisons with record order levels in recent quarters. Service and turbocharger orders remained steady while orders were lower in oil and gas and pulp and paper.

 

Revenues increased strongly in the fourth quarter as the result of the execution of the large order backlog as well as strong revenues in both service and products, reflecting the less cyclical nature of those businesses. EBIT and EBIT margin increased versus the fourth quarter of 2007 on higher volumes and improved project execution.

 

Earnings were higher than a year ago but cash flow from operations was lower, mainly reflecting the timing of project payments.

 

8



 

Robotics

 

 

 

 

 

 

 

Change

 

 

 

 

 

Change

 

$ millions unless otherwise indicated

 

Q4 08

 

Q4 07

 

US$

 

Local

 

2008

 

2007

 

US$ 

 

Local

 

Orders

 

299

 

348

 

-14

%

-10

%

1,658

 

1,488

 

11

%

5

%

Order backlog (end Dec.)

 

545

 

529

 

3

%

6

%

 

 

 

 

 

 

 

 

Revenues

 

407

 

419

 

-3

%

3

%

1,642

 

1,407

 

17

%

11

%

EBIT

 

-73

 

25

 

n/a

 

 

 

9

 

79

 

-89

%

 

 

as % of revenues

 

-17.9

%

6.0

%

 

 

 

 

0.5

%

5.6

%

 

 

 

 

Cash flow from operations

 

18

 

27

 

 

 

 

 

49

 

120

 

 

 

 

 

 

Orders declined in the fourth quarter as demand weakened in both the automotive and general industry sectors and across all regions, reflecting the general global economic downturn, especially in the shorter-cycle industries served by the Robotics division.

 

Revenues were down 3 percent in U.S. dollars and up 3 percent in local currencies on execution of the order backlog. EBIT and EBIT margin were down as the result of restructuring-related charges and asset write-downs of approximately $70 million for shifting manufacturing and engineering to low-cost emerging countries as well as adapting capacity to the rapid market downturn.

 

9



 

More information

 

The 2008 Q4 results press release and presentation slides are available on the ABB News Center at www.abb.com/news and on the Investor Relations homepage at www.abb.com/investorrelations.

 

ABB will host a press conference today starting at 10:00 a.m. Central European Time (CET). U.K. callers should dial +44 207 153 8942. From Sweden, the number is +46 8 5069 2105, and from the rest of Europe, +41 91 610 56 00. Lines will be open 15 minutes before the start of the conference. Audio playback of the call will start one hour after the call ends and will be available for 72 hours: Playback numbers: +44 20 7108 6233 (U.K.), +41 91 612 4330 (rest of Europe) or +1 866 416 2558 (U.S./Canada). The code is 592, followed by the # key.

 

A meeting for analysts and investors is scheduled to begin today at 2:00 p.m. CET (8:00 a.m. EST). Callers should dial +1 412 858 4600 (from the U.S./Canada), +44 207 107 0611 (from the U.K.), or +41 91 610 56 00 (the rest of the world). Callers are requested to phone in 10 minutes before the start of the call. The audio playback of the call will start one hour after the end of the call and be available for two weeks. Playback numbers: +1 866 416 2558 (U.S./Canada) or +41 91 612 4330 (Europe and the rest of the world). The code is 10268, followed by the # key.

 

Investor calendar 2009

 

 

 

 

 

Q1 2009 results

 

April 23, 2009

ABB Ltd Annual General Meeting

 

May 5, 2009

Q2 2009 results

 

July 23, 2009

Q3 2009 results

 

October 29, 2009

 

ABB (www.abb.com) is a leader in power and automation technologies that enable utility and industry customers to improve performance while lowering environmental impact. The ABB Group of companies operates in around 100 countries and employs about 120,000 people.

 

Zurich, February 12, 2009
Joe Hogan, CEO

 

Important notice about forward-looking information

 

This press release includes forward-looking information and statements including the sections entitled “Cost reductions,” “Outlook for 2009”, “Dividend,” “Compliance”, as well as other statements concerning the outlook for our business. These statements are based on current expectations, estimates and projections about the factors that may affect our future performance, including global economic conditions, the economic conditions of the regions and industries that are major markets for ABB Ltd. These expectations, estimates and projections are generally identifiable by statements containing words such as “expects,” “believes,” “estimates,” “targets,” “plans” or similar expressions. However, there are many risks and uncertainties, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking information and statements made in this press release and which could affect our ability to achieve any or all of our stated targets. The important factors that could cause such differences include, among others, business risks related to the financial crisis, costs associated with compliance activities, the amount of revenues we are able to generate from backlog and orders received, raw materials prices, market acceptance of new products and services, changes in governmental regulations and currency exchange rates and such other factors as may be discussed from time to time in ABB Ltd’s filings with the U.S. Securities and Exchange Commission, including its Annual Reports on Form 20-F. Although ABB Ltd believes that its expectations reflected in any such forward-looking statement are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved.

 

For more information please contact:

 

Media Relations:

Investor Relations:

ABB Ltd

Thomas Schmidt, Wolfram Eberhardt

Switzerland: Tel. +41 43 317 7111

Affolternstrasse 44

(Zurich, Switzerland)

Sweden: Tel. +46 21 325 000

CH-8050 Zurich, Switzerland

Tel: +41 43 317 6568

USA: Tel. +1 203 750 7743

 

media.relations@ch.abb.com

investor.relations@ch.abb.com

 

 

10



 

Appendix I

 

ABB fourth-quarter (Q4) and full-year 2008 key figures

 

 

 

 

 

 

 

 

 

Change

 

 

 

 

 

Change

 

$ millions unless otherwise indicated

 

Q4 08

 

Q4 07

 

US$ 

 

Local

 

2008

 

2007

 

US$

 

Local

 

Orders

 

Group

 

7’183

 

8’868

 

-19

%

-11

%

38’282

 

34’348

 

11

%

7

%

 

 

Power Products

 

2’615

 

2’751

 

-5

%

2

%

13’627

 

11’320

 

20

%

15

%

 

 

Power Systems

 

1’456

 

1’902

 

-23

%

-14

%

7’408

 

7’744

 

-4

%

-8

%

 

 

Automation Products

 

2’094

 

2’360

 

-11

%

-3

%

10’872

 

9’314

 

17

%

11

%

 

 

Process Automation

 

1’452

 

2’343

 

-38

%

-30

%

8’657

 

7’935

 

9

%

4

%

 

 

Robotics

 

299

 

348

 

-14

%

-10

%

1’658

 

1’488

 

11

%

5

%

 

 

Corporate and other

 

-733

 

-836

 

 

 

 

 

-3’940

 

-3’453

 

 

 

 

 

Revenues

 

Group

 

9’140

 

8’713

 

5

%

15

%

34’912

 

29’183

 

20

%

16

%

 

 

Power Products

 

3’208

 

2’910

 

10

%

19

%

11’890

 

9’777

 

22

%

18

%

 

 

Power Systems

 

1’902

 

1’977

 

-4

%

7

%

6’912

 

5’832

 

19

%

16

%

 

 

Automation Products

 

2’484

 

2’396

 

4

%

13

%

10’250

 

8’644

 

19

%

13

%

 

 

Process Automation

 

2’088

 

1’939

 

8

%

20

%

7’815

 

6’420

 

22

%

18

%

 

 

Robotics

 

407

 

419

 

-3

%

3

%

1’642

 

1’407

 

17

%

11

%

 

 

Corporate and other

 

-949

 

-928

 

 

 

 

 

-3’597

 

-2’897

 

 

 

 

 

EBIT

 

Group

 

459

 

1,145

 

-60

%

 

 

4’552

 

4’023

 

13

%

 

 

 

 

Power Products

 

444

 

466

 

-5

%

 

 

2’100

 

1’596

 

32

%

 

 

 

 

Power Systems

 

181

 

179

 

1

%

 

 

592

 

489

 

21

%

 

 

 

 

Automation Products

 

422

 

410

 

3

%

 

 

1’908

 

1’477

 

29

%

 

 

 

 

Process Automation

 

240

 

220

 

9

%

 

 

926

 

683

 

36

%

 

 

 

 

Robotics

 

-73

 

25

 

n.a.

 

 

 

9

 

79

 

-89

%

 

 

 

 

Corporate and other

 

-755

 

-155

 

n.a.

 

 

 

-983

 

-301

 

n.a.

 

 

 

EBIT
margin

 

Group

 

5.0

%

13.1

%

 

 

 

 

13.0

%

13.8

%

 

 

 

 

 

 

Power Products

 

13.8

%

16.0

%

 

 

 

 

17.7

%

16.3

%

 

 

 

 

 

 

Power Systems

 

9.5

%

9.1

%

 

 

 

 

8.6

%

8.4

%

 

 

 

 

 

 

Automation Products

 

17.0

%

17.1

%

 

 

 

 

18.6

%

17.1

%

 

 

 

 

 

 

Process Automation

 

11.5

%

11.3

%

 

 

 

 

11.8

%

10.6

%

 

 

 

 

 

 

Robotics

 

-17.9

%

6.0

%

 

 

 

 

0.5

%

5.6

%

 

 

 

 

 

11



 

Appendix I (cont’d)

 

Q4 and full-year 2008 orders received and revenues by region

 

Q4 2008

 

 

 

Orders received

 

Change

 

Revenues

 

Change

 

$ millions

 

Q4 08

 

Q4 07

 

US$ 

 

Local

 

Q4 08

 

Q4 07

 

US$ 

 

Local

 

Europe

 

2,887

 

3,506

 

-18

%

-8

%

3,872

 

3,840

 

1

%

13

%

Americas

 

1,722

 

1,734

 

-1

%

9

%

1,843

 

1,552

 

19

%

29

%

Asia

 

1,882

 

2,792

 

-33

%

-29

%

2,394

 

2,275

 

5

%

12

%

Middle East and Africa

 

692

 

836

 

-17

%

-7

%

1,031

 

1,046

 

-1

%

8

%

Group total

 

7,183

 

8,868

 

-19

%

-11

%

9,140

 

8,713

 

5

%

15

%

 

Full year 2008

 

 

 

2008

 

2007

 

US$ 

 

Local

 

2008

 

2007

 

US$ 

 

Local

 

Europe

 

16,633

 

15,655

 

6

%

-1

%

15,815

 

13,322

 

19

%

13

%

Americas

 

7,235

 

6,013

 

20

%

19

%

6,428

 

5,247

 

23

%

22

%

Asia

 

10,242

 

9,186

 

11

%

7

%

8,967

 

7,480

 

20

%

16

%

Middle East and Africa

 

4,172

 

3,494

 

19

%

17

%

3,702

 

3,134

 

18

%

16

%

Group total

 

38,282

 

34,348

 

11

%

7

%

34,912

 

29,183

 

20

%

16

%

 

12



 

Appendix II — Notes

 

Taxes

Certain entities have deferred tax assets with a valuation allowance related to net operating loss carry-forwards and other items, primarily related to operations in the U.S. In the fourth quarter of 2008, recognition of some of these deferred tax assets met the more likely than not standard as outlined in the applicable accounting interpretation literature. Therefore, ABB recognized in North America deferred tax assets of $330 million in the fourth quarter. Furthermore, a corporate income tax charge of approximately $140 million  was recorded relating to a pending tax dispute. In addition, an expense of approximately $100 million was recorded due to the change in tax basis, because costs of previously disclosed investigations by U.S. and European authorities into suspect payments and alleged anti-competitive practices were not tax deductible.  As a result of these one time items, ABB’s effective tax rate for the full year 2008 was reduced to 24.8 percent.

 

Debt and equity securities transactions

On February 13, 2008, the Company announced a share-buyback program up to a maximum value of CHF 2.2 billion (equivalent to $2 billion at then-current exchange rates) with the intention of completing the buyback program prior to the Annual General Meeting of Shareholders in 2010 and of proposing the cancellation of the shares at that meeting. A total of 22.675 million shares were repurchased under the program up to the end of December 2008, at a total cost of CHF 652 million ($619 million, using exchange rates effective at the respective repurchase dates). The repurchased shares are included in treasury stock in the consolidated balance sheet at December 31, 2008. Given the current market uncertainty, ABB is not actively pursuing new purchases under the CHF 2.2-billion share buyback program.

 

In July 2008, the bank holding call options (related to Management Incentive Plan launches during 2003 and 2004) which had been issued at fair value and with strike prices of CHF 7.00 and CHF 7.50, respectively, exercised a portion of the calls held. As a result, in the third quarter, approximately 6.8 million shares were issued and there was an increase in capital stock and additional paid-in capital of approximately $49 million.

 

Accounting pronouncements

On December 30, 2008, the Financial Accounting Standards Board (FASB) issued FASB Staff Position Financial Accounting Standard 132(R)-1, Employer’s Disclosures about Postretirement Benefit Plan Assets (FSP 132(R)-1). FSP 132(R)-1 amends Statement of Financial Accounting Standards No. 132 (Revised 2003), Employers’ Disclosures about Pensions and Other Postretirement Benefits, to provide guidance on an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan. The disclosures about plan assets required by FSP 132(R)-1shall be provided for fiscal years ending after December 15, 2009. Upon initial application, the provisions of FSP 132(R)-1are not required for earlier periods that are presented for comparative purposes.

 

In May 2008, the Financial Accounting Standards Board issued FASB Staff Position (FSP) on APB 14-a Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (including Partial Cash Settlement).  The FSP requires the issuer to separately account for the liability and equity components of the convertible instrument in a manner that reflects the issuer’s nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. The FSP requires bifurcation of a component of the debt, classification of that component in equity, and then accretion of the resulting discount on the debt as part of interest expense being reflected in the income statement. As of December 31, 2008 and 2007, the Company does not have any debt instruments outstanding which contain the features outlined in this guidance.  However, in 2009, the Company will be required to implement the guidance on a retroactive basis to 2007 as it relates to the CHF 1 billion convertible bonds converted in 2007. The Company is currently assessing the impact on its 2007 Consolidated Financial Statements from the implementation of this FSP.

 

In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (SFAS 161). SFAS 161 amends and expands the disclosure requirements of SFAS 133 and requires additional qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments and credit-risk-related contingent features in derivative agreements. SFAS 161

 

13



 

will be effective for the Company in 2009. The statement encourages but does not require disclosures for earlier periods presented for comparative purposes at initial adoption.

 

In February 2008, the Financial Accounting Standards Board issued FSP 157-2, which delays the effective date of SFAS 157 for all nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). FSP 157-2 delays the effective date of SFAS 157 for certain items until January 1, 2009. The Company does not believe that FSP 157-2 will have a material impact on its Consolidated Financial Statements.

 

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51 (SFAS 160) and revised Statement of Financial Accounting Standards No. 141, Business Combinations (SFAS 141(R)). Among other things, the statements change the accounting for transactions with noncontrolling interest holders, require noncontrolling interests (previously referred to as minority interests) to be reported as a component of equity and require most assets, liabilities, noncontrolling interests, and goodwill acquired in a business combination to be recorded at full fair value. Both statements are effective for periods beginning on or after December 15, 2008, and earlier adoption is prohibited. The Company will apply SFAS 141(R) to business combinations occurring after the effective date. SFAS 160 will be applied prospectively upon adoption in 2009, with the exception of the presentation and disclosure requirements which will be made on a retrospective basis, to all noncontrolling interests. After adoption, noncontrolling interests of $612 and $592 million in 2008 and 2007, respectively, will be classified as a part of stockholders’ equity. Income attributable to noncontrolling interests of $260 million, and $244 million in 2008 and 2007, respectively, will be included in net income, although such income will continue to be deducted to calculate earnings per share.

 

Employee benefits funding

During 2008, ABB made contributions of $300 million to its pension plans and $16 million to its other postretirement plans.  These contributions included additional discretionary contributions of $18 million and $36 million made to the Company’s German and U.S. pension plans, respectively, during the fourth quarter of 2008.

 

Local currencies

The results of operations and financial position of many of ABB’s subsidiaries are recorded in the currencies of the countries in which those subsidiaries reside. The Company refers to these as “local currencies.” However, ABB reports its operational and financial results in U.S. dollars. Differences in our results in local currencies as compared to U.S. dollars are caused exclusively by changes in currency exchange rates.

 

14



 

Appendix III

Reconciliation of non-GAAP financial measures regarding fiscal year 2008

($ millions, unaudited)

 

EBIT margin

 

 

 

Earnings before interest and taxes (EBIT)

 

4,552

 

Revenues

 

34,912

 

EBIT margin (EBIT as % of revenues)

 

13.0

%

 

 

 

 

Finance net

 

 

 

Interest and dividend income

 

315

 

Interest and other finance expense

 

(349

)

Finance net

 

(34

)

 

 

 

 

Free cash flow (FCF) and as a share of net income (cash conversion)

 

 

 

Net cash provided by operating activities

 

3,958

 

Changes in financing receivables

 

7

 

Purchases of property, plant and equipment and intangible assets

 

(1,171

)

Proceeds from sales of property, plant and equipment

 

94

 

Free cash flow

 

2,888

 

Net income

 

3,118

 

Free cash flow as a share of net income

 

93

%

 

Free cash flow as a share of net income

 

Free cash flow as a share of net income (also referred to as cash conversion ratio) is a financial measure that is calculated by dividing our FCF by our net income. Management believes FCF and the cash conversion ratio are measures that are helpful in analyzing the cash generated and it uses FCF as a share of net income as a performance target.

 

Net cash

 

 

 

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

 

(354

)

Long-term debt

 

(2,009

)

Total debt

 

(2,363

)

 

 

 

 

Cash and equivalents

 

6,399

 

Marketable securities and short-term investments

 

1,407

 

Cash and marketable securities

 

7,806

 

Net cash

 

5,443

 

 

Net cash is a financial measure that is calculated as cash and equivalents plus marketable securities and short-term investments, less total debt.

 

Gearing

 

 

 

 

 

 

 

Total debt

 

2,363

 

Total stockholders’ equity

 

11,158

 

Minority interest

 

612

 

Gearing

 

17

%

 

Gearing is a financial measure that is calculated as total debt divided by the sum of total debt plus total stockholders’ equity, including minority interest. Total debt used for the purpose of calculating net debt and gearing equals long-term debt plus short-term debt and current maturities of long-term debt. Management believes net cash and gearing are helpful in analyzing leverage and considers both measures in evaluating possible financing transactions.

 

15



 

Appendix III (cont’d)

 

Return on capital employed (after tax)

 

 

 

= EBIT x (1-tax rate) / Capital employed

 

 

 

 

 

 

 

EBIT

 

4,552

 

Provision for taxes

 

1,119

 

Income from continuing operations before taxes and minority interest

 

4,518

 

Tax rate

 

25

%

 

 

 

 

Capital employed

 

 

 

= fixed assets + net working capital

 

 

 

Property, plant and equipment, net

 

3,562

 

Goodwill

 

2,817

 

Other intangible assets, net

 

411

 

Investments in equity method companies

 

68

 

Fixed assets

 

6,858

 

 

 

 

 

Receivables, net

 

9,245

 

Inventories, net

 

5,306

 

Prepaid expenses

 

237

 

Accounts payable, trade

 

(4,451

)

Billings in excess of sales

 

(1,224

)

Accounts payable, other

 

(1,292

)

Advances from customers

 

(2,014

)

Accrued expenses

 

(1,569

)

Net working capital

 

4,238

 

Capital employed

 

11,096

 

 

 

 

 

ROCE (after tax)

 

31

%

 

Return on capital employed (ROCE) is a financial measure defined above that management believes is a useful performance measure to assess how efficiently we are using our capital. ABB has published a ROCE performance target for 2011.

 

16



 

ABB Ltd Consolidated Income Statements

 

 

 

Year Ended

 

Three Months Ended

 

$ millions, except per share data (unaudited)

 

Dec. 31, 2008

 

Dec. 31, 2007

 

Dec. 31, 2008

 

Dec. 31, 2007

 

Sales of products

 

29,705

 

24,816

 

7,779

 

7,384

 

Sales of services

 

5,207

 

4,367

 

1,361

 

1,329

 

Total revenues

 

34,912

 

29,183

 

9,140

 

8,713

 

 

 

 

 

 

 

 

 

 

 

Cost of products

 

(20,506

)

(17,292

)

(5,597

)

(5,192

)

Cost of services

 

(3,466

)

(2,923

)

(946

)

(898

)

Total cost of sales

 

(23,972

)

(20,215

)

(6,543

)

(6,090

)

Gross profit

 

10,940

 

8,968

 

2,597

 

2,623

 

Selling, general and administrative expenses

 

(5,822

)

(4,975

)

(1,502

)

(1,446

)

Other income (expense), net

 

(566

)

30

 

(636

)

(32

)

Earnings before interest and taxes

 

4,552

 

4,023

 

459

 

1,145

 

Interest and dividend income

 

315

 

273

 

65

 

90

 

Interest and other finance expense

 

(349

)

(286

)

(210

)

(62

)

Income from continuing operations before taxes and minority interest

 

4,518

 

4,010

 

314

 

1,173

 

Provision for taxes

 

(1,119

)

(595

)

(5

)

113

 

Minority interest

 

(260

)

(244

)

(76

)

(87

)

Income from continuing operations

 

3,139

 

3,171

 

233

 

1,199

 

Income (loss) from discontinued operations, net of tax

 

(21

)

586

 

(20

)

554

 

Net income

 

3,118

 

3,757

 

213

 

1,753

 

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per share

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

1.37

 

1.40

 

0.10

 

0.52

 

Income (loss) from discontinued operations, net of tax

 

(0.01

)

0.26

 

(0.01

)

0.24

 

Net income

 

1.36

 

1.66

 

0.09

 

0.76

 

Weighted average basic shares (in millions)

 

2,287

 

2,258

 

2,283

 

2,294

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per share

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

1.37

 

1.38

 

0.10

 

0.52

 

Income (loss) from discontinued operations, net of tax

 

(0.01

)

0.25

 

(0.01

)

0.24

 

Net income

 

1.36

 

1.63

 

0.09

 

0.76

 

Weighted average dilutive shares (in millions)

 

2,296

 

2,308

 

2,285

 

2,311

 

 

17



 

ABB Ltd Consolidated Balance Sheets

 

$ millions, except share data (unaudited)

 

Dec. 31, 2008

 

Dec. 31, 2007

 

 

 

 

 

 

 

Cash and equivalents

 

6,399

 

4,650

 

Marketable securities and short-term investments

 

1,407

 

3,460

 

Receivables, net

 

9,245

 

8,582

 

Inventories, net

 

5,306

 

4,863

 

Prepaid expenses

 

237

 

307

 

Deferred taxes

 

1,020

 

783

 

Other current assets

 

733

 

368

 

Assets held for sale and in discontinued operations

 

 

132

 

Total current assets

 

24,347

 

23,145

 

 

 

 

 

 

 

Financing receivables, net

 

445

 

487

 

Property, plant and equipment, net

 

3,562

 

3,246

 

Goodwill

 

2,817

 

2,421

 

Other intangible assets, net

 

411

 

270

 

Prepaid pension and other employee benefits

 

73

 

380

 

Investments in equity method companies

 

68

 

63

 

Deferred taxes

 

1,190

 

862

 

Other non-current assets

 

268

 

127

 

Total assets

 

33,181

 

31,001

 

 

 

 

 

 

 

Accounts payable, trade

 

4,451

 

4,167

 

Billings in excess of sales

 

1,224

 

829

 

Accounts payable, other

 

1,292

 

1,289

 

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

 

354

 

536

 

Advances from customers

 

2,014

 

2,045

 

Deferred taxes

 

528

 

371

 

Provisions for warranties

 

1,105

 

1,121

 

Provisions and other

 

3,467

 

2,322

 

Accrued expenses

 

1,569

 

1,737

 

Liabilities held for sale and in discontinued operations

 

 

62

 

Total current liabilities

 

16,004

 

14,479

 

 

 

 

 

 

 

Long-term debt

 

2,009

 

2,138

 

Pension and other employee benefits

 

1,071

 

631

 

Deferred taxes

 

425

 

407

 

Other liabilities

 

1,902

 

1,797

 

Total liabilities

 

21,411

 

19,452

 

 

 

 

 

 

 

Minority interest

 

612

 

592

 

Stockholders’ equity:

 

 

 

 

 

Capital stock and additional paid-in capital

 

4,695

 

5,634

 

Retained earnings

 

10,073

 

6,955

 

Accumulated other comprehensive loss

 

(2,710

)

(1,330

)

Less: Treasury stock, at cost (40,108,014 and 18,725,475 shares at December 31, 2008 and December 31, 2007)

 

(900

)

(302

)

Total stockholders’ equity

 

11,158

 

10,957

 

Total liabilities and stockholders’ equity

 

33,181

 

31,001

 

 

18



 

ABB Ltd Consolidated Statements of Cash Flows

 

 

 

Year Ended

 

Three Months Ended

 

$ millions (unaudited)

 

Dec. 31, 2008

 

Dec. 31, 2007

 

Dec. 31, 2008

 

Dec. 31, 2007

 

Operating activities

 

 

 

 

 

 

 

 

 

Net income

 

3,118

 

3,757

 

213

 

1,753

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

661

 

602

 

178

 

167

 

Pension and postretirement benefits

 

43

 

(61

)

(3

)

(43

)

Deferred taxes

 

(199

)

(351

)

(421

)

(408

)

Net gain from sale of property, plant and equipment

 

(49

)

(46

)

(15

)

(22

)

Income from equity accounted companies

 

(15

)

(55

)

(3

)

(5

)

Minority interest

 

261

 

246

 

77

 

88

 

Loss (gain) on sale of discontinued operations

 

 

(541

)

 

(541

)

Other

 

232

 

132

 

168

 

24

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

Trade receivables

 

(1,266

)

(1,323

)

(73

)

(286

)

Inventories

 

(800

)

(551

)

217

 

258

 

Trade payables

 

522

 

530

 

121

 

108

 

Billings in excess of sales

 

539

 

374

 

105

 

243

 

Provisions, net

 

677

 

(362

)

814

 

(166

)

Advances from customers

 

130

 

411

 

(219

)

63

 

Other assets and liabilities, net

 

104

 

292

 

236

 

236

 

Net cash provided by operating activities

 

3,958

 

3,054

 

1,395

 

1,469

 

 

 

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

 

 

 

Changes in financing receivables

 

7

 

56

 

8

 

(1

)

Purchases of marketable securities (other than trading) and short-term investments

 

(3,626

)

(10,115

)

(796

)

(2,843

)

Purchases of property, plant and equipment and intangible assets

 

(1,171

)

(756

)

(435

)

(288

)

Acquisition of businesses (net of cash acquired)

 

(653

)

(54

)

(101

)

(10

)

Proceeds from sales of marketable securities (other than trading) and short-term investments

 

5,417

 

7,361

 

1,141

 

678

 

Proceeds from sales of property, plant and equipment

 

94

 

75

 

49

 

31

 

Proceeds from sales of businesses and equity accounted companies (net of cash disposed)

 

46

 

1,142

 

 

790

 

Net cash provided by (used in) investing activities

 

114

 

(2,291

)

(134

)

(1,643

)

 

 

 

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

 

 

 

Net changes in debt with maturities of 90 days or less

 

(10

)

(19

)

(42

)

(15

)

Increase in debt

 

458

 

210

 

135

 

64

 

Repayment of debt

 

(786

)

(247

)

(145

)

(80

)

Issuance of shares

 

49

 

241

 

 

88

 

Purchase of treasury shares

 

(621

)

(199

)

(15

)

 

Dividends paid

 

(1,060

)

(449

)

 

 

Dividends paid to minority shareholders

 

(152

)

(117

)

(3

)

1

 

Other

 

3

 

(45

)

(60

)

(17

)

Net cash provided by (used in) financing activities

 

(2,119

)

(625

)

(130

)

41

 

 

 

 

 

 

 

 

 

 

 

Effects of exchange rate changes on cash and equivalents

 

(230

)

275

 

(79

)

76

 

Adjustment for the net change in cash and equivalents in assets held for sale and in discontinued operations

 

26

 

39

 

 

54

 

Net change in cash and equivalents - continuing operations

 

1,749

 

452

 

1,052

 

(3

)

 

 

 

 

 

 

 

 

 

 

Cash and equivalents beginning of period

 

4,650

 

4,198

 

5,347

 

4,653

 

Cash and equivalents end of period

 

6,399

 

4,650

 

6,399

 

4,650

 

 

 

 

 

 

 

 

 

 

 

Supplementary disclosure of cash flow information

 

 

 

 

 

 

 

 

 

Interest paid

 

244

 

246

 

70

 

70

 

Taxes paid

 

1,065

 

780

 

272

 

152

 

Carrying value of debt and accrued interest converted into capital stock

 

 

843

 

 

 

 

19



 

 

 

 

 

 

 

Accumulated other comprehensive loss

 

 

 

 

 

$  millions (unaudited)

 

Capital
stock and
additional
paid-in
capital

 

Retained
earnings

 

Foreign
currency
translation
adjustment

 

Unrealized
gain (loss)
on available-
for-sale
securities

 

Pension
and other 
postretirement
plan
adjustments

 

Unrealized
gain (loss) of
cash flow
hedge
derivatives

 

Total
accumulated
other
comprehensive
loss

 

Treasury
stock

 

Total
stockholders’
equity

 

Balance at January 1, 2007

 

4,514

 

3,647

 

(1,462

)

(2

)

(629

)

74

 

(2,019

)

(104

)

6,038

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

3,757

 

 

 

 

 

 

 

3,757

 

Foreign currency translation adjustments

 

 

 

505

 

 

 

 

505

 

 

505

 

Foreign currency translation adjustments related to divestments of businesses

 

 

 

51

 

 

 

 

51

 

 

51

 

Effect of change in fair value of available-for-sale securities, net of tax

 

 

 

 

9

 

 

 

9

 

 

9

 

Unrecognized income related to pensions and other postretirement plans, net of tax

 

 

 

 

 

59

 

 

59

 

 

59

 

Adjustments related to pensions and other postretirement plans allocated to divestments of businesses, net of tax

 

 

 

 

 

84

 

 

84

 

 

84

 

Change in derivatives qualifying as cash flow hedges, net of tax

 

 

 

 

 

 

(19

)

(19

)

 

(19

)

Total comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,446

 

Treasury share transactions

 

(1

)